SECURITY AGREEMENT



 Exhibit 10.59 
  
 SECURITY AGREEMENT 
  
 SECURITY AGREEMENT (this “Agreement”), dated as of January 20, 2004, by and among Lithium Technology Corporation, a Delaware corporation
(“Company”), and the secured parties signatory hereto and their respective endorsees, transferees and assigns (collectively, the “Secured Party”). 
  
 W I T N E S S E T H: 
  
 WHEREAS, pursuant to a Securities Purchase Agreement, dated as of January 20, 2004 between Company and the Secured Party (the “Purchase
Agreement”), Company has agreed to issue to the Secured Party and the Secured Party has agreed to purchase from Company certain of Company’s 10% Secured Convertible Debentures, due two years from the date of issue (the
“Debentures”), which are convertible into shares of Company’s Common Stock, par value $.01 per share (the “Common Stock”). In connection therewith, Company shall issue the Secured Party certain Common Stock
purchase warrants dated as of the date hereof to purchase the number of shares of Common Stock indicated below each Secured Party’s name on the Purchase Agreement (the “Warrants”); and 
  
 WHEREAS, in order to induce the Secured Party to purchase the Debentures,
Company has agreed to execute and deliver to the Secured Party this Agreement for the benefit of the Secured Party and to grant to it a first priority security interest in certain property of Company, subject only to the liens set forth in
Schedule B hereto, to secure the prompt payment, performance and discharge in full of all of Company’s obligations under the Debentures and exercise and discharge in full of Company’s obligations under the Warrants. 
  
 NOW, THEREFORE, in consideration of the agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 
  
 1. Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC (such as “general intangibles” and “proceeds”) shall have the respective meanings given such terms in Article 9 of the UCC. 







 (a) “Collateral” means the collateral in which the Secured Party is granted a security
interest by this Agreement and which shall include the following, whether presently owned or existing or hereafter acquired or coming into existence, 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: 
  
 (i) All Goods of the Company, including, without
limitations, 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 Company’s businesses and all improvements thereto (collectively, the “Equipment”); and 
  
 (ii) All Inventory of the Company; and 
  
 (iii) All of the Company’s contract rights and general intangibles, including, without limitation, all partnership interests, stock
or other securities (except the stock owned by the Company in GAIA Holdings B.V), licenses, distribution and other agreements, 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, deposit accounts, and income tax refunds (collectively, the “General Intangibles”); and 
  
 (iv) All Receivables of the Company including all insurance
proceeds, and rights to refunds or indemnification whatsoever owing, 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 Receivable, including any right of stoppage in transit; and 
  
 (v) All of the Company’s documents, instruments and chattel paper, files, records, books of account, business papers, computer
programs and the products and proceeds of all of the foregoing Collateral set forth in clauses (i)-(iv) above. 
  
 (b) “Company” shall mean, collectively, Company and all of the subsidiaries of the Company (except for GAIA Holdings B.V.). 

 
 (c) “Obligations” means all of the Company’s
obligations under this Agreement and the Debentures, 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 decreased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from the Secured Party as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time. 
  
 (d) “UCC” means the Uniform Commercial Code, as currently in
effect in the State of New York. 
  

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 2. Grant of Security Interest. As an inducement for the Secured Party to purchase the Debentures
and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, the Company hereby, unconditionally and irrevocably, pledges, grants and hypothecates to the Secured Party, a continuing
security interest in, a continuing lien upon, an unqualified right to possession and disposition of and a right of set-off against, in each case to the fullest extent permitted by law, all of the Company’s right, title and interest of
whatsoever kind and nature in and to the Collateral (the “Security Interest”). 
  
 3. Representations, Warranties, Covenants and Agreements of the Company. The Company represents and warrants to, and covenants and agrees with, the
Secured Party as follows: 
  
 (a) The Company has the requisite
corporate power and authority to enter into this Agreement and otherwise to carry out its obligations thereunder. The execution, delivery and performance by the Company of this Agreement and the filings contemplated therein have been duly authorized
by all necessary action on the part of the Company and no further action is required by the Company. This Agreement constitutes a legal, valid and binding obligation of the Company enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditor’s rights generally. 
  
 (b) The Company represents and warrants that it has no place of business or offices where its respective books of account and records are kept (other than
temporarily at the offices of its attorneys or accountants) or places where Collateral is stored or located, except as set forth on Schedule A attached hereto; 
  
 (c) The Company is the sole owner of the Collateral (except for non-exclusive licenses granted by the Company in the
ordinary course of business) and, except as set forth in Schedule B hereto, the Collateral is free and clear of any liens, security interests, encumbrances, rights or claims. The Company is fully authorized to grant the Security Interest in
and to pledge the Collateral. Except as set forth in Schedule B hereto, 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 have been filed in favor of the Secured Party pursuant to this Agreement) covering or affecting any of the Collateral. So long as this Agreement shall be in effect, the Company 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 Party pursuant to the terms of this
Agreement). 
  
 (d) No part of the Collateral has been judged
invalid or unenforceable. No written claim has been received that any Collateral or the Company’s use of any Collateral violates the rights of any third party. There has been no adverse decision to the Company’s claim of ownership rights
in or exclusive rights to use the Collateral in any jurisdiction or to the Company’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
Company, threatened before any court, judicial body, administrative or regulatory agency, arbitrator or other governmental authority. 
  

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 (e) The Company shall at all times maintain its books of account and records relating to the Collateral
at its principal place of business and its Collateral at the locations set forth on Schedule A attached hereto and may not relocate such books of account and records or tangible Collateral unless it delivers to the Secured Party at least 30
days prior to such relocation (i) written notice of such relocation and the new location thereof (which must be within the United States) and (ii) evidence that appropriate financing statements and other necessary documents have been filed and
recorded and other steps have been taken to perfect the Security Interest to create in favor of the Secured Party valid, perfected and continuing first priority liens in the Collateral. 
  
 (f) This Agreement creates in favor of the Secured Party a valid security interest in the Collateral securing the payment
and performance of the Obligations and, upon making the filings described in the immediately following sentence, a perfected first priority security interest in such Collateral. Except for the filing of financing statements on Form-1 under the UCC
with the jurisdictions indicated on Schedule C, attached hereto, no authorization or approval of or filing with or notice to any governmental authority or regulatory body is required either (i) for the grant by the Company of, or the
effectiveness of, the Security Interest granted hereby or for the execution, delivery and performance of this Agreement by the Company or (ii) for the perfection of or exercise by the Secured Party of its rights and remedies hereunder. 

 
 (g) On the date of execution of this Agreement, the Company will deliver
to the Secured Party one or more executed UCC financing statements on Form-1 with respect to the Security Interest for filing with the jurisdictions indicated on Schedule C, attached hereto and in such other jurisdictions as may be requested
by the Secured Party. 
  
 (h) The execution, delivery and
performance of this Agreement does not conflict with or cause a breach or default, or an event that with or without the passage of time or notice, shall constitute a breach or default, under any agreement to which the Company is a party or by which
the Company is bound. No consent (including, without limitation, from stock holders or creditors of the Company) is required for the Company to enter into and perform its obligations hereunder. 
  
 (i) The Company shall at all times maintain the liens and Security Interest
provided for hereunder as valid and perfected first priority liens and security interests in the Collateral in favor of the Secured Party until this Agreement and the Security Interest hereunder shall terminate pursuant to Section 11. The Company
hereby agrees to defend the same against any and all persons. The Company shall safeguard and protect all Collateral for the account of the Secured Party. At the request of the Secured Party, the Company will sign and deliver to the Secured Party at
any time or from time to time one or more financing statements pursuant to the UCC (or any other applicable statute) in form reasonably satisfactory to the Secured Party and will pay the cost of filing the same in all public offices wherever filing
is, or is deemed by the Secured Party to be, necessary or desirable to effect the rights and obligations provided for herein. Without limiting the generality of the foregoing, the Company shall pay all fees, taxes and other amounts necessary to
maintain the Collateral and the Security Interest hereunder, and the Company shall obtain and furnish to the Secured Party 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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 (j) The Company will not transfer, pledge, hypothecate, encumber, license (except for non-exclusive
licenses granted by the Company in the ordinary course of business), sell or otherwise dispose of any of the Collateral without the prior written consent of the Secured Party. 
  
 (k) The Company shall keep and preserve its Equipment, Inventory and other tangible Collateral in good condition, repair and
order and shall not operate or locate any such Collateral (or cause to be operated or located) in any area excluded from insurance coverage. 
  
 (l) The Company shall, within ten (10) days of obtaining knowledge thereof, advise the Secured Party 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 Party’s security interest therein. 
  
 (m) The Company shall promptly execute and deliver to the Secured Party such
further deeds, mortgages, assignments, security agreements, financing statements or other instruments, documents, certificates and assurances and take such further action as the Secured Party may from time to time request and may in its sole
discretion deem necessary to perfect, protect or enforce its security interest in the Collateral including, without limitation, the execution and delivery of a separate security agreement with respect to the Company’s intellectual property
(“Intellectual Property Security Agreement”) in which the Secured Party has been granted a security interest hereunder, substantially in a form acceptable to the Secured Party, which Intellectual Property Security Agreement, other
than as stated therein, shall be subject to all of the terms and conditions hereof. 
  
 (n) The Company shall permit the Secured Party and its 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 the Secured
Party from time to time. 
  
 (o) The Company will 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. 
  
 (p) The Company shall promptly notify the Secured Party in sufficient detail upon becoming aware of any attachment,
garnishment, execution or other legal process levied against any Collateral and of any other information received by the Company that may materially affect the value of the Collateral, the Security Interest or the rights and remedies of the Secured
Party hereunder. 
  
 (q) All information heretofore, herein or
hereafter supplied to the Secured Party by or on behalf of the Company with respect to the Collateral is accurate and complete in all material respects as of the date furnished. 
  
 (r) Schedule A attached hereto contains a list of all of the subsidiaries of Company. 
  

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 4. Defaults. The following events shall be “Events of Default”: 
  
 (a) The occurrence of an Event of Default (as defined in the Debentures)
under the Debentures; 
  
 (b) Any representation or warranty of
the Company in this Agreement or in the Intellectual Property Security Agreement shall prove to have been incorrect in any material respect when made; 
  
 (c) The failure by the Company to observe or perform any of its obligations hereunder or in the Intellectual Property Security Agreement for ten (10) days
after receipt by the Company of notice of such failure from the Secured Party; and 
  
 (d) Any breach of, or default under, the Warrants. 
  
 5. Duty To Hold In Trust. Upon the occurrence of any Event of Default and at any time thereafter, the Company shall, upon receipt by it of any revenue, income or other sums subject to the Security Interest,
whether payable pursuant to the Debentures or otherwise, or of any check, draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum, hold the same in trust for the Secured Party and shall forthwith endorse and
transfer any such sums or instruments, or both, to the Secured Party for application to the satisfaction of the Obligations. 
  
 6. Rights and Remedies Upon Default. Upon occurrence of any Event of Default and at any time thereafter, the Secured Party shall have the right to
exercise all of the remedies conferred hereunder and under the Debentures, and the Secured Party shall have all the rights and remedies of a secured party under the UCC and/or any other applicable law (including the Uniform Commercial Code of any
jurisdiction in which any Collateral is then located). Without limitation, the Secured Party shall have the following rights and powers: 
  
 (a) The Secured Party 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 Company shall assemble the Collateral and make it available to the Secured Party at places which the Secured Party shall reasonably select,
whether at the Company’s premises or elsewhere, and make available to the Secured Party, without rent, all of the Company’s respective premises and facilities for the purpose of the Secured Party taking possession of, removing or putting
the Collateral in saleable or disposable form. 
  
 (b) The Secured
Party shall have the right to operate the business of the Company 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 Party 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 Company or right of redemption of the Company, which are hereby expressly waived. Upon
each such sale, lease, assignment or other transfer of Collateral, the Secured Party may, 

  

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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 Company, which are hereby waived and released. 
  
 7. 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 Party in enforcing its
rights hereunder and in connection with collecting, storing and disposing of the Collateral, and then to satisfaction of the Obligations, and to the payment of any other amounts required by applicable law, after which the Secured Party shall pay to
the Company 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 Party is legally entitled, the Company will be liable for the
deficiency, together with interest thereon, at the rate of 15% per annum (the “Default Rate”), and the reasonable fees of any attorneys employed by the Secured Party to collect such deficiency. To the extent permitted by applicable
law, the Company waives all claims, damages and demands against the Secured Party arising out of the repossession, removal, retention or sale of the Collateral, unless due to the gross negligence or willful misconduct of the Secured Party.

  
 8. Costs and Expenses. The Company agrees to pay all
out-of-pocket fees, costs and expenses incurred in connection with any filing required hereunder, including without limitation, any financing statements, continuation statements, partial releases and/or termination statements related thereto or any
expenses of any searches reasonably required by the Secured Party. The Company shall also pay all other claims and charges which in the reasonable opinion of the Secured Party might prejudice, imperil or otherwise affect the Collateral or the
Security Interest therein. The Company will also, upon demand, pay to the Secured Party 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 Party
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 Party under the Debentures. Until so paid, any fees payable hereunder shall be added to the principal amount of the Debentures and shall bear interest at the Default Rate. 
  
 9. Responsibility for Collateral. The Company assumes all liabilities and responsibility in connection with all
Collateral, and the obligations of the Company hereunder or under the Debentures and the Warrants shall in no way be affected or diminished by reason of the loss, destruction, damage or theft of any of the Collateral or its unavailability for any
reason. 
  
 10. Security Interest Absolute. All rights of
the Secured Party and all Obligations of the Company hereunder, shall be absolute and unconditional, irrespective of: (a) any lack of validity or enforceability of this Agreement, the Debentures, the Warrants or any agreement entered into in
connection with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to
any departure from the Debentures, the Warrants 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 

  

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or waiver of or consent to departure from any other collateral for, or any guaranty, or any other security, for all or any of the Obligations; (d) any action
by the Secured Party 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 Company, 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 Party shall continue even if the Obligations are
barred for any reason, including, without limitation, the running of the statute of limitations or bankruptcy. The Company 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 Party hereunder shall be deemed by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the
bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due to any party other than the Secured Party, then, in any such event, the Company’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 Company waives all right to
require the Secured Party to proceed against any other person or to apply any Collateral which the Secured Party may hold at any time, or to marshal assets, or to pursue any other remedy. The Company waives any defense arising by reason of the
application of the statute of limitations to any obligation secured hereby. 
  
 11. Term of Agreement. This Agreement and the Security Interest shall terminate on the date on which all payments under the Debentures have been made in full and all other Obligations have been paid or
discharged. Upon such termination, the Secured Party, at the request and at the expense of the Company, will join in executing any termination statement with respect to any financing statement executed and filed pursuant to this Agreement.

  
 12. Power of Attorney; Further Assurances. 

 
 (a) The Company authorizes the Secured Party, and does hereby make,
constitute and appoint it, and its respective officers, agents, successors or assigns with full power of substitution, as the Company’s true and lawful attorney-in-fact, with power, in its own name or in the name of the Company, to, after the
occurrence and during the continuance of an Event of Default, (i) endorse any notes, checks, drafts, money orders, or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect of the
Collateral that may come into possession of the Secured Party; (ii) to sign and endorse any UCC financing statement or any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge taxes, liens, security interests or other encumbrances at any time levied or placed on or threatened against the
Collateral; (iv) to demand, collect, receipt for, compromise, settle and sue for monies due in respect of the Collateral; and (v) generally, to do, at the option of the Secured Party, and at the Company’s expense, at any time, or from time to
time, all acts and things which the Secured Party 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, the Debentures and the Warrants, all as
fully and effectually as the Company might or could do; and the Company 
  

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 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. 
  
 (b) On a continuing basis, the Company will make, execute, acknowledge, deliver, file and record, as the case may be, in the proper filing and recording
places in any jurisdiction, including, without limitation, the jurisdictions indicated on Schedule C, attached hereto, all such instruments, and take all such action as may reasonably be deemed necessary or advisable, or as reasonably
requested by the Secured Party, to perfect the Security Interest granted hereunder and otherwise to carry out the intent and purposes of this Agreement, or for assuring and confirming to the Secured Party the grant or perfection of a security
interest in all the Collateral. 
  
 (c) The Company hereby
irrevocably appoints the Secured Party as the Company’s attorney-in-fact, with full authority in the place and stead of the Company and in the name of the Company, from time to time in the Secured Party’s discretion, to take any action and
to execute any instrument which the Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including the filing, in its sole discretion, of one or more financing or continuation statements and amendments thereto,
relative to any of the Collateral without the signature of the Company where permitted by law. 
  
 13. Notices. All notices, requests, demands and other communications hereunder shall be in writing, with copies to all the other parties hereto, and shall be deemed to have been duly given when (i) if delivered
by hand, upon receipt, (ii) if sent by facsimile, upon receipt of proof of sending thereof, (iii) if sent by nationally recognized overnight delivery service (receipt requested), the next business day or (iv) if mailed by first-class registered or
certified mail, return receipt requested, postage prepaid, four days after posting in the U.S. mails, in each case if delivered to the following addresses: 
  

	 If to the Company:
	  	 Lithium Technology Corporation

	 	  	 5115 Campus Drive

	 	  	 Plymouth Meeting, PA 19462

	 	  	 Attention: Chairman and Chief Executive Officer

	 	  	 Telephone: (610) 940-6090

	 	  	 Facsimile:    (610) 940-6091

		
	 With copies to:
	  	 Gallagher Briody & Butler

	 	  	 Forrestal Village

	 	  	 155 Village Boulevard

	 	  	 Suite 201

	 	  	 Princeton, NJ 08540

	 	  	 Attention: Barbara J. Comly

	 	  	 Telephone: (609) 452-6000

	 	  	 Facsimile:    (609) 452-0090


  

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	 If to the Secured Party:
	  	__________________________________
		
	 	  	__________________________________
		
	 	  	__________________________________
		
	 	  	__________________________________
		
	 	  	__________________________________
		
	 	  	__________________________________
		
	 	  	__________________________________
		
	 	  	 With copies to:

		
	 	  	 Ballard Spahr Andrews & Ingersoll, LLP

	 	  	 1735 Market Street, 51st Floor

	 	  	 Philadelphia, Pennsylvania 19103

	 	  	 Attention: Gerald J. Guarcini, Esq.

	 	  	 Facsimile: 215-864-8999


  
 14. 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 Party shall
have the right, in its sole discretion, to pursue, relinquish, subordinate, modify or take any other action with respect thereto, without in any way modifying or affecting any of the Secured Party’s rights and remedies hereunder. 
  
 15. Miscellaneous. 
  
 (a) No course of dealing between the Company and the Secured Party, nor any
failure to exercise, nor any delay in exercising, on the part of the Secured Party, any right, power or privilege hereunder or under the Debentures shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. 
  
 (b) All of the rights and remedies of the Secured Party with respect to the Collateral, whether established hereby or by the Debentures or by any other
agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently. 
  
 (c) This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and is intended to supersede all prior
negotiations, understandings and agreements with respect thereto. Except as specifically set forth in this Agreement, no provision of this Agreement may be modified or amended except by a written agreement specifically referring to this Agreement
and signed by the parties hereto. 
  
 (d) In the event that any
provision of this Agreement is held to be invalid, prohibited or unenforceable in any jurisdiction for any reason, unless such provision is narrowed by judicial construction, this Agreement shall, as to such jurisdiction, be construed as if such

  

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 invalid, prohibited or unenforceable provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of this Agreement is held to be invalid, prohibited or unenforceable in any jurisdiction, such provision, as to such jurisdiction, shall be ineffective to the extent of such invalidity,
prohibition or unenforceability without invalidating the remaining portion of such provision or the other provisions of this Agreement and without affecting the validity or enforceability of such provision or the other provisions of this Agreement
in any other jurisdiction. 
  
 (e) No waiver of any breach or
default or any right under this Agreement shall be considered valid unless in writing and signed by the party giving such waiver, and no such waiver shall be deemed a waiver of any subsequent breach or default or right, whether of the same or
similar nature or otherwise. 
  
 (f) This Agreement shall be
binding upon and inure to the benefit of each party hereto and its successors and assigns. 
  
 (g) Each party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order to carry out the provisions and purposes of this Agreement. 
  
 (h) This Agreement shall be construed in accordance with the laws of the
State of New York, except to the extent the validity, perfection or enforcement of a security interest hereunder in respect of any particular Collateral which are governed by a jurisdiction other than the State of New York in which case such law
shall govern. Each of the parties hereto irrevocably submit to the exclusive jurisdiction of any New York State or United States Federal court sitting in Manhattan county over any action or proceeding arising out of or relating to this Agreement,
and the parties hereto hereby irrevocably agree that all claims in respect of such action or proceeding may be heard and determined in such New York State or Federal court. The parties hereto agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. The parties hereto further waive any objection to venue in the State of New York and any objection to an action
or proceeding in the State of New York on the basis of forum non conveniens. 
  
 (i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRAIL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH
PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY ON
THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED 
  

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 THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL
FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS AND
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 
  
 (j) This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature were the original thereof. 
  
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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. 
  

	LITHIUM TECHNOLOGY CORPORATION
		
	 By:
	 	  


	 	 	 David J. Cade

	 	 	 Chairman and Chief Executive Officer

	
	SECURED PARTY
		
	 By:
	 	 
		
	 By:
	 	  


	 	 	 Name:

	 	 	 Title:



  

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 SCHEDULE A 
  

Principal Place of Business of the Company: 
  
 5115 Campus Drive 
 Plymouth Meeting, PA 19462 
  
 Locations Where Collateral is Located or Stored: 
  
 5115 Campus Drive 
 Plymouth Meeting, PA 19462 
  

 A-1 








 SCHEDULE B 
  

The Security Interest of the Secured Party shall be subject to the following liens: 
  
 1. Ben Franklin Technology Center of Southeastern PA (the “Center”). The Center has a lien of the following
property of the Company, whether now owned or at any time in the future acquired by the Company (other than the Excluded Property): 
  
 (a) all accounts receivable; 
  
 (b) all equipment; 
  
 (c) all inventory; and 
  
 (d) all proceeds of such accounts receivable, equipment and inventory. 
  
 The “Secured Assets” do not include and the Center waives and disclaims any security interest, lien or right of any kind with
respect to the following (the “Excluded Property”): All of the Company’s now existing or hereafter acquired or developed intellectual property, trade secrets, confidential or proprietary information, licenses, and know-how including,
without limitation, the Company’s patents, trademarks, trade names, service marks, business names, logos, and copyrights and all registrations, applications, reissues, renewals, extensions, continuations, recordings, and goodwill relating
thereto whether in the United States or any State thereof or any other country or jurisdiction. 
  
 The Center is currently owed approximately $50,000. The agreements with the Center provide that the Center will subordinate its security interest upon the request of the Company, and Company will undertake to promptly
obtain such subordination. 
  
 2. Ilion Technology Corporation
(formerly known as Pacific Lithium Limited) (“Ilion”). Ilion has a lien on the following: 
  
 (a) One soft-pack cell packaging and filling machine (order number 12105 per Arcotronics Offer Nbr 245/98 with revision Nbr 266/98)—large dimensions
(cell size up to 8”x 8”); model number SPF 300A; serial number 300M674A; including, but not limited to, second lateral sealing unit, final sealing under vacuum, additional antechamber, written documentation, operating manual, spare parts
catalogue, electrical drawings and raw materials for machine testing (the “Ilion Collateral”). 
  
 (b) All proceeds of the foregoing (including, without limitation, whatever is receivable or received when Ilion Collateral or proceeds is sold, collected,
exchanged, returned, substituted or otherwise disposed of, whether such disposition is voluntary or involuntary, including rights to payment and return premiums and insurance proceeds under insurance with respect to any Ilion Collateral, and all
rights to payment with respect to any course of action affecting or relating to the Ilion Collateral). 
  

 B-1 








 SCHEDULE C 
  

Jurisdictions: 
  
 Delaware 
 Pennsylvania 
  

 C-1