Document:

United States Securities and Exchange Commission Edgar Filing

EXHIBIT 10.1

FORBEARANCE AGREEMENT AND NOTICE OF CONTINUING DEFAULT

(NOTICE - CONTAINS A WAIVER OF TRIAL BY JURY)

This Forbearance Agreement and Notice of Continuing Default by and between PC Universe, Inc. ("Customer") and IBM Credit LLC ("IBM Credit") is dated August 29, 2008 (the "Forbearance Agreement").

WITNESSETH:

WHEREAS, Customer and IBM Credit have entered into that certain Agreement for Wholesale Financing dated as of November 1, 2007 (as amended, supplemented or otherwise modified from time to time, the "Financing Agreement"); and all loans made by IBM Credit to the Customer, and all other liabilities and obligations at any time owing by the Customer to IBM Credit are secured by security interests granted by the Customer to IBM Credit pursuant to the terms of the Financing Agreement in all of the Customer's then existing and thereafter acquired inventory, equipment, accounts receivables, chattel paper, contract rights, documents, instruments, general intangibles and other items of personal property described in the Financing Agreement; 

WHEREAS, certain Events of Default (as defined in the Financing Agreement) have occurred and are continuing; 

WHEREAS, the Customer requests that IBM Credit forbear from exercising certain remedies available to IBM Credit under the Financing Agreement as a consequence of the Customer's defaults in order to afford the Customer an opportunity to reorganize its affairs and to pay the indebtedness owing to IBM Credit under the terms of the Financing Agreement and this Forbearance Agreement; 

WHEREAS, IBM Credit previously delivered to PC Universe a Notice of Event of Default, dated March 20, 2008 and a Line Reduction Letter, dated April 2, 2008 and other default notices (collectively the “Default Notices”);

WHEREAS, IBM Credit has agreed to forbear from exercising those certain remedies available under the Financing Agreement pursuant to the terms and conditions of this Forbearance Agreement.

NOW, THEREFORE, in consideration of the foregoing and the promises hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Customer, and IBM Credit agree as follows:

Section 1.

Capitalized Terms.  All capitalized terms not herein defined shall have the meaning set forth in the Financing Agreement.

Section 2.

Customer Acknowledgement.  

(A)

Customer acknowledges that the Default Notices accurately set forth that the Customer is in Default of certain of its Obligations to IBM Credit under the Financing Agreement.  

(B)

Customer acknowledges in particular that the Financing Agreements contain the following covenant requirements and, as indicated in Customer’s Form 10-Q filed with the Securities Exchange Commission for the quarter ended June 30, 2008, the Customer acknowledges that it is in default of such covenants due to Customer’s level of achievement being only as follows:

			
	PC Universe draft Forbearance 

	Page  1  of  10

	08.28.08

					
	Covenant

	 
	Requirement

	 
	Achievement

	 
	 
	 
	 
	 

	Tangible New Worth (TNW)

	     

	$1 million (at least)

	     

	$145 thousand

	 
	 
	 
	 
	 

	Total Liabilities to TNW

	 
	5 to 1 (no more than)

	 
	21.8 to 1

	 
	 
	 
	 
	 

	Profit (AT) to Revenue

	 
	minus 1%  (no less than)

	 
	minus 5.8%

	 
	 
	 
	 
	 

	Current Assets to Current Liabilities

	 
	1.1 to 1   (at least)

	 
	.9 to 1  

(C)

Customer further acknowledges that the preceding Defaults described in (A) and 

(B) above have occurred under the Financing Agreement and are continuing.

Section 3. 

Collection Costs and Expenses.  Customer reaffirms the terms of the Financing Agreement and agrees to reimburse IBM Credit for all collection costs and expenses including out of pocket costs of representatives of IBM Credit in connection with visits to Customer on August 26, 2008 through August 29, 2008, expenses of IBM Credit’s outside attorneys in connection with review of the Financing Agreement and advice to IBM Credit in connection with Customer’s defaults and any all other costs which IBM Credit may incur in connection with or arising out of the Defaults or any other current or future Event of Default and any bankruptcy filing by Customer or against Customer or other insolvency proceeding involving Customer.  IBM Credit agrees that the expenses of its representatives for visits to the Customer and of its counsel for review and advice for periods prior to August 30, 2008 shall not exceed $4000.

 

Section 4.

Forbearance Conditions.  IBM Credit is willing to forbear, subject to the terms of this Forbearance Agreement, from exercising its remedies as a result of the Defaults for the period from the date hereof until October 15, 2008 ("Termination Date"), provided that each and all of the following conditions (the "Forbearance Conditions") are satisfied at all times to the satisfaction of IBM Credit in its sole discretion: 

(A)

Effective immediately, the Credit Line is reduced to Nine Hundred Fifty Thousand Dollars ($950,000.00), and the Credit Line will terminate on October 15, 2008.

(B)

The Customer shall duly and punctually observe, perform and discharge each and every obligation and covenant to be performed under this Forbearance Agreement, the   Financing Agreement, and any other agreement between IBM Credit and the Customer;

(C)

Customer shall, at all times, maintain a minimum credit line availability of at least $65,000 computed on the same basis as are currently reported on Collateral Management Reports (CMR)  being submitted by Customer to IBM Credit;

(D)

Customer will submit CMR reports with all backups weekly with the first CMR being computed based on data as of the close of business on August 28, 2008 and will provide a complete copy of each of the CMR reports no later than noon the following business day.

(E) 

Customer will immediately deposit all payments received from Patriot in the lockbox under the control of IBM Credit.

(F)

On or before September 5, 2008, Customer shall execute and deliver to IBM Credit the form of Voluntary Surrender Acknowledgement in the form attached hereto.  On or before the close of business on Friday, September 5, 2008, all inventory of Customer shall be removed from its premises and delivered to Suddath United Van Line for storage except such items of inventory which are to be returned for credit on a basis approved by IBM Credit.  Items in storage with Suddath United Van Lines may be released for shipment to the customers of Customer upon such terms and conditions as may be 

			
	PC Universe draft Forbearance 

	Page  2  of  10

	08.28.08

approved by IBM Credit in its own discretion.  In lieu of the removal of the inventory, Customer may establish an irrevocable letter of credit with a financial institution acceptable to IBM Credit in an amount not less than the amount of inventory included in the CMR computation.

(G)

Customer shall provide such detail as IBM Credit may request concerning the reasons for amounts to be included in working capital advances, including names, dates of work and other information for employees and others to be included in advances to cover payroll, details of monthly rent payments, and other detail for items to be funded from such advances.

(H)

Customer will be available during regular business hours to provide such financial and business information to IBM Credit and discuss developments affecting the financial accommodations provided by IBM Credit as IBM Credit may request.  In particular, Customer shall provide current information and documentation related to all financing, buyout, equity infusions and other similar matters as may come into the possession of Customer.

(I)

The financial accommodations provided to Customer by IBM Credit under the Financing Agreement as modified by this Forbearance Agreement will cease and terminate on October 15, 2008 unless earlier terminated under the Financing Agreements as modified by this Forbearance Agreement.  At the time of the termination, Customer shall pay all obligations then due IBM Credit.  

(J)

No representation or warranty made by the Customer in this Forbearance Agreement or the Financing Agreement, shall prove to have been in error, or untrue; 

(K)

No additional Defaults or Event of Defaults shall occur, other than the existing events of Default referred to in this Forbearance Agreement; 

(L)

There shall occur no further deterioration of Customer's financial 

position, insolvency or any other event that could reasonably be expected to have a material adverse effect, (i) on the business, operations, results of operations, assets or financial condition of the Customer, (ii) on the aggregate value of the collateral granted to IBM Credit in connection with the Financing Agreement or any Other Documents ("Collateral") or the aggregate amount which IBM Credit would be likely to receive (after giving consideration to reasonably likely delays in payment and reasonable costs of enforcement) in the liquidation of such Collateral to recover the Obligations in full, or (iii) on the rights and remedies of IBM Credit under this Forbearance Agreement, the Financing Agreement; 

(M)

Customer shall not assign any of its rights, title and interest in and to the Collateral, to any other party; and

(N)

By no later than September 8, 2008, Customer shall provide detail as to application of the One-Hundred and Forty Seven Thousand Dollar ($147,000.00) payment transaction.

The failure to comply with the foregoing covenants within the time frames set forth above shall constitute an immediate Event of Default under the Financing Agreement and a default hereunder.

Section 5.

No Liens, Etc.  The Customer shall not, and will not permit any of its Subsidiaries to, create, incur, assume, grant or suffer to exist any lien, claim, mortgage, security interest, attachment or other encumbrance of any kind, (whether consensual or arising by operation of law) upon any of its property, assets or revenues, whether now owned or hereafter acquired, except upon the prior written consent of IBM Credit.

Section 6.

Termination.  

(A)

IBM Credit may, at it sole discretion, declare all of Customer's Outstanding Advances under the Financing Agreement to be immediately due and payable and immediately terminate the Financing Agreement and this Forbearance Agreement. Customer's Outstanding Advances under the 

			
	PC Universe draft Forbearance 

	Page  3  of  10

	08.28.08

Financing Agreement will be due and payable on the Termination Date (unless due sooner according to its terms or pursuant to the provisions hereof).

(B)

In the event that any one or more of the Forbearance Conditions is not fulfilled to IBM Credit's satisfaction in its sole discretion, IBM Credit's agreement to forbear as set forth herein shall, at IBM Credit's election but without further notice to or demand upon the Customer, terminate, and IBM Credit shall thereupon have and may exercise from time to time all of the remedies available to it under the Financing Agreement, this Forbearance Agreement and applicable law as a consequence of the existing events of Default.  In addition and provided that the Forbearance Conditions continue to be fulfilled to the satisfaction of IBM Credit, the Financing Agreement shall terminate on the Termination Date unless terminated earlier in accordance herewith and in accordance with the Financing Agreement.  Upon the termination of the Financing Agreement, all of the Customer's Obligations shall be immediately due and payable in their entirety, even if they are not yet due under their terms, on the effective date of termination.  IBM Credit's rights under the Financing Agreement and IBM Credit's security interest in the Collateral shall continue after termination of the Financing Agreement until all Customer's Obligations to IBM Credit are indefeasibly paid in full.  

Section 7.0

Miscellaneous

7.1

The execution, delivery and performance by the Customer of this Forbearance Agreement and the consummation of the transactions contemplated hereby are within the corporate power of the Customer, and have been duly authorized by all necessary corporate actions on the part of the Customer and do not result in a breach of or constitute a default under any agreement or instrument to which the Customer is a party or by which it or any of its properties are bound.

7.2

This Forbearance Agreement constitutes a legal, valid and binding obligation of Customer and each Guarantor, enforceable against the Customer and each Guarantor in accordance with its terms.

7.3

Each party is entering into this Forbearance Agreement freely and voluntarily with the advice of legal counsel of its own choosing.

7.4

Each party has freely and voluntarily agreed to the releases, waivers and undertakings set forth in this Forbearance Agreement.

7.5

Customer has not engaged in any fraudulent transfer of its assets.

7.6

Except as disclosed by Customer in writing, there is no litigation, proceeding, investigation or labor dispute pending or threatened against Customer.

7.7

Except as specifically provided in this Forbearance Agreement, there exist no promises or agreements by IBM Credit to:

(i)

provide additional funding or credit to Customer,

(ii)

extend the terms for repayment of any obligation or provide additional funding or credit to the Customer under the Financing Agreement (Customer acknowledging that, upon the occurrence of an Event of Default, IBM Credit shall be entitled to enforce in full the terms of repayment for any obligation as set forth in the Forbearance Agreement), or

(iii)

make any future advances or other financial accommodations to Customer.

7.8

 Except as specifically amended hereby, all of the provisions of the Financing Agreement shall remain unamended and in full force and effect. Customer represents that its obligations under the Financing Agreement shall remain in full force and effect and are enforceable obligations not subject to any claims, offsets or defects.

			
	PC Universe draft Forbearance 

	Page  4  of  10

	08.28.08

Section 8.

Waiver of Limitations Period.  The Customer hereby severally waives the benefit of any statute of limitations that might otherwise bar the recovery of any of the obligations from any one or more of them.

Section 9.

Relationship of Parties; No Third Party Beneficiaries. Nothing in this Forbearance Agreement shall be construed to alter the existing debtor-creditor relationship between the Customer and IBM Credit.  Nor is this Forbearance Agreement intended to change or affect in any way the relationship between IBM Credit and each Guarantor to one other than a debtor-creditor relationship.  This Forbearance Agreement is not intended, nor shall it be construed to create, a partnership or joint venture relationship between or among any of the parties hereto.  No party, other than a party hereto is intended to be a beneficiary hereof, and no party other than a party hereto shall be authorized to rely upon the contents of this Forbearance Agreement.

Section 10.

Waivers and Consents.  Neither this Forbearance Agreement nor any provisions hereof may be waived, discharged or terminated, nor may any consent to the departure from the terms hereof be given, orally (even if supported by new consideration), but only by an instrument in writing signed by the party against whom enforcement of the change, waiver discharge or termination is sought.  Any waiver or consent so given shall be effective only in the specific instance and for the specific purpose for which given.

Section 11.

Entire Forbearance Agreement; Modification of Forbearance Agreement.  This Forbearance Agreement and the Financing Agreement constitute the entire understanding of the parties with respect to the subject made hereof and thereof.  This Forbearance Agreement may not be modified, altered or amended except by agreement in writing signed by all the parties hereto.

Section 12.

Governing Law.  This Forbearance Agreement and all transactions contemplated hereunder and/or evidenced hereby shall be governed by, construed under, and enforced in accordance with the laws which govern the Financing Agreement.

Section 13.

Nonwaiver of Default.  IBM Credit expects Customer to strictly adhere to the provisions of the Financing Agreement and to perform its Obligations thereunder accordingly. Any failure by Customer to comply with the provisions of the Financing Agreement or the terms herein may result in the immediate termination of the Financing Agreement. Neither this Forbearance Agreement nor IBM Credit's forbearance hereunder shall be deemed a waiver of or consent to the existing events of Default referenced in this Forbearance Agreement or any other default that may have occurred in addition to the Existing Events of Default or a course of dealing with respect to any default.  The Customer agrees that such existing events of Default, as referenced in this Forbearance Agreement, shall not be deemed to have been waived, released or cured by virtue of such loans or IBM Credit's agreement to forbear pursuant to the terms of this Forbearance Agreement or the execution of this Forbearance Agreement. IBM Credit retains all of its rights and remedies contained in this Forbearance Agreement, and the Financing Agreement, including the right to make immediate demand as a result of Customer's default as provided thereunder.

Section 14.

No Novation, etc.  This Forbearance Agreement is not intended to be, nor shall it be construed to create, a novation or accord and satisfaction, and except as otherwise expressly stated herein, the Financing Agreement remains in full force and effect.  Notwithstanding any prior mutual temporary disregard of any of the terms of the Financing Agreement, the parties agree that the terms of the Financing Agreement shall be strictly adhered to on and after the date hereof except as expressly modified by this Forbearance Agreement.

Section 15.

Counterparts; Waivers of Notice of Acceptance.  This Forbearance Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall constitute an original, but all of which taken together shall be one and 

			
	PC Universe draft Forbearance 

	Page  5  of  10

	08.28.08

the same instrument.  In proving this Forbearance Agreement or the Financing Agreement, it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought.  Notice of IBM Credit's acceptance hereof is hereby waived.

Section 16.

JURY TRIAL WAIVER.  EACH OF IBM CREDIT, THE CUSTOMER AND THE GUARANTORS HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING (INCLUDING ANY COUNTERCLAIM) OF ANY TYPE IN WHICH IBM CREDIT, THE CUSTOMER AND THE GUARANTORS ARE PARTIES AS TO ALL MATTERS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS FORBEARANCE AGREEMENT, THE FINANCING AGREEMENT, THE GUARANTY OR ANY DOCUMENT, INSTRUMENT OR AGREEMENT EXECUTED IN CONNECTION HEREWITH.

Section 17.

RELEASE OF CLAIMS.  TO INDUCE IBM CREDIT TO ENTER INTO THIS FORBEARANCE AGREEMENT, THE CUSTOMER AND EACH OF THE GUARANTORS HEREBY RELEASES, ACQUITS AND FOREVER DISCHARGES IBM CREDIT AND IBM CREDIT'S OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS FROM ALL LIABILITIES, CLAIMS, DEMANDS, ACTIONS OR CAUSES OF ACTIONS OF ANY KIND (IF THERE BE ANY), OR ANY BASIS FOR INSTITUTING SUIT FOR LEGAL OR EQUITABLE RELIEF, WHETHER ABSOLUTE OR CONTINGENT, DUE OR TO BECOME DUE, DISPUTED OR UNDISPUTED, ANTICIPATED, LIQUIDATED OR UNLIQUIDATED, AT LAW OR IN EQUITY, THAT ANY ONE OR MORE OF THEM NOW HAVE OR EVER HAVE HAD AGAINST IBM CREDIT , AND IBM CREDIT'S OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, WHETHER ARISING UNDER OR IN CONNECTION WITH THE FINANCING AGREEMENT, THE ORIGINAL FORBEARANCE AGREEMENT, THIS FORBEARANCE AGREEMENT, THE GUARANTIES OR OTHERWISE. THIS RELEASE SHALL SURVIVE THE TERMINATION OF THIS FORBEARANCE AGREEMENT AND THE FINANCING AGREEMENT.

Section 18.

SUBMISSION AND CONSENT TO JURISDICTION.  TO INDUCE IBM CREDIT TO DELIVER THIS FORBEARANCE AGREEMENT, EACH OF THE CUSTOMER AND GUARANTORS HEREBY IRREVOCABLY AND UNCONDITIONALLY:

(A)

SUBMITS ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS FORBEARANCE AGREEMENT, THE FINANCING AGREEMENT, THE GUARANTIES AND ANY OTHER DOCUMENT, OR FOR THE RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE NEW YORK AND ANY FEDERAL DISTRICT COURT IN NEW YORK. 

(B)

CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREINAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME.

(C)

AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO CUSTOMER AND GUARANTOR AT ITS ADDRESS SET FORTH ON THE SIGNATURE PAGE HEREOF OR AT SUCH OTHER ADDRESS OF WHICH IBM CREDIT SHALL HAVE BEEN NOTIFIED IN WRITING.

(D)

AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION.

			
	PC Universe draft Forbearance 

	Page  6  of  10

	08.28.08

Section 19.

Relief from Stay.  Customer hereby agrees that in consideration of IBM Credits' forbearance of the exercise of its rights and remedies in accordance with the terms hereof, in the event Customer shall:

(A)

file with any bankruptcy court of competent jurisdiction or be the subject of any petition under Title 11 of the U.S. Code, as amended;

(B)

be the subject of any order for relief issued under such Title 11 of the U.S. Code, as amended;

(C)

file or be the subject of any petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future federal or state law relating to bankruptcy, insolvency, or other relief for debtors;

(D)

have sought or consented to or acquiesced in the appointment of any trustee, receiver, conservator, or liquidator; or

E)

be the subject of any order, judgment, or decree entered by any court of competent jurisdiction approving a petition filed against such party for any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future federal or state act of law relating to bankruptcy, insolvency, or relief for debtors,

IBM Credit shall thereupon be entitled to relief from the stay imposed by Section 362 of Title 11 of the U.S. Code, as amended, or otherwise, on or against the exercise of the rights and remedies otherwise available to IBM Credit as provided in the Financing Agreement and this Forbearance Agreement and as otherwise provided by law. 

Section 20.

Other Restrictions.  Customer agrees not to make distributions, loans, advances, contributions or payments of money or goods to any Affiliate, Subsidiary or parent company or any officer, director or stockholder of Customer or its Affiliates, Subsidiaries, or parent company. Customer shall continue to pay when due all amount under the Financing Agreement and to direct all payments by Customer's Account debtors to the Lockbox.  IBM Credit retains all of its rights and remedies contained in this Forbearance Agreement, the Financing Agreement , the right to make immediate demand as a result of Customer's Existing Defaults or any other Event of Default as provided thereunder. IBM Credit may exercise any and all rights and remedies of a secured party under the Uniform Commercial Code and any other rights and remedies it may have under applicable law.

 

THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK

			
	PC Universe draft Forbearance 

	Page  7  of  10

	08.28.08

IN WITNESS WHEREOF, the parties hereto have read this entire Forbearance Agreement and have caused this Forbearance Agreement to be duly executed and delivered on the date first written above.

		
	PC Universe, Inc.

	ATTEST:

		
	By: /s/ Gary Stern

	/s/ Thomas M. Livia

	 
	(Secretary)

	Print Name: Gary Stern

	 

	 
	 

	Title: CEO

	(Corporate Seal)

	 
	 

	Address: 504 NW 77th Street

               Boca Raton, FL 33487

	 

	
	IBM CREDIT LLC

	 

	By:     /s/ Peter F. Brown

	 

	Print Name: Peter F. Brown

	 

	Title: Credit Manager

			
	PC Universe draft Forbearance 

	Page  8  of  10

	08.28.08

Exhibit A

VOLUNTARY SURRENDER

City_____________________

State____________________

Date_____________, 200__

The undersigned customer hereby acknowledges that it is voluntarily surrendering to IBM Credit LLC (“IBM Credit") the goods listed on Schedule A attached hereto and that such Schedule is a complete and detailed list of all goods surrendered. Undersigned further acknowledges that IBM Credit has made no promise or representation of any kind, oral or written, for the surrender of the goods and that such surrender is made without relieving the undersigned of any obligations pursuant to any written agreements between it and IBM Credit. The undersigned hereby waives any right that it may have to notice of the sale of the repossessed goods.

				
	WITNESS:

	______________________

	     

	(Name of Customer)

	 
	 
	 
	 

	Name   

	 
	 
	By:________________________

	 
	 
	 
	 

	 
	 
	 
	Print Name:____________________

	 
	 
	 
	 

	 
	 
	 
	Title:________________________

			
	PC Universe draft Forbearance 

	Page  9  of  10

	08.28.08

VOLUNTARY SURRENDER

City_____________________

State____________________

Date_____________, 200__

The undersigned customer hereby acknowledges that it is voluntarily surrendering to IBM Credit LLC (“IBM Credit") the goods listed on Schedule A attached hereto and that such Schedule is a complete and detailed list of all goods surrendered. Undersigned further acknowledges that IBM Credit has made no promise or representation of any kind, oral or written, for the surrender of the goods and that such surrender is made without relieving the undersigned of any obligations pursuant to any written agreements between it and IBM Credit. The undersigned hereby waives any right that it may have to notice of the sale of the repossessed goods.

				
	WITNESS:

	______________________

	     

	(Name of Customer)

	 
	 
	 
	 

	Name   

	 
	 
	By:________________________

	 
	 
	 
	 

	 
	 
	 
	Print Name:____________________

	 
	 
	 
	 

	 
	 
	 
	Title:________________________

			
	PC Universe draft Forbearance 

	Page  10  of  10

	08.28.08Filed by Bowne Pure Compliance

Exhibit 10.68

MIMEDX GROUP, INC.

AMENDED AND RESTATED ASSUMED 2005 STOCK PLAN

(formerly the SpineMedica Corp. 2005 Employee, Director and Consultant Stock Plan)

Incentive Stock Option Award Agreement

(Employees)

THIS AGREEMENT (together with Schedule A, attached hereto, the “Agreement”), effective as of
the date specified as the “Grant Date” on Schedule A attached hereto, between MiMedx Group, Inc., a
Florida corporation (the “Corporation”), and the individual identified on Schedule A attached
hereto, an Employee of the Corporation or an Affiliate (the “Participant”);

R E C I T A L S:

In furtherance of the purposes of the MiMedx Group, Inc. Amended and Restated Assumed 2005
Stock Plan (formerly the SpineMedica Corp. 2005 Employee, Director and Consultant Stock Plan), as
it may be hereafter amended (the “Plan”), the Corporation and the Participant hereby agree as
follows:

1. Incorporation of Plan. The rights and duties of the Corporation and the
Participant under this Agreement shall in all respects be subject to and governed by the provisions
of the Plan, the terms of which are incorporated herein by reference. In the event of any conflict
between the provisions in the Agreement and those of the Plan, the provisions of the Plan shall
govern. Unless otherwise defined herein, capitalized terms in this Agreement shall have the same
definitions as set forth in the Plan.

2. Grant of Option; Term of Option. The Corporation hereby grants to the Participant
pursuant to the Plan, as a matter of separate inducement and agreement in connection with his or
her employment or service to the Corporation, and not in lieu of any salary or other compensation
for his or her services, the right and Option (the “Option”) to purchase all or any part of such
aggregate number of shares (the “Shares”) of common stock of the Corporation (the “Common Stock”)
at a purchase price (the “Option Price”) as specified on Schedule A, attached hereto, and subject
to such other terms and conditions as may be stated herein or in the Plan or on Schedule A.
The Participant expressly acknowledges that the terms of Schedule A shall be incorporated
herein by reference and shall constitute part of this Agreement. The Corporation and the
Participant further acknowledge and agree that the signatures of the Corporation and the
Participant on the Grant Notice contained in Schedule A shall constitute their acceptance of all of
the terms of this Agreement and their agreement to be bound by the terms of this Agreement.
The Option (or any portion thereof) shall be designated as an Incentive Option, as stated on
Schedule A. To the extent that the Option or any portion thereof is designated as an Incentive
Option and such Option does not qualify as an Incentive Option, the Option or portion thereof shall
be treated as a Nonqualified Option. Except as otherwise provided in the Plan or this Agreement,
this Option will expire if not exercised in full by the Expiration Date specified on Schedule A.

 

 

 

3. Exercise of Option. Subject to the terms of the Plan and this Agreement, the
Option shall become exercisable on the date or dates, and subject to such conditions, as are set
forth on Schedule A attached hereto. To the extent that an Option which is exercisable is not
exercised, such Option shall accumulate and be exercisable by the Participant in whole or in part
at any time prior to expiration of the Option, subject to the terms of the Plan and this Agreement.
The Participant expressly acknowledges that the Option may vest and be exercisable only upon
such terms and conditions as are provided in this Agreement and the Plan. Upon the exercise of
an Option in whole or in part and payment of the Option Price in accordance with the provisions of
the Plan and this Agreement, the Corporation shall, as soon thereafter as practicable, deliver to
the Participant a certificate or certificates for the Shares purchased. Payment of the Option
Price may be made (i) in cash or by cash equivalent; and, where permitted by applicable law,
payment may also be made (ii) by delivery (by either actual delivery or attestation) of shares of
Common Stock owned by the Participant (subject to such terms and conditions, if any, as may be
determined by the Administrator); (iii) by shares of Common Stock withheld upon exercise but only
if and to the extent that payment by such method does not result in variable accounting or other
accounting consequences deemed unacceptable to the Corporation; (iv) in the event that a Public
Market (as defined in the Plan) for the Common Stock exists, by delivery of written notice of
exercise to the Corporation and delivery to a broker of written notice of exercise and irrevocable
instructions to promptly deliver to the Corporation the amount of sale or loan proceeds to pay the
Option Price; (v) by such other payment methods as may be approved by the Administrator and which
are acceptable under applicable law; or (vi) by any combination of the foregoing methods. Shares
delivered or withheld in payment of the Option Price shall be valued at their Fair Market Value on
the date of exercise, determined in accordance with the terms of the Plan.

4. No Right of Employment or Service; Forfeiture of Option. Neither the Plan, this
Agreement nor any other action related to the Plan shall confer upon the Participant any right to
continue in the employment or service of the Corporation or an Affiliate or interfere with the
right of the Corporation or an Affiliate to terminate the Participant’s employment or service at
any time. Except as otherwise expressly provided in the Plan or this Agreement or as determined by
the Administrator, all rights of the Participant with respect to the Option shall terminate upon
termination of the employment of the Participant with the Corporation or an Affiliate.
Notwithstanding any thing to the contrary herein or in the Plan, if Participant’s employment with
the Corporation terminates for any reason prior to the expiration of ninety (90) days from the date
of commencement of Participant’s employment, then all Options granted, whether or not vested, shall
upon such termination be forfeited in full and shall no longer be of any force or effect.

5. Termination of Employment. Unless the Administrator determines otherwise, the
Option shall not be exercised unless the Participant is, at the time of exercise, an Employee and
has been an Employee continuously since the date the Option was granted, subject to the following:

(a) The employment relationship of the Participant shall be treated as continuing
intact for any period that the Participant is on military or sick leave or other bona fide
leave of absence, provided that the period of such leave does not exceed 90 days, or, if
longer, as long as the Participant’s right to reemployment is guaranteed either by statute or by contract. The employment relationship of the Participant shall also
be treated as continuing intact while the Participant is not in active service because of
Disability. The Administrator shall have sole authority to determine whether the
Participant is disabled and, if applicable, the Participant’s Termination Date.

 

2

 

(b) Unless the Administrator determines otherwise (subject to any requirements imposed
under Code Section 409A), if the employment of the Participant is terminated because of
Disability or death, the Option may be exercised only to the extent vested and exercisable
on the Participant’s Termination Date. The Option must be exercised, if at all, prior to
the first to occur of the following, whichever shall be applicable (X) the close of the
period of one year next succeeding the Termination Date; or (Y) the close of the Option
Period. In the event of the Participant’s death, the Option shall be exercisable by such
person or persons as shall have acquired the right to exercise the Option by will or by the
laws of intestate succession.

(c) Unless the Administrator determines otherwise (subject to any requirements imposed
under Code Section 409A), if the employment of the Participant is terminated for any reason
other than Disability, death or for Cause, the Option may be exercised to the extent vested
and exercisable on his or her Termination Date. The Option must be exercised, if at all,
prior to the first to occur of the following, whichever shall be applicable: (X) the close
of the period of three months next succeeding the Termination Date; or (Y) the close of the
Option period. If the Participant dies following such termination of employment and prior
to the date specified in (X) of this subparagraph (c), the Participant shall be treated as
having died while employed under subparagraph (b) immediately preceding (treating for this
purpose the Participant’s date of termination of employment as the Termination Date). In
the event of the Participant’s death, the Option shall be exercisable by such person or
persons as shall have acquired the right to exercise the Option by will or by the laws of
intestate succession.

(d) Unless the Administrator determines otherwise (subject to any requirements imposed
under Code Section 409A), if the employment of the Participant is terminated for Cause, the
Option shall lapse and no longer be exercisable as of his or her Termination Date, as
determined by the Administrator.

6. Notice of Disposition. To the extent that this Option is designated as an
Incentive Option, if Shares of Common Stock acquired upon exercise of the Option are disposed of
within two years following the date of grant or one year following the transfer of such Shares to
the Participant upon exercise, the Participant shall, promptly following such disposition, notify
the Corporation in writing of the date and terms of such disposition and provide such other
information regarding the disposition as the Administrator may reasonably require.

7. Limitation on Incentive Options. In no event shall there first become exercisable
by the Participant in any one calendar year Incentive Options granted by the Corporation or any
Parent or Subsidiary with respect to shares having an aggregate Fair Market Value (determined at
the time an Incentive Option is granted) greater than $100,000. To the extent that any Incentive
Options are first exercisable by the Participant in excess of such limitation, the excess shall be
considered a Nonqualified Option.

 

3

 

8. Nontransferability of Option. To the extent that this Option is designated as an
Incentive Option, the Option shall not be transferable (including by sale, assignment, pledge or
hypothecation) other than by will or the laws or intestate succession, or, in the Administrator’s
discretion, as may otherwise be permitted in accordance with Section 422 of the Code and related
regulations. To the extent that this Option is treated as a Nonqualified Option, the Option shall
not be transferable (including by sale, assignment, pledge or hypothecation) other than by will or
the laws of intestate succession, except as may be permitted by the Administrator in a manner
consistent with the registration provisions of the Securities Act of 1933, as amended (the
“Securities Act”). Except as may be permitted by the preceding, the Option shall be exercisable
during the Participant’s lifetime only by him or her or by his or her guardian or legal
representative. The designation of a beneficiary in accordance with the Plan does not constitute a
transfer.

9. Superseding Agreement; Binding Effect. This Agreement supersedes any statements,
representations or agreements of the Corporation with respect to the grant of the Option or any
related rights, and the Participant hereby waives any rights or claims related to any such
statements, representations or agreements. This Agreement does not supersede or amend any existing
confidentiality agreement, nonsolicitation agreement, noncompetition agreement, employment
agreement or any other similar agreement between the Participant and the Corporation, including,
but not limited to, any restrictive covenants contained in such agreements. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their respective
executors, administrators, heirs, successors and assigns.

10. Governing Law. Except as otherwise provided in the Plan or herein, this Agreement
shall be construed and enforced according to the laws of the State of Florida, without regard to
the conflict of laws provisions of any state, and in accordance with applicable federal laws of the
United States.

11. Amendment and Termination: Waiver. Subject to the terms of the Plan, this
Agreement may be modified or amended only by the written agreement of the parties hereto. The
waiver by the Corporation of a breach of any provision of the Agreement by the Participant shall
not operate or be construed as a waiver of any subsequent breach by the Participant.
Notwithstanding the foregoing, the Administrator shall have unilateral authority to amend the Plan
and this Agreement (without Participant consent) to the extent necessary to comply with applicable
law or changes to applicable law (including but in no way limited to Code Section 409A, Code
Section 422 and federal securities laws).

12. No Rights as Stockholder. The Participant and his or her legal representatives,
legatees and distributees shall not be deemed to be the holder of any Shares subject to the Option
and shall not have any rights of a stockholder unless and until certificates for such Shares have
been issued and delivered to him or her or them.

 

4

 

13. Withholding: Tax Matters.

(a) The Participant acknowledges that the Corporation shall require the Participant to
pay the Corporation in cash the amount of any tax or other amount required by any
governmental authority to be withheld and paid over by the Corporation to such authority for the account of the Participant, and the Participant agrees, as a
condition to the grant of the Option and delivery of the Shares or any other benefit, to
satisfy such obligations. Notwithstanding the foregoing, the Corporation may establish
procedures to permit the Participant to satisfy such obligations in whole or in part, and
any other local, state, federal, foreign or other income tax obligations relating to the
Option, by electing (the “election”) to have the Corporation withhold shares of Common Stock
from the Shares to which the Participant is entitled. The number of Shares to be withheld
shall have a Fair Market Value as of the date that the amount of tax to be withheld is
determined as nearly equal as possible to (but not exceeding) the amount of such obligations
being satisfied. Each election must be made in writing to the Administrator in accordance
with election procedures established by the Administrator.

(b) The Participant acknowledges that the Corporation has made no warranties or
representations to the Participant with respect to the tax consequences (including, but not
limited to, income tax consequences) related to the transactions contemplated by this
Agreement, and the Participant is in no manner relying on the Corporation or its
representatives for an assessment of such tax consequences. The Participant acknowledges
that there may be adverse tax consequences upon acquisition or disposition of the Shares
subject to the Option and that the Participant should consult a tax advisor prior to such
exercise or disposition. The Participant acknowledges that he or she has been advised that
he or she should consult with his own attorney, accountant, and/or tax advisor regarding the
decision to enter into this Agreement and the consequences thereof. The Participant also
acknowledges that the Corporation has no responsibility to take or refrain from taking any
actions in order to achieve a certain tax result for the Participant.

14. Administration. The authority to construe and interpret this Agreement and the
Plan, and to administer all aspects of the Plan, shall be vested in the Administrator, and the
Administrator shall have all powers with respect to this Agreement as are provided in the Plan.
Any interpretation of the Agreement by the Administrator and any decision made by it with respect
to the Agreement is final and binding.

15. Notices. Except as may be otherwise provided by the Plan or determined by the
Administrator, any written notices provided for in this Agreement or the Plan shall be in writing
and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight
courier, or by postage paid first class mail. Notices sent by mail shall be deemed received three
business days after mailed but in no event later than the date of actual receipt. Notices shall be
directed, if to the Participant, at the Participant’s address indicated on Schedule A (or such
other address as may be designated by the Participant in a manner acceptable to the Administrator),
or, if to the Corporation, at the Corporation’s principal office, attention Chief Financial
Officer, MiMedx Group, Inc.. Notice may also be provided by electronic submission, if and to the
extent permitted by the Administrator.

16. Severability. The provisions of this Agreement are severable and if any one or
more provisions may be determined to be illegal or otherwise unenforceable, in whole or in part,
the remaining provisions shall nevertheless be binding and enforceable.

 

5

 

17. Restrictions on Option and Shares. The Corporation may impose such restrictions
on the Option and the Shares or other benefits underlying the Option as it may deem advisable,
including without limitation restrictions under the federal securities laws, the requirements of
any stock exchange or similar organization and any blue sky, state or foreign securities laws
applicable to such Option or Shares. Notwithstanding any other provision in the Plan or the
Agreement to the contrary, the Corporation shall not be obligated to issue, deliver or transfer
shares of Common Stock, to make any other distribution of benefits, or to take any other action,
unless such delivery, distribution or action is in compliance with all applicable laws, rules and
regulations (including but not limited to the requirements of the Securities Act). The Corporation
may cause a restrictive legend to be placed on any certificate for Shares issued pursuant to the
exercise of the Option in such form as may be prescribed from time to time by applicable laws and
regulations or as may be advised by legal counsel.

18. Effect of Changes in Status. Unless the Administrator, in its sole discretion,
determines otherwise (or unless required by Code Section 409A), the Option shall not be affected by
any change in the terms, conditions or status of the Participant’s employment, provided that the
Participant continues to be in the employ of the Corporation or an Affiliate. Without limiting the
foregoing, the Administrator has sole discretion to determine, subject to Code Section 409A, at the
time of grant of the Option or at any time thereafter, the effect, if any, on the Option if the
Participant’s status as an Employee changes, including but not limited to a change from full-time
to part-time, or vice versa, or if other similar changes in the nature or scope of the
Participant’s employment occur.

19. Right of Offset. Notwithstanding any other provision of the Plan or the
Agreement, the Corporation may reduce the amount of any payment otherwise payable to or on behalf
of the Participant by the amount of any obligation of the Participant to the Corporation that is or
becomes due and payable and the Participant shall be deemed to have consented to such reduction.

20. Counterparts; Further Instruments. 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 parties hereto agree to execute such further instruments and to
take such further action as may be reasonably necessary to carry out the purposes and intent of
this Agreement.

[Signatures of the Corporation and the Participant follow on Schedule A/Grant Notice.]

 

6

 

MIMEDX GROUP, INC.

AMENDED AND RESTATED ASSUMED 2005 STOCK PLAN

(formerly the SpineMedica Corp. 2005 Employee, Director and Consultant Stock Plan)

Incentive Stock Option Agreement

(Employees)

Schedule A/Grant Notice

1. Pursuant to the terms and conditions of the MiMedx Group, Inc. Amended and Restated Assumed
2005 Stock Plan (formerly the SpineMedica Corp. 2005 Employee, Director and Consultant Stock Plan)
(the “Plan”), you (the “Participant”) have been granted an option (the “Option”) to purchase
 _____ 

shares (the “Shares”) of our Common Stock as outlined below.

	 	 	 	 	 	 	 
	Name of Participant:
	 	 	 	 	 	 
	 	 	 
	Address:
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	Grant Date:

	 	 	 	 	 	, 20     
	 

	 	 	 	 
	Number of Shares Subject to Option:
	 	 	 	 	 	 
	 	 	 
	Option Price:

	 	$ 	 	 	 	 
	 	 	 
	Type of Option:

	 	Incentive Stock Option
	 	 
	 	 	 
	Expiration Date (Last day of Option Period):

	 	 	 	 	 	, 20     
	 

	 	 	 	 
	Vesting Schedule/Conditions:
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	 	 	 

2. By my signature below, I, the Participant, hereby acknowledge receipt of this Grant Notice
and the Option Award Agreement (the “Agreement”) dated
 ___________________ 
         , 200
 _____ 
, between the Participant
and MiMedx Group, Inc. (the “Corporation”) which is attached to this Grant Notice. I understand
that the Grant Notice and other provisions of Schedule A herein are incorporated by reference into
the Agreement and constitute a part of the Agreement. By my signature below, I further agree
to be bound by the terms of the Plan and the Agreement, including but not limited to the terms of
this ScheduleA/Grant Notice. The Corporation reserves the right to treat the Option and the
Agreement as cancelled, void and of no effect if the Participant fails to return a signed copy of
the Grant Notice within 30 days of grant date stated above.

	 	 	 	 	 	 	 
	Signature:

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 

	 	 	 	 	 
	 	 	Agreed to by:
	 
	 	 	 	 
	 	 	MIMEDX GROUP, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	Attest:

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	Secretary
	 	 	 	 

 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}]]