Exhibit 10.2
March 10, 2003
Xxxxx Xxxxxxxxxxx
Chief Operating Officer
Serviceware Technologies, Inc.
00 Xxxx Xxxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Dear Xxxxx:
At your request, Comerica Bank - California has agreed to waive all financial
covenant violations through February 28, 2003, subject to the terms and
conditions outlined below.
Reference is made to the Loan and Security Agreement dated October 16, 2002 (the
"Loan Agreement") by and between Comerica Bank - California (the "Bank"), and
Serviceware Technologies, Inc. (the "Borrower"). Capitalized terms not defined
herein shall have the meanings ascribed to them in the Loan Agreement.
The Bank hereby agrees to the following amendments to the Loan Agreement:
1. Eliminate the Quick Ratio financial covenant as outlined in Section 6.7(a)
of the Loan Agreement.
2. Eliminate the Total Liabilities Minus Convertible Subordinated Debt to
Tangible Net Worth plus Convertible Subordinated Debt financial covenant as
outlined in Section 6.7(c) of the Loan Agreement.
3. Amend the Minimum EBITDA financial covenant amounts outlined in Section
6.7(b) according to the following schedule:
3/31/03 through 6/29/03: ($750,000)
6/30/03 through 9/29/03 Break-even
9/30/03 and thereafter: $100,000
4. Establish a new Minimum Cash financial covenant of 1.5x Bank borrowings, to
be tested monthly and with each advance to assure compliance before and
after every borrowings.
5. Establish a $250,000.00 borrowing cap on the Line of Credit until June 30,
2003. After June 30, 2003 the cap shall be eliminated as soon as the
Borrower can demonstrate three consecutive months of positive EBITDA.
The Bank will charge the Borrower a waiver fee of $5,000.00.
The Bank will also require execution of a formal subordination agreement of the
Unterberg, Towbin convertible notes.
The Bank and Borrower have agreed that the foregoing terms will be incorporated
into the terms of an amendment to Loan Agreement (the "Amendment") to be
prepared by the Bank's counsel and reviewed by Borrower and its counsel as soon
as practicable following the date hereof.
Please signify your agreement with the terms hereof by signing where indicated
below and returning a fully executed counterpart of this letter to my attention
by facsimile to (000) 000-0000.
Comerica Bank
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Senior Vice President/
Regional Managing Director
Agreed and Accepted:
Serviceware Technologies, Inc.
By: /s/ Xxxxx Xxxxxxxxxxx
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Xxxxx Xxxxxxxxxxx, COO
