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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 r
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