Exhibit 10.31
[LETTERHEAD OF ALCHEMY ALTERNATIVES]
BROKERAGE SERVICES AGREEMENT
This Brokerage Services Agreement ("Agreement") is effective as of this 22nd day
of February, 2006 ("Effective Date") by and between American Soil Technologies,
Inc., ("AST") with offices located at 00000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx
00000 and Alchemy Alternatives, Inc. ("Alchemy") or their assignees, with its
principal office located at 000 Xxxxxx Xx., Xxxxx 000, Xxx Xxxxxx, Xxxxxxxxxx
00000,
WHEREAS, Alchemy will provide Brokerage and Advisory Services to AST in
connection with suitable strategic business relationships, funding sources, and
other business opportunities ("Brokerage Services");
WHEREAS, AST desires to retain Alchemy to provide such Brokerage and Advisory
Services, and Alchemy desires to provide such Brokerage and Advisory Services to
AST;
WHEREAS, AST is endeavoring to obtain funding in an amount up to $10,000,000.00
US, in order to further develop, expand and enhance its business. AST
contemplates that the funding for its business may be in the form of common
stock, convertible preferred stock, convertible debt, other equity-linked
securities, mezzanine debt, senior debt, term loans, lines of credit, stock
options, etc. The business of the AST shall be hereinafter referred to as the
"Venture" and;
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and
conditions contained herein, AST and Alchemy (when used together the companies
are sometimes collectively referred to herein as the "Parties") hereto agree as
follows:
I. COMPANY FUNDING
1.1 Funding Duties. Alchemy shall use their best efforts to assist AST in
positioning itself to various types of prospective funding sources in order to
obtain funding for the Venture and to introduce AST to various prospective
funding sources. All potential funding sources and any of their affiliate funds
or funding sources, introduced to AST by Alchemy shall be hereinafter referred
to as ("Funder)"or Funders). A Funder shall be considered to have been
introduced to AST by Alchemy if such Introduction is submitted to AST by Alchemy
and if such Introduction shall be accepted by AST in writing. Any introduction
accepted by AST shall be added to, or listed on, "Exhibit A", attached hereto
under the column "Name of Introduction". All Funders submitted by Alchemy to AST
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and accepted by AST, shall become part of "Exhibit A" and are covered under the
stipulations of sections 1.6 and 1.7. Alchemy shall also perform the following,
if requested by AST:
a) Advise AST as to the types of funding sources generally available.
b) Introduce AST to various potential funding sources for the Venture.
Funders may include institutional investors, private investors,
venture capital funds, hedge funds, lending institutions, investment
bankers, merchant bankers, financial planners, and broker dealers. The
Funder introductions will be on a "best efforts" basis as there can be
no guarantee that Alchemy will actually succeed in raising capital for
AST.
c) Assist AST in reviewing any offer received from a Funder and help
resolve conflicts to the terms of such offer. Advise AST as to the
manner in which AST can position and structure itself, if appropriate;
in order to maximize its attractive.
d) Access to various types of funding sources. Alchemy shall not
negotiate with such Funders nor is either party authorized to
represent AST in any discussions with such Funders. Alchemy's sole
function with respect to the Funders is to provide introductions.
Alchemy shall be the registered broker-dealer in all transactions
dealing with securities.
1.2 Duties of AST. AST shall be solely responsible for the decision as to
whether to accept any Funder introduced by Alchemy or any funding source. AST
shall be under no obligation to accept any offer or to close any offer of any
Funder. AST understands and acknowledges that this Agreement is by no means a
guarantee of funding of any kind through the introduction by Alchemy of any
Funders, and all work performed by Alchemy is on a "best efforts" basis.
1.3 Introduction. Alchemy shall be deemed to have introduced a Funder to AST if
the Funders name was submitted to AST by Alchemy, via fax or email, as a
potential funding source, in accordance with Section 1.1, and Alchemy initially
advised Funder of AST's need for funding. Assuming compliance with Section 1.1,
the introduction shall be deemed to have been made by Alchemy within twenty-four
hours of Alchemy providing the Funders name to AST as a potential funding
source.
1.4 Funders Lists. Alchemy shall provide AST with a detailed list, attached
hereto as Exhibit A. AST may solicit any potential funding source, which it
deems appropriate, without the consent of Alchemy, except those Funders, which
have been previously contacted by Alchemy or those that have been subsequently
listed on Exhibit A and approved by AST.
1.5 Use of Materials. In contacting potential Funders, Alchemy shall have the
right to utilize the information concerning the Venture, which has been imparted
to it by AST, or its agents. The information contained in the materials which
AST has prepared for Alchemy's use in connection with locating a potential
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Funder. Alchemy acknowledges that any AST trade secret information imparted to
Alchemy by the AST regarding the Venture ("Proprietary Information") is for the
exclusive use of Alchemy in connection with the location of a potential funding
source for the AST and may be disclosed in accordance with the terms of this
Agreement and Alchemy shall not disclose any such Proprietary Information to any
third party other than a prospective Funder, or to an agent, representative,
employee or officer of a prospective Funder, without the consent of the AST. AST
also represents that all Proprietary Information provided by AST to Alchemy is
true and accurate.
1.6 Term & Non-Circumvention. The term of the AST Funding portion of this
Agreement shall be for a period of three (3) years from the date of funding made
by a Funder as a result of an introduction made by Alchemy, listed, and sent via
email to AST on Exhibit A under the Date of Introduction column. Alchemy shall
be compensated for any and all funding provided by a Funder which is introduced
to AST, in accordance with Section 1.1 of this Agreement, as long as the "term
sheet" or "letter of intent" to provide such funding is mutually signed by both
AST and the Funder within three (3) years from the "Date of Introduction" on
Exhibit A hereto. AST also agrees to acknowledge receipt of, names via email and
adhere to the guidelines set forth in "Exhibit B" of this Agreement entitled
"Non-Circumvention Agreement" between AST and Alchemy.
1.7 Compensation. AST agrees to pay Alchemy for Brokerage and Advisory Services
upon the successful closing of any type of equity-linked funding (which includes
common stock, equity lines of credit, convertible preferred stock, convertible
debentures, promissory notes with warrants, sub-debt with warrants, etc.),
Alchemy shall receive a cash fee of ten percent (10.0%) of the amount of all
funding actually received from all Funders, over the life of the Funding, which
were introduced to AST in accordance with Section 1.1 of this Agreement, without
regard to the form or amount thereof, as a fee for Brokerage and Advisory
Services as provided under this Article I. Alchemy shall receive such fee if one
or more Funders provide funding to finance all, or a portion, of the Venture on
terms, which have been accepted by AST and shall be paid by AST to Alchemy
directly out of the escrow account ("Escrow"), if any, or any account which is
established between the Funder and AST for any and all funding received by AST.
Such fee shall be paid in connection with any and all funding provided during
the term of this Agreement as extended under, and in accordance with Section
1.6.
In addition, upon the successful closing of any equity-linked funding provided
to AST by a Funder introduced by Alchemy, AST hereby agrees to grant and deliver
to Alchemy executed common stock certificates equal to ten percent (10%) of the
total number of common stock shares, preferred stock shares, convertible
preferred stock shares, convertible debentures, convertible debentures with
stock and/or warrants, sub-debt with stock and/or warrants, promissory notes
with stock and/or warrants or any other equity-linked security. The number of
common stock shares granted will be calculated at the time of investment from
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each Funder given AST's then existing capital structure of fully-diluted number
of shares outstanding and the corresponding fair market value price per share of
the common stock prior to any stock splits and adjustments at the time of each
funding to AST from Funders which were introduced to AST by Alchemy in
accordance with Section 1.1 of this Agreement. The common stock and/or warrants
granted to Alchemy and the underlying stock acquired pursuant to the exercise of
any such warrants shall bear all the same demand registration rights, piggyback
registration rights, and stock split adjustments, if any, afforded to similar
stocks or warrants obtained by the Funder in connection with the funding.
Under no circumstances shall AST be obligated to pay any additional fees or
grant additional stock, warrants, etc. to any third party in connection with
Funding for which Alchemy is being compensated under this section 1.7.
In the event that Alchemy successfully introduces another operating company, in
accordance with Section 1.1 (either private or publicly traded) which
successfully results in a AST transaction, merger, acquisition or combination of
any kind ("AST Transaction") consummated within the timeline of this Agreement
pursuant to Section 1.6 of this Agreement Alchemy shall be paid a cash fee of
five percent (5.0%) of the Aggregate Consideration.
The Aggregate Consideration payable or value assigned to such an AST
Transaction, whether due at closing or deferred by AST, or any affiliate of AST,
in connection with such Transaction shall be inclusive of cash, stock and the
principal amount of any equity securities (including preferred stock) issued.
Additionally, any Joint Venture, Strategic Partnership, Alliance, Cross Selling
Agreement, Licensing Agreement or any other types of relationships between AST
and another company introduced by Alchemy, in accordance with Section 1.1, AST
will pay Alchemy a fee equal to five percent (5.0%) of the total gross revenue
dollars conducted between the two Parties, unless mutually amended in writing by
both Parties.
1.8 Expenses. Alchemy shall be reimbursed for all pre-approved expenses incurred
which are approved for in writing by AST. Such reimbursable expenses would
include travel, entertainment, lodging, etc. which needs to be approved in
writing beforehand by AST on a case-by-case basis. AST will not be responsible
for any outside expenses that is not pre-approved by AST.
1.9 Best Efforts. Alchemy shall use its reasonable best efforts to locate an
appropriate funding source for the Venture. However, there can be no assurance
that Alchemy will be successful in locating such a funding source acceptable to
AST.
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II. General Provisions
2.1 Entire Agreement; Amendment. This Agreement contains the entire agreement
between these Parties with respect to the subject matter hereof and there are no
promises, covenants, or representations, which are not contained herein. This
Agreement may not be amended or modified except by a written agreement executed
by both of the Parties hereto. This Agreement shall be binding upon and shall
inure to the benefit of the successors and assigns of the Parties hereto. This
Agreement is final and supersedes over all other prior agreements made before
the date hereof, whether written or oral. Nothing in this Agreement shall be
interpreted to provide that Alchemy and AST are partners, involved in a joint
venture or assignees of AST. Alchemy shall remain as independent contractors
providing brokerage and advisory services to AST.
2.2 Notices . All notices under this Agreement shall be in writing and shall be
served by personal service, regular mail, or acknowledged via email. Notices
sent by email shall be addressed to each party at its respective email address,
which shall be agreed upon later. Either party may notify the other party of a
different email address to which notices shall be sent in writing to the then
current address.
2.3 Governing Law. This Agreement shall be governed by, and constructed under
the laws of the state of California.
2.4 Indemnification. AST hereby also agrees to indemnify and hold harmless
Alchemy, as more fully outlined in Exhibit C attached hereto as a legal and
binding part of this Agreement, and each of its agents, employees and
representatives from, and against any and all losses, claims, damages, and
liabilities, joint or several, including attorney's fees, to which any such
person may become subject insofar as such losses, claims, damages or liabilities
arise out of, or are based upon, the truthfulness or accuracy of any information
provided by AST to Alchemy. Alchemy hereby also agrees to indemnify and hold
harmless AST, as more fully outlined in Exhibit C attached hereto as a legal and
binding part of this Agreement, and each of its agents, employees and
representatives from, and against any and all losses, claims, damages, and
liabilities, joint or several, including attorney's fees, to which any such
person may become subject insofar as such losses, claims, damages or liabilities
arise out of, or are based upon, the truthfulness or accuracy of any information
provided by Alchemy unless such information was provided to Alchemy by AST.
2.5 Parties Bound. The Parties to this Agreement hereby state they have the
authority to enter into this Agreement. The promises made herein shall be
binding upon all undersigned parties, and are the joint and several obligations
of each of the undersigned. Each party will take responsible steps to insure
that their associates, employees, agents, representatives and officers abide by
the provisions of this Agreement. The parties hereto, and each of them, further
represent and declare that they have carefully read this Contract and know the
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contents thereof and sign the same freely and voluntarily, and each of the
parties hereto have been given the opportunity to confer with counsel.
2.6 Arbitration. Any controversy or claim between or among the parties,
including but not limited to those arising out of or relating to this Agreement
or any agreements or instruments relating hereto or delivered in connection
herewith and any claim based on or arising from an alleged tort, shall at the
request of any party be determined by arbitration. The arbitration shall be
conducted in Sacramento, California in accordance with the United States
Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the American
Arbitration Association ("AAA"). The arbitrator(s) shall give effect to statutes
of limitation in determining any claim.
2.7 Arbitration (continued) Any controversy concerning whether an issue is
arbitrable shall be determined by the arbitrator(s). Judgment upon the
arbitration award may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.
2.8 Not a Joint Venture. It is agreed and understood that each party herein is
acting on its own behalf and nothing in this Agreement shall be deemed to create
any relationship of partnership, joint venture or any other form of co-tenancy.
Company acknowledges that it is relying upon its own legal, accounting,
brokerage and professional counsel in connection with all actions to be taken
pursuant to, or contemplated by this Agreement.
2.9 Severability. If a court of competent jurisdiction declares any provision of
this Agreement void, illegal, or unenforceable, the remainder of this Agreement
shall be valid and enforceable to the extent permitted by applicable law. In
such event, the parties shall use their best efforts to replace the invalid or
unenforceable provisions by a provision that, to the extent permitted by the
applicable law, achieves the purposes intended under the invalid or
unenforceable provision. Any deviation by either party from the terms and
provisions of this Agreement to comply with applicable laws, rules or
regulations shall not be considered a breach of this Agreement.
3.0 Waiver of Compliance. Any failure by any party hereto to enforce any term of
this Agreement shall not be considered a waiver of that party's right thereafter
to enforce each and every item and condition of this Agreement.
3.1 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original and all of which together shall be deemed to
be one and the same instrument. Facsimile signatures shall be valid to bind the
parties if original signatures are thereafter obtained.
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IN WITNESS WHEREOF, the parties hereunto have executed this Agreement on the day
and year set forth below. This agreement is to be ratified by providing a signed
copy of a resolution of the Company authorizing and approving this agreement to
Alchemy within ten (10) business days.
Agreed & Accepted, Agreed & Accepted,
("AST") ("Alchemy")
/s/ Xxxx X. Xxxxx /s/ Xxxx Xxxxxx
--------------------------------- ---------------------------------
Xxxx X. Xxxxx Xxxx Xxxxxx
Chief Executive Officer President
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EXHIBIT A
SCHEDULE OF INTRODUCTIONS MADE TO AMERICAN SOIL TECHNOLOGIES, INC.
NAME OF INTRODUCTION DATE OF INTRO ORGANIZATION
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EXHIBIT B
NON-CIRCUMVENTION AGREEMENT & NON-DISCLOSURE AGREEMENT
In consideration of the mutual promises herein, the undersigned Parties,
intending to be legally bound, hereby irrevocably agree not to attempt to
circumvent, avoid, or bypass each other with respect to the introductions made
to AST by Alchemy, either directly or indirectly for the purpose of avoiding
payment of brokerage or advisory fees, compensation or otherwise, by way of any
corporation, trust partnership, or other entity, or individually, by either
party to the other, in conjunction with transaction or transactions of business
involving said Parties.
The Parties will neither disclose nor reveal to any third party, in any manner,
any confidential information provided by the other including, but not limited
to, names, addresses, emails, facsimile, and telephone numbers or any means or
access thereto, including bank information, code or reference and/or privileged
information without the specific prior written consent of the other party.
It is further agreed that, should AST attempt to circumvent Alchemy, the total
of all fees, expenses, and commissions will be immediately due and payable to
Alchemy. Should circumvention be attempted by AST, the minimum cash commission
due to Alchemy will be ten percent (10.0%) of any funds that were being pursued
for by AST and ten percent (10.0%) stock of the total number of shares of stock
sold to Alchemy's Funders.
All transactions will continue to be governed by the terms and conditions of
this Agreement (including Exhibit A and Exhibit B) until the term is ended as
mentioned in Section 1.6 of this Agreement.
For the convenience of the Parties, the use of email-transmitted copies of this
Agreement will be legally binding upon them. The Parties will also have the
right to seek the appropriate and/or injunctive relief to prevent a violation or
continuing violation of this Agreement in a court designated as follows. The
venue for all arbitration hearings or proceedings and any court actions will be
in San Francisco in the State of California.
This agreement may be amended by written addendum signed by all Parties hereto
or their authorized agents. Further, any changes will be incorporated as part of
this agreement.
Agreed & Accepted, Agreed & Accepted,
("AST") ("Alchemy")
Date: Date:
/s/ Xxxx X. Xxxxx /s/ Xxxx Xxxxxx
--------------------------------- ---------------------------------
Xxxx X. Xxxxx Xxxx Xxxxxx
Chief Executive Officer President
EXHIBIT C
INDEMNIFICATION AGREEMENT
AST agrees to indemnify and hold harmless Alchemy and all of its agents,
employees, affiliates, control persons, successors in interest or any other
individuals which Alchemy may contract out to assist in providing Brokerage and
Advisory Services, and assigns (each an "Indemnitee" and collectively the
"Indemnitees") from and against, without limitation, any and all liability,
losses, claims, damages, obligations, legal proceedings, causes of action,
suits, investigations, penalties, judgments, awards, costs, expenses, and
disbursements (collectively "Losses") directly or indirectly caused by, relating
to, based upon, arising out of or in connection with (a) any material or
negligent act or omission by any Indemnitee while acting on behalf of AST in any
fashion, (b) any material, actual untrue statement of a material fact contained
in or any actual omission of from written information furnished by AST to any
Indemnitee or any prospective purchaser of the Common Shares and Warrants, (c)
investigation, preparing, or defending any related action, suit, proceeding, or
investigation, whether or not in connection with litigation in which any
Indemnitee is a party as a result of any material, and negligent act or
omission.
If any action, suit, proceeding or investigation is commenced, as to which any
Indemnitee proposes to demand indemnification, the Indemnitee shall notify AST
with reasonable promptness; provided, however, failure by an Indemnitee to
notify AST shall not relieve AST from its obligations hereunder.
AST shall have the right to control the defense and settlement of any such
action, suit, proceeding or investigation; will assume the defense and
settlement of any such action, suit, proceeding or investigation:
notwithstanding the obligation of AST to employ counsel in connection with any
such action, suit, proceeding, or investigation, an Indemnitee will be entitled
to employ counsel separate from counsel of AST and from any other party in such
action if such Indemnitee reasonably determines that representation by counsel
chosen by AST constitutes a conflict on any significant issue between the
positions of such Indemnitee and AST or any other party represented by counsel
chosen by AST of if AST fails to provide counsel reasonably satisfactory to the
Indemnitee in a timely manner.
In no event will AST be responsible for the fees and expenses of more than one
counsel (in addition to any necessary local counsel) for all Indemnities at any
time in connection with any action, suit, proceeding or investigation or
separate but substantially similar or related actions, suits, proceedings, or
investigations in the same jurisdiction. AST shall be liable for any payment of
any award or settlement of any claim against any indemnitee made with AST's
written consent, which consent shall not be unreasonably withheld.
AST shall not, without the prior written consent of the Indemnitee seeking
indemnification, which shall not be withheld unreasonably, settle or compromise
any claim, or permit a default or consent to the entry of any judgment in
respect thereof, unless such settlement, compromise or consent includes an
unconditional release from all liability for the Indemnitee. In no event shall
AST be liable for special, incidental, or consequential damages.
These Indemnification Provisions shall be in addition to any liability, which
AST may otherwise have to the Indemnitees or prospective purchasers in the
transaction contemplated by the Engagement Letter. Notwithstanding any other
provision hereof, these Indemnification Provisions shall not apply to any
portion of Losses to the extent it is found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from the negligence or willful misconduct of the
Indemnitee seeking indemnification hereunder. Neither termination nor completion
of the engagement of Alchemy pursuant to the Engagement Letter shall affect
these Indemnification Provisions, which shall remain operative and in full force
and effect.
Agreed & Accepted, Agreed & Accepted,
("AST") ("Alchemy")
/s/ Xxxx X. Xxxxx /s/ Xxxx Xxxxxx
--------------------------------- ---------------------------------
Xxxx X. Xxxxx Xxxx Xxxxxx
Chief Executive Officer President
