Addendum to Financing Agreement (Inventory Financing)
Exhibit
10.25
Addendum
to Financing Agreement
(Inventory
Financing)
Summit
Financial Resources, L.P. ("Summit"), and One Up Innovations, Inc., and
FoamLabs, Inc. (individually and collectively, "Client"), have entered into a
Financing Agreement dated May 17, 2010 (the "Financing
Agreement"). Summit and Client desire to modify the Financing
Agreement as set forth herein and agree as follows:
1. Definitions. Except
as otherwise expressly provided herein, terms assigned defined meanings in the
Financing Agreement shall have the same defined meanings in this
Addendum. As used herein, the term:
"Acceptable
Inventory" means Inventory which consists of finished goods or raw materials
that can be readily marketed for sale without further processing and which is
subject to no security interest, lien, or encumbrance of any nature whatsoever
with priority over the security interest created by the Financing Agreement,
except any liens for current taxes which are not delinquent, but excluding
Inventory which consists of shipping materials or which, in the sole discretion
of Summit, is damaged, out-dated, obsolete, or otherwise unacceptable to
Summit.
"Inventory
Advance Period" means a period commencing on October 1 of each calendar year and
ending on November 30 of the same calendar year.
2. Inventory
Advances. During the Inventory Advance Period, Summit may, in
its sole discretion and without any duty to do so, elect from time to time to
make advances based upon Acceptable Inventory. Advances based upon
Acceptable Inventory shall be made only in accordance with the below formula,
which formula may be changed or modified at any time in the sole discretion of
Summit without the consent or approval of Client:
Advances
based upon Acceptable Inventory may be made upon request of Client so long as
the aggregate amount of all advances based upon Acceptable Inventory outstanding
and unpaid does not exceed the lesser of (a) Forty Percent
(40%) of the lower of book value or other value, as determined by Summit, of the
Acceptable Inventory, (b) Two Hundred Thousand Dollars ($200,000), (c)
Fifty Percent (50%) of the aggregate amount of outstanding Accounts on which an
Advance has been made, and (d) together with the aggregate amount of all other
outstanding Advances, the Maximum Credit Line.
Summit
may decline to make advances based upon Acceptable Inventory for any reason or
for no reason, without notice, regardless of any course of conduct or past
advances based upon Acceptable Inventory by Summit.
3. Terms of Inventory
Advance. Advances based upon Acceptable Inventory shall be
subject to the interest, Fees and Charges, and all terms and conditions
applicable to an Advance under the Financing Agreement. In addition,
Client shall pay a monthly collateral management fee equal to One and
Nine-Tenths Percent (1.9%) of the average monthly balance of outstanding
advances based upon Acceptable Inventory for each month, or portion
thereof. All accrued interest and collateral management fees based
upon Acceptable Inventory shall be due and payable monthly in
arrears.
Notwithstanding
anything to the contrary herein or in the Financing Agreement, the amount of all
outstanding advances based upon Acceptable Inventory, including all interest,
collateral management fees, and other fees and charges thereon, shall be due and
payable in full on the last day of the Inventory Advance Period. In
the event Client fails to repay in full all outstanding advances based upon
Acceptable Inventory, plus all interest, collateral management fees, and all
other fees and charges thereon, on or before the last day of the Inventory
Advance Period, such event shall constitute an Event of Default.
4. Sale of Inventory and Tender
of Account. Client shall diligently sell and ship the
Acceptable Inventory upon which an advance has been made. Upon
shipment and delivery of such Acceptable Inventory, the account created thereby
shall be promptly submitted to Summit for purchase. If such
Acceptable Inventory is not promptly and diligently sold and shipped, or the
account created thereby does not meet all requirements of an Acceptable Account,
or Summit declines for any reason to purchase the account created thereby, the
advance based upon Acceptable Inventory may be treated as a Chargeback Account
under the Financing Agreement.
One Up
Innovations, Inc.
5/12/10
5. Disbursement of
Advance. Upon purchase by Summit of an Account for which there
has been an underlying advance based upon Acceptable Inventory, the Advance
shall be disbursed to Summit to repay the underlying advance based upon
Acceptable Inventory and all interest and Fees and Charges owing in connection
therewith. The remainder, if any, shall be disbursed in accordance
with the terms and conditions of the Financing Agreement.
6. Secured by
Collateral. The Collateral shall secure all obligations of
Client to Summit arising under or relating to this Addendum.
7. Rights and
Remedies. Summit shall be entitled to all rights and remedies
concerning an advance based upon Acceptable Inventory as are provided for
Advances under the Financing Agreement.
8. Integrated
Agreements. This Addendum, together with the Financing
Agreement, any other addenda to the Financing Agreement, and the documents
identified or contemplated therein, constitute the entire agreement between
Summit and Client and may not be altered or amended except by written agreement
signed by Summit and Client. No provision hereof or thereof may be
waived by Summit except upon written waiver executed by Summit. The
Financing Agreement, this Addendum, and all other addenda to the Financing
Agreement shall be read and construed together as one agreement. This
Addendum shall be governed by and construed in accordance with the laws of the
State of Utah and shall be deemed to have been executed by the parties in the
State of Utah.
9. Financing Agreement Remains
in Full Force and Effect. Except as expressly modified by this
Addendum, the Financing Agreement remains in full force and effect.
[Remainder
of Page Intentionally Left Blank]
One Up
Innovations, Inc.
5/12/10
2
Dated: May
17, 2010.
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Summit
Financial Resources, L.P.
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By:
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/s/ Xxxx X.
Xxxxxxx
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Name:
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Xxxx X. Xxxxxxx
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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/ Xxxxx X.
Xxxxxxxx
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Name:
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Xxxxx X. Xxxxxxxx
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Title:
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President
and CEO
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FoamLabs,
Inc., a Georgia corporation
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By:
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/s/ Xxxxx X.
Xxxxxxxx
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Name:
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Xxxxx X. Xxxxxxxx
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Title:
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President
and CEO
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The
undersigned, constituting all of the guarantors of the obligations of Client
under the Financing Agreement pursuant to Guarantees each dated May 17, 2010,
hereby consent to and authorize the foregoing Addendum to Financing Agreement
(Inventory Financing) and agree and acknowledge that the obligations of Client
created thereunder will be subject to and guaranteed by the
Guarantees.
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/s/ Xxxxx X. Xxxxxxxx
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Xxxxx
X. Xxxxxxxx
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XXX
Consulting, Inc.
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By:
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/s/ Xxxxx X. Xxxxxxxx
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Name:
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Xxxxx X. Xxxxxxxx
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Title:
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President
& CEO
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One Up
Innovations, Inc.
5/12/10
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