Blueprint





 







Exhibit 10.65


 



SECURITY AGREEMENT


 


 


This
SECURITY AGREEMENT dated as
of December 12th, 2017 by Kure
Corp., a Florida corporation (“Borrower”), in favor of Level
Brands, Inc., a North Carolina corporation (“Secured Party”).

 


Borrower has
concurrently herewith entered into the Credit Agreement (as defined
below) with the Secured Party. As a condition precedent to the
Secured Party’s acceptance of such Credit Agreement, Borrower
has agreed to grant the Secured Party a continuing security
interest in and to the Collateral (as defined below) to secure the
Credit Agreement. Accordingly, the parties agree as
follows:

 



ARTICLE I



DEFINITIONS


 


Section 1.01 Definitions.
The following terms, as used herein, have the following respective
meanings:

 


(a)           “Collateral”
means, with respect to the Loan (as defined in the Credit
Agreement) all of Borrower’s Inventory, Accounts and Accounts
Receivables (as those terms are defined under or contemplated in
the UCC).

 


(b)           “Credit
Agreement” means that certain Revolving Line of Credit
Agreement, dated of even date herewith and entered into between
Borrower and the Secured Party, including, without limitation, the
Note (as defined in the Credit Agreement), as the same may be
renewed, extended, modified or otherwise restructured from time to
time.

 


(c)           “Event
of Default” has the meaning set forth in the Credit
Agreement.

 


(d)           “Lien”
means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind.

 


(e)           “Obligations”
means all principal and interest payable under the Credit Agreement
and all expenses as to which the Secured Party has a right to
reimbursement under this Security Agreement, including any and all
sums advanced to preserve the Collateral or to preserve its
security interests in the Collateral.

 


(f)           “Person”
means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity (or any department, agency or
political subdivision thereof).

 


(g)           “Proceeds”
means all “proceeds” (as defined in Section 9-102 of
the UCC) and shall also mean and include all proceeds of, and all
other profits, products, rents or receipts, in whatever form,
arising from the collection, sale, lease, exchange, assignment,
licensing or other disposition of or other realization upon or
payment for the use of, Collateral, including, without limitation,
all claims of Borrower against third parties for loss of, damage to
or destruction of, or for proceeds payable under, or unearned
premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with
respect to any Collateral, in each case whether now existing or
hereafter arising.

 




 

2








 






 


(h)           “Security
Agreement” means this Security Agreement, as the same may be
amended, supplemented or modified from time to time.

 


(i)           “Secured
Party” has the meaning set forth in the recitals
hereto.

 


(j)           “Security
Interests” means the security interests in the Collateral
granted under this Security Agreement securing the
Obligations.

 


(k)           “UCC”
means the Uniform Commercial Code as in effect on the date hereof
in the State of North Carolina; provided that if by reason of
mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the Security Interest in any
Collateral is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than North Carolina, “UCC”
means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.

 


(l)           “Borrower”
has the meaning set forth in the recitals hereto.

 


Section
1.02                                UCC
Terms. Unless
otherwise defined herein, or unless the context otherwise requires,
all terms used herein which are defined in the UCC shall have the
meanings stated in the UCC.

 


Section
1.03                                Terms
Generally. The
definitions in Section 1.01 shall apply equally to both the
singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words
“include”, “includes” and
“including” shall be deemed to be followed by the
phrase “without limitation”. Unless otherwise expressly
provided herein, the word “day” means a calendar
day.

 



ARTICLE II



THE SECURITY INTERESTS


 


Section
2.01                                Grant
of Security Interests. To secure the full and punctual
payment of the Obligations in accordance with the terms thereof,
and to secure the performance of all of the obligations of Borrower
hereunder, Borrower hereby assigns and pledges to the Secured
Party, and its successors and assigns, and grants to the Secured
Party, and its successors and assigns, security interests in the
Collateral.

 


Section
2.02                                Security
Interests Absolute.
All rights of the Secured Party, all security interests hereunder
and all obligations of Borrower hereunder are unconditional and
absolute and independent and separate from any other security for
or guaranty of the Obligations, whether executed by Borrower or any
other Person. Without limiting the generality of the foregoing, the
obligations of Borrower hereunder shall not be released, discharged
or otherwise affected or impaired by:

 


(a) any
extension, renewal, settlement, compromise, acceleration, waiver or
release in respect of any obligation of Borrower under the Credit
Agreement or the Obligations, by operation of law or
otherwise;

 




 

3








 






 


(b) any
release, non-perfection or invalidity of any direct or indirect
security for the Obligations, any sale, exchange, surrender,
realization upon, offset against or other action in respect of any
direct or indirect security for the Obligations or any release of
any other obligor in respect of the Obligations;

 


(c) the
existence of any claim, set-off or other right which Borrower may
have at any time against the Secured Party or any other Person,
whether in connection herewith or any unrelated
transaction;

 


(d) any
invalidity or unenforceability relating to or against Borrower or
the Secured Party for any reason of the Credit Agreement or any
other agreement or instrument evidencing or securing the
Obligations or any provision of applicable law or regulation
purporting to prohibit the payment by Borrower of the
Obligations;

 


(e) any
failure by the Secured Party: (i) to file or enforce a claim
against Borrower or its estate (in a bankruptcy or other
proceeding); (ii) to commence any action against Borrower; (iii) to
disclose to Borrower any facts which the Secured Party may now or
hereafter know with regard to Borrower; or (iv) to proceed with due
diligence in the collection, protection or realization upon any
collateral securing the Obligations; and

 


(f) any
other act or omission to act or delay of any kind by Borrower, the
Secured Party or any other Person or any other circumstance
whatsoever which might, but for the provisions of this clause,
constitute a legal or equitable discharge of Borrower’s
obligations hereunder; or

 


This
Security Agreement shall remain fully enforceable against Borrower
irrespective of any defenses that any other Person may have or
assert in respect of the Obligations, including, without
limitation, failure of consideration, breach of warranty, payment,
statute of frauds, statute of limitations, accord and satisfaction
and usury.

 


Section
2.03                                Continuing
Liability of Borrower. The Security Interests are granted as
security only and shall not subject the Secured Party to, or
transfer or in any way affect or modify, any obligation or
liability of Borrower with respect to any of the Collateral or any
transaction in connection therewith.

 



ARTICLE IV



COVENANTS


 


Borrower covenants
and agrees that until the payment in full of all Obligations,
Borrower will comply with the following:

 




 

4








 






 


Section
4.01                                Financing
Statements; Further Assurances. Borrower will, from time to time and
in such manner and form as the Secured Party may require, execute,
deliver, file and record any financing statement, specific
assignment, instrument, document, agreement or other paper and take
any other action (including, without limitation, any filings of
financing or continuation statements under the Uniform Commercial
Code) that from time to time may be necessary or desirable, or that
the Secured Party may request, in order to create, preserve,
perfect, confirm or validate the Security Interests or to enable
the Secured Party to obtain the full benefit of this Security
Agreement or to exercise and enforce any of its rights, powers and
remedies created hereunder or under applicable law with respect to
any of the Collateral. To the extent permitted by applicable law,
Borrower hereby authorizes the Secured Party to execute and file,
in the name of Borrower or otherwise and without the signature of
Borrower appearing thereon, such Uniform Commercial Code financing
statements or continuation statements as the Secured Party in its
sole discretion may deem necessary or appropriate to further
perfect or maintain the perfection of the Security Interests.
Borrower agrees that a carbon, photographic, photostatic or other
reproduction of this Security Agreement or of a financing statement
is sufficient as a financing statement.

 


Section
4.02                                Disposition
of Collateral.
Borrower will not sell, exchange, assign or otherwise dispose of,
or grant any option with respect to, any Collateral or create or
suffer to exist any Lien (other than the Security) on any
Collateral, other than in the ordinary course of
business.

 



ARTICLE V



GENERAL AUTHORITY; REMEDIES


 


Section
5.01                                General
Authority. Borrower
hereby irrevocably appoints the Secured Party and any officer or
agent thereof as its true and lawful attorney-in-fact, with full
power of substitution, in the name of Borrower, for the sole use
and benefit of the Secured Party, but at Borrower’s expense,
to the extent permitted by law, to exercise at any time and from
time to time while an Event of Default has occurred and is
continuing under the Credit Agreement or the Obligations, all or
any of the following powers with respect to all or any of the
Collateral, all acts of such attorney being hereby ratified and
confirmed; and such power, being coupled with an interest, is
irrevocable until the Obligations are paid in full:

 


(a)           to
take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to
carry out the terms of this Security Agreement;

 


(b)           to
receive, take, endorse, assign and deliver any and all checks,
credit agreements, drafts, acceptances, documents and other
negotiable and non-negotiable instruments taken or received by
Borrower as, or in connection with, the Collateral;

 


(c)           to
commence, settle, compromise, compound, prosecute, defend or adjust
any claim, suit, action or proceeding with respect to, or in
connection with, the Collateral;

 




 

5








 






 


(d)           to
sell, transfer, assign or otherwise deal in or with the Collateral
or the proceeds or avails thereof, as fully and effectually as if
the Secured Party were the absolute owner thereof; and

 


(e)           to
do, at its option, but at the expense of Borrower, at any time or
from time to time, all acts and things which the Secured Party
deems necessary to protect or preserve the Collateral and to
realize upon the Collateral.

 


Except
as otherwise provided herein, Borrower hereby waives, to the extent
permitted by applicable law, notice and judicial hearing in
connection with the Secured Party’s taking possession or
disposition of any of the Collateral, including, without
limitation, any and all prior notice and hearing for any
prejudgment remedy or remedies and any such right which Borrower
would otherwise have under the Constitution or any statute of the
United States or of any state.

 


Section
5.02                                Remedies
upon Event of Default. If an Event of Default shall have
occurred and be continuing under the Credit Agreement or the
Obligations, the Secured Party may, in addition to all other rights
and remedies granted to it in this Security Agreement and in any
other agreement securing, evidencing or relating to the
Obligations: (a) exercise all rights and remedies of a secured
party under the UCC (whether or not in effect in the jurisdiction
where such rights are exercised) and, in addition, (b) without
demand of performance or other demand or notice of any kind (except
as herein provided or as may be required by mandatory provisions of
law) to or upon Borrower or any other Person (all of which demands
and/or notices are hereby waived by Borrower), (i) apply all cash,
if any, then held by it as Collateral as specified herein and (ii)
if there shall be no such cash or if such cash shall be
insufficient to pay all the Obligations in full or cannot be so
applied for any reason, collect, receive, appropriate and realize
upon the Collateral and/or sell, assign, give an option or options
to purchase or otherwise dispose of and deliver the Collateral (or
contract to do so) or any part thereof at public or private sale,
at any office of the Secured Party or elsewhere in such manner as
is commercially reasonable and as the Secured Party may deem best,
for cash, on credit or for future delivery without assumption of
any credit risk and at such price or prices as the Secured Party
may deem satisfactory. The Secured Party may be the purchaser of
any or all of the Collateral so sold at any public sale (or, if the
Collateral is of a type customarily sold in a recognized market or
is of a type which is the subject of widely distributed standard
price quotations, at any private sale). Borrower will execute and
deliver such documents and take such other action as the Secured
Party deems necessary or advisable in order that any such sale may
be made in compliance with law.

 


Section
5.03                              
Other Rights of the
Secured Party.

 


(a)           The
Secured Party, instead of exercising the power of sale conferred
upon it pursuant to Section 5.02, may proceed by a suit or suits at
law or in equity to foreclose the Security Interests and sell the
Collateral, or any portion thereof, under a judgement or decree of
a court or courts of competent jurisdiction, and may in addition,
institute and maintain such suits and proceedings as it may deem
appropriate to protect and enforce the rights vested in it by this
Security Agreement.

 




 

6








 






 


(b)           The
Secured Party shall, to the extent permitted by applicable law,
without notice to Borrower or any party claiming through Borrower,
without regard to the solvency or insolvency at such time of any
Person then liable for the payment of any of the Obligations,
without regard to the then value of the Collateral and without
requiring any bond from any complainant in such proceedings, be
entitled as a matter of right to the appointment of a receiver or
receivers (who may be the Secured Party) of the Collateral or any
part thereof, and of the profits, revenues and other income
thereof, pending such proceedings, with such powers as the court
making such appointment shall confer, and to the entry of an order
directing that the profits, revenues and other income of the
property constituting the whole or any part of the Collateral be
segregated, sequestered and impounded for the benefit of the
Secured Party, and Borrower irrevocably consents to the appointment
of such receiver or receivers and to the entry of such
order.

 


Section
5.04                                 
Limitation on Duty
of the Secured Party in Respect of Collateral. Beyond the exercise of reasonable care
in the custody thereof, the Secured Party shall have no duty to
exercise any rights or take any steps to preserve the rights of
Borrower in the Collateral in its possession or control or in the
possession or control of any agent or bailee or any income thereon
or as to the preservation of rights against prior parties or any
other rights pertaining thereto, nor shall the Secured Party be
liable to Borrower or any other Person for failure to meet any
obligation imposed by Section 9-207 of the UCC or any successor
provision. Borrower agrees that the Secured Party shall at no time
be required to, nor shall the Secured Party be liable to Borrower
for any failure to, account separately to Borrower for amounts
received or applied by the Secured Party from time to time in
respect of the Collateral pursuant to the terms of this Security
Agreement.

 


Section
5.06                             
Waiver and
Estoppel.

 


(a)           Borrower
agrees, to the extent it may lawfully do so, that it will not at
any time in any manner whatsoever claim or take the benefit or
advantage of, any appraisal, valuation, stay, extension,
moratorium, turnover or redemption law, or any law permitting it to
direct the order in which the Collateral shall be sold, now or at
any time hereafter in force which may delay, prevent or otherwise
affect the performance or enforcement of this Security Agreement,
and Borrower hereby waives all benefit or advantage of all such
laws. Borrower covenants that it will not hinder, delay or impede
the execution of any power granted to the Secured Party pursuant to
the Credit Agreement, this Security Agreement or any other related
agreement or document.

 


(b)           Borrower
waives, to the extent permitted by law, presentment, demand,
protest and any notice of any kind (except the notices expressly
required hereunder) in connection with this Security Agreement and
any action taken by the Secured Party with respect to the
Collateral.

 


Section
5.07                                 
Application of
Proceeds. The proceeds of any sale of, or other realization
upon, all or any part of the Collateral and any cash held by the
Secured Party or its nominee or custodian hereunder shall be
applied in the following order of priority:

 




 

7








 






 


FIRST,
to payment of the expenses of such sale or other realization,
including reasonable compensation to agents and counsel for the
Secured Party, and all expenses, liabilities and advances incurred
or made by the Secured Party in connection therewith, and any other
Obligations owing to the Secured Party in respect of sums advanced
by the Secured Party to preserve the Collateral or to preserve its
security interests in the Collateral;

 


SECOND,
to the payment of the Credit Agreement and all the Obligations,
until the Credit Agreement and all the Obligations shall have been
paid in full; and

 


THIRD,
to Borrower, or its successors or assigns, or as a court of
competent jurisdiction may direct.

 


The
Secured Party may make distributions hereunder in cash or in kind
or, on a ratable basis, in any combination thereof.

 



ARTICLE VI



MISCELLANEOUS


 


Section
6.01                                Notices.
All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given in the manner and
at the respective addresses of the parties set forth in the Credit
Agreement.

 


Section
6.02                             
No
Waivers; Non-Exclusive Remedies. No failure or delay on the part of the
Secured Party to exercise, no course of dealing with respect to,
and no delay in exercising, any right, power or privilege under
this Security Agreement or any other document or agreement
contemplated hereby or thereby shall operate as a waiver thereof
nor shall any single or partial exercise of any such right, power
or privilege preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and
remedies provided herein are cumulative and are not exclusive of
any other remedies provided by law.

 


Section
6.04                          
    Amendments and
Waivers. Any
provision of this Security Agreement may be amended, changed,
discharged, terminated or waived if, but only if, such amendment or
waiver is in writing and is signed by Borrower directly affected by
such amendment, change, discharge, termination or waiver and the
Secured Party.

 


Section
6.05                                Successors
and Assigns. This
Security Agreement shall be binding upon each of the parties hereto
and inure to the benefit of the Secured Party and its successors
and assigns. In the event of an assignment of all or any of the
Obligations, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such
indebtedness. Borrower shall not assign or delegate any of its
rights and duties hereunder without the prior written consent of
the Secured Party.

 


Section
6.06                              
Governing
Law. This Agreement
shall be construed and enforced in accordance with the laws of the
State of North Carolina, without giving effect to the conflict of
law principles thereof. The parties specifically consent to the
jurisdiction of the state and federal courts located in the State
of North Carolina in any action, whether at law or in equity,
brought by the any party to protect any of their rights
hereunder.

 




 

8








 






 


Section
6.07                            
Limitation of Law;
Severability.

 


(a)           All
rights, remedies and powers provided in this Security Agreement may
be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and all the provisions of
this Security Agreement are intended to be subject to all
applicable mandatory provisions of law which may be controlling and
be limited to the extent necessary so that they will not render
this Security Agreement invalid, unenforceable in whole or in part,
or not entitled to be recorded, registered or filed under the
provisions of any applicable law.

 


(b)           If
any provision hereof is invalid or unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the
other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor of the
Secured Party in order to carry out the intentions of the parties
hereto as nearly as may be possible; and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or enforceability of such provisions in any
other jurisdiction.

 


Section
6.08                                Counterparts;
Effectiveness. This
Security Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This
Security Agreement shall become effective with respect to Borrower
when the Secured Party shall receive counterparts hereof executed
by itself and Borrower.

 


Section
6.09                                
Termination.
Upon the full, final and irrevocable payment and performance of all
Obligations, the Security Interests shall terminate and all rights
to the Collateral shall revert to Borrower.

 


Section
6.10                                Entire
Agreement. This
Security Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all
prior agreements and understandings, oral or written, and any
contemporaneous oral agreements and understandings relating to the
subject matter hereof and thereof.

 




 

9








 





 


IN WITNESS WHEREOF, the parties have
executed this Agreement to be effective as of the date first above
written.

 


 

 


Level
Brands, Inc.

 


 

 



By:                                                                            






Martin
A. Sumichrast, CEO


 


 

 


Kure
Corp.

 


 

 



By:                                                                            






Craig
Brewer, CEO


 


 


 

 




 

10