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EXHIBIT 10.28
[LETTERHEAD]
ADIRONDACK CAPITAL, LLC
29 November 1999
Mobile P.E.T. Systems, Inc.
2240 Shelter Island Drive
San Diego, CA 92106
Attn: Paul J. Crowe, President and Chief Executive Officer
Thomas G. Brown, Chief Financial Officer
Gentlemen:
This will confirm the understanding and agreement (the "Agreement") between
Adirondack Capital, LLC and its affiliates ("Adirondack") and Mobile
P.E.T. Systems, Inc. and its affiliates (the "Company") as follows:
1. The Company hereby engages Adirondack as its financial advisor in
connection with the exploration of certain financial and strategic
alternatives available to the Company.
2. Adirondack hereby accepts the engagement and in that connection agrees
to:
(a) become familiar to the extent we deem appropriate with the
business, operations, properties, financial condition, prospects and
management philosophy of the Company; and
(b) advise and assist management of the Company in evaluating
certain financial and strategic alternatives available to the Company.
3. The Company hereby agrees that in the event the Company proposes,
during the term of Adirondack engagement hereunder or within six (6) months
thereafter, to engage a third party to act as (i) placement agent in
connection with the issuance and sale of any of the Company's debt or equity
securities, or (ii) financial advisor in connection with a Transaction (as
hereinafter defined), the Company shall engage Adirondack as sole placement
agent, or financial advisor, as the case may be, unless Adirondack shall
notify the Company in writing that it declines to be so engaged. In
connection therewith, the Company shall pay Adirondack its customary fees (as
summarized in Exhibit A) for similar services and shall enter into
documentation in Adirondack's customary form including without limitation any
necessary or appropriate engagement letters, placement, or agreements.
A "Transaction" means any transaction or a series of transactions which
results, directly or indirectly in (i) the transfer of control to the Company
(whether by merger, business combination, acquisition of assets or securities,
tender or exchange offer, lease of assets, partnership, joint venture or
otherwise) of all or a material portion of the assets or securities of
another company or any material businesses; (ii) the sale of the Company
(whether or not the proposal therefor is solicited or unsolicited) of all or a
material
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portion of its assets or securities or any of its material businesses (whether
by merger, business combination, sale of assets or securities, tender or
exchange offer, lease of assets, partnership, joint venture or otherwise);
(iii) the redemption or repurchase by the Company of any of its outstanding
securities; (iv) a recapitalization or restructuring of the Company or its
businesses (including divestitures, spin-offs, split-offs and similar
transactions); (v) a liquidation of the Company; the acquisition by the
Company of an other company or its assets; or (vi) such other form of
transaction that Adirondack, after completing the process provided for in
paragraph 2(a), believes may be of possible interest to the Company.
4. The Company shall furnish, or cause to be furnished, to Adirondack all
information requested by Adirondack for the purpose of rendering services
hereunder (all such information being "Information"). In addition, the
Company agrees to make available to Adirondack upon request from time to time
the Company's officers, directors, accountants counsel and other advisors.
The Company recognizes and confirms that Adirondack: (a) will use and rely on
the Information and on information available from generally recognized public
sources in performing the services contemplated by this Letter Agreement
without having independently verified the same; (b) does not assume
responsibility for the accuracy or completeness of the Information and such
other information; and (c) will not make an appraisal of any of the assets or
liabilities (contingent or otherwise) of the Company.
5. The term of Adirondack's engagement hereunder as the Company's
financial advisor shall extend from the date hereof through March 31, 2001.
It is understood that this engagement is an initial engagement and is
renewable with the consent of both the Company and Adirondack. Subject to the
provisions of paragraphs 3 and 4 and 6 through 13, which shall survive any
termination of this Agreement, either party may terminate Adirondack's
engagement hereunder at any time, with or without cause, by giving the other
party at least ten (10) days' prior written notice.
6. As compensation for the services to be rendered by Adirondack
hereunder, the Company agrees to pay Adirondack a monthly cash retainer of
$3,000 (Three Thousand Dollars) commencing upon the completion by the Company
of an equity, or equity linked transaction in an amount equal to or greater
than $3,000,000 (Three Million Dollars).
7. In partial consideration for its services hereunder, the Company
shall, on the date hereof, issue to Adirondack or its designee an option (the
"Option") to purchase 50,000 (Fifty Thousand) shares of the Company's common
stock. The Option shall expire on December 31, 2006 and shall have an
exercise price of $2.00 (Two Dollars). In addition, the Company shall grant
to Adirondack or its designee "piggy back" registration rights for the shares
of common stock underlying the Option.
8. In addition to any fees payable hereunder, the Company shall reimburse
Adirondack and its affiliates promptly upon request for their respective
out-of-pocket and incidental expenses, incurred during the term of its
engagement hereunder, including the fees and expenses of legal counsel and
those of any advisor retained by Adirondack. It is expressly understood and
agreed that Adirondack will not engaged any outside advisor in connection
with this engagement without the express prior written consent of the
Company. Adirondack will bill the Company monthly for such expenses.
9. Since Adirondack will be acting on behalf of the Company in connection
with this engagement, the Company agrees to indemnify Adirondack as set
forth in the separate letter agreement, dated the date hereof, between
Adirondack and the Company.
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10. The Company agrees that Adirondack has the right to place advertisements
in financial and other newspapers and journals at its own expense describing its
services to the Company hereunder.
11. Any advice provided by Adirondack under this Agreement shall be treated
as confidential by the Company and shall not be disclosed or made available to
third parties without Adirondack's prior written consent.
12. The Company represents and warrants to Adirondack that there are no
brokers, agents, representatives or other persons which have an interest in
compensation paid or payable to Adirondack hereunder.
13. The benefits of this Agreement shall, together with the separate
indemnity letter, inure to the benefit of respective successors and assigns of
the parties hereto and of the indemnified parties hereunder and their successors
and assigns and representatives, and the obligations and liabilities assumed in
this Agreement by the parties hereto shall be binding upon their respective
successors and assigns.
14. This Agreement may not be amended or modified except in writing executed
by the Company and Adirondack and shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws.
Adirondack is delighted to accept this engagement and looks forward to working
with you on this assignment. Please confirm that the foregoing correctly sets
forth our agreement by signing the enclosed duplicate of this letter in the
space provided and returning it, whereupon this letter shall constitute a
binding agreement as of the date first above written.
ADIRONDACK CAPITAL, LLC
By: /s/ K. Ivan F. Gothner
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K. Ivan F. Gothner
Managing Director
AGREED:
MOBILE P.E.T. SYSTEMS, INC.
By: /s/ Paul J. Crowe
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Title: CEO
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EXHIBIT A
CUSTOMARY FEES OF ADIRONDACK CAPITAL, LLC
Private Placement of Equity or "Equity-like" Securities:
Cash: 8% - 10% of amount raised.
Equity: Options to be negotiated in the context of
the proposed transaction.
Expenses: All fees and expenses incurred in connection
with the proposed transaction.
Private Placement of Debt Securities:
Cash: 3% - 6% of amount raised.
Equity: Options to be negotiated in the context of
the proposed transaction.
Expenses: All fees and expenses incurred in connection
with the proposed transaction.
M&A Advisory Services:
Cash: 1% - 4% of total transaction value.
Equity: Generally, not applicable.
Expenses: All fees and expenses incurred in connection
with the proposed transaction.
Other Advisory Services:
Compensation for: Valuations, Fairness Opinions and other
general advisory services are negotiated on a case by case
basis to reflect the facts and circumstances of the
specific assignment. These advisory services may include
advisory services in connection with equity or debt
financings where Adirondack has not been engaged as the
placement agent.
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[LETTERHEAD]
ADIRONDACK CAPITAL, LLC
10 February 2000
Mobile P.E.T. Systems, Inc.
2240 Shelter Island Drive
San Diego, CA 92106
Attn: Paul J. Crowe, President and Chief Executive Officer
Thomas G. Brown, Chief Financial Officer
Gentlemen:
Pursuant to paragraph 3 our letter agreement dated 29 November 1999, the
following sets forth our agreement and understanding regarding the compensation
due to Adirondack Capital, LLC ("Adirondack") in connection with its role as a
financial advisor to Mobile P.E.T. Systems, Inc. (the "Company") in securing the
financing contemplated by the term sheet issued by Southridge Capital Management
and accepted by the Company on 3 February 2000.
Adirondack shall be paid a cash fee equal to ten (10) percent of the gross
proceeds from the sale of Series A Convertible Preferred Stock on the closing
date. Adirondack shall also be paid a cash fee equal to ten (10) percent of the
gross proceeds from each sale of common stock under the proposed "Equity Line of
Credit" on the date each such sale is completed.
In addition to the cash fees described above, the Company shall issue to
Adirondack, or its designee, immediately upon the completion of the sale of the
Series A Convertible Preferred Stock an option (the "Option") to purchase three
hundred thousand (300,000) shares of the Company's common stock at a price of
$3.00/share. The Option will expire on 31 December 2006. The Company shall grant
to Adirondack or its designee "piggy-back" registration rights for the shares of
common stock underlying the Option. Provided, however, that Adirondack's
"piggy-back" registration right hereunder shall not apply to the registration
statements which the Company will be filing in connection with the sale of the
Series A Preferred Stock or the "Equity Line of Credit".
Please confirm that the foregoing correctly sets forth our agreement by signing
the enclosed duplicate of this letter in the space provided and returning it,
whereupon this letter shall constitute a binding agreement as of the date first
above written.
ADIRONDACK CAPITAL, LLC
By: /s/ K. Ivan F. Gothner
--------------------------
K. Ivan F. Gothner
Managing Director
AGREED:
MOBILE P.E.T. SYSTEMS, INC.
By: /s/ Paul J. Crowe
--------------------
Title: CEO
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