COLLATERAL AGENT AGREEMENT
COLLATERAL AGENT AGREEMENT (this "Agreement") dated as of September 16,
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 convertible promissory
notes issued and to be issued by Xxxxxxx-Xxxxx Diagnostics, Inc. ("Debtor"), a
Delaware 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 and may enter into Security Agreements between the Collateral Agent and
the subsidiaries of the Debtor identified on Schedule B hereto, if any, (each a
"Subsidiary") (each a "Security Agreement"), regarding the grant of a security
interest in assets owned by Debtor and Subsidiary (such assets are referred to
herein and in the Security Agreement as the "Collateral") to the Collateral
Agent, for the benefit of the Lenders, and (ii) Debtor is issuing the Notes to
the Lenders pursuant to a "Subscription Agreement" dated at or about the date of
this Agreement. Collectively, the Security Agreements, the Notes and
Subscription Agreement, Guaranty Agreement to be provided by Subsidiaries and
other agreements 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.
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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 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 Borrower Documents. 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 Subsidiary, 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 Subsidiary, 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 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 and Subsidiary 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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(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.
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(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.
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(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.
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In the case of Debtor and Subsidiaries, to:
Xxxxxxx-Xxxxx Diagnostics, Inc.
000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, III, President
Fax: (000) 000-0000
With an additional copy by telecopier only to:
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, 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 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.
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(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"
/s/ Xxxxxx Xxxxxxxxx /s/ Xxxx Xxxxxxxxxxx
--------------------------------- -------------------------------------
ALPHA CAPITAL AKTIENGESELLSCHAFT WHALEHAVEN CAPITAL FUND LIMITED
/s/ Xxxxxxx Xxxxx /s/ Xxxxxxx Xxxxxx
--------------------------------- -------------------------------------
XXXXX INTERNATIONAL LTD. OSHER CAPITAL INC.
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
XXXXXXX X. XXXXXXX - Collateral Agent
Acknowledged:
XXXXXXX-XXXXX DIAGNOSTICS, INC.
By: /s/ Xxxxxx X. Xxxxxxx III
--------------------------------
Its: CEO
[SUBSIDIARY] [SUBSIDIARY]
By: By:
----------------------------- -------------------------------------
Its: Its:
----------------------------- -------------------------------------
[SUBSIDIARY] [SUBSIDIARY]
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
------------------------------------------------------------------------------------------
LENDER NOTE PRINCIPAL PAYMENT AFTER ORIGINAL
ISSUE DISCOUNT
------------------------------------------------------------------------------------------
ALPHA CAPITAL AKTIENGESELLSCHAFT $480,000.00 $400,000.00
Xxxxxxxxx 0
0000 Xxxxxxxxxxx
Xxxxx, Lichtenstein
Fax: 000-00-00000000
------------------------------------------------------------------------------------------
WHALEHAVEN CAPITAL FUND LIMITED $240,000.00 $200,000.00
0xx Xxxxx, 00 Xxx-Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx XX00
Fax: (000) 000-0000
------------------------------------------------------------------------------------------
XXXXX INTERNATIONAL LTD. $120,000.00 $100,000.00
00xx Xxxxxx Xxxxxxxxxxxx Xxxxxxx
Xxxxx Xxxxx, 00xx Xxxxx, Xxxxxx
Xxxxxxxx of Panama
Fax: (000) 000-0000
------------------------------------------------------------------------------------------
OSHER CAPITAL INC. $60,000.00 $50,000.00
0 Xxxxxxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
------------------------------------------------------------------------------------------
TOTAL $900,000.00 $750,000.00
------------------------------------------------------------------------------------------
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