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Exhibit 10.1
 
 
 
 
 
 
 
JOINT VENTURE AGREEMENT
 
 
ANHUI MEINENG STORE ENERGY CO., LTD.
 
 
BY AND BETWEEN
 
 
ZBB POWERSAV HOLDINGS LIMITED

AND

ANHUI XINDONG INVESTMENT MANAGEMENT CO., LTD.

 
_______________________, 2011
 
 
 
 
 
 
 
 
 
 

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TABLE OF CONTENTS
 
                                                                                            Page
 
1.
DEFINITIONS.
2

 
 
1.1
Certain Definitions
2

 
 
1.2
Other Definitions
4

 
2.
GENERAL COMPANY INFORMATION
4

 
 
2.1
Company, Generally
4

 
 
2.2
JV Investors, Generally
4

 
3.
COMPANY STRUCTURE AND STRATEGY
4

 
 
3.1
Business Scope
4

 
 
3.2
Structure
5

 
 
3.3
Strategy
5

 
4.
OWNERSHIP OF THE COMPANY
5

 
 
4.1
Registered Capital
5

 
 
4.2
Use of Registered Capital
5

 
 
4.3
Payment Schedule of Initial Registered Capital Contributions
5

 
 
4.4
Decrease or Increase of Registered Capital
6

 
 
4.5
Distribution of Net Profits
6

 
5.
OPERATIVE AGREEMENTS; VOTING AGREEMENT
6

 
 
5.1
Operative Agreements
6

 
 
5.2
Voting Agreement; Operation of the Company
7

 
6.
BOARD OF DIRECTORS
7

 
 
6.1
Composition of the Board of Directors
7

 
 
6.2
Removal; Reappointment of Directors
7

 
 
6.3
Board Meetings
8

 
 
6.4
Board Quorum: Resolutions
8

 
 
6.5
Action by the Board Without a Meeting
9

 
 
6.6
Board Unanimous Approval Rights
9

 
 
6.7
Board Supermajority Approval Rights
9

 
 
6.8
Deadlock
10

 
7.10
BOARD OF SUPERVISORS
10

 
 
7.1
Composition of the Board of Supervisors
10

 
 
 
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7.2
Removal; Reappointment of Supervisors
11

 
 
7.3
Meetings of the Board of Supervisors
11

 
 
7.4
Quorum: Resolutions
12

 
 
7.5
Action by the Board of Supervisors Without a Meeting
12

 
 
7.6
Deadlock
12

 
8.
JV INVESTORS
12

 
 
8.1
Meetings
12

 
 
8.2
Voting Rights; Actions of JV Investors; Quorum
13

 
 
8.3
Action by JV Investors Without a Meeting
13

 
 
8.4
JV Investor Unanimous Approval Rights
13

 
 
8.5
JV Investor Supermajority Rights
13

 
 
8.6
Deadlock
14

 
9.
OFFICERS
14

 
 
9.1
Appointment and Term of Office
14

 
 
9.2
Removal
14

 
 
9.3
Vacancies
14

 
 
9.4
Compensation
15

 
 
9.5
Powers and Duties
15

 
10.
BUSINESS PLANS; FINANCIAL AND OTHER RECORDS
16

 
 
10.1
Business Plans
16

 
 
10.2
Accounting and Management Information Systems
16

 
 
10.3
Financial Statements, Accounting and Other Reports
16

 
 
10.4
Right of Inspection
17

 
11.
INSURANCE; INDEMNIFICATION
 
17

 
 
11.1
Liability
17

 
 
11.2
Indemnification of Directors, Supervisors and Officers
17

 
 
11.3
Indemnification of JV Investors
18

 
 
11.4
Advancement
19

 
 
11.5
Insurance
19

 
12.
COMPLIANCE WITH LAWS
 
20

 
 
12.1
General
20

 
 
12.2
Anti-Corruption
20

 

13.
TRANSFERS AND SALES OF INTERESTS
 
20

 
 
 
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13.1
Transfers of Interests
20

 
 
13.2
Unauthorized Transfers
21

 
 
13.3
Withdrawal of a JV Investor
21

 
 
13.4
Transfers Pursuant to a Bona Fide Offer; Rights of First Refusal
21

 
 
13.5
Acknowledgment of Liquidity
22

 
 
13.6
Buy/Sell Provisions
22

 
 
13.7
Sale of the Company
24

 
14.
CONFIDENTIALITY
 
24

 
15.
REPRESENTATIONS AND WARRANTIES OF THE JV INVESTORS
 
25

 
 
15.1
Warranties of the JV Investors
25

 
16.
TERM AND TERMINATION
 
26

 
 
16.1
Term
26

 
 
16.2
Termination
26

 
 
16.3
Survival
26

 
 
16.4
Continuing Liability
27

 
17.
GOVERNING LAW; DISPUTE RESOLUTION
 
27

 
 
17.1
Governing Law
27

 
 
17.2
Discussions and Arbitration
27

 
18.
GENERAL PROVISIONS
 
27

 
 
18.1
Non-Competition; Business Opportunities
27

 
 
18.2
Notices and Other Communications
28

 
 
18.3
Severability
29

 
 
18.4
References to this Agreement; Headings
30

 
 
18.5
Further Assurances
30

 
 
18.6
No Waiver
30

 
 
18.7
Entire Agreement; Amendments
30

 
 
18.8
Expenses
30

 
 
18.9
Assignment
30

 
 
18.10
No Agency
 
31

 
 
18.11
No Third Party Beneficiaries
31

 
 
18.12
Incidental and Consequential Damages
31

 
 
18.13
Counterparts
 
31

 
 
18.14
Execution by the Company
31

 

 
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ANHUI MEINENG STORE ENERGY CO., LTD.
JOINT VENTURE AGREEMENT

This JOINT VENTURE AGREEMENT (this “Agreement”) is made and entered into as of
August 17, 2011 (the “Effective Date”), by and between (i) ZBB POWERSAV HOLDINGS
LIMITED, a Hong Kong limited liability company (“Hong Kong Holdco”) and (ii)
ANHUI XINDONG INVESTMENT MANAGEMENT CO., LTD. (Chinese name: 安徽鑫东投资管理有限公司), a
Chinese limited liability company (“China JV”).  Hong Kong Holdco and the China
JV are sometimes referred to collectively herein as the “Parties” and
individually as a “Party.”
 
STATEMENT OF PURPOSE
 
WHEREAS, ZBB Cayman Corporation, a Cayman Islands exempted company (“ZBB
Energy”), and PowerSav Inc., a Cayman Islands exempted company (“PowerSav”),
formed Hong Kong Holdco for the purposes of forming and investing in a Sino –
foreign equity joint venture company (the “Company”), the name of which is
temporarily Anhui Meineng Store Energy Co., Ltd. (Chinese name: 安徽美能储能有限公司) and
subsequently shall be what is verified on the Name Verification Notification by
the Approval Authority as defined below.
 
WHEREAS, AnHui Xinlong Electrical Co., Ltd. a Chinese corporation (“AnHui
Xinlong”), and Wuhu Huarui Power Transmission & Transformation Engineering Co.,
Ltd. a Chinese corporation (“Wuhu Huarui”), formed the China JV for the purposes
of forming and investing in the Company.
 
WHEREAS, the Parties desire to form the Company to (i) source, market and
distribute (A) certain advanced energy storage and power control technology
product families (the “ZBB Products”) of ZBB Energy’s Affiliates and (B) certain
new products that may be developed by the Company (the “Company Products,” and
together with the ZBB Products, the “Products”), (ii) integrate the Products
into other technologies and (iii) render other services in support of such
Products (the “Services”), as applicable, all as more fully described on Exhibit
B hereto.
 
WHEREAS, the Parties intend for the Company to bring the Products into
large-scale production in the People’s Republic of China (excluding Hong Kong,
Macau and Taiwan) (“Mainland China”), for distribution in Mainland China, Hong
Kong, Macau and Taiwan (collectively, the “Territory”), in accordance with the
terms and conditions of the License Agreement (as defined below).
 
WHEREAS, the Parties intend for the Company upon its establishment to enter into
the following agreements: (i) that certain License Agreement by and between the
Company and ZBB Energy Corporation, Inc., a Wisconsin corporation (“ZBB Corp.”),
in the form attached hereto as Exhibit C (the “License Agreement”); (ii) that
certain Management Services Agreement by and between the Company and Hong Kong
Holdco, in the form attached hereto as Exhibit D (the “Management Services
Agreement”) and (iii) that certain Research and Development Agreement by and
between the Company and ZBB Corp. in the form attached hereto as Exhibit E (the
“R&D Agreement”, collectively with the License Agreement and the Management
Services Agreement, the “Related Agreements”).
 
 
 
 

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WHEREAS, the Parties desire to enter into this Agreement for the purpose of
setting forth the rights and obligations of the Parties (including their rights
and obligations as JV Investors, as defined below) with respect to the Company.
 
NOW THEREFORE, in consideration of the aforesaid Statement of Purpose, the
mutual terms, provisions, covenants and agreements set forth herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:
 
AGREEMENT
 
1. DEFINITIONS.
 
1.1 Certain Definitions.  For the purposes of this Agreement, the following
capitalized terms have the respective meanings set forth below:
 
“Accounting Principles” means, collectively, the China Accounting Principles and
the U.S. Accounting Principles.
 
“Affiliate” means, as to any Person, any other Person that directly, or
indirectly through one or more intermediaries, (i) Controls, (ii) is Controlled
by or (iii) is under common Control with such Person.
 
“Applicable Law” means, as to any Person, any statute, law, rule, regulation,
directive, treaty, judgment, order, decree or injunction of any Governmental
Authority that is applicable to or binding upon such Person.
 
“Approval Authority” means the Ministry of Commerce of the People's Republic of
China (or its local branch office with competent authority and jurisdiction) and
the Wuhu City, Anhui Province government (and its relevant departments).
 
“Board” means the Board of Directors of the Company.
 
“Business Day” means a day on which commercial banks in Shanghai, China
generally are open to conduct their regular banking business.
 
“Business Plans” means, collectively, (i) the Initial Business Plan and (ii) any
subsequent business plan of the Company, as approved by the Board pursuant to
the terms of this Agreement, and in effect from time to time.
 
“China Accounting Principles” means generally accepted accounting principles in
the People’s Republic of China (or any other country which the JV Investors may
agree to in writing) as set forth in pronouncements of the Chinese Institute of
Certified Public Accountants, as consistently applied.
 
 
 
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“China JV Change of Control” means any one, or a series of any one, of the
following: (i) a merger, consolidation, security exchange, issuance or sale of
equity securities or other reorganization of, or involving, the China JV
pursuant to which the China JV’s interest holders (determined immediately prior
to the time at which such transaction is effected) collectively have beneficial
ownership of less than 51% of the total outstanding ownership interest of the
China JV, or comparable equity securities of the surviving entity if the China
JV is not the surviving entity, immediately following such transaction; (ii) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions), of all or substantially all of the assets of the China
JV; (iii) the interest holders’ or board’s approval of any plan or proposal for
the liquidation or dissolution of the China JV or (iv) the China JV’s submission
or becoming subject to any bankruptcy proceeding, the appointment of a trustee,
custodian or conservator or any other similar voluntary or involuntary
creditors’ right proceeding.
 
“Company Documents” means this Agreement, the Related Agreements, the Business
Plans and the Articles of Association of the Company, as amended from time to
time.
 
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person (whether
through the ownership of securities, by contract, or otherwise).
 
“Director” means a member of the Board.
 
“Effective Date” means the date set forth in the first paragraph of this
Agreement.
 
“Encumbrance” means any lien, mortgage, deed of trust, pledge, collateral
assignment, security interest, hypothecation, option, right of first refusal or
other encumbrance.
 
“Entity” means a corporation, partnership, limited liability company, firm or
other business association or entity.
 
“Fiscal Year” means the twelve (12) month period ending June 30 of each year, or
such other fiscal year as the Board may designate from time to time.
 
“Governmental Authority” means any domestic or foreign government, governmental
authority, court, tribunal, agency or other regulatory, administrative or
judicial agency, commission or organization, and any subdivision, branch or
department of any of the foregoing.
 
“Initial Business Plan” means the initial business plan of the Company, covering
the period running from the Effective Date through the end of the fifth full
Fiscal Year after the Effective Date, as agreed upon by the JV Investors and
adopted by the Board.
 
“Interests” means the equity interests of the Company.
 
“IPO” means an initial public offering on a nationally recognized securities
exchange.
 
 
 
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“JV Investor” means a Person that owns Interests in the Company.  A list of the
initial JV Investors is set forth on Exhibit A, which may be amended from time
to time.
 
“Party” and “Parties” are defined in the opening paragraph of this Agreement.
 
“Percentage Ownership Interest” means the percentage of Interests of the Company
owned by a particular JV Investor, determined based on the following formula:
the percentage that corresponds to (i) the quotient of (A) the JV Investor’s
committed registered capital divided by (B) the aggregate registered capital
contributed to the Company by all of the JV Investors.
 
“Person” means a natural individual, Governmental Authority or Entity.
 
“Transfer” means, as a noun, the transfer of legal, beneficial or equitable
ownership by sale, exchange, assignment, gift, donation, grant or other transfer
of any kind, whether voluntary or involuntary, including transfers by operation
of law or legal process.  As a verb, the term means the act of making any
Transfer.
 
“Supervisor” means a member of the Board of Supervisors.
 
“U.S. Accounting Principles” means generally accepted accounting principles in
the United States (or any other country which the JV Investors may agree to in
writing) as set forth in pronouncements of the Financial Accounting Standards
Board (and its predecessors) and the American Institute of Certified Public
Accountants, as consistently applied.
 
1.2 Other Definitions.  Terms not otherwise defined, but used, herein that are
defined in any Related Agreement shall have the same meaning as in the Related
Agreement when used in this Agreement, unless the context otherwise requires.
 
2. GENERAL COMPANY INFORMATION
 
2.1 Company, Generally.  The name of the Company is Anhui Meineng Store Energy
Co., Ltd. (Chinese name: ___________________________).  The Company’s principal
office shall be located at such location within Wuhu City, Anhui Province, the
People’s Republic of China (or such other location within the People’s Republic
of China as may be determined, from time to time, by the Board).
 
2.2 JV Investors, Generally.  Exhibit A hereto, which may be amended from time
to time by the Board, as required, sets forth the following information
pertaining to each of the initial JV Investors: (i) the name of the JV Investor,
(ii) the address of the principal office of the JV Investor, (iii) information
for the legal representative of the JV Investor, (iv) the committed registered
capital of the JV Investor and (v) the Percentage Ownership Interest of the JV
Investor.
 
3. COMPANY STRUCTURE AND STRATEGY
 
3.1 Business Scope.  The Company shall (a) source, market and distribute the
Products, (b) integrate the Products into other technologies and (c) render
Services to customers within the Territory.  A more detailed description of the
initial scope of the Company’s business, including (i) stages of development of
the Company; (ii) the Products to be sourced, marketed and distributed by the
Company and (iii) the Services to be provided by the Company, is set forth on
Exhibit B hereto.
 
 
 
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3.2 Structure.  The Company shall be formed as a Chinese limited liability
company.  The liability of any JV Investor with respect to the Company shall be
limited to the amount of such JV Investor’s respective registered capital
contribution made to the Company pursuant to this Agreement and no JV Investor
shall have any liability to the Company or any third party in excess of such JV
Investor’s registered capital contribution.  The JV Investors shall share the
profits, risks and losses in proportion to their respective registered capital
contributions, which are set forth on Exhibit A.
 
3.3 Strategy.  The Company will pursue its objectives as set forth in Section
3.1 above only with respect to certain sectors and regions within the Territory,
as more fully described in the License Agreement, which is attached hereto as
Exhibit C, all in accordance with the terms and conditions of the Company
Documents.
 
4. OWNERSHIP OF THE COMPANY
 
4.1 Registered Capital.  The initial registered capital of the Company shall be
Eighty Seven Million Two Hundred Thousand Renminbi (RMB 87,200,000) (“Registered
Capital”), which will be contributed by the Parties in the amounts, and forms,
as set forth on Exhibit A; provided, however, that if (i) upon an assessment of
the initial assets to be contributed by the Parties hereunder, the relevant
People’s Republic of China Governmental Authority determines under Applicable
Law that certain assets do not warrant the valuations set forth on Exhibit A and
(ii) whereupon, unless the JV Investors contribute such amount of funds as is
necessary to maintain the Percentage Ownership Interests of the JV Investors as
set forth on Exhibit A within ten (10) Business Days of the JV Investors’
receipt of notice of the occurrence of (i) hereof, this Agreement shall
terminate automatically without any further actions by the Parties and all
previous contributions to the Company shall be returned promptly to the relevant
JV Investor who made such contribution originally.
 
4.2 Use of Registered Capital.  The registered capital of the Company shall be
used (a) for the purchase of production equipment and raw materials and (b) for
working capital and other purposes as deemed appropriate by the Board, from time
to time.
 
4.3 Payment Schedule of Initial Registered Capital Contributions.  Each of the
JV Investors shall contribute to the Company its corresponding portion of the
initial registered capital of the Company in two (2) installments:
 
(a) First Installment.  The JV Investors shall contribute the respective amounts
listed below within thirty (30) days following the issuance of the Business
License to the Company by the Approval Authority:
 
(i)  
Hong Kong Holdco shall contribute an aggregate amount of Thirty Six Million
Seven Hundred Thousand Renminbi (RMB 36,700,000), of which Ten Million Five
Hundred Thousand Renminbi (RMB 10,500,000) will be contributed in cash and
Twenty Six Million Two Hundred Thousand Renminbi (RMB 26,200,000) will be
credited to Hong Kong Holdco for the intellectual property rights granted to the
Company by ZBB Corp., an Affiliate of Hong Kong Holdco member, ZBB Energy; and

 
 
 
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(ii)  
the China JV shall contribute an aggregate amount in cash of Twenty Million
Renminbi (RMB 20,000,000).

 
(b) Second Installment.  The JV Investors shall contribute the respective
amounts listed below by June 1, 2012:
 
(i)  
Hong Kong Holdco shall contribute an aggregate amount in cash of Ten Million
Five Hundred Thousand Renminbi (RMB 10,500,000); and

 
(ii)  
the China JV shall contribute an aggregate amount in cash of Twenty Million
Renminbi (RMB 20,000,000).

 
4.4 Decrease or Increase of Registered Capital.  During the Term (as defined
below) of this Agreement, the Company may increase or decrease the amount of its
registered capital; provided, that any increase or decrease in the registered
capital of the Company shall require the unanimous approval of the Board and the
approval and registration of the Approval Authority.
 
4.5 Distribution of Net Profits.  Subject to any restrictions imposed by
Applicable Law, the Company will distribute the net profits it receives to the
JV Investors, on a pro-rata basis, in amounts corresponding to their respective
Percentage Ownership Interest.  The distribution of net profits, in each
instance, will be subject to (a) the approval of the Board, (b) the
establishment of reasonable reserves and (c) the payment of any associated fees
and taxes.
 
5. OPERATIVE AGREEMENTS; VOTING AGREEMENT
 
5.1 Operative Agreements.
 
(a) License Agreement.  As of the date of establishment of the Company, the
Company and ZBB Corp. shall enter into the License Agreement, as set forth on
Exhibit C hereto.
 
(b) Management Services Agreement.  As of the date of establishment of the
Company, the Company and Hong Kong Holdco shall enter into the Management
Services Agreement, as set forth on Exhibit D hereto.
 
(c) R&D Agreement.  As of the date of establishment of the Company, the Company
and ZBB Corp. shall enter into the R&D Agreement, as set forth on Exhibit E
hereto.
 
(d) Supply Agreements.  Additionally, as promptly as practicable following the
date of establishment of the Company, the Company and ZBB Corp. shall enter into
supply agreements of a fixed term on an arms-length basis, subject to
commercially reasonable terms and conditions, pursuant to which (i) the Company
shall purchase from ZBB Corp. certain Products manufactured by ZBB Corp. at a
cost equal to One Hundred Twenty Percent (120%) of ZBB Corp.’s fully absorbed
costs in manufacturing the same, as calculated in accordance with the terms of
such supply agreement and (ii) ZBB Corp. may purchase from the Company certain
Products manufactured by the Company, priced in a manner corresponding with the
above.
 
 
 
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5.2 Voting Agreement; Operation of the Company.  Each JV Investor agrees (a) to
hold all of the Interests of the Company registered in its name or beneficially
owned by such JV Investor as of the Effective Date (and any and all other
Interests of the Company legally or beneficially acquired by such JV Investor
after the Effective Date) in accordance with the terms and conditions of this
Agreement; (b) to vote such Interests in accordance with the provisions of this
Agreement and (c) to cause the Directors and Supervisors nominated by such JV
Investor, within the bounds of the fiduciary duties of the Directors and
Supervisors to the Company under the Company Documents or Applicable Law, to
vote to effect the terms hereof.
 
6. BOARD OF DIRECTORS
 
6.1 Composition of the Board of Directors.
 
(a) Initial Composition; Term.  The Company shall be managed by the Board in
accordance with this Agreement, the applicable provisions of the Company
Documents and Applicable Law.  The Board shall initially consist of five (5)
Directors, of which (i) Hong Kong Holdco shall appoint three (3) Directors and
(ii) the China JV shall appoint two (2) Directors.  The initial Directors
appointed by the Parties are set forth on Exhibit F.  Any change to the number,
or representative composition, of Directors shall require the unanimous vote of
the JV Investors, as set forth in Section 8.4.  The Directors shall serve for
such term, or terms, as the JV Investors shall determine.
 
(b) Removal; Vacancies.  Each Director shall remain in office until such
Director’s death, disability, retirement resignation or removal.  In the event
of a vacancy on the Board (as a result of the death, disability, retirement,
resignation or removal of the Director, or otherwise), the JV Investor that
appointed such Director shall be entitled to appoint a replacement Director.  At
any time the JV Investors must elect a Director, the JV Investors shall vote all
of their respective Interests so as to elect the Director appointed by the
applicable JV Investor in accordance herewith.
 
6.2 Removal; Reappointment of Directors.  Any Director may be removed for cause
in accordance with the applicable provisions of this Agreement and Applicable
Law; provided, however, that any JV Investor proposing to remove any Director
for cause shall first consult with the other JV Investors so that the JV
Investors may, in good faith, attempt to resolve the matter without a formal
vote.  In addition, any vote taken to remove any Director elected pursuant to
Section 6.1, or to fill any vacancy created by the death, disability,
retirement, resignation or removal of a Director elected pursuant to Section
6.1, shall also be subject to the provisions of this Section 6.2.  In the event
of the death, disability, retirement, resignation or removal of any Director (a
“Former Director”), and pending the replacement of such Former Director, the
remaining members of the Board shall give effect to the vote of the other
Directors appointed by the same JV Investor as if the Former Director still
served on the Board and had cast such Director’s vote in the same way as such
other Directors.
 
 
 
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6.3 Board Meetings.
 
(a) Convention of Meetings.  Any single Director shall have the authority to
convene a meeting of the Board.  The Board shall meet at least quarterly and
written notice of each Board meeting shall be given no less than thirty (30)
Business Days in advance of the proposed meeting (which period may be waived by
Directors sufficient to represent a quorum under the terms hereof, either
through a written waiver or by actual attendance, without objection, at such
Board meeting).
 
(b) Participation by Other Means.  Members of the Board may participate in any
meeting of the Board, or any committee of the Board, by any means permitted
under Applicable Law, including by videoconference or teleconference.
 
(c) Conduction of Meetings.  Board meetings shall be conducted in English and
minutes of each meeting shall be prepared by the Company in English and
distributed to each Director promptly following such meeting.  Proposals or
reports brought before any Board meeting for information or action (including,
without limitation, the Company’s financial statements) shall be prepared in
English.
 
(d) Chairman of the Board.  The Board shall designate a Director to serve as the
“Chairman” of the Board, who shall preside over all meetings of the Board.  The
initial Chairman of the Board is the person so appointed and set forth on
Exhibit F.  The Chairman of the Board shall be the legal representative of the
Company and shall represent the Company in accordance with the Applicable Laws
of the People’s Republic of China and the Articles of Association of the
Company.  Acts of the Chairman that are either (i) not authorized by the Board
or (ii) beyond the Chairman’s authority, as the legal representative, as set
forth in the Articles of Association of the Company, shall not bind the
Company.  If the Chairman of the Board is unable to perform the Chairman’s
duties, the Chairman of the Board shall appoint, in writing, another Director to
fulfill such duties in the absence of the Chairman of the Board.  If the
Chairman of the Board is unable to appoint a temporary replacement, the Board
shall appoint one of the Directors to act as the same.
 
(e) Reimbursements.  Each Director shall be reimbursed by the Company for coach
class airfare, hotel and food expenses related to such Director’s attendance at
Board meetings; provided, that such expenses shall be properly documented, with
receipts provided to the Company, and the associated reimbursements for each
Director shall not exceed Nineteen Thousand Renminbi (RMB 19,000) per quarter.
 
6.4 Board Quorum: Resolutions.  A quorum shall be deemed to exist for the
purposes of Board action as long as at least four (4) of the members of the
Board are present, including at least one (1) Director appointed by each JV
Investor; provided, that all Directors have received notice of such meeting as
is required by Applicable Law and the terms of Section 6.3.  Except as provided
herein, including in Sections 6.6 and 6.7, any action, determination or
resolution of the Board shall require the affirmative vote of a majority of the
Directors at a duly constituted meeting of the Board.
 
 
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6.5 Action by the Board Without a Meeting.  Any action required or permitted to
be taken at a meeting of the Board may be taken without a meeting, if a proposed
written consent, setting forth the action so taken or to be taken (i) is sent to
all Directors, (ii) is signed by the number of Directors needed to approve such
action and (iii) once signed, is delivered to the Board.  Action taken under
this Section shall be effective when all of the Directors needed to approve such
action have signed the proposed written consent or counterpart thereof, unless
the written consent specifies that it is to be effective as of an earlier or
later date and time.  Such a written consent shall have the same force and
effect as if the subject matter was voted upon at a duly called and constituted
meeting of the Board and may be described as such in any document or instrument.
 
6.6 Board Unanimous Approval Rights.  Notwithstanding any other provision of
this Agreement or the Company Documents, the affirmative vote of all of the
members of the Board shall be required for any of the following Company actions:
 
(i)  
amendment of the Articles of Association of the Company;

 
(ii)  
termination, dissolution or extension of the Term of the Company, except as
otherwise provided under Section 16;

 
(iii)  
increase, decrease or transfer of the registered capital;

 
(iv)  
merger of the Company with another Entity; or

 
(v)  
reorganization of the Company into several Entities.

 
6.7 Board Supermajority Approval Rights.  Notwithstanding any other provision of
this Agreement or the Company Documents, the affirmative vote of at least four
(4) Directors shall be required for any of the following Company actions:
 
(i)  
approval of the Company’s annual budget or any material changes thereto;

 
(ii)  
entry into any agreement or arrangement by the Company with any Affiliate of any
JV Investor;

 
(iii)  
the hiring or termination of any employee or consultant with annual compensation
in excess of Six Hundred Forty Five Thousand Renminbi (RMB 645,000) or with
executive responsibilities, and the adoption of any employee benefit plan;

 
(iv)  
entry into, termination, cancellation or material modification of any contract
involving payments to or from the Company in excess of Two Million Renminbi (RMB
2,000,000);

 
(v)  
the introduction of new Products or Services;

 
 
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(vi)  
the Company’s entry into a line of business outside of the production, marketing
and distribution of Products or the provision of the Services;

 
(vii)  
the creation of marketing materials for the Company bearing the logos, names or
other intellectual property of ZBB Corp. pursuant to the License Agreement;

 
(viii)  
a change in auditors or Accounting Principles; or

 
(ix)  
the issuance of additional Company Interests.

 
6.8 Deadlock.  In the event that (a) the Board is deadlocked with an equal
number of votes in favor and opposed on any matter requiring majority approval,
or (b) any action requiring supermajority or unanimous approval of the Board
fails to pass and such action is necessary for the immediate continued operation
of the Company, then the chief executive officers of Hong Kong Holdco and the
China JV shall confer over a thirty (30) day period in an attempt to resolve the
deadlock.  If such discussions do not resolve the deadlock, then, upon the
expiration of the abovementioned thirty (30) day period, the Parties shall
submit the dispute for resolution pursuant to the dispute resolution procedures
set forth in Section 17.2 below.  If within one hundred and thirty (130) days
from the expiration of the abovementioned thirty (30) day period, either (i) the
dispute is not submitted for resolution pursuant to this Section 6.8; (ii) the
HKIAC (as defined in Section 17.2) does not accept the arbitration application;
or (iii) the HKIAC does not render an arbitral award, Hong Kong Holdco may elect
to exercise its rights pursuant to Section 13 below, and, on the date on which
Hong Kong Holdco exercises its rights under Section 13 pursuant to this Section
6.8, Hong Kong Holdco and the China JV shall immediately apply to, and use their
best efforts to cause, the arbitral tribunal to terminate the arbitration
proceedings immediately.  Any arbitral award issued after the date on which Hong
Kong Holdco exercises its rights under Section 13 shall be nonbinding against
the Parties.
 
7. BOARD OF SUPERVISORS
 
7.1 Composition of the Board of Supervisors.
 
(a) Initial Composition; Term. The Board of Supervisors shall oversee the
accounting and financial activities of the Company and monitor the conduct of
the members of the Board and senior executives, in accordance with the terms of
this Agreement, the applicable provisions of the Company Documents and
Applicable Law.  The Board of Supervisors shall initially consist of three (3)
Supervisors, of which (i) Hong Kong Holdco will appoint two (2) Supervisors and
(ii) the China JV will appoint one (1) Supervisor.  Any change to the number, or
representative composition, of Supervisors shall require the unanimous vote of
the JV Investors, as set forth in Section 8.4.  The Supervisors shall serve for
such term, or terms, as the JV Investors shall determine.
 
(b) Removal; Vacancies.  Each Supervisor shall remain in office until such
Supervisor’s death, disability, retirement resignation or removal.  In the event
of a vacancy on the Board of Supervisors (as a result of the death, disability,
retirement, resignation or removal of the Supervisor, or otherwise), the JV
Investor that appointed such Supervisor shall be entitled to appoint a
replacement Supervisor.  At any time the JV Investors must elect a Supervisor,
the JV Investors shall vote all of their respective Interests so as to elect the
Supervisor appointed by the applicable JV Investor in accordance herewith.
 
 
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7.2 Removal; Reappointment of Supervisors.  Any Supervisor may be removed for
cause in accordance with the applicable provisions of this Agreement and
Applicable Law; provided, however, that any JV Investor proposing to remove any
Supervisor for cause shall first consult with the other JV Investors so that the
JV Investors may, in good faith, attempt to resolve the matter without a formal
vote.  In addition, any vote taken to remove any Supervisor elected pursuant to
Section 7.1, or to fill any vacancy created by the death, disability,
retirement, resignation or removal of a Supervisor elected pursuant to Section
7.1, shall also be subject to the provisions of Section 7.1 and this Section
7.2.  In the event of the death, disability, retirement, resignation or removal
of any Supervisor (a “Former Supervisor”), and pending the replacement of such
Former Supervisor, the remaining members of the Board of Supervisors shall give
effect to the vote of the other Supervisors appointed by the same JV Investor as
if the Former Supervisor still served on the Board of Supervisors and had cast
his or her vote in the same way as such other Supervisors.
 
7.3 Meetings of the Board of Supervisors.
 
(a) Convention of Meetings.  Any Supervisor shall have the authority to convene
a meeting of the Board of Supervisors.  The Board of Supervisors shall meet at
least twice a year and written notice of each meeting of the Board of
Supervisors shall be given no less than thirty (30) Business Days in advance of
the proposed meeting (which period may be waived by Supervisors sufficient to
represent a quorum under the terms hereof, either through a written waiver or by
actual attendance, without objection, at such meeting of the Board of
Supervisors).
 
(b) Participation by Other Means.  Members of the Board of Supervisors may
participate in any meeting of the Board of Supervisors, by any means permitted
under Applicable Law, including by videoconference or teleconference.
 
(c) Conduction of Meetings.  Meetings of the Board of Supervisors shall be
conducted in English and minutes of each meeting shall be prepared by the
Company in English and distributed to each Supervisor promptly following such
meeting.  Proposals or reports brought before any meeting of the Board of
Supervisors for information or action (including, without limitation, the
Company’s financial statements) shall be prepared in English.  The Board of
Supervisors shall designate a Supervisor to serve as the “Chairman” of the Board
of Supervisors, who shall preside over meetings of the Board of
Supervisors.  The initial Chairman of the Board of Supervisors is the person so
appointed and set forth on Exhibit F.
 
(d) Reimbursements.  Each Supervisor shall be reimbursed by the Company for
coach class airfare, hotel and food expenses related to such Supervisor’s
attendance at meetings of the Board of Supervisors; provided, that such expenses
shall be properly documented, with receipts provided to the Company, and the
associated reimbursements for each Supervisor shall not exceed Nineteen Thousand
Renminbi (RMB 19,000) per quarter.
 
 
 
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7.4 Quorum: Resolutions.  A quorum shall be deemed to exist for the purposes of
Board of Supervisors action as long as all members of the Board of Supervisors
are present.  Except as provided herein, any action, determination or resolution
of the Board of Supervisors shall require the unanimous vote of the Supervisors
at a duly constituted meeting of the Board of Supervisors.
 
7.5 Action by the Board of Supervisors without a Meeting.  Any action required
or permitted to be taken at a meeting of the Board of Supervisors may be taken
without a meeting, if a proposed written consent, setting forth the action so
taken or to be taken (i) is sent to all Supervisors, (ii) is signed by all
Supervisors and (iii) once signed, is delivered to the Board of
Supervisors.  Action taken under this Section shall be effective when all of the
Supervisors needed to approve such action have signed the proposed written
consent or counterpart thereof, unless the written consent specifies that it is
to be effective as of an earlier or later date and time.  Such a written consent
shall have the same force and effect as if the subject matter was voted upon at
a duly called and constituted meeting of the Board of Supervisors and may be
described as such in any document or instrument.
 
7.6 Deadlock.  In the event that any action requiring the approval of the Board
of Supervisors fails to pass and such action is necessary for the immediate
continued operation of the Company, then the chief executive officers of Hong
Kong Holdco and the China JV shall confer over a thirty (30) day period in an
attempt to resolve the deadlock.  If such discussions do not resolve the
deadlock, then, upon the expiration of the abovementioned thirty (30) day
period, the Parties shall submit the dispute for resolution pursuant to the
dispute resolution procedures set forth in Section 17.2 below.  If within one
hundred and thirty (130) days from the expiration of the abovementioned thirty
(30) day period, either (i) the dispute is not submitted for resolution pursuant
to this Section 7.6; (ii) the HKIAC (as defined in Section 17.2) does not accept
the arbitration application; or (iii) the HKIAC does not render an arbitral
award, Hong Kong Holdco may elect to exercise its rights pursuant to Section 13
below, and, on the date on which Hong Kong Holdco exercises its rights under
Section 13 pursuant to this Section 7.6, Hong Kong Holdco and the China JV shall
immediately apply to, and use their best efforts to cause, the arbitral tribunal
to terminate the arbitration proceedings immediately.  Any arbitral award issued
after the date on which Hong Kong Holdco exercises its rights under Section 13
shall be nonbinding against the Parties.
 
8. JV INVESTORS
 
8.1 Meetings.
 
(a) Convention of Meetings.  The Board may call for meetings of the JV Investors
at such times as it determines to be necessary or appropriate and shall call a
meeting upon the written request of any single JV Investor.  A JV Investor
requesting a meeting must sign the request, deliver the same to the Board and
specify therein the purposes of the proposed meeting.  There shall be no
requirement that annual or other periodic meetings of the JV Investors be
held.  The Board shall give all JV Investors notice stating the date, time and
place of a meeting of the JV Investors, which date shall not be less than
fifteen (15) Business Days after the date such notice is given (which period may
be waived by the JV Investors sufficient to represent a quorum under the terms
hereof, either through a written waiver or by actual attendance, without
objection, at such meeting of the JV Investors).
 
 
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(b) Participation by Other Means.  JV Investors may participate in any meeting
of the JV Investors, by any means permitted under Applicable Law, including by
videoconference or teleconference.
 
(c) Conduction of Meetings.  Meetings of the JV Investors shall be conducted in
English and minutes of each meeting shall be prepared by the Company in English
and distributed to each JV Investor and the Board promptly following such
meeting.  Proposals or reports brought before any meeting of the JV Investors
for information or action (including, without limitation, the Company’s
financial statements) shall be prepared in English.
 
8.2 Voting Rights; Actions of JV Investors; Quorum.  Each JV Investor shall be
entitled to vote, and to cast a number of votes equal to the product of (i) one
hundred (100) multiplied by (ii) that JV Investor’s Percentage Ownership
Interest (for the avoidance of doubt, the JV Investors have an aggregate of one
hundred (100) votes) on any matter submitted to a vote of the JV Investors in
accordance with applicable provisions of this Agreement and Applicable Law.  A
quorum shall be deemed to exist for purposes of JV Investor action as long as a
majority in interest of the JV Investors are present.  Except as provided
herein, any action, determination or resolution of the JV Investors shall
require the majority vote of the JV Investors at a duly constituted meeting of
the JV Investors.
 
8.3 Action by JV Investors Without a Meeting.  Any action required or permitted
to be taken at a meeting of the JV Investors may be taken without a meeting, if
a proposed written consent, setting forth the action so taken or to be taken (i)
is sent to all JV Investors, (ii) is signed by the JV Investors holding the
number of Interests needed to approve the action and (iii) once signed, is
delivered to the Board.  Action taken under this Section shall be effective when
all of the JV Investors needed to approve such action have signed the proposed
written consent or counterpart thereof, unless the written consent specifies
that it is to be effective as of an earlier or later date and time.  Such a
written consent shall have the same force and effect as if the subject matter
was voted upon at a duly called and constituted meeting of the JV Investors and
may be described as such in any document or instrument.
 
8.4 JV Investor Unanimous Approval Rights.  Notwithstanding any other provision
of this Agreement or the Company Documents, the affirmative vote of all of the
Interests held by the JV Investors shall be required for any of the following
Company actions:
 
(i)  
Any change to the number (or representative composition) of Directors on the
Board of Directors; or

 
(ii)  
Any change to the number (or representative composition) of Supervisors on the
Board of Supervisors.

 
8.5 JV Investor Supermajority Rights.  Notwithstanding any other provision of
this Agreement or the Company Documents, the affirmative vote of JV Investors
holding at least eighty (80) votes (as described in Section 8.2 hereof) shall be
required for any of the following Company actions:
 
 
 
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(i)  
the borrowing of or the incurrence of any indebtedness by the Company or the
granting by the Company of any liens (other than those arising by the operation
of law) or encumbrances on a material amount of its assets;

 
(ii)  
the amendment of the constitutive documents of the Company;

 
(iii)  
the issuance of additional Interests, or securities convertible into shares, in
the Company; or

 
(iv)  
the filing of a voluntary winding up petition by, or the liquidation or
dissolution of, the Company.

 
8.6 Deadlock.  In the event that (a) the JV Investors are deadlocked with an
equal number of votes in favor and opposed on any matter requiring majority
approval, or (b) any action requiring supermajority or unanimous approval of the
JV Investors fails to pass and such action is necessary for the immediate
continued operation of the Company, then the chief executive officers of Hong
Kong Holdco and the China JV shall confer over a thirty (30) day period in an
attempt to resolve the deadlock.  If such discussions do not resolve the
deadlock, then, upon the expiration of the abovementioned thirty (30) day
period, the Parties shall submit the dispute for resolution pursuant to the
dispute resolution procedures set forth in Section 17.2 below. If, within one
hundred and thirty (130) days from the expiration of the abovementioned thirty
(30) day period, either (i) the dispute is not submitted for resolution pursuant
to this Section 8.6; (ii) the HKIAC (as defined in Section 17.2) does not accept
the arbitration application; or (iii) the HKIAC does not render an arbitral
award, Hong Kong Holdco may elect to exercise its rights pursuant to Section 13
below, and, on the date on which Hong Kong Holdco exercises its rights under
Section 13 pursuant to this Section 8.6, Hong Kong Holdco and the China JV shall
immediately apply to, and use their best efforts to cause, the arbitral tribunal
to terminate the arbitration proceedings immediately.  Any arbitral award issued
after the date on which Hong Kong Holdco exercises its rights under Section 13
shall be nonbinding against the Parties.
 
9. OFFICERS
 
 
.

 
9.1 Appointment and Term of Office.  The officers of the Company (a) shall
consist of the chief executive officer, chief financial officer and
administrative assistant to the Board and (b) may consist of other officers, all
as may be appointed from time to time by the Board.  Such officers will hold
office until the earlier of that officer’s death, resignation, retirement,
disqualification, or removal from office by the Board and until that officer’s
successor has been duly elected and qualified.  Two or more offices may be held
by the same person.
 
9.2 Removal.  Any officer appointed hereunder may be removed from office at any
time by the Board, with or without cause.  Such removal will be without
prejudice to the contract rights, if any, of the person so removed.  Election or
appointment of an officer will not of itself create contract rights.
 
9.3 Vacancies.  Any vacancy in an officer position shall be filled by the Board.
 
 
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9.4 Compensation.  The compensation of all officers of the Company shall be
determined by the Board and may be altered by the Board from time to time,
except as otherwise provided by contract, and no officer shall be prevented from
receiving such compensation by reason of the fact such officer is also a
Director or Supervisor.  All officers shall be entitled to be paid or reimbursed
for all costs and expenditures incurred in conjunction with carrying out the
Company’s business.
 
9.5 Powers and Duties.  Officers shall have such powers and duties as are
provided herein and as may otherwise be established or delegated to them, from
time to time, by the Board.  The officers of the Company shall possess such
powers and duties as customarily are associated with their respective offices,
subject to the general direction and supervision of the Board.  Such powers and
duties will include the following:
 
(a) Chief Executive Officer.  Except as otherwise provided in the Company
Documents, the Company’s day-to-day operations will be managed by the chief
executive officer of the Company.  The interim chief executive officer, as
appointed by Hong Kong Holdco, is set forth on Exhibit F.  The interim chief
executive officer shall be responsible for initially identifying and recruiting
candidates to serve as the chief executive officer, the chief financial officer
and the administrative assistant to the Board of the Company, and shall submit
such candidates to the Board for approval.  The person holding the office of
chief executive officer also shall perform, under the direction and subject to
the control of the Board, such other duties as may be assigned by the Board,
from time to time.
 
(b) Chief Financial Officer.  The chief financial officer shall be the principal
accounting and financial officer of the Company and will have active control of
and shall be responsible for all matters pertaining to the accounts and finances
of the Company.  The chief financial officer will have charge of Company funds
and securities and will keep a record of the property and indebtedness of the
Company.  The chief financial officer shall be prepared at all times to give
information as to the condition of the Company and shall make a detailed annual
report of the entire business and financial condition of the Company.  The
person holding the office of chief financial officer shall also perform, under
the direction and subject to the control of the Board, such other duties as may
be assigned by the Board, from time to time.
 
(c) Administrative Assistant to the Board.  The administrative assistant to the
Board shall give notice to, attend, and keep the minutes of all of the
proceedings at all meetings of the Board, the Board of Supervisors and the JV
Investors and will be the custodian of such minutes and all other legal records
of the Company.  The administrative assistant to the Board will see that all
notices required to be given to the Directors, Supervisors and the JV Investors
are duly given in accordance with this Agreement or as required by Applicable
Law.  It shall also be the duty of the administrative assistant to the Board to
keep a ledger, in which shall be correctly recorded, all transactions pertaining
to the Interests of the Company.  The person holding the office of
administrative assistant to the Board also shall perform, under the direction
and subject to the control of the Board, such other duties as may be assigned by
the Board, from time to time.
 
(d) Other Officers.  The Board may appoint such other officers, with such
titles, powers, duties and compensation, as they may deem necessary for the
conduct of the business of the Company.  In addition, the Board may authorize
the chief executive officer (or other officers) to appoint such agents or
employees as the Board deems necessary for the conduct of the business of the
Company.
 
 
 
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10. BUSINESS PLANS; FINANCIAL AND OTHER RECORDS
 
10.1 Business Plans.  The JV Investors will agree to, and the Board will adopt
an Initial Business Plan.  The Initial Business Plan and each subsequent
Business Plan shall set forth, among other things: (i) the scope of the
Company’s business; (ii) the growth needs of the Company, including personnel
requirements, working capital and investment capital; (iii) marketing plans for
the Company; (iv) capital and operational budgets for the transactions and
entities contemplated by the Company Documents and (v) plans regarding
interacting with the appropriate regulatory authorities in connection with the
approval of the Products for production and sale, and the Services for
provision, in the Territory.  After adoption of the Initial Business Plan, the
chief executive officer shall submit a proposed Business Plan to the Board for
approval at least sixty (60) days prior to the start of each Fiscal Year.  Each
such Business Plan shall cover one Fiscal Year of the Company’s operations and
shall contain the matters set forth in this Section.
 
10.2 Accounting and Management Information Systems.  In the conduct of its
business, the Company shall pursue a policy of adopting and maintaining
accounting and management information systems that facilitate the Company’s
compliance with the Reporting Requirements (as defined below), the Accounting
Principles and are otherwise consistent with sound business practices and
corporate governance in the context of the Company’s business and
operations.  The Company shall engage a reputable, international accounting firm
to provide accounting services in conjunction with the Reporting Requirements;
the initial accounting firm shall be Deloitte LLP.  Two (2) sets of books and
records will be kept, one in accordance with China Accounting Principles and one
in accordance with U.S. Accounting Principles.
 
10.3 Financial Statements, Accounting and Other Reports.  The Company shall
cause (i) two (2) sets of the following financial statements to be prepared (one
in accordance with China Accounting Principles and one in accordance with U.S.
Accounting Principles) and (ii) such financial statements to be provided to each
JV Investor (the following requirements being referred to collectively as the
“Reporting Requirements”):
 
(a) Annual Financial Statements.  As soon as available, but in any event within
forty five (45) days after the end of each Fiscal Year, a copy of the annual
financial statements of the Company, including, a balance sheet, income
statement, statement of cash flows and statement of the JV Investors’ equity as
of the end of the Fiscal Year, setting forth in each case in comparative form
the figures for the previous year, and audited and certified by the Company’s
accounting firm.
 
(b) Quarterly Financial Statements.  As soon as available, but in any event
within thirty (30) days after the end of each fiscal quarter, a copy of the
Company’s unaudited financial statements for such fiscal quarter including a
balance sheet, income statement, statement of cash flows and statement of the JV
Investors’ equity as of the end of such quarter, setting forth in comparative
form the figures for the corresponding quarter in the previous Fiscal Year, and
certified by the chief financial officer of the Company as being fairly stated
in all material respects (subject to normal year-end audit adjustments).
 
 
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(c) Quarterly Management Reports.  On a quarterly basis, the Company’s
management shall report to the Board: (i) the Company’s current business
objectives and compliance with the Business Plan then in effect, (ii) notice of
any new clients, and (iii) such other reasonable information as the Board may
request.
 
10.4 Right of Inspection.  During the regular office hours at the location of
the Company, and upon reasonable notice to the Company, each JV Investor shall
have (a) full access to all properties, books of account, and records of the
Company, (b) the right to make copies from such books and records at its own
expense and (c) the right to discuss with the Company’s executive officers the
affairs, finances and accounts of the Company.  Any information obtained by a JV
Investor through exercise of rights granted under this Section shall, to the
extent constituting Confidential Information hereunder, be subject to the
confidentiality provisions set forth in Section 14.  Any JV Investor having
rights under this Section shall also have the right to confer, upon reasonable
notice and during normal business hours, with the auditors of the Company, and
with the accounting firm which has prepared or is preparing any of the financial
statements required to be delivered by the Company, as a part of the Reporting
Requirements and the Company shall grant, or use commercially reasonable efforts
to provide for, any permission requested by such auditors to permit such
conferences to take place.
 
11. INSURANCE; INDEMNIFICATION
 
11.1 Liability.  To the fullest extent permitted by Applicable Law, each
Director, Supervisor and officer of the Company shall not be personally liable
to the Company or the JV Investors for monetary damages for breach of any duty
owed as a Director, Supervisor or officer of the Company, and the Company’s
Articles of Association shall so provide.
 
11.2 Indemnification of Directors, Supervisors and Officers.
 
(a) Generally.  Except to the extent limited hereunder, each Director,
Supervisor or officer of the Company (each a “Company Representative”) who is
made a party or is threatened to be made a party to or is involved in any
proceeding by reason of the fact that such Company Representative, or the legal
representative of such Company Representative, is or was a Company
Representative, shall be indemnified and held harmless by the Company to the
fullest extent authorized by Applicable Law, as the same exists or may hereafter
be amended (but, in case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than
said law permitted the Company to provide prior to such amendment), against all
expense, liability and loss (including attorneys’ fees, judgments, fines, excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a Company
Representative, and shall inure to the benefit of such Company Representative’s
heirs, executors and administrators.  The right to indemnification conferred
herein shall be a contract right based upon an offer from the Company, which
offer shall be deemed to be accepted by such person’s service or continued
service as a Company Representative.  The Company may, by action of the Board,
provide indemnification to employees or agents of the Company, to the extent
permitted by Applicable Law, with the same scope and effect as the foregoing
indemnification of Company Representatives.
 
 
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(b) Limitations.  Notwithstanding the foregoing, the provisions of 11.2(a) shall
not eliminate or limit the liability of, or provide indemnity to, a Company
Representative for or in connection with any act, inaction or omission of such
Company Representative that (i) constitutes a breach by Company Representative
of that Company Representative’s duties of loyalty or care to the Company or the
JV Investors (other than as expressly excepted under this Agreement; (ii) was
detrimental to the Company and not in good faith; (iii) involved intentional
misconduct or a knowing violation of the law: (iv) clearly was in conflict with
the interests of the Company or (v) results in such Company Representative
deriving an improper personal benefit.  The right to indemnification conferred
in this Section 11.2 shall not be exclusive of any other right that a Company
Representative may have or hereafter acquire under law or equity, provision of
this Agreement or otherwise.
 
11.3 Indemnification of JV Investors.
 
(a) Generally.  To the extent permitted by law, the Company will indemnify and
hold harmless each JV Investor, the partners, officers and directors of each JV
Investor and each person, if any, who Controls such JV Investor (each an
“Indemnified Party”) against all liability, loss, damage, penalty, action,
claim, judgment, settlement, cost and expense of any kind or nature whatsoever
(including all reasonable attorneys’ fees) (collectively referred to as
“Losses”) that arise under applicable securities laws, that in any way relate
to, or arise out of, or are alleged to relate to or arise out of any of the
following statements, omissions or violations (collectively a “Violation”) by
the Company: (i) any untrue statement or alleged untrue statement of a material
fact contained in any registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, or otherwise, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or otherwise, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of any applicable securities laws; and the
Company will pay to each such Indemnified Party any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such Loss; provided, however, that the indemnity agreement
contained in this Section 11.3 shall not apply to amounts paid in settlement of
any such Loss if such settlement is effected without the consent of the Company,
which consent shall not be unreasonably withheld, nor shall the Company be
liable in any such case for any such Loss to the extent that it arises out of or
is based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with any
registration of the Company’s Interests by such Indemnified Party.
 
(b) Indemnity Claims. Promptly after receipt by an Indemnified Party under this
Section 11.3 of notice of the commencement of any action (including any
governmental action), such Indemnified Party will, if a claim in respect thereof
is to be made against the Company under this Section 11.3, deliver to the
Company a written notice of the commencement thereof and the Company shall have
the right to participate in, and, to the extent the Company so desires, to
assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an Indemnified Party shall have the right to retain its
own counsel, with the fees and expenses to be paid by the Company, if
representation of such Indemnified Party by the counsel retained by the Company
would be inappropriate due to actual or potential differing interests between
such Indemnified Party and the Company.  The failure to deliver written notice
to the Company within a reasonable time of the commencement of any such action,
if materially prejudicial to its ability to defend such action, shall relieve
the Company of any liability to the Indemnified Party under this Section 11.3,
but the omission so to deliver written notice to the Company will not relieve it
of any liability that it may have to any Indemnified Party otherwise than under
this Section 11.3.
 
 
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(c) Unavailability of Indemnification.  If the indemnification provided for
under this Section 11.3 is held by a court of competent jurisdiction or by an
arbitral tribunal to which an Indemnified Party has submitted the matter to be
unavailable to an Indemnified Party with respect to any Losses referred to
herein, the Company, in lieu of indemnifying such Indemnified Party thereunder,
shall to the extent permitted by Applicable Law contribute to the amount paid or
payable by such Indemnified Party as a result of such Loss in such proportion as
is appropriate to reflect the relative fault of the Company on the one hand and
of the Indemnified Party on the other in connection with the Violations that
resulted in such Loss, as well as any other relevant equitable
considerations.  The relative fault of the Company and of the Indemnified Party
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the Company or by the Indemnified Party
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; provided, that in
no event shall any contribution by a JV Investor hereunder exceed the registered
capital contributed by such JV Investor.
 
11.4 Advancement.  The Company shall reimburse, promptly following request
therefor, all reasonable expenses incurred by a Person indemnified by the
Company pursuant to Section 11.2 or 11.3 hereof (an “Indemnitee”) in connection
with any threatened, pending or completed action, suit, arbitration,
investigation or other proceeding (“Claim”) arising out of, or relating to the
matters identified in this Article 11; provided, however, that prior to such
advancement, the Indemnitee shall have agreed in writing (determined to be
sufficient by the Board to protect the interests of the Company) to repay such
advancement in connection with acts, conduct or omissions as to which it shall
be determined by a court of competent jurisdiction or an arbitrator that such
Indemnitee engaged in intentional misconduct or in a knowing and culpable
violation of the law.
 
11.5 Insurance.  The Company shall obtain and maintain, and will continue to
maintain at all times during the terms of this Agreement, the insurance listed
below, in commercially reasonable amounts, at its own expense, from an insurer
that is A.M. Best Company rated A- or higher.  Any such policy shall be endorsed
to name specifically each of the Parties and their respective subsidiaries,
affiliates, successors and assigns as additional insureds.  The Company shall
provide any certificate of insurance to the Parties upon request and all such
certificates shall indicate that thirty (30) days prior written notice to the
Parties of cancellation or non-renewal is required.
 
(a) General liability insurance;
 
 
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(b) Product liability insurance;
 
(c) Errors & omissions insurance; and
 
(d) Director & officer insurance, to protect the Company and its Directors,
Supervisors and officers, against any such expense, liability or loss, whether
or not the Company would have the power to indemnify such person against such
expense, liability or loss under the Related Agreements.
 
12. COMPLIANCE WITH LAWS
 
12.1 General.  In the conduct of its business, the Company shall comply with all
Applicable Laws and maintaining all franchises, permits, licenses and similar
authorities necessary for the conduct of its business; provided further, that
the Company shall comply with all statutes, laws, rules, regulations,
directives, treaties, judgments, orders, decrees or injunctions of any
Governmental Authority that are applicable to ZBB Corp. as a publicly-traded
U.S. company, including without limitation relevant provisions of the Securities
Exchange Act of 1934, the Sarbanes-Oxley Act of 2002 and the Dodd–Frank Wall
Street Reform and Consumer Protection Act, to the extent reasonably requested by
Hong Kong Holdco.
 
12.2 Anti-Corruption.  Neither the Company, nor any of its Directors,
Supervisors, officers, employees, agents or other Person associated with or
acting for or on behalf of the Company, will take any action that would cause
the Company to be in violation of the Foreign Corrupt Practices Act of 1977, as
amended, or any similar state or local Applicable Law, the Anti-Kickback Act of
1986 or any state or local/municipality anti-kickback Applicable Law, Applicable
Laws restricting the payment of contingent fee arrangements, or any Applicable
Laws of similar effect.
 
13. TRANSFERS AND SALES OF INTERESTS
 
13.1 Transfers of Interests.
 
(a) General Restriction on Transfers.  Except to the extent otherwise provided
in this Section 13, no JV Investor shall Transfer (or create or suffer to exist
any Encumbrance against) all or any portion of that JV Investor’s Interest,
except with the advance approval of all JV Investors.  Such approval may specify
the rights and obligations the transferee shall have, including whether the
proposed transferee is to be admitted as a full substituted JV Investor.  The
grant or denial of a JV Investor’s approval for a proposed Transfer or
Encumbrance may be made in such JV Investor’s sole and absolute discretion.
 
(b) Rights and Obligations of Substituted JV Investor.  A substituted JV
Investor shall have all the rights and powers, and shall be subject to all the
restrictions and liabilities, of the Transferring JV Investor (as defined
below), relative to such transferred Interest.
 
(c) Continuing Obligations of Transferor.  Any Transferring JV Investor (as
defined below) who Transfers all of such JV Investor’s Interest shall cease to
be a JV Investor; provided, however, that such Transfer, without more, shall not
release the Transferring JV Investor from any liability with respect to the
transferred Interest or any other obligation that such Transferring JV Investor
may have to the Company.
 
 
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13.2 Unauthorized Transfers     Any purported Transfer or Encumbrance of an
Interest of any JV Investor that does not comply with the conditions set forth
in this Section 13 shall be null, void and of no effect.
 
13.3 Withdrawal of a JV Investor.  A JV Investor shall have no right to
withdraw, dissociate or withdraw such JV Investor’s registered capital from the
Company.
 
13.4 Transfers Pursuant to a Bona Fide Offer; Rights of First Refusal.
 
(a) Notice of Bona Fide Offer.  Notwithstanding the general restrictions on
Transfers in Section 13.1, if a JV Investor desires to Transfer all or any
portion of that JV Investor’s Interest pursuant to a Bona Fide Offer (as defined
below) made to that JV Investor by a third-party, and such JV Investor is unable
to obtain the approval of the other JV Investors to such Transfer, as provided
in Section 13.1(a) above, then such JV Investor desiring to so transfer (a
“Transferring JV Investor”) shall give written notice thereof (which shall
include a copy of such bona fide offer) to the other JV Investors (the
“Receiving JV Investors”).  As used herein, the term “Bona Fide Offer” means a
legally binding offer made in good faith (in writing) by a third party, who the
Transferring JV Investor reasonably believes has the financial means to
consummate the proposed Transfer, which offer includes (i) the Interests to be
transferred; (ii) the name and address of the proposed transferee; (iii) in the
case of a proposed transferee that is an entity (i.e., not a natural Person),
the identity of all direct and indirect owners of the proposed transferee; (iv)
the proposed consideration for the Transfer and (v) the other terms of the
proposed Transfer.
 
(b) Receiving JV Investors’ Right of First Refusal.  The Receiving JV Investors
shall have the right to purchase all, but not less than all, of the subject
Interest from the Transferring JV Investor on the terms and conditions contained
in the Bona Fide Offer.
 
(c) Exercise of Right of First Refusal; Closing. The Receiving JV Investors
shall have sixty (60) calendar days from the date of receipt of the notice
referenced in Section 13.4(a) (the “Election Period”) to elect to exercise their
purchase rights by sending written notice thereof to the Transferring JV
Investor.  Those Receiving JV Investors exercising said purchase right (the
“Electing JV Investors”) may divide the Interests to be purchased by them in any
amounts or proportions that they may mutually agree upon.  In the event that
they cannot or do not agree upon the Interests to be purchased by each, then
each such Electing JV Investor shall purchase that percentage of the subject
Interests proportionate to that Electing JV Investor’s respective Interest
relative to the aggregate Interests of all Electing JV Investors.  The Electing
JV Investors must purchase all of the Interests described in the Bona Fide
Offer.  The closing of such a purchase shall occur at a date, time and place
determined by the Electing JV Investors, which date shall be no later than
thirty (30) days following the end of the Election Period.
 
(d) Transfer to Third-Party Transferee.  If the Receiving JV Investors do not
elect to purchase all of the Interests within the Election Period, then the
Receiving JV Investors shall have no right to purchase any of the Interests, and
the Transferring JV Investor may Transfer, within a period of thirty (30)
calendar days beginning at the end of the Election Period, all of the Interests
described in the Bona Fide Offer to the proposed third-party transferee on the
terms and conditions contained in the Bona Fide Offer; provided, however, that
the proposed third-party transferee must have delivered to the Company, prior to
such Transfer, an agreement, in form and substance reasonably satisfactory to
the JV Investors, duly executed by the proposed third-party transferee, under
the terms of which such third-party transferee joins in the execution of this
Agreement, becomes a substituted JV Investor and agrees to be bound by all of
the terms and provisions of this Agreement.  If the Transferring JV Investor
does not Transfer such Interests by the end of such thirty (30) day period, the
subject Interests, and the Interest represented thereby, shall again become
subject to the restrictions of this Agreement, as though they had never been so
offered.
 
 
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13.5 Acknowledgment of Liquidity.  The JV Investors (a) acknowledge and agree
that the provisions of this Agreement provide reasonable methods of exiting the
Company and an adequate means for obtaining liquidity with respect to their
investment in the Company and (b) agree not to assert any claim in any legal
proceeding that the provisions of this Section 13 are unreasonable, unlawful or
unenforceable.
 
13.6 Buy/Sell Provisions.
 
(a) Hong Kong Holdco Call Right.  Notwithstanding the foregoing, Hong Kong
Holdco shall have the right to require the China JV to sell the China JV’s
Interests in the Company to Hong Kong Holdco at any time following any of the
circumstances listed below, upon written notice to the China JV:
 
(i)  
in the event of a deadlock by the Company’s Board that cannot be resolved or a
failure to approve an action requiring a unanimous or supermajority vote of the
Directors, in any case with respect to a matter that seriously impairs the
Company’s operations;

 
(ii)  
in the event that the Board of Supervisors fails to approve an action requiring
a unanimous vote, in any case with respect to a matter that seriously impairs
the Company’s operations;

 
(iii)  
in the event of a deadlock on a JV Investor vote that cannot be resolved or a
failure to approve an action requiring a supermajority or unanimous vote of the
JV Investors, in any case with respect to a matter that seriously impairs the
Company’s operations;

 
(iv)  
a private equity fund or other financial sponsor acquires an equity interest in,
or loans money to, the China JV (a “China JV Change in Structure”);

 
(v)  
a China JV Change of Control; or

 
(vi)  
a material breach or default of this Agreement by the China JV (a “China JV
Breach”).

 
 
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(b) Hong Kong Holdco Put Right.  Notwithstanding the foregoing, Hong Kong Holdco
shall have the right to require the China JV to purchase Hong Kong Holdco’s
Interests in the Company at any time following any of the circumstances listed
below, upon written notice to the China JV:
 
(i)  
in the event of a deadlock by the Company’s Board that cannot be resolved or a
failure to approve an action requiring a unanimous or supermajority vote of the
Directors, in any case with respect to a matter that seriously impairs the
Company’s operations;

 
(ii)  
in the event that the Board of Supervisors fails to approve an action requiring
a unanimous vote, in any case with respect to a matter that seriously impairs
the Company’s operations;

 
(iii)  
in the event of a deadlock on a JV Investor vote that cannot be resolved or a
failure to approve an action requiring a supermajority or unanimous vote of the
JV Investors, in any case with respect to a matter that seriously impairs the
Company’s operations;

 
(iv)  
a China JV Change in Structure;

 
(v)  
a China JV Change of Control; or

 
(vi)  
a China JV Breach.

 
(c) China JV Call Right.  Notwithstanding the foregoing, the China JV shall have
the right to require Hong Kong Holdco to sell Hong Kong Holdco’s Interests in
the Company to the China JV at any time following a material breach or default
of this Agreement by Hong Kong Holdco (a “Hong Kong Holdco Breach”), upon
written notice to Hong Kong Holdco.
 
(d) China JV Put Right.  Notwithstanding the foregoing, the China JV shall have
the right to require Hong Kong Holdco to purchase the China JV’s Interests in
the Company at any time following a Hong Kong Holdco Breach, upon written notice
to Hong Kong Holdco.
 
(e) Buy/Sell Arrangements.  The value of the Interests in the Company being
purchased under this Section 13.6 shall be determined as follows:
 
(i)  
In the event that either Hong Kong Holdco or the China JV exercises its put
right due to a China JV Breach or a Hong Kong Holdco Breach, respectively, an
amount equal to (i) 1.15 multiplied by (ii) the Interest Value (as defined
below);

 
(ii)  
In the event that either Hong Kong Holdco or the China JV exercises its call
right due to a China JV Breach or a Hong Kong Holdco Breach, respectively, an
amount equal to (i) .85 multiplied by (ii) the Interest Value (as defined
below); or

 
 
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(iii)  
In all other cases (for example, if Hong Kong Holdco exercises its put right due
to a China JV Change in Control), an amount equal to the Interest Value.  For
purposes hereof, the “Interest Value” shall mean the amount equal to the
appraised value of the Company, as determined by an independent third party
mutually selected by the Parties, multiplied by a fraction equal to the
percentage of equity interest represented by the Interest being sold.

 
The closing of any purchase or sale pursuant to this Section 13.6 shall occur at
a date, time and place determined by the JV Investor initiating the same, which
date shall be no later than thirty (30) days following the determination of the
Interest Value.
 
13.7 Sale of the Company.  In the event that all of the Interests of the Company
are sold to a third party, Hong Kong Holdco shall work with the buyer of those
Interests to transfer cell stack manufacturing knowledge to the purchaser’s
chosen location in a manner mutually agreed by such purchaser and Hong Kong
Holdco.
 
14. CONFIDENTIALITY
 
Each Party (the "Receiving Party") undertakes to retain in confidence the terms
of this Agreement and all other non-public information, technology, materials
and know-how of the other Party (“Disclosing Party”) disclosed or acquired by
the Receiving Party pursuant to or in connection with this Agreement that is
either designated as proprietary and/or confidential or, by the nature of the
circumstances surrounding disclosure, ought in good faith to be treated as
proprietary and/or confidential ("Confidential Information"); provided, that
each Party may disclose the terms and conditions of this Agreement to its
immediate legal and financial consultants in the ordinary course of its
business.  Neither Party may use any Confidential Information with respect to
which it is the Receiving Party for any purpose other than to carry out the
activities contemplated by this Agreement.  Each Party agrees to use
commercially reasonable efforts to protect Confidential Information of the other
Party, and in any event, to take precautions at least as great as those taken to
protect its own confidential information of a similar nature.  Each Party will
also notify the other promptly in writing if such Party learns of any
unauthorized use or disclosure of any Confidential Information that it has
received from the other Party, and will cooperate in good faith to remedy the
occurrence to the extent reasonably possible.  The restrictions set forth in
this Section do not apply to any information that: (a) was known by the
Receiving Party without obligation of confidentiality prior to disclosure
thereof by the other Party; (b) was in or entered the public domain through no
fault of the Receiving Party; (c) is disclosed to the Receiving Party by a third
party legally entitled to make the disclosure without violation of any
obligation of confidentiality; (d) is required to be disclosed by applicable
laws or regulations (but in that event, only to the extent required to be
disclosed, and provided that the Disclosing Party is given the opportunity to
review and redact the Agreement prior to disclosure); or (e) is independently
developed by the Receiving Party without reference to any Confidential
Information of the other Party.  Upon request of the Disclosing Party, the
Receiving Party will return to the Disclosing Party all materials, in any
medium, that contain or reveal all or any part of any Confidential Information
of the Disclosing Party.  Each Party acknowledges that breach of this provision
by it would result in irreparable harm to the other Party, for which money
damages would be an insufficient remedy, and therefore that the other Party will
be entitled to seek injunctive relief to enforce the provisions of this Section.
 
 
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15. REPRESENTATIONS AND WARRANTIES OF THE JV INVESTORS
 
15.1 Warranties of the JV Investors.  Each of the JV Investors hereby represents
and warrants that, as of the date of the execution and delivery hereof, the
following statements are true and correct:
 
(a) Organization; Good Standing.  The JV Investor is a legal entity, organized
and validly existing under the laws of the applicable jurisdiction, with full
power to own its assets and conduct its business as conducted and as proposed to
be conducted.  The JV Investor is registered or qualified to do business and in
good standing in each jurisdiction in which it owns or leases property or
transacts business and where the failure to be so qualified would have a
material adverse effect on the ability of the JV Investor or the Company to
consummate the transactions contemplated by this Agreement or the Related
Agreements, and no proceeding has been instituted in any such jurisdiction,
revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.  Each of the JV Investors will provide,
upon request of any other JV Investor, a copy of its formation and governing
documents, as are then currently in effect.
 
(b) Authorization.  The JV Investor has all requisite corporate power and
authority to execute and deliver this Agreement, to perform fully its
obligations hereunder and to consummate the transactions contemplated by this
Agreement or the Related Agreements.  All corporate action on the part of the JV
Investor necessary for the authorization, execution and delivery of this
Agreement and for the performance of all of its obligations hereunder has been
taken, and this Agreement when fully executed and delivered shall constitute a
valid, legally binding and enforceable obligation of the JV Investor (except as
the enforceability thereof may be limited by any laws affecting creditors’
rights generally, by general principles of equity, regardless of whether such
enforceability is considered in equity or at law).
 
(c) Government and Other Consents.  No consent, authorization, license, permit,
registration or approval of, or exemption or other action by, any Governmental
Authority, or any other Person, is required in connection with the JV Investor’s
execution, delivery and performance of this Agreement, or if any such consent is
required, the JV Investor has satisfied the applicable requirement, except for
any matters that would not have a material adverse effect on the ability of the
JV Investor or the Company to consummate the transactions contemplated by this
Agreement or the Related Agreements.
 
(d) Effect of Agreement.  The JV Investor’s execution, delivery and performance
of this Agreement, and the consummation of the transactions contemplated hereby
will not result in a breach or violation of any of the terms, conditions or
provisions of, or constitute a default (or with notice or lapse of time or both
constitute) or require the consent of any other Person under (i) any indenture,
mortgage, agreement or other instrument or arrangement to which the JV Investor
is a party; (ii) any of the terms or provisions of the formation or governing
documents of the JV Investor or any provision of Applicable Law; (iii) any
judgment, order, writ, injunction or decree applicable to the JV Investor; or
(iv) or have any effect on the compliance by the JV Investor with, any
applicable licenses, permits or authorizations, except in each case under
clauses (i), (ii), (iii) or (iv) where such breach, violation or default would
not have a material adverse effect on the ability of the JV Investor or the
Company to consummate the transactions contemplated by this Agreement or the
Related Agreements.
 
 
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(e) Proceedings.  There is no action, suit or proceeding at law or in equity or
otherwise in, before or by any Governmental Authority or, to the JV Investor’s
knowledge, threatened by or against the JV Investor which question the validity
of, or which question the JV Investor’s right to enter into or perform this
Agreement, or which would prevent or restrict its ability to enter into and
perform its obligations under this Agreement, except where such action, suit or
proceeding could not reasonably be expected to have a material adverse effect on
the ability of the JV Investor or the Company to consummate the transactions
contemplated by this Agreement or the Related Agreements.
 
(f) Anti-Corruption.  Neither the JV Investor, nor any of its directors,
supervisors, officers, employees, agents or other Person associated with or
acting for or on behalf of the JV Investor, has taken, or will take, any action
that would cause the JV Investor or the Company to be in violation of the
Foreign Corrupt Practices Act of 1977, as amended, or any similar state or local
Applicable Law, the Anti-Kickback Act of 1986 or any state or local/municipality
anti-kickback Applicable Law, Applicable Laws restricting the payment of
contingent fee arrangements, or any Applicable Laws of similar effect.
 
16. TERM AND TERMINATION
 
16.1 Term.  This Agreement shall be effective as of the Effective Date and shall
continue in effect until the earlier of (a) the expiration of the Agreement on
the tenth (10th) anniversary of the Effective Date or (b) upon the date of
termination of this Agreement pursuant to Section 16.2 (the “Term”).
 
16.2 Termination.  This Agreement shall terminate:
 
(i)  
Upon the mutual written agreement of the JV Investors;

 
(ii)  
Upon the material breach (or default in the performance of the terms) of this
Agreement by any JV Investor;

 
(iii)  
As to any JV Investor, upon the permitted Transfer of all Interests of the
Company held by such JV Investor;

 
(iv)  
Upon either Party’s exercise of its buy/sell options under Section 13.6 of this
Agreement; or

 
(v)  
Upon the occurrence of an IPO or purchase by a third party of all of the
Interests of the Company.

 
16.3 Survival.  The rights and obligations of the Parties under Section 14
(Confidentiality), Section 16.4 (Continuing Liability), Section 17 (Governing
Law and Dispute Resolution) and Section 18 (General Provisions) (except for
Section 18.5 (Further Assurances)) shall survive any termination of this
Agreement.
 
 
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16.4 Continuing Liability.  Termination of this Agreement for any reason shall
not release a Party from any liability or obligation which has already accrued
as of the effective date of such termination, and shall not constitute a waiver
or release of, or otherwise be deemed to prejudice or adversely affect, any
rights, remedies or claims, whether for damages or otherwise, which a Party may
have hereunder, at law, equity or otherwise or which may arise out of or in
connection with such termination.
 
17. GOVERNING LAW; DISPUTE RESOLUTION
 
17.1 Governing Law.  The validity, construction and enforceability of this
Agreement shall be governed by and construed in accordance with the laws of the
People’s Republic of China.
 
17.2 Discussions and Arbitration.  The Parties will discuss and finally settle
all disputes between them, and among them and the Company, arising out of this
Agreement (including with respect to this Section 17), in accordance with the
Domestic Arbitration Rules of Hong Kong International Arbitration Centre
(“HKIAC”).  The Company and the Parties shall at all times maintain authorized
agents in each of the United States and Wuhu City, Anhui Province, the People’s
Republic of China to receive, for and on its behalf service of any summons,
complaint or other legal process.
 
18. GENERAL PROVISIONS
 
18.1 Non-Competition; Business Opportunities.
 
(a) Non-Competition.  The JV Investors agree that, as applicable, they will not
(and will cause the Company and their respective members, including AnHui
Xinlong and Wuhu Huarui, not to) compete, either directly or indirectly, with
ZBB Energy or its Affiliates, or with the Company, as applicable, with respect
to the sourcing, production, marketing and distribution of any products sourced,
produced, marketed or distributed by ZBB Energy or its Affiliates or the
Company, as applicable, during the Term of this Agreement and for five (5) years
thereafter, anywhere in the world, except as explicitly provided herein or in
the Company Documents.
 
(b) Business Opportunities.  The JV Investors agree that they will cause the
Company, and the Directors, Supervisors and officers of the Company, to refer
any new business opportunities within the scope of this Agreement to the JV
Investors for determination as to whether those opportunities are best explored
in the Company or through one or more of the JV Investors or their respective
Affiliates.
 
 
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(c) Opportunities Outside the Agreement.  The fact that a JV Investor or
Affiliate takes advantage of an opportunity that is not within the scope of this
Agreement (either alone or with other Persons, including Entities in which such
JV Investor or Affiliate has an interest) and does not offer such opportunity to
the Company or to the other JV Investors shall not subject such JV Investor or
Affiliate to liability to the Company or to the other JV Investors on account of
any lost opportunity.
 
(d) Exceptions.  Notwithstanding the foregoing, the Company will renounce, and
not accept or be involved in, any interest or expectancy in any business
opportunity presented to, or which came to the attention of, any Director or
Supervisor who also is an employee or director of ZBB Energy or its Affiliates
(other than the Company, the Parties or PowerSav) in the course of performing
such Person’s official duties for ZBB Energy or its Affiliates.
 
18.2 Notices and Other Communications.  Any and all notices, requests, demands
and other communications required by or otherwise contemplated to be made under
this Agreement or Applicable Law shall be in writing and in English and shall be
provided by one or more of the following means and shall be deemed to have been
duly given (a) if delivered personally, when received; (b) if transmitted by
facsimile, on the date of transmission with receipt of a transmittal
confirmation or (c) if by international courier service, on the fourth (4th)
Business Day following the date of deposit with such courier service, or such
earlier delivery date as may be confirmed in writing to the sender by such
courier service. All such notices, requests, demands and other communications
shall be addressed as follows:
 
If to the Company:
 
____________________________________
____________________________________
____________________________________
____________________________________
____________________________________
with a copy (which copy shall not constitute notice) to:
 
____________________________________
____________________________________
____________________________________
____________________________________
____________________________________
 
 
 
 
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If to Hong Kong Holdco:
 
____________________________________
____________________________________
____________________________________
____________________________________
____________________________________
with a copy (which copy shall not constitute notice) to:
 
Mr. Mark Busch and Mr. Eliab Erulkar
K&L Gates LLP
Hearst Tower, 47th Floor
214 North Tryon Street
Charlotte, North Carolina, USA 28202

If to the China JV:
 
____________________________________
____________________________________
____________________________________
____________________________________
____________________________________
with a copy (which copy shall not constitute notice) to:
 
____________________________________
____________________________________
____________________________________
____________________________________
____________________________________
 
or to such other address or facsimile number as a Party may specify to the other
Party from time to time in writing.
 
18.3 Severability.  If any provision in this Agreement shall be found or be held
to be invalid or unenforceable then the meaning of said provision shall be
construed, to the extent feasible, so as to render the provision enforceable,
and if no feasible interpretation would save such provision, it shall be severed
from the remainder of this Agreement which shall remain in full force and
effect.  In such event, the Parties shall use their respective best efforts to
negotiate in good faith a substitute, valid and enforceable provision or
agreement that most nearly affects the Parties’ intent in entering into this
Agreement.
 
 
 
 
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18.4 References to this Agreement; Headings.  Unless otherwise indicated,
references to sections and exhibits herein are to sections of, and exhibits to,
this Agreement.  Words such as “herein,” “hereby,” “hereinafter,” “hereof,”
“hereto,” and “hereunder” refer to this Agreement as a whole, unless the context
otherwise requires.  The subject headings of the sections of this Agreement are
for reference only, and shall not affect the construction or interpretation of
any of the provisions of this Agreement.
 
18.5 Further Assurances.  The Parties shall each perform such acts, execute and
deliver such instruments and documents, and do all such other things as may be
reasonably necessary to carry out the provisions of this Agreement.
 
18.6 No Waiver.  No waiver of any term or condition of this Agreement shall be
valid or binding on a Party unless the same shall have been set forth in a
written document, specifically referring to this Agreement and duly signed by
the waiving Party.  The failure of a Party to enforce at any time any of the
provisions of this Agreement, or the failure to require at anytime performance
by the other Party of any of the provisions of this Agreement, shall in no way;
be construed to be a present or future waiver of such provisions, nor in any way
affect the ability of a Party to enforce each and every such provision
thereafter.
 
18.7 Entire Agreement; Amendments.  The terms and conditions contained in this
Agreement and the Related Agreements (including the exhibits hereto and thereto)
constitute the entire agreement between the Parties and supersede all previous
agreements and understandings, whether oral or written, between the Parties with
respect to the subject matter hereof and thereof.  No agreement or understanding
amending this Agreement shall be binding upon any Party unless set forth in a
written document which expressly refers to this Agreement and which is signed
and delivered by duly authorized representatives of each Party.
 
18.8 Expenses.  Except as otherwise described in this Agreement or the Related
Agreements, each Party shall bear its own legal and other costs and expenses in
connection with this Agreement, and the Related Agreements; provided, however,
that upon execution of this Agreement and the issuance of a business license by
the Approval Authority, the Company will reimburse each Party for all direct
expenses incurred by each Party in connection with this Agreement or the
formation of the Company, including without limitation all reasonable travel
expenses, legal fees and accounting fees.
 
18.9 Assignment.  No Party shall have the right to assign its rights or
obligations under this Agreement except in connection with a transfer of all of
a JV Investor’s Interests in a manner permitted hereunder, under terms
reasonably acceptable to the non-assigning JV Investor and providing for the
assignee to be bound by the terms hereof, and for the assigning JV Investor to
remain liable for the assignee’s performance of its obligations hereunder.  Any
assignment or purported assignment not made in accordance with this Section and
Section 13, as applicable, shall be void and of no force and effect.  This
Agreement shall inure to the benefit of, and shall be binding upon, the Parties
and their respective successors and permitted assigns.
 
 
 
 
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18.10 No Agency.  The authority of each Party hereunder is limited to that which
explicitly is set forth herein and the Company Documents.  Neither Party has,
and shall not hold itself out as having, any right, power or authority in any
manner, (i) to accept, any offer, proposal or negotiated terms solicited by that
Party pursuant to the terms hereof on behalf of the other Party, or otherwise
commit or bind the other Party, without the other Party’s advance written
consent, (ii) to otherwise create any contract or obligation, either express or
implied, on behalf of, in the name of, or binding upon the other Party or (iii)
to accept legal process on behalf of the other Party.
 
18.11 No Third Party Beneficiaries.  This Agreement is made solely and
specifically between and for the benefit of the Parties and their respective
successors and assigns, and no other Person, unless express provision is made
herein to the contrary, shall have any rights, interests or claims hereunder or
be entitled to any benefits under or on account of this Agreement as a third
party beneficiary or otherwise.
 
18.12 Incidental and Consequential Damages.  No Party will be liable to any
other Party under any contract, negligence, strict liability or other theory for
any indirect, incidental or consequential damages (including without limitation
lost profits) with respect to a breach of this Agreement.
 
18.13 Counterparts.  This Agreement may be executed in any number of
counterparts, and each counterpart shall constitute an original instrument, but
all such separate counterparts shall constitute one and the same instrument.
 
18.14 Execution by the Company.  Each of the Parties shall cause (i) the Company
to be formed as a Sino-foreign joint venture company and (ii) the Company to
enter into this Agreement and other Related Agreements to which it is a party as
soon as possible after its formation.
 
18.15 Approval by the Approval Authority. Notwithstanding any other provision
herein, this Joint Venture Agreement shall come into effect upon approval by the
Approval Authority.
 
[SIGNATURES APPEAR ON NEXT PAGE]
 
 
 
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date.
 
“Hong Kong Holdco”
ZBB PowerSav Holdings Limited
“China JV”
Anhui Xindong Investment Management Co., Ltd.
By:
__________________________
Name:
Title:
By:
__________________________
Name:
Title: