BAYTREE CAPITAL ASSOCIATES, LLC
MERCHANT BANKERS
THE ▇▇▇▇▇ BUILDING AT
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 10005
212/509-1700- FACSIMILE 212/363-4231
August 1, 2001
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▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
CEO
Dear ▇▇. ▇▇▇▇▇▇▇▇:
This letter agreement (this "Agreement") confirms the terms and Conditions
of the semi-exclusive engagement (as described below) of Baytree Capital
Associates, LLC ("Baytree") by ▇▇▇▇▇▇▇.▇▇▇ ("Nettaxi") and its affiliates to
render certain financial advisory and investment banking services to Nettaxi and
any person, corporation or other entity formed by or affiliated with such person
(the "Company") which participates in, or which was formed for the purpose of
effecting a Transaction (as hereinafter defined). In the context of this
Agreement, "Transaction" shall mean, whether effected in one transaction or a
series of transactions, any merger, consolidation, reorganization,
recapitalization or other business combination pursuant to which the business of
Nettaxi is combined with that of another entity (the "Merger Candidate"),
whether or not Nettaxi is the surviving entity in such business combination.
1. SERVICES. Pursuant to the terms and conditions set forth in this
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Agreement, ▇▇▇▇▇▇▇ will assist Nettaxi in negotiating and effecting a
Transaction. In this regard, ▇▇▇▇▇▇▇ proposes to undertake certain activities on
behalf of Nettaxi including the following:
(a) assist the Company in preparing the public entity for a potential
merger Transaction, including assisting in the negotiation of satisfying of all
current and contingent liabilities from the Company's assets;
(b) use its best efforts to identify a Merger Candidate;
(c) advise Nettaxi as to the structure and form of the Transaction;
(d) assist Nettaxi in obtaining appropriate information and performing
its due diligence regarding the Merger Candidate;
(e) counsel Nettaxi with respect to, and conducting, negotiations
with, the Merger Candidate regarding the Transaction; and
(f) arranging for consummation of the Transaction.
Any obligations pursuant to this Paragraph 1 shall survive the
termination or expiration of this Agreement.
2. COMPENSATION; EXPENSES. It shall be the Company's obligation to bear
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all of its expenses in connection with the Transaction, which expenses shall
include, but are not limited to the following: printing and duplication costs,
postage and mailing expenses with respect to the transmission of offering
materials, registrar and transfer agent fees, expenses related to a fairness
opinion, expenses related to proxy solicitation, accounting fees and issue and
transfer taxes, if any, and reasonable out of pocket expenses of Baytree
including, but not limited to, its travel expenses, attorneys' fees and
professional expenses. For its role pursuant to this Agreement, Baytree or its
nominee shall receive compensation (i) in the amount of 5% of the total amount
of the Transaction (the "Consideration," as defined below) up to $3,000,000 and
2% of the remaining amount of the Transaction, payable, at the election of
Baytree, in cash or common stock of the Company at a purchase price equal to the
average of the closing bid prices of the Company's common stock as quoted on the
Over the Counter Bulletin Board for the fifteen (15) trading days immediately
preceding June 1, 2001, calculated at $0.21 per share (the "Common Stock
Valuation"); and (ii) a warrant exercisable to purchase up to 5% of the common
stock of the Company at a purchase price equal to the Common Stock Valuation.
▇▇▇▇▇▇▇ shall be entitled to customary piggy-back and demand registration
rights.
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 or any of its security holders in connection with any
Transaction. All consideration shall be deemed paid at the closing.
Any obligation pursuant to this Paragraph 2 shall survive the
termination or expiration of this Agreement.
3. EXCLUSIVITY. In consideration for the foregoing, Baytree will have
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the semi-exclusive right to present a Transaction to the Company's board of
directors (the "Board") for a period of 90 days from the date of this Agreement.
The Company may elect to proceed with a Transaction presented by
another source, provided that the Board has approved the Transaction. In the
event the Company elects to proceed with a Transaction presented by another
source during the ninety (90) day period referenced above, Baytree shall be
entitled to one-half of the compensation described in paragraph 2 above and
shall provide those services outlined in sub-paragraphs 1(a) and 1(c) through
(f).
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4. REPRESENTATIONS, WARRANTIES, AND COVENANTS.
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(a) Nettaxi represents and warrants and shall cause the Company to so
represent and warrant 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 the transactions
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. Baytree further
represents and warrants that consummation of the transactions 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)
Nettaxi represents, warrants, and covenants that at the time of the Transaction
contemplated herein there shall be no liens, encumbrances or security interest
in any assets of Nettaxi (or any subsidiaries or affiliates) (except for
existing liens and security interests), said unencumbered assets shall include
but not be limited to the intellectual or proprietary property of Nettaxi which
property shall include but not be limited to, any and all copyrights issued to,
titled to, or claimed by Nettaxi.
(d) Nettaxi represents that prior to completion of the Transaction, it
shall have obtained audited financial statements covering the prior three (3)
years of its operations, such financial statements shall have been prepared by
an independent CPA firm licensed to practice before the SEC and which has
completed its peer review process. Nettaxi acknowledges that the above condition
shall be a condition precedent to Baytree performing its services under this
Agreement.
(e) ▇▇▇▇▇▇▇ represents and warrants that it has not been the subject
of any enforcement proceedings by the Securities Exchange Commission ("SEC"),
has not consented to any form of decree, or been sanctioned by the SEC or been
found liable by any court or administrative agency of any Federal or State
securities law violation.
5. TERM. ▇▇▇▇▇▇▇ agrees to attempt to fulfill its obligations under
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this Agreement within ninety (90) days from the date of this Agreement. In the
event a bona fide term sheet is presented to the Board, the term is extended
until the Board has acted upon it. If the Board has not elected to proceed with
a Transaction, or if a term sheet for a proposed Transaction is not presented
by Baytree to the Board, within such ninety (90) day time period (or extended
time period), Nettaxi may terminate this Agreement and shall have no further
obligations to Baytree under this Agreement other than the reimbursement of its
expenses as described in paragraph 2.
6. INFORMATION. Nettaxi recognizes and confirms that in performing its
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obligations under this Agreement, Baytree and other persons who participate
in the Investment will be using and relying on data, material, and other
information (the "Information") or ("Offering Materials") furnished by Nettaxi
and the Merger Candidate or their respective employees and representatives.
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In connection with ▇▇▇▇▇▇▇'s activities on ▇▇▇▇▇▇▇'s behalf, ▇▇▇▇▇▇▇ will
cooperate with ▇▇▇▇▇▇▇ and will furnish Baytree with all information concerning
Nettaxi, the Transaction and, to the extent available to Nettaxi, the Merger
Candidate, which ▇▇▇▇▇▇▇ deems appropriate and will provide ▇▇▇▇▇▇▇ with access
to ▇▇▇▇▇▇▇'s officers, directors, employees, independent accountants and legal
counsel for the purpose of performing ▇▇▇▇▇▇▇'s obligations pursuant to this
agreement. To the extent that ▇▇▇▇▇▇▇ has access to the officers, directors,
employees, independent accountants and legal counsel of the Merger Candidate, it
will provide such access to Baytree for the purpose of performing Baytree's
obligations pursuant to this Agreement. Nettaxi hereby agrees and represents
that all Information (a) furnished directly by Nettaxi to Baytree pursuant to
this Agreement, and (b) contained in any filing by Nettaxi 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 Nettaxi becomes materially inaccurate, incomplete or
misleading during the term of ▇▇▇▇▇▇▇'s engagement hereunder, the Company shall
so advise ▇▇▇▇▇▇▇ in writing. Accordingly, ▇▇▇▇▇▇▇ assumes no responsibility for
the accuracy and completeness of the Information. In rendering its services
hereunder, ▇▇▇▇▇▇▇ will be using and relying upon the Information without
independent verification thereof or independent evaluation of any of the assets
or liabilities of Nettaxi or the Merger Candidate. All Information that is not
publicly available will be confidential and proprietary information belonging to
Nettaxi and ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇'s duties under this Agreement) by ▇▇▇▇▇▇▇ unless
legally compelled as determined in good faith by counsel to Baytree and with
reasonable notice given to Nettaxi.
7. DISCLOSURE. ▇▇▇▇▇▇▇ agrees that, except as required by law, rule or
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regulation, it will not disclose and will cause the Company not to disclose the
services or advice to be provided by Baytree under this Agreement publicly or to
any third party without the prior written approval of ▇▇▇▇▇▇▇.
8. GOVERNING LAW AND SEVERABILITY. This agreement shall be governed by
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the laws of the State of New York. 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.
9. AUTHORIZATION. Nettaxi and ▇▇▇▇▇▇▇ represent and warrant that each
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has all requisite power and authority, and all necessary authorizations, to
enter into and carry out the terms and provisions of this Agreement.
10. JURISDICTION. The parties shall agree that the Courts of the State
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of New York shall have jurisdiction with respect to any dispute, claim or
controversy of whatever nature arising out of or relating to this Agreement.
11. SUCCESSORS. This Agreement and all rights, liabilities and
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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.
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12. HEADINGS. The descriptive headings of the Paragraphs of this
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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. Nettaxi represents and warrants to Baytree that there are
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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 Nettaxi
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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, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, 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. Final Agreement. This Agreement constitutes the entire agreement among
the parties and supersedes and replaces any agreement entered into between the
parties prior to the date hereof, including but not limited to that certain
letter agreement between the parties dated May 7, 2001.
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/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Principal
Agreed to and accepted as of the above date
▇▇▇▇▇▇▇.▇▇▇
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇., CEO
