XXXXXXXXX GROUP CORPORATE DEVELOPMENT AGREEMENT
This Agreement (the "Agreement') is entered into as of this 17th day of
June, 1998, by and between The Xxxxxxxxx Group, Inc., a Nevada corporation
("Michelson"), with its principal place of business at 0000 Xxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx Xxxxx, XX 00000, and Gen-Tel Communications with its
principal place of business at 0000 Xxxxxx Xxx., Xxxxx X-0, Xxxxx Xxxx, XX
00000 (the "Company").
RECITALS
WHEREAS, Company intends to be a public company which is required to file
periodic and other reports under section 13 or 15(d) of the Securities
Exchange Act of 1934 and envisions that it will need the services of
corporate development activities of Xxxxxxxxx; and
WHEREAS, Company desires to engage Xxxxxxxxx to perform corporate
development services on behalf of Company; and
WHEREAS, Xxxxxxxxx has the ability and knowledge necessary for the
performance of such services; and
WHEREAS, Xxxxxxxxx and Company desire, pursuant to the terms of this
Agreement, to set forth the ten, and conditions pursuant to which Xxxxxxxxx
will perform corporate development services on behalf of Company.
WHEREAS, as used herein, "Applicable Date" means June 23, 1998 if Xxxxxxxxx
does not terminate this Agreement as provided in Section 1.2.6.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
and other good and adequate consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
Scope of Services
1.1 Xxxxxxxxx agrees to perform for the Company the corporate development
services describe as follows:
1.1.1 Referrals; Key Employees. Xxxxxxxxx shall advise the Company on
the selection of professionals and Company agrees to meet and retain such
professionals provided that the compensation to such professionals is at or
less than market rate and that such professionals and their compensation are
mutually agreed upon by the Company and Xxxxxxxxx. Company will name one
designee of Xxxxxxxxx to its Board of Directors and recommend said designee
to its shareholders for election as a director at future shareholder
meetings of the Company. Xxxxxxxxx recognizes that the shareholders may not
cast their votes for such designee and such failure shall not constitute a
breach of this Agreement.
1.1.2 Stock Option Plan. Xxxxxxxxx recognizes that having management own a
significant ownership position in the Company is a valuable tool for
focusing their attention on increasing shareholder value. Accordingly,
Xxxxxxxxx recommends that the Board of Directors put into effect a stock
option plan to be used for acquiring additional management as well as
incentivizing current management.
1.1.3 Capitalization. Xxxxxxxxx shall make all reasonable efforts to help
Company reach the business objectives to be mutually agreed upon at a later
date.
1.1.4 The Support System. Xxxxxxxxx will develop, implement and maintain an
ongoing stock market support system with the general objective of expanding
stockbroker awareness of the Company's activities, and hence to generate
commensurate interest in the Company's stock.
1.2 Company acknowledges as follows:
1.2.1 No Guarantees. Xxxxxxxxx makes no guarantees, representations or
warranties as to the particular results from Xxxxxxxxx corporate development
services, the response and timeliness of action by the stockholder and
brokerage community, including but not limited to guarantees,
representations or warranties as to future stock price of Company.
1.2.2 Review Responsibility. Company understands that the accuracy and
completeness of any document prepared by Xxxxxxxxx or its advisers is
dependent upon Company's alertness to assure that such document contains all
material facts which might be important and that all such documents must not
contain any misrepresentation of a material fact nor omit information
necessary to make the statements therein not misleading. To that end,
Company agrees to review, and confirm to Xxxxxxxxx in writing that you have
reviewed, all materials for their accuracy, and completeness prior to any
use thereof. Company also acknowledges that this responsibility continues in
the event that the materials become deficient in this regard.
1.2.3 Representations and Warranties. The Company represents and warrants to
Xxxxxxxxx that all information provided prior to the execution of this
Agreement, in writing or otherwise, is true and complete. In the event that
such information is determined to be inaccurate, incomplete or otherwise
misleading, this Agreement may be immediately terminated, at the sole
discretion of Xxxxxxxxx.
1.2.4 Issuance of Additional Securities/Indebtedness. Commencing with the
execution of this Agreement and ending two years from the date of the
Agreement, the Company and its princi al shareholders will not issue any
additional securities (except Securities issued inconnection with the
currently proposed private securities offerings and Securities issuable upon
the exercise or conversion of existing warrants, options or other
convertible securities, or those issuable upon presently existing employee
stock option plans) or incur and additional indebtedness (except in the
ordinary course of business of to an aggregate of $250,000.00. It is the
Company's ordinary course of business to buy switches that can be $5
million) without the prior written consent of Xxxxxxxxx.
1.2.5 The contract is subject to Xxxxxxxxx completing its due diligence by
June 23, 1998. if Xxxxxxxxx is not satisfied for any reason, Xxxxxxxxx may
terminate this contract with no obligation to Xxxxxxxxx by June 23, 1998.
ARTICLE II
Compensation for Services
2.1 In consideration for entering into this Agreement and performing the
services described immediately above, Company agrees to compensate
Xxxxxxxxx as follows:
2.1.1 Cash Compensation. Company agrees to pay to Xxxxxxxxx a monthly fee of
$6,500.00, to
be paid on the 15th of each month, in advance, beginning upon execution of this
agreement. Xxxxxxxxx agrees to accrue one half of its fees until Company
breaks escrow
on its secondary financing, and Xxxxxxxxx agrees to accrue the first month's
fees until
Company is a public entity. Company agrees to bring current all Xxxxxxxxx
fees upon
breaking of escrow and to pre-pay three months forward fees when Company breaks
escrow on its secondary financing.
2.1.2 Stock Compensation. Commencing on the Applicable Date, Company agrees
to issue to Xxxxxxxxx warrants to purchase that number of shares of common
stock of the Company (the "Warrants") which would, upon exercise, result in
Xxxxxxxxx holding of 9.9% of the outstanding shares of the Company upon
completion of the proposed bridge financing. Such Warrants shall be
exercisable for a period of five years from the Applicable Date at an
initial price of $.01 per share. The Company shall execute and deliver a
customary Warrant Agreement evidencing the Warrants. Xxxxxxxxx acknowledges
that the Warrants and the shares issuable upon exercise of the Warrants (the
"Shares") will initially be "restricted securities" (as such term is define
in Rule 144 promulgated under the Securities Act of 1933, as amended ("Rule
144"), that the Warrants and Shares will include a restrictive legend, and
that the Warrants and Shares cannot be sold unless registered with the
United States Securities and Exchange Commission ("SEC") and qualified by
appropriate state securities regulators, or unless Xxxxxxxxx complies with
an exemption from such registration and qualification (including without
limitation, compliance with Rule 144).
2.1.3 In order to facilitate Company's growth plan, Xxxxxxxxx agrees to
exercise the warrants due Xxxxxxxxx under this contract in the following
schedule: one fourth of the warrants can bc exercised by Xxxxxxxxx
immediately, an additional one fourth upon Company's stock trading at a $40
million public stock market valuation (for example: 10 million shares
outstanding trading at $4 per share is a $40 million valuation); the
remainder under this contract, including those listed under paragraph 2.1.4,
are due Xxxxxxxxx upon Company breaking escrow on a debt or equity financing
of $3 million or over for the Company.
Company shall issue the stock certificate for the Shares within five (5)
days after the exercise of any Warrants.
2.1.4 Antidilution. It is the intention of the parties hereto that upon
completion of the reverse merger and bridge financing, the number of
warrants to be held by Xxxxxxxxx shall equal 9.9% of the then issued and
outstanding shares of stock. This 9.9% is to be calculated on a fully
diluted basis assuming that the entire bridge financing is completed. The
Company agrees that it shall issue additional warrants to Xxxxxxxxx, if
necessary, in order to assure that Xxxxxxxxx receives this 9.9%. Xxxxxxxxx
shall be diluted in the same manner that all other shareholders of the
Company are diluted, in all offerings occurring subsequent to the completion
proposed bridge financing.
2.1.5 Expenses. Company agrees to pay all incidental costs and expenses
associated with services provided by Xxxxxxxxx. Such expenses are separate
from cash compensation as set out above, and include but not limited to such
incidental costs and expenses as travel and lodging, copying charges,
printing charges, long distance telephone charges, facsimile charges,
postage, special mailings and other reasonable expenses. Such expense shall
in every instance be reasonable and verifiable with appropriate back-up
documentation. All expenses over $1,000.00 a month will be pre-approved by
Company.
ARTICLE III
Term of the Agreement
3.1 This Agreement shall commence upon execution of this Agreement and
continue during the two year period of time following the date of this
Agreement. Renewal shall be determined by a vote of the Board of Directors
of the Company. Notwithstanding the foregoing, the Company or Xxxxxxxxx, as
the case may be, may terminate this Agreement immediately upon written
notice to such party upon the occurrence of any of the following: (a) the
other party shall become insolvent or make an assignment for the benefit of
Creditors; and (b) the other party shall breach any of the material terms of
this Agreement. If this Agreement is terminated on or before the termination
date of this Agreement (as set forth above) for any reason other than a
default by Xxxxxxxxx, the entire cash fee shall immediately become due and
payable, shall be deemed to be earned as of such date, and no offset, refund
or reduction of payments shall be attributable to such termination. The
provisions of Article II shall survive the termination of this Agreement.
ARTICLE IV
Status of Parties
4.1 Nothing contained in this Agreement shall be construed to imply that
either Xxxxxxxxx, the Company, or any employee, agent or other authorized
representative of any such party, is a partner, joint venturer, agent
officer or employee of the other. Neither party hereto shall have
any authority to bind the other in any respect vis a vis any third party, it
being intended that each shall remain an independent contractor and
responsible only for its own actions. The Company and Xxxxxxxxx arc
independent contractors, each responsible for its own actions, costs and
expenses. Neither Xxxxxxxxx nor the Company shall have any right to, and
shall not, commit the other party to any agreement, contract, or undertaking
or waive or compromise any of such other party's rights against customers or
other parties. All compensation paid to Xxxxxxxxx shall
constitute earnings from self-employment income and the Company shall not
withhold any amounts therefrom as federal or state income tax withholding
from wages or as employee contributions under the Federal Insurance
Contribution Act (Social Security) or any similar federal or state law
applicable to employers and employees.
ARTICLE V
Indemnification
5.1 Company acknowledges that Xxxxxxxxx must at all times rely upon the
accuracy and completeness of information and documents supplied to Xxxxxxxxx
by the Company's officers, directors, agents and employees. Consequently,
Company and the entities affiliated with Company agree to indemnify and hold
harmless Xxxxxxxxx, its officers, directors, employees and agents
(collectively, the "Indemnitees") against and from any and all losses,
claims, damages or liabilities, joint or several, which Indemnitees or any
of them may become subject, and to reimburse Indemnitees or any of them for
any legal or other expenses (including the cost of any investigation and
preparation) incurred by Indemnitees or any of them, arising out of or in
connection with any inquiry, litigation or other proceeding, whether or not
resulting in any liability, insofar as such losses, claims, damages,
liabilities or expenses arise out of, or are based
upon, (i) any act taken or omitted to be taken by Indemnitee's services
hereunder, or (ii) any untrue statement or alleged untrue statement of a
material fact contained in any information (written or oral) furnished by
you to Indemnitees or the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading.
ARTICLE VI
Confidentiality
6.1 Xxxxxxxxx agrees not at any time (during or after the term of this
Agreement) to disclose or use, except in pursuit of the business of the
Company (for purposes of this Article, "the Company" shall include the
Company and any affiliate of the Company), and Proprietary Information of
the Company acquired during the term of this Agreement- For Purposes of this
Agreement the phrase "Proprietary Information" means all information which
is known or intended to be known only to Xxxxxxxxx or employees of the
Company any document, record or other information of the Company or others
in a confidential relationship with the Company and relates to specific
business matters such as patents, patent applications, trade secrets, secret
processes, proprietary know-how, information of the Company's business, and
identity of suppliers or customers or accounting procedures of the Company
or relates to other business of the Company. Xxxxxxxxx agrees not to remove
from the premises of the Company except in the pursuit of business of the
Company any document, record or other information of the Company. Xxxxxxxxx
recognizes that all such documents, records or other information, whether
developed by Xxxxxxxxx or by
someone else for the Company are the exclusive property of the Company, as
the case may be.
ARTICLE VII
Miscellaneous
7.1 .Waiver. No waiver of any breach of default of this Agreement by
Xxxxxxxxx shall be considered to be a waiver of any other breach or default
of this Agreement.
7.2 Severability. If any portion of this Agreement is found by a court of
competent jurisdiction to be void or unenforceable, that portion hereof
shall be deemed to be reformed to the extent necessary to cause such portion
to be enforceable and the same shall not affect the remainder of this
Agreement, which shall be given full force and effect without regard to the
invalid or unenforceable portions.
7.3 Entire Agreement. This Agreement, which may be signed in duplicate or
counterparts, replaces and supersedes all previous Agreements between
Xxxxxxxxx and the Company, contains the entire understanding between the
parties, and may not be changed, altered, amended, or modified, except in
writing, duly executed by each of the parties.
7.4 Assignment. This Agreement may not be assigned or transferred by either
party hereto without the prior written consent of the other.
7.5 Governing Law. This Agreement shall be governed by the laws of the State
of California.
7.6 Attorney's Fees. Should any action be commenced between the parties to
this Agreement concerning the matters set forth in this Agreement or the
right and duties of either in relation thereto, the prevailing party in such
action shall be entitled, in addition to such other relief as may be
granted, to a reasonable sum as and for its Attorney's Fees and Costs.
7.7 Arbitration and Venue. Any controversy arising out of or relating to
this Agreement or any modification or extension thereof, including any claim
for damages and/or recision, shall be settled by arbitration in Orange
County, California in accordance with the Commercial Arbitration Rules of
the American Arbitration Association before one arbitrator. The arbitrator
sitting in any such controversy shall have no power to alter or modify any
express provisions of this Agreement or to render any award which by its
terms effects any such alteration, or modification. The parties consent to
the jurisdiction of the Superior Court of California, and of the United
States District Court for the Central District of California for all
purposes in connection with such arbitration including the entry of judgment
on any award. The parties consent that any process or notice of motion or
other application to either of said courts, and any paper in connection with
arbitration, may be served by certified mail or the equivalent, return
receipt requested, or by personal service or in such manner as may be
permissible under the rules of the applicable court or arbitration tribunal,
provided a reasonable time for appearance is allowed. The parties further
agree that arbitration proceedings must be instituted within one year after
the claimed breach occurred, and that such failure to institute arbitration
proceedings within such period shall constitute an absolute bar or the
institution of any proceedings and a waiver of all claims. This section
shall survive the termination of this Agreement.
7.8 Facsimile Signature. Any signature on a facsimile copy of the Agreement
shall be binding and valid as if made on the original copy of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement t e uly
executed and delivered as of the date first written above.
XXXXXXXXX GROUP, INC.
By: /s/Xxxxx Xxxxxx
Xxxxx Xxxxxx, President
"COMPANY"
By: /s/ Xxxx Xxxxxx
Its: President
Amendment to The Xxxxxxxxx Group, Inc. Corporate Development
Agreement with Gen-Tel Communications dated June 17, 1998
It is mutually agreed to amend paragraph 2.1.1 to read:
Cash Compensation. Company agrees to pay to Xxxxxxxxx a monthly fee of
$6.500.00, to be paid on the 15th of each month, in advance, beginning upon
execution of this agreement. Xxxxxxxxx agrees to accrue its fees until
Company breaks escrow on its bridge financing. Company agrees to bring
current all Xxxxxxxxx fees upon breaking of escrow of bridge financing.
Company also agrees to pre-pay three months forward fees when Company
reaches $750,000.00 in gross proceeds.
It is mutually agreed to amend paragraph 2.1.3 to read:
In order to facilitate Company's growth plan Xxxxxxxxx agrees to exercise
the warrants due Xxxxxxxxx under this contract in the following schedule:
one fourth of the Warrants can be exercised by Xxxxxxxxx immediately, an
additional one fourth can be exercised by Xxxxxxxxx when company breaks
escrow on their proposed bridge financing; an additional one fourth can be
exercised upon Company's stock trading at a $40 million public stock market
valuation (for example: 10 million shares outstanding trading at $4 per
share is a $40 million valuation); the remainder under this contract,
including those listed under paragraph 2.1.4, are due Xxxxxxxxx upon Company
breaking escrow on a debt or equity financing of $3 million or over for the
Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first written above.
XXXXXXXXX GROUP, INC.
By: /s/Xxxxx Xxxxxx
Xxxxx Xxxxxx, President
"COMPANY"
By: /s/Xxxx Xxxxxx
Its: President
AGREEMENT
November 3, 1998
The Xxxxxxxxx Group agrees to loan GTC Telecom $20,000.00. GTC agrees to allow
The Xxxxxxxxx Group to exercise 567,983 shares of GTCC stock due The Xxxxxxxxx
Group.
Accepted and Agreed Accepted and Agreed
/s/Xxxxx Xxxxxx /s/ Xxxx Xxxxxxx
Xxxxx Xxxxxx Xxxx X. Xxxxxxx
President Chief Operating Officer
