EXHIBIT 4.1
[LOGO OF GFC]
September 29, 1997
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman
Terrace Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇. ▇-▇▇▇
▇▇. Lauderdale, FL 33312
RE: Engagement Letter and Fee Agreement for Financial Communication Services.
Dear ▇▇. ▇▇▇▇▇▇▇,
This letter sets forth the agreement (the "Agreement") between Terrace
Holdings, Inc. (the "Company") and GFC Communications Corp. ("GFC"), concerning
financial communication and related advisory services (hereafter being referred
to as the "Services") rendered to the Company from October 1, 1997 and
continuing through September 29, 1998 (approximately twelve months).
When countersigned in the space provided below, this letter shall serve as
our agreement, as follows:
1. The Services
GFC shall provide shareholder and financial communication services to the
Company, and serve, when requested, as the Company liaison and spokesperson.
Such services shall include but are not limited to the timely response, by fax,
telephone or mail, to all inquiries related to the Company from shareholders, or
other interested parties. Such response shall consist of written materials-such
as copies of public announcements, shareholder Due Diligence Packages, current
corporate profile of the Company, and teleconferencing as
EXHIBIT 4.1
[LOGO OF GFC]
necessary. Additionally, GFC agrees to make reasonable efforts to increase
investor participation in the Company's securities by organizing and supervising
the production of corporate advertising, and quarterly and annual financial
reports to its shareholders (collectively, the "Services"), as approved by the
Company.
With respect to providing the Services, GFC agrees to make itself available
for reasonable amounts of time and upon reasonable notice, devote reasonable and
good faith attention to the Company's other communications and public relations
needs. Specific assignments, however, will be mutually agreed upon and may incur
additional fees to the Company. It is understood that GFC does not perform
investment advisory services and/or advise any person or entity to buy or sell
the Company's stock, and that as a liaison between the Company and its
shareholders, GFC only disseminates information as an intermediary on behalf of
the Company.
2. Compensation for the Services
In compensation for the Services, the Company agrees to pay GFC a base fee
equal to Five Thousand Dollars ($5,000) per month ("Compensation"), due monthly
in arrears, thirty (30) days following the effective date of this Agreement, and
payable no later than fifteen (15) days following the close of each calendar
month.
In addition, the Company shall reimburse GFC for reasonable out-of-pocket
expenses in connection with GFC's Services to the Company, including but not
limited to expenses related to telecommunication and travel; third-party
advertising, consulting, and mail processing; postage and express mail; and
related materials (according to, but not limited to, the Schedule of Standard
Expenses, Item 14, below) within thirty (30) days upon GFC submitting to the
Company an invoice itemizing such expenses. Interest on any overdue balance owed
to GFC by the Company shall accrue at 1.5% per month.
Unless otherwise agreed and approved in writing between GFC and the
Company, all such third party and out-of-pocket expenses exceeding $1,800 per
instance incurred by GFC in performing the Services under this Agreement and not
covered by the Compensation shall
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[LOGO OF GFC]
be approved by the Company in advance (See form "Addendum A," attached.). The
Company has sixty (60) days from the date of invoice to contest any charges over
$1,800 that it believes were not approved, after which time such charges shall
be considered approved in writing.
3. Method of Compensation
At the Company's election, the Compensation may be paid in cash or in
shares of the Company's common stock (the "Fee Shares"). In the event the
Compensation contains Fee Shares, the Company shall agree to deposit a minimum
of Seventy-five Thousand (75,000) shares of the Company's common stock in the
name of GFC in a GFC-designated account and branch of a registered securities
broker. GFC will send the Company a statement for fees and costs, with notice to
the brokerage firm of the dollar amount of such statement. Unless objection is
made to GFC's bill, sufficient common stock of the Company, net of commission,
shall then be sold forthwith at the prevailing market price to satisfy such
statement. Occasionally, GFC may sell some fee shares ahead of amounts due to
GFC, or may delay the sale of shares, in order to accommodate the selling broker
or the purchaser of the stock.
In the course of GFC's representation of the Company, if all of the Fee
Shares are sold, additional shares sufficient to cover projected fees and costs,
in an amount contemporaneously agreed to by the parties, will again be placed
with the brokerage firm, under the same terms and conditions as enumerated
above. At the conclusion of GFC's representation of the Company, and the payment
of all final fees and costs, any unused Fee Shares or sale proceeds shall
forthwith be returned to the Company.
4. Termination
Either party may terminate upon thirty (30) days prior written notice to
the other. In the event of termination, all fees and charges owed by the Company
to GFC up until the effective date of termination (including any unreimbursed
expenses) will be paid to GFC within ten (10) days of the later of the effective
termination date or the notice date. Interest
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[LOGO OF GFC]
on any overdue balance owed to GFC by the Company shall accrue at 1.5% per
month. Upon termination of this Agreement the Company is to pay for all
authorized work in progress. GFC shall transfer, assign and make available to
the Company, or its representative, all property and materials in GFC's
possession or control which belong to and were paid for by the Company.
5. Reports
At the Company's request, GFC agrees to supply a report at least once a
month, verbally or included in the billing invoice, on general activities and
actions taken on behalf of the Company.
6. Materials
The Company agrees to furnish any supplies and materials which GFC may need
regarding the Company, its management, products, financial and business status
and plans.
7. Independent Contractor Status
GFC is acting as an independent contractor, and not as an employee or
partner of the Company. As such, neither party has the authority to bind the
other, nor make any unauthorized representations on the behalf of the other.
8. Indemnification
The Company shall indemnify GFC and its officers and employees and hold
them harmless for any acts, statements or decisions made by GFC in reliance upon
information supplied to GFC by the Company, or in accordance with instructions
from or acts, statements or decisions approved by the Company. This indemnity
and hold harmless obligation shall include expenses and fees including attorneys
fees incurred by GFC in connection with the defense of any act, suit or
proceeding arising out of the foregoing.
4
GFC
COMMUNICATIONS CORP
9. Confidential Information
GFC will use its best efforts to maintain the confidential nature of the
proprietary or confidential information the Company entrusts to it through
strict control of its distribution and use. Further, GFC will use its best
efforts to guard against any loss to the Company through the failure of GFC or
their agents to maintain the confidential nature of such information.
"Proprietary" and "confidential information", for the purpose of this Agreement
shall mean any and all information supplied to GFC which is not otherwise
available to the public, including information which may be considered "inside
information" within the meaning of the U.S. securities laws, rules and
regulations. GFC acknowledges that its use of "inside information" to purchase
or sell securities of Company, or its affiliates, or to transmit such
information to any other party with a view to buy, sell or otherwise deal in the
securities of Company or its affiliates is prohibited by law and would
constitute a breach of this Agreement and, notwithstanding the provisions of
this Agreement, will result in the immediate termination of the Agreement
without penalty to the Company.
10. Option to Purchase Shares
In consideration for GFC entering into this Agreement, the Company hereby
grants GFC immediately exercisable options to purchase up to Two Hundred
Thousand (200,000) shares of its common stock, exercisable as follows (in U.S.
dollars, and adjusted for stock splits).
Fifty Thousand (50,000) shares at three dollars ($3.00), Fifty Thousand
(50,000) shares at four dollars ($4.00), Fifty Thousand (50,000) shares at five
dollars ($5.00), and Fifty Thousand (50,000) shares at six dollars ($6.00) per
share.
11. Other Transactions
GFC may, on its own accord and outside of the scope of the Services to be
provided under this Agreement, choose to investigate possible acquisitions or
merger candidates for the Company, or identify sources of financing for certain
of the Company's lines of business
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GFC
COMMUNICATIONS CORP
(collectively, a "Business Opportunity"). GFC shall also be entitled to receive
from the Company a "Transaction Fee," as a result of any transaction effected by
the Company with a Business Opportunity introduced by GFC or by a third party
introduced by GFC. A Business Opportunity shall include the merger, sale of
assets, consolidation or other similar transaction or series or combination of
transactions whereby the Company or its subsidiaries transfer to the other, or
both transfer to a third entity or person, assets or any interest in its
business in exchange for stock, assets, securities, cash or other valuable
property or rights, or wherein they make a contribution of capital or services
to a joint venture, commonly owned enterprise or venture with the other for
purposes of future business operations and opportunities. To be a Business
Opportunity covered by this section, the transaction must occur during the term
of this Agreement, or during the period of one year after the expiration of this
Agreement. In the event this paragraph shall apply, any Transaction Fee due
shall be based upon the net value of the consideration, securities, property,
business, assets or other value given, paid, transferred or contributed by, or
to the Company, and shall be equal to five percent (5%) of the first One Million
Dollars ($1,000,000) of such net value, four percent (4%) of the second One
Million Dollars ($1,000,000), three percent (3%) of the third One Million
Dollars ($1,000,000), two percent (2%) of the fourth One Million Dollars
($1,000,000) and one percent (1%) of all of the remaining net value. Unless
otherwise mutually agreed in writing prior to the closing of any Business
Opportunity, the Transaction Fee shall be paid in cash at the closing of the
transaction.
12. Registration of Shares
As soon as practicable following the execution of this Agreement, the
Company will include the Option Shares and the Fee Shares, if any, in an
appropriate Registration Statement to be filed with the Securities and Exchange
Commission. In the event the compensation hereunder contains Fee Shares, GFC, at
its sole discretion, may request that such shares may be issued prior to
registration in reliance on exemptions from registration provided by Section
4(2) of the Securities Act of 1933 (the "Act"), Regulation D of the Act, and
applicable state securities laws.
6
GFC
COMMUNICATIONS CORP
14. Schedule of Standard Expenses
The following sets forth the schedule of standard expenses for financial
communications and public relations services between GFC Communications and the
Company:
Description Cost
----------- ----
Facsimile Transmission (including long distance charges): $0.60/page
First Class Mail, Standard letter/Press Release, including postage
& materials: $0.60 ea.
Bulk Rate Mail, Standard Letter, including postage & materials: $0.50 ea.
Two page fact sheet w/ Cover Letter, Custom Business Reply
Card, including materials, First Class Mail: $1.25 ea.
Two page fact sheet w/ Cover Letter, Custom Business Reply
Card, including materials, Bulk Rate Mail: $1.15 ea.
Bulk Rate Reply card return postage & processing: $0.60 ea.
Complete Investor Package (as supplied by Company),
w/ Cover Letter, 2 day, U.S. Postal Service Priority Mail: $4.00 ea.
Express Mail (i.e., Federal Express Standard Overnight): Standard Carrier
Rates
Telephone, Photocopies and Teleconferencing Charges: Standard Carrier
Rates
These rates are subject to change due to an increase or decrease in third
party vendor rates.
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[LETTERHEAD OF GFC]
If the foregoing is agreeable, please indicate your approval by dating and
signing below and returning an original copy to me.
Very truly yours,
GFC COMMUNICATIONS CORPORATION
Signed: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
GFC Communications Corp.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇. Ste. ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
APPROVAL AND ACCEPTANCE
READ AND ACCEPTED this 29th day of September, 1997, with an effective date
retroactive to the date services were first performed for the Company.
Terrace Holdings, Inc.
Signed: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Title: Vice President, Chief Operating Officer
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▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman
Terrace Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇. ▇-▇▇▇
▇▇. Lauderdale, FL 33312
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[LOGO OF GFC]
GFC COMMUNICATIONS
------------------
FINANCIAL PUBLIC RELATIONS & COMMUNICATIONS AGREEMENT
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ADDENDUM "A"
Additional activities for financial communications and financial public
relations services between GFC Communications and the Company:
Description Fee/Expense Amount One time or Monthly?
1) 75,000 mailing of fact sheet @ US$1.15 ea One-time
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APPROVAL AND ACCEPTANCE
READ AND ACCEPTED this ____ day of _______________, 19_____.
GFC COMMUNICATIONS INC.
Signed:________________________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
GFC Communications Corp.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇. Ste. ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[LOGO OF GFC]
READ AND ACCEPTED this _________ day of _______________, 19_____.
Terrace Holdings, Inc.
Signed:________________________________________________
Name:_________________________________________________
Title:__________________________________________________
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman of the Board of Directors
Terrace Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇. ▇-▇▇▇
▇▇. Lauderdale, FL 33312