Exhibit 10.2
 

Execution version 11/18/10
 

SECURITY AGREEMENT

THIS SECURITY AGREEMENT, dated as of November 18, 2010 (this “Agreement”), is by
and between THINK NORTH AMERICA, INC, a Delaware Corporation (the “Debtor”), ,
and ENER1, INC., a Florida corporation  (the “Lender”). The Lender and its
endorsees, transferees and assigns are sometimes collectively referred to herein
as the “Secured Parties”.

WITNESSETH:

WHEREAS, it is a condition to the obligation of the Lender in the Revolving Line
of Credit Agreement dated November 18, 2010 (the “Line of Credit Agreement”), by
and between the Lender and Think Holdings AS (the “Parent Company” or the
“Borrower”) that the Debtor execute and deliver to the Lender this Agreement;
and

WHEREAS, the Debtor is an indirect subsidiary of the Parent Company and will
directly or indirectly benefit from the extension of credit to the Borrower
represented by the advancement of funds contemplated by the Line of Credit
Agreement.

NOW, THEREFORE, in consideration of the agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

1.           CERTAIN DEFINITIONS.

Capitalized terms used herein and not otherwise defined shall have the meanings
given to them in the Line of Credit Agreement.  Terms used herein that are
defined in Article 9 of the UCC but not otherwise defined in this Agreement
(such as “account”, “chattel paper”, “commercial tort claim”, “deposit account”,
“document”, “equipment”, “fixtures”, “general intangibles”, “goods”,
“instruments”, “inventory”, “investment property”, “letter-of-credit rights”,
“proceeds” and “supporting obligations”) shall have the respective meanings
given such terms in Article 9 of the UCC. As used in this Agreement, the
following terms shall have the meanings set forth in this Section 1.

“Collateral” means the collateral in which the Secured Parties are granted a
security interest by this Agreement and which shall include all assets and
properties of the Debtor, including the following personal property presently
owned or hereafter acquired by the Debtor, wherever situated, and all additions
and accessions thereto and all substitutions and replacements thereof, and all
proceeds, products and accounts thereof, including, without limitation, all
proceeds from the sale or transfer of the Collateral and of insurance covering
the same and of any tort claims in connection therewith, and all dividends,
interest, cash, notes, securities, equity interest or other property at any time
and from time to time acquired, receivable or otherwise distributed in respect
of, or in exchange for, any or all of the Pledged Securities (as defined below):

 
 

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(i)           All goods, including, without limitation, (A) all machinery,
equipment, computers, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality control devices
and other equipment of every kind and nature and wherever situated, together
with all documents of title and documents representing the same, all additions
and accessions thereto, replacements therefor, all parts therefor, and all
substitutes for any of the foregoing and all other items used and useful in
connection with the Debtor’s businesses and all improvements thereto; and (B)
all inventory;

(ii)           All contract rights and other general intangibles, including,
without limitation, all partnership interests, membership interests, stock or
other securities, rights under any of the Organizational Documents, agreements
related to the Pledged Securities, licenses, distribution and other agreements,
computer software (whether “off-the-shelf”, licensed from any third party or
developed by the Debtor), computer software development rights, leases,
franchises, customer lists, quality control procedures, grants and rights,
goodwill, trademarks, service marks, trade styles, trade names, patents, patent
applications, copyrights, Intellectual Property, and income tax refunds;

(iii)           All accounts, together with all instruments, all documents of
title representing any of the foregoing, all rights in any merchandising, goods,
equipment, motor vehicles and trucks which any of the same may represent, and
all right, title, security and guaranties with respect to each account,
including any right of stoppage in transit;

(iv)           All documents, letter-of-credit rights, instruments and chattel
paper;

(v)           All commercial tort claims;

(vi)           All deposit accounts and all cash (whether or not deposited in
such deposit accounts);

(vii)          All investment property;

(viii)         All supporting obligations;

(ix)           All files, records, books of account, business papers, and
computer programs; and

(x)            the products and proceeds of all of the foregoing Collateral set
forth in clauses (i)-(ix) above.

Without limiting the generality of the foregoing, the term “Collateral” shall
include all investment property and general intangibles respecting ownership
and/or other equity interests in the Debtor, and any other shares of capital
stock and/or other equity interests of any other direct or indirect subsidiary
of the Debtor obtained in the future, in each case, all certificates
representing such shares and/or equity interests and, in each case, all rights,
options, warrants, stock, other securities and/or equity interests that may
hereafter be received, receivable or distributed in respect of, or exchanged
for, any of the foregoing (all of the foregoing being referred to herein as the
“Pledged Securities”) and all rights arising under or in connection with the
Pledged Securities, including, but not limited to, all dividends, interest and
cash.

 
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Notwithstanding the foregoing, nothing herein shall be deemed to constitute an
assignment of any asset which, in the event of an assignment, becomes void by
operation of applicable law or the assignment of which is otherwise prohibited
by applicable law (in each case to the extent that such applicable law is not
overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar
applicable law); provided, however, that to the extent permitted by applicable
law, this Agreement shall create a valid security interest in such asset and, to
the extent permitted by applicable law, this Agreement shall create a valid
security interest in the proceeds of such asset.

“Event of Default” means the occurrence of either of the following:  (i) an
Event of Default (as defined in the Line of Credit Agreement); or (ii) any
provision of this Agreement shall at any time for any reason be declared to be
null and void, or the validity or enforceability thereof shall be contested by
the Debtor, or a proceeding shall be commenced by the Debtor, or by any
governmental authority having jurisdiction over the Debtor, seeking to establish
the invalidity or unenforceability thereof, or the Debtor shall deny that the
Debtor has any liability or obligation purported to be created under this
Agreement.

“Intellectual Property” means the collective reference to all existing rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, (ii) all letters patent of
the United States, any other country or any political subdivision thereof, all
reissues and extensions thereof, and all applications for letters patent of the
United States or any other country and all divisions, continuations and
continuations-in-part thereof, (iii) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade dress,
service marks, logos, domain names and other source or business identifiers, and
all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any State thereof or
any other country or any political subdivision thereof, or otherwise, and all
common law rights related thereto, (iv) all trade secrets arising under the laws
of the United States, any other country or any political subdivision thereof,
(v) all rights to obtain any reissues, renewals or extensions of the foregoing,
(vi) all licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.
 
“Necessary Endorsement” shall mean undated stock powers endorsed in blank or
other proper instruments of assignment duly executed and such other instruments
or documents as the Secured Parties may reasonably request.

 
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“Obligations” means all of the Debtor’s obligations under this Agreement and all
of the Borrower’s obligations under the Line of Credit Agreement, in each case,
whether now or hereafter existing, voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not jointly owed
with others, and whether or not from time to time decreased or extinguished and
later increased, created or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from any of the Secured Parties as a
preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.  Without
limiting the generality of the foregoing, the term “Obligations” shall include,
without limitation: (i) principal of, and interest on the Credit Line extended
pursuant to the Line of Credit Agreement; (ii) any and all other fees,
indemnities, costs, obligations and liabilities of the Debtor from time to time
under or in connection with this Agreement or the Line of Credit Agreement; and
(iii) all amounts (including, without limitation, post-petition interest) in
respect of the foregoing that would be payable but for the fact that the
obligations to pay such amounts are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving the
Debtor.

“Organizational Documents” means with respect to an entity, the documents by
which such entity was organized (such as a certificate of incorporation,
certificate of limited partnership or articles of organization, and including,
without limitation, any certificates of designation for preferred stock or other
forms of preferred equity) and which relate to the internal governance of such
entity (such as bylaws, a partnership agreement or an operating, limited
liability or members agreement).
 
 “UCC” means the Uniform Commercial Code of the State of New York and/or any
other applicable law of any state or states which has jurisdiction with respect
to all, or any portion of, the Collateral or this Agreement, from time to
time.  It is the intent of the parties that defined terms in the UCC should be
construed in their broadest sense so that the term “Collateral” will be
construed in its broadest sense.  Accordingly if there are, from time to time,
changes to defined terms in the UCC that broaden the definitions, they are
incorporated herein and if existing definitions in the UCC are broader than the
amended definitions, the existing ones shall be controlling.

2.           GRANT OF SECURITY INTEREST.

As an inducement for the Secured Parties to advance funds under the Line of
Credit Agreement and to secure the complete and timely payment, performance and
discharge in full, as the case may be, of all of the Obligations, the Debtor
hereby unconditionally and irrevocably pledges, grants and hypothecates to the
Secured Parties, a continuing security interest in and to, a lien upon and a
right of set-off against all of their respective right, title and interest of
whatsoever kind and nature in and to, the Collateral (the “Security
Interest”).   The Security Interest granted hereunder is a first priority lien
and security interest.

 
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3.           DELIVERY OF CERTAIN COLLATERAL.

Contemporaneously or prior to the execution of this Agreement, the Debtor shall
deliver or cause to be delivered to the Secured Parties any and all certificates
of title and other documents and instruments representing or evidencing the
Debtor’s ownership interests in the 210 Think City A-306 electric vehicles
(excluding batteries), and having a value of US$23,500 per unit, located at
Elkhart, Indiana, in each case, together with all Necessary
Endorsements.  Schedule A lists each of these 210 vehicles along with their
vehicle identification numbers.  The Debtor represent that all of the
information contained in Schedule A is true, complete and accurate.

4.           REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
DEBTOR.

The Debtor represents and warrants to, and covenants and agrees with the Secured
Parties, as follows:

4.1           Good Standing; Due Authorization; Enforceability.

(a)           The Debtor is duly organized and in good standing in the
jurisdiction of its formation.  The Debtor shall at all times preserve and keep
in full force and effect its valid existence and good standing and any rights
and franchises material to its business.

(b)           The Debtor has the requisite corporate, partnership, limited
liability company or other power and authority to enter into this Agreement and
otherwise to carry out its obligations hereunder. The execution, delivery and
performance by the Debtor of this Agreement and the filings contemplated therein
have been duly authorized by all necessary action on the part of the Debtor and
no further action is required by the Debtor.  This Agreement has been duly
executed and delivered by the Debtor.

(c)           This Agreement constitutes the legal, valid and binding obligation
of the Debtor, enforceable against the Debtor in accordance with its terms
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws of general application relating to
or affecting the rights and remedies of creditors and by general principles of
equity.

4.2           No Conflicts.    The execution, delivery and performance of this
Agreement by the Debtor do not (i) violate any of the provisions of any
Organizational Documents of the Debtor or any judgment, decree, order or award
of any court, governmental body or arbitrator or any applicable law, rule or
regulation applicable to the Debtor or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing the
Debtor’s debt or otherwise) or other understanding to which the Debtor is a
party or by which any property or asset of the Debtor is bound or affected.  No
consent (including, without limitation, from stockholders or creditors of the
Debtor) is required for the Debtor to enter into and perform its obligations
hereunder.

 
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4.3           Debtor Information; Validity, Perfection and Maintenance of
Security Interests.

(a)           The Debtor shall not change its name, type of organization,
jurisdiction of organization, organizational identification number (if it has
one), legal or corporate structure, or identity, or add any new fictitious name
unless it provides at least 30 days’ prior written notice to the Secured Parties
of such change and, at the time of such written notification, the Debtor
provides any financing statements or fixture filings necessary to perfect and
continue to perfect the perfected Security Interest granted and evidenced by
this Agreement.

(b)           This Agreement creates in favor of the Secured Parties a valid
security interest in the Collateral, securing the payment and performance of the
Obligations.  Upon filing of UCC-1 financing statements with the secretary of
state’s office of the state in which the Debtor is organized (collectively, the
“Financing Statements”), and payment of the applicable filing fees, all security
interests created hereunder in any Collateral which may be perfected by filing
UCC financing statements shall have been duly perfected.  No consent of any
third parties and no authorization, approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for
(i) the execution, delivery and performance of this Agreement, (ii) the creation
or perfection of the Security Interests created hereunder in the Collateral, or
(iii) the enforcement of the rights of the Secured Parties hereunder.

(c)             The Debtor hereby authorizes the Secured Parties, or any of
them, to file the Financing Statements and any other financing statements under
the UCC with respect to the Security Interest with the proper filing and
recording agencies in any jurisdiction deemed proper by them.  The Debtor shall,
at the Debtor’s sole cost and expense, promptly execute and/or deliver to the
Secured Parties such further deeds, mortgages, assignments, security agreements,
financing statements or other instruments, documents, certificates and
assurances and take such further action as the Secured Parties may from time to
time request and may in their sole discretion deem necessary to perfect, protect
or enforce its security interest in the Collateral including, without
limitation, if applicable, the execution and delivery of a separate security
agreement with respect to the Debtor’s Intellectual Property in which the
Secured Parties have been granted a security interest hereunder, substantially
in a form acceptable to the Secured Parties.

(d)           The Debtor shall at all times maintain the liens and Security
Interest provided for hereunder as valid and perfected liens and security
interests in the Collateral in favor of the Secured Parties until this Agreement
and the Security Interest hereunder shall be terminated pursuant to Section
13.  The Debtor hereby agrees to defend the same against the claims of any and
all persons and entities.  The Debtor shall obtain and furnish to the Secured
Parties from time to time, upon demand, such releases and/or subordinations of
claims and liens which may be required to maintain the priority of the Security
Interest hereunder.

 
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4.4           Collateral.

(a)           The Debtor is the sole owner of the Collateral (except for
non-exclusive licenses granted by the Debtor in the ordinary course of
business), free and clear of any liens, security interests, encumbrances, rights
or claims, and are fully authorized to grant the Security Interest.  There has
been no adverse decision to the Debtor’s claim of ownership rights in or
exclusive rights to use the Collateral in any jurisdiction or to the Debtor’s
right to keep and maintain such Collateral in full force and effect, and there
is no proceeding involving said rights pending or, to the best knowledge of the
Debtor, threatened before any court, judicial body, administrative or regulatory
agency, arbitrator or other governmental authority.

(b)           The Debtor shall keep and preserve its equipment, inventory and
other tangible Collateral in good condition, repair and order.  The Debtor shall
take all steps reasonably necessary to diligently pursue and seek to preserve,
enforce and collect any rights, claims, causes of action and accounts receivable
in respect of the Collateral.

 (c)           There is not on file in any governmental or regulatory authority,
agency or recording office an effective financing statement, security agreement,
license or transfer or any notice of any of the foregoing (other than those that
will be filed in favor of the Secured Parties pursuant to this Agreement)
covering or affecting any of the Collateral.  So long as this Agreement shall be
in effect, the Debtor shall not execute and shall not knowingly permit to be on
file in any such office or agency any such financing statement or other document
or instrument (except to the extent filed or recorded in favor of the Secured
Parties pursuant to the terms of this Agreement).
 
(d)           The Debtor shall, within ten days of obtaining knowledge thereof,
advise the Secured Parties promptly, in sufficient detail, of any substantial
change in the Collateral, and of the occurrence of any event which would have a
material adverse effect on the value of the Collateral or on the Secured
Parties’ security interest therein.  The Debtor shall permit the Secured Parties
and their representatives and agents to inspect the Collateral at any time, and
to make copies of records pertaining to the Collateral as may be requested by a
Secured Party from time to time.

(e)           All information heretofore, herein or hereafter supplied to the
Secured Parties by or on behalf of the Debtor with respect to the Collateral is
accurate and complete in all material respects as of the date furnished.
 
5.           EFFECT OF PLEDGE ON CERTAIN RIGHTS.

If any of the Collateral subject to this Agreement consists of nonvoting equity
or ownership interests (regardless of class, designation, preference or rights)
that may be converted into voting equity or ownership interests upon the
occurrence of certain events (including, without limitation, upon the transfer
of all or any of the other stock or assets of the issuer), it is agreed that the
pledge of such equity or ownership interests pursuant to this Agreement or the
enforcement of any of the Secured Parties’ rights hereunder shall not be deemed
to be the type of event which would trigger such conversion rights
notwithstanding any provisions in the Organizational Documents or agreements to
which the Debtor or any of the Collateral is subject or to which the Debtor is
party.

 
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6.           DUTY TO HOLD IN TRUST.

6.1           Cash and Payment Obligations.  Upon the occurrence of an Event of
Default and at any time thereafter, the Debtor shall, upon receipt of any
revenue, income, dividend, interest or other sums subject to the Security
Interest, whether payable pursuant to the Line of Credit Agreement or otherwise,
or of any check, draft, note, trade acceptance or other instrument evidencing an
obligation to pay any such sum, hold the same in trust for and on behalf of and
for the benefit of the Secured Parties, and shall forthwith endorse and transfer
any such sums or instruments, or both (to the extent permitted by law), to the
Secured Parties for application to the satisfaction of the Obligations.

6.2           Securities and Other Assets.  If the Debtor shall become entitled
to receive or shall receive any securities or other property (including, without
limitation, shares of Pledged Securities or instruments representing Pledged
Securities acquired after the date hereof, or any options, warrants, rights or
other similar property or certificates representing a dividend, or any
distribution in connection with any recapitalization, reclassification or
increase or reduction of capital, or issued in connection with any
reorganization of any of its direct or indirect subsidiaries) in respect of the
Pledged Securities (whether as an addition to, in substitution of, or in
exchange for, such Pledged Securities or otherwise), the Debtor agrees to (i)
accept the same as the agent of the Secured Parties; (ii) hold the same in trust
on behalf of and for the benefit of the Secured Parties; and (iii) deliver any
and all certificates or instruments evidencing the same to the Secured Parties,
on or before the close of business on the fifth business day following the
receipt thereof by the Debtor, in the exact form received together with the
Necessary Endorsements, to be held by the Secured Parties subject to the terms
of this Agreement as Collateral.

7.           RIGHTS AND REMEDIES UPON DEFAULT.

7.1           Scope of Rights and Remedies.  Upon the occurrence of any Event of
Default and at any time thereafter, the Secured Parties, acting through any
agent appointed by them for such purpose, shall have the right to exercise all
of the remedies conferred hereunder and under the Line of Credit Agreement, and
the Secured Parties shall have all the rights and remedies of a secured party
under the UCC. Without limitation, the Secured Parties shall have the following
rights and powers:

(a)           The Secured Parties shall have the right to take possession of the
Collateral and, for that purpose, enter, with the aid and assistance of any
person, any premises where the Collateral, or any part thereof, is or may be
placed and remove the same, and the Debtor shall assemble the Collateral and
make it available to the Secured Parties at places which the Secured Parties
shall reasonably select, whether at the Debtor’s premises or elsewhere, and make
available to the Secured Parties, without rent, all of the Debtor’s premises and
facilities for the purpose of the Secured Parties taking possession of, removing
or putting the Collateral in saleable or disposable form.

(b)           Upon notice to the Debtor by the Secured Parties, all rights of
the Debtor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise and all rights of the Debtor to receive the
dividends and interest which it would otherwise be authorized to receive and
retain, shall cease.  Upon such notice, the Secured Parties shall have the right
to receive any interest, cash dividends or other payments on the Collateral and,
at the option of the Secured Parties, to exercise in the Secured Parties’
discretion all voting rights pertaining thereto.  Without limiting the
generality of the foregoing, the Secured Parties shall have the right (but not
the obligation) to exercise all rights with respect to the Collateral as if it
were the sole and absolute owner thereof, including, without limitation, to vote
and/or to exchange, at its sole discretion, any or all of the Collateral in
connection with a merger, reorganization, consolidation, recapitalization or
other readjustment concerning or involving the Collateral or a Debtor or any of
its direct or indirect subsidiaries.

 
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(c)           The Secured Parties shall have the right to operate the business
of the Debtor using the Collateral and shall have the right to assign, sell,
lease or otherwise dispose of and deliver all or any part of the Collateral, at
public or private sale or otherwise, either with or without special conditions
or stipulations, for cash or on credit or for future delivery, in such parcel or
parcels and at such time or times and at such place or places, and upon such
terms and conditions as the Secured Parties may deem commercially reasonable,
all without (except as shall be required by applicable statute and cannot be
waived) advertisement or demand upon or notice to the Debtor or right of
redemption of the Debtor, which are hereby expressly waived.  Upon each such
sale, lease, assignment or other transfer of Collateral, the Secured Parties
may, unless prohibited by applicable law which cannot be waived, purchase all or
any part of the Collateral being sold, free from and discharged of all trusts,
claims, right of redemption and equities of the Debtor, which are hereby waived
and released.

(d)           The Secured Parties shall have the right (but not the obligation)
to notify any account debtors and any obligors under instruments or accounts to
make payments directly to the Secured Parties and to enforce the Debtor’s rights
against such account debtors and obligors.

(e)           The Secured Parties may (but are not obligated to) direct any
financial intermediary or any other person or entity holding any investment
property to transfer the same to the Secured Parties or their designee.

(f)           The Secured Parties may (but are not obligated to) transfer any or
all Intellectual Property registered in the name of the Debtor at the United
States Patent and Trademark Office and/or Copyright Office into the name of the
Secured Parties or any designee or any purchaser of any Collateral.

7.2           Disposition of Collateral.  The Secured Parties may comply with
any applicable law in connection with a disposition of Collateral and such
compliance will not be considered adversely to affect the commercial
reasonableness of any sale of the Collateral.  The Secured Parties may sell the
Collateral without giving any warranties and may specifically disclaim such
warranties.  If the Secured Parties sell any of the Collateral on credit, the
Debtor will only be credited with payments actually made by the purchaser.  In
addition, the Debtor waives any and all rights that it may have to a judicial
hearing in advance of the enforcement of any of the Secured Parties’ rights and
remedies hereunder, including, without limitation, their right following an
Event of Default to take immediate possession of the Collateral and to exercise
their rights and remedies with respect thereto.

 
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7.3           License to Use Intellectual Property.  For the purpose of enabling
the Secured Parties to further exercise rights and remedies under this Section 7
or elsewhere provided by agreement or applicable law, the Debtor hereby grants
to the Secured Parties an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to the Debtor) to use, license or
sublicense following an Event of Default, any Intellectual Property now owned or
hereafter acquired by the Debtor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof.

8.           APPLICATIONS OF PROCEEDS.

The proceeds of any such sale, lease or other disposition of the Collateral
hereunder shall be applied first, to the expenses of retaking, holding, storing,
processing and preparing for sale, selling, and the like (including, without
limitation, any taxes, fees and other costs incurred in connection therewith) of
the Collateral, to the reasonable attorneys’ fees and expenses incurred by the
Secured Parties in enforcing their rights hereunder and in connection with
collecting, storing and disposing of the Collateral, and then to satisfaction of
the Obligations to the Secured Parties, and to the payment of any other amounts
required by applicable law, after which the Secured Parties shall pay to the
Debtor any surplus proceeds.  If, upon the sale, license or other disposition of
the Collateral, the proceeds thereof are insufficient to pay all amounts to
which the Secured Parties are legally entitled, the Debtor will be liable for
the deficiency, together with interest thereon, at an interest rate equal to the
lower of 18% and the maximum rate permitted by applicable law (the “Default
Rate”), and the reasonable fees of any attorneys employed by the Secured Parties
to collect such deficiency.  To the extent permitted by applicable law, the
Debtor waives all claims, damages and demands against the Secured Parties
arising out of the repossession, removal, retention or sale of the Collateral,
unless due solely to the gross negligence or willful misconduct of the Secured
Parties as determined by a final judgment (not subject to further appeal) of a
court of competent jurisdiction.

9.           SECURITIES LAW PROVISION.

The Debtor recognizes that the Secured Parties may be limited in their ability
to effect a sale to the public of all or part of the Pledged Securities by
reason of certain prohibitions in the Securities Act of 1933, as amended, or
other foreign, federal or state securities laws (collectively, the “Securities
Laws”), and may be compelled to resort to one or more sales to a restricted
group of purchasers who may be required to agree to acquire the Pledged
Securities for their own account, for investment and not with a view to the
distribution or resale thereof.  The Debtor agrees that sales so made may be at
prices and on terms less favorable than if the Pledged Securities were sold to
the public, and that the Secured Parties has no obligation to delay the sale of
any Pledged Securities for the period of time necessary to register the Pledged
Securities for sale to the public under the Securities Laws.  The Debtor shall
cooperate with the Secured Parties in their attempt to satisfy any requirements
under the Securities Laws (including, without limitation, registration
thereunder if requested by the Secured Parties) applicable to the sale of the
Pledged Securities by the Secured Parties.

 
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10.         COSTS AND EXPENSES.

The Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses
incurred in connection with any filing required hereunder, including, without
limitation, any financing statements pursuant to the UCC, continuation
statements, partial releases and/or termination statements related thereto or
any expenses of any searches reasonably required by the Secured Parties.  The
Debtor shall also pay all other claims and charges which in the reasonable
opinion of the Secured Parties might prejudice, imperil or otherwise affect the
Collateral or the Security Interest therein.  The Debtor will also, upon demand,
pay to the Secured Parties the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts and
agents, which the Secured Parties may incur in connection with (i) the
enforcement of this Agreement, (ii) the custody or preservation of, or the sale
of, collection from, or other realization upon, any of the Collateral, or (iii)
the exercise or enforcement of any of the rights of the Secured Parties under
the Line of Credit Agreement or this Agreement.  Until so paid, any fees payable
hereunder shall be added to the principal amount of the Advances under the Line
of Credit Agreement and shall bear interest at the Default Rate.

11.         RESPONSIBILITY FOR COLLATERAL.

The Debtor assume all liabilities and responsibility in connection with all
Collateral, and the Obligations shall in no way be affected or diminished by
reason of the loss, destruction, damage or theft of any of the Collateral or its
unavailability for any reason.  The Secured Parties agree to act in accordance
with commercially reasonable standards and the UCC.  Without limiting the
generality of the foregoing, (a) no Secured Party (i) has any duty (either
before or after an Event of Default) to collect any amounts in respect of the
Collateral or to preserve any rights relating to the Collateral, or (ii) has any
obligation to clean-up or otherwise prepare the Collateral for sale, and (b) the
Debtor shall remain obligated and liable under each contract or agreement
included in the Collateral to be observed or performed by the Debtor thereunder.
No Secured Party shall have any obligation or liability under any such contract
or agreement by reason of or arising out of this Agreement or the receipt by any
Secured Party of any payment relating to any of the Collateral, nor shall any
Secured Party be obligated in any manner to perform any of the obligations of
the Debtor under or pursuant to any such contract or agreement, to make inquiry
as to the nature or sufficiency of any payment received by any Secured Party in
respect of the Collateral or as to the sufficiency of any performance by any
party under any such contract or agreement, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to any Secured Party or to which it may be
entitled at any time or times.

 
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12.         SECURITY INTEREST ABSOLUTE.

All rights of the Secured Parties and all obligations of the Debtor hereunder,
shall be absolute and unconditional, irrespective of: (a) any lack of validity
or enforceability of this Agreement, the Line of Credit Agreement or any
agreement entered into in connection with the foregoing, or any portion hereof
or thereof; (b) any change in the time, manner or place of payment or
performance of, or in any other term of, all or any of the Obligations, or any
other amendment or waiver of or any consent to any departure from the Line of
Credit Agreement or any other agreement entered into in connection with the
foregoing; (c) any exchange, release or nonperfection of any of the Collateral,
or any release or amendment or waiver of or consent to departure from any other
collateral for, or any guaranty, or any other security, for all or any of the
Obligations; (d) any action by any of the Secured Parties to obtain, adjust,
settle and cancel in its sole discretion any insurance claims or matters made or
arising in connection with the Collateral; or (e) any other circumstance which
might otherwise constitute any legal or equitable defense available to the
Debtor, or a discharge of all or any part of the Security Interest granted
hereby.  Until the Obligations shall have been paid and performed in full, the
rights of the Secured Parties shall continue even if the Obligations are barred
for any reason, including, without limitation, the running of the statute of
limitations or bankruptcy.  The Debtor expressly waives presentment, protest,
notice of protest, demand, notice of nonpayment and demand for performance.  In
the event that at any time any transfer of any Collateral or any payment
received by the Secured Parties hereunder shall be deemed by final order of a
court of competent jurisdiction to have been a voidable preference or fraudulent
conveyance under the bankruptcy or insolvency laws of the United States or other
country or political subdivision, or shall be deemed to be otherwise due to any
party other than the Secured Parties, then, in any such event, each Debtor’s
obligations hereunder shall survive cancellation of this Agreement, and shall
not be discharged or satisfied by any prior payment thereof and/or cancellation
of this Agreement, but shall remain a valid and binding obligation enforceable
in accordance with the terms and provisions hereof.  The Debtor waives all right
to require any Secured Party to proceed against any other person or entity or to
apply any Collateral which the Secured Parties may hold at any time, or to
marshal assets, or to pursue any other remedy.  Each Debtor waives any defense
arising by reason of the application of the statute of limitations to any
obligation secured hereby.

13.         TERM OF AGREEMENT.

This Agreement and the Security Interest shall terminate on the date on which
all payments under the Line of Credit Agreement have been indefeasibly paid in
full and all other Obligations have been paid or discharged; provided, however,
that all indemnities of the Debtor contained in this Agreement shall survive and
remain operative and in full force and effect regardless of the termination of
this Agreement.

14.         POWER OF ATTORNEY.

The Debtor authorizes the Lender, and does hereby make, constitute and appoint
the Lender and its officers, agents, successors or assigns with full power of
substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in
the name of the various Secured Parties or the Debtor, to, after the occurrence
and during the continuance of an Event of Default, (i) endorse any note, checks,
drafts, money orders or other instruments of payment (including payments payable
under or in respect of any policy of insurance) in respect of the Collateral
that may come into possession of the Secured Parties; (ii) to sign and endorse
any financing statement pursuant to the UCC or any invoice, freight or express
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; (v) to
transfer any Intellectual Property or provide licenses respecting any
Intellectual Property; and (vi) generally, at the option of the Lender, and at
the expense of the Debtor, at any time, or from time to time, to execute and
deliver any and all documents and instruments and to do all acts and things
which the Lender deems necessary to protect, preserve and realize upon the
Collateral and the Security Interest granted therein in order to effect the
intent of this Agreement and the Line of Credit Agreement all as fully and
effectually as the Debtor might or could do; and the Debtor hereby ratifies all
that said attorney shall lawfully do or cause to be done by virtue hereof.  This
power of attorney is coupled with an interest and shall be irrevocable for the
term of this Agreement and thereafter as long as any of the Obligations shall be
outstanding.  The designation set forth herein shall be deemed to amend and
supersede any inconsistent provision in the Organizational Documents or other
documents or agreements to which the Debtor or any of the Pledged Securities is
subject or to which the Debtor is a party.  Without limiting the generality of
the foregoing, after the occurrence and during the continuance of an Event of
Default, the Lender is specifically authorized to execute and file any
applications for or instruments of transfer and assignment of any patents,
trademarks, copyrights or other Intellectual Property with the United States
Patent and Trademark Office and the United States Copyright Office. This power
of attorney is coupled with an interest and shall be irrevocable for the term of
this Agreement and thereafter as long as any of the Obligations shall be
outstanding.

 
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15.         OTHER SECURITY.

To the extent that the Obligations are now or hereafter secured by property
other than the Collateral or by the guarantee, endorsement or property of any
other person, firm, corporation or other entity, then the Secured Parties shall
have the right, in their sole discretion, to pursue, relinquish, subordinate,
modify or take any other action with respect thereto, without in any way
modifying or affecting any of the Secured Parties’ rights and remedies
hereunder.

16.         INDEMNIFICATION.

The Debtor shall indemnify, reimburse and hold harmless each of the Secured
Parties and their respective partners, members, shareholders, officers,
directors, employees and agents (collectively, “Indemnitees”) from and against
any and all losses, claims, liabilities, damages, penalties, suits, costs and
expenses, of any kind or nature, (including fees relating to the cost of
investigating and defending any of the foregoing) imposed on, incurred by or
asserted against such Indemnitee in any way related to or arising from or
alleged to arise from this Agreement or the Collateral, except any such losses,
claims, liabilities, damages, penalties, suits, costs and expenses which result
from the gross negligence or willful misconduct of the Indemnitee as determined
by a final, nonappealable decision of a court of competent jurisdiction.

17.         MISCELLANEOUS.

17.1           Severability.  In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that in such case the parties shall negotiate
in good faith to replace such provision with a new provision which is not
illegal, unenforceable or void, as long as such new provision does not
materially change the economic benefits of this Agreement to the parties.

17.2           Injunctive Relief.  The Debtor acknowledges and agrees that a
breach by it of its obligations hereunder will cause irreparable harm to each
Secured Party and that the remedy or remedies at law for any such breach will be
inadequate and agrees, in the event of any such breach, in addition to all other
available remedies, such Secured Party shall be entitled to an injunction
restraining any breach and requiring immediate and specific performance of such
obligations without the necessity of showing economic loss or the posting of any
bond.
 
 
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17.3           Governing Law; Jurisdiction.  This Agreement shall be governed by
and construed under the laws of the State of New York applicable to contracts
made and to be performed entirely within the State of New York.  Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City and County of New York for the adjudication
of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper.  Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law.
 
17.4           Successors and Assigns.  The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties.  Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.  A Secured Party may assign its
rights hereunder in connection with any assignment of rights in accordance with
the terms of the Line of Credit Agreement, in which case the term “Secured
Party” shall be deemed to refer to such transferee as though such transferee
were an original signatory hereto.  The Debtor may not assign its rights or
obligations under this Agreement.
 
17.5           Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.  This Agreement may be
executed and delivered by e-mail or facsimile transmission.
 
17.6           Headings.  The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
 
17.7           Notices.  Any notice, demand or request required or permitted to
be given by the Debtor or a Secured Party pursuant to the terms of this
Agreement shall be in writing and shall be deemed delivered (i) when delivered
personally or by verifiable facsimile transmission, unless such delivery is made
on a day that is not a Business Day, in which case such delivery will be deemed
to be made on the next succeeding Business Day, (ii) on the next Business Day
after timely delivery to an overnight courier and (iii) on the Business Day
actually received if deposited in the U.S. mail (certified or registered mail,
return receipt requested, postage prepaid), addressed as follows:
 
 
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If to the Debtor:
 
Think North America, Inc.
22226 Garrison, Dearborn, Michigan 48124
Attn: The Chief Executive Officer
Tel: (313) 565-6781Fax: 313 565 4701

If to any Secured Party:
 
Ener1, Inc.
1540 Broadway, Suite 25C
New York, NY 10036
Attn: Charles Gassenheimer
Tel: 212-920-3500
Fax: 212-920-3510

or as shall be designated by such party in writing to the other parties hereto
in accordance with this Section 17.7.
 
17.8         Entire Agreement; Amendments.  This Agreement and the Line of
Credit Agreement constitute the entire agreement between the parties with regard
to the subject matter hereof and thereof, superseding all prior agreements or
understandings, whether written or oral, between or among the parties.  No
amendment, modification or other change to this Agreement or waiver of any
agreement or other obligation of the parties under this Agreement may be made or
given unless such amendment, modification or waiver is set forth in writing and
is signed by the Debtor and the Secured Parties. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
 
[SIGNATURE PAGES FOLLOW]
 
 
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           IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
  
Title:
 
THINK NORTH AMERICA, INC., AS DEBTOR
   
By:
/s/ Barry L. Engle
 
Name: Barry L. Engle
 
Title: CEO

 
 
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           IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
  
ENER1, INC., AS SECURED PARTY
   
By:
/s/ Jeffrey Seidel
 
Jeffrey Seidel
 
Chief Financial Officer

 
 
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