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EXHIBIT (c)(1)
March 5, 2001
Xxxx Xxxxxx
Chief Financial Officer
NAB Asset Corporation
0000 X. Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Dear Xx. Xxxxxx:
This letter confirms the understanding and agreement between Xxxxxx
Xxxxxxx Xxxxxx Xxxxxxx, Inc. ("HFBE") and NAB Asset Corporation (the "Company").
We understand that the Company intends to propose a reorganization plan, which
will provide for, among other things, (i) the issuance and sale (the "Stock
Acquisition") by the Company to Centex Financial Services, Inc., a Nevada
corporation ("Centex") of shares of the common stock of the Company (the "Common
Stock") representing less than 50 percent of the Common Stock; and (ii) the
distribution of cash to the shareholders of the Company other than certain
principal shareholders. We understand that Centex proposes to pay an amount
equal to $0.125 per share for the Common Stock held by the shareholders of the
Company other than certain principal shareholders. HFBE will render to the Board
of Directors of the Company an opinion (the "Opinion") from a financial point of
view, of (i) the consideration to be received by the shareholders of the Company
other than principal shareholders is fair to such holders; and (ii) the
treatment of the principal shareholders of the Company is less favorable than
the other shareholders.
I. Scope of Engagement
HFBE hereby accepts the engagement as described above and, in that
connection, agrees to conduct such a financial review of the Company and its
businesses and operations as HFBE will deem appropriate and feasible. Such
review will be limited to an analysis of (i) publicly available information with
respect to the Company, its outstanding securities, audited and unaudited
financial statements, (ii) such other information as will be supplied to HFBE by
the Company and (iii) such other matters as HFBE deems appropriate. The Opinion
may be in such a form as HFBE will determine, including by (i) stating therein
that HFBE has relied upon the information furnished to it by the Company, (ii)
stating therein that HFBE has assumed the accuracy and completeness of such
information, (iii) stating therein that HFBE has not attempted independently to
verify any of such information and (iv) disclosing any relationships that HFBE
currently has with the Company. The Opinion will, in any event, be limited to
the fairness, from a financial point of view, of the consideration to be
received by and the treatment of the shareholders other than certain principal
shareholders, and will not address the Company's underlying business decision to
effect the Stock Acquisition.
HFBE will consent to a description and inclusion of the Opinion in the
disclosure statements to be filed with the Securities and Exchange Commission
and with the bankruptcy court and mailed to the Company's shareholders for the
purpose of approving the reorganization plan for the Company; provided, however,
that the Opinion is reproduced in full, and any description of or reference to
HFBE or summary of the Opinion will be in a form acceptable to HFBE and its
counsel. Except as otherwise provided above or otherwise required by law, the
Opinion is solely for the use and benefit of the Company and its Board of
Directors and will not be disclosed publicly or made available to third parties
without HFBE's prior written consent.
Our Opinion will be delivered in the form of a letter. We will also
prepare a Confidential Due Diligence Memorandum which will contain the analysis
and details behind the Opinion. If desired, we would present our findings at a
meeting of the Board of Directors. We will also be available to discuss the
Opinion with the Securities and Exchange Commission or other regulatory
authorities having an interest in the Stock Acquisition. We will also testify in
bankruptcy court, if required.
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Xxxx Xxxxxx
NAB Asset Corporation
March 5, 2001
Page Two
II. Obligations of the Company
Management and the Company will cooperate fully with HFBE in connection
with its financial review and analysis and the rendering of its Opinion, and
will provide HFBE with such information concerning the Company as HFBE deems
necessary for its financial review and analysis and the rendering of its
Opinion. All such information provided by the Company will be complete and
accurate and not misleading. HFBE may rely upon the accuracy and completeness of
all such information without independent verification.
III. Fees and Expenses
1. As compensation for the services rendered by HFBE
hereunder, the Company will pay HFBE as follows:
(a) An initial non-refundable retainer of
$25,000, payable upon execution of this
agreement; and
(b) an additional fee of $15,000, payable upon
delivery of the Opinion.
(c) Our fee for additional work after delivery
of our Opinion and the related Confidential
Due Diligence Memorandum will be our hourly
rates of $100-$400.
2. The Company will reimburse HFBE promptly upon
invoicing for its reasonable out-of-pocket expenses
incurred during the term of its engagement hereunder
with respect to the services to be rendered by it.
Out-of-pocket expenses will include, but not be
limited to, professional fees and disbursements
incurred by HFBE in the performance of its duties as
contemplated herein.
IV. Indemnification
1. Because HFBE will be acting on behalf of the Company,
we require indemnification from the Company. A copy
of our standard Indemnification Provision is attached
to this agreement and is incorporated by reference
herein and made a part hereof for all purposes as
though set forth entirely herein. Our Opinion is
performed at the behest of and for the benefit of the
Board alone.
2. The Company agrees that the indemnification and
reimbursement commitments set forth in the attached
Indemnification Provision will apply whether or not
HFBE is a formal party to any such lawsuits, claims,
or other proceedings and that HFBE is entitled to
retain separate counsel of its choice in connection
with any of the matters to which such commitments
relate.
V. Confidentiality
1. Except as contemplated by the terms hereof or as
required by applicable law, HFBE will keep
confidential all non-public information provided to
it by or otherwise relating to the Company, and will
not disclose such information to any third party,
other than such of its employees and advisors as HFBE
determines to have a need to know. HFBE shall be
responsible for any disclosure of such non-public
information by such employees and advisors.
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Xxxx Xxxxxx
NAB Asset Corporation
March 5, 2001
Page Three
2. Neither any advice rendered by HFBE nor any
communication from HFBE in connection with the
services performed by HFBE pursuant to this agreement
will be publicly quoted, nor will any such advice or
communication or the name of HFBE be referred to, in
any public report, document, release, or other
communication, whether written or oral, prepared,
issued, or transmitted by the Company, or any
director, officer, employee, agent or representative
of the Company, without HFBE's prior written consent,
except as specifically provided in this agreement.
VI. Miscellaneous
1. The Company agrees that HFBE, after the Stock
Acquisition is completed and subject to your
reasonable prior review, has the right to place
"tombstone" style advertisements in financial and
other newspapers and journals at its own expense
describing its services to the Company hereunder.
2. This agreement may not be amended or modified except
in writing and will be governed by and construed in
accordance with laws and State of Texas.
If the foregoing correctly sets forth the understanding and agreement
between us, please so indicate in the space provided for that purpose below,
whereupon this letter will constitute a binding agreement as of the date first
above written.
Sincerely,
XXXXXX XXXXXXX XXXXXX XXXXXXX, INC.
By:
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Xxxx X. Xxxxxx, CFA, ASA
Senior Managing Director
Accepted and agreed on this ________day of ____________________, 2001
NAB ASSET CORPORATION
By:
----------------------------
Xxxx Xxxxxx
Chief Financial Officer
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ENGAGEMENT AGREEMENT
INDEMNIFICATION PROVISIONS
1. NAB Asset Corporation (the "Company") agrees to indemnify and hold
harmless Xxxxxx Xxxxxxx Xxxxxx Xxxxxxx, Inc. ("HFBE"), against any and all
losses, claims, damages, and liabilities, expenses, or costs (and all actions in
respect thereof and any legal or other expenses in giving testimony or
furnishing documents in response to a subpoena or otherwise), including the cost
of investigating, preparing, or defending any such action or claim, whether or
not in connection with litigation in which HFBE is a party, as and when incurred
(including any loss, claim, damage, liability, or cost sustained or incurred as
a result of HFBE's negligence), directly or indirectly, caused by, relating to,
based upon, or arising out of HFBE acting for the Company including, without
limitation, any act or omission by HFBE in connection with its acceptance of or
of the performance or non-performance of its obligations under the letter
agreement dated as of March 5, 2001, as it may be amended from time to time (the
"Agreement"); provided, however, such indemnity agreement shall not apply to any
such loss, claim, damage, liability, or cost to the extent it is found in a
final judgment by a court of competent jurisdiction (not subject to further
appeal) to have resulted primarily and directly from the gross negligence or
willful misconduct of HFBE. The Company also agrees that HFBE shall not have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with the engagement of HFBE (including any loss,
claim, damage, liability, or cost sustained or incurred as a result of HFBE's
negligence), except for any such liability for losses, claims, damages,
liabilities, costs or expenses that is found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from HFBE's gross negligence or willful misconduct.
2. These Indemnification Provisions shall be in addition to any
liability that the Company may otherwise have to HFBE or the persons indemnified
below in this sentence and shall extend to the following: HFBE, its affiliated
entities, directors, officers, employees, agents, legal counsel, and controlling
persons of HFBE within the meaning of the federal securities laws, and the
respective successors, assigns, heirs, beneficiaries, and legal representatives
of each of the foregoing indemnified persons or entities. All references to HFBE
in these Indemnification Provisions (except paragraph 4) shall be understood to
include any of the foregoing indemnified persons or entities.
3. If any action, proceeding, or investigation is commenced, as to
which HFBE proposes to demand such indemnification, it will notify the Company
with reasonable promptness; provided, however, that any failure by HFBE to
notify the Company will not relieve the Company from its obligations hereunder
unless and to the extent such delay materially and adversely affects the
Company's or its affiliates' rights in such action, proceeding or investigation.
HFBE will have the right to retain counsel reasonably acceptable to the Company
to represent it, and the Company will pay the reasonable fees and expenses of
such counsel; and such counsel shall to the fullest extent consistent with its
professional responsibilities cooperate with the Company and any counsel
designated by it. The Company will be liable for any settlement of any claim
against HFBE made with the Company's written consent.
4. In order to provide for just and equitable contribution, if a claim
for indemnification pursuant to these Indemnification Provisions is made but it
is found in a final judgment by a court of competent jurisdiction (not subject
to further appeal) that such indemnification may not be enforced in such case,
even though the express provisions hereof provide for indemnification in such
case, then the Company, on the one hand, and HFBE, on the other hand, shall
contribute to the losses, claims, damages, liabilities, or costs to which the
indemnified persons may be subject in accordance with the relative benefits
received by the Company, on the one hand, and HFBE, on the other hand, and also
the relative fault of the Company on the one hand and HFBE on the other hand, in
connection with the statements, acts, or omissions that resulted in such losses,
claims, damages, liabilities, or costs and the relevant equitable considerations
shall also be considered. No person found liable for a fraudulent
misrepresentation shall be entitled to contribution from any person who is not
also found liable for such misrepresentation. Notwithstanding the foregoing,
HFBE shall not be obligated to contribute any amount hereunder that exceeds the
amount of fees received by HFBE pursuant to the Agreement.
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5. Neither termination nor completion of the engagement of HFBE
referred to above shall affect the provisions of these Indemnification
Provisions which shall then remain operative and in full force and effect.
These Indemnification Provisions may not be amended orally.
NAB ASSET CORPORATION
By:
----------------------------
Xxxx Xxxxxx
Chief Financial Officer
XXXXXX XXXXXXX XXXXXX XXXXXXX, INC.
By:
----------------------------
Xxxx X. Xxxxxx, CFA, ASA
Senior Managing Director
