Exhibit 1.3
AMENDMENT #2 TO
RESCISSION/DISTRIBUTION
BROKER/DEALER AGREEMENT
THE RESCISSION/DISTRIBUTION BROKER/DEALER AGREEMENT (the "Agreement") made
and entered into as of the 31st day of March 2000 and amended the 3rd day of
May, 2000, by and between Mountain States Capital, Inc., an Arizona corporation
(the "Company"), and Heritage West Securities, Inc., an Arizona corporation (the
"Broker/Dealer"), is hereby further amended this 31st day of October, 2000. The
Agreement is hereby amended as follows:
SECTION #4 (d) OF THE AGREEMENT IS AMENDED TO READ:
(d) In addition to the expenses described in Section 4(c) and the
commissions described in Section 4(e) with respect to the New Notes, the Company
shall pay the Broker/Dealer a fee for services rendered that are specific to the
Company's Rescission Offer. The fee shall be equal to the greater of $25,000 or
One and One-Half Percent (1 1/2%) of the total amount of principal and accrued
but unpaid interest of the Outstanding Notes applied toward the purchase of New
Notes by Rescission Offerees who have accepted the Rescission Offer. Upon
execution of this Agreement, the sum of $12,500 shall be paid to the
Broker/Dealer for Rescission Offer services to be performed.
The remainder of the Broker/Dealer's Rescission Offer fee shall be paid as
follows:
(i) $10,000 within thirty (30) days of this Agreement; and
(ii) The balance will be paid to the Broker/Dealer upon conclusion of
the Rescission Offer (at such time as the percentage of the total amount of the
face value of the rescinded Notes can be calculated).
SECTION #4 (e) OF THE AGREEMENT IS AMENDED TO READ:
(e) The Broker/Dealer's fee for all New Notes issued pursuant to the
Registration Statement shall be as follows:
(i) Three Percent (3%) of the face amount of all New Note
subscriptions where the offeree: (a) is not a current or past New Note holder;
(b) is identified by the Broker-Dealer; and (c) does not have an existing
relationship with, or was not identified by, the Company.
(ii) Three Percent (3%) of the face amount of all New Note
subscriptions where the offeree is a current or past New Note holder, but is
not, and has not ever been, identified by the Company or a Rescission Offeree.
(iii) No fee on all New Notes subscriptions where the offeree is a
Rescission Offeree who is applying his or her Outstanding Note balance toward
the purchase of the New Notes.
(iv) One and One Half Percent (1 1/2%) of the face amount of all New
Note subscriptions that are issued pursuant to the Registration Statement and do
not fall into one of the three categories described in subparagraphs 4(e)(i),
(ii) or (iii) above.
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If the Company and the Broker/Dealer agree that other broker-dealers are to
be utilized in the further distribution of the New Notes, then supplemental fees
will be negotiated amongst the parties on a case by case basis. Inclusion of
additional broker-dealers is not contemplated at this time.
- All fees under this Section 4(e) shall be payable in twelve equal monthly
installments paid monthly in arrears, beginning thirty days after the date of
the Company's receipt of subscription proceeds for the New Notes. In the event
any New Notes are prepaid or retired prior to their maturity, the Company will
be obligated to compensate the Broker/Dealer only for fees accrued through the
date the New Notes are prepaid or retired.
SECTION #10 OF THE AGREEMENT IS AMENDED TO READ:
10. Independent Bank to Oversee Separate Escrow Account.
(a) In overseeing the Rescission Offer and distribution of the New Notes,
the Broker/Dealer will be acting in the capacity of a "$5,000 broker-dealer" as
that term is defined by the SEC's net capital rules. Accordingly, all funds
initially received by the Broker/Dealer pursuant to the Company's Registration
Statement will be promptly deposited or wired to the "Separate Escrow Account"
maintained by Xxxxx Fargo Bank, National Association. The Broker/Dealer shall
cause all checks issued or wires sent by New Note investors to be made payable
to Xxxxx Fargo Bank - Escrow Account FBO Mountain States Capital, Inc.
(b) If the sum of the canceled Old Notes (as that term is defined in the
Registration Statement) and New Note Investor funds on deposit in the Separate
Escrow Account total $2,200,000 at any time prior to the termination of the
Separate Escrow Account Agreement dated August 22, 2000 and amended on October
30, 2000, then Well Fargo Bank shall release the Separate Escrow Account"funds
to the Company. If the minimum amount of canceled Old Notes and New Note
investor funds in the Separate Escrow Account has not met or exceeded the
$2,200,000 prior to the "Minimum Amount Date", Xxxxx Fargo Bank shall within a
reasonable time following the "Termination Date" refund to each of the New Note
investors all sums paid pursuant to their New Note subscription agreements. For
the purposes of this Agreement, the terms Separate Escrow Account, Minimum
Amount Date and Termination Date will have the meaning ascribed to them in the
Separate Escrow Account Agreement.
The Agreement is not otherwise amended except as expressly set forth
herein.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to the
Agreement to be executed the day and year set forth above.
MOUNTAIN STATES CAPITAL, INC.
By: /s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx, President
HERITAGE WEST SECURITIES, INC.
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx, President
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