Contract
EXECUTION COPY
Exhibit
10.1
SECOND
AMENDMENT AND WAIVER, dated
as
of November 4, 2005 (“Amendment”), to CREDIT
AND SECURITY AGREEMENT, dated
as
of June 29, 2004 (as amended from time to time, the “Credit Agreement”), among
INFOTECH
USA, INC.,
a New
Jersey corporation, as borrower (the “Borrower”), INFOTECH
USA, INC.,
a
Delaware corporation, and INFORMATION
TECHNOLOGY SERVICES, INC.,
a New
York corporation, as guarantors (together with the Borrower, the “Obligors”),
and XXXXX
FARGO BANK, NATIONAL ASSOCIATION,
acting
through its Xxxxx Fargo Business Credit operating division (the “Lender”). Terms
which are capitalized in this Amendment and not otherwise defined shall have
the
meanings ascribed to such terms in the Credit Agreement.
WHEREAS, the
Obligors have requested that the Lender waive as an Event of Default a violation
of one of the financial covenants contained in the Credit Agreement, and modify
certain terms of the Credit Agreement, and the Lender has agreed to the
foregoing request, on the terms and conditions set forth herein;
NOW,
THEREFORE,
in
consideration of the mutual promises contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Obligors and the Lender hereby agree as follows:
Section
One.
Amendments.
Effective as of the date hereof, upon satisfaction of the conditions precedent
set forth in Section Five hereof, the Credit Agreement is hereby amended as
follows:
(a) Clause (i)
of the definition of the term “Eligible Accounts” in Section 1.1 of the
Credit Agreement is deleted in its entirety and the following substituted in
lieu thereof:
“(i)
(a) That portion of Accounts (other than Accounts owing by Hackensack
University Medical Center to the Borrower) unpaid 91 days or more after the
invoice date or 61 days or more after the original due date (without reducing
such amount by the amount of any credit balances); and (b) that portion
of
Accounts owing by Hackensack University Medical Center to the Borrower unpaid
121 days or more after the invoice date or 91 days or more after the original
due date (without reducing such amount by the amount of any credit
balances);”
(b) Section
6.2(c) Minimum
Net Income. As
of the
end of each period set forth below, the Obligors will have achieved Net Income,
on a cumulative quarterly basis, of not less than the amount set forth below
opposite such period:
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“Period
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Minimum
Net
Income
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A.
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fiscal
quarter ending in December 2005
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$(200,000)
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B.
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two
(2) fiscal quarters ending in March 2006
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$(292,000)
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C.
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three
(3) fiscal quarters ending in June 2006
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$(301,000)
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D.
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four
(4) fiscal quarters ending in September 2006
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$(386,000)
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As
of the
end of each fiscal quarter ending after September 30, 2006, the Obligors will
have Net Income on a cumulative quarterly basis of not less than eighty percent
(80%) of the projected cumulative Net Income of the Obligors for such period,
as
set forth in the projections for such period delivered to the Lender. The
Obligors’ failure to deliver projections to the Lender pursuant to Section
6.1(d) that are acceptable to the Lender, in its sole discretion, shall
constitute an Event of Default.”
Section
Two.
Waivers.
The
Obligors have notified the Lender that the Obligors’ cumulative Net Income for
the fiscal year ended September 30, 2005, is expected to be less than $(60,000).
The failure of the Obligors to have cumulative Net Income for the fiscal year
ended September 30, 2005 in an amount equal to at least $(60,000) (which amount
equals 80% of the projected cumulative Net Income for such period), in violation
of Section 6.2(c) of the Credit Agreement, constitutes an Event of Default
under
Section 7.1(b) of the Credit Agreement. The Event of Default expressly referred
to in this paragraph is herein referred to as the “Designated
Default.”
Effective
as of the date hereof, upon the satisfaction of the conditions precedent set
forth in Section Five hereof, the Lender hereby waives the Designated Default
as
an Event of Default. Nothing herein shall constitute a waiver by the Lender
of
any other Default or Event of Default, whether or not the Lender has any
knowledge thereof, nor shall anything herein be deemed a waiver by the Lender
of
any Default or Event of Default which may occur after the date of this
Amendment.
Section
Three.
Amendment
and Waiver Fee.
In
consideration for the amendments and waiver provided herein, the Borrower shall
pay to the Lender a non-refundable fee in the amount of $25,000 (the “Amendment
Fee”), which fee shall be fully earned on the date hereof and shall be payable
in three (3) installments as follows: (a) $10,000 on January 2,
2006;
(b) $10,000 on February 6, 2006; and (c) $5,000 on March 6,
2006. The failure of the Borrower to pay any installment of the Amendment Fee
shall constitute an Event of Default.
Section
Four.
Representations
and Warranties.
To
induce the Lender to enter into this Amendment, each Obligor warrants and
represents to the Lender as follows:
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(a) all
of
the representations and warranties contained in the Credit Agreement and each
other Loan Document continue to be true and correct in all material respects
as
of the date hereof, as if repeated as of the date hereof, except for such
representations and warranties which, by their terms, are only made as of a
previous date;
(b) the
execution, delivery and performance of this Amendment by each Obligor is within
its corporate powers, has been duly authorized by all necessary corporate action
on its part, and each Obligor has received all necessary consents and approvals
(if any shall be required) for the execution and delivery of this
Amendment;
(c) upon
its
execution, this Amendment shall constitute the legal, valid and binding
obligation of each Obligor, enforceable against each Obligor in accordance
with
its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency or similar laws affecting creditors’ rights generally and
(ii)
general
principles of equity;
(d) no
Obligor is in default under any indenture, mortgage, deed of trust, or other
material agreement or material instrument to which it is a party or by which
it
may be bound. Neither the execution and delivery of this Amendment, nor the
consummation of the transactions herein contemplated, nor compliance with the
provisions hereof will (i)
violate
any law or regulation applicable to any Obligor, (ii)
cause a
violation by any Obligor of any order or decree of any court or government
instrumentality applicable to it, (iii)
conflict
with, or result in the breach of, or constitute a default under, any indenture,
mortgage, deed of trust, or other material agreement or material instrument
to
which any Obligor is a party or by which it may be bound, (iv)
result
in the creation or imposition of any lien, charge, or encumbrance upon any
property of any Obligor, except in favor of the Lender, to secure the
Obligations, or (v)
violate
any provision of the Constituent Documents of any Obligor;
(e) no
Default or Event of Default has occurred and is continuing, except for the
Designated Default which has been waived pursuant to Section Two hereof;
and
(f) since
September 30, 2005, no change or event has occurred which has had or
is
reasonably likely to have a Material Adverse Effect.
Section
Five.
Conditions
Precedent.
This
Amendment shall become effective upon the date on which all of the following
events shall have occurred; provided,
however,
that in
the event that all of the following events shall not have occurred on or before
November 8, 2005, then this Amendment shall thereafter be null and void and
cease to be of any force and effect:
(a) the
Lender shall have received this Amendment, duly executed by each Obligor;
(b) the
Lender shall have received payment of all fees and disbursements incurred by
the
Lender in connection with the preparation, negotiation and closing of this
Amendment and the transactions contemplated to occur hereunder; and
(c) except
for the Designated Default which has been waived pursuant to Section Two hereof,
no Default or Event of Default shall have occurred and be continuing,
and
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no
event
or development which has had or is reasonably likely to have a Material Adverse
Effect shall have occurred, in each case since the date of the financial
statements referred to above.
Section
Six.
General
Provisions.
(a) Except
as
herein expressly amended, the Credit Agreement and all of the other Loan
Documents are ratified and confirmed in all respects and shall remain in full
force and effect in accordance with their respective terms.
(b) All
references to the Credit Agreement in the Loan Documents shall mean the Credit
Agreement as amended as of the effective date hereof, and as amended hereby
and
as hereafter amended, supplemented and modified from time to time.
(c) This
Amendment embodies the entire agreement between the parties hereto with respect
to the subject matter hereof and supercedes all prior agreements, commitments,
arrangements, negotiations or understandings, whether written or oral, of the
parties with respect thereto.
(d) This
Amendment shall be governed by and construed in accordance with the internal
laws of the State of New York, without regard to the conflicts of law principals
thereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
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IN
WITNESS WHEREOF, the
Obligors and the Lender have signed below to indicate their agreement with
the
foregoing and their intent to be bound thereby.
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INFOTECH
USA, INC.,
a
New Jersey corporation
By:
/s/ J. Xxxxxx Xxxxxxxxx
Name:
J.
Xxxxxx Xxxxxxxxx
Title:
Secretary
and Treasurer
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INFOTECH
USA, INC.,
a
Delaware corporation
By:
/s/ J. Xxxxxx Xxxxxxxxx
Name:
J.
Xxxxxx Xxxxxxxxx
Title:
Chief
Financial Officer, Vice President
and Treasurer
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INFORMATION
TECHNOLOGY SERVICES, INC.
By:/s/
J. Xxxxxx Xxxxxxxxx
Name: J.
Xxxxxx Xxxxxxxxx
Title:
Chief
Financial Officer, Vice President
and Treasurer
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XXXXX
FARGO BANK, NATIONAL
ASSOCIATION,
acting
through its Xxxxx Fargo
Business
Credit operating division
By:
/s/ Xxx Xxxxxx
Name:
Xxx
Xxxxxx
Title:
Vice
President
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