{__________} Shares
(Plus {________} Shares to cover over-allotments, if any.)
ZBB ENERGY CORPORATION
COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
----------------------
_________, 2006
EMPIRE FINANCIAL GROUP, INC.
As Representative of the Several
Underwriters Named in Schedule I Hereto
c/o Empire Financial Group, Inc.
▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
ZBB Energy Corporation, a Wisconsin corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to sell to the
several Underwriters named in Schedule I hereto (the "Underwriters"), for whom
Empire Financial Group, Inc. is serving as representative (the
"Representative"), an aggregate of {__________} shares (the "Firm Shares") of
the Company's common stock, par value $.01 per share (the "Common Stock"). If
the Representative is the only firm named in Schedule I hereto, then the terms
"Underwriters" and "Representative," as used herein, shall each be deemed to
refer to such firm.
In addition, in order to cover over-allotments in the sale of the Firm
Shares, the Underwriters may, at the Underwriters' election and subject to the
terms and conditions stated herein, purchase ratably in proportion to the
amounts set forth opposite their respective names in Schedule I hereto, up to
{________} additional shares of Common Stock from the Company (such additional
shares of Common Stock, the "Option Shares"). The Firm Shares and the Option
Shares are referred to collectively as the "Shares."
The Company and the Underwriters, intending to be legally bound, hereby
confirm their agreement as follows:
1. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form SB-2 (File No. 333-_____) (the
"Initial Registration Statement") in respect of the Shares has been filed with
the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in the
form heretofore delivered to the Representative and, excluding exhibits thereto,
to each of the other Underwriters, have been declared effective by the
Commission in such form; other than a registration statement, if any, increasing
the size of the offering (a "Rule 462(b) Registration Statement"), filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Act"), which became effective upon filing, no other document with respect to
the Initial Registration Statement has heretofore been filed with the
Commission; and no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Act is hereinafter called a "Preliminary Prospectus"; the
various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and including the
information contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Act and deemed by virtue of Rule 430A under
the Act to be part of the Initial Registration Statement at the time it was
declared effective or such part of the Rule 462(b) Registration Statement, if
any, became or hereafter becomes effective, each as amended at the time such
part of the Initial Registration Statement became effective, are hereinafter
collectively called the "Registration Statement"; and such final prospectus, in
the form first filed pursuant to Rule 424(b) under the Act, is hereinafter
called the "Prospectus");
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through the Representative expressly for use therein.
(c) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder and do not and will
not, as of the applicable effective date as to the Registration Statement and
any amendment thereto, and as of the applicable filing date as to the Prospectus
and any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
this representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by an Underwriter through the Representative expressly for use
therein.
2
(d) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened to which the Company or any of its
subsidiaries (as defined in Rule 405 of the rules and regulations under the Act)
is a party or to which any of the properties of the Company or any of its
subsidiaries are subject, except any such proceedings as would not have a
material adverse effect on the financial position, results of operations or
business of the Company and its subsidiaries taken as a whole ("Material Adverse
Effect").
(e) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Wisconsin. Each of the Company's
subsidiaries has been duly incorporated and is validly existing as a corporation
in good standing under the laws of its state of incorporation or organization.
The Company has full power and authority (corporate and other) to own or lease
its properties and conduct its business as described in the Prospectus. The
Company has full power and authority (corporate and other) to enter into this
Agreement, the Underwriter's Warrant and the Consulting Agreement (defined in
Section 5(k) below) and to perform its obligations hereunder and thereunder. The
Company is duly qualified to transact business as a foreign corporation under
the laws of each other jurisdiction in which it owns or leases properties, or
conducts any business, to the extent required under such laws, except where the
failure to so qualify would not have a Material Adverse Effect.
(f) The Company's authorized, issued and outstanding capital stock is
as disclosed in the Prospectus. All of the issued shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus. None of the issued shares of capital stock of the Company have been
issued or are owned or held in violation of any statutory or any other
preemptive rights of shareholders, and no person or entity (including any holder
of outstanding shares of capital stock of the Company) has any statutory or any
other preemptive or other rights to subscribe for any of the Shares. None of the
capital stock of the Company has been issued in violation of applicable federal
or state securities laws.
(g) Other than the equity securities of its subsidiaries disclosed in
the Prospectus, the Company does not own, directly or indirectly, any capital
stock or other equity securities of any other corporation or any ownership
interest in any partnership, joint venture or other association.
(h) Except as disclosed in the Prospectus, there are no outstanding (i)
securities or obligations of the Company convertible into or exchangeable for
any capital stock of the Company, (ii) warrants, rights or options to subscribe
for or purchase from the Company any capital stock of the Company or any such
convertible or exchangeable securities or obligations (other than pursuant to
the Company's stock benefit plans) or (iii) obligations of the Company to issue
any shares of capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(i) Since the respective dates as of which information is given in the
Prospectus or otherwise disclosed therein, and prior to the Closing Date and
Option Closing Date (as such terms are hereinafter defined), (i) neither the
Company nor any of its subsidiaries has incurred any liabilities or obligations,
direct or contingent, or entered into any transactions, not in the ordinary
course of business, that are material to the Company, (ii) the Company has not
purchased any of its outstanding capital stock or declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock, (iii) there
has not been any material change in the capital stock, long-term debt or
short-term debt of the Company, and (iv) there has not been any change, or any
development involving a prospective change, which would have a Material Adverse
Effect, in each case other than as disclosed in or contemplated by the
Prospectus.
3
(j) Neither the Company nor any of its subsidiaries is, or with notice
or the passage of time or both would be, in violation of its Articles of
Incorporation or Bylaws (or comparable charter documents) or in default under
any indenture, mortgage, deed of trust, loan agreement, lease or other agreement
or instrument to which the Company or any of its subsidiaries is a party or to
which any of their properties or assets are subject.
(k) The Company and its subsidiaries have good and marketable title in
fee simple to all real property, if any, and good title to all personal property
owned by them, in each case, free and clear of all liens, security interests,
pledges, charges, encumbrances, mortgages and defects, except such as are
disclosed in the Prospectus or would not have a Material Adverse Effect and, in
any case, do not interfere with the use made or proposed to be made of such
property by the Company and its subsidiaries; and any real property and
buildings held under lease by the Company or any of its subsidiaries are held
under valid, subsisting and enforceable leases, with such exceptions as are
disclosed in the Prospectus or are not material and, in any case, do not
interfere with the use made or proposed to be made of such property and
buildings by the Company and its subsidiaries.
(l) The issue and sale of the Shares, and the issue and sale of the
Warrant Shares when issued and delivered upon exercise of the Underwriter's
Warrant, by the Company and the compliance by the Company with all of the
provisions of this Agreement, the Underwriter's Warrant and the Consulting
Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, nor will such action result
in any violation of the provisions of the Articles of Incorporation or By-laws
of the Company or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties; and no filing, consent, approval,
authorization, order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the Shares or
the Warrant Shares or the consummation by the Company of the transactions
contemplated by this Agreement, the Underwriter's Warrant and the Consulting
Agreement, except the registration under the Act of the Shares, the approval by
the National Association of Securities Dealers, Inc. (the "NASD") of the terms
of the sale of the Shares and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
blue sky laws in connection with the purchase and distribution of the Shares by
the Underwriters.
(m) Other than as disclosed in the Prospectus, there is no litigation,
arbitration, claim, proceeding (formal or informal) or investigation (including
without limitation, any Company regulatory proceeding) pending or, to the
Company's knowledge, threatened in which the Company or any of its subsidiaries
is a party or of which any of their properties or assets are the subject which,
if determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect. Neither the
Company nor any of its subsidiaries is in violation of, or in default with
respect to, any law, statute, rule, regulation, order, judgment or decree,
except as described in the Prospectus or such as do not and will not
individually or in the aggregate have a Material Adverse Effect, and neither the
Company nor any of its subsidiaries is required to take any action in order to
avoid any such violation or default.
4
(n) PKF, Certified Public Accountants, A Professional Corporation,
which has certified certain financial statements of the Company included in the
Prospectus, are independent public accountants as required by federal law and
the rules and regulations of the Commission and are registered with the Public
Company Accounting Oversight Board.
(o) The financial statements and schedules (including the related
notes) of the Company and its subsidiaries included in the Prospectus and/or any
Preliminary Prospectus were prepared in accordance with generally accepted
accounting principles for financial reporting in the United States ("GAAP"),
applied on a consistent basis throughout the periods involved and fairly present
the consolidated financial position and results of operations of the Company and
its subsidiaries at the dates and for the periods presented. The selected
consolidated financial data and other operating and statistical information set
forth in the Prospectus fairly present, on the basis stated in the Prospectus,
the information included therein, and have been compiled on a basis consistent
with that of the audited financial statements included in the Prospectus. The
unaudited interim consolidated financial statements included in the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of Rule 10-01 of Regulation S-X under the Securities Act of 1933
(the "Act").
(p) Each of this Agreement, the Underwriter's Warrant and the
Consulting Agreement has been duly authorized, executed and delivered by the
Company and, assuming due execution of this Agreement and the Consulting
Agreement by the Representative, constitutes the valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
subject, as to enforcement, to applicable bankruptcy, insolvency, reorganization
and moratorium laws and other laws relating to or affecting the enforcement of
creditors' rights generally and to general equitable principles and except as
the enforceability of rights to indemnity and contribution under this Agreement
may be limited under applicable securities laws or the public policy underlying
such laws.
(q) When the Shares to be sold by the Company hereunder have been duly
delivered against payment therefor as contemplated by this Agreement, the Shares
will be validly issued, fully paid and nonassessable, and the holders thereof
will not be subject to personal liability solely by reason of being such
holders. When the Warrant Shares to be sold by the Company upon exercise of the
Underwriter's Warrant have been duly delivered against payment therefor as
contemplated by the Underwriter's Warrant, the Warrant Shares will be validly
issued, fully paid and nonassessable, and the holders thereof will not be
subject to personal liability solely by reason of being such holders. The stock
certificate representing the Shares is in proper legal form under, and conforms
in all respects to the requirements of, the Wisconsin Business Corporation Law
and the American Stock Exchange.
5
(r) The Company has not distributed and will not distribute any
offering material in connection with the offering and sale of the Shares other
than a Preliminary Prospectus, the Prospectus and such other material, if any,
as has been or will be provided to the Underwriters prior to distribution for
their review and consent.
(s) The operations of the Company and its subsidiaries with respect to
any real property currently leased or owned by them are in compliance in all
material respects with all applicable federal, state, and local laws,
ordinances, rules, and regulations relating to occupational health and safety
and the environment (collectively, "Laws"), and neither the Company nor any of
its subsidiaries has violated any Laws in a way which would have a Material
Adverse Effect. Except as disclosed in the Prospectus, there is no pending or,
to the Company's knowledge, threatened claim, litigation or administrative
agency proceeding, nor has the Company or any of its subsidiaries received any
written or oral notice from any governmental entity or third party, that: (i)
alleges a violation of any Laws by the Company or any of its subsidiaries or
(ii) alleges the Company or any of its subsidiaries is a liable party under the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
ss. 9601 et seq. or any state superfund law.
(t) The Company and its subsidiaries have sufficient interests in, all
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively, "Intellectual
Property") necessary for their business as described in the Prospectus, and
neither the Company nor any of its subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property which, singly or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(u) The Company and its subsidiaries make and keep accurate books and
records reflecting their assets and maintain internal accounting controls which
provide reasonable assurance that (i) transactions are executed in accordance
with management's authorization, (ii) transactions are recorded as necessary to
permit preparation of the Company's consolidated financial statements in
accordance with GAAP and to maintain accountability for the assets of the
Company and its subsidiaries, (iii) access to the assets of the Company and its
subsidiaries is permitted only in accordance with management's authorization,
and (iv) the recorded assets of the Company and its subsidiaries are compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(v) The Company and its subsidiaries have filed all foreign, federal,
state and local tax returns that are required to be filed by them and has paid
all taxes shown as due on such returns, as well as all other taxes, assessments
and governmental charges that are due and payable; and no material deficiency
with respect to any such return has been assessed or, to the knowledge of the
Company, proposed.
6
(w) Except for such plans as are expressly disclosed in the Prospectus
("Plans"), the Company and its subsidiaries do not maintain, contribute to or
have any material liability with respect to any employee benefit plan, profit
sharing plan, employee pension benefit plan, employee welfare benefit plan,
equity-based plan or deferred compensation plan or arrangement that is subject
to the provisions of the Employee Retirement Income Security Act of 1974, as
amended, or the rules and regulations thereunder ("ERISA"). All Plans are in
compliance with all applicable laws, including but not limited to ERISA and the
Internal Revenue Code of 1986, as amended (the "Code") and have been operated
and administered in accordance with their terms except for such as would not
have a Material Adverse Effect. No Plan is a multi-employer plan. The Company
and its subsidiaries do not provide retiree life and/or retiree health benefits
or coverage for any employee or any beneficiary of any employee after such
employee's termination of employment, except as required by Section 4980B of the
Code or under a Plan which is intended to be "qualified" under Section 401(a) of
the Code. No liability has been, or could be expected to be, incurred under
Title IV of ERISA or Section 412 of the Code by any entity required to be
aggregated with the Company pursuant to Section 4001(b) of ERISA and/or Section
414(b) or (c) of the Code (and the regulations promulgated thereunder) with
respect to any "employee pension benefit plan" which is not a Plan. As used in
this subsection, the terms "defined benefit plan," "employee benefit plan,"
"employee pension benefit plan," "employee welfare benefit plan" and
"multi-employer plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.
(x) No material labor dispute exists with the Company's employees, and
no such labor dispute is threatened. The Company has no knowledge of any
existing or threatened labor disturbance by the employees of any of its
principal agents, suppliers, contractors or customers that would have a Material
Adverse Effect.
(y) The Company and its subsidiaries have received all permits,
licenses, franchises, authorizations, registrations, qualifications and
approvals (collectively, "Permits") of governmental or regulatory authorities
(including, without limitation, state or federal regulatory authorities) as may
be required of them to own their properties and conduct their business in the
manner described in the Prospectus, subject to such qualifications as may be set
forth in the Prospectus; and the Company and its subsidiaries have fulfilled and
performed all of its material obligations with respect to such Permits, and no
event has occurred which allows or, after notice or lapse of time or both, would
allow revocation or termination thereof or result in any other material
impairment of the rights of the holder of any such Permit, subject in each case
to such qualifications as may be set forth in the Prospectus; and, except as
described in the Prospectus, such Permits contain no restrictions that
materially affect the ability of the Company or its subsidiaries to conduct
their business.
(z) The Company has filed, or has had filed on its behalf, on a timely
basis, all materials, reports, documents and information, including but not
limited to annual reports, with the Australian Stock Exchange which are required
to be filed by it, except where the failure to have timely filed such materials,
reports, documents and information would not have a Material Adverse Effect.
(aa) The Company is not an "investment company" or a company
"controlled" by an investment company as such terms are defined in Sections 3(a)
and 2(a)(9), respectively, of the Investment Company Act of 1940, as amended
(the "Investment Company Act"), and, if the Company conducts its business as set
forth in the Prospectus, it will not become an "investment company" and will not
be required to register under the Investment Company Act.
7
(bb) The Company has in place and effective such policies of insurance,
with limits of liability in such amounts, as are normal and prudent in the
ordinary scope of business similar to that of the Company in the jurisdictions
in which it conducts business.
2. Purchase and Sale of Shares.
(a) Subject to the terms and conditions herein set forth, the Company
agrees to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
{______} Dollars and {______} Cents (${____}) per share (the "Per Share Price"),
the number of Firm Shares to be purchased by such Underwriter as set forth
opposite the name of such Underwriter in Schedule I hereto.
(b) The Company hereby grants to the Underwriters the right to purchase
at their election, in whole or in part, from time to time, up to {________}
Optional Shares, at the Per Share Price, for the sole purpose of covering
over-allotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised by written notice from the Representative to
the Company, given at any time (but not more than once) within a period of 60
calendar days after the date of this Agreement and setting forth the aggregate
number of Optional Shares to be purchased and the date on which such Optional
Shares are to be delivered, as determined by the Representative, but in no event
earlier than the First Time of Delivery (as hereinafter defined) or, unless the
Representative otherwise agrees in writing, earlier than two or later than ten
business days after the date of such notice. In the event the Underwriters elect
to purchase all or a portion of the Optional Shares, the Company agrees to
furnish or cause to be furnished to the Representative the certificates, letters
and opinions, and to satisfy all conditions set forth in Section 7 hereof at the
Subsequent Time of Delivery (as hereinafter defined).
(c) In making this Agreement, each Underwriter is contracting
severally, and not jointly, and except as provided in Sections 2(b) and 9
hereof, the agreement of each Underwriter is to purchase only that number of
shares specified with respect to that Underwriter in Schedule I hereto. No
Underwriter shall be under any obligation to purchase any Optional Shares prior
to an exercise of the option with respect to such Optional Shares granted
pursuant to Section 2(b) hereof.
3. Offering by the Underwriters. Upon the authorization by the Representative of
the release of the Shares, the several Underwriters propose to offer the Shares
for sale upon the terms and conditions disclosed in the Prospectus.
4. Delivery of Shares; Closing. The Firm Shares shall be issued in the form of
one or more fully registered stock certificates in book-entry form in such
denomination and registered in the name of the nominee of The Depositary Trust
Company ("DTC") or in such names as the Representative may request upon at least
48 hours' prior notice to the Company, and shall be delivered by or on behalf of
the Company to the Representative for the account of such Underwriter, against
payment by such Underwriter on its behalf of the purchase price therefor by wire
transfer of immediately available funds to such accounts as the Company shall
designate in writing. The closing of the sale and purchase of the Firm Shares
shall be held at the offices of Seyfarth ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇. The time and date of such delivery and
payment shall be, with respect to the Firm Shares, at 9:00
8
a.m., Washington, DC time, on the fourth (4th) full business day after this
Agreement is executed or at such other time and date as the Representative and
the Company may agree upon in writing, and, with respect to the Optional Shares,
at 9:00 a.m., Eastern time, on the date specified by the Representative in the
written notice given by the Representative of the Underwriters' election to
purchase all or part of such Optional Shares, or at such other time and date as
the Representative and the Company may agree upon in writing. Such time and date
for delivery of the Firm Shares is herein called the "First Time of Delivery,"
such time and date for delivery of any Optional Shares, if not the First Time of
Delivery, is herein called a "Subsequent Time of Delivery," and each such time
and date for delivery is herein called a "Time of Delivery." The Company shall
make the stock certificate(s) representing the Firm Shares or the Optional
Shares, as the case may be, available for examination by the Representative and
counsel for the Underwriters not later than 9:30 a.m. Eastern time on the
business day prior to each Time of Delivery at the office of Seyfarth ▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ or at such other
location specified by the Representative or counsel for the Underwriters in
writing at least 48 hours prior to such Time of Delivery.
5. Covenants of the Company. The Company covenants and agrees with each of the
Underwriters that:
(a) The Company will prepare the Prospectus in a form approved by the
Representative and file such Prospectus pursuant to Rule 424(b) under the Act
not later than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if applicable, such
earlier time as may be required by Rule 430A(a)(3) under the Act. The Company
will make no further amendment or any supplement to the Registration Statement
or Prospectus which shall be disapproved by the Representative promptly after
reasonable notice thereof.
(b) The Company will advise the Representative promptly after receiving
notice of (i) any request by the Commission for the amending or supplementing of
the Registration Statement or Prospectus or for additional information; (ii) the
time when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish the Representative with copies thereof; and (iii) the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose. In the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, promptly to use its best efforts to obtain
the withdrawal of such order.
(c) The Company promptly from time to time will take such action as the
Representative may reasonably request to qualify the Shares for offering and
sale under the securities or blue sky laws of such jurisdictions as the
Representative may request and will continue such qualifications in effect for
as long as may be necessary to complete the distribution of the Shares, provided
that in connection therewith the Company shall not be required to qualify as a
foreign corporation or as a dealer in securities or to file a general consent to
service of process in any jurisdiction. The Company will file such statements
and reports as may be required by the laws of each jurisdiction in which the
Shares have been qualified as above provided.
9
(d) The Company will promptly provide the Representative, without
charge, at each Time of Delivery, as many copies of the Prospectus and any
amendment or supplement thereto as the Representative may reasonably request.
(e) To furnish to its stockholders as soon as practicable after the end
of each fiscal year an annual report (including a balance sheet and statements
of income, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public accountants) and, as
soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective date
of the Registration Statement), to make available to its stockholders
consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail.
(f) During the period beginning from the date hereof and continuing to
and including the date 365 days after the date of the Prospectus, the Company
will not, and will use its best efforts to cause each executive officer and
director of the Company and shareholders owning 5% or more of the outstanding
Common Stock after the Closing Date to deliver to the Representative an
agreement in the form attached hereto as Exhibit A (each, a "Lock-Up
Agreement"), agreeing not, without the prior written consent of the
Representative, directly or indirectly to (i) offer, sell, contract to sell or
otherwise dispose of, any shares of Common Stock or securities convertible into
or exercisable or exchangeable for shares of Common Stock or (ii) enter into any
swap or other agreement or any transaction that transfers, in whole or in part,
the economic consequences of ownership of shares of Common Stock whether any
such swap or other agreement is to be settled by delivery of shares of Common
Stock, other securities, cash or otherwise; except for the sale of the Shares
hereunder, except for the issuance of Common Stock upon the exercise of stock
options or warrants or the conversion of convertible securities outstanding on
the date of this Agreement to the extent that such stock options, warrants and
convertible securities are disclosed in the Prospectus and except for the grant
to employees of stock options to purchase Common Stock which are not exercisable
within such 365 days.
(g) During the period of three years after the date of this Agreement,
the Company will furnish to the Representative and, upon request, to each of the
other Underwriters, without charge, (i) copies of all reports or other
communications (financial or other) furnished to shareholders and (ii) as soon
as they are available, copies of any reports and financial statements furnished
to or filed under the Securities Exchange Act of ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇ ▇▇▇").
(h) Prior to the termination of the underwriting syndicate contemplated
by this Agreement, the Company and its affiliates will not, and the Company
shall cause its officers and directors not to, (i) take, directly or indirectly,
any action designed to cause or to result in, or that might be expected to cause
or result in, the stabilization or manipulation of the price of any security of
the Company or (ii) sell, bid for, purchase or pay anyone any compensation for
soliciting purchases of, the Shares.
10
(i) In case of any event, at any time within the period between the
date hereof and the Closing Date or Option Closing Date, as a result of which
any Preliminary Prospectus or the Prospectus, as then amended or supplemented,
would contain an untrue statement of a material fact, or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, the Company promptly
will prepare an amendment or supplement that will correct such statement or
omission and will furnish to the several Underwriters such number of copies of
such amendment(s) or supplement(s) as the Representative may reasonably request.
For purposes of this subsection, the Company will provide such information to
the Representative, the Underwriters' counsel and counsel to the Company as
shall be necessary to enable such persons to consult with the Company with
respect to the need to amend or supplement any Preliminary Prospectus or the
Prospectus, and shall furnish to the Representative and the Underwriters'
counsel such further information as each may from time to time reasonably
request.
(j) The Company shall use its best efforts to list the Shares for
trading on the American Stock Exchange.
(k) On the Closing Date, enter into a consulting agreement with the
Representative (the "Consulting Agreement") whereby the Company will agree to
pay the Representative (i) a financial consulting fee of $5,000 per month for
the succeeding 24 month period, payable monthly, and (ii) a "▇▇▇▇▇▇ Formula"
finder's fee if the Representative originates a merger, acquisition, joint
venture or other similar transaction to which the Company is a party.
(l) The Company shall continue to retain as its accountants PKF,
Certified Public Accountants, A Professional Corporation or another firm of
independent public accountants acceptable to the Representative for 24 months
from the Closing Date.
(m) The Company shall retain as outside legal counsel a firm acceptable
to the Representative, which shall be expert in securities law matters, for 12
months from the Closing Date.
(n) The Company shall retain Strategic Growth Advisors, Inc. or another
investor/public relations firm acceptable to the Representative for 24 months
from the Closing Date.
(o) The Company shall accept an individual, selected by the
Representative, as a non-voting advisor to the Company's Board of Directors.
Such advisor shall be entitled to notice and to attend all meetings of the Board
of Directors, and shall be reimbursed for reasonable costs incurred in attending
such meetings. To the extent permitted by law, the Company shall indemnify the
Representative and such advisor for such advisor's actions in his role as an
advisor, and the Company shall, if possible, include the Representative and such
advisor as insureds under any directors and officers liability insurance policy
maintained by the Company, if any.
11
6. Expenses and Fees.
(a) The Company will pay all costs and expenses incident to the
performance of the obligations of the Company under this Agreement, whether or
not the transactions contemplated hereby are consummated or this Agreement is
terminated pursuant to Section 10 hereof, including, without limitation, all
costs and expenses incident to (i) the printing of and mailing expenses
associated with any Preliminary Prospectus and the Prospectus and any amendments
or supplements thereto, this Agreement, the Agreement among Underwriters, the
Underwriters' Questionnaire submitted to each of the Underwriters by the
Representative in connection herewith, the power of attorney executed by each of
the Underwriters in favor of Empire Financial Group, Inc. in connection
herewith, the Selected Dealer Agreement and related documents (collectively, the
"Underwriting Documents"); (ii) the fees, disbursements and expenses of the
Company's counsel and accountants in connection with the registration of the
Company's Common Stock under the Exchange Act and all other expenses in
connection with the preparation and, if applicable, filing of, any Preliminary
Prospectus, the Prospectus and any amendments and supplements thereto and the
Underwriting Documents; (iii) the delivery of copies of the foregoing documents
to the Underwriters; (iv) the filing fees of the National Association of
Securities Dealers, Inc. relating to its approval of the fairness and
reasonableness of the underwriting terms and arrangements; (v) the preparation,
issuance and delivery to the Underwriters of any certificates evidencing the
Shares, including transfer agent's and registrar's fees; (vi) any fees relating
to listing of the Shares on the American Stock Exchange; (vii) any expenses for
travel, lodging and meals incurred by the Company and any of its officers,
directors and employees in connection with any meetings with prospective
investors in the Shares; (viii) any cost of holding due diligence meetings and
drafting sessions; (ix) any cost for placing a "tombstone" advertisement in the
Wall Street Journal; and (x) all other costs and expenses reasonably incident to
the performance of the Company's obligations hereunder that are not otherwise
specifically provided for in this Section 6.
(b) On the Closing Date, the Company shall pay the Representative a sum
of {$ }, less any amounts paid prior to the Closing Date, as a non-accountable
expense allowance. Payment of the non-accountable expense allowance shall be
made to the Representative by wire transfer of immediately available funds. The
Representative acknowledges receipt of Twenty-Five Thousand Dollars ($25,000) as
a deposit toward such sum.
(c) On the Closing Date, the Company will further issue and sell to the
Representative or, at the direction of the Representative, to bona fide officers
of the Representative, at a purchase price of $100.00 and for other good and
valuable consideration, warrants to purchase Common Stock (the "Underwriter's
Warrant") entitling the holders thereof to purchase an aggregate of { } shares
of Common Stock (the "Warrant Shares"), exercisable for a period of four years,
such period to commence on the first anniversary of the effective date of the
Registration Statement. The Underwriter's Warrant shall be exercisable at a
price equal to 120% of the public offering price of the Firm Shares, and shall
contain terms and provisions more fully described herein below and as set forth
more particularly in the warrant agreement relating to the Underwriter's Warrant
to be executed by the Company on the effective date of the Registration
Statement (the "Underwriter's Warrant Agreement"). No sale, transfer,
assignment, pledge or hypothecation of the Underwriter's Warrant shall be made
for a period of 12 months from the effective date of the Registration Statement,
except (i) by operation of law or reorganization of the Company, or (ii) to the
Representative and bona fide partners, officers (not directors) of the
Representative and selling group members. The terms of the Underwriter's Warrant
are as set forth in Exhibit WU appended hereto.
12
7. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters hereunder to purchase and pay for the Shares to be delivered at
each Time of Delivery shall be subject, in their discretion, to the accuracy of
the representations and warranties of the Company contained herein as of the
date hereof and as of such Time of Delivery, to the accuracy of the statements
of the Company's officers made pursuant to the provisions hereof, to the
performance by the Company of its covenants and agreements hereunder, and to the
following additional conditions precedent:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 5(a)
hereof; if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have been filed by 10:00 P.M., Washington, D.C.
time, on the date of this Agreement; no stop order suspending the effectiveness
of the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to the Representative's reasonable
satisfaction.
(b) The Representative shall have received a copy of an executed
Lock-Up Agreement from the Company and each of the Company's executive officers
and directors and shareholders owning 5% or more of the outstanding Common Stock
after the Closing Date.
(c) The Representative shall have received an opinion, dated such Time
of Delivery, of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, special counsel for the Company, in form and
substance satisfactory to the Representative and its counsel, to the effect
that:
(i) The Company is validly existing as a corporation in
good standing under the laws of the State of
Wisconsin and has the corporate power and authority
to own or lease its properties and conduct its
business as described in the Prospectus and to enter
into this Agreement, the Underwriter's Warrant and
the Consulting Agreement and perform its obligations
hereunder and thereunder. The Company is duly
qualified to transact business as a foreign
corporation in each jurisdiction in which it owns or
leases property, or conducts any business, so as to
require such qualification, except where the failure
to so qualify would not have a Material Adverse
Effect.
(ii) Each U.S. subsidiary of the Company, based solely on
certificates of public officials of each applicable
jurisdiction, has been duly incorporated and is
validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation;
and all of the issued shares of capital stock of each
such subsidiary have been duly and validly authorized
and issued, are fully paid and non-assessable, and
(except for directors' qualifying shares) are owned
directly or indirectly by the Company, free and clear
of all liens, encumbrances, equities or claims (such
counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel
and in respect to matters of fact upon certificates
of officers of the Company or its subsidiaries,
provided that such counsel shall state that they
believe that both you and they are justified in
relying upon such opinions and certificates and
provided that such counsel shall provide you copies
of any such opinions and certificates).
13
(iii) All of the issued shares of capital stock of the
Company, including the Shares to be sold by the
Company pursuant hereto when delivered against
payment therefor as contemplated hereby, have been
duly authorized and validly issued, are fully paid
and nonassessable and conform to the description of
the Common Stock contained in the Prospectus. The
Warrant Shares to be sold upon exercise of the
Underwriter's Warrant when delivered against payment
therefor as contemplated thereby, have been duly
authorized and will be validly issued, fully paid and
nonassessable and conform to the description of the
Common Stock contained in the Prospectus. None of the
issued shares of Common Stock of the Company have
been issued or are owned or held in violation of any
statutory or any other preemptive rights of
shareholders, and no person or entity (including any
holder of outstanding shares of Common Stock of the
Company) has any statutory or any other preemptive or
other rights to subscribe for any of the Shares or
the Warrant Shares.
(iv) To such counsel's knowledge, except as disclosed in
the Prospectus, there are no outstanding (A)
securities or obligations of the Company convertible
into or exchangeable for any capital stock of the
Company, (B) warrants, rights or options to subscribe
for or purchase from the Company any such capital
stock or any such convertible or exchangeable
securities or obligations, other than pursuant to the
Company's stock benefit plans, or (C) obligations of
the Company to issue any shares of capital stock, any
such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(v) The sale of the Shares being sold at such Time of
Delivery, the sale of the Warrants Shares upon
exercise of the Underwriter's Warrant and the
performance of this Agreement, the Underwriter's
Warrant and the Consulting Agreement and the
consummation of the transactions herein and therein
contemplated will not conflict with or violate any
provision of the Articles of Incorporation or bylaws
or comparable charter documents of the Company as
amended to date or any existing law, statute, rule or
regulation, or, in any material respect conflict
with, or (with or without notice or the passage of
time or both) result in a breach or violation of any
of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or
instrument known to such counsel to which the Company
is a party or to which any of its properties or
assets is subject, or, conflict with or violate any
order, judgment or decree known to such counsel, of
any court or governmental agency or body having
jurisdiction over the Company or any of its
properties or assets.
14
(vi) No consent, approval, authorization, order or
declaration of or from, or registration,
qualification or filing with, any court or
governmental agency or body is required for the
offer, sale or issuance of the Shares or the Warrant
Shares except the registration under the Act and the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), of the Shares and the Warrant
Shares, and such consents, approvals, authorizations,
registrations or qualifications as may be required
under state securities or blue sky laws in connection
with the purchase and distribution of the Shares and
the Warrant Shares by the Underwriters.
(vii) To such counsel's knowledge, other than as disclosed
in or contemplated by the Prospectus, there is no
litigation, arbitration, claim, proceeding (formal or
informal) or investigation pending or threatened, in
which the Company or any of its subsidiaries is a
party or of which any of their properties or assets
is the subject which, if determined adversely to the
Company or any of its subsidiaries, would
individually or in the aggregate have a Material
Adverse Effect.
(viii) Each of this Agreement, the Underwriter's Warrant and
the Consulting Agreement has been duly authorized,
executed and delivered by the Company and, assuming
due execution of this Agreement and the Consulting
Agreement by the Representative, constitutes the
valid and binding agreement of the Company,
enforceable against the Company, in accordance with
its terms, subject, as to enforcement, to applicable
bankruptcy, insolvency, reorganization and moratorium
laws and other laws relating to or affecting the
enforcement of creditors' rights generally and to
general equitable principles and except as the
enforceability of rights to indemnity and
contribution under this Agreement may be limited
under applicable securities laws or the public policy
underlying such laws.
(ix) The Company is not an "investment company" or a
company "controlled" by an investment company as such
terms are defined in Sections 3(a) and 2(a)(9),
respectively, of the Investment Company Act.
(x) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by
the Company prior to such Time of Delivery (other
than the financial statements and related schedules
therein, as to which such counsel need express no
opinion) comply as to form in all material respects
with the requirements of the Act and the rules and
regulations thereunder; and they do not know of any
amendment to the Registration Statement required to
be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the
Registration Statement or required to be described in
the Registration Statement or the Prospectus which
are not filed or described as required.
15
Such counsel shall also state that they have participated in the
preparation of the Preliminary Prospectus and Prospectus and in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company, and representatives of and
counsel to the Underwriters at which the contents of the Preliminary Prospectus
and Prospectus and related matters were discussed and, although such counsel has
not passed upon or assumed any responsibility for the accuracy, completeness or
fairness of the statements contained in the Preliminary Prospectus or
Prospectus, and although such counsel has not undertaken to verify independently
the accuracy or completeness of the statements in the Preliminary Prospectus or
Prospectus, no facts have come to such counsel's attention to lead them to
believe that the Preliminary Prospectus or Prospectus, or any further amendment
or supplement thereto made prior to such Time of Delivery, on its issue date and
as of such Time of Delivery, contained or contains any untrue statement of a
material fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Preliminary Prospectus or Prospectus, or any amendment or supplement
thereto made prior to such Time of Delivery, as of its issue date and as of such
Time of Delivery, contained or contains any untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (provided that such counsel need express no belief
regarding the financial statements, the notes and schedules thereto and other
financial, statistical or operating information or data contained in the
Prospectus, or any amendment or supplement thereto).
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of officers of
the Company and public officials. Copies of such certificates of officers of the
Company and other certificates and letters shall be furnished to the
Underwriters and furnished to counsel for the Underwriters.
(d) Seyfarth ▇▇▇▇ LLP, counsel for the Underwriters, shall have
furnished to the Representative such opinion or opinions, dated such Time of
Delivery, with respect to such matters as the Representative may reasonably
request, and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(e) The Representative shall have received from PKF, Certified Public
Accountants, A Professional Corporation, in form and substance satisfactory to
the Representative, letters dated as of the date hereof, the date of delivery of
the Firm Shares and the date(s) of delivery of any Optional Shares, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to Underwriters with respect to the financial statements and
certain financial information contained in the Prospectus; provided that the
letter dated as of the date of delivery of the Firm Shares shall use a "cut-off
date" not earlier than the date hereof.
(f) Since the date of the latest audited financial statements included
in the Prospectus, neither the Company nor any of its subsidiaries shall not
have sustained any change or any development involving a prospective change
(including, without limitation, a change in management or control of the
Company) reasonably likely to have a Material Adverse Effect, otherwise than as
disclosed in or contemplated by the Prospectus, the effect of which, in either
such case, in the Representative's reasonable judgment makes it impracticable or
inadvisable to proceed with the purchase, sale and delivery of the Shares.
16
(g) Subsequent to the date hereof, there shall not have occurred any of
the following: (i) any suspension or limitation in trading in securities
generally on any national securities exchange or any setting of minimum prices
for trading on any national securities exchange, or in the Common Stock of the
Company by the Commission, any national securities exchange; (ii) a moratorium
on commercial banking activities declared by either federal or state
authorities; or (iii) any outbreak or escalation of hostilities involving the
United States, declaration by the United States of a national emergency or war
or any other national or international calamity or emergency if the effect of
any such event specified in this clause (iv) in the Representative's reasonable
judgment makes it impracticable or inadvisable to proceed with the purchase,
sale and delivery of the Shares.
(h) The Company shall have furnished to the Representative at such Time
of Delivery certificates of the chief executive officer or an executive vice
president and the chief financial officer of the Company satisfactory to the
Representative, as to the accuracy of the representations and warranties of the
Company herein at and as of such Time of Delivery with the same effect as if
made at such Time of Delivery, as to the performance by the Company of all of
its obligations hereunder to be performed at or prior to such Time of Delivery,
and as to such other matters as the Representative may reasonably request, and
the Company shall have furnished or caused to be furnished certificates of such
officers as to such matters as the Representative may reasonably request.
(i) The representations and warranties of the Company in this Agreement
and in the certificates delivered by the Company pursuant to this Agreement
shall be true and correct in all material respects when made and on and as of
each Time of Delivery as if made at such time, and the Company shall have
performed in all material respects all covenants and agreements and satisfied
all conditions contained in this Agreement required to be performed or satisfied
by the Company at or before such Time of Delivery.
(j) The Shares shall have been approved for listing on the American
Stock Exchange.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement made by the Company in Section
1 of this Agreement; (ii) any untrue statement or alleged untrue statement of
any material fact contained in (A) any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or (B) any application or other
document, or amendment or supplement thereto, executed by the Company or based
upon written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Shares under the securities or blue sky
laws thereof or filed with any securities association or securities exchange
(each an "Application"); or (iii) the omission of or alleged omission to state
in any Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto, or any Application of a
17
material fact required to be stated therein or necessary to make the statements
therein not misleading; and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto or any Application in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representative expressly for use therein. The Company will not, without the
prior written consent of the Representative, which shall not be unreasonably
withheld, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding (or related cause of
action or portion thereof) in respect of which indemnification may be sought
hereunder (whether or not any Underwriter is a party to such claim, action, suit
or proceeding), unless such settlement, compromise or consent includes an
unconditional release of each Underwriter from all liability arising out of such
claim, action, suit or proceeding (or related cause of action or portion
thereof).
(b) Each Underwriter, severally but not jointly, agrees to indemnify
and hold harmless the Company against any losses, claims, damages or liabilities
to which the Company may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto, or any Application 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 not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representative expressly for use
therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise than under such subsection (a) or (b). In case any
such action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to the
indemnifying party); provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to it or other indemnified parties which are different
from or additional to those available to the indemnifying party, the
indemnifying party shall not have the
18
right to assume the defense of such action on behalf of such indemnified party
and such indemnified party shall have the right to select separate counsel to
defend such action on behalf of such indemnified party. After such notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof and approval by such indemnified party of counsel appointed
to defend such action, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof. Nothing in this
Section 8(c) shall preclude an indemnified party from participating at its own
expense in the defense of any such action so assumed by the indemnifying party.
(d) If the indemnification provided for in this Section 8 is unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other hand from the
offering of the Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
the Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
19
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director and employee of
the Underwriters and to each person, if any, who controls any Underwriter within
the meaning of the Act or the Exchange Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act or the
Exchange Act.
9. Default of Underwriters.
(a) If any Underwriter defaults in its obligation to purchase Shares at
a Time of Delivery, the Representative may in its discretion arrange for one or
more other Underwriters and/or one or more other parties to purchase such Shares
on the terms contained herein within thirty-six (36) hours after such default by
any Underwriter. In the event that, within the respective prescribed period, the
Representative notifies the Company that they have so arranged for the purchase
of such Shares, the Representative shall have the right to postpone a Time of
Delivery for a period of not more than seven (7) days in order to effect
whatever changes may thereby be made necessary in the Prospectus, or in any
other documents or arrangements, and the Company agrees to file promptly any
amendments to the Prospectus that in the Representative's opinion may thereby be
made necessary. The cost of preparing, printing and filing any such amendments
shall be paid for by the Underwriters. The term "Underwriter" as used in this
Agreement shall include any person substituted under this Section with like
effect as if such person had originally been a party to this Agreement with
respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the Representative as
provided in subsection (a) above, if any, the aggregate number of such Shares
which remains unpurchased does not exceed one-eleventh (1/11) of the aggregate
number of Shares to be purchased at such Time of Delivery, then the Company
shall have the right to require each non-defaulting Underwriter to purchase the
number of Shares which such Underwriter agreed to purchase hereunder at such
Time of Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made.
20
10. Termination.
(a) This Agreement may be terminated in the sole discretion of the
Representative by notice to the Company given prior to the First Time of
Delivery or any Subsequent Time of Delivery, respectively, in the event that (i)
any condition to the obligations of the Underwriters set forth in Section 7
hereof has not been satisfied, or (ii) the Company shall have failed, refused or
been unable to deliver the Firm Shares or the Company shall have failed, refused
or been unable to perform all obligations and satisfy all conditions on its part
to be performed or satisfied hereunder at or prior to such Time of Delivery, in
either case other than by reason of a default by any of the Underwriters. If
this Agreement is terminated pursuant to this Section 10(a), the Company will
reimburse the Underwriters severally upon demand for all reasonable
out-of-pocket expenses (including counsel fees and disbursements) that shall
have been incurred by them in connection with the proposed purchase and sale of
the Shares. Any termination pursuant to this Section 10(a) shall be without
liability on the part of any Underwriter to the Company or on the part of the
Company to any Underwriter, except for expenses to be paid by the Company
pursuant to Section 6 hereof or reimbursed by the Company pursuant to this
Section 10(a) and except as to indemnification and contribution to the extent
provided in Section 8 hereof.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters as provided in Section 9(a),
the aggregate number of such Shares which remains unpurchased exceeds
one-eleventh (1/11) of the aggregate number of Shares to be purchased at such
Time of Delivery, then this Agreement (or, with respect to a Subsequent Time of
Delivery, the obligations of the Underwriters to purchase and of the Company to
sell the Optional Shares) shall thereupon terminate, without liability on the
part of any non-defaulting Underwriter or the Company, except for the expenses
to be borne by the Company and the Underwriters as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
11. Survival. The respective indemnities, agreements, representations,
warranties and other statements of the Company, its officers and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person referred to in
Section 8(f) or the Company, or any officer or director or controlling person of
the Company referred to in Section 8(f), and shall survive delivery of and
payment for the Shares. The respective agreements, covenants, indemnities and
other statements set forth in Sections 6 and 8 hereof shall remain in full force
and effect, regardless of any termination or cancellation of this Agreement.
12. Notices. All communications hereunder shall be in writing and, if sent to
any of the Underwriters, shall be sufficient in all respects if mailed,
delivered or telecopied and confirmed in writing to Empire Financial Group,
Inc., ▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (Fax No. (212) ____ -
_______ ), Attention: ▇▇ ▇▇▇▇▇▇▇, Head of Investment Banking (with a copy to
Seyfarth ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇), Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.); if to the
Company, shall be sufficient in all respects if mailed, delivered or telecopied
and confirmed in writing to ZBB Energy Corporation, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (Fax No. (262) ____ - _______ ), Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, President and Chief Executive Officer (with a copy to ▇▇▇▇▇▇▇ ▇▇▇▇ LLP,
▇▇ ▇. ▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (Fax No. (▇▇▇) ▇▇▇-▇▇▇▇),
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.).
13. Binding Effect. This Agreement shall be binding upon, and inure solely to
the benefit of, the Underwriters, the Company and, to the extent provided in
Sections 8 and 11 hereof, the officers, directors and employees and controlling
persons referred to therein and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
21
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to any
provisions regarding conflicts of laws.
15. Counterparts. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
22
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us one of the counterparts hereof, and upon the
acceptance hereof by the Representative, on behalf of each of the Underwriters,
this letter will constitute a binding agreement among the Underwriters and the
Company. It is understood that your acceptance of this letter on behalf of each
of the Underwriters is pursuant to the authority set forth in the Agreement
among Underwriters, a copy of which shall be submitted to the Company for
examination, upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
ZBB ENERGY CORPORATION
By:
----------------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first written above.
EMPIRE FINANCIAL GROUP, INC.
By:
------------------------
Name:
Title:
On behalf of each of the
Underwriters
23
SCHEDULE I
Number of Optional Shares to
Total Number of Firm Shares be Purchased if Maximum
Underwriter to be Purchased Option Exercised
--------------------------------------------------- --------------------------- -----------------------------
Empire Financial Group, Inc........................
Northeast Securities, Inc..........................
Total..........................................
EXHIBIT A
---------
FORM OF LOCK-UP AGREEMENT
-------------------------
ZBB ENERGY CORPORATION
LOCK-UP AGREEMENT
___________, 2006
EMPIRE FINANCIAL GROUP, INC.
As Representative (the "Representative")
of the Several Underwriters Named in Schedule I to the Underwriting Agreement
▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned understands that you, as Representative of the several
underwriters (the "Underwriters"), propose to enter into an underwriting
agreement (the "Underwriting Agreement") with ZBB Energy Corporation (the
"Company") providing for the public offering (the "Public Offering") by the
Underwriters, including yourself, of common stock of the Company (the "Common
Stock").
In consideration of the Underwriters' agreement to purchase and make
the Public Offering of the Common Stock, and for other good and valuable
consideration, receipt of which is hereby acknowledged, the undersigned hereby
agrees, for a period of 365 days after the First Time of Delivery, as such term
is defined in the Underwriting Agreement (the "Lock-Up Period"), not to sell,
offer to sell, solicit an offer to buy, contract to sell, encumber, distribute,
pledge, grant any option for the sale of, or otherwise transfer or dispose of,
directly or indirectly, in one or a series of transactions (collectively, a
"Disposition"), any shares of Common Stock or any securities convertible or
exercisable into or exchangeable for shares of Common Stock (collectively,
"Securities"), now owned or hereafter acquired by the undersigned or with
respect to which the undersigned has acquired or hereafter acquires the power of
disposition, without the prior written consent of the Representative. Prior to
the expiration of the Lock-Up Period, the undersigned agrees that it will not
publicly announce or disclose any intention to take any action after the
expiration of such period which the undersigned is prohibited, as provided in
the preceding sentence, from taking during the Lock-Up Period.
The undersigned acknowledges and agrees that the restrictions above are
expressly agreed to preclude the holder of the Securities from engaging in any
hedging or other transaction which is designed to or reasonably expected to lead
to or result in a Disposition of Securities (or the economic equivalent thereof)
during the Lock-Up Period even if such Securities would be disposed of by
someone other than the undersigned. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or not
against the box) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any Securities or with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from the
Securities.
The undersigned hereby also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent against the transfer of
the Securities held by the undersigned except in compliance with the Lock-Up
Agreement.
It is understood that, if the Underwriting Agreement is not executed,
or if the Underwriting Agreement shall terminate or be terminated prior to
payment for and delivery of the Common Stock the subject thereof, this Lock-Up
Agreement shall automatically terminate and be of no further force or effect.
This Lock-Up Agreement shall be governed by and construed in accordance
with the laws of the State of New York (without giving effect to its conflict of
laws provisions).
Very truly yours,
----------------------------------------
Name: