COLLATERAL AGENT AGREEMENT
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COLLATERAL AGENT AGREEMENT (this "Agreement") dated as of May 22,
2001 among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Collateral Agent"), the parties
identified on Schedule A hereto (each, individually, a "Lender" and
collectively, the "Lenders"), who hold or have subscribed for Secured
Convertible Notes in the principal amounts set forth on Schedule A hereto
("Secured Notes" and collectively, the Notes") issued or to be issued by
Science Dynamics Corporation, a Delaware corporation ("Science Dynamics").
WHEREAS, the Lenders are making loans to Science Dynamics 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.
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(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 Science Dynamics, Innovative Communications
Technology, Ltd., and Golden Phoenix Limited Partnership, who are
shareholders of Science Dynamics (collectively "Shareholders") (the
"Security Agreement"), regarding the grant of a security interest in
certain assets owned by the Shareholders (such assets are referred to
herein as the "Collateral") to the Collateral Agent, for the benefit of the
Lenders and (ii) Science Dynamics has or will issue the Secured Notes to
the Lenders.
(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 Security Agreement, 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 Security Agreement. No reference to the Security Agreement 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 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 Security Agreement).
2. Appointment of the Collateral Agent.
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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 during the continuance of an
Event of Default (as defined in the Security Agreement), 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 (as defined in the Security
Agreement), the exercise of any remedies given to the Collateral Agent
pursuant to the Security Agreement 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 Agreement. Upon disposition of the Collateral in accordance
with the Security Agreement, the Collateral Agent shall promptly distribute
any cash or Collateral in accordance with Section 10.1(d) of the Security
Agreement.
3. Action by the Majority in Interest.
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(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 Notes, but only
insofar as such waiver affects their right to receive proceeds from the
Collateral):
(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
Science Dynamics or any one or more of the Shareholders 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
Notes against Science Dynamics and the Collateral advanced by the
Shareholders, and such other rights and remedies as are provided by law or
equity; and
(iii) Waiver of Past Defaults. A Majority in Interest
may instruct the Collateral Agent to waive any Event of Default by written
notice to Science Dynamics and the Shareholders, and the other Lenders.
(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 Security Agreement in
accordance with the terms of the Notes or Security Agreement 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 Notes.
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(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 Science Dynamics and
Shareholders to evidence such subordination; provided, however, that
subsequent to any such subordination, each Note shall remain pari passu
with the other Notes.
(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 seventy-five percent (75%) of the Notes comprising a
portion of the Obligations.
4. Power of Attorney.
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(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.
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7. Duties of the Collateral Agent; Standard of Care.
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(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 ordinary 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 15 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, 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.
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(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 principles of conflicts or choice of law (or any other law that
would make any substantive laws of any state other than the State of New
York applicable hereto).
(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, (i) 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 (ii) 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 its addresses set forth below (or to any new
address of which either party hereto shall have informed the other by the
giving of notice in the manner provided herein):
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In the case of the Collateral Agent, to it at:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
In the case of the Lenders, to:
the addresses and telecopier numbers set forth on Schedule A
hereto.
In the case of Science Dynamics, to:
Science Dynamics Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(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 may become a party hereto by
signing the signature page and sending an executed copy of this Agreement
to the Collateral Agent.
(g) Fees. Upon the occurrence of an Event of Default,
the Lenders collectively shall pay the Collateral Agent the sum of $5,000
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.
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(h) Counterparts. This Agreement may be executed by the
parties hereto individually or in any combination, in one or more
counterparts, and by facsimile signature and transmission, each of which
shall be an original and all of which shall together constitute one and the
same agreement.
(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.
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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.
/S/ ▇▇▇▇ ▇▇▇▇▇▇ /S/ ▇▇▇▇ ▇▇▇▇▇▇
_____________________________________ __________________________________
THE KESHET FUND, L.P. - Lender KESHET L.P. - Lender
/S/ ▇▇▇▇▇ Grin
_____________________________________
LAURUS MASTER FUND LTD. - Lender
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ - Collateral Agent
Acknowledged:
SCIENCE DYNAMICS CORPORATION
By: /S/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
/S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
______________________________________
INNOVATIVE COMMUNICATIONS
TECHNOLOGY, LTD. - Shareholder
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, General Partner
______________________________________
GOLDEN PHOENIX LIMITED PARTNERSHIP - Shareholder
This Collateral Agent Agreement may be signed by facsimile signature and
delivered by confirmed facsimile transmission.
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SCHEDULE A TO COLLATERAL AGENT AGREEMENT
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LENDERS PRINCIPAL AMOUNT OF SECURED
CONVERTIBLE NOTES
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THE KESHET FUND, L.P. $100,000.00
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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KESHET L.P. $100,000.00
Ragnall House, ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇
▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇-▇▇▇▇-▇▇▇▇▇▇
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LAURUS MASTER FUND, LTD. $1,000,000.00
A Cayman Island corporation
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇.
▇.▇. ▇▇▇ ▇▇▇▇ G.T.
Queensgate House, South Church Street
Grand Cayman, Cayman Islands
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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TOTAL $1,200,000.00
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SCHEDULE B TO COLLATERAL AGENT AGREEMENT
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DEPOSITOR DEPOSITED STOCK ACQUISITION
SECURITY SHARES CERTIFICATE DATE *
NUMBERS
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INNOVATIVE COMMUNICATIONS 1,500,000 common JU 7894 11/21/96
TECHNOLOGY, LTD. shares ($.01 par
Le Virage value per share)
La Route de Sainte ▇▇▇▇▇ of Science Dynamics
▇▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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GOLDEN PHOENIX LIMITED 2,605,588 common JU 7978 7/2/97
PARTNERSHIP shares ($.01 par
▇.▇. ▇▇▇ ▇▇▇ value per share)
Fairfax Station, of Science ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ Corporation
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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* Each of the deposited Security Shares was initially issued on the
Acquisition Date and fully paid for as of the Acquisition Date.
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