Document:

kl06021_ex10-4.htm

    
      

    

     

    Exhibit
      10.4

     

    
 

    COLLATERAL
      PLEDGE AGREEMENT

     

    

    This
      Collateral Pledge Agreement (“Agreement”) dated May 31, 2007, is made by
QUALMAX, INC., a Delaware corporation having its principal
      place of business at 340 West Fifth Avenue, Eugene, OR 97401 (“Pledgor”) in
      favor of P&S SPIRIT, LLC, a Nevada limited liability
      company, having its principal office at 2700 Lighthouse Point East, Suite 626,
      Baltimore, MD 21224 (“Secured Party”).

     

     

    Background

     

    A.           To
      induce Secured Party to extend credit to New World Brands,
      Inc., a Delaware corporation and a subsidiary of
      Pledgor  (sometimes herein referenced as “Borrower,”) as evidenced by
      that certain Credit Line and Security Agreement dated as of even herewith
      between Secured Party and Borrower (as amended, restated, supplemented, or
      replaced from time to time, the “Loan Agreement”), and that certain Credit Line
      Note in the principal face amount of One Million Fifty Thousand Dollars
      ($1,050,000.00) from Borrower payable to the order of the Secured Party, Pledgor
      executes and delivers this Agreement to Secured Party.  All
      capitalized terms used herein and not otherwise defined shall have the same
      meanings assigned to such terms in the Loan Agreement.

     

    B.           This
      Agreement is given and is intended to provide additional security for the
      Obligations.

     

    NOW
      THEREFORE, for other good and sufficient consideration, the receipt of which
      is
      hereby acknowledged, Pledgor, intending to be legally bound hereby, covenants
      and agrees as follows:

     

    1.  Pledgor,
      for the purpose of granting a continuing lien and security interest, does hereby
      assign, pledge, hypothecate, deliver and set over to Secured Party, its
      successors and assigns, the investment properties and other assets described
      on
      Schedule I attached hereto and made part hereof, together with any additions,
      exchanges, replacements, and substitutions therefore, and distributions with
      respect thereto, and the proceeds thereof, including, without limitation, all
      of
      the stock and/or membership interests in the corporations and limited liability
      companies listed on Schedule I attached hereto, whether now owned or hereafter
      acquired by Pledgor or in which Pledgor now or hereafter has any rights, options
      or warrants, together with any certificates representing such interest and
      all
      rights (but none of the obligations) under or arising out of the applicable
      organizational documents of such corporation and/or limited liability company
      (collectively, the “Pledged Collateral”).

     

    2.  The
      pledge and security interest described herein shall continue in effect to secure
      all Obligations from time to time incurred or arising unless and until all
      Obligations have been indefeasibly paid and satisfied in full.

     

    3.  Pledgor
      hereby represents and warrants that:

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    (a)  Except
      as
      pledged herein and except as provided in Section 23 of this Agreement, Pledgor
      has not sold, assigned, transferred, pledged or granted any option or security
      interest in or otherwise hypothecated the Pledged Collateral in any manner
      whatsoever and the Pledged Collateral is pledged herewith free and clear of
      any
      and all liens, security interests, encumbrances, claims, pledges, restrictions,
      legends, and options;

     

    (b)  Pledgor
      has the full capacity to execute, deliver, and perform under this Agreement
      and
      to pledge the Pledged Collateral hereunder;

     

    (c)  This
      Agreement constitutes the valid and binding obligation of Pledgor, enforceable
      in accordance with its terms, and the pledge of the Pledged Collateral referred
      to herein is not in violation of and shall not create any default under any
      agreement, undertaking or obligation of Pledgor;

     

    (d)  The
      Pledged Collateral has been duly and validly authorized and issued by the issuer
      thereof and such Pledged Collateral is fully paid for and
      non-assessable;

     

    (e)  Pledgor
      is pledging hereunder all of the Pledgor’s interest and ownership in all the
      entities listed on Schedule I attached hereto;

     

    (f)  Contemporaneously
      with the execution hereof, Pledgor is delivering to Secured Party all stock
      certificate, representing or evidencing the Pledged Collateral in the
      corporations listed on Schedule I, accompanied by duly executed instruments
      of
      transfer or assignments in blank, to be held by Secured Party in accordance
      with
      the terms hereof;

     

    (g)  Pledgor
      hereby confirms that Secured Party is authorized to file all UCC-1 financing
      statements that are required under the UCC (as defined below) to perfect any
      security interest granted hereunder;

     

    (h)  Pledgor
      has delivered to each corporation and limited liability company on Schedule
      I
      attached hereto, a Pledge Instruction, substantially in the form of Exhibit
      A
      attached hereto, and has caused such corporation and/or limited liability
      company to register the security interest granted hereunder on its books and
      records and to deliver to Secured Party an Acknowledgment of Registration
      Statement, substantially in the form of Exhibit B attached thereto;
      and

     

    (i)  Pledgor
      will not permit any limited liability company identified on Schedule I to
      certificate any of its membership interest or “opt into” Article 8 of the
      Uniform Commercial Code.

     

    4.  If
      an
      Event of Default occurs that is continuing beyond any applicable cure
      period  under the Loan Agreement then Secured Party may, at its sole
      option, exercise from time to time with respect to the Pledged Collateral any
      and/or all rights and remedies available to it hereunder, under Article XI
      of
      the Loan Agreement and/or under the Uniform Commercial Code as adopted from
      time
      to time in the State of  Maryland (“UCC”), or otherwise available to
      it, at law or in equity, including, without limitation, the right to dispose
      of
      the Pledged Collateral at public or private sale(s) or other proceedings, and
      Pledgor agrees that, if permitted by law, Secured Party or its nominee may
      become the purchaser at any such sale(s).

     

     

     

    
      
        
        

      

      
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    5.  (a)           In
      addition to all other rights granted to Secured Party herein or otherwise
      available at law or in equity, Secured Party shall have the following rights,
      each of which may be exercised at Secured Party’s sole dis­cretion (but
      without any obligation to do so), at any time following the occurrence of an
      Event of Default under the Loan Agreement, without further consent of Pledgor:
      (i) transfer the whole or any part of the Pledged Collateral into the name
      of
      itself or its nominee or to conduct a sale of the Pledged Collateral pursuant
      to
      the UCC or pursuant to any other applicable law; (ii) vote the Pledged
      Collateral; (iii) notify the persons obligated on any of the Pledged Collateral
      to make payment to Secured Party of any amounts due or to become due thereon;
      and (iv) release, surrender or exchange any of the Pledged Collateral at any
      time, or to compromise any dispute with respect to the same.  Secured
      Party may proceed against the Pledged Collateral, or any other collateral
      securing the Obligations, in any order, and against Pledgor, as Borrower, and
      any other obligor, jointly and/or severally, in any order to satisfy the
      Obligations.  Pledgor waives and releases any right to require Secured
      Party to first collect any of the Obligations secured hereby from any other
      collateral of Pledgor, as Borrower, or any other party securing the Obligations
      under any theory of marshalling of assets, or otherwise.  All rights
      and remedies of Secured Party are cumulative, not alternative.

     

    (b)  Pledgor
      hereby irrevocably appoints Secured Party its attorney-in-fact, subject to
      the
      terms hereof, following the occurrence of an Event of Default under the Loan
      Agreement, at Secured Party’s option: (i) to effectuate the transfer of the
      Pledged Collateral on the books of the issuer thereof to the name of Secured
      Party or to the name of Secured Party’s nominee, designee or assignee; (ii) to
      endorse and collect checks payable to Pledgor representing distributions or
      other payments on the Pledged Collateral; and (iii) to carry out the terms
      and
      provisions hereof.

     

    6.  The
      proceeds of any Pledged Collateral received by Secured Party at any time,
      whether from the sale of Pledged Collateral or otherwise, may be applied to
      or
      on account of the Obligations and in such order as Secured Party may
      elect.  In addition, Secured Party may, in its discretion, apply any
      such proceeds to or on account of the payment of all reasonable costs, fees
      and
      expenses (including, without limitation, reasonable attorneys’ fees) which may
      be incurred by Secured Party.

     

    7.  Pledgor
      recognizes that Secured Party may be unable to effect, or may effect only after
      such delay which would adversely affect the value that might be realized from
      the Pledged Collateral, a public sale of all or part of the Pledged Collateral
      by reason of certain prohibitions contained in the Securities Act of 1933,
      as
      amended (“Securities Act”) and may be compelled to resort to one or more private
      sales to a restricted group of purchasers who will be obliged to agree, among
      other things, to acquire such securities for their own account, for investment
      and not with a view to the distribution or resale thereof.  Pledgor
      agrees that any such private sale may be at prices and on terms less favorable
      to Secured Party or the seller than if sold at public sales, and therefore
      recognizes and confirms that such private sales shall not be deemed to have
      been
      made in a commercially unreasonable manner solely because they were made
      privately.  Pledgor agrees that Secured Party has no obligation to
      delay the sale of any such securities for the period of time necessary to permit
      the issuer of such securities to register such securities for public sale under
      the Securities Act.

     

     

     

    
      
        
        

      

      
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    8.  In
      the
      event that any reclassification, readjustment, conversion into common stock,
      or
      other change is made or declared in the capital structure of any entity listed
      on Schedule I attached hereto or Pledgor acquires or in any other manner
      receives additional shares or interests in any such corporation and/or limited
      liability company, or any option included within the Pledged Collateral is
      exercised, any and all new, substituted or additional interest, or other
      securities, issued by reason of any such change or exercise, shall be delivered
      to and held by Secured Party under the terms hereof in the same manner as the
      Pledged Collateral originally pledged hereunder.  No distribution may
      be paid to or retained by Pledgor unless expressly permitted in the Loan
      Agreement.

     

    9.  So
      long
      as no Default or Event of Default has occurred under the Loan Agreement, and,
      until Secured Party notifies Pledgor in writing of the exercise of its rights
      hereunder, Pledgor shall retain the sole right to vote the Pledged Collateral
      and exercise all rights of ownership with respect to all corporate or company
      questions for all purposes not inconsistent with the terms hereof.

     

    10.  Secured
      Party shall have no obligation to take any steps to preserve, protect or defend
      the rights of Pledgor or Secured Party in the Pledged Collateral against other
      parties.  Secured Party shall have no obligation to sell or otherwise
      deal with the Pledged Collateral at any time for any reason, whether or not
      upon
      request of Pledgor, and whether or not the value of the Pledged Collateral,
      in
      the opinion of Secured Party or Pledgor, is more or less than the aggregate
      amount of the Obligations secured hereby, and any such refusal or inaction
      by
      Secured Party shall not be deemed a breach of any duty which Secured Party
      may
      have under law to preserve the Pledged Collateral.  Except as provided
      by applicable law, no duty, obligation or responsibility of any kind is intended
      to be delegated to or assumed by Secured Party at any time with respect to
      the
      Pledged Collateral.

     

    11.  To
      the
      extent Secured Party is required by law to give Pledgor prior notice of any
      public or private sale, or other disposition of the Pledged Collateral, Pledgor
      agrees that ten (10) days prior written notice to Pledgor shall be a
      commercially reasonable and sufficient notice of such sale or other intended
      disposition.  Pledgor further recog­nizes and agrees that if the
      Pledged Collateral, or a portion thereof, threatens to decline speedily in
      value
      or is of a type customari­ly sold on a recognized market, Pledgor shall not
      be entitled to any prior notice of sale or other intended
      disposition.

     

    12.  Pledgor
      shall indemnify, defend and hold harmless Secured Party, its managers, members,
      officers, employees, agents, representatives, accountants, attorneys, and their
      respective successors and assigns, from and against any and all claims, losses
      and liabilities resulting from any breach by Pledgor of Pledgor’s
      representations and covenants under this Agreement.

     

    13.  For
      purposes hereof, Pledgor hereby waives notice of (a) acceptance of this
      Agreement, (b) the existence and incurrence from time to time of any Obligations
      under the Loan Agreement, (c) the existence of any Event of Default, the making
      of demand, or the taking of any action by Secured Party under the Loan Agreement
      and (d) demand and default hereunder.

     

    14.  Pledgor
      hereby consents and agrees that Secured Party may at any time or from time
      to
      time pursuant to the Loan Agreement (a) extend or change the time of payment
      and/or the manner, place or terms of payment of any and all Obligations, (b)
      supplement, amend, restate, supersede, or

     

     

     

    
      
        
        

      

      
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    replace
      the Loan Agreement or any other Loan Documents, (c) renew, extend, modify,
      increase or decrease loans and extensions of credit under the Loan Agreement,
      (d) modify the terms and conditions under which loans and extensions of credit
      may be made under the Loan Agreement, (e) settle, compromise or grant releases
      for any Obligations and/or any person or persons liable for payment of any
      Obligations, (f) exchange, release, surrender, sell, subordinate or compromise
      any collateral of any party now or hereafter securing any of the Obligations
      and
      (g) apply any and all payments received from any source by Secured Party at
      any
      time against the Obligations in any order as Secured Party may determine; all
      of
      the foregoing in such manner and upon such terms as Secured Party may determine
      and without notice to or further consent from Pledgor and without impairing
      or
      modifying the terms and conditions of this Agreement which shall remain in
      full
      force and effect.

     

    15.  This
      Agreement shall remain in full force and effect and shall not be limited,
      impaired or otherwise affected in any way by reason of (a) any delay in making
      demand on Pledgor for, or delay in enforcing or failure to enforce, performance
      or payment of Pledgor’s Obligations, (b) any failure, neglect or omission on
      Secured Party’s part to perfect any lien upon, protect, exercise rights against,
      or realize on, any property of Pledgor or any other party securing the
      Obligations, (c) any failure to obtain, retain or preserve, or the lack of
      prior
      enforcement of, any rights against any person or persons or in any property,
      (d)
      the invalidity or unenforceability of any Obligations or rights in any
      Collateral under the Loan Agreement, (e) the existence of nonexistence of any
      defenses which may be available to Borrower with respect to the Obligations,
      or
      (f) the commencement of any bankruptcy, reorganization, liquidation, dissolution
      or receivership proceeding or case filed by or against Borrower.

     

    16.  Pledgor
      covenants and agrees that Pledgor shall not, without the prior written consent
      of Secured Party, sell, encumber or grant any lien, security interest or option
      on or with respect to any of the Pledged Collateral.

     

    17.  Pledgor
      hereby authorizes and instructs each issuer of the Pledged Collateral to comply
      with any instruction received by it from Secured Party in writing that states
      that an Event of Default has occurred and  without any other or
      further instructions from Pledgor, and Pledgor agrees that each such issuer
      shall be fully protected in so complying.

     

    18.  Any
      failure of or delay by Secured Party to exercise any right or remedy hereunder
      shall not be construed as a waiver of the right to exercise the same or any
      other right or remedy at any other time.

     

    19.  This
      Agreement constitutes the entire agreement between the parties hereto regarding
      the subject matter hereof and may be modified only by a written instrument
      signed by Pledgor and Secured Party.

     

    20.  This
      Agreement, and all matters arising out of or relating to this Agreement, is
      made
      in and shall be governed by and construed in accordance with the laws of the
      State of Maryland, and the provisions hereof shall be deemed severable in the
      event of the invalidity of any provision.  Pledgor irrevocably
      consents to the exclusive jurisdiction of the any state or federal court in
      the
      State of Maryland in any and all actions and proceedings whether arising
      hereunder or in connection herewith.  Pledgor irrevocably agrees to
      service of process by certified mail, return receipt requested

     

     

     

    
      
        
        

      

      
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    to
      the
      address set forth on the signature page hereto unless Pledgor otherwise notifies
      Secured Party in accordance with the terms hereof of a change in such
      address.

     

    21.  All
      communications which Secured Party may provide to Pledgor herein shall be sent
      to Pledgor at the address set forth in the Loan Agreement, and will be delivered
      in the same fashion as Section 13.4 of the Loan Agreement.

     

    22.  This
      Agreement shall be binding upon and inure to the benefit of the parties hereto,
      and their respective successors and assigns.

     

    23.  Secured
      Party, in its capacity as Secured Party under that Certain Collateral Pledge
      Agreement dated March 29, 2007 between Pledgor and Secured Party (the “First
      Pledge”) securing the Obligations described therein (herein, the “First Lien
      Collateral Agent”) under that certain Collateral Pledge Agreement dated March
      29, 2007 between Pledgor and Secured Party (the “First Pledge”) securing the
      Obligations therein described (herein, the “First Pledge
      Obligations”)  agrees to hold the Collateral that is in its possession
      or control (or in the possession or control of its agents or bailees) to the
      extent that possession or control thereof is taken to perfect a Lien thereon
      under the Uniform Commercial Code (such Collateral being the “Pledged
      Collateral”) as collateral agent  and as bailee for Secured Party
      (such bailment being intended, among other things, to satisfy the requirements
      of Section 8-301 and 9-313 of the Uniform Commercial Code) and any assignee
      solely for the purpose of perfecting the  pledge and security interest
      granted under this Agreement. Upon the discharge of First Pledge Obligations,
      the First Lien Collateral Agent shall be deemed to have delivered the Pledged
      Collateral (if any) together with any necessary endorsements, to Secured
      Party.

     

    24.  PLEDGOR
      AND SECURED PARTY EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY CLAIM,
      DEMAND, ACTION OR CAUSE OF ACTION OF ANY KIND ARISING OUT OF OR RELATED TO
      THIS
      AGREEMENT, THE LOAN AGREEMENT, THE OBLIGATIONS OR THE PLEDGED
      COLLATERAL.

     

    25.  SPECIAL
      OREGON NOTICE.  ORAL AGREEMENTS OR ORAL COMMITMENTS TO (1)
      LOAN MONEY, (2) EXTEND CREDIT, (3) MODIFY OR AMEND ANY TERMS OF LOAN DOCUMENTS,
      (4) RELEASE ANY GUARANTOR, (5) FOREBEAR FROM ENFORCING REPAYMENT OF ANY LOAN
      OR
      THE EXERCISE OF ANY REMEDY UNDER LOAN DOCUMENTS, OR (6) MAKE ANY OTHER FINANCIAL
      ACCOMMODATION PERTAINING TO ANY LOAN ARE ALL UNENFORCEABLE UNDER OREGON
      LAW.

     

    

     

    

     

     [SIGNATURE
      TO FOLLOW ON SEPARATE PAGE]

     

     

     

     

    

    
      
        
          
          

        

        
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    IN
      WITNESS WHEREOF, this Collateral Pledge Agreement has been executed and
      delivered as of the date first set forth above.

     

     

                    QUALMAX,
      INC.,

                    a
      Delaware
      corporation

    

    

    

                    By:
      /s/ M. David
      Kamrat________________________________                                                                           

    

                    Print
      Name: M. David
      Kamrat__________________________                                                                                     

    

                    Title:
      CEO_______________________________                                                                                     

    

     

     

    
 

    

    
      
        
          
          

        

        
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    EXHIBIT
      A

    Pledge
      Instruction

     

    BY
      THIS
      PLEDGE INSTRUCTION, dated as of the ___ day of May, 2007, Qualmax, Inc.
      (“Pledgor”), hereby instructs New World Brands, Inc. (“Company”), to register a
      pledge and security interest in, of and to all of the Pledgor’s right, title and
      interest in Company now and hereafter owned by the Pledgor (“Interests”) in
      favor of P&S Spirit, LLC (“Secured Party”).

     

     

    1.  Pledge
      Instructions.  Company is hereby instructed by the Pledgor to
      register all of the Pledgor’s right, title and interest in and to all of the
      Pledgor’s Interests as subject to a pledge and security interest in favor of
      Secured Party who, upon such registration of pledge, shall become a registered
      pledgee of the Interests with all rights incident thereto.

     

     

    2.  Acknowledgment
      of Registration Statement.  Company is hereby instructed by
      Pledgor to promptly inform Secured Party of the registration of the pledge
      by
      sending an Acknowledgment of Registration Statement, substantially in the form
      of Exhibit B attached hereto, to Secured Party at the address of 2700 Lighthouse
      Point East, Suite 626, Baltimore, MD 21224,
      Attention:  [__________________] with a copy to Pledgor at its address
      set forth in the Collateral Pledge Agreement.

     

     

    3.  Warranties
      of the Pledgor.  Pledgor hereby warrants that Pledgor has the
      power to originate this instruction.

     

    

    IN
      WITNESS WHEREOF, Pledgor has caused this Pledge Instruction to be duly executed
      and delivered as of the date first above written.

     

                    QUALMAX,
      INC.

    

    

    

                    By:___________________________________                                                                           

    

                    Print
      Name:_____________________________                                                                                     

    

                    Title:__________________________________                                                                                     

    

     

     

     

    
 

    
      
        
          
          

        

        
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    EXHIBIT
      B

    Acknowledgment
      of Registration Statement

     

     

    THIS
      STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS OF THE TIME
      OF
      ISSUANCE.  DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHTS ON
      THE RECIPIENT.  THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR
      A SECURITY.

     

    Qualmax,
      Inc.

    340
      West
      Fifth Avenue

    Eugene,
      OR  97401

    Attention:  __________________

    

     

    P&S
      Spirit, LLC

    2700
      Lighthouse Point East

    Suite
      626

    Baltimore,
      MD 21224

    Attention:  Selvin
      Passen, M.D.

    Telephone:  (410)
      327-9650

    FAX:  (410)
      327-9656

    

    On
      the
      31st day of May, 2007, the undersigned (“Company”), caused the pledge of all of
      the interests in the Company owned by Qualmax, Inc., which as of the date hereof
      is Certificate # 2, evidencing 100 shares of the Series A preferred convertible
      stock in New World Brands, Inc., in favor of P&S
      Spirit, LLC, to be registered on the books and records of
      Company.  To the knowledge of undersigned (including, without
      limitation, any information which may appear on the undersigned’s books and
      records) there are no other liens, restrictions or adverse claims to which
      the
      interests identified herein are, or may be subject, as of the date
      hereof.

     

    

    

                    NEW
      WORLD BRANDS,
      INC.

    

    

                    By:
      /s/ M. David
      Kamrat___________________________________                                                                                     

    

                    Name:
      M. David
      Kamrat_________________________________

    

                    Title:
      CEO__________________________________

    

    

     

     

    
 

    
      
        
          
          

        

        
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    SCHEDULE
      I

     

    Pledged
      Collateral

     

    The
      following Pledged Collateral is hereby pledged by Pledgor to Secured Party
      pursuant to the Collateral Pledge Agreement to which this Schedule is
      attached:

     

    

    
      	
              A.  

            	
              Pledged
                Corporation

            

    

     

    
      	
              Name
                of Entity

            	
              State
                of Formation

            	
              Number
                of Shares Pledged

            	
              Certificate
                #

            	
              Category
                of Stock Interests

            	
              Owner
                of Interest

            
	
              New
                World Brands, Inc.

            	
              DE

            	
              100

            	 	
              Common

            	
              Pledgor

            

    

    

     

    
      	
              B.  

            	
              Pledged
                Membership Interests -
                None

            

    

     

     

     

     

     

     

     

     

    10kl06021_ex10-5.htm

    
      

    

     

    Exhibit
      10.5

    
 

    
      COLLATERAL
        PLEDGE AGREEMENT

       

      (IP
        GEAR, LTD.)

       

      

      This
        Collateral Pledge Agreement (“Agreement”) dated May 31, 2007, is made by
NEW WORLD BRANDS, INC., a Delaware corporation having its
        principal place of business at 340 West Fifth Avenue, Eugene, OR 97401
        (“Pledgor”) in favor of P&S SPIRIT, LLC, a Nevada limited
        liability company, having its principal office at 2700 Lighthouse Point East,
        Suite 626, Baltimore, MD 21224 (“Secured Party”).

       

       

      Background

       

      A.           To
        induce Secured Party to extend credit to Pledgor  (sometimes herein
        referenced as “Borrower,”) as evidenced by that certain Credit Line and Security
        Agreement dated as of even herewith between Secured Party and Borrower (as
        amended, restated, supplemented, or replaced from time to time, the “Loan
        Agreement”), and that certain Credit Line Note in the principal face amount of
        One Million Fifty Thousand Dollars ($1,050,000.00) from Borrower payable
        to the
        order of Secured Party, Pledgor executes and delivers this Agreement to Secured
        Party.  All capitalized terms used herein and not otherwise defined
        shall have the same meanings assigned to such terms in the Loan
        Agreement.

       

      B.           This
        Agreement is given and is intended to provide additional security for the
        Obligations.

       

      NOW
        THEREFORE, for other good and sufficient consideration, the receipt of which
        is
        hereby acknowledged, Pledgor, intending to be legally bound hereby, covenants
        and agrees as follows:

       

      1.  Pledgor,
        for the purpose of granting a continuing lien and security interest, does
        hereby
        assign, pledge, hypothecate, deliver and set over to Secured Party, its
        successors and assigns, the investment properties and other assets described
        on
        Schedule I attached hereto and made part hereof, together with any additions,
        exchanges, replacements, and substitutions therefore, and distributions with
        respect thereto, and the proceeds thereof, including, without limitation,
        all of
        the stock and/or membership interests in the corporations and limited liability
        companies listed on Schedule I attached hereto, whether now owned or hereafter
        acquired by Pledgor or in which Pledgor now or hereafter has any rights,
        options
        or warrants, together with any certificates representing such interest and
        all
        rights (but none of the obligations) under or arising out of the applicable
        organizational documents of such corporation and/or limited liability company
        (collectively, the “Pledged Collateral”).

       

      2.  The
        pledge and security interest described herein shall continue in effect to
        secure
        all Obligations from time to time incurred or arising unless and until all
        Obligations have been indefeasibly paid and satisfied in full.

       

      3.  Pledgor
        hereby represents and warrants that:

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      (a)  Except
        as
        pledged herein, Pledgor has not sold, assigned, transferred, pledged or granted
        any option or security interest in or otherwise hypothecated the Pledged
        Collateral in any manner whatsoever and the Pledged Collateral is pledged
        herewith free and clear of any and all liens, security interests, encumbrances,
        claims, pledges, restrictions, legends, and options;

       

      (b)  Pledgor
        has the full capacity to execute, deliver, and perform under this Agreement
        and
        to pledge the Pledged Collateral hereunder;

       

      (c)  This
        Agreement constitutes the valid and binding obligation of Pledgor, enforceable
        in accordance with its terms, and the pledge of the Pledged Collateral referred
        to herein is not in violation of and shall not create any default under any
        agreement, undertaking or obligation of Pledgor;

       

      (d)  The
        Pledged Collateral has been duly and validly authorized and issued by the
        issuer
        thereof and such Pledged Collateral is fully paid for and
        non-assessable;

       

      (e)  Pledger
        is the legal and beneficial owner of One Hundred Percent (100%) of the issued
        and outstanding capital stock of the corporation identified on Schedule I
        attached hereto;

       

      (f)  Pledgor
        is pledging hereunder an amount equivalent to Sixty-Five Percent (65%) of
        Pledgor’s interest and ownership in the corporation identified on Schedule I
        attached hereto;

       

      (g)  Contemporaneously
        with the execution hereof, Pledgor is delivering to Secured Party one or
        more
        stock certificates, representing or evidencing the Pledged Collateral in
        the
        corporation listed on Schedule I, accompanied by duly executed instruments
        of
        transfer or assignments in blank, to be held by Secured Party in accordance
        with
        the terms hereof;

       

      (h)  Pledgor
        hereby confirms that Secured Party is authorized to file all UCC-1 financing
        statements that are required under the UCC (as defined below) to perfect
        any
        security interest granted hereunder;

       

      (i)  Pledgor
        has delivered to each corporation and limited liability company on Schedule
        I
        attached hereto, a Pledge Instruction, substantially in the form of Exhibit
        A
        attached hereto, and has caused such corporation and/or limited liability
        company to register the security interest granted hereunder on its books
        and
        records and to deliver to Secured Party an Acknowledgment of Registration
        Statement, substantially in the form of Exhibit B attached thereto;
        and

       

      (j)  Pledgor
        will not permit any limited liability company identified on Schedule I to
        certificate any of its membership interest or “opt into” Article 8 of the
        Uniform Commercial Code.

       

      4.  If
        an
        Event of Default occurs that is continuing beyond any applicable cure
        period  under the Loan Agreement then Secured Party may, at its sole
        option, exercise from time to time with respect to the Pledged Collateral
        any
        and/or all rights and remedies available to it hereunder, under Article XI
        of
        the Loan Agreement and/or under the Uniform Commercial Code as adopted from
        time
        to time in the State of  Maryland (“UCC”), or otherwise available to
        it, at law or in equity,

       

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      including,
        without limitation, the right to dispose of the Pledged Collateral at public
        or
        private sale(s) or other proceedings, and Pledgor agrees that, if permitted
        by
        law, Secured Party or its nominee may become the purchaser at any such
        sale(s).

       

      5.  (a)           In
        addition to all other rights granted to Secured Party herein or otherwise
        available at law or in equity, Secured Party shall have the following rights,
        each of which may be exercised at Secured Party’s sole dis­cretion (but
        without any obligation to do so), at any time following the occurrence of
        an
        Event of Default under the Loan Agreement, without further consent of Pledgor:
        (i) transfer the whole or any part of the Pledged Collateral into the name
        of
        itself or its nominee or to conduct a sale of the Pledged Collateral pursuant
        to
        the UCC or pursuant to any other applicable law; (ii) vote the Pledged
        Collateral; (iii) notify the persons obligated on any of the Pledged Collateral
        to make payment to Secured Party of any amounts due or to become due thereon;
        and (iv) release, surrender or exchange any of the Pledged Collateral at
        any
        time, or to compromise any dispute with respect to the same.  Secured
        Party may proceed against the Pledged Collateral, or any other collateral
        securing the Obligations, in any order, and against Pledgor, as Borrower,
        and
        any other obligor, jointly and/or severally, in any order to satisfy the
        Obligations.  Pledgor waives and releases any right to require Secured
        Party to first collect any of the Obligations secured hereby from any other
        collateral of Pledgor, as Borrower, or any other party securing the Obligations
        under any theory of marshalling of assets, or otherwise.  All rights
        and remedies of Secured Party are cumulative, not alternative.

       

      (b)  Pledgor
        hereby irrevocably appoints Secured Party its attorney-in-fact, subject to
        the
        terms hereof, following the occurrence of an Event of Default under the Loan
        Agreement, at Secured Party’s option: (i) to effectuate the transfer of the
        Pledged Collateral on the books of the issuer thereof to the name of Secured
        Party or to the name of Secured Party’s nominee, designee or assignee; (ii) to
        endorse and collect checks payable to Pledgor representing distributions
        or
        other payments on the Pledged Collateral; and (iii) to carry out the terms
        and
        provisions hereof.

       

      6.  The
        proceeds of any Pledged Collateral received by Secured Party at any time,
        whether from the sale of Pledged Collateral or otherwise, may be applied
        to or
        on account of the Obligations and in such order as Secured Party may
        elect.  In addition, Secured Party may, in its discretion, apply any
        such proceeds to or on account of the payment of all reasonable costs, fees
        and
        expenses (including, without limitation, reasonable attorneys’ fees) which may
        be incurred by Secured Party.

       

      7.  Pledgor
        recognizes that Secured Party may be unable to effect, or may effect only
        after
        such delay which would adversely affect the value that might be realized
        from
        the Pledged Collateral, a public sale of all or part of the Pledged Collateral
        by reason of certain prohibitions contained in the Securities Act of 1933,
        as
        amended (“Securities Act”) and may be compelled to resort to one or more private
        sales to a restricted group of purchasers who will be obliged to agree, among
        other things, to acquire such securities for their own account, for investment
        and not with a view to the distribution or resale thereof.  Pledgor
        agrees that any such private sale may be at prices and on terms less favorable
        to Secured Party or the seller than if sold at public sales, and therefore
        recognizes and confirms that such private sales shall not be deemed to have
        been
        made in a commercially unreasonable manner solely because they were made
        privately.  Pledgor agrees that Secured Party has no obligation to
        delay the sale of any such securities for the period of time

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

       

      necessary
        to permit the issuer of such securities to register such securities for public
        sale under the Securities Act.

       

      8.  In
        the
        event that any reclassification, readjustment, conversion into common stock,
        or
        other change is made or declared in the capital structure of any entity listed
        on Schedule I attached hereto or Pledgor acquires or in any other manner
        receives additional shares or interests in any such corporation and/or limited
        liability company, or any option included within the Pledged Collateral is
        exercised, any and all new, substituted or additional interest, or other
        securities, issued by reason of any such change or exercise, shall be delivered
        to and held by Secured Party under the terms hereof in the same manner as
        the
        Pledged Collateral originally pledged hereunder.  No distribution may
        be paid to or retained by Pledgor unless expressly permitted in the Loan
        Agreement.

       

      9.  So
        long
        as no Default or Event of Default has occurred under the Loan Agreement,
        and,
        until Secured Party notifies Pledgor in writing of the exercise of its rights
        hereunder, Pledgor shall retain the sole right to vote the Pledged Collateral
        and exercise all rights of ownership with respect to all corporate or company
        questions for all purposes not inconsistent with the terms hereof.

       

      10.  Secured
        Party shall have no obligation to take any steps to preserve, protect or
        defend
        the rights of Pledgor or Secured Party in the Pledged Collateral against
        other
        parties.  Secured Party shall have no obligation to sell or otherwise
        deal with the Pledged Collateral at any time for any reason, whether or not
        upon
        request of Pledgor, and whether or not the value of the Pledged Collateral,
        in
        the opinion of Secured Party or Pledgor, is more or less than the aggregate
        amount of the Obligations secured hereby, and any such refusal or inaction
        by
        Secured Party shall not be deemed a breach of any duty which Secured Party
        may
        have under law to preserve the Pledged Collateral.  Except as provided
        by applicable law, no duty, obligation or responsibility of any kind is intended
        to be delegated to or assumed by Secured Party at any time with respect to
        the
        Pledged Collateral.

       

      11.  To
        the
        extent Secured Party is required by law to give Pledgor prior notice of any
        public or private sale, or other disposition of the Pledged Collateral, Pledgor
        agrees that ten (10) days prior written notice to Pledgor shall be a
        commercially reasonable and sufficient notice of such sale or other intended
        disposition.  Pledgor further recog­nizes and agrees that if the
        Pledged Collateral, or a portion thereof, threatens to decline speedily in
        value
        or is of a type customari­ly sold on a recognized market, Pledgor shall not
        be entitled to any prior notice of sale or other intended
        disposition.

       

      12.  Pledgor
        shall indemnify, defend and hold harmless Secured Party, its managers, members,
        officers, employees, agents, representatives, accountants, attorneys, and
        their
        respective successors and assigns, from and against any and all claims, losses
        and liabilities resulting from any breach by Pledgor of Pledgor’s
        representations and covenants under this Agreement.

       

      13.  For
        purposes hereof, Pledgor hereby waives notice of (a) acceptance of this
        Agreement, (b) the existence and incurrence from time to time of any Obligations
        under the Loan Agreement, (c) the existence of any Event of Default, the
        making
        of demand, or the taking of any action by Secured Party under the Loan Agreement
        and (d) demand and default hereunder.

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

       

      14.  Pledgor
        hereby consents and agrees that Secured Party may at any time or from time
        to
        time pursuant to the Loan Agreement (a) extend or change the time of payment
        and/or the manner, place or terms of payment of any and all Obligations,
        (b)
        supplement, amend, restate, supersede, or replace the Loan Agreement or any
        other Loan Documents, (c) renew, extend, modify, increase or decrease loans
        and
        extensions of credit under the Loan Agreement, (d) modify the terms and
        conditions under which loans and extensions of credit may be made under the
        Loan
        Agreement, (e) settle, compromise or grant releases for any Obligations and/or
        any person or persons liable for payment of any Obligations, (f) exchange,
        release, surrender, sell, subordinate or compromise any collateral of any
        party
        now or hereafter securing any of the Obligations and (g) apply any and all
        payments received from any source by Secured Party at any time against the
        Obligations in any order as Secured Party may determine; all of the foregoing
        in
        such manner and upon such terms as Secured Party may determine and without
        notice to or further consent from Pledgor and without impairing or modifying
        the
        terms and conditions of this Agreement which shall remain in full force and
        effect.

       

      15.  This
        Agreement shall remain in full force and effect and shall not be limited,
        impaired or otherwise affected in any way by reason of (a) any delay in making
        demand on Pledgor for, or delay in enforcing or failure to enforce, performance
        or payment of Pledgor’s Obligations, (b) any failure, neglect or omission on
        Secured Party’s part to perfect any lien upon, protect, exercise rights against,
        or realize on, any property of Pledgor or any other party securing the
        Obligations, (c) any failure to obtain, retain or preserve, or the lack of
        prior
        enforcement of, any rights against any person or persons or in any property,
        (d)
        the invalidity or unenforceability of any Obligations or rights in any
        Collateral under the Loan Agreement, (e) the existence of nonexistence of
        any
        defenses which may be available to Borrower with respect to the Obligations,
        or
        (f) the commencement of any bankruptcy, reorganization, liquidation, dissolution
        or receivership proceeding or case filed by or against Borrower.

       

      16.  Pledgor
        covenants and agrees that Pledgor shall not, without the prior written consent
        of Secured Party, sell, encumber or grant any lien, security interest or
        option
        on or with respect to any of the Pledged Collateral.

       

      17.  Pledgor
        hereby authorizes and instructs each issuer of the Pledged Collateral to
        comply
        with any instruction received by it from Secured Party in writing that states
        that an Event of Default has occurred and  without any other or
        further instructions from Pledgor, and Pledgor agrees that each such issuer
        shall be fully protected in so complying.

       

      18.  Any
        failure of or delay by Secured Party to exercise any right or remedy hereunder
        shall not be construed as a waiver of the right to exercise the same or any
        other right or remedy at any other time.

       

      19.  This
        Agreement constitutes the entire agreement between the parties hereto regarding
        the subject matter hereof and may be modified only by a written instrument
        signed by Pledgor and Secured Party.

       

      20.  This
        Agreement, and all matters arising out of or relating to this Agreement,
        is made
        in and shall be governed by and construed in accordance with the laws of
        the
        State of Maryland, and the provisions hereof shall be deemed severable in
        the
        event of the invalidity of any provision.  

       

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

       

      Pledgor
        irrevocably consents to the exclusive jurisdiction of the any state or federal
        court in the State of Maryland in any and all actions and proceedings whether
        arising hereunder or in connection herewith.  Pledgor irrevocably
        agrees to service of process by certified mail, return receipt requested
        to the
        address set forth on the signature page hereto unless Pledgor otherwise notifies
        Secured Party in accordance with the terms hereof of a change in such
        address.

       

      21.  All
        communications which Secured Party may provide to Pledgor herein shall be
        sent
        to Pledgor at the address set forth in the Loan Agreement, and will be delivered
        in the same fashion as Section 13.4 of the Loan Agreement.

       

      22.  This
        Agreement shall be binding upon and inure to the benefit of the parties hereto,
        and their respective successors and assigns.

       

      23.  PLEDGOR
        AND SECURED PARTY EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY CLAIM,
        DEMAND, ACTION OR CAUSE OF ACTION OF ANY KIND ARISING OUT OF OR RELATED TO
        THIS
        AGREEMENT, THE LOAN AGREEMENT, THE OBLIGATIONS OR THE PLEDGED
        COLLATERAL.

       

      24.  SPECIAL
        OREGON NOTICE.  ORAL AGREEMENTS OR ORAL COMMITMENTS TO (1)
        LOAN MONEY, (2) EXTEND CREDIT, (3) MODIFY OR AMEND ANY TERMS OF LOAN DOCUMENTS,
        (4) RELEASE ANY GUARANTOR, (5) FOREBEAR FROM ENFORCING REPAYMENT OF ANY LOAN
        OR
        THE EXERCISE OF ANY REMEDY UNDER LOAN DOCUMENTS, OR (6) MAKE ANY OTHER FINANCIAL
        ACCOMMODATION PERTAINING TO ANY LOAN ARE ALL UNENFORCEABLE UNDER OREGON
        LAW.

       

      

       

      

       

       [SIGNATURE
        TO FOLLOW ON SEPARATE PAGE]

       

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF, this Collateral Pledge Agreement has been executed and
        delivered as of the date first set forth above.

       

                      NEW
        WORLD BRANDS,
        INC.,

                      a
        Delaware
        corporation

      

      

      

                      By:______________________________                                                                           

      

                      Print
        Name:________________________                                                                                     

      

                      Title:_____________________________                                                                                     

      

       

      
 

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      EXHIBIT
        A

      Pledge
        Instruction

       

      BY
        THIS
        PLEDGE INSTRUCTION, dated as of the ___ day of May, 2007, New World Brands,
        Inc.
        (“Pledgor”), hereby instructs IP Gear, Ltd. (“Company”), to register a pledge
        and security interest in, of and to sixty-five percent (65%) all of the
        Pledgor’s right, title and interest in Company now and hereafter owned by the
        Pledgor (“Interests”) in favor of P&S Spirit, LLC (“Secured
        Party”).

       

      1.  Pledge
        Instructions.  Company is hereby instructed by the Pledgor to
        register all of the Pledgor’s right, title and interest in and to all of the
        Pledgor’s Interests as subject to a pledge and security interest in favor of
        Secured Party who, upon such registration of pledge, shall become a registered
        pledgee of the Interests with all rights incident thereto.

       

      2.  Acknowledgment
        of Registration Statement.  Company is hereby instructed by
        Pledgor to promptly inform Secured Party of the registration of the pledge
        by
        sending an Acknowledgment of Registration Statement, substantially in the
        form
        of Exhibit B attached hereto, to Secured Party at the address of 2700 Lighthouse
        Point East, Suite 626, Baltimore, MD 21224, Attention:  Selvin Passen,
        M.D. with a copy to Pledgor at its address set forth in the Collateral Pledge
        Agreement.

       

      3.  Warranties
        of the Pledgor.  Pledgor hereby warrants that Pledgor has the
        power to originate this instruction.

      

      IN
        WITNESS WHEREOF, Pledgor has caused this Pledge Instruction to be duly executed
        and delivered as of the date first above written.

       

                      NEW
        WORLD BRANDS,
        INC.

      

      

      

                      By:______________________________                                                                           

      

                      Print
        Name:________________________                                                                                     

      

                      Title:_____________________________                                                                                     

       

       

      
 

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      EXHIBIT
        B

      Acknowledgment
        of Registration Statement

       

       

      THIS
        STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS OF THE TIME
        OF
        ISSUANCE.  DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHTS ON
        THE RECIPIENT.  THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR
        A SECURITY.

       

      New
        World
        Brands, Inc.

      340
        West
        Fifth Avenue

      Eugene,
        OR  97401

      Attention:  M.
        David Kamrat

      

       

      P&S
        Spirit, LLC

      2700
        Lighthouse Point East

      Suite
        626

      Baltimore,
        MD 21224

      Attention:  Selvin
        Passen, M.D.

      Telephone:  (410)
        327-9650

      FAX:  (410)
        327-9656

      

      On
        the
        31st day of May, 2007, the undersigned (“Company”), caused the pledge of
        sixty-five percent (65%) all of the interests in the Company owned by Qualmax,
        Inc., which as of the date hereof is Certificate # 2, evidencing 100 shares
        of
        the convertible preferred stock in IP Gear, Ltd., in favor
        of P&S Spirit, LLC, to be
        registered on the books and records of Company.  To the knowledge of
        undersigned (including, without limitation, any information which may appear
        on
        the undersigned’s books and records) there are no other liens, restrictions or
        adverse claims to which the interests identified herein are, or may be subject,
        as of the date hereof.

       

      

      

                      IP
        GEAR,
        LTD.

      

      

                      By:
        /s/ M. David
        Kamrat________________________________________                                                                                     

      

                      Name:
        M. David
        Kamrat______________________________________

      

                      Title:
        CEO_______________________________________

       

       

      
 

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
        I

       

      Pledged
        Collateral

       

      The
        following Pledged Collateral is hereby pledged by Pledgor to Secured Party
        pursuant to the Collateral Pledge Agreement to which this Schedule is
        attached:

       

      

      
        	
                A.  

              	
                Pledged
                  Corporation

              

      

       

      
        	
                Name
                  of Entity

              	
                State
                  of Formation

              	
                Number
                  of Shares Pledged

              	
                Certificate
                  No.

                %
                  of total outstanding

              	
                Category
                  of Stock Interests

              	
                Owner
                  of Interest

              
	
                IP
                  Gear, Ltd.

              	
                Israel

              	 	
                65%

              	 	
                Pledgor

              

      

      

       

      
        	
                B.  

              	
                Pledged
                  Membership Interests -
                  None

              

      

       

       

       

       

       

       

      10

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