Document:

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                              EMPLOYMENT AGREEMENT

                  THIS AGREEMENT, made and entered into as of this 4th day of
October, 2006 by and between ZBB ENERGY CORPORATION, a Wisconsin corporation,
hereinafter referred to as the "CORPORATION," and ROBERT JOHN PARRY, hereinafter
referred to as the "EMPLOYEE."

                              W I T N E S S E T H:

                  WHEREAS, the Employee desires to be continued employed by the
Corporation in the capacity of Chief Executive Officer; and

                  WHEREAS, the Corporation and the Employee desire to set forth
in this Agreement the terms and conditions under which the Employee is to
continue to be employed by the Corporation and intend to herby replace in its
entirety, the previous Employment Agreement between the parties, as amended.

                  NOW, THEREFORE, the Corporation and the Employee, in
consideration of the mutual promises hereinafter set forth, do hereby promise
and agree as follows:

                                    ARTICLE I

                                      Term

                  The term of the Employee's employment under this Agreement
shall commence effective as of the date set forth in Section I of EXHIBIT A
attached hereto and shall, except as it may otherwise be subject to termination
hereunder, continue thereafter for a period of time as set forth in Section I of
Exhibit A. The Corporation and the Employee acknowledge and agree that the term
of the Employee's employment hereunder shall be automatically extended from year
to year thereafter upon the same terms and conditions, unless terminated by
either party hereto upon ninety (90) days written notice given prior to the
expiration of the original term of this Agreement or any extension thereof.

                                   ARTICLE II

                                Employment Duties

                  During the term of the Employee's employment hereunder, the
Corporation shall employ the Employee and the Employee shall serve the
Corporation as a full-time employee in such capacity and with such powers and
duties as are set forth in Section II of Exhibit A. The Board of Directors of
the Corporation may from time to time prescribe amended duties for the Employee.
The Employee shall devote his entire working time and efforts to the business
affairs of the Corporation and shall faithfully and to the best of his ability
perform his duties hereunder.

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                                   ARTICLE III

                                  Compensation

                  3.1. Salary and Benefits. During the term of the Employee's
employment hereunder, the Employee shall be entitled to receive the salary and
fringe benefits set forth in Section III of EXHIBIT A. The Employee acknowledges
that he shall have no vested rights in any such fringe benefit programs except
as expressly provided under the terms thereof and that such programs may be
terminated as well as supplemented.

                  3.2. Withholding Taxes. The Corporation shall deduct from all
payments to the Employee hereunder any federal, state or local withholding or
other taxes or charges which the Corporation is from time to time required to
deduct under applicable law, and all amounts payable to the Employee hereunder
are stated herein before any such deductions. The Corporation shall have the
right to rely upon written opinion of legal counsel, which may be independent
legal counsel or legal counsel regularly employed by the Corporation, if any
questions should arise as to any such deductions.

                                   ARTICLE IV

                            Termination of Employment

                  4.1. Causes for Termination. Notwithstanding the term set
forth in Article I, above, the Employee's employment hereunder shall be
terminated prior to the expiration of such term upon the occurrence of any of
the following events:

                  4.1.1. In the event of the Employee's death.

                  4.1.2. In the event of the disability of the Employee. For
purposes of this Agreement, the term "disability" shall be defined as the
inability of the Employee to perform his normal duties as a full-time employee
of the Corporation for a period of ninety (90) consecutive days by reason of
physical or mental illness or incapacity, or for periods of physical or mental
illness or incapacity aggregating one hundred twenty (120) days in any
consecutive twelve (12) month period. A physical or mental disability shall be
deemed to include the written direction by a physician that the Employee shall,
for medical reasons, terminate or substantially reduce his services to the
Corporation. If there is any dispute as to whether the termination of the
Employee's employment was due to his physical or mental illness or incapacity,
such question shall be submitted to a licensed physician for the purpose of
making such determination. An examination of the Employee shall be made within
thirty (30) days after written notice by the Corporation or the Employee to the
other by a licensed physician agreeable to the Corporation. The Employee shall
submit to such examination and provide such information that such physician may
request and the determination of such physician as to the question of the
Employee's physical or mental condition shall be binding and conclusive on all
parties concerned for purposes of this Agreement. No information that is not
specifically authorized by the Employee to be disclosed by the physician need to
be disclosed. A disability shall be deemed to be continuing unless the Employee
performs his regular duties for the Corporation for a continuous period of one
(1) month.

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                  4.1.3. Upon the commission of any of the following acts:

                           (a) The failure of the Employee to perform his duties
         for the Corporation (other than by reason of illness)after being given
         written notice specifying, the breach and actions to be taken to cure
         such material breach and giving Employee reasonable time (not under 20
         business days) to cure such breach.

                           (b) Willful misconduct by the Employee which is
         demonstrably and materially injurious to the Corporation, monetarily or
         otherwise (for the avoidance of debt, any actions taken in good faith
         as an officer or director shall not be deemed misconduct).

                           (c) Conviction of the Employee of a felony or
         misdemeanor which, in the reasonable judgment of the Board of Directors
         of the Corporation, is likely to have a material adverse effect upon
         the business or reputation of the Corporation, or which substantially
         impairs the Employee's ability to perform his duties for the
         Corporation.

                           (d) Breach by the Employee of any agreement with the
         Corporation concerning noncompetition or the confidentiality of trade
         secrets or proprietary or other information, after a notice of breach
         has been given specifying the actions to be taken and given opportunity
         to take cure such breach.

                  4.2. Consequences of Termination. If the Employee's employment
with the Corporation is terminated, the following shall occur:

                  (a) If the Employee's employment is terminated prior to the
         expiration of this Agreement pursuant to any of the provisions of
         Section 4.1.1 or 4.1.2, above, (1) the Corporation shall pay to the
         Employee or the Employee's estate, as the case may be, all compensation
         accrued under Article III, above, to the date of termination, (ii) the
         Corporation shall pay to the Employee or the Employee's estate, as the
         case may be, an amount equal to the Employee's annual salary paid to
         him in the one (1) year period immediately prior to his termination of
         employment which shall be payable in 12 equal consecutive monthly
         installments commencing upon the Employee's termination, (iii) the
         Employee or the Employee's estate, as the case may be shall be entitled
         to receive for a one (1) year period following the date of termination
         all benefits the Employee was receiving on the date of termination
         pursuant to Article III above, all in accordance with the terms of such
         plans including, without limitation, any forfeiture provisions set
         forth in such plans, and (iv) the Corporation shall cause all unvested
         benefits, if any, awarded to the Employee prior to the termination of
         his employment under any equity, stock or other option program of the
         Corporation (collectively the "Option Plans") to vest and become
         immediately exercisable by the Employee.

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                  (b) If the Employee's employment is terminated prior to the
         expiration of this Agreement pursuant to the provisions of Section
         4.1.3, above, (i) the Corporation shall pay to the Employee all
         compensation accrued under Article III, above, to the date of
         termination, (ii) the Employee shall be entitled to receive all
         benefits accrued to the date of termination of the Employee's
         employment with the Corporation, all in accordance with the terms of
         such plans including, without limitation, any forfeiture provisions set
         forth in such plans, and shall have all rights to COBRA or similar
         benefits and (iii) all vested benefits, if any, held by the Employee on
         the date of his termination of employment under the Option Plans shall
         become immediately exercisable by the Employee and all unused options
         or benefits shall be terminated as provided in such agreements or
         plans.

                  (c) If (i) the Corporation terminates the Employee's
         employment prior to the expiration of the Agreement for any reason
         other than as set forth in Section 4.1.3, above, or (ii) the Employee
         voluntarily terminates his employment with the Corporation because the
         Corporation materially adversely modifies or reduces the nature or
         scope of the Employee's authority or responsibility or the Corporation
         fails to pay the Employee amounts due under the Agreement, then (A) the
         Corporation shall continue to pay the Employee his annual base salary
         which he received pursuant to Article III, above, in the year
         immediately preceding the date of his termination of employment with
         the Corporation, for the greater of eighteen (18) months or the
         remaining, (B) the Employee shall be entitled to receive all benefits
         the Employee was receiving on the date of his termination of employment
         pursuant to Article III, above, for the greater of eighteen (18) months
         or the remaining term of the Agreement, and (C) all vested or unvested
         benefits, if any, which the Employee was entitled to receive during the
         term of this Agreement under the Option Plans shall vest and become
         immediately exercisable, PROVIDED THAT the provisions of paragraphs (A)
         and (B) shall not apply unless and until the common stock of the
         Corporation is listed for trading on the American Stock Exchange (the
         "AMEX") or any other U.S. market place similar or superior and the
         Corporation's securities known as CUFS (CHESS Units of Foreign
         Securities) cease trading or, and the Corporation is no longer subject
         to the rules of, the Australian Stock Exchange Ltd (the "ASX").

         4.3 Expiration of Term. Except as set forth in Section 4.2, above, upon
the expiration of the term of this Agreement, the Corporation shall pay to the
Employee an amount equal to the Employee's annual base salary paid to him
pursuant to Article III, above, in the eighteen (18) month period immediately
prior to the expiration of the term of this Agreement, in eighteen (18) equal
consecutive monthly installments commencing upon the date of such expiration,
PROVIDED THAT the provisions of this section 4.3 shall not apply unless and
until the common stock of the Corporation is listed for trading on the AMEX or
any other similar or superior U.S. market and the Corporation's securities known
as CUFS (CHESS Units of Foreign Securities) cease trading on the ASX and the
Corporation is no longer subject to the rules of the ASX.

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                                    ARTICLE V

                    Covenant Not to Compete; Confidentiality

                  5.1. Restrictions. The Employee agrees that he shall not, at
any time while he is employed by the Corporation or at any time during the
eighteen (18) month period following the termination of his employment with the
Corporation for any reason, either directly or indirectly, whether as agent,
stockholder (except as the holder of not more than five percent (5%) of the
stock of a publicly held company, provided the Employee does not participate in
the business of such company or render advice or assistance to it), employee,
officer, director, trustee, partner, consultant, proprietor or otherwise:

                           (a) Acquire an ownership interest in, work for or
         render advice or assistance to any business, incorporated or otherwise,
         operating within a fifty (50) mile radius of the Corporation's offices
         which is engaged in the sale, marketing and/or distribution of products
         or services sold or offered by the Corporation as of the date hereof or
         during the period in which the Employee is employed by the Corporation.

                           (b) Except on behalf of the Corporation, contact,
         sell or solicit to sell, or attempt to contact, sell or solicit to
         sell, products or services competitive with those offered or sold by
         the Corporation to any customer of the Corporation.

                           (c) For purposes of this Article V, the following
         definitions shall apply:

                                    (i) During the term of the Employee's
                  employment, the term "customer" shall mean those persons or
                  entities to whom the Corporation or its predecessor entity has
                  sold, or solicited to sell, products or services during the
                  term of the Employee's employment.

                                    (ii) During the period following the
                  termination of the Employee's employment, the term "customer"
                  shall mean any entity or person to whom the Corporation or its
                  predecessor entity has sold, or solicited to sell, products or
                  services during the two (2) year period prior to the
                  termination of the Employee's employment.

                  5.2. Confidential Information. The Employee agrees that he
shall not at any time while he is employed by the Corporation, and for a period
of three years after termination of his employment with the Corporation for any
reason, except on behalf of the Corporation, either directly or indirectly,
disclose to any person other than an employee or agent of the Corporation having
the need to know such information in the ordinary course of business, or to a
person to whom such disclosure has been authorized by the Board of Directors of
the Corporation, any "confidential information." The term "confidential
information" shall mean: (A) all technical information relating to the
Corporation's or its predecessor's business; (B) any information concerning any
product or service under development by, or being tested by, the Corporation but

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not yet offered for sale; (C) any information concerning the pricing policies of
the Corporation, the prices charged by the Corporation to any customer, the
volume of orders of any customer, any bids or negotiations being submitted by or
being conducted by the Corporation and all other information concerning the
transactions of the Corporation with any customer or proposed customer; (D) any
information concerning the marketing programs or strategies of the Corporation;
(E) any financial information concerning the Corporation or its substitutes or
predecessors; (F) any information concerning the salaries or wages paid to, the
work records of or any other personnel information relating to any employee of
the Corporation; and (G) any other information determined by the Corporation to
be confidential and proprietary and which is identified as such prior to or at
the time of its disclosure to the Employee. Notwithstanding the foregoing, no
information shall be considered to be confidential information which (i) is
disclosed or published without the fault of the Employee, or (ii) is or becomes
general public information without disclosure by the Employee. The Employee
acknowledges and agrees that the provisions of this Section 5.2 shall not be
construed to constitute: (a) a waiver by the Corporation of any of its rights in
or to protect specific items of its proprietary information which constitutes
trade secrets, or (b) a release of or a limit on the Employee's legal obligation
not to disclose or misappropriate any trade secrets of the Corporation during or
after his employment with the Corporation. Notwithstanding the foregoing,
Employee shall be permitted to disclose any confidential information that was
requested under subpoena, court order or regulatory requirements or enforcement
proceedings of any governmental agency or such regulatory agency.

                  5.3. Surrender of Records. The Employee agrees upon
termination of his employment with the Corporation immediately to surrender to
the Corporation all correspondence, letters, contracts, manuals, mailing lists,
customer lists, marketing data, ledgers, supplies, corporate checks and all
other materials or records of any kind relating to the Corporation, its
predecessor or their business then in his possession or under his control, as
well as all copies of any of the foregoing.

                  5.4. Remedies. The Employee recognizes that irrevocable injury
may result to the Corporation, its business and its property, in the event of a
breach by him of the restrictions imposed by this Article V and that the
Employee's acceptance of such restrictions was a material factor in the
Corporation's decision to provide employment to the Employee. The Employee
agrees that if he shall engage in any acts in violation of this Article V, the
Corporation shall be entitled, in addition to such other remedies and damages as
may be available to it, to an injunction prohibiting him from engaging in any
such acts.

                  5.5. Notice to Subsequent Employers. The Employee agrees to
fully disclose the terms of this Agreement to any person, firm, corporation or
other entity by which or with whom he may hereafter become employed, or to which
he may hereafter render services, prior to accepting any such employment or
performing any such services and further agrees that the Corporation may, if it
desires, send a copy of this Agreement to, or otherwise make the provisions
hereof known, to any such employer.

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                                   ARTICLE VI

               Assignment and Disclosure of Inventions and Patents

                  The Employee hereby sells, assigns and transfers to the
Corporation all of his right, title and interest in and to any and all
Inventions (as hereinafter defined) and agrees that all Inventions are or shall
become the sole and exclusive property of the Corporation and that only the
Corporation shall have the right to use, sell, license, assign or otherwise
exploit such Inventions and products, articles, commodities, methods or
processes employing them. The Employee shall make a full and complete written
disclosure of any and all Inventions to the Corporation and shall promptly
execute and deliver to the Corporation all documents which the Corporation may
deem necessary or appropriate to effect a valid assignment of the Employee's
right and title to any Invention to the Corporation or to prepare, file or
prosecute any domestic or foreign patent application in connection therewith.
The Employee further agrees to fully cooperate with the Corporation and to take
such actions as the Corporation may request, including testimony in patent or
other legal proceedings, in connection with the protection, establishment and/or
enforcement of the Corporation's rights to any such Invention and/or to permit
the Corporation to reduce the same to practice. The Corporation agrees to
reimburse the Employee for any out-of-pocket expenses expended by the Employee
in complying with the provisions of this Article VI. In addition thereto, the
Corporation shall pay to the Employee an amount equal to Two Hundred Fifty
Dollars ($250.00) for each patent application prepared and filed with respect to
an Invention conceived by the Employee and One Hundred Fifty Dollars ($150.00)
for each Invention conceived by the Employee which constitutes a trade secret of
the Corporation. For purposes hereof, an "Invention" shall mean any idea,
innovation, discovery, process, design, development, improvement, application,
technique or invention, whether patentable or not, which in any way affects or
relates to, or which is or may become capable of being used in the business of
the Corporation and which the Employee may, either wholly or in part, and either
solely or jointly with others, conceive, make or secure or may have conceived,
made or secured at any time during the period of time he is employed by the
Corporation or the Corporation's predecessor entity or during the six-month
period following termination of his employment with the Corporation.

                                   ARTICLE VII

                                    Expenses

                  During the term of the Employee's employment hereunder, the
Corporation shall pay or reimburse the Employee for all reasonable and necessary
business expenses incurred by the Employee in the interest of the Corporation in
accordance with the Corporation's reimbursement policies in effect from time to
time. The Employee shall be required to submit an itemized account of such
expenditures and such proof as may be necessary to establish to the satisfaction
of the Corporation that the expenses incurred by the Employee were ordinary and
necessary business expenses incurred on behalf of the Corporation.

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                                  ARTICLE VIII

                                Waiver of Breach

                  The waiver by the Corporation of any breach of any provision
of this Agreement by the Employee shall not be deemed a waiver by the
Corporation of any subsequent breach.

                                   ARTICLE IX

                                     Notice

                  Any notice required or permitted to be given hereunder shall
be in writing and shall be deemed to be sufficiently given and received in all
respects when personally delivered or three (3) days after when deposited in the
United States mail, certified mail, postage prepaid, return receipt requested
and addressed to the principal office of the Corporation or the residence of the
Employee, as the case may be.

                                    ARTICLE X

                                   Assignment

                  This Agreement shall not be assignable by the Corporation
without the written consent of the Employee, except that if the Corporation
shall merge or consolidate with or into, or transfer substantially all of its
assets, including goodwill, to another corporation or other form of business
organization, this Agreement shall be binding upon and inure to the benefit of
the successor of the Corporation resulting from such merger, consolidation or
transfer. The Employee may not assign, pledge or encumber any interest in this
Agreement or any part thereof without the written consent of the Corporation.

                                   ARTICLE XI

                          Complete Agreement; Amendment

                  This Agreement contains the full and complete understanding
and agreement of the parties hereto and supersedes all prior agreements or
understandings, whether oral or written, between the parties hereto with respect
to the subject matter hereof. This Agreement may not be modified, amended,
terminated or discharged orally.

                                   ARTICLE XII

                                  Governing Law

                  This Agreement and all questions of its interpretation,
performance, enforceability and the rights and remedies of the parties hereto
shall be governed by and determined in accordance with the internal laws of the
State of Wisconsin.

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                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day, month and year first above written.

                              CORPORATION:

                              ZBB ENERGY CORPORATION.

                              By:
                                  -----------------------------
                                            (Title)

                              EMPLOYEE:

                              ----------------------------------
                              Robert John Parry

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                                    EXHIBIT A

SECTION I. TERM

         The term of the employee's employment under this agreement shall
commence effective as of July 1, 2006 and shall, except as it may otherwise be
subject to termination hereunder, continue thereafter for a period of three (3)
years.

SECTION II. POSITION AND DUTIES

         The employee shall be employed by the Corporation in the capacity of
Chief Executive Officer of the Corporation and in such capacity shall have
responsibility for the overall management and control of policy and direction of
the Corporation as provided for under Section 4.06 of the Corporations By-Laws.
In addition, the Employee shall serve as an Executive Director of the Board of
Directors of the Corporation.

SECTION III. SALARY AND BENEFITS

         The corporation shall pay to the employee an annual salary and benefits
package equal to at least $187,620.00). The employee's salary shall be payable
in equal installments not less frequently than monthly and shall be subject to
increase in each year in an amount mutually agreed by the Employee and the
Corporation and in any event by an amount not less than the Increase in the
Consumer Price Index. As used herein, "Consumer Price Index" as of any date
means the index published most recently preceding such date by the Bureau of
Labor Statistics, United States Department of Labor, "Consumer Price Index, All
urban Consumers, All Items, Milwaukee, Wisconsin (1982-84 =100)".

         The employee shall also be entitled to participate in any individual or
group life insurance, health insurance, qualified pension or profit sharing plan
or any other fringe benefit program which the Corporation may from time to time
make available to its management employees. In addition thereto, the employee
shall be entitled to participate in a stock option benefit which shall be made
available to the Corporation's management team.

                                       10<PAGE>

                                                                               1

LEASE SCHEDULE

1. LAND                    Jandakot agricultural area lot 253 and being lot 36
                           on plan 19944 and being the whole of the land
                           comprised in certificate of title volume 1631 folio
                           416 and being known as 240 Barrington Street, Bibra
                           Lakes, Western Australia, 6163.

2. PREMISES                The whole of the Land and the building and
                           improvements thereon.

3. TERM                    Commencement Date: 1 November 2001
                           Date of Expiry: 31 October 2006

4. RENT                    An annual rental of thirty two thousand dollars
                           ($32,000.00) to be paid in monthly instalments each
                           of $2,666.66

5. RENT REVIEW DATES       (a)  CPI REVIEWS

                                On the 1st, 3rd, 4th, 6th, 7th, 8th, 9th, 11th,
                                12th, 13th and 14th anniversaries of the
                                Commencement Date during the Term and any
                                further term of this Lease.

                           (b)  MARKET REVIEWS

                                On the 2nd, 5th and 10th anniversaries of the
                                Commencement Date during the Term and any
                                further term of this Lease.

6. PERMITTED USE           Offices, factory and research facility in relation
                           to zinc bromine battery technology.

7. PUBLIC RISK INSURANCE   The public risk insurance shall be in the sum of not
                           less than $5,000,000.00 or such higher amount as the
                           Landlord may reasonably specify from time to time

8. OPTION OF RENEWAL       Two (2) further terms each of five (5) years

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                                                                               2

9.  PAINTING               Every 5 years and in the 3 months prior to the Tenant
                           vacating the Premises

10. ADDRESS OF PARTNERS    LANDLORD

                           Address:   Level 2, Colord House,
                                      33 Colin Street,
                                      West Perth, WA, 6005

                           Fax:       61 8 9481 2434

                           Email:     rapayne@iinet.net.au

                           Attention: Richard Payne

                           TENANT

                           Address:   PO Box 2047,
                                      Kardinya, WA, 6153

                           Fax:       61 8 9310 9381

                           Email:     info@zbbenergy.com

                           Attention: The Directors

                           GUARANTOR

                           Address:   N93 W14475 Whittaker Way,
                                      Menomonee Falls
                                      Wisconsin, USA, 53051

                           Fax:       1 262 253 9822

                           Email:     zbbtec@zbbenergy.com

                           Attention: The Directors

11. SPECIAL CONDITIONS     A. APPROVALS

                           The Tenant is responsible for obtaining all
                           approvals required for carrying on the Tenant's
                           business from the Premises.

                           B. FITOUT

                           The Landlord agrees that the Tenant may construct
                           laboratories and other facilities reasonably
                           required for the Tenant's research, development and
                           manufacturing activities on the Premises (THE
                           FITOUT) on the following terms:

                           (i)   prior to commencement of construction of the
                                 fitout, the Tenant must prepare plans and
                                 specifications of the fitout (THE PLANS) and
                                 obtain all statutory and other approvals
                                 required by law to the same and the approval of
                                 the Landlord, whose approval shall not be
                                 unreasonably withheld.

                           (ii)  the Tenant shall cause the fitout to be
                                 constructed in an expeditious, professional and
                                 workmanlike manner:

                                 (a)  in accordance with the plans and any
                                      building licence issued in respect
                                      thereof; and

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                                                                               3

                                 (b)  in compliance with all applicable
                                      building, design and engineering and other
                                      applicable standards.

                           (iii) on the termination of this Lease the Tenant
                                 must at its cost remove the fitout and make
                                 good any damage to the Premises and leave the
                                 Premises in the condition required by this
                                 Lease.

                           C. ASSIGNMENT

                           The Landlord agrees that clause 6.2 will not apply to
                           a transfer of shares to a related body corporate (as
                           that term is defined in section 50 of the
                           Corporations Law) of the Tenant's ultimate holding
                           company.

                           D. OPTION TO PURCHASE LAND

                           The Landlord grants to the Tenant the option of
                           purchasing the Land in fee simple absolutely on the
                           following terms:

                           (i)   the option shall be exercisable by notice in
                                 writing (but not by email) to the Landlord (THE
                                 NOTICE) at any time after 31 July 2006 but not
                                 later than one months before the expiration of
                                 the Term or any renewal or extension of the
                                 Term.

                           (ii)  the purchase price for the Land shall be the
                                 price to be agreed between the parties but
                                 should the parties fail to agree the price
                                 within 14 days of the giving of the Notice,
                                 then the price shall be equal to the then
                                 current market value of the Land determined as
                                 follows:

                                 (a)  the Landlord and the Tenant must each give
                                      notice to the other, within 21 days after
                                      the giving of the Notice, appointing a
                                      valuer licensed under the Land Valuers
                                      Licensing Act 1978. If any party fails to
                                      make the appointment, the other party may
                                      appoint both valuers.

                                 (b)  the two valuers must inform each other of
                                      their respective views and confer as to
                                      whether they can agree on a determination
                                      of the current market value of the Land.

                                 (c)  if the two valuers have not delivered a
                                      joint determination within 21 days after
                                      the appointment of the second valuer
                                      appointed, the price is to be determined
                                      by a third valuer licensed under the Land
                                      Valuers Licensing Act 1978 appointed by
                                      the President for the time being of the
                                      Australian Institute of Valuers and Land
                                      Economists (Inc.) (W.A. Division) or his
                                      nominee at the request of either party.
                                      The Landlord and the Tenant must ensure
                                      the third valuer makes and delivers his
                                      determination within 21 days of being
                                      called upon to act and deliver written
                                      reasons for his determination. The third
                                      valuer's determination shall be conclusive
                                      and binding on the Landlord and the
                                      Tenant.

                                 (d)  each valuer is to act as an expert and not
                                      as an arbitrator, and the price determined
                                      in accordance with this clause will be the
                                      purchase price payable by the Tenant for
                                      the Land.

                                 (e)  the Landlord and the Tenant must each pay
                                      the fees of the valuer appointed by it or
                                      on its behalf and half the fees of the
                                      third valuer, if any, appointed under
                                      sub-paragraph (c).

                                 (f)  the Landlord and the Tenant must each
                                      ensure the valuer appointed by it or on
                                      its behalf does everything contemplated by
                                      this clause.

                           (iii) if the option is exercised by the Tenant in
                                 accordance with this clause, the Land shall be
                                 sold upon the following terms and conditions:

                                 (a)  within 7 days after agreement or
                                      notification of the determination of the
                                      purchase price, the Tenant shall pay a
                                      deposit of ten per centum (10%) of the
                                      purchase price.

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                                                                               4

                                 (b)  the balance of the purchase price shall be
                                      paid in full by a bank cheque within 30
                                      days of agreement or notification of the
                                      determination of the purchase price (THE
                                      SETTLEMENT DATE).

                                 (c)  if the Tenant, having given the Notice,
                                      shall fail to complete the purchase in
                                      accordance with this clause, the Tenant
                                      shall not be entitled at any subsequent
                                      time to exercise such option and such
                                      option shall be determined but without
                                      prejudice to any rights which the Landlord
                                      may have against the Tenant by reason of
                                      such default.

                                 (d)  save as expressly modified by the terms of
                                      this clause, the sale pursuant to the
                                      exercise of the option to purchase, shall
                                      be deemed to incorporate the conditions
                                      known as the Law Society of Western
                                      Australia (Inc.) and the Real Estate
                                      Institute of Western Australia (Inc.)
                                      Joint Form of General Conditions for the
                                      Sale of Land 2000 Revision (THE GENERAL
                                      CONDITIONS).

                                 (e)  the Tenant shall pay all GST on the
                                      purchase price.

                                 (f)  for all purposes connected with the
                                      exercise of the option time shall be of
                                      the essence.

                                 (g)  possession of the Land shall be given by
                                      the Landlord to the Tenant on the
                                      Settlement Date.

                                 (h)  the Land is sold subject to all easements
                                      rights interests orders and encroachments
                                      (if any) affecting the Land whether or not
                                      those easements rights interests orders or
                                      encroachments are mentioned on the
                                      certificate of title for the Land.

                           (iv)  the Tenant shall only have the benefit of this
                                 option to purchase the Land, so long as the
                                 Landlord's right of re-entry under this Lease
                                 shall not have arisen.

<PAGE>

                                                                               5

LEASE

THIS LEASE made the ______ day of ________________ 2001

BETWEEN   GEOFFREY DAVID HANN, ROBERT JOHN PARRY, MICHAEL JOHN PALMER and
          RICHARD ANDREW PAYNE all care of Level 2, Colord House, 33 Colin
          Street, West Perth, Western Australia, 6005 (THE LANDLORD)

          ZBB TECHNOLOGIES, LTD ACN 008 958 254 of Level 2, Colord House, 33
          Colin Street, West Perth, Western Australia, 6005 (THE TENANT)

AND       ZBB ENERGY CORPORATION ARBN 082 338 789 of N93 W14475 Whittaker Way,
          Menomonee Falls, Wisconsin, United States of America, 53051 (THE
          GUARANTOR)

RECITALS

A    The Landlord is the registered proprietor of the Land.

B.   The Landlord has agreed to lease and the Tenant has agreed to take on lease
     the Premises at the Rent reserved and upon and subject to the terms and
     conditions contained in this Lease.

OPERATIVE PROVISIONS

1.   INTERPRETATION

1.1  DEFINITIONS

     In this Lease unless the context otherwise requires:

     COMMENCEMENT DATE means the date of commencement of the Term specified in
     Item 3 of the Schedule.

     CPI means the Consumer Price Index (all groups) for Perth published from
     time to time by the Australian Bureau of Statistics, but in the event that
     there is any suspension or discontinuance of the Consumer Price Index (all
     groups) for Perth or its method of calculation is substantially altered
     then it shall mean any index published which reflects the fluctuations of
     the cost of living in Perth which the Landlord determines.

     EVENT OF DEFAULT means any event specified in clause 11.2.

     INSOLVENCY EVENT means the happening of any of the following events:

     (a)  a body corporate enters into, or resolves to enter into, a scheme of
          arrangement, deed of company arrangement or composition with, or
          assignment for the benefit of, all or any of its creditors, except to
          reconstruct or amalgamate on terms approved by the Landlord;

     (b)  an application is made to a court for an order or an order is made
          that a body corporate be wound up;

     (c)  an application is made to a court for an order appointing a liquidator
          or a provisional liquidator in respect of a body corporate, or one of
          them is appointed;

     (d)  a body corporate resolves to wind itself up, or otherwise dissolve
          itself, or gives notice of intention to do so, except to reconstruct
          or amalgamate on terms approved by the Landlord;

<PAGE>

                                                                               6

     (e)  a body corporate is insolvent as defined in s95A of the Corporations
          Law;

     (f)  as a result of the operation of s459F(1) of the Corporations Law, a
          body corporate is taken to have failed to comply with a statutory
          demand;

     (g)  a body corporate takes any step to obtain protection or is granted
          protection from its creditors, under any applicable legislation or an
          administrator is appointed to a body corporate;

     (h)  a person becomes insolvent under administration as defined in s9 of
          the Corporations Law;

     (i)  a controller (as defined in s9 of the Corporations Law) is appointed
          in respect of any part of the property of a body corporate;

     (j)  a natural person is unable to pay all his or her debts as and when
          they fall due and payable;

     (k)  a meeting is convened to place a natural person in bankruptcy or an
          application is made for a natural person to be made bankrupt;

     (l)  a trustee in bankruptcy is appointed to a natural person;

     (m)  a natural person proposes to enter into, or enters into, any form of
          arrangement whether formal or informal with any of its creditors; or

     (n)  anything analogous or having a substantially similar effect to any of
          the events specified above happens under the law of any applicable
          jurisdiction.

     LAND means the land specified in Item 1 of the Schedule.

     LEASE means this Lease including the Schedule and plan and annexure (if
     any) annexed hereto.

     OPERATING EXPENSES means all the following moneys expended or payable by
     the Landlord in connection with the Land or the Landlord's ownership of the
     Land during the Term, namely:

     (a)  the Rates and Taxes;

     (b)  insurance premiums for the following insurances effected by the
          Landlord:

          (i)   insuring the Premises and any plant, equipment and other
                appliance, fixture and fittings on the Premises that is the
                property of the Landlord in respect of such usual and necessary
                risks against which a landlord can and does ordinarily insure to
                the full reinstatement value thereof;

          (ii)  insurance against damage to all glass and plate glass upon or in
                the Premises;

          (iii) insurance in respect of public liability in relation to the
                Land; and

          (iv)  any other insurance the Landlord may reasonably take out
                relating to the Landlord's ownership or interest in the
                Premises.

     PREMISES means the premises specified in Item 2 of the Schedule together
     with all the plant and equipment, fixtures, fittings, furniture,
     furnishings and effects in, on or fixed to such premises that are not the
     property of the Tenant.

     RATE means the rate of interest per annum charged by the Landlord's bank
     from time to time on unsecured arranged overdrafts of less than $100,000
     plus two per cent (2%).

     RATES AND TAXES means:

     (a)  all rates, taxes, duties, impositions and fees payable to the local
          authority in respect of the Premises;

     (b)  all water, sewerage and drainage rates and charges payable for the
          supply of water to the Premises including, but not limited to, meter
          fees and charges for the disposal of storm water and sewerage; and

     (c)  any land tax or other tax in the nature of a tax upon land payable in
          respect of the Premises (but calculated on a single ownership basis).

<PAGE>

                                                                               7

     RENT means the annual rental specified in Item 4 of the Schedule as
     reviewed pursuant to this Lease.

     RENT REVIEW DATE means the dates specified in Item 5 of the Schedule as the
     date or dates upon which the Rent is to be reviewed.

     SCHEDULE means the Lease Schedule at the beginning of this Lease.

     TERM means the term of this Lease specified in Item 3 of the Schedule
     subject to the provisions in this Lease for early termination of the Term
     and, when the context requires, includes any further term and any period of
     holding over.

1.2  INTERPRETATION

     In this Lease, unless the context otherwise requires:

     (a)  words importing the singular include the plural and vice versa.

     (b)  words of one gender include every other gender.

     (c)  words denoting individuals include a firm, body corporate, an
          unincorporated association and any governmental or other public body
          or authority of any kind and vice versa.

     (d)  references to any statute or other law shall mean such statute or
          other law as amended or replaced at any time whether before or after
          the date of this Lease.

     (e)  headings shall not effect the construction or interpretation of this
          Lease.

     (f)  references to a clause, paragraph or a schedule is a reference to the
          same in this Lease.

     (g)  a reference to "party" means a party to this Lease and includes that
          party's personal representatives, successors in title and assigns.

     (h)  an agreement, representation or warranty on the part of two or more
          persons binds them jointly and severally.

     (i)  an agreement, representation or warranty in favour of two or more
          persons is for the benefit of them jointly and severally.

     (j)  a reference to a document includes that document as amended or
          replaced.

     (k)  a reference to a professional body includes the successors to or
          substitutes for that body.

     (l)  the covenants and obligations on the part of the Tenant are binding
          upon and enforceable against not only the Tenant but also against any
          occupier whatever of the Premises or any part thereof from time to
          time.

     (l)  a BUSINESS DAY means a day other than a Saturday, Sunday or State
          public holiday in Western Australia.

2.   GRANT OF LEASE

     The Landlord leases to the Tenant and the Tenant takes a lease of the
     Premises for the Term upon and subject to the provisions of this Lease and
     the covenants and powers implied in every memorandum of lease by virtue of
     the Transfer of Land Act 1893 so far as they are not excluded or modified.

3.   RENT

3.1  PAY RENT BY INSTALMENTS

     The Tenant must pay the Rent to the Landlord at the address of the Landlord
     specified in this Lease or at such other place in Western Australia as is
     nominated by the Landlord from time to time by monthly instalments in
     advance.

3.2  TIME FOR PAYMENT OF RENT

     The Tenant must pay the monthly instalments of Rent on the Commencement
     Date and thereafter on the first business day of each month. The first
     instalment and the last instalment shall (if necessary) be proportionate
     ones.

<PAGE>

                                                                               8

4.   RENT REVIEW

4.1  CPI RENT REVIEW

     From each Rent Review Date specified in Item 5(a) of the Schedule the Rent
     to be paid by the Tenant shall be an amount equal to the Rent for the 12
     months prior to such Rent Review Date increased by the inflationary trends
     disclosed by any variation by way of increase in proportion that the CPI as
     determined immediately prior to the relevant Rent Review Date bears to the
     CPI as determined immediately prior to the Commencement Date (in the case
     of the first Rent Review Date) or the previous Rent Review Date (in each
     other case). The Landlord will give notice of the amount of such reviewed
     Rent to the Tenant.

4.2  MARKET RENT REVIEW

     (a)  From each Rent Review Date specified in Item 5(b) of the Schedule
          (MARKET REVIEW DATE) the Rent payable by the Tenant shall be the
          current market rent of the Premises determined in accordance with this
          clause 4.2.

     (b)  The Landlord may between the period three (3) months prior to and six
          (6) months after each Market Review Date give to the Tenant a notice
          in writing of the rate at which the Landlord proposes the Rent shall
          be payable from the Market Review Date based on the Landlord's own
          determination of the current market rent of the Premises (THE PROPOSED
          RENT).

     (c)  If the Tenant does not within 10 business days of receiving notice of
          the Proposed Rent give the Landlord notice that he does not agree to
          pay the Proposed Rent, the Tenant is deemed to have agreed to pay the
          Proposed Rent. If the Tenant agrees, or is deemed to have agreed, to
          pay the Proposed Rent then the Rent from the relevant Market Review
          Date shall be the Proposed Rent.

     (d)  If within 10 business days of receiving notice of the Proposed Rent,
          the Tenant gives the Landlord notice that it does not agree to pay the
          Proposed Rent:

          (i)  the Landlord and Tenant must during the period of 10 business
               days after the Tenant gives notice that it does not agree to pay
               the Proposed Rent meet and negotiate in good faith with a view to
               agreeing the current market rent of the Premises.

          (ii) unless the Landlord and the Tenant agree the current market rent
               of the Premises under sub-paragraph 4.2(d)(i), the current market
               rent of the Premises must be determined by a single qualified
               valuer licensed under the Land Valuers Licensing Act 1978 to be
               appointed by the President for the time being of the Australian
               Institute of Valuers and Land Economists (Inc.) (W.A. Division)
               at the request of either party.

     (e)  The valuer is to act as an expert and not as an arbitrator, and the
          current market rent of the Premises determined in accordance with this
          clause will be the Rent payable by the Tenant from the relevant Market
          Review Date.

     (g)  The valuer's determination shall be conclusive and binding on the
          Landlord and the Tenant. The Landlord and the Tenant must each pay one
          half the valuer's fees.

4.3  RENT MAY BE REVIEWED LATER

     The Landlord shall not by reason of his failure to review the Rent at the
     time specified in clauses 4.1 or 4.2 forfeit its right to have the Rent
     reviewed from the relevant Rent Review Date and may at any time thereafter
     review the Rent in accordance with clauses 4.1 or 4.2, in which case such
     reviewed Rent shall date back to and be payable from the relevant Rent
     Review Date.

4.4  RENT UNTIL REVIEW

     Until the Rent is reviewed the Rent payable immediately before the
     applicable Rent Review Date must be paid and any necessary adjustment shall
     be made on the next day for payment of the Rent after the amount of the
     Rent is agreed or determined.

5.   OPERATING EXPENSES

5.1  PAYMENT OF OPERATING EXPENSES

     The Tenant must pay:

     (a)  the Rates and Taxes by the due date for payment where they are
          assessed directly against the Tenant or the Premises; and

<PAGE>

                                                                               9

     (b)  to the Landlord the Operating Expenses (excluding the Rates and Taxes
          where the Tenant has paid them in accordance with paragraph (a))
          within 10 business days of written demand being made by the Landlord
          to the Tenant.

5.2  DETERMINATION OF AMOUNT OF OPERATING EXPENSES

     Payments on account of the Operating Expenses shall be determined by
     reference to accounts received by the Landlord from the relevant
     government, authority, contractor, agent or supplier in respect of the
     Operating Expenses.

5.3  UTILITY CHARGES

     The Tenant must duly and punctually pay and discharge all charges and meter
     rents and connection and meter installation charges in respect of light,
     power, gas, water, garbage and waste disposal and all other utilities and
     services (including, but not limited to any telephone services) which are
     separately levied, charged, assessed or imposed against or in respect of
     the Premises.

6.   ASSIGNMENT AND SUB-LETTING

6.1  PROHIBITION

     The Tenant must not assign, sub-let, part with the possession of or dispose
     of the Premises, or any part thereof without the prior written consent of
     the Landlord, which consent will not be unreasonably withheld if:

     (a)  the proposed assignee or sub-lessee is a respectable, responsible and
          suitable person of good financial standing and reputation, the onus of
          proof of which to the reasonable satisfaction of the Landlord shall be
          upon the Tenant;

     (b)  no Event of Default has occurred which has not been remedied or
          waived;

     (c)  the Tenant procures the execution by such assignee or sub-lessee of an
          assignment or sub-lease of this Lease (prepared by the Landlord's
          solicitors at the Tenant's expense) to which the Landlord is a party
          in such form and upon such reasonable terms and conditions as the
          Landlord requires;

     (d)  the Tenant pays all the reasonable costs and expenses incurred by the
          Landlord in respect of the assignment or sub-letting of this Lease
          including, without limitation, any enquiries made in relation to any
          prospective assignee or sub-lessee; and

     (e)  if the assignee is a corporation, the Tenant must procure the
          guarantee and indemnity of the obligations to be assumed by the
          proposed assignee by the directors of that corporation on terms
          acceptable to the Landlord.

6.2  CHANGE IN SHARE HOLDING

     Where the Tenant is a corporation, any change in the principal shareholders
     of the Tenant which has the effect of altering the effective control of the
     Tenant is deemed to be an assignment of this Lease. In this clause 6.2,
     "effective control" means control of the composition of the board of
     directors or control of more than 50% of the shares with the right to vote
     in general meetings of the corporation.

6.3  EXCLUSION OF STATUTORY PROVISIONS

     Sections 80 and 82 of the Property Law Act 1969 are excluded from any
     assignment or sub-lease of this Lease.

7.   OPERATION AND USE OF PREMISES

7.1  USE

     The Tenant must use and occupy the Premises only for the purpose of
     conducting the business or permitted use specified in Item 6 of the
     Schedule.

7.2  RESTRICTIONS ON USE

     The Tenant must not:

     (a)  use or permit to be used any part of the Premises as living quarters;

     (b)  carry on or do, or permit to be carried on or done, in or upon the
          Premises:

          (i)   any noxious or offensive art trade business or calling;

          (ii)  anything which is or may be unlawful, illegal or immoral;

<PAGE>

                                                                              10

          (iii) anything which is or may become a nuisance, annoyance or damage
                to the owners or occupiers of any adjoining premises; and

          (iv)  anything which constitutes, or is likely to constitute, an
                infringement of any statute or regulation now or hereafter in
                force having control over or affecting the Premises or the
                Tenant's business;

     (c)  hold any auction fire or bankruptcy sales in the Premises without the
          prior written consent of the Landlord;

     (d)  place, or allow to be placed or maintained on the roof or any exterior
          part of the Premises, any television or wireless antennae or mast or
          other apparatus of any kind without the prior written consent of the
          Landlord;

     (e)  use, or permit to be used, any method or form of lighting, heating or
          cooling in the Premises except those provided by the Landlord;

     (f)  without the prior approval of the Landlord install any electrical
          equipment on the Premises that overloads the cables switchboards or
          sub-boards through which electricity is conveyed to the Premises;

     (g)  keep any live animal, bird or reptile on the Premises without the
          prior written consent of the Landlord;

     (h)  use, or permit to be used, the lavatories, drains, grease traps and
          other sanitary appliances installed in the Premises for any purpose
          other than that for which they were constructed;

7.3  CONDUCT OF BUSINESS

     The Tenant must conduct its business in a proper and businesslike manner.

7.4  SECURITY

     The Tenant must use its best endeavours to protect and keep the Premises
     and any property therein safe from theft or robbery and keep all doors
     windows and other openings closed and securely fastened when the Premises
     are not open for business.

7.5  SUITABILITY

     The Landlord does not expressly or impliedly warrant that the Premises are
     suitable or adequate for all or any of the purposes of the Tenant and all
     warranties (if any) as to suitability and adequacy of the Premises implied
     by law are excluded to the extent permitted by law.

7.6  APPROVALS

     The Tenant must obtain any permits or approvals required from any
     governmental or other authority to enable the Tenant to use the Premises in
     the manner specified in Item 6 of the Schedule.

7.7  COMPLY WITH LEGISLATION

     The Tenant must at all times comply with all statutes, regulations and
     by-laws and all notices, orders and requirements of any governmental or
     other competent authority including, without limiting the generality of the
     foregoing, the West Australian Fire Brigade Board and the Insurance Council
     of Australia which relate to the:

     (a)  Premises or any part thereof;

     (b)  use or occupancy of the Premises; or

     (c)  number or sex of the persons working in or from or at any time
          occupying or visiting the Premises.

7.8  SIGNS

     The Tenant must not without the prior written consent of the Landlord
     (which consent will not be unreasonably withheld) construct display affix
     or exhibit on or to the exterior of the Premises any signs lights
     embellishments advertisements names or notices visible from outside the
     Premises. Should the Landlord grant its consent under this clause the
     Tenant shall be responsible for obtaining any approvals required from any
     local authorities or otherwise to affix or erect any signs light
     embellishments advertisements names or notices.

7.9  NOT TO ENCUMBER

     The Tenant must not without the prior written consent of the Landlord
     mortgage, create any lien over, charge or otherwise encumber the interest
     or any part of the interest of the Tenant in this Lease.

<PAGE>

                                                                              11

7.10 LICENCES

     If the Premises are licensed under any legislation, the Tenant must:

     (a)  carry on in a proper and orderly manner any activity in relation to
          the licence;

     (b)  comply with all laws and the requirements and orders of all
          authorities with respect to the licence;

     (c)  do all things necessary to maintain the licence at the Premises; and

     (d)  not during the Term without the Landlord's consent:

          (i)   remove or apply to remove the licence from the Premises;

          (ii)  surrender or attempt to surrender the licence;

          (iii) dispose of, deal with or part with possession of any interest in
                the licence; or

          (iv)  create or allow to come into existence any encumbrance over the
                licence.

8.   INSURANCE AND INDEMNITIES

8.1  TENANT TO EFFECT INSURANCE

     The Tenant must maintain with insurers approved by the Landlord (which
     approval shall not be unreasonably withheld) at all times during the Term
     and, where required, in the respective names of the Tenant and the Landlord
     for their respective rights and interests:

     (a)  public risk insurance in the sum of not less than the amount specified
          in Item 7 of the Schedule;

     (b)  comprehensive insurance in respect of the plant, equipment, fittings,
          furniture, chattels, stock and effects of the Tenant on the Premises
          for full replacement value including but not limited to damage to the
          Premises arising from any actual or attempted unauthorised entry to
          the Premises;

     (c)  any other insurance required by law of the occupier of premises; and

     (d)  worker's compensation insurance with unlimited cover and extension
          cover for common law liability for at least the same amount specified
          in Item 7 of the Schedule.

8.2  PRODUCE POLICIES

     The Tenant will whenever required produce to the Landlord the policies of
     insurance required to be taken out by the Tenant in accordance with this
     Lease and the receipts for the current year's premiums.

8.3  MAINTAIN INSURANCE

     The Tenant must not vary, cancel or allow to lapse the insurance required
     to be effected by the Tenant under clause 8.1.

8.4  TENANT NOT TO PREJUDICE INSURANCE

     The Tenant must not do, or permit to be done, anything which:

     (a)  increases any insurance premium;

     (b)  adversely affects any insurance taken out by the Landlord; or

     (c)  otherwise prejudices any insurance,

     in connection with the Premises.

8.5  INDEMNITY

     The Tenant must indemnify and keep indemnified the Landlord from and
     against all actions claims demands losses damages costs and expenses which
     the Landlord may sustain or incur in connection with:

     (a)  breach of covenant: loss damage or injury to property or person inside
          or outside the Premises to the extent caused by or contributed to by
          the act, omission, neglect or default of the Tenant or any employee,
          agent or contractor of the Tenant;

<PAGE>

                                                                              12

     (b)  misuse: the negligent use or misuse waste or abuse by the Tenant or
          any employee, agent or contractor of the Tenant of any water, gas or
          electricity or other services to the Premises;

     (c)  escape of harmful agent: the overflow, leakage or escape of water,
          fire gas, electricity or any other harmful agent in or from the
          Premises to the extent caused by or contributed to by the act,
          omission, neglect or default of the Tenant or any employee, agent or
          contractor of the Tenant; or

     (d)  use of the Premises: loss damage or injury from any cause whatsoever
          to property or person to the extent caused by or contributed to by the
          use of the Premises by the Tenant or any employee, agent or contractor
          of the Tenant or other person claiming through or under the Tenant.

8.6  RESTRICTIONS ON LIABILITY OF LANDLORD The Landlord shall not be liable to
     the Tenant:

     (a)  for any act or omission of any other person in the Premises;

     (b)  from any malfunction, interruption or failure in relation to the
          water, gas, electricity, air-conditioning, fire fighting equipment or
          other services to the Premises, including, without limitation, any
          other breakdown of any plant or equipment in the Premises;

     (c)  for any other accident, blockage or damage affecting the Premises or
          any of the appurtenances contained in the Premises including, without
          limitation, the blockage of any sewer, drain, gutter, or downpipe or
          break in any pipe or wire; or

     (d)  for any other loss or damage from any cause,

     except for the Landlord's own negligence or that of any employee, agent or
     contractor of the Landlord.

9.   REPAIR AND MAINTENANCE

9.1  REPAIR BY TENANT

     The Tenant must maintain, repair and keep the Premises and every part
     thereof (including, but not limited to, all plant and equipment, glass and
     plate glass, floor and window coverings, partitioning, light fittings, air
     conditioning plant, lavatories, sinks, drains, fire hydrant, sewerage and
     plumbing facilities, gas and electrical installations and facilities and
     other fixtures, fittings, furniture and effects in, on or fixed to the
     Premises) in good and substantial repair order and condition, reasonable
     fair wear and tear and damage from any causes mentioned in the Landlord's
     insurance contract excepted save where the insurance moneys shall have been
     rendered irrecoverable by some act omission or default on the part of the
     Tenant or any employee, agent, contractor or visitor of the Tenant.

9.2  MAINTAIN DRAINS

     The Tenant must:

     (a)  keep that part of any drains, pipes and other conduits originating in
          or connected to the Premises in a clean and free flowing condition;

     (b)  regularly clean and maintain any grease traps serving the Premises,
          whether or not within the Premises; and

     (c)  promptly clean all blockages in the drains, pipes and other conduits
          and grease traps.

9.3  LANDLORD MAY REPAIR IF FAILURE BY TENANT

     If the Tenant fails to repair and maintain the Premises in accordance with
     this Lease within 10 business days of service of a notice upon the Tenant
     requiring the Tenant to do so, the Landlord and all persons authorised by
     the Landlord may thereafter enter the Premises with all necessary materials
     and appliances and carry out such maintenance and repair at the cost of the
     Tenant who shall pay such costs to the Landlord upon demand.

9.4  ENTRY AND REPAIR BY LANDLORD

     The Landlord and persons authorised by the Landlord may after giving
     reasonable notice to the Tenant (or in an emergency without notice) enter
     the Premises:

     (a)  to view and inspect the state of repair and condition of the Premises;

     (b)  with workmen and others and all necessary materials for the purpose
          of:

<PAGE>

                                                                              13

          (i)  complying with any notice or order of any authority having
               jurisdiction or authority over or in respect of the Premises for
               which the Tenant is not liable under this Lease; or

          (ii) carrying out any repair, renovation, maintenance, alteration or
               replacement to the Premises; and

     (c)  to carry out any modification or structural alterations to the
          Premises which it considers necessary or other works required by any
          authority having jurisdiction or authority over or in respect of the
          Premises.

     In the exercise of its rights under this clause the Landlord will cause as
     little inconvenience to the Tenant as practicable.

9.5  KEEP CLEAN

     The Tenant must keep the Premises (including the windows) clean and clear
     of rubbish, debris and vermin.

9.6  ALTERATIONS

     The Tenant must not without the written consent of the Landlord which
     consent shall not unreasonably withheld:

     (a)  make, or permit to be made, any alterations or additions to the
          Premises;

     (b)  remove or alter any partitioning;

     (c)  cut or injure, or permit to be cut or injured, any of the timbers,
          ceiling or walls of the Premises;

     (d)  install fixtures and fittings in the Premises which consent shall not
          be unreasonably withheld in relation to fixtures and fittings
          necessary for the operation of the Tenant's business.

9.7  NO STRUCTURAL REPAIR BY TENANT

     Despite anything in this clause 9, the Tenant has no obligation to carry
     out any structural maintenance, replacement or repair except when made
     necessary by any act neglect default or omission by the Tenant or any
     employee, agent, contractor, visitor or customer of the Tenant or by virtue
     of the Tenant's business on the Premises. The Landlord has no obligation to
     carry out any work made necessary by any act neglect default or omission by
     the Tenant or any employee, agent, contractor or customer of the Tenant or
     by virtue of the Tenant's business on the Premises.

9.8  PAINT

     The Tenant must in each of the periods referred to in Item 9 of the
     Schedule paint the inside walls and other parts of the Premises now or
     usually painted with good quality and suitable materials in colours first
     approved by the Landlord (which approval will not be unreasonably withheld)
     in a good and workmanlike manner to the reasonable satisfaction of the
     Landlord.

9.9  MAKE GOOD DAMAGE

     The Tenant must make good any breakage defect or damage to the Premises or
     to any adjoining premises or to any facility or appurtenance thereof caused
     by or contributed to by the act, omission, neglect or default of the Tenant
     or any employee, agent or contractor of the Tenant.

9.10 NOT TO OVERLOAD THE STRUCTURE

     The Tenant must at all times ensure that the floors of the Premises or any
     walls, pillars or other parts thereof are not broken, strained or damaged
     by overloading or from any other cause.

9.11 PASS ON NOTICES TO LANDLORD

     If the Premises are damaged, or if the Tenant receives any notice from any
     governmental authority with respect to the Premises, the Tenant must
     immediately give notice in writing to the Landlord of such damage or
     notice.

10.  LANDLORD'S RIGHTS AND OBLIGATIONS

10.1 QUIET ENJOYMENT

     If the Tenant complies with the Tenants obligations under this Lease, the
     Tenant may hold and enjoy the Premises during the Term without any
     interruption by the Landlord but subject to the rights of the Landlord
     under this Lease.

10.2 STRUCTURAL REPAIR BY LANDLORD

     The Landlord undertakes to carry out structural maintenance, replacement or
     repair to the Premises that is necessary to maintain the Premises in a
     safe, weather proof and water tight condition and in respect of which the
     Tenant has given written notice to the Landlord, except that the Landlord
     is not required to undertake such

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                                                                              14

     maintenance, replacement or repair when it is made necessary by any act
     neglect default or omission by the Tenant or any employee, agent,
     contractor, visitor or customer of the Tenant or by virtue of the Tenant's
     business on the Premises.

10.3 EXECUTION OF WORKS

     The Landlord may:

     (a)  execute any works which by law it is bound and has been required to
          execute on the Premises or any part thereof;

     (b)  repair or rebuild any part of the Premises;

     (c)  construct, erect, lay down, alter, repair, cleanse or maintain any
          drain, ventilator, shaft, pipe or wire in connection with the Premises
          or any part thereof;

     (d)  underpin; or

     (e)  reinstate or re-build the Premises or any part thereof in case of
          damage,

     and in any such case the Landlord may with or without employees, agents and
     contractors and appliances enter upon the Premises and carry out such works
     doing as little damage as practically possible to the Premises and
     restoring the same without unreasonable delay but without making
     compensation for any damage or inconvenience to the Tenant.

10.4 INSPECTION BY PROSPECTIVE TENANTS OR PURCHASERS

     The Landlord, or a person authorised by the Landlord, may on giving the
     Tenant reasonable notice of entry or the display:

     (a)  enter the Premises when the Premises are open for trading to allow
          prospective purchasers or tenants of the Premises to inspect the
          Premises;

     (b)  display inside or outside the Premises a sign containing any
          information which the Landlord sees fit indicating the availability of
          the Land for purchase; and

     (c)  during the 3 months before the end of the Term display inside or
          outside the Premises a sign containing any information which the
          Landlord sees fit indicating the availability of the Premises for
          lease or other occupation.

10.5 CHANGE OF LANDLORD

     If the Landlord sells the Land so that the Tenant becomes obliged to
     perform its obligations under this Lease in favour of another person, then:

     (a)  the Landlord is released from its obligations under this Lease arising
          after the Tenant receives notice of the sale; and

     (b)  the Tenant must at the cost of the Landlord enter into the documents
          the Landlord or the other person reasonably requires to enable the
          other person to enforce the benefit of all the obligations owed under
          this Lease in that other person's name.

11.  DEFAULT

11.1 ESSENTIAL TERMS

     Each of the obligations of the Tenant which are specified in this clause
     are essential terms of this Lease provided that the presence of this clause
     shall not mean or be deemed to mean that there are no other essential terms
     in this Lease:

     (a)  the obligations to pay money under clauses 3, 5.

     (b)  the obligations under clauses 6.1, 7.1, 7.9, 8.1, 9.1, 9.6, 17.2.

11.2 EVENT OF DEFAULT

     An Event of Default occurs if:

     (a)  the Rent is at any time unpaid for 7 days after becoming due, whether
          formally demanded or not;

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                                                                              15

     (b)  the Tenant fails to comply with any other of its obligations under
          this Lease, whether or not an essential term, and the non-compliance
          is not remedied within 14 days after the Landlord notifies the Tenant
          of its occurrence;

     (c)  an Insolvency Event occurs in respect of the Tenant or any guarantor
          of the Tenant; or

     (d)  any execution is issued against the Tenant and is not stayed satisfied
          or withdrawn within 30 days thereof.

11.3 LANDLORD MAY TERMINATE LEASE

     If an Event of Default occurs the Landlord may:

     (a)  terminate this Lease by re-entering the Premises, or any part of the
          Premises in the name of the whole, without notice, or if required by
          law, with notice; or

     (b)  terminate this Lease by notice to the Tenant.

11.4 DAMAGES FOR DEFAULT

     (a)  If an Event of Default occurs and as a result this Lease is
          terminated, the Tenant must indemnify and keep indemnified the
          Landlord against any liability, loss or damage arising from; and costs
          and expenses (including legal costs on a full indemnity basis)
          incurred:

          (i)  in connection with the termination of the Lease including,
               without limitation, the Landlord re-entering the Premises and the
               Landlord attempting to mitigate its loss;

          (ii) as a result of the Landlord not receiving the benefit of the
               Tenant performing its obligations under this Lease from the date
               of termination until the expiry of the Lease by the passing of
               time.

     (b)  The Landlord shall be entitled to recover damages against the Tenant
          if an Event of Default occurs for the loss and damage suffered by the
          Landlord during the entire Term of this Lease, including the periods
          before and after such event of default.

     (c)  The Landlord's entitlement to recover damages shall not be effected or
          limited by:

          (i)   the Tenant abandoning or vacating the Premises;

          (ii)  the Landlord electing to re-enter or terminate this Lease;

          (iii) the Landlord accepting the Tenant's repudiation; or

          (iv)  a party's conduct constituting a surrender by operation of law.

     (d)  The acceptance by the Landlord of Rent or other moneys under this
          Lease shall not constitute a waiver of a preceding breach or an
          acceptance of the repudiation of this Lease by the Tenant.

     (e)  After termination of this Lease the Landlord shall take reasonable
          steps to mitigate its loss but the Landlord's attempts to mitigate its
          loss is not an acceptance or waiver of the Tenant's breach or
          repudiation or a surrender by operation of law.

11.5 INTEREST

     If the Tenant shall fail to pay to the Landlord any moneys which are
     payable by the Tenant to the Landlord under the terms of this Lease within
     7 days from the due date for payment the Tenant shall pay to the Landlord
     on demand interest calculated daily at the Rate from the date the same was
     due and payable until the same shall be actually paid (and also upon any
     judgment which the Landlord may obtain against the Tenant from the date of
     any such judgment until the same shall be satisfied).

12.  TENANT'S OBLIGATIONS ON TERMINATION

12.1 YIELDING UP

     The Tenant must on the expiration or sooner determination of the Term
     peaceably vacate the Premises in the condition required by this Lease.

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                                                                              16

12.2 REMOVAL OF TENANT'S PROPERTY

     At or prior to the determination of the Term the Tenant must remove from
     the Premises all plant, equipment, signs, fixtures, furnishings, fittings,
     chattels, effects and other articles upon the Premises brought upon the
     Premises by the Tenant (other than those the property of the Landlord) and
     in such removal the Tenant must make good to the reasonable satisfaction of
     the Landlord any damage which may be occasioned by such removal.

12.3 PROPERTY NOT REMOVED BY TENANT

     Any plant, equipment, signs, fixtures, furnishings, fittings, chattels,
     effects and other articles not removed by the Tenant in accordance with
     clause 12.2 will be deemed abandoned by the Tenant and will become the
     absolute property of the Landlord (without prejudice to the other rights or
     remedies of the Landlord) and may in the absolute discretion of the
     Landlord be sold or stored at the cost of the Tenant. If any such items are
     sold the Landlord must account to the Tenant for the net proceeds but if
     the Tenant is indebted to the Landlord for any amount the Landlord may
     retain sufficient of these proceeds to offset that indebtedness.

12.4 KEYS

     The Tenant must return to the Landlord on the expiry or sooner
     determination of the Term all keys provided by the Landlord for locks on
     doors or other openings in or from the Premises.

13.  DESTRUCTION OR DAMAGE

13.1 DAMAGE OR DESTRUCTION BY FIRE OR OTHER CAUSE

     If the Premises is damaged or destroyed, so that the whole or a substantial
     part of the Premises is unfit for occupation and use by the Tenant and have
     not been made good within 2 weeks after such damage or destruction
     occurred, then, subject to clause 13.2:

     (a)  a proportionate part of the Rent according to the nature and extent to
          which the Premises are not fit for occupation and use by the Tenant
          shall after the expiration of such 2 week period be abated by the
          Landlord until the Premises shall again be rendered fit for occupation
          and use;

     (b)  any dispute concerning such abatement shall be referred to the award
          of a single arbitrator in accordance with the provisions of the
          Commercial Arbitration Act 1985 (and either party may be represented
          by a legal practitioner or other qualified representative in any such
          proceeding); and

     (c)  the Tenant must pay full Rent without any deduction until the amount
          of the Rent to be reduced is agreed or the date of the award of the
          arbitrator referred to in paragraph (b) whereupon the Landlord shall
          refund any Rent which according to such award has been overpaid.

13.2 NO ABATEMENT IF INSURANCE RENDERED INEFFECTIVE

     If the insurance policy insuring against the damage to or destruction of
     the Premises is rendered ineffective or payment of the policy moneys
     refused in consequence of some act or default of the Tenant or an employee,
     agent, contractor or customer of the Tenant, the Rent shall not be
     suspended and the Tenant shall not be entitled to any suspension or
     abatement of Rent.

13.3 NON-REINSTATEMENT OF PREMISES

     If the Premises is damaged or destroyed, so that the whole or a substantial
     part of the Premises is unfit for occupation and use by the Tenant:

     (a)  the Landlord will use its reasonable endeavours to reinstate the
          Premises as soon as practicable after such occurrence, provided that
          the Landlord will be under no obligation to reinstate the Premises
          where such damage or destruction was caused, or the insurance in
          respect thereof rendered ineffective, by any act, omission or default
          of the Tenant or an employee, agent, contractor or customer of the
          Tenant.

     (b)  if the Premises are not reinstated by the Landlord within 4 months of
          such occurrence, then:

          (i)  either party shall be at liberty by notice in writing to the
               other to terminate this Lease from the date of the giving of such
               notice without prejudice to the right of the Landlord to take
               proceedings against the Tenant for any antecedent breach by the
               Tenant of its obligations under this Lease.

          (ii) the Tenant shall not be entitled to determine this Lease under
               subparagraph (i) if such damage or destruction was caused, or the
               insurance in respect thereof rendered ineffective, by any act,
               omission or default of the Tenant or an employee, agent,
               contractor or customer of the Tenant.

     (c)  any dispute concerning this clause shall be referred to arbitration as
          provided in paragraph 13.1(b).

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                                                                              17

14.  OPTION TO RENEW

14.1 TENANT'S RIGHT TO RENEW

     If the Tenant:

     (a)  has paid the Rent regularly during the Lease;

     (b)  has not failed to observe and perform its obligations during the Lease
          in a way which has been serious or persistent or both;

     (c)  notifies the Landlord in accordance with clause 14.2; and

     (d)  between the time of notification and the end of the Term, duly and
          punctually pays the Rent and observes and performs its obligations
          under this Lease,

     then the Landlord must grant and the Tenant must take a new lease of the
     Premises in accordance with the provisions set out in clauses 14.3 and
     14.4.

14.2 NOTICE OF EXERCISE

     Notice of exercise of option:

     (a)  must clearly state that the Tenant wishes to take a further lease of
          the Premises in accordance with the option contained in the Lease; and

     (b)  must be served on the Landlord not earlier than 6 months and not later
          than 3 months before the expiration of the Term.

14.3 LEASE FOR FURTHER TERM

     The new lease is to be identical with this Lease except that:

     (a)  the new lease will begin immediately after the end of the Term and
          will be for the term first specified in Item 8 of the Schedule;

     (b)  the Rent shall continue to be subject to review in accordance with the
          terms of this Lease notwithstanding part of a Rent Period might have
          elapsed before this option for renewal was exercised; and

     (c)  the new lease will exclude any option for renewal that has already
          been exercised:

          (i)  if the particulars of the further term of new lease are the only
               particulars specified in Item 8 of the Schedule, by deleting this
               clause 14 and Item 8 of the Schedule from the new lease; or

          (ii) if the particulars of more than one further term are specified in
               Item 8 of the Schedule, by deleting the particulars of the
               further term first specified from Item 8 of the Schedule in the
               new lease.

14.4 EXTENSION OF LEASE

     To evidence the new lease of the Premises, the parties hereto shall as soon
     as practicable enter into a deed of extension of lease prepared by the
     Landlord's solicitors and the Tenant shall pay the Landlord's reasonable
     legal costs of preparing such deed and all stamp duty thereon.

14.5 WHERE NO FURTHER TERM

     This clause 14 does not apply to this Lease if the words "Not Applicable"
     appear in Item 8 of the Schedule.

15.  HOLDING OVER

     That if the Tenant shall upon the expiration of the Term or any extension
     of the Term continue to occupy the Premises with the consent of the
     Landlord he shall do so as a monthly tenant at a monthly Rent equal to one
     twelfth (1/12th) of the total annual Rent paid by him for the last year or
     extended year of the Term upon the same terms as are contained in this
     Lease insofar as they are applicable, such tenancy being determinable by
     one month's notice in writing given by either party to the other.

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                                                                              18

16.  RESTRICTIONS ON REGISTRATION AND CAVEATS

16.1 NO REGISTRATION AND ABSOLUTE CAVEAT

     The Tenant must not register this Lease or lodge any absolute caveat over
     the title to the Land or any part thereof to protect the interest of the
     Tenant under this Lease and in the event of any such lease or caveat being
     registered or lodged the Tenant irrevocably appoints the Landlord the agent
     and attorney of the Tenant to surrender sign and withdraw any such lease or
     caveat.

16.2 SUBJECT TO CLAIM CAVEAT

     The Tenant may lodge a subject to claim caveat over the title to the Land
     or any part thereof to protect the interest of the Tenant under this Lease.
     The Tenant must withdraw any such caveat upon the termination or earlier
     determination of this Lease. The Tenant irrevocably appoints the Landlord
     the agent and attorney of the Tenant to sign and withdraw any such caveat
     and the cost of any such signing and withdrawal shall be borne and paid by
     the Tenant upon demand.

17.  COSTS AND EXPENSES

17.1 COSTS FOR PREPARATION

     The Tenant must pay to the Landlord:

     (a)  all the reasonable costs of and incidental to the instructions for and
          the negotiation preparation execution and stamping of this Lease;

     (b)  all stamp duties payable on this Lease; and

     (c)  all reasonable costs incurred by the Landlord of and incidental to
          issuing any notices or making any applications (if applicable), to the
          Western Australian Planning Commission or any other governmental
          authority.

17.2 DEFAULT COSTS

     The Tenant must pay to the Landlord on demand the reasonable costs and
     expenses of the Landlord in connection with the enforcement or preservation
     or exercise of rights under this Lease, including without limitation the
     costs charges and expenses of a notice under s81 of the Property Law Act
     1969.

17.3 AMOUNT OF LEGAL COSTS

     Any legal costs to be paid by the Tenant under this Lease are to be paid on
     the higher of a full indemnity basis or a solicitor and own client basis.

17.4 GOODS AND SERVICES TAX

     (a)  In this clause:

          (i)   GST means any goods and services tax, consumption tax or similar
                value added tax imposed on the sale of goods and supply of
                services and includes the goods and services tax (GST) imposed
                under the GST Act.

          (ii)  GST ACT means A New Tax System (Goods and Services Tax) Act 1999
                and includes other GST related legislation and regulations under
                the legislation, as amended from time to time.

          (iii) TENANT PAYMENT includes every amount (other than GST) payable by
                the Tenant to the Landlord pursuant to this deed including, but
                not limited to, Rent, Operating Expenses, any other expenses or
                payments, monetary compensation for breach of this Lease and any
                legal costs associated with that monetary compensation.

          (iv)  except for defined terms in this deed, terms used in this clause
                have the same meaning as in the GST Act.

     (b)  Each Tenant Payment is exclusive of GST.

     (c)  Each Tenant Payment must be increased by the GST applying to that
          Tenant Payment, or imposed on the Taxable Supply in respect of which
          that Tenant Payment is made, and the Tenant shall pay that GST at the
          same time the Tenant Payment is due under this Lease.

     (d)  The Landlord must provide the Tenant with a Tax Invoice as required by
          the GST Act in respect of each Tenant Payment to which GST applies or
          is imposed.

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                                                                              19

18.  NOTICES

18.1 GIVING OF NOTICE

     Any notice or other communication in connection with this Lease:

     (a)  must be in writing;

     (b)  may be signed by the party giving it or its solicitor or agent,
          provided that an email is not required to be signed; and

     (c)  must be given or served in any of the following ways, namely:

          (i)   in a manner authorised by law or by personal delivery;

          (ii)  sent by prepaid post to the address of the addressee specified
                in item 10 of the Schedule;

          (iii) sent by fax to the fax number of the addressee specified in item
                10 of the Schedule; or

          (iv)  sent by email to the email address of the addressee specified
                item 10 of the Schedule,

          or if the addressee notifies another address, fax number or email
          address in accordance with this clause then to that address, fax
          number or email address.

18.2 TIME NOTICE GIVEN

     Any notice or other communication in connection with this Lease takes
     effect from the time it is received and, unless a later time is specified,
     is taken to be received:

     (a)  if served or given by personal delivery, at the time it is delivered;

     (b)  if left at the address of the addressee, at the time it is left;

     (c)  if sent by prepaid ordinary post to the address of the addressee, at
          the expiration of 2 business days after posting;

     (d)  if sent by fax, on the next business day following the date the fax
          was transmitted provided that there is a transmission report by the
          machine from which the fax was sent which indicates that the fax was
          sent in its entirety to the fax number of the addressee without error;
          and

     (e)  if sent by email, on the next business day following the date the
          email was sent unless the sender is aware or the sender's internet
          service provider notifies the sender that the email was not sent
          successfully.

18.3 SERVICE OF PROCESS

     The parties agrees that service of any legal process (including, without
     limitation, any writ of summons) may be effected by delivering or leaving
     it at any address referred to in clause 18.2 or by any other method
     permitted by law.

19.  STRATA TITLE PROVISIONS

19.1 STRATA LOT

     If the Premises are a lot or part of a lot under the Strata Titles Act,
     1985 (THE ACT) the parties agree that:

     (a)  this Lease shall be subject in all respects to all easements rights
          reservations and powers mentioned in the Act except insofar as the
          same are hereby modified or negatived.

     (b)  the Tenant and the Tenant's permitted assigns and sub-tenants and the
          Tenant's employees, customers and contractors shall have the right in
          common with the Landlord and the registered proprietors of all the
          other strata lots comprised in the strata plan of which the Premises
          form part to use the common property comprised in the strata plan
          subject to the by-laws of the strata company and to all rules and
          regulations made by the strata company in relation thereto.

     (c)  the Landlord shall pay all contributions levied by the strata company
          in respect of the Premises.

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                                                                              20

     (d)  the Tenant shall comply with the Act and all by-laws and rules and
          regulations for the time being in force made by the strata company
          pursuant to its by-laws.

     (e)  the Tenant has no claim or rights against the Landlord in consequence
          of the exercise by the strata company of any of the strata company's
          rights, duties or powers under the Act.

19.2 SUBDIVISION OR STRATA PLAN

     If the Landlord wishes to subdivide the Land or register a strata plan in
     respect of the Land or a part which includes the Premises, the Tenant must
     upon request by the Landlord withdraw any caveat lodged by the Tenant.
     Registration of a plan of subdivision or the strata plan will not terminate
     this Lease but upon registration of a strata plan:

     (a)  the Landlord must furnish the Tenant with a complete copy of the
          by-laws of the strata company; and

     (b)  the Tenant must comply with the provisions of clause 19.1.

20.  GENERAL PROVISIONS

20.1 SEVERANCE

     If any provision of this Lease or its application to any person or
     circumstance is or becomes invalid or unenforceable the remaining
     provisions of this Lease shall continue in full force and effect to the
     fullest extent permitted by law.

20.2 MORATORIUM

     Any present or future legislation which has the effect of varying the
     obligations of the Tenant under this Lease with the result that the
     Landlord's rights, powers or remedies are adversely affected is excluded so
     far as such exclusion is lawful.

20.3 CONSENTS AND APPROVALS

     Save as otherwise provided in this Lease, the Landlord may grant or refuse
     its consent or approval or grant its consent or approval subject to such
     conditions as the Landlord in its absolute discretion determines.

20.4 WAIVER AND VARIATION

     No party may waive or vary any provision of or right created by this Lease
     except in writing signed by the party or parties to be bound.

20.5 EXERCISE OF RIGHTS

     The Landlord may exercise a right, power or remedy at its discretion
     separately or concurrently with any other right, power or remedy. An
     exercise of any right, power or remedy does not prevent a further exercise
     of a power right or remedy and a failure to exercise or a delay in
     exercising any power right or remedy does not prevent its exercise.

20.6 FURTHER ASSURANCES

     If requested by the Landlord the Tenant must execute documents and do all
     other things necessary or appropriate to bind the Tenant under this Lease.

20.7 STATUTORY POWERS

     The powers and covenants conferred or implied under any applicable statute
     and all regulations by-laws requisitions or orders made under any statute
     by any other competent authority shall (except to the extent inconsistent
     with the express terms expressed in this Lease) be in augmentation of all
     or any of the rights powers and remedies of the Landlord.

20.8 ENTIRE AGREEMENT

     The provisions of this Lease comprise the entire agreement between the
     parties and supersede all prior agreements and understanding between the
     Landlord and the Tenant in relation to the Premises.

20.9 NO WARRANTY

     The Tenant acknowledges that the Tenant has not been induced to enter into
     this Lease by any verbal or written representation or warranty by or on
     behalf of the Landlord. The Tenant shall be taken to have entered into this
     Lease in reliance solely upon the Tenant's own examination, inspection and
     inquiry and not on any representation or warranty made or alleged to have
     been made by or on behalf of the Landlord.

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                                                                              21

20.10 SPECIAL CONDITIONS

     The special conditions (if any) as specified in Item 11 of the Schedule
     shall be and be deemed to be incorporated in this Lease as if fully set out
     herein and in the event that any inconsistency arises between the special
     conditions and any other provisions of this Lease the special conditions
     shall prevail.

20.11 PAYMENTS

     The Tenant must make all payments under this Lease without any set-off or
     counterclaim and free and clear of any withholding or deduction.

20.12 ANTECEDENT BREACHES

     The expiry or termination of this Lease does not affect the rights of the
     Landlord for a breach of this Lease by the Tenant before the expiry or
     termination of the Lease.

20.13 COUNTERPARTS

     This Lease may consist of a number of counterparts which when taken
     together constitute one and the same instrument.

20.14 CERTIFICATE

     A certificate signed by the Landlord or its solicitors or agent about a
     matter or about a sum payable to the Landlord in connection with this Lease
     is sufficient evidence of the amount or any other factual matter stated in
     the certificate in the absence of manifest error.

20.15 TRUST PROVISIONS

     Where the Tenant executes this Lease in the capacity of a trustee pursuant
     to any trust deed, will, deed of settlement, or other instrument whatsoever
     (in this clause THE TRUST DEED) such party (in this clause THE TRUSTEE)
     enters into this Lease for itself and as trustee of such trust and warrants
     to the Landlord that:

     (a)  as the Trustee it has power under the Trust deed to:

          (i)  enter into and execute this Lease; and

          (ii) be or become indebted to the Landlord and to enter into all other
               obligations in the manner and to the extent contemplated by this
               Lease.

     (b)  it is the sole trustee of the trusts created by the Trust Deed.

     (c)  during the Term it will not without the prior written consent of the
          Landlord, which shall not be unreasonably withheld:

          (i)   cause to vest or distribute prior to the final date for
                distribution under the Trust Deed the whole or any part of the
                trust property other than the income thereof;

          (ii)  vary alter or revoke either wholly or in part any of the terms
                of or powers under the Trust Deed;

          (iii) appoint or procure or consent to or concur in the appointment of
                any person as a new or substitute or trustee under the Trust
                Deed;

          (iv)  do any act or thing or omit to do any act or thing so as to harm
                or impair or be likely to harm the interest of the Landlord
                under this Lease.

20.16 APPLICATION OF RETAIL SHOPS LEGISLATION

     During any period when this Lease is a lease to which the Commercial
     Tenancy (Retail Shops) Agreement Act 1985 applies, the provisions of this
     Lease are subject to the provisions of that Act and any provision of this
     Lease which is prohibited, made void or otherwise unenforceable by that Act
     does not apply to the extent that the provision is so prohibited, made void
     or otherwise unenforceable, but without prejudice to the other provisions
     of this Lease which continue in full force and effect.

20.17 GOVERNING LAW

     This Lease shall be governed by the law of Western Australia and the
     parties hereto agree to submit to the jurisdiction of the courts of Western
     Australia in all matters arising out of this deed and any court hearing
     appeals from those courts. Each party unconditionally submits to the
     jurisdiction of the courts mentioned above and waives any right it has to
     object to an action being brought in any of those courts.

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21.  GUARANTEE AND INDEMNITY

21.1 GUARANTEE

     The Guarantor irrevocably guarantees to the Landlord that the Tenant will
     make all payments due to the Landlord under this Lease on time and meet all
     the Tenant's other obligations under this Lease.

21.2 INDEMNITY

     In addition to the guarantee in clause 21.1, the Guarantor indemnifies and
     shall keep indemnified the Landlord against any loss and damage the
     Landlord suffers by reason of:

     (a)  a failure by the Tenant to make a payment due to the Landlord under
          this Lease on time or to meet any of the Tenant's other obligations
          under this Lease; or

     (b)  the Landlord being unable to enforce this Lease or any of its
          provisions for any reason.

21.3 GUARANTOR'S OBLIGATIONS NOT AFFECTED

     The obligations of the Guarantor to the Landlord under this guarantee and
     indemnity shall not be prejudiced or affected by any of the following:

     (a)  the Landlord gives the Tenant extra time to make a payment or meet its
          obligations under this Lease or gives the Tenant some other
          indulgence;

     (b)  a payment made by the Tenant or any other person is held to be a
          preference, is set aside by a court or is not effective because of
          operation of law;

     (c)  the Landlord does not enforce or delays in enforcing any of its rights
          against the Tenant or the Guarantor under this Lease;

     (d)  any variation or assignment of this Lease, or any extension, renewal
          or holding over of the Term, without the consent of the Guarantor;

     (e)  the expiration or determination of the Lease for any reason;

     (f)  where the Tenant or any Guarantor is a natural person, the death of
          any one or more of them;

     (g)  any Insolvency Event occurs in respect of the Tenant or the Guarantor
          or any one or more of them,

     (h)  a change in the legal capacity, rights or obligations of the Tenant or
          the Guarantor or any one or more of them;

     (i)  the Landlord obtains a judgment against the Tenant or any other person
          for money owed to the Landlord under this Lease;

     (j)  in the event of any disclaimer of this Lease by a trustee,
          administrator or liquidator of the Tenant; or

     (k)  the Landlord is unable to enforce this Lease or any provision of it
          against the Tenant for any reason.

21.4 GUARANTOR IS PRINCIPAL DEBTOR

     As between the Guarantor and the Landlord, the Guarantor is a principal
     debtor under this Lease and is liable to the Landlord jointly and severally
     with the Tenant.

21.5 CONTINUING OBLIGATIONS

     The Guarantor's obligations under this guarantee and indemnity continue
     until all money payable by the Tenant to the Landlord have been paid and
     all the other obligations of the Tenant have been met, provided that any
     payment by the Tenant or the Guarantor later avoided by any law shall be
     deemed not to have discharged the Guarantor's liability and in such event
     the Landlord, the Tenant and the Guarantor shall be restored to the rights
     which each respectively would have had if the payment had not been made.

21.6 NO NOTICE OR DEMAND REQUIRED

     The Landlord does not have to make demand on the Tenant before enforcing
     this guarantee and indemnity and is not obliged to give the Guarantor
     notice of any default by the Tenant.

<PAGE>

                                                                              23

21.7 PAYMENT BY GUARANTOR ON DEMAND

     The Guarantor must pay all money owing to the Landlord under this Lease on
     demand by the Landlord. The Guarantor's obligations under this guarantee
     and indemnity are not affected by any claim or right of set-off which the
     Guarantor may have against the Tenant or any other person.

21.8 GUARANTOR MUST NOT COMPETE WITH LANDLORD

     Whilst the Guarantor's obligations continue under this guarantee and
     indemnity:

     (a)  if the Tenant becomes bankrupt or enters into any composition,
          arrangement or assignment in favour of creditors, or enters into
          liquidation, or has appointed under any statute or instrument, or by
          order of any court, an administrator, trustee or liquidator, the
          Guarantor must not prove in competition with the Landlord and the
          Guarantor shall hold in trust for the Landlord any such proof and
          claim.

     (b)  the Guarantor must not recover from the Tenant any money the Tenant
          owes to the Guarantor.

     (c)  the Guarantor must not enforce any debt or liability due by the Tenant
          to the Guarantor or any security which the Guarantor holds over any of
          the Tenant's assets, and the Guarantor shall hold in trust for the
          Landlord any such debt, liability and security. The Guarantor agrees
          to sign any document and do anything necessary to transfer such debt,
          liability and security to the Landlord and to enable the Landlord to
          enforce such debt, liability and security for its own benefit.

EXECUTED as a deed

The COMMON SEAL of ZBB TECHNOLOGIES,     )
LTD ACN 008 958 254                      )
was hereunto affixed by authority        )
of the Directors in the presence of :    )

--------------------------------------       -----------------------------------
Director's name                              Director's signature

--------------------------------------       -----------------------------------
Director/Secretary's name                    Director/Secretary's signature

SIGNED for and on behalf of ZBB ENERGY   )
CORPORATION ARBN 082 338 789             )   -----------------------------------
in accordance with section 127(1) of     )   Director's signature
the Corporations Law                     )

                                             -----------------------------------
                                             Director's name

--------------------------------------
Director/Secretary's signature

--------------------------------------
Director/Secretary's name

<PAGE>

                                                                              24

SIGNED by the said                       )
GEOFFREY DAVID HANN                      )
in the presence of:                      )   -----------------------------------
                                             Signature of Geoffrey David Hann

--------------------------------------
Witness signature

--------------------------------------
Name of witness

SIGNED by the said                       )
ROBERT JOHN PARRY                        )
in the presence of:                      )   -----------------------------------
                                             Signature of Robert John Parry

--------------------------------------
Witness signature

--------------------------------------
Name of witness

SIGNED by the said                       )
MICHAEL JOHN PALMER                      )
in the presence of:                      )   -----------------------------------
                                             Signature of Michael John Palmer

--------------------------------------
Witness signature

--------------------------------------
Name of witness

SIGNED by the said                       )
RICHARD ANDREW PAYNE                     )
in the presence of:                      )   -----------------------------------
                                              Signature of Richard Andrew Payne

--------------------------------------
Witness signature

--------------------------------------
Name of witness

<PAGE>

DATED                                                                       2001

                                     BETWEEN

                               GEOFFREY DAVID HANN
                                ROBERT JOHN PARRY
                               MICHAEL JOHN PALMER
                            and RICHARD ANDREW PAYNE

                                  the Landlord

                              ZBB TECHNOLOGIES, LTD

                                   the Tenant

                                       AND

                             ZBB ENERGY CORPORATION

                                  the Guarantor

                                    Lease of
                              240 Barrington Road,
                                   Bibra Lake

                           RICHARD PAYNE & ASSOCIATES

                              Commercial Solicitors
          Level 2, Colord House, 33 Colin Street, West Perth, W.A. 6005
                Telephone 61 8 9481 0844 Facsimile 61 8 9481 2434
                      P.O. Box 1275, West Perth, W.A. 6872
                                    Australia
                          e-mail - rapayne@iinet.net.au

<PAGE>

                                                                               i

                                TABLE OF CONTENTS

LEASE SCHEDULE.............................................................    1
1.  LAND...................................................................    1
2.  PREMISES...............................................................    1
3.  TERM...................................................................    1
4.  RENT...................................................................    1
5.  RENT REVIEW DATES......................................................    1
6.  PERMITTED USE..........................................................    1
7.  PUBLIC RISK INSURANCE..................................................    1
8.  OPTION OF RENEWAL......................................................    1
9.  PAINTING...............................................................    2
10. ADDRESS OF PARTNERS....................................................    2
11. SPECIAL CONDITIONS.....................................................    2
    A. Approvals...........................................................    2
    B. Fitout..............................................................    2
    C. Assignment..........................................................    3
    D. Option to purchase Land.............................................    3
LEASE......................................................................    5
1. INTERPRETATION..........................................................    5
   1.1    DEFINITIONS......................................................    5
   1.2    INTERPRETATION...................................................    7
2. GRANT OF LEASE..........................................................    7
3. RENT....................................................................    7
   3.1    PAY RENT BY INSTALMENTS..........................................    7
   3.2    TIME FOR PAYMENT OF RENT.........................................    7
4. RENT REVIEW.............................................................    8
   4.1    CPI RENT REVIEW..................................................    8
   4.2    MARKET RENT REVIEW...............................................    8
   4.3    RENT MAY BE REVIEWED LATER.......................................    8
   4.4    RENT UNTIL REVIEW................................................    8
5. OPERATING EXPENSES......................................................    8
   5.1    PAYMENT OF OPERATING EXPENSES....................................    8
   5.2    DETERMINATION OF AMOUNT OF OPERATING EXPENSES....................    9
   5.3    UTILITY CHARGES..................................................    9
6. ASSIGNMENT AND SUB-LETTING..............................................    9
   6.1    PROHIBITION......................................................    9
   6.2    CHANGE IN SHARE HOLDING..........................................    9
   6.3    EXCLUSION OF STATUTORY PROVISIONS................................    9
7. OPERATION AND USE OF PREMISES...........................................    9
   7.1    USE..............................................................    9
   7.2    RESTRICTIONS ON USE..............................................    9
   7.3    CONDUCT OF BUSINESS..............................................   10
   7.4    SECURITY.........................................................   10
   7.5    SUITABILITY......................................................   10
   7.6    APPROVALS........................................................   10
   7.7    COMPLY WITH LEGISLATION..........................................   10
   7.8    SIGNS............................................................   10
   7.9    NOT TO ENCUMBER..................................................   10
   7.10   LICENCES.........................................................   11
8. INSURANCE AND INDEMNITIES...............................................   11
   8.1    TENANT TO EFFECT INSURANCE.......................................   11
   8.2    PRODUCE POLICIES.................................................   11
   8.3    MAINTAIN INSURANCE...............................................   11

<PAGE>

                                                                              ii

   8.4    TENANT NOT TO PREJUDICE INSURANCE................................   11
   8.5    INDEMNITY........................................................   11
   8.6    RESTRICTIONS ON LIABILITY OF LANDLORD............................   12
9. REPAIR AND MAINTENANCE..................................................   12
   9.1    REPAIR BY TENANT.................................................   12
   9.2    MAINTAIN DRAINS..................................................   12
   9.3    LANDLORD MAY REPAIR IF FAILURE BY TENANT.........................   12
   9.4    ENTRY AND REPAIR BY LANDLORD.....................................   12
   9.5    KEEP CLEAN.......................................................   13
   9.6    ALTERATIONS......................................................   13
   9.7    NO STRUCTURAL REPAIR BY TENANT...................................   13
   9.8    PAINT............................................................   13
   9.9    MAKE GOOD DAMAGE.................................................   13
   9.10   NOT TO OVERLOAD THE STRUCTURE....................................   13
   9.11   PASS ON NOTICES TO LANDLORD......................................   13
10. LANDLORD'S RIGHTS AND OBLIGATIONS......................................   13
   10.1   QUIET ENJOYMENT..................................................   13
   10.2   STRUCTURAL REPAIR BY LANDLORD....................................   13
   10.3   EXECUTION OF WORKS...............................................   14
   10.4   INSPECTION BY PROSPECTIVE TENANTS OR PURCHASERS..................   14
   10.5   CHANGE OF LANDLORD...............................................   14
11. DEFAULT................................................................   14
   11.1   ESSENTIAL TERMS..................................................   14
   11.2   EVENT OF DEFAULT.................................................   14
   11.3   LANDLORD MAY TERMINATE LEASE.....................................   15
   11.4   DAMAGES FOR DEFAULT..............................................   15
   11.5   INTEREST.........................................................   15
12. TENANT'S OBLIGATIONS ON TERMINATION....................................   15
   12.1   YIELDING UP......................................................   15
   12.2   REMOVAL OF TENANT'S PROPERTY.....................................   16
   12.3   PROPERTY NOT REMOVED BY TENANT...................................   16
   12.4   KEYS.............................................................   16
13. DESTRUCTION OR DAMAGE..................................................   16
   13.1   DAMAGE OR DESTRUCTION BY FIRE OR OTHER CAUSE.....................   16
   13.2   NO ABATEMENT IF INSURANCE RENDERED INEFFECTIVE...................   16
   13.3   NON-REINSTATEMENT OF PREMISES....................................   16
14. OPTION TO RENEW........................................................   17
   14.1   TENANT'S RIGHT TO RENEW..........................................   17
   14.2   NOTICE OF EXERCISE...............................................   17
   14.3   LEASE FOR FURTHER TERM...........................................   17
   14.4   EXTENSION OF LEASE...............................................   17
   14.5   WHERE NO FURTHER TERM............................................   17
15. HOLDING OVER...........................................................   17
16. RESTRICTIONS ON REGISTRATION AND CAVEATS...............................   18
   16.1   NO REGISTRATION AND ABSOLUTE CAVEAT..............................   18
   16.2   SUBJECT TO CLAIM CAVEAT..........................................   18
17. COSTS AND EXPENSES.....................................................   18
   17.1   COSTS FOR PREPARATION............................................   18
   17.2   DEFAULT COSTS....................................................   18
   17.3   AMOUNT OF LEGAL COSTS............................................   18
   17.4   GOODS AND SERVICES TAX...........................................   18
18. NOTICES................................................................   19
   18.1   GIVING OF NOTICE.................................................   19
   18.2   TIME NOTICE GIVEN................................................   19

<PAGE>

                                                                             iii

   18.3   SERVICE OF PROCESS...............................................   19
19. STRATATITLE PROVISIONS.................................................   19
   19.1   STRATA LOT.......................................................   19
   19.2   SUBDIVISION OR STRATA PLAN.......................................   20
20. GENERAL PROVISIONS.....................................................   20
   20.1   SEVERANCE........................................................   20
   20.2   MORATORIUM.......................................................   20
   20.3   CONSENTS AND APPROVALS...........................................   20
   20.4   WAIVER AND VARIATION.............................................   20
   20.5   EXERCISE OF RIGHTS...............................................   20
   20.6   FURTHER ASSURANCES...............................................   20
   20.7   STATUTORY POWERS.................................................   20
   20.8   ENTIRE AGREEMENT.................................................   20
   20.9   NO WARRANTY......................................................   20
   20.10  SPECIAL CONDITIONS...............................................   21
   20.11  PAYMENTS.........................................................   21
   20.12  ANTECEDENT BREACHES..............................................   21
   20.13  COUNTERPARTS.....................................................   21
   20.14  CERTIFICATE......................................................   21
   20.15  TRUST PROVISIONS.................................................   21
   20.16  APPLICATION OF RETAIL SHOPS LEGISLATION..........................   21
   20.17  GOVERNING LAW....................................................   21
21. GUARANTEE AND INDEMNITY................................................   22
   21.1   GUARANTEE........................................................   22
   21.2   INDEMNITY........................................................   22
   21.3   GUARANTOR'S OBLIGATIONS NOT AFFECTED.............................   22
   21.4   GUARANTOR IS PRINCIPAL DEBTOR....................................   22
   21.5   CONTINUING OBLIGATIONS...........................................   22
   21.6   NO NOTICE OR DEMAND REQUIRED.....................................   22
   21.7   PAYMENT BY GUARANTOR ON DEMAND...................................   23
   21.8   GUARANTOR MUST NOT COMPETE WITH LANDLORD.........................   23

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