VIA
      HAND DELIVERY

            	
              Exhibit
      10.5

            


    

    


    Mr.
Steven Seeker

    S19
W28818 Price Court

    Waukesha,
WI 53188

    


    RE:      Letter
Agreement

    


    Dear
Steve:

    


    Thank you
for your January 29, 2010 e-mail regarding the end of your employment with ZBB
Energy Corporation (the “Company”).  This correspondence will
memorialize the agreement between you and the Company concerning the end of your
employment and retirement from the Company.

    


    
      	
               
      

            	
              1.

            	
              As
      we discussed on January 27, 2010, the Company does not intend on renewing
      your Employment Agreement dated November 1, 2007 (“Employment Agreement”).
      This Letter Agreement provides you written notice of the Company’s intent
      not to renew your Employment Agreement as required by Article I of the
      Employment Agreement.

            


    

    


    
      	
               
      

            	
              2.

            	
              As
      we further discussed, it is not the intent of you or the Company to
      terminate your Employment Agreement prior to the expiration of the current
      term.  Rather, you and the Company have agreed on an arrangement
      that allows you to seek other employment opportunities while continuing to
      receive the benefits under the Employment Agreement and assisting the
      Company with preparing for your departure, which terms are set forth in
      this Letter Agreement.  This means that nothing in this Letter
      Agreement should be considered a termination of your Employment Agreement
      under Article IV or otherwise.

            


    

    


    
      	
               
      

            	
              3.

            	
              To
      this end, you and the Company have agreed that from February 3, 2010
      through the end of the initial term of the Employment Agreement, you will
      be on a paid leave of absence.  This leave of absence will
      continue until the term of the Employment Agreement expires and your
      employment ends on June 30, 2010 (“Separation
  Date”).

            


    

    


    
      	
               
      

            	
              4.

            	
              During
      the leave of absence, the terms of your Employment Agreement, including
      your current salary ($208,000 per year) and vacation accrual, will
      continue in full force and effect, with the following modification to
      Article II of the Employment Agreement.  You will not be
      required to devote your entire working time and efforts to the business
      affairs of the Company and instead, you will not be expected to report to
      work during the leave of absence which we agreed will assist with your
      efforts to seek other employment consistent with your post-employment
      obligations to the Company under your Employment
  Agreement.

            


    

    


    
      	
               
      

            	
              5.

            	
              After
      the Separation Date, the Company will provide you with payment for all
      your earned and unused vacation.  In addition, the Company will
      provide you with the right to participate, at your own expense, in the
      Company’s group health insurance plan in accordance with the mandates of
      the Consolidated Omnibus Budget Reconciliation Act, as amended
      (“COBRA”).

            


    

    


    
      	
               
      

            	
              6.

            	
              As
      originally scheduled, all of your outstanding restricted stock shall vest
      on March 31, 2010, pursuant to the terms of the March 11, 2009 Consent of
      the Compensation Committee of ZBB Energy Corporation, and shall otherwise
      be subject to the terms of the 2007 Equity Incentive Plan.  The
      total shall be 17,333 shares net of the 25% claw
  back.

            


    

    


    
      
        	
                N93
      W14475 Whittaker Way

              	
                PO
      Box 2047

              
	
                Menomonee
      Falls WI  53051

              	
                Kardinya
      WA 6163

              
	
                Tel:  (262)
      253 9800 Fax:  (262) 253 9822

              	
                240
      Barrington Street

              
	
                Email:  hbrown@zbbenergy.com

              	
                Bibra
      Lake WA 6163

              
	 
      	
                Tel:  (08)
      9494 2055 Fax:  (08) 9494 2066

              
	 
      	
                Email:  info@zbbenergy.com

              
	
                www.zbbenergy.com

              	 
      


      

    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    
      	
               
      

            	
              7.

            	
              The
      performance-based stock options granted on March 11, 2009 under your
      Employee Nonstatutory Stock Option Agreement dated December 14, 2009 are
      governed by the terms of the 2007 Equity Incentive Plan.  As of
      your Separation Date, you will be vested in 18,200 of these stock
      options.  Because your termination of employment is classified
      as a “retirement” under the 2007 Equity Incentive Plan, you shall have one
      year from your Separation Date or until June 30, 2011 to exercise all of
      the above vested stock options.

            


    

    


    
      	
               
      

            	
              8.

            	
              The
      service-based stock options granted on June 6, 2008 under your Employee
      Nonstatutory Stock Option Agreement dated December 11, 2009 are governed
      by the terms of the 2002 Stock Option Plan.  As of your
      Separation Date, you will be vested in 100,000 of these stock
      options.  Because it is the intent of the Company to classify
      your termination of employment as a “retirement,” in accordance with the
      2002 Stock Option Plan, upon approval by the Board of Directors you shall
      have one year from your Separation Date or until June 30, 2011 to exercise
      all of the above vested stock
options.

            


    

    


    
      	
               
      

            	
              9.

            	
              The
      Company and you will characterize your end of employment as a
      retirement.  You and the Company agree that an announcement on
      February 3, 2010 to employees  regarding your
      departure will be as follows:

            


    

    


    Steve
Seeker has decided to retire from his position with the Company effective June
30, 2010.  The Company’s new CEO wants to get directly involved in the
operations of the Company and as a result, Steve’s expertise is no longer
needed.   We thank Steve for his contributions to the Company and
wish him well in his pursuit of other opportunities.  All staff
currently reporting to Steve Seeker (COO) will now directly report either to
Eric Apfelbach (CEO) or Scott Scampini (Executive VP).

    


    
      	
            	
              11.

            	
              In
      consideration for the benefits provided to you in this Letter Agreement
      which you acknowledge are greater then those to which you would otherwise
      be entitled, you agree, on
      behalf of yourself, your heirs, successors and assigns, to release the
      Company, its parents, subsidiaries and affiliates and their respective
      past and present officers, directors, stockholders, members, partners,
      agents, insurers and employees (“Released Parties”), from any claims
      arising on or before the date you sign this Letter
      Agreement.  This includes, but is not limited to, giving up any
      claims related in any way to your employment by the Company, the decision
      to separate your employment, and separation of our employment
      relationship.  This release of claims includes any claims,
      whether they are presently known or unknown, or anticipated or
      unanticipated by you.  Your signature below acknowledges that
      you are not entitled to any other severance or benefits, vacation, bonus,
      commission, wages or other payments of any kind, except those described in
      this agreement.  Because you are age 40 or
      older, your acceptance of this agreement also will release any and all
      claims under the federal Age Discrimination in Employment
      Act.  You should not construe this reference to age
      discrimination claims as in any way limiting the general and comprehensive
      nature of the release of claims provided under this Paragraph. You agree to waive and give up
      any benefit conferred on you by any order or judgment issued in connection
      with any proceeding filed against the Released Parties regarding any claim
      released in this Letter
Agreement.

            


    

    


    
      	
            	
              12.

            	
              Likewise,
      except for claims involving misconduct of the type specified in Wis. Stat. Sec.
      180.0828(1), the Company forever waives and gives up any and all
      claims it may have, whether known or unknown, against you, your heirs,
      successors and assigns for any monetary relief for itself and any benefits
      or remedies that are based on any act, or failure to act, that occurred
      before the date you sign this Letter Agreement, to the fullest extent
      permitted under applicable law.

            


    


    
      
         


      

      
        2

        
          

        

      

      
         


      

    

    


    
      	
            	
              13.

            	
              You
      may acknowledge your acceptance of the terms of this Letter Agreement by
      signing and returning a copy of this Letter Agreement to Helen Brown,
      Human Resource Manager, N93W14475 Whittaker Ave, Menomonee Falls, WI,
      53051, on or
      before 5:00 p.m. Central Time on the 21st calendar day
      following your receipt of this agreement. You will have seven (7)
      calendar days after signing this agreement within which to revoke your
      acceptance of it (“Revocation Period”).  Such revocation will
      not be effective unless written notice of the revocation is, via mail,
      overnight delivery or hand delivery, directed to and received by Helen
      Brown, Human Resource Manager, N93W14475 Whittaker Ave, Menomonee Falls,
      WI, 53051, on or before 5:00 p.m. Central Time on the 1st
      business day following expiration of the Revocation
      Period.  This Letter Agreement will not be binding or
      enforceable unless you have signed and delivered this agreement as
      provided for herein and have chosen not to exercise your revocation
      rights, as described above.  If you fail to accept this Letter
      Agreement or revoke your acceptance of this Letter Agreement, the terms of
      this Letter Agreement will be void.

            


    

     

    
      	
            	
              14.

            	
              By
      signing below, you agree and acknowledge that you have read this Letter
      Agreement and understand its contents.  You further agree and
      acknowledge that you have been advised by the Company to consult with an
      attorney prior to signing this agreement.  You understand that
      this Letter Agreement includes a final general release, including a
      release of all claims under the Age Discrimination in Employment
      Act.  You further understand that this Letter Agreement
      supersedes any prior agreements, practices, policies or discussions of any
      kind concerning the matters detailed in this Letter
    Agreement.

            


    

     

    Should
you have any questions, please feel free to contact me.

     

    
      
        
          
            
              
                	
                        Very
      truly yours,

                      
	 
	
                        ZBB
      ENERGY CORPORATION

                      
	 	 
	
                        By: 

                      	
                        /s/
      Eric C. Apfelbach

                      
	
                        Eric
      Apfelbach (Chief Executive
Officer)

                      


              

            

          

        

      

    

    


    I agree
with and accept the terms contained in

    this
agreement and agree to be bound by them.

    Dated
this 4th day of February 4, 2010.

     

    Time:   12:30
P.M.

     

    /s/
Steven Seeker

     

    
      
         


      

      
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