Exhibit 10.5
CREDIT LINE
AGREEMENT
THIS CREDIT LINE AGREEMENT
is entered into as of May 28, ,
2009, between SO ACT NETWORK, INC. , a Delaware corporation
(“Borrower”), and Greg Halpern
(“Lender”).
Background
WHEREAS, Borrower wish to obtain a revolving
line of credit from Lender, and, upon the terms and subject to the
conditions set forth herein, Lender is willing to make the line of
credit available to Borrower.
NOW, THEREFORE, Borrower and Lender, intending
to be legally bound hereby, agree as follows:
ARTICLE I CREDIT
LINE
1.1. Credit Line
. Absent an Event of Default and earlier termination,
Lender hereby establishes for the benefit of Borrower, subject to
the terms and conditions of this Agreement, a revolving line of
credit (the “Credit Line”) in the amount of $100,000
(the “Maximum Credit”) that will mature and expire on
or before the second (2 nd )
anniversary of the date hereof (the “Maturity
Date”). All requests for advances under the Credit
Line shall be directed to Lender pursuant to a Notice of Borrowing
in the form of Exhibit A attached hereto, no more than one
(1) Notice of Borrowing shall be issued within any 30 consecutive
day period. Borrower’s unconditional obligation to repay
all advances under the Credit Line and to pay interest thereon
shall be evidenced by the Note of Borrower set forth on Exhibit
A attached hereto and representing the obligations of Borrower
to pay Lender the outstanding amount of the Credit Line plus
interest accrued thereon, as set forth herein. In no
event shall the outstanding principal balance under the Credit Line
exceed the Maximum Credit.
1.2. Repayment of Credit
Line . Prior to the Maturity Date, Borrower may
borrow, prepay and reborrow under the Credit Line. The
outstanding balance of the Credit Line shall be due and payable on
or before the Maturity Date, subject to acceleration as herein
provided. Borrower shall pay principal balance,
interest at the prime rate as of the date of the delivery of the
Notice of Borrowing, and all other amounts payable hereunder
without any deduction whatsoever, including, but not limited to,
any deduction for any setoff or counterclaim, all of which are
hereby waived. Any prepayment of principal shall be
accompanied by accrued and unpaid interest on the amount prepaid to
the date of such prepayment.
1.3. Use of Proceeds
. Borrower shall apply the proceeds of loan advances
made by Lender to Borrower under the Credit Line (the
“Advances”) to be sued for working capital or general
corporate purposes.
1.4. Payments and
Computations.
(a) Borrower shall make each payment
hereunder and under the Credit Line Note (the “Note”)
not later than 5:00 P.M. on the day when due. Any
payment received after 5:00 P.M. (including any payment in
full of the Obligations) shall be deemed received on the
immediately following Business Day. All prepayments of
every kind on account of the Credit Line shall be first applied to
accrued and unpaid interest and then to the principal balance
thereof.
(b) Borrower shall pay principal,
interest and other amounts payable hereunder without any deduction,
setoff, recoupment or counterclaim.
(c) Lender’s records of
advances and payments under the Credit Line shall be deemed correct
and binding upon Borrower except for manifest error.
ARTICLE II CONDITIONS
PRECEDENT
The obligation of Lender to extend
the Credit Line shall be subject to the satisfaction, on or prior
to the date of the consummation of the making of the Credit line
available by Lender to Borrower under this Agreement (the
“Closing Date”), of the following conditions precedent
(all agreements and documents from Borrower or any other Person to
be in form and substance acceptable to Lender, in its sole
discretion):
2.1
Executed Loan Documents . Receipt by Lender of
duly executed copies of this Agreement and the Note (collectively,
the “Loan Documents”).
2.2
Organizational Documents . Receipt by Lender of
the following:
(a) Charter
Documents . Copies of certificates of incorporation
or other charter documents of Borrower and each Guarantor certified
to be true and complete as of a recent date by the appropriate
governmental authority of the state or other jurisdiction of its
incorporation and certified by a secretary or assistant secretary
as of the Closing Date.
(b) Bylaws
. A copy of the bylaws, as applicable, of Borrower
certified by a secretary or assistant secretary of Borrower to be
true and correct as of the Closing Date.
(c)
Resolutions . Copies of resolutions or unanimous
written consent of the board of directors or members, as
applicable, of Borrower approving and adopting the this Agreement
and the Note, the transactions contemplated therein and authorizing
execution and delivery thereof, certified by a secretary or
assistant secretary of Borrower to be true and correct and in force
and effect as of the Closing Date.
(d) Good
Standing . Copies of a certificate of good standing,
existence or its equivalent with respect to Borrower as of a recent
date by the appropriate governmental authorities of the state or
other jurisdiction of organization and each other jurisdiction in
which the failure to so qualify and be in good standing could
reasonably be expected to have a Material Adverse
Effect.
(e) Financial
Statements . Receipt by Lender of Borrower’s
Financial Statements for the fiscal year ending December 31,
2008 and such other information relating to Borrower as Lender may
reasonably require.
(f) Consents
. Receipt by Lender of evidence that all governmental,
shareholder, member and third party consents and approvals required
in connection with the transactions contemplated hereby and
expiration of all applicable waiting periods without any action
being taken by any authority that could restrain, prevent or impose
any material adverse conditions on such transactions or that could
seek or threaten any of the foregoing, and no law or regulation
shall be applicable which in the judgment of Lender could have such
effect.
ARTICLE III REPRESENTATIONS
AND WARRANTIES OF BORROWER
In order to induce Lender to enter
into this Agreement and to make available the Loan contemplated
hereby, Borrower hereby represents and warrants to
Lender.
3.1. Organization and
Qualification. Borrower (i) is a corporation
duly organized, validly existing and in good standing under the
laws of the state of its incorporation or organization, (ii) has
the power and authority to enter into the Loan Documents, and
(iii) is duly qualified and is authorized to do business and
is in good standing in every jurisdiction in which the failure to
be so qualified could reasonably be expected to have a
Material Adverse Effect.
3.2. No Conflict.
The execution and delivery by Borrower of the
Loan Documents executed and delivered in connection herewith and
the performance of the obligations of Borrower hereunder and
thereunder and the consummation by Borrower of the transactions
contemplated hereby and thereby: (i) are within the powers of
Borrower; (ii) are duly authorized by the Board of Directors
of Borrower and, if necessary, its stockholders or members;
(iii) are not in contravention of the terms of the articles or
certificate of incorporation or bylaws of Borrower or of any
contractual obligations; (iv) do not require the consent,
registration or approval of any governmental authority or any other
person; (v) do not contravene any statute, law, ordinance
regulation, rule, order or other governmental restriction
applicable to or binding upon Borrower.
3.3.
Enforceability. The Agreement and all of the
other Loan Documents are the legal, valid and binding obligations
of Borrower, and are enforceable against Borrower in accordance
with their terms.
3.4. Financial Data. Borrower
shall have furnished to Lender and Lender the following Financial
Statements (the “Financials”): (i) the balance sheet of
Borrower as of, and statements of income, retained earnings and
changes in financial position for the fiscal year ended December
31, 2008, audited by independent certified public accountants, and
(ii) the unaudited balance sheet of Borrower as of, and statement
of income, and retained earnings for the fiscal quarter ended March
31, 2009, prepared by independent certified public accountant. The
Financials are in accordance with the books and records of Borrower
and fairly present the financial condition of Borrower at the dates
thereof and the results of operations for the periods indicated
(subject, in the case of unaudited Financial Statements, to normal
year end adjustments), and such Financial Statements have been
prepared in conformity with GAAP consistently applied throughout
the periods involved. Since March 31, 2009, there have been no
changes in the condition, financial or otherwise, of Borrower as
shown on the respective balance sheets of Borrower described above,
except (a) as contemplated herein and (b) for changes which
individually or in the aggregate do not constitute a Material
Adverse Change. For the purpose of this Agreement, the
“Material Adverse Change” shall mean a material adverse
change in (i) the business, operations, results of operations,
assets, liabilities or conditions (financial or otherwise) of the
Borrower, (ii) Borrower’s ability to perform its obligations
under the Load Documents, or (iii) the validity, enforceability or
availability of rights and remedies of Lender hereunder, in each
case as determined by Lender in its sole but reasonable
discretion.
3.5. Judgments or Litigation.
There is no material (a) judgment, order, writ or decree
outstanding against Borrower or (b) pending or, to the best of
Borrower’s knowledge, threatened litigation, contested claim,
governmental, administrative or regulatory investigation,
arbitration, or governmental audit (for taxes or otherwise) or
proceeding by or against Borrower. No judgment, order,
writ, decree, pending or threatened litigation, contested claim,
investigation, arbitration and governmental proceeding pertaining
to Borrower (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect.
3.6. Defaults . Borrower
is not in default under any Contractual Obligations which default
could reasonably be expected to have a Material Adverse Effect. For
the purpose of this Agreement, the “Contractual
Obligation” shall mean with respect to any person, any term
or provision of any securities issued by such person, or any
indenture, mortgage, deed of trust, contract, undertaking,
document, instrument or other agreement to which such person is a
party or by which it or any of its properties is bound or to which
it or any of its properties is subject.
3.7. Compliance with Law
. Borrower has not violated or failed to comply with any
statute, law, ordinance, regulation, rule or order of any foreign,
federal, state or local government, or any other governmental
authority or any self regulatory organization, or any judgment,
decree or order of any court, applicable to its business or
operations which failure or violation could reasonably be expected
to have a Material Adverse Effect. Borrower has not
received any notice to the effect that, or otherwise been advised
that, it is not in compliance with, and Borrower has no reason to
anticipate that any currently existing circumstances are likely to
result in the violation of any such statute, law, ordinance,
regulation, rule, judgment, decree or order which failure or
violation could reasonably be expected to have a Material Adverse
Effect. For the purpose of this Agreement, the “Material
Adverse Effect” shall mean a material adverse effect on (i)
the business, operations, results of operations, assets,
liabilities or conditions (financial or otherwise) of Borrower,
(ii) Borrower’s ability to perform its obligations under the
Load Documents, or (iii0 the validity, enforceability or
availability of rights and remedies of Lender hereunder, in each
case as determined by Lender in its sole but reasonable
discretion.
3.8. Compliance with Environmental
Laws . The operations of Borrower materially comply
with all applicable federal, state or local environmental, health
and safety statutes, regulations, directions, ordinances, criteria
or guidelines; and none of the operations of Borrower are the
subject of any material judicial or administrative proceeding
alleging the violation of any federal, state or local
environmental, health or safety statute, regulation, direction,
ordinance, criteria or guidelines. None of the
operations of Borrower are the subject of any federal or state
investigation evaluating whether Borrower disposed any hazardous or
toxic waste, substance or constituent or other substance at any
site that may require remedial action, or any federal or state
investigation evaluating whether any remedial action is needed to
respond to a release of any hazardous or toxic waste, substance or
constituent, or other substance into the
environment. Borrower has not filed or received any
notice under any federal or state law indicating past or present
treatment, storage or disposal of a hazardous waste or reporting a
spill or release of a hazardous or toxic waste, substance or
constituent, or other substance into the
environment. Borrower has no contingent liability of
which Borrower have knowledge or reasonably should have knowledge
in connection with any release of any hazardous or toxic waste,
substance or constituent, or other substance into the environment,
nor has Borrower received any notice, letter or other indication of
potential liability arising from the disposal of any hazardous or
toxic waste, substance or constituent or other substance into the
environment.
3.9. Intellectual Property
. As of the date hereof, Borrower has the valid right to
use all of the Intellecutal Property that is necessary for the
conduct of Borrower’s business as currently conducted. The
“Intellectual Property” shall mean patents, patent
applications, trademarks, trademark applications, service marks,
trade names, copyrights, trade secrets, licenses, information and
other proprietary rights and processes.
3.10. Licenses and Permits
. Borrower has obtained and holds in full force and
effect all material franchises, licenses, leases, permits,
certificates, authorizations, qualifications, easements, rights of
way and other rights and approvals which are necessary or
appropriate for the operation of its business as presently
conducted and as proposed to be conducted. Borrower is
not in violation of the terms of any such franchise, license,
lease, permit, certificate, authorization, qualification, easement,
right of way, right or approval which in any such case could
reasonably be expected to have a Material Adverse
Effect.
3.11. Title to Property
. Borrower has (i) valid leasehold interests in all of
the real property it occupies as a tenant, and (ii) good,
marketable and exclusive title to all of the other Property it
purports to own (including without limitation, all real
and personal property in each case as reflected in the Financial
Statements delivered to Lender hereunder), other than, with respect
to property described in clause (ii) above, properties
disposed of in the ordinary course of business or in any manner
otherwise permitted under this Agreement since the date of the most
recent audited balance sheet of Borrower, and in each
case subject to no claims, options, rights or interests of any
other person. Borrower enjoys peaceful and undisturbed
possession of all its real property, and there is no pending or, to
the best of its knowledge, threatened condemnation proceeding
relating to any such real property. The leases with
respect to the leased property, together with any leases of real
property entered into by Borrower after the date hereof, are
referred to collectively as the
“Leases”. None of the Leases contains
provisions which have or could reasonably be expected to have a
Material Adverse Effect. No material default exists
under any Lease.
3.12. Labor Matters
. Borrower is not engaged in any unfair labor
practice. There is (a) no material unfair labor practice
complaint pending against Borrower or, to the best knowledge of
Borrower, threatened against Borrower, before the National Labor
Relations Board, and no grievance or arbitration proceeding with
any employee, or group or committee representing any employees, or
arising out of or under collective bargaining agreements that has
or could reasonably be expected to have a Material Adverse Effect
is so pending against Borrower or, to the best knowledge of
Borrower, threatened against Borrower, (b) no strike, labor
dispute, slowdown or stoppage pending or, to the best knowledge of
Borrower, threatened against Borrower, and (c) no union
representation questions with respect to the employees of Borrower
and no union organizing activities.
3.13. Investment Company.
Borrower is not (a) an “investment
company” or a company “controlled” by an
“investment company” within the meaning of the
Investment Company Act of 1940, as amended, (b) a “holding
company” or a “subsidiary company” of a
“holding company,” or an “affiliate” of a
“holding company” or of a “subsidiary
company” of a “holding company,” within the
meaning of the Public Utility Holding Company Act of 1935, as
amended, or (c) subject to any other law which purports to regulate
or restrict its ability to borrow money or to consummate
