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October 5, 2006
ZBB Energy Corporation
N93 W14475 ▇▇▇▇▇▇▇▇▇ ▇▇▇
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Re: Convertible Debenture (the "Debenture") dated February 28, 2006 between ZBB
Energy (the "Company") and ▇▇▇▇▇▇▇▇▇▇ Equity Partners Ltd. (the "Investor")
In regards to the Company's request for a moratorium on conversions related
to the Convertible Debenture dated February 28, 2006 the Investor and the
Company shall agree to the following terms:
The Investor will agree to not convert any portion of the Debenture
for a period of 90 days from date hereof. In consideration therefore, the
parties agree that:
o The Company will make cash payments of $20,000 per month due on the
eighteenth day of each month beginning on October 18, 2006 However such
payment shall not be deemed a payment of principle under the Debenture.
o The Company represents that none of its directors or executive officers
will sell shares held by them during the foregoing 90 day period. In
addition, no other convertible note holder or warrant holder may sell any
shares underlying any convertible notes or issuable upon exercise of their
warrants during the foregoing 90 day period.
o The parties have consented to the reverse split which shall take place
contemporaneously with the effective date of the registration statement
described in the next sub-paragraph of this letter agreement.
o The Company will provide the Investor with copies of all documentation
associated with the proposed initial public offering registration statement
to be filed with the United States Securities and Exchange Commission.
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o The parties agree that upon closing the proposed public offering (or any
other sufficient Financing Transaction, as defined in the Debenture), the
proceeds will be used to redeem the Debentures and Warrants, as adjusted,
at the Redemption Rate as defined in the Debenture dated February 28, 2006.
o The Company agrees that it shall issue all shares that it is required to
issue upon repayment of the Debenture as provided in Section 7.4 of the
Debenture.
o The Company agrees that upon material default of any items mentioned above,
the Investor will be allowed to convert as originally outlined in the
original Financing Agreement.
o The Debenture shall only be deemed modified and in forbearance without
default to the extent set forth herein during the 90 day period following
the date of execution hereof by both parties and thereafter the provisions
of the Debenture shall continue. All other provisions of the Debenture and
rights and remedies of the parties as per the original Debenture remain in
full force and effect as set forth in the Debenture during said 90 day
period.
Signed and Agreed to by Signed and Agreed to by
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ZBB Energy Corporation ▇▇▇▇▇▇▇▇▇▇ Equity Partners Ltd.
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