Amendment No. 2, Consent and Waiver to Suntron Corporation’s Second Amended and Restated Credit Agreement

Amendment No. 2, Consent and Waiver to
Suntron Corporation’s
Second Amended and Restated Credit Agreement

Amendment No. 2, Consent and Waiver (this “Amendment”), dated as of August 19, 2005, to the Second Amended and Restated Credit Agreement, dated as of July 7, 2004 (as amended to the date hereof, the “Credit Agreement”), among K*TEC Operating Corp. and EFTC Operating Corp., each a Delaware corporation, as borrowers (each a “Borrower” and collectively, the “Borrowers”), Suntron Corporation (the “Company”), the Lenders party thereto (the “Lenders”), the Issuers party thereto (the “Issuers”), Citicorp USA, Inc. as Administrative Agent and Collateral Agent (in such capacity, the “Administrative Agent”) and Wachovia Capital Finance Corporation (Western), as successor in interest to Congress Financial Corporation (Western), as Syndication Agent (the “Syndication Agent”). Capitalized terms used herein but not defined herein are used as defined in the Credit Agreement.

W i t n e s s e t h:

Whereas, the Company, the Borrowers, the Lenders, the Issuers, the Administrative Agent and the Syndication Agent are party to the Credit Agreement;

Whereas, the Lenders have entered into that certain Participation Agreement (the “Participation Agreement”) with Xxxxxx Equity Investors IV, L.P., the participant (the “Participant”), attached hereto as Exhibit A;

Whereas, the Borrowers have asked for an extension of 5 business days (the “Delivery Extension”) to deliver the Financial Statements required to be delivered pursuant to Section 6.1(b) of the Credit Agreement with respect to the Fiscal Quarter ended July 3, 2005 (the “Specified Fiscal Quarter”) and the other documents expressly required to be delivered pursuant to Section 6.1(d), (h) or (i) of the Credit Agreement at the time of delivery of such Financial Statements (collectively, the “Specified Documents”);

Whereas, it is a condition precedent to the Participation Agreement that the Company, the Borrowers, the Lenders, the Issuers, the Administrative Agent and the Syndication Agent enter into this Amendment; and

Whereas, the Company, the Borrowers, the Administrative Agent, the Syndication Agent and the Lenders have agreed, subject to certain limitations and conditions set forth below, to (a) consent to the Delivery Extension and to the parties entering into the Participation Agreement and (b) make certain amendments to the Credit Agreement, as more specifically set forth below;

Now, Therefore, in consideration of the premises and the covenants and obligations contained herein the parties hereto agree as follows:

Section 1. Consent, Waiver and Covenants

(a) As of the Amendment Effective Date, the Agents and Lenders party hereto agree to the Delivery Extension and waive compliance with Section 6.1(Financial Statements) of the Credit Agreement with respect to the delivery of the Specified Documents (and

Amendment No. 2, Consent and Waiver to
Second Amended and Restated Credit Agreement
Suntron Corporation

any Event of Defaults that may arise solely because of the non-compliance with such delivery requirements within the periods specified in such section) so long as all such Specified Documents are delivered within 52 days after the end of the Specified Fiscal Quarter. The Company hereby agrees to deliver all such Specified Documents within such period.

(b) The Company hereby agrees that, within 30 days after the Amendment Effective Date, it shall have hired a financial advisor reasonably acceptable to each Agent on terms and conditions reasonably acceptable to each Agent. Each party hereto acknowledges and agrees (without prejudice to the Administrative Agent’s ability to establish Availability Reserves, Eligibility Reserves and other reserves from time to time under and as provided in the Credit Agreement) that, on the date hereof, the aggregate amount of Eligibility Reserves and Availability Reserves is $5,000,000.

(c) The parties hereto hereby consent to the execution and delivery of the Participation Agreement and the consummation of the transactions contemplated therein.

Section 2. Amendments

(a) Amendments to Article I (Definitions, Interpretation and Accounting Terms)

(i) Clause (p) of the definition of “Eligible Receivables” in Section 1.1 (Defined Terms) of the Credit Agreement is hereby amended by inserting at the end of the parenthetical “or, if such Account Debtor is Xxxx Intercivic, for any time of determination prior to December 31, 2005, 20%”.

(ii) The following is hereby inserted at the end of the definition of “Borrowing Base” to replace the period therein:

“; and

plus (c) the Participation Increase.”

(iii) The following new definitions are hereby inserted in Section 1.1 (Defined Terms) of the Credit Agreement in an appropriate position so as to preserve the alphabetical order of definitions in such Section:

“Participant” means Xxxxxx Equity Investors IV, L.P.

“Participation Increase” means the amount of the “Purchase Price” under and as defined in the Participation Agreement, dated as of August 19, 2005, among each Lender as a seller and the Participant, as participant, as amended, supplemented or otherwise modified; provided, however, that, upon receipt by the Company, the Borrowers or any of their Subsidiaries of the Net Cash Proceeds of any Equity Issuance or Debt Issuance after August 19, 2005 for which a mandatory prepayment is required under Section 2.9(a) or, without duplication, upon receipt by the Participant of any other payment with respect to the principal amount of the “Specified Loans” under and as defined in such Participation Agreement (including as a result of a purchase of the interest of the Participant by any Lender), the amount of the “Participation Increase” shall be reduced by the amount of such Net Cash Proceeds or, as the case may be, such payment unless otherwise agreed by the Agents in their sole discretion.

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Amendment No. 2, Consent and Waiver to
Second Amended and Restated Credit Agreement
Suntron Corporation

Section 3. Conditions Precedent to the Effectiveness of this Amendment

This Amendment (including the consents and waivers set forth herein) shall become effective as of the “Effective Date” (under and as defined in the Participation Agreement) when, and only when, each of the following conditions precedent shall have been satisfied or waived by the Administrative Agent (the “Amendment Effective Date”):

(a) Certain Documents. The Administrative Agent shall have received each of the following, each dated as of the Amendment Effective Date (unless otherwise agreed by the Administrative Agent), in form and substance satisfactory to the Administrative Agent and in sufficient copies for each Lender:

(i) this Amendment, executed by the Company, each Borrower, the Administrative Agent, the Syndication Agent and the Lenders;

(ii) the Participation Agreement, executed by the Participant and the Lenders (and the “Effective Date” under and as defined therein shall have occurred); and

(iii) such additional documentation as the Administrative Agent may reasonably require;

(b) Corporate and Other Proceedings. All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by this Amendment shall be satisfactory in all respects to the Administrative Agent;

(c) No Default or Event of Default. After giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing, either on the date hereof or on the Amendment Effective Date; and

(d) Fees and Expenses Paid. Each Borrower shall have paid all Obligations due, after giving effect to this Amendment, on or before the later of the date hereof and the Amendment Effective Date including, without limitation, the fees set forth in Section 5 (Fees and Expenses) hereof.

Section 4. Representations and Warranties

On and as of the date hereof and as of the Amendment Effective Date, after giving effect to this Amendment, the Company and each Borrower hereby represent and warrant to the Administrative Agent and each Lender as follows:

(a) this Amendment has been duly authorized, executed and delivered by the Company and each Borrower and constitutes a legal, valid and binding obligation of the Company and each Borrower, enforceable against the Company and each Borrower in accordance with its terms and the Credit Agreement as amended by this Amendment and constitutes the legal, valid and binding obligation of the Company and each Borrower, enforceable against the Company and each Borrower in accordance with its terms;

(b) all of the representations and warranties of the Company and each Borrower contained in Article IV (Representations and Warranties) of the Credit Agreement and in any other Loan Document are true and correct in all material respects on and as of the date

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Amendment No. 2, Consent and Waiver to
Second Amended and Restated Credit Agreement
Suntron Corporation

hereof and the Amendment Effective Date, in each case as if made on and as of such date and except to the extent that such representations and warranties specifically relate to a specific date, in which case such representations and warranties shall be true and correct in all material respects as of such specific date; and

Section 5. Fees and Expenses

Each Borrower and each other Loan Party agrees to pay on demand in accordance with the terms of Section 11.3 (Costs and Expenses) of the Credit Agreement all costs and expenses of the Administrative Agent (including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Administrative Agent) and all reasonable fee and expenses of counsel to the Syndication Agent, in each case in connection with the preparation, reproduction, execution and delivery of this Amendment, the Participation Agreement and all other Loan Documents entered into in connection herewith.

Section 6. Release

In further consideration for the Administrative Agent and the Syndication Agent’s execution of this Agreement, each Borrower and each other Loan Party hereby release each of the Administrative Agent, the Syndication Agent, each Lender and each Issuer and their respective Affiliates, officers, employees, directors, agents and advisors (collectively, the “Releasees”) from any and all claims, demands, liabilities, responsibilities, disputes, causes of action (whether at law or equity) and obligations of any nature whatsoever, whether liquidated or unliquidated, known or unknown, matured or unmatured, fixed or contingent that any of the Loan Parties may have against any Releasee and that arise from or relate to the Obligations, any Collateral, any Loan Document, the Participation Agreement or any document, dealing or other matter in connection with any of the Loan Documents, the Participation Agreement or the Collateral, and any third party liable in whole or in part for any of the Obligations, in each case to the extent arising (a) on or prior to the date hereof or the Amendment Effective Date or (b) out of, or relating to, actions, dealings or other matters occurring on or prior to the date hereof or the Amendment Effective Date (including, without limitation, any actions or inactions of any Releasee prior to the date hereof or the Amendment Effective Date).

Section 7. Reference to the Effect on the Loan Documents

(a) As of the Amendment Effective Date, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each reference in the other Loan Documents to the Credit Agreement (including, without limitation, by means of words like “thereunder”, “thereof” and words of like import), shall mean and be a reference to the Credit Agreement as modified hereby, and this Amendment and the Credit Agreement shall be read together and construed as a single instrument. Each of the table of contents and lists of Exhibits and Schedules of the Credit Agreement shall be amended to reflect the changes made in this Amendment as of the Amendment Effective Date.

(b) Except as expressly amended hereby, all of the terms and provisions of the Credit Agreement and all other Loan Documents are and shall remain in full force and effect and are hereby ratified and confirmed.

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Amendment No. 2, Consent and Waiver to
Second Amended and Restated Credit Agreement
Suntron Corporation

(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lenders, the Issuers, the Administrative Agent or the Syndication Agent under any of the Loan Documents, nor constitute a waiver or amendment of any other provision of any of the Loan Documents or for any purpose except as expressly set forth herein.

(d) This Amendment is a Loan Document and, notwithstanding the provisions of Section 9.1 of the Credit Agreement, the parties acknowledge and agree that a failure to comply with the covenants set forth herein shall constitute an immediate “Event of Default”, as and to the extent provided in Section 9.1(d)(i) (Events of Default) of the Credit Agreement.

Section 8. Consents by Loan Parties

Each Loan Party hereby consents to the provisions hereof, including, without limitation, the amount, reductions and other terms of the “Participation Increase” as set forth above, and agrees that the terms hereof shall not affect in any way its obligations and liabilities under the Loan Documents (as amended and otherwise expressly modified hereby), all of which obligations and liabilities shall remain in full force and effect and each of which is hereby reaffirmed (as amended and otherwise expressly modified hereby).

Section 9. Execution in Counterparts

This Amendment may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are attached to the same document. Delivery of an executed counterpart by telecopy or e-mail shall be effective as delivery of a manually executed counterpart of this Amendment.

Section 10. Governing Law

This Amendment shall be governed by and construed in accordance with the law of the State of New York.

Section 11. Section Titles

The section titles contained in this Amendment are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto, except when used to reference a section, in which case they shall govern absent manifest error.

Section 12. Notices

All communications and notices hereunder shall be given as provided in the Credit Agreement.

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Amendment No. 2, Consent and Waiver to
Second Amended and Restated Credit Agreement
Suntron Corporation

Section 13. Severability

The fact that any term or provision of this Agreement is held invalid, illegal or unenforceable as to any person in any situation in any jurisdiction shall not affect the validity, enforceability or legality of the remaining terms or provisions hereof or the validity, enforceability or legality of such offending term or provision in any other situation or jurisdiction or as applied to any person

Section 14. Successors

The terms of this Amendment shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.

Section 15. Waiver of Jury Trial

Each of the parties hereto irrevocably waives trial by jury in any action or proceeding with respect to this Amendment or any other Loan Document.

[Signature Pages Follow]

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In Witness Whereof, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first written above.


Suntron Corporation
By:
	Name:	Xxxxx X. Xxxxxx
	Title:	CFO


KTEC Operating Corp., as Borrower*
By:
	Name:	Xxxxx X. Xxxxxx
	Title:	CFO


EFTC Operating Corp., as Borrower
By:
	Name:	Xxxxx X. Xxxxxx
	Title:	CFO


Citicorp USA, Inc., as Administrative Agent and Lender
By:
	Name:	Xxxxx X. Xxxxxxx
	Title:	Vice President


Citibank, N.A., as Issuer
By:
	Name:	Xxxxx X. Xxxxxxx
	Title:	Vice President


Wachovia Capital Finance Corporation (Western), successor in interest to Congress Financial Corporation (Western), as Syndication Agent and Lender
By:
	Name:	Xxxx Xxxxxxxxx
	Title:	Vice President

Exhibit A

Participation Agreement

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Amendment No. 2, Consent and Waiver to Suntron Corporation’s Second Amended and Restated Credit Agreement

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