PERSONAL & CONFIDENTIAL July 23, 2001
Xx. Xxxxxx X. Xxxxxxx
Chairman of the Board of Directors
Path 1 Network Technologies Inc.
0000 Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Dear Xxx:
This letter confirms the agreement between Alliant Partners and Path 1 Network
Technologies Inc. (the "Company") as follows:
1- Scope of Assignment:
Alliant Partners is exclusively engaged to represent the Company in
rendering financial advisory services in connection with a possible sale of
the Sistolic product line. Our Transaction services will include:
o Advice and assistance in preparation of descriptive materials
concerning Sistolic,.
o Identifying and evaluating potential acquirers acceptable to the
Company.
o Contacting prospective acquirers approved by the Company to determine
their level of interest in a Transaction.
o Evaluating the proposed structure and consideration for any
Transaction, and making such other analyses and investigations as
necessary.
o Assisting the Company in the negotiation of all aspects of the
proposed Transaction.
o Presentations to the Company's Board of Directors as requested.
Alliant Partners will not approach prospective acquirers with the Company's
consent. Alliant Partners will not purport to bind the Company or make
representations to third parties beyond those contained in the written
materials of the Company without the Company's consent.
2- Compensation:
As compensation for services, the Company shall pay to Alliant Partners:
a) An initial payment of $10,000, payable upon execution of this letter
agreement.
b) A success fee payable in cash immediately upon closing of a Transaction of
5.0% of the Total Aggregate Consideration from parties other than any
venture group led by X. X. Xxxx or Xxxx Xxxxxx (for which no success fee
will be due). Payments to Alliant Partners will be free and clear of any
other transaction expenses incurred by the Company, including those of
legal counsel, accountants, or other transaction advisors. The success fee
shall be payable if the Company reaches agreement for a Transaction during
this engagement or at any time prior to six (6) months following the
termination (as described below) of this engagement. Such "tail" will only
apply to an agreed list of parties that held discussions with Alliant or
the Company concerning the potential Transaction during the course of this
engagement.
c) In addition to the foregoing fees, the Company will also promptly reimburse
Alliant Partners for out-of-pocket expenses incurred by Alliant Partners in
connection with services rendered under this agreement. All reimbursable
expenses will require approval of the Company.
3- Information / Confidentiality:
(a) The Company will make available to Alliant Partners all information that
Alliant Partners reasonably requests in connection with the performance of
its services. Alliant Partners may rely upon the accuracy and completeness
of such information without independent verification and is authorized to
make appropriate use of such information. The Company will furnish any
appropriate information that may be reasonably required by a third party to
make a transaction decision.
(b) Except as contemplated by the terms hereof or as required by applicable
law, Alliant Partners shall keep confidential all nonpublic information
provided to it by the Company, and shall not disclose such information to
any third party without the prior consent of the Company, other than to
such of Alliant Partners' employees and contractors as have a need to know
in the course of rendering services under this agreement.
4- Indemnification:
(a) If Alliant Partners becomes involved in any action, proceeding or
investigation (other than an action between Alliant Partners and the
Company) regarding any matter in this letter, the Company will indemnify
Alliant Partners against any claims, liabilities or expenses to which
Alliant Partners may become subject (including reasonable legal and other
expenses) unless such claims, liabilities or damages resulted from Alliant
Partners' gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction. The Company agrees that this
indemnification shall apply whether or not Alliant Partners is a formal
party to such actions, and that Alliant Partners is entitled to separate
counsel (to be reasonably agreed with the Company, and whose fees shall be
reasonable) at the Company's expense in connection with any of these
matters.
(b) The indemnification and reimbursement obligations of the Company shall
extend to the shareholders, directors, employees and contractors of Alliant
Partners under the same terms that exist between Alliant Partners and the
Company.
5- Definitions:
(a) The "Transaction" shall mean any transaction or related series or
combination of transactions whereby, directly or indirectly, assets or
securities related to Sistolic are acquired outside the ordinary course of
business in a sale or exchange for stock, cash or other consideration. The
Transaction shall also include joint ventures, partnerings, and development
agreements.
(b) The "Total Aggregate Consideration" for purposes of calculating Alliant
Partners' fee shall be the total amount received or receivable by the
Company or its shareholders upon the consummation of a Transaction, plus
the amount of debt assumed by the acquirer. The Total Aggregate
Consideration shall include all forms of consideration received or
receivable by the Company or its shareholders other than normal employment
terms typically offered by the acquirer to employees, irrespective of their
ownership of the Company. In the event that the Total Aggregate
Consideration received in the Transaction includes (a) securities of the
acquiring company, or (b) deferred or contingent payments or acquisition of
additional stock or assets after the initial closing, the value of such
securities shall be their fair market value, as the parties shall mutually
agree at the time of signing a definitive agreement, using standard
valuation methodologies. Any amounts potentially recoverable by the
acquirer (including amounts placed in escrow) related to representations
and warranties of the Company will not be deducted from the Total Aggregate
Consideration.
6- Other:
Either party may terminate Alliant Partners' engagement at any time, with or
without cause, upon written notice to the other party. If the Company terminates
this engagement letter agreement in favor of another engagement with Alliant
Partners within thirty (30) days, the initial payment of US$10,000 shall be
applied to the new agreement. If the Company terminates this engagement letter
agreement without executing another agreement with Alliant Partners within
thirty (30) days, the initial payment of US$10,000 shall be forefeited. This
letter is intended by the parties to be the final expression of their agreement,
and shall supersede any other correspondence, conversations and understandings
relating to the subject matter of this letter. This agreement may not be amended
or modified except in writing, and shall be governed by the laws of the State of
California. Any dispute relating to this agreement shall be settled by
arbitration at the arbitration center in San Xxxx according to the rules of the
American Arbitration Association, with any related costs or attorneys' fees
recuperated by the prevailing party.
Alliant Partners
Signed: /s/ X. Xxx Xxxxxxx
-----------------------------
Agreed and accepted: X. Xxxxxx Xxxxxxx
Managing Partner
Path 1 Network Technologies Inc.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Xxxxxx X. Xxxxxxx
Date: 7/23/2001
