EXHIBIT 10.1
ACKNOWLEDGMENT, WAIVER AND AMENDMENT
TO THE
INVENTORY AND WORKING CAPITAL FINANCING AGREEMENT
This ACKNOWLEDGMENT, WAIVER AND AMENDMENT ("Waiver") TO THE
INVENTORY AND WORKING CAPITAL FINANCING AGREEMENT is made as of July 28, 2002 by
and between Datatec Industries, Inc., a Delaware corporation ("Customer") and
IBM Credit Corporation, a Delaware corporation ("IBM Credit").
RECITALS:
WHEREAS, Customer and IBM Credit have entered into that certain
Inventory and Working Capital Financing Agreement dated as of November 10, 2000
(as amended, supplemented or otherwise modified from time to time, the
"Agreement");
WHEREAS, Customer is in default of one or more of its financial
covenants contained in the Agreement (as more specifically explained in Section
2 hereof);
WHEREAS, Customer requests that IBM Credit waive such defaults; and
WHEREAS, IBM Credit is willing to waive such default and amend the
Agreement subject to the conditions set forth below.
AGREEMENT
NOW THEREFORE, in consideration of the premises set forth herein,
and for other good and valuable consideration, the value and sufficiency of
which is hereby acknowledged, the parties hereto agree that the Agreement is
amended as follows:
Section 1. Definitions. All capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Agreement.
Section 2. Acknowledgment.
Customer acknowledges that the financial covenants set forth in
Attachment A to the Agreement are applicable to the financial results of
Customer for the fiscal year ending April 30, 2002, and Customer was required to
maintain such financial covenants at all times. Customer further acknowledges
its actual attainment was as follows:
Covenant Covenant
Covenant Requirement Actual
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(i) Net Profit after Tax to Revenue Equal to or greater than -10.7%
0.1%
(ii) Debt Service Ratio Equal or greater than -2.5:1.0
2.0:1.0
The preceding being the "Defaults".
Section 3. Waivers to Agreement. IBM Credit hereby waives the Defaults of
Customer with the terms of the Agreement to the extent such Defaults are set
forth in Section 2 hereof.
Section 4. Amendment. The Agreement is hereby amended as follows,
notwithstanding any other conditions precedent contained herein:
A. As of the date hereof, IBM Credit shall not be obligated to make
any Term Loan Advances to Customer. Customer shall make payments to IBM Credit
in accordance with the terms of Section 2.4(D) of the Agreement as revised
herein.
B. Section 2.4(D) is hereby amended by deleting it in its entirety
and substituting the following therefor:
"(D) Customer shall pay to IBM Credit, commencing May 30, 2002,
monthly installments of $300,000 on the 25th day of every month, for each month
through November 25, 2002, and shall pay in full the Outstanding Term Loan on or
by the Term Loan Stated Maturity Date."
C. Schedule A to the Agreement is hereby amended by deleting such
Schedule A in its entirety and substituting it, in lieu thereof, the Schedule A
attached hereto.
D. Section 1.1 of the Agreement is hereby amended by deleting the
definition of "Termination Date" in its entirety and substituting, in lieu
thereof, the following definition:
"Termination Date": shall mean December 31, 2002, unless Customer fails to
secure replacement financing, in which case such agreement will be extended;
however in no event shall such extended termination date be later than May 31,
2003."
E. Section 3.1(K) of the Agreement is hereby amended by deleting
such section in its entirety.
Section 5. Conditions to Effectiveness of Waiver. The waiver set forth in
Section 3 hereof shall become effective upon:
(a) the receipt by IBM Credit from Customer of this Waiver executed by Customer;
and
(b) the payment by Customer to IBM Credit of a waiver fee (the "Waiver Fee"),
payable in immediately available funds, in the amount of $77,935 by no later
than July 31, 2002. The Waiver Fee shall be nonrefundable and shall be in
addition to any other fees IBM Credit may charge customer.
Section 6. Rights and Remedies. Except to the extent specifically waived herein
IBM Credit reserves any and all rights and remedies that IBM Credit now has or
may have in the future with respect to Customer, including any and all rights or
remedies which it may have in the future as a result of Customer's failure to
comply with its financial covenants to IBM Credit. Except to the extent
specifically waived herein neither this Waiver, any of IBM Credit's actions or
IBM Credit's failure to act shall be deemed to be a waiver of any such rights or
remedies.
Section 7. Governing Law. This Waiver shall be governed by and interpreted in
accordance with the laws which govern the Agreement.
Section 8. Counterparts. This Waiver may be executed in any number of
counterparts, each of which shall be an original and all of which shall
constitute one agreement.
IN WITNESS WHEREOF, this Waiver has been executed by duly authorized
representatives of the undersigned as of the day and year first above written.
IBM Credit Corporation Datatec Industries, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx Xxxx
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Print Name: Xxxxxx X. Xxxxxxxx Print Name: Xxxxx Xxxx
-------------------------- ---------------------------
Title: Manager Special Handling Title: Chairman and CEO
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Date: July 30, 2002 Date: July 29, 2002
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SCHEDULE A
(A) Term Loan Commitment: Three Million Dollars ($3,000,000.00);
(B) Term Loan Finance Charge: Prime Rate plus 4.25%
(C) Term Loan Minimum Draw Amount: No additional draws will be permitted;
(D) Term Loan Minimum Prepayment Amount: Two Hundred Fifty Thousand Dollars
($250,000.00);
(E) Term Loan Stated Maturity Date: December 31, 2002;
(F) Term Loan Finance Charges are due monthly and as set forth in Section
2.5 of the Agreement;
(G) Term Loan Principal Payment Schedule: as set forth in Section 2.4(D) of
the Agreement.
