Contract
Exhibit 10.2
THIS GOVERNANCE AGREEMENT (this “Agreement”), by and between ZBB Energy Corporation, a Wisconsin corporation (the “Company”), and Solar Power, Inc. and its affiliates (the “Investor”) is entered into as of this 13th day of July, 2015.
WHEREAS, on April 17, 2015, the Investor and the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) pursuant to which the Investor agreed to acquire, and the Company agreed to issue, 8,000,000 shares of the Company’s common stock (the “Common Shares”), 42,000,000 shares of the Company’s Series C Convertible Preferred Stock (the “Preferred Shares”) and a warrant issued by the Company (the “Warrant”);
WHEREAS, the Preferred Shares are convertible into 42,000,000 shares of the Company’s common stock upon the achievement of certain milestones (the “Conversion Shares”), and the Warrant is exercisable by the holder thereof for issuance of up to 50,000,000 shares of the Company’s common stock upon the achievement of certain milestones (the “Warrant Shares”, and together with the Common Shares and the Conversion Shares, the “Subject Shares”); and
WHEREAS, as a condition and inducement to the willingness of the Company and the Investor to enter into the Securities Purchase Agreement, the Company and the Investor have agreed to enter into this Agreement;
(a) “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.
(b) “Beneficially Own” with respect to any securities means having “beneficial ownership” of such securities (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, including without limitation, the 60-day provision in paragraph (d)(1)(i) thereof). The terms “Beneficial Ownership” and “Beneficial Owner” have correlative meanings.
(c) “Board” means the board of directors of the Company.
(d) “Director” means a member of the Board.
(e) “Common Stock Equivalents” means the sum of the Common Stock held by the Investor and the number of shares of Common Stock into which the Preferred Stock held by the Investor is convertible.
(f) “Equity Securities” means any Common Stock or any rights, warrants or options to subscribe for or purchase Common Stock.
(g) “Junior Securities” has the meaning ascribed thereto in the Certificate of Designations for the Preferred Stock.
(h) “Law” means any federal, state, local or foreign Order, writ, injunction, judgment, settlement, award, decree, statute, law, rule or regulation, including common law.
(i) “Permitted Issuance” means any issuance by the Company of Equity Securities (1) to officers, employees, directors or consultants of the Company and its subsidiaries pursuant to equity incentive plans approved by the Company’s Board (including an Investor Director (as defined below) if one is serving on the Board at the time such equity plan is approved by the Board) and the securities issued upon exercise of such grants, (2) pursuant to the conversion or exchange of any securities issued to the Investor pursuant to or in connection with the Securities Purchase Agreement or any other securities of the Company outstanding as of the date hereof into Capital Stock, or the exercise of any warrants or other rights issued to the Investor pursuant to or in connection with the Securities Purchase Agreement or any other warrants or rights outstanding as of the date hereof to acquire Capital Stock; (3) pursuant to a bona fide firm commitment underwritten public offering; (4) in connection with a joint venture, strategic alliance or other commercial relationship with any Person (including Persons that are customers, suppliers and strategic partners of the Company) relating to the operation of the Company’s business and for which a primary purpose thereof is not raising capital; or (5) in connection with any office lease or equipment lease or similar equipment financing transaction approved by the Board in which the Company obtains from a lessor or vendor the use of such office space or equipment for its business.
(j) “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
(k) “Pro Rata Share” means the quotient of (i) the number of shares of Common Stock Beneficially Owned by the Investor (the “Numerator Shares”) divided by, (ii) the number of shares of Common Stock outstanding at such time of determination minus any shares of Common Stock outstanding at such time held by the Investor plus the Numerator Shares.
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(a) the conduct by the Company of any business other than, or the engagement by the Company in any transaction not substantially related to, the business as currently conducted;
(b) changing the number or manner of appointment of the Directors on the Board;
(c) the dissolution, liquidation or winding-up of the Company or the commencement of a voluntary proceeding seeking reorganization or other similar relief;
(d) other than in the ordinary course of conducting the Company’s business consistent with past practice, the incurrence, issuance, assumption, guarantee or refinancing of any debt if the aggregate amount of such debt and all other outstanding debt of the Company exceeds $10 million;
(e) the acquisition, repurchase or redemption by the Company of any Junior Securities;
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(f) (i) the acquisition of an interest in any Person or the acquisition of a substantial portion of the assets or business of any Person or any division or line of business thereof or any other acquisition of material assets, in any such case where the consideration paid exceeds $2 million, or (ii) any Fundamental Transaction (as defined in the Certificate of Designation);
(g) the entering into by the Company of any agreement, arrangement or transaction with any Affiliate of the Company, other than any Subsidiary (as such term is defined in the Securities Purchase Agreement) (or any relative, beneficiary, employee or affiliate of such person) that calls for aggregate payments (other than payment of salary, bonus or reimbursement of reasonable expenses) in excess of $120,000;
(h) the commitment to capital expenditures in excess of $7 million during any fiscal year;
(i) the selection or replacement of the auditors of the Company;
(j) entering into of any partnership, consortium, joint venture or other similar enterprise involving the payment, contribution, or assignment by the Company or to the Company of money or assets greater than $5 million;
(k) amend or otherwise change its Articles of Incorporation or by-laws or equivalent organizational documents of the Company or any Subsidiary in any manner that materially and adversely affects any rights of the Investor;
(l) amend or otherwise change the Articles of Incorporation or by-laws or equivalent organizational documents of any Subsidiary in any manner;
(m) grant, issue or sell any Equity Securities (in each case, other than any Permitted Issuances) to any Person;
(n) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock; provided, however, that the dividends called for by Section 3(b) of the Certificate of Designation of Preferences, Rights and Limitations of the Company’s Series B Convertible Preferred Stock shall nonetheless continue to accrue and accumulate on each share of the Company’s Series B Convertible Preferred Stock;
(o) reclassify, combine, split or subdivide, directly or indirectly, any of its capital stock;
(p) permit any item of material intellectual property to lapse or to be abandoned, dedicated, or disclaimed, fail to perform or make any applicable filings, recordings or other similar actions or filings, or fail to pay all required fees and taxes required or advisable to maintain and protect its interest in such intellectual property; or
(q) enter into any contract, arrangement, understanding or other similar agreement with respect to any of the foregoing.
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(a) Investor holding a majority of the Company’s common stock (including all Equity Securities of the Company on an as-convertible and as-exercisable basis);
(b) upon mutual agreement of such parties as would be required to amend this Agreement; and
(c) the liquidation, dissolution or winding up of the Company.
11. Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed by and construed under the laws of the State of Wisconsin without regard to principles of conflict of laws.
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[signatures follow on next page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year hereinabove first written.
COMPANY: | |
ZBB ENERGY CORPORATION | |
By: /s/ Xxxx Xxxxxxxxx | |
Name: Xxxx Xxxxxxxxx | |
Title: Chief Executive Officer | |
INVESTOR: | |
SOLAR POWER, INC. | |
By: /s/ Xxxxx Xx | |
Name: Xxxxx Xx | |
Title: Chief Executive Officer |