Exhibit 10.8

 

410 Park Ave, 7th floor

EHRENKRANTZ KING

212 786-6928  

NUSSBAUM, Inc.

  New York , New York 10022   jobrien@eknstck.com

 

April 5, 2006

CONFIDENTIAL

John Punzo

CEO & Chairman

WENTWORTH ENERGY, INC.

#1415 – 115 West 7th Street

                      

Fort Worth, Texas 76102

Dear Mr. Punzo,

  

This letter agreement (this “Agreement”) confirms the engagement of Ehrenkrantz
King Nussbaum Inc. (“EKN”) by Wentworth Energy, Inc. (“WNWG”) as non-exclusive
placement agent to arrange the sale of equity or equity-linked securities
including convertible preferred, convertible debt and debt with warrants
(“Equity” or the “Securities”) on behalf of the Company. The sale of Securities
(the “Financing” or “Financings”) may be completed under an effective shelf
registration statement, if applicable, or may occur through a private placement
pursuant to one or more exemptions from registration under the Securities Act of
1933, as amended (the “Securities Act”), and in compliance with applicable
securities laws of states and other jurisdictions (“Blue Sky Laws”).  

 

1.    Retention.  Subject to the terms and conditions of this Agreement, WNWG
hereby engages EKN to act on behalf of the Company as its non-exclusive
placement agent during the Authorization Period (as defined below) to arrange
the sale of Securities in an amount and on terms and conditions satisfactory to
the Company and EKN hereby accepts such engagement.

2.    Authorization Period.  EKN’s engagement shall become effective on the date
hereof and, unless extended by WNWG and EKN, shall expire one (1) year after the
signing of this Agreement.  In the event that there has not been an initial
closing on a Financing within sixty (60) days of the execution of this
Agreement, the Company may terminate this Agreement in writing upon thirty days
notice.   The period from the date hereof through the expiration of this
Agreement is called the “Authorization Period.”

3.    Compensation.   WNWG shall pay EKN the compensation set forth below:

a.

Cash Fee for Equity.   WNWG shall pay EKN a cash placement fee equal to 5% on
any gross proceeds received by the Company in connection with a Financing.  The
cash placement fee shall be paid by wire transfer on the closing date on which
the Company receives such aggregate consideration.  In the event that the
Company closes a Financing arranged by EKN, then effective upon such closing EKN
shall become the Company’s exclusive placement agent during the Authorization
Period.  In such event (i) EKN shall have the exclusive right to act on behalf
of the Company to place any Securities during the Authorization Period, and (ii)
thereafter, in the event the Company closes a Financing during the Authorization
Period with, or with a party introduced by, a third-party agent that is entitled
to earn a fee in connection with the Financing, the Company may enter into such
transaction provided however that the Company shall pay to EKN 25% of the cash
placement fee. Also, EKN agrees to consider for inclusion in any financing it
arranges, any other NASD broker dealers on an “as needed basis” and subject to
EKN’s ability to negotiate an appropriate fee splitting arrangement with such
NASD broker dealer.

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b.

Placement Agent Warrants for Equity.  On each closing date of a Financing on
which aggregate consideration is paid or becomes payable to the Company for its
Securities, WNWG shall issue to EKN or its permitted assigns warrants (the
“Warrants”) to purchase such number of shares of the common stock of the Company
equal to 5% of the aggregate number of shares Securities (or into which they may
be converted) of the Company issued and issuable by the Company under and in
connection with the Financings.  The number of shares of common stock issuable
upon exercise of the Warrants shall include all shares of common stock issuable
under the Securities, including, without limitation, shares issuable upon
conversion or exercise of the Securities.  The Warrants shall provide for
cashless exercise (even if the Purchasers do not have such right) and have terms
and conditions identical to the Securities purchased by the Purchasers,
including, without limitation, anti-dilution provisions to take into account any
subdivision, consolidation or reclassification of the shares of common stock
underlying the Securities or payments of stock dividends or the amalgamation or
other reorganization of the Company.  The exercise price per share of the
Warrants shall be equal to the effective price per share paid by the Purchasers
for the Securities (or in the event of a convertible security, the conversion
price or exercise price per share of common stock on the closing date). The
Warrants shall be exercisable after the date of issuance and shall expire five
years after the date of issuance, unless otherwise extended by the Company. Upon
exercise of the Warrants, the Company shall deliver the shares to the holder
within ten (10) business days of the exercise. The Warrants shall not be
callable or redeemable. The Warrants shall also include one demand registration
right exercisable following the first anniversary of the closing, and piggyback
registration rights.  The Warrants shall be transferable within EKN, at EKN’s
discretion.

c.

Tail Period. WNWG shall and shall cause its affiliates to, pay to EKN all
compensation described in this Section 3 with respect to all Securities sold to
a purchaser or purchasers at any time prior to the expiration of twelve (12)
months after the expiration of this Agreement (the “Tail Period”) if (i) such
purchaser or purchasers were identified to the Company in writing by EKN during
the Authorization Period, or (ii) EKN advised the Company in writing with
respect to such purchaser or purchasers during the Authorization Period.

4.

Representations, Warranties and Covenants of WNWG. WNWG represents and warrants
to, and covenants with, EKN as follows:

a.

Neither the Company nor any person acting on its behalf has taken, and WNWG
shall not and shall not permit its affiliates to take, directly or indirectly,
any action so as to cause any of the transactions contemplated by this Agreement
to fail to be entitled to exemption from registration or qualification under all
applicable securities laws or which constitutes general advertising or general
solicitation (as those terms are used in Regulation D under the Securities Act)
with respect to the Securities.

b.

WNWG shall take and shall cause its affiliates to take such actions as may be
required to cause compliance with this Agreement.  EKN acknowledges that WNWG
may cause its affiliates to perform any of its obligations hereunder; provided,
however, that WNWG’s intention to do so (or any action by WNWG or EKN in respect
thereof) shall not relieve WNWG from its obligation to perform such obligations
when due.

c.

The Company will furnish, or cause to be furnished, to EKN such information as
EKN reasonably believes appropriate to its engagement hereunder (all such
information, the "Information"),

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and the Company represents that all such Information will be accurate and
complete in all material respects.  The Company will promptly notify EKN of any
change that may be material in such Information.  It is understood that EKN will
be entitled to rely on and use the Information and other information that is
publicly available without independent verification, and will not be responsible
in any respect for the accuracy, completeness or reasonableness of all such
Information or to conduct any independent verification or any appraisal or
physical inspection of properties or assets.

5.

Representations, Warranties and Covenants of EKN.  EKN represents and warrants
to, and covenants with, WNWG as follows:

a.

None of EKN, its affiliates or any person acting on behalf of EKN or any of such
affiliates has engaged or will engage in any general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
with respect to the Securities.

b.

EKN will use its best efforts to conduct the offering and sale of Securities so
that Securities are sold in a transaction or series of transactions exempt from
registration under the Securities Act.

c.

EKN will send Materials related to the Financings only to persons that the EKN
reasonably believes are “accredited investors” (as defined under Rule 501(a) of
the Securities Act).

d.

EKN agrees that, except as otherwise required by law, regulation or court order
or as contemplated by its engagement hereunder, the non-public Information
furnished to EKN by the Company shall be held by EKN as confidential.

6.

Indemnification.  The Company agrees to the indemnification and other agreements
set forth in the attached Indemnification Agreement, the provisions of which are
incorporated herein by reference.

7.

Subsequent Offerings. If a Financing has been completed then EKN shall have the
right from the date hereof until twelve months after the expiration of this
Agreement, to participate as a co-agent in connection with the sale of any
Securities of the Company through a Private Placement or Directed Public
Offering under a shelf registration statement.  In addition, during the
Authorization Period and if a Financing has been completed, then for two years
thereafter, EKN shall have the right to participate as a co-lead manager in an
underwritten public offering of the Company’s Securities and EKN’s name shall
appear as a co-managing underwriter on the cover of any prospectus used in
connection with any sale of equity securities described in this clause.

8.

Survival of Certain Provisions.  The expense, indemnification, reimbursement and
contribution obligations of WNWG provided herein and in the attached
Indemnification Agreement and EKN’s rights to compensation (which term includes
all fees, amounts and Warrants due or which may become due) shall remain
operative and in full force and effect regardless of (i) any withdrawal,
termina­tion or consummation of or failure to initiate or consummate any
transaction described herein or (ii) any termination or the completion or
expiration of this Agreement.

9.

Notices.  Notice given pursuant to any of the provisions of this Agreement shall
be given in writing and shall be sent by certified mail, return receipt request
or recognized overnight courier or personally delivered (a) if to the Company,
to WNWG office at #1415 – 115 West 7th Street, Fort

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Worth, Texas 76102, Attention: John Punzo; and (b) if to EKN, to its office at
410 Park Avenue, 7th floor, New York, NY 10022  Attention: John F. O’Brien.

10.

Confidentiality. No financial advice rendered by EKN pursuant to this Agreement
may be disclosed publicly in any manner without EKN’s prior written consent,
except as may be required by law, regulation or court order but subject to the
limitation below.  If the Company is required or reasonably expects to be so
required to disclose any advice, WNWG shall provide EKN with prompt notice
thereof so that EKN may seek a protective order or other appropriate remedy and
take reasonable efforts to assure that all of such advice disclosed will be
covered by such order or other remedy.  Whether or not such a protective order
or other remedy is obtained, WNWG will and will cause its affiliates to disclose
only that portion of such advice which the Company is so required to disclose.

11.

Miscellaneous.  This Agreement (including the attached Indemnification
Agreement) sets forth the entire agreement between the parties, supersedes and
merges all prior written or oral agreements with respect to the subject matter
hereof, may only be amended in writing and shall be governed by the laws of the
State of New York applicable to agreements made and to be performed entirely
within such State.  The parties shall make reasonable efforts to resolve any
dispute concerning this Agreement, its construction or its alleged breach by
face-to-face negotiations. If such negotiations fail to resolve the dispute, the
dispute shall be finally decided by arbitration in accordance with the rules
then in effect of the American Arbitration Association. Any arbitration will be
conducted in the New York City metropolitan area.  WNWG (for the Company, for
anyone claiming through or in the name of the Company and on behalf of the
equity holders of the Company) and EKN each hereby irrevocably waives any right
it may have to trial by jury in respect of any claim arising out of this
Agreement or the transactions contem­plated hereby.

This Agreement may not be assigned by either party without the prior written
consent of the other party, which consent may be unreasonably withheld.

If any provision of this Agreement is determined to be invalid or unenforceable
in any respect, such determination will not effect such provision in any other
respect or any other provision of this Agreement.

Please confirm that the foregoing correctly sets forth our agreement by signing
and returning to EKN the enclosed duplicate copy of this Agreement.

Very truly yours,

Ehrenkrantz King Nussbaum, Inc.

By:

Name:  John F. O’Brien

Title:    Managing Director

ACCEPTED AND AGREED TO

this

 day of

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WENTWORTH ENERGY, INC.

By:

Name: John Punzo

Title: CEO & Chairman

 

TO:

Ehrenkrantz King Nussbaum., Inc.

410 Park Avenue, 7th Floor

New York, NY

In connection with your engagement pursuant to our letter agreement of even date
herewith (the “Engagement”), we agree to indemnify and hold harmless Ehrenkrantz
King Nussbaum., Inc. (“EKN” or “you”) and its affiliates, the respective
directors, officers, partners, agents and employees of EKN and its affiliates,
and each other person, if any, controlling EKN or any of its affiliates
(collectively, “Indemnified Persons”), from and against, and we agree that no
Indemnified Person shall have any liability to us or our owners, parents,
affiliates, security holders or creditors for, any losses, claims, damages or
liabilities (including actions or proceedings in respect thereof) (collectively
“Losses”) (A) related to or arising out of (i) our actions or failures to act
(including statements or omissions made, or information provided, by us or our
agents) or (ii) actions or failures to act by an Indemnified Person with our
consent or in reliance on our actions or failures to act, or (B) otherwise
related to or arising out of the Engagement or your performance thereof, except
that this indemnification shall not apply to any Losses that are finally
judicially determined to have resulted from your bad faith or gross negligence
or breach of the letter agreement.  If such indemnification is for any reason
not available or insufficient to hold you harmless, we agree to contribute to
the Losses involved in such proportion as is appropriate to reflect the relative
benefits received (or anticipated to be received) by us and by you with respect
to the Engagement or, if such allocation is judicially determined unavailable,
in such proportion as is appropriate to reflect other equitable considerations
such as the relative fault of us on the one hand and of you on the other hand;
provided, however, that, in no event shall the amount to be contributed by you
exceed the fees actually received by you under the Engagement.

We will reimburse each Indemnified Person for all expenses (including reasonable
fees and disbursements of counsel) as they are incurred by such Indemnified
Person in connection with investigating, preparing for or defending any action,
claim, investigation, inquiry, arbitration or other proceeding (“Action”)
referred to above (or enforcing this agreement or any related engagement
agreement), whether or not in connection with pending or threatened litigation
in which any Indemnified Person is a party, and whether or not such Action is
initiated or brought by you .  We further agree that we will not settle or
compromise or consent to the entry of any judgment in any pending or threatened
Action in respect of which indemnification may be sought hereunder (whether or
not an Indemnified Person is a party therein) unless we have given you
reasonable prior written notice thereof and used all reasonable efforts, after
consultation with you, to obtain an unconditional release of each Indemnified
Person from all liability arising therefrom.  In the event we are considering
entering into one or a series of transactions involving a merger or other
business combination or a dissolution or liquidation of all or a significant
portion of our assets, we shall promptly notify you in writing.  If requested by
EKN, we shall then establish alternative means of providing for our obligations
set forth herein on terms and conditions reasonably satisfactory to EKN.  

If multiple claims are brought against you in any Action with respect to at
least one of which indemnification is permitted under applicable law and
provided for under this agreement, we agree that any judgment, arbitration award
or other monetary award shall be conclusively deemed to be based on claims as to
which indemnification is permitted and provided for.  In the event that you are
called or subpoenaed to give testimony in a court of law, we agree to pay your
reasonable expenses and fees related thereto.  Our obligations hereunder shall
be in addition to any rights that any Indemnified Person may have at common law
or otherwise.  Solely for the purpose of enforcing this agreement, we hereby
consent to personal jurisdiction and to service and venue in any court in which
any claim which is subject to this agreement is brought by or against any
Indemnified Person.  We acknowledge that in connection with the Engagement you
are acting as an independent contractor with duties owing solely to us.  YOU
HEREBY AGREE, AND WE HEREBY AGREE ON OUR OWN BEHALF AND, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, ON BEHALF OF OUR SECURITY HOLDERS, TO WAIVE ANY RIGHT TO
TRIAL BY JURY WITH RESPECT TO ANY CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF
THE ENGAGEMENT, YOUR PERFORMANCE THEREOF OR THIS AGREEMENT.

The provisions of this agreement shall apply to the Engagement (including
related activities prior to the date hereof) and any modification thereof and
shall remain in full force and effect regardless of the completion or
termination of the Engagement.  This agreement and any other agreements relating
to the Engagement shall be governed by and construed in accordance with the laws
of the state of New York, without regard to conflicts of law principles thereof.

Very truly yours,

ACCEPTED AND AGREED TO

THIS_________DAY OF MARCH_____________2006

EHRENKRANTZ, KING, NUSSBAUM, Inc.

WENTWORTH ENERGY, Inc.

By:/s/ John F. O'Brien

By: /s/ John Punzo

JOHN F. O'BRIEN

John Punzo

Managing Director--Investment Banking

CEO & Chairman

New York, New York 10022

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TO:

Wentworth Energy, Inc.

#1415 – 115 West 7th Street

Fort Worth, Texas

In connection with our engagement pursuant to our letter agreement of even date
herewith (the “Engagement”), Ehrenkrantz King Nussbaum, Inc. (“we”) agree to
indemnify and hold harmless Wentworth Energy, Inc. (“WNWG” or “you”) and its
affiliates, the respective directors, officers, partners, agents and employees
of WNWG and its affiliates, and each other person, if any, controlling WNWG or
any of its affiliates (collectively, “Indemnified Persons”), from and against,
and we agree that no Indemnified Person shall have any liability to us or our
owners, parents, affiliates, security holders or creditors for, any losses,
claims, damages or liabilities (including actions or proceedings in respect
thereof) (collectively “Losses”) (A) related to or arising out of (i) our
actions or failures to act (including statements or omissions made, or
information provided, by us or our agents) or (ii) actions or failures to act by
an Indemnified Person with our consent or in reliance on our actions or failures
to act, or (B) otherwise related to or arising out of the Engagement or your
performance thereof, except that this indemnification shall not apply to any
Losses that are finally judicially determined to have resulted from your bad
faith or gross negligence or breach of the letter agreement.  If such
indemnification is for any reason not available or insufficient to hold you
harmless, we agree to contribute to the Losses involved in such proportion as is
appropriate to reflect the relative benefits received (or anticipated to be
received) by us and by you with respect to the Engagement or, if such allocation
is judicially determined unavailable, in such proportion as is appropriate to
reflect other equitable considerations such as the relative fault of us on the
one hand and of you on the other hand .

We will reimburse each Indemnified Person for all expenses (including reasonable
fees and disbursements of counsel) as they are incurred by such Indemnified
Person in connection with investigating, preparing for or defending any action,
claim, investigation, inquiry, arbitration or other proceeding (“Action”)
referred to above (or enforcing this agreement or any related engagement
agreement), whether or not in connection with pending or threatened litigation
in which any Indemnified Person is a party, and whether or not such Action is
initiated or brought by you .  We further agree that we will not settle or
compromise or consent to the entry of any judgment in any pending or threatened
Action in respect of which indemnification may be sought hereunder (whether or
not an Indemnified Person is a party therein) unless we have given you
reasonable prior written notice thereof and used all reasonable efforts, after
consultation with you, to obtain an unconditional release of each Indemnified
Person from all liability arising therefrom.  In the event we are considering
entering into one or a series of transactions involving a merger or other
business combination or a dissolution or liquidation of all or a significant
portion of our assets, we shall promptly notify you in writing.  If requested by
WNWG, we shall then establish alternative means of providing for our obligations
set forth herein on terms and conditions reasonably satisfactory to WNWG.  

If multiple claims are brought against you in any Action with respect to at
least one of which indemnification is permitted under applicable law and
provided for under this agreement, we agree that any judgment, arbitration award
or other monetary award shall be conclusively deemed to be based on claims as to
which indemnification is permitted and provided for.  In the event that you are
called or subpoenaed to give testimony in a court of law, we agree to pay your
reasonable expenses and fees related thereto.  Our obligations hereunder shall
be in addition to any rights that any Indemnified Person may have at common law
or otherwise.  Solely for the purpose of enforcing this agreement, we hereby
consent to personal jurisdiction and to service and venue in any court in which
any claim which is subject to this agreement is brought by or against any
Indemnified Person.  You acknowledge that in connection with the Engagement we
are acting as an independent contractor with duties owing solely to you.  YOU
HEREBY AGREE, AND WE HEREBY AGREE ON OUR OWN BEHALF AND, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, ON BEHALF OF OUR SECURITY HOLDERS, TO WAIVE ANY RIGHT TO
TRIAL BY JURY WITH RESPECT TO ANY CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF
THE ENGAGEMENT, YOUR PERFORMANCE THEREOF OR THIS AGREEMENT.

The provisions of this agreement shall apply to the Engagement (including
related activities prior to the date hereof) and any modification thereof and
shall remain in full force and effect regardless of the completion or
termination of the Engagement.  This agreement and any other agreements relating
to the Engagement shall be governed by and construed in accordance with the laws
of the state of New York, without regard to conflicts of law principles thereof.

Very truly yours,

ACCEPTED AND AGREED TO

THIS_________DAY OF MARCH_____________2006

EHRENKRANTZ, KING, NUSSBAUM, Inc.

WENTWORTH ENERGY, Inc.

By: /s/ John F. O'Brien

By: /s/ John Punzo

JOHN F. O'BRIEN

John Punzo

Managing Director--Investment Banking

CEO & Chairman

New York, New York 10022

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