August 28, 2006
Exhibit
10.2
| August 28, 2006 |
Xx.
Xxxxx
Xxxxxxxx
Chief
Executive Officer
0000
Xxxxx Xxxxx, Xxxxx X
Xxxxx
Xxx, XX 00000
Re: Financial
Advisory Services Engagement
Dear
Xx.
Xxxxxxxx:
1. Retention
and Services.
This
letter agreement (the “Agreement”) con firms that Savi Media Group, Inc. (“Savi”
or the “Company”) has engaged Xxxxxxx Partners, LP (“HPLP”) to provide financial
advisory assistance. As part of the financial advisory services noted herein,
HPLP will assist SaVi by (i) providing contract CFO services by Xxxx Xxxxx,
which will include reviewing the financial accounting, policies and procedures,
and preparing SEC filings to include 10-Q’s and 10-K’s, and (ii) assist in
raising additional debt or equity capital as requested for the growth of Savi,
and (iii) the option to assume the accounting services currently being
outsourced after 30 or 60 days.
2. Scope
of the Engagement.
For
purposes of this engagement, HPLP will provide the services of Xxxx Xxxxx to
serve as the Chief Financial Officer of Savi. Xx. Xxxxx will provide the
standard services of a contract CFO to include overseeing the accounting
services, financial statement preparation, SEC filings including 10-Q’s and
10-K’s, financial analysis, projections, banking and strategic analysis. HPLP
will also assist Savi, through working with legal counsel to prepare
registration statements and other required filings. In addition, Savi agrees
to
engage HPLP on an exclusive basis for a term of two years to assist in all
future equity and debt raises. HPLP will assist in the capital raising activity
by assisting in the preparation of business plans and presentations, meeting
with prospective investors including hedge funds and private sources of capital,
assisting in preparing private placement documents, and assisting in negotiating
and completing term sheets and security purchase agreements. Finally, after
a
period of 30 days or more, if HPLP determines that the current outsource
arrangement by Savi for accounting services is inadequate, in HPLP’s sole
opinion, HPLP may assume a contract to provide the accounting services, upon
the
terms and conditions, outlined below.
3. Information
on Savi.
In
connection with the engagement activities hereunder, Savi will furnish HPLP
with
material and information regarding their respective business and financial
condition (all such information so furnished being the “Information”) and with
any other documents required to reasonably complete the engagement services
noted herein. The parties recognize and confirm that HPLP: (a) will use and
rely
solely on the Information, and on information available from generally
recognized public sources in performing the services contemplated by this
Agreement without having independently verified the same; (b) is authorized
as
SaVi’s exclusive financial advisor in connection with the matters contem plated
herein; (c) does not assume responsibility for the accuracy or completeness
of
the Information, (d) will not appraise or otherwise value the liabilities of
SaVi; and (e) retains the right to continue to perform due diligence on Savi
during the course of the engagement or any services provided
thereafter.
Savi
Media Group
August
28, 2006
4. Work
Product.
It is
expressly understood that any and all Information provided by Savi or developed
by HPLP is confidential and Savi’s proprietary property. HPLP warrants that it
will maintain the confidentiality of this engagement, the work product derived
therefrom and the Information provided herein. It is agreed that the use of
any
work product developed by HPLP is for Savi’s use exclusively and may not be
released in
part
without
HPLP’s prior written approval. Notwithstanding anything herein to the contrary
it is expressly understood that any work product, spreadsheets, models or other
data developed by HPLP and provided to SaVi as part of the engagement services
herein can only be utilized by Savi for its internal use and any commercial
application for external use by Savi is expressly prohibited.
5. Compensation.
SaVi
agrees to pay to HPLP for the contract CFO services to be rendered by HPLP
$7,000 per month for up to twenty hours of services. Payment shall be made
in
the amount of $4,000 in cash and $3,000 either
in cash or
in
registered stock, due on the 15th
of each
month. The stock will be subject to a bleed out agreement with a make-whole
provision. The initial $4,000 cash payment shall be paid upon the execution
of
this Agreement. Additionally, Savi agrees to compensate HPLP at the rate of
$350
per hour for any additional professional services rendered beyond twenty hours
per month including preparing for or providing (i) presentations to Savi’s board
of directors, (ii) responding to SEC or other regulatory comments or requests,
(iii) deposition or regulatory testimony, (iv) meetings or discussions with
employees, financial advisors, investors or other interested parties.
In
addition, Savi agrees to award HPLP two-million warrants at a strike price
of
$0.01 with a five-year term.
Contract
CFO services will be provided on a month to month basis running from the
15th
of each
month, with a 90 day termination required by either party, except in the case
of
non-payment by Savi in which HPLP may terminate immediately.
Savi
agrees to pay to HPLP for capital raising activities to be rendered hereunder
by
HPLP an hourly rate of $350 per hour, but
only after commissioned and approved by a Board vote.
In
addition, with the closing of the financing we would be commissioned at 5%
of
all equity and 3% of all debt plus the same percentage on warrant coverage.
Savi
agrees to pay to HPLP for accounting services, if HPLP determines that it is
necessary to bring the accounting services in-house, an initial rate of $3,000
per month.
This
rate will be reviewed regularly to determine if the rate is appropriate given
the level of activity as the company grows.
Savi
will
reimburse HPLP for all out-of-pocket expenses associated with the contract
CFO
services and the capital raising activities. This
amount may be negotiated before any expenses are
incurred.
6. Representations
and Warranties.
Savi
represents and warrants to HPLP that (a) this Agreement has been duly
authorized, exe cuted and delivered by Savi and constitutes a legal, valid
and
binding agreement of and enforceable against Savi in accordance with its terms,
(b) the Information will not, when delivered, contain any untrue statement
of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (c) will execute additional agreements as required,
(including
but not limited to a bleed out and make-whole agreement for payment in
registered stock,
a
warrant agreement, an accounting outsource agreement, a capital raising
agreement, etc.), to document the basic terms outlined in this engagement
letter. SaVi shall advise HPLP promptly of the occurrence of any event or any
other change which results in the Information containing any untrue statement
of
a material fact or omitting to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
7. Indemnity;
Limitation of Liability.
Since
HPLP will be acting on behalf of Savi in connec tion with the matters
contemplated by the Agreement, and as part of the consideration for the
engagement of HPLP and Xxxx Xxxxx to furnish its services pursuant to such
Agreement, Savi individually and collectively expressly agree to indemnify
and
hold harmless HPLP and its affiliates and their respective officers, directors,
partners, counsel, employees and agents (HPLP and each such other person being
referred to as an “Indemnified Person”), to the fullest extent lawful, from and
against all claims, liabilities, losses, damages and expenses (or actions in
respect thereof), as incurred, related to or arising out of or in connection
with (i) actions taken or omitted to be taken by Savi individually and
collectively, their affiliates, employees or agents, (ii) actions taken or
omitted to be taken by any Indemnified Person (including acts or omissions
constituting ordinary negligence) pursuant to the terms of, or in connection
with services rendered pursuant to, the Agreement or any matter contemplated
thereby or any Indemnified Person’s role in connection therewith, provided,
however, that Savi individually and collectively shall not be responsible for
any losses, claims, damages, liabilities or expenses of any Indemnified Person
to the extent, and only to the extent, that it is finally judicially determined
that they resulted solely from actions taken or omitted to be taken by such
Indemnified Person in bad faith or to be due solely to such Indemnified Person’s
gross negligence, and/or (iii) any untrue statement or alleged untrue statement
of a material fact contained in any of the Information, or in any amendment
or
supplement thereto, or arising out of or based upon any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading. Savi individually and collectively shall
not and shall cause their affiliates and their respective directors, officers,
employees, shareholders and agents not to, initiate any action or pro ceeding
against HPLP or any other Indemnified Person in connection with this engagement
unless such action or proceeding is based solely upon the bad faith or gross
negli gence of HPLP or any such Indemnified Person. The parties hereto agree
that HPLP and the Indemnified Persons shall not, and shall not be deemed to,
owe
any fiduciary duties to Savi individually and collectively under this Agreement
or otherwise, except for the duties as specifically set forth
herein.
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2
Savi
Media Group
August
28, 2006
8. Notices.
Notice
given pursuant to any of the provisions of this Agreement shall be in writing
and shall be mailed or delivered (a) if to Savi, at their offices located at
0000 Xxxxx Xxxxx, Xxxxx X, Xxxxx Xxx, XX, 00000 and (b) if to HPLP, at its
offices located at 000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000. Notices by
regular mail are expressly acceptable and shall be effective upon
receipt.
9. Construction
and Choice of Law.
This
Agreement incorporates the entire understanding of the parties and supersedes
all previous oral and/or written agreements relating to the subject matter
hereof, should they exist. This Agreement and any issue arising out of or
relating to the parties’ relationship hereunder shall be governed by, and
construed in accordance with, the laws of Xxxxxx County, the State of Texas,
without regard to principles of conflicts of law.
10. Binding
Arbitration.
Upon
the demand of either party, any dispute, controversy or claim arising out of
or
relating to this Agreement, or the breach, termination or invalidity thereof,
or
that arises out of the relationship of the parties shall be resolved by
mandatory binding arbitration in Houston, Texas. If despite demand, an action
is
commenced or prosecuted in any court, the party demanding arbitration may bring
any action in any court of competent jurisdiction to compel arbitration of
such
matters. Any party who fails or refuses to submit to binding arbitration
following lawful demand shall bear all costs and expenses incurred by the
opposing party in compelling arbitration of such matter. All matters submitted
to arbitration shall be resolved by binding arbitration administered by the
American Arbitration Association (herein referred to as “AAA”), in Houston,
Texas, in accordance with the Commercial Arbitration Rules of the AAA, the
Federal Arbitration Act (Title 9 of the United States Code), and, to the extent
that the foregoing are inapplicable, unenforceable, or invalid, the laws of
Xxxxxx County, the State of Texas. Any arbitrator selected must be a practicing
attorney, a member of the State Bar of Texas, and must be experienced and
knowledgeable in the substantive laws applicable to the dispute in question.
The
substantive laws of Xxxxxx County, the State of Texas shall govern any such
arbitration. The parties will agree to a single arbitrator to resolve their
dispute or AAA shall appoint an independent, third party neutral within 30
days
of being requested by either party to decide all matters. The parties expressly
agree to waive any and all appeal or other legal rights with respect to any
decision reached by arbitration hereunder
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Savi
Media Group
August
28, 2006
11. Miscellaneous. This
Agreement constitutes the entire agreement between the parties concerning this
Agreement and any subject matter herein, and may not be amended, modified,
or
waived except in writing signed by the parties. This Agreement shall inure
only
to the benefit of the parties hereto and their successors and permitted assigns,
and may not be assigned by either party without the other party’s prior written
consent. Should any clause or portion of this Agreement be deemed invalid,
void,
or otherwise unenforceable, the remainder of this Agreement shall remain in
full
force and effect as written. This Agreement may be signed in multiple
counterparts, each of which taken together shall constitute one and the same
instrument. Facsimile signatures shall have the effect of delivered originals.
Please
sign and return an original and one copy of this letter to the undersigned
to
indicate your acceptance of the terms set forth herein, affirming that HPLP
has
received the $4,000 retainer and this letter shall note your express acceptance
shall constitute a valid and binding Agreement between SaVi and HPLP as of
the
date above.
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Sincerely,
Xxxxxxx
Partners, LP
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| By | /s/ XXXX XXXXX | |
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Name:
Xxxx Xxxxx
Title:
Managing Director
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Accepted
and Agreed on this the 29th day of August 2006:
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By:
/s/
XXXXX
XXXXXXXX
Xx.
Xxxxx Xxxxxxxx
Title:
Chief Executive Officer
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