EXHIBIT 10.5
TRADEMARK SECURITY AGREEMENT
THIS TRADEMARK SECURITY AGREEMENT ("Agreement"), dated October 25, 2005,
is by US LEC CORP., a Delaware corporation ("Debtor"), with its principal office
at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, to and in favor of
WACHOVIA BANK, NATIONAL ASSOCIATION, a National Banking Association ("Secured
Party"), having an office at 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000-0000,
pursuant to the Loan Agreement (as hereinafter defined).
W I T N E S S E T H :
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WHEREAS, except as set forth on the attached Exhibit A, Debtor has
adopted, used and is using, and is the owner of the entire right, title, and
interest in and to the trademarks, trade names, terms, designs and applications
therefor described in Exhibit A hereto and made a part hereof;
WHEREAS, Debtor, certain affiliates of Debtor (together with Debtor, each
individually a "Borrower" and, collectively, "Borrowers") and Secured Party have
entered into or are about to enter into financing arrangements pursuant to which
Secured Party may make loans and advances and provide other financial
accommodations to Debtor as set forth in the Loan and Security Agreement, dated
of even date herewith, by and among Debtor, certain affiliates of Debtor and
Secured Party (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the "Loan Agreement") and
other agreements, documents and instruments referred to therein or at any time
executed and/or delivered in connection therewith or related thereto, including,
but not limited to, this Agreement (all of the foregoing, together with the Loan
Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Financing Agreements"); and
WHEREAS, in order to induce Secured Party to enter into the Loan Agreement
and the other Financing Agreements and to make loans and advances and provide
other financial accommodations to Borrowers pursuant thereto, Debtor has agreed
to grant to Secured Party certain collateral security as set forth herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor hereby agrees as follows:
1. GRANT OF SECURITY INTEREST. As collateral security for the prompt
performance, observance and indefeasible payment in full of all of the
Obligations (as hereinafter defined), Debtor hereby grants to Secured Party a
continuing security interest in and a general lien upon, the following (being
collectively referred to herein as the "Collateral"): (a) all of Debtor's now
existing or hereafter acquired right, title, and interest in and to: (i) all of
Debtor's
trademarks, trade names, trade styles and service marks and all applications,
registrations and recordings relating to the foregoing as may at any time be
filed in the United States Patent and Trademark Office or in any similar office
or agency of the United States, any State thereof, any political subdivision
thereof or in any other country, including, without limitation, the trademarks,
terms, designs and applications described in Exhibit A hereto, together with all
rights and privileges arising under applicable law with respect to Debtor's use
of any trademarks, trade names, trade styles and service marks, and all and
renewals thereof (all of the foregoing being collectively referred to herein as
the "Trademarks"); and (ii) all prints and labels on which such trademarks,
trade names, trade styles and service marks appear, have appeared or will
appear, and all designs and general intangibles of a like nature; (b) the
goodwill of the business symbolized by each of the Trademarks, including,
without limitation, all customer lists and other records relating to the
distribution of products or services bearing the Trademarks; (c) all income,
fees, royalties and other payments at any time due or payable with respect
thereto, including, without limitation, payments under all licenses at any time
entered into in connection therewith; (d) the right to xxx for past, present and
future infringements thereof; (e) all rights corresponding thereto, if any,
throughout the world; and (f) any and all other proceeds of any of the
foregoing, including, without limitation, damages and payments or claims by
Debtor against third parties for past or future infringement of the Trademarks.
2. OBLIGATIONS SECURED The security interest, lien and other interests
granted to Secured Party pursuant to this Agreement shall secure the prompt
performance, observance and payment in full of any and all of the Obligations,
as such term is defined in the Loan Agreement.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS Debtor hereby represents,
warrants and covenants with and to Secured Party the following (all of such
representations, warranties and covenants being continuing so long as any of the
Obligations are outstanding):
(a) Debtor shall pay and perform all of the Obligations according to
their terms.
(b) Except as set forth on the attached Exhibit A, all of the existing
Collateral is valid and subsisting in full force and effect, and to the best of
Debtor's knowledge, Debtor owns the sole, full and clear title thereto, and the
right and power to grant the security interest granted hereunder. Debtor shall,
at Debtor's expense, perform all acts and execute all documents necessary to
maintain the existence of the Collateral consisting of registered Trademarks as
registered trademarks and, except as set forth on the attached Exhibit A and
permitted in clause (i) below, to maintain the existence of all of the
Collateral as valid and subsisting, including, without limitation, the filing of
any renewal affidavits and applications. The Collateral is not subject to any
liens, claims, mortgages, assignments, licenses, security interests or
encumbrances of any nature whatsoever, except: (i) the security interests
granted hereunder and pursuant to the Loan Agreement, (ii) the security
interests permitted under the Loan Agreement, and (iii) the licenses permitted
under Section 3(e) below.
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(c) Debtor shall not assign, sell, mortgage, lease, transfer, pledge,
hypothecate, grant a security interest in or lien upon, encumber, grant an
exclusive or non-exclusive license relating to the Collateral, or otherwise
dispose of any of the Collateral, in each case without the prior written consent
of Secured Party, except as otherwise permitted herein or in the Loan Agreement.
Nothing in this Agreement shall be deemed a consent by Secured Party to any such
action, except as such action is expressly permitted hereunder.
(d) Debtor shall, at Debtor's expense, promptly perform all acts and
execute all documents requested in good faith at any time by Secured Party to
evidence, perfect, maintain, record or enforce the security interest in the
Collateral granted hereunder or to otherwise further the provisions of this
Agreement. Debtor hereby authorizes Secured Party to execute and file one or
more financing statements (or similar documents) with respect to the Collateral,
signed only by Secured Party or as otherwise determined by Secured Party. Debtor
further authorizes Secured Party to have this Agreement or any other similar
security agreement filed with the Commissioner of Patents and Trademarks or any
other appropriate federal, state or government office.
(e) As of the date hereof, Debtor does not have any Trademarks
registered, or subject to pending applications, in the United States Patent and
Trademark Office or any similar office or agency in the United States, any State
thereof, any political subdivision thereof or in any other country, other than
those described in Exhibit A hereto and has not granted any licenses with
respect thereto other than as set forth in Exhibit B hereto.
(f) Debtor shall, concurrently with the execution and delivery of this
Agreement, execute and deliver to Secured Party five (5) originals of a Special
Power of Attorney in the form of Exhibit C annexed hereto for the implementation
of the assignment, sale or other disposition of the Collateral pursuant to
Secured Party's exercise of the rights and remedies granted to Secured Party
hereunder.
(g) Secured Party may, in its discretion, pay any amount or do any act
which Debtor fails to pay or do as required hereunder or as requested by Secured
Party to preserve, defend, protect, maintain, record or enforce the Obligations,
the Collateral, or the security interest granted hereunder, including, but not
limited to, all filing or recording fees, court costs, collection charges,
reasonable attorneys' fees and legal expenses. Debtor shall be liable to Secured
Party for any such payment, which payment shall be deemed an advance by Secured
Party to Borrower, shall be payable on demand together with interest at the rate
then applicable to the Obligations set forth in the Loan Agreement and shall be
part of the Obligations secured hereby.
(h) In the event Debtor shall file any application for the registration
of a Trademark with the United States Patent and Trademark Office or any similar
office or agency in the United States, any State thereof, any political
subdivision thereof or in any other country, Debtor shall provide Secured Party
with written notice of such action as soon as practicable but in no event later
than 30 days after such action. If, after the date hereof, Debtor shall (i)
obtain
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any registered trademark or trade name, or apply for any such registration in
the United States Patent and Trademark Office or in any similar office or agency
in the United States, any State thereof, any political subdivision thereof or in
any other country, or (ii) become the owner of any trademark registrations or
applications for trademark registration used in the United States, any State
thereof, any political subdivision thereof or in any other country, the
provisions of Section 1 hereof shall automatically apply thereto. Upon the
request of Secured Party, Debtor shall promptly execute and deliver to Secured
Party any and all agreements, instruments, documents and such other papers as
may be requested by Secured Party to evidence the security interest in such
Trademark in favor of Secured Party.
(i) Debtor has not abandoned any of the Trademarks and Debtor will not
do any act, nor omit to do any act, whereby the Trademarks may become abandoned,
invalidated, unenforceable, avoided, or avoidable; provided, that, Debtor may,
after written notice to Secured Party, abandon, cancel, not renew or otherwise
not maintain a Trademark so long as (i) such Trademark is no longer used or
useful in the business of Debtor or any of its affiliates or subsidiaries, (ii)
such Trademark has not been used in the business of Debtor or any of its
affiliates or subsidiaries for a period of six (6) consecutive months, (iii)
such Trademark is not otherwise material to the business of Debtor or any of its
affiliates or subsidiaries in any respect, (iv) such Trademark has little or no
value, and (v) no Event of Default (as hereinafter defined) shall exist or have
occurred and be continuing as of such time. Debtor shall promptly notify Secured
Party if it knows or has reason to know of any reason why any application,
registration, or recording with respect to the Trademarks may become abandoned,
canceled, invalidated, avoided, or avoidable.
(j) Debtor shall render any assistance, as Secured Party shall
determine is necessary, to Secured Party in any proceeding before the United
States Patent and Trademark Office, any federal or state court, or any similar
office or agency in the United States, any State thereof, any political
subdivision thereof or in any other country, to maintain such application and
registration of the Trademarks as Debtor's exclusive property and to protect
Secured Party's interest therein, including, without limitation, filing of
renewals, affidavits of use, affidavits of incontestability and opposition,
interference, and cancellation proceedings.
(k) To the best of Debtor's knowledge, no material infringement or
unauthorized use presently is being made of any of the Trademarks that would
adversely affect in any material respect the fair market value of the Collateral
or the benefits of this Agreement granted to Secured Party, including, without
limitation, the validity, priority or perfection of the security interest
granted herein or the remedies of Secured Party hereunder. Debtor shall promptly
notify Secured Party if Debtor (or any affiliate or subsidiary thereof) learns
of any use by any person of any term or design which infringes on any Trademark
or is likely to cause confusion with any Trademark. If requested by Secured
Party, Debtor, at Debtor's expense, shall join with Secured Party in such action
as Secured Party, in Secured Party's discretion, may deem advisable for the
protection of Secured Party's interest in and to the Trademarks.
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(l) Debtor assumes all responsibility and liability arising from
Debtor's use of the Trademarks and Debtor hereby indemnifies and holds Secured
Party harmless from and against any claim, suit, loss, damage, or expense
(including reasonable attorneys' fees and legal expenses) arising out of any
alleged defect in any product manufactured, promoted, or sold by Debtor (or any
affiliate or subsidiary thereof) in connection with any Trademark or out of the
manufacture, promotion, labeling, sale or advertisement of any such product by
Debtor (or any affiliate or subsidiary thereof). The foregoing indemnity shall
survive the payment of the Obligations, the termination of this Agreement and
the termination or non-renewal of the Loan Agreement.
4. EVENTS OF DEFAULT The occurrence or existence of any Event of Default
under the Loan Agreement is referred to herein individually as an "Event of
Default" and collectively as "Events of Default".
5. RIGHTS AND REMEDIES At any time an Event of Default exists or has
occurred and is continuing, and after notice to Pledgor, in addition to all
other rights and remedies of Secured Party, whether provided under this
Agreement, the Loan Agreement, the other Financing Agreements, applicable law or
otherwise, Secured Party shall have the following rights and remedies which may
be exercised without notice to, or consent by, Debtor except as such notice or
consent is expressly provided for hereunder:
(a) Secured Party may require that neither Debtor nor any affiliate or
subsidiary of Debtor make any use of the Trademarks or any marks similar thereto
for any purpose whatsoever. Secured Party may make use of any Trademarks for the
sale of goods, completion of work-in-process or rendering of services or
otherwise in connection with enforcing any other security interest granted to
Secured Party by Debtor or any subsidiary or affiliate of Debtor or for such
other reason as Secured Party may determine.
(b) Secured Party may grant such license or licenses relating to the
Collateral for such term or terms, on such conditions, and in such manner, as
Secured Party shall in its discretion deem appropriate. Such license or licenses
may be general, special or otherwise, and may be granted on an exclusive or
non-exclusive basis throughout all or any part of the United States of America,
its territories and possessions, and all foreign countries.
(c) Secured Party may assign, sell or otherwise dispose of the
Collateral or any part thereof, either with or without special conditions or
stipulations except that if notice to Debtor of intended disposition of
Collateral is required by law, the giving of ten (10) days prior written notice
to Debtor of any proposed disposition shall be deemed reasonable notice thereof
and Debtor waives any other notice with respect thereto. Secured Party shall
have the power to buy the Collateral or any part thereof, and Secured Party
shall also have the power to execute assurances and perform all other acts which
Secured Party may, in its discretion, deem appropriate or proper to complete
such assignment, sale, or disposition. In any such event, Debtor shall be liable
for any deficiency.
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(d) In addition to the foregoing, in order to implement the assignment,
sale, or other disposition of any of the Collateral pursuant to the terms
hereof, Secured Party may at any time execute and deliver on behalf of Debtor,
pursuant to the authority granted in the Powers of Attorney described in Section
3(f) hereof, one or more instruments of assignment of the Trademarks (or any
application, registration, or recording relating thereto), in form suitable for
filing, recording, or registration. Debtor agrees to pay Secured Party on demand
all costs incurred in any such transfer of the Collateral, including, but not
limited to, any taxes, fees, and reasonable attorneys' fees and legal expenses.
Debtor agrees that Secured Party has no obligation to preserve rights to the
Trademarks against any other parties.
(e) Secured Party may first apply the proceeds actually received from
any such license, assignment, sale or other disposition of any of the Collateral
to the costs and expenses thereof, including, without limitation, reasonable
attorneys' fees and all reasonable legal, travel and other reasonable expenses
which may be incurred by Secured Party. Thereafter, Secured Party may apply any
remaining proceeds to such of the Obligations as Secured Party may in its
discretion determine. Debtor shall remain liable to Secured Party for any of the
Obligations remaining unpaid after the application of such proceeds, and Debtor
shall pay Secured Party on demand any such unpaid amount, together with interest
at the rate then applicable to the Obligations set forth in the Loan Agreement.
(f) Debtor shall supply to Secured Party or to Secured Party's
designee, Debtor's knowledge and expertise relating to the manufacture, sale and
distribution of the products and services bearing the Trademarks and Debtor's
customer lists and other records relating to the Trademarks and the distribution
thereof.
(g) Nothing contained herein shall be construed as requiring Secured
Party to take any such action at any time. All of Secured Party's rights and
remedies, whether provided under this Agreement, the other Financing Agreements,
applicable law, or otherwise, shall be cumulative and none is exclusive. Such
rights and remedies may be enforced alternatively, successively, or
concurrently.
6. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
(a) The validity, interpretation and enforcement of this Agreement and
the other Financing Agreements and any dispute arising out of the relationship
between the parties hereto, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of North Carolina without
regard to principals of conflicts of laws, but excluding any rule of law that
would cause the application of the law of any jurisdiction other that the laws
of the State of North Carolina.
(b) Debtor and Secured Party irrevocably consent and submit to the
non-exclusive jurisdiction of the Superior Court of North Carolina, Mecklenburg
County and United States District Court for the Western District of North
Carolina and waive any objection based on venue or forum non conveniens with
respect to any action instituted therein arising under this
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Agreement or any of the other Financing Agreements or in any way connected or
related or incidental to the dealings of Debtor and Secured Party in respect of
this Agreement or the other Financing Agreements or the transactions related
hereto or thereto, in each case whether now existing or thereafter arising, and
whether in contract, tort, equity or otherwise, and agree that any dispute with
respect to any such matters shall be heard only in the courts described above
(except that Secured Party shall have the right to bring any action or
proceeding against Debtor or its property in the courts of any other
jurisdiction which Secured Party deems necessary or appropriate in order to
realize on the Collateral or to otherwise enforce its rights against Debtor or
its property).
(c) Debtor hereby waives personal service of any and all process upon
it and consents that all such service of process may be made by certified mail
(return receipt requested) directed to its address set forth herein and service
so made shall be deemed to be completed five (5) days after the same shall have
been so deposited in the U.S. mails, or, at Secured Party's option, by service
upon Debtor in any other manner provided under the rules of any such courts.
Within thirty (30) days after such service, Debtor shall appear in answer to
such process, failing which Debtor shall be deemed in default and judgment may
be entered by Secured Party against Debtor for the amount of the claim and other
relief requested.
(d) DEBTOR AND SECURED PARTY EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF DEBTOR AND SECURED PARTY IN
RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. DEBTOR
AND SECURED PARTY EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT DEBTOR OR SECURED PARTY MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF DEBTOR AND
SECURED PARTY TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Secured Party shall not have any liability to Debtor (whether in
tort, contract, equity or otherwise) for losses suffered by Debtor in connection
with, arising out of, or in any way related to the transactions or relationships
contemplated by this Agreement, or any act, omission or event occurring in
connection herewith, unless it is determined by a final and non-appealable
judgment or court order binding on Secured Party that the losses were the result
of acts or omissions constituting gross negligence or willful misconduct. In any
such litigation, Secured Party shall be entitled to the benefit of the
rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement and the
other Financing Agreements.
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7. MISCELLANEOUS
(a) All notices, requests and demands hereunder shall be in writing and
deemed to have been given or made: if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next business day, one (1)
business day after sending; and if by certified mail, return receipt requested,
five (5) days after mailing. All notices, requests and demands upon the parties
are to be given to the following addresses (or to such other address as any
party may designate by notice in accordance with this Section):
If to Debtor: US LEC Corp.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.:(000) 000-0000
If to Secured Party: Wachovia Bank, National Association
000 Xxxxx Xxxxxxx Xxxxxx
XX 0479, 00xx Xxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(b) All references to the plural herein shall also mean the singular
and to the singular shall also mean the plural. All references to Debtor and
Secured Party pursuant to the definitions set forth in the recitals hereto, or
to any other person herein, shall include their respective successors and
assigns. The words "hereof," "herein," "hereunder," "this Agreement" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not any particular provision of this Agreement and as this Agreement
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced. An Event of Default shall exist or continue or be
continuing until such Event of Default is waived in accordance with Section 7(e)
hereof. All references to the term "Person" or "person" herein shall mean any
individual, sole proprietorship, partnership, corporation (including, without
limitation, any corporation which elects subchapter S status under the Internal
Revenue Code of 1986, as amended), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock company,
trust, joint venture or other entity or any government or any agency or
instrumentality or political subdivision thereof.
(c) This Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon Debtor and its
successors and assigns and inure to the benefit of and be enforceable by Secured
Party and its respective successors and assigns.
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(d) If any provision of this Agreement is held to be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate this
Agreement as a whole, but this Agreement shall be construed as though it did not
contain the particular provision held to be invalid or unenforceable and the
rights and obligations of the parties shall be construed and enforced only to
such extent as shall be permitted by applicable law.
(e) Neither this Agreement nor any provision hereof shall be amended,
modified, waived or discharged orally or by course of conduct, but only by a
written agreement signed by an authorized officer of Secured Party. Secured
Party shall not, by any act, delay, omission or otherwise be deemed to have
expressly or impliedly waived any of its rights, powers and/or remedies unless
such waiver shall be in writing and signed by an authorized officer of Secured
Party. Any such waiver shall be enforceable only to the extent specifically set
forth therein. A waiver by Secured Party of any right, power and/or remedy on
any one occasion shall not be construed as a bar to or waiver of any such right,
power and/or remedy which Secured Party would otherwise have on any future
occasion, whether similar in kind or otherwise.
(i) This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which taken together shall constitute
one and the same agreement. Delivery of an executed counterpart of this
Agreement by telefacsimile shall have the same force and effect as the delivery
of an original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile shall also deliver an
original executed counterpart, but the failure to do so shall not affect the
validity, enforceability or binding effect of this Agreement.
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IN WITNESS WHEREOF, Debtor and Secured Party have executed this Agreement
as of the day and year first above written.
US LEC CORP.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Title: Vice President
-----------------------------
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxx Xxxx
--------------------------------
Title: Vice President
-----------------------------
STATE OF NC )
) ss.:
COUNTY OF MECKLENBURG )
On the 24th day of October, 2005, before me personally came
Xxxxxx X. Xxxxxx, to me known, who being by me duly sworn, did depose,
acknowledge and say that he/she is the Vice President of US LEC CORP., the
corporation which executed the foregoing instrument and that he/she signed
his/her name thereto by order of the board of directors of such corporation.
/s/ Xxxxxxxx X. Xxxxx
----------------------------
Notary Public
Comm: Exp.: 3/14/09
STATE OF NC )
) ss.:
COUNTY OF MECKLENBURG )
On this 19th day of October, 2005, before me personally came
Xxxxxx Xxxx, to me known, who, being duly sworn, did depose and say, that he/she
is the Vice President of WACHOVIA BANK, NATIONAL ASSOCIATION, the corporation
described in and which executed the foregoing instrument and that he/she signed
his/her name thereto by order of the Board of Directors of said corporation.
/s/ illegible signature
----------------------------
Notary Public
