Exhibit 1.01
BROKER-DEALER AGREEMENT
THIS BROKER-DEALER AGREEMENT (the "Agreement") is entered into on this 20TH
day of FEBRUARY , 2001, by and between Medical Capital Management, Inc. a
Delaware corporation ("Issuer") and FIRST MONTAUK SECURITIES CORP.
("Broker-Dealer") for the purpose of engaging Broker-Dealer to offer, sell and
distribute certain Asset Backed Notes ("Notes") of the Issuer, as hereinafter
provided.
RECITALS
A. Broker-Dealer is a securities dealer certified with the State of NEW
YORK, registered with the Securities Exchange Commission ("SEC"), and a member
of the National Association of Securities Dealers ("NASD"). Broker-Dealer has
experience in the sale and distribution of securities similar to the Notes.
B. The Issuer has prepared a certain note issuance and security agreement
("Offering") and has filed a form SB-2 Registration Statement under the
Securities Act of 1933.
C. Broker-Dealer desires to sell and distribute the Notes of this Offering
on behalf of Issuer.
NOW, THEREFORE, in consideration of their mutual covenants and
undertakings, the parties agree as follows:
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. Seventy Five
Million Dollars ($75,000,000) in Notes will be offered for sale with a minimum
purchase of Five Thousand Dollars ($5,000) with additional incremental purchases
of One Thousand Dollars ($1,000) over that minimum amount, per investor.
1.1 LIMITATION ON SALES. Notwithstanding anything contained herein to
the contrary, the total amount of Class C Notes that may be sold in the
Offering by All Brokers combined will not exceed $20,000,000 in aggregate
principal amount and the total amount of Class D Notes that may be sold in
the Offering by all brokers combined will not exceed $10,000,000 in
aggregate principal amount.
2. EFFECTIVE TERM. This Agreement shall be effective on the date first
above written and shall continue in effect for One Year, unless extended or
cancelled upon mutual agreement of the parties.
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 set forth in the Registration statement. Broker-Dealer shall use
its reasonable efforts to ascertain the suitability of all prospective
investors.
(c) REGISTERED SECURITIES. Broker-Dealer understands that the offering of
Notes is being offered pursuant to a Registration Statement under the
Securities Act of 1933. A copy of the Registration Statement is currently
in review with the Securities and Exchange Commission, a copy of which is
attached to this agreement.
(d) MINIMUM PURCHASE. Broker-Dealer shall not sell fewer than $5,000 in
Notes to any 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.
4. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer represents and
warrants to Broker-Dealer that upon execution of this Agreement and on the
Closing Date:
(a) On the date hereof, 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 by all necessary actions of the
Issuer;
(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; and
(d) The Issuer is approved to offer the Notes to the public by the
Securities and Exchange Commission effective February 06, 2001.
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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 by the responsible party of 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 National Association
of Securities Dealers, Inc.;
(d) Broker-Dealer is a Broker-Dealer registered with the Securities and
Exchange Commission; and
(e) Broker-Dealer is registered with the State or its Headquarters as a
Broker-Dealer and has obtained all licenses and consents necessary to sell
the Notes in all States listed in Schedule A.
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 include 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 therein, in light of the circumstances
under which they are 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.
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
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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
Regulation D of the Securities Act of 1933; or
c. The sale of the Notes to any investor who does not meet the suitability
standards set forth in the Registration Statement. 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.
8. WITHDRAWAL. Broker-Dealer, in its sole discretion, may withdraw from
this Agreement without penalty at any time upon 48-hours written notice to the
Issuer, for the following causes:
(a) If, after diligently reviewing the contents of the Registration
Statement, the Broker-Dealer finds that there exist terms or assumptions
which do not fairly represent the facts of the Offering or the Issuer's
business to prospective investors.
9. COMPENSATION. Issuer shall compensate Broker-Dealer in an amount equal
to the sum of 3.5% to 9.5% 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
10. CONFIDENTIALITY. All business, financial and other proprietary
information given by any party to the other in connection with the sale and
distribution of the Notes shall be received in confidence and used only for the
purposes of such offering. The parties shall undertake reasonably appropriate
safeguards to assure the non-dissemination of such information to third parties.
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 date of this Agreement and the Closing Date. 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.
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.
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.
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14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
15. NOTICES. All notices, requests, demands and communications that are
required, provided for one 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 forty-eight (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
If to Broker-Dealer: First Montauk Securities Corp
000 Xxxxxxx Xxxxxxx Xxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
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 is binding.
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.
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 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.
ISSUER: MEDICAL CAPITAL MANAGEMENT, INC.
By: /s/ XXX XXXXX
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Xxx Xxxxx, Its Chief Executive Officer
BROKER-DEALER: FIRST MONTAUK SECURITIES CORP
By: /s/ [SIGNATURE ILLEGIBLE]
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Title General Counsel
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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.
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 9.5%
