AGREEMENT AND CONSENT

 

February 27, 2012

 

In accordance with the terms and conditions of that certain Restructuring,
Lockup and Plan Support Agreement, dated as of January 25, 2012 (the “Plan
Support Agreement”), by and among the parties hereto, (a) the parties hereto
hereby consent to the amendment to the Prepackaged Plan of Reorganization under
Chapter 11 of the Bankruptcy Code, attached as Exhibit A to the Plan Support
Agreement, and filed by Ener1, Inc., on January 26, 2012, with the United States
Bankruptcy Court for the Southern District of New York (the “Plan”), in
accordance with Exhibit A hereto, (b) the parties hereto hereby consent to the
amendment to the form of New Notes Loan Agreement (attached as Exhibit B to the
Plan Support Agreement, and filed on January 26, 2012, as Schedule 1 to the
Plan), in accordance with Exhibit B hereto, (c) the parties hereto hereby
acknowledge and agree that the aggregate amount of the Initial Equity
Contribution (as such term is defined in the form of Equity Commitment
Agreement, attached as Exhibit G to the Plan Support Agreement, and filed on
January 26, 2012, as Schedule 4 to the Plan (the “Equity Commitment
Agreement”)), shall be $11,300,000, (d) the parties hereto acknowledge and agree
that footnote 3 to the Equity Commitment Agreement (Maximum Equity Amount) is
hereby replaced in its entirety to read as follows: “$55 million less the
principal amount of the DIP borrowings converted into Preferred Stock at
confirmation of the plan” and (e) Bzinfin S.A. hereby agrees to reasonably agree
to the amendment to Exhibit B to the Equity Commitment Agreement (Consolidated
EBITDA and Working Capital Ratio Milestones) to be proposed by Ener1, Inc. (the
“Company”) following the date hereof, which amendment shall be prepared by the
Company based on the Budget attached as Exhibit J to the New Notes Loan
Agreement referred to in clause (b) above.

 

Except as amended hereby, the Plan Support Agreement is hereby reconfirmed and
shall remain in full force and effect without modification.

 

This Agreement and Consent shall be governed by and construed in accordance with
the internal laws of the State of New York, without regard to any conflict of
laws provisions which would require the application of the law of any other
jurisdiction.

 

This Agreement and Consent may be executed in one or more counterparts, each of
which shall be deemed an original and all of which shall constitute one and the
same agreement. Execution copies of this Agreement and Consent may be delivered
by facsimile or electronic mail which shall be deemed to be an original.

 

[Signature Page Follows]

 

1

 

  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Consent to
be executed as of the date first written above.

 

ENER1, INC.

 

By: /s/ Alex Sorokin       Name:  Alex Sorokin       Title:  CEO    

 

2

 

 

GSAM

 

LIBERTY HARBOR SPECIAL INVESTMENTS, LLC

 

By: Goldman Sachs Asset Management, L.P.               /s/ Gregg J. Felton      
Name:  Gregg J. Felton       Title:  Authorized Signatory    

 

 

GOLDMAN SACHS PALMETTO STATE CREDIT FUND, L.P.

 

By: Goldman Sachs Asset Management, L.P.               /s/ Gregg J. Felton      
Name:  Gregg J. Felton       Title:  Authorized Signatory    

 

 

 

 

WHITEBOX

 

WHITEBOX CREDIT ARBITRAGE PARTNERS, L.P.

 

By: /s/ Mark Strefling   Name:  Mark Strefling     Title:  CLO    

 

 

PANDORA SELECT PARTNERS, L.P.

  

By: /s/ Mark Strefling   Name:  Mark Strefling     Title:  CLO    

 

 

WHITEBOX CONCENTRATED CONVERTIBLE ARBITRAGE PARTNERS, L.P.

 

By: /s/ Mark Strefling   Name:  Mark Strefling     Title:  CLO    

 

 

WHITEBOX MULTI STRATEGY PARTNERS, L.P.

  

By: /s/ Mark Strefling   Name:  Mark Strefling     Title:  CLO    

 

 

WHITEBOX SPECIAL OPPORTUNITIES FUND LP, SERIES B

 

By: /s/ Mark Strefling   Name:  Mark Strefling     Title:  CLO    

 

 

 

 

BZINFIN

 

BZINFIN S.A.

 

 

By: /s/ Patrick T. Billet     Name:  Patrick T. Billet     Title:
Attorney-in-fact    

 

 

 

 

ITOCHU

 

ITOCHU CORPORATION                     By: /s/ Kiyoshi Fujii     Name:  Kiyoshi
Fujii     Title: General Manager     Industrial Machinery & electronic System
Dept.  

 

 

 

 

Exhibit A – Amendment to Plan

 

 

 

 

 

UNITED STATES BANKRUPTCY COURT

FOR THE SOUTHERN DISTRICT OF NEW YORK

In re:

 

ENER1, INC.,

 

Debtor.

 

Chapter 11

 

Case No.: 12-

 

 

MODIFIED PREPACKAGED PLAN OF REORGANIZATION

UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

 

REED SMITH LLP

·      599 Lexington Avenue

·      22nd Floor

·      New York, NY 10022

·      Telephone: (212) 521 5400

·      Facsimile: (212) 521 5450

Proposed Counsel for the Debtor

 

Dated: January 26,February 27, 2012

 

 

 

1.38 Exit Funding: The commitment of the Exit Funder to provide financing in an
amount of up to $8186 million less the principal amount outstanding under the
DIP Facility as of the Effective Date on the terms set forth in the Equity
Commitment Agreement, substantially in the form annexed as Schedule 4 to the
Plan, to be entered into as of the Effective Date.

 

1.39 Exit Funder: Each of Bzinfin S.A. (or its Affiliate), Goldman Sachs
Palmetto State Credit Fund, L.P., Liberty Harbor Special Investments, LLC,
Whitebox Multi Strategy Partners, L.P., Whitebox Concentrated Convertible
Arbitrage Partners L.P., Pandora Select Partners, L.P., Whitebox Credit
Arbitrage Partners, L.P., and Whitebox Special Opportunities Fund LP, Series B,
in each case, in its capacity as a provider of a portion of the Exit Funding, in
accordance with the terms of the Equity Commitment Agreement.

 

1.40 File or Filed: To file, or to have been filed, with the Clerk of the
Bankruptcy Court in the Chapter 11 Case.

 

1.41 Final Decree: A Final Order of the Bankruptcy Court entered pursuant to
section 350(a) of the Bankruptcy Code closing the Chapter 11 Case.

 

1.42 Final Distribution: The final payment made to any holders of Claims in
Class 6 (General Unsecured Claims).

 

1.43 Final Distribution Date: The date upon which the Final Distribution is
made.

 

1.44 Final Order: An order or judgment of the Bankruptcy Court or other court of
competent jurisdiction, as entered on its docket, that has not been reversed,
stayed, vacated, modified or amended, and as to which (i) the time to appeal,
petition for certiorari or move for a stay, reargument, rehearing or a new trial
has expired and no appeal, petition for

- 10 -

 

denoted as a percentage rate of interest on a principal sum of money or (ii) a
security interest in property), the term “Interest” means “equity security”, as
defined in section 101(16) of the Bankruptcy Code, and includes all issued
shares of common stock and preferred stock of the Debtor as of the Petition
Date, all Warrants, options, or other rights, contractual or otherwise, to
acquire any such equity interest in the debtor, or the right to purchase, sell,
or subscribe to a share, security, or interest specified in subparagraph (A) or
(B) of section 101(16) of the Bankruptcy Code, and any subordinated claim which
arises pursuant to section 510(b) of the Bankruptcy Code.

 

1.50 Lien: Shall have the meaning set forth in section 101(37) of the Bankruptcy
Code.

 

1.51 Line of Credit Agreement: The Line of Credit Agreement dated June 29, 2011,
as amended, by and between the Debtor and Bzinfin S.A., that established a line
of credit for the Debtor in the aggregate principal amount of $15,000,000, as
may be amended or supplemented from time to time, provided, however, that
pursuant to the terms of the Subordination Agreement the indebtedness under the
Line of Credit Agreement is subordinated to the indebtedness under the Senior
Notes Agreement.

 

1.52 Line of Credit Claims: The Claims arising under the Line of Credit
Agreement.

 

1.53 Line of Credit Claims New Common Stock Amount: $12,081,177.28

 

1.54 Net Cumulative Cash Outflows: This term shall have the meaning ascribed to
it in the New Notes Loan Agreement and be calculated for the period from
February 27, 2012 through March 29, 2013.

- 12 -

 

 

 

1.55 1.54 New Board of Directors: The board of directors of the Reorganized
Debtor on and after the Effective Date.

 

1.56 1.55 New Common Stock: The common stock, par value $0.01 per share, to be
issued by the Reorganized Debtor on the Effective Date to the holders of Claims
in Classes 3, 4, and 5 pursuant to sections 5.3, 5.4, and 5.5 of this Plan and
reserved for issuance upon the conversion of New Preferred Stock into New Common
Stock.

 

1.57 1.56 New Directors: The persons identified in the Plan Supplement who will
serve as directors of the Reorganized Debtor on and after the Effective Date.

 

1.58 1.57 New Notes: The notes to be issued to the holders of Claims in Class 3,
pursuant to the New Notes Loan Agreement and section 5.3 of this Plan.

 

1.59 1.58 New Notes Loan Agreement: The Loan Agreement, substantially in the
form annexed as Schedule 1 to this Plan, to be entered into on the Effective
Date by and among the Debtor, and as lenders, Goldman Sachs Palmetto State
Credit Fund, L.P.; Liberty Harbor Special Investments, LLC; Whitebox Multi
Strategy Partners, L.P.; Whitebox Concentrated Convertible Arbitrage Partners
L.P.; Pandora Select Partners, L.P.; Whitebox Credit Arbitrage Partners, L.P.;
and Whitebox Special Opportunities Fund LP, Series B, as may be amended or
supplemented from time to time.

 

1.60 1.59 New Organization Documents: The Amended and Restated Articles of
Incorporation and the Amended and Restated Bylaws of the Reorganized Debtor,
substantially in the form annexed as Schedule 5.

 

1.61 1.60 New Preferred Stock: The Series A Cumulative Convertible Preferred
Stock to be issued by the Reorganized Debtor on the Effective Date and
thereafter.

 

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Loan Claims are outstanding on the Effective Date, such Claims shall be paid in
full (including principal, accrued prepetition and postpetition interest through
the date of payment, any adequate protection payments required in connection
therewith and all other amounts due under the Bridge Loan Documents) in cash on
the Effective Date and upon such payment the Liens granted to the Bridge Lenders
pursuant to the Bridge Loan Documents shall terminate and be deemed released.

 

5.3 Class 3 (Senior Note Claims). Each holder of a Senior Note Claim will
receive its pro rata allocation of (i) on the Effective Date (a) Cash in the
amount of $2,717,708.76,1,001,261.12, (b) New Notes with a principal amount
equal to (1) 75% of the principal amount of the Senior Notes (plus accrued
interest through the Effective Date) minus (2) $8,153,126.28, and (c) a number
of shares of New Common Stock equal to 10,000,000 multiplied by the quotient of
the Senior Note Claims New Common Stock Amount divided by the Total New Common
Stock Calculation Amount; (ii) on the date that is four months after the
Effective Date, Cash in the amount of $2,717,708.76, together with interest
thereon accruing from the Effective Date through the date of payment at the
interest rate of 7 percent per annum to be paid in Cash; and (iii) on the date
that is eight months after the Effective Date, Cash in the amount of
$2,717,708.76, together with interest thereon accruing from the Effective Date
through the date of payment at the interest rate of 7 percent per annum to be
paid in Cash. The four and eight month; and (iv) on the later of the first
anniversary of the Effective Date or April 10, 2013, Cash in the amount of
$1,716,447.64, together with interest thereon accruing from the Effective Date
through the date of payment at the interest rate of 7 percent per annum, to be
paid in

- 26 -

 

Cash; provided, however, that for every dollar that the Net Cumulative Cash
Outflows are greater than $25,915,000.00, 85.8 cents will be satisfied in shares
of New Preferred Stock up to an aggregate amount of $1,716,447.64, plus accrued
interest on such amount, rather than paid in Cash; provided further, however,
that if the Net Cumulative Cash Outflows are greater than or equal to
$27,915,000.00, then the full amount of the $1,716,447.64 payment, including
interest thereon, will be satisfied in shares of New Preferred Stock. To the
extent that shares of New Preferred Stock are used to satisfy any portion of the
$1,716,447.64 payment, including any interest thereon, such shares shall have an
aggregate liquidation preference equal to the portion of the $1,716,447.64
payment, plus any interest thereon, satisfied with shares of New Preferred
Stock. Each of the Cash payments set forth above in clauses (ii), (iii), and
(iiiiv) shall have the benefit of the collateral and guarantees provided for in
the New Notes Loan Agreement and shall be (x) pari passu with the payments with
respect to the Convertible Note Claims set forth in sections 5.4 (ii,) (iii),
and (iiiiv) below, and (y) senior in right of payment to the principal and
interest payments under the New Notes Loan Agreement, on terms set forth in the
New Notes Loan Agreement.

 

5.4 Class 4 (Convertible Note Claims). Each holder of a Convertible Note Claim
will receive its pro rata allocation of (i) on the Effective Date (a) Cash in
the amount of $448,957.91165,405.54 and (b) a number of shares of New Common
Stock equal to 10,000,000 multiplied by the quotient of the Convertible Note
Claims New Common Stock Amount divided by the Total New Common Stock Calculation
Amount, (ii) on the date that is four months after the Effective Date, Cash in
the amount of $448,957.91, together with interest thereon accruing from the
Effective Date through the date of payment at the interest rate of 7 percent per
annum to be paid in Cash; and (iii) on the date that is eight months after the
Effective Date, Cash in the amount of $448,957.91, together with interest
thereon accruing from the Effective Date through the date of payment at the
interest rate of 7 percent per annum to be paid in Cash. The four and eight
month; and (iv) on the later of the first anniversary of the Effective Date or
April 10, 2013,

 

- 27 -

 

Cash in the amount of $283,552.36, together with interest thereon accruing from
the Effective Date through the date of payment at the interest rate of 7 percent
per annum, to be paid in Cash; provided, however, that for every dollar that the
Net Cumulative Cash Outflows are greater than $25,915,000.00, 14.2 cents will be
satisfied in shares of New Preferred Stock up to an aggregate amount of
$283,552.36, plus accrued interest on such amount, rather than paid in Cash;
provided further, however, that if the Net Cumulative Cash Outflows are greater
than or equal to $27,915,000.00, then the full amount of the $283,552.36
payment, including interest thereon, will be satisfied in shares of New
Preferred Stock. To the extent that shares of New Preferred Stock are used to
satisfy any portion of the $283,552.36 payment, including any interest thereon,
such shares shall have an aggregate liquidation preference equal to the portion
of the $283,552.36 payment, plus any interest thereon, satisfied with shares of
New Preferred Stock. Each of the Cash payments set forth above in clauses (ii),
(iii), and (iiiiv) shall have the benefit of the collateral and guarantees
provided for in the New Notes Loan Agreement and shall be (x) pari passu with
the payments with respect to the Senior Note Claims set forth in sections 5.3
(ii,) (iii), and (iiiiv) above, and (y) senior in right of payment to the
principal and interest payments under the New Notes Loan Agreement, on terms set
forth in the New Notes Loan Agreement.

 

5.5 Class 5 (Line of Credit Claims). On the Effective Date, each holder of a
Line of Credit Claim will receive its pro rata allocation of a number of shares
of New Common Stock equal to 10,000,000 multiplied by the quotient of the Line
of Credit Claims New Common Stock Amount divided by the Total New Common Stock
Calculation Amount.

 

5.6 Class 6 (General Unsecured Claims) Except to the extent that a holder of an
Allowed General Unsecured Claim agrees to a less favorable treatment or has been
paid prior to the Effective Date, each Allowed General Unsecured Claim in Class
6 (General

- 28 -

 

 

7.2 Issuance of New Notes. On the Effective Date: (i) the Senior Notes shall be
canceled and extinguished, and the holders thereof shall not retain any rights
thereunder and such instruments shall evidence no rights; and, (ii) the
Reorganized Debtor will issue the New Notes pursuant to the New Notes Loan
Agreement.

 

7.3 Issuance of New Common Stock and New Preferred Stock. On the Effective Date:
(i) all authorized or issued Interests shall be canceled and extinguished, and
the holders thereof shall not retain any rights thereunder and such instruments
shall evidence no rights; and, (ii) the Reorganized Debtor will issue the New
Common Stock and the New Preferred Stock other than the New Preferred Stock that
is to be issued at a later date pursuant to the Plan and the Equity Commitment
Agreement. Upon the issuance of the New Common Stock and the New Preferred
Stock, each holder of a Claim who accepts delivery of such shares of New Common
Stock and New Preferred Stock provided for in this Plan, will be deemed to have
consented and agreed to the terms of, and will thereby be deemed to have become
a party to, the Stockholders Agreement and the Registration Rights Agreement
regardless of whether such party actually executes the Stockholders Agreement or
the Registration Rights Agreement. An aggregate of 10,000,000 shares of New
Common Stock will be (x) issued on the Effective Date to holders of Senior Note
Claims, Convertible Note Claims, and Line of Credit Claims under the Plan and
(y) reserved for issuance upon the conversion of the New Preferred Stock issued
and outstanding as of the Effective Date (in an amount equal to the Total New
Preferred Stock Amount) into New Common Stock. The conversion price for the New
Preferred Stock shall be the Total New Common Stock Calculation Amount divided
by 10,000,000.

 

7.4 No Fractional Shares. No fractional shares of New Common Stock or New
Preferred Stock shall be distributed pursuant to the Plan. When any distribution
on account

 

- 29 -

 

other professionals have participated in good faith and in compliance with the
applicable provisions of the Bankruptcy Code in the offer and issuance of the
securities under the Plan. Accordingly, such entities and individuals shall not
be liable at any time for the violation of any applicable law, rule or
regulation governing the solicitation of acceptances or rejections of the Plan
or the offer and issuance of the securities under the Plan.

 

14.18 Expedited Tax Determination. The Reorganized Debtor may request an
expedited determination of taxes under 505(b) of the Bankruptcy Code for all
returns filed for, or on behalf of, the Debtor for any and all taxable periods
ending after the Petition Date through, and including, the Effective Date.

 

14.19 Dissolution of any Statutory Committees and Cessation of Fee and Expense
Payment. To the extent that one or more official committees are appointed in the
Chapter 11 Case, such committees shall be dissolved on the Effective Date and
the retention or employment of any advisors or professionals retained by the
committees, including, without limitation, accountants, attorneys and financial
advisors will terminate. After the Effective Date, the Reorganized Date Debtor
shall no longer be responsible for paying any fees and expenses incurred by the
members of any advisors or professionals retained by any such committees.

 

14.20 Fees and Expenses of Plan Support Parties. On the Effective Date, the
Debtor shall pay all fees and expenses of the Plan Support Parties in accordance
with the terms of the Plan Support Agreement.

 

Dated: January 26,February 27, 2012 Respectfully submitted,  

Ener1, Inc., a Florida corporation

By: _s/ Alex Sorokin____________________

 

- 58 -

 

Exhibit B – Amendment to Form of New Notes Loan Agreement

 

- 58 -

 

  

WEIL DRAFT

01/25/12

 

LOAN AGREEMENT

dated as of [__________ ___], 2012

among

ENER1, INC.,

as Borrower

 

CERTAIN SUBSIDIARIES OF ENER1, INC.,

as Guarantors

 

VARIOUS LENDERS,

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Administrative Agent and Collateral Agent,

 

________________________________________________________

 

$[_____________] Term Loan

________________________________________________________

 

 

 

  

APPENDICES: A Term Loans   B Notice Addresses SCHEDULES: 3.1(i) Closing Date
Mortgaged Properties   4.1 Jurisdictions of Organization and Qualification   4.2
Equity Interests and Ownership   4.11 Real Estate Assets   4.14 Material
Contracts   6.1 Certain Indebtedness   6.2 Certain Liens   6.3 Certain Negative
Pledges   6.5 Certain Restrictions on Subsidiary Distributions   6.6 Certain
Investments   6.11 Certain Affiliate Transactions EXHIBITS: A Note   B
Assignment Agreement   C Closing Date Certificate   D Counterpart Agreement   E
Certificate of Non-Bank Status   F Collateral Agreement   G Landlord Personal
Property Collateral Access Agreement   H Intercompany Note   I Fixed Charge
Coverage Ratio Certificate J Borrower’s Cash Flow Through Q1 2013

 

v

 

“Borrower” as defined in the preamble hereto.

“Business Day” means any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York or is a day on which
banking institutions located in such state are authorized or required by law or
other governmental action to close.

“Bzinfin” means Bzinfin S.A.

“Capital Lease” means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is or should be accounted for as a capital lease on the balance sheet
of that Person.

“Cash” means money, currency or a credit balance in any demand or Deposit
Account.

“Cash Equivalents” means, as at any date of determination, any of the following:
(i) marketable securities (a) issued or directly and unconditionally guaranteed
as to interest and principal by the United States Government or (b) issued by
any agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, a rating of at least
A-1 from S&P or at least P-1 from Moody’s; (iii) commercial paper maturing no
more than three months from the date of creation thereof and having, at the time
of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1
from Moody’s; (iv) certificates of deposit or bankers’ acceptances maturing
within three months after such date and issued or accepted by any Lender or by
any commercial bank organized under the laws of the United States of America or
any state thereof or the District of Columbia that (a) is at least “adequately
capitalized” (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $1,000,000,000; and (v) shares of any money market mutual fund that
(a) has substantially all of its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of not
less than $5,000,000,000, and (c) has the highest rating obtainable from either
S&P or Moody’s.

“Certificate re Non-Bank Status” means a certificate substantially in the form
of Exhibit E.

“Change of Control” means (a) the consummation of a merger or consolidation of
Borrower with or into another entity (except a merger or consolidation in which
the holders of Borrower’s outstanding Stock immediately prior to such merger or
consolidation continue to Beneficially Own immediately thereafter at least 50%
of the voting power of Stock or the capital stock, or equivalent equity
interests, of the surviving or acquiring entity (or its parent entity if the
surviving entity is wholly owned by the parent entity), (b) a sale, lease or
other disposition of all or substantially all of the assets of Borrower and its
Subsidiaries on a consolidated basis (including securities of Borrower’s
directly or indirectly owned subsidiaries), other than a sale, lease or other
disposition to an Affiliate of the Borrower or to Bzinfin or its Affiliates, (c)
such time that Bzinfin, together with its Affiliates, including any Permitted
Transferee as a result of a Permitted Transfer under clauses (b), (c) or (e) of
the definition thereof, cease to possess the power to elect a majority of the
members of the Board of Directors of Borrower or (d) such time that Bzinfin and
its Affiliates, including any Permitted Transferee as a result of a Permitted
Transfer under clauses (b), (c) or (e) of the definition thereof, shall cease to
Beneficially Own, in the aggregate, at least 35% of the outstanding shares of
the Stock on an as converted basis into New Common Stock.

4

 

“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief laws of the United States or other applicable jurisdictions from
time to time in effect.

“Default” means a condition or event that, after notice or lapse of time or
both, would constitute an Event of Default.

“Deferred Amount” means the amount equal to (a) $3,000,000 if on the
Amortization Date that is the later of: (i) the first anniversary of the Closing
Date and (ii) April 10, 2013, the Net Cumulative Cash Outflows from February 27,
2012 through March 29, 2013 are equal to or exceed $25,915,000 and (b) the
difference between $25,915,000 and the Net Cumulative Cash Outflows from
February 27, 2012 through March 29, 2013 (not to exceed $3,000,000) if on the
Amortization Date that is the later of: (i) the first anniversary of the Closing
Date and (ii) April 10, 2013, the Net Cumulative Cash Outflows from February 27,
2012 through March 29, 2013 is less than $25,915,000. For purposes of Section
2.7(a) hereof, the Deferred Amount shall be deemed to include accrued interest
thereon to the extent as and when the Deferred Amount is paid in shares of New
Preferred Stock in accordance with the provisos in such Section 2.7(a).

“Deposit Account” means a demand, time, savings, passbook or like account with a
bank, savings and loan association, credit union or like organization, other
than an account evidenced by a negotiable certificate of deposit.

“Disqualified Equity Interests” means any Equity Interest which, by its terms
(or by the terms of any security or other Equity Interests into which it is
convertible or for which it is exchangeable), or upon the happening of any event
or condition (i) matures or is mandatorily redeemable (other than solely for
Equity Interests which are not otherwise Disqualified Equity Interests),
pursuant to a sinking fund obligation or otherwise, (ii) is redeemable at the
option of the holder thereof (other than solely for Equity Interests which are
not otherwise Disqualified Equity Interests), in whole or in part, (iii)
provides for the scheduled payments or dividends in cash, or (iv) is or becomes
convertible into or exchangeable for Indebtedness or any other Equity Interests
that would constitute Disqualified Equity Interests, in each case, prior to the
date that is 91 days after the Latest Maturity Date.

“Dollars” and the sign “$” mean the lawful money of the United States of
America.

“Domestic Subsidiary” means any Subsidiary organized under the laws of the
United States of America, any State thereof or the District of Columbia.

“Effective Date” has the meaning assigned to that term in the Plan.

“Eligible Assignee” means any Person other than a natural Person that is (i) a
Lender, an affiliate of any Lender or a Related Fund (any two or more Related
Funds being treated as a single Eligible Assignee for all purposes hereof), or
(ii) a commercial bank, insurance company, investment or mutual fund or other
entity that is an “accredited investor” (as defined in Regulation D under the
Securities Act); provided, no Credit Party or any Subsidiary of a Credit Party
shall be an Eligible Assignee.

“Employee Benefit Plan” means any “employee benefit plan” as defined in Section
3(3) of ERISA which is or was sponsored, maintained or contributed to by, or
required to be contributed by, Borrower, any of its Material Subsidiaries or any
of their respective ERISA Affiliates.

7

 

 

“NAIC” means The National Association of Insurance Commissioners, and any
successor thereto.

“Narrative Report” means, with respect to the financial statements for which
such narrative report is required, a narrative report describing the operations
of Borrower and its Subsidiaries in the form prepared for presentation to senior
management thereof for the applicable month, Fiscal Quarter or Fiscal Year and
for the period from the beginning of the then current Fiscal Year to the end of
such period to which such financial statements relate.

“Net Asset Sale Proceeds” means, with respect to any Asset Sale, an amount equal
to: (i) Cash payments (including any Cash received by way of deferred payment
pursuant to, or by monetization of, a note receivable or otherwise, but only as
and when so received) received by Borrower or any of its Material Subsidiaries
from such Asset Sale, minus (ii) any bona fide direct costs (not payable to any
Affiliate of Borrower) incurred in connection with such Asset Sale, including
(a) income or gains taxes payable by the seller as a result of any gain
recognized in connection with such Asset Sale and any taxes that may be withheld
as a result of repatriation of such Cash payments to Borrower (including in
connection with distributions to any Subsidiary), (b) payment of the outstanding
principal amount of, premium or penalty, if any, and interest on any
Indebtedness (other than the Term Loans) that is secured by a Lien on the stock
or assets in question (or, in the case of Asset Sales by Ener1 Korea, to the
extent required by the terms of unsecured Indebtedness of Ener1 Korea; provided
that the terms requiring such repayment are substantially similar to the terms
of existing Indebtedness of Ener1 Korea on the date hereof) and that is required
to be repaid under the terms thereof as a result of such Asset Sale and (c) a
reasonable reserve for any indemnification payments (fixed or contingent)
attributable to seller’s indemnities and representations and warranties to
purchaser in respect of such Asset Sale undertaken by Borrower or any of its
Material Subsidiaries in connection with such Asset Sale; provided that upon
release of any such reserve, the amount released shall be considered Net Asset
Sale Proceeds; provided, further, that payments received with respect to any
Asset Sale consummated by a Material Subsidiary which is a joint venture or
strategic alliance shall not constitute Net Asset Sale Proceeds to the extent
that the applicable joint venture or strategic alliance agreement restricts the
distribution of such proceeds to the parties thereto.

“Net Cumulative Cash Outflows” means an aggregate amount of all cash outflows
net of all cash inflows of Borrower and its Subsidiaries calculated
substantially as set forth in Exhibit J attached hereto for illustrative
purposes only.

“Net Insurance/Condemnation Proceeds” means an amount equal to: (i) any Cash
payments or proceeds received by Borrower or any of its Material Subsidiaries
(a) under any casualty insurance policy in respect of a covered loss thereunder
or (b) as a result of the taking of any assets of Borrower or any of its
material Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, minus (ii) (a) any
actual and reasonable costs (not payable to any Affiliate of Borrower) incurred
by Borrower or any of its material Subsidiaries in connection with the
adjustment or settlement of any claims of Borrower or such Material Subsidiary
in respect thereof, and (b) any bona fide direct costs incurred in connection
with any sale of such assets as referred to in clause (i)(b) of this definition,
including income taxes payable as a result of any gain recognized in connection
therewith.

“Net Mark-to-Market Exposure” of a Person means, as of any date of
determination, the excess (if any) of all unrealized losses over all unrealized
profits of such Person arising from Indebtedness of the type described in clause
(xi) of the definition thereof. As used in this definition, “unrealized losses”
means the fair market value of the cost to such Person of replacing such
Indebtedness as of the date of determination (assuming such Indebtedness were to
be terminated as of that date), and

15

 

 

 “Secured Parties” means (i) each Agent, (ii) each Lender, (iii) solely with
respect to the Holders Plan Payments, each Holder, and (iv) solely with respect
to the Itochu Plan Payments, Itochu.

“Securities” means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as “securities” or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

“Solvent” means, with respect to any Credit Party, that as of the date of
determination, both (i) (a) the sum of such Credit Party’s debt (including
contingent liabilities) does not exceed the present fair saleable value of such
Credit Party’s present assets; (b) such Credit Party’s capital is not
unreasonably small in relation to its business as contemplated on the Closing
Date and reflected in the Projections or with respect to any transaction
contemplated to be undertaken after the Closing Date; and (c) such Person has
not incurred and does not intend to incur, or believe (nor should it reasonably
believe) that it will incur, debts beyond its ability to pay such debts as they
become due (whether at maturity or otherwise); and (ii) such Person is “solvent”
within the meaning given that term and similar terms under the Bankruptcy Code
and other applicable laws relating to fraudulent transfers and conveyances. For
purposes of this definition, the amount of any contingent liability at any time
shall be computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability (irrespective of whether
such contingent liabilities meet the criteria for accrual under Statement of
Financial Accounting Standards No.5).

“Specified Amount ” as defined in Section 2.7(a).

“Sponsor” means Bzinfin S.A.

“Stock” means all issued and outstanding shares of New Common Stock and New
Preferred Stock, together with all other shares of capital stock of Borrower of
any class or series which may after the Effective Date be issued.

“Subordinated Indebtedness” as defined in Section 6.1(o).

“Stockholders Agreement” means that certain Stockholders Agreement, dated as of
the Effective Date, by and among the Borrower and the shareholders of the
Company party thereto, as it may be amended, restated, supplemented or otherwise
modified from time to time.

“Subsidiary” means, with respect to any Person, any corporation, partnership,
limited liability company, association, joint venture or other business entity
of which more than 50% of the total voting power of shares of stock or other
ownership interests entitled (without regard to the occurrence of any
contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof; provided, in determining

20

 

such notice is delivered after the Closing Date, promptly after Borrower’s
receipt of such notice) a Note or Notes to evidence such Lender’s Term Loan.

2.4 Interest on Term Loans.

(a)                Except as otherwise set forth herein, each Loan shall bear
interest on the unpaid principal amount thereof from the date made through
repayment (whether by acceleration or otherwise) at the rate that is 7.00% per
annum; provided that (i) commencing on the Interest Payment Date occurring on
the last Business Day of the Fiscal Quarter ending March 31, 2013, in the event
that, as of any Interest Payment Date, the Fixed Charge Coverage Ratio for the
four Fiscal Quarter period most recently ended prior to such Interest Payment
Date (as demonstrated in the Fixed Charge Coverage Ratio Certificate delivered
to the Administrative Agent not later than 12:00 p.m. (New York City time) at
least three Business Days in advance of the applicable Interest payment Date)
equals or exceeds 1.75:1, accrued interest on the Term Loans as of such Interest
Payment Date shall be paid in cash and (ii) in the event that the requirements
of clause (i) above are not satisfied at such Interest Payment Date, and in any
event prior to March 31, 2013, the accrued interest on the Term Loans at such
Interest Payment Date shall be capitalized with and added to the principal
amount of the Term Loans for all purposes of this Agreement (such capitalized
interest, “PIK Interest”), it being understood that the amount of PIK Interest
as of any date shall include all PIK Interest capitalized prior to or on such
date.

(b)               Interest payable or capitalized (as applicable) pursuant to
Section 2.4(a) shall be computed on the basis of a 360-day year for the actual
number of days elapsed in the period during which it accrues. In computing
interest on any Term Loan, the Closing Date or the last Interest Payment Date
shall be included, and the date of payment of such Term Loan shall be excluded.

(c)                Except as otherwise set forth herein, interest on each Loan
(i) shall accrue on a daily basis and shall be payable or capitalized (as
applicable), in arrears on each Interest Payment Date with respect to interest
accrued on and to each such payment date; (ii) shall accrue on a daily basis and
shall be payable in arrears upon any prepayment of that Term Loan, whether
voluntary or mandatory, to the extent accrued on the amount being prepaid; and
(iii) shall accrue on a daily basis and shall be payable in arrears at maturity
of the Term Loans, including final maturity of the Term Loans.

2.5 Default Interest. Upon the occurrence and during the continuance of an Event
of Default under Section 8.1, the principal amount of all Loans outstanding
shall thereafter bear interest (including post-petition interest in any
proceeding under Debtor Relief Laws) payable on demand at a rate that is 2.00%
per annum in excess of the interest rate otherwise payable hereunder with
respect to the applicable Loans. Payment or acceptance of the increased rates of
interest provided for in this Section 2.5 is not a permitted alternative to
timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Administrative Agent or
any Lender.

2.6 Fees. Borrower agrees to pay to Agents pursuant to the Agent Fee Letter fees
in the amounts and at the times described in the letter dated as of January 13,
2012 from Wilmington to Weil, Gotshal & Manges, LLP, as counsel for the GS Funds
and delivered to Borrower1.

2.7 Scheduled Payments.

 

 

 1 Agent Fee Letter shall be executed at closing.

23

 

 

(a)                Scheduled Installments. The principal amounts of the Term
Loans shall be repaid in consecutive installments and at final maturity (each
such payment, an “Installment”) in the aggregate amounts set forth below on each
date set forth below (the “Amortization Date”):

Amortization Date Term Loan Installments

FirstThe later of: (i) the first anniversary of the Closing Date and (ii) April
10, 2013

 

$5,000,000 minus the Deferred Amount to be applied to the principal amount of
the Term Loans (excluding PIK Interest) outstanding on the first anniversary of
the Closing Date

 

SecondThe later of: (i) the second anniversary of the Closing Date and (ii)
April 10, 2014

 

$5,000,000 plus the Deferred Amount to be applied to the principal amount of the
Term Loans (excluding PIK Interest) outstanding on the second anniversary of the
Closing Date

 

Third anniversary of the Closing Date

25% of the principal amount of the Term Loans (excluding PIK Interest)
outstanding on the third anniversary of the Closing Date

 

Fourth anniversary of the Closing Date

25% of the principal amount of the Term Loans (excluding PIK Interest)
outstanding on the third anniversary of the Closing Date plus ⅓ of the PIK
Interest on and as of the fourth anniversary of the Closing Date

 

Fifth anniversary of the Closing Date

25% of the principal amount of the Term Loans (excluding PIK Interest)
outstanding on the third anniversary of the Closing Date plus ⅓ of the PIK
Interest on and as of the fourth anniversary of the Closing Date

 

Maturity Date Remainder

 

; provided, however, that so long as any Holders Plan Payment or Itochu Plan
Payment remains outstanding, Borrower shall not pay any amounts to Lenders
hereunder (although any such amounts owing to Lenders shall remain due),
including without limitation any voluntary or mandatory prepayments of the Term
Loans in accordance with Sections 2.8, 2.9 or 2.10 and any amendments,
modifications or waivers of this proviso shall be subject to Section 10.5(c);
and provided further that (a) if on the Amortization Date that is the later of:
(i) the second anniversary of the Closing Date and (ii) April 10, 2014, the Net
Cumulative Cash Outflows from April 1, 2013 through March 31, 2014 are equal to
or exceed $[__]2 (the “Specified Amount”), the full Deferred Amount will be paid
in shares of New Preferred Stock and (b) if on the Amortization Date that is the
later of: (i) the second anniversary of the

 

 

 

 

2 Such amount to be reasonably agreed upon by Lenders, Bzinfin and Borrower
based on Borrower’s revised Projections to be substantially in the form of
Exhibit J and to be delivered prior to the Effective Date.

 

24

 

 

 

Closing Date and (ii) April 10, 2014, the Net Cumulative Cash Outflows from
April 1, 2013 through March 31, 2014 are less than the Specified Amount, the
portion of the Deferred Amount equal to the difference between the Specified
Amount and such Net Cumulative Cash Outflows (not to exceed $3,000,000) shall be
paid in Cash and the balance of the Deferred Amount (if any) will be paid in
shares of New Preferred Stock. To the extent that shares of New Preferred Stock
are used to satisfy any portion of the Deferred Amount, such shares shall have
an aggregate liquidation preference equal to the portion of the Deferred Amount
satisfied with shares of New Preferred Stock.

 

Subject to the foregoing proviso, (x) such Installments shall be reduced in
connection with any voluntary or mandatory prepayments of the Term Loans in
accordance with Sections 2.8, 2.9 and 2.10, as applicable; and (y) the Term
Loans, together with all other amounts owed hereunder with respect thereto,
shall, in any event, be paid in full no later than the Maturity Date.

(b)               AHYDO Payment. On the last day of each accrual period (as
defined in Section 1272(a)(5) of the Internal Revenue Code) occurring after the
fifth anniversary of the Closing Date, Borrower shall in addition pay the
minimum amount necessary, if any, to ensure that the Term Loans do not
constitute “applicable high yield discount obligations” within the meaning of
Section 163(i) of the Internal Revenue Code.

1.2         Voluntary Prepayments.

(a)                Voluntary Prepayments. Any time and from time to time
Borrower may prepay any Term Loans on any Business Day in whole or in part
without premium or penalty, in an aggregate minimum amount of $1,000,000 and
integral multiples of $50,000 in excess of that amount.

(b)               Notice of Prepayment. All such prepayments shall be made upon
not less than three Business Day’s prior written or telephonic notice given to
Administrative Agent by 12:00 p.m. (New York City time) on the date required
and, if given by telephone, promptly confirmed by delivery of written notice
thereof to Administrative Agent (and Administrative Agent will promptly transmit
such original notice for Term Loans by telefacsimile or telephone to each
Lender). Upon the giving of any such notice, the principal amount of the Term
Loans specified in such notice shall become due and payable on the prepayment
date specified therein. Any such voluntary prepayment shall be applied as set
forth in Section 2.10.

1.3         Mandatory Prepayments.

(a)                Asset Sales. No later than the third Business Day following
the date of receipt by Borrower or any of its Subsidiaries of any Net Asset Sale
Proceeds, Borrower shall prepay the Term Loans as set forth in Section 2.10 in
an aggregate amount equal to 50% of such Net Asset Sale Proceeds.

(b)               Insurance/Condemnation Proceeds. No later than the third
Business Day following the date of receipt by Borrower or any of its
Subsidiaries, or Administrative Agent as loss payee, of any Net
Insurance/Condemnation Proceeds, Borrower shall hold such Net
Insurance/Condemnation Proceeds in an escrow account and if such proceeds may be
used by Borrower in accordance with clause (ii) below, but are not so used by
Borrower in accordance therewith, then such Net Insurance/Condemnation Proceeds
shall be used to prepay the Term Loans as set forth in Section 2.10 in an
aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided,
(i) so long as no Default or Event of Default shall have occurred and be
continuing, and (ii) to the extent that aggregate Net Insurance/Condemnation
Proceeds from the Closing Date through the applicable date of determination do
not exceed $2,000,000, Borrower shall have the option, directly or through one
or more of its Material Subsidiaries to invest such Net Insurance/Condemnation
Proceeds within one hundred

25

 

Cash Flow Forecast

 

Cash Flow Forecast through Q1 2013

Prepared as of 2-25-12

 

                                                                               
        Hearing            Effective                                            
                      Week ending   3/2/2012     3/9/2012     Date     3/16/2012
    3/23/2012     3/30/2012     4/6/2012     4/13/2012     4/20/2012    
4/27/2012     5/4/2012     5/11/2012     5/18/2012     5/25/2012  

Inflows: Receipts     5,000       88       0       488       228       643      
788       2,112       1,078       873       1,179       389       389      
1,137                                                                          
                                          Outflows:                            
                                                                               
    Payroll     (869 )     (24 )             (1,069 )     0       (1,421 )     0
      (2,216 )     0       (832 )     0       (835 )     (206 )     (130 )
Vendor payments     (1,970 )     (1,383 )     0       (1,165 )     (565 )    
(384 )     (2,802 )     (367 )     (420 )     (449 )     (648 )     (1,391 )    
(364 )     (72 ) Utilities     (30 )     (30 )             (30 )     (30 )    
(30 )     (30 )     (30 )     (30 )     (30 )     (30 )     (30 )     (30 )    
(30 ) Professional Fees and Contracts                     (775 )                
                                    (50 )                             (50 ) Real
Estate Leases             (156 )                                     (156 )    
                        (148 )                         WanXiang interest
payments                                                                        
                                        Transfers to Other subsidiaries     (167
)     (90 )     0       (214 )     (90 )     (394 )     (115 )     (234 )    
(128 )     (198 )     (75 )     (75 )     (75 )     (75 )   Total outflows    
(3,036 )     (1,683 )     (775 )     (2,478 )     (685 )     (2,229 )     (3,103
)     (2,847 )     (578 )     (1,559 )     (901 )     (2,331 )     (675 )    
(357 ) Net inflow/(outflow)     1,964       (1,596 )     (775 )     (1,990 )    
(457 )     (1,586 )     (2,315 )     (735 )     500       (686 )     278      
(1,942 )     (286 )     780  

 

 

Week ending   6/1/2012     6/8/2012     6/15/2012     6/22/2012     6/29/2012  
  July-12     August-12     September-12     October-12     November-12    
December-12     January-13     February-13     March-13  

Inflows: Receipts     1,093       303       1,111       1,298       303      
5,203       2,641       3,256       3,076       4,253       6,610       5,271  
    4,799       4,013                                                          
                                                          Outflows:            
                                                                               
                    Payroll     (702 )     (130 )     (848 )     (130 )     (702
)     (2,350 )     (1,944 )     (1,772 )     (1,772 )     (1,742 )     (1,742 )
    (1,742 )     (1,742 )     (1,742 ) Vendor payments     (422 )     (1,505 )  
  (522 )     (944 )     (857 )     (2,543 )     (4,365 )     (4,198 )     (3,126
)     (3,285 )     (3,687 )     (4,397 )     (2,551 )     (3,307 ) Utilities    
(30 )     (30 )     (30 )     (30 )     (30 )     (120 )     (110 )     (110 )  
  (110 )     (110 )     (110 )     (110 )     (110 )     (110 ) Professional
Fees and Contracts                             (100 )     (50 )     (50 )    
(50 )     (50 )     (125 )     (75 )     (150 )     (50 )     (50 )     (50 )
Real Estate Leases     (148 )                             (148 )     (148 )    
(136 )     (136 )     (136 )     (136 )     (136 )     (136 )     (136 )    
(136 ) WanXiang interest payments                     (450 )                    
                (450 )                     (450 )                     (450 )
Transfers to Other subsidiaries     (75 )     (75 )     (75 )     (75 )     (75
)     (300 )     (375 )     (300 )     (300 )     (375 )     (225 )     0      
0       0    Total outflows     (1,377 )     (1,740 )     (1,925 )     (1,279 )
    (1,862 )     (5,511 )     (6,980 )     (7,016 )     (5,569 )     (5,723 )  
  (6,500 )     (6,435 )     (4,589 )     (5,795 ) Net inflow/(outflow)     (283
)     (1,437 )     (814 )     20       (1,559 )     (308 )     (4,339 )    
(3,761 )     (2,493 )     (1,470 )     110       (1,164 )     210       (1,782 )