EXHIBIT 10.20
BROKER-DEALER
SELLING AGREEMENT
This Broker-Dealer Agreement ("Agreement") is made as of this ??th day
of December, 2001, by and between DUCT Utility Construction & Technologies,
Inc., a Colorado corporation ("Issuer" or "DUCT") and Xxxxxxx, Xxxxxxxx & Co., a
California corporation ("Broker-Dealer").
Recitals:
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A. Whereas, DUCT provides project management, construction and the installation
of communications systems for the fiber optic and cable industries ; and,
B. Whereas, Issuer desires to seek offers (the "Offering") of various security
structures (the "Securities") for total gross proceeds of up to $15,000,000, as
more particularly described in the transaction documents which will be prepared
when a term sheet is executed by DUCT and the investing party ("Transaction
Document"); and
C. Whereas, the Broker-Dealer is engaged in the business of selling securities
and the Broker-Dealer desires to provide such services to the Issuer with
respect to the Offering; and Issuer is willing to engage Broker-Dealer to
provide such services subject to the terms and conditions set forth below.
Clauses:
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Now therefore, in consideration of the mutual covenants and conditions
hereinafter set forth and other good and valuable consideration, the receipt of
which is hereby acknowledged by the parties, the parties agree as follows:
1. RECITALS ARE CORRECT.
The foregoing recitals are true and correct as of the date of this
Agreement.
2. REPRESENTATIONS AND WARRANTIES OF ISSUER.
The Issuer covenants, represents, warrants and agrees as follows:
(a) The Issuer shall prepare and deliver to the Broker-Dealer
such number of copies of the Transaction Document, business plan and any other
deal documents, including schedules thereto, and amendments to any of them, (the
"Offering Materials") as the Broker-Dealer may reasonably request for sale of
the Securities, together with such other information with respect to the Issuer
that the Broker-Dealer reasonably deems to be necessary in order to provide
continuing information to investors with respect to their investment in the
Issuer (to the extent that the Issuer possesses such information or can acquire
it without unreasonable effort or expense and to the extent that the Issuer
deems that such information is not confidential, unless the recipient of such
information agrees to maintain the confidentiality of such information).
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(b) The Issuer will notify the Broker-Dealer immediately if,
at any time, any event occurs as a result of which the Transaction Document
would, to the Issuer's knowledge, include an untrue statement of material fact,
or, in view of the circumstances under which they were made, omit to state any
material fact necessary to make the statements not misleading. If any event
occurs as a result of which it shall become necessary to amend or supplement the
Transaction Document, the Issuer shall prepare such amendments or supplements,
promptly notify the Broker-Dealer of all amendments or supplements to the
Transaction Document and provide the Broker-Dealer with a reasonable number of
copies of same;
(c) To the Issuer's knowledge, the Offering Materials do not
and will not include any untrue statement of material fact, nor do they or will
they omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (other than information relating to
Broker-Dealer furnished in writing by Broker-Dealer expressly for use in the
Offering Materials as to which the Issuer makes no representation);
(d) The Issuer shall reasonably cooperate with the
Broker-Dealer in connection with the Offering, including making appropriate
officers or principals of the Issuer reasonably available to the Broker-Dealer
for meetings with prospective purchasers of the Securities;
(e) The Issuer will prepare definitive transaction documents
for use in the Offering, including, without limitation, a subscription
agreement, each of which shall be in form and substance reasonably satisfactory
to Broker-Dealer and the Issuer. The Issuer will cause to be furnished to the
Broker-Dealer and the purchasers at the closing of the Offering and at any
subsequent closing the opinion of counsel set forth in the subscription
agreement dated as of the closing date of the Offering or any subsequent
closing, reasonably satisfactory to Broker-Dealer;
(f) Neither the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated, nor the compliance with
the terms and provisions hereof shall conflict with or result in a breach of any
of the terms, provisions or conditions of any obligation, agreement or
instrument to which the Issuer is a party, including, without limitation, its
articles of incorporation and bylaws, or violate, to Issuer's knowledge, any
order directed to Issuer by any court of any governmental body or administrative
agency having jurisdiction over the Issuer or any of the Issuer's affiliates or
any law to which the Issuer is subject;
(g) The Issuer will use its commercially reasonable efforts
to comply with all requirements imposed upon it under applicable provisions of
the Securities Act of 1933, as amended (the "Securities Act") and the
regulations thereunder, and all applicable state securities laws and
regulations, so as to permit the offer and sale of the Securities throughout the
offering period specified in the Transaction Document. The Issuer will use its
commercially reasonable efforts to sell its Securities only to persons who are
"accredited investors" within the meaning of Rule 501(a) of Regulation D of the
Securities Act, and to conduct its participation in the Offering so that the
Securities are sold in a transaction or series of transactions exempt from
registration under Regulation D of the Securities Act;
(h) For so long as may be required for the sale by the Issuer
of the Securities the Issuer shall be responsible for compliance with the filing
requirements of the securities laws of states and other jurisdictions and shall
make all filings and take all other actions as required in connection with
compliance with such laws, in accordance with this Agreement and the Transaction
Document;
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(i) The Issuer agrees to the sale of the Securities only
through (i) persons that are NASD members and their registered representatives;
or (ii) other persons legally qualified to sell the Securities;
(j) The Issuer shall advise the Broker-Dealer whenever and as
soon as they receive or learn of any order issued by the Securities and Exchange
Commission, the NASD, any state regulatory agency or any other regulatory agency
which prevents or suspends the offering or sale of the Securities, or receive
notice of any proceedings regarding any such order;
(k) The Issuer shall use its commercially reasonable efforts
to prevent the issuance of any order described in Section 2(j) above and to
obtain the lifting of any such order if issued;
(l) The Issuer shall provide the Broker-Dealer, when
received, a copy of any letter or other communication from the NASD concerning
the Offering;
(m) The Issuer shall use commercially reasonable efforts not
to take any action which would constitute a general solicitation or general
advertising in connection with the sale of the Securities;
(n) The Issuer shall use its best efforts not to engage in
any acts which will either cause any exemption from securities registration or
permit to sell Securities to be lost or canceled where it knows at the time of
engaging in such act that the result of doing so would be the loss or
cancellation of such exemption or permit;
(o) To the Issuer's knowledge, the information as to itself
that is set forth in this Agreement is correct and complete as of the date of
this Agreement and will be correct and complete on the date the Offering is
completed or halted, whichever comes first;
(p) The Issuer will apply the proceeds from the sale of the
Securities substantially in accordance with the terms and conditions of the
Offering Materials; and
(q) The Issuer is a corporation duly organized, validly
existing, and in good standing under the laws of a state of the United States or
a foreign country, with all requisite power and authority to enter into this
Agreement and to carry out Issuer's obligations hereunder. The Agreement has
been duly authorized, executed, and delivered by the Issuer and is a valid and
binding obligation of Issuer.
3. REPRESENTATIONS OF THE BROKER-DEALER.
The Broker-Dealer hereby covenants, represents, warrants and agrees as
follows:
(a) It is presently and will continue throughout the term of
this Agreement to be a member in good standing of the NASD, and in the event the
Broker-Dealer is no longer in good standing, then Broker-Dealer shall
immediately notify the Issuer in writing and shall cease any offer of Securities
by the Broker-Dealer;
(b) It is presently registered as a broker and a dealer under
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and is
a licensed broker/dealer under the laws of a state of the United States of
America;
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(c) It is a corporation duly organized, validly existing, and
in good standing under the laws of California, with all requisite power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The Agreement has been duly authorized, executed, and delivered by
the Broker-Dealer and is a valid and binding obligation of the Broker-Dealer;
(d) The consummation of the transactions contemplated herein
and those contemplated by the Offering Materials will not result in any breach
of any of the terms or conditions of, or constitute a default under, any
indenture, agreement, or other instrument to which the Broker-Dealer is a party,
or violate any order directed to the Broker-Dealer by any court or any federal
or state regulatory body or administrative agency having jurisdiction over the
Broker-Dealer or over the Broker-Dealer's affiliates;
(e) It shall use its commercially reasonable efforts to find
purchasers for the Securities from persons who are "accredited investors" within
the meaning of Rule 501(a) of Regulation D of the Securities Act, and the
Broker-Dealer will use its commercially reasonable efforts to conduct its
participation in the Offering so that the Securities are sold in a transaction
or series of transactions exempt from registration under of Regulation D of the
Securities Act;
(f) For each offer or sale of Securities, the Broker-Dealer
will deliver to the offeree or purchaser a Transaction Document. No solicitation
material other than the Offering Materials, exhibits thereto and those other
materials supplied by or approved by the Issuer and properly cleared by all
necessary state and federal agencies shall be used in connection with the sale
of Securities. The Broker-Dealer represents that it shall not give any
information or make any representation in connection with the Offering other
than those contained in the Offering Materials. The Broker-Dealer shall comply
strictly with all restrictions and conditions reasonably placed by the Issuer on
the manner, method and extent of making offers in order to comply with all
federal and applicable state securities laws;
(g) It shall use commercially reasonable efforts not to take
any action which would constitute a general solicitation or general advertising
in connection with the sale of the Securities;
(h) It shall use its commercially reasonable efforts to
comply with all federal, state, local and common laws, and all rules,
regulation, and orders of any court or government agency applicable to the
services of the Broker-Dealer, in connection with the Offering;
(i) It shall supply the Issuer with such written reports as
the Issuer may from time to time reasonably request concerning the
Broker-Dealer's activities relating to the offer and sale of the Securities; and
(j) It shall use its commercially reasonable efforts to
promptly upon receipt of any and all checks, drafts and money orders received
from prospective purchasers of the securities, transmit same together with the
original, executed subscription documentation or, if not available, a copy of
the signature page of such subscription documentation by noon of the next
business day for immediate deposit into the Issuer's escrow account in
accordance with Rule 15c2-4 under the Exchange Act, as amended, and NASD Notice
to Members 84-64.
4. DISCLAIMERS.
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The Broker-Dealer shall have no obligation under this Agreement to make
an independent appraisal of assets or investigation or inquiry as to any
information regarding, or any representations of, the Issuer and shall have no
liability hereunder in regard thereto. The Broker-Dealer shall have no
obligation under this Agreement to purchase any securities for its own account,
or to sell any securities or any specified number of securities.
5. EXCLUSIVITY: COMPENSATION TO BROKER-DEALER. The Broker-Dealer shall
be the exclusive placement agent of the Issuer and shall receive as compensation
a cash commission of ten percent (10%) of the aggregate amount raised by the
Broker-Dealer with respect to any Securities sold by the Issuer in the Offering;
and the Broker-Dealer may reallow and pay a portion of the compensation to other
broker-dealers who participate in the Offering. Compensation to the
Broker-Dealer shall be paid upon each funding from the Escrow Account to the
Issuer or on behalf of the Issuer. The Broker-Dealer acknowledges that the
Issuer has discretion to accept or reject subscriptions, in whole or in part,
and the Issuer acknowledges that the Broker-Dealer has discretion to accept or
reject subscriptions, in whole or in part.
In addition, the Broker-Dealer shall receive from the Issuer a warrant
exercisable for the purchase of a number of shares of Securities equal to ten
percent (10%) of the number of Securities sold in the Offering. The exercise
price of the Offering Warrant shall be equal to the price per share of the
Offering, and shall be exercisable for five years from the date of issuance. The
Issuer hereby grants the Broker-Dealer "piggyback" registration rights for the
Securities, subject to any lockup agreement made between the Issuer and the lead
underwriter of such registration and subject to the right of such underwriter to
cutback or exclude any such Securities from the registration.
6. PAYMENT OF BROKER-DEALER EXPENSES.
The Issuer agrees to reimburse Broker-Dealer for all reasonable fees
and expenses incurred in connection with the Offering, including any fees or
expenses of Broker-Dealer's outside counsel in connection with the Offering.
7. INDEMNIFICATION.
The Broker-Dealer and the Issuer agree to indemnify each other as set
forth below.
(a) The Issuer agrees to indemnify, defend and hold harmless
the Broker-Dealer and its affiliates, as defined under the Exchange Act, and
each of their officers, directors, employees, agents and representatives against
any and all loss, liability claim, damage and expense whatsoever (including, but
not limited to, any and all expenses reasonably incurred in investigating,
preparing or defending against any litigation commenced or threatened, or any
claim whatsoever) arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Offering Materials (as from time
to time amended and supplemented) or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Issuer shall not
be liable in any such case to the extent that any such loss, claim, damage, or
liability arises out of or is based upon an indemnified party's gross
negligence, bad faith, willful misconduct, an untrue statement, or alleged
untrue statement or omission or alleged omission made in the Offering Materials,
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or such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Issuer by any such indemnified party specifically
for use in the preparation thereof.
(b) The Issuer will indemnify and hold harmless the
Broker-Dealer and its affiliates, as defined under the Exchange Act, and each of
their officers, directors, employees, agents and representatives against any
civil lawsuits, civil claims, civil damages or civil liabilities, to which the
Broker-Dealer and its affiliates, as defined under the Exchange Act, and each of
their officers, directors, employees, agents and representatives may become
subject under Section 15 of the Exchange Act, or otherwise, insofar as such
civil losses, civil claims, civil damages or civil liabilities (or actions in
respect thereof) arise out of or are based upon any direct sale of the
Securities to investors by the Issuer with no involvement by the Broker-Dealer
or any other indemnified party.
The foregoing indemnification agreement shall extend upon the same terms and
conditions to, and shall inure to the benefit of, each person, if any, who
controls the Broker-Dealer or its affiliates within the meaning of the
Securities Act.
(c) The Broker-Dealer agrees that it will indemnify, defend
and hold harmless the Issuer and its affiliates and their respective officers,
directors, employees, and agents of any of the foregoing from and against any
loss, expense, claim, damage, or liability to which they may become subject
under any applicable securities law or otherwise (including but not limited to
any and all expense reasonably incurred in investigating, preparing or defending
against any litigation, connected or threatened, or any claim whatsoever),
insofar as any such loss, expense, claim, damage or liability (or actions in
respect thereof) arises out of or is based on the actual or alleged unlawful
sale by the Broker-Dealer of securities or an indemnified party's gross
negligence, bad faith, willful misconduct or any untrue statement or alleged
untrue statement of any material fact made by the Broker-Dealer other than in
reliance upon and consistent with the Offering Materials or other written
information furnished to the Issuer by any such indemnified party specifically
for use in the preparation thereof.
8. INDEPENDENT CONTRACTOR.
It is agreed that the Broker-Dealer's relationship with the Issuer is
as an independent contractor. Nothing contained herein shall be construed as
creating a relationship of Issuer, any of its officers, directors, employees or
agents, any affiliates of any of the foregoing, or other selling agents.
9. TERMINATION.
This Agreement may be terminated by either the Issuer or the
Broker-Dealer at any time upon giving thirty (30) days prior written notice
thereof to the other party. This Agreement shall further terminate immediately
upon the occurrence of any of the following:
(a) Material breach of this Agreement by either party;
(b) Suspension or revocation of the Broker-Dealer's
membership in the NASD or loss of good standing under the rules of any
regulatory authority of a foreign country;
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(c) Suspension or revocation of the Broker-Dealer's license to act as a
broker dealer by federal or state agency, which is not cured within ten (10)
days of occurrence during which time this Agreement shall be deemed suspended;
or (d) Termination or completion of the Offering.
10. CONFIDENTIALITY OBLIGATION OF BROKER-DEALER.
Broker-Dealer will keep confidential and not disclose to any third
party any confidential information of Issuer made available to Broker-Dealer by
Issuer, and will use the confidential information only in connection with the
engagement hereunder, provided, however, such confidential information shall not
include any information already available to or in the possession of
Broker-Dealer prior to the date of its disclosure to Broker-Dealer by Issuer,
any information in the Offering Materials or generally available to the public,
or any information which becomes available to Broker-Dealer on a
non-confidential basis from a third party who is not bound by a confidentiality
obligation to Issuer; and provided further, that such confidential information
may be disclosed (i) to Broker-Dealer's partners, employees, agents, advisors
and representatives in connection with its engagement hereunder, who shall be
informed of the confidential nature of the information and that such information
is subject to a confidentiality agreement; (ii) to any person with the written
consent of Issuer, including to any prospective investors; or (iii) if, upon the
advise of counsel, Broker-Dealer is compelled to disclose such information
pursuant to law, judicial process or regulatory demand or request; provided,
however, that prior to any such disclosures Broker-Dealer (a) shall use its best
efforts to notify Issuer promptly in writing of the order or request for
disclosure and of the facts and circumstances surrounding such order or request
so that Issuer may seek an appropriate protective order and (b) cooperate with
Issuer in any proceeding to obtain an appropriate protective order.
11. NOTICES.
All notices and communications hereunder shall be in writing to the
following addresses:
Broker-Dealer:
Xxxxxxx, Xxxxxxxx & Co.
Attn: Xxxxxx Xxxxxxx,
00 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Issuer:
DUCT Utility Construction & Technologies, Inc.
Attn: Xxxxx Xxxx,
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
All notices shall be sent first-class mail, postage prepaid. Notices
shall be deemed received seventy-two (72) hours after mailing. Any
party may change its address by notice in compliance with the terms of
this Paragraph.
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12. MISCELLANEOUS.
(a) This Agreement shall be governed by, subject to and
construed in accordance with the laws of the State of California, United States
of America, without regard to rules of conflicts of law.
(b) This Agreement may be executed in a number of identical
counterparts, each of which shall be deemed to be an original, but all of which
will constitute, collectively, one and the same Agreement.
(c) The parties hereto covenant and agree that they will
execute such other and further instruments and documents as are or may become
necessary to effectuate and carry out this Agreement.
(d) The captions used in this Agreement are for convenience
only and shall not be construed in interpreting this Agreement.
(e) This Agreement shall be binding upon and inure solely to
the benefits of the parties hereto, the indemnified parties hereunder and the
successors, legal representatives, heirs and assigns of the foregoing. No
purchaser of any of the securities sold by the Broker-Dealer in the Offering
shall be construed as a successor or assign merely by reason of such purchase.
(f) This Agreement contains the entire understanding between
the parties and supersedes any prior understandings or written or oral
agreements between them respecting the subject matter hereof, including, without
limitation, that certain letter dated October 5, 2000 between Issuer and
Broker-Dealer. This Agreement may be amended only by a written instrument
executed by both of the parties hereto.
(g) All representatives, covenants, warranties and agreements
contained herein are deemed to be made as of the date hereof and, as applicable,
as of each closing of the Offering and shall not be affected by any
investigation made by any party hereto or their Affiliates.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ISSUER: BROKER-DEALER:
DUCT Utility Construction & Xxxxxxx, Pomeranz & Co.
Technologies, Inc.
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxx Xxxxxxx
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Name: Name:
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Title: Title:
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