Exhibit 10.5 (Security Agreement)


                                                                                                                                    Exhibit
      10.5

    
 

    SECURITY
      AGREEMENT

    


    The
      parties to this security agreement are:

    SECURED
      PARTY; PC Products Inc.

    


    DEBTOR;
      Market Development Specialists, Inc.

    


    1.
      Definitions

    As
      used
      in this security agreement,

    a.
      “Collateral” means the receivables and their proceeds/the receivables, the
      inventory, and their proceeds.

    b.
      “Debtor” means the owner of the collateral.

    c.
      “Indebtedness” means debtor’s obligations, obligations representing the purchase
      price of property other than accounts payable arising in connection with the
      purchase of inventory on terms customary in the trade, and obligations under
      leases that would be capitalized in accordance with generally accepted
      accounting principles.

    d.
“Lien”
      means any security interest, mortgage, pledge, lien, attachment, claim, charge,
      encumbrance, agreement retaining title, or lessor’s interest covering the
      collateral.

    e.
      “Obligations” means existing and future indebtedness and liability of debtor to
      secured party, including attorneys’ fees incurred by secured party in enforcing
      this security agreement or collecting payment under it, except obligations
      subject to the disclosure requirements of the Consumer Credit Protection
      Act.

    f.
      “Potential default” means an event or omission that would be a default under
      this security agreement or any other document evidencing or creating security
      for the obligation, except for the passage of time or the giving of
      notice.

    g.
      “Accounts” means a right to payment for goods sold or leased, or services
      rendered, by debtor.

    h.
      “Inventory” means all raw materials, work in process, finished goods, and goods
      held for sale or lease or furnished under contracts of service in which debtor
      has or later acquires a right (held by debtor or by others), including but
      not
      limited to the following: materials and software to manufacture
      computers.

    i.
      “Receivables” means accounts, instruments, documents, chattel paper, and general
      intangibles (including but not limited to the accounts subject to this security
      agreement) in which debtor has or later acquires rights, including repossessions
      and returns, except obligations subject to the disclosure requirements of the
      Consumer Credit Protection Act.

    2.
      Debtor
      grants secured party a security interest in the collateral to secure payment
      of
      the obligations.

    All
      inventory now owned or later acquired by debtor, wherever located, and including
      without limitation the following: materials and software to manufacture
      computers.

     

    3.
      Debtor
      promises:

    a.
      To pay
      the obligations to secured party when they are due.

    b.
      To pay
      all expenses, including attorneys’ fees, incurred by secured party in the
      perfection, preservation, realization, enforcement, and exercise of its rights
      under this agreement.

    c.
      To
      indemnify secured party against loss of any kind, including reasonable
      attorneys’ fees, caused to secured party by reason of its interest in the
      collateral.

    d.
      To
      conduct debtor’s business efficiently and without voluntary
      interruption.

    e.
      To
      preserve all rights, privileges, and franchises held by debtor’s
      business.

    f.
      To
      keep debtor’s business property in good repair.

    g.
      To pay
      all taxes when due.

    h.
      To
      give secured party notice of any litigation that may have a material adverse
      effect on the business.

    i.
      Not to
      change the name or place of business, or to use a fictitious business name,
      without first notifying secured party in writing.

    j.
      Not to
      sell, lease, transfer, or otherwise dispose of the collateral except, before
      the
      occurrence of a default, for sales of inventory in the ordinary course of
      business.

    k.
      Not to
      permit liens on the collateral, except existing liens, current tax liens, and
      purchase-money liens.

    I.
      To
      maintain fire and extended coverage insurance on the collateral in the amounts
      and under policies acceptable to secured party, naming secured party under
      a
      lender’s loss payable clause, and to provide secured party with the original
      policies and certificates at secured party’s request.

    m.
      Not to
      use the collateral for any unlawful purpose or in any way that would void any
      effective insurance.

    n.
      To
      permit secured party, its representatives, and its agents to inspect the
      collateral at any time, and to make copies of records pertaining to it, at
      reasonable times at secured party’s request.

    o.
      To
      perform all acts necessary to maintain, preserve, and protect the
      collateral.

    p.
      Not to
      move the collateral from the following locations without first obtaining secured
      party’s agreement in writing: A separate secure location for all of PC Products,
      Inc. inventory.

    q.
      To
      notify secured party promptly in writing of any default, potential default,
      or
      any development that might have a material adverse effect on the
      collateral.

    r.
      To
      execute and deliver to secured party all financing statements and other
      documents that secured party requests, in order to maintain a first perfected
      security interest in the collateral.

    s.
      To
      furnish secured party the reports relating to the collateral at secured party’s
      request.

    t.
      Not to
      make or agree to make any reduction in the original amount owing on a
      receivable, or to accept less than the original amount in satisfaction of a
      receivable, except before default or potential default, when debtor may do
      so in
      the ordinary course of business and in accordance with its present
      policies.

    u.
      To
      deliver to secured party (1) duplicate invoices for each account, bearing the
      language of assignment as secured party specifies; (2) the originals of all
      instruments and documents constituting collateral, endorsed and assigned as
      secured party requests; and (3) proceeds (except cash proceeds collected in
      the
      ordinary course of business, unless debtor is in default).

     

    
      
        
        

      

      
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    4.
      Debtor
      will be in default under this agreement if:

            
      a. Debtor fails to pay any installment when due, or its entire indebtedness
      to
      secured party when due, at stated maturity, on accelerated maturity, or
      otherwise.

            
      b. Debtor fails to make any remittances required by this agreement.

            
      c. Debtor commits any breach of this agreement, or any present or future rider
      or supplement to this agreement, or any other agreement between debtor and
      secured party evidencing the obligation or securing it.

            
      d. Any warranty, representation, or statement, made by or on behalf of debtor
      in
      or with respect to the agreement, is false.

            
      e. The collateral is lost, stolen, or damaged.

            
      f. There is a seizure or attachment of, or a levy on, the
      collateral.

            
      g. Debtor ceases operations, is dissolved, terminates its existence, does or
      fails to do anything that allows obligations to become due before their stated
      maturity, or becomes insolvent or unable to meet its debts as they
      mature.

            
      h. Secured party for any reason deems itself insecure.

    5.
      When
      an event of default occurs:

            
      a. Secured creditor may:

    
      	(1) 
               	
              Declare
                the obligations immediately due and payable— without demand, presentment,
                protest, or notice to debtor, all of which debtor expressly
                waives.

            


    

    (2)  
      Terminate any obligation to make future advances.

    (3) 
       Exercise all rights and remedies available to a secured creditor after
      default, including but not limited to the rights and remedies of secured
      creditors under the California Uniform Commercial Code.

    (4) 
       Perform any of debtor’s obligations under this agreement for debtor’s
      account. Any money expended or obligations incurred in doing so, including
      reasonable attorneys’ fees and interest at the highest rate permitted by law,
      will be charged to debtor and added to the obligation secured by this
      agreement.

            
      b. Secured creditor’s notice of the time and place of public sale of the
      collateral, or the time on or after which a private sale or other disposition
      of
      the collateral will be made, is reasonable if sent to debtor in the manner
      for
      giving notice at least five days before the public or private sale.

            
      c. Debtor must:

                    (1)   Assemble
      the collateral and
      make it and all records relating to it available to secured party as secured
      party directs.

    
      	(2)   	
              Allow
                secured party, its representatives, and its agents to enter the premises
                where all or any part of the collateral, the records, or both may
                be, and
                remove any or all of it.

            


    

    


    6.
      Debtor
      will pay all costs and expenses of collection, including reasonable attorneys’
      fees.

     

    7.
      No
      waiver by secured party of any breach or default will be a waiver of any breach
      or default occurring later. A waiver will be valid only if it is in writing
      and
      signed by secured party.

     

    8.
      Debtor’s representations and warranties made in this security agreement will
      survive its execution, delivery, and termination.

     

    9.
      This
      security agreement will bind and benefit the successors and assignees of the
      parties, but debtor may not assign its rights under the agreement without
      secured party’s prior written consent.

     

    10.
      This
      contract will be governed by the law of California.

     

    11.
      This
      security agreement is the entire agreement, and supersedes any prior agreement
      or understandings, between secured party and debtor relating to the
      collateral.

     

    12.
      Notices under this security agreement are considered to be served three days
      after they are deposited in the United States mail, with prepaid first-class
      postage, addressed as follows:

            

                DEBTOR                   
        SECURED
      PARTY

    ____________________________          ______________________________

    _____________________________         ______________________________

     

    Either
      party may change its address for service of notice, by notice to the
      other.

    


    Dated:__________

    


    Signed:______________________

    Market
      Development Specialists, Inc.

     

    


    Dated:___________

    


    Signed:______________________

    PC
      Products, Inc.

    


    


    
      
        
        

      

      
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