EXHIBIT 10.36
CONFIDENTIAL TREATMENT REQUESTED
[LETTERHEAD OF EUROPLAY CAPITAL ADVISORS, LLC]
October 1, 2007
PERSONAL AND CONFIDENTIAL
Xxxxx Xxxx
Chief Executive Officer
People's Liberation,
Inc. 000 X. Xxxxxxxxx Xx.
Xxx Xxxxxxx, XX.
Dear Xxxxx:
This letter confirms the understanding and agreement (the "Agreement")
between People's Liberation, Inc. ("PL" together with its subsidiaries and
affiliates, the "Company") and Europlay Capital Advisors, LLC. ("ECA") as
follows:
1. ENGAGEMENT; SERVICES; TERM. The Company hereby retains ECA as its
exclusive financial advisor to provide financial advisory and investment banking
services in connection with a review of the Company's various possible strategic
alternatives available to the Company and other services as described in
Schedule B attached hereto. ECA's engagement will include advising the Company
with respect to any of the transactions or potential transactions described in
Schedule C hereto which Schedule is incorporated herein by reference (any one of
which is referred to herein as a "Transaction").
The Company agrees that neither it, its controlling equity holders or
other affiliates, nor its management will initiate any discussions regarding a
Transaction during the term of this Agreement, except through ECA. In the event
the Company, its controlling equity holders or affiliates, or its management
receive any inquiry regarding a Transaction, ECA will be promptly informed of
such inquiry so that it can evaluate such party and its interest in a
Transaction, and assist the Company in any resulting negotiations.
This Agreement shall have an initial term of twelve (12) months, and
thereafter shall be extended on a month-to-month basis upon the parties' mutual
; PROVIDED, HOWEVER, that no expiration or termination of this Agreement shall
affect (a) the Company's indemnification, reimbursement, contribution and other
obligations as set forth on Schedule A attached hereto, (b) the confidentiality
provisions set forth herein and Sections 5-8 hereof, and (c) ECA's right to
receive, and the Company's obligation to pay, any and all fees and expenses due,
and whether or not any Transaction shall be consummated prior to or subsequent
to the effective date of termination, all as more fully set forth in this
Agreement.
00000 Xxxxxxx Xxxx, Xxxxx 0000, Xxxxxxx Xxxx, XX 00000
Tel. 000-000-0000 Fax. 000-000-0000
Xxxxx Xxxx
People's Liberation, Inc.
October 1, 2007 -2-
2. FEES AND EXPENSES. The Company shall grant ECA a five-year warrant
to purchase 250,000 shares of the Company's common stock (the "Warrant") for its
services as described in Schedule D attached hereto. In addition, the Company
will pay ECA a monthly fee of US$5,000 per month in advance, which fees will be
treated as an advance against the fees to be paid to ECA pursuant to Schedule D
hereto.
The Warrants will contain customary terms and conditions including but
not limited to cashless exercise, and registration rights. The Warrants will
have an exercise price equal to the closing price of the Company's common stock
on the date of execution of this Agreement, and will vest in twelve monthly
installments of 20,833 (rounding adjustment to be made in final installment)
beginning on the last day of the month following the execution date of this
Agreement.
If this Agreement is terminated for any reason, and the Company
consummates, or enters into an agreement in principle to engage in (and which
subsequently closes), a Transaction within three (3) months after such
termination date with any party which (i) ECA identified, contacted or with whom
ECA or the Company had discussions regarding a potential Transaction during the
term of this agreement, or (ii) reviewed information prepared with the
assistance by ECA concerning the Company and/or the proposed Transaction, ECA
shall be entitled to receive its Transaction Fee upon the consummation of such
Transaction as if no such termination had occurred.
Additionally, and regardless of whether any Transaction is consummated,
ECA shall be entitled to reimbursement of its reasonable, actual out-of-pocket
expenses incurred from time to time during the term hereof in connection with
the services to be provided under this Agreement, promptly after invoicing the
Company therefor but in no event greater than US$2,500 without the Company's
prior approval. Out-of-pocket expenses shall include, without limitation, travel
expenses, duplicating charges, printing costs, computer and research charges,
messenger services, long-distance and cellular telephone calls, facsimile
charges, customary administrative, overhead and MIS charges, attorneys' fees and
related legal expenses.
All amounts payable to ECA shall be made by cheek or in same day funds
by wire transfer, in lawful money of the United States, (i) to such accounts as
ECA shall determine upon written notice to the Company, and (ii) exclusive of
value added tax, withholding tax, and any other similar taxes ("Taxes"). All
amounts charged by ECA will be invoiced together with Taxes where appropriate.
All invoicing will be in U.S. dollars.
3. INFORMATION. The Company will furnish ECA with such information
regarding the business and financial condition of the Company as is reasonably
requested, all of which will be, to the Company's best knowledge, accurate and
complete in all material respects at the time furnished. The Company further
represents and warrants that any projections have been prepared in good faith
based upon assumptions which, in light of the circumstances under which they are
made, are reasonable. The Company will promptly notify ECA if it learns of any
material misstatement in, or material omission from, any information previously
delivered to ECA. ECA may rely, without independent verification, on the
accuracy and completeness of all information furnished by the Company or any
other potential party to any Transaction. The Company understands that ECA will
not be responsible for independently verifying the accuracy of such information,
and shall not be liable for any inaccuracies therein. Except as may be required
by law or court process, any opinions or advice (whether written or oral)
rendered by ECA pursuant to this Agreement are intended solely for the benefit
and use of the Company, and may not be publicly disclosed in any manner or made
available to third parties (other than the Company's
Xxxxx Xxxx
People's Liberation, Inc.
October 1, 2007 -3-
management, directors, advisors, accountants and attorneys) without the prior
written consent of ECA, which consent shall not be unreasonably withheld.
4. INDEMNIFICATION; STANDARD OF CARE. The Company agrees to provide
indemnification, contribution and reimbursement to ECA and certain other parties
in. accordance with, and further agrees to be bound by the other provisions set
forth in, Schedule A attached hereto.
5. OTHER SERVICES. To the extent ECA is requested by the Company to
perform any financial advisory or investment banking services which are not
within the scope of this assignment (such as rendering a fairness opinion), such
fees shall be mutually agreed upon by ECA and the Company in writing, in
advance, depending on the level and type of services required, and shall be in
addition to the fees and expenses described hereinabove. Except as set forth in
the preceding sentence, if ECA is called upon to render services directly or
indirectly relating to the subject matter of this Agreement (including, but not
limited to, producing documents, answering interrogatories, giving depositions,
giving expert or other testimony, and whether by subpoena, court process or
order, or otherwise), the Company shall pay ECA's then current hourly rates for
the persons involved by the time expended in rendering such services, including,
but not limited to, time for meetings, conferences, preparation and travel, and
all related reasonable out-of-pocket costs and expenses, and the reasonable
legal fees and expenses of ECA's legal counsel incurred in connection therewith.
6. ATTORNEYS' FEES. If any party to this Agreement brings an action
directly or indirectly based upon this Agreement or the matters contemplated
hereby against another party, the prevailing party shall be entitled to recover,
in addition to any other appropriate amounts, its reasonable costs and expenses
in connection with such proceeding, including, but not limited to, reasonable
attorneys' fees and court costs.
7. CREDIT. Upon consummation of any Transaction, ECA may, at its own
expense, place announcements in financial and other newspapers and periodicals
(such as a customary "tombstone" advertisement) describing its services in
connection therewith.
8. MISCELLANEOUS. This Agreement shall be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, however, is intended to confer or does confer on
any person or entity, other than the parties hereto and their respective
successors and permitted assigns and, to the extent expressly set forth in
Schedule A attached hereto, the Indemnified Parties, any rights or remedies
under or by reason of this Agreement or as a result of the services to be
rendered by ECA hereunder.
The Company acknowledges that ECA and its affiliates have and will
continue to have investment banking and other relationships with parties other
than the Company pursuant to which ECA may acquire information of interest to
the Company. The Company further acknowledges that ECA shall have no obligation
to disclose such information to the Company, or to use such information in
connection with any contemplated Transaction.
The Company and ECA acknowledge, that Xxxxxx Xxxxxxxx, a member of
ECA, is also a partner of Xxxxxx Xxxxxxxx and Markiles, LLP ("XXX"), one of the
Company's outside legal services providers. The Company acknowledges and agrees,
that the services of ECA do not include legal services and that any legal
services provided by Xx. Xxxxxxxx are provided solely in his capacity as a
Partner of XXX and pursuant to the engagement agreement between the Company and
XXX. The Company agrees that it has received full disclosure of potential
conflicts resulting from the foregoing and, taking separate advice, has
determined to waive any such conflicts and proceed with this engagement.
Xxxxx Xxxx
People's Liberation, Inc.
October 1, 2007 -4-
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect pursuant to the terms
hereof. The Company agrees that it will be solely responsible for ensuring that
any Transaction complies with applicable law. This Agreement incorporates the
entire understanding of the parties regarding the subject matter hereof, and
supersedes all previous agreements or understandings regarding the same, whether
written or oral. This Agreement may not be amended, and no portion hereof may be
waived, except in a writing duly executed by the parties.
With respect to all investment banking services to be rendered pursuant
to this Agreement, the Company agrees that such services have been and will be
provided by ECA Securities, LLC. a registered securities broker-dealer and an
affiliate of ECA, and that all fees and other compensation payable pursuant to a
Transaction shall be payable to ECA Securities, LLC. Company xxxxxx agrees to
accept the performance of investment banking services from ECA Securities, LLC,
and to pay all compensation related to such investment banking services to ECA
Securities, LLC.
The parties agree that all prior engagement letters between the Company
and ECA are in full force and effect and the terms hereof shall not affect or
vary the terms of such engagements.
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO SUCH STATE'S RULES CONCERNING CONFLICTS OF LAWS.
EACH OF ECA AND THE COMPANY (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ON BEHALF OF ITS EQUITY HOLDERS) WAIVES ANY RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT,
TORT OR OTHERWISE) RELATED TO OR ARISING OUT OF THE ENGAGEMENT OF ECA PURSUANT
TO, OR THE PERFORMANCE BY ECA OF THE SERVICES CONTEMPLATED BY, THIS AGREEMENT.
REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF
THE PARTIES HERETO, EACH PARTY HEREBY IRREVOCABLY CONSENTS AND AGREES THAT ANY
CLAIMS OR DISPUTES BETWEEN THE PARTIES ARISING OUT OF OR RELATED TO THIS
AGREEMENT SHALL BE BROUGHT IN ANY FEDERAL OR STATE COURT OF COMPETENT
JURISDICTION IN THE STATE OF CALIFORNIA.
Xxxxx Xxxx
People's Liberation, Inc.
October 1, 2007 -5-
We look forward to working with you on this assignment. Please confirm
that the foregoing terms are in accordance with your understanding by signing
and returning the enclosed copy of this Agreement, together with the Warrants.
Very truly yours,
EUROPLAY CAPITAL ADVISORS, LLC.
By: /s/ Xxxxxx Xxxxxx
-----------------------------
Xxxxxx Xxxxxx
Managing Director
Accepted and agreed to as of _______________.
PEOPLE'S LIBERATION, INC.
By: /s/ Xxxxx Xxxx
-----------------------------
Xxxxx Xxxx
Chief Executive Officer
SCHEDULE A
This Schedule is attached to, and constitutes a material part of, that
certain agreement dated October 1, 2007, addressed to PL by ECA (the
"Agreement"). Unless otherwise noted, all capitalized terms used herein shall
have the meaning set forth in the Agreement.
As a material part of the consideration for the agreement of ECA to
furnish its services under the Agreement, the Company agrees to indemnify and
hold harmless ECA and its affiliates, and their respective past, present and
future directors, officers, shareholders, employees, agents and controlling
persons within the meaning of either Section 15 of the Securities Act of 1933,
as amended, or Section 20 of the Securities Exchange Act of 1934, as amended
(collectively, the "Indemnified Parties"), to the fullest extent lawful, from
and against any and all losses, claims, damages or liabilities (or actions in
respect thereof), joint or several, arising out of or related to the Agreement,
any actions taken or omitted to be taken by an Indemnified Party (including acts
or omissions constituting ordinary negligence) in connection with the Agreement,
or any Transaction or proposed Transaction contemplated thereby. In addition,
the Company agrees to reimburse the Indemnified Parties for any legal or other
expenses reasonably incurred by them in respect thereof at the time such
expenses are incurred; PROVIDED, HOWEVER, the Company shall not be liable under
the foregoing indemnity and reimbursement agreement for any loss, claim, damage
or liability which is finally judicially determined to have resulted primarily
from the willful misconduct or gross negligence of any Indemnified Party.
If for any reason the foregoing indemnification is unavailable to any
Indemnified Party or insufficient to hold it harmless, the Company shall
contribute to the amount paid or payable by the Indemnified Party as a result of
such losses, claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative benefits received (or anticipated to be
received) by the Company, on the one hand, and ECA, on the other hand, in
connection with the actual or potential Transaction and the services rendered by
ECA. If, however, the allocation provided by the immediately preceding sentence
is not permitted by applicable law or otherwise, then the Company shall
contribute to such amount paid or payable by any Indemnified Party in such
proportion as is appropriate to reflect not only such relative benefits, but
also the relative fault of the Company, on the one hand, and ECA, on the other
hand, in connection therewith, as well as any other relevant equitable
considerations. Notwithstanding the foregoing, the aggregate contribution of all
Indemnified Parties to any such losses, claims, damages, liabilities and
expenses shall not exceed the amount of fees actually received by ECA pursuant
to the Agreement.
The Company shall not effect any settlement or release from liability
in connection with any matter for which an Indemnified Party would be entitled
to indemnification from the Company, unless such settlement or release contains
a release of the Indemnified Parties reasonably satisfactory in form and
substance to ECA. The Company shall not be required to indemnify any Indemnified
Party for any amount paid or payable by such party in the settlement or
compromise of any claim or action without the Company's prior written consent.
The Company further agrees that neither ECA nor any other Indemnified
Party shall have any liability, regardless of the legal theory advanced, to the
Company or any other person or entity (including the Company's equity holders
and creditors) related to or arising out of ECA's engagement, except for any
liability for losses, claims, damages, liabilities or expenses incurred by the
Company which are finally judicially determined to have resulted primarily from
the willful misconduct or gross negligence of any Indemnified Party. The
indemnity, reimbursement, contribution and other obligations and agreements of
the Company set forth herein shall apply to any modifications of the Agreement,
shall be in addition to any liability which the Company may otherwise have, and
shall be binding upon and inure to the benefit of any successors, assigns, heirs
and personal representatives of the Company and each Indemnified Party. The
foregoing provisions shall survive the consummation of any Transaction and any
termination of the relationship established by the Agreement.
SCHEDULE B
This Schedule is attached to, and constitutes a material part of, that
certain agreement dated October 1, 2007, addressed to PL by ECA (the
"Agreement"). Unless otherwise noted, all capitalized terms used herein shall
have the meaning set forth in the Agreement. ECA's services will be provided
with the direct involvement of, and under the direct supervision of, senior
members of ECA, and such services will include, if requested by the Company:
(a) preparation of income statement, balance sheet and cash flow
forecasts for the financial performance of the Company and its
proposed capital raise and or acquisitions;
(b) preparation of strategic alternatives presentation, and
discuss of such presentation with the Company's management
and/or board of directors.
(c) soliciting, coordinating and evaluating indications of
interest and proposals regarding one or more Transactions, as
directed by the Company, as described on Schedule C of this
Agreement;
(d) advising the Company as to the structure of each Transaction
(including the valuation of any non-cash consideration) and
assisting the Company with any due diligence investigation of
any proposed Transaction;
(e) negotiating the financial aspects, and facilitating the
consummation, of each Transaction; and
(f) providing such other financial advisory and investment banking
services reasonably necessary to accomplish the foregoing.
SCHEDULE C
This Schedule is attached to, and constitutes a material part of, that
certain agreement dated October 1, 2007, addressed to PL by ECA (the
"Agreement"). Unless otherwise noted, all capitalized terms used herein shall
have the meaning set forth in the Agreement The transactions or potential
transactions with respect to which ECA will advise the Company on an exclusive
basis include the following transactions (each a "Transaction"):
(i) any proposals for the private placement of equity, preferred
stock, convertible notes, unsecured or non-senior debt
securities, senior notes, bank debt or a securitization (the
"Financing") to provide financing to the Company and/or its
subsidiaries and affiliates in one or more transactions based
in whole or in part on the value of the Company and further
wherein the potential investor has reviewed any materials
prepared by ECA such as financial models, strategic
alternatives presentation, etc. (each, a "Financing
Transaction"). It is expressly understood that this engagement
does not constitute any commitment, express or implied, on the
part of ECA to provide, and does not ensure the successful
placement of, any portion of the Financing;
(ii) any proposals for the Company to make a minority, joint
venture or control investment in, or to acquire an economic
interest in the capital stock or assets of a third party (the
"Target") in either a single transaction or a series of
transactions; whether by tender or exchange offer, purchase,
acquisition, business combination, or otherwise (a "Purchase
Transaction").
SCHEDULE D
This Schedule is attached to, and constitutes a material part of, that
certain agreement dated October I, 2007, addressed to PL by ECA (the
"Agreement"). Unless otherwise noted, all capitalized terms used herein shall
have the meaning set forth in the Agreement. The cash retainer fees set out in
Section 2 of this Agreement shall be treated as an advance against the following
transaction fees (each a "Transaction Fee") which will be paid by the Company to
ECA, as set forth below:
(i) upon the consummation of each Financing Transaction, the
Company agrees to pay ECA a Transaction Fee equal to the sum
of ***% of the aggregate amount of all equity and equity
equivalents raised or committed (including convertible
securities and preferred). In event of straight debt
financing, the parties will negotiate in good faith any fees
payable to ECA; plus
(ii) upon the consummation of each Purchase Transaction, the
Company agrees to pay ECA a Transaction Fee equal to ***% of
the Transaction Value (as hereafter defined); plus
If a fairness or other opinion (the "Opinion") is requested, the
Company and ECA will enter into a separate agreement containing customary terms
and conditions for such an assignment and such other terms and conditions
(including the fee for rendering the Opinion) as are mutually agreed upon by the
parties.
For the purpose of calculating the Transaction Fee, the Transaction
Value shall be defined as the total proceeds and other consideration paid or
received, or to be paid or received, in connection with a Transaction (which
consideration shall be deemed to include amounts in escrow), including, without
limitation, cash, notes, securities, and other property; payments made in
installments; amounts payable under consulting agreements, above-market
employment contracts, non-compete agreements or similar arrangements; and
Contingent Payments (as defined below). In addition, if any of the Company's (or
an acquisition target's) interest-bearing liabilities are assumed, decreased or
paid off in conjunction with a Sale Transaction, or any of the Company's (or
Target's) assets are retained, sold or otherwise transferred to another party
prior to the consummation of the Transaction, the Transaction Value will be
increased to reflect the fair market value of any such assets or
interest-bearing liabilities. Contingent Payments shall be defined as the fair
market value of consideration received or receivable (or paid or payable) by the
Company, its employees, former or current equity holders and/or any other
parties in the form of deferred performance-based payments, "earn-outs", or
other contingent payments based upon the future performance of the Company (or
the target) or any of its businesses or assets.
For the purpose of calculating the consideration received in the
Transaction, any securities (other than a promissory note) will be valued at the
time of the closing of the Transaction (without regard to any restrictions on
transferability) as follows: (i) if such securities are traded on a stock
exchange, the securities will be valued at the average last sale or closing
price for the ten trading days immediately prior to the closing of the
Transaction; (ii) if such securities are traded primarily in over-the-counter
transactions, the securities will be valued at the mean of the closing bid and
asked quotations similarly averaged over a ten trading day period immediately
prior to the closing of the Transaction; and (iii) if such securities have not
been traded prior to the closing of the Transaction, ECA will prepare a
valuation of the securities, and ECA and the Company will negotiate in good
faith to agree on a fair valuation thereof for the purposes of calculating the
Transaction Fee. The value of any purchase money or other promissory notes shall
be deemed to be the face amount thereof. In the event the Transaction Value
includes any Contingent Payments, the Company and ECA will negotiate in good
faith to agree on that portion of the Transaction Fee to be paid to ECA as of
the closing of the Transaction in consideration thereof.
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission (`SEC") and have been
filed separately with the SEC.
