UNDERWRITING AGREEMENT
THIS UNDERWRITING AGREEMENT (the "Agreement") is made and entered into
this 23th day of April 2002, by and between BuyEnergy 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
expiration of 90 days following the commencement of the offering. The Offering
may be extended for an additional 90 days at the Company's sole election.
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 and Reimbursement. 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. The Agent's expenses (as defined below) 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 (the
"Escrow Account") with Wachovia Bank, National Association (the "Escrow Agent")
pursuant to an Escrow Agreement. The Issuer shall pay the fee for establishing
and maintaining the Escrow Account. Subscribers' checks shall be made payable to
BuyEnergy Corp. Escrow Account and the Agent will transmit such checks directly
to the Escrow Agent 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 BuyEnergy 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 in accordance with the Escrow Agreement. The
commission relating to a particular sale shall be released by the Escrow Agent
to the Agent immediately.
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 as
outlined in Section 6.
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 March 31, 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: 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.
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 16 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 must 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
