Exhibit 10.4
SECURITY AGREEMENT
(Borrower)
This SECURITY
AGREEMENT (as the same may from time to time be amended, restated
or otherwise modified, this “Agreement”) is made as of
the 23 rd day of February, 2009 by
JUPITERMEDIA CORPORATION, a Delaware corporation, to be known as
WebMediaBrands Inc. (“Borrower”), in favor of KEYBANK
NATIONAL ASSOCIATION, as administrative agent for itself and any
other Persons that participate in the Swap Obligations
(“Agent”).
1. Recitals .
WHEREAS, Borrower entered into that
certain Credit and Security Agreement, dated as of July 12,
2007, with the lenders named therein KeyBank National Association,
as the lead arranger, sole book runner and administrative agent
(“Credit Agreement Agent”), and Citizens Bank, N.A., as
the syndication agent (as amended, the “Credit
Agreement”);
WHEREAS, Borrower and KeyBank
National Association, in its own capacity and not as agent for the
lenders (“KeyBank”), entered into that certain hedge
agreement, the terms and conditions of which are governed by that
certain 1992 ISDA Master Agreement between Borrower and KeyBank,
dated as of July 19, 2007 (the “Master
Agreement”), and evidenced by that certain Confirmation
between Borrower and KeyBank, dated as of July 19, 2007,
executed in accordance with the Master Agreement (collectively, the
“Swap Agreement”);
WHEREAS, on the date hereof,
Borrower is terminating the Commitment under the Credit Agreement,
pursuant to the terms of that certain Payoff Letter, dated as of
February 23, 2009, from Credit Agreement Agent, and
acknowledged and agreed to by Borrower;
WHEREAS, notwithstanding the
termination of the Credit Agreement, the obligations under the Swap
Agreement (together with any other obligations owing to KeyBank
under the Master Agreement, collectively, the “Swap
Obligations”) that are currently secured pursuant to the
Credit Agreement (and certain other security documents executed in
connection therewith, including the Pledge Agreement) will be
permitted to remain outstanding after the termination of the Credit
Agreement;
WHEREAS, Borrower deems it to be in
its direct pecuniary and business interests that Borrower continue
to obtain the financial accommodations provided for in the Swap
Agreement; and
WHEREAS, Borrower understands that
Agent is willing to continue to grant such financial accommodations
only upon certain terms and conditions, one of which is that
Borrower continue to grant to Agent a security interest in and
collateral assignment of the Collateral, as hereinafter defined,
and this Agreement is being executed and delivered in consideration
of
Agent continuing to grant the financial
accommodations provided for under the Swap Agreement and for other
valuable consideration;
NOW, THEREFORE, in consideration of
the premises and of the mutual covenants herein and for other
valuable consideration, Borrower and Agent agree as
follows:
2. Definitions . Except as
specifically defined herein, 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
Borrower’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.
“Business Day” means any
day that is not a Saturday, a Sunday or another day of the year on
which national banks are authorized or required to close in
Cleveland, Ohio or New York, New York.
“Cash Collateral
Account” means a commercial Deposit Account designated
“cash collateral account” and maintained by Borrower
with Agent, without liability by Agent to pay interest 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 Borrower 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.
“Collateral” means all
of Borrower’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, in an amount not to exceed Two Million Dollars
($2,000,000), 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, (B) any
indirect Foreign Subsidiary, (C)
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Japan.internet.com K.K., and
(D) Jupitermedia GmbH so long as (1) Jupitermedia
GmbH is dissolved on or prior to June 30, 2009,
(2) Jupitermedia GmbH has aggregate assets of less than
Two Hundred Fifty Thousand Dollars ($250,000), and
(3) Jupitermedia GmbH has no direct or indirect Subsidiaries
with aggregate assets for all such Subsidiaries of more than Two
Hundred Fifty Thousand Dollars ($250,000), 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.
“Companies” means
Borrower and all Subsidiaries of Borrower.
“Company” means Borrower
or a Subsidiary of Borrower.
“Default Rate” means the
Default Rate, as defined in the Swap Agreement.
“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
Borrower’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 16.1 hereof.
“Foreign Subsidiary”
means a Subsidiary of Borrower that is organized under the laws of
any jurisdiction other than the United States, any State thereof or
the District of Columbia.
“General Intangibles”
means all of Borrower’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, registrations, trade names,
trademarks, copyrights, licenses, goodwill, computer software,
rights to indemnification and tax refunds.
“Governmental Authority”
means any nation or government, any state, province or territory or
other political subdivision thereof, any governmental agency,
department, authority, instrumentality, regulatory body, court,
central bank or other governmental entity exercising executive,
legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, any securities exchange
and any self-regulatory organization exercising such
functions.
“Immaterial Deposit
Account” means a Deposit Account maintained by Borrower or
Mediabistro.com Inc., a Delaware corporation
(“Mediabistro”) that at all times, has a balance of
less than One Hundred Thousand Dollars ($100,000); provided that
the Immaterial Deposit
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Accounts of Borrower and Mediabistro shall not,
at any time, aggregate in excess of One Hundred Thousand Dollars
($100,000).
“Inventory” means all of
Borrower’s inventory, as defined in the U.C.C.
“Investment Property”
means all of Borrower’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).
“KeyBank” means KeyBank
National Association, a national banking association, and its
successors and assigns.
“Lien” means any
mortgage, deed of trust, security interest, lien (statutory or
other), charge, assignment, hypothecation, encumbrance on, pledge
or deposit of, or conditional sale, leasing (other than operating
leases), sale with a right of redemption or other title retention
agreement and any capitalized lease with respect to any property
(real or personal) or asset.
“Loan Documents” means,
collectively, this Agreement, the Swap Agreement, any documents
executed in connection with the Swap Agreement, and any documents
that secure the Swap Agreement, and any document executed by
Borrower in connection with obligations that are secured by the
security interest granted under this Agreement; as any of the
foregoing may from time to time be amended, restated or otherwise
modified or replaced, and any other document delivered pursuant
thereto.
“Obligations” means,
collectively, (a) all present and future obligations and
liabilities of any kind incurred by Borrower pursuant to the Swap
Agreement, including all Transactions, as defined in the Swap
Agreement, entered into thereunder and all termination values,
expenses and damages payable in accordance with the terms thereof;
(b) interest from time to time accruing on any of the
foregoing, and all fees and other amounts payable by Borrower
pursuant to the Swap Agreement or any other Loan Document; and
(c) all Related Expenses.
“Person” means any
individual, sole proprietorship, partnership, joint venture,
unincorporated organization, corporation, limited liability
company, unlimited liability company, institution, trust, estate,
Governmental Authority or any other entity.
“Pledged Notes” means
the promissory notes payable to Borrower, as described on
Schedule 1 hereto, if any, 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 Borrower.
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“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 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
to a Company’s sale, exchange, collection or other
disposition of any or all of the Collateral.
“Related Expenses” means
any and all costs, liabilities and expenses (including, without
limitation, losses, damages, penalties, claims, actions,
attorneys’ fees, legal expenses, judgments, suits and
disbursements) (a) incurred by Agent, or imposed upon or
asserted against Agent, in any attempt by Agent to (i) enforce
this Agreement, the Swap Agreement or any Related Writing, or to
obtain, preserve or perfect any security interest evidenced by this
Agreement, the Swap Agreement or any Related Writing;
(ii) obtain payment, performance or observance of any and all
of the Obligations; or (iii) maintain, insure, audit, collect,
preserve, repossess or dispose of any of the collateral securing
the Obligations or any part thereof, including, without limitation,
costs and expenses for appraisals, assessments and audits of any
Company or any such collateral; or (b) incidental or related
to (a) above, including, without limitation, interest
thereupon from the date incurred, imposed or asserted until paid at
the Default Rate.
“Related Writing” means
each Loan Document and any other assignment, mortgage, security
agreement, guaranty agreement, subordination agreement, financial
statement, audit report or other writing furnished by Borrower, any
guarantor of payment or any mortgagor, or any officers or agents of
any of the foregoing, to Agent pursuant to or otherwise in
connection with the Obligations.
“Subsidiary” means
(a) a corporation more than fifty percent (50%) of the
Voting Power of which is owned, directly or indirectly, by Borrower
or by one or more other subsidiaries of Borrower or by Borrower and
one or more subsidiaries of Borrower, (b) a partnership,
limited liability company or unlimited liability company of which
Borrower, one or more other subsidiaries of Borrower or Borrower
and one or more subsidiaries of Borrower, directly or indirectly,
is a general partner or managing member, as the case may be, or
otherwise has an ownership interest greater than fifty percent
(50%) of all of the ownership interests in such partnership,
limited liability company or unlimited liability company, or
(c) any other Person (other than a corporation, partnership,
limited liability company or unlimited liability company) in which
Borrower, one or more other subsidiaries of Borrower or Borrower
and one or more subsidiaries of Borrower, directly or indirectly,
has at least a majority interest in the Voting Power or the power
to elect or direct the election of a majority of directors or other
governing body of such Person.
“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.
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“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.
“Voting Power” means,
with respect to any Person, the exclusive ability to control,
through the ownership of shares of capital stock, partnership
interests, membership interests or otherwise, the election of
members of the board of directors or other similar governing body
of such Person. The holding of a designated percentage of Voting
Power of a Person means the ownership of shares of capital stock,
partnership interests, membership interests or other interests of
such Person sufficient to control exclusively the election of that
percentage of the members of the board of directors or similar
governing body of such Person.
3. Security Interest . In
consideration of and as security for the full and complete payment
of all of the Obligations, Borrower hereby grants to Agent a
security interest in the Collateral. Borrower and Agent 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 . Borrower hereby represents and warrants to Agent
as follows:
4.1. Borrower 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 Borrower.
4.2. Borrower 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 Borrower’s behalf have been
duly authorized to execute and deliver this Agreement. This
Agreement is valid and binding upon Borrower 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 Borrower 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, Borrower’s articles of incorporation and bylaws
or code of regulations or of any other writing binding upon
Borrower in any manner.
4.4. Borrower is organized solely
under the laws of the State of Delaware and has not continued
existence from any other jurisdiction. Borrower has not changed its
name during the
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last five years. Borrower’s chief
executive office is set forth on Schedule 4.4 hereto.
Borrower has places of business or maintains Collateral at the
locations set forth on Schedule 4.4 hereto.
4.5. Except with respect to the
security interests previously granted to Agent, and except as set
forth on Schedule 2 hereto, (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 Borrower or threatened to make any assessment in respect
thereof; and (d) Agent has a valid and enforceable first
security interest in the Collateral (to the extent perfection can
be accomplished by the filing of a U.C.C. Financing Statement) 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. Borrower has received
consideration that is the reasonably equivalent value of the
obligations and liabilities that Borrower has incurred to Agent.
Borrower is not insolvent, as defined in any applicable state or
federal statute, nor will Borrower be rendered insolvent by the
execution and delivery of this Agreement to Agent or any other
documents executed and delivered to Agent in connection herewith.
Borrower has not engaged, nor is Borrower 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 Agent incurred hereunder. Borrower
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.
4.8. Jupitermedia GmbH (a) has
aggregate assets of less than Two Hundred Fifty Thousand Dollars
($250,000), and (b) has no direct or indirect Subsidiaries
with aggregate assets for all such Subsidiaries of more than Two
Hundred Fifty Thousand Dollars ($250,000). Borrower intends to
dissolve Jupitermedia GmbH on or before June 30,
2009.
5. Insurance . Borrower shall
at all times maintain insurance upon its Inventory, Equipment and
other personal and real property with financially sound and
reputable insurance companies in at least such amounts and against
at least such risks as are generally insured against in the same
general area by companies engaged in the same or similar business,
with provisions reasonably satisfactory to Agent for payment of all
casualty losses thereunder to Agent and Borrower as their interests
may appear (loss payable endorsement in favor of Agent), and, if
required by Agent, Borrower shall deposit the policies with Agent.
Any such policies of insurance shall provide for no fewer than
thirty (30) days prior written notice of cancellation to
Agent. Any sums received by Agent in payment of insurance losses,
transfers or takings under the policies, where the sums received
from such loss, transfer or taking are in excess of One Million
Dollars ($1,000,000) (“Insurance Funds”), shall be held
by Agent, in an account at KeyBank in Borrower’s name (the
“Insurance Account”), as security for the Obligations;
provided that, if, within sixty (60) days after any casualty
loss covered by insurance, Borrower notifies Agent that Borrower
intends to replace, rebuild or restore the affected property, then
Agent shall release such Insurance Funds to Borrower for the
purpose of replacing, rebuilding or
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restoring the affected property. If such
replacement rebuilding or restoration is not (a) commenced
within six months of the date of the casualt
