Document:

Exhibit
10.4

AGREEMENT
OF PURCHASE AND SALE OF ASSETS

AMONG

ORGANIC
HOLDING COMPANY, INC.

VINAIGRETTES
LLC

AND

DAN
KARZEN

October 27,
2006

Table of Contents

	
  ARTICLE 1

  	
   

  	
  PURCHASE AND
  SALE OF ASSETS

  	
   

  	
  1

  
	
  1.1

  	
   

  	
  SALE AND TRANSFER OF ASSETS

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  CONSIDERATION FROM BUYER AT CLOSING

  	
   

  	
  2

  
	
  1.3

  	
   

  	
  NO ASSUMPTION OF LIABILITIES

  	
   

  	
  2

  
	
  1.4

  	
   

  	
  ALLOCATION OF PURCHASE PRICE

  	
   

  	
  2

  
	
  1.5

  	
   

  	
  TAXES

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  	
  SELLING PARTIES’
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  3

  
	
  2.1

  	
   

  	
  ORGANIZATION, STANDING AND QUALIFICATION OF COMPANY

  	
   

  	
  3

  
	
  2.2

  	
   

  	
  MEMBERSHIP INTERESTS

  	
   

  	
  3

  
	
  2.3

  	
   

  	
  SUBSIDIARIES

  	
   

  	
  3

  
	
  2.4

  	
   

  	
  TAX RETURNS AND AUDITS

  	
   

  	
  3

  
	
  2.5

  	
   

  	
  TITLE TO ASSETS

  	
   

  	
  3

  
	
  2.6

  	
   

  	
  LABOR AND EMPLOYMENT

  	
   

  	
  4

  
	
  2.7

  	
   

  	
  COMPLIANCE WITH LAWS

  	
   

  	
  4

  
	
  2.8

  	
   

  	
  LITIGATION

  	
   

  	
  4

  
	
  2.9

  	
   

  	
  AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION

  	
   

  	
  4

  
	
  2.10

  	
   

  	
  AUTHORITY AND CONSENTS

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
   

  	
  BUYER’S
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  5

  
	
  3.1

  	
   

  	
  ORGANIZATION, STANDING AND QUALIFICATION OF BUYER

  	
   

  	
  5

  
	
  3.2

  	
   

  	
  AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION

  	
   

  	
  5

  
	
  3.3

  	
   

  	
  AUTHORITY AND CONSENTS

  	
   

  	
  5

  
	
  3.4

  	
   

  	
  AS—IS PURCHASE

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
   

  	
  THE CLOSING

  	
   

  	
  6

  
	
  4.1

  	
   

  	
  TIME AND PLACE

  	
   

  	
  6

  
	
  4.2

  	
   

  	
  SELLING PARTIES’ OBLIGATIONS AT CLOSING

  	
   

  	
  6

  
	
  4.3

  	
   

  	
  BUYER’S OBLIGATIONS AT CLOSING

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  	
  SELLING PARTIES’
  OBLIGATIONS AFTER CLOSING

  	
   

  	
  8

  
	
  5.1

  	
   

  	
  INDEMNIFICATION

  	
   

  	
  8

  
	
  5.2

  	
   

  	
  SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS

  	
   

  	
  9

  
	
  5.3

  	
   

  	
  NON-COMPETITION

  	
   

  	
  9

  

 

 1
 

 

	
  5.4

  	
   

  	
  CONFIDENTIAL INFORMATION

  	
   

  	
  9

  
	
  5.5

  	
   

  	
  POST CLOSING ESCROW.

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  11

  
	
  6.1

  	
   

  	
  RETENTION OF AND ACCESS TO RECORDS

  	
   

  	
  11

  
	
  6.2

  	
   

  	
  PUBLICITY

  	
   

  	
  12

  
	
  6.3

  	
   

  	
  FINDER’S OR BROKER’S FEES

  	
   

  	
  12

  
	
  6.4

  	
   

  	
  EXPENSES

  	
   

  	
  12

  
	
  6.5

  	
   

  	
  INTERPRETATION AND EFFECT OF HEADINGS

  	
   

  	
  12

  
	
  6.6

  	
   

  	
  ENTIRE AGREEMENT; MODIFICATION; WAIVER

  	
   

  	
  12

  
	
  6.7

  	
   

  	
  COUNTERPARTS

  	
   

  	
  12

  
	
  6.8

  	
   

  	
  PARTIES IN INTEREST

  	
   

  	
  13

  
	
  6.9

  	
   

  	
  ASSIGNMENT

  	
   

  	
  13

  
	
  6.10

  	
   

  	
  ARBITRATION

  	
   

  	
  13

  
	
  6.11

  	
   

  	
  RECOVERY OF LITIGATION COSTS

  	
   

  	
  13

  
	
  6.12

  	
   

  	
  NOTICES

  	
   

  	
  14

  
	
  6.13

  	
   

  	
  GOVERNING LAW

  	
   

  	
  14

  
	
  6.14

  	
   

  	
  SEVERABILITY

  	
   

  	
  15

  

 

 2

AGREEMENT OF PURCHASE AND SALE OF ASSETS

THIS
AGREEMENT OF PURCHASE AND SALE OF ASSETS is made as of October    ,
2007, by and among Vinaigrettes LLC, a California limited liability company
doing business as “Vinaigrettes Catering Company” (“Company”),
Dan Karzen (“Member”), and Organic Holding
Company, Inc., a Delaware corporation (“Buyer”).  Company and Member are collectively referred
to in this agreement as “Selling Parties.”  This agreement is made under the following
circumstances:

A.            Buyer desires to purchase from
Company and Company desires to sell to Buyer, on the terms and subject to the
conditions of this agreement, certain business and properties of Company; and

B.            Selling Parties desire that this
transaction be consummated on the terms and subject to the conditions of this
agreement.

NOW,
THEREFORE, in consideration of the mutual covenants, agreements,
representations, and warranties contained in this agreement, the parties agree
as follows:

ARTICLE 1

PURCHASE AND SALE OF ASSETS

1.1   SALE AND TRANSFER OF ASSETS.

Subject
to the terms and conditions set forth in this agreement, Company shall sell,
convey, transfer, assign, and deliver to Buyer, and Buyer shall purchase from
Company, all of the assets, properties, and business of Company of every kind,
character, and description, whether tangible, intangible, personal, or mixed,
and wherever located, all of which are collectively referred to as the assets,
other than property and rights specifically excluded in Schedule 1
attached to this agreement. The assets acquired by Buyer pursuant to this
agreement (the “Acquired Assets”) shall include,
without limitation, the following:

1.1(a)      All
property and other rights listed in Schedule 1 attached to this
agreement; and

1.1(b)      All
other supplies, materials, work-in-progress, finished goods, equipment,
machinery, furniture, fixtures, deposits, rights and claims to refunds and
adjustments of any kind (except for taxes, contracts or liabilities with
respect to which Buyer is not assuming), and

intellectual property rights, including, without
limitation, copyrights, service marks, trade secrets, recipes, patent rights,
and royalty rights.

1.2   CONSIDERATION FROM BUYER AT CLOSING.

The
total purchase price of the Acquired Assets shall be $1,000,000.  As payment of such purchase price, Buyer
shall deliver to Seller the following:

1.2(a)      Cash
to Seller.  At the Closing (as
hereinafter defined), by wire transfer to an account designated by Seller or by
bank cashier’s check, the amount of U.S. $950,000.

1.2(b)      Cash
to Escrow Agent.  At the Closing, by
wire transfer to an account designated by Escrow Agent (as hereinafter defined)
or by bank cashier’s check payable to Escrow Agent, the amount of U.S.
$50,000.00 (the “Escrow Deposit”).

1.3   NO ASSUMPTION OF LIABILITIES.

Buyer
assumes no contracts, obligations, debts or liabilities under this agreement,
other than those listed on Schedule 1.3, if any.  It is expressly understood and agreed that
Buyer shall not be liable for any of the contracts, obligations, debts or
liabilities of Company of any kind and nature, other than those listed on Schedule
1.3, if any.

1.4   ALLOCATION OF PURCHASE PRICE.

The
purchase price of the Acquired Assets shall be allocated as follows:

	
  1.

  	
   

  	
  Inventory

  	
   

  	
  $

  	
  12,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Furniture and Equipment

  	
   

  	
  $

  	
  15,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Motor Vehicles

  	
   

  	
  $

  	
  6,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Covenant not to Compete

  	
   

  	
  $

  	
  150,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Customer Lists

  	
   

  	
  $

  	
  350,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Goodwill

  	
   

  	
  $

  	
  467,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  Total Purchase Price

  	
   

  	
  $

  	
  1,000,000

  	
   

  

 

Each
of the parties shall report this transaction for federal and state tax purposes
in accordance with this allocation of the purchase price.

1.5   TAXES.

Company
shall pay all sales and use taxes arising out of the transfer of the Acquired
Assets and shall pay its portion, prorated as of the Closing Date, of state and
local real and

 2
 

personal property taxes, and all other taxes of
Company’s business.  Buyer shall not be
responsible for any business, sales, occupation, withholding, or similar tax,
or any taxes of any kind related to any period before the Closing Date.

ARTICLE 2

SELLING PARTIES’ REPRESENTATIONS AND WARRANTIES

Selling
Parties, jointly and severally, represent and warrant that:

2.1   ORGANIZATION, STANDING AND
QUALIFICATION OF COMPANY.

Company
is a limited liability company duly organized, validly existing, and in good
standing under the laws of California and has all necessary powers to own its
properties and to operate its business as now owned and operated by it; and
neither the ownership of its properties nor the nature of its business requires
Company to be qualified in any jurisdiction other than the state of its
organization where the failure to qualify would have a material adverse effect
on its business.

2.2   MEMBERSHIP INTERESTS.

Member
is the sole manager of the Company and holds a majority of the membership
interests of the Company free and clear of all liens, encumbrances, security
agreements, equities, options, claims, charges, and restrictions.  There are no outstanding subscriptions,
options, rights, warrants, convertible securities, or other agreements or
commitments obligating the Company to issue or to transfer any additional
membership interests, or any other interests in the Company.

2.3   SUBSIDIARIES.

Company
does not own, directly or indirectly, any interest or investment (whether
equity or debt) in any corporation, partnership, limited liability company,
business, trust, or other entity.

2.4   TAX RETURNS AND AUDITS.

Except
as set forth on Schedule 2, within the times and in the manner
prescribed by law, Company has filed all federal, state, and local tax returns
required by law and has paid all taxes, assessments, and penalties due and
payable, including without limitation all sales taxes.  There are no present disputes as to taxes of
any nature payable by Company.

2.5   TITLE TO ASSETS.

Company
has good and marketable title to the Acquired Assets, whether real, personal,
mixed, tangible, or intangible, which constitute all the assets and interests
in assets that are used in the business of Company.  Except as set forth on Schedule 2, all
these assets are free and clear

 3
 

of mortgages, liens, pledges, charges, encumbrances,
equities, claims, easements, rights of way, covenants, conditions, or
restrictions, except for (i) the lien of current taxes not yet due and payable,
and (ii) possible minor matters that, in the aggregate, are not substantial in
amount and do not materially detract from or interfere with the present or
intended use of any of these assets, nor materially impair business
operations.  To the best knowledge of
Selling Parties, Company does not occupy any real property in violation of any
law, regulation, or decree.

2.6           LABOR AND EMPLOYMENT

There
is no pending nor, to Selling Parties’ knowledge, threatened labor dispute,
strike, or work stoppage affecting Company’s business.  Seller is not a party to any collective
bargaining agreement.

2.7   COMPLIANCE WITH LAWS.

Company has
complied with and is not in violation of applicable federal, state, or local
statutes, laws, and regulations (including, without limitation, any applicable
employment, immigration, building, zoning, environmental, or other law,
ordinance, or regulation) affecting or relating to its properties, employees,
or the operation of its business. 
Company has all licenses and permits required to operate its business,
and no governmental or third party approval is required to assign and transfer
such licenses and permits, if any, to Buyer pursuant to this agreement.

2.8   LITIGATION.

There
is no suit, action, arbitration, or legal, administrative, or other proceeding,
or governmental investigation, pending or threatened, to the best knowledge of
Selling Parties, against or affecting Company or its business, assets, or
financial condition.  Company is not in
default with respect to any order, writ, injunction, or decree of any federal,
state, local, or foreign court, department, agency, or instrumentality.  Except as set forth in Schedule 2,
Company is not presently engaged in any legal action to recover monies due to
it or damages sustained by it.

2.9   AGREEMENT WILL NOT CAUSE BREACH OR
VIOLATION.

The
consummation of the transactions contemplated by this agreement will not result
in or constitute any of the following: 
(i) a default or an event that, with notice or lapse of time or both,
would be a default, breach, or violation of the articles of organization or
operating agreement of Company or any lease, license, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed of trust, or
other agreement, instrument, or arrangement

 4
 

to which Member or Company is a party or by which
either of them or the property of either of them is bound; or (ii) the creation
or imposition of any lien, charge, or encumbrance on any of the properties of
Company.

2.10AUTHORITY AND CONSENTS.

Selling
Parties have the right, power, legal capacity, and authority to enter into, and
perform their respective obligations under, this agreement, and no approvals or
consents of any persons other than Company’s members are necessary in
connection with it.  The execution and
delivery of this agreement by Company has been duly authorized by all necessary
action.

ARTICLE 3

BUYER’S REPRESENTATIONS AND WARRANTIES

Buyer represents
and warrants that:

3.1   ORGANIZATION, STANDING AND
QUALIFICATION OF BUYER.

Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware and has all necessary
powers to own its properties and to operate its business as now owned and
operated by it.  Buyer is duly qualified
to do intrastate business and is in good standing in California and in each
other jurisdiction in which the nature of Buyer’s business or of its properties
makes such qualification necessary.

3.2   AGREEMENT WILL NOT CAUSE BREACH OR
VIOLATION.

The
consummation of the transactions contemplated by this agreement will not result
in or constitute any of the following: 
(i) a default or an event that, with notice or lapse of time or both,
would be a default, breach, or violation of the articles of incorporation or
bylaws of Buyer or any lease, license, promissory note, conditional sales
contract, commitment, indenture, mortgage, deed of trust, or other agreement,
instrument, or arrangement to which Buyer is a party or by it or its property
is bound; or (ii) the creation or imposition of any lien, charge, or
encumbrance on any of the properties of Buyer.

3.3   AUTHORITY AND CONSENTS.

Buyer
has the right, power, legal capacity, and authority to enter into, and perform
its obligations under, this agreement, and no approvals or consents of any
persons other than Buyer are necessary in connection with it.  The execution and delivery of this agreement
by Buyer has been duly authorized by all necessary action.

 5
 

3.4   AS—IS PURCHASE

Buyer
acknowledges that the Acquired Assets which constitute tangible personal
property (the “Tangible Personal Property”) shall
be purchased on an “As-Is,” “Where-Is” basis and no implied representations or
warranties are intended or made in connection with such purchase.  Buyer acknowledges that it has had a
reasonable opportunity to make and has made an independent investigation of all
aspects of the Tangible Personal Property that it deemed appropriate.  Buyer and not Company assumes any and all
costs to repair and maintain the Tangible Personal Property.

ARTICLE 4

THE CLOSING

4.1           TIME AND PLACE.

The
transfer of the Acquired Assets by Company to Buyer (the “Closing”)
shall occur on the date of this Agreement (the “Closing Date”)
at 126 South Glendale Boulevard, Los Angeles, California, or such other
location which the parties agree upon.

4.2           SELLING PARTIES’ OBLIGATIONS
AT CLOSING.

At
the Closing, Selling Parties shall deliver or cause to be delivered to Buyer:

4.2(a)      The
Lease of the property commonly known as 126 South Glendale Boulevard, Los
Angeles, California substantially in the form of Exhibit A attached to
this agreement (the “Lease”).

4.2(b)      A
Bill of Sale with respect to the Acquired Assets.

4.2(c)      Instruments
of assignment and transfer of all other Acquired Assets wherever situated.

4.2(d)      An
employment Offer Letter from Buyer in the form of Exhibit B attached to
this agreement, signed by Dan Karzen (the “Offer Letter”).

4.2(e)      Certificates
of title with respect to all of Company’s motor vehicles being acquired
hereunder, endorsed for transfer to Buyer and accompanied by all documents and
fees required to transfer record title to such vehicles to Buyer.

Simultaneously
with the consummation of the transfer, Company, through its officers, agents,
and employees, will put Buyer into full possession and enjoyment of all
properties and assets to be conveyed and transferred by this agreement.

Selling
Parties, at any time on or after the Closing Date, shall execute, acknowledge,
and

 6
 

deliver any further deeds, assignments, conveyances,
and other assurances, documents, and instruments of transfer reasonably
requested by Buyer, and will take any other action consistent with the terms of
this agreement that may reasonably be requested by Buyer for the purpose of
assigning, transferring, granting, conveying, and confirming to Buyer, or
reducing to possession, any or all property to be conveyed and transferred by
this agreement.  If requested by Buyer,
Company shall prosecute or otherwise enforce in its own name for the benefit of
Buyer any claims, rights, or benefits that are transferred to Buyer by this
agreement and that require prosecution or enforcement in Company’s name.  Any prosecution or enforcement of claims,
rights, or benefits under this paragraph shall be solely at Buyer’s expense,
unless the prosecution or enforcement is made necessary by a breach of this
agreement by the Selling Parties, or any of them.

As soon as reasonably practicable following the
Closing, Seller shall (i) take all action required to change Company’s name to                                              ,
(ii) take all action required to terminate its Fictitious Business Name
Statement for “Vinaigrettes Catering Company,” and (iii) not use or employ in
any manner directly or indirectly the word “Vinaigrettes” alone or in
combination with any other words.

Within
one (1) week following the Closing, Seller shall pay in full all of its
obligations (whether or not then due and payable) under its LLC gross receipts
tax payment and city tax payment agreements.

4.3           BUYER’S OBLIGATIONS AT CLOSING.

At the Closing, Buyer shall deliver the following
instruments and documents:

4.3(a)      $950,000,
by wire transfer to an account designated by Seller or by bank cashier’s check.

4.3(b)      $50,000,
by wire transfer to an account designated by Escrow Agent or by bank cashier’s
check.

4.3(c)      The
Offer Letter, signed on behalf of Buyer.

4.3(d)      The
Lease.

4.3(e)      Secretary’s
Certificate and copy of a Resolution of the Board of Directors approving this
agreement.

 7
 

ARTICLE 5

SELLING PARTIES’ OBLIGATIONS AFTER CLOSING

5.1   INDEMNIFICATION.

5.1(a)      Selling
Parties shall, jointly and severally, indemnify, defend, and hold Buyer
harmless against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries, and deficiencies,
including without limitation, interest, penalties, and reasonable attorneys’
fees, incurred or suffered by Buyer that arise from, result from, or relate to
any (a) breach of, or failure by Selling Parties to perform, any of their
representations, warranties, covenants, or agreements in this agreement or in
any schedule, certificate, exhibit, or other instrument furnished or to be
furnished by Selling Parties under this agreement (an “Agreement
Claim”), or (b) any contract, debt, liability, or obligation of
Company, including without limitation any contract, debt, liability or
obligation arising from, resulting from or relating to the ownership and
operation of the Acquired Assets before the Closing (a “Liability
Claim”); provided, however, that (i) Selling Parties’ liability
under this paragraph shall not exceed $300,000 except in the case of a breach
or failure to perform under Sections 2.2 (Membership Interests), 2.4 (Tax
Returns and Audits), 5.3 (Non-Competition), or 6.2 (Finder’s or Broker’s Fees)
or fraud, and (ii) Selling Parties shall not be liable for the first $15,000 of
liability for any Agreement Claim.

5.1(b)      Buyer
shall indemnify, defend, and hold Selling Parties harmless against and in
respect of any and all claims, demands, losses, costs, expenses, obligations,
liabilities, damages, recoveries, and deficiencies, including without
limitation, interest, penalties, and reasonable attorneys’ fees, incurred or
suffered by Selling Parties that arise from, result from, or relate to (a) any
breach of, or failure by Buyer to perform, any of its representations,
warranties, covenants, or agreements in this agreement or in any schedule,
certificate, exhibit, or other instrument furnished or to be furnished by Buyer
under this Agreement (an “Agreement Claim”),
or (b) any contract, debt, liability, or obligation of Company assumed by Buyer
under this Agreement and any contract, debt, liability or obligation arising
from, resulting from or relating to the ownership and operation of the Acquired
Assets after the Closing.

5.1(c)      Each
party (an “Indemnified Party”) shall notify
the other party or parties (the “Indemnifying Party”)
of the existence of any claim, demand, or other matter to which the
Indemnifying Party’s indemnification obligations would apply, and shall give
the

 8
 

Indemnifying Party a reasonable opportunity to defend
the same at its own expense and with counsel of its own selection; provided
that the Indemnified Party shall at all times also have the right to fully
participate in the defense at its own expense. 
If the Indemnifying Party shall, within a reasonable time after this
notice, fail to defend, the Indemnified Party shall have the right, but not the
obligation, to undertake the defense of, and to compromise or settle
(exercising reasonable business judgment), the claim or other matter on behalf,
for the account, and at the risk, of the Indemnifying Party.  If the claim is one that cannot by its nature
be defended solely by the Indemnifying Party (including, without limitation,
any federal or state tax proceeding), then the Indemnified Party shall make
available and cause to be made available all information and assistance that
Selling Parties may reasonably request.

5.2   SURVIVAL OF REPRESENTATIONS AND
OBLIGATIONS.

All
representations, warranties, covenants, and agreements of the parties contained
in this agreement, or in any instrument, certificate, opinion, or other writing
provided for in it, shall survive the Closing until one (1) year after the
Closing Date; provided that (a) the representations and warranties in Sections
2.2 (Membership Interests) and 2.4 (Tax Returns and Audits), shall survive the
Closing until the expiration of the applicable statute of limitations, (b) the
obligations in Section 5.3 (Non-Competition) shall survive the Closing for the
period specified in Section 5.3, and (c) the obligations in Section 5.4
(Confidential Information) shall survive indefinitely.

5.3   NON-COMPETITION.

Neither
Company nor Dan Karzen shall at any time during the two (2) year period
immediately after the Closing directly or indirectly engage in, or have any
interest in any person, firm, corporation, or business (whether as an employee,
officer, director, agent, security holder, creditor, consultant, or otherwise)
that engages in any activity within the United States, which activity is the
same as, similar to, or competitive with any activity that has been carried on
or is now being carried on by Company in the United States, so long as the
Buyer or any successor shall engage in that activity in the United States.

5.4   CONFIDENTIAL
INFORMATION.

The
Selling Parties shall not divulge, communicate, use to the detriment of Buyer or
for the benefit of any other person or persons, or misuse in any way, any
confidential information or trade secret of Company, including without
limitation personnel information, secret processes, know-how, customer lists,
recipes, formulas, or other technical data. 
Any information or data

 9
 

Selling Parties have acquired on any of these matters
or items was received in confidence and as fiduciaries of Company.

5.5           POST CLOSING ESCROW.

At the Closing,
Buyer shall deposit the Escrow Deposit into escrow with Rogin, Nassau, Caplan,
Lassman & Hirtle, LLC (the “Escrow Agent”)
as security for Selling Parties’ indemnification obligations under Section
5.1(a) of this Agreement.  The following
terms and conditions shall govern the Escrow Deposit.

5.5(a)      The
Escrow Agent shall invest the Escrow Deposit in an interest bearing account
(with interest, the “Escrow Account”)
to be disbursed as provided for herein.

5.5(b)      Buyer
may at any time before February 1, 2007 (the “Cut-Off Date”)
give written notice to Selling Parties and the Escrow Agent that Buyer has (i)
a Liability Claim against Selling Parties or (ii) an Agreement Claim against
Selling Parties which individually or together with other Agreement Claims
exceeds $15,000  Any such notice shall
contain a description of each claim and the amount thereof, and be signed by an
officer of Buyer.

5.5(c)      If
the Escrow Agent and Buyer do not receive from Selling Parties prior to the
thirtieth (30th) day following the date of receipt of such notice from Buyer, a
written notice from Selling Parties disputing the claim, the Escrow Agent shall
pay to Buyer an amount equal to the claim asserted in Buyer’s notice of claim.

5.5(d)      If
Selling Parties deliver a notice of dispute to the Escrow Agent and Buyer
within the thirty (30) day period, then the Escrow Agent shall refrain from
disbursing from the Escrow Account the amount disputed in the notice from
Selling Parties unless pursuant to or in accordance with: (i) a written
authorization signed by Selling Parties and Buyer, which authorization shall
set forth the distribution from the Escrow Account, or (ii) a certified copy of
a final judgment of a court of competent jurisdiction following an arbitration
pursuant to Section 6.10 (Arbitration); provided, however, that a certified copy
of a final judgment shall be effective only if no right of appeal exists, the
time for appeal has expired and no appeal has been perfected, or all appeals
have been exhausted.

5.5(e)      On
the Cut-Off Date, any and all funds in the Escrow Account, including any
interest earned, in excess of that which the Escrow Agent is or may be required
to pay by reason of a claim notice delivered by Buyer in accordance with this
section and which have not

 10

theretofore been paid, shall be distributed to Seller
without the requirement of any further act or consent by either Buyer or
Seller.

5.5(f)       In
the event of a dispute or disagreement under this Section, the Escrow Agent
shall have the right to retain the Escrow Account as provided in Section 5.5(d)
or commence an action for interpleader and in connection therewith, to deposit
the Escrow Account with the court having jurisdiction over the interpleader
action and thereafter, the Escrow Agent shall be discharged from any further
liability under this Agreement. 
Following the commencement of the interpleader action, the dispute or
disagreement shall be referred to arbitration pursuant to section 6.10
(Arbitration).

5.5(g)      The
Escrow Agent may rely upon, and shall be protected in acting or refraining from
acting upon, any written notice, instruction or request furnished to it under
this Agreement, believed by it to be genuine, and believed by it to have been
signed or presented by the proper party or parties.  The Escrow Agent shall not be liable for any
action taken by it in good faith, and believed by it to be authorized or within
the rights or powers conferred upon it by this Agreement.  Accordingly, the Escrow Agent shall only be
responsible for losses caused by its gross negligence or willful
misconduct.  The Escrow Agent shall have
no liability whatsoever arising out of its investment of the escrowed
funds.  The Escrow Agent shall be
entitled to recover from the Escrow Account its reasonable legal fees and disbursements
in any action or proceeding to determine the parties’ rights to the Escrow
Account.

5.5(h)      Buyer
and Seller waive any conflict which may be created by the Escrow Agent being
the attorney for a party to this agreement, including but not limited to, the
Escrow Agent’s continued representation of such party in any matter related to
the Escrow Account including any dispute, arbitration or litigation which may
arise hereunder or under any document delivered in connection herewith, and
expressly consent to such continued representation by the Escrow Agent.

ARTICLE 6

MISCELLANEOUS

6.1      RETENTION OF AND ACCESS TO RECORDS

 

After
the Closing Date, Company shall retain all of its books and records (including
any financial information stored electronically) for not less than two (2)
years after the Closing Date.  Company
also shall provide Buyer and its employees, agents, accountants and advisors

 11
 

reasonable access to such books and records, during
normal business hours and on at least three days’ prior written notice, to
enable them to prepare audited financial statements.

6.2      PUBLICITY.

 

All
notices to third parties and all other publicity concerning the transactions
contemplated by this agreement shall be jointly planned and coordinated by and
between Buyer and Selling Parties.  None
of the parties shall act unilaterally in this regard without the prior written
approval of the others; this approval shall not be unreasonably withheld.

6.3      FINDER’S OR BROKER’S FEES.

 

Each
of the parties represents and warrants that it has dealt with no broker or
finder in connection with any of the transactions contemplated by this
agreement, and, insofar as it knows, no broker or other person is entitled to
any commission or finder’s fee in connection with any of these transactions.

6.4      EXPENSES.

 

Each
of the parties shall pay all costs and expenses incurred or to be incurred by
it in negotiating and preparing this agreement and in closing and carrying out
the transactions contemplated by this agreement.

6.5      INTERPRETATION AND EFFECT OF HEADINGS.

 

This
agreement shall be construed as if drafted jointly by all the parties.  The subject headings of the paragraphs and
subparagraphs of this agreement are included for purposes of convenience only,
and shall not affect the construction or interpretation of any of its
provisions.

6.6      ENTIRE AGREEMENT; MODIFICATION; WAIVER.

 

This
agreement constitutes the entire agreement among the parties pertaining to the
subject matter contained in it and supersedes all prior and contemporaneous
agreements, representations, and understandings of the parties with respect to
such subject matter.  No supplement,
modification, or amendment of this agreement shall be binding unless executed
in writing by all the parties.  No waiver
of any of the provisions of this agreement shall be deemed, or shall
constitute, a waiver of any other provision, whether or not similar, nor shall
any waiver constitute a continuing waiver. 
No waiver shall be binding unless executed in writing by the party
making the waiver.

6.7      COUNTERPARTS.

 

This
agreement may be executed in multiple counterparts, each of which constitutes
an

 12
 

original, and all of which, collectively, constitute
only one agreement.  The signatures of
all of the parties need not appear on the same counterpart, and delivery of an
executed counterpart signature page by U.S. mail, overnight courier, facsimile,
or email is as effective as executing and delivering this agreement in the
presence of the other parties to this agreement.  This agreement is effective upon delivery of
one executed counterpart from each party to Edward J. Willig, Esq.

6.8      PARTIES IN INTEREST.

 

Nothing
in this agreement, whether express or implied, is intended to confer any rights
or remedies under or by any reason of this agreement on any persons other than
the parties to it and their respective successors and assigns, nor is anything
in this agreement intended to relieve or discharge the obligation or liability
of any third persons to any party to this agreement, nor shall any provision
give any third persons any right of subrogation or action over against any
party to this agreement.

6.9      ASSIGNMENT.

 

This
agreement shall be binding on, and shall inure to the benefit of, the parties
to it and their respective heirs, legal representatives, successors, and
assigns, but shall not be assignable by any party without the prior written
consent of the other parties.

6.10    ARBITRATION.

 

Any
dispute, claim or controversy arising out of or relating to this agreement or
the breach, termination, enforcement, interpretation or validity thereof,
including the determination of the scope or applicability of this agreement to
arbitrate, shall be determined by arbitration in Los Angeles, California.  The arbitration shall be administered by JAMS
pursuant to its Comprehensive Arbitration Rules and Procedures.  Judgment on the arbitration award may be
entered in any court having jurisdiction. 
This clause shall not preclude the parties from seeking provisional
remedies in aid of arbitration from a court of appropriate jurisdiction.

6.11    RECOVERY OF LITIGATION COSTS.

 

If
any legal action, arbitration or other proceeding is brought for the
enforcement of this agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this
agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable attorneys’ fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be
entitled.

 13
 

6.12    NOTICES.

 

All
notices, requests, demands, and other communications under this agreement shall
be in writing and shall be deemed to have been duly given on the date of
service or mailing if served personally on the party to whom notice is to be
given, or if mailed to the party to whom notice is to be given, by first class
mail, registered or certified, postage prepaid, and properly addressed as
follows:

	
  To Selling Parties at:

  	
   

  	
  Mr. Dan Karzen

  Vinaigrettes LLC

  11740 Wilshire Boulevard # 1605

  Los Angeles, CA 90025

  
	
   

  	
   

  	
   

  
	
  With copies to:

  	
   

  	
  Martin H. Blank, Jr., Esq.

  1990 S. Bundy Drive, Suite 540

  Los Angeles, CA 90025-5244

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Rogin Nassau Caplan Lassman &

  Hirtle LLC

  CityPlace I, 22nd Floor

  185 Asylum Street

  Hartford, CT 06103-3460

  Attn: Iris J. Brown

  
	
   

  	
   

  	
   

  
	
  To Buyer at:

  	
   

  	
  Mr. Jason Brown

  Chief Executive Officer

  Organic Holding Company, Inc.

  601 Union Street, Suite 3700

  Seattle, WA 98101

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Edward J. Willig, Esq.

  Carr, McClellan, Ingersoll,

  Thompson & Horn

  Professional Law Corporation

  216 Park Road

  Burlingame, CA 94011-4206

  

 

Any party may change its address for purposes of this
paragraph by giving the other parties written notice of the new address in the
manner set forth above.

6.13    GOVERNING LAW.

 

This
agreement shall be construed in accordance with, and governed by, the laws of
the State of California.

 14
 

6.14    SEVERABILITY

 

If
any provision of this agreement is held invalid or unenforceable by any court
of final jurisdiction, it is the intent of the parties that all other
provisions of this agreement be construed to remain fully valid, enforceable,
and binding on the parties.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

 15
 

IN
WITNESS WHEREOF, the parties to this agreement have duly executed it as of the
day and year first above written.

	
  ORGANIC HOLDING COMPANY,
  INC.

  a Delaware corporation 

  	
   

  	
  VINAIGRETTES LLC

  a California limited liability company

  
	
   

  	
   

  	
  doing business as

  
	
  By:

  	
    /s/ Jason
  Brown

  	
   

  	
  “VINAIGRETTES CATERING CO.” 

  
	
   

  	
    Jason
  Brown

  	
   

  	
   

  
	
   

  	
    Chief
  Executive Officer

  	
   

  	
  By:

  	
    /s/ Dan Karzen

  	
   

  
	
   

  	
   

  	
   

  	
    Dan Karzen, Manager 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
    /s/ Dan Karzen

  	
   

  
	
   

  	
   

  	
   

  	
    DAN KARZEN, Individually

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AGREED TO FOR PURPOSES OF SECTION 5.5

  ONLY: 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ROGIN, NASSAU, CAPLAN, LASSMAN &

  HIRTLE, LLC 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Iris Brown

  Escrow Agent

  
							

 

 16
 

LIST OF EXHIBITS AND SCHEDULES

	
  Schedule

  	
   

  	
  Description

  
	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Acquired Assets

  
	
   

  	
   

  	
   

  
	
  1.3

  	
   

  	
  Assumed Contracts and Liabilities

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Disclosure Schedule

  

 

	
  Exhibit

  	
   

  	
  Section

  	
   

  	
  Description

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  4.2(a)

  	
   

  	
  Lease

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  4.2(d)

  	
   

  	
  Offer Letter

  

 

 17

SCHEDULE 1

ASSETS OF VINAIGRETTES LLC

Acquired
Assets:

Inventory

Furniture

Fixtures

Equipment

Motor vehicles, unless excluded

Leasehold improvements

Telephone numbers

Web sites

URL’s

Trademarks

Trade names

Customer lists

Goodwill

Licenses and Permits

Excluded
Assets:

Cash

Accounts receivable

Walk-in refrigerator and freezer

Built-in HVAC and wall air conditioner

Wok table, refrigerator and related equipment and utensils owned by Asean Chef,
S. Lee.

Hood and fire retardant system

Leased Toyota 4-Runner

Any interest in real estate.

SCHEDULE 1.3

ASSUMED CONTRACTS &
LIABILITIES

Two
leased photocopiers

Two Vehicle (Van) loans

Linen Contract

SCHEDULE 2

DISCLOSURE SCHEDULE

Set
forth below are exceptions to the representations and warranties of the Selling
Parties made in Article 2 of the Agreement of Purchase and Sale of Assets dated
as of October      , 2007, by and among Vinaigrettes
LLC, a California limited liability company doing business as “Vinaigrettes
Catering Company” (“Company”), Dan
Karzen (“Member”), and Organic Holding Company,
Inc., a Delaware corporation (“Buyer”).  Company and Member are collectively referred
to in the agreement and in this Disclosure Schedule as “Selling
Parties.”  All capitalized
terms used in this Disclosure Schedule and not defined in this Disclosure
Schedule have the same meanings given to such terms in the agreement.

1.
Dispute with worker’s compensation insurer;

2. The Company has a collection matter against a former employee;

3. The Company has an LLC gross receipts tax payment agreement;

4. Car lease;

5. One year linen company contract;

6. Two leased photocopiers, one year left before owned;

7. The Company has a city tax payment agreement;

8. Insurance policies;

9. Loans on the two vans;

10. Mortgage on the building.

 2
 

EXHIBIT A

LEASE

 3

REAL ESTATE LEASE

(SINGLE TENANT FACILITY)

ARTICLE ONE: BASIC TERMS

This Article One
contains the Basic Terms of this Lease between the Landlord and Tenant named
below. Other Articles and Sections of the Lease referred to in this Article
One explain and define the Basic Terms and are to be read in conjunction
with the Basic Terms.

Section 1.01. Date of Lease: October 27, 2006

	
  Section 1.02. Landlord:

  	
  Vinaigrettes,
  LLC

  
	
   

  	
   

  
	
  Address of
  Landlord:

  	
  c/o Iris J. Brown

  
	
   

  	
  Rogin, Nassau,
  Caplan, Lassman & Hirtle, LLC

  
	
   

  	
  CityPlace l – 22nd Floor

  
	
   

  	
  185 Asylum
  Street

  
	
   

  	
  Hartford, CT
  06103-3460

  
	
   

  	
   

  
	
  Section 1.03. Tenant:

  	
  Organic
  Holding Company, Inc.

  
	
   

  	
   

  
	
  Address of
  Tenant:

  	
  601 Union
  Street, Suite 3700

  
	
   

  	
  Seattle, WA
  98101

  
	
   

  	
   

  
	
  Section 1.04. Property:

  	
  126 South
  Glendale Boulevard, Los Angeles, CA 90026

  

 

Section 1.05. Lease Term: one
(1) year beginning on October 28, 2006 and ending on October 30, 2007.

Section 1.06. Permitted Uses: (See
Article Five.) Operation of a catering and food service business.

Section 1.07. Tenant’s Guarantor: Not
Applicable.

Section 1.08. Broker: Not
Applicable.

Section 1.09. Security Deposit: (See
Section 3.03) Nineteen Thousand Eight Hundred Dollars ($19,800).

Section 1.10. Rent and Other Charges
Payable by Tenant:

(a)           BASE
RENT:

(i)            No Base Rent for the first two months of the Lease Term.

(ii)           Thereafter, $6,600.00 per month through the end of the
Lease Term. In the event that Tenant exercises the option referred to below to
extend the Lease then the Base Rent shall increase annually commencing on the
first day of the Extended Term (as hereinafter defined) by an amount equal to
six percent (6%) of the prior year’s Base Rent.

(b)           OTHER
PERIODIC PAYMENTS: (i) Real Property Taxes (See Section 4.02);
(ii) Utilities (See Section 4.03); (iii) Insurance Premiums (See Section
4.04); (iv) Impounds for Insurance Premiums and Property Taxes (See Section
4.07): and (v) Maintenance, Repairs and Alterations (See Article Six).

 1
 

Section 1.11. Landlord’s Share of Profit on Assignment or Sublease: (See
Section 9.04) fifty percent (50%) of the Profit (the “Landlord’s Share”).

ARTICLE TWO: LEASE TERM

Section 2.01. Lease of Property For Lease Term. Landlord
leases the Property to Tenant and Tenant leases the Property from Landlord for
the Lease Term. The Lease Term is for the period stated in Section 1.05
above and shall begin and end on the dates specified in Section 1.05
above, unless the beginning or end of the Lease Term is changed under any
provision of this Lease. The “Commencement Date” shall be the date specified in
Section 1.05 above for the beginning of the Lease Term, unless advanced
or delayed under any provision of this Lease.

Section 2.02. [Intentionally
Deleted]

Section 2.03. Early Occupancy. If Tenant occupies the
Property prior to the Commencement Date, Tenant’s occupancy of the Property
shall be subject to all of the provisions of this Lease. Early occupancy of the
Property shall not advance the expiration date of this Lease. Tenant shall pay
Base Rent and all other charges specified in this Lease for the early occupancy
period.

Section 2.04. Holding Over. Tenant shall vacate the
Property upon the expiration or earlier termination of this Lease. Tenant shall
reimburse Landlord for and indemnify Landlord against all damages which
Landlord incurs from Tenant’s delay in vacating the Property. If Tenant does
not vacate the Property upon the expiration or earlier termination of the Lease
and Landlord thereafter accepts rent from Tenant, Tenant’s occupancy of the
Property shall be a “month-to-month” tenancy, subject to all of the terms of
this Lease applicable to a month-to-month tenancy, except that the Base Rent
then in effect shall be increased by fifty percent (50%).

ARTICLE THREE: BASE RENT

Section 3.01. Time and Manner of Payment. On or before the start of the
third month of the Lease Term, Tenant shall pay Landlord the Base Rent in the
amount stated in Section 1.10(a) above for the third month of the Lease
Term. On the first day of each month of the Lease Term (and the Extended Term
if applicable) thereafter, Tenant shall pay Landlord the Base Rent, in advance,
without offset, deduction or prior demand. The Base Rent shall be payable at
Landlord’s address or at such other place as Landlord may designate in writing.

Section 3.02. Cost of Living Increases. Not Applicable.

Section 3.03. Security Deposit; Increases.

(a)           Upon the execution of
this Lease, Tenant shall deposit with Landlord a cash Security Deposit in the
amount set forth in Section 1.09 above. Landlord may apply all or part
of the Security Deposit to any unpaid rent or other charges due from Tenant or
to cure any other defaults of Tenant. If Landlord uses any part of the Security
Deposit, Tenant shall restore the Security Deposit to its full amount within
ten (10) days after Landlord’s written request. Tenant’s failure to do so shall
be a material default under this Lease. No interest shall be paid on the
Security Deposit. Landlord shall not be required to keep the Security Deposit
separate from its other accounts and no trust relationship is created with
respect to the Security Deposit. The amount of the Security Deposit shall not
constitute a limitation on the amount of damages that Landlord is entitled to
recover in the event of a breach of this Lease by Tenant.

 2
 

(b)           Each time the Base Rent is increased. Tenant shall deposit
additional funds with Landlord sufficient to increase the Security Deposit to
an amount which bears the same relationship to the adjusted Base Rent as the
initialSecurity Deposit bore to
the initial Base Rent.

Section 3.04. Termination; Advance Payments. Upon
termination of this Lease under ArticleSeven (Damage or
Destruction), Article Eight (Condemnation) or any other termination not
resulting from Tenant’s default, and after Tenant has vacated the Property in the
manner required by this Lease, Landlord shall refund or credit to Tenant (or
Tenant’s successor) the unused portion of the Security Deposit, any advance
rent or other advance payments made by Tenant to Landlord, and any amounts paid
for real property taxes and other reserves which apply to any time periods
after termination of the Lease.

Section 3.05. Partial Month. Should the Commencement Date
be a day of the month other than the first day of such month, then the Basic
Rent for the first fractional month shall be computed on a daily basis for the
period from the Commencement Date to the end of such calendar month and at an
amount equal to one/three hundred and sixtieth (1/360th) of the Minimum Annual
Rental for each such day. Rental for such partial month shall be due and
payable prior to the Commencement Date.

ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT

Section 4.01. Additional Rent. All charges payable by
Tenant other than Base Rent are called “Additional Rent” Unless this Lease
provides otherwise. Tenant shall pay all Additional Rent then due with the next
monthly installment of Base Rent. The term “rent” shall mean Base Rent and
Additional Rent.

Section 4.02. Property Taxes.

(a)           Real Property Taxes. Tenant
shall pay all real property taxes on the Property (including any fees, taxes or
assessments against, or as a result of, any tenant improvements installed on
the Property by or for the benefit of Tenant) during the Lease Term. Subject to
Section 4.02(c) below, such payment shall be made at least ten (10) days
prior to the delinquency date of the taxes. Within such ten (10) day period,
Tenant shall furnish Landlord with satisfactory evidence that the real property
taxes have been paid. Landlord shall reimburse Tenant for any real property
taxes paid by Tenant covering any period of time prior to or after the Lease
Term or the amount of Landlord’s increase as defined in (b). If Tenant fails to
pay the real property taxes when due, Landlord may pay the taxes and Tenant
shall reimburse Landlord for the amount of such tax payment as Additional Rent.

(b)           Definition of “Real
Property Tax.” “Real property tax” means: (i) any fee, license fee,
license tax, business license fee, commercial rental tax, levy, charge,
assessment, penalty or tax imposed by any taxing authority against the
Property: (ii) any tax on the Landlord’s right to receive, or the receipt of,
rent or income from the Property or against Landlord’s business of leasing the
Property; (iii) any tax or charge for fire protection, streets, sidewalks, road
maintenance, refuse or other services provided to the Property by any
governmental agency; (iv) any tax imposed upon this transaction or based upon a
re-assessment of the Property due to a change of ownership, as defined by
applicable law, or other transfer of all or part of Landlord’s interest in the
Property; and (v) any charge or fee replacing any tax previously included
within the definition of real property tax. “Real property tax” does not,
however, include (1) Landlord’s federal or state income, franchise, inheritance
or estate taxes or (2) Landlord’s increase which shall mean any increase in “Real
property tax” that is the result of a revaluation caused by a transfer of the
Property.

(c)           Joint Assessment. If the Property is not
separately assessed, Landlord shall reasonably determine Tenant’s share of the
real property tax payable by Tenant under Section 4.02(a) from the

 3
 

assessor’s worksheets or other reasonably available information. Tenant
shall pay such share to Landlord within fifteen (15) days after receipt of
Landlord’s written statement.

(d)           Personal Property Taxes.

(i)            Tenant shall pay all taxes charged against trade
fixtures, furnishings, equipment or any other personal property belonging to
Tenant. Tenant shall try to have personal property taxed separately from the
Property.

(ii)           If any of Tenant’s personal property is taxed with the
Property, Tenant shall pay Landlord the taxes for the personal property within
fifteen (15) days after Tenant receives a written statement from Landlord for
such personal property taxes.

Section 4.03. Utilities. Tenant shall pay, directly to
the appropriate supplier, the cost of all natural gas, heat, light, power,
sewer service, telephone, water, refuse disposal and other utilities and
services supplied to the Property. However, if any services or utilities are
jointly metered with other property, Landlord shall make a reasonable
determination of Tenant’s proportionate share of the cost of such utilities and
services and Tenant shall pay such share to Landlord within fifteen (15) days
after receipt of Landlord’s written statement.

Section 4.04. Insurance Policies.

(a)           Liability Insurance.
During the Lease Term, Tenant shall maintain a policy of commercial general
liability insurance (sometimes known as broad form comprehensive general
liability insurance) insuring Tenant against liability for bodily injury,
property damage (including loss of use of property) and personal injury arising
out of the operation, use or occupancy of the Property, Tenant shall name Landlord
as an additional insured under such policy. The initial amount of such
insurance shall be Two Million Dollars ($2,000,000) per occurrence and shall be
subject to periodic increase based upon inflation, increased liability awards,
recommendation of Landlord’s professional insurance advisers and other relevant
factors. The liability insurance obtained by Tenant under this Section
4.04(a) shall (i) be primary and non-contributing; (ii) contain
cross-liability endorsements; and (iii) insure Landlord against Tenant’s
performance under Section 5.04, if the matters giving rise to the
indemnity under Section 5.04 result from the negligence of Tenant.
The amount and coverage of such insurance shall not limit Tenant’s liability
nor relieve Tenant of any other obligation under this Lease. Landlord may also
obtain comprehensive public liability insurance in an amount and with coverage
determined by Landlord insuring Landlord against liability arising out of
ownership, operation, use or occupancy of the Property.

(b)           Property and Rental
Income Insurance. During the Lease Term, Landlord shall maintain
policies of insurance covering loss of or damage to the Property in the full
amount of its replacement cost. Such policy shall provide protection against
all perils included within the classification of fire, extended coverage,
vandalism, malicious mischief, special extended perils (all risk), sprinkler
leakage and any other perils, including earthquake sprinkler leakage, which
Landlord deems reasonably necessary. Landlord shall have the right to obtain
flood and earthquake insurance. Landlord shall not obtain insurance for Tenant’s
fixtures or equipment or building improvements installed by Tenant on the
Property. During the Lease Term, Landlord shall also maintain a rental income
insurance policy, with loss payable to Landlord, in an amount equal to one year’s
Base Rent, plus estimated real property taxes and insurance premiums. Tenant
shall not do or permit anything to be done which invalidates any such insurance
policies.

(c)           Payment of Premiums.

(i)            Tenant shall pay for the insurance policy described in Section
4.04(a).

 4
 

(ii)           Tenant shall pay all premiums for the insurance policies
described in Section 4.04(b) (whether obtained by Landlord or Tenant)
within fifteen (15) days after Tenant’s receipt of a copy of the premium
statement or other evidence of the amount due. If insurance policies maintained
by Landlord cover improvements on real property other than the Property,
Landlord shall deliver to Tenant a statement of the premium applicable to the
Property showing in reasonable detail how Tenant’s share of the premium was
computed. If the Lease Term expires before the expiration of an insurance
policy maintained by Landlord. Tenant shall be liable for Tenant’s prorated
share of the insurance premiums. Before the Commencement Date, Tenant shall
deliver to Landlord a copy of any policy of insurance which Tenant is required
to maintain under this Section 4.04. At least thirty (30) days prior to
the expiration of any such policy, Tenant shall deliver to Landlord a renewal
of such policy.

(d)           General Insurance Provisions.

(i)            Any insurance which Tenant is required to maintain under
this Lease shall include a provision which requires the insurance carrier to
give Landlord not less than thirty (30) days’ written notice prior to any
cancellation or modification of such coverage.

(ii)           If Tenant fails to deliver any policy, certificate or
renewal to Landlord required under this Lease within the prescribed time period
or if any such policy is canceled or modified during the Lease Term without
Landlord’s consent, Landlord may obtain such insurance, in which case Tenant
shall reimburse Landlord for the cost of such insurance within fifteen (15)
days after receipt of a statement that indicates the cost of such insurance.

(iii)          Tenant shall maintain all insurance required under this
Lease with companies holding a “General Policy Rating” of A-12 or better, as
set forth in the most current issue of “Best Key Rating Guide”. Landlord and
Tenant acknowledge the insurance markets are rapidly changing and that
insurance in the form and amounts described in this Section 4.04 may not
be available in the future. Tenant acknowledges that the insurance described in
Section 4.04(b) is for the primary benefit of Landlord. If at any time
during the Lease Term, Tenant is unable to maintain the insurance required
under the Lease, Tenant shall nevertheless maintain insurance coverage which is
customary and commercially reasonable in the insurance industry for Tenant’s
type of business, as that coverage may change from time to time. Landlord makes
no representation as to the adequacy of such insurance to protect Landlord’s or
Tenant’s interests. Therefore, Tenant shall obtain any such additional property
or liability insurance which Tenant deems necessary to protect Landlord and
Tenant.

Section 4.05. Late Charges.
Tenant’s failure to pay rent promptly may cause Landlord to incur unanticipated
costs. The exact amount of such costs are impractical or extremely difficult to
ascertain. Such costs may include, but are not limited to, processing and
accounting charges and late charges which may be imposed on Landlord by any
ground lease, mortgage or trust deed encumbering the Property. Therefore, if
Landlord does not receive any rent payment within ten (10) days after it
becomes due, Tenant shall pay Landlord a late charge equal to seven percent
(7%) of the overdue amount. The parties agree that such late charge represents
a fair and reasonable estimate of the costs Landlord will incur by reason of
such late payment.

Section 4.06. Interest on Past Due Obligations. Any amount owed by Tenant to Landlord which is not paid when
due shall bear interest at the rate of twelve percent (12%) per annum from the
due date of such amount. However, interest shall not be payable on late charges
to be paid by Tenant under this Lease. The payment of interest on such amounts
shall not excuse or cure any default by Tenant under this Lease. If the
interest rate specified in this Lease is higher than the rate permitted by law,
the interest rate is hereby decreased to the maximum legal interest rate
permitted by law.

Section 4.07. Impounds for Insurance Premiums and Real Property Taxes. Not
Applicable.

 5
 

Section 4.08. Subrogation Provision. Anything to the
contrary in this Lease notwithstanding, neither party, nor its officers,
directors, employees, agents or Invitees, nor, in case of Tenant, its
subtenants, shall be liable to the other party or to any insurance company (by
way of subrogation or otherwise) insuring the other party for any loss or
damage to any building, structure or other tangible property, when such loss is
caused by any of the perils which are or could be insured against under a
standard policy of full replacement cost insurance for fire, theft and all risk
coverage, or losses under workers’ compensation laws and benefits, even though
such loss or damage might have been occasioned by the negligence of such party,
its agents or employees (this clause shall not apply, however, to any damage
caused by intentionally wrongful actions or omissions); provided, however, that
if, by reason of the foregoing waiver, either party shall be unable to obtain
any such insurance, such waiver shall be deemed not to have been made by such
party and, provided further, that if either party shall be unable to obtain any
such insurance without the payment of an additional premium therefor, then,
unless the party claiming the benefit of such waiver shall agree to pay such
party for the cost of such additional premium within thirty (30) days after
notice setting forth such requirement and the amount of the additional premium,
such waiver shall be of no force and effect between such party and such
claiming party. Each party shall use reasonable efforts to obtain such
insurance from a company that does not charge an additional premium or, if that
is not possible, one that charges the lowest additional premium. Each party
shall give the other party notice at any time when it is unable to obtain
insurance with such a waiver of subrogation without the payment of an
additional premium and the foregoing waiver shall be effective until thirty
(30) days after notice is given. Each party represents that its current
insurance policies allow such waiver.

ARTICLE FIVE: USE OF PROPERTY

Section 5.01. Permitted Uses. Tenant may use the Property
only for the Permitted Uses set forth in Section 1.06 above.

Section 5.02. Manner of Use. Tenant
shall not cause or permit the Property to be used in any way which constitutes
a violation of any law, ordinance, or governmental regulation or order, which
annoys or interferes with the rights of tenants of the Project, or which
constitutes a nuisance or waste. Tenant shall obtain and pay for all permits,
including a Certificate of Occupancy, required for Tenant’s occupancy of the
Property and shall promptly take all actions necessary to comply with all
applicable statutes, ordinances, rules, regulations, orders and requirements
regulating the use by Tenant of the Property, including the Occupational Safety
and Health Act.

Section 5.03. Signs and Auctions. Tenant shall not place any signs on the
Property without Landlord’s prior written consent. Tenant shall not conduct or
permit any auctions or sheriff’s sales at the Property.

Section 5.04. Indemnity. Tenant shall indemnify Landlord
against and hold Landlord harmless from any and all costs, claims or liability
arising from: (a) Tenant’s use of the Property; (b) the conduct of Tenant’s
business or anything else done or permitted by Tenant to be done in or about
the Property, including any contamination of the Property or any other property
resulting from the presence or use of Hazardous Material caused or permitted by
Tenant; (c) any breach or default in the performance of Tenant’s obligations
under this Lease; (d) any misrepresentation or breach of warranty by Tenant
under this Lease; or (e) other acts or omissions of Tenant. Tenant shall defend
Landlord against any such cost, claim or liability at Tenant’s expense with
counsel reasonably acceptable to Landlord or, at Landlord’s election, Tenant
shall reimburse Landlord for any legal fees or costs incurred by Landlord in
connection with any such claim. As a material part of the consideration to
Landlord, Tenant assumes all risk of damage to property or injury to persons in
or about the Property arising from any cause, and Tenant hereby waives all
claims in respect thereof against Landlord, except for any claim arising out of
Landlord’s

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gross negligence or willful misconduct. As
used in this Section, the term “Tenant” shall include Tenant’s employees,
agents, contractors and invitees, if applicable.

Section 5.05. Landlord’s Access.
Landlord or its agents may enter the Property at all reasonable times to show
the Property to potential buyers, investors or tenants or other parties; to do
any other act or to inspect and conduct tests in order to monitor Tenant’s
compliance with all applicable environmental laws and all laws governing the
presence and use of Hazardous Material; or for any other purpose Landlord deems
necessary. Landlord shall give Tenant prior notice of such entry, except in the
case of an emergency. Landlord may place customary “For Sale” or “For Lease”
signs on the Property.

Section 5.06. Quiet Possession. If Tenant pays the rent and complies with
all other terms of this Lease, Tenant may occupy and enjoy the Property for the
full Lease Term, subject to the provisions of this Lease.

ARTICLE SIX: CONDITION OF
PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS

Section 6.01. Existing Conditions.
Tenant accepts the Property in its condition as of the execution of the Lease,
subject to all recorded matters, laws, ordinances, and governmental regulations
and orders. Except as provided herein, Tenant acknowledges that neither
Landlord nor any agent of Landlord has made any representation as to the
condition of the Property or the suitability of the Property for Tenant’s
intended use. Tenant represents and warrants that Tenant has made its own
inspection of and inquiry regarding the condition of the Property and is not
relying on any representations of Landlord or any Broker with respect thereto.

Section 6.02. Exemption of Landlord from Liability. Landlord shall not be
liable for any damage or injury to the person, business (or any loss of income
therefrom), goods, wares, merchandise or other property of Tenant, Tenant’s
employees, invitees, customers or any other person in or about the Property,
whether such damage or injury is caused by or results from: (a) fire, steam,
electricity, water, gas or rain; (b) the breakage, leakage, obstruction or
other defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures or any other cause; (c) conditions arising in
or about the Property or upon other portions of the Project, or from other
sources or places; or (d) any act or omission of any other tenant of the
Project. Landlord shall not be liable for any such damage or injury even though
the cause of or the means of repairing such damage or injury are not accessible
to Tenant. The provisions of this Section 6.02 shall not, however,
exempt Landlord from liability for Landlord’s gross negligence or willful
misconduct.

Section 6.03. Landlord’s Obligations. Subject to the provisions of Article
Seven (Damage or Destruction) and Article Eight (Condemnation),
Landlord shall have absolutely no responsibility to repair, maintain or replace
any portion of the Property at any time, except that Landlord shall be
responsible for the maintenance of the exterior walls, roof and foundation. Landlord
agrees to install at its cost a wall air conditioner unit of up to a maximum of
20,000 BTUs in the front office within sixty (60) days of the commencement of
this Lease. Tenant waives the benefit of any present or future law which might
give Tenant the right to repair the Property at Landlord’s expense or to
terminate the Lease due to the condition of the Property.

Section 6.04. Tenant’s Obligations.

(a)           Except as provided in Article Seven (Damage or
Destruction) and Article Eight (Condemnation), Tenant shall keep all
portions of the Property in good order, condition and repair (Including
interior repainting and refinishing, as needed, and repairs or replacement
required by fire, earthquake or other code requirements). If any portion of the
Property or any system or equipment in the Property which Tenant is obligated
to repair cannot be fully repaired or restored, Tenant shall promptly

 7
 

replace such portion of the Property or system or equipment in the
Property, regardless of whether the benefit of such replacement extends beyond
the Lease Term. Tenant shall maintain a preventive maintenance contract
providing for the regular inspection and maintenance of the heating and air
conditioning system by a licensed heating and air conditioning contractor. If any
part of the Property or the Project is damaged by any act or omission of
Tenant, Tenant shall pay Landlord the cost of repairing or replacing such
damaged property, whether or not Landlord would otherwise be obligated to pay
the cost of maintaining or repairing such property. It is the intention of
Landlord and Tenant that at all times Tenant shall maintain the portions of the
Property which Tenant is obligated to maintain in an attractive, first-class
and fully operative condition.

(b) Tenant shall fulfill all
of Tenant’s obligations under this Section 6.04 at Tenant’s sole
expense. If Tenant fails to maintain, repair or replace the Property as
required by this Section 6.04, Landlord may, upon ten (10) days prior
notice to Tenant (except that no notice shall be required in the case of an
emergency), enter the Property and perform such maintenance or repair
(including replacement, as needed) on behalf of Tenant. In such case, Tenant
shall reimburse Landlord for all costs incurred in performing such maintenance
or repair immediately upon demand.

Section 6.05. Alterations, Additions, and Improvements.

(a) Tenant shall not make any
alterations, additions, or improvements to the Property without Landlord’s
prior written consent, except for non-structural alterations which do not
exceed Ten Thousand Dollars ($10,000) in cost cumulatively over the Lease Term
and which are not visible from the outside of any building of which the
Property is part. Landlord may require Tenant to provide demolition and/or lien
and completion bonds in form and amount satisfactory to Landlord. Tenant shall
promptly remove any alterations, additions, or improvements constructed in
violation of this Section 6.05(a) upon Landlord’s written request. All
alterations, additions, and improvements shall be done in a good and
workmanlike manner, In conformity with all applicable laws and regulations, and
by a contractor approved by Landlord. Upon completion of any such work, Tenant
shall provide Landlord with “as built” plans, copies of all construction
contracts, and proof of payment for all labor and materials.

(b) Tenant shall pay when due
all claims for labor and material furnished to the Property. Tenant shall give
Landlord at least twenty (20) days’ prior written notice of the commencement of
any work on the Property, regardless of whether Landlord’s consent to such work
is required. Landlord may elect to record and post notices of
non-responsibility on the Property.

Section 6.06. Condition upon Termination. Upon the
termination of the Lease, Tenant shall surrender the Property to Landlord,
broom clean and in the same condition as received except for ordinary wear and
tear which Tenant was not otherwise obligated to remedy under any provision of
this Lease. However, Tenant shall not be obligated to repair any damage which
Landlord is required to repair under Article Seven (Damage or
Destruction). In addition, Landlord may require Tenant to remove any
alterations, additions or improvements (whether or not made with Landlord’s
consent) prior to the expiration of the Lease and to restore the Property to
its prior condition, all at Tenant’s expense. All alterations, additions and
improvements which Landlord has not required Tenant to remove shall become
Landlord’s property and shall be surrendered to Landlord upon the expiration or
earlier termination of the Lease, except that Tenant may remove any of Tenant’s
machinery or equipment which can be removed without material damage to the
Property. Tenant shall repair, at Tenant’s expense, any damage to the Property
caused by the removal of any such machinery or equipment. In no event, however,
shall Tenant remove any of the following materials or equipment (which shall be
deemed Landlord’s property) without Landlord’s prior written consent any power
wiring or power panels; lighting or lighting fixtures; wall coverings; drapes,
blinds or other window coverings; carpets or other floor coverings; heaters,
air conditioners or any other heating or air conditioning equipment; fencing or
security gates; or other similar building operating equipment and decorations.

 8
 

The term “ordinary wear and tear” shall mean wear and
tear which manifests itself solely through normal use and the passage of time,
such as may be caused by foot traffic, wear to carpets and fading of painted
surfaces, settlement of the building and other geologic condition. Ordinary
wear and tear shall not include any damage or deterioration that could have
been prevented by Tenant performing all of its obligations under this Lease.
For the purpose of this Lease, items of wear which are not ordinary include,
but are not limited to, the following (other than items as may have been caused
by Landlord’s acts or omissions or are Landlord’s obligation to maintain,
repair and/or replace pursuant to this Lease), which items shall be Tenant’s
obligation to repair and correct: (i) damage to or defacement of walls,
partitions, floors, ceilings, roof, landscaping, pavements, columns,
mechanical, electrical, and plumbing equipment, doors, or other components of
the Premises (ii) excessively soiled, stained or marked surfaces; (iii) damage
caused by the installation of or removal of Tenant’s trade fixtures,
furnishings, equipment, alterations or utility installations; (iv) the removal
of Tenant’s signs and the restoration of any area or surface affected by such
signs and/or utility installations, and (v) any defects to the Premises which
developed subsequent to the Commencement Date and which are otherwise Tenant’s
obligation to repair pursuant to this Lease.

Section 6.07. Hazardous Materials. Tenant shall not cause
or permit any Hazardous Material (as defined below) to be brought upon, kept or
used in or about the Property by Tenant, its agents, employees, contractors or
invitees, without the prior written consent of Landlord (which Landlord shall
not unreasonably withhold as long as Tenant demonstrates to Landlord’s
reasonable satisfaction that such Hazardous Material is necessary or useful to
Tenant’s business and will be used, kept and stored in a manner that complies
with all laws, rules, statutes and ordinances regulating any such hazardous
Material so brought upon or used or kept in or about the Property). If Tenant
breaches the obligations stated above in this Paragraph, or if the presence of
Hazardous Material on or about the Property caused or permitted by Tenant
results in contamination of the Property, or if contamination of the Property
or surrounding area by Hazardous Material otherwise occurs for which Tenant is
legally liable to Landlord for damage resulting therefrom, then Tenant shall
indemnify, defend and hold Landlord harmless from any and all claims,
judgments, damages, penalties, fines, costs, liabilities or losses (including,
without limitation, diminution in value of the Property or the building which
is part of the Property, damages for the loss or restriction on use of rentable
or usable space or of any amenity of the Property, damages arising from any
adverse impact on marketing of space in the building, and sums paid in
settlement of claims, attorneys’ fees, consultant fees and expert fees) which
arise during or after the term of this Lease as a result of such contamination.
This Indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any
cleanup, remedial, removal or restoration work required by any federal, state
or local governmental agency or political subdivision because of Hazardous
Material present in the soil or ground water on, under or about the Property.
Without limiting the foregoing, if the presence of any Hazardous Material on or
about the Property caused or permitted by Tenant results in any contamination
of the Property or surrounding area, or causes the Property or surrounding area
to be in violation of any laws, rules, statutes or ordinances. Tenant shall
promptly take all actions at its sole expense as are necessary to return the
Property and surrounding area to the condition existing prior to the
introduction of any such Hazardous Material; provided that Landlord’s approval
of such actions shall first be obtained, which approval shall not be
unreasonably withheld so long as such actions would not potentially have any
material adverse long-term or short-term effect on the Property or surrounding
area.

As used herein, the term “Hazardous
Material” means any hazardous or toxic substance, material or waste which is or
becomes regulated by any local governmental authority, the State of California
or the United States Government. The term “Hazardous Material” includes,
without limitation, any material or substance which is (i) defined as a “hazardous
waste,” “extremely hazardous waste,” or “restricted hazardous waste” under
Sections 25115, 25117, or 25122.7, or listed pursuant to Section 25140, of the
California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste
Control Law), (ii) defined as a “hazardous substance” under Section 25316 of
the California Health and Safety Code, Division 20, Chapter 6.8
(Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a “hazardous

 9
 

material,” “hazardous substance,” or “hazardous waste” under Section
25501 of the California Health and Safety Code, Division 20, Chapter 6.95
(Hazardous Materials Release Response Plans and Inventory), (iv) defined as a “hazardous
substance” under Section 25281 of the California Health and Safety Code,
Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v)
petroleum, (vi) asbestos, (vii) listed under Article 9 or defined as hazardous
or extremely hazardous pursuant to Article 11 of Title 22 of the California
Administrative Code, Division 4, Chapter 20, (viii) designated as a “hazardous
substance” pursuant to Section 311 of the Federal Water Pollution Control Act
(33 U.S.C. Sec. 1317), (ix) defined as a “hazardous waste” pursuant to Section
1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6901
et seq. (42 U.S.C. Sec. 6903), or (x) defined as a “hazardous substance”
pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sec. 9601 et seq. (42 U.S.C. Sec.
6901).

ARTICLE SEVEN: DAMAGE OR DESTRUCTION

Section 7.01. Partial Damage to Property.

(a)           Tenant shall notify Landlord in writing immediately upon
the occurrence of any damage to the Property. If the Property is only partially
damaged (i.e., less than twenty percent (20%) of the Property is untenantable
as a result of such damage or less than twenty percent (20%) of Tenant’s
operations are materially impaired) and if the proceeds received by Landlord
from the insurance policies described in Section 4.04(b) are sufficient
to pay for the necessary repairs, this Lease shall remain in effect and
Landlord shall repair the damage as soon as reasonably possible. Landlord may
elect (but is not required) to repair any damage to Tenant’s fixtures,
equipment, or improvements.

(b)           If the insurance proceeds received by Landlord are not
sufficient to pay the entire cost of repair, or if the cause of the damage is
not covered by the insurance policies which Landlord maintains under Section
4.04(b). Landlord may elect either to (i) repair the damage as soon as
reasonably possible, in which case this Lease shall remain in full force and
effect, or (ii) terminate this Lease as of the date the damage occurred.
Landlord shall notify Tenant within sixty (60) days after receipt of notice of
the occurrence of the damage whether Landlord elects to repair the damage or
terminate the Lease. If Landlord elects to repair the damage, Tenant shall pay
Landlord the “deductible amount” (if any) under Landlord’s insurance policies
and, if the damage was due to an act or omission of Tenant, or Tenant’s
employees, agents, contractors or invitees, the difference between the actual
cost of repair and any insurance proceeds received by Landlord. If Landlord
elects to terminate this Lease, Tenant may elect to continue this Lease in full
force and effect, in which case Tenant shall repair any damage to the Property
and any building in which the Property is located, Tenant shall pay the cost of
such repairs, except that upon satisfactory completion of such repairs,
Landlord shall deliver to Tenant any insurance proceeds received by Landlord
for the damage repaired by Tenant. Tenant shall give Landlord written notice of
such election within ten (10) days after receiving Landlord’s termination
notice.

(c)           If the damage to the Property occurs during the last six
(6) months of the Lease Term and such damage will require more than thirty (30)
days to repair, either Landlord or Tenant may elect to terminate this Lease as
of the date the damage occurred, regardless of the sufficiency of any insurance
proceeds. The party electing to terminate this Lease shall give written
notification to the other party of such election within thirty (30) days after
Tenant’s notice to Landlord of the occurrence of the damage.

Section 7.02. Substantial or Total Destruction. If the
Property is substantially or totally destroyed by any cause whatsoever (i.e.,
the damage to the Property is greater than partial damage as described in Section
7.01), and regardless of whether Landlord receives any insurance proceeds,
this Lease shall terminate as of the date the destruction occurred.

 10
 

Section 7.03. Temporary Reduction of Rent. If the
Property is destroyed or damaged and Landlord or Tenant repairs or restores the
Property pursuant to the provisions of this Article Seven, any rent
payable during the period of such damage, repair and/or restoration shall be
reduced according to the degree, if any, to which Tenant’s use of the Property
is impaired. However, the reduction shall not exceed the amount of Insurance
proceeds payable to Landlord by its insurance carrier to replace the loss of
Base Rent, insurance proceeds and real estate taxes. Except for such possible
reduction in Base Rent, insurance premiums and real property taxes, Tenant
shall not be entitled to any compensation, reduction, or reimbursement from
Landlord as a result of any damage, destruction, repair, or restoration of or
to the Property.

Section 7.04. Waiver. Tenant waives the protection of any
statute, code or judicial decision which grants a tenant the right to terminate
a lease in the event of the substantial or total destruction of the leased
property. Tenant agrees that the provisions of Section 7.02 above shall
govern the rights and obligations of Landlord and Tenant in the event of any
substantial or total destruction to the Property.

ARTICLE EIGHT: CONDEMNATION

If all or any portion of the
Property is taken under the power of eminent domain or sold under the threat of
that power (all of which are called “Condemnation”), this Lease shall terminate
as to the part taken or sold on the date the condemning authority takes title
or possession, whichever occurs first. If more than twenty percent (20%) of the
floor area of the building in which the Property is located, or which is
located on the Property, is taken, either Landlord or Tenant may terminate this
Lease as of the date the condemning authority takes title or possession, by delivering
written notice to the other within ten (10) days after receipt of written
notice of such taking (or in the absence of such notice, within ten (10) days
after the condemning authority takes title or possession). If neither Landlord
nor Tenant terminates this Lease, this Lease shall remain in effect as to the
portion of the Property not taken, except that the Base Rent and Additional
Rent shall be reduced in proportion to the reduction in the floor area of the
Property. Any Condemnation award or payment shall be distributed in the
following order: (a) first, to any ground lessor, mortgagee or beneficiary
under a deed of trust encumbering the Property, the amount of its interest in
the Property; (b) second, to Tenant, only the amount of any award specifically
designated for loss of or damage to Tenant’s trade fixtures or removable
personal property; and (c) third, to Landlord, the remainder of such award,
whether as compensation for reduction in the value of the leasehold, the taking
of the fee, or otherwise. If this Lease is not terminated, Landlord shall
repair any damage to the Property caused by the Condemnation, except that
Landlord shall not be obligated to repair any damage for which Tenant has been
reimbursed by the condemning authority. If the severance damages received by
Landlord are not sufficient to pay for such repair, Landlord shall have the
right to either terminate this Lease or make such repair at Landlord’s expense.
Any award for the taking of all or any part of the Premises under the power of
eminent domain or any payment made under threat of the exercise of such power
shall be the property of the Landlord, whether such award shall be made as
compensation for diminution in value of the leasehold or for the taking of the
fee, or as several damages.

ARTICLE NINE: ASSIGNMENT AND
SUBLETTING

Section 9.01. Landlord’s Consent Required. No portion of
the Property or of Tenant’s interest in this Lease may be acquired by any other
person or entity, whether by sale, assignment, mortgage, sublease, transfer,
operation of law, or act of Tenant, without Landlord’s prior written consent,
except as provided in Section 9.02 below. Landlord has the right to grant or
withhold its consent as provided in Section 9.04 below. Any attempted
transfer without consent shall be void and shall constitute a non-curable
breach of this Lease. If Tenant is a partnership, any cumulative transfer of
more than twenty percent (20%) of the partnership interests shall require
Landlord’s consent. If Tenant is a corporation, any change in the ownership of
a controlling interest of the voting stock of the corporation shall require
Landlord’s consent.

 11
 

Section 9.02. No Release of Tenant. No transfer permitted
by this Article Nine, whether with or without Landlord’s consent, shall
release Tenant or change Tenant’s primary liability to pay the rent and to
perform all other obligations of Tenant under this Lease. Landlord’s acceptance
of rent from any other person is not a waiver of any provision of this Article
Nine. Consent to one transfer is not a consent to any subsequent transfer.
If Tenant’s transferee defaults under this Lease. Landlord may proceed directly
against Tenant without pursuing remedies against the transferee. Landlord may
consent to subsequent assignments or modifications of this Lease by Tenant’s
transferee, without notifying Tenant or obtaining its consent. Such action
shall not relieve Tenant’s liability under this Lease.

Section 9.03. Offer to Terminate. If Tenant desires to
assign the Lease or sublease the Property, Tenant shall have the right to
offer, in writing, to terminate the Lease as of a date specified in the offer.
If Landlord elects in writing to accept the offer to terminate within twenty
(20) days after notice of the offer, the Lease shall terminate as of the date
specified and all the terms and provisions of the Lease governing termination
shall apply. If Landlord does not so elect, the Lease shall continue in effect
until otherwise terminated and the provisions of Section 9.04 with
respect to any proposed transfer shall continue to apply.

Section 9.04. Landlord’s Consent.

(a)           Tenant’s request for consent to any transfer described in Section
9.01 shall set forth in writing the details of the proposed transfer,
including the name, business and financial condition of the prospective
transferee, financial details of the proposed transfer (e.g., the term of and
the rent and security deposit payable under any proposed assignment or
sublease), and any other information Landlord deems relevant. Landlord shall
have the right to withhold consent, if reasonable, or to grant consent, based
on the following factors: (i) the business of the proposed assignee or
subtenant and the proposed use of the Property; (ii) the net worth and
financial reputation of the proposed assignee or subtenant; (iii) Tenant’s
compliance with all of its obligations under the Lease; and (iv) such other
factors as Landlord may reasonably deem relevant.

(b)           If Tenant assigns or subleases, the following shall apply:

(i)            Tenant shall pay to Landlord as Additional Rent under the
Lease the Landlord’s Share (stated in Section 1.12) of the Profit
(defined below) on such transaction as and when received by Tenant, unless
Landlord gives written notice to Tenant and the assignee or subtenant that
Landlord’s Share shall be paid by the assignee or subtenant to Landlord
directly. The “Profit” means (A) all amounts paid to Tenant for such assignment
or sublease, including “key” money, monthly rent in excess of the monthly rent
payable under the Lease, and all fees and other consideration paid for the
assignment or sublease, including fees under any collateral agreements, less
(B) costs and expenses directly incurred by Tenant in connection with the
execution and performance of such assignment or sublease for real estate broker’s
commissions and costs of renovation or construction of tenant Improvements
required under such assignment or sublease. Tenant is entitled to recover such
costs and expenses before Tenant is obligated to pay the Landlord’s Share to
Landlord. The Profit in the case of a sublease of less than all the Property is
the rent allocable to the subleased space as a percentage on a square footage
basis.

(ii)           Tenant shall provide Landlord a written statement
certifying all amounts to be paid from any assignment or sublease of the
Property within thirty (30) days after the transaction documentation is signed,
and Landlord may inspect Tenant’s books and records to verify the accuracy of
such statement. On written request, Tenant shall promptly furnish to Landlord
copies of all the transaction documentation, all of which shall be certified by
Tenant to be complete, true and correct. Landlord’s receipt of Landlord’s Share
shall not be a consent to any further assignment or subletting. The breach of
Tenant’s obligation under this Section 9.04(b) shall be a material
default of the Lease.

 12
 

Section 9.05. No Merger.
No merger shall result from Tenant’s sublease of the Property under
this Article Nine. Tenant’s surrender of this Lease or the termination
of this Lease in any other manner. In any such event, Landlord may terminate
any or all subtenancies or succeed to the interest of Tenant as sublandlord
under any or all subtenancies.

Section 9.06. Landlord Default. In no event shall Tenant
have the right to terminate this Lease as a result of Landlord’s default.
Tenant’s sole remedy shall be limited to the recovery of damages and/or the
receipt of an injunction.

ARTICLE TEN: DEFAULTS; REMEDIES

Section 10.01. Covenants and Conditions. Tenant’s
performance of each of Tenant’s obligations under this Lease is a condition as
well as a covenant. Tenant’s right to continue in possession of the Property is
conditioned upon such performance. Time is of the essence in the performance of
all covenants and conditions.

Section 10.02. Defaults. Tenant shall be in material
default under this Lease:

(a)           If Tenant abandons the Property or if Tenant vacates the
Property;

(b)           If Tenant fails to pay rent or any other charge, interest
or fee within five (5) days of the date when due;

(c)           If Tenant fails to perform any of Tenant’s non-monetary
obligations under this Lease for a period of thirty (30) days after written
notice from Landlord; provided that if more than thirty (30) days are required
to complete such performance, Tenant shall not be in default if Tenant
commences such performance within the thirty (30) day period and thereafter
diligently pursues its completion. However, Landlord shall not be required to
give such notice if Tenant’s failure to perform constitutes a non-curable breach
of this Lease. The notice required by this Section is intended to satisfy any
and all notice requirements imposed by law on Landlord and is not in addition
to any such requirement.

(d)           (i) If Tenant makes a general assignment or general
arrangement for the benefit of creditors; (ii) if a petition for adjudication
of bankruptcy or for reorganization or rearrangement is filed by or against
Tenant and is not dismissed within thirty (30) days; (iii) if a trustee or
receiver is appointed to take possession of substantially all of Tenant’s
assets located at the Property or of Tenant’s interest in this Lease and
possession is not restored to Tenant within thirty (30) days; or (iv) if
substantially all of Tenant’s assets located at the Property or of Tenant’s interest
in this Lease is subjected to attachment, execution or other judicial seizure
which is not discharged within thirty (30) days. If a court of competent
jurisdiction determines that any of the acts described in this subparagraph (d)
is not a default under this Lease, and a trustee is appointed to take
possession (or if Tenant remains a debtor in possession) and such trustee or
Tenant transfers Tenant’s interest hereunder, then Landlord shall receive, as
Additional Rent, the excess, if any, of the rent (or any other consideration)
paid in connection with such assignment or sublease over the rent payable by
Tenant under this Lease.

(e)           If any guarantor of the Lease revokes or otherwise
terminates, or purports to revoke or otherwise terminate, any guaranty of all
or any portion of Tenant’s obligations under the Lease. Unless otherwise
expressly provided, no guaranty of the Lease is revocable.

Section 10.03. Remedies. On the occurrence of any material
default by Tenant, Landlord may, at any time thereafter, with or without notice
or demand and without limiting Landlord in the exercise of any right or remedy
which Landlord may have:

 13
 

(a)           Terminate Tenant’s right to possession of the Property by
any lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Property to Landlord. In such event,
Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant’s default, including (i) the worth at the time of
the award of the unpaid Base Rent, Additional Rent and other charges which
Landlord had earned at the time of the termination; (ii) the worth at the time
of the award of the amount by which the unpaid Base Rent, Additional Rent and
other charges which Landlord would have earned after termination until the time
of the award exceeds the amount of such rental loss that Tenant proves Landlord
could have reasonably avoided; (iii) the worth at the time of the award of the
amount by which the unpaid Base Rent, Additional Rent and other charges which
Tenant would have paid for the balance of the Lease term after the time of
award exceeds the amount of such rental loss that Tenant proves Landlord could
have reasonably avoided; and (iv) any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant’s failure to
perform its obligations under the Lease or which in the ordinary course of
things would be likely to result therefrom, including, but not limited to, any
costs or expenses Landlord incurs in maintaining or preserving the Property
after such default, the cost of recovering possession of the Property, expenses
of reletting, including necessary renovation or alteration of the Property.
Landlord’s reasonable attorneys’ fees incurred in connection therewith, and any
real estate commission paid or payable. As used in subparts (i) and (ii) above,
the “worth at the time of the award” is computed by allowing interest on unpaid
amounts at the rate of fifteen percent (15%) per annum, or such lesser amount
as may then be the maximum lawful rate. As used in subpart (iii) above, the “worth
at the time of the award” is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of the
award, plus one percent (1%). If Tenant has abandoned the Property, Landlord
shall have the option of (i) retaking possession of the Property and recovering
from Tenant the amount specified in this Section 10.03(a), or (ii)
proceeding under Section 10.03(b);

(b)           Exercise the remedy described in California Civil Code
Section 1951.4 (Lessor May Continue Lease in Effect After Lessee’s Breach and
Abandonment and Recover Rent as it Becomes Due, if Lessee has Right to Sublet
or Assign, Subject Only to Reasonable Limitations);

(c)           Pursue any other remedy now or hereafter available to
Landlord under the laws or judicial decisions of the state in which the
Property is located.

Section 10.04. Repayment of “Free” Rent. If this Lease provides for a
postponement of any monthly rental payments, a period of “free” rent or other
rent concession, such postponed rent or “free” rent is called the “Abated Rent”.
Tenant shall be credited with having paid all of the Abated Rent on the
expiration of the Lease Term only if Tenant has fully, faithfully, and
punctually performed all of Tenant’s obligations hereunder, including the
payment of all rent (other than the Abated Rent) and all other monetary
obligations and the surrender of the Property in the physical condition
required by this Lease. Tenant acknowledges that its right to receive credit
for the Abated Rent is absolutely conditioned upon Tenant’s full, faithful and
punctual performance of its obligations under this Lease. If Tenant defaults
and does not cure within any applicable grace period, the Abated Rent shall
immediately become due and payable in full and this Lease shall be enforced as
if there were no such rent abatement or other rent concession. In such case
Abated Rent shall be calculated based on the full initial rent payable under
this Lease.

Section 10.05. Automatic Termination. Notwithstanding any other term or
provision hereof to the contrary, the Lease shall terminate on the occurrence
of any act which affirms the Landlord’s intention to terminate the Lease as
provided in Section 10.03 hereof, including the filing of an unlawful
detainer action against Tenant. On such termination, Landlord’s damages for
default shall include all costs and fees, including reasonable attorneys’ fees
that Landlord incurs in connection with the filing, commencement, pursuing
and/or defending of any action in any bankruptcy court or other court with
respect to the Lease; the obtaining of relief from any stay in bankruptcy
restraining any action to evict Tenant; or the pursuing of any action with
respect to Landlord’s right to possession of the Property. All

 14
 

such damages suffered (apart from Base Rent
and other rent payable hereunder) shall constitute pecuniary damages which must
be reimbursed to Landlord prior to assumption of the Lease by Tenant or any successor
to Tenant in any bankruptcy or other proceeding.

Section 10.06. Cumulative Remedies. Landlord’s exercise of
any right or remedy shall not prevent it from exercising any other right or
remedy.

ARTICLE ELEVEN: PROTECTION OF LENDERS

Section 11.01. Subordination. Landlord shall have the right to subordinate
this Lease to any ground lease, deed of trust or mortgage encumbering the
Property, any advances made on the security thereof and any renewals,
modifications, consolidations, replacements or extensions thereof, whenever
made or recorded. Tenant shall cooperate with Landlord and any lender which is
acquiring a security interest in the Property or the Lease. Tenant shall
execute such further documents and assurances as such lender may require, and
which may include provisions to the effect that this Lease will not be amended,
surrendered or terminated without the lender’s consent, that rent will not be
prepaid more than one (1) month in advance, and that the lender will not be
subject to any offsets or claims for monies previously paid to Landlord by
Tenant or for any damages caused by Landlord, Subject to the approval of the
lender, Tenant’s right to quiet possession of the Property during the Lease
Term shall not be disturbed if Tenant pays the rent and performs all of Tenant’s
obligations under this Lease and is not otherwise in default. If any ground
lessor, beneficiary or mortgagee elects to have this Lease prior to the lien of
its ground lease, deed of trust or mortgage and gives written notice thereof to
Tenant, this Lease shall be deemed prior to such ground lease, deed of trust or
mortgage whether this Lease is dated prior or subsequent to the date of said
ground lease, deed of trust or mortgage or the date of recording thereof.

Section 11.02. Attornment. If Landlord’s interest in the
Property is acquired by any ground lessor, beneficiary under a deed of trust,
mortgagee, or purchaser at a foreclosure sale or by deed in lieu of
foreclosure, Tenant shall attorn to the transferee of or successor to Landlord’s
interest in the Property and recognize such transferee or successor as Landlord
under this Lease. Tenant waives the protection of any statute or rule of law
which gives or purports to give Tenant any right to terminate this Lease or
surrender possession of the Property upon the transfer of Landlord’s interest.

Section 11.03. Signing of Documents. Tenant shall sign and
deliver any instrument or documents necessary or appropriate to evidence any
such attornment or subordination or agreement to do so. If Tenant fails to do
so within ten (10) days after written request, Tenant hereby makes, constitutes
and irrevocably appoints Landlord, or any transferee or successor of Landlord,
the attorney-in-fact of Tenant to execute and deliver any such instrument or
document.

Section 11.04. Estoppel Certificates.

(a)           Upon Landlord’s written request, Tenant shall execute,
acknowledge and deliver to Landlord a written statement certifying: (i) that
none of the terms or provisions of this Lease have been changed (or if they
have been changed, stating how they have been changed); (ii) that this Lease
has not been canceled or terminated; (iii)the last date of payment of the
Base Rent and other charges and the time period covered by such payment; (iv)
that Landlord is not in default under this Lease (or, if Landlord is claimed to
be in default, stating why); and (v) such other representations or information
with respect to Tenant or the Lease as Landlord may reasonably request or which
any prospective purchaser or encumbrancer of the Property may require. Tenant
shall deliver such statement to Landlord within ten (10) days after Landlord’s
request. Landlord may give any such statement by Tenant to any prospective
purchaser or encumbrancer of the Property. Such purchaser or encumbrancer may
rely conclusively upon such statement as true and correct.

 15
 

(b)           If Tenant does not deliver such statement to Landlord
within such ten (10) day period, Landlord, and any prospective purchaser or
encumbrancer, may conclusively presume and rely upon the following facts: (i)
that the terms and provisions of this Lease have not been changed except as
otherwise represented by Landlord; (ii) that this Lease has not been canceled
or terminated except as otherwise represented by Landlord; (iii) that not more
than one month’s Base Rent or other charges have been paid in advance; and (iv)
that Landlord is not in default under the Lease. In such event, Tenant shall be
estopped from denying the truth of such facts.

Section 11.05. Tenant’s Financial Condition. Within ten
(10) days after written request from Landlord, Tenant shall deliver to Landlord
such financial statements as Landlord reasonably requires to verify the net
worth of Tenant or any assignee, subtenant, or guarantor of Tenant. In
addition, Tenant shall deliver to any lender designated by Landlord any
financial statements required by such lender to facilitate the financing or
refinancing of the Property. Tenant represents and warrants to Landlord that
each such financial statement is a true and accurate statement as of the date
of such statement. All financial statements shall be confidential and shall be
used only for the purposes set forth in this Lease.

ARTICLE TWELVE: LEGAL COSTS

Section 12.01. Legal Proceedings. If Tenant or Landlord
shall be in breach or default under this Lease, such party (the “Defaulting
Party”) shall reimburse the other party (the “Nondefaulting Party”) upon demand
for any costs or expenses that the Nondefaulting Party incurs in connection
with any breach or default of the Defaulting Party under this Lease, whether or
not suit is commenced or judgment entered. Such costs shall include legal fees
and costs incurred for the negotiation of a settlement, enforcement of rights
or otherwise. Furthermore, if any action for breach of or to enforce the
provisions of this Lease is commenced, the court in such action shall award to
the party in whose favor a judgment is entered, a reasonable sum as attorneys’
fees and costs. The losing party in such action shall pay such attorneys’ fees
and costs. Tenant shall also indemnify Landlord against and hold Landlord
harmless from all costs, expenses, demands and liability Landlord may incur if
Landlord becomes or is made a party to any claim or action (a) instituted by
Tenant against any third party, or by any third party against Tenant, or by or
against any person holding any Interest under or using the Property by license
of or agreement with Tenant; (b) for foreclosure of any lien for labor or
material furnished to or for Tenant or such other person; (c) otherwise arising
out of or resulting from any act or transaction of Tenant or any party claiming
under Tenant or that relate to the Property, or such other person; or (d)
necessary to protect Landlord’s interest under this Lease in a bankruptcy
proceeding, or other proceeding under Title 11 of the United States Code, as
amended. Tenant shall defend Landlord against any such claim or action at
Tenant’s expense with counsel reasonably acceptable to Landlord or, at Landlord’s
election, Tenant shall reimburse Landlord for any legal fees or costs Landlord
incurs in any such claim or action.

Section 12.02. Landlord’s Consent.
Tenant shall pay Landlord’s reasonable attorneys’ fees incurred in connection
with Tenant’s request for Landlord’s consent under Article Nine
(Assignment and Subletting), or in connection with any other act which Tenant
proposes to do and which requires Landlord’s consent.

ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS

Section 13.01. Non-Discrimination. Tenant promises, and it
is a condition to the continuance of this Lease, that there will be no
discrimination against, or segregation of, any person or group of persons on
the basis of race, color, sex, creed, national origin or ancestry in the
leasing, subleasing, transferring, occupancy, tenure or use of the Property or
any portion thereof.

 16
 

Section 13.02. Landlord’s Liability; Certain Duties.

(a)           As used in this Lease, the term “Landlord” means only the
current owner or owners of the fee title to the Property or Project or the leasehold
estate under a ground lease of the Property or Project at the time in question.
Each Landlord is obligated to perform the obligations of Landlord under this
Lease only during the time such Landlord owns such Interest or title. Any
Landlord who transfers its title or interest is relieved of all liability with
respect to the obligations of Landlord under this Lease to be performed on or
after the date of transfer. However, each Landlord shall deliver to its
transferee all funds that Tenant previously paid if such funds have not yet
been applied under the terms of this Lease.

(b)           Tenant shall give written notice of any failure by
Landlord to perform any of its obligations under this Lease to Landlord and to
any ground lessor, mortgagee or beneficiary under any deed of trust encumbering
the Property whose name and address have been furnished to Tenant in writing.
Landlord shall not be in default under this Lease unless Landlord (or such
ground lessor, mortgagee or beneficiary) fails to cure such non-performance
within thirty (30) days after receipt of Tenant’s notice. However, if such
non-performance reasonably requires more than thirty (30) days to cure,
Landlord shall not be in default if such cure is commenced within such thirty
(30) day period and thereafter diligently pursued to completion.

Section 13.03. Severability. A determination by a court of
competent jurisdiction that any provision of this Lease or any part thereof is
illegal or unenforceable shall not cancel or invalidate the remainder of such
provision or this Lease, which shall remain in full force and effect.

Section 13.04. Interpretation. The captions of the
Articles or Sections of this Lease are to assist the parties in reading this
Lease and are not a part of the terms or provisions of this Lease. Whenever
required by the context of this Lease, the singular shall include the plural
and the plural shall include the singular. The masculine, feminine and neuter
genders shall each include the other. In any provision relating to the conduct,
acts or omissions of Tenant, the term “Tenant” shall include Tenant’s agents,
employees, contractors, invitees, successors or others using the Property with
Tenant’s expressed or implied permission.

Section 13.05. Incorporation of Prior Agreements; Modifications.
This Lease is the only agreement between the parties pertaining to the lease of
the Property and no other agreements are effective. All amendments to this
Lease shall be in writing and signed by all parties. Any other attempted
amendment shall be void.

Section 13.06. Notices. All notices required or permitted
under this Lease shall be in writing and shall be personally delivered or sent
by certified mail, return receipt requested, postage prepaid. In lieu of
mailing, either party may cause delivery of such notices, demands and requests
to be made by personal service, telegram or air freight, provided that written
proof of delivery is given to the sender. Notices to Tenant shall be delivered
to the address specified in Section 1.03 above, except that upon Tenant’s
taking possession of the Property, the Property shall be Tenant’s address for
notice purposes. Notices to Landlord shall be delivered to the address
specified in Section 1.02 above. All notices shall be effective upon
delivery or on the date delivery is refused by the receiving party. Either
party may change its notice address upon written notice to the other party.

Section 13.07. Waivers. All waivers must be in writing and
signed by the waiving party. Landlord’s failure to enforce any provision of
this Lease or its acceptance of rent shall not be a waiver and shall not
prevent Landlord from enforcing that provision or any other provision of this
Lease in the future. No statement on a payment check from Tenant or in a letter
accompanying a payment check shall be binding on Landlord. Landlord may, with
or without notice to Tenant, negotiate such check without being bound to the
conditions of such statement.

 17
 

Section 13.08. No Recordation. Tenant shall not record
this Lease without prior written consent from Landlord. However, either
Landlord or Tenant may require that a “Short Form” memorandum of this Lease
executed by both parties be recorded. The party requiring such recording shall
pay all transfer taxes and recording fees.

Section 13.09. Binding Effect; Choice of Law. This Lease
binds any party who legally acquires any rights or interest in this Lease from
Landlord or Tenant. However, Landlord shall have no obligation to Tenant’s
successor unless the rights or interests of Tenant’s successor are acquired in
accordance with the terms of this Lease. The laws of the state in which the
Property is located shall govern this Lease.

Section 13.10. Corporate Authority; Partnership Authority.
If Tenant is a corporation, each person signing this Lease on behalf of Tenant
represents and warrants that he has full authority to do so and that this Lease
binds the corporation. Within thirty (30) days after this Lease is signed,
Tenant shall deliver to Landlord a certified copy of a resolution of Tenant’s
Board of Directors authorizing the execution of this Lease or other evidence of
such authority reasonably acceptable to Landlord. If Tenant is a partnership,
each person or entity signing this Lease for Tenant represents and warrants
that he or it is a general partner of the partnership, that he or it has full
authority to sign for the partnership and that this Lease binds the partnership
and all general partners of the partnership. Tenant shall give written notice
to Landlord of any general partner’s withdrawal or addition. Within thirty (30)
days after this Lease is signed, Tenant shall deliver to Landlord a copy of
Tenant’s recorded statement of partnership or certificate of limited
partnership.

Section 13.11. Joint and Several Liability. All parties
signing this Lease as Tenant shall be jointly and severally liable for all
obligations of Tenant.

Section 13.12. Force Majeure. If Landlord cannot perform
any of its obligations due to events beyond Landlord’s control, the time
provided for performing such obligations shall be extended by a period of time
equal to the duration of such events. Events beyond Landlord’s control include,
but are not limited to, acts of God, war, civil commotion, labor disputes,
strikes, fire, flood or other casualty, shortages of labor or material,
government regulation or restriction and weather conditions.

Section 13.13. Execution of Lease. This Lease may be
executed in counterparts and, when all counterpart documents are executed, the
counterparts shall constitute a single binding instrument. Landlord’s delivery
of this Lease to Tenant shall not be deemed to be an offer to lease and shall
not be binding upon either party until executed and delivered by both parties.

Section 13.14. Survival. All representations and
warranties of Landlord and Tenant shall survive the termination of this Lease.

Section 13.15. Option to Extend Lease.

(a)           Tenant shall have one (1) two (2)year option to extend the
term of this Lease (the “Option”) on the terms and conditions set forth herein.
The two year option period shall be referred to herein as an “Extended Term.”
Tenant shall be required to give Landlord written notice of its intention to
exercise its option at least four (4) months prior to the expiration of the
initial Term.

(b)           The Option shall be personal to Tenant and may not be,
voluntarily or involuntarily, exercised by or assigned to any person or entity
other than Tenant.

(c)           The period of time within which the Option may be
exercised shall not be extended or enlarged by reason of Tenant’s inability to
exercise such Option prior to satisfaction of the foregoing conditions
precedent. All rights of Tenant to any extension shall terminate and be of no
further force or effect even after Tenant’s due and timely exercise thereof if,
after such exercise, but prior to the

 18
 

commencement date of the Extended Term in question: (1) Tenant falls to
pay to Landlord a monetary obligation of Tenant for a period of ten (10) days
after such obligation becomes due (without any necessity of Landlord to give
notice thereof to Tenant); (2) Tenant fails to commence to cure a material
non-monetary default within thirty (30) days after Landlord gives written
notice to Tenant of such default; provided, however, that if the nature of
Tenant’s default is such that more than thirty (30) days are reasonably
required for its cure, then Tenant shall not be in default if it begins such
cure within the thirty (30) day period described above and, thereafter,
diligently prosecutes such cure to completion; or (3) Landlord gives to Tenant
three (3) or more notices of default (and Tenant was in fact in default in such
instances) during the initial lease Term or applicable Extended Term, whether
or not such defaults are cured. Landlord’s waiver of its right to terminate
this Lease due to Tenant’s default in any instance shall not be deemed a waiver
of the foregoing conditions precedent and conditions subsequent to the exercise
of the Option.

[Signatures
on following page]

 19
 

Landlord and Tenant have signed this Lease at the
place and on the dates specified adjacent to their signatures below. 

	
  Dated: October           ,
  2006

  	
  “LANDLORD”

  	
   

  
	
   

  	
  VINAIGRETTES,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated: October           ,
  2006

  	
  “TENANT”

  	
   

  
	
   

  	
  ORGANIC HOLDING
  COMPANY, INC.,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Jason Brown

  Chief Executive Officer

  
				

 

 20

EXHIBIT B

OFFER LETTER

ORGANIC HOLDING
COMPANY, INC.

601
Union Street, Suite 3700 

Seattle WA 98101

October        ,
2006

Mr. Dan Karzen

c/o Vinaigrettes

126 South Glendale Boulevard

Los Angeles, CA 90026

Dear Dan:

Organic
Holding Company, Inc., a Delaware corporation (the “Company”) is pleased to offer you employment on the following
terms:

1.             Position. You will serve in a full-timecapacity as the California Catering
Manager of the Company. You will be a key team member in the further
development of the Company’s delivery and casual catering business. You will
report to the Chief Executive Officer. This is an exempt position. By signing
this letter agreement, you represent and warrant to the Company that you are
under no contractual commitments inconsistent with your obligations to the
Company.

2.             Salary.
You will be paid a salary at the annual rate of $100,000, payable in
semi-monthly installments in accordance with the Company’s standard payroll
practices. This salary will be subject to increase pursuant to the Company’s
employee compensation policies in effect from time to time.

3.             Incentive
Stock Options. Subject to approval by the Company’s Board of
Directors, the Company will grant you stock options to purchase 85,000 shares
of the Company’s Common Stock for $0.12 per share. It is intended that these
options will qualify, to the extent allowable under the Internal Revenue Code
of 1986 (the “Code”),as “incentive stock options” within the
meaning of Section 422 of the Code. The options will vest over four years: (a)
25% will vest on October    , 2007; and (b) l/48th of the
original grant will vest for each month of service thereafter. The stock
options will be subject to the terms and conditions of the Company’s Stock
Option Plan and the Company’s standard form of stock option agreement.

4.             Common
Stock. Upon the execution and delivery of this letter agreement, the
Company shall issue to you 128,205 shares of fully vested Common Stock. These
shares shall be valued at $0.12 per share and issued pursuant to a Common Stock
Purchase Agreement which provides that you will pay the par value of such
shares ($0.001 per share) in cash.

5.             Benefits.
You will be eligible for standard Company benefits subject to the
terms and conditions set forth in the Employee Handbook and/or the relevant
Summary Plan Descriptions, available for your review.

Mr. Dan Karzen 

October     , 2006 

Page 2

6.             Period
of Employment. Subject to earlier termination as described in this
paragraph, the term of your employment will be for one (1) year from the date
of this letter (the “Term”).
Subject to paragraph 7 (Termination Without Cause), your employment with the
Company will be “at will,” meaning that either you or the Company will be
entitled to terminate your employment at any time and for any reason, with or without
cause. Any contrary representations which may have been made to you are
superseded by this offer. This is the full and complete agreement between you
and the Company on this term. Although your job duties, title, compensation and
benefits, as well as the Company’s personnel policies and procedures, may
change from time to time, the “at will” nature of your employment may only be
changed in an express written agreement signed by you and a duly authorized
officer of the Company.

7.             Termination
Without Cause. If the Company terminates your employment during the
Term without Cause (as hereinafter defined), then the Company shall continue to
pay your salary in installments for the balance of the Term in accordance with
the Company’s standard payroll practices if you sign a written release of all
claims against the Company arising from your employment and the termination of
your employment. For purposes of this letter agreement, “Cause” shall mean and
be limited to:

(i)            An unauthorized use or disclosure by
you of the Company’s confidential information or trade secrets, which use or
disclosure causes material harm to the Company; or

(ii)           Your conviction of, or plea of “guilty”
or “no contest” to, a felony under the laws of the United States or any state
thereof;

This,
however, shall not be an exclusive list of all acts or omissions that the
Company may consider as grounds for your termination without Cause.

8.             Outside
Activities. While you render services to the Company, you will not
engage in any other gainful employment, business or activity without the
written consent of the Company. While you render services to the Company, you
also will not assist any person or organization in competing with the Company,
in preparing to compete with the Company or in hiring any employees of the
Company. Notwithstanding any other provision of this letter to the contrary,
the Company acknowledges that you will devote some of your time to the winding
down of Vinaigrettes LLC and the management of 126 South Glendale Boulevard, Los
Angeles, CA 90026, and that you may engage in personal investments provided
that they do not materially interfere with the performance of your duties.

9.             Withholding
Taxes. All forms of compensation referred to in this letter are
subject to reduction to reflect applicable withholding and payroll taxes.

10.           Entire
Agreement. This letter contains all of the terms of your employment
with the Company and supersedes any prior understandings or agreements, whether
oral or written, between you and the Company.

Mr. Dan Karzen 

October    , 2006 

Page 3

11.           Amendment and Governing
Law.  This letter agreement
may not be amended or modified except by an express written agreement signed by
you and a duly authorized officer of the Company. The terms of this letter agreement
and the resolution of any disputes will be governed by California law.

12.           Attorneys’ Fees.  If either party to this letter
commences any legal action, suit, counterclaim, appeal, or other proceeding (an
“Action”) against the other party to
this letter to enforce or interpret any of its terms, because of an alleged
breach, default, or misrepresentation in connection with any of its terms, or
because of a claim arising out of the terms of this letter, the losing or
defaulting party shall pay to the prevailing party reasonable attorneys’ fees,
costs and expenses incurred in connection with the prosecution or defense of
such Action.

We hope that you find the
foregoing terms acceptable. You may indicate your agreement with these terms
and accept this offer by signing and dating this letter and returning it to me.
As required by law, your employment with the Company is also contingent upon
your providing legal proof of your identity and authorization to work in the
United States. This offer, if not accepted, will expire at the close of
business on October 27, 2006,

We look forward to having you
join us.

	
  

  	
   

  	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  ORGANIC HOLDING COMPANY, INC. 

  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Jason Brown

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Jason Brown, Chief Executive Officer

  

 

I have read and accept this employment offer:

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DAN KARZEN

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:  27th October, 2006Exhibit
10.5

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT
(the “Agreement”) is made as of the 14th day of
April, 2005, by and between, ORGANIC HOLDING
COMPANY, INC., a Delaware corporation (the “Buyer”), and BRIAZZ INC., a Washington corporation (the
“Seller”) (collectively, the “Parties”).

RECITALS:

A.                                   Seller is engaged in the business of, among
other things, selling prepared foods on a wholesale and retail basis, including
a catering business. Seller filed its voluntary Chapter 11 bankruptcy petition
on June 7, 2004, in the United States Bankruptcy Court for the Western
District of Washington, under Case No. 04-17701-PHB, and is a
debtor-in-possession in that case.

B.                                     The Parties desire that Seller sell to Buyer,
and that Buyer purchase from Seller, the Assets on the terms set forth in this
Agreement.

NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein, and
for other good, fair and valuable consideration, the receipt, reasonable
equivalency and sufficiency of which are hereby acknowledged, the Parties
hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

The following terms shall
have the following meanings when used in this Agreement:

1.1                                 “Assets” means all of Seller’s right,
title, and interest in and to the following assets of Seller:

(a)           All inventory, furniture, fixtures, equipment, Leases and
Executory Contracts, leasehold improvements, lease deposits, owned vehicles and
telephone numbers used in connection with (i) all Seller’s locations in the
State of Washington and (ii) all Seller’s locations in Los Angeles County and
Orange County, California, other than the lease, lease deposit, and leasehold
improvements for Seller’s corporate headquarters at 3901 – Seventh Avenue
South, Seattle, Washington 98108;

(b)           All Assets, both tangible and intangible, constituting
Seller’s catering business including but not limited to Seller’s catering
contracts with the University of Washington, Starbucks, and Verizon;

(c)           The trade mark and trade name “Briazz” and all associated
good will and trademarks, service marks, trade dress, and logos (provided that
Buyer grant Seller a transferable, perpetual license to use the trade name “Briazz”
in the

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San Francisco Bay Area subject to standard
terms and conditions, pursuant to the license agreement attached as Exhibit
A):

(d)           The URL www.Briazz.com and all licenses, permits
and contracts related thereto; and

(e)           All restaurant and food storage or preparation equipment
presently in storage.

1.2           “Bankruptcy
Code” means Title 11 of the United States Code, as amended, 11 U.S.C. §§
101, et seq.

1.3           “Bankruptcy Court” means the United States
Bankruptcy Court for the Western District of Washington, or such other court
exercising competent jurisdiction over the bankruptcy case involving Seller.

1.4           “Buyer” is defined in the Preamble.

1.5           “Closing” means the delivery of the documents
necessary to transfer the Assets to the Buyer as provided in this Agreement.

1.6           “Closing Date” is defined in Section 2.4.

1.7           “Competing Bid” means a bid for some or all of the
Assets.

1.8           “Leases and Executory Contracts” means those leases
and executory contracts that are a part of the Assets and are described in the
attached Schedule 1.8.

1.9           “Note” means the secured non-negotiable convertible
promissory note described in Section 2.2(b).

1.10         Series A Preferred Stock means the Series A Preferred
Stock of the Buyer.

1.11         “Purchase Price” is defined in Section 2.2.

1.12         “Right to Overbid” means the right of the Buyer to
overbid on any sale of Seller’s assets used in the San Francisco Bay Area,
other than a transfer of all equipment at one or more locations together with
the assignment and assumption of the real property leases for such location or
locations. Seller shall provide adequate notice to Buyer so that Buyer has a
meaningful opportunity to overbid on the sales to which this subsection 1.12
applies.

1.13         “Sale Order” means the order of the Bankruptcy Court
which is not subject to stay pending appeal that is in substantially and
materially the form attached hereto as Exhibit B, authorizing the
transactions described in this Agreement, requiring the assumption and
assignment of the Leases and Executory Contracts, finding that Buyer is a good
faith purchaser under section 365(m) of the Bankruptcy Code, and waiving any
automatic stay period under applicable rules, including Bankruptcy Rule
6004(g).

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1.14         “San Francisco Bay Area” means the geographical
location of the five (5) Briazz stores currently operating in the San
Francisco/Oakland, California area.

1.15         “Seller” is defined in the Preamble.

ARTICLE II

PURCHASE AND SALE

2.1           Purchase and Sale of Assets. Subject to the terms
and conditions of this Agreement, and pursuant to sections 363 and 365 of the
Bankruptcy Code, at Closing Seller shall grant, sell, convey, transfer, assign
and deliver to Buyer, free and clear of all liens, claims, interests and
encumbrances, and Buyer shall purchase all right, title and interest in and to
the Assets. In addition, Seller shall grant to Buyer the Right to Overbid set
forth in Section 1.12.

2.2           Purchase Price. For the Assets and the Right to
Overbid, Buyer agrees to pay to Seller at the Closing a purchase price of One
Million Three Hundred Fifty Thousand dollars ($1,350,000) payable as follows:

(a)           $750,000
in cash at Closing; and

(b)           a
secured non-negotiable convertible promissory note in the principal amount of
$600,000 in the form of Exhibit C, bearing interest at the rate of seven
and three-quarters percent (7.75%) per annum, with a five-year term, payable in
20 equal quarterly payments, convertible at the holder’s election during the
first 12 months into Series A Preferred Stock. Repayment of the obligations
under Exhibit C, and any new notes issued pursuant to this Agreement
shall be secured pursuant to the terms of a Security Agreement in the form of Exhibit
D. The number of shares of the Buyer’s Series A Preferred Stock that shall
be issued to the holder (or holders) in the event of conversion equals the
amount of the note which is converted divided by 1.2987. This formula is based
on a $10 million valuation of the Buyer. When the amounts of the claims of all
of the secured noteholders of Briazz are fixed by a final Bankruptcy Court
Order which is no longer subject to appeal or revision, the note in the form of
Exhibit C shall be cancelled and returned to Buyer, whereupon Buyer will
issue new notes, as provided for in Exhibit C, provided that the
recipient of each note shall provide any written representations and warranties
which are required to assure that the Notes and any shares of Seller’s capital
stock issued upon conversion of the Notes are issued in compliance with
applicable federal and state securities laws. Such written representation and
warranties shall be in the form of the Secured Noteholder Representation and
Acknowledgment Letter (“Acknowledgement Letter”) in the form of Exhibit E.
If one or more of the proposed recipients of a new note does not provide the
Buyer with a signed Acknowledgment Letter, Buyer will issue a new note to
Seller or a successor or assignee of Seller such as a bank or trust company in
a principal amount equal to the total principal amounts of the notes which
would otherwise be issued to the secured noteholders who have not signed an
Acknowledgment Letter, and with the same terms, other than

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as to amount, as the
notes being issued to the secured noteholders who have signed the
Acknowledgment Letter. The Seller or its successor or assignee shall in turn
forward the payments in the amounts which the recipient or recipients of such
payments would have received had they signed the Acknowledgment Letter.

(c)           The Buyer shall allocate the purchase price among the
Assets. Such allocation shall be without prejudice to third parties.

2.3           Minimum Overbid. The Parties hereby agree that any
sales procedures relating to the disposition of the Assets will include, among
other things, a requirement that any subsequent bids shall be in increments of
no less than $50,000. Buyer and Seller shall further agree on reasonable
overbid procedures, including but not limited to bid procedures to insure that
any overbidders are qualified to bid. Flying Food Group shall be deemed a
qualified bidder.

2.4           The Closing. The Closing shall take place on a date
(the “Closing Date”) no later than two business days after the later of the
following:

(a)           the date on which the Sale Order becomes final and not
subject to stay pending appeal; or

(b)           April 14, 2005.

2.5           Access to Corporate Offices. During the two
(2) week period immediately after the Closing, Seller shall provide Buyer with
access to Seller’s corporate offices during regular business hours free of
charge so that Buyer can remove the Assets which are located at Seller’s
corporate offices, provided that if the two week period expires after April 30,
Buyer shall provide reasonable access to such Assets either at the corporate
offices or at an appropriate storage facility.

ARTICLE III

REPRESENTATIONS AND
WARRANTIES OF SELLER

3.1           Warranty of Title. Seller warrants that it is the
owner of the Assets and that, upon entry of the Sale Order, the Leases and
Executory Contracts will be freely assignable by Seller to Buyer and that the
Assets will be sold to Buyer free and clear of all liens, claims, interests and
encumbrances of any nature whatsoever, except for the obligations of Seller
under the Leases and Executory Contracts that accrue after the Closing Date.

3.2           Warranties of Condition. Except as otherwise
explicitly set forth in this Agreement, the sale of the Assets to the Buyer is “AS-IS,
WHERE-IS” and the Seller makes no warranties, express or implied, in connection
with the Assets or its sale of the same to the Buyer. Without limiting the
generality of the foregoing, the Seller hereby DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR
PURPOSE with respect to the Assets or its sale of the same to the
Buyer; PROVIDED that Seller
warrants that the Assets shall be conveyed to Buyer at Closing in substantially
the same condition as they were in on the date hereof.

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3.3           Warranty of Continued Operation. Seller warrants
that it shall continue to operate its business which uses the Assets until the
Closing Date.

ARTICLE IV

NO ASSUMPTION OF
LIABILITIES BY BUYER

Except as may otherwise be
explicitly provided in this Agreement, Buyer shall not assume any debts, liabilities, or obligations of the
Seller of any nature, whether present or future, fixed or contingent, disclosed
or undisclosed, including, but not limited to, any and all liabilities for any
claims, debts, defaults, warranties, or duties of the Seller of any kind, provided that Buyer shall be liable for
all liabilities accruing after the closing under assumed and assigned executory
contracts and real property leases.

ARTICLE V

TERMINATION

The Seller and the Buyer
shall each be entitled to terminate this Agreement and shall have no further
liability hereunder of any kind whatsoever on such date as the Bankruptcy Court
enters an order approving a Competing Bid or if the sale is not consummated by
the Closing Date.

ARTICLE VI

CONDITIONS OF CLOSING FOR
THE BENEFIT OF BUYER

The obligation of Buyer to
consummate the transactions contemplated hereunder is subject to the
satisfaction as of the Closing Date of each of the following conditions (all of
which shall be conclusively deemed to be satisfied or waived when Buyer
transfers the Purchase Price to the Seller):

6.1           Seller’s Obligations Performed. Seller shall have
performed its obligations under this Agreement.

6.2           Bankruptcy Court Approval. The Bankruptcy Court
shall have entered the Sale Order and the Sale Order shall be in full force and
effect and not subject to stay pending appeal.

6.3           Trade Name. Seller shall have taken all actions
necessary to ensure that Buyer will acquire all rights in all trademarks and
trade names that are part of the Assets.

6.4           Cure of Defaults. Seller shall have cured any and
all defaults, monetary or otherwise, under the Leases and Executory Contracts
as of the Closing Date, and all of Seller’s stores which are included in the
Assets shall continue to be open for business.

6.5           Employees. Seller shall have advised all of its
employees that the company is being sold. Seller shall have advised each
employee of his or her last day of

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employment and shall have
paid all wages, benefits and employment related state and federal taxes through
each employee’s last day of employment. Seller agrees that it shall have
complied with state and federal regulations regarding termination including, if
applicable, the provisions of the WARN Act.

6.6           Extension of Time to Assume or Reject Leases or
Executory Contracts. The Bankruptcy Court shall have entered an order extending
the deadline to assume or reject nonresidential real property leases so that
the Leases and Executory Contracts can be assumed and assigned at Closing
without the approval of any other party to such leases and agreements.

6.7           Closing Deliveries. At or prior to Closing, Seller
shall deliver, or cause to be delivered, to Buyer the following documents:

(a)           Bill of Sale. A bill of sale in form and substance
reasonably satisfactory to Buyer and signed by Seller; and

(b)           Assignment Notice. A written notice of assignment,
in form and substance reasonably satisfactory to Buyer and signed by Seller,
informing each party to a Lease or Executory Contract that Seller’s intent in
such contract has been assigned to Buyer.

6.8           Continued Operations Without Significant Deterioration.
Seller shall have continued to operate its business which uses the Assets until
the Closing Date without significant deterioration to the manner in which it
has operated such business since its bankruptcy case commenced and without
significant deterioration to the continuity of service to customers and
reputation in the applicable market area.

ARTICLE VII

CONDITIONS OF CLOSING FOR
THE BENEFIT OF THE SELLER

The obligation of the Seller
to consummate the transactions contemplated hereunder is subject to the
satisfaction on the Closing Date of each of the following conditions:

7.1           Bankruptcy Court Approval. The Bankruptcy Court
shall have entered the Sale Order and the Sale Order shall be in full force and
effect and not subject to stay pending appeal.

7.2           Consideration. That part of the Purchase Price
described in Section 2.2(a) shall have been received by Seller via wire
transfer or cashiers check, and the Note described in Section 2.2(b) will have
been executed and delivered to Seller.

ARTICLE VIII

MISCELLANEOUS

8.1           Notices. All notices, requests, demands, claims,
and other communications hereunder will be in writing. Any notice, request,
demand, claim, or other

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communication hereunder
shall be deemed duly given upon receipt if it is sent by facsimile, or
reputable express courier, and addressed or otherwise sent to the intended
recipient as set forth below:

(a)                                  If to the Seller:

Briazz Inc.

3901 Seventh Avenue South, Suite 200

Seattle, Washington 98108

Attention: Bill Zang

Fax: (206) 467-1970

with a copy to:

Cynthia A. Kuno 

Crocker Kuno Ostrovsky, LLC 

720 Olive Way, Suite 1000 

Seattle, Washington 98101 

Fax: (206) 624-9894

(b)                                 If to the Buyer:

Organic Holding Company

5610 E. Lake Sammamish Parkway SE, Suite A

Issaquah, Washington 98029

Attention: Jason Brown

Fax: (425) 837-9622

with a copy to:

Carr, McClellan, Ingersoll, Thompson & Horn

216 Park Road

Burlingame, California 94010

Attention: Ed Willig

Fax: (650) 373-3388

Any party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address or facsimile
number set forth above using any other means (including personal delivery,
messenger service, ordinary mail, or electronic mail), but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it is actually received by the intended recipient. Any
party may change the address or facsimile number to which notices, requests,
demands, claims and other communications hereunder are to be delivered by
giving the other party notice in the manner herein set forth.

8.2           Controlling Law. This Agreement shall be construed
under and governed by the laws of the State of Washington.

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8.3           Entire Agreement. This Agreement and the agreements
and documents referred to herein constitute the entire agreement of the Parties
with respect to the transactions contemplated hereby and supersede all other
agreements between the Parties, whether written or oral, with respect to such
transactions.

8.4           Binding Effect. This Agreement shall inure to the
benefit of and bind the Parties hereto and their respective heirs, successors
and assigns.

8.5           Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other party, provided
that this Section 8.5 shall not affect the issuance of new notes as
provided for in Section 2.2(b).

8.6           Expenses and Fees. Each party shall pay its
respective costs and expenses, including, without limitation, legal and
accounting fees in connection with this Agreement and the transactions
contemplated hereby.

8.7           Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.

8.8           Modifications and Waivers. No supplement,
modification or amendment of this Agreement shall be binding unless made in a
written instrument which is signed by all of the Parties and which specifically
refers to this Agreement. Compliance with the provisions of this Agreement may
be waived only by a written instrument specifically referring to this Agreement
and signed by the party waiving compliance. No course of dealing, nor any
failure or delay in exercising any right, shall be construed as a waiver, and
no single or partial exercise of a right shall preclude any other or further
exercise of that or any other right. This section shall not affect the
transactions described in Section 2.2(b).

8.9           Severability. Any term or provision of this
Agreement that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.

8.10         Incorporation of Exhibits and Schedules. The Exhibits
and Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.

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IN WITNESS WHEREOF, the
Parties hereto have duly caused this Agreement to be executed as of the day and
year first above written.

	
  BUYER:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
  ORGANIC
  HOLDING COMPANY, INC.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Jason Brown

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
  Jason Brown

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  CEO

  	
   

  	
   

  	
   

  	
   

  	
   

  
																			

 

	
  SELLER: 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BRIAZZ,
  INC.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Illegible

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
  Illegible

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  CFO

  	
   

  	
   

  	
   

  	
   

  	
   

  
										

 

 

 9

EXHIBIT A

BRIAZZ
TRADEMARK LICENSE AGREEMENT

BRIAZZ
TRADEMARK LICENSE AGREEMENT

This agreement, effective as
of the last date executed by a party below, is entered into by and between
Organic Holding Company, Inc. d/b/a Organic to Go, a Delaware corporation,
having an address at 5610 E. Lake Sammamish Parkway 5E, Suite A, Issaquah,
Washington 98029 (“Organic” or “Licensor”) and Briazz, Inc., a Washington
corporation, having an address at 3901 - 7th Avenue South, Suite 200, Seattle,
Washington 98108 (“Briazz” or “Licensee”).

I. Recitals

WHEREAS, contemporaneously
herewith, Licensor and Briazz have entered into an Asset Purchase Agreement
dated April         , 2005
under which Licensor has acquired all assets of Briazz related to its business
under the Briazz “Marks” (defined in Section II, below); and

WHEREAS, the Asset Purchase
Agreement requires Organic to grant Briazz a transferable perpetual license to
use the trade name “Briazz” in the “Territory” (defined in Section II, below);

NOW, THEREFORE, the parties
agree with each other as follows:

II. Definitions

1.                                       The “Marks” mean the word mark BRIAZZ as set
forth in U.S. Trademark Registration No. 2,0183,79 and BRIAZZ (AND DESIGN) as
set forth in U.S. Registration No. 2,0183,90), all confusingly similar marks,
and all rights in and to the marks, logos, designs, trade dress, and depictions
thereof, together with any and all rights whatsoever existing at the effective
date or accruing later during the term of this agreement, of either party in
the Marks and all confusingly similar terms at common law, in any U.S. state,
federal and local and foreign trademark registrations and applications, design
registrations, past and future infringement claims and rights to recover
therefrom, fictitious, assumed business, corporate and trade name, and domain
name and URL registrations, permits, licenses and contracts relating thereto,
worldwide.

2.                                       “The Field” means the field of prepared foods offered for sale on the wholesale and
retail bases, as well as catering and delicatessen services.

3.                                       “The Territory” means the sites at which
Briazz does business as of the effective date, all located in the California
counties of Alameda and San Francisco.

III. Agreements

1.                                       License. Organic hereby grants to Licensee the
perpetual, personal, irrevocable (subject to section 9, termination),
royalty-free right to use the Marks in the Territory and the Field subject to
the restrictions of this license. Nothing herein shall be construed to grant
any license or right to any trademark of the parties other than the Marks.
Licensee may neither sublicense its rights nor expand beyond the sites at which
it does business as of the effective date

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without prior written approval of Organic.
Approval of a sublicense shall not be unreasonably withheld or delayed if the
sublicense relates to the sale by Licensee of one or more of its stores located
in the Territory which are in operation on the date of this agreement provided
that (a) Each proposed sublicensee enters directly into a trademark license
with Organic with terms substantially similar to those in this agreement and
(b) Organic shall have the right to reject a proposed licensee if it finds the
sublicensee’s financial condition unacceptable. Organic reserves the right to
require payment of royalties as a condition of approval of a proposed sublicence
that results in an expansion of the Territory. Notwithstanding any provision
contained herein to the contrary, Organic may license others, including but not
limited to firms, individuals, co-partnerships or corporations, to use the
Marks in connection with any products and services, and, except as specifically
granted herein, Organic reserves all rights pertaining to the Marks.

2.                                      Ownership and Goodwill. Licensee acknowledges that Organic shall as
of the effective date and thereafter own all right, title, and interest in and
to the Marks and all goodwill related thereto, and shall not at any time do or
cause to be done any act contesting or in any way impairing or intending to
impair any part of such right, title, or interest or harming, misusing or bringing
into disrepute the Marks. Licensee recognizes the great value, prestige,
publicity and goodwill associated with the Marks, and in such connection,
acknowledges that such goodwill exclusively belongs to Organic and that the
Marks have acquired secondary meaning in the mind of the purchasing public as a
source of goods and services in the Field.

3.                                      Costs. Except as expressly herein, it is understood
that all costs associated with Licensee’s performance hereunder or use of the
Marks, whether approved or disapproved at any stage by Organic, shall be borne
by Licensee, and Organic has no responsibility for any such costs.

4.                                      Representations and Warranties.

4.1                                 Licensee warrants that, within thirty days of
the effective date, it will deliver to Organic all of its files and records
relating to the Marks, together with all depictions of the Marks not required
for Licensee to operate under the license granted hereby. Organic shall have
thirty days thereafter to advise Licensee if it desires that Licensee cease use
of any such depictions, in which event Licensee shall have the right to exhaust
its current supplies of materials bearing the Marks. Otherwise, Organic shall
be deemed to approve all current usages of the Marks by Licensee. Licensee
hereby warrants that such files and records will contain all information known
to it related to any and all claims of any kind, whether claims for
infringement of the Marks or claims that use of the Marks infringes the rights
of any third party. Otherwise, this license is given “AS IS,” without warranty
of any kind.

4.2                                 Neither party makes any warranty or
representation concerning the validity, enforceability or value of any one or
more of the Marks.

4.3                                 Neither party makes any representation or
warranty that any one or more of the Marks is available for use as a service
mark, a trademark or otherwise. EACH PARTY HEREBY DISCLAIMS ANY AND ALL
WARRANTIES RELATING TO THE MARKS AND THE LICENSED RIGHTS, INCLUDING BUT NOT
LIMITED TO WARRANTIES OF

 2
 

TITLE, AGAINST INFRINGEMENT, MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE.

5.                                      Protection of the Marks.

5.1                                 Licensee agrees to notify Organic promptly in
writing of all claims of infringement that may arise during the term, including
claims for infringement of the Marks and claims that use of the Marks infringes
the rights of any third party relating to the Marks. Organic shall have the
sole right to protect the Marks and may, in its sole discretion, commence or
prosecute and seek any trademark registrations, claims or suits it deems
advisable, at its own expense, either in its own name or in the name of
Licensee, or join Licensee as a party thereto, at its sole option. Licensee
also agrees to provide all reasonable assistance and to execute all further
documents and provide all further testimony appropriate to confirm Organic’s
sole and exclusive ownership of the Marks, worldwide.

5.2                                 Licensee agrees not, directly or indirectly,
to challenge or assist another party in challenging the validity, use or
registration by Organic of the Marks in any registration or license or
fictitious, assumed business or corporate name or URL.

5.3                                 Quality, Markings. Licensee agrees to maintain a level of
quality of the goods or services offered in connection with the Marks
substantially similar to that as of the effective date, no less than consistent
with general industry standards, and according to any and all specifications
Organic may provide to Licensee after the effective date. To ensure the quality
of the goods and services offered under the Marks, Licensee will provide
Organic’s authorized representative access to the location at which it
maintains its business records during regular business hours and at other times
as may be mutually arranged, to further the parties’ continued compliance with
minimum quality control standards. The parties will take all reasonable steps
to protect the confidentiality of all proprietary information disclosed under
this obligation. Licensee also agrees to cause statutory notices of trademark,
copyright and like registrations to be affixed to or imprinted on products and
materials on Organic’s request. Licensee also agrees not to affix its own or
any other trademark, design or service mark to products or materials bearing
the Marks without Organic’s prior written approval.

6.                                      Samples. At Organic’s request, Licensee shall promptly
provide Organic, at no charge, reasonable quantities of any Licensee materials
and products related to the Marks. No new materials or products will be
manufactured or sold by Licensee until Organic has given written approval at
each appropriate stage. Licensee agrees that the Marks possess a special,
unique and extraordinary character. If at any time Organic deems that the
continued development, manufacture or sale of any materials or product will
harm, bring into disrepute, or affect the integrity of the Marks, or is not in
keeping with the reputation of Organic, Organic shall have the right to
withdraw its approval previously given. Licensee acknowledges that all
materials produced pursuant to this agreement which incorporate the Marks and
all right, title and interest therein, including copyright, shall be owned by
Organic. These materials may include but are not limited to designs, sketches,
tracings, draft and finished artwork, packaging, advertisements, instructions
and descriptive or textual materials. In the event such materials are adjudged
not to be derivative works, Licensee hereby transfers and assigns to Organic,
for fair

 3
 

consideration, all rights, including
copyright, in all materials produced pursuant to this agreement.

7.                                      Compliance. Each party shall be solely responsible for its
compliance with all laws and regulations relating to its duties hereunder and
the design, manufacture, sale, provision of, or distribution of any and all products
and services.

8.                                      Indemnification. The parties hereby agree to indemnify, defend
and hold harmless one another and successors-in-interest to their rights under
this agreement from all claims and costs that may arise from their unlawful and
tortious activities under the Marks, whether occurring before or after the
effective date. Licensee further agrees to indemnify, defend, and hold Organic
and its agents, assigns and successors in interest harmless from any consumer
protection and products liability claims or suits arising or alleging to arise
out of Licensee’s activities. As soon as commercially practicable, therefore,
Licensee agrees to secure and maintain, at a minimum, commercial general
liability insurance, including products liability, in the minimum amount of
$2,000,000 per occurrence. Policies evidencing the above coverage shall include
Organic as an Additional Insured and shall include or provide for insurance
coverage for liability assumed under this agreement. All such insurance
policies shall contain a minimum thirty (30) day notice requirement to Organic
prior to cancellation. As evidence that Licensee has the required coverage,
original certificates of insurance or true copies of the policies shall be
presented to Organic upon request.

9.                                      Termination. This agreement shall be perpetual except in
the following events of termination:

9.1                                 Any breach of this agreement shall give the
non-breaching party the right to terminate this agreement. The aggrieved party
shall, however, give the other party written notice of the breach and 30 days
from the date of actual receipt of such notice to cure said breach. If such
breach is not cured within the 30-day period, this agreement shall
automatically terminate.

9.2                                 Upon termination of this agreement for Licensee’s
breach, Licensee shall, as soon as commercially practicable, cease use of the Marks and transfer to Organic all assumed
business names, URLs, and other registrations and applications which include
any one or more of the marks, to the extent not previously transferred to
Organic.

9.3                                 This agreement shall automatically terminate in the event that Licensee ceases use of
the Marks for a period longer than 365 days. On such a termination, all rights
of the Licensee shall revert automatically to Organic.

10.                               Disclaimer of Agency,
Partnership and Joint Venture. In
the performance of this agreement, the parties and their respective employees
and agents will at all times act as independent contractors as to one another,
and shall not be considered employees or agents of the other party. Nothing
herein shall be construed to grant either party the right to exercise control
or direction over the method by which the other party provides goods or
services. Further, nothing in this agreement shall be construed to create any
legal relationship between Organic and Licensee except as expressly set forth
herein.

 4
 

11.                               Entire Agreement. This agreement constitutes the entire
agreement and understanding between the parties relating to its subject matter,
and supersedes any and all prior agreements and understandings, or course of
prior conduct, whether written or oral, relating to such subject matter.

12.                               Severability. Any term or provision of this agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.

13.                               Assignment. Except to a successor in interest to all of
a party’s rights in the Marks, this agreement may be assigned by a party only
upon the other party’s prior written approval, not to be withheld unreasonably.
Except in the event of an assignment to such a successor in interest, Licensee
shall give Organic a minimum of 90 days advance written notice of any bona fide offer to acquire its rights in
the Marks by assignment, and Licensee shall assign the Marks to Organic if
Organic is willing to meet or exceed the offer received by Licensee in
consideration for the assignment.

14.                               Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given upon receipt
if it is sent by facsimile, or reputable express courier, and addressed or
otherwise sent to the intended recipient as set forth below:

14.1                           If to Briazz:

Briazz
Inc.

3901
Seventh Avenue, Suite 200

Seattle,
Washington 98108

Attention:
Bill Zang

Fax: (206) 467-1970

with a copy to:

Cynthia
A. Kuno

Crocker
Kuno Ostrovsky, LLC

720
Olive Way, Suite 1000

Seattle,
Washington 98101

Fax: (206) 624-9894

14.2                           If to Organic:

Organic
Holding Company

5610
E. Lake Sammamish Parkway SE, Suite A

Issaquah,
Washington 98029

Attention:
Jason Brown

Fax: (425) 837-9622

with a copy to:

 5
 

Carr,
McClellan, Ingersoll, Thompson & Horn

215
Park Road

Burlingame,
California 94010

Attention:
Ed Willig

Fax: (650) 373-3388

Any party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address or facsimile number set
forth above using any other means (including personal delivery, messenger
service, ordinary mail, or electronic mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been duly given
unless and until it is actually received by the intended recipient. Any party
may change the address or facsimile number to which notices, requests, demands,
claims and other communications hereunder are to be delivered by giving the
other party notice in the manner herein set forth.

15.                               Jurisdiction and Venue. The agreement shall be deemed to have been
made in Washington, and all questions relating to its validity, interpretation,
performance, and enforcement shall be governed by and construed in accordance
with the laws of the State of Washington, notwithstanding any conflicts of law
doctrine to the contrary. In the event of legal action between the parties,
both parties hereby consent irrevocably to the exclusive jurisdiction of and
venue in the courts of King County, Washington.

16.                               Attorney’s Fees. The substantially prevailing party in any
dispute shall be awarded its reasonable attorney’s fees, costs (including costs
on appeal, expert’s fees and court costs) and expenses as may be fixed by any
court of law.

17.                               Survival. Sections, 2, 8 and 13 through 19 (inclusive)
of Article III of this agreement shall survive any termination.

18.                               Counterparts. This agreement may be executed in one or
more counterparts, including electronic counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.

 6
 

19.                               Modifications and Waivers. No supplement, modification or amendment of
this agreement shall be binding unless made in a written instrument which is
signed by all of the parties and which specifically refers to this agreement.
Compliance with the provisions of this agreement may be waived only by a
written instrument specifically referring to this agreement and signed by the
party waiving compliance. No course of dealing, nor any failure or delay in
exercising any right, shall be construed as a waiver, and no single or partial
exercise of a right shall preclude any other or further exercise of that or any
other right.

	
  AGREED:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BRIAZZ, INC.:

  	
   

  	
   

  	
  ORGANIC HOLDING COMPANY, INC.

  d/b/a ORGANIC TO GO:

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  
								

 

 7

EXHIBIT B

ORDER AUTHORIZING SALE

 

	
  

  	
  Honorable The Honorable Philip H. Brandt 

  Chapter 11 

  Hearing Date: April     , 2005 

  Hearing Time:           
  am/pm 

  Hearing Location: United States Courthouse, 

  Seattle. Courtroom No. 8106 

  Response Date: April     , 2005

  

 

UNITED STATES
BANKRUPTCY COURT

WESTERN DISTRICT OF WASHINGTON AT SEATTLE

	
  In re

  

  BRIAZZ INC.,

   

  Debtor.

  	
  Case
  No. 04-17701

  ORDER
  AUTHORIZING ASSET PURCHASE AGREEMENT WITH ORGANIC HOLDING COMPANY; THE SALE
  OF CERTAIN OF DEBTOR’S ASSETS FREE AND CLEAR OF ALL LIENS, CLAIMS, INTERESTS,
  AND ENCUMBRANCES; THE ASSUMPTION AND ASSIGNMENT OF CERTAIN LEASES AND
  EXECUTORY CONTRACTS; AND THE GRANTING OF CERTAIN OVERBID RIGHTS

  

 

This matter having come
before this Court on the motion (the “Motion”) for an order pursuant to sections
105(a), 363(b), 365(a) and 365(f) of Title 11 of the United States Code (the “Bankruptcy
Code”) and Federal Rules of Bankruptcy Procedure 2002, 6004, and 6006 (a)
authorizing the sale of certain of debtor’s assets outside the ordinary course
of business described in and in accordance with the terms and conditions of
that certain Asset Purchase Agreement, dated April     ,
2005, between debtor and Organic Holding Company (“Organic”) (a copy of which
is annexed to the Declaration of                     
in Support of the Motion as Exhibit      , and is
hereinafter referred to as the “Asset Purchase Agreement”) for those certain
assets described in Section 1.1 of the Asset Purchase Agreement (the “Assets”),
to be conveyed free

 1
 

and clear of all liens, interests and encumbrances, approving the
assumption and assignment of Leases and Executory Contracts described in
Schedule 1.8 to the Asset Purchase Agreement (the “Leases and Executory
Contracts”) and further granting certain overbid rights as described in Section
1.12 of the Asset Purchase Agreement (the “Overbid Rights”) and notice of the
Motion having been duly given in accordance with applicable Federal Rules of
Bankruptcy Procedure to (i) the Office of the United States Trustee; (ii) all
parties who have filed notices of appearance in this chapter 11 case; (iii) all
parties who have filed proofs of claim in this chapter 11 case; (iv) all
parties listed on debtor’s creditor matrix; (v) the United States Attorney for
the Western District of Washington; (vi) all relevant state and local taxing
authorities; and (vii) all other entities asserting liens against, or other
interest in, any of debtor’s assets; and the Court having entered its order
shortening notice of hearing on the Motion, and all responses and objections to
the Motion, if any, having been duly noted in the record at the hearing on the
Motion; and after due deliberation and sufficient cause appearing therefore,
the Court hereby FINDS, DETERMINES AND CONCLUDES THAT:

A.        The Court has jurisdiction to hear and determine the Motion
and all related matters pursuant to 28 U.S.C. §§ 1334 and 157. Venue of this
proceeding in this district is proper pursuant to 28 U.S.C. § 157(b)(2)(A),(B),
(N) and (O).

B.        The findings and conclusions contained herein constitute the
findings of fact and conclusions of law required to be entered by this Court
with respect to the Motion pursuant to Rule 52 of the Federal Rules of Civil
Procedure, as made applicable herein by Rules 7052 and 9014 of the Federal
Rules of Bankruptcy Procedure.

C.        Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed thereto in the Motion.

D.        Notice of the Motion has been given in accordance with
Bankruptcy Rules 2002, 6004 and 6006, Such notice constitutes good, appropriate
and sufficient notice of the

 2
 

Motion, appropriate under the circumstances,
and no other or further notice of the Motion need be given.

E.         In the event of any inconsistency or
conflict between the Asset Purchase Agreement and this Order, this Order shall control.

F.         The provisions of sections 363(b) and
363(f) of the Bankruptcy Code have been complied with and are applicable as to the Assets.

G.        Debtor’s proposed sale of the Assets and
all transactions contemplated by the Asset Purchase Agreement are properly authorized under sections 105
and 363 of the Bankruptcy Code.

H.        The assumption and assignment of Leases
and Executory Contracts are properly
authorized under section 365 of the Bankruptcy Code. All actions required to
cure any and all defaults under the Leases and Executory Contracts are
described in Exhibit A attached hereto.

I.          To the extent that any of the Leases
are a lease of real property in a shopping center, the landlord has been provided adequate issuance of
Organic’s ability to perform in accordance with section 365(b)(3) of the
Bankruptcy Code.

J.         None of the Leases or Executory
Contracts involve aircraft terminals, loans, extensions of credit, financial accommodations, issuance of a
security of debtor, personal services, or are otherwise not assignable under
section 365(f) of the Bankruptcy Code.

K.        Organic has provided adequate assurance
of its ability to perform under the Leases and Executory Contracts.

L.         Certain of debtor’s assets, including
the Assets, are rapidly deteriorating in value. Accordingly, the prompt disposition of the Assets is required to
obtain significant value from such assets for the benefit of debtor, its
estate, its creditors and equity security holders and other parties in
interest.

 3
 

M.       Debtor has made significant and satisfactory efforts to
realize the highest or
best value for the Assets, Debtor’s agreement with Organic was the result of
arms-length negotiations, Debtor’s selection of Organic as the highest or
otherwise best offer for the Assets is the result of a fair and open marketing
process conducted in good faith by all parties.

N.        Consummation of the Asset Purchase
Agreement and related documents (collectively, the “Asset Sale”) will result in maximization of debtor’s
estate and is in the best interests of debtor, its estate, its creditors and
equity security holders and other parties in interest.

O.        The sale, conveyance, and assignment of
the Assets pursuant to the Asset Purchase Agreement, shall be free and clear of all of the following
(collectively “Liens”): allliens,
encumbrances, and interests, including, without limitation, mortgages, security
interests, conditional sale and or title retention agreements, pledges, liens,
judgments, demands, easements, restrictions, constructive or resulting trusts,
or charges of any kind, including but not limited to, any restriction on the
use, transfer, receipt of income or other exercise of any attribute of
ownership and all debts arising in any way in connection with any acts of
debtor, and claims (as that term is defined in § 101(5) of the Bankruptcy
Code), obligations, demands, guarantees, options, rights, contractual
commitments, including without limitations claims related to the sale or
distribution of products sold by debtor or its predecessors, claims related to
adverse effects upon human health or the environment, including, but not
limited to those in connection with anyof debtor’s (or its predecessors’) operations or use of any of the
Assets arising prior to the Closing Date, all whether imposed by an agreement,
understanding, law, equity or otherwise. All such Liens and any and all other
interests shall be released, terminated and discharged as to the Purchased
Assets and Organic and be satisfied solely from the proceeds of such sale or
other assets of the estate. Notwithstanding the foregoing, the term Liens shall
not include the obligations under Leases and Executory Contracts due after the
Closing Date that are being assumed and assigned hereby and the interests of
the parties other than debtor to such Leases and Executory Contracts.

 4
 

P.         As a condition of the sale of the Assets, Organic requires
that the Assets be sold
free and clear of all liens, liabilities, claims, interests and encumbrances.
Organic would not enter into and consummate the sale, thus adversely affecting
debtor’s estate and its chapter 11 efforts, if the sale were not free and clear
of all Liens of debtor or if Organic was or would be liable for any of the
Liens.

Q.        Organic is a “good-faith purchaser”
within the meaning of section 363(m) of the Bankruptcy Code, and is, therefore, entitled to the protections
of such provision. The good faith of Organic is evidenced by, among other
things, the following facts:

(a)       Debtor and Organic and their respective advisors have engaged
in substantial arms length
negotiations, in good faith. The Asset Purchase Agreement and related documents
are the product of such bargaining among the parties.

(b)       Debtor marketed the Assets to parties other than Organic prior
to its acceptance of
Organic’s offer.

(c)       Other potential purchasers of the Assets had an opportunity to
overbid, with adequate
notice,

(d)       The Asset Purchase Agreement provides debtor with the highest
or otherwise best offer
received for the Assets.

(e)       All payments to be made in connection with the Asset Purchase
Agreement has been disclosed.

(f)        Neither Debtor nor Organic have engaged in any conduct that
would permit the Asset
Purchase Agreement to be avoided under section 363(n) of the Bankruptcy Code.

R.        The Asset Purchase Agreement and all
covenants in and conditions thereto,
as well as the relief requested in the Motion, contemplate and are to be
considered integrated transactions and are subject to and protected by section
363(m) of the Bankruptcy Code.

 5
 

S.         Debtor has satisfied the standard set forth in section
363(f) for selling the Assets free and clear of all interests, as applicable
nonbankruptcy law permits the sale of such property free and clear of such
interests.

T.        Organic is not assuming any liabilities
of debtor under the Asset Purchase Agreement except for obligations under the
Leases and Executory Contracts as set forth in the Asset Purchase Agreement.

U.        The Asset Sale does not amount to a
consolidation, merger, de facto merger or similar restructuring of Organic on the
one hand or debtor on the other.

V.        The Asset Sale, including the transfer
of certain of debtor’s assets to Organic as contemplated thereby, is free from
any fraudulent intent, purpose or desire on the part of Organic to escape
liability for debtor’s obligations or debts. The consideration given by Organic
constitutes reasonably equivalent value for the Assets.

X.        Organic is only buying Assets and is not
successor in interest to debtor, nor does Organic’s acquisition of the Assets
reflect a substantial continuity of the operations of debtor’s business.

Y.        All objections, if any, to the relief
requested in the Motion have been heard and considered by the Court. All such
objections have been overruled, withdrawn, or otherwise resolved by and/or
between the parties or the Court.

Z.        Organic is a third-party purchaser
unrelated to debtor.

AA.    Immediately upon the entry of this Order,
this Order will constitute a final and appealable order within the meaning of
28 U.S.C. § 158(a). This Order shall be effective immediately upon entry and
the automatic stay provisions pursuant to Federal Rule of Bankruptcy Procedure
6004(g) and 6006(d) are hereby waived. The Court expressly finds that there is
no just reason for delay in the implementation of this Order and the closing of
the transactions described in the Motion may occur as soon as all the
conditions precedent to such

 6
 

closing have been satisfied or waived and in
accordance with the terms and conditions of the Asset Purchase Agreement.

BB.      The proposed transactions described in the
Asset Purchase Agreement do not constitute a sub rosa chapter 11 plan for
debtor as they do not: (a) propose to impair or restructure existing debt of,
or equity interest in, debtor; (b) propose to impair or circumvent creditors’
voting rights under any future chapter 11 plan proposed by debtor; (c) propose
to circumvent chapter 11 safeguards such as disclosure requirements; or (d)
propose to classify claims, cure defaults, compromise controversies or extend
debt maturities.

CC.      The Court shall retain jurisdiction to,
inter alia, interpret and enforce the terms and provisions of this Order and
the Asset Purchase Agreement, and to adjudicate, if necessary, any alleged
right, title, or property interest (including ownership claims) relating to the
Assets and the proceeds thereof, as well as the extent, validity, perfection,
and priority of any alleged liens, claims, encumbrances, judgments, charges and
other interests relating to debtor and/or the Assets.

Based
on the foregoing and after due deliberation this Court hereby ORDERS, ADJUDGES
AND DECREES THAT:

1.         The Motion is granted and approved and
the transactions described in the Asset Purchase Agreement are authorized and
approved.

2.         Debtor is hereby authorized to sell the
Assets to Organic upon the terms and conditions set forth in the Asset Purchase
Agreement as modified by this Order and debtor’sexecution and delivery thereof is hereby approved.

3.         Debtor is authorized to assume and
assign the Leases and Executory Contracts upon making payments set forth in
Exhibit A attached hereto. Upon making such payments, all Leases and Executory
Contracts will be considered current and not in default for any reason arising
out of or relating to events occurring before the date this Order is entered or
because of the assignment to Organic pursuant to the Asset Purchase Agreement.

 7
 

4.         Debtor is authorized to take any and all actions necessary
or appropriate to consummate the transactions described in the Asset Purchase
Agreement.

5.         Debtor is hereby authorized to perform,
consummate, and implement the Asset Purchase Agreement, together with all
additional instruments and documents that may be reasonably necessary or
desirable to implement the Asset Purchase Agreement, and to take any and all
further actions and pay any and all reasonable costs, expenses and other
amounts, to the extent approved by the court, from the proceeds of the sale, as
may be necessary or appropriate to the performance of its obligations as
contemplated by the Asset Purchase Agreement or this Order.

6.         Debtor is authorized to close the
transactions described in the Asset Purchase Agreement in accordance with the
terms of the Asset Purchase Agreement following the entry of this Order.

7.         Pursuant to sections 105(a) and 363(f)
of the Bankruptcy Code, upon Closing, the Assets shall be transferred, sold and
delivered to Organic free and clear of all Liens pursuant to the express terms
of the Asset Purchase Agreement.

8.         All Liens shall attach to the net
proceeds of the sale in the order of their priority, with the same validity,
force and effect which they now have as against the Purchased Assets, subject
to the rights, claims, defenses and objections, if any, of debtor and all
interested parties with respect to such Liens.

9.         The terms and provisions of the Asset
Purchase Agreement, and all collateral documents, together with the terms and
provisions of this Order, shall be binding in all respects upon debtor, its
estate, its creditors, and all parties in interest, including any and all successors
and assigns (including, without limitation, any trustee appointed under the
Bankruptcy Code).

10.       All entities holding Liens including,
without limitation, vendors, suppliers and employees, be, and they hereby are,
enjoined and/or barred from asserting such Liens against

 8
 

Organic and/or the Purchased Assets, and all entities holding Liens of
any kind and nature are ordered to release the Purchased Assets to Organic and
to assert their Liens against the proceeds received from the sale.

11.       This Order is and shall be
effective as a determination that, (a) upon Closing, all Liens existing as to
the Assets have been and hereby are adjudged and declared to be unconditionally
released as to the Assets, (b) the conveyances described herein have been made
free and clear of all such Liens, which Liens shall attach to the proceeds of
the sale to the same extent and with the same priority as they attached to the
Assets, and (c) Organic shall take the Purchased Assets free and clear of any successor liability.

12.       This Order shall be binding upon
and govern the acts of all entities, including, without limitation, all filing
agents, filing officers, title agents, title companies, recorders of mortgages,
recorders of deeds, registrars of deeds, administrative agencies, governmental
departments, secretaries of state, federal, and local officials, and all other
persons and entities who may be required by operation of law, the duties of
their office, or contract, to accept, file, register, or otherwise record or
release any documents or instruments, or who may be required to report or insure any title or state of title
in or to any of the Purchased Assets.

13.       The granting of the overbid rights
set forth in Section 1.12 of the Asset Purchase Agreement is apporved.

14.       If any person or entity that has
filed statements or other documents or agreements evidencing Liens on, or
interests in, the Assets shall not have delivered to debtor prior to Closing,
in proper form for filing and executed by the appropriate parties, termination
statements, instruments of satisfaction, releases of liens and easements, and
any other documents necessary for the purpose of documenting the release of all
Liens that the person or entity has or may assert with respect to the Purchased
Assets, debtor is hereby authorized to execute and file such statements,
instruments, releases, and other documents on behalf of the person or entity
with respect to the Purchased Assets.

 9
 

15.       Debtor is hereby authorized (a) to take such corporate
action as may be necessary to implement the provisions of the Asset Purchase
Agreement, and any other document at executed by debtor in connection therewith
and (b) to execute and file any necessary document with any appropriate
secretary of state. This Order shall constitute all approvals and consents, if
any, required by the laws of any state necessary to file, record, and accept
such documents.

16.       Nothing contained in any plan of
reorganization (or liquidation) confirmed in debtor’s chapter 11 cases, any
order of confirmation confirming any plan of reorganization (or liquidation),
or any other order of any type or kind entered in debtor’s chapter 11 cases or
any related proceeding shall
conflict with or derogate from the provisions of the Asset Purchase Agreement
or the terms of this Order.

17.       Debtor is authorized to execute,
acknowledge, and deliver such deeds, assignments, conveyances, bills of sale
and other assurances, documents, and instruments of transfer and to take such
other actions as may be reasonably necessary to perform the terms and
provisions of the Asset Purchase Agreement, and all other agreements related
thereto, and debtor shall take any other action that reasonably may be
requested by Organic for the purpose of assigning, transferring, granting,
conveying, and confirming to Organic or reducing to possession any or all of
the Purchased Assets.

18.       The Court retains jurisdiction,
even after the closing of debtor’s chapter 11 cases, to do the following:

(a)       interpret, implement, and enforce
the terms and provisions of this Order, the Asset Purchase Agreement, and any related agreement in
connection therewith;

(b)       resolve any disputes arising under
or related to the Asset Purchase Agreement, the transactions described therein,
or Organic’s peaceful use and enjoyment of the Purchased Assets, whether or not
a plan of reorganization has been confirmed in debtor’s

 10
 

chapter 11 case and irrespective of the provisions of any such plan or
order confirming any such plan;

(c)       adjudicate any and all issues
and/or disputes relating to debtor’s right, title, or interest in the Purchased
Assets and the proceeds thereof, the Motion, or the Asset Purchase Agreement; and

(d)       protect Organic, or any of the Purchased
Assets, against any Liens.

19.       The failure specifically to include
any particular provision of the Asset Purchase Agreement in this Order shall
not diminish or impair the efficacy of such provisions, it being the intent of
the Court that the Asset Purchase Agreement and each and every provision, term,
and condition thereof be
authorized and approved in its entirety.

20.       The ten-day automatic stay period
under Bankruptcy Rules 6004(g) and 6006(d) is hereby waived.

21.       This Order shall be effective and
enforceable immediately upon entry and its provisions shall be self-executing.
This Order is a final Order, and in accordance with Bankruptcy Rule 8001(a), the time to file a notice of appeal
shall commence from date of entry.

DONE
IN OPEN COURT this        day of April, 2005.

	
  

  	
   

  
	
  

  	
  Honorable Philip H. Brandt 

  
	
   

  	
  United States Bankruptcy Judge

  
	
  Presented by:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 11

EXHIBIT C

SECURED NON-NEGOTIABLE CONVERTIBLE PROMISSORY NOTE

THIS NOTE AND THE SHARES ISSUABLE
UPON THE CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SECURITIES ACT OF 1933,
AS AMENDED OR AN OPINION OF COUNSEL SATISFACTORY TO THE PAYOR THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SUCH ACT.

	
  $600,000

  	
  [April 14, 2005]

  

ORGANIC
HOLDING COMPANY, INC.

SECURED NON-NEGOTIABLE CONVERTIBLE PROMISSORY NOTE

FOR VALUE RECEIVED, ORGANIC HOLDING COMPANY, INC, a
Delaware corporation (the “Company”)
promises to pay to BRIAZZ, INC. (“Holder”), the principal amount of $600,000.001. Interest shall accrue at the rate of seven and three quarters percent
(7.75%) per annum compounded quarterly commencing on the date hereof, and shall
be payable quarterly on [July 14, October 14,
January 14, and April 14]
of each year while this Note is outstanding, commencing on [July 14, 2005]. Unless earlier converted as
provided below, the entire unpaid balance of principal and all accrued and
unpaid interest shall be due and payable on [April
14, 2010] (the “Maturity Date”).
Payment of principal and interest hereunder shall be made by check delivered to
the Holder at the address furnished to the Company for that purpose. The
repayment of this Note is secured by that certain Security Agreement of even
date.

This Note may be converted, in whole or in part at
any time before [April 14, 2006] by
written notice by the Holder to the Company. The number of shares of the
Company’s Series A Preferred Stock that shall be issued to the Holder equals
the amount of the Note which is converted divided by 1.2987.

In the event that before April 14, 2006 there is
either (a) a Corporate Transaction (as hereinafter defined) or (b) an Initial
Public Offering (as hereinafter defined), the Company will

(1) Once the claims of the 11 holders of Briazz secured notes have been
finally determined in the Briazz Chapter 11 Bankruptcy case, United States
Bankruptcy Court for the Western District of Washington, at Seattle, case no.
04-17701-PHB, this Note shall be cancelled and returned to the Company. In return
the Company shall, subject to Section 2.2(b) of the Asset Purchase Agreement
between the Company and Briazz, Inc., issue new Secured Non-Negotiable
Convertible Promissory Notes, with the same conditions and terms as this Note,
except for holder and amount. The amount of the new Secured Non-Negotiable
Convertible Promissory Notes shall be derived by multiplying the percentage
that the new holder’s approved secured claim bears to the total of all such
approved secured claims by $600,000. The new notes shall be secured by the
Security Agreement described in the body of this Note.

 1
 

provide the Holder with written notice of such
Corporate Transaction or an Initial Public Offering and an opportunity to
exercise the Holder’s conversion rights. For purposes of this paragraph:

(1)       a “Corporate
Transaction” shall mean (A) the closing of the sale, transfer or other
disposition of all or substantially all of the Company’s assets, (B) the
consummation of the merger or consolidation of the Company with or into another
entity (except a merger or consolidation in which the holders of capital stock
of the Company immediately prior to such merger or consolidation continue to
hold at least 50% of the voting power of the capital stock of the Company or
the surviving or acquiring entity), (C) the closing of the transfer (whether by
merger, consolidation or otherwise), in one transaction or a series of related
transactions, to a person or group of affiliated persons (other than an
underwriter of the Company’s securities), of the Company’s securities if, after
such closing, such person or group of affiliated persons would hold 50% or more
of the outstanding voting stock of the Company (or the surviving or acquiring
entity), or (D) a liquidation, dissolution or winding up of the Company;
provided, however, that a transaction shall not constitute a Liquidation Event
if its sole purpose is to change the state of the Company’s incorporation or to
create a holding company that will be owned in substantially the same
proportions by the persons who held the Company’s securities immediately prior
to such transaction. Notwithstanding the prior sentence, the sale of shares of
Series A Preferred Stock in a financing transaction shall not be deemed a “Liquidation
Event;” and

(2)       an “Initial
Public Offering” shall mean the closing of the issuance and sale of Common
Stock of the Company in the Company’s first underwritten public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended.

If the Holder does not
make the election described above within ten (10) days after the Holder’s
receipt of notice of the Corporate Transaction or Initial Public Offering from
the Company, then the Holder’s conversion rights will terminate.

As promptly as practicable after the conversion of
this Note, the Company at its expense will issue and deliver to the Holder of
this Note, upon surrender of this Note, a certificate or certificates for the
number of full shares of equity securities issuable upon such conversion.

All payments of interest and principal shall be in
lawful money of the United States of America. All payments shall be applied
first to costs of collection, if any, then to accrued and unpaid interest, and
thereafter to principal.

The Company reserves the right to prepay this Note in
whole or in part at any time or from time to time after [April 14, 2006] upon not less than ten (10)
days’ prior written notice to Holder, without penalty or additional fees.

The Company hereby waives presentment, demand for
payment, notice of dishonor and any and all other notices and demands in
connection with the delivery, acceptance, performance, default, or enforcement
of this Note.

The Company agrees to pay the Holder’s reasonable
costs in collecting and enforcing this Note, including reasonable attorneys’
fees.

 2
 

This Note shall be
construed in accordance with the laws of the State of Washington as applied to
contracts entered into by Washington residents within the State of Washington,
which contracts are to be performed entirely within the State of Washington.
The terms of this Note, (including, without limitation, the Maturity Date, the
rate of interest, and the conversion features) may be waived or modified only
in writing, signed by the Holder.

	
  

  	
   

  	
  ORGANIC HOLDING COMPANY, INC., a
  

  Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Jason Brown, President and Chief 

  
	
   

  	
   

  	
   

  	
  Executive Officer

  

 

 3

 

EXHIBIT D 

SECURITY AGREEMENT

SECURITY AGREEMENT

This
Security Agreement is entered into effective the          
day of April, 2005, between Organic Holding Company, Inc., a Delaware corporation (“Debtor”) and Briazz
Inc., a Washington corporation (“Creditor”).

1.            Grant of Security Interest. Debtor hereby grants, assigns, transfers,
pledges and conveys to Creditor and its successors and assigns, a first
priority security interest in all of Debtor’s rights, title and interest in and
to those certain assets acquired by Debtor from Creditor pursuant to that
certain Asset Purchase Agreement between Debtor and Creditor dated April        ,
2005, (the “Asset Purchase Agreement”) as follows;

(a)          All inventory, furniture, fixtures, equipment, Leases and
Executory Contracts, leasehold improvements, lease deposits, owned vehicles and
telephone numbers used in connection with (i) all store locations in the State
of Washington acquired by Debtor from Creditor pursuant to the Asset Purchase
Agreement and (ii) all store locations in Los Angeles County and Orange County,
California acquired by Debtor from Creditor pursuant to the Asset Purchase
Agreement;

(b)          All Assets, both tangible and intangible, constituting the
catering business acquired by Debtor from Creditor pursuant to the Asset
Purchase Agreement including but not limited to the catering contracts with the
University of Washington, Starbucks, and Verizon;

(c)          The registered trade name “Briazz” and all associated
goodwill and registered trademarks, service marks, trade dress, and logos
(provided that Debtor has granted Creditor a transferable, perpetual license to
use the trade name “Briazz” in the San Francisco Bay Area subject to standard
terms and conditions, pursuant to the license agreement);

(d)          The URL www.Briazz.com and all licenses, permits and
contracts related thereto; and

(e)          All restaurant and food storage or preparation equipment in
storage as of the effective date of the Asset Purchase Agreement and acquired
by Debtor from Creditor pursuant to the Asset Purchase Agreement.

(f)           All substitutes and replacements for (but not additions,
accessions or attachments to) the collateral described in this paragraph 1.

2.            Obligation. This Security Agreement is given to secure
the payment and performance of any and all obligations of Debtor to Creditor (“Obligations”)
under that certain Secured Non-Negotiable Convertible Promissory Note dated
April       , 2005, in the principal

 1
 

amount of $600,000 (the “Note”) and the performance by
Debtor of its obligations under this Security Agreement.

3.             Ownership
and Liens. Debtor owns the Collateral, and the same is
free and clear of all security interests and encumbrances of every nature.
Debtor shall not create nor permit the existence of any lien or security
interest on the Collateral, or sell, transfer, pledge, assign or otherwise
convey the Collateral, or any rights or interest therein, without the prior
written consent of Creditor, which written consent Creditor may grant or not
grant in its sole and subjective discretion. Notwithstanding anything to the
contrary in this Security Agreement, Debtor can sell perishable inventory in
the ordinary course of business without accounting for the proceeds.

4.             Taxes.
Debtor shall pay before delinquency all taxes or other governmental charges
that are or may become a lien or charge on the Collateral.

5.             Insurance.
Debtor shall keep the Collateral continuously insured against fire, theft and
other hazards, in an amount equal to the full insurable value thereof or to all
sums secured hereby, with a loss-payable clause in favor of Creditor. In the
event of loss, Creditor shall have full power to collect any and all insurance
upon the Collateral, and to apply the same at its option to any obligation
secured hereby, whether or not matured. Creditor shall have no liability
whatsoever for any loss that may occur by reason of the omission or lack of
coverage of any such insurance.

6.             Default.
Any of the following is an event of default under this Agreement:

(a)           Any failure by Debtor to timely
perform its obligations to Creditor within 10 days after notice of default;

(b)          Falsity of any warranty or
representation by Debtor herein;

(c)           Commencement of voluntary or
involuntary bankruptcy, receivership or insolvency proceedings by or against,
or the insolvency or business failure of, Debtor;

(d)           Failure by Debtor to pay its debts as
they become due; or

(f)            The sale, assignment, transfer,
pledge or conveyance of any kind whatsoever of any of the Collateral without
Creditor’s prior written consent.

7.             Remedies:
In the event of a default under this Security Agreement, all sums and
obligations (whether contingent or uncontingent, liquidated or unliquidated)
due or to become due shall become immediately become due and payable at
Creditor’s option without notice to Debtor, and Creditor may proceed to enforce
payment of same and have all rights and remedies available under any applicable
law, including the Washington Uniform Commercial Code, RCW 62A, in force as of
the date hereof. Without limiting the generality of the foregoing, Creditor
shall have any or all of the following rights and remedies:

 2
 

(a)           At Creditor’s request, Debtor shall
assemble the Collateral and make it available to Creditor at a place Creditor
designates which is reasonably convenient to both parties;

(b)           Debtor agrees to put Creditor into
immediate possession of the Collateral upon demand;

(c)           All payments received by Debtor under
or in connection with any of the Collateral shall, at Creditor’s election, be
deposited in a segregated FDIC-insured bank account in trust for the sole
benefit of Creditor, or immediately upon receipt by Debtor or Creditor, turned
over to Creditor, in the same form as received (duly endorsed in favor of
Creditor if and as required in its discretion);

(d)           Creditor is authorized, without
notice, demand or legal proceedings, to enter any premises where the Collateral
is situated and take possession of, keep, store or remove any of the
Collateral, and remain, or cause a custodian of its choice to remain, on the
premises in exclusive control thereof without charge so long as Creditor deems
it reasonably necessary to complete the enforcement of its rights hereunder;

(e)           Demand payment of, and collect, any
accounts comprising Collateral and, in connection therewith, Debtor irrevocably
authorizes Creditor to endorse or sign Debtor’s name, as pertinent, on all
collections, receipts, instruments and other documents as required in its
discretion;

(f)            Debtor shall pay on demand all
expenses actually incurred by Creditor in protecting, realizing upon,
repossessing, and selling the Collateral, or in interpreting or enforcing its
rights hereunder, including Creditor’s court costs and actual attorneys’ fees
incurred in both trial and appellate courts (including all fees and costs
incurred in any bankruptcy court hearings of any kind whatsoever, including
relief from stay proceedings, disclosure statement and plan confirmation
proceedings, nondischargeability proceedings, claim objection proceedings,
adversary proceedings, and investigating, preparing and filing proofs of
claims), or fees or costs incurred without suit. The covenant to pay the sums
as provided in this subparagraph 7(f) shall be secured by this Security
Agreement.

8.             Tax
Indemnification.  Debtor agrees to pay, and to
defend, save and hold Creditor harmless from and against any and all
liabilities with respect to, or resulting from any delay in paying any excise,
sales or other taxes which be payable or determined to be payable with respect
to any of the Collateral or in connection with any of the transactions
contemplated by this Security Agreement.

9.             Notice.
 All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given upon receipt if it is sent
by facsimile or reputable express courier, and addressed or otherwise sent to
the intended recipient as set forth below:

(f)           If
to the Creditor;

Briazz Inc.

 3
 

3901 Seventh Avenue, 

Suite 200 Seattle, 

Washington 98108 

Attention: Bill Zang 

Fax: (206) 467-1970

with a copy to:

Cynthia A. Kuno 

Crocker Kuno Ostrovsky, LLC 

720 Olive Way, Suite 1000 

Seattle, Washington 98101 

Fax: (206) 624-9894

(g)       If to
the Debtor:

Organic Holding Company

5610 E. Lake Sammamish Parkway SE, Suite A

Issaquah, Washington 98029

Attention: Jason Brown

Fax: (425) 837-9622

with a copy to:

Carr, McClellan, Ingersoll,
Thompson & Horn

216 Park Road

Burlingame, California 94010

Attention: Ed Willig

Fax: (650) 373-3388

Any party may send any
notice, request, demand, claim or other communication hereunder to the intended
recipient at the address or facsimile number set forth above using any other
means (including personal delivery, messenger service, ordinary mail, or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it is
actually received by the intended recipient. Any party may change the address
or facsimile number to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other party notice
in the manner herein set forth.

10.             
Miscellaneous.

(a)           Waiver. This Security
Agreement shall not be qualified or supplemented by course of dealing. No
waiver or modification by Creditor of any of the terms or conditions hereof
shall be effective unless in writing signed by Creditor. No waiver nor
indulgence by Creditor as to any required performance by Debtor shall
constitute a waiver as to any subsequent required performance or other
obligations of Debtor hereunder.

(b)           Benefit. This Agreement shall
be binding upon, and inure to the benefit of, the respective legal
representatives, successors and assigns of the parties hereto.

 4
 

(c)           Construction. This Agreement
is being executed and delivered and is intended to be performed in the State of
Washington, and shall be construed and enforced in accordance with the laws of
that state.

(d)           Venue.
The parties agree the venue of any suit or action between the parties will be
in the Superior Court for King County, Seattle, Washington.

(e)           Severability.
Should any provision of this Agreement be held by any court of competent
jurisdiction to be void or unenforceable, such defect shall not affect the
remainder of this Agreement, which shall continue in full force and effect.

(f)            Counterparts;
Facsimile Copies. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Facsimile copies hereof
may be executed as counterpart originals.

(g)           Definitions.
Capitalized terms not otherwise defined herein shall have the meaning given
them in the Asset Purchase Agreement.

(h)           Assignment
of Secured Convertible Note. Creditor may assign or otherwise transfer the
Note or any interest therein or portion thereof to any of Creditor’s secured
noteholders and such secured noteholders shall thereby be vested with all
benefits granted to Creditor in this agreement.

SIGNED effective the         
day of                                   ,
2005.

	
  DEBTOR:

  	
   

  	
  CREDITOR:

  
	
   

  	
   

  	
   

  
	
  ORGANIC
  HOLDING COMPANY, INC, 

  a Delaware corporation

  	
   

  	
  BRIAZZ INC., a Washington corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
   

  	
   

  	
  BY:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ITS:

  	
   

  	
   

  	
  ITS:

  	
   

  
							

 

 5

EXHIBIT E

SECURED
NOTEHOLDER REPRESENTATION 

AND ACKNOWLEDGEMENT LETTER

SECURED
NOTEHOLDER REPRESENTATION 

AND ACKNOWLEDGEMENT LETTER

                                        ,
200  

[Name
and Address of Briazz, Inc. Secured Noteholder]

Dear Briazz, Inc. Secured
Noteholder:

You have requested that Organic Holding Company, Inc.
(the “Company”) issue you [a Non-Negotiable
Convertible Promissory Note OR shares of the Company’s Series A
Preferred Stock] (the “Securities”)in connection with your secured claims
against Briazz, Inc. (“Briazz”). Pursuant to Section 2.2(b) of the Asset Purchase
Agreement between the Company and Briazz, it is a condition to the issuance of
such Securities that you (the “Security
Holder”)read,
execute and deliver this secured noteholder representation and acknowledgement
letter (“Letter”)to the Company. The Company will rely on
this Letter to confirm its compliance with both state and federal securities
laws in connection with your acquisition of the Securities. The Security Holder
acknowledges that the representations, warranties and acknowledgements below
are binding on the Security Holder.

In connection with the issuance of the Securities to
Security Holder and for other valuable consideration, the receipt of which is
hereby acknowledged, the Security Holder hereby represents, warrants,
acknowledges and agrees as follows:

(a)        The Security Holder acknowledges that if the Securities
constitute a Non-Negotiable Convertible Promissory Note, the principal amount
of such Note has been determined in accordance with Section 2.2(b) of the Asset
Purchase Agreement between Briazz and the Company, after taking into account
any payments made by the Company under the Non-Negotiable Convertible
Promissory Note issued to Briazz from the date of the closing under such Asset
Purchase Agreement to the date of the issuance of such Nonnegotiable
Convertible Promissory Note to the Security Holder.

(b)       The Security Holder acknowledges that the Company has
represented that the Non-Negotiable Convertible Promissory Note was issued to
Briazz, and the Securities will be issued to the Security Holder, in
transactions not involving a public offering and pursuant to exemptions from
registration under the Securities Act of 1933, as amended (the “Securities Act”), and applicable state securities laws.
The Security Holder is acquiring the Securities and will hold the Securities
for investment for its account only and not with a view to, or for resale in
connection with, any “distribution” thereof within the meaning of the
Securities Act.

(c)        The Security Holder acknowledges that the Company has
represented that theSecurities
have not been registered under the Securities Act by reason of a specific
exemption therefrom and that the Securities must be held indefinitely, unless
they are subsequently registered under the Securities Act or the Security
Holder obtains an opinion of counsel, in form and substance satisfactory to the
Company and its counsel, that such registration is not required. The Security
Holder further acknowledges and understands that the Company has represented
that the Company is under no obligation to register the Securities.

(d)       The Security Holder is aware of Rule 144 adopted by the
Securities and Exchange Commission under the Securities Act, which permits
limited public resales of securities acquired in a non-public offering, subject
to the satisfaction of certain conditions, including (without limitation) the
availability of certain current public information about the issuer, the resale
occurring only

after the holding period
required by Rule 144 has been satisfied, the sale occurring through an
unsolicited “broker’s transaction,” and the amount of securities being sold
during any three-month period not exceeding specified limitations. The Security
Holder acknowledges and understands that the Company has represented that the
conditions for resale set forth in Rule 144 have not been satisfied and that
the Company has no plans to satisfy these conditions in the foreseeable future.

(e)        The Security Holder will not sell, transfer or otherwise
dispose of the Securities in violation of the Securities Act, the Securities
Exchange Act of 1934, or the rules promulgated thereunder, including Rule 144
under the Securities Act. The Security Holder agrees that it will not dispose
of the Securities unless and until it has complied with all requirements of
this Letter applicable to the disposition of Securities and it has provided the
Company with written assurances, in substance and form satisfactory to the
Company, that (i) the proposed disposition does not require registration of the
Securities under the Securities Act or all appropriate action necessary for
compliance with the registration requirements of the Securities Act or with any
exemption from registration available under the Securities Act (including Rule
144) has been taken and (ii) the proposed disposition will not result in the
contravention of any transfer restrictions applicable to the Securities under
state securities law.

(f)        The Security Holder is an “accredited investor” within the
meaning of SEC Rule 501 of Regulation D, as presently in effect.

(g)       The Security Holder has been informed by the Company that (i)
the Company has incurred substantial losses since its organization and will
require substantial funds to develop its business as contemplated in its
business plan and (ii) the Security Holder’s investment in the Company is a
speculative investment that has limited liquidity and is subject to the risk of
complete loss. The Security Holder is able, without impairing its financial
condition, to hold the Securities for an indefinite period and to suffer a
complete loss of its investment in the Securities.

(h)       If the Security Holder is not a United States person, the
Security Holder represents that the Security Holder is satisfied as to the full
observance of the laws of the Security Holder’s jurisdiction in connection with
any invitation to acquire the Securities, including (i) the legal requirements
within the Security Holder’s jurisdiction for the acquisition of the
Securities, (ii) any foreign exchange restrictions applicable to such
acquisition, (iii) any governmental or other consents that may need to be
obtained and (iv) the income tax and other tax consequences, if any, that may
be relevant to the acquisition, holding, redemption, sale or transfer of the
Securities. The Security Holder further represents that the Security Holder’s
acquisition and continued beneficial ownership of the Securities will not
violate any applicable securities or other laws of the Security Holder’s
jurisdiction.

(i)         The Security Holder authorizes the Company and its agents to
place on each certificate representing the Securities, or any substitutions
therefor, a legend stating that the Securities have not been registered under
the Securities Act or any state securities law and setting forth the
restrictions on transfer contained in this Letter, including the following
legends:

“THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO
THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO A LOCK-UP PERIOD OF UP TO 180 DAYS AFTER THE
EFFECTIVE DATE OF THE ISSUER’S REGISTRATION STATEMENT FILED UNDER THE ACT, AS

 2
 

AMENDED, AS SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL HOLDER OF THESE SECURITIES, A
COPY OF WHICH MAY BE OBTAINED AT THE ISSUER’S PRINCIPAL OFFICE. SUCH LOCK-UP
PERIOD IS BINDING ON TRANSFEREES OF THESE SHARES.

(j)         The Security Holder
hereby agrees that it will not, without the prior written consent of the
managing underwriter, during the period commencing on the date of the final
prospectus relating to the Company’s initial public offering ofits shares of common stock pursuant to an
effective registration statement filed with the Securities and Exchange
Commission and ending on the date specified by the Company and the managing
underwriter (such period not to exceed one hundred eighty (180) days after the
closing of such public offering) (i) lend, offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of common stock of the
Company or any securities convertible into or exercisable or exchangeable for
common stock held immediately prior to the effectiveness of the registration
statement for such offering, or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic
consequences of ownership of the common stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of common
stock or other securities, in cash or otherwise. The underwriters in connection
with the Company’s initial public offering are intended third-party
beneficiaries of this paragraph and shall have the right, power and authority
to enforce the provisions hereof as though they were a party hereto. The
Security Holder further agrees to execute such agreements as may be reasonably
requested by the underwriters in the Company’s initial public offering that are
consistent with this paragraph or that are necessary to give further effect
thereto. In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Securities (and the shares or
securities of every other person subject to the foregoing restriction) until
the end of such period. The Security Holder agrees that a legend which provides
third parties with notice of the terms of this paragraph may be placed on all
certificates representing all Securities.

(k)        The Security Holder has
reviewed with the Security Holder’s own tax advisors the federal, state, local
and foreign tax consequences of the terms of this Letter and the transactions
contemplated hereby. The Security Holder understands that the Security Holder
(and not the Company, its officers, directors, agents or affiliates, or other
holders of securities of the Company) shall be responsible for the Security
Holder’s own tax liability that may arise as a result of the terms of this
Letter or the transactions contemplated hereby. The Security Holder has had the
opportunity to consult with the Security Holder’s own counsel with respect to
this Letter. The Security Holder has executed this Letter knowingly,
voluntarily and of its own free will with the intent of being bound by it.

(l)         The Security Holder’s
principal place of business is located in the state set forth opposite the
Security Holder’s signature below.

The
provisions of this Letter shall be governed by, and construed in accordance
with, the laws of the State of Washington, as such laws are applied to
contracts entered into and performed in such State. Except as otherwise
expressly provided to the contrary, the provisions of this Letter shall inure
to the benefit of, and be binding upon, the Company and its successors and
assigns and be binding upon the Security Holder and the Security Holder’s
distributees, assigns and transferees by operation of law, whether or not any
such person has become a party to this Letter or has agreed in writing to join
herein and to be bound by the terms, conditions and restrictions hereof. If one
or more provisions of this Letter are held to be unenforceable under applicable
law, such provision shall be excluded from this Letter and the balance of this
Letter shall be interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms. This Letter may be executed in
counterparts with the same force and effect as if each of the signatories had
executed the same instrument.

 3
 

Please
acknowledge your receipt of and agreement with the provisions of this Letter by
signing, dating and filling in the state of your principal residence below, and
returning the original signature page to me.

	
  

  	
   

  	
  Very Truly Yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Organic Holding Company, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Jason Brown

  Chief Executive Officer

  

I, the Security Holder,
understand and agree to the 

representations, warranties, acknowledgements and other 

terms of this Letter:

	
  Name of Security Holder (print):

  	
   

  	
  State of Security Holder’s Principal

  Place of Business:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name and Title:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
										

 

 4

SCHEDULE 1.8

TO ASSET PURCHASE AGREEMENT

Schedule 1.8 to Asset Purchase Agreement Between Organic Holding
Company, Inc. and Briazz, Inc.

1.          Leases:

All leases for Seller’s
stores open as of April 1, 2005 in Seattle, Washington, Los Angeles and Orange
County, California (the “Stores”), as follows:

	
  Locations

  	
   

  	
  Landlord

  
	
   

  	
   

  	
   

  
	
  Seattle Area

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1400 5th Avenue
601 Union Street, Suite 224A

  1120 – 112th Avenue NE

  3625 – 132nd Avenue SE, Suite 105

  	
   

  	
  Harbor Properties

  Union Square Limited Partnership

  Bellevue Hines Development, LLC

  Bentall Newport Centre L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Los
  Angeles
5757 Wilshire

  350 S. Grand Avenue

  555 W. 5th Street, Suite cc56

  Orange County
695 Town Center Drive, Suite 140

  5 Park Plaza, Suite 120

  2030 Main Street

  	
   

  	
  

  Museum Square Associates

  EOP – Two California Plaza LLC

  Maguire Partners – 555 West Fifth LLC

  

  One Town Center Associates

  The Irvine Company

  OTR Partnership

  

 

2.          Executory Contracts:

2.1.       All Executory Contracts for assets or
rights used in connection with Seller’s operation of the Stores.

2.2.       All Executory Contracts related to the
Seller’s catering business including but not limited to Seller’s catering
contracts with the University of Washington, Starbucks, and Verizon.

2.3.       The Executory Contracts required for buyer
to acquire the assets identified in Section 1.1(c) of the Asset Purchase
Agreement.

2.4.       Executory Contracts related to the URL www.Briazz.com
and all licenses, permits and contracts related thereto.

EXHIBIT 2

TO DECLARATION OF GEOFFREY
GROSHONG

MEMORANDUM OF TERMS

SERIES A PREFERRED STOCK

OF

ORGANIC HOLDING COMPANY, INC.

December 2004 to April 2005

This memorandum
summarizes the principal terms of the first-round venture capital financing of
Organic Holding Company, Inc.

	
  Offering Terms

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Issuer:

  	
   

  	
  Organic Holding Company, Inc., a Delaware
  corporation (the “Company”).

  
	
   

  	
   

  	
   

  
	
  Securities to be Issued:

  	
   

  	
  3,065,000 shares of Series A Preferred Stock (“Preferred Stock”).

  
	
   

  	
   

  	
   

  
	
  Aggregate Proceeds:

  	
   

  	
  Total anticipated proceeds: 

  	
  $3,065,000

  
	
   

  	
   

  	
   

  
	
  Price:

  	
   

  	
  $1.00 per share.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Preferred Stock

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dividends:

  	
   

  	
  Annual $0.05 per share (5%) dividend, payable when
  and if declared by the Board, and prior and in preference to
  any other dividends; dividends are not cumulative. For any other dividends or
  similar distributions, Preferred Stock participates with Common Stock on an
  as-converted basis.

  
	
   

  	
   

  	
   

  
	
  Liquidation Preference:

  	
   

  	
  First pay the original purchase price plus declared
  but unpaid dividends (if any) on each share of Preferred Stock. Balance of
  proceeds paid to the holders of Common Stock.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A sale of all or substantially all of the assets of
  the Company and a merger, reorganization or other transaction in which
  control of the Company is transferred will be treated as a liquidation (a “Liquidation Event”).

  
	
   

  	
   

  	
   

  
	
  Redemption:

  	
   

  	
  The Preferred Stock will not be redeemable.

  
	
   

  	
   

  	
   

  
	
  Conversion:

  	
   

  	
  The Preferred Stock is convertible into one share of
  Common

  

 

 

	
  

  	
   

  	
  Stock (subject to antidilution adjustment) at any
  time at the option of the holder. Automatically converts into Common Stock
  upon (i) the election of the holders of a majority of the outstanding
  Preferred Stock, or (ii) the consummation of an underwritten public offering
  with a minimum price of $5.00 per share and aggregate proceeds in excess of
  $15,000,000.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Each share of Preferred Stock is convertible at the
  option of the holder into one or more shares of the next series of preferred
  stock (the “Next Series”) issued
  by the Company. Each share of Preferred Stock will initially be convertible
  into such number of shares of the Next Series as is determined by dividing
  the original issuance price of the Series A Preferred Stock ($1.00) by the
  purchase price per share of the Next Series, so that if for example each
  share of the Next Series is issued for $2.00 per share, each share of
  Preferred Stock will be convertible into one-half (1/2) of one share of the
  Next Series.

  
	
   

  	
   

  	
   

  
	
  Antidilution Adjustments:

  	
   

  	
  Conversion ratio shall be adjusted on a broad
  weighted average basis in the event of an issuance below the Preferred Stock
  price as adjusted, subject to standard exclusions.

  
	
   

  	
   

  	
   

  
	
  Voting Rights:

  	
   

  	
  Votes on an as-converted basis, but as long as
  625,000 shares of Series A Preferred Stock are outstanding, Series A also has
  series vote as provided by law and on (i) the creation of any senior or pari
  passu security, (ii) the repurchase of Common Stock except for
  repurchases at cost upon termination of employment, (iii) any liquidation
  event, (iv) any increase in the number of authorized shares of Series A
  Preferred Stock, (v) any adverse change to the rights, preferences and
  privileges of the Preferred Stock, (vi) any amendment of the Company’s
  certificate of incorporation or bylaws, or (vii) any change in the size of the
  Company’s Board of Directors.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Amendment, waiver or termination of the right to
  convert into Common Stock or the Next Series requires the approval of each
  holder of Preferred Stock.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  As long as 625,000 shares of Preferred Stock are
  outstanding, Holders of the Preferred Stock are entitled to elect 25% of the
  Company’s directors (rounded to the nearest whole number), and not less than
  one director.

  

 

 2
 

Preferred Stock Purchase
Agreement

	
  Representations and Warranties:

  	
   

  	
  Standard representations and warranties by the
  Company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Investors’ Rights Agreement

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Registration Rights:

  	
   

  	
  The following rights will apply to Common Stock
  issued upon conversion of the Preferred Stock:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)         Beginning six (6) months after an
  initial public offering (“IPO”), two (2) demand registrations upon initiation
  by holders of at least 30% of the outstanding Preferred Stock for aggregate
  proceeds in excess of $10,000,000. Expenses paid by the Company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)        Unlimited piggyback registration
  rights subject to pro rata cutback at the underwriter’s discretion. Founders
  shall have piggyback rights. Full cutback upon IPO; 30% minimum inclusion
  thereafter. Expenses paid by the Company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)         No more than two (2) S-3
  Registrations in any 12-month period, each of at least $5,000,000, upon
  initiation by holders of 30% of the Preferred Stock. Expenses paid by the
  Company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)        Other provisions will be contained in
  the Investors’ Rights Agreement with respect to registration rights, including
  cross indemnification, the Company’s ability to delay the filing of a demand
  registration for a period of at least 120 days, the agreement by purchasers
  of the Preferred Stock if requested by the underwriter in a public offering
  not to sell Common Stock that they hold for a period of 180 days following
  the effective date of the registration statement for such offering (subject
  to officers, directors and greater than 5% stockholders of the Company
  entering into similar agreements), the period of time in which the
  registration statement will be kept effective, underwriting arrangements and
  the like.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Registration rights terminate (i) 3 years after IPO
  or (ii) when all shares can be sold under Rule 144, whichever occurs first.

  

 

 3
 

 

	
  Right
  of First Offer for

  Subsequent Financings:

  	
   

  	
  Until an IPO or a Liquidation Event, the Investors
  shall have a pro rata right, based on their percentage equity ownership of
  Common Stock, on a fully diluted basis, to participate in subsequent equity
  financings of the Company (subject to customary exclusions and the special
  right of first offer described in the following paragraph).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Certain holders of the Preferred Stock have a
  priority right to invest up to $900,000 in the Next Series.

  
	
   

  	
   

  	
   

  
	
  Financial Information:

  	
   

  	
  Subject to minimum holdings requirements, the
  Investors shall receive audited annual financial statements, unaudited
  monthly financial summaries, and annual budgets and business plans, and have
  standard inspection rights.

  
	
   

  	
   

  	
   

  
	
  Board of Directors:

  	
   

  	
  Board shall consist of 7 members. Board composition
  is presently Jason Brown, Dave Smith, Peter Meehan, Roy Bingham, Doug Lioon
  and Deborah Ciolfi.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Other Matters

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Co-Sale Right and Right of

  First Refusal:

  	
   

  	
  Until an IPO or control of the Company is
  transferred, each Investor will have the right to participate pro rata in
  transfers of any stock held by the Founders, and a right of first refusal on
  such transfers, subordinate to the Company’s right of first refusal. Any
  shares not subscribed for by an Investor may be reallocated pro rata among
  the other eligible investors. The right of first refusal and co-sale right
  will be subject to standard exceptions.

  

 

 4
 

 

	
  Interested Parties

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Company:

  	
   

  	
  Mr. Jason Brown

  Chief Executive Officer

  Organic Holding Company, Inc.

  5610 East Lake Sammamish Parkway SE

  Issaquah, WA 98029

  Phone: (425) 890-9183

  e-mail: jbrown@organicholdingcompany.com

  
	
   

  	
   

  	
   

  
	
  Counsel to the Company:

  	
   

  	
  Edward J. Willig, Esq.

  Carr, McClellan, Ingersoll, Thompson & Horn

  Professional Corporation

  216 Park Road

  Burlingame, CA 94010

  Phone: (650) 342-9600

  Fax: (650) 342-7685

  e-mail:ewillig@carr-mcclellan.com

  

 

 5

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