AGREEMENT AND PLAN OF MERGER
BY AND AMONG
METROMEDIA INTERNATIONAL GROUP, INC.,
ALLIANCE MERGER CORP.,
AND
ALLIANCE ENTERTAINMENT CORP.
DATED AS OF DECEMBER 20, 1995
TABLE OF CONTENTS
PAGE
ARTICLE 1 THE MERGER.......................................1
Section 1.1 The Merger.................................1
Section 1.2 Closing....................................1
Section 1.3 Effective Time.............................2
Section 1.4 Certificate of Incorporation and
By-laws.................................2
Section 1.5 Officers and Directors.....................2
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK,
OPTIONS AND WARRANTS; EXCHANGE OF
CERTIFICATES.....................................3
Section 2.1 Effect on Capital Stock of Alliance, Options
and Warrants...........................................3
(a) Conversion of Shares of Alliance Common Stock....3
(b) Effect on Alliance Options and Warrants..........3
(c) Treasury Shares..................................4
(d) Mergerco Common Stock............................4
Section 2.2 Exchange of Certificates...................4
(a) Exchange Agent...................................4
(b) Exchange Procedures..............................4
(c) Distributions with Respect to Unexchanged Shares
.................................................6
(d) Further Ownership Rights.........................6
(e) No Fractional Shares or Warrants.................6
(f) Termination of Exchange Fund.....................7
(g) Withholding Rights...............................8
(h) No Liability.....................................8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF ALLIANCE.......8
Section 3.1 Representations and Warranties of Alliance.8
(a) Organization, Standing and Corporate Power;
Subsidiaries.....................................8
(b) Certificate of Incorporation and By-laws.........9
(c) Capitalization...................................10
(d) SEC Documents; Financial
Statements.......................................11
(e) Authority........................................11
(f) Compliance with Applicable
Laws.............................................12
(g) Government Approvals; Required Consents..........12
(h) Non-Contravention................................13
(i) Litigation.......................................14
(j) Taxes and Related Tax Matters....................14
(k) Certain Agreements...............................15
(l) Employee Benefits................................16
(m) Contracts........................................17
(n) Environmental Matters............................18
(o) Absence of Certain Changes or Events.............18
(p) Information Supplied.............................19
(q) Real Estate......................................19
(r) Intellectual Property............................20
(s) Suppliers and Customers..........................21
(t) Investment Company Act...........................21
(u) Brokers or Finders...............................22
(v) Vote Required....................................22
Section 3.2 Representations and Warranties of Metromedia
........................................22
(a) Organization, Standing and Corporate Power;
Subsidiaries.....................................22
(b) Certificate of Incorporation and By-laws.........23
(c) Capitalization...................................23
(d) SEC Documents; Financial Statements..............24
(e) Authority........................................25
(f) Compliance with Applicable
Laws.............................................26
(g) Government Approvals; Required Consents..........26
(h) Non-Contravention................................27
(i) Litigation.......................................27
(j) Taxes and Related Tax Matters....................28
(k) Certain Agreements...............................29
(l) Employee Benefits................................29
(m) Contracts........................................30
(n) Environmental Matters............................31
(o) Absence of Certain Changes or Events.............31
(p) Information Supplied.............................32
(q) Real Estate......................................32
(r) Intellectual Property............................33
(s) Suppliers and Customers..........................34
(t) Investment Company Act...........................35
(u) Brokers or Finders...............................35
(v) Metromedia Credit Support........................35
ARTICLE 4 COVENANTS........................................35
Section 4.1 Mutual Covenants of Metromedia and Alliance.35
(a) Confidentiality..................................36
(b) Publicity........................................36
(c) Preparation of the Proxy
Statement and the Registration Statement.........36
(d) Satisfaction of Conditions.......................37
(e) Other Actions....................................37
(f) Advice of Changes; SEC
Documents........................................38
(g) Compliance with Laws.............................38
Section 4.2 Covenants of Alliance......................39
(a) Access to Information............................39
(b) Ordinary Course..................................39
(c) Meetings; Fiduciary Duties.......................41
(d) No Solicitation..................................42
(e) Affiliates.......................................43
Section 4.3 Covenants of Metromedia....................44
(a) Access to Information............................44
(b) Ordinary Course..................................44
(c) Listing..........................................46
(d) Meetings.........................................46
(e) Form S-3.........................................47
(f) Form S-8.........................................47
(g) Directors. .....................................47
(h) Directors' & Officers' Indemnification and
Insurance........................................48
ARTICLE 5 CONDITIONS PRECEDENT.............................49
Section 5.1.Conditions to the Obligations of Metromedia
and Alliance to Effect the Merger................49
(a) Stockholder Approval.............................49
(b) Registration Statement...........................49
(c) Blue Sky Laws....................................49
(d) Listing..........................................49
(e) No Injunctions or Restraints.....................50
(f) HSR Act..........................................50
(g) Governmental and Regulatory
Consents.........................................50
(h) Alliance Required Consents.......................50
(i) Metromedia Required Consents.....................50
(j) Metromedia Company Credit
Support..........................................50
(k) Stock Purchase Agreement.........................50
(l) Board of Director Approval.......................51
Section 5.2 Conditions to the Obligations of
Metromedia.......................................51
(a) Accuracy of Representations and Warranties.......51
(b) Performance of Agreements........................51
(c) No Material Adverse Change.......................51
(d) Opinions of Counsel..............................51
(e) Fairness Opinions................................52
(f) Affiliate Letters................................52
Section 5.3 Conditions to the Obligations of Alliance..52
(a) Accuracy of Representations and Warranties.......52
(b) Performance of Agreements........................52
(c) Fairness Opinions................................52
(d) No Material Adverse Change.......................53
(e) Legal Opinions...................................53
(f) Form S-3 and Form S-8............................53
(g) Closing Price....................................53
ARTICLE 6 TERMINATION AND AMENDMENT........................53
Section 6.1 Termination................................53
Section 6.2 Effect of Termination......................55
ARTICLE 7 GENERAL PROVISIONS...............................55
Section 7.1 Certain Definitions........................55
Section 7.2 Notices.................................57
Section 7.3 Interpretation.............................58
Section 7.4 Waivers and Amendments.....................58
Section 7.5 Expenses and Other Payments................58
Section 7.6 Assignment.................................59
Section 7.7 Entire Agreement; No Third Party
Beneficiaries..................................60
Section 7.8 Representations and Warranties.............60
Section 7.9 Governing Law..............................60
Section 7.10 Counterparts..............................60
EXHIBITS
Exhibit A -- Form of Warrant Agreement
Exhibit B -- Credit Support Letter
Exhibit C -- Registration Rights Agreement
Exhibit D -- Form of Stock Purchase Agreements
Exhibit E -- Form of Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Exhibit F -- Form of Opinion of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇
Page 1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 20, 1995,
between METROMEDIA INTERNATIONAL GROUP, INC., a Delaware corporation
("Metromedia"), ALLIANCE MERGER CORP., a Delaware corporation and a
wholly-owned subsidiary of Metromedia ("Alliance Mergerco"), and ALLIANCE
ENTERTAINMENT CORP., a Delaware corporation ("Alliance").
WHEREAS, upon the terms and subject to the conditions of this
Agreement, Alliance has agreed that at the Effective Time (as hereinafter
defined) Alliance Mergerco will merge with and into Alliance (the
"Merger") and the stockholders of Alliance will receive shares of
Metromedia and Warrants (as hereinafter defined) in the manner provided
in Section 2; and
WHEREAS, Metromedia and Alliance wish to make certain
representations, warranties and agreements in connection with the Merger
and also prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the
Delaware General Corporation Law (the "DGCL"), Alliance Mergerco shall be
merged with and into Alliance at the Effective Time. Upon and after the
Effective Time, the separate corporate existence of Alliance Mergerco
shall cease and Alliance shall be the surviving corporation in the Merger
(the "Surviving Corporation"). In accordance with the DGCL, all of the
rights, privileges, powers, immunities, purposes and franchises of
Alliance Mergerco and Alliance shall vest in the Surviving Corporation
and all of the debts, liabilities, obligations and duties of Alliance
Mergerco and Alliance shall become the debts, liabilities, obligations
and duties of the Surviving Corporation.
Section 1.2 CLOSING. The closing of the Merger (the
"Closing") will take place at the offices of ▇▇▇▇,
Page 2
Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ at 10:00 a.m. on a Business Day (as
hereinafter defined) mutually agreed to by Metromedia and Alliance prior
to the Termination Date (as hereinafter defined) following the satisfaction
or waiver by the party entitled to the benefit of such condition of each of
the conditions set forth in Article 5 or at such other place, time and
date as Metromedia and Alliance may agree. The time and date upon which
the Closing occurs is referred to herein as the "Closing Date."
Section 1.3 EFFECTIVE TIME. On the Closing Date (or on such
other date as Metromedia and Alliance may agree), Alliance Mergerco and
Alliance shall cause a Certificate of Merger (the "Certificate of
Merger") to be executed and filed with the Secretary of State of the
State of Delaware in accordance with the relevant provisions of the DGCL
and shall make all other filings or recordings required under the DGCL.
The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Secretary of State of the State of
Delaware, or at such later time as is specified in the Certificate of
Merger (the "Effective Time").
Section 1.4 CERTIFICATE OF INCORPORATION AND BY-LAWS. The
Certificate of Incorporation of Alliance Mergerco shall be the
Certificate of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law
except that Section 1 of the Certificate of Incorporation of Alliance
Mergerco shall be amended and restated in its entirety as follows: "1.
The name of the Corporation is "ALLIANCE ENTERTAINMENT CORP. (The
"Corporation")" or such section shall be amended to reflect the change to
such other name as the parties may agree. The By-laws of Alliance
Mergerco shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
Section 1.5 OFFICERS AND DIRECTORS.
(a) The directors of Alliance Mergerco at the Effective
Time shall be the directors of the Surviving Corporation and shall hold
office until their respective successors are duly elected or appointed
and qualified or until their earlier death, resignation or removal in
accordance with the Certificate of Incorporation and By-laws of the
Surviving Corporation.
(b) The officers set forth on Schedule 1.5 hereto shall
be the officers of the Surviving Corporation and they shall hold office
until their respective successors are duly elected or appointed and
qualified or until the their earlier death, resignation or removal in
accordance
Page 3
with the Certificate of Incorporation and By-laws of the
Surviving Corporation.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK, OPTIONS AND
WARRANTS; EXCHANGE OF CERTIFICATES
Section 2.1 EFFECT ON CAPITAL STOCK OF ALLIANCE, OPTIONS AND
WARRANTS. At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof:
(a) CONVERSION OF SHARES OF ALLIANCE COMMON STOCK. Each
issued and outstanding share of Common Stock, par value $.0001 per share
of Alliance (the "Alliance Common Stock") shall be converted into the
right to receive the Merger Consideration as defined herein. At the
Effective Time, all such shares of Alliance Common Stock shall no longer
be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such
shares of Alliance Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration to
be issued in consideration therefor upon surrender of such certificate in
accordance with Section 2.2, without interest. The term "Merger
Consideration" shall mean, for each share of Alliance Common Stock,
(i) .70 (the "Exchange Ratio") fully paid and nonassessable shares of
Common Stock, par value $1.00 per share, of Metromedia (the "Metromedia
Common Stock") and (ii) .285 Warrants to purchase Metromedia Common Stock
(each, a "Warrant") issued pursuant to the Warrant Agreement
substantially in the form of Exhibit A hereto (the "Warrant Agreement")
to be entered into between Metromedia and a warrant agent selected by
Metromedia.
(b) EFFECT ON ALLIANCE OPTIONS AND WARRANTS. At the
Effective Time, each holder of an issued and outstanding option or
warrant exercisable for shares of Alliance Common Stock ("Alliance
Options or Warrants") will receive, by virtue of the Merger and without
any action on the part of the holder thereof, options or warrants
exercisable for shares of Metromedia Common Stock with the same terms and
conditions as the Alliance Options and Warrants immediately prior to the
Effective Time except that (i) the exercise price and the number of
shares issuable upon exercise shall be divided and multiplied,
respectively, by the Exchange Ratio, and (ii) each Alliance Option or
Warrant will also be entitled to receive upon the proper exercise of any
such Alliance Option or ▇▇▇▇▇▇▇, .▇▇▇ ▇▇▇▇▇▇▇▇ for each share of Alliance
Common Stock which would have been received upon exercise of an Alliance
Option
Page 4
or Warrant immediately prior to the Effective Time and (iii) each
Alliance Option or Warrant shall vest and shall become immediately
exercisable at the Effective Time.
(c) TREASURY SHARES. Each share of Alliance Common Stock
held in treasury by Alliance immediately prior to the Effective Time
shall, by virtue of the Merger, be canceled and retired and cease to
exist, without any conversion thereof.
(d) MERGERCO COMMON STOCK. Each then issued outstanding
share of Common Stock, par value $.01 per share ("Mergerco Common
Stock"), of Alliance Mergerco shall be converted into one fully paid and
non-assessable share of Common Stock, par value $.0001 per share of the
Surviving Corporation.
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Effective Time,
Metromedia shall appoint Chemical/Mellon Shareholder Services to act as
exchange agent in the Merger (the "Exchange Agent") for purposes of
effecting the exchange for the Merger Consideration. At the Effective
Time, Metromedia shall deposit with the Exchange Agent, for the benefit
of the holders of shares of Alliance Common Stock, for exchange in
accordance with this Article 2, through the Exchange Agent, certificates
representing (i) a number of shares of Metromedia Common Stock equal to
the product (rounded down to the nearest whole number) of the Exchange
Ratio multiplied by the number of shares of Alliance Common Stock
outstanding immediately prior to the Effective Time and (ii) a number of
Warrants equal to the product (rounded down to the nearest whole number)
of .285 multiplied by the number of shares of Alliance Common Stock
outstanding immediately prior to the Effective Time. For purposes of
this Agreement, shares of Metromedia Common Stock, together with any
dividends or distributions with respect thereto, and the Warrants, are
hereinafter referred to as the "Exchange Fund" and such shares of
Metromedia Common Stock, and the Warrants are hereinafter collectively
referred to as the "Merger Securities." The Exchange Agent shall deliver
the Merger Securities out of the Exchange Fund as directed by Metromedia.
(b) EXCHANGE PROCEDURES. As soon as reasonably
practicable after the Effective Time, Metromedia shall instruct the
Exchange Agent to mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Alliance Common Stock (collectively, the
"Certificates") whose shares were converted into the right to receive the
Page 5
Merger Consideration pursuant to Section 2.1(a), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery
of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions as Metromedia may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates
in exchange for certificates representing the Merger Securities
comprising the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, and such other documents as reasonably may be
required by the Exchange Agent, and acceptance thereof by the Exchange
Agent, each holder of a Certificate shall be entitled to receive in
exchange therefor certificates representing the Merger Securities
comprising the Merger Consideration that such holder has the right to
receive pursuant to the provisions of this Article 2, and the Certificate
so surrendered shall forthwith be canceled. The Exchange Agent shall
accept such Certificates upon compliance with such reasonable terms and
conditions as the Exchange Agent may impose to effect an orderly exchange
thereof in accordance with normal exchange practices. After the
Effective Time, there shall be no further transfer on the books and
records of Alliance or its transfer agent of Certificates and if such
Certificates are presented to Alliance for transfer, they shall be
canceled against delivery of certificates representing the Merger
Securities comprising the Merger Consideration as herein provided. If
any certificates for Merger Securities are to be issued in a name other
than that in which the Certificate surrendered for exchange is
registered, it shall be a condition of such exchange that the Certificate
so surrendered shall be properly endorsed, with the signature guaranteed,
or otherwise in proper form for transfer and that the Person requesting
such exchange shall pay to Alliance or its transfer agent any transfer or
other taxes required by reason of the issuance of certificates
representing such Merger Securities in the name other than that of the
registered holder of the Certificate surrendered, or establish to the
satisfaction of Alliance or its transfer agent that such tax has been
paid or is not applicable. Until surrendered as contemplated by this
Section 2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender
certificates representing the Merger Securities to which such holder is
entitled and cash and other dividends, distributions or payments as
contemplated by this Section 2.2. Subject to applicable law, following
surrender of any such Certificate, there shall be paid to the record
holder thereof, the certificates representing the shares of Metromedia
Common Stock and Warrants issued in exchange
Page 6
therefor, as well as, (x) at the time of such surrender (or as soon thereafter
as the cash from the sale of the Alliance Excess Shares (as hereinafter
defined) is obtained by the Exchange Agent), the amount of any cash payable
in lieu of a fractional share of Metromedia Common Stock to which such holder
is entitled pursuant to Section 2.2(e), (y) at the time of such surrender,
the amount of dividends or other distributions or payments with a record
date after the Effective Time theretofore paid with respect to such
shares of Metromedia Common Stock, and (z) at the appropriate payment
date, the amount of dividends or other distributions or payments with a
record date after the Effective Time but prior to surrender and a payment
date subsequent to surrender payable with respect to such whole shares of
Metromedia Common Stock. In no event shall Persons entitled to receive
such dividends, distributions or payments be entitled to receive any
interest thereon.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions or payments declared or made after the
Effective Time with respect to Metromedia Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate, with respect to the shares of Metromedia Common Stock
represented thereby and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to Section 2.2(e) until the
holder of record of such Certificate shall surrender such Certificate.
(d) FURTHER OWNERSHIP RIGHTS. The Merger Securities
comprising the Merger Consideration issued upon the surrender for
exchange of Certificates in accordance with the terms of this Article 2,
together with any dividends, distributions or payments contemplated by
Section 2.2(b) and any cash in lieu of fractional shares as contemplated
by Section 2.2(e), shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to the shares of Alliance Common
Stock theretofore represented by such Certificates. If, after the
Effective Time, Certificates are presented to the Surviving Corporation
or the Exchange Agent for any reason, they shall be canceled and
exchanged as provided in this Article 2.
(e) NO FRACTIONAL SHARES OR WARRANTS.
(i) No certificates or scrip evidencing fractional
shares of Metromedia Common Stock or Warrants shall be issued upon the
surrender for exchange of the Certificates, and such fractional share
interests will not entitle the owner thereof to vote or to any rights of
a stockholder of the Surviving Corporation.
Page 7
(ii) As promptly as practicable following the
Effective Time, the Exchange Agent shall determine the excess of (x) the
number of full shares of Metromedia Common Stock and the number of full
Warrants in the Exchange Fund over (y) the aggregate number of full
shares of Metromedia Common Stock and the aggregate number of full
Warrants, respectively, in each case to be distributed to holders of
Alliance Common Stock pursuant to Section 2.2(a)(such excess being herein
called the "Alliance Excess Securities"). As soon after the Effective
Time as practicable, the Exchange Agent, as agent for the holders of
Metromedia Common Stock and Warrants, shall sell the Alliance Excess
Shares at then prevailing prices in the manner provided in
paragraph (iii) of this Section.
(iii) The sale of the Alliance Excess Securities by
the Exchange Agent shall be executed on the principal national securities
exchange on which the shares of Metromedia Common Stock and Warrants are
listed or, if such securities are not listed, on the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") and
shall be executed in round lots to the extent practicable. Until the net
proceeds of such sale or sales have been distributed to the former
stockholders of Alliance, the Exchange Agent will hold such proceeds in
trust for the former stockholders of Alliance (the "Alliance Securities
Trust"). Metromedia shall pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including the expenses and compensation,
of the Exchange Agent incurred in connection with such sale of the
Alliance Excess Securities out of the Alliance Securities Trust. The
Exchange Agent shall determine the portion of the Alliance Securities
Trust to which each former stockholder of Alliance shall be entitled, if
any, by multiplying the amount of the aggregate net proceeds comprising
the Alliance Securities Trust by a fraction, the numerator of which is
the amount of the fractional share interest to which such former
stockholder of Alliance is entitled and the denominator of which is the
aggregate amount of fractional share interests to which all are entitled.
(iv) As soon as practicable after the determination
of the amount of cash, if any, to be paid to former stockholders of
Alliance in lieu of any fractional interests, the Exchange Agent shall
make available such amounts to such former stockholders of Alliance.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the
Exchange Fund and the Alliance Securities Trust, which remains
undistributed to the former stockholders of Alliance for six months after
the Effective Time shall be delivered to Metromedia, upon demand, and any
Page 8
former stockholders of Alliance who have not theretofore complied with
this Article 2 shall thereafter look only to Metromedia for payment of
their claim for any Merger Consideration and any dividends or
distributions or other payments with respect to the Alliance Common
Stock. From and after the Effective Time, Metromedia shall instruct the
Exchange Agent to issue (or shall itself issue) to any holder of an
Alliance Option and Warrant, one Warrant for each share of Metromedia
Common Stock issued to any such holder upon proper conversion or exercise
of an Alliance Option or Warrant.
(g) WITHHOLDING RIGHTS. Metromedia or the Exchange Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Alliance
Common Stock such amounts as Metromedia or the Exchange Agent is required
to deduct and withhold with respect to the making of such payment under
the Internal Revenue Code of 1986, as amended (the "Code"), or any
provision of state, local or foreign tax law. To the extent that amounts
are so withheld by Metromedia or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Alliance Common Stock in respect
of which such deduction and withholding was made by the Surviving
Corporation or the Exchange Agent.
(h) NO LIABILITY. None of Metromedia, Alliance, Alliance
Mergerco or the Exchange Agent shall be liable to any Person in respect
of any Merger Securities comprising the Merger Consideration delivered to
a public official pursuant to any applicable abandoned property, escheat
or similar law.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ALLIANCE
Section 3.1 REPRESENTATIONS AND WARRANTIES OF ALLIANCE.
Alliance represents and warrants to Metromedia as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER;
SUBSIDIARIES. Each of Alliance and its Subsidiaries (as hereinafter
defined) is a corporation or partnership duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation
or organization, has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted, and is duly qualified and
Page 9
in good standing to do business in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification necessary, other than in such jurisdictions where the failure
so to qualify would not have a Material Adverse Effect (as hereinafter
defined) with respect to Alliance. Except as set forth in Section 3.1(a)
of the disclosure schedule delivered to Metromedia by Alliance on or prior
to the Delivery Date (as hereinafter defined), (the "Alliance Disclosure
Schedule") the Alliance SEC Documents (as hereinafter defined) set forth
a true and complete list of all of Alliance's Significant Subsidiaries (as
hereinafter defined), including (x) the jurisdiction of incorporation or
organization of each such Subsidiary and (y) the percentage of each such
Subsidiary's outstanding capital stock or other ownership interest owned
by Alliance and/or another Subsidiary of Alliance, as the case may be, if
less than 100%. All of the outstanding shares of capital stock or other
ownership interests in each of the Significant Subsidiaries of Alliance
are duly authorized, validly issued, fully paid and nonassessable and,
except as set forth in Section 3.1(a) of the Alliance Disclosure
Schedule, are owned (of record and beneficially) by Alliance and/or by
another Subsidiary of Alliance, as the case may be, free and clear of all
pledges, claims, options, rights of first refusal, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"), and not subject to preemptive rights created by
statute, such Subsidiary's respective Certificate of Incorporation or
By-laws or equivalent organizational documents or any agreement to which
such Subsidiary is a party or by which such Subsidiary is bound. Other
than as set forth in Section 3.1(a) of the Alliance Disclosure Schedule,
Alliance does not directly or indirectly own any material equity interest
in any Person (other than a Subsidiary) in which Alliance invested
$3,000,000 or more or invested in excess of $6,000,000 for all such
immaterial investments.
(b) CERTIFICATE OF INCORPORATION AND BY-LAWS. Complete
and correct copies of the Certificate of Incorporation and By-laws or
equivalent organizational documents, each as amended to date, of Alliance
and each of its Significant Subsidiaries shall have been delivered to
Metromedia on or prior to the date hereof. The Certificates of
Incorporation, By-laws and equivalent organizational documents of
Alliance and each of its Significant Subsidiaries are in full force and
effect. Neither Alliance nor any of its Significant Subsidiaries is in
violation of any material provision of its Certificate of Incorporation,
By-laws or equivalent organizational documents.
Page 10
(c) CAPITALIZATION. As of December 8, 1995, the
authorized capital stock of Alliance consists of: (i) 100,000,000 shares
of Alliance Common Stock of which, (A) 35,573,748 shares are issued and
outstanding, all of which are duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights, (B) no shares are
held in the treasury of Alliance, (C) 9,385,985 shares are reserved for
future issuance for the exercise of stock options with a term, exercise
price, vesting schedule and other material terms set forth separately for
each of Alliance's stock option plans in Section 3.1(c) of the Alliance
Disclosure Schedule and (D) 1,940,773 shares are reserved for future
issuance for the exercise of warrants with a term and exercise price set
forth in Section 3.1(c) of the Alliance Disclosure Schedule and
(ii) 10,000,000 shares of Alliance Preferred Stock none of which are
issued and outstanding. Except as described in this Section 3.1(c) or in
Section 3.1(c) of the Alliance Disclosure Schedule, no shares of the
capital stock or other equity securities of Alliance are authorized,
issued or outstanding, or reserved for any other purpose, and there are
no options, warrants or other rights (including registration rights),
agreements, arrangements or commitments of any character (including,
without limitation, obligations to issue shares as the deferred purchase
price for acquisitions of stock or assets of third parties) to which
Alliance or any of its Subsidiaries is a party relating to the issued or
unissued capital stock or other equity securities or ownership interests
of Alliance or any of its Subsidiaries or obligating Alliance or any of
its Subsidiaries to grant, issue or sell any shares of capital stock or
other equity securities or ownership interests of Alliance or any of its
Subsidiaries, by sale, lease, license or otherwise. Alliance has no
outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote or which are convertible into or exercisable
for securities having the right to vote with the stockholders of Alliance
on any matter. Other than as contemplated by this Agreement or as set
forth in Section 3.1(c) of the Alliance Disclosure Schedule, there are no
outstanding contractual obligations, commitments, understandings or
arrangements of Alliance or any of its Subsidiaries to repurchase, redeem
or otherwise acquire or make any payment in respect of any shares of
capital stock or other equity securities or ownership interests of
Alliance or any of its Subsidiaries. Since November 30, 1995, Alliance
has not (i) issued any shares of its capital stock (except pursuant to
the exercise of then outstanding options or warrants in accordance with
their terms) or options, warrants or other securities convertible into
shares of its capital stock, or (ii) repurchased any shares of its
capital stock.
Page 11
(d) SEC DOCUMENTS; FINANCIAL STATEMENTS. Alliance has
made available to Metromedia a true and complete copy of each form,
report, schedule, registration statement and definitive proxy statement
filed by Alliance with the SEC since September 30, 1993 (as such
documents have since the time of their filing been amended or
supplemented, the "Alliance SEC Documents"), which are all the documents
(other than preliminary material) that Alliance was required to file with
the SEC since such date. As of their respective dates, the Alliance SEC
Documents (other than preliminary material) complied in all material
respects with the requirements of the Securities Act of 1933, as amended
(the "Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as applicable, and the rules and
regulations of the SEC thereunder applicable to such Alliance SEC
Documents, and none of the Alliance SEC Documents, as such documents have
been amended to date (including all financial statements included therein
and exhibits and schedules thereto and documents incorporated by
reference therein), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of
Alliance included in the Alliance SEC Documents (as such documents may
have been amended to date) comply as to form in all material respects
with applicable accounting requirements and with the rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied
on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited financial
statements, as permitted by Exchange Act Form 10-Q) and fairly present
(subject, in the case of the unaudited financial statements, to normal,
recurring audit adjustments that, individually and in the aggregate, were
not material) the consolidated financial position of Alliance and its
consolidated Subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended.
None of the information supplied in writing by Alliance to Metromedia for
inclusion in the Proxy Statement or the Registration Statement will
contain any untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(e) AUTHORITY. Alliance has all requisite corporate
power and authority to enter into this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated
hereby, subject, in the case of the Merger, to the approval of this
Agreement by the
Page 12
Board of Directors and stockholders of Alliance. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Alliance and no other
corporate proceedings on the part of Alliance are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby,
subject, in the case of the Merger, to the approval of this Agreement by
the Board of Directors and stockholders of Alliance. This Agreement has
been duly and validly executed and delivered by Alliance and constitutes
a valid and binding obligation of Alliance enforceable against Alliance
in accordance with its terms, subject, in the case of the Merger, to the
approval of this Agreement by the Board of Directors and stockholders of
Alliance.
(f) COMPLIANCE WITH APPLICABLE LAWS. Alliance and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders
and approvals of all Governmental Entities (as hereinafter defined) that
are necessary to the operation of the businesses of Alliance and its
Subsidiaries taken as a whole (the "Alliance Permits") except as would
not have a Material Adverse Effect with respect to Alliance. Alliance
and its Subsidiaries are in compliance with the terms of the Alliance
Permits, except where any such failure so to comply would not have a
Material Adverse Effect with respect to Alliance. Except as would not
have a Material Adverse Effect with respect to Alliance, the businesses
of Alliance and its Subsidiaries are not being conducted in violation of
any law, ordinance or regulation of any Governmental Entity. No
investigation or review by any Governmental Entity with respect to
Alliance or any of its Subsidiaries is pending or, to the knowledge of
Alliance, threatened, nor, to the knowledge of Alliance, has any
Governmental Entity indicated an intention to conduct the same that
would, in any such case, have a Material Adverse Effect with respect to
Alliance.
(g) GOVERNMENT APPROVALS; REQUIRED CONSENTS.
(i) No consent, approval or authorization of, or
declaration or filing with, or notice to, any Governmental Entity on the
part of Alliance is required in connection with the execution or delivery
by Alliance of this Agreement, the consummation by Alliance of the
transactions contemplated hereby or compliance by Alliance with the
provisions hereof, other than (A) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware in accordance with
the DGCL, (B) filings with the SEC and any applicable national securities
exchange, (C) filings under state securities or "Blue Sky" laws,
(D) filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Page 13
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act") and (E) as otherwise set forth in
Section 3.1(g)(i) of the Alliance Disclosure Schedule or as would not cause
a Material Adverse Effect (any such consents, approvals, authorizations,
declarations, filings or notices specified in clauses (A) through (E) being
referred to as "Alliance Governmental Approvals").
(ii) No consent, approval or action of, or filing
with, or notice to, any Person (other than a Governmental Entity) shall
be required in connection with the execution or delivery by Alliance of
this Agreement, consummation by Alliance of the transactions contemplated
hereby or compliance by Alliance with the provisions hereof, other than
as set forth in Section 3.1(g)(ii) of the Alliance Disclosure Schedule
(the "Alliance Required Consents") and other than consents, approvals,
actions, filings or notices which would not have a Material Adverse
Effect with respect to Alliance.
(h) NON-CONTRAVENTION. The execution and delivery of
this Agreement by Alliance do not, and the consummation of the
transactions contemplated hereby and compliance by Alliance with the
provisions hereof will not, (i) conflict with or result in any violation
of any provision of the Certificate of Incorporation or By-laws or
equivalent organizational documents, in each case as amended and/or
restated, of Alliance or any of its Subsidiaries; (ii) except as set
forth in Section 3.1(h)(ii) of the Alliance Disclosure Schedule, if the
Alliance Required Consents are obtained, result in any violation or
breach of, or result in a modification of the effect of, or constitute
(with or without notice or lapse of time or both) a default under or give
rise to any right of termination, cancellation or acceleration under, any
contract, agreement, indenture, note, bond, loan, mortgage, lease,
instrument, license, permit, concession, franchise, commitment or other
binding arrangement (collectively, "Contracts") to which Alliance or any
of its Subsidiaries is a party or by or to which any of them or any of
their properties may be bound or subject, or result in the creation of
any Lien upon the properties of Alliance or any of its Subsidiaries in
each case pursuant to the terms of any such Contract; (iii) if the
Alliance Governmental Approvals are obtained, result in any violation of
any law, statute, regulation, order, writ, judgment or decree of any
Governmental Entity applicable to Alliance; or (iv) if the Alliance
Governmental Approvals and the Alliance Required Consents are obtained,
result in the violation, revocation or suspension of any Alliance Permit,
other than with respect to clauses (ii) through (iv) above, any such
violations, breaches, modifications, defaults, terminations,
Page 14
cancellations, accelerations, Liens, revocations or suspensions that,
individually and in the aggregate, would not have a Material Adverse
Effect with respect to Alliance.
(i) LITIGATION. As of the date of this Agreement and as
of the Closing Date, except as set forth as described in the Alliance SEC
Documents, there is no suit, action or proceeding pending, or, to the
knowledge of Alliance, threatened against Alliance or any Subsidiary of
Alliance that, individually or in the aggregate with any other such
suits, actions or proceedings, would have a Material Adverse Effect with
respect to Alliance, nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator outstanding against
Alliance or any Subsidiary of Alliance that, individually or in the
aggregate, would have a Material Adverse Effect with respect to Alliance.
(j) TAXES AND RELATED TAX MATTERS.
(i) Other than Taxes and Tax Sharing Agreement
Amounts (as each term is hereinafter defined) that individually and in
the aggregate are not material all federal, state, county, local, foreign
and other taxes (including, without limitation, income, profits, premium,
estimated, excise, sales, use, occupancy, gross receipts, franchise, ad
valorem, severance, capital levy, production, transfer, withholding,
employment, unemployment compensation, payroll related and property
taxes, import duties and other governmental charges and assessments),
whether or not measured in whole or in part by net income, and including
deficiencies, interest, additions to tax or interest, and penalties with
respect thereto, (hereinafter "Taxes" or, individually, a "Tax") required
to be paid on or before the date hereof by or with respect to Alliance
and its Subsidiaries (or any of them), including amounts, other than
amounts being contested in good faith, required to be paid on or before
the date hereof with respect to Taxes as a result of any tax sharing
agreement or similar arrangement ("Tax Sharing Agreement Amounts") of
Alliance and its Subsidiaries (or any of them), have been timely paid,
except with respect to Taxes and Tax Sharing Agreement Amounts for which
the failure to pay would not have a Material Adverse Effect with respect
to Alliance.
(ii) All material returns and reports required to be
filed by or with respect to Alliance and its Subsidiaries (or any of
them) with respect to Taxes (hereinafter "Tax Returns" or, individually,
a "Tax Return") on or before the date hereof have been timely filed. No
penalties or other charges in a material amount are or will become due
with respect to the late filing of any Tax Return of
Page 15
Alliance or any of its Subsidiaries or payment of any Tax of Alliance or
any of its Subsidiaries, required to be filed or paid on or before the
date hereof.
(iii) With respect to all Tax Returns filed by or with
respect to Alliance and any of its Subsidiaries, (A) Section 3.1(j) of
the Alliance Disclosure Schedule sets forth the periods for which the
statute of limitations for the assessment of federal Taxes have expired;
(B) except as set forth in Section 3.1(j) of the Alliance Disclosure
Schedule, no audit is in progress and no extension of time has been
executed with respect to any date on which any Tax Return was or is to be
filed and no waiver or agreement has been executed for the extension of
time for the assessment or payment of any Tax; and (C) except as set
forth in Section 3.1(j), there is no material unassessed deficiency
proposed or threatened against Alliance or any of its Subsidiaries.
(iv) Except as set forth in Section 3.1(j) of the
Alliance Disclosure Schedule, neither Alliance nor any of its
Subsidiaries has been or is a party to any tax sharing agreement or
similar arrangement.
(v) Section 3.1(j) of the Alliance Disclosure
Schedule identifies (i) the common parent of each group of affiliated
corporations that filed a consolidated federal income tax return, and the
period to which such returns related, that included Alliance or any of
its Significant Subsidiaries since 1989, and (ii) all material Tax
liabilities, of which Alliance has knowledge, that have been asserted by
the Internal Revenue Service (the "IRS") with respect to any such return
and all claims with respect to Taxes in a material amount that have been
asserted against Alliance under any tax sharing agreement to which it is
a party.
(k) CERTAIN AGREEMENTS. Except as set forth in
Section 3.1(k) and/or Section 3.1(l) of the Alliance Disclosure Schedule,
and except for this Agreement, as of the date of this Agreement, neither
Alliance nor any of its Subsidiaries is a party to any oral or written
(i) agreement with any executive officer or other key employee of
Alliance or any Subsidiary of Alliance the benefits of which are
contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving Alliance of the nature contemplated
by this Agreement, or agreement with respect to any executive officer of
Alliance providing any term of employment or compensation guarantee
extending for a period longer than three years after the Closing Date and
for the payment of in excess of $200,000 per annum or (ii) plan,
including any stock option plan, stock
Page 16
appreciation right plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by
this Agreement.
(l) EMPLOYEE BENEFITS.
(i) Except as set forth in Section 3.1(l) of the
Alliance Disclosure Schedule, there are no United States or foreign
employee benefit plans or arrangements (collectively, the "Alliance
Benefit Plans") of any type (including, without limitation, plans
described in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), under which Alliance or any corporation,
person or trade or business which is a member of a group which is under
common control with Alliance within the meaning of Sections 414(b)-(o) of
the Code and, if applicable, Sections 4001(a)(14) and (b) of ERISA (an
"ERISA Affiliate") has incurred any unsatisfied material liability or
could reasonably be expected in the future to incur any direct or
indirect, actual or contingent material liability (including, without
limitation, any liability that might arise indirectly under Section 414
of the Code or Section 4069 of ERISA).
(ii) With respect to each Alliance Benefit Plan,
Alliance will deliver or make available on or prior to the date hereof to
Metromedia complete and accurate copies (where applicable) of: (A) all
plan texts and agreements; (B) all material employee communications
regarding an Alliance Benefit Plan not embodied in plan texts and
agreements that could materially affect the liabilities of Alliance or
its Subsidiaries with respect to such plan; (C) the most recent annual
report; (D) the most recent annual and periodic accounting of plan
assets; (E) the most recent determination letter received from the IRS;
and (F) the most recent actuarial valuation.
(iii) No event has occurred or might reasonably be
expected to occur as a result of which any Alliance Benefit Plan or
Alliance or any of its ERISA Affiliates could, directly or indirectly
(whether through a commonly controlled entity under Code Section 414 or
otherwise), incur material liability for failure to comply with the
applicable requirements of Title IV of ERISA, section 302 of ERISA,
sections 412, 420, 4971 or 4975 of the Code, the continuation coverage
requirements of section 601 et seq. of ERISA and section 4980B of the
Code, and corresponding or similar provisions of foreign laws or
Page 17
regulations, other than routine claims for benefits in accordance with
the terms of such plan except as would not have a Material Adverse Effect
with respect to Alliance.
(iv) Each Alliance Benefit Plan has been operated in
all respects in accordance with its terms and with the requirements of
applicable law and regulations except to the extent any such operation
would not have a Material Adverse Effect with respect to Alliance.
(v) With respect to each Alliance Benefit Plan that
is a defined benefit pension plan, since the most recent financial
statements of Alliance there has been no material increase in such plan's
liabilities other than the accrual of benefits in the ordinary course and
in accordance with the terms of such plan.
(vi) Except as set forth in Sec-tion 3.1(l) of the
Alliance Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement will not, with respect to employees or
former employees of Alliance or any of its ERISA Affiliates: (A) entitle
any individual to severance pay; (B) accelerate the time of payment or
vesting of, increase the amount of, or satisfy a condition to the
compensation due to any individual; and (C) result in the payment of an
amount that would, individually or in combination with any other such
payment, constitute an "excess parachute payment" under Code section
280G(b)(1).
(m) CONTRACTS. There is no contract, agreement or
understanding required to be described in or filed as an exhibit to any
Alliance SEC Document that is not described in or filed as required by
the Securities Act or the Exchange Act, as the case may be. All such
contracts, agreements and understanding are valid and binding and are in
full force and effect and enforceable in accordance with their respective
terms other than contracts, agreements or understandings which are by
their terms no longer in force or effect. Except for the Alliance
Required Consents and except to the extent any of the following would not
have a Material Adverse Effect with respect to Alliance, (i) no approval
or consent of, or notice to, any Person is needed in order that such
contract, agreement or understanding shall continue in full force and
effect in accordance with its terms without penalty, acceleration or
rights of early termination following the consummation of the
transactions contemplated by this Agreement, and (ii) Alliance is not in
violation of breach of or default under any such contract, agreement or
understanding nor to Alliance's knowledge is any other party to any such
contract, agreement or understanding.
Page 18
(n) ENVIRONMENTAL MATTERS. Except as set forth in Section
3.1(n) of the Alliance Disclosure Schedule, (A) Alliance and each of its
Subsidiaries has obtained and is in material compliance with the terms
and conditions of all permits, licenses and other authorizations required
under applicable federal, state, local and foreign laws, regulations and
codes as currently in effect relating to pollution and protection of the
environment ("Environmental Laws"); (B) no asbestos in a friable
condition or equipment containing polychlorinated biphenyls or leaking
underground or above-ground storage tanks is contained in or located at
any facility owned, leased or controlled by Alliance or any of its
Subsidiaries; (C) Alliance and each of its Subsidiaries is in material
compliance with all applicable Environmental Laws, and has fully
disclosed all known material past and present non-compliance with
Environmental Laws, and all known past discharges, emissions, leaking or
releases known to Alliance of any substance or waste regulated under or
defined by Environmental Laws that could reasonably be expected to form
the basis of any claim, action, suit, proceeding, hearing or
investigation under any applicable Environmental Laws; and (D) neither
Alliance nor any of its Subsidiaries has received notice of any past or
present events, conditions, circumstances, activities, practices,
incidents, actions or plans that have resulted in or threaten to result
in any common law or legal liability, or otherwise form the basis of any
claim, action, suit, proceeding, hearing or investigation under any
applicable Environmental Laws; provided, however, that clauses (A)
through (D) address only those matters that would have a Material Adverse
Effect with respect to Alliance.
(o) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Alliance SEC Documents, or except as contemplated by
this Agreement, since September 30, 1995, Alliance and its Subsidiaries
have conducted their respective businesses only in the ordinary and usual
course, and, as of the date of this Agreement, there has not been (i) any
declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of
Alliance's capital stock; (ii) any return of any capital or other
distribution of assets to stockholders of Alliance; (iii) any material
investment by Alliance or any of its Subsidiaries either by the purchase
of any property or assets or by any acquisition (by merger, consolidation
or acquisition of stock or assets) of any corporation, partnership or
other business organization or division thereof other than the ownership
of an equity interest in any Person in an amount less than $3,000,000,
where the value of such ownership interests do not in the aggregate
exceed $6,000,000; (iv) any sale, disposition or other transfer of assets
or properties of
Page 19
Alliance or its Subsidiaries (other than the sale of
inventory in the ordinary course of business) in excess of $500,000
individually or $2,000,000 in the aggregate; (v) any incurrence or
guarantee of any Debt other than in the ordinary course of business
consistent with past practices and any Debt in excess of $10,000,000 in
the aggregate; or (vi) any change, occurrence or circumstance of any
character (whether or not in the ordinary course of business) that,
individually or in the aggregate, has had or would have a Material
Adverse Effect with respect to Alliance.
(p) INFORMATION SUPPLIED. None of the information
supplied or to be supplied by Alliance for inclusion or incorporation by
reference in (i) the registration statements on Form S-4 to be filed with
the SEC by Metromedia in connection with the issuance of the Merger
Securities (collectively, the "Registration Statement") and (ii) the
joint proxy statement to be filed with the SEC by Metromedia and Alliance
in connection with the Stockholders' Meeting (the "Proxy Statement")
will, at the time the Registration Statement is filed with the SEC, at
any time it is amended or supplemented or at the time it becomes
effective under the Securities Act or at the time the Proxy Statement is
mailed to the Alliance stockholders, as the case may be, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading.
(q) REAL ESTATE.
(i) All material real property owned by Alliance or
any of its Subsidiaries is described in the Alliance SEC Documents.
Alliance or one of its Subsidiaries is the owner of fee title to such
real property described in the Alliance SEC Documents and to all of the
buildings, structures and other improvements located thereon free and
clear of any mortgage, deed of trust, lien, pledge, security interest,
claim, lease, charge, option, right of first refusal, easement,
restrictive covenant, encroachment or other survey defect, encumbrance or
other restriction or limitation except for any of the foregoing which
would not have a Material Adverse Effect with respect to Alliance.
(ii) All material leases, subleases, licenses or
other agreements under which Alliance or any of its Subsidiaries uses or
occupies, or has the right to use or occupy, now or in the future, any
real property or improvements thereon (the "Alliance Real Property
Leases") are described in the Alliance SEC Documents. Except as
disclosed in the Alliance SEC Documents, all Alliance Real
Page 20
Property Leases are valid and binding on the lessors thereunder in accordance
with their respective terms and to Alliance's knowledge, there is not under
any such Alliance Real Property Leases any existing default, or any
condition, event or act which with notice or lapse of time or both would
constitute such a default, which in either case, considered individually
or in the aggregate with all such other Alliance Real Property Leases
under which there is such a default, condition, event or act, has or will
have a Material Adverse Effect with respect to Alliance.
(r) INTELLECTUAL PROPERTY.
(i) Alliance or one of its Subsidiaries owns, or is
licensed or otherwise possesses legally enforceable rights to use all
patents, trademarks, trade names, service marks, copyrights, and any
applications therefor, technology, know-how, computer software programs
or applications, and tangible or intangible proprietary information or
material that are used in the business of Alliance and its Subsidiaries
as currently conducted, except as could not reasonably be expected to
have a Material Adverse Effect with respect to Alliance.
(ii) Except as would not reasonably be expected to
have a Material Adverse Effect with respect to Alliance: Alliance is
not, nor will it be as a result of the consummation of the Merger and the
transactions contemplated by this Agreement or the performance of its
obligations hereunder, in violation of any licenses, sublicenses and
other agreements as to which Alliance is a party and pursuant to which
Alliance is authorized to use any third-party patents, trademarks,
service marks and copyrights ("Third-Party Intellectual Property
Rights"). Except as would not reasonably be expected to have a Material
Adverse Effect with respect to Alliance, no claims with respect to the
patents, registered and material unregistered trademarks and service
marks, registered copyrights, trade names and any applications therefor
owned by Alliance or any of its Subsidiaries (the "Alliance Intellectual
Property Rights"), any trade secret material to Alliance, or Third Party
Intellectual Property Rights to the extent arising out of any use,
reproduction or distribution of such Third Party Intellectual Property
Rights by or through Alliance or any of its Subsidiaries, are currently
pending or, to the knowledge of Alliance, are threatened by any Person.
Except as would not reasonably be expected to have a Material Adverse
Effect with respect to Alliance, Alliance does not know of any valid
grounds for any bona fide claims (A) against the use by Alliance or any
of it Subsidiaries, of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer
Page 21
software programs and applications used in the business of Alliance or
any of its Subsidiaries as currently conducted or as proposed to be conducted;
(B) challenging the ownership, validity or effectiveness of any of
Alliance Intellectual Property Rights or other trade secret material to
Alliance; or (C) challenging the license or legally enforceable right to
use of the Third Party Intellectual Rights by Alliance or any of its
Subsidiaries.
(iii) To Alliance's knowledge and except as would not
reasonably be expected to have a Material Adverse Effect with respect to
Alliance, (A) all patents, registered trademarks, service marks and
copyrights held by Alliance are valid and subsisting and (B) there is no
unauthorized use, infringement or misappropriation of any of the Alliance
Intellectual Property by any third party, including any employee or
former employee of Alliance or any of its Subsidiaries.
(iv) LICENSES FROM FOREIGN GOVERNMENTS. Except as
would not reasonably be expected to have a Material Adverse Effect with
respect to Alliance, Alliance has obtained (and such licenses remain in
force and effect) from foreign governments all licenses or other
authorizations required to conduct its businesses as currently operated
and as described in the Registration Statement.
(s) SUPPLIERS AND CUSTOMERS. The relationships of
Alliance and its Subsidiaries with its six largest suppliers and six
largest customers (determined by dollar volume paid for the twelve months
ended on September 30, 1995) are good commercial working relationships
and Alliance does not reasonably believe that any such Person (i) intends
to cancel, modify materially or otherwise terminate the relationship of
such Person with Alliance or any of its Subsidiaries or (ii) intends to
decrease or limit materially, its services or supplies to Alliance or any
of its Subsidiaries or its usage or purchase of the products of Alliance
or any of its Subsidiaries except with respect to clauses (i) and (ii)
above, as would not have a Material Adverse Effect with respect to
Alliance.
(t) INVESTMENT COMPANY ACT. Alliance and each of its
Subsidiaries either (i) is not an "investment company," or to Alliance's
knowledge a company "controlled" by, or to Alliance's knowledge an
"affiliated company" with respect to, an "investment company," required
to register under the Investment Company Act of 1940, as amended (the
"Investment Company Act") or (ii) satisfies all conditions for an
exemption from the Investment Company Act, and,
Page 22
accordingly, neither Alliance nor any of its Subsidiaries is required to be
registered under the Investment Company Act.
(u) BROKERS OR FINDERS. Except as set forth on
Section 3.2(u) of the Alliance Disclosure Schedule, no agent, broker,
investment banker, financial advisor or other Person retained by or on
behalf of Alliance is or will be entitled to any broker's or finder's fee
or any other commission or similar fee in connection with any of the
transactions contemplated by this Agreement.
(v) VOTE REQUIRED. The affirmative vote of a majority of
the votes that the holders of the outstanding shares of Alliance Common
Stock are entitled to cast with respect to the adoption and approval of
this Agreement is the only vote of the holders of any class or series of
the capital stock of Alliance necessary to approve the Merger and the
other transactions contemplated hereby. Section 3.1(v) of the Alliance
Disclosure Schedule sets forth a list and contains a description of the
material terms of all agreements to which Alliance or any of its
executive officers is a party which provides for "tag-along" rights or
rights of first refusal.
Section 3.2 REPRESENTATIONS AND WARRANTIES OF METROMEDIA.
Metromedia represents and warrants to Alliance as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER;
SUBSIDIARIES. Each of Metromedia and its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation, has all requisite power and authority
to own, lease and operate its properties and to carry on its business as
now being conducted, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification
necessary, other than in such jurisdictions where the failure so to
qualify would not have a Material Adverse Effect with respect to
Metromedia. Except as set forth in Section 3.2(a) of the disclosure
schedule delivered to Alliance by Metromedia on or prior to the Delivery
Date (the "Metromedia Disclosure Schedule"), the Metromedia SEC Documents
(as hereinafter defined) set forth a true and complete list of the
Significant Subsidiaries of Metromedia, including (x) the jurisdiction of
incorporation or organization of each such Subsidiary and (y) the
percentage of each such Subsidiary's outstanding capital stock or other
ownership interest owned by Metromedia, or a Subsidiary of Metromedia, as
the case may be, if less than 100%. All of the outstanding shares of
capital stock or other ownership
Page 23
interests of each of the Significant Subsidiaries of Metromedia are duly
authorized, validly issued, fully paid and nonassessable and, except as set
forth in Section 3.2(a) of the Metromedia Disclosure Schedule, are owned
(of record and beneficially) by Metromedia, and/or by a Subsidiary of
Metromedia, free and clear of all Liens and not subject to preemptive
rights created by statute, such Subsidiary's respective Certificate of
Incorporation or By-laws or equivalent organizational documents or any
agreement to which such Subsidiary is a party or by which such Subsidiary
is bound. Other than as set forth in Section 3.2(a) of the Metromedia
Disclosure Schedule, Metromedia does not directly or indirectly own any
material equity interest in any Person (other than a Subsidiary) in which
Metromedia invested $3,000,000 or more or in which Metromedia invested
more than $6,000,000 for all such immaterial investments.
(b) CERTIFICATE OF INCORPORATION AND BY-LAWS. Complete
and correct copies of the Certificate of Incorporation and By-laws or
equivalent organizational documents, each as amended to date, of
Metromedia and each Significant Subsidiary of Metromedia shall have been
delivered to Alliance no later than the date hereof. The Certificates of
Incorporation, By-laws and equivalent organizational documents of
Metromedia and each Significant Subsidiary of Metromedia are in full
force and effect. Neither Metromedia nor any Significant Subsidiary of
Metromedia is in violation of any provision of its Certificate of
Incorporation, By-laws or equivalent organizational documents.
(c) CAPITALIZATION. As of November 30, 1995, (i) the
authorized capital stock of Metromedia consists of (A) 100,000,000 shares
of Metromedia Common Stock, 42,549,886 of which shares are issued and
outstanding, and are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights, 1,914,187 shares of
Metromedia Common Stock are reserved for exercise of stock options with a
term, exercise price, vesting schedule and other material terms set forth
for each of Metromedia's stock option plans in Section 3.2(c) of the
Metromedia Disclosure Schedule and 1,801,802 shares are reserved for
issuance upon the conversion of convertible debt and (B) 70,000,000
shares of Metromedia Preferred Stock, none of which are issued and
outstanding and (ii) the authorized capital stock of Alliance Mergerco
consists of (A) 1,000 shares of Mergerco Common Stock, 1,000 shares of
which are issued and outstanding and are duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights.
Page 24
Except as described in this Section 3.2(c) or in Section 3.2(c)
of the Metromedia Disclosure Schedule, no shares of the capital stock or
other equity securities of Metromedia are authorized, issued or
outstanding, or reserved for any other purpose, and there are no options,
warrants or other rights (including registration rights), agreements,
arrangements or commitments of any character to which Metromedia or any
of its respective Subsidiaries is a party relating to the issued or
unissued capital stock or other equity securities or ownership interests
of Metromedia or any of its Subsidiaries or obligating Metromedia or any
of its Subsidiaries to grant, issue or sell any shares of capital stock
or other equity securities or ownership interests of Metromedia or any of
its Subsidiaries, by sale, lease, license or otherwise. Except as
described in Section 3.2(c) of the Metromedia Disclosure Schedule,
neither Metromedia nor any of its Subsidiaries has any outstanding bonds,
debentures, notes or other obligations the holders of which have the
right to vote or which are convertible into or exercisable for securities
having the right to vote with the stockholders of any such Person on any
matter. Other than as contemplated by this Agreement or as set forth in
Section 3.2(c) of the Metromedia Disclosure Schedule, there are no
outstanding contractual obligations, commitments, understandings or
arrangements of Metromedia or any of its Subsidiaries to repurchase,
redeem or otherwise acquire or make any payment in respect of any shares
of capital stock of Metromedia or any of its Subsidiaries. Except as set
forth in Section 3.2(c) of the Metromedia Disclosure Schedule, since
November 30, 1995 Metromedia has not (i) issued any shares of its capital
stock (except pursuant to the exercise of then outstanding options or
warrants in accordance with their terms) or options, warrants or other
securities convertible into shares of its capital stock, or
(ii) repurchased any shares of its capital stock.
(d) SEC DOCUMENTS; FINANCIAL STATEMENTS. Metromedia has
made available to Alliance a true and complete copy of each form, report,
schedule and registration statement filed with the SEC by Metromedia
since September 30, 1993 and by Orion Pictures Corporation since
September 30, 1993 (as such documents have since the time of their filing
been amended or supplemented, the "Metromedia SEC Documents"), which are
all the documents (other than preliminary material) that Metromedia or
its respective Subsidiaries was required to file with the SEC since such
date. As of their respective dates, the Metromedia SEC Documents (other
than preliminary material) complied in all material respects with the
requirements of the Securities Act or the Exchange Act as applicable, and
the rules and regulations of the SEC thereunder applicable to such
Metromedia SEC Documents, and none of the Metromedia SEC Documents,
Page 25
as such documents have been amended to date (including all financial
statements included therein and exhibits and schedules thereto and
documents incorporated by reference therein), contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
The financial statements of Metromedia and each Subsidiary of Metromedia
included in the Metromedia SEC Documents (as such documents may have been
amended to date) comply as to form in all material respects with
applicable accounting requirements and with the rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may
be indicated in the notes thereto or, in the case of the unaudited
financial statements, as permitted by Exchange Act Form 10-Q) and fairly
present (subject, in the case of the unaudited financial statements, to
normal, recurring audit adjustments that, individually and in the
aggregate, were not material) the consolidated financial position of
Metromedia and/or the applicable Subsidiaries of Metromedia and its
consolidated Subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended.
(e) AUTHORITY. Metromedia and Alliance Mergerco have all
requisite corporate power and authority to enter into this Agreement and
to perform their obligations hereunder and to consummate the transactions
contemplated hereby, subject, in the case of the Merger, to the approval
of this Agreement by the Board of Directors and stockholders of
Metromedia. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of
Metromedia and Alliance Mergerco and no other corporate proceedings on
the part of Metromedia and Alliance Mergerco are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby,
subject, in the case of the Merger, to the approval of this Agreement by
the Board of Directors and stockholders of Metromedia. This Agreement
has been duly and validly executed and delivered by Metromedia and
Alliance Mergerco and constitutes a valid and binding obligation of
Metromedia and Alliance Mergerco enforceable against Metromedia and
Alliance Mergerco in accordance with its terms, subject, in the case of
the Merger, to the approval of this Agreement by the Board of Directors
and stockholders of Metromedia.
(f) COMPLIANCE WITH APPLICABLE LAWS. Metromedia and its
Subsidiaries holds all permits, licenses,
Page 26
variances, exemptions, orders and approvals of all Governmental Entities that
are necessary to the operation of the businesses of Metromedia and its
Subsidiaries taken as a whole (the "Metromedia Permits"), except as would not
have a Material Adverse Effect with respect to Metromedia. Metromedia and its
Subsidiaries are in compliance with the terms of the Metromedia Permits
applicable to it, except where any such failure so to comply would not
have a Material Adverse Effect with respect to Metromedia. Except as
would not have a Material Adverse Effect with respect to Metromedia, the
business of Metromedia and its Subsidiaries is not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity.
No investigation or review by any Governmental Entity with respect to
Metromedia or any of its subsidiaries is pending or, to the knowledge of
Metromedia, threatened, nor, to the knowledge of Metromedia, has any
Governmental Entity indicated an intention to conduct the same that
would, in any such case, have a Material Adverse Effect with respect to
Metromedia.
(g) GOVERNMENT APPROVALS; REQUIRED CONSENTS.
(i) No consent, approval or authorization of, or
declaration or filing with, or notice to, any Governmental Entity on the
part of Metromedia and its Subsidiaries is required in connection with
the execution or delivery by Metromedia of this Agreement, and the
consummation by Metromedia and its Subsidiaries of the transactions
contemplated hereby or compliance by Metromedia and its Subsidiaries with
the provisions hereof, other than (A) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware in accordance
with the DGCL, (B) filings with the SEC and any applicable National
Security exchange, (C) filings under State securities or "Blue Sky" laws,
(D) filings under the HSR Act and (E) as otherwise set forth in
Section 3.2(g)(i) of the Metromedia Disclosure Schedule or as would not
cause a Material Adverse Effect (any such consents, approvals,
authorizations, declarations, filings or notices specified in clauses (A)
through (E) being referred to as "Metromedia Governmental Approvals").
(ii) No consent, approval or action of, or filing
with, or notice to, any Person (other than a Governmental Entity) shall
be required in connection with the execution or delivery by Metromedia of
this Agreement, the consummation by Metromedia and its Subsidiaries of
the transactions contemplated hereby or compliance by Metromedia and its
Subsidiaries with the provisions hereof, other than as set forth in
Section 3.2(g)(ii) of the Metromedia Disclosure Schedule (the "Metromedia
Required Consents") and other than the consents, approvals, actions,
filings or
Page 27
notices which would not have a Material Adverse Effect with
respect to Metromedia.
(h) NON-CONTRAVENTION. The execution and delivery of
this Agreement by Metromedia and Alliance Mergerco does not, and the
consummation of the transactions contemplated hereby and compliance by
Metromedia and Alliance Mergerco with the provisions hereof will not,
(i) conflict with or result in any violation of any provision of the
Certificate of Incorporation or By-laws or equivalent organizational
documents, in each case as amended and/or restated, of Metromedia and its
Subsidiaries (ii) except as set forth in Section 3.2(h)(ii) of the
Metromedia Disclosure Schedule, if the Metromedia Required Consents are
obtained, result in any violation or breach of, or result in a
modification of the effect of, or constitute (with or without notice or
lapse of time or both) a default under or give rise to any right of
termination, cancellation or acceleration under, any contracts to which
Metromedia and its Subsidiaries are a party or by or to which any of them
or any of their properties may be bound or subject, or result in the
creation of any Lien upon the properties of Metromedia and its
Subsidiaries in each case pursuant to the terms of any such Contract;
(iii) if the Metromedia Governmental Approvals are obtained, result in
any violation of any law, statute, regulation, order, writ, judgment or
decree of any Governmental Entity applicable to Metromedia and its
Subsidiaries or (iv) if the Metromedia Governmental Approvals and the
Metromedia Required Consents are obtained, result in the violation,
revocation or suspension of any Metromedia Permit, other than with
respect to clauses (ii) through (iv) above, any such violations,
breaches, modifications, defaults, terminations, cancellations,
accelerations, Liens, revocations or suspensions that, individually and
in the aggregate, would not have a Material Adverse Effect with respect
to Metromedia.
(i) LITIGATION. As of the date of this Agreement and as
of the Closing Date, except as disclosed in the Metromedia SEC Documents,
there is no suit, action or proceeding pending, or, to the knowledge of
Metromedia, threatened against Metromedia and its Subsidiaries that,
individually or in the aggregate with any other such suits, actions or
proceedings, would have a Material Adverse Effect with respect to
Metromedia, nor is there any judgment, decree, injunction, rule or order
of any Governmental Entity or arbitrator outstanding against Metromedia
and its Subsidiaries, that, individually or in the aggregate, would have
a Material Adverse Effect with respect to Metromedia.
Page 28
(j) TAXES AND RELATED TAX MATTERS.
(i) Other than Taxes and Tax Sharing Agreement
Amounts that individually and in the aggregate are not material all Taxes
required to be paid on or before the date hereof by or with respect to
Metromedia and its Subsidiaries (or any of them), including amounts,
other than amounts being contested in good faith, required to be paid on
or before the date hereof with respect to Taxes as a result of any Tax
Sharing Agreement of Metromedia and its Subsidiaries (or any of them),
have been timely paid, except with respect to Taxes and Tax Sharing
Agreement Amounts for which the failure to pay would not have a Material
Adverse Effect with respect to Metromedia.
(ii) All material Tax Returns required to be filed by
or with respect to Metromedia and its Subsidiaries (or any of them) with
respect to Taxes on or before the date hereof have been timely filed. No
penalties or other charges in a material amount are or will become due
with respect to the late filing of any Tax Return of Metromedia or any of
its Subsidiaries or payment of any Tax of Metromedia or any of its
Subsidiaries, required to be filed or paid on or before the date hereof.
(iii) With respect to all Tax Returns filed by or with
respect to Metromedia and any of its Subsidiaries, (A) Section 3.2(j) of
the Metromedia Disclosure Schedule sets forth the periods for which the
statute of limitations for the assessment of federal Taxes have expired;
(B) except as set forth in Section 3.2(j) of the Metromedia Disclosure
Schedule, no audit is in progress and no extension of time has been
executed with respect to any date on which any Tax Return was or is to be
filed and no waiver or agreement has been executed for the extension of
time for the assessment or payment of any Tax; and (C) except as set
forth in Section 3.2(j), there is no material unassessed deficiency
proposed or threatened against Metromedia or any of its Subsidiaries.
(iv) Except as set forth in Section 3.2(j) of the
Metromedia Disclosure Schedule, neither Metromedia nor any of its
Subsidiaries has been or is a party to any tax sharing agreement or
similar arrangement.
(v) Section 3.2(j) of the Metromedia Disclosure
Schedule identifies (i) the common parent of each group of affiliated
corporations that filed a consolidated federal income tax return, and the
period to which such returns related, that included Metromedia or any of
its Significant Subsidiaries since 1989, (ii) all material Tax
liabilities, of which Metromedia has knowledge, that have
Page 29
been asserted by the IRS with respect to any such return and all claims with
respect to Taxes in a material amount that have been asserted against
Metromedia under any tax sharing agreement to which it is a party.
(k) CERTAIN AGREEMENTS. Except as set forth in
Section 3.2(k) and/or Section 3.2(l) of the Metromedia Disclosure
Schedule, and except for this Agreement, as of the date of this
Agreement, neither Metromedia nor any of its Subsidiaries is a party to
any oral or written (i) agreement with any executive officer or other key
employee of Metromedia or any of its Subsidiaries the benefits of which
are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving Metromedia, of the nature
contemplated by this Agreement, or agreement with respect to any
executive officer of Metromedia providing any term of employment or
compensation guarantee extending for a period longer than three years
after the Closing Date and for the payment of in excess of $200,000 per
annum or (ii) plan, including any stock option plan, stock appreciation
right plan, restricted stock plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of
which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
(l) EMPLOYEE BENEFITS.
(i) Except as set forth in Section 3.2(l) of the
Metromedia Disclosure Schedule, there are no United States or foreign
employee benefit plans or arrangements (collectively, the "Metromedia
Benefit Plans") of any type (including, without limitation, plans
described in Section 3(3) of ERISA), under which Metromedia or any of its
ERISA Affiliates has incurred any unsatisfied material liability or could
reasonably be expected in the future to incur any direct or indirect,
actual or contingent material liability (including, without limitation,
any liability that might arise indirectly under Section 414 of the Code
or Section 4069 of ERISA).
(ii) With respect to each Metromedia Benefit Plan,
Metromedia will deliver or make available on or prior to the date hereof
to Alliance complete and accurate copies (where applicable) of: (A) all
plan texts and agreements; (B) all material employee communications
regarding a Metromedia Benefit Plan not embodied in plan texts and
agreements that could materially affect the liabilities of the Metromedia
Benefit Plan or the liabilities of Metromedia or its ERISA Affiliates with
Page 30
respect to such plan; (C) the most recent annual report; (D) the
most recent annual and periodic accounting of plan assets; (E) the most
recent determination letter received from the IRS; and (F) the most
recent actuarial valuation.
(iii) No event has occurred or might reasonably be
expected to occur as a result of which any Metromedia Benefit Plan or
Metromedia or any of its ERISA Affiliates could, directly or indirectly
(whether through a commonly controlled entity under Code Section 414 or
otherwise), incur liability for failure to comply with the applicable
requirements of Title IV of ERISA, section 302 of ERISA, sections 412,
420, 4971 or 4975 of the Code, the continuation coverage requirements of
section 601 et seq. of ERISA and section 4980B of the Code, and
corresponding or similar provisions of foreign laws or regulations, other
than routine claims for benefits in accordance with the terms of such
plan, except as would not have a Material Adverse Effect with respect to
Metromedia.
(iv) Each Metromedia Benefit Plan has been operated
in all respects in accordance with its terms and with the requirements of
applicable laws and regulations except to the extent any such operation
would not have a Material Adverse Effect with respect to Metromedia.
(v) With respect to each Metromedia Benefit Plan
that is a defined benefit pension plan, since the most recent financial
statements of Metromedia there has been no material increase in such
plan's liabilities other than the accrual of such benefits in the
ordinary course and in accordance with the terms of such plan.
(vi) Except as set forth in Section 3.2(l) of the
Metromedia Disclosure Schedule or the Metromedia SEC Documents, the
consummation of the transactions contemplated by this Agreement will not
without additional discretionary action by Metromedia, Alliance or any of
their respective ERISA Affiliates, with respect to employees or former
employees of Metromedia or any of their ERISA Affiliates: (A) entitle any
individual to severance pay; (B) accelerate the time of payment or
vesting of, increase the amount of, or satisfy a condition to the
compensation due to any individual; and (C) result in the payment of an
amount that would, individually or in combination with any other such
payment, constitute an "excess parachute payment" under Code
Section 280G(b)(1).
(m) CONTRACTS. There is no contract, agreement or
understanding required to be described in or filed as an exhibit to any
Metromedia SEC Document that is not described in or filed as required by
the Securities Act
Page 31
or the Exchange Act, as the case may be. All such contracts, agreements and
understanding are valid and binding and are in full force and effect and
enforceable in accordance with their respective terms other than contracts,
agreements or understandings which are by their terms no longer in force or
effect. Except for the Metromedia Required Consents and except to the extent
any of the following would not have a Material Adverse Effect with respect to
Metromedia, (i) no approval or consent of, or notice to, any Person is needed
in order that such contract, agreement or understanding shall continue in full
force and effect in accordance with its terms without penalty, acceleration or
rights of early termination following the consummation of the
transactions contemplated by this Agreement, and (ii) Metromedia is not
in violation of breach of or default under any such contract, agreement
or understanding nor to Metromedia's knowledge is any other party to any
such contract, agreement or understanding.
(n) ENVIRONMENTAL MATTERS. Except as set forth in
Section 3.2(n) of the Metromedia Disclosure Schedule, (A) Metromedia and
each of its Subsidiaries has obtained and is in material compliance with
the terms and conditions of all permits, licenses and other
authorizations required under applicable Environmental Laws; (B) no
asbestos in a friable condition or equipment containing polychlorinated
biphenyls or leaking underground or above-ground storage tanks is
contained in or located at any facility owned, leased or controlled by
Metromedia or any of its Subsidiaries; (C) Metromedia and each of its
Subsidiaries is in material compliance with all applicable Environmental
Laws, and has fully disclosed all known material past and present non-
compliance with Environmental Laws, and all known past discharges,
emissions, leaking or releases known to Metromedia or each of its
Subsidiaries of any substance or waste regulated under or defined by
Environmental Laws that could reasonably be expected to form the basis of
any claim, action, suit, proceeding, hearing or investigation under any
applicable Environmental Laws; and (D) neither Metromedia nor any of its
Subsidiaries has received notice of any past or present events,
conditions, circumstances, activities, practices, incidents, actions or
plans that have resulted in or threaten to result in any common law or
legal liability, or otherwise form the basis of any claim, action, suit,
proceeding, hearing or investigation under any applicable Environmental
Laws; provided, however, that clauses (A) through (D) address only those
matters that would have a Material Adverse Effect with respect to
Metromedia.
(o) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Metromedia SEC Documents, or
Page 32
except as contemplated by this Agreement, since September 30, 1995, Metromedia
and its Subsidiaries have conducted their respective businesses only in the
ordinary and usual course, and, as of the date of this Agreement, there has not
been (i) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of
Metromedia's capital stock; (ii) any return of any capital or other
distribution of assets to stockholders of Metromedia; (iii) any material
investment by Metromedia or any of its Subsidiaries either by the
purchase of any property or assets or by any acquisition (by merger,
consolidation or acquisition of stock or assets) of any corporation,
partnership or other business organization or division thereof other than
the ownership of an equity interest in any person in an amount less than
$3,000,000, where the value of such ownership interests do not in the
aggregate exceed $6,000,000; (iv) any sale, disposition or other transfer
of assets or properties of Metromedia or its Subsidiaries (other than the
sale of inventory in the ordinary course of business) in excess of
$500,000 individually or $2,000,000 in the aggregate; (v) any incurrence
or guarantee of any Debt other than in the ordinary course of business
consistent with past practices and any Debt in excess of $10,000,000 in
the aggregate; or (vi) any change, occurrence or circumstance of any
character (whether or not in the ordinary course of business) that,
individually or in the aggregate, has had or would have, a Material
Adverse Effect with respect to Metromedia.
(p) INFORMATION SUPPLIED. Neither the Registration
Statement nor the Proxy Statement will, at the time the Registration
Statement is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the Securities Act
or at the time the Proxy Statement is mailed to Alliance and Metromedia
stockholders, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided, however, that this representation and warranty shall not apply
to statements or omissions made in reliance upon and in conformity with
information furnished in writing by Alliance to Metromedia expressly for
use in or for incorporation by reference into the Registration Statement
or the Proxy Statement or any amendments or supplements thereto.
(q) REAL ESTATE.
(i) All material real property owned by Metromedia
or any of its Subsidiaries is described in the Metromedia SEC Documents.
Except as set forth in
Page 33
Section 3.2(q) of the Metromedia Disclosure Schedule, Metromedia or one of
its Subsidiaries is the owner of fee title to the real property described in
the Metromedia SEC Documents and to all of the buildings, structures and other
improvements located thereon free and clear of any mortgage, deed of trust,
lien, pledge, security interest, claim, lease, charge, option, right of first
refusal, easement, restrictive covenant, encroachment or other survey defect,
encumbrance or other restriction or limitation except for any of the foregoing
which would not have a Material Adverse Effect with respect to Metromedia.
(ii) All material leases, subleases, licenses or
other agreements under which Metromedia or any of its Subsidiaries uses
or occupies, or has the right to use or occupy, now or in the future, any
real property or improvements thereon (the "Metromedia Real Property
Leases") are described in the Metromedia SEC Documents. Except as
disclosed in the Metromedia SEC Documents, all Metromedia Real Property
Leases are valid and binding on the lessors thereunder in accordance with
their respective terms and to Metromedia's knowledge, there is not under
any such Metromedia Real Property Leases any existing default, or any
condition, event or act which with notice or lapse of time or both would
constitute such a default, which in either case, considered individually
or in the aggregate with all such other Metromedia Real Property Leases
under which there is such a default, condition, event or act, has or will
have a Material Adverse Effect with respect to Metromedia.
(r) INTELLECTUAL PROPERTY.
(i) Metromedia or one of its Subsidiaries owns, or
is licensed or otherwise possesses legally enforceable rights to use all
patents, trademarks, trade names, service marks, copyrights, and any
applications therefor, technology, know-how, computer software programs
or applications, and tangible or intangible proprietary information or
material that are used in the business of Metromedia and its Subsidiaries
as currently conducted, except as could not reasonably be expected to
have a Material Adverse Effect with respect to Metromedia.
(ii) Except as would not reasonably be expected to
have a Material Adverse Effect with respect to Metromedia: Metromedia is
not, nor will it be as a result of the consummation of the Merger and the
transactions contemplated by this Agreement or the performance of its
obligations hereunder, in violation of any licenses, sublicenses and
other agreements as to which Metromedia is a party and pursuant to which
Metromedia is authorized to use any third-party patents, trademarks,
service marks and
Page 34
copyrights ("Third-Party Intellectual Property Rights"). Except as would not
reasonably be expected to have a Material Adverse Effect with respect to
Metromedia, no claims with respect to the patents, registered and material
unregistered trademarks and service marks, registered copyrights, trade names
and any applications therefor owned by Metromedia or any of its Subsidiaries
(the "Metromedia Intellectual Property Rights"), any trade secret material to
Metromedia, or Third Party Intellectual Property Rights to the extent arising
out of any use, reproduction or distribution of such Third Party Intellectual
Property Rights by or through Metromedia or any of its Subsidiaries, are
currently pending or, to the knowledge of Metromedia, are threatened by
any Person. Except as would not reasonably be expected to have a
Material Adverse Effect with respect to Metromedia, Metromedia does not
know of any valid grounds for any bona fide claims (A) against the use by
Metromedia or any of it Subsidiaries, of any trademarks, trade names,
trade secrets, copyrights, patents, technology, know-how or computer
software programs and applications used in the business of Metromedia or
any of its Subsidiaries as currently conducted or as proposed to be
conducted; (B) challenging the ownership, validity or effectiveness of
any of Metromedia Intellectual Property Rights or other trade secret
material to Metromedia; or (C) challenging the license or legally
enforceable right to use of the Third Party Intellectual Rights by
Metromedia or any of its Subsidiaries.
(iii) To Metromedia's knowledge and except as would
not reasonably be expected to have a Material Adverse Effect with respect
to Metromedia, all patents, registered trademarks, service marks and
copyrights held by Metromedia are valid and subsisting and there is no
unauthorized use, infringement or misappropriation of any of the
Metromedia Intellectual Property by any third party, including any
employee or former employee of Metromedia or any of its Subsidiaries.
(iv) LICENSES FROM FOREIGN GOVERNMENTS. Except as
would not reasonably be expected to have a Material Adverse Effect with
respect to Metromedia, Metromedia has obtained (and such licenses remain
in force and effect) from foreign governments all licenses or other
authorizations required to conduct its businesses as currently operated
and as described in the Registration Statement including licenses or
other authorizations relating to its wireless cable television, paging,
wireless telephony and radio broadcast projects.
(s) SUPPLIERS AND CUSTOMERS. The relationships of
Metromedia and its Subsidiaries with its
Page 35
six largest suppliers and six largest customers (determined by dollar
volume paid for the twelve months ended on September 30, 1995) are good
commercial working relationships Metromedia does not believe that any
such Person intends to cancel, modify materially or otherwise terminate,
the relationship of such Person with Metromedia or any of its Subsidiaries
or intends to decrease or limit materially, its services or supplies to
Metromedia or any of its Subsidiaries or its usage or purchase of the
services or products of Metromedia or any of its Subsidiaries, except
with respect to clauses (i) and (ii) above, as would not have a Material
Adverse Effect with respect to Metromedia.
(t) INVESTMENT COMPANY ACT. Metromedia and each of its
Subsidiaries either (i) is not an "investment company," or to
Metromedia's knowledge a company "controlled" by, or to Metromedia's
knowledge an "affiliated company" with respect to, an "investment
company," required to register under the Investment Company Act of 1940,
as amended (the "Investment Company Act") or (ii) satisfies all
conditions for an exemption from the Investment Company Act, and,
accordingly, neither Metromedia nor any of its Subsidiaries is required
to be registered under the Investment Company Act.
(u) BROKERS OR FINDERS. No agent, broker, investment
banker, financial advisor or other Person retained by or on behalf of
Metromedia is or will be entitled to any broker's or finder's fee or any
other commission or similar fee in connection with any of the
transactions contemplated by this Agreement, except ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Securities Corporation ("DLJ"), whose fees and expenses will be
paid by Metromedia in accordance with Metromedia's agreement with such
firm.
(v) METROMEDIA CREDIT SUPPORT. As of the date hereof,
Metromedia Company, a Delaware general partnership (the "Partnership"),
has executed the Credit Support Letter in the form of Exhibit B hereto.
ARTICLE 4
COVENANTS
Section 4.1 MUTUAL COVENANTS OF METROMEDIA AND ALLIANCE. Each
of Metromedia and Alliance agrees that, except as expressly contemplated
or permitted by this Agreement, it shall (and shall cause each of its
Subsidiaries to) comply with the following covenants:
Page 36
(a) CONFIDENTIALITY. From and after the date hereof,
each party shall, and shall use its best efforts to cause its Affiliates
and its and their respective Agents (as hereinafter defined) to keep
secret and hold in strictest confidence any and all documents and
information relating to the other party and its respective Affiliates
furnished to such first party (whether before or after the date hereof)
in connection with the transactions contemplated hereunder, other than
the following: (i) information that has become generally available to
the public other than as a result of a disclosure by such party, its
Affiliates or its Agents; (ii) information that becomes available to such
party or an Agent of such party on a nonconfidential basis from a third
party having no obligation of confidentiality to a party to this
Agreement and which has not itself received such information directly or
indirectly in breach of any such obligation of confidentiality; (iii)
information that is required to be disclosed by applicable law, judicial
order or pursuant to any listing agreement with, or the rules or
regulations of, any securities exchange on which securities of such party
or any such Affiliate are listed or traded; provided that the party
making such disclosure or whose Affiliates or Agents are making such
disclosure shall notify the other party as promptly as practicable (and,
if possible, prior to making such disclosure) and shall use its
reasonable best efforts to limit the scope of such disclosure and seek
confidential treatment of the information to be disclosed; and (iv)
disclosures made by any party as shall be reasonably necessary in
connection with obtaining the Metromedia Required Consents and/or the
Alliance Required Consents.
(b) PUBLICITY. Except as otherwise required by
applicable law or the rules or regulations of any securities exchange on
which the securities of such party or any Affiliate of such party are
listed or traded, until the earlier of (i) the date on which this
Agreement ceases to be in effect and (ii) the Closing Date, no party
shall issue or cause the publication of any press release or other public
announcement with respect to the transactions contemplated by this
Agreement without the consent of the other party and in any event each
party agrees that it will give the other party reasonable opportunity to
review and comment upon any such release or announcement prior to
publication of the same.
(c) PREPARATION OF THE PROXY STATEMENT AND THE
REGISTRATION STATEMENT. As soon as practicable following the date of the
availability of audited financial statements for the fiscal year ended
December 31, 1995 for each of Metromedia and Alliance, with all
reasonably necessary assistance from Alliance, Metromedia shall prepare
Page 37
and cause to be filed with the SEC the Registration Statement, in which
the Proxy Statement will be included as a Prospectus. Each party shall
provide the other party and its Agents with reasonable opportunity to
review and comment upon the Registration Statement, including all
amendments thereto and all supplements to the Proxy Statement contained
therein, prior to the filing thereof with the SEC and/or the distribution
thereof to the stockholders of Metromedia and Alliance, and shall make
all reasonable changes thereto requested by such other party or its
Agents. Each party hereto shall use its reasonable best efforts to have
the Registration Statement declared effective by the SEC as promptly as
practicable. Each party shall provide and shall be deemed to have
provided the other party with the information concerning it required to
be included in the Registration Statement. Metromedia shall take any
action required to be taken under any applicable state securities laws in
connection with the issuance of the Merger Securities in the Merger
pursuant to this Agreement.
(d) SATISFACTION OF CONDITIONS. Subject to the terms and
conditions of this Agreement, each party hereto agrees to use its
reasonable best efforts, subject to their respective fiduciary duties, to
cause the conditions set forth in Article 5 of this Agreement to be
satisfied, and to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement
(including the transactions contemplated by Section 4.1(h)), including
cooperating fully with the other party, including by provision of
information and making of all necessary filings in connection with, among
other things, the HSR Act. In case at any time after the Closing Date
any further action is necessary or desirable to carry out the purposes of
this Agreement, each party shall take all such necessary action.
(e) OTHER ACTIONS. From the date hereof through the
Closing Date, each of Metromedia and Alliance shall not, and shall cause
its Subsidiaries not to, take any action that would or is reasonably
likely to result in any of the representations and warranties of
Metromedia or Alliance, as the case may be, set forth in this Agreement
being untrue in any material respect as of the date made, or in any of
the conditions to the Closing set forth in Article 5 of this Agreement
not being satisfied. Each of Metromedia and Alliance will deliver copies
of the Metromedia Disclosure Schedule or the Alliance Disclosure
Schedule, as the case may be, on or prior to January 15, 1996.
Page 38
(f) ADVICE OF CHANGES; SEC DOCUMENTS. Each party shall
confer on a regular and frequent basis with the other, report on
operational matters and promptly advise the other orally and in writing
of (i) any material notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement; (ii) any
material notice or other communication from any regulatory authority or
national securities exchange in connection with the transactions
contemplated by this Agreement; (iii) any claims, actions, proceedings or
investigations commenced or, to the best of such party's knowledge,
threatened, involving or affecting such party or any of its Subsidiaries,
or any of its property or assets, or, to the best of such party's
knowledge, any employee, consultant, director or officer, in his or her
capacity as such, of such party or any of its Subsidiaries, which, if
pending on the date hereof, would have been required to have been
disclosed in the Metromedia Disclosure Schedule or the Alliance
Disclosure Schedule, as the case may be, or which relates to the
consummation of the Merger or the other transactions contemplated by this
Agreement; and (iv) any change or event that would have a Material
Adverse Effect with respect to such party. Each party shall promptly
provide the other (or its counsel) copies of all filings made by such
party with any Governmental Entity in connection with this Agreement and
the transactions contemplated hereby.
(g) COMPLIANCE WITH LAWS. The parties agree to conduct
their businesses and cause the businesses of their Subsidiaries to be
conducted (i) in compliance with the Foreign Corrupt Practices Act and
all similar laws and (ii) in compliance with all applicable laws and
regulations except in the case of clauses (i) and (ii) with respect to
Alliance, where failure to comply would not have a Material Adverse
Effect with respect to Alliance and, in the case of clauses (i) and (ii)
with respect to Metromedia where failure to comply would not have a
Material Adverse Effect with respect to Metromedia.
(h) REFINANCING. Each of Metromedia and Alliance agrees
to use reasonable commercial efforts to take all necessary steps and
actions to facilitate any refinancing of indebtedness of Metromedia
and/or Alliance and their respective Subsidiaries and any other financing
arrangements in connection with the consummation of the transactions
contemplated hereby (collectively, the "Financings"), it being the
intention of Metromedia and Alliance, to the extent possible simultaneous
with the Effective Time, to consummate the Financings.
Page 39
Section 4.2 COVENANTS OF ALLIANCE. During the period from the
date of this Agreement and continuing until the Closing Date, Alliance
agrees that except as expressly contemplated or permitted by this
Agreement, or to the extent that Metromedia shall otherwise consent in
writing (which consent may be withheld in its sole discretion):
(a) ACCESS TO INFORMATION. Upon reasonable notice,
Alliance shall, and shall cause its Subsidiaries to, afford to Metromedia
and its Agents, access, during normal business hours during the period
prior to the Closing Date, to all its properties, books, Contracts,
commitments and records and, during such period, Alliance shall, and
shall cause its Subsidiaries to, promptly furnish or otherwise make
available to Metromedia (i) a copy of each report, schedule, registration
statement and other document filed or received by any of them during such
period pursuant to the requirements of Federal securities laws and
(ii) all other information concerning its business, properties and
personnel as Metromedia may reasonably request.
(b) ORDINARY COURSE. Alliance shall, and shall cause its
Subsidiaries to, carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner as
heretofore conducted and use its best efforts to preserve intact their
current business organizations, keep available the services of their
current officers and employees and preserve their relationships with
customers, suppliers, contractors, distributors, licensors, licensees and
others having business dealings with them to the end that their goodwill
and ongoing businesses shall not be impaired in any material respect at
the Closing Date. Without limiting the generality of the foregoing, and
except as otherwise required by law, neither Alliance nor any of its
Subsidiaries shall:
(i) (x) declare, set aside or pay any dividends on,
or make any other distributions in respect of, any of its capital stock
(except dividends and distributions by a direct or indirect wholly-owned
Subsidiary of Alliance to its parent), (y) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (z) purchase, redeem or otherwise acquire any shares of
capital stock of Alliance or any of its Subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(ii) authorize for issuance, issue, deliver, sell or
agree or commit to issue, sell or deliver (whether through the issuance
or granting of options,
Page 40
warrants, commitments, subscriptions, rights to purchase or
otherwise), pledge or otherwise encumber any shares of its
capital stock or the capital stock of any of its Subsidiaries, any other
voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities or any other securities or equity equivalents
(including without limitation stock appreciation rights) other than
issuances upon exercise of stock options or warrants outstanding on the
date hereof or other agreements obligating Alliance to issue shares of
Alliance Common Stock and in each case listed in Section 3.1(c) of the
Alliance Disclosure Schedule;
(iii) except with respect to annual bonuses made in
the ordinary course of business consistent with past practice and except
for the payment of contractual bonuses and other incentive bonus payments
to certain executive officers of Alliance, such other payments not to
exceed an aggregate of $9,250,000, payable in the manner agreed to in
writing by Alliance and Metromedia, adopt or amend in any material
respect any bonus, profit sharing, compensation, severance, termination,
stock option (other than the vesting of the Alliance Options or Warrants
as provided for in Section 2.1(b)(iii) hereof) stock appreciation right,
pension, retirement, employment or other employee benefit agreement,
trust, plan or other arrangement for the benefit or welfare of any
director, officer or employee of Alliance or any of its Subsidiaries or
increase in any manner the compensation or fringe benefits of any
director, officer or employee of Alliance or any of its Subsidiaries or
pay any benefit not required by any existing agreement or place any
assets in any trust for the benefit of any director, officer or employee
of Alliance or any of its Subsidiaries (in each case, except with respect
to employees in the ordinary course of business consistent with past
practice);
(iv) amend its certificate of incorporation, by-laws
or equivalent organizational documents or alter through merger,
liquidation, reorganization, restructuring or in any other fashion the
corporate structure or ownership of any Subsidiary of Alliance;
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its
material properties or assets, except sales or licenses of assets in the
ordinary course of business consistent with past practice;
(vi) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a
Page 41
substantial portion of the stock or assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or other
business organization or division thereof or (y) any assets that are material,
individually or in the aggregate, to Alliance and its Subsidiaries taken as a
whole, except for (A) purchases of inventory in the ordinary course of business
consistent with past practice, (B) acquisitions disclosed prior to the
date hereof to Metromedia in writing or in the Alliance SEC Documents, or
(C) acquisitions not exceeding $5,000,000 individually or $15,000,000 in
the aggregate;
(vii) except for borrowings and guarantees permitted
under credit facilities filed as exhibits to the Alliance SEC Documents,
incur any Debt, issue or sell any debt securities or warrants or other
rights to acquire any debt securities of Alliance or any of its
Subsidiaries, guarantee any debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement
condition of another Person or enter into any arrangement having the
economic effect of any of the foregoing, or make any loans, advances or
capital contributions to, or investments in, any other Person, other than
to Alliance or any direct or indirect wholly-owned Subsidiary of Alliance
in excess of $3,000,000 individually or $6,000,000 in the aggregate;
(viii) change any accounting principle used by it,
unless required by the SEC or the Financial Accounting Standards Board;
and
(ix) enter into any transaction or series of
transactions with any Affiliate of Alliance (other than a wholly-owned
Subsidiary of Alliance) or otherwise that would be required to be
disclosed pursuant to Item 404 of Regulation S-K other than on terms and
conditions substantially as favorable to Alliance or such Subsidiary as
would be obtainable by Alliance or such Subsidiary at the time of such
transaction with a Person that is not an Affiliate of Alliance.
(c) MEETINGS; FIDUCIARY DUTIES. Alliance shall, promptly
after the date hereof, take all action necessary in accordance with the
DGCL and its Certificate of Incorporation and By-laws to convene a
meeting of its Board of Directors on or prior to January 31, 1996 and a
meeting of Alliance's stockholders at a time mutually agreed to by
Alliance and Metromedia to, among other things, consider and vote upon
this Agreement (the "Alliance Stockholders' Meeting"), and Alliance shall
consult with Metromedia in connection therewith. In the event of
approval of this Agreement and the transactions contemplated hereby by the
Page 42
Board of Directors of Alliance, the Board of Directors of Alliance
shall recommend that Alliance's stockholders vote in favor of the
approval and adoption of this Agreement (the "Recommendation"), and the
Board of Directors of Alliance shall not withdraw or modify or propose to
withdraw or modify in a manner adverse to Metromedia, the Recommendation,
unless the Board of Directors of Alliance concludes in good faith
following receipt of a written opinion addressed to Alliance from outside
counsel to Alliance that such action is reasonably necessary for the
Board of Directors of Alliance to comply with its fiduciary obligations
to stockholders under applicable law. Alliance shall use its best
efforts to solicit from stockholders of Alliance proxies in favor of the
approval and adoption of this Agreement and to secure the vote or the
consent of the stockholders required by the DGCL to approve and adopt
this Agreement.
(d) NO SOLICITATION. Neither Alliance nor any of its
Subsidiaries shall, nor shall it or any of its Subsidiaries authorize or
permit any of their respective Agents to, (i) solicit, initiate,
encourage (including by way of furnishing information) or take any other
action to facilitate, any inquiry or the making of any proposal which
constitutes, or may reasonably be expected to lead to, any acquisition or
purchase of a substantial amount of assets of, or any equity interest in,
Alliance or any of its Subsidiaries or any tender offer (including a self
tender offer) or exchange offer, merger, consolidation, business
combination, sale of substantially all assets, sale of securities,
recapitalization, liquidation, dissolution or similar transaction
involving Alliance or any of its Subsidiaries (other than the
transactions contemplated by this Agreement) or any other material
corporate transaction (other than transactions permitted pursuant to
Section 4.2(b) of this Agreement) the consummation of which would or
could reasonably be expected to impede, interfere with, prevent or
materially delay the Merger (collectively, "Transaction Proposals") or
agree to or endorse any Transaction Proposal or (ii) propose, enter into
or participate in any discussions or negotiations regarding any of the
foregoing, or furnish to any other Person any information with respect to
its business, properties or assets or any of the foregoing, or otherwise
cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other Person to do or seek any of
the foregoing; provided, however, that the foregoing clauses (i) and (ii)
shall not prohibit Alliance from (A) furnishing information pursuant to
an appropriate confidentiality letter concerning Alliance and its
businesses, properties or assets to a third party who the Board of
Directors of Alliance has a reasonable basis for determining is likely to
Page 43
make a Qualified Transaction Proposal (as defined below), (B) engaging in
discussions or negotiations with such a third party who has made a
Qualified Transaction Proposal or (C) following receipt of a Qualified
Transaction Proposal, taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) under the Exchange Act or changing
the Recommendation, but in each case referred to in the foregoing clauses
(A) through (C) only after the Board of Directors of Alliance concludes
in good faith following receipt of a written opinion addressed to
Alliance from outside counsel to Alliance that such action is reasonably
necessary for the Board of Directors of Alliance to comply with its
fiduciary obligations to stockholders under applicable law. If the Board
of Directors of Alliance receives a Transaction Proposal, then Alliance
shall immediately inform Metromedia of the terms and conditions of such
proposal and the identity of the Person making it and shall keep
Metromedia fully informed of the status and details of any such
Transaction Proposal and of all steps it is taking in response to such
Transaction Proposal. For purposes of this Agreement, the term
"Qualified Transaction Proposal" shall mean a Transaction Proposal that
the Board of Directors of Alliance determines in good faith, after
consultation with its outside financial advisor, is reasonably capable of
being consummated and is not subject to any material contingencies
relating to financing.
(e) AFFILIATES. Prior to the Closing Date, Alliance
shall endeavor to deliver to Metromedia (i) a letter identifying all
Persons who, to the knowledge of Alliance, may be deemed to be
"affiliates" of Alliance under Rule 145 under the Securities Act,
including, without limitation, all directors and executive officers of
Alliance (collectively, the "Alliance Affiliates"), and (ii) copies of
letter agreements, each in the form prepared by Metromedia and reasonably
acceptable to Alliance, executed by each Alliance Affiliate (the letters
described in clauses (i) and (ii) being collectively referred to as
"Affiliate Letters"). The Registrants shall not be required to maintain
the effectiveness of the Registration Statement for the purposes of
resale of the Merger Securities by such affiliates and the certificates
representing the Merger Securities received by such affiliates in the
Merger shall bear a customary legend regarding applicable Securities Act
restrictions and the provisions of this Section 4.2(e); PROVIDED, THAT,
Metromedia will be required to prepare and file and cause to be effective
on or prior to the Effective Time the Form S-3 (as defined herein)
covering the Merger Securities owned of record by the Alliance
Affiliates.
(f) All Tax Returns required to be filed by or with
respect to Alliance and its Subsidiaries (or any of
Page 44
them) after the date hereof and on or before the Effective Time shall be
prepared and timely filed, in a manner consistent with prior years and
applicable laws and regulations other than such Tax Returns for which the
failure to file would not have a Material Adverse Effect with respect to
Alliance.
Section 4.3 COVENANTS OF METROMEDIA. During the period from
the date of this Agreement and continuing until the Closing Date,
Metromedia agrees that, except as expressly contemplated or permitted by
this Agreement, or to the extent that Alliance shall otherwise consent in
writing (which consent may be withheld in its sole discretion):
(a) ACCESS TO INFORMATION. Upon reasonable notice,
Metromedia shall afford to Alliance and its Agents access, during normal
business hours during the period prior to the Closing Date, to all its
properties, books, Contracts, commitments and records and, during such
period, Metromedia shall promptly furnish or otherwise make available to
Alliance (i) a copy of each report, schedule, registration statement and
other document filed or received by any of them during such period
pursuant to the requirements of Federal securities laws and (ii) all
other information concerning the businesses, properties and personnel of
Metromedia and its Subsidiaries as Alliance may reasonably request.
(b) ORDINARY COURSE. Metromedia and its Subsidiaries
shall carry on its business in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and use their best
efforts to preserve intact their current business organizations, keep
available the services of their current officers and employees and
preserve their relationships with customers, suppliers, contractors,
distributors, licensors, licensees and others having business dealings
with them to the end that their goodwill and ongoing businesses shall not
be impaired in any material respect at the Closing Date. Without
limiting the generality of the foregoing, and except as required by law,
Metromedia and its Subsidiaries shall not:
(i) declare, set aside or pay any dividends on, or
make any other distributions in respect of, any of its capital stock
(except dividends and distributions by a direct or indirect wholly-owned
Subsidiary of Metromedia to its parent);
(ii) except in connection with transactions disclosed
in the Metromedia SEC Documents or to Alliance in writing prior to the
date hereof or contemplated or permitted by this Agreement authorize for
issuance,
Page 45
issue, deliver, sell or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise), pledge or
otherwise encumber any shares of the capital stock of any of Metromedia
or any of its Subsidiaries, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities or any other
securities or equity equivalents;
(iii) except for an incentive stock plan for
Metromedia to be adopted by its Board of Directors providing for the
issuance of up to 10% of the equity of Metromedia or except with respect
to annual bonuses made in the ordinary course of business consistent with
past practice, adopt or amend in any material respect any bonus, profit
sharing, compensation, severance, termination, stock option, stock
appreciation right, pension, retirement, employment or other employee
benefit agreement, trust, plan or other arrangement for the benefit or
welfare of any director, officer or employee of Metromedia or any of its
Subsidiaries or increase in any manner the compensation or fringe
benefits of any director, officer or employee of Metromedia or any of its
Subsidiaries or pay any benefit not required by any existing agreement or
place any assets in any trust for the benefit of any director, officer or
employee of Metromedia or any of its Subsidiaries (in each case, except
with respect to employees in the ordinary course of business consistent
with past practice);
(iv) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its
material properties or assets, except sales or licenses of property or
assets in the ordinary course of business consistent with past practice;
(v) acquire or agree to acquire (x) by merging or
consolidating with, or by purchasing a substantial portion of the stock
or assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization or
division thereof or (y) any assets that are material, individually or in
the aggregate, to Metromedia and its Subsidiaries taken as a whole,
except (A) purchases of inventory in the ordinary course of business
consistent with past practice (B) acquisitions disclosed prior to the
date hereof to Alliance in writing or in the Metromedia SEC Documents, or
(C) acquisitions not exceeding $5,000,000 individually or $15,000,000 in
the aggregate;
Page 46
(vi) (x) except for borrowings and guarantees
permitted under or permitted by the credit agreements filed as exhibits
in the Metromedia SEC Documents, incur any Debt, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of
Metromedia or any of its Subsidiaries, guarantee any debt securities of
another Person, enter into any "keep well" or other agreement to maintain
any financial statement condition of another Person or enter into any
arrangement having the economic effect of any of the foregoing, or
(y) except as set forth in the Metromedia Disclosure Schedule and except
for the loans, advances or capital contributions of Metromedia
International Telecommunications, Inc. and its Subsidiaries to other
Persons, make any loans, advances or capital contributions to, or
investments in, any other Person, other than to any of its Subsidiaries;
(vii) change any accounting principle used by it,
unless required by the SEC or the Financial Accounting Standards Board;
(viii) enter into any transaction or series of
transactions with any Affiliate of Metromedia (other than a wholly-owned
Subsidiary of Metromedia) or otherwise that would be required to be
disclosed pursuant to Item 404 of Regulation S-K other than on terms and
conditions substantially as favorable to Metromedia or such Subsidiary as
would be obtainable by Metromedia or such Subsidiary at the time of such
transaction with a Person that is not an Affiliate of Metromedia; and
(c) LISTING. Metromedia shall use its best efforts to
cause the shares of each of Metromedia Common Stock and the Warrants
comprising the Merger Consideration to be approved for listing on the
AMEX, in each case subject to official notice of issuance.
(d) MEETINGS. Metromedia shall, promptly after the date
hereof, take all action necessary in accordance with the DGCL and its
Restated Certificate of Incorporation and By-laws to convene a meeting of
its Board of Directors on or prior to January 31, 1996 and a meeting of
Metromedia's stockholders at a time mutually agreed to by Alliance and
Metromedia to, among other things, consider and vote upon this Agreement
(the "Metromedia Stockholders' Meeting"), and Metromedia shall consult
with Alliance in connection therewith. In the event of approval of this
Agreement and the transactions contemplated hereby by the Board of
Directors of Metromedia, the Board of Directors of Metromedia shall
recommend that Metromedia's stockholders vote in favor of the approval
and adoption of this
Page 47
Agreement, and the Board of Directors of Metromedia shall not
withdraw or modify or propose to withdraw or modify in a manner
adverse to Alliance, its recommendation, unless the Board of Directors of
Metromedia concludes in good faith following receipt of a written opinion
addressed to Metromedia from outside counsel to Metromedia that such
action is reasonably necessary for the Board of Directors of Metromedia
to comply with its fiduciary obligations to stockholders under applicable
law. Metromedia shall use its best efforts to solicit from stockholders
of Metromedia proxies in favor of the approval and adoption of this
Agreement and to secure the vote or the consent of the stockholders
required by the DGCL to approve and adopt this Agreement.
(e) FORM S-3. Metromedia shall comply with the terms and
provisions of the Registration Rights Agreement, to be dated as of
January 31, 1996, substantially in the form of Exhibit C hereto (the
"Registration Rights Agreement") between Metromedia and the Alliance
Affiliates including, using its best efforts to as promptly as
practicable prepare and file with the SEC a shelf registration statement
on Form S-3 covering all the Merger Securities to be received by the
Affiliates identified by Alliance who will enter into an Affiliate Letter
(the "Form S-3") and keep such Form S-3 effective until the earlier of
(i) the date all Merger Securities registered on the Form S-3 have been
sold by such affiliates, (ii) the date all Merger Securities registered
on the Form S-3 may be immediately sold by each of the holders thereof
(in a single transaction by each such holder) using Rule 144 promulgated
under the Securities Act or (iii) three years from the Effective Time.
(f) FORM S-8. Metromedia shall as promptly as
practicable prepare and file with the SEC registration statement(s) on
Form S-8 or other appropriate form(s) (collectively, the "Form S-8") to
permit the resale of shares of Metromedia Common Stock and Warrants
received upon the exercise of the Alliance Options or Warrants.
(g) DIRECTOR; CHIEF EXECUTIVE OFFICER. Metromedia shall
use its best efforts to elect ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the Chairman and Chief
Executive Officer of Alliance, to Metromedia's Board of Directors within
30 days of the Effective Time. ▇▇. ▇▇▇▇▇▇ will be Chief Executive
Officer of the entertainment entities of Metromedia (other than
Metromedia International Telecommunications), reporting to the Chairman
and vice Chairman of Metromedia, with the authority, subject to the prior
approval of the Chairman or Vice Chairman of Metromedia, to hire and fire
employees of such entities.
Page 48
(h) DIRECTORS' & OFFICERS' INDEMNIFICATION AND INSURANCE.
(i) For a period of four years after the Effective
Time, Metromedia shall maintain in effect policies of directors' and
officers' liability insurance for the Surviving Corporation in
substantially the same form with substantially the same terms and
conditions as contained in Alliance's current policies of directors' and
officers' liability insurance with respect to claims arising from facts
or events which occurred before the Effective Time.
(ii) From and after the Effective Time, the Surviving
Corporation will indemnify and hold harmless each present and former
director and officer of Alliance and its Subsidiaries, determined as of
the Effective Time (the "Indemnified Parties'), against any costs or
expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time, to
the fullest extent that Alliance or such Subsidiary would have been
permitted under applicable law and its certificate of incorporation or
by-laws as in effect on the date hereof, to indemnify such person (and
the Surviving Corporation shall advance expenses as incurred to the
fullest extent permitted under applicable law provided the person to whom
expenses are advanced provides an undertaking to repay such advances if
it is ultimately determined that such person is not entitled to
indemnification).
(iii) Any Indemnified Party wishing to claim
indemnification under Section 4.3(h), upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify the
Surviving Corporation thereof, but the failure to so notify shall not
relieve the Surviving Corporation of any liability it may have to such
Indemnified Party except to the extent such failure materially prejudices
the Surviving Corporation. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the
Effective Time), an Indemnified Party may retain counsel satisfactory to
him or her, the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Party promptly as statements
therefor are received. The Surviving Corporation shall use its
respective best efforts to assist in the defense of any such matter. If such
indemnity is not available with respect to any Indemnified Party, then the
Page 49
Surviving Corporation and the Indemnified Party shall contribute
to the amount payable in such proportion as is appropriate to reflect
relative faults and benefits.
(iv) The provisions of this Section 4.3(h) are
intended for the benefit of, and shall be enforceable by, each
Indemnified Party and his or her heirs and representatives.
(i) All Tax Returns required to be filed by or with respect to
Metromedia and its Subsidiaries (or any of them) after the date hereof
and on or before the Effective Time shall be prepared and timely filed,
in a manner consistent with prior years and applicable laws and
regulations other than such Tax Returns for which the failure to file
would not have a Material Adverse Effect with respect to Metromedia.
ARTICLE 5
CONDITIONS PRECEDENT
Section 5.1 CONDITIONS TO THE OBLIGATIONS OF METROMEDIA AND
ALLIANCE TO EFFECT THE MERGER. The respective obligations of each party
to effect the Merger shall be subject to the satisfaction prior to the
Closing Date of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been
approved and adopted by the affirmative vote of a majority of the votes
that the holders of each of the outstanding shares of Metromedia Common
Stock and Alliance Common Stock, respectively, are entitled to cast.
(b) REGISTRATION STATEMENT. The Registration Statement
shall have become effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop order.
(c) BLUE SKY LAWS. Metromedia shall have received all
state securities or "Blue Sky" permits and other authorizations necessary
to issue the shares of Metromedia Common Stock and the Warrants.
(d) LISTING. The Metromedia Common Stock and the
Warrants to be issued in the Merger pursuant to this Agreement shall have
been authorized for listing on the AMEX or any other national securities
exchange or automated quotation system approved by Metromedia and
Alliance, in each case, subject to official notice of issuance.
Page 50
(e) NO INJUNCTIONS OR RESTRAINTS. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition (an "Injunction") restraining or preventing the consummation
of the Merger or subjecting any party or any of its Affiliates to
substantial damages as a result of the consummation of the Merger shall
be in effect; PROVIDED, HOWEVER, that the party invoking this condition
shall have used reasonable best efforts to have vacated such Injunction.
(f) HSR ACT. All HSR Act waiting periods shall have
expired or been terminated.
(g) GOVERNMENTAL AND REGULATORY CONSENTS. All filings
required to be made prior to the Effective Time with, and all consents,
approvals, permits and authorizations required to be obtained prior to
the Effective Time from, Governmental Entities, including, without
limitation, those set forth in the Metromedia Disclosure Schedule and/or
the Alliance Disclosure Schedule, in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby by Metromedia and Alliance will have been made or
obtained (as the case may be).
(h) ALLIANCE REQUIRED CONSENTS. The Alliance Required
Consents shall have been obtained and be in full force and effect, except
for those the failure to obtain which would not have a Material Adverse
Effect with respect to Alliance and its Subsidiaries (and Metromedia
shall have received evidence thereof reasonably satisfactory to it).
(i) METROMEDIA REQUIRED CONSENTS. The Metromedia
Required Consents shall have been obtained and be in full force and
effect, except for those the failure to obtain which would not have a
Material Adverse Effect with respect to Metromedia and its Subsidiaries
(and Alliance shall have received evidence thereof reasonably
satisfactory to it).
(j) METROMEDIA COMPANY CREDIT SUPPORT. The Partnership
or an affiliate of the Partnership shall have agreed to provide the
credit support to the Surviving Corporation contemplated by the Credit
Support Letter in the form and substance satisfactory to the parties
hereto.
(k) STOCK PURCHASE AGREEMENT. The Stock Purchase
Agreements substantially in the form of Exhibit D hereto shall have been
entered into by the parties thereto.
Page 51
(l) BOARD OF DIRECTOR APPROVAL. This Agreement shall
have been approved and adopted by the Board of Directors of Metromedia
and Alliance.
Section 5.2 CONDITIONS TO THE OBLIGATIONS OF METROMEDIA. The
obligations of Metromedia under this Agreement to consummate the
transactions contemplated hereby are subject to the satisfaction of the
following conditions, the imposition of which is solely for the benefit
of Metromedia and any one of more of which may be expressly waived by
Metromedia, in its sole discretion, except as otherwise required by law:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Alliance contained herein shall have
been true and correct in all material respects when made, and shall be
true and correct in all material respects at and as of the Closing Date
as though made on and as of the Closing Date (except to the extent that
any such representation and warranty had by its terms been made as of a
specific date in which case such representation and warranty shall have
been true and correct as of such specific date). Metromedia shall have
received a certificate dated the Closing Date signed by an executive
officer of Alliance certifying to the fulfillment of this condition.
(b) PERFORMANCE OF AGREEMENTS. Alliance shall have
performed in all material respects all obligations and agreements and
complied in all material respects with all covenants and conditions
contained in this Agreement or otherwise contemplated hereby to be
performed and complied with by it at or prior to the Closing Date.
Metromedia shall have received a certificate dated the Closing Date
signed by an executive officer of Alliance certifying to the fulfillment
of this condition.
(c) NO MATERIAL ADVERSE CHANGE. Since September 30,
1995, no change or event shall have occurred which has had or could
reasonably be expected to have a Material Adverse Effect with respect to
Alliance.
(d) OPINIONS OF COUNSEL. Metromedia shall have received
(i) the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ dated the Effective Time
substantially in the form of Exhibit E hereto and (ii) the opinion of
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ to the effect that the Merger
will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code").
Page 52
(e) FAIRNESS OPINIONS. Metromedia shall have received
the opinions of DLJ, as of the date the Board of Directors of Metromedia
approves this Agreement and as of the date the Proxy Statement is mailed
to Metromedia stockholders, to the effect that the Merger is fair to the
Metromedia stockholders from a financial point of view, which opinion
shall not have been amended, modified or withdrawn.
(f) AFFILIATE LETTERS. Metromedia shall have received
the Affiliate Letters and the Registration Rights Agreement executed by
each Alliance Affiliate.
Section 5.3 CONDITIONS TO THE OBLIGATIONS OF ALLIANCE. The
obligations of Alliance to consummate the transactions contemplated
hereby are subject to the satisfaction of the following conditions, the
imposition of which is solely for the benefit of Alliance and any one or
more of which may be expressly waived by Alliance, in its sole
discretion, except as otherwise required by law:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Metromedia contained herein shall have
been true and correct in all material respects when made, and shall be
true and correct in all material respects at and as of the Closing Date
as though made on and as of the Closing Date (except to the extent that
any such representation and warranty had by its terms been made as of a
specific date, in which case such representation and warranty shall have
been true and correct in all material respects as of such specific date).
Alliance shall have received a certificate dated the Closing Date signed
by an executive officer of Metromedia certifying to the fulfillment of
this condition.
(b) PERFORMANCE OF AGREEMENTS. Metromedia shall have
performed in all material respects all obligations and agreements and
complied in all material respects with all covenants and conditions
contained in this Agreement to be performed and complied with by it at or
prior to the Closing Date. Alliance shall have received a certificate
dated the Closing Date signed by an executive officer of Metromedia
certifying to the fulfillment of this condition.
(c) FAIRNESS OPINIONS. Alliance shall have received the
opinions of Alex. ▇▇▇▇▇ & Sons Incorporated, as of the date the Special
Committee of the Board of Directors of Alliance approves this Agreement
and as of the date the Proxy Statement is mailed to Alliance stockholders,
to the effect that the Merger Consideration is fair to the Alliance
Page 53
stockholders from a financial point of view, which opinion shall
not have been amended, modified or withdrawn.
(d) NO MATERIAL ADVERSE CHANGE. Since September 30,
1995, no change or event shall have occurred which has had or could
reasonably be expected to have Material Adverse Effect with respect to
Metromedia.
(e) LEGAL OPINIONS. Alliance shall have received (i) the
opinion of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ dated the Effective
Time substantially in the form of Exhibit F hereto and (ii) the opinion
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ to the effect that the Merger will be treated
for federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code.
(f) FORM S-3 AND FORM S-8. The Form S-3 and Form S-8
shall have been declared effective by the SEC.
(g) CLOSING PRICE. The average of the last sale prices
for the Metromedia Common Stock as reported on the American Stock
Exchange ("AMEX") for the last 20 consecutive trading days ending on the
day which is six calendar days prior to the day of the Alliance
Stockholders' Meeting and the Metromedia Stockholders' Meeting, or if
such day is not a Business Day, the Business Day immediately preceding
such day (the "Determination Date") shall not be less than $14.50.
Alliance shall, not less than 24 hours prior to the Metromedia
Stockholders' Meeting, give notice to Metromedia of its intention to
exercise its right to not consummate the Merger based on the failure to
satisfy the condition set forth in this Section 5.3(g) and if such notice
is not timely received by Metromedia, the condition set forth in this
Section 5.3(g) shall be deemed to have been waived by Alliance.
ARTICLE 6
TERMINATION AND AMENDMENT
Section 6.1 TERMINATION. This Agreement may be terminated and
the Merger contemplated hereby may be abandoned at any time prior to the
Effective Time whether before or after approval by the stockholders of
Metromedia or Alliance:
(a) by mutual written consent of Metromedia and Alliance;
(b) by either Metromedia or Alliance if there has been a
material breach of any representation,
Page 54
warranty, covenant or agreement on the part of Alliance, on the one hand, or
Metromedia, on the other hand, as the case may be, set forth in this Agreement
which breach, if not a wilful breach, has not been cured within ten (10)
Business Days following receipt by the breaching party of notice of such
breach;
(c) by either Metromedia or Alliance if the Merger shall
not have been consummated before the Termination Date (or such later date
as may be agreed to by Metromedia and Alliance); PROVIDED, HOWEVER, that
neither party may terminate this Agreement under this Section 6.1(c) if
the failure has been caused by such party's material breach of this
Agreement;
(d) by either Metromedia or Alliance, if this Agreement
is not approved by Alliance's Board of Directors by January 31, 1996
(PROVIDED, THAT, the right to terminate this Agreement as a result of the
failure of the Board of Directors in Alliance to approve this Agreement
by January 31, 1996 shall lapse upon approval by the Alliance Board of
Directors of this Agreement) or shall fail to receive the requisite vote
for approval and adoption by the stockholders of Alliance at the Alliance
Stockholders' Meeting;
(e) by either Metromedia or Alliance, if (i) the Board of
Directors of Alliance shall, modify or change the Recommendation in a
manner adverse to Metromedia or shall have resolved to do any of the
foregoing; (ii) the Board of Directors of Alliance shall have recommended
to the stockholders of Alliance a Transaction Proposal; (iii) a tender
offer (including a self-tender offer) or exchange offer for shares of
capital stock of Alliance, which would result in the beneficial ownership
by any Person or any "group" (as defined in Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder) of more than
50% of the outstanding shares of any class of capital stock of Alliance,
is commenced, and the Board of Directors of Alliance recommends that the
stockholders of Alliance tender their shares in such tender or exchange
offer; or (iv) any Person shall have acquired beneficial ownership or the
right to acquire beneficial ownership of, or any "group" shall have been
formed which beneficially owns, or has the right to acquire "beneficial
ownership" of, more than 50% of the then outstanding shares of any class
of capital stock of Alliance;
(f) by either Metromedia or Alliance if this Agreement is
not approved by Metromedia's Board of Directors by January 31, 1996
(PROVIDED, THAT, the right to terminate this Agreement as a result of the
failure of the Board of
Page 55
Directors of Metromedia to approve this Agreement by January 31, 1996 shall
lapse upon approval by the Metromedia Board of Directors of this Agreement)
or shall fail to receive the requisite vote for approval and adoption by the
stockholders of Metromedia at the Metromedia Stockholders' Meeting;
(g) by Metromedia or Alliance if a court of competent
jurisdiction or other Governmental Entity shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the consummation of the Merger and such order,
decree, ruling or other action shall have become final and nonappealable;
and
(h) by (i) Metromedia, on or prior to the date the Board
of Directors of Metromedia approves this Agreement, if the Alliance
Disclosure Schedule shall disclose any fact, agreement, event or
condition which could reasonably be expected to have a Material Adverse
Effect with respect to Alliance, or (ii) Alliance, on or prior to the
date the Board of Directors of Alliance approves this Agreement, if, the
Metromedia Disclosure Schedule shall disclose any fact, agreement, event
or condition which could reasonably be expected to have a Material
Adverse Effect with respect to Metromedia.
Section 6.2 EFFECT OF TERMINATION. In the event this
Agreement is terminated and the Merger abandoned pursuant to Section 6.1,
all further obligations of the parties hereunder shall terminate except
that the obligations set forth in Sections 4.1(a) and 4.1(b), this
Section 6.2 and Section 7.5 shall survive; provided that, if this
Agreement is so terminated by a party because one or more of the
conditions to such party's obligations hereunder is not satisfied as a
result of the other party's willful or knowing failure to comply with its
obligations under this Agreement, the terminating party's right to pursue
all legal remedies for breach of contract or otherwise, including,
without limitation, damages relating thereto, shall also survive such
termination unimpaired.
ARTICLE 7
GENERAL PROVISIONS
Section 7.1 CERTAIN DEFINITIONS. As used in this Agreement,
the following terms shall have the meanings set forth in this Section:
(a) "Affiliate" means, with respect to any Person, any
other Person that, directly or indirectly,
Page 56
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first Person.
(b) "Agent" means, with respect to any Person, such
Person's officers, directors, employees, attorneys, accountants,
investment bankers, financial advisors or other representatives or
agents.
(c) "Business Day" means any day other than a day on
which (i) banks in the State of New York are authorized or obligated to
be closed or (ii) the AMEX is closed.
(d) "Debt" of any Person means, without duplication,
(i) all indebtedness of such Person for borrowed money; (ii) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments; (iii) all obligations of such Person as lessees
under leases that have been or should be, in accordance with GAAP,
recorded as capital leases; (iv) all obligations, contingent or
otherwise, of such Person under banker's acceptance, letter of credit or
similar facilities; (v) all Debt of others referred to in clauses
(i) through (iv) above guaranteed directly or indirectly in any manner by
such Person; and (vi) all Debt of others referred to in clauses
(i) through (v) above secured by (or for which the holder of such Debt
has an existing right, contingent or otherwise, to be secured by) any
Lien on property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or
become liable for the payment of such Debt.
(e) "Delivery Date" shall mean January 15, 1996.
(f) "Governmental Entity" means any foreign, federal,
state, municipal or other governmental or regulatory department,
commission, board, bureau, agency or instrumentality.
(g) "Material Adverse Effect" means, with respect to any
Person, any change or effect that is or is reasonably likely to be
materially adverse to the business, assets, properties, operations,
prospects or condition (financial or otherwise) of such Person and its
Subsidiaries taken as a whole or adversely affects the ability of such
Person to consummate the transactions contemplated by this Agreement in
any material respect.
(h) "Person" means any individual, corporation,
partnership, firm, group (as such term is used in Section 13(d)(3) of the
Exchange Act), joint venture, association,
Page 57
trust, limited liability company, unincorporated organization, estate, trust
or other entity.
(i) "SEC" means the Securities and Exchange Commission.
(j) "Significant Subsidiary" shall have the meaning
ascribed to such term in Section 1-02(v) of Regulation S-X under the
Securities Act and, shall include, with respect to Metromedia, Alliance
Mergerco.
(k) "Subsidiary" of any Person means any corporation,
partnership, joint venture or other legal entity of which such Person
(either directly or through or together with any other Subsidiary of such
Person), owns, directly or indirectly, 50% or more of the stock or other
equity interests the holders of which are generally entitled to vote for
the election of the board of directors or similar governing body of such
corporation, partnership, joint venture or other legal entity.
(l) "Termination Date" shall mean September 30, 1996.
Section 7.2 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, upon a receipt of a transmittal confirmation if sent by
facsimile or like transmission, and on the next Business Day when sent by
Federal Express, Express Mail or similar overnight courier service to the
parties at the following addresses or facsimile numbers (or at such other
address or facsimile number for a party as shall be specified by like
notice):
(a) If to Alliance, to:
Alliance Entertainment Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Page 58
(b) If to Metromedia or Alliance Mergerco,
to:
Metromedia International Group, Inc.
c/o Metromedia Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Section 7.3 INTERPRETATION. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." The phrase "made available" in this Agreement shall mean
that the information referred to has been made available if requested by
the party to whom such information is to be made available. Dollar
amounts referred to in this Agreement shall not be deemed to establish
any standard of materiality.
Section 7.4 WAIVERS AND AMENDMENTS. This Agreement may be
amended, superseded, canceled, renewed or extended, and the terms hereof
may be waived, only by written instruments signed by the parties to this
Agreement, or in the case of a waiver, by the party waiving compliance.
Except where a specific period for action or inaction is provided herein,
no delay on the part of a party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof. Neither any
waiver on the part of a party of any such right, power or privilege, nor
any single or partial exercise of any such right, power or privilege,
shall preclude any further exercise thereof or the exercise of any other
such right, power or privilege.
Page 59
Section 7.5 EXPENSES AND OTHER PAYMENTS.
(a) The parties to this Agreement shall, except as
otherwise specifically provided herein, bear their respective expenses
incurred in connection with the preparation, execution and performance of
this Agreement and the transactions contemplated hereby, including,
without limitation, all fees and expenses of their respective Agents.
(b) Alliance agrees that if this Agreement shall be
terminated pursuant to Section 6.1(e) then Alliance shall pay to
Metromedia an amount equal to $18 million plus the reimbursement of all
of Metromedia's fees and expenses, including all of its legal, accounting
and investment banking fees and expenses. In addition, (i) if this
Agreement is terminated by Metromedia pursuant to Section 6.1(b),
Alliance shall reimburse all of Metromedia's fees and expenses, including
all of its reasonable legal, accounting and investment banking fees and
expenses relating to the Merger or (ii) if this Agreement is terminated
by Alliance pursuant to Section 6.1(b), Metromedia shall reimburse all of
Alliance's fees and expenses, including all of its reasonable legal,
accounting and investment banking fees and expenses relating to the
Merger. Furthermore, if the Merger is not consummated solely because the
condition set forth in Section 5.3(g) hereof is not satisfied or deemed
to have been satisfied, Metromedia shall reimburse all of Alliance's
reasonable fees and expenses in an amount not to exceed $1,250,000.
(c) Any payment required to be made pursuant to Section
7.5(b) shall be made as promptly as practicable but not later than two
Business Days after termination of this Agreement and shall be made by
wire transfer of immediately available funds to an account designated by
Metromedia, except that any payment to be made as the result of an event
described in Section 7.5(b)(i) shall be made as promptly as practicable
but not later than two Business Days after the earlier to occur of the
Business Combination or the execution of the definitive agreement
providing for a Business Combination.
(d) For purposes of this Section 7.5, the term "Business
Combination" shall mean (i) a merger, consolidation, share exchange,
business combination or similar transaction involving Alliance; (ii) a
sale, lease, exchange, transfer or other disposition of 50% or more of
the assets of Alliance and its Subsidiaries taken as a whole, in a single
transaction or series of transactions; or (iii) the acquisition by any
Person or "group" (as defined in Section 13(d) of the Exchange Act and
the rules and
Page 60
regulations thereunder) of "beneficial ownership" of 50% or more of
Alliance Common Stock whether by tender offer or exchange offer or
otherwise.
Section 7.6 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by either of
the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and
assigns.
Section 7.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
This Agreement (including the documents and the instruments referred to
herein) (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof and (b) other than
Section 7.6 is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
Section 7.8 REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties of the parties made in this Agreement or
in any instrument delivered hereunder shall survive the Closing.
Section 7.9 GOVERNING LAW. This Agreement shall be governed
and construed in accordance with the laws of the State of Delaware
applicable to agreements made and to be performed entirely within such
state.
Section 7.10 COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be an original and all of
which, when taken together, shall constitute one and the same instrument.
Page 61
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly
authorized as of the date first above written.
METROMEDIA INTERNATIONAL
GROUP, INC.
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
ALLIANCE MERGER CORP.
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
ALLIANCE ENTERTAINMENT CORP.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
EXHIBIT A
WARRANT AGREEMENT
BETWEEN
METROMEDIA INTERNATIONAL GROUP, INC.
AND
[WARRANT AGENT]
DATED AS OF ____________, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I
DISTRIBUTION OF WARRANT CERTIFICATES.......................2
1.1 Appointment of Warrant Agent........................2
1.2 Form of Warrant Certificates........................2
1.3 Execution of Warrant Certificates...................2
1.4 Issuance and Distribution of Warrant Certificates...3
ARTICLE II
WARRANT EXERCISE PRICE AND EXERCISE OF WARRANTS............3
2.1 Exercise Price......................................3
2.2 Exercisability of Warrants..........................3
2.3 Procedure for Exercise of Warrants..................3
2.4 Issuance of Shares of Common Stock..................4
2.5 Certificates for Unexercised Warrants...............4
2.6 Reservation of Shares...............................5
2.7 Disposition of Proceeds.............................5
ARTICLE III
ADJUSTMENTS AND NOTICE PROVISIONS..........................5
3.1 Adjustment of Exercise Price........................5
3.2 Current Market Price................................6
3.3 No Adjustments to Exercise Price....................6
3.4 Deferral of Adjustments to Exercise Price...........6
3.5 Adjustment to Number of Shares......................7
3.6 Reorganizations.....................................7
3.7 Reclassifications...................................8
3.8 Notice of Adjustments...............................9
3.9 Warrant Certificate Amendments......................9
3.10 Fractional Shares...................................9
ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS OF
REGISTERED HOLDERS OF WARRANT CERTIFICATES.................9
4.1 Rights of Warrant Holders...........................9
4.2 Lost, Stolen, Mutilated or Destroyed Warrant
Certificates........................................10
ARTICLE V
SPLIT UP, COMBINATION, EXCHANGE,
TRANSFERAND CANCELLATION OF WARRANT CERTIFICATES...........10
5.1 Split Up, Combination, Exchange and
Transfer of Warrant Certificates...................10
5.2 Cancellation of Warrant Certificates...............11
5.3 Agreement of Warrant Certificate Holders...........11
ARTICLE VI
PROVISIONS CONCERNING THE WARRANT
AGENT AND OTHER MATTERS...................................12
6.1 Payment of Taxes and Charges.......................12
6.2 Resignation or Removal of Warrant Agent............12
6.3 Notice of Appointment..............................13
6.4 Merger of Warrant Agent............................13
6.5 Company Responsibilities...........................13
6.6 Certification for the Benefit of
Warrant Agent......................................13
6.7 Books and Records..................................14
6.8 Liability of Warrant Agent.........................14
6.9 Use of Attorneys, Agents and Employees.............15
6.10 Indemnification....................................15
6.11 Acceptance of Agency...............................15
6.12 Changes to Agreement...............................15
6.13 Assignment.........................................15
6.14 Successor to Company...............................16
6.15 Notices............................................16
6.16 Defects in Notice..................................16
6.17 Governing Law......................................17
6.18 Standing...........................................17
6.19 Headings...........................................17
6.20 Counterparts.......................................17
6.21 Conflict of Interest...............................17
6.22 Availability of the Agreement......................17
Exhibit A FORM OF WARRANT CERTIFICATE INCLUDING FORM OF ELECTION TO
PURCHASE AND FORM OF ASSIGNMENT
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of __________, 1996, between
METROMEDIA INTERNATIONAL GROUP, INC., a Delaware corporation (the
"Company"), and ___________________ (the "Warrant Agent").
W I T N E S S E T H :
WHEREAS, pursuant to an Agreement and Plan of Merger (the
"Merger Agreement") dated as of December __, 1995 among the Company,
Alliance Merger Corp., a Delaware corporation and wholly-owned subsidiary
of the Company ("Alliance Mergerco"), and Alliance Entertainment Corp., a
Delaware corporation ("Alliance"), Alliance Mergerco will merge with and
into Alliance with Alliance as the surviving corporation of such merger
(the "Merger"); and
WHEREAS, pursuant to the Merger Agreement, the Company proposes
to issue to stockholders of Alliance (i) shares of its Common Stock, par
value $1.00 per share (the "Common Stock"), and (ii) Common Stock
Purchase Warrants (the "Warrants") at an exercise price of $21.00 per
share; and
WHEREAS, the Company shall include in its registration
statement on Form S-4 relating to the Merger the Warrants; and
WHEREAS, the Company shall file a Registration Statement on
Form S-3 under Rule 415 of the Securities Act of 1933 to register the
shares of Common Stock issuable upon exercise of the Warrants; and
WHEREAS, the Company proposes to issue certificates evidencing
the Warrants (such warrant certificates issued pursuant to this Agreement
being hereinafter collectively called the "Warrant Certificates"); and
WHEREAS, the Company desires the Warrant Agent, and the Warrant
Agent agrees, to act on behalf of the Company in connection with the
issuance, transfer, exchange, replacement and surrender of the Warrant
Certificates; and
WHEREAS, the Company and the Warrant Agent desire to set forth
in this Warrant Agreement, among other things, the form and provisions of
the Warrant Certificates and the terms and conditions under which they
may be issued, transferred, exchanged, replaced and surrendered in
connection with the exercise of the Warrants.
Page 2
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DISTRIBUTION OF WARRANT CERTIFICATES
1.1 APPOINTMENT OF WARRANT AGENT. The Company hereby appoints
the Warrant Agent to act on behalf of the Company in accordance with the
instructions hereinafter set forth in this Agreement, and the Warrant
Agent hereby accepts such appointment.
1.2 FORM OF WARRANT CERTIFICATES. The Warrant Certificates
for the Warrants shall be issued in registered form only and, together
with the purchase and assignment forms to be printed on the reverse
thereof, shall be substantially in the form of Exhibit A and, in
addition, may have such letters, numbers or other marks of identification
or designation and such legends, summaries or endorsements stamped,
printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement or as, in any particular case, may be required, in the opinion
of counsel for the Company, to comply with any law or with any rule or
regulation of any regulatory authority or agency or to conform to
customary usage.
1.3 EXECUTION OF WARRANT CERTIFICATES. The Warrant
Certificates shall be executed on behalf of the Company by its Chairman
or Vice Chairman of the Board, Chief Executive Officer or President or
any Vice President, and by its Chief Financial Officer or Treasurer or
any Assistant Treasurer, or Secretary or any Assistant Secretary, either
manually or by facsimile signature printed thereon. The Warrant
Certificates shall be manually countersigned and dated the date of
countersignature by the Warrant Agent and shall not be valid for any
purpose unless so countersigned and dated. In case any authorized
officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer of the Company either before
or after delivery thereof by the Company to the Warrant Agent, the
signature of such person on such Warrant Certificates shall,
nevertheless, be valid and such Warrant Certificates may be countersigned
by the Warrant Agent and issued and delivered to those persons entitled
to receive the Warrants represented thereby with the same force and
effect as though the person who signed such Warrant Certificates has not
ceased to be such officer of the Company.
Page 3
1.4 ISSUANCE AND DISTRIBUTION OF WARRANT CERTIFICATES. The
Company shall deliver to the Warrant Agent an adequate supply of Warrant
Certificates for the Warrants executed on behalf of the Company as
described in Section 1.3 hereof. Upon receipt of an order from the
Company, the Warrant Agent shall, within three business days, complete
and countersign Warrant Certificates representing the total number of
Warrants to be issued hereunder and shall deliver such Warrant
Certificates pursuant to written instructions of the Company.
ARTICLE II
WARRANT EXERCISE PRICE AND EXERCISE OF WARRANTS
2.1 EXERCISE PRICE. Each Warrant Certificate for the Warrants
shall, when signed by the Chairman, Vice Chairman, Chief Executive
Officer or President or any Vice President, and by the Chief Financial
Officer or Treasurer or any Assistant Treasurer, or Secretary or any
Assistant Secretary, of the Company and countersigned by the Warrant
Agent, entitle the registered holder thereof to purchase from the Company
one share of Common Stock for each Warrant evidenced thereby, at the
purchase price of $20.00 per share (the "Initial Exercise Price"), or
such adjusted number of shares at such adjusted purchase price as may be
established from time to time pursuant to the provisions of Article III
hereof, payable in full at the time of exercise of the Warrant. Except
as the context otherwise requires, the term "Exercise Price" as used in
this Agreement shall mean the purchase price of one share of Common Stock
upon the exercise of a Warrant reflecting all appropriate adjustments
made in accordance with the provisions of Article III hereof.
2.2 EXERCISABILITY OF WARRANTS. Each Warrant may be exercised
at any time on or after the date hereof, but not after 5:00 P.M., New
York City time, on __________, 2006{1}. The term "Exercise Deadline" as
used in this Agreement shall mean the latest time and date at which the
Warrants may be exercised.
2.3 PROCEDURE FOR EXERCISE OF WARRANTS. During the period
specified in and subject to the provisions of Section 2.2 hereof, the
Warrants may be exercised by surrendering the Warrant Certificates
representing such Warrants to the Warrant Agent at its principal office
which is presently at ____________________, with the election to purchase
form set forth on the Warrant Certificate duly completed and
---------------------------------------------------
**FOOTNOTES**
{1/}Ten years from the date of this Agreement.
Page 4
executed, with signatures guaranteed by a member firm of a national
securities exchange, a commercial bank or trust company located in the
United States, a member of the National Association of Securities Dealers,
Inc. ("NASD") or other eligible guarantor institution which is a participant
in a signature guarantee program (as such terms are defined in
Reg. 240.17Ad-15 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) acceptable to the Warrant Agent ("Signatures
Guaranteed"), accompanied by payment in full of the Exercise Price as
provided in Section 2.1 in effect at the time of such exercise, together
with such taxes as are specified in Section 7.1 hereof, for each share of
Common Stock with respect to which such Warrants are being exercised.
Such Exercise Price and taxes shall be paid in full by certified check or
money order, payable in United States currency to the order of the
Company. The date on which Warrants are exercised in accordance with
this Section 2.3(a) is sometimes referred to herein as the Date of
Exercise of such Warrants.
2.4 ISSUANCE OF SHARES OF COMMON STOCK. As soon as
practicable after the Date of Exercise of any Warrants, the Company shall
issue, or cause the transfer agent for the Common Stock, if any, to issue
a certificate or certificates for the number of full shares of Common
Stock to which such holder is entitled, registered in accordance with the
instructions set forth in the election to purchase. All such shares of
Common Stock shall be validly authorized and issued, fully paid and
nonassessable and free from all taxes, liens and charges created by the
Company in respect of the issue thereof. Each person in whose name any
such certificate for Common Stock is issued shall for all purposes be
deemed to have become the holder of record of the Common Stock
represented thereby on the Date of Exercise of the Warrants resulting in
the issuance of such shares, irrespectively of the date of issuance or
delivery of such certificate for the shares of Common Stock.
2.5 CERTIFICATES FOR UNEXERCISED WARRANTS. In the event that
less than all of the Warrants represented by a Warrant Certificate are
exercised, the Warrant Agent shall execute and mail, by first-class mail,
within 30 days of the Date of Exercise, to the registered holder of such
Warrant Certificate, or such other person as shall be designated in the
election to purchase, a new Warrant Certificate representing the number
of full Warrants not exercised. In no event shall a fraction of a
Warrant be exercised, and the Warrant Agent shall distribute no Warrant
Certificates representing fractions of Warrants under this or any other
section of this Agreement. Fractions of shares shall be treated as
provided in Section 3.10.
Page 5
2.6 RESERVATION OF SHARES. The Company shall at all times
reserve and keep available for issuance upon the exercise of Warrants a
number of its authorized but unissued shares of Common Stock that will be
sufficient to permit the exercise in full of all outstanding Warrants.
2.7 DISPOSITION OF PROCEEDS. The Warrant Agent shall account
at least monthly (or more frequently upon the request of the Company) to
the Company with respect to Warrants exercised and concurrently upon
receipt thereof, deliver to the Company all funds received upon the
exercise of Warrants.
ARTICLE III
ADJUSTMENTS AND NOTICE PROVISIONS
3.1 ADJUSTMENT OF EXERCISE PRICE. Subject to the provisions
of this Article III, the Exercise Price in effect from time to time shall
be subject to adjustment, as follows:
(a) In case the Company shall at any time after the date
hereof (i) declare a dividend or make a distribution on the outstanding
Common Stock payable in shares of its capital stock, (ii) subdivide the
outstanding Common Stock into a greater number of shares, (iii) combine
the outstanding Common Stock into a smaller number of shares, or (iv)
issue any shares of its capital stock by reclassification of the Common
Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing
corporation), then, in each case, the Exercise Price in effect, and the
number of shares of Common Stock issuable upon exercise of the Warrants
outstanding, at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification,
shall be proportionately adjusted so that the holders of the Warrants
after such time shall be entitled to receive the aggregate number and
kind of shares which, if such Warrants had been exercised immediately
prior to such time, such holders would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur.
(b) In case the Company shall distribute to all holders
of Common Stock (including any such distribution made to the shareholders
of the Company in connection with a consolidation or merger in which the
Company is the continuing corporation) evidences of its indebtedness,
cash or assets (other than (i) distributions and dividends referred
Page 6
to in Section 3.1(a) in shares of Common Stock or (ii) cash dividends paid
out of retained earnings), or rights, options or warrants to subscribe for or
purchase Common Stock, or securities convertible into or exchangeable for
shares of Common Stock, then, in each case, the Exercise Price shall be
reduced to the price determined by multiplying the Exercise Price in
effect immediately prior to the record date (the "Distribution Record
Date") for the determination of shareholders entitled to receive such
distribution by a fraction, the numerator of which shall be the Current
Market Price (as determined pursuant to Section 3.2 hereof) per share of
Common Stock immediately prior to the Distribution Record Date, less the
fair market value (as determined in good faith by the Board of Directors
of the Company, whose determination (as set forth in a Board resolution
which shall be filed with the Warrant Agent) shall be conclusive absent
manifest error) of the portion of the evidences of indebtedness or assets
so to be distributed, or of the rights, options, or warrants or
convertible or exchangeable securities, or the amount of the cash,
applicable to one share of Common Stock, and the denominator of which
shall be the Current Market Price per share of Common Stock immediately
prior to the Distribution Record Date. Such adjustment shall become
effective at the close of business on the Distribution Record Date.
3.2 CURRENT MARKET PRICE. For the purpose of any computation
under this Article III, the Current Market Price per share of Common
Stock on any date shall be deemed to be the average of the daily closing
bid prices as reported by the principal national securities exchange on
which the Common Stock is then traded for the 30 consecutive trading days
immediately preceding the date in question. If on any such date the
Common Stock is not listed or admitted to trading on any national
securities exchange and is not quoted by NASDAQ or any similar
organization, the fair value of a share of Common Stock on such date as
determined in good faith by the Board of Directors of the Company, whose
determination shall be conclusive absent manifest error, shall be deemed
to be the Current Market Price.
3.3 NO ADJUSTMENTS TO EXERCISE PRICE. No adjustment in the
Exercise Price shall be required if such adjustment is less than $.05;
provided, however, that any adjustments which by reason of this
Article III are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Article IV shall be made to the nearest cent or to the nearest one
hundredth of a share, as the case may be.
3.4 DEFERRAL OF ADJUSTMENTS TO EXERCISE PRICE. In any case in
which this Article III shall require that an adjustment in the Exercise
Price be made effective as of a
Page 7
record date for a specified event, the Company may elect to defer, until the
occurrence of such event, issuing to the holders of the Warrants, if any
holder has exercised a Warrant after such record date, the shares of Common
Stock, if any, issuable upon such exercise over and above the shares of Common
Stock, if any, issuable upon such exercise on the basis of the Exercise Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver to such exercising holder a due ▇▇▇▇ or other appropriate instrument
evidencing such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
3.5 ADJUSTMENT TO NUMBER OF SHARES. Upon each adjustment of
the Exercise Price as a result of the calculations made in Section 3.1(b)
hereof, the Warrants shall thereafter evidence the right to purchase, at
the adjusted Exercise Price, that number of shares (calculated to the
nearest hundredth) obtained by multiplying the number of shares
purchasable upon exercise of the Warrants immediately prior to such
adjustment by a fraction, the numerator of which shall be the Exercise
Price in effect immediately prior to such adjustment and the denominator
of which shall be the Exercise Price in effect immediately after such
adjustment.
3.6 REORGANIZATIONS. In case of any capital reorganization,
other than in the cases referred to in Section 3.1 hereof, or the
consolidation or merger of the Company with or into another corporation
(other than a merger or consolidation in which the Company is the
surviving or continuing corporation and which does not result in any
reclassification of the outstanding shares of Common Stock or the
conversion of such outstanding shares of Common Stock into shares of
other stock or other securities or property), or in the case of any sale,
lease or conveyance of another corporation of the property and assets of
any nature of the Company as an entirety or substantially as an entirety
(such actions being hereinafter collectively referred to as
"Reorganizations"), there shall thereafter be deliverable upon exercise
of any Warrant (in lieu of the number of shares of Common Stock
theretofore deliverable) the number of shares of stock or other
securities or property to which a holder of the number of shares of
Common Stock which would otherwise have been deliverable upon the
exercise of such Warrant would have been entitled upon such
Reorganization if such Warrant had been exercised in full immediately
prior to such Reorganization. In case of any Reorganization, appropriate
adjustment, as determined in good faith by the Board of Directors of the
Company, shall be made in the application of the provisions herein set
forth with respect to the rights and interests of Warrant holders so that
the provisions set forth herein shall there-
Page 8
after be applicable, as nearly as possible, in relation to any shares or other
property thereafter deliverable upon exercise of Warrants. Any such adjustment
shall be made by and set forth in a supplemental agreement between the Company,
or any successor thereto, and the Warrant Agent and shall for all purposes
hereof conclusively be deemed to be an appropriate adjustment. The
Company shall not effect any such Reorganization unless upon or prior to
the consummation thereof the successor corporation, or if the Company
shall be the surviving corporation in any such Reorganization and is not
the issuer of the shares of stock or other securities or property to be
delivered to holders of shares of the Common Stock outstanding at the
effective time thereof, then such issuer, shall assume by written
instrument the obligation to deliver to the registered holder of any
Warrant Certificate such shares of stock, securities, cash or other
property as such holder shall be entitled to purchase in accordance with
the foregoing provisions. In the event of sale, lease or conveyance or
other transfer of all or substantially all of the assets of the Company
as part of a plan for liquidation of the Company, all rights to exercise
any Warrant shall terminate 30 days after the Company gives written
notice to each registered holder of a Warrant Certificate that such sale
or conveyance or other transfer has been consummated.
3.7 RECLASSIFICATIONS. In case of reclassification or change
of the shares of Common Stock issuable upon exercise of the Warrants
(other than a change in par value, or as a result of a subdivision or
combination, but including any change in the shares into two or more
classes or series of shares), or in case of any consolidation or merger
of another corporation into the Company in which the Company is the
continuing corporation and in which there is a reclassification or change
(including a change to the right to receive cash or other property) of
the shares of Common Stock (other than a change in par value, or as a
result of a subdivision or combination, but including any change in the
shares into two or more classes or series of shares), the holders of the
Warrants shall have the right thereafter to receive upon exercise of the
Warrants solely the kind and amount of shares of stock and other
securities, property, cash, or any combination thereof receivable upon
such reclassification, change, consolidation or merger by a holder of the
number of shares of Common Stock for which the Warrants might have been
exercised immediately prior to such reclassification, change,
consolidation or merger. Thereafter, appropriate provision shall be made
for adjustments which shall be as nearly equivalent as practicable to the
adjustments in Article III. The above provisions of this Section 3.7
shall similarly apply to successive reclassifications and changes of
shares of Common Stock.
Page 9
3.8 NOTICE OF ADJUSTMENTS. Whenever any adjustment is made
pursuant to this Article III the Company shall cause written notice of
such adjustment to be sent by registered mail, postage prepaid to the
Warrant Agent within 15 days thereafter, such notice to include in
reasonable detail (i) the events precipitating the adjustment, (ii) the
computation of any adjustments, and (iii) the Exercise Price, the number
of shares or the securities or other property purchasable upon exercise
of each Warrant after giving effect to such adjustment. The Warrant
Agent shall within 15 days after receipt of such notice from the Company
cause a similar notice to be mailed to each registered holder of a
Warrant Certificate.
3.9 WARRANT CERTIFICATE AMENDMENTS. Irrespective of any
adjustments pursuant to this Article III, Warrant Certificates
theretofore or thereafter issued need not be amended or replaced but
certificates thereafter issued shall bear an appropriate legend or other
notice of any adjustments.
3.10 FRACTIONAL SHARES. The Company shall not be required upon
the exercise of any Warrant to issue fractional shares of Common Stock
which may result from adjustments in accordance with this Article III to
the Exercise Price or number of shares of Common Stock purchasable under
each Warrant. If more than one Warrant is exercised at one time by the
same registered holder, the number of full shares of Common Stock which
shall be deliverable shall be computed based on the number of shares
deliverable in exchange for the aggregate number of Warrants exercised.
With respect to any final fraction of a share called for upon the
exercise of any Warrant or Warrants, the Company shall pay a cash
adjustment in respect of such final fraction in an amount equal to the
same fraction of the Current Market Price of a share of Common Stock
calculated in accordance with Section 3.2.
ARTICLE IV
OTHER PROVISIONS RELATING TO
RIGHTS OF REGISTERED HOLDERS
OF WARRANT CERTIFICATES
4.1 RIGHTS OF WARRANT HOLDERS. No Warrant Certificate shall
entitle the registered holder thereof to any of the rights of a
shareholder of the Company, including, without limitation, the right to
vote, to receive dividends and other distributions, or to receive any
notice of, or to attend, meetings of shareholders or any other
proceedings of the Company.
Page 10
4.2 LOST, STOLEN, MUTILATED OR DESTROYED WARRANT CERTIFICATES.
If any Warrant Certificate shall be mutilated, lost, stolen or destroyed,
the Company shall direct the Warrant Agent to execute and deliver, in
exchange and substitution for and upon cancellation of a mutilated
Warrant Certificate, or in lieu of or in substitution for a lost, stolen
or destroyed Warrant Certificate, a new Warrant Certificate for the
number of Warrants represented by the Warrant Certificate so mutilated,
lost, stolen or destroyed but only upon receipt of evidence of such loss,
theft or destruction of such Warrant Certificate, and of the ownership
thereof, and indemnity, if requested, all satisfactory to the Company and
the Warrant Agent. Applicants for such substitute Warrant Certificates
shall also comply with such other reasonable regulations and pay such
other reasonable charges incidental thereto as the Company or Warrant
Agent may prescribe. Any such new Warrant Certificate shall constitute
an original contractual obligation of the Company, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant Certificate shall
be at any time enforceable by anyone.
ARTICLE V
SPLIT UP, COMBINATION, EXCHANGE, TRANSFER
AND CANCELLATION OF WARRANT CERTIFICATES
5.1 SPLIT UP, COMBINATION, EXCHANGE AND TRANSFER OF WARRANT
CERTIFICATES. Prior to Exercise Deadline, Warrant Certificates, subject
to the provisions of Section 5.2, may be split up, combined or exchanged
for other Warrant Certificates representing a like aggregate number of
Warrants or may be transferred in whole or in part. Any holder desiring
to split up, combine or exchange a Warrant Certificate or Warrant
Certificates shall make such request in writing delivered to the Warrant
Agent at its Principal Office and shall surrender the Warrant Certificate
or Warrant Certificates so to be split up, combined or exchanged at said
office. Subject to any applicable laws, rules or regulations restricting
transferability, any restriction on transferability that may appear on a
Warrant Certificate in accordance with the terms hereof, or any "stop-
transfer" instructions the Company may give to the Warrant Agent to
implement any such restrictions (which instructions the Company is
expressly authorized to give), transfer of outstanding Warrant
Certificates may be effected by the Warrant Agent from time to time upon
the books of the Company to be maintained by the Warrant Agent for that
purpose, upon a surrender of the Warrant Certificate to the Warrant Agent
at its Principal Office, with the assignment form set forth in the Warrant
Certificate duly executed and with Signatures Guaranteed. Upon any such
Page 11
surrender for split up, combination, exchange or transfer, the
Warrant Agent shall execute and deliver to the person entitled thereto a
Warrant Certificate or Warrant Certificates, as the case may be, as so
requested. The Warrant Agent may require the holder to pay a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any split up, combination, exchange or transfer of
Warrant Certificates prior to the issuance of any new Warrant
Certificate.
5.2 CANCELLATION OF WARRANT CERTIFICATES. Any Warrant
Certificate surrendered upon the exercise of Warrants or for split up,
combination, exchange or transfer, or purchased or otherwise acquired by
the Company, shall be cancelled and shall not be reissued by the Company;
and, except as provided (i) in Section 2.5, in case of the exercise of
less than all of the Warrants evidenced by a Warrant Certificate, or (ii)
in Section 5.1, in case of a split up, combination, exchange or transfer
of the Warrants evidenced by a Warrant Certificate, no Warrant
Certificate shall be issued hereunder in lieu of such cancelled Warrant
Certificate. Any Warrant Certificate so cancelled shall be retained by
the Warrant Agent for a period of seven years thereafter, after which it
shall be destroyed unless the Warrant Agent is otherwise directed by the
Company.
5.3 AGREEMENT OF WARRANT CERTIFICATE HOLDERS. Every holder of
a Warrant Certificate by accepting the same consents and agrees with the
Company and the Warrant Agent and with every other holder of a Warrant
Certificate that:
(a) transfer of the Warrant Certificates shall be
registered on the books of the Company maintained for that purpose by the
Warrant Agent only if surrendered at the Principal Office of the Warrant
Agent, duly endorsed or accompanied by a proper instrument of transfer,
with Signatures Guaranteed; and
(b) prior to due presentment for registration of
transfer, the Company and the Warrant Agent may deem and treat the person
in whose name the Warrant Certificate is registered as the absolute owner
thereof and of the Warrants evidenced thereby (notwithstanding any
notations of ownership or writing on the Warrant Certificates made by
anyone other than the Company or the Warrant Agent) for all purposes
whatsoever, and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
Page 12
ARTICLE VI
PROVISIONS CONCERNING THE WARRANT AGENT
AND OTHER MATTERS
6.1 PAYMENT OF TAXES AND CHARGES. The Company will from time
to time promptly pay to the Warrant Agent, or make provisions
satisfactory to the Warrant Agent for the payment of, all taxes and
charges that may be imposed by the United States or any state upon the
Company or the Warrant Agent in connection with the issuance or delivery
of shares of Common Stock upon the exercise of any Warrants, but any
transfer taxes in connection with the issuance of Warrant Certificates or
certificates for shares of Common Stock in any name other than that of
the registered holder of the Warrant Certificate surrendered shall be
paid by such registered holder; and, in such case, the Company shall not
be required to issue or deliver any Warrant Certificate or certificate
for shares of Common Stock until such taxes shall have been paid or it
has been established to the Company's satisfaction that no tax is due.
6.2 RESIGNATION OR REMOVAL OF WARRANT AGENT. The Warrant
Agent may resign its duties and be discharged from all further duties and
liabilities hereunder after giving 30 days' notice in writing to the
Company, except that such shorter notice may be given as the Company
shall, in writing, accept as sufficient. Upon comparable notice to the
Warrant Agent, the Company may remove the Warrant Agent; provided,
however, that in such event the Company shall appoint a new Warrant
Agent, as hereinafter provided, and the removal of the Warrant Agent
shall not be effective until a new Warrant Agent has been appointed and
has accepted such appointment. If the office of Warrant Agent becomes
vacant by resignation or incapacity to act or otherwise, the Company
shall appoint in writing a new Warrant Agent. If the Company shall fail
to make such appointment within a period of 30 days after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by the registered holder of any Warrant
Certificate, then the registered holder of any Warrant Certificate may
apply to any court of competent jurisdiction for the appointment of a new
Warrant Agent. Any successor Warrant Agent, whether appointed by the
Company or any such court, shall be a registered transfer agent, bank or
trust company in good standing and incorporated under the United States
banking laws or under the laws of any State within the United States,
having its principal office within the United States. Any new Warrant
Agent appointed hereunder shall execute, acknowledge and deliver to the
former Warrant Agent last in office and to the Company, an instrument
accepting such appointment under substantially the same terms and
conditions as are contained
Page 13
herein and thereupon such new Warrant Agent, without any further act or deed,
shall become vested with the rights, powers, duties and responsibilities of
the Warrant Agent and the former Warrant Agent shall cease to be the Warrant
Agent; but if for any reason it becomes necessary or expedient to have the
former Warrant Agent execute and deliver any further assurance, conveyance,
act or deed, the same shall be done at the expense of the Company and shall
be legally and validly executed and delivered by the former Warrant Agent.
6.3 NOTICE OF APPOINTMENT. Not later than the effective date
of the appointment of a new Warrant Agent, the Company shall cause notice
thereof to be mailed to the former Warrant Agent and the transfer agent,
if any, for the Common Stock and shall forthwith cause a copy of such
notice to be mailed to each registered holder of a Warrant Certificate.
Failure to mail such notice, or any defect contained therein, shall not
affect the legality or validity of the appointment of the successor
Warrant Agent.
6.4 MERGER OF WARRANT AGENT. Any company into which the
Warrant Agent may be merged or with which it may be consolidated, or any
company resulting from any merger or consolidation to which the Warrant
Agent shall be a party, shall be the successor Warrant Agent under this
Agreement without further act, provided that such company would be
eligible for appointment as a successor Warrant Agent under the
provisions of Section 6.2 hereof. Any such successor Warrant Agent may
adopt the prior countersignature of any predecessor Warrant Agent and
distribute Warrant Certificates countersigned but not distributed by such
predecessor Warrant Agent, or may countersign the Warrant Certificates in
its own name.
6.5 COMPANY RESPONSIBILITIES. The Company agrees that it
shall (i) pay the Warrant Agent reasonable remuneration for its services
as Warrant Agent hereunder and will reimburse the Warrant Agent upon
demand for all expenses, advances and expenditures that the Warrant Agent
may reasonably incur in the execution of its duties hereunder (including
reasonable fees and expenses of its counsel); (ii) provide the Warrant
Agent, upon request, with sufficient funds to pay any cash due pursuant
to Section 3.10 upon exercise of Warrants; and (iii) perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged
and delivered all further and other acts, instruments and assurances as
may reasonably be required by the Warrant Agent for the carrying out or
performing by the Warrant Agent of the provisions of this Agreement.
6.6 CERTIFICATION FOR THE BENEFIT OF WARRANT AGENT. Whenever
in the performance of its duties under this
Page 14
Agreement the Warrant Agent shall deem it necessary or desirable that any
matter be proved or established or that any instructions with respect to the
performance of its duties hereunder be given by the Company prior to taking
or suffering any action hereunder, such matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established, or such instructions may be given,
by a certificate or instrument signed by the Chairman, the Chief
Executive Officer, the President, a Vice President, the Secretary or the
Treasurer of the Company and delivered to the Warrant Agent. Such
certificate or instrument may be relied upon by the Warrant Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement; but in its discretion the Warrant Agent may in lieu thereof
accept other evidence of such matter or may require such further or
additional evidence as it may deem reasonable.
6.7 BOOKS AND RECORDS. The Warrant Agent shall maintain the
Company's books and records for registration and registration of transfer
of the Warrant Certificates issued hereunder. Such books and records
shall show the names and addresses of the respective holder of the
Warrant Certificates, the number of Warrants evidenced on its face by
each Warrant Certificate and the date of each Warrant Certificate.
6.8 LIABILITY OF WARRANT AGENT. The Warrant Agent shall be
liable hereunder of its own negligence or willful misconduct. The
Warrant Agent shall act hereunder solely as an agent for the Company and
its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
Warrant Certificates (except its counter-signature thereof) or be
required to verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Company only. The Warrant Agent
will not incur any liability or responsibility to the Company or to any
holder of any Warrant Certificate for any action taken, or any failure to
take action, in reliance on any notice, resolution, waiver, consent,
order, certificate or other paper, document or instrument reasonably
believed by the Warrant Agent to be genuine and to have been signed, sent
or presented by the proper party or parties. The Warrant Agent shall not
be under any responsibility in respect of the validity of this Agreement
or the execution and delivery hereof by the Company or in respect of the
validity or execution of any Warrant Certificate (except its counter-
signature thereof); not shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in
any Warrant Certificate; nor shall it be responsible for the making of
any adjustment required
Page 15
under the provisions of Article III hereof or responsible for the manner,
method or amount of any such adjustment or the facts that would require any
such adjustment; nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Common Stock or other securities to be issued pursuant to this
Agreement or any Warrant Certificate or as to whether any shares of Common
Stock or other securities will, when issued, be validly authorized and
issued and fully paid and nonassessable.
6.9 USE OF ATTORNEYS, AGENTS AND EMPLOYEES. The Warrant Agent
may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its
attorneys, agents or employees.
6.10 INDEMNIFICATION. The Company agrees to indemnify the
Warrant Agent and save it harmless against any and all losses, expenses
or liabilities, including judgments, costs and reasonable counsel fees
arising out of or in connection with its agency under this Agreement,
except as a result of the negligence or willful misconduct of the Warrant
Agent.
6.11 ACCEPTANCE OF AGENCY. The Warrant Agent hereby accepts the
agency established by this Agreement and agrees to perform the same upon
the terms and conditions herein set forth.
6.12 CHANGES TO AGREEMENT. The Warrant Agent may, without the
consent or concurrence of any registered holder of a Warrant Certificate,
by supplemental agreement or otherwise, join with the Company in making
any changes or corrections in this Agreement that they shall have been
advised by counsel (i) are required to cure any ambiguity or to correct
any defective or inconsistent provision or clerical omission or mistake
or manifest error herein contained, (ii) add to the covenants and
agreements of the Company or the Warrant Agent in this Agreement such
further covenants and agreements thereafter to be observed, or
(iii) result in the surrender of any right or power reserved to or
conferred upon the Company or the Warrant Agent in this Agreement, but
which changes or corrections do not or will not adversely affect, alter
or change the rights, privileges or immunities of the registered holders
of Warrant Certificates.
6.13 ASSIGNMENT. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall
bind and inure to the benefit of their respective successors and assigns.
Page 16
6.14 SUCCESSOR TO COMPANY. The Company will not merge or
consolidate with or into any other corporation or sell or otherwise
transfer its property, assets and business substantially as an entirety
to a successor corporation, unless the corporation resulting from such
merger, consolidation, sale or transfer (if not the Company) shall
expressly assume, by supplemental agreement satisfactory in form and
substance to the Warrant Agent and delivered to the Warrant Agent, the
due and punctual performance and observance of each and every covenant
and condition of this Agreement to be performed and observed by the
Company.
6.15 NOTICES. Any notice or demand required by this Agreement
to be given or made by the Warrant Agent or by the registered holder of
any Warrant Certificate to or on the Company shall be sufficiently given
or made if sent by first-class or registered mail, postage prepaid,
addressed (until another address is filed in writing with the Warrant
Agent by the Company) as follows:
Metromedia International Group, Inc.
c/o Metromedia Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice or demand required by this Agreement to be given or made by
the registered holder of any Warrant Certificate or by the Company to or
on the Warrant Agent shall be sufficiently given or made if sent by
first-class or registered mail, postage prepaid, addressed (until another
address is filed in writing with the Company by the Warrant Agent), as
follows:
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
Any notice or demand required by this Agreement to be given or made by
the Company or the Warrant Agent to or on the registered holder of any
Warrant Certificate shall be sufficiently given or made, whether or not
such holder receives the notice, if sent by first-class or registered
mail, postage prepaid, addressed to such registered holder at his last
address as shown on the books of the Company maintained by the Warrant
Agent. Otherwise such notice or demand shall be deemed given when
received by the party entitled thereto.
6.16 DEFECTS IN NOTICE. Failure to file any certificate or
notice or to mail any notice, or any defect in any certificate or notice
pursuant to this Agreement,
Page 17
shall not affect in any way the rights of any registered holder of a Warrant
Certificate or the legality or validity of any adjustment made pursuant to
Article III hereof, or any transaction giving rise to any such adjustment,
or the legality or validity of any action taken or to be taken by the Company.
6.17 GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THIS WARRANT AGREEMENT AND THE WARRANT CERTIFICATES.
6.18 STANDING. Nothing in this Agreement expressed and nothing
that may be implied from any of the provisions hereof is intended, or
shall be construed, to confer upon, or give to, any person or corporation
other than the Company, the Warrant Agent, and the registered holders of
the Warrant Certificates any right, remedy or claim under or by reason of
this Agreement or of any covenant, condition, stipulation, promise or
agreement contained herein; and all covenants, conditions, stipulations,
promises and agreements contained in this Agreement shall be for the sole
and exclusive benefit of the Company and the Warrant Agent and their
respective successors and assigns, and the registered holders of the
Warrant Certificates.
6.19 HEADINGS. The descriptive headings of the articles and
sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the
provisions hereof.
6.20 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts shall together constitute but one and the
same instrument.
6.21 CONFLICT OF INTEREST. The Warrant Agent and any
shareholder, director, officer or employee of the Warrant Agent may buy,
sell or deal in any of the Warrant Certificates or other securities of
the Company or become pecuniarily interested in any transaction in which
the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though the Warrant Agent
were not Warrant Agent under this Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the
Company, including, without limitation, as trustee under any indenture or
as transfer agent for the Common Stock or any other securities of the
Company, or for any other legal entity.
6.22 AVAILABILITY OF THE AGREEMENT. The Warrant Agent shall
keep copies of this Agreement available for inspection by holders of
Warrants during normal business
Page 18
hours at its Principal Office. Copies of this Agreement may be obtained upon
written request addressed to:
Metromedia International Group, Inc.
c/o Metromedia Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the day and year first above written.
METROMEDIA INTERNATIONAL GROUP, INC.
By:
-----------------------------------------
Name:
Title:
[WARRANT AGENT]
By:
-----------------------------------------
Name:
Title:
Page A-1
Exhibit A
[FORM OF WARRANT CERTIFICATE]
No. ___
Certificate for ____ Warrants
NOT EXERCISABLE AFTER 5:00 P.M., NEW YORK CITY TIME, ON ________,
2006{*}
METROMEDIA INTERNATIONAL GROUP, INC.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
THIS CERTIFIES that:
or registered assigns is the registered holder (the "Registered Holder")
of the number of Warrants set forth above, each of which represents the
right to purchase one fully paid and nonassessable share of Common Stock,
par value $1.00 per share (the "Common Stock"), of Metromedia
International Group, Inc., a Delaware corporation (the "Company"), at the
initial exercise price (the "Exercise Price") of $20.00, at any time
before the Expiration Date (as defined herein), by surrendering this
Warrant Certificate, with the form of election to purchase set forth
hereon duly executed at the office maintained pursuant to the Warrant
Agreement hereinafter referred to for that purpose by _________________,
or its successor as warrant agent (any such warrant agent being herein
called the "Warrant Agent"), and by paying in full the Exercise Price,
plus transfer taxes, if any. Payment of the Exercise Price shall be made
in United States currency, by certified check or money order payable to
the order of the Company.
No Warrant may be exercised after 5:00 P.M., New York City
time, on the expiration date (the "Expiration Date") which will be
__________, 2006{*/}. All warrants evidenced hereby shall thereafter
become void.
Prior to the Expiration Date, subject to any applicable laws,
rules or regulations restricting transferability and to any restriction
on transferability that may appear on this Warrant Certificate in
accordance with the terms of the Warrant Agreement, dated as of _____,
1996, between the Company and the Warrant Agent (the "Warrant
Agreement"), the Registered Holder shall be entitled to transfer this
Warrant Certificate, in whole or in part, upon surrender of this Warrant
Certificate at the office of the Warrant Agent maintained for that
purpose with the form of assignment set forth hereon duly executed, with
signatures guaranteed by a member firm of a national securities
-----------------------------------------
**FOOTNOTES**
{*/}Tenth anniversary from date of the Warrant Agreement.
Page A-2
exchange, a commercial bank or a trust company located in the United States,
or a member of the National Association of Securities Dealers, Inc., or
other eligible guarantor institution which is a participant in a signature
guarantee program (as such terms are defined in Reg. 240.17Ad-15 under
the Securities Exchange Act of 1934, as amended), acceptable to the
Warrant Agent. Upon any such transfer, a new Warrant Certificate or
Warrant Certificates representing the same aggregate number of Warrants
shall be issued in accordance with instructions in the form of
assignment.
Upon the exercise of less than all of the Warrants evidenced by
this Warrant Certificate, there shall be issued to the Registered Holder
a new Warrant Certificate in respect of the Warrants not exercised.
Prior to the Expiration Date, the Registered Holder shall be
entitled to exchange this Warrant Certificate, with or without other
Warrant Certificates, for another Warrant Certificate or Warrant
Certificates of the same aggregate number of Warrants, upon surrender of
this Warrant Certificate at the office maintained for such purpose by the
Warrant Agent.
Upon certain events provided for in the Warrant Agreement
hereinafter referred to, the Exercise Price, the number of shares of
Common Stock issuable upon the exercise of each Warrant is required to be
adjusted.
No fractional shares will be issued upon the exercise of
Warrants. As to any final fraction of a share which the registered
holder of one or more Warrant Certificates, the rights under which are
exercised in the same transaction, would otherwise be entitled to
purchase upon such exercise, the Company shall pay the cash value thereof
determined as provided in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance with
the Warrant Agreement and is subject to the terms and provisions
contained in said Warrant Agreement, to all of which terms and provisions
the Registered Holder consents by acceptance hereof.
This Warrant Certificate shall not entitle the Registered
Holder to any of the rights of a shareholder of the Company, including,
without limitation, the right to vote, to receive dividends and other
distributions, or to attend or receive any notice of meetings of
shareholders or any other proceedings of the Company.
This Warrant Certificate shall not be valid for any purpose
unless and until it shall have been countersigned by the Warrant Agent.
Page A-3
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its facsimile Corporate Seal.
METROMEDIA INTERNATIONAL, INC.
By:_______________________
Name:
Title:
Seal Attest:
Countersigned: [WARRANT AGENT],
as Warrant Agent
Dated: ___________ By:________________________
Name:
Title:
Page A-4
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise
__________ of the Warrants represented by this Warrant Certificate and to
purchase the shares of Common Stock issuable upon the exercise of said
Warrants, and requests that certificates for such shares be issued and
delivered as follows:
ISSUE TO:
-------------------------------------------------
(Name)
-------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
--------------------------------------------------
(SOCIAL SECURITY OR OTHER TAX IDENTIFYING NUMBER)
DELIVER TO:
--------------------------------------------------
(Name)
--------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE)
If the number of Warrants hereby exercised is less than all the
Warrants represented by this Warrant Certificate, the undersigned request
that a new Warrant certificate representing the number of full Warrants
not exercised be issued and delivered as set forth above.
In full payment of the purchase price with respect to the
Warrants exercised and transfer taxes, if any, the undersigned hereby
tenders payment of $________ by certified check or money order payable to
the order of the Company in United States currency.
Dated: _______________
______________________ ______________________________
(Insert Social Security (Signature of registered holder)
or other identifying
number(s) of holder(s)
-------------------------------
(signature of registered holder, if co-owned)
NOTE: Signature must conform in all respects
to name of holder as specified on the
face of the Warrant certificate.
Signature(s) Guaranteed:
Page A-5
[FORM OF
ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto the Assignee named below all of the rights of the
undersigned represented by the within Warrant Certificate, with respect
to the number of warrants set forth below:
NAME OF ASSIGNEE ADDRESS NO. OF WARRANTS
and does hereby irrevocably constitute and appoint _______________ to
make such transfer on the books of Metromedia International Group, Inc.
maintained for that purpose, with full power of substitution in the
premises.
Dated: ____________, 19__
_________________________ _____________________________
(Insert Social Security or (Signature of Assignee)
other identifying number(s)
number(s) of holder(s)
-----------------------------
(Signature of Assignee if co-owned)
NOTE: Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.
Signature(s) Guaranteed:
EXHIBIT B
Metromedia Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
December 20, 1995
Alliance Entertainment Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Merger (the
"Merger Agreement") of even date herewith among Metromedia International
Group, Inc. ("MIG"), Alliance Merger Corp. and Alliance Entertainment
Corp. ("Alliance"). This is the Credit Support Letter referred to in
Sections 3.2(v) and 5.1(j) of the Merger Agreement.
The undersigned, subject to consummation of the Merger (as
defined in the Merger Agreement), hereby agrees to provide the funds (or,
at our option, purchase the Notes (as defined below)), in a manner which
does not cause a default under Alliance's or MIG's outstanding
indebtedness, required by Alliance or MIG in connection with Alliance's
obligation, pursuant to Section 4.07 of the Indenture between Alliance
and Bankers Trust Company dated July 25, 1995 (the "Indenture"), under
which Alliance's 11 1/4 % Senior Subordinated Notes Due 2005 were issued,
to repurchase all of the Notes required to be repurchased as specified in
Section 4.07 of the Indenture. The agreement of the undersigned set
forth herein shall terminate upon termination of the Merger Agreement or
the consummation of a Change of Control Offer (as such term is defined in
the Indenture).
METROMEDIA COMPANY
By /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice
President
Accepted and Agreed to:
ALLIANCE ENTERTAINMENT CORP.
By /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
EXHIBIT C
____________________________________________________________
REGISTRATION RIGHTS AGREEMENT
Between
METROMEDIA INTERNATIONAL GROUP, INC.
and
THE STOCKHOLDERS NAMED HEREIN
_____________________________________________________
Common Stock, par value $1.00 per share
Common Stock Purchase Warrants
_____________________________________________________
Dated as of January 31, 1995
____________________________________________________________
TABLE OF CONTENTS
PAGE
1. Registration Under Securities Act, etc................1
1.1 Registration on Request; Shelf Registration......1
1.2 Registration Procedures..........................2
1.3 Preparation; Reasonable Investigation............5
1.4 Indemnification..................................5
2. Definitions...........................................9
3. Rule 144 and Rule 144A...............................11
4. Amendments and Waivers...............................11
5. Nominees for Beneficial Owners.......................11
6. Notices..............................................11
7. Assignment...........................................12
8. Calculation of Percentage Interests in
Registrable Securities...............................12
9. Representations......................................12
10. Holdback Agreements..................................12
11. No Inconsistent Agreements...........................13
12. Remedies.............................................13
13. Severability.........................................13
14. Entire Agreement.....................................13
15. Descriptive Headings.................................13
16. Governing Law........................................14
17. Counterparts.........................................14
REGISTRATION RIGHTS AGREEMENT ("Agreement"), dated as of
January 31, 1995 among the stockholders listed on the signature pages
hereof (the "Stockholders"), and Metromedia International Group, Inc., a
Delaware corporation ("MIG" or the "Company"). Capitalized terms used
herein but not otherwise defined shall have the meanings given them in
Section 2 of this Agreement.
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as
of the date hereof (as amended, the "Merger Agreement"), among the
Company, Alliance Merger Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Alliance Mergerco"), and Alliance
Entertainment Corp., a Delaware corporation, Alliance Mergerco will merge
with and into Alliance, with Alliance being the surviving corporation of
such merger (the "Merger"); and
WHEREAS, pursuant to the Merger Agreement, the Stockholders
will receive shares of common stock, par value $1.00 per share, of the
Company ("Common Stock") and Common Stock Purchase Warrants (the
"Warrants").
1. REGISTRATION UNDER SECURITIES ACT, ETC.
1.1 REGISTRATION ON REQUEST; SHELF REGISTRATION. MIG
shall file as soon as reasonably practicable following the date hereof a
"shelf" registration statement with respect to the Registrable Securities
(as defined below) to be issued to the Stockholders pursuant to the
Merger Agreement on Form S-3 pursuant to Rule 415 under the Securities
Act (the "Shelf Registration"). MIG shall use its best efforts to have
the Shelf Registration declared effective as soon as reasonably
practicable after such filing, and shall use its best efforts to keep the
Shelf Registration continuously effective from the date such Shelf
Registration is declared effective until the earlier of (i) such time as
all of the Registrable Securities shall cease to be Registrable
Securities and (ii) the third anniversary of the Effective Time (as such
term is defined in the Merger Agreement) of the Merger; provided that if,
pursuant to Section 10 hereof, the Stockholders are required to
discontinue disposition of any Registrable Securities covered by the
Shelf Registration, such time period shall be extended by the length of
such discontinuance.
Subject to Section 10 hereof, MIG shall supplement or amend, if
necessary, the Shelf Registration, as required by the registration form
utilized by MIG or by the instructions applicable to such registration
form or by the Securities Act or the rules and regulations promulgated
thereunder or as reasonably requested by the holder or holders of a
majority of the Registrable Securities (the "Majority Holders"), and MIG
shall furnish to the holders of the Registrable Securities to which the
Shelf Registration
Page 2
relates copies of any such supplement or amendment prior to
its being used and/or filed with the Commission. MIG shall pay
all Registration Expenses incurred in connection with the Shelf
Registration and any supplements or amendments thereto, whether or not it
becomes effective, and whether all, none or some of the Registrable
Securities are sold pursuant to the Shelf Registration.
1.2 REGISTRATION PROCEDURES. In connection with the
registration statement filed pursuant to Section 1.1, the Company will,
as expeditiously as possible:
(i) subject to Section 10 hereof, prepare and file
with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities
covered by such registration statement or as may be reasonably
requested by the Majority Holders, until such time as all of such
Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set
forth in such registration statement;
(ii) furnish to each seller of Registrable
Securities covered by such registration statement, such number of
conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all
exhibits) and such number of copies of the prospectus contained in
such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under
Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as
such seller may reasonably request;
(iii) use its best efforts (x) to register or
qualify all Registrable Securities and other securities covered by
such registration statement under such other securities or blue sky
laws of such States of the United States of America where an
exemption is not available and as the sellers of Registrable
Securities covered by such registration statement shall reasonably
request, (y) to keep such registration or qualification in effect
for so long as such registration statement remains in effect, and
(z) to take any other action which may be reasonably necessary or
advisable to enable such sellers to consummate the disposition in
such jurisdictions of the securities to
Page 3
be sold by such sellers, except that the Company shall not
for any such purpose be required to qualify generally to do
business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this
subdivision (iii) be obligated to be so qualified, subject itself to
taxation in any such jurisdiction or to consent to general service
of process in any such jurisdiction;
(iv) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered
with or approved by such other federal or state governmental
agencies or authorities as may be necessary in the opinion of
counsel to the Company and counsel to the seller or sellers of
Registrable Securities to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities;
(v) subject to Section 10 hereof, promptly notify
each seller of Registrable Securities covered by such registration
statement at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, in the light of the circumstances
under which they were made, and at the request of any such seller
promptly prepare and furnish to it a reasonable number of copies of
a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made;
(vi) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least
twelve months, but not more than eighteen months, beginning with the
first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
promulgated thereunder, and
Page 4
promptly furnish to each such seller of Registrable Securities
a copy of any amendment or supplement to such registration
statement or prospectus; and
(vii) use its best efforts to list all Registrable
Securities covered by such registration statement on the NYSE, the
AMEX or such other national securities exchange on which Registrable
Securities of the same class and, if applicable, series, covered by
such registration statement are then listed or on the National
Association of Securities Dealers Automated Quotations System, Inc.
("NASDAQ") if the Registrable Securities are quoted on NASDAQ.
The Company may (i) require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such
information regarding such seller and the distribution of such securities
as the Company may from time to time reasonably request in writing and
(ii) require each seller of Registrable Securities to agree to comply
with the Securities Act and the Exchange Act in connection with the
registration and distribution of the Registrable Securities.
Notwithstanding the foregoing, if any such registration or
comparable statement refers to any holder by name or otherwise as the
holder of any securities of the Company and in its sole and exclusive
judgment such holder is or might be deemed to be a controlling person of
the Company, such holder shall have the right to require the insertion
therein of language, in form and substance reasonably satisfactory to
such holder and the Company, to the effect that the holding by such
holder of such securities is not to be construed as a recommendation by
such holder of the investment quality of the Company's securities covered
thereby and that such holding does not imply that such holder will assist
in meeting any future financial requirements of the Company.
Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the
Company of the happening of any event of the kind described in
subdivision (v) of this Section 1.2, such holder will forthwith
discontinue such holder's disposition of Registrable Securities pursuant
to the registration statement relating to such Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by subdivision (v) of this Section 1.2 and, if so
directed by the Company, will promptly deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus
Page 5
relating to such Registrable Securities current at the time of receipt of
such notice.
1.3 PREPARATION; REASONABLE INVESTIGATION. In connection
with the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company (i) shall give a
representative holder designated in writing to the Company by the
Majority Holders (the "Representative") and counsel and accountants
designated by the Representative the opportunity to participate in the
preparation of such registration statement, each prospectus included
therein or filed with the Commission, and each amendment thereof or
supplement thereto, (ii) shall give each of them such reasonable access
to its books and records and such opportunities to discuss the business
of the Company with its officers and the independent public accountants
who have certified its financial statements as shall be necessary, in the
opinion of the Representative and such counsel or accountants, to conduct
a reasonable investigation within the meaning of the Securities Act and
(iii) shall promptly notify the Representative and its counsel of any
stop order issued or threatened by the Commission and promptly take all
reasonable actions required to prevent the entry of such stop order or to
remove it if entered.
1.4 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company
will, and hereby does, indemnify and hold harmless, in the case of any
registration statement filed pursuant to Section 1.1, each seller of any
Registrable Securities covered by such registration statement and each
other Person who participates as an underwriter in the offering or sale
of such securities and each other Person, if any, who controls such
seller or any such underwriter within the meaning of the Securities Act,
and their respective directors, officers, partners, shareholders,
employees and affiliates against any losses, claims, damages or
liabilities, joint or several, to which such seller or underwriter or any
such director, officer, partner, shareholder, employee, affiliate or
controlling person may become subject under the Securities Act or
otherwise, including, without limitation, the fees and expenses of legal
counsel, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration
statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement
Page 6
thereto, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
in light of the circumstances in which they were made not misleading, or
any violation by the Company of the Securities Act or any rule or
regulation thereunder applicable to the Company and the Company will
reimburse each such seller or underwriter and each such director,
officer, partner, shareholder, employee, affiliate and controlling Person
for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
liability, action or proceeding; PROVIDED, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, any
such preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed
by or on behalf of such seller or underwriter, as the case may be,
specifically stating that it is for use in the preparation thereof. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any such seller or any such
director, officer, employee, affiliate, partner or controlling person and
shall survive the transfer of such securities by such seller.
(b) INDEMNIFICATION BY THE SELLERS. As a condition
to including any Registrable Securities in any registration statement,
the Company shall have received an undertaking satisfactory to it from
the prospective seller of such Registrable Securities, to indemnify and
hold harmless (in the same manner and to the same extent as set forth in
subdivision (a) of this Section 1.4) the Company, and each director,
officer, employee and shareholder of the Company and each other Person,
if any, who participates as an underwriter in the offering or sale of
such securities and each other Person who controls the Company or any
such underwriter within the meaning of the Securities Act, with respect
to any untrue statement or alleged untrue statement of a material fact
contained in or any omission or alleged omission to state therein a
material fact in any such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or
any amendment or supplement thereto, if such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company
through an instrument duly executed by or on behalf of such seller
specifically stating that it is for use in the preparation of such
Page 7
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement; PROVIDED, HOWEVER, that the
liability of such indemnifying party under this Section 1.4(b) shall be
limited to the amount of proceeds received by such indemnifying party in
the offering giving rise to such liability. Such indemnity shall remain
in full force and effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer, employee,
shareholder or controlling person and shall survive the transfer of such
securities by such seller.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt
by an indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subdivisions of
this Section 1.4, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice
to the latter of the commencement of such action; PROVIDED, HOWEVER, that
the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 1.4, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice.
In case any such action is brought against an indemnified party the
indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred
by the latter in connection with the defense thereof other than
reasonable costs of investigation; PROVIDED, HOWEVER, that if the
indemnified party reasonably believes it is advisable for it to be
represented by separate counsel because there exists a conflict of
interest between its interests and those of the indemnifying party with
respect to such claim, or there exist defenses available to such
indemnified party which may not be available to the indemnifying party,
or if the indemnifying party shall fail to assume responsibility for such
defense, the indemnified party may retain counsel satisfactory to it and
the indemnifying party shall pay all fees and expenses of such counsel.
No indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written consent, which consent shall not
be unreasonably withheld or delayed. No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement which does not
Page 8
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation or which requires action other than
the payment of money by the indemnifying party. Each indemnified party shall
furnish such information regarding itself or the claim in question as an
indemnifying party may reasonably request in writing and as shall be
reasonably requested in connection with the defense of such claim and
litigation resulting therefrom.
(d) CONTRIBUTION. If the indemnification provided
for in this Section 1.4 shall for any reason be held by a court of
competent jurisdiction to be unavailable to an indemnified party under
subparagraph (a) or (b) hereof in respect of any loss, claim, damage or
liability, or any action in respect thereof, then, in lieu of the amount
paid or payable under subparagraph (a) or (b) hereof, the indemnified
party and the indemnifying party under subparagraph (a) or (b) hereof
shall contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating the same), (i) in such proportion as is appropriate to
reflect the relative fault of the Company and the prospective sellers of
Registrable Securities covered by the registration statement in
connection with the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations (the relative fault of the
Company and such prospective sellers to be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or such prospective
sellers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission) or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law; in such proportion as shall be appropriate
to reflect the relative benefits received by the Company and such
prospective sellers from the offering of the securities covered by such
registration statement. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. Such prospective sellers' obligations to
contribute as provided in this subparagraph (d) are several in proportion
to the relative value of their respective Registrable Securities covered
by such registration statement and not joint and no prospective seller
shall be liable under this subparagraph (d) for any amount in excess of
the proceeds received by the Seller in the offering giving rise to the
liability hereunder. In addition, no Person shall be
Page 9
obligated to contribute hereunder any amounts in payment for any settlement
of any action or claim effected without such Person's consent, which consent
shall not be unreasonably withheld or delayed.
(e) OTHER INDEMNIFICATION. Indemnification and
contribution similar to that specified in the preceding subdivisions of
this Section 1.4 (with appropriate modifications) shall be given by the
Company and each seller of Registrable Securities with respect to any
required registration or other qualification of securities under any
federal or state law, rule or regulation of any governmental authority
other than the Securities Act.
(f) INDEMNIFICATION PAYMENTS. The indemnification
and contribution required by this Section 1.4 shall be made by prompt
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense,
loss, damage or liability is incurred.
2. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"AMEX" means the American Stock Exchange Inc.
"COMMISSION" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the
time. Reference to a particular section of the Securities Exchange Act
of 1934, as amended, shall include a reference to the comparable section,
if any, of any such successor federal statute.
"MAJORITY HOLDERS" is defined in Section 1.1.
"NYSE" means the New York Stock Exchange, Inc.
"PERSON" means any individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency, department or political subdivision
thereof) or other entity of any kind.
"REGISTRABLE SECURITIES" means (i) the Shares and (ii) any
Related Registrable Securities. As to any particular Registrable
Securities, once issued such
Page 10
securities shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b) they and
all such other Registrable Securities owned by a holder may be distributed
to the public pursuant to Rule 144 (or any successor provision) under the
Securities Act, (c) they shall have been otherwise transferred, and new
certificates for them not bearing a legend restricting further transfer
shall have been delivered by the Company and subsequent public distribution of
them shall not, in the opinion of counsel to the holders (or in the opinion of
counsel to the Company, which opinion is reasonably satisfactory to the
holders), require registration of them under the Securities Act, or (d) they
shall have ceased to be outstanding. All references to percentages of
Registrable Securities shall be calculated pursuant to Section 8.
"REGISTRATION EXPENSES" means all costs, fees and expenses
incident to the Company's performance of or compliance with Section 1,
including, without limitation, all registration, filing and NASD fees,
all fees and expenses of complying with securities or blue sky laws, all
word processing, duplicating and printing expenses, messenger and
delivery expenses and the fees and disbursements of counsel for the
Company and of its independent public accountants, but excluding any
underwriting fees, expenses, discounts or other costs payable to any
underwriter, broker or dealer.
"RELATED REGISTRABLE SECURITIES" means any securities of the
Company issued or issuable with respect to the Shares by way of a
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or
otherwise.
"SECURITIES ACT" means the Securities Act of 1933, or any
successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Act of 1933 shall
include a reference to the comparable section, if any, of any such
successor federal statute.
"SHARES" means (i) the shares of Common Stock to be received by
the Stockholders pursuant to the Merger Agreement, (ii) the Warrants to
be received by the Stockholders pursuant to the Merger Agreement and
(iii) the shares of Common Stock for which the Warrants are exercisable.
Page 11
3. RULE 144 AND RULE 144A. The Company shall take all
actions reasonably necessary to enable holders of Registrable Securities
to sell such securities without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144 under
the Securities Act, as such Rule may be amended from time to time,
(b) Rule 144A under the Securities Act, as such Rule may be amended from
time to time, or (c) any similar rules or regulations hereafter adopted
by the Commission, including, without limiting the generality of the
foregoing, filing on a timely basis all reports required to be filed by
the Exchange Act. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement
as to whether it has complied with such requirements.
4. AMENDMENTS AND WAIVERS. This Agreement may be amended
with the written consent of the Company and the Company may take any
action herein prohibited, or omit to perform any act herein required to
be performed by it, only if the Company shall have obtained the written
consent to such amendment, action or omission to act, of the Majority
Holders affected by such amendment, action or omission to act. Each
holder of any Registrable Securities at the time or thereafter
outstanding shall be bound by any consent authorized by this Section 4,
whether or not such Registrable Securities shall have been marked to
indicate such consent.
5. NOMINEES FOR BENEFICIAL OWNERS. In the event that any
Registrable Securities are held by a nominee for the beneficial owner
thereof, the beneficial owner thereof may, at its election in writing
delivered to the Company, be treated as the holder of such Registrable
Securities for purposes of any request, consent, waiver or other action
by any holder or holders of Registrable Securities pursuant to this
Agreement or any determination of any number or percentage of shares of
Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of
any Registrable Securities so elects, the Company may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of
such Registrable Securities.
6. NOTICES. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be
by registered or certified first-class mail, return receipt requested,
telex, telegram, telecopier, reputable courier service or personal
delivery to the addresses of the Stockholders set forth below their
Page 12
names on the signature pages hereof and to the Company at the following
address (or at such other address for a party as shall be specified by like
notice):
c/o Metromedia Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day
after being sent by reputable courier service; three business days after
being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; and when receipt is acknowledged, if telecopied.
7. ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of and shall be enforceable by the parties hereto
and, with respect to the Company, its respective successors and assigns
and, with respect to the Stockholder, any holder of any Registrable
Securities, subject to the provisions respecting the minimum numbers of
percentages of shares of Registrable Securities required in order to be
entitled to certain rights, or to take certain actions, contained herein.
8. CALCULATION OF PERCENTAGE INTERESTS IN REGISTRABLE
SECURITIES. For purposes of this Agreement, all references to a
percentage of the Registrable Securities shall be calculated based upon
the total number of shares of Common Stock included in the definition of
the Registrable Securities outstanding at the time such calculation is
made (calculated assuming that all of the Warrants had been exercised for
shares of Common Stock).
9. REPRESENTATIONS. Each of the Stockholders agrees not to
sell or otherwise dispose of the Shares in any transaction which, in the
reasonable opinion of Company's counsel, would be in violation of the
Securities Act. Each of the Stockholders acknowledges that a legend
appears on the certificates for the Shares reflecting the foregoing
restriction and each of the Stockholders hereby consents to the Company's
maintaining "stop transfer" instructions with its transfer agent with
respect thereto.
10. HOLDBACK AGREEMENTS. Notwithstanding anything in this
Agreement to the contrary if (i) the Company shall determine in good
faith that it would be significantly disadvantageous to the Company and
its stockholders for any such Shelf Registration to be amended
Page 13
or supplemented and (ii) the need for such an amendment or supplement is not
caused by a proposed public offering of any securities of the Company by
any of its securityholders (other than an offering made pursuant to a
registration on Form S-8), the Company may defer such amending or
supplementing of such Shelf Registration for not more than 60 days and in
such event, upon appropriate notice to the Stockholders, the Stockholders
shall be required to discontinue disposition of any Registrable
Securities covered by such Shelf Registration during such period.
11. NO INCONSISTENT AGREEMENTS. The Company will not
hereafter enter into any agreement with respect to its securities which
is inconsistent with the rights granted to the holders of Registrable
Securities in this Agreement.
12. REMEDIES. Each holder of Registrable Securities, in
addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance
of its rights under this Agreement. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
13. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions
contained herein shall not be in any way impaired thereby, it being
intended and understood that all of the rights and privileges of each of
the Stockholders shall be enforceable to the fullest extent permitted by
law.
14. ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein.
There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
15. DESCRIPTIVE HEADINGS. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for
reference only and shall not limit or otherwise affect the meaning
hereof.
Page 14
16. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE
GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
17. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but
all such counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
[Insert Signature Lines for Stockholders]
METROMEDIA INTERNATIONAL GROUP, INC.
By:
------------------------------------
Name:
Title:
EXHIBIT D-1
____________________________________________________________
STOCK PURCHASE AGREEMENT
between
METROMEDIA COMPANY
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Dated
________________________
_____________, 1996
_________________________
____________________________________________________________
TABLE OF CONTENTS
PAGE
1. Sale and Purchase of Shares and Warrants..............2
1.1 Sale and Purchase of Shares....................2
1.2 Purchase Price.................................2
2. Closing; Closing Date.................................2
3. Representations and Warranties of Seller..............3
3.1 Title to the Shares and Warrants...............3
3.2 Authority to Execute and Perform Agreement.....3
3.3 Representations and Warranties on Closing
Date...........................................4
4. Conditions Precedent to the Obligation of the Buyer
to Close .............................................4
4.1 Representations and Warranties.................4
4.2 No Orders......................................5
4.3 Tag-Along Rights. ............................5
4.4 Merger. ......................................5
5. Conditions Precedent to the Obligation of the Seller
to Close..............................................5
6. Covenants of the Seller...............................5
6.1 Irrevocable Proxy..............................5
6.3 Holdback Agreements............................6
7. Survival of Representations and Warranties of the
Seller After Closing..................................7
8. General Indemnification...............................7
8.1 Obligation of the Seller to Indemnify..........7
8.2 Notice and Opportunity to Defend...............8
9. Termination of Agreement..............................9
10. Miscellaneous........................................10
10.1 Certain Definitions...........................10
10.2 Notices.......................................11
10.3 Entire Agreement..............................12
10.4 Waivers and Amendments........................12
10.5 GOVERNING LAW.................................13
10.6 Binding Effect; No Assignment.................13
10.7 Variations in Pronouns........................13
10.8 Counterparts..................................13
10.9 Headings......................................13
10.10 Severability of Provisions....................13
STOCK PURCHASE AGREEMENT
AGREEMENT, dated __________, 1996, by and between Metromedia
Company, a Delaware general partnership (the "Buyer"), and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ (the "Seller").
The Seller is the record and beneficial owner of (i) 2,100,000
shares of common stock, par value $1.00 per share (the "Common Stock"),
of Metromedia International Group, Inc., a Delaware corporation ("MIG"),
(the "Shares"), (ii) 855,000 Warrants to purchase shares of Common Stock
with the terms and provisions set forth in Exhibit A (the "Warrants") to
the Agreement and Plan of Merger dated as of the date hereof among MIG,
Alliance Merger Corp. and Alliance Entertainment Corp. (the "Merger
Agreement") and (iii) any additional Warrants received (A) as
consideration in the Merger (as such term is defined in the Merger
Agreement) and/or (B) after the Effective Time (as such term is defined
in the Merger Agreement) upon the exercise of options to purchase shares
of Common Stock (collectively, the "Additional Warrants"). The Seller
wishes to sell the Shares, the Warrants and the Additional Warrants and
the Buyer wishes to purchase the Shares, Warrants and the Additional
Warrants upon the terms and subject to the conditions of this Agreement.
Capitalized terms used herein but not otherwise defined shall have the
meanings given them in Section 10.1 hereof.
Page 2
Accordingly, the parties agree as follows:
1. SALE AND PURCHASE OF SHARES AND WARRANTS.
1.1 SALE AND PURCHASE OF SHARES AND WARRANTS. At the
Closing (as hereinafter defined), (i) the Seller shall sell, and the
Buyer shall purchase, all of the Shares, Warrants and Additional
Warrants, if any, free of any Liens, (ii) the Seller shall deliver or
cause to be delivered to the Buyer certificates representing all of the
Shares, Warrants and Additional Warrants, if any, accompanied by stock
and warrant powers duly executed in blank, in proper form for transfer,
and with all appropriate stock transfer tax stamps affixed, and (iii) the
Buyer shall deliver the Purchase Price (as hereinafter defined) to the
Seller.
1.2 PURCHASE PRICE. The aggregate purchase price for the
Shares, Warrants and the Additional Warrants (the "Purchase Price") shall
be $36,000,000 (the "Closing Payment"). The Buyer shall pay the Closing
Payment to the Seller, against receipt of the Shares, Warrants and
Additional Warrants, if any, at the Closing, by a certified or official
bank check, or cash by wire transfer of immediately available funds.
2. CLOSING; CLOSING DATE. The closing of the purchase and
sale of the Shares and Warrants (the "Closing") shall take place as soon
as practicable following the consummation of the Merger (as such term is
defined in the
Page 3
Merger Agreement) and satisfaction or waiver of the other conditions
set forth in Article 4 hereof at the offices of ▇▇▇▇, Weiss,
Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ or at such other place and time as the parties may agree in
writing (such time and date being referred to herein as the "Closing
Date"). The Closing shall be effective as of the close of business on
that date.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller
represents and warrants to the Buyer as follows:
3.1 TITLE TO THE SHARES AND WARRANTS. As of the Closing
Date, the Seller shall own of record, free and clear of any Lien, the
Shares and Warrants, and, upon delivery of and payment for such Shares
and Warrants as herein provided, the Seller will convey to the Buyer good
and valid title thereto, free and clear of any Lien. As of the date of
transfer of the Additional Warrants, the Seller shall own of record, free
and clear of any Lien, the Additional Warrants, and upon delivery of and
payment for such Additional Warrants as herein provided, the Seller will
convey to the Buyer good and valid title thereto, free and clear of any
Lien.
3.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENT. The
Seller has the full legal right, power and all authority required to
enter into, execute and deliver this Agreement and to perform fully the
Seller's obligations
Page 4
hereunder. This Agreement has been duly executed and delivered
by the Seller and (assuming the due authorization, execution
and delivery hereof by the Buyer) is a legal, valid and binding
obligation of Seller enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization, moratorium,
or other similar laws affecting creditors' rights and to general equity
principles (regardless of whether enforcement is sought in a proceeding
at law or in equity).
3.3 REPRESENTATIONS AND WARRANTIES ON CLOSING DATE. The
representations and warranties contained in this Article 3 shall be true
on and as of the Closing Date with the same force and effect as though
such representations and warranties had been made on and as of the
Closing Date.
4. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE BUYER TO
CLOSE. The obligation of the Buyer to enter into and complete the
Closing is subject, at the option of the Buyer, to the fulfillment on or
prior to the Closing Date of the following conditions, any one or more of
which may be waived by it:
4.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Seller contained in this Agreement shall be true on
and as of the Closing Date with the same force and effect as though made
on and as of the Closing Date.
Page 5
4.2 NO ORDERS. There shall be no Order of any nature in
effect that prevents the consummation of the transactions contemplated
hereby.
4.3 TAG-ALONG RIGHTS. All tag-along or similar rights
relating to the Shares and/or Warrants shall have been waived, expired or
lapsed, and to the knowledge of the Buyer and the Seller, no claim of
tag-along or similar rights relating to the Shares and/or Warrants shall
have been made.
4.4 MERGER. The Merger (as defined in the Merger
Agreement) shall have been consummated.
5. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE SELLER TO
CLOSE. The obligation of the Seller to enter into and complete the
Closing is subject, at the option of the Seller, to the fulfillment on or
prior to the Closing Date of the condition, which may be waived by the
Seller, that the Merger shall have been consummated.
6. COVENANTS OF THE SELLER.
6.1 IRREVOCABLE PROXY. The Seller hereby grants to the
Buyer an irrevocable proxy coupled with an interest with respect to the
Shares and agrees to execute all documents and do all things reasonably
necessary in connection therewith.
6.2 ADDITIONAL WARRANTS. Seller hereby assigns any
Additional Warrants and the right to receive any Additional Warrants to
the Buyer and agrees to (i)notify
Page 6
Buyer if he intends to exercise any options to purchase shares
of Alliance common stock or shares of Common Stock if
Warrants are to be received upon such exercise, (ii) instruct
MIG and the warrant agent for the Warrants that all Additional Warrants
shall be issued directly to the Buyer in the name of Buyer (or its
designee) and (iii) promptly execute all necessary instruments of
assignment to transfer to Buyer (or its designee) any Additional Warrants
received by Seller. Seller and Buyer agree that no additional
consideration other than the Purchase Price shall be paid by Buyer to
Seller for the Additional Warrants.
6.3 HOLDBACK AGREEMENTS. The Seller agrees, that in
connection with an underwritten registration statement by MIG of Common
Stock or any debt, equity or other security or other contractual right
convertible into or exercisable or exchangeable for, or based on the
value of, the Common Stock, or any warrants, options or other rights to
purchase the Common Stock or any of the foregoing ("Equity Securities"),
if so requested by the managing underwriter for such registration
statement, not to sell, make any short sale of, loan, grant any option
for the purchase of or effect any public sale or distribution of Equity
Securities or otherwise dispose of any Equity Securities of MIG during
the period beginning 15 days prior to the effective date of such
registration statement and ending 180 days after the effective date of such
Page 7
registration statement or such shorter period as the Buyer and its
Affiliates are subject. Seller and Buyer expressly agree and acknowledge
that MIG shall be deemed a third party beneficiary of this provision.
7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE SELLER
AFTER CLOSING. Notwithstanding any right of the Buyer to investigate and
notwithstanding any knowledge of facts determined or determinable by the
Buyer pursuant to such investigation or right of investigation, the Buyer
has the right to rely fully upon the representations and warranties of
the Seller contained in this Agreement. The indemnification obligations
set forth in Section 8.1, and the rights and remedies at law or equity of
the Buyer shall not be diminished or otherwise affected by the knowledge
of the Buyer at any time of any facts relating to the matters represented
or warranted by the Seller in this Agreement. Notwithstanding any waiver
by the Buyer of any condition precedent to its obligation to close, all
representations and warranties shall survive the execution and delivery
of this Agreement and the Closing hereunder.
8. GENERAL INDEMNIFICATION.
8.1 OBLIGATION OF THE SELLER TO INDEMNIFY. The Seller
(the "Indemnifying Party") agrees to indemnify, defend and hold harmless
the Buyer (and its partners, officers, employees, Affiliates, successors
and assigns) (collectively, the "Indemnitees") from and against all
Page 8
losses, liabilities, damages, deficiencies, demands, claims, actions,
judgments or causes of action, assessments, costs or expenses (including,
without limitation, interest, penalties and reasonable attorneys' fees,
disbursements and other charges incurred by any Indemnitee in any action
or proceeding between the Indemnifying Party and an Indemnitee or between
an Indemnitee and any third party or otherwise) ("Losses") based upon,
arising out of, or otherwise in respect of (i) any inaccuracy in or any
breach of any representation or warranty contained in Article 3 or any
(ii) claim, action or proceeding brought by any person claiming any tag-
along or similar rights relating to the Shares, Warrants, and/or
Additional Warrants. The Indemnifying Party shall promptly reimburse any
Indemnitee for any such costs and expenses incurred by the Indemnitee
from time to time upon the written request of the Indemnitee.
8.2 NOTICE AND OPPORTUNITY TO DEFEND.
(a) Promptly after receipt by an Indemnitee of
notice of any demand, claim or circumstances which, with the lapse of
time, would or might give rise to a claim or the commencement (or
threatened commencement) of any action, proceeding or investigation (an
"Asserted Liability") that may result in any Loss, the Indemnitee shall
give notice thereof (the "Claims Notice") to the Indemnifying Party. The
Claims Notice shall describe the Asserted Liability in reasonable detail,
and shall indicate
Page 9
the amount (estimated, if necessary and to the extent
feasible) of the Loss that has been or may be suffered by the Indemnitee.
(b) Any Indemnitee may elect to compromise or
defend, at the expense of the Indemnifying Party, any Asserted Liability.
If an Indemnitee elects to compromise or defend such Asserted Liability,
it shall within 30 days (or sooner, if the nature of the Asserted
Liability so requires) notify the Indemnifying Party of its intent to do
so, and the Indemnifying Party shall cooperate, at the expense of the
Indemnifying Party, in the compromise of, or defense against, such
Asserted Liability. Notwithstanding the foregoing, neither the
Indemnifying Party nor the Indemnitee may settle or compromise any claim
over the objection of the other; PROVIDED, HOWEVER, that consent to
settlement or compromise shall not be unreasonably withheld. In any
event, the Indemnifying Party may participate, at its own expense, in the
defense of such Asserted Liability. Each of the Indemnitee and the
Indemnifying Party shall make available to the other party any books,
records or other documents within its control that are necessary or
appropriate for any defense of an Asserted Liability by the other party.
9. TERMINATION OF AGREEMENT.
This Agreement shall terminate prior to the Closing as
follows:
Page 10
(i) upon the termination of the Merger Agreement;
or
(ii) at any time on or prior to the Closing Date, by
mutual written consent of the Seller and the Buyer.
If this Agreement so terminates, it shall become null and void
and have no further force or effect, PROVIDED, HOWEVER, that each party
shall be liable in respect of a termination of this Agreement pursuant to
this Section to the extent that failure to satisfy the conditions of
Article 4 or Article 5, as the case may be, results from the intentional
or willful violation of, or willful misstatement contained in, the
representations or warranties of such party contained in this Agreement.
10. MISCELLANEOUS.
10.1 CERTAIN DEFINITIONS. (a) As used in this Agreement,
the following terms have the following meanings:
(i) "AFFILIATE" means, with respect to any Person,
any other Person controlling, controlled by or under common control with,
or the parents, spouse, lineal descendants or beneficiaries of, such
Person.
(ii) "LIEN" means any lien, pledge, mortgage,
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude, transfer restriction under any shareholder or
similar agreement,
Page 11
encumbrance or any other restriction or limitation whatsoever.
(iii) "ORDER" means any order, judgment, injunction,
award, decision, determination, decree or writ.
(iv) "PERSON" means any individual, corporation,
partnership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Body or other entity.
10.2 NOTICES. Any notice or other communication required
or permitted hereunder shall be in writing and shall be delivered
personally, telegraphed, telexed, sent by facsimile transmission or sent
by certified, registered or express mail, postage prepaid. Any such
notice shall be deemed given when so delivered personally, telegraphed,
telexed or sent by facsimile transmission or, if mailed, five days after
the date of deposit in the United States mails, as follows:
(i) if to the Buyer, to:
Metromedia Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Page 12
(ii) if to the Seller, to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
[Address]
[Address]
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may by notice given in accordance with this Section to the
other parties designate another address or Person for receipt of notices
hereunder.
10.3 ENTIRE AGREEMENT. This Agreement contains the entire
agreement among the parties with respect to the purchase of the Shares
and Warrants and supersede all prior agreements, written or oral, with
respect thereto.
10.4 WAIVERS AND AMENDMENTS. This Agreement may be
amended, superseded, canceled, renewed or extended, and the terms hereof
may be waived, only by a written instrument signed by the Buyer and the
Seller or, in the case of a waiver, by the party waiving compliance. No
delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of any party of any such right, power or privilege,
nor any single or partial exercise of any such right, power or privilege,
preclude any further exercise thereof or the exercise of any other such
right, power or privilege.
Page 13
10.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
10.6 BINDING EFFECT; NO ASSIGNMENT. This Agreement shall
be binding upon and inure to the benefit of the parties and their
respective successors and legal representatives. This Agreement is not
assignable, except that the Buyer may assign its rights hereunder to any
of its Affiliates.
10.7 VARIATIONS IN PRONOUNS. All pronouns and any
variations thereof refer to the masculine, feminine or neuter, singular
or plural, as the context may require.
10.8 COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument. Each counterpart may
consist of a number of copies hereof each signed by less than all, but
together signed by all of the parties hereto.
10.9 HEADINGS. The headings in this Agreement are for
reference only, and shall not affect the interpretation of this
Agreement.
10.10 SEVERABILITY OF PROVISIONS. If any provision or any
portion of any provision of this Agreement, or the application of any
such provision or any portion thereof to any Person or circumstance,
shall be held invalid
Page 14
or unenforceable, the remaining portion of such provision
and the remaining provisions of this Agreement, and the
application of such provision or portion of such provision as is held
invalid or unenforceable to Persons or circumstances other than those as
to which it is held invalid or unenforceable, shall not be affected
thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date first above written.
METROMEDIA COMPANY
By____________________________
Name:
Title:
______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
EXHIBIT D-2
____________________________________________________________
STOCK PURCHASE AGREEMENT
between
METROMEDIA COMPANY
and
▇▇▇▇ ▇. ▇▇▇▇▇▇
Dated
________________________
_____________, 1996
_________________________
____________________________________________________________
TABLE OF CONTENTS
PAGE
1. Sale and Purchase of Shares and Warrants..............2
1.1 Sale and Purchase of Shares....................2
1.2 Purchase Price.................................2
2. Closing; Closing Date.................................2
3. Representations and Warranties of Seller..............3
3.1 Title to the Shares and Warrants...............3
3.2 Authority to Execute and Perform Agreement.....3
3.3 Representations and Warranties on Closing
Date...........................................4
4. Conditions Precedent to the Obligation of the Buyer
to Close .............................................4
4.1 Representations and Warranties.................4
4.2 No Orders......................................5
4.3 Tag-Along Rights. ............................5
4.4 Merger. ......................................5
5. Conditions Precedent to the Obligation of the Seller
to Close..............................................5
6. Covenants of the Seller...............................5
6.1 Irrevocable Proxy..............................5
6.3 Holdback Agreements............................6
7. Survival of Representations and Warranties of the Seller
After Closing.........................................7
8. General Indemnification...............................7
8.1 Obligation of the Seller to Indemnify..........7
8.2 Notice and Opportunity to Defend...............8
9. Termination of Agreement..............................9
10. Miscellaneous........................................10
10.1 Certain Definitions...........................10
10.2 Notices.......................................11
10.3 Entire Agreement..............................12
10.4 Waivers and Amendments........................12
10.5 GOVERNING LAW.................................13
10.6 Binding Effect; No Assignment.................13
10.7 Variations in Pronouns........................13
10.8 Counterparts..................................13
10.9 Headings......................................13
10.10 Severability of Provisions....................13
STOCK PURCHASE AGREEMENT
AGREEMENT, dated __________, 1996, by and between Metromedia
Company, a Delaware general partnership (the "Buyer"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇
(the "Seller").
The Seller is the record and beneficial owner of (i) 420,000
shares of common stock, par value $1.00 per share (the "Common Stock"),
of Metromedia International Group, Inc., a Delaware corporation ("MIG"),
(the "Shares"), (ii) 171,000 Warrants to purchase shares of Common Stock
with the terms and provisions set forth in Exhibit A (the "Warrants") to
the Agreement and Plan of Merger dated as of the date hereof among MIG,
Alliance Merger Corp. and Alliance Entertainment Corp. (the "Merger
Agreement") and (iii) any additional Warrants received (A) as
consideration in the Merger (as such term is defined in the Merger
Agreement) and/or (B) after the Effective Time (as such term is defined
in the Merger Agreement) upon the exercise of options to purchase shares
of Common Stock (collectively, the "Additional Warrants"). The Seller
wishes to sell the Shares, the Warrants and the Additional Warrants and
the Buyer wishes to purchase the Shares, Warrants and the Additional
Warrants upon the terms and subject to the conditions of this Agreement.
Capitalized terms used herein but not otherwise defined shall have the
meanings given them in Section 10.1 hereof.
Page 2
Accordingly, the parties agree as follows:
1. SALE AND PURCHASE OF SHARES AND WARRANTS.
1.1 SALE AND PURCHASE OF SHARES AND WARRANTS. At the
Closing (as hereinafter defined), (i) the Seller shall sell, and the
Buyer shall purchase, all of the Shares, Warrants and Additional
Warrants, if any, free of any Liens, (ii) the Seller shall deliver or
cause to be delivered to the Buyer certificates representing all of the
Shares, Warrants and Additional Warrants, if any, accompanied by stock
and warrant powers duly executed in blank, in proper form for transfer,
and with all appropriate stock transfer tax stamps affixed, and (iii) the
Buyer shall deliver the Purchase Price (as hereinafter defined) to the
Seller.
1.2 PURCHASE PRICE. The aggregate purchase price for the
Shares, Warrants and the Additional Warrants (the "Purchase Price") shall
be $7,200,000 (the "Closing Payment"). The Buyer shall pay the Closing
Payment to the Seller, against receipt of the Shares, Warrants and
Additional Warrants, if any, at the Closing, by a certified or official
bank check, or cash by wire transfer of immediately available funds.
2. CLOSING; CLOSING DATE. The closing of the purchase and
sale of the Shares and Warrants (the "Closing") shall take place as soon
as practicable following the consummation of the Merger (as such term is
defined in the
Page 3
Merger Agreement) and satisfaction or waiver of the other
conditions set forth in Article 4 hereof at the offices of ▇▇▇▇, Weiss,
Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ or at such other place and time as the parties may agree in
writing (such time and date being referred to herein as the "Closing
Date"). The Closing shall be effective as of the close of business on
that date.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller
represents and warrants to the Buyer as follows:
3.1 TITLE TO THE SHARES AND WARRANTS. As of the Closing
Date, the Seller shall own of record, free and clear of any Lien, the
Shares and Warrants, and, upon delivery of and payment for such Shares
and Warrants as herein provided, the Seller will convey to the Buyer good
and valid title thereto, free and clear of any Lien. As of the date of
transfer of the Additional Warrants, the Seller shall own of record, free
and clear of any Lien, the Additional Warrants, and upon delivery of and
payment for such Additional Warrants as herein provided, the Seller will
convey to the Buyer good and valid title thereto, free and clear of any
Lien.
3.2 AUTHORITY TO EXECUTE AND PERFORM AGREEMENT. The
Seller has the full legal right, power and all authority required to
enter into, execute and deliver this Agreement and to perform fully the
Seller's obligations
Page 4
hereunder. This Agreement has been duly executed and delivered by
the Seller and (assuming the due authorization, execution and delivery
hereof by the Buyer) is a legal, valid and binding obligation of Seller
enforceable in accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, reorganization, moratorium, or other
similar laws affecting creditors' rights and to general equity
principles (regardless of whether enforcement is sought in a proceeding
at law or in equity).
3.3 REPRESENTATIONS AND WARRANTIES ON CLOSING DATE. The
representations and warranties contained in this Article 3 shall be true
on and as of the Closing Date with the same force and effect as though
such representations and warranties had been made on and as of the
Closing Date.
4. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE BUYER TO
CLOSE. The obligation of the Buyer to enter into and complete the
Closing is subject, at the option of the Buyer, to the fulfillment on or
prior to the Closing Date of the following conditions, any one or more of
which may be waived by it:
4.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Seller contained in this Agreement shall be true on
and as of the Closing Date with the same force and effect as though made
on and as of the Closing Date.
Page 5
4.2 NO ORDERS. There shall be no Order of any nature in
effect that prevents the consummation of the transactions contemplated
hereby.
4.3 TAG-ALONG RIGHTS. All tag-along or similar rights
relating to the Shares and/or Warrants shall have been waived, expired or
lapsed, and to the knowledge of the Buyer and the Seller, no claim of
tag-along or similar rights relating to the Shares and/or Warrants shall
have been made.
4.4 MERGER. The Merger (as defined in the Merger
Agreement) shall have been consummated.
5. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE SELLER TO
CLOSE. The obligation of the Seller to enter into and complete the
Closing is subject, at the option of the Seller, to the fulfillment on or
prior to the Closing Date of the condition, which may be waived by the
Seller, that the Merger shall have been consummated.
6. COVENANTS OF THE SELLER.
6.1 IRREVOCABLE PROXY. The Seller hereby grants to the
Buyer an irrevocable proxy coupled with an interest with respect to the
Shares and agrees to execute all documents and do all things reasonably
necessary in connection therewith.
6.2 ADDITIONAL WARRANTS. Seller hereby assigns any
Additional Warrants and the right to receive any Additional Warrants to
the Buyer and agrees to (i) notify
Page 6
Buyer if he intends to exercise any options to purchase shares
of Alliance common stock or shares of Common Stock if Warrants
are to be received upon such exercise, (ii) instruct MIG and
the warrant agent for the Warrants that all Additional Warrants
shall be issued directly to the Buyer in the name of Buyer (or its
designee) and (iii) promptly execute all necessary instruments of
assignment to transfer to Buyer (or its designee) any Additional Warrants
received by Seller. Seller and Buyer agree that no additional
consideration other than the Purchase Price shall be paid by Buyer to
Seller for the Additional Warrants.
6.3 HOLDBACK AGREEMENTS. The Seller agrees, that in
connection with an underwritten registration statement by MIG of Common
Stock or any debt, equity or other security or other contractual right
convertible into or exercisable or exchangeable for, or based on the
value of, the Common Stock, or any warrants, options or other rights to
purchase the Common Stock or any of the foregoing ("Equity Securities"),
if so requested by the managing underwriter for such registration
statement, not to sell, make any short sale of, loan, grant any option
for the purchase of or effect any public sale or distribution of Equity
Securities or otherwise dispose of any Equity Securities of MIG during
the period beginning 15 days prior to the effective date of such registration
statement and ending 180 days after the effective date of such
Page 7
registration statement or such shorter period as the Buyer and its
Affiliates are subject. Seller and Buyer expressly agree and acknowledge
that MIG shall be deemed a third party beneficiary of this provision.
7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE SELLER
AFTER CLOSING. Notwithstanding any right of the Buyer to investigate and
notwithstanding any knowledge of facts determined or determinable by the
Buyer pursuant to such investigation or right of investigation, the Buyer
has the right to rely fully upon the representations and warranties of
the Seller contained in this Agreement. The indemnification obligations
set forth in Section 8.1, and the rights and remedies at law or equity of
the Buyer shall not be diminished or otherwise affected by the knowledge
of the Buyer at any time of any facts relating to the matters represented
or warranted by the Seller in this Agreement. Notwithstanding any waiver
by the Buyer of any condition precedent to its obligation to close, all
representations and warranties shall survive the execution and delivery
of this Agreement and the Closing hereunder.
8. GENERAL INDEMNIFICATION.
8.1 OBLIGATION OF THE SELLER TO INDEMNIFY. The Seller
(the "Indemnifying Party") agrees to indemnify, defend and hold harmless
the Buyer (and its partners, officers, employees, Affiliates, successors
and assigns) (collectively, the "Indemnitees") from and against all
Page 8
losses, liabilities, damages, deficiencies, demands, claims, actions,
judgments or causes of action, assessments, costs or expenses (including,
without limitation, interest, penalties and reasonable attorneys' fees,
disbursements and other charges incurred by any Indemnitee in any action
or proceeding between the Indemnifying Party and an Indemnitee or between
an Indemnitee and any third party or otherwise) ("Losses") based upon,
arising out of, or otherwise in respect of (i) any inaccuracy in or any
breach of any representation or warranty contained in Article 3 or any
(ii) claim, action or proceeding brought by any person claiming any tag-
along or similar rights relating to the Shares, Warrants, and/or
Additional Warrants. The Indemnifying Party shall promptly reimburse any
Indemnitee for any such costs and expenses incurred by the Indemnitee
from time to time upon the written request of the Indemnitee.
8.2 NOTICE AND OPPORTUNITY TO DEFEND.
(a) Promptly after receipt by an Indemnitee of
notice of any demand, claim or circumstances which, with the lapse of
time, would or might give rise to a claim or the commencement (or
threatened commencement) of any action, proceeding or investigation (an
"Asserted Liability") that may result in any Loss, the Indemnitee shall
give notice thereof (the "Claims Notice") to the Indemnifying Party. The
Claims Notice shall describe the Asserted Liability in reasonable detail,
and shall indicate
Page 9
the amount (estimated, if necessary and to the extent feasible) of
the Loss that has been or may be suffered by the Indemnitee.
(b) Any Indemnitee may elect to compromise or
defend, at the expense of the Indemnifying Party, any Asserted Liability.
If an Indemnitee elects to compromise or defend such Asserted Liability,
it shall within 30 days (or sooner, if the nature of the Asserted
Liability so requires) notify the Indemnifying Party of its intent to do
so, and the Indemnifying Party shall cooperate, at the expense of the
Indemnifying Party, in the compromise of, or defense against, such
Asserted Liability. Notwithstanding the foregoing, neither the
Indemnifying Party nor the Indemnitee may settle or compromise any claim
over the objection of the other; PROVIDED, HOWEVER, that consent to
settlement or compromise shall not be unreasonably withheld. In any
event, the Indemnifying Party may participate, at its own expense, in the
defense of such Asserted Liability. Each of the Indemnitee and the
Indemnifying Party shall make available to the other party any books,
records or other documents within its control that are necessary or
appropriate for any defense of an Asserted Liability by the other party.
9. TERMINATION OF AGREEMENT.
This Agreement shall terminate prior to the Closing as
follows:
Page 10
(i) upon the termination of the Merger Agreement;
or
(ii) at any time on or prior to the Closing Date, by
mutual written consent of the Seller and the Buyer.
If this Agreement so terminates, it shall become null and void
and have no further force or effect, PROVIDED, HOWEVER, that each party
shall be liable in respect of a termination of this Agreement pursuant to
this Section to the extent that failure to satisfy the conditions of
Article 4 or Article 5, as the case may be, results from the intentional
or willful violation of, or willful misstatement contained in, the
representations or warranties of such party contained in this Agreement.
10. MISCELLANEOUS.
10.1 CERTAIN DEFINITIONS. (a) As used in this Agreement,
the following terms have the following meanings:
(i) "AFFILIATE" means, with respect to any Person,
any other Person controlling, controlled by or under common control with,
or the parents, spouse, lineal descendants or beneficiaries of, such
Person.
(ii) "LIEN" means any lien, pledge, mortgage,
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude, transfer restriction under any shareholder or similar
agreement,
Page 11
encumbrance or any other restriction or limitation
whatsoever.
(iii) "ORDER" means any order, judgment, injunction,
award, decision, determination, decree or writ.
(iv) "PERSON" means any individual, corporation,
partnership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, Governmental Body or other entity.
10.2 NOTICES. Any notice or other communication required
or permitted hereunder shall be in writing and shall be delivered
personally, telegraphed, telexed, sent by facsimile transmission or sent
by certified, registered or express mail, postage prepaid. Any such
notice shall be deemed given when so delivered personally, telegraphed,
telexed or sent by facsimile transmission or, if mailed, five days after
the date of deposit in the United States mails, as follows:
(i) if to the Buyer, to:
Metromedia Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇
1285 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Page 12
(ii) if to the Seller, to:
▇▇▇▇ ▇. ▇▇▇▇▇▇
[Address]
[Address]
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may by notice given in accordance with this Section to the
other parties designate another address or Person for receipt of notices
hereunder.
10.3 ENTIRE AGREEMENT. This Agreement contains the entire
agreement among the parties with respect to the purchase of the Shares
and Warrants and supersede all prior agreements, written or oral, with
respect thereto.
10.4 WAIVERS AND AMENDMENTS. This Agreement may be
amended, superseded, canceled, renewed or extended, and the terms hereof
may be waived, only by a written instrument signed by the Buyer and the
Seller or, in the case of a waiver, by the party waiving compliance. No
delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of any party of any such right, power or privilege,
nor any single or partial exercise of any such right, power or privilege,
preclude any further exercise thereof or the exercise of any other such
right, power or privilege.
Page 13
10.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
10.6 BINDING EFFECT; NO ASSIGNMENT. This Agreement shall
be binding upon and inure to the benefit of the parties and their
respective successors and legal representatives. This Agreement is not
assignable, except that the Buyer may assign its rights hereunder to any
of its Affiliates.
10.7 VARIATIONS IN PRONOUNS. All pronouns and any
variations thereof refer to the masculine, feminine or neuter, singular
or plural, as the context may require.
10.8 COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument. Each counterpart may
consist of a number of copies hereof each signed by less than all, but
together signed by all of the parties hereto.
10.9 HEADINGS. The headings in this Agreement are for
reference only, and shall not affect the interpretation of this
Agreement.
10.10 SEVERABILITY OF PROVISIONS. If any provision or any
portion of any provision of this Agreement, or the application of any
such provision or any portion thereof to any Person or circumstance,
shall be held invalid
Page 14
or unenforceable, the remaining portion of such provision and the
remaining provisions of this Agreement, and the application of
such provision or portion of such provision as is held
invalid or unenforceable to Persons or circumstances other than those as
to which it is held invalid or unenforceable, shall not be affected
thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date first above written.
METROMEDIA COMPANY
By____________________________
Name:
Title:
______________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
Exhibit E
Opinion of Counsel to Alliance
Opinion of Counsel of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Counsel to Alliance, shall
cover the following matters, subject to customary exceptions and
limitations:
1. Alliance is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
2. Alliance has all necessary corporate power and authority
to execute, deliver and perform its obligations under the Merger
Agreement and the execution, delivery and performance (including
consummation of the Merger) by Alliance of the Merger Agreement have been
duly authorized by all necessary action on the part of the Board of
Directors and stockholders of Alliance. The Merger Agreement has been
duly executed and delivered by Alliance and constitutes the legal, valid
and binding obligation of Alliance, enforceable against Alliance in
accordance with its terms.{1}
3. The execution, delivery and performance by Alliance of the
Merger Agreement does not violate or result in a breach of or default
under (i) any provision of its certificate of incorporation or by-laws or
any law or regulation of the State of New York or the United States or
any provision of the General Corporation Law of the State of Delaware,
(ii) any order, writ, injunction or decree of which we have knowledge
(without independent investigation) of any court or governmental
authority binding upon Alliance or to which Alliance is subject, or
(iii) to our knowledge, any provision of any credit agreement, indenture
or similar agreement to which Alliance is a party or to which Alliance is
bound.
4. Upon the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware in accordance with
Section 1.3 of the Merger Agreement, the Merger will be effective in
accordance with the terms of the Certificate of Merger.
**FOOTNOTES**
{1/}Enforceability opinion may be covered by opinion delivered by
Delaware Counsel.
Exhibit F
Opinion of Counsel to MIG
Opinion of Counsel of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Counsel
to MIG, shall cover the following matters, subject to customary
exceptions and limitations:
1. MIG is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
2. MIG has all necessary corporate power and authority to
execute, deliver and perform its obligations under the Merger Agreement
and the execution, delivery and performance (including consummation of
the Merger) by MIG of the Merger Agreement have been duly authorized by
all necessary action on the part of the Board of Directors and
stockholders of MIG. The Merger Agreement has been duly executed and
delivered by MIG and constitutes the legal, valid and binding obligation
of MIG, enforceable against MIG in accordance with its terms.{1}
3. The execution, delivery and performance by MIG of the
Merger Agreement does not violate or result in a breach of or default
under (i) any provision of its certificate of incorporation or by-laws or
any law or regulation of the State of New York or the United States or
any provision of the General Corporation Law of the State of Delaware,
(ii) any order, writ, injunction or decree of which we have knowledge
(without independent investigation) of any court or governmental
authority binding upon MIG or to which MIG is subject, or (iii) to our
knowledge, any provision of any credit agreement, indenture or similar
agreement to which MIG is a party or to which MIG is bound.
4. Upon the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware in accordance with
Section 1.3 of the Merger Agreement, the Merger will be effective in
accordance with the terms of the Certificate of Merger.
5. The shares of Common Stock when issued by MIG pursuant to
the terms of the Merger Agreement will constitute validly issued, fully
paid and non-assessable shares of stock of MIG.
**FOOTNOTES**
{1/}Enforceability opinion may be covered by opinion delivered by
Delaware Counsel.
