PLACEMENT AGENCY AGREEMENT
Exhibit
10.1
This
Placement Agency Agreement (this “Agreement”) is made and entered into as of
October 21, 2005 (the “Effective Date”), by and between Ignis Petroleum Group,
Inc., a Nevada corporation (the “Company”), and Stonegate Securities, Inc., a
Texas corporation (“Stonegate”).
WHEREAS,
the Company desires to retain Stonegate as its 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:
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1.
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RETENTION
OF STONEGATE; SCOPE OF
SERVICES.
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(a)
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Subject
to the terms and conditions set forth herein, the Company hereby
retains
Stonegate to act as the exclusive placement agent to the Company
during
the Contract Period (as defined in Section 2 below), and Stonegate
hereby
agrees to be so retained.
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(b)
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Subject
to the terms and conditions of this Agreement, as the exclusive placement
agent to the Company, Stonegate will have the 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”).
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(c)
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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.
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(d)
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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, subject to the terms and conditions of this Agreement,
Stonegate
shall have the 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.
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2.
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CONTRACT
PERIOD AND TERMINATION.
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(a)
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Subject
to the terms and conditions of this Agreement, Stonegate shall act
as the
Company’s exclusive placement agent under this Agreement for a period
commencing on the Effective Date and continuing thereafter until
the
earlier to occur of (i) termination by either party upon ten (10)
days
prior written notice to the other party, or (ii) six (6) months from
the
date hereof unless extended by the parties in writing (the “Contact
Period”).
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(b)
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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.
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3.
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REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
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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, breach, cause a default, right of termination, or
acceleration (whether through the passage of time or otherwise) under any
contract, agreement, or understanding, or any law, rule, or regulation binding
upon or applicable to the Company or any subsidiary of the Company.
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4.
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COVENANTS
OF THE COMPANY.
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The
Company covenants and agrees as follows:
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(a)
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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 cause the offering of the
Securities to not be exempt from registration under the Securities
Act.
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(b)
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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.
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(c)
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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, subject to applicable law and regulations,
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 may be filed publicly
by the
Company without the prior written consent of Stonegate, if based
on advice
of counsel, such filing is required by applicable law or
regulation.
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5.
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FURNISHING
OF COMPANY INFORMATION;
CONFIDENTIALITY.
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(a)
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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.
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(b)
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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.
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(c)
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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 requirement so that the Company may seek a
protective order or other appropriate remedy and/or waive compliance
with
the terms of this Agreement.
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(d)
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The
obligations of the Parties under this Section 5 shall survive the
termination of this Agreement for 36
months.
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6.
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FEES
AND EXPENSES.
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(a)
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As
compensation for services rendered by Stonegate in connection with
the
Placements, the Company agrees to pay Stonegate a fee (the “Agency Fee”)
as follows: (i) with respect to the sale of any Securities sold in
a
Placement pursuant to an equity line of credit, a fee of seven percent
(7%) of the gross proceeds of that portion of total gross proceeds
for
amounts received up to and including Five Million Dollars ($5,000,000)
plus six percent (6%) of that portion of total gross proceeds received
in
excess of Five Million Dollars ($5,000,000); and (ii) with respect
to the
sale of any Securities sold in a Placement other than pursuant to
an
equity line of credit (a) eight percent (8%) of that portion of total
gross proceeds from the sale of Securities in the Placements for
amounts
up to and including Five Million Dollars ($5,000,000); plus (b) seven
percent (7%) of that portion of total 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; plus (c) six percent (6%) of that portion of total gross
proceeds from the sale of Securities for any Securities sold in the
Placements in excess of Ten Million Dollars ($10,000,000). In addition,
the Company agrees to pay Stonegate an Agency Fee of five percent
(5%) of
the gross proceeds received by the Company from the exercise of any
warrants issued to investors as part of any Placement. Other than
as
provided for in the immediately proceeding sentence, “gross proceeds”
referenced in this Section 6(a) shall not include proceeds received
by the
Company from the exercise of a warrant issued in any Placement. The
Agency
Fee shall be paid immediately upon the closing of each sale of Securities
by the Company, and upon the exercise of any warrants by an investor.
Notwithstanding anything in this Agreement to the contrary, Stonegate
shall not be entitled to any Agency Fee upon the exercise of any
warrant
issued to Stonegate pursuant to Section 6(d) of this Agreement, or
for any
sales of Securities to the Excluded Contacts (as defined in Section
8
hereof).
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(b)
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As
compensation to Stonegate for its initial due diligence efforts,
the
Company shall deliver to Stonegate (or Stonegate’s designee) 50,000 shares
of fully paid non-assessable shares of common stock of the Company
(the
“Shares”). Of the Shares, 25,000 of such Shares shall be issued by the
Company effective upon execution of this Agreement. The remaining
25,000
shares shall be issued by the Company the earlier of (i) in 30 days,
at
the sole discretion of the Company, or (ii) upon the closing of a
Placement. Stonegate acknowledges and agrees that the Shares will
be
issued pursuant to an exemption from the registration requirements
of the
Securities Act of 1933, as amended, that is an “accredited investor” as
such term is defined under Regulation D, and that at the time it
receives
the Shares it will take them without a view toward distribution.
The
Shares will be subject to the registration rights provisions set
forth on
Appendix I hereto. The Company will issue the Shares to such affiliates
of
Stonegate and in such denominations as will be designated by Stonegate,
so
long as such designee represent that it is an “accredited investor” and
that at the time its take such shares it will do so without a view
toward
distribution.
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(c)
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The
Company shall also promptly reimburse Stonegate for all reasonable
documented 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, attorney’s fees and costs,
long distance telephone, facsimile, courier, mail, supplies, travel
and
similar expenses, provided that in no event shall the Company be
required
to reimburse expenses in excess of $25,000 without the prior written
consent of the Company.
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(d)
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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 shares of common stock
of the
Company equal to ten percent (10%) of the total number of shares
of common
stock sold in the Placement (excluding options or warrants that are
part
of the Placement) at an exercise price per share equal to the price
at
which the Securities are sold to Purchasers. With respect to a Placement
(or any portion of a Placement) which involves (i) the issuance by
the
Company of convertible preferred stock or convertible debt, the
Representative Warrant shall entitle the holder to purchase an amount
of
shares of common stock equal to ten percent (10%) of the amount of
shares
of common stock that the convertible preferred stock or convertible
debt
is convertible assuming conversion of the entire amount thereof,
or (ii)
the issuance of any instrument of indebtedness, loan, or any Securities
not convertible into common stock, the Representative Warrant shall
entitled the holder to purchase an amount of shares of common stock
equal
to ten percent (10%) of the aggregate face amount of such debt, loan
or
other Security divided by the market price of the common stock of
the
Company on the date following the public announcement of the Closing
of
the Placement. The Representative’s Warrant shall be for a period of five
(5) years and shall otherwise be substantially in the form of Exhibit
A
attached hereto.
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(e)
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The
obligations of the Parties under this Section 6 shall survive the
termination of this Agreement for any
reason.
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7.
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INDEMNIFICATION.
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(a)
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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 (a “Non-Indemnified Claim”). In this regard,
Stonegate shall reimburse the Company for any payments made herein
for a
Non-Indemnified Claim. 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 from
the bad
faith, gross negligence or willful misconduct of Stonegate and/or
any of
its affiliates, agents or representatives. In the event that the
foregoing
indemnity is unavailable (except by reason of the bad faith, willful
misconduct or gross negligence of Stonegate and/or any of its affiliates,
agents or representatives), 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
benefit of any director, officer, employee, agent or controlling
person of
Stonegate.
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(b)
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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/or any of its affiliates,
agents or
representatives, 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.
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(c)
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The
obligations of the Parties under this Section 7 shall survive the
termination of this Agreement.
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8.
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NON-CIRCUMVENTION.
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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 to the
Company pursuant to a face to face meeting, telephone conference or video
conference, 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. Upon the termination or expiration of this Agreement,
Stonegate and the Company shall in good faith prepare a list of each Stonegate
Contact to which this Section 8 is applicable. The entities listed on the
attached Schedule A shall not be considered Stonegate Contacts (the “Excluded
Contacts”).
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9.
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GOVERNING
LAW.
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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.
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10.
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ARBITRATION.
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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.
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11.
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NO
WAIVER.
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The
failure or neglect of any party hereto to insist, in any one or more 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.
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12.
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SUCCESSORS
AND ASSIGNS.
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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.
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13.
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NOTICES.
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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:
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If
to the Company:
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000
Xxxxxxxx Xxxxx, 0xx
Xxxxx
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Xxxxxx,
Xxxxx 00000
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Facsimile:
(000) 000-0000
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Attention:
Xxxxxxx X. Xxxxxx, Chief Executive
Officer
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If
to Stonegate:
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Stonegate
Securities, Inc.
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0000
Xxxxxx Xxxx, Xxxxx 000
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Xxxxxx,
Xxxxx 00000
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Facsimile:
(000) 000-0000
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Attention:
Xxxxx Xxxxxxxx, President
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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.
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14.
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NATURE
OF RELATIONSHIP.
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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.
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15.
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MISCELLANEOUS
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Stonegate’s
obligations under this Agreement are subject to the following general
conditions:
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(a)
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All
relevant terms, conditions, and circumstances relating to the Placements
will be reasonably satisfactory to Stonegate and its
counsel.
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(b)
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Stonegate
reserves the right to solicit the assistance of licensed outside
dealers
(“Dealers”) to assist in the offer and sale of the Placements with the
prior written consent of the Company; provided, however, that any
such
Dealers agree in writing to be bound by the terms of the applicable
Placement. It is understood that Stonegate, in its sole discretion,
shall
be entitled to pay over to any such Dealers any portion of the
compensation received by Stonegate hereunder. The Company shall have
no
financial liability for any fees or expenses of any such
Dealers.
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16.
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CAPTIONS.
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The
Section titles herein are for reference purposes only and do not control or
affect the meaning or interpretation of any term or provision
hereof.
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17.
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AMENDMENTS.
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No
alteration, amendment, change or addition hereto shall be binding or effective
unless the same is set forth in a writing signed by a duly authorized
representative of each Party.
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18.
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PARTIAL
INVALIDITY.
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If
it is
finally determined that any term or provision hereof is invalid or
unenforceable, (a) the remaining terms and provisions hereof shall be
unimpaired, and (b) the invalid or unenforceable term or provision shall be
replaced by a term or provision that is valid and enforceable and that comes
as
close as possible to expressing the intention of the invalid or unenforceable
term or provision.
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19.
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ENTIRE
AGREEMENT.
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This
Agreement embodies the entire agreement and understanding of the Parties and
supersedes any and all prior agreements, arrangements and understandings
relating to the matters provided for herein.
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20.
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COUNTERPARTS.
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This
Agreement may be executed in one or more counterparts, each of which shall
be an
original, but all of which together shall be considered one and the same
agreement.
IN
WITNESS WHEREOF, this Placement Agency Agreement has been executed as of the
date first written above by duly authorized representatives of the Company
and
Stonegate.
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By:
/s/
XXXXXXX XXXXXX
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Title:
President and Chief Executive Officer
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STONEGATE
SECURITIES, INC.
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By:/s/
XXXXX XXXXXXXX
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Title:
President
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