SECURITY AGREEMENT
Exhibit
10.2
Execution
version 11/18/10
THIS
SECURITY AGREEMENT, dated as of November 18, 2010 (this “Agreement”),
is by and between THINK NORTH AMERICA, INC, a Delaware Corporation (the “Debtor”),
, and ENER1, INC., a Florida corporation (the “Lender”).
The Lender and its endorsees, transferees and assigns are sometimes collectively
referred to herein as the “Secured
Parties”.
WITNESSETH:
WHEREAS,
it is a condition to the obligation of the Lender in the Revolving Line of
Credit Agreement dated November 18, 2010 (the “Line of Credit
Agreement”), by and between the Lender and Think Holdings AS (the “Parent Company” or the “Borrower”) that the Debtor
execute and deliver to the Lender this Agreement; and
WHEREAS, the Debtor is an indirect
subsidiary of the Parent Company and will directly or indirectly benefit from
the extension of credit to the Borrower represented by the advancement of funds
contemplated by the Line of Credit Agreement.
NOW,
THEREFORE, in consideration of the agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. CERTAIN
DEFINITIONS.
Capitalized
terms used herein and not otherwise defined shall have the meanings given to
them in the Line of Credit Agreement. Terms used herein that are
defined in Article 9 of the UCC but not otherwise defined in this Agreement
(such as “account”,
“chattel
paper”, “commercial tort
claim”, “deposit
account”, “document”,
“equipment”,
“fixtures”,
“general
intangibles”, “goods”,
“instruments”,
“inventory”,
“investment
property”, “letter-of-credit
rights”, “proceeds”
and “supporting
obligations”) shall have the respective meanings given such terms in
Article 9 of the UCC. As used in this Agreement, the following terms shall have
the meanings set forth in this Section
1.
“Collateral”
means the collateral in which the Secured Parties are granted a security
interest by this Agreement and which shall include all assets and properties of
the Debtor, including the following personal property presently owned or
hereafter acquired by the Debtor, wherever situated, and all additions and
accessions thereto and all substitutions and replacements thereof, and all
proceeds, products and accounts thereof, including, without limitation, all
proceeds from the sale or transfer of the Collateral and of insurance covering
the same and of any tort claims in connection therewith, and all dividends,
interest, cash, notes, securities, equity interest or other property at any time
and from time to time acquired, receivable or otherwise distributed in respect
of, or in exchange for, any or all of the Pledged Securities (as defined
below):
(i) All
goods, including, without limitation, (A) all machinery, equipment, computers,
motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special and
general tools, fixtures, test and quality control devices and other equipment of
every kind and nature and wherever situated, together with all documents of
title and documents representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes for any of the
foregoing and all other items used and useful in connection with the Debtor’s
businesses and all improvements thereto; and (B) all inventory;
(ii) All
contract rights and other general intangibles, including, without limitation,
all partnership interests, membership interests, stock or other securities,
rights under any of the Organizational Documents, agreements related to the
Pledged Securities, licenses, distribution and other agreements, computer
software (whether “off-the-shelf”, licensed from any third party or developed by
the Debtor), computer software development rights, leases, franchises, customer
lists, quality control procedures, grants and rights, goodwill, trademarks,
service marks, trade styles, trade names, patents, patent applications,
copyrights, Intellectual Property, and income tax refunds;
(iii) All
accounts, together with all instruments, all documents of title representing any
of the foregoing, all rights in any merchandising, goods, equipment, motor
vehicles and trucks which any of the same may represent, and all right, title,
security and guaranties with respect to each account, including any right of
stoppage in transit;
(iv) All
documents, letter-of-credit rights, instruments and chattel paper;
(v) All
commercial tort claims;
(vi) All
deposit accounts and all cash (whether or not deposited in such deposit
accounts);
(vii) All
investment property;
(viii) All
supporting obligations;
(ix) All
files, records, books of account, business papers, and computer programs;
and
(x)
the products and proceeds of all of the foregoing Collateral set forth in clauses
(i)-(ix) above.
Without
limiting the generality of the foregoing, the term “Collateral”
shall include all investment property and general intangibles respecting
ownership and/or other equity interests in the Debtor, and any other shares of
capital stock and/or other equity interests of any other direct or indirect
subsidiary of the Debtor obtained in the future, in each case, all certificates
representing such shares and/or equity interests and, in each case, all rights,
options, warrants, stock, other securities and/or equity interests that may
hereafter be received, receivable or distributed in respect of, or exchanged
for, any of the foregoing (all of the foregoing being referred to herein as the
“Pledged
Securities”) and all rights arising under or in connection with the
Pledged Securities, including, but not limited to, all dividends, interest and
cash.
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Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any
asset which, in the event of an assignment, becomes void by operation of
applicable law or the assignment of which is otherwise prohibited by applicable
law (in each case to the extent that such applicable law is not overridden by
Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law);
provided, however, that
to the extent permitted by applicable law, this Agreement shall create a valid
security interest in such asset and, to the extent permitted by applicable law,
this Agreement shall create a valid security interest in the proceeds of such
asset.
“Event of
Default” means the occurrence of either of the following: (i)
an Event of Default (as defined in the Line of Credit Agreement); or (ii) any
provision of this Agreement shall at any time for any reason be declared to be
null and void, or the validity or enforceability thereof shall be contested by
the Debtor, or a proceeding shall be commenced by the Debtor, or by any
governmental authority having jurisdiction over the Debtor, seeking to establish
the invalidity or unenforceability thereof, or the Debtor shall deny that the
Debtor has any liability or obligation purported to be created under this
Agreement.
“Intellectual
Property” means the collective reference to all existing rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, (ii) all letters patent of
the United States, any other country or any political subdivision thereof, all
reissues and extensions thereof, and all applications for letters patent of the
United States or any other country and all divisions, continuations and
continuations-in-part thereof, (iii) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade dress,
service marks, logos, domain names and other source or business identifiers, and
all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise, and all
common law rights related thereto, (iv) all trade secrets arising under the laws
of the United States, any other country or any political subdivision thereof,
(v) all rights to obtain any reissues, renewals or extensions of the foregoing,
(vi) all licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.
“Necessary
Endorsement” shall mean undated stock powers endorsed in blank or other
proper instruments of assignment duly executed and such other instruments or
documents as the Secured Parties may reasonably request.
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“Obligations”
means all of the Debtor’s obligations under this Agreement and all of the
Borrower’s obligations under the Line of Credit Agreement, in each case, whether
now or hereafter existing, voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or extinguished and
later increased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from any of the Secured Parties as a
preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to
time. Without limiting the generality of the foregoing, the term
“Obligations”
shall include, without limitation: (i) principal of, and interest on the Credit
Line extended pursuant to the Line of Credit Agreement; (ii) any and all other
fees, indemnities, costs, obligations and liabilities of the Debtor from time to
time under or in connection with this Agreement or the Line of Credit Agreement;
and (iii) all amounts (including, without limitation, post-petition interest) in
respect of the foregoing that would be payable but for the fact that the
obligations to pay such amounts are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving the
Debtor.
“Organizational
Documents” means with respect to an entity, the documents by which such
entity was organized (such as a certificate of incorporation, certificate of
limited partnership or articles of organization, and including, without
limitation, any certificates of designation for preferred stock or other forms
of preferred equity) and which relate to the internal governance of such entity
(such as bylaws, a partnership agreement or an operating, limited liability or
members agreement).
“UCC” means
the Uniform Commercial Code of the State of New York and/or any other applicable
law of any state or states which has jurisdiction with respect to all, or any
portion of, the Collateral or this Agreement, from time to time. It
is the intent of the parties that defined terms in the UCC should be construed
in their broadest sense so that the term “Collateral”
will be construed in its broadest sense. Accordingly if there are,
from time to time, changes to defined terms in the UCC that broaden the
definitions, they are incorporated herein and if existing definitions in the UCC
are broader than the amended definitions, the existing ones shall be
controlling.
2. GRANT OF
SECURITY INTEREST.
As an
inducement for the Secured Parties to advance funds under the Line of Credit
Agreement and to secure the complete and timely payment, performance and
discharge in full, as the case may be, of all of the Obligations, the Debtor
hereby unconditionally and irrevocably pledges, grants and hypothecates to the
Secured Parties, a continuing security interest in and to, a lien upon and a
right of set-off against all of their respective right, title and interest of
whatsoever kind and nature in and to, the Collateral (the “Security
Interest”). The Security Interest granted hereunder is a
first priority lien and security interest.
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3. DELIVERY
OF CERTAIN COLLATERAL.
Contemporaneously
or prior to the execution of this Agreement, the Debtor shall deliver or cause
to be delivered to the Secured Parties any and all certificates of title and
other documents and instruments representing or evidencing the Debtor’s
ownership interests in the 210 Think City A-306 electric vehicles (excluding
batteries), and having a value of US$23,500 per unit, located at Elkhart,
Indiana, in each case, together with all Necessary
Endorsements. Schedule A lists each of these 210 vehicles along with
their vehicle identification numbers. The Debtor represent that all
of the information contained in Schedule A is true, complete and
accurate.
4. REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS OF THE DEBTOR.
The
Debtor represents and warrants to, and covenants and agrees with the Secured
Parties, as follows:
4.1 Good Standing; Due
Authorization; Enforceability.
(a) The
Debtor is duly organized and in good standing in the jurisdiction of its
formation. The Debtor shall at all times preserve and keep in full
force and effect its valid existence and good standing and any rights and
franchises material to its business.
(b) The
Debtor has the requisite corporate, partnership, limited liability company or
other power and authority to enter into this Agreement and otherwise to
carry out its obligations hereunder. The execution, delivery and performance by
the Debtor of this Agreement and the filings contemplated therein have been duly
authorized by all necessary action on the part of the Debtor and no further
action is required by the Debtor. This Agreement has been duly
executed and delivered by the Debtor.
(c) This
Agreement constitutes the legal, valid and binding obligation of the Debtor,
enforceable against the Debtor in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws of general application relating to or affecting
the rights and remedies of creditors and by general principles of
equity.
4.2 No
Conflicts. The execution, delivery and performance
of this Agreement by the Debtor do not (i) violate any of the provisions of any
Organizational Documents of the Debtor or any judgment, decree, order or award
of any court, governmental body or arbitrator or any applicable law, rule or
regulation applicable to the Debtor or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing the
Debtor’s debt or otherwise) or other understanding to which the Debtor is a
party or by which any property or asset of the Debtor is bound or
affected. No consent (including, without limitation, from
stockholders or creditors of the Debtor) is required for the Debtor to enter
into and perform its obligations hereunder.
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4.3 Debtor Information;
Validity, Perfection and Maintenance of Security Interests.
(a) The
Debtor shall not change its name, type of organization, jurisdiction of
organization, organizational identification number (if it has one), legal or
corporate structure, or identity, or add any new fictitious name unless it
provides at least 30 days’ prior written notice to the Secured Parties of such
change and, at the time of such written notification, the Debtor provides any
financing statements or fixture filings necessary to perfect and continue to
perfect the perfected Security Interest granted and evidenced by this
Agreement.
(b) This
Agreement creates in favor of the Secured Parties a valid security interest in
the Collateral, securing the payment and performance of the
Obligations. Upon filing of UCC-1 financing statements with the
secretary of state’s office of the state in which the Debtor is organized (collectively,
the “Financing
Statements”), and payment of the applicable filing fees, all security
interests created hereunder in any Collateral which may be perfected by filing
UCC financing statements shall have been duly perfected. No consent
of any third parties and no authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for (i) the execution, delivery and performance of this Agreement, (ii)
the creation or perfection of the Security Interests created hereunder in the
Collateral, or (iii) the enforcement of the rights of the Secured Parties
hereunder.
(c) The
Debtor hereby authorizes the Secured Parties, or any of them, to file the
Financing Statements and any other financing statements under the UCC with
respect to the Security Interest with the proper filing and recording agencies
in any jurisdiction deemed proper by them. The Debtor shall, at the
Debtor’s sole cost and expense, promptly execute and/or deliver to the Secured
Parties such further deeds, mortgages, assignments, security agreements,
financing statements or other instruments, documents, certificates and
assurances and take such further action as the Secured Parties may from time to
time request and may in their sole discretion deem necessary to perfect, protect
or enforce its security interest in the Collateral including, without
limitation, if applicable, the execution and delivery of a separate security
agreement with respect to the Debtor’s Intellectual Property in which the
Secured Parties have been granted a security interest hereunder, substantially
in a form acceptable to the Secured Parties.
(d) The
Debtor shall at all times maintain the liens and Security Interest provided for
hereunder as valid and perfected liens and security interests in the Collateral
in favor of the Secured Parties until this Agreement and the Security Interest
hereunder shall be terminated pursuant to Section
13. The Debtor hereby agrees to defend the same against the
claims of any and all persons and entities. The Debtor shall obtain
and furnish to the Secured Parties from time to time, upon demand, such releases
and/or subordinations of claims and liens which may be required to maintain the
priority of the Security Interest hereunder.
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4.4 Collateral.
(a) The
Debtor is the sole owner of the Collateral (except for non-exclusive licenses
granted by the Debtor in the ordinary course of business), free and clear of any
liens, security interests, encumbrances, rights or claims, and are fully
authorized to grant the Security Interest. There has been no adverse
decision to the Debtor’s claim of ownership rights in or exclusive rights to use
the Collateral in any jurisdiction or to the Debtor’s right to keep and maintain
such Collateral in full force and effect, and there is no proceeding involving
said rights pending or, to the best knowledge of the Debtor, threatened before
any court, judicial body, administrative or regulatory agency, arbitrator or
other governmental authority.
(b) The
Debtor shall keep and preserve its equipment, inventory and other tangible
Collateral in good condition, repair and order. The Debtor shall take
all steps reasonably necessary to diligently pursue and seek to preserve,
enforce and collect any rights, claims, causes of action and accounts receivable
in respect of the Collateral.
(c) There
is not on file in any governmental or regulatory authority, agency or recording
office an effective financing statement, security agreement, license or transfer
or any notice of any of the foregoing (other than those that will be filed in
favor of the Secured Parties pursuant to this Agreement) covering or affecting
any of the Collateral. So long as this Agreement shall be in effect,
the Debtor shall not execute and shall not knowingly permit to be on file in any
such office or agency any such financing statement or other document or
instrument (except to the extent filed or recorded in favor of the Secured
Parties pursuant to the terms of this Agreement).
(d) The
Debtor shall, within ten days of obtaining knowledge thereof, advise the Secured
Parties promptly, in sufficient detail, of any substantial change in the
Collateral, and of the occurrence of any event which would have a material
adverse effect on the value of the Collateral or on the Secured Parties’
security interest therein. The Debtor shall permit the Secured
Parties and their representatives and agents to inspect the Collateral at any
time, and to make copies of records pertaining to the Collateral as may be
requested by a Secured Party from time to time.
(e) All
information heretofore, herein or hereafter supplied to the Secured Parties by
or on behalf of the Debtor with respect to the Collateral is accurate and
complete in all material respects as of the date furnished.
5. EFFECT
OF PLEDGE ON CERTAIN RIGHTS.
If any of
the Collateral subject to this Agreement consists of nonvoting equity or
ownership interests (regardless of class, designation, preference or rights)
that may be converted into voting equity or ownership interests upon the
occurrence of certain events (including, without limitation, upon the transfer
of all or any of the other stock or assets of the issuer), it is agreed that the
pledge of such equity or ownership interests pursuant to this Agreement or the
enforcement of any of the Secured Parties’ rights hereunder shall not be deemed
to be the type of event which would trigger such conversion rights
notwithstanding any provisions in the Organizational Documents or agreements to
which the Debtor or any of the Collateral is subject or to which the Debtor is
party.
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6. DUTY TO
HOLD IN TRUST.
6.1 Cash and Payment
Obligations. Upon the occurrence of an Event of Default and at
any time thereafter, the Debtor shall, upon receipt of any revenue, income,
dividend, interest or other sums subject to the Security Interest, whether
payable pursuant to the Line of Credit Agreement or otherwise, or of any check,
draft, note, trade acceptance or other instrument evidencing an obligation to
pay any such sum, hold the same in trust for and on behalf of and for the
benefit of the Secured Parties, and shall forthwith endorse and transfer any
such sums or instruments, or both (to the extent permitted by law), to the
Secured Parties for application to the satisfaction of the
Obligations.
6.2 Securities and Other
Assets. If the Debtor shall become entitled to receive or
shall receive any securities or other property (including, without limitation,
shares of Pledged Securities or instruments representing Pledged Securities
acquired after the date hereof, or any options, warrants, rights or other
similar property or certificates representing a dividend, or any distribution in
connection with any recapitalization, reclassification or increase or reduction
of capital, or issued in connection with any reorganization of any of its direct
or indirect subsidiaries) in respect of the Pledged Securities (whether as an
addition to, in substitution of, or in exchange for, such Pledged Securities or
otherwise), the Debtor agrees to (i) accept the same as the agent of the Secured
Parties; (ii) hold the same in trust on behalf of and for the benefit of the
Secured Parties; and (iii) deliver any and all certificates or instruments
evidencing the same to the Secured Parties, on or before the close of business
on the fifth business day following the receipt thereof by the Debtor, in the
exact form received together with the Necessary Endorsements, to be held by the
Secured Parties subject to the terms of this Agreement as
Collateral.
7. RIGHTS
AND REMEDIES UPON DEFAULT.
7.1 Scope of Rights and
Remedies. Upon the occurrence of any Event of Default and at
any time thereafter, the Secured Parties, acting through any agent appointed by
them for such purpose, shall have the right to exercise all of the remedies
conferred hereunder and under the Line of Credit Agreement, and the Secured
Parties shall have all the rights and remedies of a secured party under the UCC.
Without limitation, the Secured Parties shall have the following rights and
powers:
(a) The
Secured Parties shall have the right to take possession of the Collateral and,
for that purpose, enter, with the aid and assistance of any person, any premises
where the Collateral, or any part thereof, is or may be placed and remove the
same, and the Debtor shall assemble the Collateral and make it available to the
Secured Parties at places which the Secured Parties shall reasonably select,
whether at the Debtor’s premises or elsewhere, and make available to the Secured
Parties, without rent, all of the Debtor’s premises and facilities for the
purpose of the Secured Parties taking possession of, removing or putting the
Collateral in saleable or disposable form.
(b) Upon
notice to the Debtor by the Secured Parties, all rights of the Debtor to
exercise the voting and other consensual rights which it would otherwise be
entitled to exercise and all rights of the Debtor to receive the dividends and
interest which it would otherwise be authorized to receive and retain, shall
cease. Upon such notice, the Secured Parties shall have the right to
receive any interest, cash dividends or other payments on the Collateral and, at
the option of the Secured Parties, to exercise in the Secured Parties’
discretion all voting rights pertaining thereto. Without limiting the
generality of the foregoing, the Secured Parties shall have the right (but not
the obligation) to exercise all rights with respect to the Collateral as if it
were the sole and absolute owner thereof, including, without limitation, to vote
and/or to exchange, at its sole discretion, any or all of the Collateral in
connection with a merger, reorganization, consolidation, recapitalization or
other readjustment concerning or involving the Collateral or a Debtor or any of
its direct or indirect subsidiaries.
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(c) The
Secured Parties shall have the right to operate the business of the Debtor using
the Collateral and shall have the right to assign, sell, lease or otherwise
dispose of and deliver all or any part of the Collateral, at public or private
sale or otherwise, either with or without special conditions or stipulations,
for cash or on credit or for future delivery, in such parcel or parcels and at
such time or times and at such place or places, and upon such terms and
conditions as the Secured Parties may deem commercially reasonable, all without
(except as shall be required by applicable statute and cannot be waived)
advertisement or demand upon or notice to the Debtor or right of redemption of
the Debtor, which are hereby expressly waived. Upon each such sale,
lease, assignment or other transfer of Collateral, the Secured Parties may,
unless prohibited by applicable law which cannot be waived, purchase all or any
part of the Collateral being sold, free from and discharged of all trusts,
claims, right of redemption and equities of the Debtor, which are hereby waived
and released.
(d) The
Secured Parties shall have the right (but not the obligation) to notify any
account debtors and any obligors under instruments or accounts to make payments
directly to the Secured Parties and to enforce the Debtor’s rights against such
account debtors and obligors.
(e) The
Secured Parties may (but are not obligated to) direct any financial intermediary
or any other person or entity holding any investment property to transfer the
same to the Secured Parties or their designee.
(f) The
Secured Parties may (but are not obligated to) transfer any or all Intellectual
Property registered in the name of the Debtor at the United States Patent and
Trademark Office and/or Copyright Office into the name of the Secured Parties or
any designee or any purchaser of any Collateral.
7.2 Disposition of
Collateral. The Secured Parties may comply with any applicable
law in connection with a disposition of Collateral and such compliance will not
be considered adversely to affect the commercial reasonableness of any sale of
the Collateral. The Secured Parties may sell the Collateral without
giving any warranties and may specifically disclaim such
warranties. If the Secured Parties sell any of the Collateral on
credit, the Debtor will only be credited with payments actually made by the
purchaser. In addition, the Debtor waives any and all rights that it
may have to a judicial hearing in advance of the enforcement of any of the
Secured Parties’ rights and remedies hereunder, including, without limitation,
their right following an Event of Default to take immediate possession of the
Collateral and to exercise their rights and remedies with respect
thereto.
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7.3 License to Use Intellectual
Property. For the purpose of enabling the Secured Parties to
further exercise rights and remedies under this Section 7
or elsewhere provided by agreement or applicable law, the Debtor hereby grants
to the Secured Parties an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to the Debtor) to use, license or
sublicense following an Event of Default, any Intellectual Property now owned or
hereafter acquired by the Debtor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof.
8. APPLICATIONS
OF PROCEEDS.
The
proceeds of any such sale, lease or other disposition of the Collateral
hereunder shall be applied first, to the expenses of retaking, holding, storing,
processing and preparing for sale, selling, and the like (including, without
limitation, any taxes, fees and other costs incurred in connection therewith) of
the Collateral, to the reasonable attorneys’ fees and expenses incurred by the
Secured Parties in enforcing their rights hereunder and in connection with
collecting, storing and disposing of the Collateral, and then to satisfaction of
the Obligations to the Secured Parties, and to the payment of any other amounts
required by applicable law, after which the Secured Parties shall pay to the
Debtor any surplus proceeds. If, upon the sale, license or other
disposition of the Collateral, the proceeds thereof are insufficient to pay all
amounts to which the Secured Parties are legally entitled, the Debtor will be
liable for the deficiency, together with interest thereon, at an interest rate
equal to the lower of 18% and the maximum rate permitted by applicable law (the
“Default
Rate”), and the reasonable fees of any attorneys employed by the Secured
Parties to collect such deficiency. To the extent permitted by
applicable law, the Debtor waives all claims, damages and demands against the
Secured Parties arising out of the repossession, removal, retention or sale of
the Collateral, unless due solely to the gross negligence or willful misconduct
of the Secured Parties as determined by a final judgment (not subject to further
appeal) of a court of competent jurisdiction.
9. SECURITIES
LAW PROVISION.
The
Debtor recognizes that the Secured Parties may be limited in their ability to
effect a sale to the public of all or part of the Pledged Securities by reason
of certain prohibitions in the Securities Act of 1933, as amended, or other
foreign, federal or state securities laws (collectively, the “Securities
Laws”), and may be compelled to resort to one or more sales to a
restricted group of purchasers who may be required to agree to acquire the
Pledged Securities for their own account, for investment and not with a view to
the distribution or resale thereof. The Debtor agrees that sales so
made may be at prices and on terms less favorable than if the Pledged Securities
were sold to the public, and that the Secured Parties has no obligation to delay
the sale of any Pledged Securities for the period of time necessary to register
the Pledged Securities for sale to the public under the Securities
Laws. The Debtor shall cooperate with the Secured Parties in their
attempt to satisfy any requirements under the Securities Laws (including,
without limitation, registration thereunder if requested by the Secured Parties)
applicable to the sale of the Pledged Securities by the Secured
Parties.
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10. COSTS
AND EXPENSES.
The
Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses
incurred in connection with any filing required hereunder, including, without
limitation, any financing statements pursuant to the UCC, continuation
statements, partial releases and/or termination statements related thereto or
any expenses of any searches reasonably required by the Secured
Parties. The Debtor shall also pay all other claims and charges which
in the reasonable opinion of the Secured Parties might prejudice, imperil or
otherwise affect the Collateral or the Security Interest therein. The
Debtor will also, upon demand, pay to the Secured Parties the amount of any and
all reasonable expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, which the Secured Parties may incur in
connection with (i) the enforcement of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Collateral, or (iii) the exercise or enforcement of any of the rights of
the Secured Parties under the Line of Credit Agreement or this
Agreement. Until so paid, any fees payable hereunder shall be added
to the principal amount of the Advances under the Line of Credit Agreement and
shall bear interest at the Default Rate.
11. RESPONSIBILITY
FOR COLLATERAL.
The
Debtor assume all liabilities and responsibility in connection with all
Collateral, and the Obligations shall in no way be affected or diminished by
reason of the loss, destruction, damage or theft of any of the Collateral or its
unavailability for any reason. The Secured Parties agree to act in
accordance with commercially reasonable standards and the
UCC. Without limiting the generality of the foregoing, (a) no Secured
Party (i) has any duty (either before or after an Event of Default) to collect
any amounts in respect of the Collateral or to preserve any rights relating to
the Collateral, or (ii) has any obligation to clean-up or otherwise prepare the
Collateral for sale, and (b) the Debtor shall remain obligated and liable under
each contract or agreement included in the Collateral to be observed or
performed by the Debtor thereunder. No Secured Party shall have any obligation
or liability under any such contract or agreement by reason of or arising out of
this Agreement or the receipt by any Secured Party of any payment relating to
any of the Collateral, nor shall any Secured Party be obligated in any manner to
perform any of the obligations of the Debtor under or pursuant to any such
contract or agreement, to make inquiry as to the nature or sufficiency of any
payment received by any Secured Party in respect of the Collateral or as to the
sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to any Secured Party or to which it may be entitled at any time or
times.
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12. SECURITY
INTEREST ABSOLUTE.
All
rights of the Secured Parties and all obligations of the Debtor hereunder, shall
be absolute and unconditional, irrespective of: (a) any lack of validity or
enforceability of this Agreement, the Line of Credit Agreement or any agreement
entered into in connection with the foregoing, or any portion hereof or thereof;
(b) any change in the time, manner or place of payment or performance of, or in
any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Line of Credit Agreement or
any other agreement entered into in connection with the foregoing; (c) any
exchange, release or nonperfection of any of the Collateral, or any release or
amendment or waiver of or consent to departure from any other collateral for, or
any guaranty, or any other security, for all or any of the Obligations; (d) any
action by any of the Secured Parties to obtain, adjust, settle and cancel in its
sole discretion any insurance claims or matters made or arising in connection
with the Collateral; or (e) any other circumstance which might otherwise
constitute any legal or equitable defense available to the Debtor, or a
discharge of all or any part of the Security Interest granted
hereby. Until the Obligations shall have been paid and performed in
full, the rights of the Secured Parties shall continue even if the Obligations
are barred for any reason, including, without limitation, the running of the
statute of limitations or bankruptcy. The Debtor expressly waives
presentment, protest, notice of protest, demand, notice of nonpayment and demand
for performance. In the event that at any time any transfer of any
Collateral or any payment received by the Secured Parties hereunder shall be
deemed by final order of a court of competent jurisdiction to have been a
voidable preference or fraudulent conveyance under the bankruptcy or insolvency
laws of the United States or other country or political subdivision, or shall be
deemed to be otherwise due to any party other than the Secured Parties, then, in
any such event, each Debtor’s obligations hereunder shall survive cancellation
of this Agreement, and shall not be discharged or satisfied by any prior payment
thereof and/or cancellation of this Agreement, but shall remain a valid and
binding obligation enforceable in accordance with the terms and provisions
hereof. The Debtor waives all right to require any Secured Party to
proceed against any other person or entity or to apply any Collateral which the
Secured Parties may hold at any time, or to marshal assets, or to pursue any
other remedy. Each Debtor waives any defense arising by reason of the
application of the statute of limitations to any obligation secured
hereby.
13. TERM OF
AGREEMENT.
This
Agreement and the Security Interest shall terminate on the date on which all
payments under the Line of Credit Agreement have been indefeasibly paid in full
and all other Obligations have been paid or discharged; provided, however, that all
indemnities of the Debtor contained in this Agreement shall survive and remain
operative and in full force and effect regardless of the termination of this
Agreement.
14. POWER OF
ATTORNEY.
The
Debtor authorizes the Lender, and does hereby make, constitute and appoint the
Lender and its officers, agents, successors or assigns with full power of
substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in
the name of the various Secured Parties or the Debtor, to, after the occurrence
and during the continuance of an Event of Default, (i) endorse any note, checks,
drafts, money orders or other instruments of payment (including payments payable
under or in respect of any policy of insurance) in respect of the Collateral
that may come into possession of the Secured Parties; (ii) to sign and endorse
any financing statement pursuant to the UCC or any invoice, freight or express
xxxx, xxxx of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts, and other
documents relating to the Collateral; (iii) to pay or discharge taxes, liens,
security interests or other encumbrances at any time levied or placed on or
threatened against the Collateral; (iv) to demand, collect, receipt for,
compromise, settle and xxx for monies due in respect of the Collateral; (v) to
transfer any Intellectual Property or provide licenses respecting any
Intellectual Property; and (vi) generally, at the option of the Lender, and at
the expense of the Debtor, at any time, or from time to time, to execute and
deliver any and all documents and instruments and to do all acts and things
which the Lender deems necessary to protect, preserve and realize upon the
Collateral and the Security Interest granted therein in order to effect the
intent of this Agreement and the Line of Credit Agreement all as fully and
effectually as the Debtor might or could do; and the Debtor hereby ratifies all
that said attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney is coupled with an interest and shall
be irrevocable for the term of this Agreement and thereafter as long as any of
the Obligations shall be outstanding. The designation set forth
herein shall be deemed to amend and supersede any inconsistent provision in the
Organizational Documents or other documents or agreements to which the
Debtor or any of the Pledged Securities is subject or to which the
Debtor is a party. Without limiting the generality of the foregoing,
after the occurrence and during the continuance of an Event of Default, the
Lender is specifically authorized to execute and file any applications for or
instruments of transfer and assignment of any patents, trademarks, copyrights or
other Intellectual Property with the United States Patent and Trademark Office
and the United States Copyright Office. This power of attorney is coupled with
an interest and shall be irrevocable for the term of this Agreement and
thereafter as long as any of the Obligations shall be outstanding.
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15. OTHER
SECURITY.
To the
extent that the Obligations are now or hereafter secured by property other than
the Collateral or by the guarantee, endorsement or property of any other person,
firm, corporation or other entity, then the Secured Parties shall have the
right, in their sole discretion, to pursue, relinquish, subordinate, modify or
take any other action with respect thereto, without in any way modifying or
affecting any of the Secured Parties’ rights and remedies
hereunder.
16. INDEMNIFICATION.
The
Debtor shall indemnify, reimburse and hold harmless each of the Secured Parties
and their respective partners, members, shareholders, officers, directors,
employees and agents (collectively, “Indemnitees”)
from and against any and all losses, claims, liabilities, damages, penalties,
suits, costs and expenses, of any kind or nature, (including fees relating to
the cost of investigating and defending any of the foregoing) imposed on,
incurred by or asserted against such Indemnitee in any way related to or arising
from or alleged to arise from this Agreement or the Collateral, except any such
losses, claims, liabilities, damages, penalties, suits, costs and expenses which
result from the gross negligence or willful misconduct of the Indemnitee as
determined by a final, nonappealable decision of a court of competent
jurisdiction.
17. MISCELLANEOUS.
17.1 Severability. In
the event that any provision of this Agreement becomes or is declared by a court
of competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision; provided that in such case
the parties shall negotiate in good faith to replace such provision with a new
provision which is not illegal, unenforceable or void, as long as such new
provision does not materially change the economic benefits of this Agreement to
the parties.
17.2 Injunctive
Relief. The Debtor acknowledges and agrees that a breach by it
of its obligations hereunder will cause irreparable harm to each Secured Party
and that the remedy or remedies at law for any such breach will be inadequate
and agrees, in the event of any such breach, in addition to all other available
remedies, such Secured Party shall be entitled to an injunction restraining any
breach and requiring immediate and specific performance of such obligations
without the necessity of showing economic loss or the posting of any
bond.
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17.3 Governing Law;
Jurisdiction. This Agreement shall be governed by and
construed under the laws of the State of New York applicable to contracts made
and to be performed entirely within the State of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City and County of New York for the adjudication
of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address in effect
for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.
17.4 Successors and
Assigns. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties. Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement. A Secured Party may assign its
rights hereunder in connection with any assignment of rights in accordance with
the terms of the Line of Credit Agreement, in which case the term “Secured
Party” shall be deemed to refer to such transferee as though such transferee
were an original signatory hereto. The Debtor may not assign its
rights or obligations under this Agreement.
17.5 Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
instrument. This Agreement may be executed and delivered by e-mail or
facsimile transmission.
17.6 Headings. The
headings used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
17.7 Notices. Any
notice, demand or request required or permitted to be given by the Debtor or a
Secured Party pursuant to the terms of this Agreement shall be in writing and
shall be deemed delivered (i) when delivered personally or by verifiable
facsimile transmission, unless such delivery is made on a day that is not a
Business Day, in which case such delivery will be deemed to be made on the next
succeeding Business Day, (ii) on the next Business Day after timely delivery to
an overnight courier and (iii) on the Business Day actually received if
deposited in the U.S. mail (certified or registered mail, return receipt
requested, postage prepaid), addressed as follows:
14
If to the Debtor:
Think
North America, Inc.
00000
Xxxxxxxx, Xxxxxxxx, Xxxxxxxx 00000
Attn: The
Chief Executive Officer
Tel:
(313) 565-6781Fax: 000 000 0000
If to any Secured
Party:
Ener1,
Inc.
0000
Xxxxxxxx, Xxxxx 00X
Xxx Xxxx,
XX 00000
Attn:
Xxxxxxx Xxxxxxxxxxxx
Tel:
000-000-0000
Fax:
000-000-0000
or as
shall be designated by such party in writing to the other parties hereto in
accordance with this Section
17.7.
17.8 Entire Agreement;
Amendments. This Agreement and the Line of Credit Agreement
constitute the entire agreement between the parties with regard to the subject
matter hereof and thereof, superseding all prior agreements or understandings,
whether written or oral, between or among the parties. No amendment,
modification or other change to this Agreement or waiver of any agreement or
other obligation of the parties under this Agreement may be made or given unless
such amendment, modification or waiver is set forth in writing and is signed by
the Debtor and the Secured Parties. Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for which
given.
[SIGNATURE
PAGES FOLLOW]
15
IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed on the day and year first above written.
Title:
|
THINK
NORTH AMERICA, INC., AS DEBTOR
|
|
|
By:
|
/s/ Xxxxx X. Xxxxx
|
|
Name:
Xxxxx X. Xxxxx
|
|
|
Title:
CEO
|
|
16
IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed on the day and year first above written.
|
ENER1,
INC., AS SECURED PARTY
|
|
|
By:
|
/s/ Xxxxxxx Xxxxxx
|
|
Xxxxxxx
Xxxxxx
|
|
|
Chief
Financial Officer
|
|
17
