LOAN AGREEMENT AND SECURITY ASSIGNMENT
Exhibit
10.5 10-Q
![](https://www.sec.gov/Archives/edgar/data/1120411/000114420408029962/winsonic.jpg)
This
loan
agreement and security assignment ("Agreement") is entered into on this 30th
day
of April 2008 by and between WinSonic Digital Media Group, Ltd. (“WinSonic” or
“Obligor”) with an office located at 000 Xxxxxxxx Xxxxxx, XX, Xxxxx 0000,
Xxxxxxx, Xxxxxxx
00000
and in
the Event of Default (as defined below) Xxxxxxx Xxxxxxx, an individual residing
at 0000
Xxxxxxx Xxxxx XX, Xxxxxxx, Xxxxxxx 00000
and
First Philadelphia, LLC , having offices at 000 Xxxxxxxxx Xxxx, Xxxxx Xxxxx,
Xxxxxxxx 00000, MarchFive Associates, LLC having offices at 0000 Xxxxxxx Xxx,
Xxxxxxxxxx, Xxxxxxx 00000, Crystal Beach Web Solutions, LLC, having offices
at
X.X. Xxx 00, 000 Xxxxxxx Xxxx., Xxxxxxx Xxxxx, Xxxxxxx 00000, Blue Ridge Allied
Technical Services, having offices at X.X. Xxx 0000, Xxxx Xxxxx, Xxxxxxx 00000,
Xxxxx X. Xxxxxx, having his principal residence at 00 Xxxxxx Xxxxx, Xxxxx,
Xxxxx
Xxxxxxxx, 00000, Xxxxx XxXxx, having her principal residence at 0000 Xxxx Xxxxxx
Xxxxx, Xxxxxxx, Xxxxxxx 00000, and Xxxxx X’Xxxxx, having his principal residence
at 00 Xxxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx 00000 (collectively
"Obligee"):
1. Loan
Amount: Obligee
hereby agrees to lend to Obligor the sum of One Hundred and Sixteen Thousand,
Eight Hundred Ninety Seven and Twenty Three One Hundredth’s Dollars
($116,897.23)
(the
“Loan Amount”), and Obligor does hereby borrow and promise to repay this Senior
Debt Loan Amount and to be retired by the earlier of (1) close of the Company’s
next Funding of a minimum of $3.0 million, or (2) for the amounts on the dates
as provided for below, for which each payment shall reduce the Loan Amount
pro
rata ("Installment Payments"). Either of (1) or (2) above shall be defined
as
the “Due Date”.
Obligor
and Obligee acknowledge that Obligor with the execution of this Note has, within
three business days therefrom, paid in legally available funds the amount of
ten
percent (10%) of the original total amount outstanding, or $8,067.80, net of
applicable withholding taxes, owing by Obligor to Obligee.
Obligee
agrees that payments made pursuant to this Note, shall be paid to First
Philadelphia, LLC, on behalf of the all of the parties comprising Obligee,
which
in turn shall distribute the respective amounts paid to the respective
party.
A. Definition
Funding:
1. Senior
Debt: WinSonic debt instruments that provide financing take primary security
against either specific or all assets of Obligor, have fixed terms of repayment
and charge fixed or floating interest rates. Debt that must be repaid
before subordinated debt receives any payment in the event of default.
Debt whose terms in the event of bankruptcy, require it to be repaid before
subordinated debt receives any payment; or
Loan
Security
1
Exhibit
10.5 10-Q
2. Equity
Securities: WinSonic securities whether they be in the form of common or
preferred equity or any instrument convertible into common or preferred
equity.
B. Definition
Installment Payments:
1. Ten
percent (10%) of the Loan Amount, or $9,400.52 on the May 31, 2008;
2. Twenty
percent (20%) of the Loan Amount, or $20,133.77 on June 30, 2008;
3. Fifty
percent (50%) of the Loan Amount, or $47,002.60 on July 31, 2008;
and
4. Ten
percent (10%) of the Loan Amount, or $9,400.52 on August 15, 2008.
2.
Payroll
Taxes:
Obligor
and Obligee agree that of the payments made pursuant to this Note, that Obligor
shall first offset said respective payment by any applicable payroll tax, if
any.
3.
Interest:
The
loan
shall bear 6% interest per annum up to and including the Due Date. If
the
loan is not paid by the (“Due Date”), the unpaid balance (principal and
interest) shall bear interest at the rate
of
12% per annum until paid in full. Interest
on this Note shall be payable monthly on the last Business Day of each calendar
month (commencing April 30, 2008 and upon the Due Date).
4.
Security
& Assignment:
Grant
of
Security Interest. As an inducement for the Obligor to purchase the Notes and
to
secure the complete and timely payment, performance and discharge in full,
as
the case may be, of all of the Obligations, WinSonic hereby, unconditionally
and
irrevocably, pledges, grants and hypothecates to the Obligee, a continuing
security interest in and to the Collateral (the “Security Interest”).
“Collateral”
means the collateral in which the Obligee is granted a security interest by
this
Agreement and which shall include the following, whether presently owned or
existing or hereafter acquired or coming into existence, and all additions
and
accessions thereto and all substitutions and replacements thereof, and all
proceeds, products and accounts thereof, including, without limitation, all
proceeds from the sale or transfer of the Collateral and of insurance covering
the same and of any tort claims in connection therewith:
A. All
Goods
of Obligor, including, without limitations, all machinery, equipment, computers,
motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special
and
general tools, fixtures, test and quality control devices and other equipment
of
every kind and nature and wherever situated, together with all documents of
title and documents representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes for any of the
foregoing and all other items used and useful in connection with the Company’s
businesses and all improvements thereto (collectively, the “Equipment”);
and
B. All
Receivables of Obligor, including all insurance proceeds, and rights to refunds
or indemnification whatsoever owing, together with all instruments, all
documents of title representing any of the foregoing, all rights in any
merchandising, goods, equipment, motor vehicles and trucks which any of the
same
may represent, and all right, title, security and guaranties with respect to
each Receivable.
Loan
Security
2
Exhibit
10.5 10-Q
In
the
Event of Default, pursuant to and as defined in the Note, by WinSonic, Xxxxxxx
X. Xxxxxxx, personally guarantees the Loan Amount pursuant to the Note, plus
the
12% interest (the “Default Rate”).
Further,
in the Event of Default, pursuant to the Note, then Obligor shall additionally
owe Xx. Xxxxx X. Xxxxxx the amount of $100,750.00, pursuant to the provisions
of
the employment agreement entered into between WinSonic and Xx. Xxxxxx, for
a
then total amount owing pursuant to the Note of $120,900.00, for which the
Loan
Amount shall be increased accordingly.
5.
Warranties
of Obligor:
Obligor
warrants and represents that it has full power and authority to enter into
this
agreement and that this agreement is not in violation of any other agreement
nor
of any covenant or restriction contained in any agreement to which Obligor
is
bound.
Obligor
further warrants that WinSonic has obtained all requisite corporate authority
and approval, and has complied with the necessary corporate formalities in
entering into this Agreement.
Obligor
also warrants that it will not obtain Funding that would prohibit the repayment
of this obligation. This Agreement is intended to be retired by the Obligor’s
next Funding, or pursuant to the Installment Payments, and is required to be
repaid before other debt receives any payment.
6.
Further
Documents:
Obligor
agrees to execute such other and further documents as shall be reasonable
necessary or required by Obligee to carry out the provisions of this
agreement.
7.
Collection
Costs: In
the
event that Obligee shall be required to take legal action to enforce the
provisions hereof, Obligee shall be entitled to recover all costs of collection,
including reasonable attorney's fees and costs, whether or not a legal
proceeding is commenced, if the Obligation is not paid as and when
due.
8.
Miscellaneous:
This
agreement shall be governed by Georgia Law and any action to enforce the
provisions hereof shall be resolved by binding and expedited Arbitration in
accordance with the rules and procedures of the American Arbitration Association
(AAA) in Xxxxxx County, Georgia, with a limited right of discovery consisting
of
not more that two depositions and one set each of written requests for
admissions, production of documents, form interrogatories and special
interrogatories in compliance with the Code of Civil Procedure. In the event
any
provision hereof is declared to be invalid or unenforceable, the parties agree
in good faith to replace said provision with a valid and enforceable provision
that as nearly as possible reflects the agreement and intent of the parties
hereunder. This Agreement may not be modified except by a written instrument
executed by both parties. This Agreement shall be binding upon and inure to
the
benefit of the parties and their respective heirs, representatives and
assigns.
These
signatures of the parties below confirm the foregoing as their entire
understanding and agreement, superseding all prior representations,
understandings and agreements, written or oral, between the
parties.
Executed
this ________ day of April, 2008.
WinSonic
Digital Media Group, Ltd. (Obligor)
Loan
Security
3
Exhibit
10.5 10-Q
By:_________________________________
Xxxxxxx
X. Xxxxxxx, Chairman and CEO
By:_________________________________
Xxxxxxx
X. Xxxxxxx
0000
Xxxxxxx Xxxxx XX
Xxxxxxx,
Xxxxxxx 00000
(Obligee)
By:
__________________________
Xxxxxx
X.
Xxxxx, Xx., Chairman
First
Philadelphia, LLC
By:
__________________________
Xxxxxxx
Xxxxxxxx
MarchFive
Associates
By:
__________________________
Xxxxxxx
Xxxxxx
Xxxxxxx
Beach Web Solutions, LLC
By:
__________________________
Xxxxx
X’Xxxxx
Blue
Ridge Allied Technical Services
By:
__________________________
Xxxxx
X.
Xxxxxx
By:
__________________________
Xxxxx
XxXxx
By:
__________________________
Xxxxx
X’Xxxxx
Loan
Security
4
Exhibit
10.5 10-Q
![](https://www.sec.gov/Archives/edgar/data/1120411/000114420408029962/winsonic.jpg)
PROMISSORY
NOTE
(the
“Note”)
U.S. $116,897.23 | Atlanta, Georgia | |
April 30, 2008 |
FOR
VALUE
RECEIVED, WINSONIC DIGITAL MEDIA GROUP, INC., a corporation organized under
the
laws of the State of Nevada (“WinSonic” or “Obligor”), and in the Event of
Default (as defined below) Xxxxxxx Xxxxxxx, an individual residing at
0000
Xxxxxxx Xxxxx XX, Xxxxxxx, Xxxxxxx 00000,
hereby
promises to pay to the order of First Philadelphia, LLC, having offices at
000
Xxxxxxxxx Xxxx, Xxxxx Xxxxx, Xxxxxxxx 00000, MarchFive Associates, LLC having
offices at 0000 Xxxxxxx Xxx, Xxxxxxxxxx, Xxxxxxx 00000, Crystal Beach Web
Solutions, LLC, having offices at X.X. Xxx 00, 000 Xxxxxxx Xxxx., Xxxxxxx Xxxxx,
Xxxxxxx 00000, Blue Ridge Allied Technical Services, having offices at X.X.
Xxx
0000, Xxxx Xxxxx, Xxxxxxx 00000, Xxxxx X. Xxxxxx, having his principal residence
at 00 Xxxxxx Xxxxx, Xxxxx, Xxxxx Xxxxxxxx, 00000, Xxxxx XxXxx, having her
principal residence at 0000 Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxx 00000, and
Xxxxx
X’Xxxxx, having his principal residence at 00 Xxxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx
00000 (collectively, the “Obligee”) in lawful money of the United States of
America in immediately available funds transmitted via electronic bank wire
transfer the Loan Amount, as defined below, on the Due Date as defined below.
The respective components of the Loan Amount are detailed for each of the
parties listed above under the Obligee are provided for and incorporated herein
on Exhibit A.
1. Loan
Amount: Obligee
hereby agrees to lend to Obligor the sum of One Hundred and Sixteen Thousand,
Eight Hundred Ninety Seven and Twenty Three One Hundredth’s Dollars
($116,897.23)
(the
“Loan Amount”), and Obligor does hereby borrow and promise to repay this Senior
Debt Loan Amount and to be retired by the earlier of (1) close of the Company’s
next Funding of a minimum of $3.0 million, or (2) for the amounts on the dates
as provided for below, for which each payment shall reduce the Loan Amount
pro
rata ("Installment Payments"). Either of (1) or (2) above shall be defined
as
the “Due Date”.
Obligor
and Obligee acknowledge that Obligor with the execution of this Note has, within
three business days therefrom, paid in legally available funds the amount of
ten
percent (10%) of the original total amount outstanding, or $8,067.80, net of
applicable withholding taxes, owing by Obligor to Obligee.
Obligee
agrees that payments made pursuant to this Note, shall be paid to First
Philadelphia, LLC, on behalf of the all of the parties comprising Obligee,
which
in turn shall distribute the respective amounts paid to the respective
party.
Exhibit
10.5 10-Q
A. Definition
Funding:
1. Senior
Debt: WinSonic debt instruments that provide financing take primary security
against either specific or all assets of Obligor, have fixed terms of repayment
and charge fixed or floating interest rates. Debt that must be repaid
before subordinated debt receives any payment in the event of default.
Debt whose terms in the event of bankruptcy, require it to be repaid before
subordinated debt receives any payment; or
2. Equity
Securities: WinSonic securities whether they be in the form of common or
preferred equity or any instrument convertible into common or preferred
equity.
B. Definition
Installment Payments:
1. Ten
percent (10%) of the Loan Amount, or $9,400.52 on the May 31, 2008;
2. Twenty
percent (20%) of the Loan Amount, or $20,133.77 on June 30, 2008;
3. Fifty
percent (50%) of the Loan Amount, or $47,002.60 on July 31, 2008;
and
4. Ten
percent (10%) of the Loan Amount, or $9,400.52 on August 15, 2008.
2.
Payroll
Taxes:
Obligor
and Obligee agree that of the payments made pursuant to this Note, that Obligor
shall first offset said respective principal payment by any applicable payroll
tax, if any.
3.
Interest:
The
loan
shall bear 6% interest per annum up to and including the Due Date. If
the
loan is not paid by the Due Date, the unpaid balance (principal and interest)
shall bear interest at the rate of 12% per annum until paid in full.
Interest
on this Note shall be payable monthly on the last Business Day of each calendar
month (commencing April 30, 2008 and upon the Due Date).
4.
Security
& Assignment:
Grant
of
Security Interest. As an inducement for the Obligor to purchase the Notes and
to
secure the complete and timely payment, performance and discharge in full,
as
the case may be, of all of the Obligations, WinSonic hereby, unconditionally
and
irrevocably, pledges, grants and hypothecates to the Obligee, a continuing
security interest in and to the Collateral (the “Security Interest”).
“Collateral”
means the collateral in which the Obligee is granted a security interest by
this
Agreement and which shall include the following, whether presently owned or
existing or hereafter acquired or coming into existence, and all additions
and
accessions thereto and all substitutions and replacements thereof, and all
proceeds, products and accounts thereof, including, without limitation, all
proceeds from the sale or transfer of the Collateral and of insurance covering
the same and of any tort claims in connection therewith:
A. All
Goods
of Obligor, including, without limitations, all machinery, equipment, computers,
motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special
and
general tools, fixtures, test and quality control devices and other equipment
of
every kind and nature and wherever situated, together with all documents of
title and documents representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes for any of the
foregoing and all other items used and useful in connection with the Company’s
businesses and all improvements thereto (collectively, the “Equipment”);
and
Promissory
Note
2
Exhibit
10.5 10-Q
B. All
Receivables of Obligor, including all insurance proceeds, and rights to refunds
or indemnification whatsoever owing, together with all instruments, all
documents of title representing any of the foregoing, all rights in any
merchandising, goods, equipment, motor vehicles and trucks which any of the
same
may represent, and all right, title, security and guaranties with respect to
each Receivable.
Upon
the
occurrence of any of the following specified events (each an “Event of
Default):
a) The
Obligor shall (i) default the payment then due of any principal of any of this
Note; or (ii) default, and such default shall continue unremedied for five
or
more Business Days in the payment when due of any interest on this Note or
the
principal hereof;
b) One
or
more judgments or decrees shall be hereafter entered against the Obligor or
any
of WinSonic subsidiaries, involving in the aggregate for the Obligor and its
subsidiaries, the liability (if not fully covered by insurance) of $100,000
or
more;
c) The
Obligor or any of WinSonic subsidiaries shall hereafter incur any indebtedness
senior to the indebtedness under this Note;
d) Obligor,
or any of WinSonic subsidiaries makes a general assignment of substantially
all
of its assets for the benefit of creditors, or a
petition in bankruptcy or under any insolvency law is filed by or against
Obligor or any WinSonic subsidiaries and such petition is not dismissed within
sixty (60) days after it has been filed;.
e) In
the
event of the sale of substantially all of the assets of the Obligor or, if
the
successor is not as financially secure as the Obligor, upon the merger,
consolidation or reorganization of the Obligor or any of WinSonic subsidiaries
or there is a change in control of the Obligor or any of WinSonic
subsidiaries.
then,
upon the occurrence of any such Event of Default, and at any time thereafter,
if
any Event of Default shall then be continuing; then the Obligee may declare
that
the entirety of the principal hereof, and the interest due hereunder, to be
immediately due and payable. Further Obligee shall immediately foreclose on
the
Collateral to which Obligor shall not impede in any fashion; Obligee’s rights to
liquidate said Collateral in any order of priority Obligee believes in its
best
interest to collect the total obligation of Obligor as provided for
herein.
In
the
event of default by WinSonic, Xxxxxxx X. Xxxxxxx, personally guarantees the
Loan
Amount pursuant to the Note, plus the 12% interest (the “Default Rate”).
Further,
in the Event of Default, then Obligor shall additionally owe Xx. Xxxxx X. Xxxxxx
the amount of $100,750.00, pursuant to the provisions of the employment
agreement entered into between WinSonic and Xx. Xxxxxx, for a then total amount
owing pursuant to this Note for Xx. Xxxxxx of $120,900.00, for which the Loan
Amount shall be increased accordingly.
Promissory
Note
3
Exhibit
10.5 10-Q
The
Obligor shall have the right to prepay the principal amount of this Note at
any
time, or from time to time, without penalty or premium, provided that each
such
payment shall be with accrued interest to the date of prepayment.
A
Business Day when used herein shall mean any day other than a Saturday, Sunday
or a day on which commercial banks are closed in the City of Atlanta. If a
payment is due hereunder on a day which is not a Business Day then payment
shall
be made on the preceding Business Day.
Any
fees,
including attorney’s fees of the Obligee, costs or expenses incurred by the
Obligee in collecting or enforcing the obligations of the Obligor under this
Note shall be due and payable by the Obligor when incurred after notice thereof
to Obligor. Any unpaid portion of the amounts set forth in the preceding
sentence shall bear interest at the Default Rate.
Any
notice required or permitted hereunder shall be in writing and delivered either
personally or in writing, by certified mail, return receipt requested or by
facsimile transmission, or via the Internet at the addresses set forth at the
outset hereof or to such other address as either shall give notice to the
other.
To the Obligee: | To the Obligor(s): | |
Xx. Xxxxxx X. Xxxxx, Xx. | Xx. Xxxxxxx Xxxxxxx | |
First Philadelphia, LLC | WinSonic Digital Media Group, Ltd. | |
Phone: (000) 000-0000 | Phone: (000)-000-0000 | |
Fax: (000) 000-0000 | Cell: (000) 000-0000 | |
Email: xxxxxx@xxxxxx.xxx | Fax:: (000) 000-0000 | |
Email:
xxxxxxx@xxxxxxxx.xxx
|
The
Obligor hereby waives presentment, demand protest or notice of any kind in
connection with this Note.
WINSONIC DIGITAL MEDIA GROUP, LTD. | ||
|
|
|
By: | ||
Xxxxxxx Xxxxxxx, Chief Executive Officer |
XXXXXXX XXXXXXX | ||
|
|
|
By: | ||
Xxxxxxx Xxxxxxx |
Promissory
Note
4
Exhibit
10.5 10-Q
ACKNOWLEDGMENT
)
)
ss.
)
|
Before
me, the undersigned, a Notary Public in and for said Xxxxxx County and State
of
Georgia on this _________________, 2008, personally appeared Xxxxxxx X.
Xxxxxxx,
to me
known to be the identical person who subscribed his name to the foregoing
instrument and acknowledged to me that he executed the same as his free and
voluntary act and deed for the uses and purposes therein set forth.
Witness
my hand and seal the day and year set forth above.
__________________________________
Notary
Public
My
Commission Expires:
___________________________
Promissory
Note
5
EXHIBIT
A
OBLIGEES
& AMOUNTS DUE
Name
|
Gross
Amount Due $
|
Gross
Less Prior Payment Net Amount
|
Net
Amount (exclude Payroll Taxes as Applicable)
|
Less
Prior In-Process Payment $ *
|
Net
$ Amount Loan To Pay
|
10%
Upfront Date
|
Date
maining Due & Pay
|
Due
May 31, 2008
|
Due
June 30, 2008
|
Due
July 31, 2008
|
Due
Aug. 15, 2008
|
|||||||||||||||||||||||
10.0%
|
90.0%
|
10.0%
|
20.0%
|
50.0%
|
10%
|
|||||||||||||||||||||||||||||
First
Philadelphia, LLC
|
17,729.23
|
14,729.23
|
17,729.23
|
3,000.00
|
14,729.23
|
1,472.92
|
13,256.31
|
1,472.92
|
2,945.85
|
7,364.62
|
1472.923
|
|||||||||||||||||||||||
MarchFive
Associates, LLC
|
15,000.00
|
15,000.00
|
15,000.00
|
15,000.00
|
1,500.00
|
13,500.00
|
1,500.00
|
3,000.00
|
7,500.00
|
1500
|
||||||||||||||||||||||||
Crystal
Beach Web Solutions, LLC
|
4,762.30
|
4,762.30
|
4,762.30
|
4,762.30
|
476.23
|
4,286.07
|
476.23
|
952.46
|
2,381.15
|
476.23
|
||||||||||||||||||||||||
Blue
Ridge Allied Technical Services
|
1,164.70
|
664.70
|
1,164.70
|
500.00
|
664.70
|
66.47
|
598.23
|
66.47
|
132.94
|
332.35
|
66.47
|
|||||||||||||||||||||||
Xxxxx
X'Xxxxx
|
8,089.76
|
8,089.76
|
6,305.11
|
6,305.11
|
630.51
|
5,674.60
|
630.51
|
1,261.02
|
3,152.56
|
630.51125
|
||||||||||||||||||||||||
Xxxxx
X. Xxxxxx 1 **
|
50,301.24
|
49,801.24
|
36,016.62
|
500.00
|
35,516.62
|
3,551.66
|
31,964.96
|
3,551.66
|
7,103.32
|
17,758.31
|
3551.662
|
|||||||||||||||||||||||
Xxxxx
X. Xxxxxx 2
|
20,150.00
|
20,150.00
|
13,327.24
|
13,327.24
|
0.00
|
13,327.24
|
1,332.72
|
3,998.17
|
6,663.62
|
1332.724224
|
||||||||||||||||||||||||
Xxxxxx
XxXxx 3
|
4,200.00
|
3,700.00
|
4,200.00
|
500.00
|
3,700.00
|
370.00
|
3,330.00
|
370.00
|
740.00
|
1,850.00
|
370
|
|||||||||||||||||||||||
TOTAL
|
121,397.23
|
116,897.23
|
98,505.20
|
4,500.00
|
94,005.20
|
8,067.80
|
85,937.41
|
9,400.52
|
20,133.77
|
47,002.60
|
9,400.52
|
Promissory
Note
6