SECOND AMENDMENT AGREEMENT
THIS
SECOND AMENDMENT
AGREEMENT (this "Second Amendment") is entered into
as of January
20, 2006 by and among Harvey Electronics, Inc., a New York
corporation ("Borrower"), and Webster 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 ha
