As filed with the Securities and Exchange Commission on March 8, 2005
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 1, 2005
METROMEDIA INTERNATIONAL GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-5706 58-0971455
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(State or other jurisdiction of (Commission File (IRS Employer
incorporation) Number) Identification No.)
8000 Tower Point Drive, Charlotte, NC 28227
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (704) 321-7380
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(Former name or former address, if changed since last report)
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Item 1.01. Entry into Material Definitive Agreements
On March 8, 2005 (the "Effective Date"), Metromedia International
Group, Inc. (the "Company") entered into Transaction Bonus Agreements with each
of Mark Hauf, the Company's Chairman and Chief Executive Officer and Natalia
Alexeeva, the General Counsel and Secretary of the Company. On March 1, 2005,
the Company entered into a Transaction Bonus Agreement with Victor Koresh, the
Company's Vice President of Operations - Russia. The Transaction Bonus
Agreements entered into with each of Mr. Hauf, Ms. Alexeeva and Mr. Koresh are
attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively, and are
incorporated herein by reference. The following summary of such Transaction
Bonus Agreements is qualified in its entirety by reference to the applicable
Transaction Bonus Agreement.
Transaction Bonus Agreement with Mark Hauf
Under the terms of Mr. Hauf's Transaction Bonus Agreement, which is
effective from the Effective Date through and including September 30, 2005, he
is entitled to the following compensation and benefits:
o Transaction Bonus. If the Company sells its entire interest in ZAO
PeterStar ("PeterStar"), and such sale is consummated on or before
September 30, 2005, Mr. Hauf is entitled to a cash bonus in an amount
equal to US $1,333,333, plus 15% of the amount, if any, by which the
aggregate consideration paid to the Company in the sale exceeds US
$178,000,000. This cash bonus will be paid 50% at the closing of such
transaction, 25% six-months following the closing of such transaction
and the remaining 25% on the first anniversary of such closing,
subject to Mr. Hauf's continued employment with the Company as of each
such date. After the Company pays to Mr. Hauf the portion of the bonus
payable at the closing, the remaining portion is to be placed in a
"rabbi" trust and paid when due. As previously disclosed on the Form
8-K filed by the Company on February 22, 2005, the Company has entered
into a Share Purchase Agreement, dated February 17, 2005, by and among
the Company, First National Holding S.A., Emergent Telecom Ventures,
S.A. and Pisces Investment Limited (the "Share Purchase Agreement"),
pursuant to which the Company has agreed to sell its entire interest
in PeterStar for a purchase price of US $215,000,000. In accordance
with the terms of Mr. Hauf's Transaction Bonus Agreement, Mr. Hauf
will be entitled to a cash bonus in an amount equal to US $6,883,333
if the sale of PeterStar pursuant to the Share Purchase Agreement
occurs on or before September 30, 2005.
o Termination of Employment. If Mr. Hauf's employment is terminated by
the Company without "Cause" or by Mr. Hauf for "Good Reason" (as such
terms are defined in Mr. Hauf's employment agreement) after the
payment of the first installment of his bonus described above, but
before the payment of the second or third installments, then the
balance of the bonus is payable within 10 days after the date of such
termination. In such event, Mr. Hauf is also entitled to receive (i)
Company-paid COBRA for him and his family until Mr. Hauf ceases to be
eligible for COBRA, (ii) accrued and unused vacation and (iii)
reimbursement of business and certain other expenses (relating to
costs associated with Mr. Hauf's performance of services abroad), that
are based on services performed by Mr. Hauf through the date of his
termination.
o Employment Agreement Change of Control Provisions. During the term of
Mr. Hauf's Transaction Bonus Agreement, the change of control
provisions in his employment agreement are null and void; however,
such provisions will again become effective on October 1, 2005 if the
Company's sale of its interest in PeterStar is not consummated before
that date.
o Employment Agreement Severance Provisions. If a sale by the Company of
its interest in PeterStar is consummated on or before September 30,
2005, then the severance provisions of Mr. Hauf's employment agreement
are null and void as of the date of such consummation. However, if
such sale is not consummated on or before such date, then the
severance provisions of Mr. Hauf's employment agreement will govern
any compensation and benefits that Mr. Hauf is entitled to in
connection with any termination of his employment.
o Gross-Up for "Golden Parachute" Excise Taxes. To the extent that any
amounts payable to Mr. Hauf, whether under the Transaction Bonus
Agreement or otherwise, are subject to any excise taxes, the Company
has agreed to "gross up" all such amounts in an amount equal to the
excise taxes imposed, including any excise taxes imposed on the "gross
up" payments, and any interests and penalties associated with such
excise taxes.
o Restrictive Covenants. Pursuant to Mr. Hauf's Transaction Bonus
Agreement, the Company has waived its rights under certain restrictive
covenants in Mr. Hauf's employment agreement (in exchange for which
Mr. Hauf has waived his right to severance under the employment
agreement, as described above), and Mr. Hauf has agreed to instead be
bound by certain restrictive covenants set forth in the Transaction
Bonus Agreement. The restrictive covenants in the Transaction Bonus
Agreement are in effect commencing on the Effective Date and remain in
effect during Mr. Hauf's employment and for two years following
termination of his employment for any reason. These restrictive
covenants prohibit him from, among other things, materially competing
with the Company, intentionally interfering with material business
relationships of the Company, disparaging or making certain other
public statements about the Company, soliciting business from
customers or suppliers of the Company, soliciting for employment or
employing certain employees of the Company or requesting any employee
to leave the employ of the Company. If the Company's sale of its
interest in PeterStar is not consummated on or prior to September 30,
2005, then the restrictive covenants in Mr. Hauf's employment
agreement shall once again become effective and the restrictive
covenants in his Transaction Bonus Agreement shall be null and void.
Transaction Bonus Agreement with Natalia Alexeeva
Under the terms of Ms. Alexeeva's Transaction Bonus Agreement, which is
effective from the Effective Date through and including September 30, 2005, she
is entitled to the following compensation and benefits:
o Transaction Bonus. If the Company sells its entire interest in
PeterStar, and such sale is consummated on or before September 30,
2005, Ms. Alexeeva is entitled to receive an amount equal to (i) two
times her base salary, plus (ii) US$66,667. This cash bonus will be
paid 50% at the closing of such transaction, 25% six-months following
the closing of such transaction and the remaining 25% on the first
anniversary of such closing, subject to Ms. Alexeeva's continued
employment with the Company as of each such date. In accordance with
the terms of Ms. Alexeeva's Transaction Bonus Agreement, Ms. Alexeeva
will be entitled to a cash bonus in an amount equal to US $466,667 if
the sale of PeterStar pursuant to the Share Purchase Agreement occurs
on or before September 30, 2005.
o Termination of Employment. If Ms. Alexeeva's employment is terminated
by the Company without "Cause"(as defined in Ms. Alexeeva's employment
agreement) after the payment of the first installment of her bonus
described above, but before the payment of the second or third
installments, then the balance of the bonus is payable within 10 days
after the date of such termination. In such event, Ms. Alexeeva is
also entitled to receive (i) Company-paid COBRA for her and her family
until Ms. Alexeeva ceases to be eligible for COBRA, and (ii) accrued
and unused vacation.
o Employment Agreement Severance and Change of Control Provisions. If
Ms. Alexeeva's employment is terminated by the Company without Cause
at any time after a sale of PeterStar that is consummated on or before
September 30, 2005, then, to the extent she would be entitled to
severance under Section 7.08 of her employment agreement (relating to
severance upon a termination without Cause), or Section 8.02 of her
employment agreement (relating to enhanced severance payable upon such
a termination that occurs following a "Change of Control," as defined
in the employment agreement), such severance payment shall be reduced
by the full amount of the bonus under Ms. Alexeeva's Transaction Bonus
Agreement. Ms. Alexeeva's Transaction Bonus Agreement provides that
(i) a sale of PeterStar that triggers payment of the bonus under the
agreement and (ii) the occurrence of a Change of Control under Ms.
Alexeeva's employment agreement, are mutually exclusive such that any
single transaction may not constitute both a Change of Control and a
transaction triggering the bonus payment under the Transaction Bonus
Agreement. If a sale of PeterStar is not consummated on or before
September 30, 2005, then the severance provisions in Ms. Alexeeva's
employment agreement, as amended by the amendment described below,
will govern any compensation and benefits that Ms. Alexeeva is
entitled to in connection with any termination of her employment.
o Gross-Up for "Golden Parachute" Excise Taxes. To the extent that any
amounts payable to Ms. Alexeeva, whether under the Transaction Bonus
Agreement or otherwise, are subject to any excise taxes, the Company
has agreed to "gross up" all such amounts in an amount equal to the
excise taxes imposed, including any excise taxes imposed on the "gross
up" payments, and any interests and penalties associated with such
excise taxes.
Transaction Bonus Agreement with Victor Koresh
Under the terms of Mr. Koresh's Transaction Bonus Agreement, which is
effective from March 1, 2005 through September 30, 2005, he is entitled to the
following compensation and benefits:
o Transaction Bonus. If the Company sells its entire interest in
PeterStar, and such sale is consummated on or before September 30,
2005, the Company will pay Mr. Koresh, at the closing of such
transaction, a lump sum cash bonus in an amount equal to US
$1,000,000, subject to his continued employment with the Company
through such date. In accordance with the terms of Mr. Koresh's
Transaction Bonus Agreement, Mr. Koresh will be entitled to a cash
bonus in an amount equal to US $1,000,000 if the sale of PeterStar
pursuant to the Share Purchase Agreement occurs on or before September
30, 2005.
o Termination of Employment Agreement. If Mr. Koresh is entitled to the
bonus described above, Mr. Koresh's employment with the Company and
his employment agreement with the Company will terminate as of the
date of consummation of the PeterStar sale (except that certain
covenants protecting the Company's confidential information and
intellectual property rights shall survive such termination, in
accordance with their terms).
o Employment Agreement Change of Control Provisions. During the term of
Mr. Koresh's Transaction Bonus Agreement, the change of control
provisions in his employment agreement are null and void; however,
such provisions will again become effective on October 1, 2005 if the
Company's sale of its interest in PeterStar is not consummated before
that date.
o Employment Agreement Severance Provisions. If Mr. Koresh is terminated
at any time before a sale of PeterStar, or if no sale of PeterStar
occurs on or before September 30, 2005, then the severance provisions
of his original employment agreement will become in force once again.
Employment Agreement Amendment
On March 8, 2005, the Company and Natalia Alexeeva entered into an
amendment to her employment agreement with the Company ("Employment Agreement
Amendment"). The Employment Agreement Amendment entered into with Ms. Alexeeva
is attached hereto as Exhibit 10.4 and is incorporated herein by reference. The
following summary is qualified in its entirety by reference to the Employment
Agreement Amendment.
The Employment Agreement Amendment includes changes to the following
material provisions of Ms. Alexeeva's employment agreement with the Company:
o Ms. Alexeeva's right to terminate her employment for "good reason" and
receive severance has been eliminated.
o The section of the definition of "change of control" in the Ms.
Alexeeva's employment agreement that includes a sale by the Company of
all or substantially all of its assets has been amended by deleting
the phrase "all or substantially all" and inserting in lieu thereof
"more than 90% (in value)".
Item 9.01. Financial Statements and Exhibits
(c) Exhibits.
10.1 Transaction Bonus Agreement, dated March 8, 2005, by and
between Metromedia International Group, Inc. and Mark Hauf.
10.2 Transaction Bonus Agreement, dated March 8, 2005, by and
between Metromedia International Group, Inc. and Natalia
Alexeeva.
10.3 Transaction Bonus Agreement, dated March 1, 2005, by and
between Metromedia International Group, Inc., Metromedia
International Telecommunications Services, Inc. and Victor
Koresh.
10.4 Amendment No. 1 to Employment Agreement, dated March 8,
2005, by and between Metromedia International Group, Inc.
and Natalia Alexeeva.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
METROMEDIA INTERNATIONAL GROUP, INC.
By: /S/ HAROLD F. PYLE, III
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Name: Harold F. Pyle, III
Title: Executive Vice President Finance,
Chief Financial Officer and
Treasurer
Date: March 8, 2005
Charlotte, NC