Document:

amacore_8k-ex1003.htm

 

Exhibit 10.3

 

ESCROW AGREEMENT

 

This ESCROW AGREEMENT (this “Escrow Agreement”), dated as of August 16, 2010 (the “Closing Date”), between The Amacore Group, Inc., a Delaware corporation (the “Company”), and Vicis Capital Master Fund, a series of the Vicis Capital Master Trust, a trust formed under the laws of the Cayman Islands (the “Purchaser”), and Quarles & Brady LLP, as escrow agent (“Escrow Agent”). Capitalized terms used in this Escrow Agreement without definition shall have the respective meanings ascribed to them in the Purchase Agreement.

 

R E C I T A L S

 

WHEREAS, Purchaser and Company are parties to a Securities Purchase Agreement dated August 16, 2010 (the “Purchase Agreement”), whereby the Company agrees to sell to the Purchaser up to $5,000,000 in principal amount of its 15% Senior Secured Convertible Notes due June 30, 2011, in exchange for up to $5,000,000 cash (the “Purchase Price”).

 

WHEREAS, the parties wish to have the Escrow Agent hold a portion of the Purchase Price in an escrow account and to release funds held in such account in accordance with the terms hereof.

 

NOW, THEREFORE, the Purchaser and Company, intending to be legally bound, hereby agree as follows:

 

1.           Appointment and Acceptance.  By their respective execution of this Escrow Agreement, the Purchaser and Company hereby appoint and engage the Escrow Agent, and the Escrow Agent hereby accepts such appointment and engagement, to serve as escrow agent and to perform the duties, subject to the terms and conditions, hereinafter set forth.

 

2.           Establishment of Escrow Account.  Immediately upon the execution of this Escrow Agreement, the Escrow Agent shall establish an escrow sub-account (the “Escrow Account”) in its IOLTA Trust Account into and from which certain deposits and disbursements shall be made pursuant to the terms of this Escrow Agreement.  The Escrow Agent shall hold and disburse all assets on deposit in the Escrow Account (“Account Assets”) in accordance with the terms and conditions hereof.

 

3.           Deposit into Escrow.  In accordance with Section 1.4(a) of the Purchase Agreement, the Purchaser shall deposit into the Escrow Account an aggregate of $2,500,000 cash.  Deposits into the Escrow Account shall be made as follows:

 

A.B.A. #: xxxxxxxxxx

Swift Code: xxxxxxxxxx

Account #: xxxxxxxx

Name and Address on Bank Account:

Quarles & Brady LLP IOLTA Trust Account

411 East Wisconsin Ave., Suite 2040

Milwaukee, WI 53202-4497

  

 

  

Bank Name & Address:

M&I Marshall & Ilsley Bank

770 North Water Street

Milwaukee, WI 53202

Reference:

121405.00006 (Vicis Capital)

Upon receipt of the deposit, the Escrow Agent shall advise the Company of the amount of funds received into the Escrow Account.

 

4.           Disbursements From the Escrow Account.  Except for distributions in connection with the termination of this Agreement pursuant to Section 6, the Escrow Agent shall disburse funds from the Escrow Account only pursuant to and in accordance with the written instruction made jointly by the Purchaser and Company in the form attached hereto as Exhibit A (“Joint Disbursement Instruction”).

 

5.           Disputes Regarding Disbursements.  If any dispute arises with respect to the disbursement of the Account Assets, or if any disagreements arise among the parties hereto with respect to the interpretation of this Escrow Agreement, or concerning their rights and obligations hereunder, or the propriety of any action contemplated by the Escrow Agent hereunder, or if the Escrow Agent in good faith is in doubt what action should be taken hereunder, the Escrow Agent shall not be obligated to resolve the dispute or disagreement or to make any disbursement of all or any portion of the Account Assets, but may commence an action in the nature of an interpleader without further investment or disbursement of the Escrow Funds and seek to deposit the Account Assets with a court of competent jurisdiction, and thereby be discharged from any further duty or obligation with respect to the Account Assets.  Upon the interpleader action being properly brought, all parties being joined and the Account Assets being deposited with the court, the Escrow Agent shall be discharged from any obligations accruing thereafter with respect to the Account Assets.  The Escrow Agent, in its sole discretion, may, in lieu of filing such action in interpleader, elect to cease performance under this Agreement in connection with any instruction or notice received regarding disbursements of Account Assets until the Escrow Agent has received: (a) a written notice of resolution of such dispute or disagreement signed by the parties to such dispute or disagreement, or (b) a certified copy of a final judgment of a court of competent jurisdiction, provided, however, that a certified copy of a final judgment shall serve as a valid de­termination only if the time for appeal has expired and no appeal has been perfected or all appeals have been exhausted or no right of appeal exists.

 

6.           Termination and Release of Escrow.  This Escrow Agreement shall terminate upon the earlier of (the “Termination Date”):

 

(a)           the resignation of the Escrow Agent by providing written notice to the parties hereto of the same; or

 

(b)           June 30, 2011.

 

  

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All funds remaining in the Escrow Account upon the Escrow Agent’s resignation shall be delivered to any successor escrow agent mutually agreed to by the Purchaser and Company. All funds held in the Escrow Account after June 30, 2011, shall be distributed to the Purchaser by check or wire transfer to an account designated by the Purchaser.

 

7.           Extent of Duties of Escrow Agent.

 

(a)           The Escrow Agent shall be responsible only for performance of its duties as specified in this Escrow Agreement, and no implied covenants, duties or obligations shall bind or be enforceable against the Escrow Agent.  The Escrow Agent shall not be liable to any person or entity for any act or failure to act unless due to the Escrow Agent’s fraud or willful misconduct.

 

(b)           Subject to Section 7(a) hereof, the Escrow Agent shall not be liable for any action taken or omitted by it, or any action suffered by it to be taken or administered in good faith and in the exercise of its own best judgment, and may rely conclusively and shall be protected in acting in good faith upon any order, notice, demand, certificate, advice of counsel (including counsel selected by the Escrow Agent), statement, instrument, report or other document (not only as to its due execution and the validity and effectiveness thereof, but also as to the truth and acceptability of any information therein contained) which is reasonably believed by the Escrow Agent to be genuine and to be signed by the proper person or persons.

 

(c)           The Company shall indemnify the Escrow Agent and hold it harmless from any and all claims, liabilities, damages, losses, or any other expenses, fees or charges of any character or nature, which it may incur or with which it may be threatened by reason of its acting as Escrow Agent under this Escrow Agreement, including but not limited to any and all damages, costs, losses and other expenses, including reasonable attorneys’ fees and expenses, resulting from or arising in connection with any action, suit, or proceeding incident to the Escrow Agent’s acting as such hereunder, unless such action, suit or proceeding relates to the Escrow Agent’s gross negligence or willful misconduct.

 

8.           Conflict Waiver. THE COMPANY HEREBY ACKNOWLEDGES THAT THE ESCROW AGENT IS ACTING AS LEGAL COUNSEL TO THE PURCHASER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED AND REFERRED TO HEREIN. THE COMPANY AGREES THAT IN THE EVENT OF ANY DISPUTE ARISING IN CONNECTION WITH THIS AGREEMENT OR OTHERWISE IN CONNECTION WITH ANY TRANSACTION OR AGREEMENT CONTEMPLATED AND REFERRED TO HEREIN, THE ESCROW AGENT SHALL BE PERMITTED TO CONTINUE TO REPRESENT THE PURCHASER AND THE COMPANY WILL NOT SEEK TO DISQUALIFY SUCH COUNSEL AND WAIVES ANY OBJECTION THE COMPANY MIGHT HAVE WITH RESPECT TO THE ESCROW AGENT ACTING AS THE ESCROW AGENT PURSUANT TO THIS AGREEMENT AND LEGAL COUNSEL TO THE PURCHASER.

 

9.           Entire Agreement.  This Escrow Agreement constitutes the full and entire agreement of the parties hereto with respect to the subject matter hereof.  This Escrow Agreement may be amended or modified only by a writing signed by all of the parties hereto.  This Escrow Agreement also shall not be construed to eliminate or reduce any duty, obligation or responsibility that the Purchaser or Company may have under the Purchase Agreement and any agreements ancillary thereto.

 

  

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10.           Notices.  All instructions, directions, demands, notices, consents, requests and other documents authorized, required or permitted to be given pursuant to this Agreement shall be delivered in accordance with the Purchase Agreement.

 

11.           Successor and Assigns.  This Escrow Agreement may not be assigned by the Purchaser, Company or Escrow Agent without the written consent of the other parties hereto.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective permitted successors and assigns.

 

12.           Severability.  In the event that any one or more provisions contained in this Escrow Agreement shall be deemed or declared invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not thereby be affected or impaired in any way.

 

13.           Governing Law.  This Escrow Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York without regard to conflict of law principles.

 

14.           Counterparts.  This Escrow Agreement and any Joint Disbursement Instruction may be executed in multiple counterparts, each of which when so executed shall be deemed an original, but all of which together shall constitute one and the same agreement.

 

15.           No Waiver.  No course of dealing, nor any delay on the part of any party in exercising any right hereunder, nor any failure to exercise the same, shall operate as a waiver of such right.

 

16.           Headings Without Effect.  The headings used in this Escrow Agreement are inserted as a matter of convenience and for reference only, and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof.

 

 

 

[Signature Page To Follow]

 

 

 

 

 

  

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IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be duly executed by their duly authorized rep­resentatives as of the day and year first above written.

 

 

	 	

COMPANY:

 

THE AMACORE GROUP, INC.

Name:

Title:

PURCHASER:

VICIS CAPITAL MASTER FUND

By: Vicis Capital LLC

Name:

Title:

 

 

ESCROW AGENT:

QUARLES & BRADY LLP

 

 

 

 

 

  

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EXHIBIT A

 

JOINT DISBURSEMENT INSTRUCTION

Quarles & Brady LLP

411 East Wisconsin Avenue

Milwaukee, Wisconsin 53202

Attn: Matthew C. Vogel

Fax: 414-978-8899

Email: matthew.vogel@quarles.com

Date: ______________

RE:  Joint Disbursement Instruction

This Joint Disbursement Instruction is made pursuant to that certain Escrow Agreement (the “Escrow Agreement”), dated August 16, 2010, by and among Vicis Capital Master Fund, The Amacore Group, Inc. and Quarles & Brady LLP, as escrow agent.  Capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Escrow Agreement.

Please transfer $_________________ from the Escrow Account to the account specified below:

Name:                                                                                                                                         

 

Routing Number:                                                                                                                                          

 

Bank Account Number:                                                                                                                                          

 

Other Instructions (please specify):                                                                                                                                

 

 

	
THE AMACORE GROUP, INC.

 

 

 

______________________________

Name:

Title:

 

	
VICIS CAPITAL MASTER FUND

   By: Vicis Capital LLC

 

 

_______________________________

Name:

Title:amacore_8k-ex1004.htm

 

Exhibit 10.4

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (this “Security Agreement”) is made as of August 16, 2010 by and between The Amacore Group, Inc., a Delaware corporation (“Debtor”), and Vicis Capital Master Fund (“Vicis”), a sub-trust of Vicis Capital Series Master Trust, a unit trust organized and existing under the laws of the Cayman Islands.

 

R E C I T A L S

 

WHEREAS, pursuant to a Securities Purchase Agreement of even date herewith by and between Vicis and Debtor (as amended or modified from time to time, the “Purchase Agreement”), Vicis has made or will make an investment (the “Investment”) in Debtor’s 15% Senior Secured Convertible Notes due June 30, 2011 (the “Acquired Notes”).

 

WHEREAS, it is a condition precedent to Vicis making the Investment that Debtor execute and deliver to Vicis a security agreement in the form hereof.

 

WHEREAS, this Agreement is the Security Agreement referred to in the Purchase Agreement.

 

NOW, THEREFORE, in consideration of the Recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Debtor hereby agrees with Vicis as follows:

 

ARTICLE I

 

DEFINITIONS

 

Capitalized terms not defined herein shall have the meaning given to them in the Purchase Agreement.  Capitalized terms not otherwise defined herein and defined in the UCC shall have, unless the context otherwise requires, the meanings set forth in Article 9 of the UCC as in effect on the date hereof (except that the term “document” shall only have the meaning set forth in the UCC for purposes of clause (d) of the definition of Collateral), the recitals and as follows:

 

1.1           Accounts.  “Accounts” shall mean all accounts, including without limitation all rights to payment for goods sold or services rendered that are not evidenced by instruments or chattel paper, whether or not earned by performance, and any associated rights thereto.

 

1.2           Collateral.  “Collateral” shall mean all personal properties and assets of Debtor, wherever located, whether tangible or intangible, and whether now owned or hereafter acquired or arising, including without limitation:

 

(a)           all Inventory and documents relating to Inventory;

 

(b)           all Accounts and documents relating to Accounts;

 

  

 

  

(c)           all equipment, fixtures and other goods, including without limitation machinery, furniture, vehicles and trade fixtures;

 

(d)           all general intangibles (including without limitation payment intangibles, software, customer lists, sales records and other business records, contract rights, causes of action, and licenses, permits, franchises, patents, copyrights, trademarks, and goodwill of the business in which the trademark is used, trade names, or rights to any of the foregoing), promissory notes, contract rights, chattel paper, documents, letter-of-credit rights and instruments;

 

(e)           all motor vehicles;

 

(f)           (i) all deposit accounts and (ii) all cash and cash equivalents deposited with or delivered to Vicis from time to time and pledged as additional security for the Obligations;

 

(g)           all investment property;

 

(h)           all commercial tort claims; and

 

(i)           all additions and accessions to, all spare and repair parts, special tools, equipment and replacements for, and all supporting obligations, proceeds and products of, any and all of the foregoing assets described in Sections (a) through (h), inclusive, above.

 

1.3           Event of Default.  “Event of Default” shall have the meaning specified in the Purchase Agreement.

 

1.4           Inventory.  “Inventory” shall mean all inventory, including without limitation all goods held for sale, lease or demonstration or to be furnished under contracts of service, goods leased to others, trade-ins and repossessions, raw materials, work in process and materials used or consumed in Debtor’s business, including, without limitation, goods in transit, wheresoever located, whether now owned or hereafter acquired by Debtor, and shall include such property the sale or other disposition of which has given rise to Accounts and which has been returned to or repossessed or stopped in transit by Debtor.

 

1.5           Obligations.  “Obligations” shall mean (a) Debtor’s obligation to pay interest and principal on the Acquired Notes as required by the terms thereof and the Transaction Documents; (b) all obligations of the Debtor associated with any renewal, extension, refinancing, or amendment to the terms of the Acquired Notes; and (c) all other debts, liabilities, obligations, covenants and agreements of Debtor contained in the Transaction Documents.

 

1.6           Person.  “Person” shall mean and include an individual, partnership, corporation, trust, unincorporated association and any unit, department or agency of government.

 

1.7           Security Agreement.  “Security Agreement” shall mean this Security Agreement, together with the schedules attached hereto, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof.

 

  

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1.8           Security Interest.  “Security Interest” shall mean the security interest of Vicis in the Collateral granted by Debtor pursuant to this Security Agreement.

 

1.9           UCC.  “UCC” shall mean the Uniform Commercial Code as adopted in the State of Debtor’s organization and in effect from time to time.

 

ARTICLE II

THE SECURITY INTEREST; REPRESENTATIONS AND WARRANTIES

 

2.1           The Security Interest.  To secure the full and complete payment and performance when due (whether at maturity, by acceleration, or otherwise) of each of the Obligations, Debtor hereby grants to Vicis a first priority security interest in all of Debtor’s right, title and interest in and to the Collateral.

 

2.2           Representations and Warranties.  Debtor hereby represents and warrants to Vicis that:

 

(a)           The records of Debtor with respect to the Collateral are presently located only at the address(es) listed on Schedule 1 attached to this Security Agreement.

 

(b)           The Collateral is presently located only at the location(s) listed on Schedule 1 attached to this Security Agreement.

 

(c)           The chief executive office and chief place(s) of business of Debtor are presently located at the address(es) listed on Schedule 1 to this Security Agreement.

 

(d)           Debtor is a Delaware corporation and its exact legal name is set forth in the definition of “Debtor” in the introductory paragraph of this Security Agreement.  The organization identification number of Debtor is listed on Schedule 1 to this Security Agreement.

 

(e)           All of Debtor’s present patents and trademarks, if any, including those which have been registered with, or for which an application for registration has been filed in, the United States Patent and Trademark Office are listed on Schedule 2 attached to this Security Agreement.  All of Debtor’s present copyrights registered with, or for which an application for registration has been filed in, the United States Copyright Office or any similar office or agency of any state or any other country are listed on Schedule 2 attached to this Security Agreement.

 

(f)           Debtor has good title to, or valid leasehold interest in, all of the Collateral and there are no Liens on any of the Collateral except Permitted Liens.

 

2.3           Authorization to File Financing Statements.  Debtor hereby irrevocably authorizes Vicis at any time and from time to time to file in any UCC jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets of Debtor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC or such other jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail, and (b) contain any other information required by Part 5 of Article 9 of the UCC for the sufficiency of filing office acceptance of any financing statement or amendment, including whether Debtor is an organization, the type of organization and any state or federal organization identification number issued to Debtor.  Debtor agrees to furnish any such information to Vicis promptly upon request.  Debtor also ratifies its authorization for Vicis to have filed in any UCC jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof.

 

  

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ARTICLE III

AGREEMENTS OF DEBTOR

 

From and after the date of this Security Agreement, and until all of the Obligations are paid in full, Debtor shall:

 

3.1           Sale of Collateral.  Not sell, lease, transfer or otherwise dispose of Collateral or any interest therein, except as provided for in the Purchase Agreement and for sales of Inventory in the ordinary course of business.

 

3.2           Maintenance of Security Interest.  

 

(a)           At the expense of Debtor, defend the Security Interest against any and all claims of any Person adverse to Vicis and take such action and execute such financing statements and other documents as Vicis may from time to time request to maintain the perfected status of the Security Interest.  Debtor shall not further encumber or grant a security interest in any of the Collateral except as provided for in the Purchase Agreement.

 

(b)           Take any other action requested by Vicis to ensure the attachment, perfection and first priority of, and the ability of Vicis to enforce its security interest in any and all of the Collateral including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC, to the extent, if any, that Debtor’s signature thereon is required therefor, (ii) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Vicis to enforce, its security interest in such Collateral, (iii) taking all actions required by any earlier versions of the UCC (to the extent applicable) or by other law, as applicable in any relevant UCC jurisdiction, or by other law as applicable in any foreign jurisdiction, and (iv) obtaining waivers from landlords where any of the tangible Collateral is located in form and substance satisfactory to Vicis.

 

3.3           Locations.  Give Vicis at least thirty (30) days prior written notice of Debtor’s intention to relocate the tangible Collateral (other than Inventory in transit) or any of the records relating to the Collateral from the locations listed on Schedule 1 attached to this Security Agreement, in which event Schedule 1 shall be deemed amended to include the new location.  Any additional filings or refilings requested by Vicis as a result of any such relocation in order to maintain the Security Interest in the Collateral shall be at Debtor’s expense.

 

3.4           Insurance.  Keep the Collateral consisting of tangible personal property insured against loss or damage to the Collateral under a policy or policies covering such risks as are ordinarily insured against by similar businesses, but in any event including fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, damage from aircraft, smoke and uniform standard extended coverage and vandalism and malicious mischief endorsements, limited only as may be provided in the standard form of such endorsements at the time in use in the applicable state.  Such insurance shall be for amounts not less than the actual replacement cost of the Collateral.  No policy of insurance shall be so written that the proceeds thereof will produce less than the minimum coverage required by the preceding sentence, by reason of co-insurance provisions or otherwise, without the prior consent thereto in writing by Vicis.  Debtor will obtain lender’s loss payable endorsements on applicable insurance policies in favor of Vicis and will provide certificates of such insurance to Vicis.  Debtor shall cause each insurer to agree, by endorsement on the policy or policies or certificates of insurance issued by it or by independent instrument furnished to Vicis, that such insurer will give thirty (30) days written notice to Vicis before such policy will be altered or canceled.  No settlement of any insurance claim shall be made without Vicis’s prior consent.  In the event of any insured loss, Debtor shall promptly notify Vicis thereof in writing, and Debtor hereby authorizes and directs any insurer concerned to make payment of such loss directly to Vicis as its interest may appear.  Vicis is authorized, in the name and on behalf of Debtor, to make proof of loss and to adjust, compromise and collect, in such manner and amounts as it shall determine, all claims under all policies; and Debtor agrees to sign, on demand of Vicis, all receipts, vouchers, releases and other instruments which may be necessary or desirable in aid of this authorization.  The proceeds of any insurance from loss, theft, or damage to the Collateral shall be held in a segregated account established by Vicis and disbursed and applied at the discretion of Vicis, either in reduction of the Obligations or applied toward the repair, restoration or replacement of the Collateral.

 

  

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3.5           Name; Legal Status.  (a) Without providing at least 30 days prior written notice to Vicis, Debtor will not change its name, its place of business or, if more than one, chief executive office, or its mailing address or organizational identification number if it has one, (b) if Debtor does not have an organizational identification number and later obtains one, Debtor shall forthwith notify Vicis of such organizational identification number, and (c) Debtor will not change its type of organization or jurisdiction of organization.

 

ARTICLE IV

RIGHTS AND REMEDIES

 

4.1           Right to Cure.  In case of failure by Debtor to procure or maintain insurance, or to pay any fees, assessments, charges or taxes arising with respect to the Collateral, Vicis shall have the right, but shall not be obligated, to effect such insurance or pay such fees, assessments, charges or taxes, as the case may be, and, in that event, the cost thereof shall be payable by Debtor to Vicis immediately upon demand, together with interest at an annual rate equal to 10% from the date of disbursement by Vicis to the date of payment by Debtor.

 

4.2           Rights of Parties.  Upon the occurrence and during the continuance of an Event of Default, in addition to all the rights and remedies provided in the Transaction Documents or in Article 9 of the UCC and any other applicable law, Vicis may (but is under no obligation so to do):

 

(a)           require Debtor to assemble the Collateral at a place designated by Vicis, which is reasonably convenient to the parties; and

 

  

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(b)           take physical possession of Inventory and other tangible Collateral and of Debtor’s records pertaining to all Collateral that are necessary to properly administer and control the Collateral or the handling and collection of Collateral, and sell, lease or otherwise dispose of the Collateral in whole or in part, at public or private sale, on or off the premises of Debtor; and

 

(c)           collect any and all money due or to become due and enforce in Debtor’s name all rights with respect to the Collateral; and

 

(d)           settle, adjust or compromise any dispute with respect to any Account; and

 

(e)           receive and open mail addressed to Debtor; and

 

(f)           on behalf of Debtor, endorse checks, notes, drafts, money orders, instruments or other evidences of payment.

 

4.3           Power of Attorney.  Upon the occurrence and during the continuance of an Event of Default, Debtor does hereby constitute and appoint Vicis as Debtor’s true and lawful attorney with full power of substitution for Debtor in Debtor’s name, place and stead for the purposes of performing any obligation of Debtor under this Security Agreement and taking any action and executing any instrument which Vicis may deem necessary or advisable to perform any obligation of Debtor under this Security Agreement, which appointment is irrevocable and coupled with an interest, and shall not terminate until the Obligations are paid in full.

 

4.4           Right to Collect Accounts.  Upon the occurrence and during the continuance of an Event of Default and without limiting Debtor’s obligations under the Transaction Documents:  (a) Debtor authorizes Vicis to notify any and all debtors on the Accounts to make payment directly to Vicis (or to such place as Vicis may direct); (b) Debtor agrees, on written notice from Vicis, to deliver to Vicis promptly upon receipt thereof, in the form in which received (together with all necessary endorsements), all payments received by Debtor on account of any Account; (c) Vicis may, at its option, apply all such payments against the Obligations or remit all or part of such payments to Debtor; and (d) Vicis may take any actions in accordance with Section 4.7 of this Agreement.

 

4.5           Reasonable Notice.  Written notice, when required by law, sent in accordance with the provisions of Section 10.6 of the Purchase Agreement and given at least ten (10) business days (counting the day of sending) before the date of a proposed disposition of the Collateral shall be reasonable notice.

 

4.6           Limitation on Duties Regarding Collateral.  The sole duty of Vicis with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the UCC or otherwise, shall be to deal with it in the same manner as Vicis deals with similar property for its own account.  Neither Vicis nor any of its directors, officers, employees or agents, shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of Debtor or otherwise.

 

  

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4.7           Lock Box; Collateral Account.  This Section 4.7 shall be effective only upon the occurrence and during the continuance of an Event of Default.  If Vicis so requests in writing, Debtor will direct each of its debtors on the Accounts to make payments due under the relevant Account or chattel paper directly to a special lock box to be under the control of Vicis.  Debtor hereby authorizes and directs Vicis to deposit into a special collateral account to be established and maintained by Vicis all checks, drafts and cash payments received in said lock box.  All deposits in said collateral account shall constitute proceeds of Collateral and shall not constitute payment of any Obligation until so applied.  At its option, Vicis may, at any time, apply finally collected funds on deposit in said collateral account to the payment of the Obligations, in the order of application selected in the sole discretion of Vicis, or permit Debtor to withdraw all or any part of the balance on deposit in said collateral account.  If a collateral account is so established, Debtor agrees that it will promptly deliver to Vicis, for deposit into said collateral account, all payments on Accounts and chattel paper received by it.  All such payments shall be delivered to Vicis in the form received (except for Debtor’s endorsement where necessary).  Until so deposited, all payments on Accounts and chattel paper received by Debtor shall be held in trust by Debtor for and as the property of Vicis and shall not be commingled with any funds or property of Debtor.

 

4.8           Application of Proceeds.  Vicis shall apply the proceeds resulting from any sale or disposition of the Collateral in the following order:

 

(a)           to the costs of any sale or other disposition;

 

(b)           to the expenses incurred by Vicis in connection with any sale or other disposition, including attorneys’ fees;

 

(c)           to the payment of the Obligations then due and owing in any order selected by Vicis; and

 

(d)           to Debtor.

 

4.9           Other Remedies.  No remedy herein conferred upon Vicis is intended to be exclusive of any other remedy and each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Security Agreement and the Transaction Documents now or hereafter existing at law or in equity or by statute or otherwise.  No failure or delay on the part of Vicis in exercising any right or remedy hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any right hereunder preclude other or further exercise thereof or the exercise of any other right or remedy.

 

ARTICLE V

MISCELLANEOUS

 

5.1           Expenses and Attorneys’ Fees.  Debtor shall pay all fees and expenses incurred by Vicis, including the fees of counsel including in-house counsel, the protection, administration and enforcement of the rights of Vicis under this Security Agreement or with respect to the Collateral, including without limitation the protection and enforcement of such rights in any bankruptcy.

 

5.2           Setoff.  Debtor agrees that Vicis shall have all rights of setoff and bankers’ lien provided by applicable law.

 

  

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5.3           Assignability; Successors.  Debtor’s rights and liabilities under this Security Agreement are not assignable or delegable, in whole or in part, without the prior written consent of Vicis.  The provisions of this Security Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties.

 

5.4           Survival.  All agreements, representations and warranties made in this Security Agreement or in any document delivered pursuant to this Security Agreement shall survive the execution and delivery of this Security Agreement, and the delivery of any such document.

 

5.5           Governing Law.  This Security Agreement and the rights of the parties hereunder shall be governed in all respects by the laws of the State of New York wherein the terms of this Security Agreement were negotiated, without regard to the conflicts of laws thereof.

 

5.6           Counterparts; Headings.  This Security Agreement may be executed in several counterparts, each of which shall be deemed an original, but such counterparts shall together constitute but one and the same agreement.  The article and section headings in this Security Agreement are inserted for convenience of reference only and shall not constitute a part hereof.

 

5.7           Notices.  All communications or notices required or permitted by this Security Agreement shall be given to Debtor in accordance with Section 10.6 of the Purchase Agreement.

 

5.8           Amendment; No Waiver; Cumulative Remedies.  No amendment of this Security Agreement shall be effective unless in writing and signed by Debtor and Vicis.  Vicis shall not by any act (except by a written instrument signed by Vicis), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Event of Default or in any breach of any of the terms and conditions hereof.  No failure to exercise, nor any delay in exercising, on the part of Vicis, any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by Vicis of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Vicis would otherwise have on any future occasion.  The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

 

5.9           Severability.  Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Security Agreement in such jurisdiction or affecting the validity or enforceability of any provision in any other jurisdiction.

 

5.10           WAIVER OF RIGHT TO JURY TRIAL.  VICIS AND DEBTOR ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS SECURITY AGREEMENT WOULD BE BASED UPON DIFFICULT AND COMPLEX ISSUES AND, THEREFORE, THE PARTIES AGREE THAT ANY LAWSUIT ARISING OUT OF ANY SUCH CONTROVERSY SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

  

8

  

5.11           Submission to Jurisdiction.  As a material inducement to Vicis to make the Investment:

 

(a)           DEBTOR AGREES THAT ALL ACTIONS OR PROCEEDINGS IN ANY MANNER RELATING TO OR ARISING OUT OF THIS SECURITY AGREEMENT MAY BE BROUGHT ONLY IN COURTS OF THE CITY AND STATE OF NEW YORK OR THE FEDERAL COURTS LOCATED IN THE CITY AND STATE OF NEW YORK AND DEBTOR CONSENTS TO THE JURISDICTION OF SUCH COURTS.  DEBTOR WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH COURT AND ANY RIGHT IT MAY HAVE NOW OR HEREAFTER HAVE TO CLAIM THAT ANY SUCH ACTION OR PROCEEDING IS IN AN INCONVENIENT COURT; AND

 

(b)           Debtor consents to the service of process in any such action or proceeding by certified mail sent to Debtor at the address specified in Section 10.6 of the Purchase Agreement.

 

 

[SIGNATURE PAGE TO FOLLOW]

 

  

9

  

IN WITNESS WHEREOF, this Security Agreement has been executed as of the day and year first above written.

 

 

	 	 
THE AMACORE GROUP, INC.

 

By:                                                                          

Name:

Title:

 

 

VICIS CAPITAL MASTER FUND

   By: Vicis Capital LLC

 

By:                                                                          

Name:

Title:

 

  

  

10

  

SCHEDULE 1 TO SECURITY AGREEMENT

 

Locations of Collateral

 

Organizational ID:      

Address of Debtor’s records of Collateral and chief executive office:

Collateral Locations:

  

11

  

SCHEDULE 2 TO SECURITY AGREEMENT

 

Intellectual Property

 

Patents

Trademarks

Copyrights

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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