1
EXHIBIT 10.53
AGREEMENT
AGREEMENT (this "Agreement"), dated as of July 22, 1998, made by
Global Media Management Group LLC, a California limited liability company
("Global Media"), and The Xxxxxx Entertainment Company ("Xxxxxx"), a California
corporation.
WHEREAS, Global Media and Xxxxxx entered into that certain management
consulting agreement dated as of March 23, 1998 (the "Management Consulting
Agreement");
WHEREAS, pursuant to the Management Consulting Agreement Global Media
agreed to provide the management services of Global Media for the term of the
Management Consulting Agreement, due to expire on September 23, 1998;
WHEREAS, Global Media is willing to extend the term of the Management
Consulting Agreement until the earlier of (i) December 23, 1998 and (ii)
retention by Xxxxxx of a new chief executive officer;
WHEREAS, Xxxxxx wishes to compensate Global Media if a significant
corporate transaction should occur during the Term as provided herein;
NOW, THEREFORE, as consideration for Global Media's efforts with
respect to, and consideration of, strategic transactions available to Xxxxxx,
the parties hereby agree as follows:
1. Definitions.
1.1 "Expiration Date" means the earlier of (i) the date on
which the Management Consulting Agreement terminates with the mutual consent of
Xxxxxx and Global Media or (ii) December 23, 1998.
1.2 "Fair Market Value" means (i) with respect to cash, the
dollar value of such cash and (ii) with respect to an New Equity Security, the
average closing price of such New Equity Security on the principal market on
which such New Equity Security is traded over the ten trading days preceding the
date of closing of the Qualifying Transaction (defined herein) and the ten
trading days following the date of closing of the Qualifying Transaction, or if
there is no public market for such Security, by mutual agreement of Global Media
and Xxxxxx on the date of consummation of the Qualifying Transaction.
1.3 "New Equity Security" means an equity security of a
company other than Xxxxxx.
1.4 "Per Share Consideration" means the Fair Market Value
of the consideration payable with respect to each Share upon the closing of the
Qualifying Transaction or, if no consideration is received with respect to each
Share upon the closing of the Qualifying Transaction, the distribution that a
shareholder would receive per Share if the Corporation were dissolved upon the
closing of the Qualifying Transaction.
2
1.5 "Qualifying Transaction" means a transaction which
results, or a related series of transactions which result, in the holder of (i)
each Share receiving, in exchange therefor, consideration consisting of either
cash or Eligible Equity Securities or a combination thereof, (ii) a merger,
consolidation or other business combination involving Xxxxxx or (iii) a sale
(whether solicited or unsolicited) of Xxxxxx or a significant portion of its
assets or businesses to one or more third parties.
1.6 "Qualifying Transaction Consideration" means the
product of the Per Share Consideration multiplied by the number of Shares issued
and outstanding immediately prior to the consummation of the Qualifying
Transaction.
1.7 "Strategic Transaction" means a transaction which is
not a Qualifying Transaction which results, or a related series of transactions
which result, in a person acquiring from Xxxxxx, and/or from selling
shareholders and approved by the Board of Xxxxxx, in exchange for cash or
property at least *% of the voting securities of Xxxxxx (after the consummation
of such Transaction) whether by way of purchase, merger or joint venture.
1.8 "Share" means a share of the Common Stock of Xxxxxx, no
par value.
1.9 "Term" means the period beginning on the date hereof
and ending on the earlier of (i) the date occurring six months after the
Expiration Date or (ii) if the Management Consulting Agreement is terminated
prior to the Expiration Date voluntarily by Global Media (other than with the
consent of the Company), the date of such termination.
2. Services.
If a Qualifying Transaction or Strategic Transaction is presented to
Xxxxxx during the Term which the board of directors of Xxxxxx wishes to pursue,
Global Media will advise and assist Xxxxxx in considering the desirability of
such undertaking and, if Xxxxxx believes the Transaction to be desirable, in
structuring and negotiating such Transaction.
3. Compensation.
In the event that either (i) Xxxxxx enters into a Qualifying
Transaction prior to the Expiration Date or (ii) Global Media and/or the
Corporation has had substantive discussions regarding a Qualifying Transaction
with a third party prior to the Expiration Date (and such person's name is
included on a list prepared by Global Media in good faith and delivered to
Xxxxxx by Global Media on or prior to the Expiration Date) and Xxxxxx thereafter
consummates the Qualifying Transaction during the Term, Xxxxxx shall compensate
Global Media in an amount equal to the product of the Applicable Percentage (as
determined by reference to Table A attached hereto) multiplied by the Qualifying
Transaction Consideration.
4. Strategic Transaction. In the event that Xxxxxx consummates a
Strategic Transaction during the Term, Xxxxxx shall compensate Global Media in a
fair and equitable
- 2 -
3
manner as the parties shall agree, consistent with the formula set forth herein
for a Qualifying Transaction, taking into account the percentages of equity
involved and the benefits to be received by Xxxxxx and the contribution of
Global Media in connection therewith.
5. Termination. This Agreement will continue for the Term and
terminate upon the expiration of the Term.
6. Confidentiality. Each of Global Media acknowledge that in
connection with the services to be rendered by such party pursuant hereto, such
party may obtain certain written and non-written information pertaining to the
nature and operations of Xxxxxx of a confidential nature. Each of Global Media
agrees that such party will not at any time during or subsequent to the Term or
any extension hereof, without the consent of Xxxxxx, knowingly disclose to any
third party whatsoever any such confidential information, except as required by
law or regulation or as deemed necessary by Global Media in good faith in the
performance of such party's duties.
7. Governing Law. This Agreement shall be governed and construed
pursuant to the laws of the State of California with respect to contracts wholly
entered into and performed therein. If any of the parties institute any action
or proceeding with respect to this Agreement, the prevailing party will be
entitled to reasonable fees, costs and expenses of attorneys, accountants, and
other professionals and consultants. All disputes concerning the interpretation
or enforcement of the Agreement shall be settled by arbitration conducted in Los
Angeles, California in accordance with the rules of the American Arbitration
Association, and all decisions of the arbitrator shall be final and
non-appealable.
8. Entire Agreement. This Agreement and the Management Services
Agreement constitute the entire understanding between Xxxxxx and Global Media
regarding the matters set forth herein. By executing this Agreement, each of the
parties acknowledge that such party has read it carefully and understand all of
its terms. This Agreement cannot be modified except by further written agreement
signed by each party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed the day and year first above written.
"Xxxxxx" "Global Media"
THE XXXXXX ENTERTAINMENT COMPANY GLOBAL MEDIA MANAGEMENT GROUP LLC
By: /s/ Xxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxx
----------------------------- -------------------------------
Name: Xxxx X. Xxxx Name: Xxxxxxx X. Xxxxxx
Title: Chairman of the Board
- 3 -
4
TABLE A
APPLICABLE PERCENTAGE
------------------------------------------------------------------------------
Per Share Consideration Range Applicable Percentage
------------------------------------------------------------------------------
less than $* per Share *%
------------------------------------------------------------------------------
between $* per Share and $* per *% of the Qualifying Transaction
Share Consideration
------------------------------------------------------------------------------
$* or more per Share *% of the Qualifying Transaction
Consideration
------------------------------------------------------------------------------
Where X = *
A
