FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
This First Amendment to Loan and Security Agreement (this
"Amendment") is made and entered into effective as of the 15th day of December,
1999, by and between FINOVA Capital Corporation, a Delaware corporation
("Lender"), and Datatec Industries Inc., a New Jersey corporation ("Borrower").
This Amendment is joined in by Datatec Systems, Inc., a Delaware corporation
formerly known as Glasgal Communications, Inc. ("Parent"), which is a guarantor
and holder and pledgor of 100% of the issued and outstanding stock of Borrower,
and by HH Communications, Inc., an Illinois corporation ("HHC"), which is a
guarantor. In addition, this Amendment is joined in by Computer-Aided Software
Integration, Inc., a Delaware corporation ("CASI"), to document its
participation in the transaction, as described below.
R E C I T A L S :
WHEREAS, Lender and Borrower entered into that certain Loan
and Security Agreement dated as of March 17, 1997 (the "Loan Agreement"),
pursuant to which Lender made available to Borrower loans in the amount of up to
$17,000,000 (the "Loan"), consisting of a senior term loan in the amount of
$2,000,000 (the "Term Loan") and a revolving line of credit in the amount of up
to $15,000,000 (the "Revolving Loans Facility"), upon the terms and conditions
set forth in the Loan Agreement. All terms used herein with initial capital
letters, unless otherwise specifically defined herein, shall have the same
meanings as set forth in the Loan Agreement; and
WHEREAS, Borrower has requested that Lender amend the Loan
Agreement to provide Borrower with a temporary line of credit in excess of the
maximum amount permitted by the advance ratios under the Revolving Loans
Facility (the "Overadvance") in the amount of up to $1,000,000 (such additional
$1,000,000 being referred to herein as the "Temporary Overadvance Amount"),
which Overadvance would be effective for a period commencing on the date hereof
through and including February 15, 2000 (the "Overadvance Term"), but not
thereafter; and
WHEREAS, the Revolving Loans Facility is presently secured by
the Collateral as described in the Loan Agreement; and
WHEREAS, Lender is willing to enter into this Amendment and to
make available the Temporary Overadvance Amount for the Overadvance Term, upon
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants hereinafter stated, the parties hereto do hereby agree as
follows:
1. Overadvance Availability. Effective as of the date hereof,
and notwithstanding anything set forth in Section 1.2 of the Schedule to the
Loan Agreement to the contrary, the Temporary Overadvance Amount, in addition to
the Loans described in the Loan Agreement, shall be available to Borrower
throughout the Overadvance Term. Borrower may request advances of portions of
the Temporary Overadvance Amount, provided however, that in no event shall the
aggregate of advances in excess of the Loans provided for in the Loan Agreement
at any time be permitted to exceed the Temporary Overadvance Amount, nor shall
total Advances, inclusive of the Temporary Overadvance Amount, ever be permitted
to exceed the Maximum Amount. Advances of the Temporary Overadvance Amount shall
be made available to Borrower without regard to the percentage limitations on
advances set forth in Section 1.2 of the Loan Agreement (with the result that
Borrower shall be permitted to be "out of formula" as to the Temporary
Overadvance Amount). All advances of portions of the Temporary Overadvance
Amount shall be considered Advances under the Loan Agreement.
2. Expiration of Overadvance Term. As an express condition to
Lender's agreements as set forth herein, Borrower specifically acknowledges that
upon the expiration of the Overadvance Term, the maximum permitted amounts
outstanding under the Revolving Loans Facility, as each such term is defined in
the Loan Agreement, shall be reduced to the amounts set forth therein, and any
portion of the Temporary Overadvance Amount outstanding as of February 15, 2000,
shall immediately be due and payable.
3. Early Expiration of the Overadvance Term. Notwithstanding
the provisions of Section 2 hereof, the Temporary Overadvance Amount may become
unavailable to Borrower at an earlier time in the following circumstance. Upon
the occurrence of any Event of Default, Lender shall be entitled, at its option,
to immediately terminate the availability of the Temporary Overadvance Amount
(such termination to be without prejudice to Lender in exercising any and all
other rights and remedies as set forth in the Loan Agreement and the other Loan
Documents), at which time no further advances in respect of the Temporary
Overadvance Amount shall be available to Borrower and all outstanding advances
of the Temporary Overadvance Amount shall become immediately due and payable.
4. Representations and Warranties of Borrower. To induce
Lender to enter into this Amendment, and acknowledging Lender's reliance upon
the truth and accuracy thereof, Borrower represents and warrants to Lender as
follows:
(a) Borrower has the requisite corporate power and corporate
authority to enter into this Amendment and the documents and
instruments to be executed in connection herewith, and to perform its
obligations hereunder and thereunder.
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(b) This Amendment and any other documents and instruments
executed and delivered to Lender by Borrower in connection herewith
were duly authorized by all requisite corporate action on the part of
Borrower and with any requirements of Borrower's articles of
incorporation and bylaws, and any amendments thereto, and this
Amendment and any other documents or instruments executed in connection
herewith have been duly executed and delivered by Borrower.
(c) The execution and delivery by Borrower of this Amendment
and any other instruments executed and delivered by Borrower to Lender
in connection herewith, and the full and complete performance by
Borrower of the provisions hereof, will not result in any breach of, or
constitute a default under, or, except as contemplated by this
Amendment, result in the creation of any lien, charge or encumbrance
upon any property or assets of Borrower under any indenture, mortgage,
deed of trust, bank loan or credit agreement or other material
instrument to which Borrower is a party or by which Borrower is bound.
(d) This Amendment is the legal, valid and binding obligation
of Borrower, enforceable against Borrower in accordance with its terms,
except that the enforceability hereof may be subject to or limited by
bankruptcy, insolvency, reorganization, arrangement, moratorium, or
other similar laws relating to or affecting creditors generally, and
general principles of equity.
(e) All of the respective representations and warranties made
by the Borrower in any of the Loan Documents remain true, complete and
correct as of the date hereof, unless they expressly relate to an
earlier date.
5. Joinder By CASI. As of the original Closing Date, certain
circumstances prevented CASI from both (i ) joining in the Loan Agreement, in
the manner which had previously been contemplated by the parties, and (ii)
benefiting from certain provisions thereof in the manner being enjoyed by Parent
and HHC. Those circumstances have now terminated, and CASI wishes to obtain
certain benefits under the Loan Agreement. Accordingly, CASI hereby joins in
this Amendment for the purpose of obtaining such benefits. To the extent the
Loan Agreement contains provisions which purport to extend to and bind any of
the other Loan Parties, CASI hereby adopts and agrees to be bound by such terms
and provisions of the Loan Agreement, and hereby makes and delivers all
representations, warranties, and covenants in favor of Lender which by their
terms extend to the Loan Parties or any of them. On or before January 15, 2000,
CASI shall execute and deliver, in form and substance satisfactory to Lender, a
Continuing Guaranty, Promissory Note in an amount of up to $______________, and
Guarantor Security Agreement which are in form and substance substantially
identical to those executed and delivered by HHC as of the original Closing
Date. In addition, CASI shall execute and deliver such further instruments as
Lender may reasonably request in order to effectuate the original intent of the
Parties that CASI participate in the transaction in the same manner as HHC. In
connection
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with the foregoing, on or before January 15, 2000, Parent shall execute and
deliver a Stock Pledge Agreement pledging in favor of Lender the CASI Stock, in
form and substance substantially identical to the Stock Pledge Agreement
pursuant to which Parent pledged the HHC Stock in favor of Lender at the
original Closing.
6. Release of Lender. As additional consideration for the
agreements by Lender as set forth in this Amendment, Borrower, except as
otherwise provided in the next sentence, hereby releases and forever discharges
Lender, its agents, servants, employees, directors, officers, attorneys,
branches, affiliates, subsidiaries, successors and assigns and all persons,
firms, corporations, and organizations acting or serving in its behalf, of and
from all damage, loss, claims, demands, liabilities, obligations, actions and
causes of action whatsoever which Borrower may now have or claim to have against
Lender, whether presently known or unknown, and of every nature and extent
whatsoever on account of or in any way touching, concerning, arising out of or
founded upon the Loans, any of the Loan Documents or upon this Amendment,
including without limitation all such loss or damage of any kind heretofore
sustained, or that may arise as a consequence of the dealings between the
parties. The release set forth above shall not extend to any claim arising after
the date hereof to the extent based on acts or omissions of Lender occurring
after such date, except that such release is specifically intended by the
parties to include all dealings of the parties leading to the consummation of
the transaction contemplated by this Amendment. This Amendment and the covenants
contained in this Section 6 are contractual, and not a mere recital, and the
parties hereto acknowledge and agree that no liability whatsoever is admitted on
the part of any party, except as provided for by the Loan Documents and this
Amendment.
7. Fees and Expenses. Borrower shall pay to Lender a fee in
the amount of $15,000 (the "Overadvance Fee") in consideration for Lender's
agreement to make the Overadvance available to Borrower. The Overadvance Fee
shall be due and payable in full upon the expiration of the Overadvance Term.
Borrower shall also pay, on demand, all costs and expenses arising from the
preparation of this Amendment, including Lender's reasonable attorneys' fees and
all of Lender's and its attorneys' out-of-pocket costs and expenses incurred in
connection with the negotiation and documentation of this Amendment, and any
other costs, expenses or charges that may be imposed on or incurred by Lender as
a result of this Amendment. Lender shall have the right to withhold from any
Advance made hereunder any such costs, fees, expenses or reimbursements due and
owing to Lender.
8. Confirmation of Security Interests. Borrower hereby
confirms and agrees that Lender's security interest in and to the Collateral,
all as more specifically granted pursuant to the Loan Agreement, shall remain in
full force and effect until the Loans have been paid in full to Lender.
9. No Waiver of Defaults. This Amendment in no way acts as a
waiver of any future default of Borrower except as specifically agreed upon
herein or as a release or relinquishment of any of the liens, security
interests, rights or remedies securing payment of
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the Loans or for the enforcement thereof, including, without limitation, the
liens created by the other Loan Documents. Such liens, security interests,
rights and remedies are hereby ratified, confirmed, preserved, renewed and
extended by Borrower in all respects.
10. Benefit of the Amendment. The terms and provisions of this
Amendment and the other Loan Documents shall be binding upon and inure to the
benefit of Lender and Borrower and their respective successors and assigns,
except that Borrower shall not have any right to assign its rights under this
Amendment or any of the Loan Documents or any interest therein without the prior
written consent of Lender.
11. Choice of Law. The Loan Documents and this Amendment shall
be performed and construed in accordance with the laws of the State of Arizona.
12. Entire Agreement. Except as modified by this Amendment,
the Loan Documents remain in full force and effect. The Loan Documents as
modified by this Amendment embody the entire agreement and understanding between
Borrower and Lender, and supersede all prior agreements and understandings
between said parties relating to the subject matter thereof.
13. Counterparts; Telecopy Execution. This Amendment
(including the Consents hereto) may be executed in any number of separate
counterparts, each of which, when taken together, shall constitute one and the
same agreement, admissible into evidence, notwithstanding the fact that all
parties have not signed the same counterpart. Delivery of an executed
counterpart of this Amendment by telefacsimile shall be equally as effective as
delivery of a manually executed counterpart of this Amendment. Any party
delivering an executed counterpart of this Amendment by telefacsimile shall also
deliver a manually executed counterpart of this Amendment, but the failure to
deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Amendment.
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IN WITNESS WHEREOF, the parties hereto have executed this
Amendment effective as of the day, month, and year first above written.
FINOVA CAPITAL CORPORATION, a Delaware
corporation
By:
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Name:
Title:
DATATEC INDUSTRIES INC., a New Jersey
corporation
By:
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Name:
Title:
This Amendment is executed by the undersigned for purposes of
agreeing to and adopting the provisions set forth in Section 5 thereof.
COMPUTER-AIDED SOFTWARE INTEGRATION,
INC., a Delaware corporation
By:
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Name:
Title:
CONSENT AND AGREEMENT OF PLEDGOR AND GUARANTORS
The undersigned ("Guarantors") hereby consent to the making of
the foregoing First Amendment to Loan and Security Agreement (the "Amendment")
and agree that, notwithstanding the extension of the additional Indebtedness
represented by the Temporary Overadvance Amount, and the other modifications to
the Loan Documents described in the Amendment, (a) each of the Stock Pledge
Agreements by Parent in favor of Lender, dated as of March 17, 1997 (the "Stock
Pledge Agreements"), remain in full force and effect; (b) each of the Guaranties
made by Guarantors in favor of Lender, dated as of March 17, 1997 (the
"Guaranties") remain in full force and effect; (c) the Borrower's Obligations
referred to in the Guaranties shall include all advances of the Temporary
Overadvance Amount, and all accrued interest or costs and expenses payable to
Lender in connection therewith; and (d) Guarantors do not have any offset,
defense or counterclaim with respect thereto, no claim or defense in the
abatement or reduction of such Indebtedness, or any other claim against Lender
or with respect to any document forming part of the transaction in respect of
which the Stock Pledge Agreements and the Guaranties were made or forming part
of any other transaction under which Borrower is indebted to Lender. The
undersigned are executing this Consent for the purpose of consummating the
transaction contemplated by the Amendment, and this Consent is not intended to
be an amendment or modification of any of the terms and provisions of the Stock
Pledge Agreements or the Guaranties, except to the extent of confirming that all
amounts due to Lender in respect of the Temporary Overadvance Amount are
included within the scope of the Borrower's Obligations as defined in the
Guaranties.
DATED as of this ___ day of December, 1999.
DATATEC SYSTEMS, INC., a Delaware
corporation, formerly known as Glasgal
Communications, Inc.
By:
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Name:
Title:
HH COMMUNICATIONS, INC., an Illinois
corporation
By:
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Name:
Title: