Exhibit 10.7
ADVISORY AGREEMENT
ADVISORY AGREEMENT, dated as of May 1, 1998, between RECOVERY
EQUITY INVESTORS II, L.P., a Delaware limited partnership (the "Consultant"),
and CHADMOORE WIRELESS GROUP, INC., a Colorado corporation (the "Company").
WHEREAS, the Consultant and the Company are parties to that
certain Investment Agreement, dated as of May 1, 1998 (as the same may be
amended, supplemented, or otherwise modified from time to time, the "Investment
Agreement"), between the Consultant and the Company;
WHEREAS, the Consultant has staff specially skilled in corporate
finance, strategic planning, and other management skills and services;
WHEREAS, prior to the date hereof, the Consultant has become
familiar with the operations, business, assets, and liabilities of the Company
as a result of its involvement in planning, structuring, and negotiating the
Investment Agreement and the transactions contemplated by the Investment
Agreement;
WHEREAS, following the consummation of the transactions
contemplated by the Investment Agreement, the Company will require the
Consultant's special skills and management advisory services in connection with
its general business operations; and
WHEREAS, the Consultant is willing to provide such skills and
services to the Company on the terms and conditions set forth below.
NOW THEREFORE, in consideration of the mutual rights and
obligations set forth herein, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. Engagement. The Company hereby engages the Consultant for the
Term (as hereinafter defined) upon the terms and conditions set forth herein to
provide consulting and management advisory services to the Company. These
services will be in the field of financial and strategic corporate planning and
such other management areas as the Consultant and the Company shall mutually
agree ("Services"). In consideration of the compensation specified herein, the
Consultant accepts such engagement and agrees to perform the Services, in each
case upon the terms and conditions set forth herein.
2. Term. The engagement hereunder shall be for a term (the
"Term") commencing on the date hereof and ending on the fifth anniversary of the
date hereof.
3. Services to be Performed. The Consultant shall devote such
time and efforts to the performance of the Services as the Consultant deems
necessary or appropriate to the
performance of such services. However, no precise number of hours is to be
devoted by the Consultant on a weekly or monthly basis. The Consultant may
perform the Services directly, through its employees or agents or, with the
approval of the Company, which shall not be unreasonably withheld, with such
outside consultants as the Consultant may engage for such purpose. The Company
acknowledges that, subject to compliance with Section 4 of this Advisory
Agreement, the Consultant's services to it are not exclusive and that the
Consultant, its Affiliates, and their respective partners, officers, directors,
employees, representatives, and agents will render similar services to other
Persons.
4. Confidentiality. The Consultant shall maintain secrecy with
respect to all non-public information of the Company which may come into its
possession as a result of performance of services under this Advisory Agreement,
and shall use its best efforts to ensure that its Affiliates, officers,
directors, employees, representatives, and agents also maintain the secrecy of
such information, except for any such information which, as determined by the
Consultant in its reasonable discretion, is required to be disclosed by the
Consultant or any such Affiliate, officer, director, employee, representative,
or agent pursuant to any subpoena, order, law, or regulation.
5. Compensation; Expense Reimbursement.
5.1. Advisory Fee. In consideration of the Consultant's provision
of the Services to the Company, the Company shall pay the Consultant an annual
fee of $312,500, which shall be paid in advance, in equal monthly installments,
on the first day of each month during the Term, commencing on the first
anniversary hereof; provided, however, such annual fee shall be reduced by the
amount of cash dividends paid to Consultant as holder of shares of Purchased
Preferred Stock during the twelve-month period immediately preceding the
twelve-month period during which the annual fee is to be paid.
5.2. Expenses. The Company shall reimburse the Consultant for all
out-of-pocket expenses incurred by the Consultant in connection with the
Services provided hereunder, including without limitation all travel, lodging,
and similar out-of-pocket costs incurred by the Consultant in connection with,
or on account of, the performance of such services.
6. Indemnification. The Company agrees to indemnify the
Consultant and its affiliates in accordance with Schedule A attached hereto.
7. Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally against written receipt or by facsimile transmission
against facsimile confirmation or mailed by prepaid first class certified mail,
return receipt requested, or mailed by overnight courier prepaid, to the parties
at the following addresses or facsimile numbers:
(i) If to the Consultant, to:
Recovery Equity Investors II, L.P.
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000 Xxxxxxx'x Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxx-Xxxx
Xxxxxxx X. Xxxxxx
with a copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
Attn: Xxx Xxxxx, Esq.
(ii) If to the Company, to:
Chadmoore Wireless Group, Inc.
0000 Xxxx Xxxxxxx Xxxx
Xxxxx X
Xxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, President and
Chief Executive Officer
with a copy to:
Xxxxxx & Xxxxx LLP
000 Xxxxxxx Xxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
All such notices will (a) if delivered personally to the address as provided in
this Section 7, be deemed given upon delivery, (b) if delivered by facsimile
transmission to the facsimile number as provided in this Section 7, be deemed
given upon facsimile confirmation, (c) if delivered by mail in the manner
described above to the address as provided in this Section 7, be deemed given on
the earlier of the third Business Day following mailing and the date on which
received, and (d) if delivered by overnight courier to the address as provided
in this Section, be deemed given on the earlier of the first Business Day
following the date sent by such overnight courier or upon receipt (in each case
regardless of whether such notice is received by any other Person to whom a copy
of such notice is to be delivered pursuant to this Section 7). Any party hereto
may from time to time change its address, facsimile number, or other information
for the purpose of notices to that party by giving notice specifying such change
to the other party hereto.
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8. Modifications. This Advisory Agreement constitutes the entire
agreement between the parties hereto with regard to the subject matter hereof,
superseding all prior understandings and agreements, whether written or oral,
with respect to such subject matter. This Advisory Agreement may not be amended
or modified except by a writing signed by the parties hereto.
9. Successors and Assigns. This Advisory Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns; provided, however, that neither party hereto
may assign any of its rights or obligations hereunder without the prior written
consent of the other party hereto.
10. Captions. Captions have been inserted solely for the
convenience of reference and in no way define, limit, or describe the scope or
substance of any provisions of this Advisory Agreement.
11. Severability. The provisions of this Advisory Agreement are
severable, and the invalidity of any provision shall not affect the validity of
any other provision.
12. Governing Law. This Advisory Agreement shall be governed by
and construed in accordance with the domestic laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
13. Counterparts. This Advisory Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
14. Definitions. Capitalized terms used in this Advisory
Agreement and not otherwise defined herein shall have the respective meanings
ascribed to them in the Investment Agreement.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have duly executed this Advisory
Agreement as of the date first above written.
CHADMOORE WIRELESS GROUP, INC.
By:
----------------------------------
Name:
Title:
RECOVERY EQUITY INVESTORS II, L.P.
By: Recovery Equity Partners II, L.P.,
its General Partner
By:
----------------------------------
Name: Xxxxxx X. Xxxx-Xxxx
Title: General Partner
By:
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: General Partner
[Advisory Agreement]
SCHEDULE A
to ADVISORY AGREEMENT
May 1, 1998
Indemnification Agreement
-------------------------
Recovery Equity Investors II, L.P.
000 Xxxxxxx'x Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Gentlemen:
As part of the consideration for the agreement of Recovery Equity
Investors II, L.P., a Delaware limited partnership (the "Consultant"), to
furnish its services to Chadmoore Wireless Group, Inc., a Colorado corporation
(the "Company"), pursuant to the terms of the Advisory Agreement, dated as of
May 1, 1998, between the Consultant and the Company (as the same may be amended,
supplemented, or otherwise modified from time to time, the "Advisory
Agreement"), the Company agrees to indemnify and hold harmless the Consultant,
its affiliates, their respective partners, officers, directors, employees, and
agents, and all other persons controlling the Consultant or any of its
affiliates within the meaning of either (i) Section 15 of the Securities Act of
1933, as amended, or (ii) Section 20 of the Securities Exchange Act of 1934, as
amended (individually, an "Indemnified Party" and collectively, the "Indemnified
Parties"), from and against, and the Company agrees that no Indemnified Person
shall have any liability to the Company or its affiliates, security holders, or
creditors for, all claims, liabilities, fees, penalties, expenses, losses, and
damages (including without limitation the reasonable fees, charges, and
disbursements of counsel) (collectively, "Losses") related to or arising out of
actions taken (or omitted to be taken) by any of the Indemnified Parties
pursuant to the Advisory Agreement or any Indemnified Party's role in connection
therewith, and whether or not incurred in connection with any action or
proceeding relating to any such act or omission; provided, however, that the
Company shall not be responsible for any Losses to the extent that it is finally
judicially determined that they result solely from actions taken or omitted to
be taken by an Indemnified Party due to such Indemnified Party's gross
negligence or willful misconduct.
If for any reason the foregoing indemnity is unavailable to an
Indemnified Party or insufficient to hold an Indemnified Party harmless, then
the Company shall contribute to the amount paid or payable by such Indemnified
Party as a result of such Loss in such proportion as is appropriate to reflect
not only the relative benefits received (or contemplated to be received) by the
Company on the one hand and such Indemnified Party on the other hand or, if such
allocation is judicially
determined unavailable, in such proportion as is appropriate to reflect other
equitable considerations such as the relative fault of the Company on the one
hand and of such Indemnified Party on the other hand, subject to the limitation
that in any event an Indemnified Party's aggregate contribution to all Losses
shall not exceed the amount of fees actually received by such Indemnified Party
pursuant to the Advisory Agreement.
Promptly after receipt by an Indemnified Party of notice of any
complaint or the commencement of any action or proceeding with respect to which
indemnification may be sought against the Company hereunder, such Indemnified
Party will notify the Company in writing of the receipt or commencement thereof,
but failure to notify the Company will relieve the Company from any liability
which it may have hereunder only if, and to the extent that, such failure
results in the forfeiture of substantial rights and defenses on the part of such
Indemnified Party, and will not in any event relieve the Company from any other
obligation to any Indemnified Party. The Company shall assume the defense of
such action or proceeding (including without limitation payment of reasonable
fees, charges, and disbursements of counsel) insofar as such action or
proceeding shall relate to any alleged Loss in respect of which indemnity may be
sought against the Company. An Indemnified Party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees, charges and disbursements of such counsel shall be at the expense
of such Indemnified Party unless employment of such counsel has been
specifically authorized by the Company in writing.
The Company shall authorize separate counsel for an Indemnified
Party if the named parties to any action or proceeding (including any impleaded
parties) include the Company (or any of the directors of the Company) and such
Indemnified Party, and (i) in the good faith judgment of such Indemnified Party
(as advised by counsel) the use of joint counsel would present such counsel with
an actual or potential conflict of interest or (ii) an Indemnified Party shall
have been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Company (or its directors(s)).
The Company will reimburse each Indemnified Party for all
expenses (including without limitation the reasonable fees, charges, and
disbursements of counsel authorized by the Company) as they are incurred by such
Indemnified Party in connection with investigating, preparing for, or defending
any action, claim, or proceeding ("Action") referred to above (or enforcing this
Indemnification Agreement or the Advisory Agreement) whether or not any
Indemnified Party is or becomes a party to such Action, and whether or not such
Action is initiated or brought by the Consultant. The Company further agrees
that the Company will not settle, compromise, or consent to the entry of any
judgment in any pending or threatened Action in respect of which indemnification
may be sought hereunder (whether or not an Indemnified Party is a party thereto)
unless the Company has given the Consultant reasonable prior written notice
thereof and obtained an unconditional release of each Indemnified Party from all
liability arising therefrom. No Indemnified Party shall admit any liability with
respect to, settle, compromise, or consent to the entry of any judgment in any
pending or threatened Action in respect of which indemnification is being sought
hereunder without the prior written consent of the Company (which consent shall
not be unreasonably withheld or delayed). An Indemnified Party shall not be
liable to the Company or to any other person in connection with the
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services which it renders pursuant to the Advisory Agreement, except for such
Indemnified Party's gross negligence or willful misconduct judicially determined
as aforesaid. The indemnification, contribution, and expense reimbursement
obligations that the Company has under this Indemnification Agreement shall be
in addition to any liability the Company may otherwise have. THE CONSULTANT
HEREBY AGREES, AND THE COMPANY HEREBY AGREES ON ITS OWN BEHALF AND, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS SECURITY HOLDERS, TO WAIVE
ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM, COUNTER-CLAIM, OR ACTION
ARISING OUT OF THE ADVISORY AGREEMENT, THE CONSULTANT'S PERFORMANCE THEREUNDER,
OR THIS INDEMNIFICATION AGREEMENT.
The provisions of this Indemnification Agreement shall apply to
the Consultant's services under the Advisory Agreement and shall remain in full
force and effect regardless of the completion or termination of the Advisory
Agreement or any amendment, supplement, or other modification to or of the
Advisory Agreement. This Indemnification Agreement and any other agreements
relating hereto shall be governed by and construed in accordance with the
domestic laws
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of the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
Very truly yours,
CHADMOORE WIRELESS GROUP, INC.
By:
----------------------------------
Name:
Title:
Agreed to and accepted
this 1st day of May, 1998
RECOVERY EQUITY INVESTORS II, L.P.
By Recovery Equity Partners II, L.P.,
its General Partner
By:
--------------------------------
Name: Xxxxxx X. Xxxx-Xxxx
Title: General Partner
By:
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: General Partner
