EXHIBIT 10.2
Big Content, Inc.
0 Xxxxxxx Xxxxxxx
Xxxxxxxxxxx, XX 00000
July 0, 0000
Xx. Xxxxxxx Xxxxxxx
XXXX Internet Partnership Group Holding AG
c/o Schreiber & Xxxxxx Treuhand Anstalt
Xxxxxxxxxxxx 00, 0000 Xxxxx, Xxxxxxxxxxxxx
Re: Thunderbox television program ("Thunderbox")
Dear Dr. Caderni:
This letter agreement (the "Agreement") sets forth our agreement with
respect to Thunderbox. The following are the terms and conditions of our
agreement:
1. Big Content, Inc. and/or any of its affiliates or subsidiaries ("BC") will
transfer the assets (the "Assets") related to Thunderbox set forth on
Schedule 1 (attached hereto and made a part hereof) to a newly formed
Delaware or New York limited liability company ("LLC"), the managing member
of which shall be BC. BC shall own the remaining 83% of the LLC. The
parties acknowledge that the Assets are (and will continue to be) subject
to a first priority security interest (the "Security Interest") held by
Xxxxxx Investments, LLC ("Xxxxxx") and Xxxxxxxxxx Investments, LLC
("Xxxxxxxxxx"). The Security Interest secures a number of obligations and
liabilities owed to Xxxxxx and Xxxxxxxxxx, such liabilities equal to a
maximum amount of approximately $5,300,000. Xxxxxx and Xxxxxxxxxx are 100%
owned by Xxxxxxx English. Upon execution of this Agreement, BC shall use
its commercially reasonable efforts to establish the LLC and complete the
transfer of the Assets and IPGH Internet Partnership Group Holding AG's
("IPGH") agrees to execute the LLC operating agreement prepared by BC
which, among other customary terms, will reflect the terms of this
Agreement. In consideration of IPGH's prior contribution of equity, debt or
services to Thunderbox, IPGH shall receive an ownership interest in the LLC
equal to 17% (the "IPGH Equity") and 300,000 shares (the "Shares") of
common stock of Zenascent, LLC ("Zena"). To the extent that Xxxxxx and/or
Xxxxxxxxxx exercises a default remedy ("Default Remedy") with respect to
its Security Interest in the Assets, IPGH shall be entitled to 17% of the
cash collections, if any, received by Xxxxxx and/or Xxxxxxxxxx. The Shares
shall be issued according to the following schedule: 30,000 within 7
business days after the execution of this Agreement, and 33,750 Shares
within 7 business days after the end of the next eight fiscal quarters
beginning with the fiscal quarter ending September 30, 2002. The Shares
will not be registered for resale and will be restricted securities under
Rule 144, as promulgated under the Securities Exchange Act of 1933, as
amended (the "Act"). IPGH understands and agrees that all certificates
evidencing the Shares to be issued to IPGH may bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
The parties agree that the Shares shall be subject to piggyback
registration rights.
2. Except as otherwise set forth herein, (a) IPGH and/or its affiliates and
subsidiaries shall have no further rights or claims against BC, Xxxxxx or
Xxxxxxxxxx or any of their respective officers, directors, affiliates or
subsidiaries for any amounts in connection with or related to Thunderbox or
any other matter, and (b) each of BC, Xxxxxx and Xxxxxxxxxx shall have no
further rights or claims against IPGH or any of its officers, directors,
affiliates or subsidiaries for any amounts in connection with or related to
Thunderbox or any other matter. The releases set forth above shall not
apply to any claims the respective parties may have in connection with (a)
Silver Star Holdings Inc. ("Silver Star") and (b) Xxx Xxxx Group Inc.'s
ownership of shares in IPGH.
3. BC shall give due consideration to making distributions out of the LLC to
the LLC members. Prior to a Default Remedy, the Security Interest shall not
prohibit BC from making such distributions to the LLC members. To the
extent that any distributions are made by the LLC to its members, IPGH
shall be entitled to receive 40% of the initial USD250,000 of such
distributions. BC shall have the right in its sole discretion to purchase
the IPGH Equity at a price (the "Purchase Price") which shall be based upon
the fair market value of the LLC determined in accordance with a valuation
(the "Valuation") of the LLC performed by an independent third party (the
"Third Party") selected by BC (and approved by IPGH, such approval not to
be unreasonably withheld), provided that such third party is experienced in
providing valuations of media properties. In calculating the Valuation, the
Third Party shall discount the effect of the Security Interest by 50% and
will value the LLC as if the Security Interest secures obligations equal to
50% of the actual amount of obligations (provided that the Security
Interest is still in force at the time of such Valuation). If the Valuation
is (a) equal to or less than USD20,000,000, the Purchase Price shall be
equal to USD1,500,000, (b) greater than USD20,000,000 but less than or
equal to USD30,000,000, the Purchase Price shall be equal to USD2,000,000,
and (c) greater than USD30,000,000, the Purchase Price shall be equal to
USD3,000,000. In the event that BC exercises its option to purchase the
IPGH Equity, BC shall also pay an interest payment (the "Interest Payment")
to IPGH. For purposes of calculating the Interest Payment only, the
principal amount shall be assumed to be USD1,500,000 and interest shall
accrue at a rate equal to 10%, compounded annually, beginning September 15,
2001 until the date of purchase of the IPGH Equity. Notwithstanding the
above, if any distributions have been paid to IPGH, the amount of such
distributions shall be deducted from the Interest Payment.
4. Each member of the LLC shall have access to the books and records of the
LLC.
5. THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED AND CONSTRUED
UNDER THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO NEW YORK
CONFLICT OF LAW PRINCIPLES. All disputes hereunder shall be subject to
binding arbitration under the rules of the American Arbitration
Association, which arbitration shall be held in New York City, and
conducted in the following manner. The party demanding arbitration shall
give the other party five days' written notice of the claim, together with
the name of a proposed arbitrator experienced in similar matters and who
has no relationship to either party. If the party receiving notice of the
claim does not agree with the selection of the arbitrator, then such party
shall petition a federal district judge in New York, New York to appoint an
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arbitrator within 30 days (or as soon as a hearing can reasonably be
scheduled) of receipt of notice of the demand from arbitration from the
other party. The arbitrator so selected shall hear arguments within 10 days
after appointment and shall render a decision within 5 days after the close
of arguments and the submission of briefs (if requested by the arbitrator).
The expenses of the arbitrator shall be borne equally by the parties.
Pending the decision by the arbitrator, each party shall continue to be
bound by all the terms and conditions of this Agreement and shall continue
to make all payments to the other party required to be made hereunder. The
arbitrator is authorized to award exemplary damages and to enjoin activity
contrary to the terms of this Agreement. The award of the arbitrator may be
entered and is specifically enforceable in any state or federal court
having jurisdiction of the parties.
6. This Agreement memorializes the parties agreement concerning the subject
matter as of December 27, 2001. This Agreement constitutes the entire
agreement of the parties concerning its subject matter and may be modified
only by a written document executed by all parties to this Agreement. This
Agreement may be executed in counterpart copies, each of which shall serve
as an original, but all copies of which together constitute a single
agreement. Facsimile machine copies of this Agreement may be executed by
the parties and shall be deemed as binding as if originals had been
executed. An "affiliate" of, or a person (or entity) "affiliated" with a
specified person (or entity) is a person (or entity) that directly, or
indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with, the person (or entity) specified. All
notices and other communications between the parties hereunder shall be in
writing and shall be deemed received when sent by telex or telecopier or
delivered in person or five days after deposited in the United States
mails, postage prepaid, certified or registered mail return receipt
requested, addressed to the intended party at the address below, or such
other address as such intended party may supply by written notice.
Big Content, Inc./Zenascent, Inc.
0 Xxxxxxx Xxxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxx XxXxxxxxx
IPGH Internet Partnership Group Holding AG
c/o Schreiber & Xxxxxx Treuhand Anstalt
Xxxxxxxxxxxx 00, 0000 Xxxxx, Xxxxxxxxxxxxx
Attention: Xx. Xxxxxxx Xxxxxxx
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Xxxxxxxxxx Investments, LLC/Xxxxxx Investments, LLC
000 Xxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx English
If this letter agreement accurately sets forth our agreement, please execute
below where indicated and forward a copy to the address set forth above.
Regards,
BIG CONTENT, INC.
By: __________________________
Name:
Title:
ACCEPTED AND AGREED TO:
IPGH INTERNET PARTNERSHIP GROUP HOLDING AG
By: __________________________
Name:
Title:
XXXXXXXXXX INVESTMENTS, LLC
By: __________________________
Name:
Title:
XXXXXX INVESTMENTS, LLC
By: __________________________
Name:
Title:
ZENASCENT, INC.
By: __________________________
Name:
Title:
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SCHEDULE 1
THUNDERBOX ASSETS
o Trademark and other intellectual property rights
o All contractual rights relating to the Thunderbox television series
o Master tapes of Thunderbox television series
o Ancillary rights including music and merchandise
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