Security Agreement And Collateral Assignment

EXHIBIT 10.67
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SECURITY AGREEMENT
AND
COLLATERAL ASSIGNMENT


ANDREW M. MARTIN, an individual with a mailing address of P.O. Box 8487 Tauroa Station, Matangi RD, Havelock North, New Zealand (hereinafter called "Martin"), hereby grants, pledges and assigns collaterally to ANNIE'S HOMEGROWN, INC., a Delaware corporation having a place of business at 395 Main Street, Wakefield, MA 01880 (hereinafter called "Creditor"), to secure payment of $274,630.18 as provided in Martin's Omnibus Secured Promissory Note of even date herewith (the "Note") and also to secure the payment and performance of all obligations of Martin to Creditor under this Agreement, whether now existing or hereafter arising (all of the foregoing, including said note, being hereafter called the "Obligations"), and grants a security interest in, the personal property of Martin described below, wherever located and whether now existing or hereafter acquired or arising, and any and all additions, substitutions, accessions, proceeds and products thereto or thereof (all of the same being hereinafter called the "Collateral"):


All right, title and interest of Martin, present and future, in, to and under or arising out of that certain Put Agreement and that certain Call Agreement, each between Martin as Seller and Homegrown Holdings Corp., a Delaware corporation ("HHC"), dated December 2, 1999 (said Agreements, whether in separate documents or combined in a single document, being referred to collectively as the "Stock Collar Agreement") and all rights to the payment of money thereunder, provided that so long as no Event of Default under the Note exists at the time HHC makes a payment under the Stock Collar Agreement, Creditor agrees to release its security interest in that portion of such payment equal to the difference between (i) the total amount being paid by HHC and (ii) the amounts then due to Creditor under the Note. A true and complete executed copy of the Stock Collar Agreement is attached hereto as Exhibit A.


Martin hereby warrants and covenants that:


1. NO VIOLATION. The execution, delivery and performance of this Agreement by Martin does not violate or contravene any indenture, agreement or undertaking to which Martin is a party or by which he is bound.


2. NO OTHER LIENS OR DISPOSITIONS; INTERCREDITOR AGREEMENT. Except for the security interest granted hereby, Martin is the owner of the Collateral free from all encumbrances and will defend the same against the claims and demands of all persons. Martin will not pledge, mortgage, create or suffer to exist a security interest in the Collateral, or in any of the shares of stock of the Company subject to the Stock Collar Agreement, in favor of any person other than Creditor, and will not sell or transfer the Collateral or any interest therein without the prior written consent of Creditor, provided, however, that if Martin hereafter desires to sell, assign or borrow against that portion of the amounts payable under the Stock Collar Agreement which exceeds the amounts payable under the Note, Creditor agrees to negotiate in good faith with the proposed purchaser, assignee or lender, as the case may be, provisions for an intercreditor


agreement which will reasonably protect Creditor's priority position while allowing such transaction to proceed, so long as such transaction does not involve a pledge of more than a pro-rata portion of the stock subject to the Stock Collar Agreement.


3. RESIDENCE ADDRESS; ACCESS TO RECORDS; FURTHER ASSURANCES. Martin is delivering to Creditor herewith an executed counterpart original copy of the Stock Collar Agreement. Martin agrees that said copy of the Stock Collar Agreement will be held by Creditor until the Note is paid in full. Martin shall notify HHC of the collateral assignment and grant of security interest in the Stock Collar Agreement made herein and that payments thereunder are to be made to Creditor as provided in Section 8 below. Martin will immediately notify Creditor in writing of any change in name or address from that shown in this Agreement and shall furnish to Creditor such further information as Creditor may request, including the address(es) of each residence and each place of business and shall at all reasonable times and from time to time allow Creditor, by or through any of its officers, agents, attorneys or accountants, to examine, inspect or make extracts from his books and records pertaining to the Collateral, and shall do, make, execute and deliver all such additional and further acts, things, deeds, assurances and instruments as Creditor may require more completely to vest in and assure to Creditor its rights hereunder or in any of the Collateral, including Uniform Commercial Code financing statements, and any notices or other filings which may be necessary or appropriate under the laws of New Zealand to perfect, protect or enforce with respect to any Collateral located in New Zealand the security interest, pledge and assignment created hereby.


4. NOTICE OF DEFAULT UNDER STOCK COLLAR AGREEMENT. Martin agrees to give Creditor prompt written notice, with all relevant details, in the event of any default by HHC under the Stock Collar Agreement.


5. PERFORMANCE; NO AMENDMENTS; PAYMENT OF TAXES. Martin will perform on a timely basis all of his obligations under the Stock Collar Agreement and will not, without the prior written consent of Creditor, amend, modify, change, terminate, waive any rights under or any default on the part of HHC with respect to, or commit or allow to exis ...