COMPENSATION AGREEMENT
FOR CONSULTING SERVICES
This Compensation Agreement for Consulting Services (this "Agreement"), is
made and entered into as of this 5th day of May, 2000 by and between GTC Telecom
Corp., a Nevada corporation ("GTC" or the "Company"), and Xxxxxx Xxxxxxxx, an
individual ("Consultant").
RECITALS
WHEREAS, Consultant has performed consulting services in connection with
the marketing of GTC's various products and services valued at $260,000;
WHEREAS, Consultant has agreed to accept as full consideration for such
services, shares of the Common Stock of the Company pursuant to the terms of
this agreement; and
WHEREAS, GTC wishes to fully compensate Consultant for all sums due for
Consultant's services through the date of this Agreement pursuant to the terms
of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto hereby agree as follows:
1. CONSIDERATION TO CONSULTANT
As full satisfaction of any sums due for Consultant's services rendered
through the date of this Agreement, GTC agrees to issue and transfer to
Consultant, in the name of Xxxxxx Xxxxxxxx, an individual, 173,333 Shares of the
Common Stock of the Company (the "Shares").
2. REPRESENTATIONS AND WARRANTIES OF CONSULTANT
Consultant represents and warrants to and agrees with GTC that:
a. This Agreement has been duly authorized, executed and delivered by
Consultant. This Agreement constitutes the valid, legal and binding obligation
of Consultant, enforceable in accordance with its terms, except as rights to
indemnity hereunder may be limited by applicable federal or state securities
laws, and except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditor's rights
generally.
b. The consummation of the transactions contemplated hereby will not result
in any breach of the terms or conditions of, or constitute a default under, any
agreement or other instrument to which Consultant is a party, or violate any
order, applicable to Consultant, of any court or federal or state regulatory
body or administrative agency having jurisdiction over Consultant or over any of
its property, and will not conflict with or violate the terms of Consultants'
current employment.
c. Consultant hereby acknowledges and agrees that the Shares shall initially
be "restricted securities" (as such term is defined in Rule 144 promulgated
under the Securities Act of 1933, as amended ("Rule 144")), that the securities
will include the following restrictive legend, and, except as otherwise set
forth in this Agreement, that the securities cannot be sold for a period of one
year from the date of issuance unless registered with the SEC and qualified by
appropriate state securities regulators, or unless Consultant obtains written
consent from GTC and otherwise complies with an exemption from such registration
and qualification (including, without limitation, compliance with Rule 144).
The legend shall provide as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS
OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF FOR A PERIOD OF ONE YEAR FROM THE ISSUANCE THEREOF
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY
APPLICABLE STATE LAWS OR (ii) UPON THE EXPRESS WRITTEN AGREEMENT OF THE COMPANY
AND COMPLIANCE, TO THE EXTENT APPLICABLE, WITH RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES.)
d. Consultant acknowledges that investment in the Shares involves
substantial risks and is suitable only for persons of adequate financial means
who can bear the economic risk of an investment in the Shares for an indefinite
period of time. Consultant further represents that he / she:
(1) has adequate means of providing for his /her current
needs and possible contingencies, has no need for liquidity in its investment in
the Shares, is able to bear the substantial economic risks of an investment in
the Shares for an indefinite period, and, at the present time, can afford a
complete loss of his / her investment;
(2) has such knowledge and experience in financial, tax and
business matters that he /she is capable of evaluating the merits and risks of
an investment in the Shares; and
(3) has been given the opportunity to ask questions of and to
receive answers from persons acting on each of the Company's behalf concerning
the terms and conditions of this transaction and also has been given the
opportunity to obtain any additional information which the Company possesses or
can acquire without unreasonable effort or expense. As a result, Consultant is
cognizant of the financial condition and capitalization of GTC, has available
full information concerning its affairs and has been able to evaluate the merits
and risks of the investment in the Shares.
3. REPRESENTATIONS AND WARRANTIES OF GTC
GTC hereby represents, warrants, covenants to and agrees with Consultant
that:
a. This Agreement has been duly authorized, and executed by GTC. This
Agreement constitutes the valid, legal and binding obligation of GTC,
enforceable in accordance with its terms, except as rights to indemnity
hereunder may be limited by applicable federal or state securities laws, except
in each case as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditor's rights generally.
b. GTC hereby agrees to use its best efforts to file, within a reasonable
time of the date hereof, a Form S-8 Registration Statement with the Securities
and Exchange Commission for the registration of the Shares, the effect of which
will allow Consultant to freely trade the shares. The filing of such
registration statement shall be subject to approval by GTC's legal counsel and
independent auditors, if necessary.
4. INDEPENDENT CONTRACTOR
Both GTC and the Consultant agree that the Consultant acted as an
independent contractor in the performance of his consulting duties, which this
Agreement is meant to compensate. Nothing contained in this Agreement shall be
construed to imply that Consultant, or any employee, agent or other authorized
representative of Consultant, was or is a partner, joint venturer, agent,
officer or employee of GTC. Neither party hereto shall have any authority to
bind the other in any respect vis a vis any third party, it being intended that
each shall remain an independent contractor and responsible only for its own
actions.
5. ARBITRATION
If a dispute or claim shall arise between the parties with respect to any
of the terms or provisions of this Agreement, or with respect to the performance
by any of the parties under this Agreement, then the parties agree that the
dispute shall be arbitrated in Orange County, California, before a single
arbitrator, in accordance with the rules of either the American Arbitration
Association ("AAA") or Judicial Arbitration and Mediation Services,
Inc./Endispute ("JAMS/Endispute"). The selection between AAA and JAMS/Endispute
rules shall be made by the claimant first demanding arbitration. The arbitrator
shall have no power to alter or modify any express provisions of this Agreement
or to render any award, which by its terms, affects any such alteration or
modification. The parties to the arbitration may agree in writing to use
different rules and/or arbitrator(s). In all other respects, the arbitration
shall be conducted in accordance with Part III, Title 9 of the California Code
of Civil Procedure. The parties agree that the judgment award rendered by the
arbitrator shall be considered binding and may be entered in any court having
jurisdiction as stated in Paragraph 8 of this Agreement. The provisions of this
Paragraph shall survive the termination of this Agreement.
6. NOTICES
Any notice, request, demand, or other communication given pursuant to the
terms of this Agreement shall be deemed given upon delivery, if hand delivered
or sent via facsimile, or Forty-Eight (48) hours after deposit in the United
States mail, postage prepaid, and sent certified or registered mail, return
receipt requested, correctly addressed to the addresses of the parties indicated
below or at such other address as such party shall in writing have advised the
other party.
If to GTC:
GTC Telecom Corp.
0000 Xxxxxx Xxx., Xxxxx X-0
Xxxxx Xxxx, XX 00000
Attn.: Xxxxx XxXxxxxx
Facsimile No: 000-000-0000
with a copy to:
Law Offices of M. Xxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attn: Vi Xxx, Esq.
Facsimile No: 000-000-0000
If to Consultant:
Xxxxxx Xxxxxxxx
00000 Xxxxxxx #000
Xxxxxxxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
7. ASSIGNMENT
This contract shall inure to the benefit of the parties hereto, their
heirs, administrators and successors in interest. This Agreement shall not be
assignable by either party hereto without the prior written consent of the
other.
8. CHOICE OF LAW AND VENUE
This Agreement and the rights of the parties hereunder shall be governed by
and construed in accordance with the laws of the State of California including
all matters of construction, validity, performance, and enforcement and without
giving effect to the principles of conflict of laws. Any action brought by any
party hereto shall be brought within the State of California, County of Orange.
11. NONDISCLOSURE
Each party hereto agrees to keep the terms of this Agreement and the
transactions contemplated hereby as confidential and shall not disclose such
information to any third party, other than professional advisors utilized to
negotiate and consummate the transactions contemplated hereby. The parties
hereto agree that in the event there is a breach of the foregoing
confidentiality provision, the damage to the parties hereto would be difficult
to estimate and as a result, in the event of such a breach, the non-breaching
party, in addition to any and all other remedies allowed by law, would be
entitled to injunctive relief enjoining the actions of the breaching party.
9. ENTIRE AGREEMENT
Except as provided herein, this Agreement, including exhibits, contains the
entire agreement of the parties, and supersedes all existing negotiations,
representations, or agreements and all other oral, written, or other
communications between them concerning the subject matter of this Agreement.
There are no representations, agreements, arrangements, or understandings, oral
or written, between and among the parties hereto relating to the subject matter
of this Agreement that are not fully expressed herein.
10. SEVERABILITY
If any provision of this Agreement is unenforceable, invalid, or violates
applicable law, such provision, or unenforceable portion of such provision,
shall be deemed stricken and shall not affect the enforceability of any other
provisions of this Agreement.
11. CAPTIONS
The captions in this Agreement are inserted only as a matter of convenience
and for reference and shall not be deemed to define, limit, enlarge, or describe
the scope of this Agreement or the relationship of the parties, and shall not
affect this Agreement or the construction of any provisions herein.
12. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which shall together constitute one and
the same instrument.
13. MODIFICATION
No change, modification, addition, or amendment to this Agreement shall be
valid unless in writing and signed by all parties hereto.
14. ATTORNEY'S FEES
Each party shall bear its own attorney's fees and costs associated with
this Agreement.
15. NO INTERPRETATION AGAINST DRAFTER
This Agreement has been negotiated at arm's length between persons
sophisticated and knowledgeable in these types of matters. In addition, each
party has been represented by experienced and knowledgeable legal counsel, or
had the opportunity to consult such counsel. Accordingly, any normal rule of
construction or legal decision that would require a court to resolve any
ambiguities against the drafting party is hereby waived and shall not apply in
interpreting this Agreement.
16. FAX EXECUTION
This Agreement may be executed and delivered via fax transmission. Any
signature transmitted via fax shall be treated the same as an original
signature. Any party executing this Agreement via fax, shall mail the original
signature to the other party within twenty-four (24) hours of execution.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the Effective Date.
"GTC" "CONSULTANT"
GTC Telecom Corp. Xxxxxx Xxxxxxxx
/s/ Xxxxxx XxXxxxxx /s/ Xxxxxx Xxxxxxxx
________________________________ ______________________________
By: Xxxxxx XxXxxxxx By: Xxxxxx Xxxxxxxx
Its: Chief Financial Officer
