Unassociated Document


    Exhibit
10.4

     

    ZBB
ENERGY CORPORATION

     

    NONSTATUTORY
STOCK OPTION AGREEMENT

     

    This
Nonstatutory Stock Option Agreement (this “Agreement”) is executed as of
January  ___, 2011, by and between ZBB ENERGY CORPORATION, a Wisconsin
corporation (the “Company”), and ______________ (the “Grantee”).

     

    Statement of
Purpose

     

    On the
date hereof a wholly-owned subsidiary of Company (“Acquisition Sub”) is
entering into an Asset Purchase Agreement (the “Purchase Agreement”)
pursuant to which it is contemplated that Acquisition Sub will acquire
substantially all of the assets of Tier Electronics LLC (“Tier”).  Grantee
is a member of Tier and serves as its President.  It is a condition to
closing under the Purchase Agreement that Grantee enter into an employment
agreement with the Company pursuant to which following the closing under the
Purchase Agreement he will serve as President of Tier and as a member of its
Board of Directors. This Option is being made in accordance with the terms of
the Purchase Agreement and Grantee’s employment agreement.

     

    1. 
         Determinations by
Administrator.  The Administrator (as defined below) shall make all
interpretations, rules and regulations necessary to administer this Agreement,
and such determinations of the Administrator shall be binding upon
Grantee.  For purposes of this Agreement, the term “Administrator” shall
mean the Compensation Committee of the Board of Directors.

     

    2. 
         Option; Number of Shares;
Option Price.  The Option (as defined below) granted hereunder is
intended to be a nonstatutory stock option and therefore, shall not qualify as
an incentive stock option pursuant to Section 422 of the Internal Revenue Code
of 1986, as amended.  Grantee shall have the right and option to purchase
all or any part of an aggregate of [__________] shares of $0.01 par value common
stock of the Company (“Share(s)”) at the purchase price of $1.26 per Share (the
“Option”), which is equal to the Fair Market Value (as defined below) of a Share
as of the date of this Agreement.  For purposes of this Agreement, the term
“Fair Market Value” shall mean, as of any date, the closing price of a Share on
the NYSE Amex.

     

    3. 
         Vesting and
Expiration.  This Option shall vest (become exercisable) and remain
exercisable only in accordance with Annex 1 attached
hereto.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    4. 
         Method of Exercising
Option.  Except as otherwise permitted by the Administrator, the
Option shall be exercisable by delivery to the Company (to the attention of its
Secretary), at its offices in Menomonee Falls, Wisconsin, of (i) written notice
identifying the Option and stating the number of Shares with respect to which it
is being exercised, (ii) payment in full of the exercise price of the Shares
then being acquired as provided in Section 5, below, and (iii) execution of such
other documentation as is determined to be necessary or appropriate by the
Administrator from time to time the form of which shall be provided to Grantee
at the time of execution and delivery of this Agreement.  The Company shall
have the right to delay the issue or delivery of any Shares to be delivered
hereunder until (i) the completion of such registration or qualification of such
Shares under federal, state, or foreign law, ruling, or regulation as the
Company shall deem to be necessary or advisable, and (ii) receipt from Grantee
of such documents and information as the Administrator may deem necessary or
appropriate in connection with such registration or qualification or the
issuance of Shares hereunder.

     

    5. 
         Payment of Exercise
Price.  If the Grantee elects to exercise the Option by submitting
an exercise notice under Section 4 of this Agreement, the aggregate
exercise price (as well as any applicable withholding or other taxes) may be
paid by any of the following methods, or a combination of them:

     

    (a)         cash
or check;

     

    (b)         a
“net exercise” under which the Company reduces the number of shares of Common
Stock issued upon exercise by the largest whole number of shares with a Fair
Market Value that does not exceed the aggregate Exercise Price and any
applicable withholding, or such other consideration received by the Company
under a cashless exercise program approved by the Company in connection with the
Plan;

     

    (c)         surrender
of other shares of Common Stock owned by the Grantee which have a Fair Market
Value on the date of surrender equal to the aggregate Exercise Price of the
exercised Shares and any applicable withholding; or

     

    (d)         any
other consideration that the Administrator deems appropriate and in compliance
with applicable law.

     

    For
purposes of the above, all Shares shall be valued per share at the Fair Market
Value (as defined above; provided, however, if a Share
is not susceptible to valuation by the above method, the term “Fair Market
Value” of a Share shall mean the fair market value of a Share as the
Administrator may determine in conformity with pertinent law) of a Share on the
business day immediately preceding the day on which such Shares are
delivered.

     

    6. 
         Prohibition Against
Transfer.  Unless otherwise provided by the Administrator and except
as provided below, the Option, and the rights and privileges conferred hereby,
may not be transferred by Grantee, and shall be exercisable during the lifetime
of Grantee only by Grantee.  The Option shall not be subjected to
execution, attachment or similar process.  Grantee shall have the right to
transfer the Option upon Grantee’s death, either to Grantee’s designated
beneficiary (such designation to be made in writing at such time and in such
manner as the Administrator shall approve or prescribe), or, if Grantee dies
without a surviving designated beneficiary, by the terms of Grantee’s will or
under the laws of descent and distribution, subject to any limitations set forth
in this Agreement and all such distributees shall be subject to all terms and
conditions of this Agreement to the same extent as Grantee would be if still
living.

     

    7. 
         Nature of
Option.  Grantee shall not have any interest in any fund or in any
specific asset or assets of the Company by reason of the Option granted
hereunder, or any right to exercise any of the rights or privileges of a
stockholder with respect to the Option until Shares are issued in connection
with any exercise.


    
      
         


      

      
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    8. 
         Adjustment
Provisions.

     

    (a)          Share
Adjustments.  In the event of any stock dividend, stock split,
recapitalization, merger, consolidation, combination or exchange of shares of
Company stock, or the like, as a result of which shares of any class shall be
issued in respect of the outstanding Shares, or the Shares shall be changed into
the same or a different number of the same or another class of stock, or into
securities of another person, cash or other property (not including a regular
cash dividend), the number of Shares subject to the Option and the exercise
price applicable to the Option shall be appropriately adjusted in such equitable
and proportionate amount as determined by the Administrator.  No fractional
Share shall be issued under this Agreement resulting from any such adjustment
but the Administrator in its sole discretion may make a cash payment in lieu of
a fractional Share.

     

    (b)         Acquisitions. 
In the event of a merger or consolidation of the Company with another
corporation or entity, or a sale or disposition by the Company of all or
substantially all of its assets, the Administrator shall, in its sole
discretion, have authority to provide for (i) waiver in whole or in part of any
remaining restrictions or vesting requirements in connection with the Option
granted hereunder, (ii) the conversion of the outstanding Option into cash,
(iii) the conversion of the Option into the right to receive securities,
including options, of another person or entity upon such terms and conditions as
are determined by the Administrator in its sole discretion and/or (iv) the
lapse of the Option after notice in writing has been given that the Option may
be exercised within a set period from the date of such notice and that any
Option not exercised within such period shall lapse.

     

    (c)         Binding Effect. 
Without limiting the generality of what is provided in Section 1 hereof and for
avoidance of doubt, any adjustment, waiver, conversion or other action taken by
the Administrator under this Section 8 shall be conclusive and binding on
Grantee and the Company and any respective successors and assigns.

     

    9. 
         Notices.  Any
notice to be given to the Company under the terms of this Agreement shall be
given in writing to the Company at its offices in Menomonee Falls,
Wisconsin.  Any notice to be given to Grantee may be addressed to Grantee’s
address as it appears on the payroll records of the Company or any subsidiary
thereof.  Any such notice shall be deemed to have been duly given if and
when actually received by the party to whom it is addressed, as evidenced by a
written receipt to that effect.

     

    10. 
       Taxes.  The
Company may require payment or reimbursement of or may withhold any minimum tax
that it believes is required as a result of the grant or exercise of the Option,
and the Company may defer making delivery with respect to Shares or cash payable
hereunder or otherwise until arrangements satisfactory to the Company have been
made with respect to such withholding obligations.


    
      
         


      

      
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    11. 
       Rights of
Grantee.  The Option, and any payments or other benefits received by
Grantee under the Option, is discretionary and shall not be deemed a part of
Grantee’s regular, recurring compensation for any purpose, including without
limitation for purposes of termination, indemnity, or severance pay law of any
country and shall not be included in, nor have any effect on, the determination
of benefits under any other employee benefit plan, contract or similar
arrangement provided to Grantee unless expressly so provided by such other plan,
contract or arrangement, or unless the Administrator expressly determines
otherwise.

     

    12. 
       Amendment.  The
Administrator may amend this Agreement; provided, however, that
Grantee’s consent to such action shall be required unless the Administrator
determines that the action, taking into account any related action, would not
materially and adversely affect Grantee.  However, notwithstanding any
other provision of the Agreement, the Administrator may not adjust or amend the
exercise price of the Option, whether through amendment, cancellation and
replacement grants, or any other means, except in accordance with Section 8
hereof.

     

    13. 
       No Right To
Employment.  This Agreement shall not confer upon Grantee any right
to continue employment with the Company, Acquisition Sub or any other of their
respective subsidiaries, nor shall it interfere in any way with the right of the
Company, Acquisition Sub or any such subsidiary to terminate Grantee’s
employment any time.

     

    14. 
       Severability. 
In the event any provision of this Agreement shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining
parts of the Agreement, and this Agreement shall be construed and enforced as if
the illegal or invalid provision had not been included.

     

    15. 
       Governing Law.  This Agreement and all
actions taken hereunder shall be governed by, and construed in accordance with,
the laws of the State of Wisconsin, applied without regard to the laws of any
other jurisdiction that otherwise would govern under conflict of law
principles.


    
      
         


      

      
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    IN
WITNESS WHEREOF, the Company has caused these presents to be executed as of the
date and year first above written, which is the date of the granting of the
Option evidenced hereby.

    


    
      
        
          	
                  ZBB
      ENERGY CORPORATION

                
	 
      	 
      
	
                  By:

                	 
      
	 
      	
                  Name:

                
	 
      	
                  Title:

                


        

      

    

    


    The
undersigned Grantee hereby accepts the foregoing Option and agrees to the
several terms and conditions hereof.

    


    
      
        
          	 
      
	
                  Grantee

                


        

      

    

     

    [Option
Award Agreement]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Annex
1

     

    1. 
         Vesting. The Option
initially shall be 100% unvested.  So long as Grantee remains continuously
a Service Provider to the Company (as defined below) the Option shall become
vested and exercisable according to the schedule set forth below and Grantee may
exercise this Option as to any vested Shares: [insert vesting
terms].

     

    2. 
         Expiration.  To
the extent not previously exercised according to the terms hereof, each portion
of the Option shall expire on the fifth anniversary of the vesting date
applicable to such portion of the Option.

     

    3. 
         Exercise
Period.

     

    (a)         Disability.  Upon
Grantee’s Separation of Service due to a Disability (as defined in Grantee’s
employment agreement), Grantee shall have one (1) year from the date of such
separation to exercise any portion of the Option that was vested and unexercised
as of the date of such Separation from Service; provided, however, that this
Option shall not be exercisable subsequent to the expiration dates specified in
Section 2, above.

     

    (b)         Death.  Upon Grantee’s
Separation of Service due to death, any portion of the Option that was vested
and unexercised as of the date of such Separation from Service shall remain
exercisable:

     

    
      	
            	
              (i)

            	
              for
      one (1) year after Grantee’s death, but in no event subsequent to the
      expiration dates specified in Section 2 above;
  and

            


    

     

    
      	
               
      

            	
              (ii)

            	
              only
      (i) by the designated beneficiary of Grantee (such designation to be
      made in writing at such time and in such manner as the Administrator shall
      approve or prescribe), or, if Grantee dies without a surviving designated
      beneficiary, (ii) by the personal representative, administrator, or
      other representative of the estate of Grantee, or by the person or persons
      to whom the deceased rights of Grantee under the Option shall pass by will
      or the laws of descent and distribution.  Grantee may change the
      beneficiary designation at any time, by giving written notice to the
      Administrator, subject to such conditions and requirements as the
      Administrator may prescribe in accordance with applicable
    law.

            


    

     

    (c)         Other Terminations of
Employment.  Upon Grantee’s Separation of Service for any reason
other than those specified in this Section 3 (including without limitation
Section 3(d)(iii) below), Grantee shall have ninety (90) days from the date of
such separation to exercise any portion of the Option that was vested and
unexercised as of the date of such Separation from Service; provided, however, that the
Option shall not be exercisable subsequent to the expiration dates specified in
Section 2 above.


    
      
         


      

      
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    (d)          Cancellation. 
Notwithstanding the foregoing, to the extent the Option held by Grantee
is not effectively exercised prior thereto, it shall be cancelled in its
entirety immediately upon the occurrence of:

     

    
      	
               
      

            	
              (i)

            	
              A
      material misrepresentation or breach of any representation or warranty or
      representation made under the Purchase Agreement or any Ancillary
      Agreement by Seller or the Members (as such terms are defined in the
      Purchase Agreement);

            


    

     

    
      	
               
      

            	
              (ii)

            	
              A
      breach by Seller or any Member (as such terms are defined in the Purchase
      Agreement) of the restrictive covenants contained in Article X of the
      Purchase Agreement; or

            


    

     

    
      	
               
      

            	
              (iii)

            	
              Grantee’s
      Separation from Service for Cause (as defined in Grantee’s employment
      agreement).

            


    

     

    Following
the expiration of this Option in accordance with the preceding sentence, all
Grantee’s rights hereunder will be forfeited and canceled in their
entirety.

    


    (e)          Extension of Exercise
Period.  The Administrator may in its sole discretion extend the
period permitted for exercise of the Option upon Grantee’s Separation of Service
as otherwise provided in this Section 3 if allowable under applicable
law.


    
      
         


      

      
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