THIS
SECURITY AGREEMENT, dated as of January 16, 2009 (the “
Security Agreement ”), is executed by PANGLOBAL
BRANDS INC , a company incorporated under the laws of
Delaware (“ Debtor ”), for the benefit of
Providence Wealth Management Ltd, a company incorporated
under the laws of the British Virgin Islands (“ Secured
Party ”) with an address c/o Mr. Karim Khoury, Chabrier
& Partners (Reed Smith), 3 rue du Mont-Blanc P.O. Box 1363 CH -
1211 Geneva 1 Switzerland;.
WHEREAS,
Secured Party has agreed to provide to Debtor a loan in the maximum
principal amount of $1,000,000 (the “ Loan ”),
as evidenced by that certain Revolving Loan Agreement, dated as of
even date herewith (the “ Loan Agreement ”),
made by Debtor, as borrower, in favor of Secured Party, as
lender.
WHEREAS,
it is a condition precedent to the extension of the Loan that
Debtor enter into this Agreement to secure, among other things, the
Indebtedness (as defined below), and Debtor has agreed to enter
into this Agreement in furtherance of the same.
NOW
THEREFORE, in consideration of the premises and mutual covenants
and agreements set forth herein, Debtor hereby agrees as
follows:
For value received, Debtor grants to Secured Party a continuing
security interest in the Collateral (as defined below) to secure
payment when due, whether by stated maturity, demand, acceleration
or otherwise, of all existing and future indebtedness and
obligations of Debtor (“ Indebtedness ”),
including but not limited to Indebtedness arising under the Loan
Agreement and all other agreements and instruments related thereto.
Indebtedness includes without limitation any and all obligations or
liabilities of Debtor to Secured Party, whether absolute or
contingent, direct or indirect, voluntary or involuntary,
liquidated or unliquidated, joint or several, known or unknown; any
and all obligations or liabilities for which Debtor would otherwise
be liable to Secured Party were it not for the invalidity or
unenforceability of such obligations or liabilities by reason of
any bankruptcy, insolvency or other law, or for any other reason;
any and all amendments, modifications, renewals and/or extensions
of any of the above; all costs incurred by Secured Party in
establishing, determining, continuing, or defending the validity or
priority of its security interest, or in pursuing its rights and
remedies under this Agreement or under any other agreement between
Secured Party and Debtor or in connection with any proceeding
involving Secured Party as a result of any financial accommodation
to Debtor; and all other costs of collecting indebtedness,
including without limitation attorneys’ fees. Debtor agrees
to pay Secured Party all such costs incurred by Secured Party,
immediately upon demand, and until paid all costs shall bear
interest at the highest per annum rate applicable to any of the
indebtedness, but not in excess of the maximum rate permitted by
law. Any reference in this Agreement to attorney fees shall be
deemed a reference to actual fees, costs, and expenses of both
in-house and outside counsel and paralegals, whether or not a suit
or action is instituted, and to court costs if a suit or action is
instituted, and whether attorneys’ fees or court costs are
incurred at the trial court level, on appeal, in a bankruptcy,
administrative or probate proceeding or otherwise.
1.
Collateral . Collateral shall mean all the following
property Debtor now or later owns or has an interest in, wherever
located:
1
1.1 All
present and future accounts, accounts receivable, agreements,
contracts, leases, contract rights, rights to payment, instruments,
documents, chattel paper, security agreements, guaranties, letters
of credit, undertakings, surety bonds, insurance policies, notes
and drafts, and all forms of obligations owing to Debtor or in
which Debtor may have any interest, however created or arising and
whether or not earned by performance;
1.2
All present and future general intangibles, payment intangibles,
all tax refunds of every kind and nature to which Debtor now or
hereafter may become entitled, however arising, all other refunds,
and all deposits, reserves, loans, royalties, cost savings,
deferred payments, goodwill, chooses in action, liquidated damages,
rights to indemnification, trade secrets, computer programs,
software, customer and supplier lists, trademarks, trade names,
patents, licenses, permits, copyrights, technology, processes,
proprietary information and insurance proceeds of which Debtor is a
beneficiary;
1.3 All
present and future deposit accounts of Debtor, including ,
without limitation, any demand, time, savings, passbook or like
account maintained by Debtor with Secured Party or any other bank,
savings and loan association, credit union or like organization,
and all money, cash and cash equivalents of Debtor, whether or not
deposited in any such deposit account;
1.4
All present and future books and records, including ,
without limitation, books of account and ledgers of every kind and
nature, all electronically recorded data relating to Debtor or the
business thereof, all receptacles and containers for such records,
and all files and correspondence;
1.5
All present and future goods, inventory, equipment and merchandise,
including , without limitation, all present and future goods
held for sale or lease or to be furnished under a contract of
service, all raw materials, work in process and finished goods, all
packing materials, supplies and containers relating to or used in
connection with any of the foregoing, and all bills of lading,
warehouse receipts or documents of title relating to any of the
foregoing;
1.6
All present and future investment collateral and all rights,
preferences, privileges and distributions with respect
thereto;
1.7 All
present and future accessions, appurtenances, components, repairs,
repair parts, spare parts, replacements, substitutions, additions,
issue and/or improvements to or of or with respect to any of the
foregoing;
1.8 All
rights, remedies, powers and/or privileges with respect to any of
the foregoing, including the right to make claims thereunder
or with respect thereto;
1.9
Any and all balances, credits, deposits, accounts or moneys of or
in its name arising from any of the foregoing in the possession or
control of, or in transit to, Secured Party or any other financial
institution and all sums on deposit therein from time to time and
all securities, instruments and accounts in which such sums are
invested from time to time;
1.10 Any
other collateral, rights and properties described in each and every
deed of trust, mortgage, security agreement, pledge, assignment and
other agreement which has been, or will at any time(s) later be,
executed by Debtor or its affiliates for the benefit of Secured
Party; and
2
1.11 All
products, rents, issues, profits, returns, income and proceeds of
and from any and all of the foregoing (including proceeds which
constitute property of the types described in the foregoing
clauses (1.1) through ( 1.10 ), and any and all
money, accounts, general intangibles, deposit accounts, documents,
instruments, chattel paper, goods, insurance proceeds, and any
other tangible or intangible property received upon the sale or
disposition of any of the foregoing).
2.
Warranties, Covenants and Agreements . Debtor warrants,
covenants and agrees as follows:
2.1 Debtor
shall furnish to Secured Party, in form and at intervals as Secured
Party may request, any information Secured Party may reasonably
request and shall allow Secured Party to examine, inspect, and copy
any of Debtor’s books and records. Debtor shall, at the
request of Secured Party, mark its records and the Collateral to
clearly indicate the security interest of Secured Party under this
Agreement.
2.2
At the time any Collateral becomes, or is represented to be,
subject to a security interest in favor of Secured Party, Debtor
shall be deemed to have warranted that (a) Debtor is the lawful
owner of the Collateral and has the right and authority to subject
it to a security interest granted to Secured Party; (b) none of the
Collateral is subject to any security interest other than that in
favor of Secured Party and there are no financing statements on
file, other than in favor of Secured Party; and (c) Debtor acquired
its rights in the Collateral in the ordinary course of its
business.
2.3 Debtor
confirms that the Collateral is and will keep the Collateral free
at all times from all claims, liens, security interests and
encumbrances other than those in favor of Secured Party, and other
than those agreed to by the Secured Party in writing. Debtor will
not, without the prior written consent of Secured Party, sell,
transfer, or lease, or permit to be sold, transferred or leased,
any or all of the Collateral, except (where inventory is pledged as
Collateral) for inventory in the ordinary course of its business
and will not return any inventory to its supplier. Secured Party or
its representatives may at all reasonable times inspect the
Collateral and may enter upon all premises where the Collateral is
kept or might be located.
2.4 Debtor
will do all acts and or cause to be executed all writings requested
by Secured Party to establish, maintain and continue a perfected
and first security interest of Secured Party in the Collateral.
Debtor agrees that Secured Party has no obligation to acquire or
perfect any lien on or security interest in any asset(s), whether
realty or personalty, to secure payment of the Indebtedness, and
Debtor is not relying upon assets in which Secured Party may have a
lien or security interest for payment of the Indebtedness. Without
limiting the generality of the foregoing, Debtor hereby authorizes
Secured Party to prepare, execute and file all financing
statements, continuation statements or other documents or
instruments as Secured Party shall determine are necessary or
desirable to perfect, evidence, continue or otherwise take action
in connection with the security interests granted
hereunder.
2.5 Debtor
will pay within the time that they can be paid without interest or
penalty all taxes, assessments and similar charges which at any
time are or may become a lien, charge, or encumbrance upon any
Collateral, except to the extent contested in good faith and bonded
in a manner satisfactory to Secured Party. If Debtor fails to pay
any of these taxes, assessments, or other charges in the time
provided above, Secured Party has the option (but not the
obligation) to do so, and Debtor agrees to repay all amounts so
expended by Secured Party immediately upon demand, together with
interest at the highest lawful default rate which could be charged
by Secured Party to Debtor on any indebtedness.
3
2.6
Debtor will keep the Collateral in good condition and will protect
it from loss, damage, or deterioration from any cause. Debtor has
and will maintain at all times (a) with respect to the Collateral,
insurance under an “all risk” policy against fire and
other risks customarily insured against; and (b) public liability
insurance and other insurance as may be required by law or
reasonably required by Secured Party; all of which insurance shall
be in amount, form and content, and written by companies as may be
satisfactory to Secured Party, containing a lender’s loss
payable endorsement acceptable to Secured Party. Debtor will
deliver to Secured Party immediately upon demand evidence
satisfactory to Secured Party that the required insurance has been
procured. If Debtor fails to maintain satisfactory insurance,
Secured Party has the option (but not the obligation) to do so and
Debtor agrees to repay all amounts so expended by Secured Party
immediately upon demand, together with interest at the highest
lawful default rate which could be charged by Secured Party to
Debtor on any indebtedness.
2.7
If Debtor’s accounts are pledged as Collateral under this
Agreement, then on each occasion on which Debtor evidences to
Secured Party the account balances on, and the nature and extent
of, the accounts, Debtor shall be deemed to have warranted that
except as otherwise indicated (a) each of those accounts is valid
and enforceable without performance by Debtor of any act; (b) each
of those account balances are in fact owing, (c) there are no
setoffs, recoupments, credits, contra accounts, counterclaims or
defenses against any of those accounts, (d) as to any accounts
represented by a note, trade acceptance, draft or other instrument
or by any chattel paper or document, the same have been endorsed
and/or delivered by Debtor to Secured Party, (e) Debtor has not
received with respect to any account, any notice of the death of
the related account debtor, nor the dissolution, liquidation,
termination of existence, insolvency, business failure, appointment
of a receiver for, assignment for the benefit of creditors by, or
filing of a petition in bankruptcy by or against, the account
debtor, and (f) as to each account, the account debtor is not an
affiliate of Debtor, the United States of America or any
department, agency or instrumentality of it, or a citizen or
resident of any jurisdiction outside of the United States. Debtor
will do all acts and will execute all writings requested by Secured
Party to perform, enforce performance of, and collect all accounts.
Debtor shall neither make nor permit any modification, compromise
or substitution for any account without the prior written consent
of Secured Party. Debtor shall, at Secured Party’s request
arrange for verification of accounts directly with account debtors
or by other methods acceptable to Secured Party.
2.8
Debtor at all times shall be in strict compliance with all
applicable laws, including without limitation any laws, ordinances,
directives, orders, statutes, or regulations an object of which is
to regulate or improve health, safety, or the environment (“
Environmental Laws ”).
2.9
If Secured Party, acting in its sole discretion, redelivers
Collateral to Debtor or Debtor’s designee for the purpose of
(a) the ultimate sale or exchange thereof; or (b)
presentation,
