As filed with the Securities and Exchange Commission on May 25, 2007
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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): MAY 25, 2007
METROMEDIA INTERNATIONAL GROUP, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
1-5706 58-0971455
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(Commission File Number) (I.R.S. Employer Identification No.)
8000 TOWER POINT DRIVE
CHARLOTTE, NORTH CAROLINA 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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N/A
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(Former name or address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the obligation of the registrant under any of the
following provisions:
|_| Written communication pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
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ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY
ARRANGEMENTS OF CERTAIN OFFICERS.
On May 25, 2007, the Board of Directors (the "BOARD") of
Metromedia International Group, Inc. (the "COMPANY") took the actions
described below, which actions were also separately approved by the
Compensation Committee of the Board (the "COMPENSATION COMMITTEE") and then
recommended by the Compensation Committee to the Board for approval. The
actions were all effective on May 25, 2007.
A. ADOPTION OF THE STOCK INCENTIVE PLAN
The Metromedia International Group, Inc. 2007 Stock Incentive
Plan (the "PLAN") was adopted and became effective on May 25, 2007. Other than
the restricted stock award described below, the Company has not granted any
awards under the Plan.
The Plan provides for the issuance of shares of common stock of
the Company, par value $0.01 per share ("COMMON STOCK"), pursuant to
restricted stock awards, stock options and other stock-based incentive awards
granted to employees pursuant to the Plan. No more than 12,000,000 shares of
Common Stock may be delivered pursuant to awards under the Plan, subject to
adjustment in the event of dividends or other distributions,
recapitalizations, stock splits, reorganizations, mergers, consolidations,
combinations, repurchases or exchanges of shares of Common Stock or other
similar transaction or event.
The Board appointed the Compensation Committee to administer the
Plan. The Compensation Committee has authority to designate award recipients,
determine the type of awards to be granted under the Plan and the number of
shares of Common Stock to be subject thereto, determine the terms and
conditions of awards, interpret the Plan and awards granted under the Plan,
accelerate the vesting of awards and make other determinations and take other
actions the Compensation Committee deems necessary or desirable for the
administration of the Plan.
The Plan provides that, if there is a change in control of the
Company, the Compensation Committee may provide that outstanding awards become
fully vested and, if applicable, exercisable. A change in control includes (i)
a change in beneficial ownership or voting power of 40% or more of the shares
of Common Stock, (ii) certain changes in the membership of the Board or (iii)
a reorganization, merger, recapitalization, consolidation, statutory share
exchange or similar form of corporate transaction or a sale of all or
substantially all of the business or assets of the Company, subject to several
exceptions contemplating business and ownership continuity following a
transaction.
The Board may amend or terminate the Plan at any time, and the
Compensation Committee may amend or terminate outstanding awards under the
Plan at any time, in each case, so long as any such amendment or termination
does not materially and adversely affect the interests of any award holder or
beneficiary.
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B. RESTRICTED STOCK AWARD
An award of 9,110,000 shares of restricted Common Stock was
granted by the Company to its Chairman, President and Chief Executive Officer,
Mark S. Hauf, on May 25, 2007, pursuant to the Plan described above. The award
is intended to (i) reward Mr. Hauf for Company value creation to date, (ii)
provide him with an opportunity to share in future Company success, (iii)
motivate him to maximize value for the Company's stockholders and (iv) retain
his services over a three-year vesting period. The shares of restricted Common
Stock are subject to transfer and forfeiture conditions outlined in the
restricted stock award agreement and the Plan.
Of the total number of shares of Common Stock subject to the
restricted stock award, 2,610,000 are granted in order to make Mr. Hauf whole,
on a net after-tax basis, for potential "golden parachute" excise taxes in the
event of a change in control of the Company in which shareholders of the
Company receive cash consideration. These shares vest only to the extent
necessary to cover such excise taxes and will be forfeited to the extent not
necessary for that purpose. The Company has also agreed to pay Mr. Hauf any
additional cash payments necessary to keep him whole in respect of such taxes
to the extent not covered by the vesting of these restricted shares. If a
change in control occurs in which the Company's shareholders do not receive
cash consideration, the Company will pay Mr. Hauf in cash to keep him whole
for the "golden parachute" excise taxes.
The remainder of the award, 6,500,000 shares, shall vest
according to the following schedule: 50% vest on the first anniversary of the
date the award was granted (which anniversary will first occur on May 25,
2008) and 25% vest on each of the second and third anniversaries of the date
of grant, subject to Mr. Hauf's continued employment with the Company on each
such vesting date. In addition, any unvested portion of the award will fully
vest immediately (i) upon a change in control of the Company, (ii) upon
termination of Mr. Hauf's employment by the Company without cause, (iii) if
Mr. Hauf resigns for good reason, (iv) upon Mr. Hauf's death or (v) upon the
termination of Mr. Hauf's employment by the Company due to Mr. Hauf's
disability. (Change in control has the same meaning as in the Plan; cause,
good reason and disability are defined in the restricted stock award
agreement.)
C. AMENDMENT TO CEO EMPLOYMENT AGREEMENT
The Company entered into an amendment (the "AMENDMENT") to Mr.
Hauf's employment agreement dated October 6, 2003, effective October 1, 2003,
as amended from time to time (the "EMPLOYMENT AGREEMENT"). The Amendment
provides for certain severance payments and benefits - the rights to which had
previously been waived by Mr. Hauf in connection with the Company's sale in
2005 of its interest in its Peterstar joint venture. The Amendment also
provides for certain compensation and benefits related to Mr. Hauf's
performance of his employment duties outside of the United States, which the
Board and the Compensation Committee determined were critical to providing an
appropriate and competitive compensation package to Mr. Hauf.
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SEVERANCE. The Amendment provides that, if Mr. Hauf's employment
is terminated by the Company without cause or by Mr. Hauf with good reason (as
cause and good reason are defined in the Employment Agreement), Mr. Hauf will
be entitled to receive the following payments and benefits, subject to his
execution of a release of claims and continued compliance with restrictive
covenants in the Employment Agreement and Transaction Bonus Agreement:
o Continued payment of his base salary for (i) 18 months, if
such termination of employment does not occur within the
one-year period following a change in control (as defined in
the Amendment, which definition is substantially identical to
the definition in the Plan, which is described above); or
(ii) 36 months if such termination occurs within the one-year
period following a change in control. However, if necessary
to avoid the application of Section 409A of the Internal
Revenue Code, Mr. Hauf may not receive any amounts until six
months after his termination of employment or his death, and
o Continued medical and dental insurance for the period of
salary continuation described above.
ADDITIONAL COMPENSATION AND BENEFITS. The Amendment provides that
the Company will provide Mr. Hauf with the following additional compensation
and benefits items:
o A cash amount, added to Mr. Hauf's salary and payable ratably
over the course of each fiscal year (commencing during the
2007 fiscal year), at the same time the salary is paid, of an
amount intended to compensate Mr. Hauf for the declining
value of the U.S. dollar against the Georgian lari since the
Employment Agreement became effective. This make-whole amount
is calculated based on comparing the relevant exchange rate
on the first day of each fiscal year to the exchange rate
during the month when the Employment Agreement first became
effective.
o Reimbursement for the costs of airfare for Mr. Hauf and his
wife and daughter, in business class, for two round-trips per
person per calendar year between the country of Georgia and
either China or the United States.
o Reimbursement for the costs incurred by Mr. Hauf to maintain
security guards and their facilities at his residence in the
country of Georgia, up to an aggregate cost of $20,000
annually.
o A one-time, lump sum $400,000 cash allowance to be used by
Mr. Hauf for the purchase of furnishings in the United States
for his residence in the country of Georgia.
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o Reimbursement for expenses relating to shipment of Mr. Hauf's
home furnishings from the United States to his residence in
the country of Georgia, up to an aggregate cost of $100,000.
o Replace the housing expense reimbursement commitment
currently included in the Employment Agreement, providing for
reimbursement of up to $144,000 per year, with a $12,000
monthly housing allowance.
D. STAY BONUS AWARD FOR VICE PRESIDENT OF FINANCE AND CHIEF ACCOUNTING OFFICER
The Company entered into a stay bonus agreement with B. Dean
Elledge, the Company's Vice President of Finance and Chief Accounting Officer,
to pay Mr. Elledge a $50,000 stay bonus if Mr. Elledge remains employed with
the Company for nine months. If Mr. Elledge's employment is terminated before
the expiration of nine months, either (i) by the Company without cause, or
(ii) following a change in control, by Mr. Elledge for good reason (as cause
and good reason are defined in the stay bonus agreement), he will receive the
stay bonus on the date of termination.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits:
None.
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SIGNATURE
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.
(Registrant)
By: /s/ Harold F. Pyle, III
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Name: Harold F. Pyle, III
Title: Vice President Finance, Chief
Financial Officer and Treasurer
Date: May 25, 2007
Charlotte, NC