Exhibit 10.1
EXECUTION
COPY
FIFTH AMENDMENT AND
WAIVER ,
dated as November 16, 2006
(“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 WELLS FARGO BANK, NATIONAL
ASSOCIATION , acting through its
Wells 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 Events of Default violations of
two 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:
Section 1.1 Definitions . The
definitions of the terms “Adjusted Book Net Worth
Amount” and “Original Maturity Date” set forth in
Section 1.1 of the Credit Agreement is deleted in its entirety and
the following substituted in lieu thereof, respectively:
“Adjusted
Book Net Worth Amount” means, with respect to any fiscal
quarter of the Obligors, an amount equal to the sum of: (a)
$1,575,000; plus (b) an amount equal to 50% of the aggregate
consolidated Net Income of the Obligors for all fiscal years,
commencing with the fiscal year ending in September 2008 and ending
with the most recently completed fiscal year prior to such fiscal
quarter, provided , that, for purposes of this definition,
if the consolidated Net Income of the Obligors for any fiscal year
is a negative number, such Net Income for such fiscal year shall be
deemed equal to zero.”
“Original
Maturity Date” means June 29, 2008.
Section 6.2(a) . Maximum Debt to Book Net Worth Ratio
.
Section 6.2(a) of the Credit
Agreement is deleted in its entirety and the following substituted
in lieu thereof:
“(a)
Maximum Debt to Rook Net Worth Ratio . The
Obligors will maintain a Debt to Book Net Worth Ratio of not more
than 2.10 to 1.00, determined as of the end of each fiscal
quarter.”
Section 6.2(b) Minimum Book Net Worth
. Section 6.2(b) of the Credit Agreement is
deleted in its entirety and the following substituted in lieu
thereof:
“(b)
Minimum Book Net Worth . The
Obligors will have a Book Net Worth of not less
than: (a) $1,900000, as of the end of the fiscal quarter ending in
December 2006; (b) $1,800,000, as of the end of the fiscal quarter
ending in March 2007; (c) $1,725,000, as of the end of the
fiscal quarter ending in June 2007; (d) $1,575,000, as of the end
of the fiscal quarter ending in September 2007; and (e) the
Adjusted Book Net Worth Amount, as of the end of each fiscal
quarter ending after September 30, 2007.”
Section 6.2(c) Minimum Net Income
. Section 6.2(c) of the Credit Agreement is
deleted in its entirety and the following substituted in lieu
thereof:
“(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 worse than the
amount set forth below opposite such period:
|
|
“Period
|
|
Minimum
Net Income
|
|
|
fiscal quarter
ending in December 2006
|
|
$(220,000)
|
|
|
two (2) fiscal
quarters ending in March 2007
|
|
$(320,000)
|
|
|
three (3)
fiscal quarters ending in June 2007
|
|
$(400,000)
|
|
|
four (4) fiscal
quarters ending in September 2007
|
|
$(570,000)
|
As of the end
of each fiscal quarter ending after September 30, 2007, the
Obligors will have Net Income on a cumulative quarterly basis of
not less than eighty percent (80%) of the projected
cumulative Net Income (or worse than one hundred percent (100%) of
the projected cumulative Net Loss) 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: (a) the Obligor Book Net Worth as of the end of the
fiscal quarter ended in September 2006 was $2,155,000 and (b) the
Obligors’ cumulative Net Income for the four fiscal quarters
ended in September 2006 was $(2,142,000). The failure of the
Obligors to have: (a) Book Net Worth as of the end of the fiscal
quarter ended in September 2006 of not less than $3,
