June 29, 1995
Xx. Xxxxxx Xxx Xxxxx
Chairman, Board of Directors
Xxxxx Xxxxxx Corporation
00 Xxxxxx Xxxxxx
Xxx Xxxxxx, Xxxxxxxxxxx 00000
Dear Xx. Xxx Xxxxx:
This letter serves to confirm the terms of the agreement
between Xxxxx Xxxxxx Corporation ("SCC") and X.X. Xxxxxxx &
Co., Inc. ("RFS & Co.") SCC wishes to retain RFS & Co. to
provide interim management services to SCC. Specifically, SCC
wishes to retain certain members of RFS & Co. as interim
President and Chief Executive Officer and related staff to
assist it in successfully completing an operational and
financial restructuring.
Additionally, should SCC file a Chapter 11 proceeding, members
of RFS & Co. will provide the necessary leadership to guide
SCC through a Chapter 11 proceeding to the confirmation and
consummation of a Plan of Reorganization.
In the event that SCC determines to file a Chapter 11
proceeding, SCC agrees to seek a "First Day" Order of the
Bankruptcy Court, assuming this agreement or otherwise
retaining RFS & Co. in accordance with the terms and
conditions of this agreement.
RFS & Co. agrees to provide certain members of its
organization to SCC as interim President and Chief Executive
Officer and related staff, to assist it in the above
activities in a manner responsive to the current circumstances
of the company. Additionally, RFS & Co. will support as
required the information requests of, and ongoing
conversations with, Chemical Bank, as agent for the company's
bank group, and will work with the company's other outside
professionals in this area. In providing these services, RFS
& Co. will report directly to the Board of Directors.
RFS & Co. proposes to staff the engagement as follows: Xxxxxx
X. Xxxxxxx, President of RFS & Co., will become SCC's interim
President and Chief Executive Officer. Xx. Xxxxxx X. Xxxxxx
will assist Xx. Xxxxxxx in the conduct of the engagement. RFS
& Co. will, as necessary, provide additional professional
staff, all of whom have experience working with companies in
similar circumstances and whom have strong functional
expertise in finance or operations. Staffing will be adjusted
according to project demands as the engagement progresses.
All such staffing adjustments will be discussed with and
agreed to by the Board of Directors prior to their
implementation.
RFS & Co. will bill SCC for services rendered at standard
daily rates plus actual out-of-pocket expenses related to the
performance of such services. The standard daily rates
reflect the training and experience of the professional
assigned to this engagement, and are as follows
X. Xxxxxxx $2,500 per day
X. Xxxxxx $1,700 per day
Professional Staff $1,500 - $2,500 per day
Actual out-of-pocket expenses include travel, lodging, meals,
car rental, telephone, computer charges, and other necessary
expenditures. SCC will also pay RFS & Co. a retainer of
$100,000, which will be credited against final project
invoices.
Professional fees and expenses will be billed and payable as
follows: 80% of professional fees for services rendered and
100% of expenses incurred will be billed and payable monthly.
The remaining 20% of professional fees will be set aside and
accumulated as incentive compensation and will be payable
subject to the successful completion of activities and
timetables mutually agreed upon by SCC and RFS & Co. Within
thirty (30) days of the execution of this agreement, SCC and
RFS & Co. will determine, and by letter addendum to this
agreement, state in writing those conditions under which RFS &
Co. shall be entitled to all or part of the 20% of unbilled
professional fees accumulated as incentive compensation.
Our retention is subject to the following terms and
conditions:
1. Approval of SCC's Board of Directors of this
engagement letter and all of its provisions.
2. A resolution of SCC's Board of Directors appointing
Xxxxxx X. Xxxxxxx as President and Chief Executive Officer for
the duration of this engagement.
3. Appointment of Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx
to the company's Board of Directors.
4. A wire transfer of the agreed-upon retainer.
5. In the event of a Chapter 11 proceeding, an Order of
the Bankruptcy Court approving the terms and conditions of
this agreement.
SCC may discharge us at any time. We may withdraw at any time
with SCC's consent or for good cause without SCC's consent.
Good cause includes SCC's breach of this agreement, SCC's
refusal or failure to cooperate with us, or any fact or
circumstance that would render our continuing representation
unlawful or unethical.
Additionally, as a condition of our retention, Xxxxx Xxxxxx
Corporation shall indemnify and hold harmless X.X. Xxxxxxx &
Co., Inc., its respective directors, officers, employees,
affiliates, and agents of us against any losses, claims,
damages, or liabilities (or actions in respect thereof)
relating to or arising out of such engagement or our role in
connection therewith, and to reimburse us or each other party
entitled to be indemnified hereunder for all expenses,
including reasonable attorneys' fees and expenses, as they are
incurred by us or other indemnified party in connection with
investigating, preparing, or defending any such action or
claim, whether or not in connection with pending or threatened
litigation as to which we are or may be a party. Xxxxx Xxxxxx
Corporation will not, however, be responsible for any claims,
liabilities, losses, damages, or expenses that result from our
gross negligence or intentional misconduct. The provisions of
this indemnification shall survive the termination of this
agreement.
This agreement constitutes the entire understanding between
SCC and RFS & Co. regarding our employment. By executing this
agreement you acknowledge that you have read carefully and
understand all of its terms and that you are authorized to
execute the agreement on behalf of the corporation. The
agreement cannot be modified except by further written
agreement signed by each party.
We look forward to assisting SCC in these important
activities, and are prepared to commit the resources necessary
to complete this engagement. Should this agreement be
satisfactory, please sign the attached copy and return it.
Very truly yours,
/s/Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
President
Agreed to and accepted:
Xxxxx Xxxxxx Corporation
By: /s/Xxxxxx Xxx Xxxxx
Chairman, Board of Directors
Date: July 1, 1995
