Exhibit 10.1
AMENDMENT NO. 8
TO
LOAN AND SECURITY AGREEMENT
Amendment No. 8 dated as of April 8, 2002 ("Amendment") to Loan
and Security Agreement originally dated as of December 28, 1999 and originally
among IEC ELECTRONICS CORP. ("IEC" or "Debtor") and IEC ELECTRONICS-EDINBURG,
TEXAS INC. ("IEC-Edinburg") and HSBC BANK USA, as Agent ("Agent") and HSBC BANK
USA ("HSBC Bank") and GENERAL ELECTRIC CAPITAL CORPORATION ("GE Capital") as
lenders (collectively, the "Lenders").
BACKGROUND
1. Debtor, Agent and Lenders entered into a Loan and Security Agreement
dated as of December 28, 1999 and Amendment Nos. 1, 2, 3, 4, 5, 6 and 7 thereto
dated as of March 30, 2000, December 1, 2000, April 24, 2001, December 21, 2001,
February 15, 2002, February 28, 2002 and March 15, 2002, respectively
(collectively, the "Agreement"). On or about January 27, 2000, IEC-Edinburg
merged into IEC leaving IEC as the sole Debtor under the Agreement. All
capitalized terms not otherwise defined herein shall have the meanings set forth
in the Agreement.
2. Debtor has requested that Agent and Lenders consider extending the
term of the Agreement through June 30, 2002 and has represented to Agent and the
Lenders that Debtor has undertaken efforts to cause certain asset sales to occur
in the immediate future, and is pursuing with third-party lenders a refinancing
of all of the indebtedness of Debtor under the Agreement ("Indebtedness"), and
that Debtor expects such efforts to result in the repayment in full of the
Indebtedness on or before June 30, 2002.
3. In response to Debtor's request and subject to all of the terms and
conditions set forth herein, the Agent and the Lenders are willing to make
certain amendments to the Agreement as set forth below on the conditions set
forth below.
NOW, THEREFORE, Debtor, the Agent and the Lenders for good and valuable
consideration, receipt of which is hereby acknowledged, and in contemplation of
the foregoing, hereby agree as follows:
A. Conditions. The amendments and waivers contained herein shall be
granted upon satisfaction of the following terms and conditions:
1. Debtor shall have executed, and shall have caused IEC Electronics,
S. de X.X. de C.V. ("IEC-Mexico") and IEC Electronics Foreign Sales Corporation
("IEC-FSC") to have executed, this Amendment to indicate their consent hereto,
and four executed duplicate originals of this Agreement shall have been
delivered to Agent.
2. Debtor's acknowledgement, evidenced by Debtor's signature on this
Amendment, that the Agent and the Lenders have advised Debtor: (a) of the
establishment by Agent of a reserve against Borrowing Capacity for Term Loan
Principal Payments, which reserve will commence on April 8, 2002 in the initial
amount of $45,000 and each Monday thereafter will be increased by $45,000, and
will be reduced on the date of, and by the amount of, each monthly principal
payment actually made on the Term Loan after the date hereof; and (b) that field
collateral examinations will hereafter be conducted by the Agent every sixty
days and the costs of such examinations will be an expense of the Debtor and
payable upon demand as provided in the Agreement.
3. Debtor's continuing agreement, evidenced by Debtor's signature on
this Amendment, that Debtor will: (i) continue to cooperate with Xxxxxxx &
Company, Inc. ("Xxxxxxx") so that Xxxxxxx may review Debtor's business and
business plans in order to report thereon to Agent's counsel and the Lenders;
(ii) permit Xxxxxxx to access Debtor's places of business and its books and
records in order to complete such review and report; (iii) reimburse the Agent
or its counsel, upon demand, for the cost and expenses of Xxxxxxx; and (iv)
promptly advise in writing, any professionals engaged by Debtor or its
Affiliates to advise Debtor or its Affiliates with respect to their business or
financial prospects, including, without limitation, Lincoln Partners LLC
(individually, an "Investment Banker" and collectively, the "Investment
Bankers"), that Debtor (a) consents to Agent and the Lenders communicating with
such Investment Bankers for the purpose of being advised by, and discussing
with, such Investment Bankers, the Investment Bankers' timeline, process,
recommendations and proposals for any asset or stock sales, or the refinancing
of Debtor's indebtedness, or for the recapitalization of Debtor or any
Affiliate, or any other plans for increasing Debtor's equity, reducing the
indebtedness of Debtor and its Affiliates, or otherwise improving the financial
condition or business of Debtor and its Affiliates, and (b) requests such
Investment Bankers to provide such information to the Agent and the Lenders, and
to also provide to Agent and the Lenders a copy of any contact or other reports
prepared by such Investment Bankers for Debtor when such reports are delivered
to Debtor.
Page 3 of 5
4. Debtor's agreement evidenced by Debtor's signature on this
Amendment, to pay to Agent for the account of the Lenders a $100,000 extension
fee, with such fee being earned upon execution of this Agreement by all parties,
and payable as follows:
$10,000 on each of April 15, 2002, May 15, 2002 and June 15, 2002;and
$70,000 on June 30, 2002;
provided, however, if Debtor causes all of the indebtedness of Debtor to the
Agent and the Lenders under the Agreement to be fully repaid on or before June
30, 2002, then Agent and the Lenders agree, as evidenced by their signatures on
this Amendment to waive the $70,000 payment due June 30, 2002.
5. Debtor's agreement evidenced by Debtor's signature on this
Amendment to pay by April 15, 2002 the following bills presented to Debtor by
Agent:
(a) Xxxxxxx and Company, Inc. ("Xxxxxxx") in connection with the
consulting work performed through March 31, 2002 by Xxxxxxx at
the request of counsel to the Agent;
(b) Counsel to the Agent in connection with the work performed
through April 2, 2002 by such counsel in connection with the
Agreement and in drafting Amendment 8; and
(c) Counsel to GE Capital in connection with the work performed
through March 31, 2002 by such counsel in connection with the
Agreement.
B. Amendments. Debtor, the Agent and the Lenders agree that upon Debtor's
satisfaction of, or agreement to, as appropriate, the conditions set forth in
Section A above, the Agreement and the Schedule are amended in the following
respects:
1. Item 18(g) of the Schedule to the Agreement is hereby deleted in
its entirety and replaced with the following new text:
"(g) Pricing Grid - Advances and Term Loan. The applicable rates of
interest to be charged during each time period listed below for each
Prime Rate Loan and Libor Loan made or outstanding hereunder as an
Advance or under the Term Note are listed below:
PRICING GRIDS
A. ADVANCES
Period Prime Rate Option Libor Rate Option
4/8/02 - 4/30/02 Prime Rate plus 2-1/4% None
5/1/02 - 5/31/02 Prime Rate plus 2-1/2% None
6/1/02 - 6/30/02 Prime Rate plus 2-3/4% None
B. TERM LOAN
Period Prime Rate Option Libor Rate Option
4/8/02 - 4/30/02 Prime Rate plus 2-3/4% None
5/1/02 - 5/31/02 Prime Rate plus 3% None
6/1/02 - 6/30/02 Prime Rate plus 3-1/4% None."
2. The last portion of Item 17 of the Schedule to the Agreement
regarding "Calculation of Ineligible Inventory and Receivables on a monthly
basis", is hereby deleted in its entirety and replaced with the following new
text:
"Calculation of Ineligible [X] Weekly within three
Inventory and Receivables Business Days from the
end of each week."
3. Item 32 of the Schedule to the Agreement is hereby deleted in its
entirety and replaced with the following new text:
"Initial Term: To expire on June 30, 2002
Renewal Term: NONE"
4. Debtor acknowledges that Debtor intends to refinance the Advances
and the Term Loans under the Agreement with one or more different lenders on or
before the expiration of the Initial Term as amended herein, and agrees that,
upon such payment of the Advances under the Agreement, the Term Notes of the
Debtor dated December 28, 1999 in favor of the Lenders become due and payable by
the terms thereof since such financing would not come from internally generated
funds in the ordinary course of business.
Page 4 of 5
D. Reaffirmations and Release.
1. The Agreement, except as specifically modified hereby, shall remain
in full force and effect and Debtor hereby reaffirms the Agreement,
as modified by this Amendment, and all collateral and other
documents executed and delivered to Agent and the Lenders in
connection with the Agreement.
2. IEC-Mexico and IEC-FSC, by their execution hereof, consent hereto
and hereby reaffirm the execution and delivery of their respective
Guaranties dated December 28, 1999 and each agrees that its
respective guaranty shall continue in full force and effect and
shall be applicable to all indebtedness, obligations and
liabilities of Debtor to Agent and the Lenders, including without
limitation, all indebtedness evidenced by or arising under the
Agreement, as modified by this Amendment.
3. By their execution hereof, each of Debtor, IEC-Mexico and IEC-FSC,
(each individually a "Releasor", and collectively, the
"Releasors"), for good and valuable consideration, and by these
presents does for itself, and its representatives, successors and
assigns, remise, release and forever discharge the Agent and the
Lenders in any and every capacity, their predecessors, successors,
assigns, directors, officers, shareholders, employees, attorneys,
advisors and agents (collectively, the "Releasees") of and from
all, and all manner of action and actions, cause and causes of
action, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments,
extents, executions, claims and demands whatsoever, in law or in
equity, which against such Releasees or any one or more of them,
any Releasor ever had, now has or which any Releasor or any of any
Releasor's representatives, suc or assigns hereafter can, shall or
may claim to have for or by reason of any cause, matter or thing
whatsoever, arising from the beginning of time to and through and
including the date hereof.
E. Other Provisions.
1. Debtor agrees to pay on demand by Agent all expenses of Agent and
Lenders including without limitation, fees and disbursements of
counsel for Agent and the Lenders, in connection with the
transactions contemplated by this Amendment, the negotiations for
and preparation of this Amendment and any other documents related
hereto, and the enforcement of the rights of Agent and the Lenders
under the Agreement as amended by this Amendment.
2. This Amendment shall be governed by and construed under the
internal laws of the State of New York, as the same may from time
to time be in effect, without regard to principles of conflicts of
law.
Agreed to as of the date first set forth above.
IEC ELECTRONICS CORP. HSBC BANK USA, as Agent
as Debtor
By:/s/ Xxxxxxx X. Xxxxx By:/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxx, Vice President Xxxxxxx X. Xxxxxx
and Chief Financial Officer First Vice President
GENERAL ELECTRIC CAPITAL HSBC BANK USA, as a Lender
CORPORATION, as a Lender
By:/s/ Xxxxxx X. Xxxxxxxx By:/s/ Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxx
Duly Authorized Signatory First Vice President
CONSENTED TO AND AGREED AS OF THIS 8th DAY OF APRIL, 2002.
IEC ELECTRONICOS, S. de X.X. de C.V. IEC ELECTRONICS FOREIGN SALES
as Guarantor CORPORATION, as Guarantor
By:/s/ Xxxxxxx X. Xxxxx By:/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, Director Xxxxxxx X. Xxxxx, Vice President
and Chief Financial Officer
Page 5 of 5
BFLO Doc. No. 1185199.3
