SECURITY AGREEMENT
This
Security Agreement (this “Agreement”)
is
made as of the _____ day of November, 2008, by and between Organic To Go Food
Corporation, a Delaware corporation (the “Company”
or
the
“Securing
Party”),
and
X.Xxxxxx L.P., a limited partnership organized under the laws of the Bahamas
(the “Secured
Party”).
RECITALS
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A.
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The
Securing Party and the Secured Party are parties to a Note Purchase
Agreement, dated November [__], 2008 (the “Purchase
Agreement”),
pursuant to which the Secured Party shall purchase the Note (as defined
in
the Purchase Agreement); and
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B.
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The
Securing Party and the Secured Party are also parties to a Note and
Warrant Purchase Agreement, dated June 1, 2008 (the “Note
and Warrant Purchase Agreement”),
pursuant to which the Secured Party has agreed to purchase one or
more
convertible promissory notes in the aggregate principal amount of
up to
$10,000,000 (the “Previous
Notes”
and together with the Note, the “Notes”);
and
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C.
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The
parties intend that the Securing Party’s obligations to repay the Notes
(whether now owned or hereafter purchased by the Secured Party) and
any
other obligation in favor of Secured Party arising under the Purchase
Agreement, the Note and Warrant Purchase Agreement and the Notes
be
secured by all of the tangible and intangible assets of the Securing
Party, and shall be governed by the terms and conditions of this
Agreement.
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AGREEMENT
In
consideration of the purchase of the Notes by the Secured Party and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Grant
of Security Interest.
(a) To
secure
the Securing Party’s full and timely performance of the Obligations, the
Securing Party hereby grants to the Secured Party a continuing Lien on and
security interest (the “Security
Interest”)
in,
all of the Securing
Party’s right,
title and interest in and to all of its personal property and assets (both
tangible and intangible), including, without limitation, the following, whether
now owned or hereafter acquired and wherever located: (a) all Receivables;
(b)
all Equipment; (c) all Fixtures; (d) all General Intangibles; (e) all Inventory;
(f) all Investment Property; (g) all Deposit Accounts; (h) all Cash; (i) all
other Goods of the Securing Party; (j) all Intellectual Property; and (k) all
Proceeds of each of the foregoing and all accessions to, and replacements for,
each of the foregoing (collectively, the “Collateral”).
Notwithstanding
the foregoing, the grant, assignment and transfer of a Security Interest as
provided herein shall not extend to, and the term “Collateral” shall not
include: (a) “intent-to-use” trademarks at all times prior to the first use
thereof, whether by the actual use thereof in commerce, the recording of a
statement of use with the United States Patent and Trademark Office or
otherwise, or (b) any Account, Chattel Paper, General Intangible, or Promissory
Note in which Securing Party has any right, title or interest if and to the
extent such Account, Chattel Paper, General Intangible, or Promissory Note
includes a provision containing a restriction on assignment such that the
creation of a security interest in the right, title or interest of Securing
Party therein would be prohibited and would, in and of itself, cause or result
in a default thereunder enabling another person party to such Account, Chattel
Paper, General Intangible, or Promissory Note to enforce any remedy with respect
thereto; provided
that
the
foregoing exclusion shall not apply if (i) such prohibition has been waived
or
such other person has otherwise consented to the creation hereunder of a
security interest in such Account, Chattel Paper, General Intangible, or
Promissory Note or (ii) such prohibition would be rendered ineffective
pursuant to Sections 9-406(d), 9-407(a) or 9-408(a) of the UCC, as applicable
and as then in effect in any relevant jurisdiction, or any other applicable
law
(including the Bankruptcy Code) or principles of equity; provided
further
that
immediately upon the ineffectiveness, lapse or termination of any such
provision, the Collateral shall include, and the Securing Party shall be deemed
to have granted a security interest in, all its rights, title and interests
in
and to such Account, Chattel Paper, General Intangible, or Promissory Note
as if
such provision had never been in effect; and provided further that the foregoing
exclusion shall in no way be construed so as to limit, impair or otherwise
affect the Secured Party’s unconditional continuing security interest in and to
all rights, title and interests of Securing Party in or to any payment
obligations or other rights to receive monies due or to become due under any
such Account, Chattel Paper, General Intangible, or Promissory Note and in
any
such monies and other proceeds of such Account, General Intangible, Contract,
Promissory Note or Chattel Paper.
(b) The
following terms shall have the following meanings for purposes of this
Agreement:
“Account”
means
any “Account,” as such term is defined in the UCC now owned or hereafter
acquired by the Securing Party or in which the Securing Party now holds or
hereafter acquires any interest and, in any event, shall include, without
limitation, all accounts receivable, book debts, rights to payment and other
forms of obligations (other than forms of obligations evidenced by Chattel
Paper, Documents or Instruments) now owned or hereafter received or acquired
by
or belonging or owing to the Securing Party whether or not arising out of goods
or software sold or services rendered by the Securing Party or from any other
transaction, whether or not the same involves the sale of goods or services
by
the Securing Party and all of the Securing Party’s rights in, to and under all
purchase orders or receipts now owned or hereafter acquired by it for goods
or
services, and all of the Securing Party’s rights to any goods represented by any
of the foregoing, and all monies due or to become due to the Securing Party
under all purchase orders and contracts for the sale of goods or the performance
of services or both by the Securing Party or in connection with any other
transaction (whether or not yet earned by performance on the part of the
Securing Party), now in existence or hereafter occurring, including, without
limitation, the right to receive the proceeds of said purchase orders and
contracts, and all collateral security and guarantees of any kind given by
any
Person with respect to any of the foregoing.
“Bankruptcy
Code”
means
Title XI of the United States Code.
“Cash”
means
all cash, money, currency, and liquid funds, wherever held, in which the
Securing Party now or hereafter acquires any right, title, or interest.
“Chattel
Paper”
means
any “Chattel paper,” as such term is defined in the UCC, now owned or hereafter
acquired by the Securing Party or in which the Securing Party now holds or
hereafter acquires any interest.
“Contracts”
means
all contracts (including any customer, vendor, supplier, service or maintenance
contract), leases, licenses, undertakings, purchase orders, permits, franchise
agreements or other agreements (other than any right evidenced by Chattel Paper,
Documents or Instruments), whether in written or electronic form, in or under
which Securing Party now holds or hereafter acquires any right, title or
interest, including, without limitation, with respect to an Account, any
agreement relating to the terms of payment or the terms of performance
thereof.
“Deposit
Accounts”
means
any “Deposit accounts,” as such term is defined in the UCC, and includes any
checking account, savings account, or certificate of deposit, now owned or
hereafter acquired by the Securing Party or in which the Securing Party now
holds or hereafter acquires any interest.
“Documents”
means
any “Documents,” as such term is defined in the UCC, now owned or hereafter
acquired by the Securing Party or in which the Securing Party now holds or
hereafter acquires any interest.
“Equipment”
means
any “Equipment,” as such term is defined in the UCC, now owned or hereafter
acquired by the Securing Party or in which the Securing Party now holds or
hereafter acquires any interest and any and all additions, upgrades,
substitutions and replacements of any of the foregoing, together with all
attachments, components, parts, equipment and accessories installed thereon
or
affixed thereto, now owned or hereafter acquired by the Securing Party or in
which the Securing Party now holds or hereafter acquires interest.
“Event
of Default”
shall
have the meaning given that term in the Purchase Agreement.
“Fixtures”
means
any “Fixtures,” as such term is defined in the UCC, together with all right,
title and interest of the Securing Party in and to all extensions, improvements,
betterments, accessions, renewals, substitutes, and replacements of, and all
additions and appurtenances to any of the foregoing property, and all
conversions of the security constituted thereby, immediately upon any
acquisition or release thereof or any such conversion, as the case may be,
now
owned or hereafter acquired by the Securing Party or in which the Securing
Party
now holds or hereafter acquires any interest.
“General
Intangible”
means
any “General intangible,” as such term is defined in the UCC, now owned or
hereafter acquired by the Securing Party or in which the Securing Party now
holds or hereafter acquires any interest and, in any event, shall include,
without limitation, all right, title and interest that the Securing Party may
now or hereafter have in or under any contracts, rights to payment, payment
intangibles, confidential information, interests in partnerships, limited
liability companies, corporations, joint ventures and other business
associations, permits, goodwill, claims in or under insurance policies,
including unearned premiums and premium adjustments, uncertificated securities,
deposit, checking and other bank accounts, but shall not include any
Intellectual Property (including the right to receive all proceeds and damages
therefrom), rights to receive tax refunds and other payments and rights of
indemnification.
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“Goods”
means
any “Goods,” as such term is defined in the UCC, now owned or hereafter acquired
by the Securing Party or in which the Securing Party now holds or hereafter
acquires any interest.
“Instruments”
means
any “Instrument,” as such term is defined in the UCC, now owned or hereafter
acquired by the Securing Party or in which the Securing Party now holds or
hereafter acquires any interest.
“Intellectual
Property”
means
all patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, licenses and other similar rights that are
necessary or material for use in connection with the Company’s respective
businesses as described in the SEC Reports (as defined in the Purchase
Agreement).
“Inventory”
means
any “Inventory,” as such term is defined in the UCC, now owned or hereafter
acquired by the Securing Party or in which the Securing Party now holds or
hereafter acquires any interest, and, in any event, shall include, without
limitation, all inventory, goods and other personal property that are held
by or
on behalf of the Securing Party for sale or lease or are furnished or are to
be
furnished under a contract of service or that constitute raw materials, work
in
process or materials used or consumed or to be used or consumed in the Securing
Party’s business, or the processing, packaging, promotion, delivery or shipping
of the same, and all finished goods, whether or not the same is in transit
or in
the constructive, actual or exclusive possession of the Securing Party or is
held by others for the Securing Party’s account, including, without limitation,
all goods covered by purchase orders and contracts with suppliers and all goods
billed and held by suppliers and all such property that may be in the possession
or custody of any carriers, forwarding agents, truckers, warehousemen, vendors,
selling agents or other Persons.
“Investment
Property”
means
any “Investment property,” as such term is defined in the UCC, and includes
certificated securities, uncertificated securities, money market funds and
U.S.
Treasury bills or notes, now owned or hereafter acquired by the Securing Party
or in which the Securing Party now holds or hereafter acquires any interest.
“Letter
of Credit Right”
means
any “Letter of credit right,” as such term is defined in the UCC, now owned or
hereafter acquired by the Securing Party or in which the Securing Party now
holds or hereafter acquires any interest, including any right to payment or
performance under any letter of credit.
“Lien”
means
any
mortgage, deed of trust, pledge, hypothecation, assignment for security,
security interest, encumbrance, xxxx, xxxx or charge of any kind, whether
voluntarily incurred or arising by operation of law or otherwise, against any
property, any conditional sale or other title retention agreement, any lease
in
the nature of a security interest, and the filing of any financing statement
(other than a precautionary financing statement with respect to a lease that
is
not in the nature of a security interest) under the UCC or comparable law of
any
jurisdiction.
“Obligations”
shall
mean and include all loans, advances, debts, liabilities and obligations,
howsoever arising, owed by the Securing Party to the Secured Party of every
kind
and description (whether or not evidenced by any note or instrument and whether
or not for the payment of money), direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter owed by the Securing Party
to
the Secured Party, under or in connection with the Purchase Agreement, the
Note
and Warrant Purchase Agreement and the Notes, including without limitation
all
interest, fees, charges, expenses, attorneys’ fees and accountants’ fees
chargeable to the Securing Party or payable by the Securing Party
thereunder.
“Permitted
Lien”
means:
(a) Liens in favor of the Secured Party; (b) any Liens existing on the date
of
this Agreement and set forth on Exhibit
A
attached
hereto; (c) Liens for taxes, fees, assessments or other governmental charges
or
levies, either not delinquent or being contested in good faith by appropriate
proceedings; (d) Liens (i) upon or in any Equipment acquired or held by Securing
Party to secure the purchase price of such Equipment or indebtedness (including
capital leases) incurred solely for the purpose of financing the acquisition
of
such Equipment or (ii) existing on such Equipment at the time of its
acquisition, provided that the Lien is confined solely to the Equipment so
acquired, improvements thereon and the Proceeds of such Equipment; (e) leases
or
subleases and licenses or sublicenses granted to others in the ordinary course
of the Securing Party’s business; (f) any right, title or interest of a licensor
under a license; (g) Liens arising from judgments, decrees or attachments;
(h)
easements, reservations, rights-of-way, restrictions, minor defects or
irregularities in title and other similar Liens affecting real property not
interfering in any material respect with the ordinary conduct of the business
of
the Securing Party; (i) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in connection
with the importation of goods; (j) Liens arising solely by virtue of any
statutory or common law provision relating to banker’s liens, rights of setoff
or similar rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; (k) Liens in favor of a depository
bank
or a securities intermediary pursuant to such depository bank’s or securities
intermediary’s customary customer account agreement; provided that any such
Liens shall at no time secure any indebtedness or obligations other than
customary fees and charges payable to such depository bank or securities
intermediary; (l) statutory or common law Liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other similar
Liens, arising in the ordinary course of business and securing obligations
that
are not yet delinquent or are being contested in good faith by appropriate
proceedings; (m) Liens incurred or deposits made to secure the performance
of
tenders, bids, leases, statutory or regulatory obligations, surety and appeal
bonds, government contracts, performance and return-of-money bonds, and other
obligations of like nature, in each case, in the ordinary course of business;
(n) Liens incurred or deposits made in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and other types of
social security; and (o) pledges and deposits securing liability for
reimbursement or indemnification obligations in respect of letters of credit
or
bank guarantees for the benefit of landlords.
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“Person”
means
any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or government
(whether federal, state, county, city, municipal, local, foreign, or otherwise,
including any instrumentality, division, agency, body or department thereof).
“Proceeds”
means
“Proceeds,” as such term is defined in the UCC and, in any event, shall include,
without limitation, (a) any and all Accounts, Chattel Paper, Instruments, cash
or other forms of money or currency or other proceeds payable to the Securing
Party from time to time in respect of the Collateral, (b) any and all proceeds
of any insurance, indemnity, warranty or guaranty payable to the Securing Party
from time to time with respect to any of the Collateral, (c) any and all
payments (in any form whatsoever) made or due and payable to the Securing Party
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by
any
governmental authority (or any Person acting under color of governmental
authority), (d) the proceeds, damages, or recovery based on any claim of the
Securing Party against third parties (i) for past, present or future
infringement of any copyright, patent or patent license or (ii) for past,
present or future infringement or dilution of any trademark or trademark license
or for injury to the goodwill associated with any trademark, trademark
registration or trademark licensed under any trademark license and (e) any
and
all other amounts from time to time paid or payable under or in connection
with
any of the Collateral.
“Receivables”
means
all of the Securing Party’s Accounts, Instruments, Documents, Chattel Paper,
Supporting Obligations, and letters of credit and Letter of Credit Rights.
“Supporting
Obligation”
means
any “Supporting obligation,” as such term is defined in the UCC, now owned or
hereafter acquired by the Securing Party or in which the Securing Party now
holds or hereafter acquires any interest.
“UCC”
means
the Uniform Commercial Code as the same may, from time to time, be in effect
in
the State of Delaware; provided,
that in
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect to, the Secured
Party’s Lien on any Collateral is governed by the Uniform Commercial Code as
enacted and in effect in a jurisdiction other than the State of Delaware, the
term “UCC” shall mean the Uniform Commercial Code as enacted and in effect, from
time to time, in such other jurisdiction solely for purposes of the provisions
thereof relating to such attachment, perfection, priority or remedies and for
purposes of definitions related to such provisions.
Unless
otherwise defined herein, all capitalized terms used herein and defined in
the
Purchase Agreement shall have the respective meaning given to those terms in
the
Purchase Agreement, and the terms that are defined in the UCC and used herein
shall have the meanings given to them in the UCC.
2. Representations
and Warranties.
The
Securing Party hereby represents and warrants to the Secured Party
that:
(a) Ownership
of Collateral.
The
Securing Party is the legal and beneficial owner of the Collateral (or, in
the
case of after-acquired Collateral, at the time the Securing Party acquires
rights in the Collateral, will be the legal and beneficial owner thereof).
Except for Permitted Liens, the Securing Party has rights in or the power to
transfer the Collateral free and clear of any Lien, security interest or
encumbrance.
(b) Valid
Security Interest.
The
Security Interest granted pursuant to this Agreement will constitute a valid
and
continuing perfected security interest in favor of the Secured Party in the
Collateral for which perfection is governed by the UCC or filing with the United
States Copyright Office or United States Patent and Trademark Office. The
Security Interest will be prior to all other Liens on the Collateral except
for
Permitted Liens.
(c) Organization
and Good Standing.
The
Securing Party has been duly incorporated, and is validly existing and in good
standing, under the laws of the State of Delaware.
(d) Receivables.
Each
Receivable is genuine and enforceable against the parties obligated to pay
the
same free from any right of rescission, defense, setoff or
discount.
(e) Insurance.
Each
insurance policy maintained by the Securing Party is validly existing and is
in
full force and effect. The Securing Party is not in default under the provisions
of any insurance policy, and there are no facts which, with the giving of notice
or passage of time (or both), would result in such a default under any provision
of any such insurance policy.
(f) Valid
Lien.
This
Agreement is effective to create a valid and continuing Lien upon the
Collateral. All action by the Securing Party necessary or desirable to protect
and perfect such Lien on each item of the Collateral has been duly taken, to
the
extent that a security interest in the Collateral can be perfected under the
Code by the filing of a UCC-1 financing statement in the filing office of the
Secretary of State of the State of Delaware.
3. Covenants.
Unless
the Secured Party otherwise consents, Securing Party covenants and agrees that,
from and after the date of this Agreement until the Obligations are paid in
full:
(a) Other
Liens.
The
Securing Party will defend the Collateral against the claims and demands of
all
persons at any time claiming the same or any interest therein, except Permitted
Liens.
(b) Further
Documentation.
At any
time and from time to time, upon the writ-ten request of the Secured Party,
and
at the sole expense of the Securing Party, the Securing Party will promptly
and
duly authenticate and deliver such further instruments and documents and take
such further action as such Secured Party determines necessary or
desirable for
the
purpose of obtaining or preserving the full benefits of this Agreement and
of
the rights and powers herein granted including, without limitation, filing
any
financing or continuation statements under the UCC in effect with respect to
the
Liens created hereby. The Securing Party also hereby authorizes the Secured
Party to file any such financing, amendment or continuation statement without
the authentication of the Securing Party to the extent permitted by applicable
law. A reproduction of this Agreement shall be sufficient as a financing
statement (or as an exhibit to a financing statement on form UCC-1) and for
filing in any jurisdiction.
Within
five (5) business days following the date hereof, the Securing Party will file
appropriate financing statements on form UCC-1 in the State of
Delaware.
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(c) Indemnification.
The
Securing Party agrees to defend, indemnify and hold harmless the Secured Party
against any and all liabilities, costs and expenses (including, without
limitation, reasonable legal fees and expenses) (“Liabilities”):
(i) with respect to, or resulting from, any delay in paying, any and all
excise, sales or other taxes which may be payable or determined to be payable
with respect to any of the Collateral, excluding any taxes based on or measured
by the net income of the Secured Party, except to the extent the validity
thereof is being contested in good faith and adequate reserves are being
maintained in connection therewith, (ii) with respect to, or resulting
from, any delay in complying with any law, rule, regu-lation or order of any
governmental authority applicable to any of the Collateral, or (iii) in
connection with any of the transactions contemplated by this Agreement, except
in each case for Liabilities directly caused by the gross negligence or willful
misconduct of the Secured Party.
(d) Maintenance
of Records.
The
Securing Party will keep and maintain at its own expense complete and
satisfactory records
of the Collateral.
(e) Inspection
Rights.
The
Secured Party shall have full access during normal business hours, and upon
prior reasonable notice, to all the books, correspondence and other records
of
the Securing Party relating to the Collateral. The Secured Party or its
repre-sentative may examine such records and make photocopies or otherwise
take
extracts from such records. The Securing Party agrees to render to the Secured
Party, at the Securing Party’s expense, such clerical and other assistance as
such Secured Party may reasonably request with regard to the exercise of its
rights pursuant to this paragraph.
(f) Compliance
with Laws, etc.
The
Securing Party (i) will comply in all material respects with all laws, rules,
regulations and orders of any governmental authority applicable to
any part
of
the Collateral or to the operation of the Securing Party’s business and
(ii)
shall not use or permit any Collateral to be used in violation of any provision
of the Purchase Agreement, the Note and Warrant Purchase Agreement and the
Notes, any law, rule or obligation or order of any governmental authority,
or
any policy of insurance covering the Collateral.
(g) Payment
of Taxes, Etc.
The
Securing Party will pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon the Collateral or with respect
to
any of its income or profits derived from the Collateral, as well as all claims
of any kind (including, without limitation, claims for labor, materials and
supplies) against or with respect to the Collateral, except to the extent the
validity thereof is being contested in good faith and adequate reserves are
being maintained in connection therewith.
(h) Limitation
on Liens on Collateral.
The
Securing Party will not create, incur or permit to exist, will defend the
Collateral against, and will take such other action as is necessary to remove,
any Lien or claim on or to the Collateral, other than Permitted Liens, and
will
defend the right, title and interest of the Secured Party in and to any of
the
Collateral against the claims and demands of all other persons other than
Permitted Liens.
(i) Limitations
on Dispositions of Collateral.
The
Securing Party will not sell, transfer, lease, or otherwise dispose of any
of
the Collateral, or attempt, offer or contract to do so, other than in the
ordinary course of business.
(j) Further
Identification of Collateral.
The
Securing Party will furnish to the Secured Party from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as such Secured Party may reasonably
request, all in detail reasonably acceptable to such Secured Party.
(k) Insurance.
The
Securing Party shall (i) maintain and keep in force insurance of the types
and in amounts customarily carried from time to time during the term of this
Agreement in its lines of business, including fire, public liability, property
damage and worker’s compensation, such insurance to be carried with companies
and in amounts satisfactory to the Secured Party, (ii) deliver to the
Secured Party from time to time, as the Secured Party may reasonably request,
schedules setting forth all insurance then in effect, and (iii) deliver to
the Secured Party copies of each policy of insurance which replaces, or
evidences the renewal of, each existing policy of insurance at least 15 days
prior to the expiration of such policy. The Secured Party shall be named as
additional insured or additional loss payee, as appropriate, on all liability
and property insurance of the Securing Party and such policies shall contain
such additional endorsements as shall be reasonably required by the Secured
Party.
(l) Intellectual
Property Matters.
The
Securing Party shall notify the Secured Party immediately if it knows or has
reason to know (i) that any application or registration relating to any of
its
Intellectual Property may become abandoned or dedicated, or (ii) of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent
and
Trademark Office, the United States Copyright Office or any court) regarding
the
Securing Party’s ownership of any Intellectual Property.
(m) Intellectual
Property Applications.
In no
event shall the Securing Party, either by itself or through any agent, employee,
licensee or designee, file an application for the registration of any patent,
trademark or copyright with the United States Patent and Trademark Office,
the
United States Copyright Office or any similar office or agency without giving
the Secured Party prior written notice thereof, and, upon request of the Secured
Party, the Securing Party shall execute and deliver any and all security
documents as such Secured Party may request to evidence such Secured Party’s
Lien on such Intellectual Property and the general intangibles of the Securing
Party relating thereto or represented thereby. The Securing Party hereby
authorizes the Secured Party to amend this Agreement (without any further action
or consent from the Securing Party) to include any such patent, trademark or
copyright as Collateral hereunder.
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(n) Intellectual
Property Abandonment.
The
Securing Party shall take all actions reasonably necessary or requested by
the
Secured Party to maintain and pursue each application, to obtain the relevant
registration and to maintain the registration of its Intellectual Property,
including the filing of applications for renewal, affidavits of use, affidavits
of noncontestability and opposition and interference and cancellation
proceedings, unless the Secured Party shall determine that such Intellectual
Property is not material to the conduct of its business.
4. Rights
with Respect to Collateral
(a) Accounts,
General Intangibles, etc.
Secured
Party hereby authorizes Securing Party to collect any Accounts, Chattel Paper
and General Intangibles in which Secured Party has been granted a security
interest hereunder, and Securing Party agrees to use its best efforts to effect
the prompt collection thereof. Secured Party hereby further authorizes Securying
Party to use the proceeds of any such collections in the conduct of its business
in the ordinary course.
(b) Deposit
Accounts and Securities Accounts.
The
Secured Party agrees that it will not send a notice of exclusive control or
otherwise exercise control regarding any of the Securing Party’s Deposit
Accounts or Securities Accounts unless an Event of Default shall have occurred
and be continuing.
(c) Investment
Collateral.
With
respect to any Collateral consisting of securities, partnership interest, joint
venture interest, investments or the like (referred to collectively and
individually in this Section 4(c) as the “Investment
Collateral”),
so
long as no Event of Default has occurred and is continuing (i) Securing Party
shall be entitled to exercise any and all voting and other consensual rights
pertaining to the Investment Collateral, or any part thereof, for any purpose
not inconsistent with the terms of this Agreement, the Purchase Agreement,
the
Note and Warrant Purchase Agreement or the Notes; and (ii) Securing Party shall
be entitled to receive and to retain and use any and all dividends and
distributions paid in respect of the Investment Collateral.
(d) Attorney-In-Fact.
Without
limiting in any way the responsibility and obligations of the Securing Party
and
not as substitute to such obligations, and without derogating from Section
5
below, the Securing Party hereby appoints the Secured Party and any officer
or
agent of the Secured Party, with full power of substitution, as its
attorney-in-fact with full irrevocable power and authority in the place of
the
Securing Party and in the name of the Securing Party or its own name, from
time
to time in the Secured Party’s discretion so long as an Event of Default has
occurred and is continuing, for the purpose of carrying out the terms of this
Agreement, to take any appropriate action and to authenticate any instrument
which may be necessary or desirable to accomplish the purposes of this
Agreement. Without limiting the foregoing, so long as an Event of Default has
occurred and is continuing, the Secured Party shall have the right, without
notice to, or the consent of, the Securing Party, to do any of the following
on
the Securing Party’s behalf:
(i) to
pay or
discharge any taxes or Liens levied or placed on or threatened against the
Collateral;
(ii) to
direct
any party liable for any payment under any of the Collateral to make payment
of
any and all amounts due or to become due thereunder directly to the Secured
Party or as the Secured Party directs;
(iii) to
ask
for or demand, collect, and receive payment of and receipt for, any payments
due
or to become due at any time in respect of or arising out of any
Collateral;
(iv) to
commence and prosecute any suits, actions or proceedings at law or in equity
in
any court of competent jurisdiction to enforce any right in respect of any
Collateral;
(v) to
defend
any suit, action or proceeding brought against the Securing Party with respect
to any Collateral;
(vi) to
settle, compromise or adjust any suit, action or proceeding described in
subsection (v) above and to give such discharges or releases in connection
therewith as the Secured Party may deem appropriate;
(vii) to
assign
any patent right included in the Collateral of the Securing Party (along with
the goodwill of the business to which any such patent right pertains),
throughout the world for such term or terms, on such conditions, and in such
manner, as the Secured Party shall in its sole discretion determine;
and
(viii) generally,
to sell, transfer, pledge and make any agreement with respect to or otherwise
deal with any of the Collateral and to take, at the Secured Party’s option and
the Securing Party’s expense, any actions which the Secured Party deems
necessary to protect, preserve or realize upon the Collateral and the Secured
Party’s Lien on the Collateral and to carry out the intent of this Agreement, in
each case to the same extent as if the Secured Party was the absolute owner
of
the Collateral for all purposes.
The
Securing Party hereby ratifies whatever actions the Secured Party shall lawfully
do or cause to be done in accordance with this Section 4. This power of attorney
shall be a power coupled with an interest and shall be irrevocable.
(e) No
Duty on the Secured Party’s Part.
The
powers conferred on the Secured Party by this Section 4 are solely to protect
the Secured Party’s interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. The Secured Party shall be accountable
only
for amounts that they actually received as a result of the exercise of such
powers, and no action taken by the Secured Party or any of its officers,
directors, employees or agents or omitted to be taken by any such Persons
pursuant to this Section 4 shall give rise to any defense, counterclaim or
offset in favor of Securing Party or affect any of the Obligations.
6
5. Filing
Agent.
(a) Appointment.
The
Secured Party hereby appoints any of Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxxxxxxxx
and Xxxx X. Xxxxx as agent for filing purposes for the Secured Party under
this
Agreement (in such capacity, the “Filing
Agent”)
to
serve from the date hereof until the termination of this Agreement.
(b) Powers
and Duties of Filing Agent, Indemnity by the Secured
Party.
The
Secured Party hereby irrevocably authorizes the Filing Agent to take any action
and to exercise any power in the name of the Secured Party and on its behalf,
as
shall be required and as shall be requested by the Securing Party, solely for
the purpose of filing any registration or application at or with any
governmental authority, together with such powers as are reasonably incidental
thereto. Filing Agent may execute any of its duties hereunder by or through
agents or employees and shall be entitled to request and act in reliance upon
the advise of counsel concerning all matters pertaining to its duties hereunder
and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance therewith.
Neither
the Filing Agent nor any of its directors, officers or employees shall be liable
or responsible to the Secured Party or to the Securing Party for any action
taken or omitted to be taken by the Filing Agent or any other such person
hereunder or under any related agreement, instrument or document, except in
the
case of gross negligence or willful misconduct on the part of the Filing Agent,
nor shall the Filing Agent or any of its directors, officers or employees be
liable or responsible for (A) the validity, effectiveness, sufficiency,
enforceability or enforcement of the Notes, this Agreement or any instrument
or
document delivered hereunder or relating hereto; (B) the title of the
Company to any of the Collateral or the freedom of the Collateral from any
prior
or other liens or security interests; (C) the determination, verification
or enforcement of the Company’s compliance with any of the terms and conditions
of this Agreement; (D) the failure by the Company to deliver any instrument
or document required to be delivered pursuant to the terms hereof; or
(E) the receipt, disbursement, waiver, extension or other handling of
payments or proceeds made or received with respect to the Collateral, the
servicing of the Collateral or the enforcement or the collection of any amounts
owing with respect to the Collateral.
In
the
case of this Agreement and the transactions contemplated hereby and any related
document relating to any of the Collateral, the Secured Party agrees to pay
to
the Filing Agent, on demand, all fees and all expenses incurred in connection
with the operation and enforcement of this Agreement, the Notes or any related
agreement to the extent that such fees or expenses have not been paid by the
Company. In connection to this Agreement, and each instrument and document
relating to any of the Collateral, the Secured Party and the Securing Party
hereby agree to hold the Filing Agent harmless, and to indemnify the Filing
Agent from and against any and all loss, damage, expense or liability which
may
be incurred by the Filing Agent under this Agreement and the transactions
contemplated hereby, unless such liability shall be caused by the willful
misconduct or gross negligence of the Filing Agent; provided,
however,
that
the Secured Party shall only be required to indemnify the Filing Agent for
up to
an amount equal to the amount paid by the Secured Party pursuant to the Notes
issued to the Secured Party.
6.
Performance
by the Secured Party of the Securing Party’s
Obligations.
If the
Securing Party fails to per-form or comply with any of its representations,
warranties, covenants or agreements contained in this Agreement and the Secured
Party performs or complies, or otherwise causes performance or compliance,
with
such representation, warranty, covenant or agreement in accordance with the
terms of this Agreement, then the reasonable expenses of the Secured Party
incurred in connection with such performance or compliance shall be payable
by
the Securing Party to the Secured Party on demand and
shall
constitute Obligations secured
by this Agreement.
7. Remedies.
If an
Event of Default has occurred and is continuing, the Secured Party may exercise,
in addition to all other rights and remedies granted to it in this Agreement
and
in any other instrument or agreement relating to the Obligations, all rights
and
remedies of a secured party under the UCC. Without limiting the foregoing,
the
Secured Party, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice required by
law
or expressly required herein) to or upon the Securing Party or any other person
(all of which demands, defenses, advertisements and notices are hereby waived),
may in such circumstances exercise any and all of the following rights and
remedies, all of which shall be cumulative and not mutually exclusive:
(a) The
Secured Party may declare by written notice to the Company the Notes, including
principal plus any accrued interest and any other amounts owing thereunder,
immediately due and payable;
(b)
The
Secured Party may collect, receive, appropriate and realize upon any or all
of
the Collateral; and/or
(c) The
Secured Party may sell, lease, assign, give an option or options to purchase,
or
otherwise dispose of and deliver any or all of the Collateral (or contract
to do
any of the foregoing), in one or more parcels at a public or private sale or
sales, at any exchange, broker’s board or office of the Secured Party or
elsewhere upon such terms and conditions as the Secured Party may deem
advisable, for cash or on credit or for future delivery without assumption
of
any credit risk. The Secured Party shall have the right upon any such public
sale or sales and, to the extent permitted by law, upon any such private sale
or
sales, to purchase all or any part of the Collateral so sold, free of any right
or equity of redemption in the Securing Party, which right or equity is hereby
waived or released.
7
8. Application
of Proceeds.
The
Secured Party shall apply the net proceeds of any collection, recovery, receipt,
appropriation, realization, sale or other sum received or collected by the
Secured Party, whether before or after an Event of Default, on account of the
Collateral, after deducting all reasonable expenses incurred therein or in
connection with the care or safekeeping of any of the Collateral or in any
way
relating to the Collateral or the rights of the Secured Party under this
Agreement (including, without limitation, reasonable attorneys’ fees and
expenses), to the payment in whole or in part of the Obligations, in such order
as the Secured Party may elect, and only after such application and after the
payment by the Secured Party of any other amount required by any provision
of
law. Any remaining surplus shall be paid to the Securing Party without demand.
If any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given
at
least ten days before such sale or other disposition. The Securing Party shall
remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Obligations and the
reasonable fees and disbursements of any attorneys employed by the Secured
Party
to collect such deficiency.
9. Limitation
on Duties Regarding Preservation of Collateral.
The
Secured Party’s sole duty with respect to the custody, safekeeping and
preservation of the Collateral, under Section 9207 of the UCC or otherwise,
shall be to use reasonable care in the custody and preservation thereof. Neither
the Secured Party nor any of its respective directors, officers, employees
or
agents shall be liable for failure to demand, collect or realize upon all or
any
part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request
of
the Securing Party or otherwise.
10. No
Waiver; Cumulative Remedies.
The
Secured Party shall not by any act (except by a written instrument pursuant
to
Section 12(a) hereof), delay, indulgence, omission or otherwise be deemed
to have waived any right or remedy hereunder or to have acquiesced in any
default under the Notes or in any breach of any of the terms and conditions
of
this Agreement. No failure to exer-cise, nor any delay in exercising, on the
part of the Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or
the
exercise of any other right, power or privilege. A waiver by the Secured Party
of any right or remedy under this Agreement on any one occasion shall not be
construed as a bar to any right or remedy which the Secured Party would
otherwise have on any subsequent occasion. The rights and remedies provided
in
this Agreement are cumulative, may be exercised singly or concurrently and
are
not exclusive of any rights or remedies provided by law.
11. Termination
of Security Interest.
Upon
satisfaction of the Securing Party’s Obligations pursuant to the Notes and this
Agreement, the security interest granted herein shall terminate and all rights
to the Collateral shall revert to the Securing Party. Upon any such termination,
the Secured Party shall authenticate and deliver to the Securing Party such
documents as the Securing Party may reasonably request to evidence such
termination.
12. Miscellaneous.
(a) Amendments
and Waivers.
This
Agreement may be amended or terminated and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), with the written consent of the Company and
the
Secured Party.
(b) Transfer;
Successors and Assigns.
The
terms
and conditions of this Agreement shall be binding upon the Securing Party and
its successors and assigns, as well as all persons who become bound as a
Securing Party to this Agreement and inure to the benefit of the Secured Party
and its successors and assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any parties other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
8
(c)
Arbitration. Each
party agrees that any dispute, controversy, or claim arising in relation to
this
Agreement, including with regard to its validity, invalidity, breach,
enforcement or termination, shall be resolved by binding arbitration in London,
England, in accordance with the rules of arbitration which are in force in
the
United Kingdom on the date when the notice of arbitration is submitted. The
arbitrability of such dispute, claim or controversy shall also be determined
in
such arbitration. Such arbitration proceeding shall be conducted in the English
language before one (1) arbitrator agreed to by the parties. Both the foregoing
agreement of the parties to arbitrate any and all such disputes, claims and
controversies, and the results, determinations, findings, judgments and/or
awards rendered through any such arbitration shall be final and binding on
the
parties hereto and may be specifically enforced by legal proceedings.
(d) Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original and all of which together shall constitute one instrument.
Either or all parties may execute this Agreement by facsimile signature or
scanned
signature in PDF format, and
any
such facsimile signature or scanned signature, if
identified, legible and complete, shall
be
deemed an original signature and each of the parties is hereby authorized to
rely thereon.
(e) Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
(f) Notices.
All
notices and other communications made pursuant to this Agreement shall be in
writing and shall be conclusively deemed to have been duly given:
(i) in
the
case of hand delivery to the address set forth below, on the next Business
Day
after delivery;
(ii) in
the
case of delivery by an internationally recognized overnight courier to the
address set forth below, freight prepaid, on the next Business Day after
delivery and signed receipt by the recipient; and
(iii) in
the
case of a notice sent by facsimile transmission to the number and addressed
as
set forth below, on the next Business Day after delivery, if receipt of such
facsimile transmission is confirmed.
For
all
notices given pursuant to one of the methods listed above, a copy of the notice
should also be sent by email to the email address set forth below.
Contact
details:
If
to
the Secured Party:
9
Address
for notices being delivered by hand/courier:
c/o
Inventages Whealth Management Inc.
Winterbotham
Place, Marlborough & Queen Streets
P.
O. Box
N-3026
Nassau,
The Bahamas, Attn: Xx. Xxxxxx Xxxxxxx
Always
with a copy to: IVC SA, Xxxxx xx Xxxxxx 00X, 0000 - Xxxxxxxx, Xxxxxxxxxxx,
Attn:
Xx. Xxxxxx xxx Xxxxxxxxx
Always
with a copy to: xxxxxxx@xxxxxxxxxx.xxx
and
xxxxxxxxx@xxxxxxxxxx.xxx
Number
for notices being delivered by facsimile transmission:
To:
IVC
SA, Attn: Xx. Xxxxxx xxx Xxxxxxxxx, at: x00 00 000 0000
Always
with a copy to: xxxxxxx@xxxxxxxxxx.xxx
and
xxxxxxxxx@xxxxxxxxxx.xxx
If
to
the Company:
Address
for notices being delivered by hand/courier:
Organic
To Go Food Corporation
0000
Xxxxx Xxxxxx Xxxxx
Xxxxxxx,
Xxxxxxxxxx 00000
Attn:
Chief Financial Officer
Always
with a copy to:
Loeb
& Loeb LLP
00000
Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx
0000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxxxx Xxxxxx, Esq.
Number
for notices being delivered by facsimile transmission:
To:
Organic To Go Food Corporation, Attn: Chief Financial Officer, at: x0 000 000
0000
Always
with a copy to: Loeb & Loeb LLP, Attn: Xxxxxxxx Xxxxxx, Esq, at: x0 000 000
0000
10
A
party
may change or supplement the contact details for service of any notice pursuant
to this Agreement, or designate additional addresses, facsimile numbers and
email addresses for the purposes of this Section 8(h) by giving the other
parties written notice of the new contact details in the manner set forth
above.
(g) Payments
Free of Taxes, Etc. All
payments made by the Securing Party under this Agreement shall be made by the
Securing Party free and clear of and without deduction for any and all present
and future taxes, levies, charges, deductions and withholdings excluding any
taxes based on or measured by the net income of the Secured Party. In addition,
the Securing Party shall pay upon demand any stamp or other taxes, levies or
charges of any jurisdiction with respect to the execution, delivery,
registration, performance and enforcement of this Agreement. Upon request by
the
Secured Party, the Securing Party shall furnish evidence satisfactory to such
Secured Party that all requisite authorizations and approvals by, and notices
to
and filings with, governmental authorities and regulatory bodies have been
obtained and made and that all requisite taxes, levies and charges have been
paid except to the extent the validity thereof is being contested in good faith
and adequate reserves are being maintained in connection therewith.
(h) Severability.
If one
or more provisions of this Agreement are held to be unenforceable under
applicable law, the parties agree to renegotiate such provision in good faith,
in order to maintain the economic position enjoyed by each party as close as
possible to that under the provision rendered unenforceable. In the event that
the parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (i) such provision shall be excluded from this
Agreement, (ii) the balance of the Agreement shall be interpreted as if
such provision were so excluded and (iii) the balance of the Agreement
shall be enforceable in accordance with its terms.
(i) Entire
Agreement.
This
Agreement, and the documents referred to herein constitute the entire agreement
between the parties hereto pertaining to the subject matter hereof.
(j) Confidentiality.
The
Secured Party agrees to use the same degree of care as Secured Party uses to
protect its own confidential information to keep confidential any information
furnished to such Secured Party pursuant to the Purchase Agreement, the Note
and
Warrant Purchase Agreement, the Notes or this Agreement that the Company
identifies as being confidential or proprietary (so long as such information
is
not in the public domain), except that the Secured Party may disclose such
proprietary or confidential information (i) to any partner, subsidiary or parent
of such Secured Party as long as such partner, subsidiary or parent is advised
of and agrees or has agreed to be bound by the confidentiality provisions of
this Section 11(j) or comparable restrictions; (ii) at such time as it
enters the public domain through no fault of such Secured Party; (iii) that
is
communicated to it free of any obligation of confidentiality; (iv) that is
developed by such Secured Party or its agents independently of and without
reference to any confidential information communicated by the Company; or (v)
as
required by applicable law.
(k) Governing
Law.
This
Agreement and all actions arising out of or in connection with this Agreement
shall be governed by and construed in accordance with the laws of the State
of
California, without regard to the conflicts of law provisions of the State
of
California or of any other state.
[Signature
Page Follows]
11
The
Securing Party and the Secured Party have caused this Agreement to be duly
executed and delivered as of the date first above written.
|
ORGANIC
TO GO FOOD CORPORATION
a
Delaware corporation
By:
_________________________________
Name:
Xxxxx Xxxxx
Title:
Chief Executive Officer
X.XXXXXX
L.P.
By:
_________________________________
Xx.
Xxxxxx Xxxxxxx
Director,
Inventages Whealth Management, Inc., as General Partner of X.Xxxxxx
L.P.
By:
__________________________________
Xx.
Xxxxxxxx Xxxxxxxxxxxxx
Director,
Inventages Whealth Management, Inc., as General Partner of X.Xxxxxx
L.P.
|
Exhibit
A
List
of Existing Liens
