Item 1.01. Entry into a Material Definitive Agreement.
On April 8, 2011, ZBB Energy Corporation (the “Company”) entered into a Collaboration Agreement (the “Collaboration Agreement”) with Honam Petrochemical Corporation (“Honam”), a division of LOTTE Petrochemical, pursuant to which the Company and Honam agree to collaborate on the further technical development of the Company’s third generation Zinc Bromide flow battery module (the “Version 3 Battery Module”). Pursuant o the Collaboration Agreement, Honam will pay the Company a total of $3 million dollars as follows: (1) $1 million within 10 days following execution of the Collaboration Agreement; (2) $500,000 by June 30, 2011; (3) $1.2 million by October 10, 2011 and (4) $300,000 within 10 days after a V3 single stack is set up at Honam’s research and development center.
Pursuant to the Collaboration Agreement, the parties will negotiate a license agreement under which upon the completion of the collaboration project and the receipt by the Company of all payments due under the Collaboration Agreement, the Company shall grant to Honam: (1) a fully paid-up, exclusive and royalty-free license to sell and manufacture the Version 3 Battery Module in Korea and (2) non-exclusive rights to sell the Version 3 Battery Module in Japan, Thailand, Taiwan, Malaysia, Vietnam and Singapore. In connection with such non-exclusive rights, Honam will pay a royalty to the Company.