Exhibit 10.5 10-Q LOAN AGREEMENT AND SECURITY ASSIGNMENT

EX-10.5 15 v114443_ex10-5.htm Unassociated Document

Exhibit 10.5 10-Q

LOAN AGREEMENT AND SECURITY ASSIGNMENT

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 101 Marietta Street, NW, Suite 2600, Atlanta, Georgia 30303 and in the Event of Default (as defined below) Winston Johnson, an individual residing at 1341 Audubon Court SW, Atlanta, Georgia 30311 and First Philadelphia, LLC , having offices at 400 Viewpoint Lane, Front Royal, Virginia 22630, MarchFive Associates, LLC having offices at 3795 Redcoat Way, Alpharetta, Georgia 30022, Crystal Beach Web Solutions, LLC, having offices at P.O. Box 71, 300 Florida Blvd., Crystal Beach, Florida 34681, Blue Ridge Allied Technical Services, having offices at P.O. Box 1683, Blue Ridge, Georgia 30513, David D. Lasier, having his principal residence at 16 Dinghy Court, Salem, South Carolina, 29676, Debra McNew, having her principal residence at 5010 Hurt Bridge Drive, Cumming, Georgia 30028, and Kevin O’Quinn, having his principal residence at 81 Heather Lane, Blue Ridge, Georgia 30513 (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

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

Exhibit 10.5 10-Q

In the Event of Default, pursuant to and as defined in the Note, by WinSonic, Winston D. Johnson, 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 Mr. David D. Lasier the amount of $100,750.00, pursuant to the provisions of the employment agreement entered into between WinSonic and Mr. Lasier, 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 Fulton 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

Exhibit 10.5 10-Q

By:_________________________________

Winston D. Johnson, Chairman and CEO

By:_________________________________

Winston D. Johnson

1341 Audubon Court SW

Atlanta, Georgia 30311

(Obligee)