Re: Convertible Loan Agreement (the “Agreement”) dated February 28, 2006 between ZBB Energy (the “Company”) and Montgomery Capital Partners Ltd. (the “Investor”)
as of July 11, 2007
Attention: Xxxxxx Xxxxx
| Re: | Convertible Loan Agreement (the “Agreement”) dated February 28, 2006 between ZBB Energy (the “Company”) and Xxxxxxxxxx Capital Partners Ltd. (the “Investor”) |
Reference is made to the above referenced Agreement and separate letter agreements dated as
of October 5, 2006, as of March 13, 2007 and as of ___2007 (collectively, the
“Documents”). The Investor and the Company hereby intend to effect (a) a final payment
of all loan amounts and other financial obligations owed by the Company to the Investor and its
affiliates, including Cornell Capital Partners LP) under and in connection with the Documents,
and (b) issue certain securities of the Company to the Investor or its affiliates and designees
(collectively, the “Holders”).
1. Simultaneous with the execution and delivery of this letter agreement (the “Settlement
Agreement”), the Company shall pay to the Investor by wire transfer of immediately available
funds to an account designated by the Investor, the aggregate sum of $1,295,238.80 (the
“Settlement Payment”). Each of the Company and the Investor acknowledge and agree that
the Settlement Payment is comprised of:
• $890,000.00, representing the balance of unpaid principal amount due under the Loan
referred to in the Agreement;
• $124,917.80 in unpaid accrued interest on the Loan as at June 21, 2007 of $120,041,
plus $4,876.80, representing a per diem amount of $243.84 from June 22, 2007 to July 11, 2007;
• $178,000.00, representing an agreed upon premium payment under Clauses 6.3 and 6.4 of
the Agreement; and
• $102,321.00, representing the monthly deferral fee payable through June 21, 2007.
Each of the Investor and Cornell Capital Partners do hereby acknowledge and agree that payment
of the aforesaid Settlement Payment represents payment and performance in full by the Company of
all financial obligations owed to the Investor under the Documents.
000 Xxxxxx Xxxxxx – Xxxxx 0000 Xxxxxx Xxxx, XX 00000 Tel: (000) 000-0000 / Facsimile: (000) 000-0000
2. On a date that shall be not more than 10 days from the date of this Agreement, the
Company shall issue to the Holder(s) stock certificates representing an aggregate of 265,937
shares of Company common stock (the “Shares”), and registered in the names of such Holder(s) as
shall be designated by the Investors. Such Shares are represented by:
• 202,674 unregistered and restricted Shares representing the Common Shares of the Company
issuable under Clause 7.4 of the Agreement (the “Clause 7.4 Shares”); and
• 63,263 unregistered and restricted Shares, representing Common Shares issuable upon a
“cashless exercise” as of July 5, 2007 of the additional subscription rights (warrants) granted
to the Investor under Clause 8 of the Agreement (the “Warrant Shares”).
The Company agrees that, within 30 days following completion of its audit report for the fiscal
year ending June 30, 2007, it (a) will file a registration statement with the Securities and
Exchange Commission (“SEC”) to register for resale at prevailing market prices all of the above
Shares, and (b) will use its best efforts to cause such registration statement to be declared
effective by the SEC as soon thereafter as is practicable. Each of the Holders whose shares are
included in such registration statement shall execute and deliver to the Company such
representations, warranties and indemnities with respect to their ownership and disclosures
concerning such Holders, as are customary in typical registrations of securities under the
Securities Act of 1933, as amended.
In addition, subject to compliance by the Company with its reporting requirements under the
Securities and Exchange Act of 1934, as amended and compliance by the Holder of the manner of
sale provisions and other provisions of Rule 144, upon written request of the Holder(s) the
Company will request its legal counsel to process and provide the necessary legal opinions to
permit (a) the immediate public resale of the Warrant Shares, and (b) the public resale of the
Clause 7.4 Shares within one year from the date of this Settlement Agreement, in the event that
the registration statement referred to in the immediately preceding paragraph has not been
declared effective by the SEC or is no longer current.
If the foregoing accurately reflects the substance of our mutual agreement and understanding,
please so indicate by executing and returning a copy of this Settlement Agreement in the space
provided below.
Very truly yours,
XXXXXXXXXX CAPITAL PARTNERS L.P.
By: |
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| Xxxxxxx Xxxxxxxx, Managing Director |
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2 - 000 Xxxxxx Xxxxxx – Xxxxx 0000 Xxxxxx Xxxx, XX 00000 Tel: (000) 000-0000 / Facsimile: (000) 000-0000
ACCEPTED AND AGREED TO:
ZBB ENERGY CORPORATION
By: |
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| Xxxxxx Xxxxx, President |
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