Exhibit 1.01
BROKER-DEALER AGREEMENT
THIS BROKER-DEALER AGREEMENT (the "Agreement") is entered into as of the
6th day of October, 2000, by and between Medical Capital Management, Inc., a
Delaware corporation (the "Issuer"), and First Securities USA, Inc., a Nevada
corporation (the "Broker-Dealer" and together with the Issuer, the "Parties")
for the purpose of engaging Broker-Dealer to offer, sell and distribute certain
secured notes (the "Notes") of the Issuer on a best-efforts basis (the
"Offering"), as hereinafter provided.
RECITALS
WHEREAS, Broker-Dealer is a securities dealer certified with the State of
Florida, registered with the Securities Exchange Commission ("SEC"), is a member
of the National Association of Securities Dealers, Inc. ("NASD") and has
experience in the sale and distribution of securities similar to the Notes; and
WHEREAS, The Issuer has prepared a certain note issuance and security
agreement and has filed a Registration Statement on Form SB-2, including the
prospectus (the "Prospectus") contained therein (together with the Prospectus,
the "Registration Statement") under the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder (collectively, the
"Act") relating to the Offering; and
WHEREAS, Broker-Dealer desires to sell and distribute the Notes on behalf
of Issuer on a best-efforts basis.
NOW, THEREFORE, in consideration of their mutual covenants and
undertakings, the Parties do hereby agree as follows:
SECTION 1. SERVICES OF BROKER-DEALER. Broker-Dealer, through its agents and
sales employees, agrees to use its best efforts to sell and distribute the Notes
to prospective investors pursuant to the terms of the Offering. No sales will be
made prior to the Registration Statement being declared effective (the "SEC
Effective Date") by the SEC or prior to the Notes being registered for sale
under the Blue Sky Laws of each respective state in which offers or sales of the
Notes are being made, as set forth on Schedule A hereto. Notes will be offered
in aggregate principal amount of up to $75,000,000 for sale to investors with a
minimum purchase by each investor of $5,000 in aggregate principal amount and
additional incremental purchases $1,000 over that minimum amount, per investor.
SECTION 2. EFFECTIVE TERM. This Agreement shall be effective as of the date
first above written (the "Effective Date") and shall continue in effect until
the earlier of (a) one year from the Effective Date, unless extended by the
mutual written consent of the Parties, or (b) the expiration, cancellation or
withdrawal of the Offering.
SECTION 3. OBLIGATIONS OF BROKER-DEALER.
(a) BEST EFFORTS BASIS. The Notes will be sold solely on a
best-efforts basis. Broker-Dealer makes no warranty as to its ability to
sell and distribute any minimum dollar amount of Notes. In this context,
"best-efforts" means that Broker-Dealer will staff the sales effort of the
Notes in a manner not less favorable than other projects in which
Broker-Dealer has undertaken to sell securities on a "best-efforts" basis.
(b) INVESTOR SUITABILITY. Broker-Dealer shall offer and sell the Notes
only to investors who Broker-Dealer in good faith believes meet the
suitability standards prescribed by the rules of the NASD. Broker-Dealer
shall use its reasonable efforts to ascertain the suitability of all
prospective investors, as required by the rules of the NASD.
(c) REGISTRATION STATEMENT. Broker-Dealer acknowledges that the
Offering is being made pursuant to a Registration Statement filed with the
SEC under the Act and will comply with the prospectus delivery requirements
of the Act when selling the Notes.
(d) MINIMUM PURCHASE. Broker-Dealer shall not sell fewer than $5,000
in aggregate principal amount of Notes to any one purchaser without the
prior written consent of Issuer.
(e) RECORDS. Broker-Dealer shall deliver to Issuer copies of all
records relevant to the sale of Notes, which records shall include, but not
be limited to, subscription agreements and investor data records relating
to purchases of Notes.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer
represents and warrants to Broker-Dealer that upon execution of this Agreement
and on the SEC Effective Date:
(a) The Registration Statement is true, complete and correct and does
not contain any untrue statement of a material fact or omit to state a
material fact required by any applicable law or regulation or necessary in
order to make the statements therein, in light of the circumstances under
which they are made, not misleading;
(b) The Issuer is validly organized, existing and in good standing,
and this Agreement has been duly authorized, executed and delivered by the
Issuer; and
(c) The performance of this Agreement will not violate or constitute a
default under the terms of any agreement or arrangement to which the Issuer
is a party.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BROKER-DEALER. Broker-Dealer
represents and warrants to the Issuer that upon execution of this Agreement and
at all times during the term of this Agreement:
(a) Broker-Dealer is validly organized, existing and in good standing
in its state of incorporation, and that this Agreement has been duly
authorized, executed and delivered by Broker-Dealer;
(b) The performance of this Agreement will not violate or constitute a
default under the terms of any agreement or arrangement to which
Broker-Dealer or any of its affiliates is a party;
(c) Broker-Dealer is a member in good standing of the NASD;
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(d) Broker-Dealer is a registered broker-dealer under the Act and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
of the SEC promulgated thereunder (the "Exchange Act"); and
(e) Broker-Dealer is registered with and has obtained all licenses and
consents necessary to sell the Notes in each state in which Broker-Dealer
is offering the Notes for sale.
SECTION 6. COVENANTS. Issuer covenants and agrees, for the specific benefit
of Broker-Dealer, that:
(a) If at any time an event shall have occurred as a result of which
the Registration Statement will contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend or supplement the Registration Statement in
order to comply with applicable law, Issuer shall notify Broker-Dealer
promptly in writing and will prepare and deliver to Broker-Dealer an
appropriate amendment or supplement; and
(b) The Issuer shall notify Broker-Dealer promptly, in writing, of any
material adverse change in the financial condition or business of Issuer.
SECTION 7. INDEMNIFICATION. Broker-Dealer shall indemnify and hold harmless
the Issuer against any and all losses, claims, damages, liabilities, and
expenses (including reasonable attorneys' fees and costs of investigation) to
which the Issuer may become subject insofar as such losses, claims, damages,
liabilities, or expenses arise out of or are based upon:
(a) Any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement to the extent, and only to the
extent, that any such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Issuer by or on behalf of
Broker-Dealer specifically for use with reference to the Registration
Statement in the preparation of the Registration Statement;
(b) The violation by Broker-Dealer, or any of its employees, agents,
independent contractors or other personnel of any of the provisions of the
Act or the Exchange Act, or other applicable law; or
(c) The sale of the Notes to any investor who does not meet the
suitability standards required by the rules of the NASD. The obligations of
the Parties to this Agreement under the preceding indemnification
provisions shall be in addition to any liability which they otherwise may
have.
SECTION 8. WITHDRAWAL. Broker-Dealer, in its sole discretion, may withdraw
from its participation in the Offering and this Agreement without penalty at any
time upon 48-hours written notice to the Issuer, if, after diligently reviewing
the contents of the Registration Statement, the Broker-Dealer finds that there
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exist terms or assumptions which do not fairly represent the facts of the
Offering or the Issuer's business to prospective investors.
SECTION 9. COMPENSATION. Issuer shall compensate Broker-Dealer in an amount
equal to 3.5% to 10% of the principal amount of the Notes sold by that
Broker-Dealer, as set forth on Exhibit A. Said compensation shall be due and
payable within ten days of receipt of good funds by the Issuer as payment in
full of the purchase price of the Notes sold by the Broker-Dealer.
SECTION 10. CONFIDENTIALITY/NON-DISCLOSURE. All business, financial and
other proprietary information given by any Party to the other in connection with
the Offering shall be received in confidence and used only for the purposes of
the Offering. The Parties shall undertake reasonably appropriate safeguards to
assure the non-dissemination of such information to third parties. Broker-Dealer
shall not make any disclosures or representations regarding the Issuer or the
Offering in connection with the sales of the Notes other than those contained in
the Registration Statement.
SECTION 11. SURVIVAL. The representations, warranties, covenants and
agreements contained in this Agreement shall be continuing representations,
warranties, covenants and agreements and shall survive and remain in full force
and effect after the Effective Date, the SEC Effective Date and the closing of
the sales of the Notes. No investigation by or on behalf of any party to this
Agreement shall constitute a waiver of any representation, warranty, covenant or
agreement contained herein.
SECTION 12. NO WAIVER. The failure on the part of any party to this
Agreement to exercise, or the delay in the exercise of, any right, power or
remedy hereunder shall not operate as a waiver thereof. Any single or partial
exercise of any right, power or remedy hereunder shall not preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
SECTION 13. ENFORCEABILITY. If any provision or any portion of any
provision of this Agreement is held to be unenforceable or invalid by a court of
competent jurisdiction, the validity and enforceability of the enforceable
portion of any such provision and the remaining provisions of this Agreement
shall not be adversely affected thereby.
SECTION 14. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada.
SECTION 15. NOTICES. All notices, requests, demands and communications that
are required, provided for or contemplated in this Agreement must be in writing
and will be deemed to have been given when personally delivered to the party to
whom addressed or 48 hours after deposit in any United States post office, sent
by registered or certified mail, return receipt requested, postage prepaid to
the Parties at the following addresses:
If to Issuer: Medical Capital Management, Inc.
0000 Xxxx Xxxx
Xxxx, Xxxxxx 00000
Attn: Xxx Xxxxx, Chief Executive Officer
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If to Broker-Dealer: First Securities USA, Inc.
00000 XX Xxxxxxx 00 Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxxxxxxxxx, President
SECTION 16. DISPUTE RESOLUTION. Any controversy or dispute arising out of
or in connection with this Agreement shall be resolved exclusively by the
American Arbitration Association of Los Angeles, which decision shall be
binding.
SECTION 17. ATTORNEYS' FEES. In the event of any litigation or other
dispute resolution between the parties to enforce any provision of this
Agreement or otherwise with respect to the subject matter hereof (including any
bankruptcy proceeding), the unsuccessful party in such litigation shall pay to
the successful party all costs and expenses, including reasonable attorneys'
fees incurred by the successful party.
SECTION 18. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the Parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements and understanding of the
Parties in connection therewith. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by the Parties
hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
MEDICAL CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxxxxxx, Chief
Operating Officer
BROKER DEALER
FIRST SECURITIES USA, INC.
By: /s/ Xxx Xxxxxxxxxxx
------------------------------------
Xxx Xxxxxxxxxxx, President
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EXHIBIT A
TO: BROKER-DEALER AGREEMENT
This Agreement provides for the following commission rate structure based
on the class of Note sold.
CLASS A - Commission paid at the rate of 3.5%
CLASS B - Commission paid at the rate of 6.5%
CLASS C - Commission paid at the rate of 8.5%
CLASS D - Commission paid at the rate of 10%
