bankamendment4.htm


    
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        as of November 13, 2007
 

       
 

       
 

      THE CIT GROUP/BUSINESS CREDIT,
        INC.
 

      11 West 42nd Street, 13th
        Floor
 

      New York, New York 10036
 

       
 

      Re:           
        Amendment and Waiver
 

       
 

      Ladies and Gentlemen:
 

       
 

      The CIT
        Group/Business Credit, Inc. (“CIT”), in its capacity as agent pursuant to
        the Credit Agreement (as hereinafter defined) acting for and on behalf of
        the
        financial institutions which are parties thereto as lenders (in such capacity,
        “Agent”), and the financial institutions which are parties to the Credit
        Agreement as lenders (each a “Lender” and collectively, “Lenders”)
        have entered into certain financing arrangements pursuant to which Agent
        and
        Lenders may make loans and advances and provide other financial accommodations
        to Jaco Electronics, Inc., a New York corporation (“Jaco”), and Interface
        Electronics Corp., a Massachusetts corporation (“Interface” and, together
        with Jaco, collectively, the “Borrowers”) as set forth in the Credit
        Agreement, dated as of December 22, 2006, by and among the Borrowers, Agent
        and
        Lenders (as the same now exists or may hereafter be amended, modified,
        supplemented, extended, renewed, restated or replaced, the “Credit
        Agreement”), and other agreements, documents and instruments referred to
        therein or at any time executed and/or delivered in connection therewith
        or
        related thereto (all of the foregoing, together with the Credit Agreement,
        as
        the same now exist or may hereafter be amended, modified, supplemented,
        extended, renewed, restated or replaced, being collectively referred to herein
        as the “Loan Documents”). 

 

      As of the date
        hereof, Events of Default have occurred and are continuing under the Credit
        Agreement, as more particularly described in Section 2 below (collectively,
        the
“Existing Defaults”).  As a
        result of the occurrence and continuance of the Existing Defaults, Agent
        and
        Lenders have the presently exercisable right under the Credit Agreement and
        Loan
        Documents to exercise any and all of its rights and remedies with respect
        to the
        Existing Defaults. 
 

      Borrowers have
        requested that Agent and Lenders agree to waive the Existing Defaults, amend
        certain provisions of the Loan Documents and continue to make Revolving Loans
        to
        the Borrowers, and Agent and Lenders are willing to waive the Existing Defaults,
        amend the Loan Documents and continue making Revolving Loans on and subject
        to
        the terms and conditions set forth in this Letter Agreement re: Amendment
        and Waiver (this “Agreement”). 
 

      In consideration
        of
        the respective agreements, covenants and warranties contained herein, the
        parties hereto hereby agree, covenant and warrant as follows: 
 

      1.                 
        Definitions. 
All
        capitalized terms used herein which are not otherwise defined herein
        shall have their respective meanings as set forth in the Credit
        Agreement.

      2.                 
        Acknowledgment of Existing Defaults.  The
        Borrowers hereby acknowledge,
        confirm and agree that: (a) Borrowers have failed to maintain a Fixed Charge
        Coverage Ratio of 1.10 to 1 for the Fiscal Quarter ended September 30, 2007,
        as
        required by Section 6.11 of the Credit Agreement and (b) Borrowers failed
        to
        maintain Excess Availability of at least $5,000,000 during the five (5)
        consecutive day period commencing on July 1, 2007, as required by Section
        6.11
        of the Credit Agreement; as a result of which Events of Default have occurred
        and are continuing under Section 7.1(d) of the Credit Agreement.  As a result of the foregoing, the
        Existing Defaults have occurred and are continuing and constitute Events
        of
        Default.

      3.                 
        Waiver. 


      (a)               
        Agent and Lenders hereby waive the Existing Defaults,
        provided, however, that nothing contained in this Agreement shall
        be construed to waive, limit, impair or otherwise affect any rights of Agent
        and
        Lenders in respect of any other Event of Default that may exist as of the
        date
        hereof or in respect of any future non-compliance with any and all covenants,
        terms or provisions of the Credit Agreement. 

      (b)              
        Agent and Lenders reserve the right, in their discretion,
        to
        exercise any or all of their rights and remedies under the Credit Agreement
        and
        the other Loan Documents with respect to any Event of Default (other than
        the
        Existing Defaults) which may be continuing on the date hereof or any Event
        of
        Default which may occur after the date hereof.  Agent and Lenders have not waived
        any of
        such rights or remedies, and nothing in this Agreement, nor any delay on
        Agent
        and Lenders’ part in exercising any such rights or remedies, should be construed
        as a waiver of any such rights or remedies.

      4.                 
        Amendment to Definition of Applicable Rate.  Effective
        as of October 1, 2007, the
        definition of Applicable Rate is hereby amended and restated in its entirety,
        as
        follows:

      “
        “Applicable Rate” means, for any day, with respect to any ABR Loan or
        Eurodollar Loan payable hereunder, as the case may be, the applicable rate
        per
        annum set forth below under the caption “ABR Spread” or “Eurodollar Spread,” as
        the case may be, based upon the Fixed Charge Coverage Ratio on the last day
        of
        each of the three most recently ended calendar months:
 

      
        	
                Fixed
                  Charge
Coverage Ratio
 

              	
                ABR
                  Spread
 

              	
                Eurodollar
                  Spread
 

              	
                Commitment
                  Fee
 

              
	
                3
                  1.75x
 

              	
                0.25%
 

              	
                1.75%
 

              	
                0.25%
 

              
	
                3
                  1.50x but < 1.75x
 

              	
                0.50%
 

              	
                2.00%
 

              	
                0.25%
 

              
	
                3
                  1.25x but < 1.50x
 

              	
                0.75%
 

              	
                2.25%
 

              	
                0.25%
 

              
	
                <
                  1.25x
 

              	
                1.00%
 

              	
                2.50%
 

              	
                0.375%
 

              


      

       
 

      For
        the period commencing on the Effective Date and ending on the first
        anniversary thereof, the Applicable Rate for the ABR Spread and the Eurodollar
        Spread shall be as set forth in the pricing grid in the applicable columns
        opposite the row entitled “3
        1.25x but <1.50x” and the Applicable Rate for the Commitment Fee shall be as
        set forth in the pricing grid in the column opposite the row entitled “3
        1.75x”.  If,
        as a result of any restatement of or other adjustment to the financial
        statements of the Borrowers or for any other reason, the Agent determines
        that
        (a) the Fixed Charge Coverage Ratio as calculated by the Borrowers as of
        any
        applicable date was inaccurate and (b) a proper calculation of the Fixed
        Charge
        Coverage Ratio would have resulted in different pricing for any period, then
        (i)
        if the proper calculation of the Fixed Charge Coverage Ratio would have resulted
        in higher pricing for such period, the Borrowers shall automatically and
        retroactively be obligated to pay to the Agent and Lenders, promptly on demand
        by the Agent, an amount equal to the excess of the amount of interest and
        fees
        that should have been paid for such period over the amount of interest and
        fees
        actually paid for such period; and (ii) if the proper calculation of the
        Fixed
        Charge Coverage Ratio would have resulted in lower pricing for such period,
        Agent and Lenders shall have no obligation to repay any interest or fees
        to the
        Borrowers; providedthat if, as a result of any restatement or
        other event a proper calculation of the Fixed Charge Coverage Ratio would
        have
        resulted in higher pricing for one or more periods and lower pricing for
        one or
        more other periods (due to the shifting of income or expenses form one period
        to
        another period or any similar reason), then the amount payable by the Borrowers
        pursuant to clause (i) above shall be based upon the excess, if any, of the
        amount of interest and fees that should have been paid for all applicable
        periods over the amount of interest and fees paid for all such
        periods.”

      5.                 
        Waiver and Amendment Fee.  In
        consideration of the waiver of the
        Existing Defaults and the amendments to the Credit Agreement as set forth
        herein, Borrowers shall pay to Agent, for the benefit of Lenders, or Agent,
        at
        its option, may charge the account(s) of Borrowers maintained by Agent, a
        waiver
        and amendment fee in the amount of $20,000, which fee is fully earned and
        payable as of the date hereof and shall constitute part of the
        Obligations.

      6.                 
        Representations, Warranties and Covenants.  In
        addition to the continuing
        representations, warranties and covenants heretofore made by the Borrowers
        to
        Agent and Lenders pursuant to the Credit Agreement and the other Loan Documents
        and made hereinabove, the Borrowers hereby represent, warrant and covenant
        with
        and to Agent and Lenders as follows (which representations, warranties and
        covenants are continuing and shall survive the execution and delivery of
        this
        Agreement and shall be incorporated into and made a part of the Loan
        Documents):

      (a)               
        After giving effect to the waiver contained in Section
        2, no
        Event of Default exists on the date of this Agreement; and 

      (b)              
        This Agreement has been duly executed and delivered
        by each
        Borrower and is in full force and effect as of the date hereof, and the
        agreements and obligations of each Borrower contained herein constitute its
        legal, valid and binding obligations enforceable against such Borrower in
        accordance with their respective terms.

      7.                 
        Conditions Precedent.  This
        Agreement shall not become
        effective unless all of the following conditions precedent have been satisfied
        in full, as determined by Agent:

      (a)               
        The receipt by Agent of an original (or faxed copy)
        of this
        Agreement, duly authorized, executed and delivered by each of the Borrowers;
        and


      (b)              
        As of the date of this Agreement, and after giving
        effect to
        the waiver contained in Section 3 hereof, no Default or Event of Default
        shall
        have occurred and be continuing.

      8.                 
        Effect of this Agreement.  Except
        as modified pursuant hereto, no
        other changes or modifications to the Credit Agreement and the other Loan
        Documents are intended or implied and in all other respects the Credit Agreement
        and the other Loan Documents are hereby specifically ratified, restated and
        confirmed by all parties hereto as of the effective date hereof.  To the extent of any conflict between
        the terms of this Agreement and the Credit Agreement or any of the other
        Loan
        Documents, the terms of this Agreement shall control.  The Credit Agreement and this Agreement
        shall be read and construed as one agreement.

      9.                 
        Further Assurances.  At
        Agent’s request, the Company shall
        execute and deliver such additional documents and take such additional actions
        as Agent reasonably requests to effectuate the provisions and purposes of
        this
        Agreement and to protect and/or maintain perfection of Agent’s security
        interests in and liens upon the Collateral.

      10.             
        Governing Law. 
The
        validity, interpretation and enforcement of this Agreement in any
        dispute arising out of the relationship between the parties hereto, whether
        in
        contract, tort, equity or otherwise shall be governed by the internal laws
        of
        the State of New York (without giving effect to principles of conflicts of
        law).

      11.             
        Binding Effect. 
This
        Agreement shall be binding upon and inure to the benefit of each of
        the parties hereto and their respective successors and assigns.

      12.             
        Counterparts. 
This
        Agreement may be executed in any number of counterparts, but all of
        such counterparts when executed shall together constitute one and the same
        Agreement.  In making proof of this
        Agreement, it shall not be necessary to produce or account for more than
        one
        counterpart thereof signed by each of the parties hereto.

      [SIGNATURE
        PAGE FOLLOWS]
 

    


    Very truly yours,
 

    THE
      CIT GROUP/BUSINESS CREDIT, INC., as
      Agent
 

     
 

    By: 
/s/
Andrew
      Hausspiegel           
           
                 
           
      
 

     
 

    Name:  Andrew
      Hausspiegel           
           
                 

 

     
 

    Title: VP           
                 
           
                 
           
      
 

     
 

    Read
      and Agreed to:
 

     
 

    JACO
      ELECTRONICS, INC.
 

     
 

    By: 
/s/
Jeffrey
      D. Gash           
           
      
 

     
 

    Name:
      Jeffrey D. Gash           
                 

 

     
 

    Title:
      EVP        
                       
                 

 

     
 

    INTERFACE
      ELECTRONICS
      CORP.
 

     
 

    By: 
/s/
Jeffrey
      D. Gash           
           
      
 

     
 

    Name:
      Jeffrey D. Gash           
                 

 

     
 

    Title:
      EVP        
                       
                 

 

     
 

     
 

    Acknowledged and Agreed to:
 

     
 

    BANK
      OF AMERICA, N.A., as a Lender
 

     
 

    By:
      /s/
Robert Mahoney         
           
      
 

     
 

    Name:
      Robert Mahoney         
           
      
 

     
 

    Title:
      VP          
                       
                 

 

     
 

    THE
      CIT GROUP/BUSINESS CREDIT, INC., as
      a Lender
 

     
 

    By: 
/s/
Andrew
      Hausspiegel                             
                 

 

     
 

    Name:   Andrew
      Hausspiegel                         
      
 

     
 

    Title:
      VP