Exhibit 10.7

 

**LOAN AND SECURITY AGREEMENT**

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**THE FOLLOWING TERMS ANDCONDITIONS, INCLUDING THE ARBITRATION PROVISION SET FORTH IN PARAGRAPH 31, GOVERN THIS AGREEMENT.**

 

THIS LOANAND SECURITY AGREEMENT ("Agreement")is made this 5th day of April 2013, by SMALLBUSINESS FINANCIAL SOLUTIONS, LLC,a Delaware limited liability company ("Lender")and BORROWER (as identified in the Business Loan Key Terms Supplement ("Borrower").

 

NOW,THEREFORE, Borrowerand Lender hereby agree as follows:

 

**1. INTRODUCTION**.This Business Loan and Security Agreement ("Agreement")governs your business loan ("Loan")from Lender that you applied for by submitting the application ("Application")to Lender. Please read it and keep it for your reference. In this Agreement,the words "you,""your" and"Borrower"means each individual and/or entity that signs this Agreement or on whose behalf this Agreementis signed. "We,""ours" and "Lender" means Small Business Financial Solutions, LLC."Parties" shall mean all entities and/or individuals that sign this Agreement.

 

**2. EFFECTIVEDATE**. This Agreement begins on the date we accept this Agreement in Maryland. Borrower understands and agrees that Lender maypostpone, without penalty,the disbursement of amounts to Borrower until all required security interests have been perfected,Lender has received all required personal guarantees or other documentation,and at least one payment on the loan has been processed and cleared by Lender.

 

**3. LOAN FORCOMMERCIAL PURPOSES ONLY.** The proceeds of the requested Loan may be used for business purposes,and not for personal, familyor household purposes. Borrower understands that Borrower'sagreement not to use the Loan proceeds for personal, family or household purposes means that certain important duties imposed uponentities making loans for consumer purposes, and certain important rights conferred upon consumers,pursuant to federal or state law will not apply to the Loan or the Agreement. Borrower agreesthat a breach by Borrower of the provisions of this section will not affect Lender'sright to: (i) enforce Borrower's promise to pay for allamounts owed under this Agreement, regardless of the purposefor which the Loan is in fact obtained; or (ii) use anyremedy legally available to Lender, even if that remedy would not have been available had the Loan beenmade for consumer purposes.

 

**4. DISBURSEMENTOF LOAN PROCEEDS.** If Borrower applied and was approved for a Loan by Lender, Borrower'sLoan will be disbursed, after Borrower signs this Agreement,Lender files the appropriate security interest filings,Lender approves the Loan, andLender processes at least one payment by Borrower through an electronic debit to Borrower'sbank account.

 

**5. PROMISETO PAY.** Borrower agrees to pay Lender the amount of the Loan shown in the accompanying Business Loan Key Terms Supplement andACH Authorization ("Business Loan Key Terms Supplement")in accordance with the payment schedule shown in the Business Loan Key Terms Supplement. Borrower authorizes Lender to collectrequired payments through electronic debits ("ACH") as provided in the accompanying Business Loan Key Terms Supplement.

 

**6.ALTERNATIVE PAYMENT METHODS.** If Borrower knows that for any reason Lender will be unable to process an ACHpayment, Borrower must promptly mail or deliver acheck to Lender in the amount of the missed payment or, ifoffered by Lender, make the missed payment by anypay-by-phone or on-line service that Lender may make available from time to time. If Borrower elects to send payments bypostal mail, Borrower agrees to send such payments toSmall Business Financial Solutions, LLC, 7315Wisconsin Ave., Suite 350, Bethesda,MD, 20814, Attn: Accounting. All such payments mustbe made in good funds by check, moneyorder, wire transfer, automatic transfer from anaccount at an institution offering such service, orother instrument in U.S. Dollars. Borrowerunderstands and agrees that payments made at any other address than as specified herein may result in a delay in processingand/or crediting. If Borrower makes an alternativepayment on Borrower's Loan by mail or by any pay-by-phone or on-line service that Lender makes available, Lender may treatsuch payment as an additional payment and continue to process Borrower's scheduled ACHs.

 

**7. APPLICATIONOF PAYMENTS**. Subject to applicable law, Lender reservesthe right to apply payments to Borrower's Loan in any manner Lender chooses in Lender'ssole discretion.

 

**8. POSTDATEDCHECKS, RESTRICTED ENDORSEMENT CHECKS AND OTHER DISPUTED OR QUALIFIED PAYMENTS.** Lender can accept late,postdated or partial payments without losing any of Lender'srights under this Agreement.

 

 

 

(Apostdated check is a check dated later than the day it wasactually presented for payment.) Lender is under no obligationto hold a postdated checkand Lender reserves the right to process every itempresented as if dated the same date received by Lenderunless Borrower gives Lender adequate notice anda reasonable opportunity to act onit. Except where such notice and opportunity is given,Borrower may not hold Lender liable for depositing any postdated check.Borrower agrees not to send Lender partial payments marked "paidin full," "without recourse,"or similar language. If Borrower sends sucha payment, Lender may accept it without losingany of Lender's rights under this Agreement. Allnotices and written communications concerning postdatedchecks, restricted endorsementchecks (including any check or other payment instrument that indicates that the payment constitutes"payment in full" of theamount owed or that is tendered withother conditions or limitationsor as full satisfaction of a disputed amount) or any otherdisputed, nonconformingor qualified payments,must be mailed or deliveredto Small Business Financial Solutions,LLC, 7316 WisconsinAve., Suite 350,Bethesda, MD 20814,Attn: C.E.O.

 

**9.PREPAYMENT.** Borrower may prepay Borrower's Loan inwhole by paying Lender the sum total of the payments describedin the payment scheduleset forth in Borrower'sBusiness Loan KeyTerms Supplement lessthe amount of any Loan payments made prior tosuch prepayment. Any prepaymentwill not reduce the total amount owed and there is nodiscount for prepayment.

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**10.****SECURITY INTEREST**.Borrower hereby grants to Lender, the secured party hereunder,a continuing security interest in andto any and all "Collateral" as described below to secure payment and performanceof all debts, liabilities andobligations of Borrower to Lender hereunder and also anyand all other debts,liabilities and obligations ofBorrower to Lender of every kind and description, director indirect, absoluteor contingent, primaryor secondary , dueor to become due, now existing or hereafter arising, whetheror not such obligationsare related to the Loan describedin this Agreement, byclass, or kind, or whether or notcontemplated by the Parties at the time of the grantingof this security interest,regardless of howthey arise or by what agreement or instrument they maybe evidenced or whether evidenced by anyagreement or instrument, andincludes obligations to perform acts and refrain from taking actionas well as obligationsto pay money including, withoutlimitation, all interest,other fees and expenses (all hereinafter called"Obligations"). The Collateral includes thefollowing property that Borrower now owns or shall acquireor create immediately upon the acquisition orcreation thereof: (i) any and all amounts owingto Borrower now or in the future from any merchantprocessor(s) for charges made by customers ofBorrower via any paymentcard devices (i.e. credit card, debit card,charge card, etc.);and (ii) all other tangible andintangible personal property, including, butnot limited to: (a) inventory, (b) equipment, (c)investment property , includingcertificated and uncertificated securities, securitiesaccounts, security entitlements,commodity contracts and commodity accounts,(d) instruments, including promissory notes (e)chattel paper, includingtangible chattel paper and electronic chattel paper,(f) documents, (g)letter of credit rights,(h) accounts, including health-care insurance receivablesand credit card receivables,(i) deposit accounts,G) commercial tort claims, (k)general intangibles, includingpayment intangibles andsoftware and (l)as-extracted collateral as suchterms may from time to time be defined in the Uniform Commercial Code.The security interest Borrower grantsincludes all accessions, attachments,accessories, parts,supplies and replacements for the Collateral,all products, proceeds and collections thereof and all records and data relating thereto.Lender disclaims any securityinterest in householdgoods in which Lender is forbidden by law from takinga security interest.

 

**11.PROTECTING THE SECURITY INTEREST.** Borrower agrees thatLender may file any financing statement, lien entry formor other document Lender requires in order toperfect, amend or continue Lender's security interest in the Collateraland Borrower agrees tocooperate with Lenderas may be necessary to accomplish saidfiling and to do whatever Lender deems necessary to protectLender's security interest in the Collateral.

 

**12.LOCATION OF COLLATERAL; TRANSACTIONS INVOLVING COLLATERAL**. Unless Lender hasagreed otherwise in writing,Borrower agrees and warrants that:(i) all Collateral (orrecords of the Collateralin the case of accounts,chattel paper and general intangibles)shall be located at Borrower's address asshown in the Application,(ii) except for inventory sold or accountscollected in the ordinary course ofBorrower's business, Borrower shallnot sell, offerto sell, or otherwisetransfer or dispose of theCollateral, (iii)no one else has anyinterest in or claim against theCollateral that Borrower has not alreadytold Lender about, (iv) Borrowershall not pledge, mortgage,encumber or otherwise permit the Collateralto be subject to any lien, security interest, encumbrance or charge,other than the security interestprovided for in this Agreement and/or the merchant processingagreement; and (v)Borrower shall not sell, offer to sell, or otherwisetransfer or dispose of the Collateral for less thanthe fair market value thereof. Borrower shall defendLender's rights inthe Collateral againstthe claims and demands of all other persons. All proceedsfrom any unauthorized disposition of the Collateralshall be held in trustfor Lender, shall notbe co-mingled with any other funds and shall immediatelybe delivered to Lender. This requirement,however, does not constitute consentby Lender to any suchdisposition.

 

**13.****TAXES, ASSESSMENTS AND LIENS.**Borrower will completeand file all necessaryfederal, state and local taxreturns and will paywhen due all taxes,assessments, levies and liensupon the Collateral and provideevidence of such payments to Lender upon

 

 

 

 

**14. INSURANCE.**Borrower shall procure andmaintain insurance on its businessand with respect to the Collateral,in form, amounts and coverage consistent withBorrower's business operation. Borrower must name Lenderas loss payee. IfBorrower at any time fails toobtain or maintain any insuranceas required under this Agreement, Lendermay obtain such insurance as Lender deems appropriate.Borrower shall promptlynotify Lender of any loss of ordamage to the Collateral.

 

**15. REPAIRS****AND MAINTENANCE.**Borroweragrees to keep and maintain,and to cause othersto keep and maintain, theCollateral in good order, repairand condition at all times while this Agreementremains in effect. Borrowerfurther agrees topay when due allclaims for work doneon, or services renderedor material furnished in connectionwith the Collateral so thatno lien or encumbrance may ever attachto or be filedagainst the Collateral.

 

**16. INSPECTIONOF COLLATERAL.** Lender and Lender'sdesignated representativesand agents shall have the right atall reasonable times to examine and inspectthe Collateral wherever located.

 

**17. LENDER’SEXPENDITURES.** If any action or proceeding is commencedthat would materially affect Lender'sinterest in the Collateral or if Borrower fails tocomply with any provision of thisAgreement or any related documents,including but not limited to Borrower'sfailure to discharge or pay when due any amounts Borroweris required to discharge or pay under this Agreementor any related documents, Lenderon Borrower's behalf may (butshall not be obligated to) take any action thatLender deems appropriate,including but not limited to discharging or payingall taxes, liens,security interests, encumbrances andother claims, at any timelevied or placed onthe Collateral and paying all costs forinsuring, maintaining andpreserving the Collateral. To theextent permitted by applicablelaw, all such expenseswill become a partof the amount owed to Lender by Borrower and,at Lender's option, will: (i)be payable on demand; (ii) be added to thebalance of the Loan and beapportioned among and be payable withany installment payments to become dueduring either (a) theterm of any applicable insurance policy or(b) the remainingterm of the Loan; or (iii) betreated as a balloon payment that willbe due and payableat the Loan’s maturity. Suchright shall be inaddition to all other rights and remediesto which Lender maybe entitled upon an Eventof Default.

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**18. BORROWER’SREPRESENTATIONS AND WARRANTIES.** Borrower represents and warrants that: (i) Borrower will complywith all laws, statutes,regulations and ordinancespertaining to the conduct of Borrower's business and promises tohold Lender harmless from any damages,liabilities, costs,expenses (including attorneys' fees)or other harm arisingout of any violation thereof;(ii) Borrower's principalexecutive office and the officewhere Borrower keeps its records concerning itsaccounts, contract rights andother property, isthat shown in theApplication; (iii) Borrower is duly organized, licensed,validly existing and in goodstanding under the laws of its state of formationand shall hereafter remain in goodstanding in that state, andis duly qualified, licensed and in goodstanding in every other state inwhich it is doing business,and shall hereafter remain duly qualified,licensed and in goodstanding in every other state in which itis doing business, and shall hereafterremain duly qualified, licensed and in goodstanding in every other statein which the failure to qualify orbecome licensed could havea material adverseeffect on the financial condition, businessor operations of Borrower;(iv) the exact legalname of the Borrower isset forth in the Application; (v) theexecution, delivery and performance of this Agreement,the Application andthe Business Loan Key Terms Supplement,and any other documentexecuted in connectionherewith, are withinBorrower's powers,have been duly authorized, arenot in contravention of lawor the terms of Borrower's charter,by-laws or other organizationpapers, or of anyindenture, agreement or undertaking to which Borrower isa party; (vi) all organization papers andall amendments thereto of Borrower have been dulyfiled and are in proper order and any capital stock issuedby Borrower and outstandingwas and is properlyissued and all booksand records of Borrower areaccurate and up to date and will beso maintained; (vii) Borrower (a) issubject to no charter, corporate or other legalrestriction, or any judgment,award, decree, order,governmental rule orregulation or contractual restrictionthat could have amaterial adverse effect on itsfinancial condition, business orprospects, and (b)is in compliance with its organization documentsand by-laws, all contractual requirements by whichit may be bound and all applicable laws,rules and regulationsother than laws, rulesor regulations the validityor applicability of which itis contesting in goodfaith or provisions of any of theforegoing the failure to comply with which cannot reasonablybe expected to materially adverselyaffect its financial condition, businessor prospects or the valueof the Collateral; and (viii) thereis no action, suit, proceeding orinvestigation pending or, to Borrower's knowledge, threatenedagainst or affecting it or anyof its assets beforeor by any court or other governmental authority which,if determined adversely to it, would have a material adverse effecton its financial condition, business or prospectsor the value of the Collateral.

 

**19. FEES.**In addition to any other fees describedin the Agreement, Borrower agrees to pay the followingfees:

 

 

 

 

 

 

**20. INTERESTAND FEE REFUNDS****.**Ifthe Loan is subject to a law that sets maximum charges, andthat law is finally interpreted by a court of law so that the interest or other fees collected or to be collected in connectionwith this Agreement exceed the permitted limits, then:(i) any such chargewill be reduced by the amount necessary to reduce the charge to the permitted limit; and(ii) any sums already collected from Borrower that exceed the permitted limits will be refunded or credited to Borrower.

 

**21. FINANCIALINFORMATION AND REEVALUATION OF CREDIT.** Borrower and each Guarantor authorize Lender to obtain business and personal creditbureau reports in Borrower's and Guarantor'sname, respectively ,at any time and from time to time for purposes of deciding whether to approve the requestedLoan or for any update,renewal, extensionof credit or other lawful purpose. Upon Borrower'sor any Guarantor 's request,Lender will advise Borrower or Guarantor if Lender obtained a credit report and Lender willgive Borrower or Guarantor the credit bureau 's name andaddress. Borrower and each Guarantor agree to submit currentfinancial information, a new application,or both, in Borrower'sname and in the name of each Guarantor, respectively,at any time promptly upon Lender's request. Borrower authorizes Lender to act as Borrower'sagent for purposes of accessing and retrieving transaction history information regarding Borrower from Borrower'smerchant processor(s). Lender may report Lender's credit experiences with Borrower and any Guarantor to third parties as permittedby law. Borrower also agrees that Lender may release information to comply with governmental reporting or legal processthat Lender believes may be required, whether or not suchis in fact required, or when necessary or helpful in completinga transaction, or when investigatinga loss or potential loss. Borroweris hereby notified that a negative credit report reflecting on Borrower'scredit record may be submitted to a credit reporting agency if Borrower fails to fulfill the terms of Borrower'scredit obligations hereunder.

 

**22. ATTORNEYS'FEES AND COLLECTION COSTS.** In the event Borrower defaults, Lender shall be entitled to recover from Borrower and Guarantorsall costs of collection, including reasonable attorney'sfees and third party collection costs. Any Party that files a Claim against another Party as permitted in paragraphs 28 through31 herein and prevails on the Claim shall be entitled to collect all court or arbitration costs and reasonable attorney's feesincurred in pursuing the Claim but in no event shall attorney'sfees exceed 15% of the amount of the damages awarded by the court or arbitrator regardless of the amount of attorney'sfees actually incurred by the Party. If no monetary damagesare awarded, no attorney'sfees or costs shall be awarded. If a Party files a Claimagainst another Party and the Claim is dismissed or the defending Party prevails in the matter,the Party filing the Claim shall pay the defending Party'sreasonable attorney's fees and costs incurredin the defending the matter, whether in court or arbitration.

 

**23. BORROWER’SREPORTS**. Promptly upon Lender's written request,Borrower and each Guarantor agrees to provide Lender with such information about the financialcondition and operations of Borrower or any Guarantor, asLender may, from time to time,reasonably request. Borrower also agrees promptly upon becoming aware of any Event of Default,or the occurrence or existence of an event which, withthe passage of time or the giving of notice or both, wouldconstitute an Event of Default hereunder, to provide notice thereof to Lender in writing.

 

**24. MERGERS,CONSOLIDATIONS OR SALES.** Borrower represents and agrees that Borrower will not: (i) merge or consolidatewith or into any other business entity; or (ii) sell itsassets or enter into any joint venture or partnership with any person, firmor corporation.

 

**25. CHANGEIN LEGAL STATUS.** Borrower represents and agrees that Borrower will not: (i) change its name,its place of business, chiefexecutive office, its mailing address or organizationalidentification number if it has one; or(ii) change its type of organization, jurisdiction of organizationor other legal structure. If Borrower does not have anorganizational identification number issued by the Internal Revenue Service and later obtains one, Borrower shall forthwith notifyLender of such organizational identification number.

 

**26. DEFAULT**. To the extent notprohibited by applicable law, the occurrence of any one or more of the following events (herein, "Eventsof Default") shall constitute,without notice or demand, adefault under this Agreement and all other agreements between Lender and Borrower and instruments and papers given Lender by Borrower,whether such agreements, instruments,or papers now exist or hereafter arise: (i) Lender is unable to collect any ACH due and/or,Borrower fails to pay any amount due on the date due; (ii)Borrower fails to comply with, promptly,punctually and faithfully perform or observe any term, condition or promise within this Agreement;(iii) the determination by Lender that any representations or warranties now or hereafter madeby Borrower to Lender, in any documents,instrument, agreement,or paper was not true or accurate when given; (iv) theoccurrence of any event such that any

 

 

indebtedness ofBorrower from any lender other than Lender could be accelerated, notwithstanding that such acceleration has not taken place;(v) the occurrence of any event that would cause a lien creditor,as that term is defined in the UniformCommercial Code, to take priority over the Loan made by Lender; (vi)a filing against or relating to Borrower of (a) a federal tax lien in favor of the United States of America or any political subdivisionof the United States of America, or (b) a state tax lienin favor of any state of the United States of America or any political subdivision of any such state;(vii) the occurrence of any event of default under any agreement between Lender and Borroweror instrument or paper given Lender by Borrower, whethersuch agreement, instrument,or paper now exists or hereafter arises (notwithstandingthat Lender may not have exercised its rights upon default under any such other agreement, instrument or paper);(viii) any act by, against,or relating to Borrower, or its property or assets, whichact constitutes the application for, consent to,or sufferance of the appointment of a receiver, trustee or other person, pursuant to courtaction or otherwise, over all, or any part of Borrower's property; (ix) the granting of any trust mortgage orexecution of an assignment for the benefit of the creditors of Borrower, orthe occurrence of any other voluntary or involuntary liquidation or extension of debt agreement for Borrower;(x) the failure byBorrower to generally pay the debts of Borrower as they mature; (xi) the entry of any judgment against Borrower, which judgmentis not satisfied or appealed from (with execution or similarprocess stayed) within 15 days of its entry; (xii) anyact by or against, or relating to Borrower or its assetspursuant to which any creditor of Borrower seeks to reclaim or repossess or reclaims or repossesses all or a portion of Borrower's assets; or (xiii) the termination of existence, dissolutionor liquidation of Borrower or the ceasing to carry on actively any substantial part of Borrower'scurrent business.

 

**27.****RIGHTSAND REMEDIES UPON DEFAULT.**If an Event of Default occurs under this Agreement, atany time thereafter, Lender may exercise any one or more of the following rights and remedies:

A. Accelerate Indebtedness:Lender may declare the entire amount owed immediately due and payable, without notice of any kind to Borrower.

B.Assemble Collateral: Lender may require Borrower to deliver to Lender all or any portion ofthe Collateral and any and all certificates of title and other documents relating to the Collateral Lender may require Borrowerto assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full powerto enter, provided Lender does so without a breach of thepeace or a trespass, upon the property of Borrower to takepossession of and remove the Collateral If the Collateral contains other goods not covered by this Agreement at the time of repossession,Borrower agrees Lender may take such other goods, providedthat Lender makes reasonable efforts to return them to Borrower after repossession.

C. Sell the Collateral:Lender shall have full power to sell, lease, transfer,or otherwise deal with the Collateral or proceeds thereof in Lender's own name or that of Borrower.Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline speedily in valueor is of a type customarily sold on a recognized market, Lenderwill give Borrower, and other persons as required by law,reasonable notice of the time and place of any public sale,or the time after which any private sale or any other disposition of the Collateral is to bemade. However, no notice need be provided to any personwho, after an Event of Default occurs,enters into and authenticates an agreement waiving that person's right to notification of sale.The requirements of reasonable notice shall be met if such notice is given at least 10 days before the time of the sale or disposition.All expenses relating to the disposition of the Collateral, includingwithout limitation the expenses of retaking, holding,insuring, preparingfor sale and selling the Collateral, shall become a partof the Obligations secured by this Agreement. To the extent permitted by applicable law, all such expenses will become a part ofthe amount owed and, at Lender'soption, will: (i) be payable on demand; (ii) be added tothe balance of the Loan and be apportioned among and be payable with any installment payments to become due during either (a) beadded to the term of any applicable insurance policy; or(iii) be treated as a balloon payment that will be dueand payable at the Loan's maturity.

D. Appoint Receiver:Lender shall have the right to have a receiver appointed to take possession of all or any part of the Collateral,with the power to protect and preserve the Collateral,to operate the Collateral preceding foreclosure or sale,and to collect the rents from the Collateral and apply the proceeds, over and above the costof the receivership, against the Obligations. The receivermay serve without bond if permitted by law. Lender's right to the appointment of a receiver shall exist whether or not the apparentvalue of the Collateral exceeds the amount owed by a substantial amount. Employment by Lender shall not disqualify a person fromserving as a receiver.

E. Obtain Deficiency:If Lender chooses to sell any or all of the Collateral,Lender may obtain a judgment against Borrower for any deficiency remaining on the amount dueto Lender after application of all amounts received from the exercise of the rights provided in this Agreement. Borrower shallbe liable for a deficiency even if the transaction described in this subsection is a sale of accounts or chattel paper.

F. Other Rightsand Remedies: Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform CommercialCode, as may be amended from time to time. In addition,Lender shall have and may exercise any or all other rights and remedies it may have availableat law, in equity or otherwise.

G. Election ofRemedies: Except as may be prohibited by applicable law,all of Lender's rightsand remedies, whether evidenced

by this Agreement,any related documents, or by any other writing, shall becumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit ofany other remedy, and an election to 

 

 

 

expenditures or to take action toperform an obligation of Borrower under the Agreement, afterBorrower's failure to perform,shall not affect Lender'sright to declare a default and exercise its remedies.

 

**28. GOVERNINGLAW, CONSENT TO JURISDICTION AND VENUE.** The Parties hereby agree that this Agreement is made, acceptedand performed in Maryland, whichis Lender's principalplace of business. This Agreement,all transactions it contemplates, the entire relationshipbetween the Parties, and all Claims(as defined in paragraph 29 below) , whethersuch Claims are based in tort,contract or arise under statute or inequity, including allClaims involving an AffiliatedEntity of Lender, shall be governed by and enforced inaccordance with: (i) the laws ofthe State of Maryland withoutregard to principles of conflicts of laws that wouldrequire the application of any other law;and (ii) federal lawfor the limited purpose of the Arbitration Agreement (paragraph 31below). Affiliated Entity meansand includes: (i) any entity or person that at any timehas owned or controlled Lender orany entity that at any time has been owned or controlledby Lender; (ii) anypredecessor or successor entities of Lender;(iii) any entity or person who atany time owns or holds an equity or securityinterest in the Loan and the interestwas granted by Lender; and (iv)all officers, directors, ownersand employees of Lender, its parent company orany Affiliated Entity.

 

**29. DISPUTES:**Any claim, dispute or controversybetween any of theParties or between any of the Parties and an AffiliatedEntity arising from or relating in any way to the relationship between the Parties, includingany relationship with an Affiliated Entity, whether such claims arebased in tort, contract,or arise under statuteor in equity (referred to hereinas "Claim"or "Claims"),shall be resolved only as provided in this Agreement.Claim includes but is not limited to: any disputesregarding or relating to this Agreement or the Applicationprovided in connection with thistransaction; any solicitationor advertising materials;any activities relatingto the maintenance or servicing of the transaction;any disputes arising fromany collection activity related to a breach or allegedbreach of this Agreement;any disputes regarding informationobtained by Lender from, or reported by Lender to,Borrower, credit bureausor others; and any disputes resulting from or relatingto, in any way, anyprevious relationship, agreement or contract betweenthe Parties or Borrower and an Affiliated Entity includingbut not limited to an agreement under which Borrower obtaineda loan from Lender or an AffiliatedEntity. **ALL CLAIMS MUST BE RESOLVED BY BINDING ARBITRATION AS PROVIDED IN PARAGRAPH 31BELOW OR IF NO PARTY ELECTS ARBITRATION, BY A COURT AS PROVIDED IN PARAGRAPH 30 BELOW.** The Parties hereby agreethat this provision amends and supersedes any provisionin a previous agreemententered into between the Parties or betweenBorrower and an Affiliated Entity regardless of whetherthe previous agreement has been satisfied,terminated or is indefault. Accordingly, anyClaims between the Parties or made against orby an Affiliated Entity shall nolonger be governed by the dispute resolution provisionscontained in a previous agreementbut shall be governedby paragraph 22 and paragraphs28 through 31 of this Agreement; provided, however, that any changes thisprovision makes to previous agreements between the Parties or madeagainst or by an AffiliatedEntity shall not apply in any litigation, arbitrationor other proceeding commenced before the date of thisAgreement.

 

**30. Litigation:**If a Claim is filed in court,the Claim must be filedin Montgomery County, Maryland and the Parties hereby agreethat the exclusive venue for all Claimsfiled in court shall bein Montgomery County, Maryland.No court action may be brought in any other stateor jurisdiction except as necessary to enforce a validsecurity interest or enforce a judgmententered in Maryland. The Parties hereby waive any claimagainst or objection to the in personam jurisdiction andvenue in the courts of Montgomery County, Maryland. **NO****CLAIM FILED IN COURT WILL BE HEARD BY A JURYAND ANY CLAIM WILL TAKE PLACE ON ANINDIVIDUAL BASIS; CLASS ACTIONS ARE NOT PERMITTED. NO COURTMAY ORDER, PERMIT OR CERTIFY A CLASS ACTION, REPRESENTATIVEACTION, PRIVATE ATTORNEY-GENERALLITIGATION OR CONSOLIDATED ACTION. NO COURT MAY ORDER OR PERMIT A JOINDER OF PARTIES, UNLESSBOTH BORROWER AND LENDER CONSENT TOSUCH JOINDER IN WRITING.**

 

**31. ARBITRATION:**Any Party may electto resolve any Claim byneutral, binding arbitration. Anelection to arbitrate a Claim maybe made by any Party instead of filing an actionin court or in response to a claim,counterclaim or cross claim filed incourt by any other Party. If a Partyrequests arbitration, all Claims (including counterclaims andcross claims) any Party may have against any other Party or Affiliated Entity,whether such Claims are deemed to be compulsory or permissivein law, shall be submittedto binding arbitration pursuant to this paragraph 31 (referredto herein as the "ArbitrationAgreement"). Thefailure to bring such a Claimis a waiver of,and bars, thebringing of such a Claimin any subsequent arbitration or court action.Any arbitration hearing that requires the attendance ofthe Parties shall take place in the federal judicial district where Borrower residesor, if agreed to betweenthe Parties, Maryland.The Party initiatingthe arbitration proceeding may select from the following arbitration administrators, which will apply the appropriate rulesfor commercial disputes in effect at the time the Claim is filed with the arbitration organization ("Arbitration Rules"):the American Arbitration Association ("AAA"), JAMS or any other organization the Parties agree to in writing. If neitherAAA nor JAMS is able or willing to serve as the arbitration administrator and the Parties are unable to agree on an alternativeadministrator or arbitrator(s), then a court of competent jurisdiction will appoint an administrator

 

 

 

 

arbitrator(s).For information on arbitration fees and costs, acopy of the Arbitration Rules, or to file a claim contact AAA at 335 Madison Avenue, Floor 10,New York, New York10017-4605, www.adr.org (phone1-800-778-7879) or JAMS at 620 Eighth Ave., Floor 34, NewYork, NY 10018, www.jamsadr.com (phone 1-800-352-5267).In the event of a conflict between the Arbitration Rules and this Arbitration Agreement, this Arbitration Agreement shall govern.Judgment upon any arbitration award may be entered in any court with jurisdiction and may be enforced by any court having jurisdictionover that judgment. If a Party elects arbitration and the other Party refuses to arbitrate,the Party electing arbitration may seek a court order enforcing this Arbitration Agreement.In that event, the court shall determine any issues regardingenforceability of this Arbitration Agreement, includingthe validity and effect of the class action waiver (set forth below), butall other issues shall be decided by the arbitrator. All statutes of limitation that otherwise would apply to an action broughtin court will apply in arbitration. **NO CLAIM SUBMITTED TO ARBITRATION WILL BE HEARD BY A JURY AND ANY ARBITRATION UNDER THISAGREEMENT WILL TAKE PLACE ON AN INDIVIDUAL BASIS; CLASS ARBITRATIONS AND CLASS ACTIONS ARE NOT PERMITTED. NO ARBITRATOR MAY ORDER,PERMIT OR CERTIFY A CLASS ACTION, REPRESENTATIVE ACTION, PRIVATE ATTORNEY GENERAL LITIGATION OR CONSOLIDATED ARBITRATION. NO ARBITRATORMAY ORDER OR PERMIT A JOINDER OF PARTIES, UNLESS BOTH BORROWER AND LENDER CONSENT TO SUCH JOINDER IN WRITING.**

 

The transaction(s)governed by this Agreement involves interstate commerce and the Parties agree that arbitration shall be governed by the FederalArbitration Act (9 U.S.C. *§*1 et. seq.) andthe Arbitration Rules and not by any state law concerning arbitration. Thearbitrator will be required to follow relevant law and applicable judicial precedent to arrive at a decision and shall be empoweredto grant whatever relief would be available in court. The cost of any arbitration proceeding shall be divided as follows: (i) ifa Party other than Lender or an Affiliated Entity initiates arbitration and the damages claimed are less than $25,000 or Lenderor an Affiliated Entity initiate arbitration, Lender shall pay all arbitration fees and costs; (ii) if anyone other than Lenderor an Affiliated Entity initiates arbitration and the damages claimed are $25,000or more, the parties to the arbitration shall split the fees and costs for arbitration equally.Notwithstanding the foregoing, if a Party other than Lender believes the applicable cost ofarbitration may be too burdensome, that Party may seeka waiver of costs under the applicable Arbitration Rules. If such a request is made but denied by the arbitration organization,Lender will consider a written request to either advance or pay all or part of the costs. Ifarbitration is elected, each Party shall be responsiblefor its own attorney, witness and consulting fees provided the prevailing Party may seek reimbursement of attorney fees and arbitrationcosts if they prevail as provided in paragraph 22 above. If any part of this Arbitration Agreement,other than waivers of class action rights, isdeemed or found to be unenforceable for any reason, the rest shall remain enforceable. Ifthe waiver of class action rights is deemed or found to be unenforceable for any reason in a case in which class action allegationshave been made, the remainder of this Arbitration Agreementshall be unenforceable.

 

If any Party doesnot want this Arbitration Agreement to apply, they may reject it by mailing a written rejection notice to Lender at 7316 WisconsinAve., Suite 350, Bethesda,MD 20814, attention: General Counsel. The rejection notice must state that the Party is rejectingthe Arbitration Agreement and must include the Borrower's legal name, thedate of this Agreement, and the amount of the loan. A rejection notice is effective only if it is: (i) signed by Borrower and allindividuals affiliated with Borrower that sign this Agreement; and(ii) postmarked 45 days or less after the date of this Agreement (the date is set forth on the first page). The rejection of thisArbitration Agreement will not affect any other provision of this Agreement. If a Party does not reject this arbitration clauseas required herein, it will be effective as of the dateof this Agreement.

 

**32. ASSIGNMENT.**This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the Parties hereto; provided,however, that Borrowermay not assign this Agreement or any rights or duties hereunder without Lender'sprior written consent and any prohibited assignment shall be absolutely void. Noconsent to an assignment by Lender shall release Borrower from its Obligations. Lender may assign this Agreement and its rightsand duties hereunder and no consent or approval by Borrower is required in connection with any such assignment. Lender reservesthe right to sell, assign, transfer, negotiate or grant participations in all or any part of,or any interest in Lender'srights and benefits hereunder. In connection with any assignmentor participation, Lender may disclose all documents andinformation that Lender now or hereafter may have relating to Borrower or Borrower's business.

 

**33. INTERPRETATION.**Paragraph and section headings used in this Agreement are for convenience only, and shall not affect the construction of this Agreement.Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against Lender or Borrower,whether under any rule of construction or otherwise. Onthe contrary, this Agreement has been reviewed by allParties and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish thepurposes and intentions of all Parties hereto.

 

 

**34. SEVERABILITY.**If one or more provisions of this Agreement (or the application thereof) is determined invalid,illegal or unenforceable in any respect in any jurisdiction,the same shall not invalidate or render illegal or unenforceable such provision (or its application)in any other jurisdiction or any other provision of this Agreement(or its application).

 

**35.****NOTICES.**Except as otherwise provided in this Agreement, noticeunder this Agreement must be in writing. Notices will bedeemed given when deposited in the U.S. mail,postage prepaid, first class mail; whendelivered in person; or when sent by registered mail; by certified mail; orby nationally recognized overnight courier. Notice to Borrower will be sent to Borrower'slast known address in Lender's records for this Loan .Notice to Lender may be sent to: Small Business Financial Solutions,LLC, 7316 WisconsinAve., Suite 350, Bethesda,MD 20814.

 

**36.****RECORDKEEPINGREQUIREMENTS.**Lender shall have no obligation to maintain any electronic records or any documents, schedules,invoices or any other paper delivered to Lender by Borrower in connection with this Agreementor any other agreement for more than four months after receipt of the same by Lenderexcept as required by applicable statute or regulation. At Lender'srequest, Borrower shall deliver to Lender:(i) schedules of accounts and general intangibles; and(ii) such other information regarding the Collateral asLender shall request. Lender, or any of its agents, shall have the right to call at Borrower'splace or places of business at intervals to be determined by Lender, andwithout hindrance or delay, to inspect,audit, check,and make extracts from any copies of the books, records,journals, orders, receipts,correspondence that relate to Borrower 'saccounts and Collateral or other transactions between the parties thereto and the general financial condition of Borrower and Lendermay remove any of such records temporarily for the purpose of having copies made thereof.

 

**37.****MONITORING,RECORDING AND ELECTRONIC COMMUNICATIONS.**Lender may choose to monitor and/or record telephone calls with Borrower and its owners,employees or agents. Thesecalls are monitored and/or recorded solely for evaluationby supervisors, training,monitoring for compliance purposes, collections, andquality control. By signing this Agreement, Borrower agreesthat any call between Lender and Borrower or a representativeof Borrower may be monitored and/or recorded for these purposes. Borrower further agrees that: (i)it has an established business relationship with Lender and may be contacted from time to time regarding transactions with Lenderby telephone, text message or email ; (ii) such contactsare not considered unsolicited or inconvenient; and (iii)any such contact may be made using any wireless, mobilecellular or other number Borrower or its representative give Lender, usingany e-mail address Borrower or its representative gives Lender, orusing an automated dialing and announcing or similar device, unlessprohibited by law. This authorization is binding upon Borrowerupon signing this Agreement and shall not be deemed withdrawn or revoked should Lender determine not to proceed with the transaction.

 

**38.****ENTIREAGREEMENT.**This Agreement, the Application,and the Business Loan Key Terms Supplement constitute the entire understanding between theParties in connection with the subject matter hereof and supersedes all prior and contemporaneous agreements,understanding, negotiations,and discussions, whetheroral or written, of the Parties with respect to the subject matter hereof, andthere are no warranties, representations and/or agreementsamong the Parties in conjunction with the subject matter hereof except as set forth in thisAgreement, the Application,and the Business Loan Key Terms Supplement. The Parties may change any of the terms of thisAgreement or amend this Agreement but any such changes or amendments shall not be effective unlessthey are in writing and signed by all Parties. If any of the provisions of this Agreement aredetermined to be invalid, illegal or unenforceable in anyrespect, the remaining provisions shall not be affectedin any manner. All Parties hereby acknowledge having the full power and authority to enter into and perform the obligations underthis Agreement and that this Agreement. The Parties agree to execute such further and additional documents,instruments, and writingsas may be necessary, proper, required,desirable, or convenientfor the purpose of fully effectuating the terms and provisions of this Agreement. Paragraphs 22,28, 29,30, 31, 32, 37 and38 shall survive any termination, satisfaction or cancellationof this Agreement.

 

**39.****AFFILIATES.**Borrower and Guarantor(s) agrees that Lender may share all information it obtains from Borrower and Guarantor with Lender'saffiliates for purposes of underwriting, funding,collecting, servicingand enforcing this Agreement. Additionally, Borrower acknowledgesand agrees that Lender may use its affiliates to service or collect the Loan or to sue for Events of Default and to enforce anyof Lender's rights under this Agreement.

 

**40. COUNTERPARTS;FAX SIGNATURES.**This Agreement may be executed in one or more counterparts, each of which counterparts shall be deemed to bean original, and all such counterparts shall constituteone and the same instrument. For purposes of the execution of this Agreement, faxsignatures shall be treated in all respects as original signatures.

 

**41. GUARANTY.**By signing thisAgreement as Guarantor, the Guarantor(s) hereby assume and, jointlyand severally, guarantees all obligations of the Borrowerarising under this Agreement (including the Business Loan Key Terms Supplement) and authorizes and permits Lender to automaticallywithdraw any and all funds from any of Guarantors' bankaccounts to ensure payment of any amount

 

 

 

owedunder this Agreement. This guarantee is unlimited,absolute and withoutcondition, and is bindingupon each Guarantor, the Guarantor'sheirs, legal representatives,successors and assigns. THIS GUARANTYIS A GUARANTYOF PAYMENT AND IS INNO WAY CONDITIONEDOR CONTINGENT UPON ANY ATTEMPT TOCOLLECT FROM THE BORROWER OR TOREALIZE UPON ANY PROPERTY SUBJECT TO THE LIENOF, OR SECURITY INTEREST UNDER,THE LOAN AGREEMENT,OR ANY OTHERSECURITY GIVEN FOR THE GUARANTEED OBLIGATIONS. This Guarantyis given to induceLender to make the loan that is the subject of this Agreementand Guarantor(s) understandsand agrees that Lenderwould not make such Loan withoutthis Guaranty. Guarantor further agrees that inthe event the Lender incurs any expenses in the enforcement of this Guaranty,whether legal actionbe instituted or not,the Lender shall be entitledto collect from the Guarantor, andthe Guarantor hereby agrees that they shall pay to theLender, its successors and assigns, all suchexpenses, including reasonable attorneys' fees, and theGuarantor shall be obligatedto pay same immediatelyupon demand of payment thereforeby the Lender. The Guarantors tothis Agreement are hereby notified that a negative creditreport reflecting on his/hercredit record may be submitted to a credit reporting agency ifthe terms of this Agreementare breached. Each Guarantor acknowledgesreceiving a copy of this Agreementand having read the terms of thisAgreement, including,without limitation, the guarantee set forth inthis paragraph, andthe Guarantor's signaturebelow shall serve asconfirmation that the Guarantor understands all terms andconditions of this Agreement.

 

Theparties hereto have caused this Agreementto be duly executed bytheir respective authorized officers as of the day andyear first above written,intending this to be a document under seal.

 

**EACH PARTY ACKNOWLEDGES THATTHEY HAVE READ AND AGREE TO ALL OF THE FOREGOING TERMS AND CONDITIONS, INCLUDING THE ARBITRATION PROVISION IN PARAGRAPH31.**