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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the
fiscal year ended October 31, 1995
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from .......... to ..........
Commission File No. 0-14733
DELTA COMPUTEC INC.
(Exact name of registrant as specified in its charter)
New York 16-1146345
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
366 White Spruce Boulevard
Rochester, New York 14623
(Address of principal executive offices) (Zip Code)
201-440-8585
(Registrant's telephone number, including area code)
Securities registered pursuant of Section 12(b) of the Act:
Name of exchange
Title of each class on which registered
Common Stock $.01 par value ......
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy of information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant is $84,935. Market value is determined by reference to the
price (average between bid and ask) of Registrant's Common Stock as reported
through Bloomberg as of the close of business on January 17, 1996.
The number of common shares outstanding as of January 17, 1996 was
6,811,575.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
Items 14(a)(1), 14(a)(2) and 14(d): The following financial statements and
financial statement schedules will be filed pursuant to a Form 8 Amendment to
this report as part of Item 8 of this report upon receipt of the audited
financial statements for the fiscal year ended October 31, 1995:
Independent Auditors' Report
Consolidated Balance Sheets - October 31, 1995 and 1994
Consolidated Statements of Operations for the years ended October 31,
1995, 1994, and 1993
Consolidated Statements of Changes in Stockholders' Investment for the
years ended October 31, 1995, 1994, and 1993
Consolidated Statements of Cash Flows for the years ended October 1995,
1994, and 1993
Notes to Consolidated Financial Statements
Financial Statements Schedule - Schedule VIII - Valuation and Qualifying
Accounts for the years ended October 31, 1995, 1994 and 1993.
See Index to Exhibits for a list of exhibits to this Annual Report.
All other schedules are not submitted because they are not applicable or
not required under Regulation S-X or because the required information is
included in the financial statements or notes thereto.
Individual financial statements of the Company have been omitted because
the Company is primarily an operating company and no subsidiary included in the
consolidated financial statements has minority equity interests and/or
non-current indebtedness not guaranteed by the Company in excess of 5% of total
consolidated assets.
Item 14(a)(3) 14(b) and 14(c): Not Applicable, incorporated by
reference or referred to in Exhibits
10.48 through 10.51.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1933, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: February 21, 1996 DELTA COMPUTEC INC.
By: /s/ John DeVito
John DeVito
President and
Chief Operating Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Dated: February 21, 1996 By: /s/ Alfred Engelfried
Alfred Engelfried
Director
Dated: February 21, 1996 By: /s/ Michael Julian
Michael Julian
Director and Secretary
Dated: February 21, 1996 By: /s/ Joseph M. Lobozzo II
Joseph M. Lobozzo II
Director and Chairman of the
Board of Directors
Dated: February 21, 1996 By: /s/ Michael McCusker
Michael McCusker
Director
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INDEX TO EXHIBITS
The Exhibits denominated by (1) were previously filed as part of, and
are hereby incorporated herein by reference to, the Exhibits in the Registrant's
Registration Statement on Form S-18 (File No. 33-389NY) as amended by Amendment
No. 1. the number contained in parentheses set forth opposite the Exhibit
hereunder refers to the Exhibit number in the Registrant's Registration
Statement on Form S-18 and amendments thereto.
The Exhibits denominated by (2) were previously filed as part of, and
are hereby incorporated herein, by reference to the Exhibits in the Registrant's
Annual Report on Form 10-K for the Fiscal year ended October 31, 1986. The
number contained in parentheses set forth opposite the Exhibit hereunder refers
to the Exhibit number in that Annual Report on Form 10-K.
The Exhibits denominated by (3) were previously filed as part of, and
are hereby incorporated by reference herein, the Exhibits in the Registrant's
Annual Report on Form 10-K for the Fiscal year ended October 31, 1987. The
number contained in the parentheses set forth opposite the Exhibit hereunder
refers to the Exhibit number in that Annual Report on Form 10-K.
The Exhibits denominated by (4) were previously filed as part of, and
are hereby incorporated by reference herein, the Exhibits in the Registrant's
Annual Report on Form 10-K for the Fiscal year ended October 31, 1988.
The Exhibits denominated by (5) were previously filed as part of, and
are hereby incorporated by reference herein, the Exhibits in the Registrant's
Annual Report on Form 10-K for the Fiscal year ended October 31, 1989.
The Exhibits denominated by (6) were previously filed as part of, and
are hereby incorporated by reference herein, the Exhibits in the Registrant's
Annual Report on Form 10-K for the Fiscal year ended October 31, 1990.
The Exhibits denominated by (7) were previously filed as part of, and
are hereby incorporated by reference herein, the Exhibits in the Registrant's
Annual Report on Form 10-K for the Fiscal year ended October 31, 1991.
The Exhibits denominated by (8) were previously filed as part of, and
are hereby incorporated by reference herein, the Exhibits in the Registrant's
Form 8-K dated November 13, 1992.
The Exhibits denominated by (9) were previously filed as part of, and
are hereby incorporated by reference herein, the Exhibits in the Registrant's
Annual Report on Form 10-K for the Fiscal year ended October 31, 1992.
The Exhibits denominated by (10) were previously filed as part of, and
are hereby incorporated by reference herein, the Exhibits in the Registrant's
Annual Report on Form 10-K for the Fiscal year ended October 31, 1993.
The Exhibits denominated by (11) were previously filed as part of, and
are hereby incorporated by reference herein, the Exhibits in the Registrant's
Annual Report on Form 10-K for the Fiscal year ended October 31, 1994.
(3) Certificate of Incorporation and By-Laws
(3.1) Restated Certificate of Incorporation.
(3.2) Amended and Restated By-Laws of the Registrant.(3)
(3.3) Certificate of Change, changing Registrant's address.
(4.1) Specimen Stock Certificates representing shares of the
Registrant's $.01 par value Common Stock.(1)
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(4.2) Restated Incentive Stock Option Plan.(4)
(4.3) Non-Qualified Stock Option Plan.(1)
(10.15) Asset Purchase Agreement with JWP.(5)
(10.20) Stock purchase agreement R&M Associates.(6)
(10.21) Asset purchase agreement RTK Computer Services.(6)
(10.24) Building Lease Teterboro, New Jersey (7)
(10.26) Building Lease Syracuse, New York (7)
(10.27) Equipment Lease Bell Atlantic Systems (7)
(10.28) Purchase agreement CSI (7)
(10.29) Purchase agreement Market Line (7)
(10.31) Sale and Purchase Agreement dated as of September 29,
1992 (8)
(10.32) Amendment to Sale and Purchase Agreement dated as of
October 31, 1992 (8)
(10.33) 8% Subordinated Debenture due October 31, 1997 (8)
(10.34) 8% Subordinated Short-Term Note, $1,150,000 (Subject to
Adjustment) dated October 31, 1992 (8)
(10.35) Assignment and Assumption Agreement dated October 31,
1992 (8)
(10.36) Registration Rights Agreement dated as of October 31,
1992 (8)
(10.37) 8% Subordinated Debenture due October 28, 1995 (8)
(10.38) Option Agreement dated October 28, 1992 (8)
(10.39) Registration Rights Agreement dated October 28, 1992 (8)
(10.40) Letter from Richard J. Mackey, President and Chief
Financial Officer of Willcox & Gibbs, Inc., to Peter D.
Smith, Chief Financial Officer of Delta Computec Inc.,
dated October 13, 1992. (8)
(10.41) Loan Agreement, Fleet Bank of New York to Delta Data
Net, Inc. (9)
(10.42) Credit Agreement, Norstar Bank of Upstate NY to Delta
Computec Inc. and R&M Associates Electronic Data
Products Services, Inc. (9)
(10.43) Employment Agreement between Delta Computec Inc., and L.
Rodger Loomis dated September 1, 1992. (9)
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(10.44) Joint venture Agreement between SAI/Delta, Inc., and
Systems Automation, Inc., dated March 10, 1992. (9)
(10.45) Amendment Number 1 to Loan Agreement. (10)
(10.46) Amendment Number 1 to Credit Agreement. (10)
(10.47) Amendment Number 2 to Loan Agreement. (10)
(10.48) Credit Agreement, National Canada Finance
Corporation. (11)
(10.49) Credit Agreement, National Canada Finance Corporation,
Amendment No. 1. (11)
(10.50) Asset Purchase Agreement dated October 17, 1994. (11)
(10.51) Amendment No. 1 to Asset Purchase Agreement. (11)
(10.52) Credit Agreement, National Canada Finance Corporation,
Amendment No. 2. (11)
(10.53) Credit Agreement, National Canada Finance Corporation,
Amendment No. 3.*
(10.54) Credit Agreement, National Canada Finance Corporation,
Amendment No. 4.*
(10.55) Credit Agreement, National Canada Finance Corporation,
Amendment No. 5.*
(10.56) Letter agreements dated, respectively, May 1, 1995, May
1, 1995, and May 4, 1995, with Joseph M. Lobozzo II, a
Director, Chairman of the Board of Directors and
controlling person of the Registrant, relative to
providing a commitment to advance up to $400,000 of the
Overadvance Facility provided by National Canada Finance
Corporation, and granting a stock option to Joseph M.
Lobozzo II.*
(11) Statement re: computation of per share earnings. (This
document will be filed pursuant to a Form 8 Amendment to
this report along with the audited financial statements
for the fiscal year ended October 31, 1995.
(12) Statement re: computation of ratios.
Not Applicable
(13) Annual report to security holders, Form 10-Q or
quarterly report to security holders.
Not Applicable
(16) Letter re: change in certifying accountant.
Not Applicable
(18) Letter re: change in accounting principles.
Not Applicable
(19) Report furnished to security holders.
Not applicable
* Filed by Form 10-K(A) Amendment dated February 21, 1996.
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(21) Subsidiaries of the Registrant.
(22) Published report regarding matters submitted to vote of
security holders.
Not applicable
(23) Consents of experts and counsel.
Not applicable
(24) Power of Attorney.
Not applicable
(28) Information from reports furnished to state insurance
regulatory authorities. Not applicable
(99) Additional Exhibits.
None
31
EXHIBIT 10.53
CREDIT AGREEMENT
AMENDMENT NO. 3
This sets forth the Agreement made as of April 3, 1995, between DELTA
COMPUTEC INC. ("DCI") and DELTA DATA NET, INC. ("DDI"), both of which are New
York corporations with their executive offices at 6647 Old Thompson Road,
Syracuse, New York 13211 (collectively "Borrower"), and NATIONAL CANADA FINANCE
CORPORATION, a Delaware corporation with an office at Suite 2540, Main Place
Tower, 350 Main Street, Buffalo, New York 14202 ("Lender").
Recitals
A. Borrower and Lender are parties to a Credit Agreement dated April 1,
1994 pursuant to which Lender established a Revolving Credit Facility for
Borrower for up to a maximum amount of $4,000,000 (the "Revolving Credit
Facility"). Borrower and Lender subsequently entered into Amendment No. 1 to the
Credit Agreement to increase the Revolving Credit Facility to a maximum of
$5,000,000 and to modify certain other provisions of the Credit Agreement, and
Amendment No.2 to the Credit Agreement to redefine the Borrowing Base, modify
certain of the financial covenants contained in the Credit Agreement for fiscal
year 1995, and to waive Borrower's non-compliance with certain of the financial
covenants for Borrower's fiscal quarter ended October 31, 1994. Hereafter, the
Credit Agreement, as amended, is referred to as the "Credit Agreement."
B. Borrower has advised Lender that DCI is acquiring the common stock of
SAI/DELTA, INC. ("SAI/DELTA"), a Florida corporation, representing the remaining
66% of the capital stock of SAI/DELTA not already owned by DCI, under
substantially the same terms and conditions set forth in the Stock Purchase
Agreement attached as Exhibit A. As set forth in this Amendment No. 3 to the
Credit Agreement, Lender has consented to the above stock purchase by Borrower
as it pertains to section 6.10 of the Credit Agreement, and Borrower and Lender
have agreed to amend the Credit Agreement to 1) redefine the Borrowing Base; 2)
eliminate the existing overadvance on the Revolving Credit Facility; and 3)
correct a typographical error in Section 2.4 of 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. Consent to Stock Acquisition. Lender hereby consents, pursuant to
Section 6.10 of the Credit Agreement, to DCI's purchase of the remaining 66% of
the capital stock of SAI/DELTA not already owned by DCI, under the terms of a
Stock Purchase Agreement entered into by DCI on March 15, 1995 with an effective
date of December 1, 1994.
3. Redefinition of "Borrowing Base". Section 2.1 of the Credit Agreement
which defines the Borrowing Base for the Revolving Credit Facility is amended to
(i) increase the amount of DCI Eligible Receivables included in the Borrowing
Base from 70% to 80%, (ii) decrease the maximum amount of DDI's Eligible
Inventory included in the Borrowing Base to a maximum of $500,000, (iii) add 80%
of SAI/DELTA's Eligible Receivables to the Borrowing Base, and (iv) reduce the
maximum amount of the Revolving Credit Facility to $4,500,000. Accordingly,
Section 2.1 of the Credit Agreement is amended to read as follows:
2.1 Borrowing Base. As long as neither DCI nor DDI are in default of any
of their Obligations to Lender, Lender agrees to lend to Borrower,
and Borrower agrees to borrow from Lender, from time to time, up to
that amount (hereinafter referred to as the "Borrowing Base") which
is the lesser of:
a. The sum of:
(1) Eighty percent (80%) of DCI's Eligible Receivables;
(2) Eighty percent (80%) of DDI's Eligible Receivables;
(3) Eighty percent (80%) of Intronet's Eligible Receivables;
(4) Forty percent (40%) of DDI's Eligible Inventory up to a
maximum of Five Hundred Thousand Dollars ($500,000);
and
(5) Eighty percent (80%) of SAI/DELTA's Eligible Receivables;
or
b. Four Million Five Hundred Thousand Dollars
($4,500,000.00), including Letter of Credit Obligations,
in the aggregate at any one time outstanding.
4. Eliminate Unplanned Overadvance. The Lender's authorization of the
unplanned advances previously made to Borrower totaling $250,000 in excess of
the Borrowing Base (the "Overadvance") shall expire as of April 3, 1995.
5. Correction of Typographical Error. Section 2.4.a of the Credit
Agreement, which sets forth the interest rates on the outstanding principal
balance of the Loans before and after maturity, is amended to correct a
typographical error regarding the interest rate on the outstanding principal
balance of the Loans after maturity. Accordingly, Section 2.4.a 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 one and one-half percent
(1- 1/2%) 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 three and one-half percent (3- 1/2%) per
annum above the Prime Rate.
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.
The foregoing is established by the following signatures of the parties.
LENDER: BORROWER:
NATIONAL CANADA FINANCE DELTA COMPUTEC INC.
CORPORATION
By: /s/ John DeVito
By: /s/ Michael S. Woodard President
Michael S. Woodard
Assistant Vice President
DELTA DATA NET, INC.
By: /s/ John DeVito
By: /s/ Robert G. Uhrig President
Robert G. Uhrig
Vice President
EXHIBIT 10.54
CREDIT AGREEMENT
AMENDMENT NO. 4
This sets forth the Agreement made as of May 1, 1995, between
DELTA COMPUTEC INC. ("DCI") and DELTA DATA NET, INC. ("DDI"), both of which
are New York corporations with their executive offices at 6647 Old Thompson
Road, Syracuse, New York 13211 (collectively "Borrower"), and NATIONAL
CANADA FINANCE CORPORATION, a Delaware corporation with an office at Suite
2540, Main Place Tower, 350 Main Street, Buffalo, New York 14202
("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, and
Amendment No. 3 dated as of April 3, 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"). The Revolving Credit Facility terminates
April 30, 1997.
B. Borrower has need of additional financing ("Overadvances")
over and above amounts otherwise available to Borrower on its Borrowing
Base. Borrower's largest shareholder, Joseph M. Lobozzo II ("Lobozzo") has
therefore committed to make loans of up to $400,000 to Borrower, and Lender
has agreed to lend up to an additional $300,000 on the terms and conditions
set forth in this Amendment No. 4 (collectively, the "Overadvance
Facilities").
C. Borrower and Lender are entering this Amendment No. 4 to make
provision for the additional loans under Overadvance Facilities, and to
amend certain of the financial covenants contained in the Credit Agreement.
TERMS
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. Overadvance Facilities. A new Section 9 is added to the
Credit Agreement to read as follows:
"SECTION 9. OVERADVANCE FACILITIES.
Section 9.1 Overadvances. "Overadvances" shall mean Loans to
Borrower in excess of the amount which would otherwise be available to
Borrower pursuant to the Borrowing Base as set forth in the Credit
Agreement.
Section 9.2 Lobozzo Overadvance Facility. Attached as Exhibit A
is a copy of an Agreement dated May 1, 1995 between Borrower and their
principal shareholder, Joseph M. Lobozzo II ("Lobozzo"), pursuant to which
Lobozzo agreed to make loans to Borrower up to a maximum amount of
$400,000. Hereafter, this Agreement between Lobozzo and Borrower is
referred to as the "Lobozzo Commitment" and loans made pursuant to it are
sometimes referred to as the "Lobozzo Overadvance Facility."
Section 9.3 NCFC Overadvance Facility. Subject to the conditions
precedent hereafter set forth, Lender agrees that to the extent that
Overadvances are needed over and above the Lobozzo Overadvance Facility,
Lender will lend Borrower up to an additional Three Hundred Thousand
Dollars ($300,000) (the "NCFC Overadvance Facility") on the terms and
conditions set forth in this Section 9.
Section 9.4 Conditions Precedent. Lender's obligation to make
additional Loans under the NCFC Overadvance Facility shall be subject to
the satisfaction of the following condition's:
(a) Borrower shall not be in default under the Credit Agreement or
the Lobozzo Commitment;
(b) Lobozzo shall have fully funded his Commitment to lend
$400,000 and these loans shall be outstanding;
(c) The total outstanding principal amount of Loans pursuant to
the Lobozzo Commitment and the NCFC Overadvance Facility shall not exceed
$700,000; and
(d) The total principal amount of all Loans by Lender to Borrower
under both the Revolving Credit Facility and the NCFC Overadvance Facility
shall not exceed $4,500,000.
(e) Borrower shall have executed and delivered to Lender a new
promissory note in the form of the attached Exhibit B and in the principal
amount of $4,500,000 to evidence all Loans made pursuant to the Credit
Agreement including the NCFC Overadvance Facility.
Section 9.5 Termination and Maturity Date. Lender's commitment
to make Loans to Borrower under the NCFC Overadvance Facility shall
terminate on April 30, 1996 (the "Termination Date"), and all Loans made
pursuant to the NCFC Overadvance Facility, including all accrued interest,
shall be due and payable in full on the same date (the "Overadvances
Maturity Date"). Lender may sooner terminate its obligation to make Loans
under the Revolving Credit Facility or the NCFC Overadvance Facility if the
Lobozzo Commitment is terminated prior to April 30, 1996, or in default, or
in the event of a Declaration of Default as provided in the Credit
Agreement.
Section 9.6 Interest. Until the Overadvances 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 two and one-half percent (2 1/2%) 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 Overadvance Loans are
outstanding. After maturity, whether by acceleration or otherwise,
Borrower agrees to pay interest on the outstanding principal balance of the
Overadvance Loans at a rate equal to four and one-half percent (4 1/2%) per
annum above the Prime Rate.
Section 9.7 Order of Repayments. Lender, Borrower and Lobozzo
agree that Loans under the NCFC Overadvance Facility shall be repaid, with
all accrued interest, in full before any repayment of loans made pursuant
to the Lobozzo Overadvance Facility.
Section 9.8 Commitment Fee. In consideration of Lender's
agreement to the NCFC Overadvance Facility, Borrower shall pay Lender a
commitment fee of $1,500.00 upon execution of this Agreement.
Section 9.9 Lobozzo Commitment. Lobozzo agrees that the Lobozzo
Commitment will not be modified or amended without the prior written
consent of Lender.
Section 9.10 Other Provisions. Except to the extent they are
inconsistent with the provisions of this Section 9, all provisions of the
Credit Agreement relating to Revolving Credit Loans also apply to and
govern Loans made under the NCFC Overadvances Facility.
3. Amendment of Covenants. Borrower and Lender wish to amend the
negative covenants set forth in Sections 6.3, 6.20 and 6.21 of the Credit
Agreement to read as follows:
"6.3 Borrowed Money. Incur other indebtedness for borrowed
money except (a) indebtedness described on Schedule 3 to the Credit
Agreement, (b) indebtedness permitted by Section 6.14 of the Credit
Agreement, (c) indebtedness from the Lender, (d) indebtedness to
Lobozzo under the Lobozzo Commitment provided that the principal
amount shall not exceed $400,000, and (e) intercompany transfers
between DCI, DDI, and SAI/DELTA, INC.
6.20 Pre-tax Income. Permit Borrower's loss for its month ending
April 30, 1995 to be greater than ($50,000.00). Thereafter, during
each of the next six months through October 31, 1995, Borrowers net
income for the month Before Income Taxes and Extraordinary Items
shall not be less than $0.00. After October 31, 1995, Borrower's
Income Before Income Taxes and Extraordinary Items shall be tested
monthly, not cumulatively, and covenant levels shall be determined
based upon Borrower forecasts for its fiscal year ending October 31,
1996.
6.21 Interest Coverage Ratio. Permit the ratio of Borrower's
earnings before payment or allowance for interest or income taxes
payable thereon ("E.B.I.T.") to Borrower's interest expense to be
less than the following during the following time periods:
Time Period Ratio
----------- -----
2/1/95 to 4/30/95 0.50:1
5/1/95 to 7/31/95 1.00:1
8/1/95 to 10/31/95 1.00:1
Covenant levels for quarters ending after October 31, 1995 shall be
determined using Borrowers' forecasts for its fiscal year ending
October 31, 1996.
All other loan covenants shall continue as provided in the Credit
Agreement.
4. 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.
5. Joinder. Lobozzo joins in this Agreement insofar as it
relates to the Lobozzo Commitment and the Lobozzo Overadvances Facility.
6. Counterparts. This Amendment may be executed in counterparts
which, when taken together, will constitute one original of this Agreement.
The foregoing is established by the following signatures of the
parties.
LENDER: BORROWER:
NATIONAL CANADA FINANCE DELTA COMPUTEC INC.
CORPORATION
By /s/ Michael S. Woodard By /s/ John DeVito
Michael S. Woodard, John DeVito, President
Assistant Vice President
DELTA DATA NET, INC.
By Robert G. Uhrig By /s/ John DeVito
Robert G. Uhrig, Vice President John DeVito, President
/s/ Joseph M. Lobozzo II
Joseph M. Lobozzo II
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. 4 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 John DeVito
John DeVito,
President
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 366
White Spruce Boulevard, Rochester, New York 14623 (collectively
"Borrower"), and NATIONAL CANADA FINANCE CORPORATION, a Delaware
corporation with an office at Suite 2540, Main Place Tower, 350 Main
Street, Buffalo, New York 14202 ("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 366 White Spruce Boulevard,
Rochester, New York 14623. Hereafter, notices will be sent to that
address. In addition, copies of notices will be sent to:
Delta Computec Inc.
Attention: President
900 Huyler Street
Teterboro, New Jersey 07608
Mr. Edwin M. Larkin
Jaeckle, Fleischmann & Mugel
460 Ellwanger and Barry Building
39 State Street
Rochester, New York 14614
The foregoing is established by the following signatures of the
parties.
BORROWER:
DELTA COMPUTEC, INC.
By /s/ John DeVito
John DeVito
President
DELTA DATA NET, INC.
By /s/ John DeVito
John DeVito
President
LENDER:
NATIONAL CANADA FINANCE
CORPORATION
By /s/ Michael S. Woodard
Michael S. Woodard
Assistant Vice President
By /s/ Robert G. Uhrig
Robert G. Uhrig
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/ John DeVito
John DeVito, President
EXHIBIT 10.56
JOSEPH M. LOBOZZO II
C/O JML Optical Industries, Inc.
690 Portland Avenue
Rochester, New York 14621
May 1, 1995
Delta Computec Inc.
6647 Old Thompson Road
Syracuse, New York 13211
Gentlemen:
This letter will confirm the understanding which I have reached with Delta
Computec Inc. ("Delta") and with Delta Data Net, Inc. ("Data Net", and
collectively with Delta, the "Borrower") relating to the assistance requested of
me by the Borrower regarding the Borrower's need to fund overadvances of the
Borrower's credit line with its commercial lender, National Canada Finance
Corporation (the "Lender"). The Credit Agreement between the Borrower and the
Lender, as originally executed and as amended from time to time, is referred to
as the "Credit Agreement"). The Credit Agreement is also guaranteed by
SAI/Delta, Inc., a Florida corporation, and a wholly-owned subsidiary of Delta.
Pursuant to the annexed letter agreement dated May 1, 1995, between the
Borrower and the Lender relating to payment of overadvances (the "Overadvance
Facility", as defined in the letter agreement dated May 1, 1995, between
Borrower and Lender), the undersigned, Joseph M. Lobozzo II ("Lobozzo") is
prepared to pay amounts to be used by the Borrower solely for the purpose of
repaying advances made, or to be made, pursuant to the Overadvance Facility up
to a maximum amount of $400,000.00. The amount of Lobozzo's commitment to repay
the Overadvance Facility as it exists from time to time is referred to as the
"Lobozzo Commitment".
Lobozzo is willing to make the Lobozzo Commitment payments on the
following terms and conditions:
1. As of the date of this letter agreement, Lobozzo is providing the
Borrower with Lobozzo's personal check in the amount of $400,000.00 representing
the initial amount of the Lobozzo Commitment to the Overadvance Facility which
is being utilized by the Borrower as of May 1, 1995.
2. Payments made to Borrower pursuant to the Lobozzo Commitment shall be
used only with respect to the Overadvance Facility.
3. If, during the period that the Lobozzo Commitment is outstanding, the
Borrower requires additional advances pursuant to the Lobozzo Commitment, the
Borrower agrees to provide Lobozzo with written notice of any such
additional requirements. Notice shall be sent to Lobozzo's attention,
and to the attention of Michael McCusker, by FAX at the following FAX
Number: (716) 324-6125. Both Lobozzo and Mr. McCusker shall each also be
notified by telephone at (716) 342-8900 at the earliest possible time that it
becomes apparent that an additional payment will be required pursuant to the
Lobozzo Commitment.
4. Upon receipt of a FAX transmission as set forth in paragraph 3
hereof, Lobozzo shall cause funds, up to the maximum amount of the Lobozzo
Commitment of $400,000, to be transmitted by wire transfer from Lobozzo's
personal account at M & T Bank in Rochester, New York, directly to the
Borrower's account maintained by the Lender.
5. To the extent that a recalculation of the Borrower's Borrowing Base
(as defined in the Credit Agreement), results in a determination that all or a
portion of the Overadvance Facility can be repaid, the Borrower agrees to
forward to Lobozzo a check for the portion of the Overadvance Facility which the
Borrower is repaying to Lobozzo as aresult of the recalculated Borrowing Base.
6. The Borrower agrees to pay Lobozzo interest on the amount of the
Lobozzo Commitment actually outstanding at the same rate of interest paid to the
Lender pursuant to the Credit Agreement. At the end of each calendar month, the
Borrower will calculate the amount of its interest obligation relative to the
outstanding amount of the Lobozzo Commitment during that month, and will forward
to Lobozzo a wire transfer orcheck (at Lobozzo's choice) for such amount of
interest.
7. Lobozzo agrees to provide funds for the Lobozzo Commitment through
April 30, 1996. Borrower agrees to repay the full outstanding balance of the
Lobozzo Commitment,together will all interest and any other charges, no later
than April 30, 1996.
8. As consideration for Lobozzo agreeing to perform his obligations to
repay the Borrower's Overadvance Facility pursuant to this letter agreement,
Delta agrees to issueto Lobozzo an option to purchase all authorized
uncommitted, but unissued common shares of Delta as they exist on the date of
this letter agreement. Following an exercise of the option and such issuance,
it is estimated that Lobozzo's fully exercised interest inDelta (assuming
conversion of the subordinated debenture Lobozzo holds and including security
holdings of all related persons) shall be approximately 77.99 percent of the
20,000,000 authorized common shares of Delta. Subject to reconfirmation, it is
anticipated that the option will grant a right to purchase from Delta 11,440,475
common shares constituting the remaining authorized but unissued common shares
of Delta less shares reserved for various stock option plans which remain
unexercised. The final amount of the common shares to be covered by the option
as consideration for the Lobozzo Commitment (collectively, the "Overadvance
Facility Shares"), will be determined by Gary Russell, a director of the
Borrower and a member of the Stock Option Committee of Delta's Board of
Directors. A copy of the Option Agreement is annexed hereto.
9. It is understood and agreed that the option and the Overdraft
Facility Shares to be issued will be restricted securities under the Securities
Act of 1933, as amended (the "1933 Act"), and that the option and the Overdraft
Facility Shares will not be registered under the 1933 Act, or any relevant state
laws, but are being issued pursuant to an exemption from such registrations and
that the Borrower's reliance upon such exemptions is predicated in part on
Lobozzo's representations.
10. Lobozzo represents and acknowledges that he is an "Accredited
Investor" as defined in Rule 144 of the General Rules and Regulations under the
Securities Act of 1933, as amended; that he has knowledge and experience in
financial and business matters and in investing in securities of the type
covered by this letter agreement and in making advances similar to the Lobozzo
Commitment, such that he is capable of evaluating the merits and risks of the
prospective Lobozzo Commitment; that he has knowledge of the affairs of the
Borrower satisfactory to him to enable him to make the investment represented by
the securities covered by this letter agreement; that he is aware of the high
risk entailed in making the Lobozzo Commitment; that he is a sophisticated
investor with sufficient knowledge and assets to make the Lobozzo Commitment;
and that he believes that the commitment to make the Lobozzo Commitment and the
receipt therefor of the option to purchase the Overdraft Facility Shares is a
suitable investment for him based on his investment objectives and financial
needs.
11. Lobozzo represents that he is a bona fide resident of the State of
New York, and that the option, and if exercised, the Overdraft Facility Shares
are being acquired by him in his own name solely for his own beneficial interest
and not as nominee for, or on behalf of,of for the beneficial interest of, or
with the intention to transfer the option or the Overdraft Facility Shares to,
any other person, trust, or organization.
If this letter agreement accurately reflects our understanding, kindly
execute and return one copy for my files.
Very truly yours,
/s/ Joseph M. Lobozzo II
Joseph M. Lobozzo II
ACCEPTED AND AGREED TO:
DELTA COMPUTEC, INC., DELTA DATA NET, INC.,
SAI/DELTA, INC.
By: /s/ John DeVito
John Devito, President
DELTA COMPUTEC INC.
6647 Old Thompson Road
Syracuse, New York 13211
May 1, 1995
National Canada Finance Corporation
Suite 2540
Main Place Tower
350 Main Street
Buffalo, New York 14202
Gentlemen:
Re: Overadvance Facility
This letter will set forth the terms and conditions of the understanding
reached between Delta Computec Inc. ("DCI") and Delta Data Net, Inc. ("DDI"),
both New York State corporations with offices for the conduct of business at
6647 Old Thompson Road, Syracuse, New York 13211 (collectively, "Borrower"), and
with SAI/Delta, Inc. ("SAI/Delta"), a Florida corporation, which is a guarantor
of the obligations of the Borrower, and National Canada Finance Corporation, a
Delaware corporation with an office at Suite 2540 Main Place Tower, 350 Main
Street, New York 14202 ("Lender").
Borrower and Lender are parties to a Credit Agreement dated April 1, 1994,
which has subsequently been amended by three amendments thereto (which
agreement, as amended by all three amendments, is referred to as the "Credit
Agreement"). The terms set forth in this letter agreement, unless otherwise
defined herein, shall have the same meaning as the terms set forth in the Credit
Agreement.
Borrower has advised Lender that it requires an increase of advances under
the Credit Agreement to permit Borrower to borrow amounts in excess of the
amount which would otherwise be available to Borrower pursuant to the Borrowing
Base set forth in the Credit Agreement. At the present time, the Borrower
calculates that it will require a loan or advance of at least an additional
$400,000 over the permitted Borrowing Base. To the extent that the amount of
the advances or loans exceed the Borrowing Base, such amounts are referred to
as, collectively, an "Overadvance Facility".
Borrower has advised the Lender that it has obtained the commitment of
Joseph M. Lobozzo II ("Lobozzo"), an officer, director, controlling shareholder
and holder of an existing subordinated debenture of the Borrower, to repay the
first $400,000 of the Overadvance Facility as it exists from time to time. A
copy of the commitment letter of Lobozzo to the Borrower confirming the
obligation of Lobozzo is annexed hereto as Exhibit A. To the extent that the
Lender advises the Borrower of the need to have the Overadvance Facility paid by
Lobozzo, the Borrower agrees to notify Lobozzo and to cause Lobozzo to provide
funds to the Borrower's account which it maintains with the Lender to pay the
amount of the Overadvance Facility up to $400,000. Lobozzo's commitment to
provide the Borrower with these additional funds up to $400,000 is referred to
as the "Lobozzo Commitment".
Lender has also agreed with Borrower that Lender will, to the extent that
Lobozzo has agreed to provide payment of the Overadvance Facility, provide the
Borrower with a further Overadvance of three dollars for every four dollars as
to which Lobozzo has paid the Overadvance Facility. The maximum amount of the
Overadvance Facility which the Lender will be required to pay will be $300,000,
which, when added to the Lobozzo Commitment portion, will grant to the Borrower
a total Overadvance Facility of $700,000.
Lender agrees that if the amount of the Overadvance Facility which has
been paid by Lobozzo is the only portion of the Overadvance Facility which is
outstanding at any given time, then, at the time that the Borrowing Base is
increased over the amount borrowed by the Borrower, such that the Overadvance
Facility requirements of the Borrower decrease, then Lobozzo shall be repaid
first any and all amounts as to which the Overadvance Facility has been paid by
Lobozzo. The means whereby Lobozzo will increase the amount of his payment of
the Overadvance Facility, and whereby Lobozzo will be repaid for any of his
payments of the Overadvance Facility, are each as set forth in Exhibit A.
Lender agrees that it will not provide any portion of the Overadvance
Facility to Borrower without providing notice thereof to Borrower and to
Lobozzo.
In the event that Lender ever provides any portion of the Overadvance
Facilities at the time that Lobozzo is also providing repayment of a portion of
the Overadvance Facility, any repayment of the Overadvance Facility shall be
repaid to Lobozzo and to Lender in proportion to the amount which each is
paying of the Overadvance Facility.
If this letter accurately reflects our understanding, kindly execute and
return one copy.
Very truly yours,
DELTA COMPUTEC INC.
By: /s/ John DeVito
John DeVito, President
DELTA DATA NET, INC.
By: /s/ John DeVito
John DeVito, President
SAI / DELTA, INC.
By: /s/ John DeVito
John DeVito, President
ACCEPTED AND AGREED TO:
NATIONAL CANADA FINANCE CORPORATION
By:_______________________________________
,Vice President
JOSEPH M. LOBOZZO II
C/O JML Optical Industries, Inc.
690 Portland Avenue
Rochester, New York 14621
May 4, 1995
Mr. John DeVito, President
Delta Computec Inc.
900 Huyler Street
Teterboro, New Jersey 07608
Dear John:
I spoke this afternoon with Eric Lomas, Chairman of Willcox & Gibbs, Inc.,
Delta's second largest shareholder. After discussing my option with Mr. Lomas,
I have decided to revise the Option Agreement to provide that if, prior to May
20, 1996, the core business of Delta, representing essentially the service
business (and not including the business conducted by Data Net, Data Span or
Intronet) is sold, I am prepared, at the option of the Board of Directors of
Delta, either to cancel the option agreement (if the option is unexercised) or
to resell to Delta any common shares which I have received upon exercise of the
option for a refund of the exercise price (if the option has been exercised),
provided that I receive, no later than the closing on any such sale of the core
business, payment in full of the $400,000 which I have advanced to Delta (and
its affiliated companies), plus all interest and a $100,000 additional payment.
If this is acceptable to the Board of Directors of Delta, kindly execute
and return one copy of this letter which shall constitute an amendment to the
option agreement.
Very truly yours,
By: /s/ Joseph M. Lobozzo II
Joseph M. Lobozzo II
Accepted and agreed to:
DELTA COMPUTEC INC.
By: /s/ John DeVito
John DeVito, President
