Exhibit 10.1

IBM Credit LLC

December 17, 2003

 

Datatec Systems, Inc.

23 Madison Road

Fairfield, NJ 07004

Attention: Mr. Mark J. Hirschhorn, Chief Financial Officer

Reference: That certain Inventory and Working Capital Financing Agreement by and
between Datatec Systems, Inc. ("Datatec") and IBM Credit LLC, formerly IBM
Credit Corporation ("IBM Credit"), and dated as of November 10, 2000 (and as
amended, supplemented or otherwise altered or modified from time to time through
and including November 7, 2003, the "Agreement").

Dear Mr. Hirschhorn:

IBM Credit is in receipt of Datatec's draft financial statements for the period
ending October 31, 2003 and has determined that Datatec has failed to meet
certain financial covenants, including, without limitation, the following:

 

Covenant

Covenant Requirement

Actual

Net Profit After Tax to Revenue

Equal To Or Greater Than 0.1%

A Net Loss of $7,785,000

Operating Income to Interest Expense

Equal To Or Greater Than 1.25:1

An Operating Loss

As a result of the foregoing, IBM Credit declares Datatec to be in default of
the Agreement effective immediately.

IBM Credit reserves any and all rights it now has or may have in the future.
Please be advised that it is IBM Credit's intent, pursuant to Section 9.3 of the
Agreement to pursue all remedies available to it at law or in equity in
asserting its claims against Datatec.

Please contact me at 914/765-6259 or Bruce Gordon at 914/765-6232 if you have
any questions or you wish to discuss this matter further.

Sincerely,

IBM CREDIT, LLC

/s/ Steven A Flanagan

Steven A. Flanagan

Manager, Global Special Handling