Metromedia International Group
Xxx Xxxxxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, X.X. 07073
May 18, 1999
News America Incorporated
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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 "Buyer") and Moscow Communications, Inc., a Delaware
corporation and wholly owned subsidiary of the Buyer ("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 Buyer and (ii) the
Revolving Credit Agreement, dated as of September 30, 1998, as amended (the
"News Credit Agreement"), between the Company and News America Incorporated
("News") pursuant to which News made short-term financing available to the
Company. Capitalized terms used but not defined herein shall have the meanings
set forth in the Merger Agreement.
On the date hereof, there are (a) $6.45 million aggregate principal
amount of loans outstanding under the News Credit Agreement (the "Loans") and
(b) guarantees of $3.1 million aggregate principal amount of other indebtedness
of the Company outstanding under the News Credit Agreement (the "Guarantees").
In connection with and as a condition precedent to the obligations of
the Buyer and the Merger Sub to effect the Merger and consummate the other
transactions contemplated by the Merger Agreement, the Buyer and News are
entering into this letter agreement (the "News Letter Agreement") which provides
as follows:
1. News agrees that it will not exercise any of its rights under the
News Credit Agreement or any note or guarantee issued thereunder from the date
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hereof until the earlier to occur of (x) the Closing Date (as defined in the
Merger Agreement) or (y) the date the Merger Agreement is terminated or expires
in accordance with its terms (the period ending on the earlier of such dates
being referred to as the "Pre-Closing Period").
2. News agrees that during the Pre-Closing Period it will not exercise
its rights under Section 8 of the News Credit Agreement or any note issued under
the News Credit Agreement to convert any amounts owed News under the News Credit
Agreement into shares of Company Common Stock.
3. News hereby agrees that during the Pre-Closing Period it will not
exercise its rights upon the occurrence of any default (including, without
limitation, the failure to make any payment of principal, interest or any other
Obligation (as defined in the News Credit Agreement) during the Pre-Closing
Period) under the News Credit Agreement or any Event of Default (as defined in
the News Credit Agreement) occurring as a result of the execution by the Company
of the Merger Agreement or the transactions contemplated thereby; provided,
however, that notwithstanding the foregoing agreement not to exercise remedies
during the Pre- Closing Period, any amounts otherwise coming due under the News
Credit Agreement or any promissory note, guarantee or other instrument issued
thereunder during the Pre-Closing Period, whether at maturity in accordance with
the terms thereof or otherwise, shall be immediately due and payable, without
any action required on the part of News 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 News as a claim in any proceeding to the
fullest extent permitted by law, (a) upon the termination or expiration of the
Merger Agreement and (b) 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.
4. Substantially simultaneously with the completion of the Merger, in
consideration for the cancellation of the Loans and all other Obligations
outstanding under the News Credit Agreement, the Buyer shall, or shall cause the
Company to, (i) pay to News, by wire transfer of immediately available funds to
an account designated in advance by News, the principal amount of the Loans
outstanding on such date together with interest accrued on the Loans at a rate
of 10% per annum (in lieu of the rate of 20% per annum that is specified in
Section 2.6 of the News Credit Agreement) from the date each such Loan was
advanced by News to the Company under the News Credit Agreement to and including
the date of such payment and (ii) cause the Guarantees and all obligations of
News thereunder to be canceled with no liability to News. Upon receipt of such
payments, News shall return to the Company all promissory notes issued by the
Company in favor of News marked "paid in full."
5. News acknowledges and consents to the Company entering into and
performing under each of the Bridge Loan Agreement and Pledge Agreement
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dated as of the date hereof substantially in the form of Exhibit A hereto
pursuant to which Xxxxx has agreed to make loans available to the Company during
the Pre- Closing Period and pledged certain collateral to the Buyer to secure
such loans and further agrees that the proceeds of such Loans may be used for
any purposes permitted by such Bridge Loan Agreement. Further, in consideration
of the agreements made by News herein, Xxxxx agrees that in the event that any
demand is made on News under any of the Guarantees during the Pre-Closing
Period, Buyer will indemnify News for any payments made thereunder within two
business days of receiving notice that such payments were made by News.
6. This agreement shall remain in effect so long as the Merger
Agreement is effective and shall terminate in the event that the Merger
Agreement is terminated or expires, in which case the parties will have no
further liability or obligations to each other. The obligations of the Buyer
under Section 4 of this letter agreement are expressly conditioned upon the
completion of the transactions contemplated by the Merger Agreement, including
the Merger.
7. 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.
8. 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.
9. 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
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Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer,
Executive Vice President,
Treasurer and Director
ACCEPTED AND AGREED
as of the date first written above:
NEWS AMERICA INCORPORATED
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Senior Vice President and Deputy General Counsel
