ACCOUNTS RECEIVABLE PURCHASE & SECURITY AGREEMENT

 

This Accounts Receivable Purchase & Security Agreement (the "Agreement"),
effective January 11, 2012. Is entered into by and between SOUTHERN PRODUCTS,
INC. a Nevada Corporation doing business as SIGMAC USA (hereafter "Client") and
PACIFIC BUSINESS CAPITAL CORPORATION. a California corporation (hereinafter
"PBCC"). The parties agree as follows:

 

PURPOSE OF AGREEMENT

 

1. Client desires to obtain short term financing by factoring. selling and
assigning to PBCC acceptable accounts receivable at a discount below face value.
The purpose of this financing is commercial in nature, and not for household.
family, and/or personal use.

 

DEFINITIONS

 

2. "Account" or "Account Receivable" means any right to payment of a monetary
obligation as defined in Commercial Code Section 9102 and includes, without
limitation, for goods sold, leased, and/or delivered, or services rendered which
are not evidenced by an instrument or chattel paper.

3. "Acceptable Account" means an Account conforming to the warranties and terms
set forth herein.

4. "Customer" means Client's customer or the account debtor.

5. "Client" means the seller and assignor of the Accounts.

6. "Collateral" means the intangible or tangible property given as security to
PBCC by Client for any obligations and liabilities of Client to PBCC under this
Agreement.

7. "Warrant" means to guarantee, as a material element of this Agreement. Each
separate warranty herein is also an independent condition to PBCC's duties under
this Agreement.

8. "Credit Problem" means a customer is unable to pay his debts because of
insolvency. the filing of a voluntary petition in bankruptcy, the quitting of
business, and the like.

9. "Customer Dispute" means a claim, by customer against Client, of any kind
whatsoever, that reduces the amount collectible from customer by PBCC.

(a) A "Customer Dispute" may arise from any kind of disagreement between
customer and Client whatsoever, valid or invalid.

(b) A "Customer Dispute" may arise at anytime, both before and/or after the
signing of this agreement or the purchase of the Account.

 

WARRANTIES AND COVENANTS BY CLIENT

 

10. As an inducement for PBCC to enter into this Agreement, and with full
knowledge that the truth and accuracy of the warranties in this Agreement are
being relied upon by PBCC instead of the delay of a complete credit

investigation, Client warrants and/or covenants that:

11 Client is properly licensed and authorized to operate its business under the
trade name of SIGMAC USA and Client's trade name(s) has been properly filed and
published as required by applicable law.

12. Client's business is solvent, and Client has made and shall continue to make
timely payment on deposit of any tax required to be deducted and withheld by
Client from the wages of any employee of Client.

13. Each customer's business is solvent to the best of Client's information and
knowledge.

14. Client is, at the time of purchase by PBCC the lawful owner of and has good
and undisputed title to the Accounts purchased by PBCC.

15. Each Account offered for sale to PBCC is an accurate and undisputed
statement of indebtedness by customer to Client for a certain sum which is due
and payable in thirty days or less. or within such time as is agreed to, in
writing, by PBCC and Client.

16. Each Account offered for sale to PBCC is an accurate statement of a bonafide
sale, delivery and acceptance of merchandise or performance of service by Client
to customer.

1 Client does not own, control or exercise dominion over. in any way whatsoever.
the business of any customer/account debtor to be factored by Client to PBCC.

18. All financial records, statements, books or other documents shown to PBCC by
Client at anytime. Either before or after the signing of this Agreement are true
and accurate.

19, Client will not, under any circumstances or in any manner whatsoever,
interfere with any of PBCC’s rights

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under this Agreement.

20. Client will not factor or sell Accounts except to PBCC for the period of
this Agreement, and/or for as long s any indebtedness whatsoever remains owing
by Client to PBCC.

21. Client has not transferred, pledged or granted a security interest in
Client's Accounts or other personal property to any other party which Client has
not fully disclosed in \\Titing to PBCC and Client \\ill not transfer, pledge or
grant a security interest to any other party in said Accounts or personal
properly for the term of this Agreement and for as long as Client is indebted to
PBCC hereunder.

22. Client will not change or modify the terms of the original Account with
customer unless PBCC first consents to such change in writing. For example.
Client may not extend credit to a customer beyond thil1y days without prior
written consent from PBCC.

23. Client shall not consent to the placement of any lien, security interest or
encumbrance upon Client's fixtures. personal property of any type and wherever
located except upon \written notice to PBCC, and Client shall provide written
notice to PBCC within ten days of Client obtaining any knowledge, from any
source, of the filing, recording or perfection by any means, of any
non-consensual lien, claim or encumbrance against the aforementioned property of
Client.

24. Client will maintain such insurance covering Client's business and/or the
property of Client's customers as is customary for businesses similar to the
business of Client and, at the request of PBCC, name PBCC as loss payee of such
insurance.

25. Client will notify PBCC in writing prior to any change in the location of
Client's place of business or, if Client has or intends to acquire any
additional place(s) of business, or prior to any change in Client's chief
executive office, the office or offices where Client's books and records
concerning Accounts are kept.

26. Client will immediately notify PBCC in writing of any proposed change of
Client's name, identity, legal entity, corporate structure, use of additional
trade name(s), and/or any proposed change in any of the officers, principals,
partners, and/or owners of Client.

 

FURTHER PROMISES

 

27. SECURITY INTEREST/COLLATERAL: As a further inducement for PBCC to enter into
this Agreement, Client gives to PBCC, as collateral for the repayment of any and
all obligations and liabilities whatsoever of Client to PBCC, a security
interest, under the Uniform Commercial Code, in the following described property
hereinafter collectively called "Collateral": ALL ASSETS, including, without
limitation. any and all presently existing, or hereafter arising, now owned or
hereafter acquired Accounts, Accounts Receivable. contract rights, chattel
paper, choses in action, documents, instruments, reserves, reserve accounts,
rebates, and general intangibles, and all books and records pertaining to
Accounts and all proceeds of the foregoing property, and all properly set forth
in Exhibit "A" attached hereto and incorporated by reference herein.

28. NOTIFICATION: PBCC may at any time and at its sole discretion notify any
customer/account debtor of Client to make payments directly to PBCC.

29. ASSIGNMENT: Client shall from time to time at Client's option sell, transfer
and assign Accounts to PBCC and said Accounts shall be identified by separate
and subsequent written assignments on a form to be provided to Client by PBCC
known as Schedule of Accounts.

30. APPROVAL: PBCC will not purchase an Account unless such Account is first
submitted to PBCC by Client for approval. PBCC is not obligated to buy any
Account from Client.

31. DISCOUNT: PBCC agrees to buy Acceptable Accounts from Client at a minimum
discount (fee) of .813 Percent (.00813) of the face value of each Account.

32. RESERVE: PBCC may reserve and withhold an amount in a reserve account equal
to Twenty Percent (20%) or more of the gross face amount of all Accounts
purchased. Said reserve account may be held by PBCC and applied by PBCC against
charge-backs or any obligations of Client to PBCC known or anticipated, and said
reserve account is not due and payable to Client until any and all such
obligations are fully paid and/or satisfied. Client gives to PBCC a security
interest in this reserve account \\hich secures all obligations and indebtedness
arising hereunder. 33. PURCHASE TERMS: The purchase price for each Acceptable
Account shall be the gross amount due of each Account. less PBCC's earned
discount of .813 Percent (.00813) of said gross amount. In the event that an)
Account remains unpaid after the fifteenth (l5th) from the date said Account was
purchased by PBCC, the purchase price shall be reduced by an additional service
discount of 0.54 Percent (.00054) per day, until said Account

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is paid in full commencing from the sixteenth (16th) day after purchase of each
such Account. The additional service discount shall be consideration for PBCC's
prolonging the period its funds are outstanding and the additional services
required in collecting Accounts which are paid the initial fifteen (15) day
period contemplated in this Agreement. The service discount fees stated herein
assume an advance rate of eighty percent (80%). In the event the advance rate is
more or than eighty percent the service discount fees applicable thereto shall
be adjusted pro-rata, as applicable, in order to maintain the same effective
yield assuming an eighty percent (80%) advance rate. PBCC will not apply any
partial payments against factored invoices. Partial payments shall be held by
PBCC until such time as the Client repurchases the invoice(s) in full and
complete payment is received from the customer. PBCC shall continue to charge
its full service fee on the gross invoice amount until full payment is received.
PBCC reserves the right to renegotiate its discount rate on specific Accounts,
and/or all Accounts purchased pursuant to this Agreement, as market conditions,
interest rates, and credit risks warrant. Any payments received by Client on
PBCC's Accounts shall be the sole property of PBCC and Client agrees and commits
to hold the exact payment instrument, (e.g., check received from any account
debtor in partial or full settlement of Accounts sold to PBCC) and to remit to
PBCC said payment instrument immediately. The receipt of any check or other
items of payment from account debtors or Client, shall not be considered a
payment on account until such check or other item of payment is presented to
PBCC's bank for payment, in which event, said check or other item of payment
shall be deemed to have been paid to PBCC three (3) calendar days after advise
of receipt of funds in PBCC's account at WELLS FARGO BANK located in Orange
County California. Should Client intercept and deposit checks into Client's bank
account which represent payment on any invoice(s) purchased by PBCC and fail to
reimburse PBCC for the full amount of such intercepted funds within two (2)
business days after receipt of funds by Client, in addition to the discounts
earned and due under the terms of this Agreement, Client shall forfeit the
entire initial reserve associated with the invoices involved as well as be
charged any and all reasonable collection and/or legal fees associated with the
collection of the same.

34. RESERVES. As set forth in Paragraph 32 above, the reserve shall be held by
PBCC and applied to any obligations of Client to PBCC including all discounts
earned. PBCC will pay (i.e. rebate) to Client the balance of the reserve
account, after deducting all discounts earned (PBCC fees), hard costs (legal
fees and other collection charges, UPS and other freight charges, and any other
advances required before an Account can be collected), charge backs (e.g. short
payment because of customer deductions, Client-intercepted payments), on each
Account included on the Schedule of Accounts. PBCC will generally rebate the
reserve on an invoice by invoice basis, but retains the right under appropriate
circumstances to delay payment of the reserve until all the Accounts included on
the Schedule of Accounts have been collected in full by PBCC. Reserve account
rebates shall be paid once each week on the same day (i.e. every Monday for
schedules paid in full by 12:00 pm of the preceding Monday, Tuesday or
Wednesday, and every Wednesday for schedules paid in full by 12:00 pm of the
preceding Thursday or Friday). Any sums received by PBCC with regard to an
Account shall be applied as specified in the payment or, if not readily
ascertainable, against the oldest Account of that customer. Any reserve money
owing to Client may be held by PBCC in PBCC's sole discretion as further
security for payment of any and all obligations owing by Client to PBCC. In the
event that Client intercepts any funds due to PBCC, any sums due as a result of
such intercept may be charged against any reserves otherwise due Client.

35. REQUIRED FORMS: When Client offers a Schedule of Accounts to PBCC for sale,
PBCC shall receive an original invoice(s) together with one copy thereof, a copy
of the Bill of Lading, Proof of Delivery, Contract or Purchase Order, and/or a
Purchase Order number which corresponds with such invoice(s), and any other
necessary documents as appropriate to the business of Client.

36. RECOURSE: PBCC will have recourse against Client in any of the following
events;

(a) If the Customer or Account has a Credit Problem (as defined in Paragraph 8);

(b) If the Customer asserts a claim of or offset of any kind against Client or
PBCC;

(c) If an invoice purchased by PBCC remains uncollected after 90 days of the
invoice date;

(d) If the Client has breached any warranties or promises. or has misrepresented
any material facts, with respect to this Agreement or any unpaid account;

(e) If the Client has contributed to, or aggravated Customer's credit problem or
ability to pay, or Client directly or indirectly interferes with PBCC's to
collect the unpaid and

(f) If the Client and Customer are involved in a dispute kind which remains
unresolved for more than of validity.

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PBCC may require the Client to repurchase these accounts or invoices, as the
case may be. The repurchase price shall include PBCC's purchase price plus
applicable factoring fees, or earned discounts, as set forth in this Agreement.
Should Client fail to repurchase each uncollected invoice or account within five
(5) days after receiving written notice from PBCC, PBCC may apply any and all
monies due Client held by PBCC including advances, rebates and collections of
non-factored invoices, to the invoices or accounts to be repurchased. or PBCC
may seek recovery through any other remedies legally available to it.
Furthermore, if Client has materially breached any warranties or promises in
this Agreement, misrepresented any material facts with regard to the accounts
purchased by PBCC, or is in default as defined in this Agreement, PBCC reserves
the right to require the Client to repurchase all the outstanding accounts held
by PBCC for the repurchase price defined above.

37. NOTICE OF DISPUTE: Client will immediately notify PBCC of any disputes
between customer and Client.

38. PAYMENT OF DISPUTED ACCOUNT: Client will immediately pay to PBCC the full
amount of any Account subject to a Customer Dispute (see Paragraph 9 for
definition) of any kind whatsoever.

39. SETTLEMENT OF DISPUTE: PBCC may settle any dispute with customer. Such
settlement does not relieve Client of final responsibility for such Accounts.

40. CHARGE-BACK: If Client does not fully settle the dispute with immediacy,
PBCC may, in addition to any other remedies under this Agreement, charge back or
sell back the Account to Client.

41. CHARGE-BACK FOR INVOICING ERROR: Mistaken, incorrect and/or erroneous
invoicing, submitted by Client to PBCC may, at PBCC's discretion be deemed a
disputed invoice and be charged back to Client.

42. STATEMENT OF CHARGE-BACK: PBCC shall identify in writing all charge-backs
and provide to Client a written statement thereof. Said statement shall be
deemed an "Account Stated" between Client and PBCC as to said charge-backs
except for any errors of which Client shall have notified PBCC in writing within
fifteen (15) days after the date of receipt by Client of said statement

43. SOLE PROPERTY: Once PBCC has purchased an Account, the payment from customer
as to that Account is the sole property of PBCC. Any interference by Client with
this payment will result in civil and/or criminal liability.

44. HOLD IN TRUST: Client will hold in trust and safekeeping. as the property of
PBCC, and immediately turn over to PBCC the identical check or other form of
payment received by Client, whenever any payment on an Account purchased by PBCC
comes into Client's possession. Should Client come into possession of a check
comprising payments owing to both Client and PBCC, Client shall turn over said
check to PBCC. PBCC will refund Client's portion to Client.

45. FINANCIAL RECORDS: Client will furnish PBCC financial statements and
information as requested by PBCC from time to time.

46. TAX COMPLIANCE: Client will furnish PBCC upon request satisfactory proof of
payment and/or compliance with all Federal, State and/or local tax requirements.

47. NOTICE OF LEVY: Client will promptly notify PBCC of any attachment, tax
assessment or other legal process levied against Client or any of Client's
customers.

48. NO PLEDGE: Client will not pledge the credit of PBCC to any person or
business for any purpose whatsoever. 49. BOOK ENTRY: Client will, immediately
upon sale of Accounts to PBCC, make proper entries on its books and records
disclosing the absolute sale of said Accounts to PBCC.

50. LEGAL & COLLECTION FEES: Except as is prohibited by law, Client shall pay to
PBCC all costs and expenses including without limitation attorney's fees and
costs incurred by PBCC in the prosecution or enforcement of any of PBCC's
rights, claims or causes of action which arise out or relate to or pertain to
this Agreement

51. POWER OF ATTORNEY: Anyone or more of the following shall constitute a
default provided that same is not cured or resolved within ten (10) business
days:

(a) Strike out Client's address on all Accounts mailed to customers and put
PBCC's address on all Accounts.

(b) Receive, open and dispose of all mail addressed to Client, or to Client's
fictitious trade name via PBCC's address.

(c)Endorse the name of Client or Client's fictitious trade name on any checks or
other payment that may come into the possession of PBCC on Accounts purchased by
PBCC or pursuant to default.

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(d) In the event Client has not cured any default hereunder within the time
specified, PBCC may, in Client's name, or otherwise, demand, sue for, collect,
and give releases for any and all monies due or to become due on Accounts.

(e) Do any and all things necessary and proper to carry out the purpose intended
by this Agreement.

(f) Execute and file a UCC-l Financing Statement, or UCC-2 as applicable, on
behalf of Client evidencing and perfecting the security interest granted by
Client to PBCC and renewing the security interest granted herein.

The authority granted PBCC herein shall remain in full force and effect until
all assigned Accounts are paid in full and any indebtedness of Client to PBCC is
discharged.

52. DOUBLE PAYMENTS: Should PBCC receive a double payment on an Account or other
payment which is not identified, PBCC shall carry these sums as open items and
shall return them to said Payor upon proper identification.

53. MAXIMUM ACCOUNT: The outstanding amount of Client's account with PBCC (that
is, Accounts purchased by PBCC from Client and not yet paid by customer) shall
not exceed the sum of unless otherwise agreed by the parties in writing.

54. HOLD HARMLESS: Client shall indemnify and hold PBCC free and harmless from
and against any customer ill will arising from PBCC's collecting or attempting
to collect any Accounts.

55. DEFAULTS: Anyone or more of the following shall be a default hereunder:

(a) Client shall fail to pay any indebtedness to PBCC when due.

(b) Client shall breach any term, provision, covenant, warranty or
representation under this Agreement, or under any other agreements or contracts
between Client and PBCC or obligation of Client to PBCC.

(c) The appointment of any receiver or trustee of all or a substantial portion
of the assets of Client.

(d) Client shall become insolvent or unable to pay debts as they mature, shall
make a general assignment for the benefit of creditors, or shall voluntarily
file under any bankruptcy or similar law.

(e) Any involuntary petition in bankruptcy shall be filed against Client and
shall not be dismissed within 60 days.

(f) Any levies of attachment, executions, tax assessments, tax liens, or similar
process shall be issued against the Collateral and shall not be released within
ten days thereof.

(g) Any financial statements, profit and loss statements, borrowing
certificates, or schedules, or other statements furnished by Client to PBCC
prove false or incorrect in any material respect.

(h) Client shall terminate/cease factoring while PBCC has factored Accounts
outstanding as to which the entire collectability is uncertain.

56. REMEDIES AFTER DEFAULT: In the event of any default PBCC may do anyone or
more of the following:

(a) Declare any indebtedness including outstanding factored Accounts,
immediately due and payable;

(b) Notify any customers of Client default and take possession of Collateral and
collect any Accounts without judicial process;

(c) Require Client to assemble the Collateral and the records pertaining to
Accounts and make them available to PBCC at a place designated by PBCC:

(d) Enter the premises of Client and take possession of the Collateral and of
the records pertaining to the Accounts and any other Collateral;

(e) Grant extensions, compromise claims, and settle Accounts for less than face
value, all without prior notice to Client;

(f) Use, in connection with any assembly or disposition of the Collateral, any
trademark. trade name, trade style, copyright, patent right or technical process
L1sed or utilized by Client;

(g) Return any surplus realized to Client after deducting the actual expenses,
attorneys' fees incurred by PBCC in resolving said default;

(h) Hold Client liable for any deficiency:

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(i) Any other remedy available to PBCC, whether in law or equity; and

(j) Terminate the Agreement forthwith.

57. TERMINATION: This Agreement shall have a minimum term of twelve (12) months
and shall thereafter automatically renew for successive twelve (1 month periods
unless terminated by certified written notice by either party thirty (30) prior
to such renewal period.

58. POST-TERMINATION: Afterterminatiol1, Client shall be liable to PBCC for the
full and prompt payment of the full amount of factored Accounts which are then
outstanding and unpaid. disputed or undisputed, as well as any other
indebtedness whatsoever, PBCC continues to have a security interest in the
Collateral of Client until any existing indebtedness of Client to PBCC is paid
in full.

59. BINDING ON FUTURE PARTIES: This Agreement inures to the benefit of and is
binding upon the heirs, executors, administrators, successors and assigns of the
parties thereto.

60. CUMULATIVE RIGHTS: All rights, remedies and powers granted to PBCC in this
Agreement, or in any note or other agreement given by Client to PBCC, are
cumulative and may be exercised singularly or concurrently with such other
rights and PBCC may have. These rights may be exercised from time to time as to
all or any part of the pledged Collateral as PBCC in its discretion may
determine.

61. WRITTEN WAIVER: PBCC may not waive its rights and remedies unless the waiver
is in writing and signed by PBCC. A waiver by PBCC of a right or remedy under
this Agreement on one occasion is not a waiver of the right or remedy on any
subsequent occasion.

62. GOVERNING LAW; JURISDICTION AND VENUE: This Agreement shall be governed by
and construed in accordance with the laws of the State of California. The sole
and only proper jurisdiction and venue for any action under this Agreement shall
be Orange County, California.

63. ARBITRATION: Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration administered
by the American Arbitration Association ("AAA") in accordance with its
Commercial Arbitration Rules, including the Optional Rules for Emergency
Measures of Protection, unless the parties agree to another arbitrator in
writing, and judgment on the award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof. The arbitration will be conducted in
Orange County, California. In the event that any party's claim exceeds
$1,500,000.00 exclusive of interest and attorneys' fees, the dispute shall be
heard and determined by three (3) arbitrators. Within fifteen (15) days after
the commencement of arbitration, each party shall select one person to act as
arbitrator, and the two (2) so selected shall select a third arbitrator within
thirty (30) days of the commencement of the arbitration. If the arbitrators
selected by the pa11ies are unable or fail to agree upon the third arbitrator
within the allotted time, the third arbitrator shall be appointed by AAA in
accordance with its rules. All arbitrators shall serve as neutral, independent
and impartial arbitrators. If the arbitration is to be conducted by a sole
arbitrator, the arbitrator must be:

1. A retired judge with at least five (5) years of civil law experience; or

2. A lawyer with ten (10) years of active practice in commercial finance and
asset based lending.

If the arbitration is conducted by three (3) arbitrators, at least two (2) of
the three (3) arbitrators shall meet the requirements of items 1 and 2 above.

At the request of a pa11y, the arbitrator(s) shall have the discretion to order
examination by deposition of witnesses to the extent the arbitrator deems such
additional discovery relevant and appropriate. Depositions shall be limited to a
maximum of three (3) per party and shall be held within forty-five (45) days of
the making of a request. Additional depositions may be scheduled only with the
permission of the arbitrator(s), and for good cause shown. Each deposition shall
be limited to a maximum of six (6) hours duration. All objections are reserved
for the arbitration hearing except for objections based on privilege and
proprietary or confidential information. In any arbitration arising out of or
related to this Agreement, requests for documents:

1. Shall be limited to documents which are directly relevant to significant
issues in the case or to the case’s outcome;

2. Shall be restricted in terms of time frame, subject matter and persons or
entities to which the requests

pertain; and

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3. Shall not include broad phraseology such as "documents directly or indirectly
related to arbitrators will have no authority to punitive or other not measured
by the prevailing party's actual damages, except as may be required by statute.
The arbitrator(s) may not award any incidental. indirect or consequential
damages, including damages for lost profits. The award shall be in writing,
shall be signed by a majority of the arbitrator(s), and shall include a
statement setting forth the reasons for the disposition of any claim. The
parties shall maintain the confidential nature of the arbitration proceeding and
the reward, including the hearing, except as may be necessary to prepare for or
conduct the arbitration hearing on the merits, or except as may be necessary in
connection with a court application for a preliminary remedy, a judicial
challenge to an award or its enforcement, or unless otherwise required by law or
judicial decision.

64. INVALID PROVISIONS: If any provision of this Agreement shall be declared
illegal or contrary to law, it is agreed that such provision shall be
disregarded and this Agreement shall continue in force as though such provision
had not been incorporated herein.

65. ENTIRE AGREEMENT: This instrument contains the entire Agreement between the
parties. It is further agreed and represented by each party hereto that in
executing this Agreement no party is relying on representations or promises of
the other except as expressly set forth herein. It is further agreed that this
Agreement is the final entire Agreement of the Parties. It supersedes all prior
oral or written negotiations or Agreements. This Agreement may not be modified
except in writing signed by both parties and attached hereto.

66. COUNTERPARTS: This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original Agreement, and all of which shall
constitute one agreement to be effective as of the Effective Date.

67. EFFECTIVE DATE: This Agreement becomes effective when it is accepted and
executed by an authorized officer of PBCC.

68. INDEMNIFICATION: Client agrees to indemnify and hold PBCC harmless from any
and all liability, claims and damages, including attorney fees, costs of suit
and interest which PBCC may incur as a result of the failure of Client to pay
withholding taxes due and payable to any taxing authority.

69. COSTS: Client shall pay $1,500.00 to PBCC for underwriting and other costs
associated with verification of credit, consulting and credit research. UCC
filing and registration fees shall be billed at PBCC's cost. All costs shall be
reimbursed out of the first funding. Client shall pay said fee before or out of
first funding and such fees are nonrefundable.

70. MINIMUM USAGE: Anything to the contrary notwithstanding, Client shall be
charged a minimum usage

discount fee each month equal to a factoring volume of not less than $500,000.00

 

SOUTHERN PRODUCTS. INC.

PACIFIC BUSINESS CAPITAL CORPORATION

 

By: /s/ Edward Meadows By: /s/ Bernard J. Hittner EDWARD MEADOWS, CEO BERNARD J.
HITTNER, CEO

 

ACKNOWLEDGMENT

STATE OF CALIFORNIA )

) SS

COUNTY OF ORANGE )

 

On the undersigned February 4, 2012, before me, Cathie F. Messenger, the
undersigned Notary Public in and for the said State, personally EDWARD MEADOWS,
who proved to me on the basis of satisfactory evidence to be the person whose
name is subscribed within instrument and acknowledged to me that he executed the
same in his authorized capacity. and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.

 

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is

true and correct.

 

WITNESS my hand and official seal

 

/s/ Cathie F. Messenger

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EXHIBIT "A"

 

DEBTOR: SOUTHERN PRODUCTS. INC. dba SIGMAC USA

 

SECURED PARTY' PACIFIC BUSINESS CAPITAL CORPORATION

 

As collateral securing all present and future obligations of Debtor to Secured
Party, Debtor hereby grants to Secured Party a security interest in the
following, whether now owned or hereafter acquired:

 

1. ALL ASSETS, including but not limited to the following:

 

a. All accounts, contract rights, instruments, documents, chattel paper, choses
in action, commercial tort claims, general intangibles (including but not
limited to trademarks, tradenames. patents, copyrights and all other forms of
intellectual property, and tax refunds), returned and repossessed goods and all
rights as a seller of goods; all collateral securing any of the foregoing; all
deposit or reserve accounts, special and general, whether on deposit with
Secured Party or others;

 

b. All books and records including, but not limited to, computer tapes, disks,
programs and other things upon which

or in which such books or records are stored or maintained together with all
equipment, machinery and inventory

containing or used in connection with the use, preparation or maintenance of
such books and records;

 

c. All inventory wherever located; all present and future claims against any
supplier of any of the foregoing,

including claims for defective goods or overpayments to or undershipments by
suppliers; all proceeds arising from the lease or rental of any of the
foregoing; INVENTORY RETURNED BY DEBTOR TO ITS SUPPLIERS SHALL REMAIN SUBJECT TO
SECURED PARTY'S SECURITY INTEREST;

 

d. All equipment and fixtures, NONE OF WHICH THE DEBTOR IS AUTHORIZED TO SELL,
LEASE OR\ OTHERWISE DISPOSE OF WITHOUT THE WRITTEN CONSENT OF SECURED PARTY. All
warranty and other claims against any vendor or lessor of any of the foregoing;

 

e. All substitutions, replacements, additions, accessions, proceeds and products
of any of the foregoing, whether due to voluntary or involuntary disposition,
including, but not limited to money, deposit accounts, goods, tax refunds. Other
tangible and intangible property;

 

f. All letter(s) of credit and beneficial interest there under;

 

g. All investment property; and

 

h. Insurance and the proceeds thereof covering any of the foregoing.

 

NOTICE- PURSUANT TO AN AGREEMENT BETWEEN DEBTOR AND SECURED PARTY, DEBTOR HAS
AGREED NOT TO FURTHER ENCUMBER THE COLLATERAL DESCRIBED HEREIN, THE FURTHER
ENCUMBERING OF WHICH MAY CONSTITUTE THE TORTIOUS INTERFERENCE WITH SECURED
PARTY'S RIGHTS BY SUCH ENCUMBRANCER.

 

IN THE EVENT THAT ANY ENTITY IS GRANTED A SECURITY INTEREST IN DEBTOR'S
ACCOUNTS. CHATTEL PAPER OR GENERAL INTANGIBLES CONTRARY TO THE ABOVE, THE
SECURED PARTY ASSERTS A CLAIM TO ANY PROCEEDS THEREOF RECEIVED BY SUCH ENTITY
AND THE COLLECTION AND RETENTION OF THE PROCEEDS OF THE ACCOUNTS WILL VIOLATE
THE RIGHTS OF THE SECURED PARTY NAMED HEREIN.

 

SOUTHERN PRODUCTS. INC.

By: /s/ Edward Meadows

Name & Title: EDWARD MEADOWS - CEO

 

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