EXHIBIT 10.2
Consulting Agreement
--------------------
Exhibit 10.2
CONSULTING AGREEMENT
This Consulting Agreement (the "Consulting Agreement") is made and
entered into this 11th day of August, 1998, by and between Temporary Media Co.,
LLC, a Delaware limited liability company ("TMC") and National Media
Corporation, a Delaware corporation ("Company") with respect to the following
facts:
NM Acquisition Co., LLC, a Delaware limited liability company ("ACO")
and the Company have entered into a Letter of Intent, dated July 10, 1998, as
amended July 15, 1998 ("LOI"), pursuant to which TMC is to provide, among other
things, Consulting Services (hereinafter defined) to the Company as described
below.
ACO and the Company are entering into a Stock Purchase Agreement dated
as of the date hereof (the "Stock Purchase Agreement").
Capitalized terms used but not defined herein shall have the meanings
set forth in the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the Company and TMC agree as follows:
1. ENGAGEMENT.
-----------
1.1 Term. Subject to the terms of this Consulting Agreement,
the Company hereby engages TMC for a period of six (6) months beginning on the
date of this Agreement and ending on the date six (6) months thereafter unless
terminated earlier pursuant to the terms hereof (the "Term") and TMC hereby
accepts such engagement.
1.2 Consulting Services. TMC will provide such reasonable
assistance and advice as the Company may reasonably request, including but not
limited to the following (the "Consulting Services"):
providing executive management consulting services in its good
faith and to the best of its abilities, which shall include devoting at
least an aggregate of one-hundred (100) hours per week by Xxxx X. Xxxxx
("Xxxxx"), Xxxxxx X. Xxxxxxxx ("Xxxxxxxx") and Xxxxxxx X. Xxxxxx
("Xxxxxx"), a minimum of forty (40) of such hours will be devoted by
Xxxxxx, who will be designated as "Acting CEO" of the Company; Xxxxxx
shall have the duties, responsibilities and authority normally
associated with the office and position of chief executive officer of a
corporation and as are reasonably required by the Board of Directors.
Such duties shall include, but not be limited to the following: (i)
general and active
management of the business of the Company, (ii) ensuring that all
orders and resolutions of the Board of Directors are carried into
effect, (iii) hiring and firing of all Company personnel in
consultation with the Company's Compensation Committee, (iv) general
oversight of all contracts to which the Company is, or is contemplating
becoming, a party (including past, present and future contracts), (v)
control and oversight of all Company employees, (vi) general oversight
of the content of all programming, (vii) general oversight of the
Company's programming schedule and, (viii) general oversight of all
other areas of the Company. Xxxxxx shall report to the Chairman of the
Company's Board of Directors.
1.3 Independent Contractor Status. It is understood and agreed
that TMC will provide the services under this Consultant Agreement as an
independent contractor and that during the performance of the services under
this Consulting Agreement, TMC's officers, directors, employees and members will
not be considered employees of the Company within the meaning or the
applications of any federal, state or local laws or regulations including, but
not limited to, laws or regulations covering unemployment insurance, old age
benefits worker's compensation, industrial accident, labor or taxes of any kind.
TMC's officers, directors, employees and members shall not be entitled to
benefits that may be afforded from time to time to the Company's officers,
directors and employees including without limitation, vacation, holidays, sick
leave, worker's compensation and unemployment insurance. Further, the Company
shall not be responsible for withholding or paying any taxes or social security
on behalf of TMC's officers, directors, employees and members. TMC shall be
fully responsible for any such withholding or paying of taxes or social
security.
2. CONSULTING FEES AND EXPENSES.
2.1 Retainer. During the Term of this Consulting Agreement,
the Company shall pay TMC the sum of $80,000.00 per month, payable on the first
day of each calendar month, as a retainer for services described in Section 1.2
above. Notwithstanding the above, the first such payment shall be made as of the
date hereof and shall be prorated based upon the number of days remaining in the
month of August.
2.2 Additional Compensation. (a) As additional compensation
hereunder, the Company shall grant to TMC a five year option to purchase up to
212,500 shares of the Company's common stock, par value $0.01 ("Shares") at an
exercise price of $1.32 per Share (substantially in the form attached hereto as
Exhibit "A"). One-sixth (1/6) of such options shall vest on each of the 30th,
60th, 90th, 120th, 150th and 180th day following the date hereof provided this
Consulting Agreement is in effect as of such date; provided, however, (i) all
such options shall immediately vest upon the earlier of (a) the date the
transactions contemplated by the Stock Purchase Agreement are closed (the
"Closing Date"), or (b) termination of the Consulting Agreement pursuant to
paragraph 4C below; and (ii) all non-vested options shall be cancelled if and
when the Company's stockholders vote not to approve the matters contained in the
Proxy Statement (as defined in the Stock Purchase Agreement) or this Consulting
Agreement is terminated pursuant to Section 4E.
(b) Contingent Warrant. The Company shall grant to TMC a five
year fully vested but contingent warrant (substantially in the form attached
hereto as Exhibit "B") to purchase up to 3,762,500 Shares ("Contingent
Warrant"), as follows:
A. A warrant to purchase 2,412,500 Shares exercisable
on and from the Closing as to 1,912,500 Shares, at an exercise price of
$1.32 and, upon the price of the Company's Shares first trading in
excess of $3.00 per Share for a period of fifteen (15) consecutive
trading days following the date hereof (the "Price Threshold"), the
remaining 500,000 Shares shall become exercisable at an exercise price
of $3.00 per Share.
B. A warrant to purchase 150,000 Shares at an
exercise price of $1.50 per Share, exercisable on and from the Closing
Date. Such warrants shall be distributed to BT Xxxx Xxxxx.
C. A warrant to purchase 200,000 Shares, at an
exercise price of $1.50 per Share, provided such warrant shall not be
exercisable until the Price Threshold is achieved.
D. A warrant to purchase 1,000,000 Shares
exercisable on and from the Closing at an exercise price of $1.32 per Share,
provided that such warrant (i) if transferred, may be transferred by TMC to any
officer, director, employee or consultant of the Company other than Lehman,
Yukelson, Xxxxx or any employee of TMC, (a "Permitted Transferee") and (ii) may
only be exercised by a Permitted Transferee and not by TMC.
2.3 Expense Reimbursement. The Company shall reimburse TMC for
reasonable and actual out-of-pocket business expenses incurred by TMC in the
performance of its responsibilities hereunder, provided TMC shall first furnish
proper voucher and expense accounts setting forth the information required by
the United States Treasury Department for deductible business expenses.
3. INDEMNIFICATION. The Company agrees to indemnify and hold harmless
TMC against and from any and all losses, claims, damages, liabilities and
expenses (including reasonable attorneys' fees and disbursements and other
expenses incurred by TMC in connection with the preparation for, or defense of,
any claim, action or proceeding, whether or not, resulting in any liability) to
which TMC may become liable arising out of TMC's acting for the Company pursuant
to this Consulting Agreement provided that the Company shall not be liable
hereunder to the extent any loss, claim, damage, liability or expense is found
to have resulted from TMC's gross negligence, bad faith, material breach of this
Consulting Agreement, actions outside the scope of the authority granted
hereunder or in contravention of specific Board of Directors instructions. The
indemnification provided for herein is in no way deemed exclusive and is thus,
in addition to indemnification provided by the Company's Bylaws and applicable
law. The provisions of this
Section 3 shall remain operative and in full force and effect regardless of any
termination of this Consulting Agreement.
4. TERMINATION. The Consulting Agreement will terminate upon the
earliest to occur:
A. the expiration of the Term;
B. a negative vote by the Company's stockholders regarding the
matters contained in the Proxy Statement (as defined in the Stock
Purchase Agreement).
C. the Company becomes obligated to pay the Transaction
Initiation Fee (as defined in the Stock Purchase Agreement).
D. the signing of employment agreements by the Company
with each of Messrs. Xxxxxx, Xxxxx and Xxxxxxxx.
E. the material breach by TMC of its duties and obligations
hereunder, after receipt by TMC of written notice of such breach and
the failure of TMC to cure such breach, if curable, within thirty (30)
days of receipt of such notice.
If the Consulting Agreement is terminated pursuant to (C)
above, the Company shall pay to TMC a sum equal the amount which would have been
payable to TMC if the Consulting Agreement had continued in full force and
effect for an additional six month term plus the unexpired portion of the Term,
provided that the maximum amount payable to TMC pursuant to the Consulting
Agreement shall be $720,000. If the Consulting Agreement is terminated pursuant
to (B) above, the Company shall pay to TMC a sum equal to the amount which would
have been payable to TMC if the Consulting Agreement had remained in full force
and effect for the Term.
5. NOTICES. All notices, requests, demands and other communications
provided for by this Consulting Agreement shall be in writing and shall be
deemed to have been given upon the deposit thereof for mailing at any general or
branch United States Post Office enclosed in a registered or certified postpaid
envelope and addressed as follows:
To the Company: National Media Corporation
0000 Xxxxxx Xxxxxx
00 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: General Counsel
With Copies to: Klehr, Harrison, Xxxxxx, Branzburg & Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxxx, Esq.
To TMC: Temporary Media Co., LLC
x/x Xxxxxxxxx, Xxxxx, Xxxxxx & Younger
A Professional Corporation
000 Xxxxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
With Copies to: Buchalter, Nemer, Fields & Younger
A Professional Corporation
000 Xxxxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
6. MISCELLANEOUS.
(a) GOVERNING LAW. THIS AGREEMENT AND THE OTHER INVESTMENT
DOCUMENTS (EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY SET FORTH THEREIN) SHALL BE
DEEMED TO HAVE BEEN MADE IN THE STATE OF DELAWARE AND THE VALIDITY,
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO, SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(b) JURISDICTION AND VENUE. TO THE MAXIMUM EXTENT PERMITTED BY
LAW, THE PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT OR THE OTHER INVESTMENT DOCUMENTS SHALL BE TRIED
AND LITIGATED ONLY IN THE DELAWARE COURT OF CHANCERY, COUNTY OF NEW CASTLE,
DELAWARE, OR IF JURISDICTION IS NOT AVAILABLE IN SUCH COURT, IN ANY OTHER
DELAWARE STATE COURT. TO THE EXTENT THEY MAY LEGALLY DO SO, THE PARTIES HERETO
HEREBY WAIVE ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SUBSECTION (b) AND STIPULATE THAT SUCH COURTS SHALL HAVE IN
PERSONAM JURISDICTION AND VENUE OVER EACH SUCH
PARTY FOR THE PURPOSE OF LITIGATING ANY SUCH DISPUTE, CONTROVERSY, OR PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT, OR THE OTHER INVESTMENT DOCUMENTS.
TO THE MAXIMUM EXTENT PERMITTED BY LAW, SERVICE OF PROCESS SUFFICIENT FOR
PERSONAL JURISDICTION IN ANY ACTION AGAINST THE COMPANY MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ITS ADDRESS SPECIFIED
FOR NOTICES PURSUANT TO SECTION 8.1.
(c) WAIVER OF TRIAL BY JURY. TO THE MAXIMUM EXTENT THEY MAY
LEGALLY DO SO, THE PARTIES TO THIS AGREEMENT HEREBY EXPRESSLY WAIVE ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING
ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT, OR THE OTHER INVESTMENT
DOCUMENTS, OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE
DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT, THE OTHER
INVESTMENT DOCUMENTS, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE EXTENT THEY MAY LEGALLY DO SO,
THE PARTIES TO THIS AGREEMENT HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION,
CAUSE OF ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY
AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SUBSECTION (c) WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER
PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.
6.1 Severability. If any provision of this Consulting
Agreement is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remaining provisions will continue in full force and effect
without being impaired or invalidated in any way.
6.2 Entire Agreement; Amendment. This Consulting Agreement,
the Stock Purchase Agreement and the other agreements and documents entered in
connection therewith, contain a complete statement of all the arrangements
between the parties with respect to their subject matter, supersedes all
existing agreements between them with respect to the subject matter and may not
be changed or terminated orally. Any amendment or modification must be in
writing and signed by the party to be charged.
6.3 Successors and Assigns. All the provisions of the
Consulting Agreement shall bind and inure to the benefit of the successors and
assigns of the parties hereto.
6.4 Nonassignability. Neither party may assign any of its
rights, duties or obligations hereunder, except as specifically provided herein,
without the express written consent of the other party.
IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement the date first set forth above.
NATIONAL MEDIA CORPORATION
------------------------------------
Name:
------------------------------
Title:
TEMPORARY MEDIA CO., LLC
---------------------------------
Name: Xxxx X. Xxxxx
Title: Managing Member