UNDERWRITING AGREEMENT
Xxxxxxxxxxx
Securities, Inc.
0000
Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxxx,
Xxx Xxxx 00000
Gentlemen:
Zion
Oil
& Gas, Inc., a Delaware corporation (the "Company"), proposes to offer and
sell through Xxxxxxxxxxx Securities, Inc., as underwriter (the “Offering” and
the "Underwriter," respectively), and other broker-dealers (collectively, the
"Selected Dealers") up to 2,500,000 units of the Company's securities (the
"Units") for $10.00 per Unit, each Unit consisting of one (1) share of the
Company's $.01 par value common stock (the "Shares") and one (1) common stock
purchase warrant (the "Warrants") to purchase one (1) share of common stock
at
an exercise price of $7.00 per share (the "Warrant Shares"). The Units, Shares,
Warrants and Warrant Shares are hereinafter collectively referred to as the
“Securities.”
SECTION
1. Description of Securities
1.01.
Offering. The Company represents, covenants, warrants, and agrees that its
authorized, issued and outstanding capitalization, when the Offering is
permitted to commence and at the Closing Date (hereinafter defined), will be
as
set forth in the pre-effective amendment that the Company intends to file to
its
registration statement on Form S-3 filed with the Securities and Exchange
Commission (the “Commission”) on February 1, 2008. The Company proposes to
issue, and engages Underwriter to offer and sell the Units pursuant to the
registration provisions of the Securities Act of 1933, as amended (the
“Securities Act”) provided by Form S-3 therein and/or such other form as the
Company may deem appropriate. The Warrants shall be exercisable until January
31, 2012. A minimum of 325,000 Units (the “Minimum Amount”) and a maximum of
2,500,000 Units (the “Maximum Amount”) are being offered pursuant to the
Registration Statement for gross Offering proceeds of $3,250,000 and
$25,000,000, respectively.
SECTION
2. Representations and Warranties of the Company
In
order
to induce the Underwriter to enter into this Agreement, the Company hereby
represents, warrants, and covenants to and agrees with the Underwriter as
follows:
2.01.
Registration Statement. The Company has prepared and filed with the Commission
in accordance with the provisions of the Securities Act, and the rules and
regulations thereunder, a registration statement on Form S-3 (File
No.333-148982) and will file Amendment No. 1 to that registration statement
as
soon as reasonably practicable after the execution of this Agreement which
will
include a preliminary prospectus (a “Preliminary Prospectus”) relating to the
Units (collectively, with the Preliminary Prospectus, the “Registration
Statement”). Such Registration Statement, as amended, at the time the Commission
declares it to be effective (the “Effective Date”) refers to and means said
Registration Statement, the prospectus included therein (the “Prospectus”), and
all amendments thereto, including all exhibits and financial statements, if
any.
In order to raise the maximum amount of the Offering, the Company may need
to
subsequently file a registration statement on Form S-1 (the “S-1”). If in fact
the Company files the S-1, then “Registration Statement” and “Prospectus” shall
also be deemed to include the S-1 and the prospectus included
therein.
2.02.
Preliminary Prospectus. Each Preliminary Prospectus that is filed or to be
filed
as part of the Registration Statement in the form in which it becomes effective
and also in such form as it may be when any post-effective amendment to the
Registration Statement becomes effective and distributed by the Underwriter
or a
Selected Dealer to potential purchasers complied or will comply, when so filed,
in all material respects with the provisions of the Securities Act.
2.03.
Accuracy of the Registration Statement. The Registration Statement in the form
in which it becomes effective and also in such form as it may be when any
post-effective amendment thereto shall become effective, and the Prospectus
filed as part of such Registration Statement and when any supplement thereto
is
filed with the Commission, will comply in all material respects with the
provisions of the Securities Act and will not contain at any such times an
untrue statement of a material fact or omit to state a material fact required
to
be stated therein or necessary to make the statements therein not
misleading.
2.04.
Financial Statements. The Company’s financial statements, together with related
schedules and notes to be incorporated by reference into the Registration
Statement, present fairly the financial position and the results of operations
of the Company at the respective dates or for the respective periods to which
they apply; such statements and related notes have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, except as disclosed therein.
2.05.
No
Material Adverse Change. Except as may be reflected in or contemplated by the
Registration Statement and the Prospectus, subsequent to the dates as of which
information is given in the Registration Statement and the Prospectus, and
prior
to the Closing Date, (i) there shall not be any material adverse change in
the
business or financial condition of the Company; and (ii) the Company has not
and
will not have paid or declared any dividends or other distributions on its
capital stock.
2.06.
No
Defaults. The Company is not in default in the performance of any obligation,
agreement, or condition contained in any debenture, note or other evidence
of
indebtedness, or any indenture or loan agreement of the Company, other than
as
set forth in the Registration Statement and the Prospectus. The execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated, and compliance with the terms of this Agreement, will not conflict
with or result in a material breach of any of the terms, conditions or
provisions of, or constitute a material default under, the articles of
incorporation, as amended, or bylaws of the Company, or any note, indenture,
mortgage, deed of trust, or other agreement or instrument to which the Company
is a party or by which the Company or any of its property is bound, or any
existing law, order, rule, regulation, writ, injunction, or decree of any
government, governmental instrumentality, agency or body, arbitration tribunal
or court, domestic or foreign, having jurisdiction over the Company or its
property. The consent, approval, authorization, or order of any court or
governmental instrumentality, agency, or body is not required for the
consummation of the transactions herein contemplated except such as may be
required under Form S-3 or other federal securities laws, the rules, if
applicable, of the American Stock Exchange, FINRA or other stock exchange or
securities regulatory agency, or under any applicable blue sky or securities
laws of any state or jurisdiction.
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2.07.
Incorporation and Standing. The Company is, and at the Closing Date will be,
duly incorporated and validly existing in good standing as a corporation under
the laws of its jurisdiction of incorporation, with an authorized and
outstanding capital stock as set forth in the Registration Statement and the
Prospectus, and with full power and authority (corporate and other) to own
its
property and conduct its business, as described in the Registration Statement
and the Prospectus; the Company has full power and authority to enter into
this
Agreement; the Company owns, free and clear of any lien, charge, or encumbrance,
all of its property and rights to property except as set forth in the
Registration Statement and the Prospectus; and the Company is duly qualified
and
in good standing as a foreign corporation in each jurisdiction in which it
owns
or leases real property or transacts business requiring such
qualification.
2.08.
Legality of Units. The Shares and Warrants included in the Units have been
duly
and validly authorized and when issued, will be fully paid and non-assessable.
The securities underlying the Units, upon issuance, will not be subject to
the
preemptive rights of any shareholders of the Company. A sufficient number of
shares of common stock have been reserved for issuance of the Warrant Shares
upon exercise of the Warrants.
2.09.
Prior Sales. No restricted securities of the Company have been sold by the
Company within three years prior to the date hereof, except as set forth in
the
Registration Statement and the Prospectus or other filings under the Securities
Act or the Exchange Act of 1934, as amended.
2.10.
Common Stock. Upon delivery of and payment for the Units to be sold by the
Company as set forth in Section 1.01 of this Agreement, the purchasers will
receive good and marketable title thereto, free and clear of all liens,
encumbrances, charges, and claims whatsoever except as created by the
purchasers; and the Company will have on the Effective Date and at the time
of
delivery of such Units, full legal right and power and all authorizations and
approvals required by law to sell, transfer, and deliver such Units, including
the Shares and Warrants in the manner provided hereunder.
2.11.
Finders. The Company and the Underwriter represent to each other that no person
has acted as a finder in connection with the transactions contemplated herein
and each will indemnify the other party with respect to any claim for finders’
fees in connection herewith.
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2.12.
Exhibits. There are no contracts or other documents which are required to be
included as exhibits to the Registration Statement and the Prospectus by Form
S-3 or by the Rules and Regulations which have not been so included and each
contract to which the Company is a party which is described in the Registration
Statement and the Prospectus has been duly and validly executed by the Company,
and is in full force and effect in all material respects in accordance with
its
terms, and none of such contracts has been assigned by the Company; and the
Company knows of no present situation or condition of fact which would prevent
compliance by it with the terms of such contracts, as amended to date. Except
for amendments or modifications of such contracts in the ordinary course of
business, the Company has no intention of exercising any right which it may
have
to cancel any of its obligations under any of such contracts, and has no
knowledge that any other party to any of such contracts has any intention not
to
render full performance under such contracts.
2.13.
Tax
Returns. The Company has filed all federal and state tax returns which are
required to be filed, and has paid all taxes shown on such returns and on all
assessments received by it to the extent such taxes have become due. All taxes
with respect to which the Company is obligated have been paid or adequate
accruals have been set up to cover any such unpaid taxes.
2.14.
Property. Except as otherwise set forth in or contemplated by the Registration
Statement and the Prospectus, the Company has good title, free and clear of
all
liens, encumbrances, , except liens for current taxes not due and payable,
to
all property and assets which are described in the Registration Statement and
the Prospectus as being owned by the Company, subject only to such exceptions
as
are not material and do not adversely affect the present or prospective business
of the Company.
2.15.
Licenses and Permits. To the best of its knowledge, and subject to the
description in the Registration Statement, the Company holds all material
licenses, certificates and permits from governmental authorities that are
necessary to the current conduct of its businesses; and to the best of its
knowledge, the Company has not infringed any patents, patent rights, trade
names, trademarks or copyrights in any manner material to the business of the
Company taken as a whole.
2.16.
Price of any Security. The Company has not taken, directly or indirectly, any
action designed to or that would constitute or that might reasonably be expected
to cause or result in, under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), or otherwise, stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Units.
2.17.
Related Parties. No relationship, direct or indirect, exists between or among
the Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, that is required to
be
described in the Registration Statement and the Prospectus that is not so fully
and accurately described therein or in any other filing under the Securities
Act
or the Exchange Act.
2.18.
Investment Company. The Company is not and, after giving effect to the offer
and
sale of the Units, will not be an “investment company” or an entity “controlled”
by an “investment company,” as such terms are defined in the Investment Company
Act of 1940, as amended.
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2.19.
Accuracy of Statistical and Market-Related Data. Any statistical and
market-related data included in the Registration Statement and the Prospectus
are based on or derived from sources that the Company believes to be reliable
and accurate.
2.20.
Authority. The execution and delivery by the Company of this Agreement has
been
duly authorized by all necessary corporate action and this Agreement is the
valid, binding, and legally enforceable obligation of the Company.
SECTION
3. Issue, Sale and Delivery of the Units; Post Closing
Agreements
3.01.01.
The Company hereby appoints the Underwriter as its agent from the Effective
Date
of the Registration Statement for a period of ninety (90) days to complete
the
Offering of the Minimum Amount, which period may be extended for an additional
sixty (60) days by the Company (the “Minimum Date”). If the Minimum Amount is
received by the Minimum Date, the Offering will continue until the earlier
of
(i) one hundred eight (180) days following the date of the Prospectus which
date
may be extended for up to an additional sixty (60) days without notice to
investors; (ii) the date on which the Maximum Amount has been subscribed for
and
accepted by the Company; or (iii) such date as announced by the Company on
no
less than two (2) trading days prior to such notice (collectively, the
“Termination Date”).
The
Underwriter, on the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, accepts
such appointment and agrees to use its best efforts to find purchasers for
the
Units. “Best efforts” as used in this Agreement in connection with the
Underwriter shall mean that effort which would be employed by a reasonably
diligent broker-dealer in the position of the Underwriter. The price at which
the Underwriter shall sell the Units in Offering transactions, as agent for
the
Company, shall be $10.00 per Unit, and the Company shall pay the Underwriter
a
commission of six (6%) percent of the offering price for each Unit sold and
other such other compensation as described in this Agreement. Anything to the
contrary herein notwithstanding, the underwriting compensation set forth in
this
Section 3.01.01 and the three (3%) percent non-accountable expense allowance
set
forth in Section 3.02 shall not be payable to the Underwriter on any Units
directly placed by the Company.
3.01.02.
The Company and the Underwriter agree that unless Minimum Amount offered (the
"Minimum Offering") is subscribed for on or before the Minimum Date, the agency
between the Company and the Underwriter will terminate. In the event the Minimum
Offering is not consummated by the Minimum Date, the full proceeds that have
been paid for the Units shall be returned to the purchasers within ten (10)
business days as described below.
3.01.03.
The Offering shall automatically terminate if the Minimum Amount is not sold
on
or prior to the Minimum Date or if the Minimum Amount is sold, on the
Termination Date as defined in Section 3.01.01.
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3.01.04.
Upon completion of the Offering, the Company will issue to the Underwriter
warrants to purchase common shares of the Company equal to three percent (3%)
of
the Shares underlying the Units sold in the Offering at a exercise price of
$8.75 per share (the “Underwriter Warrants”). Such Underwriter Warrants will be
exercisable after the third month anniversary of the Termination Date and shall
expire three (3) years from the Effective Date of the Registration Statement.
The Underwriter Warrants may be exercised by the payment of cash or through
"cashless exercise," at the sole election of the Underwriter. The shares
underlying the Underwriters Warrants shall be registered in the Registration
Statement. Neither the Underwriter’s Warrants nor the shares underlying the
Underwriter’s Warrants shall be sold during the offering or sold, transferred,
assigned, pledged or hypothecated, or be the subject of any hedging, short
sale,
derivative, put or call transaction that would result in the effective economic
disposition of the securities by any person for a period of one (1) year
immediately following the Effective Date of the Registration Statement, except
to any FINRA member participating in the offering and the officers or partners
thereof, or as otherwise permitted under 2710(g)(2) of FINRA’s Corporate
Financing Rule and only if the warrants so transferred remain subject to the
one-year lock-up restriction or for the remainder of the lock-up
period.
3.01.05.
The Company will make arrangements to have available at the office of its
transfer agent, Registrar and Transfer Company, Cranford, NJ, sufficient
quantities of the Company's common stock certificates as may be needed for
the
quick and efficient transfer of the Shares, and sufficient quantities of Unit
certificates and Warrant certificates as may be needed for the quick and
efficient transfer of the Units and Warrants.
3.01.06.
The Company and Sterling Trust Company (the “Escrow Agent”) have entered into an
escrow agreement ("Escrow Agreement") as set forth in Exhibit 10.1 to the
Registration Statement and the Company has set up an escrow account with the
Escrow Agent
(the “Escrow Account”). During the period of the Offering, payment for Units
shall be in clearing house funds, and the Underwriter and/or the Selected
Dealers shall request that all checks and other orders in payment for the Units
be made payable to the order of "Sterling Trust Company, Escrow Agent FBO Zion
Oil Subscribers" (the "Escrow Account"). Such checks and orders shall be
transmitted by the Underwriter and/or the Selected Dealers to the Escrow Account
by noon of the next business day following receipt. The Selected Dealers’
Agreements will provide that such Selected Dealer will (i) forward any checks
and orders to the Escrow Account by noon of the next business date following
receipt and (ii) forward copies of the subscription documents, checks,
transmittal documents to the Escrow Agent and any related correspondence to
the
Underwriter at such time as the related transmittal to the Escrow Agent. Funds
may be wired to the Escrow Account via Sterling Trust Company pursuant to the
wire instructions transmitted to the purchasers. Interim closings may be held
during the term of the offering or otherwise as fixed by notice in writing
to be
given by the Underwriter to the Company and the Escrow Agent. The Underwriter
agrees that it will only utilize the services of a Selected Dealer in states
in
which the Underwriter is not registered as a broker-dealer and will supervise
each transaction in which a Selected Dealer participates so as to insure
compliance with the respective Selected Dealers’ Agreements. . The Underwriter
shall also cause each Selected Dealer to sign a Non Disclosure Agreement (“NDA”)
similar to the NDA signed by the Underwriter with the Company.
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The
Company agrees to faithfully perform its obligations under the Escrow Agreement.
The Underwriter will deliver the funds into the Escrow Account in accordance
with Rule 15c2-4 of the Exchange Act but in any event not later than noon the
next business day after receipt of such funds. The Underwriter will at the
time
of transmittal of a check to the Escrow Agent deliver a copy of each
subscription agreement received by it to the executive offices of the Company,
to the attention of the Company's Chief Accounting Officer. In accordance with
the requirements of Rules 15c2-4 and 10b-9 of the Exchange Act, in the event
that the Minimum Offering amount is not met, the funds paid into the Escrow
Account shall be returned to each individual subscriber within ten (10) business
days by the Escrow Agent, and not returned to the Underwriter nor the Company
for delivery to such subscribers. Any pro rata interest on the escrowed funds
shall not be paid to the Underwriter, but shall be paid to the subscribers
on a
pro rata basis..
3.01.07.
The time and date of delivery and payment hereunder are herein called a “Closing
Date” and shall take place at the office of the Company on such dates as will be
fixed by notice in writing to be given by the Company to the Underwriter and
the
Escrow agent. The Closing Dates and places may be changed by the agreement
of
the Underwriter and the Company.
3.01.08.
The certificates so delivered for the Units, Shares and Warrants shall be
registered in the names of the purchasers thereof for the number of Units
purchased by each.
3.02.
The
Company shall reimburse the Underwriter for its expenses and overhead related
to
the Offering in the form of a non-accountable expense allowance in an amount
equal to three (3%) percent of the total proceeds realized from the sale of
the
Units in the offering, but shall not include the following, all of which will
be
paid by the Company: (i) all costs and expenses incident to the issuance and
delivery of the Units including all expenses and fees incident to the
Registration Statement and the “COBRA” filing with FINRA; (ii) the costs and
counsel fees for qualification of the Units, if requested by the Company, under
state securities laws, if any; (iii) the Company’s accountant's and auditor's
fees and expenses incurred or paid in connection with the Offering; (iv) costs
of preparing, printing and mailing as many copies of the Registration Statement
and/or Prospectus and related exhibits as the Underwriter may deem necessary,
including all amendments and supplements of the Registration Statement; (v)
the
amount of any attorney's fees and expenses (except those charged by
Underwriter's or Selected Dealer’s counsel) incurred or paid by the Company in
connection with the Offering; (vi) the amount of the fees and charges of any
transfer agents, registrars, indenture trustees, escrow agents, depositories,
engineers, appraisers, or other professional or technical experts; (vii) the
cost of authorizing, preparing, and printing certificates for securities and
other documents relating thereto, including any taxes and stamps; (viii) the
amount of all Company-agreed printing, advertising, traveling expenses, and
expenses in connection with meetings and presentations for informational or
promotional purposes (
e.g.
, "road
show"); and (ix) the performance by the Company of its other obligations under
this Agreement. To date, the Company has paid the Underwriter $40,000 toward
the
non-accountable allowance. The Underwriter shall pay its own costs and expenses
except as otherwise provided in this Agreement. Anything to the contrary herein
notwithstanding, the Company shall not be responsible for the payment of any
of
the fees of the Underwriter in qualifying the Underwriter as a registered
broker-dealer in any state that it is not presently registered in. Furthermore,
the Underwriter agrees to reduce the aggregate fees it is entitled to hereunder
or its expense account allowance to the extent that any fees paid to Network
Financial Securities, Inc. or allowance advanced thereto are designated by
FINRA
as chargeable to this Offering as underwriting compensation and/or are not
otherwise returned to the Company.
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3.03.
The
parties hereto respectively covenant that as of the Closing Date the
representations and warranties herein contained and the statements contained
in
all the certificates simultaneously delivered by any party to another, pursuant
to this Agreement, shall in all material respects be true and
correct.
3.04.
The
Underwriter covenants that promptly after the Closing Date it will supply the
Company with all information required from the Underwriter as the Company may
request to be supplied to the securities commissions of such states in which
the
Units have been qualified for sale or such other regulatory or reporting
agencies as may be required.
3.05.
The
Company agrees that Underwriter has the right to place tombstone advertisements
describing its services to the Company under this agreement on its website
as
well as in financial and other newspapers and journals at its own expense
following the date on which the Offering closes. Notwithstanding the foregoing,
the Underwriter shall provide the Company with a copy of any such advertisement
for its approval (which shall not be unreasonably withheld or delayed) no less
than three (3) business days before the public release of the
advertisement.
SECTION
4. Offering of the Units on Behalf of the Company
4.01.
In
offering the Units for sale, the Underwriter shall offer the Units solely as
an
agent for the Company, and such offer shall be made upon the terms and subject
to the conditions set forth in the Registration Statement and the Prospectus.
The Underwriter shall commence making such offer as an agent for the Company
upon the Effective Date.
4.02.
The
Underwriter may invite FINRA registered Selected Dealers selected by it to
offer
and sell the Units for the account of the Company pursuant to a form of Selected
Dealers Agreement, pursuant to which the Underwriter may allow such concession
(out of its underwriting commission and Underwriter Warrants) as it may
determine, within the limits set forth in the Registration Statement and the
Prospectus, and all such sales by Selected Dealers shall be as agents for the
accounts of their customers. The Company shall have no obligation with respect
to the payment or reimbursement of any Selected Dealer.
4.03.
On
each sale of any of the Units by Selected Dealers, the Underwriter shall require
the Selected Dealer offering any Units to agree to offer the Units on the terms
and conditions of the Offering set forth in the Registration Statement and
the
Prospectus.
SECTION
5. Registration Statement
5.01.
The
Company will procure, at its expense, as many printed copies of the Registration
Statement as the Underwriter may reasonably require for the purposes
contemplated by this Agreement and shall deliver said printed copies of the
Registration Statement to the Underwriter as soon as practical after the
Effective Date.
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5.02.
If
during such period of time as in the reasonable opinion of the Underwriter
or
its counsel a Registration Statement relating to this Offering is required
to be
delivered under Form S-3, or any event occurs or any event known to the Company
relating to or affecting the Company shall occur as a result of which the
Registration Statement as then amended or supplemented would include an untrue
statement of a material fact, or omit to state any material fact necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading, or if it is necessary at any time after the Effective
Date
of the Registration Statement to amend or supplement the Registration Statement
to comply with Form S-3, the Company will forthwith notify the Underwriter
thereof and prepare and file with the securities commissions of such states
in
which the offering is qualified for sale, if any and the Commission such further
amendment to the Registration Statement or supplemented or amended Registration
Statement as may be required and furnish and deliver to the Underwriter and
to
others whose names and addresses are designated by the Underwriter, all at
the
cost of the Company, a reasonable number of copies of the amended or
supplemented Registration Statement which as so amended or supplemented will
not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the Registration Statement not misleading in
the
light of the circumstances when it is delivered to a purchaser or prospective
purchaser, and which will comply in all respects with Form S-3 and the
Securities Act.
5.03.
The
Company authorizes the Underwriter and the Selected Dealers, if any, in
connection with the distribution of the Units and all dealers to whom any of
the
Units may be sold by the Underwriter or by any Selected Dealer, to use the
Registration Statement, as from time to time amended or supplemented, in
connection with the offering and sale of the Units and in accordance with the
applicable provisions of Form S-3, the applicable Rules and Regulations and
applicable state blue sky or securities laws, if any.
SECTION
6. Covenants of the Company
The
Company covenants and agrees with the Underwriter that:
6.01.
The
Company will endeavor to cause the Registration Statement to become effective
and will advise the Underwriter promptly and, if requested by the Underwriter,
will confirm such advice in writing (i) when the Registration Statement has
become effective and when any amendment thereto thereafter becomes effective,
(ii) of any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (iii)
of
the issuance by the Commission of any stop order suspending the effectiveness
of
the Registration Statement or of the suspension of qualification of the Units
for offering or sale in any state or jurisdiction, or the initiation of any
proceeding for such purposes and (iv) within the period of time referred to
in
Section 6.03 below, of the happening of any event that makes any statement
made
in the Registration Statement or the Prospectus (as then amended or
supplemented) untrue in any material respect or that requires the making of
any
addition to or change in the Registration Statement or the Prospectus (as then
amended or supplemented) to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or of the necessity
to amend or supplement the Prospectus (as then amended or supplemented) to
comply with the Securities Act or any other law. If at any time the Commission
shall issue any stop order suspending the effectiveness of the Registration
Statement, the Company will make every reasonable effort to obtain the
withdrawal of such order at the earliest possible time.
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6.02.
The
Company will not file any amendment to the Registration Statement or make any
amendment or supplement to the Prospectus of which the Underwriter shall not
have been advised previously or to which the Underwriter shall reasonably object
in writing promptly after being so advised.
6.03.
On
the Effective Date of the Registration Statement and thereafter from time to
time, for such period as in the written opinion of counsel for the Underwriter
a
Prospectus is required by law to be delivered in connection with sales by an
Underwriter or a Selected Dealer, the Company will deliver to the Underwriter
and each Selected Dealer through whom Units may be sold, without charge, as
many
copies of the Prospectus (and of any amendment or supplement thereto) as they
may reasonably request. The Company consents to the use of such Prospectus
(and
of any amendment or supplement thereto) in accordance with the provisions of
the
Securities Act and with the securities or blue sky laws of the jurisdictions
in
which the Units are offered by the Underwriter and by Selected Dealers through
whom Units may be sold, both in connection with the offering or sale of the
Units and for such period of time thereafter as the Prospectus is required
by
law to be delivered in connection therewith. If during such period of time
any
event shall occur that in the judgment of the Company, or in the opinion of
counsel for the Underwriter, requires that a material fact be stated in the
Prospectus (as then amended or supplemented) in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or if it is necessary to amend or supplement the Prospectus to
comply with the Securities Act or any other law, the Company, at its own
expense, will forthwith prepare and file with the Commission an appropriate
amendment or supplement thereto, and will furnish to the Underwriter and each
Selected Dealer through whom Units may be sold, without charge, a reasonable
number of copies thereof.
SECTION
7. Effectiveness of Agreement
7.01.
This Agreement shall become effective on the execution hereof. The Effective
Date of the Registration Statement shall be printed on the front cover of the
Registration Statement and Prospectus.
SECTION
8. Conditions of the Underwriter’s Obligations
The
Underwriter’s obligations to act as agent of the Company hereunder and to find
purchasers for the Units shall be subject to the accuracy, as of the Closing
Date, of the representations and warranties on the part of the Company herein
contained, to the fulfillment of or compliance by the Company with all covenants
and conditions hereof, and to the following additional conditions:
10
8.01.
On
or prior to the Closing Date, no order suspending offers or sales pursuant
to
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated by the Commission or any state regulatory
agency and no statements in the Registration Statement nor any amendment thereto
shall have been included to which counsel to the Underwriter shall have not
given their consent which consent shall not be unreasonably
withheld.
8.02.
The
Underwriter shall not have disclosed in writing to the Company that the
Registration Statement or any amendment thereof or supplement thereto contains
an untrue statement of a fact which, in the reasonable opinion of counsel to
the
Underwriter, is material, or omits to state a fact which, in the reasonable
opinion of such counsel, is material and is required to be stated therein,
or is
necessary to make the statements therein not misleading.
8.03.
Between the date hereof and the Closing Date, the Company shall not have
sustained any loss on account of terrorist activity, fire, explosion, flood,
accident, calamity or any other cause, of such character as to materially
adversely affect its business or property considered as an entity.
8.04.
Between the date hereof and the Closing Date, there shall be no litigation
or
proceeding instituted against the Company before or by any federal or state
commission, regulatory body or administrative agency or other governmental
body,
domestic or foreign, wherein an unfavorable final and non-appealable ruling,
decision or finding would materially adversely affect the business, franchises,
licenses, operations, financial condition or income of the Company considered
as
a whole.
8.05.
The
authorization of the Securities, the Registration Statement and all corporate
proceedings and other legal matters incident thereto and to this Agreement
shall
be reasonably satisfactory in all respects to counsel to the Underwriter, and
the Company shall have furnished such counsel such documents as they may have
requested to enable them to pass upon the matter referred to in this
subparagraph.
8,06.
All
of the Units being offered by the Company shall be tendered for delivery in
a
timely manner consistent with the terms set forth in the subscription
documents.
8.07.
The
Company shall supply such good standing, incumbency and other certificates,
as
the Underwriter shall reasonably request.
8.08.
The
Company shall have furnished to the Underwriter, at each closing, a certificate
of the Chief Accounting Officer of the Company in her capacity as such, and
not
in her individual capacity, dated as of the Closing Date, to the effect that
the
representations and warranties of the Company in this Agreement are true and
correct in all material respects at and as of the Closing Date, and the Company
has substantially complied with all of the agreements and has satisfied all
of
the conditions on its part to be performed or satisfied under this Agreement
at
or prior to the Closing Date.
11
SECTION
9. Termination
9.01.
Subject to Section 9.03 hereof,, this Agreement may be terminated by either
party by written notice sent to the other party at the address shown in this
Agreement without cause at any time prior to the earlier of (i) the time the
Units are released for sale to the public, or (ii) 11:30 a.m., Washington D.C.
time, on the first business day following the date on which the Registration
Statement becomes effective.
9.02.
An
attempt to assign any rights and obligations under this Agreement without the
prior written consent of the other party shall constitute automatic termination
of this Agreement.
9.03.
The
Underwriter may terminate this Agreement, by prior written notice to the
Company, at any time at or prior to the final closing of the Offering (i) if
there has occurred any outbreak of hostilities or other calamity or crisis
the
effect of which on the financial markets of the United States is such as to
make
it, in the Underwriter’s reasonable judgment, impracticable to enforce contracts
for the sale of the Units or (ii) if trading in the common stock of the Company
has been suspended by the Commission, or if trading generally on any national
stock exchange has been suspended, or minimum or maximum prices for trading
have
been fixed, or maximum ranges for prices for securities have been required,
by
either of said exchanges or market or by order of the Commission or any other
governmental authority, or if a banking moratorium has been declared by either
federal or any state authorities.
9.04.
If
this Agreement is terminated pursuant to this Section 9, such termination shall
be without liability of either party to the other party.
SECTION
10. Underwriter’s Representations and Warranties
The
Underwriter represents and warrants to and covenants and agrees with the Company
that:
10.01.
It
is registered as a broker-dealer with the Commission, and is registered to
the
extent registration is required with the appropriate governmental agency in
each
state in which it intends to offer or sell the Units, and is a member of FINRA
and will maintain such registrations, qualifications and memberships in good
standing throughout the term of the Offering.
10.02.
To
the knowledge of the Underwriter, no action or proceeding is pending against
the
Underwriter or any of its officers or directors concerning the Underwriter's
activities as a broker or dealer or otherwise that would affect the Company's
offering and sale of the Units.
10.03.
The Underwriter, in connection with the offer and sale of the Units and in
the
performance of its duties and obligations under this Agreement, agrees to comply
with all applicable federal laws; the laws of the states or other jurisdictions
in which the Units are offered and sold; and the Rules and current written
interpretations and policies of the FINRA.
10.04.
The Underwriter is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware with all requisite power and
authority to enter into this Agreement and to carry out its obligations
hereunder.
12
10.05.
This Agreement has been duly authorized, executed and delivered by the
Underwriter and is a valid agreement on the part of the
Underwriter.
10.06.
Neither the execution of this Agreement nor the consummation of the transactions
contemplated hereby will result in any breach of any of the terms or conditions
of, or constitute a default under, the articles of incorporation or bylaws
of
the Underwriter or any indenture, agreement or other instrument to which the
Underwriter is a party or violate any order directed to the Underwriter of
any
court or any federal or state regulatory body or administrative agency having
jurisdiction over the Underwriter or its affiliates.
10.07.
No
person acting by, through or under the Underwriter will be entitled to receive
from the Underwriter or from the Company finder's fees or similar payments,
except as set forth in this Agreement.
10.08.
The Underwriter will, reasonably promptly after any closing date, supply the
Company with all information required from the Underwriter and such additional
information as the Company may reasonably request to be supplied to the
securities commissions of such states in which the Units have been qualified
for
sale.
10.09.
The Underwriter will use its best efforts to (i) sell the Units; (ii) to become
qualified in every state in which the Company receives a subscription and/or
retain the services of a Selected Dealer registered as a broker dealer in such
state; and (iii) provide back office support for the Offering. The Underwriter
agrees that it will not, other than for the Offering, make any use of the
Company’s data base which is being delivered to the Underwriter by the Company
to facilitate the sale of the Units. The Underwriter further represents that
it
will, in its Selected Dealers’ Agreements provide for such representations of
confidentiality from each Selected Dealer.
All
of
the above representations and warranties shall survive the performance or
termination of this Agreement.
SECTION
11. Indemnification
11.01.
The Company agrees to indemnify, defend and hold harmless the Underwriter and
Selected Dealers from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable legal or other expenses) incurred
by the Underwriter in connection with defending or investigating any liabilities
that the Underwriter may incur under the federal or state securities laws and
regulations, state statutes or at common law or otherwise, but only to the
extent that such losses, claims, damages, liabilities and expenses shall arise
out of or be based upon a violation or alleged violation of the federal or
state
securities laws or regulations, a state statute or the common law resulting
from
any untrue statement or alleged untrue statement of a material fact contained
in
the Registration Statement or in any application or other papers filed with
any
of the state securities authorities or shall arise out of or be based upon
any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
13
11.02.
The foregoing indemnity of the Company in favor of the Underwriter shall not
be
deemed to protect the Underwriter against any liability to which the Underwriter
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Underwriter's duties, or by reason of
the
Underwriter's reckless disregard of the Underwriter's obligations and duties
under the Securities Act or this Agreement.
11.03.
The Underwriter agrees to give the Company an opportunity to participate in
the
defense or preparation of the defense of any action brought against the
Underwriter to enforce any such claim or liability and the Company shall have
the right so to participate. The agreement of the Company under the foregoing
indemnity is expressly conditioned upon notice of any such action having been
sent by the Underwriter to the Company in writing, addressed as provided in
this
Agreement, promptly after the receipt of a written notice of such action against
the Underwriter. Such notice shall be accompanied by copies of papers served
or
filed in connection with such action or by a statement of the nature of the
action to the extent known to the Underwriter.
11.04.
The Underwriter agrees to indemnify, defend and hold the Company or any
shareholders, officers, directors or employees of the Company and any
controlling person of the Company harmless from and against any and all losses,
claims, damages, liabilities or expenses whatsoever (including legal fees and
expenses and court costs) to which the Company may become subject in connection
with any action, suit, proceeding or claim, public or private, to the same
extent as the foregoing indemnity from the Company to the Underwriter, but
only
with reference to information relating to the Underwriter or a Selected Dealer
furnished to the Company by or on behalf of such Underwriter or a Selected
Dealer specifically for inclusion in the Registration Statement and the
Prospectus.
11.05.
The Underwriter agrees to indemnify, defend and hold the Company and any
shareholders, officers, directors or employees of the Company and any
controlling person of the Company harmless from and against any losses, claims,
damages or liabilities or expense whatsoever (including legal fees and expenses
and court costs) to which the Company may become subject in connection with
any
action, suit, proceeding or claim, public or private, arising out of, relating
to or in connection with (i) any actual or alleged breach or violation by the
Underwriter or a Selected Dealer of any of its representations, warranties,
covenants or agreements contained in this Agreement or in any agreement with
a
Selected Dealer or (ii) any actual breach by the Underwriter or a Selected
Dealer of any applicable federal or state law, rule or regulation, or the
requirements of any securities self-regulatory organizations of which the
Underwriter or Selected Dealer, as the case may be, is a member.
11.06.
The Company agrees to give the Underwriter an opportunity to participate in
the
defense or preparation of the defense of any action brought against the Company
to enforce any such claim or liability and the Underwriter shall have the right
so to participate. The agreement of the Underwriter under the foregoing
indemnity is expressly conditioned upon notice of any such action having been
sent by the Company to the Underwriter in writing, addressed as provided in
this
Agreement, promptly after the receipt of a written notice of such action against
the Company. Such notice shall be accompanied by copies of papers served or
filed in connection with such action or by a statement of the nature of the
action to the extent known to the Company.
14
SECTION
12. Notice
Except
as
otherwise expressly provided in this Agreement:
12.01.
Whenever Notice is required by the provisions of this Agreement to be given
to
the Company, such notice shall be in writing and mailed, delivered by overnight
courier or by confirmed telecopy and addressed to the Company as
follows:
Zion
Oil & Gas, Inc.
0000
Xxxxxx Xxxx (Xxxxx 000)
Xxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxxx
Fax:
(000) 000-0000
with
a
copy to:
Aboudi
& Xxxxxxxxxx 0 Xxxxxx Xxxxxx
XXX
0000
Xxxx
Xxxx
Ind. Xxxx 00000 Xxxxxx
Fax:
000
000-0-000-0000
Attention:
Xxxxx Xxxxxx, Esq.
12.02.
Whenever notice is required by the provisions of this Agreement to be given
to
the Underwriter, such notice shall be given in writing and mailed, delivered
by
overnight courier or by confirmed telecopy and addressed to the Underwriter
as
follows:
Xxxxxxxxxxx
Securities, Inc.
0000
Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxx X. Xxxxx
Fax:
(000) 000-0000
with
a
copy to:
Guzov
Ofsink, LLC
000
Xxxxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxxx X. Xxxxx, Esq.
Fax:
(000) 000-0000
15
SECTION
13. Miscellaneous
13.01.
Benefit. This Agreement is made solely for the benefit of the Underwriter,
the
Company, their respective officers and directors and any controlling person
referred to in Section 15 of the Act, and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. The term “successor” or the term “successors and assigns” as
used in this Agreement shall not include any purchasers, as such, of any of
the
Units.
13.02.
Governing Law and Venue. The validity, interpretation and construction of this
Agreement and of each part hereof will be governed by the laws of the state
of
New York. The Company and the Underwriter agree that in the event that a dispute
arises between the Underwriter and the Company or any of its officers,
directors, employees, agents, attorneys or accountants, arising out of, in
connection with or as a result of the execution of this Agreement or as a result
of any subscription tendered by any purchaser of the Units, such dispute shall
be resolved through arbitration rather than litigation. The parties agree to
submit such disputes for resolution to the FINRA within five (5) days after
receiving a written request from any of the aforesaid parties to do so. The
failure by the Company or Underwriter to submit any dispute to arbitration
as
requested may result in the commencement of an arbitration proceeding against
such party. The parties further agree that any hearing scheduled after an
arbitration proceeding is initiated by any of the aforesaid parties shall take
place in the City and state of New York. The parties acknowledge that the result
of the arbitration proceeding shall be final and binding on all of the parties
to the proceeding, and by agreeing to arbitration the parties are waiving their
respective rights to seek remedies in Court.
13.03.
Survival. The respective indemnities, agreements, representations, warranties,
covenants and other statements of the Company and the Underwriter or their
officers as set forth in or made pursuant to this Agreement and contained in
Sections 2, 10, 11 and 13.02 hereof shall survive the consummation of the
transactions contemplated by this Agreement and shall continue in full force
and
effect for 18 months thereafter or, if such transactions are not so consummated,
for 18 months following the Minimum Date or the Termination Date.
13.04.
Underwriter’s Information. The statements with respect to the Offering of the
Units on the cover page of the Registration Statement and under the caption
“Plan of Distribution” and “Underwriter” in the Registration Statement
constitute the written information furnished by or on behalf of the Underwriter
referred to in subsection 2.02 hereof.
13.05.
Counterparts. This Agreement may be executed in any number of counterparts,
each
of which may be deemed an original and all of which together will constitute
one
and the same instrument.
16
Please
confirm that the foregoing correctly sets forth the Agreement between
Xxxxxxxxxxx Securities, Inc. and the Company.
Very
truly yours,
ZION
OIL
& GAS, INC.
|
By:
|
/s/
Xxxxxxx X. Xxxxx
|
4/2/08
|
|
Xxxxxxx
X. Xxxxx
|
||
|
Title:
|
We
hereby
confirm, as of the date hereof, that the above letter sets forth the agreement
between Zion Oil & Gas, Inc. and Xxxxxxxxxxx Securities, Inc.
XXXXXXXXXXX
SECURITIES, INC.
|
By:
|
/s/Xxxxxxx
X. Xxxxx
|
4/2/08
|
|
Xxxxxxx
X. Xxxxx, President
|
17
