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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) / X / Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended 10/31/00 or / / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from to Commission file number 1-8266 DATARAM CORPORATION (Exact name of registrant as specified in its charter) New Jersey 22-1831409 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) P.O. Box 7528, Princeton, NJ 08543 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (609) 799-0071 (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date. Common Stock ($1.00 par value): As of November 28, 2000, there were 8,565,219 shares outstanding.
PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Dataram Corporation And Subsidiary Consolidated Balance Sheets October 31, 2000 and April 30, 2000 (Unaudited) (Audited) October 31, 2000 April 30, 2000 Assets Current Assets: Cash and cash equivalents $ 17,914,790 $ 13,649,601 Trade receivables, less allowance for doubtful accounts and sales returns of $550,000 at October 31, 2000 and $450,000 at April 30, 2000 17,659,726 16,241,229 Inventories 6,775,521 4,651,277 Other current assets 911,608 584,428 __________ __________ Total current assets 43,261,645 35,126,535 Property and equipment, at cost: Land 875,000 875,000 Machinery and equipment 10,034,939 8,009,925 __________ __________ 10,909,939 8,884,925 Less: accumulated depreciation and amortization 4,727,076 3,877,476 __________ __________ Net property and equipment 6,182,863 5,007,449 Other assets 18,160 17,160 __________ __________ $ 49,462,668 $ 40,151,144 ========== ========== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 10,471,265 $ 9,537,747 Accrued liabilities 2,748,374 2,878,550 __________ __________ Total current liabilities 13,219,639 12,416,297 Deferred income taxes 841,000 841,000 Stockholders' Equity: Common stock, par value $1.00 per share. Authorized 54,000,000 shares; issued and outstanding 8,565,219 at October 31, 2000 and 8,278,403 at April 30, 2000 8,565,219 8,278,403 Additional paid in capital 3,271,296 980,461 Retained earnings 23,565,514 17,634,983 __________ __________ Total stockholders' equity 35,402,029 26,893,847 __________ __________ $ 49,462,668 $ 40,151,144 ========== ========== See accompanying notes to consolidated financial statements. Dataram Corporation and Subsidiary Consolidated Statements of Earnings Three and Six Months Ended October 31, 2000 and 1999 (Unaudited) 2000 1999 2nd Quarter Six Months 2nd Quarter Six Months Revenues $ 39,865,951 $ 77,861,763 $ 29,385,690 $ 50,550,374 Costs and expenses: Cost of sales 30,755,272 59,615,860 21,940,071 37,354,818 Engineering and development 414,370 786,391 343,087 676,062 Selling, general and administrative 4,059,985 8,405,581 3,857,280 6,907,116 __________ __________ __________ __________ 35,229,627 68,807,832 26,140,438 44,937,996 Earnings from operations 4,636,324 9,053,931 3,245,252 5,612,378 Interest income, net 291,983 521,600 117,005 224,687 __________ __________ __________ __________ Earnings before income taxes 4,928,307 9,575,531 3,362,257 5,837,065 Income tax provision 1,877,000 3,645,000 1,281,257 2,225,000 __________ __________ __________ __________ Net earnings $ 3,051,307 $ 5,930,531 $ 2,081,000 $ 3,612,065 ========== ========== ========== ========== Net earnings per share of common stock Basic $ .36 $ .70 $ .27 $ .46 ========== ========== ========== ========== Diluted $ .31 $ .60 $ .22 $ .38 ========== ========== ========== ========== Weighted average number of common shares outstanding Basic 8,559,356 8,493,064 7,790,930 7,809,215 ========== ========== ========= ========= Diluted 9,944,063 9,916,452 9,460,072 9,419,416 ========== ========== ========= ========= See accompanying notes to consolidated financial statements. Dataram Corporation and Subsidiary Consolidated Statements of Cash Flows Six Months Ended October 31,2000 and 1999 (Unaudited) 2000 1999 Cash flows from operating activities: Net earnings $ 5,930,531 $ 3,612,065 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 849,600 600,000 Bad debt expense 148,032 164,450 Changes in assets and liabilities: Increase in trade receivables (1,566,529) (5,104,167) Increase in inventories (2,124,244) (1,159,331) Increase in other current assets (327,180) (177,823) Increase in other assets (1,000) (555) Increase in accounts payable 933,518 5,717,957 (Decrease)increase in accrued liabilities (130,176) 214,126 Decrease in income taxes payable 0 (20,000) __________ __________ Net cash provided by operating activities 3,712,552 3,846,722 __________ __________ Cash flows from investing activities: Purchase of property and equipment (2,025,014) (740,393) __________ __________ Net cash used in investing activities (2,025,014) (740,393) Cash flows from financing activities: Proceeds from sale of common shares under stock option plan (including tax benefits) 2,577,651 573,022 Purchase and subsequent cancellation of common stock 0 (3,382,630) __________ __________ Net cash used in financing activities 2,577,651 (2,809,608) __________ __________ Net increase in cash and cash equivalents 4,265,189 296,721 Cash and cash equivalents at beginning of year 13,649,601 8,092,527 __________ __________ Cash and cash equivalents at end of period $ 17,914,790 $ 8,389,248 ========== ========== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 32,603 $ 40,484 Income taxes $ 2,055,000 $ 2,065,000 See accompanying notes to consolidated financial statements. Notes to Consolidated Financial Statements October 31, 2000 and 1999 (Unaudited) Basis of Presentation The information at October 31, 2000 and for the three and six months ended October 31, 2000 and 1999, is unaudited but includes all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to
state fairly the financial information set forth therein in accordance with generally accepted accounting principles. The interim results are not necessarily indicative of results to be expected for the full fiscal year. These financial statements should
be read in conjuction with the audited financial statements for the year ended April 30, 2000 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission. Stock Splits On November 10, 1999 the Company's Board of Directors announced a three-for-two stock split effected in the form of a dividend for shareholders of record at the close of business on November 24, 1999 and payable December 15, 1999. The stock split has
been charged to additional paid in capital in the amount of $263,000 and retained earnings in the amount of $2,377,000. Weighted average shares outstanding and net earnings per share in the accompanying financial statements have been restated to give
retroactive effect to the stock split. Significant Accounting Policies Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Dataram International Sales Corporation (a Domestic International Sales Corporation (DISC)). All significant intercompany transactions and
balances have been eliminated. Cash and cash equivalents Cash and cash equivalents consist of unrestricted cash, money market preferred stock and commercial paper with original maturities of three months or less. Inventory valuation Inventories are valued at the lower of cost or market, with costs determined by the first-in, first-out method. Inventories at October 31, 2000 and April 30, 2000 consist of the following categories: October 31, 2000 April 30, 2000 ________________ ______________ Raw material $ 2,601,000 $ 2,454,000 Work in process 1,197,000 223,000 Finished goods 2,978,000 1,974,000 ________________ ______________ $ 6,776,000 $ 4,651,000 ================ ============== Property and equipment Property and equipment is recorded at cost. Depreciation is generally computed on the straight-line basis. Depreciation rates are based on the estimated useful lives which range from three to five years for machinery and equipment. When property or
equipment is retired or otherwise disposed of, related costs and accumulated depreciation are removed from the accounts. Repair and maintenance costs are charged to operations as incurred. Revenue recognition Revenue from product sales is recognized when the related goods are shipped to the customer and all significant obligations of the Company have been satisfied. Estimated warranty costs are accrued. Product development and related engineering The Company expenses product development and related engineering costs as incurred. Engineering effort is directed to development of new or improved products as well as ongoing support for existing products. Income taxes The Company follows the asset and liability method of accounting for income taxes in accordance with the provisions of Statement of Financial Accounting Standards SFAS No. 109, "Accounting for Income Taxes". Under the asset and liability method of
SFAS No. 109, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change
in tax rates is recognized in earnings in the period that the tax rate changes. Concentration of credit risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash and cash equivalents in financial institutions and brokerage accounts. To the
extent that such deposits exceed the maximum insurance levels, they are uninsured. The Company performs ongoing evaluations of its customers' financial condition, as well as general economic conditions and, generally, requires no collateral from its
customers. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Long-term debt On October 31, 2000, the Company amended and restated its existing credit facility with its bank. Under the agreement, the Company maintains the revolving credit facility of $12,000,000 until October 31, 2001, at which point it will decrease to
$6,000,000 until October 31, 2002. The agreement provides for Eurodollar rate loans and base rate loans at an interest rate no higher than the bank's base commercial lending rate less 3/4%. The Company is required to pay a commitment fee equal to
1/16 of one percent per annum on the unused commitment. The agreement contains certain restrictive financial covenants including a minimum current ratio, minimum tangible net worth requirement, minimum interest coverage ratio, maximum debt to equity
ratio and certain other covenants, as defined by the agreement. There were no borrowings during fiscal 2001 and 2000. As of October 31, 2000, the amount available for borrowing under the revolving credit facility was $12,000,000. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities and
Exchange Act of 1934, as amended. Actual results could differ materially from those projected in the forward looking statements. Liquidity and Capital Resources As of October 31, 2000, working capital amounted to $30.0 million reflecting a current ratio of 3.3 compared to working capital of $27.7 million and a current ratio of 2.8 as of April 30, 2000. During fiscal 2001, the Company amended and restated its $12 million unsecured revolving credit line with its bank. On October 31, 2001, $6 million of the facility is scheduled to expire and on October 31, 2002, the remaining $6 million of the
facility is scheduled to expire. The Company intends to renew any expiring portion of the facility by the expiration date and maintain a $12 million total facility. As of October 31, 2000 there was no amount outstanding under the line of credit. Management believes that its working capital together with internally generated funds and its bank line of credit are adequate to finance the Company's operating needs and future capital requirements. Results of Operations Revenues for the three month period ending October 31, 2000 increased 36% to $39,866,000 compared to revenues of $29,386,000 for the comparable prior year period. Unit volume measured in gigabytes shipped increased by approximately 22% over the
prior comparable year period. The increase in revenues was the result of increased demand for the Company's memory products driven by the growth both in shipments of network servers and memory content per server. Revenue for Intel processor based server
memory, introduced last year, increased by approximately 125% from second quarter fiscal 2000. Fiscal 2001 six month revenues totaled $77,862,000 versus six month revenues of $50,550,000 for the prior fiscal year, an increase of 54%. Cost of sales for the second quarter and first six months of fiscal 2001 were 77% and 76%, respectively of revenues versus 75% and 74% for the same prior year periods. The increase in cost of sales as a percentage of revenues is primarily attributable
to the growth of shipments of memory for the Intel processor based servers. These products typically carry smaller margins than the remainder of the Company's memory products. Engineering and development costs in fiscal 2001's second quarter and first six months were $414,000 and $786,000, respectively versus $343,000 and $676,000 for the same prior year periods. The Company intends to maintain its commitment to the
timely introduction of new memory products as new servers are introduced. Selling, general and administrative costs in this year's second quarter and first six months decreased to 10% and 11%, respectively of revenues from 13% and 14% for the same prior year periods. Year-to-date selling, general and administrative
costs increased by $1,498,000 in fiscal 2001 versus fiscal 2000. The increase in costs is primarily attributable to planned increases in sales staff and marketing programs. Interest income, net sfor the second quarter and six months of fiscal 2001 and 2000 consisted primarily of interest income on short term investments. Safe Harbor Statement The information provided in this interim report may include forward-looking statements relating to future events, such as the development of new products, the commencement of production or the future financial performance of the Company. Actual
results may differ from such projections and are subject to certain risks including, without limitation, risks arising from: changes in the price of memory chips, changes in the demand for memory systems for workstations and servers, increased competition
in the memory systems industry, delays in developing and commercializing new products and other factors described in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission which can be reviewed at
http://www.sec.gov. PART II: OTHER INFORMATION ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K A. Exhibits 27 (a). Financial Data Schedule 28 (a). Press Release reporting results of Second Quarter, Fiscal Year 2001 (Attached). 28 (b). Amendment to revolving line of credit agreement (Attached). 28 (c). Revolving Line of Credit Note. B. Reports on Form 8-K No reports on Form 8-K have been filed during the current quarter. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATARAM CORPORATION Date: November 28, 2000 By: MARK E. MADDOCKS Mark E. Maddocks Vice President, Finance (Principal Financial Officer) Dataram Contact: 609-799-0071 info@dataram.com info@dataram.com Investor Contact: Tcurtiss@WallStreetIR.com Tcurtiss@WallStreetIR.com
Mark Maddocks, Chief Financial Officer
Tim Curtiss, Wall Street Investor Relations Corp.
216-831-6532
IN SECOND QUARTER ON 36 PERECENT REVENUE GROWTH
Twelfth Consecutive Quarter of Year-Over-Year Earnings Increases
PRINCETON, N.J. November 8, 2000 - Dataram Corporation (NASDAQ: DRAM ) today reported financial results for its fiscal second quarter ended October 31, 2000. The Company reported a 47 percent increase in net earnings toof $3.1 million or $0.31 per diluted share. Earnings per share increased 41 percent compared to $2.1 million or $0.22 per diluted share$2.1 million or $0.22 per diluted share for the same period of the previous year. Revenues for the second quarter increased 36 percent to increased 36 percent to $39.9 million over the prior year's second quarter level of $29.4 million. Net earnings for the six month period ended October 31, 2000 were $5.9 million or $0.60 per diluted share, an increase of 64 percent over the same period of the previousior year of $3.6 million or $0.38 per diluted share. Revenues were $77.9 million, up 54 percent compared to $50.6 million in the comparable period of the previous fiscal year.
In thousands, except per share amounts |
Three MonthsSecond Quarter ended |
Six Months ended |
||||
2000 |
1999 |
% Gain |
2000 |
1999 |
% Gain |
|
Revenues |
$39,866 |
$29,386 |
36% |
$77,862 |
$50,550 |
54% |
Earnings from Operations |
$4,636 |
$3,245 |
43% |
$9,054 |
$5,612 |
61% |
Net Earnings |
$3,051 |
$2,081 |
47% |
$5,931 |
$3,612 |
64% |
Diluted EPS |
$0.31 |
$0.22 |
41% |
$0.60 |
$0.38 |
58% |
Shares Outstanding (diluted) |
9,944 |
9,460 |
|
9,916 |
9,419 |
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-
"Dataram's performance during the second quarter surpassed our expectations," commented Robert Tarantino, Dataram's chairman and CEO. "Our products for Intel processor based servers, introduced last year, contributed significantly to our second quarter's results, and the prospects for this part of our business are strong. Sales of our compatible products continued to exceed plan."
Mr. Tarantino continuedadded, "This marks Dataram's twelfth consecutive quarter of increased year-over-year earnings. The market for our products, driven by Iincreasing demands on information technology infrastructure, presentoffers a high growth opportunity for our products, .which Our products offer a compelling solution to the needs of memory-intensive customers, including ISPs, ASPs and corporate users."
"Our operating and net margins continue to expand," added Mark Maddocks, Dataram's CFO. "As we enter our fiscal third quarter, we are encouraged by the strong demand we are seeing for server memory."
Dataram will conduct a conference call at 11:00 am AM (EST) on November 8 to present its second quarter financial results and to respond to investor questions. Interested shareholders may participate in the call by dialing 800-497-7708 approximately and askinging to be connected to the Dataram conference call. It is recommended that participants call 10 minutes before the conference call is scheduled to begin. The conference call can also be accessed over the Internet through Vcall at www.vcall.com. at www.vcall.com www.vcall.com. A replay of the call will be available approximately one hour after the completion of the conference call through Vcall. A replay can also be accessed via the telephone until 9:00 PM PM on November 9 by dialing 800-252-6030 (402-220-2491 for international callers) and entering the following code: 7274924.
About Dataram Corporation
Dataram Corporation is a leading provider of gigabyte memory upgrades for network servers. The Company specializes in the manufacture of large capacity memory for Compaq, Hewlett-Packard, IBM, Intel, Silicon Graphics and Sun Microsystems computers. Dataram, headquartered in Princeton, New Jersey, is celebrating its 34th year in the computer industry. Additional information is available on the Internet at www.dataram.com.at www.dataram.com.
Financial Tables to Follow
DATARAM CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
Three Months Ended |
Six Months Ended |
|||||
10/31/2000 |
10/31/1999 |
10/31/2000 |
10/31/1999 |
|||
(Unaudited) |
(Unaudited) |
|||||
Revenues |
$ 39,866 |
$ 29,386 |
$ 77,862 |
$ 50,550 |
||
Costs and expenses: |
||||||
Cost of sales |
30,755 |
21,940 |
59,616 |
37,355 |
||
Engineering and development |
415 |
343 |
786 |
676 |
||
Selling, general and administrative |
4,060 |
3,858 |
8,406 |
6,907 |
||
|
35,230 |
26,141 |
68,808 |
44,938 |
||
Earnings from operations |
4,636 |
3,245 |
9,054 |
5,612 |
||
Interest income, net |
292 |
117 |
522 |
225 |
||
Earnings before income taxes |
4,928 |
3,362 |
9,576 |
5,837 |
||
Income taxes Net earnings |
1,877 $ 3,051
|
1,281 $ 2,081 |
3,645 $ 5,931 |
2,225 $ 3,612 |
||
Net earnings per share: Basic Diluted |
$ 0.36 $ 0.31 |
$ 0.27 $ 0.22 |
$ 0.70 $ 0.60 |
$ 0.46 $ 0.38 |
||
|
||||||
Average number of shares outstanding: Basic Diluted |
8,559 9,944 |
7,791 9,460 |
8,493 9,916 |
7,809 9,419 |
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DATARAM CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in thousands)
July October 31, 2000 |
April 30, 2000 |
|||
(Unaudited) |
||||
ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ |
17,915 |
$ |
13,650 |
Trade receivables, net |
17,660 |
16,241 |
||
Inventories |
6,775 |
4,651 |
||
Other current assets |
912 |
585 |
||
Total current assets |
43,262 |
35,127 |
||
Property and equipment, net |
6,183 |
5,007 |
||
Other assets |
18 |
17 |
||
$ |
49,463 |
$ |
40,151 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
Current liabilities: |
||||
Accounts payable |
$ |
10,471 |
$ |
9,538 |
Accrued liabilities |
2,749 |
2,878 |
||
Total current liabilities |
13,220 |
12,416 |
||
Deferred income taxes |
841 |
841 |
||
Stockholders' equity |
35,402 |
26,894 |
||
$ |
49,463 |
$ |
40,151 |
The information provided in this press release may include forward-looking statements relating to future events, such as the development of new products, the commencement of production, or the future financial performance of the Company. Actual results may differ from such projections and are subject to certain risks including, without limitation, risks arising from: changes in the price of memory chips, changes in the demand for memory systems for servers, increased competition in the memory systems industry, delays in developing and commercializing new products and other factors described in the Company's most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission, which can be reviewed at http://www.sec.gov.
# # #
at http://www.sec.gov.
# # #
FOURTH
REPLACEMENT
REVOLVER NOTE
$12,000,000.00 West Windsor, New Jersey
as of October 31, 2000
FOR VALUE RECEIVED, DATARAM CORPORATION, a New Jersey corporation, having an address at Route 571, Princeton Road, West Windsor Township, New Jersey 08543 ("Borrower"), promises to pay the order of FIRST UNION NATIONAL BANK, successor by merger to CoreStates Bank, N.A., successor by merger to New Jersey National Bank, a national banking association, having its principal office at 370 Scotch Road, West Trenton, New Jersey 08628 ("Bank"), at its offices or at such other address as may hereafter be specified by Bank, in lawful money of the United States of America, the principal sum of TWELVE MILLION DOLLARS ($12,000,000.00), or the aggregate unpaid principal amount of all Revolving Credit Advances (as defined in the Loan Agreement, hereinafter referred to) made to the Borrower by the Bank (the "Loan") pursuant to the Loan Agreement, together with interest thereon at the rate or rates and in the installments and at the times hereinafter provided.
1. Definitions. Whenever used in this Fourth Replacement Revolver Note, the following words and phrases shall have the respective meanings ascribed to them below.
2. Interest Rate
IN WITNESS WHEREOF, the Borrower has executed this Fourth Replacement Revolver Note as of the date and year first above written.
ATTEST: DATARAM CORPORATION,
a New Jersey corporation
By: ANTHONY LOUGEE By: MARK MADDOCKS
Anthony Lougee Mark Maddocks
Print Name and Title Print Name and Title
Controller Vice-President, Finance
SCHEDULE TO FOURTH REPLACEMENT REVOLVER NOTE
Unpaid
Principal
Amount of Balance of Name of
Amount of Principal Revolving Person Making
Date Loan Prepaid Credit Note Notation
AMENDMENT NUMBER FOUR TO LOAN AGREEMENT
This Amendment Number Four to Loan Agreement (the "Amendment") is made as of the 31st day of October, 2000, by and between DATARAM CORPORATION, a New Jersey corporation, having an address at Route 571, Princeton Road, West Windsor Township, New Jersey (the "Borrower") and FIRST UNION NATIONAL BANK, successor by merger to CoreStates Bank, N.A., successor by merger to New Jersey National Bank, having an address at 370 Scotch Road, West Trenton, New Jersey 08628 (the "Bank").
BACKGROUND
WHEREAS, the Borrower and the Bank entered into a certain Loan Agreement dated October 27, 1994 (the "Loan Agreement"), as amended by Amendment Number One to Loan Agreement dated November 1, 1996, by the Letter Agreement dated October 22, 1997, by Amendment Number Two to Loan Agreement dated October 26, 1998, and by Amendment Number Three to Loan Agreement dated October 29, 1999 (the Loan Agreement, as amended through the date hereof is referred to herein as the "Agreement");
WHEREAS, the Borrower and the Bank have agreed to further amend the Agreement to maintain the amount of the Revolver Credit Advance Limit at $12,000,000 until October 31, 2001, then decrease the amount of the Revolver Credit Advance Limit to $6,000,000 from November 1, 2001, extend the Revolving Credit Maturity Date to October 31, 2002, and amend and modify the Agreement as hereinafter set forth.
WHEREAS, all capitalized terms used herein and not otherwise defined herein shall have the meaning assigned to them in the Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:
1. The Revolving Credit Maturity Date is hereby extended to October 31, 2002. To that end, the definition of Revolving Credit Maturity Date contained in Section 1.02 of the Agreement is hereby amended to read in its entirety as follows:
"Revolving Credit Maturity Date" means October 31, 2002.
2. The amount of the Revolver Credit Advance Limit is maintained at $12,000,000 from November 1, 2000 until October 31, 2001, then decreased to $6,000,000 on November 1, 2001 until the Revolver Credit Maturity Date. To that end, the definition of Revolving Credit Advance Limit contained in Section 1.02 of the Agreement is hereby amended to read in its entirety as follows:
"Revolving Credit Advance Limit" means the sum of Twelve Million Dollars ($12,000,000) through October 31, 2001 and the sum of Six Million Dollars ($6,000,000) from November 1, 2001 until the Revolving Credit Maturity Date.
3. The Borrower shall execute and deliver to the Bank a replacement revolver note of the Borrower in substantially the form attached as Exhibit A-1 (the "Fourth Replacement Revolver Note") to evidence the indebtedness of the Borrower for the Revolving Credit Advances by the Bank. The Fourth Replacement Revolver Note shall replace and supercede the Revolver Note of the Borrower to the Bank dated October 27, 1994, the Replacement Revolver Note of the Borrower to the Bank dated November 1, 1996, the Second Replacement Revolver Note of the Borrower to the Bank dated October 26, 1996 [which should have been dated 1998] and the Third Replacement Revolver Note of the Borrower to the Bank dated October 29, 1999 (collectively, the "Original Notes"), but shall not extinguish the Borrower's unconditional obligation to repay the indebtedness evidenced by the Original Notes. All references in the Agreement to the Revolver Note shall henceforth be deemed to refer to the Fourth Replacement Revolver Note.
4. The effectiveness of this Amendment is conditioned upon the Bank's receipt of the following documents:
(A) This Amendment Number Three to Loan Agreement; and
(B) Fourth Replacement Revolver Note.
5. Representations and Warranties. In order to induce the Bank to enter into this Amendment, the Borrower makes the following representations and warranties to the Bank, which shall survive the execution and delivery hereof:
6. Full Force and Effect. The parties hereto acknowledge and agree that this Amendment is incorporated into and made a part of the Agreement and the other Loan Documents, the terms and provisions of which, unless expressly modified herein, or unless no longer applicable by their terms, continue unchanged and in full force and effect. To the extent that any term or provision in the Amendment is or may be deemed expressly inconsistent with any term or provision in the Agreement and the other Loan Documents, the terms and provisions hereof shall control. This Amendment is limited as written and shall not be deemed (i) to be an amendment of or a consent under or waiver of any other term or condition of the Agreement or (ii) to prejudice any right or rights which the Bank now has or may have in the future under or in connection with the Agreement or the other Loan Documents.
7. Security Interests. It is agreed and confirmed that after giving effect to this Amendment, the security interests granted by the Borrower pursuant to the Security Agreement and the other Loan Documents secure, inter alia, the payment of the obligations arising under the Agreement, as amended by this Amendment.
8. Indemnity. Borrower agrees to indemnify Bank from and against any and all claims, losses and liabilities growing out of or resulting from this Amendment.
9. Miscellaneous.
IN WITNESS WHEREOF, the parties have caused the Amendment to be executed as of the date first above written.
ATTEST: DATARAM CORPORATION,
A New Jersey corporation
By:_________________________ By:______________________________
_________________________ ______________________________
Print Name and Title Print Name and Title
FIRST UNION NATIONAL BANK
By:______________________________
______________________________
Print Name and Title
EXHIBIT A-1
FOURTH
REPLACEMENT
REVOLVER NOTE
$12,000,000.00 West Windsor, New Jersey
as of October 31, 2000
FOR VALUE RECEIVED, DATARAM CORPORATION, a New Jersey corporation, having an address at Route 571, Princeton Road, West Windsor Township, New Jersey 08543 ("Borrower"), promises to pay the order of FIRST UNION NATIONAL BANK, successor by merger to CoreStates Bank, N.A., successor by merger to New Jersey National Bank, a national banking association, having its principal office at 370 Scotch Road, West Trenton, New Jersey 08628 ("Bank"), at its offices or at such other address as may hereafter be specified by Bank, in lawful money of the United States of America, the principal sum of TWELVE MILLION DOLLARS ($12,000,000.00), or the aggregate unpaid principal amount of all Revolving Credit Advances (as defined in the Loan Agreement, hereinafter referred to) made to the Borrower by the Bank (the "Loan") pursuant to the Loan Agreement, together with interest thereon at the rate or rates and in the installments and at the times hereinafter provided.
1. Definitions. Whenever used in this Fourth Replacement Revolver Note, the following words and phrases shall have the respective meanings ascribed to them below.
2. Interest Rate
IN WITNESS WHEREOF, the Borrower has executed this Fourth Replacement Revolver Note as of the date and year first above written.
ATTEST: DATARAM CORPORATION,
a New Jersey corporation
By: ANTHONY LOUGEE By: MARK MADDOCKS
Anthony Lougee Mark Maddocks
Print Name and Title Print Name and Title
Controller Vice-President, Finance
FIRST UNION NATIONAL BANK
By: ELLEN DODEL
Ellen Dodel, Vice President
Print Name and Title
SCHEDULE TO FOURTH REPLACEMENT REVOLVER NOTE
Unpaid
Principal
Amount of Balance of Name of
Amount of Principal Revolving Person Making
Date Loan Prepaid Credit Note Notation