EXHIBIT 10.50
THE MERIDIAN GROUP
INVESTMENT BANKERS AND FINANCIAL CONSULTANTS [LOGO]
XXXXXXX-TREES BUILDING (000) 000-0000
000 XXXXXX XXXXXX, XXXXX 0000 (000) 000-0000 (FAX)
XXXXXXXXXX, XXXXXXXXXXXX 00000-0000 EMAIL: XX.XXXX@XXXXXXX.XXX
February 20, 2004
Xxxxxx X. Xxxxx
Chief Financial Officer
X. X. Xxxxx Corporation
00000 Xxxxxxxx Xxxx, X.X.
Xxxxxxxxxxxx, Xxxx 00000
Dear Xxx,
This agreement ("Agreement") is between X. X. Xxxxx Corporation, 00000 Xxxxxxxx
Xxxx, X. X., Xxxxxxxxxxxx, Xxxx 00000 (the "Company" or "RGB") and The Meridian
Group, 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
("Meridian"). It is the second agreement between the two parties and it
supercedes the prior agreement.
WHEREAS, the Company's prime secured lender, Huntington National Bank
("Huntington"), has expressed interest in reducing its position in RGB. As a
result, the Company has engaged Meridian to advise and assist the Company in
sourcing and securing financing from a new lender(s).
WHEREAS, the Company has suffered certain financial losses recently and has
engaged Meridian to provide additional management consulting services to the
Company for the purpose of assisting it with implementing a restructuring plan.
NOW THEREFORE, in consideration of the mutual obligations herein contained, it
is mutually agreed as follows:
CONSULTING SERVICES
FINANCING SERVICES
Meridian's services in connection with financing objectives of this engagement
are outlined below. Certain of these services are on-going, some have already
been completed and others are underway.
1. Assist the Company in obtaining temporary increases in its
revolver with Huntington.
2. Assist the Company in developing specific objectives to be
achieved in securing new financing (the "Financing
Transaction").
3. Prepare an Information Memorandum (the "Memorandum")
concerning the Company, which shall be used in discussions
with prospective banks, finance companies, insurance companies
and other lenders (collectively referred to as the "Lender");
4. Assist the Company in qualifying a prospective Lender based on
selection criterion to be developed by the Company with the
assistance of Meridian. The criteria used should include, at a
minimum, loan availability/flexibility, financial covenants,
fees, interest rate, Lender's experience with the industry and
Lender's acceptability to Huntington.
5. Initiate and participate on the Company's behalf in
solicitation of proposals with respect to a new credit
facility with the Lender that meets identified objectives and
criteria. Once proposals are received, develop a report
explaining benefits and risks of each proposal for review by
the Company.
6. Assist in the effort to secure a commitment; including
management of the due diligence process and negotiation of
final structure, terms and conditions that are acceptable to
both the Company and Huntington.
MANAGEMENT CONSULTING
Meridian's services in connection with the management consulting objectives of
this engagement have included the development of a restructuring plan, which
includes the shutdown of its Mexican operations and a significant reduction in
its administrative expenses. Going forward, Meridian may be involved in
assisting with the implementation stage.
In consideration for Meridian providing its services, the Company agrees to pay
the retainer, all hourly billable fees, all out-of-pocket expenses, and a
success fee as described below.
RETAINER
The Company will pay Meridian a retainer of $50,000 on or about January 20,
2004. At the conclusion of the engagement, Meridian will return the retainer
less any unpaid balance of outstanding fees and expenses.
Meridian will invoice weekly for Hourly Billable Fees and expenses as described
below for hours expended on both objectives. In addition to the Hourly Billable
Fees, a Financing Success Fee will be payable upon closing the Financing
Transaction, as described below.
HOURLY BILLABLE FEE
Meridian will be paid an Hourly Billable Fee based on billable hours ("Billable
Fees"). Work will be billed at Meridian's standard rates. For Xxxxxxxx X. Good,
the rate will be $350.00. For Xxxxxx X. Xxx Xxxxxx, Xxxxx Xxxxxx, Xxx X. Xxxx,
and Xxxxx Xxxxxxx, the rates will be $300.00, $275.00, $250.00, and $170.00,
respectively. For other associates of Meridian, rates will be billed at levels
commensurate with their experience. Travel time will be billed at one-half the
hourly rate. The Company will be invoiced every Friday. Payment for each invoice
will be
due upon receipt. Meridian reserves the right to increase its billable rates, as
mutually agreed between the Company and Meridian, in the event that this
engagement continues for over one year.
The Hourly Billable Fees for the financing service objective are not to exceed
in aggregate $75,000.
FINANCING SUCCESS FEE
Upon closing of the Financing Transaction, the Company agrees to pay Meridian a
Financing Success Fee for consulting services rendered. The Financing Success
Fee will be paid only if an agreement is reached with a Lender.
The Financing Success Fee shall be based on the total value of consideration,
less any participation by Huntington ("Consideration") described in the
Financing Transaction documents and may include, but is not limited to, loans,
establishment of lines of credit, issuance of Letters of Credit or other
instruments which provide credit, accounts receivable financing, guarantees,
promissory notes (secured or unsecured), equipment or other lease financing,
venture capital or other types of equity investment, bond issues,
Government-assisted financing, value of joint ventures, proceeds of public stock
issues, replacement or restructuring of existing debt, and any other element of
value provided in connection with the Financing Transaction.
The amount of the Financing Success Fee shall be 0.65% of the Consideration
taken in the form of Senior Debt. All other forms of consideration, including
subordinated debt, shall have a Financing Success Fee of 1%.
The Financing Success Fee is payable if discussions conducted with any Lender
introduced to the Company by Meridian lead to the consummation of any Financing
Transaction with such party within two years after the date of termination of
this Agreement.
The Company agrees to reimburse Meridian for all out-of-pocket expenses incurred
by Meridian on behalf of the Company. Such out-of-pocket expenses shall be
documented by Meridian and shall not exceed $15,000, in the aggregate, without
specific authorization by the Company.
The Company will provide Meridian with copies of all Financing Transaction
documents on request and will provide Meridian with adequate advance notice of
the time and place of closing, which Meridian shall have the right to attend.
STANDARD TERMS AND CONDITIONS
ACCESS TO PERSONNEL: Meridian shall have full access to all personnel, books,
and records of the Company.
ARBITRATION: Any controversy, dispute, or claim between the parties relating to
this Agreement shall be resolved by binding arbitration in accordance with the
rules of the American Arbitration Association.
AUTHORITY: The Company has the power and authority to make and carry out the
terms of this Agreement, and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement. This Agreement is the
legally binding obligation of the Company, enforceable in accordance with its
terms.
CONFIDENTIALITY: Any advice, written or oral, provided by Meridian pursuant to
this Agreement will be treated by the Company as confidential, will be solely
for the information and assistance of the Company in connection with this
engagement and will not be reproduced, summarized, described or referred to, or
furnished to any other party or used for any other purpose, except in each case
with Meridian's prior written consent, except for disclosure required by law.
ENTIRE AGREEMENT: This is the entire Agreement between the parties pertaining to
its subject matter and supersedes all prior agreements, representations, and
understandings of the parties. No modification of this Agreement shall be
binding unless agreed to in writing by the parties.
EXPENSES: Necessary and reasonable out-of-pocket expenses will be reimbursed as
incurred during this engagement. These expenses will include travel costs,
courier services, phone charges, report preparation charges, and other necessary
expenditures. Normal office charges are $0.75 per page for facsimiles and color
photocopies, $0.25 per page for black and white photocopies, and $1.00 per
billable hour for phone charges. Postage, express mail and travel-related costs
will be billed at the actual reasonable costs incurred. Weekly invoices will be
provided setting forth in reasonable detail the nature and amount of such
expenses.
INDEMNIFICATION: The Company agrees to indemnify and hold harmless Meridian and
its affiliates, and the respective directors, officers, agents and employees of
Meridian and its affiliates (Meridian and each such entity or person, an
"Indemnified Person") from and against any losses, claims, damages, judgments,
assessments, costs and other liabilities (collectively "Liabilities"), and will
reimburse each Indemnified Person for all fees and expenses (including the
reasonable fees and expenses of counsel) (collectively, "Expenses") as they are
incurred in investigating, preparing, pursuing or defending any claim, action,
proceeding or investigation, whether or not in connection with pending or
threatened litigation or arbitration and whether or not any Indemnified Person
is a party (each an "Action" and collectively, "Actions"), arising out of or in
connection with advice or services rendered or to be rendered by any Indemnified
Person pursuant to this Agreement, the engagement contemplated hereby or any
Indemnified Person's actions or inactions in connection with any such advice,
services or engagements; provided that the Company will not be responsible for
any Liabilities or Expenses of any Indemnified Person that are determined by a
judgment of a court of competent jurisdiction which is no longer subject to
appeal or further review to have resulted solely from such Indemnified Person's
gross negligence or willful misconduct in connection with any of the advice,
actions, inactions or services referred to above. The Company also agrees to
reimburse each Indemnified Person for all properly indemnifiable expenses as
they are incurred in connection with enforcing such Indemnified Person's rights
under this Agreement (including, without limitation, its rights under this
section).
INFORMATION: The Company shall make available to Meridian all financial and
other information concerning its business and operations that Meridian
reasonably requests. In performing its services hereunder, Meridian shall be
entitled to rely without investigation upon all information that is available
from public sources as well as all other information supplied to it by or on
behalf of the Company or its advisors and shall not in any respect be
responsible for the accuracy of completeness of, or have any obligation to
verify, the same or to conduct any appraisal of assets or liabilities. To the
extent consistent with legal requirements, all information given to Meridian by
the Company, unless publicly available or otherwise available to Meridian
without restriction or breach of any confidentiality agreement, will be held by
Meridian in confidence and will not be disclosed to anyone other than Meridian's
agents and advisors without the Company's prior approval or used for any purpose
other than those referred to in this Agreement.
JURISDICTION; APPLICABLE LAW; UNENFORCEABILITY; DEFAULT INTEREST RATE: This
Agreement shall be interpreted under and governed by the laws of the
Commonwealth of Pennsylvania. The Company irrevocably consents to the
jurisdiction of any state or federal court for the county or judicial district
covering Pittsburgh, Pennsylvania. In the event Meridian prevails in any action
to enforce collection of amounts due or other rights under this Agreement, the
Company agrees to pay Meridian's legal fees and other collection costs plus
interest at 1.5% per month on any unpaid balance from the original due date
until the date paid.
LIMITATION OF AUTHORITY: The relationship between the Company and Meridian
created, with respect to Meridian, is one of independent contractor, and
Meridian shall have no authority to legally bind Company in any manner
whatsoever, except as specified herein. Meridian may, in the performance of its
duties, negotiate on behalf of the Company with various parties, including but
not limited to creditors, stockholders and employees of Company, and
governmental entities. But unless authorized in writing by the Board of
Directors of the Company, in no case shall Meridian have any authority or be
under any duty whatsoever to execute documents in the name of or on behalf of
Company with respect to such negotiations or the transactions contemplated
therein.
MERIDIAN'S ROLE: The Company acknowledges and agrees that Meridian has been
retained solely to provide the services set forth in this Agreement. Meridian
shall act as an independent contractor, and any duties of Meridian arising out
of its engagement hereunder shall be owed solely to the Company.
PAYMENT OF INVOICES: Meridian's expenses will be billed each Friday, and payable
upon receipt of invoice.
PERIOD OF SERVICE AND TERMINATION: Either the Company or Meridian may terminate
this Agreement upon receipt of written notice to that effect by the other party.
Upon any termination or expiration of this Agreement, Meridian will be entitled
to prompt payment of all fees and reimbursement of all out-of-pocket expenses,
as described above, and will be entitled to its fee and expenses as set forth
above. The indemnity and other provisions contained herein will also remain
operative and in full force and effect regardless of any termination or
expiration of this Agreement. Lenders will be notified of termination.
SUCCESSORS AND ASSIGNS: This Agreement shall be binding upon and inure to the
benefit of the Company, Meridian, each Indemnified Person and their respective
heirs, executors, administrators, successors and assigns.
After reviewing this Agreement, please confirm that the foregoing is in
accordance with your understanding by signing and returning this letter,
whereupon it shall be our binding Agreement.
We appreciate the opportunity to represent you and look forward to a successful
relationship going forward.
Sincerely,
Xxxxxxxx X. Good
Xxxxxxxx X. Good
President
Agreed and accepted this 31st day of March, 2004.
X. X. Xxxxx Corporation
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Xxxxxx X. Xxxxx
Chief Financial Officer
