Modification Agreement ("Plicom Option Modification Agreement") dated
as of May 18, 1999 by and among PLD Telekom, Inc., a Delaware corporation (the
"Company"), Metromedia International Group, Inc., a Delaware corporation (the
"Parent"), Technocom Limited, a company incorporated under the Irish Companies
Acts 1963 to 1990 with registered number 183622 ("Technocom"), Plicom Limited, a
company incorporated under the Irish Companies Acts 1963 to 1990 with registered
number 214427 ("Plicom"), Elite International Limited, a company incorporated
under the Irish Companies Act of 1963 to 1990 with registered number 178152
("Elite"), ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as the
date hereof (the "Merger Agreement"), by and among the Company, the Parent and
Moscow Communications, Inc., a Delaware corporation and wholly owned subsidiary
of the Parent ("Merger Sub"), Merger Sub will merge with and into the Company
(the "Merger"), and following such Merger, the Company will become a
wholly-owned subsidiary of the Parent;
WHEREAS, the parties hereto desire to modify and then terminate (i) the
Put and Call Option Agreement, dated December 28, 1994, as amended, between the
Company and Plicom (the "Put Agreement"), (ii) the Share Purchase Agreement,
dated as of November 26, 1997, between Plicom, Technocom, the Company and ▇▇▇▇
▇▇▇▇▇▇, (iii) the Consultancy Agreement, dated December 28, 1994, as amended,
between Technocom, Plicom and ▇▇▇▇ ▇▇▇▇▇▇, (iv) the Promissory Note, dated
November 26, 1997, executed by the Company in favor of Plicom (the "Note"), (v)
the Promissory Note, dated the date hereof, executed by the Company in favor of
Plicom (the "New Note"), (vi) the Subscription and Shareholders Agreement, dated
December 28, 1994, as amended, between the Company, Plicom, Elite, Technocom,
▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Shareholders Agreement"), and (vii) the
Consultancy Agreement, dated December 28, 1994, between the Company, Plicom and
▇▇▇▇ ▇▇▇▇▇▇ (collectively, the "Agreements");
WHEREAS, in connection with and as a condition precedent to the
obligations of the Parent and the Merger Sub to effect the Merger and consummate
the other transactions contemplated by the Merger Agreement, the parties are
entering into this Plicom Option Modification Agreement in order to modify and
then terminate the Agreements; and
WHEREAS, capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement.
NOW THEREFORE, the parties hereto hereby agree as follows:
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1. Purchase and Sale. Notwithstanding anything to the contrary
contained in any of the Agreements, on the Closing Date (as defined in the
Merger Agreement), in reliance on the representations and warranties and subject
to the terms and conditions set forth herein:
(a) the Company shall, and the Parent shall procure that the
Company shall, pay to Plicom the sum of US $8,750,000 by wire transfer to an
account designated in advance by Plicom and Plicom shall, with the prior consent
of the Company pursuant to clause 7.2(a) of the Shareholders Agreement, which
consent is hereby given, sell, transfer and assign to the Company its remaining
29 Ordinary Shares of Technocom (the "Shares") free and clear of all security
interests, pledges, rights of first refusal, agreements, claims, charges, liens,
encumbrances, options or rights of pre-emption ("Liens");
(b) The Company and Technocom shall, and the Parent shall
procure that the Company shall, pay or procure payment of the following sums due
as at June 30, 1999 to Plicom for itself and/or as trustee for ▇▇▇▇ ▇▇▇▇▇▇ to
the extent not already paid:
(i) US $50,000.00 (representing US $25,000.00 x
2 for the first two quarters of 1999),
together with an additional US $25,000 for
each quarter (or part thereof) commencing on
July 1, 1999 until and including the Closing
Date in respect of the PLD consultancy
agreement;
(ii) US $49,999.98 (representing US $16,666.66 x
3 for April, May and June 1999), together
with an additional US $16,666.66 for each
month (or part thereof) commencing with July
1999 and ending with the month in which the
Closing takes place in respect of the
Technocom consultancy agreement;
(iii) US $35,196.12 (representing US $10,500.00 x
3 for the last quarter of 1998 and the first
two quarters of 1999 plus US $3,696.12 as
expenses), together with an additional US
$10,500 for each quarter (or part thereof)
commencing on July 1, 1999 until and
including the Closing Date in respect of
office expenses;
(iv) US $360,000.00 in respect of the repayment
of a loan to cover a settlement between
Vimpelkom and MTR, subject to receipt by the
Parent of a copy of a satisfactory complete
release from Vimpelkom; and
(v) any sums paid by Plicom under the guarantees
or undertakings referred to in Section 1(c)
below.
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(c) At the Closing, the Parent and the Company shall procure
that Plicom is released from any guarantees or undertakings that Plicom has
issued or entered into at the request, or with the written consent, of the
Parent, the Company or any of the Company's subsidiaries or affiliates in
respect of equipment ordered by any such subsidiaries or affiliates from Rosh
Telecom Limited or ECI Telecom Limited, and the Parent or the Company shall
issue or arrange to be issued such guarantees or other credit support as may be
required to replace any such Plicom guarantees or undertakings. Furthermore, the
Parent or the Company shall reimburse Plicom for any amounts paid under any such
guarantees or undertakings prior to the Closing.
(d) Plicom shall deliver to the Company a transfer in respect
of the Shares duly executed by it in favor of the Company and a certificate for
the Shares and any other documents which may be required to give good title to
the Shares and to enable the Company to procure registration of the same in its
name or as it may direct; and
(e) All of the Agreements shall terminate, be void and of no
further force and effect.
2. Registration. The Company shall, following the Closing Date,
promptly deliver to the Revenue Commissioners of Ireland the share transfer
referred to in Section 1(d) above for assessment of stamp duty and shall
promptly pay the duty thus assessed. Prior to the registration of such duly
stamped stock transfer form in the register of shareholders of Technocom, Plicom
shall, in respect of the Shares, cooperate in any manner required by the Company
for the convening, holding at short notice and conduct of general meetings of
Technocom, execute on a timely basis all proxy forms, appointments of
representatives, documents of consent to short notice and such others that the
Company may reasonably require and shall generally act in all respects as the
nominee and at the direction of the Company in respect of the Shares and all
rights and interests attached thereto.
3. Representations and Warranties. In order to induce the Company to
purchase the Shares, Plicom hereby represents and warrants to the Company as
follows:
(a) Organization. Plicom is a corporation duly organized,
validly existing and in good standing under the laws of Ireland.
(b) Due Authorization and Execution. Plicom has all necessary
corporate power and authority to enter into this agreement and to consummate the
transactions contemplated herein. No additional corporate proceeding or action
on the part of Plicom is necessary to authorize and approve the execution and
delivery of this agreement or the performance by Plicom of its obligations under
this agreement other than actions already taken. This agreement has been duly
executed and delivered by Plicom and, assuming due execution and delivery by the
Company, constitutes the legal, valid and binding obligation of Plicom
enforceable against Plicom in accordance with its terms.
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(c) Conflicts. Neither the execution and delivery of, nor the
consummation of the transactions contemplated in, this agreement will result in
any of the following: (a) a violation of the charter, bylaws or other governing
instruments of Plicom; (b) a default or an event that, with notice or lapse of
time, or both, would constitute a default, breach or violation of any contract,
agreement, license or instrument to which Plicom is a party or by which it is
bound; (c) an event that would permit any person or entity to terminate any
contract, agreement, license or instrument to which Plicom is a party relating
to the Shares or to accelerate the maturity of any obligation of Plicom; (d) the
creation or imposition of any Lien (as defined below) upon the Shares of Plicom;
(e) a violation or breach of any statute, ordinance, rule or regulation
applicable to Plicom or the Company or any writ, injunction or decree of any
court or governmental instrumentality to which Plicom or the Company is a party
or by which any of its properties is bound; or (f) the necessity to obtain the
consent or approval of, or give notice to or register with any government or
nongovernment third party.
(d) Ownership. Except for the Shares, Plicom does not own or
have any right to acquire any Ordinary Shares of Technocom or any other shares
of capital stock or equity of Technocom.
(e) No Liens. Each of the Shares to be delivered by Plicom to
the Company pursuant to this agreement is duly authorized, validly issued, fully
paid and not subject to preemptive rights and each such share is owned by Plicom
free and clear of all Liens except for those rights held by the Company under
any of the Agreements.
(f) Good Title. The transfer of the Shares from Plicom to the
Company pursuant to Section 1(a) of this Agreement will convey good and valid
title to the Company in and to the Shares, free and clear of all Liens, except
for those rights held by the Company under any of the Agreements.
4. Revenue Matters. Plicom hereby declares for purposes of the
Financial Transfers Act of 1992 of the Republic of Ireland that it is not
resident in any jurisdiction to which financial transfers within the meaning of
such Act are restricted by order of the Minister of Finance in accordance with
the provisions of that Act and does not hold the Shares and will not receive any
part of the consideration hereunder as nominee for any persons that so reside,
and the Company declares for the purpose of such Act that it is not so resident,
it is not acquiring the Shares as nominee for any persons so resident and it is
not to its knowledge controlled directly or indirectly with a person so
resident.
5. Covenants.
(a) Plicom hereby covenants with and undertakes to the Company
that it shall not at any time prior to the Closing Date dispose or attempt to
dispose, transfer or assign any interest in the Shares or grant any option over
or mortgage, charge or otherwise encumber or dispose of the Shares; provided,
that, Plicom may transfer the Shares to any entity owned and controlled by
either Plicom or ▇▇▇▇ ▇▇▇▇▇▇ (which does not need to be an Irish Company) as
long as prior to such transfer such entity agrees to be bound by the terms and
provisions of this
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agreement and enters into an assumption agreement with Parent in a form
reasonably satisfactory to Parent evidencing such agreement to be so bound. The
parties agree that if Plicom transfers the Shares as aforesaid, such transferee
shall be deemed to have assumed all rights and obligations under the Agreements.
From the date hereof until the earlier of (x) the Closing Date or (y) the
termination of this agreement pursuant to Section 6, Plicom agrees that it will
not take any action under either the Put Agreement, the Note or the New Note to
require either the Parent or the Company to purchase the Shares or make any
other payments on the Note or the New Note.
(b) Plicom hereby covenants with and undertakes to the Company
that it will as soon as reasonably practicable notify to the Company in writing
any matter or thing which may arise or become known to it after the date hereof
and prior to the Closing Date which constitutes (or would with the passage of
time constitute) a breach of the representations and warranties or breach of any
of the covenants or undertakings or obligations of Plicom under this agreement.
(c) Plicom hereby undertakes with the Company at the request
and at the expense of the Company to do or to procure to be done all such
further acts of things and execute or procure to be executed all such further
deeds and documents as may be necessary or desirable on or after the Closing
Date to (i) fully and effectively vest in the Company the legal and beneficial
ownership of the Shares and the benefits of this Agreement and pending such
vesting, Plicom shall, from the Closing Date, hold such Shares and benefits in
trust for the Company and shall receive all monies in connection therewith as
trustee of the Company and shall account to the Company forthwith upon receipt
thereof and (ii) acknowledge that the Agreements have been terminated.
6. Termination.
(a) This agreement shall be effective so long as the Merger
Agreement is effective and shall terminate in the event that the Merger
Agreement is terminated or expires. The obligations of the parties hereto under
Sections 1 and 2 of this agreement are expressly conditioned upon the completion
of the transactions contemplated by the Merger Agreement. This Agreement shall
in any event terminate at the option of Plicom if the transactions contemplated
under Sections 1 and 2 have not taken place by October 31, 1999.
(b) If any material breach of the representations, warranties
or covenants contained herein shall come to the attention of either the Company
or Plicom before the Closing Date or if any act or event shall occur which, had
it occurred on or before the date hereof, would have constituted a material
breach of the representations, warranties or covenants set forth herein, then
the Company shall at its own election terminate this agreement and its
obligations to purchase the Shares without any liability to Elite.
7. Consent. Each of Plicom, Elite, Technocom, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇▇ hereby consent, pursuant to the Shareholders Agreement, to (i) the
pledge, pursuant to the Pledge Agreement dated as of the date hereof (the
"Pledge Agreement"), made by the Company in favor of the Parent, by the Company
of 115
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Ordinary Shares of Technocom to the Parent to secure certain loans being made by
the Parent to the Company pursuant to a Bridge Loan Agreement dated the date
hereof, (ii) the transfer of such 115 Ordinary Shares to the Parent in the event
the Parent forecloses on such shares in accordance with the terms of the Pledge
Agreement and (iii) hold a meeting of shareholders of Technocom and vote to
amend Technocom's Articles of Association as promptly as practicable to permit
the pledge of shares of Technocom and the transfer of such shares as
contemplated by the Pledge Agreement. The Parent acknowledges and agrees that
prior to the occurrence of an Event of Default (as defined in the Bridge Loan
Agreement, dated as of the date hereof between the Company and Parent) it shall
have no rights to control the management and operations of Technocom by virtue
of the Pledge Agreement. Parent further agrees that, in the event it forecloses
on the shares of Technocom and takes possession of such shares (i) neither
Parent nor any of Parent's subsidiaries or affiliates will enter into any
transaction with Technocom (including, without limitation, the issuance or
subscription for additional shares of Technocom) that is not consummated on an
arm's length basis, (ii) Parent will not cause Technocom to cease or propose to
cease to carry on its business or be wound up unless Technocom is insolvent, and
(iii) to use its best commercial efforts to ensure that any assignee or
transferee of the Technocom shares foreclosed upon by Parent is bound by the
restrictions set forth in clauses (i) and (ii) of this sentence.
8. Survival; Indemnification.
(a) The representations, warranties and covenants set forth in
this Plicom Option Modification Agreement shall survive the consummation of the
purchase of the Shares hereunder. Plicom hereby indemnifies and holds harmless
the Parent and the Company and their respective affiliates from any claims,
losses, damages, costs, expenses (including attorney's fees and expenses)
arising in connection with the transfer by Plicom of the Shares pursuant to this
agreement that they suffer or incur as a result of any breach or default of any
representation, warranty or covenant set forth herein.
(b) The total aggregate liability of Plicom and ▇▇▇▇ ▇▇▇▇▇▇ to
all other parties hereto arising out of or in connection with this agreement
shall be limited to the amount of consideration received by Plicom from the
Company pursuant to Section 1(a).
9. Expenses. Each of the parties hereto shall pay its own fees,
expenses and other costs incurred in connection with the negotiation, execution
and delivery of this Agreement.
10. Governing Law. This agreement shall be governed in all respects by
the laws of the State of New York without reference to the choice of laws
principles thereof.
11. Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
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12. No Amendment. No amendment, modification, termination or waiver or
any provision of this agreement shall be effective unless it shall be in writing
and signed by each of the parties to this agreement.
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IN WITNESS WHEREOF, this Plicom Option Modification Agreement has been
duly executed and delivered by the parties hereto as of the date first written
above.
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
PLD TELEKOM INC.
By: /s/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇.▇. ▇▇▇▇
Title: Chairman, President and Chief
Executive Officer
PLICOM LIMITED
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Director
TECHNOCOM LIMITED
By: /s/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇.▇. ▇▇▇▇
Title: Director
/s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------
▇▇▇▇ ▇▇▇▇▇▇
ELITE INTERNATIONAL LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
