SECURITY AND PLEDGE AGREEMENT (Innovative)
(Innovative)
1. Identification.
This
Security and Pledge Agreement (the "Agreement"), dated as of February ___,
2005,
is entered into by and between Innovative Food Holdings, Inc., a Florida
corporation (“Innovative” or “Debtor”), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as collateral agent
acting in the manner and to the extent described in the Collateral Agent
Agreement defined below (the "Collateral Agent"), for the benefit of the parties
identified on Schedule A hereto (collectively, the "Lenders").
2. Recitals.
2.1 The
Lenders have made or are making loans and will make additional loans to
Innovative (the "Loans"). It is beneficial to Innovative that the Loans were
made, are being made and will be made.
2.2 The
Loans
are and will be evidenced by certain eight percent (8%) rate convertible
promissory notes (each a “Convertible Note”) issued by Innovative on or about
the date of this Agreement and issuable after the date of this Agreement,
pursuant to subscription agreements (each a “Subscription Agreement”) to which
Innovative and Lenders are parties. The Notes are further identified on Schedule
A hereto and were and will be executed by Innovative as “Borrower” or “Debtor”
for the benefit of each Lender as the “Holder” or “Lender” thereof.
2.3 In
consideration of the Loans made by Lenders to Innovative and for other good
and
valuable consideration, and as security for the performance by Innovative of
its
obligations under the Notes and as security for the repayment of the Loans
and
all other sums due from Debtor to Lenders arising under the Notes presently
outstanding or to be outstanding in the future, Subscription Agreements, and
any
other agreement between or among them (collectively, the "Obligations"),
Innovative, for good and valuable consideration, receipt of which is
acknowledged, has agreed to grant to the Collateral Agent, for the benefit
of
the Lenders, a security interest in the Collateral (as such term is hereinafter
defined), on the terms and conditions hereinafter set forth. Obligations include
all future advances by Lenders to Innovative advanced on a pro rata basis by
all
Lenders on a pro rated basis on substantially the same terms.
2.4 The
Lenders have appointed ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as Collateral Agent pursuant to that
certain Collateral Agent Agreement dated at or about February ___, 2005
(“Collateral Agent Agreement”), among the Lenders and Collateral
Agent.
2.5 The
following defined terms which are defined in the Uniform Commercial Code in
effect in the State of New York on the date hereof are used herein as so
defined: Accounts, Chattel Paper, Documents, Equipment, General Intangibles,
Instruments, Inventory and Proceeds.
3. Grant
of General Security Interest in Collateral.
3.1 As
security for the Obligations of Debtor, Innovative hereby grants the Collateral
Agent, for the benefit of the Lenders, a security interest in the
Collateral.
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3.2 “Collateral”
shall mean all of the following property of Innovative:
(A) All
now
owned and hereafter acquired right, title and interest of Innovative in, to
and
in respect of all Accounts, Goods, real or personal property, all present and
future books and records relating to the foregoing and all products and Proceeds
of the foregoing, and as set forth below:
(i) Accounts:
All now
owned and hereafter acquired right, title and interest of Innovative in, to
and
in respect of all: Accounts, interests in goods represented by Accounts,
returned, reclaimed or repossessed goods with respect thereto and rights as
an
unpaid vendor; contract rights; Chattel Paper; investment property; General
Intangibles (including but not limited to, tax and duty claims and refunds,
registered and unregistered patents, trademarks, service marks, certificates,
copyrights trade names, applications for the foregoing, trade secrets, goodwill,
processes, drawings, blueprints, customer lists, licenses, whether as licensor
or licensee, choses in action and other claims, and existing and future
leasehold interests in equipment, real estate and fixtures); Documents;
Instruments; letters of credit, bankers’ acceptances or guaranties; cash moneys,
deposits; securities, bank accounts, deposit accounts, credits and other
property now or hereafter owned or held in any capacity by Innovative, as well
as its affiliates, agreements or property securing or relating to any of the
items referred to above;
(ii) Goods:
All now
owned and hereafter acquired right, title and interest of Innovative in, to
and
in respect of goods, including, but not limited to:
(a) All
Inventory, wherever located, whether now owned or hereafter acquired, of
whatever kind, nature or description, including all raw materials,
work-in-process, finished goods, and materials to be used or consumed in
Innovative’s business; and all names or marks affixed to or to be affixed
thereto for purposes of selling same by the seller, manufacturer, lessor or
licensor thereof and all Inventory which may be returned to Innovative by its
customers or repossessed by Innovative and all of Innovative’ right, title and
interest in and to the foregoing (including all of Innovative’ rights as a
seller of goods);
(b) All
Equipment and fixtures, wherever located, whether now owned or hereafter
acquired, including, without limitation, all machinery, motor vehicles,
furniture and fixtures, and any and all additions, substitutions, replacements
(including spare parts), and accessions thereof and thereto (including, but
not
limited to Innovative’s rights to acquire any of the foregoing, whether by
exercise of a purchase option or otherwise);
(iii) Property:
All now
owned and hereafter acquired right, title and interests of Innovative in, to
and
in respect of any real or other personal property in or upon which Innovative
has or may hereafter have a security interest, lien or right of
setoff;
(iv) Books
and Records:
All
present and future books and records relating to any of the above including,
without limitation, all computer programs, printed output and computer readable
data in the possession or control of the Innovative, any computer service bureau
or other third party; and
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(v) Products
and Proceeds:
All
products and Proceeds of the foregoing in whatever form and wherever located,
including, without limitation, all insurance proceeds and all claims against
third parties for loss or destruction of or damage to any of the
foregoing.
(B) All
now
owned and hereafter acquired right, title and interest of Innovative in, to
and
in respect of the following:
(i) the
shares of stock, partnership interests, member interests or other equity
interests at any time and from time to time acquired by Innovative of any and
all entities now or hereafter existing, all or a portion of such stock or other
equity interests which are acquired by such entities at any time (such entities,
together with the existing issuers, being hereinafter referred to collectively
as the "Pledged Issuers" and individually as a "Pledged Issuer"), the
certificates representing such shares, partnership interests, member interests
or other interests all options and other rights, contractual or otherwise,
in
respect thereof and all dividends, distributions, cash, instruments, investment
property and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares,
partnership interests, member interests or other interests;
(ii) all
additional shares of stock, partnership interests, member interests or other
equity interests from time to time acquired by Innovative, of any Pledged
Issuer, the certificates representing such additional shares, all options and
other rights, contractual or otherwise, in respect thereof and all dividends,
distributions, cash, instruments, investment property and other property from
time to time received, receivable or otherwise distributed in respect of or
in
exchange for any or all of such additional shares, interests or equity; and
(iii) all
security entitlements of Innovative in, and all Proceeds of any and all of
the
foregoing in each case, whether now owned or hereafter acquired by Innovative
and howsoever its interest therein may arise or appear (whether by ownership,
security interest, lien, claim or otherwise).
3.3 The
Collateral Agent is hereby specifically authorized, after the Maturity Date
(defined in the Notes) accelerated or otherwise, or after an Event of Default
(as defined herein) and the expiration of any applicable cure period, to
transfer any Collateral into the name of the Collateral Agent and to take any
and all action deemed advisable to the Collateral Agent to remove any transfer
restrictions affecting the Collateral.
4. Perfection
of Security Interest.
4.1 Innovative
shall prepare, execute and deliver to the Collateral Agent UCC-1 Financing
Statements. The Collateral Agent is instructed to prepare and file at
Innovative’s cost and expense, financing statements in such jurisdictions deemed
advisable to the Collateral Agent, including but not limited to Florida. The
Financing Statements are deemed to have been filed for the benefit of the
Collateral Agent and Lenders identified on Schedule A hereto.
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4.2
All
other certificates and instruments constituting Collateral from time to time
required to be pledged to Collateral Agent pursuant to the terms hereof (the
"Additional Collateral") shall be delivered to Collateral Agent promptly upon
receipt thereof by or on behalf of Innovative. All such certificates and
instruments shall be held by or on behalf of Collateral Agent pursuant hereto
and shall be delivered in suitable form for transfer by delivery, or shall
be
accompanied by duly executed instruments of transfer or assignment or undated
stock powers executed in blank, all in form and substance satisfactory to
Collateral Agent. If any Collateral consists of uncertificated securities,
unless the immediately following sentence is applicable thereto, Innovative
shall cause Collateral Agent (or its custodian, nominee or other designee)
to
become the registered holder thereof, or cause each issuer of such securities
to
agree that it will comply with instructions originated by Collateral Agent
with
respect to such securities without further consent by Innovative. If any
Collateral consists of security entitlements, Innovative shall transfer such
security entitlements to Collateral Agent (or its custodian, nominee or other
designee) or cause the applicable securities intermediary to agree that it
will
comply with entitlement orders by Collateral Agent without further consent
by
Innovative.
4.3 Within
five (5) days after the receipt by Innovative of any Additional Collateral,
a
Pledge Amendment, duly executed by Innovative, in substantially the form of
Annex I hereto (a "Pledge Amendment"), shall be delivered to Collateral Agent
in
respect of the Additional Collateral to be pledged pursuant to this Agreement.
Innovative hereby authorizes Collateral Agent to attach each Pledge Amendment
to
this Agreement and agrees that all certificates or instruments listed on any
Pledge Amendment delivered to Collateral Agent shall for all purposes hereunder
constitute Collateral.
4.4 If
Innovative shall receive, by virtue of Innovative's being or having been an
owner of any Collateral, any (i) stock certificate (including, without
limitation, any certificate representing a stock dividend or distribution in
connection with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock split, spin-off
or
split-off), promissory note or other instrument, (ii) option or right,
whether as an addition to, substitution for, or in exchange for, any Collateral,
or otherwise, (iii) dividends payable in cash (except such dividends permitted
to be retained by Innovative pursuant to Section 5.2 hereof) or in securities
or
other property or (iv) dividends or other distributions in connection
with
a partial or total liquidation or dissolution or in connection with a reduction
of capital, capital surplus or paid-in surplus, Innovative shall receive such
stock certificate, promissory note, instrument, option, right, payment or
distribution in trust for the benefit of Collateral Agent, shall segregate
it
from Innovative's other property and shall deliver it forthwith to Collateral
Agent, in the exact form received, with any necessary endorsement and/or
appropriate stock powers duly executed in blank, to be held by Collateral Agent
as Collateral and as further collateral security for the
Obligations.
5. Distribution
on Liquidation.
5.1 If
any
sum is paid as a liquidating distribution on or with respect to the Collateral,
Innovative shall deliver same to the Collateral Agent to be applied to the
Obligations, then due, in accordance with the terms of the Convertible
Notes.
5.2 So
long
as no Event of Default exists, Innovative shall be entitled (i) to exercise
all
voting power pertaining to any of the Collateral, provided such exercise is
not
contrary to the interests of the Lenders and does not impair the Collateral
and
(ii) may receive and retain any and all dividends, interest payments or other
distributions paid in respect of the Collateral.
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5.3. Upon
the
occurrence and during the continuation of an Event of Default, all rights of
Innovative, upon notice given by Collateral Agent, to exercise the voting power
and receive payments, which it would otherwise be entitled to pursuant to
Section 5.2, shall be suspended and all such rights shall thereupon become
vested in Collateral Agent, which shall thereupon have the sole right to
exercise such voting power and receive such payments.
5.4 All
dividends, distributions, interest and other payments which are received by
Innovative contrary to the provisions of Section 5.3 shall be received in trust
for the benefit of Collateral Agent, shall be segregated from other funds of
Innovative, and shall be forthwith paid over to Collateral Agent as Collateral
in the exact form received with any necessary endorsement and/or appropriate
stock powers duly executed in blank, to be held by Collateral Agent as
Collateral and as further collateral security for the Obligations
6. Further
Action By Innovative; Covenants and Warranties.
6.1 Collateral
Agent at all times shall have a perfected security interest in the Collateral.
Subject to the security interests described herein, Innovative has and will
continue to have full title to the Collateral free from any liens, leases,
encumbrances, judgments or other claims. Collateral Agent's security interest
in
the Collateral constitutes and will continue to constitute a first, prior and
indefeasible security interest in favor of Collateral Agent. Innovative will
do
all acts and things, and will execute and file all instruments (including,
but
not limited to, security agreements, financing statements, continuation
statements, etc.) reasonably requested by Collateral Agent to establish,
maintain and continue the perfected security interest of Collateral Agent in
the
Collateral, and will promptly on demand, pay all costs and expenses of filing
and recording, including the costs of any searches reasonably deemed necessary
by Collateral Agent from time to time to establish and determine the validity
and the continuing priority of the security interest of Collateral Agent, and
also pay all other claims and charges that, in the opinion of Collateral Agent,
exercised in good faith, are reasonably likely to materially prejudice, imperil
or otherwise affect the Collateral or Collateral Agent’s or Lender’s security
interests therein.
6.2 Other
than in the ordinary course of business, and except for Collateral which is
substituted by assets of identical or greater value or which has become obsolete
or is of inconsequential in value, Innovative will not sell, transfer, assign
or
pledge those items of Collateral (or allow any such items to be sold,
transferred, assigned or pledged), without the prior written consent of
Collateral Agent other than a transfer of the Collateral to a wholly-owned
subsidiary on prior notice to Collateral Agent, and provided the Collateral
remains subject to the security interest herein described. Although Proceeds
of
Collateral are covered by this Agreement, this shall not be construed to mean
that Collateral Agent consents to any sale of the Collateral, except as provided
herein. Sales of Collateral in the ordinary course of business shall be free
of
the security interest of Lenders and Collateral Agent and Lenders and Collateral
Agent shall promptly execute such documents (including without limitation
releases and termination statements) as may be required by Debtor to evidence
or
effectuate the same.
6.3 Innovative
will, at all reasonable times and upon reasonable notice, allow Collateral
Agent
or its representatives free and complete access to the Collateral and all of
Innovative's records which in any way relate to the Collateral, for such
inspection and examination as Collateral Agent reasonably deems
necessary.
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6.4 Innovative,
at its sole cost and expense, will protect and defend this Security Agreement,
all of the rights of Collateral Agent and Lenders hereunder, and the Collateral
against the claims and demands of all other persons.
6.5 Innovative
will promptly notify Collateral Agent of any levy, distraint or other seizure
by
legal process or otherwise of any part of the Collateral, and of any threatened
or filed claims or proceedings that are reasonably likely to affect or impair
any of the rights of Collateral Agent under this Security Agreement in any
material respect.
6.6 Innovative,
at its own expense, will obtain and maintain in force insurance policies
covering losses or damage to those items of Collateral which constitute physical
personal property. The insurance policies to be obtained by Innovative shall
be
in form and amounts reasonably acceptable to Collateral Agent. Innovative shall
make the Collateral Agent a first loss payee thereon to the extent of its
interest in the Collateral. Collateral Agent is hereby irrevocably (until the
Obligations are paid in full) appointed Innovative’ attorney-in-fact to endorse
any check or draft that may be payable to Innovative so that Collateral Agent
may collect the proceeds payable for any loss under such insurance. The proceeds
of such insurance (subject to the rights of senior secured parties), less any
costs and expenses incurred or paid by Collateral Agent in the collection
thereof, shall be applied either toward the cost of the repair or replacement
of
the items damaged or destroyed, or on account of any sums secured hereby,
whether or not then due or payable.
6.7 Collateral
Agent may, at its option, and without any obligation to do so, pay, perform
and
discharge any and all amounts, costs, expenses and liabilities herein agreed
to
be paid or performed by Innovative. Upon Innovative’ failure to do so, all
amounts expended by Collateral Agent in so doing shall become part of the
Obligations secured hereby, and shall be immediately due and payable by
Innovative to Collateral Agent upon demand and shall bear interest at the lesser
of 15% per annum or the highest legal amount from the dates of such expenditures
until paid.
6.8 Upon
the
request of Collateral Agent, Innovative will furnish to Collateral Agent within
five (5) business days thereafter, or to any proposed assignee of this Security
Agreement, a written statement in form reasonably satisfactory to Collateral
Agent, duly acknowledged, certifying the amount of the principal and interest
and any other sum then owing under the Obligations, whether to its knowledge
any
claims, offsets or defenses exist against the Obligations or against this
Security Agreement, or any of the terms and provisions of any other agreement
of
Innovative securing the Obligations. In connection with any assignment by
Collateral Agent of this Security Agreement, Innovative hereby agrees to cause
the insurance policies required hereby to be carried by Innovative, if any,
to
be endorsed in form satisfactory to Collateral Agent or to such assignee, with
loss payable clauses in favor of such assignee, and to cause such endorsements
to be delivered to Collateral Agent within ten (10) calendar days after request
therefor by Collateral Agent.
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6.9 Innovative
will, at its own expense, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other reasonable
assurances or instruments and take further steps relating to the Collateral
and
other property or rights covered by the security interest hereby granted, as
the
Collateral Agent may reasonably require to perfect its security interest
hereunder.
6.10 Innovative
represents and warrants that it is the true and lawful exclusive owner of the
Collateral, free and clear of any liens and encumbrances.
6.11 Innovative
hereby agrees not to divest itself of any right under the Collateral except
as
permitted herein absent prior written approval of the Collateral
Agent.
6.12 Innovative
shall cause each Subsidiary of Innovative not in existence on the date hereof
to
execute and deliver to Collateral Agent promptly and in any event within 10
days
after the formation, acquisition or change in status thereof (A) a guaranty
guaranteeing the Obligations and (B) a security and pledge agreement in
substantially the form of this Agreement, together with (x) certificates
evidencing all of the capital stock of any entity owned by such Subsidiary,
(y)
undated stock powers executed in blank with signature guaranteed, and (z) such
opinion of counsel and such approving certificate of such Subsidiary as
Collateral Agent may reasonably request in respect of complying with any legend
on any such certificate or any other matter relating to such shares and (E)
such
other agreements, instruments, approvals, legal opinions or other documents
reasonably requested by Collateral Agent in order to create, perfect, establish
the first priority of or otherwise protect any lien purported to be covered
by
any such pledge and security Agreement or otherwise to effect the intent that
all property and assets of such Subsidiary shall become Collateral for the
Obligations. For purposes of this Agreement, “Subsidiary”
means,
with respect to any entity at any date, any corporation, limited or general
partnership, limited liability company, trust, estate, association, joint
venture or other business entity of which more than 50% of (A) the
outstanding capital stock having (in the absence of contingencies) ordinary
voting power to elect a majority of the board of directors or other managing
body of such entity, (B) in the case of a partnership or limited liability
company, the interest in the capital or profits of such partnership or limited
liability company or (C) in the case of a trust, estate, association,
joint
venture or other entity, the beneficial interest in such trust, estate,
association or other entity business is, at the time of determination, owned
or
controlled directly or indirectly through one or more intermediaries, by such
entity.
7. Power
of Attorney.
After
the
occurrence and during the uncured continuation of an Event of Default as defined
in Section 9 below, Innovative hereby irrevocably constitutes and appoints
the
Collateral Agent as the true and lawful attorney of Innovative, with full power
of substitution, in the place and stead of Innovative and in the name of
Innovative or otherwise, at any time or times, in the discretion of the
Collateral Agent, to take any action and to execute any instrument or document
which the Collateral Agent may deem necessary or advisable to accomplish the
purposes of this Agreement. This power of attorney is coupled with an interest
and is irrevocable until the Obligations are satisfied.
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8. Performance
By The Collateral Agent.
If
Innovative fails to perform any material covenant, agreement, duty or obligation
of Innovative under this Agreement, the Collateral Agent may, after any
applicable cure period, at any time or times in its discretion, take action
to
effect performance of such obligation. All reasonable expenses of the Collateral
Agent incurred in connection with the foregoing authorization shall be payable
by Innovative as provided in Paragraph 12.1 hereof. No discretionary right,
remedy or power granted to the Collateral Agent under any part of this Agreement
shall be deemed to impose any obligation whatsoever on the Collateral Agent
with
respect thereto, such rights, remedies and powers being solely for the
protection of the Collateral Agent.
9. Event
of Default.
An
event
of default ("Event of Default") shall be deemed to have occurred hereunder
upon
the occurrence of any event of default as defined and described in this
Agreement, in the Notes, Subscription Agreement, and any other agreement to
which Innovative and Collateral Agent or a Lender are parties. Upon and after
any Event of Default, after the applicable cure period, if any, any or all
of
the Obligations shall become immediately due and payable at the option of the
Collateral Agent, for the benefit of the Lenders, and the Collateral Agent
may
dispose of Collateral as provided below. A default by Innovative of any of
its
material obligations pursuant to this Agreement shall be an Event of Default
hereunder and an event of default as defined in the Notes, and Subscription
Agreement.
10. Disposition
of Collateral.
Upon
and
after any Event of Default which is then continuing,
10.1 The
Collateral Agent may exercise its rights with respect to each and every
component of the Collateral, without regard to the existence of any other
security or source of payment for the Obligations. In addition to other rights
and remedies provided for herein or otherwise available to it, the Collateral
Agent shall have all of the rights and remedies of a lender on default under
the
Uniform Commercial Code then in effect in the State of New York.
10.2 If
any
notice to Innovative of the sale or other disposition of Collateral is required
by then applicable law, five business (5) days prior written notice (which
Innovative agrees is reasonable notice within the meaning of Section 9.612(a)
of
the Uniform Commercial Code) shall be given to Innovative of the time and place
of any sale of Collateral which Innovative hereby agrees may be by private
sale.
The rights granted in this Section are in addition to any and all rights
available to Collateral Agent under the Uniform Commercial Code.
10.3 The
Collateral Agent is authorized, at any such sale, if the Collateral Agent deems
it advisable to do so, in order to comply with any applicable securities laws,
to restrict the prospective bidders or purchasers to persons who will represent
and agree, among other things, that they are purchasing the Collateral for
their
own account for investment, and not with a view to the distribution or resale
thereof, or otherwise to restrict such sale in such other manner as the
Collateral Agent deems advisable to ensure such compliance. Sales made subject
to such restrictions shall be deemed to have been made in a commercially
reasonable manner.
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10.4 All
proceeds received by the Collateral Agent for the benefit of the Lenders in
respect of any sale, collection or other enforcement or disposition of
Collateral, shall be applied (after deduction of any amounts payable to the
Collateral Agent pursuant to Paragraph 12.1 hereof) against the Obligations
pro
rata among the Lenders in proportion to their interests in the Obligations.
Upon
payment in full of all Obligations, Innovative shall be entitled to the return
of all Collateral, including cash, which has not been used or applied toward
the
payment of Obligations or used or applied to any and all costs or expenses
of
the Collateral Agent incurred in connection with the liquidation of the
Collateral (unless another person is legally entitled thereto) and if applicable
the Collateral Agent upon satisfaction of the Obligations will deliver form
UCC-3 Financing Statement (Termination) to the Borrower. Any assignment of
Collateral by the Collateral Agent to Innovative shall be without representation
or warranty of any nature whatsoever and wholly without recourse. To the extent
allowed by law, each Lender may purchase the Collateral and pay for such
purchase by offsetting up to such Lender’s pro rata portion of the proceeds with
sums owed to such Lender by Innovative arising under the Obligations or any
other source.
11. Waiver
of Automatic Stay.
Innovative acknowledges and agrees that should a proceeding under any bankruptcy
or insolvency law be commenced by or against Innovative, or if any of the
Collateral should become the subject of any bankruptcy or insolvency proceeding,
then the Collateral Agent should be entitled to, among other relief to which
the
Collateral Agent or Lenders may be entitled under the Note, Subscription
Agreement and any other agreement to which the Debtor, Lenders or Collateral
Agent are parties, (collectively "Loan Documents") and/or applicable law, an
order from the court granting immediate relief from the automatic stay pursuant
to 11 U.S.C. Section 362 to permit the Collateral Agent to exercise all of
its
rights and remedies pursuant to the Loan Documents and/or applicable law.
Innovative EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED BY 11
U.S.C. SECTION 362. FURTHERMORE, Innovative EXPRESSLY ACKNOWLEDGES AND AGREES
THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY
CODE
OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION
105)
SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY
OF
THE COLLATERAL AGENT TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN
DOCUMENTS AND/OR APPLICABLE LAW. Innovative hereby consents to any motion for
relief from stay which may be filed by the Collateral Agent in any bankruptcy
or
insolvency proceeding initiated by or against Innovative, and further agrees
not
to file any opposition to any motion for relief from stay filed by the
Collateral Agent. Innovative represents, acknowledges and agrees that this
provision is a specific and material aspect of this Agreement, and that the
Collateral Agent would not agree to the terms of this Agreement if this waiver
were not a part of this Agreement. Innovative further represents, acknowledges
and agrees that this waiver is knowingly, intelligently and voluntarily made,
that neither the Collateral Agent nor any person acting on behalf of the
Collateral Agent has made any representations to induce this waiver, that
Innovative has been represented (or has had the opportunity to be represented)
in the signing of this Agreement and in the making of this waiver by independent
legal counsel selected by Innovative and that Innovative has had the opportunity
to discuss this waiver with counsel. Innovative further agrees that any
bankruptcy or insolvency proceeding initiated by Innovative will only be brought
in the Federal Court within the Southern District of New York.
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12. Miscellaneous.
12.1 Expenses.
Innovative shall pay to the Collateral Agent, on demand, the amount of any
and
all reasonable expenses, including, without limitation, attorneys' fees, legal
expenses and brokers' fees, which the Collateral Agent may incur in connection
with (a) sale, collection or other enforcement or disposition of Collateral;
(b)
exercise or enforcement of any the rights, remedies or powers of the Collateral
Agent hereunder or with respect to any or all of the Obligations upon breach
or
threatened breach; or (c) failure by Innovative to perform and observe any
agreements of Innovative contained herein which are performed by the Collateral
Agent after any required notice to Innovative.
12.2 Waivers,
Amendment and Remedies.
No
course of dealing by the Collateral Agent and no failure by the Collateral
Agent
to exercise, or delay by the Collateral Agent in exercising, any right, remedy
or power hereunder shall operate as a waiver thereof, and no single or partial
exercise thereof shall preclude any other or further exercise thereof or the
exercise of any other right, remedy or power of the Collateral Agent. No
amendment, modification or waiver of any provision of this Agreement and no
consent to any departure by Innovative therefrom, shall, in any event, be
effective unless contained in a writing signed by the Collateral Agent, and
then
such waiver or consent shall be effective only in the specific instance and
for
the specific purpose for which given. The rights, remedies and powers of the
Collateral Agent, not only hereunder, but also under any instruments and
agreements evidencing or securing the Obligations and under applicable law
are
cumulative, and may be exercised by the Collateral Agent from time to time
in
such order as the Collateral Agent may elect.
12.3 Notices.
All
notices or other communications given or made hereunder shall be in writing
and
shall be personally delivered or deemed delivered the first business day after
being faxed (provided that a copy is delivered by first class mail) to the
party
to receive the same at its address set forth below or to such other address
as
either party shall hereafter give to the other by notice duly made under this
Section:
|
To
Debtor:
|
Innovative
Food Holdings, Inc.
|
|
|
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ #▇
|
||
|
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
||
|
Attn:
▇▇▇ ▇▇▇▇▇▇▇▇, CEO & President
|
||
|
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
|
||
|
With
an additional copy by telecopier only to:
|
||
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Esq.
|
||
|
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
|
||
|
▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
||
|
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
|
||
|
To
Lenders:
|
To
the addresses and telecopier numbers set forth on Schedule
A
|
|
|
To
the Collateral Agent:
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
|
|
Grushko
& ▇▇▇▇▇▇▇, P.C.
|
||
|
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
|
||
|
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
|
||
|
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
|
Any
party
may change its address by written notice in accordance with this
paragraph.
-10-
12.4 Term;
Binding Effect.
This
Agreement shall (a) remain in full force and effect until payment and
satisfaction in full of all of the Obligations; (b) be binding upon Innovative,
and its successors and permitted assigns; and (c) inure to the benefit of the
Collateral Agent, for the benefit of the Lenders and their respective successors
and assigns. All the rights and benefits granted by Debtor to the Collateral
Agent and Lenders in the Loan Documents and other agreements and documents
delivered in connection therewith are deemed granted to both the Collateral
Agent and Lenders.
12.5 Captions.
The
captions of Paragraphs, Articles and Sections in this Agreement have been
included for convenience of reference only, and shall not define or limit the
provisions hereof and have no legal or other significance
whatsoever.
12.6 Governing
Law; Venue; Severability.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York without regard to principles of conflicts or choice of law,
except to the extent that the perfection of the security interest granted hereby
in respect of any item of Collateral may be governed by the law of another
jurisdiction. Any legal action or proceeding against Innovative with respect
to
this Agreement may be brought in the courts in the State of New York or of
the
United States for the Southern District of New York, and, by execution and
delivery of this Agreement, Innovative hereby irrevocably accepts for itself
and
in respect of its property, generally and unconditionally, the jurisdiction
of
the aforesaid courts. Innovative hereby irrevocably waives any objection which
they may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Agreement
brought in the aforesaid courts and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum. If any
provision of this Agreement, or the application thereof to any person or
circumstance, is held invalid, such invalidity shall not affect any other
provisions which can be given effect without the invalid provision or
application, and to this end the provisions hereof shall be severable and the
remaining, valid provisions shall remain of full force and effect.
12.7 Counterparts/Execution.
This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but
one
and the same instrument. This Agreement may be executed by facsimile signature
and delivered by facsimile transmission.
[THIS
SPACE INTENTIONALLY LEFT BLANK]
-11-
IN
WITNESS WHEREOF, the
undersigned have executed and delivered this Security and Pledge Agreement,
as
of the date first written above.
| "DEBTOR" | "THE COLLATERAL AGENT" | ||
| INNOVATIVE FOOD HOLDINGS, INC. | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||
| a Florida corporation | |||
| By: | |||
|
|
|
||
| Its: | |||
|
|
|||
APPROVED
BY “LENDERS”:
| ALPHA CAPITAL AKTIENGESELLSCHAFT | WHALEHAVEN CAPITAL FUND LIMITED | ||
|
|
|
||
This
Security and Pledge Agreement may be signed by facsimile signature
and
delivered
by confirmed facsimile transmission.
-12-
SCHEDULE
A TO SECURITY AND PLEDGE AGREEMENT
|
LENDERS
|
INITIAL
CLOSING PURCHASE PRICE
|
CLASS
A WARRANTS
|
CLASS
B WARRANTS
|
CLASS
C WARRANTS
|
SECOND
CLOSING PURCHASE PRICE
|
|||||||||||
|
ALPHA
CAPITAL AKTIENGESELLSCHAFT
Pradafant
7
9490
Furstentums
Vaduz,
Lichtenstein
Fax:
▇▇▇-▇▇-▇▇▇▇▇▇▇▇
|
$
|
350,000.00
|
$
|
120,000.00
|
||||||||||||
|
WHALEHAVEN
CAPITAL FUND LIMITED
▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
|
$
|
50,000.00
|
$
|
30,000.00
|
||||||||||||
|
TOTAL
|
$
|
400,000.00
|
$
|
150,000.00
|
||||||||||||
-13-
ANNEX
I
TO
PLEDGE
AMENDMENT
This
Pledge Amendment, dated _________ __ 200_, is delivered pursuant to Section
4.3
of the Security and Pledge Agreement referred to below. The undersigned hereby
agrees that this Pledge Amendment may be attached to the Security and Pledge
Agreement, dated February ___, 2005, as it may heretofore have been or hereafter
may be amended, restated, supplemented or otherwise modified from time to time
and that the shares listed on this Pledge Amendment shall be hereby pledged
and
assigned to Collateral Agent and become part of the Collateral referred to
in
such Security and Pledge Agreement and shall secure all of the Obligations
referred to in such Security and Pledge Agreement.
|
Name
of Issuer
|
Number
of Shares |
Class
|
Certificate
Number(s) |
|||||||
| INNOVATIVE FOOD HOLDINGS, INC. | ||
| |
|
|
| By: | ||
|
Name:
Title:
|
||
-14-