EXHIBIT 10.14
COLLATERAL AGENT AGREEMENT
COLLATERAL AGENT AGREEMENT (this "Agreement") dated as of March
2,
2005, 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 variable interest rate
convertible promissory notes issued or to
be issued by Dyneco Corporation
("Debtor"), a Minnesota corporation, at or
about 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 ("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
and in the future may issue additional
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) 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.
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
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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 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 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, certifi
