Document:

Exhibit 10.8

Exhibit 10.8

SECURITY AGREEMENT

This SECURITY AGREEMENT, dated as of March 19, 2009 (this “Agreement”), is among UFood
Restaurant Group, Inc., a Nevada corporation (the “Company”), all of the Subsidiaries of
the Company (such subsidiaries, the “Guarantors” and together with the Company, the
“Debtors”) and the holders of the Company’s 8% Senior Secured Convertible Debentures due
three years following their issuance, in the original aggregate principal amount of up to
$7,000,000 (collectively, the “Debentures”) signatory hereto, their endorsees, transferees
and assigns (collectively, the “Secured Parties”).

W I T N E S S E T H:

WHEREAS, pursuant to the Purchase Agreement (as defined in the Debentures), the Secured
Parties have severally agreed to extend the loans to the Company evidenced by the Debentures;

WHEREAS, pursuant to a certain Subsidiary Guarantee, dated as of the date hereof (the
“Guarantee”), the Guarantors have jointly and severally agreed to guarantee and act as
surety for payment of such Debentures; and

WHEREAS, in order to induce the Secured Parties to extend the loans evidenced by the
Debentures, each Debtor has agreed to execute and deliver to the Secured Parties this Agreement and
to grant the Secured Parties, pari passu with each other Secured Party and through
the Agent (as defined in Section 18 hereof), a security interest in certain property of such Debtor
to secure the prompt payment, performance and discharge in full of all of the Company’s obligations
under the Debentures and the Guarantors’ obligations under the Guarantee.

NOW, THEREFORE, in consideration of the agreements herein contained and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties
hereto hereby agree as follows:

1. Certain Definitions. As used in this Agreement, the following terms shall have the meanings
set forth in this Section 1. Terms used but not otherwise defined in this Agreement that are
defined in Article 9 of the UCC (such as “account”, “chattel paper”, “commercial tort claim”,
“deposit account”, “document”, “equipment”, “fixtures”, “general intangibles”, “goods”,
“instruments”, “inventory”, “investment property”, “letter-of-credit rights”, “proceeds” and
“supporting obligations”) shall have the respective meanings given such terms in Article 9 of the
UCC.

 

 

 

(a) “Collateral” means the collateral in which the Secured Parties are granted
a security interest by this Agreement and which shall include the following personal
property of the Debtors, whether presently owned or existing or hereafter acquired or coming
into existence, wherever situated, and all additions and accessions thereto and all
substitutions and replacements thereof, and all proceeds, products and accounts thereof,
including, without limitation, all proceeds from the sale or transfer of the Collateral and
 of insurance covering the same and of any tort claims in connection therewith, and all
dividends, interest, cash, notes, securities, equity interest or other property at any time
and from time to time acquired, receivable or otherwise distributed in respect of, or in
exchange for, any or all of the Pledged Securities (as defined below):

(i) All goods, including, without limitation, (A) all machinery, equipment,
computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture,
special and general tools, fixtures, test and quality control devices and other
equipment of every kind and nature and wherever situated, together with all
documents of title and documents representing the same, all additions and accessions
thereto, replacements therefor, all parts therefor, and all substitutes for any of
the foregoing and all other items used and useful in connection with any Debtor’s
businesses and all improvements thereto; and (B) all inventory;

(ii) All contract rights and other general intangibles, including, without
limitation, all partnership interests, membership interests, stock or other
securities, rights under any of the Organizational Documents, agreements related to
the Pledged Securities, licenses, distribution and other agreements, computer
software (whether “off-the-shelf”, licensed from any third party or developed by any
Debtor), computer software development rights, leases, franchises, customer lists,
quality control procedures, grants and rights, goodwill, trademarks, service marks,
trade styles, trade names, patents, patent applications, copyrights, and income tax
refunds;

(iii) All accounts, together with all instruments, all documents of title
representing any of the foregoing, all rights in any merchandising, goods,
equipment, motor vehicles and trucks which any of the same may represent, and all
right, title, security and guaranties with respect to each account, including any
right of stoppage in transit;

(iv) All documents, letter-of-credit rights, instruments and chattel paper;

(v) All commercial tort claims;

(vi) All deposit accounts and all cash (whether or not deposited in such
deposit accounts);

(vii) All investment property;

(viii) All supporting obligations; and

(ix) All files, records, books of account, business papers, and computer
programs; and

(x) the products and proceeds of all of the foregoing Collateral set forth in
clauses (i)-(ix) above.

 

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Without limiting the generality of the foregoing, the “Collateral”
shall include all investment property and general intangibles respecting ownership
and/or other equity interests in each Guarantor, including, without limitation, the
 shares of capital stock and the other equity interests listed on Schedule H
hereto (as the same may be modified from time to time pursuant to the terms hereof),
and any other shares of capital stock and/or other equity interests of any other
direct or indirect subsidiary of any Debtor obtained in the future, and, in each
case, all certificates representing such shares and/or equity interests and, in each
case, all rights, options, warrants, stock, other securities and/or equity interests
that may hereafter be received, receivable or distributed in respect of, or
exchanged for, any of the foregoing and all rights arising under or in connection
with the Pledged Securities, including, but not limited to, all dividends, interest
and cash.

Notwithstanding the foregoing, nothing herein shall be deemed to constitute an
assignment of any asset which, in the event of an assignment, becomes void by
operation of applicable law or the assignment of which is otherwise prohibited by
applicable law (in each case to the extent that such applicable law is not
overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar
applicable law); provided, however, that to the extent permitted by
applicable law, this Agreement shall create a valid security interest in such asset
and, to the extent permitted by applicable law, this Agreement shall create a valid
security interest in the proceeds of such asset.

(b) “Intellectual Property” means the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without limitation, (i) all
copyrights arising under the laws of the United States, any other country or any political
subdivision thereof, whether registered or unregistered and whether published or
unpublished, all registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and applications in
the United States Copyright Office, (ii) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions thereof, and all
applications for letters patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, (iii) all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade dress,
service marks, logos, domain names and other source or business identifiers, and all
goodwill associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection therewith, whether
in the United States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political subdivision thereof,
or otherwise, and all common law rights related thereto, (iv) all trade secrets arising
under the laws of the United States, any other country or any political subdivision thereof,
(v) all rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all
licenses for any of the foregoing, and (vii) all causes of action for infringement of the
foregoing.

 

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(c) “Majority in Interest” means, at any time of determination, the majority in
interest (based on then-outstanding principal amounts of Debentures at the time of such
determination) of the Secured Parties.

(d) “Necessary Endorsement” means undated stock powers endorsed in blank or
other proper instruments of assignment duly executed and such other instruments or documents
as the Agent (as that term is defined below) may reasonably request.

(e) “Obligations” means all of the liabilities and obligations (primary,
secondary, direct, contingent, sole, joint or several) due or to become due, or that are now
or may be hereafter contracted or acquired, or owing to, of any Debtor to the Secured
Parties, including, without limitation, all obligations under this Agreement, the
Debentures, the Guarantee and any other instruments, agreements or other documents executed
and/or delivered in connection herewith or therewith, in each case, whether now or hereafter
existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated
or unliquidated, whether or not jointly owed with others, and whether or not from time to
time decreased or extinguished and later increased, created or incurred, and all or any
portion of such obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from any of the Secured Parties
as a preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time. Without limiting the
generality of the foregoing, the term “Obligations” shall include, without limitation: (i)
principal of, and interest on the Debentures and the loans extended pursuant thereto; (ii)
any and all other fees, indemnities, costs, obligations and liabilities of the Debtors from
time to time under or in connection with this Agreement, the Debentures, the Guarantee and
any other instruments, agreements or other documents executed and/or delivered in connection
herewith or therewith; and (iii) all amounts (including but not limited to post-petition
interest) in respect of the foregoing that would be payable but for the fact that the
obligations to pay such amounts are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving any Debtor.

(f) “Organizational Documents” means with respect to any Debtor, the documents
by which such Debtor was organized (such as a certificate of incorporation, certificate of
limited partnership or articles of organization, and including, without limitation, any
certificates of designation for preferred stock or other forms of preferred equity) and
which relate to the internal governance of such Debtor (such as bylaws, a partnership
agreement or an operating, limited liability or members agreement).

(g) “Pledged Interests” shall have the meaning ascribed to such term in Section
4(j).

(h) “Pledged Securities” shall have the meaning ascribed to such term in
Section 4(i).

(i) “TD Bank” means TD Bank, N.A.

 

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(j) “TD Bank Debt” means, as of the date hereof, up to $610,000 of Indebtedness
owed by the Company to TD Bank.

(k) “UCC” means the Uniform Commercial Code of the State of New York and or any
other applicable law of any state or states which has jurisdiction with respect to all, or
any portion of, the Collateral or this Agreement, from time to time. It is the intent of
the parties that defined terms in the UCC should be construed in their broadest sense so
that the term “Collateral” will be construed in its broadest sense. Accordingly if there
are, from time to time, changes to defined terms in the UCC that broaden the definitions,
they are incorporated herein and if existing definitions in the UCC are broader than the
amended definitions, the existing ones shall be controlling.

2. Grant of Security Interest in Collateral. As an inducement for the Secured Parties to
extend the loans as evidenced by the Debentures and to secure the complete and timely payment,
performance and discharge in full, as the case may be, of all of the Obligations, each Debtor
hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Parties a
security interest in and to, a lien upon and a right of set-off against all of their respective
right, title and interest of whatsoever kind and nature in and to, the Collateral (a “Security
Interest” and, collectively, the “Security Interests”).

3. Delivery of Certain Collateral. Subject to the TD Bank Debt and contemporaneously or prior
to the execution of this Agreement, each Debtor shall deliver or cause to be delivered to the Agent
(a) any and all certificates and other instruments representing or evidencing the Pledged
Securities, and (b) any and all certificates and other instruments or documents representing any of
the other Collateral, in each case, together with all Necessary Endorsements. The Debtors are,
contemporaneously with the execution hereof, delivering to Agent, or have previously delivered to
Agent, a true and correct copy of each Organizational Document governing any of the Pledged
Securities.

4. Representations, Warranties, Covenants and Agreements of the Debtors. Except as set forth
under the corresponding section of the disclosure schedules delivered to the Secured Parties
concurrently herewith (the “Disclosure Schedules”), which Disclosure Schedules shall be
deemed a part hereof, each Debtor represents and warrants to, and covenants and agrees with, the
Secured Parties as follows:

(a) Each Debtor has the requisite corporate, partnership, limited liability company
or other power and authority to enter into this Agreement and otherwise to carry out its
obligations hereunder. The execution, delivery and performance by each Debtor of this
Agreement and the filings contemplated therein have been duly authorized by all necessary
action on the part of such Debtor and no further action is required by such Debtor. This
Agreement has been duly executed by each Debtor. This Agreement constitutes the legal,
valid and binding obligation of each Debtor, enforceable against each Debtor in accordance
with its terms except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws of general application
relating to or affecting the rights and remedies of creditors and by general principles
of equity.

 

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(b) The Debtors have no place of business or offices where their respective books of
account and records are kept (other than temporarily at the offices of its attorneys or
accountants) or places where Collateral is stored or located, except as set forth on
Schedule A attached hereto. Except as specifically set forth on Schedule A,
each Debtor is the record owner of the real property where such Collateral is located, and
there exist no mortgages or other liens on any such real property except for Permitted Liens
(as defined in the Debentures). Except as disclosed on Schedule A, none of such
Collateral is in the possession of any consignee, bailee, warehouseman, agent or processor.

(c) Except for Permitted Liens (as defined in the Debentures) and except as set forth
on Schedule B attached hereto, the Debtors are the sole owner of the Collateral
(except for non-exclusive licenses granted by any Debtor in the ordinary course of
business), free and clear of any liens, security interests, encumbrances, rights or claims,
and are fully authorized to grant the Security Interests. Except as set forth on
Schedule C attached hereto, there is not on file in any governmental or regulatory
authority, agency or recording office an effective financing statement, security agreement,
license or transfer or any notice of any of the foregoing (other than those that will be
filed in favor of the Secured Parties pursuant to this Agreement) covering or affecting any
of the Collateral. Except for Permitted Liens (as defined in the Debentures) or as set
forth on Schedule C attached hereto and except pursuant to this Agreement, as long
as this Agreement shall be in effect, the Debtors shall not execute and shall not knowingly
permit to be on file in any such office or agency any other financing statement or other
document or instrument (except to the extent filed or recorded in favor of the Secured
Parties pursuant to the terms of this Agreement).

(d) No written claim has been received that any Collateral or any Debtor’s use of any
Collateral violates the rights of any third party. There has been no adverse decision to any
Debtor’s claim of ownership rights in or exclusive rights to use the Collateral in any
jurisdiction or to any Debtor’s right to keep and maintain such Collateral in full force and
effect, and there is no proceeding involving said rights pending or, to the best knowledge
of any Debtor, threatened before any court, judicial body, administrative or regulatory
agency, arbitrator or other governmental authority.

(e) Each Debtor shall at all times maintain its books of account and records relating
to the Collateral at its principal place of business and its Collateral at the locations set
forth on Schedule A attached hereto and may not relocate such books of account and
records or tangible Collateral unless it delivers to the Secured Parties at least 30 days
prior to such relocation (i) written notice of such relocation and the new location thereof
(which must be within the United States) and (ii) evidence that appropriate financing
statements under the UCC and other necessary documents have been filed and recorded and
other steps have been taken to perfect the Security Interests to create in favor of the
Secured Parties a valid, perfected and continuing perfected lien in the Collateral (subject
only to Permitted Liens).

 

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(f) This Agreement creates in favor of the Secured Parties a valid security interest in
the Collateral, subject only to Permitted Liens (as defined in the Debentures) securing the
payment and performance of the Obligations. Upon making the filings described in the
immediately following paragraph, all security interests created hereunder in any Collateral
which may be perfected by filing Uniform Commercial Code financing statements shall have
been duly perfected. Except for the filing of the Uniform Commercial Code financing
statements referred to in the immediately following paragraph, the recordation of the
Intellectual Property Security Agreement (as defined in Section 4(p) hereof) with respect to
copyrights and copyright applications in the United States Copyright Office referred to in
paragraph (m), the execution and delivery of deposit account control agreements satisfying
the requirements of Section 9-104(a)(2) of the UCC with respect to each deposit account of
the Debtors, and the delivery of the certificates and other instruments provided in Section
3, no action is necessary to create, perfect or protect the security interests created
hereunder. Without limiting the generality of the foregoing, except for the filing of said
financing statements and the consent of TD Bank (which has been obtained), the recordation
of said Intellectual Property Security Agreement, and the execution and delivery of said
deposit account control agreements, no consent of any third parties and no authorization,
approval or other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for (i) the execution, delivery and performance of this
Agreement, (ii) the creation or perfection of the Security Interests created hereunder in
the Collateral or (iii) the enforcement of the rights of the Agent and the Secured Parties
hereunder.

(g) Each Debtor hereby authorizes the Agent to file one or more financing statements
under the UCC, with respect to the Security Interests, with the proper filing and recording
agencies in any jurisdiction deemed proper by it.

(h) The execution, delivery and performance of this Agreement by the Debtors does not
(i) violate any of the provisions of any Organizational Documents of any Debtor or any
judgment, decree, order or award of any court, governmental body or arbitrator or any
applicable law, rule or regulation applicable to any Debtor or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing any Debtor’s debt or otherwise) or other
understanding to which any Debtor is a party or by which any property or asset of any Debtor
is bound or affected. If any, all required consents (including, without limitation, from
stockholders or creditors of any Debtor) necessary for any Debtor to enter into and perform
its obligations hereunder have been obtained.

(i) The capital stock and other equity interests listed on Schedule H hereto
(the “Pledged Securities”) represent all of the capital stock and other equity
interests of the Guarantors, and represent all capital stock and other equity interests
owned, directly or indirectly, by the Company. All of the Pledged Securities are validly
issued, fully paid and nonassessable, and the Company is the legal and beneficial owner of
the Pledged
Securities, free and clear of any lien, security interest or other encumbrance except
for the security interests created by this Agreement and other Permitted Liens (as defined
in the Debentures).

 

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(j) The ownership and other equity interests in partnerships and limited liability
companies (if any) included in the Collateral (the “Pledged Interests”) by their
express terms do not provide that they are securities governed by Article 8 of the UCC and
are not held in a securities account or by any financial intermediary.

(k) Except for Permitted Liens (as defined in the Debentures), each Debtor shall at all
times maintain the liens and Security Interests provided for hereunder as valid and
perfected liens and security interests in the Collateral in favor of the Secured Parties
until this Agreement and the Security Interest hereunder shall be terminated pursuant to
Section 14 hereof. Each Debtor hereby agrees to defend the same against the claims of any
and all persons and entities. Each Debtor shall safeguard and protect all Collateral for
the account of the Secured Parties. At the request of the Agent, each Debtor will sign and
deliver to the Agent on behalf of the Secured Parties at any time or from time to time one
or more financing statements pursuant to the UCC in form reasonably satisfactory to the
Agent and will pay the cost of filing the same in all public offices wherever filing is, or
is deemed by the Agent to be, necessary or desirable to effect the rights and obligations
provided for herein. Without limiting the generality of the foregoing, each Debtor shall pay
all fees, taxes and other amounts necessary to maintain the Collateral and the Security
Interests hereunder, and each Debtor shall obtain and furnish to the Agent from time to
time, upon demand, such releases and/or subordinations of claims and liens which may be
required to maintain the priority of the Security Interests hereunder (subject only to
Permitted Liens).

(l) No Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise
dispose of any of the Collateral (except for non-exclusive licenses granted by a Debtor in
its ordinary course of business and sales of inventory by a Debtor in its ordinary course of
business) without the prior written consent of a Majority in Interest.

(m) Each Debtor shall keep and preserve its equipment, inventory and other tangible
Collateral in good condition, repair and order and shall not operate or locate any such
Collateral (or cause to be operated or located) in any area excluded from insurance
coverage.

(n) Each Debtor shall maintain with financially sound and reputable insurers, insurance
with respect to the Collateral, including Collateral hereafter acquired, against loss or
damage of the kinds and in the amounts customarily insured against by entities of
established reputation having similar properties similarly situated and in such amounts as
are customarily carried under similar circumstances by other such entities and otherwise as
is prudent for entities engaged in similar businesses but in any event sufficient to cover
the full replacement cost thereof. Each Debtor shall cause each insurance policy issued in
connection herewith to provide, and the insurer issuing such policy to certify to the Agent,
that, subject to the TD Bank Debt, (a) the Agent will be named as lender loss payee and additional insured under each such insurance

 

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 policy; (b) if such insurance be
proposed to be cancelled or materially changed for any reason whatsoever, such insurer will
promptly notify the Agent and such cancellation or change shall not be effective as to the
Agent for at least thirty (30) days after receipt by the Agent of such notice, unless the
effect of such change is to extend or increase coverage under the policy; and (c) the Agent
will have the right (but no obligation) at its election to remedy any default in the payment
of premiums within thirty (30) days of notice from the insurer of such default. If no Event
of Default (as defined in the Debentures) exists and if the proceeds arising out of any
claim or series of related claims do not exceed $100,000, loss payments in each instance
will be applied by the applicable Debtor to the repair and/or replacement of property with
respect to which the loss was incurred to the extent reasonably feasible, and any loss
payments or the balance thereof remaining, to the extent not so applied, shall be payable to
the applicable Debtor; provided, however, that payments received by any
Debtor after an Event of Default occurs and is continuing or in excess of $100,000 for any
occurrence or series of related occurrences shall be paid to the Agent on behalf of the
Secured Parties and, if received by such Debtor, shall be held in trust for the Secured
Parties and immediately paid over to the Agent unless otherwise directed in writing by the
Agent. Copies of such policies or the related certificates, in each case, naming the Agent
as lender loss payee and additional insured shall be delivered to the Agent at least
annually and at the time any new policy of insurance is issued.

(o) Each Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the
Secured Parties promptly, in sufficient detail, of any material adverse change in the
Collateral, and of the occurrence of any event which would have a material adverse effect on
the value of the Collateral or on the Secured Parties’ security interest, through the Agent,
therein.

(p) Each Debtor shall promptly execute and deliver to the Agent such further deeds,
mortgages, assignments, security agreements, financing statements or other instruments,
documents, certificates and assurances and take such further action as the Agent may from
time to time request and may in its sole discretion deem necessary to perfect, protect or
enforce the Secured Parties’ security interest in the Collateral including, without
limitation, if applicable, the execution and delivery of a separate security agreement with
respect to each Debtor’s Intellectual Property (“Intellectual Property Security
Agreement”) in which the Secured Parties have been granted a security interest
hereunder, substantially in a form reasonably acceptable to the Agent, which Intellectual
Property Security Agreement, other than as stated therein, shall be subject to all of the
terms and conditions hereof.

(q) Each Debtor shall permit the Agent and its representatives and agents to inspect
the Collateral during normal business hours and upon reasonable prior notice, and to make
copies of records pertaining to the Collateral as may be reasonably requested by the Agent
from time to time.

 

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(r) Each Debtor shall take all steps reasonably necessary to diligently pursue and seek
to preserve, enforce and collect any rights, claims, causes of action and accounts
receivable in respect of the Collateral.

(s) Each Debtor shall promptly notify the Secured Parties in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process levied
against any Collateral and of any other information received by such Debtor that may
materially affect the value of the Collateral, the Security Interest or the rights and
remedies of the Secured Parties hereunder.

(t) All information heretofore, herein or hereafter supplied to the Secured Parties by
or on behalf of any Debtor with respect to the Collateral is accurate and complete in all
material respects as of the date furnished.

(u) The Debtors shall at all times preserve and keep in full force and effect their
respective valid existence and good standing and any rights and franchises material to its
business.

(v) No Debtor will change its name, type of organization, jurisdiction of organization,
organizational identification number (if it has one), legal or corporate structure, or
identity, or add any new fictitious name unless it provides at least 30 days prior written
notice to the Secured Parties of such change and, at the time of such written notification,
such Debtor provides any financing statements or fixture filings necessary to perfect and
continue the perfection of the Security Interests granted and evidenced by this Agreement.

(w) Except in the ordinary course of business, no Debtor may consign any of its
inventory or sell any of its inventory on bill and hold, sale or return, sale on approval,
or other conditional terms of sale without the consent of the Agent which shall not be
unreasonably withheld.

(x) No Debtor may relocate its chief executive office to a new location without
providing 30 days prior written notification thereof to the Secured Parties and so long as,
at the time of such written notification, such Debtor provides any financing statements or
fixture filings necessary to perfect and continue the perfection of the Security Interests
granted and evidenced by this Agreement.

(y) Each Debtor was organized and remains organized solely under the laws of the state
set forth next to such Debtor’s name in Schedule D attached hereto, which
Schedule D sets forth each Debtor’s organizational identification number or, if any
Debtor does not have one, states that one does not exist.

(z) (i) The actual name of each Debtor is the name set forth in Schedule D
attached hereto; (ii) no Debtor has any trade names except as set forth on Schedule
E attached hereto; (iii) no Debtor has used any name other than that stated in the
preamble hereto or as set forth on Schedule E for the preceding five years; and (iv)
no entity has
merged into any Debtor or been acquired by any Debtor within the past five years except
as set forth on Schedule E.

 

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(aa) At any time and from time to time that any Collateral consists of instruments,
certificated securities or other items that require or permit possession by the secured
party to perfect the security interest created hereby, subject to the TD Bank Debt, the
applicable Debtor shall deliver such Collateral to the Agent.

(bb) Subject to the TD Bank Debt, each Debtor, in its capacity as issuer, hereby agrees
to comply with any and all orders and instructions of Agent regarding the Pledged Interests
consistent with the terms of this Agreement without the further consent of any Debtor as
contemplated by Section 8-106 (or any successor section) of the UCC. Further, each Debtor
agrees that it shall not enter into a similar agreement (or one that would confer “control”
within the meaning of Article 8 of the UCC) with any other person or entity except with, or
as requested by, TD Bank.

(cc) Subject to the TD Bank Debt, each Debtor shall cause all tangible chattel paper
constituting Collateral to be delivered to the Agent, or, if such delivery is not possible,
then to cause such tangible chattel paper to contain a legend noting that it is subject to
the security interest created by this Agreement. To the extent that any Collateral consists
of electronic chattel paper, the applicable Debtor shall cause the underlying chattel paper
to be “marked” within the meaning of Section 9-105 of the UCC (or successor section
thereto).

(dd) Subject to the TD Bank Debt, if there is any investment property or deposit
account included as Collateral that can be perfected by “control” through an account control
agreement, the applicable Debtor shall cause such an account control agreement, in form and
substance in each case satisfactory to the Agent, to be entered into and delivered to the
Agent for the benefit of the Secured Parties.

(ee) Subject to the TD Bank Debt, to the extent that any Collateral consists of
letter-of-credit rights, the applicable Debtor shall cause the issuer of each underlying
letter of credit to consent to an assignment of the proceeds thereof to the Secured Parties.

(ff) Subject to the TD Bank Debt, to the extent that any Collateral is in the
possession of any third party, the applicable Debtor shall join with the Agent in notifying
such third party of the Secured Parties’ security interest in such Collateral and shall use
its best efforts to obtain an acknowledgement and agreement from such third party with
respect to the Collateral, in form and substance reasonably satisfactory to the Agent.

(gg) Subject to the TD Bank Debt, if any Debtor shall at any time hold or acquire a
commercial tort claim, such Debtor shall promptly notify the Secured Parties in a writing
signed by such Debtor of the particulars thereof and grant to the Secured Parties in such
writing a security interest therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance satisfactory to the Agent.

 

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(hh) Each Debtor shall immediately provide written notice to the Secured Parties of any
and all accounts which arise out of contracts with any governmental authority and, subject
to the TD Bank Debt, to the extent necessary to perfect or continue the perfected status of
the Security Interests in such accounts and proceeds thereof, shall execute and deliver to
the Agent an assignment of claims for such accounts and cooperate with the Agent in taking
any other steps required, in its judgment, under the Federal Assignment of Claims Act or any
similar federal, state or local statute or rule to perfect or continue the perfected status
of the Security Interests in such accounts and proceeds thereof.

(ii) Each Debtor shall cause each subsidiary of such Debtor to immediately become a
party hereto (an “Additional Debtor”), by executing and delivering an Additional Debtor
Joinder in substantially the form of Annex A-1 attached hereto and comply with the
provisions hereof applicable to the Debtors. Concurrent therewith, the Additional Debtor
shall deliver replacement schedules for, or supplements to all other Schedules to (or
referred to in) this Agreement, as applicable, which replacement schedules shall supersede,
or supplements shall modify, the Schedules then in effect. The Additional Debtor shall also
deliver such opinions of counsel, authorizing resolutions, good standing certificates,
incumbency certificates, organizational documents, financing statements and other
information and documentation as the Agent may reasonably request. Upon delivery of the
foregoing to the Agent, the Additional Debtor shall be and become a party to this Agreement
with the same rights and obligations as the Debtors, for all purposes hereof as fully and to
the same extent as if it were an original signatory hereto and shall be deemed to have made
the representations, warranties and covenants set forth herein as of the date of execution
and delivery of such Additional Debtor Joinder, and all references herein to the “Debtors”
shall be deemed to include each Additional Debtor.

(jj) Each Debtor shall vote the Pledged Securities to comply with the covenants and
agreements set forth herein and in the Debentures.

(kk) Subject to the TD Bank Debt, each Debtor shall register the pledge of the
applicable Pledged Securities on the books of such Debtor. Each Debtor shall notify each
issuer of Pledged Securities to register the pledge of the applicable Pledged Securities in
the name of the Secured Parties on the books of such issuer. Further, subject to the TD
Bank Debt, except with respect to certificated securities delivered to the Agent, the
applicable Debtor shall deliver to Agent an acknowledgement of pledge (which, where
appropriate, shall comply with the requirements of the relevant UCC with respect to
perfection by registration) signed by the issuer of the applicable Pledged Securities, which
acknowledgement shall confirm that: (a) it has registered the pledge on its books and
records; and (b) at any time directed by Agent during the continuation of an Event of
Default, such issuer will transfer the record ownership of such Pledged Securities into the
name of any designee of Agent, will take such steps as may be necessary to effect the
transfer, and will comply with all other instructions of Agent regarding such Pledged
Securities without the further consent of the applicable Debtor.

 

12

 

(ll) In the event that, upon an occurrence of an Event of Default, Agent shall sell all
or any of the Pledged Securities to another party or parties (herein called the
“Transferee”) or shall purchase or retain all or any of the Pledged Securities, each
Debtor shall, to the extent applicable: (i) deliver to Agent or the Transferee, as the case
may be, the articles of incorporation, bylaws, minute books, stock certificate books,
corporate seals, deeds, leases, indentures, agreements, evidences of indebtedness, books of
account, financial records and all other Organizational Documents and records of the Debtors
and their direct and indirect subsidiaries; (ii) use its best efforts to obtain resignations
of the persons then serving as officers and directors of the Debtors and their direct and
indirect subsidiaries, if so requested; and (iii) use its best efforts to obtain any
approvals that are required by any governmental or regulatory body in order to permit the
sale of the Pledged Securities to the Transferee or the purchase or retention of the Pledged
Securities by Agent and allow the Transferee or Agent to continue the business of the
Debtors and their direct and indirect subsidiaries.

(mm) Without limiting the generality of the other obligations of the Debtors hereunder,
each Debtor shall promptly (i) cause to be registered at the United States Copyright Office
all of its material copyrights, (ii) cause the security interest contemplated hereby with
respect to all Intellectual Property registered at the United States Copyright Office or
United States Patent and Trademark Office to be duly recorded at the applicable office, and
(iii) give the Agent notice whenever it acquires (whether absolutely or by license) or
creates any additional material Intellectual Property.

(nn) Each Debtor will from time to time, at the joint and several expense of the
Debtors, promptly execute and deliver all such further instruments and documents, and take
all such further action as may be necessary or desirable, or as the Agent may reasonably
request, in order to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Secured Parties to exercise and enforce their rights and
remedies hereunder and with respect to any Collateral or to otherwise carry out the purposes
of this Agreement.

(oo) Schedule F attached hereto lists all of the patents, patent applications,
trademarks, trademark applications, registered copyrights, and domain names owned by any of
the Debtors as of the date hereof. Schedule F lists all material licenses in favor
of any Debtor for the use of any patents, trademarks, copyrights and domain names as of the
date hereof. All material patents and trademarks of the Debtors have been duly recorded at
the United States Patent and Trademark Office and all material copyrights of the Debtors
have been duly recorded at the United States Copyright Office.

(pp) Except as set forth on Schedule G attached hereto, none of the account
debtors or other persons or entities obligated on any of the Collateral is a governmental
authority covered by the Federal Assignment of Claims Act or any similar federal, state or
local statute or rule in respect of such Collateral.

 

13

 

5. Effect of Pledge on Certain Rights. If any of the Collateral subject to this Agreement
consists of nonvoting equity or ownership interests (regardless of class, designation, preference
or rights) that may be converted into voting equity or ownership interests upon the
occurrence of certain events (including, without limitation, upon the transfer of all or any of the
other stock or assets of the issuer), it is agreed that the pledge of such equity or ownership
interests pursuant to this Agreement or the enforcement of any of Agent’s rights hereunder shall
not be deemed to be the type of event which would trigger such conversion rights notwithstanding
any provisions in the Organizational Documents or agreements to which any Debtor is subject or to
which any Debtor is party.

6. Defaults. The following events shall be “Events of Default”:

(a) The occurrence of an Event of Default (as defined in the Debentures) under the
Debentures;

(b) Any representation or warranty of any Debtor in this Agreement shall prove to
have been incorrect in any material respect when made;

(c) The failure by any Debtor to observe or perform any of its obligations hereunder
for five (5) days after delivery to such Debtor of notice of such failure by or on behalf of
a Secured Party unless such default is capable of cure but cannot be cured within such time
frame and such Debtor is using best efforts to cure same in a timely fashion; or

(d) If any provision of this Agreement shall at any time for any reason be declared
to be null and void, or the validity or enforceability thereof shall be contested by any
Debtor, or a proceeding shall be commenced by any Debtor, or by any governmental authority
having jurisdiction over any Debtor, seeking to establish the invalidity or unenforceability
thereof, or any Debtor shall deny that any Debtor has any liability or obligation purported
to be created under this Agreement.

7. Duty To Hold In Trust.

(a) Subject to the TD Bank Debt, upon the occurrence of any Event of Default and at any
time thereafter, each Debtor shall, upon receipt of any revenue, income, dividend, interest
or other sums subject to the Security Interests, whether payable pursuant to the Debentures
or otherwise, or of any check, draft, note, trade acceptance or other instrument evidencing
an obligation to pay any such sum, hold the same in trust for the Secured Parties and shall
forthwith endorse and transfer any such sums or instruments, or both, to the Secured
Parties, pro-rata in proportion to their respective then-currently outstanding principal
amount of Debentures for application to the satisfaction of the Obligations (and if any
Debenture is not outstanding, pro-rata in proportion to the initial purchases of the
remaining Debentures).

 

14

 

(b) Subject to the TD Bank Debt, if any Debtor shall become entitled to receive or
shall receive any securities or other property (including, without limitation, shares of
Pledged Securities or instruments representing Pledged Securities acquired after the date
hereof, or any options, warrants, rights or other similar property or certificates
representing a dividend, or any distribution in connection with any recapitalization,
reclassification or increase or reduction of capital, or issued in connection with any
reorganization of such Debtor or any of its direct or indirect subsidiaries) in respect of
the Pledged Securities (whether as an addition to, in substitution of, or in exchange for,
such Pledged Securities or otherwise), such Debtor agrees to (i) accept the same as the
agent of the Secured Parties; (ii) hold the same in trust on behalf of and for the benefit
of the Secured Parties; and (iii) to deliver any and all certificates or instruments
evidencing the same to Agent on or before the close of business on the fifth business day
following the receipt thereof by such Debtor, in the exact form received together with the
Necessary Endorsements, to be held by Agent subject to the terms of this Agreement as
Collateral.

8. Rights and Remedies Upon Default.

(a) Subject to the TD Bank Debt, upon the occurrence of any Event of Default and at any
time thereafter, the Secured Parties, acting through the Agent, shall have the right to
exercise all of the remedies conferred hereunder and under the Debentures, and the Secured
Parties shall have all the rights and remedies of a secured party under the UCC. Without
limitation, the Agent, for the benefit of the Secured Parties, shall have the following
rights and powers:

(i) The Agent shall have the right to take possession of the Collateral and,
for that purpose, enter, with the aid and assistance of any person, any premises
where the Collateral, or any part thereof, is or may be placed and remove the same,
and each Debtor shall assemble the Collateral and make it available to the Agent at
places which the Agent shall reasonably select, whether at such Debtor’s premises or
elsewhere, and make available to the Agent, without rent, all of such Debtor’s
respective premises and facilities for the purpose of the Agent taking possession
of, removing or putting the Collateral in saleable or disposable form.

(ii) Upon notice to the Debtors by Agent, all rights of each Debtor to exercise
the voting and other consensual rights which it would otherwise be entitled to
exercise and all rights of each Debtor to receive the dividends and interest which
it would otherwise be authorized to receive and retain, shall cease. Upon such
notice, Agent shall have the right to receive, for the benefit of the Secured
Parties, any interest, cash dividends or other payments on the Collateral and, at
the option of Agent, to exercise in such Agent’s discretion all voting rights
pertaining thereto. Without limiting the generality of the foregoing, Agent shall
have the right (but not the obligation) to exercise all rights with respect to the
Collateral as it were the sole and absolute owner thereof, including, without
limitation, to vote and/or to exchange, at its sole discretion, any or all of the
Collateral in connection with a merger, reorganization, consolidation,
recapitalization or other readjustment concerning or involving the Collateral or any
Debtor or any of its direct or indirect subsidiaries.

 

15

 

(iii) The Agent shall have the right to operate the business of each Debtor
using the Collateral and shall have the right to assign, sell, lease or otherwise
dispose of and deliver all or any part of the Collateral, at public or private sale
or
otherwise, either with or without special conditions or stipulations, for cash
or on credit or for future delivery, in such parcel or parcels and at such time or
times and at such place or places, and upon such terms and conditions as the Agent
may deem commercially reasonable, all without (except as shall be required by
applicable statute and cannot be waived) advertisement or demand upon or notice to
any Debtor or right of redemption of a Debtor, which are hereby expressly waived.
Upon each such sale, lease, assignment or other transfer of Collateral, the Agent,
for the benefit of the Secured Parties, may, unless prohibited by applicable law
which cannot be waived, purchase all or any part of the Collateral being sold, free
from and discharged of all trusts, claims, right of redemption and equities of any
Debtor, which are hereby waived and released.

(iv) The Agent shall have the right (but not the obligation) to notify any
account debtors and any obligors under instruments or accounts to make payments
directly to the Agent, on behalf of the Secured Parties, and to enforce the Debtors’
rights against such account debtors and obligors.

(v) The Agent, for the benefit of the Secured Parties, may (but is not
obligated to) direct any financial intermediary or any other person or entity
holding any investment property to transfer the same to the Agent, on behalf of the
Secured Parties, or its designee.

(vi) The Agent may (but is not obligated to) transfer any or all Intellectual
Property registered in the name of any Debtor at the United States Patent and
Trademark Office and/or Copyright Office into the name of the Secured Parties or any
designee or any purchaser of any Collateral.

(b) The Agent shall comply with any applicable law in connection with a disposition of
Collateral and such compliance will not be considered adversely to affect the commercial
reasonableness of any sale of the Collateral. The Agent may sell the Collateral without
giving any warranties and may specifically disclaim such warranties. If the Agent sells any
of the Collateral on credit, the Debtors will only be credited with payments actually made
by the purchaser. In addition, each Debtor waives any and all rights that it may have to a
judicial hearing in advance of the enforcement of any of the Agent’s rights and remedies
hereunder, including, without limitation, its right following an Event of Default to take
immediate possession of the Collateral and to exercise its rights and remedies with respect
thereto.

(c) For the purpose of enabling the Agent to further exercise rights and remedies under
this Section 8 or elsewhere provided by agreement or applicable law, each Debtor hereby
grants to the Agent, for the benefit of the Agent and the Secured Parties, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other compensation to such
Debtor) to use, license or sublicense following an Event of Default, any Intellectual
Property now owned or hereafter acquired by such Debtor, and wherever the same may be
located, and including in such license access to all media in which any of the licensed
items may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof.

 

16

 

9. Applications of Proceeds. The proceeds of any such sale, lease or other disposition of the
Collateral hereunder or from payments made on account of any insurance policy insuring any portion
of the Collateral shall be applied first, to the expenses of retaking, holding, storing, processing
and preparing for sale, selling, and the like (including, without limitation, any taxes, fees and
other costs incurred in connection therewith) of the Collateral, to the reasonable attorneys’ fees
and expenses incurred by the Agent in enforcing the Secured Parties’ rights hereunder and in
connection with collecting, storing and disposing of the Collateral, and then to satisfaction of
the Obligations pro rata among the Secured Parties (based on then-outstanding principal amounts of
Debentures at the time of any such determination and including any additional Debentures issued
pursuant to clause (d) of the definition of Exempt Issuances in the Purchase Agreement, which shall
be treated pari passu with any other Obligations), and to the payment of any other amounts required
by applicable law, after which the Secured Parties shall pay to the applicable Debtor any surplus
proceeds. If, upon the sale, license or other disposition of the Collateral, the proceeds thereof
are insufficient to pay all amounts to which the Secured Parties are legally entitled, the Debtors
will be liable for the deficiency, together with interest thereon, at the rate of 12% per annum or
the lesser amount permitted by applicable law (the “Default Rate”), and the reasonable fees
of any attorneys employed by the Secured Parties to collect such deficiency. To the extent
permitted by applicable law, each Debtor waives all claims, damages and demands against the Secured
Parties arising out of the repossession, removal, retention or sale of the Collateral, unless due
solely to the gross negligence or willful misconduct of the Secured Parties as determined by a
final judgment (not subject to further appeal) of a court of competent jurisdiction.

10. Securities Law Provision. Each Debtor recognizes that Agent may be limited in its ability
to effect a sale to the public of all or part of the Pledged Securities by reason of certain
prohibitions in the Securities Act of 1933, as amended, or other federal or state securities laws
(collectively, the “Securities Laws”), and may be compelled to resort to one or more sales
to a restricted group of purchasers who may be required to agree to acquire the Pledged Securities
for their own account, for investment and not with a view to the distribution or resale thereof.
Each Debtor agrees that sales so made may be at prices and on terms less favorable than if the
Pledged Securities were sold to the public, and that Agent has no obligation to delay the sale of
any Pledged Securities for the period of time necessary to register the Pledged Securities for sale
to the public under the Securities Laws. Each Debtor shall cooperate with Agent in its attempt to
satisfy any requirements under the Securities Laws (including, without limitation, registration
thereunder if requested by Agent) applicable to the sale of the Pledged Securities by Agent.

11. Costs and Expenses. Each Debtor agrees to pay all reasonable out-of-pocket fees, costs and
expenses incurred in connection with any filing required hereunder, including without limitation,
any financing statements pursuant to the UCC, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any searches reasonably required by the
Agent. The Debtors shall also pay all other claims and charges which in the reasonable opinion of
the Agent is reasonably likely to prejudice, imperil or otherwise affect the Collateral or the
Security Interests therein. The Debtors will also, upon demand, pay to the Agent the amount of any
and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any
experts and agents, which the Agent, for the benefit of the Secured Parties, may incur in
connection

 

17

 

with the creation, perfection, protection, satisfaction, foreclosure, collection or enforcement of the Security Interest and the preparation,
administration, continuance, amendment or enforcement of this Agreement and pay to the Agent the
amount of any and all reasonable expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, which the Agent, for the benefit of the Secured Parties, and
the Secured Parties may incur in connection with (i) the enforcement of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other realization upon, any of the
Collateral, or (iii) the exercise or enforcement of any of the rights of the Secured Parties under
the Debentures. Until so paid, any fees payable hereunder shall be added to the principal amount of
the Debentures and shall bear interest at the Default Rate.

12. Responsibility for Collateral. The Debtors assume all liabilities and responsibility in
connection with all Collateral, and the Obligations shall in no way be affected or diminished by
reason of the loss, destruction, damage or theft of any of the Collateral or its unavailability for
any reason. Without limiting the generality of the foregoing, (a) neither the Agent nor any
Secured Party (i) has any duty (either before or after an Event of Default) to collect any amounts
in respect of the Collateral or to preserve any rights relating to the Collateral, or (ii) has any
obligation to clean-up or otherwise prepare the Collateral for sale, and (b) each Debtor shall
remain obligated and liable under each contract or agreement included in the Collateral to be
observed or performed by such Debtor thereunder. Neither the Agent nor any Secured Party shall
have any obligation or liability under any such contract or agreement by reason of or arising out
of this Agreement or the receipt by the Agent or any Secured Party of any payment relating to any
of the Collateral, nor shall the Agent or any Secured Party be obligated in any manner to perform
any of the obligations of any Debtor under or pursuant to any such contract or agreement, to make
inquiry as to the nature or sufficiency of any payment received by the Agent or any Secured Party
in respect of the Collateral or as to the sufficiency of any performance by any party under any
such contract or agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been assigned to the Agent or
to which the Agent or any Secured Party may be entitled at any time or times.

13. Security Interests Absolute. All rights of the Secured Parties and all obligations of the
Debtors hereunder, shall be absolute and unconditional, irrespective of: (a) any lack of validity
or enforceability of this Agreement, the Debentures or any agreement entered into in connection
with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place
of payment or performance of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Debentures or any other agreement
entered into in connection with the foregoing; (c) any exchange, release or nonperfection of any of
the Collateral, or any release or amendment or waiver of or consent to departure from any other
collateral for, or any guarantee, or any other security, for all or any of the Obligations; (d) any
action by the Secured Parties to obtain, adjust, settle and cancel in its sole discretion any
insurance claims or matters made or arising in connection with the Collateral; or (e) any other
circumstance which might otherwise constitute any legal or equitable defense available to a Debtor,
or a discharge of all or any part of the Security Interests granted hereby. Until the Obligations
shall have been paid and performed in full, the rights of the Secured Parties shall continue even
if the Obligations are barred for any reason,

 

18

 

including, without limitation, the running of the
statute of limitations or bankruptcy. Each Debtor expressly waives presentment, protest, notice of protest, demand, notice of nonpayment
and demand for performance. In the event that at any time any transfer of any Collateral or any
payment received by the Secured Parties hereunder shall be deemed by final order of a court of
competent jurisdiction to have been a voidable preference or fraudulent conveyance under the
bankruptcy or insolvency laws of the United States, or shall be deemed to be otherwise due to any
party other than the Secured Parties, then, in any such event, each Debtor’s obligations hereunder
shall survive cancellation of this Agreement, and shall not be discharged or satisfied by any prior
payment thereof and/or cancellation of this Agreement, but shall remain a valid and binding
obligation enforceable in accordance with the terms and provisions hereof. Each Debtor waives all
right to require the Secured Parties to proceed against any other person or entity or to apply any
Collateral which the Secured Parties may hold at any time, or to marshal assets, or to pursue any
other remedy. Each Debtor waives any defense arising by reason of the application of the statute of
limitations to any obligation secured hereby.

14. Term of Agreement. This Agreement and the Security Interests shall terminate on the date
on which all payments under the Debentures have been indefeasibly paid in full and all other
Obligations have been paid or discharged; provided, however, that all indemnities of the Debtors
contained in this Agreement (including, without limitation, Annex B hereto) shall survive and
remain operative and in full force and effect regardless of the termination of this Agreement.

15. Power of Attorney; Further Assurances.

(a) Subject to the TD Bank Debt, each Debtor authorizes the Agent, and does hereby
make, constitute and appoint the Agent and its officers, agents, successors or assigns with
full power of substitution, as such Debtor’s true and lawful attorney-in-fact, with power,
in the name of the Agent or such Debtor, to, after the occurrence and during the continuance
of an Event of Default, (i) endorse any note, checks, drafts, money orders or other
instruments of payment (including payments payable under or in respect of any policy of
insurance) in respect of the Collateral that may come into possession of the Agent; (ii) to
sign and endorse any financing statement pursuant to the UCC or any invoice, freight or
express bill, bill of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts, and other documents
relating to the Collateral; (iii) to pay or discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on or threatened against the Collateral;
(iv) to demand, collect, receipt for, compromise, settle and sue for monies due in respect
of the Collateral; (v) to transfer any Intellectual Property or provide licenses respecting
any Intellectual Property; and (vi) generally, at the option of the Agent, and at the
expense of the Debtors, at any time, or from time to time, to execute and deliver any and
all documents and instruments and to do all acts and things which the Agent deems necessary
to protect, preserve and realize upon the Collateral and the Security Interests granted
therein in order to effect the intent of this Agreement and the Debentures all as fully and
effectually as the Debtors might or could do; and each Debtor hereby ratifies all that said
attorney shall lawfully do or cause to be done by virtue

 

19

 

 hereof. This power of attorney is
coupled with an interest and shall be irrevocable for the term of this Agreement and
thereafter as long as any of the Obligations shall be outstanding. The designation set forth herein shall be deemed to amend and supersede any inconsistent
provision in the Organizational Documents or other documents or agreements to which any
Debtor is subject or to which any Debtor is a party. Without limiting the generality of the
foregoing, after the occurrence and during the continuance of an Event of Default, subject
to the TD Bank Debt, each Secured Party is specifically authorized to execute and file any
applications for or instruments of transfer and assignment of any patents, trademarks,
copyrights or other Intellectual Property with the United States Patent and Trademark Office
and the United States Copyright Office.

(b) On a continuing basis, each Debtor will make, execute, acknowledge, deliver, file
and record, as the case may be, with the proper filing and recording agencies in any
jurisdiction, including, without limitation, the jurisdictions indicated on Schedule
C attached hereto, all such instruments, and take all such action as may reasonably be
deemed necessary or advisable, or as reasonably requested by the Agent, to perfect the
Security Interests granted hereunder and otherwise to carry out the intent and purposes of
this Agreement, or for assuring and confirming to the Agent the grant or perfection of a
perfected security interest in all the Collateral under the UCC.

(c) Each Debtor hereby irrevocably appoints the Agent as such Debtor’s
attorney-in-fact, with full authority in the place and instead of such Debtor and in the
name of such Debtor, from time to time in the Agent’s discretion, to take any action and to
execute any instrument which the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including the filing, in its sole discretion, of one or more
financing or continuation statements and amendments thereto, relative to any of the
Collateral without the signature of such Debtor where permitted by law, which financing
statements may (but need not) describe the Collateral as “all assets” or “all personal
property” or words of like import, and ratifies all such actions taken by the Agent. This
power of attorney is coupled with an interest and shall be irrevocable for the term of this
Agreement and thereafter as long as any of the Obligations shall be outstanding.

16. Notices. All notices, requests, demands and other communications hereunder shall be
subject to the notice provision of the Purchase Agreement (as such term is defined in the
Debentures).

17. Other Security. To the extent that the Obligations are now or hereafter secured by
property other than the Collateral or by the guarantee, endorsement or property of any other
person, firm, corporation or other entity, then the Agent shall have the right, in its sole
discretion, to pursue, relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any of the Secured Parties’ rights and remedies
hereunder.

18. Appointment of Agent. The Secured Parties hereby appoint Gene Monaco, an individual
residing at 16811 East Wellesley Avenue, Spokane, WA 99216 to act as their agent (“Monaco”
or “Agent”) for purposes of exercising any and all rights and remedies of the Secured
Parties hereunder. Such appointment shall continue until revoked in writing by a Majority in
Interest, at which time a Majority in Interest shall appoint a new Agent, provided that Monaco
may not be removed as Agent unless Monaco shall then hold less than $150,000 in principal amount of
Debentures; provided, further, that such removal may occur only if each of the
other Secured Parties shall then hold not less than an aggregate of $100,000 in principal amount of
Debentures. The Agent shall have the rights, responsibilities and immunities set forth in
Annex B hereto.

 

20

 

19. Additional Secured Parties. Each Debtor and the Secured Parties shall (a) permit
additional Secured Parties to this Agreement only to the extent that each additional Secured Party
shall be as contemplated by clause (d) in the definition of Exempt Issuance in the Purchase
Agreement and (b) cause each such additional Secured Party to immediately become a party hereto (an
“Additional Secured Party”), by executing and delivering an Additional Secured Party
Joinder, in substantially the form of Annex A-2 attached hereto, to the Company and the
Agent and complying with the provisions hereof. Upon delivery of the foregoing to each Additional
Secured Party, each Additional Secured Party shall be and become a party to this Agreement with the
same rights as the Secured Parties, for all purposes hereof as fully and to the same extent as if
it were an original signatory hereto and shall be deemed to have made the representations,
warranties and covenants set forth herein as of the date of execution and delivery of such
Additional Secured Party Joinder, and all references herein to the “Secured Parties” shall be
deemed to include each Additional Secured Party.

20. Miscellaneous.

(a) No course of dealing between the Debtors and the Secured Parties, nor any failure
to exercise, nor any delay in exercising, on the part of the Secured Parties, any right,
power or privilege hereunder or under the Debentures shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.

(b) All of the rights and remedies of the Secured Parties with respect to the
Collateral, whether established hereby or by the Debentures or by any other agreements,
instruments or documents or by law shall be cumulative and may be exercised singly or
concurrently.

(c) This Agreement, together with the exhibits and schedules hereto, contain the entire
understanding of the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, oral or written, with respect to such matters, which
the parties acknowledge have been merged into this Agreement and the exhibits and schedules
hereto. No provision of this Agreement may be waived, modified, supplemented or amended
except in a written instrument signed, in the case of an amendment, by the Debtors and a
Majority In Interest or, in the case of a waiver, by the party against whom enforcement of
any such waived provision is sought.

(d) If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their commercially reasonable efforts to find
and employ an alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

 

21

 

(e) No waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any
subsequent default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.

(f) This Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company and the Guarantors may not assign
this Agreement or any rights or obligations hereunder without the prior written consent of
each Secured Party (other than by merger). Any Secured Party may assign any or all of its
rights under this Agreement to any Person (as defined in the Purchase Agreement) to whom
such Secured Party assigns or transfers any Obligations, provided such transferee agrees
in writing to be bound, with respect to the transferred Obligations, by the provisions of
this Agreement that apply to the “Secured Parties.”

(g) Each party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the provisions and
purposes of this Agreement.

(h) Except to the extent mandatorily governed by the jurisdiction or situs where the
Collateral is located, all questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to the principles
of conflicts of law thereof. Except to the extent mandatorily governed by the jurisdiction
or situs where the Collateral is located, each Debtor agrees that all proceedings concerning
the interpretations, enforcement and defense of the transactions contemplated by this
Agreement and the Debentures (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, partners, members, employees or agents) shall
be commenced exclusively in the state and federal courts sitting in the City of New York,
Borough of Manhattan. Except to the extent mandatorily governed by the jurisdiction or
situs where the Collateral is located, each Debtor hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such proceeding is improper. Each party
hereto hereby irrevocably waives personal service of process and consents to process being
served in any such proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.

 

22

 

(i) This Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together shall constitute
one and the same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the party executing
(or on whose behalf such signature is executed) the same with the same force and effect as
if such facsimile signature were the original thereof.

(j) All Debtors shall jointly and severally be liable for the obligations of each
Debtor to the Secured Parties hereunder.

(k) Each Debtor shall indemnify, reimburse and hold harmless the Agent and the Secured
Parties and their respective partners, members, shareholders, officers, directors, employees
and agents (and any other persons with other titles that have similar functions)
(collectively, “Indemnitees”) from and against any and all losses, claims,
liabilities, damages, penalties, suits, costs and expenses, of any kind or nature,
(including fees relating to the cost of investigating and defending any of the foregoing)
imposed on, incurred by or asserted against such Indemnitee in any way related to or arising
from or alleged to arise from this Agreement or the Collateral, except any such losses,
claims, liabilities, damages, penalties, suits, costs and expenses which result from the
gross negligence or willful misconduct of the Indemnitee as determined by a final,
nonappealable decision of a court of competent jurisdiction. This indemnification provision
is in addition to, and not in limitation of, any other indemnification provision in the
Debentures, the Purchase Agreement (as such term is defined in the Debentures) or any other
agreement, instrument or other document executed or delivered in connection herewith or
therewith.

(l) Nothing in this Agreement shall be construed to subject Agent or any Secured Party
to liability as a partner in any Debtor or any if its direct or indirect subsidiaries that
is a partnership or as a member in any Debtor or any of its direct or indirect subsidiaries
that is a limited liability company, nor shall Agent or any Secured Party be deemed to have
assumed any obligations under any partnership agreement or limited liability company
agreement, as applicable, of any such Debtor or any of its direct or indirect subsidiaries
or otherwise, unless and until any such Secured Party exercises its right to be substituted
for such Debtor as a partner or member, as applicable, pursuant hereto.

(m) To the extent that the grant of the security interest in the Collateral and the
enforcement of the terms hereof require the consent, approval or action of any partner or
member, as applicable, of any Debtor or any direct or indirect subsidiary of any Debtor or
compliance with any provisions of any of the Organizational Documents, the Debtors hereby
grant such consent and approval and waive any such noncompliance with the terms of said
documents.

[SIGNATURE PAGES FOLLOW]

 

23

 

IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed
on the day and year first above written.

	 	 	 	 	 
	UFOOD RESTAURANT GROUP, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ George Naddaff
 

Name: George Naddaff

Title: Chief Executive Officer
	 	 
	 
	 	 	 	 
	KNOWFAT FRANCHISE COMPANY, INC	 	 
	 
	 	 	 	 
	BY:

	 	/s/ George Naddaff
 

NAME: George Naddaff

TITLE: Chief Executive Officer
	 	 
	 
	 	 	 	 
	KFLG WATERTOWN, INC	 	 
	 
	 	 	 	 
	BY:

	 	/s/ George Naddaff
 

NAME: George Naddaff

TITLE: Chief Executive Officer
	 	 
	 
	 	 	 	 
	KNOWFAT OF LANDMARK CENTER, INC	 	 
	 
	 	 	 	 
	BY:

	 	/s/ George Naddaff
 

NAME: George Naddaff

TITLE: Chief Executive Officer
	 	 
	 
	 	 	 	 
	KNOWFAT OF DOWNTOWN CROSSING, INC.	 	 
	 
	 	 	 	 
	BY:

	 	/s/ George Naddaff
 

NAME: George Naddaff

TITLE: Chief Executive Officer
	 	 

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

 

24

 

[SIGNATURE PAGE OF HOLDERS TO UFFC SA]

Name of Investing Entity:                                                             

Signature of Authorized Signatory of Investing entity:                                                      
       

Name of Authorized Signatory:                                                             

Title of Authorized Signatory:                                                             

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

 

25

 

SCHEDULE A

Principal Place of Business of Debtors:

Locations Where Collateral is Located or Stored:

SCHEDULE B

SCHEDULE C

SCHEDULE D

Legal Names and Organizational Identification Numbers

SCHEDULE E

Names; Mergers and Acquisitions

SCHEDULE F

Intellectual Property

SCHEDULE G

Account Debtors

SCHEDULE H

Pledged Securities

 

26

 

ANNEX A-1

to

SECURITY

AGREEMENT

FORM OF ADDITIONAL DEBTOR JOINDER

Security Agreement dated as of March 19, 2009 made by

UFood Restaurant Group, Inc.

and its subsidiaries party thereto from time to time, as Debtors

to and in favor of

the Secured Parties identified therein (the “Security Agreement”)

Reference is made to the Security Agreement as defined above; capitalized terms used herein
and not otherwise defined herein shall have the meanings given to such terms in, or by reference
in, the Security Agreement.

The undersigned hereby agrees that upon delivery of this Additional Debtor Joinder to the
Secured Parties referred to above, the undersigned shall (a) be an Additional Debtor under the
Security Agreement, (b) have all the rights and obligations of the Debtors under the Security
Agreement as fully and to the same extent as if the undersigned was an original signatory thereto
and (c) be deemed to have made the representations and warranties set forth therein as of the date
of execution and delivery of this Additional Debtor Joinder. WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE SECURED PARTIES A SECURITY INTEREST IN
THE COLLATERAL AS MORE FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE
WAIVER OF JURY TRIAL PROVISIONS SET FORTH THEREIN.

Attached hereto are supplemental and/or replacement Schedules to the Security Agreement, as
applicable.

An executed copy of this Joinder shall be delivered to the Secured Parties, and the Secured
Parties may rely on the matters set forth herein on or after the date hereof. This Joinder shall
not be modified, amended or terminated without the prior written consent of the Secured Parties.

 

27

 

IN WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in the name and on
behalf of the undersigned.

	 	 	 	 	 
	 	 	[Name of Additional Debtor]
	 
	 	 	 	 
	 

	 	By: 	 
	 

	 	 	Name:	 
	 

	 	 	Title:	 
	 
	 	 	 	 
	 

	 	 	Address: 	 

Dated:

 

 

 

ANNEX A-2

to

SECURITY

AGREEMENT

FORM OF ADDITIONAL SECURED PARTY JOINDER

Security Agreement dated as of March 19, 2009 made by

UFood Restaurant Group, Inc.

and its subsidiaries party thereto from time to time, as Debtors

to and in favor of

the Secured Parties identified therein (the “Security Agreement”)

Reference is made to the Security Agreement as defined above; capitalized terms used herein
and not otherwise defined herein shall have the meanings given to such terms in, or by reference
in, the Security Agreement.

The undersigned hereby agrees that upon delivery of this Additional Secured Party Joinder to
the Company and the Agent referred to above, the undersigned shall (a) be an Additional Secured
Party under the Security Agreement, (b) have all the rights of the Secured Parties under the
Security Agreement as fully and to the same extent as if the undersigned was an original signatory
thereto and (c) be deemed to have made the representations and warranties set forth therein as of
the date of execution and delivery of this Additional Secured Party Joinder. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY ACKNOWLEDGES AND AGREES TO THE WAIVER OF
JURY TRIAL PROVISIONS SET FORTH THEREIN.

Attached hereto are supplemental and/or replacement Schedules to the Security Agreement, as
applicable.

An executed copy of this Joinder shall be delivered to the Company and the Agent, and the
Agent may rely on the matters set forth herein on or after the date hereof. This Joinder shall not
be modified, amended or terminated without the prior written consent of the Company and the Agent.

 

 

 

IN WITNESS WHEREOF, the undersigned has caused this Additional Secured Party Joinder to be
executed in the name and on behalf of the undersigned.

Name of Additional Secured Party:                                                             

Signature of Authorized Signatory of Additional Secured Party:                                                             

Name of Authorized Signatory:                                                             

Title of Authorized Signatory:                                                             

 

 

 

ANNEX B

to

SECURITY

AGREEMENT

THE AGENT

1. Appointment. The Secured Parties (all capitalized terms used herein and not otherwise
defined shall have the respective meanings provided in the Security Agreement to which this Annex B
is attached (the “Agreement”)), by their acceptance of the benefits of the Agreement,
hereby designate Gene Monaco (“Monaco” or “Agent”) as the Agent to act as specified
herein and in the Agreement. Each Secured Party shall be deemed irrevocably to authorize the Agent
to take such action on its behalf under the provisions of the Agreement and any other Transaction
Document (as such term is defined in the Purchase Agreement) and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or required of the
Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto.
The Agent may perform any of its duties hereunder by or through its agents or employees.

2. Nature of Duties. The Agent shall have no duties or responsibilities except those
expressly set forth in the Agreement. Neither the Agent nor any of its partners, members,
shareholders, officers, directors, employees or agents shall be liable for any action taken or
omitted by it as such under the Agreement or hereunder or in connection herewith or therewith, be
responsible for the consequence of any oversight or error of judgment or answerable for any loss,
unless caused solely by its or their gross negligence or willful misconduct as determined by a
final judgment (not subject to further appeal) of a court of competent jurisdiction. The duties of
the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of
the Agreement or any other Transaction Document a fiduciary relationship in respect of any Debtor
or any Secured Party; and nothing in the Agreement or any other Transaction Document, expressed or
implied, is intended to or shall be so construed as to impose upon the Agent any obligations in
respect of the Agreement or any other Transaction Document except as expressly set forth herein and
therein.

3. Lack of Reliance on the Agent. Independently and without reliance upon the Agent, each
Secured Party, to the extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the Company and its
subsidiaries in connection with such Secured Party’s investment in the Debtors, the creation and
continuance of the Obligations, the transactions contemplated by the Transaction Documents, and the
taking or not taking of any action in connection therewith, and (ii) its own appraisal of the
creditworthiness of the Company and its subsidiaries, and of the value of the Collateral from time
to time, and the Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Secured Party with any credit, market or other information with respect
thereto, whether coming into its

 

 

 

possession before any Obligations are incurred or at any time or times thereafter. The Agent shall not be responsible to the Debtors or any Secured
Party for any recitals, statements, information, representations or warranties herein or in any
document, certificate or other writing delivered in connection herewith, or for the execution,
effectiveness, genuineness, validity, enforceability, perfection, collectibility, priority or
sufficiency of the Agreement or any other Transaction Document, or for the financial condition of
the Debtors or the value of any of the Collateral, or be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or conditions of the Agreement
or any other Transaction Document, or the financial condition of the Debtors, or the value of any
of the Collateral, or the existence or possible existence of any default or Event of Default under
the Agreement, the Debentures or any of the other Transaction Documents.

4. Certain Rights of the Agent. The Agent shall have the right to take any action with
respect to the Collateral, on behalf of all of the Secured Parties. To the extent practical, the
Agent shall request instructions from the Secured Parties with respect to any material act or
action (including failure to act) in connection with the Agreement or any other Transaction
Document, and shall be entitled to act or refrain from acting in accordance with the instructions
of a Majority in Interest; if such instructions are not provided despite the Agent’s request
therefor, the Agent shall be entitled to refrain from such act or taking such action, and if such
action is taken, shall be entitled to appropriate indemnification from the Secured Parties in
respect of actions to be taken by the Agent; and the Agent shall not incur liability to any person
or entity by reason of so refraining. Without limiting the foregoing, (a) no Secured Party shall
have any right of action whatsoever against the Agent as a result of the Agent acting or refraining
from acting hereunder in accordance with the terms of the Agreement or any other Transaction
Document, and the Debtors shall have no right to question or challenge the authority of, or the
instructions given to, the Agent pursuant to the foregoing and (b) the Agent shall not be required
to take any action which the Agent believes (i) could reasonably be expected to expose it to
personal liability or (ii) is contrary to this Agreement, the Transaction Documents or applicable
law.

5. Reliance. The Agent shall be entitled to rely, and shall be fully protected in relying,
upon any writing, resolution, notice, statement, certificate, telex, teletype or telecopier
message, cablegram, radiogram, order or other document or telephone message signed, sent or made by
the proper person or entity, and, with respect to all legal matters pertaining to the Agreement and
the other Transaction Documents and its duties thereunder, upon advice of counsel selected by it
and upon all other matters pertaining to this Agreement and the other Transaction Documents and its
duties thereunder, upon advice of other experts selected by it. Anything to the contrary
notwithstanding, the Agent shall have no obligation whatsoever to any Secured Party to assure that
the Collateral exists or is owned by the Debtors or is cared for, protected or insured or that the
liens granted pursuant to the Agreement have been properly or sufficiently or lawfully created,
perfected, or enforced or are entitled to any particular priority.

 

 

 

6. Indemnification. To the extent that the Agent is not reimbursed and indemnified by the
Debtors, the Secured Parties will jointly and severally reimburse and indemnify the Agent, in
proportion to their initially purchased respective principal amounts of Debentures, from and
against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in performing its duties hereunder or under the Agreement
or any other Transaction Document, or in any way relating to or arising out of the Agreement or any
other Transaction Document except for those determined by a final judgment (not subject to further
appeal) of a court of competent jurisdiction to have resulted solely from the Agent’s own gross
negligence or willful misconduct. Prior to taking any action hereunder as Agent, the Agent may
require each Secured Party to deposit with it sufficient sums as it determines in good faith is
necessary to protect the Agent for costs and expenses associated with taking such action.

7. Resignation by the Agent.

(a) The Agent may resign from the performance of all its functions and duties under
the Agreement and the other Transaction Documents at any time by giving 30 days’ prior
written notice (as provided in the Agreement) to the Debtors and the Secured Parties. Such
resignation shall take effect upon the appointment of a successor Agent pursuant to clauses
(b) and (c) below.

(b) Upon any such notice of resignation, the Secured Parties, acting by a Majority in
Interest, shall appoint a successor Agent hereunder.

(c) If a successor Agent shall not have been so appointed within said 30-day period,
the Agent shall then appoint a successor Agent who shall serve as Agent until such time, if
any, as the Secured Parties appoint a successor Agent as provided above. If a successor
Agent has not been appointed within such 30-day period, the Agent may petition any court of
competent jurisdiction or may interplead the Debtors and the Secured Parties in a
proceeding for the appointment of a successor Agent, and all fees, including, but not
limited to, extraordinary fees associated with the filing of interpleader and expenses
associated therewith, shall be payable by the Debtors on demand.

8. Rights with respect to Collateral. Each Secured Party agrees with all other Secured
Parties and the Agent (i) that it shall not, and shall not attempt to, exercise any rights with
respect to its security interest in the Collateral, whether pursuant to any other agreement or
otherwise (other than pursuant to this Agreement), or take or institute any action against the
Agent or any of the other Secured Parties in respect of the Collateral or its rights hereunder
(other than any such action arising from the breach of this Agreement) and (ii) that such Secured
Party has no other rights with respect to the Collateral other than as set forth in this Agreement
and the other Transaction Documents. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from
its duties and obligations under the Agreement. After any retiring Agent’s resignation or removal
hereunder as Agent, the provisions of the Agreement including this Annex B shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent.Exhibit 10.9

Exhibit 10.9

SUBSIDIARY GUARANTEE

SUBSIDIARY GUARANTEE, dated as of March 19, 2009 (this “Guarantee”), made by each of
the signatories hereto (together with any other entity that may become a party hereto as provided
herein, the “Guarantors”), in favor of the purchasers signatory (together with their
permitted assigns, the “Purchasers”) to that certain Securities Purchase Agreement, dated
as of the date hereof, between UFood Restaurant Group, Inc., a Nevada corporation (the
“Company”) and the Purchasers.

W I T N E S S E T H:

WHEREAS, pursuant to that certain Securities Purchase Agreement, dated as of the date hereof,
by and between the Company and the Purchasers (the “Purchase Agreement”), the Company has
agreed to sell and issue to the Purchasers, and the Purchasers have agreed to purchase from the
Company the Debentures, subject to the terms and conditions set forth therein; and

WHEREAS, each Guarantor will directly benefit from the extension of credit to the Company
represented by the issuance of the Debentures; and

NOW, THEREFORE, in consideration of the premises and to induce the Purchasers to enter into
the Purchase Agreement and to carry out the transactions contemplated thereby, each Guarantor
hereby agrees with the Purchasers as follows:

1. Definitions. Unless otherwise defined herein, terms defined in the Purchase
Agreement and used herein shall have the meanings given to them in the Purchase Agreement. The
words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import when used in this
Guarantee shall refer to this Guarantee as a whole and not to any particular provision of this
Guarantee, and Section and Schedule references are to this Guarantee unless otherwise specified.
The meanings given to terms defined herein shall be equally applicable to both the singular and
plural forms of such terms. The following terms shall have the following meanings:

“Guarantee” means this Subsidiary Guarantee, as the same may be amended,
supplemented or otherwise modified from time to time.

“Obligations” means, in addition to all other costs and expenses of collection
incurred by Purchasers in enforcing any of such Obligations and/or this Guarantee, all of
the liabilities and obligations (primary, secondary, direct, contingent, sole, joint or
several) due or to become due, or that are now or may be hereafter contracted or acquired,
or owing to, by the Company or any Guarantor to the Purchasers, including, without
limitation, all obligations under this Guarantee, the Debentures and any other instruments,
agreements or other documents executed and/or delivered in connection herewith or
therewith, in each case, whether now or hereafter existing, voluntary or involuntary,
direct or indirect, absolute or

 

 

 

contingent, liquidated or unliquidated, whether or not jointly
owed with others, and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or liabilities
that are paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from any of the Purchasers as a preference, fraudulent transfer or
otherwise as such obligations may be amended, supplemented, converted, extended or modified
from time to time. Without limiting the generality of the foregoing, the term
“Obligations” shall include, without limitation: (i) principal of, and interest on the
Debentures and the loans extended pursuant thereto; (ii) any and all other fees,
indemnities, costs, obligations and liabilities of the Company or any Guarantor from time
to time under or in connection with this Guarantee, the Debentures and any other
instruments, agreements or other documents executed and/or delivered in connection herewith
or therewith; and (iii) all amounts (including but not limited to post-petition interest)
in respect of the foregoing that would be payable but for the fact that the obligations to
pay such amounts are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Company or any Guarantor.

2. Guarantee.

(a) Guarantee.

(i) The Guarantors hereby, jointly and severally, unconditionally and
irrevocably, guarantee to the Purchasers and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and performance
when due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations.

(ii) Anything herein or in any other Transaction Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Transaction Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal and state laws, including
laws relating to the insolvency of debtors, fraudulent conveyance or transfer or
laws affecting the rights of creditors generally (after giving effect to the right
of contribution established in Section 2(b)).

(iii) Each Guarantor agrees that the Obligations may at any time and from time
to time exceed the amount of the liability of such Guarantor hereunder without
impairing the guarantee contained in this Section 2 or affecting the rights and
remedies of the Purchasers hereunder.

(iv) The guarantee contained in this Section 2 shall remain in full force and
effect until all the Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by indefeasible payment in full.

 

2

 

(v) No payment made by the Company, any of the Guarantors, any other
guarantor or any other Person or received or collected by the Purchasers from the
Company, any of the Guarantors, any other guarantor or any other Person by virtue
of any action or proceeding or any set-off or appropriation or application at any
time or from time to time in reduction of or in payment of the Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of any
Guarantor hereunder which shall, notwithstanding any such payment (other than any
payment made by such Guarantor in respect of the Obligations or any payment
received or collected from such Guarantor in respect of the Obligations), remain
liable for the Obligations up to the maximum liability of such Guarantor
hereunder until the Obligations are indefeasibly paid in full.

(vi) Notwithstanding anything to the contrary in this Guarantee, with respect
to any defaulted non-monetary Obligations the specific performance of which by the
Guarantors is not reasonably possible (e.g. the issuance of the Company’s Common
Stock), the Guarantors shall only be liable for making the Purchasers whole on a
monetary basis for the Company’s failure to perform such Obligations in accordance
with the Transaction Documents.

(b) Right of Contribution. Subject to Section 2(c), each Guarantor hereby
agrees that to the extent that a Guarantor shall have paid more than its proportionate
share of any payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder which has not paid its
proportionate share of such payment. Each Guarantor’s right of contribution shall be
subject to the terms and conditions of Section 2(c). The provisions of this Section 2(b)
shall in no respect limit the obligations and liabilities of any Guarantor to the
Purchasers and each Guarantor shall remain liable to the Purchasers for the full amount
guaranteed by such Guarantor hereunder.

(c) No Subrogation. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the Purchasers, no
Guarantor shall be entitled to be subrogated to any of the rights of the Purchasers against
the Company or any other Guarantor or any collateral security or guarantee or right of
offset held by the Purchasers for the payment of the Obligations, nor shall any Guarantor
seek or be entitled to seek any contribution or reimbursement from the Company or any other
Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing
to the Purchasers by the Company on account of the Obligations are indefeasibly paid in
full. If any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Obligations shall not have been paid in
full, such amount shall be held by such Guarantor in trust for the Purchasers, segregated
from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be
turned over to the Purchasers in the exact form received by such Guarantor (duly indorsed
by such Guarantor to the Purchasers, if required), to be applied against the Obligations,
whether matured or unmatured, in such order as the Purchasers may determine.

 

3

 

(d) Amendments, Etc. With Respect to the Obligations. Each Guarantor shall
remain obligated hereunder notwithstanding that, without any reservation of rights against
any Guarantor and without notice to or further assent by any Guarantor, any demand for
payment of any of the Obligations made by the Purchasers may be rescinded by the Purchasers
and any of the Obligations continued, and the Obligations, or the liability of any other
Person upon or for any part thereof, or any collateral security or guarantee therefor or
right of offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Purchasers, and the Purchase Agreement and the other Transaction Documents
and any other documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Purchasers may deem
advisable from time to time, and any collateral security, guarantee or right of offset at
any time held by the Purchasers for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released. The Purchasers shall have no obligation to protect,
secure, perfect or insure any Lien at any time held by them as security for the Obligations
or for the guarantee contained in this Section 2 or any property subject thereto.

(e) Guarantee Absolute and Unconditional. Each Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Obligations and notice
of or proof of reliance by the Purchasers upon the guarantee contained in this Section 2 or
acceptance of the guarantee contained in this Section 2; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the guarantee contained in this Section 2;
and all dealings between the Company and any of the Guarantors, on the one hand, and the
Purchasers, on the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor
waives to the extent permitted by law diligence,
presentment, protest, demand for payment and notice of default or nonpayment to or
upon the Company or any of the Guarantors with respect to the Obligations. Each Guarantor
understands and agrees that the guarantee contained in this Section 2 shall be construed as
a continuing, absolute and unconditional guarantee of payment and performance without
regard to (a) the validity or enforceability of the Purchase Agreement or any other
Transaction Document, any of the Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or

 

4

 

from time to time held by
the Purchasers, (b) any defense, set-off or counterclaim (other than a defense of payment or performance
or fraud by Purchasers) which may at any time be available to or be asserted by the Company
or any other Person against the Purchasers, or (c) any other circumstance whatsoever (with
or without notice to or knowledge of the Company or such Guarantor) which constitutes, or
might be construed to constitute, an equitable or legal discharge of the Company for the
Obligations, or of such Guarantor under the guarantee contained in this Section 2, in
bankruptcy or in any other instance. When making any demand hereunder or otherwise pursuing
its rights and remedies hereunder against any Guarantor, the Purchasers may, but shall be
under no obligation to, make a similar demand on or otherwise pursue such rights and
remedies as they may have against the Company, any other Guarantor or any other Person or
against any collateral security or guarantee for the Obligations or any right of offset
with respect thereto, and any failure by the Purchasers to make any such demand, to pursue
such other rights or remedies or to collect any payments from the Company, any other
Guarantor or any other Person or to realize upon any such collateral security or guarantee
or to exercise any such right of offset, or any release of the Company, any other Guarantor
or any other Person or any such collateral security, guarantee or right of offset, shall
not relieve any Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a matter of law,
of the Purchasers against any Guarantor. For the purposes hereof, “demand” shall include
the commencement and continuance of any legal proceedings.

(f) Reinstatement. The guarantee contained in this Section 2 shall continue to
be effective, or be reinstated, as the case may be, if at any time payment, or any part
thereof, of any of the Obligations is rescinded or must otherwise be restored or returned
by the Purchasers upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company or any Guarantor, or upon or as a result of the appointment
of a receiver, intervenor or conservator of, or trustee or similar officer for, the Company
or any Guarantor or any substantial part of its property, or otherwise, all as though such
payments had not been made.

(g) Payments. Each Guarantor hereby guarantees that payments hereunder will be
paid to the Purchasers without set-off or counterclaim in U.S. dollars at the address set
forth or referred to in the Signature Pages to the Purchase Agreement.

 

5

 

3. Representations and Warranties. Each Guarantor hereby makes the following
representations and warranties to Purchasers as of the date hereof:

(a) Organization and Qualification. The Guarantor is a corporation, duly
incorporated, validly existing and in good standing under the laws of the applicable
jurisdiction set forth on Schedule 1, with the requisite corporate power and authority to
own and use its properties and assets and to carry on its business
as currently conducted. The Guarantor has no subsidiaries other than those identified
as such on the Disclosure Schedules to the Purchase Agreement. The Guarantor is duly
qualified to do business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property owned by it makes
such qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, (x) adversely
affect the legality, validity or enforceability of any of this Guaranty in any material
respect, (y) have a material adverse effect on the results of operations, assets,
prospects, or financial condition of the Guarantor or (z) adversely impair in any material
respect the Guarantor’s ability to perform fully on a timely basis its obligations under
this Guaranty (a “Material Adverse Effect”).

(b) Authorization; Enforcement. The Guarantor has the requisite corporate
power and authority to enter into and to consummate the transactions contemplated by this
Guaranty, and otherwise to carry out its obligations hereunder. The execution and delivery
of this Guaranty by the Guarantor and the consummation by it of the transactions
contemplated hereby have been duly authorized by all requisite corporate action on the part
of the Guarantor. This Guaranty has been duly executed and delivered by the Guarantor and
constitutes the valid and binding obligation of the Guarantor enforceable against the
Guarantor in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights and remedies or
by other equitable principles of general application.

(c) No Conflicts. The execution, delivery and performance of this Guaranty by
the Guarantor and the consummation by the Guarantor of the transactions contemplated
thereby do not and will not (i) conflict with or violate any provision of its Certificate
of Incorporation or By-laws or (ii) conflict with, constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any agreement, indenture
or instrument to which the Guarantor is a party, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Guarantor is subject (including Federal and State
securities laws and regulations), or by which any material property or asset of the
Guarantor is bound or affected, except in the case of each of clauses (ii) and (iii), such
conflicts, defaults, terminations, amendments, accelerations, cancellations and violations
as could not, individually or in the aggregate, have or result in a Material Adverse
Effect. The business of the Guarantor is not being conducted in violation of any law,
ordinance or regulation of any governmental authority, except for violations which,
individually or in the aggregate, do not have a Material Adverse Effect.

 

6

 

(d) Consents and Approvals. The Guarantor is not required to obtain any
consent, waiver, authorization or order of, or make any filing or registration with, any
court or other federal, state, local, foreign or other governmental authority or other
person in connection with the execution, delivery and performance by the Guarantor of this
Guaranty which has not been obtained.

(e) Purchase Agreement. The representations and warranties of the Company set
forth in the Purchase Agreement as they relate to such Guarantor, each of which is hereby
incorporated herein by reference, are true and correct as of each time such representations
are deemed to be made pursuant to such Purchase Agreement, and the Purchasers shall be
entitled to rely on each of them as if they were fully set forth herein, provided that each
reference in each such representation and warranty to the Company’s knowledge shall, for
the purposes of this Section 3, be deemed to be a reference to such Guarantor’s knowledge.

(f) Foreign Law. Each Guarantor has consulted with appropriate foreign legal
counsel with respect to any of the above representations for which non-U.S. law is
applicable. Such foreign counsel have advised each applicable Guarantor that such counsel
knows of no reason why any of the above representations would not be true and accurate.
Such foreign counsel were provided with copies of this Subsidiary Guarantee and the
Transaction Documents prior to rendering their advice.

4. Covenants.

(a) Each Guarantor covenants and agrees with the Purchasers that, from and after the
date of this Guarantee until the Obligations shall have been indefeasibly paid in full,
such Guarantor shall take, and/or shall refrain from taking, as the case may be, each
commercially reasonable action that is necessary to be taken or not taken, as the case may
be, so that no Event of Default (as defined in the Debentures) is caused by the failure to
take such action or to refrain from taking such action by such Guarantor.

(b) So long as any of the Obligations are outstanding, unless Purchasers holding at
least 80% of the aggregate principal amount of the then outstanding Debentures shall
otherwise consent in writing, each Guarantor will not directly or indirectly on or after
the date of this Guarantee:

i. except for Permitted Indebtedness (as defined in the Debentures), enter
into, create, incur, assume or suffer to exist any indebtedness for borrowed money
of any kind, including but not limited to, a guarantee, on or with respect to any
of its property or assets now owned or hereafter acquired or any interest therein
or any income or profits therefrom;

 

7

 

ii. except for Permitted Liens (as defined in the Debentures), enter into,
create, incur, assume or suffer to exist any liens of any kind, on or with respect
to any of its property or assets now owned or hereafter acquired or any interest
therein or any income or profits therefrom;

iii. amend its certificate of incorporation, bylaws or other charter documents
so as to adversely affect any rights of any Purchaser;

iv. repay, repurchase or offer to repay, repurchase or otherwise acquire more
than a de minimis number of shares of its securities or debt obligations;

v. pay cash dividends on any equity securities of the Company;

vi. enter into any transaction with any Affiliate of the Guarantor which would
be required to be disclosed in any public filing of the Company with the
Commission, unless such transaction is made on an arm’s-length basis and expressly
approved by a majority of the disinterested directors of the Company (even if less
than a quorum otherwise required for board approval); or

vii. enter into any agreement with respect to any of the foregoing.

5. Miscellaneous.

(a) Amendments in Writing. None of the terms or provisions of this Guarantee
may be waived, amended, supplemented or otherwise modified except in writing by the
Purchasers.

(b) Notices. All notices, requests and demands to or upon the Purchasers or
any Guarantor hereunder shall be effected in the manner provided for in the Purchase
Agreement, provided that any such notice, request or demand to or upon any Guarantor shall
be addressed to such Guarantor at its notice address set forth on Schedule 5(b).

(c) No Waiver By Course Of Conduct; Cumulative Remedies. The Purchasers shall
not by any act (except by a written instrument pursuant to Section 5(a)), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any default under the Transaction Documents or Event of Default. No
failure to exercise, nor any delay in exercising, on the part of the Purchasers, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A waiver by the
Purchasers of any right or remedy hereunder on any one occasion shall not be construed
as a bar to any right or remedy which the Purchasers would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any other rights or remedies provided by law.

 

8

 

(d) Enforcement Expenses; Indemnification.

(i) Each Guarantor agrees to pay, or reimburse the Purchasers for, all its
costs and expenses incurred in collecting against such Guarantor under the
guarantee contained in Section 2 or otherwise enforcing or preserving any rights
under this Guarantee and the other Transaction Documents to which such Guarantor is
a party, including, without limitation, the reasonable fees and disbursements of
counsel to the Purchasers.

(ii) Each Guarantor agrees to pay, and to save the Purchasers harmless from,
any and all liabilities with respect to, or resulting from any delay in paying, any
and all stamp, excise, sales or other taxes which may be payable or determined to
be payable in connection with any of the transactions contemplated by this
Guarantee.

(iii) Each Guarantor agrees to pay, and to save the Purchasers harmless from,
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever
with respect to the execution, delivery, enforcement, performance and
administration of this Guarantee to the extent the Company would be required to do
so pursuant to the Purchase Agreement.

(iv) The agreements in this Section shall survive repayment of the Obligations
and all other amounts payable under the Purchase Agreement and the other
Transaction Documents.

(e) Successor and Assigns. This Guarantee shall be binding upon the successors
and assigns of each Guarantor and shall inure to the benefit of the Purchasers and their
respective successors and assigns; provided that no Guarantor may assign, transfer or
delegate any of its rights or obligations under this Guarantee without the prior written
consent of the Purchasers.

 

9

 

(f) Set-Off. Each Guarantor hereby irrevocably authorizes the Purchasers at
any time and from time to time while an Event of Default under any of the Transaction
Documents shall have occurred and be continuing, without notice to such Guarantor or any
other Guarantor, any such notice being expressly waived by each Guarantor, to set-off and
appropriate and apply any and all deposits, credits, indebtedness or claims, in any
currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Purchasers to or for the credit or the account of such Guarantor, or any part
thereof in such amounts as the Purchasers may elect, against and on account of the
obligations and liabilities of such Guarantor to the Purchasers hereunder and claims of
every nature and description of the Purchasers against such Guarantor, in any currency,
whether arising hereunder, under the Purchase Agreement, any other Transaction Document or
otherwise, as the Purchasers may elect, whether or not the Purchasers have made any demand
for payment and although such obligations, liabilities and claims may be contingent or
unmatured. The Purchasers shall notify such Guarantor promptly of any such set-off and the
application made by the Purchasers of the proceeds thereof, provided that the failure to
give such notice shall not affect the validity of such set-off and application. The rights
of the Purchasers under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Purchasers may have.

(g) Counterparts. This Guarantee may be executed by one or more of the parties
to this Guarantee on any number of separate counterparts (including by telecopy), and all
of said counterparts taken together shall be deemed to constitute one and the same
instrument.

(h) Severability. Any provision of this Guarantee 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 in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

(i) Section Headings. The Section headings used in this Guarantee are for
convenience of reference only and are not to affect the construction hereof or be taken
into consideration in the interpretation hereof.

(j) Integration. This Guarantee and the other Transaction Documents represent
the agreement of the Guarantors and the Purchasers with respect to the subject matter
hereof and thereof, and there are no promises, undertakings, representations or warranties
by the Purchasers relative to subject matter hereof and thereof not expressly set forth or
referred to herein or in the other Transaction Documents.

 

10

 

(k) Governing Laws. All questions concerning the construction, validity,
enforcement and interpretation of this Guarantee shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. Each of the Company and the Guarantors agree
that all proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Guarantee (whether brought against a party hereto or its
respective affiliates,
directors, officers, shareholders, partners, members, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New York,
Borough of Manhattan. Each of the Company and the Guarantors hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such proceeding is improper.
Each party hereto hereby irrevocably waives personal service of process and consents to
process being served in any such proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Guarantee and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Guarantee or the transactions contemplated hereby.

(l) Acknowledgements. Each Guarantor hereby acknowledges that:

(i) it has been advised by counsel in the negotiation, execution and delivery
of this Guarantee and the other Transaction Documents to which it is a party;

(ii) the Purchasers have no fiduciary relationship with or duty to any
Guarantor arising out of or in connection with this Guarantee or any of the other
Transaction Documents, and the relationship between the Guarantors, on the one
hand, and the Purchasers, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and

(iii) no joint venture is created hereby or by the other Transaction Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Guarantors and the Purchasers.

(m) Additional Guarantors. The Company shall cause each of its subsidiaries
formed or acquired on or subsequent to the date hereof to become a Guarantor for all
purposes of this Guarantee by executing and delivering an
Assumption Agreement in the form of Annex 1 hereto.

(n) Release of Guarantors. Each Guarantor will be released from all liability
hereunder concurrently with the indefeasible repayment in full of all amounts owed under
the Purchase Agreement, the Debentures and the other Transaction Documents.

 

11

 

(o) Seniority. Except for the TD Bank Debt, the Obligations of each of the
Guarantors hereunder rank senior in priority to any other Indebtedness (as defined in the
Purchase Agreement) of such Guarantor.

(p) WAIVER OF JURY TRIAL. EACH GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS
HEREOF, THE PURCHASERS, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.

*********************

(Signature Pages Follow)

 

12

 

IN
WITNESS WHEREOF, each of the undersigned has caused this Guarantee4
to be duly executed and delivered as of the date first above written.

	 	 	 	 	 
	 	KnowFat Franchise Company, Inc

 	 
	 	By:  	/s/ George Naddaff
 	 
	 	 	Name:  	George Naddaff 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	KnowFat Franchise Company, Inc

 	 
	 	By:  	/s/ George Naddaff
 	 
	 	 	Name:  	George Naddaff 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	KFLG Watertown, Inc.

 	 
	 	By:  	/s/ George Naddaff
 	 
	 	 	Name:  	George Naddaff 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	KnowFat of Landmark Center, Inc

 	 
	 	By:  	/s/ George Naddaff
 	 
	 	 	Name:  	George Naddaff 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	KnowFat of Downtown, Inc.

 	 
	 	By:  	/s/ George Naddaff
 	 
	 	 	Name:  	George Naddaff 	 
	 	 	Title:  	Chief Executive Officer 	 

 

13

 

SCHEDULE 1

GUARANTORS

The following are the names, notice addresses and jurisdiction of organization of each
Guarantor.

	 	 	 	 	 
	 	 	 	 	COMPANY
	 	 	JURISDICTION OF	 	OWNED BY
	 	 	INCORPORATION	 	PERCENTAGE
	 

	 	 	 	 

14

 

Annex 1 to

SUBSIDIARY GUARANTEE

ASSUMPTION
AGREEMENT, dated as of _____ _____,
 _____ 
made by
 __________, a
 _____ 

corporation (the “Additional Guarantor”), in favor of the Purchasers pursuant to the
Purchase Agreement referred to below. All capitalized terms not defined herein shall have the
meaning ascribed to them in such Purchase Agreement.

W I T N E S S E T H :

WHEREAS, UFood Restaurant Group, Inc., a Nevada corporation (the “Company”) and the
Purchasers have entered into a Securities Purchase Agreement, dated
as of [__________ ___, 2009 (as
amended, supplemented or otherwise modified from time to time, the “Purchase Agreement”);

WHEREAS, in connection with the Purchase Agreement, the Subsidiaries of the Company (other
than the Additional Guarantor) have entered into the Subsidiary Guarantee, dated as of
[__________ _____, 2009 (as amended, supplemented or otherwise modified from time to time, the
“Guarantee”) in favor of the Purchasers;

WHEREAS, the Purchase Agreement requires the Additional Guarantor to become a party to the
Guarantee; and

WHEREAS, the Additional Guarantor has agreed to execute and deliver this Assumption Agreement in order to become a party to the Guarantee;

NOW, THEREFORE, IT IS AGREED:

1. Guarantee. By executing and delivering this Assumption Agreement, the Additional
Guarantor, as provided in Section 5(m) of the Guarantee, hereby becomes a party to the Guarantee as
a Guarantor thereunder with the same force and effect as if originally named therein as a Guarantor
and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Guarantor thereunder. The information set forth in Annex 1 hereto is hereby added
to the information set forth in Schedule 1 to the Guarantee. The Additional Guarantor hereby
represents and warrants that each of the representations and warranties contained in Section 3 of
the Guarantee is true and correct on and as the date hereof as to such Additional Guarantor (after
giving effect to this Assumption Agreement) as if made on and as of such date.

2. Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

15

 

IN
WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly executed and delivered as of the date first above written.

	 	 	 	 	 
	 	[ADDITIONAL GUARANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

16

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