FOURTH AMENDMENT TO LOAN AGREEMENT
EXHIBIT
10.1
FOURTH
AMENDMENT TO LOAN AGREEMENT
This
Fourth Amendment to Loan Agreement (this “Amendment”) is entered into as of
September 12, 2006, between IEC
ELECTRONICS CORP.,
a
corporation organized and existing pursuant to the laws of the State of
Delaware, with its principal executive office and place of business at 000
Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000 (the “Borrower”) and KELTIC
FINANCIAL PARTNERS, LP,
a
Delaware limited partnership, with a place of business at 000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxx X-000, Xxx, Xxx Xxxx 00000 (the “Lender”) to amend a Loan
Agreement, dated January 14, 2003, between the Borrower and the Lender, as
amended by First Amendment to Loan Agreement, dated March 23, 2004, a Second
Amendment to Loan Agreement, dated as of January 7, 2005, and a Third Amendment
to Loan Agreement, dated September 30, 2005, each between the Borrower and
the
Lender (the “Loan Agreement”).
BACKGROUND
The
Borrower has requested that the Lender increase the maximum amount available
under the Loan Agreement to $5,535,000, extend the maturity date of the Loan
Agreement and modify certain other terms contained in the Loan Agreement, and
the Lender is willing to do so, subject to the terms hereafter set
forth.
Now,
therefore, for valuable consideration, the receipt and sufficiency of which
is
hereby acknowledged, the Borrower and the Lender agree as follows:
1. Recitals.
The
above recitals are true and correct in all respects and form an integral part
of
this Amendment.
2. Definitions.
Unless
otherwise defined in this Amendment, all capitalized terms will have the
meanings given them in the Loan Agreement.
3. Amendments.
The
Borrower and the Lender agree to amend the Loan Agreement as
follows:
(a) The
current definition of “Eligible Receivables” is amended by deleting subclause
(g) and replacing it with the following:
(g)
the
total unpaid Receivables of the Account Debtor and its Affiliates exceeds 15%
of
the net amount of all Receivables, to the extent of such excess; provided that
any such Receivable in excess of 15% shall be considered an Eligible Receivable
so long as (i) Borrower shall monitor closely the related Account Debtor’s
financial condition, (ii) Borrower shall provide Lender periodic updates with
respect to such Account Debtor’s financial condition and (iii) Borrower shall
provide Lender with such further financial information related to such Account
Debtor as the Lender may request. Should there be any material deterioration
in
any such Account Debtor’s financial condition or any required financial
information shall not be available, Lender may (x) apply strictly the 15%
limitation, establish a lower percentage or exclude all Receivables of such
Account Debtor, (y) establish reserves or (z) require Borrower to take other
steps to mitigate collection risks. The foregoing conditions do not limit any
other provision of this Agreement providing a basis for determining that a
Receivable is an ineligible Receivable or otherwise providing Lender
rights.
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(b) The
current definition of “Loan Interest Rate” in the Loan Agreement is deleted and
replaced with the following:
“Loan
Interest Rate”
shall
mean, the per annum interest rate equal to the prime rate published in the
“Money Rates” column of The Wall Street Journal from time to time or, in the
event that The Wall Street Journal is not available at any time, such rate
published in another publication as determined by Lender, plus 100 basis
points.
(c) The
current definition of “Maximum Facility” in the Loan Agreement is deleted and
replaced with the following:
“Maximum
Facility”
shall
mean $5,535,000.00
(d) The
current definition of “Termination Date” in the Loan Agreement is deleted and
replaced with the following:
“Termination
Date”
shall
mean the earlier of (a) September 12, 2009 or (b) the date on which Lender
terminates this Agreement pursuant to Section 12.1 of this
Agreement.
(e) Advances
of the Revolving Loan.
Section
2.1 of the Loan Agreement is amended by deleting it in its entirety and
replacing it with the following:
“Subject
to the terms and conditions of this Agreement and relying upon the
representations and warranties set forth in this Agreement, for so long as
no
Default or Event of Default exists, Lender shall lend to Borrower on its
request, a sum (“Borrowing Capacity”) equal to the lesser of:
(a)
the
Maximum Facility reduced by the outstanding principal balance of the Real Estate
Loan; or
(b)
the
sum of (i) up 85% of the net face amount of Borrower’s Eligible Receivables;
(ii) the lesser of $1,500,000 or 35% of the Value of Borrower’s Eligible
Inventory, but the amount computed under this clause (ii) shall in no event
exceed 40% of the sum of the amounts computed pursuant to clauses (i) and (ii)
of this Section 2.1(b); and (iii) the amount of any permitted Overadvances
as
described in the next paragraph. Value shall mean the lesser of cost or the
fair
market value of such Inventory.
In
addition to the amounts computed in (b)(i) and (ii) above, Lender will permit
Borrower to receive additional Advances in an aggregate principal amount
outstanding at any one time not to exceed the lesser of (A) $1,000,000 or (B)
an
amount that would not cause the outstanding principal of Advances to exceed
the
Maximum Facility reduced by the then outstanding principal balance of the Real
Estate Loan (each, an “Overadvance” and collectively “Overadvances”) provided
that (i) all outstanding Overadvances shall be repaid within 60 days of the
making of the initial Overadvance occurring during any Overadvance Period,
(ii)
no Overadvances shall be outstanding for a period of at least 30 days between
each Overadvance Period and (iii) no Default or Event of Default shall have
occurred and be continuing. “Overadvance Period” means each period of no more
than 60 days during which Overadvances are outstanding.
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Within
the limits of the Borrowing Capacity, and subject to the limitations set forth
in this Agreement, Borrower may borrow, repay and reborrow
Advances.”
(f) Term
Loan.
Section
2.2 of the Loan Agreement is amended by deleting the last two sentences thereof
and replacing them with the following:
“The
Lender shall also make a loan in the amount of $535,000 to the Borrower as
of
September 12, 2006 (the “Real Estate Loan”), which shall be payable by Borrower
in accordance with the terms of a replacement term note attached hereto as
Exhibit
B-2.”
(g) Interest
on Loans.
Section
3.1 of the Loan Agreement is amended by deleting it in its entirety and
replacing it with the following:
“Borrower
shall pay interest monthly, in arrears, on the first day of each month, on
the
unpaid principal amount of the Revolving Loan, and on the principal balance
of
the Real Estate Loan, at a fluctuating rate which is equal to the Loan Interest
Rate, except all Overadvances shall accrue interest at a rate per annum equal
to
the Loan Interest Rate, plus 100 basis points (the “Overadvance Loan Interest
Rate”). Notwithstanding the foregoing, on and after the occurrence of a Default
or Event of Default, Borrower shall pay interest on the Loans at a rate which
is
3.5% per annum above the Loan Interest Rate or the Overadvance Loan Interest
Rate (as the case may be); provided, however, in no event shall any interest
to
be paid under this Agreement or under any Loan Document exceed the maximum
rate
permitted by law.
(h) Liquidated
Damages.
Section
3.6 of the Loan Agreement is amended by deleting it in its entirety and
replacing it with the following:
“If
Borrower prepays the principal of the Revolving Loan to Lender (other than
from
time to time from working capital) or if the outstanding Obligations become
due
prior September 12, 2009 because of a payment default or other material default
of Borrower, Borrower shall pay to Lender at the time of such prepayment,
liquidated damages in an amount equal to: (a) two percent (2%) of the Maximum
Facility if the prepayment is made prior to September 12, 2007 or (b) one
percent (1%) of the Maximum Facility if the prepayment is made on or after
September 12, 2007 but before September 12, 2008 and (c) one half of one percent
(1/2%) of the Maximum Facility if the repayment occurs on or after September
12,
2008. Borrower shall give Lender at least ninety (90) days’ advance written
notice (“Termination Notice”) of Borrower’s election to terminate the
availability of the Revolving Loans under this Agreement prior to September
12,
2009. The Termination Notice shall be irrevocable and shall specify the
effective date of such termination, which effective date shall not be less
than
ninety (90) days after the giving of the Termination Notice and shall be in
no
event later than September 12, 2009. All the Obligations shall become due and
payable on such effective date specified in the Termination Notice, and after
such effective date, Lender shall have no obligation to make any Advance(s)
to
Borrower. No liquidated damages will be payable if (x) Borrower establishes
to
the reasonable satisfaction of Lender that Borrower requires an increase to
the
Maximum Facility to support internal growth or acquisitions, (y) Lender does
not
agree to provide the required increase in the Maximum Facility (whether or
not
to provide such increase being in the sole and absolute discretion of Lender),
and (z) Borrower finds another lender to provide such increased facility and
prepays the Revolving Loan and the Real Estate Loan from the proceeds of such
increased facility.”
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(i) Facility
Fee.
Section
3.3 of the Loan Agreement is amended by deleting it in its entirety and
replacing it with the following:
“Borrower
shall pay to Lender monthly, in arrears, on the first day of each month a
facility fee in an amount equal to .40% per annum of the Total
Facility.
If at
any time the aggregate outstanding principal balance of the Revolving Loan
(including any Overadvances) exceeds $5,000,000.00, the facility fee will be
increased for the remainder of the year and for each year thereafter so that
it
shall equal .40% per annum of the Maximum Facility. The facility fee is deemed
earned in full for each year on the date hereof and on each anniversary hereof,
except if the facility fee is so increased during a year, the increase
applicable to the remainder of the year is deemed earned in full as of the
date
of such increase.”
(j) Collateral
Management Fee.
Section
3.4 of the Loan Agreement is amended by deleting it in its entirety and
replacing it with the following:
“Borrower
shall pay to Lender monthly, in arrears, on the first day of each month, a
collateral management fee in an amount of $1,000.”
(k) Field
Examination Fees. Section
3.5 of the Loan Agreement is amended by deleting it in its entirety and
replacing it with the following:
“Borrower
shall promptly reimburse Lender for all costs and expenses associated with
periodic field examinations and fixed asset appraisals performed by Lender
and
its agents, as deemed necessary by Lender; provided, however, Lender shall
perform such examinations and appraisal no more than once per year and at a
cost
not to exceed $9,000 per year, in each case so long as an Event of Default
has
not occurred.”
(l) Exhibits.
Exhibit
A of the Loan Agreement is replaced by the Replacement Revolving Note in the
form of Exhibit A attached to this Amendment. Exhibit B-2 of the Loan Agreement
is replaced by the Replacement Term Note in the form of Exhibit B-2 attached
to
this Amendment.
4. No
Claims.
The
Borrower acknowledges that it does not have any claim, counterclaim, cause
of
action, defense, recoupment or right of offset (each a “Claim” and collectively
“Claims”) relating in any way to (i) this Amendment, the Obligations or the Loan
Documents , (ii) the enforceability of the Loan Documents, (iii) the validity
or
enforceability of any of the Loan Documents or (iv) any act, claim or statement
of fact that would or might lessen, eliminate or modify any of the Lender’s
rights or remedies pursuant to any of the Loan Documents or in connection with
any of the Collateral; provided, however, that if notwithstanding the foregoing,
the Borrower shall purport to have any such Claim, the Borrower hereby
irrevocably and forever waives such Claim.
5. No
Waivers.
Nothing
in this Amendment shall constitute a waiver by the Lender of any of default
or
event of default or any of the Lender’s rights arising as a result of the such
default or event of default or other rights or remedies arising pursuant to
any
of the Loan Documents or in connection with any of the Obligations or the
Collateral and the rights and remedies of the Lender shall remain for all
purposes in full force and effect. Except as expressly amended by this
Amendment, the Loan Agreement and the other Loan Documents remain in full force
and effect.
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6. Ratification.
The
Borrower ratifies and reaffirms the Loan Agreement, as amended hereby, and
the
other Loan Documents, and agrees that the Collateral secures the Obligations,
including, without limitation, those arising under the Loan Agreement, as
amended hereby.
7. Miscellaneous.
This
Amendment is governed by and is to be construed in accordance with the internal
laws of the State of New York.
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