Exhibit 10.1
March
7, 2017
|
Grandparents.com,
Inc.
Attn:
Clement S. Dwyer, Jr. and Andrew Foote
Independent
Committee of the Board of Directors of
Grandparents.com
589
Eight Avenue, 6th Floor
New
York, New York 10018
|
Re:
Grandparents.com,
Inc.
Retention of The Rising Group Consulting, Inc. for Restructuring
and Bankruptcy Services
Dear
Mr. Dwyer & Mr. Foote:
This
letter agreement (the “Agreement”) confirms the terms
and conditions of the engagement of The Rising Group Consulting,
Inc. (“TRGC”) by Grandparents.com, Inc. and its
subsidiaries, American Grandparents Association LLC, Grandparents
Insurance Solutions LLC, Grand Card LLC, and Grandcorps LLC
(collectively, “Client Group”) to employ Joshua Rizack
(“Rizack”) TRGC’s Senior Managing Director, as
the Chief Restructuring Officer to Client Group as more fully set
forth herein.
1. SERVICES TO BE
PROVIDED.
We have been informed that the Board of Directors of Client Group
is exploring options to restructure the capital structure of Client
Group or engage in a transaction to sell all or substantially all
of Client Group's assets. In connection with these activities, you
have requested us to provide the following professional services
upon adoption of a resolution by the Board of Directors of the
Client Group so providing, Rizack will be appointed as the Chief
Restructuring Officer (“CRO”) of the Client Group and shall serve in
that capacity subject to the oversight, guidance, control and
direction of the Board of Directors and at such Board’s
pleasure, to perform the following functions:
(1)
Advise and assist
management in evaluating and challenging the Client Group’s
short-term cash flow projections, including underlying
assumptions.
(2)
Direct the Client
Group in the operation of its business..
(3)
Prepare operating
reports in the Chapter 11 case as required by applicable bankruptcy
rules and US Trustee Guidelines.
(4)
Prepare a debtor in
possession financing budget in the Chapter 11 case and negotiate
the terms of any financing.
606
POST ROAD EAST, 614
WESTPORT CT
06880
TELEPHONE: (203)
227-4115 EMAIL:
JRIZACK@THERISINGGROUP.COM
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(5)
Evaluate and
formulate the Client Group’s business plan, including
underlying assumptions. Such business plan will be used as a basis
for developing capital restructuring alternatives.
(6)
Advise in
developing long-term capital restructuring
alternatives.
(7)
Negotiate and
implement Client Group’s selected capital restructuring plan
with various creditors and other parties in interest, as
necessary.
(8)
Advise and assist
the Client Group regarding contingency planning including planning
for a chapter 11 proceeding if required.
(9)
If required, direct
the Client Group in its Chapter 11 proceeding, including retaining
financial advisors, accountants and other professionals as
necessary.
(10)
If required,
institute and prosecute all legal proceedings necessary, including,
but not limited to, turnover, preferences, and/or fraudulent
conveyance actions in order to recover property of the
Estate
(11)
Periodically
provide information deemed by the CRO to be reasonable and relevant
to the Client Group and its member and/or managers to apprise them
of the status and progress of the CRO’s
activities.
(12)
Such other services
as you request and we agree to perform.
In
addition to the specific services listed above that we will
perform, we understand that we may participate, at your request and
to the extent we deem appropriate, in meetings and discussions with
Client Group, the investors, other creditor constituencies, and
with their respective professionals.
Our
work will be performed on a “level-of-effort” basis;
that is, the depth of our analyses and extent of our authentication
of the information on which our advice to you will be predicated
may be limited in some respects due to the extent and sufficiency
of available information, time constraints dictated by the
circumstances of our engagement and proposed staffing, and other
factors. Moreover, we do not contemplate examining any such
information in accordance with generally accepted auditing or
attestation standards. Rather, it is understood that, in general,
we are to rely on information disclosed or supplied to us by
employees and representatives of Client Group without audit or
other detailed verification of their accuracy and
validity.
Our
work commenced as of March 9, 2017, prior to the filing of the
Chapter 11 petitions by the Client Group, and all of such work
shall be governed by the terms hereof.
It is
our intention to work closely with you and your advisers throughout
our engagement. Regular discussions with you of our engagement
should facilitate our progress and provide you with relevant
information and an ongoing opportunity to confirm or request that
we modify the scope of our engagement to best serve your
objectives.
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March
7, 2017
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3
In
order for us to perform our services, it will be necessary to have
access to Client Group’s facilities and to certain books,
records and reports of Client Group, as well as of those of the
management companies that manage the Client Group’s assets
(the “Management
Companies”). In addition, we will need to have
discussions with Client Group and Management Companies management,
and certain other personnel. We will use commercially reasonable
efforts to perform our services in a manner that will permit the
business operations of Client Group to proceed in an orderly
fashion, subject to the requirements of this engagement. We
understand that Client Group and the Management Companies have
agreed to cooperate with our personnel and to make available to us
its personnel and its books, records and other data sources
relevant to our needs.
We will
submit, to the extent we deem necessary, periodic oral and/or
written reports summarizing our evaluations and analyses based on
our work pursuant to this engagement letter to the extent
reasonably requested from time to time. Our reports will encompass
only matters that come to our attention in the course of our work
that we perceive to be significant in relation to the objectives of
our engagement. However, because of the time and scope limitations
implicit in our engagement and the related limitations on the depth
of our analyses and the extent of our verification of information,
we may not discover all such matters or perceive their
significance. Accordingly, we will be unable to and will not
provide assurances in our reports concerning the integrity of the
information used in our analyses and on which our findings and
advice to you may be based. In addition, we will state that we have
no obligation to and will not update our reports or extend our
activities beyond the scope set forth herein unless you request and
we agree to do so.
TRGC
shall not perform, directly or indirectly, solicitation services in
connection with any transaction providing for the exchange of any
security between Client Group and any third party.
2. TERM.
Client
Group may terminate this engagement hereunder at any time without
cause by giving TRGC written notice accompanied by payment of any
unpaid fees, reimbursement of expenses or indemnification payments
due as of the time of such termination.
Rizack
and TRGC may resign upon written notice to Client Group and such
resignation shall, effective as of the date thereof, relieve Rizack
and TRGC of any further duties hereunder. Notwithstanding the
foregoing, the obligations of Client Group under paragraph 5 hereof
shall survive the termination of this agreement and the completion
of TRGC engagement and shall remain in full force and
effect.
The
term of this agreement shall be until the effective date of a plan
of reorganization in the Chapter 11 case except as set forth
above.
3. FEES.
(a) In consideration
for TRGC using commercially reasonable efforts to perform the
services to be provided pursuant to Section 1, Client Group shall
pay TRGC based on the fees below:
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(b) i) Monthly fee of
$25,000 per month and;
ii)
Success Fee – A success fee will be payable in cash upon
consummation of any arrangement (contractual, non-contractual, or
pursuant to a plan of reorganization) where all or a material
portion of the Client Group’s existing debt or capital
structure is amended, restructured or reconfigured on terms
acceptable to the Client Group (e.g., interest-rate, amortization,
dilution of existing equity holders, issuance of new equity,
exchange of old indebtedness for new indebtedness, etc.)
(collectively, a “Restructuring Transaction”) or
pursuant to a sale of all or substantially all of the assets or
equity securities of the Company (collectively, a "Sale
Transaction"). The term “Restructuring Transaction”
shall mean any recapitalization or restructuring (including,
without limitation, through any exchange, conversion, cancellation,
forgiveness, retirement and/or a material modification or amendment
to the terms, conditions or covenants thereof) of the Client
Group’s preferred equity and/or debt securities and/or other
indebtedness or obligations (including lease obligations, trade
credit facilities and/or tort obligations), including pursuant to a
repurchase or an exchange transaction, a plan or solicitation of
consents, waivers, acceptance or authorizations. The term
“Sale Transaction” shall mean any sale involving all or
substantially all of the assets or equity securities of one or more
entities comprising the Company, through a sale under section 363
of the Bankruptcy Code or otherwise. The fee for the Restructuring
Transaction shall be equal to $200,000 (the "Restructuring Success
Fee"). The fee for the Sale Transaction shall be equal to the total
of $125,000 (the "Sale Success Fee"). If the Client Group
announces, consummates or enters into an agreement with respect to
one or more Restructuring or Sale Transactions during the term of
this engagement or during the Tail Period, then the Client Group
shall pay TRGC, immediately upon consummation, a non-refundable
cash fee, equal to the Restructuring Success Fee or Sale Success
Fee, as the case may be.
If, at
any time prior to 12 months after the cessation of services
performed by TRGC under this engagement, a restructuring is
consummated, whether or not the Client Group has then engaged the
services of another professional, TRGC will be entitled to payment
in full of the compensation described in the above contingent fee
paragraph. The right to receive the success fee for the period of
12 months shall continue even if the Client Group has terminated
this engagement (the "Tail Period").
If
needed, Associates will be billed at $250 per hour and support
personnel at $100 - $150 per hour.
A
retainer in the amount of Fifty thousand dollars ($50,000) will be
due upon signing of this agreement.
In
addition to the fees above, if TRGC determines that additional
staff is necessary (in addition to Mr. Rizack), it may engage
additional consultants and assign them to this project. The
additional fees for the services of such additional consultants set
forth above will be based on the hours charged at TRGC’s
standard hourly rates that are in effect when the services are
rendered; TRGC’s rates generally are revised
semi-annually.
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7, 2017
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Without
limiting the foregoing, Client Group acknowledges that (i) no
results have been guaranteed or represented by Rizack or TRGC to
Client Group, (ii) TRGC is not obligated to produce any specific
deliverables, and (ii) the sole obligation of TRGC hereunder is to
make Joshua Rizack reasonably available to perform services as CRO
that TRGC deems necessary or appropriate during the term of this
engagement.
TRGC
will be required to apply to the Court for the payment of
compensation for services rendered and reimbursement of actual and
necessary documented out-of-pocket expenses, in accordance with
applicable provisions of the Bankruptcy Code, the Bankruptcy Rules,
the guidelines promulgated by the Office of the U. S. Trustee, the
Local Rules for the United States Bankruptcy Court for the District
where any Bankruptcy Case is commenced (the "Local Rules") and
orders of the Bankruptcy Court, and pursuant to any additional
procedures that may be established by the Bankruptcy Court for
these particular cases. Client Group will use its best efforts to
seek Bankruptcy Court authority to compensate TRCG on a monthly
basis upon the submission of monthly fee statements to Bankruptcy
Court without the need to file detailed quarterly fee
applications.
Client
Group shall seek Bankruptcy Court authority to retain TRGC pursuant
to the terms of this agreement and NUNC PRO TUNC TO the date the
Client Group’s petitions are filed. For the avoidance of
doubt, this Agreement is effective prior to the filing of the
Chapter 11 petitions and the Bankruptcy Court approval is only
necessary for the post-petition term of this
Agreement.
4. EXPENSE
REIMBURSEMENT.
Subject
to the last sentence of this section 4, in addition to the fees
payable under Section 3, Client Group shall reimburse TRGC for all
reasonable out-of-pocket expenses in connection with this
Agreement.
Reasonable
out-of-pocket expenses include, but are not limited to, telephone,
telefax, printing, courier service, accommodations and travel.
Reimbursement by Client Group of out of pocket expenses are subject
to TRGC providing a written itemization of such
expenses.
5. INDEMNIFICATION &
CONFIDENTIALITY.
Client
Group shall indemnify and hold harmless TRGC, and its personnel,
agents, officers members, successors and assigns from any and all
third party claims, liabilities, damages, losses, costs, and
expenses, including reasonable expenses and attorney’s fees
(collectively, “Losses”), relating to the services
under this Agreement, except to the extent that it is judicially
determined by a final order of a court of competent jurisdiction
that such Losses directly resulted from the gross negligence or
willful misconduct of Rizack or TRGC.
Throughout
the term of TRGC’s engagement, TRGC shall have in effect its
own errors & omission liability insurance providing for
aggregate coverage in an amount not less than $2,000,000.00 and
upon terms satisfactory to Client Group covering TRGC and its
employees, agents and representatives in all matters relating to
Client Group. Such insurance shall have “tail” or
continuation coverage upon cancellation or termination satisfactory
to Client Group. As an officer of the Client Group, Client Group
shall use its best efforts to add Rizack to Client Group's
director’s and officer’s liability policies, which
shall serve as primary director's and officer's liability coverage
for Rizack.
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In no
event shall TRGC be liable to Client Group, for any loss, damage,
cost or expense attributable to any act, omission or
misrepresentations by Client Group, its directors, employees or
agents.
Client
Group agrees that under no circumstances will TRGC or its
employees, agents, representatives, members or personnel
(collectively “Representatives”) be liable to Client
Group or its agents, equity holders, officers or directors, or any
third party, for any claims, liabilities, damages, losses or
expenses (collectively with those Losses defined above, the
“Losses”) relating to this engagement pursuant to this
engagement, except to the extent a final non-appealable order of a
Court of competent jurisdiction finds TRGC directly liable for
gross negligence or willful misconduct which caused such Losses,
and in no event shall TRGC’s aggregate liability to Client
Group and/or third parties exceed the amount of fees Client Group
paid to TRGC during the term of the engagement contemplated hereby.
In no event will TRGC or its Representatives be liable for
consequential, special, indirect, incidental, punitive or exemplary
loss, damages or expenses relating to this engagement. These
indemnification provisions and limitations of liability extend to
the Representatives of TRGC (it being understood that, in the
absence of gross negligence or willful misconduct by any such
individual, there shall be no recourse to such
individuals).
The
obligations of Client Group and TRGC under this section shall be in
addition to any other obligations which Client Group and TRGC may
otherwise have and shall be binding upon you and inure to the
benefit of any successors, assigns, heirs, affiliates, and personal
representatives of Client Group or TRGC. The foregoing provision
shall survive any termination or expiration of our engagement
hereunder and the filing of any bankruptcy proceeding under chapter
7 or chapter 11 of the Bankruptcy Code.
TRGC
agrees to hold all Confidential Information in strict confidence
and trust for the sole benefit of Client Group and not to, directly
or indirectly, disclose, use, copy, publish, summarize, or remove
any Confidential Information from Client Groups’ premises,
except (i) during the term of this Agreement TRGC may use the
Confidential Information to the extent necessary to carry out
CRO’s responsibilities under this Agreement, and (ii) as
specifically authorized in writing by the Client Group, and (iii)
as required by legal process, including any subpoena.
“Confidential Information” shall mean all Client Group
proprietary information, technical data, trade secrets, know-how
and any idea in whatever form, tangible or intangible, including
without limitation, research, product plans, customer lists,
markets, computer software, computer programs, developments,
inventions, discoveries, processes, formulas, algorithms,
technology, designs, drawings, marketing and other plans, business
strategies and financial data and information, including but not
limited to creations, whether or not marked as
“Confidential.” “Confidential Information”
shall also mean information received by Client Group from customers
of Client Group or other third parties subject to a duty to keep
confidential.
Confidential
Information shall not include any document or thing that is, (a)
other than as a result of violation of this agreement by TRGC,
publicly filed, (b) other than as a result of violation of this
agreement by TRGC, part of any public filing, (c) other than as a
result of violation of this agreement by TRGC, made available to
the public, (d) other than as a result of violation of this
agreement by TRGC, placed in the public domain, (e) independently
developed or discovered by TRGC, (f) disclosed to TRGC at any time
by any party having no obligation of confidentiality with respect
to such Confidential Information, or (g) required to be disclosed
to comply with applicable laws or regulations, or with a subpoena,
court or administrative order or other process.
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NEW YORK LAW TO GOVERN.
This
agreement shall be governed by the laws of the state of New York
and may not be amended or modified except as agreed upon in writing
by both parties.
6. SURVIVAL.
The
limitation on liability, confidentiality, compensation,
jurisdiction and trial provisions contained in this engagement
letter shall survive the completion or termination of this
engagement.
7. E-MAIL
COMMUNICATIONS.
In
connection with this engagement, we may communicate with you or
others via e-mail transmission. As e-mails can be intercepted and
read, disclosed, or otherwise used or communicated by an unintended
third party, or may not be delivered to each of the parties to whom
they are directed and only to such parties, we cannot guarantee or
warrant that e-mails from us will be properly delivered and read
only by the addressee. You agree that we shall have no liability
for any loss or damage to any person or entity resulting from the
use of e-mail transmissions.
8. EXCLUSIONS.
This
engagement does not include any services not specifically
identified in this Agreement or, to the extent payment is made to
cover services rendered during specific periods of time, services
performed at any other time. Any additional services requested by
you will be subject to a separate written understanding before the
additional services are commenced and billed at our standard hourly
rates.
9. DISTRIBUTIONS OF
REPORTS.
Any
analysis, conclusions and any reports we may elect to provide are
for your use solely to assist you in the above-referenced matter.
They are not to be used for any other purpose, or disseminated to
any other party for any purpose, without our express written
consent. Any summary of, or reference to any oral presentation we
make, or other references to TRGC in connection with the matter,
will be, in each instance, subject to TRGC’s prior review and
written approval, except as may be required by a governmental
agency or court. Any communications or reports from us will not be
included in, summarized or referred to in any manner in any
materials distributed to the public or any third party without
TRGC’s express prior written consent.
10. GENERAL.
(1)
Authority, The CRO shall be authorized
and empowered to execute by himself on behalf of and bind Client
Group with respect to all contracts or agreements entered into or
terminated by Client Group, all pleadings and motions filed with
the Bankruptcy Court, including without limitation all loan
documents and pleadings in connection with any Debtor in Possession
financing, all documents concerning and sale or transfer if any
assets or property of Client Group and assumption and assignment of
executor contracts pursuant to an order of the Bankruptcy Court,
all documents necessary to implement or effectuate a plan of
reorganization for and all such other documents as the Bankruptcy
Court shall authorize or direct.
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(2)
Force Majeure. Neither party shall be
liable to the other for any delay or failure to perform any of the
Services or obligations set forth in this Agreement due to causes
beyond its reasonable control.
(3)
Partial Invalidity. If any provision of
this Agreement is determined to be invalid under any applicable
statue or rule of law, it is to that extent to be deemed omitted,
and the balance of the Agreement shall remain
enforceable.
(4)
Headings. The section headings used
herein are for reference and convenience only and shall not enter
into the interpretation hereof.
(5)
Independent Contractor. TRGC, in
furnishing services to Client Group, is strictly an independent
contractor. TRGC does not undertake to perform any regulatory or
contractual obligation of Client Group or to assume any
responsibility for Client Group’s business or operations.
Client Group agreed that Rizack will provide services as CRO as
required and agrees that the CRO will continue as Senior Managing
Director of TRGC and may continue to provide his services to other
clients during the term of this agreement.
(6)
Waiver. No waiver, delay or omission by
either party in exercising any right or power shall impair such
right or power or be construed to be a waiver. A waiver by either
party of any of the covenants to be performed by the other or any
breach thereof shall not be construed to be a waiver of any
succeeding breach or of any other covenant. No waiver or discharge
shall be valid unless in writing and signed by an authorized
representative of the party against whom such waiver or discharge
is sought to be enforced.
(7)
Entire Agreement. This agreement
supersedes all prior agreements made between the parties. This
agreement is the entire understanding of the parties thereto and no
amendment to this agreement shall be effective unless it is in a
writing executed by TRGC and Client Group.
(8)
Successors and Assigns. This Agreement
and all rights and obligations thereunder shall be binding upon and
inure to the benefit of each party’s successors, but may not
be assigned without the prior written consent of the other
party.
(9)
Counterparts. This engagement letter
may be executed in several counterparts, each of which shall be
deemed an original, and all of which shall together constitute one
and the same instrument.
(10)
Bankruptcy Court Approval. This
agreement may be subject to and conditioned upon the approval of
the Bankruptcy Court, which Client Group agrees to seek approval
promptly after any member of the Client Group files for
bankruptcy.
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Please
confirm that the foregoing is in accordance with your understanding
by signing and returning to TRGC the enclosed duplicate of this
Agreement.
|
|
The
Rising Group Consulting, Inc.
By:
/s/ Joshua
Rizack
Joshua
Rizack
President
|
Agreed
to and Accepted this
7th day
of March, 2017
GRANDPARENTS.COM
/s/ Clement S. Dwyer,
Jr.
By:
Clement
S. Dwyer,
Jr.
Its:
Chairman of the
Board
AMERICAN
GRANDPARENTS ASSOCIATION LLC
/s/ Clement S. Dwyer,
Jr.
By:
Its:
GRANDPARENTS
INSURANCE SOLUTIONS LLC
/s/ Clement S. Dwyer,
Jr.
By:
Its:
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7, 2017
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10
GRAND
CARD LLC
/s/ Clement S. Dwyer,
Jr.
By:
Its:
GRANDCORPS
LLC
/s/ Clement S. Dwyer,
Jr.
By:
Its: