May 20, 2009
Exhibit
10.1
May 20, 2009
Xxxxxxx
X. Xxxxxxx
Chief
Executive Officer
0000 Xxxx
Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx,
XX 00000
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Re:
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Capstone Investments
Advisory Agreement
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Dear Xx.
Xxxxxxx:
This letter agreement (this
“Agreement”) will confirm the arrangements under which CapStone Investments
(“CapStone”) is authorized to act as placement agent (“Agent” or “Agency”)
for Enable Holdings, Inc.,
an entity formed under the laws of Delaware, and its affiliates and
subsidiaries (“ENAB”) in connection with a proposed offering of debt
and/or equity securities of ENAB (the “Securities”). The
terms of the offering will be set forth in a separate term sheet upon completion
of due diligence. The terms of this letter will expire at 5:00 p.m. on Friday, May 22,
2009, unless fully executed by duly authorized representatives of both
parties.
The
services provided by CapStone are separated into the following basic areas:
advisory and deal financing. A description of CapStone’s functions
and activities in each of these areas and the applicable compensation to
CapStone are described as follows:
Advisory/Disclosure
ENAB agrees to provide the Agent with
certain information which may also include confidential informational, including
up-to-date financial data on its operations. This information shall be furnished
in a timely manner and shall be complete and accurate to the best of ENAB’s
knowledge. ENAB authorizes the Agent to commence such due diligence
investigations which in the Agent’s reasonable good faith judgment would be
required to verify ENAB’s ability to complete the transactions, make the
required representations, perform its obligations under the proposed covenants
and cause the projected payments to be made under the terms of the Securities.
ENAB and its management will allow the entities set forth on Exhibit A the
opportunity to ask ENAB questions concerning the operations and financial
statements of ENAB. ENAB will also represent and warrant that the information
provided by ENAB and the Offering Materials do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated or
necessary to make any statement not misleading.
The Agent
will: (a) review the due diligence files prepared by ENAB, its counsel and/or
other 3rd parties
for the transaction, including any and all required opinion letters; (b) provide
ENAB with a commercially reasonable due diligence checklist to assist in the
preparation of the required due diligence files; (c) make comments where
appropriate and may request additional documentation and, (d) provide other
advisory services upon written request.
It is
recognized and understood that there is no assurance that the Agent’s due
diligence review process will confirm that ENAB should, in the Agent’s judgment,
proceed with the proposal. If the Agent decides not to proceed with the proposal
based on its due diligence review, it will discuss those factors supporting this
conclusion. Before a negative conclusion is arrived at, the Agent will discuss
its concerns with ENAB to determine if the proposal can be modified or adjusted
in order to allow the Agent to proceed with this engagement. If the Agent or
ENAB determines not to proceed with the proposal, than this Agreement will
automatically terminate and ENAB and the Agent have no further obligations
hereunder.
Should
ENAB elect to engage CapStone and in order to begin the Due Diligence portion of
this engagement, please execute this Agreement and remit non refundable retainer
fees in the amount of TEN THOUSAND DOLLARS ($10,000) due and payable by wire
transfer according to the wire transfer instructions below. Also,
please send a signed original to Xxxxx X’Xxxxxxxx, CapStone Investments, 00000
Xxxx Xxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000.
Deal
Financing
Depending
on the type of financing facility finally agreed to, ENAB and/or the investor(s)
will prepare or have prepared all necessary offering, transaction, and/or loan
documents. This transaction may consist of a single or multiple tranches and may
have one or more closing dates.
Fees
As
compensation for the services of CapStone hereunder, ENAB shall pay to CapStone
the following cash fees pursuant to the following wire transfer
instructions:
• Capstone
shall receive a cash fee equal to seven percent (7%) of the total cash invested
in any form of equity or equity-linked financing.
• Capstone
shall receive a cash fee equal to four percent (4%) of the maximum possible
drawdown amount of any debt or debt-related financing
• Capstone
shall receive a cash fee equal to two and one half percent (2.5%) of the total
cash consideration or transaction amount of any form of debt repurchase or
restructuring.
In
addition to the cash fees set forth above, ENAB shall also issue the following
to CapStone as additional compensation under the terms of this
Agreement:
• ENAB
shall issue to Capstone a warrant to purchase common shares of ENAB common stock
equal to seven percent (7%) of the maximum number of shares that could be issued
pursuant to any financing, including investor warrants or, in the absence of any
equity-linked issuance, seven percent (7%) of the maximum amount of cash that
could be received under the financing divided by the closing price of ENAB’s
common stock per a reputable information resource (i.e.: Bloomberg) on the day
the financing is closed. This warrant will have an exercise price
equal to the minimum exercise price of any warrants received by investors in
such Financing or in the absence of any warrant issuance, the closing price for
the common stock of ENAB on the day of the closing of the
financing.
All cash
fees will be due and payable at Closing and shall be a condition of
Closing. All shares and warrants shall be issued at Closing and shall
be a condition of Closing.
Retention
ENAB
hereby retains CapStone, and CapStone agrees to act, in accordance with the
provisions of this paragraph, as an exclusive representative and exclusive
placement agent in connection with the private issuance or sale of the
Securities during the term of this Agreement. Capstone from time to time will present
to ENAB a limited number of Potential Investor names whom Capstone believes
might be interested in investing in ENAB and if ENAB approves the name, such
names will be added into the Exhibit A. In connection with
this engagement, CapStone’s services may include, upon ENAB’s request, (i)
assistance in preparation materials (which may include a private offering
memorandum or institutional group selling document) describing ENAB, its
business, operations, assets and prospects (the “Offering Materials”) and (ii)
identifying and contacting potential purchasers of the Securities. ENAB will
remain the sole owner of all Offering Materials, including, without limitation,
all project related information, all contracts, revised or otherwise, all legal
opinions and/or documents, and all other materials associated with the
project. Notwithstanding the forgoing, CapStone agrees that ENAB may
continue to pursue its efforts to raise equity capital from retail investors
including those listed on Exhibit B. In addition, CapStone agrees to
reduce its fees by 50% for any investments made by Victory Park and its related
funds.
CapStone
acknowledges and agrees that ENAB shall retain the sole and exclusive right to
accept or reject any proposed sale of Securities and ENAB shall not incur any
liability to CapStone for such rejection. ENAB may terminate the
offer and sale of the Securities at any time in its sole
discretion.
ENAB
understands that CapStone will be acting as the exclusive Agent of ENAB in the
offering and sale of the Securities and acknowledges and agrees that, in
connection therewith, CapStone will use its “best efforts” to place the
Securities. ENAB expressly acknowledges and agrees that CapStone’s obligations
hereunder are not on a firm commitment basis and that the execution of this
Agreement does not constitute a commitment by CapStone to purchase the
Securities and does not ensure the successful placement of the Securities or any
portion thereof.
Additional Terms and
Conditions
Term. CapStone
will, on a “best
efforts” basis through its registered personnel or through separate
registered broker-dealers, arrange for the Private Offering within 180 days
following the completion and approval of the pricing of the Securities or the
completion of the transaction documents (“Term”).
If a
Letter of Intent or Term Sheet is signed or funds placed into escrow relating to
an offering of securities of ENAB during the Term or within eighteen (18) months
of the termination of this Agreement with or by a third party with whom ENAB has
any discussions as a result of an introduction by CapStone, then CapStone’s fee
will be due and payable as provided herein. CapStone shall advise ENAB of the
parties who CapStone is approaching on a monthly basis.
Escrow. It
is agreed and understood that CapStone will require that an escrow agent or
investment fund hold the investor proceeds and that the escrow agent or fund
manager holding the investor proceeds available for distribution to the issuer
shall, at closing, wire transfer directly to CapStone and any other placement
Agent any cash fee due on the funds raised.
Information. During
the course of the Term of this Agreement, ENAB agrees to furnish CapStone with
such information about ENAB as CapStone may commercially reasonably request,
including information to be included in a private offering memorandum, offering
circular or other disclosure document (“Company Information”). ENAB represents
and warrants to CapStone that all Company Information will be accurate and
complete in all material respects and will not contain any untrue statements of
a material fact or omit to state a material fact necessary to make the
statements contained therein, in light of the circumstances under which such
statements are made, not misleading, in each case at the time such information
is furnished. ENAB agrees to advise CapStone during the period of the engagement
of all developments materially affecting ENAB or the accuracy of the Company
Information previously furnished to CapStone and the entities set forth on
Exhibit A attached hereto. In addition, any representations and warranties made
by ENAB to the entities set forth on Exhibit A attached hereto pursuant to the
transactions contemplated hereby shall be deemed to be incorporated into this
Agreement and any opinions delivered by or on behalf of ENAB to the entities set
forth on Exhibit A attached hereto shall expressly provide that CapStone may
rely upon such opinions. ENAB acknowledges and confirms that CapStone may rely
upon such opinions, if applicable. ENAB acknowledges and confirms
that CapStone (i) will be relying solely on such information and other
information available from generally recognized public sources in performing the
services contemplated hereunder, (ii) will not independently verify the accuracy
or completeness of such information, (iii) does not assume responsibility for
the accuracy or completeness thereof, and (iv) will make appropriate disclaimers
consistent with the foregoing and their affiliates may share with each other,
any information related to ENAB or ENAB’s affiliates (including information
relating to creditworthiness), provided that CapStone take all necessary actions
as defined in the Non-Disclosure Agreement executed by the parties on January
15, 2009 to protect such confidential information.
Other Fees and
Expenses. ENAB will, if applicable, endeavor in good faith, in
cooperation with CapStone and its counsel, to qualify, to the extent applicable
and/or required by applicable law, the sale of the Securities for offer and sale
under the applicable securities of such jurisdictions as CapStone may
commercially reasonably designate, and ENAB will use its best efforts to
maintain such qualifications in effect for as long as may be required for the
distribution of the Securities. In each jurisdiction where the
Securities shall have been qualified as above provided, ENAB will make and file
such statements and reports in each year as are or may be required by the laws
of such jurisdiction.
In
addition, ENAB shall be responsible for all commercially reasonable fees,
charges, expenses and disbursements relating to the offering, including, without
limitation, all commercially reasonable fees, charges, expenses and
disbursements in connection with (i) the preparation (including but not limited
to reasonable attorneys’ fees, reasonable accountants’ fees, and other
reasonable related consultants’ fees), printing, filing, distribution and
mailing of any offering, transaction, or loan documents and any supplement and
amendment thereto and all other documents relating to the offering and the
purchase, sale and delivery of the Securities, including the cost of all copies
thereof; (ii) the issuance, sale, transfer and delivery of the Securities,
including any transfer of other taxes payable thereon and the fees of any
transfer agent or registrar; and (iii) the registration or qualification of the
Securities for offer and sale under the securities laws of such states and other
jurisdictions as may be required (including, without limitation, all filing and
registration fees and disbursements). Any third party cost or expense incurred
by CapStone exceeding five thousand dollars ($5,000) will be submitted in
writing to ENAB by CapStone for pre-approval, which shall not be unreasonably
withheld. It is understood that the total third party cost and expenses incurred
by CapStone are not expected to exceed $50,000. ENAB understands and
agrees that any investor may require that its attorneys’ fees and expenses also
be paid by ENAB or from the proceeds of the financing.
Indemnification. ENAB
agrees to indemnify CapStone and its affiliates and each person in control of
CapStone and its affiliates and their respective officers, directors, employees,
agents and representatives and their respective affiliates and control persons
(collectively, the “CapStone Indemnified”), arising out of or based upon any
untrue statement of any material fact contained in the Offering Materials or
confidential information or the omission or alleged omission to state therein a
material fact to be stated therein or necessary to make the statements therein
in the light of the circumstances under which they are made, not misleading;
provided, however, that ENAB shall not be liable in any such case to the extent
that any such loss, claim, damage, liability, or action arises out of, or is
based upon, an untrue statement or alleged untrue statement or omission or
alleged omission made therein upon, and conformity with, information relating to
any CapStone Indemnified party furnished to ENAB by any CapStone Indemnified
party specifically for the use in the preparation thereof; provided, further,
that no such indemnity shall be provided against negligent acts of, or willful
conduct by, the CapStone Indemnified.
CapStone
agrees to indemnify ENAB and its affiliates and each person in control of ENAB
and its affiliates and their respective officers, directors, employees, agents
and representatives and their respective affiliates and control persons arising
out of or based upon any information relating to such indemnifying party
furnished to ENAB in writing by such indemnifying party specifically for use in
the preparation of the Offering Materials or confidential information, if such
information constituted an untrue statement or alleged untrue statement of any
material fact therein or the omission or alleged omission to state therein a
material fact required to be therein or necessary to make the statements
therein, in the light of the circumstances under which they are made, not
misleading; provided, however, that no such indemnity shall be provided against
negligent acts of, or willful conduct by, such parties otherwise entitled to
indemnification herein. CapStone’s liability shall be limited to the
amount of fees it receives as a result of this engagement.
Other
Services. ENAB acknowledges and agrees that CapStone and/or
its affiliates may be requested by ENAB to provide additional services with
respect to ENAB or other matters contemplated hereby. Any such services will be
set out in and governed by a separate agreement(s) (containing terms relating,
without limitation, to services, fees and indemnification) in form and substance
satisfactory to ENAB and CapStone (or any such affiliate). Nothing in this
Agreement is intended to obligate or commit CapStone or any of its affiliates to
provide any services or financing other than as set out herein.
No Shareholder
Rights. ENAB acknowledges and agrees that CapStone has been retained only
by ENAB and that ENAB’s engagement of CapStone is not deemed to be on behalf of
and is not intended to confer rights upon any shareholder, owner or partner of
ENAB or CapStone or any other person not a party hereto. Unless otherwise
expressly agreed, no person or entity other than ENAB is authorized to rely upon
ENAB’s engagement of CapStone or any statements, advice, opinions, or conduct by
CapStone.
Successors and
Assigns. This engagement agreement is binding on all
successors and assigns. However, it shall not be assigned without the prior
written consent of the other party. This agreement shall be construed in
accordance with and enforceable under the laws of the State of
California.
Governing Law. This
Agreement constitutes the entire agreement between ENAB and CapStone, and
supersedes all other prior agreements and understandings, other written and
oral, between the parties hereto with respect to the subject matter hereof and
cannot be amended or otherwise modified except in writing executed by the
parties hereof. Any dispute arising from the interpretation, validity
or performance of this Agreement or any of its terms and provisions shall be
submitted to arbitration in Los Angeles County, California.
Miscellaneous. This
Agreement may be executed in two or more counterparts, including electronically
transmitted counterparts, all of which together shall be considered a single
instrument. The term “affiliate” as used herein shall have the
meaning ascribed to such term in the rules and regulations promulgated under the
Securities Exchange Act of 1934, as amended.
*****************************
We are
delighted to accept this engagement and look forward to working with you on this
assignment. Please confirm that the foregoing is in accordance with
your understanding by signing and returning to us the enclosed duplicate of this
letter.
Very
truly yours,
CapStone
Investments
By:
___/s/ Xxxxx
Diamond___ __________
Xxxxx
Xxxxxxx
Principal
AGREED
AND ACCEPTED:
By:
_/s/ Xxxxxxx X.
Hoffman_____________ Dated: May 20,
2009
Xxxxxxx X. Xxxxxxx.
Chief
Executive Officer
