CREDIT AGREEMENT
Dated: April 16, 2001
by and between
FIRST UNION NATIONAL BANK
and
DATARAM CORPORATION
TABLE OF CONTENTS
Page
I DEFINITIONS 1
1.1 DEFINED TERMS 1
1.2 INTERPRETATION AND CONSTRUCTION 13
II CREDIT FACILITIES 14
2.1 REVOLVING CREDIT FACILITY 14
2.2 TERM LOAN FACILITY 18
2.3 AVAILABILITY 19
2.4 FEES 20
2.5 MANNER OF PAYMENT 20
2.6 LATE CHARGES 21
2.7 USE OF PROCEEDS 21
2.8 CONDITIONS TO EXTENSION OF CREDIT FACILITIES 21
2.9 CONDITIONS TO ALL REVOLVING CREDIT LOANS 23
2.10 REGULATORY CAPITAL REQUIREMENTS 24
2.11 EXCESS REVOLVING CREDIT LOANS 24
2.12 REQUIREMENTS OF LAW 24
2.13 SALE, ASSIGNMENT OR PARTICIPATIONS 25
III REPRESENTATIONS AND WARRANTIES 26
3.1 GOOD STANDING 26
3.2 CORPORATE ORGANIZATION AND AUTHORITY 26
3.3 COMPLIANCE WITH LAW/NO CONFLICT; MARGIN REGULATIONS 27
3.4 NO LITIGATION 27
3.5 FINANCIAL STATEMENTS; NO FINANCIAL CHANGE 27
3.6 TAX COMPLIANCE 28
3.7 GOOD TITLE AND ABSENCE OF LIENS 28
3.8 ERISA 28
3.9 COLLATERAL DOCUMENTS 29
3.10 ENVIRONMENTAL STATUS 29
3.11 INTELLECTUAL PROPERTY 30
3.12 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT;
OTHER REGULATIONS 30
3.13 PROCEEDS OF REVOLVING LOANS 30
3.14 SOLVENCY 30
3.15 INSURANCE 31
3.16 NO DEFAULT 31
3.17 FULL DISCLOSURE 31
3.18 REAFFIRMATION 31
IV AFFIRMATIVE COVENANTS OF THE BORROWER 31
4.1 AUDIT AND OTHER REPORTS 31
4.2 INSURANCE 33
4.3 PAYMENT OF EXPENSES 33
4.4 GOOD WORKING CONDITION 33
4.5 OBSERVANCE OF LEGAL REQUIREMENT, LICENSES AND PERMITS AND
PROTECTION OF ASSETS 34
4.6 INSPECTION 34
4.7 PAYMENTS OF OBLIGATIONS 34
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4.8 TAXES AND OTHER CHARGES 35
4.9 [INTENTIONALLY OMITTED] 35
4.10 OPERATING ACCOUNT 35
V NEGATIVE COVENANTS OF THE BORROWER 35
5.1 LOANS, ADVANCES AND INVESTMENTS 35
5.2 FINANCIAL COVENANTS 36
5.3 LIMITATION ON LIENS 37
5.4 LIMITATION ON INDEBTEDNESS 37
5.5 LIMITATION ON GUARANTEES 37
5.6 CERTIFICATE OF INCORPORATION AND BY-LAWS 38
5.7 TRANSACTIONS AMONG AFFILIATES 38
5.8 CONSOLIDATIONS AND MERGERS 38
5.9 FISCAL YEAR 38
5.10 CHANGE IN ACCOUNTING PRINCIPLES 39
5.11 MAINTAIN CORPORATE EXISTENCE AND NATURE OF BUSINESS 39
VI EVENTS OF DEFAULT 39
6.1 NON-PAYMENT 39
6.2 NON-PERFORMANCE 39
6.3 MISREPRESENTATION 40
6.4 INSOLVENCY 40
6.5 JUDGMENT OR LIEN 40
6.6 ADVERSE CHANGE 40
6.7 OWNERSHIP 40
6.8 ERISA 41
6.9 DEFAULT IN OBLIGATIONS TO THIRD PARTIES 41
6.10 LOAN DOCUMENT ENFORCEABILITY 41
6.11 LOAN DOCUMENTS/SWAP DOCUMENTS 41
6.12 ALTA LOAN TITLE POLICY 42
6.13 LANDLORD WAIVER AND CONSENT 4
VII CONSEQUENCE OF EVENT OF DEFAULT 42
7.1 ACCELERATION 42
7.2 SET-OFF 42
7.3 ATTORNEYS' FEES AND EXPENSES 42
7.4 DEFAULT RATE 43
7.5 BANK'S PERFORMANCE OF OBLIGOR'S OBLIGATION 43
7.6 OTHER REMEDIES 43
VIII MISCELLANEOUS 43
8.1 NO WAIVER 43
8.2 MODIFICATION OR AMENDMENT 43
8.3 WAIVER OF NOTICE 44
8.4 ONE INSTRUMENT 44
8.5 LAW OF NEW JERSEY 44
8.6 JURISDICTION 44
8.7 SUCCESSORS OR ASSIGNS 44
8.8 RIGHTS CUMULATIVE 44
8.9 LIMITATION OF LIABILITY 44
8.10 ADDRESSES OF NOTICES 45
8.11 TITLES 46
8.12 DISCLOSURE/CONFIDENTIALITY 46
8.13 TERM 47
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8.14 INTEREST LIMITATION 47
8.15 INDEMNIFICATION 48
8.16 WAIVER OF TRIAL BY JURY 49
8.17. ARBITRATION 49
SCHEDULES AND EXHIBITS
Exhibit A Revolving Credit Note
Exhibit B Term Note
Exhibit C Borrower Pledge Agreement
Exhibit D Borrower Security Agreement
Exhibit E Assignment of Leases
Exhibit F [Intentionally Omitted]
Exhibit G Subsidiary Guaranty
Exhibit H Subsidiary Pledge Agreement
Exhibit I Mortgage
Schedule 3.1 Organization
Schedule 3.4 Litigation
Schedule 3.8 ERISA
Schedule 3.10(B) Certain Environmental Matters
Schedule 3.15 Insurance
Schedule 5.4 Existing Indebtedness
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "Agreement"), dated as of April 16, 2001
between Dataram Corporation, a New Jersey corporation having its chief
executive office at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the
"Borrower"), and First Union National Bank, a national banking association
with a place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Bank");
WITNESSETH:
In consideration of the mutual covenants herein contained and to
induce the Bank to extend credit to the Borrower, the parties agree as
follows:
I
DEFINITIONS
1.1 DEFINED TERMS
"Adjusted LIBO Rate" means, for each Interest Period, an interest rate
per annum equal to the product of (a) the Eurodollar Rate in effect for
such Interest Period and (1,) Eurodollar Reserves, if any, imposed upon the
Bank.
"Affiliate" means with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, five percent (5%) or more of the
capital stock having ordinary voting power in the election of directors of
such Persons, (b) each Person that controls, is controlled by or is under
common control with such Person, (c) each of such Person's officers,
directors, joint venturers and partners and (d) in the case of the
Borrower, the immediate family members, spouses and lineal descendants of
individuals who are Affiliates of the Borrower. For the purposes of this
definition, "control" of a Person means the possession, directly or
indirectly, of the power to direct or cause the direction of its management
or policies, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" shall have the meaning ascribed to such term on the first
page hereof.
"Assignment of Leases" means the Assignment of Leases by the Borrower
in favor of the Bank in the form of Exhibit E hereto.
"Bank" means the party identified on the first page hereof as the
Bank.
"Borrower" means the party identified on the first page hereof as the
Borrower
"Borrower Pledge Agreement" means the Pledge Agreement by the Borrower
in favor of the Bank, in the form of Exhibit C hereto.
"Borrower Security Agreement" means the Security Agreement by the
Borrower in favor of the Bank, in the form of Exhibit D hereto.
"Borrowing Date" means the Business Day or Working Day on which a
Revolving Credit Loan is to be made.
"Business Day" means a day other than a Saturday or Sunday or other
day on which the Bank is authorized or required to close under the laws of
the State of New Jersey or applicable federal law.
"Capital Expenditures" means for any period, the aggregate of all
expenditures (including that portion of Capital Leases which is capitalized
in accordance with GAAP on the consolidated balance sheet of a Person) by
such Person during that period for any fixed assets, improvements, or
replacements, substitutions or additions thereto that have a useful life of
more than one (1) year including, without limitation, the direct or
indirect acquisition of such assets by way of increased product charges,
offset items or otherwise.
"Capitalized Lease" means any lease the obligation for Rentals with
respect to which is required to be capitalized on a consolidated balance
sheet of the lessee and its subsidiaries in accordance with GAAP.
"Capitalized Rentals" of any Person means as of the date of
determination thereof the amount at which the aggregate Rentals due and to
be become due under all Capitalized Leases under which such Person is a
lessee would be reflected as a liability on a consolidated balance sheet of
such Person.
"Change in Control" means the occurrence of an event, or series of
events, which shall lead, or has led, to a Person or two or more ]Persons
acting as a partnership, limited partnership, syndicate or other group,
within the meaning of Section 13(d) and 14(d) of the Exchange Act (as in
effect on the date hereof), becoming the "beneficial owners" (as such term
is used in Rule 13D-3 under the Exchange Act (as in effect on the date
hereof) of more than 50 percent of the Voting Stock of the Borrower then
outstanding.
"Closing Date" means the date of this Agreement.
"Collateral Documents" means all documents and instruments delivered
and to be delivered under this Agreement to create, perfect or maintain a
security interest in, and/or Lien on, property of the Borrower or any
Subsidiary, including, without limitation, the Borrower Pledge Agreement,
the Borrower Security Agreement, the Subsidiary Pledge Agreement, the
Mortgage and the Assignment of Leases.
2
"Consolidated EBITDA" means, for the Four Quarter Period immediately
preceding the date of determination, Consolidated Net Earnings plus (to the
extent deducted in determining Consolidated Net Earnings), (a) Consolidated
Interest Charges, (b) depreciation and amortization charges and (c) all
provisions for any federal, state or other income taxes made by the
Borrower and its Subsidiaries during such period.
"Consolidated Fixed Charges" means, for the Four Quarter Period
immediately preceding the date of determination, the sum of (without
duplication) (i) Consolidated Interest Charges and (ii) scheduled payments
of principal with respect to Debt of the Borrower and all Subsidiaries
during such period.
"Consolidated Interest Charges" means, for any period all interest
expense (net of any interest income), including the interest component of
Capitalized Rentals, and all amortization of debt discount and expense on
any Indebtedness of the Borrower and its Subsidiaries.
"Consolidated Net Earnings Available for Fixed Charges" means for the
Four Quarter Period immediately preceding the date of determination, the
amount by which (a) the sum of (i) Consolidated Net Earnings plus (ii)
Consolidated Interest Charges (to the extent deducted in determining
Consolidated Net Earnings), plus (iii) depreciation and amortization
charges (to the extent deducted in determining Consolidated Net Earnings),
exceeds (1))the sum of (i) Capital Expenditures of the Borrower and
Subsidiaries and (ii) dividends or other distributions paid on the
Borrower's capital stock in cash or property, and other amounts paid in
connection with any purchase, redemption, retirement or other acquisition
of any capital stock of the Borrower by the Borrower or any Subsidiary
"Consolidated Tangible Net Worth" means, at any time, the sum (without
duplication, and in each case eliminating all offsetting debits and credits
between and among the Borrower and its Subsidiaries, and all other items
required to be eliminated in the course of the preparation of consolidated
financial statements in accordance with GAAP) of
(A) the consolidated stockholders' equity of the Borrower and
its Subsidiaries, determined at such time in accordance with GAAP, minus
(B) the net book value of all Intangible Assets of the
Borrower and its Subsidiaries, minus
(C) any net gains attributable to cumulative currency
translation adjustments (or plus any net losses attributable to such
adjustments), minus
(D) minority interests.
3
"Consolidated Total Debt" means, as of the date of any determination
thereof, the aggregate amount of all outstanding Debt of the Borrower and
its Subsidiaries on a consolidated basis.
"Contingent Obligations" means, as to any Person, any obligation of
such Person guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations ("primary obligations") of any other
Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (A) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (B) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (C) to purchase property, securities or services primarily
for the purpose of assuring the beneficiary of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, (D) for the obligations of a partnership in which such Person
is a general partner, or (E) otherwise to assure or hold harmless the
beneficiary of such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligations shall not include
the endorsement of instruments for deposit or collection in the ordinary
course of business. The amount of any Contingent Obligation shall be deemed
to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if
not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by the Bank in good faith.
"Contractual Obligations" means, as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
assets are bound.
"Credit Facilities" means the Term Loan and the Revolving Credit
Facility, collectively.
"Debt" of any Person means, as of the date of determination thereof
(without duplication),
(A) all Indebtedness for borrowed money,
(B) obligations secured by any Lien upon property owned by
such Person or created or arising under any confidential sale or other
title retention agreement with respect to property acquired by such Person,
notwithstanding the fact that the rights and remedies of the seller, lender
or lessor under any such arrangement in the event of default are limited to
repossession or sale of property including obligations secured by Liens
arising from the sale or transfer of notes or accounts receivable, but, in
all events, excluding trade payables and accrued expenses constituting
current liabilities;
(C) Capitalized Rentals;
4
(D) reimbursement obligations in respect of credit
enhancement instruments including letters of credit (excluding, however,
short-term letters of credit and surety bonds issued in commercial
transactions in the ordinary course of business);
(E) Contingent Obligations in respect of obligations of other
Persons of the character referred to in (A) through (D) above.
"Default Rate" means a rate of two percent (2%) in excess of the Prime
Rate.
"Environmental Indemnity Agreement" means that certain environmental
indemnity agreement of even date herewith from the Borrower in favor of the
Bank, as amended from time to time in accordance with the terms thereof.
"Environmental Laws" means (A) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9601 et seq.
("CERCLA"), as amended by the Superfluid Amendment and Reauthorization Act
of 1986; (B) the Resource Conservation and Recovery Act of 1976, as
amended, 42 U.S.C. 6901 et seq.; (C) the New Jersey Spill Compensation and
Control Act, as amended, N.J.S.A. 58:10-23.1lb et seq.; (D) the New Jersey
Industrial Site Recovery Act, formerly known as the Environmental Cleanup
Responsibility Act, as amended, N.J.S.A. 13:1K-6 et seq.; (E) the New
Jersey Underground Storage of Hazardous Substances Act, N.J.S.A. 58:10A-21
et seq.; (F) the New Jersey Solid Waste Management Act, as amended,
N.J.S.A. 13:1E-1 et seq.; (G) the New Jersey Water Pollution Control Act,
as amended, N.J.S.A. 58:10A-1 et seq.; and (H) any and all laws,
regulations and executive orders, federal, state and local, pertaining to
environmental matters, as same may be amended or supplemented from time to
time.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Loan(s)" means any and all Loan(s) which bear interest at
the Adjusted LIBO Rate.
"Eurodollar Rate" means the rate of interest (rounded to the next
higher 1/100 of one percent (.01%)) for deposits in U.S. Dollars for a
maturity equal to the Interest Period therefor which appears on Page 3750
as of 11:00 a.m., London time, on the day that is two (2) Working Days
prior to the commencement of such Interest Period. If such rate does not
appear on the Page 3750, the rate utilized shall be the rate as determined
by the Bank from another recognized source or interbank quotation.
"Eurodollar Reserves" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the
number one minus the applicable statutory reserve requirements (rounded to
the next higher 1/100 of
5
one percent (.01%) and expressed as a decimal) for the Bank (without
duplication, but including basic, supplemental, marginal and emergency
reserves), from time to time in effect under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor) with respect to
eurocurrency funding currently referred to as "Eurocurrency liabilities" in
such Regulation D.
"Event of Default" means an event of the nature specified in Article
VI hereof; provided, that there has been satisfied any requirement for the
giving of notice, the lapse of time or the happening of any further
condition, event or act, and "Default" means an event of the nature
specified in Article VI hereof whether or not any such requirement has been
satisfied.
"Excess Cash Flow" means, for the Borrower for any period, the sum
(without duplication) of:
(a) Net Earnings of the Borrower for such period; plus
(b) depreciation, amortization and other non-cash charges or
losses deducted in determining such Net Earnings for such period; plus
(c) the amount, if any, by which Net Working Capital of the
Borrower decreased during such period; minus
(d) the amount, if any, by which Net Working Capital of the
Borrower increased during such period; minus
(f) the aggregate principal amount of scheduled payments of
Debt by the Borrower during such period.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Four Quarter Period" means a period of four, full, consecutive fiscal
quarters of the Borrower, taken together as one accounting period.
"GAAP" means generally accepted accounting principles in existence
from time to time in the United States.
"Good Faith Contest" means an active challenge or contest initiated in
good faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP.
"Governmental Body" means any nation or government, any state or other
political subdivision thereof; any entity exercising executive,
legislative, judicial, regulatory or administrative functions of; or
pertaining to government or any court or arbitrator.
6
"Guarantor" means Dataram Acquisition Subsidiary, Inc., a New Jersey
corporation.
"including" means, unless the context clearly requires otherwise,
"including without limitation".
"Indebtedness" of any Person means and includes all obligations of
such Person which, in accordance with GAAP, should be classified on a
balance sheet of such Person as liabilities of such Person and in any event
shall include without duplication:
(A) obligations of such Person for borrowed money and its
redemption obligations in respect of mandatorily redeemable preferred stock
to the extent that such redemption obligations may be required to be
satisfied within the term of this Agreement;
(B) obligations of such Person for the deferred purchase
price of property acquired by such Person (excluding accounts payable
arising in the ordinary course of business but including all liabilities
created or arising under any conditional sale or other title retention
agreement with respect to any such property);
(C) obligations secured by any Lien or other charge upon
property or assets owned by such Person, even though such Person has not
assumed or become liable for the payment of such obligations,
(D) all liabilities appearing on its balance sheet in
accordance with GAAP in respect of Capitalized Rentals;
(E) its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account
by banks and other financial institutions (whether or not representing
obligations for borrowed money):
(F) Swap Agreements of such Person; and
(G) Contingent Obligations of such Person with respect to
liabilities of a type described in any of clauses (A) through (F) hereof.
Indebtedness of any Person shall include all obligations of such Person of
the character described in clauses (A) through (G) to the extent such
Person remains legally liable in respect thereof notwithstanding that any
such obligation is deemed to be extinguished under GAAP.
"Indemnified Parties" has the meaning ascribed to such term in Section
8.15 hereof.
7
"Intangible Assets" means, as of the date of any determination
thereof, all assets of the Borrower and its Subsidiaries which are properly
classified as "intangible assets" in accordance with GAAP, including
goodwill, patents, trade names, trademarks, copyrights, franchises,
experimental expense, organization expense, unamortized debt discount and
expense, and the excess of cost of shares acquired over book value of
related assets.
"Interest Period" means, with respect to any Eurodollar Loan,
initially the period commencing on the related Borrowing Date and ending on
the numerically corresponding day (or if there is no numerically
corresponding day, the last day) in the calendar month that is one (1), two
(2), three (3) or six (6) months thereafter, as selected by the Borrower in
a notice of borrowing, and thereafter, the period commencing on the last
day of the first preceding Interest Period and ending on the numerically
corresponding day (or if there is no numerically corresponding day, the
last day) in the calendar month that is one (1), two (2), three (3) or six
(6) months thereafter, as selected by the Borrower in a notice of
continuance of or conversion to a Loan; provided, that if any Interest
Period would end on a day which shall not be a Working Day, such Interest
Period shall be extended to the next succeeding Working Day unless such
Working Day would fall in the next succeeding calendar month in which case
the Interest Period shall end on the first preceding Working Day and
provided, further, that notwithstanding' anything to the contrary, (i) no
Interest Period shall extend beyond the Revolving Loan Maturity Date, and
(ii) in all cases, no Interest Period shall extend beyond any date on which
interest is to be paid for that portion of principal being paid on such
date.
"Letter(s) of Credit" means standby or documentary letters of credit
hereafter issued from time to time by Bank at the request and for the
account of the Borrower in accordance with the terms hereof.
"Letter of Credit Agreement" means the Bank's standard form of letter
of credit application and agreement, as the same may change from time to
time.
"Letter of Credit Obligations" means the total face amount of all
Letters of Credit as outstanding at any time and all obligations of
Borrower to reimburse the Bank for any payments by the Bank under any
Letters of Credit.
"Lien" means any interest in property securing an obligation owed to
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including the
security interest lien arising from a mortgage, encumbrance, charge,
pledge, conditional sale or other title retention device or trust receipt
or a lease, consignment or bailment for security purposes. The term "Lien'
shall include, with respect to stock, stockholder agreements, voting trust
agreements, buy-back agreements and all similar arrangements affecting
property. For the purposes of this Agreement, the Borrower or a Subsidiary
shall be deemed to be the owner of any property which it has acquired or
holds subject to a conditional sale agreement, Capitalized Lease or other
arrangement pursuant to which title to the property has been
8
retained by or vested in some other Person for security purposes and such
retention or vesting shall constitute a Lien.
"Loan(s)" means, collectively, Revolving Credit Loans and the Term
Loan.
"Loan Documents" means this Agreement, the Revolving Credit Note, the
Term Note, the Collateral Documents and other documents executed and
delivered by the Borrower hereunder, and any amendments, renewals,
modifications or supplements thereto, or substitutions therefor.
"Material Adverse Change" means, as to the Borrower or its
Subsidiaries, a material adverse change in the financial condition,
operations, business or property of the Borrower and the Subsidiaries taken
as a whole. A Material Adverse Change shall be deemed to have occurred if
the cumulative effect of such event and/or all other then existing events
would result in or create a Material Adverse Change.
"Material Adverse Effect" means a material adverse effect on the
business, assets, liabilities, operations, prospects or condition,
financial or otherwise of the Company and its Subsidiaries, taken as a
whole, or a material impairment of the Company's ability to perform any of
its obligations under this Agreement and the Notes.
"Maximum Amount" means Fifteen Million Dollars ($15,000,000).
"Mortgage" means the Mortgage and Security Agreement of even date
herewith between the Borrower and the Bank substantially in the form of
Exhibit I hereto.
"Net Earnings" for any Person in any period means the net earnings of
such Person (excluding extraordinary items determined in accordance with
GAAP) for such period, determined in accordance with GAAP consistently
applied, but excluding in any event:
(A) any gains or losses on the sale or other disposition of
investments or fixed or capital assets, and any taxes on such excluded
gains and any tax deductions or credits on account of any such excluded
losses;
(B) the proceeds of any life insurance policy;
(C) net earnings and losses of any Person, substantially all
the assets of which have been acquired in any manner by the Borrower,
realized by such Person prior to the date of such acquisition;
(D) net earnings and losses of any Person with which the
Borrower shall have consolidated or which shall have merged into or with
the Borrower prior to the date of such consolidation or merger, and
9
(E) earnings resulting from any reappraisal, revaluation or
write-up of assets;
and "Consolidated Net Earnings" for any period means the Net Earnings of
the Borrower and its Subsidiaries (excluding extraordinary items determined
in accordance with GAAP) for such period, determined on a consolidated
basis in accordance with GAAP consistently applied, but excluding in any
event:
(A) net earnings and losses of any Subsidiary accrued prior
to the date it becomes a Subsidiary;
(B) net earnings and losses of any Person (other than a
Subsidiary), all the assets of which have been acquired in any manner by
the Borrower or any Subsidiary, realized by such Person prior to the date
of such acquisition
(C) net earnings and losses of any Person (other than a
Subsidiary) with which the Borrower or a Subsidiary shall have consolidated
or which shall have merged into or with the Borrower or a Subsidiary prior
to the date of such consolidation or merger,
(D) any portion of the net earnings of any Subsidiary which
for any reason is unavailable for payment of cash dividends to the Borrower
or any other Subsidiary; and
(E) any deferred or other credit representing any excess of
the equity in any Subsidiary at the date of acquisition thereof over the
amount invested in such Subsidiary.
"Net Working Capital" means, for the Borrower at any date, (a) current
assets of the Borrower as of such date (excluding cash) minus (b) current
liabilities of the Borrower as of such date (excluding current liabilities
in respect of Debt of the Borrower).
"Notes" means the Revolving Credit Note and the Term Note,
collectively.
"Obligation" or "Obligations" means any and all loans, advances and
other financial accommodations made by the Bank prior to, on and after the
date of this Agreement to, or on the account of the Borrower (including
Revolving Credit Loans, Letters of Credit and the Term Loan), and any and
all interest, commissions, obligations, liabilities, indebtedness, charges
and expenses direct or indirect, primary, secondary, contingent, joint or
several which are due or to become due or that may hereafter be contracted
or acquired of the Borrower to the Bank, no matter how or when arising and
whether under any present or future agreement or instrument between or
among the Borrower and the Bank, or otherwise, and the amount due or to
become due upon any
10
notes, reimbursement agreement, Swap Agreement, or other obligations given
to, or received by, the Bank or on account of any of the foregoing and the
performance and fulfillment by the Borrower of all the terms, conditions,
promises, covenants and provisions contained in this Agreement and the
other Loan Documents, or in any future agreement or instrument between the
Borrower and the Bank.
"Page 3750" means the display designated as "Page 3750" on the Dow
▇▇▇▇▇ Markets Service (or such other page as may replace that page on that
service for the purpose of displaying London interbank offered rates of
major the Banks).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means (A) Liens for taxes, assessments or
governmental charges or levies on property of the Borrower or any
Subsidiary if the same shall not at the time be delinquent or thereafter
can be paid without penalty, or are being diligently contested in good
faith and by appropriate proceedings and against which the Borrower or such
Subsidiary has established adequate reserves, (13) Liens imposed by law,
such as carriers, warehousemen and mechanics Liens, and Liens incurred in
connection with construction or other similar Liens arising in the ordinary
course of business provided same are not at the time due and payable, (C)
Liens arising out of pledge or deposits under workmen's compensation law,
unemployment insurances, old age pension or other social security or
retirement benefit or similar legislation, and ([)) Liens in favor of the
Bank.
"Person" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, entity, party or
government (whether national, federal, state, county, city, municipal or
otherwise, including any instrumentality, division, agency, body or
department thereof). Without limitation, the term "Person" shall include
the Borrower.
"Plan" means an employee benefit plan or other plan maintained for
employees of the Borrower and covered by Title IV of ERISA.
"Prime Rate" means the rate of interest announced by the Bank from
time to time as its prime rate. The Borrower acknowledges that the Bank's
Prime Rate is not represented to be the lowest rate of interest offered by
the Bank. The rate of interest shall change automatically and immediately
as of the date of any change in the Prime Rate, without notice to the
Borrower or any endorser, surety or guarantor.
"Prime Rate Loan(s)" means any and all Loan(s) which bear interest
based upon the Prime Rate.
"Quick Assets" means, for the Borrower, the sum of (i) cash and cash
equivalents of the Borrower, plus (ii) marketable securities of the
Borrower, plus (iii) trade and non-trade accounts receivable of the
Borrower (net of any reserve therefor),
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plus (iv) the current portion of indebtedness due to the Borrower from its
officers, directors, employees, stockholders.
"Rentals" means and includes as of the date of any determination
thereof all fixed payments (including as such all payments which the lessee
is obligated to make to the lessor on termination of the lease or surrender
of the property) payable by the Borrower or a Subsidiary, as lessee or sub
lessee under a lease of real or personal property.
"Repayment Indemnity" means, with respect to any Eurodollar Loan, any
amounts required to compensate the Bank for any losses or expenses which it
incurs as a result of any prepayments of such Eurodollar Loan on a date
other than the last day of the relevant Interest Period. The amount of such
loss or expense shall be determined by the Bank based upon the assumption
that the Bank funded 100 percent of such Eurodollar Loans in the London
interbank market. The Bank's determination of the Repayment Indemnity shall
be conclusive and binding in the absence of manifest error. The amount
payable as determined above shall be in addition to any amounts payable
under any other Section or Paragraph of this Agreement.
"Reportable Event" has the meaning assigned to such term in Title IV
of ERISA, or regulations issued thereunder other than a Reportable Event
not subject to the provision for a thirty (30) day notice to the PBGC under
such regulations.
"Revolving Credit Facility" means the Revolving Credit Loans in the
maximum principal amount of up to the Maximum Amount made available by the
Bank pursuant to Section 2.1 hereof and evidenced by the Revolving Credit
Note.
"Revolving Credit Loans" means amount(s) loaned by the Bank to the
Borrower under the Revolving Credit Facility. Revolving Credit Loan(s) may
be Eurodollar Revolving Credit Loans or Prime Rate Revolving Credit Loans.
"Revolving Credit Maturity Date" means April 16, 2004.
"Revolving Credit Note" means that certain revolving credit note
substantially in the form of Exhibit A hereto dated the date hereof issued
by the Borrower evidencing the Revolving Credit Facility and any note
replacing such revolving note.
"Subsidiary" means any company at least 51% of the total combined
voting power of all classes of Voting Stock (in the case of a corporation)
or other equity interests (in the case of any company which is not a
corporation) of which shall, at the time as of which any determination is
being made, be owned by the Borrower either directly or through any such
company.
"Subsidiary Guaranty" means the non-recourse Guaranty by Dataram
Acquisition Subsidiary, Inc. in favor of the Bank, in the form of Exhibit G
hereto.
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"Subsidiary Pledge Agreement" means the Pledge Agreement by Dataram
Acquisition Subsidiary, Inc. in favor of the Bank, in the form of Exhibit H
hereto
"Swap Agreement(s)" means any ISDA Master Agreement(s) entered into
among the Borrower or any Subsidiary and the Bank, including the
Schedule(s) and all Confirmations (as such terms are defined in the ISDA
Master Agreement(s)), and any interest rate or foreign currency swap
agreements or similar instruments made after the Closing Date by the
Borrower or any Subsidiary.
"Term Loan" - - means the term loan made by the Bank to the Borrower
on the Closing Date in the original principal amount of $10 Million.
"Term Loan Maturity Date" means March 31, 2006.
"Term Note" means that certain term note substantially in the form of
Exhibit B hereto dated the date hereof issued by the Borrower evidencing
the Term Loan and any note replacing such term note.
"Transfer" means, with respect to any property (including capital
stock), the sale, exchange, conveyance, lease, transfer or other
disposition of such property.
"Uniform Commercial Code" means the Uniform Commercial Code as adopted
and in effect from time to time under the laws of the State of New Jersey.
"Voting Stock" means, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency).
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary one
hundred percent (100%) of which all of the equity interests (except shares
required as directors' qualifying shares) and voting interests of which are
owned by any one or more of the Borrower and the Borrower's other Wholly-
Owned Subsidiaries at such time.
"Working Day" means a Business Day on which currencies are traded in
the London interbank market.
1.2 INTERPRETATION AND CONSTRUCTION
(A) The terms "hereby", "hereof", "hereto", "herein",
"hereunder" and any similar terms, as used in this Agreement, refer to this
Agreement in its entirety and not any particular Article, section or
paragraph, and the term "hereafter" means after, and the term "heretofore"
means before, the date of delivery of this Agreement;
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(B) Words importing a particular gender mean and include every
other gender, and words importing the singular number mean and include the
plural number and vice versa.
(C) All accounting terms used herein and not otherwise defined
shall be defined in accordance with GAAP.
II
CREDIT FACILITIES
2.1 REVOLVING CREDIT FACILITY
(A) Availability. Subject to the terms and conditions
hereinafter set forth, and provided that no Default or Event of Default
shall have occurred and be continuing or would result from the making of
any Revolving Credit Loan or the issuance of any Letter of Credit, from
time to time hereafter until the Revolving Credit Maturity Date, the Bank
shall extend credit to the Borrower by (i) making Revolving Credit Loans
(and the Borrower may borrow, repay and reborrow such amounts on the terms
and conditions hereinafter set forth); and (ii) issuing Letters of Credit;
provided, that (i) at no time shall the total amount of Letter of Credit
Obligations exceed Two Million Dollars ($2, 000,000), and (ii) at no time
shall the total principal amount of Revolving Credit Loans then outstanding
plus the total amount of Letter of Credit Obligations exceed the Maximum
Amount.
(B) Requests for Revolving Credit Loans. The Borrower shall
provide the Bank with at least one (1) Business Day's oral notice of any
requested Prime Rate Revolving Credit Loan and three (3) Working Day's oral
notice of any requested Eurodollar Revolving Credit Loan, specifying (A)
the Borrowing Date and amount, and (B) whether the Revolving Credit Loan is
to be an Eurodollar Revolving Credit Loan or a Prime Rate Revolving Credit
Loan, and, if an Eurodollar Revolving Credit Loan, the Interest Period,
which shall be one, two, three or six months, which oral notice shall be
promptly confirmed in writing by the Borrower (provided, that the Bank may
rely and act upon telephonic notice whether or not such written
confirmation is ultimately received). The Bank shall, on or after 2:00 P.M.
(New Jersey time) of the Borrowing Date, make the amount of the requested
Revolving Credit Loan available to the Borrower by crediting the Borrower's
deposit accounts maintained at the Bank; provided, all conditions precedent
to such Revolving Credit Loan have been met or satisfied. Each Revolving
Credit Loan requested hereunder for less than the full amount available
under the Revolving Credit Facility shall be in the minimum amount of
$100,000.00 or any multiple thereof. In no event shall the Borrower have
more than ten (10) Eurodollar Revolving Credit Loans outstanding at any one
time.
(C) Procedures for Letters of Credit.
(i) Issuance of Letters of Credit. Until the Revolving
Loan Maturity Date, and provided that no Default or Event of Default shall
have occurred and
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be continuing or would result from the issuance of a Letter of Credit and
subject to the limitations of Section 2.1(A), the Bank shall issue Letters
of Credit for the account of Borrower on the terms hereinafter set forth.
No Letter of Credit shall (A) have a term beyond 180 days or (B) extend
beyond the Revolving Credit Maturity Date. Each of the Letters of Credit
shall be issued in a form reasonably satisfactory to the Bank and pursuant
to the Letter of Credit Agreement. The terms and conditions of any Letter
of Credit Agreement are hereby incorporated herein by reference as if fully
set forth at length. In the event any of the terms of any Letter of Credit
Agreement expressly conflict with any of the terms of this Agreement, the
terms of this Agreement shall govern. Borrower shall pay to the Bank any
and all fees imposed by the Bank for all customers in connection with the
issuance of Letters of Credit.
(ii) Payments under Letters of Credit and Reimbursement
by Borrower. In the event of a drawing under any Letter of Credit and
payment by the Bank, Borrower shall immediately reimburse the Bank
therefor, which reimbursement may be made by a charge against Borrower's
account(s) maintained at the Bank; provided, however that the Borrower may,
subject to the conditions to Revolving Credit Loans set forth in this
Agreement, request in accordance with Section 2.1(13) that such
reimbursement be financed with a Revolving Credit Loan in an equivalent
amount and, to the extent so financed, the Borrower's obligation to make
such payment shall be discharged and replaced by the resulting Revolving
Credit Loan. In the event that Borrower shall not so reimburse the Bank, or
obtain a Revolving Credit Loan, as provided above, such failure shall be an
Event of Default and, in addition to any other right or remedy available to
the Bank, Borrower shall pay to the Bank interest on the amount of such
payment from the date of such payment by the Bank through and including the
date of such reimbursement by Borrower at the Default Rate computed on the
basis of the actual number of days elapsed over a year of 360 days.
(iii) Letter of Credit Obligations Absolute. Borrower's
obligations to make payments to the Bank in order to reimburse payments by
the Bank on Letters of Credit as provided above shall be absolute and
irrevocable, and shall be performed strictly in accordance with the terms
of this Agreement and each Letter of Credit Agreement, under any and all
circumstances whatsoever, and irrespective of:
(1) any lack of validity or enforceability of any Letter of
Credit or any Loan Document, or any term or provision therein;
(2) any amendment or waiver of or any consent to departure
from all or any of the provisions of any Letter of Credit or any Loan
Document to which the Bank is not a party;
(3) the existence of any claim, setoff; defense or other
right that Borrower or any other party guaranteeing, or otherwise obligated
with, Borrower, any Subsidiary or other Affiliate thereof or any other
person may at any time have against the beneficiary under any Letter of
Credit, the Bank or any other Person,
15
whether in connection with this Agreement, any other Loan Document or any
other related or unrelated agreement or transaction;
(4) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
and
(5) any other act or omission to act or delay of any kind of
the Bank, or any other person or any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but
for the provisions of this section, constitute a legal or equitable
discharge of Borrower's obligations hereunder.
Notwithstanding the foregoing, it is expressly understood and agreed that
Borrower has not waived any rights it may have or be entitled to assert in
the event of the Bank's gross negligence or willful misconduct (other than
any claim seeking consequential damages, claims in respect of which are
hereby waived by Borrower). It is understood that the Bank may accept
documents that appear on their face to be in order, without responsibility
for further investigation, regardless of any notices or information to the
contrary and, in making any payment under any Letter of Credit (i) the
Bank's exclusive reliance on the documents presented to it under such
Letter of Credit as to any and all matters set forth therein, including
reliance on the amount of any drafts presented under such Letter of Credit,
whether or not the amount due to the beneficiary thereunder equals (but
does not exceed) the amount of such draft and whether or not any document
presented pursuant to such Letter of Credit proves to be forged or invalid
or any statement therein proves to be inaccurate or untrue in any respect
whatsoever and (ii) any noncompliance in any immaterial respect of the
documents presented under such Letter of Credit with the terms thereof
shall, in each case, be deemed not to constitute willful misconduct or
gross negligence of the Bank.
(iv) Outstanding Letter of Credit Obligations. Upon an
Event of Default, the full amount of all Letter of Credit Obligations shall
be deemed to increase the principal amount deemed outstanding under the
Revolving Credit Facility and evidenced by the Revolving Credit Note (and
any unpaid interest thereon and any unpaid letter of credit fees shall be
deemed principal under the Revolving Credit Facility) for all purposes
hereunder and under the Collateral Documents; provided, however, if any
such Letter of Credit thereafter expires without being drawn upon, the
amount thereof shall reduce the principal amount deemed outstanding under
the Revolving Credit Facility (as previously increased pursuant to this
subsection).
(D) Interest on Revolving Credit Loans.
(1) The Borrower shall pay to the Bank interest
(a) on all Eurodollar Revolving Credit Loans, on the
last day of each Interest Period and, in the case of Eurodollar Revolving
Credit Loans having a six-month Interest Period on the last Business Day of
the third month of such six-month Interest Period, until all Revolving
Credit Loans are paid in full, and
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(b) on all Prime Rate Revolving Credit Loans, on the
last Business Day of each month until all Prime Rate Revolving Credit Loans
are paid in full.
Interest on Revolving Credit Loans shall be computed on the basis of a 360
day year, for the actual number of days elapsed, on the daily unpaid
balance of all Revolving Credit Loans, at the rate of (i) for Eurodollar
Revolving Credit Loans, the Adjusted LIBO Rate plus one and three quarters
percent (1.75%), and (ii) for Prime Rate Revolving Credit Loans, the Prime
Rate less one-half of one percent (.50%) (the "Adjusted Prime Rate").
(2) The Borrower's notice to the Bank of a request for an
Revolving Credit Loan shall be provided
(a) (i) as to any Eurodollar Revolving Credit Loan which
is to be continued as such for the next Interest Period, not less than
three (3) Working Days prior to the end of the then pending Interest
Period, or (ii) as to any Prime Rate Revolving Credit Loan which is to be
converted to a Eurodollar Revolving Credit Loan, not less than three (3)
Working Days prior to the commencement of the Interest Period for such
Eurodollar Revolving Credit Loan, and
(b) as to any Eurodollar Revolving Credit Loan which is
to be converted to a Prime Rate Revolving Credit Loan, one (1) Business Day
prior to the end of the then pending Interest Period.
Conversions of Eurodollar Revolving Credit Loans shall only be made (a) on
the last day of the Interest Period applicable thereto, (1))on a Working
Day and (c) if no Default or Event of Default has occurred and is
continuing. If no notice is provided by the Borrower as to any Eurodollar
Revolving Credit Loan prior to the end of the then pending Interest Period,
such Eurodollar Revolving Credit Loan shall, at the end of the Interest
Period, automatically become a Prime Rate Revolving Credit Loan.
(3) In the event of a change in the Prime Rate, the rate of
interest on Prime Rate Revolving Credit Loans shall be changed accordingly
as of the date of the change in the Prime Rate, without notice to the
Borrower.
(E) Amortization/Optional Prepayments of Revolving Credit Loans.
(1) Amortization. The aggregate outstanding principal amount
of the Revolving Credit Facility shall be evidenced by the Revolving Credit
Note. The unpaid principal amount of all Revolving Credit Loans under the
Revolving Credit Facility shall be payable on the Revolving Credit Maturity
Date or, if earlier, the date on which the Bank shall have declared such
Revolving Credit Loans to be due and payable pursuant to Section 7.1.
(2) Optional Prepayments.
17
(i) Eurodollar Revolving Credit Loans. The Borrower
shall have the option to prepay any Eurodollar Revolving Credit Loan or
portion thereof on the last day of the relevant Interest Period; provided,
that (i) the Borrower shall provide the Bank with one (1) Business Day's
prior written notice of its intent to so prepay, (ii) the Borrower shall
pay to the Bank the amount prepaid together with accrued interest to the
date of such payment on the amount prepaid, and (iii) each partial
prepayment shall be in a principal amount of not less than $100,000.00 or
any multiple thereof. In the event any Eurodollar Revolving Credit Loan is
for any reason prepaid (by acceleration or otherwise) on the day which is
not the end of an Interest Period, the Borrower shall, upon written demand
by the Bank, pay to the Bank the Repayment Indemnity with respect to such
prepayment.
(ii) Prime Rate Revolving Credit Loans. The Borrower
shall have the option to prepay a Prime Rate Revolving Credit Loan or
portion thereof at any time without penalty; provided, that (i) the
Borrower shall provide the Bank with one (1) Business Day's prior written
notice of its intent to so prepay, (ii) the Borrower shall pay to the Bank
the amount prepaid together with accrued interest to the date of such
payment on the amount prepaid, and (iii) each partial prepayment of any
Prime Rate Revolving Credit Loan shall be in a principal amount of not less
than $100,000.00 or any multiple thereof.
(F) Mandatory Repayment. If the aggregate outstanding principal
amount of all Revolving Credit Loans plus the Letter of Credit Obligations
at any time exceeds the Maximum Amount or the other limitations set forth
in Section 2.1(A), the Borrower shall immediately pay to the Bank the
amount of such excess.
2.2 TERM LOAN FACILITY
(A) Term Loan. Subject to the terms and conditions hereof; the Bank
agrees to make a term loan (the "Term Loan") on the Closing Date to the
Borrower in the original principal amount of $10 Million. The Term Loan
shall be evidenced by the Term Note, and the Borrower shall execute and
deliver the Term Note to the Bank. The Term Note shall represent the
obligation of the Borrower to pay the amount of the Term Loan, together
with interest thereon as prescribed in Section 2.2(B).
(B) Interest on Term Loan. The Borrower shall pay interest on the
outstanding unpaid principal amount of the Term Loan at a per annum rate of
interest equal to the Adjusted LIBO Rate for 90-day maturities plus one and
nine-tenths percent (1.9%) computed on the basis of a 360 day year, for the
actual number of days elapsed. Accrued interest on the Term Loan shall be
due and payable monthly in arrears on the last Business Day of each month.
(C) Amortization. The principal amount of the Term Loan shall
amortize and be payable in equal quarterly installments of principal of
$500,000 for each calendar quarterly installment, such quarterly
installments being due and payable commencing on the last Business Day of
June, 2001 and continuing on the last Business
18
Day of each September, December, March and June thereafter through the Term
Loan Maturity Date. Any remaining balance of the Term Loan shall be due and
payable, together with any other amounts of unpaid principal and accrued
interest thereon, on the Term Loan Maturity Date.
(D) Optional Prepayments. The Borrower shall have the option to
prepay the outstanding principal amount of the Term Loan or portion thereof
on the last day of the relevant Interest Period, provided that (i) the
Borrower shall provide the Bank with thirty (30) days' prior written notice
of its intent to so prepay, (ii) the Borrower shall pay to the Bank the
amount prep aid together with accrued interest to the date of such payment
on the amount prepaid, and (iii) each partial prepayment shall be in a
principal amount of not less than $100,000 or any multiple thereof. In the
event all or any portion of the Term Loan is for any reason prepaid (1,y
acceleration or otherwise) on the day which is not the end of an Interest
Period, the Borrower shall, upon written demand by the Bank, pay to the
Bank the Repayment Indemnity with respect to such prepayment. Any
prepayments shall be applied first to accrued but unpaid interest, and then
to principal installments (including, balloon payments, if any) in the
inverse order of their maturities. Any amounts so prepaid may not be
reborrowed.
(E) Mandatory Prepayments. Not later than 90 days after the end of
each fiscal year of the Borrower commencing with the fiscal year ending
April 30,2002, the Borrower shall make a prepayment of the Term Loan in an
amount equal to one-half of Excess Cash Flow for such fiscal year.
2.3 AVAILABILITY
(A) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation by any central bank or other governmental authority charged with
the administration or interpretation thereof shall make it unlawful, or any
central bank or other governmental authority shall assert that it is
unlawful, for the Bank to perform its obligations hereunder (i) to make
Eurodollar Revolving Credit Loans, (ii) to continue to fund or maintain
Eurodollar Revolving Credit Loans hereunder or (iii) to maintain the rate
of interest on the Term Loan based upon the Adjusted LIBO Rate, then, on
notice thereof and demand therefor by the Bank to the Borrower, the
obligation of the Bank to make any such Eurodollar Revolving Credit Loans
or to continue the Term Loan at an interest rate based upon the Adjusted
LIBO Rate shall terminate and, if the foregoing clauses (ii) and/or (iii)
is applicable, the Borrower shall, upon prior notice to the Bank, either
(A) forthwith repay in full any such Eurodollar Revolving Credit Loans then
outstanding and the outstanding principal balance of the Term Loan,
together with interest accrued thereon and the Repayment Indemnity(ies) or
(B) forthwith convert any such Eurodollar Revolving Credit Loans then
outstanding into Prime Rate Revolving Credit Loans, convert the interest
rate applicable to the outstanding principal balance of the Term Loan to
the Adjusted Prime Rate and pay to the Bank the Repayment Indemnity. If no
such notice is received by the Bank within three (3) Working Days of the
prior demand by the Bank, Borrower will be deemed to have made the election
to convert any such Eurodollar Revolving Credit Loans then outstanding into
Prime Rate Revolving Credit Loans and to
19
convert the interest rate applicable to the outstanding principal balance
of the Term Loan to the Adjusted Prime Rate as of the fourth day following
such demand.
(B) If; with respect to any Interest Period, the Bank determines
that (i) extraordinary circumstances affecting the relevant market make it
impracticable to ascertain the interest rate applicable for such Interest
Period or (ii) the Adjusted LIBO Rate for such Interest Period will not
adequately and fairly reflect the cost to the Bank of making or maintaining
the Credit Facilities during such Interest Period, the Bank shall promptly
notify Borrower of such determination and no additional Eurodollar
Revolving Credit Loans shall be made nor shall there be any conversions
thereto until such notice is withdrawn. If any Eurodollar Revolving Credit
Loan and any principal balance of the Term Loan is outstanding on the date
of such notice and such notice has not been withdrawn on the last day of
the then current Interest Period applicable thereto, Borrower shall on the
last day of such Interest Period either convert such Eurodollar Revolving
Credit Loan to a Prime Rate Revolving Credit Loan and convert the interest
rate applicable to the outstanding principal balance of the Term Loan to
the Adjusted Prime Rate or prepay the outstanding principal balance of each
such Credit Facility and accrued interest thereon in full. If no such
notice is received by the Bank at least one (1) Business Day prior to the
last day of such Interest Period, Borrower will be deemed to have made the
election to convert any such Eurodollar Revolving Credit Loans then
outstanding into Prime Rate Revolving Credit Loans and to convert the
interest rate applicable to the outstanding principal balance of the Term
Loan to the Adjusted Prime Rate.
2.4 FEES
(A) Commencing on June 30, 2001 and on the last Business Day of each
March, June, September and January thereafter, and on the Revolving Credit
Maturity Date, the Borrower shall pay the Bank quarterly in arrears a fee
on the unused portion of the Revolving Credit Facility equal to one quarter
of one percent (0.25%) of the average daily unused portion of the Revolving
Credit Facility.
(B) On the date hereof; the Borrower shall pay to the Bank the
unpaid balance of the $50,000 Facility Fee payable by the Borrower to the
Bank in consideration of the making of the Term Loan.
(C) The Borrower shall pay Letter of Credit fees to the Bank in
connection with the issuance and maintenance of Letters of Credit in such
amounts as the Bank and the Borrower shall agree from time to time.
2.5 MANNER OF PAYMENT
(A) Payments of principal and interest to be made by Borrower with
respect to the Notes shall be made to the Bank at the Bank's address
specified in Section 8.10 in immediately available funds in currency of the
United States of America. The Bank shall be entitled to charge any of the
payments owing to the Bank hereunder or under any Loan Document to any
account(s) of Borrower maintained at the Bank.
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(B) Whenever any payment to be made hereunder or under any note
issued hereunder shall be stated to be due on other than a Working Day (in
the case of Eurodollar Revolving Credit Loans) or a Business Day (in the
case of Prime Rate Revolving Credit Loans), such payment may be made on the
next succeeding Working Day (in the case of Eurodollar Revolving Credit
Loans) or Business Day (in the case of Prime Rate Revolving Credit Loans),
unless, solely in the case of Eurodollar Revolving Credit Loans, such next
succeeding Working Day, falls in the next succeeding month, in which case,
such payment shall be made on the next preceding Working Day. Any such
alteration of time shall, in such case, be included in the computation of
payment of interest. All payments (including prepayments) made by the
Borrower hereunder and under the Revolving Note shall be made without set-
off or counterclaim and shall be made prior to 1:00 p.m. New Jersey time)
on the date such payment is due. The failure of the Borrower to make any
such payment by 1:00 p.m. (New Jersey time) on such due date shall not
constitute a Default or Event of Default hereunder; provided, that such
payment is made on such due date, but any such payment received by the Bank
on any Working Day or Business Day, as applicable, after 1:00 p.m. New
Jersey time) shall be deemed to have been received on the immediately
succeeding Working Day or Business Day, as applicable, for the purpose of
calculating any interest payable in respect thereof.
(C) No prepayments shall in any way alter or suspend any Obligations
of the Borrower under the terms of this Agreement and the other Loan
Documents and the Borrower shall continue to perform and be responsible for
the performance of all terms and provisions of this Agreement and the other
Loan Documents.
2.6 LATE CHARGES
In the event that any regularly scheduled payment of principal,
interest or other amounts due hereunder shall not be received by the Bank
within five (5) days of the due date, the Borrower shall pay to the Bank a
late charge of five percent (5%) of the overdue payment. Any such late
charge assessed shall be due and payable upon billing or demand.
2.7 USE OF PROCEEDS
The proceeds of the Revolving Credit Loans and Letters of Credit shall
be used by the Borrower for working capital. The proceeds of the Term Loan
shall be used by the Borrower to repay existing indebtedness.
2.8 CONDITIONS TO EXTENSION OF CREDIT FACILITIES
The obligation of the Bank to make the Term Loan and the first
Revolving Credit Loan, and continue the Revolving Credit Facility hereunder
is subject to the satisfaction of the following conditions precedent:
(A) Documents. The Bank shall have received the duly executed
Revolving Credit Note and Term Note, each conforming to the requirements
hereof; and
21
not less than four (4) copies of this Agreement and all other Loan
Documents, each executed on behalf of the Borrower or the Guarantor by its
duly authorized officers.
(B) Deliveries by the Borrower. The Borrower shall have delivered or
caused to be delivered to the Bank or the Bank shall have received, the
following items, each of which shall be in form and substance satisfactory
to the Bank:
(1) Legal Opinions. Opinion of Messrs. ▇▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇▇, counsel for the Borrower, dated the date hereof and addressed to
the Bank, with respect to matters relating to this Agreement and the other
Loan Documents as reasonably required by the Bank.
(2) Corporate Proceedings. Resolutions of the board of
directors and shareholders (if necessary) of the Borrower certified on the
date hereof by the Secretary or Assistant Secretary of the Borrower
authorizing, as applicable, (a) the execution, delivery and performance of
this Agreement and all of the other Loan Documents; (1,)the consummation of
the transactions contemplated hereby and thereby; and (c) the borrowings
and other matters contemplated in the Loan Documents. Such certificate
shall state that the resolutions set forth therein have not been amended,
modified, revoked or rescinded as of the date of such certificate and are
in full force and effect as of the Closing Date.
(3) Incumbency Certificate. A certificate of the Secretary or
Assistant Secretary of the Borrower, dated the date hereof; as to the
incumbency and signature of the officers executing each of the Loan
Documents and any other document to be delivered pursuant to any of such
documents, together with evidence of the incumbency of such Secretary or
Assistant Secretary.
(4) Officer's Certificate. A certificate of the Chief
Financial Officer of the Borrower stating that to the best of his/her
knowledge after diligent investigation: (a) as of the date hereof and
giving effect to the Term Loan and the Revolving Credit Facility and
Revolving Credit Loans thereunder no Default or Event of Default exists
hereunder; and(b) all of the Borrower's representations and warranties
contained in this Agreement and the other Loan Documents are presently true
and correct.
(5) Consents. Licenses. Approvals. etc. Copies of all
consents, licenses and approvals required in connection with the execution,
delivery, performance, validity and enforceability of this Agreement, the
Notes and the other Loan Documents.
(6) Searches: Lien Perfection. Copies of written or other
advice relating to such corporate standing, financing statement, tax lien,
judgment and litigation searches as the Bank may require, and such evidence
as the Bank may require that the Liens created pursuant to the Collateral
Documents are fully perfected..
(7) Supporting Documents. (a) A copy of the
Certificate/Articles of Incorporation of the Borrower and the Guarantor,
certified by the
22
Secretary of State or Department of Treasury of the jurisdiction(s) of
organization of the Borrower and the Guarantor; (b) a certificate of such
Secretary of State or Department of Treasury, dated as of a recent date, as
to the good standing of the Borrower and the Guarantor and attaching the
organizational documents of the Borrower and the Guarantor on file in the
office of such Secretary of State or Department of Treasury, together with
a certificate of the Secretary of State of each jurisdiction where the
Borrower and the Guarantor is conducting business outside of its
jurisdiction of incorporation, dated as of a recent date, as to the good
standing and authorization to do business of the Borrower and the Guarantor
in such jurisdiction(s); and (c) a certificate of the Secretary or
Assistant Secretary of the Borrower and the Guarantor dated the Closing
Date and certifying with respect to the Borrower and the Guarantor that
attached thereto are true and complete copies of the By-laws of the
Borrower and such Guarantor as in effect on the date of such certification,
and that the Certificate/Articles of Incorporation of the Borrower and the
Guarantor has not been amended since the date of the last amendment thereto
indicated on the certificate of the Secretary of State or Department of
Treasury furnished pursuant to clause (a) above.
(8) Fees/Costs/Taxes. The Borrower shall have paid (i) all of
the fees and expenses of the Bank and the Bank's counsel which are
occasioned in connection with the preparation of this Agreement and all
other Loan Documents arid the closing of the transactions contemplated
hereby and thereby, and (ii) all filing, recording, title insurance
premiums, documentary and/or mortgage taxes and any other fees, expenses
and taxes then due in connection herewith and therewith.
(9) Insurance. Evidence of the insurance required to be in
effect as set forth in this Agreement and the other Loan Documents.
(10) Accountant's Reliance Letter. A reliance letter from the
accountants for the Borrower as to current financial statements of the
Borrower.
(11) [Intentionally Omitted]
(12) Other Documents and Additional Information. All other
documents provided for herein and such additional information, materials
and documents which the Bank may reasonably require.
2.9 CONDITIONS TO ALL REVOLVING CREDIT LOANS
The obligation of the Bank to make any Revolving Credit Loan, issue a
Letter of Credit or extend any other financial accommodations is subject to
fulfillment of the following additional conditions precedent, to the
satisfaction of the Bank:
(A) Representations and Warranties. The representations and
warranties made by the Borrower herein or in any other of the Loan
Documents or which are contained in any certificate, document or financial
or other statement furnished at any time under or in connection herewith
shall be correct in all material respects on and as of the date of each
Revolving Credit Loan or issuance of Letter(s) of Credit, after giving
23
effect to such Revolving Credit Loan or issuance of Letter(s) of Credit as
if made on and as of such date.
(B) No Default. No Default or Event of Default shall have occurred
and be continuing.
2.10 REGULATORY CAPITAL REQUIREMENTS
If any existing or future law or regulation or the interpretation
thereof by any court or administrative or governmental authority charged
with the administration thereof; or compliance by the Bank with any request
or directive (whether or not having the force of law) of any such
authority, results in any increases after the date hereof in any capital
maintenance, capital ratio or similar requirement against loan commitments
made by the Bank and the result thereof is to impose upon the Bank or
increase any capital requirement applicable to the Bank as a result of the
making or maintenance of the Revolving Credit Loans or the Term Loan
available hereunder (which imposition of or increase in capital requirement
may be determined by the Bank's reasonable allocation of the aggregate of
such capital impositions or increases) then, upon demand by the Bank,
Borrower shall immediately pay to the Bank from time to time as specified
by the Bank an amount which shall be sufficient to compensate the Bank for
such imposition of or increase in capital requirements together with
interest on each such amount from the date demanded until payment in full
thereof at the Default Rate. A certificate setting forth in reasonable
detail the amount necessary to compensate the Bank as a result of an
imposition of or increase in capital requirements submitted by the Bank to
the Borrower shall be conclusive, absent manifest error or bad faith, as to
the amount thereof.
2.11 EXCESS REVOLVING CREDIT LOANS
In the event the Bank shall make Revolving Credit Loan(s) an amount in
excess of the Maximum Amount or if the Borrower should directly or
indirectly become indebted to the Bank under this Agreement in an amount
which, together with all Revolving Credit Loans and other Credit Facilities
made pursuant to this Agreement, is in excess of the aggregate amount set
forth in this Agreement, such Revolving Credit Loans shall nevertheless be
covered by the terms of this Agreement.
2.12 REQUIREMENTS OF LAW
If, after the date hereof; the adoption of any law, regulation,
treaty, or directive or any change therein or in the interpretation or
application thereof or compliance by the Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority, agency or instrumentality:
(A) does or shall subject the Bank to any tax of any kind whatsoever
with respect to this Agreement, any Revolving Credit Loans or the Revolving
Credit Facility, or change the basis of taxation of payments to the Bank of
principal,
24
commitment fee, interest or any other amount payable hereunder (except for
changes in the rate of any tax presently imposed on the Bank);
(B) does or shall impose, modify, or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, or deposits or other liabilities in or for the account of; advances or
loans by, or other credit extended by, or any other acquisition of funds
by, any office of the Bank which are not otherwise included in the
determination of Adjusted LIBO Rate hereunder; or
(C) has or would have the effect of reducing the rate of return on
the Bank's capital as a consequence of its obligations hereunder to a level
below that which the Bank could have achieved but for such adoption, change
or compliance (taking into consideration the Bank's policies with respect
to capital adequacy); or
(D) does or shall impose on the Bank any other condition; and the result
of any of the foregoing is to increase the cost to the Bank of making,
renewing or maintaining advances or extensions of credit to the Borrower or
to reduce any amount receivable from the Borrower thereunder or to reduce
the rate of return on the Bank's capital, then, in any such case, the
Borrower shall promptly pay to the Bank, upon its demand, any additional
amounts necessary to compensate the Bank for such additional cost or
reduced amount receivable or reduced rate of return which the Bank deems to
be material, as determined by the Bank, with respect to this Agreement, any
Revolving Credit Loans or the Revolving Credit Facility. If the Bank
becomes entitled to claim any additional amounts pursuant to this Section
2.11, it shall promptly notify the Borrower of the event by reason of which
it has become so entitled, but any failure on the part of the Bank to
provide such notice to the Borrower shall not relieve the Borrower of its
obligations under this Section 2.11 unless the Bank shall fail to provide
such notice to the Borrower within one hundred eighty (180) days after the
occurrence of such event, in which case the Borrower shall have no
obligation to pay such amount or any interest on such amount. A certificate
setting forth calculations as to any additional amounts payable pursuant to
the foregoing sentence submitted by the Bank to the Borrower shall be
conclusive in the absence of manifest error or bad faith.
2.13 SALE, ASSIGNMENT OR PARTICIPATIONS
The Bank may from time to time sell or assign, in whole or in part, or
grant participations in some or all of the Loan Documents and/or the
obligations evidenced thereby, subject to the consent of the Borrower with
respect to any assignee, such consent not to be unreasonably withheld,
provided that the consent of the Borrower shall not be required (A) if an
Event of Default shall have occurred and be continuing, or (13)in the case
of an assignment by the Bank to an Affiliate of the Bank. The holder of any
such sale, assignment or participation, if the applicable agreement between
the Bank and such holder so provides, (i) shall be entitled to all of the
rights, obligations and benefits of the Bank, and (ii) shall be deemed to
hold and may exercise the rights of setoff or banker's lien with respect to
any and all obligations of such holder to the Borrower, in each case as
fully as though the Borrower or such Subsidiary were directly indebted to
such holder. The Bank shall give notice to the Borrower of such sale or
25
assignment; however, the failure to give such notice shall not affect any
of the Bank's or such holder's rights hereunder.
III
REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement and to make the Term
Loan and the first Revolving Credit Loan, and to extend and continue the
Revolving Credit Facility hereunder, the Borrower represents and warrants
to the Bank that:
3.1 GOOD STANDING
Schedule 3.1 sets forth
(A) the jurisdiction of organization of the Borrower;
(B) all other jurisdictions in which the Borrower is authorized to
transact business or maintain any assets (with the addresses of same), in
all of which the Borrower is in good standing;
(C) any prior changes in the structure of the Borrower, such as
mergers, consolidations and the like;
(D) any prior name changes of the Borrower;
(E) all trade names or trade styles under which the Borrower conducts
business or issue invoices; and
(F) all Subsidiaries of the Borrower and the percentage of stock or
other ownership interest thereof owned by the Borrower or Affiliates of the
Borrower.
3.2 CORPORATE ORGANIZATION AND AUTHORITY
The Borrower and all Subsidiaries are duly organized and validly
existing entities. The Borrower and all Subsidiaries have the requisite
power and authority to own their property and to carry on their business as
now conducted, and are in good standing and authorized to do business in
each jurisdiction in which its business is conducted, except where the
failure to be in good standing or so authorized could not reasonably be
expected to have a Material Adverse Effect. The Borrower has the power to
execute, deliver and carry out this Agreement and all other Loan Documents
and the board of directors of the Borrower has duly authorized and approved
the terms of the Revolving Credit Facility, the taking of any and all
action contemplated herein and therein and this Agreement and all other
Loan Documents constitute the valid and binding obligations of the
Borrower, enforceable in accordance with their terms. No consent or
approval of; or exemption by, the shareholders of the Borrower, any
Governmental Body or any other Person is required to authorize, or is
otherwise required in connection with the execution,
26
delivery and performance of; this Agreement or the other Loan Documents, or
is required as a condition to the validity or enforceability of this
Agreement or the other Loan Documents.
3.3 COMPLIANCE WITH LAW; NO CONFLICT; MARGIN REGULATIONS
(A) The Borrower and each Subsidiary is in compliance with all laws,
rules and regulations to which they are subject and have all licenses,
certificates, permits, approvals and franchises and other governmental
authorizations necessary to own their properties and to conduct their
businesses, except to the extent that the failure to comply therewith or to
have any such licenses, certificates, permits, approvals, franchises and
other governmental authorizations could not reasonably be expected to have
a Material Adverse Effect.
(B) The execution of this Agreement and the other Loan Documents and
the performance by the Borrower of its Obligations hereunder and
thereunder, do not violate any existing law or regulation or any writ or
decree of any court or Governmental Body or the charter, by-laws, operating
agreement or partnership agreement of the Borrower or any agreement or
undertaking to which the Borrower is a party or by which it or its assets
are bound, in each case which individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
(C) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof; will violate the provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve System and no part of the
proceeds of any Loan will be used to purchase or carry any Margin Stock or
to extend credit for the purpose of purchasing or carrying any Margin
Stock.
3.4 NO LITIGATION
There are no judgments against the Borrower as of the date of this
Agreement and, except as set forth on Schedule 3.4 annexed hereto, no
litigation or administrative proceeding before any Governmental Body is
presently pending, or to the knowledge of the Borrower, threatened, against
the Borrower or any of its property which (i) questions the validity or
legality of the transactions contemplated by this Agreement, or (ii) if
adversely determined could reasonably be expected to have a Material
Adverse Effect.
3.5 FINANCIAL STATEMENTS; NO FINANCIAL CHANGE
(A)
(i) The Borrower has heretofore delivered to the Bank copies of
its consolidated financial statements as of and for the fiscal year ended
April 30, 2000, as included in the Borrower's report on Form 10-K dated
July 27 ,2000, and for the quarter ended January 31, 2001, as included in
the Borrower's report on Form l0-Q dated March 6, 2001. Such financial
statements present fairly, in all material respects, the
27
consolidated financial condition and the results of operations of the
Borrower and Subsidiaries as of such dates in accordance with GAAP,
subject, in the case of such statements for the quarter ended January 31,
2001, to year-end audit adjustments and the absence of footnotes. Neither
the Borrower nor any of its Subsidiaries has any material Contingent
Liabilities, liabilities for taxes, or any long-term leases or unusual
forward or long-term commitments, including any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph.
(ii) The Borrower has heretofore delivered to the Bank copies of
the "Dataram International Consolidated Opening Balance Sheets" showing the
consolidated financial condition of Dataram International ApS as of March
15, 2001. Such financial statements present fairly, in all material
respects, the consolidated financial condition of the Dataram International
ApS and Subsidiaries as of March 15, 2001 in accordance with GAAP, subject
to year-end audit adjustments and the absence of footnotes. Neither Dataram
International ApS nor any of its Subsidiaries has any material Contingent
Liabilities, liabilities for taxes, or any long-term leases or unusual
forward or long-term commitments, including any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the Dataram International
Consolidated Opening Balance Sheets.
(B) There has been no Material Adverse Change since January 31, 2001,
and the information contained in the statements and reports described in
the foregoing paragraph (A) do not contain any material misstatement of
fact or omit to state any facts necessary to make the statements contained
therein not misleading.
3.6 TAX COMPLIANCE
The Borrower has filed, or caused to be filed, all tax returns
required to be filed and has paid all taxes shown to be due and payable on
said return or on any assessment made against the Borrower, except for any
such tax or assessment which is the subject of a Good Faith Contest.
3.7 GOOD TITLE AND ABSENCE OF LIENS
The Borrower has good and marketable title to all of their properties
and assets, real, personal and mixed, and none of said properties or assets
is subject to any Lien, except for Liens permitted by Section 5.3.
3.8 ERISA
Except as set forth on Schedule 3.8, no Reportable Event or unfunded
deficiencies or failure of compliance with ERISA or the Internal Revenue
Code of 1986, as amended, has occurred and is continuing with respect to
any Plan; (B) the Borrower has complied with the provisions of ERISA and
the Internal Revenue Code of 1986, as amended, with respect to each Plan;
and (C) the Borrower is not subject to any multiemployer plan liability or
other similar liability.
28
3.9 COLLATERAL DOCUMENTS
(A) The Borrower Security Agreement and the Borrower Pledge Agreement
are legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms. The
Borrower Security Agreement and the Borrower Pledge Agreement are each
effective to create in favor of the Bank a legal, valid and enforceable
security interest in the Collateral described therein and proceeds thereof.
(B) The Subsidiary Pledge Agreement is a legal, valid and binding
obligation of Dataram Acquisition Subsidiary, Inc., enforceable against
Dataram Acquisition Subsidiary, Inc. in accordance with its terms. The
Subsidiary Pledge Agreement is effective to create in favor of the Bank a
legal, valid and enforceable security interest in the Collateral described
therein and proceeds thereof.
(C) The Subsidiary Guaranty is a legal, valid and binding obligation
of Dataram Acquisition Subsidiary, Inc., enforceable against Dataram
Acquisition Subsidiary, Inc. in accordance with its terms.
3.10 ENVIRONMENTAL STATUS
As to all properties owned, leased or operated by the Borrower and to
all operations of the Borrower's business:
(A) there is no pending or, to the Borrower's knowledge, threatened
proceeding affecting the Borrower with respect to any Environmental Law;
(B) except as shown on Schedule 3.10(B), the Borrower has not been
identified as a responsible or potentially responsible party under CERCLA
or any other Environmental Laws and the Borrower has not received
notification that any hazardous substance or contaminant has been found at
any site which the Borrower owns or leases;
(C) none of such properties are listed or proposed for listing on the
National Priorities List under CERCLA;
(D) to the Borrower's knowledge, no Hazardous Substance or Hazardous
Waste (as such term is defined in any Environmental Laws) have been
unlawfully disposed of or otherwise released or discharged on such
properties;
(E) to the Borrower's knowledge, no underground storage tanks exist
on the properties and the removal of any tanks removed from the properties
was undertaken in compliance with the Underground Storage Tank Act; and
(F) to the Borrower's knowledge, no friable asbestos, or any
substance containing asbestos or PCB's have been installed in or exist on
such properties.
29
3.11 INTELLECTUAL PROPERTY
The Borrower owns, or is licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of
its business as currently conducted (the "Intellectual Property"), except
for those the failure to own or license could not reasonably be expected to
have a Material Adverse Effect. No claim has been asserted and is pending
by any Person challenging or questioning the use of any such Intellectual
Property or the validity or effectiveness of any such Intellectual
Property, nor does the Borrower know of any valid basis for any such claim.
The use of such Intellectual Property by the Borrower does not infringe the
rights of any Person, except for such claims and infringements which could
not reasonably be expected to have a Material Adverse Effect.
3.12 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT; OTHER
REGULATIONS
The Borrower is not an "investment company," or a company "controlled"
by an "investment company," within the meaning of the Investment Company
Act of 1940, as amended, or a "holding company" as defined in, or otherwise
subject to regulation under, the Public Utility Holding Company Act of
1935. The Borrower is not subject to regulation under any federal or state
statute or regulation which limits their ability to incur indebtedness.
3.13 PROCEEDS OF REVOLVING CREDIT LOANS
The Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, as amended. No
part of the proceeds of any Revolving Credit Loan under the Revolving
Credit Facility will be used, directly or indirectly, for a purpose which
violates any law, rule or regulation of any Governmental Body, including
the provisions of Regulations T, U or X of the Board of Governors of the
Federal Reserve System, as amended. The Borrower represents that the
proceeds of Revolving Credit Loans under the Revolving Credit Facility
provided for herein shall be used solely for the purposes set forth in
Section 2.6 hereof.
3.14 SOLVENCY
The fair value of the business and assets of the Borrower will be in
excess of the amount that will be required to pay its liabilities
(including contingent, subordinated, unmatured and unliquidated liabilities
on existing debts, as such liabilities may become absolute and matured), in
each case after giving effect to the transactions contemplated by this
Agreement and the use of proceeds therefrom. The Borrower will not, after
giving effect to the transactions contemplated by this Agreement and the
use of proceeds therefrom, be engaged in any business or transaction, or
about to engage in any business or transaction, for which the Borrower has
an unreasonably small capital (within the meaning of the Uniform Fraudulent
Transfer Act, as adopted in the State of New Jersey and Section 548 of the
Federal Bankruptcy Code), and the Borrower does not have any intent to: (A)
hinder, delay or defraud any entity to which such the Borrower is, or
30
will become, on or after the date hereof; indebted, or (B) to incur debts
that would be beyond the Borrower's ability to pay as they mature.
3.15 INSURANCE
Attached as Schedule 3.15 is accurate list of all insurance policies
carried by the Borrower. The insurance carried by the Borrower is (i)
adequate in character and amount and is at least equal to the amounts and
type of insurance carried by similar businesses and (ii) with financially
sound and reputable insurers which, except as set forth on Schedule 3.15
are unaffiliated with the Borrower or any Affiliate or Subsidiary.
3.16 NO DEFAULT
The Borrower is not in default under or with respect to any of its
Contractual Obligations, except for any such default or defaults which
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
3.17 FULL DISCLOSURE
Neither this Agreement nor any other Loan Document or certificate,
written statement or other document furnished to the Bank, or to any
appraiser, accountant, or engineer employed or engaged by the Bank in
connection with the transactions contemplated by this Agreement and the
other Loan Documents, contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading under the circumstances in which
they were made. There is no fact or circumstance peculiar to the Borrower
and known to it which the Borrower has not disclosed to the Bank and which
could reasonably be expected to have a Material Adverse Effect.
3.18 REAFFIRMATION
Each and every request for a Revolving Credit Loan hereunder or the
issuance of a Letter of Credit shall be deemed as an affirmation by the
Borrower that no Default nor Event of Default has occurred and is
continuing hereunder and that the representations and warranties contained
in this Article III are true and correct in all material respects as of the
date of each such request, except to the extent that such representations
and warranties speak to an earlier specified date, which shall, on the date
of such request, shall be true and correct as of such earlier date.
IV
AFFIRMATIVE COVENANTS OF THE BORROWER
4.1 AUDIT AND OTHER REPORTS
(A) The Borrower agrees that within ninety (90) days of the close of
each fiscal year, it will deliver to the Bank audited consolidated and
consolidating
31
financial statements, including a consolidated and consolidating balance
sheet, consolidated and consolidating profit and loss statement,
consolidated and consolidating income and cash flow statement, a listing of
all Contingent Obligations that are appropriately included in such
financial statements, notes to financial statements, certified on an
unqualified basis by an independent certified public accountant
satisfactory to the Bank, together with an updated accountant's reliance
letter and any other information which may assist the Bank in assessing the
Borrower's consolidated financial condition (including without limitation,
a projection by the Borrower of its consolidated financial condition
evidencing the Borrower's projected compliance with the financial tests
described in Section 5.2 hereof);
(B) The Borrower agrees that within forty-five (45) days of the close
of each fiscal quarter, it will deliver to the Bank quarterly management-
prepared consolidated and consolidating financial statements described in
subsection (A) above, all prepared in a format acceptable to the Bank,
together with all other information described in subsection (A) above;
(C) The Borrower agrees that simultaneously with the submission of
the statements required under subsections (A) and (B) above, the Borrower
shall cause to be delivered to the Bank a certificate of the its financial
officer (or other officer having the duties of a chief financial officer)
(i) certifying the financial information as true, correct and complete,
(ii) certifying that all representations and warranties set forth in the
Loan Documents are true and correct, (iii) setting forth the calculations
of the financial tests described in Section 5.2 hereof and attesting that
none of the covenants set forth in this Agreement or any other Loan
Document have been breached and (iv) certifying that no event has occurred
which, with the passage of time and/or giving of notice, would constitute a
Default or Event of Default;
(D) The Borrower agrees that promptly after the furnishing thereof to
third parties, the Borrower will deliver to the Bank copies of any
statements, reports, proxy material, registration statement and prospectus
furnished to any holder of any securities of the Borrower filed with any
regulatory agency or agencies;
(E) The Borrower agrees that promptly (and in any event within (10)
days) after a responsible officer of the Borrower shall become aware of(i)
a Reportable Event or "prohibited transaction" as such term is defined in
ERISA, (ii) the occurrence of a Default or Event of Default, (iii) the
commencement of any proceeding or litigation which, if adversely
determined, would adversely affect an the Borrower's consolidated financial
condition or its ability to conduct business, (iv) any change in the
executive management of the Borrower or any Subsidiary, (v) the termination
or threatened termination of or claim of breach by the Borrower of any
material contract, agreement or obligation, (vi) the acceleration of any
Indebtedness of the Borrower or any Subsidiary in excess of $20,000, or
(vii) the occurrence of a default under any note, or other evidence of
Indebtedness of the Borrower or any Subsidiary in excess of $20,000, and
(viii) the occurrence of a Material Adverse Change, it will deliver to the
Bank written notice
thereof and, upon request by the Bank, a written description of the action
the Borrower is taking or proposes to take with respect thereto;
(F) The Borrower agrees that it shall furnish to the Bank prompt
written notice if: (i) any is declared or shall become due and payable
prior to its stated maturity, or called and not paid when due or (ii) a
default shall have occurred;
(G) The Borrower agrees to furnish to the Bank with reasonable
promptness such other data and information concerning the Borrower or any
Subsidiary as from time to time may be reasonably requested by the Bank;
and
(H) The Borrower agrees to furnish the Bank within ninety (90) days
after the close of each fiscal year, a management letter, if any.
4.2 INSURANCE
The Borrower agrees to keep all of its and its Subsidiaries' assets
insured and obtain hazard, liability and business interruption insurance,
at their own cost and expense, in such amounts, in such companies, and
against such risks as is customary for similar businesses and as may be
reasonably acceptable to the Bank at all times, and deliver to the Bank
copies of the policies evidencing such insurance and/or evidence of payment
of all premiums therefor upon the request of the Bank. If the Borrower
fails to take the action called for herein, the Bank may, in its discretion
obtain insurance and the amount of the premium for said insurance shall be
added to the Obligations. No insurance required hereby shall be canceled or
reduced without at least thirty (30) days prior notice to the Bank.
4.3 PAYMENT OF EXPENSES
The Borrower will pay any and all expenses, including reasonable
counsel fees and disbursements, filing and recording fees and taxes, and
all other charges and expenses incurred or to be incurred by the Bank in
connection with the preparation, execution and recording of this Agreement
and all other Loan Documents and the Credit Facilities, and Revolving
Credit Loans made under this Agreement, any and all inspections,
examinations or appraisals of the Borrower or any Subsidiary, their assets,
businesses, locations, and other audit, examination or other inspection
activities of the Bank, and all amendments and modifications hereto and in
defending or prosecuting any actions or proceedings or otherwise enforcing
any rights arising out of or relating to the Bank's transactions with the
Borrower or any Subsidiary.
4.4 GOOD WORKING CONDITION
The Borrower will, and will cause each Subsidiary, to maintain all of
their material property in good working condition, ordinary wear and tear
excepted.
33
4.5 OBSERVANCE OF LEGAL REQUIREMENT, LICENSES AND PERMITS AND PROTECTION
OF ASSETS
(A) The Borrower will, and will cause each Subsidiary to comply with
any and all laws, legislation, rules and regulations in effect as of the
date hereof and subsequent hereto, including but not limited to all state,
local and federal laws, legislation, rules and regulations relating to
employee pension and benefit funds, the payment of taxes, assessments, and
other governmental charges, zoning, and the use, occupancy, transfer or
encumbrancing of assets of the Borrower and the Subsidiaries, and all
Environmental Laws, except where the failure to comply would not have a
Material Adverse Effect. The Borrower agrees to perform all actions
reasonably requested by the Bank which are intended by the Bank to protect
the Bank and the assets of the Borrower and the Subsidiaries from the
effect of all Environmental Laws, ERISA and such other laws, legislation,
rules and regulations as are in, or may come into, effect and apply to the
Borrower or any Subsidiary, the Bank, the transactions contemplated hereby.
The Borrower will pay the cost of performing all such actions.
(B) The Borrower will observe and comply with all ordinances, orders,
judgments, certifications, franchises, permits, licenses, directions and
requirements of all Governmental Bodies, which now or at any time hereafter
may be applicable to an the Borrower or any Subsidiary, except where the
failure to comply would not have a Material Adverse Effect.
(C) The Borrower will, and will cause each Subsidiary to continue to
hold all necessary licenses, approvals and permits and maintain all rights,
privileges and franchises necessary for its or their business operations
and the ownership of their assets, and will comply with all Contractual
Obligations (including without limitation, any leases covering any of the
Mortgaged Premises), except where the failure to hold such licenses or
comply would not have a Material Adverse Effect.
4.6 INSPECTION
The Bank (by any of its officers, employees and agents) shall have the
right, after prior reasonable notice, at any time or times during usual
business hours, (i) to inspect the assets, businesses, locations and
financial records (and to make extracts therefrom) of the Borrower and each
Subsidiary, (ii) to discuss the affairs and finances of the Borrower or any
Subsidiary with any Person (including without limitation, the Borrower's
senior officers and outside accountants) and to verify the amount, quality,
quantity, value and condition of; or any other matter relating to the
Borrower or any Subsidiary or their respective assets or businesses.
4.7 PAYMENTS OF OBLIGATIONS
The Borrower shall, and shall cause each Subsidiary to pay, discharge
or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all of their obligations of whatever
nature, except where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves
34
in conformity with GAAP with respect thereto have been provided on the
books of Borrower or such Subsidiary.
4.8 TAXES AND OTHER CHARGES
The Borrower will, and will cause each Subsidiary to prepare and
timely file all federal, state and local tax returns required to be filed
by the Borrower or any Subsidiary and promptly pay and discharge all taxes,
assessments, water and sewer rents, and other governmental charges imposed
upon the Borrower or any Subsidiary or on the Borrower's or any
Subsidiary's property when due, but in no event after interest or penalties
commence to accrue thereon or become a lien upon such property, except for
those taxes, assessments, water and sewer rents, and other governmental
charges then being contested in good faith by the Borrower or such
Subsidiary by appropriate proceedings and for which the Borrower has
established on its books, a reserve for the payment thereof and so long as
such contest: (i) operates to prevent collection, stay any proceedings
which may be instituted to enforce payment of such item, and prevent a sale
of the Borrower's or such Subsidiary's property to pay such item; (ii) is
maintained and prosecuted with due diligence; and (iii) shall not have been
terminated or discontinued adversely to the Borrower or such Subsidiary.
4.9 [Intentionally Omitted]
4.10 OPERATING ACCOUNT
The Borrower will maintain its primary operating and demand deposit
accounts with the Bank.
V
NEGATIVE COVENANTS OF THE BORROWER
5.1 LOANS, ADVANCES AND INVESTMENTS
The Borrower will not, and will not permit any Subsidiary to, make any
loan or advance to, or investment in, any Person except for (A) loans,
advances or investments by the Borrower or any Subsidiary to or in the
Borrower or any Subsidiary, and (B) other loans, advances or investments
which, in the aggregate do not exceed $100,000 (measured on a consolidated
basis as to the Borrower and Subsidiaries) and provided further that at the
time of any loan, advance or investment permitted under clause (A) or (B)
above no Default or Event of Default exists or would result from the making
of such loan, advance or investment.
35
5.2 FINANCIAL COVENANTS
(A) Consolidated Total Debt to Consolidated EBITDA Ratio. The
Borrower will not permit the ratio, expressed as a percentage, of
Consolidated Total Debt to Consolidated EBITDA at any time to exceed 175
percent for the immediately preceding Four Quarter Period.
(B) Fixed Charge Coverage Ratio. The Borrower will not permit the
ratio, expressed as a percentage, of Consolidated Net Earnings Available
for Fixed Charges to Consolidated Fixed Charges at any time to be less than
150 percent for the immediately preceding Four Quarter Period.
(C) Quick Ratio. The Borrower will not permit the ratio, expressed as
a percentage, of Quick Assets to current liabilities of the Borrower during
any period set forth below to be less than the ratio set forth below for
such period:
Period Ratio
______ _____
From the Closing Date until April 29, 2002 100 percent
From April 29, 2002 until the Final 120 percent
Maturity Date
(D) Consolidated Tangible Net Worth. The Borrower will not permit
Consolidated Tangible Net Worth during any period set forth below to be an
amount less than the amount set forth below opposite such period:
Period Consolidated Tangible Net Worth
______ _______________________________
From the Closing Date until $20,000,000
April 29, 2002
After April 29, 2002 until The sum of (i) $20,000,000 plus
April 29, 2003 (ii) the greater of (A) 33.3
percent of the Borrower's
Consolidated Net Income for the
twelve months ended April 30, 2002
and (B) zero ($-0-) (such sum being
herein called the "FY02 CTNW
Minimum")
After April 29, 2003 until The sum of(i) the FY02 CTNW Minimum
April 29, 2004 plus (ii) the greater of(A) 33.3
percent of the Borrower's
Consolidated Net Income for the
twelve months ended April 30, 2003
36
and (B) zero ($-0-) (such sum being
herein called the "FY03 CTNW
Minimum")
After April 29, 2004 until The sum of (i) the FY03 CTNW Minimum
April 29, 2005 plus (ii) the greater of(A) 33.3
percent of the Borrower's
Consolidated Net Income for the
twelve months ended April 30, 2004
and (B) zero ($-0-) (such sum being
herein called the "FY04 CTNW
Minimum")
After April 29, 2005 until the The sum of (i) the FY04 CTNW
Final Maturity Date Minimum plus (ii) the greater of (A)
33.3 percent of the Borrower's
Consolidated Net Income for the
twelve months ended April 30, 2005
and (B) zero ($-0-).
5.3 LIMITATION ON LIENS.
The Borrower will not, and will not permit any Subsidiary to, create,
assume or suffer to exist any Lien on its or their property or assets,
whether now owned or hereafter acquired, or upon any income or profits
therefrom, except for Permitted Liens.
5.4 LIMITATION ON DEBT
(A) The Borrower will not, and will not permit any Subsidiary to,
create, incur, assume or suffer to exist any Debt (including any Contingent
Obligations) except for (i) Debt owed by the Borrower to any Subsidiary, or
by any Subsidiary to the Borrower or another Subsidiary, and (ii) existing
Debt set forth on Schedule 5.4 annexed hereto.
(B) The Borrower will not permit the Guarantor or Dataram Holding
Company ApS to create, incur, assume or suffer to exist any Indebtedness,
except for (i) in the case of the Guarantor, Indebtedness owed to the
Borrower, and (ii) in the case of Dataram Holding Company, ApS,
Indebtedness owed to the Guarantor.
5.5 LIMITATION ON GUARANTEES
The Borrower will not, and will not permit any Subsidiary to, assume,
guarantee, endorse or otherwise become directly or contingently liable for
the obligations of any other Person except by endorsement of negotiable
instruments for deposit or collection in the ordinary course of business
and except, to the extent otherwise prohibited hereunder, the Borrower may
be liable for the obligations of any Subsidiary, and any Subsidiary may
become liable for the obligations of another Subsidiary or the Borrower.
37
5.6 CERTIFICATE OF INCORPORATION AND BY-LAWS
The Borrower will not, and will not permit any Subsidiary to, amend or
otherwise modify their Certificate/Articles of Incorporation, Certificate
of Formation, Articles of Association, By-Laws Operating Agreement or other
governing instruments, as applicable, in any manner which would adversely
affect the Bank.
5.7 TRANSACTIONS AMONG AFFILIATES
Except for transactions between the Borrower and Subsidiaries
otherwise permitted hereby, the Borrower will not, and will not permit any
Subsidiary to, become a party to any transaction with each other or any
Affiliate unless the terms and conditions relating to such transaction are
as favorable to the Borrower or such Subsidiary as would be obtainable at
the time in a comparable arms-length transaction with a Person other than
each other or an Affiliate.
5.8 CONSOLIDATIONS AND MERGERS
The Borrower will not and will not permit any Subsidiary to
consolidate or enter into a merger with any other Person or Transfer all or
substantially all of its assets in a single transaction or series of
related transactions to any Person, except that:
(A) any Subsidiary may merge or consolidate with or into the Borrower
or any Wholly-Owned Subsidiary or Transfer all or substantially all of its
assets to the Borrower or a Wholly-Owned Subsidiary; provided, that (i) no
Default or Event of Default exists or would exist after giving effect
thereto, and (ii) so long as in any merger, consolidation or Transfer
involving the Borrower, the Borrower shall be the surviving or continuing
corporation;
(B) the Borrower may merge or consolidate with any other corporation;
provided, that (i) the Borrower shall be the surviving or continuing
corporation, (ii) the Borrower shall not incur, create or assume any Debt
in connection with such merger or consolidation, and (iii) at the time of
such merger or consolidation and after giving effect thereto no Default or
Event of Default shall have occurred and be continuing.
No such Transfer of all or substantially all of the assets of the
Borrower shall have the effect of releasing the Borrower from its liability
under this Agreement and the other Loan Documents to which the Borrower is
a party.
5.9 FISCAL YEAR
The Borrower will not change its fiscal year.
38
5.10 CHANGE IN ACCOUNTING PRINCIPLES
The Borrower will not change or permit any change in accounting
principles applied to the Borrower, except as required by GAAP.
5.11 MAINTAIN CORPORATE EXISTENCE AND NATURE OF BUSINESS
(A) The Borrower will not allow its, nor any of its Subsidiaries',
existence to be other than in good standing and will not dissolve or
liquidate (or discontinue its normal operations with the intent to
liquidate).
(B) The Borrower will not change its name without furnishing to the
Bank at least thirty (30) days prior written notice thereof.
(C) The Borrower shall (i) continue to remain in and operate
substantially the same line of businesses presently engaged in by the
Borrower; (ii) not suspend transaction of its usual businesses; and (iii)
conduct its business in its customary manner.
VI
EVENTS OF DEFAULT
The occurrence of any of the following shall constitute an Event of
Default:
6.1 NON-PAYMENT
Failure to pay any Obligation to the Bank on the date such payment is
due (including principal and/or interest under the Revolving Note).
6.2 NON-PERFORMANCE; OTHER EVENTS OF DEFAULT
(A) The Borrower shall fail to perform when such performance is due
or otherwise breach any term, covenant or condition contained in Article V
of this Agreement, or
(B) The Borrower or any Subsidiary shall fail to perform within ten
(10) days after the date on which such performance is due, or otherwise
breach (which breach shall not have been cured within ten (10) days after
it shall have first occurred) any term, covenant or condition contained
herein, in any other Loan Document or in any other agreement now existing
or hereafter entered into with the Bank, or in any document executed in
connection with any agreements.
39
6.3 MISREPRESENTATION
Any representation, covenant or warranty made by the Borrower or any
Subsidiary in this Agreement or any other Loan Document, or in connection
with any other instrument of guaranty or security furnished to the Bank or
any fact contained in any writing supplementary or ancillary hereto, shall
have proved to have been inaccurate in any material respect as of the date
or dates with respect to which it is made or deemed to have been made under
Section 3.18 hereof.
6.4 INSOLVENCY
The Borrower or any Subsidiary shall have applied for or consented to
the appointment of a custodian, receiver, trustee or liquidator of all or a
substantial part of their respective assets; a custodian shall have been
appointed with or without consent of the Borrower or such Subsidiary; the
Borrower or any Subsidiary is generally not paying its debts as they become
due, has made a general assignment for the benefit of creditors, has been
adjudicated insolvent, or has filed a voluntary petition in bankruptcy, or
a petition or an answer seeking reorganization or an arrangement with
creditors or to take advantage of any insolvency law, or an answer
admitting the material allegations of a petition in any bankruptcy,
reorganization or insolvency proceeding; or taken action for the purpose of
effecting any of the foregoing; or an order, judgment or decree shall have
been entered, without the application, approval or consent of the Borrower
or such Subsidiary by any court of competent jurisdiction approving a
petition seeking reorganization of the Borrower or any Subsidiary, or
appointing a receiver, trustee, custodian or liquidator of the Borrower or
such Subsidiary or a substantial part of its assets and such order,
judgment or decree shall have continued unstayed and in effect for any
period of sixty (60) consecutive days; or a petition in bankruptcy shall
have been filed against the Borrower or any Subsidiary and shall not have
been dismissed for a period of sixty (60) consecutive days, or if an order
for relief has been entered under the Bankruptcy Code, or if the Borrower
or any Subsidiary shall have suspended the transaction of its usual
business.
6.5 JUDGMENT OR LIEN
Issuance of any garnishment, attachment or distraint, the filing or
assertion of any lien or of any governmental attachment or claim against
any property of the Borrower or any Subsidiary in an amount which exceeds
$500,000, or entry of a judgment in an amount which exceeds $500,000 ,
which issuance, attachment, filing, assertion or entry shall not have been
vacated, discharged or stayed pending appeal within 60 days.
6.6 ADVERSE CHANGE
The occurrence of a Material Adverse Change.
6.7 OWNERSHIP
The occurrence of a Change in Control.
40
6.8 ERISA
If (A) any Reportable Event occurs and shall be continuing for thirty
(30) days after notice from the Bank to the Borrower, or (B) any Plan shall
be terminated, or (C) the Plan administrator of any Plan shall file with
the PBGC a notice of intention to terminate such Plan, or (D) the PBGC
shall institute proceedings to terminate any Plan or appoint a trustee to
administer any Plan, and, if in any of the cases set forth in (A) through
(D) above, the Bank reasonably determines in good faith that any Plan to be
terminated would cause the amount of the unfunded guaranteed benefits
(within the meaning of Title IV of ERISA) resulting upon termination of
such Plan to effect a Material Adverse Change or if a Lien against the
assets of the Borrower were to result under ERISA.
6.9 DEFAULT IN OBLIGATIONS TO THIRD PARTIES
The Borrower is in default beyond any applicable grace or cure period
of any Indebtedness or any other material obligation to any third party in
excess of $500,000 in the aggregate.
6.10 LOAN DOCUMENT ENFORCEABILITY
If this Agreement or any other Loan Document shall, at any time after
their respective execution and delivery and for any reason, cease to be in
full force and effect or shall be declared to be null and void, or the
validity or enforceability thereof shall be contested by the Borrower, or
the Borrower shall deny that it has any or further liability or obligation
under any of the Loan Documents.
6.11 LOAN DOCUMENTS/SWAP DOCUMENTS
A default or event of default, subject to any applicable grace period,
occurs with respect to any Swap Agreement.
6.12 ALTA LOAN TITLE POLICY
The failure of Borrower to deliver to the Bank, at Borrower's sole
cost and expense, within forty-five (45) days of the date hereof; an ALTA
form of Loan Policy (the "Title Policy") acceptable to the Bank insuring
the Mortgage on the Property (as defined in the Mortgage) as a valid first
lien for an amount not less than $5,000,000, free and clear of all liens
(including mechanics' and contractors' liens) and encumbrances, and subject
only to such exclusions from coverage and such exceptions to title as may
be reasonably approved by the Bank, and containing such endorsements as the
Bank may reasonably require. The Title Policy shall name the Bank, its
successors and/or assigns, as the insured under the Title Policy. Title to
the Property, as evidenced by the Title Policy, shall be good and
marketable.
41
6.13 LANDLORD WAIVER AND CONSENT
The failure of Borrower to deliver to the Bank within thirty (30) days
of the date hereof; a Landlord's Waiver and Consent Agreement in form and
content acceptable to the Bank from each and every landlord of locations
where any portion of the Collateral (as defined in the Borrower Security
Agreement) may be located. The Landlord's Waiver and Consent Agreement
shall be on the Bank's customary form and shall provide, inter alia that
the landlord waives, releases and assigns to the the Bank any and all of
said landlord's liens, claims, demands or rights on, to and/or against the
Collateral.
VII
CONSEQUENCE OF EVENT OF DEFAULT
In case any Event of Default shall have occurred, then and in every such
Event of Default, the Bank may take any or all of the following actions, at
the same time or at different times, provided that upon the occurrence of
an Event of Default under Section 6.4 hereof the Credit Facilities under
this Agreement shall automatically without notification or other action
terminate and all Obligations shall automatically without notification or
other action be immediately due and payable:
7.1 ACCELERATION
Declare all loans, sums and Obligations owing to the Bank from the
Borrower or the Guarantor under this Agreement or any other agreement or
loan between the Bank and the Borrower or the Guarantor to be forthwith due
and payable, whereupon all such sums shall forthwith become due and
payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrower and the Bank's
commitment to lend or extend other financial accommodations to the Borrower
shall be terminated.
7.2 SET-OFF
The Bank shall have the right immediately, and without notice or other
action to set-off against any of the Obligations to the Bank any sum owed
by the Bank in any capacity to the Borrower or the Guarantor whether due or
not, and the Bank shall be deemed to have exercised such right of set-off
and to have made a charge against any such sum immediately upon the
occurrence of such Event of Default, even though the actual book entries
may be made at some time subsequent thereto.
7.3 ATTORNEYS' FEES AND EXPENSES
Add to the Obligations, the Bank's reasonable expenses to obtain or
enforce payment of any Obligations hereunder and the enforcement or
liquidation of any debt hereunder shall include reasonable attorneys' fees
plus other legal expenses incurred by the Bank.
42
7.4 DEFAULT RATE
Increase the rate of interest under any Obligations to the Default
Rate. Unless otherwise agreed by the Bank, the Default Rate shall be
retroactive to the date of the first occurrence of an Event of Default.
7.5 BANK'S PERFORMANCE OF OBLIGOR'S OBLIGATION
If the Borrower or the Guarantor fails to comply with any of the
covenants or perform any of its obligations set forth herein or in any
other Loan Document, the Bank may, but shall have no obligation to, perform
any such obligations or undertake any act to cause such covenant to be
complied with, including, but not limited to, discharging any Lien on any
asset other than Permitted Encumbrances. Any and all sums, and all costs
and expenses incurred by the Bank in so performing or causing compliance,
shall be payable on demand together with interest at the Default Rate from
the date of any such payment by the Bank until the date paid by the
Borrower. Any such performance by the Bank shall not cure any Default or
Event of Default by the Borrower or the Guarantor.
7.6 OTHER REMEDIES
Exercise any other remedies under the Uniform Commercial Code or other
applicable law, or any other Loan Document, including but not limited to
proceeding to enforce its right by suit in equity, action at law or other
appropriate proceeding, whether for payment or the specific performance of
the covenants or agreements contained in this Agreement or any other Loan
Document, all in such order and in such manner as the Bank determines.
VIII
MISCELLANEOUS
8.1 NO WAIVER
The Borrower agrees that no delay on the part of the Bank in
exercising any power or right hereunder or any other Loan Document shall
operate as a waiver of any such power or right, nor act as a consent to any
departure by the Borrower or the Guarantor from any of the terms or
conditions hereof or thereof; preclude other or further exercise thereof;
or the exercise of any other power or right. No waiver whatsoever shall be
valid unless in writing signed by the Bank and then only to the extent set
forth therein.
8.2 MODIFICATION OR AMENDMENT
This Agreement and every other Loan Document cannot be changed orally
and cannot be changed by an executory agreement unless such agreement is in
writing and signed by all parties hereto by their duly authorized officers.
43
8.3 WAIVER OF NOTICE
The Borrower waives presentment, dishonor and notice of dishonor,
protest and notice of protest of all commercial papers at any time held by
the Bank on which the Borrower or the Guarantor is in any way liable.
8.4 ONE INSTRUMENT
The provisions of this Agreement shall be in addition to those of any
notes or other evidence of the Obligations held by the Bank relating to
this particular transaction, all of which shall be construed as one
instrument.
8.5 LAW OF NEW JERSEY
This Agreement and all other Loan Documents and the rights of the
parties hereto and thereto shall be governed by the internal laws of the
State of New Jersey without regard to conflict of laws.
8.6 JURISDICTION
The Borrower hereby jointly and severally irrevocably consents to the
jurisdiction of the Courts of the State of New Jersey or any Federal Court
in such State in connection with any action or proceeding arising out of or
related to this Agreement or any other Loan Document. In any such
litigation, the Borrower waives personal service of any summons, complaint
or other process and agrees that service may be made by certified or
registered mail to it, at the address provided herein.
8.7 SUCCESSORS OR ASSIGNS
This Agreement and all other Loan Documents shall be binding upon and
shall inure to the benefit of the parties hereto, their respective
successors and assigns, provided, however, that the Borrower shall not have
any right to assign any of its rights hereunder.
8.8 RIGHTS CUMULATIVE
The rights and remedies herein expressed or in any other Loan Document
to be vested in or conferred upon the Bank shall be cumulative and shall be
in addition to and not in substitution for or in derogation of the rights
and remedies conferred by the Uniform Commercial Code or any other
applicable law.
8.9 LIMITATION OF LIABILITY
No claim may be made by the Borrower or any other Person against the
Bank or, as the case may be, directors, officers, employees, attorneys or
agents of the Bank for any special, punitive, indirect or consequential
damages in respect of any claim for breach of contract arising out of or
related to the transactions contemplated by this Agreement, or any act,
omission or event occurring in connection therewith; and the Borrower
hereby
44
waives, releases and agrees not to ▇▇▇ upon any claim for any such damages,
whether or not accrued and whether or not known or suspected to exist in
its favor.
8.10 ADDRESSES OF NOTICES
Any notice required or permitted to be given by this Agreement and the
other Loan Documents shall be given or made in writing, including telecopy,
and shall be, as elected by the party giving such notice, served personally
by messenger or courier service, telecopied (followed up by a mailing), or
mailed in the United States by prepaid, registered or certified mail,
return receipt requested, to the following:
If to the Borrower or any Subsidiary:
Dataram Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President - Finance
Fax #: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.C.
▇▇ ▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax #: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Bank:
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Senior Vice President
Fax #: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ & English, LLP
Four Gateway Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. Poland, Esq.
Fax #: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice given in accordance with the provisions of this section shall be
deemed effective, if hand delivered, on the date of such delivery, or on
the date telecommunicated
45
if telecopied, or if mailed, on the date upon which the return receipt is
signed or delivery refused or the notice is designated by the postal
authorities as not deliverable, as the case may be. Each party may give
notice to each of the other parties of a change of its address for the
purpose of giving notice under this section which, thereafter until changed
by like notice, shall be the address of such party for purposes of this
Agreement. Any failure to provide notice to the parties' attorneys shall
not affect the validity of any otherwise
proper notice.
8.11 TITLES
The titles and headings indicated herein and any table of contents are
inserted for convenience only and shall not be considered apart of this
Agreement or in any way limit the construction or interpretation of this
Agreement.
8.12 DISCLOSURE/CONFIDENTIALITY
(A) The Bank is hereby authorized to disclose any financial or other
information it may have about the Borrower or any Subsidiary to any present
or future purchaser, participant or assignee or prospective participant or
assignee, any regulatory body or agency having jurisdiction over the Bank,
or to any Person which succeeds' to all or any part of the Bank's interest
herein; provided, however, that prior to the occurrence of an Event of
Default, as a condition to the release of such information to a purchaser,
participant or assignee, such person shall agree to be bound by the
confidentiality provisions set forth in this section. The information
provided may include, but is not limited to, amounts, terms, balances,
payment history, return item history and any financial or other information
about the Borrower or any Subsidiary and their respective Affiliates.
(B) The Bank agrees to, and to take those steps reasonably required
to cause its Affiliates, representatives and independent contractors to,
take reasonable precautions and exercise due care to maintain the
confidentiality of all information provided to it or on its behalf by the
Borrower or any Subsidiary, under this Agreement or any other Loan
Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in the enforcement of this
Agreement and the other Loan Documents or in connection with other business
now or hereafter existing or contemplated with the Borrower or any
Subsidiary; except to the extent such information (i) was or becomes
generally available to the public other than as a result of disclosure by
the Bank, or (ii) was or becomes available on a non-confidential basis from
a source other than such the Borrower, provided that such source is not
bound by a confidentiality agreement with the Borrower known to the Bank;
provided, however, that the Bank may disclose such information (1) at the
request or pursuant to any requirement of any Governmental Body to which
the Bank is subject or in connection with an examination of the Bank by any
such governmental body; (2) pursuant to subpoena or other court process
provided the Borrower is given prior notice of such process to the extent
the Bank is permitted to provide such notice; (3) when required to do so in
accordance with the provisions of any applicable law provided the Borrower
is given prior notice of such process to the extent the Bank is permitted
to provide such notice; (4)
46
to the extent reasonably required in connection with any litigation or
proceeding to which the Bank or its Affiliates may be party; (5) to the
extent reasonably required in connection with the exercise of any right or
remedy or under any other Loan Document; (6) to the Bank's independent
auditors and other professional advisors; (7) to any purchaser, participant
or assignee actual or potential, provided that such Person agrees in
writing to keep such information confidential to the same extent required
of the Bank hereunder; (8) as to the Bank or its Affiliates, as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which the Borrower or any Subsidiary is a party; and (9)
to its Affiliates.
8.13 TERM
This Agreement shall with respect to (i) Section 2.1 hereof have a
term through the Revolving Credit Maturity Date, and (ii) Section 2.2
hereof have a term through the Term Loan Maturity Date. The Loans provided
for in Sections 2.1 and 2.2 hereof shall be due and payable in full upon
expiration of the term as set forth therein or as otherwise set forth in
this Agreement. Notwithstanding the expiration of the term, the rights of
the Bank hereunder and the obligations of the Borrower hereunder shall
remain in full force and effect until all of the Obligations are finally
and indefeasibly paid in full and any commitment to extend credit has been
terminated.
8.14 INTEREST LIMITATION
It is the intention of the Bank and the Borrower to conform strictly
to the laws of the State of New Jersey or the laws of such other
jurisdiction which may be found to apply to the subject transaction
relating to the maximum rate of interest which may be lawfully contracted
for or charged. Nothing contained in this Agreement or any other Loan
Document shall be construed to mean that The Borrower has contracted to pay
or are obligated to pay any sum or sums to the Bank in excess of those
which may lawfully be charged or contracted for under applicable law of the
State of New Jersey or other applicable law. If any provision of this
Agreement or any of the other Loan Documents shall require payment of any
sum or sums of interest in excess of the maximum permitted rate which may
be lawfully contracted for or charged, then the Borrower and the Bank agree
that such result is as a consequence of their inadvertence and/or mistake,
and the interest charge for which the Borrower is liable under this
instrument shall be recomputed for the sole and limited purpose of
determining the extent of the obligations and liabilities of the Borrower
to the Bank so that the interest charges for which the Borrower is liable
shall not exceed the maximum permitted rate which is determined to be
applicable. Additionally, any sums of interest which are collected by the
Bank from the Borrower or other source in connection with the Credit
Facilities evidenced hereby which are in excess of the maximum permitted
rate shall, for the sole and limited purpose of determining the extent of
the obligations and liabilities of the Borrower to the Bank, be credited
against the amount of principal for which the Borrower is liable to the
Bank after giving effect to any recomputation and adjustment required
pursuant to the foregoing provisions of this section, or if such
outstanding principal balance and interest are paid in full, any such
excess shall be remitted by the Bank to the Borrower.
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8.15 INDEMNIFICATION
(A) The Borrower does hereby indemnify and agree to protect, defend
and hold harmless the Bank, any entity which "controls" the Bank within the
meaning of Section 15 of the Securities Act of 1933, as amended, or is
under common control with the Bank, and any officer, director, official,
agent, employee or attorney of the Bank, and their respective heirs,
administrators, executors, successors and assigns (collectively, the
"Indemnified Parties"), from and against any and all losses, damages,
expenses or liabilities of any kind or nature and from any suits, claims or
demands, including reasonable attorneys' fees incurred in investigating or
defending such claim, suffered by any of them and caused by, relating to,
arising out of; resulting from, or in any way connected with the Loan
Documents or the transactions contemplated therein (unless determined by a
final judgment of a court of competent jurisdiction to have been caused
solely by the gross negligence or willful misconduct of the Indemnified
Parties), including, without limitation: (i) any untrue statement of a
material fact contained in information submitted to the Bank by the
Borrower or the Guarantor or the omission of any material fact necessary to
be stated therein in order to make such statement not misleading or
incomplete; (ii) the failure of the Borrower or the Guarantor to perform
any obligations required to be performed by the Borrower or such Guarantor
under this Agreement or any of the Loan Documents; and (iii) the Bank's
reporting or disclosure of any information concerning the Borrower or any
Subsidiary to any prospective purchaser, assignee or participant as
described in Section 2.14.
(B) In case any action shall be brought against the Bank or any other
Indemnified Party in respect to which indemnity may be sought against the
Borrower, the Bank or such other Indemnified Party shall promptly notify
the Borrower and the Borrower shall assume the defense thereof; including
the employment of counsel selected by the Borrower and satisfactory to the
Bank, the payment of all costs and expenses and the right to negotiate and
consent to settlement. The failure of the Bank to so notify the Borrower
shall not relieve the Borrower of any liability they may have under the
foregoing indemnification provisions or from any liability which it may
otherwise have to the Bank or any of the other Indemnified Parties, except
for any losses, damages, expenses or liabilities which result directly from
such failure. The Bank shall have the right, at its sole option, to employ
separate counsel in any such action and to participate in the defense
thereof; all at the Bank's sole cost and expense (unless there then exists
an Event of Default, in which case same shall be at the Borrower's sole
cost and expense). The Borrower shall not be liable for any settlement of
any such action effected without its consent (unless the Borrower fails to
defend such claim), but if settled with the Borrower's consent, or if there
be a final judgment for the claimant in any such action, the Borrower
agrees to indemnify and save harmless the Bank from and against any loss or
liability by reason of such settlement or judgment.
(C) The provisions of this Section 8.15 shall survive the repayment
or other satisfaction of the Obligations.
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8.16 WAIVER OF TRIAL BY JURY
THE BORROWER AND THE BANK AGREE THAT ANY SUIT, ACTION OR PROCEEDING,
WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY THE BANK OR THE BORROWER ON OR
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS
OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE TRIED ONLY BY A
COURT AND NOT BY A JURY. THE BANK AND THE BORROWER EACH HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND INTELLIGENTLY, AND WITH THE ADVICE OF THEIR
RESPECTIVE COUNSEL, WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT,
ACTION OR PROCEEDING. FURTHER, THE BORROWER WAIVE ANY RIGHT THEY MAY HAVE
TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL,
EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. THE BORROWER ACKNOWLEDGES AND AGREES THAT THIS
SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND THAT THE
BANK WOULD NOT EXTEND CREDIT TO THE BORROWER IF THE WAIVERS SET FORTH IN
THIS SECTION WERE NOT A PART OF THIS AGREEMENT.
8.17 ARBITRATION
(A) Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute or controversy arising
out of; or relating to this Agreement and the other Loan Documents between
or among parties hereto or thereto ("Disputes") shall be resolved by
binding arbitration conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association (the "AAA") and the Federal Arbitration
Act. Disputes may include, without limitation, tort claims, counterclaims,
disputes as to whether a matter is subject to arbitration, claims brought
as class actions, or claims arising from documents executed in the future.
A judgment upon the award may be entered in any court having jurisdiction.
Notwithstanding the foregoing, this arbitration provision does not apply to
disputes under or related to Swap Agreements.
(B) All arbitration hearings shall be conducted in the city in which
the office of the Bank first stated above is located. A hearing shall begin
within 90 days of demand for arbitration, and all hearings shall be
conducted within 120 days of demand for arbitration. These time limitations
may not be extended unless a party shows cause for extension and then for
no more than a total of 60 days. The expedited procedures set forth in Rule
51 et seq. of the Arbitration Rules shall be applicable to claims of less
than $1,000,000. Arbitrators shall be licensed attorneys selected from the
Commercial Financial Dispute Arbitration Panel of the AAA. The parties do
not waive applicable Federal or state substantive law except as provided
herein.
(C) Notwithstanding the preceding binding arbitration provisions, the
Bank and the Borrower agree to preserve, without diminution, certain
remedies that any party hereto may exercise before or after an arbitration
proceeding is brought. The
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parties shall have the right to proceed in any court of proper jurisdiction
or by self-help to exercise or prosecute the following remedies, as
applicable: (i) all rights to foreclose against any real or personal
property or other security by exercising a power of sale or under
applicable law by judicial foreclosure, including a proceeding to confirm
the sale; (ii) all rights of self-help including peaceful occupation of
real property and collection of rents, set-off; and peaceful possession of
personal property; (iii) obtaining provisional or ancillary remedies
including injunctive relief; sequestration, garnishment, attachment,
appointment of receiver and filing an involuntary bankruptcy proceeding;
and (iv) when applicable, a judgment by confession of judgment. Any claim
or controversy with regard to any party's entitlement to such remedies is a
Dispute.
(D) Each party agrees that it shall not have a remedy of punitive or
exemplary damages against the other in any Dispute and hereby waives any
right or claim to punitive or exemplary damages it has now or which may
arise in the future in connection with any Dispute, whether the Dispute is
resolved by arbitration or judicially.
(E) The parties acknowledge that by agreeing to binding arbitration
they have irrevocably waived any right they may have to a jury trial with
regard to a Dispute.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
BANK:
FIRST UNION NATIONAL BANK
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By: _____________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Sr. Vice President
BORROWER:
ATTEST: DATARAM CORPORATION
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
By: _____________________ By:______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Secretary Vice President
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