Document:

Filed by sedaredgar.com - Panglobal Brands Inc. - Exhibit 10.4

REVOLVING LOAN AGREEMENT 

  
    THIS AGREEMENT dated for reference the 4th day of March,
      2008 and made, 

  

BETWEEN: 

  
    PANGLOBAL BRANDS INC., a company incorporated
      under the laws of Delaware, having an office at 2853 E. Pico Blvd, Los Angeles,
      CA 90023; 

    (the “Borrower”) 

  

AND: 

  
    Sinecure Holdings Limited, a company incorporated
      under the laws of the British Virgin Islands, with an address c/o Le Hoedheu,
      Nazin, Pontivy, France, and Capella Investments Inc, a company incorporated
      under the laws of the State of Nevada, with a business address at 5226 Connaught
      Drive, Vancouver, BC V6M 3G4, Canada;

    (Collectively, the “Lenders”
      and each a “Lender”) 

  

WITNESSES THAT WHEREAS:

A.                    
The Borrower has applied to the Lenders for a loan in the aggregate principal
amount of US$750,000 (the “Loan”) to be utilized by the Borrower for the
purposes described in Section 3. 

B.                    
Lenders have agreed to make the Loan available to Borrower in accordance with
their respective Commitment Percentages; and 

C.                    
The parties wish to provide for the terms and conditions upon which the Loan
will be made available to the Borrower. 

                         THEREFORE
in consideration of the premises and of the mutual covenants and agreements
hereinafter set forth, the Lender and the Borrower warrant and represent to and
covenant and agree with each other as set forth below. 

1.                    
DEFINITIONS; INTERPRETATION 

1.1                   For
the purpose of this Agreement, the following words and phrases will have
meanings set forth below unless the parties or the context otherwise require(s):

	 	(a) 	“Accounts Receivable” has
      the meaning give to it under GAAP; 

- 2 - 

	 	(b) 	
      “Acceptable Accounts Receivable” means Accounts
      Receivable which:

	 	 	 	 	 
	 		(i) 	
      have been:

	 	 	 	 	 
	 			A. 	
      generated pursuant to contracts entered into by the
      Borrower; and

	 	 	 	 	 
	 			B. 	
      outstanding for 90 days or less, calculated from the date
      of rendering thereof;

	 	 	 	 	 
	 		(ii) 	
      are not:

	 	 	 	 	 
	 			A. 	
      Accounts Receivable due from an Affiliate, in dispute or
      subject to offset; or

	 	 	 	 	 
	 			B. 	
      subject to any Priority Claim, except in favour of the
      Prior Lender;

	 	 	 	 	 
	 	(c) 	
      “Accredited Investor” means an accredited investor
      as that term is defined by Regulation D promulgated under the Securities
      Act;

	 	 	 	 	 
	 	(d) 	
      “Advance” means an advance or readvance on account
      of the Loan, as the context requires;

	 	 	 	 	 
	 	(e) 	
      “Advance Date” means the date set out in an
      Advance Request as the date on which the Borrower requests an Advance in
      the amount described therein be made to it and being a date not less than
      5 Business Days after the date on which the Lender receives that Advance
      Request;

	 	 	 	 	 
	 	(f) 	
      “Advance Request” means a written request by the
      Borrower in the form attached hereto as Schedule A that an Advance be made
      to it in the amount and on the Advance Date set forth therein,;

	 	 	 	 	 
	 	(g) 	
      “Affiliate” has the meaning give to it in the
      Securities Act;

	 	 	 	 	 
	 	(h) 	
      “Agreement” and “this Agreement” means this
      agreement and all schedules hereto as the same may be amended, modified,
      replaced or restated from time to time;

	 	 	 	 	 
	 	(i) 	
      “Bonus Shares” means 68,180 common shares in the
      capital of the Borrower;

	 	 	 	 	 
	 	(j) 	
      “Borrower’s Indebtedness” means all present and
      future indebtedness and liability, direct and indirect, of the Borrower to
      the Lender arising under and pursuant to the Loan Documents (including,
      without limitation, at any point in time the principal amount outstanding
      under the Loan, all unpaid accrued interest thereon, liquidated damages,
      and all fees and costs and expenses then payable in connection
      therewith);

	 	 	 	 	 
	 	(k) 	
      “Business Day” means any day, other than a
      Saturday or a Sunday, on which commercial banks in California are required
      to be open for business;

- 3 - 

	 	(l) 	
      “Commitment Percentage” of any Lender shall mean
      50% in the case of Sinecure and 50% in the case of Capella, as the same
      may be adjusted upon the mutual agreement of the Lenders;

	 	 	 
	 	(m) 	
      “Common Shares” means fully paid non assessable
      common shares par value $0.0001 in the capital of the Borrower;

	 	 	 
	 	(n) 	
      “Conditions Precedent” means the conditions
      precedent described in Article 10 hereof;

	 	 	 
	 	(o) 	
      “Conversion” means the right of the Lender to
      convert any portion of the outstanding Loan and Interest accrued as set
      out in section 8;

	 	 	 
	 	(p) 	
      “Event of Default” means any of the events
      specified in Section 14, and “Default” mean any of such events,
      whether or not any such requirement has been satisfied;

	 	 	 
	 	(q) 	
      “First Advance Date” means the date the first
      Advance is advanced by the Lender to the Borrower;

	 	 	 
	 	(r) 	
      “GAAP” means United States generally accepted
      accounting principles, as applied on a consistent basis;

	 	 	 
	 	(s) 	
      “Interest Payment Date” means the last day of each
      calendar month, commencing the last day of the calendar month immediately
      following the calendar month during which the first Advance
  occurs;

	 	 	 
	 	(t) 	
      “Interest Rate” means eight percent (8 %) per
      annum calculated as herein provided;

	 	 	 
	 	(u) 	
      “Lien” means, with respect to any Person, any
      mortgage, lien, pledge, hypothecation, charge(whether fixed or floating),
      security interest (including, without limitation, any assignment, notice
      or security interest filed pursuant to applicable federal, state or other
      laws) or other encumbrance, or any interest or title of any vendor,
      lessor, or lender to or other secured party of such Person under any
      conditional sale or other title retention agreement, upon or with respect
      to any property, asset or undertaking of such Person, including any
      agreement to create any of the foregoing, and whether arising under any
      statute, law, contract or otherwise;

	 	 	 
	 	(v) 	
      “Loan” means the revolving loan facility not
      exceeding $US750,000 established by the Lender in favour of the Borrower
      pursuant to this Agreement;

	 	 	 
	 	(w) 	
      “Loan Documents” means this Agreement and the
      Security Documents;

	 	 	 
	 	(x) 	
      “Margin Amount” at any point in time means that
      amount which is then equal to 100% of:

- 4 - 

	 	(i) 	
      the aggregate amount of the then Acceptable Accounts
      Receivable; minus

	 	 	 
	 	(ii) 	
      the aggregate amount of the then Priority
  Claims;

	 	(y) 	
      “material adverse effect” in respect of the
      Borrower means a material adverse effect on:

	 	 	 	 
	 		(i) 	
      the business, operations, affairs, financial condition,
      property, assets or undertakings of the Borrower, or

	 	 	 	 
	 		(ii) 	
      the validity, priority or enforceability of any Loan
      Document to which that Borrower is a party or by which any of its
      property, assets and undertakings are bound;

	 	 	 	 
	 	(z) 	
      “material” means, in respect of the Borrower,
      material in relation to the business, operations, affairs, financial
      condition, assets, properties, or prospects of the Borrower;

	 	 	 	 
	 	(aa) 	
      “Maturity Date” has the meaning set out in Section
      4 of this Agreement;

	 	 	 	 
	 	(bb) 	
      “Person” means and includes an individual, a
      partnership, a joint venture, a corporation, a limited liability company,
      a trust, an unincorporated organization and a government or any department
      or agency thereof;

	 	 	 	 
	 	(cc) 	
      “Priority Claim” means a claim of a Person to any
      of the Acceptable Accounts Receivable pursuant to a Lien which, in the
      opinion of the Lender or its solicitors, acting reasonably, ranks or could
      rank pari passu with or in priority to any Lien that the Lender may have
      to those Acceptable Accounts Receivable pursuant to the Security
      Documents;

	 	 	 	 
	 	(dd) 	
      “Prior Lender” means a Person in the business of
      factoring Accounts Receivable who is approved by the Lender for the
      purpose of financing the Borrower’s Accounts Receivable in whole or in
      part; such approval not to be unreasonably or arbitrarily
  withheld;

	 	 	 	 
	 	(ee) 	
      “Prior Lender’s Certificate” means a certificate
      signed by the Prior Lender and addressed to the Borrower and the Lender
      setting out, as of the date thereof:

	 	 	 	 
	 		(i) 	
      the amount of the Prior Lender’s Loan then
      outstanding;

	 	 	 	 
	 		(ii) 	
      whether the Borrower is in good standing under the Prior
      Lender’s Loan; and

	 	 	 	 
	 		(iii) 	
      the Borrower’s Accounts Receivable which have been
      assigned by the Borrower to and charged in favour of the Prior Lender and
      the amount of those Borrower’s Accounts Receivable individually and in the
      aggregate;

- 5 - 

	 	(ff) 	
      “Prior Lender’s Loan” means the loan made by the
      Prior Lender to the Borrower for the purposes of factoring the Borrower’s
      Accounts Receivables in whole or in part;

	 	 	 	 
	 	(gg) 	
      “Prior Lender’s Lien” means the Lien in favour of
      the Prior Lender over the Borrower’s Accounts Receivable which have been
      assigned to the Prior Lender for the repayment of the Prior Lender’s Loan
      and interest;

	 	 	 	 
	 	(hh) 	
      “Prior Permitted Liens” means:

	 	 	 	 
	 		(i) 	
      the Prior Lender’s Lien;

	 	 	 	 
	 		(ii) 	
      Liens in favour of any Lender;

	 	 	 	 
	 		(iii) 	
      any other Lien from time to time agreed to as such by the
      Lender in writing;

	 	 	 	 
	 		(iv) 	
      Liens incidental to the conduct of Borrower’s business as
      the ownership of its property; and

	 	 	 	 
	 		(v) 	
      Liens granted to factors over specific accounts
      receivable which the said factor is collecting on behalf of the
      Company.

	 	 	 	 
	 	(ii) 	
      “Securities” means the Bonus Shares and the Common
      Shares

	 	 	 	 
	 	(jj) 	
      “Securities Act” means the United States
      Securities Act of 1933, as amended or replaced from time to
time;

	 	 	 	 
	 	(kk) 	
      “Security Documents” means the security documents
      set out in Section 13 to this Agreement and any other security document(s)
      from time to time taken by the Lender from the Borrower or any other
      Person as security for the payment, observance and performance of the
      Borrower’s Indebtedness in whole or in part;

	 	 	 	 
	 	(ll) 	
      “Subsidiary” has the meaning give to it in the
      Securities Act;

	 	 	 	 
	 	(mm) 	
      “UCC” shall mean the Uniform Commercial Code as in
      effect in the applicable jurisdiction; and

	 	 	 	 
	 	(nn) 	
      “US$” means lawful currency of the United
      States.

2.                    
LOAN

2.1                  
Subject to the terms and conditions of this Agreement, the Lender hereby
establishes and agrees to make the Loan available to the Borrower. 

3.                    
PURPOSE 

3.1                  
The Loan will be made available to the Borrower for its general corporate
purposes and for no other purpose without the prior written consent of the
Lender. 

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4.                    
AVAILABILITY AND SUBORDINATION 

4.1                  
Subject to Section 4.2, the Loan will be available by multiple advances each in
an amount of not less than $US50,000 nor more than $US250,000 following
satisfaction of the Conditions Precedent. For the avoidance of doubt, each
advance made by the Lender shall be in accordance with its Commitment
Percentage. 

4.2                  
The aggregate amount advanced and outstanding under the Loan will at no time
exceed the lesser of: 

	 	(a) 	
      US$750,000; and

	 	 	 
	 	(b) 	
      the Margin Amount.

4.3                  
The Loan will be subordinated to a Prior Lender who is arranged by the Borrower,
so long as the borrowings of the Borrower from the Prior Lender do not exceed
90% of the Acceptable Accounts Receivable and security granted to such Prior
Lender are limited to an assignment of such Acceptable Accounts Receivable
collected by the Prior Lender.

5.                    
TERM 

5.1                  
Subject to the provisions of Section 7, the Borrower will pay the Borrower’s
Indebtedness to the Lender in full on November 30, 2008, unless sooner prepaid
or accelerated upon the occurrence and during the continuance of an Event of
Default. (the “Maturity Date”). 

6.                    
INTEREST 

6.1                  
The outstanding principal balance of the Loan will bear interest at the Interest
Rate. 

6.2                  
Interest at the Interest Rate will be calculated monthly, not in advance, as
well as before maturity, default, demand and judgment. 

6.3                  
All overdue and unpaid interest and all fees, costs, and other amounts payable
by the Borrower hereunder or under any of the Loan Documents will be added to
the principal balance of the Loan and will bear interest at the Interest Rate
until paid in full. 

6.4                  
If Interest calculated under the laws of the State of California is determined
to be in excess of the maximum interest rate permitted by law, the parties agree
to reduce the Interest payable to such rate of interest as is 0.1% below the
maximum permitted by California law and to reduce Interest otherwise paid or
payable to such adjusted rate. Any excess amount of Interest received by a
Lender shall be first applied to any unpaid principal balance owed by the
Borrower, and if the then remaining excess amount is greater than the previously
unpaid principal balance, the Lender shall promptly refund such excess amount to
the Borrower. 

- 7 - 

7.                    
REPAYMENT 

7.1                  
On each Interest Payment Date, the Borrower will pay the Lender all interest
which has accrued on account of the outstanding balance of the Lender’s Loan and
then remains unpaid. 

7.2                  
On the Maturity Date the Borrower will pay to the Lender the Borrower’s
Indebtedness then outstanding in full. 

7.3                  
The Borrower will be entitled to prepay the whole or any portion of the
Borrower’s Indebtedness at any time and from time to time, without notice, bonus
or penalty. 

7.4                  
All amounts payable by the Borrower under this Agreement will be paid without
set-off or counterclaim, and without any deductions or withholdings whatsoever.

7.5                  
Subject to the provisions hereof, all payments received by the Lender on account
of the Borrower’s Indebtedness will be applied first in payment of outstanding
interest and secondly in reduction of the principal balance of the Loan then
outstanding. If any payment is received at any time while an Event of Default
remains outstanding or after demand has been made for the repayment of the
Borrower’s Indebtedness, the Lender may appropriate such payment to such part or
parts of the Borrower’s Indebtedness as the Lender in its sole discretion may
determine and the Lender may from time to time revoke and change any such
appropriation. 

7.6                  
The Lender is hereby authorized to open and maintain books of account and other
books and records evidencing all advances under the Loan, interest accruing
thereon, fees, charges, and other amounts from time to time charged to the
Borrower under the Loan Documents; and amounts from time to time owing, paid, or
repaid by the Borrower under this Agreement. All such books, accounts, and
records will constitute prima facie evidence of the amount owing by the Borrower
under the Loan Documents; but the failure to make any entry or recording in such
books, accounts, and records will not limit or otherwise affect the obligations
of the Borrower under the Loan Documents. 

7.7                  
Notwithstanding anything in this Agreement to the contrary, any payment of
principal of or interest on the Borrower’s Indebtedness that is due on a date
other than a Business Day will be made on the next succeeding Business Day. If
the date for any payment on the Borrower’s Indebtedness is extended to the next
succeeding Business Day by reason of the preceding sentence, the period of such
extension will not be included in the computation of the interest payable on
such Business Day. 

8.                    
CONVERSION TO COMMON SHARES 

8.1                  
At any time after August 31, 2008, if the Borrower has not paid the Loan in
full, the Lender may by written notice (the "Notice") to the Borrower, exercise
its rights of Conversion in respect of either a portion of or the total
outstanding amount of the Loan plus accrued Interest as of that date into
Conversion Shares of the Company, at such price per Share as is equal to the
lesser of: 

- 8 - 

	 	(a) 	
      the average closing bid price of the Common Shares as
      listed on a Principal Market (as defined herein), as quoted by Bloomberg
      L.P. (the "Closing Bid Price") for the five (5) trading days immediately
      preceding the First Advance Date; or

	 	 	 
	 	(b) 	
      the average Closing Bid Price of the Shares as listed on
      a Principal Market, as quoted by Bloomberg L.P. for the five (5) trading
      days immediately preceding the date the Borrower receives the
    Notice.

8.2                  
As used herein, "Principal Market" shall mean The National Association of
Securities Dealers Inc.'s OTC Bulletin Board, the Nasdaq SmallCap Market, or the
American Stock Exchange, or if the Borrower’s common shares are not traded on
any of the above, on any other exchange or quotation system that the Borrower’s
Common Shares may be listed for trading. 

8.3                  
Within seven (7) days of Notice by the Lender exercising its rights of
Conversion hereunder, the Borrower shall deliver a Share Certificate to the
Lender representing the number of Shares acquired by the Lender pursuant to the
calculation set out in subparagraph 2.5 of this Agreement. 

8.4                  
Notwithstanding any of the foregoing, Interest shall be calculated and included
in any Conversion of the Loan. 

9.                    
ADVANCE 

9.1                  
The Borrower may request an Advance on account of the Loan by executing and
delivering an Advance Request to the Lender together with a Prior Lender’s
Certificate dated as of the date of that Advance Request. 

9.2                  
The Borrower agrees that subject to the provisions Article 10 hereof, the Lender
may make an Advance without the necessity of an Advance Request and any such
Advance and all interest from time to time accruing on account thereof will be
secured by the Security Documents. 

10.                  
CONDITIONS PRECEDENT 

10.1                
The Lender’s obligation to make any Advance is subject to the following
conditions precedent having been met to the Lender’s sole satisfaction or waived
by the Lender in writing at the time of that Advance, namely: 

	 	(a) 	
      Prior to the Initial Advance Date only, the Lender having
      received a properly executed original of this Agreement and the Security
      Documents then in effect;

	 	 	 
	 	(b) 	
      the Borrower’s representations and warranties contained
      herein and in the Security Documents then in effect then being true and
      correct in all material respects;

	 	 	 
	 	(c) 	
      there then being no outstanding Default or Event of
      Default;

- 9 - 

	 	(d) 	
      except as contemplated by Section 9.2 hereof, the Lender
      having received an Advance Request from the Borrower for that
    Advance;

	 	 	 	 
	 	(e) 	
      the Lender having received from the Borrower an aged list
      of the Borrower’s Accounts Receivable and Acceptable Accounts Receivable
      current to the date of the Advance Request and otherwise satisfactory to
      the Lender in form and content;

	 	 	 	 
	 	(f) 	
      the Lender having received a Prior Lender’s Certificate;
      and

	 	 	 	 
	 	(g) 	
      after the making of such Advance:

	 	 	 	 
	 		(i) 	
      the monies owed to both the Prior Lender and the Lender
      being less than 100% of Acceptable Accounts Receivable; and

	 	 	 	 
	 		(ii) 	
      the aggregate principal amount of all Advances
      outstanding not exceeding the principal amount of the
  Loan.

11.                 
 REPRESENTATIONS AND WARRANTIES 

11.1                
The Borrower represents and warrants as follows:

	 	(a) 	
      it is a corporation duly organized, validly existing and
      in good standing under the laws of Delaware;

	 	 	 
	 	(b) 	
      it has the (corporate) power and capacity to carry on
      business as currently conducted by it, own property or interests therein,
      borrow and lend money, grant security, make, keep, observe and perform
      representations, warranties, covenants and agreements and incur
      obligations and liabilities, all as contemplated hereby;

	 	 	 
	 	(c) 	
      there is no action, suit, investigation or proceeding
      outstanding or pending or, to the knowledge of the Borrower, threatened
      against it or any of its property, assets or undertakings by or before any
      court, arbitrator or administrative or governmental body which would
      reasonably be expected to have a material adverse effect;

	 	 	 
	 	(d) 	
      it has not agreed or consented to, nor has it agreed to
      cause or permit in the future (upon the happening of a contingency or
      otherwise), any of its property, whether now owned or hereafter acquired,
      to be subject to a Lien other than Prior Permitted Liens; and

	 	 	 
	 	(e) 	
      the execution and delivery by it of this Agreement and
      the Security Documents and the performance by it of its obligations
      hereunder and thereunder, do not and will not conflict with or result in a
      material breach of any of the terms, conditions, or provisions
  of:

	 	(i) 	
      its organizational documents,

- 10 - 

	 	(ii) 	
      any law, regulation, or decree applicable or binding on
      it or any of its property, assets and undertaking, or

	 	 	 
	 	(iii) 	
      any material agreement or instrument binding to which it
      or any of its property assets or undertakings is a party or bound, the
      breach of which could reasonably be expected to have a material adverse
      effect or result in, or require or permit the imposition of any Lien in or
      with respect to the property, assets and undertakings now owned or
      hereafter acquired by it.

12.                  
COVENANTS 

12.1                
The Borrower will: 

	 	(a) 	
      comply with all applicable laws, ordinances or
      governmental rules or regulations to which it or any of its property,
      assets and undertaking are subject;

	 	 	 
	 	(b) 	
      obtain and maintain in effect all licenses, certificates,
      permits, franchises and other governmental authorizations necessary to the
      ownership of its property, assets and undertakings or to the conduct of
      its businesses, in each case to the extent necessary to ensure that
      non-compliance with such applicable laws, ordinances or governmental rules
      or regulations or failures to obtain or maintain in effect such licenses,
      certificates, permits, franchises and other governmental authorizations
      could not, individually or in the aggregate, reasonably be expected to
      have a material adverse effect; and

	 	 	 
	 	(c) 	
      maintain and keep, or cause to be maintained and kept,
      its property, assets and undertakings in good repair, working order and
      condition (other than ordinary wear and tear), so that the business(es)
      carried on by it may be properly conducted at all times, provided that
      this section will not prevent the Borrower from discontinuing the
      operation and the maintenance of any of its property, assets and
      undertakings if such discontinuance is desirable in the conduct of its
      business and such the Borrower has concluded that such discontinuance
      could not, individually or in the aggregate, reasonably be expected to
      have a material adverse effect.

12.2                
So long as this Agreement remains in effect, the Borrower will not, without the
prior written consent of the Lender, which consent will not be unreasonably
withheld: 

	 	(a) 	
      alter any of its organizational documents or its
      corporate organization;

	 	 	 
	 	(b) 	
      change its name;

	 	 	 
	 	(c) 	
      create any subsidiary company, amalgamate, consolidate or
      merge with any other Person;

	 	 	 
	 	(d) 	
      redeem any of its redeemable shares or securities or
      otherwise change its capital structure or
shareholders;

- 11 - 

	 	(e) 	
      incur any further indebtedness of either a direct or
      indirect nature to any party other than the Lender and the Prior Lender
      except in the normal course of business;

	 	 	 
	 	(f) 	
      grant or allow any Lien to be registered against it or
      exist on any of its property, assets and undertaking, save and except for
      security in favour of the Lender and Prior Permitted Liens;

	 	 	 
	 	(g) 	
      make any advances or loan to, or any investment in, or
      provide any guarantees on behalf of, any Person, other than the
      endorsement of checks in the ordinary course;

	 	 	 
	 	(h) 	
      become a party to any transaction whereby all or a
      substantial part of its property assets and undertakings or of any of its
      subsidiaries would become the property of any other Person, whether by way
      of reconstruction, reorganization, amalgamation, merger, transfer, sale,
      lease or otherwise;

	 	 	 
	 	(i) 	
      in any fiscal year of the Borrower or any of its
      subsidiaries, pay dividends on any class or kind of its shares, repurchase
      or redeem any of its shares, or reduce its capital in any way
      whatsoever.

12.3                
So long as this Agreement remains in effect, the Borrower will provide the
Lender with the following information: 

	 	(a) 	
      within 90 days of each fiscal year end of the Borrower,
      consolidated and non consolidated financial statements of the Borrower
      prepared by an independent public accountant approved by the Lender (which
      approval shall not be unreasonably withheld) on a review engagement basis,
      which statements must include a balance sheet, an income statement, a
      statement of retained earnings, and a statement of changes in financial
      position, and must be prepared in accordance with GAAP applied on a basis
      consistent with the statements for the previous fiscal year and be
      approved and signed by two directors of the Borrower;

	 	 	 
	 	(b) 	
      within 20 days of each calendar month end, management
      prepared monthly financial statements and aged payables and receivables
      for the Borrower;

	 	 	 
	 	(a) 	
      within 20 days of each calendar month end, an aged list
      of the Borrower’s Accounts Receivable and Acceptable Accounts Receivable;
      and

	 	 	 
	 	(c) 	
      at the written request of the Lender, such other reports,
      certificates, projections of income and cash flow or other matters
      affecting its business affairs or financial condition as the Lender may
      reasonably request from time to time.

- 12 - 

13.                 
 SECURITY

13.1                
As security for payment, observance and performance of the Borrower’s
Indebtedness, the Borrower agrees to execute and deliver the following documents
(collectively, the “Security Documents”) in a form and manner
satisfactory to the Lender and the Lender’s attorneys:

	 	(a) 	
      a security agreement from the Borrower creating a
      security interest by way of priority security interest in the Borrower’s
      present and after-acquired personal property (including its Accounts
      Receivable) and such other collateral described in the Security Documents,
      subject to the terms described therein.

13.2                
Each Security Document is given as additional, concurrent and collateral
security to the remainder of the Security Documents and will not operate to
merge, novate or discharge the Borrower’s Indebtedness or any of the other
Security Documents. The execution and delivery of each Security Document will
not in any way suspend or affect the present or future rights and remedies of
the Lender in respect of the Borrower’s Indebtedness, or the other Security
Documents. No action or judgment taken by the Lender in respect of any of the
Security Documents or with respect to the Borrower’s Indebtedness will affect
the liability of the Borrower hereunder and nothing but the actual payment in
full by the Borrower to the Lender of the Borrower’s Indebtedness will discharge
the Borrower or any of the Security Documents. 

14.                  
EVENTS OF DEFAULT 

14.1                
Notwithstanding and without prejudice to the demand nature of the Loan, at the
option of the Lender, the Borrower’s Indebtedness will immediately become due
and payable and this Agreement and the Security Documents will become
enforceable upon the happening of any one or more of the following events: 

	 	(a) 	
      if the Borrower:

	 	 	 	 
	 		(i) 	
      fails to make any payment of principal, interest, or
      other money payable by it hereunder or under any of the Security Documents
      when the same becomes due hereunder or thereunder which failure continues
      unremediated for more than Five (5) days, or

	 	 	 	 
	 		(ii) 	
      fails to observe or perform any covenant contained in
      this Agreement or any of the Security Documents and upon notice by the
      Lender, the Borrower fails to cure the same within Thirty (30) days of the
      Borrower’s receipt of such notice;

	 	 	 	 
	 	(b) 	
      if any representation or warranty given by or on behalf
      of the Borrower is untrue in any material respect;

	 	 	 	 
	 	(c) 	
      if an order is made or a resolution is passed for the
      winding-up of the Borrower, or if a petition is filed for the winding-up
      of the Borrower;

- 13 - 

	 	(d) 	
      if the Borrower commits or threatens to commit any act of
      bankruptcy; becomes insolvent; or makes an assignment or proposal under
      applicable federal, state or other legislation in any jurisdiction, a
      general assignment in favour of its creditors, or a bulk sale of its
      assets; or if a bankruptcy petition is filed or presented against the
      Borrower;

	 	 	 
	 	(e) 	
      if a receiver, receiver and manager, or receiver-manager,
      or any person with like powers, is appointed for all or any of the
      property, assets and undertakings of the Borrower;

	 	 	 
	 	(f) 	
      if the Borrower permits any sum which has been admitted
      as due by it, or is not disputed to be due by it, and which forms or is
      capable of being made a charge upon any of its property, assets and
      undertakings in priority to any charge created by any of the Security
      Documents, to remain unpaid for 30 days after proceedings have been taken
      to enforce the same;

	 	 	 
	 	(g) 	
      if the Borrower ceases to carry on any material aspect of
      its business;

	 	 	 
	 	(h) 	
      if the Borrower makes default in payment of any of the
      Borrower’s Indebtedness or liability to the Lender, whether secured by the
      Security Documents or not;

	 	 	 
	 	(i) 	
      if the holder (other than the Lender) of any Lien against
      the property, assets and undertakings of the Borrower, any subsidiary of
      the Borrower, does anything to enforce or realize on such Lien, and if, in
      the reasonable opinion of the Lender, such enforcement or realization
      would have a material adverse effect on the security for the Borrower’s
      Indebtedness or on the Borrower’s ability to repay the Borrower’s
      Indebtedness;

	 	 	 
	 	(j) 	
      if, without the prior written consent of the Lender, the
      Borrower transfers its property, assets or undertakings or any material
      part thereof to any other Person;

	 	 	 
	 	(k) 	
      if any execution, sequestration, extent, or any other
      process of any kind is levied upon or enforced against any part of the
      property, assets or undertakings of the Borrower, any subsidiary of the
      Borrower and remains unsatisfied for a period of Thirty (30) days as to
      personal property, unless such process is disputed in good faith and, in
      the reasonable opinion of the Lender, does not jeopardize or impair the
      security constituted by the Security Documents in any material
  way;

	 	 	 
	 	(l) 	
      if a distress or analogous process is levied upon the any
      of the property, assets or undertakings of the Borrower, any subsidiary of
      the Borrower, or any part thereof, unless the process is disputed in good
      faith and adequate security is given to pay the amount claimed in full;
      and

	 	 	 
	 	(m) 	
      if, without the prior written consent of the Lender, the
      Borrower grants a Lien against any of its property, assets or undertakings
      other than in favour of the Lender or the holder of a Prior Permitted
      Lien.

- 14 - 

15.                 
 BONUS SHARES AND COMMON SHARES 

15.1                
As additional compensation to the Lender for making the Loan available to the
Borrower, the Borrower agrees to deliver the Bonus Shares to the Lender on the
First Advance Date; or the date of execution of this Agreement, whichever last
occurs; provided however, that if the entire Loan is not advanced to the
Borrower on the First Advance Date, the number of Bonus Shares shall be reduced
proportionately until such time as additional portions of the Loan are advanced
at which time the Borrower shall deliver any remaining Bonus Shares
proportionally owed. 

15.2                
Capella warrants and represents that it is an Accredited Investor. Capella
further warrants that its beneficial owners are accredited investors as that
term is defined by Multilateral Instrument 45-106 of the Canadian Securities
Administrators.

15.3                
The Lender, and each of them, represents and warrants to, and covenants and
agrees with the Borrower that: 

	 	(a) 	
      the Lender makes the Loan to the Borrower and acquires
      the Conversion right in reliance upon the Exemption from registration
      provided by Section 4(2) of the Securities Act, Section 506 of Regulation
      D of the Securities Act, or Rule 903 of Regulation S of the Securities Act
      for the private offering of securities;

	 	 	 	 
	 	(b) 	
      the Lender is eligible to make the Loan to the Borrower
      and acquire the Securities in the Borrower under Regulation S;

	 	 	 	 
	 	(c) 	
      the Lender is aware of the significant economic and other
      risks involved in making the Loan to the Borrower and in acquiring and/or
      exercising the Conversion right;

	 	 	 	 
	 	(d) 	
      the Lender has consulted with its own securities advisor
      as to its eligibility to acquire the Securities under the laws of its home
      jurisdiction and acknowledges that the Borrower has made no effort and
      takes no responsibility for the consequences to the Lender as a non-U.S.
      investor acquiring the Securities and, in particular, in purchasing
      U.S.-based securities upon exercise, if any, of the Conversion
    right;

	 	 	 	 
	 	(e) 	
      no federal or state agency has passed upon, or make any
      finding or determination as to the fairness of this investment, and that
      there have been no federal or state agency recommendations or endorsements
      of the investment made hereunder;

	 	 	 	 
	 	(f) 	
      the Lender acknowledges that:

	 	 	 	 
	 		(i) 	
      there are substantial restrictions on the sale or
      transferability of any Securities and understands that, although the
      Borrower is a reporting company, the Lender is purchasing unregistered
      securities;

	 	 	 	 
	 		(ii) 	
      the Borrower is not contractually obligated to register
      the Securities under the Securities Act; and

- 15 - 

	 	(iii) 	
      any Common Shares acquired by the Lender upon exercise of
      the Conversion right may not be sold or otherwise transferred without
      registration under the Securities Act, unless an exemption from
      registration is available.

	 	(g) 	
      the Lender has received all information and documentation
      and has asked all questions of Company representatives that it or its
      advisor deems necessary or desirable so that it can make an informed
      decision regarding the investment made hereunder;

	 	 	 
	 	(h) 	
      the Lender, alone or with its advisor, has enough
      knowledge and experience in financial and business matters to make it
      capable of evaluating the merits and risks of investing in the
    Company;

15.4                
The Lender makes the Loan to the Borrower and acquires the Conversion right as
principal for its own account and not for the benefit of any other person; 

16.                  
SECURITIES EXEMPTION 

16.1                
The Lender acknowledges that any Securities issued pursuant hereto will have
such hold periods as are required under applicable securities laws and as a
result may not be sold, transferred or otherwise disposed, except pursuant to an
effective registration statement under the Securities Act, or pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and in each case only in accordance with all
applicable securities laws.

16.2                
Each certificate for the Securities of Sinecure that has not been so registered
and that has not been sold under an exemption that permits removal of the
legend, shall bear a legend substantially in the following form, as appropriate:

  
    “THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED
      IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED
      HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT
      OF 1933, AS AMENDED (THE “SECURITIES ACT”). NONE OF THE SECURITIES
      REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, OR ANY
      U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED
      OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN)
      OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION
      S UNDER THE SECURITIES ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
      UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR
      IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
      ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
      LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT
      BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. “UNITED
      STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S
      UNDER THE SECURITIES ACT.” 

  

- 16 - 

16.3                
Each certificate for the Securities of Capella that has not been so registered
and that has not been sold under an exemption that permits removal of the
legend, shall bear a legend substantially in the following form, as appropriate:

  
    THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES
      AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
      UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED
      OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
      SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
      NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
      IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. 

  

16.4                
Upon the request of the Lender for a certificate representing any Securities
issuable pursuant hereto, the Borrower shall cause its transfer agent to remove
the foregoing legend from the certificate and issue to the Lender a new
certificate free of any transfer legend if:

	 	(a) 	
      without an effective registration statement with such
      request, Borrower shall have received either:

	 	 	 	 
	 		(i) 	
      an opinion of counsel, in form, substance and scope
      customary for opinions in such circumstances, to the effect that any such
      legend may be removed from such certificate, or

	 	 	 	 
	 		(ii) 	
      satisfactory representations from the Lender that the
      Lender is eligible to sell such security under Rule 144; or

	 	 	 	 
	 	(b) 	
      a registration statement under the Securities Act
      covering the resale of such securities is in
effect.

17.                 
 WAIVER 

17.1                
The Lender may waive any breach by the Borrower of any of the provisions
contained in this Agreement or in the Security Documents or any default by the
Borrower in the observance or performance of any covenant or condition required
to be observed or performed by the Borrower under the terms of this Agreement or
any of the Security Documents; but any waiver by the Lender of such breach or
default, or any failure to take any action to enforce its rights hereunder or
under any of the Security Documents, will not extend to or be taken in any
manner whatsoever to affect any subsequent breach or default or the rights
resulting therefrom.

18.                  
REMEDIES UNDER THIS AGREEMENT AND THE SECURITY DOCUMENTS

18.1                
Any Event of Default by the Borrower under this Agreement or under any of the
Security Documents will constitute an Event of Default under the remainder of
the Security Documents. 

- 17 - 

18.2                
All rights and remedies stipulated for the Lender hereunder or in any of the
Security Documents will be deemed to be in addition to and not restrictive of
the right and remedies which the Lender might be entitled to at law or in
equity; and the Lender may realize on the Security Documents or any part thereof
in any manner and in such order as it may be advised, and any such realization
by any means will not bar realization of any other security or any part or parts
thereof, nor will any single or partial exercise of any right or remedy preclude
any other or further exercise thereof, nor will any failure on the part of the
Lender to exercise, or any delay in exercising any rights under this Agreement
or any of the Security Documents operate as a waiver. 

18.3                
The acceptance by the Lender of any further security or of any payment of or on
account of any of the Borrower’s Indebtedness after a Default or of any payment
on account of any past Default will not be construed to be a waiver of any right
in respect of any future default or of any past default not completely cured
thereby; and the Lender may, in its uncontrolled discretion, exercise any and
all rights, powers, remedies and recourses available to it in accordance with
this Agreement and the Security Documents concurrently or individually without
the necessity of any election. 

19.                  
LAPSE AND CANCELLATION PERIODIC REVIEW 

19.1                
If, in the opinion of the Lender, any material adverse change in risk occurs or
if the Borrower fails to comply with the conditions herein, then the Lender’s
obligations to continue to make Advances hereunder may, at the option of the
Lender, be withdrawn or cancelled. 

20.                  
THE LENDER 

20.1                
Capella and Sinecure will be equal in all respects of this Agreement and the
rights and obligations it imposes. Each Advance made will be divided between the
Lenders in accordance with their respective Commitment Percentages and each will
rank equally with the other in respect of all rights conferred and payments
made. Each Lender is jointly and severally liable for all obligations under this
Agreement and the other Loan Documents. 

21.                 
 MISCELLANEOUS

21.1                
If for the purpose of obtaining or enforcing any judgment on any matter under
this Agreement in any court in any jurisdiction, it becomes necessary to convert
into any other currency (such other currency being hereinafter called the
“Judgment Currency”) an amount due in respect of the Borrower’s
Indebtedness, then the conversion shall be made at the option of the Lender at
the Rate of Exchange prevailing either on the Business Day before the date of
default or on the Business Day before the day on which the judgment is given
(the date as of which such conversion is made being hereinafter called the
“Currency Conversion Date”). If there is a change between the Rate
of Exchange in effect on the Conversion Date (or any other date which shall be
specified in any judgment or judicial award) and the Rate of Exchange in effect
on the date of payment, then the Borrower covenants and agrees to pay such
additional amounts, if any, but in any event not a lesser amount, as may be
necessary, together with the amount paid in the Judgment Currency converted at
the Rate of Exchange in effect on the date of 

- 18 - 

payment, to produce the amount in the currency of the said
amount due in respect of the Borrower’s Indebtedness which could have been
purchased with the amount of Judgment Currency stipulated in the judgment or
judicial award at the Rate of Exchange in effect on the Currency Conversion Date
or such other date as specified in such judgment or judicial award. Any amount
due under this clause shall be due as a separate and independent debt and shall
not be affected by judgment being obtained for amounts otherwise due under or in
respect of the Borrower’s Indebtedness. For the purposes of this clause,
“Rate of Exchange” means, for any relevant date and
currency, the spot rate at which any large commercial bank, in accordance with
its normal practice, is able on the relevant date to purchase such currency with
the Judgment Currency and includes premiums and costs of exchange payable in
connection with such purchase. 

21.2                
Each of the parties hereto will forthwith at all times, and from time to time,
at the Borrower’s sole cost and expense, do, execute, acknowledge and deliver,
or cause to be done, executed, acknowledged and delivered, all such further
acts, deeds, documents and assurances which, in the opinion of a Lender, acting
reasonably, are necessary or advisable for the better accomplishing and
effecting of the intent of this Agreement. 

21.3                
The Borrower will pay all legal costs, registration fees and other costs
incurred by the Lender in investigating title, preparing this Agreement and the
Security Documents and in perfecting the security for the Borrower’s
Indebtedness

21.4                
None of the execution and delivery of the Security Documents, the registration
of the Security Documents and making of any Advance will in any way merge or
extinguish this Agreement or the terms and conditions hereof, which will
continue in full force and effect.

21.5                
In the event of any inconsistency or conflict between any of the provisions of
this Agreement and any of the provisions of the Security Documents, the
provisions of this Agreement will prevail; but the omission from this Agreement
of any covenant, agreement, term, or condition contained in any of the Security
Documents will not be considered to be an inconsistency or a conflict. 

21.6                
Neither this Agreement nor any benefits hereunder may be transferred, assigned
or otherwise disposed of by the Borrower to any Person without the prior written
consent of the Lender. 

21.7                
No amendment, waiver or modification of, or agreement collateral to, this
Agreement or any of the Security Documents will be enforceable against the
Lender unless it is by a formal instrument in writing expressed to be a
modification of this Agreement or the Security Documents, as the case may be,
and executed in the same fashion as this Agreement. 

21.8                
All covenants and other agreements in this Agreement contained by or on behalf
of any of the parties hereto will bind and enure to the benefit of the
respective successors and assigns of the parties hereto (including, without
limitation, any transferee) whether so expressed or not; provided, however, that
the Borrower may not assign its rights or obligations hereunder to any Person.

- 19 - 

21.9                
Any notice required or permitted to be given under this Agreement will be in
writing and may be given by delivering, sending by electronic facsimile
transmission or other means of electronic communication capable of producing a
printed copy, or sending by prepaid registered mail posted in Canada or the
United States, as the case may be, the notice to the following address or
number: 

	 	(a) 	
      If to the Borrower:

	 	 	 
	 		
      PANGLOBAL BRANDS INC.

	 		
      2853 E. Pico Blvd

	 		
      Los Angeles, CA 90023 USA

	 	 	 
	 		
      Attention:          
      Charles Lesser

	 	 	 
	 		
      Facsimile No.:   (323) 266-6505

	 	 	 
	 		
      with a copy to (which does not constitute
  notice):

	 	 	 
	 		
      CLARK WILSON LLP

	 		
      800 – 885 West Georgia Street 
Vancouver, BC V6C 3H1
      
Canada

	 	 	 
	 		
      Attention:          
      Bernard Pinsky

	 	 	 
	 		
      Facsimile No.:    (604) 687-6314

	 	 	 
	 	(b) 	
      If to the Lender:

	 	 	 
	 		
      CAPELLA INVESTMENTS INC.

	 		
      5226 Connaught Drive 
Vancouver, BC V6M 3G4
      
Canada

	 	 	 
	 		
      Attention:          
      Peter Hough

	 	 	 
	 		
      Email address:    houghpp@hotmail.com

	 	 	 
	 		
      and to:

	 	 	 
	 		
      SINECURE HOLDINGS LIMITED, 
c/o Le Hoedheu,
      Nazin, 
Pontivy, France

	 	 	 
	 		
      Attention: Wayne Weaver

	 	 	 
	 		
      Telephone Number: 1 800 291 5574 
Email:
      wayne@pantrust.com.pa

- 20 - 

(or to such other address or number as any party may specify by
notice in writing to another party). 

              
          Any notice delivered
or sent by electronic facsimile transmission or other means of electronic
communication capable of producing a printed copy on a business day will be
deemed conclusively to have been effectively given on the day the notice was
delivered, or the transmission was sent successfully to the number set out
above, as the case may be. Any notice sent by prepaid registered mail will be
deemed conclusively to have been effectively given on the third business day
after posting; but if at the time of posting or between the time of posting and
the third business day thereafter there is a strike, lockout, or other labour
disturbance affecting postal service, then the notice will not be effectively
given until actually delivered. 

21.10                
The descriptive headings of the several sections of this Agreement are inserted
for convenience only and do not constitute a part of this Agreement. 

21.11                
This Agreement will be construed and enforced in accordance with, and the rights
of the parties will be governed by the laws of the State of California and
applicable federal laws thereto. The Lender and the Borrower hereby attorn to
the courts of competent jurisdiction located in the County of Los Angeles, State
of California in any proceedings hereunder. 

21.12                
Each Lender acknowledges that it has consulted with and is represented by
separate legal counsel.

21.13                
This Agreement may be executed simultaneously in two or more counterparts, each
of which will be deemed an original, and it will not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart. This Agreement may be executed by delivery of executed signature
pages by fax or other form of electronic transmission and such transmission will
be effective for all purposes. 

21.14                
This Agreement, the schedules attached hereto and the Security Documents contain
the entire agreement between the parties with respect to the subject matter
hereof and supersede all prior arrangements and understandings, both written and
oral, expressed or implied, with respect thereto. Any preceding correspondence
is expressly superseded and terminated by this Agreement. 

21.15                
All covenants hereunder will be given independent effect so that if a particular
action or condition is prohibited by any one of such covenants, the fact that it
would be permitted by an exception to, or otherwise be in compliance within the
limitations of, another covenant will not avoid the occurrence of a Default or
Event of Default if such action is taken or such condition exists. 

21.16                
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement, and any such prohibition or unenforceability in
any jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction. 

- 21 - 

21.17                
At such time as the Loan is repaid in full, Lender shall promptly release and
discharge the Security Documents to the Borrower (or its designee), and release
all security interests which are granted to Lender pursuant hereto. Under such
circumstances, the Lender shall, upon the Borrower’s request, promptly return to
the Borrower all original copies of this Agreement and the Security Agreement,
and shall promptly execute such termination statements and other documents as
may be required by Borrower to evidence the same. 

                     
    IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized on the 4th day of March, 2008. 

PANGLOBAL BRANDS INC. 

Per:       /s/ Stephen
Soller

            
Authorized Signatory 

SINECURE HOLDINGS LIMITED 

Per:       /s/ Wayne
Weaver 
            
Authorized Signatory 

CAPELLA INVESTMENTS INC. 

Per:        /s/ Peter
Hough 
            
Authorized Signatory 

This is page 21 of an agreement entitled REVOLVING LOAN
AGREEMENT dated for reference March 4, 2008 made by PANGLOBAL BRANDS
INC. in favour of Sinecure Holdings Limited and Capella Investments Inc.
in connection with loan(s) aggregating US$750,000.00. 

SCHEDULE A 

ADVANCE REQUEST 

                          TO:
Capella Investments Inc. 

                          AND:
Sinecure Holdings Limited 

                          This
Advance Request Claim is delivered pursuant to the terms of a revolving loan
agreement (the “Loan Agreement”) made between the you and us dated for
reference March ___, 2008. All capitalized terms in this Advance Request shall,
unless otherwise specified herein, have the meaning given to them in the Loan
Agreement. 

                          We
hereby request an Advance on account of the Loan in the amount of $
___________________. 

                          We
hereby certify that as at the date of this Advance Request:

1.          
The Advance requested will be utilized solely for working capital; 

2.          
No Event of Default has occurred and is outstanding;

3.          
The warranties and representations made by us in the Loan Documents are true and
correct as of the date of this Advance Request; 

4.          
The amount of the requested Advance and all other Advanced and Interest
outstanding totals _________% of the unencumbered Accounts Receivable of
Panglobal Brands; and

5.          
Each of the Security Documents are true and correct as though made on and as of
the date hereof; 

Yours very truly,Filed by sedaredgar.com - Panglobal Brands Inc. - Exhibit 10.5

	
      SECURITY AGREEMENT 

       

	 

          THIS
SECURITY AGREEMENT, dated as of March 8, 2008 (the “Security Agreement”),
is executed by PANGLOBAL BRANDS INC, a company incorporated under
the laws of Delaware (“Debtor”), for the benefit of Sinecure Holdings
Limited, a company incorporated under the laws of the British Virgin
Islands, and Capella Investments Inc, a company incorporated under the
laws of the State of Nevada, (each a “Secured Party”). 

          WHEREAS,
Secured Parties have together agreed to provide to Debtor a loan in the maximum
principal amount of $750,000 (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, collection, renewal, or registration of transfer
thereof; or (c) loading, unloading, storing, shipping, transshipping,
manufacturing, processing or otherwise dealing with it preliminary to sale or
exchange; such redelivery shall be in trust for the benefit of Secured Party and
shall not constitute a release of Secured Party’s security interest in it or in
the proceeds or products of it unless Secured Party specifically so agrees in
writing. If Debtor requests any such redelivery, Debtor will deliver with such
request a duly executed financing statement in form and substance satisfactory
to Secured Party. Any proceeds of Collateral coming into Debtor’s possession as
a result of any such redelivery shall be held in trust for Secured Party and
immediately delivered to Secured Party for application on the Indebtedness.
Secured Party may (in its sole discretion) deliver any or all of the Collateral
to Debtor, and such delivery by Secured Party shall discharge Secured Party from
all liability or responsibility for such Collateral. Secured Party, at its
option, may require delivery of any Collateral to Secured Party at any time with
such endorsements or assignments of the Collateral as Secured Party may request.

4

                                   2.10      At
any time and without notice, Secured Party may as to Collateral other than
equipment, fixtures or inventory (a) cause any or all of such Collateral to be
transferred to its name or to the name of its nominees; (b) receive or collect
by legal proceedings or otherwise all dividends, interest, principal payments
and other sums and all other distributions at any time payable or receivable on
account of such Collateral, and hold the same as Collateral, or apply the same
to the Indebtedness, the manner and distribution of the application to be in the
sole discretion of Secured Party; (c) enter into any extension, subordination,
reorganization, deposit, merger or consolidation agreement or any other
agreement relating to or affecting such Collateral, and deposit or surrender
control of such Collateral, and accept other property in exchange for such
Collateral and hold or apply the property or money so received pursuant to this
Agreement. 

                                   2.11     
Secured Party may assign any of the Indebtedness and deliver any or all the
Collateral to its assignee, who then shall have with respect to Collateral so
delivered all the rights and powers of Secured Party under this Agreement, and
after that Secured Party shall be fully discharged from all liability and
responsibility with respect to Collateral so delivered. 

                                   2.12      Debtor
shall defend, indemnify and hold harmless Secured Party, its employees, agents,
shareholders, officers, and directors from and against any and all claims,
damages, fines, expenses, liabilities or causes of action of whatever kind,
including without limitation consultant fees, legal expenses, and actual
attorneys’ fees, suffered by any of them as a direct or indirect result of any
actual or asserted violation of any law, including, without limitation,
Environmental Laws, or of any remediation relating to any property required by
any law, including without limitation Environmental Laws. 

                         3.       
Collection of Proceeds. 

                                   3.1     
Debtor agrees to collect and enforce payment of all Collateral until Secured
Party shall direct Debtor to the contrary. Immediately upon notice to Debtor by
Secured Party and at all times after that, Debtor agrees to fully and promptly
cooperate and assist Secured Party in the collection and enforcement of all
Collateral and to hold in trust for Secured Party all payments received in
connection with Collateral and from the sale, lease or other disposition of any
Collateral, all rights by way of suretyship, guaranty or indemnity and all
rights in the nature of a lien or security interest which Debtor now or later
has regarding Collateral. Immediately upon and after such notice, Debtor agrees
to (a) endorse to Secured Party and immediately deliver to Secured Party all
payments received on Collateral or from the sale, lease or other disposition of
any Collateral or arising from any other rights or interests of Debtor in the
Collateral, in the form received by Debtor without commingling with any other
funds, and (b) immediately deliver to Secured Party all property in Debtor’s
possession or later coming into Debtor’s possession through enforcement of
Debtor’s rights or interests in the Collateral. Debtor irrevocably authorizes
Secured Party or any Secured Party employee or agent to endorse the name of
Debtor upon any checks or other items which are received in payment for any
Collateral, and to do any and all things necessary in order to reduce these
items to money. Secured Party shall have no duty as to the collection or
protection of Collateral or the proceeds of it, nor as to the preservation of
any related rights, beyond the use of reasonable care in the custody and
preservation of Collateral in the possession of Secured Party. Debtor agrees to
take all steps necessary to preserve rights against prior parties with respect
to the Collateral. Nothing in this Section 3.1 shall be deemed a consent by
Secured Party to any sale, lease or other disposition of any Collateral. 

5

                         4.     
Defaults, Enforcement and Application of Proceeds. 

                                   4.1      Upon
the occurrence of any of the following events (each an “Event of
Default”), Debtor shall be in default under this Agreement: 

                                        
     (a)      Any failure
to pay the Indebtedness or any other indebtedness when due, or such portion of
it as may be due, by acceleration or otherwise; or 

                                              (b)      Any
failure or neglect to comply with, or breach of, or default under, any term of
this Agreement, the Loan Agreement or any other agreement or commitment between
Debtor and Secured Party; or 

                                              (c)      Any
warranty, representation, financial statement, or other information made, given
or furnished to Secured Party by or on behalf of Debtor shall be, or shall prove
to have been, false or materially misleading when made, given, or furnished; or

                                              (d)     
Sale or other disposition by Debtor of any substantial portion of its assets or
assignment for the benefit of creditors of or by Debtor; or commencement of any
proceedings under any state or federal bankruptcy or insolvency law or laws for
the relief of debtors by or against Debtor; or the appointment of a receiver,
trustee, court appointee, sequestrator or otherwise, for all or any part of the
property of Debtor. 

                                   4.2     
Upon the occurrence of any Event of Default, Secured Party may at its discretion
and without prior notice to Debtor declare any or all of the Indebtedness to be
immediately due and payable, and shall have and may exercise any one or more of
the following rights and remedies: 

                                              (a)     
exercise all the rights and remedies upon default, in foreclosure and otherwise,
available to secured parties under the provisions of the Uniform Commercial Code
and other applicable law including without limitation such rights and remedies
as are available under the Deeds of Trust; 

                                              (b)     
institute legal proceedings to foreclose upon the lien and security interest
granted by this Agreement, to recover judgment for all amounts then due and
owing as Indebtedness, and to collect the same out of any Collateral or the
proceeds of any sale of it; 

                                              (c)      institute
legal proceedings for the sale, under the judgment or decree of any court of
competent jurisdiction, of any or all Collateral; and/or 

                                              (d)      personally
or by agents, attorneys, or appointment of a receiver, enter upon any premises
where Collateral may then be located, and take possession of all or any of it
and/or render it unusable; and without being responsible for loss or damage to
such Collateral, hold, operate, sell, lease, or dispose of all or any Collateral
at one or more public or private sales, leasings or other dispositions, at
places and times and on terms and conditions as Secured Party may deem fit,
without any previous demand or advertisement; and except as provided in this
Agreement, all notice of sale, lease or other disposition, and advertisement,
and other notice or demand, any right or equity of redemption, and any
obligation of a prospective purchaser or lessee to inquire as to the power and
authority of Secured Party to sell, lease, or otherwise dispose of the
Collateral or as to the application by Secured Party of the proceeds of sale or
otherwise, which would otherwise be required by, or available to Debtor under,
applicable law are expressly waived by Debtor to the fullest extent permitted.

6

                        At
any sale pursuant to this Section 4.2, whether under the power of sale, by
virtue of judicial proceedings or otherwise, it shall not be necessary for
Secured Party or a public officer under order of a court to have present
physical or constructive possession of Collateral to be sold. The recitals
contained in any conveyances and receipts made and given by Secured Party or the
public officer to any purchase at any sale made pursuant to this Agreement
shall, to the extent permitted by applicable law, conclusively establish the
truth and accuracy of the matters stated (including, without limitation, as to
the amounts of the principal of and interest on the Indebtedness, the accrual
and nonpayment of it and advertisement and conduct of the sale); and all
prerequisites to the sale shall be presumed to have been satisfied and
performed. Upon any sale of any Collateral, the receipt of the officer making
the sale under judicial proceedings or of Secured Party shall be sufficient
discharge to the purchaser for the purchase money, and the purchaser shall not
be obligated to see to the application of the money. Any sale of any Collateral
under this Agreement shall be a perpetual bar against Debtor with respect to
that Collateral. 

                                   4.3     
Secured Party may, itself, upon the occurrence of any Event of Default notify
and direct any account debtor or obligor. 

                                   4.4      The
proceeds of any sale or other disposition of Collateral authorized by this
Agreement shall be applied by Secured Party first upon all expenses authorized
by the Uniform Commercial Code and all reasonable attorneys’ fees and legal
expenses incurred by Secured Party; the balance of the proceeds of the sale or
other disposition shall be applied in the payment of the Indebtedness, first to
interest, then to principal, then to remaining Indebtedness and the surplus, if
any, shall be paid over to Debtor or to such other person(s) as may be entitled
to it under applicable law. Debtor shall remain liable for any deficiency, which
it shall pay to Secured Party immediately upon demand. 

                                   4.5     
Nothing in this Agreement is intended, nor shall it be construed, to preclude
Secured Party from pursuing any other remedy provided by law for the collection
of the Indebtedness or for the recovery of any other sum to which Secured Party
may be entitled for the breach of this Agreement by Debtor. Nothing in this
Agreement shall reduce or release in any way any rights or security interests of
Secured Party contained in any existing agreement between Debtor and Secured
Party. 

                                   4.6     
No waiver of default or consent to any act by Debtor shall be effective unless
in writing and signed by an authorized officer of Secured Party. No waiver of
any default or forbearance on the part of Secured Party in enforcing any of its
rights under this Agreement shall operate as a waiver of any other default or of
the same default on a future occasion or of any rights. 

                                   4.7     
Debtor irrevocably appoints Secured Party or any agent of Secured Party (which
appointment is coupled with an interest) the true and lawful attorney of Debtor
(with full power of substitution ) in the name, place and stead of, and at the
expense of, Debtor: 

                                              (a)     
to demand, receive, sue for, and give receipts or acquittances for any monies
due or to become due on any Collateral and to endorse any item representing any
payment on or proceeds of the Collateral; 

                                              (b)     
to execute and file in the name of and on behalf of Debtor all financing
statements or other filings deemed necessary or desirable by Secured Party to
evidence, perfect, or continue the security interests granted in this Agreement;
and 

7

                                              (c)     
to do and perform any act on behalf of Debtor permitted or required under this
Agreement. 

                         Upon
the occurrence of an Event of Default, Debtor also agrees, upon request of
Secured Party, to assemble the Collateral and make it available to Secured Party
at any place designated by Secured Party which is reasonably convenient to
Secured Party and Debtor. 

                         5.      Miscellaneous.

                                   5.1      Each
Secured Party will be equal in all respects of this Agreement and the rights and
obligations it imposes. Each will rank equally with the other in respect of all
rights conferred and payments made.

                                   5.2      Until
Secured Party is advised in writing by Debtor to the contrary, all notices,
requests and demands required under this Agreement or by law shall be given to,
or made upon , Debtor at the address indicated in Section 5.15 below. 

                                   5.3      Debtor
will give Secured Party not less than 90 days prior written notice of all
contemplated changes in Debtor’s name, chief executive office location, and/or
location of any Collateral, but the giving of this notice shall not cure any
Event of Default caused by this change. 

                                   5.4      Secured
Party assumes no duty of performance or other responsibility under any contracts
contained within the Collateral. 

                                   5.5     
Secured Party has the right to sell, assign, transfer, negotiate or grant
participations or any interest in, any or all of the Indebtedness and any
related obligations, including without limitation this Agreement. In connection
with the above, but without limiting its ability to make other disclosures to
the full extent allowable, Secured Party may disclose all documents and
information which Secured Party now or later has relating to Debtor, the
Indebtedness or this Agreement, however obtained. Debtor further agree(s) that
Secured Party may provide information relating to this Agreement or relating to
Debtor to Secured Party’s parent, affiliates, subsidiaries and service
providers. 

                                   5.6      In
addition to Secured Party’s other rights, any Indebtedness owing from Secured
Party to Debtor can be set off and applied by Secured Party on any Indebtedness
at any time(s) either before or after maturity or demand without notice to
anyone. 

                                   5.7      Debtor
waives any right to require Secured Party to: (a) proceed against any person or
property; (b) give notice of the terms, time and place of any public or private
sale of personal property security held from Debtor or any other person, or
otherwise comply with the provisions of Section 9607 of the California
Commercial Code or other applicable Uniform Commercial Code, or any similar
provision; or (c) pursue any other remedy in Secured Party’s power. Debtor
waives notice of acceptance of this Agreement and presentment, demand, protest,
notice of protest, dishonor, notice of dishonor, notice of default, notice of
intent to accelerate or demand payment of any Indebtedness, any and all other
notices to which the undersigned might otherwise be entitled, and diligence in
collecting any Indebtedness, and agree(s) that Secured Party may, once or any
number or times, modify the terms of any Indebtedness, compromise, extend,
increase, accelerate, renew or forbear to enforce payment of any or all
Indebtedness, all without notice to Debtor and without affecting in any manner
the unconditional obligation of Debtor under this Agreement. Debtor
unconditionally and irrevocably waives each and every defense and setoff of any
nature which, under principles of guaranty or otherwise, would operate to impair
or diminish in any way the obligation of Debtor under this Agreement and
acknowledges that such 

8

waiver is by this reference incorporated into each security
agreement, collateral assignment, pledge and/or other document from Debtor now
or later securing the Indebtedness, and acknowledges that as of the date of this
Agreement no such defense or setoff exists. 

                                   5.8     
Debtor waives any and all rights (whether by subrogation, indemnity,
reimbursement, or otherwise) to recover from any person, including without
limitation the Debtor, if different that Debtor, any amounts paid or the value
of any Collateral given by Debtor pursuant to this Agreement. 

                                   5.9      In
the event that applicable law shall obligate Secured Party to give prior notice
to Debtor of any action to be taken under this Agreement, Debtor agrees that a
written notice given to Debtor at least five (5) days before the date of the act
shall be reasonable notice of the act and, specifically, reasonable notification
of the time and place of any public sale or of the time after which any private
sale, lease, or other disposition is to be made, unless a shorter notice period
is reasonable under the circumstances. A notice shall be deemed to be given
under this Agreement when delivered to Debtor or when placed in an envelope
addressed to Debtor and deposited, with postage prepaid, in a post office or
official depository under the exclusive care and custody of the United States
Postal Service or delivered to an overnight courier. The mailing shall be by
overnight courier, certified, or first class mail. 

                                   5.10      Notwithstanding
any prior revocation, termination, surrender, or discharge of this Agreement in
whole or in part, the effectiveness of this Agreement shall automatically
continue or be reinstated in the event that any payment received or credit given
by Secured Party in respect of the Indebtedness is returned, disgorged, or
rescinded under any applicable law, including, without limitation, bankruptcy or
insolvency laws, in which case this Agreement, shall be enforceable against
Debtor as if the returned, disgorged, or rescinded payment or credit had not
been received or given by Secured Party, and whether or not Secured Party relied
upon this payment or credit or changed its position as a consequence of it. In
the event of continuation or reinstatement of this Agreement, Debtor agrees upon
demand by Secured Party to execute and deliver to Secured Party those documents
which Secured Party determines are appropriate to further evidence (in the
public records or otherwise) this continuation or reinstatement, although the
failure of Debtor to do so shall not affect in any way the reinstatement or
continuation. 

                                   5.11      This
Agreement and all the rights and remedies of Secured Party under this Agreement
shall inure to the benefit of Secured Party’s successors and assigns and to any
other holder who derives from Secured Party title to or an interest in the
Indebtedness or any portion of it, and shall bind Debtor and the heirs, legal
representatives, successors, and assigns of Debtor. Nothing in this Section 5.10
is deemed a consent by Secured Party to any assignment by Debtor. 

                                   5.12     
If there is more than one Debtor, all undertakings, warranties and covenants
made by Debtor and all rights, powers and authorities given to or conferred upon
Secured Party are made or given jointly and severally. 

                                   5.13      Except
as otherwise provided in this Agreement, all terms in this Agreement have the
meanings assigned to them in Division 9 (or, absent definition in Division 9, in
any other Division) of the Uniform Commercial Code, as of the date of this
Agreement. “Uniform Commercial Code” means the California Commercial
Code, as amended. 

                                   5.14      No
single or partial exercise, or delay in the exercise, of any right or power
under this Agreement, shall preclude other or further exercise of the rights and
powers under this Agreement. The unenforceability of any provision of this
Agreement shall not affect the enforceability of 

9

the remainder of this Agreement. This Agreement constitutes the
entire agreement of Debtor and Secured Party with respect to the subject matter
of this Agreement. No amendment or modification of this Agreement shall be
effective unless the same shall be in writing and signed by Debtor and an
authorized officer of Secured Party. This Agreement shall in all respects be
governed by and construed in accordance with the internal laws of the State of
California without regard to conflict of laws principles. 

                                   5.15      To
the extent that any of the Indebtedness is payable upon demand, nothing
contained in this Agreement shall modify the terms and conditions of that
Indebtedness nor shall anything contained in this Agreement prevent Secured
Party from making demand, without notice and with or without reason, for
immediate payment of any or all of that Indebtedness at any time(s), whether or
not an Event of Default has occurred. 

                                   5.16     
Debtor’s chief executive office is located and shall be maintained at 2853 E.
Pico Blvd, Los Angeles, CA 90023. Debtor is organized under the laws of Delaware
and maintains all of its assets in the state of California and shall not
reorganize in any other jurisdiction or move any part of its assets into any
other jurisdiction without the prior written consent of the Secured Party. 

                                   5.17     
A carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement under the Uniform Commercial Code and may be
filed by Secured Party in any filing office. 

                                   5.18      This
Agreement shall be terminated only by the filing of a termination statement in
accordance with the applicable provisions of the Uniform Commercial Code, but
the obligations contained in Section 2.12 of this Agreement shall survive
termination. 

                         6.      Governing
Law. This Agreement shall be interpreted and the rights and liabilities of
the parties hereto determined in accordance with the internal laws and decisions
of the State of California without regard to conflict of law principles. THE
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
STATE AND FEDERAL COURTS LOCATED IN LOS ANGELES COUNTY, CALIFORNIA WITH RESPECT
TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT AND HEREBY WAIVES ANY OBJECTION TO SUCH FORUM BASED ON FORUM
NON-CONVENIENS. IN ADDITION, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
LENDER AND THE BORROWER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING
WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS NOTE. 

DEBTOR: 

 

 

By: /s/ Stephen Soller 
Name: Stephen Soller

Title: CEO 

10

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