Exhibit 10.2
STOCK PLACEMENT AGREEMENT
DATED JULY 16, 2004
FOR
AMERICAN SOIL TECHNOLOGIES, INC.'S
COMMON STOCK
TABLE OF CONTENTS
PAGE
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ARTICLE I. PURCHASE, SALE AND TERMS OF SHARES............................... 1
1.1 THE SHARES.................................................... 2
1.2 SUBSCRIPTION FOR SHARES; CLOSING.............................. 2
1.3 COVENANT OF BEST EFFORTS...................................... 2
1.4 REPRESENTATIONS BY BELLADOR................................... 2
1.5 TERMINATION................................................... 6
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................... 7
2.1 ORGANIZATION AND STANDING OF THE COMPANY...................... 7
2.2 CORPORATE ACTION.............................................. 7
2.3 GOVERNMENTAL APPROVALS........................................ 7
2.4 LITIGATION.................................................... 7
2.5 COMPLIANCE WITH OTHER INSTRUMENTS............................. 8
2.6 TITLE TO ASSETS; INTELLECTUAL PROPERTY RIGHTS................. 8
2.7 TAXES......................................................... 9
2.8 DISCLOSURE.................................................... 9
2.9 BROKERS OR FINDERS............................................ 9
2.10 CAPITALIZATION; STATUS OF CAPITAL STOCK....................... 9
2.11 BOOKS AND RECORDS............................................. 10
ARTICLE III. COVENANTS...................................................... 10
3.1 COMPANY'S BOARD OF DIRECTORS.................................. 10
3.2 INSPECTION RIGHTS............................................. 10
3.3 INVESTOR REPORTS AND INVESTOR RELATIONS....................... 10
3.4 CONDITIONS OF REGISTRATION.................................... 11
3.5 APPROVAL OF LEGAL COUNSEL..................................... 11
3.6 ALLOCATION OF PROCEEDS........................................ 11
ARTICLE IV. MISCELLANEOUS................................................... 12
4.1. NO WAIVER; CUMULATIVE REMEDIES................................ 12
4.2. AMENDMENTS; WAIVERS AND CONSENTS.............................. 12
4.3. ADDRESSES FOR NOTICES......................................... 12
4.4. COSTS; EXPENSES AND TAXES..................................... 12
4.5. EFFECTIVENESS; BINDING EFFECT; NO ASSIGNMENT.................. 12
4.6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.................... 12
4.7. PRIOR AGREEMENTS.............................................. 13
4.8. SEVERABILITY.................................................. 13
4.9. GOVERNING LAW; VENUE.......................................... 13
4.10. HEADINGS...................................................... 13
4.11. COUNTERPARTS.................................................. 13
4.12. FURTHER ASSURANCES............................................ 13
4.13. INCORPORATION OF RECITALS..................................... 13
STOCK PLACEMENT AGREEMENT
STOCK PLACEMENT AGREEMENT (the "Agreement"), dated as of July ___, 2004 between
AMERICAN SOIL TECHNOLOGIES, INC., a Nevada corporation having offices at 00000
Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000 (the "Company"), and Bellador
Advisory Services (Labuan) Ltd. a Malaysian business company licensed as a fund
manager in Labuan, the registered address of which is Level 6, Wisma Oceanic,
Jalan OKK Awang Besar, 00000 X X Xxxxxx, Xxxx Xxxxxxxx, Malaysia, the investment
advisor of its clients (sometimes referred to as "Bellador") who shall be
purchasers of the securities. Company and Bellador shall sometimes be
collectively referred to as the "Parties."
RECITALS:
WHEREAS, Bellador has examined the business and financial records of
Company and has relied upon the information and representations provided by the
Company herein, and
WHEREAS, Bellador has decided to recommend the Company to Bellador's
clients as an investment, and
WHEREAS, the Parties intend for this Agreement to set forth their
understanding of the terms and conditions of both phases of funding and
acknowledge that Bellador will be raising funds for the Company from clients
outside of the United States, and
WHEREAS, Bellador agrees that it will only recommend investment in the
Company to Bellador's clients outside the United States only to those clients
that are not "U.S. Persons" as defined in SECTION 1.4(F) and after providing all
such clients with information about the Company that has been approved by the
Company and the attorneys for the Company.
AGREEMENT:
IT IS, THEREFORE, HEREBY AGREED BETWEEN THE PARTIES AS FOLLOWS:
ARTICLE I.
PURCHASE, SALE AND TERMS OF SHARES
1.1. THE SHARES. The Company agrees to issue and sell to Bellador's clients
(sometimes referred to collectively as "Purchasers" and individually as
"Purchaser") in an offshore transaction negotiated outside the United States and
to be consummated outside the United States. In consideration of and in express
reliance upon the representations, warranties, covenants, terms and conditions
of this Agreement, Bellador agrees to recommend that its clients evaluate the
opportunity to purchase from the Company shares (the "Shares") of the Company's
Common Stock. Shares will be sold by the Company to Bellador's clients for the
previous trading day's closing bid price of the Company's shares of Common Stock
as quoted on the OTC Bulletin Board (the "OTCBB") immediately preceding the date
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on which the Purchaser makes a firm commitment to purchase such Shares, which
shall be confirmed in writing by Bellador to Purchaser, and the Company shall
receive the previous trading day's last bid for its shares from time to time,
and, after all expenses of the transaction, including legal, due diligence,
accounting, marketing and consulting fees, the Company shall net no less than
50% of the closing bid price. If the Company becomes listed on another United
States stock exchange or public trading market on which the shares of the
Company trade, the price shall be fixed in an amount equal to the previous
trading day's last trade during hours that the market was open and not based
upon after-hours trading.
1.2. SUBSCRIPTION FOR SHARES; CLOSING. Bellador shall deliver to the
Company a subscription agreement ("Subscription Agreement") completed in full
and signed by each potential Purchaser of Shares. After the Company accepts
subscriptions, the closing of the purchases of the Shares will take place in
Phoenix, Arizona, using the services of Arizona Escrow & Financial Corporation
("Escrow Agent"), a licensed Arizona escrow company. At each closing, the
Purchaser will cause immediately available funds to be delivered to the Escrow
Agent and Company shall deliver the share certificate(s) and/or other securities
that may be purchased to the Escrow Agent according to the terms of the Escrow
Agreement (a copy of which is attached hereto as EXHIBIT A). If the Company has
not had the opportunity to fully review the Subscription Agreement or any other
Transaction Documents related to any such purchase before the Closing with
Escrow Agent, the Company shall notify Bellador that such closing remains
"subject to" the Company's review of any documents that have not yet been
delivered to and examined by the Company, in which case Bellador will hold the
certificate(s) for such Shares pending the Company's review of such documents.
Once the Company has completed its review, it will promptly notify Bellador that
it either (a) accepts such subscription, in which case Bellador shall promptly
release such certificate(s) to the Purchaser; or (b) rejects such subscription,
in which case (i) the Company shall promptly refund the purchase price for such
Shares to the Purchaser, and (ii) Bellador, or Escrow Agent, as the case may be,
shall promptly return the certificate(s) for such Shares to the Company.
1.3 COVENANT OF BEST EFFORTS. Subject to the rights of each party to
terminate this Agreement as provided in SECTION 1.5 below, Bellador agrees to
use its best efforts to arrange for up to $3,500,000 (U.S.) of net funding to
Company on or before May 31, 2005, until the funds have been delivered to
Company or one of the Parties has terminated this Agreement.
1.4 REPRESENTATIONS BY BELLADOR. Bellador makes the following
representations and warranties to the Company:
(a) ACCESS TO INFORMATION. Bellador, in making its recommendation to
prospective Purchasers regarding the decision to purchase the Shares, has relied
and will rely upon independent investigations made by it and/or its
representatives that were based upon information, documents and representations
by the Company. Reports based upon such information have been and will be
prepared by Bellador and submitted to the Company and its legal counsel for
approval. Bellador will not submit reports or other information on the Company
to its clients regarding potential purchases of the Company's Shares without
obtaining prior approval of the materials by the Company. Each Purchaser and/or
its representatives during the course of this transaction, and prior to the
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purchase of any Shares, will have had the opportunity to ask questions of and
receive answers from the management of the Company concerning the terms and
conditions of the offering of the Shares and to receive any additional
information, documents, records and books relative to its business, assets,
financial condition, results of operations and liabilities (contingent or
otherwise) of the Company.
(b) SOPHISTICATION AND KNOWLEDGE. Each Purchaser and/or its
representatives will have such knowledge and experience in financial and
business matters that such Purchaser can represent himself/herself/itself and
will be capable of evaluating the merits and risks of the purchase of the
Shares. Each Purchaser will be instructed not to rely on the Company with
respect to the tax and other economic considerations of an investment in the
Shares, and each Purchaser will be instructed to rely on the advice of, or to
consult with, only the Purchaser's own advisor(s). The Purchasers shall be
required to represent that he/she/it has not been organized for the purpose of
acquiring the Shares in a signed Subscription Agreement.
(c) ACKNOWLEDGEMENT OF RISK. Each Purchaser will acknowledge in
his/her/its Subscription Agreement that the purchase of the Shares involves a
high degree of risk and further acknowledge that he/she/it can bear the economic
risk of the purchase of the Shares, including the total loss of its investment.
Each Purchaser will acknowledge in his/her/its Subscription Agreement that
he/she/it has no present need for liquidity in connection with its purchase of
the Shares.
(d) NO PUBLIC SOLICITATION. Each Purchaser will acknowledge in
his/her/its Subscription Agreement that he/she/it is not subscribing for the
Shares as a result of or subsequent to any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or
broadcast over television or radio, or presented at any seminar or meeting, or
any solicitation of a subscription by a person not previously known to the
Purchaser in connection with investments in securities generally. Bellador has
not engaged and will not engage in any "Directed Selling Efforts in the U.S." as
defined in Regulation S promulgated by the SEC under U.S. securities laws.
(e) AUTHORITY. Bellador has full right and power to enter into and
perform pursuant to this Agreement. This Agreement constitutes Bellador's valid
and legally binding obligation, enforceable in accordance with its terms.
Bellador is authorized, licensed and otherwise duly qualified to give investment
advice to its clients under the laws of Labuan. Bellador agrees to comply with
the laws of any jurisdiction in which it contacts clients regarding this
opportunity.
(f) REGULATION S EXEMPTION. Bellador understands and will require each
Purchaser to acknowledge in writing that the Shares are being offered and sold
to it in reliance on an exemption from the registration requirements of United
States federal and state securities laws under Regulation S promulgated under
the Securities Act of 1933 (the "Securities Act") and that the Company is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of such Purchaser set forth in
his/her/its Subscription Agreement in order to determine the applicability of
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such exemptions and the suitability of the Purchaser to acquire the Shares. In
regard to Shares sold pursuant to the Regulation S exemption, Bellador
represents, warrants and agrees that:
(i) No Purchaser will be a U.S. Person (as defined below) or an
affiliate (as defined in Rule 501(b) under the Securities Act) of the Company. A
U.S. Person means any one of the following:
(A) Any natural person residing in the United States of America;
(B) Any partnership or corporation organized or incorporated
under the laws of the United States of America;
(C) Any estate of which any executor or administrator is a U.S.
person;
(D) Any trust of which any trustee is a U.S. person;
(E) Any agency or branch of a foreign entity located in the
United States of America;
(F) Any non-discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. person;
(G) Any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organized,
incorporated or (if an individual) resident in the United States of
America; and
(H) Any partnership or corporation if:
(1) Organized or incorporated under the laws of an foreign
jurisdiction; and
(2) Formed by a U.S. person principally for the purpose of
investing in securities not registered under the Securities Act,
unless it is organized or incorporated, and owned, by accredited
investors (as defined in Rule 501(a) under the Securities Act)
who are not natural persons, estates or trusts.
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(ii) At the time of the origination of contact concerning this
Agreement and the date of the execution and delivery of this Agreement, Bellador
was outside of the United States and has agreed to limit its communications
about the Shares to clients who are non-U. S. Persons.
(iii) Each Purchaser will be required to agree in writing that
he/she/it shall not, during the period commencing on the date of issuance of the
Shares and ending on the first anniversary of such date, or such shorter period
as may be permitted by Regulation S or other applicable securities law,
including any registration of the Shares, below (the "Restricted Period"),
offer, sell, pledge or otherwise transfer the shares in the United States, or to
a U.S. Person for the account or benefit of a U.S. Person, or otherwise in a
manner that is not in compliance with Regulation S.
(iv) Each Purchaser will be required to agree in writing that he/she/it
shall, after expiration of the Restricted Period, offer, sell, pledge or
otherwise transfer the Shares only pursuant to registration under the Securities
Act or an available exemption therefrom and in accordance with all applicable
state and foreign securities laws.
(v) Each Purchaser shall be required to represent in writing that
he/she/it has not in any jurisdiction engaged in, and prior to the expiration of
the Restricted Period will not engage in, any short selling of or any hedging
transaction with respect to any of the shares of Company's common stock,
including without limitation, any put, call or other option transaction, option
writing or equity swap.
(vi) Each Purchaser shall be required to represent in writing that
neither he/she/it nor any person acting on his/her/its behalf has engaged, nor
will engage, in any directed selling efforts to U.S. Persons with respect to the
Shares and the Purchaser and any person acting on its behalf has and will comply
with the "offering restrictions" requirements of Regulation S under the
Securities Act.
(vii) The transactions contemplated by this Agreement have not been
pre-arranged with a buyer located in the United States or with a U.S. Person,
and are not part of a plan or scheme to evade the registration requirements of
the Securities Act.
(viii) Neither Bellador nor any person acting on its behalf has
undertaken or carried out any activity for the purpose of, or that could
reasonably be expected to have the effect of, conditioning the market in the
United States, its territories or possessions, for any of the Shares. Bellador
agrees not to cause any advertisement of the Shares to be published in any
newspaper or periodical or posted in any public place and not to issue any
circular relating to the Shares in the U.S. or its territories and only in
compliance with any local applicable securities laws.
(ix) Each certificate representing the Shares shall be endorsed with
the following legends:
(a) THESE SECURITIES ARE NOT REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT, IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER REGULATION S
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PROMULGATED UNDER THE SECURITIES ACT. TRANSFER IS PROHIBITED EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO
REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION; AND HEDGING TRANSACTIONS INVOLVING THESE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.
(b) Any other legend required to be placed thereon by applicable
federal or state securities laws.
(x) Bellador acknowledges that the Company shall make a notation on its
records or give instructions to any transfer agent of the Company in order to
implement the restrictions on transfer of the Shares set forth in this SECTION
1.4.
1.5 TERMINATION. Either Bellador or the Company, in its discretion, may
terminate this Agreement at any time by providing written notification and
sending it via facsimile (the sender shall retain the confirmation notice) to
the telephone numbers provided below or Federal Express (with no waiver of
signature by addressee on the delivery receipt) to the registered address of the
counter-party. Such termination shall be effective (a) ten (10) business days
after sending of written notice by facsimile transmission or (b) three business
days after sending of written notice by Federal Express to the other party. Upon
termination, Bellador shall cease all further marketing efforts for the Shares
and shall have ten (10) days to provide the Company with any new orders to
purchase the Shares, and the Company shall accept or reject any pending
subscriptions for Shares within five (5) business days after receipt of
completed subscription documents and full payment for such Shares. The Company
acknowledges that Bellador may complete any transaction where Purchaser has made
a binding commitment to purchase Shares without it constituting a further
marketing effort for purposes of this section. Company may notify Bellador from
time to time that marketing efforts should be suspended until further written
notice that marketing efforts should be resumed. Upon receipt of such notice
from the Company, Bellador will suspend marketing efforts but may complete
transactions that are already in progress. Any such notice from Company shall be
given in the same manner and shall be subject to the same conditions as a notice
of termination of this Agreement in this section.
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ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Bellador as follows:
2.1. ORGANIZATION AND STANDING OF THE COMPANY. The Company is a duly
organized and validly existing corporation in good standing under the laws of
the State of Nevada and has all requisite corporate power and authority for the
ownership and operation of its properties and for the carrying on of its
business as now conducted and as now proposed to be conducted and to execute and
deliver this Agreement and other instruments, agreements and documents
contemplated herein (together with this Agreement, the "Transaction Documents"),
to issue, sell and deliver the Shares and to perform its other obligations
pursuant hereto. The Company is duly licensed or qualified and in good standing
as a foreign corporation authorized to do business in the states of Arizona,
California and all other jurisdictions wherein the character of the property
owned or leased or the nature of the activities conducted by it makes such
licensing or qualification necessary, except where the failure to be so licensed
or qualified would not have a material adverse effect on the business,
operations or financial condition of the Company.
2.2. CORPORATE ACTION. The Transaction Documents have been duly authorized,
executed and delivered by the Company and constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except that (a) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium, or other similar
laws now or hereafter in effect relating to creditors' rights, and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefore may be brought. The issuance, sale and
delivery of the Shares have been duly authorized by all required corporate
action on the part of the Company. The Shares, when issued and paid for in
accordance with the Transaction Documents, will be validly issued, fully paid
and non-assessable and will be free and clear of all liens, charges,
restrictions, claims and encumbrances imposed by or through the Company, except
as expressly set forth in the Transaction Documents.
2.3. GOVERNMENTAL APPROVALS. No authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary for, or in connection with, the execution and
delivery by the Company of this Agreement, for the offer, issue, sale, execution
or delivery of the Shares, or for the performance by the Company of its
obligations under the Transaction Documents except for any filings required by
applicable securities laws or the laws of any jurisdiction outside the United
States.
2.4. LITIGATION. Except for those matters described on SCHEDULE 2.4 (IF
ANY), there is no litigation or governmental proceeding or investigation pending
or, to the knowledge of the Company, threatened against the Company affecting
any of its properties or assets, nor, to the best knowledge of the Company, has
there occurred any event or does there exist any condition on the basis of which
any litigation, proceeding or investigation might properly be instituted. The
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Company is not in default with respect to any order, writ, injunction, decree,
ruling or decision of any court, commission, board or other government agency,
which such default might have a material adverse effect on the business, assets,
liabilities, operations, Intellectual Property Rights (as defined hereinafter),
management or financial condition of the Company. There are no actions or
proceedings pending or, to the Company's knowledge, threatened (or any basis
therefor known to the Company) against the Company which might result, either in
any case or in the aggregate, in any material adverse change in the business,
operations, Intellectual Property Rights, affairs or financial condition of the
Company or in any of its properties or assets, or which might call into question
the validity of any of the Transaction Documents, any of the Shares, or any
action taken or to be taken pursuant hereto or thereto.
2.5. COMPLIANCE WITH OTHER INSTRUMENTS. The Company is in compliance in all
material respects with its Articles of Incorporation, Bylaws and resolutions of
its board of directors, each as amended and/or restated to date, and in all
respects with the material terms and provisions of all mortgages, indentures,
leases, agreements and other instruments by which it is bound or to which it or
any of its properties or assets are subject. The Company is in compliance in all
material respects with all judgments, decrees, governmental orders, laws,
statutes, rules or regulations by which it is bound or to which it or any of its
properties or assets are subject. Neither the execution and delivery of the
Transaction Documents nor the issuance of the Shares, nor the consummation or
performance of any transaction contemplated hereby or thereby, has constituted
or resulted in or will constitute or result in a default or violation of, create
a conflict with, trigger any "change of control" or other right of any person
under, or require any consent, waiver, release or approval under or with respect
to, any term or provision of any of the foregoing documents, instruments,
judgments, agreements, decrees, orders, statutes, rules and regulations.
2.6. TITLE TO ASSETS; INTELLECTUAL PROPERTY RIGHTS.
(a) The Company has good and marketable title in fee to such of its fixed
assets as are real property, and good and merchantable title to all of its other
assets, now carried on its books, free of any mortgages, pledges, charges,
liens, security interests or other encumbrances. The Company enjoys peaceful and
undisturbed possession under all leases and licenses under which it is
operating, and all said leases and licenses are valid and subsisting and in full
force and effect.
(b) The Company owns or has a valid right to use the patents, patent
applications, patent rights, trade secrets, confidential business information,
formulae, processes, laboratory notebooks, algorithms, copyrights, master works,
claims of infringement against third parties, licenses, permits, license rights,
contract rights with employees, consultants and third parties, trademarks,
trademark rights, inventions and discoveries, and all other intellectual
property, including, without limitation, all other such rights generally
classified as intangible, intellectual property assets in accordance with GAAP
(collectively the, "Intellectual Property Rights") owned or being used by the
Company to conduct its business as now operated and as now proposed by the
Company to be operated and, to the Company's knowledge, the conduct of its
business as now operated and as now proposed to be operated does not and will
not conflict with or infringe upon the Intellectual Property Rights of others.
The Company is not aware that any claim is pending or threatened against the
8
Company and/or its officers and employees to the effect that any such
Intellectual Property Right owned or licensed by the Company, or which the
Company otherwise has the right to use, is invalid or unenforceable by the
Company.
(c) The Company has taken reasonable measures to protect and preserve the
security, confidentiality and value of its Intellectual Property Rights,
including its trade secrets and other confidential information. The Company is
and will be the exclusive owner of all right, title and interest in its
Intellectual Property Rights as purported to be owned by the Company, and such
Intellectual Property Rights are valid and in full force and effect. Any new
inventions, secret processes or other Intellectual Property Rights or
improvements to such Intellectual Property Rights, whether the rights were owned
by or licensed by Company, shall be owned by Company and shall not be assigned
to or be permitted to be owned by an individual or agent employed by Company.
The Company has not received notice of and, to the Company's knowledge there are
no claims that the Company's Intellectual Property Rights or the use or
ownership thereof by the Company infringes, violates or conflicts with any such
right of any third party.
2.7. TAXES. Except as may be set forth on a Schedule 2.7 (if any) attached
to this Agreement, the Company has accurately prepared and timely filed all
federal, state and other tax returns required by law to be filed by it, has paid
or made provision for the payment of all taxes shown to be due and all
additional assessments, and adequate provisions have been made and are reflected
in the Company's financial statements for all current taxes and other charges to
which the Company is subject and which are not currently due and payable.
2.8. DISCLOSURE. There is no fact within the knowledge of the Company or
any of its existing directors which has not been disclosed herein or in writing
by them to Bellador and which materially adversely affects, or in the future in
their opinion may, insofar as they can now foresee, materially adversely affect
the business, operations, properties, Intellectual Property Rights, assets or
condition, financial or other, of the Company. Without limiting the foregoing,
the Company has no knowledge that there exists, or there is pending or planned,
any patent, invention, device, application or principle or any statute, rule,
law, regulation, standard or code which would materially adversely affect the
business, operations, Intellectual Property Rights, affairs or financial
condition of the Company.
2.9. BROKERS OR FINDERS. No person has or will have, as a result of the
transactions contemplated by this Agreement, any right, interest or valid claim
against or upon Bellador for any commission, fee or other compensation as a
finder or broker because of any act or omission by the Company or its respective
agents.
2.10. CAPITALIZATION; STATUS OF CAPITAL STOCK. As of the date hereof, the
Company has a total of 110,000,000 shares authorized for issuance, of which
100,000,000 are common shares with a par value of $.001, and 10,000,000 are
preferred shares with a par value of $.001. All the outstanding shares of
capital stock of the Company have been duly authorized, and are validly issued,
fully paid and non-assessable. None of the Company's outstanding securities or
authorized capital stock or the Shares is subject to any rights of redemption,
repurchase, rights of first refusal, preemptive rights or other similar rights,
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whether contractual, statutory or otherwise, for the benefit of the Company, any
stockholder, or any other person. Other than to the extent shares are issued in
the future pursuant to the Company's Stock Plan or otherwise with transfer
restrictions, there are no restrictions on the transfer of shares of capital
stock of the Company other than those imposed by relevant federal and state
securities laws and as otherwise contemplated by this Agreement. There are no
agreements, understandings, trusts or other collaborative arrangements or
understandings concerning the voting or transfer of the capital stock of the
Company to which the Company is a party, except to the extent of any options
pursuant to the Company's Stock Plan or shares issuable upon conversion of any
debt instruments. The Company does not have outstanding, and has no obligation
to grant or issue, any "phantom stock" or other right measured by the profits,
revenues or results of operations of the Company or any portion thereof except
to the extent provided in the Company's Stock Plan.
2.11. BOOKS AND RECORDS. The books of account, ledgers, order books,
records and documents of the Company accurately and completely reflect all
material information relating to the business of the Company, the location and
collection of its assets, and the nature of all transactions giving rise to the
obligations or accounts receivable of the Company.
ARTICLE III.
COVENANTS
3.1 COMPANY'S BOARD OF DIRECTORS. The Company agrees to (a) maintain the
size of its Board of Directors at five or more members and (b) to provide errors
and omissions insurance for its officers and directors with policy limits of no
less than $1,000,000. A certificate of insurance showing such coverage and
policy limit amount shall be provided to Bellador within 30 days of the
effective date of this Agreement.
3.2 INSPECTION RIGHTS. During the term of this Agreement and for one year
after termination, Bellador through its representatives shall have the right to
inspect, during ordinary business hours and upon reasonable written notice, such
of the business facilities, assets and properties and the books, records,
accounts, and financial statements of the Company as Bellador may reasonably
request. For purposes of this SECTION 3.2, "reasonable notice" shall be
interpreted to mean five business days. Financial records shall be made
available at the Company's Phoenix, Arizona, office.
3.3. INVESTOR REPORTS AND INVESTOR RELATIONS. The Company will provide
comprehensive, monthly, written reports on the business and financial affairs of
the Company to Bellador in a form suitable for electronic transmission to
Bellador's clients who have purchased, and are considering purchase of, the
Company's shares. These reports shall be provided every month about significant
business and financial news regarding the Company, including but not limited to
the progress of the Company regarding reaching the sales, marketing, production
and financial goals. The Company shall, subject to approval by Bellador from
time-to-time, retain an experienced investor relations firm and an experienced
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public relations firm. The Company will commit to two major investor/public
relations campaigns each year with a minimum budget of $150,000 each. The
Company agrees to conduct public relations and investor relations efforts with a
budget of at least $15,000.00 per month when the major campaigns are not in
progress. Subject to applicable securities laws, the Company shall (a)
disseminate or cause to be disseminated, newsworthy information about the
Company to the investment community, including, but not limited to, market
makers in the Company's stock, broker-dealers and analysts who follow the
Company and/or industries in which the Company participates, institutional
investors with a history of investing in companies similar to the Company in
nature and stage of development, and securities industry public relations wire
services, and (b) make good faith efforts to maintain a relationship with no
fewer than four active market makers.
3.4. CONDITIONS OF REGISTRATION. The parties hereby acknowledge and agree
that the Company shall be required, as a term of this Agreement, to refuse to
register any transfer of the shares not made in accordance with the provisions
of Regulation S, pursuant to an effective registration statement under the
Securities Act and applicable state laws, or pursuant to a valid exemption from
registration under the Securities Act and applicable state laws.
3.5 APPROVAL OF PURCHASERS' LEGAL COUNSEL FOR RESTRICTED SECURITIES OPINION
LETTERS. Company acknowledges that each Purchaser may use the services of Xxxxx
& Geotas, PLC, of Phoenix, Arizona, as legal counsel to determine whether, after
the required holding period, each proposed sale of the shares purchased under
this Agreement pursuant to Regulation S may be sold in compliance with Rule 144
and, if so, to issue an appropriate opinion letter. The Company agrees the
opinion letter forms attached hereto as EXHIBIT B are approved as the forms to
be used by Xxxxx & Geotas for such purposes.
3.6 COVENANT TO MAINTAIN STATUS AS A PUBLICLY OWNED, REPORTING AND TRADING
COMPANY. Subject to any applicable legal impediments, Company agrees to take all
steps reasonably necessary to maintain its status as a publicly owned, reporting
and trading company during the term of this Agreement.
3.7 ALLOCATION OF PROCEEDS FROM SALES OF THE SHARES. The Company and
Bellador agree as follows with respect to the Company's allocation of proceeds
from sales of the Shares:
(a) Marketing and sales: $720,000;
(b) General and administrative: $1,300,000,
(c) Inventory and development: $1,000,000;
(d) The Company shall set aside up to a maximum of $480,000, from
proceeds of sales of the Shares in order to fund the retention of an investor
relations firm and a public relations firm and to otherwise conduct investor
relations activity pursuant to SECTION 3.3. The Company shall provide a monthly,
written report of its investor relations and public relations efforts and
expenses to Bellador.
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ARTICLE IV.
MISCELLANEOUS
4.1. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of any
party to this Agreement in exercising any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
4.2. AMENDMENTS; WAIVERS AND CONSENTS. Any provision in this Agreement to
the contrary notwithstanding, and except as hereinafter provided, changes in,
termination or amendments of or additions to this Agreement may be made, and
compliance with any covenant or provision set forth herein may be omitted or
waived, if either Party shall obtain consent thereto in writing from the other
Party. Any waiver or consent may be given subject to satisfaction of conditions
stated therein and any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
4.3. ADDRESSES FOR NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be sent by
facsimile or Federal Express (with a signed receipt by the recipient being
required) to Company and/or to Bellador at the addresses for each set forth
above. Any notice or other communication shall be deemed given one business day
after sending by facsimile or two business days after deposit with an
internationally recognized express mail courier service, except for a notice
changing a party's address which shall be deemed given at the time of receipt
thereof.
4.4. COSTS; EXPENSES AND TAXES. Except as otherwise set forth in this
SECTION 4.4, each party shall bear its own costs and expenses incurred in
connection with this Agreement and any sales or purchases of Shares. Bellador
shall pay all closing costs related to purchases of Shares by its clients,
including but not limited to fees charged by the Escrow Agent. The Company shall
pay any and all stamp, or other similar taxes payable or determined to be
payable in connection with the execution and delivery of this Agreement, the
issuance of any securities and the other instruments and documents to be
delivered hereunder or thereunder, and agrees to save each Purchaser harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes.
4.5. EFFECTIVENESS; BINDING EFFECT; NO ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Company, Bellador and their
respective successors and assigns. Neither party may assign its rights or
obligations under this Agreement without prior written approval from the other
Party.
4.6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in the Transaction Documents or any other instrument or document
delivered in connection herewith or therewith shall survive the execution and
delivery hereof or thereof.
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4.7. PRIOR AGREEMENTS. This Agreement and the Transaction Documents
executed and delivered in connection herewith constitute the entire agreement
between the Parties with respect to the subject matter set forth herein and
therein and supersede any prior understandings or agreements concerning the
subject matter hereof, provided, however, that the Escrow Agreement attached
hereto is incorporated by reference and constitutes part of the agreement
between the Parties.
4.8. SEVERABILITY. The provisions of this Agreement and the Transaction
Documents are severable and, in the event that any court of competent
jurisdiction shall determine that any one or more of the provisions or part of a
provision contained herein or therein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
such Transaction Document and the terms of the Transaction Documents shall be
reformed and construed as if such invalid or illegal or unenforceable provision,
or part of a provision, had never been contained herein or therein, and such
provisions or part shall be reformed so that it would be valid, legal and
enforceable to the maximum extent possible.
4.9. GOVERNING LAW; VENUE. This Agreement shall be enforced, governed and
construed in accordance with the laws of Arizona without giving effect to choice
of laws principles or conflict of laws provisions. Any suit, action or
proceeding pertaining to this Agreement or any transaction relating hereto shall
be brought in the state or federal courts located in Phoenix, Arizona, United
States of America, and the undersigned hereby irrevocably consent and submit to
the jurisdiction of such courts for the purpose of any such suit, action, or
proceeding. Bellador acknowledges and agrees that venue hereunder shall lie
exclusively in Phoenix, Arizona, United States of America.
4.10. HEADINGS. Article, section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
4.11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the Parties hereto may execute this Agreement by signing
any such counterpart.
4.12. FURTHER ASSURANCES. From and after the date of this Agreement, upon
the request of Bellador or the Company, the Company and Bellador shall execute
and deliver such instruments, documents and other writings as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of the Transaction Documents.
4.13. INCORPORATION OF RECITALS. The Parties agree that the Recitals above
shall be incorporated within and shall be a part of the terms and conditions of
this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Stock Placement
Agreement to be executed as of the date first above written. .
AMERICAN SOIL TECHNOLOGIES, INC.
/s/ Xxxx Xxxxx
-------------------------
By: Xxxx Xxxxx
Its: President
BELLADOR ADVISORY SERVICES (LABUAN) LTD.
/s/ Xxxxx Xxxxx
-------------------------
By: Xxxxx Xxxxx
Its: Director
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