Document:

ex101.htm

Exhibit 10.1

 

 

    August 22nd, 2013

 

    PRIVATE & CONFIDENTIAL

    Ms. Melinda Wohl

    Apex Systems Integrators Inc.

    8697 Research Drive

    Irvine, CA

    92618

 

    Dear Ms. Wohl:

 

   Re: Investment No. 064984-01, Loan Agreement dated June 4, 2012 as amended from time to time

 

    We have amended the terms and conditions of the investment as follows: 

 

    SECURITY

 

    Replace:

       An Investment Agreement signed by Apex Systems Integrators Inc. and 2314505 Ontario Inc., containing normal representations and warranties for this type of transaction.

 

    By:

       An Investment Agreement signed by Apex Systems Integrators Inc., containing normal representations and warranties for this type oftransaction.

 

    Replace:

       General Security Agreement from Apex Systems Integrators Inc. and 2314505 Ontario Inc. providing:

 

          - A security interest on all assets, subject only to:

 

                       - Priority on inventory  and accounts receivable, intellectual property, patents, and trademarks and all other present and after-acquired personal 

              property to the lender extending line of credit and the term financing;

 

BDC will agree to the BDC standard Subordination Agreement with the lender extending line of credit provided that the terms are satisfactory to BDC. If the agreement is to include standstill provisions, then the total interest rate will automatically  be increased by 0.5%.

 

    By:

       General Security Agreement from Apex Systems Integrators Inc. providing:

 

         - A security interest on all assets, subject only to:

 

 

  

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Apex Systems Integrators Inc., Investment No. 064984-01

Page 2

August 22nd, 2013

 

 

- Priority on inventory and accounts receivable, intellectual property, patents, and trademarks and all other present and after-acquired personal property to the lender extending line of credit and the term financing;

BDC will agree to the BDC standard Subordination Agreement with the lender extending line of credit provided that the terms are satisfactory to BDC. If the agreement is to include standstill provisions, then the total interest rate will automatically be increased by 0.5%.

 

Replace:

    Assignment of the life insurance policy on the life of Don Dalicandro in the amount of $1,700,000, with BDC shown as loss payee.

 

    By:

       Assignment of Accidental Death and Dismemberment insurance policy on the life of Don Dalicandro in the amount of $1,700,000, with BDC shown as loss payee.

 

    UNDERLYING CONDITION

 

    Replace:

You will use the funds as planned in the financial program and maintain, for the duration of this investment, a term debt to tangible net worth ratio of the borrower not exceeding 0.9:1(measured quarterly); and a minimum working capital amount (measured quarterly) representing 10% of the borrower(s)  Annual Gross Sales of the previous year, revised yearly 90/120 days after each year end. For the purposes of these calculations, BDC Capital and the investment from DecisionPoint Systems Inc. will be considered Equity.

 

    By:

You will maintain, for the duration of this investment, a term debt to equity ratio of the borrower not exceeding 1.1:1(measured annually); and an adjusted current ratio of 0.40:1(measured annually) and revised yearly 120 days after each year end. For the purposes of the Current Ratio calculation, the amounts due from D. Dalicandro and the accrued earnout will be eliminated from the calculation.  The BDC reserves the right to reset the covenants on an annual basis.

  

2

  

 

	 	
Apex Systems Integrators Inc., Investment No. 064984-01

Page3

August 22nd, 2013

 

 

    Delete:

In the event the amalgamation of 2314505 Ontario Inc. and Apex Systems Integrators Inc. does not take place at closing, 2314505 Ontario Inc. will provide a General Security Agreement providing:

 

          -  A security interest in all assets, subject only to:

 

-  Priority on inventory  and accounts receivable,intellectual property, patents, and trademarks and all other present and after-acquired personal property to the lender extending line of credit and the term debt.

 

BDC will agree to the BDC standard Subordination Agreement with the lender extending line of credit provided that the terms are satisfactory to BDC. If the agreement is to include standstill provisions, then the total interest rate will automatically be increased by 0.5%.

 

    Delete:

 

       If the $1,300,000 Investment comes in as a related party loan, the full amount will be postponed and assigned in the Bank's favour. No interest may be paid.

 

       Upon your acceptance of the amendment, the letter  of offer and the security for the loan are deemed amended to the extent of this change.

 

       To give effect to the amendments, kindly sign and return the attached copy of this letter.

 

       Upon acceptance, this agreement is binding on Business Development Bank of Canada, the obligants, the guarantors and their successors and assigns.

 

   

  

  

3

  

 

 

ACKNOWLEDGMENT

(Please sign and return entire letter)

 

 

       We hereby agree to the above-mentioned amendments.

      

	
       Dated this

	15th	 day of 	October	,2013. 

 

       BORROWER

       Apex Systems Integrators Inc.

 

 

	 		Authorized Signing Officer
	 	Name and title:	 
	 	I have authority to Bind the Corporation	 

 

 

 

       GUARANTOR

       DecisionPoint Systems Inc.

 

	 		Authorized Signing Officer
	 	Name and title:	 
	 	I have authority to Bind the Corporation	 

 

 

4ex102.htm

Exhibit 10.2

	 	 	
	Jason L. Read	 	    Royal Bank of Canada
	Commercial Account Manager	       	    Knowledge Based Industries 
	 	 	    Southwestern Ontario
	 	 	    30 Duke 5treetWest, 8th Floor
	 	 	    Kitchener,Ontario N2H 3WS
	 	 	 
	 	 	    Phone:  (519) 575-2296
	 	 	    Fax:   (519) 575-2248
	 	 	    jason.read@rbc.com

 

 

August 15, 2013

Apex Systems Integrators Inc.

3170 Harvester Drive

Burlington, ON

L7N 3W8

 

Dear Sirs:

 

Your Credit Facilities with Royal Bank of Canada

 

We are writing with reference to your above credit facilities as set out in the Credit Agreement dated June 4, 2012{the "Agreement").

Our recent review reveals that Apex Systems Integrators Inc. was in default of the following covenants under the terms of the Agreement, for the fiscal quarter ended June 30, 2013.

 

FINANCIAL COVENANTS

Without affecting or limiting the right of the Bank to terminate or demand payment of, or cancel or restrict availability of any unutilized portion of any demand or other discretionary facility the Borrower covenants and agrees with the Bank that the Borrower will:

 

    a)   maintain, to be measured as at the end of each fiscal quarter:"

 

       "i Commencing with the fiscal quarter ending April30 2012, Fixed Charge Coverage, calculated on a rolling four quarter basis for the fiscal quarter then ended and the immediately preceding  3 fiscal quarters, of not less than 1.25:1; and"

 

       ii. Commencing the fiscal quarter ending April 30, 2012, a ratio of Funded Debt to EBITDA, calculated on a rolling 4 quarter basis for the fiscal quarter then ended and the immediately preceeding 3 fiscal quarters, of not greater than 2.25:1.

We acknowledge and waive the default stated above and further waive compliance with these specific covenants for the fiscal period ending June 30th 2013 as well as waive these specific covenants up to and until the subject new loan agreement outlining / resetting go forward covenants have been put in place.

Further to our recent review and approvals, we further confirm that the approved go forward financial covenants are as follows:

 

       "i. Commencing with the fiscal year ending December 31, 2013, Fixed Charge Coverage, calculated on an annual consolidated basis for the fiscal year then ended, of not less than 1.15:1; covenant step up to 1.25:1as at March 31, 2014 and to be tested on a roiling four quarter basis thereafter "

 

      ii. Commencing the fiscal year ending December 31, 2013 , a ratio of Funded Debt to EBITDA, calculated on an annual consolidated basis for the fiscal year then ended of not greater than 3.0 : 1; covenant to be tested on a rolling four quarter basis thereafter.

  

1

  

 

As further confirmation, we hereby waive any covenant testing for the Q3 (September 30th, 2013) reporting period. The next financial covenant testing will occur as at the fiscal year ending December 31, 2013. Approvals have been provided on the basis of information presented thus far and for further clarification, "consolidated" referred to Decisionpont Systems consolidated financial results. We further expect to have the new amendment to loan agreement prepared and  presented within the next 3-4 business days.

 

We reserve all rights under the Agreement and reserve the right to demand payment of borrowings outstanding under the credit facilities in the event of other breaches  of the Agreement.

 

If you have any questions about your credit facilities or would like clarification of any of the above matters, please don't hesi ate co  tact us immediately at (519) 575-2296.

 

Yours truly, 

Jason L. Read

Commercial Account Manager

 

2EXHIBIT 10.1

 

BUSINESS
FINANCING MODIFICATION AGREEMENT

 

This
Business Financing Modification Agreement is entered into as of August 1, 2013, by and between Telkonet, Inc. (the "Borrower")
and Bridge Bank, National Association ("Lender").

 

1.       DESCRIPTION
OF EXISTING INDEBTEDNESS: Among other indebtedness which may be owing by Borrower to Lender, Borrower is indebted to Lender
pursuant to, among other documents, a Business Financing Agreement, dated May 31, 2013, by and between Borrower and Lender, as
may be amended from time to time (the "Business Financing Agreement"). Capitalized terms used without definition herein
shall have the meanings assigned to them in the Business Financing Agreement.

 

Hereinafter,
all indebtedness owing by Borrower to Lender shall be referred to as the "Indebtedness" and the Business Financing Agreement
and any and all other documents executed by Borrower in favor of Lender shall be referred to as the "Existing Documents."

 

2.       DESCRIPTION
OF CHANGE IN TERMS.

 

A.     Modification(s)
to Business Financing Agreement:

 

1)      The
following definition in Section 12.1 entitled "Definitions" is amended to read as follows:

 

“Advance
Rate” means 80% in case of the Eligible Receivables (except for Receivables from the Account Debtor EthoStream),
or 75% in case of the Eligible Receivables from the Account Debtor EthoStream, and 25% in the case of the Eligible Inventory,
or in each case, such greater or lesser percentage as Lender may from time to time establish in its sole discretion upon notice
to Borrower.

 

2)      Clauses
(n) and (o) under the defined term "Eligible Receivable" in Section 12.1 entitled "Definitions is hereby amended
to read as follows:

 

(n)     The
Receivable is otherwise acceptable to Lender.

 

3.       CONSISTENT
CHANGES. The Existing Documents are each hereby amended wherever necessary to reflect the changes described above.

 

4.       INTENTIONALLY OMITTED.

 

5.       NO
DEFENSES OF BORROWER/GENERAL RELEASE. Borrower agrees that, as of this date, it has no defenses against the obligations to pay
any amounts under the Indebtedness. Each of Borrower and Guarantor (each, a "Releasing Party'') acknowledges that Lender
would not enter into this Business Financing Modification Agreement without Releasing Party's assurance that it has no claims
against Lender or any of Lender's officers, directors, employees or agents. Except for the obligations arising hereafter under
this Business Financing Modification Agreement, each Releasing Party releases Lender, and each of Lender's and entity's officers,
directors and employees from any known or unknown claims that Releasing Party now has against Lender of any nature, including
any claims that Releasing Party, its successors, counsel, and advisors may in the future discover they would have now had if they
had known facts not now known to them, whether· founded in contract, in tort or pursuant to any other theory of liability,
including but not limited to any claims arising out of or related to the Agreement or the transactions contemplated thereby. Releasing
Party waives the provisions of California Civil Code section 1542, which states:

 

A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME
OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

 

    	1

    	 

    

 

The
provisions, waivers and releases set forth in this section are binding upon each Releasing Party and its shareholders, agents,
employees, assigns and successors in interest. The provisions, waivers and releases of this section shall inure to the benefit
of Lender and its agents, employees, officers, directors, assigns and successors in interest. The provisions of this section.
shall survive payment in full of the Obligations, full performance of all the terms of this Business Financing Modification Agreement
and the Agreement, and/or Lender's actions to exercise any remedy available under the Agreement or otherwise.

 

6.       CONTINUING
VALIDITY. Borrower understands and agrees that in modifying the existing Indebtedness, Lender is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Documents. Except as expressly modified pursuant to this Business Financing
Modification Agreement, the terns of the Existing Documents remain unchanged and in full force and effect. Lender's agreement
to modifications to the existing Indebtedness pursuant to this Business Financing Modification Agreement in no way shall obligate
Lender to make any future modifications to the Indebtedness. Nothing in this Business Financing Modification Agreement shall constitute
a satisfaction of the Indebtedness. It is the intention of Lender and Borrower to retain as liable parties all makers and endorsers
of Existing Documents, unless the party is expressly released by Lender in writing. No maker, endorser, or guarantor will be released
by virtue of this Business Financing Modification Agreement. The terms of this paragraph apply not only to this Business Financing
Modification Agreement, but also to any subsequent Business Financing modification agreements.

 

7.       INTENTIONALLY OMITTED.

 

8.       NOTICE
OF FINAL AGREEMENT. BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THIS WRITTEN AGREEMENT REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES, (B) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (C) THIS WRITTEN
AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF
THE PARTIES.

 

9.       COUNTER
SIGNATURE. This Business Financing Modification Agreement shall become effective only when executed by Lender, Borrower, and
Guarantor.

 

 

 

 

 

 

 

2

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