Exhibit 1.1
ALLIANCE FARMS COOPERATIVE ASSOCIATION
A COLORADO COOPERATIVE ASSOCIATION
AGENCY AGREEMENT
, 1997
Interstate/Johnson Lane Corporation
121 West Trade Street
Charlotte, North Carolina 28202
Gentlemen:
The undersigned, Alliance Farms Cooperative Association, a Colorado
cooperative association (the "Association"), hereby confirms its agreement with
you as follows:
1. INTRODUCTION.
This Agreement sets forth the understanding and agreement among the
Association and you whereby you will serve as agent for the Association in
connection with the Association's sale, on a best efforts basis, of (a) a
minimum of 17 and a maximum of 51 shares of the Association's (Class A) Common
Stock (the "Class A Shares"), (b) a minimum of 18 and a maximum of 54 shares of
the Association's Class B Common Stock (the "Class B Shares"), and (c) a minimum
of 24 and a maximum of 72 shares of the Association's Class C Common Stock (the
"Class C Shares", and together with the Class A Shares and the Class B Shares,
the "Shares"), at the respective purchase prices and subject to the terms and
conditions set forth in the Prospectus dated , 1997, as amended or
as supplemented if the Association shall have filed with the Securities and
Exchange Commission any amendment thereof or supplement thereto (the
"Prospectus"), relating to the offer and sale of the Shares. The Prospectus is
included in a Registration Statement on Form SB-2 (Registration No. 333-25501)
filed with the Securities and Exchange Commission (the "Registration
Statement"), which Registration Statement has become effective pursuant to
Section 8 of the Securities Act of 1933, as amended, on the date of the
execution of this Agreement. Capitalized terms used herein which are not
otherwise defined shall have the same meanings as provided in the Prospectus.
2. REPRESENTATIONS AND WARRANTIES OF THE ASSOCIATION.
The Association represents and warrants to you and agrees with you
that:
(a) When the Registration Statement became effective and upon the
first delivery of the Prospectus to you, the Prospectus did contain and
will contain, as the case may be, all statements that are required to be
stated therein in accordance with applicable federal and state securities
laws and regulations and in all material respects conforms and will
conform, as the case may be, to the requirements of such laws and
regulations and did not include and will not include, as the case may be,
any untrue statements of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
except that no representations or warranties are made with respect to
statements or omissions made in reliance upon and in conformity with
written information furnished to the Association with respect to you, by
you or on your behalf expressly for use in the Prospectus or any amendment
or supplement thereof.
(b) The Association is a cooperative association duly organized and
validly existing pursuant to the Colorado Cooperative Association Law (the
"CAL"), with all corporate authority necessary to conduct its business as
described in all material respects in the Prospectus, subject only to
regulatory approvals as described in the Prospectus. The Association has
been duly organized to function as a cooperative association as described
in all material respects in the Prospectus. The Board of Directors has
authorized the Shares to be issued pursuant to the Registration Statement
and the Prospectus. Provided the requisite minimum number of Subscriptions
are received and accepted by the Association, upon acceptance of such
Subscriptions and payment therefor each such accepted subscriber will
become a shareholder of the Association entitled to all the benefits of a
shareholder under the CAL.
(c) There is no litigation or governmental proceeding pending or to
the Association's knowledge threatened involving the business of the
Association that might materially and adversely affect the value or the
operation of the business or the financial condition of the Association,
except as may be disclosed in the Prospectus.
(d) Any historical financial statements (other than pro forma
financial statements) together with related schedules and notes included in
the Prospectus present fairly the financial position of the subject entity
as of the respective dates and for the respective periods indicated and
such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a basis that is consistent in all
material respects during the periods involved, except as may be disclosed
in the Prospectus.
(e) The Association is not in default which has not been waived in
the performance of any obligation, agreement or condition contained in any
agreement by which the Association 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 any of the terms, provisions or conditions of
any agreement or instrument to which the Association is a party or by which
it is bound, or any order, rule or regulation applicable to the Association
of any court or any governmental body or administrative agency having
jurisdiction over the Association.
(f) The Shares conform in all material respects to the description
thereof contained in the Prospectus, and will have been duly and validly
authorized for issuance and, when paid for as described in the Prospectus,
will be validly issued, fully paid and nonassessable.
(g) The person or persons executing this Agreement on behalf of the
Association are duly authorized so to sign, and this Agreement is and will
be a valid, legal and binding agreement of the Association, enforceable in
accordance with its terms, except as rights to indemnity hereunder may be
limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally and subject to
general principles of equity.
(h) No officer or director of the Association or shareholder of the
Association identified under the heading "Principal Stockholders" in the
Prospectus is affiliated with a member of the National Association of
Securities Dealers, Inc., nor is any of those persons subject to "statutory
disqualification" (as defined in Section 3(a)(39) of the Securities
Exchange Act of 1934) regarding any such affiliation, except that Farmland
Industries, Inc., a shareholder of the Association, is affiliated with
Farmland Securities Company, a member of the National Association of
Securities Dealers, Inc.
(i) No affiliate of the Association has received nor is entitled to
receive, directly or indirectly, any compensation or other benefit
including, but not limited to, any commission or similar fee relating to
the investments in or of the Association, except as specifically described
in the Prospectus.
(j) Any additional written or oral information provided to
prospective purchasers of Shares by authorized representatives of the
Association ("Authorized Persons") will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
3. AGENT IN CONNECTION WITH OFFERING.
(a) The Association hereby appoints you its non-exclusive agent in
connection with this offering to assist in the sale for the account and
risk of the Association (1) a minimum of 17 and a maximum of 51 Class A
Shares, (2) a minimum of 18 and a maximum of 54 Class B Shares, and (3) a
minimum of 24 and a maximum of 72 Class C Shares. Your appointment
hereunder shall continue from the effective date of this Agreement until
the earlier to occur of (i) the date this Agreement terminates or (ii) the
date the offering is fully subscribed as determined by the Association.
You agree to use your best efforts as agent in connection with this
offering to assist in the sale of such numbers of Class A Shares, Class B
Shares and Class C Shares as contemplated by this Agreement at the
respective prices and subject to the terms and conditions set forth in the
Prospectus; provided, however, that the Association reserves the right to
reject any prospective investor ("Investor") or reduce his Subscription as
provided herein. Subject to the terms and conditions and upon the basis of
the representations and warranties set forth herein, you accept such
appointment and agree to assist in the sale of the Shares. The Company has
reserved the right to sell the Shares directly to Investors on its own
behalf through the efforts of its officers and employees in those
jurisdictions where and in such manner as it is authorized to do so.
(b) Each person desiring to purchase Shares will be required to
complete and execute the Subscription Agreement in the form included in the
Prospectus as Exhibit A thereto and to deliver the Subscription Agreement
to you together with payment of the applicable subscription price (the
"Subscription Documents"). In addition, each subscriber of Class A Shares
must complete and execute a Feeder Pig Purchase Agreement in the form
included in the Prospectus as Exhibit B thereto and to deliver said
agreement to you, each subscriber of Class B Shares must complete and
execute a Weaned Pig Purchase Agreement in the form included in the
Prospectus as Exhibit C thereto and to deliver said agreement to you, and
each subscriber of Class C Shares must complete and execute a Class C
Weaned Pig Purchase Agreement in the form included in the Prospectus as
Exhibit D thereto and to deliver said agreement to you. The subscription
price is payable by delivery of a check or bank draft, or by wire transfer,
in the amount of $80,000.00 per Class A Share subscribed, in the amount of
$60,000.00 per Class B Share subscribed and in the amount of $45,000.00 per
Class C Share subscribed. Checks and bank drafts should be made payable to
the order of "Alliance Farms Cooperative Association Escrow No. 1482300"
and delivered to NationsBank, N.A. (Mid-West) (formerly Boatmen's National
Bank), the Escrow Agent for the Association, at 920 Main Street, 11th
Floor, Corporate Trust Department, Kansas City, Missouri 64105, Attention:
Augusta Nelson.
(c) All sales to Investors will be conditioned upon the receipt of
Subscriptions accepted by the Association for 17 Class A Shares (the
"Minimum Class A Sales"), or an integral multiple thereof, for 18 Class B
Shares (the "Minimum Class B Sales"), or an integral multiple thereof, or
for 24 Class C Shares (the "Minimum Class C Sales"), or an integral
multiple thereof, in each case, on or before , 1998 at 5:00
P.M., Kansas City, Missouri, time (or until , 1999, if the
offering is extended by the Association or a prior date designated by the
Association). The date on which the Association determines that the
offering is to be terminated is herein referred to as the "Termination
Date". If Minimum Class A Sales, Minimum Class B Sales or Minimum Class C
Sales have not been made by the Termination Date, or if the Association has
exercised its discretion, as provided in the Prospectus, to terminate the
offering, this Agreement shall terminate and there shall be returned,
within 30 days of such termination, to Investors who have subscribed for
Shares, their executed Subscription Agreements and Counterpart Signature
Pages, plus any and all other documents executed by the Investors together
with a refund by the Escrow Agent of their subscription payments plus
interest, as provided in the Escrow Agreement.
(d) At the Closing Date, you will direct the Escrow Agent to deliver
to the Association the subscription funds together with accrued interest
thereon and other documents in its possession attributable to subscribers
whose subscription agreements have been accepted in accordance with the
Escrow Agreement. Upon receipt of subscription funds from the Escrow
Agent, the Association will pay all sums then currently due to you.
(e) The term "Closing Date" as used herein shall refer to the date on
which the Escrow Agent transfers funds received from subscribers for Shares
to the Association. The Closing Date may occur on such date or dates as
you and the Association shall agree at any time after you have received,
and the Association has accepted, subscriptions for at least 17 Class A
Shares, at least 18 Class B Shares or at least 24 Class C Shares and final
regulatory approvals have been received as described in the Prospectus.
The right of the Association to receive such funds on the Closing Date is
subject to fulfillment of the conditions of the Escrow Agreement. This
Agreement and the offering of Shares contemplated hereby will terminate on
the earlier of (a) the acceptance and receipt by the Association of
subscriptions for 51 Class A Shares, 54 Class B Shares and 72 Class C
Shares, (b) the Termination Date, or (c) the date on which the Association
exercises its discretion to terminate the offering.
(f) The Shares will be sold only to persons who warrant or represent
that they meet the suitability requirements set forth in the Prospectus and
the Subscription Agreement.
(g) In consideration for your execution of this Agreement, and for
the performance of your obligations hereunder, the Association agrees to
pay or cause to be paid to you a fixed lump sum fee of $40,000 whether or
not a successful closing of the offering contemplated in the Prospectus has
occurred.
4. FURTHER AGREEMENTS OF THE ASSOCIATION.
The Association further agrees that it will:
(a) Deliver to you promptly such number of copies of the Prospectus
as you may reasonably request.
(b) If during the offering of Shares any event relating to or
affecting the Association shall occur as a result of which it is necessary,
in the opinion of the Association's counsel, to amend or supplement the
Prospectus in order to make the Prospectus not misleading in light of the
circumstances existing at the time it is delivered to an Investor, the
Association will forthwith prepare and furnish to you a reasonable number
of copies of an amendment or amendments of, or a supplement or supplements
to, the Prospectus that will amend or supplement the Prospectus so that it
will not contain an untrue statement of a material fact or omit a statement
of material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances existing at the
time the Prospectus is delivered to an Investor, not misleading.
(c) Furnish or make available to you or your counsel any and all
documentation reasonably requested in connection with your due diligence
efforts regarding information in the Prospectus.
5. PAYMENT OF EXPENSES.
The Association will pay all expenses in connection with (i) the
preparation, printing, filing and delivering of the Registration Statement and
the Prospectus, including the cost of all copies thereof and any amendments
thereof or supplements thereto, (ii) the preparation and copying of other
solicitation material and related documents, (iii) filing fees and expenses
necessary to comply with the laws of any state for the offering and sale of the
Shares, including reasonable fees of your counsel, (iv) the fees of the
Association's counsel and accountant, and all reasonable out-of-pocket expenses
incurred by you including fees of counsel in connection with this transaction
whether or not the transactions contemplated herein are consummated.
6. INDEMNIFICATION.
(a) Subject to the conditions set forth below, the Association agrees
to indemnify and hold harmless you and each person, if any, who controls
you within the meaning of Section 15 of the Securities Act of 1933, as
amended (the "1933 Act"), against any and all losses, liabilities, claims,
damages and expenses whatsoever (including, but not limited to, any and all
expenses whatsoever reasonably incurred in investigating, preparing for,
defending against or settling any litigation, commenced or threatened, or
any claim whatsoever) arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in the Prospectus (as from
time to time amended or supplemented) or arising from the omission or
alleged omission therefrom of a material fact required to be stated therein
or necessary to make the statements therein not misleading, unless such
statement or omission was made in reliance upon and in conformity with
written information furnished to the Association by you or on your behalf
expressly for use in the Prospectus or any amendment or supplement thereof,
and will reimburse you and each such controlling person for any legal or
other expenses reasonably incurred by you or any such controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action.
You agree to indemnify and hold harmless the Association and each
person, if any, who controls the Association within the meaning of
Section 15 of the 1993 Act against any and all losses, liabilities, claims,
damages and expenses whatsoever (including, but not limited to, any and all
expenses whatsoever reasonably incurred in investigating, preparing for,
defending against or settling any litigation, commenced or threatened, or
any claim whatsoever) arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in the Prospectus (as from
time to time amended or supplemented) or arising from the omission or
alleged omission therefrom of a material fact required to be stated therein
or necessary to make the statements therein not misleading, only to the
extent that such statement or omission was made in reliance upon and in
conformity with written information furnished to the Association by you or
on your behalf expressly for use in the Prospectus or any amendment or
supplement thereof, and will reimburse the Association and each such
controlling person for any legal or other expenses reasonably incurred by
the Association or any such controlling person in connection with
investigating or defending any such loss, claims, damage, liability or
action.
No indemnified party will have any liability (whether direct or
indirect, in contract, tort or otherwise) to the Association for or in
connection with such engagement except for any such liability for losses,
damages, liabilities, expenses or claims incurred by the Association that
result primarily from the indemnified party's bad faith or gross negligence
or as otherwise provided above.
(b) Promptly after receipt by an indemnified party under this section
of notice of the commencement of any action, but in no event later than
fifteen (15) business days after receipt of notice of such commencement,
such indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under this section, 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
section as to the particular item for which indemnification is then being
sought, but not for any other liability that it may have to any indemnified
party, and if the indemnified party notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein, and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel who shall be to the reasonable satisfaction of such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation incurred at the written request of the
indemnifying party; provided, however, that if, notwithstanding the
election of an indemnifying party to assume the defense thereof, the
indemnifying party shall not have employed counsel to take charge of the
defense of such action or proceeding or such indemnified party shall have
reasonably concluded that there may be defenses available to it that are
different from or additional to those available to the indemnifying party
(in which case the indemnifying party shall not have the right to direct
the defense of such action or proceeding on behalf of the indemnified
party), then in any such events such legal or other expenses of the
indemnified party shall be borne by the indemnifying party. Any such
indemnifying party shall not be liable to any such indemnified party on
account of any settlement of any claim or action effected without the
consent of such indemnifying party.
(c) Notwithstanding any other provision of this section, you and each
person who controls you within the meaning of Section 15 of the 1933 Act
shall not be indemnified for any violation of federal securities laws
arising out of the offer and sale of the Shares unless (i) such
indemnification is specifically approved by a court of law or equity that
shall have been advised as to the current position of the Securities and
Exchange Commission regarding indemnification for violations of such
securities laws or (ii) such indemnification is for (A) settlement costs
(which may include legal and other expenses) or (B) litigation costs (which
may include legal and other expenses) if a successful defense has been
made.
7. DUE DILIGENCE.
You undertake and represent that you have reasonable grounds to
believe, based on information made available to you by the Association, that all
material facts have been adequately and accurately disclosed and provide a
reasonable basis for evaluating an investment in the Association.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE.
Except as the context otherwise requires, all representations,
warranties and agreements contained in this Agreement shall be deemed to be
representations, warranties and agreements of the Association and shall remain
operative and in full force and effect regardless of any investigation made by
you, or on your behalf, or by any controlling person or by or on behalf of the
Association and shall survive the Closing Date in the event of the closing of
the offering contemplated in the Prospectus, but shall not survive the
Termination Date in the event that Minimum Class A Sales, Minimum Class B Sales
or Minimum Class C Sales are not made prior to the termination of such offering.
9. EFFECTIVE DATE, TERM AND TERMINATION OF AGREEMENT.
(a) This Agreement shall become effective as of the date first
written above. This Agreement shall terminate on the date corresponding to
the occurrence of:
i. The exercise by the Association of its discretion to
terminate the offering prior to the Closing Date; or, if not
so exercised,
ii. The failure to make the Minimum Class A Sales, Minimum Class
B Sales or Minimum Class C Sales by the Closing Date; or, if
such sales are made;
iii. The failure of the Association to receive the regulatory
approvals as contemplated in the Prospectus; or, if such
approvals are granted,
iv. The payment to you of all amounts due under this Agreement.
(b) If this Agreement shall be terminated after Minimum Class A
Sales, Minimum Class B Sales or Minimum Class C Sales are made by reason of
any failure on the part of the Association to perform any undertaking or to
satisfy any condition of this Agreement by it to be performed or satisfied
(the parties hereto understanding that the Association shall not bear any
responsibility for failure of regulatory approvals to be received and that
said failure would not trigger the application of this Subsection (b)), the
Association shall be obligated to pay you the fee and expenses
reimbursement as provided herein but will have no additional liability to
you except for such liabilities, if any, as may exist or thereafter arise
under Section 6 hereof.
10. NOTICES.
(a) All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to you shall be
mailed by overnight delivery or certified mail, return receipt requested,
postage prepaid, or hand-delivered to:
Interstate/Johnson Lane Corporation
Attention: Mr. James H. Glen, Jr.
121 West Trade Street
Charlotte, NC 28202
If sent to the Association, such communications shall be mailed by
overnight delivery or certified mail, return receipt requested, postage
prepaid, or hand-delivered to:
Alliance Farms Cooperative Association
Attention: Mr. Wayne N. Snyder
3315 North Oak Trafficway
Department 47
Kansas City, MO 64116
with a copy to:
Stinson, Mag & Fizzell, P.C.
Attention: James W. Allen, Esquire
1201 Walnut Street, Suite 2800
Kansas City, MO 64106-6237
(b) A notice shall be deemed to be given by you to the Association or
by the Association to you when it is mailed as provided in Subsection (a)
of this Section 11 or upon hand delivery to the appropriate address.
11. PARTIES.
This Agreement shall inure solely to the benefit of, and shall be
binding upon you, the Association and the controlling persons referred to in
Section 6 hereof, and their respective successors, heirs, legal representatives
and assigns, and no other person shall be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained.
12. CONSTRUCTION.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Colorado.
13. ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes and cancels any and all prior agreements and understandings, written
or oral, among the parties hereto with respect to the subject matter.
14. AMENDMENT.
This Agreement may be amended only by a writing signed by all of the
parties hereto. Except as otherwise provided herein, any provision contained in
this Agreement may be waived by any party hereto upon a writing signed by the
party against whom such waiver is sought to be enforced.
15. AGREEMENT.
The foregoing agreement shall be in addition to any rights that any
indemnified party may have at common law or otherwise, and shall be in addition
to any liability which the Association may otherwise have. The Association
hereby consents to personal jurisdiction, service and venue in any court in
which any claim which is subject to this agreement is brought against you or the
Association. This Agreement and the duties, rights and obligations arising
hereunder may be assigned by a party hereto only with the prior written consent
of all other parties hereto.
16. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
If the foregoing correctly sets forth the understanding between you
and the Association, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between us.
Sincerely,
ALLIANCE FARMS COOPERATIVE
ASSOCIATION
By:
Wayne N. Snyder
Chairman of the Board
and President
Approved and Agreed to:
INTERSTATE/JOHNSON LANE CORPORATION
By:
James H. Glen, Jr.
Senior Vice President
Date: , 1997