19x, Inc. New York, New York 10022
Exhibit
22
19x,
Inc.
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
June
1, 2007
Xx.
Xxxxx
Xxxxxx Xxxxxx
00
Xxx
Xxxx
Xxxx
Xxxxx
Xxxxxx
XX00
Xxxxxxx
Mr.
Xxxxxx F.X. Sillerman
c/o
CKX,
Inc.
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
Dear
Messrs. Xxxxxx and Sillerman,
The
purpose of this letter agreement (the “Letter Agreement”) is to set forth
certain binding agreements between Simon Xxxxxx Xxxxxx (“Xxxxxx”), Xxxxxx F.X.
Sillerman (“Sillerman”) and 19X, Inc. (“19X”), a Delaware corporation, in
connection with (i) the proposed acquisition by 19X (the
“Acquisition”) of 100% of the stock of CKX, Inc. (“CKX”), the parent of 19
Entertainment Limited (“19 Entertainment”), (ii) the Director’s Service
Agreement (the “Director’s Service Agreement”), dated as of the date
hereof, between Xxxxxx and 19 Entertainment, a copy of which is attached
hereto
as Schedule I and (iii) certain related matters. In
consideration of the foregoing and the mutual representations, warranties,
promises, undertakings, covenants and agreements described herein, intending
to
be legally bound upon the execution of a counterpart of this Letter Agreement
by
Xxxxxx and Sillerman, the parties hereto agree as follows:
1. Employment
Agreements and Director’s Service Agreement. Sillerman
hereby acknowledges the effectiveness of his current employment agreement
with
CKX and hereby agrees and commits to either amend the term thereof to be
co-terminus with the term of the Directors Service Agreement or enter into
a new
agreement with a term which is co-terminus with the term of the Directors
Service Agreement and Xxxxxx hereby acknowledges the effectiveness of his
current employment agreement with 19 Entertainment. The Director’s
Service Agreement shall automatically become effective and commence, without
any
action by any party thereto or hereto, on the date upon which the Acquisition
is
completed. In addition, you shall both be entitled to share equally
in any management “promote” which provides additional participation in the
performance of 19x.
2. Contribution
of CKX stock. Xxxxxx hereby agrees to contribute
1,507,315 shares of common stock of CKX (the “Xxxxxx CKX Securities”)
immediately prior to the effective time of the Acquisition and Sillerman
hereby
agrees to contribute shares of common stock and any other securities of CKX
owned by Sillerman (the “Sillerman CKX Securities” and,
together
with the Xxxxxx CKX Securities, the “CKX Securities”) immediately prior to the
effective time of the Acquisition, having a minimum value of $120 million,
valued at the per share merger consideration contained in the Merger Agreement
(defined below), to 19X immediately prior to the effective time of the
Acquisition in exchange for equity interests in 19X pursuant to a contribution
and exchange agreement containing customary terms and conditions, as further
described in paragraph four below and as contemplated by the Merger Agreement
to
be entered into in connection with the Acquisition (the “Merger Agreement”) and
the commitment letters and financing described therein.
3. Loan. In
the event that the making of the loan to Simon Xxxxxx Xxxxxx by 19 Entertainment
in the amount of £5,878,500 pursuant to the Director’s Service Agreement is
unlawful (or if after have been made become ulawful and must be repaid),
19X
hereby agrees to make or arrange such loan (or the then unforgiven amount,
if
any), subject to the closing and effectiveness of the Acquisition, on the
same
terms as contained in the Director’s Service Agreement.
4. 19X
Equity. The parties hereto hereby acknowledge that the
current authorized capitalization of 19X is 1,000 shares of common stock,
801 of
which were issued to Xxxxxx on July 12, 2006 and are currently
outstanding and 1 of which was issued to Sillerman on July 12, 2006
and is currently outstanding. As of the effective time, after giving
effect to the Acquisition, Xxxxxx’x 801 shares of common stock currently held
(excluding any equity interests in 19X issued to Xxxxxx in exchange for the
Xxxxxx CKX Securities), will represent not less than 1.48% of the outstanding
equity of 19X, subject to normal and customary dilution if the equity needed
to
consummate the Acquisition is less than $600 million.
5. Merger
Agreement. In connection with the Acquisition, Xxxxxx
and Sillerman hereby acknowledge and understand that 19X and/or one of its
subsidiaries currently intend to enter into the Merger Agreement (copies
of
which have, and will be, provided to you) with CKX, pursuant to which 19X
and/or
one of its subsidiaries will make certain representations and warranties
and
have certain obligations, including the obligation to pay certain termination
or
“reverse break-up” fees in certain circumstances. To the extent
required by CKX or the other parties to the Acquisition, Sillerman hereby
agrees
to guarantee all such obligations, and to execute a guarantee or other agreement
in connection therewith.
6. Shareholders’
Agreement. Each of the parties hereto hereby agrees to
negotiate in good faith and to enter into a shareholders’ agreement containing
customary terms, including, among other things, voting rights, board
representation, consent rights, transfer restrictions, tag-along and drag-along
rights, rights of first refusal or offer, to the extent requested by the
financing sources of 19X and/or Xxxxxxxxx.
0. Board
Representation. The board of directors of 19X (the “Board”)
shall initially consist of three members as follows: Sillerman, a designee
of
Sillerman and Xxxxxx. All action by the board of directors will
require approval by a majority of the directors. Sillerman shall and
shall cause his designee to nominate and vote for Xxxxxx to serve on the
Board
at all times during which he continues to beneficially hold at least 75%
of his
19x
shares. Notwithstanding
the foregoing, Sillerman shall be under no such obligation if Xxxxxx is not
legally qualified to serve on the Board or if the Directors Service Agreement
is
terminated.
8. Agreement
to Vote. Xxxxxx and Sillerman have agreed to vote all
securities of 19X owned by them in favor of the Acquisition and adoption
and
approval of the Merger Agreement and the transactions contemplated thereby,
and
any actions required in furtherance thereof. Xxxxxx further hereby
irrevocably (to the fullest extent permitted by Section 212 of the Delaware
General Corporation Law) appoints, at any time prior to the Termination Date,
Sillerman, as the sole and exclusive attorney and proxy of Xxxxxx, with full
power of substitution and resubstitution, to vote, and exercise all voting
and
other rights of Xxxxxx with respect to all securities of 19X owned by Xxxxxx
on
the date hereof or hereafter acquired (the “19X Securities”) (including, without
limitation, the power to execute and deliver written consents pursuant to
Section 228 of the Delaware General Corporation Law), for all matters which
legally may come before the shareholders for vote. This proxy is
irrevocable, is coupled with an interest and is granted in consideration
of
Sillerman entering into this Letter Agreement and pursuing the
Acquisition. As used herein, the term “Termination Date” shall mean
the earlier to occur of (i) the date and time as the Acquisition shall become
effective in accordance with the terms and provisions of the Merger Agreement,
or (ii) the date the Merger Agreement shall terminate in accordance with
its
terms. Upon the execution of this Letter Agreement, any and all prior
proxies given by Xxxxxx with respect to any 19X Securities are hereby revoked
and Xxxxxx agrees not to grant any subsequent proxies with respect to the
19X
Securities at any time prior to the Termination Date. This proxy
shall be binding upon the heirs, estate, executors, personal representatives,
successors and assigns of Xxxxxx (including any transferee of any of the
19X
Securities).
9. This
Letter Agreement shall be governed by and construed in accordance with the
laws
of New York without regard to principles of conflicts of laws.
10. This
Letter Agreement may be executed in one or more counterparts, each of which
will
be deemed to be an original and all of which, taken together, will constitute
one and the same agreement.
11. If
the foregoing is in accordance with your understanding and agreement, please
sign and return a copy of this Letter Agreement to 19X.
Sincerely,
|
19X,
Inc.
|
|
|
By:
|
/s/ Xxxxx X. Xxx |
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Name:
Xxxxx X.
Xxx
|
|
|
Title:
Secretary
|
|
Accepted
by:
|
/s/
Xxxxxx F.X.
Sillerman
|
/s/
Simon Xxxxxx
Xxxxxx
|
|
|
Xxxxxx
F.X.
Sillerman
Date:
June 1,
2007
|
Simon
Xxxxxx
Xxxxxx
Date:
June 1,
2007
|
