COLLATERAL AGENT AGREEMENT
COLLATERAL AGENT AGREEMENT (this "Agreement") dated as of September ___,
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 variable interest rate
convertible promissory notes issued or to be issued by SVC Financial Services,
Inc. ("Debtor"), a Colorado 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
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
("Security Agreement"), regarding the grant of a security interest in assets
owned by Debtor (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) 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 Agreement and may issue additional Notes pursuant to
the Subscription 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.
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
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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 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 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
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 Notes or
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 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.
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(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
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.
(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.
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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
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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.
In the case of Debtor, to:
SVC Financial Services, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
0
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxxxxxx Xxxxx, CEO and President
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 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.
(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
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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"
---------
-------------------------------------- -------------------------------------
ALPHA CAPITAL AKTIENGESELLSCHAFT WHALEHAVEN CAPITAL FUND LIMITED
-------------------------------------
XXXXXXX X. XXXXXXX - Collateral Agent
Acknowledged:
SVC FINANCIAL SERVICES, INC.
By:__________________________________
Name:
Title:
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 INITIAL CLOSING PURCHASE PRICE SECOND CLOSING PURCHASE PRICE
--------------------------------- ------------------------------- ------------------------------
ALPHA CAPITAL AKTIENGESELLSCHAFT $375,000.00 $375,000.00
Xxxxxxxxx 0
0000 Xxxxxxxxxxx
Xxxxx, Xxxxxxxxxxxx
Fax: 000-00-00000000
--------------------------------- ------------------------------- ------------------------------
WHALEHAVEN CAPITAL FUND LIMITED $375,000.00 $375,000.00
0xx Xxxxx, 00 Xxx-Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx XX00
Fax: (000) 000-0000
--------------------------------- ------------------------------- ------------------------------
TOTAL $750,000.00 $750,000.00
--------------------------------- ------------------------------- ------------------------------
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