04 where does the money go?

8/22/2019 04 Where Does the Money Go?

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REALAUCTION BANKRUPTCY

AND OWNERSHIP SERIES

A collection of public documents from a recent patent infringement action andrelated bankruptcy proceedings that show who really owns Realauction.com.

Where Does the Money Go?Realauction's emergency motion for an order authorizing the debtor to use of cashcollateral [Dkt. No. 5]

Description:More details about Realauction's day-to-day operations emerged in the bankruptcy

proceeding including Realauction's disclosure of its sources and uses of cash for the

next 30 days. (see Exhibit A). The "Payroll Management" line item of $34,000

represents payments to Lloyd McClendon and Marc Thomashaw of $17,000 each

for a single month. The filing also includes copies of its promissory note and financing

statement with the British Virgin Islands entity Adila Enterprises, S.A., as well as a

security agreement that was not signed by Adila(see Exhibit C).

Note:

Document 4 of5

These documents were obtained from Grant Street Group, Inc. v. Realauction.com, LLC, Case No.

2:09-cv-01407-MRH, a patent infringement action in the United States District Court for the Western District

of Pennsylvania and from In re Realauction.com, LLC, Case No. 13-28260-RBR, a bankruptcy proceeding in the

United States Bankruptcy Court for the Southern District of Florida.
http://www.scribd.com/collections/4316432/Realauction-Bankruptcy-and-Ownershiphttp://www.scribd.com/collections/4316432/Realauction-Bankruptcy-and-Ownershiphttp://www.scribd.com/collections/4316432/Realauction-Bankruptcy-and-Ownershiphttp://www.scribd.com/collections/4316432/Realauction-Bankruptcy-and-Ownership


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Case 13-28260-RBR Doc 5 Filed 07/31/13 Page 1 of 37

Inre:

UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF FLORIDAFort Lauderdale Division

www flsb.uscourts.govChapter II

REALAUCTION.COM, LLC, Case No. 13-28260-RBR

Debtor.- - - - - - - - - - ~ /DEBTOR'S EMERGENCY MOTION FOR ORDER (A) AUTHORIZING THEDEBTOR (1) TO USE CASH COLLATERAL ON AN INTERIM BASISPURSUANT TO 11 U.S.C. 363, AND (2) TO PROVIDE ADEQUATE PROTECTIONIN CONNECTION THEREWITH PURSUANT TO 11 U.S.C. 361, AND

(B) SETTING A FINAL HEARING PURSUANT TO BANKRUPTCY RULE 4001(Emergency Hear ing Requested on Friday, August 2, 2013)

STATEMENT OF EXIGENT CIRCUMSTANCESThe Debtor requests an emergency hearing in this matter onAugust 2, 2013. Without the immediate authorization to usecash collateral, the Debtor will be irreparably harmedbecause the Debtor will not be able to meet its payrollobligations or acquire goods and services necessary for itsday-to-day operations or generally maintain and preservethe going concern, enterprise value of the business.Prior to the filing of this Chapter II case, the Debtor hasbeen in discussions with its secured lender, AdilaEnterprises, S.A. (the "Lender") in an effort to reachagreement on the consensual use of the Lender's cashcollateral. As of the filing of this Motion, the Debtor andthe Lender are still in discussions. The Debtor will continueto use its best efforts to obtain an agreement with theLender in advance of an interim hearing on the reliefrequested in this Motion.

REALAUCTION.COM, LLC (the "Debtor"), the debtor-in-possession in the above-captioned case, hereby file this Emergency Motion for an Order (A) Authorizing the Debtor (1)to use Cash Collateral on an Interim Basis Pursuant to 11 U.S. C. 363 and (2) to Provide

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Adequate Protection in Connection Therewith Pursuant to 11 U.S. C. 361, and (B) Setting aFinal Hearing Pursuant to Bankruptcy Rule 4001 (the "Motion"). In support of the Motion, theDebtor relies on the Declaration of Marc Thomashaw in Support of Chapter 11 Petition andFirst Day Motions (the "First Day Declaration"). In further support of this Motion, the Debtorrespectfully represent as follows:

BACKGROUND1. On July 31, 2013 (the "Petition Date"), the Debtor each filed a voluntary petition

in this Court for relief under Chapter 11 of Title II of the United States Code (the .BankruptcyCode.). Since that time, the Debtor has operated as a debtor-in-possession pursuant to Sections11 07 and II 08 of the Bankruptcy Code.

2. As of the date hereof, no creditors' committee has been appointed in this case. Inaddition, no trustee or examiner has been appointed.

3. For a detailed description of the Debtor, its operations and assets and liabilities,the Debtor respectfully refer the Court and parties-in-interest to the First Day Declaration.

CASH COLLATERAL AND THE RELIEF SOUGHT BY THE DEBTOR4. Any cash or cash equivalents, funds or proceeds of or derived from certain of the

collateral securing the obligations of the Debtor to the Lender under the Pre-Petition LoanAgreement (defined below) constitute cash collateral within the meaning of Section 363 of theBankruptcy Code (the "Cash Collateral"). The Cash Collateral includes, without limitation, theDebtor's cash or cash equivalents maintained in the following bank accounts: (i) $4,816.27 in theDebtor's U.S. Bank fiduciary account ending in 2174; (ii) $1,656,471.70 in the Debtor's Bank ofAmerica ("BOA") operating checking account ending in 1865; $1 in the Debtor's BOA savingsaccount ending in 1546; and $1 in the Debtor's BOA fiduciary account ending in 2061.

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5. By this Motion, the Debtor seeks the entry of an interim order (the "InterimOrder") authorizing, on an emergency and limited basis, the use of Cash Collateral inaccordance with the 30-day budget attached hereto as Exhibit "A" (the "Budget").

6. An immediate and critical need exists for the Debtor to be permitted access toCash Collateral in order to continue to operate their businesses and preserve their ongoing,enterprise value. Therefore, the Debtor seeks an emergency interim hearing (the "InterimHearing") in accordance with Rule 400l(b)(2) of the Federal Rules of Bankruptcy Procedures(the "Banluuptcy Rules"). At the Interim Hearing, the Debtor will seek entry of an InterimOrder, a copy ofwhich is attached hereto as Exhibit "B."

7. By this Motion, the Debtor fmiher seeks a final hearing (the "Final Hearing") onthis Motion, to be held approximately 30 days after the Interim Hearing in accordance withBankruptcy Rule 4001(b)(2) and (3).

8. Prior to the Petition Date, the Debtor and Lender were parties to that certainSecurity Agreement (Chattel Mortgage) dated March 15, 2010, between Lender and Debtor(hereinafter, together with all amendments thereto and modifications thereof, the "Pre-PetitionLoan Agreement"). In accordance with the Pre-Petition Loan Agreement, the Debtor wasoriginally indebted to the Lender in the amount of$3,831,329.57. As of the date of this Motion,the amount owing to the Lender under the Pre-Petition Loan Agreement is $2,577,311.11.

9. As security for the payment of all Pre-Petition Debt, the Debtor granted to Lenderpursuant to the Pre-Petition Loan Agreement and related documents (collectively, the "!'rePetition Loan Documents")1, security interests in and liens (collectively, the "Pre-PetitionLiens") ") upon all or substantially all of Debtor's personal property, including, without

A true and correct copy of the Pre-Petition Loan Documents are attached hereto as Composite Exhibit"C."

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limitation, all ofDebtor's accounts, contract rights, general intangibles (including, but not limitedto income tax refunds, copy-rights, internet and website addresses and rights, license rights,patent rights, trademarks and goodwill), chattel paper, equipment, machinery, instruments,documents, books and records relating to aforementioned collateral, the bonds filed in theBroward County Litigation, any recovery of monies or judgments in favor of the Debtor in theBroward County Lawsuit, and any proceeds of the aforementioned collateral (all such personalproperty, as the same existed on the Petition Date, together with all cash and non-cash proceedsthereof, the "Pre-Petition Collateral").

I0. In com1ection with the Debtor's proposed use of Cash Collateral hereunder and inorder to provide the Lender with adequate protection for the aggregate diminution of the CashCollateral resulting from the Debtor's use thereof, the Debtor has agreed, subject to approval ofthis Court, that the Lender, shall have, nunc pro tunc as of the commencement of this Chapter IIcase, a replacement lien pursuant to II U.S.C. 361(2) on and in all property of the Debtoracquired or generated after the Petition Date, but solely to the same extent and priority, and ofthe same kind and nature, as the property of the Debtor securing the prepetition obligations to theLender under the Pre-Petition Loan Documents.

11. For avoidance of doubt, the Lender shall not have or be granted a replacementlien on or against any claims or causes of action arising under Sections 542 through 550 of theBankruptcy Code (the "Avoidance Actions") or on or against the proceeds of the AvoidanceActions.

12. In the event that diminution occurs in the value of Cash Collateral from and afterthe Petition Date as a result of the Debtor's use thereof in an amount in excess of the value of thereplacement liens granted herein, then the Lender shall be granted an administrative claim under

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section 507(b) of the Bankruptcy Code with priority over all other administrative expense claims,subject to the Carve Out, as hereinafter defined.

13. The Debtor proposed to use the Cash Collateral strictly in accordance with theterms of that ce1iain Budget prepared by the Debtor. The Budget covers the 30 day period fromthe Petition Date through the end of August 2013. The Debtor also requests that it be authorized:(i) to exceed any line item on the Budget by an amount equal to ten percent (10%) of each suchline item; or (ii) to exceed any line item by more than ten percent (10%) so long as the total of allamounts in excess of all line items for the Budget do not exceed ten percent (1 0%) in theaggregate of the total Budget.

14. The Debtor requests that the replacement liens and administrative expense claimsgranted to the Lender pursuant to the terms hereof be at all times subject and junior to: (i) thefees of the Office of the United States Trustee pursuant to 28 U.S.C. 1930; (ii) any court costs,and (iii) the fees and expenses for Court approved professionals for the Debtor in the amountsand as set forth in the Budget (collectively, the "Carve Out").

15. Supplemental to the replacement liens provided to the Lender hereunder, theDebtor will furnish the Lender with such financial and other information as required by the PrePetition Loan Documents or other reports as the Lender reasonably requests.

16. The replacement liens granted to the Lender hereunder in connection with the useof the Cash Collateral shall be valid and perfected without the need for the execution or filing ofany further documents or instruments.

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APPLICABLE AUTHORITY FOR RELIEF REQUESTEDA. The Court Should Approve the Debtor's Requested Use of Cash CollateralTo The Extent That the Lender Consents to Such Use.17. A debtor's use of estate propetiy is governed by Section 363 of the Bankruptcy

Code. Section 363(c)(I) provides that a debtor may use estate propetiy in the ordinary course ofbusiness without notice or a hearing. Section 363(c)(2) imposes specific limitations uponproperty that constitutes cash collateral and provides that a debtor can only use, sell or lease cashcollateral either if the entity with an interest in the cash collateral consents or the Comiauthorizes such use. As set forth in the First Day Declaration, the Debtor has been working withthe Lender over the past several months in connection with the exploring various alternativesconcerning the restructuring of the obligations owed the Lender. The Debtor intends to continueto use its best efforts to explore a consensual agreement with the Lender regarding the proposeduse of Cash Collateral pursuant to this Motion. To the extent that the Debtor and the Lender canreach such an agreement, this Court should approve the Debtor's use of the Lender's CashCollateral pursuant to Section 363(c )(2) of the Bankruptcy Code under the terms of any suchagreement.

B. The Court Should Enter an Order Authorizing the Continued Use of CashCollateral Because the Debtor Is Providing the Lender with AdequatePtoteetion.18. Pursuant to the terms hereot; the Debtor is providing and will provide adequate

protection to the Lender as contemplated and required by Sections 361, 363(c)(2)(B) and 363(e),respectively, and hereby seeks the Comi's approval thereof. The Bankruptcy Code does notexplicitly define "adequate protection," but does provide a non-exclusive list of the means bywhich a debtor may provide adequate protection, including "other relief'' resulting in the"indubitable equivalent" of the secured creditor's interest in such property. See 11 U.S.C. 361.

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What constitutes adequate protection must be evaluated on a case-by-case basis. In re Swede/andDev. Group Inc., 16 F.3d 552, 564 (3d Cir. 1994) (citing In re O'Connor, 808 F.2d 1393, 1396-97 (101h Cir.l987)); In re Martin, 761 F.2d 472,476 (81h Cir. 1985).

19. Adequate protection is meant to ensure that the secured lender receives the valuefor which it originally bargained. Swede/and, 16 F.3d at 564 (citing O'Connor, 808 F.2d at1396) ("the whole purpose of adequate protection for a creditor is to ensure that the creditorreceives the value for which he bargained pre bankruptcy"). Courts have noted that "the essenceof adequate protection is the assurance of the maintenance and continued recoverability of thelien value during the interim between the filing . . . and the confirmation." In re Arriens, 25 B.R.79, 81 (Bania. D. Or. 1982). The focus of the requirement is to protect a secured creditor fromdiminution in value during the use period. See In re Kain, 86 B.R 506, 513 (Bankr. W.D. Mich.1988); In re Becker Indus. Corp., 58 B.R. 725, 736 (Bania. S.D.N.Y. 1986); In re LedgmereLand Corp., 116 B.R. 338, 343 (Bania. D. Mass. 1990).

20. The Debtor's requested use of Cash Collateral and the protections afforded to theLender herein, including but not limited to, replacement liens, monthly reporting as requiredunder the Loan Documents, and allowance of super priority administrative claims (to the extentof any diminution in the Lender's collateral), in light of the circumstances, are reasonable,appropriate, and sufficient to satisfY the legal standard of "adequate protection" and will serve tomaintain thf.' value of the Lender's Collateral.

(a) The Use of Cash Collateral Will !'reserve the Debtor 's Going ConcernValue, Which Will Inure to the Benefit of the Estate.

21. The continued operation of the Debtor's business will preserve and maintain itsgoing concem, enterprise value and enable the Debtor to continue to operate and maximize itsvalue in the reorganization process. However, as discussed above, if the Debtor is not allowed to

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use Cash Collateral, its business operations will be substantially interrupted. This would result ina significant diminution in the value of the Debtor's assets (including the Cash Collateral) to thedetriment of the Debtor's creditors and interest holders and other harm to the estate.

22. It is well established that a bankruptcy court, where possible, should resolveissues in favor of preserving the business of the debtor as a going concern:

A debtor, attempting to reorganize a business under Chapter II,clearly has a compelling need to use "cash collateral" in its eff011to rebuild. Without the availability of cash to meet daily operatingexpenses such as rent, payroll, utilities, etc., the congressionalpolicy favoring rehabilitation over economic failure would befrustrated.In re George Ruggiere Cluysler-Plymouth, Inc., 727 F.2d 1017,1019 (11 111 Cir. 1984).

23. Accordingly, comts authorize the use of cash collateral to enhance or preserve thedebtor's going concern value. For example, in In re Stein, 19 B.R. 458 (Bankr. E.D. Pa. 1982),the comt allowed a debtor to use cash collateral where the secured party was undersecured,finding that the use of cash collateral was necessary to the debtor's continued operations and thecreditor's "secured position can only be enhanced by the continued operation of the [debtor'sbusiness]" !d. at 460; see also Federal Nat. Mort. v. Dacon Bolingbrook Assocs., 153 B.R. 204,214 (N.D. Ill. 1993) (security interest protected to extent debtor reinvested rents in operation andmaintenance of the property); Inre Constable Plaza Assoc., 125 B.R. 98, 105 (Bankr. S.D.N.Y.1991) (debtor's reinvestment of rents to maintain and operate office building "will serve topreserve or enhance the value of the building which, in turn, will protect the collateral coveredby [the] mortgage"); In re Dynaco Cm]J., 162 B.R. 389, 395-96 (Bankr. D.N.H. 1983) (findingthat the alternative to the debtor's use of cash collateral, termination of its business, would doomreorganization and any chance to maximize value for all creditors); In re Karl A. Neise, Inc., 16B.R. 600, 602 (Bankr. S.D. Fla. 1981) (marginally secured creditor adequately protected by lien

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on postpetition property acquired by debtor; debtor can use cash collateral "in the normaloperation of their business").

24. As discussed above, the Debtor will use Cash Collateral in the ordinary course ofits business to, among other things, continue to operate and maintain its operations inanticipation of restructuring its debts through the reorganization process. If the Debtor cannotcontinue to use Cash Collateral, it likely will be forced to cease operations and convert this casesto Chapter 7. This cessation would irreparably damage the Debtor's business by causing, amongother things, employee attrition, lost revenues, loss of business reputation and loss of ability tosell certain business segments. By contrast, granting authority will allow the Debtor to maintainoperations and preserve the going concern value of its business, which will inure to the benefit ofthe Lender, all other creditors, and interest holders.

(b) The Lender is Adequately Protected by the Grant of ReplacementLiens on Post-Petition Assets and the Allowance of a SuperpriorityAdministrative Expense Claim.25. The Bankruptcy Code expressly provides that "granting a replacement lien is a

means of adequate protection." 11 U.S.C. 361(2). Granting replacement liens provides ampleadequate protection of the secured creditor's interest in cash collateral. See, e.g., In re O'Connor,808 F.2d at 1393; In re Dixie-Shamrock Oil & Gas. Inc., 39 B.R. 115, 118 (Bankr. M.D. Tenn.1984). The Debtor will adequately protect the Lender's interests in Cash Collateral by, amongother things, providing post-petition security interests in the Debtor's assets of the same type asthe Lender held pre-petition to the extent the Debtor's use of Cash Collateral results in a post-petition decrease in the value of the Collateral securing the Lender's claims. Such post-petitionsecurity interests will be of the same validity and priority as the Lender's pre-petition liens andsecurity interests.

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26. The Debtor believes that use of Cash Collateral pursuant to the terms andconditions set forth above is fair and reasonable and adequately protects the Lender. Thecombination of: (i) the Debtor's ability to preserve the going concern value of the business withthe use of Cash Collateral; (ii) the post-petition liens granted to the Lender; (iii) the right toassert super-priority administrative expenses granted to the Lender herein, and (iv) providing theLender with the other protections set forth herein, including the availability of financialreporting. For all of the reasons stated above, this Court's approval of the Debtor's use of theLender's Cash Collateral is proper herein.

27. A proposed Interim Order granting the Debtor's use of Cash Collateral on theterms set forth herein is attached hereto as Exhibit "B."

WHEREFORE, the Debtor respectfhlly requests that the Court enter the Interim Order:(A) authorizing the Debtor (i) to use the Cash Collateral ofthe Lender pursuant to the terms setforth above and in accordance with the Budget, and (ii) to grant the replacement liens and super-priority administrative expense claims as set forth above in connection with the use thereof, and(B) setting a final hearing hereon approximately thirty (30) days after the entry of the InterimOrder on this Motion, and for such other and further relief as the Court deems just and proper.

Dated: July 31,2013.

(26815995;6)

Respectfully Submitted,AKERMAN SENTERFITTProposed Attorneys for Debtor-in-Possession350 East Las Olas, Blvd., Suite 1600Ft. Lauderdale, Florida 33301Tel: (954) 463-2700 I Fax: (954) 463-2224By: Is! Eva/ Berger

Eyal Berger, Esq.Florida Bar No. II 069eya I.berger@akennan. comCatherine Douglas, Esq.Fla. Bar No. [email protected]

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CERTIFICATE OF SERVICEI HEREBY CERTIFY that a true and correct copy of the foregoing was served this

July 31, 2013 via CM/ECF and/or U.S. Mail upon all parties listed on the attached service list.

{26815995;6)

AKERMAN SENTERFITTProposed Attorneys for Debtor-in-Possession350 East Las Olas, Blvd., Suite 1600Ft. Lauderdale, Florida 3330 ITelephone: (954) 463-2700Facsimile: (954) 463-2224

By: /s/ Eva! BergerEyal Berger, Esq.Florida Bar No. 11069eyal. [email protected] Douglas, Esq.Fla. Bar No. [email protected]

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Christopher M. Verdini, Esq.Patrick J. McElhinny, Esq.Thomas E. Birsic, Esq.Thomas M. Joseph, Esq.K&L Gates LLPK&L Gates Center210 Sixth AvenuePittsburgh, P A 15222

SERVICE LIST

christopher. verdini@k Igates. com; patrick.mcelhinny@kl gates. com;[email protected]; [email protected] for Grant Street Group Inc.Ari Newman, Esq.Mark D. Bloom, Esq.Greenberg Traurig PA333 SE 2nd Avenue, Suite 4400Miami, FL [email protected]; [email protected] for Adilia Ente1prises, S.A.Office of the US [email protected]

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EXHIBIT "A"


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ASH COLLATERAL BUDGET: REALAUCTION.COM AUG______ --1-- ------------------ASH IN BOA CHECKING

----------RA FORECLOSURE AUCTION BILLINGS------- -AYREVARD TOROWARD

TOADEADE TOMUVALR4CUVAL TOSCAMBIAILLSBOROUGH

NDIAN RIVERTO

TO

TO

TOTO

TO

0.005500.002500.00

48000.0010000.003528.00441.00

95000.0031000.006000.00

21000.004000.001500.00

18000.002000.00

11000.009000.002000.004000.00

54000.001000.00

11000.0021000.001000.00

13000.003626.00

13000.0011000.002500.001000.00

-- 406595.00


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EXPENSESNITED STATES TRUSTEE FEES

DENNIS MCCARTHY DBA-1099I SHIPPING

RR BRIDGEFIELD INS- WORKERS COMP& LAMPLTHOMAS FEES

PA (Accountants)

W2 EMPLOYEESGEEKARATI- OMAR AMARO (1099)------------THE VANN GROUP, LLC (1099)------------WORKERS(9)@ $151HR-40HRIWK1/WK2---

(9)@ $151HR-40HRIWK3/WK4----

PHONE

ATA RANDOM SORTS)

I FIRST CARD CREDIT CARDEXPENSE RPTS

13350.008000.00200.0013000.00

1600.00864.003500.00

80000.00

1179.0034000.00-- 170000.007000.006000.006250.00

1500.0060.00100.00350.00225.002500.00225.0012500.007000.00350.00300.001500.003500.0025000.002500.00

-- 402553.00-4042.00


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EXHIBIT " B"


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In re:

UNITED STATES BANKRUJ>TCY COURTSOUTHERN DISTRICT OF FLORIDAFort Lauderdale Divisionwww.flsb.uscourts.gov

Chapter 11REALAUCTION.COM, LLC, Case No. 13-28260-RBR

Debtor.- - - - - - - - - - ~ /[PROPOSED] INTERIM ORDER (A) AUTHORIZING THE DEBTOR (1) TO USECASH COLLATERAL ON AN INTERIM BASIS PURSUANT TO 11 U.S.C. 363, AND

(2) TO PROVIDE ADEQUATE PROTECTION IN CONNECTION THEREWITH ANDPURSUANT TO 11 U.S.C. 361, AND (B) SETTING A FINAL HEARING PURSUANTTO BANKRUPTCY RULE 4001

THIS MATTER was before this Court on August_, 2013 at 9:30a.m. upon the motion(the "Motion")1 of REALAUCTION.COM, LLC (the "Debtor"), as debtor-in-possession in theabove-captioned case for entry of an Order (A) Authorizing the Debtor (1}to use Cash Collateralon an Interim Basis Pursuant to II U.S.C. 363 and (2) to Provide Adequate Protection in1 Unless otherwise defined herein, all capitalized terms shall have the meaning ascribed to them in the motion.{26816748;3}


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Connection Therewith Pursuant to 11 U.S.C. 361, and (B) Setting a Final Hearing Pursuant toBankruptcy Rule 4001; the Court finding that it has jurisdiction over the matters raised in theMotion pursuant to 28 U.S.C. !57 and 1334; this is a core proceeding pursuant to 28 U.S.C.

157(b)(2); the relief requested in the Motion is in the best of interests of the Debtor, its estate andits creditors; proper and adequate notice of the Motion and the hearing thereon has been givenand that no other or further notice is necessary; and upon the record herein after due deliberationthereon, good and sufficient cause exists for the granting of the relief as set f011h herein.Accordingly, it is

ORDERED:I. The Motion is GRANTED.2. The Debtor is authorized to use Cash Collateral, as defined in 11 U.S.C. 363(a)

and in the Motion, on a preliminary basis through the date of the hearing set forth below and inaccordance with the Budget attached to the Motion.

3. The Debtor shall be authorized to exceed the amounts set forth in the Budget by

the sum of 110% of the disbursements projected in the Budget.4. In connection with the Debtor's proposed use of Cash Collateral hereunder and in

order to provide the Lender with adequate protection for the aggregate diminution of the CashCollateral resulting from the Debtors' use thereof, the Lender, shall have, nunc pro tunc as of thecommencement of these Chapter II cases, a replacement lien pursuant to 11 U.S.C. 361 (2) onand in all property of the Debtor acquired or generated after the Petition Date, but solely to thesame extent and priority, and of the same kind and nature, as the property of the Debtor securingthe prepetition obligations to the Lender under the Pre-Petition Loan Documents (the"Replacement Liens").

{26816748;3} - 2-


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5. For avoidance of doubt, the Lender shall not have or be granted a ReplacementLien on or against any claims or causes of action arising under Sections 542 through 550 of theBankruptcy Code (the "Avoidance Actions") or on or against the proceeds of the Avoidance

Actions.6. In the event that diminution occurs in the value of Cash Collateral from and after

the Petition Date as a result of the Debtor's use thereof in an amount in excess of the value of theReplacement Lens granted herein, then the Lender shall be granted an administrative claim undersection 507(b) of the Bankruptcy Code with priority over all other administrative expense claims,subject to the Carve Out, as defined in the Motion. Notwithstanding anything herein to thecontrary, the Lender's super-priority administrative expense claim shall not attach to or be paidfrom the proceeds of the Avoidance Actions.

7. In addition to the Replacement Lens and super-priority administrative claimsprovided to the Lender hereunder, the Debtor will furnish the Lender with such financial andother information as required by the Pre-Petition Loan Documents or other reports as the Lenderreasonably requests.

8. The Replacement Liens granted to the Lender hereunder in connection with theuse of the Cash Collateral shall be valid and perfected without the need for the execution orfiling of any further documents or instruments.

9. This Order, together with the authorization to use Cash Collateral and the grantingof replacement liens pmsuant hereto, shall be with a full reservation of the rights of the Debtorand the Debtor's bankruptcy estate to contest the extent, validity and priority of the debt owed,and liens granted, to the Lender.

I 0. A further hearing, which may be a final hearing, on the relief soughthereunder shall be held on _______ at _____ a.m./p.m. at the United States(26816748;3} - 3 -


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Bankruptcy Court, 299 East Broward Blvd, Courtroom __ Ft. Lauderdale, Florida 33301.The Debtor shall serve copies of this Order upon the U.S. Trustee, all counsel of record, thesecured creditors, the top 20 unsecured creditors via U.S. mail immediately upon receipt hereof,

which shall constitute good and sufficient notice of the hearing.

Submitted by:Eyal Berger, Esq.AKERMAN SENTERFITTProposed Allorneysfor Debtor-in-Possession350 East Las Olas, Blvd., Suite 1600Ft. Lauderdale, Florida 33301Telephone: (954) 463-2700Facsimile: (954) [email protected] to: Eyal Berger, Esq.

###

(Attomcy Berger is directed to serve a conformed copy of this Order on all parties in interest)

{26816748;3} - 4-


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COMPOSITE EXHIBIT "C"


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~ ~ - - - - - - - - - - - - - - - - - - - - - - - -

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,AS AMENDED, OR TilE SECURITIES LAWS OF ANY STATE AND MAY NOT BESOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TOAN EFFECTIVE REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS. THE TRANSFER OF THIS

' NOTE IS SUBJECTTO THE CONDITIONS SPECIFIED IN THIS NOTE, AND THEISSUER RESERVES TilE RIGHT TO REFUSE TilE TRANSFER OF THIS NOTE.THIS IS NOT A NEGOTIABLE INSTRUMENT.

ANY UNITED STATES PERSON W IIO HOLDS THIS OBLIGATION WILL BESUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS,INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(1) AND 1287(11) OFTHE INTERNAL REVENUE CODEPROMISSORY NOTE

U.S,$ 3,831,329.57 Issue Date: January :l, 2010FOR VALUE RECEIVED, the undersigned, REALAUCTION.COM, LLC, a limited liabilitycompany organized and existing under the laws of the State of Florida and having. its principalplace of business at 861 SW 78 Ave #I 02, Plantation FL 33324 (the "Issuer"), hereby promisesto pay to the order of ADILA ENTERPRISES, S.A., a company o r g a n i : o ~ e d and existing underthe laws of the British Virgin Islands, or its assignee ( t h e " ~ " or "Holder"), on the PaymentDates (the "Note"), the principal amount of Three Million Eight Hundred and Thirty-OneThousand Three Hundred and Twenty-Nine U.S. Dollars and 57/100 Cents (U.S,$3,831,329.57)(the "Principal AtnoWlt"), together with interest on the unpaid Principal Amount hereof at therate per annum equal to Sixteen Percent (16%).

I. Interest. Interest shall be equal to an amount determined for each day bymultiplying a daily interest factor (based on Sixteen Percent (16%) divided by 365) by thePrincipal Amount outstanding for such day. Any interest accrued and not paid on December 31of each year shall be added to and form part of the Principal Amount for the following year.2. Payment Dates.

(a) One Million Two H\mdred and Six l11ousand Three Hundred and Twenty-Nine U.S. Dollars and 57/100 Cents (U.S.$1,206,329.57) of the Principal Amount shall be dueand payable on December 31,2011.(b) Interest accrued for the period January 1, 2010 through December 31,2011 shall be due and payable on December 31, 2012.(c) Interest accrued for the period January 1, 2012 through December 31,2013 shall be due and payable on December 31, 2013.


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(d) Interest accrued for the period January 1, 2014 through December 31,2014 shall be due and payable on December 31,2014.

(e) The entire unpaid Principal Amount and any accrued and unpaid interestthen outstanding shall be due on October 18, 2014 or such earlier date as provided herein (the"Maturity Date").(f) The Issuer shall pay to the Payee a late charge of five percent (5%) of anyamount due that has not been paid to the Payee within ten (I 0) days of its Payment Date.(g) All payments except for the payment described in section 2(a) shall beapplicable first to interest and then to principal.(h) The Issuer shall pay all amounts owed under this Note in full when duewithout set-off, counterclaim, deduction or withholding for any reason whatsoever.(i) This Note may be prepaid on or before the Payment Dates withoutpenalty. All prepayments except for the payment described in section 2(a) be applied first toInterest accrued to the date ofprepayment and then to the Principal Amount.

3. Events of Default. The occurrence of any of the events set forth below in thisSection 3 shall be an "Event ofDefault" under this Note.(a) Nonpayment. Failure to pay within thirty (30) days after the PaymentDates of any Principal Amount or any interest accrued, as the case may be.(b) Bankrup!Qy. The entry of an order for relief in a voluntary or involuntarycase involving the Issuer under title II of the United States Code, II U.S.C. 101, et seq. orany other foreign, federal, or state bankruptcy, reorganization, receivership, insolvency or othersimilar law.(c) Dissolution or Liquidation. Tite liquidation, termination of existence,dissolution, insolvency or business failure of the Issuer, or the appointment of a receiver orcustodian for the Issuer or all or substantially all of its properties.

4. Acceleratjon, If an Event ofDefault occurs and is continuing, then, and in everysuch case, the Holder of this Note may, at its option, (a) declare the Principal Amount of thisNote to be due and payable immediately, by a notice in writing to the Issuer, and upon any suchdeclaration such Principal Amount shaH become immediately due and payable withoutpresentment, demand for payment, notice of acceleration, notice of intent to accelerate or othernotice of any kind, all of which the Issuer hereby expressly waives, (b) reduce any claim tojudgment, and/or (c) without notice of default or demand, pursue and enforce any other rightsand remedies available under applicable law, all ofwhich rights shall be cumulative and may beexercised successively or concurrently.

From and after any such Event of Default, and regardless of whether the Holderalso elects to accelerate the maturity of this Note, the entire Principal Amount remaining unpaidhereunder shall bear an augmented annual interest rate equal to the lesser of (i) twenty-five?


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percent (25%) per annum or (li) the highest applicable lawful rate. Failure to exercise ~ u c hoption or any other rights the Holder may in the event of any such Event of Default. be e ~ t t t l e dto, shall not constitute a waiver of tl1e right to exercise such option or any other nghts. m theevent of any subsequent Event of Default, whether of the same or different nature. No wa1vru ofany right or remedy by the Holder shall be effective unless made in writing and signed by theHolder, not shall any waiver on one occasion apply to any future occasion.

If this Note is placed in the hand of an attorney for collection or is collectedthrough any legal proceeding, or in case it becomes necessary to protect the security hereof(whether suit be brought or not), ti1e Issuer promises to pay (in addition to costs anddisbursements otherwise allowed) all costs of collection, including to the extent pennitted bylaw, reasonable attorney's fees and court costs, including fees and costs incurred for anyappellate procedures.In the event the interest provisions hruwfor any exactions provided for herein orany other docnment related to the loan this Note evidences shall result for any reason at anytimeduring the tenn of this Note in an effective rate of interest which transcends the limit of validityprescribed by the applicable usury laws, then .iJllil facto the obligation to be fulfilled shall bereduced to the limit of such validity, so that in no event shall any exaction be possible under thisNote that is in excess of the limit of such validity, but such obligation shaH be fulfilled to thelimit of such validity. In no event shaH the Issuer be bound to pay for the use or detention of ti1emoney loaned and evidenced hereby, or the Holder's forberu:ance ln collecting same, interest, orpayment in the nature of interest of more than the maxim\lffi rate lawfully collectible inaccordance with applicable usury laws; and the right to demand any such excess shall be and ishereby waived.

5. Miscellaneous.(a) Ooveming Law. This Note shall be governed by, and construed inaccordance with the laws of the State ofFlorida, except that Federal law shall apply to the extentthat lt may pennit interest to be charged at a rate higher than that which might otherwise bepennissible under Florida law.(b) Presentment. The Issuer and all persons liable or to become liable on thlsNote: (i) waive presentment, protest and demand, notice of protest, demand, maturity anddishonor and nonpayment of this Note, and any other notice or further requirement necessary tohold each of them liable for payment, and (ii) consent to any and all renewals and extensions intime of payment hereof, and (iii) agree, further, that any time and from time to time and uponnotice, the tenns of payment herein may be modified without in any way affecting the liability of

any party to this Note or any person liable or to bccome liable with respect to MY Indebtednessevidenced hereby.(c) Assignment: TI1e Holder of this Note shall have the right to assign thisNote; provided, however, tilat the right to principal ot; and stated interest on this Note is notnegotiable by endorsement of the Holder or any assignee of the Holder urdess such endorsementis accompanied by the following actions of he Issuer:


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(i) The Issuer shall maintain a registry of the ownership of this Note(the "Registry") and its principal office.(ii) The Registry shall reflect Adlla Enterpises, S.A. as the originalHolder of this Note, and shall reflect such subsequent transferee as the Issuer shall receive n o t i ~ ethereof, by delivery to it of a certified copy of the assignment of the Note duly executed by thethen current Holder thereof.

(iii) Notices of the assignment of this Note shall be furnished by theHolder {as reflected in the Registry) to the Issuer by certified or registered mail.No transfer of this Note shall be valid unless reflected in the Registry inaccordance with the provisions of the above paragraph.(d) Documentary Stamp Tax. This Note has been executed by the Issuer anddelivered by the Issuer to the Holder outside of the Slate of Florida. Accordingly, this Note isexempt from Florida documentary stamp tax pursuant to Rule 12B4.053(34) of the FloridaAdministrative Code.

[SIGNATURE PAGE FOLLOWS]

4


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H.WITNESS the due execution hereof this '" of February 2010, effective as of the datefirst written above. -

MIA t80,400,485v2

REAI,AUCTION.COM, LLC, a Florida limitedliability C


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STATE OF FLORIDA UNIFORM COMMERCIAL CODEFINANCING STATEMENT FORMA NAME & DAYTIME PHONE NUMBER OF CONTACT PERSONErika G. Litvak, Esq. 305-579-0744B. SEND ACKNOWLEDGEMENT TO;NameAddress

Erika G. Litvak, Esq.Greenberg Traurig, P.A.

Address 1221 Brickel: AvenueCitv/State/Zin Miami, Florida 33131

TilE ABOVE SPACE IS FOil FILING OFVICE USE ONLY

ROAD TOWN Tortuht CODE

4. This covers the

The property covered by this Financing Statement is described on Exhibit "A" attached hereto.

5. ALTERNATE DESIGNATION (if applicable) 0 LESSEE/LESSOR 0 CONSIGNEEICONSIGNORO BAILEEIUAILOR0 AG. LIEN 0 NON-UCC FILING 0 SELLERIUUYER6. Floridn DOCUMENTARY STAMP TAX- YOU ARE REQUIRED TO CHECK EXACTLY ONE BOXt8J All documentary stAmps due and payable or to become due and payable pursuant to s. 201.22 F.S., have been paid.0 Florida Documentary Stamp Tax is not required.7. OPTIONAL FILER REFERENCE DATA

IBRITISHVIRGIN

STANDARD FORM -FORM UCC-1 (REV.OI/2009) Filing Office Cupy Approved by the Secretary ufState, Slate of FloridA


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Exhibit "A" to UCC

Exhibit "A" UCC from REALAUCTION.COM, LLC. ("Debtor") and for the benefit of ADILAENTERPRISES, S.A. ("Secured Party").Description ofCollateral:

I. All accounts, now owned or hereafter acquired;2. All contract rights, now owned or hereafter acquired;3. All general intangibles, including but not limited to income tax refunds, copy-rights, internet andwebsite addresses and rights, license rights, patent rights, trademarks and good will, now owned

or hereafter acquired;4. All chattel paper, now owned or hereafter acquired;

5. All equipment, including any accessions and additions thereto, now owned or hereafter acquired;6. All machinery, including any accessions and additions thereto, now owned or hereafter acquired;7. All instruments, whether negotiable or not, now owned or hereafter acquired;8. All inventory, now owned or hereafter acquired;9. All documents, now owned or hereafter acquired;I0. All books and records relating to the above-described Collateral;

The above types of collateral are as defined in Chapter 679, Chapter 677, and Chapter 671, Fla.Stat. (1993), as amended from time to time.II . All proceeds of the above-described collateral;12. The Bonds filed in that certain case styled, GRANT STREET GROUP, INC., Plaintiff, vs.REALAUCTION.COM, LLC, et al, Defendants, filed in the Circuit Court of the 17 111 JudicialCircuit in and for Broward County, Florida, under Case No. 06-006743 (08) (the "Lawsuit"), andthe proceeds thereof, together with any other bond or cash which may be filed with the court in

said Lawsuit;13. Any recovery ofmonies or judgments in favor of Debtor in said Lawsuit.

Any term above which is defined in the Florida Uniform Commercial Code ("UCC") has the meaninggiven to the term in the UCC.


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SECURITY AGREEMENT(CHATTEL MORTGAGE)

THIS AGREEMENT, made this ! l i i W ~ day of March, 2010 (the "Effective Date"), underthe laws of the state of Florida between REALAUCTION.COM, LLC, a Florida limited liabilitycompany, herein referred to as the Debtor, whose business addresses is 861 S.W. 78 Avenue, Suite102, Plantation, FL 33324, and ADILA ENTERPRISES, S.A., a company organized under thelaws ofthe British Virgin Islands, herein called the Secured Party, whose address is: P.O. Box 146,Road Town, Tortola, British Virgin Islands.WITNESSETH:

To secure the payment of an indebtedness in the principal amount of $3,831,329.57 (the"Principal Amount") with interest, payable as set forth in the promissory note payable as follows:

The note bears interest at a fixed rate of sixteen percent (16%) per annum. A payment ofOne Million Two Hundred and Six Thousand Three Hundred and Twenty-Nine U.S.Dollars and 57/100 Cents (U.S. $1,206,329.57) of the Principal Amount shall be due andpayable on December 31, 2011; a payment of interest accrued for the period January I,2010 through December 31, 2011 shall be due and payable on December 31, 2012; apayment of interest accrued for the period January I, 2012 through December 31, 2013shall be due and payable on December 31, 2013; a payment of interest accrued for theperiod January I, 2014 through December 31, 2014 shall be due and payable onDecember 31, 2014; and the entire unpaid Principal Amount and any accrued and unpaidinterest then outstanding shall be due on October 18, 2014 or such earlier date asprovided in the Note.as evidenced by a note dated January I, 20 I 0 (the "Note"), and also to secure any otherindebtedness or liability of the Debtor to the Secured Party direct or indirect, absolute orcontingent, due or to become due, now existing or hereafter arising, including all future advancesor loans which may be made at the option of the Secured Party, provided that any such advances orloans are made in accordance with that certain Subordination Agreement by Financial Markets,LLC, Secured Creditor, and Debtor dated as of the date hereof (the "Subordination Agreement"),(all hereinafter called the "obligations"), Debtor hereby grants and conveys to the Secured Party asecurity interest in, and mortgages to the Secured Party,

(a) the property described in the Schedule A attached hereto and incorporated hereinby reference (hereinafter called the "Collateral"), which collateral the Debtorrepresents will be used primarily in business or other usc;(b) all property, tangible and intangible, including accounts receivables, goods andchattels of the san1e classes as those scheduled, acquired by the Debtor subsequentto the execution of this agreement and prior to its termination;(c) all proceeds thereof, if any; and,(d) all increases, substitutions, replacements, additions and accessions thereto.


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DEBTOR, WARRANTS, COVENANTS AND AGREES, SUBJECT TO THE TERMS ANDCONDITIONS OF THE SUBORDINATION AGREEMENT, AS FOLLOWS:To pay and perform all of the obligations secured by this agreement according to theirterms.To defend the title to the Collateral against all persons and against all claims and demands,whatsoever, which Collateral, except for the security interest granted hereby, is lawfully owned bythe Debtor and is now free and clear of any and all liens, security interests, claims, charges,encumbrances, taxes and assessments except as may be set forth in Schedule B.On demand of the Secured Pruty to do the following: furnish further assurance of title,execute any written agreement or do any other acts necessary to effectuate the purposes andprovisions of this agreement, execute any instrument or statement required by law or otherwise inorder to perfect, continue or terminate the security interests of the Secured Pruty in the Collateral

and pay all costs of filing in connection therewith.To retain possession of the Collateral during the existence of this agreement and not to sell,exchru1ge, assign, loan, deliver, lease, mortgage or otherwise dispose of same without the wtittenconsent of the Secured Party. The note secured hereby shall be due upon sale or transferof theCollateral.To keep the Collateral at the location specified in the schedule and not to remove same(except in the usual course of business for temporary petiods) without the prior wtitten consentofthe Secured Pruty.To keep the Collateml free and clear of all liens, charges, encumbrances, taxes andassessments, other than the first lien ofFinancial Markets, LLC.To pay, when due, all taxes, assessments and collateral fees relating to the Collateral.To keep the Collateral, at Debtor's own cost and expense, in good repair and condition andavailable for inspection by the Secured Party at all reasonable times.To keep the Collateral fully insured against loss by fire, theft and other casualties, Debtorshall give immediate written notice to the Secured Party and to insurers of loss or damage to theCollateral ru1d shall promptly file proofs ofloss with insurers.Except for the security interests referred to in Schedule B, that the security interest grantedherein is a first lien (Chattel Mmtgage) encumbering the Collateral superior in right title and

interest to all other encumbrances upon the subject Collateral.Except for the security interest granted to Secured Party as to the Collateral, and thoseitems referred to in Schedule B attached hereto and incorporated herein by reference, there havebeen no other liens or security interests granted in the Collateral to any other patty, and no lien orencumbrance exists against the Collateral. So long as the Note remains outstanding, Debtor shallnot mortgage, pledge or grant any other security interest or lien to any other pruty in or to the

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Collateral without the prior written consent of Secured Party which consent may be granted orwithheld at Secured Party's sole and absolute discretion, except that Debtor may grant a firstpriority security interest in the Collateral to Financial Markets, LLC.

So long as Debtor is not in default under the Note, this Security Agreement, or any otherloan documents made in connection with the Note (the "Other Loan Documents"), Debtor shallbeentitled to collect and retain all monies due it in connection with the Collateral and to continue toenjoy all of its right and privileges in connection with the collection with the Collateral, andSecured Patty shall have no right to enforce the provisions of the Collateral or of this Agreementuntil Debtor is in default under the Note, this Security Agreement or any of the Other LoanDocwncnts.

If a default occurs under the Note, the Security Agreement or any of the Other LoanDocwnents beyond any applicable cure period (a "Default"), the Secured Party shall have the right,but not the obligation, to enforce all remedies available to it under the Security Agreement, theOther Loan Documents, and applicable law, including but not limited to Article 9 of the FloridaUniform Commercial Code, and to receive any proceeds resulting from such enforcement; anycash proceeds received may be applied in the same manner to principal and interest payments maybe applied under the Note and Security Agreement. Debtor shall be in default under this SecurityAgreement upon the default in the payment or performanceof any obligation, covenant or liabilitycontained or referred to herein or in the Note, this Security Agreement or any of the Other LoanDocuments, continuing beyond applicable cure periods, if any. Furthermore, a default hereundershall constitute a default under the Note, and the Other Loan Documents. In enforcing its rightshereunder, Secured Party shall not be required to resmt to any particular security, right or remedyor to proceed in any particular order of priority, or otherwise act or refrain from acting, but shallhave the right at any time and from time to time, in any mrumer and in any order to enforce itssecurity interests, liens, rights, and remedies, or any of them, pursuru1t to this Security Agreementor any other instrument or otherwise including, but not limited to the Note and the Other LoanDocuments.THE PARTIES FURTHERAGREE, SUBJECT TO THE TERMS AND CONDITIONS OF

THE SUBORDINATION AGREEMENT, AS FOLLOWS:Waiver of or acquiescence in any default by the Debtor, or failure of the Secured Patty toinsist upon strict performance by the Debtor of any watl'atlties or agreements in this SecurityAgreement, shall not constitute a waiverof any subsequent or other defaultor failure.Notices to either party shall be in writing and shall be delivered personally or by mailaddressed to the party at the address herein set forth or otherwise designated in writing.The Uniform Commercial Code shall govern the rights, duties and remediesof the partiesand any provisions herein dec!rued invalid under any law shall not invalidate any other provision

of this agreement.Without limiting anything contained herein, the following shall also constitute a Default byDebtor:

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Failure to pay the principal or any installment ofprincipal or of interest on the indebtednessor any Note when due. Failure by Debtor to comply with or perform any provision of thisagreement. False or misleading representations or warranties made or given by Debtor inconnection with this agreement. Subjection of the Collateral to levy of execution or other judicialprocess. Commencement ofany insolvency proceeding by or against the Debtor. Any reduction inthe value of the Collateral or any act of the Debtor which imperils the prospect of full performanceor satisfaction of the Debtor's obligations herein. An adverse rnling in the appeal of that certaincase styled, GRANT STREET GROUP, INC., Plaintiff, vs. REALAUCTION.COM, LLC, et al,Defendants, filed in the Circuit Court of the 17u' Judicial Circuit in and for Broward County,Florida, under Case No. 06-006743 (08), entitling the Plaintiff therein to collect against the cahbonds.Upon any default of the Debtor and at the option of the Secured Patty, the obligations

secured by this agreement shall immediately become due and payable in full without notice ordemand and the Secured Party shall have the rights, remedies and privileges with respect torepossession, retention and sale of the Collateral and disposition of the proceeds as are accorded bythe applicable sections of the Uniform Commercial Code respecting "Default" and under Floridalaw.

Upon any default and upon demand, Debtor shall assemble the Collateral and make itavailable to the Secured Party at the place and at the time designated in the demand. In connectionwith any litigation regarding this agreement, the Secured Party shall be entitled to the appointmentof a receiver to take possession of and/or operate the Collateral.

Upon any default, the Secured Party's reasonable attorney's fees and the legal and otherexpenses for pursuing, searching for, receiving, taking, keeping, storing, adve1tising, and sellingthe Collateral shall be chargeable to the Debtor. In connection with any litigation regarding theNote or this Security Agreement, the prevailing party shall be entitled to an award of costs andattorneys' fees from the non-prevailing party.

The Debtor shall remain liable for any deficiency resulting from a sale of the Collateral andshall pay any such deficiency forthwith on demand.If the Debtor shall default in the performance of any of the provisions of this agreement onthe Debtor's part to be performed, the Secured Party may perform same for the Debtor's accountand any monies expended in so doing shall be chargeable with interest to the Debtor and added tothe indebtedness secured hereby, and in no event shall the Secured Party's performance constitute

a waiver ofany rights contained herein.The Secured Party is hereby authorized to file a Financing Statement.The terms, warranties and agreements herein contained shall bind and inure to the benefit

of the respective parties hereto, and their respective legal representatives, successors and assigns.The gender and number used in this agreement are used as a reference term only and shallapply with the satne effect whether the parties are of the masculine or feminine gender, corporateor other fmm, and the singulat shall likewise include the plural.

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This agreement may not be changed orally.This agreement shall be governed by, and construed in accordance with the laws of theState of Florida, except that Federal law shall apply to the extent that it may permit interest to becharged at a rate higher than that which might otherwise be permissible under Florida law.The Debtor shall not have the right to assign this agreement. The Secured Party shallhave the right to assign this agreement at any time without the consent or any other action byDebtor.DEBTOR AND SECURED PARTY HEREBY MUTUALLY KNOWINGLY,WILLINGLY AND VOLUNTARILY WAIVE THEIR RIGHT TO TRIAL BY JURY AND NOPARTY NOR ANY ASSIGNEE, SUCCESSOR, HEIR, OR LEGAL REPRESENTATIVE OFTHE PARTIES (ALL OF WHOM ARE COLLECTIVELY REFERRED TO IN THISPARAGRAPH AS THE "PARTIES") SHALL SEEK A JURY TRIAL IN ANY LAWSUIT,PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION PROCEEDING BASEDUPON OR ARISING OUT OF THIS CHATTEL MORTGAGE, 11-!E NOTE OR ANY OF THEOTHER LOAN DOCUMENTS OR ANY INSTRUMENT EVIDENCING, SECURING ORRELATING TO THE INDEBTEDNESS OR OTHER OBLIGATIONS SECURED HEREBY ORANY RELATED AGREEMENT OR INSTRUMENT, ANY OTHER COLLATERAL FOR THEINDEBTEDNESS SECURED HEREBY OR ANY COURSE OF ACTION, COURSE OFDEALING, STATEMENTS (WHETHER VERBAL OR WRITfEN) OR ACTIONS RELATINGTO TilE LOAN EVIDENCED BY THE NOTE OR THIS CHATTEL MORTGAGE. THEPARTIES ALSO WAIVE ANY RIGHT TO CONSOLIDATE ANY ACTION IN WHICH AJURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURYTRIAL HAS NOT BEEN WAIVED. FURTHER, BORROWER AND LENDER EACH WAIVESANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION ORPROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHERDAMAGES OTHER niAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE PROVISIONSOF THIS PARAGRAPH HAVE BEEN FULLY NEGOTIATED BY THE PARTIES. 11-!EWAIVER CONTAINED HEREIN IS IRREVOCABLE, CONSTITUTES A KNOWING ANDVOLUNTARY WAIVER, AND SHALL BE SUBJECT TO NO EXCEPTIONS. DEBTOR HASIN NO WAY AGREED WITH OR REPRESENTED TO SECURED PARTY OR ANY OTHERPARTY THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLYENFORCED IN ALL INSTANCES.IN WITNESS WHEREOF, the Parties have respectively signed and sealed these presentsthe day and year first above \Witten.

WHNESSES: DEBTOR:REALAUCTION.COM, LLC,a Florida limited liability companyB y : ~ ~

Lloyd Earl McClendon, III, Manager

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B k ~arc David Thomashaw, Manager

6


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Print Name:._______Print Name:._______

SECURED PARTY:

ADILA ENTERPRISES, S.A.,a company organized under the laws of the BritishVirgin Islands

BY:___________

7


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Case 13-28260-RBR Doc 5 Filed 07/31/13 Page 36 of 37. . . -------------------- ---- . -

SCHEDULE A

I. All accounts, now owned or hereafter acquired;2. All contract rights, now owned or hereafter acquired;3. All general intangibles, including but not limited to income tax refunds, copy-rights, internetand website addresses and rights, license rights, patent rights, trademarks and good will, now

owned or hereafter acquired;4. All chattel paper, now owned or hereafter acquired;5. All equipment, including any accessions and additions thereto, now owned or hereafter

acquired;6. All machinery, including any accessions and additions thereto, now owned or hereafteracquired;7. All instruments, whether negotiable or not, now owned or hereafter acquired;8. All inventory, now owned or hereafter acquired;9. All documents, now owned or hereafter acquired;10. All books and records relating to the above-described Collateral;

The above types of collateral are as defined in Chapter 679, Chapter 677, and Chapter 671, Fla.Stat. (1993), as amended from time to time.

11. All proceeds of the above-described collateral;12. The Bonds filed in that certain case styled, GRANT STREET GROUP, INC., Plaintiff, vs.REALAUCTION.COM, LLC, et al, Defendants, filed in the Circuit Court of the 171h JudicialCircuit in and for Broward County, Florida, under Case No. 06-006743 (08) (the "Lawsuit"),and the proceeds thereof, together with any other bond or cash which may be filed with the

court in said Lawsuit;13. Any recovery ofmonies or judgments in favor ofDebtor in said Lawsuit.


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Case 13-28260-RBR Doc 5 Filed 07/31/13 Page 37 of 37---------------

SCHEDULED

I. UCC-1 Financing Statement by Rea1auction.com, LLC, as debtor, andFinancial Services, LLC, as secured party, filed February 19,2010, under FileNo. 201002034580, with the Florida Secured Transaction Registry;

2. UCC-1 Financing Statement by Realauction.com, LLC, as debtor, and DellFinancial Services, L.P., as secured party, filed December 12, 2007, under FileNo. 200604346172, with the Florida Secured Transaction Registry;3. UCC-1 Financing Statement by Rcalauction.com, LLC, as debtor, and DellFinancial Services, L.P., as secured party, filed January 12, 2007, under FileNo. 200704570821, with the Florida Secured Transaction Registry;4. UCC-1 Financing Statement by Realauction.com, LLC, as debtor, and DellFinancial Services, L.P., as secured party, filed September 12, 2007, underFile No. 200706514538, with the Florida Secured Transaction Registry;5. UCC- J Financing Statement by Realauction.com, LLC, as debtor, and DellFinancial Services, L.P., as secured party, filed September 13, 2007, underFile No. 200706530045, with the Florida Secured Transaction Registry; and6. UCC-1 Financing Statement by Realauction.com, LLC, as debtor, and DellFinancial Services, L.P., as secured party, filed December 28, 2007, under FileNo. 200707320222, with the Florida Secured Transaction Registry.