EXHIBIT 2.2
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of December 17, 2001,
is made between Lifef/x, Inc., a Nevada corporation, and Lifef/x Networks, Inc.,
a Delaware corporation (referred to herein together as "Debtor"), and Safeguard
2001 Capital, L.P., a Delaware limited partnership ("Secured Party").
Debtor and Secured Party hereby agree as follows:
SECTION 1 DEFINITIONS; INTERPRETATION.
(a) As used in this Agreement, the following terms shall have the following
meanings:
"COLLATERAL" has the meaning set forth in Section 2.
"CREDIT AGREEMENT" means that certain Credit Agreement dated as of the date
hereof, by and between the Debtor and the Secured Party, as amended, modified,
renewed, extended or replaced from time to time.
"DOCUMENTS" means this Agreement, the Credit Agreement and all other
certificates, documents, agreements and instruments delivered to Secured Party
under the Credit Agreement or in connection with the Obligations.
"EVENT OF DEFAULT" has the meaning set forth in Section 8.
"GAAP" means generally accepted principles of good accounting practice in
the United States, consistently applied.
"INDEBTEDNESS" means, for any Person, (i) all indebtedness or other
obligations of such Person for borrowed money or for the deferred purchase price
of property or services; (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred
in connection with the acquisition of property, assets or businesses; (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person; (iv) all
reimbursement and other obligations of such Person in respect of letters of
credit and bankers acceptances and all net obligations in respect of interest
rate swaps, caps, floors and collars, currency swaps, and other similar
financial products; (v) all obligations under leases which shall have been or
should be, in accordance with GAAP, recorded as capital leases; and (vi) all
indebtedness of another Person of the types referred to in clauses (i) through
(v) guaranteed directly or indirectly in any manner by the Person for whom
Indebtedness is being determined, or in effect guaranteed directly or indirectly
by such Person through an agreement to purchase or acquire such indebtedness, to
advance or supply funds for the payment or purchase of such indebtedness or
otherwise assure a creditor against loss, or secured by any Lien upon or in
property owned by the Person for whom Indebtedness is being determined, whether
or not such Person has assumed or become liable for the payment of such
indebtedness of such other Person.
"LIEN" means any mortgage, deed of trust, pledge, security interest,
assignment, deposit arrangement, charge or encumbrance, lien, or other type of
preferential arrangement.
"OBLIGATIONS" means the indebtedness, liabilities and other obligations of
Debtor to Secured Party under or in connection with this Agreement, the Credit
Agreement and the other Documents, including, without limitation, all unpaid
principal of the loan evidenced by the Credit Agreement, all interest accrued
thereon, all fees and all other amounts payable by Debtor to Secured Party
thereunder or in connection therewith, whether now existing or hereafter
arising, and whether due or to become due, absolute or contingent, liquidated or
unliquidated, determined or undetermined.
"PERMITTED LIENS" means: (i) Liens in favor of the Lender; (ii) the
existing Liens listed in SCHEDULE 1 of the Credit Agreement or incurred in
connection with the extension, renewal or refinancing of the Indebtedness
secured by such existing Liens, PROVIDED that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the Indebtedness being extended, renewed or
refinanced does not increase; (iii) Liens for taxes, fees, assessments or other
governmental charges or levies, either not delinquent or being contested in good
faith by appropriate proceedings and which are adequately reserved for in
accordance with GAAP, PROVIDED the same does not have priority over any of the
Lender's Liens and no notice of tax lien has been filed of record; (iv) Liens of
materialmen, mechanics, warehousemen, carriers or employees or other similar
Liens PROVIDED for by mandatory provisions of law and securing obligations
either not delinquent or being contested in good faith by appropriate
proceedings and which do not in the aggregate materially impair the use or value
of the property or risk the loss or forfeiture thereof; (v) Liens consisting of
deposits or pledges to secure the performance of bids, trade contracts, leases,
public or statutory obligations, or other obligations of a like nature incurred
in the ordinary course of business (other than for Indebtedness); (vi) Liens
upon or in any equipment acquired or held by the Company or any of its
Subsidiaries to secure the purchase price of such equipment or Indebtedness
incurred solely for the purpose of financing the acquisition of such equipment;
and (vii) restrictions and other minor encumbrances on real property which do
not in the aggregate materially impair the use or value of such property or risk
the loss or forfeiture thereof.
"PERSON" means an individual, corporation, partnership, joint venture,
trust, unincorporated organization, governmental agency or authority, or any
other entity of whatever nature.
"UCC" means the Uniform Commercial Code as the same may, from time to time,
be in effect in the Commonwealth of Pennsylvania.
(b) Where applicable and except as otherwise defined herein, terms used in
this Agreement shall have the meanings assigned to them in the UCC.
(c) In this Agreement, (i) the meaning of defined terms shall be equally
applicable to both the singular and plural forms of the terms defined; and (ii)
the captions and headings are for convenience of reference only and shall not
affect the construction of this Agreement.
2.
SECTION 2 SECURITY INTEREST.
(a) As security for the payment and performance of the Obligations, Debtor
hereby grants to Secured Party a security interest in all of Debtor's right,
title and interest in, to and under all of its personal property, wherever
located and whether now existing or owned or hereafter acquired or arising,
including all accounts, chattel paper, commercial tort claims, deposit accounts,
documents, equipment (including all fixtures), general intangibles, instruments,
inventory, investment property, letter-of-credit rights, money and all products,
proceeds and supporting obligations of any and all of the foregoing
(collectively, the "Collateral"). Notwithstanding the foregoing, except for
fixtures (to the extent covered by Article 9 of the UCC), such grant of a
security interest shall not extend to, and the term "Collateral" shall not
include, any asset which would be real property under the law of the
jurisdiction in which it is located.
(b) Anything herein to the contrary notwithstanding, (i) Debtor shall
remain liable under any contracts, agreements and other documents included in
the Collateral, to the extent set forth therein, to perform all of its duties
and obligations thereunder to the same extent as if this Agreement had not been
executed, (ii) the exercise by Secured Party of any of the rights hereunder
shall not release Debtor from any of its duties or obligations under such
contracts, agreements and other documents included in the Collateral, and (iii)
Secured Party shall not have any obligation or liability under any contracts,
agreements and other documents included in the Collateral by reason of this
Agreement, nor shall Secured Party be obligated to perform any of the
obligations or duties of Debtor thereunder or to take any action to collect or
enforce any such contract, agreement or other document included in the
Collateral hereunder.
(c) This Agreement shall create a continuing security interest in the
Collateral which shall remain in effect until terminated in accordance with
Section 19 hereof.
SECTION 3 FINANCING STATEMENTS, ETC. Debtor shall execute and deliver to
Secured Party concurrently with the execution of this Agreement, and Debtor
hereby authorizes Secured Party to file (with or without Debtor's signature), at
any time and from time to time thereafter, all financing statements,
assignments, continuation financing statements, termination statements, account
control agreements, and other documents and instruments, in form reasonably
satisfactory to Secured Party, and take all other action, as Secured Party may
reasonably request, to perfect and continue perfected, maintain the priority of
or provide notice of the security interest of Secured Party in the Collateral
and to accomplish the purposes of this Agreement. Without limiting the
generality of the foregoing, Debtor ratifies and authorizes the filing by
Secured Party of any financing statements filed prior to the date hereof. Debtor
will cooperate with Secured Party in obtaining control (as defined in the UCC)
of Collateral consisting of deposit accounts, investment property, letter of
credit rights and electronic chatter paper. Debtor will join with Secured Party
in notifying any third party who has possession of any Collateral of Secured
Party's security interest therein and obtaining an acknowledgment from the third
party that it is holding the Collateral for the benefit of Secured Party. Debtor
will not create any chattel paper without placing a legend on the chattel paper
acceptable to Secured Party indicating that Secured Party has a security
interest in the chattel paper.
3.
SECTION 4 REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to
Secured Party that:
(a) Debtor is duly organized, validly existing and in good standing under
the law of the jurisdiction of its organization and has all requisite power and
authority to execute, deliver and perform its obligations under this Agreement.
(b) The execution, delivery and performance by Debtor of this Agreement
have been duly authorized by all necessary action of Debtor, and this Agreement
constitutes the legal, valid and binding obligation of Debtor, enforceable
against Debtor in accordance with its terms.
(c) No authorization, consent, approval, license, exemption of, or filing
or registration with, any governmental authority or agency, or approval or
consent of any other Person, is required for the due execution, delivery or
performance by Debtor of this Agreement, except for any filings necessary to
perfect any Liens on any Collateral.
(d) Debtor's chief executive office and principal place of business (as of
the date of this Agreement) is located at the address set forth in SCHEDULE 1;
Debtor's jurisdiction of organization is set forth in SCHEDULE 1; Debtor's exact
legal name is as set forth in the first paragraph of this Agreement; and all
other locations where Debtor conducts business or Collateral is kept (as of the
date of this Agreement) are set forth in SCHEDULE 2.
(e) Debtor has rights in or the power to transfer the Collateral, and
Debtor is the sole and complete owner of the Collateral, free from any Lien
other than Permitted Liens.
(f) All of Debtor's U.S. and foreign patents and patent applications,
copyrights (whether or not registered), applications for copyright, trademarks,
service marks and trade names (whether registered or unregistered), and
applications for registration of such trademarks, service marks and trade names,
are set forth in SCHEDULE 2.
(g) Debtor is not and will not become a lessee under any real property
lease or other agreement governing the location of Collateral at the premises of
another Person pursuant to which the lessor or such other Person may obtain any
rights in any of the Collateral, and no such lease or other such agreement now
prohibits, restrains, impairs or will prohibit, restrain or impair such Debtor's
right to remove any Collateral from the premises at which such Collateral is
situated, except for the usual and customary restrictions contained in such
leases of real property.
(h) No control agreements exist with respect to any Collateral other than
control agreements in favor of Secured Party.
(i) Debtor does not have or hold any chattel paper, letter-of-credit rights
or commercial tort claims except as disclosed to Secured Party.
(j) The names and addresses of all financial institutions and other Persons
at which Debtor maintains its deposit and securities accounts, and the account
numbers and account names of such accounts, are set forth in SCHEDULE 1.
4.
SECTION 5 COVENANTS. So long as any of the Obligations remain unsatisfied,
Debtor agrees that:
(a) Debtor shall appear in and defend any action, suit or proceeding which
may affect to a material extent its title to, or right or interest in, or
Secured Party's right or interest in, the Collateral, and shall do and perform
all reasonable acts that may be necessary and appropriate to maintain, preserve
and protect the Collateral.
(b) Debtor shall comply in all material respects with all laws, regulations
and ordinances, and all policies of insurance, relating in a material way to the
possession, operation, maintenance and control of the Collateral.
(c) Debtor shall give prompt written notice to Secured Party (and in any
event not later than 30 days following any change described below in this
subsection) of: (i) any change in the location of Debtor's chief executive
office or principal place of business; (ii) any change in the locations set
forth in Schedule 1; (iii) any change in its name; (iv) any changes in its
identity or structure in any manner which might make any financing statement
filed hereunder incorrect or misleading; (v) any change in its registration as
an organization (or any new such registration); or (vi) any change in its
jurisdiction of organization; PROVIDED that Debtor shall not locate any
Collateral outside of the United States nor shall Debtor change its jurisdiction
of organization to a jurisdiction outside of the United States.
(d) Debtor shall carry and maintain in full force and effect, at its own
expense and with financially sound and reputable insurance companies, insurance
with respect to the Collateral in such amounts, with such deductibles and
covering such risks as is customarily carried by companies engaged in the same
or similar businesses and owning similar properties in the localities where
Debtor operates. Insurance on the Collateral shall name Secured Party as
additional insured and as loss payee. Upon the request of Secured Party, Debtor
shall furnish Secured Party from time to time with full information as to the
insurance carried by it and, if so requested, copies of all such insurance
policies. All insurance policies required under this subsection (d) shall
provide that they shall not be terminated or cancelled nor shall any such policy
be materially changed without at least 30 days' prior written notice to Debtor
and Secured Party. Receipt of notice of termination or cancellation of any such
insurance policies or reduction of coverages or amounts thereunder shall entitle
Secured Party to renew any such policies, cause the coverages and amounts
thereof to be maintained at levels required pursuant to the first sentence of
this subsection (d) or otherwise to obtain similar insurance in place of such
policies, in each case at the expense of Debtor.
(e) If the Collateral shall be materially damaged or destroyed, in whole or
in part, by fire or other casualty, Debtor shall give prompt notice thereof to
Secured Party. Additionally, Debtor shall in any event promptly give Secured
Party notice of all reports made to insurance companies in respect of any claim
in excess of $25,000. No settlement on account of any loss covered by insurance
shall be made for less than insured value without the consent of Secured Party.
In its sole discretion Secured Party may apply all or any portion of such
insurance proceeds to the payment of Obligations or may release all or any
portion thereof to Debtor.
5.
(f) Debtor shall keep separate, accurate and complete books and records
with respect to the Collateral, disclosing Secured Party's security interest
hereunder.
(g) Debtor shall not surrender or lose possession of (other than to Secured
Party), sell, lease, rent, or otherwise dispose of or transfer any of the
Collateral or any right or interest therein, except in the ordinary course of
business or unless such Collateral is replaced by comparable Collateral of
similar value; PROVIDED that no such disposition or transfer of Collateral
consisting of investment property or instruments shall be permitted while any
Event of Default exists.
(h) Debtor shall keep the Collateral free of all Liens except Permitted
Liens.
(i) Debtor shall pay and discharge all taxes, fees, assessments and
governmental charges or levies imposed upon it with respect to the Collateral
prior to the date on which penalties attach thereto, except to the extent such
taxes, fees, assessments or governmental charges or levies are being contested
in good faith by appropriate proceedings.
(j) Debtor shall maintain and preserve its legal existence, its rights to
transact business and all other rights, franchises and privileges necessary or
desirable in the normal course of its business and operations and the ownership
of the Collateral, except in connection with any transactions expressly
permitted by the Credit Agreement or any other Document.
(k) Upon the request of Secured Party, Debtor shall (i) immediately deliver
to Secured Party, or an agent designated by it, appropriately endorsed or
accompanied by appropriate instruments of transfer or assignment, all documents
and instruments, all certificated securities with respect to any investment
property, all letters of credit and all accounts and other rights to payment at
any time evidenced by promissory notes, trade acceptances or other instruments,
(ii) cause any securities intermediaries to show on their books that Secured
Party is the entitlement holder with respect to any investment property, and/or
obtain account control agreements in favor of Secured Party from such securities
intermediaries, in form and substance satisfactory to Secured Party, with
respect to any investment property, as requested by Secured Party, and (iii)
provide such notice, obtain such acknowledgments and take all such other action,
with respect to any chattel paper, documents and letter of credit rights, as
Secured Party shall reasonably specify.
(l) Debtor shall (i) notify Secured Party of any material claim made or
asserted against the Collateral by any Person and of any change in the
composition of the Collateral or other event which could materially adversely
affect the value of the Collateral or Secured Party's Lien thereon; (ii) furnish
to Secured Party such statements and schedules further identifying and
describing the Collateral and such other reports and other information in
connection with the Collateral as Secured Party may reasonably request, all in
reasonable detail; and (iii) upon reasonable request of Secured Party make such
demands and requests for information and reports as Debtor is entitled to make
in respect of the Collateral.
(m) If and when Debtor shall obtain rights to any new patents, trademarks,
service marks, trade names or copyrights, or otherwise acquire or become
entitled to the benefit of, or apply for registration of, any of the foregoing,
Debtor (i) shall promptly notify Secured
6.
Party thereof and (ii) hereby authorizes Secured Party to modify, amend, or
supplement SCHEDULE 2 and from time to time to include any of the foregoing and
make all necessary or appropriate filings with respect thereto.
(n) Debtor shall not enter into any agreement (including any license or
royalty agreement) pertaining to any of its patents, copyrights, trademarks,
service marks and trade names, except for non-exclusive licenses in the ordinary
course of business.
(o) At Secured Party's request, Debtor will obtain from each Person from
whom Debtor leases any premises at which any Collateral is at any time present
such collateral access, subordination, waiver, consent and estoppel agreements
as Secured Party may require, in form and substance satisfactory to Secured
Party.
(p) Debtor shall give Secured Party immediate notice of the acquisition of
any instruments or securities, or the establishment of any new deposit account
or any new securities account with respect to any investment property.
(q) Debtor shall immediately notify Secured Party if Debtor holds or
acquires (i) any commercial tort claims, (ii) any chattel paper, including any
interest in any electronic chattel paper, or (iii) any letter-of-credit rights.
SECTION 6 COLLECTION OF ACCOUNTS. Until Secured Party exercises its rights
hereunder to collect the accounts and other rights to payment, Debtor shall
endeavor in the first instance diligently to collect all amounts due or to
become due on or with respect to the accounts and other rights to payment. At
the request of Secured Party, upon the occurrence and during the continuance of
any Event of Default, all remittances received by Debtor shall be held in trust
for Secured Party and, in accordance with Secured Party's instructions, remitted
to Secured Party or deposited to an account of Secured Party in the form
received (with any necessary endorsements or instruments of assignment or
transfer). At the request of Secured Party, upon and after the occurrence of any
Event of Default, Secured Party shall be entitled to receive all distributions
and payments of any nature with respect to any investment property or
instruments, and all such distributions or payments received by the Debtor shall
be held in trust for Secured Party and, in accordance with Secured Party's
instructions, remitted to Secured Party or deposited to an account with Secured
Party in the form received (with any necessary endorsements or instruments of
assignment or transfer). Following the occurrence of an Event of Default any
such distributions and payments with respect to any investment property held in
any securities account shall be held and retained in such securities account, in
each case as part of the Collateral hereunder. Additionally, Secured Party shall
have the right, upon the occurrence of an Event of Default, following prior
written notice to the Debtor, to vote and to give consents, ratifications and
waivers with respect to any investment property and instruments, and to exercise
all rights of conversion, exchange, subscription or any other rights, privileges
or options pertaining thereto, as if Secured Party were the absolute owner
thereof; PROVIDED that Secured Party shall have no duty to exercise any of the
foregoing rights afforded to it and shall not be responsible to the Debtor or
any other Person for any failure to do so or delay in doing so.
SECTION 7 AUTHORIZATION; SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
7.
Secured Party shall have the right to, in the name of Debtor, or in the
name of Secured Party or otherwise, upon notice to but without the
requirement of assent by Debtor, and Debtor hereby constitutes and appoints
Secured Party (and any of Secured Party's officers, employees or agents
designated by Secured Party) as Debtor's true and lawful attorney-in-fact,
with full power and authority to: (i) sign and file any of the financing
statements and other documents and instruments which must be executed or
filed to perfect or continue perfected, maintain the priority of or provide
notice of Secured Party's security interest in the Collateral (including any
notices to or agreements with any securities intermediary); (ii) assert,
adjust, xxx for, compromise or release any claims under any policies of
insurance; (iii) give notices of control, default or exclusivity (or similar
notices) under any account control agreement or similar agreement with
respect to exercising control over deposit accounts or securities accounts;
and (iv) execute any and all such other documents and instruments, and do any
and all acts and things for and on behalf of Debtor, which Secured Party may
deem reasonably necessary or advisable to maintain, protect, realize upon and
preserve the Collateral and Secured Party's security interest therein and to
accomplish the purposes of this Agreement. Secured Party agrees that, except
upon and during the continuance of an Event of Default, it shall not exercise
the power of attorney, or any rights granted to Secured Party, pursuant to
clauses (ii), (iii) and (iv). The foregoing power of attorney is coupled with
an interest and irrevocable so long as the Obligations have not been paid and
performed in full. Debtor hereby ratifies, to the extent permitted by law,
all that Secured Party shall lawfully and in good faith do or cause to be
done by virtue of and in compliance with this Section 7.
SECTION 8 EVENTS OF DEFAULT. Any of the following events which shall occur
and be continuing shall constitute an "Event of Default":
(a) Debtor shall fail to pay when due any amount of principal of or
interest on the loan evidenced by the Credit Agreement or other amount payable
hereunder or under the Credit Agreement or any other Document or in respect of
the Obligations.
(b) Any representation or warranty by Debtor under or in connection with
this Agreement, the Credit Agreement or any other Document shall prove to have
been incorrect in any material respect when made or deemed made.
(c) Debtor shall fail to perform or observe in any material respect any
other term, covenant or agreement contained in this Agreement, the Credit
Agreement or any other Document on its part to be performed or observed and any
such failure shall remain unremedied for a period of ten days from the
occurrence thereof; or any "Event of Default" as defined in the Credit Agreement
or any other Document shall have occurred.
(d) Debtor shall admit in writing its inability to, or shall fail generally
or be generally unable to, pay its debts (including its payrolls) as such debts
become due, or shall make a general assignment for the benefit of creditors; or
Debtor shall file a voluntary petition in bankruptcy or a petition or answer
seeking reorganization, to effect a plan or other arrangement with creditors or
any other relief under the Bankruptcy Reform Act of 1978, as amended or
recodified from time to time (the "Bankruptcy Code") or under any other state or
federal law relating to bankruptcy or reorganization granting relief to debtors,
whether now or hereafter in effect, or shall file an answer admitting the
jurisdiction of the court and the material allegations
8.
of any involuntary petition filed against Debtor pursuant to the Bankruptcy Code
or any such other state or federal law; or Debtor shall be adjudicated a
bankrupt, or shall make an assignment for the benefit of creditors, or shall
apply for or consent to the appointment of any custodian, receiver or trustee
for all or any substantial part of Debtor's property, or shall take any action
to authorize any of the actions set forth above in this paragraph; or an
involuntary petition seeking any of the relief specified in this paragraph shall
be filed against Debtor; or any order for relief shall be entered against Debtor
in any involuntary proceeding under the Bankruptcy Code or any such other state
or federal law referred to in this subsection (d).
(e) Debtor shall (i) liquidate, wind up or dissolve (or suffer any
liquidation, wind-up or dissolution), except to the extent expressly permitted
by the Credit Agreement, (ii) suspend its operations other than in the ordinary
course of business, or (iii) take any action to authorize any of the actions or
events set forth above in this subsection (e).
(f) Any material impairment in the value of the Collateral or the priority
of Secured Party's Lien hereunder.
(g) Any levy upon, seizure or attachment of any of the Collateral which
shall not have been rescinded or withdrawn.
(h) Any loss, theft or substantial damage to, or destruction of, any
material portion of the Collateral (unless within five days after the occurrence
of any such event, Debtor furnishes to Secured Party evidence satisfactory to
Secured Party that the amount of any such loss, theft, damage to or destruction
of the Collateral is fully insured under policies naming Secured Party as an
additional named insured or loss payee).
SECTION 9 REMEDIES.
(a) Upon the occurrence and continuance of any Event of Default, Secured
Party may declare any of the Obligations to be immediately due and payable and
shall have, in addition to all other rights and remedies granted to it in this
Agreement, the Credit Agreement or any other Document, all rights and remedies
of a secured party under the UCC and other applicable laws. Without limiting the
generality of the foregoing, (i) Secured Party may peaceably and without notice
enter any premises of Debtor, take possession of any the Collateral, remove or
dispose of all or part of the Collateral on any premises of such Debtor or
elsewhere, or, in the case of equipment, render it nonfunctional, and otherwise
collect, receive, appropriate and realize upon all or any part of the
Collateral, and demand, give receipt for, settle, renew, extend, exchange,
compromise, adjust, or xxx for all or any part of the Collateral, as Secured
Party may determine; (ii) Secured Party may require any Debtor to assemble all
or any part of the Collateral and make it available to Secured Party at any
place and time designated by Secured Party; (iii) Secured Party may secure the
appointment of a receiver of the Collateral or any part thereof (to the extent
and in the manner provided by applicable law); (iv) Secured Party may sell,
resell, lease, use, assign, license, sublicense, transfer or otherwise dispose
of any or all of the Collateral in its then condition or following any
commercially reasonable preparation or processing (utilizing in connection
therewith any of Debtor's assets, without charge or liability to Secured Party
therefor) at public or private sale, by one or more contracts, in one or more
parcels, at the same or different times, for cash or credit, or for future
delivery without
9.
assumption of any credit risk, all as Secured Party deems advisable; PROVIDED,
however, that Debtor shall be credited with the net proceeds of sale only when
such proceeds are finally collected by Secured Party. Secured Party shall have
the right upon any such public sale, and, to the extent permitted by law, upon
any such private sale, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption, which right or equity of
redemption Debtor hereby releases, to the extent permitted by law. Secured Party
shall give Debtor such notice of any private or public sales as may be required
by the UCC or other applicable law.
(b) For the purpose of enabling Secured Party to exercise its rights and
remedies under this Section 9 or otherwise in connection with this Agreement,
Debtor hereby grants to Secured Party an irrevocable, non-exclusive and
assignable license (exercisable without payment or royalty or other compensation
to Debtor) to use, license or sublicense any intellectual property Collateral.
(c) Secured Party shall not have any obligation to clean up or otherwise
prepare the Collateral for sale. Secured Party has no obligation to attempt to
satisfy the Obligations by collecting them from any other Person liable for
them, and Secured Party may release, modify or waive any Collateral provided by
any other Person to secure any of the Obligations, all without affecting Secured
Party's rights against Debtor. Debtor waives any right it may have to require
Secured Party to pursue any third Person for any of the Obligations. Secured
Party may comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral and compliance will not be
considered adversely to affect the commercial reasonableness of any sale of the
Collateral. Secured Party may sell the Collateral without giving any warranties
as to the Collateral. Secured Party may specifically disclaim any warranties of
title or the like. This procedure will not be considered adversely to affect the
commercial reasonableness of any sale of the Collateral. If Secured Party sells
any of the Collateral upon credit, Debtor will be credited only with payments
actually made by the purchaser, received by Secured Party and applied to the
indebtedness of the purchaser. In the event the purchaser fails to pay for the
Collateral, Secured Party may resell the Collateral and Debtor shall be credited
with the proceeds of the sale.
(d) To the extent Debtor uses the proceeds of any of the Obligations to
purchase Collateral, Debtor's repayment of the Obligations shall apply on a
"first-in, first-out" basis so that the portion of the Obligations used to
purchase a particular item of Collateral shall be paid in the chronological
order the Debtor purchased the Collateral.
(e) The cash proceeds actually received from the sale or other disposition
or collection of Collateral, and any other amounts received in respect of the
Collateral the application of which is not otherwise provided for herein, shall
be applied FIRST, to the payment of the reasonable costs and expenses of Secured
Party in exercising or enforcing its rights hereunder and in collecting or
attempting to collect any of the Collateral, and to the payment of all other
amounts payable to Secured Party pursuant to Section 13 hereof; and SECOND, to
the payment of the Obligations. Any surplus thereof which exists after payment
and performance in full of the Obligations shall be promptly paid over to Debtor
or otherwise disposed of in accordance with the UCC or other applicable law.
Debtor shall remain liable to Secured Party for any deficiency which exists
after any sale or other disposition or collection of Collateral.
10.
SECTION 10 CERTAIN WAIVERS. Debtor waives, to the fullest extent permitted
by law, (i) any right of redemption with respect to the Collateral, whether
before or after sale hereunder, and all rights, if any, of marshalling of the
Collateral or other collateral or security for the Obligations; (ii) any right
to require Secured Party (A) to proceed against any Person, (B) to exhaust any
other collateral or security for any of the Obligations, (C) to pursue any
remedy in Secured Party's power, or (D) to make or give any presentments,
demands for performance, notices of nonperformance, protests, notices of
protests or notices of dishonor in connection with any of the Collateral; and
(iii) all claims, damages, and demands against Secured Party arising out of the
repossession, retention, sale or application of the proceeds of any sale of the
Collateral
SECTION 11 NOTICES. All notices or other communications hereunder shall be
in writing (including by facsimile transmission or by email) and mailed, sent or
delivered to the respective parties hereto at or to their respective addresses,
facsimile numbers or email addresses set forth below their names on the
signature pages hereof, or at or to such other address, facsimile number or
email address as shall be designated by any party in a written notice to the
other parties hereto. All such notices and other communications shall be deemed
to be delivered when a record (within the meaning of the UCC) has been (i)
delivered by hand; (ii) sent by mail upon the earlier of the date of receipt or
five business days after deposit in the mail, first class (or air mail as to
communications sent to or from the United States); (iii) sent by facsimile
transmission; or (iv) sent by email.
SECTION 12 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
Secured Party to exercise, and no delay in exercising, any right, remedy, power
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right, remedy, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights and remedies under this Agreement are cumulative
and not exclusive of any rights, remedies, powers and privileges that may
otherwise be available to Secured Party.
SECTION 13 COSTS AND EXPENSES.
(a) Debtor agrees to pay on demand:
(i) the reasonable out-of-pocket costs and expenses of Secured Party, and
the reasonable fees and disbursements of counsel to Secured Party, in connection
with the negotiation, preparation, execution, delivery and administration of
this Agreement and the Credit Agreement, and any amendments, modifications or
waivers of the terms thereof, and the custody of the Collateral;
(ii) all title, appraisal, survey, audit, consulting, search, recording,
filing and similar costs, fees and expenses incurred or sustained by Secured
Party in connection with this Agreement or the Collateral; and
(iii) all costs and expenses of Secured Party, and the fees and
disbursements of counsel, in connection with the enforcement or attempted
enforcement of, and preservation of any rights or interests under, this
Agreement and the Credit Agreement, including in any out-of-court workout or
other refinancing or restructuring or in any bankruptcy case, and the
protection,
11.
sale or collection of, or other realization upon, any of the Collateral,
including all expenses of taking, collecting, holding, sorting, handling,
preparing for sale, selling, or the like, and other such expenses of sales and
collections of Collateral.
SECTION 14 BINDING EFFECT. This Agreement shall be binding upon, inure to
the benefit of and be enforceable by Debtor, Secured Party and their respective
successors and assigns and shall bind any Person who becomes bound as a debtor
to this Agreement. Debtor may not assign, transfer, hypothecate or otherwise
convey its rights, benefits, obligations or duties hereunder without the prior
express written consent of Secured Party. Any such purported assignment,
transfer, hypothecation or other conveyance by Debtor without the prior express
written consent of Secured Party shall be void. Debtor acknowledges and agrees
that in connection with an assignment of, or grant of a participation in, the
Obligations Secured Party may assign, or grant participations in, all or a
portion of its rights and obligations hereunder. Upon any assignment of Secured
Party's rights hereunder, such assignee shall have, to the extent of such
assignment, all rights of Secured Party hereunder. Debtor agrees that, upon any
such assignment, such assignee may enforce directly, without joinder of Secured
Party, the rights of Secured Party set forth in this Agreement. Any such
assignee shall be entitled to enforce Secured Party's rights and remedies under
this Agreement to the same extent as if it were the original secured party named
herein.
SECTION 15 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the Commonwealth of Pennsylvania,
except as required by mandatory provisions of law and to the extent the validity
or perfection of the security interests hereunder, or the remedies hereunder, in
respect of any Collateral are governed by the law of a jurisdiction other than
Pennsylvania.
SECTION 16 ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and shall not
be amended except by the written agreement of the parties.
SECTION 17 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
all applicable laws and regulations. If, however, any provision of this
Agreement shall be prohibited by or invalid under any such law or regulation in
any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any
reason it is not deemed so modified, it shall be ineffective and invalid only to
the extent of such prohibition or invalidity without affecting the remaining
provisions of this Agreement, or the validity or effectiveness of such provision
in any other jurisdiction.
SECTION 18 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.
SECTION 19 TERMINATION. Upon payment and performance in full of all
Obligations, the security interest created under this Agreement shall terminate
and Secured Party shall promptly execute and deliver to Debtor such documents
and instruments reasonably
12.
requested by Debtor as shall be necessary to evidence termination of all
security interests given by Debtor to Secured Party hereunder.
SECTION 20 JOINT AND SEVERAL LIABILITY. If Debtor consists of more than one
Person, the liability of each Person comprising Debtor shall be joint and
several, and each reference herein to "Debtor" shall mean and be a reference to
each such Person comprising Debtor. The Debtors agree that any and all of their
obligations hereunder shall be the joint and several responsibility of each of
them notwithstanding any absence herein of a reference such as "jointly and
severally" with respect to any such obligation. The compromise of any claim
with, or the release of, any Debtor shall not constitute a compromise with, or a
release of, any other Debtor.
SECTION 21 CONFLICTS. In the event of any conflict or inconsistency between
this Agreement and the Credit Agreement, the terms of this Agreement shall
control.
13.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement,
as of the date first above written.
LIFEF/X, INC.
By /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Title: Chief Executive Officer
000 Xxxxxxx Xxxxxx, Xxxxxxxx Xxx
Xxxxxx, XX 00000
Attn: Chief Executive Officer
Fax: 000-000-0000
email: _________________________________
LIFEF/X NETWORKS, INC.
By /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Title: Chief Executive Officer
000 Xxxxxxx Xxxxxx, Xxxxxxxx Xxx
Xxxxxx, XX 00000
Attn: Chief Executive Officer
Fax: 000-000-0000
email: _________________________________
SAFEGUARD 2001 CAPITAL, L.P.
By Safeguard Delaware, Inc., its general
partner
By /s/ N. Xxxxxxx Xxxxxxx
--------------------------------------
Title: Executive Vice President and
General Counsel
000 Xxxxx Xxxx Xxxxx
Xxxxx, XX 00000
Attn: __________________________________
Fax: ___________________________________
email: __________________________________
14.
OMITTED SCHEDULES AND EXHIBITS
1. Schedule 1 - Jurisdiction of Organization Business Locations and Accounts
2. Schedule 2 - Intellectual Property
The Registrant undertakes to supply copies of the omitted schedules and
exhibits to the Commission upon request.
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