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EXHIBIT 99.2
AMENDED AND RESTATED
FINANCIAL ADVISORY AGREEMENT
THIS AMENDED AND RESTATED FINANCIAL ADVISORY AGREEMENT, is made and entered
into November 4, 1998 to be effective as of August 21, 1998 (this "Agreement"),
is made and entered into between Coho Energy, Inc., a Texas corporation (the
"Company"), and ▇▇▇▇▇, Muse & Co. Partners, L.P., a Texas limited partnership
(together with its successors, "HMCo").
WHEREAS, an affiliate of HMCo, HM 4 Coho, L.P., a Texas partnership
("Purchaser"), previously entered into an agreement, which agreement is being
amended and restated concurrently herewith (the "Purchase Agreement"), with the
Company to purchase a portion of the capital stock of the Company (the
"Transaction");
WHEREAS, the Company requested that HMCo render, and HMCo has rendered,
financial advisory services to the Company and its subsidiaries in connection
with the negotiation of the Transaction;
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 any
person or group of beneficial ownership of (i) a majority of the combined voting
power of the then outstanding securities of the Company entitled to vote
generally in the election of directors, or (ii) a majority of the Company's
outstanding capital stock, (b) a reorganization, recapitalization, merger,
consolidation or similar business combination or transaction or sale or other
disposition (whether in a single transaction or series of related transactions)
of all or substantially all of the assets of the Company and its subsidiaries
taken as a whole (unless the holders of the outstanding securities of the
Company entitled to vote generally in the election of directors prior to such
transaction continue to own at least a majority of the securities entitled to
vote generally in the election of directors of the entity resulting from such
transaction upon the completion of such transaction), (c) the sale of oil and
gas properties of the Company or its subsidiaries involving consideration of
$100 million or more, (d) any acquisition by the Company or its subsidiaries
involving consideration of $100 million or more of (i) a majority of the voting
power of the then outstanding voting securities of any corporation entitled to
voting generally in the election of directors or (ii) a majority of the
ownership interests of an entity other than a corporation (whether by merger,
tender offer, exchange offer or similar extraordinary transaction), or (e) any
acquisition by the Company or its subsidiaries of oil and gas properties or
other assets involving consideration of $100 million or more (collectively,
"Additional Transactions"); and
WHEREAS, concurrently with the execution of the Purchase Agreement, on
August 21, 1998 the Company and HMCo entered into a Financial Advisory Agreement
(the "Original Agreement"), and the Company and HMCo now desire to amend and
restate the Original Agreement in its entirety as set forth below;
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 Transaction.
(b) The Company acknowledges that, effective as of the Closing (as defined
in the Purchase Agreement), it has retained HMCo as the exclusive financial
advisor in connection with any Additional Transactions that may be consummated
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 Additional 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
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would be appropriate with respect to a given Additional Transaction; and
provided, that the Company, at the discretion of the CEO, may elect not to
retain a financial advisor with respect to a particular Additional Transaction
and in such event HMCo shall not be entitled to receive the 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
Additional Transaction as may be requested from time to time by the board of
directors of the Company.
2. Term. The term of this Agreement shall continue until the earlier to
occur of (a) the tenth anniversary of the date hereof or (b) the date on which
Purchaser and its affiliates cease to own beneficially, directly or indirectly,
at least five percent of the outstanding equity securities of the Company or its
successors; provided that no termination of this Agreement shall eliminate the
obligations of the Company under Section 3(a) hereof.
3. Compensation. (a) As compensation for HMCo's services as a financial
advisor to the Company and its subsidiaries in connection with the Transaction,
the Company paid HMCo a cash fee of $1,250,000 by wire transfer of immediately
available funds concurrently with the execution of the Original Agreement and
hereby irrevocably agrees to pay HMCo:
(i) if the shareholders of the Company shall have approved the
transactions contemplated by the Purchase Agreement on or before December
31, 1998, a cash fee of $8,750,000 by wire transfer of immediately
available funds on the Closing Date (as defined in the Purchase Agreement);
and
(ii) if the shareholders of the Company shall not have approved the
transactions contemplated by the Purchase Agreement on or before December
31, 1998, a fee of $8,750,000 by wire transfer of immediately available
funds on December 31, 1998; provided however, that the Company may elect to
satisfy such obligation through the payment of $3,750,000 by wire transfer
of immediately available funds and the issuance to HMCo of 1,000,000 shares
of common stock, par value $.01 per share, of the Company; and provided
further that such shares shall have been approved for listing on The Nasdaq
Stock Market National Market System and that the Company shall have
received all other required consents and approvals to the issuance of such
shares.
(b) As compensation for HMCo's financial advisory, investment banking, and
other similar services rendered in connection with any Additional Transaction
pursuant to Section 1(b) hereof, the Company shall pay to HMCo, at the closing
of any such Additional Transaction, a fee payable in cash in an amount equal to
the amount of fees then charged by first tier investment banking firms for
similar advisory services rendered in connection with transactions similar to
such Additional Transaction; provided, however, that (c) such fee shall be
divided equally between HMCo and any additional financial advisor retained by
the Company as provided in the first sentence of Section 1(b) and (d) HMCo shall
not be entitled to a fee with respect to any Additional Transaction for which
the CEO elects not to retain a financial advisor.
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 fees and disbursements of counsel) incurred by HMCo (a) as
financial advisor to the Company or any of its subsidiaries in connection with
the Transaction or (b) in connection with the performance by it of the services
contemplated by Section 1(b) hereof.
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 Securities Exchange Act of 1934), 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 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 any of its subsidiaries or
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(ii) actions taken or omitted to be taken by an Indemnified Person with the
Company's or any of its subsidiaries' consent or in conformity with the
Company's or any such subsidiaries' instructions or the Company's or any such
subsidiaries' 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 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 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 to 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. 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 or any
termination of the engagement. The Company hereby consents, and shall cause its
subsidiaries to consent, 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 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 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.
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 divulge any confidential information,
secret processes or trade secrets disclosed by the Company or any of its
subsidiaries to HMCo 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 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.
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
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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 to be effective as of
August 21, 1998.
COHO ENERGY, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇ ▇'▇▇▇▇▇▇
Senior Vice President
▇▇▇▇▇, MUSE & CO. PARTNERS, L.P.
By: HM PARTNERS INC.,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Senior Vice President
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