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EXHIBIT 10.7
FINANCIAL ADVISORY AGREEMENT
THIS FINANCIAL ADVISORY AGREEMENT (this "Agreement") is made and entered
into as of October 16, 1996, between Capstar Broadcasting Partners, Inc. (the
"Company"), a Delaware corporation, and Xxxxx, Muse & Co. Partners, L.P., a
Texas limited partnership (together with its successors, "HMCo.").
WHEREAS, certain affiliates of HMCo., including Hicks, Muse, Xxxx &
Xxxxx Equity Fund III, L.P. ("HMTF") are simultaneously with the execution of
this Agreement, purchasing, by means of the Company, all or a portion of the
common stock of Commodore Media, Inc. ("Commodore"), a Delaware corporation
(the "Acquisition");
WHEREAS, the Company has requested that HMCo. render, and HMCo. has
rendered, financial advisory services to the Company and Commodore in
connection with the negotiation of the Acquisition and the debt and equity
financing transactions related thereto (collectively with the Acquisition, the
"Transaction"); and
WHEREAS, the Company has requested that HMCo. render financial advisory,
investment banking, and other similar services to the Company and Commodore
with respect to any future proposals for a tender offer, acquisition, sale,
merger, exchange offer, recapitalization, restructuring, or other similar
transaction directly or indirectly involving the Company or Commodore, or any
of their respective subsidiaries, and any other person or entity (collectively,
"Add-on Transactions");
NOW, THEREFORE, in consideration of the services rendered and to be
rendered by HMCo. to the Company and Commodore, and to evidence the obligations
of the Company to HMCo. and the mutual covenants herein contained, the Company
and HMCo. hereby agree as follows:
1. Retention.
(a) The Company hereby acknowledges that it has retained HMCo.
for the benefit of the Company and Commodore, and HMCo. acknowledges that it
has acted, as financial advisor to the Company and Commodore in connection with
the Transaction.
(b) The Company acknowledges that it has retained HMCo. as the
exclusive financial advisor in connection with any Add-on Transactions that may
be consummated during the term of this Agreement, and that the Company will
not, and will cause Commodore not to, retain any other person or entity to
provide such services in connection with any such Add-on Transaction without
the prior written consent of HMCo. HMCO. agrees that it shall provide such
financial
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advisory, investment banking, and other similar services in connection with any
such Add-on Transaction as may be requested from time to time by the board of
directors of the Company.
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 HMTF and its affiliates cease to own beneficially, directly or
indirectly, any securities of the Company or their successors.
3. Compensation.
(a) As compensation for HMCo.'s services as financial advisor
to the Company and Commodore in connection with the Transaction, the Company
hereby irrevocably agrees to pay to HMCo. a cash fee of $3,375,000 to be paid
at the closing of the Transaction. The parties hereto agree that the
compensation due pursuant to this Section 3(a) shall be allocated among the
segments of the financing for the Transaction in proportion to the dollar
amount of each such segment.
(b) As compensation for HMCo.'s financial advisory, investment
banking, and other similar services rendered in connection with any Add-on
Transaction pursuant to Section 1(b) hereof, the Company shall pay to HMCo., at
the closing of any such Add-on Transaction, a cash fee in the amount of 1.5% of
the Transaction Value of such Add-on Transaction. As used herein, the term
"Transaction Value" means the total value of the Add-on Transaction, including,
without limitation, the aggregate amount of the funds required to complete the
Add-on Transaction (excluding any fees payable pursuant to this Section 3(b))
including the amount of any indebtedness, preferred stock or similar items
assumed (or remaining outstanding).
4. Reimbursement of Expenses. In addition to the compensation to be
paid pursuant to Section 3 hereof, the Company agrees to reimburse HMCo.,
promptly following demand therefor, together with invoices or reasonably
detailed descriptions thereof, for all reasonable disbursements and
out-of-pocket expenses (including fees and disbursements of counsel) incurred
by HMCo. (i) as financial advisor to the Company or Commodore in connection
with the Transaction or (ii) in connection with the performance by it of the
services contemplated by Section 1(b) hereof.
5. Indemnification. The Company shall indemnify and hold harmless
each of HMCo., its affiliates, and their 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 (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
resulting from the negligence of the Indemnified Person 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
and/or Commodore or (ii) actions taken or omitted to be taken
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by an Indemnified Person with the Company's or Commodore's consent or in
conformity with the Company's or Commodore's instructions or the Company's or
Commodore's actions or omissions or (B) are otherwise related to or arise out
of HMCo.'s engagement, and will reimburse each Indemnified Person for all costs
and expenses, including fees 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 Xxxxxx shall
have any liability to the Company or Commodore for or in connection with such
engagement except for any such liability for claims, liabilities, losses,
damages, or expenses incurred by the Company and/or Commodore that have
resulted primarily from HMCo.'s bad faith, gross negligence or willful
misconduct. The Company further agrees that it will not, and the Company will
cause Commodore to 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 indemnification 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 PERSEON.
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, and shall cause
Commodore to consent, 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 and/or Commodore in one or more
additional capacities, and that the terms of this engagement or any such
additional engagement 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
engagements.
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The Company further understands that if HMCo. is asked to furnish the
Company and/or Commodore a financial opinion letter or act for the Company
and/or Commodore in any other formal capacity, such further action may be
subject to a separate agreement containing provisions and terms to be mutually
agreed upon.
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 or
Commodore 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 Understanding. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
XXXXX, MUSE & CO. PARTNERS, L.P.,
its General Partner
By: HM PARTNERS INC., its General
Partner
By: /s/ XXXXXXX X. XXXXX
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Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer
CAPSTAR BROADCASTING PARTNERS, INC.
By: /s/ XXXXX XXXXXXX
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Name: Xxxxx Xxxxxxx
Title: Secretary
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