1290 Avenue of the Americas, 3rd Fl.
New York, NY 10104
Telephone Number: 212/884-7088 Fax Number: 212/884-7313m
November 7, 2003
JACO ELECTRONICS, INC. ("Jaco")
145 Oser Avenue
Hauppauge, NY 11788
NEXUS CUSTOM ELECTRONICS, INC. ("Nexus")
Prospect Street
Brandon, VT 05733
INTERFACE ELECTRONICS, INC. ("Interface")
124 Grove Street
Franklin, MA 02028
Gentlemen:
Reference is made to the Second 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 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 you have informed us that you are in default of your
minimum EBITDA requirement under Section 18(g) of the Agreement as amended, for
the period ending September 30, 2003, and you have requested that we waive the
default relating to your EBITDA requirement for the period ending September 30,
2003 only; and
WHEREAS the Lenders are willing to agree to waive the above
described default subject to the terms and conditions stated herein below;
NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:
1. The Lenders hereby waive the Debtors default of their
minimum EBITDA requirement, as required by Section 18(g) (as
amended) of the Agreement for only the period terminating on
September 30, 2003 and only if such EBITDA for such period
is at least $300,000.00.
2. Effective as of the date hereof, the definition of "Contract
Rate" as set forth in Section 1 of the Agreement, as
heretofore amended, is hereby deleted in its entirety and
replaced with the following:
""Contract Rate" means an interest rate per annum
equal to the Alternate Base Rate plus one (1.0%)
percent. "Alternate Base Rate" shall have the meaning
ascribed to such term in Section 1 of the Agreement.
The "LIBO Rate" shall no longer be an available
option to the Debtors."
3. The Contract Rate as stated in Section 2 above shall
increase to an interest rate per annum equal to the
Alternate Base Rate plus two (2%) percent, if the Debtors
shall have not arranged for a suitable replacement lender
("Replacement Lender") to payout the pro-rata outstanding
obligations owing by Debtors to Fleet under the Agreement
and replace Fleet as a lender under the Agreement (which
Replacement Lender shall be acceptable to the Agent in its
sole discretion) by December 31, 2003.
4. In consideration of the foregoing, the Debtors agree to pay
to the Agent for the pro-rata benefit of the Lenders a
waiver fee of $25,000.00 payable as of the date of this
letter.
5. It is hereby agreed that the second sentence of Section 7 of
a certain amendment letter, dated September 19,2003, to the
Agreement shall be deleted in its entirety and replaced with
the following sentence;
"If Fleet shall not have been replaced by a
Replacement Lender by December 31, 2003, the Debtors
agree to pay, on December 31, 2003 and on the last
day of every calendar quarter thereafter during which
Fleet has not been replaced by a Replacement Lender,
to the Agent for the pro-rata share of the Lenders,
an additional fee of $125,000.00 for each such
quarter."
6. The fees provided for in Sections 4 and 5 above may be
automatically charged by the Agent to the Debtors account as
of the due date of such fees.
7. The waiver provided herein is only with respect to the
section of the Agreement referred to above, and only for the
time period referred to above, and should not be construed
as a waiver of your compliance with any other provisions of
the Agreement, nor as waiver of the provisions of the
specific section referred to above for any other time
period.
8. 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 October
31, 2004, or any extended termination date, or any earlier
termination date, whether by acceleration or otherwise).
9. 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, as
previously amended shall remain in full force and effect in accordance with its
terms.
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.
SIGNATURES FOLLOW ON THE NEXT PAGE
Very truly yours,
GMAC COMMERCIAL FINANCE LLC
(as Agent and Lender)
By: /s/ David Duffy
--------------------------
Title:Senior Vice President
AGREED AND ACCEPTED:
JACO ELECTRONICS, INC. FLEET BANK, N.A.
(as Lender)
By: /s/ Jeffrey D. Gash By: /s/ Kenneth R. Geiger
------------------------------ -------------------------------
Title:Executive Vice President Title:Managed Assets Officer
Finance
NEXUS CUSTOM ELECTRONICS, INC. INTERFACE ELECTRONICS CORP.
By: /s/ Jeffrey D. Gash By: /s/ Jeffrey D. Gash
------------------------------ ------------------------------
Title:Executive Vice President Title:Executive Vice President
Finance Finance
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, 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 any previous 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 Finance 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/ Jeffrey D. Gash
------------------------------
Title:Executive Vice President
Finance