FINANCIAL SERVICES ADVISORY AGREEMENT
This Financial Services Advisory Agreement (this "Agreement") is made and
entered into effective as of the 31st day of December 2004, by and between VT
Gaming Services, Inc., an Arizona corporation, with a place of business at 00000
Xxxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 ("VTG"), and Visitalk
Capital Corporation dba Aztore Capital, a Nevada corporation, with a place of
business at 00000 Xxxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 ("Aztore
Capital").
RECITALS
A. WHEREAS, Aztore Capital is in the business of providing certain
financial consulting and capital advisory services to clients.
B. WHEREAS, contemporaneously with this Agreement, VTG has acquired Dynasig
Corporation ("Dynasig") through an Exchange Agreement (the "Exchange Agreement")
whereby DynaSig shall be a wholly owned by VTG and continue to execute Dynasig's
business plan. Hereinafter the combined companies are referred to as "Newco".
C. WHEREAS, contemporaneously with this Agreement, VTG has designated
2,000,000 shares its authorized preferred shares as Series A Preferred stock and
such designation is attached hereto as Exhibit A (the "Series A Preferred
Stock"). Some of the shares of the Series A Preferred Stock were issued as part
of the Exchange Agreement.
D. WHEREAS, immediately after the execution of the Exchange Agreement, VTG
will seek to obtain additional capital though the sale of additional shares of
Series A Preferred Stock to finance Newco's efforts and will be preparing
documentation for this purpose (the "Private Placement").
E. WHEREAS, as a commitment under the Exchange Agreement, Newco is required
to bring its financial reporting current, including the preparation of audited
financial statements and tax returns, and to take actions as appropriate to
cause its common stock to be eligible to be traded in public markets. Aztore
Capital is qualified, experienced and capable of providing such services.
F. WHEREAS, VTG was formed in accordance with the Second Joint Plan of
Reorganization of Xxxxxxxx.xxx, Inc. under the auspices of the Bankruptcy Court
(the "Plan") and is committed to issue under the Plan a maximum of approximately
8,900,000 of each of Series A through Series F Warrants with exercise prices
ranging from $2.00 to $4.00 (the "Plan Warrants").
G. WHEREAS, as a commitment under the Exchange Agreement, VTG shall
enter into a Warrant Advisory Agreement with Aztore Capital whereby VTG will pay
Aztore a fee related to the exercise of the Plan Warrants.
H. WHEREAS, the terms and condition of such Warrant Advisory Agreement shall
be set forth in this Agreement and a separate Warrant Advisory Agreement is not
necessary.
I. WHEREAS, VTG desires to engage Aztore Capital to provide, and Aztor
Capital desires to provide, services to VTG as specified herein to assist VTG in
fulfilling its commitments under the Exchange Agreement.
AGREEMENTS
Now, therefore, in consideration of the promises and mutual agreements set
forth herein, VTG and Aztore Capital hereby agree as follows:
1. FINANCIAL CONSULTING SERVICES
(a) During the term of this Agreement, Aztore Capital shall provide (i)
financial consulting services related to, among other activities, those
scheduled on Exhibit B plus advise VTG on such other financial reporting,
internal accounting, capital raising, investment activities and such other
financial matters as may be requested from time to time by VTG, and (ii) capital
advisory and investment banking services related to stock trading and such other
capital advisory services as may be requested from time to time by VTG,
(collectively, the "Services"). Aztore Capital is an independent contractor and
solely responsible for determining the manner in which the Services are to be
provided; provided, however, that Aztore Capital shall provide the Services in
accordance with standards reasonably acceptable to VTG.
(b) VTG acknowledges that Aztore Capital's performance of the Services
may be dependent on timely decisions and approvals by VTG and Aztore Capital
shall be entitled to rely on all decisions and approvals of or provided by VTG
in connection with the Services. Further, VTG acknowledges that Aztore Capital
will be relying upon the information that VTG has provided or will provide and
VTG hereby represents and warrants that such information is and shall be true,
accurate and complete. Because of the importance of such information to Aztore
Capital's satisfactory performance of the Services, VTG agrees to release Aztore
Capital and its personnel from any liability and costs relating to the Services
attributable to any false, inaccurate or incomplete information provided by VTG.
It shall be the responsibility of VTG's management to provide accurate
information, make implementation and strategic decisions, if any, and to
determine further courses of action with respect to any recommendations made by
Aztore Capital.
(c) VTG acknowledges that Aztore Capital is not a law firm and does not
render legal advice and that Aztore Capital is not a qualified independent
auditor and does not opine on financial statements. Aztore Capital will
coordinate with VTG's attorneys, and other financial advisors such as
independent audit firms or tax advisors in developing documents and strategies.
VTG shall be responsible for engaging requisite advisors to prepare and review
any documents or strategies to assure that such documents or strategies are
satisfactory and adequate and to advise VTG management of risks surrounding such
documents or strategies. Aztore Capital makes no representations or warranties
as to the accuracy or adequacy of documents initially developed by Aztor
Capital.
2. WARRANT ADVISORY AND INVESTMENT BANKING SERVICES
(a) Warrant Advisory Services. Aztore Capital shall receive 5% of the
proceeds from the exercise of the Plan Warrants when and as received by VTG (the
"Warrant Advisory Fee"). This Agreement may be used by Aztore Capital to
instruct the Warrant Agent issuing the shares under the Plan Warrants to remit
the Warrant Advisory Fee portion of the funds received directly to Aztore
Capital. The Warrant Agent must be acceptable to Aztore Capital in its
reasonable discretion. The Warrant Agent may not be VTG unless Aztore Capital
specifically approves such appointment. VTG shall not lower the exercise prices
of the Plan Warrants without the approval of Aztore Capital. In the event VTG
allows any of the Plan Warrants to expire unexercised, VTG shall pay Aztore
Capital its Warrant Advisory Fee related to such expired Plan Warrants
immediately upon such event.
(b) Investment Banking Services. Aztore Capital shall have the right
of first refusal to perform investment banking services for VTG at customary
rates for investment bankers exclusive of public or private placements of VTG
shares in excess of $10,000,000 (the "Stock Sale Exclusion"). The preceding
Stock Sale Exclusion in no way effects or restricts the rights of VTG to receive
its Warrant Advisory Fee. In the event that VTG desires to hire an investment
banker other than Aztore Capital for investment banking services (an
"Alternative Investment Banker"), upon the closing of any such investment
banking transaction, Aztore Capital shall receive a fee equal to 1% of such
investment banking transaction on the same terms any fees are paid to the
Alternative Investment Bankers.
3. NO AUTHORITY TO BIND VTG
Aztore Capital shall not have any right, power or authority to create any
obligation, express or implied, or make any representation on behalf of VTG
except as Aztore Capital may be expressly authorized in advance in writing from
time to time by VTG and then only to the extent of such authorization.
4. TERM
(a) General termination of the Agreement. Throughout the term of this
Agreement, either VTG or Aztore Capital may terminate this Agreement, with or
without cause and without penalty, upon 30 days written notice. In the event
that Aztore Capital is terminated, any Series A Preferred Stock received by
Aztore Capital for services shall be earned, and the Warrant Advisory Fee and
Investment Banking Fee specified in Section 2(a) and 2(b) shall survive.
(b) Termination of Warrant Advisory Services and Investment
Banking Services under Section 2(a) and 2(b). Section 2(a) of this Agreement
regarding the Warrant Advisory Services will continue as long as the Plan
Warrants are outstanding. Section 2(b) of this Agreement regarding Investment
Banking Services shall terminate upon a "Change of Control Event" meaning more
than 50% of the ownership of VTG changes owners, excluding transfers to
affiliates of such owners such as estates, trusts, partners or similar related
or affiliated entities or persons.
(c) VTG's additional obligations under Sections 2(a) and 2(b) and
Sections 6, 8, 9 and 10 of this Agreement shall survive termination of this
Agreement for any reason.
5. CONSIDERATION
(a) Initial Services Fee. Upon signing this Agreement, VTG shall issue
One Hundred Thousand (100,000) shares of Series A Preferred Stock to Aztore
Capital as payment in full for the Services listed on Schedule B. This fee
shall be considered earned when the Series A Preferred Stock is issued.
(b) Contingent Success Feefor the Private Placement. Aztore Capital
will receive 20,000 shares of Series A Preferred Stock plus warrants to purchase
285,000 shares of common stock on the same terms as the Selling Agent Warrants
to be issued under the Private Placement. Such fees shall not be earned until
at least $400,000 in gross proceeds is received under the Private Placement.
(c) Hourly Fee. Beginning on the date that shares of VTG's common
stock begin trading on the OTC Bulletin Board or equivalent exchange, Aztore
Capital shall be paid a fee of $175 per hour for any additional Services
performed for VTG. This work shall be invoiced weekly and paid within 72 hours
of VTG's receipt of the invoice.
(d) Expenses. VTG shall reimburse Aztore Capital for all actual
reasonable out-of-pocket expenditures incurred by Aztore Capital in connection
with the Services. Aztore Capital shall maintain records relating to all
expenses incurred in connection therewith and shall provide VTG access to such
records upon request during normal business hours.
6. WARRANTY
(a) Aztore Capital warrants that the Services will be performed in a
professional and workmanlike manner and shall reperform any work not in
compliance with this warranty brought to its attention within 30 days after that
work is performed. Aztore Capital will provide the services in accordance with
its good faith knowledge of all state and federal laws and regulations but may
rely on VTG and its professional advisors for analysis and option regarding such
laws and regulations. Aztore Capital does not warrant and will not be
responsible for the performance of any third party product or service. The
preceding is Aztore Capital's only warranty concerning the Services and is made
expressly in lieu of all other warranties and representations, express or
implied, including, without limitation, any implied warranties of
merchantability, fitness for a particular purpose or otherwise.
(b) VTG acknowledges and agrees that its ability to achieve the full
benefit of the Services is largely dependent on numerous financial, market and
other factors not within Aztore Capital's control. Accordingly, Aztore Capital
does not warrant or guarantee that the benefits expected to be derived from the
Services will actually be achieved.
7. Aztore CAPITAL'S COVENANTS
(a) Aztore Capital, its employees and agents will comply at all times
with (i) all applicable laws and regulations of any jurisdiction in which
Services are provided and with all applicable VTG rules, policies and standards,
and (ii) all security provisions in effect from time to time at VTG's premises
with respect to access to premises and materials and information belonging to
VTG.
(c) Aztore Capital shall not use VTG's name in any promotional
materials or other communications with third parties without VTG's prior written
consent.
(d) Aztore Capital is legally authorized to engage in business in the
United States and will provide VTG satisfactory evidence of such authority upon
request.
8. CONFIDENTIALITY
During the course of performance of this Agreement, each party may be given
access to information (regardless of whether in oral, written, electronic,
digital, magnetic or other form or media) that relates to the other's past,
present, and future research, development, business activities, customers,
products, services, and technical knowledge, and has been identified as
proprietary or confidential ("Confidential Information"). In connection
therewith, the following subsections shall apply:
(a) Confidential Information of the other party may be used by the
receiver only in connection with the Services.
(b) Each party agrees to protect the confidentiality of the
Confidential Information of the other in the same manner that it protects the
confidentiality of its own proprietary and confidential information of like
kind. Access to the Confidential Information shall be restricted to those of
VTG's and Aztore Capital's personnel engaged in a use permitted hereby.
(c) Confidential Information may not be copied or reproduced without
the discloser's prior written consent.
(d) All Confidential Information made available hereunder, including
copies thereof (regardless of whether in written, electronic, digital, magnetic
or other form or media), shall be returned or destroyed (including deleting such
information from all computer systems) upon the first to occur of (i)
termination of this Agreement or (ii) request by the discloser.
(e) Nothing in this Agreement shall prohibit or limit either party's
use of information (including, but not limited to, ideas, concepts, know-how,
techniques, and methodologies) (i) previously known to it without obligation of
confidence, (ii) independently developed by it, (iii) acquired by it from a
third party which is not, to its knowledge, under an obligation of confidence
with respect to such information, or (iv) which is or becomes publicly available
through no breach of this Agreement.
(f) In the event either party receives a subpoena or other validly
issued administrative or judicial process requesting any portion of the
Confidential Information of the other party, it shall promptly notify the other
party and tender to it defense of such demand. Unless the demand shall have been
timely limited, quashed or extended, the recipient shall thereafter be entitled
to comply with such subpoena or other process to the extent permitted by law. If
requested by the disclosing party, the recipient shall cooperate (at the expense
of the disclosing party) in the defense of a demand.
9. INDEMNIFICATION
(a) Each party (an "Indemnifying Party") shall indemnify and hold the
other party, its employees and agents (each, an "Indemnified Party"), harmless
from and against all claims, demands, loss, damage or expense, including
reasonable attorneys' fees (collectively, "Losses"), to the extent such Losses
are caused by the negligence, willful acts or omissions or breach of this
Agreement of or by the Indemnifying Party and except to the extent such Losses
are caused by the negligent or willful acts or omissions of the Indemnified
Party.
(b) To receive the foregoing indemnity, the Indemnified Party must
promptly notify the Indemnifying Party in writing of a claim or suit and provide
reasonable cooperation (at the Indemnifying Party's expense). The Indemnifying
Party will reimburse each Indemnified Party for all fees and expenses (including
the fees and expenses of counsel) (collectively, "Expenses") incurred in
connection with investigating, preparing, pursuing, defending or responding to
any threatened or pending claim, action, litigation, proceeding or investigation
(collectively, the "Proceedings"), whether or not such Indemnified Party is a
formal party to such Proceeding. The Indemnifying Party will not enter into any
waiver, release or settlement of any pending or threatened Proceeding (whether
or not any Indemnified Party is a formal party to such Proceeding) without the
prior written consent of the Indemnified Party, unless such waiver, release or
settlement (i) includes an unconditional release of the Indemnified Party, in
form and substance satisfactory to such Indemnified Party, from all liabilities
and claims that are the subject matter of or arise out of such Proceeding and
(ii) does not contain any factual or legal admission by or with respect to any
Indemnified Party or any adverse statement with respect to the character,
professionalism, expertise or reputation of any Indemnified Party or any action
or inaction of any Indemnified Party. The indemnity and reimbursement
obligations of the Indemnifying Party hereunder will be in addition to any
liability that the Indemnifying Party may have at common law or otherwise to any
Indemnified Party and will be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Indemnified
Party.
10. MISCELLANEOUS
(a) Independent Contractor. Aztore Capital is and shall remain an
independent contractor and Aztore Capital acknowledges, and confirms to VTG, its
status as that of an independent contractor. Nothing herein shall be deemed or
construed to create a joint venture, partnership, agency or employment
relationship between the parties for any purpose, including but not limited to
taxes or employee benefits. Aztore Capital shall be solely responsible for
payment of any and all employment related taxes, insurance and employee benefits
with respect to Aztore Capital's personnel.
(b) Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona, without reference
to choice of law principles. The parties agree to bring any actions related to
this Agreement only in the state and federal courts sitting in Maricopa County,
Arizona.
(c) Limitation of Liability. Aztore Capital's maximum liability
relating to Services rendered hereunder (regardless of form of action, whether
in contract, negligence or otherwise) shall be limited, including specifically
any indemnification obligation, to the fees paid to Aztore Capital for the
portion of the Services giving rise to liability. Aztore Capital shall have the
option of paying such indemnification in cash or in the securities received. In
no event shall Aztore Capital be liable for consequential, special, incidental
or punitive loss, damage or expense (including without limitation, lost profits,
opportunity costs, etc.) even if it has been advised of their possible
existence. The allocations of liability in this Section 13 represent the agreed
and bargained-for understanding of the parties and Aztore Capital's compensation
for the Services reflects such allocations.
(d) Severability. If any term or provision of this Agreement shall be
found by a court of competent jurisdiction to be invalid, illegal or otherwise
unenforceable, the same shall not effect the other terms or provisions hereof or
the whole of this Agreement, but such term or provision shall be deemed modified
to the extent necessary in the court's opinion to render such term or provision
enforceable, and the rights and obligations of the parties shall be construed
and enforced accordingly, preserving to the fullest permissible extent the
intent and agreements of the parties herein set forth.
(e) Notice. Any notice or other communication given pursuant to this
Agreement shall be in writing and shall be effective either when delivered
personally to the party for whom intended, or five days following deposit of the
same into the United States mail (certified mail, return receipt requested, or
first class postage prepaid), addressed to such party at the address set forth
on the initial page of this Agreement. Either party may designate a different
address by notice to the other given in accordance herewith.
(f) Force Majeure. Neither party shall be liable for any delays or
failures in performance due to circumstances beyond its control.
(g) Complete Agreement; Amendment. This Agreement sets forth the
entire understanding between the parties hereto and supercedes all prior
agreements, arrangements and communications, whether oral or written, with
respect to the subject matter hereof. No other agreements, representations,
warranties or other matters, whether oral or written, shall be deemed to bind
the parties hereto with respect to the subject matter hereof. This Agreement
may not be modified or amended except by the mutual written agreement of the
parties.
In witness whereof, the parties have duly executed this Agreement as of the
day and year first above written.
VT GAMING SERVICES, INC,
VISITALK CAPITAL CORPORATION
D/B/A Aztore CAPITAL
/s/ X. X. Xxxxxxxx /s/ Xxxxxxx X. Xxx
By: Xxxxxxx X. Xxxxxxxx By: Xxxxxxx X. Xxx
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Its: President Its: Chief Executive Officer and President
EXHIBIT A
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CERTIFICATE OF DESIGNATION
EXHIBIT B
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INITIAL SERVICES
1. Prepare the Private Placement Memorandum
2. Coordinate the sale of the Private Placement
3. Prepare financial statements for audit
4. Coordinate the audit
5. Prepare the Form 10 and coordinate amend same for SEC comments
6. File the 15c211 and respond to comments
7. Prepare an S&P Manual filing.
