Exhibit 1.1
ECB BANCORP, INC.
SALES AGENCY AGREEMENT
, 0000
XXXXXXXXXX/XXXXXXX XXXX CORPORATION
IJL Financial Center
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Ladies and Gentlemen;
This letter sets forth and confirms the terms and conditions of the
engagement (the "Agreement") of Interstate/Xxxxxxx Xxxx Corporation ("IJL") by
ECB Bancorp, Inc. (the "Company") as 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 registration
statement (the "Registration Statement") and a prospectus (the "Prospectus") set
forth therein, which will be provided to IJL. IJL's engagement hereunder shall
be non-exclusive, provided that IJL shall be entitled to approve the engagement
of other selling agents and such other selling agents shall in any event conduct
their sales efforts in a manner consistent with the Prospectus.
1. Representations and Warranties of the Company and the Bank.
The Company and the Bank represent and warrant to, and agree with IJL as
follows:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect and no
proceedings for such purpose are pending before or threatened by the Securities
and Exchange Commission (the "Commission").
(b) The Registration Statement, at the time it became effective, did 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 not misleading. 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.
(c) The Company is a corporation and a bank holding company validly
existing and in good standing under the laws of the State of North Carolina; 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 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. The Reorganization (as defined and described in the
Prospectus) has become effective and remains in full force and effect as so
described.
(d) The Bank is an FDIC-insured, state-chartered bank validly existing and
in good standing under the laws of the State of North Carolina; has full
corporate 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 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 Bank.
(e) The shares of Common Stock to be issued and sold by the Company
hereunder and pursuant to the Prospectus (the "Shares"), when issued and
delivered against payment therefor as provided herein, will be duly authorized,
validly issued, fully paid and nonassessable and will conform to the description
thereof contained in the Prospectus.
(f) Except as disclosed in the Prospectus, there are no (i) outstanding
securities or obligations of the Company or the Bank (or any subsidiary thereof)
convertible into or exchangeable for any capital stock of the Company, (ii)
warrants, rights or options to subscribe for or purchase from the Company or the
Bank (or any subsidiary) any such capital stock or any such convertible or
exchangeable securities or obligations or (iii) obligations of the Company or
the Bank (or any subsidiary) to issue any such convertible or exchangeable
securities or obligations, or any such warrants, rights or options.
(g) Each of the Company and the Bank has the full legal right, power and
authority to enter into and perform this Agreement, and the Company has such
right, power and authority to sell and deliver the Shares as provided herein.
This Agreement has been duly authorized by the Board of Directors of, and duly
executed and delivered on behalf of, each of the Company and the Bank.
(h) Other than filings with, and any necessary registrations,
qualifications or exemptions from, the 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.
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(i) Except as provided in Section 2(a), there are no contracts, agreements
or understandings between the Company or the Bank and any person which would
give rise to a valid claim against the Company or the Bank 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 IJL and any other
selling agents for the Shares as permitted hereby.
(j) No action, suit or proceeding at law or in equity is pending or, to
the Company's or the Bank's knowledge, threatened to which the Company or the
Bank (or any subsidiary thereof) is or would be a party, and no proceedings are
pending or, to the Company's or the Bank's knowledge, threatened against or
affecting the Company or the Bank (or any subsidiary thereof) 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 on the condition, financial or otherwise, results
of operations affairs or business prospects of the Company or the Bank.
(k) Each of the Company and the Bank 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 or the Bank.
(l) Neither the Company nor the Bank is an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940.
(m) The Company has applied for and obtained admission for quotation of
its Common Stock on the Small Cap listing of the National Association of
Securities Dealers Automated Quotation system.
(n) The Company and the Bank agree as follows:
(i) The Company or the Bank, as applicable, will notify IJL
immediately and confirm such notice in writing, of the receipt of any
comments from the Commission, any state securities commission or
regulatory authority or any state or federal banking commission or
regulatory authority that relate to the Prospectus or any amendment
thereto or the transactions contemplated thereby or requests by the
Commission, any state securities commission or regulatory authority or any
state or federal banking 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."
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(iii) For three years from the date of this Agreement, the Company
will furnish to IJL copies of all reports and communications (financial or
otherwise) furnished by the Company to its stockholders, and the Company
or the Bank, as applicable, will furnish to IJL copies of all reports or
financial statements filed with 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
or the Bank as IJL may reasonably request.
2. Services to be Provided by IJL.
In connection with this Agreement, the scope of IJL's services shall
consist of the following:
(a) Pursuant to this Agreement, IJL will serve as a selling agent for the
Company and will offer the Shares for sale on a reasonable efforts basis. IJL
acknowledges that the Company may contract with other selling agents for the
sale of the Shares, provided that IJL shall be entitled to approve the
engagement of other selling agents and such other selling agents shall in any
event conduct their sales efforts in a manner consistent with the Prospectus.
(b) With respect to its efforts as a selling agent, IJL will employ all
reasonable efforts to achieve a broad, retail distribution of the Shares
(c) IJL 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 IJL pursuant to this Agreement, the
Company agrees to pay IJL a selling commission equal to seven percent (7.0%) of
the total dollar amount of the Common Stock sold in the offering. The selling
commission shall be payable at such time as the Shares sold by IJL are accepted
by and payment in full is received therefor by the Company. In the event the
offering is terminated, IJL will be reimbursed only for its actual accountable
out-of-pocket expenses. The Company shall make and pay all NASD and blue sky
filings and fees and all related expenses, including, without limitation,
reasonable attorneys' fees of IJL's counsel incurred in connection therewith.
3. Further Agreements by the Company; Conditions to IJL's Agreements
Hereunder.
The Company further agrees, in connection with the Offering, and as a
condition to IJL's agreements and undertakings herein, to deliver the following
to IJL prior to the closing of the Offering:
(a) An opinion of counsel to the Company and the Bank, reasonably
acceptable to IJL, to the effect that:
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(i) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect
and no proceedings for such purpose are pending before or threatened by
the Commission.
(ii) The Registration Statement, at the time it became effective,
did 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 not misleading. 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.
(iii) The Company is a corporation and a bank holding company
validly existing and in good standing under the laws of the State of North
Carolina; 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 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. The Reorganization (as defined and described in
the Prospectus) has become effective and remains in full force and effect
as so described.
(iv) The Bank is an FDIC-insured, state-chartered bank validly
existing and in good standing under the laws of the State of North
Carolina; has full corporate 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 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 Bank.
(v) The Shares of Common Stock to be issued and sold by the Company
hereunder and pursuant to the Prospectus, when issued and delivered
against payment therefor as provided herein, will be duly authorized,
validly issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus.
(vi) [Except as disclosed in the Prospectus, to the best knowledge
of such counsel, there are no (i) outstanding securities or obligations of
the Company or the Bank (or any subsidiary thereof) convertible into or
exchangeable for any capital stock of the Company, (ii) warrants, rights
or options to subscribe for or purchase from the Company or the Bank (or
any subsidiary) any such capital stock or any such convertible or
exchangeable securities or obligations or (iii) obligations of the Company
or the Bank (or any subsidiary) to issue any such convertible or
exchangeable securities or obligations, or any such warrants, rights or
options.]
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(vii) Each of the Company and the Bank has the full legal right,
power and authority to enter into and perform this Agreement, and the
Company has such right, power and authority to sell and deliver the Shares
as provided herein. This Agreement has been duly authorized by the Board
of Directors of, and duly executed and delivered on behalf of, each of the
Company and the Bank.
(viii)Other than filings with, and any necessary registrations,
qualifications or exemptions from the 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.
(ix) To the best knowledge of such counsel, no action, suit or
proceeding at law or in equity is pending or threatened to which the
Company or the Bank (or any subsidiary thereof) is or would be a party,
and no proceedings are pending or threatened against or affecting the
Company or the Bank (or any subsidiary thereof) 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 on the condition, financial
or otherwise, results of operations affairs or business prospects of the
Company or the Bank.
(x) Neither the Company nor the Bank is an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940.
(xi) The issuance and sale of the Shares and the consummation of the
transaction as contemplated by this Agreement and the Prospectus will not
violate or result in a breach of the Company or the Bank of any of the
terms of or constitute a default by the Company or the Bank under the
Articles of Incorporation or Bylaws thereof or any material agreement or
instrument known to such counsel to which the Company or the Bank is a
party or by which the Company or the Bank or any of their respective
properties is bound or any existing law, rule, regulation, writ,
injunction, or decree known to such counsel of any government,
governmental instrumentality, agency, body, arbitration tribunal, or
court, domestic or foreign, having jurisdiction over the Company or the
Bank or their respective properties.
(xii) Each of the Registration Statement and Prospectus, as of the
effective date of the Registration Statement complies to form in all
material respects with the Securities Act of 1933, as amended (the "1933
Act"), and rules and regulations thereunder; all contracts, to the extent
described in the Registration Statement or Prospectus are fairly
summarized or described therein, or filed as exhibits thereto as required,
and such counsel does not know of any other contracts required to be
summarized or disclosed or filed as exhibits.
(b) A letter from KPMG Peat Marwick LLP, as auditors of the Company and
the Bank, in form and substance satisfactory to IJL, containing statements and
information of the type
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ordinarily included in accountants' "comfort letters" with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(c) A certificate duly executed by an officer of the Company and an
officer of the Bank certifying that the representations and warranties of the
Company and the Bank set forth in Section 1 hereof are true and correct as of
the date of such closing.
(d) Letters from each executive officer, director and holder of 5% or more
of the outstanding Common Stock of the Company (as determined prior to giving
effect to the Offering), in form and substance satisfactory to IJL, containing
provisions of the type ordinarily included in "lock-up letters" pursuant to
which each such person agrees not to sell or otherwise transfer shares of Common
Stock held by them for a period of 90 days after closing of the Offering.
4. Indemnification and Contribution.
(a) The Company and the Bank agree to indemnify and hold harmless IJL, and
each person, if any, who controls IJL within the meaning of Section 15 of 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 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 IJL 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 IJL, or any affiliate or person who controls IJL, 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 IJL or any
person controlling IJL in respect of which indemnity may be sought from the
Company and the Bank, IJL 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 and the Bank shall assume the defense thereof,
including the employment of one counsel for all of IJL and the payment of all
expenses. 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. IJL 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 IJL or such controlling person unless (i) the
employment thereof has been specifically authorized in advance by the Company in
writing, (ii) the Company and the Bank 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 IJL or such controlling person
and the Company
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and/or the Bank, and IJL or such controlling person shall have been advised by
such counsel 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 and/or the
Bank (in which case, if IJL or such controlling person notifies the Company in
writing that it elects to employ separate counsel at the expense of the Company
and the Bank, the Company and the Bank shall not have the right to assume the
defense of such action on behalf of IJL 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 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) IJL agrees individually, and not jointly with any other selling agent
for the Shares, to indemnify and hold harmless the Company and the Bank and
their respective directors and each person, if any, who controls the Company and
the Bank 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 loss,
liability, claim, damage and expenses described in the indemnity contained in
subsection (a) of this Section 4 but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions made in the Prospectus (as
amended or supplemented) based upon information furnished to the Company by IJL.
(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 and
the Bank on the one hand and IJL 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 and
the Bank on the one hand and of IJL 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 and the Bank on the one hand and
IJL 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 IJL in the Offering
(before deducting expenses), and the total selling commission received by IJL.
The relative fault of the Company and the Bank on the one hand and of IJL on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of material fact or the omission to state a
material fact relates to information supplied by the Company or the Bank, or by
IJL, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Bank on the one hand and IJL 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
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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, labilities 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 Xxxxxxx 0, XXX 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 IJL 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 and the Bank 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 IJL or the Company or the Bank or
controlling person of the Company or the Bank, 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 North
Carolina. No party may assign this Agreement without the prior written consent
of the other party.
7. 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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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 among the Company, the Bank and IJL.
Very truly yours,
ECB BANCORP, INC.
By:___________________________
THE EAST CAROLINA BANK
By:___________________________
CONFIRMED AND ACCEPTED,
INTERSTATE/XXXXXXX LANE CORPORATION
By:________________________
Xxxxx X. Xxxx, Jr.
Managing Director
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