UltraV Holdings, the investor group that now controls Relativity Media following a bankruptcy proceeding, has hired the company’s controversial founder and former CEO Ryan Kavanaugh as a consultant. The agreement also opens the door for him to take part in other ways in the company’s new iteration.
According to a lengthy asset purchase agreement (read it here) dated May 17 but filed over the weekend in U.S. Bankruptcy Court for the Southern District of New York, Kavanaugh will make $10,000 a month as a non-exclusive consultant. The deal runs through the end of 2019 and is renewable for subsequent 12-month terms.
The real reward for Kavanaugh could come if the company’s value grows on his watch. He will receive a one-time payment of $5 million if the company’s “fair market value” reached $150 million. The valuation can be achieved (as verified by third parties) either through the sale of a stake for at least $25 million or the sale of the entire enterprise for $150 million or higher.
Besides that potential payday, the contract stipulates that any film or TV projects generated by Kavanaugh during his consultancy will remain the property of the company. However, there is also a provision in the consulting contract covering new projects. “From time to time,” the document says, Kavanaugh and his “affiliates” may have business opportunities around projects or ideas that previously involved Relativity Holdings LLC but do not use intellectual property that is currently Relativity property. Kavanaugh, the deal states, is free to pursue those opportunities but must take on the current ownership as a 50-50 partner.
The purchase agreement sets the closing date of July 2, and lays out consideration for the transaction. UltraV is acquiring Relativity in exchange for waiving $40 million in outstanding obligations, assuming its liabilities and funding wind-down administrative costs and setting aside $350,000 in cash for unsecured creditors.