Exhibit 1.2
DIVERSIFIED SECURITY SOLUTIONS, INC.
1,500,000 Shares of Common Stock
($.01 Par Value)
SELECTED DEALER AGREEMENT
New York, New York
July __, 2001
Dear Sirs:
1. A registration statement on Form SB-2 (the "Registration Statement")
filed by Diversified Security Solutions, Inc. (the "Company") under the
Securities Act of 1933, as amended (the "Securities Act"), covering 1,500,000
shares of the common stock of the Company (the "Common Stock"), $.01 par value,
plus up to 225,000 additional shares of such Common Stock which are subject to
an option for the purpose of covering over-allotments, has become effective. The
Shares (which term as used in this Agreement means such 1,500,000 shares plus
any of such 225,000 shares purchased upon exercise of such option) are being
sold for the account of the Company and are described in the enclosed final
prospectus (the "Prospectus"). We are acting as the Underwriter in all matters
connected herewith and with the purchase of the Shares of the Company. We are
individually and not in our capacity as Representative are severally, and not
jointly, offering certain of the Shares for purchase by a selected group of
dealers (the "Selected Dealers") as principals on the terms and conditions
stated herein.
Authorized Public
Offering Price: $6.50 per Share.
Dealers' Selling
Concession: Not to exceed $.___ per Share, except that in the event
that prior to the termination of this Agreement (or
prior to such earlier date as we may determine) we
purchase or contract to purchase, in the open market or
otherwise, any of the Shares delivered to you, we
reserve the right to charge you and you agree to repay
us on demand the amount of the dealer's selling
concession allowed to you.
Reallowance: You may reallow not more than $.10 per Share as a
selling concession on the Shares to dealers that are
members in good standing of the National Association of
Securities Dealers, Inc. (the "NASD") or to foreign
dealers not eligible to be members of the NASD that
agree to abide by the NASD's Rules of the Association.
Delivery and Payment: On or about __________, 2001, or such later date as we
may advise on not less than one day's notice to you, at
the offices of GunnAllen Financial, Inc. or at such
other place as we may specify on not less than one
day's notice to you. Payment is to be made, against
delivery, at the full public offering price, by a
certified or official bank check in New York Clearing
House funds to the order of GunnAllen Financial, Inc.
Termination: This Agreement will terminate at the close of business
on the 45th day following the effective date of the
Registration Statement unless extended, at our
discretion, for a period or periods not to exceed in
the aggregate 45 additional days; but we may terminate
this Agreement, whether or not extended, at any time
without notice.
2. Any of the Shares purchased by you hereunder are to be offered by
you to the public at the public offering price, except as herein otherwise
provided and except that a reallowance from such public offering price not in
excess of the amount set forth in the Prospectus under the caption
"Underwriting" may be allowed as consideration for services rendered in
distribution to dealers that (a) are actually engaged in the investment banking
or securities business; (b) execute the written agreement prescribed by Rule
2740(c) of the NASD's Rules of the Association; and (c) are
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either members in good standing of the NASD or foreign banks, dealers or
institutions not eligible for membership in the NASD which represent to you that
they will promptly reoffer such Shares at the public offering price and will
abide by the conditions with respect to foreign banks, dealers and institutions
set forth in your confirmation below. We, in turn, are prepared to receive
orders subject to confirmation and allotment by us. We reserve the right to
reject any order in whole or in part or to allot less than the number of Shares
applied for. Orders transmitted by telephone must be promptly confirmed by
letter or telegram.
3. You, by becoming a Selected Dealer, irrevocably agree (a) to take up
and pay for the number of Shares allotted and confirmed to you; (b) not to use
any such Shares to reduce or cover any short position you may have; and (c) upon
our request, to advise us of the number of Shares purchased from us, as manager
of the selling group comprised of all the Selected Dealers (the "Selling
Group"), remaining unsold by you and to resell to us any or all of such unsold
Shares at the public offering price stated above, less all or such part of the
concession allowed you as we may determine. You are not authorized to give any
information or to make any representations other than those contained in the
Prospectus or any supplements or amendments thereto. You confirm that you have
distributed expeditiously copies of a preliminary prospectus complying with Rule
430 under the Securities Act to all persons to whom you expected to mail
confirmation of sale not less than 48 hours prior to the time you expected to
mail any such confirmation, and that you have informed us by telegram of
compliance with this provision not later than 2:00 P.M., New York City time, on
the day prior to the anticipated effective date of the Registration Statement.
You confirm that you are conversant with the requirements for delivery of the
Prospectus pursuant to Rule l5c2-8 under the Securities Exchange Act of 1934 and
that you will comply with all of the applicable provisions thereof.
4. You agree that until termination of this Agreement you will not make
purchases or sales of Shares except (a) pursuant to this Agreement; (b) pursuant
to authorization received from us; or (c) in the ordinary course of business as
broker or agent for a customer pursuant to an unsolicited order.
5. Additional copies of the Prospectus and any supplements or
amendments thereto will be supplied in reasonable quantities upon request.
6. It is expected that public advertisement of the Shares will be made
on or about _________ __, 2001. After the date of appearance of such
advertisement, but not before, you are free to advertise over your own name at
your own expense and risk.
7. The Shares are offered by us for delivery when, as and if sold to,
and accepted by,
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us and subject to the terms stated herein and in the Prospectus or any
supplements or amendments thereto, to our right to vary the concession and terms
of offering after the release of the Shares for public sale, to approval of
counsel as to legal matters and to withdrawal, cancellation or modification of
the offer without notice.
8. No later than 45 days following the effective date of the
Registration Statement (or such later date on which this Agreement shall
terminate as provided herein), you shall be paid, by a certified or official
bank check in New York Clearing House funds, an amount equal to the aggregate
number of Shares sold by you multipled by the amount of the concessions to
dealers stated herein; provided, however, that we reserve the right to withhold
such payment of the dealer's selling concession with respect to any of the
Shares delivered to you hereunder which we purchase or contract to purchase, in
the open market or otherwise, prior to the termination of this Agreement.
9. Upon written application, you will be informed as to the states and
jurisdictions under the securities or Blue Sky laws of which we believe the
Shares are eligible for sale, but we will assume no responsibility as to such
eligibility or the right of any Selected Dealer to sell any Shares in any state
or jurisdiction. [We have caused to be filed a Further State Notice respecting
the Shares to be offered to the public in New York in the form required by, and
pursuant to, the provisions of Article 23A of the General Business Law of the
State of New York.] Upon the completion of the public offering contemplated
herein, you agree to promptly furnish to us, upon our request, territorial
distribution reports setting forth each jurisdiction in which sales of the
Shares were made by such member, the number of Shares sold in such jurisdiction,
and any further information as we may request, in order to permit us to file on
a timely basis any report which we as Underwriter of the offering or manager of
the Selling Group may be required to file pursuant to the securities or Blue Sky
laws of any jurisdiction.
10. Each dealer, in becoming a Selected Dealer and accepting membership
in the Selling Group, represents that it is actually engaged in the investment
banking or securities business and that it is a member in good standing of the
NASD, or, if a foreign dealer not eligible for membership in the NASD, that it
agrees (i) to comply with all applicable provisions of the NASD's Rules of the
Association, (ii) to make no sales within the United States, its territories or
possessions or to persons who are citizens thereof or residents therein and
(iii) that in making other sales, any and all such sales shall be in compliance
with the NASD's interpretation with respect to Free-Riding and Withholding.
11. Nothing herein will constitute the Selected Dealers partners with
the Underwriter or with each other, but you agree, notwithstanding any prior
settlement of accounts or termination of this Agreement, to bear your proper
proportion of any tax or other liability based upon the claim
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that the Selling Group constitutes a partnership, association, unincorporated
business or other separate entity and a like share of any expenses of resisting
any such claim.
12. We will be the manager of the offering and of the Selling Group,
and we will have full authority to take such action as we may deem advisable in
respect of all matters pertaining to the offering or the Selling Group. Except
as expressly stated herein, or as may arise under the Securities Act, GunnAllen
Financial, Inc. will not be under any liability to any Selected Dealer as such
for, or in respect of, the validity or value of the Shares, the form of, or the
statements contained in, the Prospectus, the Registration Statement, any
preliminary prospectus (or any amendments or supplements to the Prospectus or
the Registration Statement) or any supplemental sales data or other letters or
instruments executed by, or obtained from, the Company, or others, the form or
validity of this Agreement or the Underwriting Agreement between the Company and
GunnAllen Financial, Inc., the eligibility of the Shares for sale under the laws
of any state or jurisdiction, the delivery of the Shares or the performance by
the Company or others of any agreement on its or their part, or any matter in
connection with any of the foregoing, except our own lack of good faith.
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If you desire to become a Selected Dealer, please advise us to that
effect immediately by telegram and sign and return to us the enclosed
counterpart of this letter attached hereto as Exhibit A.
Very truly yours,
GUNNALLEN FINANCIAL, INC.
By
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Name: Xxxxxx Xxxxx
Title: Executive Vice President
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DIVERSIFIED SECURITY SOLUTIONS, INC.
EXHIBIT A
TO
SELECTED DEALER AGREEMENT
GunnAllen Financial, Inc.
0000 Xxxxx Xxxxxxxxx Xxxx.
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Dear Sirs:
We hereby confirm our agreement to purchase the Shares (as defined in
the foregoing Selected Dealer Agreement) allotted to us subject to the terms and
conditions of the foregoing Selected Dealer Agreement and your telegram to us
confirming our allotment. We hereby acknowledge receipt of the definitive
Prospectus relating to the Shares, and we confirm that in purchasing Shares we
have not relied upon any statements whatsoever, written or oral, other than the
statements in such Prospectus. We have made a record of our distribution of
preliminary prospectuses and, when furnished with copies of any revised
preliminary prospectus, we have upon your request promptly forwarded copies
thereof to each person to whom we had theretofore distributed preliminary
prospectuses. We hereby represent that we are actually engaged in the investment
banking or securities business and that we are either a member in good standing
of the National Association of Securities Dealers, Inc. (the "NASD") or if we
are not such a member, that we are a foreign dealer or institution not eligible
for membership in the NASD which agrees (i) to comply with all applicable
provisions of the NASD's Rules of the Association, (ii) not to make any sales
within the United States, its territories or its possessions or to persons who
are citizens thereof or residents therein; and (iii) in making other sales, to
comply with the NASD's interpretation with respect to free-riding and
withholding.
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We agree that, in connection with any purchase or sale of the Shares
wherein a selling concession, discount or other allowance is received or
granted, (1) we will comply with the provisions of Rule 2740 of the NASD's Rules
of the Association; (2) if we are a non-NASD member broker or dealer in a
foreign country, we will also comply (a) as though we were an NASD member, with
the provisions of Rules 2730 and 2750 of the NASD's Rules of the Association
thereof and (b) with Rule 2420 of the NASD's Rules of the Association as that
Rule applies to a non-NASD member broker or dealer in a foreign country.
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Name of Selected Dealer
By:
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(Authorized Signature)
Dated: ______, 2001
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