Execution Copy
THIS AGREEMENT is made on 9 February 2006 BETWEEN
(1) ZBB ENERGY CORPORATION a corporation registered in a Wisconsin and whose
principal office is at X00 X00000 Xxxxxxxxx Xxx, Xxxxxxxxx Xxxxx,
Xxxxxxxxx, XXX 00000 (THE "COMPANY"); and
(2) XXXXXXXXXX CAPITAL PARTNERS L.P. a limited partnership registered in
Delaware whose principal office is at 000 Xxxxxx Xxxxxx, Xxxxxx Xxxx, XX
00000 XXX (the "LENDER").
BACKGROUND
On the terms as set out in this Agreement, the Lender has agreed to advance
to the Company an amount of one million three hundred thousand Australian
dollars (AUS$1,300,000) or such other amount of Australian dollars as,
based on the Closing Date Exchange Rate, shall represent one million United
States dollars (US$1,000,000).
IT IS AGREED:
1 DEFINITIONS
1.1 In this Agreement:
"ASTC SETTLEMENT RULES" means the settlement rules from time to time
published by ASX Settlement and Transfer Corporation Pty Limited.
"ASX" means the Australian Stock Exchange Limited
"ASX RULES" means the listing rules from time to time published by the ASX.
"BLOOMBERG" means Bloomberg LP, a financial information provider.
"BUSINESS DAYS" shall mean any day, other than Saturday, Sunday or any
other day in which the national banks in either Australia or the United
States shall not be open for business.
"CASH PAYMENT" means any amount paid into the Lender's Bank Account in
accordance with Clause 6.2 (or if applicable Clause 7.1).
"CASH PAYMENT DATE" means the date of a Cash Payment Notice.
"CASH PAYMENT DATE EXCHANGE RATE" means in relation to each Cash Payment
Date the Australian dollar to US dollar spot exchange rate as quoted in the
London edition of the Financial Times on such Cash Payment Date.
"CASH PAYMENT NOTICE" has the meaning given to it in Clause 6.1.
"CLOSING DATE" means a date that shall be the date on which the Company
shall provide Lender with official notice of Shareholder Approval;
provided, that such Closing Date shall be not later than twenty (20)
Business Days following the date of this Agreement.
"CLOSING DATE EXCHANGE RATE" means, at any point in time, the Australian
dollar to US dollar spot exchange rate as quoted in the London edition of
the Financial Times on the Closing Date.
"COMMON SHARES" means the common stock of par value $0.01 per share each in
the capital of the Company.
"CONVERSION AMOUNT" has the meaning set out in Clause 5.1 of this
Agreement.
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"CONVERSION PRICE" means in respect of any Loan Notice Date (or for the
purposes of Clause 7.4 the Financing Transaction Date) the lower of (i) the
lowest VWAP reported during the 10 consecutive Trading Days prior to the
Closing Date and (ii) 80% (eighty per cent) of the lowest VWAP for the 10
consecutive Trading Days immediately prior to the Loan Notice Date (or for
the purposes of Clause 7.4 the Financing Transaction Date).
"CHESS" means the Clearing House Electronic Subregister System operated by
ASX Settlement and Transfer Corporation Ply Limited (a wholly owned
subsidiary of the ASX) under which securities may be held or transferred in
uncertificated form.
"CUFS" means CHESS Depositary Interests for Common Shares in the form of
CHESS Units of Foreign Financial Products that permit trades in Common
Shares to be settled in CHESS.
"DELIVERY" in respect of any Lender's Shares means, at the sole option of
the Lender, either:
(a) from and after the date that the Common Shares trade on any US Stock
Exchange, the physical delivery of stock certificates evidencing such
Lender's Shares registered in the name of the Lender or its
nominee(s), or:
(b) whilst the Common Shares and/or CUFS maintain a Quotation on the ASX:
(i) the registration of CHESS Depository Nominees Pty Limited as
holder of the legal title to such Lender's Shares;
(ii) the issue to the Lender of CUFS in respect of such Lender's
Shares; and
(iii) the issue of a holding statement in respect of the CUFS to the
Lender,
all In accordance with the ASTC Settlement Rules,
and "DELIVER" shall be construed accordingly.
"DELIVERY DATE" means the date on which Loan Shares are Delivered pursuant
to a Loan Notice.
"FINANCING TRANSACTION" means the collective reference to (a) the Pipe
Transaction, or (b) any other public or private financing of debt or equity
securities of the Company that provides the Company with sufficient net
proceeds to repay the Loan in full (and all other amounts owed to the
Lender) pursuant to Clause 6.
"FINANCING TRANSACTION DATE" means the date upon which the PIPE Transaction
or another Financing Transaction completes.
"FINANCING TRANSACTION DATE EXCHANGE RATE" means in relation to any
Financing Transaction Date the Australian dollar to US dollar exchange rate
as quoted in the London edition of the Financial Times on such Financing
Transaction Date.
"FLOOR PRICE" shall in respect of a Loan Notice Date or a Subscription
Notice Date mean six and one-quarter United States cents (US$0.0625) or the
equivalent amount in Australian Dollars at the Loan Notice Date Exchange
Rate, subject to adjustment as provided in Clause 10; PROVIDED, HOWEVER,
that unless on or before 31 July 2006, the Company shall have tendered
payment in full of the outstanding principal amount of the Loan and all
interest thereon pursuant to clauses 6 or 7, and the Lender shall have
either accepted such payment or converted the Loan in full into Loan Shares
(as herein provided), from and after 1 August 2006, the Floor Price shall
be zero (0).
"GROUP" means the Company and its subsidiaries (as defined in s736
Companies Act 1985) from time to time.
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"LENDER'S BANK ACCOUNT" means the Lender's account with XX Xxxxxx Chase
Bank, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000, sort code ABA number
000000000 account name Xxxxxxxxxx Equity Partners LP account number 957 201
613 or such other bank and/or account information as Lender may advise the
Company in writing.
"LENDER'S SHARES" means any of the Common Shares or CUFS, including Loan
Shares and Warrant Shares that may be issued to the Lender pursuant to this
Agreement.
"LOAN" means the amount of one million three hundred thousand Australian
dollars (AUS$1,300,000) or such other amount of Australian dollars as,
based on the Closing Date Exchange Rate, shall represent one million United
States dollars (US$1,000,000) to be advanced pursuant to Clause 2, or the
principal amount outstanding for the time being of that loan (including any
interest compounded with the Loan pursuant to Clause 4.1).
"LOAN NOTICE" has the meaning set out in Clause 5.1 of this Agreement.
"LOAN NOTICE DATE" means the date of a Loan Notice.
"LOAN NOTICE DATE EXCHANGE RATE" means in relation to each Loan Notice Date
the Australian dollar to US dollar spot exchange rate as quoted in the
London edition of the Financial Times on such Loan Notice Date.
"LOAN SHARES" means Common Shares and/or CUFS issued to the Lender pursuant
to this Agreement upon any one or more conversions of the Loan (other than
pursuant to Clause 7).
"PIPE SECURITIES" means the Common Shares, preferred or preference shares
or notes or debentures that may be issued pursuant to the PIPE Transaction;
provided, that, for purposes of this Agreement, the term "PIPE Securities"
shall not mean Options or Warrants to purchase Common Shares.
"PIPE TRANSACTION" means the proposed private investment in public equity
(PIPE) transaction to be arranged by Empire Financial Group, Inc. or any
other placement agent acceptable to the Company, whereby the Company will
issue the PIPE Securities to accredited investors by way of a private
placement or any other similar financing transaction which provides the
Company with sufficient net proceeds to repay the Loan (and all other
amounts owed to the Lender) pursuant to Clause 6.
"QUOTATION" means official quotation by ASX and, if and when the Common
Shares trade on a US Stock Exchange, as quoted on such US Stock Exchange
and as reported by Bloomberg; and "Quote" or "Quoted" shall be construed
accordingly.
"REDUCTION NOTICE" has the meaning set out in Clause 8.4 of this Agreement.
"REDUCTION NOTICE DATE" means the date of a Reduction Notice.
"REGISTRATION RIGHTS AGREEMENT" means the agreement in substantially the
form of Exhibit A hereto, between Lender and the Company, pursuant to which
the Company shall agree, following the Quotation of its Common Shares on a
US Stock Exchange, to register for resale under the US Securities Act of
1933, as amended, all of the Lender's Shares.
"REDUCTION NOTICE DATE EXCHANGE RATE" means in relation to each Reduction
Notice Date the Australian dollar to US dollar spot exchange rate as quoted
in the London edition of the Financial Times on such Reduction Notice Date.
"SEC" means the United States Securities and Exchange Commission.
"SHAREHOLDER APPROVAL" means the approval by the shareholders of the
Company at the Shareholders Meeting of this Agreement and all of the
transactions contemplated hereby, including the issuance of all of the
Lender's Shares, CUFS and the Warrant pursuant to this
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Agreement; in each case by the affirmative vote of the requisite number of
outstanding Company Shares of the Company.
"SHAREHOLDERS MEETING" shall mean the special meeting of shareholders of
the Company to be conducted not later than fifteen (15) Business Days
following the date of execution of this Agreement, pursuant to which the
Company shall seek Shareholder Approval.
"SUBSCRIPTION NOTICE" has the meaning set out in Clause 8.1 of this
Agreement.
"SUBSCRIPTION NOTICE DATE" means the date of the Subscription Notice.
"TAXATION" means any of the following: (a) any tax, duty, impost or levy,
past or present, of the United Kingdom or elsewhere, whether governmental,
state, provincial, local governmental or municipal, including income tax
(including income tax required to be deducted or withheld from or accounted
for in respect of any payment under section 203 of the Taxes Act or
otherwise), corporation tax, advance corporation tax, capital gains tax,
inheritance tax, VAT, customs and other import or export duties, rates,
stamp duty, stamp duty reserve tax, national insurance and social security
contributions; and (b) any fine, penalty, surcharge, interest or other
imposition relating to any tax, duty, impost or levy mentioned in
paragraph(a) of this definition or to any account, record, form, return or
computation required to be kept, preserved, maintained or submitted to any
person for the purposes of any such tax, duty, impost or levy.
"TRADING DAY" means any day during which ASX is open for business.
"US STOCK EXCHANGE" means any one of the New York Stock Exchange, Inc., the
American Stock Exchange Inc., the Nasdaq Stock Market, Inc., or the
National Association of Securities Dealers ("NASD") OTC Bulletin Board.
"VWAP" means on any date, the volume weighted average price of the Common
Shares as Quoted on the ASX; PROVIDED, HOWEVER, if the Common Shares shall
subsequently be listed for trading on a US Stock Exchange, the term VWAP in
relation to any period on or after such listing on a US Stock Exchange
occurs shall mean the LOWER of (a) the volume weighted average price (as
reported by Bloomberg) of the Common Shares as Quoted on such US Stock
Exchange, or (b) if also Quoted on the ASX, the volume weighted average
price of the Common Shares as Quoted on the ASX.
"WARRANT" means the subscription right or option held by the Lender to
purchase Common Shares or CUFS, as contemplated by Clause 8 of this
Agreement.
"WARRANT SHARES" means the aggregate number of Common Shares or CUFS
issuable upon exercise of the Warrant.
1.2 References in this Agreement to Clauses are to the clauses of this
Agreement.
2 LOAN
2.1 Subject to Clause 12.3 and the Lender approving the use of proceeds
information provided by the Company, on or before the third Trading Day
after the Closing Date the Lender shall advance to the Company the amount
of one million three hundred thousand Australian dollars (AUS$1,300,000) or
such other amount of Australian dollars as, based on the Closing Date
Exchange Rate, shall represent one million United States dollars
(US$1,000,000).
3 REPAYMENT
The Company shall pay or repay the Loan, together with all other amounts
due to the Lender pursuant to this Agreement, on or before the second
anniversary of the Closing Date. Any such payments or repayments shall be
made as set out in this Agreement and in particular any payment or
repayment in cash may only be made in accordance with Clause 6 or Clause 7.
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4 INTEREST
4.1 The Company shall pay interest to the Lender on the outstanding amount of
the Loan at the rate of 10% (ten per cent) per annum to be compounded with
the Loan monthly on the last day of each calendar month. Interest, as so
compounded, shall be added to the principal amount of the Loan and shall be
payable on the due date of the Loan; provided, that the Company may elect
at any time to pay any one or more interest payments in cash on the last
day of each calendar month.
4.2 If the Company fails to pay any amount payable by it under this Agreement
on its due date, interest shall accrue on the overdue amount from the due
date up to the date of actual payment (both before and after judgment) at
the rate of 13% (thirteen per cent) per annum. Any interest accruing under
this Clause 4.2 shall be immediately payable by the Company on demand by
the Lender. Any such interest (if unpaid) arising on an overdue amount will
be compounded daily with the overdue amount but will remain immediately due
and payable.
5 ISSUE OF LOAN SHARES
5.1 The Company shall upon written notice (a "LOAN NOTICE") from the Lender at
any time when any amounts are outstanding under this Agreement issue and
Deliver to the Lender Loan Shares. The Loan Notice will specify the
Australian dollar value of the Loan Shares to be issued pursuant to the
Loan Notice (the "CONVERSION AMOUNT") which shall not exceed the total
amount outstanding under this Agreement from time to time.
5.2 Unless the Company agrees otherwise or the Company notifies the Lender of a
PIPE Transaction or other Financing Transaction pursuant to Clause 7.1, the
Lender shall not, in any one period of seven consecutive days, be entitled
to issue Loan Notices in respect of an aggregate Conversion Amount of more
than AUS$130,000.
5.3 Subject to Clause 11.1 the number of Loan Shares to be issued and Delivered
by the Company in respect of a Loan Notice shall be the Conversion Amount
specified in that Loan Notice divided by the Conversion Price then in
effect; provided that if the Conversion Price is lower than the Floor Price
the Conversion Price shall be increased so that it is equal to the Floor
Price. In the case of any fractional entitlements the number of Loan Shares
to be issued shall be rounded up to the next whole number.
5.4 The amounts outstanding under this Agreement will be reduced on each
Delivery Date by the Conversion Amount set out in the Loan Notice relating
to that Loan Notice Date.
5.5 Notwithstanding any other provision of this Agreement the Lender may, in
its sole discretion, elect to require the Company to satisfy in cash any
amounts due to the Lender pursuant to either (i) Clause 4.2 or Clause 9.5,
or (ii) any provision of this Agreement after this Agreement has been
terminated in accordance with Clause 15.
5.6 Any payments received, or treated as being received pursuant to Clause 5.4,
by the Lender shall be applied;
(a) firstly to pay any fees, expenses or other amounts due pursuant to
this Agreement other than the amounts referred to in sub Clauses 5.6
(b) and (c) below;
(b) secondly to pay any amounts due to the Lender in respect of interest
pursuant to Clause 4.1 of this Agreement to the extent such interest
has not been compounded with the Loan;
(c) thirdly to repay any amount of the Loan still outstanding.
6 OPTIONAL CASH PAYMENT
6.1 Subject to Clause 6.5, the Company shall be entitled at any time, or from
time to time, to make a payment in cash in respect of all or any portion of
any amount which is outstanding pursuant
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to this Agreement by giving the Lender written notice no less than three
Trading Days prior to the date of payment (a "Cash Payment Notice").
6.2 The Cash Payment Notice will specify the cash amount to be paid by the
Company and the date of payment. Any amount to be so paid shall be
transferred to the Lender's Bank Account.
6.3 Each Cash Payment shall, subject to Clause 11.2, be applied:
(a) firstly to pay any fees, expenses or other amounts due pursuant to
this Agreement other than the amounts referred to in sub Clauses
6.3(b) and (c) below;
(b) secondly to pay any amounts due to the Lender in respect of interest
pursuant to Clause 4.1 of this Agreement to the extent such interest
has not been compounded with the Loan;
(c) thirdly to repay any amount of the Loan still outstanding.
6.4 Any part of a Cash Payment which is applied pursuant to Clause 6.3(c) shall
reduce the outstanding amount of the Loan as follows:
(a) if such Cash Payment is made less than 120 days after the Closing
Date, by an amount equal to 100 divided by 107.5 multiplied by the
amount of the Cash Payment applied pursuant to Clause 6.39(c);
(b) if such Cash Payment is made 120 days or more but not more than 180
days, after the Closing Date, by an amount equal to 100 divided by 110
multiplied by the amount of the Cash Payment applied pursuant to
Clause 6.3(c); or
(c) if such Cash Payment is made 180 days or more after the Closing Date,
by an amount equal to 100 divided by 120 multiplied by the amount of
the Cash Payment applied pursuant to Clause 6.3(c).
6.5 If a Cash Payment Notice is issued after or on the same date as a Loan
Notice then the Loan Notice will be treated as having been received first.
The amounts received or treated as being received in respect of the Loan
Notice will therefore be applied first (as set out in Clause 5) and then
any amounts received or treated as being received in respect of the Cash
Payment Notice will be applied (as set out in the preceding provisions of
this Clause 6).
7 MANDATORY CASH PAYMENT
7.1 On the Financing Transaction Date, the Company shall be required to make a
payment in cash in respect of all amounts that are outstanding pursuant to
this Agreement, subject to any adjustment required pursuant to Clause 11.4.
Such payment shall be deemed a Cash Payment and subject to the provisions
of Clause 6.3 and 6.4. Any amount to be so paid shall be transferred to the
Lender's Bank Account.
7.2 As soon as reasonably practicable and in any case not less that ten (10)
Trading Days before the Financing Transaction Date, the Company shall
notify the Lender of the proposed completion date of the Financing
Transaction or PIPE Transaction (as the case may be) and keep the Lender
informed as to the progress of the Financing Transaction or PIPE
Transaction, as the case may be.
7.3 Prior to the Financing Transaction Date, the Lender shall notify the
Company of the total amount which is outstanding pursuant to this Agreement
as referred to in Clause 7.1 and, subject to any adjustment required
pursuant to Clause 11.4 the total number of shares which must be Delivered
to the Lender on the Financing Transaction Date pursuant to Clause 7.4.
7.4 Subject to clause 7.5, on the Financing Transaction Date, the Company shall
issue and Deliver to the Lender such number of Common Shares and/or CUFS as
is equal to 50% of the amount which is determined by dividing (a) the
outstanding amount required to be repaid to the Lender
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pursuant to this Agreement immediately prior to repayment pursuant to
Clause 7.1, and (b) the applicable Conversion Price then in effect.
7.5 If the PIPE Securities do not rank pari passu in all respects with the
Common Shares, then, at the option of the Lender, the Company shall issue
and Deliver to the Lender PIPE Securities in lieu of Common Shares in order
to discharge its obligation in Clause 7.4.
7.6 In respect of any payment in cash pursuant to either Clause 6 or 7, the
Company, at its sole option, may elect to make such payment in US dollars
or Australian dollars. If the Company elects to make a cash payment in US
dollars, the US dollar to Australian dollar spot exchange rate (as quoted
in the London edition of the Financial Times on the date of such cash
payment is received by the Lender) shall be used for the purposes of
calculating the equivalent amount of Australian dollars by which the
outstanding amount of the Loan (and any other amounts outstanding under
this Agreement) shall be reduced by. For the avoidance of doubt, such cash
payment shall still be subject to increase due to exchange rate movements
as provided for in clauses 11.2 and 11.4(a) (as applicable).
8 ADDITIONAL SUBSCRIPTION RIGHTS (WARRANTS)
8.1 The Company shall (in addition to the Loan Shares referred to above) upon
receipt of one or more written notices (each a "Subscription Notice") from
the Lender at any time after the Closing Date and on or prior to the fourth
anniversary of the Closing Date, issue to the Lender, in accordance with
this Clause 8 such number of Common Shares as are specified in the
Subscription Notice.
8.2 The Lender shall be entitled to issue Subscription Notices in respect of up
to 2,000,000 Warrant Shares less the number of Common Shares in respect of
which Reduction Notices have been issued.
8.3 The Lender shall, within three Trading Days of any Common Shares being
Delivered to the Lender pursuant to Clause 8.1, pay to the Company in
respect of such Common Shares an amount per Common Share equal to the lower
of (i) 80% of the VWAP on the 10 consecutive Trading Days prior to the
Closing Date and (ii) 80% of the VWAP on the date of the relevant
Subscription Notice provided that if the amount per Common Share is lower
than the Floor Price such amount shall be increased so that it is equal to
the Floor Price.
8.4 The Lender shall be entitled by notice in writing to the Company (a
"Reduction Notice") to reduce the number of Common Shares in respect of
which it may issue Subscription Notices. The Lender shall only be entitled
to issue a Reduction Notice on or after the date which is 120 days after
the Closing Date. During the period of one month immediately after the date
which is 120 days after the Closing Date and during each period of one
month immediately thereafter until the fourth anniversary of the Closing
Date, the Lender shall be entitled to issue Reduction Notices in respect of
up 10% of the Unexercised Warrants (as defined in Clause 8.6) in any one
month.
8.5 The Company shall pay to the Lender an amount of AUS$0.10 (ten cents) for
each Common Share in respect of which a Reduction Notice is issued. The
Company shall, at its election either
(a) pay such amount (adjusted if applicable pursuant to Clause 11.3) in
cash to the Lender (by transferring such amount to the Lender's Bank
Account) within 2 Trading Days of the date of the relevant Reduction
Notice; or
(b) issue Common Shares to the Lender in respect of such amount, in
exactly the same way as if a Loan Notice had been issued on the date
of the Reduction Notice for a Conversion Amount equal to the total
amount due to the Lender in respect of that Reduction Notice.
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8.6 The Lender shall be entitled to issue Reduction Notices in respect of up to
2,000,000 Common Shares less the number of Common Shares which have been
validly issued pursuant to a Subscription Notice or have been subject to a
Reduction Notice (the "Unexercised Warrants").
9 ISSUE OF SHARES OR CUFS
9.1 In respect of any Lender's Shares, to be issued to the Lender pursuant to
this Agreement the Company shall make application for Quotation of the
Lender's Shares, as soon as possible after receipt of a Loan Notice or
Subscription Notice. Any such Quotation is expected to be on the third
Trading Day after such application is made.
9.2 The Lender shall with each Loan Notice or Subscription Notice advise the
Company whether the Lender's Shares to be Delivered pursuant to such Loan
Notice or Subscription Notice shall be in the form of certificated Common
Shares Quoted on a US Stock Exchange or in CUFS. The relevant number of
Lender's Shares or CUFS (as the case may be) shall be Delivered within
seven (7) Trading Days of the date on which the Loan Notice or as the case
may be, Subscription Notice is received (or deemed to have been received,
in accordance with Clause 18). Any breach of this Clause 9.1 will amount to
a serious breach of this Agreement which the Company acknowledges may cause
the Lender significant financial loss.
9.3 On or before the Trading Day immediately prior to the anticipated date of
Quotation of the Lender's Shares the following shall occur:
(a) the Company shall, conditional only upon Quotation of the Lender's
Shares, allot and issue the relevant Lender's Shares to the Lender;
(b) the Company shall do all acts and things necessary to procure
Quotation of the relevant Lender's Shares on the next following
Trading Day including, without limitation to the forgoing, if the
Lender requests that such Lender's Shares are to be in the form of
Common Shares to be traded on a US Stock Exchange, the Company shall
do all acts and things necessary to procure the SEC's declaration that
the Company's registration statement covering such Lenders' Shares is
effective; and;
(c) the Company shall give all necessary directions and instructions to
its registrars to procure that the relevant Lenders Shares or CUFS are
Delivered to the Lender on the date of Quotation.
9.4 The Lender's Shares to be issued to the Lender under this Agreement shall
be allotted and issued by the Company fully paid and free from all claims,
charges, liens, encumbrances, equities and third party rights whatsoever
and (save for any Common Shares that are issued pursuant to Clause 7.4)
will rank pari passu in all respects with the existing issued Common Shares
including the right to receive all dividends or other distributions
declared, made or paid after the date of allotment.
9.5 If the Company fails to Deliver any Lender's Shares in breach of its
obligations under this Agreement to do so and such Lender's Shares still
have not been issued seven (7) Trading Days after the date of the relevant
Loan Notice, then the Company shall, without prejudice to any other rights
which the Lender may have under this Agreement, pay to the Lender an amount
equal to two (2%) per cent of the then outstanding amount of the Loan each
calendar month (or part of a calendar month) that such Lender's Shares are
not Delivered. The parties agree that this represents a genuine
pre-estimate of loss and is not in any way intended to be a penalty. Any
such payment shall be made within three (3) days of the end of the calendar
month during which such seven (7) Trading Day period expires and within
three (3) days of the end of any subsequent calendar month (or part
thereof) in which such Lender's Shares remain outstanding.
10 STOCK SPLITS AND ADJUSTMENT PROVISIONS
10.1 In the event that, at any time prior to Delivery of a Loan Notice or a
Subscription Notice, the Company shall effect any forward split of its
outstanding Common Shares, the Floor Price shall
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be appropriately and equitably decreased and the aggregate number of
Warrant Shares shall be appropriately and equitably increased.
10.2 In the event that, at any time prior to Delivery of a Loan Notice or a
Subscription Notice, the Company shall effect any reverse split of its
outstanding Common Shares, the Floor Price shall be appropriately and
equitably increased and the aggregate number of Warrant Shares shall be
appropriately and equitably decreased.
10.3 Except in connection with the contemplated PIPE Transaction or as otherwise
consented to by the Lender, the Company shall not consummate any forward
split or reverse split of its outstanding Common Shares at any time while
the Loan shall be issued and outstanding.
10.4 In the event that the Company issues Common Shares (save in respect of
options or warrants to purchase Common Shares) at any time on or after the
Closing Date at a price below the Floor Price, the Floor Price shall be
decreased to 100% of the lowest price at which Common Shares are issued by
the Company.
11 EXCHANGE RATE MOVEMENTS
11.1 If on any Loan Notice Date, the Loan Notice Date Exchange Rate is less than
the Closing Date Exchange Rate then the number of Loan Shares to be issued
shall be increased by the same percentage as results from dividing the
Closing Date Exchange Rate by the relevant Loan Notice Date Exchange Rate.
By way of example, if the number of Loan Shares to be issued in respect of
a particular Loan Notice would, but for this Clause 11.1, be 1,000 and if
the Closing Date Exchange Rate is 1.80 and the relevant Loan Notice Date
Exchange Rate is 1.75, then 1,029 Loan Shares will be issued in relation to
that Loan Notice.
11.2 If on any Cash Payment Date, the Cash Payment Date Exchange Rate is less
than the Closing Date Exchange Rate then the amount of cash required to
satisfy the amounts due pursuant to Clause 6.3 shall be increased by the
same percentage as results from dividing the Closing Date Exchange Rate by
the relevant Cash Payment Date Exchange Rate.
By way of example, if the amount of cash required to repay all amounts due
pursuant to Clause 6.3(a) would, but for this Clause 11.2, be US$1,000 and
if the Closing Date Exchange Rate is 1.80 and the relevant Cash Payment
Notice Date Exchange Rate is 1.75 then the amount of cash from the Cash
Payment required to repay all amounts due pursuant to Clause 6.3(a) will be
US$1,028.57. Accordingly only the surplus over US$1,028.57 from such Cash
Payment will be applied (again in the same manner) towards any amounts due
pursuant to Clause 6.3(b) and if any amount of the Cash Payment remains
after all amounts so due pursuant to Clause 6.3(b) have been paid then the
surplus will be applied (again in the same manner and after the application
of Clause 6.4) to pay amounts pursuant to Clause 6.3(c).
11.3 If in relation to a Reduction Notice an amount is to be paid pursuant to
Clause 8.5(a) and if in relation to that Reduction Notice the Reduction
Notice Date Exchange Rate is less than the Closing Date Exchange Rate then
the amount of cash required to satisfy the amount due pursuant to Clause
8.5(a) shall be increased by the same percentage as results from dividing
the Closing Date Exchange Rate by the relevant Reduction Payment Date
Exchange Rate. By way of example, if the amount of cash to be paid pursuant
to Clause 8.5(a) would, but for this Clause 11.3, be US$1,000 and if the
Closing Date Exchange Rate is 1.80 and the relevant Reduction Notice Date
Exchange Rate is 1.75 then the amount of cash to be paid pursuant to Clause
8.5(a)in respect of that Reduction Notice will be US$1,028.57.
11.4 If on any Financing Transaction Date, the Financing Transaction Date
Exchange Rate on such date is less than the Closing Date Exchange Rate
then:
(a) the amount of cash required to satisfy the amounts due pursuant to
Clause 7.1 shall be increased by the same percentage as results from
dividing the Closing Date Exchange Rate by the relevant Financing
Transaction Date Exchange Rate.
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(b) the number of shares to be issued pursuant to Clause 7.4 shall be
increased by the same percentage as results from dividing the Closing
Date Exchange Rate by the Financing Transaction Date Exchange Rate.
12 PAYMENT OF COSTS, EXPENSES, FEES AND COMMISSIONS
12.1 Each of the parties shall pay its own fees and expenses (including the fees
of any solicitors, accountants, or others engaged by such party) in
connection with this Agreement and the transactions contemplated hereby,
except that the Company will pay the fees and expenses of the solicitors to
the Lender in the sum of US$20,000 (plus applicable VAT and expenses
(including bank transfer fees)).
12.2 The Company shall pay to the Lender a due diligence fee of US$7,500, an
arrangement fee of US$35,000 and a facility fee of US$20,000.
12.3 The legal fees and expenses referred to in Clause 12.1 and the arrangement
fee referred to in Clause 12.2 shall be paid on or before the Closing Date
and such amounts shall, if not already paid, be withheld from the advance
of the Loan to be made pursuant to Clause 2.
13 SECURITY
The Company shall not provide any additional security under this Agreement.
14 INDEMNITIES
14.1 The Company shall indemnify the Lender against any loss or liability, costs
or expenses incurred by the Lender as a direct or indirect result of any
breach by the Company of any of its obligations under this Agreement
including any failure by the Company to issue Common Shares and/or CUFS or
pay, to the Lender any amount due under this Agreement on its due date.
14.2 The Company shall, within three Trading Days of a demand from the Lender,
pay to the Lender the amount of all costs and expenses (including legal
fees and any disbursements) properly and reasonably incurred by the Lender
in connection with the enforcement of, or the preservation of any of the
Lender's rights under, this Agreement.
15 TERMINATION
15.1 The Lender shall be entitled to terminate this Agreement by notice to the
Company immediately at any time if:
(a) the Company fails to obtain at the Shareholders Meeting to be held by
a date that shall be not more than twenty (20) Business Days from the
date of this Agreement, all necessary Shareholder Approval.
(b) the Company fails to pay any amount payable by it under this Agreement
on its due date;
(c) the Company is in breach of any of its obligations or covenants under
this Agreement,
(d) unless the Common Shares shall have been previously listed for trading
on a US Stock Exchange, the Common Shares and/or CUFS cease to be
Quoted on ASX or there shall occur any suspension of their Quotation
on ASX;
(e) there shall occur any suspension or cessation of trading of the Common
Shares on a US Stock Exchange or the Company is removed from the
official list of the ASX or a US Stock Exchange while any amount is
outstanding under this Agreement;
(f) the Company is or becomes unable to pay its debts as defined in
section 123 of the Insolvency Xxx 0000;
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(g) any petition, application or order is made or resolution proposed for
the winding up or administration of the Company or any other member of
the Group provided that this shall not apply to any such petition
which is removed within 21 days of being made; or
(h) a receiver is appointed over all or any part of the assets or
undertaking of the Company.
15.2 If this Agreement is terminated by the Lender in accordance with its terms
then any part of the Loan which has not been advanced shall immediately be
cancelled and any part of the Loan, together with accrued interest, and all
other amounts accrued or outstanding under this Agreement shall become
immediately due and payable.
16 COVENANTS
16.1 The Company covenants to the Lender that (otherwise than with the prior
written consent of the Lender) it;
(a) will use all reasonable endeavours to obtain all necessary Shareholder
Approval at the Shareholders Meeting;
(b) will use all reasonable endeavours to maintain the Quotation of the
Common Shares and/or CUFS and CUFS on ASX;
(c) in connection with the contemplated Financing Transaction, will use
all reasonable endeavours to register its Common Shares under the
United States Securities and Exchange Act of 1934, as amended, and
list its Common Shares for trading on a US Stock Exchange;
(d) subject to compliance with Section 16.1(a) above, will ensure on each
day for so long as any amount remains outstanding under this
Agreement, that it has the necessary shareholder authority to issue
the requisite number of Lender's Shares required to satisfy a Loan
Notice issued on that day in respect of a Conversion Amount equal to
at least the then outstanding amount of the Loan including any
interest capable of becoming due pursuant to Clause 4.1;
(e) will comply with its covenants set forth in Clause 10.3 above;
(f) will not, except in relation to a Financing Transaction, issue or
agree to issue Common Shares or any other shares in the share capital
of the Company other than (i) pursuant to this Agreement (ii) shares
which are already issued at the date of this Agreement or which the
Company at the date of this Agreement is contractually obliged to
issue;
(g) will file in a timely manner all reports and other documents required
of it under the Companies Xxx 0000, the ASX Rules and all other laws
or regulations applicable to it;
(h) until such time as
(A) the Company shall have become a full reporting company under the
Securities Exchange Act of 1934, as amended,
(B) the Common Shares shall have been approved for Quotation on a US
Stock Exchange, and
(C) the SEC shall have declared effective the Company's registration
statement covering the Lender's Shares, all as provided in the
Registration Rights Agreement,
the Company shall not take any action or file any document to
terminate or suspend such registration or to terminate or suspend the
Quotation of its Common Shares and/or CUFS on ASX or to have it
removed from the official list of ASX and if seeking a listing
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on a US Stock Exchange, the Company will use all reasonable endeavours
to procure completion of the steps set out in sub clauses 16.1(h)(A),
(B) and (C) above;
(i) will take all steps reasonably necessary to preserve and continue the
corporate existence of the Company;
(j) will immediately notify the Lender upon its becoming aware of:
(A) the suspension of the Common Shares and/or CUFS from Quotation on
ASX or a US Stock Exchange;
(B) the Common Shares and/or CUFS ceasing to be Quoted on either ASX
or a US Stock Exchange; or
(C) the Company being removed from the official list of the ASX.
(k) will not, at any time after the date hereof, until expiry of this
Agreement effect any merger or consolidation of the Company whether by
scheme of arrangement or otherwise with or into, or a transfer of all
or any substantial part of the assets or undertaking of the Company to
another entity (a "CONSOLIDATION EVENT") unless the resulting
successor or acquiring entity (if not the Company) assumes by written
instrument the obligation to deliver to the Lender such shares and/or
securities as following such Consolidation Event the Lender is
entitled to receive pursuant to this Agreement.
17 WITHHOLDING AND GROSSING-UP
17.1 Except as required by law, all payments due to the Lender under this
Agreement will be made free and clear of all deductions and withholdings
(whether in respect of Taxation, set- off, counter-claim or otherwise).
17.2 If any deduction or withholding is required by law to be made from any
payment due to the Lender under this Agreement, the person who is obliged
to make such payment will pay to the Lender such additional amount as is
necessary to ensure that the Lender receives a net amount (after the
deduction or withholding) equal to the amount which it would have received
had the payment in question not been subject to the deduction or
withholding.
17.3 If any payment received by the Lender under this Agreement from the Company
(other than the fees and commissions referred to in Clause 12 is subject to
Taxation, the person who is obliged to make such payment will pay to the
Lender such additional amount as is necessary to ensure that the Lender
receives and retains a net amount (after taking into account such Taxation
and any Taxation payable in respect of such additional amount) equal to the
full amount which it would have received and retained had the payment in
question not been subject to Taxation.
18 NOTICES
18.1 Any demand, notice or other communication given or made under or in
connection with this Agreement will be in writing and will, if otherwise
given or made in accordance with this Clause 18 be deemed to have been duly
given or made as follows:
(a) if sent by prepaid first class post, on the second Trading Day after
the date of posting if posted in the UK for UK delivery and on the
seventh Trading Day if posted for overseas delivery; or
(b) if delivered by hand, upon delivery; or
(c) if sent by facsimile or e-mail, on the day of transmission;
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provided however that, if it is delivered by hand or sent by facsimile or
e-mail on a day which is not a Trading Day or after 4.00 pm London time on
a Trading Day, it will instead be deemed to have been given or made on the
next Trading Day.
Any such demand, notice or other communication will, in the case of service
by post or delivery by hand, be addressed (subject as provided in this
Clause) to the recipient at the recipient's address stated in this
Agreement or at such other address as may from time to time be notified in
writing by the recipient to the sender as being the recipient's address for
service.
18.2 Any such demand, notice or other communication will, in the case of service
by facsimile or e-mail be sent to the recipient using the facsimile number
or e-mail set out below.
(a) Fax the Company: (000) 000-0000
(b) E-mail the Company: xxxxxx@xxxxxxxxx.xxx or xxxxxx@xxxxxxxxx.xxx
(c) Fax the Lender: x0 000-000-0000 marked for the attention of Xxx Xxxxx
Esq.
(d) E-mail the Lender: xxxxxx@x-xxxxxx.xxx
18.3 The provisions of this Clause 18 will not apply, in the case of service of
court documents, to the extent that such provisions are inconsistent with
Part 6 of the Civil Procedure Rules.
19 REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of the
Lender, any right or remedy under this Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right or remedy prevent any
further or other exercise or the exercise of any other right or remedy. The
rights and remedies provided in this Agreement are cumulative and not
exclusive of any rights or remedies provided by law.
20 GOVERNING LAW AND JURISDICTION
This Agreement is governed by and is to be construed in accordance with
English law and the courts of England have exclusive jurisdiction to settle
any dispute arising out of or in connection with this Agreement (including
a dispute regarding the existence, validity or termination of this
Agreement)
This Agreement has been entered into as a Deed on the date stated at the
beginning of this Agreement.
SIGNED as a deed by )
ZBB ENERGY CORPORATION )
acting by )
/s/ Xxxxxx Xxxx Xxxxx
-------------------------------------
Xxxxxx Xxxx Xxxxx
Chief Executive Officer
DIRECTOR
DIRECTOR /SECRETARY
SIGNED as a deed by XXXXXXXXXX )
CAPITAL PARTNERS, L.P )
acting by )
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provided however that, if it is delivered by hand or sent by facsimile or
e-mail on a day which is not a Trading Day or after 4.00 pm London time on
a Trading Day, it will instead be deemed to have been given or made on the
next Trading Day.
Any such demand, notice or other communication will, in the case of service
by post or delivery by hand, be addressed (subject as provided in this
Clause) to the recipient at the recipient's address stated in this
Agreement or at such other address as may from time to time be notified in
writing by the recipient to the sender as being the recipient's address for
service.
18.2 Any such demand, notice or other communication will, in the case of service
by facsimile or e-mail be sent to the recipient using the facsimile number
or e-mail set out below.
(a) Fax the Company: (000) 000-0000
(b) E-mail the Company: xxxxxx@xxxxxxxxx.xxx or xxxxxx@xxxxxxxxx.xxx
(c) Fax the Lender: x0 000-000-0000 marked for the attention of Xxx Xxxxx
Esq.
(d) E-mail the Lender: xxxxxx@x-xxxxxx.xxx
18.3 The provisions of this Clause 18 will not apply, in the case of service of
court documents, to the extent that such provisions are inconsistent with
Part 6 of the Civil Procedure Rules.
19 REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of the
Lender, any right or remedy under this Agreement shall operate as a waiver,
nor shall any single or partial exercise of any right or remedy prevent any
further or other exercise or the exercise of any other right or remedy. The
rights and remedies provided in this Agreement are cumulative and not
exclusive of any rights or remedies provided by law.
20 GOVERNING LAW AND JURISDICTION
This Agreement is governed by and is to be construed in accordance with
English law and the courts of England have exclusive jurisdiction to settle
any dispute arising out of or in connection with this Agreement (including
a dispute regarding the existence, validity or termination of this
Agreement)
This Agreement has been entered into as a Deed on the date stated at the
beginning of this Agreement.
SIGNED as a deed by )
ZBB ENERGY CORPORATION )
acting by )
DIRECTOR
DIRECTOR /SECRETARY
SIGNED as a deed by XXXXXXXXXX ) /s/ ILLEGIBLE
CAPITAL PARTNERS, L.P ) ----------------------------------------
acting by ) Portfolio Manager
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