AMOTHY CORPORATION
0000 XXXXXXXXX XXXXX
XXXXXXX, XX 00000
December 10, 2002
Xx. Xxxx Xxxxxxxxx
President and Chief Operating Officer
Star E Media Corporation
00000 Xxxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Dear Xx. Xxxxxxxxx:
This letter agreement (Agreement) confirms the understanding and agreement
between Amothy Corporation (Amothy) and Star E Media Corporation (Company or
STRE) as follows:
1. The Company wishes to engage Xxxxxx to provide strategic services and
Amothy is willing to provide such services.
2. The Company has informed Xxxxxx that it has entered into a Placement
Agent Agreement with Bathgate Capital Partners, LLC (Placement Agent)
pursuant to which the Placement Agent has undertaken to obtain a $230,000
secured loan for STRE (the Secured Loan) and has a two year right of first
refusal to provide up to an additional $6,500,000 of debt and/or equity
financing for the Company, in one or more rounds (an Additional Financing).
3. Until the Company closes the Secured Loan, Company's management does not
have the time to devote to working with Xxxxxx, nor the resources to begin
to implement any recommendations Amothy may make. Consequently, the Company
and Amothy have determined that Xxxxxx's consulting services would be of
little or no benefit until such time and have determined that Amothy's
services should be divided into two phases (See Schedule I attached).
4. Accordingly, the Company and Amothy hereby agree that the first phase
(Phase I) of Xxxxxx's consulting services shall begin, and the Company's
obligation to pay consideration under Paragraph 9 of this Agreement shall
arise, upon the Secured Loan closing and shall have a duration of four
months.
5. Until the Company closes an Additional Financing in a minimum amount of
between $1,000,000 and $1,500,000 (Phase II Financing) it will not have the
resources to implement Amothy's Phase II recommendations.
6. Accordingly, the Company and Amothy hereby agree that the second phase
(Phase II) shall begin only upon both (i) the completion of Phase I, and
(ii) upon the closing of a Phase II Financing, and shall have duration of
fourteen months.
7. If the Secured Loan has not closed by December 31, 2002 this Agreement
shall be deemed null and void, and no party shall have any further
obligations hereunder.
8. If the Phase II Financing has not closed by July 31, 2003 this Agreement
shall be deemed terminated at the conclusion of Phase I, and no party shall
have any further obligations hereunder.
9. As compensation for the strategic services to be rendered by Amothy
during Phase I as set forth in Schedule I, the Company will issue to Amothy
250,000 shares of its restricted common stock at the commencement of Phase
I.
10. As compensation for the strategic services to be rendered by Amothy
during Phase II as set forth on Schedule I, the Company will issue to
Amothy 950,000 shares of its restricted common stock at the commencement of
Phase II.
11. The Company will reimburse Amothy, upon request, for its reasonable
expenses (including, without limitation, travel expenses and professional
and legal fees) incurred in connection with its engagement hereunder.
Xxxxxx agrees not to incur reimbursable expenses on behalf of the Company
without prior written approval by the Company.
12. Except as required by applicable law or pursuant to an order entered or
subpoena issued by a court of competent jurisdiction, Xxxxxx will keep
confidential all material non-public information provided to it by the
Company, and will not disclose such information to any third party, other
than its employees and advisors that are involved in providing services to
the Company hereunder. This provision shall survive the termination of the
Agreement and shall remain in full force and effect for three years from
the date hereof. Xxxxxx acknowledges that the remedy of damages may be
inadequate to protect the interests of the Company in the event of breach
or threatened breach of this Agreement. Accordingly, Xxxxxx acknowledges
the availability and propriety of injunctive or other equitable relief to
the Company in addition to any other remedy at law that may be available to
the Company.
13. It is the policy and practice of Amothy to receive indemnification when
it is acting as an advisor on behalf of its clients. Accordingly, the
Company and Xxxxxx agree to the indemnification and other provisions set
forth in Schedule II.
14. This Agreement supersedes all prior agreements between the parties
concerning the subject matter hereof. This Agreement may be modified only
with a written instrument duly executed by each of the parties. No waiver
by any party of any breach of this Agreement will be deemed to be a waiver
of any proceeding or succeeding breach. This Agreement may be executed in
more than one counterpart, each of which will be deemed to be an original,
or by facsimile or electronic signature, and all such counterparts together
will constitute but one and the same instrument. The invalidity or
unenforceability of any provision of this Agreement will not affect the
validity or enforceability of any other provisions of this Agreement, which
will remain in full force and effect. 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.
15. This Agreement will be governed by the internal laws of the state of
Georgia. Any proceeding related to or arising out of the engagement of
Amothy pursuant to this Agreement shall be commenced, prosecuted or
continued in any court of the State of Georgia located in Xxxxxx County or
in the United States District Court for the Northern District of Georgia.
The Company and Amothy waive all rights to trial by jury in any such
proceeding
16. Both the Company and the Consultant agree that the Consultant will act
as an independent contractor in the performance of his duties under this
Agreement. Nothing contained in this Agreement shall be construed to imply
that Consultant, or any employee, agent or other authorized representative
of Consultant, is a partner, joint venturer, agent, officer or employee of
the Company. 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.
17. All notices, requests, demands, and other communications under this
Agreement shall be in writing, sent either by hand delivery, facsimile, or
overnight mail, and notice is given for the purposes of this Agreement upon
receipt by the receiving party.
If to the Company: Star E Media Corporation
00000 Xxxxxxx Xxxx
Xxxx Xxxxxx, XX 00000 Facsimile
(000) 000-0000
Attn: President
If to Consultant: Amothy Corporation
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Facsimile (000) 000-0000
Attn: Executive Vice President
If the foregoing correctly sets forth the understanding and agreement between
Amothy and the Company, please so indicate in the space provided for that
purpose below, whereupon this letter will constitute a binding agreement as of
the date hereof.
Amothy Corporation
By:/s/ Xxxxx X. Xxxxxxxx
-----------------------------------------------
Xxxxx X. Xxxxxxxx, Executive Vice President
12/7/02
Date:---------------------------------------------
AGREED:
Star E Media Corporation
By:E.G. Xxxxxxxxx
--------------------------------------------
E.G.(Gene) Xxxxxxxxx, President & COO
Date: 12/11/02
-------------------------------------------
SCHEDULE I
STRATEGIC SERVICES
PHASE I
During Phase I Amothy's personnel will meet with Company's management,
review the Company's business plan and become thoroughly familiar with the
Company's strategic goals and operating strategies. Amothy will also review all
material contracts and other legal documents. During this period Xxxxxx will
discuss changes to the Company's business plan and/or operating strategies that
Xxxxxx feels appropriate, and at the conclusion of this initial phase of our
engagement Amothy will render a written report, which will include Xxxxxx's
evaluation of the Company's strengths and weaknesses.
PHASE II
During Phase II Amothy will continue the activities undertaken in Phase I
with a view toward keeping the business plan and operating strategies consistent
with the Company's long term strategic goals. Xxxxxx will also work with the
Company's senior executives to develop a strategic plan to accelerate the
acquisition and localization of additional titles. Amothy will evaluate
strategic relationships with partners, customers, and suppliers; and Amothy will
assist the Company in identifying new strategic relationships. Amothy will
identify new personnel needs and develop appropriate job descriptions; and then
advise the Company in finding and recruiting the best people available to fill
these positions. Amothy will assist the Company in implementing any project
that will have a quantum impact on shareholder value creation. Amothy will
advise in the evaluation, selection, and recruitment of the Company's Board of
Directors and if deemed appropriate the establishment and staffing of an
Advisory Board. Amothy will assist in the establishment of procedures and
processes for Board review and action. During Phase II Amothy will meet with
Company's management on not less than a monthly basis (in person or via
conference telephone) and will render written reports on a quarterly basis.
SCHEDULE II
INDEMNIFICATION
1. The Company will:
(a) indemnify Amothy and hold it harmless against any and all losses,
claims, damages or liabilities to which Amothy may become subject
arising in any manner out of or in connection with the rendering of
services by Xxxxxx hereunder (including any services rendered prior to
the date hereof) or the rendering of additional services by Xxxxxx as
requested by the Company that are related to the services rendered
hereunder, unless it is finally judicially determined that such
losses, claims, damages or liabilities resulted directly from the
gross negligence or willful misconduct of Amothy; and
(b) reimburse Amothy promptly for any reasonable legal or other expenses
reasonably incurred by it in connection with investigating, preparing
to defend or defending, or providing evidence in or preparing to serve
or serving as a witness with respect to, any lawsuits, investigations,
claims or other proceedings arising in any manner out of or in
connection with the rendering of services by Xxxxxx hereunder or the
rendering of additional services by Xxxxxx as requested by the Company
that are related to the services rendered hereunder (including,
without limitation, in connection with the enforcement of this
Agreement and the indemnification obligations set forth herein);
provided, however, if it is finally judicially determined that such
losses, claims, damages or liabilities resulted directly from the
gross negligence or willful misconduct of Amothy; then Xxxxxx will
remit to the Company any amounts reimbursed under this subparagraph
1(b).
The Company agrees that the indemnification and reimbursement commitments
set forth in this paragraph 1 will apply whether or not Amothy is a formal
party to any such lawsuits, investigations, claims or other proceedings and
that such commitments will extend upon the terms set forth in this
paragraph to any controlling person, affiliate, shareholder, member,
director, officer, employee or consultant of Amothy (each, with Xxxxxx, an
"Indemnified Person"). The Company further agrees that, without Xxxxxx's
prior written consent (which consent will not be unreasonably withheld), it
will not enter into any settlement of a lawsuit, claim or other proceeding
arising out of the transactions contemplated by this Agreement (whether or
not Amothy or any other Indemnified Person is an actual or potential party
to such lawsuit, claim or proceeding) unless such settlement includes an
explicit and unconditional release from the party bringing such lawsuit,
claim or other proceeding of all Indemnified Persons.
The Company further agrees that the Indemnified Persons are entitled to
retain separate counsel of their choice in connection with any of the
matters in respect of which indemnification, reimbursement or contribution
may be sought under this Agreement.
2. The Company and Amothy agree that if any indemnification or reimbursement
sought pursuant to the preceding paragraph 1 is judicially determined to be
unavailable, then the Company will contribute to the losses, claims, damages,
liabilities and expenses for which such indemnification or reimbursement is held
unavailable (i) in such proportion as is appropriate to reflect the relative
economic interests of the Company on the one hand, and Amothy on the other hand,
in connection with the transaction or event to which such indemnification or
reimbursement relates, or (ii) if the allocation provided by clause (i) above is
judicially determined not to be permitted, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) but also the
relative faults of the Company on the one hand, and Amothy on the other hand, as
well as any other equitable considerations; provided, however, that in no event
will the amount to be contributed by Amothy pursuant to this paragraph exceed
the value of the compensation actually received by Xxxxxx hereunder.
3. Amothy will:
(a) indemnify the Company and hold it harmless against any and all losses,
claims, damages or liabilities to which the Company may become subject
arising in any manner out of or in connection with the rendering of
services by Xxxxxx hereunder (including any services rendered prior to
the date hereof) or the rendering of additional services by Xxxxxx as
requested by the Company that are related to the services rendered
hereunder, unless it is finally judicially determined that such
losses, claims, damages or liabilities resulted directly from the
gross negligence or willful misconduct of the Company; and
(b) reimburse the Company promptly for any reasonable legal or other
expenses reasonably incurred by it in connection with investigating,
preparing to defend or defending, or providing evidence in or
preparing to serve or serving as a witness with respect to, any
lawsuits, investigations, claims or other proceedings arising in any
manner out of or in connection with the rendering of services by
Xxxxxx hereunder or the rendering of additional services by Xxxxxx as
requested by the Company that are related to the services rendered
hereunder (including, without limitation, in connection with the
enforcement of this Agreement and the indemnification obligations set
forth herein); provided, however, if it is finally judicially
determined that such losses, claims, damages or liabilities resulted
directly from the gross negligence or willful misconduct of the
Company; then the Company will remit to Amothy any amounts reimbursed
under this subparagraph 3(b).
Xxxxxx agrees that the indemnification and reimbursement commitments set
forth in this paragraph 3 will apply whether or not the Company is a formal
party to any such lawsuits, investigations, claims or other proceedings and
that such commitments will extend upon the terms set forth in this
paragraph to any controlling person, affiliate, shareholder, member,
director, officer, employee or consultant of the Company (each, with the
Company, an "Indemnified Person"). Amothy further agrees that, without the
Company's prior written consent (which consent will not be unreasonably
withheld), it will not enter into any settlement of a lawsuit, claim or
other proceeding arising out of the transactions contemplated by this
Agreement (whether or not the Company or any other Indemnified Person is an
actual or potential party to such lawsuit, claim or proceeding) unless such
settlement includes an explicit and unconditional release from the party
bringing such lawsuit, claim or other proceeding of all Indemnified
Persons.
Xxxxxx agrees that the Indemnified Persons are entitled to retain separate
counsel of their choice in connection with any of the matters in respect of
which indemnification, reimbursement or contribution may be sought under
this Agreement.
4. Amothy and the Company agree that if any indemnification or reimbursement
sought pursuant to the preceding paragraph 3 is judicially determined to be
unavailable, then Xxxxxx will contribute to the losses, claims, damages,
liabilities and expenses for which such indemnification or reimbursement is
held unavailable (i) in such proportion as is appropriate to reflect the
relative economic interests of Amothy on the one hand, and the Company on
the other hand, in connection with the transaction or event to which such
indemnification or reimbursement relates, or (ii) if the allocation
provided by clause (i) above is judicially determined not to be permitted,
in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) but also the relative faults of the
Amothy on the one hand, and the Company on the other hand, as well as any
other equitable considerations; provided, however, that in no event will
the amount to be contributed by Xxxxxx pursuant to this paragraph exceed
the value of the compensation actually received by Xxxxxx xxxxxxxxx.
5. Nothing in this Agreement, expressed or implied, is intended to confer or
does confer on any person or entity other than the parties hereto or their
respective successors and assigns, any rights or remedies under or by
reason of this Agreement or as a result of the services to be rendered by
Xxxxxx hereunder. The parties acknowledge that Xxxxxx is not acting as an
agent of the Company or in a fiduciary capacity with respect to the Company
and that Amothy is not assuming any duties or obligations other than those
expressly set forth in this Agreement. The Company further agrees that
neither Amothy nor any of its controlling persons, affiliates, directors,
officers, employees or consultants will have any liability to the Company
or any person asserting claims on behalf of or in right of the Company for
any losses, claims, damages, liabilities or expenses arising out of or
relating to this Agreement or the services to be rendered by Amothy
hereunder, unless it is finally judicially determined that such losses,
claims, damages, liabilities or expenses resulted directly from the gross
negligence or willful misconduct of Amothy.
6. The provisions of this Schedule II shall survive any expiration or
termination of this Agreement or Xxxxxx's engagement hereunder.
