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EXHIBIT 10.5
NEW COMMERCE BANK (IN ORGANIZATION)
SALES AGENCY AGREEMENT
December 11, 1998
X.X. Xxxxxxxx & Co.
000 Xxxxxx Xxxxxx XX
First Lawyers Building, 2nd Floor
Hickory, North Carolina 28601
Ladies and Gentlemen:
This letter sets forth and confirms the terms and conditions of the
engagement (the "Agreement") of X.X. Xxxxxxxx & Co. ("Bradford") by New
Commerce Bank (the "Company") as non-exclusive selling agent of the Company
with respect to the Company's proposed public offering (the "Offering") of its
common stock (the "Common Stock"). The Offering will be made by means of a
prospectus (the "Prospectus"), which will be provided to Bradford.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to, and agrees with Bradford as
follows:
(a) The Prospectus 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 a corporation validly existing and in good
standing under the laws of the state of its incorporation;
has full corporate and other power and authority under such
laws to own 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 it business
so as to require qualification and is in good standing in
each such jurisdiction, except 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 of common stock to be issued and sold by the
Company hereunder (the "Shares"), when issued and delivered
against payment therefor as provided
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herein, will be duly and validly authorized and issued and
fully paid 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 (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 sell and deliver
the Shares as provided herein, and this Agreement has been
duly authorized by its Board of Directors and duly executed
and delivered on behalf of the Company.
(f) Other than filings with, and any necessary registrations,
qualifications or exemptions from the Securities and Exchange
Commission 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) Except as provided in section 2(a), there are no contracts,
agreements or understanding 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 Bradford.
(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 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.
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(j) 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.
(k) The Company agrees as follows:
(i) The Company will notify Bradford immediately, and
confirm such notice in writing, of the receipt of
any comments from any state securities commission or
regulatory authority that relate to the Prospectus
or any amendment thereto or requests by any state
securities commission or regulatory authority for
amendments to the Prospectus 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."
(iii) The Company will supply Bradford with such number of
Prospectuses as Bradford shall reasonably request.
(iv) For three years from the date of this Agreement, the
Company will furnish to Bradford copies of all
reports and communications (financial or otherwise)
furnished by the Company to its stockholders, copies
of all reports or financial statements filed with
the regulatory agencies as soon as such are
available, and such other publicly available
documents, reports and information concerning the
business and financial condition of the Company as
Xxxxxxxx xxx reasonably request.
2. SERVICES TO BE PROVIDED BY BRADFORD.
In connection with this Agreement, the scope of Bradford's services
shall include, but not be limited to, the following:
(a) Pursuant to this Agreement, Bradford will serve as the
exclusive selling agent for the Company and will offer up to
400,000 Shares for sale, on a "Best Efforts" basis.
(b) Bradford will perform its duties pursuant to this Agreement
in compliance with all applicable federal and state
securities laws, and will offer and sell the Shares only by
means of the Prospectus and only in such Jurisdictions
specified by the Company and in which such offers and sales
may be made lawfully.
In exchange for the services of Bradford pursuant to this
Agreement, the Company agrees to pay Bradford a selling
commission of $.50 for each Share
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sold by Bradford as selling agent. The selling commission
shall be payable at such time as the subscription Shares sold
by Bradford as selling agent are accepted by and payment in
full is received therefor by the Company and the funds are
released from escrow. The Company shall make and pay all NASD
and SEC and blue sky filings and fees.
3. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless Bradford
and each person, if any, who controls Bradford within the
meaning of Section 15 of the Securities Act of 1933 (the
"1933 Act"), against any and all losses, claims, damages,
liabilities and expenses (including reasonable cost of
investigation and counsel's fees) arising out of or based
upon any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus, or in any
amendment or supplement thereto, or arising out of or based
upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of
any breach of this Agreement except insofar as such losses,
claims, damages, liabilities and expenses arise out of or are
based upon any untrue statement or omission or alleged untrue
statement or omission made by any means by Bradford or its
agents, directors or employees in connection with the offer
and sale of the Common Stock. The foregoing indemnity shall
not, with respect to untrue statements or omissions in the
Prospectus inure to the benefit of Bradford or any affiliate
or person who controls Bradford, from whom the person
asserting any such loss, liability, claim, damage or expense
purchased any of the Shares that are the subject hereof, if
such person was not sent or given a copy of the Prospectus
(as amended or supplemented).
(b) If any action or claim shall be brought or asserted against
Bradford or any person controlling Bradford in respect of
which indemnity may be sought from the Company, Bradford or
such controlling person shall promptly notify the Company in
writing, enclosing copies of all papers served on or
delivered to such party, and the Company shall assume the
defense thereof, including the employment of one counsel for
all of Bradford and the payment of all expenses. The failure
to notify an indemnifying party shall not relieve the
indemnifying party from any liability hereunder to the extent
it is not materially prejudiced as a result of such failure.
Bradford or any such controlling person shall have the right
to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses
of such counsel shall be at the sole expense of Bradford or
such controlling person unless (i) the employment thereof has
been specifically authorized in advance by the Company in
writing, (ii) the Company failed to assume the defense and
employ counsel as described above or (iii) the named parties
to any such action (including any impleaded parties) include
both Bradford or such controlling person and the Company, and
Bradford or such controlling person shall have been advised
by such counsel
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that there may be one or more legal defenses available to it
that are different from or in addition to those available to
the Company (in which case, if Bradford or such controlling
person notifies the Company in writing that it elects to
employ separate counsel at the expense of the Company, the
Company shall not have the right to assume the defense of
such action on behalf of Bradford or such controlling
person). 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 3 (whether or
not the indemnified parties are actual or potential parties),
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) Bradford 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 against, any and all loss, liability, claim, damage
and expenses described in the indemnity contained in
subsection (a) of this Section 3 but only with respect to
untrue statements or omissions, or alleged untrue statements
or omissions made in the Prospectus (as amended or
supplemental) based upon information furnished to the Company
by Bradford.
(d) If the indemnification provided for in this Section 3 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 reflect the relative benefits received by the
Company on the one hand and Bradford 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 Bradford 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
Bradford 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 by Bradford in the Offering (before
deducting expenses), and the total selling commission
received by Bradford. The relative fault of the Company on
the one hand and of Bradford on the other shall be determined
by references to, among other things, whether the untrue or
alleged untrue
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statement of a material fact or the omission to state a
material fact relates to information supplied by the Company,
or by Bradford 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 Bradford on the other agree
that it would not be just and equitable if contribution be
made pursuant to this Section 3 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 3, Bradford
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 Bradford 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.
4. REPRESENTATION, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY.
The representations, warranties, indemnities, agreements and
other statements of the Company set forth in or made pursuant
tot his Agreement shall remain operative and in full force
and effect regardless of any investigation made by or on
behalf of Bradford or the Company or controlling person of
the Company, and shall survive delivery of and payment for
the Shares.
5. GOVERNING LAW; ASSIGNMENTS.
This Agreement shall be governed by the laws of the State of
South Carolina. Neither party may assign this Agreement
without the prior written consent of the other party.
6. COUNTERPARTS.
This Agreement may be executed in one or 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.
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7. NO PERSONAL LIABILITY.
In no event shall any officer or director of the Company have
any personal liability to Bradford or to any other person
under this Agreement.
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 Bradford.
Very truly yours,
New Commerce Bank (In Organization)
By: /s/ Xxxxx X. Xxxxxxx, President
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CONFIRMED AND ACCEPTED,
X.X. Xxxxxxxx & Co.
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: Partner
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COMPENSATION
(a) Pursuant to this Agreement, Bradford will serve as the exclusive
selling agent for the Company and will offer as many shares as the
Company may allot, but in no case less than 100,000 shares and more
than 400,000 shares for sale on a "best efforts" basis.
(b) Xxxxxxxx xxx associate with other dealers as the need arises at its
discretion.
(c) The Company agrees to pay Bradford a general selling commission of
$.50 per share for each share sold by Bradford at the public offering
price of $10.00.
(d) The Company agrees to pay Bradford a general and administrative fee of
$.07 per share sold by or through Bradford at the public offering
price of $10.00.
(e) No selling commission will be payable on shares sold to the Company's
employees, officers, directors and immediate families of the
employees, officers and directors.
