Exhibit 1.1
▇▇▇▇▇▇▇▇▇ Communities Inc.
5,000,000 shares of Preferred Stock
SALES AGENCY AGREEMENT
Date: June 10, 2003
Ladies and Gentlemen:
▇▇▇▇▇▇▇▇▇ Communities Inc., a Georgia corporation, hereby confirms its
respective agreements with ▇▇▇▇▇▇▇▇▇ Securities LLC ("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 5,000,000 shares of its Series A
preferred 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 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. 333-103358), including the Prospectus, for the registration of the
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 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.
(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 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) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 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 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 Confidential Services, and Agent is a
registered selling agent in the jurisdictions in which the 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 Shares.
(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 the Shares will
be handled in accordance with Rule 15c2-4 under the ▇▇▇▇ ▇▇▇.
(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. 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 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 Shares to
the Company by the earliest practical date.
Agent shall receive, as compensation for its services hereunder, a
commission equal to four percent (4%) of the aggregate dollar amount of Shares
sold by Agent in the Offering.
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 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 up to 5,000,000 Shares
in the Offering. The 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 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 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 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
the 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
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 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 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 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 Shares
in the manner set forth in the Prospectus under the caption "Use of
Proceeds."
(g) The Company shall not deliver the 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;
(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 Shares
(excluding any necessary registrations or registration under the Blue
Sky Laws of the various jurisdictions in which the 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' Shares, 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 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 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 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, 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 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
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 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.
(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
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 ▇▇▇▇ ▇▇▇) 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
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 Shares; 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.
(c) In the event this Agreement is terminated, the Agent will be
reimbursed only for its actual accountable out-of-pocket expenses incurred
in connection with the Offering.
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 ▇▇▇▇▇▇▇▇▇ Securities, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, if sent to the
Company, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, President, (with a copy to Drew Field, Esq., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇ 93923).
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 affect 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,
▇▇▇▇▇▇▇▇▇ COMMUNITIES INC.
By: S/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Agreed to and accepted
this 10th day of June, 2003.
▇▇▇▇▇▇▇▇▇ Securities, Inc.
By: S/▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇, President