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ECOtality (ECTY) Discloses Filing for Ch. 11 Bankruptcy

On September 16, 2013, ECOtality, Inc. (Nasdaq: ECTY) and its U.S. subsidiaries (collectively with the Company, the “Debtors”) each filed a voluntary petition for relief (the “Bankruptcy Filing”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Arizona (the “Bankruptcy Court”). The Debtors have proposed to jointly administer their chapter 11 cases under the caption In re Electric Transportation Engineering Corporation, dba ECOtality North America, Case No. 2:13-bk-16126-RJH (the “Chapter 11 Case”). All documents filed with the Bankruptcy Court are available for inspection at the Office of the Clerk of the Bankruptcy Court, online at for a fee, and for free at

Each of the Debtors remains in possession of its respective assets and will continue to operate its respective business as a “debtor in possession” under the jurisdiction of the Bankruptcy Court, and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.

The Company cannot predict what the ultimate value of its common stock may be or whether the holders of common stock will receive any distribution in the Company’s reorganization; however, it is likely that the Company’s common stock will have very little or no value given the amount of the Company’s liabilities compared to its assets.

The Company’s shareholders are cautioned that trading in shares of the Company’s equity securities during the pendency of the Chapter 11 Case is highly speculative and poses substantial risks. Trading prices for the Company’s equity securities may bear little or no relationship to the actual recovery, if any, by holders in the Chapter 11 Case. Accordingly, the Company urges extreme caution with respect to existing and future investments in its equity securities.

On September 16, 2013 and in connection with the Company’s filing of a voluntary petition for relief under the Bankruptcy Code, the Company and its Electric Transportation Engineering Corporation subsidiary (“ETEC”, together with the Company, the “Borrowers”) and its subsidiaries including ECOtality Stores, Inc. (“Stores”); ETEC North LLC (“North”); The Clarity Group, Inc. (“Clarity”); and G.H.V. Refrigeration (“GHV”, together with Stores, North, and Clarity, the “Guarantors”, and the Guarantors together with the Borrowers, the “Credit Parties”) entered into a Credit and Security Agreement (the “Credit Agreement”) with Nissan North America (the “Lender”). Under the terms of the Credit Agreement and subject to approval of the Bankruptcy Court, the Lender will make available to the Borrowers a delayed draw term loan in an amount up to $1,250,000 (the “Term Loan”).

Subject to the provisions of the Credit Agreement, Lender agrees to loan to Borrower in the amounts (each, an “Advance”) and on the dates following: (i) At closing of the Credit Agreement – $500,000, (ii) On September 25, 2013 – $250,000, (iii) On September 30, 2013 – $250,000, and (iv) On October 7, 2013 – $250,000. All amounts outstanding and other obligations shall be due and payable on the date (the “Maturity Date”) which is the earliest of (i) any date on which Lender accelerates the maturity of the Term Loan pursuant to an event of default as defined in the Credit Agreement, (ii) the date upon which the Interim Financing Order from the Bankruptcy Court expires, if the Final Financing Order from the Bankruptcy Court has not been entered prior to such date, (iii) the closing of the Sale (defined below), or (iv) October 28, 2013.

Interest accrues on the outstanding principal balance of the Term Loan at a rate of 5% per annum. All interest is due and payable on the Maturity Date. Upon the occurrence and during the continuation of any event of default, interest shall accrue at a rate of 7% per annum.

Under the Credit Agreement, each Credit Party grants to Lender a continuing security interest in, a lien upon, and a right to set off against, and pledges to Lender any and all right, title and interest in and to all assets of each Credit Party (excluding certain assets acquired with funds that were reimbursed with federal funds unless certain conditions are met) including but not limited to the following, whether now owned or existing, or subsequently acquired or arising, and including any leasehold interest therein, which security interest is intended to be a first priority security interest: (i) all goods, accounts, equipment, inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, general intangibles, documents, instruments (including any promissory notes), chattel paper, cash, deposit accounts, securities accounts, fixtures, letter of credit rights, securities, and all other investment property, supporting obligations, and financial assets; (ii) all of each Credit Party’s books and records relating to any of the foregoing; and (iii) any and all claims, rights and interest in any of the above and all substitutions for, additions, attachments, accessories and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

In the event of default under the Credit Agreement, Lender may, without notice or demand, (i) terminate its obligations to make Advances and (ii) elect amounts due Lender, all interest thereon and all other obligations to be due and payable immediately. Events of default include, but are not limited to (i) expenditures by the any of the Credit Parties, on a rolling two week basis by an amount exceeding 10% of budgeted amounts on an aggregate basis (such amounts are provided in a budget accompanying the Credit Agreement), without the prior consent of Lender, (ii) conversion of any Bankruptcy Case to a case under chapter 7 of the Bankruptcy Code, and (iii) dismissal of any Debtor’s Chapter 11 Case.

The proceeds of the Term Loan shall be used by the Borrowers to (i) fund Borrowers’ operations until a sale (the “Sale”) of substantially all of the Credit Parties’ assets and any interest of the Department of Energy (the “DOE”) in those assets (or subject to the DOE grant, as such grant may be amended, to Borrowers if it is assumed, assigned and novated in favor of a purchaser, (ii) to fund $27,000 for the operations of the Borrower’s Stores and Portable subsidiaries, and (iii) to pay certain administration costs necessary to maintain the corporate existence of the Guarantors.

The Debtors intend to seek approval of the Bankruptcy Court of an auction and sale of substantially all of their assets under section 363 of the Bankruptcy Code.

The foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement, a copy of which is filed with this Current Report on Form 8-K as Exhibit 10.1 attached hereto and incorporated by reference herein.

The Bankruptcy Filing described in Item 1.03 above, which is incorporated by reference into this Item 2.04, constituted an event of default, and triggered repayment obligations of the Company and certain of its subsidiaries and/or gave rise to certain other rights and remedies, including termination rights, of counterparties. The Company believes that any efforts to enforce such payment obligations or rights and remedies are subject to limitation by, and automatically stayed as a result of, the Bankruptcy Filing and the applicable provisions of the Bankruptcy Code. The Bankruptcy Filing and/or related circumstances constituted an event of default or otherwise triggered rights and remedies of counterparties under the following instruments, agreements or arrangements:



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