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Exhibit 10.4
PLACEMENT AGENCY AGREEMENT
This Placement Agency Agreement (this
"Agreement") is made and entered into as
of December __, 2004 (the "Effective
Date"), by and between Consolidated
Energy, Inc., a Wyoming corporation (the
"Company"), and Stonegate Securities,
Inc., a Texas corporation
("Stonegate").
WHEREAS, the Company desires to retain
Stonegate as its non-exclusive
placement agent, and Stonegate is willing
to act in such capacity, in each
case subject to the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the
premises and the mutual covenants
herein contained, the Company and Stonegate
(each a "Party" and collectively,
the "Parties") hereby agree as follows:
1. RETENTION OF STONEGATE; SCOPE OF
SERVICES.
(a) Subject to the terms and conditions set
forth herein, the Company hereby
retains Stonegate to act as the
non-exclusive placement agent to the Company
during the Contract Period (as defined in
Section 2 below), and Stonegate
hereby agrees to be so retained.
(b) As the non-exclusive placement agent to
the Company, Stonegate will have
the non-exclusive right during the Contract
Period to identify for the Company
prospective purchasers (collectively, the
"Purchasers" and each individually,
a "Purchaser") in one or more placement
(each, a "Placement"
and
collectively, the "Placements") of debt
and/or equity securities to be issued
by the Company, the type and dollar amount
being as mutually agreed to by the
Parties (the "Securities").
(c) Terms of the Placements shall be as set
forth in subscription documents,
including any stock purchase or
subscription agreement, escrow agreement,
registration rights agreement, warrant
agreement and/or other documents to be
executed and delivered in connection with
each Placement (collectively, the
"Subscription Documents"). The Placements are intended to be
exempt from the
registration requirements of the Securities
Act of 1933, as amended (the
"Securities Act"), pursuant to Regulation D
("Regulation D") of the rules and
regulations of the Securities and Exchange
Commission (the "SEC") promulgated
under the Securities Act.
(d) Stonegate will act on a best efforts
basis and will have no obligation to
purchase any of the Securities offered in
any Placement. During the Contract
Period, Stonegate shall have the
non-exclusive right to arrange for all sales
of Securities in the Placements, including
without limitation the exclusive
right to identify potential buyers for the
Securities. All sales
of
Securities in the Placements shall be
subject to the approval of the Company,
which approval may be withheld in the
Company's sole discretion.
2. CONTRACT PERIOD AND TERMINATION.
(a) Stonegate shall act as the Company's
non-exclusive placement agent under
this Agreement for a period commencing on
the Effective Date, and continuing
until terminated by either Party upon 10
days notice to the other Party (the
"Contract Period").
(b) Upon termination, neither party will
have any further obligation under
this Agreement, except as provided in
Sections 5, 6, 7, 8, 9 and 10 hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.
The representations and warranties of the
Company made to the Purchasers as
set forth in the Subscription Documents are
hereby incorporated by reference
as of the date of consummation of the sale
of the Securities (the "Closing")
and all such representations and warranties
are hereby deemed made by the
Company directly to Stonegate as though set
forth in full herein.
The company
represents and warrants that it has full
power and authority to enter into
this Agreement and to perform its
obligations hereunder.
This Agreement is
enforceable against the Company in
accordance with its terms, subject to
applicable laws governing bankruptcy,
insolvency and creditors' rights
generally. The Agreement does not conflict
with, violate, cause a default,
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right of termination, or acceleration
(whether through the passage of time or
otherwise) under any contract, agreement,
or understanding binding upon the
Company or any subsidiary of the
Company.
4. COVENANTS OF THE COMPANY.
The Company covenants and agrees as
follows:
(a) Neither the Company nor any affiliate
of the Company (as defined in Rule
501(b) of Regulation D) will sell, offer
for sale or solicit offers to buy or
otherwise negotiate in respect of any
security (as defined in the Securities
Act) of the Company which will be
integrated with the sale of the Securities
in a manner which would require the
registration under the Securities Act of
the Securities.
(b) Any and all filings and documents
required to be filed in connection with
or as a result of the Placements pursuant
to federal and state securities laws
are the responsibility of the Company and
will be filed by the Company.
(c) Any press release to be issued by the
Company announcing or referring to
any Placement shall be subject to the prior
review of Stonegate, and each such
press release shall, at the request of
Stonegate, identify Stonegate as the
placement agent. Stonegate shall be permitted to
publish a tombstone or
similar advertisement upon completion of
each Placement identifying itself as
the Company's placement agent with respect
thereto. This
Agreement shall not
be filed publicly by the Company without
the prior written consent of
Stonegate, unless required by applicable
law or regulation.
(a)
5. FURNISHING OF COMPANY INFORMATION;
CONFIDENTIALITY.
(a) In connection with Stonegate's
activities hereunder on the Company's
behalf, the Company shall furnish Stonegate
with all reasonable information
concerning the Company and its operations
that Stonegate deems necessary or
appropriate (the "Company Information") and
shall provide Stonegate with
reasonable access to the Company's books,
records, officers, directors,
employees, accountants and counsel.
The Company
acknowledges and agrees that,
in rendering its services hereunder,
Stonegate will be using and relying upon
the Company Information without independent
verification thereof or
independent appraisal of any of the
Company's assets and may, in its sole
discretion, use additional information
contained in public reports or other
information furnished by the Company or
third parties.
(b) Stonegate agrees that the Company
Information will be used solely for the
purpose of performing its services
hereunder. Subject to
the limitations set
forth in subsection (c) below, Stonegate
will keep the Company Information
provided hereunder confidential and will
not disclose such Company Information
or any portion thereof, except (i) to a
third party contacted by Stonegate on
behalf of, and with the prior approval of,
the Company pursuant hereto who has
agreed to be bound by a confidentiality
agreement satisfactory in form and
substance to the Company, or (ii) to any
other person for which the Company's
consent to disclose such Company
Information has been obtained.
(c) Stonegate's confidentiality obligations
under this Agreement shall not
apply to any portion of the Company
Information which (i) at the time of
disclosure to Stonegate or thereafter is
generally available to and known by
the public (other than as a result of a
disclosure directly or indirectly by
Stonegate in violation of this Agreement);
(ii) was available to Stonegate on
a non-confidential basis from a source
other than the Company, provided that
such source is not and was not bound by a
confidentiality agreement with the
Company; (iii) has been independently
acquired or developed by Stonegate
without violating any of its obligations
under this Agreement; or (iv) the
disclosure of which is legally compelled
(whether by deposition,
interrogatory, request for documents,
subpoena, civil or administrative
investigative demand or other similar
process). In the event
that Stonegate
becomes legally compelled to disclose any
of the Company Information,
Stonegate shall provide the Company with
prompt prior written notice of such
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requirement so that the Company may seek a
protective order or other
appropriate remedy and/or waive compliance
with the terms of this Agreement.
(d) The obligations of the Parties under
this Section 5 shall survive the
termination of this Agreement for 12
months.
6. FEES AND EXPENSES.
(a) As compensation for services rendered
by Stonegate in connection with the
Placements, the Company agrees to pay
Stonegate a fee (the "Agency Fee") of:
(i) eight percent (8%) of the gross
proceeds from the sale of Securities in
the Placements for Five Million Dollars
($5,000,000) or less (on a cumulative
basis); (ii) seven percent (7%) of the
gross proceeds from the sale of
Securities for between Five Million Dollars
($5,000,000) and up to and
including Ten Million Dollars ($10,000,000)
of Securities sold in the
Placements (on a cumulative basis); and
(iii) six percent (6%) of the gross
proceeds from the sale of Securities for
any Securities sold in the Placements
in excess of Ten Million Dollars
($10,000,000) (on a cumulative basis). The
Agency Fee shall be paid immediately upon
the closing of each sale of
Securities by the Company.
(b) The Company shall also promptly
reimburse Stonegate for all reasonable
out-of-pocket expenses incurred by
Stonegate and its directors, officers and
employees in connection with the
performance of Stonegate's services under
this Agreement. For these purposes, "out-of-pocket
expenses" shall include,
but not be limited to, attorneys' fees and
costs, long distance telephone,
facsimile, courier, mail, supplies, travel
and similar expenses.
(c) Upon closing of the Placement, the
Company agrees to issue to Stonegate a
Securities Purchase Warrant (the
"Representative's Warrant") entitling the
holder(s) thereof to purchase an amount of
Securities equal to ten percent
(10%) of the total number of Securities
sold in the Placement for a period of
five (5) years at an exercise price per
share equal to the price at which the
Securities are sold to Purchasers.
The Representative's
Warrant shall
otherwise be substantially in the form of
Exhibit A attached hereto.
(d) The obligations of the Parties under
this Section 6 shall survive the
termination of this Agreement for any
reason.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and
hold Stonegate harmless from and
against any and all losses, claims, damages
or liabilities (or actions,
including securityholder actions, in
respect thereof) related to or arising
out of Stonegate's engagement hereunder or
its role in connection herewith,
and will reimburse Stonegate for all
reasonable expenses (including reasonable
costs, expenses, awards and counsel fees
and/or judgments) as they are
incurred by Stonegate in connection with
investigating, preparing for or
defending any such action or claim, whether
or not in connection with pending
or threatened litigation in which Stonegate
is a party. The
Company will not,
however, be responsible for any claims,
liabilities, losses, damages or
expenses which are finally judicially
determined to have resulted primarily
from the bad faith, gross negligence or
willful misconduct of Stonegate. The
Company also agrees that Stonegate shall
not have any liability to the Company
for or in connection with such engagement,
except for any such liability for
losses, claims, damages, liabilities or
expenses incurred by the Company that
result primarily from the bad faith, gross
negligence or willful misconduct of
Stonegate. In the event that the foregoing
indemnity is unavailable (except
by reason of the bad faith or gross
negligence of Stonegate), then the Company
shall contribute to amounts paid or payable
by Stonegate in respect of its
losses, claims, damages and liabilities in
such proportion as appropriately
reflects the relative benefits received by,
and fault of, the Company and
Stonegate in connection with the matters as
to which such losses, claims,
damages or liabilities relate, and other
equitable considerations. The
foregoing shall be in addition to any
rights that Stonegate may have at common
law or otherwise and shall extend upon the
same terms to and inure to the
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benefit of any director, officer, employee,
agent or controlling person of
Stonegate. The Company hereby consents to
personal jurisdiction, service and
venue in any court in which any claim which
is subject to this agreement is
brought against Stonegate or any other
person entitled to indemnification or
contribution under this subsection (a).
(b) Stonegate agrees to indemnify and hold
the Company harmless from and
against any and all losses, claims, damages
or liabilities (or actions,
including securityholder actions, in
respect thereof) which are finally
judicially determined to have resulted
primarily from the bad faith, gross
negligence or willful misconduct of
Stonegate, and will reimburse the Company
for all reasonable expenses (including
reasonable costs, expenses, awards and
counsel fees and/or judgments) as they are
incurred by the Company in
connection with investigating, preparing
for or defending any such action or
claim, whether or not in connection with
pending or threatened litigation in
which the Company is a party. In the event that the foregoing
indemnity is
unavailable, then Stonegate shall
contribute to amounts paid or payable by the
Company in respect of its losses, claims,
damages and liabilities in such
proportion as appropriately reflects the
relative benefits received by, and
fault of, the Company and Stonegate in
connection with the matters as to which
such losses, claims, damages or liabilities
relate, and other equitable
considerations. The foregoing shall be in addition
to any rights that the
Company may have at common law or otherwise
and shall extend upon the same
terms to and inure to the benefit of any
director, officer, employee, agent or
controlling person of the Company.
Stonegate hereby
consents to personal
jurisdiction, service and venue in any
court in which any claim, which is
subject to this agreement, is brought
against the Company or any other person
entitled to indemnification or contribution
under this subsection (b).
(c) The obligations of the Parties under
this Section 7 shall survive the
termination of this Agreement.
8. NON-CIRCUMVENTION.
The Company hereby agrees that, for a
period of one year from the end of the
Contract Period or other termination of
this Agreement, the Company will not
enter into any agreement, transaction or
arrangement with any of the
institutions (including their agents,
principals and affiliates and the
accounts and funds which they manage or
advise) which Stonegate has
introduced, directly or indirectly, to the
Company pursuant to a meeting,
telephone call, any written communication,
or by e mail, as prospective
purchasers of the Securities in the
Placements (collectively, the "Stonegate
Contacts"), regardless of whether a
transaction is consummated with such
prospective purchasers, unless the Company
notifies Stonegate in writing of
the agreement, transaction or arrangement,
and pays Stonegate a fee equal to
the Agency Fee for securities of the
Company sold to Stonegate Contacts.
9. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF TEXAS, WITHOUT GIVING
EFFECT TO ANY CONFLICT OF LAWS
PROVISIONS THEREOF.
10. ARBITRATION.
Stonegate and the Company will attempt to
settle any claim or controversy
arising out of this Agreement through
consultation and negotiation in good
faith and a spirit of mutual cooperation.
Any dispute which the
parties
cannot resolve may then be submitted by
either party to binding arbitration in
Dallas, Texas under the rules of the
American Arbitration Association for
resolution. Nothing in this paragraph will
prevent either party from
resorting to judicial proceedings if (a)
good faith efforts to resolve the
dispute under these procedures have been
unsuccessful or (b) interim relief
from a court is necessary to prevent
serious and irreparable injury.
11. NO WAIVER.
The failure or neglect of any party hereto
to insist, in any one or more
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instances, upon the strict performance of
any of the terms or conditions of
this Agreement, or waiver by any party of
strict performance of any of the
terms or conditions of this Agreement,
shall not be construed as a waiver or
relinquishment in the future of such term
or condition, but the same shall
continue in full force and effect.
12. SUCCESSORS AND ASSIGNS.
The benefits of this Agreement shall inure
to the benefit of the Parties,
their respective successors, assigns and
representatives, and the obligations
and liabilities assumed in this Agreement
by the Parties shall be binding upon
their respective successors and assigns.
This Agreement may not
be assigned
by either Party without the express written
consent of the other Party, which
consent shall not be unreasonably
withheld.
13. NOTICES.
All notices and other communications
required or permitted to be given under
this Agreement shall be in writing and
shall be delivered personally or sent
by certified mail, return receipt
requested, recognized overnight delivery
service, or facsimile as follows:
If to the Company:
Consolidated Energy, Inc.
9900 West Sample Road, Suite 300
Coral Springs, FL 33065
Facsimile: (954) 575-9124
Attention: David Guthrie, President
If to Stonegate:
Stonegate Securities, Inc.
5940 Sherry Lane, Suite 410
Dallas, Texas 75225
Facsimile: (214) 987-1981
Attention: Scott Griffith, President
Either Party may change its address or
facsimile number set forth above by
giving the other Party notice of such
change in accordance with the provisions
of this Section 13. A notice shall be
deemed given (a) if by personal
delivery, on the date of such delivery, (b)
if by certified mail, on the date
shown on the applicable return receipt, (c)
if by overnight delivery service,
on the day after the date delivered to the
service, or (d) if by facsimile, on
the date of transmission.
14. NATURE OF RELATIONSHIP.
The Parties intend that Stonegate's
relationship to the Company and the
relationship of each director, officer,
employee or agent of Stonegate to the
Company shall be that of an independent
contractor and not as an employee of
the Company or an affiliate thereof.
Nothing contained in
this Agreement
shall constitute or be construed to be or
create a partnership or joint
venture between Stonegate and the Company
or their respective successors or
assigns. Neither Stonegate nor any
director, officer, employee or agent of
Stonegate shall be considered to be an
employee of the Company by virtue of
the services provided hereunder.
15. MISCELLANEOUS
Stonegate's obligations under this
Agreement are subject to the following
general conditions:
(a) All relevant terms, conditions, and
circumstances relating to the
Placements will be re
