EXHIBIT 99.2
LETTER OF INTENT
This Letter of Intent is entered into as of April 27, 1997 by and
among METROMEDIA INTERNATIONAL GROUP, INC., a Delaware corporation ("Seller"),
ORION PICTURES CORPORATION, a Delaware corporation ("Orion" and, together with
all of its direct and indirect subsidiaries other than the Landmark Theater
Group and each of its subsidiaries, the "Entertainment Companies"), and P&F
ACQUISITION CORP., a Delaware corporation ("Buyer").
Seller, the Entertainment Companies and Buyer hereby express their
intention to enter into a definitive agreement (the "Definitive Agreement")
substantially in the form of the Stock Purchase Agreement attached hereto dated
as of May __, 1997 among the parties hereto (the "Stock Purchase Agreement"), as
the same may be modified by good faith negotiation, pursuant to which Buyer will
acquire the businesses of the Entertainment Companies through a purchase of all
of the capital stock of Orion (the "Transaction"). The obligation of the parties
to enter into the Definitive Agreement shall be subject to approval of the
respective boards of directors of the Buyer and the Seller and subject in the
case of Seller to delivery by Buyer of the Bank Commitment Letter (as defined
below) and Equity Commitment Letter (as defined below) or other similar
satisfactory substantiation by Buyer. Based upon the foregoing, Buyer will
continue its due diligence investigation of the Entertainment Companies and
Seller will continue its efforts with respect to the fairness of the
Transaction. Capitalized terms used but not defined herein shall have the
meaning provided in the Stock Purchase Agreement.
Upon execution of a counterpart of this Letter of Intent, the
following lettered sections will constitute legally binding and enforceable
agreements of Buyer and Seller, in recognition of the significant costs to be
borne by Buyer and Seller in pursuing the Transaction and further in
consideration of their mutual undertakings as to the matters described herein.
(A) ACCESS. Seller will permit Buyer's employees, auditors, legal
counsel, potential financing sources and other authorized representatives
access to the officers, employees, agents, advisors, properties, records
and documents of the Seller and all of its affiliates relating to the
Entertainment Companies. Buyer will conduct this inspection, investigation
and audit in a reasonable manner and, to the extent practicable, during
regular business hours.
(B) BEST EFFORTS. Buyer and Seller will use their best efforts to
submit the Definitive Agreement for approval by the respective boards of
directors of Seller and Buyer by the close of business New York time on
May 2, 1997. If the Definitive Agreement is approved by the boards of
directors of both Buyer and Seller, the Definitive Agreement shall be
dated the date of the last such approval and executed and delivered on
that day. The boards of directors of Seller and
Buyer shall have complete discretion to approve or withhold approval of
the Definitive Agreement.
(C) EXCLUSIVE DEALING; TERMINATION. Until the earlier of (x) the
date of the Definitive Agreement (if the Definitive Agreement is executed
by the parties hereto and approved by their respective boards of
directors) or (y) the close of business New York time May 2, 1997, the
parties agree to be bound by the terms of Section 5.08 of the Stock
Purchase Agreement, which Section is deemed incorporated herein by this
reference. If the Definitive Agreement is not executed by the parties
(following approval by the respective boards of directors) by the close of
business New York time on May 2, 1997, any party may terminate this Letter
of Intent immediately upon providing written notice to the other parties
at the addresses specified in the Stock Purchase Agreement; PROVIDED,
HOWEVER, the provisions of Section (d) below shall survive any such
termination.
(D) COMMITMENT FEE; EXPENSES.
(i) To compensate Buyer for entering into this Letter of
Intent and taking action to consummate the Transaction and incurring the
costs and expenses related thereto and other losses and expenses,
including the foregoing by Buyer of other opportunities, Seller agrees to
pay to Buyer an aggregate amount equal to Five Million Dollars
($5,000,000) less Buyer's Expenses (as defined below) (the "Commitment
Fee") if (w) Buyer's board of directors has authorized execution by Buyer
of the Definitive Agreement, subject to execution of same by Seller, (x)
Buyer has provided to Seller on or before the close of business New York
Time May 2, 1997 a Bank Commitment Letter and an Equity Commitment Letter
providing for debt and equity financing for the Transaction in an
aggregate amount of at least Five Hundred Sixty Million Dollars
($560,000,000), (y) either Seller's board of directors does not authorize,
on or before May 2, 1997, Seller to execute the Definitive Agreement or
Seller once so authorized does not execute the Definitive Agreement on or
before the close of business New York time on May 2, 1997, and (z) on or
before the close of business New York time on May 2, 1997 either (A) an
Alternative Proposal shall become publicly announced or shall have been
publicly known (excluding any such Alternative Proposal that has been
publicly announced on or before the date hereof), or (B) an Alternative
Proposal shall have been communicated to Seller or any of Seller's
Affiliates or the Entertainment Companies, or any representative of any of
the foregoing (including any such Alternative Proposal that has been so
communicated on or before the date hereof), and on or before the close of
business New York time on May 1, 1998 Seller or any of the Seller
Affiliated Group or the Entertainment Companies either enters into an
agreement (the "Alternative Agreement") with any party directly or
indirectly connected with the Alternative Proposal to consummate an
Alternative Proposal or otherwise effectuates an Alternative Proposal with
any such party (the "Alternative Transaction"). If any of the foregoing
events occurs, Seller shall also pay Buyer's Expenses. "Bank
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Commitment Letter" shall mean a commitment letter from Xxxxxx Guaranty
Trust Company of New York, or another lender selected by Buyer, in form
and substance satisfactory to Buyer, which shall provide the New Orion
Credit Facility, subject to customary conditions precedent to such
lender's obligation to make such financing available. "Equity Commitment
Letter" shall mean a commitment letter or letters from one or more of
Buyer's existing stockholders in form and substance satisfactory to Buyer
(and not containing any material conditions other than those specified in
the Stock Purchase Agreement and consummation of the financing
contemplated by the Bank Commitment Letter), by which such stockholder(s)
agree to contribute cash to the capital of Buyer, or purchase for cash
additional capital stock of Buyer.
(ii) The Commitment Fee and Buyer's Expenses shall be payable
by Seller to Buyer on or before May 5, 1997 if the event described in
Section (d)(i)(z)(A) occurs or on the next business day following the
execution of the Alternative Agreement or effectuation of the Alternative
Transaction if either event described in Section (d)(i)(z)(B) occurs.
"Buyer's Expenses" shall mean the actual out-of-pocket expenses incurred
by Buyer and any Affiliate in connection with or arising out of this
Letter of Intent and efforts to consummate the Transaction (including,
without limitation, amounts paid or payable to investment bankers, fees
and expenses of counsel, accountants and consultants, and printing
expenses), regardless of when those expenses are incurred, not to exceed
Five Million Dollars ($5,000,000) in the aggregate for purposes of this
Letter of Intent.
(iii) Seller acknowledges that the agreements contained in
this Section (d) are an integral part of the Transaction contemplated by
this Letter of Intent, and that, without these agreements, Buyer would not
enter into this Letter of Intent. Accordingly, if Seller fails to pay any
amounts owing pursuant to this Section (d) when due, Seller shall in
addition thereto pay to Buyer all costs and expenses (including attorneys'
fees and costs) incurred in collecting such amounts, together with
interest on such amounts (or any unpaid portion thereof) from the date
such payment was required to be made until the date such payment is
received by Buyer at one percent in excess of the Reference Rate as in
effect from time to time during such period; PROVIDED, HOWEVER, that in no
event shall such interest rate exceed the maximum rate permitted by
Applicable Law (as defined in the Stock Purchase Agreement).
Other than set forth in Sections (a)-(d) above, this Letter of
Intent does not, and is not intended to, constitute a legally binding obligation
on the part of any of the parties hereto. It does, however, constitute a
statement of the intention of the parties to proceed promptly in good faith with
respect to the Transaction, and it shall be governed by, and construed and
enforced in accordance with, the internal laws of New York applicable to
contracts made and to be performed therein.
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IN WITNESS WHEREOF, the parties hereto have caused this Letter of
Intent to be duly executed by their respective authorized officers as of the day
and year first above written.
METROMEDIA INTERNATIONAL
GROUP, INC.
/S/ XXXXXX XXXXXX
-----------------------------
By: Xxxxxx Xxxxxx
Its: Executive Vice President
ORION PICTURES CORPORATION
/S/ XXXXXX XXXXXX
-----------------------------
By: Xxxxxx Xxxxxx
Its: Senior Executive Vice President
P&F ACQUISITION CORP.
/S/ XXXXX X. XXXXXXX
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By: Xxxxx X. Xxxxxxx
Its: Chairman and Chief Executive Officer
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