CONSENT TO SUPPLEMENTAL LOAN UNDER LOAN AND SECURITY AGREEMENT
UNDER
LOAN AND SECURITY AGREEMENT
THIS
CONSENT TO SUPPLEMENTAL LOAN UNDER LOAN AND SECURITY AGREEMENT, dated as of
March 5, 2007 (this "Consent"), is made by and between
THE CIT GROUP/BUSINESS CREDIT, INC., as Agent on behalf of the Lenders
("Agent") and JACO ELECTRONICS, INC., a New York
corporation (the “Parent”), and INTERFACE ELECTRONICS
CORP., a Massachusetts corporation (“Interface”;
together with the Parent, collectively, the
“Borrowers”).
WITNESSETH
WHEREAS,
Borrowers and Agent and Lenders are parties to that certain Credit Agreement,
dated as of December 22, 2006 (as it may be amended, restated, modified or
supplemented from time to time, the "Loan Agreement";
capitalized terms used but not otherwise defined herein shall have the meanings
ascribed thereto in the Loan Agreement); and
WHEREAS,
Borrowers have requested that Agent consent to the provision of a Revolving
Loan
which exceeds the Availability for a limited period and for a limited amount
(the “Supplemental Loan”), as more fully set forth herein, and Agent is
agreeable to such request only on the terms and conditions set forth
herein;
NOW,
THEREFORE, in consideration of the premises, the covenants and
agreements contained herein, and for other good and valuable consideration,
the
receipt and adequacy of which are hereby acknowledged, the parties do hereby
agree as follows:
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SECTION 1.
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ACKNOWLEDGMENT
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1.1 Acknowledgment
of Obligations
. Borrowers
hereby acknowledge, confirm and agree that as of the close of business on March
5, 2007, Borrowers are indebted to Agent and Lenders in respect of the Revolving
Loans in the principal amount of $28,561,173. All such Loans,
together with interest accrued and accruing thereon, and fees, costs, expenses
and other charges now or hereafter payable by Borrowers to Lenders, are
unconditionally owing by Borrower to Lenders, without offset, defense or
counterclaim of any kind, nature or description whatsoever.
1.2 Acknowledgment
of Security Interests
. Borrowers
hereby acknowledge, confirm and agree that Agent has and shall continue to
have
valid, enforceable and perfected liens upon and security interests in the
Collateral heretofore granted to Agent pursuant to the Loan Documents or
otherwise granted to or held by Agent.
1.3 Binding
Effect of Documents
. Each
Borrower hereby acknowledges, confirms and agrees that: (a) each of the Loan
Documents to which it is a party has been duly executed and delivered to Agent
by such Borrower, and each is in full force and effect as of the date hereof,
(b) the agreements and obligations of such Borrower contained in such documents
and in this Agreement constitute the legal, valid and binding Obligations of
such Borrower, enforceable against it in accordance with their respective terms,
and such Borrower has no valid defense to the enforcement of such Obligations,
and (c) Agent and Lenders are and shall be entitled to the rights, remedies
and
benefits provided for in the Loan Documents and applicable law.
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SECTION 2.
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. Agent
hereby consents to extend to Borrowers a Supplemental Loan under the Loan
Agreement (but in no event shall the Revolving Loans plus the Supplemental
Loan
exceed the Revolving Commitment) in an amount equal to $1,000,000 beginning
on
the date hereof and continuing through and including the date which is
forty-five (45) days from the date hereof (the “Supplemental Loan Repayment
Date”). If the Supplemental Loan is not repaid in full by the
Supplemental Loan Repayment Date, Borrowers acknowledges that such condition
shall constitute an Event of Default under the Loan Agreement.
2.2 Interest
on Supplemental Loan
. Interest
shall accrue on the Supplemental Loan at a rate equal to the lower of (a) ten
percent (10%) per annum and (b) the LIBO Rate plus four percent (4%), and shall
be paid in accordance with the terms of the Loan Agreement.
2.3 Repayment
of Supplemental Loan
. Notwithstanding
anything to the contrary contained herein or in the Loan Agreement, Borrowers
may only repay the Supplemental Loan if, on the day such repayment is to be
made, Borrowers shall have Availability of $6,000,000 prior to making such
Supplemental Loan Repayment.
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SECTION 3.
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REPRESENTATIONS
AND WARRANTIES
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To
induce
Agent to enter into this Consent, each Borrower hereby represents and warrants
to Agent as follows: (a) each representation and warranty of the Borrowers
set
forth in the Loan Agreement is true and correct on and as of the date hereof
(except to the extent that any such representation or warranty expressly relates
to a prior specific date or period in which case it is true and correct as
of
such prior date or period); (b) no Default or Event of Default has occurred
and
is continuing as of this date after giving effect to this Consent; (c) each
Borrower has the power and is duly authorized to enter into, deliver and perform
this Consent; and (d) this Consent constitutes the legal, valid and binding
obligation of such Borrower enforceable against it in accordance with its
terms.
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SECTION 4.
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CONDITIONS
TO THE EFFECTIVENESS OF CERTAIN PROVISIONS OF THIS
CONSENT.
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This
Consent shall be effective as of the date first above written, and such
effectiveness shall be subject to the receipt by Agent of each of the following,
in form and substance satisfactory to Agent:
(a) an
original of this Consent, duly authorized, executed and delivered by
Borrowers;
(b) payment
of the fees and disbursements of counsel to Agent incurred in connection with
the preparation, negotiation, execution and delivery of this Consent and the
transactions hereunder;
(c) by
no
later than March 9, 2007, Borrowers’ 13 week cash flow projections and updated
monthly projections through June 30, 2007.
(d) any
and
all such further instruments and documents as Agent may require to obtain the
full benefits of this Consent and to protect, preserve and maintain Agent’s
rights in the Collateral.
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SECTION 5.
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PROVISIONS
OF GENERAL APPLICATION
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5.1 Effect
of this Amendment
. Except
as modified pursuant hereto, no other consents, changes or modifications to
the
Loan Documents are intended or implied and in all other respects the Loan
Documents are hereby specifically ratified, restated and confirmed by all
parties hereto as of the effective date hereof. To the extent of
conflict between the terms of this Consent and the other Loan Documents, the
terms of this Consent shall control. The Loan Agreement and this
Consent shall be read and construed as one agreement.
5.2 Costs
and Expenses
. Borrowers
absolutely and unconditionally agree to pay to the Agent, on demand by the
Agent
at any time and as often as the occasion therefor may require, whether or not
all or any of the transactions contemplated by this Consent are consummated:
all
fees and disbursements of any counsel to Agent in connection with the
preparation, negotiation, execution, or delivery of this Consent and any
agreements delivered in connection with the transactions contemplated hereby
and
expenses which shall at any time be incurred or sustained by the Agent, and
Lender or any participant of a Lender or any of their respective directors,
officers, employees or agents as a consequence of or in any way in connection
with the transactions contemplated hereby.
5.3 Further
Assurances
. The
parties hereto shall execute and deliver such additional documents and take
such
additional action as may be necessary or desirable to effectuate the provisions
and purposes of this Consent.
5.4 Continuing
Effect of Loan Agreement
. Except
as expressly amended and modified hereby, the provisions of the Loan Agreement,
and the Liens granted thereunder, are and shall remain in full force and
effect.
5.5 Required
Lender Authorization
. Agent
is executing this Consent at the request and on behalf of Required Lenders
in
accordance with Section 9.03 of the Loan Agreement.
5.6 Counterparts
. This
Consent may be executed in multiple counterparts, each of which shall be deemed
to be an original and all of which when taken together shall constitute one
and
the same instrument. Any signature delivered by a party via facsimile shall
be
deemed to be an original signature hereto.
5.7 Governing
Law. THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN SUCH STATE WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING
CONFLICTS OF LAWS.
IN
WITNESS WHEREOF, the parties hereto have caused this Consent to be duly
executed and delivered as of the day and year specified at the beginning
hereof.
JACO
ELECTRONICS, INC.
By:
/s/ Xxxxxxx X.
Xxxx
Name:
Xxxxxxx X.
Xxxx
Title:
CFO
INTERFACE
ELECTRONICS CORP.
By:
/s/ Xxxxxxx X.
Xxxx
Name:
Xxxxxxx X.
Xxxx
Title:
EVP
THE
CIT GROUP/BUSINESS CREDIT, INC., as Agent and as a Lender
By:
/s/ Xxxxxx Xxxxx
XxXxxxxx
Name: Xxxxxx
Xxxxx
XxXxxxxx
Title:
Vice
President
