Exhibit 10.3
COLLATERAL AGENT AGREEMENT
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COLLATERAL AGENT AGREEMENT (this "Agreement") dated as of November
16,
2006, among Barbara R. Mittman (the "Collateral Agent"), and the
parties
identified on Schedule A hereto (each, individually, a "Lender"
and
collectively, the "Lenders"), who hold or will acquire promissory
Notes issued
or to be issued by Stem Cell Innovations, Inc. ("Parent"), a
Delaware
corporation, at or about the date of this Agreement as described in
the Security
Agreement referred to in Section 1(a) below (collectively herein
the "Notes").
WHEREAS, the Lenders have made, are making and will be making loans
to
Parent to be secured by certain collateral; and
WHEREAS, it is desirable to provide for the orderly administration
of
such collateral by requiring each Lender to appoint the Collateral
Agent, and
the Collateral Agent has agreed to accept such appointment and to
receive, hold
and deliver such collateral, all upon the terms and subject to the
conditions
hereinafter set forth; and
WHEREAS, it is desirable to allocate the enforcement of certain
rights
of the Lenders under the Notes for the orderly administration
thereof.
NOW, THEREFORE, in consideration of the premises set forth herein
and
for other good and valuable consideration, the parties hereto agree
as follows:
1.
Collateral.
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(a)
Contemporaneously with the execution and delivery of
this Agreement by the Collateral Agent and the Lenders, (i) the
Collateral Agent
has or will have entered into a Security Agreement among the
Collateral Agent,
Parent and Stem Cell Innovations BV, a Netherlands corporation,
Amphioxus Cell
Technologies, Inc., a Delaware corporation (each a "Guarantor" and
together with
Parent, "Debtors") ("Security Agreement"), regarding the grant of a
security
interest in assets owned by Debtors (such assets are referred to
herein and in
the Security Agreement as the "Collateral") to the Collateral
Agent, for the
benefit of the Lenders, (ii) Parent is issuing the Notes to the
Lenders pursuant
to a "Subscription Agreement" dated at or about the date of this
Agreement.
Collectively, the Security Agreement, the Notes and Subscription
Agreement and
other agreements referred to therein are referred to herein as
"Borrower
Documents".
(b) The
Collateral Agent hereby acknowledges that any
Collateral held by the Collateral Agent is held for the benefit of
the Lenders
in accordance with this Agreement and the Borrower Documents. No
reference to
the Borrower Documents or any other instrument or document shall be
deemed to
incorporate any term or provision thereof into this Agreement
unless expressly
so provided.
(c) The
Collateral Agent is to distribute in accordance
with the Borrower Documents any proceeds received from the
Collateral which are
distributable to the Lenders in proportion to their respective
interests in the
Obligations as defined in the Security Agreement.
2.
Appointment of the Collateral Agent.
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The Lenders hereby appoint the Collateral Agent (and the
Collateral Agent hereby accepts such appointment) to take any
action including,
without limitation, the registration of any Collateral in the name
of the
Collateral Agent or its nominees prior to or during the continuance
of an Event
of Default (as defined in the Borrower Documents), the exercise of
voting rights
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upon the occurrence and during the continuance of an Event of
Default, the
application of any cash collateral received by the Collateral Agent
to the
payment of the Obligations, the making of any demand under the
Borrower
Documents, the exercise of any remedies given to the Collateral
Agent pursuant
to the Borrower Documents and the exercise of any authority
pursuant to the
appointment of the Collateral Agent as an attorney-in-fact pursuant
to the
Security Agreement that the Collateral Agent deems necessary or
proper for the
administration of the Collateral pursuant to the Security
Agreements. Upon
disposition of the Collateral in accordance with the Borrower
Documents, the
Collateral Agent shall promptly distribute any cash or Collateral
in accordance
with Section 10.4 of the Security Agreement. Lenders must notify
Collateral
Agent in writing of the issuance of Notes to Lenders by Debtor. The
Collateral
Agent will not be required to act hereunder in connection with
Notes the
issuance of which was not disclosed in writing to the Collateral
Agent nor will
the Collateral Agent be required to act on behalf of any assignee
of Notes
without the written consent of Collateral Agent.
3.
Action by the Majority in Interest.
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(a) Certain
Actions. Each of the Lenders covenants and
agrees that only a Majority in Interest shall have the right, but
not the
obligation, to undertake the following actions (it being expressly
understood
that less than a Majority in Interest hereby expressly waive the
following
rights that they may otherwise have under the Borrower
Documents):
(i)
Acceleration. If an Event of Default occurs,
after the applicable cure period, if any, a Majority in Interest
may, on behalf
of all the Lenders, instruct the Collateral Agent to provide to
Debtors notice
to cure such default and/or declare the unpaid principal amount of
the Notes to
be due and payable, together with any and all accrued interest
thereon and all
costs payable pursuant to such Notes;
(ii)
Enforcement. Upon the occurrence of any
Event of Default after the applicable cure period, if any, a
Majority in
Interest may instruct the Collateral Agent to proceed to protect,
exercise and
enforce, on behalf of all the Lenders, their rights and remedies
under the
Borrower Documents against Debtors, and such other rights and
remedies as are
provided by law or equity; and
(iii)
Waiver of Past Defaults. A Majority in
Interest may instruct the Collateral Agent to waive any Event of
Default by
written notice to Debtors, and the other Lenders.
(b) Permitted
Subordination. A Majority in Interest may
instruct the Collateral Agent to agree to subordinate any
Collateral to any
claim and may enter into any agreement with Debtors to evidence
such
subordination; provided, however, that subsequent to any such
subordination,
each Note shall remain pari passu with the other Notes held by the
Lenders.
(c) Further
Actions. A Majority in Interest may instruct
the Collateral Agent to take any action that it may take under this
Agreement by
instructing the Collateral Agent in writing to take such action on
behalf of all
the Lenders.
(d) Majority
in Interest. For so long as any obligations
remain outstanding on the Notes, Majority in Interest for the
purposes of this
Agreement and the Security Agreement shall mean Lenders who hold
not less than
sixty-five percent of the outstanding principal amount of the
Notes.
4.
Power of Attorney.
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(a) To
effectuate the terms and provisions hereof, the
Lenders hereby appoint the Collateral Agent as their
attorney-in-fact (and the
Collateral Agent hereby accepts such appointment) for the purpose
of carrying
out the provisions of this Agreement including, without limitation,
taking any
action on behalf of, or at the instruction of, the Majority in
Interest at the
written direction of the Majority in Interest and executing any
consent
authorized pursuant to this Agreement and taking any action and
executing any
instrument that the Collateral Agent may deem necessary or
advisable (and
lawful) to accomplish the purposes hereof.
(b) All acts
done under the foregoing authorization are
hereby ratified and approved and neither the Collateral Agent nor
any designee
nor agent thereof shall be liable for any acts of commission or
omission, for
any error of judgment, for any mistake of fact or law except for
acts of gross
negligence or willful misconduct.
(c) This power
of attorney, being coupled with an
interest, is irrevocable while this Agreement remains in
effect.
5.
Expenses of the Collateral Agent. The Lenders shall pay any
and all reasonable costs and expenses incurred by the Collateral
Agent,
including, without limitation, reasonable costs and expenses
relating to all
waivers, releases, discharges, satisfactions, modifications and
amendments of
this Agreement, the administration and holding of the Collateral,
insurance
expenses, and the enforcement, protection and adjudication of the
parties'
rights hereunder by the Collateral Agent, including, without
limitation, the
reasonable disbursements, expenses and fees of the attorneys the
Collateral
Agent may retain, if any, each of the foregoing in proportion to
their holdings
of the Notes.
6.
Reliance on Documents and Experts. The Collateral Agent shall
be entitled to rely upon any notice, consent, certificate,
affidavit, statement,
paper, document, writing or communication (which may be by
telegram, cable,
telex, telecopier, or telephone) reasonably believed by it to be
genuine a
