EXHIBIT 10.12
[Jesup & Xxxxxx Securities Corporation Letterhead]
April 27, 1999
Xx. Xxxx X. Xxxxx
Chief Executive Officer
Healthcore Medical Solutions, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Dear Xx. Xxxxx:
This letter (including Exhibits A, B and C annexed hereto and made a
part hereof, all of which taken together constitute the "Engagement Agreement")
confirms our understanding and agreement with respect to the retention of Jesup
& Xxxxxx Securities Corporation (or, together with Jesup & Xxxxxx Capital
Markets, "Jesup & Xxxxxx"), as exclusive financial advisor to Healthcore Medical
Solutions, Inc. (referred to herein as "HMSI" or the "Company") in connection
with its merger ("Merger") with Adatom, Inc. ("Adatom") and as the Company's
exclusive placement agent in connection with the placement (the "Placement") of
equity securities (the "Securities"). The gross proceeds of the Placement are
estimated to be approximately $6.0 million. The Placement will be made solely to
accredited investors under SEC Regulation D and will be at the Company's
direction.
It is anticipated that the Placement will consist of approximately $6.0
million in Securities to take place after the Merger. It is anticipated that the
Placement will be at a price not less that $20 million. The specific terms of
the Placement, including but not limited to, the valuation and lock-up period
will be agreed to in writing by the Company and Jesup & Xxxxxx prior to the
commencement of the Placement
Upon the terms and subject to the conditions of this Engagement
Agreement, the parties hereto agree as follows:
1. APPOINTMENT. Subject to the terms and conditions of this
Engagement Agreement hereinafter set forth, the Company hereby retains Jesup &
Xxxxxx and Jesup & Xxxxxx hereby agrees to act as the Company's exclusive
placement agent and financial advisor in connection with the Merger and the
Placement, effective as of the date hereof. The Company expressly acknowledges
and agrees that Jesup & Xxxxxx'x obligations hereunder as Placement Agent are on
a best efforts basis only and that the execution of this Engagement Agreement
does not constitute a commitment by Xxxxx & Xxxxxx to purchase the Securities
nor ensure the successful placement of the Securities or any portion thereof, or
the success of Jesup & Xxxxxx with respect to securing any other financing on
behalf of the Company.
Jesup & Xxxxxx agrees to act as financial advisor with respect
to the following matters:
(i) assisting HSMI in structuring, negotiating and
advising on the Merger with Xxxxxx;
(ii) coordinating and advising on issues with NASDAQ and
SEC with regards to the Merger and Placement;
(iii) providing market-making activities and general
advisory services in connection with post-Merger investor
relations and communications, research coverage and
related;
(iv) providing general corporate finance advisory services
as required by the Company; and
(v) anything incidental to the above as directed by the
Company.
2. TERMS OF RETENTION. This Engagement Agreement shall
terminate at the close of business March 31, 2000 unless (a) it is extended by
agreement of the parties hereto; or (b) it is terminated sooner by either party
hereto providing not less than 30 days' prior written notice to the other party.
Notwithstanding anything herein to the contrary, the
obligation to pay the Fees and Compensation and Expenses described in Sections 3
and 4, if any, and paragraphs 2, 6, and 8 of Exhibit A and all of Exhibit B and
Exhibit C attached hereto, shall survive any termination or expiration of the
Engagement Agreement. It is expressly understood and agreed by the parties
hereto that any financing, whether through senior or subordinated debt or
equity, of the Company within 12 months of the termination of this Engagement
Agreement with any investors or lenders first identified and substantively
contacted by Jesup & Xxxxxx while this Engagement Agreement was in effect, and
relating to this Engagement Agreement, shall result in such fees and
compensation due and payable by the Company to Jesup & Xxxxxx under the same
terms of Sections 3 and 4 below. A complete list of all financing sources,
investors or lenders contacted by Xxxxx & Xxxxxx will be provided to the Company
upon termination of this Engagement Agreement.
3. FEES AND COMPENSATION. In consideration of the services to
be rendered by Xxxxx & Xxxxxx in connection with the Placement, the Company
agrees to pay Xxxxx & Xxxxxx the following fees and other compensation:
(a) immediately upon the signing of this Engagement Agreement,
a financial advisor fee (the "Financial Advisor Warrants") consisting of
five-year warrants to purchase 200,000 shares of Common Stock of HMSI at an
exercise price of $1.00 per share (100,000 to be granted upon execution of this
letter; and 100,000 to be granted upon the closing of the merger). The holders
of the Financial Advisor Warrants will have unlimited "piggyback" registration
rights, subject to standard underwriters' approval and contain, among other
things, cashless exercise.
(b) a cash fee payable immediately upon the closing of the
Placement equal to 8.0% of the gross amount of the Placement.
(c) immediately upon the closing of the Placement, five-year
warrants to purchase Securities equal to 10.0% of the Securities sold in the
Placement (the "Placement Agent Warrants"). The Placement Agent Warrants will be
exercisable at the price at which the Securities were sold in the Placement. The
holders of the Placement Agent Warrants will have unlimited "piggyback"
registration rights, subject to standard underwriters' approval and contain,
among other things, cashless exercise.
4. EXPENSES. HMSI shall promptly reimburse Jesup & Xxxxxx for
all Jesup & Xxxxxx'x reasonable out-of-pocket expenses incurred in rendering
services under this agreement. Jesup & Xxxxxx shall not incur expenses in excess
of $1,500 for any individual item, other than fees and disbursements of its
legal counsel, without first obtaining the Company's approval. The total
expenses shall not exceed $30,000 unless agreed to in writing by the Company.
5. RIGHT OF FIRST REFUSAL. Upon the Company's commercially
reasonable satisfaction with the completion of the Placement (which satisfaction
the Company and Jesup & Xxxxxx agree will not be unreasonably withheld), HMSI
shall grant Jesup & Xxxxxx an irrevocable right of first refusal for a period of
one year to assist HMSI in undertaking any additional capital raising activities
totaling $20 million or less for any given transaction (other than conventional
banking arrangements, bank borrowings and commercial debt financing). For any
capital raising activity of greater than $20 million, the role of Jesup &
Xxxxxx, if any, shall be determined at that time. Jesup & Xxxxxx will not be
entitled to any compensation upon the exercise of any outstanding warrants,
unless the Company engages Jesup & Xxxxxx under a separate engagement letter to
act as the Warrant Solution Agent
6. MISCELLANEOUS. This Engagement Agreement shall be governed
by, and interpreted and enforced in accordance with, the laws of the State of
New York applicable to instruments made and to be performed entirely within such
State.
This Engagement Agreement constitutes the entire understanding and
agreement between the parties with respect to its subject matter and there are
no agreements or understandings with respect to the subject matter which are not
contained in this Engagement Agreement. This Engagement Agreement may be
supplemented or modified from time to time, but only in writing and signed by
the party to be charged hereunder.
If the foregoing correctly sets forth our agreement, please confirm
this by signing and returning to us the duplicate copy of this letter.
We appreciate this opportunity to be of service and we look forward to
working with you on this matter.
Very truly yours,
JESUP & XXXXXX
SECURITIES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Xxxxxxx X. Xxxxxxxxx
Managing Director
Agreed to and Accepted
as of the Effective Date:
HEALTHCORE MEDICAL SOLUTIONS, INC.
By: /s/ Xxxx X. Xxxxx
-----------------
Xxxx X. Xxxxx
Chief Executive Officer
Acknowledged and Agreed subject to and
As of the closing of the Merger of Healthcore
Medical Solutions, Inc. and Adatom, Inc.
ADATOM, INC.
By: /s/ Xxxxxxx Xxxxxx
------------------
Xxxxxxx Xxxxxx
President
EXHIBIT A
STANDARD TERMS AND CONDITIONS
1. The Company shall promptly provide Jesup & Xxxxxx with all relevant
information about the Company (to the extent available to the Company
in the case of parties other than the Company) that shall be reasonably
requested or required by Jesup & Xxxxxx, which information shall be
accurate, to the best of the Company's ability, in all material
respects at the time furnished.
2. Jesup & Xxxxxx shall keep all information obtained from the Company
strictly confidential except: (a) for information which is otherwise
publicly available, or previously known to Jesup & Xxxxxx or was
obtained by Jesup & Xxxxxx independently of the Company and without
breach of Jesup & Xxxxxx'x Engagement Agreement with the Company; (b)
Jesup & Xxxxxx may disclose such information to its employees and
attorneys, and to financial institutions and others designated in
writing by the Company on a "need to know" basis but shall ensure that
all such employees and attorneys will keep such information strictly
confidential; and (c) pursuant to any order of a court of competent
jurisdiction or other governmental body.
3. The Company recognizes that in order for Jesup & Xxxxxx to perform
properly its obligations in a professional manner, it is necessary that
Jesup & Xxxxxx be informed of and, to the extent practicable,
participate in meetings and discussions between the Company and any
third party relating to the matters covered by the terms of Jesup &
Xxxxxx'x engagement.
4. The Company agrees that any report or opinion, oral or written,
delivered to it by Xxxxx & Xxxxxx is prepared solely for its
confidential use and shall not be reproduced, summarized, or referred
to in any public document or given or otherwise divulged to any other
person without Jesup & Xxxxxx'x prior written consent, except as may be
required by applicable law or regulation, which consent shall not be
unreasonably withheld or delayed.
5. No fee payable by the Company to any other financial advisor or
financing source committed to by the Company shall reduce or otherwise
affect any fee payable by the Company to Jesup & Xxxxxx.
6. The Company represents and warrants that: (a) it has full right, power
and authority to enter into this Engagement Agreement and to perform
all of its obligations hereunder; (b) this Engagement Agreement has
been duly authorized and executed and constitutes a valid and binding
Engagement Agreement of the Company enforceable in accordance with its
terms; and (c) the execution and delivery of this Engagement Agreement
and the consummation of the transactions contemplated hereby does not
conflict with or result in a breach of (i) the Company's certificate of
incorporation or by-laws or (ii) any Engagement Agreement to which the
Company is a party or by which any of its property or assets is bound.
EXHIBIT A (CONT'D)
7. Nothing contained in this Engagement Agreement shall be construed to
place Jesup & Xxxxxx and the Company in the relationship of partners or
joint venturers. Neither Jesup & Xxxxxx nor the Company shall represent
itself as the agent or legal representative of the other for any
purpose whatsoever nor shall either have the power to obligate or bind
the other in any manner whatsoever. Jesup & Xxxxxx in performing its
services hereunder, shall at all times be an independent contractor.
8. This Engagement Agreement has been and is made solely for the benefit
of Jesup & Xxxxxx and the Company and each of the persons, agents,
employees, officers, directors and controlling persons referred to in
Exhibit B and their respective heirs, executors, personal
representatives, successors and assigns, and nothing contained in this
Engagement Agreement shall confer any rights upon, nor shall this
Engagement Agreement be construed to create any rights in, any person
who is not a party to such Engagement Agreement, other than as set
forth in this paragraph.
9. Jesup & Xxxxxx is duly licensed and authorized to act in each state that it
will offer the Shares.
EXHIBIT B
INDEMNIFICATION
Recognizing that transactions of the type contemplated in this
engagement sometimes result in litigation and that the role of Xxxxx & Xxxxxx
Securities Corporation ("Jesup & Xxxxxx") is advisory, the Company agrees to
indemnify and hold harmless Jesup & Xxxxxx, its affiliates and their respective
officers, directors, employees, agents and controlling persons (collectively,
the "Indemnified Parties"), from and against any losses, claims, damages and
liabilities, joint or several, related to or arising in any manner out of any
transaction, proposal or any other matter (collectively, the "Matters")
contemplated by the engagement of Jesup & Xxxxxx xxxxxxxxx, and will promptly
reimburse the Indemnified Parties for all expenses (including reasonable fees
and expenses of legal counsel) as incurred in connection with the investigation
of, preparation for or defense of any pending or threatened claim related to or
arising in any manner out of any Matter contemplated by the engagement of Jesup
& Xxxxxx xxxxxxxxx, or any action or proceeding arising therefrom (collectively,
"Proceedings"), whether or not such Indemnified party is a formal party to any
such Proceeding. Notwithstanding the foregoing, the Company shall not be liable
in respect of any losses, claims, damages, liabilities or expenses that a court
of competent jurisdiction shall have determined by final judgment resulted
solely from (a) the gross negligence or willful misconduct of an Indemnified
Party, or (b) a material breach by Xxxxx & Xxxxxx of the terms of its
engagement. The Company further agrees that it will not, without the prior
written consent of Xxxxx & Xxxxxx xxxxxx compromise or consent to the entry of
any judgment in any pending or threatened proceeding in respect of which
indemnification may be sought hereunder (whether or not Jesup & Xxxxxx or any
Indemnified Party is an actual or potential party to such Proceeding), unless
such settlement, compromise or consent includes an unconditional release of
Jesup & Xxxxxx and each other Indemnified Party hereunder from all liability
arising out of such proceeding.
The Company agrees that if any indemnification or reimbursement sought
pursuant to this letter were for any reason not to be available to any
Indemnified Party or insufficient to hold it harmless as and to the extent
contemplated by this letter, then the Company shall contribute to the amount
paid or payable by such Indemnified Party in respect of losses, claims, damages
and liabilities in such proportion as is appropriate to reflect the relative
benefits to the Company and its stockholders on the one hand, and Jesup & Xxxxxx
on the other, in connection with the Matters to which such indemnification or
reimbursement relates or, if such allocation is not permitted by applicable law,
not only such relative benefits but also the relative faults of such parties as
well as any other equitable considerations. It is hereby agreed that the
relative benefits to the Company and/or its stockholder and to Jesup & Xxxxxx
with respect to Jesup & Xxxxxx'x engagement shall be deemed to be in the same
proportion as (i) the total value paid or received or to be paid or received by
the Company and/or its stockholders pursuant to the Matters (whether or not
consummated) for which Jesup & Xxxxxx is engaged to render financial advisory
services bears to (ii) the fees paid to Jesup & Xxxxxx in connection with such
engagement. In no event shall the Indemnified Parties contribute or otherwise be
liable for an amount in excess of the aggregate amount of fees actually received
by Xxxxx & Xxxxxx pursuant to such engagement (excluding amounts received by
Xxxxx & Xxxxxx as reimbursement of expenses).
EXHIBIT B (CONT'D)
The Company further agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with Jesup & Xxxxxx'x engagement hereunder except
for losses, claims, damages, liabilities or expenses that a court of competent
jurisdiction shall have determined by final judgment resulted solely from the
gross negligence or willful misconduct of such Indemnified Party. The indemnity,
reimbursement and contribution obligations of the Company 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 or an Indemnified Party.
The indemnity, reimbursement and contribution provisions set forth
herein shall remain operative and in full force and effect regardless of (i) any
withdrawal, termination or consummation of or failure to initiate or consummate
any Matter referred to herein, (ii) any investigation made by or on behalf of
any party hereto or any person controlling (within the meaning of Section 15 of
the Securities act of 1933 as amended, or Section 20 of the Securities Exchange
Act of 1934, as amended) any party hereto, (iii) any termination or the
completion or expiration of this Engagement Agreement with Jesup & Xxxxxx and
(iv) whether or not Jesup & Xxxxxx shall, or shall not be called upon to, render
any formal or informal advice in the course of such engagement.
EXHIBIT C
JURISDICTION
Each of the Company and Jesup & Xxxxxx hereby irrevocably: (a) submits
to the jurisdiction of any court of the State of New York or any federal court
sitting in the State of New York for the purposes of any suit, action or other
proceeding arising out of the Engagement Agreement between the Company and Jesup
& Xxxxxx which is brought by or against either party; (b) agrees that all claims
in respect of any suit, action or proceeding may be heard and determined in any
such court; and (c) to the extent that The Company or Jesup & Xxxxxx has
acquired, or hereafter may acquire, any immunity from jurisdiction of any such
court or from any legal process therein, each of them hereby waives, to the
fullest extent permitted by law, such immunity.
Each of Jesup & Xxxxxx and the Company hereby waives, and the Company
agrees not to assert in any such suit, action or proceeding, in each case, to
the fullest extent permitted by applicable law, any claim that: (a) the Company
is not personally subject to the jurisdiction of any such court; (b) it is
immune from any legal process (whether through service or notice, attachment
prior to judgement, attachment in the aid of execution, execution or otherwise)
with respect to it or its property; (c) any such suit, action or proceeding is
brought in an inconvenient forum; (d) the venue of any such suit, action or
proceeding is improper; or (e) this Engagement Agreement may not be enforced in
or by any such court.
Nothing in these provisions shall effect any party's right to
serve process in any manner permitted by law or limit its rights to bring a
proceeding in the competent courts of any jurisdiction or jurisdictions or to
enforce in any lawful manner a judgement obtained in one jurisdiction in any
other jurisdiction.
