ZBB ENERGY CORPORATION NONSTATUTORY STOCK OPTION AGREEMENT
Exhibit
10.4
ZBB
ENERGY CORPORATION
This
Nonstatutory Stock Option Agreement (this “Agreement”) is executed as of January
7, 2010, by and between ZBB ENERGY CORPORATION, a Wisconsin corporation (the
“Company”), and Xxxx Xxxxxxxxx (the “Employee”).
WITNESSETH:
WHEREAS,
the Compensation Committee of the Board of Directors of the Company wishes to
grant the Employee a Nonstatutory Stock Option in conjunction with the
Employee’s appointment as Chief Executive Officer of the Company subject to the
terms provided in this Agreement; and
WHEREAS,
the Compensation Committee of the Board of Directors of the Company anticipates
that this Agreement will promote the best interests of the Company and its
shareholders by providing the Employee a proprietary interest in the Company
with a stronger incentive to put forth maximum effort for the continued success
and growth of the Company and its subsidiaries.
NOW,
THEREFORE, in consideration of the benefits that the Company will derive in
connection with the services to be rendered by the Employee, the Company and the
Employee hereby agree as follows:
1.
Determinations by
Administrator. The Administrator (as defined below) shall make all
interpretations, rules and regulations necessary to administer this Agreement,
and such determinations of the Administrator shall be binding upon the
Employee. For purposes of this Agreement, the term “Administrator” shall
mean the Compensation Committee of the Board of Directors.
2.
Option; Number of
Shares; Option Price. The Option (as defined below) granted
hereunder is intended to be a nonstatutory stock option and therefore, shall not
qualify as an incentive stock option pursuant to Section 422 of the Internal
Revenue Code of 1986, as amended (the “Nonstatutory Stock Option”). The
Employee shall have the right and option to purchase all or any part of an
aggregate four hundred thousand (400,000) shares of $0.01 par value common stock
of the Company (“Share(s)”) at the purchase price of $1.33 per Share (the
“Option”), which is equal to the Fair Market Value (as defined below) of a Share
as of the date of this Agreement. For purposes of this Agreement, the term
“Fair Market Value” shall mean, as of any date, the closing price of a Share on
the NYSE Amex.
3.
Vesting and
Expiration.
(a)
Vesting.
This Option shall vest ratably and become exercisable over a three (3)
year period with one-third (1/3) of the Option vesting on the first (1st)
anniversary of the date hereof and the remaining
two-thirds (2/3) of the Option vesting in 24 equal monthly installments as of
the end of each calendar month beginning on January 31, 2011 and ending on
December 31, 2012 provided
that the Employee is still an Employee on each such vesting date. Except
as determined by the Administrator, upon the Employee’s termination of
employment for any reason, the Employee shall forfeit the Option or portion of
the Option that has not vested at the time of such termination.
Notwithstanding the foregoing, upon a Change of Control (as defined in the
Employee’s offer letter of employment dated January 7, 2007 (the “Offer
Letter”)) while employed by the Company, the Option shall become immediately
exercisable and fully vested as to all Shares. Similarly, notwithstanding
the foregoing, upon the Employee’s death or Disability (as defined in the Offer
Letter) while Employee is employed by the Company, the Option shall become
immediately exercisable and fully vested as to all Shares.
(b)
Expiration. To the
extent not previously exercised according to the terms hereof, each portion of
the Option shall expire on the fifth anniversary of the vesting date applicable
to such portion of the Option.
4.
Exercise
Period.
(a)
Disability. Upon the
Employee’s termination of employment due to a Disability, the Employee shall
have one (1) year from the date of such termination to exercise the Option
granted hereunder as to all or part of the Shares subject to this Option; provided, however, that this
Option shall not be exercisable subsequent to the expiration dates specified in
Section 3(b), above.
(b)
Death. Upon the
Employee’s termination of employment due to death, the Option, as to all or any
part of the Shares subject to this Option, shall be exercisable:
(1)
for one (1) year after the Employee’s death,
but in no event subsequent to the expiration dates specified in Section 3(b),
above; and
(2)
only (i) by the designated beneficiary of
the Employee (such designation to be made in writing at such time and in such
manner as the Administrator shall approve or prescribe), or, if the Employee
dies without a surviving designated beneficiary, (ii) by the personal
representative, administrator, or other representative of the estate of the
Employee, or by the person or persons to whom the deceased rights of the
Employee under the Option shall pass by will or the laws of descent and
distribution. The Employee may change the beneficiary designation at any
time, by giving written notice to the Administrator, subject to such conditions
and requirements as the Administrator may prescribe in accordance with
applicable law.
(c)
Other Terminations of
Employment. Upon the Employee’s termination of employment for any
reason other than those specified above in this Section 4, the Employee shall
have ninety (90) days from the date of such termination to exercise the Option
as to all or part of the Shares, provided the Employee has a present right to
exercise such Option as of the date of such termination; provided, however, that the
Option shall not be exercisable subsequent to the expiration dates specified in
Section 3(b), above. Notwithstanding the foregoing, if Employee’s
employment is terminated for Cause (as defined in the Offer Letter), to the
extent the Option held by the Employee is not effectively exercised prior to
such termination, it shall lapse immediately upon such termination.
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(d)
Extension of Exercise
Period. The Administrator may in its sole discretion extend the
period permitted for exercise of the Option upon the Employee’s termination of
employment as otherwise provided in this Section 4 if allowable under applicable
law.
5.
Method of Exercising
Option. Except as otherwise permitted by the Administrator, the
Option shall be exercisable by delivery to the Company (to the attention of its
Secretary), at its offices in Menomonee Falls, Wisconsin, of (i) written notice
identifying the Option and stating the number of Shares with respect to which it
is being exercised, (ii) payment in full of the exercise price of the Shares
then being acquired as provided in Section 6, below, and (iii) execution of such
other documentation as is determined to be necessary or appropriate by the
Administrator from time to time the form of which shall be provided to the
Employee at the time of execution and delivery of this Agreement. The
Company shall have the right to delay the issue or delivery of any Shares to be
delivered hereunder until (i) the completion of such registration or
qualification of such Shares under federal, state, or foreign law, ruling, or
regulation as the Company shall deem to be necessary or advisable, and (ii)
receipt from the Employee of such documents and information as the Administrator
may deem necessary or appropriate in connection with such registration or
qualification or the issuance of Shares hereunder.
6.
Payment of Exercise
Price. The exercise price shall be payable in whole or in part in
cash, Shares held by the Employee, other property, or such other consideration
consistent with the Agreement’s purpose and applicable law as may be determined
by the Administrator from time to time. Except as otherwise determined by
the Administrator at the time of grant, such price shall be paid in cash in full
at the time that the Option is exercised. If the Employee is permitted by
the Administrator to pay all or a part of the exercise price in Shares and
elects to do so, the Employee may make such payment by delivering to the Company
a number of Shares, either directly or by attestation, which are equal in value
to the purchase or exercise price hereunder. For this purpose, all Shares
so delivered shall be valued per share at the Fair Market Value (as defined
above; provided, however, if a Share
is not susceptible to valuation by the above method, the term “Fair Market
Value” of a Share shall mean the fair market value of a Share as the
Administrator may determine in conformity with pertinent law) of a Share on the
business day immediately preceding the day on which such Shares are
delivered.
7.
Prohibition Against
Transfer. Unless otherwise provided by the Administrator and except
as provided below, the Option, and the rights and privileges conferred hereby,
may not be transferred by the Employee, and shall be exercisable during the
lifetime of the Employee only by the Employee. The Option shall not be
subjected to execution, attachment or similar process. The Employee shall
have the right to transfer the Option upon the Employee’s death, either to the
Employee’s designated beneficiary (such designation to be made in writing at
such time and in such manner as the Administrator shall approve or prescribe),
or, if the Employee dies without a surviving designated beneficiary, by the
terms of the Employee’s will or under the laws of descent and distribution,
subject to any limitations set forth in this Agreement and all such distributees
shall be subject to all terms and conditions of this Agreement to the same
extent as the Employee would be if still living.
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8.
Nature of
Option. The Employee shall not have any interest in any fund or in
any specific asset or assets of the Company by reason of the Option granted
hereunder, or any right to exercise any of the rights or privileges of a
stockholder with respect to the Option until Shares are issued in connection
with any exercise.
9.
Adjustment
provisions.
(a)
Share
Adjustments. In the event of any stock dividend, stock split,
recapitalization, merger, consolidation, combination or exchange of shares of
Company stock, or the like, as a result of which shares of any class shall be
issued in respect of the outstanding Shares, or the Shares shall be changed into
the same or a different number of the same or another class of stock, or into
securities of another person, cash or other property (not including a regular
cash dividend), the number of Shares subject to the Option and the exercise
price applicable to the Option shall be appropriately adjusted in such equitable
and proportionate amount as determined by the Administrator. No fractional
Share shall be issued under the Agreement resulting from any such adjustment but
the Administrator in its sole discretion may make a cash payment in lieu of a
fractional Share.
(b)
Acquisitions.
In the event of a merger or consolidation of the Company with another
corporation or entity, or a sale or disposition by the Company of all or
substantially all of its assets, the Administrator shall, in its sole
discretion, have authority to provide for (i) waiver in whole or in part of any
remaining restrictions or vesting requirements in connection with the Option
granted hereunder, (ii) the conversion of the outstanding Option into cash,
(iii) the conversion of the Option into the right to receive securities,
including options, of another person or entity upon such terms and conditions as
are determined by the Administrator in its sole discretion and/or (iv) the
lapse of the Option after notice in writing has been given that the Option may
be exercised within a set period from the date of such notice and that any
Option not exercised within such period shall lapse.
(c)
Binding
Effect. Without limiting the generality of what is provided in
Section 1 hereof and for avoidance of doubt, any adjustment, waiver, conversion
or other action taken by the Administrator under this Section 9 shall be
conclusive and binding on the Employee and the Company and any respective
successors and assigns.
10.
Notices.
Any notice to be given to the Company under the terms of this Agreement shall be
given in writing to the Company at its offices in Menomonee Falls,
Wisconsin. Any notice to be given to the Employee may be addressed to
Employee’s address as it appears on the payroll records of the Company or any
subsidiary thereof. Any such notice shall be deemed to have been duly
given if and when actually received by the party to whom it is addressed, as
evidenced by a written receipt to that effect.
11.
Taxes.
The Company may require payment or reimbursement of or may withhold any minimum
tax that it believes is required as a result of the grant or exercise of the
Option, and the Company may defer making delivery with respect to Shares or cash
payable hereunder or otherwise until arrangements satisfactory to the Company
have been made with respect to such withholding obligations.
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12.
Rights of
Employee. The Option, and any payments or other benefits received
by the Employee under the Option, is discretionary and shall not be deemed a
part of the Employee’s regular, recurring compensation for any purpose,
including without limitation for purposes of termination, indemnity, or
severance pay law of any country and shall not be included in, nor have any
effect on, the determination of benefits under any other employee benefit plan,
contract or similar arrangement provided to the Employee unless expressly so
provided by such other plan, contract or arrangement, or unless the
Administrator expressly determines otherwise.
13. Amendment. The
Administrator may amend the Agreement; provided, however, that the
Employee’s consent to such action shall be required unless the Administrator
determines that the action, taking into account any related action, would not
materially and adversely affect the Employee. However, notwithstanding any
other provision of the Agreement, the Administrator may not adjust or amend the
exercise price of the Option, whether through amendment, cancellation and
replacement grants, or any other means, except in accordance with Section 9
hereof.
14.
No Right To
Employment. The Agreement shall not confer upon the Employee any
right to continue employment with the Company or a subsidiary, nor shall it
interfere in any way with the right of the Company or such subsidiary to
terminate the Employee’s employment any time.
15.
Severability. In
the event any provision of this Agreement shall be held illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining parts of
the Agreement, and this Agreement shall be construed and enforced as if the
illegal or invalid provision had not been included.
16. Governing Law. This Agreement and all
actions taken hereunder shall be governed by, and construed in accordance with,
the laws of the State of Wisconsin, applied without regard to the laws of any
other jurisdiction that otherwise would govern under conflict of law
principles.
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IN
WITNESS WHEREOF, the Company has caused these presents to be executed as of the
date and year first above written, which is the date of the granting of the
Option evidenced hereby.
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ZBB
ENERGY CORPORATION
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By:
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/s/
Xxxx X. Xxxxxx
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Xxxx
X. Xxxxxx
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Interim
Chief Executive Officer
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The
undersigned Employee hereby accepts the foregoing Option and agrees to the
several terms and conditions hereof.
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/s/
Xxxx X. Xxxxxxxxx
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Employee
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