SECURITY AGREEMENT
This
Security Agreement (this “
Agreement ”)
is made and entered into as of June 6, 2008, by and among
theglobe.com, inc. ,
a Delaware corporation (“
theglobe ”),
Strategy Plus, Inc. ,
a Vermont corporation (“
Strategy ”),
tglo.com, Inc. ,
a Delaware corporation (“
tglo ”),
Chips & Bits, Inc. ,
a Vermont corporation (“
Chips ”),
Direct Partner Telecom, Inc., a
Florida corporation (“
Direct ”),
Tralliance Corporation ,
a New York corporation (“
Tralliance ”),
Tralliance Partners International Corp.
, a Delaware corporation (“
Tralliance Partners ”)
and
Dancing Bear Investments, Inc. ,
a Florida corporation (the “
Secured Party ”)
(Strategy, tglo, Chips, Direct, Tralliance, Tralliance Partners and
Promotions are sometimes collectively referred to herein as the
“
Subsidiaries ,”
and together with theglobe, as the “
Grantors ”).
RECITALS
A.
Pursuant
to that certain Revolving Loan Agreement dated as of June 6,
2008 by and between theglobe, the Guarantors and the Secured
Party (the “Revolving Loan Agreement”), Secured
Party has made certain advances of money, and may make further
advances of money, to Grantors in the amount and manner set
forth in the Revolving Loan Agreement (collectively,
the
“Loan” )
and as represented by a Promissory Note issued by theglobe (the
“
Note ”).
B.
In
order to induce the Secured Party to enter into the Revolving
Loan Agreement and in furtherance of covenants and
undertakings pursuant to the Revolving Loan Agreement, the
Subsidiaries entered into an Unconditional Guaranty Agreement
(the “
Guaranty ”)
pursuant to which each agreed to guaranty the obligations of
theglobe under the Revolving Loan Agreement and related
documentation and agreed to secure such Guaranty with a lien on
their respective assets as provided herein (the Revolving Loan
Agreement, the Note, the Guaranty and this Agreement are sometimes
collectively referred to herein as the “
Transaction Documents ”);
C.
Subsidiaries
acknowledge that they will substantially benefit, economically
and otherwise, from the theglobe executing the Revolving Loan
Agreement and the proceeds of the loan(s) derived
therefrom;
D.
Grantors
wish to secure performance and payment of all obligations
under the Transaction Documents (the “
Obligations ”)
to the Secured Parties pursuant to the Transaction Documents, this
Agreement or otherwise, with all of their tangible and intangible
assets, including without limitation, goodwill, intellectual
property and Grantors’ contractual rights with third parties,
all as further described on Exhibit A attached hereto. All terms
used without definition in this Agreement shall have the meaning
assigned to them in the Revolving Loan Agreement. All terms used
without definition in this Agreement or in the Revolving Loan
Agreement shall have the meaning assigned to them in the Uniform
Commercial Code as enacted in the State of Florida (the
“UCC”).
E.
Secured
Party is willing to make the Loan to theglobe, but only upon
the condition, among others, that the Grantors shall have
executed and delivered to Secured Party this
Agreement.
NOW, THEREFORE ,
Grantors and the Secured Party agree as follows:
1.
Grant of Security Interest .
To secure all of the Obligations, Grantors grant to Secured Parties
a security interest in the property described in
Exhibit A (the
“Collateral”).
2.
Grantors’ Representations and Warranties
.
Grantors represent, warrant, and covenant, jointly and severally,
as follows:
(a)
Authorization .
Grantors have authority and have obtained all approvals and
consents necessary to enter into this Agreement, and
Grantors’ execution, delivery and performance of this
Agreement will not violate or conflict with the terms of
Grantors’ Certificates of Incorporation or Bylaws or any
statute, regulation, ordinance, rule of law, agreement, contract,
mortgage, indenture, bond, bill, note, or other instrument or
writing binding upon Grantors or to which Grantors are
subject.
(b)
Title .
The Collateral is owned by the Grantors and is free of all liens,
encumbrances and other security interests, other than the lien of
this Agreement and the liens set forth on
Exhibit B attached
hereto (collectively, “Permitted Liens”).
(c)
Further Representations .
Grantors further represent, warrant, and covenant that (i) Grantors
are not in default under any agreement under which Grantors owe any
money, or any agreement, the violation or termination of which
could reasonably be expected to have a material adverse effect on
the Grantors; (ii) the information, if any, provided by the
Grantors to Secured Party pursuant to a request for such
information from the Secured Party on or prior to the date of this
Agreement is true and correct in all material respects; (iii) all
financial statements and other information provided to the Secured
Party, if any, fairly present Grantors’ financial condition
as at the respective dates thereof, and there has not been a
material adverse change in the financial condition of the Grantors
since the date of the most recent of the financial statements
submitted to Secured Party; (iv) Grantors are in compliance with
all laws and orders applicable to it where the failure to so comply
could reasonably be expected to have a material adverse effect on
the Grantors; (v) Grantors are not party to any litigation and are
not, to their knowledge the subject of any government
investigation, and the Grantors have no knowledge of any pending
litigation or investigation or the existence of circumstances that
reasonably could be expected to give rise to such litigation or
investigation; (vi) Grantors’ principal place of business is
located at the address specified in Section 9; and (vii) the
representations and other statements made by the Grantors to
Secured Party, do not, taken as a whole, contain any untrue
statement of a material fact or omit to state a material fact
necessary to make any statements made to Secured Party not
misleading.
3.
Covenants .
(a)
Encumbrances .
The Grantors shall not grant an additional security interest in any
of the Collateral or execute any financing statements covering any
of the Collateral in favor of any person or entity other than the
Secured Party.
(b)
Use of Collateral .
The Collateral will not be used for any unlawful purpose or in any
way that will void any insurance required to be carried in
connection therewith. Grantors will keep the Collateral free and
clear of liens (other than Permitted Liens) and, as appropriate and
applicable, will keep it in good condition and repair, and will
clean, shelter, and otherwise care for the Collateral in all such
ways as are considered good practice by owners of like
property.
(c)
Indemnification .
Grantors shall indemnify Secured Party against all losses, claims,
demands and liabilities of any kind caused by the
Collateral.
(d)
Perfection of Security Interest .
Grantors shall execute and deliver such documents, including
without limitation, mortgages, collateral assignments and UCC
financing statements, as Secured Party reasonably deems necessary
to create, perfect and continue the security interest in the
Collateral contemplated hereby.
(e)
Insurance of Collateral .
Grantors, at their expense, shall keep the Collateral insured
against loss or damage by fire, theft, explosion, sprinklers, and
all other hazards and risks, and in such amounts, as are ordinarily
insured against by other owners in similar businesses conducted in
the locations where Grantors’ business is conducted on the
date hereof. Grantors shall also maintain insurance relating to
Grantors’ ownership and use of the Collateral in amounts and
of a type that are customary to businesses similar to
Grantors.
(f)
Inventory .
As to Collateral which is Inventory, Grantors agrees (a) to
the extent held in any warehouse or other third party storage
facility, to deliver immediately to Secured Party or Secured
Party’s nominee all warehouse receipts or other documents
otherwise entitling Grantors to possession of the Collateral,
(b) to execute and deliver to Secured Party such financing
statements as the Secured Party may request with respect to the
Inventory, (c) to take such other steps as Secured Party may
from time to time reasonably request to perfect Secured
Party’s security interest in the Inventory under applicable
law, including, with respect to any portion of the Inventory held
by, or in the possession or under the control of any person or
entity other than Grantors, to obtain the agreement of such person
or entity that Secured Party has a first priority security interest
in the Inventory and that Secured Party may take or otherwise
exercise control over such Inventory, free and clear of any claims
of such person or entity.
(g)
Binding Agreement .
Anything herein to the contrary notwithstanding, (i) Grantors
shall remain liable under the contracts and agreements included in
the Collateral to the extent set forth therein to perform all of
its duties and obligations thereunder to the same extent as if this
Agreement had not been executed; (ii) the exercise by Secured
Party of any of the rights granted hereunder shall not release
Grantors from any of their duties or obligations under the
contracts and agreements included in the Collateral; and
(iii) Secured Party shall not have any obligation or liability
under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall Secured Party be obligated to
perform any of the obligations or duties of the Grantors thereunder
or to take any action to collect or enforce any claim for payment
assigned hereunder.
(h)
Instruments .
Grantors will deliver and pledge to Secured Party all Instruments
that are part of the Collateral duly endorsed and accompanied by
duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Secured Party.
(i)
Records .
Grantors shall prepare and keep, in accordance with generally
accepted accounting principles consistently applied, complete and
accurate records regarding the Collateral and, if and when
requested by the Secured Party, shall prepare and deliver a
complete and accurate schedule of all the Collateral in such detail
as the Secured Party may reasonably require.
(j)
Inspection of Grantors’ Books .
Grantors shall permit Secured Party or its designee at reasonable
times and from time to time to inspect Grantors’ books,
records and properties and to audit and to make copies of extracts
from such books and records.
(k)
Fees and Costs .
Grantors shall pay all expenses, including reasonable
attorneys’ fees, incurred by Secured Party in the
preservation, realization, enforcement or exercise of Secured
Party’s rights under this Agreement.
(l)
Further Actions and Assurances .
At any time and from time to time, upon the written request of the
Secured Party, and at the sole expense of the Grantors, Grantors
shall promptly and duly execute and deliver any and all such
further instruments and documents and take such further action as
the Secured Party may reasonably deem desirable to obtain the full
benefits of this Agreement and of the rights and powers herein
granted, including, without limitation, (i) to secure all
consents and approvals necessary or appropriate for the grant of a
security interest to Secured Party in any Collateral held by
Grantors or in which Grantors have any rights not heretofore
assigned, (ii) filing any financing or continuation statements
under the UCC with respect to the security interests granted
hereby, (iii) transferring Collateral to Secured Party’s
possession (if a security interest in such Collateral can be
perfected by possession), (iv) placing the interest of Secured
Party as lienholder on the certificate of title (or other evidence
of ownership) of any vehicle owned by the Grantors or in or with
respect to which the Grantors hold a beneficial interest,
(v) using its best efforts to obtain waivers of liens from
landlords and mortgagees, (vi) causing each wholly-owned or
majority-owned subsidiary which becomes a subsidiary of theglobe
after the effective date hereof to (A) join in the Guaranty as an
additional guarantor and (B) join in this Agreement as an
additional “Subsidiary” and “Grantor”
within the meaning hereof, (vii) executing, delivering and filing
all necessary mortgages to reflect the Secured Party security
interest in any real property; and (viii) executing,
deliverin
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