1
EXHIBIT 10.10
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is made and entered into as of
August 1, 1999, by and between HALLMARK ENTERTAINMENT NETWORKS, INC., a Delaware
corporation ("Debtor"), and HALLMARK CARDS, INCORPORATED ("Hallmark").
RECITALS
A. Debtor has executed a Trademark License Agreement dated as of
August 1, 1999 with Hallmark (the "Trademark Agreement").
B. For purposes of this Agreement, the term "Collateral" shall mean all
of the following: (i) the Trademark Agreement and all rights and interests
therein and thereunder; and (ii) the proceeds of any of the foregoing including,
but not limited to, accounts, contract rights, notes, drafts, investments,
general intangibles, the proceeds of insurance or other tangible or intangible
property of Debtor resulting from the sale, licensing or other disposition of
any of the foregoing, and the proceeds thereof (hereinafter collectively
referred to as "Proceeds").
C. As security for Debtor's performance pursuant to and in accordance
with the Trademark Agreement and compensation for any damage to Hallmark's name
or reputation due to a breach of the Trademark Agreement by Debtor, Debtor
desires to grant to Hallmark a security interest in and to the Collateral.
TERMS AND CONDITIONS
NOW THEREFORE, the parties hereto agree as follows:
1. Grant of Security Interest. Debtor hereby grants and specifically
assigns to Hallmark a security interest in and to all of the Collateral to
secure Debtor's performance pursuant to and in accordance with the Trademark
Agreement and compensation for any damage to Hallmark's name or reputation due
to a breach of the Trademark Agreement by Debtor.
2. Representations, Warranties and Covenants. Debtor represents,
warrants and covenants as follows:
2.1 Title to Collateral. Debtor owns all right, title and interest as
licensee in and to the Collateral, free and clear of all liens, claims,
encumbrances and rights of others.
2.2 Limitation on Further Encumbrances. The Collateral shall remain
free from all purchase money or other security interests, liens or
encumbrances, except the security interests created by this Agreement.
2
2.3 Tax Obligation. Debtor shall pay when due all taxes, assessments
and governmental charges imposed on or with respect to the Collateral,
other than those being contested in good faith and by appropriate
proceedings.
2.4 Notice of Material Adverse Claims. Debtor shall present Hallmark
with a copy of any notice which Debtor receives from any party claiming any
material interest in the Collateral, or any material portion thereof, or
attempting to attach or to levy on any material portion of the Collateral.
3. Financing, Statements: Perfection of Security Interest. Concurrently
with the execution hereof, or at any time or from time to time hereafter, Debtor
shall execute any financing statements reasonably requested by Hallmark which
are necessary to perfect Hallmark's security interest in the Collateral. Debtor
shall also cooperate with Hallmark with respect to and shall execute and
acknowledge any assignments (for security purposes only) or other instruments
reasonably required in order to perfect Hallmark's security interest or to
comply with any applicable foreign, federal or state statute. Any filing or
recording fees for any financing statements, mortgages, assignments or other
similar documents shall be promptly paid by Hallmark.
4. Remedies in the Event of Default. If an Event of Default shall
occur, Hallmark shall be entitled to all remedies available, including remedies
at law or in equity and including the right to a return of the collateral.
Debtor hereby acknowledges the difficulty in determining the amount of any
damage to Hallmark's name or reputation arising from Debtor's failure to perform
in accordance with the Trademark Agreement and consequently, if an Event of
Default shall occur, Debtor agrees that Hallmark shall be entitled to receive
the Collateral and any and all rights of Debtor in and to the Collateral, free
and clear of all encumbrances in full satisfaction of any claim that Hallmark
may have against Debtor for breach of the Trademark Agreement.
5. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their successors or
assigns.
6. Applicable Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Missouri.
7. Notices. All notices hereunder shall be deemed given when personally
delivered or when sent by certified or registered mail, postage prepaid, or by
facsimile transmission, to the parties hereto at their respective addresses as
set forth below, or at such other addresses as each of the parties shall from
time to time designate in like manner to the other parties.
If to Debtor: Hallmark Entertainment Networks, Inc.
Xxxxx Xxxxxxx'x Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
Fax: 000-000-0000
3
If to Hallmark: Hallmark Cards, Incorporated
0000 XxXxx Xxxxxxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
9. Counterparts. This Agreement may be executed simultaneously or in
one or more counterparts, each of which together shall constitute one and the
same instrument.
10. Further Assurances. The parties hereto agree to do any and all
things and to undertake to perform any and all acts reasonably necessary in
order to carry out the intent of the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
HALLMARK ENTERTAINMENT NETWORKS, INC. HALLMARK CARDS, INCORPORATED
By /s/ XXXXXX X. XXXXXX By /s/ XXXXXX XXXXXXXXX
----------------------------------- ---------------------------
Its Vice President Its Vice President
---------------------------------- --------------------------
