Document:

Exhibit 10.32

 

INDEMNIFICATION AGREEMENT

ELIO MOTORS, INC.

THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is made and entered into as of ________, 2017 between ELIO MOTORS, INC., a Delaware corporation (the “Company”), and ___________ (“Indemnitee”).

WITNESSETH:

WHEREAS, the Company has asked Indemnitee to serve as a member of the Board of Directors and/or an executive officer of the Company, and Indemnitee is able, willing, and interested in serving as a member of the Board of Directors and/or an executive officer of the Company; and

WHEREAS, the Company will purchase certain Directors & Officers (D&O) Insurance to protect members of its Board of Directors and its executive officers from certain liabilities with respect to their service as members of the Board of Directors and executive officers; and

WHEREAS, D&O Insurance coverage may contain a number of qualifications and limitations that may make it inadequate to provide adequate indemnification to members of the Board of Directors and/or executive officers, and accordingly Indemnitee has requested the Company to enter into this Indemnification Agreement to provide mandatory indemnification as provided herein to the fullest extent permitted by applicable law with respect to his/her service as a member of the Board of Directors and/or an executive officer; and

WHEREAS, the Company is formed pursuant to the General Corporation Law of the State of Delaware (“DGCL”), which entitles the Company to indemnify members of the Board of Directors and its executive officers; and

WHEREAS, the DGCL expressly provides that the indemnification provisions set forth therein are not exclusive, and thereby contemplates that contracts may be entered into between the Company and members of the board of directors, officers and other persons with respect to indemnification; and

WHEREAS, the Company has determined that it is in the best interest of the Company and the Company’s stockholders to attract qualified Board members and/or executive officers such as Indemnitee who are able and willing to serve as members of the Board and/or executive officers and to enter into such agreements with members of the Board of Directors and/or executive officers of the Company to encourage them to exercise freely their discretion and duties in the best interest of the Company and the Company’s stockholders; and

WHEREAS, the Company has determined that it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, Indemnitee to the fullest extent permitted by applicable law so that Indemnitee will serve as a member of the Board of Directors and/or executive officer of the Company free from undue concern that he might not be so indemnified; and

WHEREAS, this Agreement is a supplement to and in furtherance of the By-laws of the Company and any resolutions adopted pursuant thereto, and is a supplement to and in furtherance of any rights of indemnification permitted under the DGCL, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;

NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as a member of the Board of Directors and/or an executive officer after the date hereof, the parties hereto agree as follows:

1.          Indemnity of Indemnitee.  The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time.  In furtherance of the foregoing indemnification, and without limiting the generality thereof:

(a)          Proceedings Other Than Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section l(a) if, by reason of his/her Corporate Status (as hereinafter defined), the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company.  Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him/her, or on his/her behalf, in connection with such Proceeding or any claim, issue or matter therein, if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful.

(b)          Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of his/her Corporate Status, the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company.  Pursuant to this Section 1(b), Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with such Proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that a court of competent jurisdiction applying DGCL, or other applicable governing law, shall determine that such indemnification may be made.

(c)          Indemnification for Expenses of a Party Who is Wholly or Partly Successful.  Subject to Section 9 of this Agreement, to the extent that Indemnitee is, by reason of his/her Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he/she shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses actually and reasonably incurred by him/her or on his/her behalf in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him/her or on his/her behalf in connection with each successfully resolved claim, issue or matter.  For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

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2.          Additional Indemnity.  In addition to, and without regard to any limitations on, the indemnification provided for in Section 1 of this Agreement, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him/her or on his/her behalf if, by reason of his/her Corporate Status, he/she is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee.  The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful.

3.          Contribution.

(a)          Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee.  The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

(b)          Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the Law may require to be considered.  The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

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(c)          The Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.

(d)          To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

4.          Indemnification for Expenses of a Witness.  Subject to Section 9 of this Agreement, to the extent that Indemnitee is, by reason of his/her Corporate Status, a witness, or is made (or asked) to respond to discovery requests, in any Proceeding to which Indemnitee is not a party, h/shee shall be indemnified against all Expenses actually and reasonably incurred by him/her or on his/her behalf in connection therewith.

5.          Advancement of Expenses.  Subject to Section 9 of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses.  Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free.

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6.          Procedures and Presumptions for Determination of Entitlement to Indemnification.  It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the DGCL and public policy of the State of Delaware.  Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

(a)          To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification.  The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification. Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company.

(b)          Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four methods, which shall be at the election of the Board of Directors of the Company:  (1) by a majority vote of the disinterested directors, even though less than a quorum, (2) by a committee of disinterested directors designated by a majority vote of the disinterested directors, even though less than a quorum, (3) if there are no disinterested directors or if the disinterested directors so direct,  or in the event of a Change of Control as provided below, by independent legal counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee, or (4) if so directed by the Board, by the stockholders of the Company.  For purposes hereof, disinterested directors are those members of the board of directors of the Company who are not parties to the action, suit or proceeding in respect of which indemnification is sought by Indemnitee.  For purposes of this Section 6(b) a “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

(i)  Acquisition of Stock by Third Party.  Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing forty percent (40%) or more of the combined voting power of the Company’s then outstanding securities;

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(ii)  Change in Board of Directors.  During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 6(b)(i), 6(b)(iii) or 6(b)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;

(iii)  Corporate Transactions.  The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

(iv)  Liquidation.  The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and

(v)  Other Events.  There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

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For purposes of this Section 6(b), the following terms shall have the following meanings:

(A)          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(B)          “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(C)          “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

(c)          If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) hereof, the Independent Counsel shall be selected as provided in this Section 6(c).  The Independent Counsel shall be selected by the Board of Directors.  Indemnitee may, within 10 days after such written notice of selection shall have been given, deliver to the Company, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 13 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected shall act as Independent Counsel.  If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit.  If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware (the “Delaware Court”) for resolution of any objection which shall have been made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 6(b) hereof.  The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Counsel was selected or appointed.

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(d)          In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.  Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

(e)          Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise (as hereinafter defined) in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise.  In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.  Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he/she reasonably believed to be in or not opposed to the best interests of the Company.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(f)          If the person, persons or entity empowered or selected under Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and provided further, that the foregoing provisions of this Section 6(f) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 6(b) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination, the Board or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy five (75) days after such receipt and such meeting is actually held within such seventy-five (75) day period, and such determination is made by the stockholders thereat, or (B) (i) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, (ii) such meeting is held for such purpose within sixty (60) days after having been so called and (iii) such determination is made thereat.

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(g)          Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.  Any Independent Counsel or member of the Board of Directors of the Company shall act reasonably and in good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this Agreement.  Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

(h)          The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty.  In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(i)          The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his/her conduct was unlawful.

7.          Remedies of Indemnitee.

(a)          In the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification is made pursuant to Section 6(b) of this Agreement within 90 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in the Delaware Court of Indemnitee’s entitlement to such indemnification.  Indemnitee shall commence such proceeding seeking an adjudication within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a).  The Company shall not oppose Indemnitee’s right to seek any such adjudication.

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(b)          In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(b).

(c)          If a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.

(d)          In the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of his/her rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on his/her behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 13 of this Agreement) actually and reasonably incurred by him/her in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.

(e)          The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement.  The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefore) advance, to the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

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(f)          Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

8.          Non-Exclusivity; Survival of Rights; Insurance; Subrogation.

(a)          The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the certificate of incorporation of the Company, the Bylaws, any agreement, a vote of stockholders, a resolution of directors or otherwise.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his/her Corporate Status prior to such amendment, alteration or repeal.  To the extent that a change in the DGCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b)          To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any director, officer, employee, agent or fiduciary under such policy or policies.  If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

(c)          In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(d)          The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

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(e)          The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

9.          Exception to Right of Indemnification. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

(a)          for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or

(b)          for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act, or similar provisions of state statutory law or common law; or

(c)          in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board of Directors of the Company authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

10.          Duration of Agreement/ Inurement to Successors.  All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer or director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7 hereof) by reason of his/her Corporate Status, whether or not he/she is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement.  This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.

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11.          Security.  To the extent requested by Indemnitee and approved by the Board of Directors of the Company, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral.  Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

12.          Enforcement.

(a)          The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as a member of the Board of Directors and/or an executive officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a member of the Board of Directors and/or executive officer of the Company.

(b)          This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

(c)          The Company shall not seek from a court, or agree to, a “bar order” which would have the effect of prohibiting or limiting the Indemnitee’s rights to receive advancement of expenses under this Agreement.

13.          Definitions.  For purposes of this Agreement:

(a)          “Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the express written request of the Company.

(b)          “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(c)          “Enterprise” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a director, officer, employee, agent or fiduciary.

(d)          “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding.  Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent.  Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

13

(e)          “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent:  (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

(f)          “Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that Indemnitee is or was an officer or director of the Company, by reason of any action taken by him/her or of any inaction on his/her part while acting as an officer or director of the Company, or by reason of the fact that he/she is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other Enterprise; in each case whether or not he/she is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement to enforce his/her rights under this Agreement.

14.          Severability.  The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.  Further, the invalidity or unenforceability of any provision hereof as to Indemnitee shall in no way affect the validity or enforceability of any provision hereof as to the other.  Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by applicable laws.  In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

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15.          Modification and Waiver.  No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

16.          Notice By Indemnitee.  Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder.  The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.

17.          Notices.  All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given:  (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent:

		(a)	
To Indemnitee at the address set forth below Indemnitee’s signature hereto or in the books and records of the Company.

		(b)	
To the Company at:

2942 North 24th Street, Suite 114-700

Phoenix, Arizona 85016

Attention: Chief Executive Officer

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

18.          Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.  This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

19.          Headings.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

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20.          Governing Law and Consent to Jurisdiction.  This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court, and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) appoint, to the extent such party is not otherwise subject to service of process in the State of Delaware, irrevocably the Company at its principal office in the State of Delaware as its agent in the State of Delaware as such party’s agent for acceptance of legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

SIGNATURE PAGE TO FOLLOW

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.

	 	
ELIO MOTORS, INC.

	 	 
	 	
By:_____________________________

	 	
Name:  Paul Elio

	 	
Title:  Chief Executive Officer

	 	 
	 	
INDEMNITEE

	 	 
	 	
By:_____________________________

	 	
Name:

	 	
Title:

17Exhibit 10.33

FORBEARANCE AGREEMENT

This Forbearance Agreement (this “Agreement”) is made effective as of the 1st day of July, 2017 (the “Effective Date”), between Revitalizing Auto Communities Environmental Response Trust (“RACER”) and Elio Motors, Inc. (“Elio”).

RECITALS

A.           RACER Properties LLC , an affiliate of RACER, and Elio are parties to that certain Purchase and Sale Agreement dated February 28, 2013 (the “PSA”). In connection with the PSA, Elio, as the maker, and RACER, as the holder, entered into that certain Promissory Note dated February 28, 2013 , as amended by that certain First Amendment to Promissory Note dated March 17, 2015, and by that certain Third Amendment to the PSA dated May 31, 2017, which effectively extended the term of the Promissory Note to July 31, 2018 (the “Note”), whereby RACER made a loan to Elio in the original principal amount of $23,000,000 (the “Loan”). The Loan is secured by Collateral (as hereinafter defined) and further evidenced, in part, pursuant to a Security Agreement dated as of February 28, 2013 (“Security Agreement”) and UCC Financing Statements and amendments (“UCC Filings”). The Collateral is comprised of all of Elio’s right, title and interest, without limitation, all goods, machinery, tooling, furniture, equipment, trade fixtures or any other personal property located at 7600 General Motors Boulevard, Shreveport, Parish of Caddo, Louisiana, whether now owned or hereafter acquired, together with all substitutions, renewals or replacements of and additions, improvements, accessories, replacement parts and accumulations to any and all of such goods, equipment, fixtures or personal property, together with all proceeds thereof, including, without limitation, insurance, condemnation, requisition or similar payments, and all proceeds from sales, renewals, releases or other dispositions thereof, and the PayPal Account number B3VEMJAKW622Q (collectively, the “Collateral”). The Note, Security Agreement and UCC Filings, as modified to date, and other documents, instruments, certificates given and/or executed in connection with the Loan are hereinafter referred to as the “Loan Documents” and each individually as a “Loan Document.”

B.           As of the Effective Date, Elio is indebted to RACER under the Loan Documents for an amount no less than $21,126,147, plus unpaid interest, late charges, attorneys’ fees, of $9,118,942 pursuant to Section 7.3.3 of the PSA, and other charges pursuant to the Loan Documents (collectively, the “Indebtedness”).

		C.	
The Indebtedness is secured by the Collateral pursuant to the Loan Documents .

D.           As of the Effective Date, Elio has failed to pay to RACER in full the September 2016, October 2016, November 2016, December 2016, January 2017, February 2017, March 2017, April 2017, May 2017, and June 2017 payments due under the Note, and Elio anticipates that it will fail to pay to RACER in full the July 2017 payment due under the Note (collectively, the “Existing Defaults”).

E.            Elio also borrowed the original principal sum of $9,850,000 from GEM CAP LENDING I, LLC, (“GEMCAP”), which loan was purchased by and assigned to CH Capital Lending, LLC (hereinafter the “CH Capital Loan”). As of March 31, 2017, the outstanding principal balance due CH Capital Lending, LLC (“CH Capital”) under the CH Capital Loan is $4,381,243.25.

F.            In a “Second Loan Extension Agreement” dated April 27, 2017, Elio and CH Capital agreed to modify the CH Loan to, among other things, have Elio pay CH Capital $1,250,000 toward the principal of the CH Loan on or before Monday, July 31, 2017, if Elio’s receives proceeds of at least $25,000,000 in the aggregate from one or more offerings of Elio’s equity or debt on or before such date. If Elio fails to make the timely payment of $1,250,000, Elio shall pay to CH Capital $350,000 on or before August 1, 2017 and thereafter pay to CH Capital $50,000 per month. Elio represents and warrants that no other amendments, modifications or changes exist with respect to the CH Loan or any of the documents evidencing the CH Loan (the “CH Loan Documents”).

G.            Section 12 of the March 1, 2013, Intercreditor and Subordination Agreement between GEMCAP, Elio, and RACER (“Intercreditor Agreement”) provides in relevant part that RACER be given notice and an opportunity to consent prior to CH Capital’s and Elio’s agreement to “change the terms of payment or change or extend the time of payment of, or increase, renew, exchange, amend, or altar, the terms of any of the [CH] Loan Documents.”

H.           Elio acknowledges that, as of the Effective Date, the Existing Defaults have occurred and are continuing.

1.             Elio represents it is actively seeking to engage an investment banking firm to underwrite offerings of Elio equity or debt and to raise equity financing to refinance the Note in furtherance of satisfying its commitment to create jobs in Parish of Caddo, Shreveport and has requested that RACER forbear from enforcing its rights and remedies arising under the Loan Documents as a result of the Existing Defaults.

J.             Elio represents that it has honored or satisfied all requests for the return of refundable deposits made by prospective Elio customers.

AGREEMENT

NOW THEREFORE, in consideration of the mutual promises set forth in this Agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1.            Incorporation of Recitals.  The foregoing Recitals are incorporated as though fully set forth herein.

2.            Loan Documents In Effect.  Elio hereby expressly acknowledges and agrees that (i) the Loan Documents are in full force and effect, (ii) Elio has no claims, set offs or counterclaims against RACER relating to or arising out of the Loan or Loan Documents, (iii) Elio has no defenses, offsets or reductions against its obligation to pay the entire amount of the Indebtedness, (iv) this Agreement does not constitute a Loan Document, and (v) any default hereunder shall be deemed a breach or default under the Loan Documents and in addition to RACER’ s rights and remedies under this Agreement, at law or in equity, Lender shall be entitled to pursue all of its rights and remedies under the Loan Documents by reason of such default.

3.             No Waiver.  Nothing in this Agreement, nor the execution and delivery thereof, shall operate to (i) waive, modify, impair, release, or in any manner affect Elio’s obligations under the Loan Documents, (ii) waive any breach or violation of any provision of any of the Loan Documents or waive or impair any rights or remedies of RACER against any person, firm, association, corporation or other entity liable or responsible for performance of any of the provisions, covenants, agreements, terms or conditions in any of the Loan Documents or available at law or in equity, or (iii) waive any rights or claims that RACER has under the Loan Documents against Elio or the Collateral.

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4.            Forbearance.  Provided that simultaneously with the execution of this Agreement, Elio pays to RACER the sum of $10,000, and an additional $10,000 on each of August 1 and September 1, 2017, then, subject to the terms and conditions of this Agreement, including the non-occurrence of a Forbearance Default (as hereinafter defined), RACER will forbear from enforcing any of its remedies under the Note and Loan Documents, and from commencing any action or proceeding against Elio or the Collateral through but in any event, not beyond September 30, 2017 (the “Forbearance Termination Date”). The payments being made simultaneously herewith and hereafter are to reimburse RACER for its administration fees and costs in connection with the Loan. Elio acknowledges that these payments do not cover and are not being applied to existing interest, arrearages and other charges due under the Loan Documents, all of which shall continue to remain and accrue after the payments are made.

5.             Forbearance Termination and Default. On or after September 30, 2017, RACER shall be free to commence any action or proceeding against Elio or the Collateral and to otherwise enforce all of its rights and remedies under the Note and Loan Documents. Furthermore, if (i) Elio shall default in any of its obligations under this Agreement, including, without limitation, the payments required pursuant to paragraph 4 above or failure to deliver to RACER documents sufficient to perfect a security interest in the Trademark Collateral (as hereinafter defined), or (ii) a petition in bankruptcy or other insolvency proceeding is filed by or against Elio, or (iii) any event of default set forth in the Loan Documents, PSA or under applicable law (other than the Existing Defaults) shall occur prior to the Forbearance Termination Date, or (iv) CH Capital or any other person or entity seeks to enforce rights or remedies against the Collateral or any of Elio’s property or assets, or (v) Elio breaches any representations, warranties and covenants set forth in this Agreement, the PSA or any Loan Document, or (vi) any liens, other than those currently held by CH Capital attach to or are asserted against the Collateral or any other assets of Elio, or (vii) Elio defaults under the CH Loan, or (viii) a judgment is entered against Elio, or (ix) Elio fails to provide to RACER on or before July 15, 2017, the documents and information requested by RACER on June 27, 2017, namely, Elio’s most recent published financial statements dated March 31, 2017, as well as the corresponding schedules supporting the debt structure (generally, but particularly with Shreveport Business Park and CH Capital); list of creditors; list of payables and aging of these payables; list of vendor debts; list of liens; statement as to how much cash Stuart Lichter has contributed to Elio; ((i) - (ix) are collectively, the “Forbearance Defaults” and individually a “Forbearance Default”), then, in any such event, RACER’ s agreement of forbearance hereunder shall automatically terminate and RACER shall have the right to commence any action or proceeding and take all enforcement actions against Elio and the Collateral and to otherwise pursue any and all rights and remedies under the Loan Documents. Additionally, upon the Forbearance Termination Date or a Forbearance Default, all sums due under the Loan Documents shall immediately become due and payable.

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6.             Representations, Covenants and Warranties: In consideration of RACER’s agreements set forth herein, Elio hereby covenants, represents and warrants as follows:

		(a)	
Recitals.  The Recitals in this Agreement are true and correct in all respects.

		(b)	
Incorporation of Representations.  All representations and warranties of Elio in the Loan Documents are incorporated herein in full by this reference and are true and correct as of the date hereof.

		(c)	
Corporate Power; Authorization.  Elio has the corporate power, and is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder.

		(d)	
Enforceability.  This Agreement and the Loan Documents are the legal, valid and binding obligations of Elio enforceable against Elio in accordance with their respective terms.

		(e)	
No Violation.  Elio’s execution, delivery  and performance of this Agreement does not and will not (i) violate any law, rule, regulation or court order to which Elio is subject; (ii) conf1ict with or result in a breach of Elio’s Articles of Organization or any shareholder agreements or any agreement or instrument to which Elio is party or by which it or its assets and properties are bound, or (iii) result in the creation or imposition of any lien, security interest or encumbrance on any property of Elio, whether now owned or hereafter acquired, other than liens in favor of RACER.

		(f)	
Obligation Absolute. The obligation of Elio to repay the Indebtedness under the Loan Documents, together with all interest, late charges, attorneys’ fees and costs accrued thereon, is absolute and unconditional, and there exists no right of set off or recoupment, counterclaim or defense of any nature whatsoever to payment of the Loan.

		(g)	
Defaults. Borrower hereby represents and warrants that as of the date hereof, except as to the Existing Defaults, there are no existing defaults under the Note or any other Loan Document.

		(h)	
CH Loan. The CH Loan is current, not in default and no amendments or modifications to the CH Loan have been made or entered into other than or subsequent to the Second Loan Extension Agreement.

		(i)	
No Liens. Other than the liens or encumbrances held by RACER, CH Capital, the note holders of the 2015 Convertible Subordinated Secured Notes, Stuart Lichter, and Schwab Industries, Inc., no other liens or encumbrances exist with respect to the Collateral or any of the other assets owned by Elio.

		(j)	
Payroll, Vendors, Suppliers. Elio is current on all its payroll obligations and, other than as set forth on Schedule 6(j), all payables due to Elio’s vendors and suppliers are current as of March 31, 2017. Each calendar quarter beginning with the current quarter of the Effective Date, Elio shall provide to RACER a similar payables due ledger.

		(k)	
Modifications to CH Capital Loan. Elio will neither make nor agree to any further modifications to the CH Capital Loan without prior notice to and consent by RACER pursuant to the Intercreditor Agreement.

4

7.             Additional Collateral.  In consideration of RACER entering into this Agreement, Elio hereby assigns as additional collateral all of Elio’s trademarks and trade names including, but not limited to, “Elio Design” and “Elio Motors” pursuant to and more fully described in the Trademark Security Agreement annexed hereto as Exhibit A (the “Trademark Collateral”). Elio shall take all necessary actions and execute such documents in order to perfect RACER’ s security interest in the Trademark Collateral within ten days from the date hereof.

8.            Catch-Up Payment.  If Elio receives net proceeds of at least $25,000,000 in the aggregate from one or more offerings of Elio’s equity or debt on or before September 30, 2017, then Elio shall pay to RACER, on or before September 30, 2017, the sum of the unpaid monthly amounts due to RACER, under the Note (from October 2016 to September 2017), a total of $2,099,255.50, irrespective of whether Elio pays CH Capital or CH Capital waives the receipt of Elio’s payment of the $1,250,000 toward the CH Loan on (or before) such date (per the Second Loan Extension Agreement between CH Capital and Elio).

9.            Refinancing.  As of the Effective Date, Elio shall continue to diligently pursue refinancing the Note or to sell its business and shall provide RACER with a written update detailing its progress in finding a replacement lender every thirty (30) days after the Effective Date. If Elio obtains a commitment for financing (the “Replacement Financing”). Elio shall promptly enter into such Replacement Financing and, simultaneously with the receipt by Elio of the Replacement Financing, pay the outstanding Indebtedness under the Note and Loan Documents in full.

10.          Release of Claims and Waiver.  Elio hereby releases, remises, acquits and forever discharges RACER and RACER’s employees, agents, representatives, consultants, attorneys, fiduciaries, servants, officers, directors, members, affiliates, predecessors, successors and assigns, subsidiary and parent corporations, and related entities (all of the foregoing hereinafter called the “Released Parties”), from any and all actions and causes of action, judgments, executions, suits debts, claims, demands, liabilities, obligations, damages and expenses of any and every character, known or unknown, direct and/or indirect, at law or in equity, of whatsoever kind or nature, whether heretofore or hereafter arising, for or because of any matter or things done, omitted or suffered to be done by any of the Released Parties prior to and including the date of execution hereof, and in any way directly or indirectly arising out of or in any way in connection with this Agreement and the Loan Documents, including but not limited to, claims relating to any negotiations with respect to the Loan Documents heretofore occurring (all of the foregoing hereinafter called the “Released Matters”). Elio acknowledges that the agreements in this paragraph are intended to be in full satisfaction of all or any alleged injuries or damages arising in connection with the Released Matters. Elio represents and warrants to RACER that it has not or purported to transfer, assign or otherwise convey any right, title or interest of Elio in any Released Matter to any other Person and that the foregoing constitutes a full and complete release of all Released Matters.

5

		11 .	
Waiver.

(a)  Elio agrees that, for valuable consideration which Elio acknowledges having been received herein and heretofore (including multiple forbearances), RACER shall be entitled to relief from the automatic stay under Section 362 of the Bankruptcy Code, any stay or other form of creditor restraint imposed under Section 105 or any other section of the Bankruptcy Code or any other stay or creditor restraint imposed under any other proceeding, any of which would adversely impact the rights and remedies that are available to RACER under this Agreement, the Loan Documents or applicable law. Elio, to the fullest extent permitted by law, irrevocably and unconditionally consents to such relief and hereby irrevocably and unconditionally waives its rights to object to the foregoing relief. In the event Elio files any bankruptcy or insolvency proceeding, Elio hereby consents and agrees that this Agreement shall be deemed to be a stipulation between RACER and Elio that an order providing that Elio shall not be entitled to use cash collateral (to the extent a claim is raised by Elio that any cash or other collateral actually constitute cash collateral which the RACER does not concede) in any manner shall be entered by the bankruptcy or other court, and Elio shall not oppose the entry of such an order by any bankruptcy or other court.

(b)  Elio shall not seek to modify, impair or limit the rights and remedies of RACER under sections 506(c) or 552(b) of the Bankruptcy Code or otherwise, and shall not seek to obtain credit or incur debt to be secured by a senior or equal lien on the Collateral or Trademark Collateral, or any other property which constitutes collateral of RACER pursuant to section 364(d) or otherwise.

12.           Advice of Counsel. Elio has carefully read and understands the effect of this Agreement, and has either been represented by its own counsel, or has elected to waive counsel. RACER has advised Elio that this Agreement is an important legal document and has recommended that Elio be represented by its own legal counsel in connection with this agreement. Elio acknowledges that any attorney representing RACER (whether outside counsel or staff counsel) is acting solely in the interests of RACER and that RACER’s attorney(s) have not given any legal advice to Elio or otherwise made any statement upon which Elio has relied. Elio has executed this Agreement as its free and voluntary act, without any duress, coercion or undue influence exerted by any other party.

13.           No Modification of the Note.  Other than the limited forbearance set forth herein, nothing in this Agreement shall be deemed to modify, reduce or effect Elio’s obligations under the Loan Documents.

14.           Further Assurances.  The parties agree to execute any and all additional documents that may reasonably be required in order to evidence, secure or carry out the agreements and undertakings set forth in this Agreement.

15.           Counterparts.  This Agreement may be executed in multiple counterparts and by facsimile or other electronic signatures, each of which shall constitute a duplicate original, but all of which together shall constitute one and the same instrument.

16.           Applicable Law.  This Agreement is executed in and shall be construed under and governed by the laws of the State of Louisiana, without regard to conflict of laws principles.

17.           Successors and Assigns.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

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18.          Costs of Enforcement.  In the event any party to this Agreement commences any legal action to enforce its rights hereunder as a result of the breach of this Agreement by other party, the prevailing party in such action shall be entitled to recovery all of its costs and expenses in connection therewith, including all reasonable legal fees and costs.

19.           Integration.  This Agreement, together with the Loan Documents, constitutes the entire agreement and understanding among the parties relating to the subject matter hereof, and supersedes all prior proposals, negotiations, agreements and understandings relating to such subject matter. In entering into this Agreement, Elio acknowledges that it is relying on no statement, representation, warranty, covenant or agreement of any kind made by RACER or any employee or agent of RACER, except for the agreements set forth herein.

20.           Survival.  All representations, warranties, covenants, agreements, undertakings, waivers and releases of Elio contained herein shall survive the termination of the forbearance agreed to hereunder.

21.           No Oral Changes.  No amendment, modification, termination, discharge or waiver of any provision of this Agreement or of any party’s obligations hereunder shall be effective unless it is in writing and signed by the party intended to be bound thereby and then such amendment, modification, termination or waiver shall be effective only in the specific instance and for the specific purpose given.

22.           Notices.  All notices, requests, consents or demands herein provided to be given or made, or which may be given or made by either Party to the other hereunder (collectively, the “Notices”), shall be given or made only in writing and shall be deemed to have been duly given: (a) when delivered personally at the address set forth below, or if delivery is rejected when delivery was attempted, or (b) on the first business day after the date sent when sent via reputable overnight courier, property addressed, prepaid and delivered to such courier’s office during its business hours, otherwise, it shall be effective the next Business Day; (c) on the date sent via facsimile or electronic mail transmission, if sent prior to 5:30 PM (eastern standard time) on a business day, and if a hard copy is deposited in the United States mail, properly addressed and first class postage prepaid, return receipt requested. The proper address to which all Notices may be given or made by either party shall be the address set forth below, or to such other address or to such other person as any party shall designate by Notice given to the other party in accordance with this paragraph. The attorneys for either party may, but shall not be required to, deliver any notice pursuant to this Agreement on behalf of their respective clients.

	
If to Seller:

RACER Trust

500 Woodward Avenue, Suite 2650

Detroit, MI  48226

Attn:  Bruce Rasher, Redevelopment Manager

Facsimile:  734.879.9537

Email: brasher@racertrust.org

	
With a Copy to:

RACER Trust

500 Woodward Avenue, Suite 2650

Detroit, MI  48226

Attn:  Carl Garvey, General Counsel

Facsimile:  734.879.9537

Email : cgarvey@racertrust.org

	
 

	
And a Copy to:

Thompson & Knight LLP

900 Third Avenue

New York, NY  10022

Attn:  Michael V. Blumenthal, Esq.

Facsimile:  214.999.9279

Email:  michael.blumenthal@tklaw.com

	
If to Buyer:

Elio Motors, Inc.

102 W. EI Caminito Drive

Phoenix, AZ 85021

Attn:  Paul Elio

Facsimile: ___________

Email: pelio@esgeng.com

	
With a Copy to:

7

23.          Waiver of Jury Trial.  RACER AND ELIO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAWS, ANY RIGHT THEY OR THEIR AFFILIATES, SUCCESSORS OR ASSIGNS MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY CLAIM ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY LOAN DOCUMENT OR OTHER DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, THE RELATIONSHIP OF RACER AND ELIO HEREUNDER, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO RACER ACCEPTING AND ENTERING INTO THIS AGREEMENT.

[Remainder of this page left blank; signature page follows]

8

IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the Effective Date.

	 	
RACER:

	 	 	 
	 	
REVITALIZ1NG AUTO COMMUNITIES ENVIRONMENTAL RESPONSE TRUST

	 	 	 
	 	
By:

	
EPLET, LLC, acting solely in its capacity as Administrative Trustee of Revitalizing Auto Communities Environmental Response Trust

	 	 	 
	 	 	 
	 	
By:

	
/s/ Elliott P. Laws

	 	 	
ELLIOTT P. LAWS, not individually, but acting solely in his capacity as Managing Member

	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	
ELIO:

	 	 	 
	 	
ELIO MOTORS, INC.

	 	 	 
	 	 	 
	 	
By:

	
/s/ Paul Elio

	 	 	 
	 	
Its:

	
CEO

9

EXHIBIT A

TRADEMARK SECURITY AGREEMENT

 

TRADEMARK SECURITY AGREEMENT

This TRADEMARK SECURITY AGREEMENT (“Trademark Security Agreement”), dated as of July 1, 2017, is made by and between Elio Motors, Inc., a Delaware corporation (the “Grantor”) in favor of Revitalizing Auto Communities Environmental Response Trust (the “Lender”), a trust formed under the laws of the State of New York.

WHEREAS, the Grantor has entered into a Forbearance Agreement dated as of July 1, 2017 (the “Forbearance Agreement”), with the Lender.

WHEREAS, under the terms of the Forbearance Agreement, the Grantor has granted to the Lender a security interest in, among other property, certain intellectual property of the Grantor, and has agreed to execute and deliver this Trademark Security Agreement for recording with governmental authorities, including, but not limited to, the United States Patent and Trademark Office.

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.             Grant of Security. Grantor hereby pledges and grants to the Lender a security interest in and to all of the right, title, and interest of Grantor in, to, and under the following (the “Trademark Collateral”):

(a)          the trademark registrations and applications set forth in Schedule I hereto, together with the goodwill connected with the use of and symbolized thereby, and all extensions and renewals thereof (the “Trademarks”);

(b)          all rights of any kind whatsoever of Grantor accruing under any of the foregoing provided by applicable law of any jurisdiction, by international treaties and conventions, and otherwise throughout the world;

(c)          any and all royalties, fees, income, payments, and other proceeds now or hereafter due or payable with respect to any and all of the foregoing; and

(d)          any and all claims and causes of action, with respect to any of the foregoing, whether occurring before, on, or after the date hereof, including all rights to and claims for damages, restitution, and injunctive and other legal and equitable relief for past, present, and future infringement, dilution, misappropriation, violation, misuse, breach, or default, with the right, but no obligation, to sue for such legal and equitable relief and to collect, or otherwise recover, any such damages.

2.            Recordation.  Grantor authorizes the Commissioner for Trademarks and any other government officials to record and register this Trademark Security Agreement upon request by the Lender.

3.            Forbearance Documents.  This Trademark Security Agreement has been entered into pursuant to and in conjunction with the Forbearance Agreement, which is hereby incorporated by reference. The provisions of the Forbearance Agreement shall supersede and control over any conflicting or inconsistent provision herein. The rights and remedies of the Lender with respect to the Trademark Collateral are as provided by the Forbearance Agreement, and related documents, and nothing in this Trademark Security Agreement shall be deemed to limit such rights and remedies.

 

4.            Execution in Counterparts.  This Trademark Security Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page to this Trademark Security Agreement by facsimile or in electronic (i.e., “pdf” or “tif” format) shall be effective as delivery of a manually executed counterpart of this Trademark Security Agreement.

5.            Successors and Assigns.  This Trademark Security Agreement will be binding on and shall inure to the benefit of the parties hereto and their respective successors and assigns.

6.            Governing Law.  This Trademark Security Agreement and any claim, controversy, dispute, or cause of action (whether in contract or tort or otherwise) based upon, arising out of, or relating to this Trademark Security Agreement and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the laws of the United States and the State of New York, without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction).

[SIGNATURE PAGE FOLLOWS]

2

IN WITNESS WHEREOF, Grantor has caused this Trademark Security Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

	 	
GRANTOR:

	 	 	 
	 	
Elio Motors, Inc.

	 	 	 
	 	 	 
	 	
By:

	
/s/ Paul Elio

	 	
Name:

	
Paul Elio

	 	
Title:

	
CEO

	 	
Address for Notices:

AGREED TO AND ACCEPTED:

	 	
LENDER:

	 	
Revitalizing Auto Communities Environmental Response Trust

	 	 	 
	 	
By:

	
EPLET, LLC, acting solely in its capacity as Administrative Trustee of Revitalizing Auto Communities Environmental Response Trust

	 	 	 
	 	 	 
	 	
By:

	
/s/ Elliott P. Laws

	 	 	
ELLIOTT P. LAWS, not individually, but acting solely in his capacity as Managing Member

 

AKNOWLEDGEMENT

	
STATE OF ARIZONA

	 	
)

	 	 	
)SS.

	
COUNTY OF MARICOPA

	 	
)

On the 25th day of July, 2017, before me personally appeared Paul Elio, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the foregoing instrument, who, being duly sworn, did depose and say that he executed the same in his authorized capacity as the CEO of Elio Motors, Inc. a Delaware corporation, and acknowledged the instrument to be his free act and deed/the free act and deed of Elio Motors, Inc. for the uses and purposes mentioned the instrument.

 

	 	
/s/ Juanita J. Tyson

	 	
Notary Public

	 	
Printed Name: Juanita J. Tyson

	
My Commission Expires:

	 
	
            11-30-2018            

	 
	 	 
	 	

 

3

SCHEDULE 1

TRADEMARKS

Trademark Registrations

	
Mark

	
Jurisdiction

	
Registration

Number

	
Registration

Date

	
Record Owner

	
ELIO & Design

	
US

	
4,510,655

	
April 8, 2014

	
Elio Motors, Inc. (an Arizona Corporation) [sic]

	
ELIO MOTORS

	
US

	
4,598,749

	
September 2, 2014

	
Elio Motors, Inc. (an Arizona Corporation) [sic]

 

4

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