Exhibit 11.1
CONSULTING AGREEMENT
Xxx Xxxxxxxxxxxx
Benchmark Securities Group
000 Xxxx Xxxx Xxxx
Xxxxxx Xxxx, XX 00000
January 16, 2003
Xxxxxx Xxxxxxx
Telecommunications Products
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxx X
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Gentlemen,
This will confirm the arrangements, terms and conditions pursuant to which
Benchmark Securities Group, Inc. (the "Consultant") has been retained to serve
as consultant and advisor to Telecommunication Products, Inc, a Colorado
corporation (the "Company"), on a non-exclusive basis for the term set forth in
Section 2 below. The undersigned hereby agree to the following terms and
conditions:
1. Duties of Consultant
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(a) Consulting Services. Consultant will provide such financial consulting
services and advice pertaining to the Company's business affairs as the
Company may from time to time reasonably request. Without limiting the
generality of the foregoing, Consultant will assist the Company in
developing, studying and evaluating financing, merger and acquisition
proposals, prepare reports and studies thereon when advisable, and assist
in negotiations and discussions pertaining thereto.
(b) Financing. Consultant will assist and represent the Company in obtaining
both short and long-term financing, when so requested by the Company. The
Consultant will be entitled to additional compensation under such terms as
may be agreed to by the parties.
(c) Wall Street Liaison. Consultant will, when appropriate, arrange meetings
between representatives of the Company and individuals and financial
institutions in the investment community, such as security analysts,
portfolio managers and market makers. The services described in this
Section 1 shall be rendered by Consultant without any direct supervision by
the Company and at such time and place and in such manner (whether by
conference, telephone, letter or otherwise) as Consultant may determine.
2. Term.
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This Agreement shall initially be for a period of Twelve (12) months from
the date hereof (the "Term") and shall continue for a successive period on
the same terms and conditions upon mutual agreement of the parties hereto.
3. Compensation.
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(a) As compensation for Consultant's services hereunder, the Company shall pay
to Consultant a fee of one hundred twenty thousand (120,000) shares of
common stock which are to be registered pursuant to a Form SB-2
Registration Statement. In addition, Consultant shall receive immediately
exercisable options to acquire eight hundred thousand (800,000) shares of
common stock at an exercise price of $.35 per share.
(b) As additional compensation for Consultant's services hereunder, Consultant
shall also be entitled to receive an aggregate of 2,000,000 options to
acquire 2,000,000 shares of the Company's common stock exercisable at $.50
per share which options shall be registered pursuant to a Form SB-2 to be
filed within sixty (60) days of execution of this agreement. All warrants
shall be fully vested at the time this agreement is executed.
4. Registration Rights.
The shares to be issued underlying the warrants issued
pursuant to subsection 3(b) of this agreement shall contain
one demand registration right and unlimited piggyback
registration rights. Consultant's piggyback registration
rights shall commence from the date hereof, Consultant's
demand registration right shall commence six months after the
date hereof and such rights shall terminate five (5) years
after the date hereof. The Company shall bear the costs of
such registrations. Consultant shall pay any and all
underwriting commissions and non-accountable expenses of any
underwriter selected by Consultant to sell the common stock
(the "Registrable Securities"), together with the expenses of
any legal counsel selected by Consultant to represent
Consultant in connection with the sale of the Registrable
Securities. The Company agrees to use its prompt best efforts
to cause any demand registration filing required herein to
become effective and to qualify or register the Registrable
Securities in such states as are reasonably requested by the
Consultant. The Company will maintain the effectiveness of any
such registration statement, filed pursuant to Consultant's
demand registration right, for the greater of sixteen months
from the date of the latest balance sheet of the audited
financial statements contained therein on the initial
effective date of such registration statement or one year from
the initial effective date of such registration statement. As
to Consultant's piggyback registration rights, the Company
agrees to qualify or register the Registrable Securities in
such additional states as are reasonably requested by
Consultant. As to Consultant's demand and piggyback
registration rights, in no event shall the Company be required
to register the Registrable Securities in a state in which
such registration would cause (i) the Company to be obligated
to do business in such state, or (ii) the principal
stockholders of the Company to be obligated to escrow any of
their securities. Additionally, the Company shall not be
obligated to include the Registrable Securities in any
registration statement filed by the Company in connection with
a transaction contemplated by Rule 145(a) promulgated under
the Securities Act of 1933, as amended (the"Act") or pursuant
to Form X-0, X-0 or any other form on which it is
inappropriate to register such shares. Nothing herein shall
require the Company to file or maintain a registration
statement at such time as the Company determines, in good
faith, that such filing or registration would adversely effect
the Company (for example, by causing premature disclosure of a
pending transaction), provided however that the Company can
only exercise this right once in any 12 month period. In
addition with respect to any "piggyback" registration, the
Company shall not be obligated to register the Consultant's
shares if the underwriter of the offering which Consultant
proposes to piggyback on determines that permitting such
piggyback would adversely affect the offering.
5. PrivateFinancings.
In the event that Consultant (i) negotiates or arranges on the
Company's behalf a non-public equity financing or (ii) arrange
on the Company's behalf a non-public debt financing the
compensation will be:
10% Commission of the Gross Proceeds
3% Non-Accountable Allowance
10% In-Kind
In the event that Consultant introduces or arranges for others
on the Company's behalf a non-public equity financing or
non-public debt financing; the compensation will be no greater
than:
10% Commission of the gross proceeds
3% Non-Accountable Allowance
13% In-Kind
6. Mergers and Acquisitions.
In the event that Consultant arranges for or assists the
Company at the Company's request with the purchase or sale of
assets, or for a merger acquisition or joint venture for the
Company, then the Company will compensate the Consultants
(based on the Transaction Value, as defined below) for such
services in an amount equal to:
5% on the first $1,000,000 of the Transaction Value;
4% on the amount from $1,000,001 to $2,000,000; 3% on
the amount from $2,000,001 to $3,000,000; 2% on the
amount from $3,000,001 to $4,000,000; 1% on the
amount from $4,000,001 to $5,000,000; 1% on the
amount in excess of $5,000,000.
If the Company identifies and negotiates its own acquisitions
without assistance of the Consultants, the Consultants will
not be entitled to the above referenced compensation. The
above referenced compensation is in effect unless in writing
and signed by the Consultant.
"Transaction Value" shall mean the aggregate value of all
cash, securities and other property (i) paid to the Company,
its affiliates or their shareholders in connection with any
transaction referred to above involving any investment in or
acquisition of the Company or any affiliates (or the assets of
either), (ii) paid by the Company or any affiliate in any such
transaction involving an investment in or acquisition of
another party or its equity holdings by the Company or any
affiliate, or (iii) paid or contributed by the Company or an
affiliate and by the other party or parties in the event of
any such transaction involving a merger, consolidation, joint
venture or similar joint enterprise or undertaking. The value
of any such securities shall be the fair market value thereof
as determined by mutual agreement of the Company and the
Consultants or by an independent appraiser jointly selected by
the Company and the Consultants.
7. Relationship.
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Nothing herein shall constitute the Consultant as employees or
agents of the Company, except to such extent as might
hereinafter be agreed upon for a particular purpose. Except as
might hereinafter be expressly agreed, Consultant shall not
have the authority to obligate or commit the Company in any
manner whatsoever.
8. Confidentiality.
Except in the course of the performance of its duties
hereunder, Consultant agree that they shall not disclose any
trade secrets, know-how, or other proprietary information not
in the public domain learned as a result of this Agreement
unless and until such information becomes generally known.
9. Litigation Expenses.
If any action is brought by either party to enforce or
interpret the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorney's fees, costs and
disbursements in addition to any other relief to which it may
be entitled.
10. Notices.
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Any notice, request, demand or other communication required or
permitted hereunder shall be deemed to be properly given when
personally served in writing or when deposited in the United
States mail, postage prepaid, addressed to the other party at
the address appearing at the end of this Agreement. Either
party may change its address by written notice made in
accordance with this Section.
11. Governing Law.
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This Agreement is made and shall be governed and construed in
accordance with the laws of the State of New York.
12. Assignment and Termination.
This Agreement shall not be assignable by any party except to
successors to all or substantially all of the business of
either party for any reason whatsoever without the prior
written consent of the other party, which consent may be
arbitrarily withheld by the party whose consent is required.
Either party can terminate this Agreement at any time for any
reason with 30 days written notice after six months from the
above date. All shares and warrants earned at time of
termination notice, plus 30 days, will still be due and
payable. Consultant will have 120 days to exercise all
unearned warrants or will forfeit them.
Very truly yours, AGREED AND ACCEPTED:
Benchmark Securities Group
By:_______________________ By:______________________
Name:Xxx Xxxxxxxxxxxx Name:Xxxxxx Xxxxxxx
Title: Chief Executive Officer
