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Exhibit 10.8
[LOGO] 000 XXXXX XXXXXX, XXX XXXX, XX 00000 212 297-5600
Commonwealth Associates
INVESTMENT BANKING
Northstar Health Services, Inc.
The Atrium
000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000 June 9, 1997
Gentlemen,
This letter, when executed by the parties hereto, will constitute an
agreement between Northstar Health Services, Inc. ("Northstar" or "the Company")
and Commonwealth Associates ("Commonwealth"), pursuant to which the Company
agrees to retain Commonwealth and Commonwealth agrees to be retained by the
Company under the following terms and conditions:
1. The Company hereby retains Commonwealth to perform advisory services
related to corporate finance, capital raising, capital restructuring and
mergers and acquisitions, and Commonwealth hereby accepts such retention
for a term commencing on the date hereof and ending on December 31, 1997
(other than with respect to its retention under paragraphs 3(i) and (ii)
below), with automatic extensions thereto unless thereafter terminated by
either party with a minimum of 60 days prior written notice to the other.
In this regard, and subject to the terms set forth below, Commonwealth
specifically shall furnish to the Company advice and recommendations with
respect to (i) the restructuring of the Company's senior indebtedness to
IBJ Xxxxxxxx Bank and Trust Co., including its possible acquisition or
pay-out by another lending institution; (ii) the restructuring of the
Company's junior indebtedness to Xxxxxx X. Xxxxxx and his family
partnership; (iii) the manner and timing of public or private offerings of
Northstar's securities; and (iv) any inquiries received or to be made by
the Company with respect to possible sales, mergers, acquisitions or
business combinations.
2. As compensation for the services described in paragraph 1 above the Company
shall issue to Commonwealth, at the execution hereof, as an initial
non-refundable retainer fee, five year warrants, in a form designated by
Commonwealth and acceptable to the Company, to purchase up to 100,000
shares of the Company's Common Stock, at a strike price equal to 120% of
the average closing bid price of the Company's Common Stock for the five
preceding business days. As additional compensation the Company shall pay
monthly non-refundable cash retainer payments of $6,500 payable on the
first day of each month starting on July 1, 1997. In addition, the exercise
price of the 87,500 warrants to purchase
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shares of the Company's Common Stock issued to Commonwealth Associates and
certain of its directors, officers, and employees in connection with the
Company's public offering of Common Stock in May 1995 shall be reset to the
same exercise price as above. Commonwealth also shall receive from the
Company the following incentive compensation:
(i) Upon successful completion of the restructuring of the Company's
senior indebtedness a cash fee equal to 1.5% of the principal amount
restructured; and
(ii) Upon successful completion of the restructuring of the Company's
junior indebtedness a cash fee equal to .5% of the principal amount
restructured. However, should Commonwealth Associates arrange or
provide services in connection with a third party financing, a cash
fee equal to 1.5% of the principal amount shall be due and payable at
the closing of such financing.
3. (i) In the event that the Company engages in a sale to or a merger or
combination with another entity having an actual or implied value of
greater than $10 million (value being defined as the sum of all
consideration to be exchanged or offered to Northstar and/or its
shareholders, including but not limited to cash, securities,
assumption of debt and deferred and/or contingent payments),
Commonwealth shall act as the Company's investment banker in any such
transaction and shall receive the following cash fees upon its
closing:
o 1.5% of the value of the transaction up to and including $50
million;
o 1.125% of any value in excess of $50 million up to and
including $100 million; and
o 0.75% of any value in excess of $100 million.
(ii) In the event that the Company engages in an acquisition or the
purchase of assets of another company having an actual or implied
value of greater than $10 million, Commonwealth shall act as the
Company's investment banker in any such transaction and shall receive
the following cash fees upon its closing:
o 2.25% of the first $25 million value of the transaction;
o 1.5% of the second $25 million value of the transaction; and
o 0.75% of any value in excess of $50 million.
Commonwealth's rights under these paragraphs 3(i) and (ii) shall survive
the expiry of this agreement by a period of nine months.
4. In the event that the Company engages in a transaction or transactions to
issue its securities (whether publicly or privately), Commonwealth shall
have the right of first negotiation to lead-manage or co-manage any such
transaction on terms and conditions to be mutually agreed with the Company.
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5. The Company will reimburse Commonwealth, monthly in arrears, for
Commonwealth's reasonable expenses incurred in the performance of its
duties and Commonwealth shall account for such expenses to the Company
setting forth in reasonable detail the amount and reason for such cost or
expense.
6. All obligations of Commonwealth contained herein shall be subject to
Commonwealth's reasonable availability for such performance, in view of the
nature of the requested service and the amount of notice received.
Commonwealth shall devote time and effort to the performance of its duties
hereunder as Commonwealth shall determine is reasonably necessary for such
performance. Commonwealth may look to others for information, investment
recommendations, economic advice and/or research, upon which to base its
advice to the Company hereunder, as it shall deem appropriate. The Company
shall furnish to Commonwealth all information relevant to the performance
by Commonwealth. In the event that the Company fails to furnish any such
material or information when reasonably requested by Commonwealth and thus
prevents or impedes Commonwealth's performance hereunder, any inability of
Commonwealth to perform shall not be a breach of its obligations
7. Commonwealth will hold, and will use its commercially reasonable efforts to
cause its officers, directors, employees, consultants, advisors, and agents
to hold in confidence any confidential information which the Company
provides to Commonwealth pursuant to this Agreement. Commonwealth may
disclose such information to its officers, directors, employees,
consultants, advisors, and agents, in connection with the services to be
rendered as contemplated by this Agreement, so long as such persons are
informed by Commonwealth of the confidential nature of such information and
are directed by Commonwealth to treat such information confidentially in
accordance herewith. Notwithstanding the forgoing, Commonwealth shall not
be required to maintain confidentiality with respect to information (i)
which is or becomes part of the public domain; (ii) of which Commonwealth
had independent knowledge prior to disclosure to it by the Company; (iii)
which comes into the possession of Commonwealth in the normal and routine
course of its own business from and through independent non-confidential
sources; or (iv) which is required to be disclosed by Commonwealth by
governmental requirements. If Commonwealth is requested or required (by
oral questions, interrogatories, requests of information document
subpoenas, civil investigative demands, or similar process) to disclose any
confidential information supplied to it by the Company, or its
representatives. Commonwealth shall, unless prohibited by law, promptly
notify the Company of such request(s) so that the Company may seek an
appropriate protective order.
8. The Company agrees to the indemnification and other agreements set forth in
the Indemnification Agreement attached hereto, the provisions of which are
incorporated herein reference and shall survive the termination,
expiration per supercession of this Agreement.
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9. This Agreement may not be transferred, assigned or delegated by any of the
parties hereto without the prior written consent of the other party hereto.
10. Any notice hereunder shall be sent to the Company and to Commonwealth at
their respective addresses set forth above. Any notice shall be given by
hand delivery, facsimile transmission or overnight delivery or courier
service, against receipt thereof, and shall be deemed to have been given
when received. Either party may designate any other address to which notice
shall be given, by giving written notice to the other of such change of
address.
11. This Agreement has been made in the State of New York and shall be
construed and governed in accordance with the laws as thereof without
giving effect to principles governing conflicts of law.
12. This Agreement contains the entire agreement between the parties and, may
not be altered or modified, except in writing and signed by each party.
13. In the event any dispute exists hereunder, the prevailing party shall be
able to recover form the other party its legal fees and expenses in
addition to any other recovery in such litigation or arbitration. The
parties hereto agree to arbitrate any such dispute hereunder in New York
City, State of New York (site of Commonwealth's primary office) in
accordance with the standards of the AAA.
If you are in agreement with the foregoing, please execute two copies of
this letter in the space provide below and return them undersigned.
Yours sincerely,
COMMONWEALTH ASSOCIATES
/s/ XXXXXXX X. XXXXX /s/ XXXXXX X. XXXXX
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Xxxxxxx X. Xxxxx Xxxxxx X. Xxxxx
Senior Managing Director Managing Director
[Signature page follows)
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By: Commonwealth Associates Management, Inc
as General Partner
By: /s/ XXXXX XXXXXXXX
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Title: C.O.O.
Name: Xxxxx Xxxxxxxx
Agreed to and accepted as of this date
NORTHSTAR HEALTH SERVICES, INC.
By: /s/ XXXXXX X. XXXXXX
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Name: Xxxxxx X. Xxxxxx
Title: Chairman & Chief Executive Officer
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NORTHSTAR HEALTH SERVICES, INC.
THE ATRIUM
000 XXXXXXXXXXXX XXXXXX
XXXXXXX, XX 00000
Commonwealth Associates June 9, 1997
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Gentlemen:
This letter will confirm that we have engaged Commonwealth Associates, to
advise and assist us in connection with the matters referred to in our letter
agreement June 9, 1997 (the "Engagement Letter"). In consideration of your
agreement (the "Agreement") to act on our behalf in connection with such
matters, we agree to indemnify and hold harmless you and your affiliates and you
and your respective officers, directors, employees and agents and each other
person, if any, controlling you or any of your affiliates (you and each such
other person being an "Indemnified Person") from and against any losses, claims,
damages or liabilities related to, arising out of or in connection with the
engagement (the "Engagement") under the Engagement Letter, and will reimburse
each Indemnified Person for all expenses (including, to the extent set forth
below, reasonable fees and expenses of counsel) as they are incurred in
connection with investigating, preparing, pursuing or defending any action,
claim, suit, investigation or proceeding related to, arising out of or in
connection with the Engagement, whether or not pending or threatened and whether
or not any Indemnified Person is a party. Promptly after receipt by an
Indemnified Person of the commencement of any such action, such Indemnified
Person will, if a claim in respect thereof is to be made against us hereunder,
notify us of the commencement thereof; but the failure to so notify us will not
relieve us from liability except to the extent of actual prejudice caused
thereby. Upon such notification, we shall be entitled to participate in the
action and, upon notice thereof to the Indemnified Person, to assume the defense
thereof with counsel of our choice reasonably satisfactory to you who may,
except in the case of manifest conflict, be counsel to us and other parties
similarly situated, whereupon we will not be liable to such Indemnified Party
for any legal or other expenses subsequently incurred by such Indemnified Person
in connection with the defense thereof other than reasonable costs of
investigation. We will not, however, be responsible for any losses, claims,
damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted from the bad faith or gross negligence of
any Indemnified Person. We also agree that no Indemnified Person shall have any
liability, (whether direct or indirect, in contract or tort or otherwise), to us
for or in connection with the Engagement, except for any such liability for
losses, claims, damages or liabilities incurred by us that are finally
judicially determined to have resulted from gross negligence or recklessness of
such Indemnified Person.
We will not, without your prior written consent, settle, compromise,
consent to the entry of any judgment in or otherwise seek to terminate any
action, claim, suit or
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proceeding in respect of which indemnification may be sought hereunder (whether
or not any Indemnified Person is a party thereto) unless such settlement,
compromise, consent or termination includes a release of each Indemnified Person
from any liabilities arising out of such action, claim, suit or proceeding. No
Indemnified Person seeking indemnification, reimbursement or contribution under
this agreement will, without our prior written consent, settle, compromise,
consent to the entry of any judgment in or otherwise seek to terminate any
action, claim, suit, investigation or proceeding referred to in the preceding
paragraph.
If the indemnification provided for in the first paragraph of this
agreement is judicially determined to be unavailable (other than in accordance
with the third sentence of the first paragraph hereof) to an Indemnified Person
in respect of any losses, claims, damages or liabilities referred to herein,
then, in lieu of indemnifying such Indemnified Person hereunder, we shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities (and expenses relating thereto)
(i) in such proportion as is appropriate to reflect the relative benefits to
you, on the one hand, and us, on the other hand, of the Engagement or (ii) if
the allocation provided by clause (i) above is not available, in such proportion
as is appropriate to reflect not only the relative benefits referred to in such
clause (i) but also the relative fault of each of you and us, as well as any
other relevant equitable considerations; provided, however, in no event shall
your aggregate contribution to the amount paid or payable exceed the aggregate
amount of cash fees actually received by you under the Engagement Letter. For
the purposes of this Agreement, the relative benefits to us and you of the
Engagement shall be deemed to be in the same proportion as: (a) the total value
paid or contemplated to be paid or received or contemplated to be received by us
or our shareholders, as the case may be, in the transaction or transactions by
you that are the subject of the Engagement, whether or not any such transaction
is consummated, bears to (b) the cash fees paid or to be paid to you under the
Engagement Letter in respect of such transaction or transactions.
The provisions of this Agreement shall apply to the Engagement and any
modification thereof and shall remain in full force and effect regardless of
any termination or the completion of your services under the Engagement Letter.
This Agreement and the Engagement Letter shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
executed in and to be performed in that state.
Very truly yours,
Northstar Health Services, Inc.,
/s/ XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx
Chairman & Chief Executive Officer
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