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APPLICATION UNDER 11 U.S.C. SSSS 327(a) and 1107(b) to Approve the EMPLOYMENT and RETENTION of Gersten SAVAGE, LLP as attorneys for The Debtors. CPBR and its affiliated debtor, ClearPoint Resources, Inc. ("CPR") collectively with CPBR, the "Debtors" or "ClearPoint" file this Application pursuant to sections 327
APPLICATION UNDER 11 U.S.C. SSSS 327(a) and 1107(b) to Approve the EMPLOYMENT and RETENTION of Gersten SAVAGE, LLP as attorneys for The Debtors. CPBR and its affiliated debtor, ClearPoint Resources, Inc. ("CPR") collectively with CPBR, the "Debtors" or "ClearPoint" file this Application pursuant to sections 327
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APPLICATION UNDER 11 U.S.C. SSSS 327(a) and 1107(b) to Approve the EMPLOYMENT and RETENTION of Gersten SAVAGE, LLP as attorneys for The Debtors. CPBR and its affiliated debtor, ClearPoint Resources, Inc. ("CPR") collectively with CPBR, the "Debtors" or "ClearPoint" file this Application pursuant to sections 327
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Attribution Non-Commercial (BY-NC)
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Téléchargez comme PDF, TXT ou lisez en ligne sur Scribd
In re CLEARPOINT BUSINESS RESOURCES, INC., et al.,1 Debtors. Chapter 11 Case No. 10-12037 (Joint Administration Requested) APPLICATION UNDER 11 U.S.C. 327(a) and 1107(b), FED. R. BANKR. P. 2014 & 2016, AND BANKR. D. DEL. L.R. 2014-1 & 2016-1 TO APPROVE THE EMPLOYMENT AND RETENTION OF GERSTEN SAVAGE, LLP AS ATTORNEYS FOR THE DEBTORS ClearPoint Business Resources, Inc. (CPBR), and its affiliated debtor, ClearPoint Resources, Inc. (CPR), and collectively with CPBR, the Debtors or ClearPoint), file this Application, pursuant to sections 327(a) and 1107(b) of title 11 of the United States Code (as amended, the Bankruptcy Code), Rules 2014 and 2016 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules) and Rules 2014-1 and 2016-1 of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the Local Rules), to Approve the Employment and Retention of Gersten Savage LLP (Gersten Savage or the Firm) as attorneys for the Debtors nunc pro tunc to the Petition Date (as defined below). In support of this Application, the Debtors rely upon and incorporate by reference (a) the Declaration of Christine Doelp in Support of the Debtors Chapter 11 Petitions and First Day Pleadings (the Doelp Declaration), filed contemporaneously herewith, and (b) the
1 The Debtors, along with the last four digits of their federal tax identification numbers, are: ClearPoint Business Resources, Inc. (4371) and ClearPoint Resources, Inc. (9869). The Debtors mailing address for purposes of these cases is P.O. Box 3400. Easton, PA. 18045. Declaration of Paul Rachmuth (the Rachmuth Declaration), attached hereto as Exhibit A, and represent as follows: I. JURISDICTION AND VENUE 1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334 and 11 U.S.C. 327(a). This is a core proceeding pursuant to 28 U.S.C. 157. Venue is proper pursuant to 28 U.S.C. 1408 and 1409. 2. The statutory bases for the relief requested herein are sections 327(a) and 1107(b) of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016, and Local Rules 2014-1 and 2016-1. II. BACKGROUND 3. On this date (the Petition Date), each of the Debtors filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. The Debtors continue to manage and operate their business as debtors in possession pursuant to 1107 and 1108 of the Bankruptcy Code. The Debtors have filed a motion requesting that the Court jointly administer the Debtors bankruptcy estates. 4. An official committee of unsecured creditors has not been appointed in these Chapter 11 cases. Further, no trustee or examiner has been requested or appointed in any of these Chapter 11 cases. 5. A more complete discussion of the Debtors background is contained in the Declaration of Christine Doelp filed contemporaneously with the bankruptcy petitions and incorporated herein by reference. 6. ClearPoint was a provider of staffing services to businesses throughout the United States. CPBR was formed in Delaware on July 21, 2004. CPR, a wholly-owned subsidiary of CPBR, formerly known as Mercer Staffing, Inc. (Mercer), was formed in Delaware on January 1, 2005, as a holding company of its wholly owned subsidiaries consisting of, among others, Mercer Ventures Inc. (MVI) and Allied Contract Services, LLC (Allied). At that time, the owners of MVI and Allied exchanged their respective ownership interests for the common stock of Mercer. MVI, a Pennsylvania corporation, has been in existence since 2001. Allied, a Pennsylvania limited liability company, was formed in 2004 to acquire certain assets of New Staff, Inc. Mercer acquired 100% of common stock of Quantum Resources Corporation (Quantum) on July 29, 2005. Effective July 12, 2006, Mercer changed its name to ClearPoint Business Resources, Inc. and then after the merger (as described below), changed its name again to ClearPoint Resources, Inc. 7. On February 12, 2007, CPR merged with a wholly-owned subsidiary of Terra Nova Acquisition Corporation (Terra Nova), whereby as a result of the merger (the merger), stockholders of CPR received 6,051,549 shares of Terra Nova common stock and CPR became a wholly-owned subsidiary of Terra Nova. A certain percentage of shares of common stock issued by Terra Nova to CPRs stockholders is being held in escrow to secure the indemnity rights of Terra Nova under the merger agreement. The merger agreement also provides for the stockholders to receive additional performance payments in three separate annual payments based on the share price of Terra Novas common stock after the merger. The performance payments are payable in a combination of cash and shares. No such payments have been made to date and none are yet due. Upon the closing of the merger, Terra Nova changed its name to ClearPoint Business Resources, Inc. and its securities became listed on The NASDAQ Capital Market (symbol: CPBR). 8. Upon consummation of the merger, $30.6 million was released from a trust fund to be used by the combined company. After payments totaling approximately $3.3 million for professional fees and other direct and indirect costs related to the merger, the net proceeds amounted to $27.3 million. The merger was accounted for under the purchase method of accounting as a reverse acquisition in accordance with accounting principles generally accepted in the United States of America for accounting and financial reporting purposes. Under this method of accounting, Terra Nova was treated as the acquired company for financial reporting purposes. In accordance with guidance applicable to these circumstances, this merger was considered to be a capital transaction in substance. Accordingly, for accounting purposes, the merger was treated as the equivalent of CPBR issuing stock for the net monetary assets of Terra Nova, accompanied by a recapitalization. All historical share and per share amounts have been retroactively adjusted to give effect to the reverse acquisition of Terra Nova and related recapitalization. 9. On February 23, 2007, CPBR acquired certain assets and liabilities of ALS. The purchase price of $24.4 million consisted of cash of $19 million, a note of $2.5 million at an interest rate of 7% (the ALS Note), shares of CPBR common stock with a value of $2.5 million (439,367 shares) and the assumption of approximately $400,000 of current liabilities. 10. Prior to year 2008, ClearPoint provided various temporary staffing services as both a direct provider and as a franchisor. During the year ended December 31, 2008, ClearPoint sold or subcontracted all of its traditional staffing contracts and transitioned its business model from a temporary staffing provider through a network of branch-based offices or franchises to a provider that managed clients temporary staffing needs through its open Internet portal-based iLabor network. Under the new business model, ClearPoint acted as a broker for its clients and network of temporary staffing suppliers using iLabor. 11. On April 26,2010 ClearPoint sold its iLabor Network to MDT Tek, LLC., an entity owned and/or controlled by ClearPoints former Chief Executive Officer, Michael D. Traina, for a promissory note of $4,850,000, with payments of at least $50,000 per quarter beginning March 15, 2011 ending March 15,2018. 12. ClearPoint currently derives its revenues from royalty payments related to client contracts which ClearPoint subcontracted or sold to other providers of temporary staffing services. These consist of a perpetual franchise fee calculated at .75% of cash collected related to the sold contracts which averages approximately $35,000 per month and a subcontract fee of $250,000 per month for 28 months which ends on December 31,2010. 13. Due to a change in business environments, the Debtors entered into several agreements to transfer their business operations to several third parties. In exchange, the Debtors received royalty agreements, payment obligations and other contract rights (collectively, the Contract Rights). The revenue ClearPoint receives fromthe Contract rights is not sufficient to meet its obligations. 14. ClearPoints Board of Directors has considered the available alternatives, consulting with its advisors and has negotiated with ComVest Capital, LLC, ClearPoints secured lender (ComVest). As a result, it has determined that the best course of action for ClearPoint and its creditors and interest holders is for ClearPoint to voluntarily commence the instant chapter 11 Bankruptcy proceedings. Substantially contemporaneous with the commencement of the cases, the Debtors will move the Court for an Order authorizing it to conduct a sale of the Contract Rights. 15. Additional information regarding the Debtors business, capital structure, and the circumstances leading to these chapter 11 filings is described in the Doelp Declaration. III. PROPOSED ATTORNEYS FOR THE DEBTORS 16. The Debtors seek approval of the employment and retention of Gersten Savage as their attorneys in these bankruptcy cases, effective as of the Petition Date. 17. Section 327(a) of the Bankruptcy Code provides: the trustee, with the courts approval, may employ one or more attorneys . . . that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the trustee in carrying out the trustees duties under this title. 11 U.S.C. 327(a). 18. ClearPoint seeks to retain Gersten Savage for, in addition to others, the following reasons: a. Gersten Savage has extensive experience and knowledge in the field of debtors and creditors rights and business reorganizations under Chapter 11 of the Bankruptcy Code. Gersten Savage has expertise, experience, and knowledge practicing before bankruptcy courts in this and other districts throughout the country. Gersten Savages appearance before this Court for the matters in these Chapter 11 cases will be efficient and cost effective for the Debtors estates. b. Gersten Savage is a full-service law firm with experience and expertise in all other legal areas that will have an impact on the Debtors day-to-day operations and their reorganization under Chapter 11 of the Bankruptcy Code. 19. The Debtors contemplate that Gersten Savage will render specialized legal services to the Debtors as needed throughout these cases. Generally, the legal services that Gersten Savage will render may be summarized, in part, as follows: a. Advising the Debtors of their rights, powers and duties as debtors in possession under the Bankruptcy Code; b. Performing all legal services for and on behalf of the Debtors that may be necessary or appropriate in the administration of these bankruptcy cases and the Debtors businesses; c. Advising the Debtors concerning, and assisting in, the negotiation and documentation of financing agreements and debt restructurings; d. Counseling the Debtors in connection with the formulation, negotiation, and consummation of a possible sale of the Debtors or their assets; e. Reviewing the nature and validity of agreements relating to the Debtors interests in real and personal property and advising the Debtors of their corresponding rights and obligations; f. Advising the Debtors concerning preference, avoidance, recovery, or other actions that they may take to collect and to recover property for the benefit of the estates and their creditors, whether or not arising under Chapter 5 of the Bankruptcy Code; g. Preparing on behalf of the Debtors all necessary and appropriate applications, motions, pleadings, draft orders, notices, schedules, and other documents and reviewing all financial and other reports to be filed in these bankruptcy cases; h. Advising the Debtors concerning, and preparing responses to, applications, motions, complaints, pleadings, notices, and other papers that may be filed and served in these bankruptcy cases; i. Counseling the Debtors in connection with the formulation, negotiation, and promulgation of a plan of reorganization and related documents or other liquidation of the estates; j. Working with and coordinating efforts among other professionals to attempt to preclude any duplication of effort among those professionals and to guide their efforts in the overall framework of Debtors reorganization or liquidation; and k. Working with professionals retained by other parties in interest in this bankruptcy case to attempt to structure a consensual plan of reorganization, liquidation, or other resolution of the bankruptcy cases for Debtors. 20. By separate application, the Debtors are seeking to retain and employ the law firm of Bayard, P.A., Attn: Jamie L. Edmonson, 222 Delaware Avenue, Suite 900, Wilmington, DE 19801 (Bayard) as Delaware bankruptcy counsel to represent the Debtors in these Chapter 11 cases. Gersten Savage and Bayard will make every effort to avoid and minimize duplication of services in these cases. IV. GERSTEN SAVAGES DISINTERESTEDNESS 21. Gersten Savage was engaged by ClearPoint on May 7, 2010 to provide advice concerning financial restructuring, pre-bankruptcy and bankruptcy planning. 22. Gersten Savage has expended significant resources over the past few months working with ClearPoint to prepare for the filing of these cases. Over the last few months, Gersten Savage has become intimately familiar with ClearPoints business operations and financial affairs and many of the legal issues that will likely arise in the context of these Chapter 11 cases. If ClearPoint is forced to retain counsel other than Gersten Savage, the Debtors estates would incur additional expenses and delays associated with familiarizing new counsel with the intricacies of ClearPoints financial affairs and business. 23. To the best of ClearPoints knowledge, information and belief, and except as set forth on Schedule A annexed to the Rachmuth Declaration, Gersten Savage has no connection with ClearPoints creditors, parties in interest or affiliates, or attorneys or accountants for any of them, the United States Trustee, or any person employed in the Office of the United States Trustee. 24. To the best of ClearPoints knowledge based upon the Rachmuth Declaration, Gersten Savage does not represent or hold any interest adverse to the Debtors, their estates, creditors, equity security holders, or affiliates in the matters upon which Gersten Savage is to be engaged, and is a disinterested person within the meaning of section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code, and as required by section 327(a) of the Bankruptcy Code. V. COMPENSATION 25. Subject to Court approval, and in accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules and any applicable orders of this Court, the Debtors propose to pay Gersten Savage its customary hourly rates in effect from time to time as set forth herein, plus reimbursement of actual, necessary expenses incurred by Gersten Savage on the Debtors behalf. The following are Gersten Savages currently hourly rates for work of this nature: Partners $525 to $650 Associates $350 to $450 Paraprofessionals $250 26. Consistent with historical firm practice, the hourly rates set forth above are subject to adjustments on January 1st of each year (beginning January 1, 2011) to reflect economic and other conditions (subject to client approval and Court approval, if necessary). 27. Gersten Savage will comply with the requirements of this Court, the Bankruptcy Code, the Bankruptcy Rules and the Local Rules with respect to fee and expense applications of professionals employed by bankruptcy estates. 28. Prior to the petition date, Gersten Savage received a retainer in the amount of $120,000 for work to be performed by the Firm. $57,607.50 of the retainer was applied to prepetition invoices prior to the filing of the bankruptcy cases. Accordingly, Gersten Savage currently holds $62,392.50 a retainer for the postpetition engagement. Gersten Savage was not a creditor of the Debtors when the bankruptcy petitions were filed. Except as set forth herein, Gersten Savage has never been counsel for the Debtor, or otherwise received payment for services related thereto. 29. No promises have been received by Gersten Savage, nor any partner, counsel, nor associate thereof, as to compensation in connection with this case other than in accordance with the provisions of the Bankruptcy Code. Gersten Savage has no agreement with any other entity to share with such entity any compensation received by Gersten Savage in connection with these cases. 30. Gersten Savages compliance with the requirements of sections 327, 329, 330, and 504 of the Bankruptcy Code, Bankruptcy Rules 2014 and 2016, and the Local Rules 2014-1 and 2016-1 is set forth in detail in the Rachmuth Declaration. VI. NOTICE 31. No trustee, examiner or creditors committee has been appointed in these chapter 11 cases. Notice of the Motion has been provided to: (a) the United States Trustee; (b) those parties listed on the consolidated list of creditors holding the twenty (20) largest unsecured claims against the Debtors, as identified in their chapter 11 petitions; (c) counsel for ComVest; and (d) those parties who have requested notice in these cases pursuant to Bankruptcy Rule 2002. In light of the nature of the relief requested herein, the Debtors submit that no other or further notice is required. VII. CONCLUSION 32. No previous request for the relief sought herein has been made to this or any other Court. WHEREFORE, ClearPoint respectfully requests that the Court (i) approve this Application, (ii) authorize ClearPoint to employ and retain Gersten Savage as counsel in these Chapter 11 cases as requested in this Application, effective as of the Petition Date, and (iii) grant ClearPoint any other relief that is just and proper. Dated: Junedl, 2010 ClearPoint Business Resources, Inc. (for itself and on behalf of its affiliated Debtors and Debtors in Possession) By ffi.k4#, Name: 0/ltltr;Jo.) l)(ytP' Title: {':egr 10e ~ v -r 11 EXHIBIT A IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re CLEARPOINT BUSINESS RESOURCES, INC., et al.,1 Debtors. Chapter 11 Case No. 10-12037 (Joint Administration Requested) DECLARATION OF PAUL RACHMUTH IN SUPPORT OF APPLICATION UNDER 11 U.S.C. 327(a) and 1107(b), FED. R. BANKR. P. 2014 & 2016, AND BANKR. D. DEL. L.R. 2014-1 & 2016-1 TO APPROVE THE EMPLOYMENT AND RETENTION OF GERSTEN SAVAGE, LLP AS ATTORNEYS FOR THE DEBTORS I, PAUL RACHMUTH, hereby declare as follows under penalty of perjury: I. BACKGROUND 1. I am an attorney licensed to practice law in the State of New York and have been a member of good standing of the New York Bar since 1996. 2. I am a partner in the law firm of Gersten Savage, LLP (Gersten Savage or the Firm). My office address is 600 Lexington Avenue, New York, New York 10022. 3. Pursuant to 327, 329, 330, and 504 and Bankruptcy Rules 2014(a) and 2016(b), I make this Declaration and Disclosure of Compensation Pursuant to Bankruptcy Rule 2016 and 11 U.S.C. 329 (the Declaration) in Support of the Application Under Section 327(a) of the Bankruptcy Code to Approve the Employment and Retention of Gersten Savage as Attorneys for the Debtors (the Application).
1 The Debtors, along with the last four digits of their federal tax identification numbers, are: ClearPoint Business Resources, Inc. (4371) and ClearPoint Resources, Inc. (9869). The Debtors mailing address for purposes of these cases is P.O. Box 3400. Easton, PA. 18045. 2 II. GENERAL STATEMENT 4. Neither I nor Gersten Savage represent any interest adverse to any of the above- referenced debtors (ClearPoint or the Debtors), as required by 11 U.S.C. 327(a), 328(a), 329, and 504. Additionally, we are disinterested persons, as defined by 11 U.S.C. 101(14). 5. Except as set forth on Schedule A annexed hereto, neither I, Gersten Savage, nor any partner, counsel, or associate thereof, insofar as I have been able to ascertain, have any connection with ClearPoint or their creditors, the United States Trustee, persons employed in the United States Trustees office, or any other potential parties-in-interest herein, or their respective attorneys, except as set forth herein. I do not believe any of these relationships creates an adverse relationship with ClearPoint. 6. Gersten Savage has approximately 25 attorneys. Consequently, it is possible that Gersten Savage has connections with another attorney or other professional to be involved in these cases. Gersten Savage may have referred matters to professionals to be involved in these cases or been referred matters by such parties. 1. Gersten Savage was engaged by ClearPoint on May 7, 2010 to provide advice concerning financial restructuring, pre-bankruptcy and bankruptcy planning. 2. A copy of Gersten Savages Retention Agreement (the Retention Agreement) is annexed hereto as Exhibit 1. Pursuant to the Retention Agreement, Gersten Savage has agreed to cap its fees at $125,000, subject to certain caveats. 7. In the process of Gersten Savages representation of ClearPoint, we have become familiar with ClearPoints business operations and financial affairs and many of the legal issues that will likely arise in the context of these Chapter 11 cases. If ClearPoint is forced to retain counsel other than Gersten Savage, the Debtors estates would incur additional expenses and 3 delays associated with familiarizing new counsel with the intricacies of ClearPoints financial affairs and business. III. SEARCH AND DISCLOSURE PROCEDURES 8. Gersten Savage maintains a conflicts database management system (the System), which is designed to reveal the potential for conflicts of interest and other connections to existing and former clients. When retained by ClearPoint, we utilized the System to search for potential conflicts of interest and other connections to existing and former clients and other potential parties-in-interest in this case whom Gersten Savage has represented. We searched for connections to the following: (a) ClearPoint; (b) ClearPoints largest creditors; (c) ClearPoints secured lenders; (d) ClearPoints landlord; (e) ClearPoints utility providers; (f) ClearPoints litigation counterparties; (g) ClearPoints directors and officers; (h) ClearPoints financial advisor; (i) the applicable taxing authorities; and (j) the United States Trustee (collectively the Potentially Interested Parties). 9. I have, or one of my partners has, reviewed the results of this conflict search. The System holds no information that would suggest that Gersten Savage is now or has ever been adverse to ClearPoint, or that we have ever represented any parties in interest in matters related to this case or to ClearPoint. All connections between Gersten Savage and the Potentially Interested Parties are set forth on Schedule A, annexed hereto. To the best of my knowledge, information and belief: (i) Gersten Savage does not represent or hold any interest adverse to ClearPoint, their estates, creditors, equity security holders, or affiliates in the matters upon which Gersten Savage is to be engaged; and (iii) Gersten Savage is a disinterested person within the meaning of section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code, and as required by section 327(a) of the Bankruptcy Code. 4 10. Additionally, the proposed employment of Gersten Savage is not prohibited by or improper under Bankruptcy Rule 5002. I am not related, and to the best of my knowledge, no attorney at the Firm is related, to any United States Bankruptcy Judge or District Court Judge for the District of Delaware or to the United States Trustee for such district or any employee in the office thereof. 11. The disclosures identified above are based upon all information reasonably available to Gersten Savage at the time of submission of the Application to the Bankruptcy Court for approval. Gersten Savage will, to the extent necessary, supplement this Declaration as may be required by the Bankruptcy Code and Bankruptcy Rules if and when any other relationships exist or are modified such that further disclosure is required. Gersten Savage will implement appropriate internal procedures to protect the interests of ClearPoint in connection with the representations and relationships set forth above. IV. COMPENSATION INFORMATION 12. Prior to the petition date, Gersten Savage received a retainer in the amount of $120,000 for work to be performed by the Firm. $57,607.50 of the retainer was applied to prepetition invoices prior to the filing of the bankruptcy cases. Accordingly, Gersten Savage currently holds $62,392.50 as a retainer for this engagement. Accordingly, Gersten Savage was not a creditor of the Debtors when the bankruptcy petitions were filed. Except as set forth herein, Gersten Savage has never been counsel for the Debtor, or otherwise received payment for services related thereto. 13. Pursuant to Local Rule 2016-1, all payments received by Gersten Savage for the year prior to the Petition Date are set forth in Schedule B, annexed hereto. 5 14. Subject to Court approval, and in accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules. The Local Rules and any applicable orders of this Court, the Debtors propose to pay Gersten Savage its customary hourly rates in effect from time to time as set forth herein, plus reimbursement of actual, necessary expenses incurred by Gersten Savage on the Debtors behalf. The following are Gersten Savages currently hourly rates for work of this nature: Partners $525 to $650 Associates $350 to $450 Paraprofessionals $250 15. Consistent with historical firm practice, the hourly rates set forth above are subject to adjustments on January 1st of each year (beginning January 1, 2011) to reflect economic and other conditions (subject to client approval and Court approval, if necessary). 16. Gersten Savage will comply with the requirements of this Court, the Bankruptcy Code, the Bankruptcy Rules and the Local Rules with respect to fee and expense applications of professionals employed by bankruptcy estates. 17. No promises have been received by Gersten Savage, nor any partner, counsel, nor associate thereof, as to compensation in connection with this case other than in accordance with the provisions of the Bankruptcy Code. 18. Gersten Savage has no agreement with any other entity to share with such entity any compensation received by Gersten Savage in connection with these cases. 6 19. I declare under penalty of perjury under the laws of the United States that the foregoing statements are true and correct. Dated: June 23, 2010 New York, New York /s/ Paul Rachmuth Paul Rachmuth 7 SCHEDULE A to the DECLARATION OF PAUL RACHMUTH IN SUPPORT OF APPLICATION UNDER 11 U.S.C. 327(a) and 1107(b), FED. R. BANKR. P. 2014 & 2016, AND BANKR. D. DEL. l.R. 2014-1 & 2016-1 TO APPROVE THE EMPLOYMENT AND RETENTION OF GERSTEN SAVAGE, LLP AS ATTORNEYS FOR THE DEBTORS Connections to Potentially Interested Parties: Gersten Savage has, over the past 3 years, represented ComVest and its affiliate, Commonwealth Associates LP (Commonwealth), in other matters unrelated to ClearPoint. Gersten Savage is not currently representing ComVest or Commonwealth on any matters. Gersten Savages revenue from matters in which it represented ComVest and/or Commonwealth has been less than 5% of Gersten Savages total annual revenue in each of the past 3 years. Upon review, we have determined that no potential exists for this prior representation to create a conflict of interest. SCHEDULE B to the DECLARATION OF PAUL RACHMUTH IN SUPPORT OF APPLICATION UNDER 11 U.S.C. 327(a) and 1107(b), FED. R. BANKR. P. 2014 & 2016, AND BANKR. D. DEL. l.R. 2014-1 & 2016-1 TO APPROVE THE EMPLOYMENT AND RETENTION OF GERSTEN SAVAGE, LLP AS ATTORNEYS FOR THE DEBTORS Pursuant to Local Rule 2016-1, the following payments were received by Gersten Savage during the year prior to the Petition Date: Date Payment Amount May 11, 2010 $40,000 June 10, 2010 $80,000 TOTAL: $120,000 GERSTEN SAVAGE LLP VIA ELECTRONIC MAIL ClearPoint Business Resources, Inc. Attn:Gary Jaggard Re: Retention of Gersten Savage LLP Dear Gary; May 7, 2010 600 LEXINGTON AVENUE NEW YORK NY 10022-6018 T: 212752-9700 F: INFO@GERSTENSAVAGE.COM WWW.GERSTENSAVAGE.COM Thank you for selecting our finn to represent ClearPoint Business Resources, Inc. ("ClearPoint") in connection with it restructuring reorganization. The purpose of this letter (the "Retention Agreement") is to confirm the terms and conditions upon which you have retained us, as set forth below. Scope o(Services ClearPoint has engaged Gersten Savage LLP (the "Finn") to assist it in a corporate restructuring, which may include a transfer of the interests in ClearPoint and a filing for protection under Chapter 11 of the Bankruptcy Code (a "Bankruptcy Filing"). Accordingly, as part of the Finn's representation of ClearPoint, we will prepare all documents necessary for a Bankruptcy Filing. Assignment o(Firm Personnel Jay Kaplowitz, John Riley and I will be the partners primarily responsible for your matter. We will draw upon the expertise of other partners and associates within the Firm as may be required in order to fulfill our responsibilities under this engagement. We may also use legal assistants to handle certain tasks, as appropriate. Fees, Expenses and Billings The time spent on this matter will be charged against an initial retainer payment as provided below. The retainer payment will in all likelihood not represent the amount of the overall fee which you may incur by virtue of our services. GERSTEN SAVAGE LLP Retention Agreement May 7, 2010 Page 2 of5 The amount of our fee will be based on our regular hourly rates, along with any out-of- pocket disbursements which are incurred on ClearPoint's behalf. ClearPoint will be billed on the basis of hourly rates multiplied by the number of hours worked on your matter, subject to a fee cap as described below. The billing rates for partners in the Firm range from $525.00 per hour to $650.00 per hour, and billing rates for associates range from $375.00 per hour to $450.00 per hour. Our paralegals-law clerks billing rate is $225.00 to $350.00 per hour. Kindly note, these rates are subject to periodic adjustment. In accordance with Bankruptcy practice, ClearPoint will be billed for disbursements and charges incurred on its behalf that are beyond the Firm's general office-related expenses. These disbursements and charges are likely to include, but are not limited to, photocopying and facsimile charges, long distance telephone expenses, hand deliveries, postage, overnight courier services, and computer research charges from subscription services such as Lexis-Nexis and PACER. A statement of fees, disbursements and charges will be sent to ClearPoint monthly for any work performed prior to a Bankruptcy Filing. If you have any questions regarding the billing format or information contained in any invoice, please contact us so that we can try to answer them promptly. If there is a Bankruptcy Filing, the Firm will seek to be retained by the debtor-in- possession with a fee arrangement substantially similar to the one described here. Fee Limitation Notwithstanding the foregoing, the Firm hereby agrees to limit its total fees with respect to the engagement described in this Retention Agreement to $125,000.00 (the "Fee Cap"). The Fee Cap will apply to all fees earned prior to or during a Bankruptcy Filing through consummation of a successful plan of reorganization and closing of the bankruptcy case, or similar event concluding the bankruptcy process. Specifically excluded from the Fee Cap are (a) expenses actually incurred by the Firm, including filing fees; (b) fees related to any litigation not contemplated in this Retention Agreement, such as a third party challenges to the validity, priority or perfection of a secured party's liens in the assets of ClearPoint, claims, disputes or litigation based on actions by ClearPoint officers, directors or employees prior to the Bankruptcy Filing, and actions to enforce contracts; and (c) the fees and expenses of third parties, including any financial advisor, local counsel, or committee counsel retained in connection to the Bankruptcy Filing. Initial Retention Payment The Firm requests an initial payment of $40,000.00 as an advance for services to be rendered and expenses to be incurred in connection with the Firm's representation of ClearPoint. In addition, the Firm may request other advance payments from time to time in amounts necessary to maintain an adequate advance payment balance, in consideration of anticipated GERSTEN SAVAGE LLP Retention Agreement May 7, 2010 Page 3 of5 services for the next period. We will return to ClearPoint any portion of our advance fee that is not earned upon the conclusion of our engagement. Some fees, charges and disbursements incurred may remain unpaid as of the date of a Bankruptcy Filing. Immediately prior to the filing, we will prepare an estimated invoice for fees and expenses incurred and deduct such amount from the advance. Thereafter, we will perform a reconciliation with respect to prepetition fees and expenses actually incurred, with any additional amounts to be charged against the advance or, alternatively, as the case may be, any excess amounts previously deducted to be returned to and augment the remaining advance. After the filing of any Chapter 11 case, the remaining advance will be applied against postpetition fees and expenses in accordance with Federal Rule of Bankruptcy Procedure 2016 or other applicable laws and mles. Postpetition fees and expenses are to be paid by ClearPoint as and when approved by the Court (subject to the Fee Cap described above) and are not intended to be setoff against the advance until the conclusion of the case. Under local practice in many jurisdictions, including Delaware, a debtor's professionals may submit applications for their fees and expenses to the Court on a monthly basis, for approval of 80% of their fees and 1 00% of their expenses. Upon approval by the Court, these amounts may be paid by the debtor. On a quarterly basis, professionals may seek approval of the remaining 20% of their fees that had not been paid. Again, upon approval by the Court, these amounts may be paid by the debtor. Wiring instmctions for the aforementioned advance and any additional advances are as follows: Questions and Termination Signature Bank 565 Fifth A venue New York, NY 10017 ABA# 026013576 Account# 1500884408 While we anticipate that you will be satisfied with our representation, we encourage you to inform us if at any time our services do not meet your expectations. If we cannot resolve an issue stemming from our representation of you, you may end this relationship at anytime by giving us written notice, subject to your obligation to pay us according to the terms of this agreement. We, in turn, reserve the right, subject to any limitations imposed by a bankruptcy court or other court of competent jurisdiction, to withdraw from the representation upon written notice in the event that you fail to cooperate with us in any way which we may reasonably request, or to timely pay our statements in full as submitted, or in the event we determine in our reasonable discretion that it would be improper under rules of professional responsibility or impractical to continue our relationship. GERSTEN SAVAGE LLP Retention Agreement May 7, 2010 Page 4 of5 By agreeing to be bound by the terms of this agreement, you hereby consent to our voluntary withdrawal and the termination of our engagement as your counsel at any time for good cause, such as your failure t i m ~ l y to pay our legal fees and the costs and expenses incurred on your behalf or any other fact or circumstance which would, in our opinion, render our continuing representation unlawful, unethical, or inadvisable. Such discharge or withdrawal shall not affect your obligation promptly to pay us for the fees and costs that you have incurred through the date of our termination. Resolution of Disputes- Mediation and Arbitration Any dispute, controversy or claim arising out of or relating to this engagement before a Bankruptcy Filing, including any dispute, controversy or claim relating to our fees, disbursements and charges, shall first be submitted to non-binding mediation before a mediator jointly selected by the parties. Failing resolution through mediation, any such dispute, controversy or claim shall be finally resolved by confidential arbitration as follows: (1) If and to the extent that the New York Fee Dispute Resolution Program (Part 137 of 22 NYCRR) providing for the informal and expeditious resolution of fee disputes between attorneys and clients is applicable, then the rules and procedures of such Fee Dispute Resolution Program shall apply; (2) If such Fee Dispute Resolution Program is not applicable to any such dispute, controversy or claim, then the arbitration shall be conducted in New York City in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and any award issued in such arbitration shall be enforceable in any court with jurisdiction. A copy of the New York Fee Dispute Resolution Program is available upon request. Binding Agreement This letter represents the entire agreement between ClearPoint and the Firm concerning the terms and conditions of this engagement. By signing below, ClearPoint acknowledges that this letter has been reviewed and its content understood and that ClearPoint agrees to be bound by its terms and conditions. Furthermore, ClearPoint acknowledges that the Firm has made no representations regarding the outcome of the matter for .which the Firm has been engaged hereunder. No change or waiver of any of the provisions of this letter shall be binding on either ClearPoint or on the Firm unless the change or waiver is in writing and signed by both ClearPoint and the Firm. The use of this letter is to help ensure that there are no misunderstandings regarding the services the Firm is to perform for you or the basis of compensation. If the foregoing accurately reflects our agreement and understanding, kindly date and sign this letter on behalf of ClearPoint and return one copy to us in person, by mail, facsimile or email and wire transfer an initial retainer payment as described above. GERSTEN SAVAGE LLP Retention Agreement May 7, 2010 Page 5 of5 Thank you again for this opportunity to be of service to Clear Point. My colleagues and I look forward to working with you. Very truly yours, AGREED: By: Date: I I