SECURITY AND PLEDGE AGREEMENT (Subsidiary)
(Subsidiary)
1. Identification.
This
Security and Pledge Agreement (the "Agreement"), dated as of February ___,
2005,
is entered into by and between Food Innovations, Inc., a Florida corporation,
(“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 Debtor
is
a wholly-owned subsidiary of Innovative Food Holdings, Inc., a Florida
(“Innovative”). The Lenders have made or are making loans and will make
additional loans to Innovative (the "Loans"). It is beneficial to Debtor
that
the Loans were made, are being made and will be made. Debtor will obtain
substantial benefit from the proceeds of the Loans.
2.2 The
Loans
are evidenced by certain eight percent (8%) 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 Debtor and Lenders are
parties and which Convertible Notes are guaranteed by Debtor. The Notes are
further identified on Schedule A hereto and were and will be executed by
Debtor
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,
a
Guaranty Agreement delivered by Debtor to the Collateral Agent and Lenders,
and
any other agreement between or among them (collectively, the "Obligations"),
Debtor, 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 Debtor advanced on a pro rata basis by all Lenders
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.
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3.1 As
security for the Obligations of Debtor, Debtor hereby grants the Collateral
Agent, for the benefit of the Lenders, a security interest in the
Collateral.
3.2 “Collateral”
shall mean all of the following property of Debtor:
(A) All
now
owned and hereafter acquired right, title and interest of Debtor 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 is set forth below:
(i) Accounts:
All now
owned and hereafter acquired right, title and interest of Debtor 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 Debtor, 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 Debtor 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
Debtor’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 Debtor by its customers
or
repossessed by Debtor and all of Debtor’ right, title and interest in and to the
foregoing (including all of Debtor’ 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 Debtor’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 Debtor in, to
and in
respect of any real or other personal property in or upon which Debtor 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 Debtor, 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 Debtor 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 Debtor 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 Debtor, 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 Debtor in, and all Proceeds of any and all of the
foregoing in each case, whether now owned or hereafter acquired by Debtor
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 Debtor
shall prepare, execute and/or deliver to the Collateral Agent UCC-1 Financing
Statements. The Collateral Agent is instructed to prepare and file at Debtor’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 any of Debtor. 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, Debtor 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 Debtor. If any Collateral
consists of security entitlements, Debtor 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 Debtor.
4.3 Within
five (5) days after the receipt by Debtor of any Additional Collateral, a
Pledge
Amendment, duly executed by Debtor, 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. Debtor 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
Debtor
shall receive, by virtue of Debtor'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 Debtor 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, Debtor 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 Debtor'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,
Debtor 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, Debtor 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
Debtor, 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
Debtor 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
Debtor,
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 Debtor; Covenants and Warranties.
6.1 Collateral
Agent at all times shall have a perfected security interest in the Collateral.
Debtor 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.
Debtor 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 of
Lenders’ 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, Debtor 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 Debtor
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
Debtor'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 Debtor,
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 Debtor
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 Debtor,
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 Debtor shall
be in
form and amounts reasonably acceptable to Collateral Agent. Debtor 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 Debtor’ attorney-in-fact to endorse any check or
draft that may be payable to Debtor 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 Debtor. Upon Debtor’ 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 Debtor to Collateral
Agent upon demand and shall bear interest at the lesser of 18% per annum
or the
highest legal amount from the dates of such expenditures until
paid.
6.8 Upon
the
request of Collateral Agent, Debtor 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
Debtor securing the Obligations. In connection with any assignment by Collateral
Agent of this Security Agreement, Debtor hereby agrees to cause the insurance
policies required hereby to be carried by Debtor, 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.
6.9 Debtor
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.
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6.10 Debtor
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 Debtor
hereby agrees not to divest itself of any right under the Collateral except
as
permitted herein absent prior written approval of the Collateral Agent, except
to a subsidiary organized and located in the United States on prior notice
to
Collateral Agent provided the Collateral remains subject to the security
interest herein described.
6.12 Debtor
shall cause each Subsidiary of Debtor 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
substantially in 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, Debtor hereby irrevocably constitutes and appoints the
Collateral Agent as the true and lawful attorney of Debtor, with full power
of
substitution, in the place and stead of Debtor and in the name of Debtor
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.
8. Performance
By The Collateral Agent.
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If
Debtor
fails to perform any material covenant, agreement, duty or obligation of
Debtor
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
Debtor 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 Debtor 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 Debtor 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 Debtor of the sale or other disposition of Collateral is required
by
then applicable law, five business (5) days prior written notice (which Debtor
agrees is reasonable notice within the meaning of Section 9.612(a) of the
Uniform Commercial Code) shall be given to Debtor of the time and place of
any
sale of Collateral which Debtor 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, Debtor 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 Debtor 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 Debtor arising under the Obligations
or any other source.
11. Waiver
of Automatic Stay.
Debtor
acknowledges and agrees that should a proceeding under any bankruptcy or
insolvency law be commenced by or against Debtor, 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, Guaranty 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. Debtor EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY
IMPOSED BY 11 U.S.C. SECTION 362. FURTHERMORE, Debtor 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. Debtor 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 Debtor, and
further agrees not to file any opposition to any motion for relief from stay
filed by the Collateral Agent. Debtor 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. Debtor 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 Debtor 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 Debtor and that Debtor has had the opportunity to discuss this
waiver with counsel. Debtor further agrees that any bankruptcy or insolvency
proceeding initiated by Debtor will only be brought in the Federal Court
within
the Southern District of New York.
12. Miscellaneous.
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12.1 Expenses.
Debtor
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 Debtor to perform and observe any
agreements of Debtor contained herein which are performed by the Collateral
Agent.
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 Debtor 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 after any applicable notice
to
Debtor.
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:
|
c/o
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:
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
|
▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, P.C.
|
|
|
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
|
|
|
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
|
|
| Fax: (▇▇▇) ▇▇▇-▇▇▇▇ | |
-10-
Any
party
may change its address by written notice in accordance with this
paragraph.
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 Debtor,
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 Debtor 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, Debtor hereby irrevocably accepts for itself and in respect
of
its property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Debtor 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"
FOOD
INNOVATIONS, INC.
a
Florida
corporation
By:
_____________________________________
Its:
_____________________________________
‘THE
COLLATERAL AGENT”
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
_________________________________________
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)
|
| FOOD INNOVATIONS, INC. | ||
| |
|
|
| By: | ||
|
Name: |
||
| Title: | ||
-14-