CLEAR SKIES GROUP, INC.
PLACEMENT AGENT AGREEMENT
Dated:
November 14, 2007
Westminster
Securities Corporation
100
Wall Street
New
York, NY 10005
Ladies
and Gentlemen:
The
undersigned, Clear Skies Group, Inc., a New York corporation,
(together with its successors, the “
Company ”),
proposes to issue and sell a minimum of $3,250,000 (“
Minimum Offering ”)
and up to $6,500,000 (“
Maximum Offering ”)
of its common stock, par value $0.001 per share (the “Common
Stock”), in units consisting of 50,000 shares of common stock
(“
Units ”)
at a purchase price of $25,000 per Unit in a private placement of
securities (the “
Offering ”).
This Placement Agent Agreement (“
Agreement ”)
is to confirm the arrangement with you, Westminster Securities
Corp. (the “
Placement Agent ”),
with respect to the sale of the Units by Placement Agent and
certain other selected broker-dealers acceptable to us as exclusive
placement agent for the Offering. As used herein, Company includes
the publicly-traded parent successor to the business and assets of
Company which will upon closing of the Offering will agree to be
bound by the terms and agreements hereof as if a party
hereto.
SECTION
1.
Offering Summary.
(a)
Securities .
The Units, the shares of the Company’s Common Stock
underlying the Units (“
Shares ”)
and the Placement Agent Warrants (as hereinafter defined) are
referred to collectively herein as the “
Securities ”.
The Securities shall conform in all material respects to
descriptions thereof contained in the Transaction Documents (as
hereinafter defined).
(b)
Documents .
The terms and conditions of the sale and issuance of the Units and
the rights held by the purchasers of the Units with respect to the
Offering and the securities underlying the Units will be as set
forth in (i) the private placement memorandum relating to the
Offering (ii) the agreements between the Company and the purchasers
of the Units (including, without limitation, the subscription
agreement, the registration rights agreement, and the
reconfirmation of subscription), and (iii) all exhibits, schedules
and supplements to the foregoing, and all documents included or
incorporated by reference therein (including, without limitation,
any of the Company’s filings or Company approved draft
filings with the SEC delivered to offerees of the Units so included
or incorporated) (all such documents hereinafter collectively
referred to as the “
Transaction Documents ”).
(c)
Timing .
The date on which the Offering is authorized by the Company to
commence is November 14, 2007 and is herein called the
“
Commencement Date .”
Each closing on the sale of Units is herein called the
“
Closing ”,
and each such date a “
Closing Date ”.
(d)
Exemption .
The Offering will not be registered with the Securities and
Exchange Commission (“
SEC ”)
nor with any state securities authority, but rather will be offered
as a private placement solely to accredited investors pursuant to
an exemption from registration under Regulation D (“
Regulation D ”)
promulgated under Section 4(2) and Rule 506 of the Securities Act
of 1933, as amended (“
Securities Act ”),
and available state securities law exemptions. The Units are to be
offered and sold in the Offering only to “accredited
investors”, as that term is defined in Rule 501(a)
promulgated under Regulation D.
SECTION
2.
Representations and Warranties of the Company.
The
Company hereby represents, warrants and covenants with the
Placement Agent as follows:
(a)
Subsidiaries .
As used herein, including with respect to the representations and
warranties contained herein, unless the context otherwise requires,
the term “Company” shall include the Company together
with all of its direct and indirect wholly owned subsidiaries, if
any (the “
Subsidiaries ”),
and all representations and warranties of the Company herein shall
also be deemed made on behalf of and with respect to each such
Subsidiary of the Company, except where the context indicates that
such representation and warranty applies only to the Company,
including, without limitation, any representations and warranties
relating to the capital stock of the Company. The Company currently
has no Subsidiaries. The Company intends to reorganize upon the
initial closing of the Offering and to have Subsidiaries pursuant
to the “reverse merger” transaction as described in the
Transaction Documents.
(b)
Disclosure .
The Transaction Documents, which have been prepared by the Company
and subject to the reasonable approval of the Placement Agent, will
be carefully prepared to disclose such information concerning the
Company that management of the Company determines would be material
to an investment opportunity in the Company.. To the knowledge of
the Company, the Transaction Documents as of their respective
dates, as may be amended and supplemented from time to time, are
true and correct in all material respects and as of each Closing
Date and do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which
they were made, not misleading.
(c)
Representations .
The Transaction Documents will include representations and
warranties of the Company in such form and covering such matters as
is usual and customary for a transaction of this
nature.
(d)
Compliance .
The Company will comply in all material respects with the
Transaction Documents.
(e)
Financials .
Except as disclosed in the Transaction Documents, the audited
financial statements of the Company for its most recent two fiscal
years and the unaudited financial statements for the interim period
since the end of the most recent fiscal year, each as included in
the Transaction Documents (collectively, the “
Financial Statements ”),
fairly present in all material respects the information purported
to be shown therein of the Company, at the respective dates to
which they apply; and such Financial Statements have been prepared
in conformity with GAAP consistently applied throughout the periods
involved and are in accordance in all material respects with the
books and records of the Company.
(f)
Litigation .
Except as disclosed in the Transaction Documents, there are no
actions, suits or proceedings at law or in equity pending, or to
the Company’s knowledge, threatened, against the Company
before or by any federal or state commission, regulatory body,
administrative agency or other governmental body wherein, either in
any case or in the aggregate, an unfavorable ruling, decision or
finding would have a material adverse effect on the financial
condition, results of operations, assets or business of the Company
or its Subsidiaries (a “
Material Adverse Effect ”).
(g)
No Conflicts. The
execution and delivery by the Company of this Agreement, the
consummation and performance of the transactions herein
contemplated, and compliance with the terms of this Agreement by
the Company will not conflict with, result in a material breach of,
or constitute a material default under, the Certificate of
Incorporation or the bylaws of the Company, in each case as
amended, or any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company is now a party or by
which it or any of its assets or properties is bound, or any law,
order, rule, regulation, writ, injunction, judgment or decree of
any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any of its
business or properties, to the extent that such conflict, breach or
default could have a Material Adverse Effect.
(h)
Survival .
All of the representations, agreements and warranties in this
Section 2 shall survive delivery of and payment for all or any part
of the Units for two (2) years from and after closing on the sale
of Units.
SECTION
3.
Issuance, Sale and Delivery of the Units.
(a)
Sale .
The Placement Agent hereby agrees to offer the Units directly to
subscribers identified by the Placement Agent on a “best
efforts, mini-max basis” for the Minimum Offering and up to
the Maximum Offering, as may be increased as provided in the
Transaction Documents.
(b)
Payment .
The Units will be offered for cash and for exchange of certain
existing debt securities of the Company as provided for in the
Transaction Documents. The cash proceeds of the Offering will be
deposited in escrow in a non-interest bearing account with
Signature Bank (“
Escrow Agent ”)
in accordance with the terms of the Transaction Documents and as
set forth in the escrow agreement to be executed among the Company,
the Placement Agent, and the Escrow Agent.
(c)
Closing .
A Closing will not be held unless as least the Minimum Offering has
been raised and the subscribers for at least the Minimum Offering
have reconfirmed their subscription pursuant to the procedures set
forth in the Transaction Documents. During the period of escrow,
subscribers will not be entitled to a return of their
subscriptions, except as required by law. The Offering will
continue until the first to occur of (i) the completion of the
Maximum Offering (as may be increased as provided in the
Transaction Documents), (ii) December 15, 2007 (unless extended by
the Company to no later than January 31, 2008) or (iii) the
termination of the Offering by the Company. On each scheduled
Closing Date as the Company and the Placement Agent may agree, the
Company shall deliver to the Placement Agent such opinions,
documents and certificates as are provided for herein and shall
cause the certificates representing the Securities comprising the
Units to be issued as promptly as possible and in any event within
ten (10) days of each Closing Date. No funds shall be disbursed
from escrow in connection with the Closing without the written
consent of both the Company and the Placement Agent.
(d)
Return of Funds .
Unless a Closing is held, the Offering will terminate and all funds
theretofore received from the sale of the Units will be promptly
returned to the subscribers without deduction therefrom or interest
thereon. Notwithstanding anything contained herein to the contrary,
the Company, in its sole discretion, shall have the right to accept
or reject any subscription upon which the escrow agent shall be
instructed to return any rejected amount to any potential investor
together with the appropriate cancellation of any signed
subscription agreements prior to consummation of such potential
investors’ purchase of such Units (or applicable portion
thereof), without interest or deduction. The Company may withdraw
its offer to sell the Units at any time prior to acceptance of a
subscription or terminate the offering. No purchase will be
effective unless and until accepted by the Company and included in
a Closing.
(c)
The parties hereto represent that at each Closing, the
representations and warranties herein contained, and the
statements contained in all certificates theretofore or
simultaneously delivered by any party to another pursuant to
this Agreement, shall be true and correct, except as otherwise
disclosed in any certificate delivered at such
Closing.
SECTION
4.
Covenants of the Company .
The Company covenants and agrees with the Placement Agent
that:
(a)
True and Complete .
On the Commencement Date, and on each Closing Date, the Transaction
Documents (as amended or as supplemented, if the same shall have
been amended or supplemented) will not (i) contain an untrue
statement of a material fact and will not omit to state a material
fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which
they were made, not misleading and (ii) contain any material,
non-public information required to be disclosed to the general
public in order to comply with Regulation FD promulgated under the
Securities Exchange Act of 1934, as amended, unless all recipients
of the Transaction Documents execute a confidentiality agreement in
form and substance acceptable to the Company and the Placement
Agent, prior to receipt of the Transaction Documents.
(b)
Amendments .
The Company will prepare promptly upon the reasonable request of
the Placement Agent, such amendments or supplements to the
Transaction Documents, in such form as in the opinion of counsel to
the Placement Agent may be reasonably necessary or advisable in
connection with the Offering. In addition, if at any time prior to
the final Closing of the Offering, (i) an event relating to or
affecting the Company shall have occurred which, in the judgment of
the Company or in the opinion of counsel for the Placement Agent,
would cause the Transaction Documents as then in effect to include
an untrue statement of a material fact or to omit to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading, or (ii) it is otherwise
necessary to amend or supplement the Transaction Documents, the
Company shall promptly notify the Placement Agent of the occurrence
and shall promptly prepare and deliver to the Placement Agent,
without charge, sufficient copies of an amended or supplemented
Transaction Documents, and shall use its reasonable best efforts to
cause the appropriate state securities authorities to take any
required action with regard to any amendment as may be necessary to
permit the lawful use of the Transaction Documents, as so amended
and supplemented, in connection with the Offering.
(c)
Blue Sky .
The Company’s counsel shall prepare and file any necessary
filings, in the reasonable opinion of Company’s counsel or
Placement Agent’s counsel, under the state securities, or
so-called “blue sky” laws and regulations (the
“
Blue Sky Laws ”)
and the Company shall pay the filing fees and all other expenses in
connection with any such qualification in such jurisdictions as the
Placement Agent shall designate, and to continue such qualification
in effect so long as required for the purposes of the Offering;
provided, however, that the Company shall not be required to
qualify as a foreign corporation or to file a consent to service of
process in any jurisdiction in any action other than one arising
out of the offering or sale of the Units. The Company will provide
copies to the Placement Agent of all documents, exhibits and
information filed in connection with the qualification of the Units
for sale under the Blue Sky Laws.
(d)
Rights .
The forms of the Transaction Documents shall contain the
information, representations, rights, warranties and covenants as
shall be reasonably acceptable to Placement Agent and its counsel.
The Company shall not release any Transaction Documents unless they
are reasonably acceptable to the Placement Agent and its
counsel.
(e)
Securities .
At each Closing, (i) the Securities will conform, in all material
respects, to all statements with regard thereto contained in the
Transaction Documents, (ii) the Securities shall have been duly and
validly authorized , (iii) each portion of the Securities, when
issued, exercised and/or paid for (as applicable), or otherwise
earned, each in accordance with its terms, will be validly issued,
fully paid and nonassessable and (iv) all shares of Common Stock
that comprise the Securities shall have been duly and validly
reserved for issuance. The Company shall ensure that all exercises
and conversions properly requested in accordance with the terms of
the Securities shall be effected promptly by the Company following
payment of any applicable exercise or conversion
price.
SECTION
5.
Other Agreements of the Company and the Placement Agent
.
(a)
Engagement Letter .
The Company and the Placement Agent hereby acknowledge that they
are parties to an engagement letter dated June 27, 2007 (the
“
Engagement Letter ”),
which contains various agreements and representations among them.
The Engagement Letter shall continue to remain in full force and
effect and shall survive any termination of this Agreement;
provided that this Agreement may supplement the Engagement Letter
only with respect to the terms and conditions of the Offering
described herein. The Company will pay all cash and security-based
compensation and expenses due to the Placement Agent in the manner,
amounts and at times set forth in the Engagement Letter, as
summarized below and supplemented herein.
(b)
Cash Compensation .
As per the Engagement Letter, the Placement Agent’s cash
commission shall be equal to eight percent (8%) of the gross cash
proceeds received by the Company from the sale of Units.
Notwithstanding the for
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