EXHIBIT 10.1
AFTER MARKET SUPPORT, LLC
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxxxxx Xxxxxxx, XX 00000-0000
(000) 000-0000 Fax (000) 000-0000
September 24, 2007
Xxxxxx X. Xxxxxxx
Chairman of the Board and CEO
American TonerServ Corporation
000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxx Xxxx, XX 00000
Re: After Market Support, LLC Consulting Agreement
Dear Xx. Xxxxxxx:
After Market Support, LLC, a Delaware limited liability company ("AMS"),
is engaged in the business of providing comprehensive investor relations
services designed specifically for micro-cap and small-cap public companies,
offering a strategic path to a NASDAQ Capital Market listing. American
TonerServ Corporation, a publicly owned and traded California corporation,
desires to engage AMS as its exclusive investor relations consultant. This
letter agreement (the "Agreement") will confirm our prior conversations,
negotiations and agreement regarding the Services (as that term is defined in
Section 1 below) to be performed by AMS as the exclusive investor relations
consultant to American TonerServ Corporation and its subsidiaries, affiliates
and controlled persons (collectively, the "Company") and the Company's duties
and obligations to AMS. This Agreement shall become effective upon its
execution by both AMS and the Company. AMS and the Company are sometime
individually referred to as a "Party" and collectively as the "Parties".
I. Performance of the Services. AMS covenants and agrees to execute
the strategic and tactical plans, objectives, the third party marketing plan
(the "Partner Marketing Plan") and underlying services set forth on Exhibit A
annexed hereto and hereby incorporated herein by reference (collectively the
"Services"). In doing so, AMS shall make itself available to consult with
the Board of Directors and the officers, senior managers, representatives and
agents of the Company at reasonable times during normal business hours,
concerning matters pertaining to the Company's investor relations and
aftermarket support plans and programs ("Program"). The primary objectives
of the Program will be to: (i) achieve recognition of the Company with the
financial community, investors and the public as a provider of print
management solutions to middle-market companies; (ii) recommend strategies to
enhance shareholder value; (iii) increase retail and institutional interest
in the Company's common stock, its only class of trading securities; and (iv)
achieve a listing upgrade to the NASDAQ Capital Market.
II. Performance by the Company. Pursuant to the terms of this
Agreement, the Company hereby covenants and agrees to follow the strategic
and tactical parameters of the Program and to cooperate with, aid and assist
AMS in its performance of the Services.
III. Term and Termination. The term of this Agreement shall commence
upon its execution by both AMS and the Company and shall continue for a
period of twelve (12) months, or such longer period as mutually agreed to by
the Parties in writing ("Term"). This Agreement shall be terminable by
either Party on 30 days prior written notice. This Agreement can also be
terminated on November 30, 2007 if the Financing (described below) is not
completed by that time. In the event of termination, all fees due to AMS
shall be paid including its Monthly Fee (as that term is defined in Section
IV below) through the date of the termination notice.
IV. AMS's Compensation and Payment. As its total compensation for the
Services to be rendered by AMS under this Agreement, the Company agrees to
compensate AMS in cash and securities as follows:
A. Cash. During the Term of this Agreement, the Company
covenants and agrees to pay to AMS a monthly fee of $10,000 per month
commencing October 1, 2007 (the "Monthly Fee"). Until the closing date of
the Company's upcoming financing of at least $5,000,000 (the "Financing"),
Monthly Fee payments shall be made in advance on the first day of each month
against invoices submitted by AMS. All Monthly Fee payments which have not
been received by AMS within 10 days of the due dates, as set out on the
monthly invoices, are subject to interest at the rate of 2% per month (or
such lesser rate as may be required by applicable law). Commencing with the
first full calendar quarter following the closing date of the Financing, the
Company covenants and agrees to pay the Monthly Fees to AMS, in advance, on a
quarterly basis at the rate of $30,000 per quarter against invoices submitted
by AMS. All Monthly Fee payments which have not been received by AMS within
ten days of the due dates, as set out on the quarterly invoices, are subject
to interest at the rate of 2% per month (or such lesser rate as may be
required by applicable law);
B. Common Stock. As additional consideration, and in recognition
of the unique nature and value of the Services the Company hereby sells to
AMS (or Xxxxxxx Investments, LLC ("Xxxxxxx Investments") and/or its
designees) an aggregate of 3,000,000 restricted (i.e., unregistered) shares
of the Company's Common Stock, par value of $0.001 per share (the "Shares"),
for $3,000. In the event that the Company does not raise at least $5,000,000
within a period of 12 months following the execution of this Agreement, AMS
(or Xxxxxxx Investments and/or its designees) covenants and agrees to return
200,000 Shares to the Company for every $1,000,000 below the $5,000,000 up to
an aggregate of 1,000,000 Shares to the Company, representing thirty-three
and one-third percent (33 1/3%) of the total Shares purchased by AMS (or
Xxxxxxx Investments and/or its designees) above. In the event that the
Company does not achieve a NASDAQ Capital Market listing within a period of
12 months following the execution of this Agreement, AMS (or Xxxxxxx
Investments and/or its designees) covenants and agrees to return an aggregate
of 1,000,000 Shares to the Company, representing thirty-three and one-third
percent (33 1/3%) of the total Shares purchased by AMS (or Xxxxxxx
Investments and/or its designees) above. In the event the Company terminates
AMS on or before November 30, 2007 subject to its sole discretion in Section
III of this Agreement, AMS (or Xxxxxxx Investments and/or its designees)
covenants and agrees to return 2,000,000 Shares to the Company for a total of
$2,000.
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C. Payments of Monthly Fees, Partner Marketing Fees and Expenses.
Within ten days following the closing date of the Financing, the Company
covenants and agrees: (i) to open a bank account at Xxxxxx Street State Bank
at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000 with the Company as the sole
signatory (the "Account"); and (ii) to deposit a sum equal to at least
$250,000 representing the Partner Marketing Fees (as that term is defined in
Section V below) plus the aggregate Monthly Fees due through the remainder of
the Term in the Account. All payments of the Monthly Fees, the Partner
Marketing Fees and the Expenses (as that term is defined in Paragraph IV D)
shall be made from the Account via federal wire transfer or ACH. The Company
shall obtain and deliver to AMS a Debit/Credit card (the "Card") for the
Account for the sole purpose of paying the Partner Marketing Fees and the
Expenses. Prior to the use of the Card by AMS, AMS shall give the Company 30
business days prior written notice containing a full detailed description of
the nature and amount of any Partner Marketing Fee sought to be paid; and 15
days prior written notice containing a full detailed description of the
nature and amount of any distribution costs, printing costs, airline travel,
hotel accommodations, road shows, investor conferences, and other ordinary
and necessary costs and expenses that AMS intends to incur in the performance
of the Services (collectively the "Expenses"). No payment shall be made out
of the Account until and unless the Company shall have furnished AMS with
prior written approval of such expenditure. When Expenses payments aggregate
$5,000, the Company shall deposit the amount thereof into the Account.
V. Partner Marketing. In consideration of AMS entering into this
Agreement, the Company hereby agrees to undertake the services and pay the
associated costs, fees and expenses (the "Partner Marketing Fees") in
connection with the Partner Marketing Plan set forth on Exhibit A annexed
hereto. The elements of the Partner Marketing Plan, the costs thereof and
the related timing may only be modified upon mutually written consent by the
Company and AMS. The Company agrees to deposit the at least $250,000
estimated cost of the Partner Marketing Plan as well the Monthly Fee in the
Account as set forth in Section IV D above.
VI. Compliance with Law. The Parties hereto acknowledge and agree that
AMS is not rendering legal advice or performing tax, accounting or auditing
services. The Company is solely responsible for compliance with all federal,
state and local laws, ordinances, regulations, statutes, rules, orders,
injunctions, judgments and decrees applicable to the Company (collectively,
the "Laws"), including, without limitation, federal and state securities
laws. The Company is responsible for ensuring that any presentation
(written, oral, web cast or other format), press release, marketing
materials, website materials, documents or disclosures comprising or
resulting from the Services are truthful and complete and otherwise comply
with all Laws.
VII. Independent Contractor. AMS is and will hereafter act as an
independent contractor and not as an employee of the Company and nothing in
this Agreement shall be interpreted or construed to create any employment,
partnership, joint venture, or other relationship between AMS and the
Company. AMS will not hold itself out as having, and will not state to any
person that AMS has, any relationship with the Company other than as an
independent contractor. AMS shall have no right or power to find or create
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any liability or obligation for or in the name of the Company or to sign any
documents on behalf of the Company. AMS shall be free to provide services
for other persons and entities, which services shall not be deemed to be in
conflict with the services to be performed by AMS under this Agreement;
provided, however, that AMS shall not, during the Term hereof, perform
services similar to those set forth herein to any third party that directly
competes with the business of the Company without the prior written consent
of the Company.
VIII. AMS's Related Parties. AMS is a wholly-owned subsidiary of
Xxxxxxx Investments, an investment advisor registered with the United States
Securities and Exchange Commission. Xxxxxxx Securities, LLC ("Xxxxxxx
Securities") is a 90% owned subsidiary of Xxxxxxx Investments. Xxxxxxx
Securities is a broker-dealer registered with the U.S. Securities and
Exchange Commission and various state securities commissions and agencies,
and is a member of the National Association of Securities Dealers (the
"NASD") and Securities Investor Protection Corporation. AMS hereby
acknowledges and agrees that the Services are being provided solely by AMS,
and that neither Xxxxxxx Securities nor Xxxxxxx Investments will be providing
any of the Services in any capacity whatsoever.
IX. Market-Making Activities. AMS hereby represents to the Company
that Xxxxxxx Securities, an affiliate of AMS, is currently registered and
licensed to publish a quotation for, and act as market-maker in, a security
under the rules of the NASD and, as such, Xxxxxxx Securities may, in its sole
discretion and subject to regulatory requirements, make a market in the
Company's common stock from time to time. The Company hereby acknowledges
and agrees that: (A) NASD Rule 2460 specifically prohibits broker-dealers
such as Xxxxxxx Securities from accepting any payment or other consideration,
directly or indirectly, from an issuer of a security, or any affiliate or
promoter thereof, for publishing a quotation, acting as market maker in a
security, or submitting an application in connection therewith; (B) Xxxxxxx
Securities maintains full compliance with this rule at all times, and the
Services to be provided hereunder are "bona fide services" as permitted by
Rule 2460; (C) the compensation payable to AMS under this Agreement is not,
and should not be construed to be, for the provision of any market-making
services; and (D) nothing contained in this Agreement shall be construed as
an agreement by AMS to cause Xxxxxxx Securities to make a market in the
Company's common stock.
X. Availability and Accuracy of Information. The Company shall
furnish AMS with all reasonable information and material requested or
required by AMS involving the Company including, without limitation,
information concerning historical and projected financial results, public and
regulatory filings, material contracts and commitments, proposed financings,
acquisitions or other transactions, and possible and known litigation,
environmental and other contingent liabilities of the Company
("Information"). The Company also agrees to make available to AMS such
representatives of the Company, including, among others, directors, officers,
employees, outside counsel and independent certified public accountants, as
AMS may reasonably request. The Company will promptly advise AMS of any
material changes in the Company's business or finances. The Company
represents and warrants that the Information provided or made available to
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AMS by the Company, at all times during the Term is and shall be complete and
true in all material respects and will, to the best of its knowledge and
belief, not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements thereof not
misleading in light of the circumstances under which such statements are
made. The Company further represents and warrants that any projections
provided to AMS will have been prepared in good faith and will be based upon
assumptions that, in light of the circumstances under which they are made,
are reasonable. The Company acknowledges and agrees that in performing the
Services AMS will be using and relying on the Information, without
independent investigation, appraisal or verification, and AMS assumes no
responsibility for the accuracy or completeness of the Information. The
Company is solely responsible for the compliance with Laws of any
presentation (written, oral, web cast or other format), press release,
marketing materials, website materials, documents or disclosures created
pursuant to this Agreement.
XI. Indemnification. The Company agrees to indemnify and hold harmless
AMS, its controlling persons and affiliates and their respective officers,
directors, shareholders, members, partners, employees, agents, advisors and
affiliates and control persons of any of the above (each an "Indemnified
Person") from and against all claims, liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind whatsoever, including, without limitation,
reasonable attorneys' fees (collectively, "Losses") that are related to or
arise out of (A) actions taken or omitted to be taken (including any untrue
statements made or any statements omitted to be made) by the Company, (B) any
breach of any warranty, representation or agreement of Company contained in
this Agreement, or (C) actions taken or omitted to be taken by an Indemnified
Person with the consent of or in conformity with the actions or omissions of
the Company. The Company shall not be responsible, however, for any Losses
pursuant to the preceding sentence that are determined in a final judicial
determination or final conclusion of an arbitrator engaged by the Parties
pursuant to the terms of this Agreement to have resulted from gross
negligence or reckless or wrongful conduct of AMS; and AMS agrees to
indemnify and hold Company harmless from any Losses incurred by the Company
arising solely out of: (i) the gross negligence and reckless or wrongful
conduct of AMS as determined in a final judicial determination or final
conclusion of an arbitrator engaged by the parties hereto pursuant to the
terms of this Agreement or (ii) any breach of any warranty, representation or
agreement of AMS contained in this Agreement. The Company agrees to
reimburse each Indemnified Person for all reasonable out-of-pocket expenses
(including reasonable fees and expenses of counsel for such Indemnified
Person) of such Indemnified Person in connection with investigating,
preparing, conducting or defending any such action or claim, whether or not
in connection with litigation in which any Indemnified Person is a named
party, or in connection with enforcing the rights of an Indemnified Person
under this Agreement. The indemnity agreements under this Section shall
survive the completion of the Services rendered by AMS and the termination or
expiration of this Agreement.
XII. Disclosure and Confidentiality. Any advice, descriptive
memoranda or other documentation rendered by AMS pursuant to this Agreement:
(A) may not be disclosed publicly or to any third party without the prior
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written approval of AMS; and (B) shall be reviewed by the Company for
compliance with all Laws prior to its public dissemination. The Company
shall clearly indicate to AMS any Information provided to AMS that has not
been publicly disclosed. All non-public information provided by the Company
to AMS shall be considered confidential information and shall be maintained
as such by AMS, except as required by law or as required to enable AMS to
perform its Services pursuant to this Agreement, until the same becomes known
to third parties or the public without release thereof by AMS.
XIII. Restricted Securities. AMS acknowledges, accepts and understands
that until and unless the same are registered under the Securities Act of
1933, as amended (the "33 Act"): (i) the Shares will be "restricted
securities" as that term is defined under the 33 Act; (ii) AMS will be
acquiring the Shares solely for its own account, for investment purposes and
without a view towards the resale or distribution thereof; (iii) the Shares
will be subject of stop transfer orders on the books and records of the
Company's transfer agent and shall be imprinted with a standard form of
restrictive legend; and (iv) any sale of the Shares will be accomplished only
in accordance with the 33 Act and the rules and regulations of the Securities
and Exchange Commission adopted thereunder.
XIV. Miscellaneous.
A. Use of AMS Name. Before the Company releases any information
referring to AMS's role as the Company's investor relations consultant under
this Agreement or uses AMS's name in a manner which may result in public
dissemination thereof, the Company shall furnish drafts of all documents or
prepared oral statements to AMS for comments, and shall not release any
information relating thereto without the prior written consent of AMS, which
shall not unreasonably be withheld. Nothing herein shall prevent the Company
from releasing any information to the extent that such release is required by
law.
B. Authorization. The Company represents and warrants that this
Agreement has been duly authorized and represents the legal, valid, binding
and enforceable obligation of the Company and that neither this Agreement nor
the consummation of any transactions contemplated hereby requires the
approval or consent of any governmental or regulatory agency or violates or
conflicts with any law, regulation, contract or order binding the Company.
C. Binding Effect. The terms, provision and conditions of this
Agreement are solely for the benefit of the Company and AMS and the other
Indemnified Persons and their respective heirs, successors and permitted
assigns and no other person or entity shall acquire or have a right by virtue
of this Agreement. This Agreement may not be assigned by either Party
without prior written consent of the other Party.
D. Entire Agreement. Each of the Parties hereby covenants that
this Agreement is intended to and does contain and embody herein all of the
understandings and agreements, both written and oral, of the parties hereby
with respect to the subject matter of this Agreement, and that there exists
no oral agreement or understanding, express or implied, whereby the absolute,
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final and unconditional character and nature of this Agreement shall be in
any way invalidated, empowered or affected. There are no representations,
warranties or covenants other than those set forth herein.
E. Amendment. No provision of this Agreement may be waived or
amended except in a writing signed by both Parties. A waiver or amendment of
any term or provision of this Agreement shall not be construed as a waiver or
amendment of any other term or provision.
F. Counterparts. This Agreement may be executed by facsimile
signatures and in multiple counterparts, each of which shall be deemed an
original. It shall not be necessary that each Party executes each
counterpart, or that any one counterpart be executed by more than one party
so long as each Party executes at least one counterpart.
G. Validity. If any provision of this Agreement is declared by
any court of competent jurisdiction to be invalid for any reason, such
invalidity shall not affect the remaining provisions of this Agreement.
H. Governing Law. This Agreement shall be governed by and
constructed under the laws of the State of Colorado without regard to such
state's conflicts of law principles, and may be amended, modified or
supplemented only by written instrument executed by Parties hereto.
I. Arbitration. All disputes, controversies or claims
("Disputes") arising out of or relating to this Agreement shall in the first
instance be the subject of a meeting between a representative of each Party
who has decision-making authority with respect to the matter in question.
Should the meeting either not take place or not result in a resolution of the
Dispute within twenty (20) business days following notice of the Dispute to
the other Party, then the Dispute shall be resolved in a binding arbitration
proceeding to be held in Denver, Colorado in accordance with the
international rules of the American Arbitration Association. The arbitrators
may award attorneys' fees and other related arbitration expenses, as well as
pre- and post-judgment interest on any award of damages, to the prevailing
Party, in their sole discretion. The Parties agree that a panel of three
arbitrators shall be required, all of whom shall be fluent in the English
language, and that the arbitration proceeding shall be conducted entirely in
the English language. Any award of the arbitrators shall be deemed
confidential information, except to the extent public disclosure of such
information is required by applicable securities laws or regulations.
J. Notices. All notices required by the terms of this Agreement
shall be in writing and delivered to the other Party at the addresses set
forth below, either by personal delivery, by a recognized international
overnight courier service, or by facsimile. Notices will be deemed given as
of the date of receipt, which date shall be evidenced by the signature of an
authorized representative of the receiving party or by written evidence of a
successful transmission of either a facsimile or e-mail message.
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If to AMS: If to Company:
After Market Support, LLC American TonerServ Corporation
Xxxxxx X. Xxxxx Xxxxxx Xxxxxxx
0000 XXX Xxxxxxx, Xxxxx 0000 Chairman of the Board and CEO
Xxxxxxxxx Xxxxxxx, XX 00000-0000 000 Xxxxxxxx Xxxx., Xxxxx 000
(000) 000-0000 Telephone Xxxxx Xxxx, XX 00000
(000) 000-0000 Fax (000) 000-0000 Telephone
(000) 000-0000 Fax
If the forgoing correctly sets forth the entire understanding and
agreement between the Company and AMS, please so indicate by executing this
Agreement as indicated below and returning an executed copy to AMS together,
whereupon this Agreement shall constitute a binding agreement as of the date
first above written.
ACCEPTED AND AGREED TO:
AMERICAN TONERSERV CORPORATION AFTER MARKET SUPPORT, LLC
By:/s/ Xxxxxx Xxxxxxx By:/s/ X. Xxxxxxx
Xxxxxx Xxxxxxx, Chairman and CEO Xxxxxxx X. Xxxxxxx, Manager
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