VALIDITY AND SUPPORT GUARANTY
THIS VALIDITY AND SUPPORT GUARANTY (the "GUARANTY") is made as of June
14, 2006 by the undersigned in favor of the Buyers (as defined below).
WITNESSETH:
WHEREAS, pursuant to a Note Purchase Agreement, dated June 14, 2006,
(the "NOTE PURCHASE AGREEMENT") ZBB ENERGY CORPORATION, a Wisconsin corporation
(the "COMPANY"), issued to certain investors (the "BUYERS") certain 8% Senior
Secured Notes (collectively, the "NOTES"); and
WHEREAS, pursuant to the Note Purchase Agreement, the Company, the
Buyers and CRUCIAN TRANSITION INC. DBA CTI CAPITAL MANAGEMENT, a Delaware
corporation (the "COLLATERAL AGENT"), as agent for the Buyers, entered into a
Security Agreement dated June 14, 2006 (the "SECURITY AGREEMENT");
WHEREAS, pursuant to the Note Purchase Agreement, each of ZBB
Technologies, Inc., a Wisconsin corporation, and ZBB Technologies, Ltd., an
Australian corporation (each a "SUBSIDIARY" and collectively the "SUBSIDIARIES")
each a wholly-owned Subsidiary (as defined in the Note Purchase Agreement) of
the Company, has executed and delivered a Guaranty Agreement, dated June 14,
2006; and
WHEREAS, pursuant to the Note Purchase Agreement, each Subsidiary, the
Buyers and the Collateral Agent entered into a Subsidiary Security Agreement
dated June 14, 2006 (each a "SUBSIDIARY SECURITY AGREEMENT", and collectively
the "SUBSIDIARY SECURITY AGREEMENTS").
NOW, THEREFORE, the undersigned does hereby unconditionally,
irrevocably and absolutely warrant and represent to and covenant with the Buyers
as follows:
1. DOCUMENT ROOM. In order to induce the Buyers to enter into the Note
Purchase Agreement and the related agreements therein, and due to the close
business and financial relationship between the undersigned and each of the
Company and each Subsidiary, whereby it is in the direct interest and benefit of
the undersigned, and for other good and valuable consideration received, the
undersigned, at any and all time the undersigned is employed as an executive
officer of the Company, hereby represents, warrants, covenants and agrees in
favor of the Buyers, together with their successors and assigns, that the
Company, on behalf of itself and each of the Company Subsidiaries, shall, in
accordance with Section 7(i) of the Note Purchase Agreement, establish within
thirty (30) days of the Closing Date (as defined in the Note Purchase Agreement)
and maintain continuously thereafter until all of the Obligations (as defined in
the Security Agreement) have been indefeasibly paid in full, a secure document
control room designated as such at the Company's central offices located at N93
X00000 Xxxxxxxx Xxx, Xxxxxxxxx Xxxxx, Xxxxxxxxx, which shall contain all
complete, genuine and accurate current, as of the Closing Date, and future of
all of the Document Control Room Items, as such term is defined in Section 7(i)
of the Note Purchase Agreement.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS.
a. The undersigned will, at any and all time the undersigned is
employed as an executive officer of the Company, to use his or her good faith
efforts, subject to his or her fiduciary obligations, to work with the Buyers
and the Collateral Agent, to: (i) ensure the Buyers have a continuing
unconditional, first-priority, perfected security interest in the Collateral, as
defined in the Security Agreement, and (ii) ensure the Buyers have a continuing
unconditional, first-priority, perfected security interest in the Collateral, as
defined in the Subsidiary Security Agreements. The undersigned represents and
warrants to the Buyers and the Collateral Agent that the Company and each
Subsidiary, respectively, has good right to pledge and transfer same, and has no
knowledge of any fact which would impair the validity thereof.
b. The undersigned further represents and warrants to the Buyers
and the Collateral Agent, together with their respective successors and assigns,
and agrees to indemnify and hold harmless the Buyers and the Collateral Agent
and their respective successors and assigns against, any and all liabilities,
claims, actions, causes of action, damages, losses, judgments, costs and
expenses, including but not limited to reasonable attorneys' fees which any of
them may suffer as a result of: (i) any illegal, improper, fraudulent or
dishonest act of the undersigned, without limitation, any misappropriation,
conversion, or diversion of any Collateral; (ii) the making, by the undersigned
of any representation, warranty, or other statement or the furnishing of any
information to the Buyers or the Collateral Agent by the Company or any
Subsidiary in connection with this Guaranty which shall have been false or
misleading in any material respect when made or furnished; and (iii) the breach
or failure of any of the obligations, covenants, representations and conditions
guaranteed, made or assumed by the undersigned in accordance with the terms of
this Guaranty.
c. During any liquidation of the Company or any Subsidiary or any
of their respective assets, the undersigned agrees to be available at the
request of the Buyers or the Collateral Agent, at an agreed upon compensation
commensurate with the compensation previously paid to the undersigned by the
Company, and at and under the Buyers' or the Collateral Agent's direction, to
cooperate in such a liquidation, including, without limitation, collect and
prepare the Collateral for sale, initiating and hold discussions with possible
purchasers, and in general providing the benefit of the undersigned knowledge
and experience.
d. The undersigned agrees to unconditionally guaranty to the
Buyers and the Collateral Agent as surety against any loss, damage, liability or
cost as a result of any breach of a representation, warranty, covenant or
agreement contained in Sections 1 and 2 hereof.
3. NO RELEASE FROM OBLIGATIONS. The undersigned waives notice of
acceptance of this Guaranty and notice of any liability to which it may apply,
and waives presentment, demand for payment, protest, notice of dishonor or
nonpayment of any liabilities, suit or taking other action by the Buyers and/or
the Collateral Agent against, and any other notice, to any party liable thereon
(including the undersigned), and waives any defense, offset or counterclaim to
any liability hereunder. The Buyers and/or the Collateral Agent may at any time
and from time to time (whether or not after revocation of termination of this
Guaranty) without
2
the consent of, or notice to, the undersigned, without incurring responsibility
to the undersigned without impairing or releasing the obligations of the
undersigned hereunder, upon or without any terms or conditions and in whole or
in part:
a. change the manner, place or terms of payment, and/or change or
extend the time of payment of, renew or alter, any of the Obligations, any
security therefor, or any liability incurred directly or indirectly in respect
thereof, and the guaranty herein made shall apply to the Obligations as so
changed, extended, renewed or altered;
b. sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof and/or offset there against;
c. exercise or refrain from exercising any rights against the
Company or any Subsidiary or others (including the undersigned) or otherwise act
or refrain from acting;
x. xxxxxx or compromise any of the Obligations, any security
therefor or any liability (including any of those hereunder) incurred directly
or indirectly in respect thereof or hereof, and may subordinate the payment of
all or any part thereof to the payment of any liability, (whether due or not) to
creditors of the Company or any Subsidiary other than the Buyers; and
e. apply any sums by whomsoever paid or howsoever realized to any
of the Obligations regardless of what Obligations or other liabilities of the
Company remain unpaid.
4. SEVERABILITY. No invalidity, irregularity or unenforceability of
all or any part of the Obligations hereby guaranteed or of any security therefor
shall affect, impair or be a defense to this Guaranty. The liability of the
undersigned hereunder is primary and unconditional and shall not be subject to
any offset, defense or counterclaim of the Company or any Subsidiary. This
Guaranty is a continuing one and all obligations to which it applies or may
apply under the terms hereof shall be conclusively presumed to have been created
in reliance hereon.
5. ATTORNEYS' FEES. In the event any of the Buyers or the Collateral
Agent retains attorneys for the purpose of enforcing this Guaranty, the
undersigned shall on demand, pay all costs and expenses of every kind (including
without limitation, reasonable attorneys' fees) which may be paid or incurred by
the Buyers or the Collateral Agent in enforcing any rights under this Guaranty.
6. WAIVERS. No delay on the part of the Buyers or the Collateral Agent
in exercising any of their options, powers or rights, or partial or single
exercise thereof, shall constitute a waiver thereof. No waiver of any of their
rights hereunder, and no modification or amendment of this Guaranty, shall be
deemed to be made by the Buyers or the Collateral Agent
3
unless the same shall be in writing, duly signed on behalf of the Buyers or the
Collateral Agent, and each waiver, if any, shall apply only with respect to the
specific instance involved, and shall in no way impair the rights of any of the
Buyers or the Collateral Agent or the obligations of the undersigned to the
Buyers or the Collateral Agent in any other respect at any other time. The
undersigned shall have no right of subrogation, indemnification or recourse
against the Company or any Subsidiary or any of their respective assets or
property or any security held for any Obligations until all of the Obligations
are indefeasibly paid in full to the Buyers.
7. LAW GOVERNING AND JURISDICTION. This Guaranty shall be enforced,
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within such state,
without regard to the principles of conflict of laws. The undersigned hereby
submits to the exclusive jurisdiction of the United States federal courts or New
York state courts located in New York, New York with respect to any dispute
arising under this Guaranty, the agreements entered into in connection herewith
or the transactions contemplated hereby or thereby, and consent to the personal
jurisdiction of such courts and shall subject himself or herself to such
personal jurisdiction. The undersigned irrevocably waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The
undersigned further agrees that service of process upon him or her mailed by
first class mail shall be deemed in every respect effective service of process
upon the undersigned in any such suit or proceeding. Nothing herein shall affect
any right to serve process in any other manner permitted by law. The undersigned
agrees that a final non-appealable judgment in any such suit or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner. THE UNDERSIGNED AGREES AND DOES HEREBY
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT AGAINST
THE UNDERSIGNED ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED
WITH THIS GUARANTY OR THE RELATIONSHIP CREATED HEREBY.
[remainder of page internationally left blank]
4
IN WITNESS WHEREOF, the undersigned has been duly executed this Guaranty on
the date set forth above.
----------------------------
Signature
----------------------------
Name
----------------------------
Address
----------------------------
City, State, Zip Code
5
