EXHIBIT 99.1
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is entered into as of the
17th day of April, 2003, by and between American Media, Inc., a Delaware
corporation (the "Company"), THL Managers V, LLC, a Delaware limited liability
company ("THL"), and Evercore Advisors L.P., a Delaware limited partnership
("Evercore" and, together with THL, the "Sponsors").
WHEREAS, certain affiliates of THL and Evercore have provided equity
financing to the Company's parent, EMP GROUP L.L.C., a Delaware limited
liability company ("Holdings"), pursuant to that certain Contribution Agreement
dated as of February 24, 2003, by and among EMP Merger Corporation, a Delaware
corporation ("Merger Corp"), certain affiliates of THL and Evercore, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, the persons listed on the signatures pages thereto and those persons
which become parties thereto upon execution and delivery of an Instrument of
Accession pursuant to Section 1.3 thereof, and that certain Merger Agreement
dated as of February 24, 2003 by and between Holdings and Merger Corp (the
"Merger Agreement").
WHEREAS, the Sponsors have staff specifically skilled in corporate
finance, strategic corporate planning, and other management skills and advisory
services.
WHEREAS, the Company will require the Sponsors' special skills and
management advisory services in connection with its business operations and
execution of its strategic plan.
WHEREAS, the Sponsors are willing to provide such skills and services
to the Company.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. Services. Each Sponsor, severally and not jointly, hereby agrees
that if during the term of this Agreement (the "Term") the Company reasonably
and specifically requests that the Sponsors provide the services set forth below
and the Sponsors agree to provide such services, the Sponsors or one of their
affiliates will provide the following services to the Company and its
subsidiaries:
(a) advice in connection with the negotiation and consummation of
agreements, contracts, documents and instruments related to the Company's
finances or relationships with banks or other financial institutions;
(b) advice with respect to the development and implementation of
strategies for improving the operating, marketing and financial performance of
the Company, and other senior management matters related to the business,
administration and policies of the Company; or
(c) advice concerning such management matters that relate to
proposed mergers, acquisitions, dispositions, recapitalizations, issuances of
securities, financings or other similar transactions.
No Sponsor shall have any obligation to the Company as to the method or
timing of services rendered hereunder, and the Company shall not have any right
to dictate or direct the details of the performance of services by the Sponsors
rendered hereunder.
The parties hereto expressly acknowledge that the services to be
performed hereunder by the Sponsors shall not include investment banking or
other financial advisory services rendered by any Sponsor or its affiliates to
the Company in connection with any specific acquisition, divestiture,
refinancing or recapitalization by the Company or any of its subsidiaries for
which any such Sponsor providing such service may be entitled to receive
additional compensation by mutual agreement of the Company or its subsidiary and
the applicable Sponsor. This Agreement shall in no way prohibit a Sponsor or any
of its affiliates or any of their respective partners (both general and
limited), members (both managing and otherwise), officers, directors, employees,
agents or representatives from engaging in other activities, whether or not
competitive with any business of the Company of any of its affiliates.
The Company hereby agrees to continue to provide to each director
serving on the Company's Board of Directors designated by the Sponsors and their
affiliates and each Manager serving on Holding's Board of Managers designated by
the Sponsors and their affiliates board materials and information with respect
to the Company in accordance with past practice.
2. Payment of Fees. In exchange for each Sponsor's arrangement of
the equity financing and agreement to provide the services set forth herein, the
Company hereby agrees to pay to each Sponsor (or its designee) the following
fees:
(a) a transaction fee in connection with the transactions
contemplated in the Merger Agreement payable at Closing (as defined in the
Merger Agreement) of $6,000,000; and
(b) a management fee equal to $1,000,000 per year, payable annually
in advance at the Closing and on each subsequent anniversary of the Closing
until the termination of this Agreement in accordance with Section 3 below.
Each payment made pursuant to this Section 2 shall be paid by wire
transfer of immediately available funds to the accounts specified on Exhibit A
attached hereto, or to such other account(s) as each Sponsor may specify in
writing to the Company. The Company hereby agrees to provide written
notification to each Co-Investor (as defined in the Merger Agreement) of any
amendment to Section 2(b) hereof.
3. Term. This Agreement shall be effective as of the date hereof
and shall continue in full force and effect, unless and until (a) terminated by
a Sponsor (with respect to itself and not any other Sponsor) upon thirty (30)
days notice to the Company and the other Sponsor, (b) terminated upon the mutual
consent of the Sponsors upon thirty (30) days notice to the Company, (c)
terminated automatically, with respect to a particular Sponsor, on the date
which such Sponsor and its affiliates no longer beneficially owns at least
twenty percent (20%) of the equity securities of Holdings acquired by it
pursuant to the Merger Agreement, or (d) terminated by a Sponsor (with respect
to itself and not any other Sponsor) upon the consummation of any public
offering of the equity securities of the Company or Holdings, or any change in
law after the date of this Agreement (each an "Adverse Event") which, in the
mutual determination of such Sponsor and a majority of Holding's Board of
Directors, causes the existence of this Agreement to (i) render any director
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designated by such Sponsor as an "interested" or otherwise not an "independent"
director, (ii) adversely affect such Sponsor's right to designate a Person or
Persons (as defined below) to serve on the Company's Board of Directors, or
(iii) affect the ability of a Person who has been designated by such Sponsor to
serve on the Company's Board of Directors to perform his duties as a director.
Upon any termination of this Agreement, each of (A) the obligations of the
Company under Section 4 below, (B) any and all owed and unpaid obligations of
the Company under Section 2 above and (C) the provisions of Section 7 shall
survive any termination of this Agreement to the maximum extent permitted under
applicable law. In the event that a Sponsor terminates this Agreement in
accordance with clause (d) above of this Section, the Company agrees to pay such
Sponsor a cash lump-sum termination fee equal to the net present value of the
fees that would have been payable to such Sponsor (but for the termination
hereof) pursuant to Section 2 hereof for a period of seven (7) years from the
date of such termination calculated using a discount rate equal to the ten-year
treasury rate on the date of such termination. Such termination fee shall be
payable by wire transfer of immediately available funds within ten (10) days
after the date of termination to the account specified on Exhibit A attached
hereto, or to such other account(s) as such Sponsor may specify in writing to
the Company. As used herein, the term "Person" shall be construed in the
broadest sense and means and includes a natural person, a partnership, a
corporation, an association, a joint stock company, a limited liability company,
a trust, a joint venture, an unincorporated organization and any other entity
and any federal, state, municipal, foreign or other government, governmental
department, commission, board, bureau, agency or instrumentality, or any private
or public court or tribunal.
4. Expenses; Indemnification.
(a) Expenses. In addition to the fees set forth in Section 2 hereof,
the Company agrees to pay on demand all costs and expenses incurred by the
Sponsors and their affiliates or any of them in connection with this Agreement,
including but not limited to the fees and disbursements of Weil, Gotshal &
▇▇▇▇▇▇ LLP, counsel to THL, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to Evercore,
and any other consultants or advisors retained by the Sponsors or their
respective counsel arising in connection therewith, including but not limited to
the preparation, negotiation and execution of this Agreement, the performance of
services hereunder (including, without limitation, fees and expenses of
independent professionals, research, transportation and per diem costs;
provided, however, that neither Sponsor (and their affiliates) shall incur
expenses with respect to private aircrafts in connection with the performance of
services hereunder in excess of $150,000 per annum), or the transactions
contemplated hereby.
(b) Indemnity and Liability. The Company will indemnify and hold
harmless each Sponsor, its affiliates and their respective partners (both
general and limited), members (both managing and otherwise), officers,
directors, employees, agents and representatives (each such Person being an
"Indemnified Party") from and against any and all losses, claims, damages and
liabilities, whether joint or several, expenses of any nature (including
reasonable attorneys' fees and disbursements), judgments, fines, settlements and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative, arbitral or investigative,
in which an Indemnified Party was involved or may be involved, or threatened to
be involved, as a party or otherwise (the "Liabilities"), related to, arising
out of or in connection with the advisory and consulting services contemplated
by this Agreement or the engagement of each Sponsor pursuant to, and the
performance by each Sponsor of the services contemplated by, this Agreement, and
any other action taken by an Indemnified Party on behalf of the Company, whether
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or not pending or threatened, and any other action taken by an Indemnified Party
on behalf of the Company, whether or not resulting in any liability and whether
or not such action, claim, suit, investigation or proceeding is initiated or
brought by the Company. The Company will reimburse any Indemnified Party for all
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) as they are incurred in connection with investigating, preparing,
pursuing, defending or assisting in the defense of any action, claim, suit,
investigation or proceeding for which the Indemnified Party would be entitled to
indemnification under the terms of the previous sentence, or any action or
proceeding arising therefrom, whether or not such Indemnified Party is a party
thereto, provided that, subject to the following sentence, the Company shall be
entitled to assume the defense thereof at its own expense, with counsel
satisfactory to such Indemnified Party in its reasonable judgment. Any
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense, and in any action, claim, suit, investigation or
proceeding in which both the Company and/or one or more of its subsidiaries, on
the one hand, and an Indemnified Party, on the other hand, is, or is reasonably
likely to become, a party, such Indemnified Party shall have the right to employ
separate counsel at the expense of the Company and to control its own defense of
such action, claim, suit, investigation or proceeding if, in the reasonable
opinion of counsel to such Indemnified Party, a conflict or potential conflict
exists between the Company, on the one hand, and such Indemnified Party, on the
other hand, that would make such separate representation advisable. The Company
agrees that it will not, without the prior written consent of the applicable
Indemnified Party, settle, compromise or consent to the entry of any judgment in
any pending or threatened claim, suit, investigation, action or proceeding
relating to the matters contemplated hereby (if any Indemnified Party is a party
thereto or has been threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional release of the
applicable Indemnified Party and each other Indemnified Party from all liability
arising or that may arise out of such claim, suit, investigation, action or
proceeding. Provided the Company is not in breach of its indemnification
obligations hereunder, no Indemnified Party shall settle or compromise any claim
subject to indemnification hereunder without the consent of the Company. The
Company will not be liable under the foregoing indemnification provision with
respect to any Indemnified Party, to the extent that any loss, claim, damage,
liability, cost or expense is determined by a court, in a final judgment from
which no further appeal may be taken, to have resulted primarily from the gross
negligence or willful misconduct by an Indemnified Party. If an Indemnified
Party is reimbursed hereunder for any expenses, such reimbursement of expenses
shall be refunded to the extent it is finally judicially determined that the
Liabilities in question resulted primarily from the gross negligence or willful
misconduct of such Indemnified Party.
The Company agrees that if any indemnification sought by any
Indemnified Party pursuant to this Section 4 is unavailable for any reason or is
insufficient to hold the Indemnified Party harmless against any Liabilities
referred to herein, then the Company shall contribute to the Liabilities for
which such indemnification is held unavailable or insufficient in such
proportion as is appropriate to reflect the relative benefits received (or
anticipated to be received) by the Company, on the one hand, and the Indemnified
Party, on the other hand, in connection with the transactions which gave rise to
such Liabilities or, if such allocation is not permitted by applicable law, not
only such relative benefits but also the relative faults of the Company, on the
one hand, and the Indemnified Party, on the other hand, as well as any other
equitable considerations, subject to the limitation that in any event the
aggregate contribution by the Indemnified Parties to all Liabilities with
respect to which contribution is available hereunder shall not exceed the fees
actually received by the Sponsors in connection with the transaction which gave
rise to such Liabilities (excluding any amounts paid as reimbursement of
expenses).
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5. Assignment, etc. Except as provided below, neither the Company
nor the Sponsors shall have the right to assign this Agreement. Each Sponsor
acknowledges that its services under this Agreement are unique. Accordingly, any
purported assignment by any Sponsor shall be void. Notwithstanding the
foregoing, any Sponsor may assign all or part of its rights and obligations
hereunder to (a) any affiliate of such Sponsor which provides services similar
to those called for by this Agreement, or (b) to the other Sponsor. In the event
of an assignment in accordance with clause (b) above of this Section, such
assigning Sponsor shall be released from all of its rights and obligations
hereunder.
6. Amendments and Waivers. No amendment or waiver of any term,
provision or condition of this Agreement shall be effective, unless in writing
and executed by each Sponsor and the Company. No waiver on any one occasion
shall extend to or effect or be construed as a waiver of any right or remedy on
any future occasion. No course of dealing of any Person nor any delay or
omission in exercising any right or remedy shall constitute an amendment of this
Agreement or a waiver of any right or remedy of any party hereto.
7. Miscellaneous.
(a) Choice of Law. This Agreement shall be governed by and construed
in accordance with the domestic substantive laws of the State of New York
without giving effect to any choice or conflict of law provision or rule that
would cause the application of the domestic substantive laws of any other
jurisdiction.
(b) Consent to Jurisdiction. Each of the parties agrees that all
actions, suits or proceedings arising out of or based upon this Agreement or the
subject matter hereof shall be brought and maintained exclusively in the federal
and state courts of the State of New York. Each of the parties hereto by
execution hereof (i) hereby irrevocably submits to the jurisdiction of the
federal and state courts in the State of New York for the purpose of any action,
suit or proceeding arising out of or based upon this Agreement or the subject
matter hereof and (ii) hereby waives to the extent not prohibited by applicable
law, and agrees not to assert, by way of motion, as a defense or otherwise, in
any such action, suit or proceeding, any claim that it is not subject personally
to the jurisdiction of the above-named courts, that it is immune from
extraterritorial injunctive relief or other injunctive relief, that its property
is exempt or immune from attachment or execution, that any such action, suit or
proceeding may not be brought or maintained in one of the above-named courts,
that any such action, suit or proceeding brought or maintained in one of the
above-named courts should be dismissed on grounds of forum non conveniens,
should be transferred to any court other than one of the above-named courts,
should be stayed by virtue of the pendency of any other action, suit or
proceeding in any court other than one of the above-named courts, or that this
Agreement or the subject matter hereof may not be enforced in or by any of the
above-named courts. Each of the parties hereto hereby consents to service of
process in any such suit, action or proceeding in any manner permitted by the
laws of the State of New York, agrees that service of process by registered or
certified mail, return receipt requested, at the address specified in or
pursuant to Section 10 is reasonably calculated to give actual notice and waives
and agrees not to assert by way of motion, as a defense or otherwise, in any
such action, suit or proceeding any claim that service of process made in
accordance with Section 10 does not constitute good and sufficient service of
process. The provisions of this Section 7(b) shall not restrict the ability of
any party to enforce in any court any judgment obtained in a federal or state
court of the State of New York.
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(c) Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO HEREBY WAIVES, AND
COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT, OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND, CAUSE OF ACTION, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR
BASED UPON THIS AGREEMENT OR THE SUBJECT HEREOF, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. Each
of the parties hereto acknowledges that it has been informed by each other party
that the provisions of this Section 7(c) constitute a material inducement upon
which such party is relying and will rely in entering into this Agreement and
the transactions contemplated hereby. Any of the parties hereto may file an
original counterpart or a copy of this Agreement with any court as written
evidence of the consent of each of the parties hereto to the waiver of its right
to trial by jury.
8. Independent Contractor. The parties agree and understand that
each Sponsor is and shall act as an independent contractor of the Company in the
performance of its duties hereunder. Each Sponsor is not, and in the performance
of its duties hereunder will not hold itself out as, an employee, agent or
partner of the Company.
9. Merger/Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes any prior communication or agreement with respect thereto.
10. Notice. All notices, demands, and communications of any kind
which any party may require or desire to serve upon any other party under this
Agreement shall be in writing and shall be served upon such other party and such
other party's copied persons as specified below by personal delivery to the
address set forth for it below or to such other address as such party shall have
specified by notice to each other party or by mailing a copy thereof by
certified or registered mail, or by Federal Express or any other reputable
overnight courier service, postage prepaid, with return receipt requested,
addressed to such party and copied persons at such addresses. In the case of
service by personal delivery, it shall be deemed complete on the first business
day after the date of actual delivery to such address. In case of service by
mail or by overnight courier, it shall be deemed complete, whether or not
received, on the third day after the date of mailing as shown by the registered
or certified mail receipt or courier service receipt. Notwithstanding the
foregoing, notice to any party or copied Person of change of address shall be
deemed complete only upon actual receipt by an officer or agent of such party or
copied person.
If to the Company, to it at:
American Media, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to THL, to it at:
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THL Managers V, LLC
c/o ▇▇▇▇▇▇ ▇. ▇▇▇ Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Evercore, to it at:
Evercore Advisors L.P.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Mr. ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
11. Severability. If in any judicial or arbitral proceedings a court
or arbitrator shall refuse to enforce any provision of this Agreement, then such
unenforceable provision shall be deemed eliminated from this Agreement for the
purpose of such proceedings to the extent necessary to permit the remaining
provisions to be enforced. To the full extent, however, that the provisions of
any applicable law may be waived, they are hereby waived to the end that this
Agreement be, deemed to be a valid and binding agreement enforceable in
accordance with its terms, and in the event that any provision hereof shall be
found to be invalid or unenforceable, such provision shall be construed by
limiting it so as to be valid and enforceable to the maximum extent consistent
with and possible under applicable law.
12. Counterparts. This Agreement may be executed in any number of
counterparts and by each of the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
together shall constitute one and the same agreement.
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13. Headings. All descriptive headings in this Agreement are
inserted for convenience only and shall be disregarded in construing or applying
any provision of this Agreement.
14. Prevailing Party. If any legal action or other proceedings is
brought for a breach of this Agreement or any of the warranties herein, the
prevailing party shall be entitled to recover its reasonable attorneys' fees and
other costs incurred in bringing such action or proceeding, in addition to any
other relief to which such party may be entitled.
15. Sponsors. Any reference herein to action to be taken by "the
Sponsors" or consent to be granted by "the Sponsors" shall require the action or
consent, as the case may be, of each of THL and Evercore.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf as an instrument under seal as of the date first above
written by its officer or representative thereunto duly authorized.
AMERICAN MEDIA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
THL MANAGERS V, LLC
By: ▇▇▇▇▇▇ ▇. ▇▇▇ Partners, L.P.,
its Managing Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
EVERCORE ADVISORS L.P.
By: Evercore Advisors L.L.C.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Member