Exhibit 10.2
SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of March 23, 2006, by and
among Hybrid Fuel Systems, Inc., a Xxxxxx corporation ("Company"), and Dutchess
Private Equities Fund, LP, a Delaware Limited partnership, as the secured
parties signatory hereto and their respective endorsees, transferees and assigns
(collectively, the "Secured Party") (sometimes hereinafter the Company and the
Secured Party are collectively referred to as the "parties").
W I T N E S S E T H:
WHEREAS, pursuant to Note Agreement, dated the date hereof between the
Company and the Secured Party (the "Note Agreement"), and the prior Note between
the Company and the Secured Party dated December 20, 2005, the Company has
agreed to issue to the Secured Party and the Secured Party has agreed to
purchase from Company certain of Company's 0% Secured Notes, due one year from
the date of issue (the "Note")
WHEREAS, pursuant to Subscription Agreement, dated November 4, 2005 between
Company and the Secured Party (the "Subscription Agreement"), Company has issued
to the Secured Party and the Secured Party has purchased from Company certain of
Company's twelve percent (12%) Secured Convertible Debentures, due five years
from the date of issue (the "Debentures"), which are convertible into shares of
Company's Common Stock, par value $.001 per share (the "Common Stock"). In
connection therewith, Company shall issue to the Secured Party certain Common
Stock purchase warrants dated as of the date hereof to purchase the number of
shares of Common Stock (the "Warrants"); and
WHEREAS, in order to further induce the Secured Party's purchase of the
Note, and for further consideration of the Secured Party's purchase of the
Debenture, the 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 to secure the prompt
payment, performance and discharge in full of all of Company's obligations under
the Note, Debenture 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 limitation, 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, 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 Company, a list of which is contained in Schedule A,
attached hereto.
(c) "Obligations" means all of the Company's obligations under this
Agreement and the Notes, 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 Commonwealth of Massachusetts.
2. Grant of Security Interest. As an inducement for the Secured Party to
purchase the Notes 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 first 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), free and clear of any liens, security interests, encumbrances,
rights or claims, and is fully authorized to grant the Security Interest in
and to pledge the Collateral. 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.
(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 B, 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 B, 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.
(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.
4. Defaults. The following events shall be "Events of Default":
(a) The occurrence of an Event of Default (as defined in the
Transaction Documents) under the Transaction Documents, or breach of the
terms of the Transaction Documents.
(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.
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 Notes 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 Notes, 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, 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 18% 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 Notes.
Until so paid, any fees payable hereunder shall be added to the principal
amount of the Notes 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 Transaction Documents 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 Notes, 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 Notes, 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 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 Notes have been made in full
and all other Obligations of the Company 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 xxxx, xxxx 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 xxx 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 Notes and the Warrants, all as fully and effectually as the
Company might or could do; and the Company 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 B, 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 the to the Company:
Xxxx Xxxxxx
Hybrid Fuel Systems
00000 Xxxxxxx Xxxxx
Xxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
With copy to:
Xxxxxx X. Xxxxxx, Esq.
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
If to the Holder:
Dutchess Capital Management, LLC
Xxxxxxx Xxxxxxxx
00 Xxxxxxxxxxxx Xxx, Xxxxx 0
Xxxxxx, XX 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
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
Notes 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 Notes 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 to the
subject matter hereof. 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 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) The validity, terms, performance and enforcement of this Agreement
shall be governed and construed by the provisions hereof and in accordance
with the laws of the Commonwealth of Massachusetts applicable to agreements
that are negotiated, executed, delivered and performed solely in the
Commonwealth of Massachusetts.
(i) All disputes arising under this agreement shall be governed by and
interpreted in accordance with the laws of the Commonwealth of
Massachusetts, without regard to principles of conflict of laws. The
parties to this agreement will submit all disputes arising under this
agreement to arbitration in Boston, Massachusetts before a single
arbitrator of the American Arbitration Association ("AAA"). The arbitrator
shall be selected by application of the rules of the AAA, or by mutual
agreement of the parties, except that such arbitrator shall be an attorney
admitted to practice law in the Commonwealth of Massachusetts. No party to
this agreement will challenge the jurisdiction or venue provisions as
provided in this section. Nothing in this section shall limit the Holder's
right to obtain an injunction for a breach of this Agreement from a court
of law.
(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.
(k) This Agreement shall supersede the prior executed Security
Agreement dated November 4, 2005, and upon execution of this Agreement, the
prior Security Agreement shall be void.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed on the day and year first above written.
HYBRID FUEL SYSTEMS, INC.
By: /s/ Xxxx Xxxxxx
-----------------
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
DUTCHESS PRIVATE EQUITIES FUND, L.P.
BY ITS GENERAL PARTNER DUTCHESS
CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: A Managing Member
