AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED
AND RESTATED
THIS
AMENDED AND RESTATED SECURITY AGREEMENT
(the
“Agreement”), is entered into and made effective as of May 31, 2007 by and
between NATURAL
NUTRITION, INC.,
a
Nevada corporation (the “Company” and f/k/a CSI
BUSINESS FINANCE, INC.,
a
Florida corporation), and the secured party listed on the signature page hereto
(the “Secured Party”), and amends and restates the SECURITY
AGREEMENT
(the
“2005 Security Agreement”), entered into and made effective as of
September 9, 2005 by and between the Company and the Secured
Party.
WHEREAS,
the
Company previously issued and sold to the Secured Party, as provided in a
Securities Purchase Agreement dated September 9, 2005 (the “2005 Securities
Purchase Agreement”), and the Secured Party purchased a Convertible Debenture in
the original principal amount of to Fifteen Million Six Hundred Thirty Five
Thousand One Hundred Ninety Nine Dollars (U.S. $15,635,199) (the “2005
Convertible Debenture”), which is convertible into shares of the Company’s
common stock, par value $0.001 (the “Common Stock”) (as converted, the
“2005 Conversion Shares”); and
WHEREAS,
to
induce the Secured Party to enter into the transaction contemplated by the
2005 Securities Purchase Agreement, the 2005 Convertible Debenture, the
Investor Registration Rights Agreement dated September 9, 2005 between the
Company and the Secured Party (the “2005 Investor Registration Rights
Agreement”), the Escrow Agreement dated September 9, 2005 among the
Company, the Secured Party, and Xxxxx Xxxxxxxx, Esq. (the “2005 Escrow
Agreement”), and the Irrevocable Transfer Agent Instructions among the Company,
the Secured Party, the Transfer Agent, and Xxxxx Xxxxxxxx, Esq. (the
“2005 Transfer Agent Instructions”) (collectively referred to as the
“2005 Transaction Documents”), the Company granted to the Secured Party a
security interest in and to the pledged property identified on Exhibit A to
the
2005 Security Agreement (collectively referred to as the “Pledged Property”)
until the satisfaction of the Obligations, as defined in the 2005 Security
Agreement; and
WHEREAS,
the
Company has agreed to issue and sell to the Secured Party, as provided in a
Securities Purchase Agreement of even date herewith between the Company and
the
Secured Party (the “2007 Securities Purchase Agreement”), and the Secured
Party shall purchase a Secured Convertible Note in the original principal amount
of Nine Million Two Hundred Ninety-Two Thousand Eight Hundred and Ninety-Four
Dollars (U.S. $9,292,894) (the “2007 Convertible Note” and, together
with the 2005 Convertible Debenture, the “Debentures”), which shall be
convertible into shares of Common Stock) (as converted, and together with the
2005 Conversion Shares, the “Conversion Shares”); and
WHEREAS,
to
induce the Secured Party to enter into the transaction contemplated by the
2007
Securities Purchase Agreement, the 2007 Convertible Note and the other
transaction documents contemplated thereby (collectively referred to as the
“2007 Transaction Documents” and, together with the 2005 Transaction
Documents, the “Transaction Documents”), the Company hereby amends and restates
the 2005 Security Agreement to, among other things, (i) include within the
definition of “Obligations” the obligations of the Company under the
2007 Securities Purchase Agreement, the 2007 Convertible Note and the
other 2007 Transaction Documents, (ii) to include within the definition of
“Pledged Property” the Convertible Promissory Note, dated March 31, 2004,
originally issued to Nesracorp Inc. (under its former name Interactive
Nutrition, Inc.) jointly by Bio-One Corporation and Interactive Nutrition
International, Inc., a company incorporated under the laws of Canada and a
wholly-owned subsidiary of the Company. (“INII”) in the principal amount of
U.S. $15,000,000, as such note may be amended from time to time (the
“Subsidiary Note”) and (iii) to make certain other changes as set forth
herein.
NOW,
THEREFORE,
in
consideration of the promises and the mutual covenants herein contained, and
for
other good and valuable consideration, the adequacy and receipt of which are
hereby acknowledged, the parties hereto hereby agree that the 2005 Security
Agreement is amended and restated as follows:
ARTICLE
1. -
DEFINITIONS AND INTERPRETATIONS
Section
1.1. Recitals.
The
above
recitals are true and correct and are incorporated herein, in their entirety,
by
this reference.
Section
1.2. Interpretations.
Nothing
herein expressed or implied is intended or shall be construed to confer upon
any
person other than the Secured Party any right, remedy or claim under or by
reason hereof.
Section
1.3. Obligations
Secured.
The
obligations secured hereby are any and all obligations of the Company now
existing or hereinafter incurred to the Secured Party, whether oral or written
and whether arising before, on or after the date hereof including, without
limitation, those obligations of the Company to the Secured Party under this
Agreement, the Transaction Documents (including, without limitation, the
2007 Convertible Note and the other 2007 Transaction Documents), and
any other amounts now or hereafter owed to the Secured Party by the Company
thereunder or hereunder (collectively, the “Obligations”).
ARTICLE
2. -
PLEDGED PROPERTY, ADMINISTRATION OF COLLATERAL
AND
TERMINATION OF SECURITY INTEREST
Section
2.1. Pledged
Property.
(a) Company
hereby pledges to the Secured Party, and creates in the Secured Party for its
benefit, a security interest for such time until the Obligations are paid in
full, in and to all of the property of the Company as set forth in
Exhibit A attached hereto and the products thereof and the proceeds of all
such items, including, without limitation, the Subsidiary Note (collectively,
the “Pledged Property”).
(b) Simultaneously
with the execution and delivery of this Agreement, the Company shall make,
execute, acknowledge, file, record and deliver to the Secured Party any
documents reasonably requested by the Secured Party to perfect its security
interest in the Pledged Property. Simultaneously with the execution and delivery
of this Agreement, the Company shall make, execute, acknowledge and deliver
to
the Secured Party such documents and instruments, including, without limitation,
financing statements, certificates, affidavits and forms as may, in the Secured
Party’s reasonable judgment, be necessary to effectuate, complete or perfect, or
to continue and preserve, the security interest of the Secured Party in the
Pledged Property, and the Secured Party shall hold such documents and
instruments as secured party, subject to the terms and conditions contained
herein.
-2-
Section
2.2. Rights;
Interests; Etc.
(a) So
long
as no Event of Default (as hereinafter defined) shall have occurred and be
continuing:
(i) the
Company shall be entitled to exercise any and all rights pertaining to the
Pledged Property or any part thereof for any purpose not inconsistent with
the
terms hereof; and
(ii) the
Company shall be entitled to receive and retain any and all payments paid or
made in respect of the Pledged Property.
(b) Upon
the
occurrence and during the continuance of an Event of Default:
(i) All
rights of the Company to exercise the rights which it would otherwise be
entitled to exercise pursuant to Section 2.2(a)(i) hereof and to receive
payments which it would otherwise be authorized to receive and retain pursuant
to Section 2.2(a)(ii) hereof shall be suspended, and all such rights shall
thereupon become vested in the Secured Party who shall thereupon have the sole
right to exercise such rights and to receive and hold as Pledged Property such
payments; provided, however, that if the Secured Party shall become entitled
and
shall elect to exercise its right to realize on the Pledged Property pursuant
to
Article 5 hereof, then all cash sums received by the Secured Party, or held
by
Company for the benefit of the Secured Party and paid over pursuant to
Section 2.2(b)(ii) hereof, shall be applied against any outstanding
Obligations; and
(ii) All
interest, dividends, income and other payments and distributions which are
received by the Company contrary to the provisions of Section 2.2(b)(i)
hereof shall be received in trust for the benefit of the Secured Party, shall
be
segregated from other property of the Company and shall be forthwith paid over
to the Secured Party; or
(iii) The
Secured Party in its sole discretion shall be authorized to sell any or all
of
the Pledged Property at public or private sale in order to recoup all of the
outstanding principal plus accrued interest owed pursuant to the Debentures
as
described herein.
(c) An
“Event
of Default” shall be deemed to have occurred under this Agreement if an Event of
Default has occurred under the 2005 Convertible Debenture or the
2007 Convertible Note (as such term is defined in those
documents).
-3-
ARTICLE
3.
- ATTORNEY-IN-FACT; PERFORMANCE
Section
3.1. Secured
Party Appointed Attorney-In-Fact.
Upon
the
occurrence of an Event of Default, the Company hereby appoints the Secured
Party
as its attorney-in-fact, with full authority in the place and stead of the
Company and in the name of the Company or otherwise, from time to time in the
Secured Party’s discretion to take any action and to execute any instrument
which the Secured Party may reasonably deem necessary to accomplish the purposes
of this Agreement, including, without limitation, to receive and collect all
instruments made payable to the Company representing any payments in respect
of
the Pledged Property or any part thereof and to give full discharge for the
same. The Secured Party may demand, collect, receipt for, settle, compromise,
adjust, xxx for, foreclose, or realize on the Pledged Property as and when
the
Secured Party may determine. To facilitate collection, the Secured Party may
notify account debtors and obligors on any Pledged Property to make payments
directly to the Secured Party.
Section
3.2. Secured
Party May Perform.
If
the
Company fails to perform any agreement contained herein, the Secured Party,
at
its option, may itself perform, or cause performance of, such agreement, and
the
expenses of the Secured Party incurred in connection therewith shall be included
in the Obligations secured hereby and payable by the Company under
Section 8.3.
ARTICLE
4. -
REPRESENTATIONS AND WARRANTIES
Section
4.1. Authorization;
Enforceability.
Each
of
the parties hereto represents and warrants that it has taken all action
necessary to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby; and upon execution and delivery,
this
Agreement shall constitute a valid and binding obligation of the respective
party, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights or by the principles governing the
availability of equitable remedies.
Section
4.2. Ownership
of Pledged Property.
The
Company warrants and represents that it is the legal and beneficial owner of
the
Pledged Property free and clear of any lien, security interest, option or other
charge or encumbrance except for the security interest created by this
Agreement.
ARTICLE
5. -
DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL
Section
5.1. Default
and Remedies.
(a) If
an
Event of Default occurs, then in each such case the Secured Party may declare
the Obligations to be due and payable immediately, by a notice in writing to
the
Company, and upon any such declaration, the Obligations shall become immediately
due and payable.
-4-
(b) Upon
the
occurrence of an Event of Default, the Secured Party shall: (i) be entitled
to receive all distributions with respect to the Pledged Property, (ii) to
cause the Pledged Property to be transferred into the name of the Secured Party
or its nominee, (iii) to dispose of the Pledged Property, and (iv) to
realize upon any and all rights in the Pledged Property then held by the Secured
Party.
Section
5.2. Method
of Realizing Upon the Pledged Property: Other Remedies.
Upon
the
occurrence of an Event of Default, in addition to any rights and remedies
available at law or in equity, the following provisions shall govern the Secured
Party’s right to realize upon the Pledged Property:
(a) Any
item
of the Pledged Property may be sold for cash or other value in any number of
lots at brokers board, public auction or private sale and may be sold without
demand, advertisement or notice (except that the Secured Party shall give the
Company ten (10) days’ prior written notice of the time and place or of the
time after which a private sale may be made (the “Sale Notice”)), which notice
period is hereby agreed to be commercially reasonable. At any sale or sales
of
the Pledged Property, the Company may bid for and purchase the whole or any
part
of the Pledged Property and, upon compliance with the terms of such sale, may
hold, exploit and dispose of the same without further accountability to the
Secured Party. The Company will execute and deliver, or cause to be executed
and
delivered, such instruments, documents, assignments, waivers, certificates,
and
affidavits and supply or cause to be supplied such further information and
take
such further action as the Secured Party reasonably shall require in connection
with any such sale.
(b) Any
cash
being held by the Secured Party as Pledged Property and all cash proceeds
received by the Secured Party in respect of, sale of, collection from, or other
realization upon all or any part of the Pledged Property shall be applied as
follows:
(i) to
the
payment of all amounts due the Secured Party for the expenses reimbursable
to it
hereunder or owed to it pursuant to Section 8.3 hereof;
(ii) to
the
payment of the Obligations then due and unpaid.
(iii) the
balance, if any, to the person or persons entitled thereto, including, without
limitation, the Company.
(c) In
addition to all of the rights and remedies which the Secured Party may have
pursuant to this Agreement, the Secured Party shall have all of the rights
and
remedies provided by law, including, without limitation, those under the Uniform
Commercial Code.
(i) If
the
Company fails to pay such amounts due upon the occurrence of an Event of Default
which is continuing, then the Secured Party may institute a judicial proceeding
for the collection of the sums so due and unpaid, may prosecute such proceeding
to judgment or final decree and may enforce the same against the Company and
collect the monies adjudged or decreed to be payable in the manner provided
by
law out of the property of Company, wherever situated.
-5-
(ii) The
Company agrees that it shall be liable for any reasonable fees, expenses and
costs incurred by the Secured Party in connection with enforcement, collection
and preservation of the Transaction Documents, including, without limitation,
reasonable legal fees and expenses, and such amounts shall be deemed included
as
Obligations secured hereby and payable as set forth in Section 8.3
hereof.
Section
5.3. Proofs
of Claim.
In
case
of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relating to the Company or the property of the Company or of such
other obligor or its creditors, the Secured Party (irrespective of whether
the
Obligations shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Secured Party shall have made
any
demand on the Company for the payment of the Obligations), shall be entitled
and
empowered, by intervention in such proceeding or otherwise:
(i) to
file
and prove a claim for the whole amount of the Obligations and to file such
other
papers or documents as may be necessary or advisable in order to have the claims
of the Secured Party (including any claim for the reasonable legal fees and
expenses and other expenses paid or incurred by the Secured Party permitted
hereunder and of the Secured Party allowed in such judicial proceeding), and
(ii) to
collect and receive any monies or other property payable or deliverable on
any
such claims and to distribute the same; and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by the Secured Party to make such payments
to
the Secured Party and, in the event that the Secured Party shall consent to
the
making of such payments directed to the Secured Party, to pay to the Secured
Party any amounts for expenses due it hereunder.
Section
5.4. Duties
Regarding Pledged Property.
The
Secured Party shall have no duty as to the collection or protection of the
Pledged Property or any income thereon or as to the preservation of any rights
pertaining thereto, beyond the safe custody and reasonable care of any of the
Pledged Property actually in the Secured Party’s possession.
ARTICLE
6. -
AFFIRMATIVE COVENANTS
The
Company covenants and agrees that, from the date hereof and until the
Obligations have been fully paid and satisfied, unless the Secured Party shall
consent otherwise in writing (as provided in Section 8.4 hereof):
Section
6.1. Existence,
Properties, Etc.
(a) The
Company shall do, or cause to be done, all things, or proceed with due diligence
with any actions or courses of action, that may be reasonably necessary (i)
to
maintain Company’s due organization, valid existence and good standing under the
laws of its state of incorporation, and (ii) to preserve and keep in full force
and effect all qualifications, licenses and registrations in those jurisdictions
in which the failure to do so could have a Material Adverse Effect (as defined
below); and (c) the Company shall not do, or cause to be done, any act impairing
the Company’s corporate power or authority (i) to carry on the Company’s
business as now conducted, and (ii) to execute or deliver this Agreement or
any
other document delivered in connection herewith, including, without limitation,
any UCC-1 Financing Statements required by the Secured Party to which it is
or
will be a party, or perform any of its obligations hereunder or thereunder.
For
purpose of this Agreement, the term “Material Adverse Effect” shall mean any
material and adverse affect as determined by Secured Party in its sole
discretion, whether individually or in the aggregate, upon (a) the Company’s
assets, business, operations, properties or condition, financial or otherwise;
(b) the Company’s to make payment as and when due of all or any part of the
Obligations; or (c) the Pledged Property.
-6-
Section
6.2. Financial
Statements and Reports.
The
Company shall furnish to the Secured Party within a reasonable time such
financial data as the Secured Party may reasonably request, including, without
limitation, the following:
(a) Within
one hundred (100) days after the close of each fiscal year, the balance
sheet of the Company as of the close of each fiscal year, the statement of
earnings and retained earnings of the Company as of the close of such fiscal
year, and statement of cash flows for the Company for such fiscal year, all
in
reasonable detail, prepared in accordance with generally accepted accounting
principles consistently applied, certified by the chief executive and chief
financial officers of the Company as being true and correct and accompanied
by a
certificate of the chief executive and chief financial officers of the Company,
stating that the Company has kept, observed, performed and fulfilled each
covenant, term and condition of this Agreement during such fiscal year and
that
no Event of Default hereunder has occurred and is continuing, or if an Event
of
Default has occurred and is continuing, specifying the nature of same, the
period of existence of same and the action the Company proposes to take in
connection therewith;
(b) Within
sixty (60) days after the close of each quarter, a balance sheet of the
Company as of the close of each quarter, and statement of earnings and retained
earnings of the Company as of the close of such quarter, all in reasonable
detail, and prepared substantially in accordance with generally accepted
accounting principles consistently applied, certified by the chief executive
and
chief financial officers of the Company as being true and correct;
and
(c) Copies
of
all accountants’ reports and accompanying financial reports submitted to the
Company by independent accountants in connection with each annual examination
of
the Company.
Section
6.3. Maintenance
of Books and Records; Inspection.
The
Company shall maintain its books, accounts and records in accordance with
generally accepted accounting principles consistently applied, and permit the
Secured Party, its officers and employees and any professionals designated
by
the Secured Party in writing, at any time to visit and inspect any of its
properties (including but not limited to the collateral security described
in
the Transaction Documents), corporate books and financial records, and to
discuss its accounts, affairs and finances with any employee, officer or
director thereof.
-7-
Section
6.4. Maintenance
and Insurance.
(a) The
Company shall maintain or cause to be maintained, at its own expense, all of
its
assets and properties in good working order and condition, making all necessary
repairs thereto and renewals and replacements thereof.
(b) The
Company shall maintain or cause to be maintained, at its own expense, insurance
in form, substance and amounts (including deductibles), which the Company deems
reasonably necessary to the Company’s business, (i) adequate to insure all
assets and properties of the Company, which assets and properties are of a
character usually insured by persons engaged in the same or similar business
against loss or damage resulting from fire or other risks included in an
extended coverage policy; (ii) against public liability and other tort claims
that may be incurred by the Company; (iii) as may be required by the Transaction
Documents and/or applicable law and (iv) as may be reasonably requested by
Secured Party, all with adequate, financially sound and reputable
insurers.
Section
6.5. Contracts
and Other Collateral.
The
Company shall perform all of its obligations under or with respect to each
instrument, receivable, contract and other intangible included in the Pledged
Property to which the Company is now or hereafter will be party on a timely
basis and in the manner therein required, including, without limitation, this
Agreement.
Section
6.6. Defense
of Collateral, Etc.
The
Company shall defend and enforce its right, title and interest in and to any
part of: (a) the Pledged Property; and (b) if not included within the Pledged
Property, those assets and properties whose loss could have a Material Adverse
Effect, the Company shall defend the Secured Party’s right, title and interest
in and to each and every part of the Pledged Property, each against all manner
of claims and demands on a timely basis to the full extent permitted by
applicable law.
Section
6.7. Payment
of Debts, Taxes, Etc.
The
Company shall pay, or cause to be paid, all of its indebtedness and other
liabilities and perform, or cause to be performed, all of its obligations in
accordance with the respective terms thereof, and pay and discharge, or cause
to
be paid or discharged, all taxes, assessments and other governmental charges
and
levies imposed upon it, upon any of its assets and properties on or before
the
last day on which the same may be paid without penalty, as well as pay all
other
lawful claims (whether for services, labor, materials, supplies or otherwise)
as
and when due.
Section
6.8. Taxes
and Assessments; Tax Indemnity.
The
Company shall (a) file all tax returns and appropriate schedules thereto that
are required to be filed under applicable law, prior to the date of delinquency,
(b) pay and discharge all taxes, assessments and governmental charges or levies
imposed upon the Company, upon its income and profits or upon any properties
belonging to it, prior to the date on which penalties attach thereto, and (c)
pay all taxes, assessments and governmental charges or levies that, if unpaid,
might become a lien or charge upon any of its properties; provided, however,
that the Company in good faith may contest any such tax, assessment,
governmental charge or levy described in the foregoing clauses (b) and (c)
so
long as appropriate reserves are maintained with respect thereto.
-8-
Section
6.9. Compliance
with Law and Other Agreements.
The
Company shall maintain its business operations and property owned or used in
connection therewith in compliance with (a) all applicable federal, state and
local laws, regulations and ordinances governing such business operations and
the use and ownership of such property, and (b) all agreements, licenses,
franchises, indentures and mortgages to which the Company is a party or by
which
the Company or any of its properties is bound except where such non-compliance
would not have a Material Adverse Effect. Without limiting the foregoing, the
Company shall pay all of its indebtedness promptly in accordance with the terms
thereof.
Section
6.10. Notice
of Default.
The
Company shall give written notice to the Secured Party of the occurrence of
any
default or Event of Default under this Agreement, any Transaction Document
or
any other agreement of Company for the payment of money, promptly upon the
occurrence thereof.
Section
6.11. Notice
of Litigation.
The
Company shall give notice, in writing, to the Secured Party of (a) any actions,
suits or proceedings wherein the amount at issue is in excess of $250,000,
instituted by any persons against the Company, or affecting any of the assets
of
the Company, and (b) any dispute, not resolved within fifteen (15) days of
the commencement thereof, between the Company on the one hand and any
governmental or regulatory body on the other hand, which might reasonably be
expected to have a Material Adverse Effect on the business operations or
financial condition of the Company.
ARTICLE
7. -
NEGATIVE COVENANTS
The
Company covenants and agrees that, from the date hereof until the Obligations
have been fully paid and satisfied, the Company shall not, unless the Secured
Party shall consent otherwise in writing:
Section
7.1. Liens
and Encumbrances.
The
Company shall not directly or indirectly make, create, incur, assume or permit
to exist any assignment, transfer, pledge, mortgage, security interest or other
lien or encumbrance of any nature in, to or against any part of the Pledged
Property or of the Company’s capital stock, or offer or agree to do so, or own
or acquire or agree to acquire any asset or property of any character subject
to
any of the foregoing encumbrances (including any conditional sale contract
or
other title retention agreement), or assign, pledge or in any way transfer
or
encumber its right to receive any income or other distribution or proceeds
from
any part of the Pledged Property or the Company’s capital stock; or enter into
any sale-leaseback financing respecting any part of the Pledged Property as
lessee, or cause or assist the inception or continuation of any of the
foregoing.
-9-
Section
7.2. Certificate
of Incorporation, By-Laws, Mergers, Consolidations, Acquisitions and
Sales.
Without
the prior express written consent of the Secured Party, the Company shall not:
(a) Amend its Certificate of Incorporation or By-Laws; (b) issue or sell its
stock, stock options, bonds, notes or other corporate securities or obligations
except as otherwise permitted in Section 4(k) of the 2005 Securities
Purchase Agreement or Section 4(k) or (o) of the 2007 Securities
Purchase Agreement; (c) be a party to any merger, consolidation or corporate
reorganization, (d) purchase or otherwise acquire all or substantially all
of
the assets or stock of, or any partnership or joint venture interest in, any
other person, firm or entity, nor (e) sell, transfer, convey, grant a security
interest in or lease all or any substantial part of its assets.
Section
7.3. Management,
Ownership.
The
Company shall not materially change its ownership, executive staff or management
without the prior written consent of the Secured Party. The ownership, executive
staff and management of the Company are material factors in the Secured Party’s
willingness to institute and maintain a lending relationship with the
Company.
Section
7.4. Dividends,
Etc.
The
Company shall not declare or pay any dividend of any kind, in cash or in
property, on any class of its capital stock, nor purchase, redeem, retire or
otherwise acquire for value any shares of such stock, nor make any distribution
of any kind in respect thereof, nor make any return of capital to shareholders,
nor make any payments in respect of any pension, profit sharing, retirement,
stock option, stock bonus, incentive compensation or similar plan (except as
required or permitted hereunder), without the prior written consent of the
Secured Party.
Section
7.5. Guaranties;
Loans.
The
Company shall not guarantee nor be liable in any manner, whether directly or
indirectly, or become contingently liable after the date of this Agreement
in
connection with the obligations or indebtedness of any person or persons, except
for (i) the indebtedness currently secured by the liens identified on the
Pledged Property identified on Exhibit A hereto and (ii) the endorsement of
negotiable instruments payable to the Company for deposit or collection in
the
ordinary course of business. The Company shall not make any loan, advance or
extension of credit to any person other than in the normal course of its
business.
Section
7.6. Debt.
The
Company shall not create, incur, assume or suffer to exist any additional
indebtedness of any description whatsoever in an aggregate amount in excess
of
$250,000 (excluding any indebtedness of the Company to the Secured Party, trade
accounts payable and accrued expenses incurred in the ordinary course of
business and the endorsement of negotiable instruments payable to the Company,
respectively for deposit or collection in the ordinary course of
business).
-10-
Section
7.7. Conduct
of Business.
The
Company will continue to engage, in an efficient and economical manner, in
a
business of the same general type as conducted by it on the date of this
Agreement.
Section
7.8. Places
of Business.
The
location of the Company’s chief place of business is 000 Xxxxx Xxxx Xxx Xxxx,
Xxxxx 000, Xxxxxxx, XX 00000. The Company shall not change the location of
its
chief place of business, chief executive office or any place of business
disclosed to the Secured Party or move any of the Pledged Property from its
current location without thirty (30) days’ prior written notice to the
Secured Party in each instance.
ARTICLE
8. -
MISCELLANEOUS
Section
8.1. Notices.
All
notices or other communications required or permitted to be given pursuant
to
this Agreement shall be in writing and shall be considered as duly given on:
(a) the date of delivery, if delivered in person, by nationally recognized
overnight delivery service or (b) five (5) days after mailing if
mailed from within the continental United States by certified mail, return
receipt requested to the party entitled to receive the same:
|
If
to the Secured Party:
|
Cornell
Capital Partners, LP
000
Xxxxxx Xxxxxx-Xxxxx 0000
Xxxxxx
Xxxx, Xxx Xxxxxx 00000
Attention:
Xxxx
Xxxxx, Esq.
Senior
Managing
Director
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
|
| And if to the Company: |
Natural
Nutrition, Inc.
000
Xxxxx Xxxx Xxx Xxxx - Xxxxx 000
Xxxxxxx,
XX
Attention:
Xxxxxxx X. Xxxxxxxx, President & CEO
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
|
| With a copy to: |
Xxxxxxxxxxx
& Xxxxxxxx Xxxxxxx Xxxxx Xxxxx LLP
000
Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx,
Xxxxxxx 00000
Attention:
Xxxxxxx X. Xxxxxx, Esq.
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
-11-
Any
party
may change its address by giving notice to the other party stating its new
address. Commencing on the tenth (10th) day after the giving of such
notice, such newly designated address shall be such party’s address for the
purpose of all notices or other communications required or permitted to be
given
pursuant to this Agreement.
Section
8.2. Severability.
If
any
provision of this Agreement shall be held invalid or unenforceable, such
invalidity or unenforceability shall attach only to such provision and shall
not
in any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if
any
such invalid or unenforceable provision were not contained herein.
Section
8.3. Expenses.
In
the
event of an Event of Default, the Company will pay to the Secured Party the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel, which the Secured Party may incur in connection with:
(i) the custody or preservation of, or the sale, collection from, or other
realization upon, any of the Pledged Property; (ii) the exercise or enforcement
of any of the rights of the Secured Party hereunder or (iii) the failure by
the
Company to perform or observe any of the provisions hereof.
Section
8.4. Waivers,
Amendments, Etc.
The
Secured Party’s delay or failure at any time or times hereafter to require
strict performance by Company of any undertakings, agreements or covenants
shall
not waiver, affect, or diminish any right of the Secured Party under this
Agreement to demand strict compliance and performance herewith. Any waiver
by
the Secured Party of any Event of Default shall not waive or affect any other
Event of Default, whether such Event of Default is prior or subsequent thereto
and whether of the same or a different type. None of the undertakings,
agreements and covenants of the Company contained in this Agreement, and no
Event of Default, shall be deemed to have been waived by the Secured Party,
nor
may this Agreement be amended, changed or modified, unless such waiver,
amendment, change or modification is evidenced by an instrument in writing
specifying such waiver, amendment, change or modification and signed by the
Secured Party.
Section
8.5. Continuing
Security Interest.
This
Agreement shall create a continuing security interest in the Pledged Property
and shall: (i) remain in full force and effect until payment in full of the
Obligations; and (ii) be binding upon the Company and its successors and
heirs and (iii) inure to the benefit of the Secured Party and its successors
and
assigns. Upon the payment or satisfaction in full of the Obligations, the
Company shall be entitled to the return, at its expense, of such of the Pledged
Property as shall not have been sold in accordance with Section 5.2 hereof
or otherwise applied pursuant to the terms hereof.
Section
8.6. Independent
Representation.
-12-
Each
party hereto acknowledges and agrees that it has received or has had the
opportunity to receive independent legal counsel of its own choice and that
it
has been sufficiently apprised of its rights and responsibilities with regard
to
the substance of this Agreement.
Section
8.7. Applicable
Law: Jurisdiction.
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of New Jersey without regard to the principles of conflict of laws.
The parties further agree that any action between them shall be heard in Xxxxxx
County, New Jersey, and expressly consent to the jurisdiction and venue of
the
Superior Court of New Jersey, sitting in Xxxxxx County and the United States
District Court for the District of New Jersey sitting in Newark, New Jersey
for
the adjudication of any civil action asserted pursuant to this
Paragraph.
Section
8.8. Waiver
of Jury Trial.
AS
A
FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT AND TO
MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY WAIVES
ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS
TRANSACTION.
Section
8.9. Entire
Agreement.
This
Agreement constitutes the entire agreement among the parties and supersedes
any
prior agreement or understanding among them with respect to the subject matter
hereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
-13-
IN
WITNESS WHEREOF, the parties hereto have executed this Amended and Restated
Security Agreement as of the date first above written.
| COMPANY:
NATURAL
NUTRITION, INC.
By:
___/s/
Xxxxxxx X. Connolly____________
Name:
Xxxxxxx X. Xxxxxxxx
Title:
President & CEO
SECURED
PARTY:
CORNELL
CAPITAL PARTNERS, L.P.
By: Yorkville
Advisors, LLC
Its:
Investment
Manager
By: /s/
Xxxx Xxxxx
Name: Xxxx
Xxxxx
Title:
Senior
Managing Director
|
-14-
EXHIBIT A
DEFINITION
OF PLEDGED PROPERTY
The
following property of the Company and the products thereof and the proceeds
of
all such items now owned or hereafter acquired or created:
|
(a)
|
all
goods of the Company, including, without limitation, machinery, equipment,
furniture, furnishings, fixtures, signs, lights, tools, parts, supplies
and motor vehicles of every kind and description, now or hereafter
owned
by the Company or in which the Company may have or may hereafter
acquire
any interest, and all replacements, additions, accessions, substitutions
and proceeds thereof, arising from the sale or disposition thereof,
and
where applicable, the proceeds of insurance and of any tort claims
involving any of the foregoing;
|
|
(b)
|
all
inventory of the Company, including, but not limited to, all goods,
wares,
merchandise, parts, supplies, finished products, other tangible personal
property, including such inventory as is temporarily out of Company’s
custody or possession and including any returns upon any accounts
or other
proceeds, including insurance proceeds, resulting from the sale or
disposition of any of the
foregoing;
|
|
(c)
|
all
contract rights and general intangibles of the Company, including,
without
limitation, goodwill, trademarks, trade styles, trade names, leasehold
interests, partnership or joint venture interests, patents and patent
applications, copyrights, deposit accounts, securities or equity
interest
in any other entity (including, without limitation, all equity interest
in
its subsidiaries, including, without limitation, Interactive Nutrition
International, Inc., a corporation incorporated under the laws of
Canada
and a wholly-owned subsidiary of the Company (“INII”), and CSI Business
Finance, Inc., a Texas corporation (“CSI”)), and all receivables, loans
and other amounts due from INII and CSI (including, without limitation,
that certain Convertible Promissory Note, dated March 31, 2004,
originally issued to Nesracorp Inc.), in each case and any other
entity,
whether now owned or hereafter
created;
|
|
(d)
|
all
documents, warehouse receipts, instruments and chattel paper of the
Company whether now owned or hereafter
created;
|
|
(e)
|
all
accounts and other receivables, instruments or other forms of obligations
and rights to payment of the Company (herein collectively referred
to as
“Accounts”), together with the proceeds thereof, all goods represented by
such Accounts and all such goods that may be returned by the Company’s
customers, and all proceeds of any insurance thereon, and all guarantees,
securities and liens which the Company may hold for the payment of
any
such Accounts including, without limitation, all rights of stoppage
in
transit, replevin and reclamation and as an unpaid vendor and/or
lienor,
all of which the Company represents and warrants will be bona fide
and
existing obligations of its respective customers, arising out of
the sale
of goods by the Company in the ordinary course of
business;
|
|
(f)
|
to
the extent assignable, all of the Company’s rights under all present and
future authorizations, permits, licenses and franchises issued or
granted
in connection with the operations of any of its facilities;
and
|
|
(g)
|
all
products and proceeds (including, without limitation, insurance proceeds)
from the foregoing.
|
A-1
