Exhibit 10.19
{Xxxxx Xxxxxx Letterhead}
December 2, 2003
Xx. Xxxxx Xxxxxxx
Chief Executive Officer
American Bio Medica Corp.
000 Xxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Dear Xxxxx:
This is to acknowledge and confirm the terms of our corporate finance
representation agreement (the "Agreement") as follows:
1. American Bio Medica Corp. (the "Company") hereby engages Xxxxx Xxxxxx &
Co., Inc. ("BMC") and BMC hereby agrees to render services to the Company,
as its exclusive corporate finance advisor and investment banker on the
terms and for the services specified within.
BMC agrees to provide advice to the Company and evaluate relevant
transaction(s) the Company may consider during the term of this Agreement,
including but not limited to public or private offerings of debt or equity
securities, acquisitions, mergers or the partial or complete sale of the
stock or assets of the Company or any of its divisions or subsidiaries,
joint ventures, strategic alliances or any other financing transaction(s)
and the preparation of any fairness opinions required with respect to the
Company in connection with any transaction(s) or other matter. BMC shall
be the Company's exclusive agent with respect to any and all of the
Company's corporate finance or similar transaction(s), including the
aforementioned transaction(s), and the fee schedules cited in paragraph 4
below shall apply.
XXX agrees to work with the Company in attempting to consummate
transactions the Company considers undertaking pursuant to this Agreement.
In that regard and upon the Company's request, BMC will endeavor to:
A. Assist the Company in its due diligence review of any investor or
company and other matters, if any pertinent to a transaction.
B. Work with the Company and its management in preparing any offering
memoranda or similar documents describing the Company and its
operations for use in discussions with any investor or company. It
is understood that it is the Company's responsibility to ensure the
accuracy and completeness of the information in the memorandum.
Xx. Xxxxx Xxxxxxx
December 2, 2003
Page 2
C. Assist in preparing any financial projections or modeling in respect
of a transaction.
D. Assist in structuring and negotiating the transaction.
2. The term of this engagement (the "Engagement Period") shall be for a
period of twelve months commencing with the execution of this Agreement by
the Company (the "Effective Date") and will be automatically extended for
an additional twelve month period unless cancelled by the Company upon
thirty days written notice by certified mail at any time subsequent to the
initial Engagement Period.
3. On the Effective Date and each monthly anniversary thereafter during the
Engagement Period, the Company agrees to remit to BMC a non-refundable
retainer payment of $5,000 (five thousand dollars). Also, on the Effective
Date only, the Company will issue a warrant to acquire 300,000 (three
hundred thousand) shares of the Company's common stock at an exercise
price equal to $1.15 per share of the Company's common stock, such warrant
to be exercisable any time before the fifth anniversary of the Effective
Date (the "Retainer Warrant"). The Retainer Warrant will have the same
terms and conditions (except as to exercise price) as the Agent's Warrant,
described below.
4. The Company agrees that should it consummate any transactio(s) pursuant to
this Agreement from the Effective Date through a period lasting until one
year from cancellation of the Agreement with: a) a party or parties with
whom BMC has been in contract, has been obtained through the efforts of
BMC, directly or indirectly or, b) a party or parties obtained by the
Company before or during the terms of this Agreement, in addition to the
compensation set forth in paragraph 3, the Company shall pay to BMC, or
cause BMC to be paid, at the closing of such transaction(s), a fee equal
to the following:
In the event of a public offering of debt or equity securities, the fee
will be an amount to be negotiated but no less than what is customary in
the industry for a transaction of that type. In the event of a private
offering of debt or equity securities, the fee will be 2% of the gross
proceeds raised and/or commitments provided from the sale or placement of
senior bank debt, 4.0% of the gross proceeds raised and/or commitments
provided from the sale or placement of non-convertible subordinated debt
and 8% of the gross proceeds raised and/or commitments provided from the
sale or placement of private equity or securities convertible into equity.
In the event of the acquisition of another company or business by the
Company, or a merger or the partial or complete sale of the stock or
assets of the
Xx. Xxxxx Xxxxxxx
December 2, 2003
Page 3
Company or any of its divisions or subsidiaries (a "Sale/Purchase
Transaction"), the fee will be 3% of the consideration received or paid.
For the purposes of this Agreement, "consideration" shall mean any and all
cash, securities, notes, consulting agreements, agreements not to compete,
the total value of liabilities assumed, contingent payments, payments made
in installments and all other forms of payment, compensation and purchase
or sale consideration. In the event of a fairness opinion assignment, the
Company will pay BMC a fee in an amount to be negotiated but no less than
what is customary in the industry for an engagement of this type, half of
which is due upon the Company's request that the opinion be rendered and
the remaining half of which is due on the date the opinion is presented to
the Company. In the event the Company chooses to enter into any other
transaction(s) not specified above, BMC shall be so notified by the
Company and shall receive for its services or otherwise by virtue of its
being the Company's exclusive corporate finance advisor and investment
banker hereunder such fees as are customary in the banking or financial
industry for a transaction of that type, unless otherwise agreed to
between the Company and BMC.
5. In addition to the foregoing, in the event of a transaction(s) in which
debt or equity capital is raised, BMC will receive a warrant (the "Agent's
Warrant") allowing it to purchase, at its option, such number of shares or
principal amount of a security with terms and pricing identical to the
security or securities purchased by and/or issued or granted to an
investor(s) in such a transaction(s), in an amount that is equal in value
to 10% of the gross proceeds received by the Company pursuant to any such
transaction(s). The Agent's Warrant will be exercisable at any time before
the fifth anniversary of the closing of a transaction(s) pursuant to this
Agreement. The Agent's Warrant shall, among other things: (i) be
transferable to officers and directors of BMC, (ii) permit exercise on a
cashless basis, (iii) grant BMC at least two demand registrations and
unlimited piggyback registration rights (with all related costs to be the
responsibility of the Company), and (iv) contain such other terms as are
customarily included in warrants of this type. We expressly agree that
this paragraph is intended to grant to BMC the right, through the terms of
its Agent's Warrant, to acquire or receive, on a pari passu basis, each
and every type of security or instrument issued, sold or granted to such
Investor(s) up to the amount described herein.
6. For the one (1) year period commencing on the closing of any tranaction(s)
pursuant to this Agreement, if the Company proposes to effect any
Sale/Purchase Transaction(s), any public offering, or private placement of
securities, the Company agrees to offer to engage BMC as the Company's
exclusive financial advisor, lead manager underwriter, or lead placement
agent, as the case may be, in connection with such transaction(s) on terms
and conditions customary to BMC for similar transactions; provided,
however, that BMC may decline such engagement in its sole and absolute
discretion at such time. The terms of such engagements shall be set forth
in separate agreements and may be subject to, among other things,
satisfactory completion of due diligence by BMC, market
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December 2, 2003
Page 4
conditions, the absence of adverse change to the Company's business or
financial condition, approval of BMC's internal committee and any other
conditions that BMC may deem appropriate for transaction of such nature.
The Company will notify BMC in writing of its intention to pursue such a
transaction, and BMC will advise the Company promptly of BMC's election to
exercise its right (but in no event no later than fifteen (15) business
days following the submission to BMC). If any such proposal is not
accepted by BMC, but later modified, the Company will re-submit such
proposal in writing to BMC and BMC will be subject to the same fifteen
(15) business day notice provision. BMC's election not to exercise its
right with respect to a particular proposal transaction will not adversely
affect its rights hereunder with respect to any other proposed transaction
of the Company during the one-year period referred to above.
7. Transaction fees described herein are payable in full, without discount or
reduction, in cash on closing of any transaction(s) pursuant to this
Agreement, except fees related to contingent payment which shall be
payable when and at any time such payments are remitted.
The Retainer Warrant will be forwarded by the Company for receipt by BMC
within ten (10) business days of the Effective Date and the Agent's
Warrant will be forwarded by the Company for receipt by BMC within ten
(10) business days of the closing of any transaction pursuant to this
Agreement.
8. The Company will reimburse BMC for out-of-pocket expenses incurred in
connection with its representation and services hereunder. Reimbursement
for out-of-pocket expenses shall be paid by the Company within ten days of
receipt of invoice from BMC. T he Company's obligation to BMC for
reimbursement of out-of-pocket expenses will survive any cancellation of
this Agreement.
9. Indemnification is incorporated by reference to Addendum I.
10. The benefits of this Agreement shall inure to the parties hereto and their
respective successors and assigns and the obligations and liabilities
assumed in this Agreement shall be binding upon the parties hereto and
their respective successors and assigns. Notwithstanding anything
contained herein to the contrary, the Company shall not assign to an
unaffiliated third party any of its rights or obligations hereunder
without the express written consent of BMC.
11. Any disputes between the parties to this Agreement shall be settled by
arbitration before the facilities of the New York Stock Exchange, Inc. or
the National Association of Securities Dealers, Inc. in the City of New
York and will be conducted pursuant to applicable federal laws, the laws
of the State of New York, without regard to conflicts of laws, and the
rules of the selected abitral facility. The parties understand that the
award of the arbitrators, or a majority of them, will be final and that a
judgement upon any award rendered may be entered in any court having
jurisdiction.
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December 2, 2003
Page 5
12. All notices provided hereunder shall be given in writing and either
delivered personally or by overnight courier service or sent by certified
mail, return receipt requested, if to BMC, to Lexington Ave, 11th Floor,
New York, New York 10022, Attention: Xx. X. Xxxxx Xxxxxx; and if to the
Company, to 000 Xxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxx 00000, Attn: Xx. Xxxxx
Xxxxxxx.
13. The Company represents and warrants to BMC that Xx. Xxxxxxx is the Chief
Executive Officer of the Company and is authorized on behalf of the
Company to execute the Agreement and to consummate the potential
transaction(s) described herein, and the execution of this Agreement will
not conflict with or breach the certificate of articles of incorporation
or by-laws of the Company or any agreement to which the Company is a
party.
14. The Agreement sets forth the entire understanding of the parties relating
to the subject matter hereof, and supersedes and cancels any prior
communications, understandings and agreements between the parties. This
Agreement cannot be modified, or changed, nor can any of its provisions be
waived, except by written agreement signed by all parties
Please confirm that the foregoing is in accordance with your understanding
by signing and returning this letter to BMC and keeping a duplicate for
your files. This Agreement shall be effective after your acceptance below
and its receipt by BMC at its address set forth on this letter.
Sincerely,
Xxxxx Xxxxxx & Co., Inc.
/s/ X. Xxxxx Xxxxxx
---------------------------
NAME: X. Xxxxx Xxxxxx
TITLE: Chairman and Chief Executive Officer
Xxxxxx and accepted as of 2 day of DEC, 2003.
American Bio Medica Corp.
/s/ Xxx Xxxxxxx
---------------------------
NAME: Xx. Xxxxx Xxxxxxx
TITLE: Chief Executive Officer
Xx. Xxxxx Xxxxxxx
November 11, 2003
Page 6
Addendum 1 - Indemnification
The Company shall:
a. Indemnify BMC, its parents, affiliates and/or subsidiaries and each
of their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") and hold them harmless
against any losses, claims, damages, expenses or liabilities to
which the Indemnified Parties may become subject arising in any
manner out of or in connection with the rendering of services by BMC
hereunder unless it is finally judicially determined, without any
further right to appeal, that such losses, claims, damages, expenses
or liabilities resulted primarily from the gross negligence, bad
faith or willful misconduct of BMC; and
b. Reimburse the Indemnified Parties for any legal or other expenses
reasonably incurred by them in connection with investigating,
preparing to defend or defending lawsuits, claims or other
proceedings arising in any manner out of or in connection with the
rendering of services by BMC hereunder; provided, however, that in
the event a final judicial determination is made to the effect
specified in subparagraph (a) above, the Indemnified Parties will
remit to the Company any amount reimbursed under this paragraph (b).
The Company agrees that the indemnification and reimbursement commitments
set forth in this paragraph shall apply whether or not the Indemnified
Parties are a formal party of any such lawsuits, claims or other
proceedings, that the Indemnified Parties are entitled to retain separate
counsel or their choice in connection with any of the matters to which
such commitments relate and that such commitments shall extend upon the
terms set forth in this paragraphs to any Indemnified Party.
Further, the Company and BMC agree that if any indemnification or
reimbursement sought by BMC of the Company is finally judicially
determined to be unavailable then, whether or not BMC is entitled to
indemnification or reimbursement, the Company and BMC shall contribute to
the losses, claims, damages, liabilities and expenses for which such
indemnification is held unavailable in such proportion as is appropriate
to reflect the relative benefits to the Company on the one hand, and BMC
on the other, in connection with the transaction(s) to which such
indemnification or reimbursement related, and other equitable
considerations; provided, however, that in no event shall the amount to be
contributed by the Indemnified Parties exceed the amount of fee actually
received by BMC hereunder. The provisions hereof shall survive any
termination of this Agreement.
