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EXHIBIT 10.4
FINANCIAL ADVISORY AGREEMENT
This FINANCIAL ADVISORY AGREEMENT, effective as of August 31, 1998
(this "Agreement"), is made and entered into between Triton Energy Limited, a
Cayman Islands company (the "Company"), and Xxxxx, Muse & Co. Partners, L.P., a
Texas limited partnership (together with its successors, "HMCo").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, an affiliate of HMCo, HM 4 Triton, L.P., a Cayman Islands exempted
limited partnership ("Purchaser"), is entering into a Stock Purchase Agreement
of even date herewith with the Company (the "Stock Purchase Agreement")
pursuant to which Purchaser has agreed, subject to the terms and conditions of
the Stock Purchase Agreement, to purchase a portion of the share capital of the
Company ( the "Acquisition");
WHEREAS, the Company has requested that HMCo render, and HMCo has
rendered, financial advisory services to the Company and its Subsidiaries in
connection with the negotiation of the Acquisition; and
WHEREAS, the Company has requested that HMCo render financial
advisory, investment banking, and other similar services to the Company and its
Subsidiaries with respect to any future proposals for (a) the acquisition (by
direct issuance from the Company, from existing securityholders or otherwise)
by any Person or group of Persons deemed a "person" under Section 13(a)(3) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of
beneficial ownership of securities representing a majority of the combined
voting power of the outstanding securities of the Company entitled to vote,
generally or as a separate class or series or together with one or more class
or series of shares or stock, in the election of directors of the Company, the
result of which would result in such Person or Persons (or group) having the
ability to elect a majority of the Board of Directors, (b) a reorganization,
recapitalization, merger, consolidation or similar business combination or
transaction (unless the holders of the outstanding securities of the Company
entitled to vote in the election of directors prior to such transaction
continue to own securities of the entity resulting from or surviving such
transaction (a "Surviving Entity") entitled to vote in the election of
directors sufficient to allow such holders to elect a majority of the board of
directors of the Surviving Entity upon the completion of such transaction) or
(c) a sale or other disposition (in a single transaction or a series of related
transactions) of assets with an Asset Value (as defined in the Stock Purchase
Agreement) in excess of 50% of the market value of the assets of the Company
and its Subsidiaries as a whole (any one or more of such transactions described
in clause (a) or (b) above, a "Stock Transaction"; any one or more of such
transactions described in clause (c) above, an "Asset Transaction" and any one
or more of such transactions, a "Sale Transaction");
WHEREAS, capitalized terms used but not defined herein and defined in
the Stock Purchase Agreement shall have the meanings ascribed to such terms in
the Stock Purchase Agreement;
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NOW, THEREFORE, in consideration of the services rendered and to be
rendered by HMCo to the Company and its Subsidiaries 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 its Subsidiaries, and HMCo acknowledges that
it has acted, as financial advisor to the Company and its Subsidiaries in
connection with the Acquisition.
(b) The Company acknowledges that it has retained HMCo as its
exclusive financial advisor in connection with any Sale Transaction that may be
consummated from and after the First Closing during the term of this Agreement,
and that the Company will not, and will cause its Subsidiaries not to, retain
any other person or entity to provide such services in connection with any such
Sale Transaction unless the Chief Executive Officer of the Company (the "CEO")
and HMCo mutually agree that the retention by the Company of a second financial
advisor in addition to HMCo would be appropriate with respect to a given Sale
Transaction; provided, however, that the Company, at the discretion of the CEO,
may elect not to retain a financial advisor with respect to a particular Sale
Transaction and in such event HMCo shall not be entitled to receive the cash
fee set forth in Section 3(b) below. HMCo agrees that it shall provide such
financial advisory, investment banking, and other similar services in
connection with any such Sale Transaction as may be requested from time to time
by the board of directors of the Company.
2. Term.
(a) The term of this Agreement shall continue until the
earlier to occur of (i) the tenth anniversary of the date hereof, (ii) the date
on which the Stock Purchase Agreement is terminated if such date occurs prior
to the First Closing or (iii) the date on which Purchaser and its Affiliates
cease to own beneficially, directly or indirectly, at least 5% of the
outstanding Common Stock (determined after giving effect to the conversion of
all 8% Preference Shares of the Company held by Purchaser and its Affiliates at
the conversion rate thereof in effect as of any date of determination) (such
date on which the term of this Agreement terminates herein referred to as the
"Termination Date").
(b) Notwithstanding any termination of this Agreement, (i)
the rights of the Indemnified Persons (as defined in Section 5 hereof) under
Section 5 hereof shall survive any such termination of this Agreement, (ii) the
Company shall pay to HMCo (A) if the Termination Date occurs prior to the First
Closing, the Acquisition Fee contemporaneously with the termination of this
Agreement, (B) on the fifteenth (15th) day following the Termination Date,
amounts payable to HMCo pursuant to Section 3(b) which have not been paid as of
the Termination Date and (C) promptly (but not more than 10 days) after request
by or notice from HMCo, the Reimbursable Expenses for which HMCo has provided
the Company invoices or reasonably detailed descriptions relating to periods up
to and including the Termination Date which have not been paid as of the
Termination Date and (iii) the terms of this Agreement (including Section 7
hereof) shall survive any
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such termination for the purpose of enabling HMCo to enforce its rights set
forth in this Section 2(b) and Section 5.
3. Compensation.
(a) As compensation for HMCo's services as financial advisor
to the Company and its Subsidiaries in connection with the Acquisition, the
Company hereby acknowledges that, upon the execution and delivery by HMCo of
the Stock Purchase Agreement and this Agreement, HMCo has earned a cash fee in
the amount of US$7,000,000 (the "Acquisition Fee") and irrevocably agrees to
pay to HMCo a cash amount equal to the Acquisition Fee by wire transfer of
immediately available funds to the account designated on Schedule A hereto
contemporaneously with the earlier to occur of (i) the First Closing or (ii)
the termination of the Stock Purchase Agreement.
(b) As compensation for HMCo's financial advisory, investment
banking, and other similar services rendered in connection with any Sale
Transaction pursuant to Section 1(b) hereof consummated after the First
Closing, the Company shall pay to HMCo, at the closing of any such Sale
Transaction, a fee payable in cash in an amount equal to the lesser of (i) the
amount of fees then charged by first tier investment banking firms for similar
advisory services rendered in connection with transactions similar to such Sale
Transaction or (ii) 1.5% of the Transaction Value; provided, however, that (A)
such fee shall be divided equally between HMCo and any additional financial
advisor retained by the Company with respect to such Sale Transaction as
provided in the first sentence of Section 1(b) and (B) HMCo shall not be
entitled to a fee with respect to any Sale Transaction for which the CEO elects
not to retain a financial advisor.
(c) For purposes of this Agreement, the term "Transaction
Value" means (i) in the case of a Stock Transaction, (A) the fair market value
of the sum of (1) all outstanding common equity securities of the Company
immediately prior to such Stock Transaction and (2) the aggregate amount of
common equity securities issuable upon the conversion, exercise or exchange of
any securities convertible into or exercisable or exchangeable for common
equity securities of the Company ("Common Equity Equivalents") immediately
prior to such Stock Transaction (minus the cash proceeds to be received by the
Company upon the conversion, exercise or exchange of such Common Equity
Equivalents), (B) all cash, securities, settlement or termination amounts,
notes or other debt instruments, and other consideration paid or to be paid,
directly or indirectly, by the Company, the acquiring Person, any Surviving
Entity or their respective Affiliates pursuant to or in connection with any
consulting agreement, non-competition agreement, confidentiality agreement,
severance agreement, settlement agreement or release agreement entered into,
directly or indirectly, by the Company, the acquiring Person, any Surviving
Entity or their respective Affiliates as a part of or in connection with the
Stock Transaction (but excluding any fees payable pursuant to Section 3(b)) and
(C) the principal amount of any indebtedness and the liquidation preference and
accumulated and unpaid dividends of any preferred stock or similar items of the
Company immediately prior to such Stock Transaction); provided, however, that
if all or any part of such consideration referred to in clause (B) above is
payable in whole or in part in property (which term shall include the
securities of any issuer other than the Company) other than cash, the fair
market value of such property shall be determined as follows: (x) if such
property consists of securities, such value shall be the last reported sales
price, regular way on the day immediately preceding the
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Stock Purchase, or, if no sale takes place on such day, the average of the
reported closing bid and asked prices on such day, regular way, in either case
as reported on the principal national securities exchange on which such
security is listed or admitted for trading or, if not listed or admitted for
trading on any national securities exchange, on The Nasdaq Stock Market or, if
such security is not quoted on The Nasdaq Stock Market, the average of the
closing bid and asked prices on such day in the over-the-counter market as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or, if bid and asked prices for such security on
such day shall not have been reported through NASDAQ, the average of the bid
and asked prices on such day as furnished by any NYSE member firm regularly
making a market in such security selected for such purpose by HMCo and approved
by the Company (which approval shall not be unreasonably withheld) or, if no
such market is regularly made, as provided in clause (y) and (y) such value of
property other than securities (or with respect to securities in which a market
is not regularly made) shall be determined by the Company and HMCo in good
faith or, if the Company and HMCo do not agree on the fair market value of such
property within five (5) Business Days after HMCo's receipt of written notice
describing and quantifying the non-cash consideration to be paid, then the
Company and HMCo shall select one independent appraiser (with each of the
Company and HMCo bearing one-half of the expense of such appraiser) to
determine the fair market value of that property and the appraised fair market
value of that property as determined by such appraiser shall be deemed the fair
market value of that property and (ii) in the case of an Asset Transaction, the
Asset Value of such Asset Transaction.
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 reasonable fees and disbursements of counsel)
incurred by HMCo (a) as financial advisor to the Company or any of its
Subsidiaries in connection with the Acquisition or (b) in connection with the
performance by HMCo of the services contemplated by Section 1(b) hereof
("Reimbursable Expenses").
5. Indemnification. The Company shall indemnify and hold harmless each
of HMCo, its affiliates, and their respective directors, officers, partners,
members, controlling persons (within the meaning of Section 15 of the
Securities Act of 1933 or Section 20(a) of the Exchange Act), 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 reasonable fees and
disbursements of the respective Indemnified Person's counsel) which (a) are
related to or caused by 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 or any of its Subsidiaries or (ii) actions taken or
omitted to be taken by an Indemnified Person with the consent of the Company or
any of its Subsidiaries or in conformity with instructions of the Company or
any of its Subsidiaries or any actions or omissions of the Company or any of
its Subsidiaries or (b) are otherwise related to or arise out of HMCo's
engagement hereunder, and will reimburse each Indemnified Person for all costs
and expenses, including reasonable 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
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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 Person shall have any liability to the Company or any of
its Subsidiaries for or in connection with such engagement except for any
claims, liabilities, losses, damages or expenses incurred by the Company or any
such Subsidiary to the extent the same have resulted from HMCo's bad faith,
gross negligence or willful misconduct. The Company further agrees that it will
not, and the Company will cause its Subsidiaries not to, without the prior
written consent of HMCo, such consent not to be unreasonably withheld, 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 PERSON.
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 of
the engagement created hereby or any termination of the engagement or this
Agreement.
It is understood that, in connection with HMCo's engagement, HMCo may
also be engaged to act for the Company or any of its Subsidiaries 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
Section 1 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.
The Company further understands that if HMCo is asked to furnish the
Company or any of its Subsidiaries a financial opinion letter or to act for the
Company or any such Subsidiary 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, and to use commercially reasonable
efforts to cause its officers, directors, employees, agents and representatives
acting on behalf of HMCo pursuant to this Agreement not to, divulge any
confidential information, secret processes or trade secrets disclosed
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by the Company or any of its Subsidiaries to HMCo or any such person in
connection with the providing of services by HMCo (or any such person on HMCo's
behalf) as a financial advisor pursuant to this Agreement, unless the Company
consents in advance 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 (in which case HMCo will use commercially reasonable efforts to provide
the Company with as much advance notice as is reasonably practicable).
7. Governing Law; Jurisdiction and Venue. 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
purposes 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, acting 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.
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.
TRITON ENERGY LIMITED
By: /s/ Xxxxxx X. Xxxxxxx, III
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Xxxxxx X. Xxxxxxx, III
Interim Chief Executive Officer and
General Counsel
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By: XXXXX, MUSE & CO. PARTNERS, L.P.
By: HM PARTNERS INC.,
its General Partner
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: Senior Vice President
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