8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: September 27, 2011

 (Date of earliest event reported: September 23, 2011)

PHOENIX INTERNATIONAL VENTURES, INC.

(Exact name of registrant as specified in its charter)

Nevada	333-140257	20-8018146
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification No.)

61B Industrial PKWY, Carson City, NV	89706
(Address of principal executive offices)	(Zip Code)

775 882 9700

(Registrant's telephone number, including area code)

(Former name or former address, if changed since last report)

Check  the  appropriate  box  below  if  the  Form  8-K  filing  is intended to simultaneously  satisfy the filing obligation of the registrant under any of the following  provisions:

o  Written communications pursuant to Rule 425 under the Securities Act

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE-SHEET ARRANGEMENT OF A REGISTRANT

On September 23, 2011 we, through our wholly-owned subsidiary, Phoenix Aerospace, Inc. (“Borrower”) entered into a convertible loan agreement with Zvi Bar-Nes Nissensohn (“Lender”), to obtain a secured line of credit facility in an aggregate maximum principal amount of $1,000,000. The line of credit is evidenced by a convertible loan agreement, an unconditional guarantee agreement, a security agreement, and a pledge and security agreement (collectively “the Loan Agreement”).

The proceeds of loans made under the Loan Agreement may be used for working capital by the Borrower solely to finance its business activities. The initial term of the Loan Agreement is 12 months from the closing date, maturing on September 23, 2012, which may be extended if mutually agreed upon by the Borrower and the Lender.  Our company unconditionally guaranteed the obligations of the Borrower under the Loan Agreement and our subsidiary, as Borrower granted the Lender with a lien and security interest on the cash account funded by Lender as well as a subordinated lien on Borrower’s assets subordinated to vendor and customer liens and any bank debt. We also pledged to the Lender 100% of the shares of common stock of the Borrower. The principal amount of the line of credit shall accrue interest at 8% annually. The loan agreement contains customary representations and warranties, conditions, covenants and events of default.

The material terms of the loan agreement, unconditional guarantee agreement, security agreement, and pledge and security agreement, are qualified in their entirety by the agreements attached as Exhibits 10.1 through 10.4, respectively, to this Current Report on Form 8-K and incorporated herein by reference.

Section 9 – Financial Statements and Exhibits

Item 9.01:  Financial Statements and Exhibits

(c) Exhibits

Exhibit No.                                           Description

10.1	Convertible Loan Agreement dated September 23, 2011
10.2	Unconditional Guarantee dated September 23, 2011
10.3	Security Agreement dated September 23, 2011
10.4	Security Agreement dated September 23, 2011

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: September 27, 2011 

PHOENIX INTERNATIONAL VENTURES, INC.
	/s/   Zahir Teja ______________________  Name: Zahir Teja
	Title:  Chief Executive Officer

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EX-10.1

CONVERTIBLE LOAN AGREEMENT

This Convertible Loan Agreement (this “Agreement”) is made as of September [__], 2011, by and among Phoenix Aerospace, Inc., a company incorporated under the laws of the State of Nevada of 61B Industrial Parkway, Mound House, NV 89706, U.S.A (the “Borrower”); Phoenix International Ventures, Inc., a company incorporated under the laws of the State of Nevada of 61B Industrial Parkway, Mound House, NV 89706, U.S.A (“Phoenix”); and Zvi Bar-Nes Nissensohn Nissensohn, Israeli Passport no. 9379265 of 27 Alexander Penn, Tel-Aviv 69641, Israel and\or a company under his control (at least more than 50%) (collectively, the “Lender”). The Borrower, Phoenix and the Lender may be referred to as “Party” and collectively, as the “Parties”.

W I T N E S S E T H:

WHEREAS,                      the Board of Directors of the Borrower (the "Board") resolved to raise financing for the going forward business activity of the Borrower by means of a convertible loan of up to the aggregate amount of One Million United States Dollars (USD$1,000,000) on the terms set forth herein; and

WHEREAS,                      the Borrower is a wholly-owned subsidiary of Phoenix; and

WHEREAS,                      the Borrower has requested the Lender and the Lender has agreed, to provide the Borrower with a loan of up to the Principal Amount (as defined below) under the terms and subject to the conditions set forth in this Agreement;

NOW THEREFORE, based on the representations contained herein and in consideration of the mutual promises and covenants set forth herein, and intending to be legally bound hereby, the Parties hereto agree as follows:

1.Principal Amount

1.1           Under the terms and subject to the conditions set forth in this Agreement, the Lender shall lend to the Borrower a loan (the “Loan”) of up to the aggregate amount of One Million United States Dollars (USD$1,000,000) (the “Maximum Amount”).

1.2           The Loan shall be made by the Lender to the Borrower in one or more advances (each an “Advance”) in the Lender’s sole discretion based upon the Lender’s assessment of the financial needs of the Borrower. Unless otherwise agreed by the Lender, the aggregate amount of Advances shall not exceed the Maximum Amount. The aggregate amount of all of the Advances actually provided by the Lender to the Borrower under this Agreement shall be referred to “Principal Amount”.

2.Disbursement

2.1.At the Closing (as defined below), the Lender shall disburse an initial Advance of Three Hundred Fifty Thousand United States Dollars (USD$350,000) to the Borrower (the “Initial Advance”) by means of wire-transfer to the Borrower's bank account, which details are: Account Name: Phoenix Aerospace, Inc.; Bank: Nevada State Bank; Address: 2200 Highway 50 East, Dayton, Nevada 89403; Account #: 0532006764; Routing #: 122400779 (the “Designated Account”).

2.2.Following receipt of the Initial Advance, the Borrower may, from time to time, deliver to the Lender, not less than 7 (seven) days in advance of the expected date of each funding of an Advance, a written document specifying the amount of money it requests the Lender to disburse to the Designated Account and the proposed use of such Advance in the business of the Borrower (the “Advance Request”), provided, however, that the amount specified in the Advance Requests in the aggregate shall not exceed the Maximum Amount. The Lender shall review the Advance Request and shall determine, upon his sole discretion, whether to confirm it or not. In the event the Lender determined to confirm the respective Advance Request the Lender shall disburse the amount of the Advance Request to the Designated Account.

3.Interest

3.1.The Principal Amount shall accrue interest at the rate of 8% (eight percent) per annum (the “Interest”). The Interest shall be compounded annually on the basis of a 365-day year for the actual days elapsed as of the date of disbursement of each Advance to the Borrower and until the full repayment or conversion thereof in accordance with the provisions of this Agreement.

3.2.The Interest shall be due and payable together with the Principal Amount on the Maturity Date. The Principal Amount together with the Interest accrued thereon shall be referred to as the “Loan Amount”.

4.Maturity Date; Early Repayment

4.1.Maturity Date. The Loan Amount shall mature on a date which shall be twelve (12) months following the date of the Closing, or such other later date mutually agreed upon by the Borrower and the Lender (the “Maturity Date”).

4.2.Early Repayment. Notwithstanding Section ‎4.1 above, the Lender shall be entitled to demand immediate and early repayment of the outstanding and not repaid balance of the Loan Amount (“Balance of the Loan”) or any part of the Balance of the Loan, in the event that prior to the Maturity Date:

4.2.1.the balance of the Designated Account is positive (“Positive Balance”), provided, however, that in no event the amount actually repaid under this section ‎4.2.1 shall exceed the Positive Balance; or .

4.2.2.Phoenix shall consummate and close one or more rounds of either debt or equity financing (or any combination thereof), in an amount equal to not less than Five Million United States Dollars (USD$5,000,000) in the aggregate (a “Qualified Financing”).

5.Security Interest

5.1.To secure the prompt repayment of the Loan Amount:

5.1.1.Phoenix shall unconditionally guaranty the Loan Amount as per Exhibit A hereto;

5.1.2.The Borrower hereby grants to the Lender and his successors a continuing security interest in Phoenix’ present and future right(s) in and to the Designated Account and the Proceeds (as defined in Section ‎9.3 below), as fully set forth under the Security Agreement, Exhibit B hereto.

5.1.3.As collateral to secure its guaranty of the Loan Amount, Phoenix shall pledge to the Lender and grant the Lender and his successors a first ranking lien, security interest and fixed charge in one hundred percent (100%) of the shares of common stock of the Borrower registered under the name of Phoenix or in which Phoenix is the beneficial owner, as fully set forth under the Pledge agreement, Exhibit C hereto.

(collectively, the “Collateral”).

5.2.Upon repayment of the Loan Amount in its entirety or conversion of the Loan Amount in its entirety into shares of Phoenix the Collateral shall be cancelled simultaneous with such repayment or within five (5) days of such conversion.

6.Conditions of Lender's Obligations at Closing

The obligations of the Lender to disburse the Principal Amount or any part thereof to the Borrower are subject to the fulfillment on or before the Closing of each of the following conditions, the waiver of which shall not be effective against such Lender if it does not consent in writing thereto:

6.1.The Borrower's and Phoenix’s Board of Directors shall adopt resolutions approving the transactions contemplated by this Agreement.

6.2.The representations and warranties of the Borrower and Phoenix set forth in this Agreement shall be true and correct in every material respect at the time of Closing, as certified in writing by the CEO of the Borrower and the CEO of Phoenix.

7.Closing

7.1.Subject to the terms and conditions of this Agreement, the Lender shall advance the Principal Amount or any part thereof in accordance with Section ‎2.1 hereof at a closing to take place remotely by exchange of signatures and documents, at 11:00 a.m. (GMT-7) in 61B Industrial Parkway, Mound House, NV 89706, U.S.A, or such other time and place as may be agreed upon either orally or in writing by the Borrower and the Lender (the “Closing” and the “Closing Date”, respectively).

7.2.At the Closing, the following transactions shall occur, which transactions shall be deemed to take place simultaneously and no transaction shall be deemed to have been completed or any document delivered until all such transactions have been completed and all required documents delivered.

7.2.1.the Borrower shall deliver to the Lender a certified copy of each of the documents listed in Section ‎6 hereof; and

7.2.2.the Lender shall wire the Principal Amount, net of any bank or transfer costs, in immediately available funds in United States currency to the corresponding bank account specified in Section ‎2.1 hereof.

8.Conversion of the Loan

8.1.Voluntary Conversion. Up to the Maturity Date the Lender may, upon his sole discretion, convert the Loan Amount into such number of fully paid and non-assessable shares of Series A Preferred Stock US$0.001 par value of Phoenix (“Preferred Stock”) or if such exist, then the most senior class of shares of Phoenix at the time of the conversion at a conversion price per share of US$0.15 (fifteen United States Cents) (the “Voluntary Conversion Shares”).

8.2.Conversion Upon Default. If, by the Maturity Date either (a) the Borrower shall not have repaid the Loan Amount, or (b) the Lender shall have not elected to receive the Voluntary Conversion Shares, then the Lender shall have the right to convert the Loan Amount into shares of Preferred Stock (the “Default Conversion Shares”), at a conversion price per share of US$0.10 (ten United States Cents).

8.3.Default Conversion Shares and Voluntary Conversion Shares. The Default Conversion Shares or the Voluntary Conversion Shares (as applicable) shall confer upon the holders thereof the same rights, preferences, privileges and obligations conferred upon the holders of the existing shares of Preferred Stock, or if such exist, then the most senior class of shares of the Phoenix at the time of the conversion.

8.4.For the avoidance of doubt, in any case of conversion of the Loan Amount into equity under the terms of any section of this Agreement, for the purposes of dividend preference, liquidation preference and anti-dilution rights, the Lender shall be deemed to have invested at 100% (one hundred percent) of the price per share of such transaction.

9.Covenants

Each of the Borrower and Phoenix hereby covenants to the Lender that, unless otherwise agreed upon in writing by the Parties, as of the Closing:

9.1.Designated Account; Signing Rights. The Lender or its designee shall be a required signatory in the Designated Account.

9.2.Use of the Loan Amount. Each Advance shall be used by the Borrower as a working capital solely to finance business activities of the Borrower as of the Closing Date. Unless otherwise agreed upon in writing among the Parties, in no event the Loan amount shall be used to pay debts of the Borrower or Phoenix prior to the Closing Date (“Prior Debts”), provided, however, that the Lender shall have the sole discretion to determine whether to confirm use of the Principal Amount for payments of Prior Debts.

9.3.Deposit of Proceeds. All proceeds generated by the Borrower from execution of work provided to customers or other third parties (“Proceeds”) shall be deposited in the Designated Account, unless upon receipt of the Borrower prior written request the Lender at his sole discretion confirm that such Proceeds are to be promptly reinvested in inventory or other assets used solely to provide additional products or services for customers or other third parties.

9.4.Distribution; Dividends. For as long as the Loan Amount or any part thereof is outstanding, the Borrower shall not be entitled to make any distribution or pay any dividend (including, without limitation any liquidation dividend) to its stockholders.

10.Representations and Warranties of the Borrower and Phoenix

Each of the Borrower and Phoenix hereby represents and warrants to the Lender that as at the Closing:

10.1.Organization. It is duly organized and validly existing under the laws of the State of Nevada and has full corporate power and authority to own, lease and operate its properties and assets and to conduct its business as now being conducted and as proposed to be conducted. It has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions and perform its obligations contemplated hereby, subject to receipt of Board and shareholder approval as provided for herein. It has not taken any action or failed to take any action, which action or failure would preclude or prevent it from conducting its business after the Closing in the manner heretofore conducted or proposed to be conducted. It has all authorizations, approvals, permits, licenses, and any similar authority necessary or required under any law, regulation, rule or ordinance, for the conduct of its business as now being conducted and as proposed to be conducted by it, and to own and operate its properties as now conducted and as proposed to be conducted, owned, leased and operated by it.

10.2.Authorization; Approvals. All corporate action on its part, its directors necessary for the authorization, execution, delivery, and performance of all of its obligations under this Agreement has been (or will be) taken prior to the Closing. This Agreement, when executed and delivered by or on its behalf, shall be duly and validly authorized, executed and delivered, by it and shall constitute its valid and legally binding obligations, legally enforceable against it in accordance with its terms. No consent, approval, order, license, permit, action by, or authorization of or designation, declaration, or filing with any governmental authority on its part is required that has not been, or will not have been, obtained by it prior to the Closing in connection with the valid execution, delivery and performance of this Agreement or the consummation of any other transaction contemplated hereby, except for the adoption and filing of an amendment to the Articles of Incorporation and other notices with the Secretary of State of the State of Nevada necessary to effectuate the increase of the number of registered share of the Preferred Stock.

10.3.No Breach. Neither the execution and delivery of this Agreement, nor the issuance of the Default Conversion Shares nor the Voluntary Conversion Shares (as applicable) nor compliance by it with the terms and provisions hereof, will conflict with, or result in a breach or violation of, any of the terms, conditions and provisions of: (i) its Articles of Incorporation, (ii) any judgment, order, injunction, decree, or ruling of any court or governmental authority, domestic or foreign, (iii) any agreement, contract, lease, license or commitment to which it is a party or to which it is subject, or (iv) to its best knowledge, applicable law. The execution and delivery of, and compliance with, this Agreement will not (a) give to others any rights, including rights of termination, cancellation or acceleration, in or with respect to any agreement, contract or commitment referred to in this paragraph, or to any of its properties, or (b) otherwise require the consent or approval of any person, which consent or approval has not heretofore been obtained.

11.Representations and Warranties of Phoenix

Phoenix hereby represents and warrants to each of the Lender that as at the Closing:

11.1.The Default Conversion Shares or the Voluntary Conversion Shares (as applicable) issued upon conversion of the Loan Amount, and the ordinary shares issued upon conversion of the Default Conversion Shares or the Voluntary Conversion Shares (as applicable), when issued and allotted in accordance with this Agreement, will be duly authorized, validly issued, fully paid, nonassessable, and free of any preemptive rights, and will have the rights, preferences, privileges, and restrictions applicable to the Preferred Stock as set forth in the Articles of Incorporation and the By-Laws, and subject to the provisions thereof, or if such exist, then the most senior class of shares of Phoenix at the time of the conversion, will be free and clear of any liens, claims, encumbrances or third party rights of any kind and duly registered in the name of the Lender in the Phoenix’ register of stockholders.

12.Miscellaneous

12.1.Governing Law. This Agreement shall be governed exclusively by and construed solely in accordance with, the laws of the State of Nevada, and the United States District Court of Nevada shall have exclusive jurisdiction over the interpretation of this Agreement and any dispute between Parties hereto arising in connection herewith.

12.2.Assignment. This Agreement may not be assigned by either party (except to Permitted Transferees (as defined in the Articles of Association of the Borrower) subject to such transferee agreeing in writing to be bound by the terms hereof), without the prior written consent of the other parties. Subject to the foregoing restriction, this Agreement shall inure to the benefit of the parties and their respective successors, assigns and heirs.

12.3.Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

12.4.Notices Any notice required or permitted hereunder shall be in writing and shall be sent by registered mail or confirmed facsimile to the parties hereto at the respective addresses as set forth above, as may be changed by each of the parties in a written notice from time to time.

12.5.Amendment and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance), only with the written consent of the Borrower and the Lender.

12.6.Severability If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

12.7.Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK. SIGNATURE PAGES FOLLOW]

[Signature Page to Convertible Loan Agreement]

BORROWER:                                           PHOENIX AEROSPACE, INC.

________________________________

By:           ____________________

Title:           ____________________

PHOENIX:                                PHOENIX INTERNATIONAL VENTURES, INC.

________________________________

By:           ____________________

Title:           ____________________

LENDER:

_______________________

________________________________

__________________________

By:           ____________________

Title:           ____________________

EX-10.2

Exhibit A

UNCONDITIONAL GUARANTEE

In consideration of financial accommodations given or to be given or continued to, Phoenix Aerospace, Inc., a company incorporated under the laws of the State of Nevada (the “Borrower”) of 61B Industrial Parkway, Mound House, NV 89706, U.S.A., by Zvi Bar-Nes Nissensohn, Israeli Passport no. 9379265 (the “Lender”), pursuant to that certain Convertible Loan Agreement made and entered into on even date (“CLA”) among the Borrower, the undersigned and the Lender, the undersigned irrevocably and unconditionally guarantee to the Lender, payment pursuant to the CLA when due, whether by acceleration or otherwise, of any and all liabilities of the Borrower to the Lender, to amounts, together with all interest thereon and all attorney’s fees, costs and expenses of collection incurred by the Lender in enforcing any of such liabilities and/or the terms hereof.

The term “liabilities of the Borrower” shall include all liabilities, direct or contingent, joint, several or independent, of the Borrower now or hereafter existing, due or to become due to, or held or to be held by, the Lender for its own account or as agent for another or others, whether created directly or acquired by assignment or otherwise.

The undersigned waives notice of acceptance of this guarantee and notice of any liability to which it may apply, and waives presentment, demand of payment, protest, notice of dishonour or non-payment of any such liabilities, suit or taking other action by the Lender against, and any other notice to, any part liable thereon (including the undersigned).

The Lender may at any time and from time to time (whether or not after revocation or termination of this guarantee) without the consent of, or notice (except as shall be required by applicable statute and cannot be waived) to, the undersigned, without incurring responsibility to the undersigned, without impairing or releasing the obligations of the undersigned hereunder, upon or without any terms or conditions and in whole or in part:

1.Change the manner, place of and/or terms of payment, and/or change or extend the time of payment of, renew or alter, any liability of the Borrower, any security therefor, or any liability incurred directly or indirectly in respect thereto and the guarantee herein made shall apply to the liabilities of the Borrower as so changed, extended, renewed or altered; and

2.Sell, exchange, release, surrender, realize upon or otherwise deal with, in any manner and in any order, any property by whosoever at any time pledged or mortgaged to secure or howsoever securing, the liabilities hereby guaranteed or any liabilities (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and/or any offset there against; and

3.Exercise or refrain from exercising any rights against the Borrower or others (including the undersigned) or otherwise act or refrain from acting; and

4.Settle or compromise any liability hereby guaranteed, any security therefor or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and may subordinate the payment of all or any part thereof to the payment of any liability (whether due or not) of the Borrower to creditors of the Borrower other than the Lender and the undersigned; and

5.Apply any sums by whomsoever paid or howsoever realized to any liability or liabilities of the Borrower to the Lender regardless of what liability or liabilities of the Borrower remain unpaid.

No invalidity, irregularity or unenforceability of all or any part of the liabilities hereby guaranteed or of any security therefor shall affect, impair or be a defence to this guarantee and this guarantee is a primary obligation of the undersigned.

This guarantee is unlimited and a continuing one and all liabilities to which it applies or may apply under the terms hereof shall be conclusively presumed to have been created in reliance hereon. As to the undersigned, this guarantee shall continue until written notice of revocation signed by the undersigned shall have been actually received by the Lender, notwithstanding a revocation by, or complete or partial release for any cause of anyone liable in any manner for the liabilities hereby guaranteed or for the liabilities (including those hereunder) incurred directly or indirectly in respect thereof or hereof, and notwithstanding the dissolution, termination or increase, decrease or change in personnel of any one or more of the undersigned which may be partnerships. No revocation or termination hereof shall affect in any manner rights arising under this guarantee with respect to (a) liabilities which shall have been created, contracted, assumed or incurred prior to receipt by the Lender of written notice of such revocation or termination or (b) liabilities which shall have been created, contracted, assumed or incurred after receipt of such written notice pursuant to any contract entered into by the Lender prior to receipt of such notice; and the sole effect of revocation or termination hereof shall be to exclude from this guarantee liabilities thereafter arising which are unconnected with liabilities therefore arising or transactions therefore entered into.

Any and all rights and claims of the undersigned against the Borrower or any of its property, arising by reason of any payment by the undersigned to the Lender pursuant to the provisions of this guarantee, shall be subordinate and subject in right of payment to the prior payment in full of all liabilities of the Borrower to the Lender.

The Lender at all times and from time to time shall have the right to require the undersigned to deliver to the Lender as security for the liabilities of the undersigned hereunder collateral security, original or additional, satisfactory to the Lender.

Upon the happening of any of the following events: the insolvency (however evidenced) of the Borrower, or of any person (including the undersigned) who is liable directly or indirectly in respect of any of the liabilities of the Borrower, or an adverse change in the financial condition of the Borrower, or suspension of business of the Borrower, or the issuance of any warrant, process or order of attachment, garnishment or other lien and/or the filing of a lien as a result thereof against any of the property of the Borrower, or the making by the Borrower of an assignment for the benefit of creditors, or a trustee or receiver being appointed for the Borrower, or for any of its property, or any proceeding being commenced by or against the Borrower under any bankruptcy, reorganization, arrangement of debts, insolvency, readjustment of debt, receivership, liquidation or dissolution law or statute, or it appears that any representation in any financial or other statement of the Borrower, delivered to the Lender by or on behalf of the Borrower, is untrue or incomplete, or if the Lender deems itself insecure - then and in any such event, and at any time thereafter, the Lender may, without notice to the Borrower, make the liabilities of the Borrower to the Lender, whether or not then due, immediately due and payable hereunder as to the undersigned, and the Lender shall be entitled to enforce the obligations of the undersigned hereunder.

Upon non-payment when due of any of the liabilities of the Borrower or the undersigned to the Lender, the Lender shall have the right from time to time, without advertisement or demand upon notice to the Borrower or the undersigned or right of redemption except as shall be required by applicable statute and cannot be waived, to sell, re-sell, assign, transfer and deliver all or part of said property of the undersigned, at any brokers board or exchange or at public or private sale, for cash or on credit or for future delivery, and in connection therewith may grant options and may impose reasonable conditions such as requiring any purchase of any stock so sold to represent that such stock is purchased for investment purposes only. Upon each sale the Lender, unless prohibited by provision of any applicable statute which cannot be waived, may purchase all or any part of said property being sold, free from and discharged of all trusts, claims, right of redemption and equities of the undersigned.

In the case of each such sale, or of any proceedings to collect any liabilities of the undersigned to the Lender, the undersigned shall pay all costs and expenses of every kind for collection, sale or delivery, including reasonable attorney’s fees, and after deducting such costs and expenses from the proceeds of sale or collection, the Lender may apply any residue to pay any of such liabilities of the undersigned, who shall continue liable for any deficiency, with interest.

If claim is ever made upon the Lender for repayment or recovery of any amount or amounts received by the Lender in payment or on account of any of the liabilities of the Borrower and the Lender repays all or part of said amount by reason of (a) any judgment, decree or order of any court or administrative body having jurisdiction over the Lender or any of its property, or (b) any settlement or compromise of any such claim effected by the Lender with any such claimant (including the Borrower), then and in such event the undersigned agree that any such judgment, decree, order, settlement or compromise shall be binding upon the undersigned, notwithstanding any revocation hereof or the cancellation of any note or other instrument evidencing any liability of the Borrower, and the undersigned shall be and remain liable to the Lender hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by the Lender.

Unless prohibited by any applicable statute which cannot be waived, any acknowledgement or new promise, whether by payment of principal or interest or otherwise and whether by the Borrower or others (including the undersigned), with respect to any of the liabilities of the Borrower shall, if the statute of limitations in favor of the undersigned against the Lender shall have commenced to run, toll the running of such statute of limitations and, if the period of such statute of limitations shall have expired, prevent the operation of such statute of limitations.

The Lender shall have no responsibility for ascertaining, nor for informing the undersigned with respect to, nor be required to take any action concerning, any maturities, calls, conversions, exchanges, offers, tenders or similar matters relating to any of the property of the undersigned (whether or not the Lender has, or is deemed to have, knowledge of any of the aforesaid), provided the Lender shall endeavour to take such action as or may be requested or authorized by the undersigned if the Lender determines, in its sole discretion, that such action will not adversely affect the value as collateral of the property of the undersigned in question and the relative request or authorization is made in writing and is received by the Lender in due time.

The Lender shall not be bound to take any steps necessary to preserve any rights in any of the property of the undersigned against prior parties which may be liable in connection therewith, and the undersigned hereby agrees to take such steps. The Lender may nevertheless at any time (a) take any action it may deem appropriate, for the case or preservation of such property or of any rights of the undersigned or the Lender thereon, (b) demand, use for, collect or receive any money or property at any time due, payable or receivable on account of or in exchange for any property of the undersigned, (c) compromise and settle with any person liable on such property, or (d) extend the time of payment or otherwise change the terms thereof as to any party liable thereon, all without notice to, without incurring responsibility to, and without effecting any of the liabilities hereunder of, the undersigned. The undersigned shall pay to the Lender all costs and expenses, including filing fees and attorney’s fees, incurred by the Lender in connection with the custody, care, preservation or collection of any of the property of the undersigned or in seeking to enforce any of the liabilities or obligations of the undersigned hereunder.

The Lender shall have the right, at any time and from time to time, without notice, to (i) notify any obligor on any of such property to make payment to the Lender of any amounts due thereon; and/or (ii) take control of any proceeds of any of such property.

No delay on the part of the Lender in exercising any of its options, powers or rights, or partial or single exercise thereof, shall constitute a waiver thereof. No waiver of any of its rights hereunder, and no modification or amendment of this guarantee, shall be deemed to be made by the Lender unless the same shall be in writing, duly signed on behalf of the Lender, and each such waiver, if any, shall apply only with respect to the specific issuance involved, and shall in no way impair the rights of the Lender or the obligations of the undersigned to the Lender in any other respect at any other time.

The Lender is under no duty to the undersigned to protect, secure, insure or obtain, or perfect any security interest in, any property pledged in connection with the liabilities of the Borrower (i) which is set in the Lender’s possession or (ii) which has not been pledged by the undersigned.

The undersigned shall pay the unpaid accounts of the obligations of the Borrower in U.S. currency and at the same places where such liabilities are payable by their terms.

The undersigned, if more than one, shall be jointly and severally liable hereunder and the term “undersigned” wherever used herein shall mean the undersigned or any one or more of them. Anyone signing the guarantee shall be bound hereby, whether or not anyone else signs this guarantee at any time. The term “Lender” includes any agent of the Lender acting for it.

The undersigned hereby irrevocably waives and gives up any and all legal and equitable rights and claims arising from the existence or performance of this guarantee that the undersigned may now or hereafter have and that would result in the undersigned being deemed a “creditor” (under the Federal Bankruptcy Code or any other law) of the Borrower or of any other person or entity directly or contingently liable for any of the liabilities of the Borrower (a “Third Party”), including without limitation all rights of subrogation, indemnity, reimbursement, exoneration and/or contribution, and including without limitation any such right or claim against or with respect to any property (including without limitation any collateral security) of the Borrower or of any Third Party. In furtherance, and not in limitation, of the preceding waiver, the undersigned agrees that any payment by the undersigned to the Lender pursuant to this guarantee shall be deemed a contribution to the capital of the Borrower, and any such payment shall not constitute the undersigned as a “creditor” of the Borrower or of any Third Party.

This Guarantee and the rights and obligations of the Lender and of the undersigned hereunder shall be governed and construed in accordance with the internal laws of the State of Nevada without giving effect to conflict of law principles. The undersigned submit to the jurisdiction of the United States District Court of Nevada with respect to any dispute arising hereunder or relating to any of the liabilities of the Borrower. Service of process may be made on the undersigned in the manner specified hereinbelow, by personal delivery at, or by mail addressed to, any address to which the Lender may address notices to the undersigned as set forth below. Any judicial proceeding shall take place without a jury, which is hereby waived. The undersigned also waives the right to assert any counterclaim or setoff in any litigation brought to enforce the Lender’s rights and remedies hereunder. In connection with any litigation, the undersigned irrevocably waives any sovereign immunity that they may have or hereafter acquire, including but not limited to immunity from the jurisdiction of any court, from any legal process, from attachment prior to judgement, from attachment in aid of execution, from execution or otherwise.

Any notice in connection with this Guarantee shall be in writing and may be delivered personally or by fax, or by registered or certified mail, return receipt requested, addressed (a) to the undersigned at 61B Industrial Parkway, Mound House, NV 89706, U.S.A, Fax: +1-775-882-9777, or to any other address that the Lender believes to be the address of the undersigned, and (b) to the Lender at 27 Alexander Penn, Tel-Aviv 69641, Israel. Any such notice or other communication may also be addressed to such other address(es) as may be designated in writing afterwards. All such notices or other communication shall be deemed given when delivered personally or electronically or when mailed, except notice of change of address, which shall be deemed to have been given when received.

Date: September __, 2011

PHOENIX INTERNATIONAL VENTURES, INC.

By:           _______________________________________________

Name:           Zahir Teja

Title:           Chairman and Chief Executive Officer

EX-10.3

Exhibit C

PLEDGE AND SECURITY AGREEMENT

This Pledge and Security Agreement (“Security Agreement”) is made this __ day of September 2011, by Phoenix International Ventures, Inc., a Nevada corporation (“Company”), of 61B Industrial Parkway, Mound House, NV 89706, U.S.A. in favor of Zvi Bar-Nes Nissensohn (“Bar-Nes”), Israeli Passport no. 9379265 of 27 Alexander Penn, Tel-Aviv 69641, Israel or his assigns or affiliates (with Bar-Nes, the “Lender”) in accordance with the Company’s Articles of Incorporation and all the other provisions that grant the Company power in such respect and in accordance with resolutions of the Company’s board of directors dated September __, 2011.

Whereas pursuant to that certain Convertible Loan Agreement made and entered into on even date (“CLA”) among the Company, its fully owned subsidiary Phoenix Aerospace, Inc. (“PAI”) and Lender the PAI will obtain from Lender credit, documentary credit, various loans, current and other account overdrafts, indemnities, bonds and guarantees for the Company or for others at the Company’s request (jointly and severally, “Facility”) on such terms as have been and/or are in future from time to time agreed.

And whereas it has been agreed between the Company and Lender that the Company will, by this Security Agreement, secure all its debts and liabilities to Lender of every type and kind whatsoever, as set out below, in addition to all the collateral that has been and/or is in future given to Lender.

Now therefore this Security Agreement witnesseth as follows -

1.Secured Amounts

a.This Security Agreement has been issued to secure the full and punctual payment of all the amounts, whether in U.S. Dollars or in any foreign currency, now and in future due to Lender from the Company in any manner or way and for any reason, whether or not the amounts are due from the Company in connection with the provision of the Facility, whether due from the Company alone or together with others, whether the Company has already become liable for them or becomes liable for them in the future, as debtor and/or guarantor and/or otherwise, that are now and/or in future due, payable prior to or after realization of the Collateral hereby given, absolutely or contingently due, directly or indirectly due, due pursuant to the Company’s original obligation or formulated in a court judgment or otherwise -

*           ALL AMOUNTS DUE UNDER THE CLA

plus interest, commissions and all expenses whatsoever, including the costs of realization, advocates’ professional fees, insurance fees, stamp duty and other payments pursuant to this Security Agreement, with the addition of linkage of any type now or in future due from the Company to Lender in any way in respect of linked principal and linked interest (all the aforegoing, “Secured Sums”).

b.Secured Sums that are now or in future due to Lender from the Company in any foreign currency shall be deemed secured by this Security Agreement only insofar as, in respect of the transaction pursuant whereto they are due, an appropriate permit from the competent authorities in Israel is given in advance or after the event, so long as such a permit is legally necessary.

2.The Company hereby undertakes to pay Lender every one of the Secured Sums:

a.on its agreed due date, if it has been agreed between Lender and the Company that the particular amount is payable on a particular date;

b.at the end of seven (7) days from the date of Lender’s sending its first written demand to the Company, if a due date has not been agreed as provided in paragraph (a) above.

3.Interest

a.Lender may compute interest on the Secured Sums at such rate as has been or is in future from time to time agreed between it and the Company. In cases in which the interest rate has not been agreed, Lender may fix the interest rate and give notice thereof to the Company. The Company shall be charged such interest rates as aforesaid and Lender may add them to principal at the end of each quarter or at the end of any other period, as determined by it.

b.In the event of default in payment of all or any of the Secured Sums, they shall bear default interest at the rate agreed upon in the agreement for the provision of the Facility. In the absence of a provision with regard to default interest in those agreements, the Secured Sums shall bear interest at the maximum rate prevailing at Lender in respect of unauthorized withdrawals and defaults on an approved overdraft account, but not less than two percent (2%) more than the interest rate fixed in the agreement for the provision of any banking service.

c.In the event that Lender becomes entitled to realize the Collateral under this Security Agreement it may increase the interest rates of the Secured Sums to the maximum rate for the time being prevailing at Lender in respect of unauthorized withdrawals and defaults on an approved overdraft account.

4.Collateral

a.A pledge of all of the shares of capital stock of PAI owned of record or beneficially by the Company (the “Shares”) and a first ranking lien, security interest and fixed charge in the Shares (the “Collateral”).

b.The Collateral granted pursuant to Section ‎4.‎a. hereof is and shall be senior to any other interests and rights of third parties.

5.The Company hereby represents and warrants as follows:

a.that the Collateral is not charged or pledged to others or attached in any way;

b.that the Collateral is owned by it and in its sole possession;

c.that there is no legal, contractual or other restraint or condition governing the transfer, charge or pledge of the Collateral;

d.that it may pledge or charge the Collateral in any way whatsoever;

e.that no assignment of right or other transaction has been made that derogates from the value of the Collateral;

f.that it received the necessary consents and/or waivers (if any) from the shareholders or investors pursuant to the articles of association of the Company or the various investment agreements.

6.The Company hereby undertakes to Lender as follows:

a.to keep the Collateral in its possession; and

b.not, without obtaining Lender’s prior written consent, to sell, lease out, move elsewhere or howsoever deliver up the Collateral or any of it, save for sales, transfers and leases of business inventory made in the ordinary course of the Company’s business;

c.not to sell, lease out, move elsewhere, deliver up or grant to others any right to use the Collateral without obtaining Lender’s prior written consent;

d.forthwith to notify Lender of the imposition of an attachment over the Collateral and forthwith to notify the attacher of the charge in favor of Lender and at the Company’s expense forthwith and without delay to take all steps in order to remove the attachment. If the Company does not take such steps as aforesaid, Lender may (but need not) take all steps to remove the attachment, and the Company shall be liable immediately to pay Lender all the expenses involved therein (including the professional fees of Lender’s advocates);

e.not howsoever to charge the Collateral or any of it with rights that are pari passu with or prior or inferior to Lender’s rights and not to assign any right that the Company has in the Collateral without obtaining Lender’s prior written consent;

f.to keep books of account and permit Lender or its representative at any time to examine the books. The Company undertakes to assist Lender or its representatives and to give them on demand balance sheets, documents and any information required by them, including explanations in connection with the financial and operational state of the Company and/or its business;

g.that there shall be no material change to the business of the Company without Lender’s prior written consent; and

h.to the best of its knowledge, the Company is not currently in breach and there are no proceedings against it in connection with any breach of any intellectual property rights of any third party.

7.Term

a.The Collateral that has been given to Lender pursuant to this Security Agreement is of perpetual character notwithstanding settlement of all or any of the Company’s accounts and it shall remain in force until Lender confirms in writing that this Security Agreement is void.

b.Should Lender have been or in future be given collateral or guarantees for payment of the Secured Sums, all the collateral and guarantees shall be independent of each other.

c.Should Lender compromise with or grant forbearance or a concession to the Company, should Lender alter the Company’s obligations in connection with the Secured Sums or release or waive other collateral or guarantees, the same shall not alter the nature of the Collateral created pursuant to this Security Agreement and all the Collateral and obligations of the Company pursuant to this Security Agreement shall remain in full force and effect.

8.Lender may at any time charge any of the Company’s accounts with it with any amount now or in future due to it from the Company and apply any amount that it receives from or for the Company to the credit of such account as it deems fit and transfer any amount standing to the Company’s credit in any account with it to any other account with it as Lender deems fit.

9.Without prejudice to right of Lender to call for the immediate payment of all or any of the Secured Sums pursuant to any loan agreement or account opening agreement between Lender and PAI, and without prejudice to the generality of the provisions of this Security Agreement, Lender may in any of the under-mentioned cases call for the immediate payment of all or any of the Secured Sums, without prior notice to the Company:

a.if the Company does not discharge to Lender on the due date or dates any of the Secured Sums due to it;

b.if a voluntary winding-up resolution is passed by the Company or if a winding-up order is issued against it by the court or if the court calls a creditors meeting for the purpose of finding an arrangement with them or if the Company’s name has been removed or is about to be removed from any register operated by law;

c.if a (provisional or permanent) receiver, receiver and manager or liquidator is appointed over the Company’s assets or any of them, and such appointment is not revoked within fourteen (14) days;

d.if an attachment is imposed over all or any of the Company’s assets or over any of the Collateral given by the Company to Lender or if any act of execution is taken against it, and such attachment is not cancelled within fourteen (14) days;

e.if the Company stops paying its debts or carrying on its business;

f.if the work or a substantial part of it is stopped for two (2) or more months;

g.if all or any material portion of the Company’s assets are burned, lost or otherwise damaged;

h.if it appears to Lender, at its absolute discretion, that there has been a change in the authority over the Company, in comparison with the situation existing on the date hereof, by a voluntary share transfer or otherwise (save for transfers in good faith to a transferee who was also a shareholder of the Company on the date hereof, and save for the transmission of shares by inheritance) or by a resolution of the members who constitute the Company, without Lender’s prior written approval;

i.if, there is a deterioration in the value of the Collateral that has been given to secure payment of the Secured Sums;

j.if the Company is required to accelerate the discharge of debts that it owes to other creditors;

k.if the Company breaches or does not perform any of its material obligations that are contained in this Security Agreement and/or any agreement and/or instrument and/or contract made in the past and/or future between the Company and Lender;

l.if it transpires that any warranty of the Company in this Security Agreement and/or any contract made in the past and/or future between the Company and Lender is incorrect and/or inaccurate in any material respect.

m.if the Company alters its certificate of incorporation, its by-law or some of them and does not give notice thereof to Lender within forty eight (48) hours;

n.if the Company merges with or is acquired by another company, whether as absorbing or target company; and

o.if any license, consent, approval or registration of any of the intellectual property rights of the Company that is material to its business is denied, becomes void, suspended or is materially prejudiced, and has a material effect on the Company.

10.Exercise

a.In each of the cases set out in the preceding clause, Lender may take all the steps it deems fit in order to collect all the Secured Sums, realize the Collateral in any way that the law permits and exercise all its rights pursuant to this Security Agreement, including realizing the Collateral, in whole or parts and applying the proceeds thereof in discharge of the Secured Sums, without Lender having to enforce or realize any other guarantees or collateral that it might have.

b.In each case where Lender has the right to call for immediate payment of all Secured Amounts, Lender may, as the Company’s attorney, for which purpose the Company irrevocably appoints Lender as its attorney, sell the Collateral and any part of it by auction or otherwise, itself or through others and on conditions at Lender’s absolute discretion, and Lender may itself or by the court or execution office realize the Collateral granted to it pursuant to this Security Agreement or otherwise by the appointment of a receiver or receiver and manager on behalf of Lender (and the Company agrees in advance to any person or legal entity that Lender appoints or proposes as receiver and manager as aforesaid) and amongst his other powers, he may:

(1)take possession of all or any of the Collateral;

(2)sell or let and/or agree to the sale or letting of the Collateral, in whole or parts, or otherwise transfer it on such conditions as he deems fit; and

(3)make any other arrangement in respect of all or any of the Collateral.

11.All income obtained by the receiver and manager from the Collateral and all proceeds obtained by Lender and/or the receiver and manager from the sale of the Collateral or part of it shall be applied:

a.firstly, in discharge of all expenses incurred in connection with collecting the Secured Sums, including the expenses and remuneration of the receiver or receiver and manager at such rate as fixed by Lender;

b.secondly, in discharge of the further amounts that are due to Lender in consequence of the linkage conditions, the interest, damages, commission and expenses now and in future due to Lender pursuant to this Security Agreement;

c.thirdly, in discharge of the principal of the Secured Sums, or in any other order of application as prescribed by Lender.

12.In the event that at the time the Collateral is realized the Secured Sums have not yet fallen due or the Secured Sums are only due to Lender contingently, Lender may collect from the proceeds of realization an amount sufficient to cover the Secured Sums and the amount that it collects shall be charged to Lender as collateral for them and be retained by Lender until their discharge.

13.Without derogating from the other provisions of this Security Agreement, no waiver, forbearance, concession, silence or abstinence (“Waiver”) on the part of Lender in respect of the non-performance or partial or incorrect performance of any of the Company’s obligations pursuant to this Security Agreement shall be construed as a Waiver by Lender of any right and it shall only be treated as acquiescence limited to the specific instance in which it was given. Any Waiver that Lender grants to any party to a bill that Lender holds pursuant to this Security Agreement shall have no effect whatsoever on the Company’s obligations.

14.If and insofar as the Company is made liable or treated as a guarantor (hereinafter referred to as the “Guarantor Company”), the Company hereby agrees that Lender may:

a.take proceedings in accordance with the law in order to realize the Collateral and/or collect the said amounts, without Lender first being liable to apply to the guaranteed debtors to discharge the said amounts that are due from them to Lender;

b.stop, modify, increase, reduce or renew any credit or other banking service that has been and/or is in future given to the debtors;

c.grant an extension of time and/or similar concession in connection with the discharge of the said amounts;

d.replace, renew, release, amend, refrain from performing or realizing collateral or other guarantees that Lender now or in future holds, whether received by it from the guaranteed debtors or others; and

e.compromise with the guaranteed debtors or others.

The Guarantor Company hereby agrees that the doing of any of the said acts by Lender shall not vest it with any right to alter or revoke its obligations to Lender.

15.The Company confirms that Lender’s books and accounts are acceptable to it, shall be deemed correct and shall serve as conclusive evidence against it of all their particulars, including as regards the computation of the Secured Sums, the details of the bills and guarantees and the other collateral and every other matter relating to this Security Agreement. The expression “Lender’s books” means every statement or copy statement and every loan contract or deed signed by the Company, and the expression “accounts” means every record or copy record, whether entered or copied in handwriting or typewriter or entered or copied by means of printing, duplication or photocopying or by means of any electrical or electronic technical instrument, including microfilm.

16.Lender may at any time, at its discretion, without needing the Company’s consent, transfer to another this Security Agreement and the rights pursuant hereto, including the Collateral, in whole or parts, and any transferee may also transfer the said rights without requiring further consent from the Company. The transfer may be made by endorsement of the Security Agreement or in such other manner as Lender deems fit.

17.Lender may deposit the Collateral that has been or is in future given pursuant to this Security Agreement or any of it with a bailee at its discretion at the Company’s expense and from time to time replace the bailee, and Lender may also register all or any of the said Collateral with any legally competent authority.

18.No Prejudice

a.The grant of this Security Agreement is without prejudice to Lender’s right to collect the Secured Sums otherwise than by realization of this Security Agreement.

b.The realization of this Security Agreement shall be without prejudice to Lender’s right to collect from the Company the remainder of the Secured Sums that have not been discharged by realization of the Security Agreement.

19.All expenses in connection with this Security Agreement, its stamping and registration, the realization of the Collateral (including the professional fees of Lender’s advocates) and also insurance, bailment, maintenance and repair of the Collateral shall be paid by the Company to Lender on its first demand, plus interest at the maximum rate prevailing at Lender for the time being on unauthorized withdrawals and defaults on approved overdraft accounts from the date of demand until full discharge. Until their full discharge all the said expenses shall be secured by this Security Agreement.

20.In this Security Agreement:

a.“Lender” means Zvi Bar-Nes Nissensohn and entity controlled by Lender existing on the date hereof and/or established anytime in the future and also Lender’ successors and assigns;

b.the recitals to this Security Agreement constitute an integral part of it; and

c.should this Security Agreement be signed by two (2) or more persons, the signatories shall be jointly and severally liable for the performance of all the obligations pursuant to this Security Agreement.

21.Any notice posted by Lender to the Company by registered or ordinary mail at the address specified above, of which the Company shall give Lender written notice, shall be deemed duly received by the Company within forty eight (48) hours of the time the letter containing the notice was posted.

22.The competent court in Reno, Nevada is hereby vested with jurisdiction for the purpose of this Security Agreement but Lender may also take legal proceedings in any other competent court.

23.This Security Agreement shall be binding and deemed effective when executed by the Company and Lender.

24.This Security Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Security Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Security Agreement.

25.This Security Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without giving effect to the rules respective conflict of law, and the parties hereto irrevocably submit to the exclusive jurisdiction of the courts of Reno, Nevada in respect of any dispute or matter arising out of or connected with this Security Agreement.

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

PHOENIX INTERNATIONAL VENTURES, INC.

By:          _____________________________

Name:                    Zahir Teja

Title:          Chief Executive Officer

By:          _____________________________

Name:

Title:

ZVI BAR-NES NISSENSOHN

_____________________________

EX-10.4

Exhibit B

SECURITY AGREEMENT

This Security Agreement (“Security Agreement”) is made this __ day of September 2011, by Phoenix Aerospace, Inc., a Nevada corporation (“PAI”), of 61B Industrial Parkway, Mound House, NV 89706, U.S.A. in favor of Zvi Bar-Nes Nissensohn (“Bar-Nes”), Israeli Passport no. 9379265 of 27 Alexander Penn, Tel-Aviv 69641, Israel, or any affiliate of Bar-Nes (with Bar-Nes, the “Lender”) in accordance with PAI’s Articles of Incorporation and all the other provisions that grant PAI power in such respect and in accordance with resolutions of PAI’s board of directors dated September __, 2011.

Whereas pursuant to that certain Convertible Loan Agreement made and entered into on even date (“CLA”) among PAI, Phoenix International Ventures, Inc. (“PIVN”) and Lender, PAI will obtain from Lender credit, documentary credit, various loans, current and other account overdrafts, indemnities, bonds and guarantees for PAI or for others at PAI’s request (jointly and severally, “Facility”) on such terms as have been and/or are in future from time to time agreed in accordance with the CLA.

And whereas it has been agreed between PAI and Lender that PAI will, by this Security Agreement, secure all its debts and liabilities to Lender or his affiliates (the “Lender, the “Lender”) of every type and kind whatsoever, as set out below, in addition to all the collateral that has been and/or is in future given to Lender.

Now therefore this Security Agreement witnesseth as follows -

1.Secured Amounts

a.This Security Agreement has been issued to secure the full and punctual payment of all the amounts, whether in U.S. Dollars or in any foreign currency, now and in future due to Lender from PAI in any manner or way and for any reason, whether or not the amounts are due from PAI in connection with the provision of the Facility, whether due from PAI alone or together with others, whether PAI has already become liable for them or becomes liable for them in the future, as debtor and/or guarantor and/or otherwise, that are now and/or in future due, payable prior to or after realization of the Collateral hereby given, absolutely or contingently due, directly or indirectly due, due pursuant to PAI’s original obligation or formulated in a court judgment or otherwise -

*           ALL AMOUNTS DUE UNDER THE CLA

plus interest, commissions and all expenses whatsoever, including the costs of realization, advocates’ professional fees, insurance fees, stamp duty and other payments pursuant to this Security Agreement, with the addition of linkage of any type now or in future due from PAI to Lender in any way in respect of linked principal and linked interest (all the aforesaid, the “Secured Sums”).

b.Secured Sums that are now or in future due to Lender from PAI in any foreign currency shall be deemed secured by this Security Agreement only insofar as, in respect of the transaction pursuant whereto they are due, an appropriate permit from the competent authorities in Israel is given in advance or after the event, so long as such a permit is legally necessary.

2.The PAI hereby undertakes to pay Lender every one of the Secured Sums:

a.on its agreed due date, if it has been agreed between Lender and PAI that the particular amount is payable on a particular date;

b.at the end of seven (7) days from the date of Lender’s sending its first written demand to PAI, if a due date has not been agreed as provided in paragraph (a) above.

3.Interest

a.Lender may compute interest on the Secured Sums at such rate as has been or is in future from time to time agreed between it and PAI. In cases in which the interest rate has not been agreed, Lender may fix the interest rate and give notice thereof to PAI. The PAI shall be charged such interest rates as aforesaid and Lender may add them to principal at the end of each quarter or at the end of any other period, as determined by it.

b.In the event of default in payment of all or any of the Secured Sums, they shall bear default interest at the rate agreed upon in the agreement for the provision of the Facility. In the absence of a provision with regard to default interest in those agreements, the Secured Sums shall bear interest at the maximum rate prevailing at Lender in respect of unauthorized withdrawals and defaults on an approved overdraft account, but not less than two percent (2%) more than the interest rate fixed in the agreement for the provision of any banking service.

c.In the event that Lender becomes entitled to realize the Collateral under this Security Agreement it may increase the interest rates of the Secured Sums to the maximum rate for the time being prevailing at Lender in respect of unauthorized withdrawals and defaults on an approved overdraft account.

4.Collateral

a.To secure the prompt repayment of any and all of the Secured Sums, PAI hereby grants to Lender and its successors:

(1)a continuing first lien and security interest in the Designated Account, as such term is defined under the CLA; and

(2)a lien and security interest on all of the other assets of PAI, including accounts receivable, equipment, inventory and all proceeds thereof, provided, however, that such lien and security interest is hereby made, and shall be, expressly subject and subordinated at all times to any liens or security interests, now existing or hereafter created, in favor of any vendors, suppliers or customers of PAI and of any banks or other lending institutions that may extend credit to PAI;

collectively, the “Collateral”.

b.The Collateral granted pursuant to Section ‎4.‎a.(1) hereof is and shall be senior to any other interests and rights of third parties.

c.The Lender agrees to enter into any form of intercreditor and subordination agreement that may be requested by a bank or other lending institution to reflect the subordination of Lender’s lien and security interest in the Collateral described in Section 4.a.(2) above, to the prior lien and security interest of such bank or other lending institution.

5.The PAI hereby represents and warrants that, except as contemplated by Section 4.a.(2) above:

a.the Collateral is not charged or pledged to others or attached in any way;

b.the Collateral is owned by it and in its sole possession;

c.there is no legal, contractual or other restraint or condition governing the transfer, charge or pledge of the Collateral;

d.PAI may pledge or charge the Collateral in any way whatsoever;

e.no assignment of right or other transaction has been made that derogates from the value of the Collateral;

f.it received the necessary consents and/or waivers (if any) from the shareholders or investors pursuant to the articles of association of PAI or the various investment agreements.

1.

1.

6.The PAI hereby undertakes to Lender as follows:

a.except for the sales of inventory in the ordinary course of business, to keep the Collateral in its possession; and

b.except as contemplated by Section 4.a.(2) above, not, without obtaining Lender’s prior written consent, to sell, lease out, move elsewhere or howsoever deliver up the Collateral or any of it, save for sales, transfers and leases of business inventory made in the ordinary course of PAI’s business;

c.except as contemplated by Section 4.a.(2) above, not to sell, lease out, move elsewhere, deliver up or grant to others any right to use the Collateral without obtaining Lender’s prior written consent;

d.except as contemplated by Section 4.a.(2) above, forthwith to notify Lender of the imposition of an attachment over the Collateral and forthwith to notify the attacher of the charge in favor of Lender and at PAI’s expense forthwith and without delay to take all steps in order to remove the attachment. If PAI does not take such steps as aforesaid, Lender may (but need not) take all steps to remove the attachment, and PAI shall be liable immediately to pay Lender all the expenses involved therein (including the professional fees of Lender’s advocates);

e.except as contemplated by Section 4.a.(2) above, not howsoever to charge the Collateral or any of it with rights that are pari passu with or prior or inferior to Lender’s rights and not to assign any right that PAI has in the Collateral without obtaining Lender’s prior written consent;

f.to keep books of account and permit Lender or its representative at any time to examine the books. The PAI undertakes to assist Lender or its representatives and to give them on demand balance sheets, documents and any information required by them, including explanations in connection with the financial and operational state of PAI and/or its business;

g.that there shall be no material change to the business of PAI without Lender’s prior written consent; and

h.to the best of its knowledge, PAI is not currently in breach and there are no proceedings against it in connection with any breach of any intellectual property rights of any third party.

7.Term

a.The Collateral that has been given to Lender pursuant to this Security Agreement is of perpetual character notwithstanding settlement of all or any of PAI’s accounts and it shall remain in force until Lender confirms in writing that this Security Agreement is void.

b.Should Lender have been or in future be given collateral or guarantees for payment of the Secured Sums, all the collateral and guarantees shall be independent of each other.

c.Should Lender compromise with or grant forbearance or a concession to PAI, should Lender alter PAI’s obligations in connection with the Secured Sums or release or waive other collateral or guarantees, the same shall not alter the nature of the Collateral created pursuant to this Security Agreement and all the Collateral and obligations of PAI pursuant to this Security Agreement shall remain in full force and effect.

8.Lender may at any time charge any of PAI’s accounts with it with any amount now or in future due to it from PAI and apply any amount that it receives from or for PAI to the credit of such account as it deems fit and transfer any amount standing to PAI’s credit in any account with it to any other account with it as Lender deems fit.

9.Without prejudice to right of Lender to call for the immediate payment of all or any of the Secured Sums pursuant to any loan agreement or account opening agreement between Lender and PAI, and without prejudice to the generality of the provisions of this Security Agreement, Lender may in any of the under-mentioned cases call for the immediate payment of all or any of the Secured Sums, without prior notice to PAI:

a.if PAI does not discharge to Lender on the due date or dates any of the Secured Sums due to it;

b.if a voluntary winding-up resolution is passed by PAI or if a winding-up order is issued against it by the court or if the court calls a creditors meeting for the purpose of finding an arrangement with them or if PAI’s name has been removed or is about to be removed from any register operated by law;

c.if a (provisional or permanent) receiver, receiver and manager or liquidator is appointed over PAI’s assets or any of them, and such appointment is not revoked within fourteen (14) days;

d.if an attachment is imposed over all or any of PAI’s assets or over any of the Collateral given by PAI to Lender or if any act of execution is taken against it, and such attachment is not cancelled within fourteen (14) days;

e.if PAI stops paying its debts or carrying on its business;

f.if the work or a substantial part of it is stopped for two (2) or more months;

g.if all or any material amount of PAI’s assets are burned, lost or otherwise damaged;

h.if it appears to Lender, at its absolute discretion, that there has been a change in the authority over PAI, in comparison with the situation existing on the date hereof, by a voluntary share transfer or otherwise (save for transfers in good faith to a transferee who was also a shareholder of PAI on the date hereof, and save for the transmission of shares by inheritance) or by a resolution of the members who constitute PAI, without Lender’s prior written approval;

i.if there is a deterioration in the value of the Collateral that has been given to secure payment of the Secured Sums;

j.if PAI is required to accelerate the discharge of debts that it owes to other creditors;

k.if PAI breaches in any material respect or does not perform any of its material obligations that are contained in this Security Agreement and/or any agreement and/or instrument and/or contract made in the past and/or future between PAI and Lender;

l.if it transpires that any warranty of PAI in this Security Agreement and/or any contract made in the past and/or future between PAI and Lender is incorrect and/or inaccurate in any material respect

m.if PAI alters its certificate of incorporation, its by-law or some of them and does not give notice thereof to Lender within forty eight (48) hours;

n.if PAI passes a resolution to merge with another company, whether as absorbing or target company; and

o.if any license, consent, approval or registration of any of the intellectual property rights of PAI is denied, becomes void, suspended or is materially prejudiced, and has a material effect on PAI.

10.Exercise

a.In each of the events set out in the preceding Section 9 shall have occurred and be continuing, Lender may take all the steps it deems fit in order to collect all the Secured Sums, realize the Collateral in any way that the Uniform Commercial Code of the State of Nevada, United States of America permits and exercise all its rights pursuant to this Security Agreement, including realizing the Collateral, in whole or parts and applying the proceeds thereof in discharge of the Secured Sums, without Lender having to enforce or realize any other guarantees or collateral that it might have.

b.In each case where Lender has the right to call for immediate payment of all Secured Amounts, Lender may, as PAI’s attorney, for which purpose PAI irrevocably appoints Lender as its attorney, sell the Collateral and any part of it by auction or otherwise, itself or through others and on conditions at Lender’s absolute discretion, and Lender may itself or by the court or execution office realize the Collateral granted to it pursuant to this Security Agreement or otherwise by the appointment of a receiver or receiver and manager on behalf of Lender (and PAI agrees in advance to any person or legal entity that Lender appoints or proposes as receiver and manager as aforesaid) and amongst his other powers, he may:

(1)take possession of all or any of the Collateral;

(2)sell or let and/or agree to the sale or letting of the Collateral, in whole or parts, or otherwise transfer it on such conditions as he deems fit; and

(3)make any other arrangement in respect of all or any of the Collateral.

11.All income obtained by the receiver and manager from the Collateral and all proceeds obtained by Lender and/or the receiver and manager from the sale of the Collateral or part of it shall be applied:

a.firstly, in discharge of all expenses incurred in connection with collecting the Secured Sums, including the expenses and remuneration of the receiver or receiver and manager at such rate as fixed by Lender;

b.secondly, in discharge of the further amounts that are due to Lender in consequence of the linkage conditions, the interest, damages, commission and expenses now and in future due to Lender pursuant to this Security Agreement;

c.thirdly, in discharge of the principal of the Secured Sums, or in any other order of application as prescribed by Lender.

12.In the event that at the time the Collateral is realized the Secured Sums have not yet fallen due or the Secured Sums are only due to Lender contingently, Lender may collect from the proceeds of realization an amount sufficient to cover the Secured Sums and the amount that it collects shall be charged to Lender as collateral for them and be retained by Lender until their discharge.

13.Without derogating from the other provisions of this Security Agreement, no waiver, forbearance, concession, silence or abstinence (“Waiver”) on the part of Lender in respect of the non-performance or partial or incorrect performance of any of PAI’s obligations pursuant to this Security Agreement shall be construed as a Waiver by Lender of any right and it shall only be treated as acquiescence limited to the specific instance in which it was given. Any Waiver that Lender grants to any party to a bill that Lender holds pursuant to this Security Agreement shall have no effect whatsoever on PAI’s obligations.

14.If and insofar as PAI is made liable or treated as a guarantor (hereinafter referred to as the “Guarantor PAI”), PAI hereby agrees that Lender may:

a.take proceedings in accordance with the law in order to realize the Collateral and/or collect the said amounts, without Lender first being liable to apply to the guaranteed debtors to discharge the said amounts that are due from them to Lender;

b.stop, modify, increase, reduce or renew any credit or other banking service that has been and/or is in future given to the debtors;

c.grant an extension of time and/or similar concession in connection with the discharge of the said amounts;

d.replace, renew, release, amend, refrain from performing or realizing collateral or other guarantees that Lender now or in future holds, whether received by it from the guaranteed debtors or others; and

e.compromise with the guaranteed debtors or others.

The Guarantor PAI hereby agrees that the doing of any of the said acts by Lender shall not vest it with any right to alter or revoke its obligations to Lender.

15.The PAI confirms that Lender’s books and accounts are acceptable to it, shall be deemed correct and shall serve as conclusive evidence against it of all their particulars, including as regards the computation of the Secured Sums, the details of the bills and guarantees and the other collateral and every other matter relating to this Security Agreement. The expression “Lender’s books” means every statement or copy statement and every loan contract or deed signed by PAI, and the expression “accounts” means every record or copy record, whether entered or copied in handwriting or typewriter or entered or copied by means of printing, duplication or photocopying or by means of any electrical or electronic technical instrument, including microfilm.

16.Lender may at any time, at its discretion, without needing PAI’s consent, transfer to another this Security Agreement and the rights pursuant hereto, including the Collateral, in whole or parts, and any transferee may also transfer the said rights without requiring further consent from PAI. The transfer may be made by endorsement of the Security Agreement or in such other manner as Lender deems fit.

17.Lender may deposit the Collateral that has been or is in future given pursuant to this Security Agreement or any of it with a bailee at its discretion at PAI’s expense and from time to time replace the bailee, and Lender may also register all or any of the said Collateral with any legally competent authority.

18.No Prejudice

a.The grant of this Security Agreement is without prejudice to Lender’s right to collect the Secured Sums otherwise than by realization of this Security Agreement.

b.The realization of this Security Agreement shall be without prejudice to Lender’s right to collect from PAI the remainder of the Secured Sums that have not been discharged by realization of the Security Agreement.

19.All expenses in connection with this Security Agreement, its stamping and registration, the realization of the Collateral (including the professional fees of Lender’s advocates) and also insurance, bailment, maintenance and repair of the Collateral shall be paid by PAI to Lender on its first demand, plus interest at the maximum rate prevailing at Lender for the time being on unauthorized withdrawals and defaults on approved overdraft accounts from the date of demand until full discharge. Until their full discharge all the said expenses shall be secured by this Security Agreement.

20.In this Security Agreement:

a.“Lender” means Zvi Bar-Nes Nissensohn and entity controlled by Lender existing on the date hereof and/or established anytime in the future and also Lender’s successors and assigns;

b.the recitals to this Security Agreement constitute an integral part of it; and

c.should this Security Agreement be signed by two (2) or more persons, the signatories shall be jointly and severally liable for the performance of all the obligations pursuant to this Security Agreement.

21.Any notice posted by Lender to PAI by registered or ordinary mail at the address specified above, of which PAI shall give Lender written notice, shall be deemed duly received by PAI within forty eight (48) hours of the time the letter containing the notice was posted.

22.The competent court in Reno, Nevada is hereby vested with jurisdiction for the purpose of this Security Agreement but Lender may also take legal proceedings in any other competent court.

23.This Security Agreement shall be binding and deemed effective when executed by PAI and Lender.

24.This Security Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Security Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Security Agreement.

25.This Security Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without giving effect to the rules respective conflict of law, and the parties hereto irrevocably submit to the exclusive jurisdiction of the courts of Reno, Nevada in respect of any dispute or matter arising out of or connected with this Security Agreement.

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

PHOENIX AEROSPACE, INC.

By:          _____________________________

Name:                    Zahir Teja

Title:          Chief Executive Officer

By:          _____________________________

Name:

Title:

ZVI BAR-NES NISSENSOHN

  By: _______________________________