Metromedia International Group, Inc. PLD Telekom Inc.
One Meadowlands Plaza 000 Xxxx Xxxxxx
Xxxx Xxxxxxxxxx, XX 00000-0000 Xxx Xxxx, XX 00000
May 18, 1999
The Travelers Insurance Company
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
The Travelers Indemnity Company
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Reference is made to (i) the Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), by and among PLD Telekom, Inc., a
Delaware corporation (the "Company"), Metromedia International Group, Inc., a
Delaware corporation (the "Parent") and Moscow Communications, Inc., a Delaware
corporation and wholly owned subsidiary of the Parent ("Merger Sub"), pursuant
to which, at the Effective Time (as defined in the Merger Agreement), Merger Sub
will merge with and into the Company (the "Merger"), and following such Merger,
the Company will become a wholly-owned subsidiary of the Parent and (ii) the
Revolving Credit Note and Warrant Agreement, dated as of November 26, 1997, as
amended (the "Travelers Credit Agreement") between The Travelers Insurance
Company, The Travelers Indemnity Company (collectively, "Travelers") and the
Company, pursuant to which Travelers made a revolving line of credit available
to the Company. Capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement.
In connection with and as a condition precedent to the obligations of
the Parent and the Merger Sub to effect the Merger and consummate the other
transactions contemplated by the Merger Agreement, the Parent and Travelers are
entering into this letter agreement (the "Travelers Note Modification
Agreement") which provides as follows:
1. Notwithstanding anything to the contrary set forth in the Travelers
Credit Agreement, Travelers shall defer payment by the Company of the
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mandatory repayments of the outstanding Revolving Credit Loans (and waive any
related Events of Default as provided in Section 3 below) until the earlier to
occur of (x) the Closing Date and (y) the date the Merger Agreement is
terminated or expires (such date referred to as the "Termination Date"). On the
Closing Date, the Company and Travelers will amend and restate the Travelers
Credit Agreement (the "Restated Credit Agreement") to provide that all amounts
payable under the Travelers Credit Agreement shall be payable in the manner set
forth in Section 4 below.
2. Travelers agrees that it shall not exercise any warrants that it
owns or may acquire to purchase shares of the Company's common stock, par value
$.01 per share (the "Company Common Stock") between the date hereof and the
Closing Date.
3. Travelers hereby waives the occurrence of any default or any Event
of Default (as defined in the Travelers Credit Agreement) under Section 11 of
the Travelers Credit Agreement, provided that, notwithstanding such waiver,
through the Closing Date subject to the provisions of Section 2 above, Travelers
shall continue to be entitled to all rights it may have under Section 9.27 of
the Travelers Credit Agreement and/or Section 2A of the Warrant Agreement (the
"Warrant Agreement"), dated as of November 26, 1997, between the Company and the
Bank of New York, resulting from the failure of the Company to make the payment
in full of the principal and any accrued but unpaid interest on the Series A
Notes as and when due on December 31, 1998, or as extended thereafter, or the
payment in full of the principal and any accrued but unpaid interest on the
Series B Notes as and when due on September 30, 1998, or as extended thereafter,
(including, in each case, all payments of principal previously deferred);
provided, further that notwithstanding the foregoing agreement not to exercise
any remedies as a result of any default or Event of Default prior to the
Termination Date, any amounts otherwise coming due under the Travelers Credit
Agreement or any promissory note, guarantee or other instrument issued
thereunder prior to the Termination Date, whether at maturity in accordance to
the terms thereof or otherwise, shall be immediately due and payable, without
any action required on the part of Travelers or the Company, and shall in all
respects be deemed to be a currently payable obligation which shall be paid by
the Company and may be asserted by Travelers as a claim in any proceeding to the
fullest extent permitted by law, if the Company shall be adjudged bankrupt or
insolvent, or shall commence any voluntary case (or become the subject of any
involuntary case that remains undismissed for a period of 30 days) under the
United States Bankruptcy Code. Travelers agrees that the Restated Credit
Agreement will provide that in consideration for the payments and issuance of
the warrants specified in Section 4 below, Travelers will on the Closing Date
forever waive any rights and relinquishes any claim it might now have or have
had in the past with regard to (i) the reset of the exercises prices of the
Initial Warrants or the Additional Warrants to $.01, (ii) the issuance of
Default Warrants (each as defined in the Warrant Agreement) with an exercise
price of $.01 or (iii) the issuance of any additional Default Warrants.
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4. (a) The Restated Credit Agreement will provide that on the Closing
Date, in consideration for the undertakings of the Company in Section 4(b)
hereunder, any and all warrants to purchase the Company's common stock, par
value $.01 per share, held by Travelers (including the Initial Warrants, the
Additional Warrants and any Default Warrants) shall be canceled and shall
thereafter, no longer be exercisable.
(b) The Restated Credit Agreement will further provide that in
consideration for the cancellation of the warrants held by Travelers
contemplated by Section 4(a) above, the Company shall:
(i) pay to Travelers on the Closing Date the sum of $8,500,000
by wire transfer to an account designated in advance by Travelers,
which amount will be applied first, to the repayment of the entire
outstanding Series B Revolving Credit Loans (as defined in the
Travelers Credit Agreement), and second, after all Series B Revolving
Credit Loans have been paid in full, to the repayment of outstanding
Series A Revolving Credit Loans;
(ii) issue to Travelers on the Closing Date 100,000 shares of
Company Common Stock which will be immediately converted pursuant to
Section 2.1 of the Merger Agreement into shares of the Parent's common
stock, par value $1.00 per share (the "Parent Common Stock"); provided,
however, that Travelers will agree not to sell, assign, pledge or
otherwise transfer such shares of Parent Common Stock prior to June 30,
2000;
(iii) issue to Travelers on the Closing Date warrants to
purchase 700,000 shares of Parent Common Stock (the "Warrants"). The
Warrants will be exercisable during the period beginning on the date of
the third anniversary of the Closing Date and ending on the date of the
tenth anniversary of the Closing Date at an exercise price (the
"Exercise Price") calculated as follows:
(A) the Exercise Price for the Warrants will be equal
to 125% of the average of the daily closing price of the
Parent Common Stock as reported on the American Stock Exchange
Composite Transactions Tape (as reported by The Wall Street
Journal (national edition)) (or if the Parent Common Stock is
no longer listed on the American Stock Exchange, such exchange
upon which the Parent Common Stock is principally traded) for
each trading day in December 2000; and
(B) notwithstanding Section 4(b)(iii)(A), if the
Exercise Price calculated pursuant to such section is at least
$15.00 then the Exercise Price will be $15.00 or if the
Exercise
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Price is less than $10.00 then the Exercise Price will be
$10.00; and
(C) notwithstanding anything in this Section
4(b)(iii)(A) or (B) if the new Series A Notes are not repaid
in full on or prior to the Maturity Date (as defined below),
then the Exercise Price will be $.01;
(iv) amend and restate the existing Series A Notes which
evidence the Series A Revolving Credit Loans which remain outstanding
after giving effect to the repayment contemplated by the foregoing
clause (ii) such that (x) the interest rate on the Series A Revolving
Credit Loans evidenced thereby shall be changed to 10.5% and (y) the
Series A maturity date shall be changed to the date (the "Maturity
Date") which is the earlier of (I) August 30, 2000 or (II) one year
from the Closing Date, and issue to Travelers new Series A Notes
reflecting such amendment and restatement in substitution for such
existing Series A Notes;
(v) pay interest on the new Series A Notes at the rate of
10.5% per annum, payable monthly in arrears; and
(vi) secure the Note with the following collateral:
(1) the existing guarantee from Wireless
Technology Corporations Limited;
(2) the existing guarantee from Baltic
Communications Limited;
(3) a guarantee from PLD Holdings Limited in
form and substance satisfactory to the parties;
(4) a guarantee from Metromedia
International Group Inc. in form and substance
satisfactory to the parties;
(5) the existing pledge of 28 ordinary
shares of Technocom Limited; and
(6) the existing lien on the receivables of
the Company.
5. The new Series A Notes will not be secured by any guarantee from
News America Incorporated ("News") and at the Closing Date the existing
guarantee of News of certain amounts payable under the Travelers Credit
Agreement will be terminated and canceled by Travelers and returned to News
marked "canceled."
6. Travelers hereby consents pursuant to the Travelers Credit Agreement
(a) to the execution and delivery of the Merger Agreement and
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consummation of the Merger and (b) to the execution by the Company of (i) the
Bridge Loan Agreement and Pledge Agreement, each dated as of the date hereof
between Parent and Company, and (ii) the pledge of the collateral by the Company
to the Parent contemplated by the Pledge Agreement to secure the Company's
obligations under the Bridge Loan Agreement.
7. Except for those amendments expressly contemplated by this Travelers
Note Modification Agreement and to permit the issuance of the new Parent Senior
Notes to the holders of the Company's existing senior notes and convertible
notes as contemplated by the Agreement to Exchange and Consent dated as of the
date hereof, the Restated Credit Agreement shall continue, ratify and confirm,
the terms, covenants and conditions contained in the Travelers Credit Agreement
as in effect on the date hereof and the Travelers Credit Agreement, as so
amended and restated by the Restated Credit Agreement, shall remain in full
force and effect.
8. This Travelers Note Modification Agreement shall terminate on the
Termination Date, in which event the parties hereto will have no further
liability to each other.
9. This letter agreement shall be governed in all respects by the laws
of the State of New York without reference to the choice of laws principles
thereof.
10. This letter agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
11. No amendment, modification, termination or waiver or any provision
of this letter agreement shall be effective unless it shall be in writing and
signed by each of the parties to this agreement.
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If the foregoing sets forth your understanding with regard to the
matter specified herein, please so indicate by signing a copy of this letter and
returning an original to us at the address set forth above.
Sincerely,
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
PLD TELEKOM INC.
By: /s/ Xxxxx X.X. Xxxx
-------------------
Name: Xxxxx X.X. Xxxx
Title: Chairman, President and Chief
Executive Officer
ACCEPTED AND AGREED
as of the date first written above:
THE TRAVELERS INSURANCE COMPANY
By: /s/ Xxxxx Xxxxxxxxxx
--------------------
Name: Xxxxx Xxxxxxxxxx
Title: 2nd Vice President
THE TRAVELERS INDEMNITY COMPANY
By: /s/ Xxxxx Xxxxxxxxxx
--------------------
Name: Xxxxx Xxxxxxxxxx
Title: 2nd Vice President
