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EXHIBIT 10.1
CONSULTING AGREEMENT
THIS CONTRACT, made as of this 3rd day of October, 1996, by and between
TELECHIPS CORPORATION ("TELECHIPS" or the "Company"), a Nevada corporation, and
COASTLINE FINANCIAL GROUP, INC. ("Coastline"), a Florida corporation, having
offices at 0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000.
WHEREAS, TELECHIPS desires to secure the services of Coastline as a
consultant and Coastline desires to provide such services to TELECHIPS;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto agree as follows:
1. Engagement of Consultant. TELECHIPS hereby engages Coastline to
perform, and Coastline hereby agrees that it will render, the financial
consulting, business consulting, investor relations and financial public
relations services described in paragraph 3 below during the Term of this
Contract. If TELECHIPS should merge into or be acquired by any other
corporation, this contract shall be assumed by such successor corporation and
the term "TELECHIPS" when used herein includes any such successor corporation,
and its successors.
2. Term of Contract. The Term of this Contract shall be effective
as of October 1, 1996, and shall continue until September 30, 1997, subject to
the Early Termination conditions of Paragraph 11.
3. Services of Consultant. During the term of this contract,
Coastline will provide the following services pursuant to the directions
received from TELECHIPS's Board of Directors:
(a) Coastline will assist TELECHIPS management in developing
a business plan summary stating strategic business goals and specific strategies
to achieve those goals, including but not limited to the financing of TELECHIPS'
present mix of products and services to emphasize and enhance TELECHIPS'
existing operations, add additional revenue sources, and promote the Company's
image with the investor community.
(b) Coastline will assist TELECHIPS' senior management in
developing a corporate financing plan to satisfy the capital requirements
contemplated by its business plan.
(c) Coastline will act as liaison between TELECHIPS and the
financial community. In particular, Coastline will assist TELECHIPS in
approaching and negotiating with investment bankers and other intermediaries,
fund managers, venture capitalists, institutional lenders and other potential
funding sources. Coastline will advise TELECHIPS management and assist it in
evaluating equity financing proposals, including the valuations upon which such
proposals are based.
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(d) In connection with any financing transaction and if
requested by TELECHIPS, Coastline will assist TELECHIPS management in
coordinating the activities of TELECHIPS personnel and professionals engaged by
TELECHIPS related to the financing, as well as in the selection of
professionals.
(e) Coastline will advise and assist TELECHIPS in
maintaining satisfactory relations with its investors, and promoting the good
name and business of TELECHIPS through preparation, development and distribution
of press releases and press kits, meetings and conferences with investor groups
and members of the financial community, and other and sundry investor and
financial public relations services.
Coastline will consult with TELECHIPS senior management
on business issues related to actions required to meet interim objectives and to
properly position TELECHIPS to successfully pursue its business plan, including
the structure and implementation of an anticipated program of growth through
acquisition and/or the formation of "strategic" alliances with other
participants in the computer services industry.
Coastline will sub-contract with S/S Small Cap Network
for additional institutional coverage on the buy-side of stock placement and
interest.
4. Compensation for Services.
In consideration of the services to be rendered and performed by
Coastline during the term of the Agreement, TELECHIPS will pay Coastline a fee
of $7,500 per month during the term hereof.
Coastline shall also be reimbursed for all travel and
travel-related out-of-pocket expenses incurred in the performance of its duties,
upon presentation of monthly statements, provided that TELECHIPS has requested
or approved such travel.
5. Grant of Stock Options.
(a) Upon execution of this Contract and subject to paragraph
13 below, TELECHIPS will issue to Coastline options to purchase 50,000 shares
of TELECHIPS Common Stock ("Shares") exercisable no sooner than 90 days
following the last closing of the recent $2.9 million Regulation S offering and
no later than 5:30 p.m. New York City time on March 31, 1999 at $2.25 per share.
On each of the 91st day, the 181st day and the 271st day following the execution
of this Agreement, TELECHIPS will issue to Coastline options to purchase an
additional 50,000 Shares at the same price no later than 5:30 p.m. New York City
time on March 31, 1999, respectively, so long as neither party shall have
notified the other that this Agreement shall be terminated on or prior to such
date.
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(b) Subject to the rights of X.X. Xxxxx and Whale
Securities in their respective agreements with TELECHIPS concerning rights of
first refusal to conduct offerings of securities on behalf of TELECHIPS, upon
the closing of any financing transaction by TELECHIPS that shall have been
arranged solely through the efforts of Coastline (a "Financing"), TELECHIPS
will issue to Coastline options to purchase 150,000 Shares exercisable no
sooner than 90 days following the last closing of the recent $2.9 million
Regulation S offering and no later than 5:30 p.m. New York City time on March
31, 1999 at 110% of the price paid by the investors in the Financing.
(c) All Shares acquired by Coastline upon exercise of
options granted under this Agreement will be entitled to piggyback registration
rights subject to cutback at the sole discretion of the underwriters of the
TELECHIPS offering and will be subject to market standoff restrictions of a
period no shorter than the period imposed on shares held by members of the
TELECHIPS management.
(d) The number of shares subject to the Option will be
adjusted to reflect any stock splits, stock dividends, recapitalizations, etc.
affecting TELECHIPS common.
6. Compensation of M & A Services. In the event Coastline is
directly and solely responsible for arranging a merger or acquisition
transaction during the term of this Agreement and one thereafter, at the
closing of such transaction, TELECHIPS will compensate Coastline at the rate
of 5% of the first million dollars of the fair market value of the transaction
(the "Value"), plus 4% of the next million of Value, plus 3% on the next
million of Value, plus 2% on the next million of Value and 1% on every million
dollars of Value thereafter. Value will be the total amount of cash paid
and/or securities issued (as determined by the closing price of such securities
on the day of the closing of such transaction) (the "Consideration") by
TELECHIPS in any transaction in which TELECHIPS is the survivor or the
Consideration received by the TELECHIPS shareholders if TELECHIPS is not the
survivor. If TELECHIPS pays any investment banking or similar fees to any
other person in connection with the transaction, the fee paid to Coastline will
be reduced by that amount.
7. Obligations to TELECHIPS. Coastline agrees to use its best
efforts to perform the services set forth in this Agreement for the benefit of
TELECHIPS and represents that it has no obligations or commitments that
conflict with its full and faithful discharge of its duties under this
Agreement.
8. Confidentiality of Information. Coastline agrees that neither
it nor its employees or agents will, during the term of this Contract, or at
any time thereafter, disclose or divulge or use, directly or indirectly, for
its own benefit, any confidential information, data, trade secrets, etc.,
relation to the business of TELECHIPS learned in connection with its work for
TELECHIPS. The provisions of this paragraph shall survive the termination of
the Contract, and shall continue until such information, data, trade secrets,
etc., becomes public knowledge through no fault of Coastline or any of its
employees or agents.
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9. Reliance on Information Furnished: Indemnification by
TELECHIPS. As a consultant for TELECHIPS, Coastline must at all times rely
upon the information supplied to Coastline by TELECHIPS' authorized officers,
directors, agents and employees as to accuracy and completeness. Therefor,
TELECHIPS agrees to indemnify, hold harmless and defend Coastline, its
directors, officers, employees and agents from and against any and all claims,
actions, proceeds, losses, liabilities, costs and expenses (including, without
limitation, reasonable attorney's fees) incurred by any of them in connection
with or as a result of any material inaccuracy, incompleteness or omission of
information given to Coastline by such authorized personnel of TELECHIPS.
10. Indemnification by Coastline. Coastline agrees to indemnify,
hold harmless and defend TELECHIPS, its directors, officers, employees and
agents from and against any and all claims, actions, proceeds, losses,
liabilities, costs and expenses (including, without limitation, reasonable
attorney's fees) incurred by any of them in connection with or as a result of
any material inaccuracy, incomplete statement (or omission) made by Coastline or
its officers, employees or agents, except if such statement or omission is the
result of any inaccuracy, incompleteness or omission of information provided to
Coastline by authorized personnel of TELECHIPS.
11. Early Termination. This Contract is being entered into by
Coastline and TELECHIPS in the expectation that TELECHIPS and Coastline will
each achieve certain benchmarks of performance and, therefore, this Contract
may be terminated by either party at the end of six (6) months with thirty (30)
days notice to the other party. If no such notice is received by the end of
the fifth month this Contract shall continue through the term.
12. Notices. All notices, requests, payments or other
communication hereunder shall be in writing and shall be deemed to have been
given when delivered personally or three days after being sent by registered or
certified mail, postage prepaid, to the following address or addresses or such
other address or addresses as the parties may designate in writing in
accordance with this paragraph:
If to TELECHIPS: TELECHIPS Corporation
0000 X. XxXxxxxx Xxxx.
Xxxx, XX 00000
Attn: C. A. Xxxxx
Chairman
If to Coastline: Coastline Financial Group, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxx, Xxx. 000
Xxxx Xxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
President
13. Approval of Board of Directors and Shareholders. This
Agreement will be effective when approved by the Board of Directors of
TELECHIPS and may be revoked by TELECHIPS in the event the shareholders of
TELECHIPS fail to approve an amendment to the Articles of Incorporation of
TELECHIPS Corporation to increase in authorized shares by the shareholders of
TELECHIPS in a number sufficient to permit the issuance of all Shares
contemplated by this Agreement.
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14. Miscellaneous. This Contract may not be assigned without the
consent of the parties hereto and shall be interpreted under the laws of the
State of Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Contract on
the day above written.
COASTLINE FINANCIAL GROUP, INC. TELECHIPS CORPORATION
By: By:
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President Chairman & Chief Executive Officer
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