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SECOND AMENDMENT TO REVOLVING
LOAN AGREEMENT,
PROMISSORY NOTE AND OTHER LOAN DOCUMENTS
THIS AGREEMENT made as of this 29th day of September 2006 between
SYNERGX
SYSTEMS INC. ("Borrower"), a corporation organized and existing
pursuant to the
laws of the State of Delaware, having an address at 209 Lafayette
Drive,
Syosset, New York 11791, and TD BANKNORTH, N.A., successor by
merger to HUDSON
UNITED BANK ("Lender"), a New Jersey corporation, with a place of
business at
1000 MacArthur Boulevard, Mahwah, New Jersey 07430.
W I T N E S S E T H:
WHEREAS:
A. Borrower entered into a revolving loan agreement with Hudson
United Bank
("Hudson") on October 9, 2003 and pursuant to such revolving loan
agreement,
Borrower executed and delivered to Lender its promissory note in
the original
principal amount of THREE MILLION AND NO/100 (3,000,000.00) DOLLARS
(the
Revolving Note);
B. Borrower subsequently requested that Hudson continue to provide
financing
under the Revolving Loan and otherwise modify the terms and
conditions of the
aforementioned revolving loan agreement;
C. Lender agreed to continue to provide financing under the
Revolving Loan and
to otherwise modify certain other terms and conditions of the
aforementioned
revolving loan agreement strictly in accordance with the terms and
conditions of
a first amendment to revolving loan agreement, promissory note and
other loan
documents dated April 11, 2005 (the revolving loan agreement dated
October 9,
2003 as amended by the first amendment to revolving loan agreement,
promissory
note and other loan documents dated April 11, 2005 are hereinafter
collectively
referred to as, the "Loan Agreement");
D. Borrower has now requested that Lender extend the maturity date
of the
Revolving Loan and the Revolving Note, release General Sound
(Texas) Company
from its guaranty of the obligations of Borrower to Lender and make
certain
other modifications and changes to the terms and conditions of the
Loan
Agreement; and
E. Lender has agreed to extend the maturity date of the Revolving
Loan and the
Revolving Note, to release General Sound (Texas) company from its
guaranty of
the obligations of Borrower to Lender and to make certain other
modifications
and changes to the terms and conditions of the Loan Agreement
strictly as set
forth in this Agreement.
NOW THEREFORE, in consideration of the foregoing, and for other
good and
valuable consideration, the receipt and sufficiency of which are
hereby
acknowledged, the undersigned hereto agree as follows:
1. Section 1.24 of the Loan Agreement is deleted in its entirety
and replaced
with the following:
"1.24 "Guarantor" shall mean Casey Systems Inc. and any other
Person who
shall, at any time, agree to be a guarantor surety for
Borrower."
2. Section 1.28 of the Loan Agreement is amended to read as
follows:
"1.28 "Loan Interest Rate" shall mean the Prime Rate plus
one-quarter of
one (1/4) percent per annum until January 31, 2006 and thereafter
the "Base
Rate" (as hereinafter defined) of Lender plus one-quarter of one
(1/4) percent
per annum. The "Base Rate" shall mean the fluctuating rate of
interest announced
from time to time by Lender as its "Base Rate." Any interest that
has the Base
Rate as a factor will change immediately upon Lender's announcement
of its new
rate. The Base Rate is not necessarily the lowest rate charged by
Lender on its
loans and is set by Lender in its sole discretion. If the Base Rate
index
becomes unavailable during the term of the Loan, Lender may
designate a
substitute index. Interest shall be computed by the Bank on the
basis of actual
days elapsed, divided by a 360-day year."
3. Section 1.39 of the Loan Agreement is amended to read as
follows:
"1.39. "Prime Rate" means the fluctuating rate of interest, which
is
determined periodically, announced from time to time by Hudson
United Bank as
its "Prime Rate."
4. Section 1.45 of the Loan Agreement is amended to read as
follows:
"1.45 "Termination Date" shall mean the earlier of January 31,
2008, or the
date on which Lender terminates this Agreement pursuant to Section
12.1 of this
Agreement."
5. Section 14.3 of the Loan Agreement is amended by changing the
name and
address for notice to Lender to read as follows:
"If to Lender: TD Banknorth, N.A.
1000 MacArthur Boulevard
Mahwah, New Jersey 07430
Attn: David S. Yanagisawa
Senior Vice President
Tel: (201)236-2773
Fax: (201)236-1935"
6. Section 9.19 of the Loan Agreement is amended to read as
follows:
"9.19. Effective Tangible Net Worth. Permit Borrower's Effective
Tangible
Net Worth, to be tested quarterly, to be less than:
Amount Time Period
$5,232,000.00* September 29, 2006 to
January 31, 2008
*which number shall increase effective as of September 30, 2006
and each fiscal year thereafter by an amount equal to
twenty-five (25) percent of Borrower's net profit as set forth
in the financial statements referred to in Article 6."
7. Section 9.20 of the Loan Agreement is amended to read as
follows:
"9.20. Debt to Effective Tangible Net Worth. Cause, suffer or
permit
Borrower's Debt to Effective Tangible Net Worth Ratio for the
period set forth
below to be greater than the levels set forth below, tested
quarterly:
Ratio Time Period
1.5 to 1.0 October 2003 to
January 31, 2008"
8. The Loan Agreement is further amended by adding a new Section
9.21 to read as
follows:
"9.21 Debt Service Coverage Ratio. Cause, suffer or permit
Borrower's Debt
Service Coverage Ratio (as hereinafter defined) to be less than
1.20 to 1.0,
tested annually commencing September 30, 2006. Debt Service
Coverage Ratio is
defined as net income plus depreciation plus amortization expense
plus interest
expense le
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