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This excerpt taken from the CKXE DEF 14A filed Mar 30, 2007. In February 2005, the Company entered into a sublease for approximately 16,810 square feet for its principal corporate offices in New York, New York. The prior subtenants from whom we assumed the terms of the sublease were FXM, Inc. (“FXM”) and MJX Asset Management LLC (“MJX”). Mr. Sillerman is the managing member of MJX and is the principal stockholder of FXM. Messrs. Ferrel, Tytel, Slater and Benson are also investors in MJX and FXM. The terms of the sublease are identical to those which governed FXM’s and MJX’s occupation of such space. In accordance with certain requirements set forth in the existing sublease for the space, FXM was required to remain as a guarantor 16 to the Company’s obligations under the sublease. The Company has agreed to use its best efforts to have FXM released from these obligations. While the Company was not yet subject to the rules and regulations of The NASDAQ Stock Market® at the time of this transaction, the transaction was subsequently ratified by the independent members of our board of directors in accordance with The NASDAQ Stock Market’s® rules for affiliated transactions. Under the terms of their employment agreements, certain employees of the Company, including Messrs. Tytel and Benson, are permitted to spend a portion of their time providing services for Mr. Sillerman and/or MJX. In addition, certain non-management employees provide services for Mr. Sillerman and/or MJX. The Compensation Committee of our board of directors reviews the amount of time spent on outside endeavors by CKX employees on a quarterly basis, and to the extent the Compensation Committee believes any such employee is engaging in outside activities at a level whereby he is being compensated by the Company for the time spent on such outside activities, the Compensation Committee may require that the employee reduce the level of outside services being performed, and further, may require that the recipient of such services (either Mr. Sillerman or MJX) reimburse the Company for the compensation attributable to the time spent thereon. In 2006, the Compensation Committee determined that certain non-management employees of CKX had provided services to MJX and/or Mr. Sillerman with an aggregate value of $120,817. Mr. Sillerman’s salary for the year ended December 31, 2006 was reduced by such amount to compensate the Company for such services. Although Mr. Sillerman is an investor as a limited partner in an affiliate of The Huff Alternative Fund, L.P. which, together with that affiliate, invested $43.8 million in the Company in 2005, Mr. Sillerman and The Huff Alternative Fund, L.P. and that affiliate agreed that Mr. Sillerman would not participate in the investment in CKX by The Huff Alternative Fund, L.P. and its affiliate. Other than the aforementioned, there have been no transactions during the last two years, or proposed transactions, to which we were or will be a party, in which any director, executive officer, beneficial owner of more than 5% of the Company’s Common Stock or any member of the immediate family (including spouse, parents, children, siblings and in-laws) of any of these persons, had or is to have a direct or indirect material interest. The Company reviews all relationships and transactions in which the Company or its directors, executive officers, stockholders holding 5% or more of the Company’s outstanding capital stock or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. If a transaction is determined to be an affiliate transaction, it must be approved by a majority of the Company’s independent and disinterested directors who will have access to the Company’s counsel or independent legal counsel at the Company’s expense. The Company is subject to, and complies with, the regulations of The NASDAQ Stock Market® relating to affiliate transactions. 17 This excerpt taken from the CKXE 8-K filed Feb 8, 2005. Related Party Transactions
Mr. Sillerman, through his ownership of limited partnership interests and certain interests in the general partner, is an investor in StarVest Partners, L.P., a $150,000,000 venture capital investment fund, in which John D. Miller is both an investor and serves as a managing member. Mr. Sillerman has also co-invested with StarVest in several portfolio companies in which the fund invested. The terms of Mr. Sillerman’s investment in Starvest are standard and customary for private equity investments of this type. Mr. Sillerman has no special rights not afforded to the other limited partners or investors in the general partner of StarVest. Mr. Tytel is also an investor as a limited partner in StarVest Partners, L.P.
Immediately prior to the closing of the Simultaneously Closed Transactions, the Company entered into a sublease for approximately 16,810 square feet for its principal corporate offices in New York, New York. The prior subtenants from whom the Company assumed the terms of the sublease were FXM, Inc. (“FXM”) and MJX Asset Management LLC (“MJX”). Mr. Sillerman is the managing member of MJX and is the principal shareholder of FXM. Messrs. Tytel, Slater, Benson and Fox are also investors in MJX and FXM. The assignment of the sublease was an arms-length transaction permitted under the terms of the existing lease for the space, and the terms of the Company’s sublease are identical to those which governed FXM’s and MJX’s occupation of such space. In accordance with certain requirements set forth in the existing sublease for the space, FXM was required to remain as a guarantor to the Company’s obligations under the sublease. The Company has agreed to use its best efforts to have FXM released from these obligations.
It is anticipated that under the terms of their employment agreements, certain employees of the Company, including Messrs. Tytel, Fox and Benson, will be permitted to spend a portion of their time providing services for Mr. Sillerman and/or MJX. The Compensation Committee of the Board of Directors will review the amount of time spent on outside endeavors by Company employees on a
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quarterly basis, and to the extent the Compensation Committee believes any such employee is engaging in outside activities at a level whereby he is being compensated by the Company for the time spent on such outside activities, the Compensation Committee will require that the employee reduce the level of outside services being performed, and further, will require that the recipient of such services (either Mr. Sillerman or MJX) reimburse the Company for the compensation attributable to the time spent thereon. In any event, the Compensation Committee will consider the amount of time dedicated to outside activities in determining the appropriate compensation for the employees involved.
At closing, the Company reimbursed FXM for approximately $1.1 million of third party expenses incurred in connection with the Simultaneously Closed Transactions previously paid by FXM on behalf of the Company and $1.2 million of overhead and similar expenses incurred by FXM on behalf of the Company in connection with the Simultaneously Closed Transactions.
Although Mr. Sillerman is an investor as a limited partner in the Huff Alternative Fund, L.P. which, together with certain affiliates, invested $43.8 million in the Company in the Huff Investment, Mr. Sillerman and Huff agreed that Mr. Sillerman would not participate in the Huff Investment so as to guarantee and protect Mr. Sillerman’s and Huff’s respective objectivity in negotiating the terms of the investment.
Mr. Sillerman is an investor in private equity funds managed by affiliates of Bear Stearns Corporate Lending, Inc., the lender under our Short Term Senior Loan. The funds in which Mr. Sillerman is an investor did not participate in the Short Term Senior Loan.
Bruce Morrow was the Chairman of the Board of Multi-Market Radio, a company in which Mr. Sillerman was the largest individual shareholder, and which was acquired by SFX Broadcasting, Inc., for which Mr. Sillerman served as Chairman and Chief Executive Officer. Messrs. Tytel and Benson were also shareholders and directors of SFX Broadcasting, Inc.
Mr. Morrow is a minority participant in an investment made by Mr. Sillerman in a theatrical production.
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