April 1, 1999
Xx. Xxxxxxx X. Xxxxx
President and Chief Executive Officer
United Americas Bankshares, Inc.
00 Xxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Dear Xxxxx:
This letter sets forth your agreement ("Agreement") with GMA
Partners, Inc. ("GMA") as to the terms and conditions on which GMA
will provide financial advisory services to United Americas
Bankshares, Inc. (the "Company") and assist the Company, on a best
efforts basis, to raise approximately $12,000,000 in equity capital
through the sale of the Company's common stock (the "Transaction").
The proceeds of the Transaction will be used for the initial
capitalization of United Americas Bank, N.A. ("Bank"), a wholly owned
subsidiary of the Company.
During the term of this Agreement, GMA shall serve as the
Company's exclusive financial adviser and sales agent with respect to
the Transaction, although it is contemplated that officers and
directors of the Company may assist the Company in effecting the
Transaction. GMA will not, however, purchase any securities of the
Company for resale or otherwise act as an underwriter as that term is
defined in the Securities Act of 1933, as amended (the "Act"), in
connection with the Transaction.
The Company anticipates that the equity capital will be raised
through the sale of common shares of the Company commencing in April
of this year. The shares will be offered to investors via a
Registration Statement to be prepared by the Company and filed with
the Securities and Exchange Commission and state securities regulators
as required (the "Offering"). It is anticipated the Company's Board of
Directors and Board of Advisors, together with their Hispanic
contacts, will invest approximately fifty-one percent (51%) of the
funds required to complete the Transaction. Proceeds of the Offering
will be placed in escrow as described in the draft Registration
Statement prepared by the Company and delivered to GMA prior to
execution of this Agreement and released as described therein.
This Agreement shall become effective upon the execution hereof
by the Company. The term of this Agreement shall be four (4) months
from the date of the acceptance of this Agreement (the "Term"),
provided that GMA may continue to work with and solicit funds from
prospective investors contacted (as defined below) prior to the
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United Americas Bankshares, Inc.
April 1, 1999
Page 2
termination of this Agreement. This Agreement may be terminated by
either the Company or GMA after the four (4) months for any reason by
providing the other party five (5) business days written notice of its
election to terminate. The Company shall be liable for fees and
expense reimbursements as provided for in this Agreement and the
Company's indemnification obligations set forth herein shall survive
such termination. If the Company, or any successor thereof, Closes the
Transaction during the Term of this Agreement or receives money into
the escrow account within six (6) months after the Registration
Statement is initially filed with the Securities and Exchange
Commission from any party with which the Company, its officers,
directors, shareholders or GMA has had "contact " (as defined below)
concerning the proposed Transaction during the term of this Agreement;
then GMA shall be due and paid the Success Fee (as hereinafter
defined) upon the Closing of the Transaction. For the purpose of this
Agreement, "contact" is defined as meetings, telephonic or telecopier
communication, written communication or transmission of communication
or information by computer medium with or to prospective equity
investors.
I. PERFORMANCE OF SERVICES.
GMA agrees to provide the following services to the Company in
connection with the transaction:
(i) Serve as the exclusive financial advisor to the Company in
connection with all phases of the Offering;
(ii) Coordinate preparation of a list of potential investors for the
purpose of identifying and contacting target investors;
(iii) Act as sales agent in marketing the shares and assist the Company
in the Transaction on a best efforts basis; and
(iv) Perform other related activities reasonably requested by the
Company in regard to the Transaction.
GMA represents and warrants that it and its applicable agents and
employees have all requisite licenses and permits to perform its
obligations contained herein, and that it and its applicable agents
and employees are duly licensed, where such licensure is necessary or
appropriate, as a broker or dealer under Federal laws and under the
laws of each state where GMA will offer or sell the Company's
securities.
The Company agrees to provide to GMA, among other things, all
financial data, corporate records, and information requested or
reasonably required by GMA to provide its services outlined in this
Agreement. GMA shall have the right to rely upon the accuracy and
completeness of all information provided regarding the Company,
without the need for GMA to independently verify such accuracy or
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United Americas Bankshares, Inc.
April 1, 1999
Page 3
completeness. All information, including in any offering memorandum,
shall be provided by and be the responsibility of the Company.
II. COMPENSATION OF SERVICES
In consideration of services performed, the Company agrees to pay
or compensate GMA as follows:
a. Upon invoice, reimbursement for all reasonable documented
expenses incurred in connection with the performance of
GMA's services pursuant to this Agreement, including the
cost of legal counsel retained on our behalf. Expenses
shall primarily consist of, but are not limited to legal,
travel, delivery and data services as well as other related
communications expenses. Once expenses reach an aggregate
total of $30,000, GMA will seek the Company's approval
before accruing any additional expenses; provided, however,
legal fees will not exceed $20,000. It is anticipated that
the Company will pay for road show expenses directly and
that counsel retained by the Company will be responsible for
preparing the required offering materials.
The Company agrees to pay GMA and be responsible for the following
fees (the "Success Fee") upon payment to the Company of the funds in
escrow upon the termination of the Escrow Agreement as described in
the Registration Statement (the "Closing"):
b. If less than $10.5 million is transferred from the escrow account
to the company on the date of Closing (the "Closing Date"),
the Success Fee shall equal the product of $0.15 per share
times the number of shares sold by GMA retail brokers to
their retail clients and contacts, not including any shares
sold to GMA's partners, Board of Directors members, or
Advisory Board members.
c. If more than $10.5 million is deposited into the escrow account
on or prior to six (6) months from the acceptance of this
Agreement and the Closing occurs, the Success Fee shall
equal the lesser of: (i) the sum of $100,000 plus the
product of 2/15 times the amount deposited into the escrow
account above $10.5 million, or (ii) $300,000.
d. If $12 million is deposited into the escrow account within two
(2) months after the Registration Statement is initially
filed with the Securities and Exchange Commission and the
Closing occurs, the Success Fee will be increased by
$100,000.
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United Americas Bankshares, Inc.
April 1, 1999
Page 4
e. If $12 million is deposited into the escrow account between two
months and four months after the Registration Statement is
initially filed with the Securities and Exchange Commission
and the Closing occurs, the Success Fee will be increased by
$50,000.
III. Indemnification
In the event that GMA becomes involved in any capacity in any
action, proceeding or investigation in connection with the performance
by GMA of the services contemplated by this letter, which involvement
is not a result of GMA's breach of GMA's representations and
warranties contained herein, gross negligence or willful malfeasance
in the performance of such services, the Company will, upon the
written request of GMA from time to time, reimburse GMA for its
reasonable legal and other expenses (including the reasonable cost of
any investigation and preparation) incurred in connection therewith.
The Company will also indemnify GMA against any losses, claims,
damages or liabilities to which it may become subject in connection
with the performance by GMA of the services contemplated by this
letter, except to the extent that any such loss, claim, damage,
liability or expense results from GMA's breach of GMA's
representations and warranties contained herein, gross negligence or
willful malfeasance in performing the services which are the subject
of this letter. If for any reason the foregoing indemnification is
unavailable to GMA or insufficient to hold GMA harmless, then the
Company shall contribute to the amount paid or payable by GMA as a
result of such loss, claim, damage or liability in such proportion as
is appropriate to reflect not only the relative benefits received by
the Company on the one hand and GMA on the other hand, but also the
relative fault of the Company and GMA, as well as any relative
equitable considerations, except that the Company shall not in any
event be responsible for any such loss, claim, damage or liability
resulting from GMA's breach of GMA's representations and warranties
contained herein, gross negligence or willful malfeasance in
performing the services which are the subject of this Agreement;
provided, however, that in no event shall the amount contributed by
GMA pursuant to this paragraph exceed the amount of fees actually
received by GMA under this Agreement. The Company's reimbursement,
indemnity and contribution obligations under this paragraph shall be
in addition to any liability which it may otherwise have, shall extend
upon the same terms and conditions to GMA's employees and controlling
persons (if any), and shall be binding upon and inure to the benefit
of any successors, assigns, heirs and personal representatives of GMA
and any such person. The Company agrees that neither GMA nor any of
its directors, agents, or affiliates shall have any liability to the
Company for any losses, damages, liabilities or expenses arising out
of the performance of services by GMA under this Agreement, unless it
is finally determined judicially that such losses, damages,
liabilities or expenses resulted directly from the breach of GMA's
representations and warranties contained herein, gross negligence or
willful malfeasance of GMA.
V. DISCLOSURE
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United Americas Bankshares, Inc.
April 1, 1999
Page 5
Any financial or other advice or documentation rendered by GMA or
prepared by or on behalf of GMA pursuant to this Agreement shall not
be disclosed publicly in any manner without the prior consent of GMA.
All non-public information provided by the Company to GMA will be
considered to be confidential information and shall be maintained as
such by GMA until the same becomes known to third parties or the
public without release thereof by GMA.
The Company agrees to provide GMA, among other things, all
reasonable information requested or reasonably required by GMA or a
potential investor, including but not limited to, information
concerning projected financial results and contingent liabilities or
claims. The Company will advise GMA in a timely manner if in
management's judgment any material change, adverse or otherwise,
occurs in its business or finances during the term of this Agreement.
IV. PUBLIC NOTICE
Following the completion of a Transaction, the Company agrees
that GMA has the right to place advertisements in financial and other
newspapers and journals as GMA deems appropriate, describing its
services to the Company, provided that GMA shall submit copies of such
advertisements to the Company so that the Company may consent to the
form, content and timing of such advertisements. Such consent shall
not be unreasonably withheld or delayed.
V. ENTIRE AGREEMENT, ETC.
This Agreement sets forth the entire understanding of the parties
relating to the subject matter hereof and supersedes and cancels any
prior communications, understandings and agreements. This Agreement
cannot be modified or changed, nor can any of its provisions be
waived, except by written agreement executed by both parties hereto.
VI. GOVERNING LAW
This Agreement shall be governed by and construed in accordance
with the laws of the State of Georgia. The parties hereto agree to
submit to arbitration any action or dispute arising under this
Agreement or any action to enforce the terms hereof. Such arbitration
shall be determined pursuant to the procedure and rules as prescribed
and adopted by the National Association of Securities Dealers, Inc.
VII. SEVERABILITY
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United Americas Bankshares, Inc.
April 1, 1999
Page 6
If any term, provision, covenant or restriction contained in this
Agreement, including Article III, is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or
against its regulatory policy, the remainder of the terms, provisions,
covenants and restrictions contained in this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated.
VIII. ACCEPTANCE
Please confirm your acceptance of the foregoing terms of the
Agreement by signing and then returning an executed original of the
Agreement whereupon it shall become a binding agreement between the
Company and GMA. The terms of this Agreement will expire on April 3,
1999, unless accepted by you prior to such date.
Very truly yours,
GMA Partners, Inc.
By: __________________________
Xxxxxx Xxxxxxxxx,
Managing Director
Accepted and agreed to as of April ____, 1999:
United Americas Bankshares, Inc.
By: ________________________
Xxxxxxx X. Xxxxx, President and Chief Executive Officer
