EXHIBIT 1
3,333,333 Shares
(Plus up to 500,000 Option Shares to cover over-allotments, if any.)
ZBB ENERGY CORPORATION
COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
_________, 2007
EMPIRE FINANCIAL GROUP, INC.
As Representative of the Several
Underwriters Named in Schedule I Hereto
c/o Empire Financial Group, Inc.
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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 up to 3,333,333 shares (the "FIRM SHARES") of the Company's common
stock, par value $.01 per share (the "COMMON STOCKp"). 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, unless
agreed to otherwise by the Underwriters, up to 500,000 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. 333-138243) (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 by the Commission 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 final 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 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 or its counsel
expressly for use therein.
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(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 or country 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 (both, as 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 by it in violation of applicable
federal or state securities laws.
(g) Other than the equity securities of its subsidiaries (including,
without limitation, ZBB China Pty Ltd. 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
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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.
(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 other then as would not have
a Material Adverse Effect.
(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 due 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 sale 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 of the Warrants and the approval by the
American Stock Exchange of the listing of such Shares on the American Stock
Exchange 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.
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(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.
(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 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 and performance 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
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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.
(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 said consent not to be unreasonably withheld.
(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.
Section. 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.
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(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
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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.
(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")
for an aggregate of at least $20,000,000, 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, the Option 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 Option 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 Option Shares to be
purchased and the date on which such Option 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 Option 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 Option Shares prior to an exercise
of the option with respect to such Option 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
two business days' 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
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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 ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The time and date of such delivery and
payment shall be, with respect to the Firm Shares, at 9:00 a.m., New York City
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 Option Shares, at 9:00 a.m., Eastern time,
on the date reasonably specified by the Representative in the written notice
given by the Representative of the Underwriters' election to purchase all or
part of such Option 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 Option 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."
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 its
counsel and 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. Any further amendment or any supplement to the Registration Statement or
Prospectus shall be presented to the Representative in advance of filing and
shall be filed unless disapproved by the Representative for good reason within 3
business days 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 within the
United States 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.
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(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 here 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 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) Upon request of the Representative and 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 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. Notwithstanding anything herein to the
contrary, no market stabilization activities lawfully and reasonably implemented
by the Underwriters with respect to the Shares or Option Shares, during the
period immediately after the closing of First Delivery Date shall be deemed a
violation of this Agreement.
(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
10
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's 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, it will 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 reasonably 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 experienced in securities law matters, for 12
months from the Closing Date. The Representative acknowledges that ▇▇▇▇▇▇▇ ▇▇▇▇
LLP, the Company's current United States counsel is so qualified.
(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. The foregoing appointment shall be subject to
the advisor's execution of a non-disclosure agreement and/or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
policy or agreement.
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
11
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 the Representative
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 up to
333,333 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. A copy of the form 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.
The Representative shall have received an opinion, dated such Time of
Delivery, of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, securities counsel for the Company in
connection with this Agreement, in form and substance satisfactory to the
Representative and its counsel, to the effect that:
(i) Based solely upon certificates of public officials, the
Company is validly existing as a corporation, and is in good
standing, under the Business Corporation Law of the State of
Wisconsin. The Company has the corporate power under the
Business Corporation Law of the State of Wisconsin and the
Articles of Incorporation and the By-Laws of the Company to
execute, deliver and perform (including, but not limited to,
issuing the shares and the Option Shares in accordance with
this Agreement) this Agreement, the Underwriter's Warrant and
the Consulting Agreement. The Company has the corporate power
under the Business Corporation Law of the State of Wisconsin
and the Articles of Incorporation and the By-laws of the
Company to own its properties and conduct its business as
described in the Prospectus. There is no state in which, by
virtue of the ownership of property, or the conduct of
business, by the Company in such state, the Company would be
required to qualify to do business under the statute of such
state providing for the qualification of a business
corporation incorporated in another state to do business to
such state, assuming that, in determining whether such
qualification was necessary, such state applied the principles
applied under the Business Corporation Law of the State of New
York to determine if such a business corporation is required
to qualify under such Business Corporation Law to do business
in the State of New York.
13
(ii) Based solely upon certificates of public officials, ZBB
Technologies, Inc. (the "U.S. SUBSIDIARY") is validly existing
as a corporation, and is in good standing, under the Business
Corporation Law of the State of Wisconsin. All of the issued
shares of capital stock of the U.S. Subsidiary have been duly
and validly authorized and issued, and are fully paid and
non-assessable, under the Business Corporation Law of the
State of Wisconsin and the Articles of Incorporation and the
By-Laws of the Company, are owned of record directly by the
Company and, to such counsel's knowledge, are free and clear
of all liens, encumbrances, equities and claims other than
identified in a Pledge and Escrow Agreement, dated as of June
14, 2006, from the Company as pledgor in favor of certain
secured creditors as pledgees.
(iii) All of the issued shares of capital stock of the Company,
including, but not limited to, all of the Shares delivered on
the Closing Date and all other outstanding shares of the
Common Stock, have been duly authorized and validly issued,
and are fully paid and non-assessable, under the Business
Corporation Law of the State of Wisconsin and the Articles of
Incorporation and the By-laws of the Company and conform in
all material respects to the description thereof contained in
the Prospectus. The Warrant Shares been duly authorized, and,
when delivered against payment therefor as contemplated by the
Underwriter's Warrant, will be validly issued, fully paid and
nonassessable, under the Business Corporation Law of the State
of Wisconsin and the Articles of Incorporation and the By-laws
of the Company and will conform to the description thereof
contained in the Prospectus. None of the issued shares of the
Common Stock has been issued in violation of the Business
Corporation Law of the State of Wisconsin or any preemptive
right of any shareholder under the Articles of Incorporation
or the By-laws of the Company, and no party (including, but
not limited to, any holder of outstanding shares of the Common
Stock) has any preemptive right under the Business Corporation
Law of the State of Wisconsin to subscribe for any of the
Shares or any of the Warrant Shares.
(iv) To such counsel's knowledge, except as disclosed in the
Prospectus, there is no outstanding (A) security or obligation
of the Company convertible into or exchangeable for any
capital stock of the Company, (B) warrant, right or option to
subscribe for or purchase from the Company any such capital
stock or any such security or obligation of the Company
convertible into or exchangeable for any such capital stock
other than pursuant to the Company's stock benefit plans or
(C) obligation of the Company to issue any shares of such
capital stock, any such security or obligation of the Company
convertible into or exchangeable for any such capital stock or
any such warrant, right or option.
(v) The sale of those of the Shares being sold at such Time of
Delivery, the sale of the Warrant Shares upon exercise of the
Underwriter's Warrant and
14
the performance of this Agreement, the Underwriter's Warrant
and the Consulting Agreement and the consummation of the
transactions contemplated by this Agreement, the Underwriter's
Warrant and the Consulting Agreement will not, assuming the
application of proceeds from the sale of the Shares as set
forth in the Prospectus, violate (a) the Business Corporation
Law of the State of Wisconsin, any statute, rule or regulation
of the State of New York or any United States federal statute
rule or regulation, (b) to counsel's knowledge, any order of
any governmental agency or body or any court having
jurisdiction over the Company, the U.S. Subsidiary or any of
the properties of the Company or the U.S. Subsidiary, (c) any
agreement or instrument (including, but not limited to, any
indenture but excluding any loan or credit agreement, mortgage
or lease) to which the Company or the U.S. Subsidiary is a
party, by which the Company or the U.S. Subsidiary is bound or
to which any of the properties of the Company or the U.S.
Subsidiary is subject and that is identified to such counsel
by the Company or (d) the Articles of Incorporation or the
By-laws of the Company.
(vi) No consent, approval, authorization or order of, or filing
with, any governmental agency or body of the State of
Wisconsin or the State of New York, any court of the State of
Wisconsin or the State of New York or any United States
federal governmental agency or body or United States federal
court is required to be obtained or made by the Company under
the Business Corporation Law of the State of Wisconsin, any
statute, rule or regulation of the State of New York or any
United States federal statute, rule or regulation for the
consummation of the transactions contemplated by this
Agreement in connection with the sale of the Shares and the
Warrant Shares by the Company, except for those that have been
obtained and made under the Act and those required under the
Exchange Act or any state securities statute, rule or
regulation.
(vii) To such counsel's knowledge, other than as disclosed in the
Prospectus, there is no pending or threatened litigation,
arbitration or investigation to which the Company or the U.S.
Subsidiary is a party or to which any of the properties of the
Company or the U.S. Subsidiary is subject that, if determined
adversely to the Company or the U.S. Subsidiary, would
individually or in the aggregate have a Material Adverse
Effect.
(viii) The execution, delivery and performance (including, but not
limited to, the issuance of the Shares and the Option Shares
in accordance with this Agreement) of this Agreement, the
Underwriter's Warrant and the Consulting Agreement by the
Company have been duly authorized by all corporate (including,
but not limited to, shareholder) action of the Company
necessary under the Business Corporation Law of the State of
Wisconsin and the Articles of Incorporation and the By-Laws of
the Company.
15
(ix) Each of this Agreement, the Underwriter's Warrant and the
Consulting Agreement is enforceable against the Company in
accordance with its terms under the law of the State of New
York, subject to applicable bankruptcy, insolvency,
reorganization and moratorium statutes, rules and regulations
and other statutes, rules and regulations relating to or
affecting the enforcement of creditors' rights generally and
to general equitable principles and except that the
enforceability of rights to indemnity and contribution under
this Agreement may be limited under any applicable securities
statute, rule or regulation or any public policy underlying
any such statute, rule or regulation.
(x) The Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus and taking account of
the operation of the Company's business as described in the
Prospectus, will not be an "investment company" as defined in
the Investment Company Act.
(xi) The Registration Statement and the Prospectus, and each
amendment of or supplement to either thereof, each as of its
effective or issue date (other then the financial statements
and the notes and schedules thereto, as to which such counsel
need express no opinion), complied as to form in all material
respects with the requirements of the Act and the rules and
regulations thereunder.
Such counsel shall also confirm that, although such counsel has not passed
upon, has not undertaken to verify independently, and does not assume any
responsibility for, the accuracy, completeness or fairness of any statement
contained in the Preliminary Prospectus or the Prospectus, subject to the
qualifications set forth in such opinion, that, based upon participation in
conferences with officers, directors and other representatives of the Company,
representatives of the independent public accountants for the Company and
representatives of the Representative at which the contents of the Prospectus or
any amendment thereof or supplement thereto were discussed, such counsel has no
reason to believe that the Prospectus or any amendment thereof or supplement
thereto, as of its issue date or as of the date of such opinion, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (provided that such counsel need not express any 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, to the extent such
counsel deems proper, on certificates of officers of the Company or the U.S.
Subsidiary as to matters of fact, on certificates of public officials and on
opinions of local counsel. Copies of such certificates and opinions shall be
furnished to the Underwriters and counsel for the Underwriters.
In rendering such opinion, such counsel may limit statements qualified by
phrases such as "to our knowledge" or "we have no reason to believe" to the
actual knowledge of those of such counsel's present attorneys who have had
primary responsibility for advising the Company with
16
respect to the transactions contemplated by this Agreement, reviewing and
negotiating this Agreement on behalf of the Company and participating in
conferences with officers, directors and other representatives of the Company,
representatives of the independent public accounts for the Company and
representatives of the Representative at which the contents of this Agreement or
any amendment thereof or supplement thereto were discussed.
In rendering such opinion, such counsel need not address statutes, rules
and regulations regulating or otherwise applicable to any matter relating to
utility company regulation, energy regulation, energy or providers or
transmitters of energy or compliance with any of the foregoing.
(c) 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.
(d) 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 Option 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.
(g) Subsequent to the date hereof and prior to Closing, 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
17
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 actual 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 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 to state in any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto, or any Application of a 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).
18
(b) Each Underwriter, severally but not jointly, agrees to indemnify and
hold harmless the Company against any actual 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 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
19
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 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
20
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 Registration Statement or
American Stock Exchange listing application, 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. Notwithstanding the foregoing, in the event that any Underwriter does
not purchase the Shares contemplated hereby, the Representative shall be
ultimately responsible therefore.
(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.
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
21
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 Option 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. (▇▇▇) ▇▇▇-▇▇▇▇),
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) 253 - 9822), 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.
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.
22
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
23
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
24
SCHEDULE I
Number of Option
Shares to be Purchased
Total Number of Firm if Maximum Option
Underwriter Shares to be Purchased Exercised
Empire Financial Group, Inc. ...
Jesup & ▇▇▇▇▇▇ Securities.......
Total.......................
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
ZBB ENERGY CORPORATION
LOCK-UP AGREEMENT
___________, 2007
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: