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EXHIBIT 10.23
FINANCIAL ADVISORY AGREEMENT
THIS FINANCIAL ADVISORY AGREEMENT (this "Agreement") is made and
entered into as of October 27, 1995, among Xxxxxxxx Holdings, Inc.
("Holdings"), a Delaware corporation, Xxxxxxxx Corporation (the "Company"), a
Delaware corporation, and HM2/Management Partners, L.P., a Delaware limited
partnership (together with its successors, "HM2").
WHEREAS, Hicks, Muse, Xxxx & Xxxxx Equity Fund II, L.P. ("HMTF") has
acquired substantially all of the common stock of Holdings pursuant to a Stock
Purchase Agreement dated October __, 1995, among HMTF, Holdings and the other
parties thereto (the "Acquisition");
WHEREAS, Holdings and the Company have requested that HM2 render, and
HM2 has rendered, financial advisory services to them in connection with the
negotiation of the Acquisition and the debt and equity financing transactions
related thereto (collectively with the Acquisition, the "Transaction"); and
WHEREAS, Holdings and the Company have requested that HM2 render
financial advisory, investment banking, and other similar services to them with
respect to any future proposals for a tender offer, acquisition, sale, merger,
exchange offer, recapitalization, restructuring, or other similar transaction
directly or indirectly involving Holdings, the Company, or any of their
respective subsidiaries, and any other person or entity (collectively, "Add-on
Transactions");
NOW, THEREFORE, in consideration of the services rendered and to be
rendered by HM2 to Holdings and the Company, and to evidence the obligations of
Holdings and the Company to HM2 and the mutual covenants herein contained,
Holdings and the Company hereby jointly and severally agree as follows:
1. Retention.
(a) Holdings and the Company hereby acknowledge that they
have retained HM2, and HM2 acknowledges that it has acted, as financial advisor
to Holdings and the Company in connection with the Transaction.
(b) Each of Holdings and the Company acknowledges that it
has retained HM2 as its exclusive financial advisor in connection with any
Add-on Transactions that may be consummated during the term of this Agreement,
and that Holdings and the
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Company will not retain any other person or entity to provide such services in
connection with any such Add-on Transaction without the prior written consent
of HM2. HM2 agrees that it shall provide such financial advisory, investment
banking, and other similar services in connection with any such Add-on
Transaction as may be requested from time to time by the board of directors of
Holdings.
2. Term. The term of this Agreement shall continue until the
earlier to occur of (i) the tenth anniversary of the date hereof or (ii) the
date on which HMTF is dissolved, liquidated, and wound up (the "Primary Term"),
and shall continue on a year to year basis thereafter unless terminated by
Holdings and the Company or HM2 by written notice delivered to the other
parties on or before the 30th day prior to the expiration of the Primary Term
or prior to the expiration of any subsequent yearly term.
3. Compensation.
(a) As compensation for HM2's services as financial
advisor to Holdings and the Company in connection with the Transaction, the
Company hereby irrevocably agrees to pay to HM2 (i) a cash fee of $1,175,000 to
be paid at the closing of the Transaction and (ii) a cash fee in the amount of
1.5% of the principal amount actually earned on the promissory notes (Series A
and B), dated as the date hereof made by the Company to the several payees
parties thereto, to be paid as of the date of the determination of the earned
principal amounts thereon. The parties hereto agree that the compensation due
pursuant to this Section 3(a) shall be allocated among the segments of the
financing for the Transaction in proportion to the dollar amount of each such
segment.
(b) As compensation for HM2's financial advisory,
investment banking, and other similar services rendered in connection with any
Add-on Transaction pursuant to Section 1(b) hereof, the Company shall pay to
HM2, at the closing of any such Add-on Transaction, a cash fee in the amount of
1.5% of the Transaction Value of such Add-on Transaction. As used herein, the
term "Transaction Value" means the total value of the Add-on Transaction,
including, without limitation, the aggregate amount of the funds required to
complete the Add-on Transaction (excluding any fees payable pursuant to this
Section 3(b)) including the amount of any indebtedness, preferred stock or
similar items assumed (or remaining outstanding).
4. Reimbursement of Expenses. In addition to the compensation to
be paid pursuant to Section 3 hereof, Holdings and
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the Company agree to reimburse HM2, 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 HM2 (i) as financial advisor to Holdings
and the Company in connection with the Transaction or (ii) in connection with
the performance by it of the services contemplated by Section 1(b) hereof.
5. Indemnification. Holdings and the Company hereby jointly and
severally agree to indemnify HM2, its affiliates, and certain other indemnitees
as provided in that certain letter agreement dated of even date herewith by and
among Holdings, the Company, and HM2 (a copy of which is attached hereto as
Exhibit A). The indemnity provisions contained in such letter agreement shall
remain operative and in full force and effect notwithstanding termination of
this Agreement.
6. Confidential Information. In connection with the performance
of the services hereunder, HM2 agree not to divulge any confidential
information, secret processes or trade secrets disclosed by Holdings or the
Company to it solely in its capacity as a financial advisor, unless Holdings
and the Company consents to the divulging thereof or such information, secret
processes, or trade secrets are publicly available or otherwise available to
HM2 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
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned (other than with respect to the rights and obligations of HM2 to
Xxxxxx X. Xxxxx, Xxxx X. Xxxx, Xxxxxxx X. Xxxx and/or Xxxx X. Xxxxx or to any
entity controlled by any one or more of Xxxxxx X. Xxxxx, Xxxx X. Xxxx, Xxxxxxx
X. Xxxx and/or Xxxx X. Xxxxx) 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
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shall be deemed a signature to, and may be appended to, any other counterpart.
10. Other Understandings. 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.
HM2/MANAGEMENT PARTNERS, L.P.
By: XXXXX, MUSE & CO. PARTNERS,
L.P., its General Partner
By: HM PARTNERS INC., its General
Partner
By: /s/ XXXX X. XXXXXX
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Xxxx X. Xxxxxx
Vice President
XXXXXXXX HOLDINGS, INC.
By: /s/ XXXXXX X. XXXXX
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Name: Xxxxxx X. Xxxxx
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Title: Chairman & President
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XXXXXXXX CORPORATION
By: /s/ XXXXXX X. XXXXX
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Name: Xxxxxx X. Xxxxx
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Title: Chairman & President
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Exhibit A
October 27, 1995
HM2/Management Partners, L.P.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
In connection with the engagement (herein so called) of
HM2/Management Partners, L.P. ("HM2") pursuant to the Financial Advisory
Agreement, dated as of October 27, 1995, by and among HM2, Xxxxxxxx Holdings,
Inc. ("Holdings") and Xxxxxxxx Corporation (the "Company"), Holdings and the
Company jointly and severally will indemnify and hold harmless each of HM2, 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 of
HM2 or any of its affiliates (HM2, 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 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 Holdings and/or the Company or (ii) actions taken or omitted to be
taken by an Indemnified Person with Holdings' or the Company's consent or in
conformity with Holdings' or the Company's instructions or Holdings' or the
Company's actions or omissions or (B) are otherwise related to or arise out of
HM2'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 HM2'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. Neither Holdings nor the
Company will, however, be responsible for any claims, liabilities, losses,
damages, or expenses pursuant to clause (B) of the preceding sentence that have
resulted primarily from HM2's bad faith, gross negligence or willful
misconduct. Holdings and
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HM2/Management Partners, L.P.
August 29, 1995
Page 2
the Company also agree that neither HM2 nor any other Indemnified Person shall
have any liability to Holdings or the Company for or in connection with such
engagement except for any such liability for claims, liabilities, losses,
damages, or expenses incurred by Holdings and/or the Company that have resulted
primarily from HM2's bad faith, gross negligence or willful misconduct.
Holdings and the Company further agree that neither of them will, without the
prior written consent of HM2, 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 indemnifications 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 HM2 and each other Indemnified Person hereunder from
all liability arising out of such claim, action, suit or proceeding.
The foregoing right to indemnity shall be in addition to any
rights that HM2 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. Holdings and the Company hereby 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 HM2 or any other
Indemnified Person.
It is understood that, in connection with HM2's engagement,
HM2 may also be engaged to act for Holdings and/or 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.
Holdings and the Company further understand that if HM2 is
asked to furnish Holdings and/or the Company a financial opinion letter or act
for Holdings and/or the Company in any other formal capacity, such further
action may be subject to a separate agreement containing provisions and terms
to be mutually agreed upon.
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HM2/Management Partners, L.P.
August 29, 1995
Page 3
This letter agreement shall be construed, interpreted, and
enforced in accordance with the laws of the State of Texas, excluding any
choice-of-law provisions thereof. This letter 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.
Very truly yours,
XXXXXXXX HOLDINGS, INC.
By: /s/ XXXXXX X. XXXXX
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Name: Xxxxxx X. Xxxxx
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Title: Chairman & President
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XXXXXXXX CORPORATION
By: /s/ XXXXXX X. XXXXX
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Name: Xxxxxx X. Xxxxx
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Title: Chairman & President
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AGREED AND ACCEPTED:
HM2/MANAGEMENT PARTNERS, L.P.
By: XXXXX, MUSE & CO. PARTNERS, L.P.,
its General Partner
By: HM PARTNERS INC.,
its General Partner
By: /s/ XXXX X. XXXXXX
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Xxxx X. Xxxxxx
Vice President
