Xcel Associates, Inc.
224 Middle Road, 2nd floor Hazlet, New Jersey 07730
Telephone: 732-264-3433 Facsimile: 732-264-5327
2517 Durango Drive Colorado Springs, Colorado 80910 Telephone:
719-391-1826 Facsimile: 719-391-4565
March 29, 2000
By Hand Page 1 of 10
Mr. Clayton Timothy
Terra Systems, Inc
5912 West 11600 South
Payson, UT 84651
Dear Clayton:
Thank you for taking the time to meet with me yesterday. I
have prepared the attached revised Agreements based on our
conversations. As we discussed, our analyst William N. Walling,
Jr. CFA, will do the follow up Due Diligence, he will be
available Monday, April 10, 2000, and will write an Initial
Research Report. Xcel's market awareness program includes but is
not limited to the following:
1. Xcel will begin recommending TSYI by speaking with
Investors, Retail Brokers, Analyst, Institutional Investors and
Investment Bankers who we have worked with in the past. When
item 4 is completed we will fax and email the information to
this same group.
2. Xcel will review TSYI's Business Plan
3. TSYI will provide us with a development schedule of
significant events to occur including events such as proposed
mergers, acquisitions, new management, new directors, proposed
fundings, and other such events.
4. Xcel will have a company profile and news article prepared.
TSYI will bear the expense if any of placing the article in IBD
or other such publications.
5. Xcel will have News and Information placed on Investor News
Services and Xcel Associates, Inc. Website with hyperlinks to
TSYI site.
6. Xcel will seek a Brokerage or Investment banking firm to
raise the funds to support TSYI's growth plan. TSYI will pay a
success only fee based on the standard Lehman Formula for any
value added excluding the options or shares sold pursuant to
this agreement.
/1/
Xcel Associates, Inc.
224 Middle Road, 2nd floor Hazlet, New Jersey 07730
Telephone: 732-264-3433 Facsimile: 732-264-5327
2517 Durango Drive Colorado Springs, Colorado 80910 Telephone:
719-391-1826 Facsimile: 719-391-4565
March 29, 2000
Please find attached the Business Consulting Agreement for 6
months with payment under this agreement being TSYI shall grant
to XAI or its designee the right to purchase fifty thousand
(50,000) units at a purchase price of Five Dollars ($5.00) per
unit. The units consisting of 20 freely tradable common shares
and the option to purchase five (5) shares at $0.50, five (5)
shares at $0.75, five (5) shares at $1.00, and five (5) shares
at $1.25 freely tradable shares. The shares of TSYI shall be
issued pursuant to a registration statement, Rule 504 or other
acceptable exemption.
We will agree to purchase 20,000 units today for One Hundred
Thousand Dollars ($100,000) we will make payment today by
Federal Funds wire for 10,000 units or Fifty Thousand ($50,000).
Upon delivery of the 20,000 units we will make the second
payment of Fifty Thousand ($50,000) by Federal Funds wire.
Please provide us with your wire instructions.
When you have arranged for the delivery please have the 200,000
shares delivered by DTC to:
DTC 0030
Account # HJL
950411
Xcel Associates,
Inc.
If you wish to make physical delivery our Tax ID number is 52-
2100035. Please deliver the certificate to:
D. Weckstein & Company
230 Park Avenue, Suite 1516
New York, New York 10169
Telephone: 800-366-1250
In addition, we have attached an Option Agreement and Finders
Fee Agreement. If we arrange any other equity or debt for you
or TSYI we will be paid the standard Lehman formula finder's
fee. If you have any questions or concerns please call me at
732-319-9235 or email me at [email protected].
Sincerely,
/s/ Edward T. Whelan
Edward T. Whelan
President
/2/
BUSINESS CONSULTING AGREEMENT
AGREEMENT, made and entered into March 29, 2000, by and
between Xcel Associates, Inc. a New Jersey Corporation, with
offices located at 224 Middle Road, 2nd floor, Hazlet, New
Jersey 07730 and 2517 Durango Drive, Colorado Springs, CO 80910
("XAI") and Terra Systems, Inc., a Utah Corporation with offices
located at 5912 West 11600 South, PO Box 238, Payson, UT 84651
("TSYI").
W I T N E S S E T H:
WHEREAS, XAI provides consultation and advisory services
relating to business management and marketing; and
WHEREAS, TSYI desires to utilize XAI services in connection
with its operations.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter set forth, XAI and TSYI hereby
agree as follows:
1. Consulting Services. Effective as of March 29, 2000, by and
subject to the terms and conditions herein contained, XAI shall
provide business management, marketing consultation and advisory
services to TSYI. Such services shall include (a) the
preparation, implementation and monitoring of business and
marketing plans, (b) advice concerning production layout and
planning and internal controls and (c) such other managerial
assistance as XAI shall deem necessary or appropriate for TSYI's
business.
2. Payment. In consideration for the services of XAI to be
provided hereunder, TSYI agrees to grant to XAI or its designee
the right to purchase fifty thousand (50,000) units at a
purchase price of Five Dollars ($5.00) per unit. The units
consisting of 20 freely tradable common shares and the option to
purchase five (5) shares at $0.50, five (5) shares at $0.75,
five (5) shares at $1.00, and five (5) shares at $1.25 freely
tradable shares. The shares of TSYI shall be issued pursuant to
a registration statement, Rule 504 or other acceptable
exemption.
3. Expenses. TSYI shall reimburse XAI for all pre-approved
travel and other expenses incurred by it in rendering services
hereunder, including any expenses incurred by consultants when
such consultants are temporarily located outside of the
metropolitan New York, area for the purpose of rendering
services to or for the benefit of TSYI pursuant to this
Agreement. XAI shall provide receipts and vouchers to TSYI for
all expenses for which reimbursement is claimed.
4. Invoices. All pre-approved invoices for services provided to
TSYI and expenses incurred by XAI in connection therewith shall
be payable in full within ten (10) days of the date of such
invoice. Payment of invoices shall be made by wire transfer to:
Summit Bank, ABA: 021202162, Account: 4247021126, FBO Xcel
Associates, Inc.
5. Personnel. XAI shall be an independent contractor and no
personnel utilized by XAI in providing services hereunder shall
be deemed an employee of TSYI. Moreover, neither XAI nor any
such person shall be empowered hereunder to act on behalf of
TSYI. XAI shall have the sole and exclusive responsibility and
liability for making all reports and contributions,
withholdings, payments and taxes to be collected, withheld, made
and paid with respect to persons providing services to be
performed hereunder on behalf of TSYI,
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whether pursuant to any
social security, unemployment insurance, worker's compensation
law or other federal, state or local law now in force and effect
or hereafter enacted.
6. XAI Assistance. TSYI agrees to provide XAI with such
secretarial, clerical and bookkeeping assistance as XAI may
reasonably request and shall otherwise cooperate with XAI
personnel in their rendering of services hereunder. TSYI
further agrees to provide XAI monthly a certified shareholders
list and on a weekly basis the DTC sheets.
7. Term and Termination. This Agreement shall be effective from
March 22, 2000 and shall continue in effect for a period of six
months thereafter. This Agreement may be renewed for a
provisional three-month period thereafter, upon mutual agreement
of the parties.
8. Non-Assignability. The rights, obligations, and benefits
established by this Agreement shall not be assignable by either
party hereto. This Agreement shall, however, be binding upon
and shall inure to the benefit of the parties and their
successors.
9. Confidentiality. Neither XAI nor any of its consultants,
other employees, officers, or directors shall disclose knowledge
or information concerning the confidential affairs of TSYI with
respect to TSYI's business or finances that was obtained in the
course of performing services provided for herein.
10. Limited Liability. Neither XAI nor any of its consultants,
other employees, officers or directors shall be liable for
consequential or incidental damages of any kind to TSYI that may
arise out of or in connection with any services performed by XAI
hereunder.
11. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey
without giving effect to the conflicts of law principles thereof
or actual domicile of the parties.
12. Notice. Notice hereunder shall be in writing and shall be
deemed to have been given at the time when deposited for mailing
with the United States Postal Service enclosed in a registered
or certified postpaid envelope addressed to the respective party
at the address of such party first above written or at such
other address as such party may fix by notice given pursuant to
this paragraph.
13. No other Agreements. This Agreement supersedes all prior
understandings, written or oral, and constitutes the entire
Agreement between the parties hereto with respect to the subject
matter hereof. No waiver, modification or termination of this
Agreement shall be valid unless in writing signed by the parties
hereto.
IN WITNESS WHEREOF, TSYI and XAI have dully executed this
Agreement as of the day and year first above written.
TERRA SYSTEMS, INC. XCEL ASSOCIATES, INC.
By: ____/s/ Clayton By: ___/s/ Edward T.
Timothy__________ Whelan_________
Clayton Timothy, CEO Edward T. Whelan, President
/4/
OPTION AGREEMENT
THIS AGREEMENT, entered into March 29, 2000, by and between
Terra Systems, Inc., a Utah Corporation with offices located at
5912 West 11600 South, PO Box 238, Payson, UT 84651 ("the
Company") and XCEL ASSOCIATES, Inc., a New Jersey Corporation
having its principal office at 224 Middle Road, 2nd floor,
Hazlet, New Jersey 07730, and 2517 Durango Drive, Colorado
Springs, Colorado 89010 a consultant to the Company (the
"Optionee").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company believes
that the interests of the Company will be advanced by granting
an incentive to the Optionee by providing him with the
opportunity to purchase shares of the Company's Common Stock,
par value $.01 per share ("Common Stock"), on terms which will
give him a more direct and continuing interest in the future
success of the Company's business;
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the parties agree as follows:
1. Grant of Options. Subject to all terms and conditions
of this Agreement, the Company hereby grants to the Optionee the
right and option (the "Option") to purchase all or any part of
an aggregate of 800,000 shares (the "Shares") of Common Stock at
a purchase price of TSYI shall grant to XAI or its designee the
right to purchase fifty thousand (50,000) units at a purchase
price of Five Dollars ($5.00) per unit. The units consisting of
20 freely tradable common shares and the option to purchase five
(5) shares at $0.50, five (5) shares at $0.75, five (5) shares
at $1.00, and five (5) shares at $1.25 freely tradable shares.
The shares of TSYI shall be issued pursuant to a registration
statement, Rule 504 or other acceptable exemption.
2. Expiration. The Option to purchase the 1,000,000 shares
may not be exercised after March 22, 2000 (the "Expiration
Date"). Unless XAI introduces or arranges for an acceptable
secondary offering approved by TSYI at which time the option
shall automatically extend for an additional two years and
expire on March 22, 2003.
3. Exercise of Option. The Option may be exercised, in
whole or in part, at any time prior to the Expiration Date or
the earlier termination of the Option. If the Option is not
exercised to the maximum extent permissible, it shall be
exercisable, in whole or in part, with respect to all Shares not
so purchased at any time prior to the Expiration Date or the
earlier termination of the Option.
4. Payment of Purchase Price Upon Exercise. The Option
granted under this Agreement may be exercised in whole or in
part by the Optionee's delivering or mailing to the Company at
its principal office, or such other place as the Company may
designate, written notice of exercise duly signed by the
Optionee. Such exercise shall be effective upon (a) receipt of
such written notice by the Company and (b) payment to the
Company of the full purchase price in cash.
/5/
5. Issuance and Delivery. The Optionee's written notice to
the Company shall state the number of Shares with respect to
which the Option is being exercised and specify a date, not less
than five (5) or more than fifteen (15) days after the date of
the mailing of such notice, on which the Shares will be taken
and payment made therefor. On the date specified in the notice
of exercise, the Company shall deliver, or cause to be
delivered, to the Optionee (or his personal representative, as
the case may be) stock certificates for the number of Shares
with respect to which the Option is being exercised, against
receipt of payment therefor. Certificates evidencing the Shares
issued upon exercise of the Option may contain such legends
reflecting any restrictions upon transfer of the Shares
evidenced thereby as in the opinion of counsel to the Company
may be necessary for the lawful and proper issuance of such
certificates. Delivery of the Shares may be made at the office
of the Company or at the office of a transfer agent appointed
for the transfer of shares of Common Stock.
6. Transferability. The Option shall not be transferable
otherwise than by will or by the laws of descent and
distribution. The Option shall not be subject, in whole or in
part, to attachment, execution or levy of any kind.
7. No Rights as a Shareholder. Neither the Optionee nor
his legal representative shall be, nor have any of the rights or
privileges of, a shareholder of the Company in respect of any of
the Shares, unless and until certificates representing such
Shares shall have been issued and delivered to the Optionee (or
his legal representative).
8. Adjustment. (a) In case, prior to the expiration of the
Option by exercise or by its terms, the Company shall issue any
shares of its Common Stock as a stock dividend or subdivide the
number of outstanding shares of Common Stock into a greater
number of shares, then, in either of such cases, the purchase
price per share of the Shares issuable upon exercise of the
Option in effect at the time of such action shall be
proportionately reduced and the number of Shares at that time
purchasable pursuant to the Option shall be proportionately
increased; and conversely, in the event the Company shall
contract the number of outstanding shares of Common Stock by
combining such shares into a smaller number of shares, then, in
such case, the purchase price per share of the Shares issuable
upon exercise of the Option in effect at the time of such action
shall be proportionately increased and the number of Shares at
that time purchasable pursuant to Option shall be
proportionately decreased. Any dividend paid or distributed
upon the Common Stock in stock of any other class of securities
convertible into shares of Common Stock shall be treated as a
dividend paid in Common Stock to the extent that shares of
Common Stock are issuable upon the conversion thereof.
(b) In case, prior to the expiration of this Option by
exercise or by its terms, there shall be a recapitalization,
whether by reorganization, reclassification or otherwise of the
capital of the Company, or the Company or a successor
corporation shall be consolidated or merge with or convey all or
substantially all of its or of any successor corporation's
property and assets to any other corporation or corporations
(any such corporation being included within the meaning of the
term "successor corporation" in the event of any consolidation
or merger of any such corporation with, or the sale of all or
substantially all of the property of any such corporation to,
another corporation or corporations), in exchange for stock or
securities of a successor corporation, the Optionee shall
thereafter have the right to purchase upon the terms and
conditions and during the time specified in this Option, in lieu
of the Shares theretofore purchasable upon the
/6/
exercise of this
Option, the kind and amount of shares of stock and other
securities receivable upon such recapitalization or
consolidation, merger or conveyance by a holder of the number of
shares of Common Stock which the Optionee might have purchased
immediately prior to such recapitalization or consolidation,
merger or conveyance.
9. Sale of the Company. Notwithstanding any provision in
this Agreement to the contrary, in the event of a Sale of the
Company, the Option, at the election of the Optionee, shall be
terminated and the Optionee shall receive an amount in cash
equal to the difference between the purchase price in effect at
the time of such Sale of the Company and the Fair Market Value
(as defined in paragraph (a) below) of the Shares subject to the
then remaining unexercised portion of the Option.
(a) "Fair Market Value" per share on any given date means
the average of the closing prices of the sales of the Common
Stock on all securities exchanges on which such stock may at the
time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest
asked prices on all such exchanges at the end of such day, or,
if on any day the Common Stock is not so listed, the average of
the representative bid and asked prices quoted on the Nasdaq
Stock Market as of 4:00 P.M., New York time, or, if on any day
the Common Stock is not quoted on the Nasdaq Stock Market, the
average of the highest bid and lowest asked prices on such day
in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar
successor organization. If at any time the Common Stock is not
listed or quoted, the Fair Market Value per share shall be
determined by the Board of Directors of the Company in good
faith based on such factors as the members thereof, in the
exercise of their business judgment, consider relevant.
10. Compliance with Law and Regulations. The Option and
the obligation of the Company to sell and deliver Shares
hereunder shall be subject to all applicable federal and state
laws, rules and regulations and to such approvals by any
governmental or regulatory agency as may be required. The
Company shall not be required to issue or deliver any
certificates for Shares prior to (i) the listing of such Shares
on any stock exchange on which the Common Stock may then be
listed and (ii) the completion of any registration or
qualification of such Shares under any federal or state law, or
any rule or regulation of any government body which the Board of
Directors of the Company shall, in its sole discretion,
determine to be necessary or advisable. Moreover, the Option
may not be exercised if its exercise or the receipt of Shares
pursuant thereto, would be contrary to applicable law.
11. Investment Representation. The Board of Directors of the
Company may require the Optionee to furnish to the Company,
prior to the issuance of any Shares upon the exercise of any
Option, an agreement (in such form as the Board of Directors may
specify) in which the Optionee represents that the Shares
acquired by the Optionee upon exercise are being acquired for
investment and not with a view to the sale or distribution
thereof.
12. Continued Services. Neither this Agreement nor any Option
granted hereunder shall confer upon the Optionee any right to
continue to render services to the Company or any subsidiary of
the Company, or limit in any respect the right of the Company,
the Board of Directors of the Company, or any subsidiary of the
Company to terminate the services of the Optionee at any time.
/7/
13. Notices. Any notice hereunder to the Company shall be
addressed to it at its offices, located at 5912 West 11600
South, PO Box 238, Payson, UT 84651, Attention: Timothy
Clayton and any notice hereunder to Optionee shall be addressed
to Edward T. Whelan, President, at 224 Middle Road, 2nd floor,
Hazlet, New Jersey 07730, subject to the right of either party
to designate at any time hereafter in writing some other
address.
14. Governing Law. This Agreement shall be interpreted, and
the rights and liabilities of the parties hereto determined, in
accordance with the internal laws of the State of New Jersey,
without regard to the conflicts of law principles thereof.
15. Counterparts. This Agreement may be executed in two
counterparts each of which shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the undersigned have signed this
Agreement as of the date and year first above written.
TERRA SYSTEMS, INC.
By: __/s/ Clayton Timothy____________
Clayton Timothy, CEO
XCEL ASSOCIATES, INC.
By __/s/ Edward T Whelan____________
Edward T. Whelan, President
/8/
AGREEMENT FOR A FINDER'S FEE
It is agreed that, Xcel Associates, Inc., a New Jersey
Corporation, herein referred to as ("XAI") is appointed effective
March 29, 2000, as the exclusive finder for a period of 6 months
by Clayton Timothy, CEO and Terra Systems, Inc. Should XAI
introduce a Company, individual investor or any prospect for
business investment or combination, and you or your nominee, or
any affiliated company or person acting on behalf of you or your
nominee, directly or indirectly, wish to negotiate with said
prospect and ultimately, a legal binding transaction is effected
with the prospect, either by debt or equity investment,
acquisition, consolidation, merger, purchase of assets or through
any form or union with said prospect within twenty-four (24)
months from date of our submission, you, your nominee, or any
affiliated company or person acting on your behalf, by virtue of
this Agreement recognizes XAI as the "Finder of Record,"
acknowledge hereby that XAI is deemed a "Party-in-Interest" to
the proposed transaction(s) and is further deemed to be a
principal party to any closing or series of closings required to
fully effect the transaction(s) contemplated hereby and will
protect XAI's position with respect to our Finder's Fee, as
listed in Fee Schedule below. This fee is to be paid to XAI at
the time of said closing(s), or as mutually agree by Certified or
Bank Check only, calculated on the total value of the
transaction(s) on the basis of the Fee Schedule as herein below
described.
FEE SCHEDULE
5% on the value of each transaction of $1,000,000;plus
4% on the second $1,000,000;plus
3% on the third $1,000,000;plus
2% on the fourth $1,000,000;plus
1% on the value of each transaction in $5,000,000
the excess of
For example, a 5% fee would be paid on the first million
dollars obtained, a 4% fee would be paid on the second million
dollars, a 3% fee would be paid on the third million dollars, a
2% fee would be paid on the fourth million dollars, and a 1% fee
would be paid on all additional monies raised.
Consideration is defined as all cash, payments in stock,
options, fees, notes, leases or other evidences of indebtedness.
It is intended to include the total value of any investment,
debt or equity, earn out, or consulting agreements, covenants,
assets, standby facilities or instruments of credit of any kind
to be given or committed to be given in connection with the
prospective transaction(s) contemplated herein, and/or
assumption of debt. XAI's fee shall be based upon all of the
foregoing.
XAI, at its option, may elect to obtain all or part as
mutually agreed of its fee in shares of stock of the Company in
lieu of cash. The stock shall be valued at eighty percent (80%)
of its most recent bid price for the purpose of conversion to
its cash value in this transaction.
This Agreement shall be binding upon the parties hereto,
their heirs, estates, successors and assigns.
/9/
IN WITNESS WHEREOF, the undersigned have signed this Agreement
as of the date and year first above written.
TERRA SYSTEMS, INC. XCEL ASSOCIATES, INC.
By: ____/s/ Clayton By: ___/s/ Edward T.
Timothy__________ Whelan_________
Clayton Timothy, CEO Edward T. Whelan, President
/10/
