Weststar Financial Services Corporation
SALES AGENCY AGREEMENT
November 13, 2000
Wachovia Securities, Inc.
IJL Financial Center
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Ladies and Gentlemen:
This letter sets forth and confirms the terms and conditions of the
engagement (the "Agreement") of Wachovia Securities, Inc. ("WSI") by Weststar
Financial Services Corporation (the "Company") as selling agent for the Company
with respect to the Company's proposed public offering (the "Offering") of
between 117,000 and 410,000 shares 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 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 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
Wachovia Securities, Inc.
November 13, 2000
Page 2
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 and
any other selling agents for the Shares named by the Company.
(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.
(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
Wachovia Securities, Inc.
November 13, 2000
Page 3
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:
(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
Prospectus or any amendment thereto or requests by
the SEC or 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) 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 stockholders, 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.
(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
Wachovia Securities, Inc.
November 13, 2000
Page 4
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, 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 December 15, 2000 (the "Commencement Date") and
continuing until such time as the Offering is terminated, WSI
will serve as selling agent for the Company on a non-exclusive
basis and will act as a placement agent for the Shares for
sale on a best efforts basis; provided, however, that WSI
-------- -------
shall not commence any active solicitation efforts pursuant to
this Section 2(a) unless the Adjusted Trading Price (as
defined below) of the Company's common stock equals or exceeds
the Public Offering Price provided in the Prospectus or any
supplement thereto filed on or before the Commencement Date.
"Adjusted Trading Price" means 110% of the average bid price
of the Company's common stock on the OTC Bulletin Board System
for the twenty (20) trading days prior to the Commencement
Date (the "Commencement Condition"). It is expressly
acknowledged and agreed that prior to the Commencement Date,
WSI shall have no duty or obligation to (i) distribute copies
of the Prospectus or any supplement thereto to any prospective
purchaser or (ii) otherwise actively solicit any prospective
purchaser of the Shares. WSI acknowledges that the Company may
contract with other selling agents for the sale of the Shares
and that no such contractual arrangements shall violate or
conflict with the terms of this Agreement, nor shall WSI be
entitled to any selling commissions for any Shares sold by any
authorized selling agents other than WSI.
(b) WSI will perform its duties pursuant to this Agreement in
compliance with all applicable federal and state securities
laws, and will 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 6.0% of the gross
dollar amount for each Share sold by WSI, irrespective
Wachovia Securities, Inc.
November 13, 2000
Page 5
of whether or not the Commencment Condition has been satisfied. Such
amount shall be paid as soon as sufficient funds become available to
the Company from the sale of Shares in the Offering and in no event
later than ten days after the completion of the Offering. In addition,
whether or not the Offering is terminated, the Company will reimburse
WSI for its actual accountable out-of-pocket expenses, including fees
of counsel. WSI shall perform the services contemplated by this
Agreement in compliance with the requirements of Rules 2420, 2730, 2740
and 2750 of the NASD Conduct Rules.
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 WSI's counsel in connection with
state Blue Sky and NASD filings;
(d) the filing fees of the SEC and 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
Wachovia Securities, Inc.
November 13, 2000
Page 6
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.
(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 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
Wachovia Securities, Inc.
November 13, 2000
Page 7
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.
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.
Wachovia Securities, Inc.
November 13, 2000
Page 8
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,
WESTSTAR FINANCIAL SERVICES CORPORATION
By: /s/ G. Xxxxxx Xxxxxxxxx
------------------------
Name: G. Xxxxxx Xxxxxxxxx
Title: President and CEO
Confirmed and Accepted,
Wachovia Securities, Inc.
By: /s/ Xxxxx X. Xxxx, Jr.
----------------------
Name: Xxxxx X. Xxxx, Jr.
Title: Senior Vice President
