Cornerstone Ministries Investments, Inc.
UP TO 350,000 SHARES OF COMMON STOCK ($2,275,000)
AND $17,000,000 OF CERTIFICATES OF INDEBTEDNESS
Purchase Price $ 6.50 Per Share
$2,500 (Minimum Purchase) Certificates of Indebtedness
SALES AGENCY AGREEMENT
____________, 2000
Ladies and Gentlemen:
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 350,000 shares of
its common stock (the "Common Stock") and up to $17,000,000 certificates of
indebtedness for an aggregate purchase price of up to $19,275,000 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 Common Stock and
Certificates in the Offering as described in the Offering Circular 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 an offering
statement on Form SB-2, including exhibits and all amendments and supplements
thereto (No. 24-3710), including the Offering Circular, for the registration of
the Common Stock and Certificates under the 1933 Act. Such offering statement
has been qualified 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 offering statement, as amended or supplemented, if
amended or supplemented, on file with the Commission at the time the offering
statement becomes effective, including the Offering Circular, financial
statements, schedules, exhibits and all other documents filed as part thereof,
is herein called the "Offering Statement," and the Offering Circular, as amended
or supplemented, if amended or supplemented, on file with the Commission at the
time the Offering Statement becomes effective is herein called the "Offering
Circular," and shall include any amendments or supplements thereto from and
after their dates of qualification or use, respectively.
(b) As of the date of the Offering Circular (i) the Offering
Statement and the Offering Circular (as amended or supplemented, if amended or
supplemented) complied and will comply in all material respects with the 1933
Act, (ii) the Offering 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 Offering Circular (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 Offering Statement or the Offering Circular.
(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 Offering Circular.
(d) The Company has good, marketable and insurable title to
all assets material to its business and to those assets described in the
Offering Circular as owned by the Company, free and clear of all material liens,
charges, encumbrances or restrictions, except as are described in the Offering
Circular, and all of the leases and subleases of the Company under which it
holds properties, including those described in the Offering Circular, 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 Offering
Circular. 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 Common Stock
and Certificates to be sold by it as provided herein.
(h) The financial statements of the Company which are included
in the Offering Statement and are part of the Offering Circular 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 Offering Circular
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 on
the latest period for which such operations is set forth in the Offering
Circular 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 Offering Circular 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
Offering Circular.
(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.
(l) Subsequent to the respective dates as of which information
is given in the Offering Circular 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.
(m) The authorized, issued and outstanding equity capital of
the Company shall be as set forth in the Offering Circular under the caption
"Capitalization," and no equity or debt securities of the Company has been or
shall be issued and outstanding prior to the Closing Date; the issuance and the
sale of the Common Stock have been duly authorized by all necessary action of
the Company and shall be validly issued, fully paid and nonassessable and shall
conform to the description thereof contained in the Offering Circular; the
issuance of the Common Stock is not subject to preemptive rights; and good title
to the Common Stock will be transferred to the purchasers thereof upon issuance
thereof against payment therefore, free and clear of all claims, encumbrances,
security interests and liens whatsoever, with respect to the Company's interest
in such Common Stock. The certificates representing the Common Stock will
conform with the requirements of applicable laws and regulations.
(n) 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 Common Stock and Certificates, except as may be
required by the Commission and under the Blue Sky Laws of various jurisdictions.
(o) All contracts and other documents required to be filed as
exhibits to the Offering Statement have been filed with the Commission.
(p) X. Xxxxxxx XxXxxxxx, who has certified the financial
statements of the Company included in the Offering Circular, is, and was during
the periods covered in its report in the Offering Circular, 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).
(q) 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.
(r) All documents delivered by the Company in connection with
the issuance and sale of the Common Stock and the Certificates, except for those
documents which were prepared by parties other than the Company were on the
dates on which they were delivered, true, complete and correct.
(s) 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 Common Stock and
Certificates 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 Common Stock and/or Certificates.
(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 shares of Common
Stock or Certificates will be handled in accordance with Rule 15c2-4 under the
1934 Act.
(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 Shares and
Certificates. 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 Shares of Common Stock and Certificates
in the Offering as described in the Offering Circular attached hereto as Exhibit
"A" and made a part hereof. The employment of Agent hereunder shall terminate
upon completion of the Offering.
As provided for in the Escrow Agreement dated as of
_________between the Company and American Securities Transfer and Trust
("ASTT"), Agent shall forward all proceeds received from the sale of the Shares
of Common Stock and Certificates to ASTT by noon of the next business day. Agent
shall cause all checks received by it in payment for such Shares of Common Stock
and Certificates to be made payable to ASTT.
When the Offering is completed, the Company agrees to issue or
have issued such shares of Common Stock and to release for delivery certificates
to subscribers thereof for such shares of Common Stock and Certificates as soon
as possible.
Agent shall receive as compensation for its services
hereunder, a commission equal to seven percent (7.0%) of the aggregate dollar
amount of shares of Common Stock sold by Agent in the Offering. Agent
shall also receive as compensation for its services hereunder, a commission
equal to the following percentages of the aggregate dollar amount of
Certificates sold by Agent in the Offering:
Term of Certificates Percentage
-------------------- ----------
5-Year Certificate 5%
3-Year Certificate 3%
The Company shall wire, or shall cause to be wired, payment of
the foregoing commissions to Agent within five (5) business days of the
Company's receipt of an invoice from Agent. The Company shall pay all stock
issue and transfer taxes with respect to the sale of the shares of Common Stock
and Certificates. 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 up to $2,275,000 in
shares of Common Stock and $17,000,000 of Certificates in the Offering. The
shares of Common Stock and Certificates are to be offered to the public at the
price set forth on the cover page of the Offering Circular 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 Offering Circular as Agent reasonably may request.
The Company authorizes Agent to use the Offering Circular in connection with the
offer and sale of the shares of Common Stock and the Certificates.
(b) The Company shall notify Agent immediately, and confirm
the notice in writing, (i) when the Offering Statement is qualified, (ii) of the
issuance by the Commission of any stop order relating to the Offering 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 qualification of
the shares of Common Stock or Certificates for offering or sale in any
jurisdiction, and (iv) of the receipt of any comments from the staff of the
Commission relating to the Offering Statement. If the Commission enters a stop
order relating to the Offering 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 Offering Circular 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 in the shares of
Common Stock and Certificates in accordance with the provisions hereof and the
Offering Circular. If during the period when the Offering Circular is used in
connection with the offer and sale of the shares of Common Stock and
Certificates 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 Offering Circular in order
to make the Offering Circular not false or misleading in light of the
circumstances existing at the time it is delivered to a purchaser of the shares
of Common Stock and/or Certificates, 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 Offering Circular (in form and substance
satisfactory to counsel for Agent) which shall amend or supplement the Offering
Circular so that, as amended or supplemented, the Offering Circular 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 Offering Circular is delivered to a purchaser of the
Common Stock, not misleading. The Company will not file or use any amendment or
supplement to the Offering Statement or the Offering Circular 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 shares of Common Stock and Certificates 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 qualification 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
shares of Common Stock and Certificates, 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 or
Certificate holders, 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 Common Stock and the Certificates in the manner set forth in the Offering
Circular under the caption "Use of Proceeds."
(g) The Company shall not deliver the shares of Common Stock
or the Certificates 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 Offering Circular;
(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;
(iii) the Company has authorized Common Stock as set
forth in the Offering Statement and the Offering Circular;
(iv) the issuance and sale of the shares of Common
Stock have been duly and validly authorized by all necessary corporate
action on the part of the Company; the shares of Common Stock, upon
receipt of payment and issuance will be fully paid and non-assessable,
and, to the best knowledge of such counsel, the purchasers of the
Common Stock from the Company, upon issuance thereof against payment
therefor, will acquire such shares of Common Stock and Certificates
free and clear of all claims, encumbrances, security interests and
liens.
(v) 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 each of the Company,
except to the extent that the provisions of Section 7 and 8 hereof may
be unenforceable as against public policy;
(vi) except as set forth in the Offering Circular,
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 Offering 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 Offering Circular, 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 Offering Circular which are not so described or disclosed and the
description in the Offering Circular of such statutes, regulations,
contracts and other documents therein described are accurate summaries
and fairly present the information required to be shown;
(vii) the Offering Statement has been qualified by
the Commission; and no further approval of any other governmental
authority is required for the issuance and sale of the Common Stock and
Certificates excluding any necessary qualifications or registration
under the Blue Sky Laws of the various jurisdictions in which the
Common Stock and Certificates 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 Offering Statement or
the Offering Circular 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;
(viii) 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
(ix) to the best knowledge of such counsel based
solely on the conferences and other investigations and officers'
certificates, 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 certificates of officers and directors of the Company and
certificates 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 qualifications, 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 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 Agent, (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 Offering Circular,
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 Offering Circular 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 shares of Common Stock and
Certificates shall have been qualified 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 Offering Circular
and the Offering Circular, 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 Offering Circular became authorized for
final use, no event has occurred which should have been set forth in an
amendment or supplement to the Offering Circular 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 Offering Circular 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
Offering Statement qualified; (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, certificates, 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 certificates 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 Offering Statement or the Offering Circular 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 qualification of the Common Stock 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 Offering Circular or any amendment or supplement thereof, or any unwritten
statement made with the Company's consent to a purchaser of the Common Stock or
Certificates 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.
(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 Offering
Circular 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 Offering Circular. 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 Common Stock and Certificates 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, xxxxxxxxxxx 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 1933 Act) 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 referred to in Section 8
hereof, and shall survive any termination or consummation of this Agreement
and/or the issuance of the Common Stock, 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 of
the Common Stock or Certificates; 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 and delivered by an
overnight courier service the same day.
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 _________________________________________,
if sent to the Company 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx X, Xxxxxxxx, Xxxxxxx
00000-0000, Attention: Xxxxx X. Xxxxxx, President (with a copy to Xxxx Xxxxx,
Esq. 000 Xxxxxxx Xxx. San Francisco, CA 94133.).
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. The term
"successors" shall not include any purchaser of any of the Common Stock.
(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 which
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,
CORNERSTONE MINISTRIES INVESTMENTS, INC.
By: ______________________________________
Xxxxx X. Xxxxxx, President
Agreed to and accepted this
___ day of ___________, 199__.
______________________________________
By:
Name:
Title:
