EXHIBIT 10.1
 
 
 
SECOND BUSINESS FINANCING MODIFICATION AGREEMENT

This Second Business Financing Modification Agreement is entered into as of
October 11, 2012, by and between BRIDGE BANK, NATIONAL ASSOCIATION (“Lender”)
and INUVO, INC., a Nevada corporation (“Parent”), BABYTOBEE, LLC, a New York
limited liability company (“Babytobee”), KOWABUNGA MARKETING, INC., a Michigan
corporation (“Kowabunga”) VERTRO, INC., a Delaware corporation (“Vertro“) and
ALOT, INC., a Delaware corporation (“ALOT”) and together with Parent, Babytobee,
Kowabunga and Vertro, each a Borrower” and collectively, “Borrowers”)

1.           DESCRIPTION OF EXISTING INDEBTEDNESS:  Among other indebtedness
which may be owing by Borrowers to Lender, Borrowers are indebted to Lender
pursuant to, among other documents, a Business Financing Agreement, dated March
1, 2012 by and between Borrowers and Lender, as may be amended from time to
time, including by that certain First Business Modification Agreement dated as
of June 29, 2012 (collectively, the “Business Financing
Agreement”).  Capitalized terms used without definition herein shall have the
meanings assigned to them in the Business Financing Agreement.

Hereinafter, all indebtedness owing by Borrowers to Lender shall be referred to
as the “Indebtedness” and the Business Financing Agreement and any and all other
documents executed by a Borrower in favor of Lender shall be referred to as the
“Existing Documents.”

2.           DESCRIPTION OF CHANGE IN TERMS.

A.           Modification(s) to Business Financing Agreement:

i)  Section 2.2(i) of the Business Financing Agreement is hereby amended and
restated in its entirety to read as follows:

“(i)           Warrant/Fee in Lieu of Warrant.  On the Second Modification Date,
Borrowers shall either (a) execute a warrant in favor of and in form and
substance acceptable to Lender providing for $45,000 of warrant coverage, or
(ii) pay the Fee in Lieu or Warrant to Lender.”

ii)  Section 4.15 of the Business Financing Agreement is hereby deleted in its
entirety and replaced by the following:

“4.15           Maintain Borrowers’ consolidated financial condition as follows
using generally accepted accounting principles consistently applied and used
consistently with prior practices (except to the extent modified by the
definitions herein):

(a)           Asset Coverage Ratio, measured monthly, but not at any time less
than (i) 0.90 to 1.00 for the September 2012 and October 2012 measuring periods,
(ii) 1.00 to 1.00 for the November 2012 and December 2012 measuring periods and
(iii) 1.15 to 1.00 for each measuring period thereafter beginning with the
January 2013 measuring period.

(b)           Operating Profit, measured monthly on a trailing 3 month basis, of
not less than (i) $600,000 for the September 2012 measuring period and (ii)
$1,000,000 for the October 2012 measuring period.

(c)           Debt Service Coverage Ratio, measured monthly on a trailing 3
month basis, of not less than (i) 1.10 to 1.00 for the November 2012 measuring
period, (ii) 1.25 to 1.00 for the December 2012 measuring period and (iii) 1.50
to 1.00 for each measuring period thereafter beginning with the January 2013
measuring period.”

ii)  The following defined terms are hereby added to Section 12.1 of the
Business Financing Agreement, or amended and restated, as follows:

“Fee in Lieu of Warrant” means a payment of a fee equal to $45,000.

“Second Modification Date” means October 11, 2012.

iii)           Lender hereby waives the Event of Default that occurred due to
Borrowers’ failure to comply with Section 4.15(b) of the Business Financing
Agreement, as in effect prior to the date hereof, for the July 2012 and August
2012 measuring periods.

 
 
 

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3.           CONSISTENT CHANGES.  The Existing Documents are each hereby amended
wherever necessary to reflect the changes described above.

4.           PAYMENT OF WAIVER FEE/EXPENSES. Borrowers shall pay Lender a fee in
the amount of $2,500 plus all out-of-pocket expenses.

5.           NO DEFENSES OF BORROWER/GENERAL RELEASE.  Each Borrower agrees
that, as of this date, it has no defenses against the obligations to pay any
amounts under the Indebtedness.  Each Borrower (each, a “Releasing Party”)
acknowledges that Lender would not enter into this Business Financing
Modification Agreement without Releasing Party’s assurance that it has no claims
against Lender or any of Lender’s officers, directors, employees or
agents.  Except for the obligations arising hereafter under this Business
Financing Modification Agreement, each Releasing Party releases Lender, and each
of Lender’s and entity’s officers, directors and employees from any known or
unknown claims that Releasing Party now has against Lender of any nature,
including any claims that Releasing Party, its successors, counsel, and advisors
may in the future discover they would have now had if they had known facts not
now known to them, whether founded in contract, in tort or pursuant to any other
theory of liability, including but not limited to any claims arising out of or
related to the Agreement or the transactions contemplated thereby.  Releasing
Party waives the provisions of California Civil Code section 1542, which states:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.
 
The provisions, waivers and releases set forth in this section are binding upon
each Releasing Party and its shareholders, agents, employees, assigns and
successors in interest.  The provisions, waivers and releases of this section
shall inure to the benefit of Lender and its agents, employees, officers,
directors, assigns and successors in interest.  The provisions of this section
shall survive payment in full of the Obligations, full performance of all the
terms of this Business Financing Modification Agreement and the Business
Financing Agreement, and/or Lender’s actions to exercise any remedy available
under the Agreement or otherwise.
 
6.           CONTINUING VALIDITY.  Each Borrower understands and agrees that in
modifying the existing Indebtedness, Lender is relying upon such Borrower’s
representations, warranties, and agreements, as set forth in the Existing
Documents.  Except as expressly modified pursuant to this Business Financing
Modification Agreement, the terms of the Existing Documents remain unchanged and
in full force and effect.  Lender’s agreement to modifications to the existing
Indebtedness pursuant to this Business Financing Modification Agreement in no
way shall obligate Lender to make any future modifications to the
Indebtedness.  Nothing in this Business Financing Modification Agreement shall
constitute a satisfaction of the Indebtedness.  It is the intention of Lender
and Borrower to retain as liable parties all makers and endorsers of Existing
Documents, unless the party is expressly released by Lender in writing.  No
maker, endorser, or guarantor will be released by virtue of this Business
Financing Modification Agreement.  The terms of this paragraph apply not only to
this Business Financing Modification Agreement, but also to any subsequent
Business Financing modification agreements.
 
7.           CONDITIONS.  The effectiveness of this Business Financing
Modification Agreement is conditioned upon (i) payment of all fees and expenses
due and owing in accordance with Section 4 hereof, (ii) delivery of a warrant or
payment of the Fee in Lieu of Warrant in accordance with Section 2.2(i) of the
Business Financing Agreement, as amended hereby and (iii) delivery by each
Borrower of updated Corporate Resolutions to Borrow.

9.           COUNTERSIGNATURE.  This Business Financing Modification Agreement
shall become effective only when executed by Lender and each Borrower.

 
 

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IN WITNESS WHEREOF, Borrowers and Lender have executed this Second Business
Financing Modification Agreement on the day and year above written.
 

BORROWERS:     LENDER:             INUVO, INC.     BRIDGE BANK, NATIONAL
ASSOCIATION                                 By: /s/ Wallace D. Ruiz     By: /s/
Sarah Schmidt   Name: Wallace D. Ruiz     Name: Sarah Schmidt   Title: Chief
Financial Officer     Title:
Vice President
 

 

BABYTOBEE, LLC                                       By: /s/ Wallace D. Ruiz    
      Name: Wallace D. Ruiz           Title: Chief Financial Officer      
 
 

 
KOWABUNGA MARKETING, INC.
                                      By: /s/ Wallace D. Ruiz           Name:
Wallace D. Ruiz           Title: Chief Financial Officer      
 
 

 

VERTRO, INC.                                       By: /s/ Wallace D. Ruiz      
    Name: Wallace D. Ruiz           Title: Chief Financial Officer      
 
 

 
ALOT, INC.
                                      By: /s/ Wallace D. Ruiz           Name:
Wallace D. Ruiz           Title: Chief Financial Officer      
 
 

 
[Signature Page to Second Business Financing Modification Agreement]