Exhibit 10.2
METROMEDIA INTERNATIONAL GROUP, INC.
INCENTIVE BONUS AGREEMENT
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THIS AGREEMENT is entered into as of the 1st day of October, 2006 (the
"Effective Date") by and between Metromedia International Group, Inc., a
Delaware corporation (the "Company"), and ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ("Executive").
WHEREAS, the Company has entered into a letter of intent pursuant to which
it anticipates selling all or substantially all of its assets (the "LOI Sale
Transaction"); and
WHEREAS, Executive is currently employed by the Company as its Chief
Executive Officer, and the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its stockholders
to compensate Executive for creating the value in the Company's securities that
the Company expects to realize in connection with the LOI Sale Transaction or
any other "Sale Transaction" (defined below) and to provide an incentive for
Executive to perform his duties to the Company in furtherance of the Company's
efforts to consummate such transaction; and
WHEREAS, to such end, the Company desires to provide Executive with certain
payments and benefits pursuant to the terms of this Agreement; and
WHEREAS, the Board of Directors has authorized the Company to enter into
this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and Executive hereby agree as follows:
I. Incentive Bonus. The Company agrees that, if a definitive agreement to
consummate the LOI Sale Transaction or any other sale of the Company or
transaction pursuant to which the Company sells all or substantially all of its
assets (collectively with the LOI Transaction, a "Sale Transaction") is entered
into by January 31, 2007, the Sale Transaction is subsequently consummated and
the holders of shares of preferred stock, par value $1.00 per share, of the
Company ("Preferred Stock") have received an amount equal to $68.00 per share of
Preferred Stock, Executive shall be entitled to receive a bonus equal to 3.2% of
the gross proceeds received by the Company or its shareholders in the Sale
Transaction (the "Incentive Bonus"), which shall be payable in a single lump sum
cash payment as soon as reasonably practicable following the date of the last
payment to the holders of Preferred Stock that results in such holders receiving
at least $68.00 per share (the "Payment Date"), subject to Executive's continued
employment on such date. Notwithstanding the foregoing, if Executive's
employment is terminated by the Company without "Cause" or by Executive for
"Good Reason" (as such terms are defined in the employment agreement, entered
into on October 6, 2003 and effective as of October 1, 2003, by and between
Executive and the Company, as amended from time to time (the "Employment
Agreement")) at any time before the Payment Date, Executive shall be entitled to
receive the Incentive Bonus on the Payment Date, if it occurs. Executive hereby
acknowledges that the Company's filing of any chapter 11 case in any United
States Bankruptcy Court shall not constitute Good Reason within the meaning of
his Employment Agreement.
II. Certain Additional Payments by the Company
A. If it is determined (as hereafter provided) that any payment or
distribution by the Company to or for the benefit of Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise pursuant to or by reason of any other agreement, policy, plan,
program or arrangement (a "Payment"), would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code")
(or any successor provision thereto) or to any similar tax imposed by state or
local law, or any interest or penalties with respect to such excise tax (such
tax or taxes, together with any such interest and penalties, are hereafter
collectively referred to as the "Excise Tax"), then Executive will be entitled
to receive an additional payment or payments (a "Gross-Up Payment") in an amount
such that, after payment by Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax, imposed
upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
B. Subject to Section II.F of this Agreement, all determinations
required to be made under this Section II, including whether an Excise Tax is
payable by Executive and the amount of such Excise Tax and whether a Gross-Up
Payment is required and the amount of such Gross-Up Payment, will be made by a
nationally recognized firm of certified public accountants (the "Accounting
Firm") selected by the Company, which may be the Company's regular outside
auditors. The Company will direct the Accounting Firm to submit its
determination and detailed supporting calculations to both the Company and
Executive within 30 calendar days after the date of consummation of the Sale
Transaction and any other such time or times as may be requested by the Company
or Executive. If the Accounting Firm determines that any Excise Tax is payable
by Executive, the Company will pay the required Gross-Up Payment to Executive no
later than five calendar days prior to the due date for the Executive's income
tax return on which the Excise Tax is included. If the Accounting Firm
determines that no Excise Tax is payable by Executive, it will, at the same time
as it makes such determination, furnish Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal, state, local
income or other tax return. Any determination by the Accounting Firm as to the
amount of the Gross-Up Payment will be binding upon the Company and Executive.
As a result of the uncertainty in the application of Section 4999 of the Code
(or any successor provision thereto) and the possibility of similar uncertainty
regarding applicable state or local tax law at the time of any determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. If the Company
exhausts or fails to pursue its remedies pursuant to Section II.F hereof, and
Executive thereafter is required to make a payment of any Excise Tax, Executive
shall so notify the Company, which will direct the Accounting Firm to determine
the amount of the Underpayment that has occurred and to submit its determination
and detailed supporting calculations to both the Company and Executive as
promptly as possible. Any such Underpayment will be promptly paid by the Company
to, or for the benefit of, Executive within five business days after receipt of
such determination and calculations.
C. The Company and Executive will each provide the Accounting Firm
access to and copies of any books, records and documents in the possession of
the Company or Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determination contemplated by Section
II.B hereof.
D. The federal, state and local income or other tax returns filed by
Executive will be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
Executive. Executive will make proper payment of the amount of any Excise Tax,
and at the request of the Company, provide to the Company true and correct
copies (with any amendments) of his federal income tax return as filed with the
Internal Revenue Service and corresponding state and local tax returns, if
relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment. If prior
to the filing of Executive's federal income tax return, or corresponding state
or local tax return, if relevant, the Accounting Firm determines that the amount
of the Gross-Up Payment should be reduced, Executive will within five business
days pay to the Company the amount of such reduction.
E. The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by Section II.B
and Section II.D hereof will be borne by the Company. If such fees and expenses
are initially advanced by Executive, the Company will reimburse Executive the
full amount of such fees and expenses within five business days after receipt
from Executive of a statement therefor and reasonable evidence of his payment
thereof.
F. Executive will notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Payment. Such notification will be given as promptly as
practicable but no later than 10 business days after Executive actually receives
notice of such claim and Executive will further apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid
(in each case, to the extent known by Executive). Executive will not pay such
claim prior to the earlier of (i) the expiration of the 30-calendar-day period
following the date on which he gives such notice to the Company and (ii) the
date that any payment of amount with respect to such claim is due. If the
Company notifies Executive in writing prior to the expiration of such period
that it desires to contest such claim, Executive will:
1. provide the Company with any written records or documents in
his possession relating to such claim reasonably requested by the Company;
2. take such action in connection with contesting such claim as
the Company will reasonably request in writing from time to time, including
without limitation accepting legal representation with respect to such claim by
an attorney competent in respect of the subject matter and reasonably selected
by the Company;
3. cooperate with the Company in good faith in order
effectively to contest such claim; and
4. permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company will bear and pay directly
all costs and expenses (including interest and penalties)
incurred in connection with such contest and will indemnify and
hold harmless Executive, on an after-tax basis, for and against
any Excise Tax or income tax, including interest and penalties
with respect thereto, imposed as a result of such representation
and payment of costs and expenses. Without limiting the foregoing
provisions of this Section II.F, the Company will control all
proceedings taken in connection with the contest of any claim
contemplated by this Section II.F and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of
such claim (provided that Executive may participate therein at
his own cost and expense) and may, at its option, either direct
Executive to pay the tax claimed and ▇▇▇ for a refund or contest
the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and
in one or more appellate courts, as the Company will determine;
provided, however, that, if the Company directs Executive to pay
the tax claimed and ▇▇▇ for a refund, the Company will advance
the amount of such payment to Executive on an interest-free basis
and will indemnify and hold Executive harmless, on an after-tax
basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such
advance; and provided further, however, that any extension of the
statute of limitations relating to payment of taxes for the
taxable year of Executive with respect to which the contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of any such contested
claim will be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder, and Executive will be
entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing
authority.
G. If, after the receipt by Executive of an amount advanced by the
Company pursuant to Section II.F hereof, Executive receives any refund with
respect to such claim, Executive will (subject to the Company's complying with
the requirements of Section II.F hereof) promptly pay to the Company the amount
of such refund (together with any interest paid or credited thereon after any
taxes applicable thereto). If, after the receipt by Executive of an amount
advanced by the Company pursuant to Section II.F hereof, a determination is made
that Executive will not be entitled to any refund with respect to such claim,
and the Company does not notify Executive in writing of its intent to contest
such denial or refund prior to the expiration of 30 calendar days after such
determination, then such advance will be forgiven and will not be required to be
repaid, and the amount of such advance will offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid pursuant to this Section II. If,
after the receipt by Executive of a Gross-Up Payment but before the payment by
Executive of the Excise Tax, it is determined by the Accounting Firm that the
Excise Tax payable by Executive is less than the amount originally computed by
the Accounting Firm and consequently that the amount of the Gross-Up Payment is
larger than that required by this Section II, Executive shall promptly refund to
the Company the amount by which the Gross-Up Payment initially made to Executive
exceeds the Gross-Up Payment required under this Section II.
III. Withholding Taxes. The Company may withhold from all payments due to
Executive hereunder all taxes which, by applicable federal, state, local or
other law, the Company is required to withhold therefrom.
IV. Non-Exclusivity of Rights. Other than as specifically stated in this
Agreement, nothing in this Agreement shall prevent or limit Executive's right to
participate in any benefit, bonus, incentive or other plan or program provided
by the Company and for which Executive may qualify, nor shall anything herein
limit or reduce such rights as Executive may have under any agreements with the
Company. Amounts which are vested benefits or which Executive is otherwise
entitled to receive under any plan or program of the Company shall be payable in
accordance with such plan or program, except as explicitly modified by this
Agreement.
V. Entire Agreement. This Agreement constitutes the entire agreement of the
parties hereto and supersedes all prior and contemporaneous agreements and
understandings (including term sheets) both written and oral, between the
parties hereto, or either of them, with respect to bonus arrangements payable in
connection with the Sale Transaction. No agreements or representations, oral or
otherwise, express or implied, with respect to bonus arrangements payable in
connection with the Sale Transaction have been made by either party which are
not expressly set forth in this Agreement.
VI. Not an Employment Agreement. This Agreement is not, and nothing herein
shall be deemed to create, a contract of employment between Executive and the
Company. The Company may terminate the employment of Executive with the Company
at any time, subject to the terms of this Agreement and/or the Employment
Agreement and/or any other employment agreement or arrangement between the
Company and Executive that may be in effect.
VII. Successors; Binding Agreement.
A. The Company agrees that it will cause any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business of the Company (other than a successor in
connection with the Sale Transaction), unconditionally to assume, by written
instrument delivered to Executive (or his beneficiary or estate) if such
assumption does not occur by operation of law, all of the obligations of the
Company hereunder. As used in this Agreement, "Company" shall mean (i) the
Company as hereinbefore defined, and (ii) any successor described in the
preceding sentence or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law, including any parent or
subsidiary of such a successor.
B. This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive shall die
while any amounts would be payable to Executive hereunder had Executive
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to such person or persons
appointed in writing by Executive to receive such amounts or, if no person is so
appointed, to Executive's estate. Neither this Agreement nor any right arising
hereunder may be assigned or pledged by Executive.
VIII. Notice.
A. For purposes of this Agreement, all notices and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered or, if later, five days after deposit in the
United States mail, certified and return receipt requested, postage prepaid or
two days after deposit with a nationally recognized overnight courier service,
addressed as follows:
If to Executive:
Metromedia International Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇, c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
Metromedia International Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
IX. Arbitration: Any dispute between the parties to this Agreement in
connection with, arising out of or asserting breach of this Agreement, or any
statutory or common law claim by Executive relating to Executive's rights under
this Agreement (including any tort or discrimination claim), shall be
exclusively resolved by binding statutory arbitration. Such dispute shall be
submitted to arbitration in New York, before a panel of three neutral
arbitrators in accordance with the Commercial Rules of the American Arbitration
Association then in effect, and the arbitration determination resulting from any
such submission shall be final and binding upon the parties hereto. Judgment
upon any arbitration award may be entered in any court of competent
jurisdiction.
X. Governing Law: This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles that would cause the laws of another jurisdiction to apply.
XI. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original and all of which together shall constitute one
and the same instrument.
XII. Miscellaneous. No provision of this Agreement may be modified or waived
unless such modification or waiver is agreed to in writing and signed by
Executive and by a duly authorized officer of the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Failure by Executive
or the Company to insist upon strict compliance with any provision of this
Agreement or to assert any right Executive or the Company may have hereunder,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement. Except as otherwise specifically provided
herein, the rights of, and benefits payable to Executive, his estate or his
beneficiaries pursuant to this Agreement are in addition to any rights of, or
benefits payable to, Executive, his estate or his beneficiaries under any other
employee benefit plan or compensation program of the Company.
[Remainder of page intentionally left blank; signature page to follow]
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
a duly authorized officer of the Company and Executive has executed this
Agreement as of the day and year first above written.
METROMEDIA INTERNATIONAL GROUP, INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ III
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇ III
Title: Chief Financial Officer
/S/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
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