Exhibit 10.1
LOCK-UP AND VOTING AGREEMENT
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This Lock-up and Voting Agreement, dated as of [ , 2006] (this
"Agreement"), is made and entered into by and between Metromedia International
Group, Inc., a Delaware corporation ("MIG"), and each holder of MIG's 7.25%
Cumulative Convertible Preferred Stock, par value $1.00 per share (the
"Preferred Stock") that is a signatory party hereto (individually, a "Consenting
Preferred Stockholder" and collectively, the "Consenting Preferred
Stockholders"). MIG and each of the Consenting Preferred Stockholders is
referred to individually as a "Party" and are referred to collectively as the
"Parties."
RECITALS
WHEREAS, each of the Consenting Preferred Stockholders, as of the date
hereof, is the beneficial owner (and/or agent, advisor, affiliate, manager or
other authorized representative of the beneficial owner(s)) of, has voting power
and dispositive power with respect to (i) the Preferred Stock, and owns or
controls the aggregate amount of Preferred Stock identified on the signature
page hereto (the rights evidenced by the Preferred Stock owned by the Consenting
Preferred Stockholders on the date of this Agreement and any Preferred Stock
acquired by any Consenting Preferred Stockholder after the date of this
Agreement are referred to herein as the "Preferred Stock Interests") and (ii)
the common stock of MIG (the "Common Stock") and owns or controls the aggregate
amount of Common Stock identified on the signature page hereto (the rights
evidenced by the Common Stock owned by the Consenting Preferred Stockholders on
the date of this Agreement and any Common Stock acquired by any Consenting
Preferred Stockholder after the date of this Agreement are referred to herein as
the "Common Stock Interests");
WHEREAS, MIG and the Consenting Preferred Stockholders have engaged in good
faith negotiations with the objective of reaching an agreement with regard to
the distribution of the proceeds of the sale of substantially all of MIG's
assets (the "Sale Transaction") (should such a sale be consummated);
WHEREAS, MIG intends, subject to the terms and conditions of this
Agreement, to prepare and file a disclosure statement (the "Disclosure
Statement") and plan of reorganization (the "Plan") consistent with and to
implement the terms set forth in this Agreement and the term sheet attached
hereto as Exhibit "A" (the "Term Sheet") in a case (the "Chapter 11 Case") filed
under chapter 11 of title 11 of the United States Code, as amended (the
"Bankruptcy Code"), and MIG intends to use its reasonable best efforts to have
such Disclosure Statement approved and such Plan confirmed by the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"), in each
case as expeditiously as possible under the Bankruptcy Code and the Federal
Rules of Bankruptcy Procedure (the "Bankruptcy Rules") following a binding
agreement to sell substantially all of its assets;
WHEREAS, in order to expedite the implementation of the Plan, each
Consenting Preferred Stockholder is prepared to commit, on the terms and subject
to the conditions of this Agreement and, when properly solicited to do so, to
vote its Preferred Stock Interests to accept the Plan.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, MIG and each
Consenting Preferred Stockholder hereby agrees as follows:
1. Agreement. MIG and the Consenting Preferred Stockholders, to the
extent permitted by applicable law, agree to the terms set forth in the Term
Sheet and this Agreement.
2. Voting.
2.1 So long as this Agreement shall remain in effect, each Consenting
Preferred Stockholder agrees that (i) when properly solicited to do so, it shall
timely vote its Preferred Stock Interests and Common Stock Interests (and not
revoke or withdraw such vote) to accept the Plan, in accordance with the Term
Sheet, subject to the terms herein, including the provisions of Section 6
herein, provided that the terms of the Plan and Disclosure Statement are in all
material respects consistent with the terms set forth in the Term Sheet, (ii) it
shall not object to or otherwise commence any proceeding to oppose or object to
confirmation and consummation of the Plan including, but not limited to, filing
an involuntary chapter 11 case against MIG, and (iii) it shall not vote its
Preferred Stock Interests and Common Stock Interests in favor of any other plan.
2.2 Notwithstanding the foregoing provisions, nothing in this
Agreement shall require the Consenting Preferred Stockholders to take any action
prohibited by the United States Bankruptcy Code, the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), any rule or regulations thereunder or by other applicable
law or regulation or by any order or direction of any court or any federal or
state governmental authority.
2.3 It is agreed by and among MIG and the Consenting Preferred
Stockholders that the right of any or all of them to enforce the rights and
obligations under this Agreement between and among MIG and the Consenting
Preferred Stockholders shall not be abridged, modified or in any manner affected
by the commencement of a chapter 11 case against MIG.
3. Restriction on Transfer/Obligations of Transferee. Each Consenting
Preferred Stockholder hereby agrees that, so long as this Agreement shall remain
in effect, it shall not sell, transfer or assign its Preferred Stock or any
option thereon or any right or interest (voting or otherwise) therein, unless
the transferee thereof agrees in writing to be bound by all the terms of this
Agreement by executing the transfer form attached hereto as Exhibit "B" and the
transferor promptly provides MIG with a copy thereof, in which event MIG shall
be deemed to have acknowledged that its obligations to the Consenting Preferred
Stockholder hereunder shall be deemed to constitute obligations in favor of such
transferee, and MIG shall confirm that acknowledgement in writing (but the
transferor need not wait for such confirmation prior to consummating such
transfer).
4. Company Agreements. MIG hereby agrees that it shall, following
execution of a binding agreement to sell substantially all of its assets, use
its reasonable efforts to have the Disclosure Statement approved by the
Bankruptcy Court, and thereafter to use its reasonable efforts to obtain an
order of the Bankruptcy Court confirming the Plan, in each case as expeditiously
as possible under the Bankruptcy Code and the Bankruptcy Rules, and consistent
with the terms and conditions set forth in the Term Sheet.
5. Support of the Plan. Subject to Section 14 of this Agreement, as long
as this Agreement remains in effect, each Consenting Preferred Stockholder will,
subject to the provisions of this Agreement, support and, when properly
solicited to do so, vote for the Plan. As long as this Agreement remains in
effect, each Consenting Preferred Stockholder, in any capacity, whether as a
holder of the Preferred Stock or other securities or claims against MIG, shall
not (a) oppose the chapter 11 filing; (b) object to confirmation of the Plan or
otherwise commence any proceeding to oppose or alter the Plan, (c) vote for,
consent to, support or participate in the formulation of any other plan of
reorganization or liquidation proposed or filed or to be proposed or filed in
any chapter 11 or chapter 7 case commenced in respect of MIG, (d) directly or
indirectly seek, solicit, support or encourage any other plan, sale, proposal or
offer of dissolution, winding up, liquidation, reorganization, merger or
restructuring of MIG or any of its subsidiaries that could reasonably be
expected to prevent, delay or impede the successful sale of substantially all of
MIG's assets and distribution of the proceeds of such sale as contemplated by
the Term Sheet or the Plan, (e) permit any of its subsidiaries, affiliates,
officers, directors, employees, members, investment bankers, attorneys,
advisors, agents or representatives (collectively, any "Affiliate")(1) to,
directly or indirectly, (i) solicit, initiate or encourage the submission of any
other plan, (ii) enter into any agreement with respect to any other plan, or
(iii) participate in any discussions or negotiations regarding, or furnish to
any person any information, with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or may
be reasonably expected to lead to, any plan other than the Plan, (f) object to
the Disclosure Statement or the solicitation of acceptances to the Plan, or (g)
take any action, directly or indirectly, with respect to MIG, any of its
subsidiaries or otherwise that is inconsistent with, or that would delay
confirmation of, the Plan. Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in the preceding sentence by any
Consenting Preferred Stockholder or any Affiliate, whether or not such Affiliate
is purporting to act on behalf of such Consenting Preferred Stockholder, shall
be deemed to be a material breach of this Agreement by such Consenting Preferred
Stockholder.
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(1) It is acknowledged by both parties that a person or entity having an
investment in a Consenting Preferred Holder will not be deemed an "Affiliate".
6. Acknowledgement. This Agreement is not and shall not be deemed to be a
solicitation for consents to the Plan. The acceptance of the Consenting
Preferred Stockholder will not be solicited until the Consenting Preferred
Stockholder shall have received the Disclosure Statement and related ballot, as
approved by the Bankruptcy Court.
7. Termination of Agreement. The Consenting Preferred Stockholder may
terminate its obligations hereunder, and may rescind its vote on the Plan (which
vote shall be null and void and have no further force and effect) if one of the
following termination events occurs:
(a) MIG shall not have commenced the Chapter 11 Case on or before
December 31, 2006 (such date of commencement, the "Petition Date"), filed a Plan
consistent in all material respects with the Term Sheet and Disclosure Statement
relating thereto with the Bankruptcy Court on or before five (5) days after the
Petition Date, or such later date as MIG and the holders of Preferred Stock who
are a party to a lock-up and voting agreement with respect to the distributions
contemplated by the Term Sheet with the Company representing a majority of
Preferred Stock held by such holders (a "Consenting Majority") shall mutually
agree;
(b) MIG shall file with the Bankruptcy Court a plan of
reorganization, or an amendment to the plan of reorganization that is materially
inconsistent with the Term Sheet;
(c) The Plan shall not have been confirmed by the Bankruptcy Court on
or before October 1, 2007; provided, however, that with respect to this Section
7(c) of this Agreement, such date shall be extended, on a daily basis, so long
as (i) a hearing to consider confirmation of the Plan has commenced and is
continuing and (ii) the Company is using its best efforts to obtain an order of
the Bankruptcy Court confirming the Plan;
(d) MIG publicly announces that it is no longer actively engaged in
discussions or negotiations in respect of a sale transaction involving the sale
of all or substantially all of its assets (whether by merger, stock sale, asset
sale or other form of transaction); it being understood and agreed that MIG is
hereby covenanting that it shall, in its reasonable judgment, determine if the
foregoing set of circumstances exists, and, if so, issue a press release to such
effect no later than 48 hours after making such determination;
(e) The Chapter 11 Case shall have been dismissed or converted to a
case under Chapter 7 of the Bankruptcy Code;
(f) an occurrence of whatever nature that results in the material
impairment of the ability of (x) MIG to perform its material obligations under
the Plan or Term Sheet or (y) the Consenting Preferred Stockholder to realize
the material benefits intended to be provided to the Consenting Preferred
Stockholder under the Plan;
(g) MIG shall have made or engaged in any act or omissions that is
inconsistent with the Term Sheet; or
(h) A Chapter 11 trustee shall have been appointed for MIG pursuant
to section 1104 of the Bankruptcy Code;
provided, however, that a Consenting Majority is required to take any action
under Section 7(b), and such Consenting Majority shall give MIG no less than
five (5) business days' notice in order to provide MIG an opportunity to cure
such inconsistency.
8. Additional Payments. If, prior to April 1, 2007, holders of Preferred
Stock have not received sixty-eight dollars ($68.00) in cash payable to them in
accordance with the Term Sheet, the holders of Preferred Stock shall, from and
after such date, be entitled to receive additional amounts equal to an annual
rate of five percent (5 %) on the difference between (a) sixty-eight dollars
($68.00) and (b) any amounts received, in cash pursuant to the Term Sheet, prior
to April 1, 2007. As of July 1, 2007, such annual rate shall increase and the
holders of Preferred Stock shall, be entitled to receive additional amounts
equal to an annual rate of seven and a quarter percent (7.25 %) on the
difference, if any, between (a) sixty-eight dollars ($68.00) and (b) any amounts
received, in cash pursuant to the Term Sheet, prior to July 1, 2007.
9. Good Faith Negotiation of Documents. Each Party hereby further
covenants and agrees to negotiate the definitive documents relating to the Plan
in good faith, in any event, in all respects consistent with the Term Sheet.
10. Effectiveness. This Agreement shall not become effective and binding
on the parties hereto unless and until: (i) counterpart signature pages hereto
shall have been executed and delivered by MIG and Consenting Preferred
Stockholders holding in the aggregate at least sixty-seven percent of the issued
and outstanding shares of Preferred Stock and (ii) a fully executed letter of
intent has been entered into between MIG and a buyer for the sale of
substantially all of the assets of MIG.
11. Representations and Warranties. MIG and each Consenting Preferred
Stockholder, as applicable, represent and warrant to each other that the
following statements are true, correct and complete as of the date hereof:
(a) Beneficial Ownership. As of the date hereof, such Consenting
Preferred Stockholder is the beneficial owner (and/or agent, advisor, affiliate,
manager or other authorized representative of the beneficial owner(s)) of and
has voting power and dispositive power with respect to, the Preferred Stock and
Common Stock, and owns or controls the aggregate amount of Preferred Stock and
Common Stock identified on the signature page hereto.
(b) Corporate Power and Authority. Each party has all requisite
corporate, partnership or Limited Liability Company power and authority to enter
into this Agreement and to carry out the transactions contemplated by, and
perform its respective obligations under, this Agreement.
(c) Authorization. The execution and delivery of this Agreement and
the performance of its obligations hereunder have been duly authorized by all
necessary corporate, partnership or Limited Liability Company action on its
part.
(d) No Conflicts. The execution, delivery and performance by each
party of this Agreement does not and shall not (i) violate any provision of law,
rule or regulation applicable to such party or any of its subsidiaries or its
certificate of incorporation or bylaws or other organizational documents or
those of any of its subsidiaries, or (ii) conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
material contractual obligation to which it or any of its subsidiaries is a
party.
(e) Governmental Consents. The execution, delivery and performance by
each party to this Agreement does not and shall not require any registration or
filing with, other than potentially filing a form 8K by MIG and/or the filing of
a 13D by any Consenting Preferred Stockholders or group thereof holding more
than 5% of the Preferred Stock Claims, consent or approval of, or notice to, or
other action to, with or by, any federal, state or other governmental authority
or regulatory body, other than the approval of the Bankruptcy Court, in the case
of MIG.
(f) Binding Obligation. Subject to the provisions of sections 1125
and 1126 of the Bankruptcy Code, this Agreement is the legally valid and binding
obligation of each party, enforceable against it in accordance with its terms,
except to the extent that enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relating to the rights of a
creditor against a debtor, or by equitable principles relating to
enforceability.
12. Further Acquisition of Interests. This Agreement shall in no way be
construed to preclude a Consenting Preferred Stockholder from acquiring
additional Preferred Stock Interests. However, any such additional Preferred
Stock Interests so acquired shall automatically be deemed to be subject to the
terms of this Agreement.
13. Amendments. This Agreement may not be modified, amended or
supplemented without the prior written consent of MIG and each of the Consenting
Preferred Stockholders.
14. Impact of Appointment to Equity Security Holders' Committee. If any
equity security holders' committee is appointed by the United States Trustee in
the Chapter 11 Case and the United States Trustee appoints one or more of the
Consenting Preferred Stockholders to be a member of such equity security
holders' committee pursuant to section 1102 of the Bankruptcy Code, then the
fact of such service on such equity security holders' committee shall not
otherwise affect the continuing obligations of the Consenting Preferred
Stockholders under this Agreement or the validity or enforceability of this
Agreement; provided, however, that nothing contained herein shall prevent any
such Consenting Preferred Stockholder, in its capacity as a member of such
equity committee, from acting in a manner consistent with its fiduciary duties
as a member of such equity security holders' committee even if such action is
inconsistent with this agreement and the Term Sheet.
15. Disclosure of Consenting Preferred Stockholder. Unless required by
applicable law or regulation, MIG shall not disclose any Consenting Preferred
Stockholder's holdings of Preferred Stock Interests without the prior written
consent of the Consenting Preferred Stockholder; and if such announcement or
disclosure is so required by law or regulation, MIG shall afford the Consenting
Preferred Stockholder a reasonable opportunity to review and comment upon any
such announcement or disclosure prior to MIG's making such announcement or
disclosure. The foregoing shall not prohibit MIG from disclosing the approximate
aggregate holdings of Preferred Stock Interests by the Consenting Preferred
Stockholders as a group.
16. Governing Law and Jurisdiction. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Delaware,
without regard to any conflicts of law provision which would require the
application of the law of any other jurisdiction. By its execution and delivery
of this Agreement, each of the Parties hereto hereby irrevocably and
unconditionally agrees for itself that any legal action, suit or proceeding
against it with respect to any matter under or arising out of or in connection
with this Agreement or for recognition or enforcement of any judgment rendered
in any such action, suit or proceeding, may be brought in the United States
District Court for the District of Delaware. By execution and delivery of this
Agreement, each of the Parties hereto hereby irrevocably accepts and submits
itself to the nonexclusive jurisdiction of such court, generally and
unconditionally, with respect to any such action, suit or proceeding.
Notwithstanding the foregoing consent to Delaware jurisdiction, upon the
commencement of the Chapter 11 Case, each of the Parties hereto hereby agrees
that the Bankruptcy Court shall have exclusive jurisdiction of all matters
arising out of or in connection with this Agreement.
17. Specific Performance. It is understood and agreed by each of the
Parties hereto that money damages would not be a sufficient remedy for any
breach of this Agreement by any Party and each non-breaching Party shall be
entitled to specific performance and injunctive or other equitable relief as a
remedy of any such breach.
18. Headings. The headings of the sections, paragraphs and subsections of
this Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
19. Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of the Parties and their respective successors, assigns, heirs,
executors, administrators and representatives. Except as set forth herein,
including without limitation paragraph 3 hereof, no party may assign any of its
rights or obligations hereunder without the prior consent of all other parties.
20. Prior Negotiations. This Agreement and the Term Sheet supersede all
prior negotiations with respect to the subject matter hereof.
21. Counterparts. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signature of more than one
party, each of which shall be deemed an original, and all of which shall
constitute one and the same Agreement. This Agreement may be executed by
facsimile signatures.
22. No Third-Party Beneficiaries. Unless expressly stated herein, this
Agreement shall be solely for the benefit of the Parties hereto and no other
person or entity shall be a third-party beneficiary hereof.
23. Consideration. It is hereby acknowledged by the Parties hereto that no
consideration shall be due or paid to the Consenting Preferred Stockholders for
their agreement to vote to accept the Plan in accordance with the terms and
conditions of this Agreement other than MIG's agreement to use its reasonable
efforts to obtain approval of the Disclosure Statement and reasonable efforts to
confirm the Plan in accordance with the terms and conditions of this Agreement.
24. No Waiver of Participation and Reservation of Rights. Except as
expressly provided in this Agreement, nothing contained herein is intended to,
or does, in any manner waive, limit, impair or restrict the ability of any
Consenting Preferred Stockholder to protect or preserve its rights, remedies and
interests, including, without limitation, its interests and claims against MIG
or its full participation in any case filed by or against MIG under the
Bankruptcy Code. If the transactions contemplated by this Agreement, including,
without limitation, the Plan, are not consummated, or if this Agreement is
terminated for any reason, then the Consenting Preferred Stockholders, as well
as the other parties hereto, fully reserve any and all of their rights,
remedies, interests and claims against the other parties hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed and delivered by its duly authorized officer as of the date first above
written.
METROMEDIA INTERNATIONAL GROUP, INC.
By:
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Name:
Title:
Consenting Preferred Stockholder
By:
------------------------------------
Name:
Title:
Aggregate number of shares of Preferred
Stock beneficially owned by Consenting
Preferred Stockholder:
Aggregate number of shares of Common
Stock beneficially owned by Consenting
Preferred Stockholder:
EXHIBIT A
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THIS OUTLINE IS NOT AN OFFER WITH RESPECT TO
ANY SECURITIES OR SOLICITATION OF ACCEPTANCES
OF A CHAPTER 11 PLAN. SUCH OFFER OR SOLICITATION
ONLY WILL BE MADE IN COMPLIANCE WITH
ALL APPLICABLE SECURITIES LAWS AND/OR
PROVISIONS OF THE BANKRUPTCY CODE
METROMEDIA INTERNATIONAL GROUP, INC.
PRELIMINARY OUTLINE OF
PRINCIPAL TERMS OF CHAPTER 11 PLAN
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This outline describes certain of the principal terms of a proposed prearranged
chapter 11 plan (the "Plan") under 11 U.S.C. xx.xx. 101 et seq. (the "Bankruptcy
Code") for Metromedia International Group, Inc., a Delaware corporation (the
"Company"). The Company intends to file for chapter 11 in the United States
Bankruptcy Court for the District of Delaware (the "Chapter 11 Case"). The
purpose of the chapter 11 filing is to effectuate a sale of substantially all of
the Company's assets and to distribute the proceeds of such sale in the most
efficient and timely manner (the "Proposed Transaction"). The Proposed
Transaction is subject in all respects to, among other things, definitive
documentation, including the Plan, appropriate disclosure materials and related
documents. The Proposed Transaction is also subject to the agreement of the
Company's major preferred shareholders and entry into appropriate lock-up
arrangements with those entities.
Sale of Assets:
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The Company intends to sell substantially all of its assets in the Chapter
11 Case pursuant to section 363 of the Bankruptcy Code (the "363 Sale"). The
Company intends to negotiate and execute a sale agreement immediately prior to
filing for chapter 11 and seek approval of the 363 Sale as soon as reasonably
practicable after the Chapter 11 filing. Once the 363 Sale is approved and
consummated, the Company will hold the proceeds of such sale pending
confirmation of the Plan.
Chapter 11 Plan
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Pursuant to the Plan, claims against, and equity interests in, the Company
shall be organized into the following classes. Claims and equity interests in
each such class will be satisfied by delivery of the consideration as set forth
below on the effective date of the Plan.(2)
Administrative Expense Claims..... On the Effective Date, each allowed
administrative expense claim shall be
paid, in full, in cash or upon such
other terms as the Company and holder
thereof may agree.
Priority Claims (including
tax claims) ......... On the Effective Date, each allowed
priority claim shall be paid, in full,
in cash or upon such other terms as the
Company and holder thereof may agree.
Secured Claims.................... On the Effective Date, each holder of an
allowed secured claim shall, at the sole
election of the Company, (a) be paid in
full, in cash, or (b) otherwise be
rendered unimpaired.
Unsecured Claims.................. On the Effective Date, each holder of an
allowed unsecured claim shall be paid,
in full, in cash or upon such other
terms and the Company and holder thereof
may agree.
Preferred Stock................... On the Effective Date, each holder of
preferred stock, that was issued and
outstanding on or prior to the Effective
Date, shall receive the following
consideration: (A) If the net sales
proceeds after allowed claim payments
and payments of all costs and expenses
associated with the sale and the Chapter
11 case (including, but not limited to:
(i) payments of or, in the case of
disputed claims or expenses, reserves
for, all administrative expense claims,
priority tax claims, secured claims and
general unsecured claims; (ii) necessary
reserves for the final liquidation of
the Company and its subsidiaries); (iii)
professional fees; and (iv) taxes
arising out of the sale of assets), plus
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(2) The "Effective Date" shall mean the first business day ten (10) days
following the entry of a final order confirming the Plan.
any cash on hand and the proceeds of the
liquidation of any other of the
Company's assets (the "Net Distributable
Consideration") is $420 million or less,
$68 in cash for each share of preferred
stock. If the Net Distributable
Consideration is above $420 million, $68
in cash for each share of preferred
stock, plus their pro rata share in cash
of 50% of the Net Distributable
Consideration above $420 million until
each holder receives the full amount of
all accrued and unpaid dividends payable
on the preferred stock as of the date
of the chapter 11 filing ("Payment in
Full"). After each holder receives
Payment in Full, plus any Additional
Amounts due and owing, they will also
receive their pro rata share in cash of
20% of all remaining Net Distributable
Consideration.
- and -
(B) If, prior to April 1, 2007, holders
of Preferred Stock have not received
$68.00 in cash payable to them in
accordance with the Term Sheet, the
holders of Preferred Stock shall, from
and after such date, be entitled to
receive additional amounts equal to an
annual rate of five percent (5 %) on the
difference between (a) $68.00 and (b)
any amounts received, in cash pursuant
to he Term Sheet, prior to April 1,
2007. As of July 1, 2007, such annual
rate shall increase and the holders of
Preferred Stock shall, be entitled to
receive additional amounts equal to an
annual rate of seven and a quarter
percent (7.25%) on the difference, if
any, between (a) $68.00 and (b) any
amounts received, in cash pursuant to
the Term Sheet, prior to July 1, 2007.
Any amounts received pursuant to this
section shall be deemed the "Additional
Amounts."
Common Stock...................... On the Effective Date, each holder of
existing common stock shall receive the
following consideration: If the Net
Distributable Consideration is $420
million or less, their pro rata share of
the remaining Net Distributable
Consideration after payment of $68 in
cash for each share of existing
preferred stock, plus any Additional
Amounts due and owing. If the Net
Distributable Consideration is above
$420 million, in addition to receiving
the amounts described above, their pro
rata share of 50% of the Net
Distributable Consideration above $420
million and, after Payment in Full, plus
any Additional Amounts due and owing,
their pro rata share of 80% of any
remaining Net Distributable
Consideration.
Tax Treatment..................... The Company represents and warrants that
after consummation of the sale of
substantially all of its assets, it will
have no earnings and profits as defined
for United States federal income tax
purposes. Further, the Company covenants
that information reporting and
withholding shall be made in accordance
with this representation and warranty.
Releases.......................... The Plan shall provide for releases from
the Company and the reorganized Company
for the benefit of all (i) current and
former directors and officers, and (ii)
holders of Preferred Stock. In addition,
all indemnification provisions currently
in place for current and former
directors and officers (whether in the
company's bylaws, contractual or
otherwise) shall survive confirmation of
the Plan and shall not be impaired
thereby.
D&O Insurance..................... The Company shall purchase a 6 year tail
policy covering claims against the
Company's current and former officers
and directors.
Fees/Expenses..................... Counsel to [Preferred Holder] shall be
reimbursed by the Company for all
reasonable documented fees and expenses
incurred on behalf of the Preferred
Stockholders with respect to the
Proposed Transaction and Chapter 11
Case. If [Preferred Holders] counsel
acts as counsel to the Consenting
Preferred Stockholders prior to the
filing of the Chapter 11 Case, the
Company shall likewise pay all of its
reasonable documented fees and expenses.
In the Chapter 11 Case, the Company
shall support a motion under Section
503(b) of the Bankruptcy Code for
allowance and payment of fees and
expenses for [Preferred Holders] counsel
whether they are acting for [Preferred
Holder] or the Consenting Preferred
Stockholders.
Transaction Bonus................. The Company's management shall not
receive a bonus (or additional
compensation) in connection with the
Proposed Transaction until the Preferred
Stockholders receive at least $68.00, in
cash, per Share of Preferred Stock.
The terms set forth in this outline are part of a comprehensive compromise, each
element of which is an integral aspect of the Proposed Transaction and, as such,
are non-severable. This outline of principal terms is being provided on a
confidential basis, and is entitled to protection from any use or disclosure to
any party or person pursuant to the terms of the confidentiality arrangements
between the Company and the holders of Preferred Stock Interests.
EXHIBIT B
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Re: Issuer: Metromedia International Group, Inc.
Securities: 7.25% Cumulative Convertible Preferred Stock
CUSIP No.: _________________
Amount of Shares: __________
Seller: ____________________
Buyer: _____________________
Trade Date: ________________
Reference is made to the transaction identified above. In connection
therewith, Buyer represents, warrants, acknowledges and agrees as follows:
1. In connection with its ownership of the Securities, Seller is a party to
a certain Lock-Up and Voting Agreement, dated as of ____, 2006 (the
"Lock-Up Agreement"), pursuant to which Seller agreed to support and when
properly solicited to do so vote in favor of a Chapter 11 plan or
reorganization for the Issuer consistent with the terms of a certain Term
Sheet. A copy of the form of Lock-Up Agreement, with exhibits thereto,
executed by Seller is annexed hereto as Exhibit A.
2. Section 3 of the Lock-Up Agreement provides that Seller may not Transfer
(as defined therein) the Securities unless the transferee agrees to be
bound by the terms of the Lock-Up Agreement as if such transferee had
originally executed the Lock-Up Agreement.
3. As a condition to Seller's agreement to sell the Securities to Buyer,
Buyer agrees to be bound by all of the terms and conditions of the Lock-Up
Agreement as if it was a party thereto, including, without limitation,
Section 3 thereof.
4. Buyer represents and warrants to Seller that it is purchasing the
Securities for its own account as principal and is not acting as a broker
in connection with the transaction identified above.
5. Buyer agrees to indemnify, defend and hold Seller and its officers,
directors, employees, agents, partners and controlling persons
(collectively, the "Seller Indemnitees") harmless from and against any and
all expenses, losses, claims, damages and liabilities which are incurred by
or threatened against the Seller Indemnitees or any of them including,
without limitation, reasonable attorneys' fees and expenses, caused by or
in any way resulting from, relating to or in connection with Buyer's breach
of any of its representations, warranties or agreements set forth in this
Agreement.
6. The person executing this Agreement on behalf of the Seller represents
and warrants that it has been duly authorized and empowered to execute and
deliver this Agreement on behalf of the Seller.
7. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, without regard to its conflict of laws
provision.
Dated: __________
[SELLER]
By:________________________
Name:
Title:
[BUYER]
By:________________________
Name:
Title:
