Exhibit 10.45
October 23, 2006
Mr. Xxxx Xxxxxx
Reclamation Consulting and Applications, Inc.
000 Xxxxx Xxxxxxxx
Xxxx X
Xxx Xxxxxxxx, XX 00000
Dear Xx. Xxxxxx:
This letter agreement confirms the engagement of Monarch Bay Capital Group,
L.L.C. ("MBCG") by Reclamation Consulting and Applications, Inc. ("RCAI") as
consultants to assist in the definition and execution of a debt & warrant
purchase agreement.
1. SERVICES.
(a) MBCG will use its best professional efforts to perform the
consulting services described in Exhibit A hereto (the "Services"). MBCG will
devote such time and effort as is it deems necessary to provide the Services.
RCAI will provide MBCG with all information concerning RCAI which MBCG
reasonably deems appropriate in connection with its engagement and will provide
MBCG with reasonable access to RCAI's officers, directors and advisors upon
reasonable notice in advance. To RCAI's knowledge, all such information will be
true and accurate in all material respects and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading in light of the circumstances
under which such statements are made. RCAI acknowledges that MBCG will be using
and relying upon the accuracy and completeness of publicly available information
and the information supplied by the Company and its officers in connection with
its engagement without independent verification.
(b) RCAI shall have complete discretion whether or not to accept and
enter into definitive agreements reflecting the terms and conditions proposed by
MBCG in connection with its performance of the Services, and RCAI shall have no
obligation to enter into any agreement with any party which is not approved by
its Board of Directors in accordance with its corporate requirements.
(c) MBCG will keep confidential and not disclose or permit its
employees or representatives to disclose confidential information received from
RCAI (other than to MBCG employees or agents involved in the performance of
services hereunder or otherwise on a need-to-know basis), except as contemplated
in this letter agreement, as otherwise may be authorized in writing by RCAI, or
as may be required by law. For purposes of this letter agreement, "confidential
information" means information provided by RCAI to MBCG that is not otherwise
lawfully available to MBCG from sources outside of RCAI, and any such
information shall cease to be confidential information when it becomes generally
available to the public, or comes to MBCG's attention in either case, through
other sources that do not, to MBCG's knowledge at the time, involve a violation
of this or any similar agreement.
(d) In the performance of the Services by MBCG hereunder, MBCG and its
agents and representatives shall comply with all applicable laws and
regulations. MBCG is not bound by any agreement, arrangement, undertaking, law,
regulation, or court order which would prohibit it from providing the Services
and receiving fees in the manner contemplated by this letter agreement.
2. FEES.
(a) REDEMPTION FEE. RCAI will pay to MBCG a fee (the "Redemption Fee")
equal to twenty percent (20%) of the difference between (A) the sum of (1)
RCAI's total obligations owed to AJW Offshore, Ltd., AJW Qualified Partners,
LLC, AJW Partners, LLC and New Millennium Capital Partners II, LLC
(collectively, the "Investors") as of the date of redemption of such, the
("Investor Debt") and (2)
the value of RCAI warrants issued to the Investors in connection with Investor
Debt. ("Investor Warrants") and (B) the total redemption amount paid by RCAI to
the Investors for redeeming the Investor Debt and the Investor Warrants
("Redemption Amount"). The Investor Debt shall be determined by the Investor and
shall include outstanding notes, fees, penalties, interest and all other charges
owed to the Investor. The Redemption Fee will be due and payable in cash, upon
RCAI's payment of the Redemption Amount to the Investors.
3. EXPENSES. In addition to the compensation described in Section 2
above, RCAI will reimburse MBCG for all reasonable out-of-pocket expenses
incurred in connection with the performance of the Services upon presentation of
supporting documentation provided that such expenses are pre-approved by RCAI.
Such reimbursement will be due and payable within five (5) business days after
RCAI's receipt of MBCG's invoice for same.
4. INDEMNITY; LIMITATION OF LIABILITY.
(a) RCAI will indemnify and hold harmless MBCG against any and all
losses, claims, damages, obligations, penalties, judgments, awards, liabilities,
costs, expenses and disbursements (and any and all actions, suits, proceedings
and investigations in respect thereof and any and all legal and other costs,
expenses and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise), including, without limitation, the costs,
expenses and disbursements, reasonably incurred, of investigating, preparing or
defending any such action, suit, proceeding or investigation (whether or not in
connection with litigation in which MBCG is a party), directly or indirectly,
caused by, relating to, based upon, arising out of, or in connection with this
letter agreement or MBCG's performance hereunder, except to the extent primarily
caused by the gross negligence or willful misconduct of MBCG, or its agents or
representatives.
(b) MBCG will indemnify and hold harmless RCAI against any and all
losses, claims, damages, obligations, penalties, judgments, awards, liabilities,
costs, expenses and disbursements (and any and all actions, suits, proceedings
and investigations in respect thereof and any and all legal and other costs,
expenses and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise), including, without limitation, the costs,
expenses and disbursements, reasonably incurred, of investigating, preparing or
defending any such action, suit, proceeding or investigation (whether or not in
connection with litigation in which RCAI is a party), directly or indirectly,
caused by, relating to, based upon, arising out of, or in connection with this
letter agreement or MBCG's performance hereunder, except to the extent primarily
caused by the gross negligence or willful misconduct of RCAI, or its agents or
representatives.
(c) The indemnification provisions of paragraph 4(b) above shall be in
addition to any liability or damages which an indemnified party may otherwise be
entitled to receive from an indemnifying party hereunder, and shall extend to
the following for each of MBCG or RCAI, as the case may be: its affiliated
entities, members, employees, legal counsel, agents and controlling persons
(within the meaning of the federal securities laws), and the officers,
directors, employees, legal counsel, agents and controlling persons of any of
them. All references to MBCG or RCAI in this Section 4 shall be understood to
include any and all of the foregoing relationships to such party, as applicable.
(d) Other then for direct breach of this letter agreement by either
MBCG or RCAI, neither party shall have any liability (whether direct or
indirect, in contract or tort or otherwise) to the other for or in connection
with this letter agreement or such party's performance hereunder, except to the
extent that any such liability is found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have resulted
primarily from such party's gross negligence or willful misconduct, or that of
such party's agents or representatives. IN NO EVENT SHALL EITHER PARTY BE LIABLE
TO THE OTHER FOR INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE, EXEMPLARY, OR
INDIRECT DAMAGES, WHETHER CLAIMED UNDER CONTRACT, TORT, OR ANY OTHER LEGAL
THEORY, EVEN IF THE PARTY ALLEGED TO BE LIABLE FOR THE DAMAGES HAS BEEN ADVISED
IN ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES.
2
5. TERM OF ENGAGEMENT. This letter agreement shall continue in full
force and effect until the earlier of the following occurs: (a) all of the
Services hereunder have been fully performed; (b) both parties have mutually
agree to terminate this letter agreement, effective as of the date agreed upon
by the parties; and (c) either party has notified the other of its desire to
terminate the letter agreement, effective as of a date not less than thirty (30)
days from the date such notification is received. Upon termination of this
letter agreement, neither party will have any liability or continuing obligation
to the other, except that: (a) RCAI will remain liable for any previously
approved, out-of-pocket expenses incurred up to the time of termination; (b) the
provisions of Sections 1(b), 4, 6 and 7 will survive the termination of this
letter agreement.
6. SUCCESSORS AND ASSIGNS. The benefits of this letter agreement shall
inure to the respective successors and assigns of the parties hereto and of the
indemnified parties hereunder and their successors and assigns and
representatives, and the obligations and liabilities assumed in this letter
agreement by the parties hereto shall be binding upon their respective
successors and assigns; provided, that the rights and obligations of either
party under this Agreement may not be assigned without the prior written consent
of the other party hereto and any other purported assignment shall be null and
void.
7. MISCELLANEOUS.
(a) RCAI is a sophisticated business enterprise that has retained MBCG
for the limited purposes set forth in this letter agreement, and the parties
acknowledge and agree that their respective rights and obligations are
contractual in nature. RCAI recognizes that the consulting relationship is not
an exclusive relationship for MBCG or any of its personnel. Each party disclaims
an intention to impose fiduciary obligations on the other by virtue of the
engagement contemplated by this letter agreement, and each party agrees that
there is no fiduciary relationship between them.
(b) The Services do not include requiring MBCG to engage in any
activities for which an investment advisor's registration or license is required
under the U.S. Investment Advisors Act of 1940, or under any other applicable
federal or state law; or for which a "broker's" or "dealer's" registration or
license is required under the U.S. Securities Exchange Act of 1934, or under any
other applicable federal or state law. MBCG's work on this engagement shall not
constitute the rendering of legal advice, or the providing of legal services, to
RCAI. Accordingly, MBCG shall not express any legal opinions with respect to any
matters affecting RCAI.
(c) This Agreement shall be governed by and construed in accordance
with the internal laws of the State of California applicable to the performance
and enforcement of contracts made within such state, without giving effect to
the law of conflicts of laws applied thereby. In the event that any dispute
shall occur between the parties arising out of or resulting from the
construction, interpretation, enforcement or any other aspect of this Agreement,
the parties hereby agree to accept the exclusive jurisdiction of the Courts of
the State of California sitting in and for the County of Orange. In the event
either party shall be forced to bring any legal action to protect or defend its
rights hereunder, then the prevailing party in such proceeding shall be entitled
to reimbursement from the non-prevailing party of all fees, costs and other
expenses (including, without limitation, the reasonable expenses of its
attorneys) in bringing or defending against such action.
(d) This letter agreement constitutes the entire agreement of the
parties with respect to the matters herein referred and supersedes all prior
agreements and understandings, written and oral, between the parties with
respect to the subject matter hereof. Neither this letter agreement nor any term
hereof may be changed, waived or terminated orally, except by an instrument in
writing signed by the party against which enforcement of the change, waiver or
termination is sought.
Please confirm your agreement by signing and returning a copy of this letter
agreement to MBCG.
3
Very truly yours,
Monarch Bay Capital Group, L.L.C.
By: /s/ Xxxxx Xxxxxxx
--------------------------------
Accepted and agreed by:
Reclamation Consulting and Applications, Inc.
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------
4
EXHIBIT A
SERVICES
DEBT & WARRANT PURCHASE AGREEMENT
o Assist the Company to negotiate a redemption formula with the Investors
which is more favorable to the Company than the formula to which the
Company is currently subject under its agreements with the Investors.
5
