Exhibit 1.1
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American Community Bancshares, Inc.
Sales Agency Agreement
July ___, 2000
Wachovia Securities, Inc.
IJL Financial Center
000 Xxxxx Xxxxx Xxxxxx, 00/xx/ Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Ladies and Gentlemen:
This letter agreement (this "Agreement") sets forth and confirms the terms
and conditions of the engagement of Wachovia Securities, Inc. ("WSI") by
American Community Bancshares, Inc. (the "Company") as selling agent for the
Company with respect to the Company's proposed public offering (the "Offering")
of between 500,000 and 1,000,000 share of its common stock, par value $1.00 per
share (the "Shares"). The Offering will be made by means of a prospectus (the
"Prospectus"), which will be provided to WSI.
1. Representations and Warranties of the Company
The Company represents and warrants to, and agrees with WSI as follows:
(a) The Company has prepared and filed with the U.S. Securities and
Exchange Commission (the "SEC") a Registration Statement on Form SB-2
and amendments thereto (the "Registration Statement"), including the
Prospectus, for registration under the Securities Act of 1933, as
amended (the "1933 Act") of the offering and sale of the Shares. The
Registration Statement has been declared effective by the SEC and no
stop order has been issued with respect thereto. The Prospectus
accurately describes the Company and its business and properties, and
does not and will not contain any untrue statements of material fact
or omit to state any material facts required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(b) The Company is, and at all times during the Offering will be, a
corporation duly organized, validly existing and in good standing,
with all power and authority to own, lease or operate its properties
and conduct its business as described in the Prospectus; and is duly
qualified to do business as a foreign corporation in each other
jurisdiction in which it owns or leases properties or conducts its
business so as to require qualification and is in good standing in
each such jurisdiction, except
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where failure to be so qualified would not have a material adverse
effect on the condition, financial or otherwise, results of
operations, affairs or business prospects of the Company;
(c) The Shares to be issued and sold by the Company hereunder, when issued
and delivered against payment therefor as provided herein, will be
duly and validly authorized and issued, fully paid and nonassessable
and will conform to the description thereof contained in the
Prospectus;
(d) Except as disclosed in the Prospectus or information incorporated
therein by reference, there are no (i) outstanding securities or
obligations of the Company convertible into or exchangeable for any
capital stock of the Company, (ii) warrants, rights or options to
subscribe for or purchase from the Company any such capital stock or
any such convertible or exchangeable securities or obligations or
(iii) obligations of the Company to issue any such convertible or
exchangeable securities or obligations, or any such warrants, rights
or options;
(e) The Company has the full legal right, power and authority to enter
into and perform this Agreement and to sell and deliver the Shares as
provided in the Prospectus and herein, this Agreement has been duly
authorized by its Board of Directors and duly executed and delivered
on behalf of the Company, and this Agreement is a valid, legal and
binding obligation of the Company;
(f) Other than filings with, and any necessary registrations or
qualifications with the Securities and Exchange Commission (the
"SEC"), the National Association of Securities Dealers, Inc. (the
"NASD") and applicable state securities and "Blue Sky" authorities, no
consent, approval, authorization or order, registration or
qualification of or with any court or governmental agency or body is
required for the issuance and sale of the Shares or for the
consummation of the other transactions contemplated by this Agreement;
(g) There are no contracts, agreements or understandings between the
Company and any person which would give rise to a valid claim against
the Company for a brokerage commission, finder's fee or other like
payment in connection with the Offering of the Shares, other than
compensation due and payable to WSI pursuant to this Agreement;
(h) No action, suit or proceeding at law or in equity is pending or, to
the Company's knowledge, threatened to which the Company is a party,
and no proceedings are pending or, to the Company's knowledge,
threatened against or affecting the Company before or by any
governmental official, commission, board or other
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administrative agency, (other than in connection with required
regulatory approvals) wherein an unfavorable decision, ruling or
finding could have a material adverse effect on the consummation of
this Agreement or the condition, financial or otherwise, results of
operations, affairs or business prospects of the Company;
(i) The Company has such permits, licenses, franchises and governmental
and regulatory authorizations ("permits") as are necessary to own its
properties and conduct its business in the manner described in the
Prospectus, subject to such qualifications as may be set forth in the
Prospectus, and except where the failure to have such permits would
not have a material adverse effect on the consummation of this
Agreement or the condition, financial or otherwise, results of
operations, affairs or business prospects of the Company;
(j) Any historical financial statements (other than any pro forma
financial statements) included in the Prospectus present fairly the
financial position of the Company as of the date indicated and the
results of operations, equity and cash flows for the periods
specified, and such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
basis that is consistent in all material respects during the periods
involved;
(k) To the best knowledge of the Company after due inquiry, no officer,
director or 5% shareholder of the Company is affiliated with a member
of the NASD;
(l) The Company is not in default in the performance of any obligation,
agreement or condition contained in any agreement by which the Company
is bound. Neither the execution and delivery of this Agreement nor the
consummation of the transactions herein contemplated, nor compliance
with the terms and provisions hereof, conflict with or result in a
breach of, or default under, any of the terms, provisions or
conditions of the Articles of Incorporation or Bylaws of the Company
or any agreement or instrument to which the Company is a party or by
which it is bound, or any order, rule or regulation applicable to the
Company of any court or any governmental body or administrative agency
having jurisdiction over the Company;
(m) The Company is not an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment
Company Act of 1940;
(n) The Company agrees as follows:
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(i) The Company will notify WSI immediately, and confirm such
notice in writing, of the receipt of any comments from the SEC
or any state securities commission or regulatory authority that
relate to the Registration Statement or any amendment thereto
or requests by the SEC or any state securities commission or
regulatory authority for amendments to the Registration
Statement or amendments or supplements to the Prospectus or for
additional information;
(ii) The Company will use the net proceeds from the sale of the
Shares received by it in the manner specified in the Prospectus
under the caption "Use of Proceeds;" and
(iii) For three years from the date of this Agreement, the Company
will furnish to WSI copies of all reports and communications
(financial or otherwise) furnished by the Company to its
shareholders, copies of all reports or financial statements
filed with the regulatory agencies as soon as such are
available (except for quarterly Call Reports), and such other
publicly available documents, reports and information
concerning the business and financial condition of the Company
as WSI may reasonably request; and
(o) The Company acknowledges and agrees that WSI and its affiliates may,
from time to time, have relationships and engagements with the Company
or other parties including, but not limited to, its customers,
suppliers, creditors, potential investors and investors. Such
engagements and relationships may include, but are not limited to, the
following: (i) loans, other extensions of credit or financial
accommodations; (ii) treasury and cash management services; (iii)
acting in various capacities in connection with private or public
placement of debt and/or equity; (iv) acting as trustee or otherwise
performing fiduciary services for the Company or such other parties or
in connection with transactions in which the Company is involved or
may have an interest, including without limitation any employee
benefit plan or trust; (v) any and all forms of depository services;
(vi) any and all other services or products which may be offered or
provided by WSI or any of its affiliated companies; and (vii) other
services or products customarily provided from time to time by
financial institutions. The Company waives any and all conflicts of
interest, which may result from WSI dealing in any of the aforesaid
capacities. Specifically, the Company waives any conflict that may
arise on account of, or in connection with WSI's engagement pursuant
to this Agreement. The Company acknowledges that WSI and its
affiliates may, in the course of such other relationships, acquire
information about the Company or such other parties but WSI shall have
no obligation to disclose such information,
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or the fact that it has such information in its possession, to the
Company or to use such information on the Company's behalf.
2. Services to be Provided by WSI
In connection with this Agreement, the scope of WSI's services shall
include the following:
(a) Commencing on _______, 2000 [insert date that falls four weeks
following the effective date of the Registration Statement] (the
"Commencement Date") and continuing until such time as the Offering is
terminated by the Company, WSI shall serve as the selling agent for
the Company and will act on a best efforts basis. The Company
acknowledges that WSI may enter into selected dealer agreements with
other registered broker-dealers (the "Selected Dealers") for the sale
of the Shares and that no such contractual arrangements shall violate
or conflict with the terms of this Agreement. WSI acknowledges that
the Company, through its officers and directors, also may be selling
the Shares by means of the Subscription Offer that is attached to and
made part of the Prospectus during the period of time WSI and the
Selected Dealers are acting as selling agents; and
(b) WSI shall perform its duties pursuant to this Agreement in compliance
with all applicable federal and state securities laws, and shall
solicit subscriptions for the Shares only by means of the Prospectus
and only in such jurisdictions specified by the Company and in which
the Company may make such offers and sales.
In exchange for the services of WSI pursuant to this Agreement, the Company
agrees to pay WSI a selling commission of 5.0% of the gross dollar amount
for each Share sold by any registered representatives of WSI or the
Selected Dealers. If WSI places Shares in the Offering, the Company shall
also pay WSI a nonrefundable financial advisory fee of $50,000. If WSI does
not place Shares in the Offering, the Company shall pay WSI a nonrefundable
"standby" fee of $25,000. The aggregate amount of such selling commissions
fees shall be paid as soon as sufficient funds become available to the
Company from the sale of at least 500,000 Shares in the Offering, and in no
event later than ten (10) days after the completion of the Offering. In
addition, whether or not any Shares are sold by WSI, the Selected Dealers
or the Company, the Company shall promptly reimburse WSI for its actual
accountable out-of-pocket expenses, including fees of its counsel, up to a
maximum of $10,000.
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3. Payment of Offering Expenses
In addition to the amounts set forth in Section 2, above, the Company is
expected to be responsible for the following expenses of the Offering:
(a) the fees and disbursements of the independent accountants and counsel
retained by the Company and other related expenses in connection with
the Offering;
(b) the cost of printing, filing and distributing the Prospectus and Blue
Sky memoranda and all other documents relating to the Offering;
(c) the fees and disbursements of the Company's counsel in connection with
state Blue Sky filings;
(d) the filing fees of the SEC, the NASD, and state Blue Sky filing fees,
as applicable;
(e) any costs associated with preparing any stock certificates, as well as
any transfer agent's or registrar's fees;
(f) the fees and other costs relating the services of the Escrow Agent and
any expenses associated with the preparation of the Escrow Agreement;
(g) any miscellaneous travel and informational meeting expenses for the
Company associated with the Offering; and
(h) other usual and customary expenses.
4. Indemnification and Contribution
(a) The Company agrees to indemnify and hold harmless WSI, and each
person, if any, who controls WSI within the meaning of Section 15 of
the Securities Act of 1933 as amended (the "1933 Act"), against any
and all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation and counsel's fees) arising out of
or based upon the engagement of WSI as selling agent hereunder, and
will reimburse WSI and each such controlling person for any legal or
other expenses reasonably incurred by WSI or any such controlling
person in connection with investigating or defending any such loss,
claim, damage, liability or action, provided that the Company will not
be responsible for any losses, claims, damages, liabilities or
expenses that are finally judicially determined to have resulted
primarily from WSI's bad faith or gross negligence.
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(b) If any action or claim shall be brought or asserted against WSI or any
person controlling WSI in respect of which indemnity may be sought
from the Company, WSI or such controlling person shall promptly notify
the Company in writing, enclosing copies of all papers served on or
delivered to such party. The failure to notify an indemnifying party
shall not relieve the indemnified party from any liability hereunder
to the extent it is not materially prejudiced as a result of such
failure. WSI or any such controlling person shall have the right to
employ separate counsel in any such action and to participate in the
defense thereof, and the fees and expenses of such counsel shall be at
the expense of the Company and shall be promptly reimbursed by the
Company. No indemnified party shall settle, compromise or consent to
the entry of any judgment with respect to any litigation, any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or claim whatsoever in respect of which
indemnification or contribution can be sought under this Section 4
(whether or not the indemnified parties are actual or potential
parties thereto), unless the indemnified party gives prior written
notification to the indemnifying party and such settlement, compromise
or consent does not include any statement or admission of fault,
culpability or failure to act on behalf of, or with respect to, any
indemnified party.
(c) WSI agrees individually, and not jointly with any other selling agent
for the Shares, to indemnify and hold harmless the Company and its
respective directors and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the
Securities Exchange Act of 1934, as amended against, any and all
losses, liabilities, claims, damages and expenses to which the Company
or such persons may become subject if such losses, liabilities,
claims, damages or expenses arise solely out of, or are based solely
on, any untrue or alleged untrue statement of material fact contained
in the Prospectus, or any amendment or supplement thereto, or arise
out of, or are based upon, the omission of a material fact required to
be stated therein, or necessary to make the statements therein not
misleading, but only if such untrue statement or omission or alleged
omission was made in the Prospectus (as amended or supplemented) based
upon and in conformity with written information concerning WSI
furnished to the Company by WSI, specifically for use in the
Prospectus.
(d) If the indemnification provided for in this Section 4 is unavailable
to an indemnified party under paragraphs (a), (b) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses (i) in such proportion as is
appropriate to
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reflect the relative benefits received by the Company on the one hand
and WSI on the other from the Offering or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault
of the Company on the one hand and of WSI on the other in connection
with the statements or omissions that resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the
Company on the one hand and WSI on the other shall be deemed to be in
the same proportion as the total net proceeds received by the Company
from the Shares sold in the Offering (before deducting expenses), and
the total commissions received by WSI. The relative fault of the
Company on the one hand and of WSI on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by the Company, or by WSI, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company on the one hand and WSI on the other agree that it would not be
just and equitable if contribution to be made pursuant to this Section 4
were determined by pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in
the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities
and expenses referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection
with defending any such action or claim. Notwithstanding the provisions of
this Section 4, WSI shall not be required to contribute any amount in
excess of the amount by which the total price at which the Shares sold by
it exceeds the amount of any damages that WSI has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
5. Representations, Warranties and Agreements to Survive Delivery
The representations, warranties, indemnities, agreements and other
statements of the Company set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of WSI or the Company or controlling
person of the Company, and shall survive delivery of and payment for the
Shares.
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6. Governing Law; Assignments
This Agreement shall be governed by the laws of the State of New York. The
Company and WSI each hereby waives any right to a trial by jury with
respect to any claim or action arising out of the engagement of WSI under
this Agreement. The Company hereby consents to the jurisdiction of any
state or federal court of competent jurisdiction sitting within the area
comprising the Southern District of New York as well as to the jurisdiction
of all courts from which an appeal may be taken from such courts, for the
purpose of any litigation, proceeding or other action arising out of the
Company's obligations under or with respect to this Agreement, and
expressly waives any and all objections the Company may have as to venue in
any of such courts. Neither party may assign this Agreement without the
prior written consent of the other party.
7. Counterparts
This Agreement may be executed in one of more counterparts, and when a
counterpart has been executed by each party hereto all such counterparts
taken together shall constitute one and the same Agreement. Signatures sent
by facsimile shall have the same effect as if manually signed copies had
been delivered, and shall be binding upon the parties.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this shall become a
binding agreement between the Company and WSI.
Very truly yours,
AMERICAN COMMUNITY BANCSHARES, INC.
By:_________________________
Xx. Xxxxx X. Xxxxxx
President and Chief Executive Officer
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Confirmed and Accepted,
WACHOVIA SECURITIES, INC.
By:_________________________
Xxxxx X. Xxxx, Jr.
Senior Vice President
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