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EXHIBIT 10.16
March 11, 1999
LETTER OF INTENT
Team Communications Group, Inc.
00000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx
Re: PUBLIC OFFERING
Dear Xx. Xxxxx:
This letter agreement (this "Letter of Intent") sets forth our
intentions with respect to a public offering (the "Public Offering"), on a "best
efforts" basis, of shares of Common Stock of Team Communications Group, Inc.
(the "Company") through an underwriting group, for which Value Management and
Research, A.G. (the "Representative") will serve as coordinator of an
underwriting to be underwritten through its affiliate VEM, A.G., or a third
party of parties to be engaged by the Representatives with TEAM consulted on and
our agreements with respect to certain matters thereto. The Representative will
also act as the Company's exclusive agent for listing the Company's shares on
the Neuer Markt of the Deutsche Borse ("Neuer Markt"). The parties hereto hereby
agree as follows:
1. AMOUNT OF PUBLIC OFFERING: A minimum of Euros 5.5 million to 10.0
million to be offered on a "best-efforts" basis on the Neuer Markt..
2. PRE-OFFERING CAPITALIZATION: Our proposal is based on no more than 6.5
million shares of capital stock of the Company (including shares to be
issued upon the exercise of outstanding options, warrants and
convertible securities and debt) being outstanding immediately prior to
the effective date of the offering.
3. THE OFFERING: The number of shares of Common Stock (the "Shares") to be
sold in the Public Offering will be a function of the public offering
price (the "Public Offering Price"), the exact amount of which is
subject to market and other conditions at the time of the Public
Offering and will be determined by the Company and the Representative at
the time of the Public Offering. Such Public Offering Price may not be
reflective of the trading price of the Company's common stock as
reported on the Nasdaq Small Cap Market.
4. COMPENSATION:
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(a) The Representative shall receive seven percent (7%) of the aggregate
Public Offering Price of the Shares sold in the Public Offering. In
addition, the Company shall pay Century City Securities ("CCS") a
finders fee of two percent (2%) of the aggregate Public Offering Price
of the Shares. Also, the Company shall pay the Representative a
non-accountable expense allowance equal to two percent (2%) of the
aggregate Public Offering Price of the Shares sold in the Public
Offering.
(b) Upon execution of this Letter of Intent, the Company will pay the
Representative the sum of $25,000 on account for expenses. Such sums
shall be credited toward the non-accountable expense allowance referred
to above, but shall not be refundable by the Representative to the
Company under any circumstances.
5. REPRESENTATIVE'S WARRANTS: The Company shall sell the Representative at
the closing of the Public Offering (the "Closing"), at a price of $0.001
per warrant, warrants (the "Representative's Warrants") to purchase up
to ten percent (10%) of the Shares sold by the Company. The
Representative's Warrants shall be exercisable for a period of three (3)
years on the date of the consummation of the Public Offering and shall
be exercisable at 110% of the Public Offering Price of the Shares.
As soon as practicable following the Public Offering, the Company shall
take all actions to cause the Representative's Warrants and the
underlying Common Stock to be freely tradeable on the Neuer Markt.
6. CONSULTING AGREEMENT: The Company agrees to retain the Representative
for a period of six (6) months after the offering at $5,000 per month,
to continue the development of interest and sponsorship in the common
shares of the Company; such amount shall be paid in advance at the
consummation of the Public Offering.
7. EXPENSES: In addition to the Spread and the non-accountable expense
allowance, and except as set forth below, the Company shall pay all
costs and expenses incident to the purchase, sale and delivery of the
Shares, including without limitation, all fees and expenses, including
fees of the Representative's counsel in connection with the listing of
the shares on the Neuer Markt in Germany; fees and disbursements of
counsel and accountants for the Company; printing costs, including costs
of printing the Prospectus, any amendments thereto, all underwriting
documents, and a reasonable quantity of prospectuses as determined by
the Representative; all road show costs and expenses; the cost of
preparing bound volumes of the Public Offering documents for the
Representative and its counsel. The Company shall also pay for the cost
of any tombstone advertisements, and such other expenses for advertising
undertaken at the Company's request, including
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March 11, 1999
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graphic slide costs. The Representative shall pay the fees and
disbursements of its counsel.
8. CONDITIONS, REPRESENTATIONS AND COVENANTS: The Company represents,
warrants and covenants that:
Current Company management, as disclosed to us, will continue in
place after the Public Offering for a reasonable period of time.
The Company does not know of any facts which may adversely
affect its earnings, prospects or business which have not been
fully disclosed to the Representative.
The Company shall cause at least 40% of the proceeds from the
Public Offering to be expended on business activities in Europe
as described in the Prospectus.
A financial printing services acceptable to the Representative
shall be used to print the Prospectus and underwriting and/or
placement documents.
There will be included in the Prospectus, audited financial
statements of the Company for the three fiscal years preceding
the effective date of the Prospectus (reported on by a national
accounting firm reasonably acceptable to the Representative)
and, current unaudited comparative interim financial statements.
The financial statements will present fairly the financial
condition of the Company and the results of its operations at
the time and for the periods covered by such financial
statements, and such statements will be substantially as
heretofore represented to the Representative.
The Company has prepared and delivered to the Representative its
most recent financial statements and projections constituting
its best estimate of revenues, earnings and cash flow and shall
update such estimates on a monthly basis during the registration
period.
The Company shall have in place a reasonable amount of Director
and Officer Liability Insurance (provided that such insurance
can be obtained at a reasonable cost as determined by the
Company and the Representative) from a responsible insurer, all
satisfactory to the Representative, prior to the consummation of
the Public Offering.
The Representative shall have the right for such eighteen (18)
month period to
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designate an observer to the Board of Directors of the Company,
which observer shall have the right to attend all Board and
Board committee meetings.
The Company will use its best efforts to have the Shares listed
on the Neuer Markt concurrently with the consummation of the
Public Offering.
For a period of two (2) years after the closing of the Public
Offering or until an offering occurs which the Representative
declined, the Company shall notify the Representative in writing
at least ten (10) days before the execution of an Agreement for
a proposed public offering of any debt or equity securities
(other than bank debt or similar financing) by the Company or by
any of its majority owned or controlled subsidiaries
(collectively referred to herein as the Company) or any of its
stockholders owning at least five percent of the Company's
Common Stock ("Principal Shareholders") so that the
Representative or, at its option, a group of associated
investment bankers, shall have the right of first refusal to
effect the offering on terms as favorable as theretofore offered
in writing by a reputable investment banker. If the Company
receives an offer from a major bracket investment banker, the
foregoing condition shall be considered satisfied if the
Representative is included in the offering as a syndicate member
and receives a reasonable retention. We agree to notify the
Company if we intend to exercise the right of first refusal
within ten (10) days of receipt by us of such notice from the
Company. If the Representative fails to exercise the right of
first refusal within the ten day period and the terms of the
proposed subsequent financings thereafter are altered in any
material respect, the Company shall again offer to the
Representative the right of first refusal to effect subsequent
financings upon such altered terms and the Representative shall
have ten (10) days from the date of receipt to notify the
Company of its acceptance.
The Company represents to the Representative that except for
CCS, no one is entitled, directly or indirectly, to compensation
from the Company, for services as a finder in connection with
the proposed Offering or any other transaction contemplated by
this letter.
9. STATEMENT OF INTENT: It is understood that our undertaking to effectuate
the proposed Public Offering on a "best-efforts" basis is subject to the
Prospectus and the documentation related thereto, being reasonably
satisfactory to the Representative and its counsel.
The Representative intends to effect the Public Offering as soon
as practicable after the Company has complied with all
applicable statutes, laws, rules and
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regulations and the terms of this Letter of Intent; provided,
however, that the Representative reserves the right not to
proceed with the Public Offering if, in its sole judgment,
market conditions are unsuitable for such offering, or
information comes to its attention relating to the Company, its
management or its position in the industry, which could, in the
Representative's sole judgment, preclude a successful offering
of the Shares to the public.
This Letter of Intent is only a statement of intent. If
executed, it does not, either expressly or by implication,
constitute a binding agreement by the Representative to
undertake the financing outlined herein or an agreement to enter
into an underwriting and/or placement agreement. Except with
respect to the obligations of the Company to proceed with the
underwriting outlined herein and the obligations set forth in
Paragraphs 4(b), 6 and 11 hereof (which obligations of the
Company are intended to be legally binding), any legal
obligation between the Company and the Representative or the
underwriters shall be only as set forth in a duly negotiated and
executed underwriting and/or placement agreement which shall be
in form and content satisfactory to the Representative.
10. CONDITIONS OF PERFORMANCE BY THE REPRESENTATIVE: Notwithstanding
anything to the contrary hereinabove set forth, the performance of the
obligations of the Representative as provided in this Letter of Intent
is specifically subject to and conditioned upon the following:
Successful completion of in depth investigative procedures to be
conducted by the Representative in respect to the Company, its
operations and general performance as well as its officers and
directors (commonly referred to as "due diligence" procedures);
and
Results of the due diligence procedures employed by the
Representative satisfactory to the Representative in its sole
determination.
11. LEGALLY BINDING: In addition to the provisions of Paragraph 5, the
Company and the Representative agree that the following provisions shall
be legally binding on the Company:
If,the Public Offering is not commenced for any reason
whatsoever, then the Company shall (1) reimburse the
Representative in full for its direct, out-of-pocket expenses,
including without limitation, its legal fees and disbursements,
but not to exceed an aggregate of $100,000, of which $25,000
will have been
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paid to the Representative, (2) pay all listing fees and
expenses, including Neuer Markt listing legal fees not to exceed
an aggregate of $30,000.
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If the foregoing correctly sets forth the understanding we have
heretofore reached regarding the proposed Public Offering, please sign and
return the enclosed copy of this Letter of Intent by March __, 1999. Your
acceptance hereto also constitutes an agreement to keep this letter confidential
and not to "shop" it with any other underwriters.
Very truly yours,
VALUE MANAGEMENT AND RESEARCH, A.G.
By: ______________________
______________________
Managing Director
ACCEPTED AND AGREED TO
this 18th day of March, 1999
Team Communications Group, Inc.
By: ______________________
Xxxx Xxxxx
Chairman & C.E.O.
