Exhibit 10.1


    
      
EXECUTION
      COPY


     

    Exhibit
      10.1

     

     

     

    SECOND
      AMENDMENT AND WAIVER, dated
      as
      of November 4, 2005 (“Amendment”), to CREDIT
      AND SECURITY AGREEMENT, dated
      as
      of June 29, 2004 (as amended from time to time, the “Credit Agreement”), among
INFOTECH
      USA, INC.,
      a New
      Jersey corporation, as borrower (the “Borrower”), INFOTECH
      USA, INC.,
      a
      Delaware corporation, and INFORMATION
      TECHNOLOGY SERVICES, INC.,
      a New
      York corporation, as guarantors (together with the Borrower, the “Obligors”),
      and WELLS
      FARGO BANK, NATIONAL ASSOCIATION,
      acting
      through its Wells Fargo Business Credit operating division (the “Lender”). Terms
      which are capitalized in this Amendment and not otherwise defined shall have
      the
      meanings ascribed to such terms in the Credit Agreement.

     

    WHEREAS, the
      Obligors have requested that the Lender waive as an Event of Default a violation
      of one of the financial covenants contained in the Credit Agreement, and modify
      certain terms of the Credit Agreement, and the Lender has agreed to the
      foregoing request, on the terms and conditions set forth herein;

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual promises contained herein, and for other good and
      valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the Obligors and the Lender hereby agree as follows:

     

    Section
      One.    
      Amendments.
      Effective as of the date hereof, upon satisfaction of the conditions precedent
      set forth in Section Five hereof, the Credit Agreement is hereby amended as
      follows:

     

    (a)    Clause (i)
      of the definition of the term “Eligible Accounts” in Section 1.1 of the
      Credit Agreement is deleted in its entirety and the following substituted in
      lieu thereof:

     

    “(i)
      (a) That portion of Accounts (other than Accounts owing by Hackensack
      University Medical Center to the Borrower) unpaid 91 days or more after the
      invoice date or 61 days or more after the original due date (without reducing
      such amount by the amount of any credit balances); and (b) that portion
      of
      Accounts owing by Hackensack University Medical Center to the Borrower unpaid
      121 days or more after the invoice date or 91 days or more after the original
      due date (without reducing such amount by the amount of any credit
      balances);”

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    (b)    Section
      6.2(c) Minimum
      Net Income. As
      of the
      end of each period set forth below, the Obligors will have achieved Net Income,
      on a cumulative quarterly basis, of not less than the amount set forth below
      opposite such period:

     

    
      	 	
              “Period

            	
              Minimum

              Net
                Income

            
	
              A.

            	
              fiscal
                quarter ending in December 2005

            	
              $(200,000)

            
	 	 	 
	
              B.

            	
              two
                (2) fiscal quarters ending in March 2006

            	
              $(292,000)

            
	 	 	 
	
              C.

            	
              three
                (3) fiscal quarters ending in June 2006

            	
              $(301,000)

            
	 	 	 
	
              D.

            	
              four
                (4) fiscal quarters ending in September 2006

            	
              $(386,000)

            


    

     

    As
      of the
      end of each fiscal quarter ending after September 30, 2006, the Obligors will
      have Net Income on a cumulative quarterly basis of not less than eighty percent
      (80%) of the projected cumulative Net Income of the Obligors for such period,
      as
      set forth in the projections for such period delivered to the Lender. The
      Obligors’ failure to deliver projections to the Lender pursuant to Section
      6.1(d) that are acceptable to the Lender, in its sole discretion, shall
      constitute an Event of Default.”

     

    Section
      Two.    
      Waivers.
      The
      Obligors have notified the Lender that the Obligors’ cumulative Net Income for
      the fiscal year ended September 30, 2005, is expected to be less than $(60,000).
      The failure of the Obligors to have cumulative Net Income for the fiscal year
      ended September 30, 2005 in an amount equal to at least $(60,000) (which amount
      equals 80% of the projected cumulative Net Income for such period), in violation
      of Section 6.2(c) of the Credit Agreement, constitutes an Event of Default
      under
      Section 7.1(b) of the Credit Agreement. The Event of Default expressly referred
      to in this paragraph is herein referred to as the “Designated
      Default.”

     

    Effective
      as of the date hereof, upon the satisfaction of the conditions precedent set
      forth in Section Five hereof, the Lender hereby waives the Designated Default
      as
      an Event of Default. Nothing herein shall constitute a waiver by the Lender
      of
      any other Default or Event of Default, whether or not the Lender has any
      knowledge thereof, nor shall anything herein be deemed a waiver by the Lender
      of
      any Default or Event of Default which may occur after the date of this
      Amendment.

     

    Section
      Three.    
      Amendment
      and Waiver Fee.
      In
      consideration for the amendments and waiver provided herein, the Borrower shall
      pay to the Lender a non-refundable fee in the amount of $25,000 (the “Amendment
      Fee”), which fee shall be fully earned on the date hereof and shall be payable
      in three (3) installments as follows: (a) $10,000 on January 2,
      2006;
      (b) $10,000 on February 6, 2006; and (c) $5,000 on March 6,
      2006. The failure of the Borrower to pay any installment of the Amendment Fee
      shall constitute an Event of Default.

     

    Section
      Four.    
      Representations
      and Warranties.
      To
      induce the Lender to enter into this Amendment, each Obligor warrants and
      represents to the Lender as follows:

     


    
      
         

      

      
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    (a)    all
      of
      the representations and warranties contained in the Credit Agreement and each
      other Loan Document continue to be true and correct in all material respects
      as
      of the date hereof, as if repeated as of the date hereof, except for such
      representations and warranties which, by their terms, are only made as of a
      previous date;

     

    (b)    the
      execution, delivery and performance of this Amendment by each Obligor is within
      its corporate powers, has been duly authorized by all necessary corporate action
      on its part, and each Obligor has received all necessary consents and approvals
      (if any shall be required) for the execution and delivery of this
      Amendment;

     

    (c)    upon
      its
      execution, this Amendment shall constitute the legal, valid and binding
      obligation of each Obligor, enforceable against each Obligor in accordance
      with
      its terms, except as such enforceability may be limited by (i)
      bankruptcy, insolvency or similar laws affecting creditors’ rights generally and
(ii)
      general
      principles of equity;

     

    (d)    no
      Obligor is in default under any indenture, mortgage, deed of trust, or other
      material agreement or material instrument to which it is a party or by which
      it
      may be bound. Neither the execution and delivery of this Amendment, nor the
      consummation of the transactions herein contemplated, nor compliance with the
      provisions hereof will (i)
      violate
      any law or regulation applicable to any Obligor, (ii)
      cause a
      violation by any Obligor of any order or decree of any court or government
      instrumentality applicable to it, (iii)
      conflict
      with, or result in the breach of, or constitute a default under, any indenture,
      mortgage, deed of trust, or other material agreement or material instrument
      to
      which any Obligor is a party or by which it may be bound, (iv)
      result
      in the creation or imposition of any lien, charge, or encumbrance upon any
      property of any Obligor, except in favor of the Lender, to secure the
      Obligations, or (v)
      violate
      any provision of the Constituent Documents of any Obligor;

     

    (e)    no
      Default or Event of Default has occurred and is continuing, except for the
      Designated Default which has been waived pursuant to Section Two hereof;
      and

     

    (f)    since
      September 30, 2005, no change or event has occurred which has had or
      is
      reasonably likely to have a Material Adverse Effect.

     

    Section
      Five.    
      Conditions
      Precedent.
      This
      Amendment shall become effective upon the date on which all of the following
      events shall have occurred; provided,
      however,
      that in
      the event that all of the following events shall not have occurred on or before
      November 8, 2005, then this Amendment shall thereafter be null and void and
      cease to be of any force and effect:

     

    (a)    the
      Lender shall have received this Amendment, duly executed by each Obligor;


     

    (b)    the
      Lender shall have received payment of all fees and disbursements incurred by
      the
      Lender in connection with the preparation, negotiation and closing of this
      Amendment and the transactions contemplated to occur hereunder; and

     

    (c)    except
      for the Designated Default which has been waived pursuant to Section Two hereof,
      no Default or Event of Default shall have occurred and be continuing,
      and

     


    
      
         

      

      
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    no
      event
      or development which has had or is reasonably likely to have a Material Adverse
      Effect shall have occurred, in each case since the date of the financial
      statements referred to above.

     

    Section
      Six.    
      General
      Provisions.

     

    (a)    Except
      as
      herein expressly amended, the Credit Agreement and all of the other Loan
      Documents are ratified and confirmed in all respects and shall remain in full
      force and effect in accordance with their respective terms.

     

    (b)    All
      references to the Credit Agreement in the Loan Documents shall mean the Credit
      Agreement as amended as of the effective date hereof, and as amended hereby
      and
      as hereafter amended, supplemented and modified from time to time.

     

    (c)    This
      Amendment embodies the entire agreement between the parties hereto with respect
      to the subject matter hereof and supercedes all prior agreements, commitments,
      arrangements, negotiations or understandings, whether written or oral, of the
      parties with respect thereto.

     

    (d)    This
      Amendment shall be governed by and construed in accordance with the internal
      laws of the State of New York, without regard to the conflicts of law principals
      thereof.

     

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    IN
      WITNESS WHEREOF, the
      Obligors and the Lender have signed below to indicate their agreement with
      the
      foregoing and their intent to be bound thereby.

     

    
      	 	
              INFOTECH
                USA, INC.,
                a
                New Jersey corporation

               

               

              By:
                /s/ J. Robert Patterson

              Name: 
                J.
                Robert Patterson

              Title:   
                Secretary
                and Treasurer

            
	 	 
	 	
              INFOTECH
                USA, INC.,
                a
                Delaware corporation

               

               

              By:
                /s/ J. Robert Patterson

              Name: 
                J.
                Robert Patterson

              Title:   
                Chief
                Financial Officer, Vice President

                          
                and Treasurer

            
	 	 
	 	
              INFORMATION
                TECHNOLOGY SERVICES, INC.

               

               

              By:/s/
                J. Robert Patterson

              Name: J.
                Robert Patterson

              Title:  
                Chief
                Financial Officer, Vice President

                          
                and Treasurer

            
	 	 
	 	
              WELLS
                FARGO BANK, NATIONAL

              ASSOCIATION,
                acting
                through its Wells Fargo

              Business
                Credit operating division

               

               

              By:
                /s/ Sal Mutone

              Name: 
                Sal
                Mutone

              Title:   
                Vice
                President

            


    

    
 

     

     

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