Document:

Exhibit 10.2

     

    
      

    

    Exhibit
      10.2

    
      
        Southwest
          Bank

      

      PROMISSORY
        NOTE

      

      
        	
                Principal

                $1,500,000.00

              	
                Loan
                  Date

                08-01-2006

              	
                Maturity

                11-01-2006

              	
                Loan
                  No

                12030954-22003

              	
                Call
                  / Coll

                 

              	
                Account

                00000122565

              	
                Officer

                32405

              	
                Initials

              
	
                References
                  in
                  the shaded area are for Lender’s use only and do not limit the
                  applicability of this document to any particular loan or
                  item.

                Any
                  item
                  above containing “***” has been omitted due to text length
                  limitations.

              

      

      

      
        	
                Borrower:

              	
                Siboney
                  Learning Group Inc

                Siboney
                  Corporation

                325
                  Kirkwood Rd #300

                St
                  Louis, MO 63122

              	
                Lender:

              	
                Southwest
                  Bank of St. Louis

                St
                  Louis Region Commercial Lending

                13205
                  Manchester Road

                Des
                  Peres, MO 63131

              

      

    

    
      	 	 	 
	
              Principal
                Amount: $1,500,000.00

            	
              Initial
                Rate: 8.250%

            	
              Date
                of Note: August 1, 2006    
                

            

    

    

      PROMISE
        TO
        PAY. Siboney
        Learning
        Group Inc and Siboney Corporation (“Borrower”) jointly and severally promise to
        pay to Southwest Bank of St. Louis (“Lender”), or order, in lawful money of
        the United States of America, the principal amount of One Million Five Hundred
        Thousand & 00/100 Dollars ($1,500,000.00) or so much as may be
        outstanding, together with interest on the unpaid outstanding principal balance
        of each advance. Interest shall be calculated from the date of each advance
        until repayment of each advance.

       

      PAYMENT.
        Borrower
        will pay
        this loan in one payment of all outstanding principal plus all accrued unpaid
        interest on November 1, 2006. In addition, Borrower will pay regular monthly
        payments of all accrued unpaid interest due as of each payment date, beginning
        August 31, 2006, with all subsequent interest payments to be due on the last
        day
        of each month after that. Unless otherwise agreed or required by applicable
        law,
        payments will be applied to Accrued Interest, Credit Life Premiums, Principal,
        Late Charges, and Escrow. The annual interest rate for this Note is computed
        on
        a 365/360 basis; that is, by applying the ratio of the annual interest rate
        over
        a year of 360 days, multiplied by the outstanding principal balance, multiplied
        by the actual number of days the principal balance is outstanding. Borrower
        will
        pay Lender at Lender’s address shown above or at such other place as Lender may
        designate in writing.

       

      VARIABLE
        INTEREST RATE.
        The interest rate
        on this Note is subject to change from time to time based on changes in an
        index
        which is Lender’s Prime Rate (the “Index”). This is the rate Lender charges, or
        would charge, on 90-day unsecured loans to the most creditworthy corporate
        customers. This rate may or may not be the lowest rate available from Lender
        at
        any given time. Lender will tell Borrower the current Index rate upon Borrower’s
        request. The interest rate change will not occur more often than each Index
        rate
        change and will become effective without notice to the Borrower. If the Index
        becomes unavailable during the term of the Note, the Lender may substitute
        a
        comparable Index. Borrower understands that Lender may make loans based on
        other
        rates as well. The
        Index currently
        is 8.250% per annum. The interest rate to be applied to the unpaid principal
        balance during this Note will be at a rate equal to the index, resulting in
        an initial rate of 8.250% per annum.NOTICE:
        Under no circumstances will the interest rate on this Note be more than the
        maximum rate allowed by applicable law.

       

      PREPAYMENT.
        Borrower may pay
        without penalty all or a portion of the amount owed earlier than it is due.
        Early payments will not, unless agreed to by Lender in writing, relieve Borrower
        of Borrower’s obligation to continue to make payments of accrued unpaid
        interest. Rather, early payments will reduce the principal balance due. Borrower
        agrees not to send Lender payments marked “paid in full”, “without recourse”, or
        similar language. If Borrower sends such a payment, Lender may accept it
        without
        losing any of Lender’s rights under this Note, and Borrower will remain
        obligated to pay any further amount owed to Lender. All written communications
        concerning disputed amounts, including any check or other payment instrument
        that indicates that the payment constitutes “payment in full” of the amount owed
        or that is tendered with other conditions or limitations or as full satisfaction
        of a disputed amount must be mailed or delivered to: Southwest Bank of St.
        Louis, St Louis Region Commercial Lending, 13205 Manchester Road, Des Peres,
        MO
        63131.

       

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

       

      INTEREST
        AFTER DEFAULT.
        Upon default,
        including failure to pay upon final maturity, the interest rate on this
        Note  shall be increased by adding a 3.000 percentage point margin (“Default
        Rate
        Margin”). The
        Default Rate Margin shall also apply to each succeeding interest rate change
        that would have applied had there been no default. However, in no event will
        the
        interest rate exceed the maximum interest rate limitations under applicable
        law.

       

      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 or any
        Grantor 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 or
        termination of Borrower’s existence as a going business, 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.

       

    

    
      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. This includes
        a garnishment of any of Borrower’s accounts, including deposit accounts, with
        Lender. 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.

       

      Events
        Affecting Guarantor.
        Any of the
        preceding events occurs with respect to any guarantor, endorser, surety,
        or
        accommodation party of any of the indebtedness or any guarantor, endorser,
        surety, or accommodation party dies or becomes incompetent, or revokes or
        disputes the validity of, or liability under, any guaranty of the indebtedness
        evidenced by this Note. In the event of a death, Lender, at its option, may,
        but
        shall not be required to, permit the guarantor’s estate to assume
        unconditionally the obligations arising under the guaranty in a manner
        satisfactory to Lender, and, in doing so, cure any Event of
        Default.

       

      Change
        In
        Ownership.
        Any change in
        ownership of twenty-five percent (25%) or more of the common stock of
        Borrower.

       

      Adverse
        Change.
        A material adverse
        change occurs in Borrower’s financial condition, or Lender believes the prospect
        of payment or 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 under this Note and
        all accrued unpaid interest immediately due, and then Borrower will pay that
        amount.

       

      ATTORNEYS’
        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 and 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.

       

      GOVERNING
        LAW.
        This Note will be
        governed by federal law applicable to Lender and, to the extent not preempted
        by
        federal law, the laws of the State of Missouri without regard to its conflicts
        of law provisions. This Note has been accepted by Lender in the State of
        Missouri.

       

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

       

      DISHONORED
        ITEM FEE.
        Borrower will pay
        a fee to Lender of $15.00 if Borrower makes a payment on Borrower’s loan and the
        check or preauthorized charge with which Borrower pays is later
        dishonored.

       

      RIGHT
        OF
        SETOFF.
        To the extent
        permitted by applicable law, Lender reserves a right of setoff in all Borrower’s
        accounts with Lender (whether checking, savings, or some other account).
        This
        includes all accounts Borrower holds jointly with someone else and all accounts
        Borrower may open in the future. However, this does not include any IRA or
        Keogh
        accounts, or any trust accounts for which setoff would be prohibited by law.
        Borrower authorizes Lender, to the extent permitted by applicable law, to
        charge
        or setoff all sums owing on the debt 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.

       

      LINE
        OF
        CREDIT.
        This Note
        evidences a revolving line of credit. Advances under this Note, as well as
        directions for payment from Borrower’s accounts, may be requested orally or in
        writing by Borrower or by an authorized person. Lender may, but need not,
        require that all oral requests be confirmed in writing. Borrower agrees to
        be
        liable for all sums either: (A) advanced in accordance with the instructions
        of
        an authorized person or (B) credited to any of Borrower’s accounts with Lender.
        The unpaid principal balance owing on this Note at any time may be evidenced
        by
        endorsements on this Note or by Lender’s internal records, including daily
        computer print-outs. Lender will have no obligation to advance funds under
        this
        Note if: (A) Borrower or any guarantor is in default under the terms of this
        Note or any agreement that Borrower or any guarantor has with Lender, including
        any agreement made in connection with the signing of this Note;
        (B) Borrower or any guarantor ceases doing business or is insolvent; (C)
        any guarantor seeks, claims or otherwise attempts to limit, modify or revoke
        such guarantor’s guarantee of this Note or any other loan with Lender; (D)
        Borrower has applied funds provided pursuant to this Note for purposes other
        than those authorized by Lender; or (E) Lender in good faith believes itself
        insecure.

       

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

       

      GENERAL
        PROVISIONS.
        If any part of
        this Note cannot be enforced, this fact will not affect the rest of the Note.
        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 of
        any
        indebtedness, including increases and decreases of the rate of interest on
        the
        indebtedness; (c) exchange, enforce, waive, subordinate, fail 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) 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 of 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.

    

    
       

      ORAL
        AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM
        ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH
        DEBT
        ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED
        THAT
        IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER(S))
        AND
        US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE
        REACH
        COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE
        AND
        EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER
        AGREE IN WRITING TO MODIFY IT.

      

      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.

      

      PRIOR
        TO
        SIGNING THIS NOTE, EACH BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
        THIS
        NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. EACH BORROWER AGREES
        TO
        THE TERMS OF THE NOTE.

      

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

      

      BORROWER:

    

    

    SIBONEY
      LEARNING
      GROUP INC

    

    
      	
              By: /s/ Timothy
                J.
                Tegeler                                              
                

              Timothy
                J.
                Tegeler, Chief Executive Officer of

              Siboney
                Learning Group Inc.

            	
              By:/s/ Rebecca
                Braddock                                                      
                

              Rebecca
                Braddock, Secretary of 

              Siboney
                Learning Group Inc.

            
	
               

            	
               

            
	
               

            	
               

            
	
               

            	
               

            
	
               

            	
               

            
	
              SIBONEY
                CORPORATION

            	
               

            
	
               

            	
               

            
	
              By: /s/ Timothy
                J.
                Tegeler                                                 
                

              Timothy
                J.
                Tegeler, Chief Executive Officer of

              Siboney
                Corporation

            	
              By:/s/ Rebecca
                Braddock                                                      
                

              Rebecca
                Braddock, Secretary of

              Siboney
                CorporationExhibit 10.3

    
      

    

     

    Exhibit
      10.3

    
      GENERAL
        BUSINESS SECURITY AGREEMENT

      

      Dated
               June
        01, 2003         

      

      1.
        SECURITY INTEREST

      

      The
        undersigned (“Debtor”, whether one or more) grants                      SOUTHWEST
        BANK OF ST.
        LOUIS                
        (“Lender”) a security interest in all equipment, fixtures, investment property,
        general intangibles, accounts, contract rights, chattel paper, instruments,
        inventory deposit accounts (unless a security interest would render a nontaxable
        account taxable), letter of credit rights and documents now owned or hereafter
        acquired by Debtor (or by Debtor with spouse), and all additions and accessions
        to, all spare and repair parts, special tools, equipment and replacements
        for,
        software used in, all returned or repossessed goods the sale of which give
        rise
        to, and all proceeds, supporting obligations and products of the foregoing
        (“Collateral”), wherever located, to secure all debts, obligations and
        liabilities of any Debtor to Lender arising out of credit previously granted,
        credit contemporaneously granted and credit granted in the future by Lender
        to
        any Debtor, to any Debtor and another, or to another guaranteed or indorsed
        by
        any Debtor (“Obligations”).

      

      2.
        DEBTOR’S WARRANTIES

      Debtor
        warrants that while any of the Obligations are unpaid:

      (a) Ownership
        and use. Debtor owns (or with spouse owns) the Collateral free of all
        encumbrances and security interests (except Lender’s security interest). Chattel
        paper constituting Collateral evidence a perfected security interest in the
        goods (including software used in the goods) covered by it, free from all
        other
        encumbrances and security interests, and no financing statement is on file
        or
        control agreement in existence (other than Lender’s) covering the Collateral or
        any of it. Debtor, acting alone, may grant a security interest in the
        Collateral. The Collateral is used or bought for use primarily for business
        purposes.

      (b) Sale
        of
        goods or services rendered. Each account and chattel paper constituting
        Collateral as of this date arose from the performance of services by Debtor
        or
        from a bona fide sale or lease of goods, which have been delivered or shipped
        to
        the account debtor and for which Debtor has genuine invoices, shipping documents
        or receipts.

      (c) Enforceability.
        Each account, contract right and chattel paper constituting Collateral as
        of
        this date is genuine and enforceable against the account debtor according
        to its
        terms. It and the transaction out of which it arose comply with all applicable
        laws and regulations. The amount represented by Debtor to Lender as owing
        by
        each account debtor is the amount actually owing and is not subject to setoff,
        credit, allowance or adjustment, except discount for prompt payment, nor
        has any
        account debtor returned the goods or disputed liability.

      (d) Due
        date. There has been no default as of this date according to the terms of
        any
        chattel paper or account consulting Collateral and no step has been taken
        to
        foreclose the security interest it evidences or otherwise enforce its
        payment.

      (e) Financial
        condition of account debtor. As of this date Debtor has no notice or knowledge
        of anything which might impair the credit standing of any account
        debtor.

      (f) Valid
        Organization. If a corporation, limited liability company or partnership,
        Debtor
        is duly organized, validly existing and in good standing under the laws of
        the
        state of organization and is authorized to do business in Missouri.

      (g) Other
        agreements. Debtor is not in default under any agreement for the payment
        of
        money.

      (h) Authority
        to contract. The execution and delivery of this Agreement and any instruments
        evidencing Obligations will not violate or constitute a breach of Debtor’s
        articles of incorporation or organization, by-laws, partnership agreement,
        operating agreement or any other agreement or restriction to which Debtor
        is a
        party or is subject.

      (i) Accuracy
        of information. All information, certificates or statements given to Lender
        pursuant to this Agreement shall be true and complete when given.

      (j) Name
        and
        address. Debtor’s exact legal name as is set forth below Section 9. If Debtor is
        an individual, the address of Debtor’s principal residence is as set forth below
        Section 9. If Debtor is an organization that has only one place of business,
        the
        address of Debtor’s place of business, or if Debtor has more than one place of
        business, then the address of Debtor’s chief executive office, is as set forth
        below Section 9.

      (k) Location.
        The address where the Collateral will be kept, if different from that appearing
        below Section 9, is _____________         N/A                                                                .
        Such
        location shall not be changed without prior written consent of Lender, but
        the
        parties intend that the Collateral, wherever located, is covered by this
        Agreement.

      (l) Organization.
        If Debtor is an organization, this type of organization and the state under
        whose law it is organized are as set forth below Section 9.

      (m) Environmental
        laws. (i) No substance has been, is or will be present, used, stored, deposited,
        treated, recycled or disposed of on, under, in or about any real estate now
        or
        at any time owned or occupied by Debtor (“Property”) during the period of
        Debtor’s ownership or use of the Property in a form, quantity or manner which if
        known to be present on, under, in or about the Property would require clean-up,
        removal or some other remedial action (“Hazardous Substance”) under any federal,
        state or local laws, regulations, ordinances, codes or rules (“Environmental
        Laws”), (ii) Debtor has no knowledge, after due inquiry, of any prior use
        or existence of any Hazardous Substance on the Property by any prior owner
        of or
        person using the Property, (iii) without limiting the generality of the
        foregoing, Debtor has no knowledge, after due inquiry, that the Property
        contains asbestos, polychlorinated biphenyl components (PCBs) or underground
        storage tanks, (iv) there are no conditions existing currently or likely to
        exist during the term of this Agreement which would subject Debtor to any
        damages, penalties, injunctive relief or clean-up costs in any governmental
        or
        regulatory action or third-party claim relating to any Hazardous Substance,
        (v) Debtor is not subject to any court or administrative proceeding,
        judgment, decree, order or citation relating to any such substance, and
        (vi) Debtor in the past has been, at the present is, and in the future will
        remain in compliance with all Environmental Laws. Debtor shall indemnify
        and
        hold harmless Lender, its directors, officers, employees and agents from
        all
        loss, cost (including reasonable attorneys’ fees and legal expenses), liability
        and damage whatsoever directly or indirectly resulting from, arising out
        of, or
        based upon (1) the presence, use, storage, deposit, treatment, recycling or
        disposal, at any time, of any Hazardous Substance on, under, in or about
        the
        Property, or the transportation of any such substance to or from the Property,
        (2) the violation or alleged violation of any Environmental Law, permit,
        judgment or license relating to the presence use, storage, deposit, treatment,
        recycling or disposal of any Hazardous Substance on, under, in or about the
        Property, or the transportation of any Hazardous Substance to or from Property,
        or (3) the imposition of any governmental lien for the recovery of
        environmental clean-up costs expended under any Environmental Law. Debtor
        shall
        immediately notify Lender in writing of any governmental or
        regulatory

        
           

          
            
            

            
              

            

          

          
            
            

          

        

      action
        or third-party claim instituted or threatened in connection with any Hazardous
        Substance described above, on, in, under or about the Property.

      (n) Fixtures.
        If any of the Collateral is affixed to real estate, the legal description
        of the
        real estate set forth in each UCC Financing Statement signed or authorized
        by
        Debtor is true and correct.

      

      3.
        SHIPPERS

      Shippers
        authorized to draw drafts on Lender under Section 6(c) are:
        NONE.

      

      4.
        SALE AND COLLECTIONS

      (a) Sale
        of
        inventory. So long as no default exists under any of the Obligations or this
        Agreement, Debtor may (a) sell inventory in the ordinary course of Debtor’s
        business for cash or on terms customary in the trade, at prices not less
        than
        any minimum sale price shown on instruments evidencing Obligations and
        describing inventory, or (b) lease or license inventory on terms customary
        in the trade.

      (b) Verification
        and notification. Lender may verify Collateral in any manner, and Debtor
        shall
        assist Lender in so doing. Upon default Lender may at any time and Debtor
        shall,
        upon request of Lender, notify the account debtors or other persons obligated
        on
        the Collateral to make payments directly to Lender and Lender may enforce
        collection of, settle, compromise, extend or renew the indebtedness of such
        account debtors or other persons obligated on the Collateral. Until account
        debtors or other persons obligated on the Collateral are so notified, Debtor,
        as
        agent of Lender, shall make collections and receive payments on the
        Collateral.

      (c) Deposit
        with Lender. At any time Lender may require that all proceeds of Collateral
        received by Debtor shall be held by Debtor upon an express trust for Lender,
        shall not be commingled with any other funds or property of Debtor and shall
        be
        turned over to Lender in precisely the form received (but endorsed by Debtor
        if
        necessary for collection) not later than the business day following the day
        of
        their receipt. Except as provided in Section 4(d) below, all proceeds of
        Collateral received by Lender directly or from Debtor shall be applied against
        the Obligations in such order and at such times as Lender shall
        determine.

      (d) Accounting.
        If the extent to which Lender’s security interest in the Collateral is a
        purchase money security interest depends on the application of a payment
        to a
        particular obligation of Debtor, the payment shall first be applied to
        obligations of Debtor for which Debtor did not create a security interest
        in the
        order in which those obligations were incurred and then to obligations of
        Debtor
        for which Debtor did create a security interest, including the Obligations
        secured by the Collateral, in the order in which those obligations were
        incurred; provided, however, that Lender shall retain its security interest
        in
        all Collateral regardless of the allocation of payments.

      

      5.
        DEBTOR’S COVENANTS

      (a) Maintenance
        of Collateral. Debtor shall: maintain the Collateral in good condition and
        repair and not permit its value to be impaired; keep it free from all liens,
        encumbrances and security interests (other than Lender’s security interest);
        defend it against all claims and legal proceedings by persons other than
        Lender;
        pay and discharge when due all taxes, license fees, levies and other charges
        upon it; not sell, lease, license or otherwise transfer or dispose of it
        or
        permit it to become a fixture or an accession to other goods, except for
        sales,
        leases or licenses of inventory as provided in this Agreement; not permit
        it to
        be used in violation of any applicable law, regulation or policy of insurance;
        and, as to Collateral consisting of instruments, chattel paper and letter
        of
        credit rights, preserve rights in it against prior parties. Loss of or damage
        to
        the Collateral shall not release Debtor from any of the
        Obligations.

      (b) Insurance.
        Debtor shall keep the Collateral and Lender’s interest in it insured for all
        risks of physical damage to or loss of the Collateral (including loss or
        damage
        occasioned by flood if the Collateral includes a building or mobile home
        on a
        permanent foundation), under policies with such provisions, for such amounts
        and
        by such insurers as shall be satisfactory to Lender from time to time, and
        shall
        furnish evidence of such insurance satisfactory to Lender. Subject to Lender’s
        satisfaction, Debtor is free to select the insurance agent or insurer through
        which the insurance is obtained. Debtor assigns (and directs any insurer
        to pay)
        to Lender the proceeds of all such insurance and any premium refund, and
        authorizes Lender to endorse in the name of Debtor any instruments for such
        proceeds or refunds and, at the option of Lender, to apply such proceeds
        and
        refunds to any unpaid balance of the Obligations, whether or not due, and/or
        to
        restoration of the Collateral, returning any excess to Debtor. Lender is
        authorized, in the name of Debtor or otherwise, to make, adjust and/or settle
        claims under any credit insurance financed by Lender or any insurance on
        the
        Collateral, or cancel the same after the occurrence of an event of
        default.

      Notice:
        The
        following notice is included in compliance with R.S.Mo. 427.120(3). Unless
        you
        provide evidence of the insurance coverage required by your agreement with
        us,
        we may purchase insurance at your expense to protect our interests in your
        collateral. This insurance may, but need not, protect your interests. The
        coverage that we purchase may not pay any claim that you make or any claim
        that
        is made against you in connection with the collateral. You may later cancel
        any
        insurance purchased by us, but only after providing evidence that you have
        obtained insurance as required by our agreement. If we purchase insurance
        for
        the collateral, you will be responsible for the costs of that insurance,
        including the insurance premium, interest and any other charges we may impose
        in
        connection with the placement of the insurance, until the effective date
        of the
        cancellation or expiration of the insurance. The costs of the insurance may
        be
        added to your total outstanding balance or obligation. The costs of the
        insurance may be more than the cost of insurance you may be able to obtain
        on
        your own.

      (c) Maintenance
        of security interest. Debtor shall pay all expenses and upon request, take
        any
        action reasonably deemed advisable by Lender to preserve the Collateral or
        to
        establish, evidence, determine and maintain priority of, perfect, continue
        perfected, terminate and/or enforce Lender’s interest in it or rights under this
        Agreement. Debtor authorizes Lender to file Uniform Commercial Code financing
        statements describing the Collateral (including describing the Collateral
        as
“all assets”, “all personal property” or with words of similar affect if
        Section 2(a) is checked) and amendments to such financing statements and
        ratifies any such financing statement or amendment filed prior to the date
        of
        this Agreement. Debtor will cooperate with Lender in obtaining control of
        Collateral or other security for the Obligations for which control may be
        required to perfect Lender’s security interest under applicable law. If the
        Collateral is in possession of a third party, Debtor will join with Lender
        at
        its request in notifying the third party of Lender’s security interest and
        obtaining an acknowledgment from the third party that it is holding the
        Collateral for the benefit of Lender.

      (d) Taxes
        and other charges. Debtor shall pay and discharge all lawful taxes, assessments
        and government charges upon Debtor or against its properties prior to the
        date
        on which penalties attach, unless and to the extent only that such taxes,
        assessments and charges are contested in good faith and by appropriate
        proceedings by Debtor.

      (e) Records
        and statements. Debtor shall furnish to Lender financial statements at least
        annually and such other financial information respecting Debtor at such times
        and in such form as Lender may request. Debtor shall keep accurate and complete
        records respecting the Collateral in such form as Lender may approve. At
        such
        times as Lender may require, Debtor shall furnish to Lender a

      
        
          
          

        

        
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      statement
        certified by Debtor and in such form and containing such information as may
        be
        prescribed by Lender, showing the current status and value of the
        Collateral.

      (f) Inspection
        of Collateral. All reasonable times Lender may examine the Collateral and
        Debtor’s records pertaining to it, wherever located, and make copies of records.
        Debtor shall assist Lender in so doing.

      (g) Service
        charge. In addition to the required payments under the Obligations and this
        Agreement, Debtor shall pay Lender’s then current service charges for servicing
        and auditing in connection with this Agreement.

      (h) Chattel
        paper. Lender may require that chattel paper constituting Collateral shall
        be on
        forms approved by Lender. Unless it consists of electronic chattel paper,
        Debtor
        shall promptly mark all chattel paper constituting Collateral, and all copies,
        to indicate conspicuously the Lender’s interest and, upon request, deliver them
        to Lender. If it consists of electronic chattel paper, Debtor shall promptly
        notify Lender of the existence of the electronic chattel paper and, at the
        request of Lender, shall take such actions as Lender may reasonably request
        to
        vest in Lender control of such electronic chattel paper under applicable
        law.

      (i) United
        States contracts. If any accounts or contract rights constituting Collateral
        arose out of contracts with the United States or any of its departments,
        agencies or instrumentalities, Debtor will notify Lender and execute writings
        required by Lender in order that all money due or to become due under such
        contracts shall be assigned to Lender and proper notice of the assignment
        given
        under the Federal Assignment of Claims Act.

      (j) Modifications.
        Without the prior written consent of Lender, Debtor shall not alter, modify,
        extend, renew or cancel any accounts, letter of credit rights, chattel paper
        constituting Collateral or any Collateral constituting part of the Debtor’s
        borrowing base.

      (k) Returns
        and repossessions. Debtor shall promptly notify Lender of the return to or
        repossession by Debtor of goods underlying any Collateral and Debtor shall
        hold
        and dispose of them only as Lender directs.

      (l) Promissory
        Notes, Chattel Paper and Investment Property. If Debtor shall at any time
        hold
        or acquire Collateral consisting of promissory notes, chattel paper or
        certificated securities, Debtor shall endorse, assign and deliver the same
        to
        Lender accompanied by such instruments of transfer or assignment duly executed
        in blank as Lender may from time to time request.

      (m) Change
        of name, address or organization. Debtor shall not change Debtor’s legal name or
        address without providing at least 30 days prior written notice of the change
        to
        Lender. Debtor if it is an organization shall not change its type of
        organization or state under whose law it is organized and shall preserve
        its
        organizational existence, and Debtor shall not whether or not Debtor is an
        organization, in one transaction or in a series of related transactions,
        merge
        into or consolidate with any other organization, change Debtor’s legal
        structure, or sell or transfer all or substantially all of Debtor’s
        assets.

      

      6.
        RIGHTS OF LENDER

      (a) Authority
        to perform for Debtor. Upon the occurrence of an event of default or if Debtor
        fails to perform any of Debtor’s duties set forth in this Agreement or in any
        evidence of or document relating to the Obligations, Lender is authorized,
        in
        Debtor’s name or otherwise, to take any such action including without limitation
        signing Debtor’s name or paying any amount so required, and the cost shall be
        one of the Obligations secured by this Agreement and shall be payable by
        Debtor
        upon demand with interest from the date of payment by Lender at the highest
        rate
        stated in any evidence of any Obligation but not in excess of the maximum
        rate
        permitted by law.

      (b) Charging
        Debtor’s credit balance. Unless a lien would be prohibited by law or would
        render a nontaxable account taxable, Debtor grants Lender, as further security
        for the Obligations, a security interest and lien in any deposit account
        Debtor
        may at any time have with Lender and other money now or hereafter owed Debtor
        by
        Lender and agrees that Lender may, at any time after the occurrence of an
        event
        of default, without prior notice or demand, set-off all or any part of the
        unpaid balance of the Obligations against any deposit balances or other money
        now or hereafter owed Debtor by Lender.

      (c) Power
        of
        attorney. Debtor irrevocably appoints any officer of Lender as Debtor’s
        attorney, with power after an event of default to receive, open and dispose
        of
        all mail addressed to Debtor (and Lender shall not be required as a condition
        to
        the exercise of this power to prove the occurrence of an event of default
        to the
        Post Office); to notify the Post Office authorities to change the address
        for
        delivery of all mail addressed to Debtor to such address as Lender may
        designate; to endorse the name of Debtor upon any instruments which may come
        into Lender’s possession; and to sign and make draws under any letter of credit
        constituting Collateral on Debtor’s behalf. Debtor agrees that Obligations may
        be created by drafts drawn on Lender by shippers of inventory named in
        Section 3. Debtor authorizes Lender to honor any such draft accompanied by
        invoices aggregating the amount of the draft and describing inventory to
        be
        shipped to Debtor and to pay any such invoices not accompanied by drafts.
        Debtor
        appoints any employee of Lender as Debtor’s attorney, with full power to sign
        Debtor’s name on any instrument evidencing an Obligation, or any renewals or
        extensions, for the amount of such drafts honored by Lender and such instruments
        may be payable at fixed times or on demand, shall bear interest at the rate
        from
        time to time fixed by Lender and Debtor agrees, upon request of Lender, to
        execute any such instruments. This power of attorney to execute instruments
        may
        be revoked by Debtor only by written notice to Lender and no such revocation
        shall affect any instruments executed prior to the receipt by Lender of such
        notice. All acts of such attorney are ratified and approved and such attorney
        is
        not liable for any act or omission or for any error of judgment or mistake
        of
        fact or law.

      (d) Non-liability
        of Lender. Lender has no duty to determine the validity of any invoice, the
        authority of any shipper named in section 3 to ship goods to Debtor or
        compliance with any order of Debtor. Lender has no duty to protect, insure,
        collect or realize upon the Collateral or preserve rights in it against prior
        parties. Debtor releases Lender from any liability for any act or omission
        relating to the Obligations, the Collateral or this agreement, except Lender’s
        willful misconduct.

      

      7.
        DEFAULT

      Upon
        the
        occurrence of one or more of the following events of default:

      Nonperformance.
        Debtor fails to pay any of the Obligations or to perform, or rectify breach
        of,
        any warranty or covenant or other undertaking by Debtor in this Agreement
        or in
        any evidence of or document relating to the Obligations or an event of default
        occurs under any evidence of or document relating to any other obligation
        secured by the Collateral;

      Inability
        to Perform. Debtor or a surety for any of the Obligations dies, ceases to
        exist,
        becomes insolvent or the subject of bankruptcy or insolvency proceedings
        or any
        guaranty of the Obligations is revoked or becomes unenforceable for any
        reason;

      Misrepresentation.
        Any representation made to induce Lender to extend credit to Debtor, under
        this
        Agreement or otherwise, is false in any material respect when made;
        or

      Insecurity.
        Any other event which causes Lender in good faith to deem itself
        insecure;

      
        
          
          

        

        
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      All
        of
        the Obligations shall, at the option of Lender and without notice or demand,
        become immediately payable; and Lender shall have all rights and remedies
        for
        default provided by the Arizona Uniform Commercial Code and this Agreement,
        as
        well as any other applicable law and any evidence of or document relating
        to any
        Obligation. With respect to such rights and remedies:

      (a) Repossession.
        Lender may take possession of Collateral without notice or hearing, which
        Debtor
        waives;

      (b) Assembling
        collateral. Lender may require Debtor to assemble the Collateral and to make
        it
        available to Lender at any place reasonably designated by Lender;

      (c) Notice
        of disposition. Written notice, when required by law, sent to any address
        of
        Debtor in this Agreement at least 10 calendar days (counting the day of sending)
        before the date of a proposed disposition of the Collateral is reasonable
        notice;

      (d) Expenses
        and application of proceeds. Debtor shall reimburse Lender for any expense
        incurred by Lender in protecting or enforcing its rights under this Agreement
        before and after judgment, including, without limitation, reasonable attorneys’
fees and legal expenses (including those incurred in successful defense or
        settlement of any counterclaim brought by Debtor or incident to any action
        or
        proceeding involving Debtor brought pursuant to the United States Bankruptcy
        Code) and all expenses of taking possession, holding, preparing for disposition
        and disposing of Collateral (provided, however, Lender has no obligation
        to
        clean up or otherwise prepare the Collateral for sale). After deduction of
        such
        expenses, Lender shall apply the proceeds of disposition to the extent actually
        received in cash to the Obligations in such order and amounts as it elects
        or as
        otherwise required by this Agreement; and

      (e) Waiver.
        Lender may permit Debtor to remedy any default without waiving the default
        so
        remedied, and Lender may waive any default without waiving any other subsequent
        or prior default by Debtor.

      

      8.
        INTERPRETATION

      The
        validity, construction and enforcement of this Agreement are governed by
        the
        internal laws of Missouri. All terms not otherwise defined have the meanings
        assigned to them by the Missouri Uniform Commercial Code, as amended from
        time
        to time, provided, however, that the term “instrument” shall be such term as
        defined in the Missouri Uniform Commercial Code-Secured Transactions. All
        references in this Agreement to Sections of the Missouri Revised Statutes
        are to
        those sections as they may be renumbered from time to time. Invalidity of
        any
        provision of this Agreement shall not affect the validity of any other
        provision. This Agreement is intended by Debtor and Lender as a final expression
        of this Agreement and as a complete and exclusive statement of its terms,
        there
        being no conditions to the enforceability of this Agreement. This Agreement
        may
        not be supplemented or modified except in writing.

      

      9.
        PERSONS BOUND AND OTHER PROVISIONS

      The
        obligations hereunder of all Debtors are joint and several. This Agreement
        benefits Lender, its successors and assigns, and binds Debtor(s) and their
        respective heirs, personal representatives, successors and assigns and shall
        bind all persons and entities who become bound as a debtor to this Agreement.
        If
        checked here, this Agreement amends and replaces in their entirety the provision
        of all existing General Business Security Agreements between Debtor and Lender;
        provided, however, that all security interests granted to Lender under those
        existing security agreements shall remain in full force and effect, subject
        to
        the provisions of this Agreement.

      

        
          	 	 	
                      SIBONEY
                    LEARNING GROUP,
                    INC.                        

                	
                  (SEAL)

                
	 	 	 	 	 
	 	 	
                             
                    CORPORATION                                              

                	 
	 	 	
                                                  
                    (Type of Organization)

                	 	 
	 	 	
                  BY:/s/
                    Ernest
                    Marx                                                      

                  
                    ERNEST
                      MARX PRESIDENT

                  

                	
                  (SEAL)

                
	 	 	 	 	 
	
                  Address:          325
                    KIRKWOOD RD
                    300                               
                    

                  
                                                       
                      SEE SECTIONS 2(j) and (k)

                  

                	 	
                  BY:
                    /s/ Rebecca M.
                    Braddock                                    

                  
                    REBECCA
                      BRADDOCK SECRETARY

                  

                	
                  (SEAL)

                
	 	 	 	 	 
	
                                         
                    SAINT LOUIS MO
                    63122-4042                        
                    

                	 	                                                                             
                  	
                  (SEAL)

                
	 	 	 	 	 
	
                                         
                    TEXAS                                                             

                  
                                                       
                      STATE OF ORGANIZATION

                  

                	 	                                                                                  
                  	
                  (SEAL)

                
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	                                                                              
                  	
                  (SEAL)

                
	 	 	 	 	 
	 	 	
                                                                                                                                                  
                    

                  (Type
                    of Organization)

                
	 	 	 	 	 
	 	 	                                                                              
                  	
                  (SEAL)

                
	 	 	 	 	 
	
                  Address:                                                               
                    

                  
                                                               
                      SEE SECTIONS 2(j) and (k)

                  

                	 	                                                                                    
                  	
                  (SEAL)

                
	 	 	 	 
	                                                                                                              	 	                                                                              
                  	
                  (SEAL)

                
	 	 	 	 	 
	
                                                                                                                                       

                  
                                                        
                      STATE OF ORGANIZATION

                  

                	 	                                                                                  
                  	
                  (SEAL)

                

        

      

    

     

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