COLLATERAL AGENT AGREEMENT
COLLATERAL
AGENT AGREEMENT (this "Agreement")
dated as of March 10, 2006, among Xxxxxxx Xxxxxxxxx (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 debentures issued or to be issued by
Aprecia 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 “Debenture").
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 Debenture 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 among the Collateral Agent, Parent and ______________ and
_______________ (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 Debenture to the Lenders pursuant to a “Securities Purchase Agreement” dated
at or about the date of this Agreement. Collectively, the Security Agreement
and
may issue additional Debenture pursuant to the Securities Purchase Agreement,
the Debenture and Securities Purchase 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.
The
Lenders hereby appoint the Collateral Agent (and the Collateral Agent hereby
accepts such appointment) to take any action including, without limitation,
the
registration of any Collateral in the name of the Collateral Agent or its
nominees prior to or during the continuance of an Event of Default (as defined
in the Borrower Documents), the exercise of voting rights upon the occurrence
and during the continuance of an Event of Default, the application of any cash
collateral received by the Collateral Agent to the payment of the Obligations,
the making of any demand under the Borrower Documents, the exercise of any
remedies given to the Collateral Agent pursuant to the Borrower Documents and
the exercise of any authority pursuant to the appointment of the Collateral
Agent as an attorney-in-fact pursuant to the Security Agreement that the
Collateral Agent deems necessary or proper for the administration of the
Collateral pursuant to the Security Agreements. Upon disposition of the
Collateral in accordance with the Borrower Documents, the Collateral Agent
shall
promptly distribute any cash or Collateral in accordance with Section 10.4
of
the Security Agreement. Lenders must notify Collateral Agent in writing of
the
issuance of Debenture to Lenders by Debtor. The Collateral Agent will not be
required to act hereunder in connection with Debenture 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 Debentures 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 Debtors notice to cure such default and/or declare the
unpaid principal amount of the Debentures to be due and payable, together with
any and all accrued interest thereon and all costs payable pursuant to such
Debentures;
(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;
(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; 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 Debenture
or
Borrower Documents in accordance with the terms of the Debenture or Borrower
Documents so long as such waiver, amendment, supplement or modification is
made
with respect to all of the Debenture 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 Debtors to
evidence such subordination; provided,
however,
that subsequent to any such subordination, each Note shall remain pari passu
with the other Debenture 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 Debenture, Majority
in
Interest for the purposes of this Agreement and the Security Agreement shall
mean Lenders who hold not less than seventy-five percent (75%) of the
outstanding principal amount of the Debenture.
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 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 Debenture.
6. Reliance
on Documents and Experts.
The Collateral Agent shall be entitled to rely upon any notice, consent,
certificate, affidavit, statement, paper, document, writing or communication
(which may be by telegram, cable, telex, telecopier, or telephone) reasonably
believed by it to be genuine and to have been signed, sent or made by the proper
person or persons, and upon opinions and advice of its own legal counsel,
independent public accountants and other experts selected by the Collateral
Agent.
7. Duties
of the Collateral Agent; Standard of Care.
(a) The
Collateral Agent's only duties are those expressly set forth in this Agreement,
and the Collateral Agent hereby is authorized to perform those duties in
accordance with commercially reasonable practices. The Collateral Agent may
exercise or otherwise enforce any of its rights, powers, privileges, remedies
and interests under this Agreement and applicable law or perform any of its
duties under this Agreement by or through its officers, employees, attorneys,
or
agents.
(b) The
Collateral Agent shall act in good faith and with that degree of care that
an
ordinarily prudent person in a like position would use under similar
circumstances.
(c) Any
funds held by the Collateral Agent hereunder need not be segregated from other
funds except to the extent required by law. The Collateral Agent shall be under
no liability for interest on any funds received by it hereunder.
8. Resignation.
The Collateral Agent may resign and be discharged of its duties hereunder at
any
time by giving written notice of such resignation to the other parties hereto,
stating the date such resignation is to take effect. Within five (5) days of
the
giving of such notice, a successor collateral agent shall be appointed by the
Majority in Interest; provided,
however,
that if the Lenders are unable so to agree upon a successor within such time
period, and notify the Collateral Agent during such period of the identity
of
the successor collateral agent, the successor collateral agent may be a person
designated by the Collateral Agent, and any and all fees of such successor
collateral agent shall be the joint and several obligation of the Lenders.
The
Collateral Agent shall continue to serve until the effective date of the
resignation or until its successor accepts the appointment and receives the
Collateral held by the Collateral Agent but shall not be obligated to take
any
action hereunder. The Collateral Agent may deposit any Collateral with the
Supreme Court of the State of New York for New York County or any such other
court in New York State that accepts such Collateral.
9. Exculpation.
The Collateral Agent and its officers, employees, attorneys and agents, shall
not incur any liability whatsoever for the holding or delivery of documents
or
the taking of any other action in accordance with the terms and provisions
of
this Agreement, for any mistake or error in judgment, for compliance with any
applicable law or any attachment, order or other directive of any court or
other
authority (irrespective of any conflicting term or provision of this Agreement),
or for any act or omission of any other person engaged by the Collateral Agent
in connection with this Agreement, unless occasioned by the exculpated person's
own gross negligence or willful misconduct; and each party hereto hereby waives
any and all claims and actions whatsoever against the Collateral Agent and
its
officers, employees, attorneys and agents, arising out of or related directly
or
indirectly to any or all of the foregoing acts, omissions and circumstances.
10. Indemnification.
The Lenders hereby agree to indemnify, reimburse and hold harmless the
Collateral Agent and its directors, officers, employees, attorneys and agents,
jointly and severally, from and against any and all claims, liabilities, losses
and expenses that may be imposed upon, incurred by, or asserted against any
of
them, arising out of or related directly or indirectly to this Agreement or
the
Collateral, except such as are occasioned by the indemnified person's own gross
negligence or willful misconduct.
11. Miscellaneous.
(a) Rights
and Remedies Not Waived.
No act, omission or delay by the Collateral Agent shall constitute a waiver
of
the Collateral Agent's rights and remedies hereunder or otherwise. No single
or
partial waiver by the Collateral Agent of any default hereunder or right or
remedy that it may have shall operate as a waiver of any other default, right
or
remedy or of the same default, right or remedy on a future
occasion.
(b) Governing
Law. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York without regard to conflicts of laws that
would result in the application of the substantive laws of another
jurisdiction.
(c) Waiver
of Jury Trial and Setoff; Consent to Jurisdiction; Etc.
(i) In
any litigation in any court with respect to, in connection with, or arising
out
of this Agreement or any instrument or document delivered pursuant to this
Agreement, or the validity, protection, interpretation, collection or
enforcement hereof or thereof, or any other claim or dispute howsoever arising,
between the Collateral Agent and the Lenders or any Lender, then each Lender,
to
the fullest extent it may legally do so, (A) waives the right to interpose
any
setoff, recoupment, counterclaim or cross-claim in connection with any such
litigation, irrespective of the nature of such setoff, recoupment, counterclaim
or cross-claim, unless such setoff, recoupment, counterclaim or cross-claim
could not, by reason of any applicable federal or state procedural laws, be
interposed, pleaded or alleged in any other action; and (B) WAIVES
TRIAL BY JURY IN CONNECTION WITH ANY SUCH LITIGATION AND ANY RIGHT IT MAY HAVE
TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE
OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH LENDER AGREES THAT THIS SECTION 11(c) IS A SPECIFIC AND MATERIAL
ASPECT OF THIS AGREEMENT AND ACKNOWLEDGE THAT THE COLLATERAL AGENT WOULD NOT
ENTER THIS AGREEMENT IF THIS SECTION 11(c) WERE NOT PART OF THIS
AGREEMENT.
(ii) Each
Lender irrevocably consents to the exclusive jurisdiction of any State or
Federal Court located within the County of New York, State of New York, in
connection with any action or proceeding arising out of or relating to this
Agreement or any document or instrument delivered pursuant to this Agreement
or
otherwise. In any such litigation, each Lender waives, to the fullest extent
it
may effectively do so, personal service of any summons, complaint or other
process and agree that the service thereof may be made by certified or
registered mail directed to such Lender at its address for notice determined
in
accordance with Section 11(e) hereof. Each Lender hereby waives, to the fullest
extent it may effectively do so, the defenses of forum non conveniens and
improper venue.
(d) Admissibility
of this Agreement.
Each of the Lenders agrees that any copy of this Agreement signed by it and
transmitted by telecopier for delivery to the Collateral Agent shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence.
(e) Address
for Notices.
Any notice or other communication under the provisions of this Agreement shall
be given in writing and delivered in person, by reputable overnight courier
or
delivery service, by facsimile machine (receipt confirmed) with a copy sent
by
first class mail on the date of transmissions, or by registered or certified
mail, return receipt requested, directed to such party’s addresses set forth
below (or to any new address of which any party hereto shall have informed
the
others by the giving of notice in the manner provided herein):
In
the case of the Collateral Agent, to him at:
Xxxxxxx
Xxxxxxxxx
With
a copy to:
Grushko
& Xxxxxxx, P.C.
000
Xxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx, Xxx Xxxx 00000
Fax:
(000) 000-0000
In
the case of the Lenders, to:
To
the address and telecopier number set forth on
Schedule
A hereto.
In
the case of Debtors, to:
0000
Xxxxxx xx Xxxxxxxx
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
With
a
copy by telecopier only to:
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
0000
Xxxxxx xx Xxxxxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxx Xxxx, 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 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 Debenture. The Collateral Agent is hereby
authorized to deduct any sums due the Collateral Agent from Collateral in the
Collateral Agent's possession.
(h)
Counterparts/Execution.
This Agreement may be executed in any number of counterparts and by the
different signatories hereto on separate counterparts, each of which, when
so
executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument. This Agreement may be executed
by
facsimile signature and delivered by facsimile transmission.
(i) Successors
and Assigns.
Whenever in this Agreement reference is made to any party, such reference shall
be deemed to include the successors, assigns, heirs and legal representatives
of
such party. No party hereto may transfer any rights under this Agreement, unless
the transferee agrees to be bound by, and comply with all of the terms and
provisions of this Agreement, as if an original signatory hereto on the date
hereof.
(j) Captions:
Certain Definitions.
The captions of the various sections and paragraphs of this Agreement have
been
inserted only for the purposes of convenience; such captions are not a part
of
this Agreement and shall not be deemed in any manner to modify, explain, enlarge
or restrict any of the provisions of this Agreement. As used in this Agreement
the term "person"
shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
(k) Severability.
In the event that any term or provision of this Agreement shall be finally
determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by an authority having jurisdiction and venue, that
determination shall not impair or otherwise affect the validity, legality or
enforceability (i) by or before that authority of the remaining terms and
provisions of this Agreement, which shall be enforced as if the unenforceable
term or provision were deleted, or (ii) by or before any other authority of
any
of the terms and provisions of this Agreement.
(l) Entire
Agreement.
This Agreement contains the entire agreement of the parties and supersedes
all
other agreements and understandings, oral or written, with respect to the
matters contained herein.
(m) Schedules.
The Collateral Agent is authorized to annex hereto any schedules referred to
herein.
[THIS
SPACE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties hereto have caused this Collateral Agent Agreement
to be signed, by their respective duly authorized officers or directly, as
of
the date first written above.
“LENDERS”
| ______________________________________ | _______________________________________ |
| ALPHA CAPITAL AKTIENGESELLSCHAFT | DOUBLE U MASTER FUND L.P. |
| _______________________________________ | _______________________________________ |
| TOBANNA ENTERPRISES CORP. | CMS CAPITAL |
| _____________________________________ | |
|
XXXXXXX
XXXXXXXXX - Collateral Agent
|
Acknowledged:
For
Itself and on behalf of the Subsidiaries
By:__________________________________
Name:
Title:
This
Collateral Agent Agreement may be signed by facsimile signature and delivered
by
confirmed facsimile transmission.
SCHEDULE
A TO COLLATERAL AGENT AGREEMENT
|
LENDER
|
PRINCIPAL
AMOUNT OF DEBENTURE
|
|
ALPHA
CAPITAL AKTIENGESELLSCHAFT
Xxxxxxxxx
0
0000
Xxxxxxxxxxx
Xxxxx,
Lichtenstein
Fax:
000-00-00000000
|
$250,000.00
|
|
DOUBLE
U MASTER FUND L.P.
X/x
Xxxxxxxxx Xxxxxxxxxx Xxx.
Xxxxxx
Xxxxx, Xxxxxxxxxx Drive
P.O.
Box 972
Road
Town, Tortola
British
Virgin Islands
Attn:
Xxxxxx Xxxx
Fax:
(000) 000-0000
|
$100,000.00
|
|
TOBANNA
ENTERPRISES CORP.
00
Xxxxxxxxxxx Xxxxxx, Xxx. #00
Xxx
Xxxx, Xxxxxx 00000
Fax:
000-000-0-000-0000
|
$125,000.00
|
|
CMS
CAPITAL
0000
Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx
Xxxx, XX 00000
Attn:
Xxxxx Xxxxx
Fax:
(000) 000-0000
|
$25,000.00
|
|
TOTALS
|
$500,000.00
|
