AGREEMENT AND PLAN OF MERGER
BY AND AMONG
METROMEDIA INTERNATIONAL GROUP, INC.,
SGC MERGER CORP.,
AND
THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ COMPANY
DATED AS OF JANUARY 31, 1996
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
AND OPTIONS; EXCHANGE OF CERTIFICATE.................3
Section 2.1 Effect on Capital Stock of the
Company and Options..........................3
(a) Conversion of Shares of Company
Common Stock.............................3
(b) Effect on Company Options................4
(c) Treasury Shares..........................4
(d) Mergerco Common Stock....................4
Section 2.2 Exchange of Certificates.....................4
(a) Exchange Agent...........................4
(b) Exchange Procedures......................5
(c) Distributions with Respect to
Unexchanged Shares.......................6
(d) Further Ownership Rights.................6
(e) No Fractional Shares.....................7
(f) Termination of Exchange Fund.............8
(g) Withholding Rights.......................8
(h) No Liability.............................8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY........8
Section 3.1 Representations and Warranties of the
Company......................................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...................21
(s) Investment Company Act..................22
(t) Brokers or Finders......................22
(u) Vote Required...........................22
Section 3.2 Representations and Warranties
of Metromedia...............................22
(a) Organization, Standing and
Corporate Power; Subsidiaries...........23
(b) Certificate of Incorporation
and By-laws.............................23
(c) Capitalization..........................24
(d) SEC Documents; Financial Statements.....25
(e) Authority...............................25
(f) Compliance with Applicable Laws.........26
(g) Government Approvals; Required
Consents................................26
(h) Non-Contravention.......................27
(i) Litigation..............................28
(j) Taxes and Related Tax Matters...........28
(k) Certain Agreements......................29
(l) Employee Benefits.......................30
(m) Contracts...............................31
(n) Environmental Matters...................31
(o) Absence of Certain Changes or Events....32
(p) Information Supplied....................33
(q) Real Estate.............................33
(r) Intellectual Property...................34
(s) Investment Company Act..................35
(t) Brokers or Finders......................35
ARTICLE 4 COVENANTS...........................................35
Section 4.1 Mutual Covenants of Metromedia and the
Company.....................................35
(a) Confidentiality.........................35
(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........37
(g) Compliance with Laws....................38
Section 4.2 Covenants of the Company.....................39
(a) Access to Information...................39
(b) Ordinary Course.........................39
(c) Meetings; Fiduciary Duties..............41
(d) No Solicitation.........................42
(e) Affiliates..............................43
(f) Tax Returns.............................43
Section 4.3 Covenants of Metromedia......................43
(a) Access to Information...................44
(b) Listing.................................44
(c) Meeting.................................44
(d) S-3; S-8................................44
(e) Directors' & Officers'
Indemnification and Insurance...........44
(f) Tax Returns.............................46
(g) Interim Financing.......................46
(h) Production and Development..............46
ARTICLE 5 CONDITIONS PRECEDENT................................47
Section 5.1 Conditions to the Obligations of
Metromedia and the Company to Effect
the Merger..................................47
(a) Stockholder Approval....................47
(b) Registration Statement..................47
(c) Blue Sky Laws...........................47
(d) Listing.................................47
(e) No Injunctions or Restraints............47
(f) HSR Act.................................48
(g) Governmental and Regulatory Consents....48
(h) The Company Required Consents...........48
(i) Metromedia Required Consents............48
(j) Employment Agreement....................48
(k) Credit Agreement........................48
(l) Interim Financing.......................49
Section 5.2 Conditions to the Obligations of
Metromedia..................................49
(a) Accuracy of Representations and
Warranties..............................49
(b) Performance of Agreements...............49
(c) No Material Adverse Change..............49
(d) Opinions of Counsel.....................49
(e) Fairness Opinions.......................49
(f) Affiliate Letters.......................50
(g) Distribution Agreement..................50
(h) Trademark License.......................50
(i) Option Agreement........................50
(j) Certain Agreement.......................50
(k) Certain Assets..........................50
Section 5.3 Conditions to the Obligations of the
Company.....................................50
(a) Accuracy of Representations and
Warranties..............................51
(b) Performance of Agreements...............51
(c) Fairness Opinion........................51
(d) No Material Adverse Change..............51
(e) Legal Opinions..........................51
(f) Forms S-3 and S-8.......................52
ARTICLE 6 TERMINATION AND AMENDMENT...........................52
Section 6.1 Termination.................................52
Section 6.2 Effect of Termination.......................53
ARTICLE 7 GENERAL PROVISIONS..................................53
Section 7.1 Certain Definitions.........................53
Section 7.2 Notices.....................................55
Section 7.3 Interpretation..............................56
Section 7.4 Waivers and Amendments......................56
Section 7.5 Expenses and Other Payments.................56
Section 7.6 Assignment..................................58
Section 7.7 Entire Agreement; No Third Party
Beneficiaries...............................58
Section 7.8 Representations and Warranties..............58
Section 7.9 Governing Law...............................58
Section 7.10 Counterparts................................58
EXHIBITS
Exhibit A -- Voting Agreement
Exhibit B -- [Intentionally Omitted]
Exhibit C -- [Intentionally Omitted]
Exhibit D -- Form of Opinion of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
Exhibit E -- Distribution Agreement
Exhibit F -- Trademark License Agreement
Exhibit G -- Option Agreement
Exhibit H -- Form of Opinion of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 31, 1996,
between METROMEDIA INTERNATIONAL GROUP, INC., a Delaware corporation
("Metromedia"), SGC MERGER CORP., a Delaware corporation and a wholly-
owned subsidiary of Metromedia ("SGC Mergerco"), and THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
COMPANY, a Delaware corporation ("the Company").
WHEREAS, upon the terms and subject to the conditions of this
Agreement, the Company has agreed that at the Effective Time (as
hereinafter defined) SGC Mergerco will merge with and into the Company
(the "Merger") and the stockholders of the Company will receive shares of
Metromedia in the manner provided in Section 2; and
WHEREAS, Metromedia and the Company 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"), SGC Mergerco shall be
merged with and into the Company at the Effective Time. Upon and after
the Effective Time, the separate corporate existence of SGC Mergerco
shall cease and the Company 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
SGC Mergerco and the Company shall vest in the Surviving Corporation and
all of the debts, liabilities, obligations and duties of SGC Mergerco
and the Company 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 ▇▇▇▇, Weiss, Rifkind,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ at 10:00 a.m. on a Business Day (as hereinafter
defined) mutually agreed to by
Page 2
Metromedia and the Company 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 the
Company 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 the Company may agree), SGC Mergerco and the
Company 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 SGC 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 SGC Mergerco shall be amended and
restated in its entirety as follows: "1. The name of the Corporation is
"GOLDWYN ENTERTAINMENT COMPANY (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 SGC 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 SGC 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 of the Surviving Corporation at the
Effective Time shall consist of the individuals designated at the
Effective Time by Metromedia and the Company and they shall hold office
until their respective successors are duly elected or appointed and
qualified or until the their earlier death, resignation or
Page 3
removal in accordance with the Certificate of Incorporation and By-laws
of the Surviving Corporation.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK
AND OPTIONS; EXCHANGE OF CERTIFICATE
Section 2.1 EFFECT ON CAPITAL STOCK OF THE COMPANY AND
OPTIONS. 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 COMPANY COMMON STOCK. Each
issued and outstanding share of Common Stock, par value $.20 per share,
of the Company (the "Company Common Stock") shall be converted into the
right to receive the Merger Consideration (as defined herein). At the
Effective Time, all such shares of Company 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 Company 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 Company Common Stock, a
number of fully paid and nonassessable shares of Common Stock, par value
$1.00 per share, of Metromedia (the "Metromedia Common Stock") equal to a
fraction (rounded to the fourth decimal point) (the "Exchange Ratio"),
the numerator of which is 5 and the denominator of which is 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 date (the "Determination Date") which is five business
days prior to the Metromedia Stockholders' Meeting (as defined in Section
4.3(c) hereof) including both the day of the Metromedia Stockholders'
Meeting and the day of the Determination Date in such determination (the
"Average Closing Price"); PROVIDED, THAT, if the Average Closing Price is
below $12.50 it shall be deemed to be $12.50 and if the Average Closing
Price is greater than $16.50, it shall be deemed to be $16.50.
Notwithstanding the foregoing, if between the date of this Agreement and
the Effective Time the outstanding shares of Metromedia Common Stock or
Company Common Stock shall have been changed into a different number of
shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the Exchange Ratio shall be correspondingly adjusted
to reflect such stock dividend,
Page 4
subdivision, reclassification, recapitalization, split, combination or
exchange of shares.
(b) EFFECT ON COMPANY OPTIONS. At the Effective Time,
each holder of an issued and outstanding option exercisable for shares of
Company Common Stock ("Company Options") will receive, by virtue of the
Merger and without any action on the part of the holder thereof, options
exercisable for shares of Metromedia Common Stock with the same terms and
conditions as Company Options 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) all Company Options will become immediately exercisable in
accordance with their terms.
(c) TREASURY SHARES. Each share of Company Common Stock
held in treasury by the Company 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 SGC Mergerco shall be converted into one fully paid and non-
assessable share of Common Stock, par value $.20 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 Company Common Stock, for exchange in
accordance with this Article 2, through the Exchange Agent, certificates
representing 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 Company 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, are hereinafter referred to as the
"Exchange Fund" and such shares of Metromedia Common Stock, 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.
Page 5
(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 the Company Common Stock (collectively, the
"Certificates") whose shares were converted into the right to receive the
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 the Company or its transfer agent of Certificates and if such
Certificates are presented to the Company 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 the Company 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 the Company 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 sur-
Page 6
render 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 issued in exchange therefor, as well as, (x) at the time of
such surrender (or as soon thereafter as the cash from the sale of
Company 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 Company 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.
Page 7
(e) NO FRACTIONAL SHARES.
(i) No certificates or scrip evidencing fractional
shares of Metromedia Common Stock 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.
(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 in the Exchange Fund
over (y) the aggregate number of full shares of Metromedia Common Stock
to be distributed to holders of the Company Common Stock pursuant to
Section 2.2(a)(such excess being herein called the "Company Excess
Securities"). As soon after the Effective Time as practicable, the
Exchange Agent, as agent for the holders of Metromedia Common Stock,
shall sell the Company Excess Shares at then prevailing prices in the
manner provided in paragraph (iii) of this Section.
(iii) The sale of the Company Excess Securities by the
Exchange Agent shall be executed on the principal national securities
exchange on which the shares of Metromedia Common Stock 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 the
Company, the Exchange Agent will hold such proceeds in trust for the
former stockholders of the Company (the "Company 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 Company Excess
Securities out of the Company Securities Trust. The Exchange Agent shall
determine the portion of the Company Securities Trust to which each
former stockholder of the Company shall be entitled, if any, by
multiplying the amount of the aggregate net proceeds comprising the
Company Securities Trust by a fraction, the numerator of which is the
amount of the fractional share interest to which such former stockholder
of the Company 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 the
Company in lieu of any fractional
Page 8
interests, the Exchange Agent shall make available such amounts to such
former stockholders of the Company.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the
Exchange Fund and the Company Securities Trust, which remains
undistributed to the former stockholders of the Company for six months
after the Effective Time shall be delivered to Metromedia, upon demand,
and any former stockholders of the Company 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 Company Common Stock.
(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 Company
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 Company 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, the Company, SGC
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 THE COMPANY
Section 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Metromedia as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER;
SUBSIDIARIES. Each of the Company 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
Page 9
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 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 the
Company. Except as set forth in Section 3.1(a) of the disclosure
schedule delivered to Metromedia by the Company on or prior to the date
hereof (the "Company Disclosure Schedule"), the Company SEC Documents (as
hereinafter defined) set forth a true and complete list of all of
Company'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 the Company and/or
another Subsidiary of the Company, 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 the Company are duly
authorized, validly issued, fully paid and nonassessable and, except as
set forth in Section 3.1(a) of the Company Disclosure Schedule, are owned
(of record and beneficially) by the Company and/or by another Subsidiary
of the Company, 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 Company Disclosure Schedule, the
Company does not directly or indirectly own any material equity interest
in any Person.
(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 the
Company 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 the
Company and each of its Significant Subsidiaries are in full force and
effect. Neither the Company 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 January 15, 1996, the
authorized capital stock of the Company consists of: (i) 15,000,000
shares of Company Common Stock of which, (A) 8,489,226 shares are issued
and outstanding, all of which are duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights, (B) 43,448
shares are held in the treasury of the Company, (C) 1,590,667 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 the Company's stock option plans in Section 3.1(c)
of the Company Disclosure Schedule and (ii) 3,000,000 shares of Preferred
Stock, par value $.20 per share (the "Company 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 Company Disclosure Schedule, no shares
of the capital stock or other equity securities of the Company 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 the Company or any of its Subsidiaries is a party
relating to the issued or unissued capital stock or other equity
securities or ownership interests of the Company or any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to
grant, issue or sell any shares of capital stock or other equity
securities or ownership interests of the Company or any of its
Subsidiaries, by sale, lease, license or otherwise. The Company 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 the
Company on any matter. Other than as contemplated by this Agreement or
as set forth in Section 3.1(c) of the Company Disclosure Schedule, there
are no outstanding contractual obligations, commitments, understandings
or arrangements of the Company 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 the
Company or any of its Subsidiaries. Since January 15, 1996, the Company
has not (i) issued any shares of its capital stock (except pursuant to
the exercise of then outstanding options 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. The Company has
made available to Metromedia a true and complete copy of each form,
report, schedule, registration statement and definitive proxy statement
filed by the Company with the SEC since September 30, 1993 (as such
documents have since the time of their filing been amended or
supplemented, the "Company SEC Documents"), which are all the documents
(other than preliminary material) that the Company was required to file
with the SEC since such date. As of their respective dates, the Company
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 Company SEC
Documents, and none of the Company 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
the Company included in the Company 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 the Company and its
consolidated Subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended.
Section 3.1(d) of the Company Disclosure Schedule contains a description
(specifying obligation, obligee and amount) of all Debt (as defined in
Section 7.1) of the Company and its Subsidiaries as of the date hereof.
(e) AUTHORITY. The Company 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 stockholders of the Company. The execution and delivery
of this Agreement and the consummation of the transactions
Page 12
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of the Company and no other corporate proceedings
on the part of the Company 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 stockholders of the
Company. This Agreement has been duly and validly executed and delivered
by the Company and constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms,
subject, in the case of the Merger, to the approval of this Agreement by
the stockholders of the Company.
(f) COMPLIANCE WITH APPLICABLE LAWS. The Company 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 the Company and its
Subsidiaries taken as a whole (the "Company Permits") except as would not
have a Material Adverse Effect with respect to the Company. The Company
and its Subsidiaries are in compliance with the terms of the Company
Permits, except where any such failure so to comply would not have a
Material Adverse Effect with respect to the Company. Except as would not
have a Material Adverse Effect with respect to the Company, the
businesses of the Company 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 the
Company or any of its Subsidiaries is pending or, to the knowledge of the
Company, threatened, nor, to the knowledge of the Company, 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
the Company.
(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 the Company is required in connection with the execution or
delivery by the Company of this Agreement, the consummation by the
Company of the transactions contemplated hereby or compliance by the
Company 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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder (the "HSR Act")
Page 13
and (E) as otherwise set forth in Section 3.1(g)(i) of the Company Disclosure
Schedule or as would not cause a Material Adverse Effect with respect to the
Company (any such consents, approvals, authorizations, declarations, filings
or notices specified in clauses (A) through (E) being referred to as
"Company 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 the Company
of this Agreement, consummation by the Company of the transactions
contemplated hereby or compliance by the Company with the provisions
hereof, other than as set forth in Section 3.1(g)(ii) of the Company
Disclosure Schedule (the "Company Required Consents") and other than
consents, approvals, actions, filings or notices which would not have a
Material Adverse Effect with respect to the Company.
(h) NON-CONTRAVENTION. The execution and delivery of
this Agreement by the Company do not, and the consummation of the
transactions contemplated hereby and compliance by the Company 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 the Company or any of its Subsidiaries; (ii) except as set
forth in Section 3.1(h)(ii) of the Company Disclosure Schedule, if the
Company 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 the Company 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 the Company or any of its Subsidiaries in
each case pursuant to the terms of any such Contract; (iii) if the
Company Governmental Approvals are obtained, result in any violation of
any law, statute, regulation, order, writ, judgment or decree of any
Governmental Entity applicable to the Company; or (iv) if the Company
Governmental Approvals and the Company Required Consents are obtained,
result in the violation, revocation or suspension of any Company 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
Page 14
aggregate, would not have a Material Adverse Effect with respect to the
Company.
(i) LITIGATION. As of the date of this Agreement and as
of the Closing Date, except as disclosed in the Company SEC Documents or
in Section 3.1(i) of the Company Disclosure Schedule, there is no suit,
action or proceeding pending, or, to the knowledge of the Company,
threatened against the Company or any Subsidiary of the Company that,
individually or in the aggregate with any other such suits, actions or
proceedings, would have a Material Adverse Effect with respect to the
Company, nor is there any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against the Company or
any Subsidiary of the Company that, individually or in the aggregate,
would have a Material Adverse Effect with respect to the Company.
(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 the Company
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 the
Company 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 the Company.
(ii) All material returns and reports required to be
filed by or with respect to the Company 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
Page 15
of the Company or any of its Subsidiaries or payment of any Tax of the
Company 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 the Company and any of its Subsidiaries, (A) Section 3.1(j) of
the Company 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 Company 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) of the Company Disclosure Schedule, there is no
material unassessed deficiency proposed or threatened against the Company
or any of its Subsidiaries.
(iv) Except as set forth in Section 3.1(j) of the
Company Disclosure Schedule, neither the Company 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 Company 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 the Company or any of
its Significant Subsidiaries since 1992, and (ii) all material Tax
liabilities, of which the Company 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 the Company 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 Company Disclosure Schedule, and
except for this Agreement, as of the date of this Agreement, neither the
Company nor any of its Subsidiaries is a party to any oral or written (i)
agreement with any executive officer or other key employee of the Company
or any Subsidiary of the Company the benefits of which are contingent, or
the terms of which are materially altered, upon the occurrence of a
transaction involving the Company of the nature contemplated by this
Agreement, or agreement with respect to any executive officer of the
Company 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
Page 16
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. Section 3.1(k) of the Company Disclosure Schedule sets forth
a schedule of assets (other than immaterial assets with a value less than
$25,000) of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Productions, Inc. ("SG Productions") and
Nightlife Productions, Inc. ("Nightlife").
(l) EMPLOYEE BENEFITS.
(i) Except as set forth in Section 3.1(l) of the
Company Disclosure Schedule, there are no United States or foreign
employee benefit plans or arrangements (collectively, the "Company
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 the Company or any
corporation, person or trade or business which is a member of a group
which is under common control with the Company 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 Company Benefit Plan, the
Company 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 the Company Benefit Plan not embodied in plan texts and
agreements that could materially affect the liabilities of the Company 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 Company Benefit Plan or the
Company 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
Page 17
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 the Company.
(iv) Each Company 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 the Company.
(v) With respect to each Company Benefit Plan that
is a defined benefit pension plan, since the most recent financial
statements of the Company 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
Company Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement will not, with respect to employees or
former employees of the Company 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 (i) no contract, agreement or
understanding required to be described in or filed as an exhibit to any
Company SEC Document that is not described in or filed as required by the
Securities Act or the Exchange Act, as the case may be and (ii) except as
described in Section 3.1(m) of the Company Disclosure Schedule, no output
agreement, material license agreement or contract providing for the
payment by the Company of more than $100,000 per annum or $500,000 in the
aggregate. 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 Company Required Consents and except to the extent any of
the following would not have a Material Adverse Effect with respect to
the Company, (i) no approval or consent of, or notice to, any Person is
needed in order that such contract, agreement or
Page 18
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)
the Company is not in violation of breach of or default under any such
contract, agreement or understanding nor to the Company's knowledge is
any other party to any such contract, agreement or understanding.
(n) ENVIRONMENTAL MATTERS. Except as set forth in Section
3.1(n) of the Company Disclosure Schedule, (i) the Company 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"); (ii) 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 the Company or any
of its Subsidiaries; (iii) the Company 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 the Company 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 (iv) neither
the Company 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 (i)
through (iv) address only those matters that would have a Material
Adverse Effect with respect to the Company.
(o) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Company SEC Documents, or except as contemplated by this
Agreement, since December 31, 1995, the Company 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
the Company's capital stock; (ii) any return of any capital or other
distribution of assets to stockholders of the Company; (iii) any material
Page 19
investment by the Company 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; (iv) any
sale, disposition, license or other transfer of assets or properties of
the Company or its Subsidiaries (other than the license of product in the
ordinary course of business); (v) any incurrence or guarantee of any Debt
other than in the ordinary course of business consistent with past
practices; 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 the Company.
(p) INFORMATION SUPPLIED. None of the information
supplied or to be supplied by the Company for inclusion or incorporation
by reference in (i) the registration statement 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 (the "Proxy Statement") to be filed with the SEC by
Metromedia and the Company in connection with the Metromedia
Stockholders' Meeting and the Company Stockholders' Meeting (as
hereinafter defined) 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 Company's 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) OWNERSHIP OF PREMISES. The Company or one of
its Subsidiaries is the owner of good and insurable fee title to the land
described on Section 3.1(q)(i) of the Company Disclosure Schedule and to
all of the buildings, structures and other improvements located thereon
(collectively, the "Company Owned Real Property") free and clear of all
Title Defects (as hereinafter defined) except as would not have a
Material Adverse Effect with respect to the Company. The Company Owned
Real Property constitutes all of the real property owned by the Company
and its Subsidiaries on the date hereof. As used in this Agreement,
"Title Defects" shall mean and include any mortgage, deed of trust, lien,
pledge, security interest, claim, lease, charge, option, right of first
refusal, easement, restrictive covenant, encroachment or other survey
Page 20
defect, encumbrance or other restriction or limitation whatsoever.
(ii) LEASED PROPERTIES. Section 3.1(q)(ii) of the
Company Disclosure Schedule sets forth a true, correct and complete
schedule of all leases, subleases, licenses and other agreements
(collectively, the "Company Real Property Leases") under which the
Company or any Subsidiary uses or occupies or has the right to use or
occupy, now or in the future, any real property (the land, buildings and
other improvements covered by the Company Real Property Leases being
herein called the "Company Leased Real Property"), which Section
3.1(q)(ii) of the Company Disclosure Schedule sets forth the date of and
parties to each Company Real Property Lease, the date of and parties to
each amendment, modification and supplement thereto, the term and renewal
terms (whether or not exercised) thereof and a brief description of the
Company Leased Real Property covered thereby. The Company has heretofore
delivered to or made available true, correct and complete copies of all
Company Real Property Leases (including all modifications, amendments and
supplements). Each Company Real Property Lease is valid, binding and in
full force and effect, all rent and other sums and charges payable by the
Company or a Subsidiary as tenant thereunder are current, no notice of
default or termination under any Company Real Property Lease is
outstanding, no termination event or condition or uncured default on the
part of the Company or the applicable Subsidiary or, to the Company's or
the applicable Subsidiary's knowledge, the landlord, exists under any
Company Real Property Lease, and no event has occurred and no condition
exists which, with the giving of notice or the lapse of time or both,
would constitute such a default or termination event or condition, which,
when considered individually or in the aggregate with all such other
Company Real Property Leases under which there is such an event or
condition has or will have a Material Adverse Effect with respect to the
Company. Except as set forth on Section 3.1(q)(ii) of the Company
Disclosure Schedule, to the Company's or the applicable Subsidiaries'
knowledge, no landlord under any Company Real Property Lease has notified
the Company or the applicable Subsidiary that it does not intend to renew
any such lease following the expiration of its term. Except as does not
have a Material Adverse Effect with respect to the Company, the Company
or a Subsidiary, whichever is applicable, holds the leasehold estate
under and interest in each Company Real Property Lease free and clear of
all Title Defects. The Company and its Subsidiaries have no ownership,
financial or other interest in the landlord under any Company Real
Property Lease.
Page 21
(iii) ENTIRE PREMISES; CONDITION. All of the land,
buildings, structures and other improvements used by the Company and its
Subsidiaries in the conduct of their business are included in the Company
Owned Real Property and the Company Leased Real Property. The
facilities, machinery, equipment, furniture, leasehold improvements,
fixtures, vehicles, structures, any related capitalized items and other
tangible property material to the business of the Company located on the
Company Owned Real Property and the Company Leased Real Property
including, without limitation, the improvements on such property and the
utility systems serving such properties (collectively, the "Tangible
Property") are in good operating condition and repair, subject to
ordinary wear and tear, and are suitable for their intended use. During
the past three years there has not been any significant interruption of
the operations of the Company due to inadequate maintenance of the
Tangible Property or otherwise.
(r) INTELLECTUAL PROPERTY.
Section 3.1(r) of the Company Disclosure Schedule sets forth a
list of all of the Company's and its Subsidiaries' registered trademarks
and registered copyrights, all applications for any of the foregoing and
all permits, grants and licenses or other rights running to the Company
and any of its Subsidiaries relating to any of the foregoing that are
material to the business of the Company and its Subsidiaries taken as a
whole. Except as set forth on Section 3.1(r) of the Company Disclosure
Schedule, (i) the Company or one of its Subsidiaries own, or are licensed
to, or otherwise have, the right to use all registered trademarks and
copyrights set forth on Section 3.1(r) of the Company Disclosure
Schedule, and (ii) the Company's rights in the property set forth on such
list are free and clear of any liens or other encumbrances and the
Company and its Subsidiaries have not received written notice of any
adversely-held copyright or trademark of any other person, or notice of
any charge or claim of any person relating to such intellectual property
or any process or confidential information of the Company and its
Subsidiaries and to the Company's knowledge there is no basis for any
such charge or claim, and (iii) the Company, its Subsidiaries and their
respective predecessors, if any, have not conducted business at any time
during the period beginning five years prior to the date hereof under any
corporate or partnership, trade or fictitious names other than their
current corporate or partnership names, except in the case of clauses
(i), (ii) and (iii) above, any of the foregoing which do not and will not
have an Material Adverse Effect with respect to the Company.
Page 22
(s) INVESTMENT COMPANY ACT. The Company and each of its
Subsidiaries either (i) is not an "investment company," or to the
Company's knowledge a company "controlled" by, or to the Company'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 the Company nor any of its Subsidiaries is required
to be registered under the Investment Company Act.
(t) BROKERS OR FINDERS. No agent, broker, investment
banker, financial advisor or other Person retained by or on behalf of the
Company 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 ▇▇▇▇▇▇ ▇▇▇▇ L.L.C.,
whose fees and expenses will be paid by the Company in accordance with
the Company's agreement with such firm.
(u) VOTE REQUIRED. The Board of Directors of the Company
has approved this Agreement, the Merger and the other transactions
contemplated hereby and has recommended that its stockholders vote in
favor of the adoption and approval of this Agreement (the
"Recommendation"). The affirmative vote of a majority of the votes that
the holders of the outstanding shares of Company 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 the Company necessary to approve the Merger and the
other transactions contemplated hereby. Attached as Exhibit A hereto is
a true and correct copy of the executed Voting Agreement by and among
Metromedia and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr. Family Trust (the "Trust")
pursuant to which the Trust has agreed to vote its shares of Company
Common Stock in favor of the Merger and the transactions contemplated by
this Agreement. As of the date hereof and as of the Closing Date, the
letter and Deal Memo dated December 15, 1995 ("Deal Memo") between the
Company and Polygram Filmed Entertainment Distribution Inc. ("Polygram")
has been terminated and is of no further force and effect except to the
extent that the payment of a breakup fee of $2,000,000 payable to
Polygram and the reimbursement of Polygram's fees and expenses pursuant
to Section 8 of the Deal Memo may be applicable.
Section 3.2 REPRESENTATIONS AND WARRANTIES OF METROMEDIA.
Metromedia represents and warrants to the Company as follows:
Page 23
(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 the Company by Metromedia on or prior to the date
hereof (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 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 has invested more than $5,000,000.
(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 the Company 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
Page 24
Certificate of Incorporation, By-laws or equivalent organizational documents.
(c) CAPITALIZATION. As of January 15, 1996, (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 SGC Mergerco
consists of 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.
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
January 15, 1996 Metromedia has not (i) issued
Page 25
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 the Company 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 SEC thereunder applicable
to such Metromedia SEC Documents, and none of the Metromedia 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 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 SGC 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
Page 26
hereby, subject, in the case of the Merger, to the approval
of this Agreement by the stockholders of Metromedia and the receipt by
the Board of Directors of Metromedia of the opinion of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ Securities Corporation ("DLJ") referred to in Section 5.2(e)
hereof (the "Fairness Opinion"). 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 SGC Mergerco and no other corporate
proceedings on the part of Metromedia and SGC 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 stockholders of Metromedia and the receipt by the Board
of Directors of Metromedia of the Fairness Opinion. This Agreement has
been duly and validly executed and delivered by Metromedia and SGC
Mergerco and constitutes a valid and binding obligation of Metromedia and
SGC Mergerco enforceable against Metromedia and SGC Mergerco in
accordance with its terms, subject, in the case of the Merger, to the
approval of this Agreement by the stockholders of Metromedia and the
receipt by the Board of Directors of Metromedia of the Fairness Opinion.
(f) COMPLIANCE WITH APPLICABLE LAWS. Metromedia and its
Subsidiaries hold all permits, licenses, 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
Page 27
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 ("Metromedia
Required Consents") and other than the consents, approvals, actions,
filings or 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 SGC Mergerco does not, and the
consummation of the transactions contemplated hereby and compliance by
Metromedia and SGC 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
Page 28
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.
(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.
Page 29
(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) of the Metromedia Disclosure Schedule, 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 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
Page 30
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 the Company 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 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
Page 31
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, the Company 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 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, (i) Metromedia and
each of its Subsidiaries has obtained and is in material compliance with
the terms and
Page 32
conditions of all permits, licenses and other authorizations required
under applicable Environmental Laws; (ii) 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; (iii) 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 (iv) 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 (i) through (iv) address only those
matters that would have a Material Adverse Effect with respect to
Metromedia.
(o) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in Section 3.2(o) of the Metromedia Disclosure Schedule or as
disclosed in the Metromedia SEC Documents, or as contemplated by this
Agreement, since December 31, 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
$5,000,000; (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
Page 33
or 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 the Company's and
Metromedia's 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 the Company 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) OWNERSHIP OF PREMISES. Metromedia or one of its
Subsidiaries is the owner of good and insurable fee title to the land in
the United States described on Section 3.2(q)(i) of the Metromedia
Disclosure Schedule and to all of the buildings, structures and other
improvements located thereon (collectively, the "Metromedia Owned Real
Property") free and clear of all Title Defects (as hereinafter defined)
except as would not have a Material Adverse Effect with respect to
Metromedia. The Metromedia Owned Real Property constitutes all of the
real property owned by Metromedia and its Subsidiaries on the date
hereof.
(ii) LEASED PROPERTIES. Section 3.2(q)(ii) of the
Metromedia Disclosure Schedule sets forth a true, correct and complete
schedule of all leases, subleases, licenses and other agreements
(collectively, the "Metromedia Real Property Leases") under which
Metromedia or any Subsidiary uses or occupies or has the right to use or
occupy, now or in the future, any real property in the United States (the
land, buildings and other improvements covered by the Metromedia Real
Property Leases being herein called the "Metromedia Leased Real
Property"), which Section 3.2(q)(ii) of the Metromedia Disclosure
Schedule sets forth the date of and parties to each Metromedia Real
Property Lease, the date of and parties to each amendment, modification
and supplement thereto, the term and renewal
Page 34
terms (whether or not exercised) thereof and a brief description of the
Metromedia Leased Real Property covered thereby. Metromedia has heretofore
delivered to or made available true, correct and complete copies of all
Metromedia Real Property Leases (including all modifications, amendments and
supplements). Each Metromedia Real Property Lease is valid, binding and
in full force and effect, all rent and other sums and charges payable by
Metromedia or a Subsidiary as tenant thereunder are current, no notice of
default or termination under any Metromedia Real Property Lease is
outstanding, no termination event or condition or uncured default on the
part of Metromedia or the applicable Subsidiary or, to Metromedia's or
the applicable Subsidiary's knowledge, the landlord, exists under any
Metromedia Real Property Lease, and no event has occurred and no
condition exists which, with the giving of notice or the lapse of time or
both, would constitute such a default or termination event or condition,
which, when considered individually or in the aggregate with all such
other Metromedia Real Property Leases under which there is such an event
or condition has or will have a Material Adverse Effect with respect to
Metromedia. Except as does not have a Material Adverse Effect with
respect to Metromedia, Metromedia or a Subsidiary, whichever is
applicable, holds the leasehold estate under and interest in each
Metromedia Real Property Lease free and clear of all Title Defects.
Metromedia and its Subsidiaries have no ownership, financial or other
interest in the landlord under any Metromedia Real Property Lease.
(iii) ENTIRE PREMISES. All of the land, buildings,
structures and other improvements in the United States used by Metromedia
and its Subsidiaries in the conduct of their business are included in
Metromedia Owned Real Property and Metromedia Leased Real Property.
(r) INTELLECTUAL PROPERTY.
Section 3.2(r) of the Metromedia Disclosure Schedule sets forth
a list of all of Metromedia's and its Subsidiaries' registered trademarks
and registered copyrights, all applications for any of the foregoing and
all permits, grants and licenses or other rights running to Metromedia
and any of its Subsidiaries relating to any of the foregoing that are
material to the business of Metromedia and its Subsidiaries taken as a
whole. Except as set forth on Section 3.2(r) of the Metromedia
Disclosure Schedule, (i) Metromedia or one of its Subsidiaries own, or
are licensed to, or otherwise have, the right to use all registered
trademarks and registered copyrights set forth on Section 3.2(r) of the
Metromedia Disclosure Schedule, and (ii) Metromedia's rights in the
property set forth on such
Page 35
list are free and clear of any liens or other encumbrances and Metromedia
and its Subsidiaries have not received written notice of any adversely-held
copyright or trademark of any other person, or notice of any charge or claim
of any person relating to such intellectual property or any process or
confidential information of Metromedia and its Subsidiaries and to
Metromedia's knowledge there is no basis for any such charge or claim,
and (iii) Metromedia, its Subsidiaries and their respective predecessors,
if any, have not conducted business at any time during the period beginning
five years prior to the date hereof under any corporate or partnership, trade
or fictitious names other than their current corporate or partnership names,
except in the case of clauses (i), (ii) and (iii) above, any of the
foregoing which do not and will not have an Material Adverse Effect with
respect to Metromedia.
(s) 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.
(t) 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 DLJ, whose fees and
expenses will be paid by Metromedia in accordance with Metromedia's
agreement with such firm.
ARTICLE 4
COVENANTS
Section 4.1 MUTUAL COVENANTS OF METROMEDIA AND THE COMPANY.
Each of Metromedia and the Company 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:
(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
Page 36
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
Company 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. Metromedia shall, with all reasonably necessary
assistance from the Company, prepare and cause to be filed with the SEC
the Registration Statement, in which the Proxy Statement will be included
as a Prospectus, it being understood that the Proxy Statement and the
Prospectus will also serve as a proxy statement and prospectus for
Metromedia's transactions with Alliance Entertainment Corp. Each party
shall provide the other
Page 37
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 the Company, 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 the Company 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 the Company, 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.
(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;
Page 38
(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 Company 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 in compliance with all applicable laws and regulations except
with respect to the Company, where failure to comply would not have a
Material Adverse Effect with respect to the Company and, 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 the Company
agrees to use reasonable commercial efforts to take all necessary steps
and actions to facilitate any refinancing of indebtedness of Metromedia
and/or the Company and their respective Subsidiaries and any other
financing arrangements in connection with the consummation of the
transactions contemplated hereby including, without limitation, all
amounts owed by the Company pursuant to the Second Amended and Restated
Credit Agreement dated as of April 28, 1995 (the "Credit Agreement")
among the Company and Bank of America National Trust and Savings
Association, as Agent, Collateral Agent and the Letter of Credit Issuing
Bank and the Other Financial Institutions Party thereto, as amended
(collectively, the "Financings"), it being the intention of Metromedia
and the Company to refinance (or extend the maturity date of) all amounts
outstanding pursuant to the Credit Agreement on or prior to the maturity
date set forth in the Credit Agreement and to consummate the Merger by
May 15, 1996.
Section 4.2 COVENANTS OF THE COMPANY. During the period from
the date of this Agreement and continuing until
Page 39
the Closing Date, the Company 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, the
Company 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, the Company 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. The Company 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 the Company 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 the Company 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 the Company 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) except for the exercise by the Company of the
Goldwyn Option pursuant to the Option Agreement dated as of April 13,
1993 by and among the Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr. and The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Jr.
Page 39
Trust (the "Option Exercise"), authorize for issuance, 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 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 employee and
director stock options issued pursuant to employee and non-employee
director stock option plans outstanding on the date hereof and listed in
Section 3.1(c) of the Company Disclosure Schedule;
(iii) except with respect to annual bonuses made in
the ordinary course of business consistent with past practice and except
as contemplated by this Agreement, 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 the
Company or any of its Subsidiaries or increase in any manner the
compensation or fringe benefits of any director, officer or employee of
the Company 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 the Company 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 the Company;
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its
material properties or assets;
(vi) 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,
Page 41
individually or in the aggregate, to the Company and its Subsidiaries taken
as a whole;
(vii) except for borrowings permitted under credit
facilities filed as exhibits to the Company SEC Documents, incur any
Debt, issue or sell any debt securities or warrants or other rights to
acquire any debt securities of the Company or any of its Subsidiaries,
guarantee any debt securities of another person, enter into any "keep
well" or other agreement to maintain any financial 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 the Company or any
direct or indirect wholly-owned Subsidiary of the Company;
(viii) change any accounting principle used by it,
unless required by the SEC or the Financial Accounting Standards Board;
and
(ix) except for the Option Exercise, enter into any
transaction or series of transactions with any Affiliate of the Company
(other than a wholly-owned Subsidiary of the Company) 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 the
Company or such Subsidiary as would be obtainable by the Company or such
Subsidiary at the time of such transaction with a Person that is not an
Affiliate of the Company.
(c) MEETINGS; FIDUCIARY DUTIES. The Company 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 the Company's stockholders at a time mutually agreed to by
the Company and Metromedia to, among other things, consider and vote upon
this Agreement (the "Company Stockholders' Meeting"), and the Company
shall consult with Metromedia in connection therewith. The Board of
Directors of the Company 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 the Company concludes in good faith
following receipt of a written opinion addressed to the Company from
outside counsel to the Company that such action is reasonably necessary
for the Board of Directors of the Company to comply with its fiduciary
obligations to stockholders under applicable law. The Company shall use
its best efforts to solicit from stockholders of the Company proxies in
favor of the approval and adoption of this Agreement and to secure the
vote or the
Page 42
consent of the stockholders required by the DGCL to approve and adopt
this Agreement.
(d) NO SOLICITATION. Neither the Company 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,
the Company 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 the Company 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 the Company from (A) furnishing information pursuant
to an appropriate confidentiality letter concerning the Company and its
businesses, properties or assets to a third party who the Board of
Directors of the Company has a reasonable basis for determining is likely
to 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 the Company
concludes in good faith following receipt of a written opinion addressed
to the Company from outside counsel to the Company that such action is
reasonably necessary for the Board of Directors of the Company to comply
with its fiduciary obligations to stockholders under applicable law. If
the Board of Directors of the Company receives a Transaction Proposal,
Page 43
then the Company 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 the Company 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, the Company
shall endeavor to deliver to Metromedia (i) a letter identifying all
Persons who, to the knowledge of the Company, may be deemed to be
"affiliates" of the Company under Rule 145 under the Securities Act,
including, without limitation, all directors and executive officers of
the Company (collectively, the "Company Affiliates"), and (ii) copies of
letter agreements, each in the form prepared by Metromedia and reasonably
acceptable to the Company, executed by each Company Affiliate (the
letters described in clauses (i) and (ii) being collectively referred to
as "Affiliate Letters"). The parties agree that the Affiliate Letter to
be signed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr. will contain a lockup provision with
Metromedia's lead underwriter for the Financings providing that ▇▇.
▇▇▇▇▇▇▇ agree not to sell his shares of Metromedia Common Stock received
in the Merger (other than the shares issued in exchange for the Company
Common Stock received by ▇▇. ▇▇▇▇▇▇▇ pursuant to the Option Exercise) for
a period of 180 days from the Closing Date. Metromedia 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).
(f) TAX RETURNS. All Tax Returns required to be filed by
or with respect to the Company 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
the Company.
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
Page 44
expressly contemplated or permitted by this Agreement, or to the extent that
the Company 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 the Company 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 the Company (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 the
Company may reasonably request.
(b) LISTING. Metromedia shall use its best efforts to
cause the shares of Metromedia Common Stock comprising the Merger
Consideration to be approved for listing on the AMEX, subject to official
notice of issuance.
(c) MEETING. 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
Metromedia's stockholders at a time mutually agreed to by the Company and
Metromedia to, among other things, consider and vote upon this Agreement
(the "Metromedia Stockholders' Meeting"), and Metromedia shall consult
with the Company in connection therewith.
(d) S-3; S-8. Metromedia shall enter into a registration
rights agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr. and, as contemplated thereby,
agrees to file and use its best efforts to have declared effective by the
SEC a Registration Statement on Form S-3 (the "Form S-3") covering the
shares of Metromedia Common Stock to be received by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr.
in the Merger. In addition, Metromedia agrees to file a Form S-8 to
cover the shares of Metromedia Common Stock to be issued upon exercise of
the Company Options (the "Form S-8").
(e) 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
Page 45
with substantially the same terms and conditions as contained in the Company'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 the Company 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 the Company 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(e), 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 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(e) are
intended for the benefit of, and shall be
Page 46
enforceable by, each Indemnified Party and his or her heirs and
representatives.
(f) TAX RETURNS. 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.
(g) INTERIM FINANCING. Promptly following the execution of
this Agreement, Metromedia shall use its best efforts to cause Orion
Pictures Corporation or an Affiliate of Orion Pictures Corporation to
provide the Company up to $5.5 million of financing in accordance with
the terms of that certain letter from Orion Pictures Corporation to the
Company dated the date hereof (the "Interim Financing").
(h) PRODUCTION AND DEVELOPMENT. From and after the Closing
Date, Metromedia will provide the Surviving Corporation with a revolving
credit facility in the aggregate principal amount of $20,000,000 to be
utilized by the Surviving Corporation solely for the production and
acquisition (including by way of a negative pick-up) of Motion Picture
Product (as hereinafter defined). Motion Picture Product shall mean
full-length feature films with budgeted negative costs (including all
costs customarily included in connection with the preparation, production
and completion, both above-the-line and below-the-line, of such product)
not in excess of $5,000,000 (provided that one film per fiscal year may
have a budgeted negative cost not in excess of $7,000,000) which is, (i)
with respect to Motion Picture Product produced by the Surviving
Corporation, approved in advance by the Office of the Chairman of
Metromedia and (ii) with respect to Motion Picture Product acquired by
the Surviving Corporation, is either approved in advance or is a feature
film included in an acquisition plan or acquisition strategy for a film
festival or similar event the acquisition costs of which were pre-
approved by the Office of the Chairman of Metromedia. In addition,
Metromedia will provide the Surviving Corporation with a revolving
development fund for the development of Motion Picture Product which will
not exceed at any time $1,000,000 for the one year period from the
Effective Time to the first anniversary of the Effective Time, increasing
by $250,000 per year thereafter to a maximum of $2,000,000. As projects
are "greenlighted" by Metromedia, the amount of development costs for
such Motion Picture Product shall be included in the budgeted negative
cost for such project and the amount of the Surviving Corporation's
development fund shall be
Page 47
increased (up to the applicable maximum amount) by the amount of such
development costs that become included in the budgeted negative costs
for projects. In addition, the Surviving Corporation may expend amounts
for the development of television product (other than deficit-financed
television product) as such amounts are approved by the Office of the
Chairman of Metromedia.
ARTICLE 5
CONDITIONS PRECEDENT
Section 5.1 CONDITIONS TO THE OBLIGATIONS OF METROMEDIA AND
THE COMPANY 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 the Company Common Stock, respectively, are entitled to cast;
PROVIDED, THAT, to the extent Metromedia determines in good faith upon
the advice of counsel to Metromedia that the approval by Metromedia's
stockholders of the Merger and the transactions contemplated by this
Agreement is not required under applicable law or the rules and
regulations of the AMEX, Metromedia may unilaterally waive the condition
regarding approval by Metromedia's stockholders of the Merger and the
transactions contemplated by this Agreement.
(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.
(d) LISTING. The Metromedia Common Stock 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 the Company, in
each case, subject to official notice of issuance.
(e) NO INJUNCTIONS OR RESTRAINTS. No temporary
restraining order, preliminary or permanent injunction
Page 48
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 Company Disclosure Schedule, in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby by Metromedia and the Company will have been made or
obtained (as the case may be).
(h) THE COMPANY REQUIRED CONSENTS. The Company 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 the Company 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 the Company shall have received evidence thereof reasonably
satisfactory to it).
(j) EMPLOYMENT AGREEMENT. The Surviving Corporation
shall have entered into an employment agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr.
having the principal terms set forth in that certain letter dated as of
the date hereof from Metromedia to ▇▇. ▇▇▇▇▇▇▇.
(k) CREDIT AGREEMENT. All amounts outstanding under the
Credit Agreement (or any refinancing, renewal or extension thereof) shall
have been repaid or refinanced in full.
Page 49
(l) INTERIM FINANCING. The Interim Financing shall have
been provided in the manner specified in the Financing and Distribution
Agreement.
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 the Company 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 the Company certifying to the fulfillment of this condition.
(b) PERFORMANCE OF AGREEMENTS. The Company 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 the Company certifying to the
fulfillment of this condition.
(c) NO MATERIAL ADVERSE CHANGE. Since December 31, 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 the
Company.
(d) OPINIONS OF COUNSEL. Metromedia shall have received
the opinion of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P. dated the Effective Time
substantially in the form of Exhibit D hereto.
(e) FAIRNESS OPINIONS. Metromedia shall have received
the opinion of DLJ, as of the date determined by the Board of Directors
of Metromedia in connection with the approval of this Agreement and as of
the date the Proxy Statement is mailed to Metromedia stockholders, to the
Page 50
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 executed by each Company Affiliate.
(g) DISTRIBUTION AGREEMENT. The agreement between the
Company and the Trust relating to the distribution of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Classics Library shall have been amended and restated in a manner
satisfactory to Metromedia containing the principal terms set forth on
Exhibit E hereto.
(h) TRADEMARK LICENSE. The license agreement between the
Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr. relating to the use of certain trademarks
shall have been amended and restated in a manner satisfactory to
Metromedia containing the principal terms set forth on Exhibit F hereto.
(i) OPTION AGREEMENT. The Option Agreement dated as of
April 13, 1993 shall have been amended in a manner satisfactory to
Metromedia with the principal terms set forth on Exhibit G hereto.
(j) CERTAIN AGREEMENT. Metromedia shall be satisfied as
to the matters referred to in that certain side letter dated the date
hereof between the Company and Metromedia.
(k) CERTAIN ASSETS. The assets of Productions and
Nightlife financed by the Company or otherwise relating to the Company's
operations shall have been transferred to the Surviving Corporation or
another entity in a manner satisfactory to Metromedia.
(l) EMPLOYMENT AGREEMENT. The Surviving Corporation
shall have entered into an employment agreement with ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in
form and substance satisfactory to the parties thereto.
(m) OTHER INDEBTEDNESS. The maturity date for all
amounts outstanding under the Loan and Security Agreement dated as of
April 2, 1994 by and between ▇▇▇▇▇ Productions Limited and Banque Paribas
Los Angeles Agency, as amended, shall have been extended beyond the
Effective Time.
Section 5.3 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the
Page 51
transactions contemplated hereby are subject to the satisfaction of the
following conditions, the imposition of which is solely for the benefit
of the Company and any one or more of which may be expressly waived by
the Company, 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).
The Company 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. The Company 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 OPINION. The Company shall have received
the opinion of Furman, Selz, L.L.C., as of the date the Board of
Directors of the Company approves this Agreement and as of the date the
Proxy Statement is mailed to the Company's stockholders, to the effect
that the Merger Consideration is fair to the Company's stockholders from
a financial point of view, which opinion shall not have been amended,
modified or withdrawn.
(d) NO MATERIAL ADVERSE CHANGE. Since December 31, 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. The Company shall have received (i)
the opinion of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ dated the
Effective Time substantially in the form of Exhibit H hereto and (ii) the
opinion of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, LLP 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.
Page 52
(f) FORMS S-3 AND S-8. The Form S-3 and Form S-8 shall
have been declared effective by the SEC.
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 the Company:
(a) by mutual written consent of Metromedia and the
Company;
(b) by either Metromedia or the Company if there has been
a material breach of any representation, warranty, covenant or agreement
on the part of the Company, 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 the Company if the Merger
shall not have been consummated before the Termination Date (or such
later date as may be agreed to by Metromedia and the Company); 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 the Company, if this
Agreement shall fail to receive the requisite vote for approval and
adoption by the stockholders of the Company at the Company Stockholders'
Meeting;
(e) by either Metromedia or the Company, if (i) the Board
of Directors of the Company 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 the Company shall have
recommended to the stockholders of the Company a Transaction Proposal;
(iii) a tender offer (including a self-tender offer) or exchange offer
for shares of capital stock of the Company, 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 the Company, is commenced, and the Board of
Page 53
Directors of the Company recommends that the stockholders of the Company
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 the
Company;
(f) by either Metromedia or the Company if this Agreement
shall fail to receive the requisite vote for approval and adoption by the
stockholders of Metromedia at the Metromedia Stockholders' Meeting; or
(g) by Metromedia or the Company 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.
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, 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, attor-
Page 54
neys, 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 (whether on-balance
sheet or off-balance sheet); (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) "Governmental Entity" means any foreign, federal,
state, municipal or other governmental or regulatory department,
commission, board, bureau, agency or instrumentality.
(f) "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 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.
(g) "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, trust, limited liability
company, unincorporated organization, estate, trust or other entity.
(h) "SEC" means the Securities and Exchange Commission.
(i) "Significant Subsidiary" shall have the meaning
ascribed to such term in Section 1-02(v) of
Page 55
Regulation S-X under the Securities Act and, shall include, with respect
to Metromedia, SGC Mergerco.
(j) "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.
(k) "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 the Company, to:
The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Company
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Metromedia or SGC Mergerco,
to:
Metromedia International Group, Inc.
c/o Metromedia Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Page 56
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.
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) The Company agrees that if this Agreement shall be
terminated pursuant to:
(i) Section 6.1(e); or
Page 57
(ii) (A) Section 6.1(b) and such termination is the result
of a material breach by the Company of any covenant, representation or
warranty contained herein which is not cured and (B) within six months
after the date of termination of this Agreement, a Business Combination
(as hereinafter defined) shall have occurred or the Company shall have
entered into a definitive agreement providing for a Business Combination;
then the Company shall pay to Metromedia an amount equal to $3
million plus the reimbursement of all of Metromedia's fees and expenses,
including all of its reasonable legal, accounting and investment banking
fees and expenses.
In addition, (i) if this Agreement is terminated by Metromedia
pursuant to Section 6.1(b), the Company 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 the Company pursuant to
Section 6.1(b), Metromedia shall reimburse all of the Company's fees and
expenses, including all of its reasonable legal, accounting and
investment banking fees and expenses relating to the Merger.
(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)(ii) 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 the Company; (ii) a
sale, lease, exchange, transfer or other disposition of 50% or more of
the assets of the Company 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 regulations thereunder) of "beneficial ownership" of
50% or more of Company Common Stock whether by tender offer or exchange
offer or otherwise.
Page 58
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 59
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: President
SGC MERGER CORP.
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ COMPANY
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
EXHIBIT A
VOTING AGREEMENT
VOTING AGREEMENT, dated as of January 31, 1996 (this
"Agreement"), between THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, JR. FAMILY TRUST (the
"Stockholder"), and METROMEDIA INTERNATIONAL GROUP, INC., a Delaware
corporation ("Metromedia").
WHEREAS, The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Company, a Delaware corporation
(the "Company"), and Metromedia propose to enter into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement"),
which provides for, among other things, the merger of a wholly-owned
subsidiary of Metromedia with and into the Company (the "Merger");
WHEREAS, as of the date hereof, the Stockholder owns (i)
5,111,261 shares of Common Stock, par value $.20 per share, of the
Company ("Company Common Stock").
WHEREAS, as a condition to the willingness of Metromedia to
enter into the Merger Agreement, Metromedia has required that the
Stockholder agree, and in order to induce Metromedia to enter into the
Merger Agreement, the Stockholder has agreed, to enter into this
Agreement with respect to all the shares of Company Common Stock now
owned and which may hereafter be acquired by the Stockholder (the
"Shares").
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements contained herein, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I.
Section 1.1 VOTING AGREEMENT. The Stockholder hereby agrees
that during the time this Agreement is in effect, at any meeting of the
stockholders of the Company, however called, and in any action by consent
of the stockholders of the Company, the Stockholder shall vote the
Shares: (a) in favor of the Merger, the Merger Agreement (as amended from
time to time) and the transactions contemplated by the Merger Agreement
and (b) against any proposal for any recapitalization, merger, sale of
assets or other business combination between the Company and any person
or entity (other than the Merger) or any other action or agreement that
would result in a breach of any covenant, representation or warranty or
any other obligation or agreement of the Company under the Merger
Agreement or which could result in any of the conditions to the Company's
obligations under the Merger Agreement not being fulfilled. The
Stockholder acknowledges receipt and review of a copy of the Merger
Agreement.
Page 2
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder hereby represents and warrants to Metromedia as
follows:
Section 2.1 AUTHORITY RELATIVE TO THIS AGREEMENT. The
Stockholder has all necessary power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by the Stockholder and the consummation by the Stockholder of
the transactions contemplated hereby have been duly and validly
authorized by the Stockholder, and no other proceedings on the part of
the Stockholder are necessary to authorize this Agreement or to
consummate such transactions. This Agreement has been duly and validly
executed and delivered by the Stockholder and, assuming the due
authorization, execution and delivery by Metromedia, constitutes a legal,
valid and binding obligation of the Stockholder, enforceable against the
Stockholder in accordance with its terms except to the extent
enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting creditors' rights generally or by general
principles governing the availability of equitable remedies.
Section 2.2 NO CONFLICT. (a) The execution and delivery of
this Agreement by the Stockholder do not, and the performance of this
Agreement by the Stockholder shall not, (i) conflict with or violate the
organizational documents of the Stockholder, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable
to the Stockholder or by which the Shares are bound or affected or (iii)
result in any breach of or constitute a default (or an event that with
notice or lapse or time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or encumbrance on any of the
Shares pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Stockholder is a party or by which the
Stockholder or the Shares are bound or affected, except, in the case of
clauses (ii) and (iii), for any such conflicts, violations, breaches,
defaults or other occurrences which would not prevent or delay the
performance by the Stockholder of its obligations under this Agreement.
(b) The execution and delivery of this Agreement by the
Stockholder do not, and the performance of this Agreement by the
Stockholder shall not, require any
Page 3
consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity (as such term is defined in
the Merger Agreement) except for applicable requirements, if any, of
the Securities Exchange Act of 1934, as amended, and except where
the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent
or delay the performance by the Stockholder of its obligations under this
Agreement.
Section 2.3 TITLE TO THE SHARES. As of the date hereof, the
Stockholder is the record and beneficial owner of 5,111,261 shares of
Company Common Stock. Such Shares are all the securities of the Company
owned, either of record or beneficially, by the Stockholder. The Shares
are owned free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreement, limitations on the
Stockholder's voting rights, charges and other encumbrances of any nature
whatsoever. The Stockholder has not appointed or granted any proxy,
which appointment or grant is still effective, with respect to the
Shares.
ARTICLE III.
Covenants of the Stockholder
Section 3.1 NO INCONSISTENT AGREEMENT. The Stockholder hereby
covenants and agrees that, except as contemplated by this Agreement, and
the Merger Agreement, the Stockholder shall not enter into any voting
agreement or grant a proxy or power of attorney with respect to the
Shares which is inconsistent with this Agreement.
Section 3.2 TRANSFER OF TITLE. The Stockholder hereby
covenants and agrees that the Stockholder shall not transfer record or
beneficial ownership of any of the Shares unless the transferee agrees in
writing to be bound by the terms and conditions of this Agreement.
ARTICLE IV.
Miscellaneous
Section 4.1 TERMINATION. This Agreement shall terminate upon
the termination of the Merger Agreement.
Section 4.2 SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that
the parties shall
Page 4
be entitled to specific performance of the terms hereof, in addition
to any other remedy at law or in equity.
Section 4.3 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between Metromedia and the Stockholder with respect to
the subject matter hereof and supersedes all prior agreements and
understandings, both written and oral, between Metromedia and the
Stockholder with respect to the subject matter hereof.
Section 4.4 AMENDMENT. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
Section 4.5 SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule or law, or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long
as the economic or legal substance of this Agreement is not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereby shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties
as closely as possible to the fullest extent permitted by applicable law
in a mutually acceptable manner in order that the terms of this Agreement
remain as originally contemplated.
Section 4.6 GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware
regardless of the laws that might otherwise govern under applicable
principles of conflicts of law.
IN WITNESS WHEREOF, the Stockholder and Metromedia have caused
this Agreement to be duly executed on the date hereof.
THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, JR. FAMILY TRUST
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr.
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr.
Title: Trustee
METROMEDIA INTERNATIONAL GROUP, INC.
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
Exhibit D
Opinion of Counsel to The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Company
(the "Company")
Opinion of Counsel of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, Counsel to the Company,
shall cover the following matters, subject to customary exceptions and
limitations:
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
2. The Company 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 the Company of the Merger Agreement have
been duly authorized by all necessary action on the part of the Board of
Directors and stockholders of the Company. The Merger Agreement has been
duly executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.{1}
3. The execution, delivery and performance by the Company 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 California 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 the Company or to which the Company is subject, or
(iii) to our knowledge, any provision of any credit agreement, indenture
or similar agreement to which the Company is a party or to which the
Company 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 E
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (the "Agreement") is dated
___________, 1996 and it amends and restates in its entirety a
Distribution Services Agreement dated as of December 1, 1979, as amended
to the date hereof by and between THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, JR. FAMILY TRUST,
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ 90067-
6403 ("Owner") and THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ COMPANY, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Licensee")
with regard to the following subject matter:
A. PICTURES: The "Pictures" are the 75 feature motion
pictures named in Exhibit A attached hereto and by this reference
incorporated herein and made a part hereof.
B. MEDIA: All media of every kind and nature, whether or not
now known (the "Media"). The scope of Licensee's license hereunder shall
encompass, but shall not be limited to, theatrical and non-theatrical
rights, all forms of television rights including standard and non-
standard free television and pay television rights, the right to use
film, tape, wire, discs and/or any other means, methods, modes or
devices, known or hereafter conceived or created, of any and all gauges,
the right to project, exhibit, reproduce, broadcast, transmit and perform
the Pictures and prints and trailers thereof by means of projection
devices, television, audio-visual cartridges, cassettes and discs, and by
any other technological, mechanical and/or electronic means, methods,
modes or devices, whether now known or hereafter conceived or created,
music publishing and soundtrack rights and all merchandising rights
relating to the Pictures, to the full extent that Owner now has or may
hereafter acquire such rights.
C. TERRITORY: The entire universe (the "Territory").
D. TERM: The term of this Agreement (the "Term") shall
commence as of December 1, 1979 and continue without interruption until
the end of the day on December 31, 2020, subject to the sell-off period
set forth in Section 8(b) hereof. Following the end of the Term,
Licensee shall have the rights of first negotiation and first and last
refusal set forth in Section 8 hereof.
E. FILM MATERIALS: The "Film Materials" are all of the
picture and sound "master materials" relating to the Pictures (including,
without limitation, picture negative and preprint materials) which are
owned or controlled by
Page 2
Owner and from which the prints, video tapes and
other materials actually used in the exploitation of the Pictures are
processed and manufactured as set forth on the Delivery Schedule set
forth on Exhibit B hereto.
In consideration of their respective representa-tions,
warranties and promises set forth below, Owner and Licensee hereby agree
as follows:
1. RIGHTS GRANTED. Subject to all of the provisions hereof,
Owner hereby grants to Licensee the sole and exclusive right and license
under copyright for the distribution, licensing and other exploitation of
the Pictures (including, for all purposes of this Agreement, all of the
parts and elements thereof), in any and all versions and languages,
during the entire Term in all of the Media throughout the Territory.
Owner shall retain all remake and sequel rights in the Pictures,
PROVIDED, THAT Licensee shall have (i) an exclusive right of first
refusal to produce any remakes or sequels of any of the Pictures which
Owner proposes in its sole discretion to produce during the Term (which
rights must be expressly waived in writing by the Licensee) and (ii) the
right to act as Owner's sole and exclusive agent and representative for
the distribution, licensing and other exploitation of any such remake or
sequel rights during the Term in all of the Media throughout the
Territory which Owner proposes in its sole discretion to exploit;
PROVIDED, THAT, if Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr. no longer serves as Chairman
of the Licensee other than as a result of his termination by Licensee for
"cause" (as defined in the Employment Agreement dated the date hereof
between Licensee and ▇▇. ▇▇▇▇▇▇▇), the Licensee's rights set forth in
clauses (i) and (ii) above shall terminate; PROVIDED, FURTHER, that if
▇▇. ▇▇▇▇▇▇▇ is terminated as Chairman of the Licensee for "cause",
Licensee's rights set forth in clauses (i) and (ii) above shall terminate
on the seventh anniversary of the date hereof. Owner shall have the
right to produce, distribute and exploit a compilation film involving the
Pictures.
2. AGREEMENTS OF LICENSEE. Subject to all of the provisions
hereof, Licensee agrees to do the following:
(a) Account for and pay on Owner's behalf any and all
union and guild "residuals," deferments, participations and other sums
which may be payable to any third parties in respect of the exploitation
of the Pictures during the Term;
(b) Maintain at all times during the Term the Film
Materials in and (where necessary) restore such materials to first class
condition, to the extent technically and economically feasible, and to
safeguard and protect the same. In this regard, Owner acknowledges and
agrees that since many of the Pictures are quite old and
Page 3
since the age of the Pictures is reflected in the less than first class
quality of certain of the Film Materials, the archival and restoration
work to be done by Licensee hereunder may necessitate the expenditure of
substantial funds;
(c) Licensee may not license any rights in the Pictures
for license periods extending beyond the expiration of the Term without
the prior written approval of Owner;
(d) Upon the expiration or earlier termina-tion of the
Term, Licensee's license hereunder shall terminate, subject to all of the
provisions of Paragraph 8 below;
(e) Licensee shall not "re-cut," edit or "colorize" any
of the Pictures (whether in connection with any restoration work or
otherwise) without Owner's prior written consent;
(f) Licensee shall not use clips from or compilations of
the Pictures (without Owner's prior written consent) other than in
connection with the publicity, advertising and promotion of the Pictures
and in connection with general corporate promotion of Licensee or its
affiliates, which shall not require consent;
(g) Licensee shall use all reasonable efforts to
distribute, license and otherwise exploit the Pictures to the fullest
possible extent in a manner which is economically beneficial to the Owner
during the Term and Licensee shall safeguard the rights of Owner in and
to the Pictures; and
(h) All licenses to affiliated parties shall be on an
arm's-length basis.
Licensee hereby agrees that Owner shall at all relevant times have the
right to consult fully and meaningfully with Licensee regarding all
aspects of the exploitation of the Pictures and Owner shall have the
right to approve (which shall not be unreasonably withheld) all costs in
excess of $5,000 per Picture incurred in connection with the maintenance
and restoration of the Film Materials pursuant to Licensee's license
hereunder. Owner shall control the advertising and marketing for each
Picture (including the key art and publicity). Licensee shall not,
without Owner's prior written approval, license to any third party any of
the Pictures together with any motion picture product other than the
Pictures. Owner shall have the right to approve the sales and marketing
plan for the Pictures, which shall be presented to Owner no less
frequently than annually, such approval shall not be unreasonably
withheld.
Page 4
3. COMPENSATION. Subject to the full performance of all of
Licensee's obligations under this Agreement, Licensee shall be entitled
to recoup expenses and commission receipts as set forth below:
(a) "Gross Receipts" means all monies (including, without
limitation, advances and guarantees) which are received by Licensee or
any related distribution company of Licensee in United States Dollars in
the United States (or outside the United States in freely convertible and
remittable currency) from the exploitation of the Pictures during the
Term and which are not subject to forfeiture or return.
(b) "Distribution Expenses" means the aggregate of all
direct costs, expenses and charges incurred by Licensee or any of its
affiliates during the Term in any connection with the Pictures, the Film
Materials or Licensee's license hereunder, including, without limitation,
all expenses payable by Licensee pursuant to Section 2(a) hereof, re-use
fees and third-party payments, if any, (provided, however, that
Distribution Expenses shall not include (i) any general administration
overhead of Licensee or its related distribution companies, such as rent
and maintenance of Licensee's offices, normal salaries of Licensee's
regular employees while working their normal hours in the ordinary course
of their employment, any portion of Licensee's corporate income taxes and
the like or (ii) the distribution fee of any affiliate of Licensee).
(c) Gross Receipts shall be applied as follows:
(i) If received prior to the end of the day on
December 31, 1996, Licensee shall first retain 35% of all such monies as
its distribution fee, and Licensee shall then retain all such monies
remaining until it has recouped therefrom all theretofore unrecouped
Distribution Expenses;
(ii) If received on or after January 1, 1997,
Licensee shall first retain 30% of all such monies as its distribution
fee, and Licensee shall then retain all such monies remaining until it
has recouped therefrom all theretofore unrecouped Distribution Expenses;
(iii)Subject to Subsection 3(c)(iv) below, Licensee
shall pay to Owner the entire balance of all Gross Receipts ("Owner's
Share of Gross Receipts") in accordance with and subject to all of the
provisions hereof; and
(iv) Licensee and Owner acknowledge and agree that
the amounts accrued and payable to the Owner pursuant to this Agreement
as of ___________, 1996 is $________ (the "Accrued Participations").
From and after
Page 5
the date hereof, Licensee shall pay to Owner in each year
the amount of the Owner's Share of Gross Receipts earned by Owner during
any such year (the "Earned Participations"); PROVIDED, HOWEVER, that in
addition, Licensee shall pay to Owner a minimum of $800,000 per year in
respect of the Accrued Participations (the "Minimum Amount") until the
amount of the Accrued Participations has been reduced to zero; PROVIDED,
FURTHER, that in no event shall Licensee be obligated to pay Owner in any
year in respect of the aggregate of the Accrued Participations and the
Earned Participations for such year an amount in excess of the Maximum
Dollar Amount. The term "Maximum Dollar Amount" shall mean an amount
equal to $1,250,000 for the one year period from the date hereof through
the first anniversary of the date hereof, $1,350,000 for the one year
period from the first anniversary of the date hereof through the second
anniversary of the date hereof, $1,450,000 for the one year period from
the second anniversary of the date hereof through the third anniversary
of the date hereof and $1,500,000 for each of the annual periods from the
fourth anniversary of the date hereof through the end of the Term, at
which time any accrued but unpaid participation shall be paid. Any
Earned Participations not paid because of the Maximum Dollar Amount
limitations shall accrue and be deemed to constitute Accrued
Participations payable out of the Minimum Amount.
(d) Notwithstanding anything to the contrary contained
herein, if as of the expiration or other termina-tion of this Agreement
there should be any Distribution Expenses which Licensee has not recouped
in accordance with the foregoing, then upon Licensee's request Owner
shall reimburse to Licensee the entire amount thereof.
4. BOOKS, RECORDS AND ACCOUNTINGS.
(a) Licensee shall maintain complete and accurate books
of account and records with respect to Gross Receipts, Distribution
Expenses and all of the activities of Licensee relating to the Pictures
and Film Materials, including (as the case may be) the advertisement,
promotion, exploitation, maintenance and restoration thereof. If
Licensee receives any sums in any currency other than United States
Dollars, which sums are otherwise Gross Receipts, then Licensee shall
convert such sums to United States Dollars and take such United States
Dollars into Gross Receipts hereunder as soon as shall be reasonably
practicable. Licensee shall account to Owner, by means of a written
statement delivered to Owner within 60 days after the end of each
calendar quarter, with respect to Gross Receipts, Distribution Expenses,
Licensee's distribution fee and the calculation of the amount of Owner's
Share of Gross Receipts. Gross Receipts which are payable to Owner
hereunder, and a pro rata portion of the Minimum Amount,
Page 6
shall be paid concurrently with the delivery to Owner of such accounting
statement.
(b) Owner shall have the right to audit, at Owner's sole
cost and expense, the books and records of Licensee upon which
accountings to Owner hereunder are based. Audits hereunder may be
conducted only by a certi-fied public accountant, upon reasonable advance
notice, during regular business hours and in a manner so as not to
interfere with Licensee's normal business activities and no such audit
shall continue for a period longer than in rea-sonably necessary to
complete the same. Audits hereunder may not be conducted more frequently
than once annually and the same books and records may not be audited more
than once. In no event may an audit with respect to any particular
accounting be commenced later than 24 months after delivery to Owner of
the statement thereof and, moreover, each accounting statement delivered
to Owner hereunder shall be conclusive and binding upon Owner and Owner's
successors and assigns for all purposes, and shall not be subject to
objection for any reason whatever, unless a written objec-tion to such
statement (specifying in reasonable detail the grounds for objecting
thereto) is delivered to Licensee within 24 months after delivery to
Owner of the statement involved and, then, unless a lawsuit based
thereupon is filed within 12 months after delivery of such objection to
Licensee. If cumulative figures are included in any accounting statement
delivered hereunder, such statement shall nonetheless be deemed for
purposes of the foregoing to include only current figures (i.e., those
for the most recent quarterly period covered by the statement) and the
"limitations period" for commencing any audit or objecting to any
statement hereunder shall not be enlarged or extended by reason thereof.
A true copy of any final audit report shall be delivered to Licensee if
and when Owner shall determine, on the basis of such report, to object to
any accounting hereunder.
(c) The Pictures shall be fully "crosscollateralized,"
each against all of the others, for purposes of accountings hereunder.
Accordingly, all of the Pictures shall comprise a single accounting unit
and Gross Receipts attributable to any particular one of the Pictures may
be applied toward recoupment of Distribution Expenses relating to the
same motion picture and/or any of the other motion pictures included in
the Pictures.
5. OWNERSHIP AND FURTHER ACTS.
(a) Subject to the rights granted hereunder, all rights,
title and interest in and to the Pictures (including the copyrights
therein and in any remakes or sequels thereto) and Film Materials are and
shall remain the sole and exclusive property of Owner. Owner shall,
however, execute, acknowledge and deliver to Licensee an Exclusive
Page 7
License in the form of Exhibit C attached hereto and by this reference
incorporated herein and made a part hereof, which instrument Licensee may
file in the United States Copyright Office to evidence the grant to the
Licensee of the rights herein granted to it. In addition, Owner agrees,
at its option, to either (i) make physical delivery of the Film Materials
to such delivery locations as Licensee may designate, or (ii) make
available by a fully executed irrevocable access letter (the "Access
Letter") substantially similar in substance to the letter attached hereto
as Exhibit D and incorporated herein, at one or more delivery locations
as Licensee shall designate, the Film Materials in accordance with the
Delivery Schedule.
(b) Licensee shall promptly take all reasonable legal
steps necessary to protect the rights and interests of Owner with respect
to the Pictures and Film Materials and to restrain (and otherwise obtain
appropriate redress for) any unauthorized duplication of or other
dealings in any of the Pictures or Film Materials or any infringement
upon any of the Pictures or the materials relating thereto or any of the
trademarks, copyrights or other proprietary rights in or to the Pictures
and such related materials. Licensee may prosecute any of the aforesaid
actions in its own name and/or the name of Owner and Owner shall be free
to participate therein at Owner's own cost and expense by means of
counsel retained by Owner. Any and all costs and expenses incurred by
Licensee or any of its related companies in connection with any of the
actions referred to in this paragraph shall be included in Distribution
Expenses and any and all recoveries therein shall be included in Gross
Receipts hereunder. In addition, Licensee agrees to cause Owner to be
named as an additional insured on Licensee's errors and omissions policy.
(c) Owner and Licensee shall each, at the reasonable
request of the other, execute, acknowledge and deliver such additional
documents and furnish such additional information and materials and
otherwise perform such further acts as may be reasonably necessary or
desirable to further evidence, maintain, perfect and/or protect the
respective rights and interests of the parties hereunder and otherwise
carry out the intents and purposes of this Agreement. If Owner should
fail to execute, acknowledge or deliver any additional document as
aforesaid, then Licensee shall be and is hereby authorized to do so in
the name and on behalf of Owner as Owner's attorney-in-fact, which
authority given to Licensee is a power coupled with an interest and
therefore irrevocable. Likewise, if Licensee should fail to execute,
acknowledge or deliver any additional document as aforesaid, then Owner
shall be and is hereby given a similar irrevocable power of attorney to
do so in Licensee's name and on Licensee's behalf.
Page 8
6. REPRESENTATIONS AND WARRANTIES.
(a) Owner represents and warrants to Licensee as follows:
(i) Owner has full right, power and authority to
enter into and fully perform this Agreement and to grant, sell, assign,
transfer and convey to Licensee all of the rights and privileges herein
granted and to be granted to Licensee hereunder.
(ii) Owner owns and controls all rights in and to the
Pictures required for the full and complete exercise and enjoyment of all
rights, licenses and privileges granted and agreed to be granted to
Licensee hereunder.
(iii) Except as specified in Schedule 6 hereto, Owner
has not heretofore sold, assigned, licensed or granted to any person any
rights with respect to the Pictures in the Territory.
(iv) None of the Pictures nor any part or element
thereof, nor the lawful exercise of any of the rights granted to Licensee
herein, violates, will violate, infringes or will infringe any right of
privacy or publicity, copyright of trademark, constitute defamatory,
obscene or unlawful matter, or otherwise violate or infringe any right of
any kind of any person.
(v) Except as set forth on Schedule 6(a)(v) hereof,
none of the Pictures are in the public domain in the United States.
Owner will not take any action which will allow any of the Pictures to
fall into the public domain in the United States during the period of
copyright protection afforded under the United States Copyright Act.
Each of the Pictures as delivered will contain the copyright notices
required under the United States Copyright Act.
(vi) Except as set forth on Schedule 6(a)(vi) hereof,
Owner has obtained or will have obtained prior to delivery of the
Pictures, at its sole cost and expense, all music clearances, including,
without limi-tation, synchronization and master use licenses, necessary
for the exploitation of the use of the music and/or lyrics contained in
the Pictures. Notwithstanding the foregoing, the performing rights to
all musical compositions contained in the Pictures are: (a) controlled
by the American Society of Composers, Authors and Publishers (ASCAP),
Broadcast Music, Inc. (BMI) or similar organizations or (b) in the public
domain the Territory or (c) controlled by Owner.
(vii) There is not now and will not be any lien,
encumbrance, litigation, proceeding or claim
Page 9
pending or threatened against Owner which are caused by Owner and which
will adversely affect Owner's rights in and to the Pictures, the
copyrights pertaining thereto or the rights granted to Licensee hereunder.
Owner promptly shall notify Licensee upon the institution of any
litigation, proceeding or claim which materially adversely affects Owner's
rights in and to the Pictures, the copyrights pertaining thereto or the
rights granted to Licensee hereunder.
(b) Licensee represents and warrants that Licensee has
the right, power and authority to enter into and perform this Agreement;
that neither the execution of this Agreement nor the performance thereof
shall violate any other agreement to which Licensee is a party; and that
no advertising or publicity materials, dubbed or subtitled versions of
the Pictures or any other materials created by or under Licensee's
authority shall give rise to any adverse claim with respect to any rights
(including, without limitation any copyright, trademark, trade name,
contract or private rights) of any person or entity.
7. INDEMNITY. Each party agrees, at its own expense, to
defend, indemnify and hold harmless the other party from and against any
and all charges, claims, loss, damages, liability, expense, costs,
penalties, reasonable attorneys' fees actually paid, of any kind or
nature whatsoever arising out of a breach or failure of any of the
covenants, agreements, obligations or representations made hereunder.
The indemnitor shall have the right to control the defense of any claim,
action or other proceeding which may involve its indemnity with counsel
of its choice. The indemnitee shall have the right to participate in the
defense of any such claim, action or other proceeding with counsel of its
choice. There shall be no settlement of any claim, action or other
proceeding for which indemnity may be sought without the prior written
approval of the indemnitor. The indemnity contained herein shall extend
also to the parents, subsidiaries, affiliates, permitted licensees,
permitted assigns, successors, and representatives of the indemnities and
to the employees, officers, directors, agents, representative, attorneys
and shareholders of each of them.
8. BREACH AND TERMINATION.
(a) Each of the following shall constitute a material
breach of this Agreement by Licensee entitling Owner (in addition to all
of the other rights and remedies of Owner in the circumstances) to
terminate this Agreement and Licensee's license hereunder by notice given
to Licensee:
Page 10
(i) Licensee's or any of its affiliates' ceasing to
engage in the business of motion picture distribution for a continuous
period of 30 or more days;
(ii) Licensee's failure to pay any sum due to Owner (and
not disputed in good faith) as and when required hereunder if not cured
within 10 days after notice thereof given by Owner; and
(iii) Licensee's failure within 30 days after receipt of
written demand by Owner to remedy completely any other act or failure
constituting a material breach of this Agreement.
(b) From and after the expiration or earlier termination
of this Agreement, Licensee shall have the non-exclusive right during the
one year period following such expiration or early termination (the "Sell
Off Period") to dispose of its entire inventory of video cassettes,
videograms or other related materials manufactured or produced utilizing
the rights granted to Licensee hereunder and Licensee shall account to
and pay to Owner amounts owing to Owner on account of such sales in
accordance with the terms of this Agreement. During the Sell Off Period,
Licensee shall not dispose of its inventory of video cassettes,
videograms or other related materials outside of distribution channels in
which Licensee was selling such products prior to the expiration or
earlier termination of this Agreement or with a change in pricing policy
outside the ordinary course of business. In addition, Licensee hereby
grants to Owner following the expiration or earlier termination of this
Agreement, the option to acquire all of Licensee's inventory of video
cassettes, videograms or other related materials at Licensee's cost for
such product.
(c) In the event Licensee desires to negotiate for an
extension of the Term, it shall provide written notice of such desire to
the Owner no less than two years prior to the end of the Term, with such
negotiations to continue up to one year (or if longer, up to the date one
year prior to the end of the Term). In the event such negotiations do
not result in an agreement between Licensee and the Owner, the Licensee
shall have the following rights of first and last refusal: if the Owner
desires to accept an offer to license distribution of any of the
Pictures, Owner shall give Licensee written notice and Licensee shall be
entitled to make Owner an offer in reasonable detail to distribute any
such Pictures. Owner may accept such offer in its discretion. If Owner
rejects such Offer, Owner may for a 60-day period negotiate with a third
party for the right to distribute such Pictures on terms which are more
favorable to Owner than those offered by Licensee. If Owner desires to
accept such third party offer, it shall give Licensee written notice
specifying the material terms and conditions of such proposed license
agreement (the "Offer
Page 11
Terms"). If Licensee then desires to enter into a proposed licensing
agreement on the Offer Terms, Licensee shall so notify Owner within
10 business days after receipt of the Offer Notice, and the parties
shall thereon use their reasonable commercial efforts to enter into
a definitive agreement for such distribution on mutually acceptable
terms within 30 days following Licensee's response to Owner. If no
definitive agreement is reached within the 30-day period, Owner shall
have the right to enter into a licensing agreement with a third party
within 60 days thereafter on terms and conditions no less favorable to
Owner than the Offer Terms. If no agreement is reached within such 60
day period has expired, Owner shall be obligated to deliver the notices
required hereunder and comply with the provisions of this Section. Owner
may not enter into any agreement for the exploitation of any Pictures
without having complied with the provisions of this Section.
9. AGREEMENT OF OWNER. Owner agrees and acknowledges that:
(i) the Pictures are works of authorship protected under Title 17 of the
United States Code and are intended to constitute, and do constitute,
"intellectual property" within the meaning of sections 101(56)(E) and
365(n) of Title 11 of the United States Code (the "Bankruptcy Code");
(ii) the rights of Licensee hereunder are "rights to intellectual
property" within the meaning of such sections; and (iii) the obligations
of Owner set forth in this Agreement shall continue in full force and
effect, in circumstances described in subsections (3) and (4) of such
section 365(n) of the Bankruptcy Code.
10. NOTICES. All notices required or desired to be given
hereunder shall be in writing and shall be transmitted by either personal
delivery, prepaid telegram, cable or telex, prepaid air mail, telecopy or
telefax or prepaid messenger or courier service. Owner's and Licensee's
respective addresses for notices shall be as set forth above. Either
party may change its address for notices by so advising the other party
in writing. All notices shall be deemed given when received. Courtesy
copies of all notices to Owner shall be sent to ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇, Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇.
11. ASSIGNMENT. Owner may assign this Agreement to any person
or entity acquiring all or substantially all of Owner's rights in and to
the Pictures but not otherwise without Licensee's written consent.
Licensee may assign this Agreement without Owner's consent to an
affiliate of Licensee.
12. FORCE MAJEURE. Notwithstanding anything to the contrary
contained herein, neither Licensee nor Owner shall be liable in damages
for any failure to perform hereunder if such failure is due to any cause
beyond such
Page 12
party's control, including but not limited to fire, earth-quake, flood,
epidemic, accident, explosion, casualty, strike, lockout, labor
controversy, riot, civil disturbance, act of public enemy, embargo,
war, act of God, passage of any governmental ordinance or law, issuance
of any executive or judicial order, failure or delay by any laboratory,
failure (without the fault of such party) to obtain materials,
transportation, power or any other essential thing required in the
conduct of such party's business and all similar causes.
13. RELATIONSHIP OF THE PARTIES. Nothing in this Agreement
shall be construed to create or evidence a joint venture or partnership
relationship between the parties hereto. This Agreement is not for the
benefit of any third party and shall not be deemed to create or evidence
any right or remedy of any such party, whether referred to herein or not.
Neither of the parties hereto shall hold itself out contrary to the
provisions of this paragraph.
14. WAIVER. No waiver by either of the parties hereto of any
breach of any provision of this Agreement shall be deemed to be a waiver
of any preceding or succeeding breach of the same provision or any breach
of any other provision hereof and no waiver shall be effective unless
made in writing and, then, only to the extent specifically set forth.
The exercise of any rights granted to either party hereunder shall not
operate as a waiver of any default or breach on the part of the other
party hereto. Each and all of the several rights and remedies of the
parties hereto (whether at law, in equity, as provided herein or
otherwise) shall be construed as cumulative and no one of them as
exclusive of the others or of any priority allowed by law.
15. SEVERABILITY. Nothing in this Agreement shall be
construed so as to require the commission of any act contrary to law, and
wherever there is any conflict between any provisions of this Agreement
and any statute, law or ordinance contrary to which the parties have no
legal right to contract, the latter shall prevail, but in such event the
provisions of this Agreement affected shall be curtailed and limited only
to the minimum extent necessary to bring this Agreement within the
applicable legal requirements.
16. CAPTIONS. Captions and paragraph headings contained
herein are for convenience only and shall not be considered for any
purpose in interpreting or construing this Agreement.
17. APPLICABLE LAW, JURISDICTION AND SERVICE OF PROCESS. This
Agreement is entered into pursuant to the laws of the State of California
and shall be interpreted in accordance with the laws applicable to
agreements entered into and wholly performed therein. Owner and Licensee
each
Page 13
hereby irrevocably consents to the jurisdiction of the State and
Federal Courts in the County of Los Angeles with respect to any matter,
claim or controversy relating to this Agreement or the Pictures or Film
Materials and each hereby agrees that process in any action relating
thereto may be served by registered or certified mail, return receipt
requested, in addition to any other means permitted by applicable law.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto as well as their respective heirs, executors, successors
and assigns.
18. MODIFICATION. This Agreement, including all of the
exhibits made a part hereof, is complete and consti-tutes the entire
agreement between the parties regarding the subject matter hereof, any
and all prior understanding (whether oral or written) having been
superseded hereby. No officer, employee or representative of either
party has any authority to make any representation or promise in connec-
tion with this Agreement or the subject matter hereof which is not
contained herein and each party acknowledges that it has not executed
this Agreement in reliance upon any such representation or promise. No
purported modification of or amendment to this Agreement shall be
effective unless made in a writing signed by Licensee and Owner.
19. GUARANTY. Metromedia International Group, Inc. hereby
agrees to guarantee all of Licensee's obligations hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement an of the day and year first written above.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, JR. FAMILY TRUST("Owner")
By: ___________________________
Its: ___________________________
THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ COMPANY
("Licensee")
By: ___________________________
Its: ___________________________
Accepted and agreed as
to paragraph 19 only:
METROMEDIA INTERNATIONAL GROUP, INC.
By:
Its:
Page 15
Exhibit A
THE PICTURES
ADVENTURES OF ▇▇▇▇▇ ▇▇▇▇
BALL OF FIRE
BARBARY COAST
BELOVED ENEMY
BEST YEARS OF OUR LIVES
▇▇▇▇▇▇'▇ WIFE
COME AND GET IT
CONDEMNED
COWBOY AND THE LADY
CYNARA
DARK ANGEL
DEAD END
DEVIL TO PAY
▇▇▇▇▇▇▇▇▇
EDGE OF DOOM
ENCHANTMENT
GOLDWYN FOLLIES
GUYS AND DOLLS
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
I WANT YOU
KID FROM BROOKLYN
KID FROM SPAIN
▇▇▇ ▇▇▇▇▇▇▇▇
LITTLE FOXES
MASQUARADER
MY FOOLISH HEART
POTASH AND ▇▇▇▇▇▇▇▇▇▇
TARNISH
A THIEF IN PARADISE
STELLA DALLAS (1925)
THE WINNING OF ▇▇▇▇▇▇▇ WORTH
THE MAGIC FLAME
TWO LOVERS
THE RESCUE
BULLDOG ▇▇▇▇▇▇▇▇
WHOOPEE
ARROWSMITH
SECRETS
ONE HEAVENLY NIGHT
OUR VERY OWN
PALMY DAYS
PRIDE OF THE YANKEES
PRINCESS AND THE PIRATE
RAFFLES
REAL GLORY
ROMAN SCANDALS
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SECRET LIFE OF ▇▇▇▇▇▇ ▇▇▇▇▇
Page 16
A SONG IS BORN
SPLENDOR
STELLA DALLAS
STRIKE ME PINK
THESE THREE
THEY GOT ME COVERED
THEY SHALL HAVE MUSIC
UNHOLY GARDEN
UP IN ARMS
WEDDING NIGHT
WE LIVE AGAIN
WESTERNER
WOMAN CHASES MAN
WONDER MAN
WUTHERING HEIGHTS
NANA
▇▇▇▇▇▇▇▇
IN HOLLYWOOD WITH POTASH & ▇▇▇▇▇▇▇▇▇▇
HIS SUPREME MOMENT
PARTNERS AGAIN, WITH POTASH & ▇▇▇▇▇▇▇▇▇▇
THE NIGHT OF LOVE
THE DEVIL DANCER
THE AWAKENING
THIS IS HEAVEN
RAFFLES (1930)
TONIGHT OR NEVER
PORGY AND ▇▇▇▇
Page 17
Exhibit B
WHEN RECORDED PLEASE RETURN TO:
THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ COMPANY
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Business Affairs Department
EXCLUSIVE LICENSE
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, JR. FAMILY TRUST ("Owner") for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, hereby grants to THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ COMPANY ("Licensee")
the sole and exclusive right and license under copyright for the
distribution, licensing and other exploitation of the Pictures
(including, for all purposes of this Agreement, all of the parts and
elements thereof), in any and all versions and languages, during the
entire Term in all of the Media throughout the Territory. Owner shall
retain all remake and sequel rights in the Pictures, PROVIDED, THAT
Licensee shall have (i) an exclusive right of first refusal to produce
any remakes or sequels of any of the Pictures which Owner proposes in its
sole discretion to produce during the Term (which rights must be
expressly waived in writing by the Licensee) and (ii) the right to act as
Owner's sole and exclusive agent and representative for the distribution,
licensing and other exploitation of any such remake or sequel rights
during the Term in all of the Media throughout the Territory which Owner
proposes in its sole discretion to exploit; PROVIDED, THAT, if Mr. ▇▇▇▇▇▇
▇▇▇▇▇▇▇, Jr. no longer serves as Chairman of the Licensee other than as a
result of his termination by Licensee for "cause" (as defined in the
Employment Agreement dated the date hereof between Licensee and ▇▇.
▇▇▇▇▇▇▇), the Licensee's rights set forth in clauses (i) and (ii) above
shall terminate; PROVIDED, FURTHER, that if ▇▇. ▇▇▇▇▇▇▇ is terminated as
Chairman of the Licensee for "cause", Licensee's rights set forth in
clauses (i) and (ii) above shall terminate on the seventh anniversary of
the date hereof. Owner shall have the right to produce, distribute and
exploit a compilation film involving the Pictures.
Furthermore, Licensee is hereby empowered to bring, prosecute,
defend and appear in suits, actions and proceedings of any nature under
or concerning the copyrights in the Pictures or the renewal of same, or
concerning any infringement thereof and particularly infringement of or
interference with any of the rights granted under any such copyright or
renewal, all in its own name and/or the name of Owner.
Page 18
The Pictures are: "ARROWSMITH," "ADVENTURES OF ▇▇▇▇▇ ▇▇▇▇,"
"BALL OF FIRE," "BARBARY COAST," "BELOVED ENEMY," "BEST YEARS OF OUR
LIVES," "▇▇▇▇▇▇'▇ WIFE," "COME AND GET IT," "CONDEMNED," "COWBOY AND THE
LADY," "CYNARA," "DARK ANGEL," "DEAD END," "DEVIL TO PAY," "▇▇▇▇▇▇▇▇▇,"
"EDGE OF DOOM," "ENCHANTMENT," "GOLDWYN FOLLIES," "GUYS AND DOLLS," "▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇," "I WANT YOU," "KID FROM BROOKLYN," "KID FROM SPAIN,"
"▇▇▇ ▇▇▇▇▇▇▇▇," "LITTLE FOXES," "MASQUARADER," "MY FOOLISH HEART,"
"POTASH AND ▇▇▇▇▇▇▇▇▇▇," "TARNISH," "A THIEF IN PARADISE," "STELLA DALLAS
(1925)," "THE WINNING OF ▇▇▇▇▇▇▇ WORTH," "THE MAGIC FLAME," "TWO LOVERS,"
"THE RESCUE," "BULLDOG ▇▇▇▇▇▇▇▇," "WHOOPEE," "ARROWSMITH," "SECRETS,"
"ONE HEAVENLY NIGHT," "OUR VERY OWN," "PALMY DAYS," "PRIDE OF THE
YANKEES," "PRINCESS AND THE PIRATE," "RAFFLES," "REAL GLORY," "ROMAN
SCANDALS," "▇▇▇▇▇▇▇▇ ▇▇▇▇▇," "SECRET LIFE OF ▇▇▇▇▇▇ ▇▇▇▇▇," "A SONG IS
BORN," "SPLENDOR," "STELLA DALLAS," "STRIKE ME PINK," "THESE THREE,"
"THEY GOT ME COVERED," "THEY SHALL HAVE MUSIC," "UNHOLY GARDEN," "UP IN
ARMS," "WEDDING NIGHT," "WE LIVE AGAIN," "WESTERNER," "WOMAN CHASES MAN,"
"WONDER MAN," "WUTHERING HEIGHTS," "NANA ▇▇▇▇▇▇▇▇," "IN HOLLYWOOD WITH
POTASH & ▇▇▇▇▇▇▇▇▇▇," "HIS SUPREME MOMENT," "PARTNERS AGAIN, WITH POTASH
& ▇▇▇▇▇▇▇▇▇▇," "THE NIGHT OF LOVE," "THE DEVIL DANCER," "THE AWAKENING,"
"THIS IS HEAVEN," "RAFFLES (1930)," "TONIGHT OR NEVER" and "PORGY AND
▇▇▇▇."
Page 19
This exclusive license is subject to the terms and conditions
of that certain Distribution Agreement between Owner and Licensee dated
_________, 1996 and made as of December 1, 1979.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, JR. FAMILY TRUST
By _____________________________
Its ____________________________
Date: __________________________
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On this _____ day of __________, in the year 1996, before me,
_____________________, a Notary Public in and for said County and State,
personally appeared ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr., personally known to me (or who
proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to this instrument as _____________________ of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr. Family Trust (the "Trust"), and acknowledged to me
that he is authorized to execute this instrument on behalf of the Trust
and that the Trust executed it.
WITNESS MY HAND AND OFFICIAL SEAL
_________________________________
EXHIBIT F
TRADEMARK LICENSE AGREEMENT
BETWEEN
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, JR.
AND
GOLDWYN ENTERTAINMENT COMPANY
Dated as of ___________ __, 1996
______________________________
TRADEMARK LICENSE AGREEMENT (the "Agreement"), dated as of
__________ __, 1996, between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr. ("Licensor") and Goldwyn
Entertainment Company, a Delaware corporation formerly known as The
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Company ("Licensee").
WHEREAS, Licensor and Licensee are among the parties to that
certain letter agreement, dated April 28, 1995 (the "Old Agreement"),
pursuant to which Licensor granted to Licensee the right to use the
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇" name as part of any trademark, service ▇▇▇▇, trade name,
related logo or for any other business purpose, on the terms and subject
to the conditions set forth therein;
WHEREAS, Licensor and Licensee wish to (i) enter into a new
agreement, which agreement shall supersede the Old Agreement, relating to
the name "▇▇▇▇▇▇ ▇▇▇▇▇▇▇" or "▇▇▇▇▇▇ ▇▇▇▇▇▇▇, JR", including all
variations and combinations thereof (including the stylized signature
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇"), all registrations, renewals and applications therefor,
including the registrations and applications set forth on Schedule 1
hereto, and all goodwill related thereto (collectively, the
"Trademarks"), on the terms set forth herein and (ii) establish certain
standards for the quality of all products sold or otherwise utilizing
such Trademarks;
NOW, THEREFORE, in consideration of the foregoing, other good
and valuable consideration and the mutual terms
Page 2
and covenants contained herein, the parties hereto agree as follows:
ARTICLE I
GRANT OF PERPETUAL EXCLUSIVE LICENSE
1.1 Licensor hereby grants to Licensee an irrevocable,
perpetual, royalty-free license throughout the world (the "Territory") to
use the Trademarks on, as part of or in connection with and relating to
the distribution, licensing, sublicensing and exploitation of Existing
Product (as defined below) in any manner and in any media whatsoever,
including, without limitation, by projection, radio, all forms of
television (including, without limitation, free, pay, toll, cable,
subscription, sponsored and direct satellite broadcast), in theaters,
non-theatrically, on cassettes, cartridges and discs and by any and all
other scientific, mechanical or electronic means, methods, processes or
devices now known or hereafter conceived, devised or created. For the
purposes hereof, "Existing Product" shall mean all completed and in-
production film and television product owned, licensed or otherwise
controlled by Licensee on the date hereof. Notwithstanding the
foregoing, Licensor agrees that as long as he serves as Chairman of
Licensee he will not grant to any third party the right to use any of the
Trademarks in connection with the production, development, distribution
or licensing of motion picture and television product.
Page 2
1.2 In addition, Licensor hereby grants to Licensee an
irrevocable, perpetual, royalty-free license throughout the Territory to
use the Trademarks that consist of the name "GOLDWYN" alone and not in
conjunction with the name "▇▇▇▇▇▇" as part of a corporate name or on, as
part of or in connection with, and relating to, the distribution,
licensing, sublicensing and exploitation of Existing Product or film and
television product created, acquired or distributed by Licensee from and
after the date hereof, in any manner and in any media whatsoever,
including, without limitation, by projection, radio, all forms of
television (including, without limitation, free, pay, toll, cable,
subscription, sponsored and direct satellite broadcast), in theaters,
non-theatrically, on cassettes, cartridges and discs and by any and all
other scientific, mechanical or electronic means, methods, processes or
devices now known or hereafter conceived, devised or created.
1.3 Licensee shall have the right to grant sublicenses to
its affiliates and to third parties to use the Trademarks in the
Territory for any purposes for which Licensee has been granted a license
hereunder, provided that (i) copies of all such sublicenses granted by
Licensee shall be delivered to Licensor immediately after execution and
(ii) any such sublicensee shall agree in writing to be bound by the terms
of this Agreement.
Page 4
ARTICLE II
OWNERSHIP OF TRADEMARKS
2.1 Licensee acknowledges that Licensor owns all legal
right, title and interest in and to the Trademarks in the Territory and
all associated goodwill. Use of the Trademarks by Licensee and its
affiliates and sublicensees shall be deemed to have been used by Licensor
for purposes of trademark maintenance and registration, and all uses of
the Trademarks by Licensee and its affiliates and sublicensees shall
inure to the benefit of Licensor. Licensee will not at any time
affirmatively do by act or omission any thing which would in any way
adversely affect Licensor's legal title in the Trademarks or any
registrations or applications for registration thereof.
2.2 Licensee shall, at Licensor's reasonable request,
execute any documents and take any actions required by Licensor to
confirm Licensor's legal title in and to the Trademarks in the Territory
and the respective rights of Licensor and Licensee pursuant to this
Agreement. Licensee will cooperate with Licensor and will, at Licensor's
reasonable request, take any actions requested by Licensor in connection
with the filing and prosecution by Licensor of applications in Licensor's
name to register the Trademarks in the Territory and in connection with
the maintenance and renewal of such registrations as may issue, subject
to the grant to Licensee of the irrevocable, exclusive, perpetual,
royalty-free rights hereunder.
Page 5
2.3 The parties agree to take whatever actions they mutually
deem to be reasonably necessary to effect the purposes of this Agreement,
including recording this Agreement or other documents prepared by
Licensee and acceptable to Licensor with appropriate government offices
throughout the Territory. All reasonable costs of compliance with this
Section (including recording fees, taxes and attorneys' fees) shall be
borne by the Licensee.
ARTICLE III
QUALITY CONTROL
Licensee agrees that all products sold, licensed, sublicensed,
distributed, advertised, provided and/or marketed with or in connection
with the Trademarks shall be of a consistent and high standard of
quality, commensurate with the prestige of the Trademarks. At Licensor's
request, Licensee shall provide at its own expense samples of any product
sold, licensed, sublicensed, distributed, advertised, provided and/or
marketed with or in connection with the Trademarks. Licensee shall
cooperate fully with the reasonable instructions of Licensor with respect
to the maintenance of the foregoing standards.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.1 AMENDMENTS. This Agreement supersedes the Old
Agreement and all prior oral or written understandings and agreements
relating hereto, and may not be modified,
Page 6
discharged or terminated except by a written instrument signed by the
parties hereto.
4.2 WAIVERS. No failure or delay on the part of any party
in exercising any power, right or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or remedy preclude any other or further exercise
thereof or the exercise of any other power, right or remedy.
4.3 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
4.4 NO JOINT VENTURES. Nothing herein contained shall be
construed to constitute the parties hereto as partners, joint venturers
or agents of the other, and no party shall have any power to obligate or
bind any other in any manner whatsoever.
4.5 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New
York applicable to agreements made and to be performed wholly within such
State, and in accordance with the trademark laws of the United States, as
applicable. The parties hereby consent to the jurisdiction
Page 7
of the state and federal courts of general jurisdiction situated in New York
County, New York, for the resolution of all disputes arising out of or relating
to the Trademarks or this Agreement, and the parties hereby waive any and
all defenses of improper venue or that the forum is inconvenient.
4.6 COUNTERPARTS. This Agreement may be executed in two
or more counterparts and by different parties on separate counterparts,
each of which shall be an original, but all of which taken together shall
constitute one and the same instrument.
4.7 SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of each
party and its respective successors, assigns, transferees and all other
successors in interest. The parties further acknowledge and agree that
each shall obtain a written, signed and notarized acknowledgment by any
immediate successors that such successors (and their successors) are and
will be bound by the terms and conditions of this Agreement, and any and
all other Agreements entered into between the parties in connection with
the Trademarks, and such successors shall agree similarly to obtain such
acknowledgments from their successors.
Page 8
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date and year first above written.
_________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr.
GOLDWYN ENTERTAINMENT COMPANY
By:
Name:
Title:
EXHIBIT G
AMENDED AND RESTATED OPTION AGREEMENT
THIS AMENDED AND RESTATED OPTION AGREEMENT ("Option Agreement")
dated as of the __th day of _________, 1996, provides for an option from
Metromedia International Group, Inc., a Delaware corporation (the
"Company"), to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr. ("Goldwyn") and an option from The
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Jr. Family Trust ("Goldwyn Trust") to the Company. The
Goldwyn Trust is a grantor trust of which Goldwyn is the grantor and
trustee.
WHEREAS, The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Company, a wholly-owned subsidiary
of the Company ("SGC"), Goldwyn and the Goldwyn Trust are parties to an
Option Agreement dated as of April 13, 1993 (the "Original Option
Agreement") which generally provides for (i) the grant of an option from
SGC to Goldwyn for the purchase of a number of shares of SGC's common
stock and (ii) the grant of an option from the Goldwyn Trust to SGC to
reduce the amount of certain "participations payable" (the
"Participations") accrued pursuant to that certain Amended and Restated
Distribution Agreement dated as of the date hereof between SGC and the
Goldwyn Trust in exchange for shares of SGC's common stock;
WHEREAS, the options granted pursuant to the Original Option
Agreement are substantially similar to the options provided for herein;
WHEREAS, pursuant to an Agreement and Plan of Merger dated as
of January __, 1996 (the "Merger Agreement") by and among the Company,
SGC and SGC Merger Corp., all the outstanding shares of SGC are being
exchanged for shares of the Company in the manner specified in the Merger
Agreement; and
WHEREAS, the parties to the Original Option Agreement desire,
in connection with the consummation of the transactions set forth in the
Merger Agreement, to amend and restate the Original Option Agreement to
clarify that the options granted thereunder may be exercised by the
Company or the Goldwyn Trust, as the case may be, utilizing the Company's
common stock, par value $1.00 per share (the "Common Stock"), instead of
SGC's common stock, upon the terms and subject to the conditions set
forth herein.
NOW THEREFORE, the Company, Goldwyn and the Goldwyn Trust agree
as follows:
Page 2
1. GOLDWYN OPTION; NUMBER OF SHARES, OPTION PRICE. The
Company hereby grants to Goldwyn an option (the "Goldwyn Option"), to
purchase up to an aggregate of __________{1} shares of Common Stock (the
"Option Shares") at a price per share equal to $____{2} (the "Option
Price") in cash, on the term and subject to the conditions set forth
herein.
2. GOLDWYN TRUST OPTION; NUMBER OF SHARES, OPTION PRICE. The
Goldwyn Trust hereby grants to the Company an option (the "Trust Option")
to cause the Goldwyn Trust to purchase up to an aggregate of _________{3}
Option Shares at the "Trust Option Price" (as hereinafter defined) in
exchange for a dollar-for-dollar reduction of the Participations up to an
aggregate amount of $7,000,000 in principal amount of Participations, on
the terms and subject to the conditions set forth herein. The Trust
Option Price shall be the average closing price of the Common Stock as
reported by the Wall Street Journal--"American Stock Exchange Composite
Transactions" for the ten (10) trading days prior to the date of notice
of exercise pursuant to Section 4(b) hereof, if such average price is not
less than $_____{4} per share or not greater than $____{5} per share; and
if such average price is less than $_____{6} per share, the Trust Option
Price shall be $_____,{7} and, if such average price is greater than
$____{8} per share,
---------------------------------
{1/}The number of Option Shares shall be equal to the product of (x)
875,000 multiplied by (y) the Exchange Ratio (as defined in the Merger
Agreement).
{2/}The Option Price shall be equal to the quotient of (x) $8.00 divided
by (y) the Exchange Ratio.
{3/}The number of Option Shares shall be equal to the product of (x)
875,000 multiplied by (y) the Exchange Ratio (as defined in the Merger
Agreement).
{4/}Price to be equal to quotient of (x) $6.50 divided by (y) Exchange
Ratio.
{5/}Price to be equal to the quotient of (x) $9.00 divided by (y) the
Exchange Ratio.
{6/}Price to be equal to quotient of (x) $6.50 divided by (y) Exchange
Ratio.
{7/}Price to be equal to quotient of (x) $6.50 divided by (y) Exchange
Ratio.
{8/}Price to be equal to the quotient of (x) $9.00 divided by (y) the
Exchange Ratio.
Page 3
the Trust Option Price shall be $____.{9} Nothing
herein shall in any way limit or restrict the Company's ability or right
to pay or settle Participations due the Goldwyn Trust with cash.
3. AGGREGATE LIMITATION ON GOLDWYN OPTION AND TRUST OPTION.
The aggregate number of shares of Common Stock subject to this Option
Agreement shall be ________.{10} Accordingly, any exercise of the
Goldwyn Option or the Trust Option shall reduce the number of shares of
Common Stock subject to either of such options by the number of option
Shares theretofore issued pursuant to any such exercise or exercises.
The Goldwyn Option and the Trust Option are hereafter collectively and
interchangeably referred to as the "Options," or individually as the
"Option."
4. PERIOD OF OPTIONS AND CONDITIONS OF EXERCISE.
(a) The term of the Options shall commence on the date
hereof and terminate an April 11, 1999 (the "Expiration Date").
(b) The Options shall be exercisable, in whole or in
part, at any time or from time to time from the date hereof (except
during any periods where Goldwyn, or the Goldwyn Trust, as the case may
be, may legally or contractually be prohibited from selling the Common
Stock) and until the Expiration Date.
The Options may be exercised by giving written notice to the
Company or the Goldwyn Trust, as the case may be, which notice shall
include the date, the number of Option Shares as to which the Option is
then being exercised and the aggregate purchase price of such Option
Shares. At the time of issuance and delivery of certificates
representing the Option Shares to Goldwyn or the Goldwyn Trust pursuant
to the exercise of the Option, in whole or in part, the aggregate Option
Price of the Option Shares purchased pursuant thereto shall be paid in
full at the principal office of the Company by certified or bank
cashier's check in connection with the exercise of the Goldwyn Option or
by a written confirmation from the Goldwyn Trust that an amount equal to
the Trust Option Price in principal amount of the Participations has been
exchanged
-----------------------------------------
{9/}Price to be equal to the quotient of (x) $9.00 divided by (y) the
Exchange Ratio.
{10/}The number of shares shall be equal to the product of (x) 875,000
multiplied by (y) the Exchange Ratio.
Page 4
for the Option Shares in connection with the exercise of the
Trust Option.
(c) Issuance and delivery of the certificates
representing the Option Shares following exercise of the Options an
hereinabove provided shall be subject to the following express conditions
precedent:
(i) A Registration Statement under the Securities
Act of 1933, as amended (the "Securities Act"), as contemplated by
Section 5 hereof, shall at the time of issuance and delivery of
certificates representing the Option Shares pursuant to exercise of
the Options be in effect with respect to resale by Goldwyn or the
Goldwyn Trust, as the case may be, of the Option Shares and Goldwyn
or the Goldwyn Trust, as the case may be, shall be free to sell the
Common Stock issuable upon exercise of the Options publicly or
privately in conformity with all legal and contractual obligations
of the Company, Goldwyn, and the Goldwyn Trust, including without
limitation, in compliance with the Securities Act and all applicable
state securities laws. In the case of exercise by the Company of
the Trust Option, the Goldwyn Trust shall have the right to have an
underwriter for the resale of the Option Shares within the
contemplation of Section 5(b)(vii) hereof as precondition to the
effectuation of such exercise by the Company. Notwithstanding the
foregoing, Goldwyn or the Goldwyn Trust may at his or its sole
option elect to receive the Option Shares without registration under
the Securities Act provided that Goldwyn, or the Goldwyn Trust, as
the case may be, shall have delivered to the Company such assurances
as the Company may reasonably request that the Option Shares are
being acquired in accordance with the terms of an applicable
exemption from the registration requirements of the Securities Act.
If the foregoing Registration Statement is not in effect within
ninety (90) days after notice as provided in Section 4(b), such
exercise shall be null and void at the option of Goldwyn or the
Goldwyn Trust, as the case may be. If the Registration Statement is
on Form S-3 (or any other form requiring that the registered
securities be issued and outstanding), the Company shall take all
such action as may be required to comply with such form, including
issuing the Option Shares; provided that if such Registration
statement is not in effect within such ninety (90) day period, such
exercise shall be null and void and any Option Shares so issued
shall be cancelled and retired at the option of Goldwyn or the
Goldwyn Trust, as the case may be. The Company shall used its best
efforts to satisfy the condition of this Section 4(c)(1).
Page 5
(ii) If the shares of Common Stock or other
securities issuable on exercise of the Option are then listed on any
securities exchange or quotation system such shares shall have been
authorized for listing on such exchange or quotation system on
official notice of issuance.
(iii)If required, the Company or a subsidiary shall
have obtained the written consent of any lender to the Company or a
subsidiary to the exchange of the Participations for Common Stock.
5. (a)"PIGGY BACK" REGISTRATION. Subject to contractual
requirements of the Company that would prevent the inclusion of the
Option Shares on a registration statement, if at any time during the
period of this Option Agreement the Company shall determine to register
under the Securities Act (including pursuant to a demand of any
stockholder of the Company exercising registration rights) any of its
Common Stock, other than on Form S-8 or Form S-4 for a business
combination or then equivalent forms, it shall send to Goldwyn written
notice of such determination and, if within thirty (30) days after
receipt of such notice, Goldwyn shall exercise the Option by giving
notice pursuant to Section 4(b) hereof and so requests in writing, the
Company shall use its best efforts to include in such registration
statement all or any part of the Option Shares Goldwyn requests to be
registered, except that if, in connection with any offering involving an
underwriting of Common Stock to be issued by the Company, the managing
underwriter shall impose a limitation on the number of shares of such
Common Stock which may be included in any such registration statement
(including a total elimination of shares held by holders of "piggy back"
rights) because, in its judgment, such limitation is necessary to effect
an orderly public distribution, and such limitation is imposed PRO RATA
among the holders of such Common Stock having an incidental ("piggy
back") right to include such Common Stock in the registration statement
according to the amount of such Common Stock which each holder had
requested to be included pursuant to such right, then the Company shall
be obligated to include in such registration statement only such limited
portion of Option Shares with respect to which such holder has requested
inclusion hereunder and Goldwyn shall thereupon be entitled to rescind
entirely or ratably reduce the number of Option Shares covered by such
notice. No incidental right under this Section 5(a) shall be construed
to limit any registration requested under Section 5(b).
(b) REQUIRED REGISTRATION. The Company will use its best
efforts to prepare and file with the Securities and Exchange Commission,
within forty-five (45) days after
Page 6
(i) receipt of notice, pursuant to Section 4(b) hereof, of
exercise of the Goldwyn Option or (ii) sending of notice pursuant
to Section 4(b), of exercise by the Company of the Trust
Option, a registration statement (the "Registration Statement") covering
the number of shares of Common Stock required to be registered pursuant
to such notice, and to cause such of the Option Shares as are the subject
of such request to be registered under the Securities Act. The Company
shall not be required to file (i) more than one (1) registration
statement within any twelve (12) month period or (ii) more than three (3)
registration statements pursuant to this Section 5(b). Neither the
Company nor any other person may include any securities in a registration
statement filed pursuant to this Section 5(b), without the consent of
Goldwyn or the Goldwyn Trust, as the case may be.
(c) OTHER UNDERTAKINGS OF GOLDWYN AND THE GOLDWYN TRUST.
If the Option Shares to be registered hereunder are to be sold in a non-
underwritten offering and/or pursuant to Rule 415 promulgated under the
Securities Act:
(i) Goldwyn or the Goldwyn Trust, as the case may
be, shall advise the Company in writing of his or its then present
intention to sell the Option Shares as to which registration is
requested within ninety (90) days after the effective date of the
Registration Statement filed pursuant to Sections 5(a) or 5(b), and
the Company shall only be obligated to use its best efforts to keep
the Registration Statement and the prospectus (the "Prospectus")
used in connection therewith to the extent necessary to comply with
the Securities Act for a period of not more than forty (40) days
from the initial effective date thereof.
(ii) Goldwyn and the Goldwyn Trust each represents
and warrants to, and agrees with, the Company that:
(A) Neither Goldwyn nor the Goldwyn Trust will
effect stabilization transactions or engage in any
stabilization activity proscribed by Rule 10b-7 under the
Securities Exchange Act of 1934, as amended ("the "Exchange
Act"), in connection with the securities of the Company during
the period of any distribution of the Option Shares pursuant to
the Registration Statement;
(B) Goldwyn or the Goldwyn Trust will furnish
each broker through whom the Option Shares are offered such
number of copies of the Prospectus which such broker may
require
Page 7
(PROVIDED, that the Company has provided Goldwyn or the
Goldwyn Trust with such Prospectuses), will inform such broker
as to the number of Option Shares offered through such broker,
that such Option Shares are part of a distribution and that
such broker is subject to the provisions of Rule 10b-6 under
the Exchange Act until such time as such broker has completed
the sale of all such Option Shares, and will notify such broker
when distribution of the Option Shares pursuant to the
Registration Statement has been completed or the Registration
Statement is no longer effective or is withdrawn;
(C) Goldwyn or the Goldwyn Trust will promptly
furnish to each person (including each broker) to whom Goldwyn
or the Goldwyn Trust has delivered copies of the Prospectus an
equivalent number of copies of any amendment or supplement
thereto (provided, that the Company has provided Goldwyn or the
Goldwyn Trust with such amendment or supplement);
(D) Goldwyn or the Goldwyn Trust will, promptly
after the end of each week in which any disposition of the
Option Shares pursuant to the Registration Statement has
occurred and upon completion of the distribution of the Option
Shares pursuant to the Registration Statement, report to the
Company such dispositions made during the week or upon such
completion, as the case may be; and
(E) Neither Goldwyn nor the Goldwyn Trust will,
during the period from the effective date of the Registration
Statement until the completion of any offering of the Option
Shares pursuant to the Registration Statement:
(1) bid for purchase, for any account in
which Goldwyn, the Goldwyn Trust, or any affiliate of either
of them, has a beneficial interest, any securities of the
Company other than in transactions permitted by Rule 10b-6
under the Exchange Act;
(2) attempt to induce any person to purchase
any securities of the Company other than in transactions
permitted by Rule 10b-6 under the Exchange Act; or
(3) pay or offer or agree to pay to anyone,
directly or indirectly, any
Page 8
compensation for soliciting another to purchase any
securities of the Company on a national securities
exchange or pay or offer or agree to pay to anyone any
compensation for purchasing securities of the
Company an a national securities exchange other than
those securities offered by Goldwyn or the Goldwyn Trust.
(F) Goldwyn and the Goldwyn Trust have been
advised by the Company that neither of them may, during the
period of any offering of the Option Shares hereunder, use
or disseminate any information concerning the Company other
than the Prospectus and may not undertake any form of
publicity with respect to the Company or engage in any similar
activities which may be deemed to be an unlawful selling
effort within the meaning of Section 10 of the Securities Act.
(G) Except as disclosed to the Company, neither
Goldwyn nor the Goldwyn Trust will pay unusual or special
brokerage commissions on any sales effected through a broker,
and no selling arrangement will have been entered into
between Goldwyn or the Goldwyn Trust and any securities dealer
or broker.
(d) INDEMNIFICATION OF GOLDWYN OR THE GOLDWYN TRUST. In the
event that the Company registers any of the Option Shares under the
Securities Act, the Company will indemnify and hold harmless Goldwyn, the
Goldwyn Trust, their respective trustors, trustees, beneficiaries,
agents, employees and representatives, and each underwriter of the Option
Shares so registered (including any broker or dealer through whom such
shares may be sold) and each person, if any, who controls such holder or
any such underwriter within the meaning of Section 15 of the Securities
Act from and against any and all losses, claims, damages, expenses,
liabilities or actions, joint or several, to which they or any of them
become subject under the Securities Act or under any other statute or at
common law or otherwise, including any amount paid in settlement of any
litigation, commenced or threatened, if such settlement is effected with
the consent of the Company, which consent shall not be unreasonably
withheld, and, except as hereinafter provided, will reimburse them for
any legal or other expenses reasonably incurred by them in connection
with investigating or defending any actions whether or not resulting in
any liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, in
Page 9
any preliminary or amended preliminary prospectus or in the
Prospectus (or the Registration Statement or Prospectus
as from time to time amended or supplemented by the Company)
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary
in order to make the statements therein not misleading or any violation
by the Company of any rule or regulation promulgated under the Securities
Act applicable to the Company and relating to action or inaction required
of the Company in connection with such registration, unless such untrue
statement or omission was made in the Registration Statement, preliminary
or amended, preliminary prospectus or Prospectus in reliance upon and in
conformity with information furnished in writing to the Company in
connection therewith by Goldwyn or the Goldwyn Trust expressly for use
therein. Promptly after receipt by Goldwyn or the Goldwyn Trust, their
respective trustors, trustees and beneficiaries, and any underwriter or
any controlling person of notice of the commencement of any action in
respect of which indemnity may be sought against the Company, Goldwyn,
the Goldwyn Trust, their respective trustors, trustees and beneficiaries,
or such underwriter or such controlling person, as the case may be, will
notify the Company in writing of the commencement thereof, and, subject
to the provisions hereinafter stated, the Company shall assume the
defense of such action (including the employment of counsel who shall be
counsel, acceptable to Goldwyn, the Goldwyn Trust, their respective
trustors, trustees and beneficiaries, such underwriter or such
controlling person, as the case may be), and the payment of expenses
insofar as such action shall relate to any alleged liability in respect
of which indemnity may be sought against the Company. The omission of an
indemnified party so to notify the indemnifying party shall not relieve
the indemnifying party of its obligations hereunder except to the extent
that the indemnifying party demonstrates that the defense of such action
is prejudiced thereby. If the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified
party shall have concluded that there may be legal defenses available to
it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, as a result of
which the indemnified party reasonably believes a conflict of interest
may exist, the indemnified party shall have the right to select separate
counsel to assert such legal defenses and to otherwise participate in the
defense of much action on behalf of such indemnified party and the
indemnifying party shall be liable for the legal fees and disbursements
of such separate counsel. The indemnity agreements in this Section shall
be in addition to any liabilities which the indemnifying party may have
pursuant to law.
Page 10
(e) INDEMNIFICATION OF THE COMPANY. In the event that the
Company registers any of the Option Shares under the Securities Act,
Goldwyn, or the Goldwyn Trust, as the case may be, will indemnify and
hold harmless the Company, each of its directors, each of its officers
who have signed the registration statement, each underwriter of the
Option Shares so registered (including any broker or dealer through whom
any of the shares may be sold) and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act from and
against any and all losses, claims, damages, expenses, liabilities or
actions, joint or several, to which they or any of them may become
subject under the Securities Act or under any other statute or at common
law or otherwise, including any amount paid in settlement of any
litigation, commenced or threatened, if such settlement is effected with
the consent of Goldwyn, or the Goldwyn Trust, as the case may be, which
consent shall not be unreasonably withheld, and, except as hereinafter
provided, will reimburse them for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any
actions whether or not resulting in any liability, insofar as such
losses, claims, damages, expenses, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration or in the Prospectus (or the
Registration Statement or Prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, but
only upon and in conformity with information furnished in writing to the
Company in connection therewith by Goldwyn, or the Goldwyn Trust, as the
case may be, expressly for use therein. Promptly after receipt of notice
of the commencement of any action in respect of which indemnity may be
sought against Goldwyn, or the Goldwyn Trust, as the case may be, the
Company will notify Goldwyn, or the Goldwyn Trust, as the case may be, in
writing of the commencement thereof, and Goldwyn, or the Goldwyn Trust,
as the case may be, shall, subject to the provisions hereinafter stated,
assume the defense of such action (including the employment of counsel,
who shall be counsel satisfactory to the Company) and the payment of
expenses insofar as such action shall relate to the alleged liability in
respect of which indemnity may be sought against Goldwyn, or the Goldwyn
Trust, as the case may be. The omission of any indemnified party so to
notify the indemnifying party shall not relieve the indemnifying party of
its obligations hereunder except to the extent that the indemnifying
party demonstrates that the defense of such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have concluded that there may be legal defenses available to it
and/or
Page 11
other indemnified parties which are different from or additional
to those available to the indemnifying party, as a result of which the
indemnified party reasonably believes a conflict of interest may exist,
the indemnified party shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of
such action on behalf of such indemnified party and the indemnifying
party shall be liable for the legal fees and disbursements of such
separate counsel. The indemnity agreements in this Section shall be in
addition to any liabilities which the indemnifying party may have
pursuant to law.
(f) FURTHER OBLIGATIONS OF THE COMPANY. Whenever under
Sections 5(a) and 5(b) hereof, the Company is required hereunder to
register the Option Shares, it agrees that it shall also do the
following:
(i) Before filing the Registration Statement, the
Prospectus included therein or any amendment or supplement thereto,
furnish counsel to Goldwyn or the Goldwyn Trust, as the case may be,
copies of such documents, which documents shall be subject to the
review of such counsel;
(ii) Furnish to Goldwyn or the Goldwyn Trust, as the case
may be, such copies of each preliminary and final prospectus and
such other documents as Goldwyn, or the Goldwyn Trust, as the case
may be, may reasonably request;
(iii)Furnish to Goldwyn, or the Goldwyn Trust, as the case
may be, a signed counterpart of
(A) an opinion of counsel for the Company, dated the
effective date of the Registration Statement, and
(B) "comfort" letters signed by the Company's
independent public accountants who have examined and reported
on the financial statements included in the Registration
Statement, to the extent permitted by the standards of the
American Institute of Certified Public Accountants, covering
substantially the same matters with respect to the Registration
Statement (and the Prospectus) and (in the case of the
accountants' "comfort" letters) with respect to events
subsequent to the date of the financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountants' "comfort" letters delivered to the underwriters in
underwritten public offerings of securities, to
Page 12
the extent that the Company is required to deliver or cause
the delivery of such opinion or "comfort" letters to the
underwriters in an underwritten public offering of securities;
(iv) Notify Goldwyn, or the Goldwyn Trust, as the case may
be, of the happening of any event as a result of which the
Prospectus contains 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, and the
Company shall promptly prepare a supplement or amendment to
Prospectus so that, as thereafter delivered to the purchaser of the
registered Option Shares, the Prospectus will not contain an 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;
(v) Furnish to Goldwyn, or the Goldwyn Trust, as the case
may be, a copy of all documents filed and all correspondence from or
to the Securities and Exchange Commission in connection with any
such offering;
(vi) Obtain all necessary approval from the National
Association of Securities Dealers, Inc.;
(vii)Upon the request of Goldwyn or the Goldwyn Trust, enter
into an underwriting agreement containing representations,
warranties and agreements customarily made by an issuer in
underwriting agreements, including, without limitation, the right of
such underwriter (which underwriter shall be designated by the
Company ("Company's Underwriter") and be reasonably acceptable to
Goldwyn, or the Goldwyn Trust, as the case may be, provided that
Goldwyn, or the Goldwyn Trust, as the case may be, may use an
underwriter of his or its own designation ("Goldwyn's Underwriter")
if Goldwyn's Underwriter is of at least comparable national standing
as the Company's Underwriter and the Company's Underwriter cannot
match the underwriting terms provided by Goldwyn's Underwriter) to
conduct due diligence on the issuer and to be indemnified by the
issuer with respect to Securities Act liabilities in connection with
any offering of the Option Shares and in connection therewith
Goldwyn, or the Goldwyn Trust, as the case may be shall be a party
to any such underwriting agreement in which case Goldwyn, or the
Goldwyn Trust, as the case may be, shall provide such
representations and warranties and agree to such terms and
provisions
Page 13
as are no more unreasonable or burdensome to Goldwyn, or
the Goldwyn Trust, as the case may be, than those customarily
provided by selling shareholders in underwriting agreements with
respect to secondary distributions, it being understood that failure
of Goldwyn or the Goldwyn Trust, as the case may be, to provide such
representations and warranties shall relieve the Company of its
obligations to register Option Shares in such offering; and
(viii)Notwithstanding any of the obligations of the Company
set forth in this Section 5, the Company shall not be required to furnish
any audited annual or unaudited quarterly or monthly financial statements
in connection with filing the Registration Statement pursuant to this
Section 5 other than those statements customarily prepared by or for the
Company at the end of each fiscal year and each quarter.
(g) REGISTRATION PROCEDURES. In connection with the
registration of the Option Shares pursuant to this Section 5:
(i) The Company shall have the sole right to make all
decisions with respect to questions concerning the content of the
Registration Statement;
(ii) Goldwyn, or the Goldwyn Trust, as the case may be,
shall furnish to the Company such information as may be needed from
Goldwyn or the Goldwyn Trust in connection with the Registration
Statement;
(iii)The Company will use its best efforts to effect the
registration of such Option Shares and will, as expeditiously an
possible:
(A) Prepare and file with the Commission such
amendments and supplements to the Registration Statement and
Prospectus as may be necessary to keep the Registration
Statement or Prospectus in effect for a period of forty (40)
days and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the
Registration Statement during such period in accordance with
the intended methods of disposition by Goldwyn, or the Goldwyn
Trust, as the case may be, as set forth in the Registration
Statement; and
(B) use its best efforts to register or qualify the
Option Shares covered by the Registration Statement under the
applicable
Page 14
securities or "blue sky" laws of such jurisdictions
as Goldwyn, or the Goldwyn Trust, as the case may be, may
reasonably request; PROVIDED, HOWEVER, that the Company shall
not be obligated to effect any such registration or
qualification in any jurisdiction where the Company's
securities are not so qualified or registered as of the date
hereof or to qualify to do business in any jurisdiction where
it is not now so qualified or to take any action which would
subject it to the service of process in suits other than those
arising out of the offer or sale of the securities covered by
the Registration Statement in any jurisdiction where it is not
now so subject.
(h) EXPENSES. The Company shall bear all costs and
expenses of each such registration, including, but not limited to,
printing, legal and accounting expenses, Securities and Exchange
Commission filing fees and "blue sky" fees and expenses; PROVIDED,
HOWEVER, that the Company shall have no obligation to pay or otherwise
bear the fees of counsel or accountants for Goldwyn, or the Goldwyn
Trust, as the case may be, in connection with the registration of the
Option Shares or any portion of the underwriters' commissions or
discounts attributable to the Option Shares.
(i) SUCCESSORS AND ASSIGNS. If the Company or any of its
successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger, or (ii) liquidates, dissolves or
transfers all or substantially all of its properties and assets to any
person, then, and in each such case, proper provision shall be made so
that the successors and assigns of the Company will assume the
obligations set forth in this Section 5 to the maximum extent permitted
under the law of such person's jurisdiction of incorporation, if such
person is a corporation or under applicable law.
(j) CERTAIN DEFINED TERMS. Reference to the "Option
Shares" in this Section shall mean the shares of Common Stock issued or
issuable to Goldwyn, or the Goldwyn Trust, pursuant to this Option
Agreement as well as any additional shares issued to Goldwyn, or the
Goldwyn Trust, as the case may be, in respect of such Option Shares
already held by Goldwyn, or the Goldwyn Trust, such as by means of a
stock split, stock dividend, recapitalization or other similar
distribution.
6. STOCK SPLITS AND REVERSE SPLITS. In case at any time the
Company shall subdivide its outstanding shares of Common Stock into a
greater number of shares, the Option Price and Trust Option Price in
effect immediately prior to
Page 15
such subdivision shall be proportionately
reduced and the number of shares of Common Stock purchasable pursuant to
this Option Agreement immediately prior to such subdivision shall be
proportionately increased, and conversely, in case at any time the
Company shall combine its outstanding shares of Common Stock into a
smaller number of shares, the Option Price and Trust Option Price in
effect immediately prior to such combination shall be proportionately
increased and the number of shares of Common Stock purchasable upon the
exercise of the Option immediately prior to such combination shall be
proportionately reduced.
7. STOCK DIVIDENDS. In case at any time the Company
shall declare a dividend or any other distribution upon any capital stock
of the company payable in shares of Common Stock, then the Option Price
and Trust Option Price in effect immediately prior to the declaration of
such dividend or distribution shall be reduced to the quotient obtained
by dividing (a) the product of (i) the number of shares of Common Stock
outstanding immediately prior to such declaration multiplied by (ii) the
Option Price and Trust Option Price, by (b) the total number of shares of
Common Stock outstanding immediately after such dividend declaration.
8. MINIMUM ADJUSTMENTS. Anything to the contrary
notwithstanding, no adjustment shall be required under Sections 6 and 7
hereof unless and until the amount of such adjustments would result in an
adjustment of the total Option Price and Trust Option Price in effect by
at least $100.00; provided, however, that any such adjustment not made as
a result of the foregoing shall be carried forward and included in the
subsequent calculations of adjustment until such time as it has been
given effect.
9. EFFECT OF REORGANIZATION, ASSET AND STOCK SALES. If any
capital reorganization or reclassification of the capital stock of the
Company, or consolidation or merger of the Company with another
corporation, or sale of all or substantially all of its assets or Common
Stock to another entity (a "Sale Event"), shall be effected in such a way
that the relevant holders of Common Stock shall be entitled to receive
cash, stock, securities, assets or other property or consideration with
respect to or in exchange for Common Stock, then at the consummation of
the Sale Event, if the Goldwyn Option has not been sooner exercised, the
Company shall cause Goldwyn to receive from the Company or the purchasing
entity, in exchange for Goldwyn's entire remaining Goldwyn Option
(representing the right to purchase all Option Shares not previously
exercised) either (i) the net of (A) such cash as Goldwyn would have been
entitled to receive, pursuant to such exchange, had it owned the number
of shares of Common Stock purchasable upon the exercise of
Page 16
the Option, minus (B) the Option Price (the difference being the "Sale
Price"), if holders of Common Stock are entitled to receive only cash as
a result of the Sale Event or (ii) such other consideration (or a
combination of cash and other consideration), having a value
equivalent to the Sale Price (determined in good faith by the Company's
Board of Directors), if the holders of Common Stock are entitled to
receive consideration other than cash as a result of the Sale Event.
The Company shall give Goldwyn not less than 10 business days' notice
of any Sale Event.
10. INVESTMENT COVENANT. Goldwyn and the Goldwyn Trust each
represents, covenants and agrees that, unless the Option Shares shall
have been registered under the Securities Act or other applicable federal
or state statutes in effect at the time of purchase, such Option Shares
will be acquired by Goldwyn, or the Goldwyn Trust, as the same may be,
for investment for his or its own account and not with a view to
distribution and agrees to execute such other and further instruments as
may be required to evidence such investment intent, except that Goldwyn
may transfer the Option Shares to the Goldwyn Trust.
11. LIMITED TRANSFERABILITY OF OPTION. The Option and this
Option Agreement shall not be transferable, except by Goldwyn to the
Goldwyn Trust. Except as provided above, the Option may not be assigned,
transferred, pledged or hypothecated in any way, shall not be assignable
by operation of law, shall not be subject to execution, attachment or
similar process, and any attempted assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the
provisions hereof shall be null and void and without effect. In the
event of an assignment of the Option or the Option Agreement by Goldwyn
to the Goldwyn Trust, the Goldwyn Trust shall succeed to all of the
rights of Goldwyn hereunder subject to assumption of all of the
responsibilities and liabilities of Goldwyn hereunder, including without
limitation, the registration rights provided in Section 5 hereof.
12. NOTICE. Any notice required or permitted under this
Option Agreement shall be deemed given when delivered personally or when
deposited in a United States Post Office as registered mail, postage
prepaid, addressed, as appropriate, either to Goldwyn or the Goldwyn
Trust at: c/o The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Company, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Jr., or such
other address as may be designated in writing to theCompany at:
Metromedia International Group, Inc., c/o Metromedia Company, ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General
Counsel, or such other address(es) as the Company may designate in
writing to Goldwyn and the Goldwyn Trust.
Page 17
13. FAILURE TO ENFORCE NOT A WAIVER. The failure of the
Company, Goldwyn, or the Goldwyn Trust, to enforce at any time any
provision of this Option Agreement shall in no way be construed to be a
waiver of such provision or of any other provision hereof.
14. GOVERNING LAW. THIS OPTION AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF NEW YORK.
15. PRIOR AGREEMENTS. This Agreement supersedes the Original
Option Agreement, which upon the execution hereof, shall be terminated
and no longer be of force or effect.
IN WITNESS WHEREOF, the Company, Goldwyn, and the Goldwyn
Trust, have each executed this Amended and Restated Option Agreement on
the day and year first above written.
METROMEDIA INTERNATIONAL GROUP, INC.
By:_________________________________
Title
____________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, JR.
THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, JR. FAMILY TRUST
____________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, JR., TRUSTEE
Exhibit H
Opinion of Counsel to Metromedia
Opinion of Counsel of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Counsel
to Metromedia, shall cover the following matters, subject to customary
exceptions and limitations:
1. Metromedia is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
2. Metromedia 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 Metromedia of the Merger Agreement have
been duly authorized by all necessary action on the part of the Board of
Directors and stockholders of Metromedia. The Merger Agreement has been
duly executed and delivered by Metromedia and constitutes the legal,
valid and binding obligation of Metromedia, enforceable against
Metromedia in accordance with its terms.{1}
3. The execution, delivery and performance by Metromedia 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 Metromedia or to which Metromedia is subject, or
(iii) to our knowledge, any provision of any credit agreement, indenture
or similar agreement to which Metromedia is a party or to which
Metromedia 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 Metromedia
pursuant to the terms of the Merger Agreement will constitute validly
issued, fully paid and non-assessable shares of stock of Metromedia.
**FOOTNOTES**
{1/}Enforceability opinion may be covered by opinion delivered by
Delaware Counsel.
SCHEDULES
---------
The Registrant agrees to furnish supplementally to the Commission upon
request a copy of any schedules to the Agreement and Plan of Merger.