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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): October 31, 1996
Delta Computec Inc.
(Exact Name of Registrant as Specified in its Charter)
New York
(State or Other Jurisdiction of Incorporation)
0-14733 16-1146345
(Commission File Number) (I.R.S. Employer Identification No.)
366 White Spruce Blvd., Rochester, New York 14623
(Address of Principal Executive Offices) (Zip Code)
201-440-8585
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changes Since Last Report)
Total number of pages in Report (including Exhibits) 13.
Exhibit Index located on page 5.
Page 1 of 13
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
A. Purchase of $475,000 Debenture of Registrant and subsidiary.
Delta Computec Inc. (the "Registrant") announced that it has signed a
letter agreement, a copy of which is annexed to this Form 8-K Current Report as
Exhibit 1 (the "Rexel Letter Agreement") dated as of October 31, 1996, with
Rexel DS, Inc., f.k.a. Willcox & Gibbs DS, Inc., and Rexel DN, Inc., f.k.a.
Willcox & Gibbs DN, Inc. (collectively, the "Sellers"), whereby the Sellers
agreed to sell to the Registrant the 8% Subordinated Debenture of the Registrant
and its wholly-owned subsidiary, Delta Data Net, Inc. ("Data Net", and, together
with the Registrant, the "Buyers"), as amended, which Debenture was issued in
the original face amount of $475,000 (the "Debenture"), and which Debenture, as
of the date of the purchase, was held by the Sellers and was due on October 31,
1997.
The Buyers agreed to purchase the Debenture for payment of $75,000. The
purchase price included the principal and interest payable on the Debenture,
which interest payable, as to which the Buyers were in default as of October 31,
1996, was in the aggregate amount of $55,383.56. The Rexel Letter Agreement
provides for the release of the Buyers from any obligations under the Debenture.
The purchase of the Debenture and the terms of the Rexel Letter Agreement were
consented to by two of the Registrant's lenders, Joseph M. Lobozzo II
("Lobozzo"), a director, officer, principal shareholder and controlling person
of the Registrant, and National Canada Finance Corporation ("NCFC"), the holder
of a five-year term note of the Registrant. Rexel, Inc., the parent of the
Sellers, holds 1,000,000 common shares of the Registrant.
The purchase of the Debenture, which has been recorded in the fiscal year
ended October 31, 1996, has resulted in an extraordinary gain of $455,383.56 to
the Registrant, which gain will be included in the consolidated balance sheet of
the Registrant in the Registrant's consolidated net loss for the year ended
October 31, 1996.
B. Amendments to certain loan agreements.
The Registrant and Lobozzo agreed to amendments of certain loan agreements
between the Registrant and Lobozzo to effectuate reductions of the interest rate
payable on those loan agreements.
The annual interest rate applicable to: (i) the 1995 Letter Agreement
(attached as an Exhibit to the Registrant's Form 8-K Current Report dated May 4,
1995) between Lobozzo and the
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Registrant, whereby Lobozzo agreed to provide up to $400,000 (the "Lobozzo
Commitment") of an Overadvance Facility between the Registrant, Lobozzo and the
Registrant's then commercial lender, NCFC, and (ii) certain additional advances
(the "Additional Advances") made by Lobozzo to the Registrant during the period
between July 25, 1996, and October 9, 1996, which Additional Advances were
acknowledged by a series of documents executed contemporaneously with the
Additional Advances, have each been charged at the same rate of interest as
charged by NCFC with regard to the former Credit Agreement, as amended, between
NCFC and the Registrant and Data Net (the "NCFC Credit Agreement"). The NCFC
Credit Agreement interest rates, prior to the assignment of that agreement from
NCFC to Lobozzo on October 10, 1996 (as reported in the Registrant's Form 8-K
Current Report dated October 24, 1996), were three percent (3%) over the prime
rate of NCFC, and five percent (5%) over the prime rate of NCFC in the event of
maturity, by acceleration or otherwise.
By a document entitled Amendment No. 1 to Amended and Restated Credit
Agreement and Other Agreements, annexed hereto as Exhibit 2 (Amendment No. 1"),
Lobozzo and the Registrant and Data Net have agreed that, from and after October
10, 1996, the interest rate applicable to both the Lobozzo Commitment and the
Additional Advances would be reduced to one and three quarters of one percent (1
and 3/4%) per annum over the Prime Rate (defined as the highest prime rate
published from time to time in the "Money Rates" column of the Wall Street
Journal, or any successor publication, as it may change from time to time, based
on a 360 day year), and to three and three quarters of one percent (3 and 3/4%)
over the Prime Rate in the event of maturity, by acceleration or otherwise.
These are the same interest rates as are paid by the Registrant to Lobozzo under
the Amended and Restated Credit Agreement between Lobozzo and the Registrant and
Data Net, dated October 10, 1996, a copy of which was annexed as Exhibit 25 to a
Form 8-K Current Report of the Registrant dated October 24, 1996 (the "Lobozzo
Credit Agreement"). The Lobozzo Credit Agreement was entered into between
Lobozzo and the Registrant and Data Net simultaneously with the assignment to
Lobozzo of the NCFC Credit Agreement.
By Amendment No. 1 the Registrant and Lobozzo also agreed to amend the
definition of "Borrowing Base" as to which "Loans" (as those terms are defined
in the Lobozzo Credit Agreement) could be made to the Registrant under the
Lobozzo Credit Agreement, to increase the Borrowing Base available to the
Registrant from the applicable portion of the Registrant's eligible receivables
to include one hundred percent (100%) of any positive cash balance per books as
shown by the internal records of the Registrant and Data Net relative to the
operating account of the Registrant and Data Net maintained at Manufacturer's &
Traders Trust Company (the "M&T Account"), together with any checks or
instruments of payments in the possession of either the Registrant or Data Net,
or NCFC, and in transit for deposit to the M&T Account. By Amendment No. 1,
Lobozzo also waived any non-compliance which may have existed with
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regard to the Borrowing Base for the period between October 10, 1996, and
November 18, 1996, the date of Amendment No. 1.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following Exhibits are filed as part of this Report.
1. Letter Agreement between the Registrant, Data Net, Rexel DS, Inc., Rexel
DN, Inc. and Rexel, Inc. dated as of October 31, 1996.
2. Amendment No. 1 to Amended and Restated Credit Agreement and Other
Agreements dated November 18, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Delta Computec Inc.
Registrant
Date: November 22, 1996 By: /s/ John DeVito
John DeVito, President
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INDEX TO EXHIBITS
The following Exhibits are filed as part of this Report:
1. Letter Agreement between the Registrant, Data Net, Rexel DS, Inc., Rexel
DN, Inc. and Rexel, Inc. dated as of October 31, 1996.
2. Amendment No. 1 to Amended and Restated Credit Agreement and Other
Agreements dated November 18, 1996.
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REXEL DS, INC.
REXEL DN, INC.
October 31, 1996
Delta Computec Inc.
900 Huyler Street
Teterboro, New Jersey 07608
Dear Sirs:
This letter agreement will confirm our agreement for Delta Computec Inc.
("DCI") to purchase, and Rexel DS, Inc. (f.k.a. Willcox & Gibbs DS, Inc.) and
Rexel DN, Inc. (f.k.a. Willcox & Gibbs DN, Inc.)(together, "Sellers") to sell to
DCI, the 8% Subordinated Debenture of DCI and of DCI's wholly-owned subsidiary
Delta Data Net, Inc. ("Data Net" and, collectively with DCI, the "Buyers"), as
amended, which Debenture was issued in the original face amount of $475,000 and
is due October 31, 1997 (the "Debenture"), pursuant to the following terms and
conditions:
1. Pursuant to this letter agreement, and subject to receipt of funds
after clearance of a check to be received by Sellers from DCI for the Purchase
Price, the adequacy of all of which consideration is hereby acknowledged by the
Sellers, Sellers, jointly and severally hereby agree to sell, assign, convey and
transfer to DCI any and all title which the Sellers may ever have in and to the
Debenture to DCI, and included within the purchase of the Debenture is all
principal and interest related thereto.
2. The purchase of the Debenture by DCI is subject to obtaining the
Consent of National Canada Finance Corp. on or before November 18, 1996.
3. DCI shall pay the purchase price of $75,000 ("Purchase Price") by
corporate check made payable to Rexel, Inc., and to be transmitted to Sellers
at: 150 Alhambra Circle, Suite 900, Coral Gales, Florida 33134, Attention: Eric
Pierson.
4. At the time that the check representing the Purchase Price clears
and funds have been received by Sellers, Sellers shall send by overnight courier
service to DCI the Debenture marked "PAID IN FULL", and such clearance of the
check and receipt of funds representing the Purchase Price shall, without
further action on the part of the Sellers or Buyers, constitute the full sale,
assignment, conveyance and transfer of the Debenture to DCI.
5. Sellers acknowledge having received sufficient information
regarding the Buyers to enable them to make the sale of the Debenture pursuant
to this letter agreement.
6. At the time that the check representing the Purchase Price clears
and funds have been received by Sellers, DCI and Data Net, without further
action on the part of the Sellers or Buyers,
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shall each be fully released from any and all actions, causes of action, suits,
debts, dues, sums of money, accounts reckonings, bonds, bills specialties,
covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, extents, executions, claims, counterclaims,
cross-claims, third party claims, set-offs, and demands, whatsoever in law
admiralty or equity which Sellers may have against DCI or against Data Net, or
both, relating in any manner to the Debenture and relating in any manner to any
default which now exists, or which ever may have existed, under or pursuant to
the Debenture.
7. Notwithstanding the provisions of paragraph 6 of this letter
agreement, if at any time all of the Purchase Price is ever required by a court
of competent jurisdiction to be returned to DCI, or if this transaction is ever
ordered by a court of competent jurisdiction to be rescinded and as a result
thereof the Purchase Price is returned in full to DCI, then, at such time, the
obligations owed to the Sellers pursuant to the Debenture shall be deemed to
have been reinstated as of the date of such return of the Purchase Price, as
those obligations exist on the date of the clearance of the check representing
the Purchase Price.
8. This letter agreement may be terminated by Seller if the check
representing the Purchase Price has not cleared and funds thereof have not been
received by Sellers on or before November 18, 1996.
9. Each of Sellers represents and warrants to Buyers, and each of
Buyers represents and warrants to Sellers, that: (a) it is duly organized and
existing and in good standing in its state of incorporation; (b) it has the
corporate power and authority to execute, deliver and perform the obligations
set forth in this letter agreement; (c) it has taken all necessary corporate
action to authorize the execution, delivery and performance of this letter
agreement; (d) this letter agreement constitutes the legal, valid and binding
obligation of it and is enforceable against it in accordance with its terms; and
(e) this letter agreement will not violate or contravene any provision of law or
statute, any order, decree or judgment binding it, or any other agreement or
obligation of any nature whatsoever by which it may be bound.
10. Each of the Sellers represents and warrants to the Buyers that:
(a) as of the date of the transfer of the Debenture to DCI, the Sellers are the
sole owners of the Debenture; (b) neither Seller has sold, transferred,
assigned, pledged or hypothecated the Debenture, except as provided herein; and
(c) the Debenture is free and clear of any liens, claims, encumbrances and
restrictions of any kind, except for restrictions contained in the Debenture or
arising under the Securities Act of 1933. Buyers represent and warrant to
Sellers that no consent or approval of any person or entity is required in order
for DCI to acquire the Debentures, except those that have been provided hereby.
Knowledge by Sellers, by Rexel, Inc. ("Rexel"), or by Buyers of any event,
circumstance
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or fact will not vitiate or otherwise impair any of the representations of
the others.
11. Rexel, the parent of the Sellers, confirms the accuracy of the
representations of the Sellers as set forth in paragraphs 9 and 10 of this
letter agreement.
12. This letter agreement: (a) sets forth the entire agreement and
understanding between the parties and supersedes all prior negotiations,
discussions, agreements and understandings of the parties with regard to the
subject matter hereof; (b) may be modified only by a writing executed by or on
behalf of each party; (c) may be waived only by a writing executed by the party
to be charged with the waiver; (d) shall survive the payment of the Purchase
Price and the transfer of the Debenture to DCI; (e) shall be binding on and
shall inure to the benefit of the successors and assigns of each party; (f) may
be executed in two or more counterparts, each of which when executed shall be an
original and which together shall constitute the same instrument; and (g) shall
be governed by the law of the State of New York without regard to its conflicts
of laws principles.
13. This letter agreement may be executed and delivered by facsimile
transmission and shall be binding upon a party upon delivery of a copy by
facsimile transmission. The later exchange of original executed copies by the
parties hereto if they so desire, shall not diminish or impair the efficacy of
the original facsimile transmission.
Please indicate your agreement with the forgoing by signing in the space
provided below.
Very truly yours,
REXEL DS, INC.
By: /s/ Jon O. Fulerton
Name:
Title:
REXEL DN, INC.
By: /s/ Jon O. Fulerton
Name:
Title:
Executed for the purposes as set forth in paragraph 11 of this letter
agreement.
REXEL, INC.
By: /s/ Jon O. Fulerton
Name:
Title:
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AGREED: CONSENTED TO:
DELTA COMPUTEC INC. NATIONAL CANADA FINANCE CORP.
By: /s/ John DeVito By: /s/ E. Lynn Forgosh
Name: John DeVito Name: E. Lynn Forgosh
Title: President Title: Group Vice President
DELTA DATA NET, INC. CONSENTED TO:
By: /s/ John DeVito /s/ Joseph M. Lobozzo II
Name: John Devito JOSEPH M. LOBOZZO II
Title: President
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AMENDMENT NO. 1
to
AMENDED AND RESTATED CREDIT AGREEMENT AND OTHER AGREEMENTS
This Amendment No. 1 to Amended and Restated Credit Agreement and Other
Agreements ("Amendment No. 1"), is made by and among JOSEPH M. LOBOZZO II, an
individual having an office at 690 Portland Avenue, Rochester, New York 14621
(the "Lender" or "Lobozzo"), DELTA COMPUTEC INC., a New York corporation having
its principal place of business located at 900 Huyler Street, Teterboro, New
Jersey 07608 ("DCI"), and DELTA DATA NET, INC., a New York corporation having
its principal place of business located at 900 Huyler Street, Teterboro, New
Jersey 07608 ("DDI"). DCI and DDI are referred to collectively as the Borrower.
W I T N E S S E T H
A. WHEREAS, the Borrower and the Lobozzo entered into a certain letter
agreement dated May 1, 1995 (the "1995 Letter Agreement"), pursuant to which
Lobozzo loaned to Borrower $400,000 as part of Lobozzo's commitment (the
"Lobozzo Commitment", as defined in the 1995 Letter Agreement) to fund a portion
of an overadvance facility (the "Overadvance Facility", as defined in the 1995
Letter Agreement) which was entered into, also as of May 1, 1995, between the
Borrower and the Borrower's then commercial lender, National Canada Finance
Corp. ("NCFC"); and
B. WHEREAS, the annual interest rate which NCFC charged to the Borrower
with regard to the Overadvance Facility was, as of May 1, 1995, two and one half
percent (2 and 1/2%) over the prime rate of NCFC, with the annual interest rate
on the Overadvance Facility increasing to the annual interest rate of four and
one-half percent (4 and 1/2%) over the prime rate of NCFC in the event of
maturity, by acceleration or otherwise, of the Overadvance Facility; and
C. WHEREAS, as of October 27, 1995, by a certain amendment No. 5 to the
then existing credit agreement between the Borrower and NCFC (such credit
agreement, and all amendments thereto, collectively the "NCFC Agreement"), the
annual interest rate on the Overadvance Facility was increased to three percent
(3%) over the prime rate of NCFC, with the annual interest rate on the
Overadvance Facility increasing to five percent (5%) over the prime rate of NCFC
in the event of maturity, by acceleration or otherwise, of the Overadvance
Facility; and
D. WHEREAS, pursuant to the 1995 Letter Agreement, the Borrower agreed to
pay to Lobozzo interest on the outstanding amount of the Lobozzo Commitment at
the same rate of interest paid to NCFC pursuant to the NCFC Agreement; and
E. WHEREAS, the Borrower and the Lender desire to reduce the amount of
interest payable by the Borrower with regard to the Lobozzo Commitment, such
reduction to be effective as of October
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10, 1996, the date of the Amended and Restated Credit Agreement (the "October
1996 Credit Agreement"); and
F. WHEREAS, in addition to the Lobozzo Commitment, between July 25,
1996, and October 9, 1996, Lobozzo also made certain additional loan advances
(the "Additional Advances") to the Borrower in the aggregate amount of
$633,600, which Additional Advances were acknowledged by a series of documents
executed contemporaneously with the Additional Advances (the "Additional
Advance Documents"); and
G. WHEREAS, with regard to the Additional Advances, Lobozzo also charged
the Borrower the annual interest rate which NCFC charged to the Borrowers with
regard to the Overadvance Facility as set forth in WHEREAS paragraphs B and C,
above; and
H. WHEREAS, the Borrower agreed to pay to Lobozzo interest on the
outstanding amount of the Additional Advances at the same rate of interest paid
to NCFC pursuant to the NCFC Agreement; and
I. WHEREAS, the Borrower and the Lobozzo desire to reduce the amount of
interest payable by the Borrower with regard to the Additional Advances, such
reduction to be effective as of October 10, 1996, the date of the October 1996
Credit Agreement; and
J. WHEREAS, the Borrower and the Lender entered into the October 1996
Credit Agreement as of October 10, 1996; and
K. WHEREAS, the Borrower and the Lender desire to amend the October 1996
Credit Agreement to provide for an increased Borrowing Base relative to the
Loans (as those terms are defined in the October 1996 Credit Agreement) which
may exist from time to time from Lender to Borrower.
NOW, THEREFORE, it is agreed as follows:
1. Incorporation of Recitals. The recitals set forth in the WHEREAS
paragraphs of this Amendment No. 1 are intended to be, and are, incorporated
into this Amendment No. 1 as a part hereof.
2. Amendment to 1995 Letter Agreement. (a) The parties hereto agree that,
from and after October 10, 1996, paragraph 6 of the 1995 Letter Agreement be,
and it hereby is, amended to decrease the rate of interest applicable to the
Lobozzo Commitment from the same rate of interest paid to NCFC pursuant to the
NCFC Agreement to the same interest rate as is charged to the Borrowers under
the October 1996 Credit Agreement.
(b) The first sentence of paragraph 6 of the 1995 Letter Agreement is
hereby deleted in its entirety and the following sentences are hereby
substituted in its place and stead:
"Until the maturity date of the Lobozzo Commitment, whether by
acceleration or otherwise, the Borrower agrees
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to pay interest on the outstanding principal balance of the Lobozzo
Commitment at the rate of one and three quarters of one percent (1
3/4%) per annum above the highest prime rate published from time to
time in the "Money Rates" column of the Wall Street Journal or any
successor to such publication ("Prime Rate") as it may change from
time to time based upon a 360-day year for the actual number of days
the Lobozzo Commitment is 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 Lobozzo Commitment at a rate equal to three
and three quarters percent (3 3/4%) per annum above the Prime Rate."
(c) Except as amended by this Amendment No. 1, the terms and
conditions of the 1995 Letter Agreement insofar as they relate to the Lobozzo
Commitment are hereby reaffirmed in their entirety.
3. Amendment to Additional Advance Documents. (a) The parties hereto agree
that, from and after October 10, 1996, each document representing any of the
Additional Advances be, and they hereby are, amended to decrease the rate of
interest applicable to the Lobozzo Commitment from the same rate of interest
paid to NCFC pursuant to the NCFC Agreement to the same interest rate as is
charged to the Borrower under the October 1996 Credit Agreement.
(b) The portions of any and all Additional Advance Documents relating
to the payment of interest by the Borrowers on the Additional Advances are
hereby deleted in their entirety and the following sentences are hereby
substituted, or, if necessary, added, in the place and stead of any reference to
interest payable by the Borrower in the Additional Advance Documents:
"Until the maturity date of the Advance represented by this document
(the "Advance"), whether by acceleration or otherwise, the Borrower
agrees to pay interest on the outstanding principal balance of the
Advance at the rate of one and three quarters of one percent (1 3/4%)
per annum above the highest prime rate published from time to time in
the "Money Rates" column of the Wall Street Journal or any successor
to such publication ("Prime Rate") as it may change from time to time
based upon a 360-day year for the actual number of days the Advance is
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 Advance at a
rate equal to three and three quarters percent (3 3/4%) per annum
above the Prime Rate."
(c) Except as amended by this Amendment No. 1, the terms and
conditions of the Additional Advance Documents are hereby reaffirmed in their
entirety.
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4. Amendment to October 1996 Credit Agreement. (a) The parties hereto agree
that, from and after November 18, 1996, paragraph 2.1 of the October 1996 Credit
Agreement be, and it hereby is, amended to add to the Borrowing Base any
positive check balance shown by the internal records of the Borrower in the
operating account maintained by the Borrower at Manufacturers & Traders Trust
Company, and any checks or instruments of payment in the hands of either the
Borrower or NCFC and in transit for deposit to the Borrower's Manufacturers &
Traders Trust Company operating account.
(b) Paragraph 2.1 of the October 1996 Credit Agreement is hereby
revised by deleting the period (".") after the words "SAI/Delta's Eligible
Receivables" and by adding the following words thereafter:
", together with one hundred percent of any positive check book
balance shown by the internal records of the Borrower relative to the
Borrower's operating account maintained by the Borrower at
Manufacturers & Traders Trust Company, and any checks or instruments
of payment in the hands of either the Borrower or NCFC and in transit
for deposit to the Borrower's Manufacturers & Traders Trust Company
operating account."
(c) Lender hereby waives any non-compliance which may have existed
with regard to the Borrowing Base for the period between October 10, 1996, and
the date of this Amendment No. 1.
(d) Except as amended by this Amendment No. 1, the terms and
conditions of the October 1996 Credit Agreement are hereby reaffirmed in their
entirety.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to be duly
executed and delivered by the proper and duly authorized officers as of the date
first above written.
/s/ Joseph M. Lobozzo II
Joseph M. Lobozzo II
DELTA COMPUTEC INC.
By: /s/ John DeVito
John DeVito, President
DELTA DATA NET, INC.
By: /s/ John DeVito
John DeVito, President
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