FIFTH AMENDMENT AND WAIVERS TO CREDIT AGREEMENT

FIFTH AMENDMENT AND WAIVER TO AMENDED AND RESTATED CREDIT AGREEMENT dated as of
April 27, 2009 (the “Fifth Amendment”) by and among NU HORIZONS ELECTRONICS
CORP., a Delaware corporation having its executive offices at 70 Maxess Road,
Melville, New York (the “Borrower”), each of the lenders that is a signatory
thereto identified under the caption “Lenders” on the signature pages to the
Credit Agreement (as defined below) (individually, a “Lender”, and collectively,
the “Lenders”), BANK OF AMERICA, N.A., a national banking association,
as  Documentation Agent for the Lenders, JPMORGAN CHASE BANK, N.A., a national
banking association, as Syndication Agent for the Lenders, ISRAEL DISCOUNT BANK
OF NEW YORK, a New York bank, as Syndication Agent for the Lenders and CITIBANK,
N.A., a national banking association, as administrative agent for the Lenders
(the “Administrative Agent”).

RECITALS

The Borrower, the Lenders, the Documentation Agent, the Syndication Agents and
the Administrative Agent entered into an Amended and Restated Credit Agreement
dated as of January 31, 2007, as amended by a Consent and First Amendment to
Credit Agreement dated as of June 6, 2007, a Second Amendment dated as of
January 4, 2008, a Third Amendment dated as of May 30, 2008 and a Fourth
Amendment dated August 29, 2008 (collectively, the “Credit Agreement”), pursuant
to which certain financial accommodations were made available to the Borrower.

The Borrower has requested that the Lenders and the Administrative Agent modify
certain of the terms set forth in the Credit Agreement and waive certain terms
thereof and the Lenders and the Administrative Agent are willing to modify such
terms and provide such waivers but only upon and subject to the following terms
and conditions.

NOW THEREFORE, in consideration of the premises and mutual covenants and
promises exchanged herein, the parties hereto mutually agree as follows:

Section 1.            Definitions.  Except as otherwise defined in this Fifth
Amendment, terms defined in the Credit Agreement are used herein as defined
therein.
 
Section 2.            Amendment.  Subject to the satisfaction of the conditions
precedent specified in Section 4 below:
 
(A)           Section 1.1 of the Credit Agreement is hereby amended by deleting
the definitions of “Borrowing Base” and “Eligible Inventory” and substituting
the following therefore:

“Borrowing Base” shall mean the lesser of (i) the amount of the Total Revolving
Credit Commitment or (ii) 80% of the Eligible Accounts plus the lesser of (a)
40% of the Eligible Inventory as reported on the most recent Borrowing Base
Certificate delivered pursuant to Section 5.1 (12) hereof or (b) $40,000,000;
provided, however, if such certificate has not been provided the Borrowing Base
shall be deemed to be zero.

 
 

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“Eligible Inventory” shall mean all unencumbered inventory of raw material, work
in process and finished goods of the Borrower and its Domestic Subsidiaries in
which the Administrative Agent has a valid and perfected first priority security
interest except for End of Life Inventory, other than up to $20,000,000.00 of
the value of Eligible End of Life Inventory, as each of such terms is herein
defined, from time to time on hand valued at the lowest of (a) cost, (b) market
value, or (c) the valuation consistent with that employed in the preparation of
the financial statements of the Borrower referred to in Section 5.1
hereof.  “End of Life Inventory” shall mean inventory that the vendor of which
has discontinued or declared obsolete and whose sale is final and without return
privileges.  “Eligible End of Life Inventory” means End of Life Inventory
located in the United States for which the Borrower or its Domestic Subsidiaries
have irrevocable purchase orders to sell to creditworthy Account Debtors who are
obligated to take delivery of same within two years of the date of the relevant
purchase order.

(B)           Section 2.4 of the Credit Agreement is hereby amended by deleting
same and substituting the following therefor:

“2.4           Interest.  Interest on each Revolving Credit Loan shall be at a
per annum rate to be elected by the Borrower, in accordance with Section 2.5
hereof, and shall be either (y) a fluctuating rate equal to the Prime Rate for
the period up to and including April 26, 2009 and the Prime Rate plus 1.75% for
all periods after April 26, 2009 or, (z) subject to availability, Reserve
Adjusted LIBOR for Interest Periods selected by the Borrower plus 1.75% for the
periods up to and including April 26, 2009 and plus 3.5% for all periods after
April 26, 2009 (including Interest Periods already in effect on such
date).  Interest on each Prime Rate Loan shall be payable monthly in arrears to
the Administrative Agent for the pro rata benefit of the Lenders, on the first
Business Day of each month, commencing on the first such day to occur after the
pertinent Revolving Credit Loan is made and upon payment in full
thereof.  Interest on each Eurodollar Loan shall be payable to the
Administrative Agent for the pro rata benefit of the Lenders in arrears (i) in
the case of Eurodollar Loans with Interest Periods of three months or less, at
the end of each applicable Interest Period and (ii) in the case of Eurodollar
Loans with Interest Periods of more than three months, on the numerically
corresponding day that falls three months after the beginning of such Interest
Period and at the end of the applicable Interest Period.  Whenever the unpaid
principal balance of any Revolving Credit Loan shall become due and payable
(whether at the stated maturity thereof, by acceleration or otherwise) interest
shall thereafter be payable, on demand, to the Administrative Agent for the pro
rata benefit of the Lenders at the Involuntary Rate.  Interest on each Revolving
Credit Loan shall be calculated on the basis of a year of 360 days for the
actual number of days elapsed.”

 
 

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(C)           Section 2.8(a) of the Credit Agreement is hereby amended by
deleting same and substituting the following therefor:

“(a)           Commitment Fees. As additional compensation for the Revolving
Credit Commitments, the Borrower agrees to pay to the Administrative Agent for
the pro rata benefit of the Lenders a commitment fee for the Commitment Period
based on the average daily unused portion of the Total Revolving Credit
Commitment (without reference to the Borrowing Base) of .25% for the period up
to and including April 26, 2009 and .5% for all periods commencing after April
26, 2009.”

(D)           Section 5.11 (ii) of the Credit Agreement is hereby amended
deleting same and substitute the following therefore:

At all times relevant hereto the Borrower shall grant reasonable access to the
Administrative Agent and/or its duly authorized representatives or agents, and
cooperate fully with the Administrative Agent in any inspection of the
Borrower’s and its Subsidiaries books and records and all collateral wherever
located (“Field Audit”), provided that, prior to an Event of Default, such Field
Audits will be limited to two in each 12 month period, provided that the second
such Field Audit in any 12 month period will be at the request of the Required
Lenders, and to a review of Accounts, Inventory, accounts payable, taxes and
insurance of the Borrower and its Domestic Subsidiaries.

(E)           Section 6.4 of the Credit Agreement is hereby amended by deleting
same and substituting the following therefor:

“6.4 Maximum Net Loss.  Not incur a net loss, except as specifically permitted,
as at the end of any fiscal quarter as follows: (i) for the rolling three fiscal
quarters ended 11/30/09 no cumulative net loss in excess of $1,000,000 nor more
than  an individual net loss in excess of $1,250,000 in  the fiscal quarter
ended 5/31/09, an individual net loss in excess of $1,000,000 for the fiscal
quarter ended 8/31/09 and an individual net loss in excess of  $750,000 for the
fiscal quarter ended 11/30/09, (ii) for the fiscal quarter ended 2/28/10 and for
each fiscal quarter thereafter, no cumulative net loss for the rolling four
fiscal quarters then ended. For the purpose of the aforesaid calculation of net
loss, non cash charges related to intangible assets, including without
limitation, good will impairment, which are not amortized  on a ratable basis,
or otherwise in accordance with GAAP, will be excluded and not  subtracted from
gross income in determining net loss.”

 
 

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(F)           Section 7.1 (vi) of the Credit Agreement is hereby amended by
deleting same and substituting the following therefor:

“(vi) indebtedness incurred by the Foreign Subsidiaries to institutional lenders
not to exceed an aggregate of $65,000,000.00.”

(G)           Section 7.3 (vii) of the Credit Agreement is hereby deleted and
the following is substituted therefor:

“(vii) investments by the Borrower and its Domestic Subsidiaries in stocks,
securities or assets of Foreign Subsidiaries or loans to Foreign Subsidiaries
provided that such investments and loans do not exceed an aggregate amount of
$79,909,000.  In determining investments and loans for purposes of this Section,
the Borrower’s investment in its Foreign Subsidiaries shall exclude retained
earnings of such Foreign Subsidiaries accrued after 2/28/09 and any accounts
payable of such Foreign Subsidiaries to the Borrower or its Domestic
Subsidiaries incurred and payable on regular trade terms in the ordinary course
of business inclusive of intercompany accounts due for accounts payable to third
parties that settle at least as frequently as regular trade terms.”
 
(H)           Section 7.5 (iii) of the Credit Agreement is hereby amended by
deleting same and substituting the following therefor:
 
“(iii) guarantees by the Borrower and its Foreign Subsidiaries for obligations
of Foreign Subsidiaries permitted by Section 7.1 (vi) hereof provided that such
guarantees are not secured by any property of the Borrower or its Domestic
Subsidiaries, and, provided further, however, that the guaranteed amount
pursuant to guarantees by the Borrower and/or one or more guarantors of the same
indebtedness or obligations shall only be counted once.”

 
 

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(I)           Schedule I to the Credit Agreement is amended by deleting same and
substituting the attached Schedule I-1 which is incorporated herewith and made a
part hereof.

Section 3.              Waivers. The Lenders hereby waive non-compliance with
the following covenants:
 
(A)          Section 6.4 of the Credit Agreement, as in effect prior to the date
of this Fifth Amendment, which requires the Borrower not to incur a net loss as
at the end of each fiscal quarter for the rolling four quarters then ended to
the extent that Borrower incurred a net loss of not more than $9,500,000 for the
four fiscal quarters ended February 28, 2009.
 
(B)           Section 7.3 (vii) of the Credit Agreement, as in effect prior to
the date of this Fifth Amendment, which requires that the aggregate amount of
the Borrower’s and its Domestic Subsidiaries’ investments and loans to Foreign
Subsidiaries shall not exceed $60,000,000 at any time, to the extent the
aggregate of same was not more than $77,909,000 as at February 28, 2009.

(C)           Section 4.2 of the Credit Agreement, to the extent that the
waivers contained in this Fifth Amendment were not in effect on the date of any
extension of credit under the Credit Agreement prior to the date hereof.

Section 4.      (A)           Conditions Precedent. The amendments to the Credit
Agreement set forth in Section 2 hereof and the waiver set forth in Section 3
hereof shall become effective, on the date of this Fifth Amendment, upon the
execution and delivery of this Fifth Amendment by the Borrower, the
Administrative Agent and each of the Required Lenders and the satisfaction of
the following conditions:

(1)           Certified Copies and Other Documents.  The Administrative Agent
shall have received certificates of an officer of the Borrower and each
Guarantor dated the date of this Fifth Amendment certifying (x) no changes in
their respective  certificates of incorporation or by-laws from the date of the
Agreement or attaching copies of any amendments, (y) true and correct copies of
resolutions adopted by the board of directors of the Borrower and each
Guarantor(1) authorizing the borrowings and the other extensions of credit from
the Lenders under the Agreement as amended hereby, the execution, delivery and
performance by the Borrower and each Guarantor of this Fifth Amendment, and any
related documents (2) approving forms in substantially execution form of this
Fifth Amendment, and any related documents and (3) authorizing officers of the
Borrower and each Guarantor to execute and deliver this Fifth Amendment, and any
related documents, and (z) the incumbency and specimen signatures of the
officers of the Borrower and each Guarantor executing any documents delivered to
the Administrative Agent or a Lender by the Borrower and each Guarantor in
connection herewith.

 
 

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(2)           Approval of the Administrative Agent and Agent’s Counsel.   All
other documents and legal matters in connection with the transactions
contemplated by this Fifth Amendment shall be satisfactory in form and substance
to the Administrative Agent and its counsel.

(B)         Conditions Subsequent. Within ninety (90) days of the date of this
Fifth Amendment the Administrative Agent through its agents will cause to be
conducted  a formal  inventory study or appraisal of the Borrower and its
Domestic Subsidiaries inventory by a consultant satisfactory to the
Administrative Agent at the Borrower’s sole cost and expense.  The Borrower and
its Domestic Subsidiaries shall cooperate fully in such study in accordance with
Section 5.1(11) hereof.

Section 5.            Representations and Warranties.  The Borrower represents
and warrants to the Lenders that the representations and warranties set forth in
the Credit Agreement and in the other Loan Documents are true and complete on
the date of this Fifth Amendment and as if made on and as of the date hereof
(or, if such representation or warranty is expressly stated to have been made as
of a specific date, as of such specific date) except for the representation
contained in Section 3.2 of the Credit Agreement, to the extent that the net
loss described in Section 3(A) of this Fifth Amendment could be deemed to be a
breach of such representation.

Section 6.            Borrower’s Acknowledgments.  The Borrower acknowledges and
agrees that the Borrower has no claims, counterclaims, offsets, or defenses to
the Loan Documents and the performance of the Borrower’s obligations thereunder
or if the Borrower did have any such claims, counterclaims, offsets or defenses
to the Loan Documents or any transaction related to the Loan Documents, the same
are hereby waived, relinquished and released in consideration of execution and
delivery of this Fifth Amendment.

Section 7.            Acknowledgement of Guarantors.  The Guarantors acknowledge
and consent to all of the terms and conditions of this Fifth Amendment and agree
that this Fifth Amendment and all documents executed in connection herewith do
not operate to reduce or discharge the Guarantors’ obligations under the Credit
Agreement or the other Loan Documents.  The Guarantors further acknowledge and
agree that the Guarantors have no claims, counterclaims, offsets, or defenses to
the Loan Documents and the performance of the Guarantors’ obligations thereunder
or if the Guarantors did have any such claims, counterclaims, offsets or
defenses to the Loan Documents or any transaction related to the Loan Documents,
the same are hereby waived, relinquished and released in consideration of
execution and delivery of this Fifth Amendment.

Section 8.             Governing Law; Execution in Counterparts.  Except as
herein provided, the Credit Agreement shall remain unchanged and in full force
and effect.  This Fifth Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same amendatory
instrument and any of the parties hereto may execute this Fifth Amendment by
signing any such counterpart.  This Fifth Amendment shall be governed by, and
construed in accordance with, the internal laws of the State of New York
(without regard to New York conflicts of laws principles).

 
 

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Section 9.            Amendment Fee.  The Borrower agrees that in consideration
for the Lenders executing this Fifth Amendment, it shall pay a fee (the
“Amendment Fee”) to the Administrative Agent for the account of each Lender that
executed and delivered this Fifth Amendment on or prior to 5:00 p.m. (New York
City time) on April 27, 2009 (or such later time as the Borrower and the
Administrative Agent shall agree) in an amount equal to $125,000.00 to be shared
pro rata among the Lenders so executing and delivering this Fifth Amendment in
proportion to their Revolving Credit Commitments.  The Amendment Fee shall be
earned upon the effective date of this Fifth Amendment and shall be payable on
April 28, 2009.

Section 10.          Expenses, etc.  The Borrower agrees to pay or reimburse the
Administrative Agent for all reasonable out-of-pocket costs and expenses of the
Administrative Agent (including, without limitation, the reasonable fees and
expenses of Certilman Balin Adler & Hyman, LLP) in connection with the
negotiation, preparation, execution and delivery of this Fifth Amendment and the
transactions contemplated hereby.

Section 11.          Effective Date.  This Fifth Amendment is dated for
convenience as of April 27, 2009 and shall be effective as of such date, on the
delivery of an executed counterpart to the Borrower upon satisfaction of the
conditions precedent contained in Section 3 hereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to
Credit Agreement to be duly executed and delivered by their duly authorized
officers, all as of the day and year first above written.

 
       
Borrower:
           
NU HORIZONS ELECTRONICS CORP.
           
By:
/s/ Kurt Freudenberg
     
Kurt Freudenberg
     
Executive Vice President, Treasurer and
     
Chief Financial Officer
                   
Guarantors:
           
NIC COMPONENTS CORP.
           
By:
/s/ Kurt Freudenberg
     
Kurt Freudenberg
     
Executive Vice President, Treasurer and
     
Chief Financial Officer
           
NU HORIZONS INTERNATIONAL CORP.
           
By:
/s/ Kurt Freudenberg
     
Kurt Freudenberg
     
Executive Vice President, Treasurer and
     
Chief Financial Officer
           
TITAN SUPPLY CHAIN SERVICES CORP.
           
By:
/s/ Kurt Freudenberg
     
Kurt Freudenberg
     
Executive Vice President, Treasurer and
     
Chief Financial Officer
           
RAZOR ELECTRONICS, INC.
           
By:
/s/ Kurt Freudenberg
     
Kurt Freudenberg
     
Executive Vice President, Treasurer and
     
Chief Financial Officer
 

 
 
 
 

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NuXCHANGE B2B SERVICES, INC.
           
By:
/s/ Kurt Freudenberg
     
Kurt Freudenberg
     
Executive Vice President, Treasurer and
     
Chief Financial Officer
           
Administrative Agent:
           
CITIBANK, N.A.,
   
as Administrative Agent
           
By:
/s/ Stuart N. Berman
     
Stuart N. Berman
     
Vice President
           
Documentation Agent:
           
BANK OF AMERICA, N.A.,
   
as Documentation Agent
           
By:
  
     
Steven J. Melicharek
     
Senior Vice President
           
Syndication Agent:
           
JPMORGAN CHASE BANK, N.A.,
   
as Syndication Agent
           
By:
  
     
Alicia T. Schreibstein
     
Vice President
           
ISRAEL DISCOUNT BANK OF NEW YORK,
as Syndication Agent
           
By:
/s/ Richard R. Tripaldi
     
Richard R. Tripaldi
     
Vice President
 

 

 
By:
/s/ David A. Acosta
   
Name:
David A. Acosta
   
Title:
Senior Vice President
 

 
 

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Notice Addresses:
Lenders:
         
CITIBANK, N.A.
CITIBANK, N.A.
 
730 Veterans Memorial Highway
     
Hauppauge, NY 11788
By:
/s/ Stuart N. Berman
     
Stuart N. Berman
     
Vice President
 

ISRAEL DISCOUNT BANK OF NEW YORK
ISRAEL DISCOUNT BANK OF NEW YORK
 
511 Fifth Avenue
     
New York, NY 10017
By:
/s/ Richard R. Tripaldi
     
Richard R. Tripaldi
     
Vice President
 

 
By:
/s/ David A. Acosta
   
Name:
David A. Acosta
   
Title:
Senior Vice President
 

BANK OF AMERICA, N.A.
BANK OF AMERICA, N.A.
 
1185 Avenue of the Americas
     
New York, NY 10036
By:
  
     
Steven J. Melicharek
     
Senior Vice President
 

SOVEREIGN BANK
SOVEREIGN BANK
 
330 South Service Road
     
Melville, NY 11747
By:
  
     
Christine Gerula
     
Senior Vice President
 

HSBC BANK USA, NATIONAL
HSBC BANK USA, NATIONAL
 
ASSOCIATION
ASSOCIATION
 
534 Broad Hollow Road
     
Melville, NY 11747
By:
/s/ Brian S. Dossie
     
Brian S. Dossie
     
Vice President
 

 
 
 
 

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CAPITAL ONE, N.A.,
CAPITAL ONE, N.A.,  
275 Broadhollow Road
formerly known as North Fork Bank
 
Melville, NY 11747
     
 
By:
/s/ Philip Davi
     
Philip Davi
     
Senior Vice President
         
BANK LEUMI USA
BANK LEUMI USA
 
562 Fifth Ave.
     
New York, NY 10036
By:
/s/ Fran Davis
     
Francine Davis
     
Vice President
           
By:
/s/ Eric A. Halpern
     
Eric A. Halpern
     
Senior Vice President and Group Head
                         
JPMORGAN CHASE BANK, N.A.
JPMORGAN CHASE BANK, N.A.
 
395 North Service Road, Floor 3
     
Melville, NY 11747
By:
 
     
Alicia T. Schreibstein
     
Vice President
                 
NEW YORK COMMERCIAL BANK
NEW YORK COMMERCIAL BANK
 
1 Jericho Plaza
     
Jericho, NY 11753
By:
/s/ Robert T. Stratford, Jr.
     
Robert T. Stratford, Jr.
     
Senior Vice President
 

 
 
 

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SCHEDULE I

Revolving Credit Commitments (Section 2.1)

Facility Amount: $120,000,000

Bank
Revolving Credit Commitment
Percentage of Total
     
Citibank, N.A
$24,000,000
20%
     
Israel Discount Bank of New York
$16,800,000
14%
     
Bank of America, N.A.
$15,600,000
13%
     
Sovereign Bank
$14,400,000
12%
     
HSBC Bank USA, National Association
$12,000,000
10%
     
Capital One, N.A.
$10,800,000
9%
     
Bank Leumi USA
$ 9,600,000
8%
     
JPMorgan Chase Bank, N.A.
$ 8,400,000
7%
     
New York Commercial Bank
$ 8,400,000
7%

 
 

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