Exhibit 10.5
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("SECURITY AGREEMENT") is executed as of this 17th
day of May, 2005, by and between THE PEOPLES PUBLISHING GROUP, INC. (the
"GRANTOR"), a corporation organized and registered under the laws of the State
of Delaware with an address at 000 Xxxxxx Xxxxxx, Xxxxxx Xxxxx, Xxx Xxxxxx, and
MANUFACTURERS AND TRADERS TRUST COMPANY (the "BANK"), a New York banking
corporation having its chief executive office at One M&T Plaza, Buffalo, New
York. This Security Agreement is incorporated into and made part of certain
other financing documents and security agreements executed by and between the
Grantor and the Bank or by and between the Borrower (as defined in the Credit
Agreement dated the date hereof) and the Bank (all such documents including this
Security Agreement being collectively referred to as "LOAN DOCUMENTS"). All
capitalized terms not otherwise defined in this Security Agreement shall have
the same meanings ascribed to such terms in the other Loan Documents.
The Grantor has United States and foreign common law trademarks and
registered trademarks listed on Schedule "A" attached hereto and made part
hereof (the "TRADEMARKS") and United States and foreign copyrights and
registered copyrights listed on Schedule "B" attached hereto and made part
hereof (the "COPYRIGHTS").
The Bank desires to acquire a lien and security interest on the
Trademarks, and the Copyrights, together with all the goodwill of the Grantor
associated therewith and represented thereby, as security for all of the
Obligations (as defined in the Credit Agreement) to the Bank, and the Bank
desires to have its security interest in such Trademarks and Copyrights
confirmed by a document identifying same and in such form that it may be
recorded in the United States Patent and Trademark Office and the United States
Copyright Office, respectively.
NOW, THEREFORE, with the foregoing background deemed incorporated by
reference and made part hereof, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
1. GRANT OF SECURITY INTEREST. In consideration of and pursuant to the
terms of the Loan Documents, and for other good, valuable and sufficient
consideration, the receipt and sufficiency of which is hereby acknowledged, and
to secure payment and performance of the Obligations, the Grantor grants a first
lien and first security interest to the Bank in all its present and future
right, title and interest in and to the Trademarks and Copyrights, together with
all the goodwill and other intangible and tangible assets of the Grantor
associated with and represented by the Trademarks and Copyrights, and the right
(but not the obligation) to xxx for past, present and future infringements, and
the proceeds thereof, including, without limitation, license royalties and
proceeds of infringement suits.
2. REPRESENTATIONS AND WARRANTIES. The Grantor represents, warrants and
covenants that: (a) the Trademarks and Copyrights are subsisting and have not
been abandoned, suspended, voluntarily terminated or canceled by the Grantor,
have not been adjudged invalid or unenforceable, and to the best of the
Grantor's knowledge, there is no reason why the Trademarks and Copyrights should
be adjudged invalid or unenforceable; (b) each of the Trademarks and Copyrights
is valid and enforceable; (c) the Grantor is the sole and exclusive owner of the
entire and unencumbered right, title and interest in and to each of the
Trademarks and Copyrights, and each of the Trademarks and Copyrights is free and
clear of any liens, charges and encumbrances, including, without limitation,
pledges, assignments, licenses and covenants by the Grantor not to xxx third
persons; (d) the Grantor has the unqualified right to enter into this Security
Agreement and perform its terms; (e) the Grantor does not own any other
trademarks or copyrights other than those listed on Schedules A and B; and (f)
the Grantor has used, and will continue to use for the duration of this Security
Agreement, proper notice, as required by 15 U.S.C. xx.xx. 1051-1129 or similar
statutes in foreign jurisdictions in connection with its use of the Trademarks
and 17 U.S.C. xx.xx. 101-1332 or similar statues in foreign jurisdictions in
connection with its use of the Copyrights; and (f) the Grantor will not (and
will not permit any licensee thereof to) do any act or knowingly omit to do any
act whereby any of the Trademarks or Copyrights may become invalidated,
abandoned, unenforceable, avoided, avoidable or otherwise diminished in value,
and shall notify the Bank immediately if it knows of any reason or has any
reason to know of any grounds under which any of the foregoing may occur.
3. COVENANTS. The Grantor further covenants to the Bank that until all of
the Obligations have been satisfied in full: (a) the Grantor shall maintain the
Trademarks and Copyrights in full force and effect; (b) the Grantor will not
enter into any agreements that are inconsistent with the Grantor's obligations
under this Security Agreement or which restrict or impair the Bank's rights
hereunder; (c) the Grantor will take commercially reasonable care of the
Trademarks and Copyrights and continue to use them as currently used in the
present conduct of its business; (d) the Grantor will pay all costs necessary to
obtain, preserve, and enforce the security interest granted herein; (e) the
Grantor will sign any papers furnished by Bank that are necessary to obtain and
maintain the security interest granted herein; (f) the Grantor will use its best
efforts to prevent or halt any infringement of the Trademarks and Copyrights;
(g) upon reasonable request of the Bank, the Grantor shall make application on
registrable but unregistered Trademarks and Copyrights belonging to the Grantor;
and (h) if the Grantor acquires additional Trademarks and Copyrights, the
provisions of this Security Agreement shall automatically apply thereto and the
Grantor shall give the Bank prompt written notice thereof along with amended
Schedules A and B; provided, however, that notwithstanding anything to the
contrary contained in this Agreement, the Grantor shall have the right to enter
into agreements in the ordinary course of business with respect to the
Trademarks and Copyrights.
4. EXCLUSIVE USE OF TRADEMARKS AND COPYRIGHTS. So long as this Security
Agreement is in effect and so long as the Grantor has not received notice from
the Bank that an Event of Default has occurred under the Loan Documents, the
Grantor shall continue to have the exclusive right to use the Trademarks and
Copyrights including licenses thereof, and the Bank shall have no right to use
the Trademarks or Copyrights or issue any exclusive or non-exclusive license
with respect thereto, or assign, pledge or otherwise transfer title in the
Trademarks and Copyrights to anyone else.
5. NEGATIVE PLEDGE. The Grantor agrees not to sell, assign (by operation
of law or otherwise) or further encumber its rights and interest in the
Trademarks and Copyrights without prior written consent of the Bank. The Grantor
shall defend the Trademarks and Copyrights against and shall take other action
as is necessary to remove any lien, security interest, claim, right or other
encumbrance of any nature whatsoever in or to the Trademarks and Copyrights, and
will defend the right, title and interest of the Bank in and to any of the
Grantor's rights under the Trademarks and Copyrights against the claims or
demands of all persons whatsoever.
6. PLEDGE OF ADDITIONAL TRADEMARKS AND COPYRIGHTS. In the event the
Grantor, either itself or through any agent, employee, licensee or designee:
(a) uses a new common law trademark or authors a new an unregistered
copyright;
(b) files or records an application for the registration of any trademark
with the United States Patent and Trademark Office or any similar office
or agency of the United States, any State thereof, or any other country or
any political subdivision thereof, or files or records an application for
the registration of any copyright with the United States Copyright Office
or any similar office or agency of the United States, any State thereof,
or any other country or any political subdivision thereof; or
(c) files or records any assignment of any Trademark which the Grantor may
acquire, own or license from a third party, with the United States Patent
and Trademark Office or any similar office or agency of the United States,
any State thereof or any other country or any political subdivision
thereof, or files or records any assignment of any Copyright which the
Grantor may acquire, own or license from a third party, with the United
States Copyright Office or any similar office or agency of the United
States, any State thereof or any other country or any political
subdivision thereof;
the Grantor shall promptly, but in no event more than fifteen (15) days
subsequent to such use, authorship, or filing as the case may be, notify the
Bank thereof, and upon request of the Bank shall promptly, but in no event more
than twenty (20) days subsequent to such notice, execute and deliver any and all
assignments, agreements,
instruments, documents and papers as the Bank may reasonably request to evidence
the Bank's interest in such trademark or copyright and the goodwill of the
Grantor associated thereto or represented thereby. The Grantor hereby grants the
Bank a power of attorney, irrevocable until the Obligations are fully paid and
satisfied, to modify this Security Agreement by amending Schedules A and/or B,
as applicable, to include any future Trademarks or Copyrights, or Licenses,
including, without limitation, registrations or applications for Trademarks or
Copyrights appurtenant thereto, covered by this Security Agreement.
7. REMEDIES UPON DEFAULT. (a) Anything herein contained to the contrary
notwithstanding, if and while the Grantor shall be in default hereunder or an
Event of Default exists under the Loan Documents, the Grantor hereby covenants
and agrees that the Bank, as the holder of the security interest herein, may
take such action permitted under the Loan Documents or permitted by law, in its
exclusive discretion, to use the Trademarks and Copyrights covered hereby.
(b) For such purposes, and in the event of the Grantor's default
hereunder or an Event of Default under the Loan Documents and while such default
or Event of Default exists, the Grantor hereby authorizes and empowers the Bank
to make, constitute and appoint any officer or agent of the Bank as the Bank may
select, in its exclusive discretion, as the Grantor's true and lawful
attorney-in-fact, with the power to endorse the Grantor's name on all
applications, documents, papers and instruments necessary for the Bank to use
the Trademarks and Copyrights or to grant or issue any exclusive or
non-exclusive license under the Trademarks and Copyrights to anyone else, or
necessary for the Bank to assign, pledge, convey or otherwise transfer title in
or dispose of the Trademarks and Copyrights to anyone else. The Grantor hereby
ratifies all that such attorney shall lawfully do or cause to be done by virtue
hereof, except for the gross negligence or willful misconduct of such attorney.
This power of attorney shall be irrevocable for the life of this Security
Agreement and the Loan Documents, and until all the Obligations are satisfied in
full.
(c) The Grantor expressly acknowledges that this Security Agreement
shall be recorded with the Patent and Trademark Office and the United States
Copyright Office in Washington, D.C. and other appropriate offices in foreign
jurisdictions. Contemporaneously herewith, the Grantor shall also execute and
deliver to the Bank such documents as the Bank shall reasonably request to
permanently assign all rights in the Trademarks and Copyrights to the Bank,
which documents shall be held by the Bank, until the occurrence of an Event of
Default hereunder or under the Loan Documents. After such occurrence, the Bank
may, at its sole option, record such documents with the United States Patent and
Trademark Office and the United States Copyright Office.
8. WRITTEN CONSENT. This Security Agreement shall be subject to the terms,
provisions, and conditions set forth in the Security Agreement and may not be
modified without the written consent of the party against whom enforcement is
being sought.
9. INCONSISTENT WITH SECURITY AGREEMENT. All rights and remedies herein
granted to the Bank shall be in addition to any rights and remedies granted to
the Bank under the Loan Documents. In the event of an inconsistency between this
Security Agreement and the Credit Agreement, the language of this Security
Agreement shall control.
10. TERMINATION OF AGREEMENT. Upon payment and performance of all
Obligations under the Loan Documents, the Bank shall execute and deliver to the
Grantor all documents necessary to re-vest all rights in and to the Trademarks
and Copyrights in the Grantor and/or terminate any interest of the Bank therein.
11. PROSECUTION OF TRADEMARK APPLICATIONS. Subject to the terms of the
Loan Documents, the Grantor shall have the duty to prosecute diligently any
trademark application with respect to the Trademarks pending as of the date of
this Security Agreement or thereafter.
12. RIGHT TO XXX. The Grantor shall have the right to bring suit in its
own name to enforce the Trademarks or Copyrights, in which event the Bank may,
if the Grantor deems it necessary or after an Event of Default under the Loan
Documents, be joined as a nominal party to such suit if the Bank shall have been
satisfied that it is not thereby incurring any risk of liability because of such
joinder. The Grantor shall promptly, upon demand, reimburse and indemnify the
Bank for all damages, reasonable costs and reasonable expenses, including
attorneys' fees, incurred by the Bank in the fulfillment of the provisions of
this paragraph.
13. RESPONSIBILITY AND LIABILITY. The Grantor assumes all responsibility
and liability arising from the use of the Trademarks and Copyrights, and hereby
indemnifies and holds the Bank and each director, officer, employee, affiliate
and agent thereof, harmless from and against any claim, suit, loss, damage or
expense (including attorneys' fees and expenses) arising out of any alleged
defect in any product or service manufactured, promoted or sold by the Grantor
in connection with any of the Trademarks or Copyrights or otherwise arising out
of the Grantor's operation of its business from the use of the Trademarks or
Copyrights. In any suit, proceeding or action brought by the Bank under any
License for a Trademark or Copyright for any sum owing thereunder, or to enforce
any provisions of such License, the Grantor will indemnify and keep the Bank
harmless from and against all expense, loss or damage suffered by reason of any
defense, set off, recoupment, claim, counterclaim, reduction or liability
whatsoever of the obligee thereunder or arising out of a breach of the Grantor
of any obligation thereunder or arising out of any agreement, indebtedness or
liability at any time owing to or in favor of such obligee or its successors
from the Grantor, and all such Obligations of the Grantor shall be and remain
enforceable against and only against the Grantor and shall not be enforceable
against the Bank.
14. BANK'S RIGHTS. (a) The Bank may, in its sole discretion, pay any
amount or do any act required of the Grantor hereunder or requested by the Bank
to preserve, defend, protect, maintain, record or enforce the Grantor's
obligations contained herein, the Obligations of the Grantor to the Bank, the
Trademarks and Copyrights, or the right, title and interest granted the Bank
herein, and which the Grantor fails to do or pay, and any such payment shall be
deemed an advance by the Bank to the Grantor and shall be payable on demand
together with interest thereon at the default rate specified in the Loan
Documents.
(b) Upon the occurrence of an Event of Default under the Loan
Documents, the Bank may, without any obligation to do so, complete any
obligation of the Grantor hereunder, in the Grantor's name or in the Bank's
name, but at the Grantor's expense, and the Grantor hereby agrees to reimburse
the Bank in full for all reasonable expenses, including reasonable attorney's
fees, incurred by the Bank in protecting, defending and maintaining the
Trademarks and Copyrights.
15. PROTECTION OF THE TRADEMARKS AND COPYRIGHTS. The Grantor agrees that
if it learns of any use by any person or any term or design likely to cause
confusion with any Trademark, or of any use by any person or any work similar to
any Copyright, or of any claim of any lien, security interest, claim, right or
other encumbrance of any nature whatsoever in or to the Trademarks and
Copyrights, the Grantor shall promptly notify the Bank of such use, lien,
security interest, claim, right or other encumbrance and, if requested by the
Bank, shall join with the Bank, at the Grantor's expense, in such action as the
Bank, in its reasonable discretion, may deem advisable for the protection of the
Bank's interest in and to the Trademarks and Copyrights, it being understood
that the foregoing shall not preclude the Grantor from bringing an action
against a person for the protection of the Grantor's interest in and to such
Trademarks and Copyrights.
16. GOVERNING LAW. THIS SECURITY AGREEMENT WILL BE INTERPRETED AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE WHERE THE BANK'S OFFICE INDICATED ABOVE IS LOCATED, EXCLUDING
ITS CONFLICT OF LAWS RULES, EXCEPT THAT THE FEDERAL LAWS OF THE UNITED STATES OF
AMERICA SHALL GOVERN TO THE EXTENT APPLICABLE.
17. COUNTERPARTS. This Security Agreement may be signed in any number of
counterpart copies and by the parties hereto on separate counterparts, but all
such copies shall constitute one and the same instrument. Delivery of an
executed counterpart of a signature page to this Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart.
Any party so executing this Agreement by facsimile transmission shall promptly
deliver a manually executed counterpart, provided that any failure to do so
shall not affect the validity of the counterpart executed by facsimile
transmission.
WITNESS the due execution hereof as a document under seal, as of the date first
written above.
THE PEOPLES PUBLISHING GROUP, INC.
/s/ Xxxxxxx X. XxXxxxx
----------------------
Print Name: Xxxxxxx X. XxXxxxx
Title: Chief Financial Officer
MANUFACTURERS AND TRADERS TRUST COMPANY
/s/ Xxx X. Xxxxx
----------------
Print Name: Xxx X. Xxxxx
Title: Vice President
SCHEDULE A TO SECURITY AGREEMENT - TRADEMARKS
APPLICATION OR REGISTRATION OR
TRADEMARK REGISTRATION NO. COUNTRY FILING DATE
--------- ---------------- ------- ---------------
TRADEMARK ASSIGNMENT
WHEREAS, THE PEOPLES PUBLISHING GROUP, INC. (the "GRANTOR") is the owner
of the entire right, title and interest in and to the United States trademarks,
trade names and registrations listed on Schedule A attached hereto and made a
part hereof (collectively, the "TRADEMARKS"), which are registered in the United
States Patent and Trademark Office or which are subject of pending applications
in the United States Patent and Trademark Office; and
WHEREAS, MANUFACTURERS AND TRADERS TRUST COMPANY, having a place of
business at One M&T Plaza, Buffalo, New York, identified as the "BANK" under
that certain Security Agreement to Security Agreement - Trademarks (the
"SECURITY AGREEMENT") of even date herewith (the "GRANTEE") is desirous of
acquiring said Trademarks;
WHEREAS, the Grantee has a security interest in the assets of the Grantor
adequate to carry on the business of the Grantor; and
WHEREAS, the Security Agreement provides that this Assignment shall become
effective upon the occurrence of an Event of Default as defined in the Security
Agreement dated as of May 17, 2005 by and between the Grantor and the Grantee.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the Grantor, for itself and its successors and assigns does hereby
collaterally transfer, assign and set over unto Grantee, its successors,
transferees and assigns, all of its present and future right, title and interest
in and to the Trademarks, the goodwill of the business associated with such
Trademarks and all proceeds thereof and all rights and proceeds associated
therewith.
IN WITNESS WHEREOF, the undersigned has caused this Trademark Assignment
to be executed by its duly authorized officer on this 17th day of May, 2005.
WITNESS / ATTEST: THE PEOPLES PUBLISHING GROUP, INC.
/s/ Xxxxxxx XxXxxxx
-------------------
(SEAL)
Print Name:__________________ Print Name: Xxxxxxx X. XxXxxxx
Title:_______________________ Title: Chief Financial Officer
Include title only if an
officer of entity signing to
the right)
SCHEDULE B TO SECURITY AGREEMENT - COPYRIGHTS
APPLICATION OR REGISTRATION OR
COPYRIGHT REGISTRATION NO. COUNTRY FILING DATE
--------- ---------------- ------- ---------------
COPYRIGHT ASSIGNMENT
WHEREAS, THE PEOPLES PUBLISHING GROUP, INC. (the "GRANTOR") is the owner
of the entire right, title and interest in and to the United States copyrights
and registrations listed on Schedule B attached hereto and made a part hereof
(collectively, the "COPYRIGHTS"), which are registered in the United States
Copyright Office or which are subject of pending applications in the United
States Copyright Office; and
WHEREAS, MANUFACTURERS AND TRADERS TRUST COMPANY, having a place of
business at One M&T Plaza, Buffalo, New York, identified as the "BANK" under
that certain Security Agreement to Security Agreement - Copyrights (the
"SECURITY AGREEMENT") of even date herewith (the "GRANTEE") is desirous of
acquiring said Copyrights;
WHEREAS, the Grantee has a security interest in the assets of the Grantor
adequate to carry on the business of the Grantor; and
WHEREAS, the Security Agreement provides that this Assignment shall become
effective upon the occurrence of an Event of Default as defined in the Security
Agreement dated as of May 17, 2005 by and between the Grantor and the Grantee.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the Grantor, for itself and its successors and assigns does hereby
collaterally transfer, assign and set over unto Grantee, its successors,
transferees and assigns, all of its present and future right, title and interest
in and to the Copyrights and all rights and proceeds associated therewith.
IN WITNESS WHEREOF, the undersigned has caused this Copyright Assignment
to be executed by its duly authorized officer on this 17th day of May, 2005.
WITNESS / ATTEST: THE PEOPLES PUBLISHING GROUP, INC.
/s/ Xxxxxxx X. XxXxxxx
----------------------
(SEAL)
Print Name:__________________ Print Name: Xxxxxxx X. XxXxxxx
Title:_______________________ Title: Chief Financial Officer
(Include title only if an
officer of entity signing to
the right)
