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REVOLVING LOAN AGREEMENT
THIS REVOLVING LOAN AGREEMENT (this
“
Loan Agreement ”)
is made this
6th
day of June, 2008, by and among Dancing Bear Investments, Inc., a
Florida corporation (the “
Lender ”),
theglobe.com, inc., a Delaware corporation (the “
Borrower ”);
and Chips & Bits, Inc., a Vermont corporation (“
Chips ”),
Strategy Plus, Inc., a Vermont corporation (“
Strategy ”),
tglo.com, inc., a Delaware corporation (“
tglo ”),
Tralliance Partners International, Corp., a Delaware corporation
(“
TPI ”),
Tralliance Corporation, a New York corporation (“
Tralliance ”)
and Direct Partner Telecom, Inc., a Florida corporation
(“
Direct ”
and together with Chips, Strategy, tglo, TPI and Tralliance, the
“
Guarantors ”
and each a “
Guarantor, ”
and together with the Borrower, the “
Grantors ”).
WITNESSETH:
WHEREAS, the
Lender is willing to make a revolving loan to Borrower in an amount
of up to $500,000 (the “
Loan ”)
on the terms and conditions and on the security hereinafter set
forth.
NOW, THEREFORE ,
in consideration of the mutual promises, conditions,
representations and warranties hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
I
DEFINITIONS
Section
I.1
Definitions
As
used in this Loan Agreement, the Exhibits and Schedules
attached hereto, if any, and any Loan Document executed
incidental thereto, the following terms shall have the
following meanings unless the context otherwise
requires:
“
Agreement ”
shall mean this Loan Agreement, as the same may be amended,
supplemented or otherwise modified from time to time by an
agreement in writing signed by the Borrower and the
Lender.
“
Closing Date
” shall
mean the date on which the Loan Agreement and all related documents
have been executed.
“
Collateral
” shall
have the meaning set forth in the Security Agreement attached
hereto as Exhibit “B”.
“
Future Advance
” shall
have the meaning set forth in Section 2.2 hereof.
“
Generally Accepted Accounting Principles” or
“GAAP ”
shall mean those principles of accounting set forth in Opinions of
the Financial Accounting Standards Board of the American Institute
of Public Accountants or which have other substantial authoritative
support and are applicable in the circumstances as of the date of
any report required herein or as of the date of an application of
such principles as required herein.
“
Initial Advance
” shall
have the meaning set forth in Section 2.2 hereof.
“
Loan ”
shall mean the credit facility described in Section 2.1
hereof.
“
Loan Documents ”
shall mean this Agreement, the Note, the Security Agreement, the
Unconditional Guaranty Agreement, the UCC-1 Financing Statements,
and all other documents, agreements, instruments or certificates
delivered to the Lender in connection with the Loan (whether at,
prior to or after the Closing Date).
“
Maturity Date
” shall
mean June 6, 2009.
“
Note ”
shall mean the instrument of even date herewith from the Borrower
evidencing the indebtedness to the Lender created by the Loan in
the amount of up to FIVE HUNDRED THOUSAND DOLLARS
($500,000.00).
“
Permitted Liens
” shall
have the meaning set forth in Security Agreement.
“
Person ”
shall mean any corporation, business entity, natural person, firm,
joint venture, partnership, trust, unincorporated organization,
association, government, or any department or agency of any
government.
“
Security Agreement ”
shall have the meaning set forth in Section 3.1
hereof.
“
Security Documents ”
shall have the meaning set forth in Section 3.3
hereof.
ARTICLE
II
AMOUNT AND TERMS OF LOAN
Section 2.1
Revolving Line of Credit Loan
Subject
to the terms and conditions set forth herein (including, the
discretion of the Lender with regard to Future Advances), the
Lender agrees to make available to the Borrower a revolving
line of credit loan (the “Loan”) in an amount not
to exceed the sum of FIVE HUNDRED THOUSAND DOLLARS
($500,000.00).
The Borrower will execute and deliver to the Lender the Note
bearing interest at TEN percent (10%) per annum calculated
on
the basis of the actual number of days in the year for the actual
number of days in the applicable period .
The entire unpaid principal balance then outstanding plus accrued
and unpaid interest, if any, shall mature and be due and payable on
the Maturity Date, at which time the Loan shall be reviewed by the
Lender and renewed, modified or terminated in the Lender's sole and
absolute discretion.
Subject
to the terms and conditions set forth herein, the Borrower may
borrow, repay and reborrow at any time while the Note is
outstanding, but at no time shall the aggregate principal
amount outstanding be greater than FIVE HUNDRED THOUSAND
DOLLARS ($500,000.00). Furthermore, at no time will the
Borrower reduce the principal balance under the Note to less
than ONE THOUSAND DOLLARS ($1,000.00) unless the Borrower
intends to pay the Note in full. All advances must be
supported by a Certificate and Loan Advance Request in the
form attached hereto as Exhibit “A.”
Section 2.2
Initial and Future Advances under the
Loan
The
Lender shall fund to the Borrower [One Hundred Thousand
Dollars ($100,000)] on the Closing Date (the “
Initial Advance ”).
All or part of the [Four Hundred Thousand Dollar ($400,000)]
balance of the Loan may be drawn down from time to time during the
term of this Agreement only upon Lender’s receipt of a
Certificate and Loan Advance Request, and then solely in the
discretion of the Lender. Any such amounts which Lender shall in
its discretion elect to fund, shall be referred to herein as a
“
Future Advance ”.
Section 2.3
Prepayment of Loan
The
Note may be prepaid in whole or in part without penalty. Any
voluntary or mandatory partial prepayment shall be applied
first to any accrued and unpaid interest and the balance (if
any) in reduction of the principal amount
outstanding.
Section 2.4
Intent Not to Commit Usury
The
Borrower does not intend or expect to pay, nor does the Lender
intend or expect to charge, accept or collect, any interest
under the Note, this Agreement or any other instrument
executed in connection herewith greater than the maximum legal
rate of interest which may be charged under applicable law.
Should any event result in the computation or earning of
interest in excess of such maximum legal rate, any and all
such excess shall be refunded to the Borrower. Notwithstanding
anything to the contrary contained in this Agreement, the
Note, or any other instrument delivered in connection
herewith, the amount of interest due under the terms of this
Agreement, the Note or any other instrument shall in no event
exceed the maximum amount of interest permitted to be charged
by law.
Section 2.5
Use of Proceeds
The
proceeds of the Loan will be disbursed to the Borrower to be
used solely for working capital purposes.
ARTICLE
III
SECURITY AND GUARANTY
Section 3.1
Security Interest
As
security for the full and timely payment of the principal and
interest under the Note, and for any and all other
indebtedness or liability of the Borrower to the Lender
pursuant to the Loan Documents, whether now existing or
hereafter arising, the Borrower, together with the Guarantors,
shall duly execute and deliver to the Lender a security
agreement in the form attached hereto as Exhibit
“B” (the “
Security Agreement ”)
pursuant to which they will grant to Lender a security interest in
the Collateral.
Section 3.2
Guarantees
The
Guarantors shall duly execute and deliver to the Lender their
absolute, unconditional, continuing and unlimited guarantee,
in the form attached hereto as Exhibit “C”,
whereby each Guarantor, jointly and severally, if more than
one, guarantees the Borrower's obligations hereunder and under
the Note, as well as any other liability of the Borrower to
the Lender.
Section 3.3
Security Documents
The
Borrower and the Guarantors, shall execute and deliver to the
Lender, in form and substance satisfactory to the Lender and
its Counsel, any and all additional security agreements,
financing statements, guarantees and any other documents
relating to any security as the Lender shall require from time
to time (all herein referred to collectively as the
“
Security Documents ”).
ARTICLE
IV
BORROWER'S REPRESENTATIONS AND
WARRANTIES
To
induce the Lender to enter into this Agreement, the Borrower
and each Guarantor, as applicable, make the following
representations and warranties which shall be deemed to be
continuing representations and warranties so long as the Note
or other indebtedness of the Borrower to the Lender remains
unpaid:
Section 4.1
Organization, Good Standing and
Qualification
. The
Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each
Guarantor is duly organized, validly existing and in good standing
under the laws of its state of organization. The Borrower and each
Guarantor is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so qualify
would have a material adverse effect on its business or
properties.
Section 4.2
Authorization
.
All
corporate action on the part of the Borrower and Guarantors, their
officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the Note,
the Security Agreement, the Guaranty and the performance of all
obligations of the Borrower and Guarantors hereunder and thereunder
have been taken on or prior to the date hereof.
Section 4.3
Public
Reports
.
The
Borrower is current in its filing obligations under the Securities
Act of 1934, as amended (the “1934 Act”), including
without limitation as to its filings of Annual Reports on Form 10-K
(or 10-KSB, as applicable) and Quarterly Reports on Form 10-Q (or
10-QSB, as applicable) (collectively, the “Public
Reports”). The Public Reports do not contain any untrue
statement of a material fact or omit to state any fact necessary to
make any statement therein not misleading. The financial statements
included within the Public Reports for the fiscal year ended
December 31, 2006, and for the fiscal year ended December 31, 2007
(the “Financial Statements”), have been prepared in
accordance with generally accepted accounting principles
(“GAAP”) applied on a consistent basis throughout the
periods indicated. The Financial Statements fairly present, in all
material respects, the financial condition and operating results of
the Borrower as of the dates, and for the periods, indicated
therein.
Section 4.6
Compliance
W
i
th
Laws .
Neither the Borrower nor any Guarantor has violated any law or any
governmental regulation or requirement which violation has had or
would reasonably be expected to have a material adverse effect on
its business or prospects, and neither the Borrower nor any
Guarantor has received written notice of any such
violation.
Section 4.7
Violations .
The consummation of the transactions contemplated by this Agreement
and all other documents and instruments required to be delivered in
connection herewith and therewith, including without limitation,
the Security Agreement, the Guaranty and the Note, will not result
in or constitute any of the following: (a) a violation of any
provision of the certificate of incorporation, bylaws or other
governing documents of the Borrower or any Guarantor; (b) a
violation of any provisions of any applicable law or of any writ or
decree of any court or governmental instrumentality; (c) a default
or an event that, with notice or lapse of time or both, would be a
default, breach, or violation of a lease, license, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed
of trust, or other agreement, instrument, or arrangement to which
the Borrower or any Guarantor is a party or by which the Borrower,
any Guarantor or their property is bound; (d) an event that would
permit any party to terminate any agreement or to accelerate the
maturity of any indebtedness or other obligation of the Borrower or
any Guarantor; or (e) the creation or imposition of any lien,
pledge, option, security agreement, equity, claim, charge,
encumbrance or other restriction or limitation on the capital stock
or on any of the properties or assets of the Borrower or any
Guarantor.
Section 4.8
Consents
;
Waivers
. No
consent, waiver, approval or authority of any nature, or other
formal action, by any person, firm or corporation, or any agency,
bureau or department of any government or any subdivision thereof,
not already obtained, is required in connection with the execution
and delivery of this Agreement by the Borrower or any Guarantor or
the consummation by the Borrower or any Guarantor of the
transactions provided for herein and therein.
ARTICLE
V
BORROWER'S AFFIRMATIVE COVENANTS
The
Borrower, and each Guarantor, as applicable, covenants and
agrees that until the Note, together with interest and all
other indebtedness to the Lender under the terms of this
Agreement, are paid in full, unless specifically waived by the
Lender in writing:
Section 5.1
Corporate Existence and Qualification
The
Borrower and each Guarantor shall do, or cause to be done, all
things necessary to preserve, renew and keep in full force and
effect their corporate existence.
Section 5.2
Financial Statements
The
Borrower shall keep its books of account in accordance with
GAAP and shall furnish to the Lender within ninety (90) days
after the close of its fiscal year a balance sheet as of the
close of such year, a profit and loss statement and statements
of income, retained earnings and reconciliation of surplus for
such year. Such statements shall be prepared by an independent
certified public accountant acceptable to the Lender and in
the form of a financial statement review. Such
stat
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