August 1, 1997
JACO ELECTRONICS, INC.
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
NEXUS CUSTOM ELECTRONICS, INC.
Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Gentlemen:
Reference is made to the Second Restated and Amended Loan and Security
Agreement between Jaco Electronics, Inc. and Nexus Custom Electronics, Inc., as
Debtor, and our predecessor-in-interest, The Bank of New York Commercial
Corporation, as Lender, and each other Lender a party thereto, dated September
13, 1995, as amended and supplemented (the "Loan Agreement"). Initially
capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Loan Agreement.
It is hereby agreed that effective as of August 1, 1997, the Loan
Agreement shall be amended as follows:
1. The definition of "Agent ABR Loan" set forth in Paragraph 1 is
deleted in its entirety and replaced by the following definition of "Agent
LIBO Rate Loan":
" "Agent LIBO Rate Loan" shall have the meaning set forth in Paragraph
4( c ) of this Agreement."
2. The definition of "Contract Rate" set forth in Paragraph 1 is
amended to read in its entirety as follows:
" "Contract Rate" means an interest rate per annum equal to (i) the
applicable LIBO Rate plus one percent (1%) in the case of LIBO Rate
Loans first arising, or first continued or converted thereto prior to
January 1, 1998, and (ii) in the case of LIBO Rate Loans first arising,
or first continued or converted thereto on or after January 1, 1998,
the applicable LIBO Rate plus ( a ) one and one-quarter percent (1
1/4%) if the ratio of total Loans to net earnings before interest,
taxes, depreciation, amortization, extraordinary gains and losses, and
all other non-cash charges on a consolidated basis ("EBITDA") during
the immediately preceding four (4) fiscal quarters is greater than 2 to
1, ( b ) one percent (1%) if the ratio of total Loans to EBITDA during
the immediately preceding four (4) fiscal quarters is 1.5-2 to 1, or (
c ) three-quarters of one percent (3/4%) if the ratio of total Loans to
EBITDA during the immediately preceding four (4) fiscal quarters is
less than 1.5 to 1. The Contract Rate applicable to LIBO Rate Loans
under clause (ii) hereof shall be adjusted quarterly."
3. The definitions of "Interest Period", "LIBO Rate (Reserve
Adjusted)", "LIBOR Office" and "LIBOR Reserve Percentage" set forth in Paragraph
1 are deleted in their entirety.
4. The definition of "LIBO Rate" set forth in Paragraph 1 is amended
to read in its entirety as follows:
" "LIBO Rate" means the rate per annum for the one month LIBOR as
published in The Wall Street Journal, averaged monthly on a calendar
month basis."
5. The definition of "LIBO Rate Loan" set forth in Paragraph 1 is amended
to read in its entirety as follows:
" "LIBO Rate Loan" means a Loan or any portion thereof that bears
interest based on the LIBO Rate."
6. The fourth through the seventh lines of the definition of "Term Loan
Notes" set forth in Paragraph 1 are deleted in their entirety and replaced by
the following:
"restate in their entirety, upon terms and conditions therein more
fully described, that certain promissory note initially issued by
Debtor to the order of BNYCC dated as of March 11, 1994 in the original
principal amount of $1,500,000."
7. The second full paragraph of Paragraph 2 is amended by deleting the
following language:
"provided that any application of the proceeds of Accounts which (i) is
made prior to the occurrence of an Event of Default and (ii) is not
made at the direction of Borrower, and which application results in the
payment of a LIBO Rate Loan prior to the last day of an Interest Period
with respect thereto shall not result in the required payment by Debtor
to Lender of any penalty or premium or loss or expense pursuant to
Paragraph 5(g) hereof,"
8. Paragraph 4( c )( i ) is deleted in its entirety and replaced by the
following:
"[INTENTIONALLY OMITTED]".
9. Paragraph 4( c )( ii ) is amended to read in its entirety as follows:
"( ii ) The Debtor may by telephonic notice received by an officer of
the Agent, request a borrowing prior to 1:00 P.M. New York time in the
form of a LIBO Rate Loan on the date on which it requests to incur such
a Loan, such request to specify the amount of the Loan requested. In
any such instance, the Agent may: (a) notify each of the Lenders, not
later than 2:00 P.M. New York time, of the LIBO Rate Loan to be funded
on such date, as well as the amount of such Lender's Pro Rata Share of
the requested LIBO Rate Loan, and each such Lender shall make such
amount available to the Agent on such date in same day funds, to such
account of the Agent as the Agent may designate, by not later than 5:00
P.M. New York time; or (b) if the Agent shall elect to do so in its
sole and absolute discretion, subject to the terms and conditions
hereof and in its capacity as a Lender, make such LIBO Rate Loan
available to the Debtor (each an "Agent LIBO Rate Loan") on the date so
requested, by transferring same day funds to the operating account(s)
of the Debtor maintained with the Agent. Each such Agent LIBO Rate Loan
shall constitute a Loan hereunder and shall be subject to all of the
terms and conditions applicable to other Loans, except that all
payments thereon shall be payable to the Agent in its capacity as
Lender, solely for its own account, until such time as each of the
Lenders shall Settle with the Agent as to such Agent LIBO Rate Loan on
the Settlement Date next occurring. Until such Settlement shall occur,
the Agent shall correspondingly increase its Pro Rata Share of the
Aggregate Maximum Loan Amount and the Pro Rata Share of each such other
Lender shall be correspondingly decreased and upon such Settlement
occurring, appropriate adjustments shall be made to such Pro Rata
Shares in order to restore such Pro Rata Shares to their respective
levels prior to the relevant Agent LIBO Rate Loan."
10. Paragraph 4( c )( v ) is deleted in its entirety and replaced by the
following:
"[INTENTIONALLY OMITTED]".
11. Paragraph 5(a)(i) is amended by deleting the words "except that
interest with respect to LIBO Rate Loans shall be payable on the last day of the
Interest Period with respect thereto" and inserting at the end of said paragraph
the following sentence:
"Whenever the LIBO Rate is increased or decreased, the applicable
Contract Rate shall be similarly changed without notice or demand by an
amount equal to the amount of such change in the LIBO Rate."
12. Paragraph 4(e)is amended by deleting the following language:
"(except as set forth in subsection (b) of the definition of "Interest
Period" appearing herein)".
13. Paragraph 5(a) is amended by deleting the following language:
"except that interest with respect to LIBO Rate Loans shall be payable
on the last day of the Interest Period with respect thereto".
14. Paragraph 5(e) is amended by deleting the following language:
"at the end of the then current Interest Periods with respect thereto
or sooner".
15. Paragraph 5(g) is deleted in its entirety and replaced by the
following:
"[INTENTIONALLY OMITTED]".
16. The first sentence of Paragraph 17(d) is amended to read in its
entirety as follows:
"Maintain at all times a ratio of consolidated current assets of Debtor
and its Subsidiaries to consolidated current liabilities of Debtor and
its Subsidiaries of not less than 1.6 to 1.0."
17. Paragraphs 17(e), (f) and (g) are amended to read in their entirety
as follows:
"(e) Maintain at all times consolidated net worth (all amounts which
would be included under shareholders' equity on a consolidated balance
sheet of the Debtor determined in accordance with generally accepted
accounting principles) in an amount not less than $34,000,000, which
amount shall be increased at the end of each quarter on a cumulative
basis by an amount equal to fifty percent (50%) of the consolidated net
profit after taxes, if any, for such quarter."
"(f) Maintain at all times a ratio of the sum of (1) cash and cash
equivalents plus (2) accounts receivable to current liabilities (as
defined in Paragraph 17(d)) of not less than 0.65 to 1.0 on a
consolidated basis."
"(g) Maintain at all times an excess of current assets over current
liabilities (both as defined in Paragraph 17(d) and each on a
consolidated basis) of not less than $23,000,000."
18. The first sentence of Paragraph 18(e) is amended to read in its
entirety as follows:
"Permit at any time the ratio of Indebtedness to Tangible Net Worth to
be greater than 1.30 to 1.0; "Indebtedness" shall mean consolidated
total liabilities of Debtor and its Subsidiaries determined in
accordance with generally accepted accounting principles consistently
applied."
19. The first sentence of Paragraph 21 is amended to read in its
entirety as follows:
"This (Second Restated and Amended Loan and Security) Agreement shall
(subject to compliance with the 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 the fifth anniversary of the Closing Date."
20. The fifth sentence of Paragraph 21 is amended by deleting the
following language:
"provided that any such payment which results in a payment of a LIBO
Rate Loan before the last date of the Interest Period with respect
thereto shall be subject to the provisions of Paragraph 5(g) hereof".
Except as hereinabove specifically set forth, the Loan Agreement shall
remain unmodified and in full force and effect in accordance with its terms.
If you are in agreement with the foregoing, please so indicate by
signing and returning to us the enclosed copy of this letter.
Very truly yours,
BNY FINANCIAL CORPORATION f/k/a THE
BANK OF NEW YORK COMMERCIAL CORPORATION,
as Agent and Lender
By:/s/ Xxxxx Xxxxxxxx
_______________________
Title: Vice President
FLEET BANK, N.A. f/k/a/
NATWEST BANK N.A., as Lender
By:/s/ Xxxxx Xxxxxxxx
_______________________
Title: Vice President
AGREED:
JACO ELECTRONICS, INC.
By: /s/ Xxxxxxx X. Xxxx
_______________________
Title: Vice President
NEXUS CUSTOM ELECTRONICS, INC.
By: /s/ Xxxxxxx X. Xxxx
_______________________
Title: Vice President
DATED: November 12, 1997
