EXHIBIT 10.2

AMENDMENT TO AGREEMENT FOR WHOLESALE FINANCING
AND BUSINESS FINANCING AGREEMENT

          This Amendment is made to (i) that certain Agreement for Wholesale
Financing executed on the 29th day of July, 2005, between EMTEC, INC., a New
Jersey corporation, and Westwood Computer Corporation (individually,
collectively and jointly and severally “Dealer”) and GE Commercial Distribution
Finance Corporation (“CDF”), as amended (“AWF) and (ii) that certain Business
Financing Agreement between Dealer and CDF dated July 29, 2005, as amended
(“BFA”).

          FOR VALUE RECEIVED, CDF and Dealer agree as follows (capitalized terms
shall have the same meaning as defined in the BFA unless otherwise indicated):

 

 

     1. Section 1.1 of the BFA is hereby amended to incorporate the following
defined terms:

 

 

 

“‘Government Accounts’: all accounts due and payable from a U.S. federal
governmental body, agency or instrumentality; or body, agency or instrumentality
of the District of Columbia.

 

 

 

‘Non-Government Accounts’: all Accounts other than Government Accounts.”

 

 

     2. Section 3.2 of the BFA is hereby amended to read as follows, and, to the
extent applicable, the following provision shall also amend the AWF (capitalized
terms shall have the same meaning as defined in the BFA unless otherwise
indicated):

 

 

 

“3.2 Available Credit; Paydown. On receipt of each Schedule, CDF will credit
Dealer with such amount, up to the remainder of (a) Eighty-Five Percent (85%) of
the net amount of eligible Accounts listed in such Schedule, minus (b) the
amount of Dealer’s SPP Deficit (as defined below) under Dealer’s Agreement for
Wholesale Financing (the ‘AWF’) with CDF, as in effect from time to time, minus
(c) Three Million Fifteen Thousand Dollars ($3,015,000) ((a) minus the sum of
(b) and (c) is referred to herein as the ‘Available Credit’). In no event will
CDF credit Dealer with more than Dealer’s maximum Accounts Receivable Facility
from time to time established by CDF, not to exceed the Available Credit.

 

 

 

Dealer’s ‘SPP Deficit’ shall mean the amount, if any, by which Dealer’s total
current outstanding indebtedness to CDF under the AWF as of the date of the
Inventory Report (as defined below) exceeds the Inventory Value (as defined
below) as determined by, and as of the date of, the Inventory Report. Such SPP
Deficit, if any, will remain in effect for purposes of this Agreement until the
preparation and delivery by Dealer to CDF of a new Inventory Report. Dealer will
forward to CDF by the tenth (10th) day of every month an Inventory Report dated
as of the last day of the prior month which specifies the total aggregate
wholesale invoice price of all of Dealer’s inventory financed by CDF under the
AWF that is unsold and in Dealer’s possession and control as of the date of the
Inventory Report.

 

 

 

The term ‘Inventory Value’ is defined herein to mean One Hundred Percent (100%)
of the total aggregate wholesale invoice price of all of Dealer’s inventory
financed by CDF under the AWF that is unsold and in Dealer’s possession and
control as of the date of the Inventory Report and to the extent that CDF has a
first priority, fully perfected security interest therein.

 

 

 

If, for any reason, Dealer’s outstanding loans under Dealer’s Accounts
Receivable Facility shall at any time exceed Dealer’s Available Credit, Dealer
will immediately repay to CDF the amount of such excess.

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Furthermore, as an amendment to the AWF, in the event Dealer’s SPP Deficit
exceeds at any time (a) Eighty-Five Percent (85%) of the net amount of eligible
Accounts, minus (b) Dealer’s outstanding loans under Dealer’s Accounts
Receivable Facility, minus (c) Three Million Fifteen Thousand Dollars
($3,015,000), Dealer will immediately pay to CDF, as a reduction of Dealer’s
total current outstanding indebtedness to CDF under the AWF, such excess. CDF
will loan Dealer, on request, such amount so credited or a part thereof as
requested provided that at no time will such outstanding loans exceed the
Accounts Receivable Facility.

 

 

 

No advances or loans need be made by CDF if Dealer is in Default.”

 

 

3.

Section 3.3(b) of the BFA is hereby amended to read in its entirety as follows:

 

 

 

“(b) Non-Government Accounts unpaid more than ninety (90) days from date of
invoice and Government Accounts unpaid more than one hundred twenty (120) days
from date of invoice;”

 

 

4.

Section 3.3(c) of the BFA is hereby amended to read in its entirety as follows:

 

 

 

“(c) all Non-Government Accounts of any obligor if fifty percent (50%) or more
of the aggregate outstanding balance of such obligor’s Non-Government Accounts
are unpaid for more than ninety (90) days from the date of invoice and all
Government Accounts of any obligor if fifty percent (50%) or more of the
aggregate outstanding balance of such obligor’s Government Accounts are unpaid
for more than one hundred twenty (120) days from the date of invoice;”

 

 

5.

CDF and Dealer agree that the following paragraph is incorporated into the AWF
and BFA as if fully and originally set forth therein, and it hereby replaces in
its entirety all other financial covenants previously in effect:

 

 

 

“Dealer’s parent, Emtec, Inc., a Delaware corporation (“Parent”), will, as of
each day set forth below:

 

 

 

 

(a)

maintain a Tangible Net Worth and Subordinated Debt in the combined amount of
not less than the amount shown below:

 

 

 

 

 

 

Date

 

 

Amount

 

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February 28, 2006

 

$

3,000,000

 

May 31, 2006

 

$

3,000,000

 

August 31, 2006

 

$

3,300,000

 

November 30, 2006

 

$

4,500,000

 

February 28, 2007

 

$

4,800,000

 

May 31, 2007 and each quarter-end thereafter

 

$

5,000,000

 

 

 

 

 

(b)

maintain a ratio of Debt minus Subordinated Debt to Tangible Net Worth and
Subordinated Debt of not more than the amount shown below:

 

 

 

 

 

 

Date

 

 

Ratio Amount

 

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February 28, 2006

 

12.0:1.0

 

 

May 31, 2006

 

12.0:1.0

 

 

August 31, 2006

 

12.0:1.0

 

 

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November 30, 2006

 

12.0:1.0

 

 

February 28, 2007

 

7.0:1.0

 

 

May 31, 2007 and each quarter-end thereafter

 

6.0:1.0

 

 

 

 

 

 

(c)

achieve an EBITDA for the twelve-month period ending on the last day of each
fiscal quarter, of at least the percentage shown below of Parent’s Gross
Revenues for the twelve-month period ending on the last day of each fiscal
quarter shown below:

 

 

 

 

 

 

Date

 

 

Percent

 

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February 28, 2006

 

0.5

%

 

May 31, 2006

 

0.5

%

 

August 31, 2006

 

1.0

%

 

November 30, 2006

 

1.0

%

 

February 28, 2007

 

1.0

%

 

May 31, 2007 and each quarter-end thereafter

 

1.0

%

 

 

 

 

For purposes of this paragraph: (i) ‘Tangible Net Worth’ means the book value of
Parent’s assets less liabilities, excluding from such assets all Intangibles;
(ii) ‘Intangibles’ means and includes general intangibles; software (purchased
or developed in-house); accounts receivable and advances due from officers,
directors, employees, stockholders, members, owners and affiliates; leasehold
improvements net of depreciation; licenses; good will; prepaid expenses; escrow
deposits; covenants not to compete; the excess of cost over book value of
acquired assets; franchise fees; organizational costs; finance reserves held for
recourse obligations; capitalized research and development costs; the
capitalized cost of patents, trademarks, service marks and copyrights net of
amortization; and such other similar items as CDF may from time to time
determine in CDF’s sole discretion; (iii) ‘Debt’ means all of Parent’s
liabilities and indebtedness for borrowed money of any kind and nature
whatsoever, whether direct or indirect, absolute or contingent, and including
obligations under capitalized leases, guaranties, or with respect to which
Parent has pledged assets to secure performance, whether or not direct recourse
liability has been assumed by Parent; (iv) ‘Subordinated Debt’ means all of
Dealer’s Debt which is subordinated to the payment of Dealer’s liabilities to
CDF by an agreement in form and substance satisfactory to CDF; (v) ‘EBITDA’
means, for any period of calculation, the net income of Parent before provision
for income taxes, interest expense (including without limitation, implicit
interest expense on capitalized leases), depreciation and amortization,
excluding therefrom (to the extent included): (A) non-operating gains
(including, without limitation, extraordinary or nonrecurring gains, gains from
discontinuance of operations and gains arising from the sale of assets other
than inventory) during the applicable period; (B) net earnings of any business
entity in which Parent has an ownership interest (other than a wholly owned
subsidiary) unless such net earnings shall have actually been received by Parent
in the form of cash distributions; (C) any portion of the net earnings of any
subsidiary which for any reason is unavailable for payment of dividends to
Parent; (D) the earnings of any entity to which any assets of Parent shall have
been sold, transferred or disposed of, or into which Parent shall have merged,
or been a party to any consolidation or other form of reorganization, prior to
the date of such transaction; (E) any gain arising from the acquisition of any
securities of Parent; and (F) non-operating losses arising from the sale of
capital assets during such period; and (vi) ‘Gross Revenues’ means all revenues
arising out of Parent’s sales of goods and services. All terms used herein to
the extent not defined shall be used in accordance with generally accepted
accounting principles consistently applied. All amounts, if applicable, shall be
calculated on a consolidated basis.”

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          Dealer waives notice of CDF’s acceptance of this Amendment.

          All other terms and provisions of the AWF and BFA, to the extent not
inconsistent with the foregoing, are ratified and remain unchanged and in full
force and effect.

          This Amendment may be executed in any number of counterparts which
shall together constitute but one and the same agreement.

          IN WITNESS WHEREOF, Dealer and CDF have executed this Amendment on
this 10th day of April, 2006.

 

 

 

 

 

Westwood Computer Corporation

 

EMTEC, INC.

 

 

 

 

 

By: 

/s/ Keith Grabel

 

By: 

/s/ Dinesh Desai

 

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Keith Grabel

 

 

Dinesh Desai

 

President

 

 

Chairman

 

 

 

 

 

GE COMMERCIAL DISTRIBUTION FINANCE

 

 

 

CORPORATION

 

 

 

 

 

 

 

 

By:

/s/ David Mintert

 

 

 

 

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David Mintert

 

 

 

 

Vice President of Operations

 

 

 

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