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EXHIBIT 10.30
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Security Agreement") is made as of
this 3rd day of April 1998, by The Delicious Frookie Company, Inc., a Delaware
corporation ("Buyer"), in favor of Xxxxxxx Foods, L.L.C., a Delaware limited
liability company ("Seller").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Asset Purchase Agreement of even
date herewith by and between Buyer and Seller (as the same may from time to time
be amended, restated, modified or supplemented, the "Purchase Agreement"),
Seller has sold to Buyer substantially all of the assets of Seller in
consideration for certain cash, the assumption of certain liabilities, and a
certain Promissory Note of even date herewith in the original principal amount
of $1,500,000 made in favor of Seller (the "Purchase Note"); and
WHEREAS, Seller has required Buyer to execute and deliver this
Security Agreement as security for the Purchase Note.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Obligations Secured. The principal, interest, and indebtedness
evidenced by the Purchase Note plus all fees, costs and expenses (including,
without limitation, all court costs and reasonable attorneys' fees, costs and
expenses) paid or incurred by Seller in endeavoring to collect all or any part
of the obligations evidenced by the Purchase Note and taking any action with
respect to the collateral securing the Purchase Note (the "Obligations").
2. Grant of Security Interest. (i) To secure the full and prompt
payment and performance of the Obligations, Buyer hereby grants to Seller a
right of setoff against and a continuing security interest in and to the
following property and interests in property of Buyer, whether now owned and
existing or hereafter acquired or arising and wheresoever located: accounts,
goods, contract rights, chattel paper, instruments, documents, inventory,
equipment, general intangibles (including, without limitation, inventions,
designs, patents, patent applications, the trademarks and trademark applications
listed on Exhibit A hereto, trade names, trade secrets, goodwill, licenses,
franchises, tax refund claims, guaranty claims, rights and claims against
shippers and carriers, and security interests or other security held by Buyer),
tax refunds, rights to other refunds and indemnification, machinery, furniture
and fixtures, together with all accessions and additions to, products,
replacements and proceeds (including, without limitation, proceeds of insurance
policies insuring the same) of,
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and substitutions for any of the foregoing property and interests in property
and all of Buyer's books and records related to any of the foregoing property
(collectively, the "Collateral").
(ii) Buyer will execute and deliver to Seller such financing
statements and amendments thereof and supplements thereto, and such other
instruments as Seller may from time to time require (and will pay all costs of
filing the same), and will take such other actions as Seller may request, in
order to perfect, preserve, protect and maintain the security interests hereby
granted. Seller may file one or more financing statements disclosing Seller's
security interest under this Security Agreement without Buyer's signature
appearing thereon if, promptly following Seller's request, Buyer has not
executed and delivered to Seller any such financing statement. Buyer further
agrees that a carbon, photographic, photostatic or other reproduction of this
Security Agreement or of a financing statement is sufficient as a financing
statement.
(iii) If Buyer shall at any time hereafter acquire any interest in
real property, whether as owner, lessee or otherwise, Buyer shall execute and
deliver to Seller, at Seller's request, such instruments and documents as Seller
may request to grant Seller a lien on such real property interest, and shall
reimburse Seller for the cost of recording the same.
3. Obligations Unconditional. Buyer hereby agrees that its
obligations and security interests granted under this Security Agreement shall
be unconditional, irrespective of:
(i) the validity, enforceability, avoidance or subordination of any
of the Obligations;
(ii) the absence of any attempt by, or on behalf of, Seller to
collect, or to take any other action to enforce, all or any part of the
Obligations whether from or against Buyer, any guarantor of the
Obligations or any other person or entity which may become responsible for
repayment of the Obligations;
(iii) the election of any remedy by, or on behalf of, Seller with
respect to all or any part of the Obligations;
(iv) the waiver, consent, extension, forbearance or granting of any
indulgence by, or on behalf of, Seller with respect to the Obligations;
(v) the failure of Seller to take any steps to perfect and maintain
its security interest in, or to preserve its rights to, any security or
collateral for the Obligations;
(vi) the election by, or on behalf of, Seller, in any proceeding
instituted under Chapter 11 of Title 11 of the
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United States Code (11 U.S.C. 101 et seq.) (the "Bankruptcy Code"), of the
application of Section 1111(b)(2) of the Bankruptcy Code;
(vii) the disallowance, under Section 502 of the Bankruptcy Code, of
all or any portion of the claims of Seller for repayment of all or any
part of the Obligations;
(viii) the assumption, assignment, or endorsement of the Purchase
Note; or
(ix) any other circumstance which might otherwise constitute a legal
or equitable discharge or defense of Buyer.
4. Enforcement; Application of Payments. (i) Upon the occurrence of
an "Event of Default" (as defined below), Seller may proceed directly and at
once, without notice, against Buyer to obtain performance of and to collect and
recover the full amount, or any portion, of the Obligations, without first
proceeding against any other person or entity, or against any other security or
collateral for the Obligations.
(ii) Seller shall have, in addition to all other rights and remedies
provided for herein or otherwise available to Seller under applicable law, all
the rights and remedies of a secured party under the Uniform Commercial Code
("UCC") as in effect in the State of Illinois with respect to the Collateral,
which rights and remedies shall be cumulative and not exclusive to the extent
permitted by law. Seller shall have the right to remove any and all of the
Collateral from Buyer's premises ("Premises") and/or to assemble and store the
Collateral on the Premises, and otherwise to operate, occupy and use the
Premises, in connection with public or private sales of the Collateral, all
without cost to Seller. At Seller's request, Buyer will, at Buyer's expense,
assemble the Collateral at one or more places, reasonably convenient to both
parties, where the Collateral may, at Seller's option, remain at Buyer's
expense, pending sale or other disposition thereof. In no event shall Seller be
liable to Buyer or any other person for any warranty, expense or charge at any
time incurred or arising in connection with any sale pursuant to this paragraph
of any of the Collateral and Buyer shall indemnify Seller in respect of any and
all such amounts. Buyer acknowledges that any breach by Buyer of any of the
provisions of this paragraph will cause irreparable injury to Seller and that
there is no adequate remedy at law for a breach of the provisions of this
paragraph. Seller shall have the immediate right, upon such breach, to obtain
injunctive and other equitable relief in any court of competent jurisdiction
without any requirement of notice, and that the granting of any such relief
shall not preclude Seller from pursuing any other available relief or remedies
for such breach.
(iii) An "Event of Default" shall mean (A) any payment of
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principal or interest under the Purchase Note shall remain unpaid 30 days after
the same shall have become due and payable; (B) Buyer admits in writing in any
proceeding its inability to pay its debts generally as they become due, or makes
a general assignment for the benefit of creditors; (C) any proceeding is
instituted by Buyer seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property; (D) there shall be
commenced against Buyer any case, proceeding or other action of a nature
referred to in clause (C) which results in the entry of an order for relief or
any adjudication that it is bankrupt or insolvent or which remains undismissed,
undischarged, unstayed or unbounded for period of at least 60 days, or (E) Buyer
takes any corporate action to authorize any of the actions set forth in this
paragraph.
5. Waivers. (i) Buyer hereby waives diligence, presentment, demand
of payment, filing of claims with a court in the event of receivership or
bankruptcy of any endorser or guarantor of the Obligations, protest or notice
with respect to the Obligations, all setoffs and counterclaims and all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor and notices of acceptance of this
Security Agreement, the benefits of all statutes of limitation, and all other
demands whatsoever, and covenants that this Security Agreement will not be
discharged, except by complete payment (in cash) and performance of the
Obligations and any other obligations contained herein. Buyer further waives all
notices that the principal amount, or any portion thereof, and/or any interest
on any instrument or document evidencing all or any part of the Obligations is
due, notices of any and all proceedings to collect from any endorser or any
other guarantor of all or any part of the Obligations, or from any other person
or entity, and, to the extent permitted by law, notices of exchange, sale,
surrender or other handling of any security or collateral given to Seller to
secure payment of all or any part of the Obligations.
(ii) Seller is hereby authorized, without notice or demand and
without affecting the liability of Buyer hereunder, from time to time, (a) to
renew, extend, accelerate or otherwise change the time for payment of, or other
terms relating to, all or any part of the Obligations, or to otherwise modify,
amend or change the terms of the Purchase Note; (b) to accept partial payments
on all or any part of the Obligations; (c) to take and hold security or
collateral for the payment of all or any part of the Obligations, this Security
Agreement, or any other guaranties of all or any part of the Obligations, (d) to
exchange, enforce, waive and release any such security or collateral; (e) to
apply such
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security or collateral and direct the order or manner of sale thereof as in its
discretion it may determine; (f) to settle, release, exchange, enforce, waive,
compromise or collect or otherwise liquidate all or any part of the Obligations,
this Security Agreement, any guaranty of all or any part of the Obligations, and
any security or collateral for the Obligations or for any such guaranty. Any of
the foregoing may be done in any manner, without affecting or impairing the
obligations of Buyer hereunder.
6. Financial Information. Buyer hereby assumes responsibility for
keeping itself informed of the financial condition of any and all endorsers
and/or other guarantors of all or any part of the Obligations, and of all other
circumstances bearing upon the risk of nonpayment of the Obligations, or any
part thereof, that diligent inquiry would reveal, and Buyer hereby agrees that
Seller shall have no duty to advise Buyer of information known to it regarding
such condition or any such circumstances.
7. No Marshaling; Reinstatement. Buyer consents and agrees that
neither Seller nor any person or entity acting for or on behalf of Seller shall
be under any obligation to marshal any assets in favor of Buyer or against or in
payment of any or all of the Obligations. Buyer further agrees that, to the
extent that Buyer or any endorser or guarantor of all or any part of the
Obligations makes a payment or payments to Seller, or Seller receives any
proceeds of Collateral, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to Buyer, such endorser, such guarantor or any
other person or entity, or their respective estates, trustees, receivers or any
other party, including, without limitation, Buyer, under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of such
payment or repayment, the part of the Obligations which has been paid, reduced
or satisfied by such amount shall be reinstated and continued in full force and
effect as of the time immediately preceding such initial payment, reduction or
satisfaction.
8. Subrogation. Until the Obligations have been paid in full, Buyer
(i) shall not exercise any right of subrogation, if any, with respect to such
Obligations and (ii) waives any right to enforce any remedy which Seller now has
or may hereafter have against any endorser or any guarantor of all or any part
of the Obligations or any other person or entity, and Buyer waives any benefit
of, and any right to participate in, any security or collateral given to Seller
to secure the payment or performance of all or any part of the Obligations.
9. Enforcement; Amendments; Waivers. No delay on the part of Seller
in the exercise of any right or remedy arising under
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this Security Agreement or otherwise with respect to all or any part of the
Obligations, the Collateral or any other guaranty of or security for all or any
part of the Obligations shall operate as a waiver thereof, and no single or
partial exercise by Seller of any such right or remedy shall preclude any
further exercise thereof. No modification or waiver of any of the provisions of
this Security Agreement shall be binding upon Seller, except as expressly set
forth in a writing duly signed and delivered by Seller. Failure by Seller at any
time or times hereafter to require strict performance by Buyer, any endorser or
guarantor of all or any part of the Obligations or any other person or entity of
any of the provisions, warranties, terms and conditions contained in any
agreement now or at any time or times hereafter executed by such person or
entity and delivered to Seller shall not waive, affect or diminish any right of
Seller at any time or times hereafter to demand strict performance thereof and
such right shall not be deemed to have been waived by any act or knowledge of
Seller, or its agents, officers or employees, unless such waiver is contained in
an instrument in writing, directed and delivered to Buyer specifying such
waiver, and is signed by Seller. No waiver of any Event of Default by Seller
shall operate as a waiver of any other Event of Default or the same Event of
Default on a future occasion, and no action by Seller permitted hereunder shall
in any way affect or impair Seller's rights and remedies or the obligations of
Buyer under this Security Agreement.
10. Effectiveness; Termination. This Security Agreement shall become
effective upon its execution by Buyer and shall continue in full force and
effect and may not be terminated or otherwise revoked until the Obligations
shall have been fully paid (in cash) and discharged.
11. Successors and Assigns. This Security Agreement shall be binding
upon Buyer and upon the successors and assigns of Buyer and shall inure to the
benefit of Seller and its successors and assigns; provided, however, that Buyer
shall not assign its obligations hereunder without the written consent of
Seller.
12. Governing Law. THIS SECURITY AGREEMENT SHALL BE INTERPRETED, AND
THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH
THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) AND DECISIONS OF
THE STATE OF ILLINOIS.
13. Consent to Jurisdiction; Counterclaims; Forum Non Conveniens.
(i) EACH OF SELLER AND BUYER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY ILLINOIS STATE COURT
OR FEDERAL COURT SITTING IN CHICAGO, ILLINOIS, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO
OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
SECURITY AGREEMENT, WHETHER
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ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF SELLER AND BUYER AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. BUYER WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO
THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(ii) BUYER AGREES THAT SELLER SHALL HAVE THE RIGHT TO PROCEED
AGAINST BUYER OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE SELLER TO
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SELLER. BUYER AGREES
THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT
BY SELLER TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SELLER.
BUYER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN
WHICH SELLER MAY COMMENCE A PROCEEDING DESCRIBED IN THIS SECTION.
14. Notices. All notices and other communications required or
desired to be served, given or delivered hereunder shall be in writing or by a
telecommunications device capable of creating a printed record and shall be
addressed to the party to be notified in the manner set forth in the Purchase
Agreement.
15. Severability. Wherever possible, each provision of this Security
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity without invalidating the remainder
of such provision or the remaining provisions of this Security Agreement.
16. Merger. This Security Agreement represents the final agreement
of Buyer with respect to the matters contained herein and may not be
contradicted by evidence of prior, contemporaneous or subsequent agreements
between Buyer and Seller.
[Signature Page Immediately Follows]
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IN WITNESS WHEREOF, this Security Agreement has been duly executed
by Buyer as of the day and year first set forth above.
THE DELICIOUS FROOKIE COMPANY, INC.
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
Title: President
Accepted and acknowledged by:
XXXXXXX FOODS, L.L.C.
By: /s/ Xxxxxx X. Xxxx
-------------------------------
Name: Xxxxxx X. Xxxx
Manager
[Signature Page to Security Agreement]
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Exhibit A
to
Security Agreement
Trademarks and Trademark Registrations and Applications
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STATE OF ILLINOIS
UNIFORM COMMERCIAL CODE - FINANCING STATEMENT - FORM UCC-1
REORDER FORM
Registre, Inc.
000 XXXXXX XX.
X.X. XXX 000
XXXXX, XX. 00000
(000) 000-0000
INSTRUCTIONS:
1. This form must be typed. Fold only along perforation for mailing.
2. Remove Secured Party and Debtor copies and send other 3 copies with
interleaved carbon paper to the filing officer. Enclose filing fee.
3. If the space provided for any item(s) on the form is inadequate the
item(s) should be continued on additional sheets, preferably 5" x 8" or 8"
x 10". Only one copy of such additional sheets need be presented to the
filing officer with a set of three copies of the financing statement. Long
schedules of collateral, indentures, etc., may be on any size paper that
is convenient for the secured party.
4. At the time of filing, the filing officer will return third copy as an
acknowledgement, please enclose a self addressed envelope for this return.
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This STATEMENT is presented to a filing officer for filing pursuant to the
Uniform Commercial Code.
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Debtor(s) (Last Name First) and address(es) Secured Party(ies) and address(es)
The Delicious Frookie Xxxxxxx Foods, L.L.C.
Company, Inc. 000 X. Xxxxxx Xxxxx, Xxxxx 0000
0000 Xxxxx Xxxx, Xxxxx 000 Xxxxxxx, Xxxxxxxx 00000
Xxx Xxxxxxx, Xxxxxxxx 00000
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For Filing Officer
(Date, Time, Number, and Filing Office)
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1. This financing statement covers the following types (or items) of property:
All of Debtor's now owned and existing and hereafter acquired or arising
accounts, goods, contract rights, chattel paper, instruments, documents,
inventory, equipment, general intangibles (including, without limitation,
trademarks and trademark applications), machinery, equipment, and fixtures,
wheresoever located, and all proceeds of the foregoing, as more particularly
described on Exhibit A attached hereto and made a part hereof.
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ASSIGNEE OF SECURED PARTY
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2. |X| Products of Collateral are also covered.
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|I| Additional sheets presented.
|X| Filed with Office of Secretary of State of Illinois.
|_| Debtor is a transmitting utility as defined in UCC ss.9-105.
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THE DELICIOUS FROOKIE COMPANY, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------------
Signature of (Debtor)
(Secured Party)*
*Signature of Debtor Required in Most Cases:
Signature of Secured Party in Cases Covered By UCC ss.9-402(2)
FILING OFFICER-ALPHABETICAL This form of financing statement is approved by
the Secretary of State.
STANDARD FORM - UNIFORM COMMERCIAL CODE - FORM UCC-1 - REV. 1 - 75
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EXHIBIT A
TO
FINANCING STATEMENT
Debtor: Secured Party:
THE DELICIOUS FROOKIE COMPANY, XXXXXXX FOODS, L.L.C.
INC. 000 X. Xxxxxx Xxxxx, Xxxxx 0000
0000 Xxxxx Xxxx, Xxxxx 000 Xxxxxxx, Xxxxxxxx 00000
Xxx Xxxxxxx, Xxxxxxxx 00000
Description of Collateral:
All of the following property, and interests in property, of Debtor, whether now
owned or existing or hereafter acquired or arising and wheresoever located:
accounts, inventory, goods, furniture, machinery, equipment, fixtures, general
intangibles (including, without limitation, goodwill, inventions, designs,
patents, patent applications, trademarks, registered trademarks, trademark
applications, service marks, registered service marks, service xxxx
applications, trade names, trade secrets, licenses, franchises, tax refund
claims, guaranty claims, all rights against shippers and carriers, security
interests or other security held by Debtor), tax refunds, chattel paper,
contract rights, instruments, documents, notes, returned and repossessed goods
and all other personal property or interests in personal property; together with
all accessions to, substitutions for, and all replacements, products and
proceeds of the foregoing (including, without limitation, proceeds of insurance
policies insuring any of the foregoing), and all books and records pertaining to
any of the foregoing.
THE DELICIOUS FROOKIE COMPANY, INC.
By: /s/ Xxxxxx Xxxxxx
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Title: CFO
