Engagement Letter - HealthCore Medical Solutions Inc. and Kaufman Bros. LP
[LETTERHEAD OF KAUFMAN BROS., L.P.]
July 26, 1999
Mr. Neal J. Polan
Chairman & CEO
HealthCore Medical Solutions, Inc.
405 Lexington Avenue
50th Floor
New York, NY 10174
Dear Mr. Polan:
You have informed us that HealthCore Medical Solutions, Inc. (the
"Company") has under consideration a transaction pursuant to which the Company
would engage in a business combination (the "Transaction") with Adatom, Inc.
("Target") as a result of which the Company's current shareholders would own
approximately 22.5% of the common stock (subject to adjustment in certain
circumstances) of the combined entity after the Transaction. The Transaction is
subject to, among other things, the approval of the Board of Directors and the
shareholders of the Company.
In connection with its review and analysis of the Transaction, the Board of
Directors of the Company has requested Kaufman Bros., L.P. ("Kaufman") to advise
it and to render a written opinion (the "Opinion") as to the fairness to the
shareholders of the Company from a financial point of view of the consideration
to be received in the Transaction. Kaufman agrees to conduct such financial
review of the Company and Target, and their respective businesses and operations
as Kaufman shall deem appropriate and feasible. The Company agrees to provide or
cause to be provided to Kaufman such financial and other information concerning
the Company as Kaufman may request, and to use its best efforts to obtain
financial and other information concerning the Target as Kaufman may request, in
connection with the services performed or to be performed hereunder. In
rendering the Opinion, Kaufman will be assuming and relying, without independent
verification, upon the accuracy and completeness of the financial and other
information used by it in arriving at its Opinion.
In consideration for the services to be performed by Kaufman pursuant to
this agreement, the Company agrees to pay Kaufman a fee of $65,000, of which
$32,500 is payable in cash on the date of this letter and $32,500 is payable in
cash on the date Kaufman delivers the Opinion. In addition, Kaufman shall be
reimbursed by the Company for its reasonable out-of-pocket expenses (including
legal fees and disbursements) in connection with its services hereunder, limited
to $5,000. Such fees and reimbursements shall be payable irrespective of either
the conclusions reached in the Opinion or the consummation of the Transaction.
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HealthCore Medical Solutions, Inc.
July 26, 1999
Page 2
Kaufman will consent to a description and inclusion of the Opinion in a
proxy statement to be used in connection with a meeting (if needed) of the
Company's shareholders to be held for the purpose of voting on the Transaction
and to references to Kaufman in such proxy statement provided that any such
description is acceptable to Kaufman. In addition to the meeting of
stockholders, or otherwise in connection with providing information to
stockholders regarding the Transaction, the Company may provide to stockholders
a copy of the Opinion in the form delivered to the Company's Board of Directors.
Except as otherwise provided above, the Opinion is solely for the use and
benefit of the Company and shall not be described publicly or made available to
third parties without Kaufman's prior approval, except as otherwise required by
law.
The Company agrees to indemnify and hold Kaufman harmless from and against
any losses, claims, damages or liabilities (or actions, including securityholder
actions, in respect thereof) related to or arising out of Kaufman's engagement
hereunder or its role in connection herewith, and will reimburse Kaufman for all
reasonable expenses (including reasonable counsel fees) as they are incurred by
Kaufman in connection with investigating, preparing for or defending any such
action or claim, whether or not in connection with pending or threatened
litigation in which Kaufman is a party. The Company will not, however, be
responsible for any claims, liabilities, losses, damages or expenses which are
finally judicially determined to have resulted from the bad faith, willful
misconduct or gross negligence of Kaufman. The Company also agrees that Kaufman
shall not have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Company for or in connection with such engagement, except for
any such liability for losses, claims, damages, liabilities or expenses incurred
by the Company that result from the bad faith, willful misconduct or gross
negligence of Kaufman. In the event that the foregoing indemnity is unavailable
(except by reason of the bad faith, willful misconduct or gross negligence of
Kaufman), then the Company shall contribute to amounts paid or payable by
Kaufman in respect of its losses, claims, damages and liabilities in such
proportion as appropriately reflects the relative benefits received by, and
fault of, the Company and Kaufman in connection with the matters as to which
such losses, claims, damages or liabilities relate and other equitable
considerations; provided, however, that in no event shall the amount to be
contributed by Kaufman exceed the amount of the fee actually received by
Kaufman. The foregoing shall be in addition to any rights that Kaufman or any
other indemnified person may have at common law or otherwise and shall extend to
and inure to the benefit of any director, officer, employee, agent or
controlling person of Kaufman.
This Agreement may not be amended or modified except in writing and shall
be governed by and construed in accordance with the laws of the State of New
York.
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HealthCore Medical Solutions, Inc.
July 26, 1999
Page 3
Please confirm that the foregoing is in accordance with your understandings
and agreements with Kaufman by signing and returning to us the duplicate of this
letter enclosed herewith.
Very truly yours,
KAUFMAN BROS., L.P.
By: /s/ Bradford W. Harries
-----------------------------------
Bradford W. Harries
Managing Director
Accepted and Agreed to as of the date first above written.
HEALTHCORE MEDICAL SOLUTIONS, INC.
By: /s/ Neal J. Polan -- CEO
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Neal J. Polan
Chairman & CEO
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