EXHIBIT 10.2
EXECUTION COPY
METROMEDIA INTERNATIONAL GROUP, INC.
TRANSACTION BONUS AGREEMENT
THIS AGREEMENT is entered into as of the 29th day of July,
2005 (the "EFFECTIVE DATE") by and between
Metromedia International Group, Inc.,
a Delaware corporation (the "COMPANY"), and
Bryce Dean Elledge ("EXECUTIVE").
WHEREAS, Executive is currently employed by the Company
pursuant to an employment agreement,
entered into on October 6, 2003 and
effective as of October 1, 2003, by and
between Executive and the Company (the
"EMPLOYMENT AGREEMENT"), as amended by that
certain amendment to the Employment
Agreement, dated July 29, 2005, by and
between Executive and the Company (the
"Amendment"); and
WHEREAS, the Company has entered into an agreement, dated as
of February 17, 2005, pursuant to which it
has agreed to sell all of its
interest in Peterstar ZAO ("PETERSTAR") to
First National Holding S.A., a
SOCIETE ANONYME organized under the laws of
Luxembourg ("FNH"), Emergent Telecom
Ventures S.A., a SOCIETE ANONYME organized
under the laws of Switzerland
("ETV"), Pisces Investment Limited, a
company organized under the Companies Law
of Cyprus and a wholly-owned subsidiary of
FNH and ETV (the "PETERSTAR SALE
AGREEMENT"); and
WHEREAS, the Board of the Directors of the Company (the
"BOARD") recognizes that (i) during the
period pending the consummation of the
transactions contemplated by the Peterstar
Sale Agreement, or (ii) in the event
the transactions contemplated by the
Peterstar Sale Agreement are not
consummated, because a sale by the Company
of its interest in Peterstar may
nevertheless arise, key employees of the
Company may be motivated to leave the
employment of the Company or be distracted
in the performance of their duties to
the Company and its subsidiaries, to the
detriment of the Company and its
stockholders; and
WHEREAS, Executive is a key executive of the Company, and the
Board has determined that it is in the best
interests of the Company and its
stockholders to secure Executive's
continued services and to ensure Executive's
continued and undivided dedication to his
duties in the event of any sale by the
Company of its interest in Peterstar;
and
WHEREAS, the Board 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. EFFECT OF THIS AGREEMENT ON
THE EMPLOYMENT AGREEMENT; DURATION OF THIS
AGREEMENT.
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A. Other than as specifically stated in
this Agreement, the Employment
Agreement, as amended by the Amendment,
shall remain in full force and effect.
B. On and
following the Effective Date, Section 2.07 of the Employment
Agreement, relating to the reduction of
compensation to avoid the trigger of
certain excise taxes, shall be void and of
no further effect; PROVIDED, that
such Section 2.07 shall once again become
effective on October 1, 2005 if and
only if a "Peterstar Sale Transaction"
(defined below) has not been consummated
prior to that date.
C. If
Executive's employment is terminated by the Company without
"CAUSE"
(as defined in the Employment Agreement) at
any time after the consummation of a
Peterstar Sale Transaction that is
consummated on or prior to September 30,
2005, to the extent that any amounts become
payable to Executive under Section
7.08 of the Employment Agreement, relating
to payments to Executive in
connection with a termination without
Cause, or Section 8.02 of the Employment
Agreement, relating to payments to Executie
in connection with a termination
without Cause following a "CHANGE OF
Control" (as defined in the Employment
Agreement), such amounts shall be reduced
by the full amount of any Peterstar
Transaction Bonus.
D. The Executive
and the Company agree that the definition of Change of
Control in the Employment Agreement and of
Peterstar Sale Transaction in this
Agreement are mutually exclusive such that,
the consummation of a Peterstar Sale
Transaction on or before September 30, 2005
shall not constitute a Change of
Control for purposes of the Employment
Agreement, and the occurrence of a Change
of Control for purposes of the Employment
Agreement shall not also constitute a
Peterstar Sale Transaction.
E. This
Agreement shall terminate and be of no further force and effect
on
and after October 1, 2005 if a Peterstar
Sale Transaction has not occurred prior
to that date.
F. For purposes
of this Agreement, a "PETERSTAR SALE TRANSACTION" shall
mean the sale, directly or indirectly, of
the Company's entire interest in the
Peterstar business venture.
II. EFFECT OF A PETERSTAR SALE
TRANSACTION.
A. PETERSTAR
TRANSACTION BONUS TRIGGER. The Company agrees that, in
connection with a Peterstar Sale
Transaction that is consummated on or prior to
September 30, 2005, Executive shall be
entitled to the "Peterstar Transaction
Bonus" (defined below), which, subject to
Section II.B. of this Agreement, shall
be payable as follows: (i) 50% in one lump
sum payment concurrent with the
consummation of the Peterstar Sale
Transaction, provided Executive is still
employed by the Company as of the date of
such consummation; (ii) 25% in one
lump sum payment on the date that is six
months after the consummation of the
Peterstar Sale Transaction (the "SECOND
PAYMENT DATE"), provided Executive is
still employed by the Company as of such
date; and (iii) 25% in one lump sum
payment on the date that is 12 months after
the consummation of the Peterstar
Sale Transaction (the "THIRD PAYMENT
DATE"), provided Executive is still
employed by the Company as of such
date.
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B. TERMINATION
OF EMPLOYMENT. If Executive's employment with the Company or
any of its affiliates is terminated by the
Company without Cause at any time
after payment of the first installment of
the Peterstar Transaction Bonus, but
before the Second Payment Date or Third
Payment Date, the Company shall, within
10 days after such termination (i) cause to
be paid the unpaid balance of the
Peterstar Transaction Bonus, and (ii) to
the extent that the severance that
Executive would have been entitled to
receive under Section 7.08 of the
Employment Agreement upon a termination of
Executive's employment by the Company
without Cause on such date (the "EMPLOYMENT
AGREEMENT SEVERANCE"), had such
section been in effect, would be greater
than the full amount of the Peterstar
Transaction Bonus, pay Executive an
additional amount equal to the Employment
Agreement Severance less the Transaction
Bonus. In addition, if Executive is
entitled to payments under this Section
II.B., he shall also be entitled to any
amounts due under Section 7.07 of the
Employment Agreement, and, provided
Executive is eligible for and timely elects
to continue group health insurance
coverage for himself and, if applicable,
his family, under Part 6 of Title I of
the Employee Retirement Income Security Act
of 1986, as amended ("COBRA"), the
Company shall directly pay the cost of
continuing group health insurance for
Executive and, if applicable, his qualified
beneficiaries under COBRA until the
date Executive or any such qualified
beneficiary, as applicable, ceases for any
reason to be eligible for continuation of
group health insurance coverage under
COBRA.
C. PETERSTAR
TRANSACTION BONUS. The "PETERSTAR TRANSACTION BONUS" shall be
equal to (a) two times Executive's "BASE
SALARY" (as defined in the Employment
Agreement), plus (b) $66,667.
D. If Executive
receives payments pursuant to Section II of this Agreement,
Executive shall have no further rights to
any compensation or other benefits
under this Agreement (other than pursuant
to Section III of this Agreement, if
applicable), and any other benefits due
Executive shall be determined in
accordance with all plans, policies and
practices of the Company; PROVIDED,
however, that, Executive shall not be
entitled to any payments or benefits under
any separately stated severance, retention
or change of control plan, policy,
program or arrangement of the Company.
III. 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.
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B. Subject to
Section III.F of this Agreement, all determinations required
to be made under this Section III,
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 consummation of a Peterstar
Sale Transaction or the date of
Executive's termination of employment, if
applicable, 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 Paym
