EXHIBIT 10.55
CREDIT AGREEMENT
AMENDMENT NO. 5
This sets forth the Agreement made as of October ,1995,
between DELTA COMPUTEC INC. ("DCI") and DELTA DATA NET, INC. ("DDI"), both
of which are New York corporations with their executive offices at 000
Xxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (collectively
"Borrower"), and NATIONAL CANADA FINANCE CORPORATION, a Delaware
corporation with an office at Suite 0000, Xxxx Xxxxx Tower, 000 Xxxx
Xxxxxx, Xxxxxxx, Xxx Xxxx 00000 ("Lender").
Recitals
A. Borrower and Lender are parties to a Credit Agreement dated
April 1, 1994, which was subsequently amended by Amendment No. 1 dated as of
November 17, 1994, Amendment No. 2 dated as of January 24, 1995, Amendment No.
3 dated as of April 3, 1995, and Amendment No. 4 dated as of May 1, 1995.
Hereafter, the Credit Agreement, as amended, is referred to as the "Credit
Agreement." The Credit Agreement establishes a Revolving Credit Facility for
Borrower for Loans based upon a "Borrowing Base" of Eligible Receivables and
Inventory as set forth in the Credit Agreement, up to a maximum amount of
$4,500,000 (the "Revolving Credit Facility"), and for an NCFC Overadvance
Facility for Loans of up to $300,000 (the "NCFC Overadvance Facility").
B. Borrower has advised Lender that it was not in
compliance with certain financial covenants contained in the Credit
Agreement for Borrower's fiscal quarter ended July 31, 1995 and for the
month ended June 30, 1995. Lender has agreed to waive this non-compliance,
and Borrower and Lender have agreed further to amend the Credit Agreement
to increase the applicable interest rates on the Revolving Credit Facility
and the NCFC Overadvance Facility, as set forth in this Amendment No. 5 to
the Credit Agreement.
NOW, THEREFORE, in consideration of the matters recited and
of the mutual promises contained herein, Borrower and Lender agree as
follows:
1. Defined Terms. Capitalized terms not otherwise
defined in this Amendment shall have the meaning defined in the Credit
Agreement.
2. Waiver of Non-compliance. Borrower is in violation
of the following financial covenants contained in the Credit Agreement for
Borrower's fiscal quarter ended July 31, 1995:
Section Covenant Required Actual
6.17 Tangible Net Worth $3,000,000 $2,538,000
6.18 Debt to Tangible Net Worth 3.30:1 4.38:1
6.19 Working Capital Ratio 0.85:1 0.80:1
6.20 Pre-Tax Income $ 0.00 ($ 185,000)
6.21 Interest Coverage Ratio 1.0:1 Negative
Lender hereby waives Borrowers' non-compliance with the foregoing covenants
for the quarter ended July 31, 1995 only.
Borrower is in violation of the following financial covenant
for the month ended June 30, 1995.
Section Covenant Required Actual
6.20 Pre-Tax Income $ 0.00 ($108,000)
Lender hereby waives Borrowers' non-compliance with the
foregoing covenant for the month ended June 30, 1995 only.
3. Interest Rates.
(a) Section 2.4 of the Credit Agreement which
defines the interest rate for the Revolving Credit Facility is amended to
increase the interest rate on the outstanding principal balance of the
Revolving Credit Loans to two percent (2%) per annum above the National
Bank of Canada Prime Rate, and Section 9.6 which defines the interest rate
on Overadvances is amended to increase the interest rate on the outstanding
principal balance of the NCFC Overadvance Facility to three percent (3%)
per annum above the National Bank of Canada Prime Rate.
(b) Accordingly, Section 2.4 of the Credit Agreement
is amended to read as follows:
"2.4 Interest.
a. Until the Maturity Date, whether by acceleration or
otherwise, the Borrower agrees to pay interest on the
outstanding principal balance of the Loans at the rate of
two percent (2%) per annum above the National Bank of Canada
Prime Rate as announced in the United States ("Prime Rate")
as it may change from time to time based upon a 360-day year
for the actual number of days the Loans are outstanding
which may result in a higher effective annual rate. After
maturity, whether by acceleration or otherwise, the Borrower
agrees to pay interest on the outstanding principal balance
of the Loans at a rate equal to four percent (4%).
b. Any change in the Prime Rate shall, without notice to
Borrower, be effective hereunder commencing at the same time
such new rate becomes effective."
(c) Section 9.6 of the Credit Agreement is amended
to read as follows:
"Section 9.6 Interest.
a. Until the Maturity Date, whether by acceleration or
otherwise, the Borrower agrees to pay interest on the outstanding
principal balance of all Loans made pursuant to the NCFC
Overadvance Facility at the rate of three percent (3%) per annum above
the National Bank of Canada Prime Rate as announced in the United States
("Prime Rate") as it may change from time to time based upon a 360-
day year for the actual number of days the Overadvance Loans are
outstanding. After maturity, whether by acceleration or otherwise, the
Borrower agrees to pay interest on the outstanding principal balance of
the Overadvance Loans at a rate equal to five percent (5%).
b. Any change in the Prime Rate shall, without notice to
Borrower, be effective hereunder commencing at the same time such
new rate becomes effective."
4. Additional Fees.
(a) Waiver and Amendment Fee. In consideration
of Lender's waiver of Borrower's non-compliance with certain financial
covenants, and of Lender's agreement to the amendment of certain of the
financial covenants as set forth herein, Borrower shall pay Lender a fee of
$6,000 payable upon execution of this Amendment. Borrower shall also pay
all legal costs and expenses incurred by Lender in connection with this
Amendment.
5. Promissory Note. The Promissory Note shall be
amended and restated to reflect the change in interest rates. The "Third
Amended and Restated Promissory Note" shall be in the form of attached
Exhibit A.
6. Reaffirmation of Obligations. Except as hereby
amended, all terms of the Credit Agreement shall remain in full force and
effect. Further, Borrower ratifies and reaffirms its obligations under the
Credit Agreement, the Supplemental Agreements, the Promissory Note, and all
other Obligations to Lender.
7.Counterparts. This Amendment may be executed in
counterparts which, when taken together, will constitute one original of
this Agreement.
8. Notices to Borrower. Borrower has advised Lender
that it has changed its corporate address to 000 Xxxxx Xxxxxx Xxxxxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000. Hereafter, notices will be sent to that
address. In addition, copies of notices will be sent to:
Delta Computec Inc.
Attention: President
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Xx. Xxxxx X. Xxxxxx
Xxxxxxx, Xxxxxxxxxxx & Mugel
460 Xxxxxxxxx and Xxxxx Building
00 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
The foregoing is established by the following signatures of the
parties.
BORROWER:
DELTA COMPUTEC, INC.
By /s/ Xxxx XxXxxx
Xxxx XxXxxx
President
DELTA DATA NET, INC.
By /s/ Xxxx XxXxxx
Xxxx XxXxxx
President
LENDER:
NATIONAL CANADA FINANCE
CORPORATION
By /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Assistant Vice President
By /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Vice President
Consent of Guarantor
SAI/DELTA, INC. ("Guarantor"), a Florida corporation, is a
Guarantor of all Loans to Borrower by Lender under an Unlimited Continuing
Guaranty (the "Guaranty") dated April 3, 1995. Guarantor hereby consents
to Amendment No. 5 to the Credit Agreement and ratifies and reaffirms its
obligations under the Guaranty, its General Security Agreement dated April
3, 1995 in favor of Lender as Secured Party, and under all related
documents, agreements, and instruments.
SAI/DELTA, INC.
By: /s/ Xxxx XxXxxx
Xxxx XxXxxx, President
