GMAC Commercial Credit LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
September 23, 2002
JACO ELECTRONICS, INC. ("Jaco")
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
NEXUS CUSTOM ELECTRONICS, INC. ("Nexus")
Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
INTERFACE ELECTRONICS CORP. ("Interface")
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Gentlemen:
Reference is made to the Second Restated and Amended Loan and
Security Agreement in effect between us as successor by merger to BNY Financial
Corporation ("GMAC") as Agent and Lender, and Fleet Bank, N.A., f/k/a Natwest
Bank, N.A ("Fleet") as Lender, and Jaco, Nexus and Interface, dated September
13, 1995, as supplemented and amended from time to time, (the "Agreement"). Both
GMAC and Fleet may hereinafter be referred to jointly as the "Lenders", and
individually, as a "Lender" and GMAC may also be herein referred to as "Agent"
when acting in such capacity, as the case may be. Initially capitalized terms
not defined herein shall have the meanings ascribed to such terms in the
Agreement. Jaco, Nexus and Interface may hereinafter and in the Agreement, be
referred to jointly and severally as "Debtors", and each individually as a
"Debtor".
WHEREAS, the Lenders and Jaco, Nexus, and Interface have
requested and agreed to certain changes and amendments to the
Agreement, as here and after described; and
WHEREAS, pursuant to such amendments the Maximum Loan Amount
for each Lender will be reduced from $35,000,000 to $22,500,000, for a
total amount of $45,000,000;
NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:
1. Effective as of the date hereof, the Agreement shall
be amended by replacing the phrase (as previously
amended) "$35,000,000" appearing next to the phrase
"Maximum Loan Amount" underneath the signature of
each Lender, with the phrase "$22,500,000".
2. The phrase (as previously amended) of "$30,000,000"
appearing on the 8th line of Section 4(a) of the
Agreement shall be deleted in its entirety, and
replaced with the phrase "$25,000,000".
3. The definition of "Contract Rate" as set forth in
paragraph 1 of the Agreement, as amended by Amendment
letters dated August 1, 1997, June 6, 2000 and
November 14, 2001, is hereby deleted and replaced
with the following:
" 'Contract Rate' means an interest rate per
annum equal to the applicable LIBO Rate plus the
margin ("LIBO Margin") stated opposite the ratio
range of Funded Debt to net earnings before interest,
taxes, depreciation, amortization, extraordinary
gains and non-cash losses and all other non-cash
charges on a consolidated basis ("EBITDA") during the
immediately preceding four fiscal quarters as stated
in the table immediately below:
Funded Debt/EBITDA LIBO Margin
------------------ -----------
greater than 3.0 to 1 2 3/4%
2.0 to 2.99 to 1 2 1/2%
less than 2.0 to 1 2 1/4%
The Contract Rate applicable to LIBO Rate Loans shall be
adjusted quarterly. "
4. The definition of "Inventory Borrowing Base" appearing
in Section 1 of the Agreement, shall be amended, as of
the date hereof, so that the percentage (as previously
amended) of "55%" appearing in the first line of such
definition, shall be replaced with the percentage
"50%".
5. You hereby agree to pay us a closing fee of $22,500 on
the date of closing of this amendment.
6. Section 4(a) of the Agreement shall be amended by
deleting the following phrase stated on the eighth and
ninth lines of such Section 4(a) of the Agreement "plus
(C), the lesser of (x) the Equipment Borrowing Base or
(y) $500,000;" . It is the intent of this amendment
that the Lenders will not make any additional loans
based on or calculated with respect to the Equipment
Borrowing Base.
7. Section 5(b)(i) of the Agreement is hereby amended by
deleting the phrase "2/10 of one percent (.2%)"
appearing on the third line of such Section 5(b)(i) and
replacing it with the phrase "4/10 of one percent
(.4%)".
8. Section 17(d) of the Agreement as amended shall be
deleted in its entirety and replaced by the following:
"(d) INTENTIONALLY LEFT BLANK."
9. Section 17(e) of the Agreement shall be amended to read
in its entirety as follows:
"(e) Maintain at all times consolidated net worth
(all amounts which would be included under
shareholder's equity on a consolidated balance sheet
of Debtor, determined in accordance with generally
accepted accounting principles), in an amount not
less than those set forth on the table below opposite
the corresponding calendar quarter:
Quarter Ending Net Worth
-------------- ---------
9/30/02 $47,000,000
12/31/02 $45,750,000
3/31/03 and
anytime thereafter $45,000,000
For purposes of calculating this covenant, any
writedown for impairment of goodwill, will not be
taken into account in making the calculation under
this covenant."
10. Section 17(f) of the Agreement as amended shall be
deleted in its entirety and replaced by the following:
"(f) INTENTIONALLY LEFT BLANK."
11. Section 18(g) of the Agreement as amended shall be
deleted in its entirety and replaced by the following:
"(g) The Debtors shall attain at the end of each
quarter, on a consolidated basis, EBITDA for such
quarter, in amounts of no less than the amounts
stated opposite the fiscal quarters stated below:
Fiscal Quarter Minimum EBITDA Amount
----------------- ---------------------
9/30/02 ($800,000)
12/31/02 ($400,000)
3/31/03 $300,000
6/30/03 and at the end of each
Fiscal Quarter thereafter at least $600,000"
12. Section 18(e) of the Agreement as amended shall be
deleted in its entirety and replaced by the following:
"(e) INTENTIONALLY LEFT BLANK."
13. Inconsideration of the execution and delivery of this
amendment and compliance with the terms hereof by the
Debtors, the Lenders hereby agree to waive a default by
the Debtors of the EBITDA covenant of the Debtors under
Section 18(g) of the Agreement for the fiscal quarter
ending June 30, 2002. This waiver is and shall be
effective only with respect to the specific waiver
described herein above and only for the fiscal quarter
ending June 30, 2002 and shall not be deemed a waiver
of any other covenant, representation, warranty or
Event of Default under the Agreement.
14. The Debtors shall hire or retain a financial
consultant, acceptable to the Lenders in all respects,
by October 31, 2002.
15. As an additional condition precedent to the execution
of the amendment, Debtors shall provide and deliver to
the Agent $800,000 in cash or cash equivalent as
collateral for the payment of six months interest for
the pro-rata benefit of the Lenders to be maintained in
an account (if in cash) open in the name of the Agent
with Fleet.
16. Additionally, the Debtors shall also deliver, to the
Agent and the Lenders, ratifications and consents by
the Guarantors of the amendment to the Agreement and
ratification of the security interests of the Lenders
in form and substance satisfactory to the Lenders.
17. It is hereby agreed by and between us that as of the
date hereof, the first sentence of Section 21 of the
Agreement as amended is hereby deleted, and replaced
with the following sentence:
"This Second Restated and Amended Loan and Security
Agreement shall (subject to compliance with
Conditions Precedent) become effective on the closing
date hereof, without any interruption or break in
continuity (as more fully described in the second
paragraph hereof) and shall continue until March 31,
2004."
18. By their signatures below, Jaco, Nexus and Interface
hereby ratify the Agreement and agree to be jointly and
severally liable for all Obligations under the
Agreement and agree that all of the outstanding amounts
of the Loans under the Agreement, as of the date
hereof, shall be valid and binding Obligations of each
of them, and shall be deemed Obligations outstanding
under the Agreement, and hereby agree and promise to
repay to the Agent, for the benefit of the Lenders,
such Obligations (including but not limited to all
applicable interest) in accordance with the terms of
the Agreement, but in no event, later than the
Termination Date (for purposes hereof, "Termination
Date" shall mean March 31, 2004 (which for all purposes
of the Agreement shall be deemed to be the last date of
the Term), or any extended termination date, or any
earlier termination date, whether by acceleration or
otherwise).
19. By their signatures below, Jaco, Nexus and Interface
hereby ratify and affirm to the Agent that as of the
date hereof, they are in full compliance with all
covenants under the Agreement and certify that all
representations and warranties of the Agreement are
true and accurate as of the date hereof, with the
same effect as if they had been made as of the date
hereof.
Except as herein specifically amended, the Agreement shall
remain in full force and effect in accordance with its original terms, except as
previously amended.
If the foregoing accurately reflects our understanding, kindly sign the enclosed
copy of this letter and return it to our office as soon as practicable.
Very truly yours,
GMAC COMMERCIAL CREDIT LLC
(as Agent and Lender)
By: /s/ Xxxxx Imperto
----------------------
Xxxxx Imperto
Title:Senior Vice Presidnet
AGREED AND ACCEPTED:
JACO ELECTRONICS, INC. FLEET BANK, N.A.
By:/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxx Xxxx
---------------------- ----------------------
Xxxxxxx X. Xxxx Xxxxxxx Xxxx
Title: Executive Vice President Title: Vice President
NEXUS CUSTOM ELECTRONICS, INC. INTERFACE ELECTRONICS CORP.
By:/s/ Xxxxxxx X. Xxxx By:/s/ Xxxxxxx X. Xxxx
---------------------- ----------------------
Xxxxxxx X. Xxxx Xxxxxxx X. Xxxx
Title: Executive Vice President Title: Executive Vice President
RATIFICATION OF GUARANTOR
By its signature below, Jaco Overseas, Inc. hereby ratifies its guaranty of the
Agreement, as such Agreement has been amended from time to time, including but
not limited to certain amendments dated June 6, 2000, September 28, 2000,
January 31, 2001, June 12, 2001, July 1, 2001, November 14, 2001 and February 6,
2002, (the "Amendments") and hereby agrees to be liable for all of the
Obligations under the Guaranty with respect to the Agreement as amended from
time to time, including but not limited to by this amendment and the Amendments,
and hereby agrees that the said Guaranty shall continue to apply and remain in
full force and effect with respect to the amended Agreement and hereby agrees
and consents that a certain General Loan and Security Agreement dated January
20, 1989, shall continue to be in full force and effect and apply to the amended
Agreement, and it further hereby agrees to make all payments of all its
Obligations under the said Guaranty and General Loan and Security Agreement to
GMAC Commercial Credit LLC as Agent and Lender, and to Fleet Bank, N.A. as
Lender, as successors in interest to the previous Agent and Lenders
respectively.
RATIFIED, ACCEPTED AND CONSENTED:
JACO OVERSEAS, INC.
By:/s/ Xxxxxxx X. Xxxx
----------------------
Xxxxxxx X. Xxxx
Title: Executive Vice President
