Exhibit 10.31

[image00001.jpg]

Master Loan and Security Agreement
          

This Master Loan and Security Agreement (this “Agreement”) dated as of March 13,
2018, is made by and among FIFTH THIRD BANK, a Florida banking corporation, for
itself and as agent for any affiliate of Fifth Third Bancorp (together with its
successors and assigns, the “Lender”), and INNOVATIVE FOOD HOLDINGS, INC.; FOOD
INNOVATIONS, INC.; GOURMET FOODSERVICE GROUP, INC.; 4 THE GOURMET, INC.; HALEY
FOOD GROUP, INC.; GOURMET FOODSERVICE GROUP WAREHOUSE, INC., each a corporation
organized under the laws of the State of Florida and having a principal place of
business at 28411 Race Track Road, Bonita Springs, FL 34135; ARTISAN SPECIALTY
FOODS, INC., a corporation organized under the laws of the State of Delaware and
having a principal place of business at 28411 Race Track Road, Bonita Springs,
FL 34135; ORGANIC FOOD BROKERS LLC, a limited liability company organized under
the laws of the State of Colorado and having a principal place of business at
28411 Race Track Road, Bonita Springs, FL 34135; and INNOVATIVE GOURMET, LLC and
FOOD FUNDING, LLC, each a limited liability company organized under the laws of
the State of Delaware and having a principal place of business at 28411 Race
Track Road, Bonita Springs, FL 34135 (collectively, “Borrowers”).
RECITALS
WHEREAS, Lender has determined that it may make one or more loans, advances or
other extensions of credit (each an “Advance” and collectively, the “Loan”), in
its sole and absolute discretion, to Borrowers;
WHEREAS, Lender and Borrowers desire to set forth the general requirements and
conditions for the approval of credit to Borrowers applicable to the Loan; and
WHEREAS, for each additional extension of credit, Lender may impose additional
requirements as it deems necessary for the approval of the credit, terms, the
documentation of the associated Advance, and the perfection of Lender’s security
interests;
NOW, THEREFORE, the parties agree that it is appropriate to enter into this
Master Loan and Security Agreement in order to set forth general terms and
conditions that shall be applicable to each Advance and the Loan and to
establish the framework for the making of future Advances and the documentation
thereof.
1.          General Terms Applicable to Loans, Advances and Credit Commitments.
(a)          Each Advance individually, and the Loan generally, shall be subject
to the terms and conditions of this Agreement and any additional terms or
conditions which Lender may specify to Borrowers in the case of any particular
Advance to Borrowers.
(b)          As of the date of this Agreement, Lender has NOT extended to
Borrowers any credit commitment (“Commitment”) or made any representation or
warranty to Borrowers that a Commitment will be extended to Borrowers.  Any
Commitment, if made at all, shall be made in writing by Lender in either a
separate commitment letter, in the written documentation relating to a
particular Advance or evidenced by the promissory note relating to such
Advance.  The drafting of documents relating to a requested Advance, preliminary
proposals made to Borrowers, or Lender’s furnishing of drafts of documents to
Borrowers, however, shall not signify or be interpreted as the making of a
Commitment.  No credit Commitment may be extended without the completion of
Lender’s internal credit approval processes and any such Commitment at the time
of an Advance shall only be made upon and evidenced by the

--------------------------------------------------------------------------------

completion and execution of written documentation satisfactory to Lender in all
respects and in its sole discretion.
(c)          Advances (if any) shall be made on or before any applicable
Commitment termination or expiration date specified by Lender with regard to
such Advances or the Loans generally.
(d)          Borrowers shall give Lender notice (which shall be irrevocable) not
later than 10:00 am (Eastern time) on the third Business Day prior to the
requested day for the making of any Advance, which notice shall include the
contemporaneous delivery to Lender of the documents described herein.  Each such
notice shall specify (a) the requested date for the making of such Advance which
shall be a Business Day and (b) the amount of such Advance.  As used herein, the
term “Business Day” means any day other than Saturday or Sunday or other days on
which banks are authorized or required to close in Cincinnati, Ohio.
2.          Principal and Interest.
(a)          The obligation to repay any Loan hereunder shall be evidenced by
one or more promissory notes payable by Borrowers to the order of Lender (as
each such promissory note may be amended, amended and restated, supplemented or
modified from time to time, a “Note”).  Each Note shall bear interest, be
payable and mature as set forth in the Note.  Upon the occurrence and during the
continuance of an Event of Default (as hereinafter defined), or if the Note is
accelerated in accordance with the terms of this Loan Agreement, the outstanding
principal and all accrued interest, as well as any other charges due Lender
hereunder, shall bear interest from the date on which such amount shall have
first become due and payable to Lender to the date on which such amount shall be
paid to Lender (whether before or after judgment), at a default rate, to be
determined by Lender in its sole discretion from time to time, equal to up to
six percentage points (6.0%) in excess of the otherwise applicable rate of
interest, not to exceed the maximum rate permitted by applicable law (the
“Default Rate”).
(b)          Time is of the essence with respect to the payment and performance
of the Obligations (as defined below) to be paid or otherwise performed under
this Agreement, the Note and all of the other Loan Documents (as defined below).
(c)          Once repaid no Advance may be reborrowed hereunder.
(d)          If Borrowers fail to pay any amount due hereunder, after the
expiration of any applicable grace period, Borrowers shall pay to Lender a late
payment fee equal to five percent (5%) of the amount unpaid.  Such fee shall be
payable on demand and shall constitute part of the Obligations.
(e)          All amounts due hereunder and under the Note will be due on the
dates or at the times specified hereunder or under the Note regardless of
whether Borrowers have received any notice that such amounts are due.
(f)            Principal and interest payments, and any other amounts due
hereunder, shall be made to Lender at the address specified herein or such other
address as Lender may designate from time to time, in writing.
3.          Security.
(a)          As security for the payment as and when due of the indebtedness of
Borrowers to Lender under this Agreement, any Note, the Rate Management
Obligations, and any other documents relating thereto (and any renewals,
extensions and modifications thereof) and under any other agreement or
instrument (as the same may be renewed, extended or modified and hereinafter
collectively referred to as the “Loan Documents”), both now in existence and
hereafter created relating to Borrowers’ acquisition of the equipment described
on Schedule A hereto (as supplemented from time to time) or on any similar
schedule attached to a Note (collectively, the “Equipment” and, individually, an
“Item of Equipment”),
-2-

--------------------------------------------------------------------------------

together with any other obligation of Borrowers to Lender or its affiliates, and
the performance as and when due of all obligations of Borrowers under the Loan
Documents and any Rate Management Agreement (as the same may be renewed,
extended or modified; and hereinafter collectively referred to as the
“Obligations”; provided, however, any Excluded Swap Obligations are specifically
excluded from the definition of Obligations), Borrowers hereby grant to Lender a
first priority security interest in all of Borrowers’ right, title and interest
in the following (whether now existing or hereafter created and whether now
owned or hereafter acquired): (i) the Equipment (including, without limitation,
all inventory, equipment, fixtures or other property comprising the same), and
general intangibles relating thereto, (ii) additions, attachments, accessories
and accessions thereto whether or not furnished by the supplier of such
Equipment, (iii) any and all Rate Management Obligations, (iv) all subleases
(including the right to receive any payment thereunder and the right to make any
election or determination or give any consent or waiver thereunder), chattel
paper, accounts, security deposits and bills of sale relating thereto, (v) any
and all substitutions, replacements or exchanges for any such Equipment or other
collateral, (vi) any and all products and proceeds of any collateral hereunder
(including all insurance and requisition proceeds and all other payments of any
kind with respect to the Equipment and other collateral in and against which a
security interest is granted hereunder) and (vii) any other property or assets
in which any such Borrower may have in the past or shall have in the future
granted a security interest to secure any other obligation of such Borrower to
Lender or any of its affiliates (collectively, the “Collateral”).
(b)          To further secure the payment and performance of all of the
Obligations, the Collateral shall also include, and each Borrower hereby grants
to Lender a continuing security interest in and assigns to Lender all assets and
property of each such Borrower, including, but not limited to, all of such
Borrower’s right, title and interest in and to all accounts, accounts
receivable, chattel paper, commercial tort claims, contract rights, deposit
accounts, documents, instruments, investment property, equipment, fixtures,
general intangibles, goods, inventory, letter of credit rights, and all other
personal and real property, whether now owned or hereafter acquired, and all
products and proceeds thereof.
(c)          Borrowers agree that, with respect to the Collateral, Lender shall
have all of the rights and remedies of a secured party under the Uniform
Commercial Code as in effect in the applicable jurisdiction from time to time. 
To the extent that any proceeds of the Loan are used to acquire equipment which
is not described on Schedule A hereto or to a Note, the Lender is authorized to
supplement Schedule A with a description of such equipment.  Upon the
acquisition of any such equipment, without further action by Lender or any of
the Borrowers (i) the equipment described on such supplement to Schedule A shall
constitute part of the Equipment and (ii) Schedule A shall be deemed to have
been amended to include such supplement.
4.          Conditions Precedent.
(a)          Concurrently with the execution hereof, or on or prior to the date
on which Lender is to make the first Advance hereunder, Borrowers shall cause to
be provided to Lender the following:
With respect to each such Borrower, (i) a certificate of the secretary,
assistant secretary, manager, member, partner, trustee or other representative
of each such Borrower dated the date hereof (or in any case prior to the first
Advance, if after the date of this Agreement) certifying (A) the incumbency of
each officer, manager, member, partner, trustee or representative executing the
applicable Loan documents, (B) a copy of the applicable organizational documents
of such Borrower and (C) copies of any other documents evidencing the
authorization of the officers, managers, members, partners, trustees or
representatives on behalf of such Borrower to execute, deliver and perform this
Agreement and each other Loan Document; and (ii) if requested by Lender, an
opinion of counsel for each such Borrower in form and substance satisfactory to
Lender as to the matters set forth in Section 12 and as to such other matters as
Lender may reasonably request.
(b)          The obligation of Lender to make any Advance hereunder is subject
to the satisfaction (or waiver by Lender) of each of the following conditions
prior to the date specified for such Advance: (i) Lender shall have received
each of the following documents in form and substance satisfactory to Lender: 
(A) a certificate executed by a duly authorized officer, manager, member
partner, trustee or
-3-

--------------------------------------------------------------------------------

representative of each Borrower, certifying that the representations and
warranties of such Borrower contained herein and in each of the Loan Documents
remain true and correct as of such date, and no Default or Event of Default (as
defined in Section 13) has occurred both with and without giving effect to the
transactions contemplated hereby; (B) copies of the invoice(s) or other evidence
satisfactory to Lender, related to the acquisition cost of the Equipment to
which such Advance relates; (C) a schedule describing the Equipment, in a form
approved by Lender and to be attached as Schedule A, a supplement to Schedule A
and/or as a schedule to the Note; (D) upon delivery of such Equipment, copies of
the bills of sale evidencing chain of title from the manufacturer or supplier to
such Borrower with respect to such Equipment; and (E) any and all Rate
Management Agreements; (ii) Lender shall have received, evidence satisfactory to
Lender of the filing of Uniform Commercial Code financing statements or other
records relating to the Equipment in form and substance satisfactory to Lender
in the jurisdiction in which each Borrower is a registered organization or is
domiciled or resident (in the case of an individual Borrower) and such other
jurisdictions as Lender may reasonably request by the date of the Advance; (iii)
Lender shall have received evidence of insurance policies covering the Equipment
which comply with the requirements of Section 7 hereof; (iv) the representations
and warranties of each Borrower contained herein and in each of the other Loan
Documents shall be true and correct on and as of the date specified for such
Advance both with and without giving effect to the making of such Advance; (v)
no Default or Event of Default shall have occurred and be continuing or result
from the transactions contemplated by the making of such Advance; (vi) Borrowers
shall have paid the fees and reasonable out-of-pocket expenses of Lender
(including the fees and expenses of counsel to the Lender and any filing or
recordation fees) incurred in connection with the negotiation, execution and
delivery of the Loan Documents relating thereto shall have been paid; (vii) no
material adverse change, in the sole judgment of Lender, in the existing or
prospective financial condition or results of operations of any Borrower or any
guarantor of Borrowers’ obligations hereunder (a “Guarantor”) which may affect
the ability of any Borrower to perform its obligations under the Loan Documents,
or the ability of any Guarantor to perform its obligations under any Guaranty,
shall have occurred since the date of the most recent audited (if audited) or
unaudited financial statements of the Borrowers delivered to Lender; (viii)
Borrowers shall have furnished proof of payment for the Equipment prior to the
date of each applicable Advance and, to the extent that Borrowers have not paid
for any Item of Equipment, Lender may remit proceeds of the Advance directly to
the vendor of the Equipment in payment thereof; and (ix) Borrowers shall have
executed and delivered to Lender a Payment Proceeds letter authorizing Lender to
remit funds to the appropriate parties.
5.          Acceptance of Equipment.  The execution of each Note relating to any
Equipment shall constitute Borrowers’ representation and warranty to Lender that
such Equipment (a) was received by Borrowers, (b) is satisfactory to Borrowers
in all respects, (c) is suitable for Borrowers’ purposes, (d) is in good order,
repair and condition, (e) has been installed and operates properly, and (f) is
subject to all of the terms and conditions of the Loan Documents.  Borrowers’
execution and delivery of each such Note shall be conclusive evidence as between
Lender and Borrowers that the Items of Equipment described therein are in all of
the foregoing respects satisfactory to Borrowers, and Borrowers shall not assert
any claim of any nature whatsoever against Lender based on any of the foregoing
matters; provided, however, that nothing contained herein shall in any way bar,
reduce or defeat any claim that Borrowers may have against any manufacturer or
supplier of such Equipment or any other person (other than Lender).  Borrowers’
execution of each Note shall be deemed an affirmation and ratification of the
terms and conditions herein.
6.          Use and Maintenance; Alterations.
(a)          Borrowers covenant and agree that: (i) Borrowers shall use the
Equipment solely in the conduct of their business, for the purpose, and in the
manner, for which the Equipment was designed, (and shall not permanently
discontinue use of the Equipment); (ii) Borrowers shall operate, maintain,
service and repair the Equipment, and maintain all records and other materials
relating thereto, (A) in accordance and consistent with (1) the supplier’s or
manufacturer’s recommendations all maintenance and operating manuals or service
agreements, whenever furnished or entered into, including any subsequent
amendments or replacements thereof, issued by the supplier or manufacturer
thereof or other service provider (including requiring all components, fuels and
fluids installed in or used on the Equipment to meet the standards specified by
such service provider from time to time), (2) the requirements of all applicable
insurance policies, (3) the supply contract or purchase order, so as to preserve
all of Borrowers’ and
-4-

--------------------------------------------------------------------------------

Lender’s rights thereunder, including all rights to any warranties, indemnities
or other rights or remedies, (4) all applicable laws, and (5) the prudent
practice of other similar companies in the same business as Borrowers, but in
any event, to no lesser standard than that employed by Borrowers for comparable
equipment owned or leased by it; and (B) without limiting the foregoing, so as
to cause the Equipment to be in good repair and operating condition and in at
least the same condition as when delivered to Borrowers hereunder, except for
ordinary wear and tear resulting despite Borrowers’ full compliance with the
terms hereof; (iii) shall not discriminate against the Equipment with respect to
scheduling of maintenance, parts or service; (iv) shall not change the location
of any Equipment from that specified on Schedule A (or otherwise as Borrowers
informed Lender at the time the Loan was made) without the prior written consent
of Lender and (v) to the extent requested by Lender, shall cause each item of
Equipment to be continually marked, in a plain and distinct manner, with the
following: “Subject to a Security Interest in favor of “FIFTH THIRD BANK” or
such other words designated by Lender on labels furnished by Lender.  If the
location for any Equipment comprising collateral for the Loan is a facility
leased by any Borrower or owned by a Borrower subject to one or more mortgage
liens, upon the request of Lender, such Borrower will obtain a real property
waiver or waivers in form and substance satisfactory to Lender from the lenders
or mortgagees of such facility.
(b)          Borrowers, at their own cost and expense, will promptly replace all
parts, appliances, systems, components, instruments and other equipment
incorporated in, or installed on, the Equipment which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason whatsoever.  In
addition, in the ordinary course of maintenance, service repair, overhaul or
testing, Borrowers may remove any parts, whether or not worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use, provided that Borrowers shall replace such parts as promptly as
practicable.  All replacement parts shall be free and clear of all Liens (as
defined in Section 6(c)) and shall be in as good an operating condition as, and
shall have a value and utility at least equal to, the parts replaced, assuming
such replaced parts were in the condition and repair required to be maintained
by the terms hereof.  Any replacement part installed, or incorporated on, the
Equipment shall be considered an accession to such Equipment.
(c)          Borrowers will keep the Equipment and its interest therein free and
clear of all liens, claims, mortgages, charges and encumbrances of any type
regardless of how arising (“Liens”) other than the Lien of the Lender
hereunder.  If any Lien shall attach to any Equipment, Borrowers will provide
written notification to Lender within five (5) days after Borrowers receive
notice of any such attachment stating the full particulars thereof and the
location of such Equipment on the date of such notification.
(d)          At its sole option, Borrowers may make any alteration, modification
or attachment to the Equipment deemed appropriate by Borrowers, provided that
such alteration, modification, attachment is of a type which is readily
removable without damage to the Equipment, does not decrease the value,
condition, utility or useful life of the Equipment or cause such Equipment to
become a fixture (as defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction), or real property or affect the insurability or impair
any manufacturer’s warranty with respect to the Equipment.  All alterations,
modifications and attachments of whatsoever kind or nature made to any Equipment
that cannot be removed without damaging or reducing the functional capability,
economic value or insurability of the Equipment or impairing any manufacturer’s
warranty shall only be made with the prior written consent of the Lender and
shall be deemed to be part of the Equipment and subject to the Lien of this
Agreement.  Under no circumstance shall any alteration, modification or
attachment be subjected by Borrowers to any encumbrance other than the Lien of
the Lender hereunder.
7.          Insurance.
(a)          Borrowers shall provide, maintain and pay for insurance coverage
with respect to the Equipment, insuring against, among other things, the loss,
theft, damage, or destruction of the Equipment, in amounts acceptable to Lender;
and public liability and property damage with respect to the use or operation of
the Equipment in amounts acceptable to Lender.  All insurance against loss shall
name Lender as the sole loss payee and all liability insurance shall name Lender
and its successors and
-5-

--------------------------------------------------------------------------------

assignees and their subsidiaries and affiliated companies, and their successors
and assigns as additional insureds.  All of such insurance shall be in form
(including all endorsements required by Lender), and with companies, reasonably
satisfactory to Lender.
(b)          All policies of insurance required hereunder shall (i) provide that
any cancellation, expiration, lapse, or material modification shall not be
effective as to the Lender for a period of thirty (30) days after receipt by
Lender of written notice thereof; (ii) provide that premiums may be paid by the
Lender, but without liability on the part of the Lender for such premiums; (iii)
be primary without any right of set-off or right of contribution from any other
insurance carried by the Lender; (iv) contain breach of warranty provisions
providing that, in respect of the interests of the Lender, the insurance shall
not be invalidated by any action, inaction or breach of warranty, declaration,
or condition by Borrowers or any other person or by any fact or information
known to Lender; and (v) waive any right of subrogation against Lender.
(c)          If Borrowers do not obtain, maintain or furnish to Lender
acceptable proof of the insurance coverage required by this Agreement, Lender
shall be entitled to procure such insurance, as Lender shall deem appropriate in
its discretion, at Borrowers’ sole cost and expense.
8.          Risk of Loss; Damage to Equipment.
(a)          Borrowers shall bear the entire risk of loss and damage to any and
all Items of Equipment from any cause whatsoever, whether or not insured
against.  No loss or damage shall relieve Borrowers of the obligation to pay any
amounts due under the Note or of any other Obligations.  An “Event of Loss”
shall be deemed to have occurred with respect to any Item of Equipment if such
Item of Equipment or any material part thereof has been lost, stolen,
requisitioned or condemned by any governmental authority, damaged beyond repair
or damaged in such a manner that results in an insurance settlement on the basis
of an actual or arranged total loss.
(b)          Upon any loss or damage to any Item of Equipment not constituting
an Event of Loss, Borrowers will promptly notify Lender of such loss or damage,
and in any event within thirty (30) days of such loss or damage (or such longer
period as Lender shall determine in its sole discretion), place such Item of
Equipment in good condition and repair as required by the terms of this
Agreement.  If an Event of Loss to any Item of Equipment has occurred, Borrowers
shall immediately notify Lender of same, and at the option of Lender, Borrowers
shall: (i) not more than thirty (30) days following such Event of Loss (or such
longer period as Lender shall determine in its sole discretion) replace such
Item of Equipment with replacement equipment (acceptable to Lender) in as good
condition and repair, and with the same value remaining useful economic life and
utility, as such replaced Item of Equipment immediately preceding the Event of
Loss (assuming that such replaced Item of Equipment was in the condition
required by this Agreement), which replacement equipment shall immediately, and
without further act, be deemed to constitute Equipment and be fully subject to
this Agreement as if it originally constituted part of the Equipment hereunder
and shall be free and clear of all Liens; or (ii) prepay on the next succeeding
Payment Date (as defined in each Note relating to the Equipment) (the
“Prepayment Date”), together with all other amounts due and payable on such
Prepayment Date, an amount equal to the Ratable Portion (as defined below) of
each installment of principal and interest payable under such Note on each
Payment Date after the Prepayment Date, in each case, discounted from the
Payment Date on which such payment would have been due to the Prepayment Date at
a rate per annum equal to the 30 day LIBOR rate as of the date of the Note to be
prepaid or the Prepayment Date, whichever is lower.  As used herein, “Ratable
Portion” means a fraction the numerator of which is the original amount advanced
to Borrowers in respect of the purchase of such Item of Equipment and the
denominator of which is the original principal amount of such Note.  Upon
Lender’s receipt of the payment required under clause (ii) above, Lender shall
release its security interest in the Item of Equipment to which such payment
relates.
9.          Application of Proceeds.  Notwithstanding anything herein to the
contrary, all funds received at any time by Lender, whether as a result of any
loss of the Equipment, as a result of the exercise of any remedy or otherwise
shall be applied as follows: (i) if the Loan has not been accelerated pursuant
to Section 13, in the following manner: first, to the payment of all fees,
charges and other sums (with exception of principal and interest) due and
payable hereunder and under each Note, second, to the payment of all
-6-

--------------------------------------------------------------------------------

interest (including default interest) then due and payable on the outstanding
principal of the Loan, third, to the payment of all principal then due and
payable on the Loan, fourth, to the payment of the remaining principal on the
Loan in inverse order of maturity, and fifth, to the payment of all Rate
Management Obligations, and sixth, to Borrowers or such other person as may have
an interest in such proceeds, as their interests may appear, and (ii) if the
Loan has been accelerated pursuant to Section 13, or if a Default or an Event of
Default hereunder shall have occurred, in the following manner: first, to the
payment or reimbursement of Lender for all costs, expenses and losses incurred
or sustained by Lender in or incidental to the collection of the Obligations, or
the exercise, protection or enforcement of all or any of the rights and remedies
of Lender under the Loan Documents, and second, to the payment of all of the
Obligations in the manner and order as provided in clause (i) above.  If the
Loan is comprised of more than one Note, Lender shall be entitled to apply
proceeds to one or more of the Notes in such order and manner as the Lender may,
in its discretion, deem appropriate.
10.          Financial, Other Information and Notices.
(a)          Borrowers shall maintain a standard and modern system for
accounting and shall furnish to Lender:
(i)           Within forty-five (45) days after the end of each quarter, a copy
of each Borrower’s inventory report and each Borrower’s internally-prepared
consolidated accounts payable and accounts receivable aging reports for that
quarter and for the year to date in a form reasonably acceptable to Lender,
prepared and certified as complete and correct, subject to changes resulting
from year-end adjustments, by the chief financial officer, manager, member,
partner, trustee or other representative of such Borrowers.
(ii)           Within forty-five (45) days after the end of each quarter, a copy
of each Borrower’s internally-prepared consolidated financial statements for
that quarter and for the year to date in a form reasonably acceptable to Lender,
prepared and certified as complete and correct, subject to changes resulting
from year-end adjustments, by the chief financial officer, manager, member,
partner, trustee or other representative of such Borrowers.
(iii)           Within one hundred twenty (120) days after the end of each
fiscal year, a copy of each Borrowers’ internally prepared consolidated
compliance certificates for that year-end in a form reasonably acceptable to
Lender, prepared and certified as complete and correct, subject to changes
resulting from year-end adjustments, by the chief financial officer, manager,
member, partner, trustee or other representative of such Borrowers.
(iv)           Within one hundred twenty (120) days after the end of each fiscal
year, a copy of each Borrowers’ consolidated year-end financial statements
audited by a firm of independent certified public accountants acceptable to
Lender (which acceptance shall not be unreasonably withheld) and accompanied by
an audit opinion of such accountants without qualification.
All such financial statements shall be prepared in accordance with generally
accepted accounting principles, consistently applied.  So long as any Borrower
is a reporting company under the Securities Exchange Act of 1934 and is timely
filing the reports required thereunder to the Securities Exchange Commission on
a consolidated basis with all Borrowers, Borrower will have no obligation to
furnish its financial statements as provided above.
(b)          Borrowers shall provide prompt written notice to Lender (i) of any
Event of Default, (ii) of any loss or damage to any Item of Equipment or any
Event of Loss with respect to any Item of Equipment, and (iii) any existing or
threatened investigation, claim or action by any governmental authority which
could adversely affect the Equipment or this Agreement.
-7-

--------------------------------------------------------------------------------

(c)          Borrowers shall furnish such other information as Lender may
reasonably request from time to time relating to the Equipment, this Loan or the
operation or condition of Borrowers including, without limitation, such
additional financial statements of the Borrowers for such periods as Lender may
request.
(d)          For purposes of the following financial covenants, certain
capitalized terms are defined as follows:
(i)           “EBITDA” shall mean, for any Reference Period, and computed on a
consolidated basis (if applicable), the amount of Borrowers’ earnings before
interest, taxes, depreciation, and amortization expense for such period.
(ii)           “Fixed Charge Coverage Ratio” shall mean, for any Reference
Period, and computed on a consolidated basis (if applicable), the ratio of:
(A)           Borrowers’ EBITDA plus rent and operating lease payments for such
period, less distributions, dividends and capital expenditures (other than
capital expenditures financed with the proceeds of purchase money indebtedness)
and other extraordinary or nonrecurring items such as gain or loss on sale of
assets, accounting changes and insurance proceeds, to
(B)           Borrowers’ interest expense, all principal payments with respect
to Funded Indebtedness that were paid or were due and payable during the period,
rent and operating lease expense incurred, and cash taxes or distributions made
in respect of taxes paid during such period.
(iii)           “Funded Indebtedness” shall mean Indebtedness (A) in respect of
money borrowed, (B) evidenced by a note, debenture (senior and subordinated) or
other like written obligation to pay money, (C) in respect of rent or hire of
property under leases or lease arrangements which under generally accepted
accounting principles are required to be capitalized, or (D) in respect of
obligations under conditional sales or other title retention agreements.
(iv)           “Indebtedness” means (A) all items (except items of capital
stock, of capital surplus, of general contingency reserves or of retained
earnings, deferred income taxes, and amount attributable to minority interest if
any) which in accordance with generally accepted accounting principles would be
included in determining total liabilities on a consolidated basis (if any
Borrower should have a subsidiary) as shown on the liability side of a balance
sheet as at the date as of which Indebtedness is to be determined, (B) all
indebtedness secured by any mortgage, pledge, lien or conditional sale or other
title retention agreement to which any property or asset owned or held is
subject, whether or not the indebtedness secured thereby shall have been assumed
(excluding non-capitalized leases which may amount to title retention agreements
but including capitalized leases), and (C) all indebtedness of others which
Borrowers or any subsidiary has directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business),
discounted or sold with recourse or agreed (contingently or otherwise) to
purchase or repurchase or otherwise acquire, or in respect of which Borrowers or
any subsidiary has agreed to apply or advance funds (whether by way of loan,
stock purchase, capital contribution or otherwise) or otherwise to become
directly or indirectly liable.
(v)           “Reference Period” means, with respect to any Computation Date,
the period beginning at the commencement of a fiscal year of Borrower and ending
on such Computation Date.
-8-

--------------------------------------------------------------------------------

(e)          For each annual Reference Period ended on December 31, 2018,
Borrowers shall incur no new Indebtedness greater than $250,000.00 by Borrowers
without written approval from the Lender.
(f)          For each annual Reference Period ended on the Computation Dates
stated below, Borrowers, on a consolidated basis, shall maintain a Fixed Charge
Coverage Ratio equal to or greater than the ratio indicated.
Computation Date
Fixed Charge Coverage Ratio
12/31/17
1.20 to 1.00

 
For the last annual period stated above, the corresponding ratio or greater
shall be maintained during any subsequent period that an obligation remains
outstanding pursuant to this Agreement.
 
11.          Inspections.  Lender may from time to time during each Borrower’s
normal business hours, inspect the Equipment and such Borrower’s records with
respect thereto.  Borrowers shall cooperate with Lender in scheduling such
inspection and in making the Equipment available for inspection by Lender or its
designee at a single location as reasonably specified by Borrowers.  Borrowers
will, upon reasonable request, provide a report on the condition of the
Equipment, a record of its maintenance and repair, a summary of all items
suffering any loss or damage, a certificate of no Event of Default, or such
other information or evidence of compliance with Borrowers’ obligations under
this Agreement as Lender may reasonably request.
12.          Borrowers’ Representations and Warranties.  Each Borrower
represents and warrants as of the date of execution and delivery of this
Agreement and as of the date of each Advance as follows:  (a) (i) Innovative
Food Holdings, Inc. is a corporation organized under the laws of the State of
Florida, having a principal place of business at 28411 Race Track Road, Bonita
Springs, FL 34135, duly organized, validly existing under the laws of the
jurisdiction of its organization, (ii) Food Innovations, Inc. is a corporation
organized under the laws of the State of Florida, having a principal place of
business at 28411 Race Track Road, Bonita Springs, FL 34135, duly organized,
validly existing under the laws of the jurisdiction of its organization, (iii)
Gourmet Foodservice Group, Inc. is a corporation organized under the laws of the
State of Florida, having a principal place of business at 28411 Race Track Road,
Bonita Springs, FL 34135, duly organized, validly existing under the laws of the
jurisdiction of its organization, (iv) 4 The Gourmet, Inc. is a corporation
organized under the laws of the State of Florida, having a principal place of
business at 28411 Race Track Road, Bonita Springs, FL 34135, duly organized,
validly existing under the laws of the jurisdiction of its organization, (v)
Haley Food Group, Inc. is a corporation organized under the laws of the State of
Florida, having a principal place of business at 28411 Race Track Road, Bonita
Springs, FL 34135, duly organized, validly existing under the laws of the
jurisdiction of its organization,  (vi) Gourmet Foodservice Group Warehouse,
Inc. is a corporation organized under the laws of the State of Florida, having a
principal place of business at 28411 Race Track Road, Bonita Springs, FL 34135,
duly organized, validly existing under the laws of the jurisdiction of its
organization, (vii) Artisan Specialty Foods, Inc. is a corporation organized
under the laws of the State of Delaware, having a principal place of business at
28411 Race Track Road, Bonita Springs, FL 34135, duly organized, validly
existing under the laws of the jurisdiction of its organization, (viii) Organic
Food Brokers LLC is a limited liability company organized under the laws of the
State of Colorado, having a principal place of business at 28411 Race Track
Road, Bonita Springs, FL 34135, duly organized, validly existing under the laws
of the jurisdiction of its organization, (ix) Innovative Gourmet, LLC is a
limited liability company organized under the laws of the State of Delaware,
having a principal place of business at 28411 Race Track Road, Bonita Springs,
FL 34135, duly organized, validly existing under the laws of the jurisdiction of
its organization and (x)  Food Funding, LLC is a limited liability company
organized under the laws of the State of Delaware, having a principal place of
business at 28411 Race Track Road, Bonita Springs, FL 34135, duly organized,
validly existing under the laws of the jurisdiction of its organization, each
with full power to enter into and to pay and perform its obligations under this
Agreement and the other Loan Documents, and each Borrower is duly qualified or
licensed in all other jurisdictions where its failure to so qualify would
adversely affect the conduct of its business or its ability to perform any of
its obligations under or the enforceability of this Agreement; (b) this
Agreement and
-9-

--------------------------------------------------------------------------------

all other Loan Documents have been duly authorized, executed and delivered by
each Borrower, are valid, legal and binding obligations of each Borrower, are
enforceable against each Borrower in accordance with their terms and do not and
will not contravene any provisions of or constitute a default under any
Borrower’s organization documents, any agreement to which any Borrower is a
party or by which it or any of its property is bound, or any applicable law,
regulation or order of any governmental authority; (c) the proceeds of each
Advance will be used exclusively to finance the acquisition of the Equipment;
(d) one or more Borrowers are (or upon the acquisition thereof will be) the sole
owner of, and have good and marketable title to, and all necessary rights in,
and power to transfer pursuant to the terms hereof, all of the Equipment, free
and clear of all liens and encumbrances (excepting only the Lien of the Lender),
and upon the filing with the Secretary of State of each Borrower’s jurisdiction
of formation or residence (in the case of an individual Borrower) of a Uniform
Commercial Code financing statement naming Lender, as secured party, each
Borrower, as debtor, and the Equipment as the collateral, Lender shall have a
valid, perfected, first priority security interest in the Equipment; (e) no
approval of, or filing with, any governmental authority or other person is
required in connection with any Borrower’s entering into, or the payment or
performance of its obligations under, this Agreement and the other Loan
Documents; (f) there are no suits or proceedings pending or, to the knowledge of
Borrowers, threatened, before any court or governmental agency against or
affecting Borrowers which, if decided adversely to Borrowers, would adversely
affect the conduct of its business or its ability to perform any of its
obligations under or the enforceability of this Agreement and the other Loan
Documents; (g) the financial statements of Borrowers which have been delivered
or made publicly available to Lender have been prepared in accordance with
generally accepted accounting principles consistently applied, and fairly
present Borrowers’ financial condition and the results of its operations as of
the date of and for the period covered by such statements (subject to customary
year-end adjustments), and since the date of such statements there has been no
adverse change in such financial condition or operations; (h) Borrowers’ full
and correct legal names are set forth on the signature page hereof and Borrowers
will not change its legal name or the location of its jurisdiction of
organization without giving to Lender at least thirty (30) days prior written
notice thereof; (i) the Equipment will always be used for business or
commercial, and not personal purposes; (j) no Borrower is in default under any
obligation for borrowed money, for the deferred purchase price of property or
any lease agreement which, either individually or in the aggregate, would have
an adverse effect on the condition of their respective businesses or their
respective ability to perform any of its obligations under or the enforceability
of this Agreement; (k) under the laws of the jurisdiction(s) in which the
Equipment is to be located, the Equipment consists solely of personal property
and not fixtures; and (l) Borrowers are, and will remain, in full compliance
with all laws and regulations applicable to it including without limitation, (i)
ensuring that no person who owns a controlling interest in or otherwise controls
any Borrower is or shall be (A) listed on the Specially Designated National and
Blocked Person List maintained by the Office of Foreign Assets Control (“OFAC”),
Department of the Treasury and/or any other similar lists maintained by OFAC
pursuant to any authorizing statute, executive order or regulations or (B) a
person designated under Section 1(b), (c) or (d) of Executive Order No. 13224
(September 23, 2001), any related enabling legislation or any other similar
executive order and (ii) compliance with all applicable Bank Secrecy Act (“BSA”)
laws, regulations and government guidance on BSA compliance and on the
prevention and detection of money laundering violations.
Borrowers’ representations and warranties shall survive termination or
expiration of this Agreement.
13.          Events of Default and Remedies.
(a)          Each of the following events constitutes an “Event of Default”
hereunder and any event that, with the passage of time or the giving of notice,
or both, would constitute an Event of Default shall constitute a “Default”
hereunder: (i) Borrowers fail to pay any amount of principal and interest when
due under any Note and such failure continues for a period of ten (10) days;
(ii) any representation or warranty made by any Borrower in this Agreement, any
Note or in any other Loan Document shall at any time prove to have been
incorrect in any material respect as and when made; (iii) Borrowers (A) fail to
obtain and maintain the insurance coverage required herein; or (B) fail to
observe or perform any other covenant, condition or agreement under this
Agreement, any Note or any other Loan Document and, in the case of clause (B),
such failure continues unremedied for a period of fifteen (15) days; (iv) any
Borrower which is not an individual shall have consolidated with or merged with
or into another entity, or conveyed,
-10-

--------------------------------------------------------------------------------

sold or otherwise transferred all or substantially all of its assets or shall
have failed to maintain its corporate existence; (v) any Borrower that is an
individual dies or becomes permanently and totally disabled; (vi) any Borrower
(A) ceases doing business as a going concern; (B) makes an assignment for the
benefit of creditors or admits in writing its inability to pay its debts as they
mature or generally fails to pay its debts as they become due; (C) initiates any
voluntary bankruptcy, reorganization, insolvency or similar proceeding; (D)
fails to obtain the discharge of any bankruptcy, reorganization, insolvency or
similar proceeding initiated against it by others within sixty (60) days of the
date such proceedings were initiated; (E) requests or consents to the
appointment of a trustee, custodian or receiver or other officer with similar
powers for itself or a substantial part of its property; or (F) a trustee,
custodian or receiver or other officer with similar powers is appointed for
itself or for a substantial part of its property; (vii) a default shall have
occurred and be continuing under any contract, agreement or document between any
Borrower and Lender or any affiliate of Lender; (viii) nonpayment by any
Borrower of any Rate Management Obligation when due or the breach by any
Borrower of any term, provision, or condition contained in any Rate Management
Agreement; (ix) a default shall have occurred and be continuing under any
contract, agreement or document between any Borrower and any of its other
creditors, (x) if Borrowers’ obligations are guaranteed by any other party, an
“Event of Default” (under and as defined in the Guaranty executed by such
Guarantor) shall occur; (xi) Lender shall have determined, in its sole
discretion, that a material adverse change in Borrowers’ existing or prospective
financial condition, management or results of operations since the date hereof
which may affect the ability of Borrowers to perform their obligations under the
Loan Documents has occurred; or (xii) both the President and the CEO of Borrower
depart the company, and/or one single person or entity comes to own 50.1% or
more of the capital stock or other ownership interest of such Borrower.
(b)          Upon the occurrence of an Event of Default, Lender may, (i) at its
option, declare all of the Obligations, including the entire unpaid principal of
all Notes, all of the unpaid interest accrued therein, and all of the other sums
(if any) payable by Borrowers under this Agreement, any Notes, or any of the
other Loan Documents, to be immediately due and payable, plus three percent (3%)
of the unpaid principal of all Notes declared due by Lender (as compensation for
reinvestment costs and not as a penalty), and (ii) proceed to exercise any one
or more of the following remedies and any additional rights and remedies
permitted by law (none of which shall be exclusive), all of which are hereby
authorized by Borrowers:
(i)           Borrowers shall upon demand assemble or cause to be assembled any
or all of the Equipment at a location designated by Lender; and/or to return
promptly, at Borrowers’ expense, any or all of the Equipment to Lender at such
location;
(ii)           Lender may itself or by its agents enter upon the premises of any
Borrower or any other location where the Equipment is located and take
possession of and render unusable by Borrowers any or all of the Equipment,
wherever it may be located, without any court order or other process of law and
without liability for any damages occasioned by such taking of possession;
(iii)           Sell, lease or otherwise dispose of any or all of the Equipment,
whether or not in Lender’s possession, at public or private sale with or without
notice to Borrowers, with the right of Lender to purchase and apply the net
proceeds of such disposition, after deducting all costs of such disposition
(including but not limited to costs of transportation, possession, storage,
refurbishing, advertising and brokers’ fees), to the obligations of Borrowers
under the Notes and the other Loan Documents, with Borrowers remaining liable
for any deficiency, or retain any and all of the Equipment;
(iv)           Proceed by appropriate court action, either at law or in equity
(including an action for specific performance), to enforce performance by
Borrowers or to recover damages associated with such Event of Default; or
exercise any other right or remedy available to Lender at law or in equity; and
(v)           By offset, recoupment or other manner of application, apply any
security deposit, monies held in deposit or other sums then held by Lender or
any affiliate of Lender,
-11-

--------------------------------------------------------------------------------

and with respect to which any Borrower has an interest, against any obligations
of such Borrower arising under this Agreement, any Notes or any other Loan
Document, whether or not such Borrower has pledged, assigned or granted a
security interest to Lender in any or all such sums as collateral for said
obligations.
(c)          Borrowers shall indemnify, defend and hold Lender harmless for any
loss, personal injury (including death), or damage to property, suffered by
Lender, its employees or any of its agents in connection with its entry onto the
premises of Borrowers or any third party hereunder.  Each of the rights and
remedies of Lender hereunder and under the other Loan Documents is in addition
to all of its other rights and remedies hereunder, under the other Loan
Documents and under applicable law and nothing in this Agreement or any other
Loan Document shall be construed as limiting any such right or remedy.  Lender’s
failure to exercise or delay in exercising any right, power or remedy available
to Lender shall not constitute a waiver or otherwise affect or impair its rights
to the future exercise of any such right, power or remedy.  Waiver by Lender of
any Event of Default shall not be a waiver by Lender of any other or subsequent
Events of Default.
(d)          Borrowers shall notify Lender in writing of the occurrence of an
Event of Default pursuant to this Agreement promptly after such Event of Default
has occurred, and in any event within ten (10) days thereafter.
14.          General Indemnification.  Borrowers shall pay, and shall indemnify
and hold Lender, its directors, officers, agents, employees, successors and
assigns (each an “Indemnitee”) harmless on an after-tax basis from and against,
any and all liabilities, causes of action, claims, suits, penalties, damages,
losses, costs or expenses (including attorneys’ fees), obligations, liabilities,
demands and judgments, and Liens, of any nature whatsoever (collectively, a
“Liability”) arising out of or in any way related to: (a) the Loan Documents,
(b) the manufacture, purchase, ownership, title, selection, acceptance,
rejection, possession, lease, sublease, operation, use, maintenance,
documenting, inspection, control, loss, damage, destruction, removal, storage,
surrender, sale, use, condition, delivery, nondelivery, return or other
disposition of or any other matter relating to any Item of Equipment or any part
or portion thereof (including, in each case and without limitation, latent or
other defects, whether or not discoverable, any claim for patent, trademark or
copyright infringement) and any and all Liabilities in any way relating to or
arising out of injury to persons, properties or the environment or any and all
Liabilities based on strict liability in tort, negligence, breach of warranties
or violations of any regulatory law or requirement, (c) a failure to comply
fully with applicable law and (d) Borrowers’ failure to perform any covenant, or
Borrowers’ breach of any representation or warranty, hereunder; provided, that
the foregoing indemnity shall not extend to the Liabilities to the extent
resulting solely from the gross negligence or willful misconduct of an
Indemnitee.
15.          No Reduction.  All payments due to the Lender under the Loan
Documents, and all other terms, conditions, covenants and agreements to be
observed and performed by Borrowers thereunder, shall be made, observed or
performed by Borrowers without any reduction or deduction whatsoever, including
any reduction or deduction for any set-off, recoupment, counterclaim (whether in
tort, contract or otherwise) or for any tax, levy or impost.
16.          Power of Attorney and Filing Authority.  Each Borrower hereby
authorizes Lender to file financing statements, either before or after an
Advance and, if applicable, amendments and continuation statements, and execute
in the name of such Borrower any other documents, including applications for or
transfers of title, that Lender may reasonably deem necessary to perfect and
maintain Lender’s interest in the Equipment, to exercise its rights and remedies
hereunder and to fully consummate all transactions contemplated under this
Agreement.  Each Borrower hereby irrevocably makes, constitutes and appoints,
with an interest, Lender as true and lawful attorney with power to sign the name
of such Borrower on any such documents.  Each Borrower agrees promptly to
execute and deliver to Lender such further documents or other assurances, and to
take such further action, as Lender may from time to time reasonably request. 
Lender shall have the right to receive, endorse, assign and/or deliver in the
name of such Borrower any and all checks, drafts and other instruments for the
payment of money relating to the Collateral, and each Borrower hereby waives
notice of presentment, protest and non-payment of any instrument so endorsed. 
All acts of said attorney or designee are hereby ratified and approved, and said
attorney or designee shall
-12-

--------------------------------------------------------------------------------

not be liable for any acts of omission or commission nor for any error of
judgment or mistake of fact or of law, unless done with gross (not mere)
negligence or willful misconduct; this power being coupled with an interest is
irrevocable while any of the Obligations remain unpaid.
17.          Successors and Assigns.  This Agreement shall inure to the benefit
of Lender, its successors and assigns.  No Borrower shall sublease or otherwise
relinquish possession of any Equipment, or assign, transfer or encumber its
rights, interest or obligation hereunder.  Lender reserves the right to sell,
assign, transfer, negotiate or grant any interest in all or any part of, or any
interest in, Lender’s rights and obligations in, under and to this Agreement,
any Note, any one or more of the Loan Documents, in the Equipment and/or the
Obligations, at any time and from time to time.  Each Borrower will fully
cooperate with Lender in connection with any such conveyance and will execute
and deliver such consents and acceptances to any such conveyance, amendments to
this Agreement in order to effect any such conveyance (including, without
limitation, the appointment of Lender as agent for itself and all assignees) and
new or replacement promissory notes for any Note (in an aggregate principal
amount not to exceed the Lender’s Commitment) in conjunction with any such
conveyance.
18.          Miscellaneous.
(a)          Borrowers shall pay all costs and expenses of Lender, including,
without limitation, reasonable attorneys’ and other professional fees, incurred
by Lender in the preparation, negotiation, execution and enforcement of the Loan
Documents, perfection of security interests, payment of any obligations of
Borrowers required to be performed under this Agreement (including without
limitation, taxes and assessments with respect to any Collateral), enforcement
of any terms, conditions or provisions hereof and protection of Lender’s rights
hereunder.  If Borrowers fail to reimburse Lender for any such costs and
expenses within thirty (30) days of invoice, interest shall accrue at the
Default Rate on the unpaid balance thereof.
(b)          This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio.  Any judicial proceeding arising out of or
relating to this Agreement may be brought in any court of competent jurisdiction
in Hamilton County, Ohio and each of the parties hereto (i) accepts the
nonexclusive jurisdiction of such courts and any related appellate court and
agrees to be bound by any judgment rendered by any such court in connection with
any such proceeding and (ii) waives any objection it may now or hereafter have
as to the venue of any such proceeding brought in such court or that such court
is an inconvenient forum.  EACH BORROWER AND LENDER HEREBY WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING ARISING OUT OF OR IN ANY WAY RELATING
TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
(c)          All notices delivered hereunder shall be in writing (including
facsimile) and shall be delivered to the following addresses:
if to Borrowers:

Innovative Food Holdings, Inc.
28411 Race Track Road
Bonita Springs, FL  34135
Attn:   _______________________
Facsimile:   (____) _____-_______

Food Innovations, Inc.
28411 Race Track Road
Bonita Springs, FL  34135
Attn:   _______________________
Facsimile:   (____) _____-_______

-13-

--------------------------------------------------------------------------------

Gourmet Foodservice Group, Inc.
28411 Race Track Road
Bonita Springs,
FL  34135
Attn:   _______________________
Facsimile:   (____) _____-_______

4 The Gourmet, Inc.
28411 Race Track Road
Bonita Springs,
FL  34135
Attn:   _______________________
Facsimile:   (____) _____-_______

Haley Food Group, Inc.
28411 Race Track Road
Bonita Springs, FL  34135
Attn:   _______________________
Facsimile:   (____) _____-_______

Gourmet Foodservice Group Warehouse, Inc.
28411 Race Track Road
Bonita Springs,
FL  34135
Attn:   _______________________
Facsimile:   (____) _____-_______

Artisan Specialty Foods, Inc.
28411 Race Track Road
Bonita Springs,
FL  34135
Attn:   _______________________
Facsimile:   (____) _____-_______

Organic Food Brokers LLC
28411 Race Track Road
Bonita Springs, FL  34135
Attn:   _______________________
Facsimile:   (____) _____-_______

Innovative Gourmet, LLC
28411 Race Track Road
Bonita Springs,
FL  34135
Attn:   _______________________
Facsimile:   (____) _____-_______

Food Funding, LLC
28411 Race Track Road
Bonita Springs,
FL  34135
Attn:   _______________________
Facsimile:   (____) _____-_______

-14-

--------------------------------------------------------------------------------

If to Lender:

Fifth Third Equipment Finance Company
Mail Drop 10904A
38 Fountain Square Plaza
Cincinnati, Ohio  45263
Telephone:  (800) 998-3444
Facsimile:  (513) 534-6706

Notice to any Borrower shall constitute notice to all Borrowers.
(d)          Borrowers acknowledge and agree that time is of the essence with
respect to its performance under the Loan Documents.  Any failure of Lender to
require strict performance by any Borrower or any waiver by Lender of any
provision herein shall not be construed as a consent or waiver of any provision
of this Agreement. This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto, their permitted successors and assigns.
(e)          Each Borrower shall be jointly and severally liable to Lender for
all Obligations of Borrower to Lender under this Agreement, and for each and
every representation, warranty and covenant of said Borrower made in or pursuant
to this Agreement.  Each representation and warranty made by Borrower shall be
deemed to have been made by each such party; each covenant and undertaking on
the part of Borrower shall be deemed individually applicable with respect to
each such party; and each event constituting a Default or an Event of Default
under this Agreement shall be determined with respect to each such party.  A
separate action or actions may be brought against any other party or whether any
other party is joined in any such action or actions.  Each such party waives any
right to require Lender to:  (a) proceed against any other party; (b) proceed
against or exhaust any security held from any other party; or (c) pursue any
other remedy in Lender's power whatsoever.  Notices hereunder required to be
provided to Borrower shall be effective if provided to any such party.  Any
consent on the part of Borrower hereunder shall be effective when provided by
any such party and Lender shall be entitled to rely upon any notice or consent
given by any such party as being notice or consent given by Borrower hereunder.
(f)          This Agreement, together with all other Loan Documents, constitutes
the entire understanding or agreement between Lender and Borrowers with respect
to the Loan, and supercedes all prior agreements, representations and
understandings relating to the subject matter hereof.
(g)          Neither this Agreement nor any other Loan Document may be amended
except by a written instrument signed by Lender and Borrowers.
(h)          This Agreement may be executed in any number of counterparts, each
of which shall be an original and all of which shall constitute but one and the
same instrument.
(i)          Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability shall
not invalidate or render unenforceable such provision in any other
jurisdiction.  Captions are intended for convenience or reference only, and
shall not be construed to define, limit or describe the scope or intent of any
provisions hereof.
19.          Definitions.
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et
seq.), as amended from time to time, and any successor statute.
“Excluded Swap Obligation” means, with respect to any guarantor of a Swap
Obligation, including the grant of a security interest to secure the guaranty of
such Swap Obligation, any Swap Obligation if, and to the extent that, such Swap
Obligation is or becomes illegal under the Commodity Exchange Act or any rule,
regulation or order of the Commodity Futures Trading Commission (or the
application or official
-15-

--------------------------------------------------------------------------------

interpretation of any thereof) by virtue of such guarantor’s failure for any
reason to constitute an “eligible contract participant” as defined in the
Commodity Exchange Act and the regulations thereunder at the time the guaranty
or grant of such security interest becomes effective with respect to such Swap
Obligation.  If a Swap Obligation arises under a master agreement governing more
than one swap, such exclusion shall apply only to the portion of such Swap
Obligation that is attributable to swaps for which such Swap Obligation or
security interest is or becomes illegal.
"Modified Following Business Day Convention" means the first following day that
is a Business Day unless that day falls in the next calendar month, in which
case that date will be the first preceding day that is a Business Day.
"Rate Management Agreement" means any agreement, device or arrangement providing
for payments which are related to fluctuations of interest rates, exchange
rates, forward rates, or equity prices, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts and warrants, and any
agreement pertaining to equity derivative transactions (e.g., equity or equity
index swaps, options, caps, floors, collars and forwards), including without
limitation any ISDA Master Agreement between any Borrower and Lender or any
affiliate of Fifth Third Bancorp, and any schedules, confirmations and documents
and other confirming evidence between the parties confirming transactions
thereunder, all whether now existing or hereafter arising, and in each case as
amended, modified or supplemented from time to time.
"Rate Management Obligations" means any and all obligations of any Borrower to
Lender or any affiliate of Fifth Third Bancorp, whether absolute, contingent or
otherwise and howsoever and whensoever (whether now or hereafter) created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefore), under or in connection with
(i) any and all Rate Management Agreements, and (ii) any and all cancellations,
buy-backs, reversals, terminations or assignments of any Rate Management
Agreement.
“Swap Obligation” means any Rate Management Obligation that constitutes a “swap”
within the meaning of section 1a(47) of the Commodity Exchange Act, as amended
from time to time.

{Remainder of page intentionally left blank. Signature page follows.}
 
-16-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, Lender and Borrowers have executed this Agreement as of the
day and year first above written.
 
LENDER:
     
FIFTH THIRD BANK
     
By:                                                                          
 
Name:                                                                     
 
Title:                                                                       
     
BORROWER(S):
     
INNOVATIVE FOOD HOLDINGS, INC.
FOOD INNOVATIONS, INC.
   
By:                                                                         
By:                                                                         
Name:                                                                     
Name:                                                                     
Title:                                                                       
Title:                                                                       
   
GOURMET FOODSERVICE GROUP, INC.
4 THE GOURMET, INC.
   
By:                                                                         
By:                                                                         
Name:                                                                     
Name:                                                                     
Title:                                                                       
Title:                                                                       
   
HALEY GOOD GROUP, INC.
GOURMET FOODSERVICE GROUP WAREHOUSE, INC.
   
By:                                                                         
By:                                                                         
Name:                                                                     
Name:                                                                     
Title:                                                                       
Title:                                                                       
   
ARTISAN SPECIALTY FOODS, INC.
ORGANIC FOOD BROKERS LLC
   
By:                                                                         
By:                                                                         
Name:                                                                     
Name:                                                                     
Title:                                                                       
Title:                                                                       
   
INNOVATIVE GOURMET, LLC
FOOD FUNDING, LLC
   
By:                                                                         
By:                                                                         
Name:                                                                     
Name:                                                                     
Title:                                                                       
Title:                                                                       

 

-17-