EXHIBIT 1.1
AMERICAN FAMILY HOLDINGS, INC.
$5,000,000 OF UNITS
WHOLESALING AGREEMENT
American Family Holdings, Inc.
0000 Xxx Xxxxxx
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Dear Sir:
American Family Holdings, Inc., a Delaware corporation (the "Corporation"),
proposes to offer and sell to investors, upon the terms and conditions set forth
in the Prospectus dated _______________, 1997, and as the same may be amended or
supplemented from time to time (the "Prospectus"), Units (consisting of one
share of Common Stock and one warrant to purchase one share of Common Stock)
aggregating $5,000,000, $10 per Unit (the "Offering"). The Offering will not be
completed if the Acquisition described in the Prospectus is not completed.
You are hereby requested to perform, on an exclusive basis, the wholesaling
activities related to the public offering of the Units and by your execution of
a counterpart of this letter in the place indicated, you agree to use your best
efforts, consistent with the terms of this Offering as set forth in the
Prospectus, to perform the services customarily performed by persons conducting
wholesaling services for similar offerings, in accordance with the following
terms and conditions:
1. SOLICITATION AND SOLICITATION MATERIAL. Solicitation and other
activities by you hereunder shall be undertaken only in accordance with
applicable laws and regulations and the terms hereof. Accompanying this letter
is a copy of the Prospectus which you may use to familiarize yourself with the
terms of this Offering. Additional copies of the Prospectus will be sent to you
in reasonable quantities upon your request. No person is authorized to use any
solicitation material other than that referred to in the Prospectus and no
person is authorized to use any solicitation material in any state where such is
prohibited by law.
2. COMPENSATION. As a compensation for services rendered in connection
with your activities, the Corporation hereby agrees to pay to you a commission
equal to two percent of the sales price of the Units sold by broker-dealers
through your efforts or through the efforts of any officer or employee of the
Corporation whose assistance is made available to you. Payment of the
compensation described in this Paragraph 2 is subject to the provisions of
Paragraph 3 hereof.
3. CONDITIONS FOR PAYMENT OF SALES COMPENSATION. All commissions payable
by the Corporation under Paragraph 2 above are subject to acceptance by the
Corporation of the Subscription Agreements from potential investors and the
Corporation specifically reserves the right to reject any such Agreement. In
the event that the Offering is not completed or if the transactions referred to
herein and in the Prospectus are not consummated for any reason, and, as a
result thereof, all subscription payments are refunded to all potential
investors, no commission will be due or payable to you. Commissions to be paid
to you pursuant to Paragraph 2 hereof shall be paid by the Corporation to you
within 15 days following the completion of the Acquisition. There is no minimum
number of Units which must be sold.
4. REPORTS. You agree to provide the Corporation progress reports on
your sales activities on a regular basis, such basis to be mutually agreed upon
among the parties hereto.
5. UNAUTHORIZED INFORMATION AND REPRESENTATIONS. Neither you nor any
other person is authorized by the Corporation or any other person to give any
information or make any representation in connection with this Agreement or the
Offering other than those contained in the Prospectus furnished by the
Corporation. You agree not to publish, circulate or otherwise use any other
advertisement or solicitation material under any circumstances
unless you have obtained the prior written agreement of the Corporation and such
materials have been approved by counsel to the Corporation and by any relevant
securities regulatory authorities.
6. BLUE SKY QUALIFICATIONS. The Corporation assumes no obligation or
responsibility with respect to the qualification of the Units or the right to
solicit purchases of the Units under the laws of any state or other
jurisdiction. Services to be performed by you hereunder are to be performed
only within the states or other jurisdictions in which solicitations by broker-
dealers are qualified to be made. The Corporation has listed the [UNITS][COMMON
STOCK AND WARRANTS] on the ______________ and, as such, believes their offer and
sale is exempt from blue sky regulation in all states other than
_______________.
7. GENERAL. You hereby represent that you are a member in good
standing of the National Association of Securities Dealers, Inc. and that you
will continue such qualification during the term of this Agreement. Upon
your acceptance of this Agreement, you agree to comply with any applicable
requirements of the Securities Act of 1933, as amended (the "Act"), and of
the Securities Exchange Act of 1934, as amended, and the published rules and
regulations thereunder, any applicable rules of the National Association of
Securities Dealers, Inc., and the rules and regulations of all state
securities authorities, as applicable.
8. TERMINATION. This Agreement shall be deemed to have been entered into
as of _______________, 1997 and it may be terminated by written or telegraphic
notice to you from the Corporation upon 60 days prior written notice and, in any
case, will terminate at the close of business on ___________, 199_ (unless
extended thereafter by the Corporation), PROVIDED that all compensation payable
to you under the terms and conditions hereof shall be paid when due, although
this Agreement shall have theretofore been terminated.
9. EXCLUSIVE AGREEMENT. You will provide to the Corporation the services
described herein on an exclusive basis, and the Corporation hereby agrees that
it will employ no other person or entity to perform such wholesaling services
during the term of this Agreement.
10. INDEMNIFICATION.
(a) The Corporation agree to indemnify and hold harmless you and each
person who controls you within the meaning of the Act, against any losses,
claims, damages or liabilities, joint or several, to which you may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Prospectus; or (ii) the omission or alleged omission to state in the
Prospectus a material fact 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; and will reimburse you for any legal or other expenses
reasonably incurred by you in connection with investigating or defending any
such loss, claim, damage, liability or action, provided, however, that you shall
not be indemnified for any losses, liabilities or expenses arising from or out
of an alleged violation of federal or state securities laws unless (1) there has
been a successful adjudication on the merits of each count involving alleged
securities law violations as to the particular indemnitee, (2) such claims have
been dismissed with prejudice on the merits by a court of competent jurisdiction
as to the particular indemnitee or (3) a court of competent jurisdiction
approves a settlement of the claims against a particular indemnitee. In any
claim for indemnification for federal or state securities law violations, the
party seeking indemnification shall place before the court the position of the
Securities and Exchange Commission and the position, if applicable, of any state
securities regulatory authority in any jurisdiction in which Units were sold
with respect to the issue of indemnification for securities law violations. The
Corporation shall not incur the cost of that portion of any insurance, other
than public liability insurance, which insures any party against any liability
the indemnification of which is herein prohibited.
(b) You agree to indemnify and hold harmless the Corporation against any
losses, claims, damages or liabilities to which the Corporation may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon (i)
any untrue
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statement or alleged untrue statement of a material fact in any communication
between you, your representatives or agents and any investor, or (ii) the
omission or alleged omission to state a material fact required to be stated in
any communication between you, your representatives or agents, and any investor,
or necessary to make the statements to said investor not misleading.
(c) Promptly after receipt by an indemnified party under this Paragraph 10
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereto is to be made against any indemnifying party under this
Paragraph 10, notify in writing the indemnifying party of the commencement
thereof; and the omission so to notify the indemnifying party will relieve it
from any liability under this Paragraph 10 as to the particular item for which
indemnification is then being sought but not from any other liability which it
may have to any indemnified party. In case any such action is brought against
any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will not be liable to such
indemnified party under this Paragraph 10 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. If any such indemnifying
party elects to defend any such action, such indemnifying party shall not be
liable to any such indemnified party on account of any settlement of such claim
or action effected without the consent of such indemnifying party. Any
indemnified party may, at its own cost and expense, participate at any time in
any claim or action covered by this Paragraph 10.
11. MISCELLANEOUS. In the event that any dispute arises between you and
the Corporation out of or by reason of this Agreement, then and in that event
such parties do hereby agree that said dispute shall be arbitrated in accordance
with the then existing rules of the American Arbitration Association in Orange
County, California, and that any award rendered thereunder, including attorneys'
fees and costs to the prevailing party, may be entered in any court of competent
jurisdiction, state or federal, including attorneys' fees and costs to the
prevailing party.
This Agreement constitutes the entire Agreement between you and the
Corporation and any change, amendment or alteration to this Agreement shall be
ineffective unless reduced to writing and executed by both parties. This
Agreement shall be governed by California law without giving effect to conflicts
of law or choice of law provisions. Each party agrees to perform any further
acts and execute and deliver any other documents which may reasonably be
necessary to carry out the terms of this Agreement.
It is expressly understood that no representations have been made in
connection with this Agreement other than as herein set forth, except those
representations contained in the Prospectus provided to you.
Very truly yours,
AMERICAN FAMILY HOLDINGS, INC.,
a Delaware corporation
By_____________________________
Xxxxx X. Xxxxxx, President
Agreed and Accepted By:
L.H. Friend, Weinress, Xxxxxxxx & Xxxxxxx, Inc.
By_____________________________________________
Name_________________________________________
Title________________________________________
Date: ________________________, 1997
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