INVESTMENT BANKING AGREEMENT
Agreement made as of August 1, 1999, by and between TRANSGLOBAL
CAPITAL CORPORATION, ("TCC"), whose address is 00000 Xxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxx Xxxxx, XX 00000 and GTC Telecom ("Client"),
whose address is 0000 Xxxxxx Xxx. Xxxxx X-0, Xxxxx Xxxx, XX 00000.
WITNESSETH
WHEREAS, Client requires expertise in the area of
investment banking to support its business and growth; and
WHEREAS, TCC has substantial contacts among the members of the
investment community, investment banking expertise, and desires to
act as a consultant to provide investment banking and advisory
services.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants contained herein and subject specifically to
the conditions hereof, and intending to be legally bound thereby,
the parties agree as follows:
1. Certain Definitions. When used in this Agreement, the
following terms shall have the meanings set forth below:
1.1 Affiliate shall mean any persons or entities holding more
than a 51% interest in either party to this Agreement.
1.2 Client shall mean the Client's contractors, contacts or
associates.
1.3 Contact Person shall refer to the person who shall be
primarily responsible for carrying out the duties of the parties
hereunder. Client and TCC shall each appoint a Contact Person to be
responsible for their respective duties. In the event that one
party gives notice to the other party in writing that in their
reasonable opinion, the other party's Contact Person is not able to
fulfill their duties and responsibilities hereunder, both parties
shall mutually agree upon a replacement Contact Person within 10
days of said notice.
1.4 Extraordinary Expenses shall mean expenses that are
beyond those expenses that are usual, regular, or customary in the
conduct of Client's investment banking consulting activities in
fulfillment of the scope of this Agreement.
1.5 Equity shall mean cash, securities or liquid assets,
specifically excluding real property.
1.6 Payment or Payable in Kind shall refer to distribution of
the proceeds of a transaction in the same type and form as was given
as valuable consideration for the transaction.
2. Contact Persons. The Contact Person for TCC is Xxxxxxx
Xxxxx. The Contact Person for Client is Xxxx Xxxxxxx.
3. Services to be Rendered by TCC. Services to be rendered
by TCC are as follows:
3.1 Advice and Counsel. TCC will provide advice and counsel
regarding Client's strategic business and financial plans, strategy
and negotiations with potential lenders/investors, market timing
advice, merger/acquisition candidates, joint venturers, corporate
partners, primary or secondary market funding sources, and others
involving financial and financially related transactions.
3.2 Introduction to the Securities Brokerage Community. TCC
has a close association with numerous broker/dealers and investment
professionals across the country and will enable contact between
Client and/or Clients to facilitate business transactions among
them. TCC shall use its contacts in the brokerage community to
assist Client in establishing relationships with securities dealers
and to provide the most recent corporate information to interested
securities dealers on a regular and continuous basis. TCC
understands that this is in keeping with Client's business objective
to establish a nationwide network of securities dealers who have an
interest in Client and/or Clients.
3.3 Market-Timing Information. TCC will monitor and react to
sensitive market information on a timely basis and provide advice,
counsel and proprietary intelligence (including but not limited to,
information on price, volume and the identification of
market-makers, buyers and sellers) to Client in a timely fashion
with respect to securities of Client or in which Client has an
interest. Client understands that this information is available
from other sources but acknowledges that TCC can provide it in a
more timely fashion and with substantial value-added interpretation
of such information. The foregoing notwithstanding, no information
will be provided to Client with respect to the activities of any
other TCC customers or TCC customer accounts without such customer's
prior consent.
3.4 Client and/or ClientsTransaction Due Diligence. TCC will
undertake due diligence on all proposed financial transactions
affecting the Client, including investigation and advice on the
financial, dilutive, valuation and stock price implications thereof.
3.5 Additional Duties. Client and TCC shall mutually agree upon any
additional duties, which TCC may provide for compensation paid or
payable by Client under this Agreement. Such additional
agreement(s) may from time to time, although there is no requirement
to do so, be attached hereto and made a part hereof as Exhibits
beginning with Exhibit A.
3.6 Best Efforts. TCC shall devote such time and best efforts as may
be reasonable necessary to perform its services hereunder. TCC is
not responsible for the performance of any services, which may be
rendered hereunder without the Client providing the necessary
information prior thereto. TCC cannot guarantee results on behalf
of Client, but shall pursue all avenues available through its
network of financial contacts. At such time as an interest is
expressed in Client's needs, TCC shall notify Client and advise it
as to the source of such interest and any terms and conditions of
such interest. The acceptance and consummation of any transaction
is subject to acceptance of the terms and conditions by Client. It
is understood that a portion of the compensation to be paid
hereunder is being paid by Client to have TCC remain available to
assist it with transactions on an as needed basis.
4. Compensation to TCC.
4.2 Completion of Financing. Upon receipt of the $2,000,000
or parts thereof, client agrees to pay TCC an investment
banking fee equal to 13% of the gross proceeds. In
addition, TCC shall also receive 200,000 FIVE YEAR
WARRANTS (EXERCISABLE AT $1.10) TO PURCHASE CLIENT'S
RESTRICTED COMMON STOCK. "GTC" will grant "TCC" options
(10%) based solely on the total amount of dollars raised.
4.2.1 TCC agrees not to short sell, pledge, or
hypothecate in any manner any of the GTC stock
it receives. However, In the event GTC or it's
officers decide to an additional holding (lock
up) period beyond the time frame listed in the
original Investment Banking agreement, TCC
shall have the sole discretion to accept or
deny such lock up.
4.3 Client hereby directs and authorizes such funding
source(s) or underwriter(s) to pay said investment banking fee
directly to, or to direct a third party escrow, if applicable, to
make payment directly to TCC.
4.4 TCC may, at its sole option, elect to receive all or a
portion of said investment banking fees as payment in kind, i.e.,
prorata in the same form and type of securities, equity, or
financing instruments issued to the funding source or underwriter by
Client. In the event the exercise of this option results in
additional expense over and above the expenses of the funding and/or
underwriting then the additional expenses shall be borne by TCC. In
addition, the exercise of this option by TCC shall not impede or
otherwise have a negative effect on the funding or underwriting.
4.5 Interest on Unpaid Investment Banking Fees. Client shall
pay interest on all payments in arrears due to TCC at the rate of
10% per annum.
4.6 Additional Fees. Client and TCC shall mutually agree
upon any additional fees, which Client may, pay in the future for
services rendered by TCC under this Agreement. Such additional
agreement(s) may, although there is no requirement to do so, be
attached hereto and made a part hereof as Exhibits beginning with
Exhibit A.
4.6 Optional Form of Payment. TCC may, at the time for each
payment and its' sole option, elect to receive all or a portion of
said fees in the form of securities equity, or financing instruments
issued by Client or Client's Clients to TCC on terms agreed upon by
Client in writing.
4.7 Extraordinary Expenses. Extraordinary expenses of TCC,
including, but not limited to, air travel, lodging, meals, website
creation, printing expenses or car rental shall be submitted to
Client for approval prior to expenditure and shall be paid by
Client, within ten (10) business days of receipt of TCC's request
for payment.
5. Indemnification. Each party shall hold the other party
harmless from and against, and shall indemnify the other party, for
any liability, loss, and costs, expenses or damages howsoever caused
by reason of any injury (whether to body, property, personal or
business character or reputation) sustained by any person or to any
person or property by reason of any act, neglect, default or
omission of it or any of its agents, employees, or other
representatives arising out of or in relation to this Agreement.
Nothing herein is intended to nor shall it relieve either party from
liability for its own act, omission or negligence. All remedies
provided by law or in equity shall be cumulative and not in the
alternative.
6. Client Representations. Client hereby represents,
covenants and warrants to TCC as follows:
6.6 Authorization. Client and it's signatories herein have
full power and authority to enter into this Agreement and to carry
out the transactions contemplated hereby. Client shall provide TCC
with a certified copy of the resolutions of Client's Board of
Directors authorizing the entry into this Agreement and the payment
terms included herein.
6.7 No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will violate any provision of the charter or by-laws of
Client or, violate, or be in conflict with, or constitute a default
under, any agreement or commitment to which Client is a party, or
violate any status or law or any judgment, decree, order, regulation
or rule of any court or governmental authority.
6.8 Validity of Information. All business plans,
registration statements, contracts, agreements, plans, leases,
policies and licenses submitted to TCC as part of Client's due
diligence or to which Client is a party are valid and in full force
and effect.
6.9 Litigation. Except as set forth below, there is no
action, suit, inquiry, proceeding or investigation by or before any
court or governmental or other regulatory or administrative agency
or commission pending or, to the best knowledge of Client threatened
against or involving Contract, or which questions or challenges the
validity of this Agreement and its subject matter, and Client does
not know or have any reason to know of any valid basis for any such
action, proceeding or investigation.
6.10 Consents. No consent of any person, other than the
signatories hereto, is necessary to the consummation of the
transactions contemplated hereby, including, without limitation,
consents from parties to loans, contracts, leases or other
agreements and consents from government agencies, whether federal,
state, or local.
6.11 TCC Reliance. That TCC has and will rely upon the
documents, instruments and written information furnished to TCC by
the Client's officers, or designated employees; and:
6.11.1 Client Material. That all representations and statements
provided about the Client are true and complete and accurate.
Client agrees to indemnify, hold harmless, and defend TCC, its
officers, directors, agents and employees, at Client's expense for
any proceeding or suit which may arise out of any inaccuracy or
incompleteness of any such material or written information supplied
to TCC; and,
6.11.2 Client and Other Material. That all representations and
statements provided, other than about the Client, are, to the best
of its knowledge, true and complete and accurate.
6.12 Services Not Expressed or Implied.
6.12.1 That TCC has not agreed with Client, in this Agreement or
any other agreement, verbal or written, to obtain market makers, or
to become a market-maker in any specific securities that Client or
Clients has an interest; and,
6.12.2 That any payments made herein to TCC are not, and shall
not be construed as, compensation to TCC for the purposes of making
a market, to cover TCC's out-of-pocket expenses for making a market,
or for the submission by TCC of an application to make a market in
any securities; and,
6.12.3 That no payments made herein to TCC are for the purposes
of affecting the price of any security or influencing any
market-making functions, including but not limited to, bid/ask
quotations, initiation and termination of quotations, retail
securities activities, or for the submission of any application to
make a market.
7. Confidentiality. TCC and Client each agree to provide
reasonable security measures to keep information confidential whose
release may be detrimental to the business. TCC and Client shall
each require their employees, agents, affiliates, subClients, other
licensees, and others who will properly have access to the
information through TCC and Client respectively, to first enter into
appropriate non-disclosure agreements requiring the confidentiality
contemplated by this Agreement in perpetuity.
8. Miscellaneous Provisions.
8.1 Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified and supplemented by written
agreement of TCC and Client or by their duly authorized respective
officers.
8.2 Waiver of Compliance. Any failure of TCC, on the one
hand, or Client, on the other, to comply with any obligation,
agreement or condition herein may be expressly waived in writing,
but such waiver of failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate
as a waiver of, or estoppel with respect to, any subsequent or other
failure.
8.3 Expenses; Transfer Taxes, Etc. Whether or not the
transaction contemplated by this Agreement shall be consummated, TCC
agrees that all fees and expenses incurred by TCC in connection with
this Agreement, shall be borne by TCC and Client agrees that all
fees and expenses incurred by Client in connection with this
Agreement shall be borne by Client, including, without limitation as
to TCC or Client, all fees of counsel and accountants.
8.4 Other Business Opportunities. Except as expressly
provided in this Agreement, each party hereto shall have the right
independently to engage in and receive full benefits from business
activities. In the case of business activities which would be
competitive with the other party, notice shall be given prior to
this Agreement or, if such activities are proposed, within 10 days
prior to engagement herein. The doctrines of "corporate
opportunity" or "business opportunity" shall not be applied to any
other activity, venture, or operation of either party.
8.5 Compliance with Regulatory Agencies. Each party
represents to the other party that all actions, direct or indirect,
taken by it and its respective agents, employees and affiliates in
connection with this Agreement and any financing or underwriting
hereunder shall conform to all applicable Federal and state
securities laws.
8.6 Notices. Any notices to be given hereunder by any part
to the other may be effected by personal delivery in writing or by
mail, registered or certified, postage prepaid with return receipt
requested. Mailed notices shall be addressed to the parties at the
addresses appearing on the introductory paragraph of this Agreement,
but any party may change his address by written notice in accordance
with this subsection. Notices delivered personally shall be deemed
communicated as of actual receipt, mailed notices shall be deemed
communicated as of three (3) days after mailing.
8.7 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto
without the prior written consent of the other party.
8.8 Delegation. Neither party shall delegate the performance
of its duties under this Agreement without the prior written consent
of the other party.
8.9 Publicity. Neither TCC nor Client shall make or issue,
or cause to be made or issued, any announcement or written statement
concerning this Agreement or the transactions contemplated hereby
for dissemination to the general public without the prior consent of
the other party. This provision shall not apply, however, to any
announcement or written statement required to be made by law or the
regulations of any federal or state governmental agency, except that
the party required to make such announcement shall, whenever
practicable, consult with the other party concerning the timing and
consent of such announcement before such announcement is made.
8.10 Governing Law. This Agreement and the legal relations
among the parties hereto shall be governed by and construed in
accordance with the laws of the State of California, without regard
to its conflict of law doctrine. Client and TCC agree that if
action is instituted to enforce or interpret any provision of this
Agreement then jurisdiction and venue shall be Orange County,
California.
8.11 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be
deemed an original, but of which together shall constitute one and
the same instrument.
8.12 Headings. The headings of the Sections of this Agreement
are inserted for convenience only and shall not constitute a part
hereof or affect in any way the meaning or interpretation of this
Agreement.
8.13 Entire Agreement. This Agreement, including any Exhibits
hereto, and any other documents and certificates delivered pursuant
o the terms hereof, set forth the entire agreement and understanding
of the parties hereto in respect of the subject matter contained
herein, and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether
oral or written, by any officer, employee or representative of any
party hereto.
8.14 Third Parties. Except as specifically set forth or
referred to herein, nothing herein expressed or implied is intended
or shall be construed to confer upon or give to any person or
corporation other than the parties hereto and their successors or
assigns, any rights or remedies
8.15 Attorneys' Fees and Costs. If any action is necessary to
enforce and collect upon the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees and costs, in
addition to any other relief to which that party may be entitled.
This provision shall be construed as applicable to the entire
agreement.
8.16 Survivability. If any part of this Agreement is found,
or deemed by a court of competent jurisdiction, to be invalid or
unenforceable, that part shall be severable from the remainder of
this Agreement.
8.17 Further Assurances. Each of the parties agrees that it
shall from time to time take such actions and execute such
additional instruments as may be reasonably necessary or convenient
to implement and carry out the intent and purpose of this Agreement.
8.18 Right to Data After Termination. After termination of
this Agreement each party shall be entitled to copies of all
information acquired hereunder as of the date of termination and not
previously furnished to it.
8.19 Relationship of the Parties. Nothing contained in this
Agreement shall be deemed to constitute either party the partner of
the other, nor, except as otherwise herein expressly provided, to
constitute either party the agent or legal representative of the
other, nor to create any fiduciary relationship between them. It is
not the intention of the parties to create, nor shall this Agreement
be construed to create any commercial or other partnership. Neither
party shall have any authority to act for or to assume any
obligation or responsibility on behalf of the other party, except as
otherwise expressly provided herein. The rights, duties,
obligations and liabilities of the parties shall be several and not
joint or collective. Each party hereto shall be responsible only
for its obligations as herein set out and shall be liable only for
its share of the costs and expenses as provided herein. Each party
shall indemnify, defend and hold harmless the other party, its
directors, officers, and employees from and against any and all
losses, claims, damages and liabilities arising out of any act or
any assumption of liability by the indemnifying party, or any of its
directors, officers or employees, done or undertaken, or apparently
done or undertaken, on behalf of the other party, except pursuant to
the authority expressly granted herein or otherwise agreed in
writing between the parties. Each party shall be responsible for
the acts of its agent and affiliates.
9. Terms of Agreement and Termination. This Agreement shall
be effective upon execution, and shall continue for one year unless
terminated sooner, by either party, upon giving to the other party
30 days written notice, after which time this Agreement is
terminated. TCC shall be entitled to any investment banking fees for
fundings, mergers, or underwriting commitments entered into within
one year after the termination of this Agreement if said funding,
merger or underwriting was the result of TCC's consulting and
introduction efforts prior to the termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
Client: GTC TELECOM
By: /s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: Chief Operating Officer
TCC:
TRANSGLOBAL CAPITAL CORPORATION
a California corporation
By: /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Managing Director
