EXHIBIT 10.23.1
AMENDMENT #1 TO THE THIRD RESTATED AND AMENDED LOAN AND SECURITY AGREEMENT
September 20, 2004
JACO ELECTRONICS, INC. ("Jaco")
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
NEXUS CUSTOM ELECTRONICS, INC. ("Nexus")
Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
INTERFACE ELECTRONICS, INC. ("Interface")
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Gentlemen:
Reference is made to the Third Restated and Amended Loan and
Security Agreement in effect between GMAC Commercial Finance LLC, as successor
by merger to GMAC Commercial Credit LLC, which was the successor in interest to
BNY Financial Corporation ("GMAC"), as Agent and Lender, and PNC Bank National
Association ("PNC") as Lender and Co-Agent, and Jaco, Nexus and Interface, dated
December 22, 2003, as supplemented and amended from time to time, (the
"Agreement"). Both GMAC and PNC 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 and PNC may also
herein be referred as "Co-Agent", 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 you have informed us that you intend to sell substantially
all of the assets of Nexus to Sagamore Advisors LLC (the "Buyer") for a purchase
price in the amount of $9,250,000 in cash (the "Cash Portion of the Purchase
Price"), a subordinated promissory note in the amount of $2,750,000 (the "Note")
and an additional $1,000,000 in cash based on performance of the purchaser after
the completion of the sale (the "Cash Performance Amount"); and
WHEREAS you have requested the Agent and the Lenders consent to the
proposed sale (as required by the terms of the Agreement), subject to the terms
and conditions, outlined in a certain letter of intent (the "Letter of Intent"),
between Jaco and the Buyer, dated July 6, 2004 (the "Sale"); and
WHEREAS the Agent and the Lenders are willing to give the requested
consent subject to the terms and conditions stated herein below;
NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:
Effective as of the closing date of the Sale, the Agreement is
hereby amended as follows:
1. The definition of "Contract Rate" as stated in Sub-Section 1.2
of the Agreement is hereby deleted in its entirety and
replaced by the following definition:
" "Contract Rate" shall mean, as applicable, with
respect to Revolving Advances, an interest rate per
annum equal to (i) the Base Rate plus three-quarters
of one (.75%) percent or (ii) the Eurodollar Rate
plus three (3%) percent, as applicable (provided
however, that it shall mean the Eurodollar Rate plus
three and one-quarter (3.25%) percent, until
September 30, 2005. However, the Contract Rate, for
Eurodollar Rate Loans, shall continue to mean the
Eurodollar Rate plus three and one-quarter (3.25%)
percent, after September 30, 2005, if the Fixed
Charge Coverage Ratio on September 30, 2005,
calculated on a four (4) quarter rolling basis, for
the previous four (4) quarters, shall be less than
1.1 to 1.0, until such time as the Fixed Charge
Coverage Ratio shall be equal to or greater than 1.1
to 1.0 at the end of any fiscal quarter ending after
September 30, 2005, calculated on a four (4) quarter
rolling basis, for the previous four (4) quarters.)"
2. Section 6.9(a), of the Agreement, is hereby deleted in its
entirety and replaced by the following:
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"6.9. Financial Covenants.
(a) EBITDA. Maintain EBITDA for the Loan Parties
on a Consolidated Basis as of the end of each
fiscal quarter set forth below for the respective
fiscal periods set forth below ending on the last
day of such fiscal quarter in an amount not less
than the amount set forth below:
Fiscal Period Minimum EBITDA
------------- --------------
Fiscal Quarter Ending 12/31/03 $ 400,000
Fiscal Quarter Ending 3/31/04 $ 1,000,000
Fiscal Quarter Ending 6/30/04 $ 1,300,000
Fiscal Quarter Ending 9/30/04 $ 235,000
Fiscal Quarter Ending 12/31/04 $ 400,000
(b) Fixed Charge Coverage Ratio. Maintain as of
the end of each quarter, on a four quarter rolling
basis for the previous four quarters, a Fixed
Charge Coverage Ratio for the Loan Parties on a
Consolidated Basis as of the end of each fiscal
quarter set forth below for the respective periods
set forth below of not less than the ratios set
forth below:
Fiscal Period Ending Fixed Charge Coverage Ratio
-------------------- ---------------------------
3/31/05 1.0 to 1.0
6/30/05 1.0 to 1.0
9/30/05 and any fiscal period thereafter 1.1 to 1.0"
3. Sub-Section 6.10, of the Agreement, shall be deleted in its
entirety and replaced by the following:
"6.10. Minimum Net Worth.
Maintain at all times a minimum Net Worth of at
least $44,500,000 to be increased for each fiscal
year by sixty-five (65%) percent of fiscal year
end net income (excluding net income from the Sale
of Nexus) and increased by eighty (80%) percent of
the profit from the sale of the assets of Nexus
(during the fiscal year of such sale) and reduced
by eighty (80%) percent of the amount of any
write-off amount (if any) of the note executed by
the buyer of such assets for the benefit of Jaco
(during the fiscal year of any such write-off)."
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4. The following Sub-Section 6.12 shall be added to Section VI of
the Agreement.
"6.12. Permanent Undrawn Availability .
Maintain at all times (for all Loan Parties) an
aggregate Undrawn Availability of $1, 500,000,
provided however, that such Undrawn Availability
may be reduced to $500, 000 at all times on the
later to occur of (i) 3-31-05 or (ii) the last day
of the second consecutive fiscal quarter during
which the Fixed Charge Coverage Ratio equals 1.1
to 1.0, calculated on a rolling four quarter
basis, excluding any profits derived from the
Sale."
5. Sub-Section 7.6, of the Agreement, is hereby deleted in its
entirety and replaced by the following:
"7.6. Capital Expenditures.
Contract for, purchase or make any net Capital
Expenditures, as of each fiscal year, in an amount
not exceeding the amount stated opposite such
fiscal year in the table below.
Fiscal Year Ending Amount
------------------ ------
6/30/04 $750,000
6/30/05 and each fiscal year thereafter $500,000"
6. Notwithstanding anything contrary in the Agreement, as of the
closing date of the Sale, the Effective Additional
Availability Amount shall be reduced to zero (0).
7. The Agent and the Lenders hereby consent to the Sale of all of
the assets of Nexus, subject to the terms and conditions of
the Letter of Intent, and the sales agreement executed
pursuant thereto dated September __, 2004, provided Lender
receives the Cash Portion of the Purchase Price. The Agent, on
behalf of the Lenders, shall release, as of the date of the
closing of the Sale, upon receipt of the Cash Portion of the
Purchase Price at the account specified below, any and all
liens it may have on the assets of Nexus in which the Agent
and/or the Lenders presently have a lien on or a security
interest in and agree, at Borrowers' expense, to execute all
necessary releases and financing statements, as may reasonably
be requested by Borrowers. Borrowers hereby agree to also
arrange to have the proceeds of the Note and the Cash
Performance Amount to be wired transferred to the account
specified below. The Cash Portion of the Purchase Price, the
proceeds of the Note and the Cash Performance
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Amount (if any) shall be applied, by the Agent, to reduce the
amount of the Obligations in accordance, with the terms of the
Agreement. The Cash Portion of the Purchase Price, the
proceeds of the Note and the Cash Performance Amount (if any)
shall be wire transferred to the Agent's account as follows:
"BANK ONE NA
ABA # 000000000
Account # 361324984
Attention Operations Department
For the account of GMAC Commercial Finance LLC
Reference Jaco Electronics, Inc."
8. As additional Collateral and inconsideration of the Sale, Jaco
shall pledge and assign, to the Agent, for the pro rata
benefit of the Lenders, the Note.
9. In consideration of the foregoing consent, Loan Parties hereby
agree to pay, the Agent, a fee of $25,000 for the pro rata
benefit of the Lenders on September 20, 2004. The Loan Parties
hereby authorize the Lender to automatically charge to
Borrowers' account with the amount of such fee, as of such
date.
10. By their signatures below, Jaco, Nexus and Interface hereby
ratify the Agreement (as hereby amended) 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.
11. 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 (except as waived above) 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
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copy of this letter and return it to our office as soon as practicable.
Very truly yours,
GMAC COMMERCIAL FINANCE LLC
(as Agent and Lender)
By: /s/ Xxxxxx Xxxxxx
---------------------------
Title: 1st. Vice President
AGREED AND ACCEPTED:
JACO ELECTRONICS, INC. PNC BANK NATIONAL ASSOCIATION
(as Lender)
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxx Xxxxx
--------------------------------- ---------------------------
Title: Vice President - Secretary Title: Vice President
NEXUS CUSTOM ELECTRONICS, INC. INTERFACE ELECTRONICS CORP.
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxx
--------------------------------- ---------------------------
Title: Vice President Title: Vice President
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