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EXHIBIT 10.13
FINANCIAL ADVISORY AGREEMENT
THIS FINANCIAL ADVISORY AGREEMENT (this "AGREEMENT") is made and
entered into as of November 12, 1997, between FWT, Inc. a Texas corporation
(the "COMPANY"), and Xxxxx Capital Corp., a Delaware corporation ("XXXXX
CAPITAL").
PRELIMINARY STATEMENT
X. Xxxxx Communications Fund, L.P., an affiliate of Xxxxx Capital
is simultaneously with the execution of this Agreement acquiring approximately
80% of the common stock of the Company.
X. Xxxxx Capital has rendered financial advisory services in
connection with, among other things, the negotiation of the acquisition of the
common stock of the Company and the debt and equity financing transactions
related thereto.
C. The Company has requested that Xxxxx Capital render financial
advisory and other similar services to the Company with respect to certain
future transactions by the Company.
D. The Company has requested that Xxxxx Capital render financial
oversight and monitoring services to the Company on an ongoing basis.
NOW, THEREFORE, in consideration of the services rendered and to be
rendered by Xxxxx Capital and the mutual covenants herein contained, and for
other good, valuable and binding consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and Xxxxx Capital, intending to be
legally bound hereby, now agree as follows:
STATEMENT OF AGREEMENT
Section 1. Retention.
(a) The Company hereby retains Xxxxx Capital as financial
advisor to the Company in connection with the leveraged recapitalization of the
Company to be effected pursuant to the Stock Purchase and Redemption Agreement
of even date herewith and related transactions, including the financing thereof
(collectively, the "TRANSACTION").
(b) The Company may, but is not obligated to retain Xxxxx
Capital as its financial advisor with respect to future transaction involving
the sale of securities by the Company, tender offer, acquisition, sale, merger,
exchange offer, recapitalization, restructuring or other similar transaction
directly or indirectly involving the Company or any of its subsidiaries
(collectively, "FUTURE TRANSACTIONS"). If so retained, the
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Company will pay to Xxxxx Capital reasonable compensation no less favorable to
the Company than could be obtained in a transaction involving an unrelated
third party. Any retention of Xxxxx Capital pursuant to this clause (b) will
constitute a "Related Party Transaction" for purposes of Section 1.4 of the
Shareholders' Agreement of even date herewith among the Company, Xxxxx Capital,
FWT Acquisition, Inc. and the other shareholders of the Company.
(c) The Company hereby retains Xxxxx Capital to provide
ongoing financial oversight and monitoring services to the Company as may be
reasonably requested by the board of directors of the Company during the term
of this Agreement.
Section 2. Term. The term of this Agreement shall continue
until the earlier to occur of (i) the tenth anniversary of the date hereof and
(ii) the date on which Xxxxx Capital and its affiliates cease to beneficially
own, (as such term is defined in Rule 13d under the Securities Exchange Act of
1934) directly or indirectly, at least five percent (5%) of the outstanding
Common Stock of the Company or its successors.
Section 3. Compensation.
(a) As compensation for Xxxxx Capital's services as
financial advisor to the Company in connection with the Transaction, the
Company agrees to pay to Xxxxx Capital a cash fee of: (i) One Million Dollars
($1,000,000) to be paid upon consummation of the acquisition of Common Stock of
the Company by Xxxxx Communications Fund, L.P. and (ii) an additional One
Million Dollars ($1,000,000) upon closing of the related offering of the
Company's Senior Subordinated Notes due 2007.
(b) As compensation for Xxxxx Capital's oversight and
monitoring services under Section 1(c) hereof, the Company shall pay to Xxxxx
Capital an annual base fee (the "MONITORING FEE") of $250,000, subject to
adjustment pursuant to paragraphs (d) and (e) below and prorated on a daily
basis for any period less than a full calendar year. The Monitoring Fee shall
be payable in arrears in quarterly installments on each January 1, April 1,
July 1, and October 1 during the term of this Agreement, commencing January 1,
1998.
(c) For each year during the term of this Agreement
commencing 1998, the Monitoring Fee shall be increased by an additional
$250,000 (the "EBITDA FEE") for each year the Company meets the EBITDA target
("TARGETED EBITDA") for the Company and its Subsidiaries on a consolidated
basis for the year. For purposes hereof, "Targeted EBITDA" shall mean: (i)
with respect to the period ending April 30, 1998, $21,700,000, and (ii) with
respect to each calculation period ending thereafter, an amount determined by a
majority vote of the Compensation Committee of the board of directors of the
Company. In no event shall the Targeted EBITDA for any period exceed the
EBITDA target for the same period established pursuant to the terms of the
Employment Agreement between the Company and Xxx X. Xxxxx. The EBITDA Fee
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earned for any year shall be payable no later than the publication of the
Company's audited annual financial statement for the year.
Section 4. Reimbursement of Expenses. In addition to the
compensation to be paid pursuant to Section 3 hereof, the Company agrees to pay
or reimburse Xxxxx Capital for all "Reimbursable Expenses", which shall consist
of all reasonable disbursements and out-of-pocket expenses (including without
limitation, fees and disbursements of counsel, costs of travel, postage,
deliveries, communications, etc.) incurred by Xxxxx Capital or its affiliates
for the account of the Company or in connection with the performance by Xxxxx
Capital of the services contemplated by Section 1 hereof.
Section 5. Indemnification. The Company shall indemnify and
hold harmless each of Xxxxx Capital, its affiliates, and their respective
directors, officers, controlling persons (within the meaning of Section 15 of
the Securities Act of 1933 or Section 20(a) of the Securities Exchange Act of
1934), if any, agents and employees (Xxxxx Capital, 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 fees and disbursements of the respective Indemnified Person's counsel)
which (A) are related to 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 (ii) actions taken or omitted to be taken by an
Indemnified Person with the Company's consent or in conformity with the
Company's instructions or the Company's actions or omissions or (B) are
otherwise related to or arise out of Xxxxx Capital's engagement hereunder, and
will reimburse each Indemnified Person for all costs and expenses, including
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 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 Xxxxx Capital'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 Xxxxx
Capital's bad faith, gross negligence or willful misconduct. The Company also
agrees that neither Xxxxx Capital nor any other Indemnified Person shall have
any liability to the Company for or in connection with such engagement except
for any such liability for claims, liabilities, losses, damages, or expenses
incurred by the Company that have resulted primarily from Xxxxx Capital's bad
faith, gross negligence or willful misconduct. The Company further agrees that
it will not, without the prior written consent of Xxxxx Capital, 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
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release of Xxxxx Capital 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 XXXXX CAPITAL OR ANY OTHER INDEMNIFIED
PERSON.
The foregoing right to indemnity shall be in addition to any rights
that Xxxxx Capital 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. The Company 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 Xxxxx Capital or any other
Indemnified Person.
It is understood that, in connection with Xxxxx Capital's engagement,
Xxxxx Capital may also be engaged to act for the Company 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
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.
If the indemnity referred to in this Agreement should be, for any
reason whatsoever, rendered unenforceable, unavailable or otherwise
insufficient to hold each Indemnified Person harmless, the Company shall pay to
or on behalf of each Indemnified Person contributions for Losses so that each
Indemnified Person ultimately bears only a portion of such Losses as is
appropriate to reflect the relative benefits received by and the relative fault
of each such Indemnified Person, respectively, on the one hand and the Company
on the other hand in connection with the transaction; provided, however, that
in no event shall the aggregate contribution of all Indemnified Persons to all
Losses in connection with any transaction exceed the amount of the fee actually
received by the Manager pursuant to this Agreement. The relative fault of each
Indemnified Person and the Company shall be determined by reference to, among
other things, whether the actions or omissions to act were by such Indemnified
Person or the Fund and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action or omission to
act.
Section 6. Confidential Information. In connection with the
performance of the services hereunder, Xxxxx Capital agrees not to divulge any
confidential information, secret processes or trade secrets disclosed by the
Company to it solely in its capacity as a financial advisor, unless the Company
consents to the divulging thereof or such information, secret processes, or
trade secrets are publicly available or otherwise available to Xxxxx Capital
without restriction or breach of any confidentiality agreement
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or unless required by any governmental authority or in response to any valid
legal process.
Section 7. Governing Law. This Agreement shall be construed,
interpreted, and enforced in accordance with the laws of the State of New York,
excluding any choice-of-law provisions thereof.
Section 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 Xxxxx
Capital, which may be assigned to any one or more of its principals or
affiliates) by either party without the prior written consent of the other.
Section 9. Independent Contractor. For all purposes of this
Agreement, Xxxxx Capital shall be an independent contractor and not an employee
or dependent agent of the Company. Except as provided in this Agreement, Xxxxx
Capital shall have no authority to bind, obligate or represent the Company.
Section 10. Amendment. Except as otherwise expressly
provided herein, this Agreement shall not be amended, nor shall any provision
of this Agreement be considered modified or waived, unless evidenced by a
writing signed by the parties hereto.
Section 11. Termination. The expiration, revocation or
termination of this Agreement shall not extinguish the obligations of the
Company for the payment of fees and expenses in respect of services for periods
prior to the effective date of such expiration, revocation or termination. The
indemnification and contribution obligations of the Company under Section 5
shall survive the expiration, revocation or termination of this Agreement.
Section 12. 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.
Section 13. 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.
FWT, INC.
By:
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Name:
Title:
XXXXX CAPITAL CORP.
By:
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Name:
Title:
