EXHIBIT 10.12
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BUSINESS COMBINATION SERVICES AGREEMENT
This Agreement has been entered into and is effective October 1, 2005 by and
between BRIDGELINE Software, Inc., located at Xxxxx Xxxx, Xxxxxx, XX 00000
("BRIDGELINE") and Xxxxxx Xxxxxx & Co., LLC, located at Thirty Xxxxx Xxxxxx, Xxx
Xxxx, XX 00000 ("JGUN").
By execution of this document (the "M &A Agreement"), BRIDGELINE agrees to
retain JGUN and JGUN agrees to be retained by BRIDGELINE, pursuant to the
following terms and conditions:
1. SERVICES.
JGUN shall devote general advisory/consultative time and attention to
any presently ongoing and potentially upcoming BRIDGELINE transactional
business combination matters (the "Services") about which BRIDGELINE
shall request its services, pursuant to the direction of Xxxxxx X.
Xxxxxx, BRIDGELINE'S Chief Executive Officer, or others designated by
Xxxxxx X. Xxxxxx, as shall be determined reasonable, in scope and time
required, by JGUN. It is acknowledged by BRIDGELINE and JGUN that
BRIDGELINE shall not be required to accept nor use any Services
provided by JGUN. It is further acknowledged by BRIDGELINE and JGUN
that financial advisory services and capital raising Services are not
services contemplated by this M & A Agreement.
2. TERM.
JGUN's retention shall be for twelve (12) months commencing October 1,
2005 (the "Term"); automatically renewed yearly ("Renewed Term") unless
either BRIDGELINE or JGUN notifies the other of its intention to not
renew at least ninety (90) calendar days prior to the expiration of the
then applicable term; or if, during any initial or Renewed Term, two
(2) or more business combinations involving BRIDGELINE (or one of its
affiliates) is consummated. Notwithstanding anything to the contrary
contained herein, in the event JGUN fails to exercise good faith in
processing a bridge acquisition financing or initial public offering
("IPO") on behalf of Bridgeline and BRIDGELINE elects not to proceed
with the bridge acquisition financing or IPO as a result of such
failure, BRIDGELINE may terminate this M & A Agreement. Notwithstanding
anything to the contrary contained herein, in the event that during the
processing of the Bridge Acquisition Financing JGUN and BRIDGELINE are
unable to agree on the satisfaction of any or all of the Miscellaneous
Conditions to Financing set forth in the Bridge Acquisition Letter of
Intent, BRIDGELINE may immediately terminate this M&A Agreement.
3. COMPENSATION.
(a) For BUSINESS COMBINATION TRANSACTIONS (MERGER, ACQUISITION,
SALE AND JOINT VENTURE): JGUN shall be entitled to receive,
at closing, cash compensation equal to six percent (6%) of
the Total Consideration (as hereinafter defined; see Exhibit
A) relating to (i) any acquisition of 20% or more of the
stock or assets of any company consummated during the Term
or, if applicable, any Renewed Term (or agreed to pursuant
to term sheet, letter of intent or similar during the Term
or, if applicable, any Renewed Term, and thereafter
consummated) (ii) any sale of 20% or more of the stock or
assets of BRIDGELINE (exclusive of an IPO of its common
stock) consummated during the Term or, if applicable, any
Renewed Term (or agreed to pursuant to term sheet, letter of
intent or similar during the Term or, if applicable, any
Renewed Term, and thereafter consummated) and/or (iii) any
merger or other business combination, including joint
ventures, involving BRIDGELINE, consummated during the Term
or, if applicable, any Renewed Term (or agreed to pursuant
to term sheet, letter of intent or similar during the Term
or, if applicable, any Renewed Term, and thereafter
consummated) (compensation for any such transaction set
forth in (i) - (iii) during the Term
or Renewed Term(s), if applicable, the "Success Fee"). In no
event shall the Success Fee payable be less than $125k or
more than $375k for any one Business Combination
Transaction, net of any Advance Credits (as will be
described in Section 3 (b) following).
(b) ADVANCES: During the Term and, if applicable, Renewed
Term(s), BRIDGELINE shall remit to JGUN non-refundable cash
advances (the "Advance Credits") to be credited against
Success Fees earnable, as follows: $7500 monthly commencing
October 1, 2005, increasing to $10,000 monthly if and when
BRIDGELINE consummates a capital raise of at least
$1,000,000, increasing to $15,000 monthly if and when
BRIDGELINE consummates an initial public offering of its
common stock.
(c) EXPENSES: BRIDGELINE shall reimburse JGUN, as and when
billed, for out-of-pocket expenses reasonably incurred by
JGUN in connection with Services provided or to be provided.
Such expenses contemplated may include, but are not limited
to, printing, postage, travel, and lodging. It is
acknowledged by JGUN that no single such expense in excess
of $1000 or monthly aggregate expense in excess of $5000
shall be incurred without prior approval by BRIDGELINE.
4. EXCLUSIVITY.
BRIDGELINE agrees that JGUN shall have a preferential right during the
Term and any Renewed Term(s), if applicable, to provide Services to
BRIDGELINE, and that so long as JGUN stands ready to provide Services
on a good faith basis, it shall be entitled to the Success Fee
compensation described in Section 3 (a) above, for any Business
Combination Transaction described in Section 3 (a) (i) - (iii)
consummated during the Term or, if applicable, any Renewed Term (or
agreed to pursuant to term sheet, letter of intent or similar during
the Term or, if applicable, any Renewed Term, and thereafter
consummated).
5. LIABILITY AND INDEMNIFICATION.
(a) It is acknowledged by BRIDGELINE that JGUN shall not be
subject to liability to BRIDGELINE or to any affiliate,
officer, director, employee, shareholder or creditor of
BRIDGELINE by virtue of any act or omission in the course of
or connected with the rendering or providing Services,
except for JGUN acts of bad faith or gross negligence.
(b) BRIDGELINE agrees to defend, indemnify and hold harmless
JGUN from and against any and all costs, expenses, and
liabilities (including reasonable attorney's fees) which may
in any way result from Services rendered by JGUN pursuant to
or in connection with this Agreement, except for JGUN acts
of bad faith or gross negligence.
6. NOTICES.
Notices must be sent to BRIDGELINE and JGUN at their respective
addresses set forth above to the attention of Xxxxxx X. Xxxxxx at
BRIDGELINE and Xxxxxxx X. Xxxxx at JGUN. Any Notice must be given by
registered or certified mail, postage prepaid, and shall be deemed to
have been given when deposited in the placecountry-regionUnited States
mail. 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 in the manner described in this section.
7. GOVERNING LAW.
This Agreement has been made in the State of New York and shall be
construed and governed in accordance with its laws. Any action relating
to this Agreement shall be brought only in Federal and State courts in
the City, County and State of New York.
8. ENTIRE AGREEMENT.
This Agreement contains the entire Agreement between BRIDGELINE and
JGUN, and may not be altered or modified, except in writing and signed
by both.
9. BINDING EFFECT.
This Agreement shall be binding upon BRIDGELINE and JGUN and their
respective heirs, administrators, successors and assigns and may only
be assigned upon written agreement of BRIDGELINE and JGUN.
The terms and conditions described above are understood and acceptable:
Xxxxxx Xxxxxx & Co., LLC Bridgeline Software, Inc.
(with Board of Directors approval)
By: /S/ XXXXXXX X. XXXXX By: /S/ XXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxx, Member Xxxxxx X. Xxxxxx, CEO
EXHIBIT A
TO BUSINESS COMBINATION SERVICES AGREEMENT (THE M & A AGREEMENT)
DATED SEPTEMBER 30, 0000 XXXXXXX XXXXXXXXXX SOFTWARE, INC.
("BRIDGELINE") AND XXXXXX XXXXXX & CO., LLC ("JGUN")
Definition of Total Consideration: See Section 3 (b) of M & A Agreement
For purposes of the M & A Agreement, "Total Consideration" shall mean the
total value of all cash, securities, or other property paid at the closing
of a Business Combination Transaction (as defined by Section 3a of the M &
A Agreement), (or to be paid in the future) either to BRIDGELINE or its
shareholders with respect to such Business Combination Transactions,
including, without limitation, consideration paid in respect of (i) the
assets of the acquired company, (ii) the capital stock of the acquired
company (and any securities convertible into options, warrants or other
rights to acquire such capital stock) and (iii) the assumption, directly or
indirectly (by operation of law or otherwise), of any long-term liabilities
of the acquired company or repayment of indebtedness, including without
limitation, indebtedness secured by the assets of the acquired company. In
the event a Business Combination Transaction is consummated in one or more
steps, including without limitation, any additional consideration paid or
to be paid in any subsequent step as set forth above, such additional
consideration shall be included in the definition of "Total Consideration".
If all or portion of the Total Consideration paid in the Business
Combination Transaction is other than cash or negotiable securities, then
the value of such non-cash consideration shall be the fair market value
thereof on the date the global sale transaction to Business Combination
Transaction is consummated as mutually agreed upon in good faith by
BRIDGELINE and JGUN. If such non-cash consideration consists of common
stock, options, warrants or rights for which a public trading market
existed prior to consummation of the Business Combination Transaction, then
the value of such securities shall be determined by the closing or last
sales price thereof on the date of the consummation of the Business
Combination Transaction; provided, however, that if any of such non-cash
consideration consists of newly-issued, publicly traded common stock,
options, warrants or rights for which no public trading markets existed
prior to the consummation of the Business Combination Transaction, then the
value thereof shall be the average of the closing prices for the 20 trading
days subsequent to the fifth trading day after the consummation of the
Business Combination Transaction. In such event, the fee payable to JGUN
with respect to such securities shall be paid on the 30th trading day
subsequent to consummation of the Business Combination Transaction. If no
public market exists for the common stock, options, warrants or rights
issued in the Business Combination Transactions, then the value of such
securities shall be as mutually agreed upon in good faith by BRIDGELINE'S
board of directors and JGUN. If such non-cash consideration consists of
preferred stock or debt securities (regardless of whether a public trading
market existed for such preferred stock or debt securities prior to the
consummation of the Business Combination Transaction or exists thereafter),
the value thereof shall be the fair market value of such non-cash
consideration. Any amounts payable to or by BRIDGELINE, or any affiliate of
BRIDGELINE or any shareholder of BRIDGELINE in connection with a
non-competition agreement or any employment, consulting, licensing, supply
or other agreement, to the extent that such amounts payable are greater
than what would customarily be paid on arms-length basis to an employee,
consultant, licensee or supplier, shall be deemed to be part of the
consideration paid in the Business Combination Transaction includes future
payments, then BRIDGELINE shall pay JGUN any additional cash fee,
determined in accordance with this definition, when, and if, such payments
are paid.
