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Exhibit
MATERIAL CONTRACTS
Item 21-4k
Nexcore Capital Selling Agreement
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SELLING AGREEMENT
October 20, 1998
Xxxxx Xxxxxx
PowerSource Corporation
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Re: Private Placement of Units Comprised of Common Stock and Warrants of
PowerSource Corporation Gentlemen:
PowerSource Corporation, a Nevada corporation ("the Company") is engaged in
the business of being a registered electric service provider in the state of
California. The Company is registered with the California Public Utilities
Commission and the Federal Energy Regulatory Commission as a purchaser,
aggregator and seller of energy and power generally provided by utilities. The
Company desires to raise capital by the sale of units (the "Units") in order to
finance its business. Each Unit is comprised of 1,000 shares of Common Stock
(the "Shares") and 1,000 Class B Warrants (the "Warrants") exercisable at a
price of $6.50 per share. Each Unit has a purchase price of $5,000 payable in
cash in full upon subscription. The Company hereby confirms as follows its
agreement with Nexcore Capital, Inc. ("Nexcore"), a registered member in good
standing of the National Association of Securities Dealers, Inc. ("NASD"), under
which Nexcore will act as an exclusive agent for the Company in connection with
the offering of the Units.
1. Memorandum. The Company has caused the preparation of a private
placement memorandum ("Memorandum") relating to the Company covering the Units,
the Shares and the Warrants.
2. Appointment of Agent. On the basis of the representations, warranties
and covenants herein contained, and subject to the terms and conditions herein
set forth, Nexcore is hereby appointed as the exclusive agent of the Company to
offer and sell the Units in a private placement. Nexcore covenants to offer and
sell Units on behalf of the Company in accordance with the terms of this
Agreement and the Memorandum, and not to misrepresent orally or in writing any
of the facts regarding the Company, its business, or the offering. Nexcore
covenants to closely supervise all of its representatives in the offering of the
Units and to comply with all applicable federal and state securities laws and
NASD rules and regulations. Nexcore is not responsible for the contents of the
Memorandum. Nexcore covenants not to use any written material or oral statements
in offering or selling the Units which are not specifically authorized by the
Company, provided, that Nexcore is specifically authorized to use the
Memorandum. Subject to the performance by the Company of its obligations to be
performed hereunder, and to the accuracy of all the representations and
warranties contained herein, Nexcore hereby accepts such exclusive agency and
agrees to perform its obligations hereunder.
3. Representations and Warranties of the Company. The Company represents,
warrants and agrees with Nexcore for Nexcore's benefit that:
(a) All action required to be taken by the Company as a condition to the
issuance and sale of the Units, the Shares and the Warrants has been taken.
(b) The Company is duly and validly organized, existing and in good
standing as a corporation under the laws of the State of Nevada and is duly
qualified to conduct its business and is in good standing in the State of
California, with full power and authority to conduct its business and proposed
business as described in the Memorandum. The Company has good unencumbered title
to all government licenses and permits necessary to conduct its business, and is
duly qualified to conduct its business in all jurisdictions in which such
qualification is necessary or appropriate.
(c) From the commencement of the offering period through the Sales
Termination Date, as that term is defined in the Memorandum, the Memorandum will
not contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) This Agreement has been duly and validly authorized, executed and
delivered by or on behalf of the Company and constitutes the valid, binding and
enforceable agreement of the Company.
(e) No federal or state securities agency has issued an order preventing or
suspending the offering or the use of the Memorandum with respect to the sale of
the Units. The Company will notify Nexcore promptly upon the issuance of any
such order and furnish Nexcore with a copy thereof. The Memorandum and any
amendment or supplement thereto will comply and will Continue to comply with all
applicable requirements of the Securities Act of 1933, as amended (the "Act"),
the Securities Exchange Act of 1 934, as amended (the "Exchange Act") and any
other applicable federal and state laws and regulations at all times during the
term of this Agreement.
(f) No consent, approval, authorization or other order of any governmental
authority is required in connection with the execution, delivery or performance
by the Company of this Agreement.
(g) The execution and delivery of this Agreement will not constitute a
breach of, or default under, any instrument by which the Company is bound or, to
the best of its knowledge, any order, rule or regulation applicable to the
Company, of any court or any governmental body or administrative agency having
jurisdiction over the Company.
4 Nexcore Representation and Warranties. Nexcore represents and warrants
that it is duly and fully licensed under the rules and regulations of the NASD
and is capable of performing and satisfying its obligations under this
Agreement. Nexcore further represents and warrants that Nexcore's execution and
performance of this Agreement will not cause Nexcore to be in default under or
to violate any agreement, law, rule, regulation, order or judgement.
5. Compensation to Nexcore. In consideration for Nexcore's services
hereunder, the Company covenants to pay to Nexcore a selling commission equal to
10% of the total purchase price of Units sold by representatives who are
registered with Nexcore, or registered with other members of the NASD who are
designated by Nexcore to participate in the offering of the Units as
participating dealers, in which case said selling commissions would be paid
directly to such other participating broker-dealer firms with respect to Units
sold by them. Nexcore will determine the amount of the allocation of selling
commission to other participating broker-dealers, provided that Nexcore agrees
to allocate a selling commission of at least 8% to other participating broker
dealers introduced by the Company to Nexcore, with respect to the sale of Units
by those broker-dealers The selling commission payable to Nexcore, or to such
other participating broker dealers, as the case may be, will be paid as sales of
Units are accepted by the Company, once the minimum amount of the offering has
been raised as provided in Section 7 of this Agreement. Once the first
disbursement from the subscription escrow account is made, Nexcore will
determine the timing of the payment of selling commissions in its sole
discretion.
6. Compensation to Fulcrum Enterprises. Inc. In consideration for the
services of Fulcrum Enterprises, Inc., a California corporation ("Fulcrum"),
rendered to the Company during the term of this Agreement, including but not
limited to administrative, consulting, blue sky and investor relations services,
preparation of SEC filings, and due diligence, Fulcrum will be paid cash equal
to 4% of the gross proceeds of the offering, payable on a schedule determined by
Nexcore. Notwithstanding anything else to the contrary herein, Fulcrum will,
from its 4% administrative fee upon first disbursement from the subscription
escrow as provided in Section 7 of this Agreement, (a) reimburse the Company for
its direct out pocket expenses attributable to blue sky and SEC filings made for
the Company, and (b) pay 50% of the legal fees and costs incurred for the
offering of the Units.
7. Subscription Escrow Account. An escrow account will be established for
the offering of Units with an escrow agent selected by Nexcore, in accordance
with Rule 1 5c2-4 of the Exchange Act. The minimum offering amount will be
$250,000. Once $250,000 of subscription funds have been deposited into the
escrow account, accepted by the Company, and cleared to good funds, then
subscription funds will be disbursed from the escrow account in accordance with
this Agreement. All subscription funds in excess of the minimum offering amount
of $250,000 will be deposited into the escrow account and may be disbursed
immediately upon acceptance of the subscribers by the Company and clearance to
good funds, in accordance with this Agreement. Funds will be disbursed from
escrow only upon the written instructions of both Nexcore and the Company,
provided, however, that 14% of all subscription funds may be disbursed from the
escrow account to Nexcore solely upon the written instructions of Nexcore.
8. Incentive Compensation and Offering Costs. An amount equal to 2% of the
gross proceeds of the offering of Units will be allocated first to the payment
of legal1 accounting5 printing and other offering expenses incurred by the
Company, and the balance, if any, to be disbursed to the Company to be utilized
in accordance with the Memorandum. As additional incentive compensation for
Nexcore and other participating broker-dealers, Nexcore is entitled to the
following equity interest in the Company, all or a portion of which it may
designate for allocation to other participating broker-dealers or to its own
registered representatives and principals in its sole discretion: subject to
applicable state blue sky laws, for each Unit sold, Nexcore or its designee will
be issued 400 Class E Warrants exercisable for a period of five years at an
exercise price of $5.00 per share (i.e. a maximum aggregate of 400,000 Class E
Warrants). The shares issuable upon the exercise of Class E Warrants will have
piggybank registration rights such that they will be registered on the first
registration statement filed by the Company under the Securities Act of 1933, as
amended.
9. Covenants of the Company. that: (a) The Company covenants with Nexcore
The term of this Agreement will commence on the date first above written and
will terminate on the Sales Termination Date, as defined in the Memorandum,
unless sooner terminated by the written agreement of both parties to this
Agreement. (b) If any event relating to the Company occurs which requires, in
the opinion of the Company's counsel, an amendment or supplement to the
Memorandum in order that the Memorandum will not contain an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing at
the time it is delivered to a subscriber, the Company will forthwith prepare the
amendment or supplement to the Memorandum and deliver a copy thereof to Nexcore.
The Company will furnish such information to Nexcore as Nexcore may from time to
time reasonably request.
(c) The Company will endeavor in good faith to qualify the Units for
offering and sale under, or to establish the exemption of the offering and sale
of the Units from qualification or registration under, applicable state
securities or "blue sky" laws. The Company will pay all legal fees and related
expenses in connection with qualifying the Company under said "blue sky" laws,
except as otherwise provided in Section 6 of this Agreement.
(d) The Company will not offer to sell Units in any state in which such
offer would be unlawful. The Company will bear all of the costs and liability
incurred by it or Nexcore as a result of the unlawful offer of Units by the
Company in any state, unless Nexcore directly causes such unlawful offer without
the participation of the Company.
(e) The Company covenants to issue financial statements and reports in
accordance with the Memorandum.
(f) The Memorandum will list each limited liability partnership, limited
liability company or other entity which conducts or intends to conduct business
with the Company. The Memorandum will include a brief description of each of
these entities, the grids for which they have contracted, and a biographical
summary of the principal officers and managers of said entities (the "Marketing
Companies").
(g) The Company and each nonaffiliated Marketing Company will obtain
management's errors and omissions insurance policies reasonably satisfactory to
Nexcore.
(h) Nexcore will have reasonable review and approval rights with respect to
the Memorandum and its contents.
(i) Mr. Andrew Lugullo will not represent himself as an agent for either
the Company or Nexcore until such time as his registration with the NASD and
Nexcore is complete, and the following conditions are satisfied: (a) Mr. Lugullo
offers and sells Units only as a duly registered representative of Nexcore, from
a location physically separate and distinct from the offices of the Company, (b)
Xx. Xxxx Xxxx agrees to work closely with Mr. Lugullo as the supervising
principal of the branch office of Nexcore in which both Mr. Lugullo and Xx. Xxxx
work in accordance with NASD rules and regulations.
(k) The offering of Units will provide for total capital of $5,000,000 to
the Company for the purchase of Units, and the Unitholders will own total issued
and outstanding common stock of the Company, plus all of Warrants.
(I) The Company will not pay any consideration to any affiliate of Nexcore
without the prior written approval of Nexcore.
(m) The $1,750,000 potentially payable by unaffiliated marketing companies
to the Company will not be recorded as revenue on the Company's financial
statements, but may be disclosed in footnotes to the Company's financial
statements, subject to the reasonable review and approval of Nexcore's
accounting firm.
(n) The Company covenants not to make any other offerings of its securities
during the term of this Agreement without the prior written consent of Nexcore.
10. Payment of Expenses and Fees. Except as provided in Sections 5, 6 and 7
of this Agreement, Nexcore and the Company will each pay its own expenses
incident to the transactions contemplated by this Agreement. The Company will
bear all of the fees and expenses incurred in printing of the Memorandum.
11. Noncircumvention. The Company covenants not to directly or indirectly
circumvent Nexcore or any of its affiliates with respect to any relationships
introduced or made known to the Company by Nexcore as a direct or indirect
result of this Agreement, including but not limited to investors, purchasers of
power, and professionals, without the prior written consent of Nexcore. In the
event of a breach of this section by the Company, Nexcore will have all
injunctive and equitable relief available, as well as all other remedies at law
or in equity.
12. Conditions of Nexcore's Obligations. Nexcore's obligations hereunder
are subject to the accuracy of and compliance with the representations and
warranties of the Company in this Agreement, and to the performance by the
Company of its obligations hereunder.
13. Conditions of the Obligations of the Company. The obligations of the
Company hereunder are subject to the accuracy of and the compliance with
Nexcore's representations and warranties in this Agreement, and to the
performance by Nexcore of its obligations hereunder.
14. Term of Agreement. The term of this Agreement will commence on the date
first above written and will terminate on the Sales Termination Date, as that
term is defined in the Memorandum. Either party may terminate this Agreement for
any reason upon 30 days prior written notice to the other party, provided, that
if the Company terminates this Agreement without cause, Fulcrum will be entitled
to remain as a consultant to the Company as provided in Section 6 of this
Agreement and to be paid 4% of all monies raised by the Company from any source
during what would have been the remaining term of this Agreement, had it not
been terminated by the Company. For the purposes of Section 14 of this
Agreement, the Company shall be deemed to have terminated this Agreement for
cause if the minimum investment of $250,000 is not raised within 60 days from
the date of the Memorandum, or if at least $1 ,000,000 in capital is not raised
within 1 50 days after the date of the Memorandum.
15. Indemnification.
The Company hereby indemnifies and holds Nexcore, Nexcore's affiliates,
officers, directors, shareholders, agents, employees, accountants and attorneys,
and each of them, harmless from and against all liabilities, claims, damages,
losses, costs, attorneys fees and expenses arising directly or indirectly from
(a) the transactions contemplated in this Agreement, (b) the offering and sale
of the Units, (c) the conduct of the Company's business, (d) the manner and
conduct of any offer or sale of limited liability partnership interests or other
securities by persons or entities which conduct any business with the Company,
(e) any financial statements or other financial information prepared, provided,
published, or disseminated by the Company, or (f) the source or manner of
solicitation of any prospective investors referred by the Company to Nexcore. In
addition, the Company hereby indemnifies and holds Nexcore, Nexcore's
affiliates, officers, directors, shareholders, agents, employees, consultants
and attorneys, and each of them, harmless from and against any loss, expense,
claim, damage or liability to which Nexcore or said other parties may become
subject under any securities act, common law concept, or otherwise, insofar as
such loss, expense, claim, damage or liability or action in respect thereof,
arises out of or is based in whole or in part on any untrue statement or alleged
untrue statement of any material fact made by the Company or in the Memorandum,
or the omission thereby of any material fact required to be stated or necessary
to make the statement made to a prospective investor not misleading. The Company
shall promptly reimburse the indemnified parties for any reasonable legal or
other expenses incurred by them in connection with any such indemnified action
or Claim.
(b) The Company will not be liable under this indemnity agreement with
respect to any claim made against Nexcore or any of said other persons related
to Nexcore unless the Company is notified in writing of the nature of the claim,
but failure so to notify the Company shall not relieve it from any liability
which it may have otherwise than on account of this indemnity agreement. The
Company shall be entitled to participate at its own expense in the defense or,
if it so elects within a reasonable time after receipt of such notice, to assume
the defense of any such claims, which defense shall be conducted by counsel
chosen by it and reasonably satisfactory to Nexcore and the other said person or
persons related to Nexcore who are defendants in any suit so brought. In the
event that the Company elects to assume the defense of any such suit and retain
such counsel, Nexcore or the person or persons who are defendants in the suit,
shall bear the fees and expenses of any additional counsel thereafter retained
by Nexcore or them. The Company agrees to notify Nexcore within a reasonable
time of the assertion of any claim against it or any person, if any, who
controls the Company in connection with the sale of the Units.
(c) Nexcore agrees to indemnify and hold harmless the Company and its
affiliates, officers, directors, shareholders, agents, employees, attorneys and
accountants against any and all loss, liability, claim, damage and expense
whatsoever directly or indirectly resulting from material violations by Nexcore
or its representatives of any of Nexcore's representations, warranties or
covenants in this Agreement, or of any applicable law, rule or regulation. In
case any action is brought against the Company or any of its affiliates under
such laws, regulations or rules on account of such material violation of such
representations, warranties or covenants, Nexcore shall have the rights and
duties given to the Company, and the Company shall have the rights and duties
given to Nexcore, by the provisions of Section 12(b).
16. Representations. Warranties and Agreements to Survive Delivery. All
representations, warranties shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of Nexcore or any person
who controls Nexcore, or by or on behalf of the Company or any person who
controls the Company, for a period of four years after the Sales Termination
Date, as that term is defined in the Memorandum.
17. Notices. All communications herein shall be in writing and, if sent to
Nexcore, shall be mailed, delivered or telegraphed and confirmed to Nexcore at
the address first above written, attention: Xxx X. Xxxxxx, President, or, if
sent to the Company, shall be delivered or telegraphed and confirmed to it at
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, attention:
Xxxxx Xxxxxx.
18. Parties. This Agreement shall inure to the benefit of and be binding
upon Nexcore, the Company, and Nexcore's and the Company respective successors
and assigns.
19. Entire Agreement. This Agreement represents the entire agreement among
the parties hereto and may not be amended except by a writing signed by the
party against whom enforcement of the provision is sought.
20. Injunctive Relief.
20.1 Damages Inadequate
Each party acknowledges that it would be impossible to measure in money the
damages to the other party if there is a failure to comply with any covenants or
provisions of this Agreement, and agrees that in the event of any breach of any
covenant or provision, the other party to this Agreement will not have an
adequate remedy at law.
20.2 Injunctive Relief
It is therefore agreed that the other party to this Agreement who is
entitled to the benefit of the covenants or provisions of this Agreement which
have been breached, in addition to any other rights or remedies which they may
have, shall be entitled to immediate injunctive relief to enforce such covenants
and provisions, and that in the event that any such action or proceeding is
brought in equity to enforce them, the defaulting or breaching party will not
urge a defense that there is an adequate remedy at law.
21. Waivers. If any party shall at any time waive any rights hereunder
resulting from any breach by the other party of any of the provisions of this
Agreement, such waiver is not to be construed as a continuing waiver of other
breaches of the same or other provisions of this Agreement. Resort to any
remedies referred to herein shall not be construed as a waiver of any other
rights and remedies to which such party is entitled under this Agreement or
otherwise.
22. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, and the venue for any
action hereunder shall be in the appropriate forum in the County of Los Angeles,
State of California.
23. Counterparts This agreement may executed simultaneously in any number
of counterparts, each of which counterparts shall be deemed to be an original,
and such counterparts shall constitute but one and the same instrument.
24. Attorneys' Fees and Costs. In the event that either party must resort
to legal action in order to enforce the provisions of this Agreement or to
defend such action, the prevailing party shall be entitled to receive
reimbursement from the non prevailing party for all reasonable attorneys fees
and all other costs incurred in commencing or defending such action, or in
enforcing this Agreement, including but not limited to post judgment costs.
25. Further Acts. The parties to this Agreement hereby agree to execute any
other documents and take any further actions which are reasonably necessary or
appropriate in order to implement the transactions contemplated by this
Agreement.
26. Time of Essence. Time is of the essence in the performance of the
obligations under this Agreement.
27. Authorized Signatures. Each party to this Agreement hereby represents
that the persons signing below are duly authorized to execute this Agreement on
behalf of their respective party.
28. Execution. If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon this
Agreement along with all counterparts will become a binding agreement among
Nexcore and the Company in accordance with its terms.
Very truly yours, Nexcore Capital, Inc.
a California corporation
By: /ss/____________________
PowerSource Corporation Xxx X. Xxxxxx, President
a Nevada Corporation ;
By: /ss/____________________
Xxxxx Xxxxxx
Confirmed and Accepted
By: /ss/______________
Xxxxx Xxxx
