Attached files
| file | filename |
|---|---|
| 8-K - EnSync, Inc. | v208575_8k.htm |
| EX-10.1 - EnSync, Inc. | v208575_ex10-1.htm |
| EX-10.4 - EnSync, Inc. | v208575_ex10-4.htm |
| EX-10.3 - EnSync, Inc. | v208575_ex10-3.htm |
| EX-10.2 - EnSync, Inc. | v208575_ex10-2.htm |
Exhibit
10.5
NON-NEGOTIABLE
PROMISSORY
NOTE
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$1,350,000.00
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Menomonee
Falls, Wisconsin
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January
21, 2011
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The
undersigned, DCDC Acquisition Company LLC, a Wisconsin limited liability company
(“Maker”), for value received, promises to pay to Tier Electronics LLC, a
Wisconsin limited liability company (“Payee”), at such place as Payee shall from
time to time direct, the principal sum of ONE MILLION THREE HUNDRED FIFTY
THOUSAND AND 00/100 DOLLARS ($1,350,000.00) plus interest on the outstanding
principal balance accruing from the date hereof at a fixed annual interest rate
equal to eight percent (8%), in lawful money of the United States of
America. Interest shall be computed on the basis of a 360-day
year.
The
principal balance and accrued interest hereunder shall be due and payable in
accordance with the following schedule: (i) all interest accrued hereunder
during the previous one (1) month period shall be due and payable on the one (1)
month anniversary of the date hereof and on each monthly
anniversary of the date hereof thereafter until the third (3rd)
anniversary of the date hereof, which is the date the last interest payment
shall be due hereunder; and (ii) the sum of Four Hundred Fifty Thousand and
00/100 Dollars ($450,000.00) shall be due and payable on the first (1st)
anniversary of the date hereof and on each anniversary of the date hereof
thereafter until the third (3rd)
anniversary of the date hereof, which is the date the last principal payment
shall be due hereunder. If any date for the payment of principal and/or
interest hereunder shall be a Saturday, Sunday or legal holiday in the United
States, then such payment shall be made on the first regular business day
immediately following such date.
Notwithstanding
the foregoing, in the event that (i) Payee or current and/or former members of
Payee are obligated to pay any amount of income taxes relating solely and
exclusively to income from operations of Payee for Payee’s tax year ending
December 31, 2010, and (ii) Payee has not previously made tax distributions to
its members for the estimated payment of such amount, Maker shall, within five
(5) business days after actual receipt of written notice from Payee containing
reasonably detailed evidence of the amount of such income tax obligations of
Payee or Payee’s current and/or former members (after giving effect to any
applicable state or federal deductions), make a prepayment hereunder in the
aggregate amount of such income tax obligations in accordance with the
prepayment provisions set forth below.
Further
notwithstanding the foregoing, if at any time prior to the payment in full of
the unpaid principal balance and accrued interest hereunder the federal capital
gains rate applicable to Payee is greater than fifteen percent (15%) and/or the
State of Wisconsin capital gains rate applicable to Payee is greater than five
and 425/1,000 percent (5.425%), then the principal amount hereunder (retroactive
to the date hereof) shall be increased by an amount equal to the product of (i)
the aggregate amount of federal and state capital gain realized by Payee in
connection with the transactions contemplated by the Purchase Agreement (as
defined below), multiplied by (ii) the difference between (A) the combined
federal and State of Wisconsin capital gains rate as of the date of calculation,
minus (B) the combined federal and State of Wisconsin capital gains rate of
twenty and 425/1,000 percent (20.425%) as of the date hereof. Any
adjustment to the principal amount hereunder pursuant to the terms and
conditions of this paragraph shall be effected by increasing the amount of the
last payment due hereunder without affecting the next regularly-scheduled
payment(s) hereunder. For purposes of this paragraph, “Payee” shall
include, without limitation, Jeffrey Reichard, the sole member of Tier
Electronics LLC, or such other person who bears the ultimate tax liability on
such capital gains. It is the intent of this paragraph to benefit the
ultimate taxpayer on such capital gains against any increase in the capital
gains rates applicable to Payee during the period when this Note is
outstanding.
This Note
is secured by the pledge by Maker of certain collateral pursuant to that certain
Collateral Pledge Agreement dated as of the date hereof between Maker and
Payee.
Maker
reserves and shall have the right at any time without notice, bonus or penalty
to prepay all or any portion of the unpaid principal balance and accrued
interest hereunder. Maker may require presentation of this Note for
endorsement of the prepayment in case prepayment is in part, or for surrender in
case prepayment is in full. Any partial prepayment shall first be applied
to accrued interest and then to the payment of principal.
Maker
shall be in default on this Note upon the occurrence of any of the
following:
(a) Any
payment of principal or interest is not made when due, and such nonpayment
continues for fifteen (15) days following written notice by Payee to
Maker.
(b) Maker
becomes the subject of bankruptcy or insolvency proceedings that are not
dismissed within thirty (30) days.
(c) A
Maker Parent Change in Control occurs. “Maker Parent Change in Control”
means any transaction or series of transactions resulting in any of the
following: (i) the acquisition by one or more Unrelated Purchasers
(as defined below) of all or substantially all of the assets of Maker Parent (as
defined below); (ii) the acquisition of equity interests constituting more than
fifty percent (50%) of the issued and outstanding equity interests of Maker
Parent by one or more Unrelated Purchasers, including, without limitation,
pursuant to a purchase of stock, plan of merger, share exchange or
consolidation; or (iii) a combination or plan of merger involving Maker Parent
in which one or more Unrelated Purchasers hold more than fifty percent (50%) of
the economic and voting interests of the surviving entity. “Unrelated
Purchaser” means any person or entity other than Maker Parent or an Affiliate of
Maker Parent. “Maker Parent” means ZBB Energy Corporation, the owner of
all of the membership interests of Maker. “Affiliate” means, as to any
entity, any person or other entity which, directly or indirectly, is in control
of, is controlled by, or is under common control with, such entity. A
person or entity shall be deemed to control another entity if the controlling
person or entity possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of the other entity, whether
through the ownership of voting securities, by contract or
otherwise.
2
(d) Maker
Parent ceases to hold at least eighty percent (80%) of the economic and voting
interests of Maker.
(e) Maker
is in default, and such default continues for five (5) business days following
written notice by Payee to Maker, on the performance of any covenant of Maker
contained in Section 9.1(a) or Section 9.1(b) of the Purchase Agreement (as
defined below).
Upon a
default, the unpaid principal balance and all accrued interest hereunder shall,
at the option of Payee and without notice, mature and become immediately due and
payable. In the event that Payee engages an attorney or collection agency
to assist with the collection of any past due amounts hereunder, Maker shall
reimburse Payee for all reasonable fees and expenses incurred by Payee by reason
thereof.
This Note
is issued pursuant to that certain Asset Purchase Agreement dated as of the date
hereof by and among Maker, Payee, Jeffrey Reichard and ZBB Energy Corporation
(the “Purchase Agreement”). The Purchase Agreement contains provisions for
set-off by Maker against amounts due under this Note under certain circumstances
specified in the Purchase Agreement. Reference is made to the
Purchase Agreement for relevant provisions which bear upon this Note. Notwithstanding anything
contained herein to the contrary, any set-off by Maker of amounts due under this
Note permitted by the terms of the Purchase Agreement shall not be deemed to be
a default by Maker hereunder, but any set-off by Maker not permitted by the
terms of the Purchase Agreement shall be deemed to be a default by Maker
hereunder.
No delay
or omission on the part of Payee in exercising any right or option given to
Payee shall impair such right or option or be considered as a waiver thereof or
acquiescence in any default hereunder.
Maker
hereby waives presentment, demand, notice of dishonor and protest.
This Note
may be amended only by a writing signed by the parties to be
charged.
This Note
shall be construed and enforced in accordance with the laws of the State of
Wisconsin, without reference to choice of law or conflicts of law
principles.
During
any period of default by Maker under this Note, the entire
remaining principal amount and accrued interest under this
Note during such default period will accrue interest at a rate equal
to the lesser of (i) four percent (4%) plus the interest rate that would have
otherwise been charged hereunder, or (ii) the maximum rate permitted by
applicable law.
[Signature page
follows]
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MAKER:
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DCDC
ACQUISITION COMPANY LLC
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By:
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/s/ Eric C. Apfelbach
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Eric
C. Apfelbach, President
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and
Chief Executive Officer
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Signature
page to Note