Amendment No. 1 to Security Agreement between American Technical Ceramics (Florida), Inc. and Commerce Bank, N.A.

  EXHIBIT 10.26(I) AMENDMENT NO. 1 TO THE SECURITY AGREEMENT AMENDMENT NO. 1 entered into January 25, 2007 effective as of November 30, 2006 ("Amendment No. 1") to the Security Agreement dated as of November 30, 2004 by and between AMERICAN TECHNICAL CERAMICS (FLORIDA) INC., a Florida corporation ("Guarantor"), and COMMERCE BANK, N.A., a national banking association ("Lender"). W I T N E S S E T H: WHEREAS, as of November 30, 2004, AMERICAN TECHNICAL CERAMICS CORP., a Delaware corporation ("Borrower"), and Lender had entered into a certain loan agreement, as extended on or about November 30, 2005, as further extended by an Amendment No. 1 thereto entered into on the date hereof effective as of November 30, 2006, as same as may be further amended from time to time; WHEREAS, as of November 30, 2004, Guarantor executed and delivered to Lender its Surety Agreement ("Surety Agreement") and Security Agreement granting a general security interest in Accounts and Inventory ("Agreement") WHEREAS, Guarantor has requested that Lender release its general security agreement in Inventory and the Lender has agreed to do so, in the manner set forth below; provided however, that, among other things, Guarantor execute this Amendment No. 1. NOW, THEREFORE, in consideration of the mutual promises and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. Lender has agreed to release its security interest in Inventory. Therefore, Section 2. of the Agreement is hereby amended to read in its entirety as follows: SECTION 2. GRANT OF SECURITY INTERESTS. As security for the prompt payment in full and performance of all of Obligations, whether presently existing or hereafter arising, Guarantor hereby authorizes the Lender to file financing statements against and pledges and grants to Lender a first priority lien upon and security interest in the following assets of Guarantor (collectively, the "Collateral"): a. Accounts; and b. all Proceeds of any of the foregoing, including cash and non-cash proceeds as defined in the Code, and including (i) proceeds of any insurance, indemnity, warranty or guaranty 1  payable to Lender or Guarantor from time to time with respect to the Accounts, (2) payments in any form made or due an payable to Lender or Guarantor in connection with any requisition, confiscation, condemnation, seizure of forfeiture of any Account or any proceeds thereof, and (3) all other amounts paid or payable under or in connection with any Account . The security interest granted hereunder shall extend and attach to all Accounts and the proceeds thereof, which are owned by the Guarantor or in which the Guarantor has any interest whether held by the Guarantor or others for its account. The property described in subparagraphs above, together with all accessions, additions, replacements, substitutions, proceeds and products as aforesaid, is referred to collectively hereinafter as the "Collateral" and sometimes as "Pledged Property". Guarantor shall execute and deliver such financing statements and other documents (in form and substance reasonably satisfactory to Lender), and take such other actions, as Lender may reasonably request from time to time in order to create, perfect or continue the security interests provided for above under the UCC or other laws of the States of New York or Florida or under any other state or federal law. In addition, the Guarantor authorizes the Lender to complete and file financing statements covering the Collateral described above. 5. Lender shall execute, deliver and file UCC-3 Termination Statements and otherwise take such action as Guarantor may reasonably request in order to release Lender's Lien and security interest in and to Guarantor's Inventory. 6. The text of Section 3 (c) of the Agreement is hereby deleted in its entirety and replaced with the words "Intentionally Omitted." 7. Section 4 (c) of the Agreement is hereby amended in its entirety to read as follows: "(c) From time to time, as requested by Lender, deliver in form and content satisfactory to Lender an updated list of Guarantor's Accounts." 8. The text of Section 4 (g) of the Agreement is hereby deleted in its entirety and replaced with the words "Intentionally Omitted." 9. Guarantor represents and warrants to Lender that there are no offsets, defenses or counterclaims to the payment of the Obligations under the Surety Agreement, and to the continuing general security interest in the Collateral granted to Lender by Guarantor as security for payment of the Obligations, as fully described in the Surety Agreement and Agreement. 2  10. Except as modified herein, all other provisions of the Agreement and the Surety Agreement remain unmodified and are in full force and effect. 11. Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Agreement. 12. This Amendment No. 1, the Security Agreement and the Surety Agreement (for purposes herein, the "Loan Documents") and the rights and obligations of the parties hereunder or thereunder, as the case may be, will be construed and interpreted in accordance with the laws of the State of New York (the "Governing State") (excluding the laws applicable to conflicts or choice of law). IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 as of the day and year first above written. AMERICAN TECHNICAL CERAMICS (FLORIDA), INC. By: /S/ Andrew Perz ----------------------------- Andrew Perz Vice-President - Controller COMMERCE BANK, N.A. By: /S/ Richard Ohl ----------------------------- Richard Ohl Vice President 3