SECURITY AGREEMENT
To: Cohanzick Credit Opportunities
Master Fund Ltd., as Agent
000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxxxx, Xxx Xxxx 00000
Gentlemen:
1. To secure the payment of all Obligations (as hereafter defined), we
hereby grant to you, for your benefit and for the ratable benefit of lenders (as
hereinafter defined) a continuing first priority security interest in all of the
following property now owned or at any time hereafter acquired by us, or in
which we now have or at any time in the future may acquire any right, title or
interest (the "Collateral"): all accounts, inventory, equipment, goods,
documents, instruments (including, without limitation, promissory notes),
contract rights, general intangibles (including, without limitation, payment
intangibles), chattel paper, supporting obligations, investment property,
letter-of-credit rights, trademarks, tradestyles, patents and copyrights in
which we now have or hereafter may acquire any right, title or interest, all
proceeds and products thereof (including, without limitation, proceeds of
insurance) and all additions, accessions and substitutions thereto or therefor.
For the purposes hereof, Collateral shall not include and we are not granting a
security interest in the property described in Schedule 1 hereto.
2. The term "Obligations" as used herein shall mean and include all debts,
liabilities and obligations owing by us to Cohanzick Credit Opportunities Master
Fund Ltd., Xxxxxxx Capital, L.P. and Xxxx X. Xxxxxxxx, (collectively, the
"Lenders") and all loans, advances, extensions of credit, endorsements,
guaranties, benefits and/or financial accommodations heretofore or hereafter
made, granted or extended by the Lenders to us or which the Lenders have or will
become obligated to make, grant or extend to us or for our account and any and
all interest, charges and/or expenses heretofore or hereafter owing by us to the
Lenders and any and all renewals or extensions of any of the foregoing, direct
or indirect, absolute or contingent, liquidated or unliquidated, arising out of
that certain Convertible Senior Note dated as of January ___, 2005 made by us in
favor of the Lenders in the original principal amounts of $900,000, $900,000 and
$450,000 (as each may be amended, modified and supplemented from time to time,
collectively, the "Notes").
3. We hereby represent, warrant and covenant to you that: (a) we are a
company validly existing, in good standing and formed under the laws of the
State of Florida and we will provide you thirty days prior written notice of any
change in our state of formation; (b) our legal name is "SuperStock, Inc.", as
set forth in our Certificate of Incorporation as amended through the date
hereof; (c) we are the lawful owner of the Collateral and have the sole right to
grant a security interest therein and will defend the Collateral against all
claims and demands of all persons and entities; (d) other than liens and
security interests in existence on the date hereof and Permitted Liens (as
defined herein), we will keep the Collateral free and clear of all attachments,
levies, taxes, liens, security interests and encumbrances of every kind and
nature; (e) we will at our own cost and expense maintain and keep the Collateral
in good state of repair and will not waste or destroy the same or any part
thereof; (f) we will at all times allow you or your representatives free access
to and the right of inspection of the Collateral; (g) we will at our own cost
and expense adequately insure the Collateral against customary risks and subject
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to commercially reasonable limitations and deductibles; (h) we will pay all
taxes due with respect to the Collateral other than taxes being diligently
contested in good faith by appropriate proceedings, provided adequate reserves
with respect thereto are maintained on our books in conformity with GAAP; and
(i) we will not sell any Collateral, other than in the ordinary course of
business, without your prior written consent which will not be unreasonably
withheld or delayed. For the purposes of Section 3(i) hereof, you will be deemed
to have consented to a proposed sale of Collateral if you have failed to respond
to a written notice delivered in accordance with Section 10 below within ten
(10) business days after the notice is given. For purposes hereof, "Permitted
Liens" means (a) liens of carriers, warehousemen, artisans, bailees, mechanics
and materialmen incurred in the ordinary course of business securing sums not
overdue; (b) liens incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, relating to employees, securing sums (i) not
overdue or (ii) being diligently contested in good faith provided that adequate
reserves with respect thereto are maintained on our books in conformity with
GAAP; (c) liens in favor of you; (d) liens for taxes (i) not yet due or (ii)
being diligently contested in good faith by appropriate proceedings, provided
that adequate reserves with respect thereto are maintained on our books in
conformity with GAAP; provided, that, the lien shall have no effect on the
priority of liens in your favor or the value of the assets in which you have a
lien; and (e) liens securing purchase money indebtedness to the extent such
indebtedness is permitted by the Notes.
4. We shall be in default under this Agreement upon the happening of any
of the following events or conditions, each such event or condition an "Event of
Default" (a) we shall fail to pay when due or punctually perform any of the
Obligations; (b) any covenant, warranty, representation or statement made or
furnished to you or any other Lender by us or on our behalf was false in any
material respect when made or furnished; (c) we shall breach any provision of
this Agreement or any other document, instrument or agreement delivered to you
or any other Lender in connection with the transactions contemplated hereby, as
the same may be amended, modified and supplemented from time to time, and such
breach shall not have been cured during any applicable cure or grace period; (d)
we shall become insolvent, cease operations, dissolve, terminate our business
existence, make an assignment for the benefit of creditors, suffer the
appointment of a receiver, trustee, liquidator or custodian of all or any part
of our property; (e) any proceedings under any bankruptcy or insolvency law
shall be commenced by or against us; or (f) a "default" or "event of default"
shall have occurred under and as defined in the Notes, which shall not have been
cured during any applicable cure or grace period.
5. Upon the occurrence of any Event of Default and at any time thereafter,
you may declare all Obligations immediately due and payable and you shall have
the remedies of a secured party provided in the Uniform Commercial Code as in
effect in the State of Florida, this Agreement and other applicable law. You
will at all times have the right to take possession of the Collateral and to
maintain such possession on our premises or to remove the Collateral or any part
thereof to such other premises as you may desire. Upon your request, we shall
assemble the Collateral and make it available to you at a place designated by
you. If any notification of intended disposition of any Collateral is required
by law, such notification, if mailed, shall be deemed properly and reasonably
given if mailed at least ten days before such disposition, postage prepaid,
addressed to us either at our address shown herein or at any address appearing
on your records for us. Any proceeds of any disposition of any of the Collateral
shall be applied by you to the payment of all expenses in connection with the
sale of the Collateral, including reasonable attorneys' fees and other legal
expenses and disbursements and the reasonable expense of retaking, holding,
preparing for sale, selling, and the like, and any balance of such proceeds may
be applied by you toward the payment of the Obligations in such order of
application as you may elect, and we shall be liable for any deficiency.
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6. If we default in the performance or fulfillment of any of the terms,
conditions, promises, covenants, provisions or warranties on our part to be
performed or fulfilled under or pursuant to this Agreement, you may, at your
option without waiving your right to enforce this Agreement according to its
terms, immediately or at any time thereafter and without notice to us, perform
or fulfill the same or cause the performance or fulfillment of the same for our
account and at our sole cost and expense, and the cost and expense thereof
(including reasonable attorneys' fees) shall be added to the Obligations and
shall be payable on demand with interest thereon at the highest rate permitted
by law.
7. We appoint you, any of your officers, employees or any other person or
entity whom you may designate as our attorney, with power to execute such
documents in our behalf and to supply any omitted information and correct patent
errors in any documents executed by us or on our behalf; to file financing
statements against us covering the Collateral; to sign our name on public
records; and to do all other things you deem necessary to carry out this
Agreement. We hereby ratify and approve all acts of the attorney and neither you
nor the attorney will be liable for any acts of commission or omission, nor for
any error of judgment or mistake of fact or law. This power being coupled with
an interest, is irrevocable so long as any Obligations remains unpaid.
8. No delay or failure on your part in exercising any right, privilege or
option hereunder shall operate as a waiver of such or of any other right,
privilege, remedy or option, and no waiver whatever shall be valid unless in
writing, signed by you and then only to the extent therein set forth, and no
waiver by you of any default shall operate as a waiver of any other default or
of the same default on a future occasion. The Lenders' books and records
containing entries with respect to the Obligations shall be admissible in
evidence in any action or proceeding, shall be binding upon us for the purpose
of establishing the items therein set forth and shall constitute prima facie
proof thereof. The Lenders shall have the right to enforce any one or more of
the remedies available to the Lenders, successively, alternately or
concurrently. We agree to join with you in executing financing statements or
other instruments to the extent required by the Uniform Commercial Code in form
satisfactory to you and in executing such other documents or instruments as may
be required or deemed necessary by you for purposes of affecting or continuing
your security interest in the Collateral.
9. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York and cannot be terminated orally. All of the
rights, remedies, options, privileges and elections given to the Lenders
hereunder shall inure to the benefit of all successors and assigns of the
Lenders. The term "you" as herein used shall include your company, any parent of
your company, any of your subsidiaries and any co-subsidiaries of your parent,
whether now existing or hereafter created or acquired, and all of the terms,
conditions, promises, covenants, provisions and warranties of this Agreement
shall inure to the benefit of and shall bind the representatives, successors and
assigns of each of us and them. You and we hereby (a) waive any and all right to
trial by jury in litigation relating to this Agreement and the transactions
contemplated hereby and we agree not to assert any counterclaim in such
litigation, (b) submit to the nonexclusive jurisdiction of any Florida court;
provided, that nothing in this Agreement shall be deemed to preclude you from
bringing suit or taking other legal action in any other jurisdiction, and (c)
waive any objection you or we may have as to the bringing or maintaining of such
action with any such court. We hereby waive personal service of process in any
such action and agree that service of such process may be made by registered or
certified mail addressed to us at the address set forth below.
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10. All notices from one party hereto to the other shall be sufficiently
given if mailed by registered or certified mail, postage prepaid, or delivery to
a nationally recognized overnight delivery service for next Business Day
delivery, to the addresses set forth below.
SUPERSTOCK, INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
Title: Chief Executive Officer
Address: 0000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Dated as of February 22, 2005
ACKNOWLEDGED:
Cohanzick Credit Opportunities
Master Fund Ltd., as Agent
By: Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Authorized Agent
Address:
000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxxxx, Xxx Xxxx 00000
With a copy to: Xxxxx Xxxxxxx LLP
Attention: Xxxxxxx X. Xxxxx, Esq.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
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Schedule 1
1. Sublease for the premises located at 0000 Xxxxxxxxx Xxxxxxx, Xxxxxxxxxxxx,
XX 00000.
2. Lease for the premises located at 0000 Xxxxxxxxx Xxxxxxx, Xxxxxxxxxxxx, XX
00000.
3. Equipment Leases, if any.
