Exhibit 10.12
SERVICES AGREEMENT
THIS AGREEMENT, made and entered into as of this 1st day of May, 1998,
by and between QUAESTUS MANAGEMENT CORPORATION, a Delaware corporation
("QUAESTUS") and CUMULUS MEDIA INC., an Illinois corporation (the "Company")
(QUAESTUS and the Company shall be referred to collectively as the "Parties").
R E C I T A L S:
WHEREAS, the Company is in the business of identifying and entering into
acquisitions of media properties;
WHEREAS, QUAESTUS has expertise and resources in the areas of market
identification, due diligence, and corporate finance support; and
WHEREAS, the Company wishes to outsource the provision of these services to
QUAESTUS.
NOW, THEREFORE, the Parties agree as follows:
1. TERM. The effective date of this Agreement shall be _____________
("Effective Date") and it shall continue in effect until the second
anniversary of the Effective Date unless terminated before then as provided
below.
2. PROVISION OF SERVICES. The Company agrees to purchase, and
QUAESTUS agrees to provide, services under the terms and conditions described
herein.
3. DUTIES OF SERVICE PROVIDER. QUAESTUS has and will maintain a staff
trained and experienced in identifying broadcast and media properties,
analyzing media markets, using broadcast research tools and methods, and
developing cash flow and analytical financial models to support the process
of identifying attractive broadcast markets and prospective acquisition
candidates for the Company within those markets. Such staff is and will be
adequate for the performance of QUAESTUS' duties under this Agreement.
Services to be rendered by QUAESTUS under this Agreement shall include the
services identified in Exhibit A to this Agreement. In addition to the
services of its own staff, QUAESTUS shall, after consultation with the
Company regarding services to be rendered at the Company's request, arrange
for and coordinate the services of other professionals and experts, such as
consulting engineers, broadcast research services, or other outside service
providers. Such use of service providers other than QUAESTUS shall be at the
expense of the Company. QUAESTUS shall report to and be accountable to the
Chief Executive Officer and Chief Financial Officer in connection with the
performance of its services under this Agreement.
4. COMPENSATION. In consideration of the services to be provided by
QUAESTUS, the Company agrees to pay QUAESTUS the amounts listed in Exhibit B
to this Agreement. Such
amounts shall be due and payable upon the closing of the transactions which
relate to the services provided. No amounts shall be due for transactions
which do not close. In addition, the Company shall promptly, but in no event
later than thirty (30) days, reimburse QUAESTUS for all of its documented
out-of-pocket and direct expenses incurred in connection with the performance
of its services under this Agreement. The Chief Financial Officer of the
Company may request QUAESTUS to provide corporate support services in
addition to those outlined in Exhibit A to this agreement, such as marketing
support, graphic design, administrative services, shareholder relations, and
other services. Such services shall be provided under such terms as may be
agreed between the Chief Financial Officer and QUAESTUS and approved by the
outside members of the Company's Board of Directors
5. TERMINATION. This Agreement may be terminated for cause by either
Party upon thirty (30) days' notice, plus the cure period described in
section 6 below. "Cause" for this purpose shall consist of a Party's failure
substantially to perform its duties under this Agreement. Otherwise the
Agreement shall terminate upon the expiration of the term described in
Section 1 above. Notwithstanding the termination of the Agreement, QUAESTUS
shall be entitled to compensation for services provided before termination in
connection with Company transactions which are consummated after termination.
6. CURE PERIOD. The defaulting party shall have thirty (30) days from
the date on which the non-defaulting party has provided the defaulting party
with written notice specifying the event(s) of default to curer any such
event(s) of default. If the event of default cannot be cured by the
defaulting party within such time period but commercially reasonably efforts
are being made to effect a cure or otherwise secure or protect the interests
of the non-defaulting party (in which case, if successful, the event of
default shall be deemed cured), then the defaulting party shall have an
additional period not to exceed thirty (30) days to effect a cure or a deemed
cure.
7. RENEWAL. The Agreement shall be renewed for an additional
twelve-month term beyond the initial term upon the same terms and conditions,
unless either Party provides written notice to the other Party no later than
thirty (30) days before the expiration of the initial term, of its intent to
terminate the Agreement.
8. AMENDMENT. This Agreement can be modified or amended only by a
writing signed by the parties hereto.
9. ENTIRE AGREEMENT. This Agreement reflects the sole understanding of
the Parties with respect to the subject matter hereof and supersedes and
replaces any agreement (whether oral or written) between the Parties with
respect to the subject matter hereof.
10. INDEMNIFICATION. The Company shall indemnify, defend, and hold
harmless QUAESTUS from and against any and all claims, losses, costs,
liabilities, damages, and expenses (including reasonable attorneys' fees and
other expenses incidental thereto) of every kind, nature and description
arising out of QUAESTUS' provision of services to the Company under this
Agreement, except and to the extent that QUAESTUS has committed gross
negligence or willful misconduct.
11. ASSIGNMENT; BINDING EFFECT. Neither party may assign its rights or
obligations hereunder without the prior written consent of the other party.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
12. GOVERNING LAW. The Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin.
IN WITNESS WHEREOF, the undersigned have executed this Services
Agreement as of the date first above written.
QUAESTUS MANAGEMENT CORPORATION
By:
---------------------------------------
Charles F. Wright, Vice President
CUMULUS MEDIA INC.
By:
---------------------------------------
Title:
------------------------------------
EXHIBIT A
SERVICES TO BE PROVIDED BY QUAESTUS
1. INDUSTRY RESEARCH
-- Perform function comparable to media research group of investment bank
-- Monitor current status of acquisition multiples
-- Review trade press
-- Public company research, filings retrieval, etc
-- Analyze competitors' acquisition strategy, capital structures
2. DEAL SOURCING AND ORIGINATION
-- Identify and screen potential radio markets based on Cumulus criteia
-- Retrieve and distribute BIA and other data
-- Review trade press
-- Discuss potential markets with brokers, analysts, industry experts
-- Prepare profiles of markets and competitors
-- Market modeling and assessment
-- Bid discussions and strategies
-- Research on sellers/competitors
-- Prepare valuations based on cash flow and other criteria
-- Analyze comparable sales
3. DUE DILIGENCE/ACQUISITION SUPPORT
-- Prepare and distribute due diligence request lists
-- Collate and distribute due diligence materials received from Sellers
-- Follow-up with Sellers to make certain all necessary information
received
-- Follow-up with Company personnel to make certain all data analyzed
-- Re-formatting of financial data to Company's management format
-- Coordinate and oversee outside diligence efforts by environmental
consultants, financial consultants, and engineers
-- Prepare contract summaries
-- Schedule audits as needed at Seller locations
-- Prepare contour and engineering analysis to support FCC applications
4. SUPPORT FOR BOARD OF DIRECTORS
-- Prepare acquisition materials and other board decision materials for
Directors
-- Respond to requests for additional information
5. CORPORATE FINANCE /TREASURY SUPPORT
-- Prepare and maintain current actual and projected financial models
-- Respond to financial questions from investors, lenders
-- Cash needs analysis
-- Equity/debt discussion
-- Covenant compliance forecasts
-- Investor return models
-- Prepare and revise models to test various financial forecasts and
conditions
-- Budgeting process support
6. PUBLIC RELATIONS /MARKETING SUPPORT
-- Draft, maintain and update Company and personnel brochure
-- Serve as chief public contact for the Company
-- Develop Company's public and community services programs
-- Develop and maintain relationships with public officials on Company's
behalf
EXHIBIT B
COMPENSATION
For each transaction which is successfully consummated, upon closing the Company
shall pay QUAESTUS:
$15,000 for each transaction involving one FM station;
$30,000 for each transaction involving two FM stations;
$45,000 for each transaction involving three FM stations; and.
$60,000 for each transaction involving four or more FM stations.