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 statements shall also be certified by the Chief Financial Officer of Borrower. Within forty-five (45) days after each second quarter, the Borrower shall furnish to the Lender a balance sheet, income statement and reconciliation of surplus for such six month period certified by the Chief Financial Officer of the Borrower. The Borrower and each Guarantor also, with reasonable promptness, shall furnish to the Lender copies of their respective tax returns and such other data as the Lender may request.

Section 5.3   Taxes and Claims

The Borrower and each Guarantor shall properly pay and discharge all taxes, assessments and governmental charges upon or against the Borrower, the Guarantor or their assets, including payroll taxes, prior to the date on which penalties attach thereto.

Section 5.4   Insurance

The Borrower and each Guarantor shall: (i) keep its properties adequately insured at all times with insurance carriers acceptable to the Lender against loss or damage by fire and other hazards; (ii) maintain adequate insurance at all times with responsible insurance carriers against liability on account of damaged persons and property and under all applicable worker's compensation laws; and (iii) maintain adequate insurance covering such other risks as the Lender may request.

Section 5.5   Books and Reserves

The Borrower and each Guarantor shall: (a) maintain at all times true and complete books, records and accounts in which true and correct entries shall be made of its transactions in accordance with GAAP consistently applied and consistent with those applied in the preparation of the financial statements referred to in Section 5.2; and (b) by means of appropriate quarterly entries reflected in its accounts and in all financial statements furnished pursuant to Section 5.2, proper liabilities and reserves for all taxes and proper reserves for depreciation, renewal and replacement, obsolescence and amortization of its properties and bad debts, all in accordance with GAAP consistently applied as above.

Section 5.6   Inspection by the Lender; Audits

The Borrower and each Guarantor shall allow any representative of the Lender to visit and inspect any of the properties of the Borrower and each Guarantor, to examine and audit the books of account and other records and files of the Borrower and each Guarantor, to make copies thereof and to discuss the affairs, business, finances and accounts of the Borrower and each Guarantor with their officers and employees, all at such reasonable times and as often as the Lender may request.

Section 5.7   Litigation

The Borrower and each Guarantor will promptly notify the Lender upon the commencement of any action, suit, claim, counterclaim or proceeding against or investigation of the Borrower or such Guarantor where the damage claim is in excess of $25,000 or where the litigation may materially adversely affect the Borrower's or such Guarantor’s business.

Section 5.8   Assessments

The Borrower and each Guarantor shall promptly notify the Lender in writing of any material assessment by any taxing authority for unpaid taxes as soon as the Borrower or such Guarantor has knowledge thereof and shall supply the Lender with copies of all notices from the Internal Revenue Service or any other taxing authority.

Section 5.9   Change of Name, Principal Place of Business, Etc.

The Borrower and each Guarantor shall notify the Lender immediately of any change in the name of the Borrower or such Guarantor, the principal place of business of the Borrower or such Guarantor, the office where the books and records of the Borrower or such Guarantor are kept or any change in the registered agent of the Borrower or such Guarantor for the purpose or service of process.

ARTICLE VI

BORROWER'S NEGATIVE COVENANTS

The Borrower and each Guarantor, as applicable, covenants and agrees that from the date hereof and until payment in full of the principal of and interest on the Note, and all other indebtedness to the Lender under this Agreement, unless the Lender shall otherwise consent in writing, it will not, either directly or indirectly, do the following:

Section 6.1   Merger, Sale of Assets, Dissolution, Etc.

The Borrower and the Guarantors will not enter into any transaction of merger or consolidation, or transfer, sell, assign, lease or otherwise dispose of (other than sales of products and services in the ordinary course of business) all or a substantial part of its properties or assets without prior consent of the Lender.

Section 6.2   Change of Fiscal Year, Etc.

The Borrower and the Guarantors shall not change their fiscal year nor will the Borrower or any Guarantor amend in any respect its Certificate of Incorporation or Bylaws from those in existence on the date of this Agreement or change its accounting methods or practices, its depreciation or amortization policy or rates, except as required to comply with law or with Generally Accepted Accounting Principles.

ARTICLE VII

DEFAULTS AND REMEDIES

Section 7.1   Defaults

The occurrence of any one or more of the following events shall constitute an “Event of Default” by Borrower hereunder:

(a)   the failure of the Borrower to pay when due any of the Obligations under the Note;

(b)   the failure of the Borrower or any Guarantor to perform, keep or observe any of the covenants, conditions, promises, agreements or obligations of such party under this Agreement or any of the Loan Documents, after notice thereof and a fifteen day opportunity to cure (without such cure);

(c)   the making or furnishing by the Borrower or any Guarantor to Lender of any representation or warranty within this Agreement or the other Loan Documents or in connection with any Certificate relating to a Future Advance, which is untrue or misleading in any material respect, after notice thereof and a fifteen day opportunity to cure such misstatement (without such cure);

(d)   the creation (whether voluntary or involuntary) of, or any attempt by the Borrower or any Guarantor to create, any lien or other encumbrance upon any of the Collateral, other than the Permitted Liens, or the making or any attempt to make any levy, seizure or attachment thereof;

(e)   the commencement of any proceedings in bankruptcy by or against the Borrower or any Guarantor or for the liquidation or reorganization of the Borrower or any Guarantor, or alleging that such Borrower or Guarantor is insolvent or unable to pay its debts as they mature, or for the readjustment or arrangement of the Borrower's or any Guarantor’s debts, whether under the United States Bankruptcy Code or under any other law, whether state or federal, now or hereafter existing for the relief of debtors, or the commencement of any analogous statutory or non-statutory proceedings involving the Borrower or any Guarantor; provided, however, that if such commencement of proceedings against the Borrower or any Guarantor is involuntary, such action shall not constitute an Event of Default unless such proceedings are not dismissed within sixty (60) days after the commencement of such proceedings;

(f)   the appointment of a receiver or trustee for the Borrower or any Guarantor, for any of the Collateral or for any substantial part of the Borrower's or any Guarantor’s assets or the institution of any proceedings for the dissolution, or the full or partial liquidation, or the merger or consolidation, of the Borrower or any Guarantor which is a corporation, limited liability company or a partnership; provided, however, that if such appointment or commencement of proceedings against the Borrower or any Guarantor is involuntary, such action shall not constitute an Event of Default unless such appointment is not revoked or such proceedings are not dismissed within sixty (60) days after the commencement of such proceedings; and

(g)   the entry of any judgment or order against the Borrower or any Guarantor which remains unsatisfied or undischarged and in effect for thirty (30) days after such entry without a stay of enforcement or execution;

Section 7.2   Action for Enforcement

Upon the occurrence of an Event of Default, the Lender may proceed to protect and enforce its rights or remedies either by suit in equity or by action at law, or both, whether for the specific performance of any covenant, agreement or other provision contained herein, in the Note, or in any document or instrument delivered in connection with or pursuant to this Agreement, or to enforce the payment of the Note or any other legal or equitable right or remedy.

Section 7.3   Suit Against the Guarantors

Upon the occurrence of an Event of Default, the Lender may proceed directly against any Guarantor with or without exercising its rights against the Borrower and obtain judgment against such Guarantor. The liability of any Guarantor shall be joint and several, if more than one Guarantor.

Section 7.4   Rights and Remedies Cumulative

No right or remedy herein conferred upon the Lender is intended to be exclusive of any other right or remedy contained herein, in the Note, Security Documents or in any instrument or document delivered in connection with or pursuant to this Agreement, and every such right or remedy shall be cumulative and shall be in addition to every other such right or remedy contained herein and therein or now or hereafter existing at law or in equity or by statute or otherwise. In the event of any conflict among the Loan Documents as to the notice required before resort to any remedy, the shortest notice provision shall control all others with respect to the remedy in question (for purposes of this Section only, “without notice” shall be deemed a notice provision).

Section 7.5   Rights and Remedies Not Waived

No course of dealing between the Lender and any party hereto, or any failure or delay on the part of the Lender in exercising any rights or remedies hereunder shall operate as a waiver of any rights or remedies of the Lender and no single or partial exercise of any rights or remedies hereunder shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder.

ARTICLE VIII

FEES AND PAYMENTS

Section 8.1   Costs, Taxes and Attorneys' Fees

Whether or not the closing is effectuated and the transactions contemplated hereby shall be consummated, the Borrower and the Guarantors agree: (a) to pay all out-of-pocket costs, expenses, disbursements and fees incurred by the Lender in connection with the preparation, execution and delivery of any amendment, supplement or modification to, any of the Loan Documents and any other documents prepared in connection herewith, (b) to pay or reimburse the Lender for all its out-of-pocket ( i.e. , non-overhead) costs and expenses incurred in connection with the administration, audit and/or enforcement or preservation of any rights under the Loan Documents and any such other documents; and (c) to indemnify and hold the Lender harmless from any and all recording and filing fees (including all intangible and documentary stamp taxes) and any and all liabilities with respect to, or resulting from, any delay in paying stamp, excise, documentary and other similar taxes, if any, which may be payable or determined to be payable in connection with the origination, administration, audit, execution and delivery of, or consummation of, any of the transactions contemplated by, or any amendment, supplement or modification to, or any waiver or consent under or in respect of, the Loan Documents and any such other document. The agreements contained in this Section shall survive repayment of the Note and all other amounts payable hereunder or under the other Loan Documents. Furthermore, the Borrower and the Guarantors shall be liable for post-closing collection expenses, including, but not limited to, expenses related to the repossession, storage or sale of the Collateral and to the collection of obligations of the Borrower hereunder, including reasonable attorneys' fees, including appellate proceedings, post-judgment proceedings and bankruptcy proceedings.

ARTICLE IX

MISCELLANEOUS

Section 9.1   Notices

All notices, requests, consents and other communications hereunder to any party, shall be deemed to be sufficient if in writing and contained (i) delivered in person, (ii) delivered and received by facsimile or telecopier, if a confirmatory mailing in accordance herewith is also made, (iii) duly sent by first class, registered or certified mail return receipt requested and postage prepaid or (iv) duly sent by overnight delivery service, addressed to such party at the address set forth below (or at such other addresses as shall be specified by like notice):

All such notices and communications shall be deemed to have been received when personally delivered or mailed to the foregoing persons at the addresses set forth above; provided, however, that the time period in which a response to any such notice must be given shall commence on the date of receipt thereof; provided, further, that rejection or other refusal to accept or inability to deliver because of changed address for which no notice has been received shall also constitute receipt.

Section 9.2   Further Assurances

At any time and from time to time, upon the Lender's request and at the expense of the Borrower, the Borrower and each Guarantor will promptly (and in no event within more than 10 days) execute and deliver any and all further instruments and documents and take such further action as the Lender may deem reasonable to effect the purposes of this Agreement and/or any of the other Loan Documents.

Section 9.3   Survival of Representations and Warranties

All representations and warranties made hereunder, in the other Loan Documents or in any document, certificate or statement delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery of this Agreement, the Note, and the other Loan Documents.

Section 9.4   Attorneys' Fees

Any and all references to the payment of attorneys' fees and disbursements herein or in any of the other Loan Documents shall include those incurred before, during and after litigation, whether in negotiating, drafting, closing, attempting collection without litigation, investigating and litigating in all trial and appellate levels, as well as those incurred in any bankruptcy proceedings and post-judgment proceedings. Attorneys' fees includes fees of paraprofessionals such as paralegals and investigators, administrative costs and all other charges whatsoever billed by Counsel to the Lender.

Section 9.5   Severability

Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 9.6   Conflict

If the terms and provisions of any of the other Loan Documents should conflict with any of the terms and provisions of this Agreement, the terms and provisions of this Agreement shall be interpreted as being paramount, superior and controlling.

Section 9.7   Jurisdiction and Venue

Each of the parties irrevocably and unconditionally: (a) agrees that any suit, action or other legal proceeding arising out of or relating to this Agreement may, and to the extent permitted by the courts of the State of Florida shall be brought in the courts of record of the State of Florida in Broward County or the District Court of the United States, Southern District of Florida; (b) consents to the jurisdiction of each such court in any such suit, action or proceeding; (c) waives any objection which it may have to the laying of venue of any such suit, action or proceeding in any of such court; and (d) agrees that service of any court paper may be effected on such party by mail, as provided in this Agreement, or in such other manner as may be provided under applicable laws or court rules in the State of Florida.

Section 9.8   Amendments

The provisions of this Agreement may not be amended, supplemented, waived or changed orally, but only by a writing signed by the party as to whom enforcement of any such amendment, supplement, waiver or modification is sought and making specific reference to this Agreement.

Section 9.9   Waivers

The Borrower and the Guarantors waive presentment, demand, protest, notice of default, nonpayment, partial payments and all other notices and formalities relating to this Agreement other than notices specifically required hereunder. The Borrower and the Guarantors consent to and waive notice of the granting of indulgences or extensions of time of payment, the taking or releasing of security, the addition or release of persons primarily or secondarily liable on or with respect to liabilities of the Borrower or any Guarantor to the Lender, all in such manner and at such time or times as the Lender may deem advisable. No act or omission of the Lender shall in any way impair or affect any of the indebtedness or liabilities of the Borrower or any Guarantor to the Lender or rights of the Lender in any security. No delay by the Lender to exercise any right, power or remedy hereunder or under any Security Documents, and no indulgence given to the Borrower or any Guarantor in case of any default, shall impair any such right, power or remedy or be construed as having created a course of dealing or performance contrary to the specific provisions of this Agreement or as a waiver of any default by the Borrower or any Guarantor or any acquiescence therein or as a violation of any of the terms or provisions of this Agreement.

Section 9.10   Governing Law; Benefit

This Agreement and all rights hereunder shall be governed by the laws of the State of Florida and of the United States.

Section 9.11   WAIVER OF JURY TRIAL

THE PARTIES HERETO DO HEREBY MUTUALLY AND WILLINGLY WAIVE THE RIGHT TO A TRIAL BY JURY OF ANY AND ALL CLAIMS MADE AMONG THEM WHETHER NOW EXISTING OR ARISING IN THE FUTURE, INCLUDING WITHOUT LIMITATION, ANY AND ALL CLAIMS, DEFENSES, COUNTERCLAIMS, CROSSCLAIMS, THIRD PARTY CLAIMS AND INTERVENOR'S CLAIMS WHETHER ARISING FROM OR RELATED TO THE NEGOTIATION, EXECUTION AND PERFORMANCE OF THE TRANSACTION TO WHICH THIS LOAN AGREEMENT RELATES.

[SIGNATURES ARE ON THE FOLLOWING PAGES]

LENDER:
DANCING BEAR INVESTMENTS, INC.
By:	/s/ Michael S. Egan
	Michael S. Egan, President
BORROWER:
theglobe.com, inc.
By:	/s/ Edward A. Cespedes
	Edward A. Cespedes, President
GUARANTORS:
Chips & Bits, Inc.
By:	/s/ Edward A. Cespedes
	Edward A. Cespedes, President
Strategy Plus, Inc.
By:	/s/ Edward A. Cespedes
	Edward A. Cespedes, President
tglo.com, inc.
By:	/s/ Edward A. Cespedes
	Edward A. Cespedes, President
Tralliance Partners International, Corp.
By:	/s/ Edward A. Cespedes
	Edward A. Cespedes, President
Tralliance Corporation
By:	/s/ Edward A. Cespedes
	Edward A. Cespedes, President
Direct Partner Telecom, Inc.
By:	/s/ Edward A. Cespedes
	Edward A. Cespedes, President

EXHIBIT “A”

CERTIFICATE AND LOAN ADVANCE REQUEST

DATE: ____________, 2008

Dear Sir:

Pursuant to Section 2.1 of the Revolving Loan Agreement between Dancing Bear Investments, Inc. (the “Lender”) and theglobe.com, inc. (the “Borrower”), dated June 6, 2008, the undersigned, being the President of the Borrower, applies for an advance of $ ____________ to be credited to the account of theglobe.com, inc. and certifies that:

1.

No Event of Default as defined in the Loan Agreement

2.

The advance applied for hereunder plus the present principal balance of the Loan does not exceed $500,000.

theglobe.com, inc.
By: ________________________

EXHIBIT “B”

SECURITY AGREEMENT

EXHIBIT “C”

UNCONDITIONAL GUARANTY AGREEMENT

 

 

PROMISSORY NOTE

 

$500,000.00

June 6, 2008

theglobe.com, inc., a Delaware corporation

110 E. Broward Boulevard, Suite 1400

Fort Lauderdale, FL 33301

(Hereinafter referred to as "Borrower")

Dancing Bear Investments, Inc., a Florida corporation

110 E. Broward Boulevard, Suite 1400

Fort Lauderdale, FL 33301

(Hereinafter referred to as “Lender")

Borrower promises to pay to the order of Lender, in lawful money of the United States of America, at its office indicated above or wherever else Lender may specify, the sum of Five Hundred Five Thousand and No/100 Dollars ($500,000.00) or such sum as may be advanced and outstanding from time to time, with interest on the unpaid principal balance at the rate and on the terms provided in this Promissory Note (including all renewals, extensions or modifications hereof, this "Note").

LINE OF CREDIT. Subject to the terms and conditions of that certain Revolving Loan Agreement of even date between the Lender, the Borrower and others (the “Loan Agreement”), Borrower may borrow, repay and reborrow, and, upon the request of Borrower, Lender may advance and readvance under this Note from time to time until the maturity hereof (each an "Advance" and together the "Advances"), so long as the total principal balance outstanding   under this   Note at any one time does not exceed the principal amount stated on the face of this   Note; provided, however, that the amount available for Advances hereunder shall be automatically reduced to no less than One Thousand and 00/100 Dollars ($1,000.00) through the Maturity Date (as hereafter defined). Lender's obligation to make Advances under this   Note shall be in its sole discretion and, in all events, shall terminate if Borrower is in Default.

INTEREST RATE.    Interest shall accrue on the unpaid principal balance of this Note from the date hereof at the rate of ten percent (10%) per annum as of the date of this Note (the "Interest Rate").

DEFAULT RATE. In addition to all other rights contained in this Note, if a Default occurs and as long as a Default continues ,   all outstanding principle under this Note shall bear interest at the Interest Rate plus 3% ("Default Rate"). The Default Rate shall also apply from acceleration   until the obligations or any judgment thereon is paid in full.

INTEREST AND FEE(S) COMPUTATION   (ACTUAL/ACTUAL). Interest and fees, if any, shall be computed on the basis of the actual number of days in the year for the actual number of days in the applicable period ("Actual/Actual Computation"). The Actual/Actual Computation determines the annual effective yield by taking the stated (nominal) rate for a year's period and then dividing said rate by the actual number of days in the year to determine the daily periodic rate to be applied for each day in the applicable period.

REPAYMENT TERMS. This Note shall be due and payable in one lump sum of principal and interest on the Maturity Date. In addition, if at anytime the amount outstanding hereunder exceeds the amount then available for Advances, Borrower shall immediately repay the loans evidenced by this Note in an amount sufficient to eliminate such excess. In any event, all principal and accrued interest shall be due and payable on the Maturity Date. For purposes hereof, “Maturity Date” shall mean the first to occur of (i) June 6, 2009 or (ii) the occurrence of an “Event of Default” as defined in the Loan Agreement.

APPLICATION OF PAYMENTS. Monies received by Lender from any source for application toward payment of the Obligations shall be applied to accrued interest and then to principal. If a Default occurs, monies may be applied to the Obligations in any manner or order deemed appropriate by Lender.

If any payment received by Lender under this Note is rescinded, avoided or for any reason returned by Lender because of any adverse claim or threatened action, the returned payment shall remain payable as an obligation of all persons liable under this Note as though such payment had not been made.

DEFINITIONS. Obligations. The term "Obligations", as used in this Note, refers to any and all indebtedness and other obligations under this Note.

ATTORNEYS' FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Lender's reasonable expenses incurred to enforce or collect any of the Obligations including, without limitation, reasonable arbitration, paralegals', attorneys' and experts' fees and expenses, whether incurred without the commencement of a suit, in any trial, arbitration, or administrative proceeding, or in any appellate or bankruptcy proceeding.

USURY. If at any time the effective interest rate under this Note would, but for this paragraph, exceed the maximum lawful rate, the effective interest rate under this Note shall be the maximum lawful rate, and any amount received by Lender in excess of such rate shall be applied to principal and then to fees and expenses, or, if no such amounts are owing, returned to Borrower.

REMEDIES UPON DEFAULT. If a Default occurs under this Note, Lender may at any time thereafter, take any of the actions or remedies set forth in the Loan Agreement, including acceleration of the maturity of this Note,   whereupon this Note and the accelerated Obligations shall be immediately due and payable.

WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note shall be valid unless in writing and signed by Lender. No waiver by Lender of any Default   shall operate as a waiver of any other Default or the same Default on a future occasion. Neither the failure nor any delay on the part of Lender in exercising any right, power, or remedy under this Note shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

Borrower or any person liable under this Note waives presentment, protest, notice of dishonor, demand for payment, n otice of intention to accelerate maturity, notice of acceleration of maturity, notice of sale and all other notices of any kind. Further, each agrees that Lender may extend, modify or renew this Note or make a novation of the loan evidenced by this Note for any period, and grant any releases, compromises or indulgences with respect to any collateral securing this Note, or with respect to any other Borrower or any other person liable under this Note, all without notice to or consent of Borrower or each person who may be liable under this Note and without affecting the liability of Borrower or any person who may be liable under this Note.

MISCELLANEOUS PROVISIONS. Assignment. This Note shall inure to the benefit of and be binding upon the parties and their respective heirs, legal representatives, successors and assigns. Lender's interests in and rights under this Note re freely assignable, in whole or in part, by Lender. Borrower shall not assign its rights and interest hereunder without the prior written consent of Lender, and any attempt by Borrower to assign without Lender's prior written consent is null and void. Any assignment shall not release Borrower from the Obligations. Applicable Law. This Note shall be governed by and construed under the laws of the state named in Lender's address on the first page hereof without regard to that state's conflict of laws principles. Jurisdiction. Borrower irrevocably agrees to non-exclusive personal jurisdiction in the state named in Lender's address on the first page hereof . Severability. If any provision of this Note shall be prohibited or invalid under applicable law, such provision shall be ineffective but only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note or other such document.

 

WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF   BORROWER   AND LENDER KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS   NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO ACCEPT THIS   NOTE .  

IN WITNESS WHEREOF , the undersigned has caused this Note to be executed under seal.

 

theglobe.com, inc., a Delaware corporation
By:	/s/ Edward A. Cespedes
	Edward A. Cespedes, President

     

 

 

UNCONDITIONAL GUARANTY AGREEMENT

 

This Unconditional Guaranty Agreement (this "Guaranty") is given this 6th day of June, 2008, by Chips & Bits, Inc., a Vermont corporation , Strategy Plus, Inc., a Vermont corporation , tglo.com, inc., a Delaware corporation, Direct Partner Telecom, Inc., a Florida corporation, Tralliance Corporation, a New York corporation, and Tralliance Partners International Corp. , a Delaware corporation (each a “ Guarantor ” and collectively, the " Guarantor "`) in conjunction with that certain Revolving Loan Agreement dated June 6th, 2008, (the "Revolving Loan Agreement") by and between theglobe.com, inc ., a Delaware corporation (the “Borrower") and Dancing Bear Investments, Inc., a Florida corporation (the " Lender ").

 

WITNESSETH:

A.   In order to induce Lender to enter into the Revolving Loan Agreement and in furtherance of covenants and undertakings pursuant to that certain Revolving Loan Agreement, each Guarantor does hereby undertake and agree that, if for any reason the Borrower does not make payment of any such sums or comply with any such obligations by the time, on the date and otherwise in the manner specified in the Revolving Loan Agreement (or in any of the promissory notes issued to the Lender in connection therewith, whether such notes are issued at the initial closing thereof or any subsequent additional closing (the “Notes”)) (the Notes together with the Revolving Loan Agreement, this Agreement and the Security Agreement of even date, the “Note Documentation”), the Guarantor will pay to the Lender such sums and comply with such obligations on demand by the Lender in the manner provided in the Note Documentation. Each Guarantor agrees that its obligations hereunder shall be joint and several with each other Guarantor; and

B.   Each Guarantor is a subsidiary of the Borrower, and will substantially benefit, economically and otherwise, from the Borrower executing the Note Documentation and from the proceeds of the loans derived therefrom.

 

NOW, THEREFORE , in consideration of the premises herein, in the Revolving Loan Agreement, and of the sum of TEN DOLLARS ($10.00) paid to Guarantor by the Lender, the receipt and adequacy whereof is hereby acknowledged, and as part of the consideration for the execution by the Lender of the Revolving Loan Agreement, each Guarantor hereby covenants and agrees with the Lender as follows:

1.   Guaranty of Borrower’s Obligations. Each Guarantor, jointly and severally, irrevocably, absolutely and unconditionally guarantees to Lender the due and punctual payment, when due, by acceleration or otherwise, of all obligations to pay under the Note Documentation and performance of all of the obligations of the Note Documentation and related documents.

2.   Absolute and Unconditional Guaranty. This is also an absolute and unconditional Guaranty pursuant to which the obligations of the Guarantors may be enforced without first having recourse to the Borrower, any other Guarantor or person or any other agreement, security, guaranty or indemnity.

3.   General Guaranty. This Guaranty is a general guaranty and shall inure to the benefit of the Lender and its successors and assigns. The obligations of each Guarantor under this Guaranty shall be binding on each of the Guarantors and their respective successors and assigns. No Guarantor may assign its rights or transfer its obligations under this Guaranty without the prior written approval of the Lender.

4. Waiver of Defenses . Each Guarantor specifically waives any and all defenses to any action or proceeding brought to enforce this Guaranty or any part of this Guaranty, either at law or in equity, except for the defense that the sum claimed by the Lender to be due has actually been paid to the Lender. Any release of any Guarantor from this Guarantor shall not affect the obligation and liability of the remaining Guarantors.

 

 

5. Waiver of Jury Trial . Each Guarantor hereby knowingly, voluntarily, and intentionally, waives the right it may have to a trial by jury in respect of any litigation based on, or arising out of, under or in connection with this Guaranty and any document executed in conjunction herewith or any course of conduct, course of dealing, statement (whether oral or written) or actions of or by any Guarantor or the Lender.

6. Submission to Jurisdiction; Attorneys’ Fees . Each Guarantor irrevocably and unconditionally (a) agrees that any suit, action or other legal proceeding arising out of or relating to this Guaranty shall be brought in the circuit court located in Broward County, Florida or the court of the United States, Southern District of Florida; (b) consents to the jurisdiction of each such court located in any such suit, action or proceeding; (c) waives any objection which it may have to the laying of venue of any such suit, action or proceeding in any of such courts; and (d) agrees that service of any court paper may be affected on such party by mail or in such other manner as may be provided under applicable laws or court rules in said state. Each Guarantor further agrees to pay all costs of collection, including reasonable attorneys' fees, costs and other legal expenses incurred by the Lender in attempting to enforce the Guarantors’ obligations under this Guaranty.

7. Notices . All notices, requests, consents and other communications under this Guaranty shall be in writing and shall be (as elected by the person giving such notice) (i) hand delivered by messenger or courier service, (ii) telecommunicated, (iii) mailed by registered or certified mail (postage prepaid, return receipt requested), or (iv) sent by recognized overnight courier service to the relevant party at its/his/her address listed below (or at such other address as the relevant Guarantor or the Lender may specify by written notice in accordance with this paragraph). Each such notice shall be deemed delivered (a) on the date delivered if by personal delivery; (b) on the date of transmission with confirmed answer back if by facsimile (provided that notice is also sent on such date in accordance with either clause (i), (iii) or (iv); (c) on the date upon which the return receipt is signed or delivery is refused or the notice is designated by the postal authorities as not deliverable, as the case may be, if mailed; or (d) on the second business day following delivery to a recognized overnight courier service for next business day delivery.

If to the Borrower:

110 E. Broward Boulevard, Suite 1400

Fort Lauderdale, FL 33301

Attn: Edward Cespedes

If to a Guarantor:

110 E. Broward Boulevard, Suite 1400

Fort Lauderdale, FL 33301

Attn: Edward Cespedes

If to the Lender:

110 E. Broward Boulevard, Suite 1400

Fort Lauderdale, FL 33301

Attn: Michael Egan

8. Entire Agreement . This Guaranty (together with the Security Agreement of even date herewith) represents the entire understanding and agreement among the Guarantors and the Lender with respect to the subject matter hereof and supersedes all other negotiations, understandings and representations (if any) made by and among such parties. No course of dealing, course of performance or trade usage, shall be used to supplement or modify any terms hereof.

9. Severability . If any part of this Guaranty is contrary to, prohibited by or deemed invalid under applicable law or regulation, such provision shall be inapplicable and deemed omitted to the extent so contrary, prohibited or invalid, but the remainder of this Guaranty shall not be invalidated and shall be given full force and effect.

 

 

10. Governing Law . This Guaranty shall be governed by the laws of the State of Florida, without regard to the conflicts of law principles thereof.

11. Amendment and Waiver . Any term of this Guaranty may be amended, only with the written consent of the Guarantors and the Secured Parry. Any amendment or waiver effected in accordance with this paragraph shall be binding upon the Guarantors and the Lender.

 

[EXECUTION PAGES FOLLOW]

 

 

IN WITNESS WHEREOF, the Guarantors have duly executed this Guaranty this ___ day of June, 2008, pursuant to a corporate resolution approving same.

 

Signed, sealed, and delivered

in the presence of:

STATE OF          )

            ) SS:

COUNTY OF                   )

The foregoing instrument was acknowledged before me this ____ day of ________________, 2008, by _________________________ as _____________ of Chips & Bits, Inc., a Vermont corporation, on behalf of the corporation. He/She is (check one) ____ personally known to me or ____ has produced _____________________________________ as identification.

 

		Notary Public Signature
		Print Name
(SEAL)		State of                 at Large
		Commission No.:
		My Commission expires:

 

Signed, sealed, and delivered

in the presence of:

				Strategy Plus, Inc., a Vermont corporation
				By: Edward A. Cespedes
Signature of Witness 1				Its: President
				Print Name: Edward A. Cespedes
Print Name of Witness 1
Signature of Witness 2
Print Name of Witness 2

 

STATE OF                          )

) SS:

COUNTY OF                      )

The foregoing instrument was acknowledged before me this ____ day of ________________, 2008, by _________________________ as _____________ of Strategy Plus, Inc., a Vermont corporation on behalf of the corporation. He/She is (check one) ____ personally known to me or ____ has produced _____________________________________ as identification.

 

		Notary Public Signature
		Print Name
(SEAL)		State of                  at Large
		Commission No.:
		My Commission expires:

Signed, sealed, and delivered

in the presence of:

				tglo.com, inc., a Delaware corporation
				By: Edward A. Cespedes
Signature of Witness 1				Its: President
				Print Name: Edward A. Cespedes
Print Name of Witness 1
Signature of Witness 2
Print Name of Witness 2

 

STATE OF                          )

) SS:

COUNTY OF                      )

The foregoing instrument was acknowledged before me this ____ day of ________________, 2008, by _________________________ as _____________ of tglo.com, inc., a Delaware corporation on behalf of the corporation. He/She is (check one) ____ personally known to me or ____ has produced _____________________________________ as identification.

 

		Notary Public Signature
		Print Name
(SEAL)		State of                           at Large
		Commission No.:
		My Commission expires:

 

 

Signed, sealed, and delivered

in the presence of:

				Tralliance Partners International Corp., a Delaware corporation
				By: Edward A. Cespedes
Signature of Witness 1				Its: President
				Print Name: Edward A. Cespedes
Print Name of Witness 1
Signature of Witness 2
Print Name of Witness 2

 

STATE OF                          )

) SS:

COUNTY OF                                 )

The foregoing instrument was acknowledged before me this ____ day of ________________, 2008, by _________________________ as _____________ of Tralliance Partners International Corp., a Delaware corporation on behalf of the corporation. He/She is (check one) ____ personally known to me or ____ has produced _____________________________________ as identification.

 

		Notary Public Signature
		Print Name
(SEAL)		State of                                    at Large
		Commission No.:
		My Commission expires:

Signed, sealed, and delivered

in the presence of:

				Direct Partner Telecom, Inc., a Florida corporation
				By: Edward A. Cespedes
Signature of Witness 1				Its: President
				Print Name: Edward A. Cespedes
Print Name of Witness 1
Signature of Witness 2
Print Name of Witness 2

 

STATE OF                          )

) SS:

COUNTY OF                      )

The foregoing instrument was acknowledged before me this ____ day of ________________, 2008, by _________________________ as _____________ of Direct Partner Telecom, Inc., a Florida corporation on behalf of the corporation. He/She is (check one) ____ personally known to me or ____ has produced _____________________________________ as identification.

 

		Notary Public Signature
		Print Name
(SEAL)		State of                                           at Large
		Commission No.:
		My Commission expires:

Signed, sealed, and delivered

in the presence of:

				Tralliance Corporation, a New York corporation
				By: Edward A. Cespedes
Signature of Witness 1				Its: President
				Print Name: Edward A. Cespedes
Print Name of Witness 1
Signature of Witness 2
Print Name of Witness 2

 

STATE OF                         )

) SS:

COUNTY OF                     )

The foregoing instrument was acknowledged before me this ____ day of ________________, 2008, by _________________________ as _____________ of Tralliance Corporation., a New York corporation on behalf of the corporation. He/She is (check one) ____ personally known to me or ____ has produced _____________________________________ as identification.

 

		Notary Public Signature
		Print Name
(SEAL)		State of                                  at Large
		Commission No.:
		My Commission expires:

 

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, delivering and filing any and all Collateral Assignments and other instruments necessary to perfect the Secured Party security interest in any other form of property, including without limitation, Collateral Assignments with respect to all patents and patent applications. Where permitted by applicable law, Grantors also hereby authorize Secured Party to file any financing or continuation statement without the signature of Grantors. If any amount payable under or in connection with any of the Collateral is or shall become evidenced by any Instrument, such Instrument, other than checks and notes received in the ordinary course of business, shall be duly endorsed in a manner satisfactory to Secured Party and delivered to Secured Party promptly upon Grantors’ receipt thereof.

 

4.   Events of Default . The occurrence of (i) any breach or default under the Revolving Loan Agreement (or any promissory note or other agreement or instrument delivered in connection therewith, the Transaction Documents) (after giving affect to any applicable notice and cure period thereunder) or (ii) the breach of any representation under this Agreement (after notice of any such breach from the Secured Party and expiration of a fifteen (15) day cure period without cure of such breach to the Secured Party’s satisfaction), or the failure to perform any obligation under Section 3 of this Agreement, shall constitute an “ Event of Default ” under this Agreement.

 

5.   Remedies on Default .

 

(a)   Upon the occurrence of an Event of Default, the Secured Party may declare all amounts outstanding under the Revolving Loan Agreement to be immediately due and payable, and thereupon all such amounts shall be and become immediately due and payable to the Secured Party. Secured Party shall have all rights, privileges, powers and remedies provided by law.

 

i.   Secured Party may gather, take possession of, and sell or otherwise dispose of, the Collateral in accordance with applicable law; and

 

ii.   Secured Party may use, operate, consume and sell the Collateral in its possession as appropriate for the purpose of performing Grantors’ obligations with respect thereto to the extent necessary to satisfy the obligations of Grantors.

 

(b)   All payments received and amounts realized by Secured Party (or Lienholders, as applicable) shall be promptly applied and distributed by the Secured Party (or Lienholders, as applicable) in the following order of priority:

 

i.   first, to the payment of all costs and expenses, including reasonable legal expenses and attorneys fees, incurred or made hereunder by Secured Party (or the Lienholders, as applicable), including any such costs and expenses of foreclosure or suit, if any, and of any sale or the exercise of any other remedy under this Section 5, and of all taxes, assessments or liens superior to the lien granted under this Agreement;

 

ii.   second, to payment to the Secured Party (up to the amount then owing under the Revolving Loan Agreement) on a pro rata basis, based upon the respective amount of principal and interest then outstanding to all of such Parties; and

 

iii.   third, to the Grantors (to the extent of any surplus).

 

6.   Power of Attorney . Following an Event of Default, Grantors hereby appoint Secured Party, or its attorney-in-fact to prepare, sign and file or record, for Grantors in Grantors’ name, any financing statements, applications for registration and like papers and to take any other action deemed by the Secured Party as necessary or desirable in order to perfect the security interest of the Secured Party hereunder, to dispose of any Collateral, and to perform any obligations of the Grantors hereunder, at Grantors’ expense, but without obligation to do so. Any proceeds received from the foregoing actions of Secured Party will be distributed in accordance with Section 5(b) of this Agreement.

7.   Remedies Cumulative . The Secured Party’s rights and remedies under this Agreement and all other agreements shall be cumulative. The Secured Party shall have all other rights and remedies not inconsistent herewith as provided under the UCC, by law, or in equity; provided, however, that all such acts shall be as directed by the Secured Party. No exercise by Secured Party of one right or remedy shall be deemed an election, and no waiver by Secured Party of any Event of Default shall be deemed a continuing waiver. No delay by Secured Party shall constitute a waiver, election, or acquiescence by it. No waiver by Secured Party shall be effective unless made in a written document signed on behalf of Secured Party and then shall be effective only in the specific instance and for the specific purpose for which it was given.

 

8.   Grantors’ Waivers . Secured Party may, at its election, exercise or decline or fail to exercise any right or remedy it may have against the Grantors or any security held by Secured Party, including without limitation the right to foreclose upon any such security by judicial or nonjudicial sale, without affecting or impairing in any way the liability of the Grantors hereunder. Grantors waive any setoff, defense or counterclaim that the Grantors may have against Secured Party. Grantors waive any defense arising out of the absence, impairment or loss of any right of reimbursement or subrogation or any other rights against the Grantors. Grantors waive all rights to participate in any security now or hereafter held by Secured Party. Grantors waive all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, and notices of acceptance of this Agreement and of the existence, creation, or incurring of new or additional indebtedness. Grantors acknowledge and agree that their obligations hereunder shall be unaffected by any release of any particular Grantor, or any particular Collateral, from the provisions of this Agreement by the Secured Party.

 

9.   Notices . Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by telefacsimile to the Grantors or to Secured Party, as the case may be, at its addresses set forth below:

 

The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.

 

10.   Choice of Law and Venue; Jury Trial Waiver .

 

This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Florida, without regard to principles of conflicts of law. Each of Grantors and Secured Party acknowledge that a substantial portion of negotiations and anticipated performance and execution of this Agreement occurred or shall occur in Broward County, Florida, and that, therefore, without limiting the jurisdiction or venue of any other federal or state courts, each of the parties irrevocably and unconditionally (a) agrees that any suit, action or legal proceeding arising out of or relating to this Agreement may be brought in the courts of record of the State of Florida in Broward County or the court of the United States, Southern District of Florida; (b) consents to the jurisdiction of each such court in any suit, action or proceeding; (c) waives any objection which it may have to the laying of the venue of any such suit, action or proceeding in any of such courts; and (d) agrees that service of any court paper may be effected on such party by mail, as provided in this Agreement, or in such other manner as may be provided under applicable laws or court rules in said state. GRANTORS AND SECURED PARTY EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

11.   General Provisions .

 

(a)   Successors and Assigns . This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties; provided, however, that neither this Agreement nor any rights hereunder may be assigned by the Grantors without Secured Party’s prior written consent, which consent may be granted or withheld in Secured Party’s sole discretion. Secured Party shall have the right without the consent of or notice to the Grantors to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Secured Party’s obligations, rights and benefits hereunder.

 

(b)   Indemnification . Grantors shall defend, indemnify and hold harmless Secured Party and its respective officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with Grantors’ failure to comply with the terms of this Agreement; and (b) all losses or expenses in any way suffered, incurred, or paid by Secured Party as a result of or in any way arising out of, following, or consequential to Grantors’ failure to comply with the terms of this Agreement (including without limitation reasonable attorneys fees and expenses), except for losses caused by Secured Party’s gross negligence or willful misconduct.

 

(c)   Time of Essence . Time is of the essence for the performance of all obligations set forth in this Agreement.

 

(d)   Severability of Provisions . Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

 

(e)   Amendments in Writing, Integration . This Agreement cannot be amended or terminated orally. All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement, if any, are merged into this Agreement. Any term of this Agreement may be amended only with the written consent of the Grantors and the Secured Party. Any amendment or waiver effected in accordance with this paragraph shall be binding upon the Grantors and Secured Party.

(f)   Counterparts . This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement.

 

(g)   Survival . All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations remain outstanding or Secured Party has any obligation to make Credit Extensions to the Grantors. The obligations of the Grantors to indemnify the Secured Party with respect to the expenses, damages, losses, costs and liabilities described in Section (b) shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Secured Party have run.

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the date set forth above.

 

GRANTORS:			SECURED PARTY:
theglobe.com, inc.			Dancing Bear Investments, Inc.
By:	/s/ Edward A. Cespedes
Name:	Edward A. Cespedes		By:	/s/ Robin S. Lebowitz, Treasurer
Title:	President

Chips & Bits, Inc., a Vermont corporation
By:	/s/ Edward A. Cespedes
Name:	Edward A. Cespedes
Title:	President
Strategy Plus, Inc., a Vermont corporation
By:	/s/ Edward A. Cespedes
Name:	Edward A. Cespedes
Title:	President
tglo.com, inc., a Delaware corporation
By:	/s/ Edward A. Cespedes
Name:	Edward A. Cespedes
Title:	President
Tralliance Corporation., a New York corporation
By:	/s/ Edward A. Cespedes
Name:	Edward A. Cespedes
Title:	President
Direct Partner Telecom, Inc., a Florida corporation
By:	/s/ Edward A. Cespedes
Name:	Edward A. Cespedes
Title:	President
Tralliance Partners International Corp., a Delaware corporation
By:	/s/ Edward A. Cespedes
Name:	Edward A. Cespedes
Title:	President

 

GRANTORS:

theglobe.com, inc., a Delaware corporation

Chips & Bits, Inc., a Vermont corporation

Strategy Plus, Inc., a Vermont corporation

tglo.com, inc., a Delaware corporation

Tralliance Corporation, a New York corporation

Direct Partner Telecom, Inc., a Florida corporation

Tralliance Partners International Corp., a Delaware corporation

EXHIBIT A

COLLATERAL DESCRIPTION ATTACHMENT

TO THIS SECURITY AGREEMENT

 

All real and personal property of Grantors whether presently existing or hereafter created or acquired, and wherever located, including, but not limited to:

 

(a)   all accounts, chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable documents), contract rights, equipment (including all accessions and additions thereto), general intangibles (including payment intangibles and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of each Grantor’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records;

 

(b)   all common law and statutory copyrights and copyright registrations, applications for registration, now existing or hereafter arising, in the United States of America or in any foreign jurisdiction, obtained or to be obtained on or in connection with any of the forgoing, or any parts thereof or any underlying or component elements of any of the forgoing, together with the right to copyright and all rights to renew or extend such copyrights and the right (but not the obligation) of Secured Parties to sue in their own name and/or in the name of any Grantor for past, present and future infringements of copyright;

 

(c)   all state and federal trademarks, service marks, trade names and service names and the goodwill associated therewith, together with the right to trademark and all rights to renew or extend such trademarks and the right (but not the obligation) of Secured Parties to sue in its own name and/or in the name of a Grantor for past, present and future infringements of trademark;

 

(d)   all (i) patents and patent applications filed in the United States Patent and Trademark Office or any similar office of any foreign jurisdiction, and interests under patent license agreements, including, without limitation, the inventions and improvements described and claimed therein, (ii) licenses pertaining to any patent whether a Grantor is licensor or licensee, (iii) income, royalties, damages, payments, accounts and accounts receivable now or hereafter due and/or payable under and with respect thereto, including, without limitation, damages and payments for past, present or future infringements thereof, (iv) right (but not the obligation) to sue in the name of any Grantor and/or in the name of Secured Parties for past, present and future infringements thereof, (v) rights corresponding thereto throughout the world in all jurisdictions in which such patents have been issued or applied for, and (vi) reissues, divisions, continuations, renewals, extensions and continuations-in-part with respect to any of the foregoing; and

 

(e)     any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment. All terms above have the meanings given to them in the Florida Uniform Commercial Code, as amended or supplemented from time to time.

 

Notwithstanding the foregoing, the term “Collateral” shall not include any Equipment or rights of the Grantors as a lessee or licensee to the extent the granting of a security interest therein would be contrary to the terms of such lease or license or applicable law.

EXHIBIT B

Permitted Liens

1.   Any liens of landlords pursuant to the terms of the applicable lease or pursuant to applicable law.

2.   The lien of the Security Agreement dated April 22, 2005 (the “$4M Loan Security Agreement”) by and among theglobe.com, inc., the Grantors and the Investors who are parties to the $4M Loan Security Agreement.

3.   The lien of the Security Agreement dated May 29, 2007 (the “$3M Loan Security Agreement”) by and among theglobe.com, inc. and the Grantors who are parties to the $3M Loan Security Agreement.