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Exhibit
10.5
SECURITY AGREEMENT
This SECURITY AGREEMENT (as
the same may from time to time be amended, restated or otherwise
modified, this “Agreement”) is made as of the 12
th day of July, 2007 by JUPITERIMAGES CORPORATION,
an Arizona corporation (“Pledgor”), in favor of KEYBANK
NATIONAL ASSOCIATION, as the administrative agent under the Credit
Agreement, as hereinafter defined (“Agent”), for the
benefit of Agent and the Lenders, as hereinafter
defined.
1. Recitals
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JUPITERMEDIA CORPORATION, a
Delaware corporation (together with its successors and assigns,
“Borrower”), is entering into that certain Credit and
Security Agreement, dated as of July 12, 2007, with the
lenders from time to time listed on Schedule 1 thereto
(together with their respective successors and assigns and any
other additional lenders that become party to the Credit Agreement,
collectively, the “Lenders” and, individually, each a
“Lender”), Agent, and Citizens Bank, N.A., as the
syndication agent (as the same may from time to time be amended,
restated or otherwise modified, the “Credit
Agreement”). Pledgor desires that the Lenders grant the
financial accommodations to Borrower as described in the Credit
Agreement.
Pledgor, a subsidiary of
Borrower whose financing is provided by the Loans and Letters of
Credit, as each term is defined in the Credit Agreement, deems it
to be in the direct pecuniary and business interests of Pledgor
that Borrower obtain from the Lenders the Commitment, as defined in
the Credit Agreement, and the Loans and Letters of Credit, provided
for in the Credit Agreement.
Pledgor understands that the
Lenders are willing to grant such financial accommodations only
upon certain terms and conditions, one of which is that Pledgor
grant to Agent, for the benefit of the Lenders, a security interest
in and a collateral assignment of the Collateral, as hereinafter
defined, and this Agreement is being executed and delivered in
consideration of the Lenders entering into the Credit Agreement and
each financial accommodation granted to Borrower by the Lenders and
for other valuable consideration.
2. Definitions .
Except as specifically defined herein, (a) capitalized terms
used herein that are defined in the Credit Agreement shall have
their respective meanings ascribed to them in the Credit Agreement,
and (b) unless otherwise defined in the Credit Agreement,
terms that are defined in the U.C.C. are used herein as so defined.
As used in this Agreement, the following terms shall have the
following meanings:
“Account” means
all of Pledgor’s accounts, as defined in the
U.C.C.
“Account Debtor”
means any Person obligated to pay all or any part of any Account in
any manner and includes (without limitation) any guarantor thereof
or other accommodation party therefor.
“Cash Collateral
Account” means a commercial Deposit Account designated
“cash collateral account” and maintained by Pledgor
with Agent, and any interest earned thereon, from which account
Agent shall have the exclusive right to withdraw funds until all of
the Obligations are paid in full.
“Cash Security”
means all cash, instruments, Deposit Accounts, and other cash
equivalents, whether matured or unmatured, whether collected or in
the process of collection, upon which Pledgor presently has or may
hereafter have any claim, wherever located, including but not
limited to any of the foregoing that are presently or may hereafter
be existing or maintained with, issued by, drawn upon, or in the
possession of Agent or any Lender.
“Collateral”
means all of Pledgor’s existing and future (a) personal
property; (b) Accounts, Investment Property, instruments,
contract rights, chattel paper, documents, supporting obligations,
letter-of-credit rights, Pledged Notes, commercial tort claims,
General Intangibles, Inventory and Equipment; (c) funds now or
hereafter on deposit in the Cash Collateral Account, if any;
(d) Cash Security; and (e) Proceeds of any of the
foregoing; provided that Collateral shall exclude (i) any
fixed asset that is subject to a purchase money security interest
or capital lease permitted under the Credit Agreement to the extent
that and only so long as the agreements with respect to such
purchase money security interest or capital lease, as the case may
be, specifically prohibit additional Liens, (ii) licenses and
contracts which by the terms of such licenses and contracts
prohibit the assignment of such agreements (to the extent such
prohibition is enforceable at law), (iii) equity interests in
(A) any direct Foreign Subsidiary in excess of
(1) sixty-five percent (65%) of the total combined voting
power of all classes of equity interests or stock of such Foreign
Subsidiary’s stock or other equity interests, and
(2) one hundred percent (100%) of the non-voting equity
interests or stock of such Foreign Subsidiary’s stock or
other equity interests, and (B) any indirect Foreign
Subsidiary, and (iv) any letter-of-credit right for a
specified purpose, to the extent Pledgor is required by applicable
law to apply the proceeds of such letter-of-credit right for such
specified purpose.
“Deposit Account”
means (a) a deposit account, as defined in the U.C.C.,
(b) any other deposit account, and (c) any demand, time,
savings, checking, passbook or similar account maintained with a
bank, savings and loan association, credit union, or similar
organization; provided that Deposit Account shall exclude any
Deposit Account that is a trust or special account exclusively
comprised of funds for (i) payroll (and related payroll
taxes), (ii) 401(k) and other retirement plans and employee
benefits, including rabbi trusts for deferred compensation,
(iii) health care benefits, and (iv) escrow arrangements
(e.g., environmental indemnity accounts).
“Equipment” means
all of Pledgor’s equipment, as defined in the
U.C.C.
“Event of
Default” means an event or condition that constitutes an
Event of Default, as defined in Section 15.1
hereof.
“General
Intangibles” means all of Pledgor’s (a) general
intangibles, as defined in the U.C.C.; and (b) choses in
action, causes of action, intellectual property, customer lists,
corporate or other business records, inventions, designs, patents,
patent applications, service marks,
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registrations, trade names, trademarks,
copyrights, licenses, goodwill, computer software, rights to
indemnification and tax refunds.
“Immaterial Deposit
Account” means a Deposit Account maintained by Pledgor that
at all times, has a balance of less than One Hundred Thousand
Dollars ($100,000); provided that the Immaterial Deposit Accounts
of all Credit Parties shall not, at any time, aggregate in excess
of One Hundred Thousand Dollars ($100,000).
“Inventory” means
all of Pledgor’s inventory, as defined in the
U.C.C.
“Investment
Property” means all of Pledgor’s investment property,
as defined in the U.C.C., unless the Uniform Commercial Code as in
effect in another jurisdiction would govern the perfection and/or
priority of a security interest in investment property, and, in
such case, investment property shall be defined in accordance with
the law of that jurisdiction as in effect from time to
time.
“ITU Application”
shall mean a trademark application filed with the USPTO pursuant to
15 U.S.C. § 1051(b).
“Obligations”
means, collectively, (a) all Indebtedness and other
obligations now owing or hereafter incurred by Borrower to Agent,
the Fronting Lender, the Swing Line Lender or any Lender pursuant
to the Credit Agreement, and includes the principal of and interest
on all Loans and all obligations pursuant to Letters of Credit;
(b) each renewal, extension, consolidation or refinancing of
any of the foregoing, in whole or in part; (c) all interest
from time to time accruing on any of the foregoing, and all fees
and other amounts payable to Agent or any Lender pursuant to the
Credit Agreement or any other Loan Document; (d) all
obligations and liabilities of the Companies owing to Lenders under
Hedge Agreements; (e) the Bank Product Obligations owing to
Lenders under Bank Product Agreements; (f) every other
liability, now or hereafter owing to Agent or any Lender by any
Company or Pledgor pursuant to the Credit Agreement or any other
Loan Document; and (g) all Related Expenses.
“Pledged Notes”
means the promissory notes payable to Pledgor, as described on
Schedule 1 hereto, and any additional or future note with an
unpaid principal amount exceeding One Hundred Thousand Dollars
($100,000) that may hereafter from time to time be payable to
Pledgor.
“Proceeds” means
(a) proceeds, as defined in the U.C.C. and any other proceeds,
and (b) whatever is received upon the sale, exchange,
collection or other disposition of Collateral or proceeds, whether
cash or non-cash. Cash proceeds include, without limitation,
moneys, checks, and Deposit Accounts. Proceeds include, without
limitation, any Account arising when the right to payment is earned
under a contract right, any insurance payable by reason of loss or
damage to the Collateral, and any return or unearned premium upon
any cancellation of insurance. Except as expressly authorized in
this Agreement, the right of Agent and the Lenders to Proceeds
specifically set forth herein, or indicated in any financing
statement, shall never constitute an express or implied
authorization on the part of Agent or any Lender to Pledgor’s
sale, exchange, collection, or other disposition of any or all of
the Collateral.
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“Trademark Act”
shall mean the U.S Trademark Act of 1946, as amended.
“U.C.C.” means
the Uniform Commercial Code, as in effect from time to time in
Ohio.
“U.C.C. Financing
Statement” means a financing statement filed or to be filed
in accordance with the Uniform Commercial Code, as in effect from
time to time in the relevant state or states.
3. Security Interest .
In consideration of and as security for the full and complete
payment of all of the Obligations, Pledgor hereby grants to Agent,
for the benefit of the Lenders, a security interest in and a
collateral assignment of the Collateral. Pledgor, Agent and the
Lenders hereby acknowledge and agree that, with respect to any ITU
Application included within the Collateral, to the extent such an
ITU Application would, under the Trademark Act, be deemed to be
transferred in violation of 15 U.S.C. § 1060(a) as a result of
the security interest granted herein, or otherwise invalidated or
made unenforceable as a result of the execution or performance of
this Agreement, no security interest shall be deemed to have been
granted in such ITU Application (notwithstanding the provisions of
this Agreement or any other Loan Document) until such time as the
circumstances that would give rise to such violation, invalidation
or unenforceability no longer exist.
4. Representations and
Warranties . Pledgor hereby represents and warrants to Agent
and each Lender as follows:
4.1. Pledgor is a corporation
duly organized, validly existing and in good standing under the
laws of its state of incorporation and is duly qualified to do
business in each state in which a failure to so qualify would have
a material adverse effect on Pledgor.
4.2. Pledgor has full power,
authority and legal right to pledge the Collateral, to execute and
deliver this Agreement, and to perform and observe the provisions
hereof. The officers acting on Pledgor’s behalf have been
duly authorized to execute and deliver this Agreement. This
Agreement is valid and binding upon Pledgor in accordance with the
terms hereof.
4.3. Neither the execution
and delivery of this Agreement, nor the performance and observance
of the provisions hereof, by Pledgor will materially conflict with,
or constitute a material violation or default under, any provision
of any applicable law or of any contract (including, without
limitation, Pledgor’s certificate (or articles) of
incorporation and bylaws (or regulations) or of any other writing
binding upon Pledgor in any manner.
4.4. Pledgor is organized
solely under the laws of the State of Arizona and has not continued
existence from any other jurisdiction. Pledgor’s chief
executive office is set forth on Schedule 6.9 to the Credit
Agreement. Pledgor has places of business or maintains Collateral
at the locations set forth on Schedule 6.9 to the Credit
Agreement.
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4.5. At the execution and
delivery hereof, except as permitted pursuant to the Credit
Agreement, (a) there is no effective U.C.C. Financing
Statement outstanding covering the Collateral, or any part thereof;
(b) none of the Collateral is subject to any security interest
or Lien of any kind; (c) the Internal Revenue Service has not
alleged the nonpayment or underpayment of any tax by Pledgor or
threatened to make any assessment in respect thereof; and
(d) upon execution of this Agreement and the filing of the
U.C.C. Financing Statements in connection herewith, Agent will
have, for the benefit of the Lenders, a valid and enforceable first
security interest in the Collateral (to the extent perfection can
be accomplished by such filing or action) that is the type in which
a security interest may be created under the U.C.C. by the
execution of a security agreement and perfected by the filing of a
U.C.C. Financing Statement (other than commercial tort
claims).
4.6. Pledgor has received
consideration that is the reasonably equivalent value of the
obligations and liabilities that Pledgor has incurred to the
Lenders. Pledgor is not insolvent, as defined in any applicable
state or federal statute, nor will Pledgor be rendered insolvent by
the execution and delivery of this Agreement to Agent or any other
documents executed and delivered to Agent or the Lenders in
connection herewith. Pledgor has not engaged, nor is Pledgor about
to engage, in any business or transaction for which the assets
retained by it are or will be an unreasonably small amount of
capital, taking into consideration the obligations to the Lenders
incurred hereunder. Pledgor does not intend to, nor does it believe
that it will, incur debts beyond its ability to pay such debts as
they mature.
4.7. At the execution and
delivery hereof, no Event of Default will exist.
5. Insurance . Pledgor
shall at all times maintain insurance upon the Inventory, Equipment
and other personal and real property in accordance with
Section 5.1 of the Credit Agreement.
6. Taxes and Other Pledgor
Obligations . Pledgor shall pay in full (a) all taxes,
assessments and governmental charges and levies in accordance with
Section 5.2 of the Credit Agreement; (b) all of its wage
obligations to its employees in accordance with Section 5.2 of
the Credit Agreement; (c) all obligations under the Employees
Retirement Income Security Act of 1974, as amended from time to
time, in accordance with Section 5.6 of the Credit Agreement;
and (d) all of Pledgor’s other obligations calling for
the payment of money in accordance with Section 5.2 of the
Credit Agreement.
7. Corporate Names and
Location of Collateral . Pledgor shall not (a) change its
name, or (b) change its jurisdiction or form of organization
or extend or continue its existence in or to any other jurisdiction
(other than its jurisdiction of organization at the date of this
Agreement) except in accordance with Section 5.19 of the
Credit Agreement. Agent is hereby authorized to file new U.C.C.
Financing Statements describing the Collateral and otherwise in
form and substance sufficient for recordation wherever necessary or
appropriate, as determined in Agent’s sole discretion, to
perfect or continue perfected the security interest of Agent, for
the benefit of the Lenders, in the Collateral. Pledgor shall pay
all filing and recording fees and taxes in connection with the
filing or recordation of such U.C.C. Financing Statements and
shall
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immediately reimburse Agent therefor if
Agent pays the same. Such amounts not so paid or reimbursed shall
be Related Expenses.
8. Financial Records .
Pledgor shall forward to Agent, upon request of Agent or any
Lender, whenever made, (a) invoices, sales journals or other
documen
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