INVESTMENT BANKING AGREEMENT
Agreement made as of November 19, 1998, 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.
4.1 Initial Fee. Client shall pay TCC an initial fee of
[50,000 SHARES OF CLIENT'S RESTRICTED COMMON STOCK] for TCC's
initial setup activities, which are necessary for TCC to provide
the services herein. This fee shall be considered in arrears if
not received by the tenth (10th) business day following execution
of this Agreement. Client shall register those 50,000 shares
upon demand of TCC.
4.2 Completion of Financing Tranche. Upon receipt of the
first tranche of $100,000., Client agrees to pay TCC an
investment banking fee in an amount equal to 13% of the
gross proceeds received plus 100,000 FIVE YEAR OPTIONS
AT $.01 TO PURCHASE CLIENT'S RESTRICTED COMMON STOCK.
4.2.1 TCC agrees not to short sell, pledge, or
hypothecate in any manner any of the GTC stock it
receives and TCC agrees, that in the event if it
is a requirement by GTC Investment Banker in the
future, to enter into a lockup
agreement to
provide financing, TCC will lockup under the same
terms that either GTC Management or The Xxxxxxxxx
Group agrees to at TCC's choice.
4.2.2 Additional Stock.
4.2.2.1 If TCC funds a total of $250,000 by
December 31, 1998, TCC will receive an
option to purchase an additional 100,000
shares of stock.
4.2.2.2 And if TCC raises an additional
$250,000 by January 15th (bringing total
raised $500,000), TCC will receive an
option to
purchase an additional 100,000 shares
(bringing total to 350,000 shares).
4.2.2.3 And if TCC raises an additional
$500,000 by February 15th, 1999, TCC will
receive an option to purchase an
additional 300,000 shares, bringing total
to 650,000 shares to TCC and $1,000,000 to
GTC.
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 or 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:
6.1 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.
6.2 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.
6.3 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.
6.4 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.
6.5 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.
6.6 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:
6.6.1 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,
6.6.2 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.
6.7 Services Not Expressed or Implied.
6.7.1 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,
6.7.2 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,
6.7.3 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 to 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 Xxxxxx
Name: Xxxx Xxxxxx
Title: President
TCC:
TRANSGLOBAL CAPITAL CORPORATION
a California corporation
By: /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Managing Director
