FINANCIAL ADVISORY AGREEMENT December 29, 2010
Exhibit
10.3
December
29, 2010
Stonegate
Securities, Inc.
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▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Ladies
and Gentlemen:
ZBB
Energy Corporation, a Wisconsin corporation (the “Company”), proposes,
subject to the terms and conditions of Stock Purchase Agreements dated of even
date herewith between the Company and certain Investors named therein (the
“Purchase
Agreements”), to issue and sell shares (the “Shares”) of the
Company’s Common Stock, no par value per share (the “Common Stock”)
directly to the Investors on a self-underwritten best efforts basis (the “Offering”). Stonegate
Securities, Inc. (“Stonegate”) has acted
as a financial advisor to the Company, including in connection with the Offering
and the Company and Stonegate now desire to clarify in writing the terms and
conditions of such financial advisory services in this Financial Advisory
Agreement (the “Agreement”). For
purposes of this Agreement, “Closing” means the
consummation of the purchase and sale of the Shares by the Investors and
Company, respectively, and “Closing Date” means
the date upon which Closing occurs.
The
Company hereby confirms and clarifies its agreement with Stonegate as
follows:
Section
1. Financial Advisory Services, Compensation and Expenses.
(a) The
Company and Stonegate hereby acknowledge and agree that Stonegate has acted
solely as a financial advisor in connection with the Offering, and that
(i) the terms of the Offering are subject to market conditions and
negotiations between the Company and the Investors directly, (ii) Stonegate
is not serving as a placement agent for the Offering and has not identified
potential Investors to the Company in conjunction with the Offering,
(iii) Stonegate has made no commitment to purchase any of the Shares, and
(iv) Stonegate shall have no authority to bind the Company regarding a sale
and issuance of the Shares; except, however, Stonegate
may, as an accommodation to the Company and solely upon the Company’s request,
process each Investor’s purchase through such Investor’s executing brokerage
account previously established at Stonegate on a delivery versus payment (“DVP”)
basis, in which case the Company will agree to release the Shares to be
purchased by the Investors to Stonegate prior to payment for such Shares so that
the delivery can be made, and once the DVP transaction is complete, Stonegate
will wire the proceeds from sale of such Shares to the Company.
(b) The
Company acknowledges that any advice given by Stonegate or its representatives
to the Company is solely for the benefit and use of the Company, the Board of
Directors of the Company (the “Board”) and the
management of the Company and may not be used, reproduced, disseminated, quoted
or referred to, without Stonegate’s prior written consent.
(c) The
Company confirms that as compensation for financial advisory services rendered
in connection with the Offering, and provided that the Shares are sold to
Investors in the Offering, on the Closing Date of the Offering, the Company
shall pay to Stonegate a $27,500 cash fee (the “Cash Fee”). The Cash
Fee shall be delivered to Stonegate no later than 5:00 p.m. Central Time on the
Closing Date.
Exhibit
10.3
(d) If
the Closing occurs, the Company also agrees to reimburse the costs, fees and
expenses incurred by Stonegate in connection with the Offering, including
attorneys’ fees and expenses and costs related to communications with the
Investors and potential investors at the Company’s request in an amount equal to
$5,000.
(e)
Stonegate acknowledges that the Company has no obligation to complete the
Offering. If the Closing Date of the Offering does not occur prior to January
31, 2011, the Company and Stonegate acknowledge that this Agreement will
terminate and the Company will have no payment obligations under this
Agreement.
Section
2. Representations and Warranties of the Company.
The
Company represents and warrants to Stonegate, and to the Investors as
anticipated by Section 8 hereof, as of the date hereof and the Closing
Date:
(a) Organization, Good Standing
and Qualification. Each of the Company and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to carry on its business as now conducted and to own or lease its
properties, in each case as described in the SEC Filings. Each of the Company
and its Subsidiaries is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property makes such qualification or
leasing necessary unless the failure to so qualify has not had and could not
reasonably be expected to have a material adverse effect on (i) the assets,
liabilities, results of operations, condition (financial or otherwise), business
or prospects of the Company and its Subsidiaries taken as a whole, or
(ii) the ability of the Company to perform its obligations under this
Agreement (a “Material
Adverse Effect”). For purposes of this Agreement, a “Subsidiary” of any
Person means another Person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect at
least a majority of its board of directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first Person. “Person” means an
individual, corporation, partnership, limited liability company, trust, business
trust, association, joint stock company, joint venture, sole proprietorship,
unincorporated organization, governmental authority or any other form of entity
not specifically listed herein.
(b) Authorization. The
Company has the corporate power and authority to enter into this Agreement and
has taken all requisite action on its part, its officers, directors and
shareholders necessary for (i) the authorization, execution and delivery of
this Agreement, (ii) the authorization, execution and delivery of the
Purchase Agreements, (iii) the authorization of the performance of all
obligations of the Company hereunder and under the Purchase Agreements, and
(iv) the authorization, issuance (or reservation for issuance) and delivery
of the Shares under the Purchase Agreements. This Agreement and each of the
Purchase Agreements constitute the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors’
rights generally and to general equitable principles.
Exhibit
10.3
(c) Capitalization;
Subsidiaries.
(i) The
Company has duly and validly authorized capital stock as set forth in the SEC
Filings and in the Articles of Incorporation of the Company, as amended and as
in effect as of the Closing Date (the “Articles of
Incorporation”). All of the issued and outstanding shares of the
Company’s capital stock have been duly authorized and validly issued and are
fully paid, nonassessable and free of pre-emptive rights and were issued in full
compliance with applicable state and federal securities law and any rights of
third parties. Except as described in the SEC Filings, all of the issued and
outstanding shares of capital stock of each Subsidiary have been duly authorized
and validly issued and are fully paid, nonassessable and free of pre-emptive
rights, were issued in full compliance with applicable state and federal
securities law and any rights of third parties and are owned by the Company,
beneficially and of record, subject to no lien, encumbrance or other adverse
claim. Except as described in the SEC Filings, no Person is entitled to
pre-emptive or similar statutory or contractual rights with respect to any
securities of the Company. Except as described in the SEC Filings, there are no
outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of any character under which the Company or any of
its Subsidiaries is or may be obligated to issue any equity securities of any
kind and except as contemplated by the Purchase Agreements, neither the Company
nor any of its Subsidiaries is currently in negotiations for the issuance of any
equity securities of any kind. Except as described in the SEC Filings, there are
no voting agreements, buy-sell agreements, option or right of first purchase
agreements or other agreements of any kind among the Company and any of the
securityholders of the Company relating to the securities of the Company held by
them. Except as described in the SEC Filings, no Person has the right to require
the Company to register any securities of the Company under the Securities Act
of 1933, as amended, or any successor statute, and the rules and regulations
promulgated thereunder (the “1933 Act”), whether
on a demand basis or in connection with the registration of securities of the
Company for its own account or for the account of any other Person. Except as
described in the SEC Filings, the issuance and sale of the Shares pursuant to
the Purchase Agreements will not obligate the Company to issue shares of Common
Stock or other securities to any other Person (other than the Investors) and
will not result in the adjustment of the exercise, conversion, exchange or reset
price of any outstanding security. Except as described in the SEC Filings, the
Company does not have outstanding any shareholder purchase rights or “poison
pill” or any similar arrangement in effect giving any Person the right to
purchase any equity interest in the Company upon the occurrence of certain
events.
(ii) The
Company has no significant subsidiary (as such term is defined in Rule 1-02(w)
of Regulation S-X promulgated by the Commission) other than the Subsidiaries
disclosed in the SEC Filings. All of the issued and outstanding shares of
capital stock or other equity interests of each Subsidiary have been duly and
validly authorized and issued, are fully paid and non-assessable and, except as
otherwise described in the SEC Filings, are owned directly by the Company or
through its wholly owned Subsidiaries, free and clear of all liens,
encumbrances, equities or claims. There is no outstanding option, right or
agreement of any kind relating to the issuance, sale or transfer of any capital
stock or other equity securities of the Subsidiaries to any person or entity
except the Company, and none of the outstanding shares of capital stock or other
equity interests of any Subsidiary was issued in violation of any preemptive or
other rights to subscribe for or to purchase or acquire any securities of
any of the Subsidiaries. Except for the Subsidiaries, the Company owns no
beneficial interest, directly or indirectly, in any corporation, partnership,
joint venture or other business entity.
Exhibit
10.3
(d) Issuance of the
Shares.
(i) The
Shares have been duly and validly authorized and, when issued and paid for
pursuant to the Purchase Agreements, will be validly issued, fully paid and
nonassessable, and shall be free and clear of all encumbrances and restrictions
except for restrictions on transfer imposed by applicable securities laws, if
any.
(ii) For
purposes of this Agreement:
(1)
“Prospectus”
means the final prospectus filed for the Registration Statement (including the
documents incorporated by reference in the Registration Statement) including the
documents incorporated by reference in the final prospectus as filed with the
SEC on May 1, 2009.
(2)
“Prospectus
Supplement” means the supplement to the Prospectus complying with Rule
424(b) of the 1933 Act that is filed with the SEC and delivered by the Company
to each Investor prior to the execution and delivery of the Purchase Agreement,
including the documents incorporated by reference in the prospectus
supplement.
(3) “Registration
Statement” means the registration statement on Form S-3 (SEC File
No. 333-156941) filed by the Company with the SEC pursuant to the 1933 Act
for the registration of the Shares, as such Registration Statement may be
amended and supplemented from time to time (including pursuant to Rule 462(b) of
the 1933 Act), including all documents filed as part thereof or incorporated by
reference therein, and including all information deemed to be a part thereof at
the time of effectiveness pursuant to Rule 430B of the 1933 Act.
Exhibit
10.3
(iii) The
Shares are being issued pursuant to the Registration Statement and the issuance
of the Shares has been registered by the Company pursuant to the 1933 Act. The
Company has prepared and filed the Registration Statement with the U.S.
Securities and Exchange Commission (the “SEC”) in accordance
with the provisions of the 1933 Act. The Registration Statement was declared
effective by the SEC on May 13, 2009. The Registration Statement is effective
pursuant to the 1933 Act and available for the issuance of the Shares
thereunder, and the Company has not received any written notice that the SEC has
issued or intends to issue a stop-order or other order with respect to the
Registration Statement or the Prospectus or that the SEC has otherwise
(i) suspended or withdrawn the effectiveness of the Registration Statement
or (ii) issued any order preventing or suspending the use of the
Prospectus, in either case, either temporarily or permanently or intends or has
threatened in writing to do so. The “Plan of Distribution” section of the
Registration Statement permits the issuance of the Shares under the terms of the
Purchase Agreements. Upon receipt of the Shares, the Investors will have good
and marketable title to such Shares and such Shares will be immediately freely
tradable on The NYSE Amex. At the time the Registration Statement and any
amendments thereto became effective, at the date of this Agreement and at each
deemed effective date of the Registration Statement pursuant to
Rule 430B(f)(2) of the 1933 Act, the Registration Statement and any
amendments thereto complied and will comply in all material respects with the
requirements of the 1933 Act and did not and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading; and
the Prospectus and any amendments or supplements thereto, at the time the
Prospectus or any amendment or supplement thereto was issued and on the Closing
Date, complied and will comply in all material respects with the requirements of
the 1933 Act and did not and will not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company meets all of the requirements for the use of a
registration statement on Form S-3 (“Form S-3”) pursuant
to the 1933 Act for the offering and sale of the Shares contemplated by the
Purchase Agreements, including compliance with Instruction I.B.6. to Form S-3
and the offering limitations therein, and the SEC has not notified the Company
of any objection to the use of the form of the Registration Statement pursuant
to Rule 401(g)(1) of the 1933 Act. The Registration Statement, as of its
effective date, meets the requirements set forth in Rule 415(a)(1)(x) pursuant
to the 1933 Act. At the earliest time after the filing of the Registration
Statement that the Company or another offering participant made a bona fide
offer (within the meaning of Rule 164(h)(2) of the ▇▇▇▇ ▇▇▇) relating to the
Shares, the Company was not and is not an “Ineligible Issuer” (as defined in
Rule 405 of the 1933 Act). The Company (i) has not distributed any offering
material in connection with the offering and sale the Shares and (ii) until
no Investor holds any of the Shares, shall not distribute any offering material
in connection with the offering and sale of the Shares, or by, the Investors, in
each case, other than the Registration Statement, the Prospectus, the Prospectus
Supplement or any amendment or supplement thereto required pursuant to
applicable law. The Company has not issued and will not issue any Issuer Free
Writing Prospectus (as defined by Rule 433 pursuant to the ▇▇▇▇ ▇▇▇) pertaining
to the sale and offering of the Shares.
(e) Consents. Except as
described in the SEC Filings, the execution, delivery and performance by the
Company of this Agreement and the Purchase Agreements, and the offer, issuance
and sale of the Shares require no consent of, action by or in respect of, or
filing with, any Person, governmental body, agency, or official or of or with
any self-regulatory organization or other non-governmental regulatory authority
(including, without limitation, the NYSE Amex (“Amex”)), or approval
of the stockholders of the Company (including, but not limited to, such as may
be required pursuant to the NYSE Amex Company Guide), is required in connection
with the issuance and sale of the Shares or the consummation by the Company of
the transactions contemplated by the Purchase Agreements, other than
(i) filings as may be required under the Securities Act and state
securities law and (ii) under the rules and regulations of the Financial
Industry Regulatory Authority (“FINRA”), which the
Company undertakes to file within the applicable time periods and (iii) receipt
of clearance from NYSE Amex for issuance of the Shares which is a closing
condition under the Purchase Agreements. Subject to the accuracy of the
representations and warranties of each Investor set forth in the Purchase
Agreements, the Company has taken all action necessary to exempt the issuance
and sale of the Shares from the provisions of any shareholder rights plan or
other “poison pill” arrangement, any anti-takeover, business combination or
control share law or statute binding on the Company or to which the Company or
any of its assets and properties may be subject and any provision of the
Articles of Incorporation or the Company’s Bylaws, as amended and as in effect
as of the Closing Date (the “Bylaws”), that is or
could reasonably be expected to become applicable to the Investors as a result
of the transactions contemplated hereby, including, without limitation, the
issuance of the Shares and the ownership, disposition or voting of the Shares by
the Investors or the exercise of any right granted to the Investors pursuant to
the Purchase Agreements.
Exhibit
10.3
(f) SEC Filings;
Business.
(i) The
Company has made available to the Investors through the ▇▇▇▇▇ system of the SEC
(“▇▇▇▇▇”), true
and complete copies of the Company’s most recent Annual Report on Form 10-K for
the fiscal year ended June 30, 2010 (as amended prior to the date hereof,
the “10-K”),
and all other reports filed by the Company pursuant to Sections 13(a), 13(e), 14
and 15(d) of the Securities Exchange Act of 1934, as amended, or any successor
statute, and the rules and regulations promulgated thereunder (the “1934 Act”) since the
filing of the 10-K and during the twelve (12) months preceding the date
hereof (the foregoing materials, including the exhibits thereto and the
documents incorporated by reference therein, together with the Prospectus and
the Prospectus Supplement, collectively, the “SEC Filings”). The
SEC Filings are the only filings required of the Company pursuant to the 1934
Act for such period and each SEC Filing was filed in a timely manner. The
Company and its Subsidiaries are engaged in all material respects only in the
business described in the SEC Filings and the SEC Filings contain a complete and
accurate description in all material respects of the business of the Company and
its Subsidiaries, taken as a whole.
(ii) The
statements set forth in each of the SEC Filings describing the Shares, this
Agreement and the Purchase Agreements, insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate, complete
and fair in all material respects.
(iii) Any
statistical, industry-related and market-related data included or incorporated
by reference in the Registration Statement, the Prospectus or the Prospectus
Supplement, are based on or derived from sources that the Company reasonably and
in good faith believes to be reliable and accurate, and such data agree with the
sources from which they are derived.
(g) Use of Proceeds. The
net proceeds of the sale of the Shares pursuant to the Purchase Agreements shall
be used by the Company for the purposes described in the Prospectus
Supplement.
(h) No Material Adverse
Change. Since June 30, 2010, except as described in the SEC Filings,
there has not been:
(i) any
change in the consolidated assets, liabilities, financial condition or operating
results of the Company from that reflected in the financial statements included
in the Company’s Quarterly Report on Form 10-Q for the quarter ended September
30, 2010, except for changes in the ordinary course of business which have not
had and could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate;
Exhibit
10.3
(ii) any
declaration or payment of any dividend, or any authorization or payment of any
distribution, on any of the capital stock of the Company, or any redemption or
repurchase of any securities of the Company;
(iii) any
material damage, destruction or loss, whether or not covered by insurance to any
assets or properties of the Company or its Subsidiaries;
(iv) any
waiver, not in the ordinary course of business, by the Company or any Subsidiary
of a material right or of a material debt owed to it;
(v) any
satisfaction or discharge of any lien, claim or encumbrance or payment of any
obligation by the Company or a Subsidiary, except in the ordinary course of
business and which is not material to the assets, properties, financial
condition, operating results or business of the Company and its Subsidiaries
taken as a whole (as such business is presently conducted and as it is proposed
to be conducted);
(vi) any
change or amendment to the Articles of Incorporation (other than in connection
with the transactions contemplated hereby) or Bylaws, or material change to any
Material Contract or arrangement by which the Company or any Subsidiary is bound
or to which any of their respective assets or properties is
subject;
(vii) any
material labor difficulties or labor union organizing activities with respect to
employees of the Company or any Subsidiary;
(viii)
any material transaction entered into by the Company or a Subsidiary other than
in the ordinary course of business;
(ix) the
loss of the services of any key employee, or material change in the composition
or duties of the senior management of the Company or any
Subsidiary;
(x) the
loss or, to the Company’s Knowledge, threatened loss of any customer which has
had or could reasonably be expected to have a Material Adverse Effect;
or
(xi) any
other event or condition of any character that has had or could reasonably be
expected to have a Material Adverse Effect.
For
purposes of this Agreement, “Company’s Knowledge”
means the actual knowledge of the executive officers (as defined in Rule 405
under the ▇▇▇▇ ▇▇▇) of the Company, after due inquiry; “Material Contract”
means any contract, instrument or other agreement to which the Company or any
Subsidiary is a party or by which it is bound which has been filed as an exhibit
to the SEC Filings pursuant to Item 601(b)(4) or Item 601(b)(10) of
Regulation S-K.
Exhibit
10.3
(i) SEC
Filings.
(i) At
the time of filing thereof, the SEC Filings complied as to form in all material
respects with the requirements of the 1934 Act and did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading.
(ii) Each
registration statement and any amendment thereto filed by the Company since
January 1, 2009 pursuant to the 1933 Act and the rules and regulations
thereunder, as of the date such statement or amendment became effective,
complied as to form in all material respects with the 1933 Act and did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein not misleading; and each prospectus filed pursuant to Rule 424(b)
under the 1933 Act, as of its issue date and as of the closing of any sale of
securities pursuant thereto did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The SEC has not issued
any stop order or other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the 1933 Act or the 1934
Act.
(j) No Conflict, Breach,
Violation or Default. Except as described in the SEC Filings, the
execution, delivery and performance of this Agreement and the Purchase
Agreements by the Company and the issuance and sale of the Shares will not
(i) conflict with or result in a breach or violation of (a) any of the
terms and provisions of, or constitute a default under the Articles of
Incorporation or the Bylaws (true and complete copies of which have been made
available to the Investors through ▇▇▇▇▇), or (b) any statute, rule,
regulation or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company, any Subsidiary or any of their
respective assets or properties, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any lien, encumbrance or other adverse
claim upon any of the properties or assets of the Company or any Subsidiary or
give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any Material
Contract, except in the case of clauses (i)(b) and
(ii) above, such
as could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.
(k) Tax Matters. The
Company and each Subsidiary have prepared and filed (or filed applicable
extensions therefore) all tax returns required to have been filed by the Company
or such Subsidiary with all appropriate governmental agencies and paid all taxes
shown thereon or otherwise owed by it, other than any such taxes which the
Company or any Subsidiary are contesting in good faith and for which adequate
reserves have been provided and reflected in the Company’s financial statements
included in the SEC Filings. The charges, accruals and reserves on the books of
the Company in respect of taxes for all fiscal periods are adequate in all
material respects, and there are no material unpaid assessments against the
Company or any Subsidiary nor, to the Company’s Knowledge, any basis for the
assessment of any additional taxes, penalties or interest for any fiscal period
or audits by any federal, state or local taxing authority except for any
assessment which is not material to the Company and its Subsidiaries, taken as a
whole. All taxes and other assessments and levies that the Company or any
Subsidiary is required to withhold or to collect for payment have been duly
withheld and collected and paid to the proper governmental entity or third party
when due, other than any such taxes which the Company or any Subsidiary are
contesting in good faith and for which adequate reserves have been provided and
reflected in the Company’s financial statements included in the SEC Filings.
There are no tax liens or claims pending or, to the Company’s Knowledge,
threatened in writing against the Company or any Subsidiary or any of their
respective assets or property. Except as described in the SEC Filings, there are
no outstanding tax sharing agreements or other such arrangements between the
Company and any Subsidiary or other corporation or entity.
Exhibit
10.3
(l) Title to Properties.
Except as disclosed in the SEC Filings, the Company and each Subsidiary have
good and marketable title to all real properties and all other properties and
assets (excluding Intellectual Property assets which are the subject of Section 2(o)
hereof) owned by it, in each case free from liens, encumbrances and defects that
would materially affect the value thereof or materially interfere with the use
made or currently planned to be made thereof by them; and except as disclosed in
the SEC Filings, the Company and each Subsidiary hold any leased real or
personal property under valid and enforceable leases with no exceptions that
would materially interfere with the use made or currently planned to be made
thereof by them.
(m) Certificates, Authorities
and Permits. The Company and each Subsidiary possess adequate
certificates, authorities or permits issued by appropriate governmental agencies
or bodies necessary to conduct the business now operated by it, except to the
extent failure to possess such certificates, authorities or permits could not
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate, and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to the Company or such
Subsidiary, could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.
(n) Labor
Matters.
(i)
Except as set forth in the SEC Filings, the Company is not a party to or bound
by any collective bargaining agreements or other agreements with labor
organizations. The Company has not violated in any material respect any laws,
regulations, orders or contract terms, affecting the collective bargaining
rights of employees, labor organizations or any laws, regulations or orders
affecting employment discrimination, equal opportunity employment, or employees’
health, safety, welfare, wages and hours.
(ii) (1)
There are no labor disputes existing, or to the Company’s Knowledge, threatened,
involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts
or any other disruptions of or by the Company’s employees, (2) there are no
unfair labor practices or petitions for election pending or, to the Company’s
Knowledge, threatened before the National Labor Relations Board or any other
federal, state or local labor commission relating to the Company’s employees,
(3) no demand received by the Company for recognition or certification
heretofore made by any labor organization or group of employees is pending with
respect to the Company, and (4) to the Company’s Knowledge, the Company
enjoys good labor and employee relations with its employees and labor
organizations.
Exhibit
10.3
(iii) The
Company is, and at all times has been, in compliance with all applicable laws
respecting employment (including laws relating to classification of employees
and independent contractors) and employment practices, terms and conditions of
employment, wages and hours, and immigration and naturalization, except where
the failure to so comply could not reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate. There are no claims pending
against the Company before the Equal Employment Opportunity Commission or any
other administrative body or in any court asserting any violation of Title VII
of the Civil Rights Act of 1964, the Age Discrimination Act of 1967, 42 U.S.C.
§§ 1981 or 1983 or any other federal, state or local Law, statute or ordinance
barring discrimination in employment.
(iv)
Except as disclosed in the SEC Filings, the Company is not a party to, or bound
by, any employment or other contract or agreement that contains any severance,
termination pay or change of control liability or obligation, including, without
limitation, any “excess parachute payment,” as defined in Section 280G(b)
of the Internal Revenue Code of 1986, as amended.
(v) To
the Company’s Knowledge, the Company has no liability for the improper
classification by the Company of its employees as independent contractors or
leased employees prior to the Closing.
(o) Intellectual
Property. The Company and the Subsidiaries own, or have obtained valid
and enforceable licenses for, or other rights to use, the Intellectual Property
necessary for the conduct of the business of the Company and the Subsidiaries as
currently conducted and as described in the SEC Filings as being owned or
licensed by them, except where the failure to own, license or have such
rights could not reasonably be expected to result in a Material Adverse Effect,
individually or in the aggregate. For purposes of this Agreement, “Intellectual
Property” means all of the following: (i) patents, patent
applications, patent disclosures and inventions (whether or not patentable and
whether or not reduced to practice); (ii) trademarks, service marks, trade
dress, trade names, corporate names, logos, slogans and Internet domain names,
together with all goodwill associated with each of the foregoing;
(iii) copyrights and copyrightable works; (iv) registrations,
applications and renewals for any of the foregoing; and (v) proprietary
computer software (including but not limited to data, data bases and
documentation). Except as described in the SEC Filings, (i) to the
Company’s Knowledge, there are no third parties who have or will be able to
establish rights to any Intellectual Property, except for the ownership rights
of the owners of the Intellectual Property which is licensed to the Company as
described in the SEC Filings or where such rights could not reasonably be
expected to result in a Material Adverse Effect, individually or in the
aggregate, (ii) there is no pending or, to the Company’s Knowledge, threat
of any, action, suit, proceeding or claim by others challenging the Company’s or
any Subsidiary’s rights in or to any Intellectual Property owned by or licensed
to the Company or any Subsidiary or claiming that the use of any Intellectual
Property by the Company or any Subsidiary in their respective businesses as
currently conducted infringes, violates or otherwise conflicts with the
intellectual property rights of any third party, and (iii) to the Company’s
Knowledge, the use by the Company or any Subsidiary of any Intellectual Property
by the Company or any Subsidiary in their respective businesses as currently
conducted does not infringe, violate or otherwise conflict with the intellectual
property rights of any third party.
Exhibit
10.3
(p) Environmental
Matters. To the Company’s Knowledge, neither the Company nor any
Subsidiary is in violation of any statute, rule, regulation, decision or order
of any governmental agency or body or any court, domestic or foreign, relating
to the use, disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environment or human exposure to hazardous
or toxic substances (collectively, “Environmental Laws”),
owns or operates any real property contaminated with any substance that is
subject to any Environmental Laws, is liable for any off-site disposal or
contamination pursuant to any Environmental Laws, or is subject to any claim
relating to any Environmental Laws, which violation, contamination, liability or
claim has had or could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate; and there is no pending or, to the Company’s
Knowledge, threatened investigation that might lead to such a
claim.
(q) Litigation. Except as
described in the SEC Filings, (i) there are no pending actions, suits or
proceedings against or affecting the Company, its Subsidiaries or any of its or
their properties before or by any federal, state, local or foreign governmental
or regulatory commission, board, body, authority or agency, or before or by any
self-regulatory organization or other non-governmental regulatory authority
(including, without limitation, Amex), and (ii) to the Company’s Knowledge,
no such actions, suits or proceedings are threatened, except for any such
proceeding, which if resolved adversely to the Company or any Subsidiary, could
not reasonably be expected to have a Material Adverse Effect, individually or in
the aggregate. Neither the Company nor any Subsidiary, nor any director or
officer thereof, is or has been the subject of any action involving a claim of
violation of or liability under federal or state securities laws or a claim of
breach of fiduciary duty. There has not been, and to the Company’s Knowledge,
there is not pending or contemplated, any investigation by the SEC involving the
Company or any current or former director or officer of the
Company.
(r) Financial Statements.
The financial statements included in each SEC Filing comply in all material
respects with applicable accounting requirements and the rules and regulations
of the SEC with respect thereto as in effect at the time of filing (or to the
extent corrected by a subsequent restatement) and present fairly, in all
material respects, the consolidated financial position of the Company as of the
dates shown and its consolidated results of operations and cash flows for the
periods shown, and such financial statements have been prepared in conformity
with United States generally accepted accounting principles applied on a
consistent basis (“GAAP”) (except as may
be disclosed therein or in the notes thereto, and, in the case of quarterly
financial statements, as permitted by Form 10-Q under the 1934 Act). There are
no other financial statements (historical or pro forma) that are required to be
included in the SEC Filings; and the Company and the Subsidiaries do not have
any material liabilities or obligations, direct or contingent (including any
off-balance sheet obligations), not disclosed in the SEC Filings. The SEC
Filings do not include any “non-GAAP financial measures” (as such term is
defined by the rules and regulations of the SEC). Except as set forth in the SEC
Filings, neither the Company nor any of its Subsidiaries has incurred any
liabilities, contingent or otherwise, except those incurred in the ordinary
course of business, consistent (as to amount and nature) with past practices
since the date of such financial statements, none of which, individually or in
the aggregate, have had or could reasonably be expected to have a Material
Adverse Effect.
Exhibit
10.3
(s) Insurance Coverage.
The Company and each Subsidiary maintains in full force and effect insurance
coverage that is customary for comparably situated companies for the business
being conducted and properties owned or leased by the Company and each
Subsidiary. Neither the Company nor any of the Subsidiaries has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a
Material Adverse Effect.
(t) Compliance with Amex
Continued Listing Requirements. Except as described in the SEC Filings,
(a) the Company is in compliance with applicable Amex continued listing
requirements, (b) there are no proceedings pending or, to the Company’s
Knowledge, threatened against the Company relating to the continued listing of
the Common Stock on Amex, (c) the Company has not received any currently
pending notice of the delisting of the Common Stock from Amex and (d) the
Company has taken no action designed to terminate, or likely to have the effect
of terminating, the listing of the Common Stock.
(u) Brokers and Finders.
No Person will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company, any
Subsidiary or an Investor for any commission, fee or other compensation pursuant
to any agreement, arrangement or understanding entered into by or on behalf of
the Company, other than a fee payable pursuant to this Agreement for services as
a financial advisor.
(v) Questionable Payments.
Neither the Company nor any of its Subsidiaries nor, to the Company’s
Knowledge, any of their respective current or former shareholders, directors,
officers, employees, agents or other Persons acting on behalf of the Company or
any Subsidiary, has on behalf of the Company or any Subsidiary or in connection
with their respective businesses: (a) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (b) made any direct or indirect unlawful payments to
any governmental officials or employees from corporate funds;
(c) established or maintained any unlawful or unrecorded fund of corporate
monies or other assets; (d) made any false or fictitious entries on the
books and records of the Company or any Subsidiary; or (e) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment of any nature.
(w) Transactions with
Affiliates. Except as disclosed in the SEC Filings and except as would
not be required to be disclosed in the SEC Filings, none of the officers or
directors of the Company and, to the Company’s Knowledge, none of the employees
of the Company is presently a party to any transaction with the Company or any
Subsidiary (other than as holders of stock options and/or warrants, and for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
Company’s Knowledge, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
Exhibit
10.3
(x) Internal Controls.
The Company is in material compliance with the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act of 2002 currently applicable to the Company. The Company and the
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
The Company has established disclosure controls and procedures (as defined in
1934 Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company, including the Subsidiaries, is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company’s most recently filed periodic report under the 1934 Act, as
the case may be, is being prepared. The Company’s certifying officers have
evaluated the effectiveness of the Company’s controls and procedures as of the
end of the period covered by the most recently filed periodic report under the
1934 Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the 1934
Act the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in the Company’s internal controls (as such term is defined in
Item 308 of Regulation S-K) or, to the Company’s Knowledge, in other
factors that could significantly affect the Company’s internal controls. The
Company maintains and will continue to maintain a standard system of accounting
established and administered in accordance with GAAP and the applicable
requirements of the 1934 Act.
(y) Disclosures. Neither
the Company nor any Person acting on the Company’s behalf has provided the
Investors or their agents or counsel with any information that constitutes or
might constitute material, non-public information, other than the terms of the
transactions contemplated by the Purchase Agreements.
(z) Investment Company.
The Company is not required to be registered as, and is not an Affiliate of (as
defined under the 1934 Act), and immediately following the Closing will not be
required to register as, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.
(aa)
No Price
Stabilization. Neither the Company nor any of the Subsidiaries nor,
to the Company’s knowledge, any of their respective officers, directors,
affiliates or controlling persons has taken or will take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares.
Exhibit
10.3
(bb)
FINRA
Affiliations. To the Company’s knowledge, there are no affiliations
or associations between (i) any member of FINRA and (ii) the Company
or any of the Company’s officers, directors or 5% or greater securityholders or
any beneficial owner of the Company’s unregistered equity securities that were
acquired at any time on or after the one hundred eightieth (180th) day
immediately preceding the date of the Prospectus Supplement, except as set forth
in the SEC Filings.
Section
3. Covenants of the Company.
(a) Opinion of Counsel for the
Company. On the Closing Date of the Offering, Stonegate shall receive and
the Company shall cause to be delivered to Stonegate the opinion of legal
counsel to the Company filed as Exhibit 5.1 to the Registration Statement, dated
the Closing Date, and either addressed to Stonegate or delivered with a reliance
letter addressed to Stonegate/Accuracy of Representations and
Warranties. The representations and warranties made by the Company in
Section 2
hereof qualified as to materiality shall be true and correct at all times prior
to and on the Closing Date as so qualified, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct as of such earlier
date as so qualified, and, the representations and warranties made by the
Company in Section 2 hereof
not qualified as to materiality shall be true and correct in all material
respects at all times prior to and on the Closing Date, except to the extent any
such representation or warranty expressly speaks as of an earlier date, in which
case such representation or warranty shall be true and correct in all material
respects as of such earlier date. The Company shall have performed in all
material respects all obligations and covenants herein required to be performed
by it on or prior to the Closing Date.
(c) The
Company has filed with Amex a listing application the Shares.
Section
4. Indemnification.
The
Company agrees to indemnify and hold harmless Stonegate (including its
directors, officers, employees and representatives) against any losses, claims,
damages or liabilities to which Stonegate may become subject, under the
Securities Act or otherwise (including in settlement of any litigation if such
settlement is effected with the written consent of the Company), insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) an untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, including the
information deemed to be a part of the Registration Statement at the time of
effectiveness and at any subsequent time pursuant to Rule 430B of the Rules and
Regulations, the Prospectus, or any amendment or supplement thereto (including
any documents filed under the Exchange Act and deemed to be incorporated by
reference into the Prospectus and the Prospectus Supplement), or any Company
information provided by the Company in writing for use in communications with
Investors (whether in person or electronically), or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, and will reimburse
Stonegate for any reasonable and documented legal or other expenses incurred by
it in connection with investigating or defending against such loss, claim,
damage, liability or action; or (ii) in whole or in part upon any
inaccuracy in the representations and warranties of the Company contained
herein; or (iii) in whole or in part upon any failure of the Company to
perform its obligations hereunder.
Exhibit
10.3
Section
5. Representations, Warranties and Covenants of Stonegate
Stonegate
hereby represents, warrants and covenants to the Company as of the date hereof,
and as of the Closing Date of the Offering, as follows:
(a) Regulatory Compliance.
Stonegate has complied and will comply with Regulation M, applicable
FINRA rules and regulations and any other rules and regulations setting forth
restrictions on the dissemination of research reports and the activities of
analysts in connection with this Offering, and is a member in good standing with
FINRA and any applicable state licensing authorities.
(b) No Unauthorized Distribution of
Materials. Stonegate has not distributed and will not distribute any
offering material in connection with the Offering and sale of the Shares other
than copies of the SEC Filings and the form of Purchase Agreement as otherwise
instructed by the Company.
Section
6. Representations and Indemnities to Survive Delivery.
The
respective indemnities, agreements, representations, warranties and other
statements of the Company or any person controlling the Company, including its
officers and directors, and of Stonegate set forth in or made pursuant to this
Agreement, including, but not limited to the indemnity agreement contained in
Section 4 above, will remain in full force and effect, regardless of
(i) any investigation made by or on behalf of Stonegate or any person
controlling Stonegate, the Company, its directors or officers or any persons
controlling the Company; and (ii) any termination of this Agreement. A
successor to Stonegate, or to the Company, its directors or officers or any
person controlling the Company, shall be entitled to the benefits of the
indemnity and reimbursement agreements contained in Sections 1 and 4
above.
Section
7. Notices.
All
communications to the parties hereto hereunder shall be in writing and shall be
mailed, hand delivered or sent by facsimile, with confirmation of receipt by the
intended recipient confirmed as follows:
If to
Stonegate:
Stonegate
Securities, Inc.
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
With a
copy to (which shall not constitute notice):
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Exhibit
10.3
If to the
Company:
ZBB
Energy Corporation
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇
▇▇▇▇▇▇▇▇▇, CEO
With a
copy to (which shall not constitute notice):
K&L
Gates LLP
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇
Any party
hereto may change the address for receipt of communications by giving written
notice to the others.
Section
8. Successors; Third Party Beneficiaries.
This
Agreement will inure to the benefit of and be binding upon the parties hereto,
and to the benefit of their respective employees, officers and directors and
controlling persons, and to their respective successors, and personal
representatives, and no other person will have any right or obligation
hereunder, except, the
incorporation by reference of Section 2 as provided in the Purchase
Agreements for the benefit and reliance of the Investors. Neither the Company
nor Stonegate shall be entitled to assign their rights, or delegate their
responsibilities, hereunder without the prior written consent of the other party
hereto.
Section
9. Partial Unenforceability.
The
invalidity or unenforceability of any section, paragraph or provision of this
Agreement shall not affect the validity or enforceability of any other Section,
paragraph or provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there
shall be deemed to be made such minor changes (and only such minor changes) as
are necessary to make it valid and enforceable.
Section
10. Governing Law Provisions.
(a) Governing Law. This agreement
shall be governed by and construed in accordance with the internal laws of the
state of Texas applicable to agreements made and to be performed in such
state.
(b) Consent to Jurisdiction. Any
legal suit, action or proceeding arising out of or based upon this Agreement or
the transactions contemplated hereby (“Related Proceedings”)
may be instituted in the federal courts of the United States of America located
in Dallas, Texas, or the courts of the State of Texas in each case located in
Dallas (collectively, the “Specified Courts”),
and each party irrevocably submits to the exclusive jurisdiction (except for
proceedings instituted in regard to the enforcement of a judgment of any such
court (a “Related
Judgment”), as to which such jurisdiction is non-exclusive) of such
courts in any such suit, action or proceeding. Service of any process, summons,
notice or document by mail to such party’s address set forth above shall be
effective service of process for any suit, action or other proceeding brought in
any such court. The parties irrevocably and unconditionally waive any objection
to the laying of venue of any suit, action or other proceeding in the Specified
Courts and irrevocably and unconditionally waive and agree not to plead or claim
in any such court that any such suit, action or other proceeding brought in any
such court has been brought in an inconvenient forum.
Exhibit
10.3
Section
11. General Provisions.
This
Agreement constitutes the entire agreement of Stonegate and the Company with
respect to the Offering, and supersedes all prior or contemporaneous written or
oral agreements, understandings and negotiations with respect to the subject
matter hereof.
This
Agreement may be executed in two or more counterparts (including via facsimile
or by emailed document in PDF format), each one of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement may not be amended or modified unless in writing by
all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit. Section headings herein are for the convenience of the parties only and
shall not affect the construction or interpretation of this
Agreement.
[The remainder of this page has been
intentionally left blank. Signature page follows.]
17
Exhibit 10.3
If the
foregoing is in accordance with your understanding of our agreement, please sign
and return to the Company the enclosed copies hereof, whereupon this instrument,
along with all counterparts hereof, shall become a binding agreement in
accordance with its terms.
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Very
truly yours,
|
||
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ZBB
ENERGY CORPORATION
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||
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By:
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||
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Name:
|
▇▇▇▇
▇▇▇▇▇▇▇▇▇
|
|
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Title:
|
President
and CEO
|
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The
foregoing Financial Advisory Agreement is hereby confirmed and accepted by
Stonegate as of the date first above written.
STONEGATE
SECURITIES, INC.
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By:
|
|
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Name:
|
|
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Title:
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18