2. Amendment of the Agreement. The definition of the term “EBITDA” appearingin Paragraph 1.1 of the Agreement is hereby amended and restated to read as follows:     “EBITDA” means, with respect to any fiscal period of Borrower,Borrower’s (a) net income for such period, plus (b) the aggregate amountsdeducted in determining such net income in respect of (i) Interest Expense, (ii)federal and state income taxes, (iii) depreciation, (iv) amortization and (v)extraordinary losses minus (c) extraordinary gains, each determined on aconsolidated basis and in accordance with GAAP consistently applied.Notwithstanding the foregoing, solely for purposes of calculating EBITDA during theBorrower’s fiscal year ended April 30, 2008, the Borrower may add back the amount ofnon-cash charges taken against earnings during such period as a result of theimpairment of goodwill; provided, however, that such add-back shall not exceed$9,300,000 in the aggregate at any time.     3. Representations and Warranties. The representations and warranties set forth inthe Agreement and all covenants set forth in the Agreement shall be deemed remade and affirmed asof the date hereof by Borrower, except any and all references to the Agreement in suchrepresentations, warranties and covenants shall be deemed to include this Amendment. Borrowerhereby expressly reaffirms, reinstates and assumes (on the same basis as set forth in theAgreement) all of the obligations and liabilities to the Agent as set forth in the Agreement andthis Amendment, and agrees to be bound by and abide by and operate and perform under and pursuantto and comply fully with all of the terms, conditions, provisions, agreements, representations,undertakings, warranties, guarantees, indemnities, grants of security interest and covenantscontained in the Agreement. Borrower also acknowledges and reaffirms that the Agreement, asamended by this Amendment, is in full force and effect and that no defenses exist as of the date ofthis Amendment to Borrower’s full compliance with the Agreement, as amended by this Amendment.Borrower hereby acknowledges that the security interests granted in the Agreement constitute avalid continuing first Lien in and to the Collateral. Except as set forth herein, no Event ofDefault has occurred and is continuing and no event has occurred and is continuing which, with thelapse of time, the giving of notice, or both, would constitute such an Event of Default under theAgreement.     4. Delivery of Documents/Information. Prior to entering into this Amendment, Agentshall have received from the Borrower the following fully executed documents, in form and substancesatisfactory to Agent and each Bank, and all of the transactions contemplated by each such documentshall have been consummated or each condition contemplated by each such document shall have beensatisfied:          (a) this Amendment; and          (b) such other document and certificates as Agent may request.
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     5. Reference to the Effect on the Agreement.          (a) References. Upon the date of this Amendment and on and after the date hereof,each reference in the Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words oflike import shall mean and be a reference to the Agreement, as amended hereby.          (b) Ratification. As specifically modified above, the Agreement and all otherdocuments, instruments and agreements executed and/or delivered in connection therewith shallremain in full force and effect, and are hereby ratified and confirmed.     6. Representations and Warranties of the Borrower. Borrower hereby represents andwarrants to Agent and the Banks as of the date hereof as follows:          (a) The execution and delivery of this Amendment and the performance by Borrower of itsobligations hereunder are within Borrower’s powers and authority, have been duly authorized by allnecessary corporate action and do not and will not contravene or conflict with the Certificate ofIncorporation or By-laws of Borrower.          (b) The Agreement (as amended by this Amendment) and the Other Agreements constitute legal,valid and binding obligations enforceable in accordance with their terms by Agent and the Banksagainst Borrower, and Borrower expressly reaffirms each of its obligations under the Agreement (asamended by this Amendment) and each of the Other Agreements, including, without limitation,Borrower’s Liabilities. Borrower further expressly acknowledges and agrees that Agent has a valid,duly perfected, first priority and fully enforceable security interest in and lien against eachitem of Collateral except as otherwise set forth in the Agreement. Borrower agrees that it shallnot dispute the validity or enforceability of the Agreement (as it was stated before and after thisAmendment) or any of the Other Agreements or any of its respective obligations thereunder, or thevalidity, priority, enforceability or extent of Agent’s security interest in or lien against anyitem of Collateral, in any judicial, administrative or other proceeding;          (c) No consent, order, qualification, validation, license, approval or authorization of, orfiling, recording, registration or declaration with, or other action in respect of, anygovernmental body, authority, bureau or agency or other Person is required in connection with theexecution, delivery or performance of, or the legality, validity, binding effect or enforceabilityof, this Amendment; and          (d) The execution, delivery and performance of this Amendment by Borrower does not and willnot violate any law, governmental regulation, judgment, order or decree applicable to Borrower anddoes not and will not violate the provisions of, or constitute a default or any event of defaultunder, or result in the creation of any security interest or lien upon any property of Borrowerpursuant to, any indenture, mortgage, instrument, contract, agreement or other undertaking to whichBorrower is a party or is subject or by which Borrower or any of its real or personal property maybe bound.
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     7. Releases; Indemnities.          (a) In further consideration of the Banks’ execution of this Amendment, Borrower, and onbehalf of its successors, assigns, subsidiaries and Affiliates, hereby forever releases Agent andeach Bank and their respective successors, assigns, parents, subsidiaries, Affiliates, officers,employees directors, agents and attorneys (collectively, the “Releasees”) from any and all debts,claims, demands, liabilities, responsibilities, disputes, causes, damages, actions and causes ofaction (whether at law or in equity) and obligations of every nature whatsoever, whether liquidatedor unliquidated, known or unknown, matured or unmatured, fixed or contingent (collectively,“Claims”), that Borrower may have against the Releasees which arise from or relate to any actionswhich the Releasees may have taken or omitted to takeprior to the date this Amendment was executed, including without limitation with respect toBorrower’s Liabilities, any Collateral, the Agreement, any Other Agreement and any third partiesliable in whole or in part for Borrower’s Liabilities. This provision shall survive and continuein full force and effect whether or not Borrower shall satisfy all other provisions of thisAmendment, the Other Agreements or the Agreement, including payment in full of Borrower’sLiabilities.          (b) Borrower hereby agrees that its obligation to indemnify and hold the Releasees harmless asset forth in Paragraph 7(a) of this Amendment shall include an obligation to indemnify andhold the Releasees harmless with respect to any and all liabilities, obligations, losses,penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or naturewhatsoever incurred by the Releasees, or any of them, whether direct, indirect or consequential, asa result of or arising from or relating to any proceeding by, or on behalf of, any Person,including, without limitation, officers, directors, agents, trustees, creditors, partners orshareholders of Borrower, whether threatened or initiated, asserting any claim for legal orequitable remedy under any statute, regulation or common law principle arising from or inconnection with the negotiation, preparation, execution, delivery, performance, administration andenforcement of this Amendment or any other document executed in connection herewith. The foregoingindemnity shall survive the payment in full of the Borrower’s Liabilities and the termination ofthis Amendment, the Agreement and the Other Agreements.     8. Fees and Expenses. Borrower agrees to pay on demand all costs, fees and expensesof or incurred by the Agent in connection with the evaluation, negotiation, preparation, executionand delivery of this Amendment and the other instruments and documents executed and delivered inconnection with the transactions described herein (including the filing or recording thereof),including, but not limited to, the reasonable fees and expenses of counsel for the Agent, searchfees and taxes payable in connection with this Amendment and any future amendments to theAgreement.     9. Counterparts. This Amendment may be executed in two or more counterparts, each ofwhich shall be deemed an original, and all of which together shall constitute one and the sameinstrument.**[SIGNATURE PAGE FOLLOWS]**
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***(Sixteenth Amendment to Loan and Security Agreement Signature Page)***     IN WITNESS WHEREOF, the parties hereto have duly executed this Sixteenth Amendment to Loan andSecurity Agreement as of the date first above written.      SIGMATRON INTERNATIONAL, INC.