ACKNOWLEDGMENT, WAIVER AND AMENDMENT
TO
FINANCING AGREEMENT
This ACKNOWLEDGMENT, WAIVER AND AMENDMENT ("Amendment") TO THE
INVENTORY AND WORKING CAPITAL FINANCING AGREEMENT is made as of July 26, 2001 by
and between Datatec Industries, Inc., duly organized under the laws of the State
of Delaware ("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 (a) is in default of one or more of its financial
covenants contained in the Agreement and (b) has been in default of other terms
and conditions of the Agreement within the previous three (3) months (as more
specifically explained in Section 2 hereof); and
WHEREAS, IBM Credit is willing to waive such defaults 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 Agreement are applicable to the financial results of Customer
for the fiscal year ending April 30, 2001, 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
------------------------------ ---------------------------------- ------
Revenue on an Annual Basis Greater than Zero and
to Working Capital Equal to or Less than 25.0 : 1.0 - 25.5 : 1.0
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:
A. Attachment A to the Agreement is hereby amended by deleting such
Attachment A in its entirety and substituting, in lieu thereof, the Attachment A
attached hereto. Such new Attachment A shall be effective as of the date
specified in the new Attachment A. The changes contained in the new Attachment A
include, without limitation, that Customer shall be required to maintain the
following financial percentage(s) and ratio(s) as of the last day of the fiscal
period under review by IBM Credit::
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Covenant Requirement
------------------------------------------ -----------
(i) On and after April 30, 2002
Revenue on an Annual Basis to Working Capital Greater than Zero and
Equal to or Less than 25.0 : 1.0
(ii) On and after October 1, 2001
Net Profit after Tax to Revenue Equal to or Greater than 0.10 percent
(iii) On and after October 1, 2001
Tangible Net Worth Equal to or Greater than $2,500,000.00
Section 5. Conditions to Effectiveness of Waiver. The waiver set forth in
Section 3 hereof shall become effective upon the receipt by IBM Credit from
Customer of (i) this Amendment executed by Customer, and (ii) a waiver fee, in
immediately available funds, equal to One Hundred and Seventy - Five Thousand
Dollars ($175,000.00) on or prior to July 26, 2001. Such waiver fee payable to
IBM Credit hereunder shall be nonrefundable and shall be in addition to any
other fees IBM Credit may charge Customer.
Section 6. Additional Requirements. None.
Section 7. 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 Amendment, 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 8. Governing Law. This Amendment shall be governed by and interpreted in
accordance with the laws which govern the Agreement.
Section 9. Counterparts. This Amendment 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 Amendment 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.
IBM Credit Corporation Datatec Industries, Inc.
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxxx Xxxx
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Print Name: Xxxxxxx Xxxxx Print Name: Xxxxx Xxxx
------------------------------- ------------------------------
Title: Region Credit Manager Title: Chairman of the Board/CEO
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Date: Date:
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