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EXHIBIT 10.26
June 5, 2000
Board of Directors
Verdant Brands, Inc
9555 James Avenue South, Suite 200
Bloomington, MN 55431-2543
Dear Board of Directors:
This letter is to follow up our on-going discussions regarding our involvement
with Verdant Brands, Inc. ("Verdant" or "the Company"). As we have discussed,
Verdant is in an extremely precarious position. The company has continued to
miss its projections, has experienced significant losses, is in violation of
certain loan covenants and is currently unable to meet its financial obligations
to its trade creditors. There is a $2.1 million payment due to a large creditor
that the Company is unable to meet. Key employees have voluntarily left the
Company. The Company's senior secured lender has just completed its collateral
audit, which showed a significant lowering of the Company's collateral base,
threatening the Company's borrowing availability and cash flow. Verdant's
Chairman, CEO & President, Vice President of Finance and CFO are resigning their
board and officer positions. Simply put, the Company is in crisis.
To affect a workout of the current situation, Platinum Management, LLC
(Platinum) will provide the crisis management needed to carry out the
responsibilities of the office of Chairman & CEO, President & COO, CFO and
Controller for the company. The Company agrees to continue paying a weekly
retainer of $12,000.00 for fulfilling these responsibilities, subject to
periodic review and adjustment, based upon Platinum resources assigned to
Verdant. Verdant also agrees to pay Platinum for any out-of-pocket expenses that
may be incurred.
In addition to the above compensation, Verdant agrees to pay Platinum incentive
compensation based on the achievement of certain goals:
1. $50,000 for preventing the company from either voluntarily filing for
protection from its creditors under Chapter 11 of the Bankruptcy Act:
or from involuntarily being placed in Chapter 7 of the Bankruptcy Act
by its creditors.
2. 2% of the balance sheet change based on conversion of the Company's
accounts payable to subordinated debt and 3% of any balance sheet
change based on the conversion of accounts payable to equity.
3. $50,000 bonus if Verdant or any subsidiary raises at least
$1,000,000 in new, outside equity to support a going forward basis
business strategy (not including equity conversion of existing debt).
4. A fully vested, non-incentive stock option, (for 5years) to purchase
200,000 shares of the Company's common stock at an exercise price
determined by the average market price of the Company's common stock
for 30 days after the signing of this agreement.
In consideration for Platinum undertaking this assignment, the company agrees to
indemnify and hold harmless Platinum and its associates against all charges or
legal actions that may be taken against us while acting as interim management
and/or consultants to the Company, other than as to matters where Platinum or
its associates have been grossly negligent in their duties hereunder, or due to
fraud or malfeasance have breached their obligations to the Company under this
agreement.
Please countersign this agreement below and return it, keeping a copy for your
file. We look forward to working with you on this critically important project.
Very truly yours,
/s/ Dean Bachelor
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Managing Partner
/s/ Gordon Stofer
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For the Board of Directors
