Exhibit 4.20
PLACEMENT AGENCY AGREEMENT
This Placement Agency Agreement (this "Agreement") is made and entered
into as of October 16, 2002 (the "Effective Date"), by and between Stonepath
Group, Inc., a Delaware 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
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"). Each placement of securities in
which Stonegate acts as a placement agent is sometimes referred to
as a "Placement" and collectively as the "Placements".
(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 of the
Company by the Company, including without limitation the
non-exclusive right to identify potential buyers for such
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 6, 7, 8, 9,
10 and 11 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.
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.
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 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. REPRESENTATIONS AND WARRANTIES OF STONEGATE.
Stonegate represents and warrants to the Company that Stonegate is duly
registered, pursuant to the applicable provisions of the Securities
Exchange Act of 1934, as amended, as a dealer and as a member in good
standing of the National Association of Securities Dealers, Inc.
7. 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) six percent (6%) of the gross proceeds
from the sale of Securities for the first $10 million of
Securities sold in the Placements (on a cumulative basis); and
(ii) five percent of the gross proceeds from the sale of
Securities for any Securities sold in the Placements over the
initial $10 million (on a cumulative basis). The Agency Fee shall
be paid immediately upon the closing of each sale of Securities by
the Company.
(b) Upon execution of this Agreement by the Parties, the Company shall
deliver to Stonegate $25,000 as a non-accountable and
non-refundable expense allowance to compensate Stonegate for its
initial diligence efforts, including preparation and printing of
reports and/or other materials to be used by the Company and
Stonegate in connection with a series of investor meetings. 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,
attorney's fees and costs, long distance telephone, facsimile,
courier, mail, supplies, travel and similar expenses. Except for
bills for long distance telephone, facsimile, federal express,
courier, mail and supplies, Stonegate will not incur any expenses
without the prior consent of the Company; and the Parties shall
attempt to have the Company direct billed as often as possible for
such expenses.
(c) The Company agrees to issue to Stonegate a Warrant, in
substantially the form attached hereto as Exhibit A (the "Initial
Warrant"). The exercise price of the Initial Warrant shall be
$1.23 per share. The Initial Warrant will be granted to Stonegate
on the earlier of: (i) November 1, 2002; or (ii) such earlier date
that the Company has approved such grant (the "Grant Date");
provided that the Company has not otherwise notified Stonegate in
writing prior to the Grant Date that the Company has terminated
this Agreement pursuant to Section 2(a) above. The Initial Warrant
shall be dated as of the Grant Date and such Initial Warrant shall
promptly be delivered to Stonegate (but in no event later than
five business days following the Grant Date).
(d) Upon each closing of the Placements, 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 (i) (1) ten percent (10%) of the total number
of Securities sold in the Placements for the first $10 million of
Securities sold in the Placements (on a cumulative basis); plus
(2) six percent (6%) of the total number of Securities sold in the
Placements over the initial $10 million of Securities sold in the
Placements (on a cumulative basis); less (ii) the number of shares
of Common Stock underlying the Initial Warrant. The
Representative's Warrant shall be for a period of five (5) years,
have an exercise price per share equal to 110% of the price at
which the Securities are sold to Purchasers in the applicable
Placement, and shall otherwise be substantially in the form of
Exhibit B attached hereto.
(e) The obligations of the Parties under this Section 7 shall survive
the termination of this Agreement for any reason.
8. 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 security holder 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; provided, however, that the Company will not 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
benefit of any director, officer, employee, agent or controlling
person of Stonegate; provided, however, that the Company shall
only be obligated to pay the fees and expenses of one counsel for
all of the persons to be indemnified. 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 security holder 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; provided,
however, that Stonegate shall only be obligated to pay the fees
and expenses of one counsel for all of the persons to be
indemnified. 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) Each party entitled to indemnification under this Section 8 (the
"Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying
Party to assume the defense of any such claims or any litigation
resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (which
approval shall not be unreasonably withheld), and the Indemnified
Party may participate in such defense at such Indemnified Party's
expense; provided, however, that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless
the failure to give such notice is materially prejudicial to an
Indemnifying Party's ability to defend such action; provided,
further, however, that the Indemnifying Party shall not be
entitled to assume the defense for such matters as to which there
is, in the opinion of counsel to the Indemnifying Party, a
conflict of interest or separate and different defenses and the
representation of both the Indemnifying Party and the Indemnified
Parties would be improper. No Indemnifying Party, in the defense
of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of
such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall
be reasonably required in connection with the defense of such
claim and the litigation resulting therefrom.
(d) The obligations of the Parties under this Section 7 shall survive
the termination of this Agreement.
9. NON-CIRCUMVENTION.
The Company hereby agrees that during the Contract Period and for a
period of one year after the end of the Contract Period, 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 (excluding,
however, any account that did not directly or indirectly make an
investment in the Company following an introduction, referral or
passing of information by, any such institution)) which Stonegate has
introduced to the Company as prospective purchasers of securities of
the Company (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.
Stonegate agrees to periodically deliver to the Company in writing
updates on its progress with prospective purchasers; it being agreed
and understood that such prospective purchasers shall be deemed to be
Stonegate Contacts unless the Company objects thereto in writing within
three (3) days following its receipt of the update first disclosing
such prospective purchaser.
10. 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.
11. 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.
12. NO WAIVER.
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.
13. 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.
14. 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:
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Stonepath Group, Inc.
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Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Chief Financial Officer
▇▇▇▇▇▇▇ ▇▇▇▇▇, General Counsel
If to Stonegate:
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Stonegate Securities, Inc.
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, 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.
15. 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.
16. 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 reasonably satisfactory to Stonegate and its
counsel.
(b) Stonegate reserves the right to solicit the assistance of outside
dealers ("Dealers") to assist in the offer and sale of the
Placements; 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.
17. CAPTIONS.
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.
18. AMENDMENTS.
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.
19. PARTIAL INVALIDITY.
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.
20. ENTIRE AGREEMENT.
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.
21. COUNTERPARTS.
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 Agreement has been executed as of the date
first written above by duly authorized representatives of the Company and
Stonegate.
STONEPATH GROUP, INC.
By:__________________________________
Title:_______________________________
STONEGATE SECURITIES, INC.
By:__________________________________
Title:_______________________________