EXHIBIT 10.44
COLLATERAL AGENT AGREEMENT
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COLLATERAL AGENT AGREEMENT (this "Agreement") dated as of January 27,
2004, 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 8% convertible
promissory notes issued or to be issued by Provo International Inc. ("Provo"),
a Delaware corporation, at or about the date of this Agreement and after 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 or will be making loans to
Provo 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 Provo (the "Security Agreement"), regarding the grant of a security
interest in assets owned by Provo (such assets are referred to herein as the
"Collateral") to the Collateral Agent, for the benefit of the Lenders and (ii)
Provo is issuing the 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 in accordance with the
Security Agreement 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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(Collateral Agent Agreement)
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 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, 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 10.4 of the Security Agreement.
Lenders must notify Collateral Agent in writing of the issuance of Notes by
Provo. The Collateral Agent will not be required to act hereunder in
connection with Notes not disclosed in writing to the 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 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 Provo 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
Provo, 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 Provo, 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 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.
(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 Provo 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.
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(Collateral Agent Agreement)
(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 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 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.
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(Collateral Agent Agreement)
(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.
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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
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(Collateral Agent Agreement)
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 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 it at:
Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
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(Collateral Agent Agreement)
In the case of the Lenders, to:
To the address and telecopier number set forth on Schedule A
hereto.
In the case of Provo, to:
Provo International Inc.
Xxx Xxxx Xxxx Xxxxx, 0xx Xxxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxx, Chief Executive Officer
Fax: (000) 000-0000
With a copy by email, fax, or first class mail only to:
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx X. XxXxxxxxxx, Esq.
Fax: (000) 000-0000
(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 acknowledged 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
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(Collateral Agent Agreement)
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]
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(Collateral Agent Agreement)
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"
/s/ /s/
------------------------------------ ---------------------------------------
ALPHA CAPITAL AKTIENGESELLSCHAFT XXXXXXXXXXX LIMITED PARTNERSHIP
/s/
------------------------------------
CONGREGATION MISHKAN XXXXXX
INCORPORATED
------------------------------------
LUCRATIVE INVESTMENTS
/s/ Xxxxxxx Xxxxxxx
------------------------------------ ---------------------------------------
XXXXXXX X. XXXXXXX - Collateral Agent
Acknowledged:
PROVO INTERNATIONAL INC.
By: /s/ Xxxxxxx X. Xxxx-Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxx-Xxxxxxxx
Title: CEO
THIS COLLATERAL AGENT AGREEMENT MAY BE SIGNED BY FACSIMILE
SIGNATURE AND DELIVERED BY CONFIRMED FACSIMILE TRANSMISSION.
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(Collateral Agent Agreement)
SCHEDULE A TO COLLATERAL AGENT AGREEMENT
+------------------------------------------------+-----------------------------+
|LENDER | PRINCIPAL AMOUNT OF NOTE |
+------------------------------------------------+-----------------------------+
|ALPHA CAPITAL AKTIENGESELLSCHAFT | $500,000.00 |
|Pradafant 7 | |
|9490 Furstentums | |
|Vaduz, Lichtenstein | |
|Fax: 000-00-00000000 | |
+------------------------------------------------+-----------------------------+
|XXXXXXXXXXX LIMITED PARTNERSHIP | $300,000.00 |
|C/o Canaccord Capital Corporation | |
x000 Xxx Xxxxxx, Xxxxx 0000 | |
|Toronto, Xxxxxxx X0X 0X0, Xxxxxx | |
|Fax: (000) 000-0000 | |
+------------------------------------------------+-----------------------------+
|CONGREGATION MISHKAN XXXXXX INCORPORATED | $150,000.00 |
|9612 Xxx Xxxx Xxxxxxxxx, Xxxxx 000 | |
|Panorama Xxxx, XX 00000 | |
|Fax: 000-000-0000 | |
+------------------------------------------------+-----------------------------+
|LUCRATIVE INVESTMENTS | $50,000.00 |
|Ajeltake Island | |
|P.O. Xxx 0000 | |
|Majuro Xxxxxxxx Xxxxxx X.X. 00000 | |
|Fax: 000-00000000 | |
+------------------------------------------------+-----------------------------+
|TOTALS | $1,000,000.00 |
+------------------------------------------------+-----------------------------+
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(Collateral Agent Agreement)
