EXHIBIT 10.1 

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EXCELLENCE IN INVESTOR RELATIONS

800 Third Avenue 17th FLOOR ( New York, NY 10022

212.838.3777 ( Fax 212.838.4568

WWW.LHAI.COM

 

November 4, 2005

 

Mr. Daniel G. Hayes

President & CEO

Enclaves Group, Inc.

45 Knollwood Road

Fifth Floor

Elmsford, NY 10523

 

 

Dear Mr. Hayes

 

This letter confirms the following agreement between our respective companies:

 

1.

Enclaves Group, Inc. (“Company”) hereby retains Lippert/Heilshorn & Associates,
Inc., (“LHA”) effective December 1, 2005 for implementation of Company’s
Financial Communications Program (the “Program”).

 

2.

The services (“Services”) to be performed by LHA on behalf of the Company
regarding the Program will include, but are not limited to the services
described in the attached (Appendix 1) memorandum entitled “IR Proposal for
Enclaves Group, Inc.”, dated November 2, 2005.

 

3.

The term (the “Term”) of this Agreement shall be the twelve (12) month period
commencing December 1, 2005 and ending on November 30, 2006. The Company may
elect to delay the commencement date (but no later than February 1, 2005).
However, Company may terminate the agreement at anytime after the initial
ninety- (90) day period with thirty- (30) day notice. During said thirty- (30)
day notice period, the parties shall continue to perform all of their
obligations under this Agreement, including Company’s payment of the monthly
retainer fee and reimbursement of disbursements under Paragraph 2 hereof.

 

4.

During the Term, in consideration of the Services, the Company shall pay LHA as
outlined in Appendix 1; paragraph entitled “Proposed Fee For Professional
Services”.

 

5.

In the event, LHA is required to perform services outside the scope (Crisis
Communications, and/or Special Situations, i.e. M & A) of the agreed upon IR
services under Paragraph 2 hereof, LHA with written client approval, will
invoice the company at the standard billable hourly rates, as listed in Appendix
3, for the participating principals and staff, as they are required to carry out
this task; plus expenses.

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6.

The Company shall be responsible for all reasonable and necessary expenses and
disbursements (collectively “Expenses”) made by LHA on its behalf, including but
not limited to long distance telephone calls and in-house expenses (see Appendix
2). All LHA Partner air travel, scheduled longer than two (2) hours, will be
“Business Class”. At the end of each month, LHA shall invoice the Company and
each invoice shall itemize all Expenses and the Company shall reimburse LHA for
them. LHA’s invoices to the Company will be dated as of the 1st of each month
and are due and payable within 30 days.

 

7.

Recognizing that LHA’s most highly valued resource is its professional staff,
the Company agrees that it shall not employ, hire or retain, or recommend to
others the employment, hiring or retention of any person employed by LHA without
prior written consent of LHA partners. This limitation would expire two (2)
years after the employee has left LHA. The liquidated damages due to LHA shall
be three (3) times the last annualized total compensation paid by LHA to any
such person in addition to relief at law or in equity. In return, LHA agrees not
to employ, hire or retain, or recommend to others the employment, hiring or
retention of any person employed by Company without prior written consent of
Company. This limitation would expire two (2) years after employee has left
Company. The liquidated damages due to Company shall be three (3) times the last
annualized total compensation paid by Company to any such person in addition to
relief at law.

 

8.

LHA acknowledges its responsibility to use reasonable efforts to preserve the
confidentiality of any information disclosed by Company on a confidential basis
to LHA, except for disclosures required by court order, subpoena or other
judicial process.

 

9.

All materials produced by LHA on behalf of the Company are the Company’s
property and all rights in such materials are hereby granted to the Company by
LHA. However, such materials will not be sent to the Company until LHA’s receipt
of final payment of all amounts invoiced by it to the Company, subject to
Company’s right to question expenses. These materials include all print
collateral, and electronic documents such as fax lists and email lists.

 

 

10.

Company understands and acknowledges that LHA will rely upon the accuracy of all
information (“Information”) provided to it by Company. Company shall have full
responsibility and liability to LHA for such Information and Company shall
indemnify and hold LHA harmless from and against any demands, claims, judgments
and liabilities related thereto (collectively “Claims Against LHA”). Company
shall reimburse LHA for amounts payable by LHA in settlement of or in payment of
any Claims Against LHA resulting from LHA’s use of the Information and all costs
and expenses incurred by LHA in connection therewith, including without
limitation, reasonable attorney’s fees and costs of defending Claims Against
LHA; provided that the Company is given reasonable notice of such Claims by LHA
and elects in writing addressed to LHA to assume the defense of such Claims,
subject to LHA’s agreement to settle or pay any such claims.

 

 

 

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11.

LHA understands and acknowledges that it will only utilize the Information in
connection with its Services and LHA hereby assumes full responsibility and
liability to the Company for such utilization. LHA shall have full
responsibility and liability to Company for using the Information accurately in
connection with its Services and LHA shall indemnify and hold the Company
harmless from and against any demands, claims, judgments and liabilities related
thereto (collectively “Claims Against The Company”). LHA shall reimburse the
Company for amounts payable by the Company in settlement of or in payment of any
Claims Against the Company resulting from LHA’s negligent use of the Information
in connection with the Services and all costs and expenses incurred by LHA in
connection therewith, including without limitation, reasonable attorney’s fees
and costs of defending Claims Against the Company; provided that LHA is given
reasonable notice of such Claims by the Company and elects in a writing
addressed to LHA to assume the defense of such Claims, subject to the Company’s
agreement to settle or pay any such claims.

 

12.

This Agreement constitutes the entire understanding and agreement between the
parties with respect to the subject matter here of and all prior contemporaneous
understandings; negotiations and agreements are merged herein.

 

13.

The Agreement may not be altered, extended, or modified nor any of its
provisions waived, except by a document in writing signed by the party against
whom such alteration, modification, extension or waiver is sought to be
enforced.

 

14.

A waiver by either party of any breach, act or omission of the other party is
not to be deemed a waiver of any subsequent similar breach, act or omission.

 

15.

The terms and provisions of this Agreement shall be binding upon and shall inure
to the benefit of the parties, and their respective successors and assigns.

 

16.

Any controversy or claim arising out of or relating to this agreement, or the
breach thereof, shall be settled by arbitration in New York, New York in
accordance with the rules of the American Arbitration Association, and judgment
upon the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction.

 

If the foregoing correctly states our understandings, please execute the
enclosed two copies of this Agreement in the spaces provided for your signature
below and return one copy to the undersigned. We look forward to a long and
mutually successful relationship with your exciting company.

 

Very truly yours,

 

LIPPERT/HEILSHORN & ASSOCIATES, INC.

 

By: /s/ Keith L. Lippert                                                  

Keith L. Lippert

 

By: /s/ John W. Heilshorn                                            

John W. Heilshorn

 

Agreed to and Approved

this 7th day of November, 2005.

 

Enclaves Group, Inc.:

 

By: /s/ Daniel G. Hayes                                    

 

Daniel G. Hayes

 

Its:

President & CEO

 

 

 

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APPENDIX 1 

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EXCELLENCE IN INVESTOR RELATIONS

800 Third Avenue 17th FLOOR ( New York, NY 10022

212.838.3777 ( Fax 212.838.4568

WWW.LHAI.COM

 

 

 

To:

Daniel Hayes

From:

LHA Account Team

Subject:

IR Proposal for Enclaves Group

Date:

November 2, 2005

_____________________________________________________________

It was a pleasure meeting you last Friday and thank you for taking the time to
learn about Lippert/Heilshorn’s investor relations capabilities. As discussed in
our meeting, we propose constructing a program for Enclaves Group in support of
the following objectives:

 

•

Work with management to lay out an investor relations strategy in keeping with
the Company’s achievement of financial and non-financial milestones

•

Develop the investment case and key messages that clearly defines the company’s
market opportunity and articulates the key elements of the company’s growth
strategy

•

Establish Enclaves Group’s Wall Street identity by developing collateral
materials and issuing press releases on a regular basis

•

Build market awareness of Enclaves Group’s investment thesis ahead of
anticipated registration of shares

•

Support the company’s listing on an accredited exchange

 

 

As the LHA team learns more about Enclaves Group and as developments unfold, we
will reexamine both strategies and tactics. Our investor relations programs are
custom-designed to suit a client’s circumstances and needs, and we may add or
subtract elements from this proposed program. As your partners in investor
relations, we are committed to maintaining open channels of communications to
ensure that we are always working together toward achieving shared goals.

 

PHASE ONE

Preliminary Activities

•

As a first step in our engagement, your LHA account Team will thoroughly
research Enclaves Group including past public communications, SEC filings, other
relevant documents, competition, industry dynamics and more. Then, we will hold
an orientation session with the executive team. The purpose of this meeting is
to provide LHA with a solid understanding of the building blocks of Enclaves
Group’s business, the growth strategy and business model, strengths and
weaknesses and IR goals, among other topics.

 

•

In advance of the meeting LHA will submit an agenda outlining the topics for
discussion. After the meeting, we will submit a plan that lays out a timetable
of activities we will undertake during the first phase of our relationship.

 

•

Messages and Positioning – To guide our communication and to ensure that over
time we are building and reinforcing the company’s story among all target
audiences, together we will develop a set of key investment community messages
and desired positioning.

 

 

LHA – Enclaves Group Investor Relations Proposal

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Collateral Material Development

Upon completion of the due diligence and establishment of the key message set,
LHA will review and/or create collateral materials for Enclaves Group to be used
in our investor outreach program. These collateral materials will be designed to
clearly and concisely articulate the company’s investment thesis; convey a
professional image for the company in keeping with current best practice
standards; and, properly position the story to maximize attention and interest.

 

•

Factsheet -- LHA will develop a corporate fact sheet for Enclaves Group that
provides an overview of the company, its market opportunity and growth strategy,
and highlights reasons to consider the company as an investment opportunity. A
one-page, two-sided document, and the fact sheet is an effective tool for
soliciting interest in meeting management.

 

•

Investor Presentation - LHA will work with you to develop a presentation that
concisely, effectively and memorably communicates the Enclaves Group story by
fleshing out the skeletal presentation of the story contained in the fact sheet.

 

•

Investor Kit -- LHA will develop materials for inclusion in an information kit
with the fact sheet serving as the lead-in document. The investor kit is a
valuable tool for providing the information investors need to quickly gain an
understanding of the company’s business fundamentals. We send investor kits to
prospective investors who are considering meeting with management and to all
investors who have agreed to meet with management ahead of the meeting.

 

•

Website -- Institutional and individual investors alike access the Internet for
quick, in depth, company-specific information. LHA will draft the content and
coordinate the creation of an IR site for Enclaves Group with an outside vendor.
Content will likely include the information investors routinely seek, such as an
overview of the company’s business, SEC filings, press releases, and management
biographies.

 

Investor Outreach

•

During the first phase of our program we anticipate arranging between six and
ten days of meetings to be held in key financial centers for small cap companies
with an emphasis on New York, San Francisco, Southern California and Seattle.

 

•

We will assemble lists of target audiences utilizing our proprietary database of
investment community contacts, 13-F filings and other sources.

 

•

We envision targeting small cap funds whose investment criteria match Enclaves
Group’s investment fundamentals, particularly funds that manage under $100
million, have an appetite for under-followed, undiscovered ‘gems’ and are
receptive to OTC stocks with limited float.

 

•

We will arrange meetings with appropriate sources of capital nationwide.

 

 

•

We also will consider arranging retail stockbroker luncheons in target markets
whereby management can make a presentation in a group setting, and field
questions from a select group of pre-screened brokers.

 

•

LHA will pre-market the meetings, arrange the itinerary, provide background on
individuals/firms where you will be going, and accompany management to certain
meetings.

 

 

LHA - Enclaves Group Investor Relations Proposal

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•

After each set of meetings, we will canvas the meeting participants for their
assessment of the Enclaves Group story and the presentation structure and flow,
and then submit a memo summarizing our findings and making recommendations, as
appropriate.

 

Press Releases

•

Enclaves Group and your LHA Team will identify activities and accomplishments
that warrant public disclosure, and will work to position the news to support
our core messages and positioning. This includes quarterly earnings
announcements, as well as other material and opportunistic announcements.
Enclaves Group and LHA will strategize the content and timing of these releases,
with specific roles/responsibilities to be determined, including first drafts,
coordinating revisions and distribution.

 

•

Once a release is finalized, LHA will be responsible for distributing the
release via Business Wire and monitoring Dow Jones, Reuters, and Bloomberg to
ensure receipt and accurate dissemination. In addition, for particularly
important news, LHA will follow up with key investors to assess their reaction
to the announcement.

 

PHASE TWO

Begin implementing programming aimed at driving systematic outreach activities,
albeit at a less frenetic pace than envisioned in Phase One.

 

•

Collateral Materials – We will update the fact sheet and corporate presentation
for all key developments and following the reporting of quarterly earnings
results. We will also ensure that the investor kit remains current with all
developments at the company.

•

Press Releases – We will continue to draft, iterate and issue announcements as
described above.

•

Street Outreach – We envision a systematic program of quarterly meetings with
members of the investment community in addition to opportunistic meetings to
leverage management’s business travel.

 

•

Each quarter, we will arrange three days of one-on-one meetings with
institutional investors. We will expand the geographic reach of the meetings to
include Chicago/Milwaukee, Minneapolis and Boston while continuing to arrange
meetings in New York, San Francisco, Seattle and Southern California, among
others.

 

•

As appropriate, we will arrange meetings with sources of capital nationwide.

 

 

•

On the sell-side, we will target analysts at independent research boutiques and
broker/dealers that cover micro-cap emerging growth companies.

 

ONGOING ACTIVITIES

•

Investor inquiries - LHA is well respected on Wall Street as being a credible
information provider on behalf of its client base. LHA will be the initial point
of contact for all investors.

 

•

Information Fulfillment -- LHA will handle all mail information requests. Even
with the Internet, many investors still request hard copies of materials. LHA
has a full service mail room which can handle these requests in a timely manner.

 

•

Strategic Counsel – In all that we do, it is incumbent on your LHA Team to keep
our eye on the big picture, to counsel management on activities and
opportunities, and to effectively handle unexpected issues – all on a consistent
basis.

 

•

Creative Thinking – Along with being strategic, we strive to bring a creative
component to our work. While oftentimes Wall Street operates in a highly
prescribed, somewhat predictable way,

 

 

LHA - Enclaves Group Investor Relations Proposal

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there are opportunities for creativity that help our message to stand out and
make the Enclaves Group story memorable. As we establish a better understanding
of your Company, we will challenge ourselves for fresh thinking – in particular
as it relates to conference calls and collateral.

 

•

Issues Management – The list of potential “crisis” situations is extensive, and
includes problems with marketed products, missed Street estimates, lawsuits and
much more. While it is not practical to prepare for all possible crisis
situations, rest assured that your LHA account Team – indeed the resources of
our entire firm – stands ready to provide strategic and tactical support should
such a situation arise.

 

•

After the end of each calendar quarter, LHA will provide Enclaves Group with an
activity report detailing the activities for the quarter, and evaluating the
shareholder base and valuation of the company. To ensure that we are constantly
fine tuning our program to take into account recent company events and current
market conditions, the Activity Report will also propose a strategy and game
plan for the following quarter.

 

Proposed Fee for Professional Services

 

“As proposed we envision a quick and aggressive start to the program to create
interest in the Enclaves Group Story followed by a program focused on systematic
outreach activities. LHA and Enclaves Group would agree as follows:

 

(a)

Initial Period.

Ninety (90) days from commencement.

 

(b)

Commencement. Enclaves Group would designate a date for commencement of services
by LHA, not earlier than December 1, 2005, and not later than February 1, 2006.

 

(c)

Monthly Fee. Enclaves Group would pay LHA a monthly fee in arrears from the
commencement date in the amount of Fourteen Thousand Dollars ($ 14,000). This
fee is the base fee for all services but separate from reimbursement of
customary out-of-pocket expenses and the Warrants.

 

(d)

Continued Period. From and after the Initial Period the agreement would
continue, subject to termination by either party with thirty (30) days advance
notice, for a period of nine (9) months and thereafter renewed on terms to be
agreed.

 

(e)

Warrants. As additional consideration for services to Enclaves Group it will
grant LHA designees with the monthly fee each month anti-dilution protected
warrants for common stock of Enclaves Group as follows:

 

(i)

for each month in the Initial Period Forty Five Thousand (45,000) warrants at
$ 0.40 / share; and

 

(ii)

for each month in the Continued Period Forty Five Thousand (45,000) warrants at
$ 0.65 / share;

 

provided that Enclaves Group shall include sufficient shares of stock for twelve
(12) months of compensation in its registration to be filed under its existing

 

LHA - Enclaves Group Investor Relations Proposal

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equity line facility from Cornell Capital, and use best efforts to obtain
registration of such warrants;

 

provided further that the warrants shall be deemed earned on the first day of
the applicable month; and

 

provided further that the warrants may be exercised as a net exercise exchanging
the warrants for stock shares equal to number of shares assuming immediate sale
of shares at the market price to fund the exercise price; and

 

provided further that the warrants shall set forth anti-dilution provisions; and

 

provided further that the warrants must be exercised not later than the third
anniversary of issuance; and

 

provided finally that the warrants will be limited on exercise in the twelve
(12) months after commencement to not more than fifty thousand (50,000) warrants
in any thirty (30) day period, with no limitations thereafter.”

 

Throughout the term of our relationship, Enclaves Group will reimburse LHA for
customary out-of-pocket expenses (i.e., commercial newswire distribution, phone,
fax, etc.) billed at cost and reflective of any LHA vendor discount.

 

We are eager and prepared to start the program immediately, and look forward to
your response.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LHA - Enclaves Group Investor Relations Proposal

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THE ENCLAVES GROUP ACCOUNT TEAM:

 

John W. Heilshorn - Partner/New York Office

John W. Heilshorn joined LHA in September of 1984, was named a Partner of the
firm in 1991, and has since contributed significantly to the organization’s
success. In particular, his early work with overseas high-technology clients
helped build LHA’s reputation in that sector and forged lasting relationships
with institutional investors. Mr. Heilshorn maintains a high level of
involvement in the firm’s technology and communications business, in addition to
his healthcare responsibilities. Mr. Heilshorn is a thought leader on a broad
range of investor relations topics and speaks regularly at NASDAQ and NIRI
(National Investor Relations Institute) events across the country. Prior to
joining LHA, Mr. Heilshorn was a registered investment advisor for Merrill
Lynch.

 

He serves on the Board of Advisors for Main Street Resources, a venture capital
firm, a member of the Executive Counsel of the University Club in New York,
chairman of the capital steering committee for Madison Avenue Presbyterian
Church, a member of the New York Angler’s Club and Hollenbeck Club.

 

He holds a BA in Government from Lawrence University.

 

Jody Burfening - Managing Director, Principal/New York Office

Jody Burfening leads a team of account professionals who represent a broad
universe of companies from a range of sectors including Software,
Telecommunications, and Semiconductor Equipment.

Prior to joining LHA in 1996, Ms. Burfening worked on mergers and acquisitions
with in-house groups at W.R. Grace and PepsiCo, and equity valuations at
Houlihan, Lokey, Howard & Zukin. Ms. Burfening earned an MBA from the Wharton
School of Business. She holds an MA in International Relations from the
University of Chicago and a BA from Wheaton College. She is also a member of the
National Investor Relations Institute (NIRI). In her spare time she enjoys
playing tennis, going to the theater, traveling, and any activity that touches
on her passion for Medieval/Renaissance history.

 

Chris Witty – Assistant Vice President/New York Office

Chris Witty has over 10 years experience in equity research, investor relations,
corporate finance, strategic planning, and M&A.

Prior to joining LHA in 2004, Mr. Witty was the assistant treasurer at Star Gas
Partners, where he managed various activities in investor relations, corporate
planning, and capital markets. Before Star Gas, he spent several years in equity
research at such well-known firms as Lazard Fréres, UBS Warburg, and Goldman
Sachs, prior to which he served in several senior finance and M&A positions at
Delphi Automotive and General Motors.

Mr. Witty has both an MBA and Masters in Asian Studies from the University of
Virginia, where he also received his BA. He enjoys travel and outdoor
activities, while being actively involved as a relatively new resident in
Harlem.

 

Chenoa Taitt - Vice President, Media Relations/New York Office

Chenoa Taitt joined LHA in 2000, and is in charge of the firm’s Financial Media
team. As such, she is responsible for the development of strategic media
programs, media counsel, press outreach, and corporate positioning for the
company’s client base. Ms. Taitt’s efforts have focused on media-relations
initiatives surrounding mergers and acquisitions, product launches, initial
public offerings, earnings announcements, FDA approvals, and related
event-driven news.

 

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Prior to joining LHA, Ms. Taitt worked for The MWW Group, the nation’s 18th
largest public relations and marketing communications firm. While at MWW, she
worked for both the public affairs and investor relations departments. She began
her career in public relations as a Media Director for the Morris County
Historical Society in Morristown, N.J.

Ms. Taitt received a BA in Communications from Seton Hall University. She enjoys
sports, writing, reading, and art.

 

 

LHA - Enclaves Group Investor Relations Proposal

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APPENDIX 2

 

M E M O R A N D U M

 

TO:

CLIENTS

 

 

FROM:

LIPPERT/HEILSHORN & ASSOCIATES, INC.

 

ACCOUNTING DEPARTMENT

 

 

SUBJECT:

IN-HOUSE EXPENSES

 

 

 

LHA provides documentation, in the form of receipts and back up, for all
expenses incurred by Third-Party Vendors utilized on clients’ behalf. In house
expenses, including photocopying, local telephone, mailing list maintenance, and
access to Bloomberg Business News on-line service are expenses, which are,
incurred monthly by LHA on clients’ behalf. The following is an explanation of
these expenses for which documentation is not provided in monthly invoices.

 

Photocopying

Photocopying costs are charged to clients at the rate of $0.15 per sheet of
standard white paper and $0.20 per sheet of LHA bonded letterhead. This rate
covers the costs of paper, machinery and photocopier operator utilized in the
production of client informational kits, distribution of press releases, press
articles, etc.

 

Local Telephone

Local telephone costs are charged to clients on a pro rated weighted basis. The
partner’s weighting of the average is determined by the client’s activity during
the billing period. These activities pertain to investor inquiries,
telemarketing press releases, conference call marketing and investor meetings.

 

Bloomberg Business News Service

On-line access to Bloomberg Business News Service is allocated to clients at a
rate of $150.00 per month.

 

Third - Party Vendors

Due to the volume of business LHA provides to its vendors, the agency has been
successful in obtaining volume discounts.

 

 

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APPENDIX 3

 

Listed below, are the hourly rates for LHA Principals and Staff whom, if
required, will perform services outside of the scope of IR services outlined in
Paragraph 2 of this Agreement:

 

•

Partner: $350

 

•

Managing Director/Group Leader $285

•

Senior Vice President $255

 

•

Vice President: $225

 

•

Assistant Vice President: $205

 

•

Senior Account Executive: $185

 

•

Account Executive: $135