Exhibit
10.26 Consulting Agreement between the Company and the Abraham
Group dated October 1, 2008
THE ABRAHAM GROUP LLC
Engagement Agreement
We are pleased to confirm our mutual
understanding in this engagement agreement (this "Agreement")
effective as of October 1, 2008 between The Abraham Group, LLC
("TAG") and Sunovia Energy Technologies Inc. ("SUNOVIA"), the
"Parties," as follows:
I. Services
TAG agrees to provide the following
services to SUNOVIA (the "Consulting Services") as outlined in our
Proposal Memorandum: (i) Assistance with expansion and growth; (ii)
Assistance with brand building; (iii) Assistance with public
relations, marketing and business development;
(iv) Strategic advice and assistance in
Washington and key states; and (v) Assistance with the advisory
board and other personnel matters.
TAG will perform the Consulting Services
in a professional manner and in accordance with applicable ethical,
industry and professional standards. Each of TAG and SUNOVIA shall
comply with all applicable laws and regulations.
TAG reserves the right to approve in
advance any use of the name, brand or personal image, as the case
may be, of The Abraham Group, or any of its members, employees,
agents or consultants, in any written documents or materials
produced by SUNOVIA or its employees or agents for external
purposes, including without limitation briefing slides, marketing
material or public relations documents.
II. Compensation and Expenses
A. Consulting Services:
1.
SUNOVIA shall pay to TAG a monthly
retainer in the amount of $10,000 (the "Retainer"). So long as this
Agreement remains in effect, the Retainer shall be payable on the
first day of each month. The first payment shall be payable with
receipt of the final signed agreement. Future payments shall be
payable in response to monthly invoices to be sent by TAG. Upon
closing of the next round of financing (anticipated during lQ
2009), the Retainer will be increased to $25,000 per month. At that
time, agreement between the SUNOVIA and TAG dated shall be amended
to include more favorable terms specific to Abraham's ability to
travel and attend mutually agreed upon events as a SUNOVIA
advisor.
2. Until the retainer is at the $25,000 a
month level, the Parties agree that TAG is unable to travel at the
request of SUNOVIA; therefore, TAG will provide SUNOVIA dates and
locations of TAG's existing travel and will make good faith efforts
to incorporate SUNOVIA participation.
3.SUNOVIA will issue or cause to be
issued to TAG 100,000 shares of common stock of SUNOVIA on the
first day of each quarter, beginning in 1Q 2009 and ending in 4Q
2010 (8 issuances). Assuming TAG is not considered an affiliate of
Sunovia (director, officer
or 10% stockholder), these shares will be
available for re-sale under Rule 144 six months
following each issuance (each, a "Release
Date"). SUNOVIA shall comply with all
necessary regulatory or filing
requirements so that the TAG shares may be sold under
Rule 144 as of each respective Release
Date. If, for whatever reason, TAG is unable to
sell its shares under Rule 144, Sunovia
hereby agrees to repurchase at fair market
value such number of shares as may be
necessary to cover the tax liability to TAG (or its
members) in a given year arising from the
original issuance. If the fair market value of
all TAG shares available for repurchase
is insufficient to cover such tax liability,
SUNOVIA shall pay TAG a gross-up amount
in cash equal to the difference between
TAG's tax liability and the fair market
value of all repurchased shares. For purposes
hereof, the term "fair market value"
shall mean the last reported sale price of a share
of SUNOVIA common stock on the last trade
reported prior to the relevant Release Date
(or the average closing bid and asked
prices for such day if no such sale is made on such
day).
4. SUNOVIA will issue TAG an option to
purchase 200,000 shares of common stock with an expiration period
of 5 years, an exercise price equal to 75% of the market bid price
as of the date of grant, and a vesting schedule and other terms and
conditions as set forth in that certain Nonstatutory Stock Option
Agreement between SUNOVIA and TAG of even date herewith.
5. TAG will become a member of Craca
Properties LLC ("CRACA"), owning 0.1% (one tenth of one percent) of
such entity. TAG to execute and deliver a counterpart to the CRACA
Operating Agreement dated SUNOVIA represents and warrants that
CRACA holds an option to purchase 500,000,000 shares of SUNOVIA
(the "CRACA Option") and that TAG's interest in CRACA is the
equivalent of an option to purchase 500,000 SUNOVIA common shares
at the exercise price specified in the CRACA Option.
B. Other Services:
TAG may also agree to participate in
additional projects or provide additional services, as may be
mutually agreed to between TAG and SUNOVIA. In consideration for
such participation or the provision of such services, TAG and
SUNOVIA shall mutually agree on a fee schedule, which shall be
attached to this Agreement as an addendum at that time. Should TAG
determine that any request for services by SUNOVIA falls outside
the scope of this agreement, TAG shall promptly notify SUNOVIA.
Such notification shall include (i) what portion of the request TAG
believes falls outside of the agreement and (ii) the anticipated
fees to perform the work. TAG shall not commence any such work
without the prior consent of SUNOVIA.
C.
Expenses:
SUNOVIA shall reimburse TAG for all
reasonable and necessary out-of-pocket expenses
incurred in connection with the provision
of the Consulting Services, such as computer-based
research charges, express mail delivery
and postage costs, long distance and other
telecommunications charges, messenger
services and business-class travel accommodations. All
such expenses shall be submitted to
Sunovia for payment accompanied by appropriate
documentation. Travel by TAG shall not be
undertaken without the prior consent of SUNOVIA.
D. Representations; Covenants:
SUNOVIA represents and warrants that the
options granted pursuant to Sections II(A)(4) and (5) above, and
all applicable SUNOVIA and CRACA stock option and equity incentive
plans are compliant with the Internal Revenue Code, including,
without limitation, Section 409A thereof. SUNOVIA, on behalf of
itself and CRACA, covenants to take all actions necessary to
maintain compliance with the foregoing and all other applicable tax
laws. SUNOVIA hereby agrees to hold TAG harmless from and against
all liabilities, damages, fines, penalties, and expenses arising in
connection with any breach by SUNOVIA breach of the foregoing
representations and
covenants. TAG hereby represents that it
is an accredited investor as that term is defined in Regulation D
as promulgated under the Securities Act of 1933, as
amended.
III. Term and Termination
Subject to the provisions for termination
provided herein, the Agreement shall be in effect for a period of
two years from the date hereof (the "Term"). The parties may renew
this Agreement upon mutually agreed terms.
In the event that SUNOVIA is dissatisfied
with the performance of TAG during the Term, SUNOVIA shall notify
TAG in writing and provide a 60-day period for TAG to cure the
specified deficiency. In the event that SUNOVIA is not reasonably
satisfied by the cure, this Agreement may be terminated upon 10
days written notice following the end of the cure period. SUNOVIA
may also terminate this Agreement immediately upon written notice
in the event of gross negligence or willful misconduct by TAG in
the performance of the Consulting Services.
IV. Non-Disclosure and
Conflicts
Except as contemplated by the terms
hereof, as required by applicable law, or pursuant to an order
entered or subpoena issued by a court of competent jurisdiction,
each Party shall, during the term of this Agreement and thereafter,
keep confidential the terms of this Agreement and all material
non-public information provided to it by the other. In ensuring
confidentiality of such information received from the other, each
Party shall use the same care as it uses with its own information,
but not less than reasonable care. Each Party agrees not to
disclose such information to any third party, other than its
employees and advisors as the Party determines have a need to know
in connection with services provided hereunder, each of whom shall
be advised of the confidentiality requirements of this Agreement
and agree to be bound by the terms hereof.
TAG often represents several businesses
that participate in the same or related industries, and believes
that doing so affords a better understanding of the dynamics and
regulatory issues related to those industries. In keeping with
ethical standards, TAG shall not knowingly enter into another
engagement that would conflict with the provision of the Consulting
Services. In the event that a conflict arises, TAG and SUNOVIA
agree to work together in good faith to reach a resolution
satisfactory to the Parties.
V. Indemnification
SUNOVIA shall indemnify and hold harmless
TAG, its members, officers, directors, employees, agents and
affiliates (each being an "Indemnified Person") from and against
losses, costs, expenses, claims, damages or other liabilities,
including costs of litigation and reasonable attorney fees,
(collectively "TAG Losses") to which Indemnified Persons may become
subject under any applicable law, or any claim made by any third
party, or otherwise, to the extent those TAG Losses relate to,
arise out of or are incurred in connection with the performance of
the Consulting Services or the engagement of TAG by SUNOVIA, or any
breach by SUNOVIA of the terms hereof; provided, however, that
Indemnified Persons shall not be indemnified for TAG Losses that
are due solely to the gross negligence or willful misconduct of
TAG. To the extent of Sunovia’s obligations under the
preceding sentence, SUNOVIA shall reimburse Indemnified Persons for
all reasonable expenses (including fees and expenses of counsel) as
they are incurred in connection with investigating, preparing,
pursuing, or defending any pending or threatened action, claim,
suit, investigation or proceeding for which Indemnified Persons
would be entitled to indemnification hereunder.
TAG shall indemnify and hold harmless
SUNOVIA and its officers, directors, employees and affiliates from
and against losses, costs, expenses, claims, damages or other
liabilities, including costs of litigation and reasonable attorney
fees, (collectively "SUNOVIA Losses") to the extent that the
SUNOVIA Losses are due solely to the gross negligence or willful
misconduct of TAG. Notwithstanding any provision contained herein
to the contrary, the terms of this Section V shall su
