Document:

United States Securities and Exchange Commission EDGAR Filing

EXHIBIT 10.8

THIS DOCUMENT EXECUTED IN CHICAGO, ILLINOIS.

SUBSTITUTED AND MODIFIED PROMISSORY NOTE

				
	Borrower:   

	P.C. UNIVERSE, INC., a Florida corporation

504 N.W. 77th Street

Boca Raton, Florida 33487

	Lender:

	GARY S. SYLVAN, NOMINEE

1247 WAUKEGAN ROAD, SUITE 100

GLENVIEW, IL 60025

Principal Amount:  $500,000.00

Interest Rate:  15.00%

Date of Note:  September 19, 2005

WHEREAS, this Substituted and Modified Promissory Note (“Note”) hereby substitutes and modifies the terms of the that certain Promissory Note dated August 2, 2004 in the original principal amount of Five Hundred Thousand Dollars ($500,000.00) executed by P.C. Universe, Inc., a Florida corporation (“Borrower”), in favor of Gary S. Sylvan, Nominee (“Lender”) (“Original Note”); and

WHEREAS, Borrower acknowledges and agrees that the outstanding principal balance of the Original Note is  Five Hundred Thousand Dollars ($500,000.00) plus accrued interest pursuant to the terms of the Original Note; and 

WHEREAS, Lender has agreed to substitute and modify the Original Note with this Note;

NOW, THEREFORE, FOR VALUE RECEIVED, Borrower hereby promises to pay to Lender, in lawful money of the United States of America, the principal amount of Five Hundred Thousand Dollars ($500,000.00), together with interest at rate of 15.00% per annum on the unpaid principal balance from August 2, 2004, until paid.

PAYMENT.  Commencing on October 31, 2004 and continuing on January 31, April 30 and July 31 of each year during the term of this Note, Borrower agrees that it will make quarterly payment of interest only on the outstanding principal balance hereunder as follows: (i) Borrower shall pay Lender an amount equal to ten (10.00%) percent per annum of the initial principal balance of this Note in the amount of Five Hundred Thousand Dollars ($500,000.00) on each of the aforementioned dates during the term of this Note computed for the actual number of days elapsed; (ii)  Lender shall multiply the outstanding principal balance by fifteen (15.00%) percent per annum computed for the actual number of days elapsed and subtract the interest payment due Lender for the applicable quarter and add such difference to the current principal balance; (iii) on August 1, 2007 (hereinafter referred to as the “Maturity Date”) the entire outstanding principal balance and accrued and unpaid interest shall be paid to Lender; and (iv) on or before ninety (90) days after the Maturity Date, Borrower shall pay Lender an amount calculated by the Valuation Formula (as hereinafter defined).  “Valuation Formula” shall mean the difference between 5 times EBITDA (earnings before interest, taxes, depreciation, amortization), plus cash (determined per Borrower’s Balance Sheet and Income Statement on December 31, 2003 for the 2003 calculation and as of July 31, 2007 for the August 1, 2007 calculation), less total interest-bearing debt (determined per Borrower’s Balance Sheet and Income Statement on December 31, 2003 for the 2003 calculation and as of July 31, 2007 for the August 1, 2007 calculation) as of December 31, 2003 and August 1, 2007 multiplied by three (3.00%) percent. For purposes of example only, the quarterly interest payments and new principal balances shall be computed as follows:

August 2, 2004 through October 31, 2004:

$500,000.00 x 15% =  $75,000.00 / 365 = $205.48 x 91 days = $18,698.68

$500,000.00 x 10% = $50,000.00 / 365 = $136.99 x 91 days = $12,465.75

$18,698.68 - $12,465.75 = $6,232.93

PROMISSORY NOTE

                                                                               (Continued)                                                                 Page 2 of 4

Borrower pays Lender on October 31, 2004 - $12,465.75

Lender adds the difference b/w 15% and 10% ($6,232.93) to the $500,000.00 principal balance for a new principal balance of $506,232.93.

November 1, 2004 through January 31, 2005 

$506,232.93 x 15% = $ 75,934.94 / 365 = $208.04 x 92 days = $19,139.76

$500,000.00 x 10% = $50,000.00 / 365 = $136.99 x 92 days = $12,603.08

$19,139.76 - $12,603.08 = $6,536.68

Borrower pays Lender on January 31, 2005 - $12,603.08

Lender adds the difference between 15% and 10% ($6,536.68) to the current principal balance of $506,232.93 for a new principal balance of $512,769.61.

All payments to be made by Borrower to Lender shall be mailed to the address set forth at the beginning of this Note.

PREPAYMENT.  Borrower shall not be entitled to prepay the amounts due hereunder unless Borrower receives prior written approval from Lender.  In the event Borrower desires to prepay the amounts due hereunder, with Lender’s approval, Borrower shall be required to pay Lender a premium in an amount equal to the principal balance, plus accrued interest plus the August 1, 2007 payment computed using the Valuation Formula, that would be due by Borrower had the Note remained in effect through the Maturity Date.  For purposes of this paragraph only, Lender shall estimate the Valuation Formula based on the most recent year end Balance Sheet and Income Statement and shall hold such funds in an escrow pending the actual valuation to be determined on August 1, 2007.  On or before 90 days after the actual Maturity Date, Lender shall compute the Valuation Formula and Borrower shall pay Lender such amount.  If the amount in the escrow is sufficient to pay the actual amount due Lender, Lender shall deposit such amount and return the balance to Borrower.  If the amount held in the escrow is insufficient to pay the actual amount due Lender, Lender shall deposit the amount held in the escrow and Borrower shall pay Lender the balance immediately upon demand.   

LATE CHARGE.  If a payment is 10 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment.

DEFAULT.  Each of the following shall constitute an event of default (“Event of Default”) under this Note:

Payment Default.  Borrower fails to make any payment when due under this Note.

Other Defaults.  Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

Default in Favor of Third Parties.  Borrower defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s property or Borrower’s ability to repay this Note or perform Borrower’s obligations under this Note or any of the related documents.

False Statements.  Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

Insolvency.  The dissolution of Borrower, the insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor  workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

PROMISSORY NOTE

                                                                               (Continued)                                                                 Page 3 of 4

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan.  However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

Adverse Change.  A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment of performance of this Note is impaired.

Insecurity.  Lender in good faith believes itself insecure.

LENDER’S RIGHTS.  Upon default, Lender may declare the entire unpaid principal balance on this Note and all accrued unpaid interest immediately due, and then Borrower will pay that Amount.

ATTORNEY’S FEES; EXPENSES.  Lender may hire or pay someone else to help collect this Note if Borrower does not pay.  Borrower will pay Lender that amount.  This includes, subject to any limits under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit, including attorneys’ fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction, and appeals.  If not prohibited by applicable law. Borrower also will pay any court costs, in addition to all other sums provided by law.

JURY WAIVER.  Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.

GOVERNING LAW.  This Note will be governed by, construed and enforced in accordance with federal law and the laws of the State of Illinois.  This Note has been accepted by Lender in the State of Illinois.  

CHOICE OF VENUE.  If there is a lawsuit Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of Cook County, State of Illinois.

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender.  This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future.  Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.  

COLLATERAL.  Borrower acknowledges this Note is secured by a Commercial Security Agreement of an even date herewith executed by Borrower to and for the benefit of Lender.

SUCCESSOR INTERESTS.  The terms of this Note shall be binding upon Borrower, and upon Borrower’s successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS.   Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them.  Each Borrower understands and agrees that, with or without notice to Borrower, Lender may with respect to any other Borrower (a) make one or more additional secured or unsecured loans or otherwise extend additional credit;  (b) alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms any indebtedness, including increases and decreases of the rate of interest on the indebtedness; (c) exchange, enforce, waive, subordinate, fall or decide not to perfect, and release any security, with or without the substitution of new collateral; (d) apply such security and direct the order or manner of sale thereof, including without limitation, any non-judicial sale permitted by the terms of the controlling security agreements, as Lender in its discretion may determine;  (e) 

PROMISSORY NOTE

                                                                               (Continued)                                                                 Page 4 of 4

release, substitute, agree not to sue, or deal with any one or more of Borrower’s sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; and (f) determine how, when and what application payments and credits shall be made on any other indebtedness owing by such other Borrower.  Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor.  Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability.  All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan  or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender’s security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone.  All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made.  The obligations under this Note are joint and several.  

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE.  BORROWER AGREES TO THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

THIS NOTE IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS NOTE IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.

BORROWER:

P.C. UNIVERSE, INC., a Florida corporation

		
	By:

	/s/ Thomas M. Livia

	  

	 

	  

	 

	Its:

	Co-Chief Executive OfficerUnited States Securities and Exchange Commission EDGAR Filing

EXHIBIT 10.9

THIS DOCUMENT IS EXECUTED IN CHICAGO, ILLINOIS.

COMMERCIAL SECURITY AGREEMENT

				
	Borrower:   

	P.C. UNIVERSE, INC., 

A FLORIDA CORPORATION

504 N.W. 77TH STREET

BOCA RATON, FLORIDA 33487

	Lender:

	GARY S. SYLVAN, NOMINEE

1247 WAUKEGAN ROAD

SUITE 100

GLENVIEW, ILLINOIS 60025

THIS COMMERCIAL SECURITY AGREEMENT is entered into between P.C. UNIVERSE, INC., a Florida corporation (referred to below as “Grantor”) to and for the benefit of GARY S. SYLVAN, NOMINEE (referred to below as “Lender”).  For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.

DEFINITIONS.  The following words shall have the following meanings when used in this Agreement.  Terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code.  All references to dollar amounts shall mean amounts in lawful money of the United States of America.

Agreement.  The word “Agreement” means this Commercial Security Agreement, as this Commercial Security Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial Security Agreement from time to time.

Collateral.  The word “Collateral” means the following described property of Grantor, whether now owned or hereafter acquired, whether now existing or hereafter arising, and wherever located:

All inventory, chattel paper, accounts, general intangibles and equipment and without limiting the foregoing all assets referred to on Exhibit “A” attached hereto and made a part hereof.

In addition, the word “Collateral” includes all the following, whether now owed or hereafter acquired, whether now existing or hereafter arising, and wherever located:

(a)  All attachments, accessions, accessories, tools, parts, supplies, increases, and additions to and all replacements of and substitutions for any property described above.

(b)  All products and produce of any of the property described in this Collateral section.

(c)  All accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, or other disposition of any of the property described in this Collateral section.

(d)  All proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described in this collateral section.

(e)  All records and data relating to any of the property described in this Collateral section, whether in the form of a writing, photograph, microfilm, microfiche, or 

COMMERCIAL SECURITY AGREEMENT

                                                                               (Continued)                                                                 Page 2 of 10

electronic media, together with all of Grantor’s right, title, and interest in and to all computer software required to utilize, create, maintain, and process any such records or data on electronic media.

Event of Default.  The words of “Event of Default” mean and include without limitation any of the Events of Default set forth below in the section titled “Events of Default.”

Grantor.  The word “Grantor” means P. C. Universe, Inc., a Florida corporation, and its successors and assigns.

Indebtedness.  The word “Indebtedness” means the indebtedness evidenced by the Note, including all principal and interest, together with all other indebtedness and costs and expenses for which Grantor is responsible under this Agreement or under any of the Related Documents.

Lender.  The word “Lender” means Gary S. Sylvan, Nominee, his successors and assigns.

Note.  The word “Note” means the Promissory Note dated August 2, 2004, in the principal amount of $500,000.00 from Grantor to Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of and substitutions for the note or credit agreement.

Related Documents.  The words “Related Documents” mean and include without limitation all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the indebtedness.

RIGHT OF SETOFF.  Grantor hereby grants Lender a contractual possessory security interest in and hereby assigns, conveys, delivers, pledges, and transfers all of Grantor’s right, title and interest in and to Grantor’s accounts with Lender (whether checking, savings, or some other account), including all accounts held jointly with someone else and all accounts Grantor may open in the future.  Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all indebtedness against any and all such accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.

OBLIGATIONS OF GRANTOR.  Grantor warrants and covenants to Lender as follows:

Perfection of Security Interest.  Grantor agrees to execute such financing statements and to take whatever other actions are requested by Lender to perfect and continue Lender’s security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Grantor will note Lender’s interest upon any and all chattel paper if not delivered to Lender for possession by Lender.  Grantor hereby appoints Lender as its irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect or to continue the security interest granted in this Agreement.  Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement.  Grantor will reimburse Lender for all expenses for the perfection and the continuation of the perfection of Lender’s security interest in the Collateral.  Grantor promptly will notify Lender before any change in Grantor’s name including any change to the assumed business names of Grantor.

No Violation.  The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its membership agreement does not prohibit any term or condition of this Agreement.

Enforceability of Collateral.  To the extent the Collateral consists of accounts, chattel paper, or general intangibles, the Collateral is enforceable in accordance with its terms, is genuine, and 

COMMERCIAL SECURITY AGREEMENT

                                                                               (Continued)                                                                 Page 3 of 10

complies with applicable laws concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the Collateral have authority and capacity to contract and are in fact obligated as they appear to be on the Collateral.  At the time any account becomes subject to a security interest in favor of Lender, the account shall be a good and valid account representing an undisputed, bona fide indebtedness incurred by the account debtor, for merchandise held subject to delivery instructions or theretofore shipped or delivered pursuant to a contract of sale, or for services theretofore performed by Grantor with or for the account debtor; there shall be no setoffs or counterclaims against any such account; and no agreement under which any deductions or discounts may be claimed shall have been made with the account debtor except those disclosed to Lender in writing.

Location of Collateral.  Grantor, upon request of Lender, will deliver to Lender in form satisfactory to Lender a schedule of real properties and Collateral locations relating to Grantor’s operations, including without limitation the following:  (a) all real property owned or being purchased by Grantor; (b) all real property being rented or leased by Grantor; (c) all storage facilities owned, rented, leased, or being used by Grantor; and (d) all other properties where Collateral is or may be located.  Except in the ordinary course of its business, Grantor shall not remove the Collateral from its existing locations without the prior written consent of Lender.

Removal of Collateral.  Grantor shall keep the Collateral (or to the extent the Collateral consists of intangible property such as accounts, the records concerning the Collateral) at Grantor’s address shown above, or at such other locations as are acceptable to lender.  Except in the ordinary course of its business, including the sales of inventory, Grantor shall not remove the Collateral from its existing locations without the prior written consent of Lender.  To the extent that the Collateral consists of vehicles, or other titled property, Grantor shall not take or permit any action which would require application for certificates of title for the vehicles outside the State of Illinois, without the prior written consent of Lender.

Transactions Involving Collateral.  Except for inventory sold or accounts collected in the ordinary course of Grantor’s business, Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral.  While Grantor is not in default under this Agreement, Grantor may sell inventory, but only in the ordinary course of its business and only to buyers who qualify as a buyer in the ordinary course of business.  A sale in the ordinary course of Grantor’s business does not include a transfer in partial or total satisfaction of a debt or any bulk sale.  Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security interest, encumbrance, or charge, other than the security interest provided for in this Agreement, without the prior written consent of Lender.  This includes security interests even if junior in right to the security interests granted under this Agreement.  Unless waived by Lender, all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition.  Upon receipt, Grantor shall immediately deliver any such proceeds to Lender.

Title.  Grantor represents and warrants to Lender that it holds good and marketable title to the Collateral, free and clear of all liens and encumbrances except for the lien of this Agreement.  No financing statement covering any of the Collateral is on file in any public office other than those which reflect the security interest created by this Agreement or to which Lender has specifically consented.  Grantor shall defend Lender’s rights in the Collateral against the claims and demands of all other persons.

Collateral Schedules and Locations.  As often as Lender shall require, and insofar as the Collateral consists of accounts and general intangibles, Grantor shall deliver to Lender schedules of such Collateral, including such information as Lender may require, including without 

COMMERCIAL SECURITY AGREEMENT

                                                                               (Continued)                                                                 Page 4 of 10

limitation names and addresses of account debtors and agings of accounts and general intangibles.  Insofar as the collateral consists of inventory and equipment, Grantor shall deliver to Lender, as often as Lender shall require, such lists, descriptions, and designations of such Collateral as Lender may require to identify the nature, extent, and location of such Collateral.  Such information shall be submitted for Grantor and each of its subsidiaries or related companies.

Maintenance and Inspection of Collateral.  Grantor shall maintain all tangible Collateral in good condition and repair.  Grantor will not commit or permit damage to or destruction of the Collateral or any part of the Collateral.  Lender and its designated representatives and agents shall have the right at all reasonable times to examine, inspect, and audit the Collateral wherever located.  Grantor shall immediately notify Lender of all cases involving the return, rejection, repossession, loss or damage of or to any Collateral; of any request for credit or adjustment or of any other dispute arising with respect to the Collateral; and generally of all happenings and events affecting the Collateral or the value of the amount of the Collateral.

Taxes, Assessments and Liens.  Grantor will pay when due all taxes, assessments and liens upon the collateral, its use or operation, upon this Agreement, upon any promissory note or notes evidencing the indebtedness, or any of the other Related Documents.  Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender’s interest in the Collateral is not jeopardized in Lender’s sole opinion.  If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, costs, attorneys’ fees or other charges that could accrue as a result of foreclosure or sale of the collateral.  In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before enforcement against the Collateral.  Grantor shall name Lender as an additional Obligee under any surety bond furnished in the contest proceedings.

Compliance With Governmental Requirements.  Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral.  Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lender’s interest in the Collateral, in Lender’s opinion, is not jeopardized.

Hazardous Substances.  Grantor represents and warrants that the Collateral never has been, and never will be so long as this Agreement remains a lien on the Collateral, used for the generation, manufacture, storage, transportation, treatment, disposal, release or threatened release of any hazardous waste or substance, as those terms are defined in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or Federal laws, rules, or regulations adopted pursuant to any of the foregoing.  The terms “hazardous waste” and “hazardous substance” shall also include, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.  The representations and warranties contained herein are based on Grantor’s due diligence in investigating the Collateral for hazardous wastes and substances.  Grantor hereby (a) releases and waives any future claims against Lender for indemnity or contribution in the event Grantor becomes liable for cleanup or other costs under any such laws, and (b) agrees to indemnify and hold harmless Lender against any and all claims and losses resulting from a breach of this provision of this Agreement.  This 

COMMERCIAL SECURITY AGREEMENT

                                                                               (Continued)                                                                 Page 5 of 10

obligation to indemnify shall survive the payment of the indebtedness and the satisfaction of this agreement.

Maintenance of Casualty Insurance.  Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and liability coverage together with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender.  Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days’ prior written notice to Lender and not including any disclaimer of the insurer’s liability for failure to give such a notice.  Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Grantor or any other person.  In connection with all policies covering assets in which Lender holds or is offered a security interest, Grantor will provide Lender with such loss payable or other endorsements as Lender may require.  If Grantor at any time fails to obtain or maintain any insurance as required under this Agreement, Lender may (but shall not be obligated to) obtain such insurance as Lender deems appropriate, including if it so chooses “single interest insurance,” which will cover only Lender’s interest in the Collateral.

Application of Insurance Proceeds.  Grantor shall promptly notify Lender of any loss or damage to the Collateral.  Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty.  All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral.  If Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration.  If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the indebtedness, and shall pay the balance to Grantor.  Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the indebtedness.

Insurance Reserves.  Lender may require Grantor to maintain with Lender reserves for payment of insurance premiums, which reserves shall be created by monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce, at least fifteen (15) days before the premium due date, amounts at least equal to the insurance premiums to be paid.  If fifteen (15) days before payment is due, the reserve funds are insufficient, Grantor shall upon demand pay any deficiency to Lender.  The reserve funds shall be held by Lender as a general deposit and shall constitute a non-interest-bearing account which Lender may satisfy by payment of the insurance premiums required to be paid by Grantor as they become due.  Lender does not hold the reserve funds in trust for Grantor, and Lender is not the agent of Grantor for payment of the insurance premiums required to be paid by Grantor.  The responsibility for the payment of premiums shall remain Grantor’s sole responsibility.

Insurance Reports.  Grantor, upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing such information as Lender may reasonably request including the following:  (a) the name of the insurer; (b) the risks insured; (c) the amount of the policy; (d) the property insured; (e) the then current value on the basis of which insurance has been obtained and the manner of determining that value; and (f) the expiration date of the policy. In addition, Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost of the Collateral.

COMMERCIAL SECURITY AGREEMENT

                                                                               (Continued)                                                                 Page 6 of 10

GRANTOR’S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS.  Until default and except as otherwise provided below with respect to accounts, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Related Documents, provided that Grantor’s right to possession and beneficial use shall not apply to any Collateral where possession of the Collateral by Lender is required by law to perfect Lender’s security interest in such Collateral.  Until otherwise notified by Lender, Grantor may collect any of the Collateral consisting of accounts.  At any time and even though no Event of Default exists, Lender may exercise its rights to collect the accounts and to notify account debtors to make payments directly to Lender for application to the indebtedness.  If Lender at any time has possession of any Collateral, whether before or after an Event of Default, Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lender’s sole discretion, shall deem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care.  Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security interest given to secure the indebtedness.

EXPENDITURES BY LENDER.  If not discharged or paid when due, Lender may (but shall not be obligated to) discharge or pay any amounts required to be discharged or paid by Grantor under this Agreement, including without limitation all taxes, liens, security interests, encumbrances, and other claims, at any time levied or placed on the Collateral.  Lender also may (but shall not be obligated to) pay all costs for insuring, maintaining and other claims, at any time levied or placed on the Collateral.  All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Grantor.  All such expenses shall become a part of the indebtedness and at Lender’s option, will (a) be payable on demand, (b) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (i) the term of any applicable insurance policy or (ii) the remaining term of the Note, or (c) be treated as a balloon payment which will be due and payable at the Note’s maturity.  This Agreement also will secure payment of these amounts.  Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon the occurrence of an Event of Default.

REINSTATEMENT OF SECURITY INTEREST.  If payment is made by Grantor, whether voluntarily or otherwise or by any third party on the indebtedness and thereafter Lender is forced to remit the amount of that payment (a) to Grantor’s trustee in bankruptcy or to any similar person under any federal or state bankruptcy law or law for the  relief of debtors, (b) by reason of any judgment, decree or order of any court or administrative body having jurisdiction over Lender or any of Lender’s property, or (c) by reason of any settlement or compromise of any claim made by Lender with any claimant (including without limitation Grantor), the indebtedness shall be considered unpaid for the purpose enforcement of this Agreement and this Agreement shall continue to be effective or shall be reinstated, as the case may be, notwithstanding any cancellation of this Agreement or of any note or other instrument or agreement evidencing the Indebtedness and the Collateral will continue to secure the amount repaid or recovered to the same extent as if that amount never had been originally received by Lender, and Grantor shall be bound by any judgment, decree, order settlement or  compromise relating to the Indebtedness or to this Agreement.

EVENTS OF DEFAULT.  Each of the following shall constitute an Event of Default under this Agreement:

Default on Indebtedness.  Failure of Grantor to make any payment when due on the Indebtedness.

COMMERCIAL SECURITY AGREEMENT

                                                                               (Continued)                                                                 Page 7 of 10

Other Defaults.  Failure of Grantor to comply with or to perform any other term, obligation, covenant or condition contained in the Agreement or in any of the Related Documents or in any other agreement between Lender and Grantor.

Default in Favor or Third Parties.  Should borrower or any Grantor default under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of  any other creditor or person that may materially affect any of Borrower’s property or Borrower’s or any Grantor’s ability to repay the Loans or perform their respective obligations under this Agreement or any of the Related Documents.

False Statements.  Any warranty, representation or statement made or furnished to Lender by or on behalf of Grantor under this Agreement, the Note or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished.

Defective Collateralization.  This agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral documents to create a valid and perfected security interest or lien) at any time and for any reason.

Death or Insolvency.  The dissolution (regardless of whether election to continue is made), any member withdraws from the limited liability  company, or any other termination  of Grantor’s existence as a going business or the death of any member, the insolvency of Grantor, the appointment of a receiver for any part of Grantor’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Grantor.

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,  repossession or any other method, by any creditor of Grantor or by any governmental agency against the Collateral or any other collateral securing the indebtedness.  This includes a garnishment of any of Grantor’s accounts, including deposit accounts, with Lender.

Adverse Change.  A material adverse change occurs in Grantor’s financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is Impaired.

Insecurity.  Lender, in good faith, deems itself insecure.

RIGHTS AND REMEDIES ON DEFAULT.  If an Event of Default occurs  under  this Agreement, at any time thereafter, Lender shall have all  the rights of a secured party under the Illinois Uniform Commercial Code.  In addition, and without limitation, Lender may exercise any one or more of the following rights and remedies:

Accelerate Indebtedness.  Lender may declare the entire indebtedness, including any prepayment penalty which Grantor would be required to pay, immediately due and  payable, without notice.

Assemble Collateral.  Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral.  Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender.  Lender also shall have full power to enter  upon the property of Grantor to take possession of and remove the Collateral.  If the Collateral contains other goods not covered by  this agreement at the time of repossession,  Grantor agrees Lender may take such 

COMMERCIAL SECURITY AGREEMENT

                                                                               (Continued)                                                                 Page 8 of 10

other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession.

Sell the Collateral.  Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in its own name or that of Grantor.  Lender may sell the Collateral at public auction or private sale.  Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will give Grantor reasonable notice of the time after which any private sale of any other intended disposition of the Collateral is to be made.  The requirements of reasonable notice shall be met if such notice is given at least ten (10) days before the time of the sale or disposition.  All expenses relating to the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the indebtedness secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid.

Appoint a Receiver.  To the extent permitted by applicable law, Lender shall have the following rights and remedies regarding the appointment of a receiver:  (a) Lender may have a receiver appointed as a matter of right, (b) the receiver may be an employee of Lender and may serve without bond, and (c) all fees of the receiver and his or her attorney shall become part of the Indebtedness secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid.

Collect Revenues, Apply Accounts.   Lender, either itself or through a receiver, may collect the payments, rents, income, and revenues from the Collateral.  Lender may at any time in its discretion transfer any Collateral into its own name or that of its nominee and receive the payments, rents, income, and revenues there from and  hold the same as security for the indebtedness or apply it to payment of the indebtedness in such order of preference as Lender may determine.  Insofar as the  Collateral consists of  accounts, general intangibles, insurance policies, instruments, chattel paper, choses in action, or similar property, Lender may demand, collect,  receipt for,  settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as Lender may determine, whether or not Indebtedness or Collateral is then  due.  For these purposes, Lender may, on behalf of and in the name of Grantor, receive, open and dispose of mail addressed to Grantor; change any address to which  mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents of title, instruments and items pertaining to payment, shipment  or storage of any Collateral.  To facilitate collection, Lender may notify account debtors and obligors on any Collateral to make payments directly  to Lender.

Obtain Deficiency.  If Lender chooses to sell any or all of the Collateral, Lender may obtain a judgment against Grantor for any deficiency remaining on the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement.  Grantor shall be liable for a deficiency even if the transaction described in this subsection is a sale of accounts or chattel paper.

Other Rights and Remedies.  Lender shall  have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time. In addition, Lender shall have and may exercise any or all other rights and remedies it may have available at law, in equity, or otherwise.

Cumulative Remedies.  All of Lender’s rights and remedies, whether evidenced by this Agreement or the Related Documents or by any other writing, shall  be cumulative and may be exercised singularly or concurrently.  Election by Lender to pursue any remedy shall not exclude 

COMMERCIAL SECURITY AGREEMENT

                                                                               (Continued)                                                                 Page 9 of 10

pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this Agreement, after Grantor’s failure to perform, shall not affect Lender’s right  to declare a default and to exercise its remedies.

MISCELLANEOUS PROVISIONS.  The following miscellaneous provisions are a part of this Agreement:

Amendments.  This Agreement, together with any Related Documents, constitutes the entire Understanding and agreement of the parties as to the matters set forth in this Agreement.  No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.

Applicable Law.  This Agreement has been delivered to Lender and accepted by Lender in the State of Illinois.  If there is a lawsuit, Grantor agrees upon Lender’s request to submit to the jurisdiction of the courts of Cook County, the State of Illinois.  This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois. 

Attorneys’ Fees; Expenses.  Grantor agrees to pay upon demand all  of Lender’s costs and expenses, including attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement of this Agreement.  Lender may pay someone else to help enforce this Agreement, and Grantor shall pay the costs and expenses of such enforcement.  Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or  not  there is a lawsuit, including attorneys’  fees and legal expenses for bankruptcy proceedings  (and including efforts to modify or vacate stay or injunction), appeals, and any anticipated post-judgment collection services.  Grantor also shall  pay all court costs and such additional fees as may be directed by the court.

  

Caption Headings.  Caption headings in this Agreement are for convenience only and are not to be used to interpret or define the provisions of this Agreement.

Multiple Headings.  Caption headings in this Agreement are for convenience purposes only and are not be used to interpret or define the provisions of this Agreement.

Multiple Parties.   All obligations of Grantor under this Agreement shall be joint and several, and all references to Grantor  shall mean each and every Grantor.  This means that each of the persons signing below is responsible for all obligations in this Agreement.

Notices.    All notices required to be given under this Agreement shall be given in writing, may be sent by   telefacsimile (unless otherwise required by law), and shall be effective when actually delivered or  when deposited  with a nationally recognized overnight courier or deposited in the United States mail,  first class, postage prepaid, addressed to the party to whom the notice is to be given at the address shown above.  Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party’s address.  To the extent permitted by applicable law, if there is more than one Grantor, notice to any Grantor will constitute notice to all Grantors.  For notice purposes, Grantor will keep Lender informed at all times of Grantor’s current address(es).

Power of Attorney.  Grantor hereby appoints Lender as its true and lawful attorney-in-fact irrevocably, with full power of substitution to do the following: (a) to demand, collect, receive, receipt for, sue and recover all sums of money or other property which may now or hereafter become due, owing or payable from the Collateral; (b) to execute, sign and endorse any and all claims, instruments, receipts, checks, drafts or warrants issued in payment for the Collateral; (c) 

COMMERCIAL SECURITY AGREEMENT

                                                                               (Continued)                                                                 Page 10 of 10

to settle or compromise any and all claims arising under the Collateral, and, in the place and stead of Grantor, to execute and deliver its release and settlement for the claim; and (d) to file any claim or claims or to take any action or institute or take part in any proceedings, either in its own name or in the name of Grantor, or otherwise, which in the discretion of Lender may seem to be necessary or advisable.  This power is given as security for the indebtedness, and the authority hereby conferred is and shall be irrevocable and shall remain in full force and effect until renounced by Lender. 

Severabillity.  If a court of competent jurisdiction finds any  provision of this Agreement to be invalid  or unenforceable as to any person or circumstance, such finding shall not render that provision invalid or unenforceable as to any other persons or circumstances.  If feasible, any such offending provision shall be deemed to be modified to be within the limits of enforceability or validity; however, if the offending provision cannot be so modified, it shall be stricken and all other provisions of this Agreement in all other respects shall remain valid and enforceable.  

Successor Interests.  Subject to the limitations set forth above on transfer of  the Collateral, this Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns.

Waiver.  Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender.  No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right.  A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision or any other provision of this Agreement.  No prior waiver by Lender,  nor any course of dealing between Lender and Grantor, shall constitute a waiver of any Lender’s rights or of any Grantor’s obligations as to any future transactions.  Whenever the consent of Lender is required under this Agreement, the granting  of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases  such consent may be granted or withheld in the sole discretion of Lender.

GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT, AND GRANTOR AGREES TO ITS TERMS.  THIS AGREEMENT IS DATED AUGUST 2, 2004.

GRANTOR:

		
	P.C. UNIVERSE, INC., A FLORIDA CORPORATION

	  

	  

	By:

	/s/ Thomas M. Livia

	  

	 

	Its:

	Co-Chief Executive Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}]]