CONSULTING SERVICES AGREEMENT

Exhibit 10.1

 

EXECUTION COPY

 

CONSULTING SERVICES AGREEMENT

 

by and among

 

WEIDER PUBLICATIONS, LLC

 

and

 

OAK PRODUCTIONS, INC.

 

and

 

AMERICAN MEDIA, INC.

 

 

Dated as of January 1, 2004

Table of Contents

 

 

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Table of Contents

 

 

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This CONSULTING SERVICES AGREEMENT, dated as of January 1, 2004, is entered into by and among Weider Publications, LLC, a Delaware limited liability company (together with its successors and permitted assigns, “ Weider ”), Oak Productions, Inc., a California corporation (“ Oak ”) and, solely for purposes of Article VIII, American Media, Inc., a Delaware corporation (together with its successors and permitted assigns, “ AMI ”).

 

W I T N E S S E T H

 

WHEREAS, Weider is engaged in the magazine publication business and would like to obtain certain consulting services from Oak, and Oak would like to provide such consulting services to Weider;

 

WHEREAS, Weider and Oak entered into a Memorandum of Understanding on November 15, 2003 pursuant to which Oak agreed to provide certain consulting services to Weider subject to, among other things, the execution of this Agreement;

 

NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending to be legally bound hereby, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1 Definitions .

 

Unless the context otherwise requires, the following terms shall have the following meanings for purposes of this Agreement:

 

“ Affiliate ” with respect to any Person means (i) any other Person who controls, is controlled by or is under common control with such Person, (ii) any director, officer or employee of such Person or any Person specified in clause (i) above or (iii) any immediate family member of any Person specified in clause (i) or (ii) above. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, as trustee or executor, by contract or credit arrangement or otherwise.

 

“ Agreement ” means this Consulting Services Agreement, as it may be amended, supplemented, modified or restated from time to time.

 

“ AMI ” shall have the meaning ascribed to such term in the preamble.

 

“ AMO ” means American Media Operations, Inc., a Delaware corporation, together with its successors by merger or consolidation or sale of all or substantially all of the assets of AMO.

 

“ AMO/AMI Liquidity Event ” shall have the meaning ascribed to such term in the definition of “ Total Enterprise Value of Weider .”

“ Anniversary Liquidity Events ” shall have the meaning ascribed to such term in Section 6.2(e).

 

“ Base Amount ” with respect to Calendar Year 2004 means the amount equal to 105% of the Net Print Advertising Revenues for Calendar Year 2003. The “ Base Amount ” with respect to any subsequent Calendar Year means the amount equal to 105% of the Base Amount for the immediately preceding Calendar Year. Base Amount is subject to adjustment as described in Sections 5.2(b) and 5.2(d).

 

“ Board ” means the Board of Directors of AMI.

 

“ Business Day ” means a day which is not a Saturday, Sunday or other day on which banks in New York City are closed.

 

“ Calendar Year ” means the one-year period beginning on January 1 and ending on December 31 of each year.

 

“ Change of Control ” with respect to Weider, AMO or AMI, as applicable, means the acquisition by any Person or group of Persons acting in concert (other than Weider, AMO, AMI, any subsidiary of AMO or AMI, any Sponsor or any Affiliate of a Sponsor) of beneficial ownership (as defined under Section 13(d) of the Exchange Act) of securities of Weider, AMO or AMI, as applicable, such that following such acquisition such Person or group of Persons acting in concert beneficially own (as defined under Section 13(d) of the Exchange Act) a majority of (i) the voting power of all outstanding voting securities of Weider, AMO or AMI, as applicable, or (ii) the common equity interests on a fully diluted and as converted basis of Weider, AMO or AMI, as applicable.

 

“ COC Notice ” shall have the meaning ascribed to such term in Section 2.3(c).

 

“ Confidential Information ” with respect to Weider, means that confidential or proprietary information of Weider and its Affiliates (including AMO and AMI), of whatever kind or nature, disclosed to Oak or its Affiliates, employees or agents in connection with this Agreement or the provision by Oak of consulting services pursuant to the terms hereof, including without limitation any information regarding (i) advertising revenues of the Weider Business, AMO or AMI, (ii) EBITDA of the Weider Business, AMO or AMI, (iii) the Total Enterprise Value of Weider, and (iv) the TEV of the Weider Business, AMO or AMI; provided, however, that Confidential Information of Weider shall not include any information that is publicly known or publicly available, other than as a result of Oak’s breach of Section 2.6. “ Confidential Information ” with respect to Oak, means that confidential or proprietary information of Oak and its Affiliates, of whatever kind or nature, disclosed to Weider or its Affiliates, employees or agents in connection with this Agreement or the provision by Oak of consulting services pursuant to the terms hereof; provided, however, that Confidential Information of Oak shall not include any information that is publicly known or publicly available, other than as a result of Weider’s breach of Section 2.6.

 

“ EBITDA ” means, for any period with respect to AMO or AMI, as applicable, the Net Profit (Loss) of AMO or AMI, as applicable, for such period, plus (i) net Interest Expense of AMO or AMI, as applicable, (ii) consolidated depreciation expense of AMO or AMI, as applicable, (iii) consolidated amortization expense of AMO or AMI, as

 

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applicable, (iv) all consolidated federal, state, local and foreign income tax expense of AMO or AMI, as applicable, and (v) to the extent deducted in determining such Net Profit (Loss), any extraordinary and non-recurring losses, minus to the extent added in determining such Net Profit (Loss), any extraordinary and non-recurring gains, all as determined in good faith in accordance with AMO’s accounting principles in effect as of the date of this Agreement for the preparation of its financial statements.

 

“ EBITDA of the Weider Business ” means, for any period, with respect to the Weider Business, total revenues less operating expenses of the Weider Business determined on the basis used in calculating projected EBITDA of the Weider Business set forth on Exhibit A attached hereto; it being understood that no additional expense line items shall be added to those set forth on Exhibit A and that all line items shall reflect the consistent application of the accounting principles used in calculating the projected EBITDA set forth on Exhibit A. For purposes of clarification, (i) the Weider Business shall not be charged any expenses or other charges consisting of any consolidated corporate or other overhead of AMI or AMO that would not be allocated to a specific business unit of AMI or AMO in accordance with the methodology used in calculating projected EBITDA of the Weider Business set forth on Exhibit A attached hereto, (ii) the SG&A line item on Exhibit A shall not include any charges or expenses for depreciation, amortization, Interest Expense or income taxes, and (iii) extraordinary and non-recurring losses or gains relating to the Weider Business will not be included.

 

“ End Date ” means December 31, 2008 unless the Term is extended pursuant to Section 2.3(d), in which event the “ End Date ” will be December 31, 2010.

 

“ Event Year ” shall have the meaning ascribed to such term in Section 5.2(d).

 

“ Evercore ” shall mean, collectively, (a) each of Evercore Capital Partners II L.P. and Evercore Co-Investment Partnership II L.P. and (b) any Affiliate of any of the Persons set forth in clause (a).

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

“ Fiscal Quarter ” means each three calendar month period ending on March 31, June 30, September 30 and December 31.

 

“ Governmental Authority ” shall have the meaning ascribed to such term in Section 3.3(b).

 

“ Independent Firm ” shall have the meaning ascribed to such term in Section 6.3(a).

 

“ Interest Expense ” means, for any period, the amount of consolidated interest expense of the Weider Business, AMO or AMI, as applicable, for such period.

 

“ IPO Notice ” shall have the meaning ascribed to such term in Section 6.2(d).

 

 

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“ Liquidity Event ” means the earliest to occur of: (i) a sale of all or substantially all of the Weider Business to a Third Party, whether by stock or asset sale or otherwise, (ii) a sale to a Third Party of all or substantially all of the assets of AMO or AMI (in each case, including the Weider Business), (iii) a Change of Control of AMO or AMI, (iv) the consummation of an underwritten public offering of common stock of AMO or AMI, following which the common stock of AMO or AMI is traded on a Stock Market, or (v) the consummation of an underwritten public offering of equity interests of Weider following which the equity interests of Weider is traded on a Stock Market.

 

“ Liquidity Event Payment ” shall have the meaning ascribed to such term in Section 6.2(a).

 

“ LTM EBITDA ” means the EBITDA of the Weider Business, AMI or AMO, as applicable, for the last four Fiscal Quarters for which unaudited financial results are available prior to the date of the consummation of a Liquidity Event or an Anniversary Liquidity Event. Further, if the Weider Business, AMO, AMI or any of their respective subsidiaries acquired or disposed of any magazine, publication or other operations or Person during the period for which LTM EBITDA is being calculated, LTM EBITDA for such period will be calculated in good faith after giving effect on a pro forma basis to such acquisition or disposition as if such acquisition or disposition occurred on the first day of such period for which LTM EBITDA is calculated.

 

“ Mr. S ” means Arnold Schwarzenegger.

 

“ Mr. S Partnership ” means a partnership satisfying the following criteria: (a) the only persons who are partners of such partnership at any time are (w) Mr. S, (x) Mr. S’s spouse, (y) the lineal descendants (by blood or adoption) of Mr. S and/or (z) a special purpose corporation whose sole stockholders are persons identified in clauses (w), (x) or (y), (b) that engages in no business activities and (c) that agrees in writing with Weider that the conditions contained in this definition will at all times be satisfied.

 

“ Mr. S Trust ” means a trust or custodianship the beneficiaries of which may include only Mr. S, his spouse or his lineal descendants by blood or adoption.

 

“ Mr. S’s Estate ” means Mr. S’s executors, administrators, testamentary trustees, legatees or beneficiaries.

 

“ Net Print Advertising Revenues ” with respect to any period means the North American print advertising revenues of the Weider Magazines net of bad debt and rebate reserves (which is currently expected to be approximately $105,000,000 for Calendar Year 2003), all as determined in good faith in accordance with AMO’s accounting principles in effect as of the date of this Agreement for the preparation of its financial statements. For the avoidance of doubt, print advertising revenues will only include advertising revenues derived from the North American distribution of printed magazines and publications included within the Weider Magazines and will not include advertising revenues from internet, broadcasting or other non-print media nor will it include any advertising revenues derived from the distribution of any magazines or publications outside of North America. Net Print Advertising Revenues are subject to adjustment as described in Section 5.2(d) hereof.

 

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“ Net Profit (Loss) ” with respect to any period means the consolidated net income or loss of AMO, or AMI, as applicable, for such period determined in good faith in accordance with AMO’s accounting principles in effect as of the date of this Agreement for the preparation of its financial statements.

 

“ Oak ” shall have the meaning ascribed to such term in the preamble.

 

“ 1% Advertising Payment ” shall have the meaning ascribed to such term in Section 5.1(a).

 

“ Other Securities ” means any securities that Oak may receive as a Liquidity Event Payment.

 

“ Permitted Transferees ” means Mr. S, Mr. S’s Estate, Mr. S Trust and Mr. S Partnership.

 

“ Person ” means any individual, partnership, company, joint venture, corporation, association, limited liability company, trust, unincorporated organization, government or any department or agency thereof or any other entity.

 

“ Phantom Equity Interest ” means the phantom equity interest in Weider as provided in this Agreement and includes any and all rights and benefits to which a holder of such Phantom Equity Interest may be provided under this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement applicable to the holder of a Phantom Equity Interest.

 

“ Qualifying Public Offerings ” means the events described in clauses (iv) and (v) of the definition of “ Liquidity Event .”

 

“ Relevant EBITDA Multiple ” with respect to AMO or AMI, as applicable, means, prior to or upon the occurrence of a Qualifying Public Offering of AMO or AMI, as applicable, (i) the TEV of AMO or AMI, as applicable, based on the consideration paid by the purchaser in such Liquidity Event or the price to the public of shares of common stock of AMO or AMI, as applicable, in a Qualifying Public Offering divided by (ii) LTM EBITDA of AMO or AMI, as applicable, all determined in good faith on a consolidated basis. “ Relevant EBITDA Multiple ” with respect to AMO or AMI, as applicable, means, subsequent to the occurrence of a Qualifying Public Offering of AMO or AMI, as applicable, (i) the TEV of AMO or AMI, as applicable, based on the average trading prices of the common stock of AMO or AMI, as applicable, for the sixty (60) consecutive trading days immediately preceding a subsequent Liquidity Event or an Anniversary Liquidity Event divided by (ii) the LTM EBITDA of AMO or AMI, as applicable, all determined in good faith on a consolidated basis

 

“ Repurchase Notice ” shall have the meaning ascribed to such term in Section 6.3(b).

 

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“ Repurchase Payment ” shall have the meaning ascribed to such term in Section 6.3(a).

 

“ Securities Act ” means the Securities Act of 1933, as amended.

 

“ Sponsors ” means, collectively, Evercore and THL.

 

“ Stock Market ” shall mean any nationally recognized securities exchange or the Nasdaq Stock Market.

 

“ Subsequent Weider Magazines ” means any magazine or other publication which (i) is (x) first published after January 1, 2004 by (A) Weider (either directly or indirectly through a subsidiary) or (B) AMI, AMO or another subsidiary of AMI or AMO as long as Weider is a subsidiary of AMI or (y) acquired after January 1, 2004 from a Third Party by (A) Weider (either directly or indirectly through a subsidiary) or (B) AMI, AMO or another subsidiary of AMI or AMO as long as Weider is a subsidiary of AMI and (ii) primarily relates to sports, health or fitness, provided that any Subsequent Weider Magazine described in clause (x)(B) or (y)(B) will cease to be a Subsequent Weider Magazine at such time (if any) as Weider is no longer a subsidiary of AMI or AMO (unless such magazine is then published by Weider or a subsidiary of Weider).

 

“ 10% Advertising Payment ” shall have the meaning ascribed to such term in Section 5.2(a) and shall be subject to adjustment as provided in Sections 5.2(b) and 5.2(d).

 

“ Term ” shall have the meaning ascribed to such term in Section 2.3(a).

 

“ Termination Year ” shall have the meaning ascribed to such term in Section 5.2(b).

 

“ TEV ” means (a) with respect to AMO or AMI, as applicable, the sum of (i) the aggregate value of AMO’s or AMI’s (as applicable) outstanding equity at the time at which TEV is being determined plus (ii) the consolidated net indebtedness of such Person at the time at which TEV is being determined and (b) with respect to the Weider Business, the value of the entire Weider Business at the time at which TEV is being determined, which value will be determined as if all of the equity of the Weider Business were being sold without any minority discount on a debt-free basis with all income tax liability of the Weider Business relating to the pre-sale period being retained by the seller.

 

“ Third Party ” means any Person that is not (a) a Sponsor or an Affiliate of a Sponsor or (b) AMO, AMI or any subsidiary of AMO or AMI.

 

“ THL ” shall mean, collectively, (a) each of Thomas H. Lee Equity Fund V, L.P., Thomas H. Lee Parallel Fund V, L.P., Thomas H. Lee Equity (Cayman) Fund V, L.P., Putnam Investments Holdings, LLC, Putnam Investments Employees’ Securities Company I, LLC, Putnam Investments Employees’ Securities Company II LLC, 1997 Thomas H. Lee Nominee Trust, and Thomas H. Lee Investors Limited Partnership and (b) any Affiliate of any of the Persons set forth in clause (a).

 

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“ Total Enterprise Value of Weider ” means, if Total Enterprise Value of Weider is being calculated due to an event involving the Weider Business as described in clauses (i) or (v) of the definition of a Liquidity Event (a “ Weider Liquidity Event ”), the TEV of the Weider Business as calculated in good faith as of the consummation of such Weider Liquidity Event based on the consideration paid by the purchaser or on the offering price to the public, as applicable, in such Weider Liquidity Event. “ Total Enterprise Value of Weider ” means, if Total Enterprise Value of Weider is being calculated due to an event involving AMO or AMI as described in clauses (ii), (iii) or (iv) of the definition of a Liquidity Event (an “ AMO/AMI Liquidity Event ”), the product of multiplying the LTM EBITDA of the Weider Business by the Relevant EBITDA Multiple of AMO (if the AMO/AMI Liquidity Event relates to AMO) or AMI (if the AMO/AMI Liquidity Event relates to AMI), as applicable. “ Total Enterprise Value of Weider ” means, if Total Enterprise Value of Weider is being calculated due to an option to repurchase pursuant to Section 6.3(a), the TEV of the Weider Business as determined in accordance with Section 6.3(a). Notwithstanding the above, the “ Total Enterprise Value of Weider ” shall be increased by an amount, if any, equal to (i) the aggregate sale proceeds received by Weider, AMI, AMO or their respective subsidiaries from the sale to a Third Party (prior to the relevant Liquidity Event or exercise of the option to repurchase pursuant to Section 6.3(a)) of any Weider Magazines as determined in good faith by the Board minus (ii) the purchase price paid by Weider, AMI, AMO or their respective subsidiaries to acquire from a Third Party (prior to the relevant Liquidity Event or exercise of the option to redeem or repurchase pursuant to Section 6.3(a)) any Subsequent Weider Magazines specified in clause (i)(y) of the definition thereof, as determined in good faith by the Board. Based on a projected fiscal year end March 2004 EBITDA of the Weider Business of $52,000,000 and an assumed EBITDA multiple of ten (10), the Total Enterprise Value of Weider as of the date hereof is estimated to be approximately $520,000,000.

 

“ Transfer ” or “ transfer ” shall have the meaning ascribed to such term in Section 6.4(a).

 

“ Voting Stock ” of a Person means all classes of capital stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.

 

“ Weider ” shall have the meaning ascribed to such term in the preamble.

 

“ Weider Business ” means the business conducted by Weider and its Affiliates (provided that for purposes of this definition, the term “control” as used in the definition of Affiliate will mean directly or indirectly owning Voting Stock representing a majority of the voting power of the outstanding voting power of the relevant Person) of publishing, selling, advertising, distributing and marketing the Weider Magazines through any medium and in any jurisdiction. It is expressly understood that the service provided by Distribution Services, Inc. (“ DSI ”) are not part of the Weider Business and that the expenses of the Weider Business include payments to DSI for providing such services.

 

“ Weider Liquidity Event ” shall have the meaning ascribed to such term in the definition of “ Total Enterprise Value of Weider .”

 

 

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“ Weider Magazine LTM Net Print Advertising Revenues ” means the North American print advertising revenues of any subsequently acquired or disposed Weider Magazine net of bad debt and rebate reserves (all as determined in good faith in accordance with AMO’s accounting principles in effect as of the date of this Agreement for the preparation of its financial statements) for the last twelve (12) full calendar months prior to the date of the consummation of such acquisition or disposition. For the avoidance of doubt, print advertising revenues will only include advertising revenues derived from such acquired or disposed Weider Magazine and will not include advertising revenues from internet, broadcasting or other non-print media nor will it include any advertising revenues derived from the distribution of any magazines or publications outside of North America.

 

“ Weider Magazines ” means (i) the seven existing magazines of Weider (Flex, Muscle & Fitness, Men’s Fitness, Shape, Natural Health, Fit Pregnancy and Muscle & Fitness Hers) and (ii) any Subsequent Weider Magazines, provided that “ Weider Magazines ” will not include any such magazines after it has been sold by Weider, AMI, AMO or their respective subsidiaries to a Third Party.

 

ARTICLE II

 

SERVICES TO BE PROVIDED

 

Section 2.1 Consulting Arrangements .

 

Oak hereby agrees to furnish Weider with consulting services on the terms and subject to the conditions of this Agreement. Weider and Oak shall agree from time to time upon the specific consulting services to be provided pursuant to the terms of this Agreement which will include, advising on the overall editorial direction of the specific Weider Magazines and otherwise helping in various ways to further the business objectives of the Weider Business by either (i) performing services suggested by Mr. S and consented to by Weider or (ii) being responsive to the reasonable requests of Weider. Such consulting services of Oak to be furnished to Weider pursuant to this Agreement will be provided exclusively by Mr. S and are subject to Mr. S’s other commitments and his professional and personal availability as determined in his sole discretion. Mr. S shall seek in good faith to make himself available from time to time to Weider after regular business hours or on weekends throughout the Term (defined below). For the avoidance of doubt, Mr. S shall not provide any consulting services to Weider pursuant to this Agreement during normal business hours on Business Days.

 

Section 2.2 Title .

 

Mr. S will serve as the “Executive Editor” of Muscle & Fitness and Flex in relation to the consulting services being provided to Weider pursuant to the terms of this Agreement. Mr. S will be listed as an “Executive Editor” in Muscle & Fitness and Flex (and such other Weider Magazines as the parties may agree from time to time in their sole discretion). The parties hereto acknowledge that Mr. S may be listed as an “Executive Editor” of the aforementioned Weider Magazines distributed after the termination of the Term as long as such Weider Magazines were printed during the Term. Such title of “Executive Editor” will not confer upon Mr. S any management authority or the authority to make any representation, contract or commitment on behalf of Weider.

 

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Section 2.3 Term; Extension and Termination of Term .

 

(a) The term of Oak’s consultancy under this Agreement (the “ Term ”) shall commence on January 1, 2004 and, unless sooner terminated or extended pursuant to this Section 2.3, shall expire on December 31, 2008.

 

(b) Weider may terminate this Agreement if (i) Oak is not providing the consulting services to Weider as contemplated by Section 2.1, including, without limitation, due to the death or disability of Mr. S or (ii) upon five (5) Business Days’ notice to Oak after Oak notifies Weider in writing that Mr. S. is no longer able or willing to serve as Executive Editor of Muscle & Fitness and Flex. Other than with respect to death or disability of Mr. S, termination pursuant to clause (i) of the foregoing sentence shall not take effect unless (A) Oak’s services provided hereunder viewed as a whole over the term of the Agreement have not reasonably satisfied the expectations of the parties pursuant to Section 2.1 hereof (it being understood that the failure to comply with individual requests shall not by themselves constitute grounds for termination), (B) Oak shall be given written notice by Weider of its intention to terminate Oak, such notice to state in reasonable detail the particular failures to act that constitute the grounds on which the proposed termination is based, and (C) Oak shall have six (6) months after the delivery of the notice specified in clause (B) in which to cure such failures. Prior to any termination of this Agreement by Weider, Oak shall be entitled to a hearing before the Board of Directors of Weider or its managing member. Such hearing shall be held within fifteen (15) Business Days of notice to Oak, which notice shall be given after the 6 month cure period set forth above. If, after the hearing, the Board of Directors of Weider or its managing member confirms in writing that it believes the grounds for termination still exist, Weider may then send a notice of termination to Oak pursuant to clause (i) above.

 

(c) Weider will give Oak written notice of any Change of Control of Weider, AMI or AMO within five (5) Business Days of the consummation of such Change of Control (the “ COC Notice ”). Each of Weider and Oak will have the right to immediately terminate the Term in their sole discretion by delivering written notice to the other party of such termination at any time during the thirty (30) days following the delivery to Oak of a COC Notice, provided that following a Change in Control of Weider the provisions of this Section 2.3(c) will not apply to any subsequent Change in Control of AMO or AMI. If Oak chooses not to terminate the Term upon a Change of Control of Weider, then the guarantee of AMI as provided in Section 8.10 will immediately be terminated and be of no further force and effect.

 

(d) If a Liquidity Event has not occurred on or prior to October 31, 2008, then Weider will have the option in its discretion to extend the Term until December 31, 2010 (subject to early termination pursuant to Section 2.3(b) or (c)) by providing written notice to Oak of such extension on or prior to November 30, 2008, provided that if a Liquidity Event occurs between November 1, 2008 and December 31, 2008 any extension of the Term pursuant to this Section 2.3(d) will be null and void and the Term will end on December 31, 2008 (subject to early termination pursuant to Section 2.3(b) or (c)).

 

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(e) Oak may terminate this Agreement (and thereby terminate the Term) upon five (5) Business Days’ notice to Weider if (i) Weider, AMO or AMI (A) voluntarily commences any proceeding or files any petition seeking liquidation, reorganization or other relief under applicable bankruptcy, insolvency or receivership law, (B) applies for or consents to the appointment of a receiver, trustee or custodian for Weider, AMO or AMI, as applicable, or (C) makes a general assignment for the benefit of creditors, or (ii) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking liquidation, reorganization or other relief in respect of Weider, AMO, or AMI, as applicable, and, in any such case, such proceeding or petition shall continue undismissed for ninety (90) days or an order or decree approving or ordering any of the foregoing shall be entered. For the avoidance of doubt, if Oak terminates this Agreement pursuant to this Section 2.3(e), the 1% Advertising Payment for the Calendar Year in which such termination occurred shall be calculated in accordance with Section 5.1(c), the 10% Advertising Payment for the Calendar Year in which such termination occurred shall be calculated in accordance with Section 5.2(b), and the Liquidity Event Payment shall be calculated in accordance with Section 6.2(a).

 

Section 2.4 Compensation .

 

In consideration of Oak’s agreement to furnish Weider with Mr. S’s consulting services pursuant to Section 2.1, Weider (i) will pay Oak a percentage of the Net Print Advertising Revenues, as more fully described in Article V, and (ii) grant Oak Phantom Equity Interests, as more fully described in Article VI.

 

Section 2.5 Status .

 

Oak’s relation with Weider will be that of an independent contractor and nothing in this Agreement shall be construed to create a partnership, joint venture or employer-employee relationship between Weider and Oak or Weider and Mr. S. Neither Oak nor Mr. S is the agent of Weider and neither is authorized to make any representation, contract or commitment on behalf of Weider. Neither Oak nor Mr. S will be entitled to any of the benefits which Weider may make available to its employees, such as group insurance, profit-sharing or retirement benefits. Oak will solely be responsible for all tax returns and payments required to be filed with or made to any federal, state or local tax authority with respect to Oak’s furnishing Mr. S’s consulting services and receipt of fees under this Agreement. Weider will regularly report amounts paid to Oak by filing Form 1099-MISC with the IRS as required by law. Because Oak is an independent contractor, Weider will not withhold or make payments for social security, make unemployment-insurance or disability insurance contributions, or obtain worker’s compensation insurance on Mr