UNDERWRITING AGREEMENT
THIS UNDERWRITING AGREEMENT (the "Agreement") is made and entered into this 28th
day of February , 2002, by and between Buy Energy Corporation, a Nevada
corporation, the address of which is 0000 Xxxxxx Xxxx. # 000, Xxxxxx, XX 00000
(the "Issuer"), and Galleon Merchant Banking, Inc., a Florida corporation, the
address of which is 0000 XX 00xx Xxx, #000, Xxxx Xxxxxxxxxx, XX 00000 (the
"Agent").
Recitals:
A. The Issuer desires to offer and sell up to 150,000 shares of its Common
Stock, $0.001 par value (the "Stock"), at a price of ninety cents ($0.90) per
share in cash in a public offering in certain states (the "Jurisdictions"), in
connection with a Regulation C, Rule 419 offering (the "Offering").
B. The Offering will be a public offering.
C. The Issuer desires to obtain the services of an Underwriter to assist
it in the offering and sale of the Stock in the Jurisdictions.
D. The Agent is a member of the National Association of Securities Dealers,
Inc. (the "NASD") and is willing, as an Agent, to assist the Issuer in the
offering and sale of the Stock in the Jurisdictions on the terms and
conditions set forth herein.
Agreement:
NOW, THEREFORE, for and in consideration of the foregoing, and of the mutual
covenants, agreements undertakings, representations and warranties contained
herein, the parties hereto agree as follows:
1. Appointment of Agent. The Issuer hereby appoints the Agent as its Agent
in the Jurisdictions for the Offering. The Issuer further appoints the Agent
to act in its behalf to form and manage a selling group to sell the Offering.
The Issuer maintains the right in its sole discretion to approve or disapprove
any potential member of the selling group.
2. Acceptance of Appointment; Best Efforts. The Agent hereby accepts the
appointment described in Section 1 above and agrees, as Agent for the Issuer,
to use its best efforts to find purchasers for the Stock in the Jurisdictions.
The Agent makes no commitment to purchase all or any of the shares of the Stock.
3. Other Jurisdictions. The Issuer retains the right to employ other
agents in jurisdictions other than the Jurisdictions for and in connection
with the sale of the Stock. However, the Issuer, in its sole discretion,
may accept or reject those agents.
4. Termination of Offering. The Offering shall terminate upon the happening of
the earlier of (i) the sale of all of the Stock, (ii) May 30, 2002, (or such
later date if the Offering is extended by the Issuer for an additional period,
not to extend beyond December 31, 2002), or (iii) the withdrawal or cancellation
of the Offering by the Issuer in its sole and absolute discretion (the earlier
of (i), (ii) and (iii) being sometimes referred to herein as the "Termination
Date"). Upon the Agent's receipt of written notice from the Issuer of the
termination of the Offering, the Agent immediately shall cease making offers of
the Stock and shall terminate all then pending offers.
5. Proceeds to Issuer. The net proceeds that shall be paid to the Issuer on
the sale of Stock by the Agent are $0.792 per share.
6. Agent Compensation. As compensation for its activities hereunder and
pursuant hereto, the Agent shall be paid a commission equal to $0.081 (9%) per
share of the Stock (whose subscription is accepted by the Issuer) sold by the
Agent. Re-allowance shall be equal to $0.027 (3%) per share.
7. Escrow and Release of Proceeds. Any and all proceeds received by the Agent
from the sale of the Stock shall be deposited in an escrow account to be
maintained at Bank of America (the "Escrow Account"). The Issuer shall pay the
fee for establishing and maintaining the Escrow Account. Subscribers' checks
shall be made payable to Buy Energy Corp. Escrow Account and the Agent will
transmit such checks directly to the Escrow Account by noon the next business
day after receipt. There is no total minimum number of shares to be sold or a
total minimum amount to be received prior to the use of the proceeds other than
an amount which is acceptable to Buy Energy Corp. to insure closing the
transaction to merge with, acquire, or be acquired by a target company, or until
the termination of the offering. The maximum amount will be one hundred
thirty-five thousand dollars ($135,000). Funds will be disbursed as per the
instructions attached hereto as Exhibit A. The commission relating to a
particular sale shall be released from the Escrow Account to the Agent when the
net proceeds of that sale are released to the Issuer.
8. Agent Expenses. The Agent shall be responsible for payment of all of its
travel, printing and other expenses, whether or not there is a closing under
the Offering. The Issuer shall, however, reimburse the Agent for its
reasonable legal, Blue Sky, disbursements and mailing fees related to the
offering.
9. Subscriptions. Each subscriber purchasing Stock through the Agent shall
subscribe for the Stock by completing and executing a subscription agreement in
the form attached hereto as Exhibit B ("Subscription Agreement") and delivering
the completed and executed Subscription Agreement along with payment to the
Agent. The Agent will transmit such Subscription Agreements directly to the
Issuer by noon the next business day after receipt.
10. Acceptance or Rejection of Subscriptions. The Issuer has the right to accept
or reject any subscription. Only upon the acceptance of a subscription by the
Issuer is a sale made. Upon the acceptance of a subscription, the Issuer shall
execute the acceptance on the Subscription Agreement, and shall forward a
duplicate of the accepted Subscription Agreement to the subscriber with a copy
to the Agent.
11. Representations and Warranties of the Issuer. The Issuer represents and
warrants to, and agrees with the Agent that:
(a) The Issuer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada with power and authority to own
its properties and to conduct its business as described in the Offering
Statement;
(b) The authorized, issued and outstanding capital stock of the Company as of
October 10, 2001, is as set forth in the Prospectus under "Capitalization"; all
shares of issued and outstanding capital stock of the Company set forth
thereunder have been duly authorized, validly issued and are fully paid and
non-assessable; except as set forth in the Prospectus, no options, warrants, or
other rights to purchase, agreements or other obligations to issue, or
agreements or other rights to convert any obligation into, any shares of capital
stock of the Company have been granted or entered into by the Company; and the
capital stock conforms to all statements relating thereto contained in the
Registration Statement and Prospectus. The issuance and sale of all such capital
stock complied in all respects with applicable federal and state securities
laws; the holders thereof have no rights of rescission with respect thereto, and
are not subject to personal liability by reason of being such holders; and none
of such securities were issued in violation of the preemptive rights of any
holders of any security of the Company or similar contractual rights granted by
the Company.
(c) The Issuer shall prepare and file the Offering Statement with the
Jurisdictions in which such filing(s) is required, if any and shall use its best
efforts to cause the registration or exemption with each such regulatory agency
to become effective;
(d) The Offering Statement does not contain any untrue statement of a material
fact or omit to state any material fact required to be stated or necessary to
make the statements in the Offering Statement, in light of the circumstances
under which they are made, not misleading;
(e) The execution and delivery of this Agreement, the consummation of the
transactions contemplated in this Agreement and compliance with the terms and
provision of this Agreement shall not conflict with, or result in a breach of,
any of the terms or provisions of, or constitute a default under, the Articles
of Incorporation, as amended, or the Bylaws of the Issuer, or any indenture,
mortgage or other agreement or instrument to which the Issuer is a party or by
which any of their respective assets or properties are bound, or any applicable
law, rule, regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over the
Issuer or any of its subsidiaries or any of their respective assets or
properties, except for instances where not material to the Issuer;
(f) This Agreement has been duly authorized, executed and delivered on
behalf of the Issuer, and is the valid, binding and enforceable obligation
of the Issuer;
(g) No authorization, approval, consent or license of any regulatory body or
authority is required for the valid authorization, issuance, sale and delivery
of the Stock, or, if so required, all authorizations, approvals, consents and
licenses have been obtained and are in full force and effect, except for
instances where not material to the Issuer;
(h) Except as described in the Prospectus, no default exists in the due
performance and observance of any term, covenant or condition of any license,
contract, indenture, mortgage, deed of trust, note, loan or credit agreement, or
any other agreement or instrument to which the Company is a party or by which
the Company may be bound or to which any of the property or assets of the
Company are subject;
12. Covenants of the Issuer. The Issuer covenants that:
(a) The Issuer shall not at any time make or file any amendment or supplement to
the Offering Statement of which the Agent previously has not been advised and
furnished a copy, or to which the Agent reasonably may object in writing. The
Issuer shall prepare and file any amendments or supplements to the Offering
Statement that in the reasonable opinion of counsel for the Agent may be
necessary in connection with the offering and sale of the Stock by the Agent,
and shall use its best efforts to cause each such amendment or supplement to
become effective as promptly as possible.
(b) The Issuer shall deliver to the Agent a confidential listing of potential
investors for the Offering, including contact information for each such
potential investor (the "Confidential Investor List"). The Issuer shall also
deliver to the Agent, without charge, from time to time during the term of this
Agreement as many copies of the Offering Statement, the Offering Circular
included therein (as amended from time to time, the "Circular") and any other
documents as the Agent reasonably may request.
(c) The Issuer shall use its best efforts to comply with, and to continue to
comply with, all applicable state and federal securities and other laws so as to
permit the continuation of the offering and sale of the Stock.
(d) The Issuer promptly shall notify the Agent in the event of (i) the issuance
by any federal or state securities commission or authority of any stop order
suspending the effectiveness of the Offering Statement, or (ii) the institution
or notice of the intended institution of any action or proceeding for that
purpose. The Issuer shall make every reasonable effort to prevent the issuance
of such a stop order, and, if such a stop order is issued at any time, to obtain
the withdrawal of the order at the earliest possible time.
(e) The Issuer will cooperate with the Agent in connection with, and shall make
available to the Agent such documents and other information as the Agent shall
reasonably require to satisfy, its reasonable due diligence requirements.
13. Representations and Warranties of the Agent. The Agent represents and
warrants to, and agrees with the Issuer that:
(a) The Agent is a member in good standing of the NASD and is currently
licensed in the jurisdictions in which the offering will be sold;
(b) The Agent and all persons employed by it or who work for it as agents have
all necessary permits, licenses and permissions to enable it and them to act as
agent for the Issuer in the offering and sale of the Stock as required by
applicable state and federal securities and other laws; and
(c) Neither the Agent nor any partner, director or officer of the Agent is
disqualified under Rule 262 promulgated under the Securities Act or any
applicable disqualification provision of any Jurisdiction's law.
14. Covenants of the Agent. The Agent covenants that:
(a) The Agent shall not sell the stock offered pursuant to the Offering
Statement in any manner that violates the conditions imposed by applicable state
or federal securities laws in connection with an offer and sale of securities
pursuant to registrations pertaining to the Offering and under the Securities
Act and the registrations and/or exemptions therefrom in each of the
Jurisdictions.
(b) The Agent shall use its best efforts to contact all of the potential
investors listed in the Confidential Investor List to be provided by the Issuer
for purposes of Offering and selling the Stock in the
Offering. The Agent hereby agrees that this list will be considered "Privileged
Information", and that it will not take any action to circumvent or usurp, for
its own benefit, the Confidential Investor List supplied by the Company.
Furthermore, the Agent agrees to not solicit any potential investor on this list
for sales of other investments. However, the Agent shall not be limited to
offering the Stock solely to the potential investors listed in the Confidential
Investor List, and the Agent shall not be required to contact any additional
potential investors listed in the Confidential Investor List not already
contacted by the Agent, after the Issuer has accepted Subscription Agreements
from investors for the total amount of Stock available in the Offering.
15. Termination of Agreement. This Agreement may, subject to the other
provisions hereof, be terminated as follows:
(a) At any time prior to the commencement of the Offering, the Issuer may, by
notice to the Agent, terminate this Agreement; and at any time prior to the
commencement of the Offering, the Agent may, by notice to the Issuer, terminate
this Agreement;
(b) By the Agent at any time by notice to the Issuer because of any failure on
the part of the Issuer to comply with any of the terms and provisions, or to
fulfill any of the conditions hereof, or if for any reason the Issuer is unable
to perform its obligations hereunder;
(c) By the Issuer at any time by notice to the Agent because of any failure on
the part of the Agent to comply with any of the terms and provisions, or to
fulfill any of the conditions hereof, or if for any reason the Agent is unable
to perform its obligations hereunder;
(d) By the Issuer at any time by notice to the Agent because of disapproval of
the terms of this Agreement by the NASD, SEC, or any state securities regulatory
authority charged with approving such agreements or the registration of the
Offering or any exemption therefrom. However, without first terminating this
Agreement, the Issuer and the Agent, by mutual written consent, may amend this
Agreement, by adding, deleting, or modifying any of the provisions hereof if
necessary to obtain approval of this Agreement or of the offering by the NASD,
SEC, or any state securities regulatory authority.
(e) Upon the occurrence and satisfactory completion of the offering and
sale of all of the Stock and the distribution of the proceeds to the Agent.
16. Indemnification. The Issuer shall indemnify and hold harmless the Agent and
each person, if any, who controls the Agent within the meaning of Section 15 of
the Securities Act from and against any and all losses, claims, damages,
expenses or liabilities, joint or several, to which they or any of them may
become subject under the Securities Act or under any other statute or at common
law or otherwise, and, except as provided below, shall reimburse the Agent and
each controlling person, if any, for any legal or other expenses reasonably
incurred by them or any of them in connection with investigating or defending
any actions whether or not resulting in any liability, insofar as the losses,
claims, damages, expenses, liabilities actions or expenses (collectively,
"Losses") arising out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Offering
Statement, or arising out of or based upon the omission or alleged omission to
state a material fact contained in the Offering Statement, or arising out of or
based upon the omission or alleged omission to state a material fact required to
be stated in the Offering Statement necessary in order to make the statements in
the Offering Statement not misleading, unless the untrue statement or omission
was made in the Offering Statement in reliance upon and in conformity with
information furnished in writing to the Issuer by the Agent directly or through
counsel expressly for the purpose of inclusion therein. However, this
indemnification provision shall not benefit the Agent or any person controlling
the Agent if the Agent failed to send or give a copy of the Offering Statement
to a person at or prior to the time an offer of Stock was made to that person,
or acted in violation of any covenants made by it herein.
Promptly after receipt by the Agent or any person controlling the Agent of
notice of the commencement of any action with respect to which indemnification
may be sought from the Issuer under this Section, the Agent shall notify the
Issuer in writing of the commencement, and, subject to the provisions stated
below, the Issuer shall assume the defense of the action (including the
employment of counsel and the payment of expenses) in so far as the action
relates to any alleged Losses with respect to which indemnification may be
sought from the Issuer. The Agent or any person controlling the Agent shall have
the right to employ separate counsel in any action and to participate in the
defense of the action, but the fees and expenses of such counsel must be
specifically authorized in writing by the Issuer before being incurred. The
Issuer shall not be liable, and shall not be required, to indemnify any person
in connection with any settlement of any action effected without the Issuer's
consent in writing.
The Agent shall indemnify and hold harmless the Issuer, each of its directors,
each of its officers, and each person, if any, who controls the Issuer within
the meaning of Section 15 of the Securities Act from and against any and all
Losses to which they or any of them may become subject under the Securities Act
or under any other statute or at common law or otherwise, and, except as
provided below, shall reimburse the Issuer and each director, officer or
controlling person, if any, for any legal or other expenses reasonably incurred
by them or any of them in connection with investigating or defending any actions
whether or not resulting in any liability, (i) insofar as the Losses arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained the Offering Statement, or arise out of or are based
upon the omission or alleged omission to state a material fact required to be
stated in the Offering Statement or necessary in order to make the statements in
the Offering Statement not misleading, but only in so far as the untrue
statement or omission was made in the Offering Statement in reliance upon and in
conformity with information furnished in writing to the Issuer by the Agent
directly or through counsel expressly for the purpose of inclusion therein, or
(ii) in so far as the Losses arise out of or are based upon any statements made
or action taken in connection with an offer or sale in connection with the
offering and under the Securities Act and the registrations and/or exemptions
therefrom in each of the Jurisdictions.
Promptly after receipt of notice of the commencement of any action with respect
to which indemnification may be sought from the Agent under this Section, the
Issuer shall notify the Agent in writing of the commencement, and, subject to
the provisions stated below, the Agent shall assume the defense of the action
(including the employment of counsel and the payment of expenses) in so far as
the action relates to any alleged Losses with respect to which indemnification
may be sought from the Agent. The Issuer and each director, officer or
controlling person shall have the right to employ separate counsel in any action
and to participate in the defense of the action, but the fees and expenses of
the counsel shall not be the expense of the Agent unless the employment of the
counsel has been specifically authorized in writing by the Agent. The Agent
shall not be liable, and shall not be required, to indemnify any person in
connection with any settlement of any action effected without the Agent's
consent in writing.
17. Contribution. If the indemnity referred to in Section 17 should be, for any
reason whatsoever, unenforceable, unavailable or otherwise insufficient to hold
each indemnified person harmless, the indemnified person shall pay to or on
behalf of each indemnified person contributions for Losses so that each
indemnified person ultimately bears only a portion of such Losses as is
appropriate (i) to reflect the relative benefits received by each such
indemnified person, respectively, on the one hand and the indemnifying person on
the other hand in connection with the transaction, or (ii) if the allocation of
that basis is not permitted by applicable law, to reflect not only the relative
fault of each such indemnified person, respectively, and the indemnifying person
as well as any other relevant equitable considerations. The respective relative
benefits received by the Agent and the Issuer shall be deemed to be in the same
proportion as the aggregate commission paid to the Agent bears to the total
gross proceeds of the Offering. The relative fault of each indemnifying person
shall be determined by reference to, among other things, whether the actions or
omissions to act were by such indemnifying person and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action or omission to act.
18. Provisions to Survive Delivery. The representations, warranties, covenants,
indemnities, understandings, agreements, and other statements of the Issuer and
the Agent contemplated by, set forth in, or made pursuant to, this Agreement and
the indemnification agreements of the Issuer and the Agent shall survive
delivery of, and payment for, the Stock.
19. Arbitration. Any dispute arising out this Agreement or breach hereof shall,
at the election of a party hereto, by written notice to the other (the
"Non-electing Party"), be referred to the NASD Regulation (the "NASD") to be
settled by arbitration in the city and state where the Non-electing Party, or
its principal executive office, is located under the then existing Arbitration
Rules of the NASD. Any arbitration conducted pursuant hereto shall be conducted
by a recognized independent and impartial arbitrator mutually agreed to by the
Issuer and the Agent involved in such dispute, or, if they cannot agree, by
three (3) arbitrators, one chosen by the Issuer, one chosen by the Agent and the
third (who shall be a recognized independent and impartial arbitrator and who
shall act as chairperson of the arbitrators) selected by the first two
arbitrators; provided, however, that if either party fails to appoint an
arbitrator within fifteen (15) calendar days of its receipt of written notice by
the other that the other has appointed an arbitrator, the arbitration shall be
conducted by an arbitrator selected by the NASD. If the arbitrators selected by
the issuer and the Agent fail to agree on a third arbitrator, the NASD shall
appoint the third arbitrator. All costs of each arbitration pursuant to this
Section (including, without limitation, all fees of the arbitrator(s) and
attorneys' fees) shall be borne by the party whose last written offer of
settlement (or claim if no offer of settlement was made by such party) differed
by a greater amount from the award made by the arbitrator(s), or in the case of
an arbitration to determine a matter other than a dollar amount or percentage,
by the party against whom the decision of the arbitration(s) shall be rendered,
as such issue is determined by the arbitrator(s); provided, however, that no
offer of settlement shall be disclosed by a party to the arbitrator(s) until
after the arbitrator(s) has (have) rendered an award or decision on the merits.
Any award granted or decision reached pursuant to arbitration hereunder shall be
final and binding upon the parties and payment shall be made as so determined
within seven calendar days of the date of the award or decision. Judgment upon
the arbitration award or decision may be entered in any court having competent
jurisdiction.
20. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Florida without regard to conflict of law principles.
21. Assignment. Neither this Agreement nor any interest of any party
herein may be assigned, pledged or transferred without the prior written
consent of the parties hereto.
22. Binding Effect. This Agreement inures to the benefit of, and is binding
upon, the parties hereto, and their respective heirs, representatives,
successors, assigns and controlling person, but nothing herein shall be
construed as an authorization or right of any party to assign its rights and
obligations hereunder. A successor or an assign does not include a purchaser of
Stock of the Issuer solely by reason of that purchase.
23. Waiver. No waiver of any provision hereof is valid unless it is in
writing and signed by the person against whom it is charged.
24. Notice. Any notice required or permitted to be given pursuant hereto
ust be in writing addressed to the person at the address specified herein,
or at an address changed in this manner.
25. Entire Agreement. This Agreement, including all exhibits, constitutes the
entire agreement among the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day,
month and year first written above.
THE ISSUER: Buy Energy Corporation
/s/Xxxxxxx X. Xxxxxxx
--------------------------
By: Xxxxxxx X. Xxxxxxx, President
THE AGENT: Galleon Merchant Banking, Inc
/s/Xxxxxxxx X. Xxxxxx
-------------------------
By: Xxxxxxxx X. Xxxxxx, President
