Exhibit 10.8

AMENDED & RESTATED

RECEIVABLES FINANCING AGREEMENT

 

ENTERED INTO BETWEEN

 

ADVANCE FINANCIAL CORPORATION

 

and

 

ONE UP INNOVATIONS, INC.

 

 

Date: September 4, 2013

 

Advance Financial Corporation

3700 Mansell Road, Suite 550

Alpharetta, Georgia 30022

 

 

Gentlemen:

 

This Amended and Restated Receivables Financing Agreement amends and restates
the Receivable Financing Agreement dated May 24th, 2011 entered between the
parties hereto. We are pleased to reconfirm the following agreement by which you
are to finance receivables arising from sales made by us.

 

1. To induce you to accept this agreement and to make loans and advances to us
from time to time pursuant to these terms, we hereby assign and transfer to you
all of our interest in, full title to, and the proceeds of: all accounts,
instruments, contract rights, chattel paper, documents, and general intangibles
(hereafter called "receivables") now existing and those hereafter created. Such
assignment and transfer is made for the purpose of securing, and as collateral
for, any and all loans and advances made to us under this agreement, together
with all other Obligations of ours to you. As additional security for all our
Obligations to you, we hereby grant to you a security interest in and lien upon
all of our inventory and other Collateral (as said term is defined on Exhibit B
attached hereto and made a part hereof) all of our books and records relating to
receivables, all our title and/or interest in the goods represented by
receivables and in all such goods that may be returned by or replevied or
reclaimed from customers. You hereby have the right to stop goods in transit or
to replevy or to reclaim such goods. All returned, replevied and reclaimed goods
(unless released by you) coming into our possession shall be held by us in trust
for you. We shall notify you promptly of all such returned, replevied or
reclaimed goods. The receivables, the books and records relating thereto, the
goods represented by receivables and all such goods that may be returned by or
replevied or reclaimed from customers along with the Collateral as said term is
defined in Exhibit B attached hereto and made a part hereof are hereinafter
collectively referred to as the "collateral".

 

2. We will provide you with listings of receivables created in form satisfactory
to you, together with copies of customer invoices and conclusive evidence of
shipment and such other documents and proof of delivery/rendition as you may at
any time require. You may lend against these receivables, provided, however,
that there shall be no obligation on your part to make loans and advances
against any of our receivables. Whether or not you choose to make any loans and
advances to us based upon our receivables, we represent and warrant that each
receivable meets and will continue to meet the following requirements:

 

(i) it is genuine and in all respects what it purports to be;

 

(ii) it is owned by us and we have the right to subject it to a security
interest in favor of you or assign it to you;

 

(iii) it arises from (A) the performance of services by us and such services
have been fully performed and acknowledged and accepted by the account debtor
thereunder; or (B) the sale or lease of goods by us, and such goods have been
completed in accordance with the account debtor's specifications (if any) and
delivered to and accepted by the account debtor, such account debtor has not
refused to accept and has not returned or offered to return any of the goods, or
has not refused to accept any of the services, which are the subject of such
account, and we have possession of, or have delivered to you at your request,
shipping and delivery receipts evidencing delivery of such goods;

 

(iv) it is evidenced by an invoice rendered to the account debtor thereunder, is
due and payable within thirty (30) days after the date of the invoice and does
not remain unpaid past the due date thereof; provided, however, that
notwithstanding your having made prior loans and advances against the
receivables of an account debtor, if more than fifty (50%) percent of the
aggregate dollar amount of invoices owing by a particular account debtor remain
unpaid more than 90 days past the invoice date after the respective due dates
thereof, then all accounts owing by that account debtor shall not be deemed
acceptable for loans or advances;

 

(v) it is not subject to any prior assignment, claim, lien, security interest or
encumbrance whatsoever, other than the security interest granted to you
hereunder;

 

(vi) it is a valid, legally enforceable and unconditional obligation of the
account debtor thereunder, and is not subject to setoff, counterclaim, credit,
allowance, deduction or adjustment by such account debtor, or to any claim by
such account debtor denying liability thereunder in whole or in part;

 

(vii) it does not arise out of a contract or order which fails in any material
respect to comply with the requirements of applicable law;

 

(viii) the account debtor thereunder is not a director, officer, employee or
agent of ours or a Subsidiary, Parent or Affiliate;

 

(ix) it is not an account with respect to which the account debtor is the United
States of America or any department, agency or instrumentality thereof, unless
we assign our right to payment of such account to you pursuant to, and in full
compliance with, the Assignment of Claims Act of 1940, as amended;

 

(x) it is not an account with respect to which the account debtor is located in
a state which requires us as a precondition to commencing or maintaining an
action in the courts of that state, either to (A) receive a certificate of
authority to do business and be in good standing in such state, or (B) file a
notice of business activities report or similar report with such state's taxing
authority, unless (x) we have taken one of the actions described in clauses (A)
or (B), (y) the failure to take one of the actions described in either clause
(A) or (B) may be cured retroactively by Borrower at its election, or (z) we
have proven, to your satisfaction, that it is exempt from any such requirements
under any such state's laws;

 

(xi) it is an account which arises out of a sale made in the ordinary course of
our business;

 

(xii) the account debtor is a resident or citizen of, and is located within, the
United States of America;

 

(xiii) it is not an account with respect to which the account debtor's
obligation to pay is conditional upon the account debtor's approval of the goods
or services or is otherwise subject to any repurchase obligation or return
right, as with sales made on a bill-and-hold, guaranteed sale, sale on approval,
sale or return or consignment basis;

 

(xiv) it is not an (A) account with respect to which any representation or
warranty contained in this agreement is untrue or (B) which violates any of our
covenants contained in this agreement;

 

(xv) it is not an account which, when added to a particular account debtor's
other indebtedness to us, exceeds a credit limit determined by you in your sole
discretion for that account debtor; and

 

(xvi) it is not an account with respect to which the prospect of payment or
performance by the account debtor is or will be impaired, as determined by you
in your sole discretion.

 

The term "Affiliate" as used herein shall mean any Person directly or indirectly
controlling, controlled by or under common control with Borrower.

 

The term “Business Day” as used herein shall mean any day which is not a
Saturday, Sunday, or other day on which banks in the State of Georgia are
authorized or required to close.

 

The term "Parent" as used herein shall mean any Person now or at any time or
times hereafter owning or controlling (alone or with any other Person) at least
a majority of our issued and outstanding stock or any Subsidiary of ours.

 

The term "Person" as used herein shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party or foreign or United States government
(whether federal, state, county, city, municipal or otherwise), including,
without limitation, any instrumentality, division, agency, body or department
thereof.

 

The term "Subsidiary" as used herein shall mean any corporation of which more
than fifty percent (50%) of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time stock of any other class of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time, directly or indirectly, owned by Borrower or by
any partnership or joint venture of which more than fifty percent (50%) of the
outstanding equity interests are at the time, directly or indirectly, owned by
Borrower.

 

3. Notwithstanding any of the foregoing, and without limiting your discretion,
there shall be no obligation on your part to make loans and advances to us and
from time to time at our request you may at your discretion lend to us up to 85%
of the face value of each invoice (said percentage is hereinafter referred to as
the "advance rate") acceptable to you, but the total of such loans and advances
shall not exceed $1,000,000 (“Maximum Credit Line”) and you may at your
discretion lend to us up to 50% of Eligible Inventory valued at cost (“Inventory
Advances”), not to exceed the lesser of $300,000 or 75% of the Eligible Accounts
Receivable Loan at any one time outstanding. The amounts of such loans shall be
determined by you with consideration for the value of the collateral, taking
into account all fluctuations of the value thereof in light of your experience
and sound business principles. Such determinations by you shall be subject to
the requirements of good faith on your part, our undertakings hereunder, and
especially our assignment and transfer of all our receivables as security for
the loans and our other Obligations to you, which will, of necessity, fluctuate
in amount, and to the condition that you be at all times fully secured. At your
option you may prepare and mail all customers' invoices. Billing on invoices by
whomever done shall be conclusive evidence of assignment and transfer hereunder
to you of the receivables represented thereby, whether or not we execute any
other instrument with regard to any specific receivable.

 

All loans and advances shall, in your sole discretion, be evidenced by one or
more promissory notes in form and substance satisfactory to you. However, if
such loans and advances are not so evidenced, such loans and advances may be
evidenced solely by entries upon the books and records maintained by you.

 

Any and all accrued interest, charges or fees which are not paid when due, shall
become Obligations, shall be treated as such and shall be taken into
consideration in your determination of the amount of the loans and advances
which you may make to us; provided, however, that all such accrued and unpaid
interest, charges and fees shall not be treated as an Obligation until the first
day of the month immediately proceeding the month in which they accrued. You
shall calculate the principal balance each day prior to our receiving credit for
any collections received by you on that day. If at any time and for any reason,
the aggregate amount of the outstanding advances made pursuant to Paragraph 2
exceeds the dollar or percentage limitations contained in Paragraph 2 (an
“Overadvance”), then we shall, upon demand by you, immediately pay to you in
cash, the amount of such excess. Any and all advances hereunder shall be added
to and deemed part of the Obligations when made.

 

4. We shall pay you interest monthly, on the first (1st) day of each month, at
the rate of three percent ( 3.00%) per annum in excess of the prime rate (as
defined herein) on the average daily principal balance of all loans made
hereunder. As used herein, the term "prime rate" shall mean the interest rate
announced by SunTrust Bank from time to time as its prime rate. We understand
that the prime rate is not necessarily the lowest interest rate available on
loans made by SunTrust Bank, which loans may be priced at, above or below its
prime rate. The prime rate as of the date hereof is three and twenty five one
hundredths ( 3.25 %) percent per annum; accordingly, the interest rate hereunder
expressed in simple interest terms as of the date hereof is six and twenty five
one hundredths ( 6.25 %) percent per annum. If at any time or from time to time
the prime rate increases or decreases, then the interest rate set forth in (b)
above shall be correspondingly increased or decreased effective on the first day
of the month immediately following the day on which any such increase or
decrease in the prime rate is publicly announced. In the event that SunTrust
Bank abolishes or abandons the practice of announcing its prime rate, you will
designate a comparable reference rate which shall be deemed to be the prime rate
hereunder. Interest hereunder shall be computed on a 360-day year simple
interest basis. In addition, we shall pay you monthly, on the first (1st) day of
each month, (a) as compensation for underwriting, administrative services,
costs, and other services performed or incurred by you in connection with this
agreement, a service fee equal to fifty hundredths of one percent ( .50%) per
month of the average daily principal balance of all loans outstanding hereunder
during the previous month with respect to advances for receivables (the “Monthly
Receivables Loan Service Fees”) (Monthly Service Fees shall be calculated on the
basis of a 360-day year) and a service fee equal to fifty hundredths of one
percent ( .50%) per month of the average daily principal balance of all loans
outstanding hereunder during the previous month with respect to advances for
inventory (the “Monthly Inventory Loan Service Fees”) (Monthly Inventory Loan
Service Fees shall be calculated on the basis of a 360-day year) (b) as
compensation for delays in collection and clearance of checks and other
remittances, an amount equal to two (2) Business Days on interest and service
fees computed at the rate set forth above in effect on the last day of the
previous month on the total amount of all remittances delivered to you in
payment of our Obligations during the previous month. In the event of an
Overadvance that remains unpaid to you (irrespective of any demand for the
repayment thereof which may be made by you), we shall pay to you, in addition to
the Monthly Service Fee, a surcharge of 25% of the Monthly Service Fee for each
day that an Overadvance exists. You will render a statement of account monthly,
and such statement shall be deemed binding upon us unless you are notified in
writing to the contrary within thirty (30) days after the date of each statement
rendered. We shall pay to you a fee of seventy five hundredths of one percent
($7,500.00)(the "Modification Fee") of the Maximum Credit Line at closing and at
each Renewal Term (defined below), which shall be for administrative services,
costs, and other services performed or incurred by you in connection with the
closing of this agreement, and shall be due and fully earned at such time as
this Agreement is signed by us.

 

5. We shall direct all of our account debtors, as well as any other obligor, to
make all payments on the accounts as directed by, exclusively and directly to a
post office box or any other address designated by you (the "Lock Box"), and
under your exclusive control. Any and all payments received by us shall be held
in trust for the benefit of you and shall be immediately remitted, by us in the
identical form in which such payments were made, whether by cash or check to
such account as you may direct, however, nothing herein shall be interpreted or
construed as consent or authorization by you to our receipt of payments made by
account debtors or obligors on the accounts. If we, any Affiliate or Subsidiary,
or any shareholder, officer, director, employee or agent of ours or any
Affiliate or Subsidiary, or any other Person acting for or in concert with us
shall receive any monies, checks, notes, drafts or other payments relating to or
as proceeds of accounts, we and each such Person shall receive all such items in
trust for, and as your sole and exclusive property and, immediately upon receipt
thereof, shall remit the same (or cause the same to be remitted) in kind to you.
These remittances shall be listed and certified on a form satisfactory to you.
In the event any payments or remittances, received by us are not delivered to
you in kind, per the terms and conditions set forth in this Agreement, we shall
pay to you a fee of fifteen percent of the face amount of any such payment or
remittance. You will apply (conditioned upon final collection) each payment
deposited, which payment has been made by any account debtor on a receivable
represented by any invoice on which you have based any loan made to us
hereunder, to such loan and any other Obligations which are due and payable, on
the first day after receipt by you. You may, at any time and from time to time,
whether before or after the maturity of any of the Obligations, (i) enforce
collection of any of our accounts or contract rights by suit or otherwise; (ii)
exercise all of our rights and remedies with respect to proceedings brought to
collect any accounts; (iii) surrender, release or exchange all or any part of
any accounts, or compromise or extend or renew for any period (whether or not
longer than the original period) any indebtedness thereunder; (iv) sell or
assign any account of ours upon such terms, for such amount and at such time or
times as you deem advisable; (v) prepare, file and sign our name on any proof of
claim in bankruptcy or other similar document against any account debtor; and
(vi) do all other acts and things which are necessary, in your sole discretion,
to fulfill our Obligations under this agreement and to allow you to collect the
accounts. In addition to any other provision hereof, you may at any time,
whether before or after the occurrence of a default, at our expense, notify any
parties obligated on any of the accounts to make payment directly to you of any
amounts due or to become due thereunder.

 

6. We hereby appoint and constitute you as our attorney-in- fact: to receive,
open, and dispose of all mail addressed to us and to notify the postal
authorities to change the address and delivery of mail addressed to us to such
address as you may designate (provided that you shall return to us all mail not
pertaining to receivables); to endorse our name upon any notes, acceptances,
checks, drafts, money orders and other evidences of payment of receivables that
may come into your possession and to deposit or otherwise collect the same; to
sign our name on any bill of lading relating to any receivable, on drafts
against customers; to verify accounts with communications to customers; to
execute in our name any affidavits and notices with regard to any and all lien
rights; and to do all other acts and things necessary to carry out this
agreement. All acts of said attorney-in-fact are hereby ratified and approved,
and said attorney-in-fact shall not be liable for any errors of commission or
omission, nor for any error of judgment or mistake of fact or law. This power,
being coupled with an interest, is irrevocable while we are indebted to you.

 

7. We make the following warranties, representations and covenants with and to
you, understanding that you have relied upon each of them and will continue to
rely upon each of them in making loans and advances to us:

 

(a) the financial statements delivered or to be delivered by us to you at or
prior to the date of this agreement and at all times subsequent thereto
accurately reflect our financial condition, and there has been no adverse change
in the financial condition, the operations or any other of our status since the
date of the financial statements delivered to you most recently prior to the
date of this agreement;

 

(b) the office where we keep our books, records and accounts (or copies thereof)
concerning the collateral, our principal place of business and all of our other
places of business, locations of collateral and post office boxes are as set
forth in Exhibit A of this agreement; we shall promptly (but in no event less
than ten (10) days prior thereto) advise you in writing of the proposed opening
of any new place of business, the closing of any existing place of business, any
change in the location of our books, records and accounts (or copies thereof) or
the opening or closing of any post office box by us;

 

(c) the collateral is and shall be kept, or based, only at the addresses set
forth on Exhibit A of this agreement, and at other locations within the
continental United States of which you have been advised by us in writing;

 

(d) if any of the collateral consists of goods of a type normally used in more
than one state, whether or not actually so used, we shall immediately give
written notice to you of any use of any such goods in any state other than a
state in which we have previously advised you such goods shall be used, and such
goods shall not, unless you shall otherwise consent in writing, be used outside
of the continental United States;

 

(e) no security agreement, financing statement or analogous instrument exists or
shall exist with respect to any of the collateral other than any security
agreement, financing statement or analogous instrument evidencing security
interests in your favor;

 

(f) we are and shall at all times during the Original Term or any Renewal Term
be the lawful owner of all collateral now purportedly owned or hereafter
purportedly acquired by us, free from all liens, claims, security interests and
encumbrances whatsoever, whether voluntarily or involuntarily created and
whether or not perfected;

 

(g) we have the right and power and are duly authorized and empowered to enter
into, execute and deliver this agreement and perform our obligations hereunder
and thereunder; our execution, delivery and performance of this agreement does
not and shall not conflict with the provisions of any statute, regulation,
ordinance or rule of law, or any agreement, contract or other document which may
now or hereafter be binding on us, and our execution, delivery and performance
of this agreement shall not result in the imposition of any lien or other
encumbrance upon any of our property under any existing indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or instrument by
which we or any of our property may be bound or affected;

 

(h) there are no actions or proceedings which are pending or threatened against
us which might result in any material adverse change in our financial condition
or materially adversely affect the collateral and we shall, promptly upon
becoming aware of any such pending or threatened action or proceeding, give
written notice thereof to you;

 

(i) we have obtained all licenses, authorizations, approvals and permits, the
lack of which would have a material adverse effect on the operation of our
business, and we are and shall remain in compliance in all material respects
with all applicable federal, state, local and foreign statutes, orders,
regulations, rules and ordinances (including, without limitation, statutes,
orders, regulations, rules and ordinances relating to taxes, employer and
employee contributions and similar items, securities, employee retirement and
welfare benefits, employee health and safety or environmental matters), the
failure to comply with which would have a material adverse effect on our
business, property, assets, operations or condition, financial or otherwise;

 

(j) all written information now, heretofore or hereafter furnished by us to you
is and shall be true and correct as of the date with respect to which such
information was or is furnished;

 

(k) we are not conducting, permitting or suffering to be conducted, nor shall we
conduct, permit or suffer to be conducted, any activities pursuant to or in
connection with which any of the collateral is now, or will (while any
Obligations remain outstanding) be owned by any Affiliate; provided, however,
that we may enter into transactions with Affiliates in the ordinary course of
business pursuant to terms that are no less favorable to us than the terms upon
which such transfers or transactions would have been made had they been made to
or with a Person that is not an Affiliate and, in connection therewith, may
transfer cash or property to Affiliates for fair value;

 

(l) our name has always been as set forth on Exhibit A of this agreement and we
use no tradenames or division names in the operation of our business, except as
otherwise disclosed in writing to you; we shall notify you in writing within ten
(10) days of the change of our name or the use of any tradenames or division
names not previously disclosed to you in writing;

 

(m) this agreement to which we are a party are our the legal, valid and binding
obligations and are enforceable against us in accordance with their respective
terms;

 

(n) we are solvent, are able to pay our debts as they become due and have
capital sufficient to carry on our business, now own property having a value
both at fair valuation and at present fair saleable value greater than the
amount required to pay our debts, and will not be rendered insolvent by the
execution and delivery of this agreement or by completion of the transactions
contemplated hereunder;

 

(o) other than the loans disclosed to you on the Loan Schedule, we are not now
obligated, nor shall we create, incur, assume or become obligated (directly or
indirectly), for any loans or other indebtedness for borrowed money other than
the loans made hereunder and pursuant hereto, except that we may (i) borrow
money from a Person other than you on an unsecured and subordinated basis if a
subordination agreement in favor of you and in form and substance satisfactory
to you is executed and delivered to you relative thereto; (ii) maintain any
present indebtedness to any Person which has been disclosed to you in writing
and consented to in writing by you; and (iii) incur unsecured indebtedness to
trade creditors in the ordinary course of our business;

 

(p) except as otherwise disclosed in writing to you, we have no Parents,
Subsidiaries or divisions, nor are we engaged in any joint venture or
partnership with any other Person;

 

(q) we are duly organized and in good standing in our state of our organization
and we are duly qualified and in good standing in all states where the nature
and extent of the business transacted by us or the ownership of our assets makes
such qualification necessary;

 

(r) we are not in default under any material contract, lease or commitment to
which it is a party or by which it is bound, nor do we know of any dispute
regarding any contract, lease or commitment which is material to our continued
financial success and well-being;

 

(s) there are no controversies pending or threatened between us and any of our
employees, other than employee grievances arising in the ordinary course of
business which are not, in the aggregate, material to our continued financial
success and well-being and we are in compliance in all material respects with
all federal and state laws respecting employment and employment terms,
conditions and practices; and

 

(t) we possess, and shall continue to possess, adequate licenses, patents,
patent applications, copyrights, service marks, trademarks, trademark
applications, tradestyles and tradenames to continue to conduct our business as
heretofore conducted by us.

 

(u) we will notify you promptly of and shall settle all customer disputes, but,
if you so elect, you are to have the right at all times to settle, compromise,
adjust or litigate all customer disputes directly with the customer or other
complainant upon such terms and conditions as you deem advisable, without
incurring liability to us for your performance of any such acts.

 

(v) our Federal Employment Identification Number is 20-2635129.

 

8. We represent, warrant and covenant to you that all of our representations,
warranties and covenants contained in this Agreement (whenever appearing herein)
shall be true at the time of our execution of this agreement, shall survive the
execution, delivery and acceptance hereof by the parties hereto and the closing
of the transactions described herein or related hereto, shall remain true until
the repayment in full of all of the Obligations and termination of this
agreement, and shall be remade by us at the time each loan or advance is made
pursuant to this agreement.

 

9. Until payment or satisfaction in full of all Obligations and termination of
this agreement, unless we obtain your prior written consent waiving or modifying
any of our covenants hereunder in any specific instance, we agree as follows:

 

(a) we shall at all times keep accurate and complete books, records and accounts
with respect to all of our business activities, in accordance with sound
accounting practices and generally accepted accounting principles consistently
applied from period to period, and shall keep such books, records and accounts,
and any copies thereof, only at the addresses indicated for such purpose on
Exhibit A of this agreement;

 

(b) we shall promptly advise you in writing of any material adverse change in
our business, assets or condition, financial or otherwise, the occurrence of any
default hereunder or the occurrence of any event which, if uncured, will become
an default hereunder after notice or lapse of time (or both);

 

(c) we shall:

 

(i) keep the collateral properly housed and shall keep the collateral insured
for the full insurable value thereof against loss or damage by fire, theft,
explosion, sprinklers, and such other risks as are customarily insured against
by Persons engaged in businesses similar to ours with such companies, in such
amounts and under policies in such form as shall be satisfactory to you.
Original (or certified) copies of such policies of insurance have been or shall
be delivered to you within fifteen (15) days after the date hereof, together
with evidence of payment of all premiums therefor, and shall contain an
endorsement, in form and substance acceptable to you, showing loss under such
insurance policies payable to you. Such endorsement, or an independent
instrument furnished to you, shall provide that the insurance company shall give
you at least thirty (30) days written notice before any such policy of insurance
is altered or canceled and that no act of ours, whether willful or negligent, or
default or any other Person shall affect you right to recover under such policy
of insurance in case of loss or damage. We hereby direct all insurers under such
policies of insurance to pay all proceeds payable thereunder directly to you. We
irrevocably, make, constitute and appoint you (and all officers, employees or
agents designated by you) as our true and lawful attorney (and agent-in-fact)
for the purpose of making, settling and adjusting claims under such policies of
insurance, endorsing our name on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance and making all
determinations and decisions with respect to such policies of insurance; and

 

(ii) maintain, at our expense, such public liability and third party property
damage insurance as is customary for Persons engaged in businesses similar to
ours with such companies and in such amounts, with such deductibles and under
policies in such form as shall be satisfactory to you and original (or
certified) copies of such policies have been or shall be delivered to you within
fifteen (15) days after the date hereof, together with evidence of payment of
all premiums therefor; each such policy shall contain an endorsement showing you
as additional insured thereunder and providing that the insurance company shall
give you at least thirty (30) days written notice before any such policy shall
be altered or canceled. If we at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay any
premium in whole or in part relating thereto, then you, without waiving or
releasing any obligation or default by us hereunder, may (but shall be under no
obligation to) obtain and maintain such policies of insurance and pay such
premiums and take such other actions with respect thereto as you deem advisable.
All sums disbursed by you in connection with any such actions, including,
without limitation, court costs, expenses, other charges relating thereto and
reasonable attorneys' fees, shall constitute loans hereunder and shall be
payable on demand by us to you and, until paid, shall bear interest at the
highest rate then applicable to loans hereunder;

 

(d) all monies and other property obtained by us from you pursuant to this
agreement will be used solely for business purposes;

 

(e) we shall, at your request, indicate on our records concerning the Collateral
a notation, in form satisfactory to you, of your security interest hereunder,
and we shall not maintain duplicates or copies of such records at any address
other than our principal place of business set forth on Exhibit “A” of this
agreement;

 

(f) we shall file all required tax returns and pay all of our taxes when due,
including, without limitation, taxes imposed by federal, state or municipal
agencies, and shall cause any liens for taxes to be promptly released; provided,
that we shall have the right to contest the payment of such taxes in good faith
by appropriate proceedings so long as (i) the amount so contested is shown on
our financial statements, (ii) the contesting of any such payment does not give
rise to a lien for taxes, (iii) we keep on deposit with you (such deposit to be
held without interest) an amount of money which, in your sole judgment, is
sufficient to pay such taxes and any interest or penalties that may accrue
thereon, and (iv) if we fail to prosecute such contest with reasonable
diligence, you may apply the money so deposited in payment of such taxes. If we
fail to pay any such taxes and in the absence of any such contest by us, you may
(but shall be under no obligation to) advance and pay any sums required to pay
any such taxes and/or to secure the release of any lien therefore, and any sums
so advanced by you shall constitute loans hereunder, shall be payable by us to
you on demand, and, until paid, shall bear interest at the highest rate then
applicable to loans hereunder;

 

(g) we shall not assume, guarantee or endorse, or otherwise become liable in
connection with, the obligations of any Person, except by endorsement of
instruments for deposit or collection or similar transactions in the ordinary
course of business;

 

(h) we shall not enter into any merger or consolidation, or sell, lease or
otherwise dispose of all or substantially all of our assets, or enter into any
transaction outside the ordinary course of our business, including, without
limitation, any purchase, redemption or retirement of any shares of any class of
our stock, and any issuance of any shares of, or warrants or other rights to
receive or purchase any shares of, any class of our stock;

 

(i) we shall not amend our organizational documents or change our fiscal year;

 

(j) we shall reimburse you for all costs and expenses, including, without
limitation, legal expenses and reasonable attorneys' fees, incurred by you in
connection with documentation and consummation of this transaction and any other
transactions between us and you, including, without limitation, Uniform
Commercial Code and other public record searches, lien filings, Federal Express
or similar express or messenger delivery, appraisal costs, surveys, title
insurance and environmental audit or review costs, and in seeking to collect,
protect or enforce any rights in or to the collateral or incurred by you in
seeking to collect any obligations and to administer and enforce any of your
rights under this agreement. All such costs, expenses and charges shall
constitute loans hereunder, shall be payable by us to you on demand, and, until
paid, shall bear interest at the highest rate then applicable to loans
hereunder.

 

10. You or your representatives at all reasonable times shall have the right to
examine all of our books and records pertaining to receivables and goods
affected by this agreement or any other future agreement between us. We have
agreed to pay any field audit fees deemed necessary by AFC; but said fees shall
not exceed $4,000 per year, plus expenses. We will submit to you an aging of
receivables and accounts payable as of the end of each month, in form and manner
satisfactory to you, by the 10th of the following month, and we agree to have
prepared and to furnish to you quarterly within 30 days after the close of each
quarter's financial statements, which shall include a balance sheet, a statement
of profit and loss and a statement of cash flow and shall be prepared in a
uniform manner consistent with prior years, in such form, substance and detail
as you may reasonably require. We also agree to have prepared and to furnish to
you within sixty days after the close of our fiscal year, similar annual
financial statements in such form, substance and detail as you may reasonably
require. You may, at any time during which this agreement or any provision
contained herein is in force, contact any account debtor of ours in order to
ascertain any details regarding that account debtor or any account which may be
owed to us by that account debtor. You are authorized to contact and discuss our
affairs, finances and business with any officer, employee or director of ours or
with any Affiliate or the officers, employees or directors of any Affiliate, and
to discuss our financial condition with our independent public accountants.

 

11. You shall be entitled to hold or set off all sums and all other property of
ours, at any time to our credit or in your possession by pledge or otherwise or
upon or in which you may have a lien or security interest, as security for any
and all obligations of ours owing to you. “Obligations” as said term is used in
this Agreement shall mean all obligations hereunder, and under all notes,
contracts of suretyship, guaranty or accommodation made by us in your favor, and
all our other obligations to you, however created, arising or evidenced, whether
direct or indirect, whether through assignment from third persons, whether
absolute or contingent, or otherwise, now or hereafter existing, or due or to
become due. You shall have the right and are hereby irrevocably authorized and
directed to apply all payments received from the collateral account to the
amounts of any and all Obligations. Recourse to security shall not at any time
be required. We shall at all times remain liable for the repayment to you on
demand of all Obligations. In any case we shall remain liable to you for any
deficiencies arising upon the liquidation of any security held by you. If any
receivable is not paid when due or if any customer raises any claim of
non-conformity of goods, total or partial failure of delivery, set-off,
counterclaim, or breach of warranty, or any other claim inconsistent with our
warranties of receivables, or there is otherwise non-compliance with our
warranties and representations regarding our receivables as made above, we will,
upon demand, pay you for application to the Obligations the gross amount of the
receivable so affected or unpaid, together with any damages or loss sustained by
you, but such payment shall not be deemed a reassignment thereof, and title
thereto and to the goods represented thereby shall remain in you until and
unless you execute a reassignment. Before or after default hereunder you shall
be entitled to notify any or all account debtors or other obligors on the
receivables to pay you directly, and we agree that while assigned to you, you
may take such action with regard to the custody and collection of receivables as
you may deem necessary. We agree that failure to take any action with regard to
any given receivable shall not be unreasonable until and unless you receive a
request for specific action from us with regard thereto. You may also apply all
payments received from the collateral account to, or at your option we will pay
you on demand, all costs and expenses, including fifteen percent (15%) of the
total amount involved as attorneys' fees, incurred upon the liquidation of any
collateral, to obtain or enforce payment of any Obligations, in the settlement,
adjustment, compromise or litigation of customer disputes or in the prosecution
or defense of any action or proceeding either against you or against us
concerning any matter growing out of or connected with this Agreement and/or any
receivables and/or any Obligations. In the event of any breach by us of any
provision herein, we will repay upon demand all of our Obligations to you. If at
any time you pay any state, city, local, federal or other tax or levy arising
from sales hereunder, we will repay to you the amount of tax so paid by you.

 

12. This Agreement shall be in effect from the date hereof until September 4,
2015 (the "Original Term") and shall automatically renew itself from year to
year thereafter (each such one-year renewal being referred to herein as a
"Renewal Term") unless (a) you make demand for repayment prior to the end of the
Original Term or the then current Renewal Term; (b) the due date of the
Obligations is accelerated; or (c) we elect to terminate this Agreement at the
end of the Original Term or at the end of any Renewal Term by giving you written
notice of such election at least ninety (60) days prior to the end of the
Original Term or the then current Renewal Term and by paying all of the
Obligations in full on the last day of such term. If this Agreement is
terminated by us prior to the end of the First year of the Original Term, we
shall pay to you a fee (as liquidated damages and compensation for the costs of
being prepared to make funds available hereunder and not as a penalty) of one
percent (1.00%) of the Maximum Credit Facility during the Original Term. We
agree that this fee is a reasonable calculation of your lost profit in view of
the difficulties and impracticality of determining actual damages resulting from
an early termination of this Agreement. If one or more of the events specified
in clauses (a), (b) and (c) occurs, this Agreement shall terminate on the date
thereafter that the Obligations are paid in full, provided, however, that the
security interests and liens created under this Agreement shall survive such
termination until the payment of the Obligations have become indefeasible. At
such time as we have repaid all of the Obligations and this Agreement has
terminated, we shall deliver to you a release, in form and substance
satisfactory to you, of all Obligations and liabilities of you and your
officers, directors, employees, agents, parents, subsidiaries and affiliates to
us, and if we obtain new financing from another lender, we shall deliver such
lender's indemnification of you, in form and substance satisfactory to you, for
checks which you have credited to our account, but which subsequently are
dishonored for any reason. Notice of termination shall be given either
personally or by registered or certified mail to the addresses shown herein, or
to any other address designated in writing by either of us to the other.
Notwithstanding the foregoing, should either party breach this Agreement or
become insolvent or unable to pay our debts as they mature, or should we make an
assignment for the benefit of creditors, or should a petition under any chapter
of the Federal Bankruptcy Code, as amended, be filed by or against us, or should
any guarantor of the Obligations hereunder terminate or revoke or attempt to
terminate or revoke such guaranty, or should you deem yourselves insecure, or
should we fail to pay promptly any amount due hereunder, or should we be in
default under any of the terms or conditions of this Agreement, of any other
agreement or agreements now or hereafter effective between us, then, and in any
of the aforesaid events, the party aggrieved shall have the right to terminate
this Agreement at any time without notice. Upon termination, all of our
Obligations to you shall become immediately due and payable. Notwithstanding
such termination, all the terms, conditions and provisions hereof shall continue
to be fully operative until all transactions entered into, rights created or
obligations incurred hereunder prior to termination and all our Obligations have
been fully disposed of, concluded, paid, satisfied and liquidated. No delay or
failure on your part in exercising any right, privilege or option hereunder
shall operate as a waiver of such or of any other right, privilege or option,
and no waiver shall be valid unless in writing signed by you and then only to
the extent therein stated.

 

13. This Agreement is submitted by us to you for your acceptance or rejection at
your principal place of business as an offer by us to borrow monies from you now
and from time to time hereafter and shall not be binding upon you or become
effective until accepted by you, in writing, at said place of business. If
accepted by you, this Agreement shall be deemed to have been made in the State
of Georgia. We hereby waive demand, presentment, protest and notice of
nonpayment, and further waive the benefit of all valuation, appraisal and
exemption laws. If any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or remaining provisions of this
Agreement. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement. If this Agreement is accepted by
you, it shall be effective on the date set forth above, and shall continue in
full force and effect until one year from such effective date, and from year to
year thereafter, unless terminated, on any such anniversary date, or otherwise
by reason of default, by either of us giving to the other not less than sixty
(60) days prior written notice. You may terminate this Agreement at any time
without notice to us should we breach any of our Obligations hereunder or under
any other agreement or document evidencing financial arrangements between us, or
should you deem yourself insecure. If any Obligation of ours to you is collected
by or through an attorney, we agree to pay all costs and expenses of collection,
including fifteen (15%) percent of the total amount involved as attorneys' fees.
No termination of this Agreement shall terminate or adversely affect your rights
hereunder or under any other agreement or document evidencing financial
arrangements between us.

 

14. This Agreement is an amendment and a restatement of the Receivables
Financing Agreement entered between us and you dated May 24th, 2011. It is not
intended by either of us to be a novation, accord and satisfaction, discharge or
release of any Obligation.

 

15. Disputes regarding the nonpayment of any amount due under this Agreement to
you or any of your affiliates which arise from, result from or relate to a
counterclaim, offset, recoupment, claim or defense of us which is founded upon,
arises out of or is related to, any theory of lender liability or other similar
theory, and all disputes and claims relating to any provision hereof or relating
to or arising out of the parties relationship or creation or termination hereof
(including, without limitation, any claim that any provision of this Agreement
is illegal, unenforceable or voidable under any law, ordinance or ruling) shall
be settled by arbitration at the Office of the American Arbitration Association
in Atlanta, Georgia, in accordance with the United States Arbitration Act (9
U.S.C. Section 1 et seq.) and the Rules of the American Arbitration Association.
Suits to compel arbitration or to determine arbitrability shall be brought in
the United States District Court for the Northern District of Georgia. All
awards of the arbitration shall be binding and non-appealable except as
otherwise provided in the United States Arbitration Act. Judgment upon the award
of the arbitrator may be entered in any court having jurisdiction thereof.
PROVIDED, HOWEVER, that nothing contained in this Paragraph shall be interpreted
or construed so as to make claims by you to enforce your rights in the
Collateral or for the payment of sums due to you or to others by you (whether
prior or subsequent to an event of default), subject to arbitration, even though
counterclaims, offsets, recoupments, and other defenses and claims by us are
subject to arbitration.

16. THE VALIDITY OF THIS AGREEMENT, AND ALL OTHER AGREEMENTS BETWEEN THE
PARTIES, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT AND THE RIGHTS OF THE
PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE COURTS LOCATED IN THE COUNTY OF COBB, STATE OF
GEORGIA, THE FEDERAL COURTS WHOSE VENUE INCLUDES THE COUNTY OF COBB, STATE OF
GEORGIA, OR, AT YOUR SOLE OPTION, IN ANY OTHER COURT IN WHICH YOU SHALL INITIATE
LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER
THE MATTER IN CONTROVERSY. EACH OF THE PARTIES HERETO WAIVES, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY AND ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF "FORUM NON CONVENIENS" OR TO OBJECT TO VENUE
TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS AGREEMENT. We
represent and warrant that no representative or agent of yours has represented,
expressly or otherwise, that you will not, in the event of litigation, seek to
enforce this right to jury waiver. Undersigned acknowledges that you have been
induced and enter into this Agreement by, among other things, the provisions of
this paragraph.

 

17. WE HEREBY WAIVE ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO THE
EXERCISE BY YOU OF YOUR RIGHTS TO REPOSSESS THE COLLATERAL WITHOUT JUDICIAL
PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON SUCH COLLATERAL WITHOUT PRIOR NOTICE
OR HEARING.

 

18. Your failure, at any time or times hereafter, to require strict performance
by us of any provision of this Agreement shall not waive, affect or diminish any
of your rights thereafter to demand strict compliance and performance therewith.
Any suspension or waiver by you a default under this Agreement shall not
suspend, waive or affect any other default under this Agreement, whether the
same is prior or subsequent thereto and whether of the same or of a different
kind or character. No delay on your part in the exercise of any right or remedy
under this Agreement shall preclude other or further exercise thereof or the
exercise of any right or remedy. None of our undertakings, agreements,
warranties, covenants and representations contained in this Agreement and no
default under this Agreement shall be deemed to have been suspended or waived by
you unless such suspension or waiver is in writing, signed by your duly
authorized officer and directed to us specifying such suspension or waiver.

 

 

 

      ONE UP INNOVATIONS, INC.             BY:  /s/ Ronald P. Scott    BY:  /s/
Louis S. Friedman    Ronald P. Scott     Louis S. Friedman  Its:  Secretary  
 Its: President

 

 

 

 

 

A C C E P T A N C E

 

The foregoing Receivables Financing Agreement is accepted in Atlanta, Georgia,
this 25th day of May , 2011.

 

 

 

      ADVANCE FINANCIAL CORPORATION                 BY:  /s/ A. James Perry    
    A. James Perry        Its: President

 

BY: /s/

A. James Perry

Its: President

 
 

 

EXHIBIT A

 

 

Schedule of Collateral Location

 

 

Street City State Zip         2745 Bankers Industrial Drive Atlanta Georgia
30360

 

 

 

 
 

Exhibit B

 

 

SECURITY AGREEMENT

 

(ACCOUNTS RECEIVABLE, INVENTORY AND EQUIPMENT)

 

STATE OF: GEORGIA

 

COUNTY OF: DEKALB

 

DATE: May 24, 2011

 

FOR VALUE RECEIVED One Up Innovations, Inc., a Georgia corporation (hereinafter
called the "Borrower") hereby conveys to Advance Financial Corp., a Georgia
corporation (hereinafter called the "Secured Party") and hereby grants to the
Secured Party security title to and a security interest in and lien upon the
goods held by the Borrower for sale or lease or furnished or to be furnished by
the Borrower under any contract of service or held by the Borrower as raw
materials or work in process and made a part hereof to be used or consumed in
Borrower's business (such goods being referred to herein as ("Inventory") all
equipment, tools, furniture and fixtures (“Equipment”) and all rights of the
Borrower now owned or hereafter acquired in payment for Inventory sold or leased
or for services rendered ("Accounts")' and to all rights of the Borrower
pursuant to a writing or writings which evidences both a monetary obligation and
a security interest in or lease of Inventory ("Chattel Paper") and all rights of
the Borrower to payment under a contract for the sale or lease of Inventory or
the rendering of services which right is at the time not yet earned by
performance ("Contract Rights") (said Inventory, Accounts, Chattel Paper and
Contract Rights being referred to herein collectively as "Collateral", and said
Equipment, Accounts, Contract Rights and Chattel Paper being referred to herein
collectively as "Non-Inventory Collateral") and all proceeds thereof whether
cash, negotiable instruments or otherwise to secure the payment of the principal
of, interest on and satisfaction of all Obligations of Borrower under that
certain Accounts Receivable Financing Agreement (hereafter referred to as the
"Agreement") dated on or about the date hereof, between the Borrower and the
Secured Party, satisfaction of all obligations of the Borrower hereunder, and
satisfaction of all other obligations of the Borrower to the Secured Party, its
successors and assigns, however created, arising or evidenced, whether direct or
indirect, absolute or contingent, now or hereafter existing, due or to become
due. The obligations under the Agreement and all other obligations secured
hereby are herein collectively called the "Obligations."

 

Until Default (as defined herein) the Borrower: (a) may in the ordinary course
of its business, at its own expense, sell, lease or furnish under contract of
service any of the Inventory normally held by the Borrower for such purpose and
use and consume in the ordinary course of its business any raw material, work in
process, or materials normally held by Borrower for such purpose, (b) will at
its own expense endeavor to collect as, and when due, all amounts due with
respect to any of the Accounts, Chattel Paper, Contract Rights or proceeds
therefore, or any of the proceeds of the Inventory, including the taking of such
action with respect to such collection as the Secured Party may reasonably
request, or in the absence of such request, as the Borrower may deem advisable,
and (c) may grant in the ordinary course of business to any party obligated on
any of the Non-Inventory Collateral any rebate, refund or adjustment to which
such party may be lawfully entitled, and may accept in connection therewith, the
return of such goods, the sale or lease of which shall have given rise to such
Non-Inventory Collateral.

 

The Borrower hereby warrants and agrees that: (a) to the extent, if any, it
shall have advised the Secured Party that any of the Collateral is being
acquired with the proceeds of any loan from Secured Party to the Borrower, such
proceeds may be disbursed by the Secured Party directly to the seller of such
Collateral; (b) the principal place of business of the Borrower is located at
2745 Bankers Industrial Drive, Atlanta, Georgia 30360 and the Borrower will
notify Secured Party in advance of any change in such principal place of
business; (c) the Collateral and all records relating to the Collateral as
appropriate will be kept at the Borrower's principal place of business set forth
above, unless the Secured Party shall otherwise consent in writing; (d) the
Borrower will continuously operate its business as now conducted and according
to the customary and usual business practices (including business hours) as
similar types of business; (e) the Secured Party or any person designated by it
shall have the right to call at the Borrower's various places of business at any
time and without notice to inspect, audit, check and make extracts from the
Borrower's books, records, journals, orders, receipts and other correspondence
and other data relating to the Borrower's business and any other transaction
between the Borrower and Secured Party without hindrance or delay, and Secured
Party shall have the right to make direct verification from any persons
obligated on any of the Non-Inventory Collateral with respect to any or all of
the Non-Inventory Collateral assigned to the Secured Party hereunder; (f) the
Borrower has full power and authority to enter into this agreement, and the
execution of this agreement shall not constitute a default under or be in
violation of any contract, agreement, debenture, note or similar document or any
public law, rule, regulation or ordinance by which the Borrower is bound; (g)
the Borrower will, upon request of Secured Party, indicate by notation, signs or
otherwise upon any of the Collateral or records relating thereto, a notation in
form and content satisfactory to the Secured Party of the security interest of
the Secured Party hereunder; (h) the Borrower will furnish to the Secured Party
such information concerning the Borrower, the Collateral and any persons
obligated on Non-Inventory Collateral as the Secured Party may from time to time
reasonably request; (i) the Borrower has, or forthwith will acquire, full title
to the Collateral, and will at all times keep the Collateral free of all liens
and claims whatsoever, other than the security interest hereunder; (j) no
financing statement covering any of the Collateral is on file in any public
office other than financing statement in favor of Secured Party and it will from
time to time, on request of the Secured Party, execute such financing statements
and other documents (and pay the cost of filing or recording the same in all
offices deemed necessary or desirable by the Secured Party) and do such other
acts and things, all as the Secured Party may request to establish and maintain
a valid security title and interest in the Collateral (free of all other liens
and claims whatsoever) to secure the payment of the Obligations, including,
without limitation, deposit with the Secured Party any negotiable instruments
covered by this agreement as proceeds or otherwise, any documents constituting
chattel paper or any contracts, the proceeds of which are included in
Collateral; (k) except for the sale or lease of any of the Inventory in the
ordinary course of its business, the Borrower will not sell, transfer, lease,
abandon or otherwise dispose of any of the Collateral or any interest therein
except with the prior written consent of the Secured Party; (l) the Borrower
will at all times keep the Collateral in first class order and repair, excepting
any loss, damage or destruction which is fully covered by proceeds of insurance;
(m) the Borrower will at all times keep the Collateral insured against loss,
damage, theft and other risks, in such amounts and companies and under such
policies and in such form, all as shall be satisfactory to the Secured Party,
which policies shall, among other things, provide for 30 days' notice of
cancellation or non-renewal to Secured Party and that loss thereunder shall be
payable to the Secured Party as its interest may appear (and the Secured Party
may apply any proceeds of such insurance which may be received by it toward
payment of the Obligations, whether or not due, in such order of application as
the Secured Party may determine) and such policies or certificates thereof
shall, if the Secured Party so requests, be deposited with the Secured Party;
and (n) none of the Inventory will be delivered to a warehouseman or other
bailee.

 

The Secured Party may from time to time, at its option, perform any agreement of
the Borrower hereunder which the Borrower shall fail to perform and take any
other action which the Secured Party deems necessary for the maintenance or
preservation of any of the Collateral or its interest therein, and the Borrower
agrees to forthwith reimburse the Secured Party for all expenses of the Secured
Party in connection with the foregoing, together with interest thereon at the
rate of 12% per annum.

 

The occurrence of any of the following events shall constitute a Default (as
such term is used herein): (a) non-payment, when due, of any amount payable on
any of the Obligations or failure to perform any agreement of the Undersigned
contained herein; (b) if any statement, representation or warranty of the
Borrower herein or in any other writing at any time furnished by the Borrower to
the Secured Party is untrue in any material respect as of the date made; (c) if
the Borrower becomes insolvent or unable to pay debts as they mature or makes an
assignment for the benefit of creditors or an order for relief is entered
against the Borrower following the filing of any petition by or against it
pursuant to the Bankruptcy Code, as amended or voluntarily takes the benefit of
any debtor's relief proceeding (including the appointment of a receiver or
trustee) under Federal or state law; (d) if an involuntary petition pursuant to
the Bankruptcy Code is filed against the Borrower and is not dismissed for
thirty (30) days or if a receiver is appointed for any of the property of the
Borrower and is not dismissed for a period of thirty (30) days after such
appointment or if a judgment is entered against the Borrower pursuant to which a
sale of any part of the assets of the Borrower is scheduled for enforcement of
said judgment or if a sale of any of the assets of the Borrower is scheduled
pursuant to any other form of legal proceeding (including without limitation
enforcement pursuant to the Georgia Uniform Commercial Code or exercise of a
power of attorney contained in any deed to secure debt, trust deed or mortgage)
instituted against the Borrower. Provided, that no such judgment, sale or
enforcement shall be deemed a default pursuant to this sub-section (d) in the
event the Borrower furnishes a surety company bond from a company acceptable to
Secured Party in lieu of discharge, judgment, lien or foreclosure at the earlier
of (i) five (5) days prior to the date upon which such enforcement or sale is
scheduled, or (ii) ten (10) days after such judgment, enforcement, lien, sale or
foreclosure is first entered, scheduled or instituted; (e) the dissolution,
merger or consolidation, or transfer of a substantial part of the property of
the Borrower; (f) the sale, transfer or exchange, either directly or indirectly,
of a controlling stock interest of the Borrower; or (g) if Secured Party
reasonably deems itself insecure for any other reason whatsoever.

 

Whenever a Default shall exist, all Obligations may (notwithstanding any
provisions thereof), at the option of Secured Party, and without demand or
notice of any kind, be declared, and thereupon immediately shall become in
default and due and payable; and the Secured Party may exercise from time to
time any rights and remedies available to it under applicable law. The Borrower
agrees, in case of Default, to assemble, at its expense, all the Collateral at a
convenient place acceptable to the Secured Party and to pay all costs of the
Secured Party of collection of all of the Obligations, and enforcement of rights
hereunder (including 15% of amounts due as attorneys' fees) and legal expenses
and expenses of any repairs to any realty or other property to which any of the
Collateral may be affixed or be a part.

 

In the event of Default, the Borrower will (except as the Secured Party may
otherwise consent in writing) forthwith upon receipt, transmit and deliver to
the Secured Party in the form received all cash, checks, draft items, chattel
paper and other instruments for the payment of money (properly endorsed where
required) so that such items may be collected by the Secured Party which may be
received by the Borrower at any time in full or partial payment or otherwise as
proceeds of any of the Collateral. Except as the Secured Party may otherwise
consent in writing, upon default such proceeds which may be received by the
Borrower will not be commingled with any other of its funds or property but will
be held separate and apart from its own funds or property and upon express trust
for the Secured Party until delivery is made to the Secured Party. The Borrower
will comply with the terms and conditions of any consent given by the Secured
Party pursuant to the provisions of this paragraph.

 

In the event of default as defined herein or in the Agreement, the Borrower
agrees that the actual amount of damages by Secured Party shall be difficult and
impossible to determine, and that the remedies of Secured Party to recover such
damages may be inadequate; therefore, Secured Party is authorized to enforce its
rights hereunder by injunctive or other equitable relief without regard to the
existence of actual damages. The Borrower hereby constitutes and appoints, upon
Default, any officer of the Secured Party its true and lawful agent and attorney
in fact for the purpose of filing any and all notices of lien and waivers
thereof, actions, lawsuits and other appropriate documents to enforce the rights
of Secured Party in and to any of the Non-Inventory Collateral.

 

If any notification of intended disposition of any of the Collateral is required
by law, such notification, if mailed, shall be deemed reasonably and properly
given if mailed at least five (5) days before such disposition, postage prepaid,
addressed to the Borrower either at the address shown above, or at any other
address of the Borrower which the Secured Party reasonably believes to be the
Borrower's then current address. Any and all other notices given to the Borrower
shall be deemed when personally delivered or when mailed registered or certified
mail and addressed to the Borrower as provided in the preceding sentence.

 

Any proceeds of any disposition of any of the Collateral may be applied by the
Secured Party to the payment of expenses in connection with the Collateral,
(including 15% of amounts due as attorneys' fees) and legal expenses, and any
balance of such proceeds may be applied by the Secured Party toward the payment
of such of the Obligations, and in such order of application, as the Secured
Party may from time to time elect.

 

The Secured Party may exercise any right or remedy provided herein in its
discretion without exercising any other right or remedy provided herein. The
Secured Party shall be under no duty to exercise any or all of the rights and
remedies given by this agreement. No forbearance or indulgence shall operate as
a waiver of any right or remedy of Secured Party or obligation of the Borrower
and no single or partial exercise by the Secured Party of any rights or remedy
shall preclude, as other or further exercise thereof or the exercise of any
other right or remedy and unless Secured Party shall otherwise agree in writing,
Secured Party shall be entitled to invoke any remedy available to Secured Party
under any agreement or by law or in equity and enforce any covenant or condition
against the Borrower despite said forbearance or indulgence.

 

The Secured Party shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral if the Secured Party takes such
action for that purpose as the Borrower shall request in writing, but failure of
the Secured Party to comply with any such request shall not of itself be deemed
a failure to exercise reasonable care and no failure of the Secured Party to
preserve or protect any rights with respect to the Collateral against prior
parties or do any act with respect to the preservation of the Collateral not so
requested by the Borrower shall be deemed a failure to exercise reasonable care
in the custody or preservation of the Collateral.

 

The delivery of any checks, drafts or other orders for the payment of money to
Secured Party shall not constitute payment thereof until such checks, drafts or
other items are finally paid.

 

Time is of the essence of this agreement.

 

If this agreement is not dated when executed by the Borrower, the Secured Party
is authorized, without notice to the Borrower, to date this agreement.

 

This agreement has been delivered in the State of Georgia and shall be construed
in accordance with the laws of the State. Wherever possible, each provision of
this agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this agreement.

 

The rights and privileges of the Secured Party hereunder shall inure to the
benefit of its heirs, legal representatives, successors and assigns.

 

IN WITNESS WHEREOF, this agreement has been duly executed under seal as of the
30th day of May, 2011.

 

(CORPORATE SEAL)

 

 

      ONE UP INNOVATIONS, INC.                   BY:  /s/ Louis S. Friedman    
    Louis S. Friedman        Title: President                  BY:  /s/ Ronald
P. Scott          Ronald P. Scott        Title:  Secretary

 

 

 

 

 

LSF /RPS_

(initial)

 

 

One Up Innovations, Inc.