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EXHIBIT 10.1.18
[IMPERIAL CAPITAL, LLC LETTERHEAD]
January 13, 1998
Xxxxxxx X. Xxxxxxx
President & Chief Executive Officer
Newriders, Inc.
00000 Xxxxxxx Xx.
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Dear Xx. Xxxxxxx:
This letter agreement (the "Agreement") confirms our understanding that
Newriders, Inc., (which together with its subsidiaries and affiliates is
hereinafter referred to as the "Company") has engaged Imperial Capital, LLC
("IC") to act as the exclusive financial advisor and agent to the Company with
respect to (a) a possible transaction with Paisano Publications, Inc.,
Easyriders Franchising, Inc., Easyriders, of Columbus, Inc., Xxxxxx, Inc. and
other related entities (collectively, the "Target"), which transaction, may
include a merger, consolidation or any other business combination, in one or a
series of transactions, or a purchase involving all or a substantial amount of
the business, securities or assets of the Target, or any transaction structured
to substantially achieve the same result (each a "Transaction"), and (b) the
placement of any financing required to complete the transaction ( the
"Financing") on a "best efforts" basis in accordance with the Securities Act of
1933.
Section 1. Services to be Rendered. In connection with this engagement,
IC agrees to undertake certain services on your behalf including, to the extent
requested by the Company: (i) assisting you in evaluating the Target; (ii)
advising on a proposed purchase price and form of consideration; (iii)
structuring a Transaction; and (iv) negotiating the financial aspects of any
Transaction under your guidance. With respect to the proposed Financing, IC's
services to the Company will include: (i) assistance in the preparation of a
private placement memorandum describing the Company and the Target, its
operations, its historical performance and its future prospects (the "Offering
Materials"); (ii) assistance in structuring the proposed Financing and its
terms; (iii) identifying and contacting selected qualified purchasers (the
"Purchasers") of the proposed Financing and furnishing them, on behalf of the
Company with copies of the Offering Materials; and (iv) negotiating the
financial aspects of the proposed Financing under your guidance. Nothing
contained herein constitutes a commitment on the part of IC to purchase any
securities.
The Company acknowledges and agrees that IC has been retained solely to
provide the advice or services set forth in this Agreement. IC shall act as an
independent contractor, and any duties of IC arising out of its engagement
hereunder shall be owed solely to the Company. As IC will be acting on your
behalf, the Company agrees to the indemnification and other obligations set
forth in Schedule I attached hereto, which Schedule is an integral part hereof
and incorporated by reference herein.
Section 2. Compensation. As compensation for services to be provided by
IC hereunder, the Company agrees to pay to IC: (i) a cash fee in an amount equal
to 1.5% of the aggregate value of the consideration received by the Target and
or its shareholders (including the consideration paid with respect to the
exercise or termination of options, warrants or other rights of conversion) and
including in such consideration the amount of any debt securities assumed or
preferred stock redeemed in connection with a
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NEWRIDERS, INC.
January 13, 1998
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Transaction; (ii) a cash fee equal to 2.0% of the principal amount of any senior
debt securities sold or arranged; (iii) a cash fee equal to 5.0% of the
principal amount of any subordinated debt securities sold or arranged but not
including subordinated debt issued to the Target (iv) a cash fee equal to 6.0%
of the principal amount of any equity securities sold or arranged including any
preferred stock but not including any equity securities issued to the Target;
and (v) a warrant to purchase 2.5% of the fully diluted equity of the Company
pro forma for the Transaction and the Financing (such warrant shall have a
market exercise price reflecting the closing price of the Company's common stock
on the date of this Agreement and contain "cashless exercise", standard
anti-dilution provisions, at least one demand registration right and "piggyback"
registration rights). The fees in this Section 2 (i), (ii), (iii) and (iv) shall
be payable upon consummation of and out of the proceeds of the Financing.
Additionally, the fees in this Section 2 do not reflect any fees to be paid to
IC should IC render a fairness opinion to the Company's Board of Directors in
connection with a Transaction described herein.
Upon request by IC from time to time, the Company agrees to reimburse
IC promptly for all out-of-pocket expenses (including without limitation all
reasonable fees and expenses of counsel) incurred by IC in connection with this
engagement hereunder. Further, the Company will be responsible for all other
expenses associated with the Transaction and placement of the Financing,
including, but not limited to, its own accounting and legal fees, printing and
travel costs, and legal costs of the investors. Reimbursement of out-of-pocket
expenses will be paid to IC promptly by the Company whether or not the proposed
Transaction or Financing is consummated. IC will be paid a cash deposit of
$50,000 ("Deposit") against expenses upon execution of this Agreement and any
unused amounts of the Deposit will be returned to the Company upon demand.
In the event that the consideration in a Transaction is paid in whole
or in part in the form of securities or other assets, the value of such
securities or other assets, for the purposes of calculating IC's fee, shall be
the fair market value thereof, as the parties hereto shall mutually agree, on
the day prior to the consummation of the Transaction; provided that, if such
consideration includes securities with an existing public trading market, the
value thereof shall be determined by the last sales price for such securities on
the last trading day thereof prior to such consummation.
A Transaction shall be deemed to have been consummated upon the
earliest of any of the following events to occur: (i) the acquisition of a
majority of the outstanding common stock of the Target by the Company calculated
on a fully diluted basis; (ii) a merger or consolidation of the Target with or
into the Company; (iii) the acquisition by the Company of substantially all of
the Target's assets; or (iv) in the case of any other Transaction, the
consummation thereof. The proposed Financing shall be deemed to have been
consummated upon the closing thereof.
In the event that a letter of intent or a definitive agreement is
reached between the Company and the Target, and the Company, for any reason, is
paid a break-up fee, topping fee, or any other termination fee or any fee paid
in lieu of the completion of the Transaction, IC will be entitled to and paid
25.0% of said fee.
If the Company completes a transaction in lieu of the proposed
Financing or IC presents the Company with reasonable proposals which the Company
declines to accept the Company will pay to IC the compensation due under this
section 2.
Section 3. Term of Engagement. This Agreement may be terminated by
either party hereto upon 30 days written notice. Upon any termination or
expiration of this agreement, IC will be entitled to prompt payment of all fees
accrued prior to such termination or expiration and reimbursement of all
out-of-pocket expenses described above. Sections 2, 3, 5, 6, 9 and 11 of this
Agreement and the indemnity and other
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January 13, 1998
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provisions contained in Schedule I will also remain operative and in full force
and effect regardless of any termination or expiration of this agreement.
In addition, if at any time prior to 24 months after the termination or
expiration of this Agreement the Company enters into a financing transaction
with respect to the Target with proposed Purchasers introduced to the Company by
IC or any transactions with respect to the Target, IC, in addition to any fee
and expense reimbursement otherwise owing pursuant to Section 2 of this
Agreement, shall be entitled to payment in full of the compensation described in
Section 2 of this Agreement with respect to such financing transaction or
transactions.
Section 4. Cooperation. To the extent possible, the Company will
furnish IC with all financial and other information and data as IC believes
appropriate in connection with its activities on the Company's behalf, and shall
provide IC full access to its officers, directors, employees and professional
advisors. In addition, the Company with the assistance of IC will be responsible
for preparing the Offering Materials relating to any proposed Financing. The
Company agrees that it and its counsel will be solely responsible for ensuring
that the Transaction, the Financing and the Offering Materials comply in all
respects with the applicable law. The Company will also cause to be furnished to
IC at the closing of the Transaction copies of such agreements, opinions,
certificates and other documents delivered at the closing as IC may request. The
Company will promptly notify IC if it learns of any material inaccuracy or
misstatement in, or material omission from, any information theretofore
delivered to IC. IC represents that it is a registered broker dealer, as defined
by the NASD, permitted to act as agent in the private placement of the
Securities.
The Company recognizes and confirms that IC, in connection with
performing its services hereunder: (i) will be relying without investigation
upon all information that is available from public sources or supplied to it by
or on behalf of the Company, or its advisors, (ii) shall not in any respect be
responsible for the accuracy or completeness of, or have any obligation to
verify, the same, (iii) will not conduct any appraisal of any assets of the
Company, and (iv) may require that the Offering Materials contain appropriate
disclaimers consistent with the foregoing. The Company recognizes and confirms
that IC will be relying on the Company for the information that it will be
providing to IC.
Section 5. Confidentiality. The Company agrees that, except as
otherwise required by law, in the opinion of the Company's counsel, any advice,
written or oral, provided by IC pursuant to this Agreement will be treated by
the Company as confidential, will be solely for the information and assistance
of the Company in connection with its consideration of a transaction of the type
referred to in Section 1 of this agreement and will not be used, circulated,
quoted or otherwise referred to for any other purpose, nor will it be filed
with, included in or referred to, in whole or in part, in any registration
statement, proxy statement or any other communication, whether written
(including, without limitation, the Offering Materials) or oral, prepared,
issued or transmitted by the Company or any affiliate, director, officer,
employee, agent or representative of any thereof, without, in each instance,
IC's prior written consent.
Further, in connection with this engagement of IC, it is contemplated
that the Company, or the Target may supply to IC certain non-public or
proprietary information ("Confidential Information"). The Company agrees to use
its best efforts to appropriately mark all such information which is delivered
in written form. IC shall use Confidential Information solely for the purposes
of rendering services pursuant to and in accordance with this engagement and
shall not, without the prior written consent of the Company, disclose any
Confidential Information to any person, other than its officers, directors,
employees and outside advisors with a need to know; provided, however, that the
foregoing shall not apply to any information which becomes publicly available
other than as a result of the breach of IC's undertakings hereunder, or that
which IC is required to disclose by judicial or administrative process in
connection with any action, suit, proceeding or claim.
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Section 6. Conflicts. The Company acknowledges that IC and its
affiliates may have and may continue to have investment banking and other
relationships with parties other than the Company pursuant to which IC may
acquire information of interest to the Company. IC shall have no obligation to
disclose such information to the Company, or to use such information in
connection with any contemplated financing. The Company recognizes that IC is
being engaged hereunder to provide the services described above only to the
Company and is not acting as an agent or a fiduciary of, and shall have no
duties or liability to, the equity holders of the Company or any third party in
connection with its engagement hereunder, all of which are hereby expressly
waived. No one other than the Company is authorized to rely upon the engagement
of IC hereunder or any statements, advice, opinions or conduct by IC.
Section 7. Exclusivity. The Company agrees that no other financial
advisor is or will be authorized by it during the term of this Agreement to
perform services on its behalf of the type which IC is authorized to perform
hereunder. Except as otherwise provided in Section 2, no fee payable to any
other financial advisor either by the Company or any other entity shall reduce
or otherwise affect the fees payable hereunder to IC.
Section 8. Public Announcements. Subject to the restrictions set forth
in Section 5 of this Agreement, IC shall have the right to place announcements
and advertisements in financial and other newspapers and journals, at its own
expense, describing their services in connection with a Transaction and the
Financing, provided that IC obtain the Company's prior written consent, which
consent will not be unreasonably withheld.
Section 9. Complete Agreement; Severability; Amendments; Assignment.
This Agreement embodies the entire agreement and understanding between the
parties hereto and supersedes any prior agreements and understandings relating
to the subject matter hereof. If any provision of this Agreement is determined
to be invalid or unenforceable in any respect, such determination will not
affect such provision in any other respect or any other provision of this
Agreement, which will remain in full force and effect. This Agreement may not be
amended or otherwise modified or waived except by an instrument in writing
signed by both IC and the Company. This Agreement may not be assigned by either
party without the prior written consent of the other party.
This Agreement shall be binding upon and inure to the benefit of the
Company, IC, each Indemnified Person (as defined in Schedule I hereto) and their
respective successors and assigns.
Section 10. Right of Notification. The Company agrees that they shall
notify IC of any plans they may have to pursue any private placement or public
offering of securities for the Company and shall offer IC the right to
participate in such private placement or equity offering, on terms and for fees
which are mutually acceptable to the Company and IC. The foregoing
notwithstanding, under no circumstances shall IC be obligated to accept any
offer to act as the Company's placement agent or underwriter in any such private
placement or equity offering.
Section 11. Governing Law; Forum. This Agreement will be governed by,
and construed in accordance with, the laws of the state of California applicable
to agreements made and to be performed entirely in such state. Each of the
Company and IC agree that any action or proceeding based hereon, or arising out
of IC's engagement hereunder, shall be brought and maintained exclusively in the
courts of the state of California or in the United States District Court for
California. The Company and IC each hereby irrevocably submit to the
jurisdiction of the courts of the state of California and of the United States
District Court of California for the purpose of any such action or proceeding as
set forth above and irrevocably agree to be bound by any judgment rendered
thereby in connection with such action or proceeding. Each of
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the Company and IC hereby irrevocably waive, to the fullest extent permitted by
law, any objection which it may have or hereafter may have to the laying of
venue of any such action or proceeding brought in any such court referred to
above and any claim that any such action or proceeding has been brought in an
inconvenient forum. The Company (for itself, anyone claiming through it or its
name, and on behalf of its equity holders) and IC each hereby irrevocably waive
any right they may have to a trial by jury in respect of any claim based upon or
arising out of this agreement, the Transaction or the proposed Financing
contemplated hereby.
Please confirm that the foregoing correctly sets forth our agreement by
signing and returning to IC the enclosed original copy of this Agreement.
Very truly yours,
IMPERIAL CAPITAL, LLC
By: /s/ XXXX XXXXX
------------------------------
Xxxx Xxxxx
Managing Director
Accepted as of the date written above,
NEWRIDERS, INC.
By: /s/ XXXXXXX X. XXXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxxx
President & Chief Executive Officer
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January 13, 1998
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SCHEDULE I
This Schedule I is a part of and is incorporated into that certain letter
agreement (together, the "Agreement") dated January 13, 1998 by Newriders, Inc.
(which together with its subsidiaries and affiliates is hereinafter referred to
as the "Company") and Imperial Capital, LLC ("IC").
This Schedule will confirm that the Company agrees to indemnify and hold
harmless IC and its affiliates, the respective directors, officers, and
employees of IC and its affiliates and each other person, if any, controlling IC
or any of its affiliates (IC and each such person and entity being referred to
as an "Indemnified Person"), to the full extent lawful, from and against any
losses, claims, damages or liabilities or actions (including without limitation
shareholder actions and actions arising from the use of information contained in
the Offering Materials or omissions from such materials) related to or arising
out of this engagement or IC's role in connection herewith, and will pay (or, if
paid by an Indemnified Person, reimburse such Indemnified Person) for all
reasonable fees and expenses (including without limitation reasonable counsel
fees) incurred by such Indemnified Person in connection with investigating,
preparing or defending any such action or claim, whether or not in connection
with pending or threatened litigation in which any Indemnified Person is a
party. The Company will not, however, be responsible for any claims,
liabilities, losses, damages or expenses which result from any compromise or
settlement not approved by the Company or which result primarily from the fraud,
willful misconduct or gross negligence of any Indemnified Person. The Company
also agrees that no Indemnified Person shall have any liability to the Company
for or in connection with this engagement, except for any such liability for
losses, claims, damages, liabilities or expenses incurred by the Company that
result from the fraud, willful misconduct or gross negligence of the Indemnified
Person or the violation of any applicable law, rule or regulation. The foregoing
agreement shall be in addition to any rights that any Indemnified Person may
have at common law or otherwise, including without limitation any right to
contribution.
If any action or proceeding is brought against any Indemnified Person
in respect of which indemnity may be sought against the Company pursuant hereto,
or if any Indemnified Person receives notice from any potential litigant of a
claim which such person reasonably believes will result in the commencement of
any such action or proceeding, such Indemnified Person shall promptly notify the
Company in writing of the commencement of such action or proceeding, or of the
existence of any such claim, but the failure so to notify the Company of any
such action or proceeding shall not relieve the Company from any other
obligation or liability which it may have to any Indemnified Person otherwise
than under this Agreement or with respect to any other action or proceeding. In
case any such action or proceeding shall be brought against any Indemnified
Person, the Company shall be entitled to assume the defense of such action or
proceeding with counsel of the Company's choice, or compromise or settle such
action or proceeding, at its expense (in which case the Company shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by such Indemnified Person); provided, however, that such counsel shall
be satisfactory to the Indemnified Person in the exercise of its reasonable
judgment. Notwithstanding the Company's election to assume the defense of such
action or proceeding, such Indemnified Person shall have the right to employ
separate counsel and to participate in the defense of such action or proceeding,
and the Company shall bear the reasonable fees, costs and expenses of such
separate counsel (and shall pay such fees, costs and expenses at least
quarterly), if (i) the use of counsel chosen by the Company to represent such
Indemnified Person would, in the reasonable judgment of the Indemnified Person,
present such counsel with a conflict of interest; (ii) the defendants in, or
targets of, any such action or proceeding include both an Indemnified Person and
the Company, and such Indemnified Person shall have reasonably concluded that
there may be legal defenses available to it or to other Indemnified Persons
which are different from or additional to those available to the Company (in
which case the Company shall not have the right to direct the defense of such
action or proceeding on behalf of the Indemnified Person); (iii) the Company
shall not have employed counsel satisfactory to such Indemnified Person in the
exercise
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of the Indemnified Person's reasonable judgment to represent such Indemnified
Person within a reasonable time after notice of the institution of such action
or proceeding; or (iv) the Company shall authorize such Indemnified Person to
employ separate counsel at the Company's expense.
In order to provide for the just and equitable contribution, if a claim
for indemnification hereunder is found unenforceable in a final judgment by a
court of competent jurisdiction (not subject to further appeal), even though the
express provisions hereof provide for indemnification in such case, then the
Company and IC shall contribute to the losses, claims, damages, judgments,
liability or costs to which the Indemnified Person may be subject in accordance
with the relative benefits received by, and the relative fault of, each in
connection with the statements, acts or omissions which resulted in such losses,
claims, damages, judgments, liabilities, or costs. The Company agrees that a pro
rata allocation would be unfair. No person found liable for a fraudulent
misrepresentation or omission shall be entitled to contribution from any person
who is not also found liable for such fraudulent misrepresentation or omission.
Notwithstanding the foregoing, IC shall not be obligated to contribute to any
amount hereunder that exceeds the amount of fees previously received by IC for
its services to the Company.
These indemnification provisions shall (i) remain operative and in full
force and effect for a period of ten years regardless of any termination or
completion of the engagement of IC; (ii) inure to the benefit of any successors,
assigns, heirs or personal representative of any Indemnified Person or the
Company; and (iii) be in addition to any other rights that any Indemnified
Person or the Company may have.
