SECURITY
AGREEMENT
This
Security Agreement (this “ Agreement ”) is made
as of the ___ day of February, 2009, by and between Organic To Go
Food Corporation, a Delaware corporation (the “
Company ” or the “ Securing Party
”), and W.Health L.P., a limited partnership organized under
the laws of the Bahamas (the “ Secured Party
”).
RECITALS
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The
Securing Party and the Secured Party are parties to a Note Purchase
Agreement, dated February 11, 2009 (the “ Purchase
Agreement ”), pursuant to which the Secured Party shall
purchase the Note (as defined in the Purchase Agreement);
and
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The
parties intend that the Securing Party’s obligations to repay
the Note (whether now owned or hereafter purchased by the Secured
Party) and any other obligation in favor of Secured Party arising
under the Purchase Agreement and the Note 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 Note 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.
“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, levy, lien 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 and the Note, 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.
“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
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