Exhibit 4.5
------------
INTELLECTUAL PROPERTY SECURITY AGREEMENT
----------------------------------------
INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of December 31, 2002,
between Electric Fuel Corporation, a Delaware corporation (the "PARENT"),
Electric Fuel Transportation Corp., a Delaware corporation ("EFT"), Electric
Fuel B.V., a Netherlands corporation ("EF-BV"), Instant Power Corporation, a
Delaware corporation ("IPC"), I.E.S. Defense Services, Inc., a Delaware
corporation ("IDS"), IES Interactive Training, Inc. ("IES"), Electric Fuel GmbH,
a German corporation ("EF-G"), Summit Training International, Inc., a Delaware
corporation ("STI"), Electric Fuel UK Ltd., a British corporation ("EF-UK")
(each of EFT, EF-BV, IPC, IDS, IES, EF-G, STI and EF-UK, a "SUBSIDIARY" and,
together with Parent, the "DEBTORS") and the investors signatory hereto (each
investor including their respective successors, endorsees, transferees and
assigns, a "SECURED PARTY", and collectively, the "SECURED PARTIES").
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to the Securities Purchase Agreement, dated the date
hereof between the Parent and the Secured Parties (the "PURCHASE AGREEMENT"),
the Secured Parties have agreed to extend certain loans to the Parent which
shall be evidenced by the issuance to the Secured Parties of Secured Convertible
Debentures, due June 30, 2005 (the "DEBENTURES"); and
WHEREAS, in order to induce the Secured Parties to enter into the Purchase
Agreement, the Debtors have agreed to execute and deliver to the Secured Parties
this Agreement for the benefit of the Secured Parties and a separate agreement
granting to them a first priority security interest in certain intangible
property of the Debtors (the "SECURITY AGREEMENT") to secure the prompt payment,
performance and discharge in full of all of the Debtors' obligations under this
Agreement, the Debentures and the Security Agreement.
NOW, THEREFORE, in consideration of the agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
--------------------
shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC
(such as "GENERAL INTANGIBLES" and "PROCEEDS") shall have the respective
meanings given such terms in Article 9 of the UCC.
(a) "AGENT" means ZLP Master Technology Fund as agent for each of the
Secured Parties pursuant to this Agreement and the Security Agreement, or such
other Person as shall have been subsequently appointed as a successor agent
pursuant to this Agreement.
(b) "COLLATERAL" means all of the Debtors' right, title and interest
in and to all of Trademarks, Patents, Copyrights, domain names and other general
intangible property of the Debtors, all Debtors' trade secrets, Debtors'
intellectual property rights in Debtors' computer software and Debtors' computer
software products, design rights which may be available, owned or licensed to
the Debtors, all income, royalties, damages and payments now or hereafter due
and/or payable under any of the foregoing or with respect to any of the
foregoing Debtors' rights to proceeds arising from any and all claims for
damages by way of past, present and future infringement of any Collateral with
the right but not the obligation to sue on behalf of and collect such damages
for said use or infringement of the Copyrights, Patents or Trademarks, and
Debtors' rights with respect to licenses granted by Debtors' to third parties or
licensed to Debtors to use any of the Copyrights, domain names, Patents or
Trademarks, and all license fees and royalties due to the Debtors arising from
such use to the extent permitted by such license or rights, all of which are now
or hereafter existing, created, acquired or held. The term "COLLATERAL" shall
include all of the foregoing items, whether presently owned or existing or
hereafter acquired or coming into existence, all of Debtors' additions and
accessions thereto, all of Debtors' substitutions and replacements thereof, and
all of Debtors' proceeds, products and accounts thereof, including without
limitation all proceeds from the licensing or sale or other transfer of
Collateral and of insurance covering the same and of any tort claims in
connection therewith.
(c) "COPYRIGHTS" means any and all of Debtors' (i) copyrights in
computer software owned by the Company, including any revisions and derivative
works, whether registered or not and whether or not the same also constitutes a
trade secret, now or hereafter existing, created, acquired or held, including,
without limitation, those set forth on Exhibit A attached hereto and (ii)
----------
copyrights, copyright applications, copyright registration and like protections
in each work of authorship and any derivative work thereof, including computer
programs, that is created by the Debtors, whether published or unpublished and
whether or not the same also constitutes a trade secret, and all copyright
licenses now or hereafter existing, created, acquired or held by the Debtors,
including, without limitation, those registrations and applications set forth on
Exhibit A attached hereto
- ---------
(d) "OBLIGATIONS" means all of the Debtors' obligations under this
Agreement, the Debentures and the Security 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 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.
(e) "PATENTS" means all of the Debtors' patents, patent applications,
patent licenses, letters patent and like protections of the United States or any
other country, including, without limitation, improvements, divisions,
continuations, renewals, reissues, extensions and continuations-in-part of the
same, all of which are now or hereafter existing, created, acquired or held and
including, without limitation, those registrations and applications set forth on
Exhibit B attached hereto and all goodwill associated with or symbolized by any
- ---------
of the foregoing.
-2-
(f) "TRADEMARKS" means any Debtor trademark or service mark right,
whether or not registered, Debtors' applications to register and registrations
of the same and like protections, any trademark or service mark licenses and the
entire goodwill of the business of the Debtors connected with or symbolized by
such trademarks or service marks, including all renewals thereof all of which
are now or hereafter existing, created, acquired or held, including, without
limitation, those registrations and applications set forth on Exhibit C attached
---------
hereto all goodwill associated with or symbolized by any of the foregoing.
(g) "UCC" means the Uniform Commercial Code and/or any other
applicable law of each jurisdiction in which any Debtor is incorporated or
organized (including, without limitation the State of Delaware) and any
jurisdiction as to any Collateral located therein.
2. Grant of Security Interest. As an inducement for the Secured
------------------------------
Parties to enter into the Purchase Agreement and to secure the complete and
timely payment, performance and discharge in full, as the case may be, of all of
the Obligations, each of the Debtors hereby, unconditionally and irrevocably,
pledges, grants and hypothecates to the Secured Parties, a continuing first
priority security interest in, a first lien upon and a right of set-off against
all of the Debtors' right, title and interest of whatsoever kind and nature in
and to the Collateral (the "SECURITY INTEREST").
3. Representations, Warranties, Covenants and Agreements of the Debtors
-----------------------------------------------------------------------
jointly and severally represent and warrant to, and covenant and agree with, the
Secured Parties as follows:
(a) Each Debtor has the requisite corporate power and authority to
enter into this Agreement and otherwise to carry out its obligations thereunder.
The execution, delivery and performance by each Debtor of this Agreement and the
filings contemplated therein have been duly authorized by all necessary action
on the part of such Debtor and no further action is required by such Debtor.
(b) Except for the Security Interest and as set forth in Schedule 3(b)
-------------
hereto, each Debtor is the sole owner of the Collateral (except for
non-exclusive licenses granted by the Debtors in the ordinary course of
business), free and clear of any liens, security interests or encumbrances, and
is fully authorized to grant the Security Interest in and to pledge the
Collateral. There is not on file in any governmental or regulatory authority,
agency or recording office an effective financing statement, security agreement
or transfer or any notice of any of the foregoing (other than those that have
been 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 Debtors 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).
-3-
(c) Exhibit A sets forth a true and complete list of all Debtors'
----------
registrations and applications for Copyrights in existence as of the date of
this Agreement. Exhibit B sets forth a true and complete list of all Debtors'
----------
registrations and applications for Patents that have been filed as of the date
of this Agreement. Exhibit C sets forth a true and complete list of all
----------
Debtors' registrations and applications for Trademarks filed as of the date of
this Agreement. The Debtors shall, within ten (10) days of obtaining knowledge
thereof, advise the Secured Parties in writing of any change in the composition
of the Collateral, including, without limitation, any subsequent ownership
rights of the Debtors in or to any Copyrights, Patents or Trademarks.
(d) Each of the Patents, Trademarks and Copyrights is valid and
enforceable, and no part of the Collateral has been judged invalid or
unenforceable. No written claim has been received that any of the Patents,
Trademarks or Copyrights or the Debtors' use of any Collateral violates the
rights of any third party. There has been no adverse decision to the Debtors'
claim of ownership rights in or exclusive rights to use the Collateral in any
jurisdiction or to the Debtors' 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 Debtors, threatened before any court, judicial
body, administrative or regulatory agency, arbitrator or other governmental
authority.
(e) Each Debtor shall at all times maintain its books of account and
records relating to the Collateral at its principal place of business and may
not relocate such books of account and records unless it delivers to the Secured
Parties at least 30 days prior to such relocation (i) written notice of such
relocation and the new location thereof (which must be within the United States)
and (ii) evidence that appropriate financing statements and other necessary
documents have been filed and recorded and other steps have been taken to
perfect the Security Interest to create in favor of the Secured Parties a valid,
perfected and continuing first priority liens in the Collateral. The principal
place of business of the Debtors is located at the address set forth in Schedule
--------
A hereto, and will not be moved without notice to each Secured Party.
- --
(f) This Agreement creates in favor of the Secured Parties a valid
security interest in the Collateral, including the Collateral listed on the
Exhibits hereto, securing the payment and satisfaction of the Obligations, and,
upon making the filings described in the immediately following sentence, a
perfected first priority security interest in such Collateral that is senior to
all existing and hereinafter created security interests. Except for (x) the
filing of this Agreement with the United States Patent and Trademark Office with
respect to the Patents and Trademarks and the filing of this Agreement with the
United States Copyrights Office with respect to the Copyrights, and (y) the
filing of financing statements on Form UCC-1 under the UCC with the
jurisdictions indicated in Schedule A, attached hereto, no authorization or
-----------
approval of or filing with or notice to any governmental authority or regulatory
body is required either (i) for the grant by the Debtors of, or the
effectiveness of, the Security Interest granted hereby or for the execution,
delivery and performance of this Agreement by the Debtors or (ii) for the
perfection of or exercise by the Secured Parties of its rights and remedies
hereunder. The Debtors acknowledge and agree that a copy of this Agreement (or
instruments executed and delivered pursuant hereto) will be filed and recorded
-4-
with each of the United States Patent and Trademark Office and the United States
Copyrights Office with respect to the Patents, Trademarks and Copyrights that
are now or hereafter in existence.
(g) The Debtors acknowledge and agree that on the date of execution of
this Agreement, the Secured Parties will: (i) file one or more financing
statements under the UCC with respect to the Security Interest for filing with
the jurisdictions indicated on Schedule A, attached hereto and in such other
-----------
jurisdictions the Secured Parties may deem necessary and (ii) one or more
executed recordation sheets relating to the filing and recording of this
Agreement with each of the United States Patent and Trademark Office and the
United States Copyrights Office with respect to the Patents, Trademarks and
Copyrights that are now in existence.
(h) The execution, delivery and performance of this Agreement does not
conflict with or cause a breach or default, or an event that with or without the
passage of time or notice, shall constitute a breach or default, under any
agreement to which the Debtors are a party or by which the Debtors are bound.
No consent (including, without limitation, from stock holders or creditors of
the Debtors) is required for the Debtors to enter into and perform their
obligations hereunder.
(i) The Debtors shall at all times maintain the liens and Security
Interest provided for hereunder as valid and perfected first priority liens and
security interests in the Collateral in favor of each of the Secured Parties to
ensure that such liens and Security Interest are and remain senior to all not
existing and hereafter created security interests and liens. The Collateral will
be kept free of all liens, security interest, claims and encumbrances
whatsoever. Each Debtor hereby agrees to defend the same against any and all
persons. Each Debtor shall safeguard and protect all Collateral for the account
of the Secured Parties. At the request of the Agent and/or Secured Parties, the
Debtors will sign and deliver to the Secured Parties at any time or from time to
time one or more financing statements pursuant to the UCC in form reasonably
satisfactory to the Secured Parties and will pay the cost of filing the same in
all public offices wherever filing is, or is deemed by the Secured Parties to
be, necessary or desirable to effect the rights and obligations provided for
herein. Without limiting the generality of the foregoing, the Debtors shall pay
all fees, taxes and other amounts necessary to maintain the Collateral and the
Security Interest hereunder, and the Debtors 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.
(j) The Debtors will not allow any Collateral to be abandoned,
forfeited or dedicated to the public without the prior written consent of the
Secured Parties. The Debtors will not transfer, pledge, hypothecate, encumber,
license (except for non-exclusive licenses granted by the Debtors in the
ordinary course of business), sell or otherwise dispose of any of the Collateral
without the prior written consent of the Secured Parties.
-5-
(k) Each Debtor shall, within ten (10) days of obtaining knowledge
thereof, advise the Agent, 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.
(l) The Debtors shall permit the Secured Parties and its
representatives and agents upon reasonable prior notice to inspect the
Collateral at any time during normal business hours, and to make copies of
records pertaining to the Collateral as may be requested by the Secured Parties
from time to time.
(m) Each Debtor will, at its own expense, 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.
(n) Each Debtor shall promptly notify the Agent in sufficient detail
upon becoming aware of any attachment, garnishment, execution or other legal
process levied against any Collateral and of any other information received by
the Debtors that may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Parties hereunder.
(o) Each Debtor shall not use or permit any Collateral to be used
unlawfully or in violation of any provision of this Agreement or any applicable
statute, regulation or ordinance or any policy of insurance covering the
Collateral where violation is reasonably likely to have a material adverse
effect on the Secured Parties' rights in the Collateral or Secured Parties'
ability to foreclose on the Collateral.
(p) The Debtors shall not grant to any person or entity any rights or
interests in or to any of the Collateral that are senior to, or pari passu with,
the Secured Parties.
(q) Each Debtor shall notify the Agent of any change in such Debtor's
name, identity, chief place of business, chief executive office or residence
within 5 days of such change.
(r) All information heretofore, herein or hereafter supplied to the
Secured Parties by or on behalf of the Debtors with respect to the Collateral is
accurate and complete in all material respects as of the date furnished.
4. Defaults. The following events shall be "EVENTS OF DEFAULT":
--------
(a) The occurrence of an Event of Default (as defined in the
Debentures) under the Debentures;
(b) Any representation or warranty of the Debtors in this Agreement or
in the Security Agreement shall prove to have been incorrect in any material
respect when made; and
-6-
(c) The failure by a Debtor to observe or perform any of its
obligations hereunder or in the Security Agreement for ten (10) days after
receipt by the Debtors of notice of such failure from the Secured Parties.
5. Duty To Hold In Trust. Upon the occurrence and during the
-------------------------
continuation of any Event of Default, the Debtors shall, upon receipt by it of
any revenue, income or other sums subject to the Security Interest, whether
payable pursuant to the Debentures 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 the Secured Parties and shall forthwith endorse
and transfer any such sums or instruments, or both, to the Secured Parties for
application to the satisfaction of the Obligations.
6. Rights and Remedies Upon Default. Upon the occurrence and during the
------------------------------------
continuation of any Event of Default, the Agent (on behalf of, and for the
benefit of itself and each of the Secured Parties) shall have the right to
exercise all of the remedies conferred hereunder, under the Debentures and under
the Security Agreement, and the Agent 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 Agent shall have the right to take possession of all tangible
manifestations or embodiments 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 Debtors shall
assemble the Collateral and make it available to the Agent at places which the
Agent shall reasonably select, whether at the Debtors' premises or elsewhere.
(b) The Agent shall have the right to operate the business of the
Debtors using the Collateral and shall have the right to assign, sell, 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 Agent 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 Debtors or right of redemption of
the Debtors, which are hereby expressly waived. Upon each such sale, assignment
or other transfer of Collateral, the Agent 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 Debtors, which are hereby waived and released.
(c) The Agent may license or, to the same extent the Debtors is
permitted by law and contract to do so, sublicense, whether on an exclusive or
non-exclusive basis, any of the Collateral throughout the world for such period,
on such conditions and in such manner as the Secured Parties shall, in its
reasonable discretion, determine.
-7-
(d) The Agent may (without assuming any obligations or liabilities
thereunder), at any time, enforce (and shall have the exclusive right to
enforce) against licensee or sublicensee all rights and remedies of the Debtors
in, to and under any license agreement with respect to such Collateral, and take
or refrain from taking any action thereunder.
(e) The Agent may, in order to implement the assignment, license, sale
or other disposition of any of the Collateral pursuant to this Section, pursuant
to the authority provided for in Section 12, execute and deliver on behalf of
the Debtors one or more instruments of assignment of the Collateral in form
suitable for filing, recording or registration in any jurisdictions as the
Secured Parties may determine advisable.
(f) In the event that any Secured Party shall recover from the Debtors
or the Collateral more than its pro rata share of the Obligations owed to all
Secured Parties hereunder, whether by agreement, understanding or arrangement
with the Debtors or any other Person, set off or other means, such Secured Party
shall immediately deliver or pay over to the other Secured Parties their pro
rata portion of any such recovery in the form received.
(g) Agent may, at any time or times that an Event of Default exists or
has occurred and is continuing, (i) notify any or all account debtors that the
Accounts have been assigned to Secured Parties and that Secured Parties have a
security interest therein and Agent may direct any or all accounts debtors to
make payment of Accounts directly to Secured Parties, (ii) extend the time of
payment of, compromise, settle or adjust for cash, credit, return of merchandise
or otherwise, and upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts or such other obligations, but without any duty
to do so, and Agent shall not be liable for its failure to collect or enforce
the payment thereof nor for the negligence of its agents or attorneys with
respect thereto and (iv) take whatever other action Agent may deem necessary or
desirable for the protection of its interests. At any time that an Event of
Default exists or has occurred and is continuing, at Agent's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Secured Parties and are payable
directly and only to Secured Parties and the Debtors shall deliver to Agent such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may require.
7. Applications of Proceeds. The proceeds of any such sale, lease,
--------------------------
license or other disposition of the Collateral hereunder shall be applied (i)
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, (ii) to the
reasonable attorneys' fees and expenses incurred by the Agent and/or Secured
Parties in enforcing its rights hereunder and in connection with collecting,
storing and disposing of the Collateral, (iii) to satisfaction of the
Obligations, and (iv) to the payment of any other amounts required by applicable
-8-
law, after which the Secured Parties shall pay to the Debtors 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 Debtors will be liable for the deficiency,
together with interest thereon, at the rate of 12% per annum or the lesser
amount permitted by applicable law (the "DEFAULT RATE"), and the reasonable fees
of any attorneys employed by the Agent and/or Secured Parties to collect such
deficiency. To the extent permitted by applicable law, each 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 to the
gross negligence or willful misconduct of the Agent and/or Secured Parties.
8. Costs and Expenses. The Debtors agree to pay all out-of-pocket fees,
--------------------
costs and expenses incurred in connection with any filing required hereunder,
including, without limitation, any financing statements, continuation
statements, partial releases and/or termination statements related thereto or
any expenses of any searches reasonably required by the Agent. The Debtors
shall also pay all other claims and charges which in the reasonable opinion of
the Agent and/or Secured Parties might prejudice, imperil or otherwise affect
the Collateral or the Security Interest therein. The Debtors will also, upon
demand, pay to the Agent and/or 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 Agent and/or 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 Debentures. Until so paid, any fees payable
hereunder shall be added to the principal amount of the Debentures and shall
bear interest at the Default Rate.
9. Responsibility for Collateral. Each Debtor assumes all liabilities and
-------------------------------
responsibility in connection with all Collateral, and the obligations of such
Debtor hereunder, under the Debentures or under the Security Agreement 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.
10. Security Interest Absolute. All rights of the Secured Parties and all
----------------------------
Obligations of the Debtors hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
the Debentures, the Security 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 Debentures, the Security 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 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 Debtors, or a discharge of all
-9-
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.
Each 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 shall be deemed to be otherwise due to
any party other than the Secured Parties, then, in any such event, the Debtors'
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. Each Debtor waives all
right to require the Secured Parties to proceed against any other person 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.
11. Term of Agreement. This Agreement and the Security Interest shall
-------------------
terminate on the date on which all payments under the Debentures have been made
in full or otherwise converted pursuant to the terms thereof and all other
Obligations have been paid or discharged. Upon such termination, the Secured
Parties, at the request and at the expense of the Debtors, will join in
executing any termination statement with respect to any financing statement
executed and filed pursuant to this Agreement.
12. Power of Attorney; Further Assurances. (a) Each Debtor authorizes the
--------------------------------------
Secured Parties, and does hereby make, constitute and appoint it, and its
respective officers, agents, successors or assigns with full power of
substitution, as the Debtors' true and lawful attorney-in-fact, with power, in
its own name or in the name of the Debtors, to, after the occurrence and during
the continuance of an Event of Default, (i) endorse any notes, 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 UCC
financing statement or any invoice, freight or express bill, bill 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 sue for monies due in respect of the Collateral; and (v) generally, to do,
at the option of the Secured Parties, and at the Debtors' expense, at any time,
or from time to time, all acts and things which the Secured Parties deem
necessary to protect, preserve and realize upon the Collateral and the Security
Interest granted therein in order to effect the intent of this Agreement, the
Debentures and the Security Agreement, all as fully and effectually as the
Debtors might or could do; and each Debtor hereby ratifies all that said
attorney shall lawfully do or cause to be done by virtue hereof. This power of
-10-
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.
(b) On a continuing basis, each Debtor will make, execute,
acknowledge, deliver, file and record, as the case may be, with the proper
filing and recording places in any jurisdiction, including, without limitation,
the jurisdictions indicated on Schedule A, attached hereto, all such
------------
instruments, including appropriate financing and continuation statements and
collateral agreements and filings with the United States Patent and Trademark
Office and the United States Copyrights Office, and take all such action as may
reasonably be deemed necessary or advisable, or as reasonably requested by the
Secured Parties, to perfect the Security Interest granted hereunder and
otherwise to carry out the intent and purposes of this Agreement, or for
assuring and confirming to the Secured Parties the grant or perfection of a
first priority security interest in all the Collateral.
(c) Each Debtor hereby irrevocably appoints the Secured Parties as
such Debtors' attorney-in-fact, with full authority in the place and stead of
such Debtor and in the name of such Debtor, from time to time in the Secured
Parties' discretion, to take any action and to execute any instrument which the
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including:
(i) To modify, in its sole discretion, this Agreement without
first obtaining the Debtors' approval of or signature to such modification
by amending Exhibit A, Exhibit B and Exhibit C, hereof, as appropriate, to
---------- --------- ---------
include reference to any right, title or interest in any Copyrights,
Patents or Trademarks acquired by the Debtors after the execution hereof or
to delete any reference to any right, title or interest in any Copyrights,
Patents or Trademarks in which the Debtors no longer has or claims any
right, title or interest; and
(ii) To file, in its sole discretion, one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of the Debtors where permitted by law.
13. Agent.
-----
(a) Actions The Agent shall at all times act upon and in accordance
-------
with written instructions received from a Majority-in-Interest (as defined in
Section 16) time to time. The Agent shall be deemed to be authorized on behalf
of each Secured Party to act on behalf of such Secured Party under this
Agreement and the Security Agreement and, in the absence of written instructions
from a Majority-in-Interest (with respect to which the Agent agrees that it
will, subject to the last two sentences of this Section, comply, except as
otherwise advised by counsel), to exercise such powers hereunder and thereunder
as are specifically delegated to or required of the Agent by the terms hereof
and thereof, together with such powers as may be reasonably incidental thereto.
The Agent shall have no duty to ascertain or inquire as to the performance or
observance of any of the terms of this Agreement or Security Agreement by the
Debtors. By accepting their Debentures, each Secured Party shall be deemed to
-11-
have agreed to indemnify the Agent (which agreement shall survive any
termination of such Secured Party's percentage), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may at
any time be imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of this Agreement, the Debentures and the Security
Agreement, including the reimbursement of the Agent for all out-of-pocket
expenses (including attorneys' fees) incurred by the Agent hereunder or in
connection herewith or in enforcing the Obligations of the Debtors under this
Agreement, the Debentures or the Security Agreement, in all cases as to which
the Agent is not reimbursed by the Debtors; provided that no Secured Party shall
--------
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements determined by a court of competent jurisdiction in a final
proceeding to have resulted solely from the Agent's gross negligence or willful
misconduct. The Agent shall not be required to take any action hereunder, under
the Debentures or under Security Agreement, or to prosecute or defend any suit
in respect of this Agreement or under the Debentures or under the Security
Agreement, unless the Agent is indemnified to its reasonable satisfaction by the
Secured Parties against loss, costs, liability and expense. If any indemnity in
favor of the Agent shall become impaired, it may call for additional indemnity
and cease to do the acts indemnified against until such additional indemnity is
given.
(b) Exculpation. Neither the Agent nor any of its directors,
-----------
officers, partners, members, shareholders, employees or agents shall be liable
to any Secured Party for any action taken or omitted to be taken by it under
this Agreement, the Debentures or the Security Agreement, or in connection
herewith or therewith, except for its own willful misconduct or gross negligence
or be responsible for the consequences of any error in judgment. Neither the
Agent nor any of its directors, officers, partners, members, shareholders,
employees or agents has any fiduciary relationship with any Secured Party by
virtue of this Agreement or the Security Agreement. The Agent shall not be
responsible to any Secured Party for any recitals, statements, representations
or warranties herein or in any certificate or other document delivered in
connection herewith or for the authorization, execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, or
sufficiency this Agreement, the Debentures or the Security Agreement, the
financial condition of the Debtors or the condition or value of any of the
Collateral, or be required to make any inquiry concerning either the performance
or observance of any of the terms, provisions or conditions of this Agreement,
the Debentures or the Security Agreement, the financial condition of the Debtors
or the existence or possible existence of any default or event of default. The
Agent shall be entitled to rely upon advice of counsel concerning legal matters
and upon any notice, consent, certificate, statement or writing which it
believes to be genuine and to have presented by a proper person.
(c) Obligations Held by the Agent. The Agent shall have the same
----------------------------------
rights and powers with respect to any Debentures held by it or any of its
affiliates, as any Secured Party and may exercise the same as if it were not the
Agent. Each of the Debtors and the Secured Parties hereby waives, and each
successor to any Secured Party shall be deemed to waive, any right to disqualify
-12-
any Secured Party from serving as the Agent or any claim against that Secured
Party for serving as Agent.
(d) Copies, etc. The Agent shall give prompt notice to each Secured
-------------
Party of each notice or request required or permitted to be given to the Agent
by the Debtors pursuant to the terms of this Agreement. The Agent will
distribute to each Secured Party each instrument and other agreement received
for its account and copies of all other communications received by the Agent
from a Debtor for distribution to the Secured Parties by the Agent in accordance
with the terms of this Agreement. Notwithstanding anything herein contained to
the contrary, all notices to and communications with the Debtors under this
Agreement shall be effected by the Secured Parties through the Agent.
(e) Resignation of Agent. The Agent may resign as such at any time
-----------------------
upon at least thirty (30) days' prior notice to the Debtors and all the Secured
Parties, such resignation not to be effective until a successor Agent is in
place. If the Agent at any time shall resign, a Majority-in-Interest may jointly
appoint another Secured Party as a successor Agent which shall thereupon become
the Agent hereunder. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall be entitled to receive from the
retiring Agent such documents of transfer and assignment as such successor Agent
may reasonably request, and shall thereupon succeed to and become vested with
all rights, powers, privileges, and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement.
(f) Replacement of Agent. A Majority-in-Interest may at any time and
----------------------
for any reason replace the Agent with a successor Agent jointly selected by
them, upon at least ten days written notice to the Debtors and the other Secured
Parties. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall be entitled to receive from the
--------
terminated Agent such documents of transfer and assignment as such successor
Agent may reasonably request, and shall thereupon succeed to and become vested
with all rights, powers, privileges, and duties of the retiring Agent, and the
terminated Agent shall be discharged from its duties and obligations under this
Agreement.
14. Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing, with copies to all the other parties hereto, and
shall be deemed to have been duly given when (i) if delivered by hand, upon
receipt, (ii) if sent by facsimile, upon receipt of proof of sending thereof,
(iii) if sent by nationally recognized overnight delivery service (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified mail, return receipt requested, postage prepaid, four days after
posting in the U.S. mails, in each case if delivered to the following addresses:
If to the Debtors: Electric Fuel Corporation
632 Broadway, Suite 301
New York, NY 10012
Facsimile No.: (212) 529-5800
Attn: Chief Financial Officer and General Counsel
-13-
With a copy to: Electric Fuel (E.F.L.) Ltd.
Western Industrial Zone
Beit Shemesh 99000, Israel
Facsimile No.: 011-972-2-990-6688
Attn.: Chief Financial Officer and General Counsel
If to Secured Parties: To the address set forth under such Secured Parties'
name on the signature pages hereto.
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 its 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. Actions by Secured Parties. Any action required or permitted hereunder
---------------------------
to be taken by or on behalf of the Secured Parties shall, for such action to be
valid, require the approval of the Majority-in-Interest prior to the taking of
such action. If the consent, approval or disapproval of the Secured Parties is
required or permitted pursuant to this Agreement, such consent, approval or
disapproval shall only be valid if given by the Majority-in-Interest.
"MAJORITY-IN-INTEREST" means the Secured Party or Secured Parties (as the case
may be) holding in excess of a majority of the outstanding aggregate principal
amount under the Debentures, determined on a cumulative basis.
17. Miscellaneous. (a) No course of dealing between the Debtors and the
-------------
Secured Parties, nor any failure to exercise, nor any delay in exercising, on
the part of the Secured Parties, any right, power or privilege hereunder, under
the Debentures or under the Security Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
(b) All of the rights and remedies of the Secured Parties with respect
to the Collateral, whether established hereby, by the Debentures, by the
Security Agreement or by any other agreements, instruments or documents or by
law shall be cumulative and may be exercised singly or concurrently.
(c) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and is intended to supersede all prior
negotiations, understandings and agreements with respect thereto. Except as
specifically set forth in this Agreement, no provision of this Agreement may be
modified or amended except by a written agreement signed by the parties.
-14-
(d) In the event that any provision of this Agreement is held to be
invalid, prohibited or unenforceable in any jurisdiction for any reason, unless
such provision is narrowed by judicial construction, this Agreement shall, as to
such jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under this
Agreement shall be considered valid unless in writing and signed by the party
giving such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default or right, whether of the same or similar nature or
otherwise.
(f) This Agreement shall be binding upon and inure to the benefit of
each party hereto and its successors and assigns.
(g) Each party shall take such further action and execute and deliver
such further documents as may be necessary or appropriate in order to carry out
the provisions and purposes of this Agreement.
(h) This Agreement shall be construed in accordance with the laws of
the State of New York, except to the extent the validity, perfection or
enforcement of a security interest hereunder in respect of any particular
Collateral which are governed by a jurisdiction other than the State of New York
in which case such law shall govern. Each of the parties hereto irrevocably
submits to the exclusive jurisdiction of any New York State or United States
Federal court sitting in New York county over any action or proceeding arising
out of or relating to this Agreement, and the parties hereto hereby irrevocably
agree that all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. The parties hereto agree
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. The parties hereto further waive any objection to venue
in the State of New York and any objection to an action or proceeding in the
State of New York on the basis of forum non convenient. If either party shall
commence an action or a proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorney's fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.
(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF
-15-
THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY
HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY
ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL FOLLOWING
SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT, NOTWITHSTANDING
ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS AND
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
(j) This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same Agreement. In the event that
any signature is delivered by facsimile transmission, such signature shall
create a valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
* * * * * * * * * * *
-16-
IN WITNESS WHEREOF, the parties hereto have caused this Intellectual
Property Security Agreement to be duly executed on the day and year first above
written.
ELECTRIC FUEL CORPORATION
By: _____________________________
Name:
Title:
ELECTRIC FUEL TRANSPORTATION
CORP.
By: _____________________________
Name:
Title:
I.E.S. DEFENSE SERVICES, INC.
By: _____________________________
Name:
Title:
IES INTERACTIVE TRAINING, INC.
By: _____________________________
Name:
Title:
ELECTRIC FUEL GMBH
By: _____________________________
Name:
Title:
SUMMIT TRAINING INTERNATIONAL, INC.
By: _____________________________
Name:
Title:
ELECTRIC FUEL UK LTD.
By: _____________________________
Name:
Title:
ELECTRIC FUEL B.V.
By: _____________________________
Name:
Title:
INSTANT POWER CORPORATION
By: _____________________________
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Intellectual
Property Security Agreement to be duly executed on the day and year first above
written.
ZLP MASTER TECHNOLOGY FUND, LTD.
By:_____________________________________
Name:
Title:
Address for Notice:
45 Broadway - 28th Floor
New York, NY 10006
Facsimile No.: ( )
Attn:
With a copy to:
Bryan Cave LLP
1290 Avenue of the Americas
New York, NY 10104
Facsimile No.:(212)541-4630 and (212)541-1432
Attn: Eric L. Cohen, Esq.
IN WITNESS WHEREOF, the parties hereto have caused this Intellectual
Property Security Agreement to be duly executed on the day and year first above
written.
SMITHFIELD FIDUCIARY LLC
By:_____________________________________
Name:
Title:
Address for Notice:
c/o Highbridge Capital Management, LLC
9 West 57th Street, 27th Floor
New York, New York 10019
Attention: Ari J. Storch / Adam J. Chill
Facsimile: 212-751-0755
Telephone: 212-287-4720
With a copy to:
Bryan Cave LLP
1290 Avenue of the Americas
New York, NY 10104
Facsimile No.:(212)541-4630 and (212)541-1432
Attn: Eric L. Cohen, Esq.
IN WITNESS WHEREOF, the parties hereto have caused this Intellectual
Property Security Agreement to be duly executed on the day and year first above
written.
VERTICAL VENTURES INVESTMENTS, LLC
By:_________________________________
Name:
Title:
Address for Notice:
c/o Vertical Ventures, LLC
900 Third Avenue, 26th Floor
New York, NY 10022
Facsimile No.: (646) 274-1728
Attn: Joshua Silverman
With a copy to:
Bryan Cave LLP
1290 Avenue of the Americas
New York, NY 10104
Facsimile No.:(212)541-4630 and (212)541-1432
Attn: Eric L. Cohen, Esq.
EXHIBIT A
---------
COPYRIGHTS
Registration Registration
Description Number Date
- ------------------------------------------------------------------
EXHIBIT B
---------
PATENTS
Registration Registration
Description Number Date
- ------------------------------------------------------------------
EXHIBIT C
---------
TRADEMARKS
Registration Registration
Description Number Date
- ------------------------------------------------------------------
SCHEDULE A
----------
Jurisdictions:
- --------------