Exhibit 10.1
Guy S. Amico
President
April 10, 2002
Mr. James L. Conway
Chief Executive Officer
Netsmart Technologies, Inc.
146 Nassau Avenue
Islip, NY 11751
Re: Business Advisory and Consulting Services
Dear Mr. Conway:
On behalf of Newbridge Securities Corporation ("Newbridge"), please allow
this letter to serve as an expression of our interest in establishing a
relationship with Netsmart Technologies, Inc. (the "Company") to provide
business advisory and related consulting services to the Company. This letter
sets forth the terms of such a relationship.
1. Scope of Engagement. Newbridge will assist the Company and provide
services in the following areas (the "Services"). Newbridge will study and
review the business, operations, historical financial performance and
projections as to enable Newbridge to provide advice to the Company, which will
include an independent research report on the Company based solely on its own
analysis and evaluation for circulation to analysts, institutional investors and
others in the financial community with which Newbridge has a relationship. In
performing the Services, Newbridge shall comply with all applicable federal and
state laws and the rules of the National Association of Securities Dealers, Inc.
2. Term. Newbridge's engagement would commence on the date of execution of
this Agreement (the "Effective Date") and continue for a period of two (2)
years; provided, however, that the term may be extended by mutual agreement of
the parties and this Agreement may be terminated at any time and for any reason,
with or without cause, by either party upon ten (10) days written notice to the
other.
3. Compensation. In consideration of the services to be rendered and
performed by Newbridge during the Consulting Period, the Company will pay to
Newbridge a business advisory fee of $4,000 per month, payable as follows: (a)
$4,000 non-refundable retainer due upon the Effective Date and (b) $4,000
payable on the tenth day of each month thereafter during the term; provided,
however, if this Agreement is terminated prior to two years from the date of
this Agreement, no payment shall be made for any period subsequent to the
effective date of termination.
In addition, the Company will issue to Newbridge warrants in substantially the
form of Exhibit A to this Agreement, to acquire up to 200,000 shares
("Warrants") in six tranches in the amounts and at exercise prices as follows:
Exercise Date Number of Shares Exercise Price
- ------------- ---------------- --------------
Effective Date 50,000 shares market price on the
date of issuance
June 1, 2002 30,000 shares $4.00 per share
September 1, 20021 30,000 shares $5.00 per share
November 1, 20021 30,000 shares $6.00 per share
January 1, 20031 30,000 shares $7.00 per share
February 28, 20031 30,000 shares $8.00 per share
1 The Warrants will be issued on the Effective Date and will become
exercisable on each of the Exercise Dates listed above for a period, as
described below (the "exercise period") commencing on such applicable
Exercise Date provided that the Warrant exercise has not been terminated
prior to the Exercise Date. Any Warrant which becomes exercisable after the
date of the termination of Warrant exercise shall terminate immediately
upon the termination of this Agreement. The exercise period shall be one
year for the Warrants with an Exercise Date of the Effective Date and June
1, 2002, eighteen months for the Warrants with an Exercise Date of
September 1, 2002 and November 1, 2002, and two years for the remaining
Warrants. The date of the termination of Warrant exercise shall mean (a)
thirty (30) days after the date that notice of termination is given by the
Company unless termination is for cause, as described in clause (b); (b)
the date that the notice of termination is given by the Company if
termination is a result of a violation by Newbridge of federal or state law
or the regulations of the National Association of Securities Dealers, Inc.
or NASD Regulation, Inc. (collectively, "cause"); or (c) the date the
notice of termination is given by Newbridge.
4. Transaction Fees. The Company is not engaging Newbridge to introduce
the Company to a source for a financing. In the event that, with the consent of
the Company and pursuant to a separate agreement, Newbridge introduces to the
Company a party which consummates an Applicable Financing, as hereinafter
defined, the Company will pay upon the closing of the Applicable Financing (a) a
separate and additional fee based on the successful completion of the Applicable
Financing, but not greater than that fee that would be derived by applying a
Lehman Formula (five percent (5%) of the first million dollars or part thereof,
four percent (4%) of the next million dollars or part thereof, three percent
(3%) of the next million dollars or part thereof, two percent (2%) of the next
million dollars or part thereof, and one percent (1%) of the amount by which the
gross proceeds from the Applicable Financing exceed four million dollars) to the
total amount of the Applicable Financing, or (b) such separate and additional
fee as may be mutually agreed upon by the Company and Newbridge not to exceed
the fee referred to in clause (a) of this Section 4. Any fee shall be based
solely on the proceeds received by the Company. An Applicable Financing shall
mean a private placement of debt or equity securities with parties introduced to
the Company by Newbridge, other than (i) a financing
with a bank or institutional or commercial lender, (ii) a secured financing,
including capital lease financing, (iii) a revolving credit or similar
financing, or (iv) a financing in connection with an acquisition.
5. Access To/And Use Of Information. The Company will work together with
Newbridge to provide any and all necessary documents and full access to the
Company's officers, directors, employees and accountants as are reasonably
requested by Newbridge in order for it to provide the Services.
If these terms are consistent with your view of the basic terms of our
relationship, please countersign a copy of this letter and return it to me by
fax and mail at the above address.
Please contact me if you have any questions need any additional
information.
Very truly yours,
NEWBRIDGE SECURITIES CORPORATION
By: /s/Guy S. Amico
-----------------------------
Guy S. Amico
President
ACKNOWLEDGED this 10 day
of April, ___ 2002
Netsmart Technologies, Inc.
/s/James L. Conway
- ------------------
By: James L. Conway
Title: CEO