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EXHIBIT 1.2
CASTLE SECURITIES CORP.
00 Xxxxxx Xxxxxx, Xxxxx #00
Xxxxxxxx, Xxx Xxxx 00000
(000) 000-0000
EXHAUST TECHNOLOGIES, INC.
(a Washington corporation)
Up to 1,000,000 Units
and
1,000,000 Class A Common Stock Purchase Warrants
SELECTED DEALER'S AGREEMENT
CASTLE SECURITIES CORP., as Underwriter for EXHAUST TECHNOLOGIES,
INC., a Washington corporation (the "Company"), invite your
participation as a Selected Dealer ("Selected Dealer") in an offering
of up to 1,000,000 Units at $5.10 per Unit and 1,000,000 Class A Common
Stock Purchase Warrants ( "Additional Warrants") at $.10 per Warrant.
Each Unit shall consists of one (1) share of Common Stock, $.00001 par
value per share, and one (1) Class A Common Stock Purchase Warrant.
Each Class A Warrant included in the Units as well each Additional
Warrant shall entitle the holder thereof to purchase one share of
Common Stock, par value $.00001 per share, at a price of $7.00
exercisable at any time from the Separation Date (as hereinafter
defined) through ________________, 2000 ("Exercise Period One") and at,
a price of $10.00 from _______________, 2000 to _______________, 2001
(Exercise Period Two"). Moreover, the respective exercise prices may be
adjusted pursuant to the anti-dilution provisions contained therein. In
addition, the Class A Common Stock Purchase Warrants shall be callable
at any tine solely during the exercise period at $.01 per Warrant on at
least thirty (30) days' written notice and provide that the closing bid
price for the Common Stock of the Company on each day during the thirty
(30) trading days immediately preceding the date of the notice during
Exercise Period One is at least $10.00 per share and is at least $15.00
per share during Exercise Period Two. The Underwriter is offering the
Units and the Additional Warrants pursuant to a Registration Statement
filed under the Securities Act of 1933, as amended ("the 33 Act"),
subject to the, terms of (a) its Underwriting Agreement with the
Company, (b) this Agreement and (c) the Underwriter's instructions
which, may be forwarded to the Selected Dealers from time to time. This
invitation is made by the Underwriter only if the Units may be lawfully
offered by dealers in your state. The terms and conditions of this
invitation are as follows:
1. Acceptance of Orders. Orders received from the Selected Dealers
will be accepted only at the price, in the amounts and on the terms
which are set forth. in the Company's current Prospectus.
2. Selling Concession. All Selected Dealers will be allowed on all
Units sold by them, a commission of ____________ of the total sales
prices, respectively (________________ of the full 10% commission,
respectively, or, ________________ per Unit or per Additional Warrant,
respectively) as shown in the Company's current Prospectus.,
3. Selected Dealers Sales. The Selected Dealer shall purchase the
Units and/or Additional Warrants for its customers only through the
Underwriter, and all such purchases shall be made only upon orders
already received by the Selected Dealer from its customers. No Xxxxx,
00
and/or Additional Warrants may be purchased for the account of the
Selected Dealer or its principals. In all sales of the Units and/or
Additional Warrants to the public, the Selected Dealer shall confirm
as agent for another.
4. Delivery of Funds. The Selected Dealer shall promptly transmit
to the escrow agent no later than 12 noon of the day subsequent to the
receipt of funds all funds received from purchasers and a confirmation
or a record of each sale which shall set forth the name, address and
social security, number of each individual purchaser, the number of
Units and/or Additional Warrants purchased, and, if there is more than
one registered owner, whether the certificate or certificates
evidencing the securities comprising the Units as well as the
Additional Warrants purchased are to be issued to the purchaser in
joint tenancy or otherwise. Also, each Selected Dealer shall report, in
writing, to the Underwriter the number of persons in each such state
who purchase the Units and/or Additional Warrants from Selected
Dealers. Each sale may be rejected by the Underwriter; and if rejected,
the escrow agent will return to the purchaser all funds paid by the
purchaser which have been received by the escrow agent.
5. Payment for Sales. Payment for the Company's Units and/or
Additional Warrants shall accompany all confirmations and applications
and shall be in clearing house funds. All checks and other orders for
the payment of money shall be made payable to the escrow agent for
deposit into an escrow, account maintained at ________________________
entitled "Escrow Account for the Benefit of Subscribers to EXHAUST
TECHNOLOGIES, INC.'s securities." Units and/or Additional Warrants sold
by the Selected Dealer will be available for delivery at American
Securities Transfer and Trust Co., Inc., unless other arrangements are
made with the Underwriter for delivery.
6. Deposit of Sales Proceeds. The proceeds from the sale of all
of the Units and/or Additional Warrants sold in the offering (the
"offering proceeds") will be deposited in the escrow account mentioned
in Paragraph 5 hereof. In the event that offering proceeds in an amount
of at least $5.10 and/or $.10 have not been deposited and cleared
within ninety (90) days from the date the Company's Registration
Statement is declared effective (unless, extended by mutual written
consent for an additional ninety (90) days) by the Securities and
Exchange Commission, the full amount paid will be refunded to the
purchasers. No certificates evidencing, the securities comprising the
Company's Units and/or Additional Warrants will be issued, unless and
until offering proceeds in an amount of $5.10 and $.10, respectively
have been cleared and such funds have been released and the net
proceeds thereof delivered to the Company. If offering proceeds in an
amount set forth above are cleared within the time period provided
above, all amounts so deposited will be delivered to the Company,
except that the Underwriter may deduct as underwriting commissions from
the proceeds of the offering prior to the delivery of such proceeds to
the Company. No commissions will be paid by the Company of concessions
allowed by the Underwriter unless and until offering proceeds in a
minimum amount set forth above have been cleared and such funds have
been released and the net proceeds thereof delivered to the Company.
However, it is understood that if the required funds relating to at
least one (1) Unit and/or one (1) Additional Warrants are received and
deposited within the Escrow Account referred in Paragraph 4 hereof, but
not cleared within the time set forth above, then up to an additional
five (5) business days shall be allowed for the sole purpose of
clearance of such funds and the Closing of the offering.
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7. Failure of Order. If an order is rejected or if a payment is
received which proves insufficient, any compensation paid to the
Selected Dealer shall be returned either by the Selected Dealer in cash
or by a charge, against the account of the Selected Dealer, as the
Underwriter may elect.
8. Conditions of Offering. All sales, will be subject to delivery
by the Company of certificates evidencing the securities.
9. Selected Dealer's Undertakings. No person is authorized to make
any representations concerning the Company's Units and/or the
Additional Warrants except those contained in the Company's then
current Prospectus. The Selected Dealer will not sell the Company's
Units and/or the Additional Warrants pursuant to this Agreement unless
the Prospectus is furnished to the purchaser at least forty-eight (48)
hours prior to the mailing of the confirmation of sale, or is sent to
such persons under such circumstances that it would be received by him
48 hours prior to his receipt of a confirmation of the sale. The
Selected Dealer agrees not to use any supplemental sales literature of
any kind without prior written approval of the Underwriter unless it
is furnished by the Underwriter for such purpose. In offering and
selling the Company's Units and/or Additional Warrants, the Selected
Dealer will rely solely on the representations contained in the
Company's then current Prospectus. Additional copies of the then
current Prospectus will be supplied by the Underwriter in reasonable
quantities upon request.
The Selected Dealer understands that during the ninety (90) day
period after the first date upon which the Company's Units and/or
Additional Warrants are bona ride offered to the public, all dealers
effecting transactions in the Company's Units and/or Additional
Warrants may be required to deliver the Company's current Prospectus to
any purchaser thereof prior to or concurrent with the receipt of the
confirmation of sale. Additional copies of the then current Prospectus
will be supplied by the Underwriter in reasonable quantities upon
request.
10. Representations and Agreements of Selected Dealers. By
accepting this Agreement, the Selected Dealer represents that either
(a) it is registered as a broker-dealer under the Securities and
Exchange Act of 1934, as amended; is qualified to act as a dealer in
the states or other jurisdictions in which it offers the Company's
Units and/or Additional Warrants; is a member in good standing with the
National Association of Securities Dealers, Inc. ("NASD"), and will
maintain such registrations, qualifications and memberships throughout
the term of this Agreement or (b) is, a foreign bank, dealer or
institution not eligible for membership in the NASD which agrees to
make no sales in the United States, its territories or possessions or
to persons who are citizens thereof or residents therein, and in making
other sales to comply with NASD's interpretation with respect to
rewriting and withholding. Further, the Selected Dealer agrees to
comply with all applicable Federal laws, the laws of the states or
other jurisdictions concerned and the Rules and Regulations of the
NASD, and in particular the Selected Dealer agrees that in connection
with any purchase or sale of the Company's Units and/or Additional
Warrants wherein a selling concession, discount or other allowance is
received or granted (1) that it will comply with the decisions of
Conduct Rule 2420 of the NASD or (2) if a non-NASD member, broker or
dealer in a foreign country, it will also comply with the provisions of
the successor Conduct Rules to Sections 8 and 36 of Article III of the
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NASD's Rules of Fair Practice, thereof as though it were a NASD member
and with the provisions of Conduct Rule 2420 Subsection (c) thereof as
such applies to a non-NASD member, broker, or dealer in a foreign
country. Further, the Selected Dealer agrees that it will not offer to
sell the Company's Units and/or Additional Warrants in any state or
jurisdiction except the states in which it is licensed as a broker-
dealer under the laws of such states. The Selected Dealer shall not be
entitled to any compensation during any period in which it has been
suspended or, expelled from membership in the NASD.
11. Selected Dealer's Employees. By accepting this Agreement,
the Selected Dealer has assumed full responsibility for proper
training and instruction of its representatives concerning the selling
methods to be used in connection with the offer and sale of the
Company's Units and/or Additional Warrants, giving special emphasis to
the principles of suitability and full disclosure to prospective
investors, and prohibitions against "free-riding and withholding."
12. Indemnification. The Company has agreed in the Underwriting
Agreement to indemnify and hold harmless the Underwriter (including
within the definition of Underwriter, any member of the Selected Dealer
group) and each person, if any, who controls the Underwriter within,
the meaning of Section 15 of the 33 Act or under any other statute or
at common law and will reimburse the Underwriter and each such person
specified as above for any legal or other expenses (including the cost
of any investigation and preparation) reasonably incurred by them or
any of them in connection with any litigation or claim whether or not
resulting in any liability, but only insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective amendment
thereto or in any Blue Sky application or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein necessary to make the statements therin
not misleading, all as of the date when the Registration Statement or
such post-effective amendment, the filing of any such Blue Sky
application as the case may be, becomes effective or any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus or final prospectus (as amended or
supplemented thereto), or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, not misleading;
provided however, that the indemnity agreement contained in this
paragraph 12 shall not apply to amounts paid in settlement of any such
litigation if such settlement is effected without the consent of the
Company nor shall it extend to any Underwriter or any person
controlling the Underwriter in respect of any such losses, claims,
damages, liabilities or actions of any such losses, claims, damages,
liabilities or actions arising out of, or based upon any such untrue
statement or alleged untrue statement, or any such omission, if such
statement or omission was made in reliance upon and in conformity with
written information furnished to the Company by the Underwriter on
behalf of such Underwriter specifically for use in connection with the
preparation of the Registration Statement, the Prospectus or any such
amendment thereof or supplement thereto or Blue Sky application.
13. Selected Dealer's Indemnification. The Selected Dealer agrees
to indemnify and hold harmless the Company, the, Underwriter, each of
the Company's officers and directors who signed the Registration
Statement, and each person, if any, who controls the Company and the
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Underwriter within the meaning of Section 15 of the 33 Act, against any
and all loss, liability, claim, damage and expense (a) described in the
indemnity contained in Paragraph 12 of this Agreement, but only with
respect to untrue statements or omissions or alleged untrue. statements
or omissions, made in the Registration Statement or the Prospectus or
any amendment or supplement thereto in reliance upon and in conformity
with written information furnished to the Company by such Selected
Dealer expressly for use in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or supplement
thereto) or (b) based upon allegpd misrepresentations or omissions to
state material facts in connection with statements made by the Selected
Dealer or the Selected Dealer's salesmen orally or by other means; and
the Selected Dealer will reimburse the Company, the Underwriter, each
of the Company's officers and directors who signed the Registration
Statement and each person, if any, who controls the Company and the
Underwriter within the meaning of Section 15 of the 33 Act, for any
legal or other expenses reasonably incurred in connection with the
investigation of or the defending of any such action or claim.
14. Required Notices and Claims. Each indemnified party is
required to give prompt notice to each indemnifying party of any action
commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may otherwise have on account of
the indemnification provisions hereof. Any indemnifying party may
participate at its own expense in the defense of such action. If it so
elects within a reasonable time after receipt of such notice, an
indemnifying party, jointly with any other indemnifying parties
receiving such notice, may assume the defense of such action with
counsel chosen by it and approved by the indemnified parties defendant
in such action, unless such indemnified parties reasonably object to
such assumption on the ground that there may be legal defenses
available to them which are different from or in addition to those
available to such indemnifying parties and shall not be liable for any
fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action. In no event shall the
indemnify parties be liable for the fees and expenses of more than one
counsel for all indemnified parties in connection with any one action
or separate but similar or related actions in the same jurisdiction
arising out of the same general alleptiom or circumstances.
15. Expenses. No expenses will be charged to Selected Dealers. A
single transfer tax, if any, on the sale of the Units and/or Additional
Warrants by the Selected Dealer to its customers will be paid when such
Units and/or Additional Warrants are delivered to the Selected Dealer
for delivery to its customers. However, the Selected Dealer will pay
its proportionate share of any transfer tax or any other tax (other
than the single transfer tax described above) if any such tax shall be
from time to time assessed against the Underwriter and other Selected
Dealers.
16. Communications. All communications to the Underwriter should
be sent to the address shown in the first page of this Agreement. Any
notice the Selected Dealer shall be properly given if mailed or
telephoned to the Selected Dealer at the address given below. This
Agreement shall be construed according to the laws of the State of New
York.
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17. Assignment and Term This Agreement may not be assigned by the
Selected Dealer without the Underwriter's written consent. This
Agreement will terminate upon the termination of the offering of the
Units and/or Additional Warrants except that either party may terminate
this Agreement at any time by giving written, notice to the other.
CASTLE SECURITIES CORP.
BY: __________________________________
Date of Acceptance: _____________________________
Dealer Name: _____________________________
Address: _____________________________
_____________________________
_____________________________
Accepted: _____________________________
Telephone No.: _____________________________
IRS Employer I.D. No.: _____________________________
Unit Allocation _____________________________
