Dataram announced it signed a financing agreement with Rosenthal and Rosenthal, which provides for a revolving loan with a maximum borrowing capacity of $3.5 million.
The loans under the mature on November 30, 2016 unless such the financing statement is terminated or renewed. Loans outstanding under the agreement will bear interest at a rate of the Prime Rate plus 3.25% or on over-advances, if any, at a rate of the Effective Rate plus 3%. The Agreement contains other restrictive covenants, including, among others, covenants limiting the ability to incur indebtedness, guarantee obligations, sell assets, make loans, enter into mergers and acquisition transactions and declare or make dividends. Borrowings under the agreement are collateralized by substantially all the assets of the company. The funds will provide working capital to the company.
At the same time, the company entered into a financing arrangement with David Sheerr, structured as a sale lease-back. Pursuant to the arrangement, the company sold certain equipment and furniture to Sheerr in consideration for a reduction of $500,000 in the remaining principal balance of an outstanding promissory note owed to Sheerr.
Simultaneously, the company leased the equipment and furniture back from Sheerr pursuant to an Equipment and Furniture Lease Agreement. The lease has a 5-year term, and provides the company with the option to extend the term for an additional 2 years.
John H. Freeman, Dataram’s president and CEO commented, “These are steps we are taking in a program to strengthen our balance sheet, reduce expenses and have working capital available to support large recent wins and to position Dataram for future growth.”
Founded in 1967, Dataram is a worldwide manufacturer of high-quality computer memory and software products.