SECOND AMENDMENT AGREEMENT
THIS SECOND AMENDMENT AGREEMENT (this "Second Amendment") is entered into
as of January 20, 2006 by and among Xxxxxx Electronics, Inc., a New York
corporation ("Borrower"), and Xxxxxxx Business Credit Corporation ("Lender").
Introduction
Borrower and Lender are parties to a Loan and Security Agreement dated as
of November 21, 2003 (as amended through the date hereof and as further amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement") pursuant to which Lender has agreed to make revolving credit loans
and to provide certain other financial accommodations to Borrower.
Borrower has requested certain amendments to the Loan Agreement. Lender is
willing to effect the amendments of the Loan Agreement requested by Borrower on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender agree as
follows:
1. Amendments to the Loan Agreement. Upon the date that this Second
Amendment shall have been executed by each of the parties hereto and all
conditions set forth in Section 3 of this Second Amendment have been satisfied,
Borrower and Lender agree that the Loan Agreement shall be amended as follows:
(a) Section 7.21 of the Loan Agreement is hereby amended by deleting such
Section 7.21 in its entirety and inserting in lieu thereof the following new
Section 7.21:
7.21 Financial Covenants.
(a) Minimum EBITDA. Measured as of the last day of each fiscal month, allow
(A) EBITDA for such fiscal month to vary negatively by more than $187,500 from
the EBITDA projected for such fiscal month in the Business Plan and (B) EBITDA
for the rolling-three fiscal month period ended on the last day of each fiscal
month to vary negatively by more than $375,000 from the EBITDA projected for
such rolling-three fiscal month period in the Business Plan. In the case of the
first two fiscal months covered by the Business Plan, the calculation in clause
(B) shall be made using the applicable months from the prior year's Business
Plan.
(b) Capital Expenditures. Make capital expenditures (other than capital
expenditures made with proceeds of Permitted Purchase Money Indebtedness) in any
fiscal year in excess of $1,000,000.
(c) Covenant levels with respect to EBITDA and capital expenditures for
periods beyond those set forth in the foregoing subsections (a) and (b) will be
set at a later date and based upon the applicable Business Plans approved by
Lender. Borrower shall submit each such Business Plan in accordance with Section
6.3(c). If Borrower fails to deliver an updated Business Plan satisfactory to
Lender in its Permitted Discretion or if Borrower and Lender are unable to
mutually agree upon covenant levels with respect to EBITDA and capital
expenditures by October 15 of any fiscal year, the minimum Excess Availability
at all times thereafter shall be no less than $1,500,000."
(d) 2006 Business Plan. Borrower has delivered to Lender a business plan
and set of Projections for its fiscal quarter ending [October 31, 2006], a copy
of which is attached hereto as Exhibit A (the "2006 Business Plan"). For the
period from the date that this Second Amendment is effective through [October
31, 2006], the term "Business Plan" shall mean the 2006 Business Plan for all
purposes of the Loan Agreement (as amended hereby).
2. Lender's Rights. Lender expressly reserves the full extent of its rights
under the Loan Agreement, the other Loan Documents and applicable law with
respect to any Default or Event of Default existing on the date hereof.
3. Conditions Precedent to Second Amendment. The satisfaction of each of
the following, unless waived or deferred by Lender in its Permitted Discretion
constitute conditions precedent to the effectiveness of this Second Amendment:
(a) Lender shall have received this Second Amendment, duly executed by
Borrower;
(b) the representations and warranties in this Second Amendment, the Loan
Agreement, as amended hereby, and the other Loan Documents shall be true and
correct in all respects on and as of the date hereof, as though made on such
date (except to the extent that such representations and warranties relate
solely to an earlier date);
(c) no Default or Event of Default shall have occurred and be continuing on
the date hereof, and no Default or Event of Default shall result from the
consummation of the transactions contemplated herein;
(d) no injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the consummation of the transactions
contemplated herein shall have been issued and remain in force by any court or
other governmental authority against Borrower or Lender; and
(e) Lender shall have received payment in full of its out-of-pocket
expenses (including reasonable attorneys' fees and expenses) incurred in
connection with the Loan Agreement and this Second Amendment.
4. Representations and Warranties. Borrower hereby represents and warrants
to the Lender that:
(a) the execution, delivery, and performance of this Second Amendment, the
Loan Agreement and the other Loan Documents (i) are within Borrower's corporate
powers, (ii) have been duly authorized by all necessary corporate action, (iii)
do not require any approval or consent of any Person under any contractual
obligation of the Borrower and (iv) do not contravene (A) any law, rule, or
regulation, or any order, judgment, decree, writ or injunction, or award of any
arbitrator, court, or Governmental Authority, (B) the terms of its charter,
bylaws or other operative or formative documents or (C) any contract or
undertaking to which it is a party or by which any of its properties may be
bound or affected;
(b) this Second Amendment has been duly executed and delivered by Borrower;
(c) this Second Amendment and the Loan Agreement and the other Loan
Documents, each as previously amended and as amended hereby, constitute
Borrower's legal, valid, and binding obligations, enforceable against Borrower
in accordance with their respective terms;
(d) Borrower is in compliance with all of the terms and provisions set
forth in the Loan Agreement and each of the other Loan Documents, each as
previously amended and as amended hereby, on its part to be observed or
performed on or prior to the date hereof; and
(e) no Default or Event of Default has occurred and is continuing under the
Loan Agreement or any other Loan Document.
5. Reaffirmation. Borrower further reaffirms all of its obligations under
the Loan Agreement and the other Loan Documents, each as previously amended and
as amended hereby.
6. Effect on Loan Agreement. Except as expressly provided herein, the
execution, delivery, and performance of this Second Amendment shall not operate
as a waiver or an amendment of any right, power, or remedy of the Lender under
the Loan Agreement or any other Loan Document. Except to the extent expressly
amended hereby, the Loan Agreement and all other Loan Documents shall be
unaffected hereby, shall continue in full force and effect, are hereby in all
respects ratified and confirmed, and shall constitute the legal, valid, binding
and enforceable obligations of Borrower to the Lender.
7. No Novation; Entire Agreement. This Second Amendment evidences solely
the amendment of certain terms and provisions of Borrower's obligations under
the Loan Agreement expressly set forth herein and is not a novation or discharge
thereof. There are no other understandings, express or implied, between Lender
and Borrower regarding the subject matter hereof.
8. Choice of Law. The validity of this Second Amendment, its construction,
interpretation and enforcement, and the rights of the parties hereunder, shall
be determined under, governed by, and construed in accordance with the laws of
The Commonwealth of Massachusetts without regard to conflicts of laws
principles.
9. Definitions and Construction.
(a) Capitalized terms used but not otherwise defined herein shall have the
respective meanings given to such terms in the Loan Agreement, as amended
hereby.
(b) Upon and after the effectiveness of this Second Amendment, each
reference in the Loan Agreement to "this Agreement", "hereunder", "herein",
"hereof" or words of like import referring to the Loan Agreement, and each
reference in the other Loan Documents to "the Loan Agreement", "thereunder",
"therein", "thereof", or words of like import referring to the Loan Agreement,
shall mean and be a reference to the Loan Agreement as amended hereby.
10. Counterparts; Telefacsimile Execution. This Second Amendment may be
executed in any number of counterparts and by different parties in separate
counterparts, each of which when so executed and delivered, shall be deemed an
original, and all of which, when taken together, shall constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to this
Second Amendment by facsimile shall be as effective as delivery of a manually
executed counterpart of this Second Amendment. Any party delivering an executed
counterpart of this Second Amendment by facsimile also shall deliver a manually
executed counterpart of this Second Amendment but the failure to deliver a
manually executed counterpart shall not affect the validity, enforceability, and
binding effect of this Second Amendment.
[Signatures appear on thefollowing page.]
SIGNATURE PAGE
IN WITNESS WHEREOF, Borrower and Lender caused this Second Amendment to be
executed as of the date first above written.
BORROWER:
XXXXXX ELECTRONICS, INC.
By:/s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
LENDER:
XXXXXXX BUSINESS CREDIT CORPORATION
By:/s/_____________________________
Name:________________________
Title:_________________________
EXHIBIT A
2006 Business Plan
