Exhibit 10.8
November 21, 2000
Xx.Xxxx X. Kitchen
President
American Soil Technologies, Inc.
000 X. Xxxxxxx Xxx., Xxx. 000
Xxxxxxxx, XX 00000-0000
Dear Mr. Kitchen:
This Engagement Agreement ("Agreement") defines the scope of services to be
provided by Xxxxxx Xxxx Financial Group, LLC and/or Xxxxxx Xxxx Securities, LLC
(hereinafter collectively "Xxxxxx Xxxx") to American Soil Technologies, Inc.
(the "Company") as well as the compensation to be paid by the Company to Xxxxxx
Xxxx in exchange.
1.0 ENGAGEMENT.
1.1 ADVISORY SERVICES. Xxxxxx Xxxx will provide advisory services to the
Company in the areas of corporate development, corporate finance and capital
placement transactions. Xxxxxx Xxxx will assign Managing Director Xxxxxxx X.
Xxxxxxxxx and Xxxx Xxxxxxx to lead its activities and act as primary interface
with the Company. Xxxxxx Xxxx will also introduce other firms, products and
services to the Company as indicated during the normal course of business and
act as coordinator for all activities within its purview. It is also understood
that Xxxxxx Xxxx is acting as an advisor only, and shall have no authority to
enter into any commitments on the Company's behalf, or to negotiate the terms of
any transaction, or to hold any funds or securities in connection with any
transaction or to perform any other acts on behalf of the Company without the
Company's express written consent.
1.2 TRANSACTIONS. During the course of the Engagement Period, it is
anticipated that the Company will choose to execute one or more corporate
development and/or corporate finance transactions. Xxxxxx Xxxx will assist the
Company in executing these transactions on a best efforts basis, on terms
satisfactory to the Company. Xxxxxx Xxxx will act as exclusive advisor and/or
placement agent on these transactions in accordance with the terms of Section
2.2 below.
2.0 ENGAGEMENT TERMS.
2.1 PERIOD. The period of Xxxxxx Xxxx'x engagement (the "Engagement
Period") will expire upon the earlier to occur of (i) twelve (12) months from
the date we receive an executed copy of the Agreement from the Company or (ii)
the mutual written agreement of the Company and Xxxxxx Xxxx, or (iii) the
Company, may at its sole option, terminate this Agreement without liability if,
in the reasonable opinion of the Company, a change has occurred in the
composition of the personnel or management of Xxxxxx Xxxx assigned to the
Company and said change is detrimental to the goals of the Company as they
pertain to the objectives of this Agreement. The Engagement Period may be
Xx. Xxxx X. Kitchen
November 21, 2000
Page 2
extended for additional six (6) month periods under the same terms and
conditions as described herein upon mutual consent of the Company and Xxxxxx
Xxxx. Notwithstanding the foregoing, Xxxxxx Xxxx may, at its sole option,
terminate its obligation hereunder without liability if, in the reasonable
opinion of Xxxxxx Xxxx, a change has occurred in the Company's financial
condition, results of operations, properties, business prospects or the
composition of the Company's management or Board of Directors, which, in Xxxxxx
Xxxx'x sole determination, has adversely affected the Company's business.
2.2 EXCLUSIVITY. The Company engages Xxxxxx Xxxx on an exclusive basis. The
Company shall not be permitted to engage any other firm or person as an
investment banker or other professional intermediary for the duration of the
Engagement Period, except that for fourteen (14) days from the date of execution
of this Agreement, Summa Capital Corporation and Sagaponack Partners LP may
submit a Letter of Intent ("LOI") to the Company for proposed financing and
Xxxxxx Xxxx will share fees (if either submission has incorporated fees) on a
reasonable basis, so that the Company pays a total fee no greater than those
contained in Section 3.0 Compensation of this Agreement. Notwithstanding any
other provisions of this Agreement, if at any time during the twelve (12) month
period following the end of the Engagement Period the Company completes a
securities transaction with an investor or potential investor introduced by
Xxxxxx Xxxx (or an affiliate of any such entity), upon the closing of any such
transaction (a "Closing") Xxxxxx Xxxx will be paid the compensation which would
be due under Section 3.0 hereof.
2.3 RIGHT OF FIRST REFUSAL. The Company will provide Xxxxxx Xxxx with the
right of first refusal for one (1) year from the date of the termination of this
Agreement (except for termination under Section 2.1(ii) or 2.1(iii)) to serve as
a financial advisor or to act as a joint financial advisor on at least equal
economic terms on any public or private financing (debt or equity), merger,
business combination, recapitalization or sale of some or all of the equity or
assets of the Company (collectively, "Future Services"), with the exception of
any extension, expansion or revision of the Company's existing credit
facilities. In the event the Company notifies Xxxxxx Xxxx of its intention to
pursue an activity that would enable Xxxxxx Xxxx to exercise its right of first
refusal to provide Future Services, Xxxxxx Xxxx shall notify the Company of its
election to provide such Future Services, under the same terms and conditions as
competitively presented, within thirty (30) days of written notice by the
Company. In the event the Company engages Xxxxxx Xxxx to provide such Future
Services, Xxxxxx Xxxx will make every effort to expedite these Future Services.
3.0 COMPENSATION.
Throughout the course of what Xxxxxx Xxxx anticipates will be a long-term
relationship with the Company, Xxxxxx Xxxx may perform a variety of services, in
exchange for which Xxxxxx Xxxx shall receive compensation as follows:
Xx. Xxxx X. Kitchen
November 21, 2000
Page 3
3.1 TRANSACTIONS. Other than in the Company's normal course of business
activities, for any sale, merger, acquisition, joint venture, strategic
alliance, technology partnership, licensing agreement or other similar
agreements Xxxxxx Xxxx shall accrue compensation for the total amount of any
transaction broken down as follows:
A rate of 6.0% will be charged for Aggregate Consideration of
the first $10,000,000 or portion thereof, then
A rate of 4.5% will be charged for Aggregate Consideration of
the next $15,000,000 or portion thereof, then
A rate of 4.0% will be charged for Aggregate Consideration of
the next $25,000,000 or portion thereof, then
A rate of 3.0% will be charged for Aggregate Consideration of
the next $25,000,000 or portion thereof, then
A rate of 2.0% will be charged for Aggregate Consideration of
the next $25,000,000 or portion thereof, then
A rate of 1.0% will be charged for Aggregate Consideration of
all amounts above $100,000,000.
A minimum fee of two hundred fifty thousand dollars ($250,000) will be due
for any transaction falling under the description defined above. "Aggregate
Consideration" is defined as the greater of the total amount actually payable or
the value assigned to such a transaction, whether due at Closing or deferred by
the Company or any affiliate of the Company, and shall include all cash or cash
equivalents, the principal amount of any notes, all classes of securities
issued, the aggregate amounts payable pursuant to any consulting agreements,
employment agreements, agreements not to compete and similar agreements, and the
aggregate amount of value of any bank or term loans or other debts assumed or
refinanced as part of the transaction.
3.2 CORPORATE FINANCE. All securities transactions for the benefit of the
Company will accrue compensation to Xxxxxx Xxxx according to the corresponding
categories below:
3.2.1 SECURED DEBT FINANCING. Other than in the Company's normal
course of business activities, when Xxxxxx Xxxx acquires any traditional
financing (which includes senior debt financing, revolving lines of credit,
equipment lease financing, purchase order financing, accounts receivable,
or any other type of secured debt financing), with the exception of any
extension, expansion or revision of the Company's existing credit
facilities, Xxxxxx Xxxx shall receive upon Closing: a success fee, payable
in cash, equal to one and one-half percent (1.5%) of the gross proceeds
received by the Company at each such Closing, and no warrants.
3.2.2 SUBORDINATED DEBT FINANCING. Other than in the Company's normal
course of business activities, for any debt investment placed for the
Company by Xxxxxx Xxxx (including mezzanine funding, notes, term loans,
promissory notes, debentures, etc.), with the exception of any extension,
expansion or revision of the Company's existing credit facilities, Xxxxxx
Xxxx shall receive upon Closing: (i) a success fee, payable in cash, equal
to fourfour percent (4.0%) of the gross proceeds received by the Company at
each such Closing, plus (ii) warrants in the entity financed, equal to
fourfour percent (4.0%) of the gross proceeds received by the Company at
Xx. Xxxx X. Kitchen
November 21, 2000
Page 4
each such Closing, exercisable at a strike price equal to one hundred
percent (100%) of the transaction price of the common stock for the Company
as of the date the Company receives the funds, in whole or in part, at any
time within five (5) years from issuance.
3.2.3 EQUITY INVESTMENT. For any equity investment into the Company by
a financing source contact of Xxxxxx Xxxx for which the Company receives
funds (including any common stock, preferred stock, convertible preferred
stock, convertible debentures, subordinated debt with warrants or any other
securities convertible into common stock), Xxxxxx Xxxx shall receive upon
Closing: (i) a success fee, payable in cash, equal to eighteight percent
(88%) of the gross amount to be disbursed to the Company at each such
Closing, plus (ii) warrants in the entity financed, equal to eight
percent (8%) of the gross amount to be disbursed to the Company at each
such Closing, exercisable at a strike price equal to one hundred percent
(100%) of the transaction price of the common stock for the Company as of
the date the Company receives the funds, in whole or in part, at any time
within five (5) years from issuance.
3.2.4 PUBLIC OFFERING. For any public offering or a secondary
offering, Xxxxxx Xxxx will act as the exclusive advisor to the Company in
connection with assisting and advising the Company in choosing an
investment bank for underwriting of the offering. Xxxxxx Xxxx'x advisor
fees hereunder shall be one percent (1%) of the aggregate amount of the
offering, plus warrants equal to an additional one percent (1%) of the
aggregate amount of the offering.
3.3 RETAINER. The Company will issue to Xxxxxx Xxxx, and/or its designee,
fifteen thousand (15,000) shares of common stock, which shall be registered in a
certain SB-2 registration statement that will be filed within ten (10) business
days after the execution of this Agreement.
3.4 EXPENSES. In addition to any success fee payable to Xxxxxx Xxxx herein,
the Company will reimburse Xxxxxx Xxxx monthly for Xxxxxx Xxxx'x reasonable
direct out-of-pocket expenses incurred in connection with its services; however,
all expenses in excess of one thousand dollars ($1,000) shall be pre-approved.
4.0 OTHER.
4.1 OFFERING MATERIALS. Xxxxxx Xxxx will use no offering materials other
than such materials prepared by the Company and approved by Company's counsel.
The Company agrees to use its best efforts to approve and/or prepare, as
necessary, any offering materials within thirty (30) days from the date the
Company advises Xxxxxx Xxxx that it intends to execute a financial transaction,
in accordance with Section 1.2 hereof.
4.2 CLOSING. Xxxxxx Xxxx will assist with the Closing of any transaction or
financing which will occur through an escrow established with City National Bank
or other escrow agent designated by Xxxxxx Xxxx and reasonably acceptable to the
Company.
Xx. Xxxx X. Kitchen
November 21, 2000
Page 5
4.3 CONFIDENTIALITY. This Agreement is for the confidential use of the
Company and Xxxxxx Xxxx only and may not be disclosed by the Company to any
person other than its attorneys, accountants and financial advisors, and only on
a confidential basis in connection with the proposed transaction or financing,
except where disclosure is required by law or is mutually consented to in
writing by Xxxxxx Xxxx and the Company.
4.4 DISCLOSURE. During the Engagement Period and for sixty (60) days
thereafter, the Company agrees not to issue any press releases or communications
to the public relating to the transactions or financings without Xxxxxx Xxxx'x
prior approval or unless otherwise required by law, which will not be
unreasonably withheld or delayed, and the Company agrees that such press release
will state that the transaction or financing was arranged by Xxxxxx Xxxx, unless
we mutually agree otherwise or unless otherwise required by law. The Company
further agrees that Xxxxxx Xxxx may, at its own expense, publicize its services
to the Company hereunder including, without limitation, issuing press releases,
placing advertisements and referring to the transaction or financing on Xxxxxx
Xxxx'x website.
4.5 PERFORMANCE. Notwithstanding any other provision of this Agreement,
nothing set forth herein shall be construed as a firm commitment to execute any
transaction or place the full amount of any offering or any minimum portion
thereof. Xxxxxx Xxxx cannot guarantee the successful conclusion of any
transaction, for which the Company has the right to reject, for any reason, in
its sole and absolute discretion.
4.6 INDEMNIFICATION. The Company shall indemnify and hold harmless Xxxxxx
Xxxx from and against all claims, damages, losses, and liabilities (including,
without limitation, reasonable attorneys' fees and expenses) arising out of or
based upon (i) any misstatement or omission or alleged misstatement or omission,
in any Company documentation or any other materials or information supplied or
approved by the Company which are disseminated by Xxxxxx Xxxx to third parties,
including financing sources, or (ii) any agreement between the Company and any
financing source; except that the Company shall not be liable for any claim
damage, loss or liability which is finally determined to have resulted from
Xxxxxx Xxxx'x fraud, gross negligence or willful misconduct. In any action where
the Company's indemnity applies, Xxxxxx Xxxx shall be entitled to its own
separate counsel at the Company's expense. Neither termination nor completion of
this Agreement shall affect these indemnification provisions, which shall
survive any such termination or completion and remain operative and in full
force and effect.
4.7 GOVERNING LAW / ARBITRATION. The terms of this Agreement will be
governed by and interpreted in accordance with the internal laws of the State of
Arizona, without regard to the principles of conflict of laws. Any controversy,
dispute or claim between the parties relating to this Agreement shall be
resolved by binding arbitration in Maricopa County, Arizona in accordance with
the rules of the American Arbitration Association. The parties agree that in the
event that any controversy, dispute or claim between the parties relating to
this Agreement is resolved by binding arbitration, the prevailing party, if any,
as determined by the arbitrator's award, shall be entitled to reimbursement of
all expenses incurred in the arbitration including reasonable attorneys' fees,
provided that in no event shall the arbitrator have the authority to award
punitive damages. Judgment on the award may be entered in any court having
jurisdiction over the award.
Xx. Xxxx X. Kitchen
November 21, 2000
Page 6
4.8 MISCELLANEOUS. The Company undertakes and represents to Xxxxxx Xxxx
that the number of shares necessary to fulfill any offerings will be available
at Closing; that the number of shares of common stock underlying the shares will
be available upon each conversion of the shares; that the shares of common stock
underlying the warrants will be available upon exercise of the warrants; and
that the Company will comply in all respects with the terms of each purchase
agreement and registration rights agreement entered into with the purchasers of
the shares.
If the foregoing is acceptable, please sign and return to Xxxxxx Xxxx a
copy of this Agreement, which shall represent the entire agreement between us
with respect to the matters addressed herein. We look forward to working with
you and remain,
Yours very truly,
XXXXXX XXXX FINANCIAL GROUP, LLC AMERICAN SOIL TECHNOLOGIES, INC.
/s/ Xxxx X. Xxxxx /s/ Xxxx X. Kitchen
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By: Xxxx X. Xxxxx By: Xxxx X. Kitchen
President President
XXXXXX XXXX SECURITIES, LLC
/s/ Xxxx X. Xxxxx
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By: Xxxx X. Xxxxx
President
