onecle

Business Contracts

Consumer Forms

Projects

Loading

printer-friendly

Sample Business Contracts

Services Forms

Sponsored Links

                                                               [GRAPHIC OMITTED]
October 10, 2001

Netgateway, Inc.
754 E. Technology Avenue
Orem, UT 84097

Attention:        Don Danks
                  Chairman of the Board of Directors and
                  Chief Executive Officer

Gentlemen:

         1.       We understand that  Netgateway,  Inc., (the "Company") intends
to pursue a merger agreement with Category 5 Technologies, Inc. ("Category 5")
(collectively, the "Merger"):

         2.  The  purpose  of this  letter  is to  confirm  the  agreement  (the
"Agreement") through which SBI E2-Capital (USA) Ltd. ("SBI") is engaged to serve
as a financial  advisor  ("Advisor")  to the Company  previous to and during the
Merger.

         3.  During the term of this  Agreement,  the Advisor  will  provide the
Company with (1) such regular and customary advice as is reasonably requested by
the Company, provided that the Advisor shall not be required to undertake duties
not reasonably  within the scope of the advisory  service  contemplated  by this
Agreement, and (2) a fairness opinion (the "Fairness Opinion") to be provided to
the Board of  Directors  of the Company  relative  to the  proposed  merger.  In
performance  of these  duties,  the Advisor  shall  provide the Company with the
benefits of its best judgment and efforts.  It is understood and acknowledged by
the parties  that the value of the  Advisor's  advice is not  measurable  in any
quantitative  manner,  and that the Advisor shall be obligated to render advice,
upon the request of the  Company,  in good faith,  but shall not be obligated to
spend any specific amount of time in doing so.

         4. In connection with our activities on your behalf, the Company agrees
to cooperate with us, to furnish or cause to be furnished to us such information
and data as we may reasonably  request,  and to give us reasonable access to the
Company's   officers,   directors,   employees,   appraisers,   and  independent
accountants.  The Company  represents that all information made available to SBI
by the Company will be complete  and correct in all  material  respects and will
not contain any untrue  statement of a material fact or omit to state a material
fact necessary in order to make the  statements  therein not misleading in light
of the  circumstances  under which such statement are made. The Company  further
represents  and warrants  that any  projections  provided by it to SBI will have
been prepared in good faith and will be based on assumption  which,  in light of
the  circumstances  under  which  they are made,  are  reasonable.  The  Company
acknowledges  and agrees that in rendering its services  hereunder,  SBI will be
using and relying on the  Information  (and  information  available  from public
sources  and  other  sources  deemed   reliable  by  SBI)  without   independent
verification  thereof  by SBI,  and SBI does not assume  responsibility  for the
accuracy or completeness of the information or any other  information  regarding
the Company or the Engagement.


         5. For our services in connection with serving as Advisor,  the Company
shall pay, or cause to be paid,  to SBI a fee equal to two  percent  (2%) of the
Merger transaction value of $37,500,000. The fee shall be paid to us as follows:

              (a)  An  aggregate  cash fee of  $150,000.00.  This  fee  shall be
                   payable  to SBI  E2-Capital  upon  delivery  of the  Fairness
                   Opinion.

              (b)  2,333,333  shares of common stock of the Company to be issued
                   in the  name  of SBI  E2-Capital  or its  designees,  free of
                   restrictive  legend or any  encumbrance.  The shares shall be
                   issued upon execution of the definitive merger agreement.


         6. If (i) the Merger is not  consummated  within six months of the date
of this letter or (ii) the form of  consideration to be offered in the Merger is
materially  changed,  SBI's  continuation  of its engagement  hereunder shall be
subject to additional compensation to be mutually agreed upon.

         7. In addition to the fees described in paragraph 5 above,  the Company
agrees to  promptly  reimburse  SBI,  upon  request  from time to time,  for all
out-of-pocket expenses incurred by SBI, (including, without limitation, fees and
expenses of counsel,  and other  consultants  and  advisors  retained by SBI) in
connection with the matters contemplated by this Agreement.

         8.  The  Company  agrees  to  indemnify  SBI  in  accordance  with  the
indemnification  provisions (the "Indemnification  Provisions") attached to this
Agreement which  Indemnification  Provisions are incorporated  herein and made a
part hereof.

         9.  The  benefits  of this  Agreement  shall  inure  to the  respective
successors  and assigns of the  parties  hereto and of the  indemnified  parties
hereunder  and  then  successors  and  assigns  and  representatives,   and  the
obligations  and  liabilities  assumed in this  Agreement by the parties  hereto
shall be binding upon their respective successors and assigns.

         10. Either party hereto may terminate  this  Agreement at any time upon
30 days prior written notice, without liability or continuing obligation, except
as set forth in the following  sentence.  Neither  termination nor completion of
this assignment shall effect: (i) any compensation  earned by SBI up to the date
of termination or completion,  as the case may be, (ii) any  compensation  to be
earned after termination pursuant to paragraph 5 hereof, (iii) the reimbursement
of expenses incurred by SBI up to the date of termination or completion,  as the
case may be, (iv) the  provisions or  paragraphs 5 through 12 of this  Agreement
and (v) the Indemnification Provisions hereof which are incorporated herein, all
of which shall remain operatable and in full force and effect.

         11. The validity and interpretation of this Agreement shall be governed
by, and  construed  and enforced in  accordance  with,  the laws of the State of
California applicable to agreements made and to be fully performed therein.

         12. For the  convenience of the parties,  any number of counterparts of
this  Agreement  may be executed by the parties  hereto.  Each such  counterpart
shall  be,  and shall be deemed  to be,  an  original  instrument,  but all such
counterparts  taken together shall  constitute one and the same Agreement.  This
Agreement may not be modified or amended,  except in wring signed by the parties
hereto.



<PAGE>


         If the above terms are in accordance  with your  understanding,  please
sign the enclosed copy of this letter and return it to us.

                         Very truly yours,

                         SBI E2-CAPITAL (USA) LTD.


                         By: _________________________________
                               Name:       Shelly Singhal
                               Title:      Managing Director and
                                                   Executive Vice President

Confirmed and Agreed to this
_____ day of October, 2001:

NETGATEWAY, INC.


By:  ___________________________
       Name:
       Title:









<PAGE>


                           INDEMNIFICATION PROVISIONS



         The Company (as such term is defined  below)  agrees to  indemnify  and
hold  harmless  SBI against any and all losses,  claims,  damages,  obligations,
penalties,  judgments,  awards, liabilities,  costs, expenses, and disbursements
(and any and all actions,  suits,  proceedings,  and  investigations  in respect
thereof and any legal and other costs,  expenses,  and  disbursements  in giving
testimony  or  furnishing  documents  in response  to a subpoena or  otherwise),
including,  without limitation,  the costs, expenses, and disbursements,  as and
when incurred, of investigating,  preparing, or defending any such action, suit,
proceeding,  or  investigation  (whether or not in connection with litigation in
which SBI is a party) directly or indirectly caused by, relating to, based upon,
arising out of, our in connection  with (a) SBI's acting for the Company [and/or
the Special Committee], including without limitation, any act or omission by SBI
in connection with its acceptance of or the performance or nonperformance of its
obligations under the agreement,  between SBI and Netgateway, Inc., as it may be
amended from time to time (the "Agreement"), (b) any untrue statement or alleged
untrue  statement  of a material  fact  contained  in, or  omissions  or alleged
omissions  from,  any  information  furnished  by the Company to SBI, or (c) any
Merger (as such term is  defined  in the  Agreement),  however,  such  indemnity
agreement  shall not  apply to any  portion  of any such  loss,  claim,  damage,
obligation,  penalty,  or judgment  by a court of  competent  jurisdiction  (not
subject to further  appeal) to have  resulted  primarily  and directly  from the
gross negligence or willful  misconduct of SBI. The Company also agrees that SBI
shall not have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Company for, or in  connection  with,  the  engagement of SBI,
except to the extent that any such  liability is found in a final  judgment by a
court of competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from SBI's willful misconduct.

         These indemnification  provisions shall be in addition to any liability
which the Company may otherwise have to SBI or the persons  indemnified below in
this sentence and shall extend to the following:  SBI, its affiliated  entities,
directors,  officers,  employees, legal counsel, agents, and controlling persons
of SBI within the meaning of the federal  securities laws. All references to SBI
in this Indemnification  Agreement shall be understood to include any and all of
the foregoing.



<PAGE>


         If any action, suit, proceeding,  or investigation is commenced,  as to
which SBI proposes to demand  indemnification,  it shall notify the Company with
reasonable promptness;  provided, however, that any failure by SBI to notify the
Company shall not relieve the Company of its  obligations  hereunder.  SBI shall
have the right to retain  counsel  of its own  choice to  represent  it, and the
Company  shall have the right to retain  counsel of its own choice to  represent
it, and the Company shall pay the fees, expenses, and disbursements of each such
counsel;  and such counsel shall to the extent  consistent with its professional
responsibilities  cooperate  with the Company and any counsel  designated by the
Company. The Company shall be liable for any settlement of any claim against SBI
made with the Company's written consent, which consent shall not be unreasonably
withheld.  The  Company  shall not,  without the prior  written  consent of SBI,
settle or compromise  any claim,  or permit a default or consent to the entry of
any judgment in respect  thereof,  unless such settlement  compromise or consent
includes, as an unconditional term thereof, the giving by the claimant to SBI of
an unconditional  release from all liability in respect of such claim in respect
of such claim.

         In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these indemnification  provisions is made, but it is
found in a final judgment by a court of competent  jurisdiction  (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express  provisions hereof provide for  indemnification in such case,
then the Company,  on the one hand, and SBI, on the other hand, shall contribute
to the losses,  claims,  damages,  obligations,  penalties,  judgments,  awards,
liabilities, costs, expenses, and disbursements to which the indemnified persons
may be subject in accordance with the relative benefits received by the Company,
on the one hand,  and SBI, on the other hand, and also the relative fault of the
Company  on the one hand,  and SBI on the other  hand,  in  connection  with the
statements,  acts,  or omissions  which  resulted in such loses claim,  damages,
obligations,  penalties,  judgments,  awards, liabilities,  costs, expenses, and
disbursements  relevant equitable  considerations  shall also be considered.  No
person  found  liable for a  fraudulent  misrepresentation  shall be entitled to
contribution  from any person who is not also found  liable for such  fraudulent
misrepresentation.  Notwithstanding the foregoing, SBI shall not be obligated to
contribute  any amount  hereunder  that  excess  the  amount of fees  previously
received by SBI pursuant to the Agreement.

         Neither termination nor completion of the engagement of SBI referred to
above shall  affect  these  indemnification  provisions  which shall then remain
operative and in full force and effect.






Sponsored Links