PRODUCT CONSIGNMENT AND SALE AGREEMENT
This Product Consignment And Sale Agreement (this "Agreement") is
entered into as of the 27th day of July, 2010 (the "Effective Date") by
and between Sheerr Memory, Inc., having an office at 130 Corporate Drive,
Montgomeryville, PA 18936 ("SHEERR"), and Dataram Corporation, having an
office at 186 Princeton Road, West Windsor, NJ 08550 ("DATARAM").
WHEREAS, pursuant to an Asset Purchase Agreement dated March 31, 2009
between DATARAM and SHEERR, which was named Micro Memory Bank, Inc. ("MMB")
at the time the parties entered into such Asset Purchase Agreement, DATARAM
purchased certain assets from MMB (the "MMB Asset Purchase Agreement").
WHEREAS, David Sheerr, the sole shareholder of MMB, and DATARAM entered
into an employment agreement dated March 31, 2009 in connection with the MMB
Asset Purchase Agreement (the "Sheerr Employment Agreement").
WHEREAS, SHEERR desires to sell to DATARAM, and DATARAM desires to
purchase from SHEERR, certain memory products on a consignment sale basis.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged,
DATARAM and SHEERR hereby agree as follows.
1.0 TERM; PURCHASE AND CONSIGNMENT OF PRODUCTS
1.1 This Agreement shall commence as of the Effective Date and shall be
effective until it expires or it terminated as provided in Section 6 hereof.
1.2 DATARAM from time to time throughout the term of this Agreement
shall issue product acquisition requests (each, a "Product Acquisition
Request") to SHEERR for memory components (the "Products") that will be used
by DATARAM in the production of products that will be sold by DATARAM.
SHEERR shall (a) procure such Products from DATARAM or from vendors approved
by DATARAM, and (b) consign such Products to DATARAM (the "Consigned
Products") at DATARAM'S facilities in Ivyland, Pennsylvania or
Montgomeryville, Pennsylvania in accordance with DATARAM's written
instructions; provided, however, SHEERR shall not be required to consign a
Product to DATARAM if such consignment will cause the aggregate value of all
Consigned Products held in the Cage (as defined below) at such time to
exceed the Consigned Inventory Commitment Amount (as defined below). In
addition, SHEERR shall have the right from time to time after receiving a
Product Acquisition Request from DATARAM to request that DATARAM provide
SHEERR with a Product different than the one specified in the Product
Acquisition Request to acquire and consign to DATARAM under this Agreement.
If DATARAM receives such a request from SHEERR, DATARAM shall use reasonable
good faith efforts to provide SHEERR with a different Product to acquire and
consign to DATARAM under this Agreement. If DATARAM is not able to provide
SHEERR with a different Product to acquire and consign to DATARAM, SHEERR
shall acquire the Product listed in DATARAM's Product Acquisition Request
and shall consign such Product to DATARAM. The "Consigned Inventory
Commitment Amount" shall mean an amount equal to the sum of (A) $1,000,000
plus (B) seventy percent (70%) of the Cumulative Earn Out Payments (as
defined below). The "Cumulative Earn Out Payments" shall mean an amount
equal to the quarterly earn out payment due to MMB pursuant to
Section 4.1(c) of the MMB Asset Purchase Agreement for (I) DATARAM's
Q4FY2010 plus (II) each of DATARAM's fiscal quarters for DATARAM's fiscal
year 2011. SHEERR'S Consigned Inventory Commitment Amount shall be limited
to $3,000,000 of which amount any sum over $2,500,000 shall be at SHEERR'S
sole discretion. DATARAM shall purchase the Consigned Products from SHEERR
from time to time subject to and in accordance with the terms of this
Agreement.
1.3 If SHEERR acquires Products from DATARAM pursuant to Section 1.2,
the terms of sale shall be NET 30 DAYS from the date of DATARAM's invoice.
1.4 DATARAM agrees that transactions entered into pursuant to this
Agreement shall not be deemed to be in violation of Section 8.1(b) of the
Sheerr Employment Agreement.
1.5 Within 15 business days after the Effective Date of this Agreement,
DATARAM shall pay David Sheerr the principal balance and any accrued and
unpaid interest due on the Note and Security Agreement entered into on
February 24, 2010 between Dataram Corporation and David Sheerr.
2.0 CONSIGNMENT CONTROL AND REPORTING
2.1 DATARAM shall store the Consigned Products in secure storage areas
at its facilities in Ivyland, Pennsylvania and in Montgomeryville,
Pennsylvania (such secure storage facilities, collectively, the "Cage") and
shall not commingle the Consigned Products with other products owned by
DATARAM or other parties.
2.2 DATARAM shall provide SHEERR with a purchase order (a "Consigned
Products Purchase Order") on the same business day on which DATARAM removes
Consigned Products from the Cage that identifies the Consigned Products that
DATARAM removed from the inventory in the Cage. DATARAM shall provide the
following information in each Consigned Products Purchase Order: (1) the
date the Consigned Products were removed from the Cage; (2) the part number
or numbers of the Consigned Products; (3) the number of units per part
number; (4) the unit price per part number; and (5) the purchase order
number.
2.3 DATARAM agrees to grant a representative of SHEERR access to
DATARAM's facilities in Ivyland, Pennsylvania and in Montgomeryville,
Pennsylvania, at least one time per month during DATARAM's normal business
hours upon reasonable prior written notice from SHEERR to allow such
representative to inventory the Consigned Products.
2.4 DATARAM and SHEERR shall meet monthly at DATARAM's corporate offices
to discuss consignment inventory levels and to review processes and controls.
3.0 TRANSFER OF TITLE
3.1 Title to a Consigned Product shall pass from SHEERR to DATARAM when
DATARAM removes such Consigned Product from the Cage, issues a Consigned
Products Purchase Order to SHEERR for such Consigned Product, and purchases
such Consigned Product from SHEERR.
4.0 PURCHASE; PURCHASE PRICE; PAYMENT; CONSIGNED PRODUCT FEE
4.1 DATARAM shall purchase a Consigned Product upon the removal of such
Consigned Product from the inventory of Consigned Product in the Cage and
the issuance of a Consigned Products Purchase Order to SHEERR with respect
to such Consigned Product. In addition, if a Consigned Product has not been
removed from the Cage and purchased by DATARAM by the ninety first (91st)
day after such Consigned Product was consigned by SHEERR to DATARAM and
placed in the Cage, DATARAM shall remove such Consigned Product from the
Cage, issue a Consigned Products Purchase Order to SHEERR with respect to
such Consigned Product, and purchase it from SHERR in accordance with this
Agreement.
4.2 The purchase price for each Consigned Product shall be equal to the
purchase price that SHEERR paid for such Consigned Product determined on a
First In, First Out, basis.
4.3 DATARAM shall pay SHEERR for each Consigned Product within thirty
(30) days of the date on which such Consigned Product was purchased by
DATARAM from SHEERR in accordance with Section 4.1 of this Agreement.
4.4 DATARAM shall pay SHEERR a monthly consigned product fee equal to
0.833% of the average daily balance of the purchase price paid by SHEERR for
the Consigned Products held in the Cage for each calendar month that this
Agreement is in effect. DATARAM shall pay this consigned product fee to
SHEERR within thirty (30) calendar days of the end of each calendar month
in which Consigned Products are held by DATARAM under this Agreement.
5.0 CONTROL OF CONSIGNED PRODUCTS; RISK OF LOSS; INSURANCE
5.1 The Consigned Products shall be subject to DATARAM's direction and
control until the expiration or termination of this Agreement pursuant to
Section 6.
5.2 DATARAM shall have the risk of loss with respect to any Consigned
Products that are in the Cage. If any Consigned Products are damaged, lost,
or stolen (each, a "Casualty Event"), DATARAM will be deemed to have
purchased such Consigned Products from SHEERR on the date of such Casualty
Event and shall pay SHEERR the purchase price for such Consigned Products
through the insurance proceeds from DATARAM's insurance coverage with
respect to such Consigned Products. If such insurance proceeds are not
sufficient to pay the purchase price for such Consigned Products in full,
DATARAM shall pay the deficiency to SHEERR within thirty (30) days of the
Casualty Event.
5.3 DATARAM shall insure the Consigned Products in a commercially
reasonable manner and shall provide SHEERR with a certificate of insurance
with respect to such coverage in which SHEERR is named as a loss payee.
6.0 TERM AND TERMINATION
6.1 This Agreement shall commence on the Effective Date and shall
continue for twenty four (24) calendar months unless sooner terminated in
accordance with this Section.
6.2 Either party may terminate this Agreement for cause through written
notice to the other party if such other party breaches this Agreement and
fails to cure such breach within (a) ten (10) business days of its receipt
of written notice of such breach from or on behalf of the non-defaulting
party if such breach involves the payment of money, and (b) twenty (20)
business days of its receipt of written notice of such breach from or on
behalf of the non-defaulting party if such breach does not involve the
payment of money. In addition, either party may, at its option, terminate
this Agreement immediately upon written notice to the other party if:
(i) A receiver is appointed for the other party or its property;
(ii) The other party files a voluntary bankruptcy petition or has
an involuntary bankruptcy petition filed against it, which
is not dismissed within sixty (60) days from the date of
initiation; or
(iii) The other party is liquidated or dissolved.
6.3 SHEERR shall have the right to terminate this Agreement through
written notice to DATARAM:
(i) upon the occurrence of a material adverse change in
DATARAM's business or its financial condition as reasonably determined by
SHEERR which is not cured by DATARAM to the reasonable satisfaction of
SHEERR within fifteen (15) business days of DATARAM's receipt of written
notice from SHEERR which describes such material adverse change in
reasonable detail and which references this Section of this Agreement, or
(ii) immediately upon any default in payment to SHEERR of any
Cumulative Earn Out Payments.
6.4 DATARAM shall return all Consigned Product in the Cage to SHEERR at
DATARAM's expense within ten (10) business days of the effective date of any
(i) expiration of this Agreement, or (ii) termination of this Agreement by
SHEERR for cause pursuant to Section 6.2. or Section 6.3, above. DATARAM
shall return all Consigned Product in the Cage to SHEERR at SHEERR's expense
within ten (10) business days of the effective date of any termination of
this Agreement by DATARAM for cause pursuant to Section 6.2.
6.5 No termination of this Agreement shall (i) relieve either party from
any obligations hereunder which have accrued on or before the effective date
of such termination including without limitation any obligation to pay to
the other party any sum owed pursuant to this Agreement, or (ii) affect any
rights of either party with respect to any breach of this Agreement. In
addition, all provisions of this Agreement which are by their nature
ntended to survive the expiration or termination of this Agreement will
survive such expiration or termination.
6.6 This Agreement shall be void ab initio if the parties have not
entered into a sale/leaseback agreement for the machinery, equipment,
furniture, fixtures and premises at 130 Corporate Drive, Montgomeryville, PA
18936 within 30 days of the Effective Date, unless extended by the mutual
agreement of the parties.
7.0 NOTICES
7.1 Any notice required or permitted hereunder to the parties hereto
will be deemed to have been duly given only if in writing and delivered by
(a) certified U.S. mail, return receipt requested, postage prepaid, or by a
national overnight delivery service that provides a delivery receipt, with
any service or delivery fee prepaid, to the address of the receiving party
as set forth below or such other address as may be specified by such party
in a notice delivered to the other party in accordance with this Section, or
(b) via hand delivery. Notices shall be deemed delivered when received by
the party being notified.
SHEERR at: DATARAM at:
Sheerr Memory Dataram Corporation
130 Corporate Drive 186 Princeton-Heightstown Road
Montgomeryville, PA 18936 West Windsor, NJ 08550
Attn: David Sheerr Attn: Vice-President, Finance
Telephone: 215-643-6700 Telephone: 609-799-0071
and if notice is given to DATARAM, a copy shall also be given to:
Thomas J. Bitar, Esq.
Dillon, Bitar & Luther, L.L.C.
200 Park Ave., Suite 301
Florham Park, New Jersey 07932
Telephone: 973-539-3100
Facsimile: 973-292-2960
And if notice is given to SHEERR, a copy shall also be given to:
L. Gerald Rigby, Esq.
ARCHER & GREINER, P.C.
One Liberty Place, 32nd Floor
1650 Market Street
Philadelphia, PA 19130
Telephone: 215-963-3300
Fax: 215-568-2843
Email: Grigby@archerlaw.com
8.0 INTERCREDITOR AGREEMENTS; UCC-1 FINANCING STATEMENTS
8.1 Upon DATARAM's request, SHEERR shall execute and deliver any and all
subordination agreements, intercreditor agreements, or other similar
documents or agreements that DATARAM may reasonably request to confirm,
effect, or memorialize that SHEERR's rights in and to the Consigned Products
under this Agreement does not give SHEERR a lien upon or any rights in and
to (i) DATARAM's accounts receivable, including, but not limited to,
accounts receivable generated through the sale of DATARAM products
manufactured through the use of Consigned Products, or (ii) any other assets
of DATARAM.
8.2 DATARAM shall execute and deliver to SHEERR such Uniform Commercial
Code financing statements as SHEERR may deem necessary to perfect or
maintain its rights in and to the Consigned Products under the Uniform
Commercial Code of the State of New Jersey. In addition, DATARAM hereby
authorizes SHEERR to (i) execute on DATARAM's behalf and file such Uniform
Commercial Code financing statements as SHEERR may deem necessary to perfect
or maintain its rights in and to the Consigned Products under the Uniform
Commercial Code of the State of New Jersey, and (ii) file one or more
Uniform Commercial Code financing statements disclosing SHEERR's rights in
and to the Consigned Products under the Uniform Commercial Code of the State
of New Jersey without DATARAM's signature appearing thereon.
9.0 MISCELLANEOUS
9.1 This Agreement is the complete and exclusive statement of the
agreement of the parties with respect to the subject matter hereof and
supersedes and merges all prior proposals and agreements, oral or written,
between the parties with respect to the subject matter hereof. This
Agreement may not be modified except by a written instrument duly executed
by the parties hereto.
9.2 Section headings are provided for convenience of reference and do
not constitute part of this Agreement. Any references to a particular
section of this Agreement shall be deemed to include reference to any and
all subsections thereof.
9.3 If any provision of this Agreement is held to be invalid or
unenforceable for any reason, the remaining provisions will continue in full
force without being impaired or invalidated in any way. The parties agree
to replace any invalid provision with a valid provision which most closely
approximates the intent and economic effect of the invalid provision. No
waiver of any provision of this Agreement will be effective unless it is in
writing and signed by the party against which it is sought to be enforced.
The delay or failure by either party to exercise or enforce any of its
rights under this Agreement is not a waiver of that party's right to later
enforce those rights, nor will any single or partial exercise of any such
right preclude any other or further exercise of these rights or any other
right.
9.4 If any part of this Agreement shall be adjudged by any court of
competent jurisdiction to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not
be affected or impaired thereby and shall be enforced to the maximum extent
permitted by applicable law. If any remedy set forth in this Agreement is
determined to have failed of its essential purpose, then all other
provisions of this Agreement shall remain in full force and effect.
9.5. Neither party may assign or delegate any or all of its rights
(other than the right to receive payments) or its duties or obligations
hereunder without the consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, however, that either party may
assign this Agreement, without the need to obtain consent of the other
party, to an affiliate of such party or to a successor in interest to
substantially all of the business of that party to which this Agreement
relates. An assignee of either party authorized hereunder shall be bound by
the terms of this Agreement and shall have all of the rights and obligations
of the assigning party set forth in this Agreement.
9.6 "Confidential Information" shall mean any information obtained by
one party from or with respect to the other party under or in connection
with this Agreement and shall include, but shall not be limited to, any
information obtained by one party with respect to the other party's
research, product plans, products, services, clients, markets, software,
inventions, designs, processes, marketing plans, or finances. Information
will not, however, be considered to be Confidential Information if it (a) is
already, or otherwise becomes, publicly known by third parties as a result
of no act or omission of the receiving party; (b) is lawfully received,
after disclosure hereunder, from a third party having the right to
disseminate the information without restriction on disclosure; (c) is
furnished to others by the disclosing party without restriction on
disclosure; or (d) can be shown by the receiving party to have been
independently developed by such party prior to the execution of this
Agreement. Both during and after the term of this Agreement, each of the
parties agrees (a) to use commercially reasonable efforts to protect the
Confidential Information of the other party from unauthorized use or
disclosure and to use at least the same degree of care with regard thereto
as it uses to protect its own Confidential Information of a like nature;
(b) to use and reproduce the Confidential Information of the other party
only as permitted under this Agreement or as needed to perform its duties
hereunder; and (c) not to disclose or otherwise permit access to the
Confidential Information of the other party to any third party, without the
other party's prior written consent. The parties agree that any breach by
either party or any of its officers, directors, or employees, of any
provisions of this Section may cause immediate and irreparable injury to the
other party and that, in the event of such breach, the injured party will be
entitled to seek injunctive relief as well as any and all other remedies
available at law or in equity.
9.7 If an ambiguity or question of intent arises with respect to any
provision of this Agreement, the Agreement will be construed as if drafted
jointly by the parties and no presumption or burden of proof will arise
favoring or disfavoring either party by virtue of authorship of any of the
provisions of this Agreement.
9.8 Either party shall be excused from performance and shall not be
liable for any delay in whole or in part, caused by the occurrence of any
contingency beyond the reasonable control either of the excused party or its
subcontractors or suppliers including, but not limited to, war, sabotage,
insurrection, riot or other act of civil disobedience, act of public enemy,
failure or delay in transportation, act of any government or any agency or
subdivision thereof affecting the terms hereof, accident, fire, explosion,
flood, severe weather or other act of God, or shortage of labor or fuel or
raw material.
9.9 This Agreement shall be deemed to have been made in, and shall be
construed pursuant to the laws of, the State of New Jersey without regard to
its conflicts of laws provisions.
9.10 This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which shall be taken together
and deemed to be one instrument. Signatures delivered by telecopier or
other electronic device shall be binding and enforceable against the party
as if an original signed counterpart had been delivered.
IN WITNESS WHEREOF, each party hereto has caused this Product
Consignment And Sale Agreement to be executed by its duly authorized
representative as of the date first set forth above.
SHEERR MEMORY, INC DATARAM CORPORATION
By: /s/ David Sheerr By: /s/ John H. Freeman
_____________________________ _______________________________
Name: David Sheerr Name: John H. Freeman
____________________________ _____________________________
Title: President Title: President
____________________________ _____________________________
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