EXHIBIT 10.23
FINANCIAL ADVISORY AGREEMENT
THIS FINANCIAL ADVISORY AGREEMENT (this "Agreement") is made and
entered into effective as of December 1, 2004, by and among Regency Acquisition
LLC, a Delaware limited liability company ("Regency Acquisition"), Regency Gas
Services LLC, a Delaware limited liability company ("Regency"), Regency Waha LP,
LLC, a Delaware limited liability company ("Waha LP"), Regency NGL GP, LLC, a
Delaware limited liability company ("NGL GP"), Regency Treating GP, LLC, a
Delaware limited liability company ("Treating GP"), Regency Waha GP, LLC, a
Delaware limited liability company ("Waha GP"), Regency Intrastate Gas LLC, a
Delaware limited liability company ("Regency Intrastate"), Regency Midcon Gas
LLC, a Delaware limited liability company ("Regency Midcon"), Regency Liquids
Pipeline LLC, a Delaware limited liability company ("Regency Liquids"), Regency
Gas Gathering and Processing LLC, a Delaware limited liability company ("Regency
Gathering"), Gulf States Transmission Corporation, a Louisiana corporation
("Gulf States"), Regency NGL Marketing LP, a Delaware limited partnership
("Regency Marketing"), Regency Gas Treating LP, a Delaware limited partnership
("Regency Treating"), Regency Gas Services Waha, LP, a Delaware limited
partnership ("Regency Waha" and, collectively with Regency Acquisition, Regency,
Waha LP, NGL GP, Treating GP, Waha GP, Regency Intrastate, Regency Midcon,
Regency Liquids, Regency Gathering, Gulf States, Regency Marketing and Regency
Treating, the "Clients"), and Xxxxx, Muse & Co. Partners, L.P., a Texas limited
partnership (together with its successors, "HMCo").
WHEREAS, pursuant to the Purchase and Sale Agreement, dated October 21,
2004 (the "Acquisition Agreement"), by and among Regency Acquisition, Regency
Services, LLC, a Delaware limited liability company ("Parent"), Regency, the
members of Parent, and the partners of CB Offshore Equity Fund V - Holdings,
L.P., a Cayman Islands limited partnership, as of the date hereof Regency
Acquisition is purchasing all of the equity interests of Regency (the
"Acquisition"); and
WHEREAS, the Clients have requested that HMCo render, and HMCo has
rendered, financial advisory services to them in connection with the negotiation
and implementation of the Acquisition and the debt and equity financing
transactions and certain other transactions related thereto (collectively with
the Acquisition, the "Transaction"); and
WHEREAS, the Clients have requested that HMCo render financial
advisory, investment banking, and other similar services to them with respect to
future proposals for a tender offer, acquisition, sale, merger, exchange offer,
recapitalization, restructuring, refinancing, issuances of debt or equity
(whether in a private or a public offering) or other similar transaction
(including asset sales or acquisitions and purchases or sales of subsidiaries or
divisions directly or indirectly involving any Client or any of its subsidiaries
and any other person or entity (collectively, "Subsequent Transactions");
NOW, THEREFORE, in consideration of the services rendered and to be
rendered by HMCo to the Clients, and to evidence the obligations of the Clients
to HMCo and the mutual covenants herein contained, the Clients hereby agree with
HMCo as follows:
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NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT CONTAINS INDEMNIFICATION PROVISIONS
IN SECTION 5 THAT APPLY TO 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 IDENTIFIED THEREIN.
1. Retention.
(a) The Clients hereby acknowledge that they have retained
HMCo, and HMCo acknowledges that it has acted, as financial advisor to the
Clients in connection with the Transaction.
(b) The Clients acknowledge that they have retained HMCo as
their exclusive financial advisor in connection with any Subsequent Transactions
that may be consummated during the term of this Agreement, and that each Client
will not retain any other person or entity to provide such services in
connection with any such Subsequent Transaction without the prior written
consent of HMCo. HMCo agrees that it shall provide such financial advisory,
investment banking and other similar services in connection with any such
Subsequent Transaction as may be requested from time to time by the board of
directors, board of managers, members, or similar governing body of any Client.
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 Incorporated ("HMTF") or its successors and their
respective affiliates (including, without limitation, any equity fund sponsored
by HMTF or its successors) shall cease to own beneficially, directly or
indirectly, any securities of any Client or its respective successors.
3. Compensation.
(a) As compensation for HMCo's services as financial advisor
to the Clients in connection with the Transaction, the Clients hereby
irrevocably agree, jointly and severally, to pay to HMCo a cash fee equal to
$6,075,000, which will be payable at (and only if and when) the closing of the
Acquisition.
(b) In connection with any Subsequent Transaction consummated
during the term of this Agreement, the Clients hereby irrevocably agree, jointly
and severally, to pay to HMCo, at the closing of any such Subsequent
Transaction, a cash fee equal to 1.5% of the Transaction Value of such
Subsequent Transaction. As used herein, the term "Transaction Value" means the
total value of the Subsequent Transaction, including without limitation the
aggregate amount of the funds required to complete the Subsequent Transaction
(excluding any fees payable to this Section 3(b)), including without limitation
the amount of any indebtedness, equity or similar items issued, assumed or
remaining outstanding and the amount of any working capital items or other
assets retained by the seller in such Subsequent Transaction.
4. Reimbursement of Expenses. In addition to the compensation to be
paid pursuant to Section 3 hereof, the Clients hereby irrevocably agree, jointly
and severally, to reimburse HMCo, promptly following demand therefor, together
with invoices or reasonably detailed
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descriptions thereof, for all reasonable disbursements and out-of-pocket
expenses (including without limitation fees and disbursements of counsel)
incurred by HMCo (i) as financial advisor to the Clients in connection with the
Transaction and (ii) in connection with the performance by it of the services
contemplated by Section l(b) hereof.
5. Indemnification. The Clients jointly and severally 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, as amended, or Section 20(a) of the Securities Exchange
Act of 1934, as amended), if any, agents, independent contractors 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 an Indemnified Person (including without limitation those
arising out of an Indemnified Person's negligence or gross negligence and
reasonable fees and disbursements of the respective Indemnified Person's
counsel) that (A) are related to or arise out of (i) actions taken or omitted to
be taken (including without limitation any untrue statements made or any
statements omitted to be made) by any of the Clients or (ii) actions taken or
omitted to be taken by an Indemnified Person with any Client's consent or in
conformity with any Client's instructions or any Client'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, without
limitation 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
HMCo's engagement, whether or not any Indemnified Person is named as a party
thereto and whether or not any liability results therefrom. None of the Clients
will, 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 or willful misconduct. The Clients also agree
that neither HMCo nor any other Indemnified Person shall have any liability to
any Client for or in connection with such engagement except for any such
liability for claims, liabilities, losses, damages or expenses incurred by any
Client that have resulted primarily from HMCo's bad faith or willful misconduct.
The Clients agree that in no event will HMCo be liable for any consequential,
exemplary or punitive damages in connection with its performance under this
Agreement. Each Client 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 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. EACH CLIENT
HEREBY ACKNOWLEDGES THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO ALL
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 OR GROSS NEGLIGENCE OF HMCO OR ANY OTHER
INDEMNIFIED PERSON.
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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. Each Client 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 a Client or Clients in one or more additional
capacities, and that the terms of this engagement or any such additional
engagements 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.
Each of the Clients further understands and agrees that if HMCo is
asked to furnish any Client a financial opinion letter or act for any Client 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 any Client or any of its
subsidiaries to it solely in its capacity as a financial advisor, unless such
Client 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. Each of the parties hereby (a) irrevocably
submits to the exclusive jurisdiction of the United States Federal District
Court for the Northern District of Texas, sitting in Dallas County, Texas, the
United States of America, in the event such court has jurisdiction or, if such
court does not have jurisdiction, to any district court sitting in Dallas
County, Texas, the United States of America, for the purpose of any suit,
action, or proceeding arising out of or relating to this Agreement, including
any claims by any Indemnified Persons for indemnity pursuant to Section 5,
hereof, (b) waives, and agrees not to assert in any such suit, action, or
proceeding, any claim that (i) it is not personally subject to the jurisdiction
of such court or of any other court to which proceedings in such court may be
appealed, (ii) such suit, action or proceeding is brought in an inconvenient
forum, or (iii) the venue of such suit, action, or proceeding is improper and
(c) expressly waives any requirement for the posting of a bond by the party
bringing such suit, action, or proceeding. Each of the parties consents to
process being served in any such suit, action, or proceeding by mailing,
certified mail, return receipt requested, a copy thereof to such party at the
address in effect for notices hereunder, and agrees that such services shall
constitute good and sufficient service of process and notice thereof. Nothing in
this Section 7 shall affect or limit any right to serve process in any other
manner permitted by law.
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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 permitted 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. Certain Waivers. No (a) direct or indirect holder of any equity
interests or securities of HMCo (whether such holder is a limited or general
partner, member, stockholder or otherwise), (b) affiliate of HMCo, or (c) any
direct or indirect director, officer, employee, partner, affiliate, member,
controlling person, representative, or agent of HMCo, any of HMCo's respective
affiliates or any such direct or indirect holder of any equity interests or
securities of HMCo (collectively, the "Party Affiliates") shall have any
liability or obligation of any nature whatsoever in connection with or under
this letter or the transactions contemplated hereby, and each party hereto
hereby waives and releases all claims against such Party Affiliates related to
any such liability or obligation.
11. Amendment and Waiver. Any provision of this Agreement may be
altered, supplemented, amended, or waived by the written consent of the Clients
and HMCo. No failure or delay by any party to this Agreement in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
12. Notices. All notices, requests and other communications to any
party to this Agreement shall be in writing (including telex, facsimile
transmission or similar writing) and shall be given to such party by messenger,
telex, or facsimile transmission (a) at its address, facsimile number or telex
number set forth on the signature pages hereof, or (b) such other address,
facsimile number or telex number as a party may hereafter specify for the
purpose by notice to each of the other parties. Each such notice, request or
other communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section 12 and the appropriate
answer back is received, (ii) if given by facsimile transmission, when
transmitted to the facsimile number specified in or pursuant to this Section 12
and electronic confirmation of receipt is received, (iii) if given by messenger
or any other means, when delivered at the address specified in or pursuant to
this Section 12.
13. Section Headings. Headings contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit or extend
the scope or intent of this Agreement or any provisions hereof.
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14. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
15. Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under any present or future law, and if
the rights or obligations of the parties under this Agreement shall not be
materially and adversely affected thereby (a) such provision shall be fully
severable, (b) this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance herefrom, and (d) in lieu of such illegal,
invalid, or unenforceable provision, there shall be added automatically as a
part of this Agreement a legal, valid, and enforceable provision as similar in
terms to such illegal, invalid, or unenforceable provision as may be possible.
16. Other Understandings. All discussions, understandings and
agreements heretofore 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.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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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.
By: HM PARTNERS INC.,
its General Partner
By: /s/ XXXX XXXXX
-----------------------------------
Xxxx Xxxxx
General Counsel and Assistant
Secretary
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000)000-0000
REGENCY ACQUISITION LLC*
By: /s/ XXXXX X. XXXX
----------------------------------------
Xxxxx X. Xxxx
President
REGENCY GAS SERVICES LLC*
By: /s/ XXXXX X. XXXX
----------------------------------------
Xxxxx X. Xxxx
President
REGENCY WAHA LP, LLC*
BY: REGENCY GAS SERVICES LLC, ITS MANAGER
By: /s/ XXXXX X. XXXX
----------------------------------------
Xxxxx X. Xxxx
President
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REGENCY NGL GP, LLC*
By: /s/ XXXXX X. XXXX
----------------------------------------
Xxxxx X. Xxxx
President
REGENCY TREATING GP, LLC*
By: /s/ XXXXX X. XXXX
----------------------------------------
Xxxxx X. Xxxx
President
REGENCY WAHA GP, LLC*
By: /s/ XXXXX X. XXXX
----------------------------------------
Xxxxx X. Xxxx
President
REGENCY INTRASTATE GAS LLC*
By: /s/ XXXXX X. XXXX
----------------------------------------
Xxxxx X. Xxxx
President
REGENCY MIDCON GAS LLC*
By: /s/ XXXXX X. XXXX
----------------------------------------
Xxxxx X. Xxxx
President
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REGENCY LIQUIDS PIPELINE LLC*
By: /s/ XXXXX X. XXXX
----------------------------------------
Xxxxx X. Xxxx
President
GULF STATES TRANSMISSION CORPORATION*
By: /s/ XXXXX X. XXXX
----------------------------------------
Xxxxx X. Xxxx
President
REGENCY GAS GATHERING AND PROCESSING LLC*
By: /s/ XXXXX X. XXXX
----------------------------------------
Xxxxx X. Xxxx
President
REGENCY NGL MARKETING LP*
By: REGENCY NGL GP, LLC,
its General Partner
By: /s/ XXXXX X. XXXX
-------------------------------
Xxxxx X. Xxxx
President
REGENCY GAS TREATING LP*
By: REGENCY TREATING GP, LLC,
its General Partner
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By: /s/ XXXXX X. XXXX
-------------------------------
Xxxxx X. Xxxx
President
REGENCY GAS SERVICES, WAHA, LP*
By: REGENCY WAHA GP, LLC,
its General Partner
By: /s/ XXXXX X. XXXX
-------------------------------
Xxxxx X. Xxxx
President
* Address for Notices:
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxx
Facsimile: (000)000-0000
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