MASTER SECURITY AGREEMENT
Master Security Agreement (the "Agreement"), dated as of August 31,
2005 between SMARTSERV ONLINE, INC. ( "Obligor") in favor of CAMOFI MASTER LDC
(the "Secured Party"), .
W I T N E S S E T H:
WHEREAS, Secured Party has entered into certain financing arrangements
with the Obligor, pursuant to a (a) Securities Purchase Agreement dated as of
the date hereof (the "Purchase Agreement") and (b) Loan Agreement dated as of
the date hereof, (in each case, together with and all financing statements,
agreements, documents, promissory notes and instruments executed and/or
delivered specifically in connection therewith, as the same may now exist or may
hereafter be amended, modified, supplemented, extended, renewed or replaced, the
"Transaction Documents") pursuant to which the Secured Party may provide
financial accommodations to Obligor;
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein, Obligor and the Secured Party agree as follows:
1. Grant of Security Interest
(a) To secure payment and performance of the Obligations, Obligor hereby
grants to Secured Party a security interest in all property and interests in
property of Obligor, whether now owned or hereafter acquired or existing, and
wherever located (together with all other collateral security for the
Obligations at any time granted to or held or acquired by Secured Party,
collectively, the "Collateral"), including, without limitation, the following:
(i) all Accounts;
(ii) all Equipment;
(iii) all General Intangibles;
(iv) all Inventory;
(v) all Investment Property (including, without limitation, the
shares of capital stock of KPCCD, Inc.; and
(vi) all proceeds and products of (i), (ii), (iii), (iv), and (v).
(b) Notwithstanding anything to the contrary contained in Section 1(a)
above, the types or items of Collateral described in such Section shall not
include any rights or interest in
any contract, lease, permit, license, charter or license agreement covering real
or personal property of Obligor, as such, if under the terms of such contract,
lease, permit, license, charter or license agreement, or applicable law with
respect thereto, the valid grant of a security interest or lien therein to
Secured Party is prohibited as a matter of law or under the terms of such
contract, lease, permit, license, charter or license agreement and such
prohibition has not been or is not waived or the consent of the other party to
such contract, lease, permit, license, charter or license agreement has not been
or is not otherwise obtained; provided, that, the foregoing exclusion shall in
no way be construed (i) to apply if any such prohibition is unenforceable under
the UCC or other applicable law or (ii) so as to limit, impair or otherwise
affect Secured Party's unconditional continuing security interest in upon any
rights or interests of Obligor in or to monies due or to become due under any
such contract, lease, permit, license, charter or license agreement (including
any Accounts).
(c) Perfection of Security Interests.
(i) Obligor irrevocably and unconditionally authorizes Secured Party (or
its agent) to file at any time and from time to time such financing statements
with respect to the Collateral naming Secured Party or its designee as the
secured party and Obligor or any affiliate of Obligor as debtor, as Secured
Party may require, and including any other information with respect to Obligor
or otherwise required by part 5 of Article 9 of the UCC of such jurisdiction as
Secured Party may determine, together with any amendment and continuations with
respect thereto, which authorization shall apply to all financing statements
filed on, prior to or after the date hereof. Obligor hereby ratifies and
approves all financing statements naming Secured Party or its designee as
secured party and Obligor as debtor with respect to the Collateral (and any
amendments with respect to such financing statements) filed by or on behalf of
Secured Party prior to the date hereof and ratifies and confirms the
authorization of Secured Party to file such financing statements (and
amendments, if any). Obligor hereby authorizes Secured Party to adopt on behalf
of Obligor any symbol required for authenticating any electronic filing. In no
event shall Obligor at any time file, or permit or cause to be filed, any
correction statement or termination statement with respect to any financing
statement (or amendment or continuation with respect thereto) naming Secured
Party or its designee as secured party and Obligor as debtor.
(ii) Obligor shall take any other actions reasonably requested by Secured
Party from time to time to cause the attachment and perfection of, and the
ability of Secured Party to enforce, the security interest of Secured Party in
any and all of the Collateral.
2. Covenants Relating to Collateral; Indebtedness; Dividends. Obligor covenants
that:
(a) it shall at all times: (i) be the sole owner of each and every item of
Collateral, (ii) defend the Collateral against the claims and demands of all
persons and (iii) in the case of tangible property constituting part of the
Collateral, (A) properly maintain and keep in good order and repair such
property and (B) keep such property fully insured with responsible companies
acceptable to Secured Party against such risks as the Collateral may be subject
to, or as Secured Party may request;
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(b) it will comply with the requirements of all leases, mortgages and
other instruments relating to premises where any Collateral is located;
(c) Obligor shall not change its name unless each of the following
conditions is satisfied: (i) Secured Party shall have received not less than
thirty (30) days' prior written notice from Obligor of such proposed change
which notice shall accurately set forth the proposed new name; and (ii) Secured
Party shall receive a copy of the amendment to the Certificate of Incorporation
of Obligor providing for the name change certified by the Secretary of State of
Delaware of as soon as it is available;
(d) Obligor shall not change its chief executive office or its mailing
address unless Secured Party shall have received not less than thirty (30) days'
prior written notice from Obligor of such proposed change, which notice shall
set forth such information with respect thereto as Secured Party may require and
Secured Party shall have received such agreements as Secured Party may
reasonably require in connection therewith; and
(e) Obligor shall not change its type of organization, jurisdiction of
organization or other legal structure.
3. Remedies.
(a) Upon the occurrence and after the continuance of an Event of Default
(as defined in the Transaction Documents), (i) Secured Party shall have the
right to exercise any and all other rights and remedies provided for herein,
under the UCC and at law or equity generally, including, without limitation, the
right to foreclose the security interests granted herein and to realize upon any
Collateral by any available judicial procedure and/or to take possession of and
sell any or all of the Collateral with or without judicial process; (ii) Secured
Party may enter Obligor's premises or other premises without legal process and
without incurring liability to Obligor therefor, and Secured Party may
thereupon, or at any time thereafter, in its discretion without notice or
demand, take the Collateral and remove the same to such place as Secured Party
may deem advisable and Secured Party may require Obligor to make the Collateral
available to Secured Party at a convenient place; (iii) with or without having
the Collateral at the time or place of sale, Secured Party may sell the
Collateral, or any part thereof, at public or private sale, at any time or
place, in one or more sales, at such price or prices, and upon such terms,
either for cash, credit or future delivery, as Secured Party may elect.
4. Representations, Warranties and Agreements.
Obligor hereby represents, warrants and agrees that:
(a) (i) Obligor is a corporation duly organized and validly existing under
the laws of Delaware.
(ii) the exact legal name of Obligor is as set forth on the signature
page of this Agreement. Obligor has not, during the past five years, been known
by or used any other composite or fictitious name or been a party to any merger
or consolidation, or acquired all
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or substantially all of the assets of any Person, or acquired any of its
properties or assets out of the ordinary course of business.
(iii) the chief executive office and mailing address of Obligor and
Obligor's Records concerning Receivables are located only at the address
identified as such on Schedule 4(a)(iii) and its only other places of business
and the only other locations of Collateral, if any, are the addresses set forth
on Schedule 4(a)(iii).
5. Expenses of Obligor's Duties; Secured Party's Right to Perform on
Obligor's Behalf;
(a) Obligor's agreements hereunder shall be performed by it at its sole
cost and expense.
(b) If Obligor shall fail to do any act which it has covenanted to do
hereunder, Secured Party may (but shall not be obligated to) do the same or
cause it to be done, either in its name or in the name and on behalf of Obligor,
and Obligor hereby irrevocably authorizes Secured Party so to act.
6. No Waivers of Rights hereunder; Rights Cumulative.
(a) No delay by Secured Party in exercising any right hereunder, or in
enforcing any of the Obligations, shall operate as a waiver thereof, nor shall
any single or partial exercise of any right preclude other or further exercises
thereof or the exercise of any other right. No waiver of any of the Obligations
shall be enforceable against Secured Party unless in writing and signed by an
officer of Secured Party, and unless it expressly refers to the provision
affected; any such waiver shall be limited solely to the specific event waived.
(b) All rights granted Secured Party hereunder shall be cumulative and
shall be supplementary of and in addition to those granted or available to
Secured Party under any other agreement with respect to the Obligations or under
applicable law and nothing herein shall be construed as limiting any such other
right.
7. Termination. This Agreement shall continue in full force and effect until
all Obligations then outstanding (whether absolute or contingent) shall have
been paid and satisfied in full.
8. Governing Law; Jurisdiction; Certain Waivers.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applied to contracts to be performed wholly
within the State of New York. Any judicial proceeding brought by or against
Obligor with respect to any of the Obligations, this Agreement or any
Transaction Document may be brought in any court of competent jurisdiction in
the State of New York, United States of America, and, by execution and delivery
of this Agreement, Obligor accepts for itself and in connection with its
properties, generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. Obligor hereby waives personal
service of any and all process upon it and consents
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that all such service of process may be made by certified or registered mail
(return receipt requested) directed to Obligor at its address set forth in
Section 10, and service so made shall be deemed completed five (5) days after
the same shall have been so deposited in the mails of the United States of
America. Nothing herein shall affect the right to serve process in any manner
permitted by law or shall limit the right of Secured Party to bring proceedings
against Obligor in the courts of any other jurisdiction. Obligor waives any
objection to jurisdiction and venue of any action instituted hereunder and shall
not assert any defense based on lack of jurisdiction or venue or based upon
forum non conveniens. Any judicial proceeding by Obligor against Secured Party
involving, directly or indirectly, any matter or claim in any way arising out
of, related to or connected with this Agreement or any related agreement, shall
be brought only in a federal or state court located in The City of New York,
State of New York.
(b) EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE, AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
9. Additional Definitions. As used herein:
(a) All terms used herein which are defined in Article 1 or Article 9 of
the UCC shall have the meanings given therein unless otherwise defined in this
Agreement. All references to the plural herein shall also mean the singular and
to the singular shall also mean the plural unless the context otherwise
requires. All references to Obligor 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. The
word "including" when used in this Agreement shall mean "including, without
limitation". An Event of Default shall exist or continue or be continuing until
such Event of Default is waived in accordance with this Agreement or is cured in
a manner satisfactory to Secured Party, if such Event of Default is capable of
being cured as determined by Secured Party. For purposes of this Agreement, the
following terms shall have the respective meanings given to them below:
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"Accounts" shall mean all present and future rights of Obligor to payment
of a monetary obligation, whether or not earned by performance, which is not
evidenced by chattel paper or an instrument, (i) for property that has been or
is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for
services rendered or to be rendered, (iii) for a secondary obligation incurred
or to be incurred, or (iv) arising out of the use of a credit or charge card or
information contained on or for use with the card.
"Equipment" shall mean all of Obligor's now owned and hereafter acquired
goods (other than Inventory), wherever located, including, without limitation,
equipment, machinery, vehicles, tools, furniture, fixtures, data processing and
computer equipment and computer hardware and software, whether owned or
licensed, and including embedded software, all attachments, accessions and
property now or hereafter affixed thereto or used in connection therewith, and
substitutions and replacements thereof, wherever located.
"General Intangibles" shall mean and include all of Obligor's general
intangibles, whether now owned or hereafter acquired including, without
limitation, all choses in action, causes of action, corporate or other business
records, patents, patent rights, patent applications, equipment formulations,
manufacturing procedures, quality control procedures, trademarks, service marks,
service xxxx applications, goodwill (including any goodwill associated with any
trademark or service marks or the license of any trademark), copyrights, works
which are the subject matter of copyrights, rights in works of authorship,
copyright registrations, inventions, trade secrets, formulae, processes,
compounds, drawings, designs, blueprints, surveys, research, analysis, reports,
manuals and operating standards, design rights, registrations, licenses,
franchises, customer lists, tax refunds, tax refund claims, computer programs,
domaine names, domaine name registrations, software and contract rights relating
to software, all claims under guaranties, security interests or other security
held by or granted to Obligor to secure payment of any of the Receivables by a
customer, all rights of indemnification and all other intangible property of
every kind and nature (other than Receivables).
"Inventory" shall mean all of Obligor's now owned and hereafter existing
or acquired goods, wherever located, which (i) are leased by Obligor as lessor;
(ii) are held by Obligor for sale or lease or to be furnished under a contract
of service; (iii) are furnished by Obligor under a contract of service; or (iv)
consist of raw materials, work in process, finished goods or materials used or
consumed in its business, together with all documents of title or other
documents representing or relating to any of the foregoing.
"Obligations" means:
(1) the full and prompt payment Obligor when due of all obligations
and liabilities to the Secured Party, whether now existing or hereafter
arising, under the Notes or the other Transaction Documents and the due
performance and compliance by Obligor with the terms of the Transaction
Documents;
(2) any and all sums advanced in accordance with the terms of the
Transaction Documents or applicable law by the Secured Party in order to
preserve the Collateral or to preserve the Secured Party's security
interest in the Collateral; and
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(3) in the event of any proceeding for the collection or enforcement
of any obligations or liabilities of the Company referred to in the
immediately preceding clauses (1) and in accordance with the terms of the
Transaction Documents, the reasonable expenses of re-taking, holding,
preparing for sale, selling or otherwise disposing of or realizing on the
Collateral, or of any other exercise by Secured Party of its rights
hereunder, together with reasonable attorneys' fees and court costs.
"Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
"Receivables" shall mean all of the following now owned or hereafter
arising or acquired property of Obligor: all Accounts; all amounts at any time
payable to Obligor in respect of the sale or other disposition by Obligor of any
Account or other obligation for the payment of money; all interest, fees, late
charges, penalties, collection fees and other amounts due or to become due or
otherwise payable in connection with any Account; all payment intangibles of
Obligor and other contract rights, chattel paper, instruments, notes, and other
forms of obligations owing to Obligor, whether from the sale and lease of goods
or other property, licensing of any property (including General Intangibles),
rendition of services or from loans or advances by Obligor or to or for the
benefit of any third person (including loans or advances to any affiliates or
Subsidiary of Obligor) or otherwise associated with any Accounts, Inventory or
General Intangibles of Obligor (including, without limitation, choses in action,
causes of action, tax refunds, tax refund claims, any funds which may become
payable to Obligor in connection with the termination of any employee benefit
plan and any other amounts payable to Obligor from any employee benefit plan,
rights and claims against carriers and shippers, rights to indemnification,
business interruption insurance and proceeds thereof, casualty or any similar
types of insurance and any proceeds thereof and proceeds of insurance covering
the lives of employees on which Obligor is beneficiary).
"Records" shall mean, all of Obligor's present and future books of account
of every kind or nature, purchase and sale agreements, invoices, ledger cards,
bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of Obligor with respect to the
foregoing maintained with or by any other person).
"Subsidiary" shall have the meaning set forth in the Purchase Agreement.
"Transaction Documents" shall have the meaning set forth in the recitals
hereto.
"UCC" shall mean the Uniform Commercial Code as in effect in the State of
New York and any successor statute, as in effect from time to time (except that
terms used herein which are defined in the Uniform Commercial Code as in effect
in the State of New York on the date
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hereof shall continue to have the same meaning notwithstanding any replacement
or amendment of such statute except as Lender may otherwise determine).
The words "it" or "its" as used herein shall be deemed to refer to
individuals and to business entities.
10. Notices. Any notice or other communication required or permitted pursuant
to this Agreement shall be deemed given (a) when personally delivered to any
officer of the party to whom it is addressed, (b) on the earlier of actual
receipt thereof or five (5) days following posting thereof by certified or
registered mail, postage prepaid, return receipt requested, or (c) upon actual
receipt thereof when sent by a recognized overnight delivery service, or (d)
upon actual receipt thereof when sent by telecopier to the number set forth
below with telephone communication confirming receipt and subsequently confirmed
by registered or certified mail, return receipt requested, or by recognized
overnight delivery service to the address set forth below, in each case
addressed to the applicable party at its address set forth below or at such
other address as has been furnished in writing by such party to the other by
like notice:
(A) If to Secured Party:
c/o Centrecourt Asset Management
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(B) If to Obligor:
0000 Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxx Xxxxxxxx, XX
Attention: Xxxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any requirement under applicable law of reasonable notice by Secured Party
to Obligor of any event shall be met if notice is given to Obligor in the manner
prescribed above at least five (5) days before (a) the date of such event or (b)
the date after which such event will occur.
11. General.
(a) This Agreement shall be binding upon the assigns or successors of each
of the undersigned Obligor and shall inure to the benefit of and be enforceable
by Secured Party and its successors, transferees and assigns permitted under the
Transaction Documents.
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(b) Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
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Dated, in New York, New York as of the date first above written.
SMARTSERV ONLINE, INC.
By: /s/ Xxxxxx X. Xxxx
-----------------------------
Name: Xxxxxx X. Xxxx
Title: Chief Executive Officer
Accepted in New York, New York, as of August __ , 2005
CAMOFI MASTER LDC
By: /s/ Xxxxxxx Xxxxxxxxx
------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title:
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SCHEDULE 4(a)(iii)
TO
MASTER SECURITY AGREEMENT
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