WESTSTAR FINANCIAL SERVICES CORP
POS AM, EX-1.1, 2001-01-19
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                     Weststar Financial Services Corporation

                             SALES AGENCY AGREEMENT

November 13, 2000



Wachovia Securities, Inc.
IJL Financial Center
201 North Tryon Street, 23rd Floor
Charlotte, North Carolina  28202

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

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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

<PAGE>

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

<PAGE>

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

<PAGE>

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

<PAGE>

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

<PAGE>

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 1933 Act) 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.

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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. Gordon Greenwood
         ------------------------
Name:    G. Gordon Greenwood
Title:   President and CEO

Confirmed and Accepted,

Wachovia Securities, Inc.


By:      /s/ James H. Glen, Jr.
         ----------------------
Name:    James H. Glen, Jr.
Title:   Senior Vice President




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