Exhibit 1.1
PIF/Cornerstone Ministries Investments, Inc.
"Series E" Certificates of Indebtedness and Common Stock
SALES AGENCY AGREEMENT
Date April __, 2003
Ladies and Gentlemen:
PIF/Cornerstone Ministries Investments, Inc., a Georgia corporation,
hereby confirms its respective agreements with
______________________________________ ("Agent"), a broker-dealer registered
with the Securities and Exchange Commission ("Commission") and a member of the
National Association of Securities Dealers, Inc. ("NASD"), as follows:
1. Introduction.
The Company desires to offer up to $____________ of its Certificates of
Indebtedness and up to ________ shares of its common stock in an offering
pursuant to Regulation SB-2 under the Securities Act of 1933, as amended (the
"1933 Act"). The Company has been advised by Agent that it desires to use its
best efforts to assist the Company with its sale of the Certificates and Shares
in the Offering as described in the Prospectus attached hereto as Exhibit "A"
and made a part hereof.
2. Representations and Warranties of the Company. The Company
represents and warrants to Agent that:
(a) The Company has filed with the Commission a Registration
Statement on Form SB-2, including exhibits and all amendments and supplements
thereto (No. _________), including the Prospectus, for the registration of the
Certificates and Shares under the 1933 Act. Such Registration Statement has been
registered under the 1933 Act and no proceedings therefor have been initiated
or, to the best of the Company's knowledge, threatened by the Commission
(provided that for this purpose the Company shall not regard any such proceeding
as "threatened" unless the Commission has manifested to the management of the
Company, or to its counsel, a present intention to initiate such proceeding).
Such Registration Statement, as amended or supplemented, if amended or
supplemented, on file with the Commission at the time the Registration Statement
becomes effective, including the Prospectus, financial statements, schedules,
exhibits and all other documents filed as part thereof, is herein called the
"Registration Statement," and the Prospectus, as amended or supplemented, if
amended or supplemented, on file with the Commission at the time the
Registration Statement becomes effective is herein called the "Prospectus," and
shall include any amendments or supplements thereto from and after their dates
of registration or use, respectively.
(b) As of the date of the Prospectus (i) the Registration
Statement and the Prospectus (as amended or supplemented, if amended or
supplemented) complied and will comply in all material respects with the 1933
Act, (ii) the Registration Statement (as amended or supplemented, if amended or
supplemented) did not and will not contain an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(iii) the Prospectus (as amended or supplemented, if amended or supplemented)
did not and will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading. Representations
or warranties in this subsection shall not apply to statements or omissions made
in reliance upon and in conformity with written information furnished to the
Company relating to Agent by or on behalf of Agent expressly for use in the
Registration Statement or the Prospectus.
(c) The Company is duly organized as a business corporation
under the laws of the State of Georgia, and is validly existing and in good
standing under the laws of the State of Georgia with full power and authority to
own its property and conduct its business as described in the Prospectus.
(d) The Company has good, marketable and insurable title to
all assets material to its business and to those assets described in the
Prospectus as owned by the Company, free and clear of all material liens,
charges, encumbrances or restrictions, except as are described in the
Prospectus, and all of the leases and subleases of the Company under which it
holds properties, including those described in the Prospectus, are in full force
and effect as described therein.
(e) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of the Company, and this
Agreement is a valid and binding obligation of the Company, enforceable in
accordance with its terms (except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, reorganization or similar laws relating
to or affecting the enforcement of creditors' rights generally or by general
equity principles, regardless of whether such enforceability is considered in a
proceeding in equity or at law, and except to the extent that the provisions of
Sections 7 and 8 hereof may be unenforceable as against public policy).
(f) There is no litigation or governmental proceeding pending
or, to the knowledge of the Company, threatened against or involving the Company
or any of its assets except as required to be disclosed in the Prospectus. Any
litigation or governmental proceeding is not considered "threatened" unless the
potential litigant or governmental authority has manifested to the management of
the Company, or to their counsel, a present intention to initiate such
litigation or proceeding.
(g) The Company has all power, authority, authorizations,
approvals and orders as may be required to enter into this Agreement, to carry
out the provisions and conditions hereof and to issue and sell the Certificates
and Shares to be sold by it as provided herein.
(h) The financial statements of the Company which are included
in the Registration Statement and are part of the Prospectus fairly present the
financial condition, results of operations, retained earnings and cash flows of
the Company at the respective dates thereof and for the respective periods
covered thereby and comply as to form in all material respects with applicable
accounting requirements of the regulations promulgated under the 1933 Act (the
"1933 Act Regulations"). Such financial statements have been prepared according
to generally accepted accounting principles consistently applied throughout the
periods involved except as noted therein. The tables in the Prospectus
accurately present the information purported to be shown thereby at the
respective dates thereof and for the respective periods covered thereby.
(i) There has been no material change with respect to the
condition (financial or otherwise) results of operations, business, assets or
properties of the Company since the latest date as of which such condition or
the latest period for which such operations is set forth in the Prospectus
except as referred to therein; and the capitalization, assets, properties and
businesses of the Company conform in all material respects to the descriptions
thereof contained in the Prospectus as of the date specified and, since such
date, there has been no material adverse effect on the Company. The Company does
not have any contingent liabilities, except as set forth in the Prospectus.
(j) No default exists, and no event has occurred which with
notice or lapse of time, or both, would constitute a default, on the part of the
Company, to the best knowledge of the Company, on its part in the due
performance and observance of any material term, covenant or condition of any
agreement which would result in a material adverse effect on the Company; said
agreements are in full force and effect; and no other party to any such
agreement has instituted or, to the best knowledge of the Company, threatened
any action or proceeding wherein the Company would be alleged to be in default
thereunder.
(k) The Company is not in violation of its articles of
incorporation or bylaws or in default in the performance of any material
obligation, agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness. The execution and delivery of this Agreement,
the fulfillment of the terms set forth herein and the consummation of the
transactions contemplated hereby shall not violate or conflict with the articles
of incorporation or bylaws of the Company or violate, conflict with or
constitute a breach of, or default (or an event which, with notice or lapse of
time, or both, would constitute a default) in any material respects under, any
agreement, indenture or other instrument by which any of the Company is bound,
or under any governmental license or permit or any law, administrative
regulation, authorization, approval, order, court decree, injunction or order,
except as may be required under the blue sky laws and regulations (collectively,
the "Blue Sky Laws") of various jurisdictions.
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(l) Subsequent to the respective dates as of which information
is given in the Prospectus and prior to the Closing Date, except as otherwise
may be indicated or contemplated therein, the Company has not issued any
securities or incurred any liabilities or obligation, direct or contingent, for
borrowed money, or entered into any transaction which is material in light of
the businesses and properties of the Company other than in the normal course of
business.
(m) No approval of any regulatory, supervisory or other public
authority is required in connection with the execution and delivery of this
Agreement or the issuance of the Certificates and Shares, except as may be
required by the Commission and under the Blue Sky Laws of various jurisdictions.
(n) All contracts and other documents required to be filed as
exhibits to the Registration Statement have been filed with the Commission.
(o) Xxxxxx X. Xxxxxxx, CPA, PA, who has opined upon the
financial statements of the Company included in the Prospectus, is, and was
during the periods covered in its report in the Prospectus, an independent
public accountant with respect to the Company within the meaning of the 1933
Act, the 1933 Act Regulations, the Code of Professional Ethics of the American
Institute of Certified Public Accountants and 12 C.F.R. 571.2(c)(3).
(p) The Company has not made any payment of funds of the
Company prohibited by law, and no funds of the Company have been set aside to be
used for any payment prohibited by law.
(q) All documents delivered by the Company in connection with
the issuance and sale of the Certificates and Shares, except for those documents
that were prepared by parties other than the Company were on the dates on which
they were delivered, true, complete and correct.
(r) To the best knowledge of the Company, the Company complies
with all laws, rules and regulations relating to environmental protection, and
the Company has not been notified or is otherwise aware that it is potentially
liable, or is considered potentially liable, under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or
any similar state or local laws. There are no actions, suits, regulatory
investigations or other proceedings pending or, to the best knowledge of the
Company, threatened against the Company relating to environmental protection,
nor does the Company have any reason to believe any such proceedings may be
brought against it. To the best knowledge of the Company, no disposal, release
or discharge of hazardous or toxic substances, pollutants or contaminants,
including petroleum and gas products, as any of these terms may be defined under
applicable federal, state or local laws, has occurred on, in, at or about any of
the facilities or properties of the Company or any of the facilities or
properties pledged to the Company as collateral for any loan or other extension
of credit granted by the Company.
2. Representations and Warranties of Agent. Agent represents and
warrants to the Company that:
(a) Agent is registered as a broker-dealer with the Commission
and a member of the NASD, and is in good standing with the Commission and the
NASD.
(b) Agent is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to provide the services to be furnished to the
Company hereunder.
(c) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Agent, and this
Agreement is a legal valid and binding obligation of Agent, enforceable in
accordance with its terms (except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, reorganization or similar laws relating
to or affecting the enforcement of creditors' rights generally or by general
equity principles, regardless of whether such enforceability is considered in a
proceeding in equity or at law, and except to the extent that the provisions of
Sections 7 and 8 hereof may be unenforceable as against public policy).
(d) Agent and each of its employees, agents and
representatives who shall perform any of the services required hereunder to be
performed by Agent shall be duly authorized and shall have all licenses,
approvals and permits necessary, to perform such services, and Agent is a
registered selling agent in the jurisdictions in which the Certificates and
Shares are to be offered for sale and will remain registered in such
jurisdictions in which the Company is relying on such registration for the sale
of the Certificates and Shares.
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(e) The execution and delivery of this Agreement by Agent, the
fulfillment of the terms set forth herein and the consummation of the
transactions contemplated hereby shall not violate or conflict with the
corporate charter or bylaws of Agent or violate, conflict with or constitute a
breach of, or default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, any material agreement, indenture or other
instrument by which Agent is bound or under any governmental license or permit
or any law, administrative regulation, authorization, approval or order or court
decree, injunction or order.
(f) Any funds received by Agent to purchase Certificates or
Shares will be handled in accordance with Rule 15c2-4 under the 0000 Xxx.
(g) There is not now pending nor, to Agent's knowledge,
threatened against Agent any action or proceeding before the Commission, the
NASD, any state securities commission or any state or federal court concerning
Agent's activities as a broker-dealer.
3. Employment of Agent; Sale and Delivery of the Certificates and
Shares. On the basis of the representations and warranties herein but subject to
the terms and conditions set forth in this Section 3, the Company hereby employs
Agent as its agent to use its best efforts in assisting the Company with the
Company's sale of the Certificates and Shares in the Offering as described in
the Prospectus attached hereto as Exhibit "A" and made a part hereof. The
employment of Agent hereunder shall terminate upon completion of the Offering.
Agent shall forward all proceeds received from the sale of the
Certificates and Shares to the Company by the earliest practical date.
Agent shall receive, as compensation for its services
hereunder, a commission equal to
The Company shall forward commissions by check to Agent within
five (5) business days of the Company's receipt of an invoice from that Agent.
The Company shall pay all transfer taxes with respect to the sale of the
Certificates and Shares. The Company shall pay all expenses of the Company
relating to any required Blue Sky or state securities laws, research and
filings.
4. Offering. Subject to the provisions of Section 6 hereof, Agent is
assisting the Company on a best efforts basis in offering Certificates and
Shares in the Offering. The Certificates and Shares are to be offered to the
public at the price set forth on the cover page of the Prospectus and the first
page of this Agreement.
5. Further Agreements. The Company covenants and agrees that:
(a) The Company shall deliver to Agent, from time to time,
such number of copies of the Prospectus as Agent reasonably may request. The
Company authorizes Agent to use the Prospectus in connection with the offer and
sale of the Certificates and Shares.
(b) The Company shall notify Agent immediately, and confirm
the notice in writing, (i) when the Registration Statement is registered, (ii)
of the issuance by the Commission of any stop order relating to the Registration
Statement or of the initiation or the threat of any proceedings for that
purpose, (iii) of the receipt of any notice with respect to the suspension of
the registration of the Certificates or Shares for offering or sale in any
jurisdiction, and (iv) of the receipt of any comments from the staff of the
Commission relating to the Registration Statement. If the Commission enters a
stop order relating to the Registration Statement, the Company will make every
reasonable effort to obtain the lifting of such order(s) as soon as possible.
(c) During the time when the Prospectus is required to be
delivered under the 1933 Act, the Company will comply with all requirements
imposed upon it by the 1933 Act, as now in effect and hereafter amended, and by
the 1933 Act Regulations, as from time to time in force, so far as necessary to
permit the continuance of offers and sales of or dealings with the Certificates
or Shares in accordance with the provisions hereof and the Prospectus. If during
the period when the Prospectus is used in connection with the offer and sale of
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the Certificates and Shares any event relating to or affecting the Company shall
occur as a result of which it is necessary, in the opinion of both counsel for
Agent and counsel for the Company, to amend or supplement the Prospectus in
order to make the Prospectus not false or misleading in light of the
circumstances existing at the time it is delivered to a purchaser of the
Certificates or Shares, the Company forthwith shall prepare and furnish to Agent
a reasonable number of copies of an amendment or amendments or of a supplement
or supplements to the Prospectus (in form and substance satisfactory to counsel
for Agent) which shall amend or supplement the Prospectus so that, as amended or
supplemented, the Prospectus shall not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at the time the Prospectus is
delivered to a purchaser of the Certificates or Shares, not misleading. The
Company will not file or use any amendment or supplement to the Registration
Statement or the Prospectus of which Agent has not first been furnished a copy
or to which Agent shall reasonably object after having been furnished such copy.
For the purposes of this subsection (c) the Company shall furnish such
information with respect to itself as Agent from time to time may reasonably
request.
(d) The Company shall take all necessary action and furnish to
counsel for the Company such information as may be required to qualify or
register the Certificates and Shares for offer and sale by the Company under the
Blue Sky Laws of such jurisdictions as Agent and the Company may reasonably
agree upon; provided, however, that the Company shall not be obligated to
qualify as a foreign corporation to do business under the laws of any such
jurisdiction. In each jurisdiction where such registration or registration shall
be effected, the Company, unless Agent agrees that such action is not necessary
or advisable in connection with the distribution of the Certificates and Shares,
shall file and make such statements or reports as are, or reasonably may be,
required by the laws or regulations of such jurisdiction.
(e) For three (3) years from the date of this Agreement, the
Company shall furnish Agent, (i) as soon as publicly available after the end of
each fiscal year, a copy of its annual report to shareholders for such year; and
the Company will furnish Agent a copy of each report mailed to shareholders,
(ii) at least twenty-four (24) hours prior to dissemination to shareholders, a
facsimile of any letter, notice or other similar communication, provided that
the foregoing in no way obligates the Company to await Agent approval of such
letter, notice or similar communication prior to dissemination, and (iii) from
time to time, such other public information concerning the Company as Agent may
reasonably request.
(f) The Company shall use the net proceeds from the sale of
the Certificates and Shares in the manner set forth in the Prospectus under the
caption "Use of Proceeds."
(g) The Company shall not deliver the Certificates and Shares
until it has satisfied all conditions set forth in Section 6 hereof, unless such
condition is waived in writing by Agent.
(h) The Company will take such actions and furnish such
information as are reasonably requested by Agent in order for Agent to ensure
compliance with any NASD requests.
(i) The terms and conditions provided to Agent by the Company
hereunder are at least as favorable as those offered to any other selected
dealer of the Company and will remain so during the term of this Agreement.
6. Conditions of Agent's Obligations. Except as may be waived in
writing by Agent, the obligations of Agent as provided herein shall be subject
to the accuracy of the representations and warranties contained in Section 2
hereof as of the date hereof, to the accuracy of the statements of officers and
directors of the Company made pursuant to the provisions hereof, to the
performance by the Company of their obligations hereunder and to the following
conditions:
(a) At the date hereof, Agent shall receive an opinion of
counsel of the Company that:
(i) the Company is incorporated, validly existing and in good
standing under the laws of State of Georgia and with full power and
authority to own its properties and conduct its business as described
in the Prospectus;
(ii) to the best knowledge of such counsel, all such licenses,
permits and other governmental authorizations are in full force and
effect and the Company is complying in all material respects therewith;
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(iii) this Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been duly executed
and delivered on behalf of the Company. This Agreement is enforceable
in accordance with its terms against the Company, except to the extent
that the provisions of Section 7 and 8 hereof may be unenforceable as
against public policy;
(iv) except as set forth in the Prospectus, based solely on
conferences with the senior executive officers of the Company, and an
investigation of certain corporate records made available to counsel by
the Company as conducted in connection with the preparation of the
Registration Statement, there are no material legal or governmental
proceedings pending or, to the best knowledge of such counsel,
threatened against or involving the assets of the Company required to
be disclosed in the Prospectus, provided that for this purpose such
counsel shall not regard any litigation or governmental procedure to be
"threatened" unless the potential litigant or government authority has
manifested to the management of the Company, or to such counsel, a
present intention to initiate such litigation or proceeding; nor are
there any statutes, regulations, contracts or other documents required
to be described or disclosed in the Prospectus which are not so
described or disclosed and the description in the Prospectus of such
statutes, regulations, contracts and other documents therein described
are accurate summaries and fairly present the information required to
be shown;
(v) the Registration Statement has been registered by the
Commission; and no further approval of any other governmental authority
is required for the issuance and sale of the Certificates and Shares
(excluding any necessary registrations or registration under the Blue
Sky Laws of the various jurisdictions in which the Certificates and
Shares were offered as to which no opinion is expressed); and no
proceedings are pending by or before the Commission seeking to revoke
or rescind the qualifying the Registration Statement or the Prospectus
or, to the best knowledge of such counsel, are any such proceedings
contemplated or threatened; provided that for this purpose such counsel
not regard any litigation or governmental procedure to be "threatened"
unless the potential litigant or government authority has manifested to
the management of the Company, or to such counsel, a present intention
to initiate such litigation or proceeding;
(vi) to such counsel's best knowledge the execution and
delivery by the Company of, and performance of their agreements in this
Agreement, shall not conflict with nor result in a breach of the
articles of incorporation or bylaws of the Company, nor constitute a
breach of or default (or an event which, with notice or lapse of time
or both, would constitute a default) under, nor give rise to any right
of termination, cancellation or acceleration contained in, or result in
the creation or imposition or any material lien, charge or other
encumbrance upon any of the properties or assets of the Company
pursuant to any of the terms, provisions or conditions, any material
agreement, contract, indenture, bond, debenture, note, instrument or
obligation to which the Company is a party or by which it or its assets
or properties may be bound or is subject, or any governmental license
or permit; nor will any of such actions violate any law, administrative
regulation or order or court order, writ, injunction or decree; and
(vii) to the best knowledge of such counsel based solely on
the conferences and other investigations and officers' statements,
there has been no breach of the Company's articles of incorporation or
bylaws, or material breach or default (or the occurrence of any event
which, with the lapse of time or action, or both, by a third party,
would result in a material breach or a material default), under any
agreement, contract, indenture, bond, debenture, note, instrument or
obligation to which the Company is a party or by which any of them or
any of their respective assets or properties may be bound, or any
governmental license or permit, or a violation of any law,
administrative regulation or order, or court order, writ, injunction or
decree.
In giving such opinion, such counsel may rely as to all matters of fact
on statements of officers and directors of the Company and statements of public
officials delivered pursuant hereto. Such opinion shall be governed by, and
interpreted in accordance with, the Legal Opinion Accord ("Accord") of the ABA
Section of Business Law (1991) whereby it shall be subject to the registrations,
exceptions, definitions, limitations on coverage and other limitations all as
more particularly described in the Accord, which opinion should be read in
conjunction therewith. For purposes of such opinion, any litigation or
governmental proceeding is not considered to be "threatened" unless the
potential litigant or governmental authority has manifested to the management of
the Company, or to their counsel, a present intention to initiate such
litigation or proceeding.
(b) Counsel for Agent shall have been furnished such documents
as they reasonably may require for the purpose of enabling them to review or
pass upon the matters required by Agent, and for the purpose of evidencing the
accuracy, completeness or satisfaction of any of the representations, warranties
or conditions
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herein contained, including but not limited to, resolutions of the Board of
Directors of the Company regarding the authorization of this Agreement and the
transactions contemplated hereby.
(c) Upon the completion of the Offering, in the reasonable
opinion of the Company, (i) there shall have been no material adverse change in
the condition or affairs, financial or otherwise, of the Company from that as of
the latest date as of which such condition is set forth in the Prospectus,
except as referred to therein; (ii) there shall have been no material
transactions entered into by the Company from the latest date as of which the
financial condition of the Company is set forth in the Prospectus other than
transactions referred to or contemplated therein and transactions by the Company
in the ordinary course of business; (iii) no action, suit or proceeding, at law
or in equity or before or by any federal or state commission, board or other
administrative agency, shall be pending or to the Company's best knowledge
threatened against the Company or affecting any of their respective assets,
wherein an unfavorable decision, ruling or finding would result in a material
adverse effect on the Company; and (iv) the Certificates and Shares shall have
been registered or registered for offering and sale by the Company under the
Blue Sky Laws of such jurisdictions as Agent and the Company shall have agreed
upon.
(d) Upon the completion of the Offering, Agent shall receive a
certificate of the President of the Company, dated as of the completion date of
the Offering, that states: (i) each has carefully examined the Prospectus and
the Prospectus, and it does not contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; (ii) since the date the Prospectus became authorized for final use,
no event has occurred which should have been set forth in an amendment or
supplement to the Prospectus which has not been so set forth, including
specifically, but without limitation, any event that has or may have a material
adverse effect on the Company, and the conditions set forth in clauses (ii) and
(iii) of subsection (c) of this Section 6 have been satisfied; (iii) no order
has been issued by the Commission to suspend the Offering or the effectiveness
of the Prospectus and, to the best knowledge of such officers, no action for
such purposes has been instituted or threatened by the Commission; and, (iv) all
of the representations and warranties contained in Section 2 of this Agreement
are true and correct, with the same force and effect as though expressly made on
the date of the completion of the Offering.
(e) Upon the completion of the Offering, Agent shall receive,
among other documents, (i) a copy of the order of the Commission declaring the
Registration Statement registered; (ii) a copy of the letter from the Georgia
Secretary of State evidencing the good standing of the Company; (iii) a copy of
the Company's certificate of incorporation certified by the Georgia Secretary of
State.
All such opinions, statements, letters and documents
shall be in compliance with the provisions hereof only if they are, in the
reasonable opinion of Agent and its counsel, satisfactory to Agent and its
counsel. Any statements signed by an officer or director of the Company and
delivered to Agent or to counsel for Agent shall be deemed a representation and
warranty by the Company to Agent as to the statements made therein. If any
condition to Agent's obligations hereunder to be fulfilled prior to or upon the
completion of the Offering is not so fulfilled, Agent, in its sole discretion,
may terminate this Agreement or, if Agent, in its sole discretion so elects, may
waive any such conditions which have not been fulfilled, or may extend the time
of their fulfillment.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless Agent,
its officers, directors and employees and all persons who control Agent within
the meaning of Section 15 of the 1933 Act or Section 20(a) of the Securities
Exchange Act of 1934 (the "1934 Act"), against any and all loss, liability,
claim, damage and expense whatsoever that such indemnified persons shall suffer
and shall further reimburse promptly such persons for any legal or other
expenses reasonably incurred by each or any of them investigating, preparing to
defend or defending against any such action, proceeding or claim (whether
commenced or threatened) arising out of any misrepresentation by the Company in
this Agreement, or any breach of warranty by the Company with respect to this
Agreement or arising out of or based upon any untrue or alleged untrue statement
of a material fact or the omission or alleged omission of a material fact
necessary to make it not misleading in light of the circumstances under which it
was made, any statements contained in the Registration Statement or the
Prospectus or prepared or executed by or on behalf of the Company or based upon
information furnished by or on behalf of the Company with their consent, whether
or not filed in any jurisdiction, to effect the registration of the Certificates
and Shares under the Blue Sky Laws thereof or filed with the Commission, unless
such statement or omission was made in reliance upon and in conformity with
written information furnished to the Company with respect to Agent by or on
behalf of Agent expressly for use in the Prospectus or any amendment or
supplement thereof, or any unwritten statement made with the Company's consent
to a purchaser of the Certificates or Shares by any director or officer or any
person employed by or associated with the Company other than Agent, its
officers, directors or employees. This indemnity shall be in addition to any
other liability the Company may have to Agent.
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(b) Agent agrees to indemnify and hold harmless the Company,
its officers, directors and employees and all persons who control the Company
within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934
Act, to the same extent as the foregoing indemnity from the Company to Agent,
but only with respect to any statements or omissions made in the Prospectus or
any amendment or supplement thereof in reliance upon, and in conformity with,
written information furnished to the Company with respect to Agent by or on
behalf of Agent expressly for use in the Prospectus. This indemnity shall be in
addition to any other liability that Agent may have to the Company.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 7, notify the indemnifying party of the commencement
thereof, but the omission to so notify the indemnifying party shall not relieve
the indemnifying party from any liability which it may have to any indemnified
party otherwise than under this Section 7. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it may wish, jointly with the other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to 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 shall not be liable to such indemnified party
under this Section 7 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than the
reasonable cost of investigation except as otherwise provided herein. In the
event the indemnifying party elects to assume the defense of any such action and
retain counsel acceptable to the indemnified party, the indemnified party may
retain additional counsel, but shall bear the fees and expenses of such counsel
unless (i) the indemnifying party shall have specifically authorized the
indemnified party to retain such counsel or (ii) the parties to such suit
include such indemnifying party and the indemnified party, and such indemnified
party shall have been advised by counsel that one or more material legal
defenses may be available to the indemnified party which may not be available to
the indemnifying party, in which case the indemnifying party shall not be
entitled to assume the defense of such suit notwithstanding the indemnifying
party's obligation to bear the fees and expenses of such counsel. An
indemnifying party against who indemnity may be sought shall not be liable to
indemnify an indemnified party under this Section 7 if any settlement of any
such action is effected without such indemnifying party's consent.
8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 7 above is for any reason held to be unavailable to the Company or Agent
other than in accordance with its terms, the Company and Agent shall contribute
to the aggregate losses, liabilities, claims, damages, and expenses of the
nature contemplated by said indemnity agreement incurred by the Company and
Agent (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and Agent on the other from the offering
of the Certificates or Shares 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 on the one hand and Agent on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and Agent on the other shall be deemed to be in the same proportion as
the net proceeds from the Offering received by the Company bear to the total
fees received by Agent under this Agreement. The relative fault of the Company
on the one hand and Agent 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 or alleged omission to state a material fact relates to
information supplied by the Company or by Agent and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and Agent agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation or by any other method of allocation which 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 or judgments 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 investigating or defending any such action or claim. 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 is
innocent of such fraudulent misrepresentation.
9. Survival of Agreements, Representations and Indemnities. The
respective indemnities of the Company and Agent and the representations and
warranties of the Company set forth in or made pursuant to this Agreement shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of Agent or the
Company or any controlling person or indemnified party
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referred to in Section 8 hereof, and shall survive any termination or
consummation of this Agreement, and any legal representative of Agent, the
Company and any such controlling persons shall be entitled to the benefit of the
respective agreements, indemnities, warranties and representations.
10. Termination. The Company or Agent may terminate this Agreement by
giving the notice indicated in Section 11 below at any time after this Agreement
becomes effective as follows:
(a) If any domestic or international event or act or
occurrence has materially disrupted the U.S. securities markets such as to make
it, in Agent's reasonable opinion, impracticable to proceed with the Offering;
or if the United States shall have become involved in a war or major
hostilities; or if a moratorium in foreign exchange trading by major
international banks or persons has been declared; or if there shall have been a
material adverse change in the capitalization, condition or business of the
Company.
(b) If any party hereto elects to terminate this Agreement as
provided in this Section, such party shall notify the other parties hereto
promptly by telephone or telegram, confirmed by letter furnished the same day to
a courier service for overnight delivery
11. Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to Agent shall be mailed,
delivered or faxed and confirmed to Xxxxxxxxx Securities, Inc., 0000 Xxxxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxx, XX 00000 Attention: Xxxx Xxxxxxx, if sent to the
Company, 0000 Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, XX 00000 Attention: Xxxx X.
Xxxxxxxx, President, (with a copy to Drew Field, Esq. 000 Xxxxxxx Xxx. Xxx
Xxxxxxxxx, XX 00000.).
12. Governing Law. This Agreement shall be governed by the laws of the
State of Georgia unless Federal law shall be deemed to apply.
13. Severability. Any provision of this Agreement found to be invalid,
unenforceable, or otherwise limited by law or regulation shall not effect the
validity or enforceability of the remaining terms of this Agreement.
14. Miscellaneous.
(a) Time shall be of the essence of this Agreement.
(b) This Agreement is made solely for the benefit of and will
be binding upon the parties hereto and their respective successors and the
controlling persons, directors and officers referred to in Section 7 hereof, and
no other person will have any right or obligation hereunder.
(c) This Agreement sets forth the entire understanding and
agreement among the parties hereto representing the subject matter hereof and
supersedes and cancels all prior agreements and understanding, written or oral.
(d) This Agreement may be signed in various counterparts that
together will constitute one agreement.
If the foregoing correctly sets forth the arrangement between the
Company and Agent, please indicate acceptance thereof in the space provided
below for that purpose, whereupon this letter and your acceptance shall
constitute a binding agreement.
Yours very truly,
XXXXXXXXX COMMUNITIES INC.
By: ____________________________________
Xxxx X. Xxxxxxxx, President
Agreed to and accepted
this ___ day of ___________, 2003.
Xxxxxxxxx Securities, Inc.
By:
Name:
Title:
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EXHIBIT "A"
PROSPECTUS
A copy of the Prospectus follows this page.
