Exhibit 10.7.2

SYPRIS SOLUTIONS, INC.

SECOND AMENDMENT

TO NOTE PURCHASE AGREEMENT

$7,500,000 4.73% Senior Notes, Series A

Due June 30, 2009

$27,500,000 5.35% Senior Notes, Series B

Due June 30, 2011

$20,000,000 5.78% Senior Notes, Series C

Due June 30, 2014

Dated as of March 13, 2006

To the Holders of the Senior Notes

    of Sypris Solutions, Inc.

    Named in the Attached Schedule I

Ladies and Gentlemen:

Reference is made to the Note Purchase Agreement dated as of June 1, 2004, as
amended by a First Amendment to Note Purchase Agreement dated as of August 3,
2005 (as so amended, the “Note Agreement”), among Sypris Solutions, Inc., a
Delaware corporation (the “Company”), and each of the Purchasers named in
Schedule A thereto, pursuant to which the Company issued $7,500,000 aggregate
principal amount of its 4.73% Senior Notes, Series A, due June 30, 2009,
$27,500,000 aggregate principal amount of its 5.35% Senior Notes, Series B, due
June 30, 2011 and $20,000,000 aggregate principal amount of its 5.78% Senior
Notes, Series C, due June 30, 2014 (together, the “Notes”). You are referred to
herein individually as a “Holder” and collectively as the “Holders.” Capitalized
terms used and not otherwise defined in this Second Amendment to Note Purchase
Agreement (this “Amendment”) shall have the meanings ascribed to them in the
Note Agreement, as amended hereby.

The Company has requested modifications to Section 10.1 of the Note Agreement
and in connection with such modifications also has agreed to a restriction on
capital expenditures. The Holders have agreed to modify the Note Agreement on
the terms and conditions set forth herein.

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In consideration of the premises and for good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the Company and the Holders
agree as follows:

 

1. AMENDMENTS TO NOTE AGREEMENT

1.1. Amendment of Section 10.1. Section 10.1 of the Note Agreement is amended to
read in its entirety as follows:

“10.1 Consolidated Net Debt; Fixed Charge Coverage Ratio; Capital Expenditures.

(a) Consolidated Net Debt. The Company will not permit the ratio of Consolidated
Net Debt to Consolidated EBITDA (for the Company’s then most recently completed
four fiscal quarters) as of the last day of any fiscal quarter to be greater
than the following:

(i) 3.25 to 1.00 for the period of four fiscal quarters ending June 30, 2005;

(ii) 3.75 to 1.00 for the period of four fiscal quarters ending September 30,
2005;

(iii) 3.25 to 1.00 for the period of four fiscal quarters ending December 31,
2005; and

(iv) 3.00 to 1.00 for the period of four fiscal quarters ending March 31, 2006
and for the period of four fiscal quarters ending on each fiscal quarter
thereafter.

(b) Fixed Charge Coverage Ratio. The Company will not permit the Fixed Charge
Coverage Ratio (calculated as of the end of the applicable fiscal quarter) for
any fiscal quarter ending on or after March 31, 2006 to be less than 3.0 to 1.0.

(c) Capital Expenditures. The Company will not, and will not permit any
Subsidiary to, make Capital Expenditures in an amount exceeding, on a
consolidated basis, (i) $30,000,000 for the fiscal year ending December 31,
2006, (ii) $35,000,000 for the fiscal year ending December 31, 2007 and
(iii) $40,000,000 for any fiscal year thereafter.”

1.2. Amendment of Section 11(f). Section 11(f) of the Note Agreement is amended
to read in its entirety as follows:

“(f) (i) the Company or any Significant Subsidiary is in default (as principal
or as guarantor or other surety) in the payment of any principal of or premium
or make-whole amount or interest on any Debt that is outstanding in an aggregate
principal amount of at least $15,000,000 beyond any period of grace provided
with respect thereto, or (ii) the Company or any Significant Subsidiary is in
default in the performance of or compliance with any term of any evidence of any

 

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Debt in an aggregate outstanding principal amount of at least $15,000,000 or of
any mortgage, indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or condition such Debt
has become, or has been declared (or one or more Persons are entitled to declare
such Debt to be), due and payable before its stated maturity or before its
regularly scheduled dates of payment, or (iii) as a consequence of the
occurrence or continuation of any event or condition (other than the passage of
time or the right of the holder of Debt to convert such Debt into equity
interests), (x) the Company or any Significant Subsidiary has become obligated
to purchase or repay Debt before its regular maturity or before its regularly
scheduled dates of payment in an aggregate outstanding principal amount of at
least $15,000,000, or (y) one or more Persons have the right to require the
Company or any Significant Subsidiary so to purchase or repay such Debt; or”

1.3. Schedule B. The following defined terms are added to, or restated in their
entirety to read as follows in, Schedule B:

“Capital Expenditure” means, for any period, the consolidated sum of all
expenditures by, or obligations incurred by, the Company and its Subsidiaries
for an asset that will be used in a year or years subsequent to and in the year
in which the expenditure is made or obligation is incurred, and which asset is
properly classified in relevant financial statements of the Company and its
Subsidiaries as equipment, real property or improvements, fixed assets or a
similar type of capitalized asset, all in accordance with GAAP.

“Consolidated EBITDA” means, for any period, the sum of Consolidated Net Income
for such period, plus, to the extent deducted in determining such Consolidated
Net Income, (i) federal, state, local and foreign income, value added and
similar taxes, (ii) Consolidated Interest Expense, (iii) depreciation and
amortization expense, (iv) noncash stock compensation expense and (v) other
non-cash expenses, in each case determined on a consolidated basis in accordance
with GAAP. If, during the period for which Consolidated EBITDA is being
calculated, the Company or a Subsidiary has (i) acquired one or more Persons (or
the assets thereof) or (ii) disposed of one or more Subsidiaries (or
substantially all of the assets thereof), Consolidated EBITDA shall be
calculated on a pro forma basis (including adjustments to reflect consolidation
savings) as if all of such acquisitions and all such dispositions had occurred
on the first day of such period.

“Fixed Charge Coverage Ratio” means, as of any date, the ratio of (i) the sum of
the Company’s Consolidated EBITDA plus Operating Lease Rentals to (ii) the sum
of the Company’s Consolidated Interest Expense, plus Operating Lease Rentals, in
each case for the immediately preceding four fiscal quarters.

 

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2. REAFFIRMATION; REPRESENTATIONS AND WARRANTIES

2.1. Reaffirmation of Note Agreement. The Company reaffirms its agreement to
comply with each of the covenants, agreements and other provisions of the Note
Agreement and the Notes, including the additions and amendments of such
provisions effected by this Amendment.

2.2. Note Agreement. The Company represents and warrants that the
representations and warranties contained in the Note Agreement are true and
correct as of the date hereof, except (a) to the extent that any of such
representations and warranties specifically relate to an earlier date and
(b) for such changes, facts, transactions and occurrences that have arisen since
December 31, 2005 in the ordinary course of business, (c) such other matters as
have been previously disclosed in writing by the Company (including in its
financial statements and notes thereto) to the Holders and (d) other changes
that could not reasonably be expected to have a Material Adverse Effect, except
for changes in Debt permitted by the Note Agreement.

2.3. No Default or Event of Default. After giving effect to the transactions
contemplated hereby, there will exist no Default or Event of Default.

2.4. Authorization. The execution, delivery and performance by the Company of
this Amendment have been duly authorized by all necessary corporate action and
do not require any registration with, consent or approval of, notice to or
action by, any Person (including any Governmental Authority) in order to be
effective and enforceable. The Note Agreement and this Amendment each constitute
the legal, valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

 

3. EFFECTIVE DATE

This Amendment shall become effective as of the date set forth above upon the
satisfaction of the following conditions:

3.1. Consent of Holders to this Amendment. Execution by the Holders of at least
a majority in aggregate principal amount of the Notes outstanding and receipt by
the Holders of a counterpart of this Amendment duly executed by the Company.

3.2. Amendment of Credit Agreement. The Company shall have amended the Credit
Agreement in the form attached hereto as Exhibit A, such amendment shall be
effective and the Holders shall have received a copy of an executed counterpart
thereof.

3.3. Amendment Fee. Each Holder shall have received payment of an amendment fee
equal to 0.20% of the principal amount of the outstanding Notes held by such
Holder.

3.4. Expenses. The Company shall have paid all fees and expenses of special
counsel to the Holders.

 

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4. MISCELLANEOUS

4.1. Ratification. The Note Agreement, as amended hereby, shall remain in full
force and effect and is ratified, approved and confirmed in all respects.

4.2. Reference to and Effect on the Note Agreement. Upon the final effectiveness
of this Amendment, each reference in the Note Agreement and in other documents
describing or referencing the Note Agreement to the “Agreement,” “Note
Agreement,” “hereunder,” “hereof,” “herein,” or words of like import referring
to the Note Agreement, shall mean and be a reference to the Note Agreement, as
amended hereby.

4.3. Binding Effect. This Amendment shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto.

4.4. Governing Law. This Amendment shall be governed by and construed in
accordance with Illinois law, excluding choice-of-law principles of the law of
such State that would require the application of the laws of a jurisdiction
other than such State.

4.5. Counterparts. This Amendment may be executed in any number of counterparts,
each executed counterpart constituting an original, but altogether only one
instrument.

 

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IN WITNESS WHEREOF, the Company and the Holders have caused this Amendment to be
executed and delivered by their respective officer or officers thereunto duly
authorized.

 

SYPRIS SOLUTIONS, INC.

By:

 

/s/ Anthony C. Allen

Name:

 

Anthony C. Allen

Title:

 

Vice President & Treasurer

 

S-1

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HOLDERS:

 

THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA

By:

 

/s/ Ellen I. Whittaker

Name:

 

Ellen I. Whittaker

Title:

 

Director Fixed Income Investments

 

S-2

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CONNECTICUT GENERAL LIFE INSURANCE COMPANY

By:

 

CIGNA Investments, Inc. (authorized agent)

 

By:

 

/s/ David M. Case

 

Name:

 

David M. Case

 

Title:

 

Managing Director

LIFE INSURANCE COMPANY OF NORTH AMERICA

By:

 

CIGNA Investments, Inc. (authorized agent)

 

By:

 

/s/ David M. Case

 

Name:

 

David M. Case

 

Title:

 

Managing Director

 

S-3

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SCHEDULE I

 

     Principal Amount

Holder

   Series A    Series B    Series C

The Guardian Life Insurance Company of America

         $ 20,000,000

Connecticut General Life Insurance Company

      $ 12,000,000   

Life Insurance Company of North America

        8,000,000   

Jefferson Pilot Financial Insurance Company

   $ 6,000,000      

Jefferson-Pilot Life Insurance Company

        5,000,000   

Jefferson Pilot LifeAmerica Insurance Company

     1,500,000      2,500,000   

 

Schedule I

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EXHIBIT A

Amendment to Credit Agreement

 

Exhibit A