Attached files
LOAN AND SECURITY AGREEMENT
("Agreement")
This Agreement dated July 27, 2010, is an agreement between CRESTMARK
COMMERCIAL CAPITAL LENDING LLC, a Michigan limited liability company
("Crestmark"), and DATARAM CORPORATION, a New Jersey corporation
("Borrower"). In this Agreement, Crestmark and Borrower are collectively
the "Parties". The Parties have the addresses shown on the schedule
("Schedule") which is attached to this Agreement. These are the addresses
of the Parties for all purposes and may be changed by one party giving
notice to the other party in writing of the new address.
1. PURPOSE. The purpose of this Agreement, including the Schedule,
is to set forth the terms and conditions of the revolving loan from
Crestmark to Borrower ("Loan") and the obligations of Borrower. The
Schedule is part of this Agreement. The promissory note ("Note") to be
signed by Borrower, any guaranty(s), and any other documents now or
hereafter signed by any of the Parties in connection with this Agreement,
the Loan or any document issued by Crestmark or the bank holding the lockbox
("Lockbox Bank"), including subordination agreements or intercreditor
agreements, are also all part of this Agreement. All of the documents
together are referred to collectively as the "Loan Documents".
2. LOAN; LOAN ADVANCES.
A. Any disbursement of money or advance of credit by Crestmark,
including but not limited to amounts advanced for the payment of interest,
fees, expenses and amounts necessary to protect, maintain and preserve
Crestmark's Collateral under the Loan Documents ("Protective
Disbursements"), is referred to collectively as an "Advance". Whether
Crestmark makes an Advance is in Crestmark's sole discretion. If an Advance
is made, it will be made in accordance with the advance formula set forth in
the Schedule ("Advance Formula"); but not at any time to exceed the maximum
amount set forth on the Schedule ("Maximum Amount"). Crestmark may choose
to make Protective Disbursements in excess of the Maximum Amount or Advance
Formula in its sole discretion. Each time Crestmark makes an Advance,
including a Protective Disbursement, the Advance will be debited against an
account in Borrower's name on Crestmark's books ("Loan Account"), and each
payment will be credited against the Loan Account in the manner described in
this Agreement.
B. The total amount Borrower owes to Crestmark will be the
aggregate of the Advances made by Crestmark, the expenses and fees set forth
in the Schedule and any and all costs incurred by Crestmark (including
reasonable attorney's fees), and interest at the rate set forth in the Note
on all amounts advanced less the aggregate amount paid by Borrower with
respect to such Advances, expenses and fees, and costs (together with the
outstanding balance of all other obligations of Borrower under the Loan
Documents, the "Obligations").
C. Borrower must repay all Advances with respect to the Loan with
interest, which is due monthly as specified in the Note, along with all
other fees and expenses of Crestmark set forth herein or in the Schedule.
Crestmark may in its sole discretion collect any Obligations due Crestmark
by (i) directly applying any funds in the Lockbox Account, as defined in
paragraph 5 below, to the Obligations (ii) directly applying funds from any
reserve to the Obligations, (iii) collecting the Obligations directly from
Borrower; or (d) otherwise collecting the Obligations. Borrower understands
that all the Obligations are repayable at any time in full or in part upon
demand by Crestmark pursuant to the Note. Crestmark may make demand for
partial payments and such demand will not preclude Crestmark from demanding
payment in full at any time.
D. Borrower must comply with its representations, promises,
covenants and reporting requirements set forth in this Agreement, in the
Schedule and in the other Loan Documents. Borrower's failure to do any of
the foregoing is a default ("Default"). The demand nature of the Obligations
is not modified by reference to a Default in this Agreement or the other
Loan Documents and any reference to a Default is for the purpose of
permitting Crestmark to exercise it remedies for Default, including charging
interest at the Extra Rate provided in the Note.
E. The aggregate amount of all Advances, plus the expenses and
fees set forth in the Schedule, any and all costs incurred by Crestmark
(including reasonable attorney's fees), and interest at the rate set forth
in the Note on all amounts advanced (the "Loan Amount"), may not, at any
time, exceed the Maximum Amount" or the Advance Formula, and Borrower
understands that if at any time it should owe more to Crestmark than the
lesser of the Maximum Amount or the Advance Formula it must repay that
amount immediately, whether or not demand to repay the whole of the
Obligations has been made. Protective Disbursements must be immediately
repaid whether or not the lesser of the Maximum Amount or the Advance
Formula has been exceeded.
3. RESERVES. If Crestmark believes in its sole discretion that the
prospect for repayment of the Obligations is impaired or that its Collateral
margin is insufficient, Crestmark may establish cash reserves and credit
balances to protect its interests and the repayment of the Obligations. The
reserve may be established by reducing the Advance Formula to achieve the
target reserve level, withholding monies due Borrower from any payments
Crestmark receives, from a cash payment from Borrower or any other method
Crestmark chooses. Any money in a reserve account, whether or not it is a
cash reserve, will not earn interest for Borrower, and Crestmark may apply
the funds in the reserve account to reduce the Obligations at any time
Crestmark elects.
4. FEES AND EXPENSES. In connection with the Loan there are
several types of fees that may be charged and Borrower may be required to
maintain a minimum Loan balance. Such fees and requirements are set forth
in the Schedule. In addition, all out of pocket expenses of every kind
incurred by Crestmark in connection with the Loan, any Advance, collection
of the Obligations, inspection, and examination are to be paid by Borrower.
5. LOCKBOX. Borrower must immediately notify all persons who are
obligated on accounts generated by the Borrower with customers domiciled in
the United States and Canada that are not considered foreign account debtors
by Crestmark for purposes of determining whether an account is an Eligible
Account under this Agreement (such accounts, "Debtor Accounts" and such
persons, collectively, a "Debtor") to remit all payments due Borrower to the
lock box address or pursuant to the wire transfer or ACH instructions set
forth in the Schedule (the "Lockbox Account"). The remit to address on all
documents related to the Debtor Accounts, including invoices, purchase
orders, or contracts ("Documents") must be the Lockbox Account. At
Crestmark's request, all Documents must be marked by Borrower to show
assignment to Crestmark, and Borrower must notify each Debtor by mail that
the Debtor Account has been assigned to Crestmark and that all payments on
the Debtor Account, whether made by mail or electronically or otherwise must
be made payable to Borrower or Crestmark, at Crestmark's sole discretion, to
the Lockbox Account or other address provided by Crestmark in writing. The
language used in such notices shall be approved by Crestmark in writing.
Crestmark may at any time and from time to time, and at its sole discretion,
notify any Debtor or third party payee with respect to a Debtor Account to
make payments payable directly to Crestmark or to notify Debtor of the
assignment to Crestmark. All expenses for notification of each Debtor will
be paid by Borrower. Borrower shall not be required to deposit payments
received with respect to COD sales or accounts that are not Debtor Accounts
into the Lockbox Account.
If notwithstanding the notice to Debtors, Borrower receives any funds
from a Debtor, including any cash, checks, drafts or wire transfers from the
collection, enforcement, sale or other disposition of a Debtor Account,
whether derived in the ordinary course of business or not, Borrower shall
hold such funds in trust for Crestmark, shall not mix such funds received
with any other funds, and shall within two business days deposit such funds
in the Lockbox Account. Crestmark will have sole possession and control
over the Lockbox Account. The Lockbox Bank will process all deposits and
Borrower has no right to the Lockbox Account, it belongs to Crestmark.
Crestmark is the owner of all deposits in the Lockbox Account, and has no
duty as to collection or protection of funds as long as it is not grossly
negligent or commits actual fraud. All expenses plus any applicable
administration and servicing fees of the Lockbox Account will be paid by
Borrower.
6. LOAN ACCOUNT. All of the Obligations which are owed by Borrower
will be shown in the Loan Account and Borrower will receive a monthly
statement either by mail, electronically or via access to the Crestmark
online system at Crestmark's sole discretion. The statement is binding on
Borrower unless Borrower provides a written objection to Crestmark (which
may be provided by fax or e-mail) that is sent to Crestmark within twenty
(20) business days of the time the statement is provided or made available
to Borrower with notice to Borrower that such statement is available.
7. PAYMENTS. Should a check or other credit instrument not be
collected after Borrower has been given credit for such payment, then the
credit will be reversed and a fee charged at Crestmark's then standard
rate. Crestmark, at its sole discretion, may establish reserves as set
forth above or not apply a payment that it reasonably believes may be
returned unpaid for any reason or disgorged due to a preference claim or
garnishment, and in such event the Monthly Maintenance Fee (as defined in
the Schedule) will still be payable. In the event that any payment received
by Crestmark is sought to be recovered by or on behalf of the payer
(including a trustee in bankruptcy or assignee for the benefit of creditors),
then Borrower agrees to immediately reimburse Crestmark on demand for any
amount so recovered and all of Crestmark's expenses in connection with any
such proceeding, including reasonable attorneys fees. This provision shall
survive termination of this Agreement. Any payments received by Crestmark
shall be applied to the Obligations in whatever order Crestmark determines
in its reasonable discretion.
8. SECURITY INTEREST.
A. Borrower grants to Crestmark a security interest in all of its
assets, now existing or hereafter arising, wherever located including all
Accounts, Goods, Inventory, Equipment, Chattel Paper, Instruments,
Investment Property, specifically identified Commercial Tort Claims,
Documents, Deposit Accounts, Letter of Credit Rights, General Intangibles,
Contract Rights, customer lists, furniture and fixtures, books and records
and supporting obligations for any of the foregoing, and all Proceeds of the
foregoing (the "Collateral"), to secure repayment of the Obligations
("Security Interest"). The Collateral also includes all monies on deposit
with Crestmark, or on deposit in the Lockbox Account. All capitalized terms
used in this Section 8A which are not otherwise defined shall have the
meanings assigned to them in the Uniform Commercial Code as adopted in the
State of Michigan (the "UCC"). Without limiting the forgoing, "Accounts"
will also mean and include any and all other forms of obligations now owed
or hereafter arising or acquired by the Borrower evidencing any obligation
for payment for goods of any kind, nature, or description sold or leased or
services rendered, and all proceeds of any of the forgoing.
B. Borrower gives Crestmark all of the rights of a secured party
under the UCC. Borrower grants Crestmark the authority to file all
appropriate documentation for Crestmark to perfect its security interest in
the Collateral, including a UCC-1 financing statement listing the Collateral
as "All assets of the Debtor, now existing and hereafter arising, wherever
located," or similar terms, as well as UCC-3 amendments as may be required
from time to time. All expenses of Crestmark relating to searching, filing
or protecting the Security Interest are part of the Obligations.
C. The Security Interest gives Crestmark rights with respect to
the Collateral and the Security Interest and this Agreement imposes duties
upon Borrower which relate to the Collateral. Some of the rights and duties
are: (i) the right of Crestmark at any time after a Default that is not
cured within the applicable cure period to notify any persons who may hold
any part of the Collateral, such as Account Debtors and other debtors, of
Crestmark's Security Interest. Borrower understands that Crestmark may
verify Accounts with the Account Debtors; (ii) Borrower, after a default
which is not cured within the applicable cure period, must cooperate with
Crestmark in obtaining control of any Collateral in the possession of
third persons, particularly Collateral consisting of deposit accounts,
investment property, letter of credit rights or other Collateral which is
evidenced by electronic entries; (iii) except for the right of Borrower to
(I) sell its inventory in the ordinary course of business, (II) provide
samples of its products to customers on a trial basis, and (III) move its
inventory, equipment, and other assets between its business locations,
Borrower shall not sell or transfer any of the Collateral or grant any other
security interest in the Collateral, except as Crestmark may specifically
agree to in writing. Borrower remains liable to perform all of its
obligations with respect to the Collateral such as the recognition of any
warranties in inventory sold and Crestmark is under no responsibility to
perform any of the obligations of Borrower; and (iv) Borrower must notify
Crestmark immediately if it knows that any Account Debtor disputes an
Account whether or not such disputes are deemed valid by Borrower.
9. POWER OF ATTORNEY. Borrower irrevocably appoints Crestmark,
or any person(s) designated by Crestmark, as its attorney-in-fact, which
appointment is coupled with an interest and shall remain in full force and
effect until all Obligations of Borrower to Crestmark have been fully
satisfied and discharged, with full power, at Borrower's sole expense, to
exercise at any time in Crestmark's reasonable discretion all or any of the
following powers:
A. Receive, take, endorse, assign, deliver, accept and deposit, in
the name of Crestmark or Borrower, any and all cash, checks, commercial
paper, drafts, remittances and other instruments and documents relating to
the Collateral or the proceeds thereof.
B. Change Borrower's address on all invoices and statements of
Account mailed or to be mailed to Borrower's customers and to substitute
thereon the address designated by Crestmark, to place legends on all
invoices and statements of Account mailed or to be mailed to Borrower's
customers, and to receive and open all mail addressed to Borrower, or to
Borrower's trade name at Crestmark's address, or any other designated
address.
C. Upon and after the occurrence of a Default, to change the
address for delivery of Borrower's mail to Crestmark's or an address
designated by Crestmark. Borrower specifically authorizes Crestmark to sign
any forms on behalf of Borrower to affect this change with the United States
Postal Service or any third party and requests such change to be accepted.
D. Upon and after the occurrence of a Default that is not cured
within the applicable cure period, to take or bring, in the name of
Crestmark or Borrower, all steps, actions, suits or proceedings deemed by
Crestmark necessary or desirable to effect collection of or other
realization upon any Collateral.
E. Execute on behalf of Borrower any UCC-l and/or UCC-3 Financing
Statement(s) and/or any notices or other documents necessary or desirable
to carry out the purpose and intent of this Agreement, and to do any and all
things reasonably necessary and proper to carry out the purpose and intent
of this Agreement.
F. Upon and after the occurrence of a Default that is not cured
within the applicable cure period, to transfer any lockboxes belonging to
Borrower to Crestmark at Crestmark's sole discretion.
G. Upon and after the occurrence of a Default that is not cured
within the applicable cure period, to endorse and take any action with
respect to bills of lading covering any inventory.
H. Upon and after a Default, or at any time in the event that
Borrower fails to do so within a reasonable time, execute, file and serve,
in its own name or in the name of Borrower, mechanics lien or similar
notices, or claims under any payment or performance bond for the benefit
of Borrower.
I. Upon and after a Default, or at any time in the event that
Borrower fails to do so within a reasonable time, pay any sums necessary to
discharge any lien or encumbrance on the Collateral, which sums shall be
included as Obligations hereunder, and which sums shall accrue interest at
the Extra Rate until paid in full.
10. REPRESENTATIONS. Borrower makes the following representations
and warranties to Crestmark and such representations and warranties must be
true at all times until the Obligations are paid in full. If Borrower
learns that a representation and warranty once made is no longer true,
it has the duty to immediately notify Crestmark in writing:
A. Borrower is in good standing under the laws of the state of its
organization and is authorized to conduct business in any state that in
conducts business. Borrower has the power and authority to enter into this
Agreement, and the persons signing this Agreement and all persons who sign
any documents with Crestmark have the appropriate authority. Borrower's
organization identification number, state of organization, and addresses
where it conducts business are as shown on the Schedule.
B. Borrower's entry into the Loan Documents do not violate any
agreement which Borrower has or which binds Borrower.
C. The Loan Documents are fully enforceable against Borrower and
the Collateral.
D. Except as disclosed on the Schedule, there are no litigation
or criminal charges pending or threatened against Borrower or Guarantor and
neither Borrower nor Guarantor are in default of any order or judgment of
any court or any governmental agency of any kind. There are no unsatisfied
liens or judgments pending against Borrower in any jurisdiction except as
shown on the Schedule.
E. The financial information furnished by Borrower to Crestmark
has been prepared in accordance with generally accepted accounting
principles, all financial statements are true and correct in all material
respects, and any projections of the business operations of Borrower that
have been given or will be given to Crestmark in the future will be based
upon Borrower's reasonable assumptions and estimates.
F. Except for inventory that has been consigned to Borrower which
is disclosed on Schedule 10F and disclosed after the date of this Agreement
to Crestmark in writing, Borrower is the owner of all of the Collateral and
there are no other liens or claims against the Collateral, except the
Security Interest of Crestmark or as shown on the Schedule.
G. All of the Collateral is personal property and none of the
Collateral will be permanently affixed to real estate.
H. Borrower has filed and will file all federal, state, local and
foreign tax returns that it is required to file and has paid and will pay
all taxes and all other governmental charges as they become due.
I. Borrower is able to pay its debts as they become due and has
sufficient capital to carry on its business. Borrower's obligations under
this Agreement and the Loan Documents, including the obligation to repay the
Loan and the grant of the Security Interest, do not render Borrower
insolvent.
J. Borrower only uses the fictitious names, d/b/a's, tradenames
and tradestyles set forth on the Schedule (collectively the "Tradenames"),
and Borrower certifies that all sales and any and all business done in the
name of the Tradenames are the sales and business of Borrower. Any and all
checks, remittances or other payments received in the name of any of the
Tradenames are Borrower's sole and exclusive property, and are subject to
Crestmark's security interest hereunder. Any and all authority given to
Crestmark by Borrower in this Agreement or elsewhere to endorse Borrower's
name on any checks, negotiable instruments or other remittances extends with
equal and full force and effect to any checks, negotiable instruments, and
other remittances received in the name of any Tradename.
K. All Accounts assigned to Crestmark by Borrower are and will at
all times be bonafide accounts arising from the sale of inventory or
providing services, and are not subject to discounts, deductions,
allowances, contra items, offset or counterclaim and are free and clear of
all encumbrances of any kind whatsoever, except (i) as disclosed to
Crestmark in writing, and (ii) if such discount, deduction, allowance,
contra item, offset, or counterclaim exceeds the greater of (A) $20,000, or
(B) 20% of the outstanding face amount of such Account, as approved by
Crestmark in writing. Notwithstanding the foregoing, Borrower shall not be
permitted to provide or allow any discount, deduction, allowance, contra
item, offset, or counterclaim with respect to an Account if doing so would
cause Borrower to be in default pursuant to Section 11(J) of this Agreement.
L. Borrower's assignment of any Accounts to Crestmark pursuant to
this Agreement will not at any time violate any federal, state and/or local
law, rule or regulation, court or other governmental order or decree or
terms of any contract relating to such Accounts.
M. Borrower possesses all necessary trademarks, trade names,
copyrights, patents, patent rights and licenses to conduct its business as
now operated, without any known conflict with any trademarks, trade names,
copyrights, patents and license rights of any other person or entity.
N. Borrower's legal name as of the date hereof as it appears in
its official filing with its state of organization is as set forth in the
opening paragraph of this Agreement. Borrower has not organized another
entity or Tradename using Borrower's name or Tradename as set forth herein
in any other jurisdiction.
O. As to all of Borrower's Inventory and Equipment:
i. The Inventory and Equipment are currently located only at the
locations identified on the Schedule, or such other locations as consented
to by Crestmark in writing;
ii. All Inventory is now and at all times hereafter shall be of good
and merchantable quality, free from defects, except as disclosed to
Crestmark in writing;
iii. The Inventory and Equipment are and shall remain free from all
liens, claims, encumbrances, and security interests (except as held by
Crestmark, and except as identified on the Schedule).
iv. The Inventory is not now stored with a bailee, warehouseman or
similar party unless such party has entered into a waiver letter in form
satisfactory to Crestmark.
11. BORROWER'S PROMISES. Borrower makes the following promises to
Crestmark and these promises are effective until the Obligations are fully
paid:
A. To pay all Obligations when due and perform all terms,
conditions and obligations of the Loan Documents.
B. To permit Crestmark, or its representatives, upon prior written
notice to Borrower, reasonable access to the Collateral on Borrower's
premises and to Borrower's computer systems, books of account and financial
records. Borrower will pay the cost of Field Examinations as specified in
the Schedule.
C. To notify Crestmark promptly of any litigation, administrative
or tax proceeding or other action threatened or instituted against Borrower
or Guarantor or its property, or of any other material matter which may
adversely affect Borrower's financial condition.
D. To pay when due all taxes, assessments and governmental
charges, provided that Borrower has the right to contest the same as long as
any such proceedings will not result in a lien on any Collateral or it has a
cash reserve with Crestmark in an amount as determined by Crestmark in its
sole discretion.
E. To comply with the Financial Covenants described in the
Schedule (if applicable).
F. Borrower will maintain such insurance covering Borrower's
business and/or the property of the Account Debtors as is customary and
adequate for businesses similar to the business of Borrower in an amount as
is sufficient to compensate for reasonably foreseeable loss, and promptly
pay all premiums with respect to the policies covering such insurance.
Further, Borrower shall have Crestmark named as additional insured for such
insurance.
G. To comply with all laws, ordinances and regulations or other
requirements of any governmental authority or agency applicable to
Borrower's business.
H. To maintain and preserve all Collateral in good repair, working
order and condition, and with respect to accounts, pursue collections
thereof.
I. To provide Crestmark with evidence of ownership of any
Collateral upon the request of Crestmark.
J. To maintain a Loan Amount balance which shall not exceed the
sum of Eligible Collateral times the corresponding Advance Rate.
12. NEGATIVE COVENANTS. Borrower agrees until the Obligations are
paid in full, it will not:
A. Change its state of organization or its name, or move its
executive office or at any time adopt any assumed name without giving
Crestmark at least 15 days prior written notice.
B. Declare or pay any dividend or make any other distribution with
regard to its equity or purchase or retire any of its equity without
Crestmark's prior written consent, provided if it is taxed as an S
Corporation or other "pass through" entity, Borrower may prior to a Default
distribute profits to its equity holders in an amount necessary to enable
such holders to pay personal, state and federal taxes directly attributable
to the profits earned by Borrower for such year.
C. Make any loan (excluding trade credit provided to customers
in the ordinary course of business) or guaranty or assume any obligation or
liability, whether as borrower, guarantor, surety, indemnitor or otherwise
(a "Borrower Obligation") (i) that would result in or create a Default, or
(ii) that together with all other existing Borrower Obligations would exceed
the "Borrower Obligation Threshold" set forth in the Schedule, without
Crestmark's prior written consent.
D. Enter into any transaction with its equity holders or any
affiliates of Borrower except on terms at least as favorable as would be
usual and customary in similar transactions if the person with whom the
transaction is entered into was not related to Borrower.
E. Release, redeem, purchase, or acquire any of its equity
interests without the prior written consent of Crestmark.
F. Default in the payment of any debt to any other person.
G. Suffer or permit any judgment, decree or order not fully
covered by insurance to be entered against Borrower or a Guarantor, or
permit or suffer any warrant or attachment to be filed against Borrower,
any Guarantor, or against any property or asset of Borrower or Guarantor.
H. Sell any of the Collateral outside the normal course of its
business without the prior written consent of Crestmark; provided, however,
Borrower shall be permitted to sell furniture, fixtures, and equipment
outside the normal course of its business without Crestmark's prior written
consent provided that the aggregate total of any such sales does not exceed
$200,000 in any fiscal year.
I. Purchase the stock or assets of any other entity without the
prior written consent of Crestmark.
13. FINANCIAL REPORTS. Borrower promises that until the Obligations
are fully paid and this Agreement is terminated, it will keep its books and
records in accordance with GAAP (as defined in the Schedule) and Crestmark
will have the right at any time to verify any of the Collateral,
documentation or books and records of Borrower in whatever manner and as
often as Crestmark reasonably deems necessary. Borrower will permit
Crestmark, or its representatives, access to the Collateral and Borrower's
premises and to Borrower's computer systems, books of account and financial
records. Borrower will furnish to Crestmark the financial reports
identified on the Schedule, certified in the manner specified in the
Schedule. All financial reports will be prepared in accordance with GAAP
and will be true and accurate in all material respects.
14. CRESTMARK'S REMEDIES. Notwithstanding anything in this Agreement
to the contrary, Crestmark shall refrain from exercising its rights and
remedies hereunder with respect to a Default until the expiration of the
following cure periods: Borrower shall have (a) five (5) days after
Borrower's receipt of written notice of the occurrence of a Default
involving the payment of money to Crestmark to cure any such default, and
(b) ten (10) days after Borrower's receipt of written notice of the
occurrence of a Default that does not involve the payment of money to
Crestmark to cure any such default; provided, however, Borrower shall not
have the right to cure any default arising from any fraud or other
intentional misconduct committed by Borrower. Crestmark has all the
remedies available at law or in equity (including those under the UCC) in
the event of a Default that is not cured within the applicable cure period
or if Borrower fails to pay the Obligations on demand, including but not
limited to the following: to charge the Extra Rate; to notify Account
Debtors to make the payments directly to Crestmark; to settle or compromise
any disputed Account, sue on any Account and make any agreement to deal with
the accounts as if it were the owner; to offset any of Borrower's or
Guarantor's funds under the control of Crestmark against the Obligations;
and to require Borrower to gather up the Collateral and make it available to
Crestmark for Crestmark to conduct public or private UCC foreclosure sales.
Subject to Borrower's rights in and to such intellectual property, Borrower
grants to Crestmark a license or other right to use, without charge,
Borrower's labels, patents, copyrights, trademarks, rights of use of any
name, trade secrets, tradenames and advertising materials, or any property
of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale and selling any Collateral, and
Borrower's rights under all licenses and franchise agreements shall inure to
Crestmark's benefit. If Crestmark should proceed against the Collateral and
sell any of the Collateral on credit, Borrower will be credited on the
Obligations only with the amount actually received by Crestmark and Borrower
waives any and all provisions as to notice or a particular method of sale of
any of the Collateral. Borrower will pay all expenses in connection with
the assembly or sale of the Collateral. Crestmark does not have to incur
its own expenses in realizing upon the Collateral, but all the expenses are
for the account of Borrower. Borrower recognizes that at no time is
Crestmark its agent in dealing with the Collateral, but Crestmark acts only
in its own interest.
15. CUMULATIVE RIGHTS. Crestmark's rights and remedies under this
Agreement and all other agreements shall be cumulative. Crestmark shall
have all other rights and remedies not inconsistent herewith as provided
under the UCC, by law, or in equity. No exercise by Crestmark of one right
or remedy shall be deemed an election, and no waiver by Crestmark of any
Default on Borrower's part shall be deemed a continuing waiver. No delay by
Crestmark shall constitute a waiver, election or acquiescence by it.
16. LENDER ACTIONS. To the extent applicable law may impose duties
on Crestmark to exercise remedies in a commercially reasonable manner,
Borrower agrees that it is not commercially unreasonable for Crestmark: to
fail to exercise remedies against any Collateral or any particular Account
Debtor; to proceed against Account Debtors either directly or through
collection agencies; to advertise disposition of Collateral through
publications or media of general circulation; to hire professional
auctioneers to dispose of Collateral; to dispose of Collateral in wholesale
or retail markets; to disclaim warranties with respect to Collateral; or to
obtain services of attorneys or other professionals. The foregoing is not
an exhaustive list and nothing contained in the foregoing shall be construed
to grant any rights to Borrower or to impose any duties on Crestmark that
would not have been granted or imposed by this Agreement or by applicable
law in the absence of this Section 16. Borrower agrees that under no
circumstances is Crestmark the agent or representative of Borrower.
17. APPLICATION OF PROCEEDS. Once collection efforts are commenced
by Crestmark, any proceeds of sale or disposition of Collateral may be
applied by Crestmark first to expenses authorized by this Agreement,
including Crestmark's reasonable attorneys' fees, which Borrower must pay,
and the balance to payment of the Obligations in such manner as Crestmark
may elect. Borrower and Guarantor remain liable for any deficiency.
18. NOTICES. Any notice required or permitted hereunder to the
parties hereto will be deemed to have been duly given only if in writing and
delivered by (a) certified U.S. mail, return receipt requested, postage
prepaid, (b) a national overnight delivery service that provides a delivery
receipt, with any service or delivery fee prepaid, (c) facsimile or e-mail
transmission with confirmation of receipt, or (d) via hand delivery, to the
address of the receiving party as set forth on the Schedule or such other
address as may be specified by such party in a notice delivered to the other
party in accordance with this Section. Notices shall be deemed delivered
when received by the party being notified.
19. MISCELLANEOUS PROVISIONS.
A. This Agreement is binding upon and is for the benefit of
Borrower and Crestmark, and their respective successors and assigns.
However, under no circumstances may Borrower assign this Agreement or its
rights and duties hereunder. Crestmark may assign this Agreement and its
rights under the Loan Documents and Borrower will make payments to any such
assignee if so directed.
B. Crestmark has the right at any time to assign, transfer,
negotiate or sell participations in this Agreement or the Obligations or the
rights of Crestmark hereunder. In connection with any assignment, and
provided that any participant is subject to a commercially reasonable
non-disclosure agreement which includes a provision that discloses to such
participant that Borrower is a publicly traded corporation and that any
information disclosed by Crestmark to such participant may be material
non-public information. Borrower consents to disclosure of any and all
books, records, files, Loan Documents and all other documents in the
possession or under the control of Crestmark.
C. No delay or failure of Crestmark in exercising any right or
remedy will affect such right or remedy. No delay or failure of Crestmark
to demand strict adherence to the terms of this Agreement will be deemed to
waive Crestmark's rights to demand such adherence at any time in the future.
D. The term "including" means "including, without limitation", and
the term "includes" means "includes, without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall."
The definitions of terms in this Agreement shall apply equally to the
singular and plural forms of the terms defined.
E. This Agreement and the other Loan Documents will be interpreted
and determined under the laws of the State of Michigan without any regard to
any conflict of laws provisions.
F. Borrower, at Crestmark's request, will make, execute and
acknowledge any and all further instruments or agreements necessary to carry
out the intent of this Agreement and the other Loan Documents.
G. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if all
signatures were upon the same instrument. Delivery of an executed
counterpart of the signature page to this Agreement by facsimile or
electronic mail shall be effective as delivery of a manually executed
counterpart of this Agreement, and any party delivering such an executed
counterpart of the signature page to this Agreement by facsimile or
electronic mail to any other party shall thereafter also promptly deliver
a manually executed counterpart of this Agreement to such other party,
provided that the failure to deliver such manually executed counterpart
shall not affect the validity, enforceability, or binding effect of this
Agreement.
H. Neither Crestmark nor its affiliates directors, officers,
agents, attorneys or employees are liable to Borrower or Guarantor or
affiliates for any action taken or omitted by it or any of them under the
Loan Documents except for such liability as may be imposed by law for gross
negligence or actual fraud, and no claim shall be made by Borrower or
Guarantor or any of Borrower's affiliated, directors, officers, agents,
employees for any special or consequential damages or punitive damages
arising out of, or related to the Loan Documents or the transactions
between the Parties.
I. This Agreement and the other Loan Documents represent the
complete Agreement between the parties with respect to the subject matter of
this Agreement, and there are no promises, undertakings, representations or
warranties by Crestmark relative to the subject matter of this Agreement not
expressly set forth in this Agreement or the other Loan Documents. This
Agreement and the other Loan Documents may be amended only in writing.
J. If any provision of this Agreement is in conflict with any law
or statute or is otherwise unenforceable, then the provision will be deemed
null and void only to the extent of such provision and the provision will be
deemed severable and the remainder of this Agreement shall be in full force
and effect.
K. Any payment made to Crestmark by either Borrower or Guarantor
which is subsequently invalidated, declared fraudulent or preferential or
otherwise set aside under any bankruptcy, state, federal or equitable law,
then to the extent of such invalidity such payment will be deemed not to
have been made and the obligation will continue in full force and effect.
This provision shall survive termination of this Agreement.
L. USA Patriot Act Notification - The following notification is
provided to Borrower pursuant to Section 3265 of the USA Patriot Act of
2001, 31 U.S.C. Section 5318:
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To
help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain,
verify, and record information that identifies each person or entity
that opens an account, including any deposit account, treasury
management account, loan or other extension of credit. We may ask for
the name, address, date of birth, and other information that will allow
us to identify all Borrowers, principals and owners. We may also ask
to see your driver's license or other identifying documents.
20. INDEMNIFICATION. Borrower hereby agrees to indemnify, defend
and hold Crestmark and its executive committees, parent affiliates,
subsidiaries, agents, directors, officers, participants, employees, agents
and their successors and assigns (collectively "Indemnified Parties")
harmless against any and all liabilities of any kind, nature or description
and damages whether they are direct, indirect or consequential, including
attorney's fees and other professionals and experts incurred or suffered
directly or indirectly by Indemnified Parties or asserted against
Indemnified Parties by anyone whosoever, including Borrower, which arise out
of the Loan Documents or the relationship and transaction between the
Parties and which does not involve gross negligence or willful misconduct
of such Indemnified Party. This provision shall survive the termination of
this Agreement.
21. JOINT AND SEVERAL OBLIGATIONS. If more than one person or
entity is named as Borrower in this Agreement, all Obligations,
representations, warranties, covenants and indemnities of Borrower set forth
herein and in the other Loan Documents shall be the joint and several
obligations of such persons and/or entities.
22. JURISDICTION. BORROWER AND GUARANTOR AGREE THAT ANY ACTION TO
ENFORCE BORROWER'S OR GUARANTOR'S OBLIGATIONS TO CRESTMARK SHALL BE
PROSECUTED EITHER IN THE CIRCUIT COURT OF OAKLAND COUNTY MICHIGAN OR THE
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN (UNLESS
CRESTMARK, IN ITS SOLE DISCRETION, ELECTS SOME OTHER JURISDICTION), AND
BORROWER AND GUARANTOR SUBMIT TO THE JURISDICTION OF ANY SUCH COURT SELECTED
BY CRESTMARK. BORROWER AND GUARANTOR WAIVE ANY AND ALL RIGHTS TO CONTEST
THE JURISDICTION AND VENUE OF ANY ACTION BROUGHT IN THIS MATTER AND
BORROWER AND GUARANTOR MAY BRING ANY ACTION AGAINST CRESTMARK ONLY IN THE
CIRCUIT COURT FOR THE COUNTY OF OAKLAND OR THE FEDERAL COURT OR THE UNITED
STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN.
23. WAIVER. ALL PARTIES, INCLUDING BORROWER AND GUARANTOR EACH
KNOWINGLY AND VOLUNTARILY WAIVE ANY CONSTITUTIONAL RIGHT TO A TRIAL BY JURY
WITH RESPECT TO ANY CLAIM, DISPUTE OR CONFLICT BETWEEN THE PARTIES OR UNDER
THE LOAN DOCUMENTS AND AGREE THAT ANY LITIGATION SHALL BE HEARD BY A COURT
OF COMPETENT JURISDICTION SITTING WITHOUT A JURY. BORROWER AND GUARANTOR
ACKNOWLEDGE THAT THEY HAVE HAD THE OPPORTUNITY TO REVIEW THE EFFECT OF THIS
PROVISION WITH COUNSEL OF THEIR CHOICE.
24. RELEASE. BORROWER AND GUARANTOR RELEASE AND FOREVER DISCHARGE
CRESTMARK, ITS AFFILIATES, OFFICERS, AGENTS, EMPLOYEES AND DIRECTORS FROM
ANY AND ALL CLAIMS OF ANY KIND WHATSOEVER FROM THE BEGINNING OF TIME TO
DATE OF THIS AGREEMENT.
25. CONFIDENTIAL INFORMATION. Crestmark shall keep any proprietary
or confidential information that it receives from or obtains regarding
Borrower under or in connection with this Agreement strictly confidential
using the procedures that such party uses to protect its own confidential
or proprietary information of a similar nature which procedures shall, in
all cases, provide for at least a reasonable standard of care with respect
to the protection of such information.
The parties have executed this Agreement as of the date and year first
written above.
CRESTMARK: BORROWER:
_________ ________
CRESTMARK COMMERCIAL DATARAM CORPORATION
CAPITAL LENDING LLC
By: /s/ Patrick M. Haney By: /s/ John H. Freeman
_______________________________ __________________________
Patrick M. Haney, Group President
Print Name: John H. Freeman
__________________________
Title: President & CEO
__________________________
