COLLATERAL AGENT AGREEMENT
Exhibit
4.5
COLLATERAL
AGENT AGREEMENT (this "Agreement") dated
as of March 31, 2005, among Xxxxxxx X. Xxxxxxx (the "Collateral
Agent"), and
the parties identified on Schedule A hereto (each, individually, a "Lender" and
collectively, the "Lenders"), who
hold or will acquire variable interest rate convertible promissory notes issued
or to be issued by Hybrid Fuel Systems, Inc. (“Debtor”), a Georgia corporation,
at about or prior to the date of this Agreement as described in the Security
Agreements referred to in Section 1(a) below (collectively herein the
“Notes").
WHEREAS,
the Lenders have made, are making and will be making loans to Debtor to be
secured by certain collateral; and
WHEREAS,
it is desirable to provide for the orderly administration of such collateral by
requiring each Lender to appoint the Collateral Agent, and the Collateral Agent
has agreed to accept such appointment and to receive, hold and deliver such
collateral, all upon the terms and subject to the conditions hereinafter set
forth; and
WHEREAS,
it is desirable to allocate the enforcement of certain rights of the Lenders
under the Notes for the orderly administration thereof.
NOW,
THEREFORE, in consideration of the premises set forth herein and for other good
and valuable consideration, the parties hereto agree as follows:
1. Collateral.
(a) Contemporaneously
with the execution and delivery of this Agreement by the Collateral Agent and
the Lenders, (i) the Collateral Agent has or will have entered into a Security
Agreement between the Collateral Agent and Debtor ("Security
Agreement"),
regarding the grant of a security interest in assets owned by Debtor (such
assets are referred to herein and in the Security Agreement as the "Collateral") to the
Collateral Agent, for the benefit of the Lenders, (ii) Debtor is issuing the
Notes and in the future may issue additional Notes to the Lenders pursuant to a
“Subscription Agreement” dated at or about the date of this Agreement.
Collectively, the Security Agreement, the Notes and Subscription Agreement and
other agreements referred to therein are referred to herein as Borrower
Documents.
(b) For
purposes solely of perfection of the security interests granted to the
Collateral Agent, as agent on behalf of the Lenders, and on its own behalf under
the Borrower Documents, the Collateral Agent hereby acknowledges that any
Collateral held by the Collateral Agent is held for the benefit of the Lenders
in accordance with this Agreement and the Borrower Documents. No reference to
the Borrower Documents or any other instrument or document shall be deemed to
incorporate any term or provision thereof into this Agreement unless expressly
so provided.
(c) The
Collateral Agent is to distribute in accordance with the Borrower Documents any
proceeds received from the Collateral which are distributable to the Lenders in
proportion to their respective interests in the Obligations as defined in the
Borrower Documents.
2. Appointment
of the Collateral Agent.
The
Lenders hereby appoint the Collateral Agent (and the Collateral Agent hereby
accepts such appointment) to take any action including, without limitation, the
registration of any Collateral in the name of the Collateral Agent or its
nominees prior to or during the continuance of an Event of Default (as defined
in the Borrower Documents), the exercise of voting rights upon the occurrence
and during the continuance of an Event of Default, the application of any cash
collateral received by the Collateral Agent to the payment of the Obligations,
the making of any demand under the Borrower Documents, the exercise of any
remedies given to the Collateral Agent pursuant to the Borrower Documents and
the exercise of any authority pursuant to the appointment of the Collateral
Agent as an attorney-in-fact pursuant to the Security Agreement that the
Collateral Agent deems necessary or proper for the administration of the
Collateral pursuant to the Security Agreements. Upon disposition of the
Collateral in accordance with the Borrower Documents, the Collateral Agent shall
promptly distribute any cash or Collateral in accordance with Section 10.4 of
the Security Agreement. Lenders must notify Collateral Agent in writing of the
issuance of Notes to Lenders by Debtor. The Collateral Agent will not be
required to act hereunder in connection with Notes the issuance of which was not
disclosed in writing to the Collateral Agent nor will the Collateral Agent be
required to act on behalf of any assignee of Notes without the written consent
of Collateral Agent.
3. Action
by the Majority in Interest.
(a) Certain
Actions. Each of
the Lenders covenants and agrees that only a Majority in Interest shall have the
right, but not the obligation, to undertake the following actions (it being
expressly understood that less than a Majority in Interest hereby expressly
waive the following rights that they may otherwise have under the Borrower
Documents):
(i) Acceleration. If an
Event of Default occurs, after the applicable cure period, if any, a Majority in
Interest may, on behalf of all the Lenders, instruct the Collateral Agent to
provide to Debtor notice to cure such default and/or declare the unpaid
principal amount of the Notes to be due and payable, together with any and all
accrued interest thereon and all costs payable pursuant to such
Notes;
(ii) Enforcement. Upon
the occurrence of any Event of Default after the applicable cure period, if any,
a Majority in Interest may instruct the Collateral Agent to proceed to protect,
exercise and enforce, on behalf of all the Lenders, their rights and remedies
under the Borrower Documents against Debtor, and such other rights and remedies
as are provided by law or equity;
(iii) Waiver
of Past Defaults. A
Majority in Interest may instruct the Collateral Agent to waive any Event of
Default by written notice to Debtor, and the other Lenders; and
(iv) Amendment. A
Majority in Interest may instruct the Collateral Agent to waive, amend,
supplement or modify any term, condition or other provision in the Notes or
Borrower Documents in accordance with the terms of the Notes or Borrower
Documents so long as such waiver, amendment, supplement or modification is made
with respect to all of the Notes and with the same force and effect with respect
to each of the Lenders.
(b) Permitted
Subordination. A
Majority in Interest may instruct the Collateral Agent to agree to subordinate
any Collateral to any claim and may enter into any agreement with Debtor to
evidence such subordination; provided,
however, that
subsequent to any such subordination, each Note shall remain pari passu with the
other Notes held by the Lenders.
(c) Further
Actions. A
Majority in Interest may instruct the Collateral Agent to take any action that
it may take under this Agreement by instructing the Collateral Agent in writing
to take such action on behalf of all the Lenders.
(d) Majority
in Interest. For so
long as any obligations remain outstanding on the Notes, Majority in Interest
shall mean Lenders who hold not less than sixty-five percent (65%) of the
outstanding principal amount of the Notes.
4. Power
of Attorney.
(a) To
effectuate the terms and provisions hereof, the Lenders hereby appoint the
Collateral Agent as their attorney-in-fact (and the Collateral Agent hereby
accepts such appointment) for the purpose of carrying out the provisions of this
Agreement including, without limitation, taking any action on behalf of, or at
the instruction of, the Majority in Interest at the written direction of the
Majority in Interest and executing any consent authorized pursuant to this
Agreement and taking any action and executing any instrument that the Collateral
Agent may deem necessary or advisable (and lawful) to accomplish the purposes
hereof.
(b) All acts
done under the foregoing authorization are hereby ratified and approved and
neither the Collateral Agent nor any designee nor agent thereof shall be liable
for any acts of commission or omission, for any error of judgment, for any
mistake of fact or law except for acts of gross negligence or willful
misconduct.
(c) This
power of attorney, being coupled with an interest, is irrevocable while this
Agreement remains in effect.
5. Expenses
of the Collateral Agent. The
Lenders shall pay any and all costs and expenses incurred by the Collateral
Agent, all waivers, releases, discharges, satisfactions, modifications and
amendments of this Agreement, the administration and holding of the Collateral,
insurance expenses, and the enforcement, protection and adjudication of the
parties' rights hereunder by the Collateral Agent, including, without
limitation, the reasonable disbursements, expenses and fees of the attorneys the
Collateral Agent may retain, if any, each of the foregoing in proportion to
their holdings of the Notes.
6. Reliance
on Documents and Experts. The
Collateral Agent shall be entitled to rely upon any notice, consent,
certificate, affidavit, statement, paper, document, writing or communication
(which may be by telegram, cable, telex, telecopier, or telephone) reasonably
believed by it to be genuine and to have been signed, sent or made by the proper
person or persons, and upon opinions and advice of its own legal counsel,
independent public accountants and other experts selected by the Collateral
Agent.
7. Duties
of the Collateral Agent; Standard of Care.
(a) The
Collateral Agent's only duties are those expressly set forth in this Agreement,
and the Collateral Agent hereby is authorized to perform those duties in
accordance with commercially reasonable practices. The Collateral Agent may
exercise or otherwise enforce any of its rights, powers, privileges, remedies
and interests under this Agreement and applicable law or perform any of its
duties under this Agreement by or through its officers, employees, attorneys, or
agents.
(b) The
Collateral Agent shall act in good faith and with that degree of care that an
ordinarily prudent person in a like position would use under similar
circumstances.
(c) Any funds
held by the Collateral Agent hereunder need not be segregated from other funds
except to the extent required by law. The Collateral Agent shall be under no
liability for interest on any funds received by it hereunder.
8. Resignation. The
Collateral Agent may resign and be discharged of its duties hereunder at any
time by giving written notice of such resignation to the other parties hereto,
stating the date such resignation is to take effect. Within five (5) days of the
giving of such notice, a successor collateral agent shall be appointed by the
Majority in Interest; provided,
however, that if
the Lenders are unable so to agree upon a successor within such time period, and
notify the Collateral Agent during such period of the identity of the successor
collateral agent, the successor collateral agent may be a person designated by
the Collateral Agent, and any and all fees of such successor collateral agent
shall be the joint and several obligation of the Lenders. The Collateral Agent
shall continue to serve until the effective date of the resignation or until its
successor accepts the appointment and receives the Collateral held by the
Collateral Agent but shall not be obligated to take any action hereunder. The
Collateral Agent may deposit any Collateral with the Supreme Court of the State
of New York for New York County or any such other court in New York State that
accepts such Collateral.
9. Exculpation. The
Collateral Agent and its officers, employees, attorneys and agents, shall not
incur any liability whatsoever for the holding or delivery of documents or the
taking of any other action in accordance with the terms and provisions of this
Agreement, for any mistake or error in judgment, for compliance with any
applicable law or any attachment, order or other directive of any court or other
authority (irrespective of any conflicting term or provision of this Agreement),
or for any act or omission of any other person engaged by the Collateral Agent
in connection with this Agreement, unless occasioned by the exculpated person's
own gross negligence or willful misconduct; and each party hereto hereby waives
any and all claims and actions whatsoever against the Collateral Agent and its
officers, employees, attorneys and agents, arising out of or related directly or
indirectly to any or all of the foregoing acts, omissions and circumstances.
10. Indemnification. The
Lenders hereby agree to indemnify, reimburse and hold harmless the Collateral
Agent and its directors, officers, employees, attorneys and agents, jointly and
severally, from and against any and all claims, liabilities, losses and expenses
that may be imposed upon, incurred by, or asserted against any of them, arising
out of or related directly or indirectly to this Agreement or the Collateral,
except such as are occasioned by the indemnified person's own gross negligence
or willful misconduct.
11. Miscellaneous.
(a) Rights
and Remedies Not Waived. No act,
omission or delay by the Collateral Agent shall constitute a waiver of the
Collateral Agent's rights and remedies hereunder or otherwise. No single or
partial waiver by the Collateral Agent of any default hereunder or right or
remedy that it may have shall operate as a waiver of any other default, right or
remedy or of the same default, right or remedy on a future
occasion.
(b) Governing
Law. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York without
regard to
conflicts
of laws that
would result in
the application of the
substantive laws of another
jurisdiction.
(c) Waiver
of Jury Trial and Setoff; Consent to Jurisdiction; Etc.
(i) In any
litigation in any court with respect to, in connection with, or arising out of
this Agreement or any instrument or document delivered pursuant to this
Agreement, or the validity, protection, interpretation, collection or
enforcement hereof or thereof, or any other claim or dispute howsoever arising,
between the Collateral Agent and the Lenders or any Lender, then each Lender, to
the fullest extent it may legally do so, (A) waives the right to interpose any
setoff, recoupment, counterclaim or cross-claim in connection with any such
litigation, irrespective of the nature of such setoff, recoupment, counterclaim
or cross-claim, unless such setoff, recoupment, counterclaim or cross-claim
could not, by reason of any applicable federal or state procedural laws, be
interposed, pleaded or alleged in any other action; and (B) WAIVES
TRIAL BY JURY IN CONNECTION WITH ANY SUCH LITIGATION AND ANY RIGHT IT MAY HAVE
TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH LENDER AGREES THAT THIS SECTION 11(c) IS A SPECIFIC AND MATERIAL
ASPECT OF THIS AGREEMENT AND ACKNOWLEDGE THAT THE COLLATERAL AGENT WOULD NOT
ENTER THIS AGREEMENT IF THIS SECTION 11(c) WERE NOT PART OF THIS
AGREEMENT.
(ii) Each
Lender irrevocably consents to the exclusive jurisdiction of any State or
Federal Court located within the County of New York, State of New York, in
connection with any action or proceeding arising out of or relating to this
Agreement or any document or instrument delivered pursuant to this Agreement or
otherwise. In any such litigation, each Lender waives, to the fullest extent it
may effectively do so, personal service of any summons, complaint or other
process and agree that the service thereof may be made by certified or
registered mail directed to such Lender at its address for notice determined in
accordance with Section 11(e) hereof. Each Lender hereby waives, to the fullest
extent it may effectively do so, the defenses of forum non conveniens and
improper venue.
(d) Admissibility
of this Agreement. Each of
the Lenders agrees that any copy of this Agreement signed by it and transmitted
by telecopier for delivery to the Collateral Agent shall be admissible in
evidence as the original itself in any judicial or administrative proceeding,
whether or not the original is in existence.
(e) Address
for Notices. Any
notice or other communication under the provisions of this Agreement shall be
given in writing and delivered in person, by reputable overnight courier or
delivery service, by facsimile machine (receipt confirmed) with a copy sent by
first class mail on the date of transmissions, or by registered or certified
mail, return receipt requested, directed to such party’s addresses set forth
below (or to any new address of which any party hereto shall have informed the
others by the giving of notice in the manner provided herein):
In the
case of the Collateral Agent, to her at:
Xxxxxxx
X. Xxxxxxx
000 Xxxxx
Xxxxxx, Xxxxx 0000
Xxx Xxxx,
Xxx Xxxx 00000
Fax:
(000) 000-0000
In the
case of the Lenders, to:
To the
address and telecopier number set forth on
Schedule
A hereto.
In the
case of Debtor, to:
Hybrid
Fuel Systems, Inc.
00000
Xxxxxxx Xxxxx
Xxxxx, XX
00000
Attn:
Xxxx Xxxxxx, CEO
Fax:
(000) 000-0000
With a
copy by telecopier only to:
(f) Amendments
and Modification; Additional Lender. No
provision hereof shall be modified, altered, waived or limited except by written
instrument expressly referring to this Agreement and to such provision, and
executed by the parties hereto. Any transferee of a Note who acquires a Note
after the date hereof will become a party hereto by signing the signature page
and sending an executed copy of this Agreement to the Collateral Agent and
receiving a signed acknowledgement from the Collateral Agent.
(g) Fee. Upon
the occurrence of an Event of Default, the Lenders collectively shall pay the
Collateral Agent the sum of $10,000 to apply against an hourly fee of $350 to be
paid to the Collateral Agent by the Lenders for services rendered pursuant to
this Agreement. All payments due to the Collateral Agent under this Agreement
including reimbursements must be paid when billed. The Collateral Agent may
refuse to act on behalf of or make a distribution to any Lender who is not
current in payments to the Collateral Agent. Payments required pursuant to this
Agreement shall be pari passu to the
Lenders' interests in the Notes. The Collateral Agent is hereby authorized to
deduct any sums due the Collateral Agent from Collateral in the Collateral
Agent's possession.
(h)
Counterparts/Execution. This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument. This Agreement may be executed by facsimile signature
and delivered by facsimile transmission.
(i) Successors
and Assigns.
Whenever in this Agreement reference is made to any party, such reference shall
be deemed to include the successors, assigns, heirs and legal representatives of
such party. No party hereto may transfer any rights under this Agreement, unless
the transferee agrees to be bound by, and comply with all of the terms and
provisions of this Agreement, as if an original signatory hereto on the date
hereof.
(j) Captions:
Certain Definitions. The
captions of the various sections and paragraphs of this Agreement have been
inserted only for the purposes of convenience; such captions are not a part of
this Agreement and shall not be deemed in any manner to modify, explain, enlarge
or restrict any of the provisions of this Agreement. As used in this Agreement
the term "person" shall
mean and include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof.
(k) Severability. In the
event that any term or provision of this Agreement shall be finally determined
to be superseded, invalid, illegal or otherwise unenforceable pursuant to
applicable law by an authority having jurisdiction and venue, that determination
shall not impair or otherwise affect the validity, legality or enforceability
(i) by or before that authority of the remaining terms and provisions of this
Agreement, which shall be enforced as if the unenforceable term or provision
were deleted, or (ii) by or before any other authority of any of the terms and
provisions of this Agreement.
(l) Entire
Agreement. This
Agreement contains the entire agreement of the parties and supersedes all other
agreements and understandings, oral or written, with respect to the matters
contained herein.
(m) Schedules. The
Collateral Agent is authorized to annex hereto any schedules referred to
herein.
[THIS
SPACE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties hereto have caused this Collateral Agent Agreement
to be signed, by their respective duly authorized officers or directly, as of
the date first written above.
“LENDERS”
| ______________________________________ | ______________________________________ |
| ALPHA CAPITAL AKTIENGESELLSCHAFT | WHALEHAVEN CAPITAL FUND LIMITED |
| ______________________________________ | |
| XXXXX INTERNATIONAL LTD. | |
| /s/ Xxxxxxx X. Mittman________________________ | |
| XXXXXXX X. XXXXXXX - Collateral Agent | |
| Acknowledged: | |
| HYBRID FUEL SYSTEMS, INC. | |
| By: /s/ Xxxx Clancy___________________ | |
| Name: Xxxx Xxxxxx | |
| Title: Chief Executive Officer |
This
Collateral Agent Agreement may be signed by facsimile signature and delivered by
confirmed facsimile transmission.
SCHEDULE
A TO COLLATERAL AGENT AGREEMENT
LENDER |
INITIAL
CLOSING PURCHASE PRICE |
SECOND
CLOSING PURCHASE PRICE |
|
ALPHA
CAPITAL AKTIENGESELLSCHAFT
Pradafant
7
9490
Furstentums
Vaduz,
Lichtenstein
Fax:
000-00-00000000 |
$250,000.00 |
$250,000.00 |
|
WHALEHAVEN
CAPITAL FUND LIMITED
0xx
Xxxxx, 00 Xxx-Xxxxxxx Xxxx
Xxxxxxxx,
Xxxxxxx XX00
Fax:
(000) 000-0000 |
$300,000.00 |
$300,000.00 |
|
XXXXX
INTERNATIONAL LTD.
00xx
Xxxxxx Xxxxxxxxxxxx Xxxxxxx
Xxxxx
Tower, 16th
Floor, Panama
Republic
of Panama
Fax:
(000) 000-0000 |
$50,000.00 |
$50,000.00 |
|
TOTAL |
$600,000.00 |
$600,000.00 |
