SECURITY AGREEMENT
Exhibit
10.22
THIS
SECURITY AGREEMENT (“Agreement”) is made as of the ____ day of July 2009 by
ARTISANAL CHEESE, LLC, a New York limited liability company with an address at
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000
(“Borrower”), in favor of each of several Lenders signatory hereto (each such
Lender, a “Lender” and, collectively, the “Lenders”).
W I T N E
S S E T H :
This
Agreement is made pursuant to the Bridge Note of even date herewith executed by
the Company in favor of the Lenders (the “Bridge Note”) pursuant to which the
Company agrees to repay the Lenders that amount which each Lender has loaned
respectively to the Company thereunder including all principle and interest owed
by the Company through the date of the repayment thereof.
The
Company and each Lender hereby agrees as follows:
WHEREAS,
Borrower is indebted to the Lenders for certain payments under the Bridge Note;
and
WHEREAS,
it is a condition of the Bridge Note that Borrower execute and deliver this
Agreement to the Lenders to secure Borrower’s obligations
thereunder.
NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. As
used in this Agreement, the term “Collateral” means all assets, accounts, goods,
general intangibles (excluding any and all patents, trademarks and copy
rights—registered or unregistered—trade secrets, domain name and addresses, and
intellectual property licenses), inventory, furniture, fixtures, tools,
equipment, materials, supplies, instruments, securities, chattel paper, contract
rights, general intangibles, credits, claims and other property, rights and
interests owned by Borrower, together with all additions and accession thereto,
all substitutions and replacements therefore, and all proceeds and products
thereof, whether now or hereafter existing or now owned or hereafter acquired,
wherever located, of every kind and description.
2. As
used in this Agreement, the term “Liability” or “Liabilities” means all present
and future obligations of Borrower to the Lenders, whether direct or indirect,
joint or several, otherwise secured or unsecured, primary or secondary, absolute
or contingent, which are due or that may become due under the Note.
3. To
secure the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of the Liabilities, the Borrower
hereby assigns, conveys, mortgages, pledges, transfers and grants to the Lenders
a security interest in and too all of the Collateral subject to any prior
properly perfected security interest.
4. The
Borrower represents that the Collateral and its books and records relating to
the Collateral are located at the address of Borrower set forth
above. The Borrower covenants and agrees that it will promptly notify
the Lenders in writing of any change of such location.
5. Except
for those properly perfected security interests previously disclosed to Lenders,
the Borrower represents, warrants and covenants that: (a) it is the
sole owner of the Collateral, free and clear of any liens, security interests,
charges or encumbrances; (b) it has the right to grant the security interest
created by this Agreement; (c) no financing statements, or other instruments of
similar effect, covering all or any part of the Collateral are on file in any
recording office; (d) it is a limited liability company, duly organized, validly
existing and in good standing in the place of its organization, and the
execution and delivery of this Agreement and the Bridge Note have been duly
authorized by all necessary corporate action; (e) it is and will continue to be
eligible to do business and is otherwise in good standing in all jurisdictions
where it owns property or transacts business, except to the extent that the
failure to be eligible or in good standing could not, in the aggregate,
reasonably be expected to have a material adverse effect; (f) it is and will
continue to be in compliance with all applicable laws, statutes, rules and
regulations, including without limitation, those concerning the environment,
employee pension and benefit plans and the payment of taxes, assessments and
other governmental charges, except to the extent that the failure to comply
could not, in the aggregate, reasonably be expected to have a material adverse
effect; and (g) neither this Agreement nor any other document delivered by the
Borrower to the Lenders contains any untrue statement of a material fact or
omits to state any material fact necessary to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made as of the date made or deemed made.
6. The
Borrower covenants and agrees that, until its obligations under the Bridge Note
have been paid or fulfilled in full: (a) it will defend the Collateral against
the claims and demands of all persons; (b) it will not sell, lease, encumber,
remove, conceal, grant or permit any security interest in the Collateral, nor
part with possession of any thereof, nor permit the same to be used in violation
of any law or ordinance; (c) it will maintain the Collateral in good condition
and repair at its sole expense; (d) it will pay all taxes levied on the
Collateral, and will make due and timely payment or deposit of all federal,
state and local taxes, assessments or contributions required by law and will
execute and deliver to the Lenders, on reasonable demand, appropriate
certificates attesting to such payment or deposit; (e) the Collateral shall not
become subject to any purchase money or superior lien or security interest,
except in favor of the Lenders or as otherwise provided in Section 10 hereof;
(f) it shall procure and maintain adequate insurance on the tangible Collateral
against the risks of fire, theft and such other risks; (g) it will permit the
Lenders, with or without notice, to inspect the Collateral and to make extracts
from the books and records of Borrower; (h) it will join with the Lenders in
doing whatever may be necessary under applicable law to perfect the Lenders’
security interest; and (i) the Lenders may at any time and from time to time to
file in any Uniform Commercial Code jurisdiction any initial financing
statements, continuations and amendments thereto with respect to the Collateral
and the Liabilities.
7. Each
Lender agrees that any security interests in the Collateral granted pursuant to
this Agreement in favor of such other Lenders shall have equal priority as those
granted in favor of the other Lenders. Accordingly, Lenders agrees to
cooperate in good faith with the other Lenders to jointly file any Uniform
Commercial Code initial financing statements, continuations and amendments with
respect to the Collateral and the Liabilities.
8. The
following shall be an Event of Default under this Agreement: (a) a breach by
Borrower of any term, covenant, obligation or warranty arising under this
Agreement; (b) any statement made in or pursuant to this Agreement or the Bridge
Note shall prove to be untrue in any material respect, and such untruth is not
attributable to the Lenders; or (c) any default shall occur under the Bridge
Note.
9. Upon
the occurrence of any Event of Default, all Liabilities of the Borrower shall
immediately be due and payable and the Lenders may: (a) proceed, with or without
judicial process, to take possession of all or any part of the Collateral; (b)
assign, transfer and deliver at any time any portion of the Collateral; (c) upon
proper notice, elect to retain the Collateral in partial satisfaction of
Liabilities; (d) set off against any money due from the respective Lenders, if
any; and (e) pursue any remedy available to it by law or equity, including
without limitation, all rights and remedies granted to a secured party under the
Uniform Commercial Code in effect in the State of New York and/or under any
other agreement between the Borrower and the Lenders unless otherwise stated
therein. The Borrower agrees that upon receipt of notice from the
Lenders demanding possession of the Collateral, the Borrower will do everything
necessary to assemble the Collateral and make it available to the Lenders at a
location designated by the Lenders within five (5) days of the date of the
Lenders’ request. Any sale of the Collateral may be public or
private. Any sale or other disposition of the Collateral may, at the
option of the Lenders, be for cash, for credit, for future delivery, in bulk or
in parcels and with or without having the Collateral present at the sale or
disposition. The Lenders may be the purchaser at any public
sale. In the event of a sale or other disposition of the Collateral,
the Lenders shall apply all proceeds first to all costs and expenses of
disposition, including attorneys' fees, and then to the
Liabilities. Any required notification of a sale or other disposition
of the Collateral or of any action by the Lenders will be sufficient and
reasonable if given personally or received from overnight courier service not
less than seven (7) days prior to the day on which the action is to be
taken.
If the
Collateral is or includes equipment or inventory the Borrower shall (a) keep
accurate books and records with respect to the Collateral, including without
limitation, maintenance records and current stock, cost and sales records
accurately itemizing the types and quantities, and (b) upon request, deliver to
the Lenders all evidence of ownership including certificates of title with the
Lenders' interest appropriately noted on the certificate.
10. The
Lenders shall not be deemed to waive, by any act, delay, omission or otherwise,
any of their rights or remedies hereunder unless such waiver is in writing and
signed by the Lenders and then only to the extent specifically set forth
therein. A waiver in one event shall not be continuing or a bar to or
waiver of such right or remedy on a subsequent event. Any rights and
remedies provided for in this Agreement may be exercised singly or
concurrently.
11. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and assigns.
12. The
Borrower waives presentment for payment, demand, notice of nonpayment, notice of
protest, and protest of all commercial paper at any time held by the Lenders on
which the Borrower is in any way liable. The Borrower consents to any
and all extensions of time, renewals, waivers, or modifications that may be
granted by the Lenders with respect to the payment or other provisions of any
such commercial paper, and to the release of any Collateral, with or without
substitution, and to the release of any party against which the Borrower has a
right of recourse. The liability of the Borrower shall not be
affected by the loss, theft, damage, destruction or seizure of the
Collateral.
13. This
Agreement shall be governed by and construed under the laws of the State of New
York without regard to conflict of laws principles. Borrower
irrevocably agrees that any suit regarding this Note shall be brought in the
state or federal courts located in New York, New York and Borrower submits to
such jurisdiction.
14. BORROWER
AND THE LENDERS ACKNOWLEDGE AND AGREE THAT (i) ANY SUIT, ACTION OR PROCEEDING,
WHETHER CLAIM OR COUNTERCLAIM, BROUGHT OR INSTITUTED BY THE LENDERS OR BORROWER
OR ANY SUCCESSOR OR ASSIGN OF THE LENDERS OR BORROWER, ON OR WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT
HERETO, OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY AND EACH
PARTY WAIVES THE RIGHT TO TRIAL BY JURY; (ii) EACH WAIVES ANY RIGHT IT MAY HAVE
TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES; AND (iii) THIS SECTION IS A SPECIFIC AND MATERIAL
ASPECT OF THIS AGREEMENT AND THE LENDERS WOULD NOT EXTEND CREDIT TO BORROWER IF
THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS
AGREEMENT.
15. This
Agreement may be executed in two or more counterparts, each of which taken
together shall constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such counterpart.
[Intentionally
blank, signature page follows]
IN
WITNESS WHEREOF, this Agreement has been executed and delivered by the
undersigned as of the date and year first above written.
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BORROWER:
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ARTISANAL
CHEESE, LLC
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By:
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Name:
Xxxxxx X. Xxxx
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Title:
President
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LENDER:
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By:
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Name:
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