BAYTREE CAPITAL ASSOCIATES, LLC
INVESTMENT BANKERS
THE XXXXX BUILDING AT
00 XXXX XXXXXX
XXX XXXX, XXX XXXX 00000
(000) 000-0000 FACSIMILE (000) 000-0000
August 22, 2000
XxxxxxXxxxxx.xxx, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
This letter agreement (this "Agreement") sets forth the
understanding between Baytree Capital Associates, LLC ("Baytree") and
XxxxxxXxxxxx.xxx, Inc.(the "Company") in connection with the engagement of
Baytree by the Company for the purposes stated below.
1. Services and Duties. Pursuant to the terms and conditions set forth
in this Agreement, the Company hereby engages Baytree on a non-exclusive basis
for the term specified in Paragraph 2 hereof to render consulting advice to the
Company with respect to financial, corporate and general business development
matters. Xxxxxxx shall seek out Transactions (as hereinafter defined) on behalf
of the Company, furnish advice to the Company in connection with any such
Transactions and general business development matters, and undertake to
negotiate and effect Transactions on behalf of the Company. In this regard,
Xxxxxxx proposes to undertake certain activities on behalf of the Company
including, but not limited to, the following:
(a) advise the Company as to the structure of any Transaction;
(b) assist the Company in obtaining appropriate information
regarding any potential companies that may participate in any Transaction and
performing its due diligence regarding any Transaction;
(c) counsel the Company with respect to future general
business development matters, including but not limited to, any Transaction.
Any obligations pursuant to this Paragraph 1 shall survive the
termination or expiration of this Agreement, as provided for herein.
2. Term Except as otherwise specified in Paragraph 3 hereof, this
Agreement shall be effective for a period of twenty-four (24) months from the
date first written above.
3. Compensation and Expenses. In consideration for the services
rendered by Xxxxxxx to the Company pursuant to this Agreement as a management
consultant (and in addition to the expenses provided for herein), the Company
shall compensate Baytree as follows:
(a) Upon execution of this Agreement, Xxxxxxx shall receive a
warrant to purchase up to 300,000 shares of the Company's Common Stock (the
"Warrant"). The Warrant shall be exercisable for a period of five (5) years, at
an exercise price of $1.1875 per share. The Warrant shall contain standard
anti-dilution and cashless exercise provisions. Baytree is hereby granted
piggyback registration rights, whereby in the event the Company files any
registration statement (except pursuant to Forms S-4 or S-8) to register
securities of the Company under the Securities Act of 1933, as amended (the
"Act"), Xxxxxxx shall have the right to request the Company to include the
shares of Common Stock underlying the Warrant in any such registration statement
and the Company shall be obligated to do so.
(b) In the event that any Transaction (as hereinafter defined)
occurs during the term of this Agreement and for twelve months thereafter, the
Company shall pay to Baytree, solely in connection with its activities pursuant
hereto as an management consultant, fees equal to seven percent (7%) of the
Consideration exchanged in any such Transaction.
(c) In addition to the fees payable hereunder, and regardless
of whether any Transaction is proposed or consummated, the Company shall
reimburse Baytree for all fees and disbursements of Xxxxxxx's counsel and
Xxxxxxx's travel and reasonable out-of-pocket expenses incurred in connection
with and in direct furtherance of the services performed by Xxxxxxx pursuant to
this Agreement, including without limitation, hotels, food and associated
expenses and long- distance telephone calls.
(d) For the purposes of this Agreement, a "Transaction" shall
mean (i) any transaction whereby, directly or indirectly, control of or a
material interest in the Company or any of its businesses or any of their
respective assets, is transferred for Consideration, (ii) any transaction
whereby the Company acquires any other company or the assets of any other
company or an interest in any other company (an "Acquisition"), (iii) any
transaction whereby the Company merges or combines with any other
company(regardless of whether or not the Company is the surviving corporation, a
"Merger"), or (iv) any transaction whereby the Company enters into a Joint
Venture or Strategic Alliance (including the Strategic Alliance between the
Company and XxxXxxx.xxx, Inc., which such Strategic Alliance Baytree has
introduced to the Company), or (v) any sale, Acquisition or Merger in connection
with which the Company engages an investment banker other than Baytree and pays
such investment banker a fee in respect of such Transaction unless Xxxxxxx was
unwilling to so act and waives their rights under this Agreement, in writing.
(e) For the purposes of this Agreement, "Consideration" shall
mean the total market value on the day of the closing of stock, cash, assets and
all other property (real or personal) exchanged or received, directly or
indirectly by the Company, its affiliates, subsidiaries, or any of its security
holders in connection with any Transaction.
(f) All compensation and expenses to be paid pursuant to this
Agreement, except as otherwise specified, are due and payable to Baytree in
cash, or in securities, or in cash and securities depending on the Transaction,
at the closing or closings of any Transaction. In the event that this Agreement
shall not be renewed or if terminated for any reason, notwithstanding any such
non- renewal or termination, Baytree shall be entitled to a full fee as provided
under Paragraph 3, for any Transaction for which the discussions were initiated
during the term of this Agreement and which is consummated within a period of
twelve months after non-renewal or termination of this Agreement.
Any obligation pursuant to this Paragraph 3 shall survive the
termination or expiration of this Agreement, as provided for herein.
4. Representations, Warranties, and Covenants.
(a) The Company represents and warrants that this Agreement
has been duly authorized, executed and delivered by the Company and constitutes
a valid and binding agreement of the Company enforceable against the Company in
accordance with its terms. The Company further represents and warrants that
consummation of any Transaction contemplated herein will not conflict with or
result in a breach of any of the terms, provisions or conditions of any written
agreement to which it is a party.
(b) Baytree represents and warrants that this Agreement has
been duly authorized, executed and delivered by it and constitutes its valid and
binding agreement enforceable against it in accordance with its terms. Xxxxxxx
further represents and warrants that consummation of any Transaction
contemplated herein will not conflict with or result in a breach of any of the
terms, provisions or conditions of any written agreement to which it is a party.
(c) The Company represents and warrants that the Warrant to be
issued to Xxxxxxx pursuant to this Agreement will be issued solely as
consideration for the services rendered and to be rendered by Baytree to the
Company pursuant to this Agreement, and does not in any way compensate Xxxxxxx
for the loss of a warrant previously issued to Baytree by the Company in
connection with a completely separate and distinct arrangement between the
Company and Baytree.
(d) The Company represents that it is aware that Baytree is
not an NASD member and that it is aware that Xxxxxxx will not be acting as a
broker/dealer in connection with the sale of any shares of the Company's
securities and that any compensation received by Xxxxxxx is deemed to be in
connection with Xxxxxxx's provision of the services provided for in Section 1 of
the Agreement.
5. Liability of Baytree: The Company acknowledges that all opinions and
advice (written or oral) given by Xxxxxxx to the Company in connection with
Xxxxxxx's engagement are intended solely for the benefit and use of the Company
in considering the Transaction to which they relate, and the Company agrees that
no person or entity other than the Company shall be entitled to make use of or
rely upon the advice of Xxxxxxx to be given hereunder, and no such opinion or
advice shall be used for any other purpose or reproduced, disseminated, quoted
or referred to at any time, in any manner or for any purpose, nor may the
Company make any public references to Baytree, or use Xxxxxxx's name in any
annual reports or any other reports or releases of the Company without Xxxxxxx's
prior written consent.
6. Xxxxxxx's Services to Others: The Company acknowledges that Baytree
and their affiliates are in the business of providing financial services and
consulting advice to others. Nothing herein contained shall be construed to imit
or restrict Baytree in conducting such business with respect to others, or in
rendering such advice to others.
7. Indemnification. The Company agrees to indemnify Baytree, its
principals, members, officers, employees and agents who participate in any
Transaction, as set forth in Annex A, attached hereto, which provisions will be
incorporated into the definitive agreements relating to any Transaction.
8. Information. The Company recognizes and confirms that in performing
its obligations under this Agreement, Xxxxxxx and other persons who participate
in any Transaction contemplated hereby will be using and relying on data,
material, and other information (the "Information") furnished by the Company or
their respective employees and representatives. In connection with Xxxxxxx's
activities on the Company's behalf, the Company will cooperate with Xxxxxxx and
will furnish Baytree with all information concerning the Company, and any
Transaction, and will provide Baytree with access to the Company's officers,
directors, employees, independent accountants and legal counsel for the purpose
of performing Xxxxxxx's obligations pursuant to this agreement. The Company
hereby agrees and represents that all Information (a) furnished directly by the
Company to Baytree pursuant to this Agreement, and (b) contained in any filing
by the Company with any court or governmental or regulatory agency, commission
or instrumentality (each, an "Agency") shall, at all times during the period of
the engagement of Baytree hereunder, be accurate and complete in all material
respects and that, if the Information provided by the Company becomes materially
inaccurate, incomplete or misleading during the term of Xxxxxxx's engagement
hereunder, the Company shall so advise Xxxxxxx in writing. Accordingly, Xxxxxxx
assumes no responsibility for the accuracy and completeness of the Information.
In rendering its services hereunder, Xxxxxxx will be using and relying upon the
Information without independent verification thereof or independent evaluation
of any of the assets or liabilities of the Company. All Information that is not
publicly available will be confidential and proprietary information belonging to
the Company and Baytree shall have no interest of any kind in such information
by virtue of the Agreement. No information shall be revealed, or used (except in
the performance of Xxxxxxx's duties under this Agreement) by Xxxxxxx unless
legally compelled as determined in good faith by counsel to Baytree and with
reasonable notice given to the Company.
9. Xxxxxxx as Independent Contractor . Baytree shall perform its
services hereunder as an independent contractor and not as an employee or agent
of the Company or an affiliate thereof. It is expressly understood and agreed to
by the parties hereto that Xxxxxxx shall have no authority to act for, represent
or bind the Company or any affiliate thereof in any manner, except as may be
agreed to expressly by the Company in writing from time to time.
10. Severability. If any provision of this Agreement shall be held or
made invalid by a statute, rule, regulation, decision of a tribunal or
otherwise, the remainder of this Agreement shall not be affected thereby and, to
this extent, the provisions of this Agreement shall be deemed to be severable.
11. Successors. This Agreement and all rights, liabilities and
obligations hereunder shall be binding upon and inure to the benefit of each
party's successors but may not be assigned without the prior written approval of
the other party. Any such approval shall not be unreasonably withheld.
12. Headings. The descriptive headings of the paragraphs of this
Agreement are inserted for convenience only, do not constitute a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement.
13. No Brokers. The Company represents and warrants to Baytree that
there are no brokers, representatives or other persons which have an interest in
or claim for compensation due to Baytree from any Transaction contemplated
herein.
14. Notices. Any notice or other communication to be given to the
Company hereunder may be given by delivering the same in writing to the address
set forth above, and any notice or other communication to be given to Baytree
may be given by delivering the same to Baytree Capital Associates, LLC, 00 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx Xxxxxxx, Principal, or in
each case, such other address of which a party shall have received notice. Any
notice or other communication hereunder shall be deemed given three days after
deposit in the mail if mailed by certified mail, return receipt requested, or on
the day after deposit with an overnight courier service for next day delivery,
or on the date personally delivered.
15. Miscellaneous:
(a) This Agreement between the Company and Baytree constitutes
the entire agreement and understanding of the parties hereto, and supersedes any
and all previous agreements and understandings, whether oral or written, between
the parties with respect to the matters set forth herein.
(b) This Agreement may be executed in any number of
counterparts, each of which together shall constitute one and the same
originaldocument.
(c) No provision of this Agreement may be amended, modified
orwaived, except in a writing signed by all of the parties hereto.
(d) This Agreement shall be construed in accordance with any
governed by the laws of the State of New York, without giving effect to conflict
of law principles. The parties hereby agree that any dispute which may arise
between them arising out of or in connection with this Agreement shall be
adjudicated before a court located in New York City, and they hereby submit to
the exclusive jurisdiction of the courts of the State of New York located in New
York, New York and of the federal courts in the Southern District of New York
with respect to any action or legal proceeding commenced by any party, and
irrevocably waive any objection they now or hereafter may have respecting the
venue of any such action or proceeding brought in such a court or respecting the
fact that such court is an inconvenient forum, relating to or arising out of
this Agreement, and consent to the service of process in any such action or
legal proceeding by means of registered or certified mail, return receipt
requested, as provided in Paragraph 14 hereof.
Please confirm that the foregoing correctly sets forth our agreement by
signing the enclosed letters in the space provided and returning them to us for
execution, whereupon we will send you a fully executed original letter which
shall constitute a binding agreement as of the date first above written.
Very truly yours,
BAYTREE CAPITAL ASSOCIATES, LLC
By: /s/ Xxxxxxx Xxxxxxx
--------------------------
Xxxxxxx Xxxxxxx, Principal
Agreed to and accepted as of the above date
XXXXXXXXXXXX.XXX, INC.
By: /s/ X.X. Xxxxxxxx
---------------------------------
X.X. Xxxxxxxx, Chairman
ANNEX A:
INDEMNIFICATION
The Company agrees to indemnify Baytree, its principals,
members, officers, employees and agents and other persons who participate in any
Transaction, and their respective employees, directors, officers, agents,
affiliates, and each person, if any, who controls them within the meaning of
either Section 20 of the Securities Exchange Act of 1934 or Section 15 of the
Securities Act of 1933 (each such person, including Xxxxxxx, is referred to as
"Indemnified Party") from and against any losses, claims, damages and
liabilities, joint or several including all legal or other expenses reasonably
incurred by an Indemnified Party in connection with the preparation for or
defense of any threatened or pending claim, action or proceeding, whether or not
resulting in any liability ("Damages"), to which such Indemnified Party, in
connection with its services or arising out of its engagement hereunder, may
become subject under any applicable Federal or state law or otherwise, including
but not limited to liability (i) caused by or arising out of an untrue statement
or an alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact necessary in order to make a statement
notmisleading in light of the circumstances under which it was made, (ii) caused
by or arising out of any act or failure to act by the Company or (iii) arising
out of Baytree's engagement or the rendering by any Indemnified Party of its
services under this Agreement; provided, however, that the Company will not be
liable to the Indemnified Party hereunder to the extent that any Damages
arefound in a final non-appealable judgment by a court of competent jurisdiction
to have resulted from the gross negligence, bad faith or willful misconduct of
the Indemnified Party seeking indemnification hereunder, or the violation of any
federal or state securities law or regulation by an Indemnified Party.
These indemnification provisions shall be in addition to any
liability which the Company may otherwise have to any Indemnified Party.
If for any reason, other than a final non-appealable judgment
finding an Indemnified Party liable for Damages for its gross negligence, bad
faith, or willful misconduct the foregoing indemnity is unavailable to an
Indemnified Party or insufficient to hold an Indemnified Party harmless, then
the Company shall and shall cause the Company, to contribute to the amount paid
or payable by an Indemnified Party as a result of such Damages in such
proportion as is appropriate to reflect not only the relative benefits received
by the Company, as the case may be and its shareholders on the one hand, and
Xxxxxxx on the other, but also the relative fault of the Company, as the case
may be, and the Indemnified Party as well as any relevant equitable
considerations, subject to the limitation that in no event shall the total
contribution of all Indemnified Parties to all such Damages exceed the amount of
fees actually received and retained by Baytree and others who participate in any
Transaction.
Promptly after receipt by the Indemnified Party of notice of
any claim or of the commencement of any action in respect of which indemnity may
be sought, the Indemnified Party will immediately notify the Company in writing
of the receipt or commencement thereof and the Company shall have the right to
assume the defense of such claim or action (including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of fees and
expenses of such counsel), provided that the Indemnified Party shall have the
right to control its defense if, in the opinion of its counsel, the Indemnified
Party's defense is unique or separate to it as the case may be, as opposed to a
defense pertaining to the Company In any event, the Indemnified Party shall have
the right to retain counsel reasonably satisfactory to the Company, at the
Company's expense, to represent it in anyclaim or action in respect of which
indemnity may be sought and agrees to cooperate with the Company and the
Company's counsel in the defense of such claim or action, it being understood,
however, that the Company shall not, in connection with any one such claim or
action or separate, but substantially similar or related claims or actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys, for all the Indemnified Parties unless the defense
of one Indemnified Party is unique or separate from that of another Indemnified
Party subject to the same claim or action. In the event that the Company does
not promptly assume the defense of a claim or action, the Indemnified Party
shall have the right to employ counsel reasonably satisfactory to the Company,
at the Company's expense, to defend such claim or action. The omission by an
Indemnified Party to promptly notify the Company of the receipt or commencement
of any claim or action in respect of which indemnity may be sought will relieve
the Company from any liability the Company may have to such Indemnified Party
only to the extent that such a delay in notification materially prejudice the
Company's defense of such claim or action. The Company shall not be liable for
any settlement of any such claim or action effected without its written consent,
which shall not be unreasonably withheld or delayed. Any obligation pursuant to
this Annex shall survive the termination or expiration of this Agreement.
