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EXHIBIT 10.8
MONITORING AND OVERSIGHT AGREEMENT
THIS MONITORING AND OVERSIGHT AGREEMENT (the "Agreement") is made and
entered into effective as of October 16, 1996, between Capstar Broadcasting
Partners, Inc., a Delaware corporation (the "Company") and Xxxxx, Muse & Co.
Partners, L.P., a Texas limited partnership (together with its successors,
"HMCo").
1. Retention. The Company hereby acknowledges that it has retained
HMCo, and HMCo acknowledges that, subject to reasonable advance notice in order
to accommodate scheduling, HMCo will provide financial oversight and monitoring
services to the Company as requested by the board of directors of the Company
during the term of this Agreement.
2. Term. The term of this Agreement shall continue until the
earlier to occur of (i) the tenth anniversary of the date hereof, or (ii) the
date on which Hicks, Muse, Xxxx & Xxxxx Equity Fund III, L.P. and its
affiliates cease to own beneficially, directly, or indirectly, any securities
of the Company or its successors.
3. Compensation.
(a) As compensation for HMCo's services under this Agreement,
the Company shall be obligated to pay to HMCo an annual fee (the "Monitoring
Fee") of $100,000 (the "Base Fee"), subject to adjustment pursuant to
paragraphs (b) and (c) below and prorated on a daily basis for any partial
calendar year during the term of this Agreement. The Monitoring Fee shall be
payable in equal quarterly installments on each January 1, April 1, July 1, and
October 1 during the term of this Agreement (each a "Payment Date"), beginning
with the first Payment Date following the date hereof. All payments shall be
made by wire transfer of immediately available funds to the account described
on Exhibit A hereto (or such other account as HMCo may hereafter designate in
writing).
(b) On January 1 of each calendar year during the term of this
Agreement, the Monitoring Fee shall be adjusted to an annual amount equal to
(i) the budgeted consolidated annual net sales of the Company and its
subsidiaries for the then-current fiscal year, multiplied by (ii) 0.2% (the
"Percentage"); provided, however, that in no event shall the annual Monitoring
Fee be less than the Base Fee.
(c) On each occasion that the Company or any of its
subsidiaries shall acquire another entity or business during the term of this
Agreement, the annual Monitoring Fee for the calendar year in which such
acquisition occurs shall be adjusted prospectively (i.e., for periods
subsequent to such acquisition until the next adjustment pursuant to clause (b)
above), as of the
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closing of such acquisition, to an annual amount equal to (i) the pro forma
combined budgeted consolidated annual net sales of the Company and its
subsidiaries for the entire then-current fiscal year of the Company (including
the sales of the acquired entity or business for such entire fiscal year, on a
pro forma basis), multiplied by (ii) the Percentage; provided, however, that in
no event shall the annual Monitoring Fee be less than the Base Fee.
(d) All past due payments in respect of the Monitoring Fee
shall bear interest at the lesser of the highest rate of interest which may be
charged under applicable law or the prime commercial lending rate per annum of
Chemical Bank, N.A. or its successors (which rate is a reference rate and is
not necessarily its lowest or best rate of interest actually charged to any
customer) (the "Prime Rate") as in effect from time to time, plus five percent
(5%), from the due date of such payment to and including the date on which
payment is made to HMCo in full, including such interest accrued thereon.
4. Reimbursement of Expenses. In addition to the compensation to be
paid pursuant to Section 3 hereof, the Company agrees to pay or reimburse HMCo
for all "Reimbursable Expenses", which shall consist of (i) all reasonable
disbursement and out-of-pocket expenses (including without limitation, costs of
travel, postage, deliveries, communications, etc.) incurred by HMCo or its
affiliates for the account of the Company or in connection with the performance
by HMCo of the services contemplated by Section 1 hereof and (ii) the Company's
Pro Rata Share of Allocable Expenditures as defined in Exhibit B hereto.
Promptly (but not more than 10 days) after request by or notice from HMCo, the
Company shall pay HMCo, by wire transfer of immediately available funds to the
account described on Exhibit A hereto (or such other account as HMCo may
hereafter designate in writing), the Reimbursable Expenses for which HMCo has
provided the Company invoices or reasonably detailed descriptions. All past
due payments in respect of the Reimbursable Expenses shall bear interest at the
lesser of the highest rate of interest which may be charged under applicable
law or the Prime Rate plus 5% from the Payment Date to and including the date
on which such Reimbursable Expenses plus accrued interest thereon, are fully
paid to HMCo.
5. Indemnification. The Company shall indemnify and hold harmless
each of HMCo, its affiliates, and the respective directors, officers,
controlling persons (within the meaning of Section 15 of the Securities Act of
1933 or Section 20(a) of the Securities Exchange Act of 1934), if any, agents
and employees of HMCo and/or any of its affiliates (HMCo, its affiliates, and
such other specified persons being collectively referred to as "Indemnified
Persons", and individually as an "Indemnified Person") from and against any and
all claims, liabilities, losses, damages, and expenses incurred by any
Indemnified Person (including those arising out of an Indemnified Person's
negligence and fees and disbursements of the respective Indemnified Person's
counsel) which (A) are related to or arise out of (i) actions taken or omitted
to be taken (including any untrue statements made or any statements omitted to
be made) by the Company or (ii) actions taken or omitted to be taken by an
Indemnified Person with the Company's consent or in conformity with the
Company's instructions or the Company's actions or omissions or (B) are
otherwise related to or
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arise out of HMCo's engagement, and will reimburse each Indemnified Person for
all costs and expenses, including fees and disbursements of any Indemnified
Person's counsel, as they are incurred, in connection with investigating,
preparing for, defending, or appealing any action, formal or informal claim,
investigation, inquiry, or other proceeding, whether or not in connection with
pending or threatened litigation, caused by or arising out of or in connection
with HMCo's acting pursuant to the engagement, whether or not any Indemnified
Person is named as a party thereto and whether or not any liability results
therefrom. The Company will not, however, be responsible for any claims,
liabilities, losses, damages, or expenses pursuant to clause (B) of the
preceding sentence that have resulted primarily from HMCo's bad faith, gross
negligence, or willful misconduct. The Company also agrees that neither HMCo
nor any other Indemnified Person shall have any liability to the Company for or
in connection with such engagement except for any such liability for claims,
liabilities, losses, damages, or expenses incurred by the Company that have
resulted primarily from HMCo's bad faith, gross negligence, or willful
misconduct. The Company further agrees that it will not, without the prior
written consent of HMCo, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit, or proceeding in
respect of which indemnifications may be sought hereunder (whether or not any
Indemnified Person is an actual or potential party to such claim, action, suit,
or proceeding) unless such settlement, compromise, or consent includes an
unconditional release of HMCo and each other Indemnified Person hereunder from
all liability arising out of such claim, action, suit, or proceeding. THE
COMPANY HEREBY ACKNOWLEDGES THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO
ANY CLAIMS, LIABILITIES, LOSSES, DAMAGES, OR EXPENSES THAT HAVE RESULTED FROM
OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT,
OR CONCURRENT ORDINARY NEGLIGENCE OF HMCO OR ANY OTHER INDEMNIFIED PERSON.
The foregoing right to indemnity shall be in addition to any rights that
HMCo and/or any other Indemnified Person may have at common law or otherwise
and shall remain in full force and effect following the completion or any
termination of the engagement. The Company hereby consents to personal
jurisdiction and to service and venue in any court in which any claim, which is
subject to this agreement, is brought against HMCo or any other Indemnified
Person.
It is understood that, in connection with HMCo's engagement, HMCo may
also be engaged to act for the Company in one or more additional capacities,
and that the terms of this engagement or any such additional engagement(s) may
be embodied in one or more separate written agreements. This indemnification
shall apply to the engagement specified in the first paragraph hereof as well
as to any such additional engagement(s) (whether written or oral) and any
modification of said engagement or such additional engagement(s) and shall
remain in full force and effect following the completion or termination of said
engagement or such additional engagement(s).
The Company further understands that if HMCo is asked to furnish the
Company a financial opinion letter or act for the Company in any other formal
capacity, such further action may be subject to a separate agreement containing
provisions and terms to be mutually agreed upon.
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6. Confidential Information. In connection with the performance of
the services hereunder, HMCo agrees not to divulge any confidential
information, secret processes, or trade secrets disclosed by the Company to it
solely in its capacity as a financial advisor, unless the Company consents to
the divulging thereof or such information, secret processes, or trade secrets
are publicly available or otherwise available to HMCo without restriction or
breach of any confidentiality agreement or unless required by any governmental
authority or in response to any valid legal process.
7. Governing Law. This Agreement shall be construed, interpreted,
and enforced in accordance with the laws of the State of Texas, excluding any
choice-of-law provisions thereof.
8. Assignment. This Agreement and all provisions contained herein
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, neither this Agreement
nor any of the rights, interests, or obligations hereunder shall be assigned
(other than with respect to the rights and obligations of HMCo, which may be
assigned to any one or more of its principals or affiliates) by any of the
parties without the prior written consent of the other parties.
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended
to, any other counterpart.
10. Other Understandings. All discussions, understandings, and
agreements theretofore made between any of the parties hereto with respect to
the subject matter hereof are merged in this Agreement, which alone fully and
completely expresses the Agreement of the parties hereto. All calculations of
the Monitoring Fee and Reimbursable Expenses shall be made by HMCo and, in the
absence of mathematical error, shall be final and conclusive.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
XXXXX, MUSE & CO. PARTNERS, L.P.
By: HM PARTNERS INC.,
its General Partner
By: /s/ XXXXXXX X. XXXXX
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Name: XXXXXXX X. XXXXX
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Title: CHIEF FINANCIAL OFFICER
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CAPSTAR BROADCASTING PARTNERS, INC.
By: /s/ XXXXX XXXXXXX
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Name: XXXXX XXXXXXX
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Title: SECRETARY
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EXHIBIT A
[Wire Transfer Instructions]
Texas Commerce Bank
ABA #: 000000000
Account #: 08805113824
Credit: Xxxxx, Muse & Co. Partners
Reference: Payment of [Monitoring Fees or Expenses]
by _____________________________.
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EXHIBIT B
PRO RATA SHARE OF ALLOCABLE EXPENDITURES AND RELATED DEFINITIONS
Pro Rata Share of Allocable Expenditures shall equal the product
obtained by multiplying (i) the sum of all Allocable Expenditures that have not
previously been paid or reimbursed to HMCo by the Company and other
Participating Acquired Companies, by (ii) a fraction, the numerator of which
shall equal the total amount of Invested Capital (as from time to time
outstanding) that any Fund has invested in the Company's securities or
instruments and the denominator of which shall equal the total amount of
Invested Capital (as from time to time outstanding) that any Fund has invested
in the securities or instruments of any and all Participating Acquired
Companies.
The capitalized terms used in the foregoing definitions have the
meanings set forth below:
Allocable Expenditures shall mean all variable, fixed, and other costs,
expenses, expenditures, charges, or obligations (including without limitation
letters of credit, deposits, etc.) that are related to assets utilized,
services provided, or programs administered by HMCo or its affiliates in
connection with the performance by HMCo of financial oversight and monitoring
services on behalf of the Company and other Participating Acquired Companies,
including without limitation corporate airplanes, charitable contributions,
retainers for lobbyists and other professionals, and premiums and finance
charges for director and officer insurance maintained for representatives of
HMCo or its affiliates.
Fund shall mean any one or more of the equity funds now or hereafter
sponsored by Hicks, Muse, Xxxx & Xxxxx Incorporated or its successors,
including any LP Investment Entity (as defined in the limited partnership
agreement for any such equity fund) formed under or with respect to any such
equity fund.
Invested Capital shall mean the total amount of partner capital that a
Fund from time to time invests in the purchase of securities or instruments of
a Participating Acquired Company, less the total cash distributions that
constitute a return of such partner capital with proceeds from the disposition
of all or any part of such securities or instruments. For each period for
which the Pro Rata Share of Allocable Expenditures is being made, the
applicable Invested Capital shall equal the amount outstanding as of the end of
the respective period.
Participating Acquired Company shall mean any partnership, corporation,
trust, limited liability company, or other entity that is, for the period for
which the Pro Rata Share of Allocable Expenditures is being determined, a party
to a monitoring agreement or similar contract with HMCo or its affiliates and
is, as of the end of such period, designated by HMCo to bear a portion of such
allocable expenditures. HMCo may, in its sole and absolute discretion,
determine not to designate an entity as a Participating Acquired Company with
respect to such period. HMCo may make such
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determination of non-designation for no reason or for any reason, including
without limitation the respective entity's bankruptcy or other temporary or
permanent inability to pay fees or expenses to HMCo or its affiliates.
