Exhibit 10.3
COLLATERAL AGENT AGREEMENT
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COLLATERAL AGENT AGREEMENT (this "Agreement") dated as of November 16,
2006, among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Collateral Agent"), and the parties
identified on Schedule A hereto (each, individually, a "Lender" and
collectively, the "Lenders"), who hold or will acquire promissory Notes issued
or to be issued by Stem Cell Innovations, Inc. ("Parent"), a Delaware
corporation, at or about the date of this Agreement as described in the Security
Agreement referred to in Section 1(a) below (collectively herein the "Notes").
WHEREAS, the Lenders have made, are making and will be making loans to
Parent 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 among the Collateral Agent,
Parent and Stem Cell Innovations BV, a Netherlands corporation, Amphioxus Cell
Technologies, Inc., a Delaware corporation (each a "Guarantor" and together with
Parent, "Debtors") ("Security Agreement"), regarding the grant of a security
interest in assets owned by Debtors (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) Parent is issuing the 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) 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 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 prior to or during the continuance of an Event
of Default (as defined in the Borrower Documents), the exercise of voting rights
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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.
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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 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 Debtors 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 Debtors, 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 Debtors, and the other 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 Debtors 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 for the purposes of this
Agreement and the Security Agreement shall mean Lenders who hold not less than
sixty-five percent of the outstanding principal amount of the Notes.
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 reasonable costs and expenses incurred by the Collateral Agent,
including, without limitation, reasonable costs and expenses relating to 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.
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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 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
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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.
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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 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,
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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:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
In the case of the Lenders, to:
To the address and telecopier number set forth on
Schedule A hereto.
In the case of Debtors, to:
Stem Cell Innovations, Inc.
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▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇, CEO
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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With an additional copy by telecopier only to:
▇▇▇▇▇▇▇▇▇ & Kahr
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Debtor, Lender or Collateral Agent,
with a copy by telecopier only to:
Grushko & ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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 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 on
account, 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"
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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]
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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.
"LENDERS"
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ALPHA CAPITAL ANSTALT
By:_____________________________________
Print Name of Signator:_________________
_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ - Collateral Agent
Acknowledged:
STEM CELL INNOVATIONS, INC.
By:__________________________________
Name:
Title:
"GUARANTOR" "GUARANTOR"
STEM CELL INNOVATIONS BV AMPHIOXUS CELL TECHNOLOGIES
a Netherlands corporation INC.
a Delaware corporation
By: __________________________________ By: ________________________________
Its: _________________________________ Its: _______________________________
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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LENDER PRINCIPAL AMOUNT OF NOTE TO BE
ISSUED ON CLOSING DATE
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ALPHA CAPITAL ANSTALT $1,000,000.00
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▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇-▇▇▇▇▇▇▇▇
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