Exhibit 10.3
SETTLEMENT AGREEMENT AND RELEASE
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This Settlement Agreement and Release (the "Agreement") is dated as of
March 24, 2006 and is made by and between ALPHA CAPITAL AKTIENGESELLSCHAFT,
WHALEHAVEN CAPITAL FUND LIMITED, and ▇▇▇▇▇ INTERNATIONAL LTD. (collectively the
"Investors") and Hybrid Fuel Systems, Inc., a Georgia corporation ("Hybrid").
WHEREAS, Hybrid, issued to the Investors an aggregate of $600,000.00
principal amount promissory notes pursuant to the Subscription Agreement dated
on or about March 31, 2005 (collectively the "Debentures");
WHEREAS, Hybrid desires to redeem all outstanding Debentures, including
interest and liquidated damages ("Remaining Debentures") in accordance with the
terms and conditions hereof; and
NOW, THEREFORE, in consideration of the mutual conditions and covenants
contained in this Agreement, and for other good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, it is hereby
stipulated, consented to and agreed by and among the Investors and Hybrid as
follows:
1. (a) On or before March 28, 2006, in full satisfaction of the Remaining
Debentures Hybrid shall (i) pay to the Investors an aggregate of
$541,542.00 (the "Funds") as set forth on Exhibit A hereto, by wire
transfer to the bank and account as set forth on Exhibit A hereto, and (ii)
reduce the exercise price to $0.19 per share for the warrants on the
attached Exhibit B. Each Investor, individually, hereby agrees that they
will not exercise or sell more than sixty-seven thousand five hundred
(67,500) shares underlying the Warrant in any thirty (30) day period unless
Hybrid's common stock is trading above forty cents ($0.40) per share. Upon
receipt of the Funds, the Investors shall return, via overnight delivery,
the Remaining Debentures to Hybrid. The Company agrees to file all
necessary paperwork with the SEC, including any post-effective amendments,
for the Investors within seven (7) days. The Company shall agree to abide
by all terms and conditions in the original Warrant with respect to
registration and issuance of shares underlying the Warrant.
2. In consideration of the foregoing, upon receipt by the Investors, or their
agent, of the Funds, except in connection with third party indemnification,
the Investors release and discharge Hybrid, Hybrid's officers, directors,
principals, control persons, past and present employees, insurers,
successors, agents and assigns ("Hybrid Parties") from all actions, cause
of action, suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, extents, executions,
claims, and demands whatsoever, in law, admiralty or equity, which against
Hybrid Parties ever had, now have or hereafter can, shall or may, have for,
upon, or by reason of any matter, cause or thing whatsoever, whether or not
known or unknown, from the beginning of the world to the day of the date of
this Release arising under the Debentures and Subscription Agreement dated
on or about March 31, 2005. In addition, all security interests, mortgages
and other liens, if any, which Hybrid may have granted to Investors shall
automatically be released and terminated. Investors authorize Hybrid, or
its designees, to file Uniform Commercial Code financing statement
amendments evidencing the release and termination of Investor's liens in
any assets or properties of Hybrid.
3. In consideration of the foregoing, Hybrid releases and discharges
Investors, Investors' officers, directors, principals, control persons,
past and present employees, insurers, successors, agents and assigns
("Investors Parties") from all actions, cause of action, suits, debts,
dues, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, extents, executions, claims, and demands
whatsoever, in law, admiralty or equity, which against Investors Parties
ever had, now have or hereafter can, shall or may, have for, upon, or by
reason of any matter, cause or thing whatsoever, whether or not known or
unknown, from the beginning of the world to the day of the date of this
Release arising under the Debentures and Subscription Agreement dated on or
about March 31, 2005.
4. Hybrid and the Investors each understand and agree that this Agreement
(including all of its terms) is forever deemed confidential between them.
Except as required under the statutes, rules or regulations of any federal
or state government, government agency or court of competent jurisdiction,
each of Hybrid and the Investors, and their respective counsel, shall not
disclose or divulge any of the matters underlying this Agreement, or any of
the terms or substance of this Agreement to others.
All inquiries, if any, regarding the other party's performance shall
be responded to promptly. Each party shall furnish the other party with a
written copy of each and every written response; or, if such response was
oral the date, time and person to whom a response was given.
5. All parties acknowledge and represent that: (a) they have read the
Agreement; (b) they clearly understand the Agreement and each of its terms;
(c) they fully and unconditionally consent to the terms of this Agreement;
(d) they have had the benefit and advice of counsel of their own selection;
(e) they have executed this Agreement, freely, with knowledge, and without
influence or duress; (f) they have not relied upon any other
representations, either written or oral, express or implied, made to them
by any person; and (g) the consideration received by them has been actual
and adequate.
6. This Agreement contains the entire agreement and understanding concerning
the subject matter hereof between the parties and supersedes and replaces
all prior negotiations, proposed agreement and agreements, written or oral.
Each of the parties hereto acknowledges that neither any of the parties
hereto, nor agents or counsel of any other party whomsoever, has made any
promise, representation or warranty whatsoever, express or implied, not
contained herein concerning the subject hereto, to induce it to execute
this Agreement and acknowledges ands warrants that it is not executing this
Agreement in reliance on any promise, representation or warranty not
contained herein.
7. This Agreement may not be modified or amended in any manner except by an
instrument in writing specifically stating that it is a supplement,
modification or amendment to the Agreement and signed by each of the
parties hereto.
8. Should any provision of this Agreement be declared or be determined by any
court or tribunal to be illegal or invalid, the validity of the remaining
parts, terms or provisions shall not be affected thereby and said illegal
or invalid part, term or provision shall be severed and deemed not to be
part of this Agreement.
9. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to principles of conflicts of
laws. Any action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only in the
state courts of New York or in the federal courts located in the state of
New York. Both parties and the individuals executing this Agreement and
other agreements on behalf of the Company agree to submit to the
jurisdiction of such courts and waive trial by jury. The prevailing party
shall be entitled to recover from the other party its reasonable attorney's
fees and costs.
10. This Agreement may be executed in counterparts, each of which, when all
parties have executed at least one such counterpart, shall be deemed an
original, with the same force and effect as if all signatures were appended
to one instrument, but all of which together shall constitute one and the
same Agreement.
11. Immediately upon receipt of the funds, Grushko & ▇▇▇▇▇▇▇ is instructed to
wire the balances to the Investors.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first indicated above.
ALPHA CAPITAL AKTIENGESELLSCHAFT
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director
WHALEHAVEN CAPITAL FUND LIMITED
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Title: Chief Operating Officer
▇▇▇▇▇ INTERNATIONAL LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title:
HYBRID FUEL SYSTEMS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
EXHIBIT A
ALLOCATIONS AND
WIRE TRANSFER INSRUCTIONS
INVESTOR BANK ACCOUNT AMOUNT
-------------------------------- ------------------------- -----------
ALPHA CAPITAL AKTIENGESELLSCHAFT C/O GRUSHKO & ▇▇▇▇▇▇▇ P.C $199,500.00
-------------------------------- ------------------------- -----------
WHALEHAVEN CAPITAL FUND LIMITED C/O GRUSHKO & ▇▇▇▇▇▇▇ P.C $313,500.00
-------------------------------- ------------------------- -----------
▇▇▇▇▇ INTERNATIONAL LTD. C/O GRUSHKO & ▇▇▇▇▇▇▇ P.C $ 28,542.00
-------------------------------- ------------------------- -----------
TOTAL $541,542.00
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EXHIBIT B
PRIVATE WARRANTS ISSUED EXPIRATION
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ALPHA CAPITAL AKTIENGESELLSCHAFT
WHALEHAVEN CAPITAL FUND LIMITED
▇▇▇▇▇ INTERNATIONAL LTD.
Total 1,600,000
