RENEWABLE ENERGY ACQUISITION CORP. UNDERWRITING AGREEMENT
________________,
2007
Crusader
Securities, LLC
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Dear
Sirs:
Pursuant
to the terms of this Underwriting Agreement, Renewable Energy Acquisition Corp.,
a Nevada corporation (the "Company"), hereby confirms its agreement with
Crusader Securities, LLC (the "Underwriter") as follows:
1.
Appointment
of Underwriter. The Company hereby appoints the Underwriter, on all the terms
and conditions hereinafter set forth, as the Company's exclusive agent to use
its best efforts to sell on behalf of the Company 1,000,000 Units and a maximum
of 2,000,000 Units at $6.00 per Unit on a “best efforts” basis. The offering of
Units contemplated hereby may sometimes be referred to as the "Offering."
Each
unit
consists of one share of the Company’s common stock, $0.001 par value per share
("Common Stock"), and two redeemable common stock purchase warrants (the
"Warrant(s)"; together, the Common Stock and two Warrants are sometimes referred
to as a “Unit(s)”). The shares of Common Stock and the Warrants included in the
Units will not be separately transferable until 90 days after the effective
date
(“Effective Date”) of the Registration Statement (as defined in Paragraph 2(a)
hereof) unless the Underwriter informs the Company of its decision to allow
earlier separate trading, but in no event will the Underwriter allow separate
trading until the preparation of an audited balance sheet of the Company
reflecting receipt by the Company of the proceeds of the Offering and the filing
of a Form 8-K by the Company which includes such balance sheet.
(a)
The
Warrants.
Each
Warrant shall entitle the holder to purchase one share of Common Stock at $5.00
per share, subject to adjustment. Each Warrant is exercisable commencing on
the
later of the date the Company completes a business combination or one year
following the effective date of the Registration Statement, as defined in
Paragraph 2(a) (the "Effective Date") until their expiration four years after
the Effective Date. The shares of Common Stock issuable upon the exercise of
the
Warrants are hereinafter referred to as the "Warrant Shares."
(b)
Underwriter's
Option.
At the
closing of the sale referred to in Paragraph 4, the Company will sell to the
Underwriter for a purchase price of $100.00, (i) an option (the “Underwriter’s
Option”) to purchase 5 Units ("Underwriter's Units") for every 100 Units
actually sold as part of the best efforts public offering. The Underwriter’s
Units shall be the same as the Units offered to the public, except that the
price of the Underwriter’s Units shall be $6.60 per Unit (110% of the public
price), and the exercise price of the underlying warrants (the “Underwriter’s
Warrants”) shall be $6.25 per share (125% of the public price). The
Underwriter’s Option and the Underwriter’s Warrants shall be non-exercisable and
non-transferable other than to (i) officers of the Underwriter, and (ii) members
of the selling group and their officers or partners, for a period of 12 months
following the Effective Date. If the Underwriter's Option or the Underwriter's
Warrants are not exercised during their term, they shall, by their terms,
automatically expire. The Underwriter's Units, and the Common Stock and Warrants
issuable thereunder, shall be registered for sale to the public and shall be
included in the Registration Statement filed in connection with the
Offering.
2.
Representations
and Warranties of the Company.
The
Company represents and warrants to the Underwriter that:
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(a)
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Filing
of Registration Statement.
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(i) Pursuant
to the Act.
The
Company has filed with the Securities and Exchange Commission (“Commission”) a
registration statement and an amendment or amendments thereto, on Form ____
(File No. _________ ), including any related preliminary prospectus
(“Preliminary Prospectus”), for the registration of the Public Securities under
the Securities Act of 1933, as amended (“Act”), which registration statement and
amendment or amendments have been prepared by the Company in conformity with
the
requirements of the Act, and the rules and regulations (“Regulations”) of the
Commission under the Act. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at the time
the
registration statement becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents filed as a part thereof
or incorporated therein and all information deemed to be a part thereof as
of
such time pursuant to paragraph (b) of Rule 430A of the Regulations), is
hereinafter called the “Registration Statement,” and the form of the final
prospectus dated the Effective Date included in the Registration Statement
(or,
if applicable, the form of final prospectus filed with the Commission pursuant
to Rule 424 of the Regulations), is hereinafter called the “Prospectus.” The
Registration Statement has been declared effective by the Commission on the
date
hereof.
(ii) Pursuant
to the Exchange Act.
The
Company has filed with the Commission a Form 8-A (File Number ______________)
providing for the registration under the Securities Exchange Act of 1934, as
amended (“Exchange Act”), of the Units, the Common Stock and the Warrants. The
registration of the Units, Common Stock and Warrants under the Exchange Act
has
been declared effective by the Commission on the date hereof.
(b) Pricing
Disclosure Package.
The
Pricing Disclosure Package did not, as of the date hereof, contain 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, in the light of
the
circumstances under which they were made, not misleading; provided that no
representation or warranty is made as to information contained in or omitted
from the Pricing Disclosure Package in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any Underwriter
specifically for inclusion therein. As used in this Agreement, “Pricing
Disclosure Package” means, as of the date hereof, the most recent Preliminary
Prospectus.
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(c)
No
Stop Orders, Etc.
Neither
the Commission nor, to the best of the Company’s knowledge, any state regulatory
authority has issued any order or threatened to issue any order preventing
or
suspending the use of any Preliminary Prospectus, or has instituted or, to
the
best of the Company’s knowledge, threatened to institute any proceedings with
respect to such an order.
(d)
Disclosures
in Registration Statement.
(i) 10b-5
Representation.
At the
time the Registration Statement became effective and at all times subsequent
thereto up to the Closing Date the Registration Statement and the Prospectus
does and will contain all material statements that are required to be stated
therein in accordance with the Act and the Regulations, and will in all material
respects conform to the requirements of the Act and the Regulations; neither
the
Registration Statement, the Pricing Disclosure Package, nor the Prospectus,
nor
any amendment or supplement thereto, on such dates, does or will contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light
of
the circumstances under which they were made, not misleading. When any
Preliminary Prospectus was first filed with the Commission (whether filed as
part of the Registration Statement for the registration of the Securities or
any
amendment thereto or pursuant to Rule 424(a) of the Regulations) and when any
amendment thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus and any amendments thereof and supplements thereto
complied or will comply in all material respects with the applicable provisions
of the Act and the Regulations and did not and will not contain an untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading. The representation
and warranty made in this Paragraph 2(d)(i) does not apply to statements made
or
statements omitted in reliance upon and in conformity with written information
furnished to the Company with respect to the Underwriter expressly for use
in
the Registration Statement or Prospectus or any amendment thereof or supplement
thereto.
(ii) Disclosure
of Agreements.
The
agreements and documents described in the Registration Statement and the
Prospectus conform to the descriptions thereof contained therein and there
are
no agreements or other documents required to be described in the Registration
Statement or the Prospectus or to be filed with the Commission as exhibits
to
the Registration Statement, that have not been so described or filed. Each
agreement or other instrument (however characterized or described) to which
the
Company is a party or by which its property or business is or may be bound
or
affected and (i) that is referred to in the Prospectus, or (ii) is material
to
the Company’s business, has been duly and validly executed by the Company, is in
full force and effect and is enforceable against the Company and, to the
Company’s knowledge, the other parties thereto, in accordance with its terms,
except (x) as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally, (y) as
enforceability of any indemnification or contribution provision may be limited
under the federal and state securities laws, and (z) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, and none of such agreements or instruments
has been assigned by the Company, and neither the Company nor, to the best
of
the Company’s knowledge, any other party is in breach or default thereunder and,
to the best of the Company’s knowledge, no event has occurred that, with the
lapse of time or the giving of notice, or both, would constitute a breach or
default thereunder. To the best of the Company’s knowledge, performance by the
Company of the material provisions of such agreements or instruments will not
result in a violation of any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its assets or
businesses, including, without limitation, those relating to environmental
laws
and regulations.
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(iii) Prior
Securities Transactions.
No
securities of the Company have been sold by the Company or by or on behalf
of,
or for the benefit of, any person or persons controlling, controlled by, or
under common control with the Company since the Company’s formation, except as
disclosed in the Registration Statement.
(iv) Regulations.
The
disclosures in the Registration Statement concerning the effects of Federal,
State and local regulation on the Company's business as currently contemplated
are correct in all material respects and do not omit to state a material
fact.
(e) Changes
After Dates in Registration Statement.
(i)
No
Material Adverse Change.
Since
the respective dates as of which information is given in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, except as
otherwise specifically stated therein, (i) there has been no material adverse
change in the condition, financial or otherwise, or business prospects of the
Company, (ii) there have been no material transactions entered into by the
Company, other than as contemplated pursuant to this Agreement, and (iii) no
member of the Company’s management has resigned from any position with the
Company.
(ii)
Recent
Securities Transactions, Etc.
Subsequent to the respective dates as of which information is given in the
Registration Statement, the Pricing Disclosure Package and the Prospectus,
and
except as may otherwise be indicated or contemplated herein or therein, the
Company has not (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money; or (ii) declared or paid
any dividend or made any other distribution on or in respect to its equity
securities.
(f) Independent
Accountants.
▇.▇.
▇▇▇▇▇▇▇▇ & Associates, whose report is filed with the Commission as part of
the Registration Statement, are independent accountants as required by the
Act
and the Regulations. ▇.▇. ▇▇▇▇▇▇▇▇ & Associates has not, during the periods
covered by the financial statements included in the Prospectus, provided to
the
Company any non-audit services, as such term is used in Section 10A(g) of the
Exchange Act.
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(g) Financial
Statements.
The
financial statements, including the notes thereto and supporting schedules
included in the Registration Statement and Prospectus fairly present the
financial position, the results of operations and the cash flows of the Company
at the dates and for the periods to which they apply; and such financial
statements have been prepared in conformity with generally accepted accounting
principles, consistently applied throughout the periods involved; and the
supporting schedules included in the Registration Statement present fairly
the
information required to be stated therein. The summary financial data included
in the Registration Statement and the Prospectus present fairly the information
shown thereon and have been compiled on a basis consistent with the audited
financial statements presented therein. No other financial statements or
schedules are required to be included in the Registration Statement or the
Prospectus. The Registration Statement discloses all material off-balance sheet
transactions, arrangements, obligations (including contingent obligations),
and
other relationships of the Company with unconsolidated entities or other persons
that may have a material current or future effect on the Company’s financial
condition, changes in financial condition, results of operations, liquidity,
capital expenditures, capital resources, or significant components of revenues
or expenses.
(h)
Authorized
Capital; Options; Etc.
The
Company had at the date or dates indicated in the Prospectus duly authorized,
issued and outstanding capitalization as set forth in the Registration Statement
and the Prospectus. Based on the assumptions stated in the Registration
Statement and the Prospectus, the Company will have on the Closing Date the
adjusted stock capitalization set forth therein. Except as set forth in, or
contemplated by, the Registration Statement and the Prospectus, on the Effective
Date and on the Closing Date, there will be no options, warrants, or other
rights to purchase or otherwise acquire any authorized but unissued shares
of
Common Stock of the Company or any security convertible into shares of Common
Stock of the Company, or any contracts or commitments to issue or sell shares
of
Common Stock or any such options, warrants, rights or convertible
securities.
(i) Valid
Issuance of Securities; Etc.
(i) Outstanding
Securities.
All
issued and outstanding securities of the Company have been duly authorized
and
validly issued and are fully paid and non-assessable; 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 pre-emptive rights of any holders of any security
of
the Company or similar contractual rights granted by the Company. The authorized
Common Stock conforms to all statements relating thereto contained in the
Registration Statement and the Prospectus. The offers and sales of the
outstanding Common Stock were at all relevant times either registered under
the
Act and the applicable state securities or Blue Sky laws or, based in part
on
the representations and warranties of the purchasers of such shares of Common
Stock, exempt from such registration requirements.
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(ii) Securities
Sold Pursuant to this Agreement.
The
Securities have been duly authorized and, when issued and paid for, will be
validly issued, fully paid and non-assessable; the holders thereof are not
and
will not be subject to personal liability by reason of being such holders;
the
Securities are not and will not be subject to the preemptive rights of any
holders of any security of the Company or similar contractual rights granted
by
the Company; and all corporate action required to be taken for the
authorization, issuance and sale of the Securities has been duly and validly
taken. The Securities conform in all material respects to all statements with
respect thereto contained in the Registration Statement. When issued, the
Underwriter’s Option, the Underwriter’s Warrants and the Warrants will
constitute valid and binding obligations of the Company to issue and sell,
upon
exercise thereof and payment of the respective exercise prices therefor, the
number and type of securities of the Company called for thereby in accordance
with the terms thereof and such Underwriter’s Option, the Underwriter’s Warrants
and the Warrants are enforceable against the Company in accordance with their
respective terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally, (ii) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and (iii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(j) Registration
Rights of Third Parties.
Except
as set forth in the Prospectus, no holders of any securities of the Company
or
any rights exercisable for or convertible or exchangeable into securities of
the
Company have the right to require the Company to register any such securities
of
the Company under the Act or to include any such securities in a registration
statement to be filed by the Company.
(k) Validity
and Binding Effect of Agreements.
This
Agreement, the Underwriter’s Option (as defined in Paragraph 1(b) hereof), the
Trust Agreement (as defined in Paragraph 2(y) hereof), and the Escrow Agreement
(as defined in Paragraph 2(w)(ii) hereof) have been duly and validly authorized
by the Company and when executed and delivered, will constitute, the valid
and
binding agreements of the Company, enforceable against the Company in accordance
with their respective terms, except (i) as such enforceability may be limited
by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally, (ii) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and (iii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(l) No
Conflicts, Etc.
The
execution, delivery, and performance by the Company of this Agreement, the
Warrant Agreement, the Underwriter’s Option, the Trust Agreement, and the Escrow
Agreement, the consummation by the Company of the transactions herein and
therein contemplated and the compliance by the Company with the terms hereof
and
thereof do not and will not, with or without the giving of notice or the lapse
of time or both (i) result in a breach of, or conflict with any of the terms
and
provisions of, or constitute a default under, or result in the creation,
modification, termination or imposition of any lien, charge or encumbrance
upon
any property or assets of the Company pursuant to the terms of any agreement
or
instrument to which the Company is a party except pursuant to the Trust
Agreement referred to in this Agreement; (ii) result in any violation of the
provisions of the Articles of Incorporation or the Bylaws of the Company; or
(iii) violate any existing applicable law, rule, regulation, judgment, order
or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or any of its properties or business.
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(m)
No
Defaults; Violations.
No
material default exists in the due performance and observance of any term,
covenant or condition of any material license, contract, indenture, mortgage,
deed of trust, note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any other material
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the properties or assets of the Company is
subject. The Company is not in violation of any term or provision of its
Articles of Incorporation or Bylaws or in violation of any material franchise,
license, permit, applicable law, rule, regulation, judgment or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over
the
Company or any of its properties or businesses.
(n)
Corporate
Power; Licenses; Consents.
(i)
Conduct
of Business.
The
Company has all requisite corporate power and authority, and has all necessary
authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental regulatory officials and bodies that it needs as of the
date hereof to conduct its business purpose as described in the Prospectus.
The
disclosures in the Registration Statement concerning the effects of federal,
state and local regulation on this offering and the Company’s business purpose
as currently contemplated are correct in all material respects and do not omit
to state a material fact required to be stated therein or necessary in order
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading.
(ii)
Transactions
Contemplated Herein.
The
Company has all corporate power and authority to enter into this Agreement
and
to carry out the provisions and conditions hereof, and all consents,
authorizations, approvals and orders required in connection therewith have
been
obtained. No consent, authorization or order of, and no filing with, any court,
government agency or other body is required for the valid issuance, sale and
delivery, of the Securities and the consummation of the transactions and
agreements contemplated by this Agreement, the Underwriter’s Option, the Trust
Agreement and the Escrow Agreement and as contemplated by the Prospectus, except
with respect to applicable federal and state securities laws.
(o)
D&O
Questionnaires.
To the
best of the Company’s knowledge, all information contained in the questionnaires
(“Questionnaires”) completed by each of the Company’s stockholders immediately
prior to the Offering (the “Initial Stockholders”) and provided to the
Underwriters is true and correct and the Company has not become aware of any
information which would cause the information disclosed in the questionnaires
completed by each Initial Stockholder to become inaccurate and incorrect.
7
(p) Litigation;
Governmental Proceedings.
There
is no action, suit, proceeding, inquiry, arbitration, investigation, litigation
or governmental proceeding pending or, to the best of the Company’s knowledge,
threatened against, or involving the Company or, to the best of the Company’s
knowledge, any Initial Stockholder, which has not been disclosed in the
Registration Statement or the Questionnaires.
(q)
Good
Standing.
The
Company has been duly organized and is validly existing as a corporation and
is
in good standing under the laws of its state of incorporation, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the conduct
of
business requires such qualification, except where the failure to qualify would
not have a material adverse effect on the assets, business or operations of
the
Company.
(r) Stop
Orders.
The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus or Prospectus or any part thereof and has not threatened
to issue any such order.
(s) Transactions
Affecting Disclosure to FINRA.
(i) Finder’s
Fees.
Except
as described in the Prospectus, there are no claims, payments, arrangements,
agreements or understandings relating to the payment of a finder’s, consulting
or origination fee by the Company or any Initial Stockholder with respect to
the
sale of the Securities hereunder or any other arrangements, agreements or
understandings of the Company or, to the best of the Company’s knowledge, any
Initial Stockholder that may affect the Underwriters’ compensation, as
determined by the Financial Industry Regulatory Authority
(“FINRA”).
(ii)
Payments
Within Twelve Months.
Other
than payments to the Underwriter, the Company has not within the twelve months
prior to the Effective Date made any direct or indirect payments (in cash,
securities or otherwise) (i) to any person, as a finder’s fee, consulting fee or
otherwise, in consideration of such person raising capital for the Company
or
introducing to the Company persons who raised or provided capital to the
Company, (ii) to any FINRA member or (iii) to any person or entity that has
any
direct or indirect affiliation or association with any FINRA
member.
(iii)
Use
of
Proceeds.
None of
the net proceeds of the Offering will be paid by the Company to any
participating FINRA member or its affiliates, except as specifically authorized
herein and except as may be paid in connection with a Business Combination
as
contemplated by the Prospectus.
(iv)
Insiders’
FINRA Affiliation.
No
officer, director or any beneficial owner of the Company’s unregistered
securities has any direct or indirect affiliation or association with any FINRA
member. The Company will advise the Underwriter and its counsel if it learns
that any officer, director or owner of at least 5% of the Company’s outstanding
Common Stock is or becomes an affiliate or associated person of an FINRA member
participating in the offering.
8
(t) Foreign
Corrupt Practices Act.
Neither
the Company nor any of the Initial Stockholders or any other person acting
on
behalf of the Company has, directly or indirectly, given or agreed to give
any
money, gift or similar benefit (other than legal price concessions to customers
in the ordinary course of business) to any customer, supplier, employee or
agent
of a customer or supplier, or official or employee of any governmental agency
or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was, is, or
may
be in a position to help or hinder the business of the Company (or assist it
in
connection with any actual or proposed transaction) that (i) might subject
the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had a
material adverse effect on the assets, business or operations of the Company
as
reflected in any of the financial statements contained in the Prospectus or
(iii) if not continued in the future, might adversely affect the assets,
business, operations or prospects of the Company. The Company’s internal
accounting controls and procedures are sufficient to cause the Company to comply
with the Foreign Corrupt Practices Act of 1977, as amended.
(u)
Officers’
Certificate.
Any
certificate signed by any duly authorized officer of the Company and delivered
to you or to your counsel shall be deemed a representation and warranty by
the
Company to the Underwriter as to the matters covered thereby.
(v) Warrant
Agent Agreement.
The
Company has entered into a warrant agreement with respect to the Warrants with
Inter-West Transfer Company substantially in the form annexed as Exhibit 4.4
to
the Registration Statement (“Warrant Agreement”).
(w) Agreements
With Initial Stockholders.
(i)
Insider
Letters.
The
Company has caused to be duly executed legally binding and enforceable
agreements (except (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights
generally, (ii) as enforceability of any indemnification, contribution or
noncompete provision may be limited under the federal and state securities
laws,
and (iii) that the remedy of specific performance and injunctive and other
forms
of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought)
annexed as Exhibits 10.1 through 10.4 and 10.12 and 10.15 to the Registration
Statement (“Insider Letters”), pursuant to which each of the Initial
Stockholders of the Company agrees to certain matters, including but not limited
to, certain matters described as being agreed to by them in the Prospectus.
(ii)
Escrow
Agreement. The Company has caused the Initial Stockholders to enter into an
escrow agreement (“Escrow Agreement”) with Interwest Transfer Company, Inc.
(“Escrow Agent”) substantially in the form annexed as Exhibit 10.10 to the
Registration Statement, whereby the Common Stock owned by the Initial
Stockholders will be held in escrow by the Escrow Agent, until the earlier
of
(i) the date the Company consummates a merger, stock exchange, asset acquisition
or other similar business combination (as described more fully in the Company’s
Registration Statement), (ii) the liquidation of the Company, and (iii) the
date
that is three years following the date of the Prospectus. During such escrow
period, the Initial Stockholders shall be prohibited from selling or otherwise
transferring such shares (except to spouses and children of Initial Stockholders
and trusts established for their benefit and as otherwise set forth in the
Escrow Agreement) but will retain the right to vote such shares. To the
Company’s knowledge, the Escrow Agreement is enforceable against each of the
Initial Stockholders and will not, with or without the giving of notice or
the
lapse of time or both, result in a breach of, or conflict with any of the terms
and provisions of, or constitute a default under, any agreement or instrument
to
which any of the Initial Stockholders is a party. The Escrow Agreement shall
not
be amended, modified or otherwise changed without the prior written consent
of
the Underwriter.
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(x) Intentionally
Omitted.
(y)
Investment
Management Trust Agreement.
The
Company has entered into the Trust Agreement with respect to certain proceeds
of
the Offering substantially in the form annexed as Exhibit 10.11 to the
Registration Statement.
(z)
Covenants
Not to Compete.
No
Initial Stockholder, employee, officer or director of the Company is subject
to
any non-competition agreement or non-solicitation agreement with any employer
or
prior employer which could materially affect his ability to be an Initial
Stockholder, employee, officer and/or director of the Company.
(aa) Investment
Company Act; Investments.
The
Company has been advised concerning the Investment Company Act of 1940, as
amended (the “Investment Company Act”), and the rules and regulations thereunder
and has in the past conducted, and intends in the future to conduct, its affairs
in such a manner as to ensure that it will not become an “investment company” or
a company “controlled” by an “investment company” within the meaning of the
Investment Company Act and such rules and regulations. The Company is not,
nor
will the Company become upon the sale of the Units and the application of the
proceeds therefore as described in the Prospectus under the caption “Use of
Proceeds”, an “investment company” or a person controlled by an “investment
company” within the meaning of the Investment Company Act. No more than 45% of
the “value” (as defined in Section 2(a)(41) of the Investment Company Act) of
the Company’s total assets (exclusive of cash items and “Government Securities”
(as defined in Section 2(a)(16) of the Investment Company Act) consist of,
and
no more than 45% of the Company’s net income after taxes is derived from,
securities other than the Government Securities.
(bb) Subsidiaries.
The
Company does not own an interest in any corporation, partnership, limited
liability company, joint venture, trust or other business entity.
(cc)
Related
Party Transactions.
There
are no business relationships or related party transactions involving the
Company or any other person required to be described in the Prospectus that
have
not been described as required. There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors or Initial Stockholders of the Company or any of the
members of the families of any of them, except as disclosed in the Registration
Statement and the Prospectus.
10
(dd) No
Distribution of Offering Material.
The
Company has not distributed and will not distribute prior to the Closing Date
any offering material in connection with the offering and sale of the Units
other than any Preliminary Prospectuses, the Prospectus, the Registration
Statement and other materials, if any, permitted by the Act.
(ee) Title
to Assets.
Except
as set forth in the Registration Statement and Prospectus, the Company has
good
and marketable title to all properties and assets described in the Registration
Statement and Prospectus as owned by it, free and clear of any pledge, lien,
security interest, encumbrances, claim or equitable interest, other than such
as
would not have a material adverse effect on the financial condition, earnings,
operations, business or business prospects of the Company.
(ff) Taxes.
The
Company has timely filed all necessary federal, state and foreign income and
franchise tax returns and has paid all taxes shown thereon as due, and there
is
no tax deficiency that has been or, to the best of the Company’s knowledge,
might be asserted against the Company that might have a material adverse effect
on the financial condition, earnings, operations, business or business prospects
of the Company, and all material tax liabilities are adequately provided for
on
the books of the Company.
3.
Covenants
of the Company.
The
Company covenants and agrees that:
(a) It
will
deliver to the Underwriter, without charge, two fully signed copies of the
Registration Statement and of each amendment or supplement thereto, including
all financial statements and exhibits.
(b) The
Company has delivered to the Underwriter, without charge, as many copies as
the
Underwriter has requested of each Preliminary Prospectus heretofore filed with
the Commission in accordance with and pursuant to the Commission's Rule 430
under the Act, and will deliver to the Underwriter and to any Selected Dealer
(as hereinafter defined), without charge, on the Effective Date of the
Registration Statement, and thereafter from time to time during such reasonable
period as the Underwriter may request if, in the opinion of counsel for the
Underwriter, the Prospectus is required by law to be delivered in connection
with sales by an Underwriter or a dealer, as many copies of the Prospectus
(and,
in the event of any amendment of or supplement to the Prospectus, of such
amended or supplemented Prospectus) as the Underwriter may request for the
purposes contemplated by the Act. The Company will take all necessary actions
to
furnish to whomever the Underwriter directs, when and as requested by the
Underwriter, all necessary documents, exhibits, information, applications,
instruments and papers as may be reasonably required or, in the opinion of
counsel to the Underwriter are desirable in order to permit or facilitate the
sale of the Common Stock and Warrants.
11
(c) The
Company has authorized the Underwriter to use, and make available for use by
prospective dealers, the Preliminary Prospectus, and authorizes the Underwriter,
and all dealers selected by the Underwriter in connection with the distribution
of the Common Stock and Warrants (the "Selected Dealers") to use the Prospectus,
as from time to time amended or supplemented, in connection with the sale of
the
Common Stock and Warrants in accordance with the applicable provisions of the
Act, the applicable Regulations and applicable state law, until completion
of
the distribution of the Common Stock and Warrants and for such longer period
as
the Underwriter may request if the Prospectus is required under the Act, the
applicable Regulations or applicable state law to be delivered in connection
with sales of the Common Stock and Warrants by the Underwriter or the Selected
Dealers.
(d) The
Company will use its best efforts to cause the Registration Statement to become
effective and will notify the Underwriter immediately, and confirm the notice
in
writing: (i) when the Registration Statement or any post-effective amendment
thereto becomes effective; (ii) of the issuance by the Commission of any stop
order or of the initiation, or the threatening, of any proceedings for that
purpose; (iii) of the suspension of the qualification of the Common Stock and
Warrants and the Underwriter's Option and the Underwriter's Warrants, or
underlying securities, for offering or sale in any jurisdiction or of the
initiating, or the threatening, of any proceeding for that purpose; and (iv)
of
the receipt of any comments from the Commission. If the Commission shall enter
a
stop order at any time, the Company will make every reasonable effort to obtain
the lifting of such order at the earliest possible moment.
(e) During
the time when a prospectus is required to be delivered under the Act, the
Company will comply with all requirements imposed upon it by the Act and the
Exchange Act, as now and hereafter amended and by the Regulations, as from
time
to time in force, as necessary to permit the continuance of sales of or dealings
in the Common Stock and Warrants in accordance with the provisions hereof and
the Prospectus. If at any time when a prospectus relating to the Common Stock
and Warrants is required to be delivered under the Act, any event shall have
occurred as a result of which, in the opinion of counsel for the Company and
counsel for the Underwriter, the Prospectus as then amended or supplemented
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
or
if it is necessary at any time to amend the Prospectus to comply with the Act,
the Company will notify the Underwriter promptly and prepare and file with
the
Commission an appropriate amendment or supplement in accordance with Section
10
of the Act and will furnish to the Underwriter copies thereof.
(f) The
Company will endeavor in good faith, in cooperation with the Underwriter, at
or
prior to the time the Registration Statement becomes effective, to qualify
the
Common Stock and Warrants for offering and sale under the securities laws or
blue sky laws of such jurisdictions as the Underwriter may reasonably designate.
In each jurisdiction where such qualification shall be effected, the Company
will, unless the Underwriter agrees that such action is not at the time
necessary or advisable, file and make such statements or reports at such times
as are or may reasonably be required by the laws of such jurisdiction.
12
(g) The
Company will make generally available to its security holders, as soon as
practicable, but in no event later than the first day of the fifteenth full
calendar month following the Effective Date of the Registration Statement,
an
earnings statement of the Company, which will be in reasonable detail but which
need not be audited, covering a period of at least twelve months beginning
after
the Effective Date of the Registration Statement, which earnings statements
shall satisfy the requirements of Section 11(a) of the Act and the Regulations
as then in effect. The Company may discharge this obligation in accordance
with
Rule 158 of the Regulations.
(h) During
the five year period commencing on the Effective Date of the Registration
Statement, the Company will furnish to its stockholders an annual report
(including financial statements audited by its independent public accountants),
in reasonable detail, and, at its expense, furnish the Underwriter if so
requested (i) within 105 days after the end of each fiscal year of the Company,
a consolidated balance sheet of the Company and its then consolidated
subsidiaries and a separate balance sheet of each subsidiary of the Company
the
accounts of which are not included in such consolidated balance sheet as of
the
end of such fiscal year, and consolidated statements of operations,
stockholder's equity and cash flows of the Company and its consolidated
subsidiaries and separate statements of operations, stockholder's equity and
cash flows of each of the subsidiaries of the Company the accounts of which
are
not included in such consolidated statements, for the fiscal year then ended,
all in reasonable detail and all certified by independent accountants (within
the meaning of the Act and the Regulations), (ii) within 50 days after the
end
of each of the first three fiscal quarters of each fiscal year, similar balance
sheets as of the end of such fiscal quarter and similar statements of
operations, stockholder's equity and cash flows for the fiscal quarter then
ended, all in reasonable detail, and subject to year end adjustment, all
certified by the Company's principal financial officer or the Company's
principal accounting officer as having been prepared in accordance with
generally accepted accounting principles applied on a consistent basis, (iii)
as
soon as available, each report furnished to or filed with the Commission or
any
securities exchange and each report and financial statement furnished to the
Company's shareholders generally and (iv) as soon as available, such other
material as the Underwriter may from time to time reasonably request regarding
the financial condition and operations of the Company and its
subsidiaries.
(i) For
a
period of three years from the Closing Date, the Company, at its expense, shall
cause its regularly engaged independent certified public accountants to consult
with the Company concerning the Company's financial statements for each of
the
first three quarters prior to the announcement of quarterly financial
information, the filing of the Company's 10-Q (or 10Q-SB) quarterly report
and
the mailing of quarterly financial information to stockholders. The purpose
of
such consultation is to obtain the assistance and input of such accountants
so
that each of such financial statements will comply in all material respects
with
the applicable accounting requirements of the Exchange Act and the regulations
promulgated thereunder and will be fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent
with
that of the then most recently audited financial statements of the Company.
It
is not the intended purpose of this provision that such accountant's audit
or
review such financial statements within the meaning of the AICPA's Statement
on
Auditing Standards or that such accountants issue any report to the Company
or
the Underwriter.
13
(j) Prior
to
the Closing Date, the Company will not issue, directly or indirectly, without
the Underwriter's prior written consent and that of counsel for the Underwriter,
which consent shall not be unreasonably withheld, any press release or other
public announcement or hold any press conference with respect to the Company
or
its activities with respect to this Offering, other than promotion of its
products in the ordinary course of business; provided, however, that if a press
release is required as a matter of law or prudent corporate disclosure posture,
the Company may make said press release without consent.
(k) It
will
deliver to the Underwriter prior to filing, any amendment or supplement to
the
Registration Statement or Prospectus proposed to be filed after the Effective
Date of the Registration Statement and will not file any such amendment or
supplement to which the Underwriter shall reasonably object after being
furnished such copy.
(l) During
the period of 120 days commencing on the date hereof, the Company will not
at
any time take, directly or indirectly, any action designed to, or which will
constitute or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Common Stock and Warrants
to
facilitate the sale or resale of any of the Common Stock and Warrants.
(m) The
Company will not, without the Underwriter's prior written consent, issue or
sell, or contract to sell or otherwise dispose of any of its securities, except
sales of the Common Stock and Warrants (and the Common Stock underlying the
Warrants) pursuant to this Agreement and except for stock options under the
Company's stock option plan and outstanding warrants, or as otherwise described
in the Prospectus for a period of 120 days after the commencement of the
Offering.
(n) The
Company will apply the net proceeds from the Offering received by it in a manner
consistent with the application described in "Use of Proceeds" in the
Prospectus.
(o) Counsel
for the Company, the Company's accountants, and the officers and directors
of
the Company will, respectively, furnish the opinions, the letters and the
certificates referred to in subsections of Paragraph 9 hereof, and, in the
event
that the Company shall file any amendment to the Registration Statement relating
to the offering of the Common Stock and Warrants or any amendment or supplement
to the Prospectus relating to the offering of the Common Stock and Warrants
subsequent to the Effective Date of the Registration Statement, whether pursuant
to subsection (j) herein or otherwise, such counsel, such accountants, such
officers and directors will, at the time of such filing or at such subsequent
time as the Underwriter shall specify, so long as securities being registered
by
such amendment or supplement are being underwritten by the Underwriter,
respectively, furnish to the Underwriter such opinions, letters and
certificates, each dated the date of its delivery, of the same nature as the
opinions, the letters and the certificates referred to in said Paragraph 9,
respectively, as the Underwriter may reasonably request, or, if any such opinion
or letter or certificate cannot be furnished by reason of the fact that such
counsel or such accountants or any such officer or director believes that the
same would be inaccurate, such counsel or such accountants or such officer
or
director will furnish an accurate opinion or letter or certificate with respect
to the same subject matter.
14
(p) The
Company will comply with all of the provisions of any undertakings contained
in
the Registration Statement.
(q) The
Company will reserve and keep available for issuance that maximum number of
its
authorized but unissued Shares which are issuable upon exercise of the Warrants
and issuable upon exercise of the Underwriter's Option and Underwriter's
Warrants (including the underlying securities) outstanding from time to time.
(r) Following
the Effective Date and from time to time thereafter, so long as the Warrants
are
outstanding, the Company will timely prepare and file at its sole cost and
expense one or more post-effective amendments to the Registration Statement
or a
new registration statement as required by law as will permit Warrant holders
to
be furnished with a current prospectus in the event Warrants are exercised,
and
to use its best efforts and due diligence to have same be declared effective.
Such post-effective amendments or new registration statements shall also
register the Underwriter's Option and Underwriter's Warrants and all the
securities underlying such Underwriter's Option and Underwriter's Warrants
as
provided in the Underwriter's Option and Underwriters Warrants. The Company
will
deliver a draft of each such post-effective amendment or new registration
statement to the Underwriter at least ten days prior to the filing of such
post-effective amendment or registration statement.
(s) Following
the Effective Date and from time to time thereafter so long as any of the
Warrants remain outstanding, the Company will timely deliver and supply to
its
warrant agent sufficient copies of the Company's current Prospectus, as will
enable such warrant agent to deliver a copy of such Prospectus to any Warrant
or
other holder where such Prospectus delivery is by law required to be made.
(t) So
long
as any of the Warrants remain outstanding, the Company shall continue to employ
the services of a firm of registered independent certified public accountants
reasonably acceptable to the Underwriter in connection with the preparation
of
the financial statements to be included in any registration statement to be
filed by the Company hereunder, or any amendment or supplement thereto.
Notwithstanding the foregoing, ▇.▇. ▇▇▇▇▇▇▇▇ & Associates, or any accounting
firm of national recognition shall be acceptable to the Underwriter.
(u) So
long
as any of the Warrants remain outstanding, the Company shall continue to appoint
a warrant agent for the Warrants, who shall be reasonably acceptable to the
Underwriter.
(v) Commencing
on the Effective Date, the Company shall have entered into a mergers and
acquisitions agreement (the "Mergers and Acquisitions Agreement") with the
Underwriter in form reasonably satisfactory to the Underwriter.
(w) The
Common Stock and Warrants shall be listed on the OTC Bulletin Board as soon
as
practicable on or after the Closing Date. After the Closing Date, the Company
will effect and use its best efforts to maintain such listing (unless the
Company is acquired or is listed on either the New York Stock Exchange or
American Stock Exchange) for at least five years from the date of this
Agreement.
15
(x) The
Company has applied for listing in Standard and Poors Corporation Reports and
shall use its best efforts to have the Company included in such publications
for
at least five years after the Effective Date.
(y) The
Company agrees not to file a registration statement on Form S-8 or any similar
form currently in effect or which may be hereafter adopted pursuant to the
Act,
during the twenty-four months following the Effective Date without prior written
consent of the Underwriter.
4.
Appointment
of Agent to Sell the Units.
(a)
Subject
to the terms and conditions of this Agreement, and upon the basis of the
representations, warrants and agreements herein contained, the Company hereby
appoints the Underwriter as its exclusive agent for a period of three months
from the Effective Date, subject to an extension by mutual agreement of the
Company and the Underwriter for an additional period not to exceed two months,
to sell the Units, and the Underwriter, on the basis of the representations
and
warranties of the Company herein, accepts such appointment on a "best efforts,
all or none" basis with respect to the first 1,000,000 Units, and a "best
efforts" basis with respect to the remaining 1,000,000 Units. The price at
which
the Underwriter shall sell the Units to the public, as agent for the Company,
shall be $6.00 per Unit, and the Company shall pay a commission of $0..42 in
respect of such Units sold on behalf of the Company by the
Underwriter.
(b)
Provided
that 1,000,000 of the Units are sold and paid for, the Company agrees to pay
the
Underwriter a non-accountable expense allowance equal to 3% of the gross
proceeds of the offering, subject to Paragraph 8 herein.
(c)
It
is a
condition of this Agreement that the Underwriter shall use its best efforts
to
sell the Units on behalf of the Company, that the Underwriter will instruct
investors to make all remittances payable to the Escrow Agent (hereinafter
defined) and that any and all funds received from such sale, without any
deduction therefrom whatsoever, including, but not limited to, any underwriting
commission or any dealer concession or otherwise, shall be forthwith deposited
in a non-interest bearing escrow account with ___________________, as Escrow
Agent, pursuant to the terms of an Escrow Agreement entered into by and among
the Company, the Underwriter and the Escrow Agent, no later than 12 noon of
the
next business day after receipt. In the event at least 1,000,000 Units are
not
sold within three months from the Effective Date, or following the expiration
of
an additional two-month period if so agreed in writing by the Company and the
Underwriter (with an additional ten business days to permit clearance of the
funds in escrow), all funds will be promptly refunded to the subscribers in
full, without deduction therefrom or interest thereon. During the period of
escrow, subscribers will not have the right to demand a refund of their
subscriptions. Certificates will be issued to purchasers only if proceeds from
the sale of at least 1,000,000 Units are released from escrow to the Company
or
as directed by the Company. Until such time as the funds have been released,
such purchasers, if any, will be deemed subscribers and not shareholders. The
funds in escrow will be held for the benefit of those subscribers until released
to the Company and will not be subject to creditors of the Company or for the
expenses of this offering.
16
(d)
In
the
event of the sale of at least 1,000,000 Units such concessions from the public
offering price may be allowed to selected dealers and members of the Financial
Industry Regulatory Authority ("FINRA") as the Underwriter determines, within
the limits set forth in the Prospectus.
5.
Delivery
and Payment.
(a)
Delivery
of the shares of Common Stock and Warrants against payment therefor shall take
place at the offices of Crusader Securities, LLC, (or at such other place as
may
be agreed to by the Company and Underwriter) at 10:00 A.M., New York time,
on
such date after the Registration Statement has become effective as the
Underwriter shall designate, such time and date of payment for and delivery
of
the Units being herein called the "Closing Date".
(b)
The
Company will make the certificates for the shares of Common Stock and Warrants
to be sold hereunder available to the Underwriter for inspection at least two
full business days prior to the Closing Date at the offices of the Company's
transfer agent. The certificates shall be in such names and denominations as
the
Underwrtier may request, at least two full business days prior to the Closing
Date.
6.
Offering
the Units On Behalf of the Company.
It is
understood that the Underwriter proposes to offer the Units to the public on
a
best efforts basis, solely as agent for the Company, upon the terms and
conditions set forth in the Registration Statement. The Underwriter shall
commence making such offer as agent for the Company on the Effective Date or
as
soon thereafter as the Underwriter deems advisable.
7.
Selected
Dealers.
The
Underwriter may offer and sell the Common Stock and Warrants for the Company's
account through Selected Dealers registered with FINRA, as selected by the
Underwriter in accordance with a form of Selected Dealer Agreement, pursuant
to
which the Underwriter may allow a concession (out of the underwriting
commission) in the event of the sale of at least 1,000,000 Units within the
limits to be set forth in the Prospectus, but all such sales by Selected Dealers
shall be made by the Company, acting through the Underwriter as agent, and
not
for the account of the Underwriter.
8.
Payment
of Expenses.
(a)
Upon
the
sale of Units contemplated in this Offering, the Company will pay and bear
all
costs, fees, taxes and expenses incident to the performance of this Agreement
by
the Company, including but not limited to: (i) the issuance, offer, sale and
delivery of the Common Stock and Warrants, including all expenses and fees
incident to the preparation, printing, filing and mailing (including the payment
of postage with respect to such mailing) of the Registration Statement
(including all exhibits thereto), each Preliminary Prospectus, the Prospectus,
and amendments and post-effective amendments thereof and supplements thereto,
and this Agreement and related documents, Preliminary and Final Blue Sky
Memoranda, including the cost of preparing and printing all copies thereof
to be
printed by a financial printer selected by the Underwriter in quantities deemed
necessary by the Underwriter; (ii) the preparing and printing of one "Tombstone"
advertisement in the Wall Street Journal (iii) the printing, engraving, issuance
and delivery of the Common Stock, Warrants, Warrant Shares, Underwriter's Option
and Underwriter's Warrants and the securities underlying the Underwriter's
Option and Underwriter's Warrants, including any transfer or other taxes payable
thereon in connection with the original issuance thereof; (iv) the qualification
of the Common Stock and Warrants under the state or foreign securities or "Blue
Sky" laws selected by the Underwriter and the Company, plus the filing fees
for
such states; (v) fees and disbursements of counsel and accountants for the
Company; (vi) the filing fees payable to the Commission and the FINRA; (vii)
any
other expenses incurred by the Company on behalf of the Company; (viii) any
listing of the Common Stock and Warrants on the Over the counter bulletin board;
and, subject to the sale of at least the minimum number of Units: (ix) the
cost
of preparing and delivering to the Underwriter and its counsel three (3) bound
volumes containing copies of all documents and appropriate correspondence filed
with or received from the Commission and the FINRA, and all closing documents;
(x) the preparation, binding and delivery of transaction “bibles,” in form and
style reasonably satisfactory to the Underwriter and transaction lucite cubes
or
similar commemorative items in a style and quantity as reasonably requested
by
the Underwriter; and (xi) all other costs and expenses customarily borne by
an
issuer incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Paragraph 8(a).
17
(b)
In
addition to the expenses to be paid and borne by the Company referred to in
Paragraph 8(a) above, if 1,000,000 Units are sold as provided by this Agreement,
the Company shall reimburse the Underwriter at closing for expenses incurred
by
the Underwriter in connection with the Offering (for which the Underwriter
need
not make any accounting of), in the amount of 3% of the price to the public
of
each Unit sold in the Offering. This 3% non-accountable expense allowance shall
cover the fees of the Underwriter's legal counsel, but shall not include any
expenses for which the Company is responsible under Paragraph 8(a) above,
including the reasonable fees and disbursements of the Underwriter's legal
counsel with respect to Blue Sky matters. As of the date hereof, $10,000 has
been advanced by the Company to the Underwriter with respect to such
non-accountable expense allowance.
(c)
If
the
transactions contemplated hereby are not consummated for any reason whatsoever,
or in the event that the Company does not or cannot, for any reason whatsoever,
expeditiously proceed with the Offering, or if any of the representations,
warranties or covenants contained in this Agreement are not materially correct
or cannot be complied with by the Company, or business prospects or obligations
of the Company are adversely affected and the Company does not commence or
continue with the Underwriting at any time or terminates the proposed
transaction prior to the closing of this Agreement, the Company shall reimburse
the Underwriter on an accountable basis for all out-of-pocket expenses actually
incurred in connection with the Underwriting, this Agreement and all of the
transactions hereby contemplated, including, without limitation, the
Underwriter's legal fees and expenses, up to an aggregate total of $10,000
less
such sums which have already been paid.
18
9.
Conditions
of Underwriter's Obligations.
The
Obligations of the Underwriter to consummate the transactions contemplated
by
this Agreement shall be subject to the continuing accuracy of the
representations and warranties of the Company contained herein as of the date
hereof and as of the Closing Date, the accuracy of the statements of the Company
and its officers and directors made pursuant to the provisions hereof, and
to
the performance by the Company of its covenants and agreements hereunder and
under each certificate, opinion and document contemplated hereunder and to
the
following additional conditions:
(a)
The
Registration Statement shall have become effective not later than 5:00 P.M.,
New
York time, on the date following the date of this Agreement, or such later
date
and time as shall be consented to in writing by the Underwriter and, on or
prior
to the Closing Date, no stop order suspending the effectiveness of the
Registration Statement or the qualification or registration of the Common Stock
and Warrants under the securities laws of any jurisdiction shall have been
issued and no proceedings for that purpose shall have been instituted or shall
be pending or to the Underwriter's knowledge or the knowledge of the Company,
shall be contemplated by the Commission or any such authorities of any
jurisdiction and any request on the part of the Commission or any such
authorities for additional information shall have been complied with to the
reasonable satisfaction of the Commission or such authorities and counsel to
the
Underwriter and after the date hereof no amendment or supplement shall have
been
filed to the Registration Statement or Prospectus without the Underwriter's
prior consent.
(b)
The
Registration Statement or the Prospectus or any amendment thereof or supplement
thereto shall not contain an untrue statement of a fact which is material,
or
omit to state a fact which is material and is required to be stated therein
or
is necessary to make the statements therein, in light of the circumstances
under
which they were made, not misleading.
(c)
Between
the time of the execution and delivery of this Agreement and the Closing Date,
there shall be no litigation instituted against the Company or any of its
officers or directors and between such dates there shall be no proceeding
instituted or, to the Company's knowledge, threatened against the Company or
any
of its officers or directors before or by any federal, state or county
commission, regulatory body, administrative agency or other governmental body,
domestic or foreign, in which litigation or proceeding an unfavorable ruling,
decision or finding would have a material adverse effect on the Company or
its
business, business prospects or properties, or have a material adverse effect
on
the financial condition or results of operations of the Company.
(d)
Each
of
the representations and warranties of the Company contained herein and each
certificate and document contemplated under this Agreement to be delivered
to
the Underwriter shall be true and correct at the Closing Date as if made at
the
Closing Date, and all covenants and agreements contained herein and in each
such
certificate and document to be performed on the part of the Company, and all
conditions contained herein and in each such certificate and document to be
fulfilled or complied with by the Company at or prior to the Closing Date shall
be fulfilled or complied with.
(e)
At
the
Closing Date, the Underwriter shall have received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇
& ▇▇▇▇▇▇▇, counsel to the Company, dated such Closing Date, addressed to the
Underwriter and in form and substance satisfactory to counsel to the
Underwriter, and such counsel may rely upon certificates given to them from
such
persons that they deem appropriate, to the effect that:
(i)
The
Company and each of its subsidiaries are corporations duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation, with full corporate power and authority, and all necessary
and
material licenses, permits, certifications, registrations, approvals, consents
and franchises of and from all government and regulatory officials and bodies
to
own or lease and operate their properties and to conduct their business as
described in the Registration Statement. Such licenses, permits, certifications,
registrations, approvals, consents and franchises are in full force and effect
and the Company is in compliance therewith in all material respects. The Company
and each of its subsidiaries are duly qualified to do business as foreign
corporations and are in good standing in all jurisdictions wherein such
qualification is necessary and failure so to qualify could have a material
adverse effect on the financial condition, results of operations, business
or
properties of the Company and its subsidiaries;
19
(ii)
The
Company has full corporate power and authority to execute, deliver and perform
the Underwriting Agreement, the Warrant Agreement and the Underwriter's Option
and the Underwriter's Warrants and to consummate the transactions contemplated
thereby. The execution, delivery and performance of the Underwriting Agreement,
the Warrant Agreement, the Underwriter's Option and the Underwriter's Warrants
by the Company, the consummation by the Company of the transactions therein
contemplated and the compliance by the Company with the terms of the
Underwriting Agreement, the Warrant Agreement, the Underwriter's Option and
the
Underwriter's Warrants have been duly authorized by all necessary corporate
action, and each of the Underwriting Agreement, the Warrant Agreement, the
Underwriter's Option and the Underwriter's Warrants has been duly executed
and
delivered by the Company. Each of the Underwriting Agreement, the Warrant
Agreement, the Underwriter's Option and the Underwriter's Warrants is a valid
and legally binding obligation of the Company, enforceable in accordance with
their respective terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
the
rights of creditors generally and the discretion of courts in granting equitable
remedies and except that enforceability of the indemnification provisions and
the contribution provisions set forth in the Underwriting Agreement may be
limited by the federal securities laws or public policy underlying such laws;
(iii)
The
execution, delivery and performance of the Underwriting Agreement, the Warrant
Agreement, the Underwriter's Option and the Underwriter's Warrants by the
Company, the consummation by the Company of the transactions therein
contemplated and the compliance by the Company with the terms of the
Underwriting Agreement, the Warrant Agreement, the Underwriter's Option and
the
Underwriter's Warrants do not, and will not, with or without the giving of
notice or the lapse of time, or both, (A) result in a violation of the articles
of incorporation or by-laws of the Company or any of its subsidiaries, (B)
to
the best of such counsel's knowledge, result in a breach of, or conflict with,
any terms or provisions of or constitute a default under, or result in the
modification or termination of, or result in the creation or imposition of
any
lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company or any of its subsidiaries pursuant to, any indenture,
mortgage, note, contract, commitment or other material agreement or instrument
to which the Company or its subsidiaries is a party or by which the Company
or
its subsidiaries or any of its properties or assets are or may be bound or
affected; (C) to the best of such counsel's knowledge violate any existing
applicable law, rule or regulation or judgment, order or decree known to such
counsel of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or its subsidiaries or any of its properties
or
business; or (D) to the best of such counsel's knowledge, have any material
adverse effect on any material permit, certification, registration, approval,
consent, license or franchise necessary for the Company or its subsidiaries
to
own or lease and operate its properties and to conduct its business or the
ability of the Company or its subsidiaries to make use thereof;
20
(iv)
To
the
best of such counsel's knowledge, no authorization, approval, consent, order,
registration, license or permit of any court or governmental agency or body
(other than under the Act, the Regulations and applicable state securities
or
Blue Sky laws) is required for the valid authorization, issuance, sale and
delivery of the Common Stock, the Warrants, the Warrant Shares, or the
Underwriter's Option and the Underwriter's Warrants, and the consummation by
the
Company of the transactions contemplated by the Underwriting Agreement, the
Warrant Agreement, the Underwriter's Option or the Underwriter's Warrants;
(v)
The
Registration Statement was declared effective under the Act on ______________,
2007; to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no proceedings
for that purpose have been instituted or are pending, threatened or contemplated
under the Act;
(vi)
The
Registration Statement and the Prospectus, as of the Effective Date (except
for
the financial statements and other financial data included therein or omitted
therefrom, as to which such counsel expresses no opinion), comply as to form
in
all material respects with the requirements of the Act and Regulations and
the
conditions for use of a registration statement on Form SB-2 have been satisfied
by the Company;
(vii)
The
description in the Registration Statement and the Prospectus of statutes,
regulations, contracts and other documents have been reviewed by such counsel,
and, based upon such review, are accurate in all material respects and present
fairly the information required to be disclosed, and there are no material
statutes or regulations, or, to the best of such counsel's knowledge, material
contracts or documents, of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement, which are not so described or filed as
required;
(viii)
None
of
the material provisions of the contracts or instruments described above violates
any existing applicable law, rule or regulation or judgment, order or decree
known to such counsel of any United States governmental agency or court having
jurisdiction over the Company or its subsidiaries or any of its assets or
businesses;
21
(viii)
The
outstanding Common Stock has been duly authorized and validly issued. The
outstanding Common stock is fully paid and nonassessable. None of the
outstanding Common Stock has been issued in violation of the preemptive rights
of any shareholder of the Company. None of the holders of the outstanding Common
Stock is subject to personal liability solely by reason of being such a holder.
The offers and sales of the outstanding Common Stock were at all relevant times
either registered under the Act and the applicable state securities or Blue
Sky
laws or issued in reliance upon exemptions from such registration requirements.
The authorized Common Stock conforms to the description thereof contained in
the
Registration Statement and Prospectus. To the best of such counsel's knowledge,
except as set forth in the Prospectus, no holder of any of the Company's
securities has any rights, "demand," "piggyback" or otherwise, to have such
securities registered under the Act;
(ix)
The
issuance and sale of the Common Stock, the Warrants, the Warrant Shares, the
Underwriter's Option and the Underwriter's Warrants have been duly authorized
and when issued and paid for, will be validly issued, fully paid and
nonassessable, and the holders thereof will not be subject to personal liability
solely by reason of being such holders. The Common Stock is not subject to
preemptive rights of any stockholder of the Company. The certificates
representing the securities are in proper legal form;
(x)
To
the
best of such counsel's knowledge, there are no claims, actions, suits,
proceedings, arbitrations, investigations or inquiries before any governmental
agency, court or tribunal, foreign or domestic, or before any private
arbitration tribunal, pending or threatened against the Company or its
subsidiaries, or involving their properties or business, other than as described
in the Prospectus, such description being accurate, and other than litigation
incident to the kind of business conducted by the Company which, individually
and in the aggregate, is not material, and, except as otherwise disclosed in
the
Prospectus and the Registration Statement, the Company and its subsidiaries
are
not in violation of any applicable federal and state laws, statutes and
regulations concerning its business;
(xv)
Such
counsel has participated in reviews and discussions in connection with the
preparation of the Registration Statement and the Prospectus, and although
such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus (except as otherwise set forth in
the
opinion), in the course of such reviews and discussions and such other
investigation as they deemed necessary, no facts came to their attention which
lead them to believe that (A) the Registration Statement (except as to the
financial statements and other financial data contained therein, as to which
such counsel expresses no opinion), on the Effective Date, contained any untrue
statement of a material fact required to be stated therein or necessary to
make
the statements therein not misleading, or that (B) the Prospectus (except as
to
the financial statements and other financial data contained therein, as to
which
such counsel expresses no opinion) contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements therein not misleading;
22
(f)
INTENTIONALLY
LEFT BLANK.
(g)
On
or
prior to the Closing Date, counsel for the Underwriter shall have been furnished
such documents, certificates and opinions as they may reasonably require for
the
purpose of enabling them to review the matters referred to in subparagraph
(e)
of this Paragraph 9, or in order to evidence the accuracy, completeness or
satisfaction of any of the representations, warranties or conditions herein
contained.
(h)
Prior
to
the Closing Date:
(i)
There
shall have been no material adverse change in the condition or prospects or
the
business activities, financial or otherwise, of the Company, other than as
contemplated in the Registration Statement, from the latest dates as of which
such condition is set forth in the Registration Statement and
Prospectus;
(ii)
There
shall have been no transaction, outside the ordinary course of business, entered
into by the Company from the latest date as of which the financial condition
of
the Company is set forth in the Registration Statement and Prospectus which
is
material to the Company, which is either (x) required to be disclosed in the
Prospectus or Registration Statement and is not so disclosed, or (y) likely
to
have material adverse effect on the Company's business or financial condition;
(iii)
The
Company shall not be in default under any material provision of any instrument
relating to any outstanding indebtedness;
(iv)
No
material amount of the assets of the Company shall have been pledged, mortgaged
or otherwise encumbered, except as set forth in the Registration Statement
and
Prospectus;
(v)
No
action, suit or proceeding, at law or in equity, shall have been pending or
to
its knowledge threatened against the Company or affecting any of its properties
or businesses before or by any court or federal or state commission, board
or
other administrative agency wherein an unfavorable decision, ruling or finding
would materially and adversely affect the business, operations, prospects or
financial condition or income of the Company, taken as a whole, except as set
forth in the Registration Statement and Prospectus;
(vi) No
stop
order shall have been issued under the Act and no proceedings therefor shall
have been initiated or, to the Company's knowledge, threatened by the
Commission; and
23
(vii)
Each
of
the representations and warranties of the Company contained in this Agreement
and in each certificate and document contemplated under this Agreement to be
delivered to the Underwriter was, when originally made and is at the time such
certificate is dated, true and correct.
(i)
Concurrently
with the execution and delivery of this Agreement and at the Closing Date,
the
Underwriter shall have received a certificate of the Company signed by the
Chief
Executive Officer of the Company and the principal financial officer of the
Company, dated as of the Closing Date, to the effect that the conditions set
forth in subparagraph (h) above have been satisfied that, as of the Closing
Date, the representations and warranties of the Company set forth in Paragraph
2
herein and the statements in the Registration Statement and Prospectus were
and
are true and correct. Any certificate signed by any officer of the Company
and
delivered to the Underwriter or counsel for the Underwriter shall be deemed
a
representation and warranty by the Company to the Underwriter as to the
statements made therein.
(j)
At
the
time this Agreement is executed, and at the Closing Date, the Underwriter shall
have received letters, addressed to the Underwriter and in form and substance
satisfactory in all respects (including the nonmaterial nature of the changes
or
decreases, if any, referred to in clause (iii) below) to the Underwriter and
counsel for the Underwriter, from ▇.▇. ▇▇▇▇▇▇▇▇ & Associates , dated as of
the date of this Agreement and as of the Closing Date:
(i)
Confirming
that they are independent registered public accounting firm with respect to
the
Company within the meaning of the Act and the applicable Regulations and that
they have not, during the periods covered by the financial statements included
in the Prospectus, provided to the Company any non-audit services, as such
term
is used in Section 10A(g) of the Exchange Act;
(ii)
Stating
that in their opinion the financial statements of the Company included in the
Registration Statement and Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act and the published
Regulations thereunder;
(iii)
Stating
that, on the basis of a reading of the latest available unaudited interim
financial statements of the Company (with an indication of the date of the
latest available unaudited interim financial statements), a reading of the
latest available minutes of the stockholders and board of directors and the
various committees of the board of directors, consultations with officers and
other employees of the Company responsible for financial and accounting matters
and other specified procedures and inquiries, they have been advised by the
Company officials that (a) the unaudited financial statements of the Company
included in the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Regulations or are fairly presented in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that
of
the audited financial statements of the Company included in the Registration
Statement and (b) at a date not later than five days prior to the Closing Date
there was no change in the capital stock or long-term debt of the Company,
or
any decrease in the stockholders’ equity of the Company as compared with amounts
shown in the June 30, 2007, balance sheet included in the Registration
Statement, other than as set forth in or contemplated by the Registration
Statement, or, if there was any decrease, setting forth the amount of such
decrease;
24
(iv)
Stating
that they have carried out certain specified procedures (specifically set forth
in such letter or letters) as specified by the Underwriter not constituting
an
audit, with respect to certain tables, statistics and other financial data
in
the Prospectus specified by the Underwriter and compared them with, either
the
audited financial statements filed with and as a part of the Prospectus and
covered by their report included therein, or other financial data, specified
by
the Underwriter, not included in the Prospectus but from which information
in
the Prospectus is derived, and which have been obtained directly from the
general accounting records of the Company, or indirectly from such accounting
records by analysis or computation, and having compared such tables, statistics
and other financial data with such audited financial statements or the
accounting records of the Company, stating that they have found such tables,
statistics and other financial data to agree therewith; and
(v)
Stating
such other matters incident to the transaction contemplated hereby as the
Underwriter may reasonably request.
(vi) Stating
that they have not provided the Company’s management with any written
communication in accordance with Statement on Auditing Standards No. 60
“Communication of Internal Control Structure Related Matters Noted in an
Audit.”
(k)
All
proceedings taken in connection with the authorization, issuance or sale of
the
Common Stock, Warrants, Warrant Shares, the Underwriter's Option and
Underwriter's Warrants as herein contemplated shall be satisfactory in form
and
substance to the Underwriter and to counsel to the Underwriter, and the
Underwriter shall have received from such counsel an opinion, dated as the
Closing Date with respect to such of these proceedings as the Underwriter may
reasonably require.
(l)
The
Company shall have furnished to the Underwriter such certificates, additional
to
those specifically mentioned herein, as the Underwriter may have reasonably
requested in a timely manner as to the accuracy and completeness, at the Closing
Date, of any statement in the Registration Statement or the Prospectus, as
to
the accuracy, at the Closing Date, of the representations and warranties of
the
Company herein and in each certificate and document contemplated under this
Agreement to be delivered to the Underwriter, as to the performance by the
Company of its obligations hereunder and under each such certificate and
document or as to the fulfillment of the conditions concurrent and precedent
to
the Underwriter's obligations hereunder.
10.
Indemnification
and Contribution.
(a)
Subject
to the conditions set forth below, the Company agrees to indemnify and hold
harmless the Underwriter and each person, if any, who controls the Underwriter
("controlling person") within the meaning of either Section 15 of the Act or
Section 20 of the Exchange Act, against any and all losses, liabilities, claims,
damages, actions and expenses or liability, joint or several, whatsoever
(including but not limited to any and all expense whatsoever reasonably incurred
in investigating, preparing or defending against any litigation, commenced
or
threatened, or any claim whatsoever), joint or several, to which it or such
controlling persons may become subject under the Act, the Exchange Act or under
any other statute or at common law or otherwise or under the laws of foreign
countries, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
Preliminary Prospectus or the Prospectus (as from time to time amended and
supplemented); in any post-effective amendment or amendments or any new
registration statement and prospectus in which is included the Warrant Shares
of
the Company issued or issuable upon exercise of the Warrants, or Underwriter's
Warrant Shares upon exercise of the Underwriter's Option and Underwriter's
Warrants; or in any application or other document or written communication
(in
this Paragraph 10 collectively called "application") executed by the Company
or
based upon written information furnished by the Company filed in any
jurisdiction in order to qualify the Common Stock, Warrants, Warrant Shares,
Underwriter's Option and Underwriter's Warrants (including the Shares issuable
upon exercise of the Underwriter’s Warrants) under the securities laws thereof
or filed with the Commission or any securities exchange; or the omission or
alleged omission therefrom of a material fact required to be stated therein
or
necessary to make the statements therein not misleading (in the case of the
Prospectus, in the light of the circumstances under which they were made),
unless such statement or omission was made in reliance upon or in conformity
with information furnished to the Company by or on behalf of the Underwriter
expressly for use in any Preliminary Prospectus, the Registration Statement
or
Prospectus, or any amendment or supplement thereof, or in application, as the
case may be. Notwithstanding the foregoing, the Company shall have no liability
under this Paragraph 10(a) if any such untrue statement or omission made in
a
Preliminary Prospectus, is cured in the Prospectus and the Underwriter failed
to
deliver to the person or persons alleging the liability upon which
indemnification is being sought, at or prior to the written confirmation of
such
sale, a copy of the Prospectus. This indemnity will be in addition to any
liability which the Company may otherwise have.
25
(b)
The
Underwriter agrees to indemnify and hold harmless the Company and each of the
officers and directors of the Company who have signed the Registration Statement
and each other person, if any, who controls the Company within the meaning
of
Section 15 of the Act or Section 20(a) of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to the Underwriter in Paragraph
10(a), but only with respect to any untrue statement or alleged untrue statement
of any material fact contained in, or any omission or alleged omission to state
a material fact required to be stated in, any Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment or supplement thereof
or
necessary to make the statements therein not misleading or in any application
made solely in reliance upon, and in conformity with, information furnished
to
the Company by the Underwriter expressly for use in the preparation of such
Preliminary Prospectus, the Registration Statement or Prospectus. This indemnity
agreement will be in addition to any liability which the Underwriter may
otherwise have. Notwithstanding the foregoing, the Underwriter shall have no
liability under this Paragraph 10(b) if any such untrue statement or omission
made in a Preliminary Prospectus is cured in the Prospectus, and the Prospectus
is delivered to the person or persons alleging the liability upon which
indemnification is being sought.
26
(c)
If
any
action is brought against the Underwriter or controlling person in respect
of
which indemnity may be sought against the Company pursuant to the foregoing,
the
Underwriter shall promptly notify the Company in writing of the institution
of
such action and the Company shall assume the defense of the action, including
the employment and fees of counsel (reasonably satisfactory to the Underwriter)
and payment of expenses. The Underwriter or controlling person shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of the Underwriter or such
controlling person unless the employment of such counsel shall have been
authorized in writing by the Company in connection with the defense of such
action. If the Company shall have employed counsel to have charge of the defense
or shall previously have assumed the defense of any such action or claim, the
Company shall not thereafter be liable to any Underwriter or controlling person
in investigating, preparing or defending any such action or claim. Each
indemnified party shall promptly notify the Underwriter of the commencement
of
any litigation or proceedings against the Company or any of its officers or
directors or controlling persons in connection with the issue and sale of the
Common Stock, Warrants, Warrants Shares, Underwriter's Option and Underwriter's
Warrants or in connection with the Registration Statement or Prospectus.
(d)
In
order
to provide for just and equitable contribution under the Act in any case in
which: (i) the Underwriter makes a claim for indemnification pursuant to
Paragraph 10 hereof, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the time to appeal
has expired or the last right of appeal has been denied) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Paragraph 10 provides for indemnification of such case; or (ii)
contribution under the Act may be required on the part of the Underwriter in
circumstances for which indemnification is provided under this Paragraph 10,
then, and in each such case, the Company and the Underwriter shall contribute
to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after any contribution from others) in such proportion so that the
Underwriter is responsible for the portion represented by dividing the total
compensation received by the Underwriter herein by the total purchase price
of
all Common Stock and Warrants sold in the public offering and the Company is
responsible for the remaining portion; provided, that in any such case, no
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was
not
guilty of such fraudulent misrepresentation.
The
foregoing contribution agreement shall in no way affect the contribution
liabilities of any persons having liability under Section 11 of the Act other
than the Company, and the Underwriter. As used in this Paragraph 10, the term
"Underwriter" includes any officer, director, or other person who controls
the
Underwriter within the meaning of Section 15 of the Act, and the word "Company"
includes any officer, director or person who controls the Company within the
meaning of Section 15 of the Act. If the full amount of the contribution
specified in this paragraph is not permitted by law, then the Underwriter and
each person who controls the Underwriter shall be entitled to contribution
from
the Company to the full extent permitted by law. No contribution shall be
requested with regard to the settlement of any matter from any party who did
not
consent to the settlement.
27
(e)
Within
fifteen (15) days after receipt by any party to this Agreement (or its
representative) of notice of the commencement of any action, suit or proceeding,
such party will, if a claim for contribution in respect thereof is made against
another party (the "contributing party"), notify the contributing party of
the
commencement thereof, but the omission so to notify the contributing party
will
not relieve it from any liability it may have to any other party other than
for
contribution hereunder.
In
case
any such action, suit or proceeding is brought against any party, and such
party
notifies a contributing party or his or its representative of the commencement
thereof within the aforesaid fifteen (15) days, the contributing party will
be
entitled to participate therein with the notifying party and any other
contributing party similarly notified. Any such contributing party shall not
be
liable to any party seeking contribution on account of any settlement of any
claim, action or proceeding effected by such party seeking contribution without
the written consent of such contributing party. The indemnification provisions
contained in this Paragraph 10 are in addition to any other rights or remedies
which either party hereto may have with respect to the other or
hereunder.
11.
Representations,
Warranties, Agreements to Survive Delivery.
The
respective indemnity and contribution agreements by the Underwriter and the
Company contained in Paragraph 10 hereof, and the covenants, representations
and
warranties of the Company set forth in this Agreement, shall remain operative
and in full force and effect regardless of (i) any investigation made by the
Underwriter or on its behalf or by or on behalf of any person who controls
the
Underwriter, or by the Company or any controlling person of the Company or
any
director or any officer of the Company, (ii) acceptance of any of the Common
Stock and Warrants and payment therefor, or (iii) any termination of this
Agreement, and shall survive the delivery of the Common Stock and Warrants
and
any successor of the Underwriter or the Company, or of any person who controls
the Underwriter or the Company or any other indemnified party, as the case
may
be, shall be entitled to the benefit of such respective indemnity and
contribution agreements. The respective indemnity and contribution agreements
by
the Underwriter and the Company contained in this Paragraph 11 shall be in
addition to any liability which the Underwriter and the Company may otherwise
have.
12.
Effective
Date of This Agreement and Termination Thereof.
(a)
This
Agreement shall become effective at 10:00 A.M., New York time, on the first
full
business day following the day on which the Underwriter and the Company receive
notification that the Registration Statement became effective.
(b)
This
Agreement may be terminated by the Underwriter by notifying the Company at
any
time on or before the Closing Date, if in the Underwriter's judgment it is
impracticable to offer for sale or to enforce contracts made by the Underwriter
for the resale of the Common Stock and Warrants agreed to be purchased hereunder
by reason of (i) the Company having sustained a material loss, whether or not
insured, by reason of fire, earthquake, flood, accident or other calamity,
or
from any labor dispute or court or government action, order or decree, (ii)
trading in securities on the New York Stock Exchange or the American Stock
Exchange having been suspended or limited, (iii) material governmental
restrictions having been imposed on trading in securities generally (not in
force and effect on the date herein), (iv) a banking moratorium having been
declared by federal or New York State authorities, (v) an outbreak of major
international hostilities or other national or international calamity having
occurred, (vi) a pending or threatened legal or governmental proceeding or
action relating generally to the Company's business, or a notification having
been received by the Company of the threat of any such proceeding or action,
which could materially adversely affect the Company, (vii) the Company is merged
or consolidated into or acquired by another company or group or there exists
a
binding legal commitment for the foregoing or any other material change of
ownership or control occurs, (viii) the passage by the Congress of the United
States or by any state legislative body of similar impact, or any act or
measure, or the adoption of any orders, rules or regulations by any governmental
body or any authoritative accounting institute or board, or any governmental
executive, which is reasonably believed likely by the Underwriter to have a
material impact on the business, financial condition or financial statements
of
the Company, (ix) any adverse change in the financial or securities markets
beyond normal market fluctuations having occurred since the date of this
Agreement, or (x) any material adverse change having occurred, since the
respective dates of which information is given in the Registration Statement
and
Prospectus, in the earnings, business prospects or general condition of the
Company, financial or otherwise, whether or not arising in the ordinary course
of business.
28
(c)
If
the
Underwriter elects to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Paragraph 12, the Company shall
be
notified promptly by the Underwriter by telephone or facsimile, confirmed by
letter.
(d)
If
this
Agreement shall not become effective by reason of an election of the Underwriter
pursuant to this Paragraph 12 or if this Agreement shall not be carried out
within the time specified herein by reason of any failure on the part of the
Company to perform any undertaking, or to satisfy any condition of this
Agreement by it to be performed or satisfied, the sole liability of the Company
to the Underwriter, in addition to the obligations assumed by the Company
pursuant to Paragraph 8 herein, will be to reimburse the Underwriter for the
following: (i) Blue Sky counsel fees and expenses to the extent set forth in
Paragraph 8(a)(iv); (ii) Blue Sky filing fees; and (iii) such reasonable
out-of-pocket expenses of the Underwriter (including the fees and disbursements
of their counsel), to the extent set forth in Paragraph 8(c), in connection
with
this Agreement and the proposed offering of the Units, but in no event to exceed
the sum of $10,000 less such amounts already paid.
Notwithstanding
any contrary provision contained in this Agreement, any election hereunder
or
any termination of this Agreement, and whether or not this Agreement is
otherwise carried out, the provisions of Paragraph 8 and 10 hereof shall not
be
in any way affected by such election or termination or failure to carry out
the
terms of this Agreement or any part hereof.
13.
Notices.
All
communications hereunder, except as herein otherwise specifically provided,
shall be in writing and, if sent to the Underwriter, shall be mailed, delivered
or telegraphed and confirmed to Crusader Securities, LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇; and, if sent to the Company,
shall be mailed, delivered or telegraphed and confirmed to the Company at
Renewable Energy Acquisition Corp., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ with a copy thereof to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇, PLC, One Utah Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
29
14.
Parties.
This
Agreement shall inure solely to the benefit of and shall be binding upon, the
Underwriter, the Company and the controlling persons, directors and officers
referred to in Paragraph 10 hereof, and their respective successors, legal
representatives and assigns, and no other person, shall have or be construed
to
have any legal or equitable right, remedy or claim under or in respect of or
by
virtue of this Agreement or any provision herein contained.
15.
Waiver,
etc.
The
failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver
of
any such provision, nor to in any way effect the validity of this Agreement
or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought;
and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
16.
Governing
Law and Venue.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of New York, without giving effect to conflicts of law
principles that would result in the application of the substantive laws of
another jurisdiction. The Company hereby agrees that any action, proceeding
or
claim against it arising out of, or relating in any way to this Agreement shall
be brought and enforced in the courts of the State of New York of the United
States of America for the Southern District of New York, and irrevocably submits
to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby
waives any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by registered or
certified mail, return receipt requested, postage prepaid, addressed to it
at
the address set forth in Paragraph 13 hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon the Company in any action,
proceeding or claim. The Company agrees that the prevailing party(ies) in any
such action shall be entitled to recover from the other party(ies) all of its
reasonable attorneys’ fees and expenses relating to such action or proceeding
and/or incurred in connection with the preparation therefor.
17.
Counterparts.
This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall be deemed to be
an
original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has been
signed by each of the parties hereto and delivered to each of the other parties
hereto
If
the
foregoing correctly sets forth the understanding between the Underwriter and
the
Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between
us.
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Very
truly yours,
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| By: | ||
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Name:
Title
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Accepted
as of the date first above written:
CRUSADER
SECURITIES, LLC
By:
Name:
Title:
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