Attached files
| file | filename |
|---|---|
| 10-K - Luvu Brands, Inc. | v198800_10k.htm |
| EX-31.2 - Luvu Brands, Inc. | v198800_ex31-2.htm |
| EX-32.2 - Luvu Brands, Inc. | v198800_ex32-2.htm |
| EX-31.1 - Luvu Brands, Inc. | v198800_ex31-1.htm |
| EX-32.1 - Luvu Brands, Inc. | v198800_ex32-1.htm |
| EX-10.21 - Luvu Brands, Inc. | v198800_ex10-21.htm |
| EX-10.24 - Luvu Brands, Inc. | v198800_ex10-24.htm |
| EX-10.23 - Luvu Brands, Inc. | v198800_ex10-23.htm |
| EX-10.25 - Luvu Brands, Inc. | v198800_ex10-25.htm |
Exhibit
10.22
Financing
Agreement
This
Financing Agreement is made and entered into by and between Summit Financial
Resources, L.P., 2455 East Parley's Way, Suite 200, Salt Lake City,
Utah 84109, Attention: Senior Portfolio Manager, and One
Up Innovations, Inc., a Georgia corporation, and FoamLabs, Inc., a Georgia
corporation, each at 2745 Bankers Industrial Drive, Atlanta,
Georgia 30360, Attention: President.
For good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Definitions. Terms
defined in the singular shall have the same meaning when used in the plural and
vice versa. Terms defined in the UCC shall have the meanings set
forth in the UCC, except as otherwise defined herein. As used herein,
the term:
"Acceptable
Account" means an Account of Client conforming to the representations,
warranties, and requirements of Section 15, Acceptable
Accounts.
"Accounts"
shall have the meaning set forth in the definition of Collateral.
"Account
Debtor" means any person or entity obligated for payment of an
Account.
"Account
Due Date" means Ninety (90) days from the date of the invoice evidencing the
Account.
"Advance"
means an advance of any portion of the Purchase Price to or on behalf of
Client.
"Advance
Rate" means Eighty Percent (80%), or such other Percent as may be determined
from time to time by Summit in its sole discretion.
"Agreement"
means this Financing Agreement, together with any amendments, addenda, and
modifications.
"Authorized
Overadvance" means an Overadvance authorized in writing by Summit.
"Banking
Business Day" means any day not a Saturday, Sunday, legal holiday in the State
of Utah, or day on which national banks in the State of Utah are authorized to
close.
"Chargeback
Account" means an outstanding Purchased Account which is past the Account Due
Date or is determined to no longer be an Acceptable Account.
"Client"
means, individually and collectively, jointly and severally, FoamLabs and One
Up, or either of them.
"Collateral"
means the following personal property of Client, wherever located, now owned or
existing or hereafter acquired or created, all additions and accessions thereto,
all replacements, insurance or condemnation proceeds, all documents covering any
of the Collateral, all leases of any of the Collateral, all rents, revenues,
issues, profits and proceeds arising from the sale, lease, license, encumbrance,
collection, or any other temporary or permanent disposition of any of the
Collateral or any interest therein, all amendments, modifications, renewals,
extensions, and replacements thereof, and all products and proceeds thereof: (a)
all inventory (the "Inventory"); (b) all accounts (the "Accounts"); (c) all
equipment, goods and motor vehicles (collectively, the "Equipment");
(d) all general intangibles, including any and all patents, trademarks and
copyrights (registered or unregistered), trade secrets, domain names and
addresses, and intellectual property licenses; (e) any and all promissory notes
and instruments payable to or owing to Client or held by Client; any and all
leases under which Client is the lessor; any and all chattel paper in favor of,
owing to, or held by Client, including, without limitation, any and all
conditional sale contracts or other sales agreements, whether Client is the
original party or the assignee; and any and all security agreements, collateral
and titles to motor vehicles which secure any of the foregoing obligations; (f)
all deposit accounts, including without limitation, all interest, dividends or
distributions accrued or to accrue thereon, whether or not due; (g) all
investment property, including all interest, dividends or distributions accrued
or to accrue thereon, whether or not due; (h) all documents; (i) all
letter-of-credit rights; (j) all supporting obligations; and (k) all balances,
deposits, debts or any other amounts or obligations of Summit owing to Client,
including, without limitation, any Reserve, whether or not due.
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"Collateral
Management Fee" means Four-Tenths Percent (0.4%) of the face amount of each
Purchased Account for each period of Ten (10) days, or portion thereof, that the
Purchased Account remains outstanding until payment in full is applied to the
Purchased Account, due and payable in arrears.
"Collected
Payments" means collections and payments received by Summit on Accounts of
Client, less all interest, Fees and Charges, amounts due and payable to Summit
by Client, deductions and setoffs. Credits for Collected Payments
shall be provisional and subject to final payment and collection of the
deposited item. For purposes of calculating interest owing, Collected
Payments delivered to a bank or other agent on behalf of Summit shall be deemed
received Two (2) Banking Business Days after the date of receipt of advice by
Summit from the bank or agent that the Collected Payments have been credited to
the account of Summit.
"Daily
Funds Rate" means the prime rate as announced in the Wall Street Journal plus
Two Percent (2%) divided by 360. The initial prime rate shall be the
prime rate in effect on the date of this Agreement. The Daily Funds
Rate may be adjusted from time to time as of the date of any change in the prime
rate.
"Default
Rate" means the Daily Funds Rate plus Ten Percent (10%) per annum.
"Equipment"
shall have the meaning set forth in the definition of Collateral.
"Event of
Default" shall have the meaning set forth in Section 27, Default and
Remedies.
"FoamLabs"
means FoamLabs, Inc., a corporation organized and existing under the laws of the
State of Georgia, its successors and assigns.
"Fees and
Charges" means the Collateral Management Fees and the Other
Charges.
"Financing
Period" means an initial period of One (1) year commencing on the date
of this Agreement and thereafter successive periods of One (1) year each
commencing upon completion of each prior Financing Period.
"Inventory"
shall have the meaning set forth in the definition of Collateral.
"Maximum
Credit Line" means Six Hundred Thousand Dollars ($600,000) or such other amount
as may be determined from time to time by Summit in its sole
discretion.
"One Up"
means One Up Innovations, Inc., a corporation organized and existing under the
laws of the State of Georgia, its successors and assigns.
"Other
Charges" means any Payment Conversion Fees and all other charges and fees which
may be charged by Summit pursuant to this Agreement, other than the Collateral
Management Fees.
"Outstanding
Advances" means Advances for which Summit has not received Collected Payments in
full and includes Advances against Chargeback Accounts for which Collected
Payments in full have not been received and the full re-purchase price has not
been paid.
"Overadvance"
means (a) the amount by which the Outstanding Advances exceed the Maximum Credit
Line, or (b) the amount by which the Outstanding Advances exceed Purchased
Accounts which are not Chargeback Accounts multiplied by the Advance
Rate.
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"Payment
Conversion Fee" means Ten Percent (10%) of any payment received by Client on a
Purchased Account which is not tendered to Summit as required in this
Agreement.
"Purchase
Price" of an Account means the face amount of the Account less all interest and
Fees and Charges.
"Purchased
Account" means an Account that has been purchased by Summit pursuant to Section
2, Purchase of
Accounts.
"Qualified
Bank Financing" means financing provided directly by a full service commercial
bank whose deposits are insured by the Federal Deposit Insurance Corporation in
the form of a revolving line of credit for which the primary collateral is
Client's Accounts. Financing provided by a subsidiary, affiliate or
division of such a bank does not qualify as Qualified Bank
Financing.
"Reserve"
means such amount as may be determined from time to time by Summit in its sole
discretion.
"Settlement
Date" means dates set by Summit, which dates shall be at least
weekly.
"Summit"
means Summit Financial Resources, L.P., a Hawaii limited partnership, its
successors and assigns.
"UCC"
means the Uniform Commercial Code, as adopted now or in the future in the State
of Utah.
2. Purchase of
Accounts.
Client
shall request purchase of Accounts by submitting to Summit a Schedule of
Accounts and Bill of Sale, copies of the invoices listed on the Schedule of
Accounts and Bill of Sale, supporting documentation for such invoices as
requested by Summit, and such other documentation as required by
Summit. Summit shall notify Client which Accounts are purchased by
providing reports to Client.
Unless
otherwise agreed in writing by Summit, upon purchase by Summit of any Account,
Client shall thereafter offer all Accounts owing by that Account Debtor for
purchase by Summit. Summit may also require that all Accounts owing
by that Account Debtor which Summit declines to purchase nonetheless be subject
to Section 14 Collection Procedures
and be paid to Summit.
Summit
may purchase from Client such Acceptable Accounts as Summit
elects. All purchases shall be subject to the terms and conditions of
this Agreement. THE OBLIGATION OF SUMMIT TO PURCHASE ACCOUNTS FROM
CLIENT IS DISCRETIONARY AND SUMMIT SHALL HAVE NO OBLIGATION TO PURCHASE ANY
ACCOUNT FROM CLIENT, NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT. Summit may decline to purchase any Account submitted by
Client for any reason or for no reason, without notice, regardless of any course
of conduct or past purchases of Accounts by Summit. Each purchase by
Summit shall be a true purchase with transfer of all legal and equitable title
and shall not be deemed to be a loan agreement or secured
transaction. Client shall thereafter have no right, title or interest
in or to Purchased Accounts. Client shall make appropriate entries on
its books and records disclosing the sale of Purchased Accounts to
Summit.
Summit
shall be the sole and exclusive purchaser of Client's
Accounts. Client will not sell, factor or otherwise finance its
Accounts and shall not grant any other security interest in its Accounts or
Inventory.
3. Purchase Price of
Accounts.
The
Purchase Price shall be payable as follows: (i) an amount equal to
the face amount of the Account multiplied by the Advance Rate shall be payable
upon purchase of the Account by Summit; and (ii) the balance of the Purchase
Price shall be payable after receipt of Collected Payments in full for the
Purchased Account, such balance to be paid on the next Settlement Date;
provided, however, that notwithstanding anything to the contrary in this
Agreement, Summit shall not be obligated to make any Advance if, after making
the Advance, the amount of all Outstanding Advances will exceed the Maximum
Credit Line.
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Payment
shall be made in accordance with any written instructions of Client which are
agreed to by Summit. Absent other instructions, payment shall be made
by mailing a check to Client.
4. Interest, Fees and
Charges.
Interest
shall accrue on Outstanding Advances, both before and after judgment, from the
date of disbursement until receipt of Collected Payments, at the Daily Funds
Rate. Upon occurrence of an Event of Default, interest on Outstanding
Advances shall thereafter accrue, both before and after judgment, at the Default
Rate until receipt of Collected Payments.
In
addition, Client shall pay Summit the Fees and Charges. The
Collateral Management Fees are for monitoring of the Collateral, collection of
the Accounts, and administration of this Agreement. The Collateral
Management Fees are not intended to be and shall not be construed to be
interest.
Interest
and Fees and Charges may be deducted from Advances or from Collected
Payments.
5. Recourse
Purchases.
Unless
specifically designated otherwise in writing by Summit, all Accounts shall be
purchased with recourse and shall become a Chargeback Account if not paid in
full by the Account Due Date.
6. Re-Purchase Obligation and
Chargeback Accounts.
If (i) a
Purchased Account is not paid in full by the Account Due Date, or (ii) if at any
time Summit determines that the Purchased Account is no longer an Acceptable
Account, the Purchased Account shall thereupon automatically be a Chargeback
Account without any action by Summit.
Client
shall immediately re-purchase all Chargeback Accounts by paying Summit the
amount of the outstanding Advance against the Chargeback Account, plus all
accrued interest and Collateral Management Fees thereon.
Interest
shall accrue on Chargeback Accounts at the Default Rate until the re-purchase
amount is paid in full.
7. Overadvance.
Authorized
Overadvances shall be due upon demand by Summit. Authorized
Overadvances shall accrue interest at the Daily Funds Rate plus Three Percent
(3%) per annum or such other rate as may be specified by Summit at the time of
its authorization for the Authorized Overadvance.
If at any
time an Overadvance exists which is not an Authorized Overadvance, Client shall
immediately make payment to Summit of an amount equal to the
Overadvance. If such payment is not immediately made, interest shall
accrue on the Overadvance at the Default Rate regardless of whether Summit
waives the Event of Default caused by such non-payment.
8. Reserve.
Summit
may fund the Reserve by withholding amounts owing to Client for Advances or
deducting amounts from Collected Payments.
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Upon
non-renewal of the Financing Period, termination of the right of Client to
submit Accounts to Summit as provided in Section 20, Renewal
of Financing Period and Termination of
Financing, and payment of all amounts owing to Summit by Client, any
balance of the Reserve shall be paid to Client, provided that if Summit has
reasonable grounds to believe that any collections or other payments received by
Summit may be dishonored, voided, or preferential, or claims may be made against
Summit for which Client would be liable, Summit may continue to hold the Reserve
so long as such matters are outstanding and unresolved.
Summit
shall be free to use the Reserve as working capital or as Summit otherwise
determines. Summit shall have no obligation to segregate, not
commingle, or otherwise account for the use of the Reserve. Client
shall not be entitled to any interest on the Reserve. The Reserve
shall be a debt owed to Client by Summit, payable in accordance with the terms
and conditions of this Agreement.
9. Conditions to
Advances.
Summit
shall not consider purchasing any Account or otherwise making any Advance under
this Agreement until, at a minimum, all of the conditions set forth below have
been satisfied. All of the documents referred to below must be in a
form and substance acceptable to Summit.
a. This
Agreement and all other documents contemplated to be executed and delivered to
Summit prior to making any Advances have been fully executed and delivered to
Summit.
b. All
of the documents contemplated by this Agreement which require filing or
recording have been properly filed and recorded so that all of the liens and
security interests granted to Summit in connection with this Agreement will be
properly created and perfected and will have a priority acceptable to
Summit.
c. That
certain UCC Financing Statement filed in favor of Marlin Leasing Corp with the
Georgia Secretary of State on or about May 22, 2006, File No. 007-2006-009075,
has been terminated or the security interests perfected thereby have been
subordinated to the security interests granted to Summit in connection with this
Agreement in a manner acceptable to Summit in Summit’s sole
discretion.
d. That
certain UCC Financing Statement filed in favor of CC Funding with the Georgia
Secretary of State on or about July 2, 2008, File No. 007-2008-014612, has been
terminated or the security interests perfected thereby have been subordinated to
the security interests granted to Summit in connection with this Agreement in a
manner acceptable to Summit in Summit’s sole discretion.
e. That
certain UCC Financing Statement filed in favor of Entrepreneur Growth Capital,
LLC, with the Georgia Secretary of State on or about November 13, 2009, File No.
007-2009-020583, has been terminated or the security interests perfected thereby
have been subordinated to the security interests granted to Summit in connection
with this Agreement in a manner acceptable to Summit in Summit’s sole
discretion.
f. That
certain UCC Financing Statement filed in favor of Credit Cash NJ, LLC, with the
Florida Secretary of State on or about November 13, 2009, File No. 200901522781,
has been terminated or the security interests perfected thereby have been
subordinated to the security interests granted to Summit in connection with this
Agreement in a manner acceptable to Summit in Summit’s sole
discretion.
g. That
certain UCC Financing Statement filed in favor of Entrepreneur Growth Capital,
LLC, with the Florida Secretary of State on or about November 13, 2009, File No.
200901524423, has been terminated or the security interests perfected thereby
have been subordinated to the security interests granted to Summit in connection
with this Agreement in a manner acceptable to Summit in Summit’s sole
discretion.
h. That
certain UCC Financing Statement filed in favor of Credit Cash NJ, LLC, with the
Georgia Secretary of State on or about November 13, 2009, File No.
007-2009-020584, has been terminated or the security interests perfected thereby
have been subordinated to the security interests granted to Summit in connection
with this Agreement in a manner acceptable to Summit in Summit’s sole
discretion.
All
conditions precedent to Advances set forth in this Agreement are set for the
sole benefit of Summit and may be waived unilaterally by Summit.
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10. Application of Payments and
Collections.
Summit
may apply payments and recoveries first to Fees and Charges, second to
outstanding and accrued interest, and third to Outstanding
Advances.
11. Setoff and Deduction by
Summit.
As to all
amounts owing to Summit by Client, Summit may (i) deduct such amount from
Collected Payments received on Accounts, (ii) setoff and deduct such amount
against Advances or any amount owing by Summit to Client, (iii) demand payment
from Client whereupon Client shall promptly pay such amount to Summit, or (iv)
exercise any combination of the alternatives set forth in this Section or
available under this Agreement, at law, or in equity.
12. Excess
Interest.
It is the
intent of the parties to comply with any usury law applicable to this Agreement
and to all amounts owing pursuant to this Agreement and it is understood and
agreed that in no event and upon no contingency shall Client or any guarantor be
required to pay interest in excess of the rate allowed by any laws of any state
which are determined to be applicable and governing. The intention of
the parties being to conform strictly to any applicable usury laws, this
Agreement shall be held to be subject to reduction to the amount allowed under
any applicable and governing usury laws as now or hereafter construed by the
courts having jurisdiction. In the event Summit receives any interest
under this Agreement in excess of any highest permissible rate under any
applicable and governing law, such excess interest (including simple interest
thereon at the highest permissible rate which is applicable and governing) shall
be promptly applied to the amounts owing by Client hereunder and then to
Outstanding Advances. To the extent such excess interest is greater
than such amounts, Summit shall promptly remit such overage to
Client.
13. Reports and
Audits.
Upon
request, which request may be made as frequently as determined by Summit, Client
will promptly submit to Summit a current Account Debtor list, which shall
include the name, address, contact person name, phone number and fax number for
each active Account Debtor and such other records and reports concerning its
Accounts, Inventory, the Collateral, and operations as may be requested by
Summit.
Client
shall, at any reasonable time and from time to time, permit Summit or any
representative of Summit to conduct field audits, examine, audit, and make
copies of and extracts from the records and books of, and visit and inspect the
Collateral, properties and assets of, Client, and to discuss the affairs,
finances, and Accounts of Client with any of Client's officers, directors, and
partners and with Client's independent accountants.
14. Collection
Procedures.
a. Unless
directed otherwise in writing by Summit, Client shall promptly mail an invoice
to each Account Debtor on each Purchased Account, which invoice shall be stamped
or printed with a notice, in a form acceptable to Summit, stating that the
Account is payable to Summit and providing payment
instructions. Except as agreed otherwise in writing by Summit, Summit
shall have the exclusive right to collect and to receive all payments on all
Purchased Accounts. Client shall not otherwise bill for, submit any
invoice, or otherwise attempt to collect any Purchased Account, except as
authorized in writing by Summit. Summit is authorized to notify
Account Debtors of the assignment and purchase of Client's Accounts and to
direct Account Debtors to make all payments on Purchased Accounts directly to
Summit.
b. Client
authorizes Summit to contact Account Debtors concerning verification and payment
of Accounts and to settle or compromise any Account, in the sole discretion of
Summit subject only to acting in good faith. Client hereby waives and
releases any and all claims relating to or arising out of any act or omission by
Summit in the verification and collection of the Accounts, excluding those based
on gross negligence or intentional misconduct.
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c. All
collections of Purchased Accounts shall be handled by
Summit. Collection of Accounts in a commercially reasonable manner
does not require, and Summit is not obligated, to commence any legal action,
including the sending of an attorney's demand letter, to collect any
Account. Client acknowledges and agrees that Summit is not a
collection agency and will not provide debt collection services for Client's
Accounts. If any Purchased Account is not timely paid, Summit may,
but is not obligated to, engage a collection agency, attorney or other service
provider to collect Purchased Accounts. All commissions, fees and
charges of any such collection agency, attorney or other service provider shall
be paid by Client. CLIENT HEREBY WAIVES AND RELEASES ANY AND ALL
CLAIMS RELATING TO OR ARISING OUT OF ANY ACT OR OMISSION BY SUMMIT IN THE
COLLECTION OF PURCHASED ACCOUNTS, GROSS NEGLIGENCE AND INTENTIONAL MISCONDUCT
EXCEPTED.
d. Client
shall promptly and completely respond to all requests from Summit for any
information or records requested to assist in collection of
Accounts. If Client fails to respond to any request within Fifteen
(15) days, Summit may deem the Account to no longer be an Acceptable
Account.
e. Upon
inquiry from an Account Debtor or upon request of Summit, Client shall notify
the Account Debtor to make payment directly to Summit.
f. Any
payments received by Client on Purchased Accounts shall be held in trust by
Client for Summit. In the event an Account Debtor makes payment to
Client on any Purchased Account, Client shall immediately notify Summit of the
payment and deliver the payment to Summit. If payment is made in
cash, such payment shall be immediately delivered to Summit. If
payment is made by check or similar instrument, such instrument shall be
immediately delivered to Summit in the form received without
negotiation. If payment is made by electronic funds transfer, Client
shall immediately forward such payment to Summit by electronic funds
transfer.
If any
payment received by Client on any Account is deposited or negotiated by Client,
or if Client fails to tender the payment to Summit within Five (5) Banking
Business Days of receipt by Client, Client shall promptly pay Summit the Payment
Conversion Fee.
Client
acknowledges and agrees that it has no right, title or interest whatsoever in
the funds constituting payment of Purchased Accounts, that said funds are the
sole and exclusive property of Summit, and that any use of or interference with
said funds by Client will result in civil and criminal liability.
g. Client
shall immediately notify Summit of any dispute concerning any Purchased Account
and of any bankruptcy filing, lien, garnishment or other legal action concerning
any Purchased Account or Account Debtor.
h. Summit
may, but has no duty to, and Client hereby authorizes Summit to, execute
and file, on behalf of Client or in Summit's name, mechanic's liens
and all other notices and documents to create, perfect, preserve,
foreclose and/or release any lien for work performed or materials
provided to improve real property. Except as otherwise
instructed by Summit, Client is authorized to file any such mechanic's liens and
other notices and documents in Client's discretion.
15. Acceptable
Accounts.
An
Acceptable Account must meet all of the following requirements and conditions
unless waived in writing by Summit.
a. Client
has sole and unconditional good title to the Account and the Account and any
goods sold to create the Account are free from any security interest,
assignment, lien or other encumbrance of any type except the security interests
granted to Summit in connection with this Agreement.
b. The
Account is a bona fide obligation of the Account Debtor for the amount
identified on the records of Client and there have been no payments, deductions,
credits, payment terms, or other modifications or reductions in the amount owing
on such Account except as reported to Summit in writing prior to making an
Advance based on the Account.
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c. The
Account must be submitted to Summit within Sixty (60) days of the date the goods
are sold or the services performed giving rise to the Account are
completed.
d. There
are no defenses or setoffs to payment of the Account which can be asserted by
way of defense or counterclaim against Client or Summit.
e. The
Account will be timely paid in full by the Account Debtor.
f. There
have been no extensions, modifications, or other agreements relating to payment
of such Account except as reported to Summit in writing prior to making an
Advance.
g. The
Account does not represent a pre-billing and any services performed or goods
sold which give rise to the Account have been completed and delivered and have
been rendered or sold in compliance with all applicable laws, ordinances, rules
and regulations and were performed or sold in the ordinary course of Client's
business.
h. The
Account Debtor is located or authorized to do business within the United States
or the Account has been insured under a policy of credit insurance from an
insurer and upon terms acceptable to Summit.
i.
No proceeding has been commenced or petition
filed under any bankruptcy or insolvency law by or against the Account Debtor;
no receiver, trustee or custodian has been appointed for any part of the
property of the Account Debtor; and no property of the Account Debtor has been
assigned for the benefit of creditors.
j.
Neither the Account, nor any invoice, credit
application, bill, billing memorandum, correspondence, or any other document
relating to an Account, contracts for or charges interest or any other charge in
excess of the maximum non-usurious rate allowed pursuant to applicable
law.
k. The
Account is not past the Account Due Date.
l.
If the total of the outstanding Purchased
Accounts owing by any single Account Debtor equals Sixty Percent (60%) or more
of the total outstanding Purchased Accounts owing by all Account Debtors, the
portion of the Purchased Accounts owing by that single Account Debtor in excess
of this limit shall not be Acceptable Accounts.
m. If
Twenty-Five Percent (25%) or more of the outstanding Accounts owing by an
Account Debtor are past the Account Due Date, none of the Accounts owing by that
Account Debtor shall be Acceptable Accounts.
n. Client
is not liable to the Account Debtor for goods sold or services rendered by the
Account Debtor.
o. The
Account Debtor is a duly organized and registered business entity and not an
individual consumer.
p. The
Account will not be paid by credit card or other forms of electronic payment
other than wire or ACH transfers sent directly to a deposit account specified by
Summit.
q. The
Account does not arise from goods that are delivered on a bill-and-hold or
cash-on-delivery basis or placed on consignment, guaranteed sale, or other terms
by reason of which the payment by the Account Debtor is or may be
conditional.
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r. The
Account is not owing by a parent, subsidiary, sister company, or other company
related to or an affiliate of Client, including, without limitation, WES
Consulting, Inc.
16. Grant of Security
Interest.
Client
hereby grants Summit a security interest in the Collateral. Client
and Summit acknowledge their mutual intent that all security interests
contemplated herein are given as a contemporaneous exchange for new value to
Client, regardless of when Advances to Client are actually made or when the
Collateral is acquired.
The
Collateral shall secure all of Client's present and future debts, obligations,
and liabilities of whatever nature to Summit, including, without limitation, (a)
all obligations of Client under this Agreement, and (b) transactions in which
the documents evidencing the indebtedness refer to this grant of security
interest as providing security therefore.
Client's
obligations under this Agreement may also be secured by other collateral as may
be evidenced by other documentation apart from this Agreement.
17. Representations, Warranties,
and Covenants of Client.
Client
represents, warrants, and covenants that:
a. FoamLabs
is a corporation organized and existing in good standing under the laws of the
State of Georgia.
b. The
complete and exact name of FoamLabs is FoamLabs, Inc. The
organizational number of FoamLabs assigned by its state of organization is
0640681. During the Five (5) years preceding the date of this
Agreement: (a) FoamLabs has not been known by or used any legal,
fictitious or trade name; (b) FoamLabs has not changed its name in any respect;
(c) FoamLabs has not been the surviving entity of a merger or consolidation; and
(d) FoamLabs has not acquired all or substantially all of the assets of any
person or entity.
c. One
Up is a corporation organized and existing in good standing under the laws of
the State of Georgia.
d. The
complete and exact name of One Up is One Up Innovations, Inc. The
organizational number of One Up assigned by its state of organization is
0439371. During the Five (5) years preceding the date of this
Agreement: (a) One Up has not been known by or used any legal,
fictitious or trade name; (b) One Up has not changed its name in any respect;
(c) One Up has not been the surviving entity of a merger or consolidation except
that in 2009 One Up was the surviving entity of a merger with One Up
Acquisitions, Inc.; and (d) One Up has not acquired all or substantially all of
the assets of any person or entity.
e. The
execution, delivery and performance by Client of this Agreement have been duly
authorized by all necessary action on the part of Client, and are not
inconsistent with any organizational documents of Client, do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which Client is a party or by which it
is bound, and upon execution and delivery hereof, this Agreement will constitute
a legal, valid and binding agreement and obligation of Client, enforceable in
accordance with its terms.
f. All
financial statements of Client, and of any guarantor of Client's obligations
under this Agreement, fully and fairly present the financial condition of Client
and any guarantor as of the date thereof and the results of operations for the
period or periods covered thereby. Since the date of such financial
statements there has been no material adverse change in the financial condition
of Client or any guarantor. Client agrees to submit financial
statements for Client to Summit and Client shall cause any guarantor to submit
financial statements for such guarantor to Summit as may be requested by Summit,
all such financial statements to fully and fairly present the financial
condition of Client or such guarantor, as the case may be, and to be in a form
and from a firm acceptable to Summit.
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g. Client
shall conduct its business in a lawful manner and in compliance with all
applicable federal, state, and local laws, ordinances, rules, regulations, and
orders and shall pay when due all lawfully imposed taxes upon its property,
business and income. No later than the fifth day of each month,
Client shall certify in writing to Summit, in a form acceptable to Summit, that
all federal, state, and other taxes and assessments owing during the prior month
have been paid in full. Such certification shall be accompanied by
proof of payment in a form acceptable to Summit.
h. This
Agreement, the financial statements referred to herein, and all other statements
furnished by Client to Summit in connection herewith contain no untrue statement
of a material fact and omit no material fact necessary to make the statements
contained therein or herein not misleading. Client represents and
warrants that it has not failed to disclose in writing to Summit any fact that
materially and adversely affects, or is reasonably likely to materially and
adversely affect, Client's business, operations, properties, prospects, profits,
condition (financial or otherwise), or ability to perform this
Agreement.
i.
No change of control of Client or any guarantor shall occur
except with prior written consent of Summit.
Change of
control means (1) in the case of a corporation, any sale, assignment, or other
transfer of more than Twenty-Five Percent (25%) of the stock of such corporation
or the persons who are the directors of such corporation as of the date of this
Agreement fail to constitute a majority of the Board of Directors of such
corporation, or the president or any other executive officer of such corporation
resigns, is terminated, or otherwise ceases to function in such position; (2) in
the case of a general or limited partnership, any sale, assignment, or other
transfer of more than Twenty-Five Percent (25%) of the general partnership
interests of such partnership, any of the persons or entities who are a general
partner of such partnership as of the date of this Agreement ceases to be a
general partner of such partnership, the occurrence of any change of control in
any general partner in such partnership, or any general manager or person
holding a similar position in such partnership resigns, is terminated, or
otherwise ceases to function in such position; or (3) in the case of a limited
liability company, any of the persons or entities who are members of such
limited liability company as of the date of this Agreement ceases to be a member
of such limited liability company, any managing member or manager of such
limited liability company resigns, is terminated, or otherwise ceases to
function in such position, or the occurrence of any change of control in any
such member, managing member or manager of such limited liability
company.
18. Representations, Warranties,
and Covenants Concerning Collateral.
Client
represents, warrants, and covenants concerning the Collateral as
follows:
a. All
Purchased Accounts are Acceptable Accounts.
b. Client
is the sole owner of the Collateral.
c. The
Inventory and Accounts are not subject to, and will be kept free and clear of,
any security interest, lien, assignment, or other encumbrance of any nature
whatsoever except for current taxes and assessments which are not delinquent,
the security interests created by this Agreement, and assignments and security
interests created and disclosed in writing to Summit prior to execution of this
Agreement.
d. Summit
is authorized to file UCC Financing Statements concerning the
Collateral. Client agrees to execute any notices of assignment and
other documents reasonably requested by Summit for perfection or enforcement of
the rights and interests of Summit, and to give good faith, diligent cooperation
to Summit, and to perform such other acts reasonably requested by Summit for
perfection and enforcement of the rights and interests of
Summit. Summit is authorized to file, record, or otherwise utilize
such documents as it deems necessary to perfect and/or enforce any security
interest or lien granted hereunder.
e. The
place of business of Client, or, if Client has more than one place of business,
the location of its chief executive office, is located in the State of
Georgia. During the Five (5) years preceding the date of this
Agreement, this location has not been located outside the State of
Georgia. This location will not be moved from the State of Georgia
without at least Thirty (30) days prior written notice to Summit.
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f. The
Collateral and all records of Client pertaining to the Collateral are located in
the State of Georgia. During the Five (5) years preceding the date of
this Agreement, the Collateral and all records of Client pertaining to the
Collateral have not been located outside the State of Georgia.
g. Client
shall keep the Equipment, if any, in good repair and be responsible for any loss
or damage to the Equipment. Client shall pay when due all taxes,
license fees and other charges on the Equipment. Client shall not
sell, misuse, conceal, or in any way dispose of the Equipment or permit it to be
used unlawfully or for hire or contrary to the provisions of any insurance
coverage. Risk of loss of the Equipment shall be on Client at all
times unless Summit takes possession of the Equipment. Loss of or
damage to the Equipment or any part thereof shall not release Client from any of
the obligations secured by the Equipment.
h. Client
agrees to (i) insure the Equipment and Inventory, at Client's expense, against
loss, damage, theft, and such other risks as Summit may request to the full
insurable value thereof and (ii) maintain general business liability insurance
and product liability insurance, at Client’s expense, to such extent and against
such hazards and liabilities as are commonly maintained by companies engaged in
the same or a similar business and similarly situated as Client with insurance
companies and policies satisfactory to Summit. Summit shall be named
as an additional insured and loss payee under such policies. All such policies
shall provide for a minimum Thirty (30) days written cancellation notice to
Summit. Upon request, policies or certificates attesting to such
coverage shall be delivered to Summit. Insurance proceeds may be
applied by Summit toward payment of any obligation secured by this Agreement,
whether or not due, in such order of application as Summit may
elect.
i. So
long as no Event of Default has occurred, Client shall have the right to sell or
otherwise dispose of the Inventory in the ordinary course of
business. No other disposition of the Inventory may be made without
the prior written consent of Summit.
19. Assignment of Rights
Concerning Collateral.
Client
hereby assigns to Summit all of its interest in and rights to any Inventory
which may be returned by Account Debtors, all rights as an unpaid vendor or
lienor, all rights of stoppage in transit, repletion and reclamation relating
thereto, all rights in and to all security therefor and guarantees thereof, all
rights against third parties with respect thereto, and all rights under the UCC
and any other law, statute, regulation or agreement.
20. Renewal of Financing Period
and Termination of Financing.
Each
Financing Period shall automatically renew for an additional Financing Period
unless Client or Summit provides written notice of non-renewal at least Sixty
(60) days prior to the end of the current Financing Period.
If Client
elects to terminate a Financing Period at any time other than the last day of a
Financing Period, except to replace this financing with Qualified Bank Financing
as provided herein during the first Twelve (12) months from the date hereof, or
if an Event of Default terminates the financing of Client's Accounts, Client
shall pay Summit an early termination fee equal to One Percent (1%) of the
Maximum Credit Line, which amount shall be due and payable in full upon such
termination.
Client
must provide at least Sixty (60) days written notice to Summit of its intent to
replace this financing with Qualified Bank Financing, which notice shall itemize
the material financial terms of the Qualified Bank Financing. Within
Thirty (30) days of receipt of such notice, Summit may provide written notice to
Client that Summit will match the material financial terms of the Qualified Bank
Financing whereupon Summit and Client shall amend this Agreement to match the
material financial terms of the Qualified Bank Financing and this Agreement
shall remain in force.
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Upon such
non-renewal or termination, all other terms and provisions of this Agreement,
including, without limitation, the security interests granted in favor of
Summit, shall remain in full force and effect until all amounts owing to Summit
hereunder have been finally paid in full, except that Client shall be excused
from the covenants herein providing that Summit shall be the sole and exclusive
purchaser and source of financing for Client's Accounts.
Upon
expiration of the final Financing Period or any other termination, at the
election of Summit, all outstanding Purchased Accounts will immediately be
Chargeback Accounts and all amounts owing to Summit by Client pursuant to this
Agreement shall, without notice of such election, accelerate and become
immediately due and payable in full.
21. Right to Perform for
Client.
Summit
may, in its sole discretion, elect to discharge any security interest, lien or
other encumbrance upon any Accounts, elect to pay any subcontractor, vendor,
materialman, laborer, or other person to whom Client is obligated, whether or
not any mechanic's lien or other encumbrance has been asserted, and elect to pay
any insurance charges payable by Client or provide insurance as required herein
if Client fails to do so. Any such payments and all expenses incurred
in connection therewith shall be immediately due and payable by
Client. Summit shall have no obligation to discharge any such
security interest, lien or other encumbrance or pay such insurance charges or
provide such insurance.
22. Power of Attorney to Endorse
Checks.
Client
does hereby make, constitute and appoint Summit, and its designees, as its true
and lawful attorneys-in-fact, with full power of substitution, with full power
to endorse the name of Client upon any checks or other forms of payment on
Accounts and to effect the deposit and collection thereof. This power
of attorney is irrevocable and coupled with an interest. Such power
may be exercised at any time. Client does hereby make, constitute,
and appoint Summit, and its designees, as Client's true and lawful attorneys in
fact, with full power of substitution, such power to be exercised only upon the
occurrence of an Event of Default, to: (a) receive, open, and dispose
of all mail addressed to Client; (b) cause mail relating to Accounts of Client
to be delivered to a designated address of Summit where Summit may open all such
mail and remove therefrom any payment of such Accounts; and (c) Summit may do
any and all other things necessary or proper to carry out the intent of this
Agreement and to perfect and protect the rights of Summit created under this
Agreement. This power of attorney is irrevocable and coupled with an
interest. Exercise of any of the foregoing powers shall be in the
sole discretion of Summit without any duty to do so.
23. Disclosure of
Information.
Client
hereby consents to Summit disclosing to any financial institution or investor
providing financing for Summit or participating in this financing, any and all
information, knowledge, reports and records, including, without limitation,
financial statements, concerning Client or any guarantor.
24. Interest on Unpaid Amounts
and Late Fees.
In the
event Client fails to pay any amount owing to Summit when due, Client agrees to
pay interest on such amount from the due date until paid, both before and after
judgment, at the Default Rate.
25. No Third Party
Beneficiary.
This
Agreement is made for the sole and exclusive benefit of Summit and Client and is
not intended to benefit any third party. No such third party may
claim any right or benefit or seek to enforce any term or provision of this
Agreement.
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26. Indemnification.
CLIENT
AGREES TO INDEMNIFY SUMMIT FOR ANY AND ALL CLAIMS WHICH MAY BE ASSERTED AND FOR
LIABILITIES AND DAMAGES WHICH MAY BE AWARDED AGAINST SUMMIT, AND FOR ALL
REASONABLE ATTORNEYS FEES, LEGAL EXPENSES AND OTHER EXPENSES INCURRED IN
DEFENDING SUCH CLAIMS, ARISING FROM OR RELATING IN ANY MANNER TO THE PURCHASE,
FINANCING AND/OR COLLECTION OF ACCOUNTS PURSUANT TO THE TERMS OF THIS AGREEMENT,
EXCLUDING CLAIMS BASED ON THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
SUMMIT. SUMMIT SHALL HAVE SOLE AND COMPLETE CONTROL OF THE DEFENSE OF
ANY SUCH CLAIMS, AND IS HEREBY GIVEN AUTHORITY TO SETTLE OR OTHERWISE COMPROMISE
ANY SUCH CLAIMS AS SUMMIT, IN GOOD FAITH, DETERMINES SHALL BE IN ITS BEST
INTERESTS.
27. Default and
Remedies.
Time is
of the essence of this Agreement. The occurrence of any of the
following events shall constitute a default under this Agreement and be termed
an "Event of Default":
a. Failure
by Client to pay any amount to Summit when due.
b. Client
fails in the payment or performance of any obligation, covenant, agreement, or
liability created by this Agreement.
c. Any
representation, warranty, or financial statement made by or on behalf of Client,
or any guarantor, proves to have been materially false or materially misleading
when made or furnished.
d. Any
default or event which, with the giving of notice or the passage of time or
both, would constitute a default, occurs on any indebtedness of Client or any
guarantor.
e. Client
or any guarantor becomes dissolved or terminated, dies, or experiences a
business failure.
f. A
receiver, trustee, or custodian is appointed for any part of Client's or any
guarantor's property, or any part of Client's or any guarantor's property is
assigned for the benefit of creditors.
g. Any
proceeding is commenced or petition filed under any bankruptcy or insolvency law
by or against Client or any guarantor.
h. Any
judgment is entered against Client or any guarantor which may materially affect
Client's or any guarantor's financial condition.
i.
Client or any guarantor becomes insolvent or
unable to pay its debts as they mature.
j. The
Purchased Accounts become, for any reason whatsoever, substantially delinquent
or uncollectible.
Waiver of
any Event of Default shall not constitute a waiver of any subsequent Event of
Default.
Upon the
occurrence of any Event of Default and at any time thereafter, at the election
of Summit and without notice of such election, Summit may immediately terminate
the right of Client to request Advances, treat all outstanding Purchased
Accounts as Chargeback Accounts, and all obligations of Client to Summit shall
accelerate and become immediately due and payable in full and Summit shall have
all rights and remedies created by or arising from this Agreement and the
following rights and remedies, in addition to all other rights and remedies
existing at law, in equity, or by statute:
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a. Summit
shall have all the rights and remedies available under the UCC.
b. Summit
shall have the right to enter upon any premises where the Collateral or records
pertaining thereto may be and take possession of the Collateral and records
relating thereto.
c. Upon
request of Summit, Client shall, at the expense of Client, assemble the
Collateral and records relating thereto at a place designated by Summit and
tender the Collateral and records to Summit.
d. Without
notice to Client, Summit may obtain the appointment of a receiver of the
business, property and assets of Client and Client hereby consents to the
appointment of Summit or such person as Summit may designate as such
receiver.
e. Summit
may sell, lease or otherwise dispose of any or all of the Collateral and, after
deducting the reasonable costs and out-of-pocket expenses incurred by Summit,
including, without limitation, (i) reasonable attorneys fees and legal expenses,
(ii) transportation and storage costs, (iii) costs of advertising sale of the
Collateral, (iv) sale commissions, (v) sales tax, (vi) costs for improving or
repairing the Collateral, and (vii) costs for preservation and protection of the
Collateral, and apply the remainder against, or to hold as a reserve against,
the obligations secured by this Agreement.
Client
and any guarantors shall be liable for all deficiencies owing on any obligations
secured by the Collateral after liquidation of the Collateral.
Upon
occurrence of an Event of Default, the interest rate on obligations of Client
owing to Summit shall be increased to the Default Rate. After the
occurrence of an Event of Default, Summit shall retain the exclusive right to
collect outstanding Chargeback Accounts, regardless of whether the Chargeback
Account has been repurchased by Client, until all obligations owing to Summit by
Client have been paid in full.
The
rights and remedies herein conferred are cumulative and not exclusive of any
other rights or remedies and shall be in addition to every other right, power
and remedy herein specifically granted or existing at law, in equity, or by
statute which Summit might otherwise have and may be exercised from time to time
and as often and in such order as may be deemed expedient by
Summit. No delay or omission by Summit in the exercise of any such
right, power or remedy or in the pursuance of any remedy shall impair any such
right, power or remedy or be construed to be a waiver of any Event of Default or
to be an acquiescence therein.
28. Payment of Expenses and
Attorneys Fees.
Client
shall pay all reasonable expenses of Summit relating to the negotiation,
documentation, and administration of this Agreement, including, without
limitation, title insurance, recording fees, filing fees, fees of collection
services, reasonable attorneys fees and legal expenses, returned check fees,
photocopies, postage, audit and field examination fees and costs, inspection
fees, wire transfer fees, and overnight delivery expenses, whether incurred in
making Advances, in future amendments or modifications to this Agreement, or in
ongoing administration of this financing.
Upon
occurrence of an Event of Default, Client agrees to pay all costs and expenses,
including reasonable attorney fees and legal expenses, incurred by Summit in
enforcing or exercising any remedies under this Agreement or any other rights
and remedies.
Client
agrees to pay all expenses, including reasonable attorney fees and legal
expenses, incurred by Summit in any bankruptcy proceedings of any type involving
Client, any guarantor, this Agreement, the Purchased Accounts, or the
Collateral, including, without limitation, expenses incurred in modifying or
lifting the automatic stay, determining adequate protection, use of cash
collateral or relating to any plan of reorganization.
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29. Bankruptcy
Considerations.
Client
covenants that it will notify Summit of any voluntary or involuntary bankruptcy
petition under the United States Bankruptcy Code filed by or against Client or
any guarantor, or any assignment for the benefit of creditors by Client or any
guarantor, within Twenty-Four (24) hours of any such filing or
assignment. Failure to notify Summit of any such bankruptcy filing or
assignment within Twenty-Four (24) hours shall constitute an Event of
Default.
Client
acknowledges that this Agreement is a contract to extend debt financing or
financial accommodations to or for the benefit of Client within the meaning of
11 U.S.C. § 365(c)(2) and, as such, may not be assumed or
assigned. Summit shall be under no obligation to provide any
financing under this Agreement from and after the filing of any voluntary or
involuntary petition against Client.
30. Limitation of Consequential
Damages.
Summit
and its general and limited partners, the partners, members, officers and
directors thereof, and the employees, representatives, agents, and attorneys of
Summit, shall not be liable to Client or any guarantor for consequential damages
arising from or relating to any breach of contract, tort, or other wrong in
connection with the negotiation, documentation, administration of this Agreement
or collection of the Accounts.
31. Force
Majeure.
In the
event Summit is unable to carryout its obligations under this Agreement due to
reasons beyond its reasonable control, it is agreed that the obligations of
Summit hereunder shall be suspended during the continuance of such inability,
Summit shall not be liable for damages, and Client shall not be entitled to any
refund of amounts paid, provided that such cause shall be remedied as far as
reasonably possible with all reasonable dispatch.
32. Revival
Clause.
If the
incurring of any debt by Client or the payment of any money or transfer of
property to Summit by or on behalf of Client or any guarantor (including
collection of any Account) should for any reason subsequently be determined to
be "voidable" or "avoidable" in whole or in part within the meaning of any state
or federal law (collectively "voidable transfers"), including, without
limitation, fraudulent conveyances or preferential transfers under the United
States Bankruptcy Code or any other federal or state law, and Summit is required
to repay or restore any voidable transfers or the amount or any portion thereof,
or upon the advice of counsel for Summit is advised to do so, then, as to any
such amount or property repaid or restored, including all reasonable costs,
expenses, and attorneys fees of Summit related thereto, the liability of Client
and any guarantor shall automatically be revived, reinstated and restored and
shall exist as though the voidable transfers had never been made.
33. Nature of Client’s
Obligations.
a. All
obligations pursuant to this Agreement shall be the joint and several
obligations of each Client. Each reference to “Client” hereunder
shall be deemed to refer to each Client individually and collectively and each
obligation to be performed by “Client” hereunder shall be performed by each
Client. Summit shall have no responsibility to inquire into the
apportionment, allocation, or disposition of any Advances or other payments made
under this Agreement. Each Client hereby irrevocably appoints the
other as its agent and attorney-in-fact for all purposes of the related
documents, including, without limitation, the giving and receiving of notices
and other communications and the making of all certifications and reports
required pursuant to this Agreement. The action of any Client with
respect to any Advance or other payment made under this Agreement and the
requests, notices, reports, and other materials submitted by any Client shall
bind each Client.
b. Each
Client hereby agrees to indemnify Summit and hold Summit harmless from and
against any and all liabilities, expenses, losses, damages and/or claims of any
damage or injury asserted against Summit by Client or any other person arising
from or incurred by reason of the joint nature of the financing hereunder or any
action taken by Summit pursuant hereto.
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c. Each
Client represents and warrants to Summit that each request for the purchase of
any Account was and is made by each Client and that each Client is engaged in
operations that require financing on such a joint basis. Each Client
will and expects to derive benefit, directly or indirectly, from Summit’s
purchase of Acceptable Accounts.
d. Each
Client shall be a direct, primary, and independent obligor and shall not be
deemed to be a guarantor, accommodation party, or other person secondarily
liable for the Obligations. “Obligations” as used in this Section
means, as the context requires, all duties and obligations from time to time
arising under this Agreement and under all agreements and documents related
hereto. Without limiting the foregoing, however, each Client
represents, warrants, covenants, and agrees as follows:
(i)
Summit may enforce this Agreement against
any property, interests in property, and rights to property securing any or all
Obligations without first having sought enforcement of this Agreement and any
related documents against Client or any other Collateral.
(ii) Such
Obligations shall not be affected by any of the following: (A) the
bankruptcy, disability, dissolution, incompetence, insolvency, liquidation, or
reorganization of any Client; (B) any defense of any Client to payment or
performance of any or all Obligations or enforcement of any and all liens and
encumbrances; (C) the discharge, modification of the terms of, reduction in the
amount of, or stay of enforcement of any or all liens and encumbrances or any or
all Obligations in any bankruptcy, insolvency, reorganization, or other legal
proceeding or by law, ordinance, regulation, or rule (federal, state, province,
territory, or local); (D) the cessation of liability of any Client or any or all
Obligations; and (E) any claim or dispute by any other Client concerning the
occurrence of any default in performance of any Obligations, or any other
matter.
(iii) Summit
may do the following acts or omissions from time to time without notice to or
consent of any Client and without receiving payment or other value, nor shall
the following acts or omissions affect, delay, or impair any of such Obligations
or any or all liens and encumbrances: (A) Summit may obtain
Collateral or additional collateral; (B) with the agreement of one Client,
Summit may substitute for any or all Collateral regardless of whether the same
type or greater or lesser value; (C) Summit may release any or all Collateral;
(D) Summit may compromise, delay enforcement, fail to enforce, release, settle
or waive any rights or remedies of Summit as to any or all Collateral; (E)
Summit may sell or otherwise dispose of any Collateral in accordance with this
Agreement and in such manner or order as Summit determines; (F) Summit may fail
to perfect, fail to protect the priority of, and fail to ensure an or all liens
or encumbrances; (G) Summit may fail to inspect, insure, maintain, preserve or
protect any of the Collateral; (H) Summit may obtain additional obligors for any
or all such Obligations; (I) with the agreement of one Client, Summit may
increase or decrease any or all Obligations or otherwise change terms of any or
all Obligations; (J) Summit may release any Client; (K) Summit may compromise,
delay enforcement, fail to enforce, release, settle, or waive any Obligation of
any Client with the agreement of that Party; (L) Summit may make Advances to, or
grant other financial accommodations for any Client; (M) Summit may fail to file
or pursue a claim in any bankruptcy, insolvency, reorganization or other
proceeding as to any or all liens and encumbrances or any or all Obligations;
(N) Summit may amend, modify, extend, renew, restate, supplement, or terminate
in whole or in part the obligation of any Party with the agreement of that
Party; (O) Summit may take or fail to take any other action with respect to
this agreement or any Party; and (P) Summit may do any other acts or make any
other omission that result in the extinguishment of the obligation of any
Party. As used herein, “Party” means Client and each other person
that from time to time is or becomes obligated to Summit under this Agreement or
any guarantee or grants any lien or encumbrance to Summit with respect to any
Collateral.
(iv) Each
Client waives any and all rights and benefits under any laws that limit the
liability or exonerate guarantors or sureties now or hereafter in effect and any
other statutes or rules now or hereafter in effect that purport to confer
specific rights upon or make specific defenses or procedures available to any
Client.
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(v) Each
Client waives any rights that require Summit, and Summit shall have no
obligation to, provide to Client any information concerning the performance of
any other Client, the Obligations of Client hereunder, or under any related
documents, or the ability of the other to perform the Obligations or any other
matter, regardless of what information Summit may from time to time
have. Each Client waives any and all present and future claims,
remedies and rights against the other or any other Client, the Collateral and
any other property, interest in property or rights to property of any other
Party (A) arising from any performance hereunder, (B) arising from any
application of any Collateral, or any other property, interest in property or
rights to property of any other Client, or (C) otherwise arising in respect of
this Agreement, regardless of whether such claims, remedies and rights arise
under any present or future agreement, document or instrument or are provided by
any law, ordinance, regulation or rule (federal, state, province, territory, or
local) (including, without limitation, any and all rights of contribution,
exoneration, indemnity, reimbursement, and subrogation and any and all rights to
participate in the rights and remedies of Summit, against any
Client). To the fullest extent that rights of contribution,
exoneration, indemnity, reimbursement, and subrogation are not waivable, such
rights are hereby subordinate and subject to all rights, liens, and claims of
Summit.
e. Each
Client hereby represents and warrants to Summit that:
(i)
As of the date of this Agreement and after giving
effect to the execution and delivery of this Agreement and the obligations
hereby assumed, the sum of each Client’s debts is less than all of such Client’s
assets at fair valuation.
(ii) Client
is not entering into this Agreement, granting any security in connection with
this Agreement, or otherwise making any transfer in connection with this
Agreement, with actual intent to hinder, delay, or defraud any creditor of
Client, whether such creditor now exists or may hereafter arise.
(iii) Client
acknowledges that Summit’s agreement to consider purchasing Acceptable Accounts
pursuant to this Agreement constitutes reasonably equivalent value in exchange
for the execution and delivery by Client of this Agreement, the granting of
security in connection with this Agreement, and all transfers made by Client in
connection with this Agreement. Client agrees that the execution of
this Agreement, the joint financing contemplated by this Agreement, and other
related documents, and the other terms and conditions of this Agreement, even
though entailing some risks, have been determined by Client to be the most
desirable form of financing for Client’s operations and to provide to Client
more availability of funds and flexibility in satisfying Client’s needs for
funds.
(iv) Client
is not engaged or about to be engaged in a business or transaction for which the
assets of Client (after giving effect to the granting of any security in
connection with the execution and delivery of this Agreement and any other
transfer made or contemplated to be made in connection with the execution and
delivery of this Agreement) would be unreasonably small in relation to the
business or transaction.
(v) Client
does not intend to incur, or believe that it will incur, debts beyond its
ability to pay such debts as they become due.
(vi) As
used in this Section, the term “transfer” shall include every mode, direct or
indirect, absolute or conditional, voluntary or involuntary of disposing of or
parting with an asset or an interest in an asset and includes payment of money,
release, lease, and creation of a lien or other encumbrance.
f. Indemnity
Obligations:
(i)
Each Client acknowledges that pursuant to the terms of this
Agreement and all other agreements and documents related hereto, each Client,
along with any guarantor, is jointly and severally liable for all of the
Obligations, whether or not the Obligations represent amounts actually advanced
to an individual Client. Accordingly, each Client has expressly
assumed the risk that such Client may be held liable for, and such Client’s
property may be applied to payment of, amounts advanced pursuant to this
Agreement to or for the benefit of another Client. Nothing contained
in this Agreement shall in any way limit the obligations of any Client to Summit
or otherwise limit the joint and several nature of all of the obligations of
each Client. Each Client shall be fully liable to Summit pursuant to
this Agreement without regard to any allocation of losses and liabilities by
virtue of such indemnity provisions or otherwise.
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(ii) In
any action or proceeding involving any state or local law, or any state, local,
or federal bankruptcy, insolvency, reorganization, or other law affecting the
rights of creditors generally, if the obligations of any Client would otherwise,
taking into account the provisions of this Section, be held or determined to be
void, invalid, or unenforceable, or subordinated to the claims of any of their
creditors, on account of the amount of its liability under this Agreement and
all other related documents, then, notwithstanding any other provision hereof to
the contrary, the amount of such liability shall, without any further action by
such Client, Summit, or any other person, be automatically limited and reduced
to the highest amount which is valid and enforceable and not subordinated to the
claims of other creditors as determined in such action or
proceeding.
34. Severability of Invalid
Provisions, Headings, Interpretations of Agreement.
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.
All
references in this Agreement to the singular shall be deemed to include the
plural when the context so requires, and visa versa. References in
the collective or conjunctive shall also include the disjunctive unless the
context otherwise clearly requires a different interpretation.
35. Notices.
All
notices which are expressly required to be in writing may be mailed, postage
prepaid, addressed to the address stated at the beginning of this Agreement, or
to such other address which is provided in accordance with this
Section. Any notice so mailed shall be deemed given Three (3) days
after mailing. Any notice otherwise delivered shall be deemed given
when received by the addressee. Any notice which is not expressly
required to be given in writing may be given orally.
36. Survival of Representations,
Warranties and Covenants.
All
agreements, representations, warranties and covenants made herein by Client
shall survive the execution and delivery of this Agreement and any bankruptcy
proceedings involving Client and shall continue in effect so long as any
obligation to Summit contemplated by this Agreement is outstanding and unpaid,
notwithstanding any termination of this Agreement.
37. Jury Waiver, Exclusive
Jurisdiction of Utah Courts.
CLIENT
HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING,
CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR IN TORT, AT LAW OR IN EQUITY,
ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT.
Client
acknowledges that by execution and delivery of this Agreement, Client has
transacted business in the State of Utah and Client hereby voluntarily submits
to, consents to, and waives any defense to the jurisdiction of courts located in
the State of Utah as to all matters relating to or arising from this
Agreement.
EXCEPT AS
EXPRESSLY AGREED IN WRITING BY SUMMIT, THE STATE AND FEDERAL COURTS LOCATED IN
THE STATE OF UTAH SHALL HAVE SOLE AND EXCLUSIVE JURISDICTION OF ANY AND ALL
CLAIMS, DISPUTES, AND CONTROVERSIES ARISING UNDER OR RELATING TO THIS
AGREEMENT. NO LAWSUIT, PROCEEDING, ALTERNATIVE DISPUTE RESOLUTION, OR
ANY OTHER ACTION RELATING TO OR ARISING UNDER THIS AGREEMENT MAY BE COMMENCED OR
PROSECUTED IN ANY OTHER FORUM, EXCEPT AS EXPRESSLY AGREED IN WRITING BY
SUMMIT.
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38. Assignability.
This
Agreement is not assignable or transferable by Client and any such purported
assignment or transfer is void. This Agreement shall be binding upon
the successors of Client. Client acknowledges and agrees that Summit
may assign all or any portion of this Agreement, including, without limitation,
assignment of the rights, benefits and remedies of Summit hereunder without any
assignment of the duties, obligations or liabilities of Summit hereunder, and
may sell participations in this financing.
39. Integrated Agreement,
Amendment, Headings, Governing Law.
This
Agreement replaces and supersedes any prior agreement between Client and
Summit. This Agreement and the documents identified or contemplated
herein constitute the entire agreement between Summit and Client as to the
subject matter hereof and may not be altered or amended except by written
agreement signed by Summit and Client. No provision hereof may be
waived by Summit except upon written waiver executed by Summit. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Utah and this Agreement shall be deemed to have been executed by the
parties in the State of Utah. This Agreement shall not be deemed to
have been entered into until accepted by Summit at its chief executive office in
Salt Lake City, Utah and shall be performed by Summit and the financing
administered by Summit in Salt Lake City, Utah.
Dated: May
17, 2010.
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Summit
Financial Resources, L.P.
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By:
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/s/ Mark J. Picillo
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Name:
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Mark J. Picillo
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Title:
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Senior Vice President
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One
Up Innovations, Inc., a Georgia corporation
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By:
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/s/ Louis S. Friedman
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Name:
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Louis
S. Friedman
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Title:
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President
& CEO
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FoamLabs,
Inc., a Georgia corporation
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By:
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/s/ Louis S. Friedman
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Name:
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Louis
S. Friedman
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Title:
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President
& CEO
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One
Up Innovations, Inc.
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