EXHIBIT 10.53
[SSG CAPITAL ADVISORS, L.P. LOGO]
August 11, 2004
Xx. Xxxx Xxxxxx
President
Sight Resource Corporation
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Dear Xx. Xxxxxx:
This agreement ("Engagement Agreement") will serve as the agreement between
Sight Resource Corporation (the "Company"), as debtor and debtor in possession
in its pending chapter 11 reorganization case (the "Chapter 11 Case"), and SSG
Capital Advisors, L.P. ("SSG" or "Advisor") regarding the retention of SSG as
exclusive investment banker to the Company in the Chapter 11 Case. SSG will
provide investment banking and related financial advisory services to the
Company in connection with (a) the review of the Company's strategic
reorganization alternatives, as set forth in more detail below, (b) the private
placement or refinancing of debt or equity (either as a debtor in possession
financing or post-confirmation financing) for the Company (a "Financing
Transaction") and/or (c) a potential sale of all or part of the Company's assets
or operations (the "Sale Transaction").
In particular, we have agreed as follows:
A. SSG'S ROLE
(1) REVIEW OF STRATEGIC ALTERNATIVES
SSG will assist the Company in reviewing its strategic
reorganization alternatives, including either a Financing
Transaction and/or a Sale Transaction. Specifically, SSG will assist
the Company in:
- Preparing and reviewing its forecasted cash flow and financial
performance;
- Analyzing the going concern value of the business as a whole
and in its operating units;
- Assessing the Company's long-term business plan and valuation;
- If appropriate, assisting the Company in formulating,
presenting, and soliciting approval of a plan of
reorganization in the Chapter 11 Case; and
- Assisting the Company in making presentations to the
Bankruptcy Court and other constituencies in the Chapter 11
Case concerning the services contemplated herein.
Five Tower Bridge, Suite 000 - 000 Xxxx Xxxxxx Xxxxx - Xxxx Xxxxxxxxxxxx,
XX 00000
Phone (000)000-0000 - Fax (000)000-0000
xxx.xxxxx.xxx
Xx. Xxxx Xxxxxx
August 11, 2004
Page 2
(2) FINANCING TRANSACTION
As directed by the Company, SSG, on a best efforts basis, will act
as exclusive financial advisor regarding a Financing Transaction.
Specifically, SSG will provide the following services regarding a
Financing Transaction:
- Identify appropriate lenders or investors, including
commercial banks, commercial financing companies, private
capital investment funds, and other institutional investors,
to provide debt or equity financing in connection with a
Financing Transaction;
- Facilitate the due diligence review of prospective lenders or
investors in connection with a Financing Transaction;
- Solicit term sheets from those lenders and investors
interested in a Financing Transaction;
- Negotiate with lenders and investors regarding the terms and
structure of the Financing Transaction;
- Assist in the review of documentation for the Financing
Transaction;
- Provide litigation support to the Company in the Chapter 11
Case, as necessary, in connection with a Financing
Transaction; and
- Assist in the closing of a Financing Transaction.
(3) SALE TRANSACTION
As directed by the Company, SSG, on a best efforts basis, will act
as exclusive financial advisor regarding a Sale Transaction.
Specifically, SSG will provide the following services regarding the
Sale Transaction:
- Identify appropriate prospective purchasers for some or all of
the Company's assets or businesses;
- Facilitate the due diligence review of prospective purchasers
in connection with a Sale Transaction;
- Assist the Company in structuring a competitive bidding
process for the solicitation of offers from prospective
purchasers;
- Advise and assist the Company in structuring the transaction
and negotiating the transaction agreements;
- Advise and assist the Company in conducting an auction, if
appropriate, concerning the sale of some or all of its assets
or businesses;
- Provide litigation support to the Company in the Chapter 11
Case, as necessary, in connection with a Sale Transaction; and
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August 11, 2004
Page 3
- Assist in the closing of a Sale Transaction.
In performing the service described above, you agree to furnish or
cause to be furnished to SSG such information as SSG reasonably
believes appropriate to the execution of its engagement hereunder
(all such information so furnished being the "Information"). The
Company represents that all Information furnished by you or your
agents will be complete and correct in all material respects, to the
best of your knowledge, and that until the expiration of SSG's
engagement hereunder, you will advise SSG immediately of the
occurrence of any event or any other change known by you or your
agents which results in the Information ceasing to be complete and
correct in all material respects. The Company recognizes and
confirms that SSG (a) will use and rely primarily on the Information
and on information available from generally recognized public
sources in performing the services contemplated hereby without
having independently verified any of the same, (b) does not assume
responsibility for accurateness or completeness of the Information
and such other information, and (c) will not make an appraisal of
any of the assets or liabilities of the Company.
B. SSG'S COMPENSATION
SSG's fees for acting as investment banker to the Company will consist of
the following:
(1) MONTHLY FEES
The Company shall pay SSG monthly fees (the "Monthly Fees") in accordance
with the following schedule:
First Monthly Fee $25,000. Payable (i) $10,000 in cash upon
entry of the Retention Order (as hereafter
defined) and (ii) $15,000 accrued and payable
on the Termination Date (as hereafter
defined).
Second Monthly Fee $25,000. Payable (i) $17,500 in cash upon the
first monthly anniversary of this Engagement
Agreement (or, if the Retention Order has not
then been entered, upon entry of the Retention
Order) and (ii)$7,500 accrued and payable on
the Termination Date.
All Monthly Fees Thereafter $25,000. Payable in cash on the monthly
anniversary of this Engagement Agreement.
(2) FINANCING FEES
DIP Financing. Upon the closing of a Financing Transaction involving the
placement or refinancing of debt or equity to be utilized by the Company
during the Chapter 11 Case
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August 11, 2004
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and prior to its emergence from bankruptcy (a "DIP Financing"), the
Company shall pay SSG a cash fee (the "DIP Financing Fee") equal an amount
calculated based on the following schedule: (a) 2.0% of all Senior Debt
(as hereafter defined) raised, plus (b) 4.0% of all Junior Secured Debt
(as hereafter defined) raised, plus (b) 6.0% of all Subordinated Debt
and/or Equity (as hereafter defined) raised.
Exit Financing. Upon the closing of a Financing Transaction involving the
placement or refinancing of debt or equity for use by the Company upon its
emergence from the Chapter 11 Case (an "Exit Financing"), the Company
shall pay SSG a cash fee (the "Exit Financing Fee") equal the greater of
(a) $300,000 or (b) an amount calculated based on the following schedule:
(a) 2.0% of all Senior Debt (as hereafter defined) raised, plus (b) 4.0%
of all Junior Secured Debt (as hereafter defined) raised, plus (b) 6.0% of
all Subordinated Debt and/or Equity (as hereafter defined) raised;
PROVIDED, HOWEVER, THAT THE EXIT FINANCING FEE SHALL BE REDUCED BY THE
FULL AMOUNT OF ANY (x) MONTHLY FEES AND (y) DIP FINANCING FEE ACTUALLY
PAID BY THE COMPANY AND RECEIVED BY SSG. For purposes of clarity, nothing
herein shall be construed to mean that a DIP Financing Fee, as defined
above, shall be construed as an Exit Financing.
The DIP Financing Fee or Exit Financing Fee (collectively, the "Financing
Fees"), as applicable, shall be due and payable upon the closing of any
Financing Transaction that any entity or individual agrees to provide to
the Company, and the Company in its sole discretion chooses to accept. The
Financing Fees shall be payable in cash, in federal funds via wire
transfer or certified check, at, and as a condition of, closing of such
Financing Transaction regardless of whether the Company chooses to draw
down the full amount of the committed financing at that time
(3) SALE FEE
Upon the closing of a Sale Transaction, the Company shall pay SSG a cash
fee (the "Sale Fee") equal to the greater of (a) $300,000 (or, with
respect to the parties listed on Schedule A hereto, $250,000 - in either
case, the "Minimum Fee") or (b) an amount equal to 3.0% of the Total
Consideration (as such term is defined below); PROVIDED, HOWEVER, THAT THE
SALE FEE SHALL BE REDUCED BY THE FULL AMOUNT OF ANY (x) MONTHLY FEES AND
(y) DIP FINANCING FEE ACTUALLY PAID BY THE COMPANY AND RECEIVED BY SSG.
THE MINIMUM FEE SHALL NOT APPLY TO A SALE OF LESS THAN ALL OR
SUBSTANTIALLY ALL OF THE COMPANY'S ASSETS OR OPERATIONS (TO ONE OR MORE
BUYER(s)) AND SHALL BE BASED ON THE AGGREGATE VALUE OF TOTAL CONSIDERATION
FOR ALL ASSET SALES. FOR PURPOSES OF THIS AGREEMENT "SUBSTANTIALLY ALL" OF
THE COMPANY'S ASSETS MEANS AND INCLUDES A SALE INVOLVING EACH OF THE
COMPANY'S OPERATING RETAIL OPTICAL CHAINS.
The Sale Fee shall be due and payable upon the closing of a Sale
Transaction that involves the sale or transfer, directly or indirectly, of
all or a significant portion of the assets or more than 49.9% of the
voting stock of the Company, or any other extraordinary corporate
transaction involving the Company involving a change of control, whether
by way of recapitalization, financial restructuring, consolidation,
negotiated purchase, or otherwise, or any combination of the foregoing, to
any party, whether pursuant to section 363 of the United States Bankruptcy
Code, a confirmed Plan in the Chapter 11 Case, or otherwise. The Sale Fee
shall be payable in cash, in federal funds
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August 11, 2004
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via wire transfer or certified check, at, and as a condition of, closing
of such Sale Transaction.
(4) In the event that a particular transaction could be construed as
obligating the Company to pay SSG both an Exit Financing Fee and a
Sale Fee, the Company shall pay SSG whichever of such fees is
greater (as calculated above), but not both.
(5) In addition to the foregoing fees, the Company shall reimburse SSG,
on a monthly basis, for all reasonable out-of-pocket expenses
incurred by SSG in connection with its duties under this Engagement
Agreement during the Engagement Term.
C. DEFINITIONS
For the purpose of this Engagement Agreement:
SENIOR DEBT means (1) funds received or to be received by the Company or
any entity acquired, controlled by, or under common control with the
Company, in the form of revolving credit facilities, notes, term loans,
lines of credit, offering lines, purchase and sale of accounts receivable
facilities, or any other type of credit facility, for which the Company or
any entity acquired, or controlled, by or under common control with the
Company, is obligated to repay the funds on a fixed schedule with interest
on the unpaid balance thereof at a fixed interest rate or a floating
interest rate, without any profit participation or yield enhancement as a
return on the repayment of the funds received by the Company, or any
entity acquired, or controlled by, or under common control with the
Company and (2) for which the lender may have a claim to or senior
security interest in the assets of the Company, or any entity acquired, or
controlled by, or under common control with the Company, superior or prior
to the claim of the holders of any Junior Secured Debt.
JUNIOR SECURED DEBT means funds (1) received or to be received by the
Company, or any entity acquired, controlled by, or under common control
with the Company, for which the Company or any entity acquired, controlled
by, or under common control with the Company is obligated to repay on a
fixed schedule with interest on the unpaid balance therefore at a fixed
interest rate or a floating rate and (2) for which the lender may have a
claim to or security interest in the assets of the Company, or any entity
acquired, or controlled by, or under common control with the Company,
junior to the claims of the holders of Senior Debt.
SUBORDINATED DEBT means (1) funds received or to be received by the
Company, or any entity acquired, controlled by, or under common control
with the Company, for which the Company or any entity acquired, controlled
by, or under common control with the Company is obligated to repay on a
fixed schedule with interest on the unpaid balance therefore at a fixed
interest rate or a floating rate and (2) (a) for which the lender does not
have a claim to or security interest in the assets of the Company, or any
entity acquired, controlled by, or under common control with the Company
or (b) for which part of the overall return to the investor on these funds
is anticipated to consist of a participation in the profits of the Company
and/or some other type of income enhancement (whether realized through
equity warrants conversions of the debt to equity, or otherwise) that has
the effect of raising the overall return on these funds to the investors
above the level that could be realized solely due to the receipt of stated
interest income.
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August 11, 2004
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EQUITY shall include, but not be limited to, common stock preferred stock,
convertible stock, and the proceeds from any joint venture agreement,
including contributions by a joint venture partner involving cash, stock,
property, plant and equipment or any other assets, or asset sale.
TOTAL CONSIDERATION shall mean the amount paid (in cash, debt or equity
securities, or otherwise) for the stock or assets, or any portion of
either, of the Company. For purposes of this Engagement Agreement, Total
Consideration shall also include (1) the assumption or payoff of
indebtedness existing on the Company's balance sheet as of the closing of
a Sale Transaction and (2) any consideration payable under consulting
agreements and/or non-competition agreements and for salaries and bonuses
paid by the buyer in a Sale Transaction (but not salaries or bonuses paid
by the Company or the estate) in excess of salaries and bonuses as of the
time of the closing of the Sale Transaction. In the event that the
consideration is paid in whole or in part in the form of securities of the
acquiring entity, the value of such securities, for the purpose of
calculating the Sale Fee, shall be the market value thereof as of the date
of the purchase agreement. If such aggregate consideration may be
increased by contingent payments such as an "earnout" or other monetary
agreement in the transaction, the portion of SSG's fee relating thereto
shall be calculated and paid when and as such contingent payments or other
monetary amounts are paid.
D. TERM OF ENGAGEMENT
This Engagement Agreement may be terminated by either party upon 30 days
written notice to the other (the date on which the Engagement Agreement
terminates, the "Termination Date"). Upon the termination of the
Engagement Agreement, neither party shall have any further obligations to
the other, except that (1) termination of the Engagement Agreement shall
not affect SSG's right to indemnification under the Indemnification
paragraph below, (2) the Company shall remain obligated to pay any accrued
but unpaid Monthly Fees through the date of such termination (pro rated,
as appropriate), (3) the Company shall remain obligated to reimburse any
accrued expenses of SSG prior to the termination date, and (4) if the
Company closes a Sale Transaction or a Financing Transaction with one or
more Identified Parties (as hereafter defined) within 8 months of the
termination of the Engagement Agreement, it shall remain obligated to pay
SSG a Sale Fee or a Financing Fee, as applicable.
As used herein, the term "Identified Parties" shall mean and include any
person or entity that SSG contacted in connection with a Financing
Transaction or Sale Transaction prior to the Termination Date. For
purposes of clarity, SSG shall provide the Company a list of Identified
Parties within 10 business days following the Termination Date. Unless the
Company objects to any of the persons or entities identified therein
within 10 business days of its receipt of such list, such list will be
conclusively presumed to reflect the Identified Parties.
E. INDEMNIFICATION
The following provisions regarding indemnification, contribution and
related matters have been agreed to by the Company and SSG.
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August 11, 2004
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1. Except as provided in the last sentence of this paragraph, the
Company shall indemnify and hold harmless SSG, and its partners,
officers, agents, employees and affiliates (collectively,
"indemnitees") from and against all losses, claims, judgments,
liabilities, costs, damages and expenses, including reasonable
attorneys' fees (collectively "Claims"), that SSG may incur and
which are based upon, or arise out of, any services that SSG
provides to the Company as its agent and financial advisor in
connection with the services that SSG provides, pursuant to this
Engagement Agreement. The Company shall defend any Claim asserted
against SSG through counsel reasonably satisfactory to SSG, which
with SSG's approval may be the Company's counsel. The Company shall
pay SSG's fees and expenses, including counsel fees, as they are
incurred in defending any such Claim, and SSG shall repay the
Company for any costs and expenses advanced by the Company pursuant
to the preceding sentence, in a case where it has been determined in
a final judgment by a court of competent jurisdiction (not subject
to further appeal) that the Claim resulted from the gross negligence
or willful misconduct of SSG.
2. If for any reason the foregoing indemnity is unavailable to the
indemnitees or insufficient to hold them harmless, the Company shall
contribute to the amount paid or payable by the indemnitees as a
result of the Claim in such proportion as is appropriate to reflect
not only the relative benefits received by the Company on the one
hand and the indemnitees on the other, but also the relative fault
of the Company and the indemnitees, as well as any relevant
equitable considerations. In no event shall the aggregate
contribution of the indemnitees to all Claims exceed the amount of
fees actually received by the indemnitees pursuant to the engagement
letter. The parties further agree that the relative benefits to the
Company on the one hand and the indemnitees on the other with
respect to any Financing contemplated by the engagement letter shall
be deemed in the same proportion as (i) the total value the
Financing bears to (ii) the fees paid to SSG with respect to the
Financing.
3. SSG shall not have any liability to the Company or any other person
in connection with the services performed by SSG pursuant to the
engagement letter (whether direct or indirect, in contract or tort
or otherwise) except for any liability for losses, claims, damages
or liabilities that is found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have
resulted from the gross negligence or willful misconduct of SSG.
4. The Company shall not 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 from
the Company by SSG or any bother of the indemnitees (whether SSG is
any actual or potential party to the claim, action, suit or
proceeding) unless such settlement, compromise or consent includes
an unconditional release of SSG and all other indemnities from all
liability arising out of the claim, action, suit or proceeding.
5. The provisions hereof shall survive any termination or completion of
the engagement set forth in the engagement letter.
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OTHER MATTERS
The parties acknowledge that all of their respective rights and obligations
pursuant to this Engagement Agreement remain subject to the entry of an order
(the "Retention Order"), acceptable in form and substance to each party in their
respective discretion, approving the terms set forth herein. The Company shall
use its best efforts to cause the Retention Order to provide, among other
things, that SSG's right to receive the compensation and reimbursement of
expenses set forth herein shall (a) constitute an administrative claim in the
Chapter 11 Case and (b) be payable as a "carve out" from the collateral of any
secured lender in the Chapter 11 Case. The Company shall promptly seek approval
of the Retention Order.
SSG shall have the right to place advertisements in financial and other
newspapers and journals at its own expense describing its services to the
Company hereunder to the extent that such services have been publicly disclosed
in the Chapter 11 Case. No public disclosures or press releases in connection
with a transaction are to be made mentioning SSG without SSG's prior consent.
Xxxxxxxx X. Xxxxxxx shall be the SSG professional who shall have primary
responsibility for providing services pursuant to this Engagement Agreement.
Any amendment, modification or other changes to this Engagement Agreement must
be in writing and signed by both parties to be enforceable.
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August 11, 2004
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Please indicate your acceptance of the foregoing by executing and returning the
enclosed copy of this letter.
SSG CAPITAL ADVISORS, L.P.
By: Xxxxxx, XxXxxxxx, Xxxxxxx, Xxxxxx Securities Corporation,
General Partner
By: /s/ XXXXXXXX XXXXXXX
____________________________ --------------------------
Xxxx X. Xxxxxx Xxxxxxxx Xxxxxxx
President Managing Director
ACCEPTED:
SIGHT RESOURCE CORPORATION
By: /s/ XXXX X XXXXXX
----------------------------
Date 10/1/04
Name: XXXX X XXXXXX
Its: PRESIDENT
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SCHEDULE A
Vision Point I & II
000 Xxxx Xxxxx Xx.
Valparaiso, Indiana 46385
Rodenstock North America
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Sequel Management LLC
000 Xxxxxxxx Xxx.
4th Floor
Boston, Massachusetts 02118
Palisade Capital Management LLC
Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx Xxx, Xxx Xxxxxx 00000
