SECURITY AGREEMENT
Exhibit
10.23
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
|
||
