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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 Definit
