Exhibit 10.1
FINANCIAL ADVISORY AGREEMENT
This Financial Advisory Agreement (the "Agreement") is made as of February 17,
2005 by and between Coastal Bancshares Acquisition Corp., a Delaware corporation
(the "Company" or "CBAC"), and Xxxxxxx Xxxxxx Xxxxxx Inc. ("SMH" or "Advisor").
The terms "CBAC" or the "Company" are understood to include any entity in which
the Company has an ownership, profits or similar interest, including any entity
or successor company formed for the purpose of facilitating a merger,
acquisition, divestiture, joint venture or other business combination (the
"Transaction") as contemplated in Paragraph 1 hereof.
1. Engagement of Advisor. CBAC hereby engages Advisor, on an exclusive
basis (subject to certain limitations - See Exhibit A) for the term of this
Agreement, and Advisor hereby agrees, to advise, consult with, and assist the
Company in various matters, including: (i) identifying potential acquisition or
merger candidates ("Target") in order to effect a possible Transaction; (ii)
conducting due diligence review of any proposed acquisition or merger
candidate's management, business, assets, operations, and financial condition;
(iii) assisting the Company in the formulation and negotiation of the financial
terms and structure of any prospective Transaction; (iv) assisting the Company
in the presentation of any Transaction to the management and/or Board of
Directors of prospective Targets and the Company's Board of Directors, which
would include examining the pro forma financial and strategic impact of any
prospective Transaction on the Company; and (v) providing other financial
advisory services normal and customary for similar engagements and as may be
mutually agreed upon by the Company and SMH. During the term of this Agreement,
the Company agrees not to use the services of any other investment banker
regarding matters similar to those outlined herein.
2. Compensation. As compensation for services rendered to the Company under
this Agreement, the Company shall pay to Advisor the following compensation:
2.1 Retainer Fee. As compensation for providing advisory services, the
Company agrees to pay SMH a retainer fee equal to $5,000 per month (the
"Retainer Fee"). The Retainer Fee will be payable monthly in advance on the
first day of the month beginning March 1, 2005, and will continue until a
Transaction occurs or CBAC is required to liquidate its assets. The $5,000
monthly Retainer Fee, to the extent previously paid (and without duplication),
will be credited against any Transaction fees payable to SMH.
2.2 If during the term of this engagement the Company enters into a
Transaction or series of Transaction(s) the Company agrees to pay SMH a success
fee as set forth in Exhibit A hereto. Any fee payable to Advisor in Exhibit A
will be due in cash at the closing of the Transaction and shall be payable to
Advisor by the Company, provided, however, that Advisor shall not be entitled to
any fee under Exhibit A unless the closing of the Transaction occurs during the
Term of Agreement (except as provided under paragraph 5 due to an early
termination of the Agreement by the Company).
2.3 In the event the Company desires to have Advisor furnish any formal
written opinion as to the financial aspects of any transaction, such as a
fairness opinion or formal valuation, then such transaction will be subject to a
separate engagement. Such engagement shall be in addition to the services
contemplated by this Agreement and shall be made under a separate agreement
containing terms and provisions, including the terms of compensation, to be
mutually agreed upon at that time. The foregoing notwithstanding, if the
Transaction fee to be earned by SMH for the Transaction is greater than or equal
to $1,200,000, then the Company may still request that SMH provide such opinion
and the fee for the opinion will be credited against the Transaction fee. If the
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Transaction fee is less than $1,050,000, the opinion fee will be $150,000, and
if the Transaction fee is between $1,050,000 and $1,200,000, then the opinion
fee will be the difference between $1,200,000 and the Transaction fee.
2.4 CBAC will pay or reimburse Advisor for all reasonable out-of-pocket
costs and expenses incurred by Advisor in performing its obligations under this
Agreement, which costs and expenses shall include, but not be limited to, travel
expenses incurred in performing its duties, including due diligence and
marketing, in connection with this Agreement and possible Transactions, legal
fees and expenses, costs of supplies, printing, copying and mailing and all
other expenses reasonably incurred by Advisor in performing its obligations
under this Agreement; provided, however, that Advisor shall obtain the prior
approval of the Company for any single expenditure in excess of $2,500, which
approval shall not be unreasonably withheld. Upon request by the Company,
Advisor shall provide to the Company a written statement or statements detailing
expenses for which reimbursement is sought and provide copies of invoices and
other documentation supporting such expenses. Reimbursable expenses shall be
payable by the Company within 15 days of receipt by the Company of a statement
requesting reimbursement. The maximum out of pocket expenses that my be charged
to the Company by SMH pursuant to this agreement, without the express written
consent of the Company to exceed, is $25,000.00
3. Business Practice. The Company recognizes that Advisor is in the
business of advising and consulting with other businesses, some of which
businesses may be in competition with the Company. The Company acknowledges and
agrees that Advisor may advise and consult with other businesses, including
those that may be in competition with the Company, and shall not be required to
devote its full time and resources to performing services on behalf of the
Company under this Agreement. Advisor shall only be required to expend such time
and resources as are reasonably appropriate to advise and assist the Company as
provided for herein.
4. Indemnification. (a) CBAC agrees to indemnify and hold harmless Advisor
and its affiliates, agents, and advisors, and their respective directors,
officers, employees, agents and controlling persons (each such person is
hereinafter referred to as an "SMH Indemnified Party"), from and against any and
all losses, claims, damages, liabilities and expenses whatsoever, joint or
several, to which any such SMH Indemnified Party may become subject under any
applicable federal or state law of the United States of America or otherwise,
caused by, relating to or arising out of the engagement evidenced hereby. The
Company will reimburse any SMH Indemnified Party for any expenses (including
reasonable attorney fees and expenses) as they are incurred by an SMH
Indemnified Party in connection with the investigation of, preparation for or
defense of any pending or threatened claim or any action or proceeding arising
therefrom, whether or not resulting in liability within thirty (30) days of the
receipt of an invoice therefore; provided, however, that at the time of such
reimbursement the SMH Indemnified Party shall have entered into an agreement
with the Company whereby the SMH Indemnified Party agrees to repay all such
reimbursed amounts if it is determined in a judgment by a court of competent
jurisdiction that the SMH Indemnified Party is not entitled to indemnity from
the Company. Notwithstanding the foregoing, the Company shall not be liable to
any SMH Indemnified Party under this Section 4(a) to the extent that (a) any
loss, claim, damage, liability or expense is determined by a court of competent
jurisdiction to result primarily from any such SMH Indemnified Party's bad
faith, unlawful conduct, willful misconduct or gross negligence or (b) to the
extent that Advisor is required to indemnify the Company pursuant to Section
4(b) hereof.
(b) Advisor agrees to indemnify and hold harmless the Company, CBAC and
their affiliates, agents, and advisors, and their respective directors,
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officers, employees, agents and controlling persons (each individually a
"Company Indemnified Party"), from and against any and all losses, claims,
damages, liabilities and expenses whatsoever, joint or several, to which any
such Company Indemnified Party may become subject under any applicable federal
or state law of the United States of America or otherwise, caused by, relating
to or arising out of (i) Advisor's breach of a representation, warranty or
covenant herein, or (ii) the gross negligence, bad faith, willful misconduct, or
unlawful conduct of Advisor. Advisor will reimburse any Company Indemnified
Party for all expenses (including reasonable attorney fees and expenses) as they
are incurred by such Company Indemnified Party in connection with the
investigation of, preparation for or defense of any pending or threatened claim
or any action or proceeding arising therefrom, whether or not resulting in
liability; provided, however, that at the time of such reimbursement the Company
Indemnified Party shall have entered into an agreement with Advisor whereby the
Company Indemnified Party agrees to repay all such reimbursed amounts if it is
determined in a final judgment by a court of competent jurisdiction that the
Company Indemnified Party is not entitled to indemnity from Advisor.
Notwithstanding the foregoing, Advisor shall not be liable to any Company
Indemnified Party under this section 4(b) to the extent that (a) any loss,
claim, damage, liability or expense is determined by a court of competent
jurisdiction to result directly from any such Company Indemnified Party's
willful misconduct or gross negligence, or (b) to the extent the Company is
required to indemnify Advisor therefore pursuant to section 4(a) hereof.
(c) If for any reason (other than a final non-appealable judgment finding
any SMH Indemnified Party or the Company or Company Indemnified Party (any such
party, an "Indemnified Party") liable for losses, claims, damages, liabilities
or expenses for its gross negligence or willful misconduct) the foregoing
indemnity is unavailable to an Indemnified Party or insufficient to hold an
Indemnified Party harmless, then the other party shall contribute to the amount
paid or payable by an Indemnified Party as a result of such loss, claim, damage,
liability or expense in such proportion as is appropriate to reflect not only
the relative benefits received by the Company on the one hand and Advisor on the
other, but also the relative fault by the Company, Advisor and each Indemnified
Party, as well as any relevant equitable considerations, subject to the
limitation that in no event shall the total contribution of all SMH Indemnified
Parties to all such losses, claims, damages, liabilities or expenses exceed the
amount of fees actually received and retained by Advisor hereunder.
5. Term of Agreement. This Agreement shall terminate upon the sooner of
eighteen (18) months after the effectiveness of the Company's initial public
offering (February 14, 2005) or upon the completion of a Transaction. This term
will be extended to twenty-four (24) months after the effectiveness of the
Company's initial public offering if a letter of intent, agreement in principle
or definitive agreement has been executed within 18 months after the Company's
initial public offering becomes effective. The foregoing notwithstanding, the
Company may terminate this agreement at any time after six months by providing
10 days advance written notice to SMH. Upon termination of this Agreement,
neither party shall have any further rights or obligations to the other, except
that (i) the Company shall be obligated to pay fees under Sections 2.1 and 2.2
hereof relating to Transaction(s) commenced by the Company prior to termination
of the Agreement, (ii) the Company shall be obligated to reimburse expenses
under Section 2.4 incurred by Advisor during the period prior to termination of
this Agreement or related to transactions continuing beyond termination of the
Agreement, (iii) if the Company terminates this Agreement early, the provisions
of paragraph 5 (i) above shall extend to any transaction that occurs with Target
with whom the Company has had meaningful discussions regarding a Transaction at
the time of termination, and (iii) Advisor and the Company shall continue to be
bound by the provisions of Section 4 hereof.
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6. Relationship of Parties. The parties agree that their relationship under
this Agreement is an advisory relationship only, and nothing herein shall cause
Advisor to be partners, agents or fiduciaries of, or joint venturers with, the
Company or with each other.
7. Notices. All notices required or permitted herein must be in writing and
shall be deemed to have been duly given the first business day following the
date of service if served personally, on the first business day following the
date of actual receipt if delivered by telecopier, telex or other similar
communication to the party or parties to whom notice is to be given, or on the
third business day after mailing if mailed to the party or parties to whom
notice is to be given by registered or certified mail, return receipt requested,
postage prepaid, to Advisor and to the Company at the addresses set forth below,
or to such other addresses as either party hereto may designate to the other by
notice from time to time for this purpose.
Advisor: XXXXXXX XXXXXX XXXXXX INC.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
(000) 000-0000
Fax: (000) 000-0000
Company: COASTAL BANSCHARES ACQUISITION CORP.
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
(000) 000-0000
Fax: (000) 000-0000
8. Parties. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.
9. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas, except for its conflicts of law
principles.
10. Entire Agreement, Waiver. This Agreement constitutes the entire
Agreement between the parties hereto and supersedes all prior Agreements
relating to the subject matter hereof. This Agreement may not be amended or
modified in any way except by subsequent Agreement executed in writing. Either
the Company or Advisor may waive in writing any term, condition, or requirement
under this Agreement which is intended for its own benefit, and written waiver
of any breach of such term or condition of this Agreement shall not operate as a
waiver of any other breach of such term or condition, nor shall any failure to
enforce any provision hereof operate as a waiver of such provision or of any
other provision hereof.
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XXXXXXX XXXXXX XXXXXX INC. COASTAL BANCSHARES ACQUISITION CORP.
/s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxx X. Xxxxxxxx
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By: Xxxxxxx X. Xxxxxxxx By: Xxxx X. Xxxxxxxx
Managing Director Co-Chief Executive Officer
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