EXHIBIT 1
BAYTREE CAPITAL ASSOCIATES, LLC
MERCHANT BANKERS
THE XXXXX BUILDING AT
00 XXXX XXXXXX
XXX XXXX, XXX XXXX 10005
212/509-1700 - FACSIMILE 212/363-4231
August 1, 2001
Nettaxi. Com
0000 X. Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxx Xxxxxxxx, Xx.
CEO
Dear Xx. Xxxxxxxx:
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 Xxxxxxx.xxx ("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
Agreement, Xxxxxxx will assist Xxxxxxx in negotiating and effecting a
Transaction. In this regard, Xxxxxxx 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
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.
Xxxxxxx 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, Xxxxxxx will have
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).
4. REPRESENTATIONS, WARRANTIES, AND COVENANTS.
(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.
(c) 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.
(d) Xxxxxxx 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. Xxxxxxx agrees to attempt to fulfill its obligations under
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
obligations under this Agreement, Xxxxxxx 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. In
connection with Xxxxxxx's activities on Xxxxxxx's behalf, Xxxxxxx will cooperate
with Xxxxxxx and will furnish Baytree with all information concerning Nettaxi,
the Transaction and, to the extent available to Nettaxi, the Merger Candidate,
which Xxxxxxx deems appropriate and will provide Xxxxxxx with access to
Xxxxxxx's officers, directors, employees, independent accountants and legal
counsel for the purpose of performing Xxxxxxx's obligations pursuant to this
agreement. To the extent that Xxxxxxx 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 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 Nettaxi or the Merger Candidate. All Information that is not
publicly available will be confidential and proprietary information belonging to
Nettaxi and Xxxxxxx 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 Nettaxi.
7. DISCLOSURE. Xxxxxxx agrees that, except as required by law, rule or
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 Xxxxxxx.
8. GOVERNING LAW AND SEVERABILITY. This agreement shall be governed by
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 Xxxxxxx represent and warrant that each
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
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
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. Nettaxi 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 Nettaxi
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. 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\Xxxxxxx Xxxxxxx
--------------------
Xxxxxxx Xxxxxxx
Agreed to and Accepted as of the above date
XXXXXXX.XXX
By: \s\ Xxxxxx Xxxxxxxx, Xx.
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Xxxxxx Xxxxxxxx Xx., CEO
