Exhibit 10.4
Rockefeller Center
000 Xxxxx Xxxxxx
[TRIAX CAPITAL 2nd Floor
ADVISORS LOGO] New York, NY 10020
212.332-4011
Fax: 212 332.4019
xxx.xxxxxxxxxxxxx.xxx
July 23, 2004
Xxxx Xxxxxxxxx
Chairman of the Board
U.S. Plastic Lumber Corp.
0000 X. Xxxxxx Xx., Xxxxx 0000
Xxxx Xxxxx, XX 00000
Re: Engagement as Financial Advisor and Chief Restructuring Advisor
Dear Xx. Xxxxxxxxx:
We are writing this letter to confirm our agreement (the "Agreement") that U.S.
Plastic Lumber Corp. et al. (the "Debtors" or the "Company") in the Chapter 11
cases currently pending in the United States Bankruptcy Court for the Southern
District of Florida will engage Triax Capital Advisors, LLC ("Triax") to provide
financial and restructuring advisory services and to serve as Chief
Restructuring Officer on behalf of the Company which includes, but is not
limited to, analyzing, assisting and developing a financial restructuring plan
involving the Company, assisting the Company in a developing and negotiating a
plan of reorganization with its creditors, selling the Company's assets, and/or
raising additional debt/equity capital for the Company, providing turnaround and
crisis management services, and any other tasks that may be requested by the
Company. Triax shall provide the Company with the services of Xxxxxx Xxxxxxxx to
serve as Chief Restructuring Officer and at least one additional professional to
work for the Company as set forth below.
This Agreement shall become effective as of July 23, 2004 upon the execution
hereof by both the Company and Triax and approval of the Bankruptcy Court and
shall terminate at any time after thirty (30 days) upon reasonable notice by the
Company or Triax, subject to Bankruptcy Court approval. This agreement shall
supercede any previous agreements executed by the Company. Neither termination
nor completion of this assignment shall effect: a) any compensation earned by
Triax up to the date of termination; b) any compensation which Triax is
otherwise entitled to hereunder; c) the reimbursement of expenses incurred by
Triax up to the date of termination; d) the attached indemnification provisions,
which are incorporated herein, all of which shall remain in full force and
effect.
Compensation of Services
Subject to approval by the United States Bankruptcy Court, and pursuant to the
provisions of the Bankruptcy Code and Rules:
I. The Company shall pay Triax an hourly fee of $375 for senior
professionals, $250 for junior professionals and $100 for associates
("Hourly Fee"), beginning July 23, 2004 with a monthly maximum
compensation on hourly fees of $75,000 per month.
TRIAX CAPITAL ADVISORS, LLC
U.S. Plastic LumberCorp.
II. In addition to the Hourly Fee, the Company shall pay Triax a Transaction
Fee (the "Transaction Fee"), which is contingent upon the consummation of
a sale or sales of assets, a refinancing or repurchase of the secured
debt, or any other financial restructuring which provides aggregate gross
proceeds (whether in cash or other-in-kind consideration, including
assumption and forgiveness of debt ) as follows:
Gross Proceeds Cumulative Transaction Fee
-------------- --------------------------
From 0 to $5,000,000 3%, plus
From $5,000,000 to $7,500,000 4% of the incremental, plus
From $7,500,000 to $10,000,000 5% of the incremental, plus,
Over $10,000,000 6% of any amount over $10,000,000
III. In addition to the Hourly Fee and Transaction Fee, the Company shall pay
Triax a Financing Fee (the "Financing Fee") of 1% of the aggregate amount
of any Financing, whether it be DIP Financing or exit financing committed
to the Company. The Financing Fee shall be paid out of the proceeds of any
Financing.
IV. Triax shall be reimbursed for all reasonable out-of-pocket expenses
incurred in carrying out the terms of this Agreement, including telephone,
travel, facsimile, courier, computer time charges and attorneys' fees (to
the extent necessary), food, messenger services, postage and copying.
V. The Transaction Fee and any accrued Hourly Fees that are due and owing,
shall be paid upon the earlier of i) a plan of reorganization is
confirmed, ii) a sale of, a portion or, substantially all of the assets;
or iii) a financing which provides that AMPAC Capital Solutions, LLC. is
no longer providing debtor in possession financing to the Company; iv) a
Trustee is appointed or the Company's cases are converted to Chapter 7;
and v) Triax's services have been terminated pursuant to this agreement.
All compensation and reimbursement of expenses are subject to prior approval of
the Bankruptcy Court in accordance with sections 330 and 331 of the Bankruptcy
Code. Triax agrees to include in its application for approval of compensation a
narrative of services performed and will, to the best of its ability, include
the time spent in connection with such services performed. The Debtors will seek
an order from the Bankruptcy Court to have the non-accrued portion of the Hourly
Fees of Triax be paid on a monthly basis. Payment of all fees and expenses
incurred under this Agreement, are solely the responsibility of the Company,
however Triax shall be granted a carve-out for its professional fees from the
secured claim of APFC. For a period of six months following termination of this
Agreement, Triax shall be entitled to receive the Transaction Fee and Financing
Fee in the event the Company or its successors consummate a Transaction or a
Financing with any party with whom Triax or the Company have contacted during
the term of this Agreement.
2
TRIAX CAPITAL ADVISORS, LLC
U.S. Plastic LumberCorp.
Indemnification
The Company shall seek Bankruptcy Court approval to execute the Indemnification
Agreement attached hereto as Appendix A and that the terms and conditions be
incorporated herein.
If at any time after the termination of this Agreement, Triax is called upon to
render services directly or indirectly relating to the subject matter of this
Agreement beyond the services contemplated herein (including, but not limited
to, producing of documents, answering interrogatories, giving depositions,
giving expert or other testimony, whether by agreement, subpoena or otherwise),
the Company shall pay Triax's then current hourly rates for the persons involved
for the time expended in rendering such services, including, but not limited to,
time for meetings, conferences, preparation and travel, and all related costs
and expenses, including the reasonable legal fees and expenses of Xxxxx's
counsel.
Conflicts Of Interest
We have reviewed Xxxxx's database of relationships, and we believe that we meet
the definition of "disinterested person" in Section 101(14) of the Bankruptcy
Code.
Non-Solicitation of Employees
The Company agrees that it may not solicit for employment any professionals of
Triax without the written consent of Xxxxx.
Disclosure
All non-public information provided by the Company to Triax will be considered
as confidential information and shall be maintained as such by Triax, except as
required by law or as required to enable Triax to perform its services pursuant
to this Agreement, until the same becomes known to third parties or the public
without release thereof by Triax.
Responsibility for Assignment/Obligations of Triax Solely to the Company
The services herein provided are to be rendered solely to the Company. They are
not being rendered by Xxxxx as an agent or as a fiduciary of the shareholders of
the Company and Triax shall not have any liability or obligation with respect to
its services hereunder to such shareholders or any other person, firm or
corporation other than the Company.
Triax will not be responsible for independently verifying the accuracy of any
information provided to Triax by the Company or its agents (the "Information")
and shall not be liable for inaccuracies in any Information provided to Triax by
or at the direction of the Company.
Entire Agreement, Governing Laws and Jurisdiction, Etc.
This Agreement sets forth the entire understanding of the parties relating to
the subject matter hereof and supersedes and cancels any prior communications,
understandings and agreements between the parties. This Agreement cannot be
terminated or changed, nor can any of its provisions be waived, except by
written agreement signed by all parties hereto. This Agreement
3
TRIAX CAPITAL ADVISORS, LLC
U.S. Plastic LumberCorp.
shall be binding upon and inure to the benefit of any successors, assigns, heirs
and personal representatives of the Company and Triax.
This Agreement shall be governed by and construed to be in accordance with the
laws of the State of Florida applicable to contracts made and to be performed
solely in such state by citizens thereof. Any dispute arising out of this
Agreement shall be adjudicated by the Bankruptcy Court.
Acceptance
Please confirm that the foregoing is in accordance with your understanding by
signing upon behalf of the Company and returning an executed copy of this
Agreement, and thereafter submitting an appropriate application to the
Bankruptcy Court seeking the retention of Triax on these terms. Any order
submitted to the Bankruptcy Court in connection herewith shall be in accordance
with this Agreement. A telecopy of a signed original of this Agreement shall be
sufficient to bind the parties whose signatures appear hereon.
Very truly yours,
TRIAX CAPITAL ADVISORS, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxxx, Managing Partner
Date: July 23, 2004
ACCEPTED AND AGREED TO:
U.S. Plastic Lumber Corp.
By: /s/ Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxx
Date: July 23, 2004
4
Triax Capital Advisors, LLC
U.S. Plastic Lumber Corp.
APPENDIX A
INDEMNIFICATION AGREEMENT
Appendix A to Letter Engagement Agreement (the "Agreement"), dated June 7, 2005
by and between U.S. Plastic Lumber Corp. and its subsidiaries, affiliates and
related entities (the "Company") and Triax Capital Advisors, LLC ("Triax").
The Company agrees to indemnify and hold Triax and its affiliates, control
persons, directors, officers, employees and agents (each an "Indemnified
Person") harmless from and against all losses, claims, damages, liabilities,
costs or expenses, including those resulting from any threatened or pending
investigation, action, proceeding or dispute whether or not Triax or any such
other Indemnified Person is a party to such investigation, action, proceeding or
dispute, arising out of Triax's entering into or performing services under this
Agreement, or arising out of any matter referred to in this Agreement. This
indemnity shall also include Triax's and/or any such other Indemnified Person's
reasonable attorneys' and accountants' fees and out-of-pocket expenses incurred
in, and the cost of Triax's personnel whose time is spent in connection with,
such investigations, actions, proceedings or disputes which fees, expenses and
costs shall be periodically reimbursed to Triax and/or to any such other
Indemnified Person by the Company as they are incurred; provided, however, that
in no event shall Triax and its affiliates, control persons, directors,
officers, employees and agents be indemnified in the case of its or their own
bad-faith, self-dealing, breach of fiduciary duty, gross negligence, reckless or
willful misconduct or malpractice arising from the foregoing (except ordinary
negligence). A court of competent jurisdiction shall make such a determination,
(but pending any such final determination the indemnification and reimbursement
provisions hereinabove set forth shall apply and the Company shall perform its
obligations hereunder to reimburse Triax and/or each such other Indemnified
Person as described herein). In no event shall Triax, its affiliates, control
persons, directors, officers, employees or agents be indemnified if the Company
asserts a claim for, and a court determines by final order that such claim arose
out of Triax, its affiliates, control persons, directors, officers, employees or
agents own bad-faith, self-dealing, breach of fiduciary duty, gross negligence,
reckless or willful misconduct or malpractice arising from the foregoing (except
ordinary negligence).
The Company also agree that no Indemnified Person shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company
for or in connection with any act or omission to act as a result of its
engagement under this Agreement except for any such liability for losses,
claims, damages, liabilities or expenses incurred by the Company that is found
in a final determination by a court of competent jurisdiction to have resulted
from Triax, its affiliates, control persons, directors, officers, employees or
agents own bad-faith, self-dealing, breach of fiduciary duty, gross negligence,
reckless or willful misconduct or malpractice arising from the foregoing (except
ordinary negligence).
If for any reason, the foregoing indemnification is unavailable to Triax or any
such other Indemnified Person or insufficient to hold it harmless, then the
Company shall contribute to the amount paid or payable by Triax or any such
other Indemnified Person as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the relative benefits
received by the Company on the one hand and Triax or any such other Indemnified
Person on the other hand, but also the relative fault of the Company and Triax
or any such other Indemnified Person, as well as any relevant equitable
considerations; provided that in no event
Triax Capital Advisors, LLC
U.S. Plastic Lumber Corp.
will the aggregate contribution by Xxxxx and any such other Indemnified Person
hereunder exceed the amount of fees actually received by Triax pursuant to this
Agreement. The reimbursement, indemnity and contribution obligations of the
Company hereinabove set forth shall be in addition to any liability which the
Company may otherwise have and these obligations and the other provisions
hereinabove set forth shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company, Triax
and any other Indemnified Person.
Nothing herein shall be construed to impose any liability on any officers,
directors or shareholders of the Company.
The terms and conditions hereinabove set forth in this Appendix A. shall survive
the termination and expiration of this Agreement and shall continue indefinitely
thereafter.
U.S. Plastic Lumber Corp.
/s/ Xxxx Xxxxxxxxx
By:
Xxxx Xxxxxxxxx
TRIAX CAPITAL ADVISORS, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------
Managing Partner
2
