Exhibit 10.6
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 29 th day of May, 2009 by
MEDIABISTRO.COM, INC., a Delaware corporation,
(“Borrower”), in favor of ALAN M. MECKLER, a New York
resident (“Lender”).
1. Recitals .
WHEREAS, Lender has
made a loan (the “Loan”) to the Borrower and
WebMediaBrands Inc. as evidenced by a Promissory Note of even date
herewith (the “Note”) from Borrower and WebMediaBrands
Inc. to Lender in the original principal amount of Seven Million
One Hundred Ninety Seven Thousand One Hundred Forty Three
and 21
/
100
Dollars
($7,197,143.21);
WHEREAS, Borrower deems it to be in
its direct pecuniary and business interests that Borrower to obtain
the Loan from the Lender; and
WHEREAS, Borrower understands that
Lender is willing to make the Loan to Borrower only upon certain
terms and conditions, one of which is that Borrower grant to Lender
a security interest in and an assignment of the Collateral, as
hereinafter defined, and this Agreement is being executed and
delivered in consideration of the Loan 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 Lender 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 New
York, New York.
“Cash Collateral
Account” means a commercial Deposit Account designated
“cash collateral account” and maintained by Borrower
with a financial institution designated by Lender, from which
account Lender 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 Lender.
“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) Cash
Security; and (d) Proceeds of any of the foregoing.
“Companies” means
Borrower and all Subsidiaries of Borrower.
“Company” means Borrower
or a Subsidiary of Borrower.
“Default Rate” means the
interest rate applicable after any Event of Default (as defined in
the Note) under the Note.
“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.
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“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 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).
“Lender” means Alan M.
Meckler, a New York resident.
“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 Note, any documents executed in
connection with the Note, and any documents that secure the Note,
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 indebtedness and other obligations now
owing or hereafter incurred by Borrower under the Note and the
other Loan Documents, and includes the principal of and interest on
the Loan; (b) each renewal, extension, consolidation or
refinancing of the Note, in whole or in part; (c) the
Accommodation Fee and all fees and other amounts payable to Lender
pursuant to the Note or any other Loan Document; and (d) 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.
3
“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.
“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 Lender to Proceeds specifically set
forth herein or indicated in any financing statement shall never
constitute an express or implied authorization on the part of
Lender 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, reasonable
attorneys’ fees, legal expenses, judgments, suits and
disbursements) (a) incurred by Lender, or imposed upon or
asserted against Lender, in any attempt by Lender to
(i) enforce this Agreement, the Note or any Related Writing,
any Loan Document, or to obtain, preserve or perfect any security
interest evidenced by this Agreement, the Note, any Loan Document,
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 Lender 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.
4
“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 New
York.
“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 Lender a
security interest in and an assignment of the Collateral as
security for the Obligations. Borrower and Lender 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 Lender
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.
5
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 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 KeyBank to be terminated
on the date hereof, 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) Lender 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 Lender.
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 Lender or any other
documents executed and delivered to Lender 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 Lender 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. [Intentionally
omitted]
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 Lender for payment of
all casualty losses thereunder to Lender and Borrower as their
interests may appear (loss payable endorsement in favor of Lender),
and, if required by Lender, Borrower shall deposit the policies
with Lender. Any such policies of insurance shall provide for no
fewer than thirty (30) days prior written notice of
cancellation to Lender. Any sums received by Lender 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 Five
6
Hundred Thousand Dollars ($500,000.00
(“Insurance Funds”), shall be held by Lender, (the
“Insurance Account”), as security for the Obligations;
provided that, if, within sixty (60) days after any casualty
loss covered by insurance, Borrower notifies Lender that Borrower
intends to replace, rebuild or restore the affected property, then
Lender shall release such Insurance Funds to Borrower for the
purpose of replacing, rebuilding or restoring the affected
property. If such replacement rebuilding or restoration is not
(a) commenced within six months of the date of the casualty
loss with respect thereto, or (b) substantially completed
within twelve (12) months of such commencement date (or such
longer period of time necessary to complete the work with
reasonable diligence, if approved by Lender in writing, in its
reasonable discretion), Borrower shall immediately deposit such
Insurance Funds into the Insurance Account. In addition, any
amounts of such Insurance Funds not applied to the costs of the
replacement or restoration of the affected property shall be
immediately deposited in the Insurance Account upon the completion
of such replacement or restoration. Lender is hereby authorized to
act as attorney-in-fact for Borrower, from and during the
continuance of an Event of Default, in obtaining, adjusting,
settling and canceling such insurance and indorsing any drafts. In
the event of failure to provide such insurance as herein provided,
Lender may, at its option, provide such insurance and Borrower
shall pay to Lender, upon demand, the cost thereof. Should Borrower
fail to pay such sum to Lender upon demand, interest shall accrue
thereon, from the date of demand until paid in full, at the Default
Rate. Within ten (10) days of Lender’s written request,
Borrower shall furnish to Lender such information about
Borrower’s insurance as Lender may from time to time
reasonably request, which information shall be prepared in form and
detail satisfactory to Lender and certified by a Financial Officer
of Borrower.
6. Taxes and Other Borrower
Obligations . Borrower shall pay in full (a) prior in each
case to the date when penalties would attach, all taxes,
assessments and governmental charges and levies (except only those
so long as and to the extent that the same shall be contested in
good faith by appropriate and timely proceedings and for which
adequate reserves have been established in accordance with
generally accepted accounting principles) for which Borrower may be
or become liable or to which any or all of Borrower’s
properties may be or become subject; (b) all of
Borrower’s wage obligations to Borrower’s employees in
compliance with the Fair Labor Standards Act (29 U.S.C. 206-207) or
any comparable provisions; and (c) all of Borrower’s
material obligations calling for the payment of money (except only
those so long as and to the extent that the same shall be contested
in good faith and for which adequate reserves have been established
in accordance with generally accepted accounting principles) before
such payment becomes overdue.
7. Corporate Names and Location
of Collateral . Borrower 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) unless, in each case, Borrower shall provide Lender with
at least ten (10) days prior written notice thereof. Lender 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 Lender’s sole discretion, to perfect or
continue perfected the security interest of Lender in the
Collateral. Borrower 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 immediately reimburse Lender
therefor if Lender pays the same. Such amounts not so paid or
reimbursed shall be Related Expenses.
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8. Notice . Borrower shall
give Lender prompt written notice if any Event of Default shall
occur hereunder or if the Internal Revenue Service shall allege the
nonpayment or underpayment of any tax by Borrower or threaten to
make any assessment in respect thereof.
9. Financial Records .
Borrower shall (a) maintain at all times true and complete
financial records and books of accounts in accordance with
generally accepted accounting principles consistently applied and,
without limiting the generality of the foregoing, prepare authentic
invoices for all of the Accounts; (b) render to Lender,
forthwith upon each request of Lender, such financial statements of
Borrower’s financial condition and operations, including but
not limited to Borrower’s tax returns, and such reports of
the Accounts, as Lender may from time to time request;
(c) give Lender prompt written notice whenever any Account
Debtor shall become in default in any manner or assert any defense
or offset and whenever any other event, omission, condition or
thing h
