Exhibit 10.5
AMENDED AND RESTATED
SERVICES AGREEMENT
AMENDMENT AND RESTATEMENT, dated as of January 2, 2001, of the AGREEMENT,
dated as of June 1, 1997 (as amended by Amendments dated as of July 1, 1997 and
March 25, 1999, the "Agreement"), between INTEREP NATIONAL RADIO SALES, INC., a
New York corporation ("Interep"), and MEDIA FINANCIAL SERVICES, INC., a Florida
corporation ("Media").
W I T N E S S E T H :
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WHEREAS, Interep and Media are parties to the Agreement, whereby Media
provides certain financial and accounting services to Interep and its
subsidiaries;
WHEREAS, Interep and Media wish to extend the term of the Agreement, which
currently runs through May 31, 2002, by five years, to modify certain of its
provisions and to restate it in its entirety as so modified;
NOW, THEREFORE, the parties agree as follows:
1. Term. The term of this Agreement (the "Term") shall commence on the date
hereof and, unless earlier terminated by either party pursuant to the provisions
of Section 8, shall continue until May 31, 2007 or such later date to which it
may be extended as provided in the following sentence (the "Term"). On June 1,
2002 and each following June 1 during the Term, the Term shall automatically be
extended for one additional "Contract Year", unless Interep or Media notifies
the other on or before the immediately preceding April 30 that the Term is not
to be so extended. For example, (i) if no such notice is given on April 30,
2002, the Term would automatically be extended by one Contract Year and would
end on May 31, 2008 (unless subsequently extended) or (ii) if such notice is
given by Interep or Media on April 30, 2002, the Term would end on May 31, 2007.
For purposes of this Agreement, "Contract Year" means the 12 months beginning
June 1 and ending May 31.
2. Services. During the Term of this Agreement, Media shall perform all
corporate, accounting and financial functions for Interep, each of its
subsidiaries and, as requested by Interep, departments or business segments of
Interep, including without limitation, the following:
(a) the preparation of monthly, quarterly and annual financial statements
and projections and operating reports as required by management;
(b) the preparation and filing with the Securities and Exchange Commission,
with the assistance of Interep's counsel and independent auditors, of all
periodic reports required under the federal securities laws;
(c) the preparation of annual budgets;
(d) the preparation and maintenance of all accounts payable, accounts
receivable and fixed asset ledgers and all other customary books and records of
account;
(e) the preparation and filing of all required federal, state and local tax
returns for Interep, each of its subsidiaries and Interep's Employee Stock
Ownership Plan (the "ESOP") and Stock Growth Plan ("SGP"), although Media may
utilize the services of Interep's independent accounting firm or other experts
for such purpose;
(f) the preparation and filing of any other reports, applications and other
documents required by the federal and any applicable state and local governments
with respect to Interep, each of its subsidiaries, the ESOP and the SGP;
(g) the maintenance of appropriate internal accounting controls;
(h) all accounts payable functions;
(i) all billing, accounts receivable and collections functions;
(j) all dealings with independent accountants and auditors, including the
coordination of all audits;
(k) the maintenance of all banking accounts and all relationships between
Interep and commercial lenders, investment bankers and other financial
institutions in the ordinary course and in connection with any financings;
(l) the investment of cash balances;
(m) all unwired network accounting and dealings with radio stations and
agency clients;
(n) such similar, additional services as the parties may agree from time to
time.
Media shall have no responsibility for any payroll, personnel or benefits
functions, all of which shall be performed by Interep.
3. Services of ▇▇▇▇▇▇▇.
(a) During the Term, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., President of Media, shall be
in charge of all services rendered by Media to Interep. Further, as requested by
Interep, Media shall cause ▇▇. ▇▇▇▇▇▇▇ to serve as Vice President and Chief
Financial Officer of Interep and in such other offices as Interep and Media
shall agree. In such capacity, ▇▇. ▇▇▇▇▇▇▇ shall participate on behalf of
Interep with respect to such corporate mergers, acquisitions, dispositions,
mergers and similar transactions as are requested by Interep.
(b) For such services, Interep shall pay ▇▇. ▇▇▇▇▇▇▇ an annual salary of
$160,000 in 2001 and $200,000 during the remainder of the Term. In addition, ▇▇.
▇▇▇▇▇▇▇ shall
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be entitled to receive an incentive bonus in the amount of 25% of
his then current salary in respect of each calendar year during the Term
(beginning with 2001), if Interep or ▇▇. ▇▇▇▇▇▇▇ achieve the performance goals
for that period that are established by Interep's Chief Executive Officer and
▇▇. ▇▇▇▇▇▇▇ prior to the beginning of that period, subject to increase or
decrease in the reasonable discretion of Interep's Chief Executive Officer
depending on his evaluation of ▇▇. ▇▇▇▇▇▇▇'▇ performance. ▇▇. ▇▇▇▇▇▇▇ shall be
paid an incentive bonus of $30,000 for 2000, which represents 25% of his salary
for that year.
(c) During the Term, ▇▇. ▇▇▇▇▇▇▇ shall be entitled to participate in the
SGP, Interep's 401-k Plan and any other pension, profit-sharing and similar
plans, stock option, incentive compensation, savings, investment, retirement and
supplemental benefit plans that Interep may make available to its senior
executives from time to time (other than health or hospitalization insurance),
in each case subject to the eligibility and other provisions of any such plan or
policy. Nothing in this Section 3(c) shall require Interep to institute or make
available to ▇▇. ▇▇▇▇▇▇▇ any particular benefit plan or policy.
4. Annual Fees.
(a) In consideration of the services to be provided by Media to Interep
pursuant to this Agreement, Interep shall pay annual fees to Media as follows:
Contract Year
Ending May 31, Annual Fee
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2001 $3,067,800
2002 $3,229,190
2003 $3,400,650
2004 $3,580,682
2005 $3,769,716
2006 $3,968,202
2007 $4,176,612
The fee rate for the Contract Year ending May 31, 2001 is effective as of, and
solely for periods after, the date of this Agreement. If the Term is extended
beyond May 31, 2007, Media's fees shall be in such amounts as the parties shall
agree or, absent such agreement, shall be 105% of the preceding Contract Year's
annual fee. All annual fees shall be payable, in advance, in 24 equal
semi-monthly installments (initially $127,825 per installment) on the first and
16th days of each month. Media shall render invoices for such monthly fees to
Interep at least five days prior to the scheduled payment dates. Media shall be
responsible for the payment of any sales, use or similar taxes, if any, that may
be payable with respect to the services it provides pursuant to this Agreement.
No deduction shall be made to any annual fee on account of any payments or
benefits provided to ▇▇. ▇▇▇▇▇▇▇ pursuant to Section 3.
(b) If pursuant to clause (n) of Section 2, Media provides additional
services to Interep, or Interep forms or acquires an additional subsidiary,
business segment or business, with the result that Media must expand its
personnel, office space or facilities, the parties shall in good faith
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negotiate and agree on an appropriate increase in Media's fee to take the
reasonable, additional costs of such expansion into account. If Media finds,
initiates or otherwise arranges for financing for Interep, or is able to reduce
the charges of any firm which provides or arranges for such financing, Interep
shall pay Media a fee for its financing activities, or an incentive for its cost
savings, as the case may be, and as the parties shall agree.
5. Expenses. The fees contemplated under Section 4 are intended to
compensate Media for all expenses that it may incur in the performance of its
services under this Agreement, including, without limitation, employee
compensation and fringe benefits, travel, telephone, postage, supplies, dues and
subscriptions, office rent and related charges, equipment rent, maintenance and
office services charges, employment agency fees, bank charges, computer costs,
local taxes, and all auditing and tax preparation fees payable in connection
with Interep's annual audit (but only up to $120,000 per year) and tax returns
of Interep and its subsidiaries (but not the ESOP or SGP). Accordingly, Media
shall not be entitled to seek any further amounts from Interep on account of
expenses or otherwise, except as provided in the next sentence. If Media
anticipates that it shall be necessary to incur any extraordinary expenses in
addition to those listed above in connection with the performance of its
services, it shall obtain Interep's prior written consent therefor, in which
case such expenses shall be paid by Interep. Media shall not incur any such
expenses without Interep's written consent.
It is contemplated that ▇▇. ▇▇▇▇▇▇▇ shall be required to be in New York,
New York, from time to time in order to carry out his duties. Media shall be
responsible for all travel and lodging costs incurred for up to 24 trips to New
York each year by ▇▇. ▇▇▇▇▇▇▇ in connection with Interep business. Interep shall
pay the cost of any additional such trips. If ▇▇. ▇▇▇▇▇▇▇ is required to travel
to visit Interep client stations or agencies, Interep shall reimburse Media for
all related travel and lodging costs.
6. Confidentiality. During and after the Term, Media shall, and shall cause
its employees and agents to, keep secret and not divulge to any party not
employed or retained by Interep any information or documents regarding Interep's
business and affairs, whether or not marked as confidential. This obligation
shall not apply to any information or document if it is or becomes public
knowledge as a result of causes other than the acts or omissions of Media or its
employees.
7. Non-Competition. During the Term and for one year following the end of
the Term, Media shall not provide any financial, accounting or other services to
▇▇▇▇ Media Group, Inc. or any of its subsidiaries, parents, affiliates,
successors or assigns.
8. Termination. Prior to a Change in Control (as defined below), either
party may terminate this Agreement if the other party breaches any material
provision of this Agreement and such breach is not cured within 90 days after
the first party notifies the breaching party of such breach. Further, if a
Change in Control occurs, Interep and Media shall each have the right to
terminate the Agreement during the 90-day period immediately following the date
of the Change in Control. If either party elects to terminate this Agreement
during such period, Interep shall pay Media a lump sum termination payment equal
to 50% of the aggregate amount that would otherwise be payable to Media and ▇▇.
▇▇▇▇▇▇▇ under Sections 2 and 3 of this Agreement through the date
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then established under Section 1 as the end of the Term (with no further
extensions), plus an amount equal to all amounts payable by Media to the
landlord for its principal offices in order to obtain the early termination of
the lease for such premises. If either party elects to terminate this Agreement
during such period, any unexercised stock options, warrants or similar rights
previously granted by Interep to Media, ▇▇. ▇▇▇▇▇▇▇ or any other employee of
Media shall continue to remain in full force and effect through the end of its
stated term despite the termination of this Agreement. If neither party elects
to terminate this Agreement during such 90-day period, the Agreement shall
continue in full force and effect in accordance with its terms, including,
without limitation, the provisions of Section 1.
(b) For purposes of this Agreement, "Change in Control", means the
occurrence of any of the following events:
(i) any "person," including a "group" (as such terms are used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934 (the
"Exchange Act"), but excluding Interep, its "Affiliates" (that is, any of
its subsidiaries or any parent corporation), or any of its or its
Affiliates' employee benefit plans or employees or any group of which any
of the foregoing is a member, is or becomes the "beneficial owner" (as
defined in Rule 13(d)(3) under the Exchange Act), directly or indirectly,
of securities representing 30% or more of the combined voting power of
Interep's then outstanding securities;
(ii) during any period of 24 consecutive months, individuals (A) who
on November 24, 1999 constituted Interep's entire Board of Directors
("Initial Directors") or (B) whose election, appointment or nomination for
election was approved prior to such election or appointment by a vote of at
least two-thirds of the Initial Directors who were in office immediately
prior to such election or appointment, cease for any reason to constitute
at least a majority of Interep's Board of Directors;
(iii) the consummation of a merger, business combination, share
exchange, division or other reorganization of Interep with any other
corporation, and following such transaction (A) a majority of the directors
of the surviving entity are persons who (I) were not members of Interep's
Board of Directors immediately prior to the merger or other combination and
(II) are not Interep's nominees or representatives, (B) Interep's
shareholders immediately prior to such merger or combination beneficially
own, directly or indirectly, less than 60% or more of the combined voting
power of the surviving corporation, as well as 60% or more of the total
market value of its outstanding equity securities, in substantially the
same proportion as they owned the combined voting power of Interep, (C) any
"person," including a "group" (each as defined in clause (i) above), but
excluding Interep, its Affiliates, or any of its or its Affiliates'
employee benefit plans or employees or any group of which any of the
foregoing is a member, is or becomes the "beneficial owner" (as defined in
Rule 13(d)(3) under the Exchange Act), directly or indirectly, of
securities representing 30% or more of the combined voting power of the
surviving corporation or (D) in the case of a division, 60% or more of the
combined voting power of the outstanding voting securities of each entity
resulting from the division as well as 60% or more of the total market
value of each such entity's outstanding equity securities, in each case in
substantially the same proportion as such shareholders owned shares of
Interep prior to such transaction;
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(iv) the consummation of a direct or indirect sale or other
disposition of all or substantially all of Interep's assets;
(v) We adopt any plan of liquidation providing for the distribution of
all or substantially all of Interep's assets;
(vi) any other change in control of Interep of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A under the Exchange Act; or
(vii) any other event or transaction that is declared by resolution of
the Compensation Committee of the Board of Directors of Interep to be a
Change in Control for purposes of Interep's 1999 Stock Incentive Plan.
9. Indemnification. ▇▇. ▇▇▇▇▇▇▇ and Interep are parties to an
Indemnification Agreement, dated as of March 3, 1997. Interep agrees to
provide the same indemnification rights to Media as it provides to ▇▇.
▇▇▇▇▇▇▇ under such Agreement, on and subject to the terms and conditions
set forth in such agreement.
10. Independent Contractor. For all purposes, Media shall be an
independent contractor, and not an employee, partner or joint venturer, of
Interep. Media may employ or retain any person it believes appropriate to
assist it in carrying out its obligations under this Agreement, and no such
person shall be deemed to be an employee of Interep. Media shall be solely
responsible for (i) the compensation and benefits of all of its employees,
including workers' compensation benefits, and (ii) withholding and payment
of all taxes and contributions which an employer is required to withhold or
pay in respect of its employees.
11. Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to its subject matter, merges and
supersedes any prior or contemporaneous understandings with respect to its
subject matter, and shall not be modified or terminated except by a written
instrument executed by both of the parties. Failure of a party to enforce
one or more of the provisions of this Agreement or to require at any time
performance of any of the obligations hereunder shall not be construed to
be a waiver of such provisions by such party nor to in any way affect the
validity of this Agreement or such party's right thereafter to enforce any
provision of this Agreement, nor to preclude such party from taking any
other action at any time which it would legally be entitled to take.
12. Communications. All notices, consents and other communications
given under this Agreement shall be in writing and shall be deemed to have
been duly given (a) when delivered by hand or by Federal Express or a
similar overnight courier to, (b) seven days after being deposited in any
United States post office enclosed in an airmail postage prepaid registered
or certified envelope addressed to, or (c) when successfully transmitted by
facsimile (with a confirming copy of such communication to be sent as
provided in (a) or (b) above) to, the party for whom intended, at the
address or facsimile number for such party set forth below, or to such
other address or facsimile number as may be furnished by such party by
notice in the manner provided herein;
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provided, however, that any notice of change of address or facsimile number
shall be effective only on receipt.
If to Interep: If to Media:
Interep National Radio Sales, Inc. Media Financial Services, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ 2090 Palm Beach ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 10017 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. Guild Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
13. Successors and Assigns. This Agreement shall inure to the benefit of,
be binding on and be enforceable by, the parties and their respective
permissible successors and assigns. Neither party shall have the right to assign
this Agreement, or any rights or obligations hereunder, without the consent of
the other, which consent may be withheld for any reason.
14. Governing Law. This Agreement shall be governed by the laws of the
State of New York applicable to agreements made and fully to be performed in
such state, without giving effect to conflicts of law principles.
15. Arbitration. Any controversy or claim arising out of or relating to
this Agreement shall be finally resolved by arbitration pursuant to the
Commercial Arbitration Rules of the American Arbitration Association. Any such
arbitration shall take place in New York, New York, before three arbitrators,
one of which shall be appointed by Interep, one by Media and the third by the
arbitrators so appointed; provided, however, that the parties may by mutual
agreement designate a single arbitrator. The parties further agree that (i) the
arbitrators shall be empowered to include arbitration costs and attorney fees in
the award to the prevailing party in such proceedings and (ii) the award in such
proceedings shall be final and binding on the parties. Judgment on the
arbitrators' award may be entered in any court having the requisite
jurisdiction. Each party irrevocably submits to the jurisdiction and venue of
the arbitration described above and to the jurisdiction and venue of the federal
and state courts sitting in New York County, New York, for the enforcement of
any judgment on the arbitrators' award, and waives any objection it may have
with respect to the jurisdiction of such arbitrations or courts or the
inconvenience of such forums or venues.
16. Construction; Counterparts. The headings contained in this Agreement
are for convenience only and shall in no way restrict or otherwise affect the
construction of the provisions hereof. References in this Agreement to Sections
are to the sections of this Agreement.
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This Agreement may be executed in multiple counterparts, each of which shall be
an original and all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
INTEREP NATIONAL RADIO SALES, INC.
By /s/ ▇▇▇▇▇ ▇. Guild
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▇▇▇▇▇ ▇. Guild
Chairman of the Board
MEDIA FINANCIAL SERVICES, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
President
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