Exhibit 10.29
SUNTRUST BANK LOAN PROGRAM
BORROWER
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), dated January 13,
2003, is made by and between IEC Electronics Corp., whose principal place of
business is at 000 Xxxxxx Xxxxxx, Xxxxxx, XX 00000 (herein called the
"Borrower") and SUNTRUST BANK, a Georgia banking corporation with offices at 000
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, Attn: Mail Center 1923 (herein called
the "Bank").
WITNESSETH:
WHEREAS. the Borrower desires to establish a loan for business purposes;
WHEREAS, in order to finance the 1oan for business purposes, the Borrower
has requested that the Bank agree to extend to the Borrower a loan in the
principal amount of $2,300,000.00. and the Bank is willing to make such loan
subject to the terms and conditions hereof; and
NOW, THEREFORE, for and in consideration of the premises and agreements
contained herein and other good and valuable consideration, the sufficiency of
which is hereby Acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Terms. The Bank agree: to make a loan to the Borrower on January
13,2003, (the "Closing Date") in the principal amount of $2,200,000.00 (the
"Loan"), which Loan shall be evidenced by a promissory note, dated as of the
Closing Date, executed and delivered by the Borrower, payable to the order of
the Bank, in substantially the form of Exhibit A attached hereto (the "Note")
and shall be subject to all terms and conditions set forth in the Note, all of
which terms and conditions are incorporated herein by reference.
2. Collateral. To secure the payment and performance of Term Loan
Commitment, the Loan, the Note, and any other indebtedness, obligation or
liability of the Borrower to the Bank, now or hereafter existing or arising,
including, without limitation, all increases and extensions of Term Loan
Commitment, the Loan and the Note, (collectively, the "Obligations"), the
Borrower grants to the Bank a security interest in all of its right, title and
interest in and to its accounts, chattel paper, documents, equipment, general
intangibles, inventory and instruments, including, 1, without limitation, all
proceeds, accessions, benefits, substitutions and replacements of and 10 any of
the foregoing (as such terms are defined in Article 9 of the Uniform Commercial
Code as in effect in the State of Georgia, collectivity. the "Collateral"). The
Borrower hereby appoints the Bank as its attorney-in-fact to do all acts and
things which the Bank may deem necessary or desirable to perfect and continue to
perfect the security interest created by this Agreement and to protect the
Collateral. The security interests created by this Agreement are intended to
attach (i) to existing Collateral when the Borrower signs this Agreement, and
(ii) to Collateral subsequently acquired by the Borrower, immediately upon the
Borrower acquiring any rights in such Collateral. The parties do not intend to
postpone the attachment of any security interest Created by this Agreement
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3. Representations. The Borrower represents and warrants that:
(i) it owns the Collateral free and clear of all liens and security
interests except the security interest granted to Keltic Financial Partners LP
and to the Bank.
(ii) this Agreement and the Notes have been duly authorized, executed and
delivered by the Borrower and constitute the legal, valid and binding agreements
of the Borrower enforceable against the Borrower in accordance with their
respective terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles
relating to or limiting creditors' right generally,
(iii) the execution, delivery and performance by the Borrower of this
Agreement and Notes. (A) have been duly authorized by all requisite corporate
action and, if required, shareholder action, (B) does not require the consent or
approval of any governmental authority. and (C) will not (1) violate (a) any
provision of law, statute, rule or regulation or the Borrower's articles of
incorporation or any other organizational document, (b) any order of any court
or any rule, regulation or order of any other agency or government binding upon
the Borrower, or (c) any provision of any indenture, agreement or other
instrument to which the Borrower is a party or by which the Borrower's
properties or assets; are or may be bound! or (2) result in a breach or
constitute (alone or with due notice or lapse of time or both) a default under
any indenture, agreement or other instrument referred to in clause
3(iii)(C)(1)(c) above,
(iv) to default or Event of Default has occurred which is continuing,
(v) the Borrower has available on the Closing Dare a minimum unused
committed credit facility of $1,000,000.00 from Keltic Financial Partners LP,
2nd
(vi) no part of the proceeds of the Loan will be used for "purchasing" or
"carrying" any "margin stock within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the Fcdera1 Reserve
System as now and from time to time hereafter in effect or for any purpose which
violates the provisions of the regulations of such Board of Governors. If
requested by the Bank, the Borrower will furnish to the Bank a statement to the
foregoing effect in conformity with the requirements of FR Form U-1 referred to
in said Regulation U.
4. Covenants. So long as the Obligations are outstanding) the Borrower
covenants and agrees that
(a) it will promptly notify the Bank in writing of any change in its
address from that set forth below or any change in its name or corporate
organization;
(b) it will pay and perform all of the: Obligations according to their
terms;
(c) it will defend its title to the Collateral against all persons and
against all claims and demands whatsoever;
(d) it will not, without the Bank's prior written consent, sell) assign,
lease, pledge, transfer or dispose of any of the Collateral;
(e) it will furnish to the Bank:
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(1) within 20 days after the end of each calendar quarter an unaudited
balance sheet and income statement accurately reflecting the financial
transactions and status of the Borrower as of the end of such quarter and on a
year-to-date basis, on a consolidated basis, prepared in accordance with
generally accepted accounting procedures;
(1) within 90 days after the end of each fiscal year an audited balance
sheet and income statement of the Borrower as of the end of such year, compiled
by such firm of independent public accountants as may be designated by the
Borrower and be satisfactory to the Bank as prepared in accordance with
generally accepted accounting procedures;
(2) concurrently with the delivery of the financial statements referred to
in Sections 4(e)(i) and 4(e)(ii), a certificate of the chief executive officer,
the chairman of the board, the president, the chief financial officer, the chief
accounting officer, any executive Or senior vice president or the treasurer of
the Borrower substantially in the form of Exhibit C; and
(iv) within 60 days after the end of each fiscal year, a business plan
(including balance sheet, income statement and cash flow statement) of the
Borrower for the current fiscal year.
(1) it shall maintain and operate its business in such a manner to insure
that it is in compliance with Section S and Section 9 of that certain Loan
Agreemet1t dated as of 12/28/02 by and between Borrower and IEC Electronics
Corp. and Keltic financial Partners LP.
5. Event of Default: An. "Event of Default" shall occur if: (i) the
Borrower fails to pay when due any amount owing hereunder within five (5)
business days after such amount becomes due. (ii) any representation or warranty
made or deemed made by the Borrower herein or which is Contained in any
certificate, document or financial or other statement furnished by it at any
time finder or in connection with this Agreement shall be false or misleading in
any material respect as of the date made or deemed to have been made, (iii) the
Borrower fails to comply with the covenants set forth in Section 4(c), 4(f),
(iv) the Borrower fails to perform or observe any other covenant made by the
Borrower pursuant to this Agreement and which failure is not cured within thirty
(30) days after the earlier of (i) the Borrower's actual knowledge thereof or
(ii) I notice to the Borrower, (v) that certain supply agreement by and between
Borrower and Arrow Electronics Inc. (the "Supplier") (the "Supply Agreement") is
terminated regardless of whether such termination occurs "for cause" or "without
cause" as defined therein or the occurrence of a material default occurs
thereunder, (vi) the Borrower shall make or take any action to cause the
appointment of a receiver of all or any part of the Borrower's property, an
assignment for the benefit of creditors of the Borrower, a calling of a meeting
of creditors of the Borrower, the commencement of any proceeding under any
bankruptcy, insolvency or debtor relief laws by or against the Borrower or any
guarantor or surety for the Borrower, (vii) the Borrower dies, dissolves,
terminates its existence, becomes insolvent or its business fails, (viii) the
Borrower is a corporation or partnership and the persons owning the voting
control of the Borrower on the date hereof cease to own such voting control,
(ix) the value of the Collateral is reduced, due- to the fault of the Borrower,
in a manner that imperils satisfaction of the Borrower's obligations under this
Agreement Or the Note or (x) any lien, levy, attachment or assessment is placed
on any Collateral, and the claim is not fully discharged and satisfied within 30
days of such filing of recordation. (xi) (i) the Borrower is in default in the
payment of any principal of or premium or make-whole amount or interest on any
debt of the Borrower that is outstanding in an aggregate principal amount of at
least $100,000.00 beyond any period of grace provided with respect thereto, or
the Borrower is in default in the performance of or compliance with any term of
any evidence of any debt of the Borrower in an aggregate outstanding principal
amount of at least $100,000.00 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 (xii) the
Borrower fails to pay Arrow Electronics, Inc.'s invoices, so that the average
days to pay from the date of invoice. is not greater than 45 days from 1/2/03 to
1/2/06, measured at the close of each fiscal month by Arrow Electronics, Inc.
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6. Remedies Upon Event of Default. If an Event of Default (other than an
Event of Default described in Section 5(vi) above) shall occur and be continuing
the obligation of the Bank to make additional advances hereunder shall
terminate, and the Bank may declare the Note, with secured interest thereon, and
all obligations of the Borrower under this Agreement to be immediately due and
payable. If an Event of Default described in Section 5(vi) above shall occur and
be continuing the obligation of the Bank to make an additional advance hereunder
shall terminate automatically, and the Note and all accrued interest hereon, and
all other obligations of the Borrower under this Agreement shall automatically
become immediately due: and payable. In addition, if an Event of Default has
occurred and is continuing; the Bank (i) may exercise any other rights or
remedies available to it under this Agreement, the Note. any other document
executed by the Borrower in connection with this Agreement Or as otherwise
provided by law, (ii) shall have all of the rights and remedies with respect to
the Collateral of a secured party under Article 9 of the Uniform Commercial Code
as in effect in the State of Georgia (the "UCC") (whether or not the UCC is in
effect in the jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights and remedies hereunder may
be asserted and (iii) may, upon 10 Business Days' prior notice to the Borrower
of the time and place, with respect to the Collateral or any part thereof which
shall then be or shall thereafter come into the possession, custody or control
of the Bank, sell, lease, assign or otherwise dispose of all or any part of such
Collateral, at such place or places as the Bank deems best, and for cash or for
credit or for future delivery (without thereby assuming any credit risk), at
public or private sales; without demand of performance or notice of intention to
effect any such disposition or of the time or place thereof (except such notice
as is required above or by applicable statute and cannot be waived).
7. Release of Information. The Borrower authorizes the Bank to release such
information about the Borrower and the Loan, the Note, or the Collateral as the
Bank deems necessary or appropriate, including, without limitation, any
financial information regarding the Borrower as the Bank may possess. The Bank
may assign the Loan, the Note and the Collateral therefor to any other person,
at any time, whether or not there has occurred an Event Default.
8. Miscellaneous. No amendment or waiver of any provision of this Agreement
or the Note shall be effective unless the same shall be in writing and signed by
the Bank, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. THIS AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF GEORGIA. In case any provision in
or obligation under this Agreement or the Note shall be invalid, illegal or
unenforceable, in whole or in part, in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby. This Agreement shall bind and inure to the benefit
of the parties hereto and their respective legal representatives, successors and
assigns; provided, however, that the Borrower may not assign its rights or
Obligations under this Agreement or the Note. The Borrower acknowledges that the
Bank may assign its rights and obligations under this Agreement and the Note to
any other party, without notice to or consent from the Borrower. The rights and
remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which the Bank or the holder of the Note would otherwise
have, This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
9. Notices. All notices and communications provided for hereunder shall be
in writing, delivered by hand or sent by first-class, registered or certified
mail, postage prepaid, to the addresses set forth on the signature pages hereto.
Either party may change its address for notice purposes by giving written notice
to the other party in the manner specified above. Any notice given by U.S. mail
shall be deemed received on the third business day following deposit in the U.S.
mail addressed as set forth above.
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10. Relations with Arrow Electronics, Inc. and its Affiliates. The Borrower
understands and acknowledges that in making the loan evidenced by this Agreement
and the Note to Borrower, the Bank is relying on certain agreements with, and
the credit support of, Arrow Electronics, Inc. (the "Sponsor") and its
affiliates (the "Related Agreements"). The Sponsor or one of its affiliates has
induced the Bank to make this loan in connection therewith. The Bank may release
to the Sponsor and its affiliates such information about the Borrower and the
loan evidenced hereby as the Bank deems necessary or appropriate, including,
without limitation, any financial information regarding the Borrower as the Bank
may possess. The Bank may also condition its agreement to any waiver,
modification or amendment with respect to this Agreement or the Note on
obtaining the Sponsor's or its affiliates' prior written consent Upon the
occurrence of any Event of Default hereunder or under the Note or event which
with notice or lapse of lime or both may become an Event of Default, the Bank
may, without incurring any liability to the Borrower, notify the Sponsor or its
affiliates of such Event of Default before notifying you. The Bank shall not
have any liability to the Borrower as a result of any action taken or not taken
by the Bank with respect to the loan evidenced by this Agreement and the Note on
the instructions of the Sponsor or its affiliates. The Bank may assign the Note
to the Sponsor or any other person, at any time, whether or not there has
occurred an Event of Default under this Agreement or the Note.
11. Closing Fee: Expenses of Loan Closing. The Borrower has agreed to pay a
closing fee to the Bank in the amount of 1.00% of the principal amount of the
Term Loan or $22,000.00 (the "Closing Fee") and a $300.00 loan fee to cover the
Bank's administrative costs in funding the loan. The Borrower agrees that the
closing fee is a valid administrative cost and not a charge for the use of
money. The Borrower agrees that the Bank may deduct such closing fee from the
proceeds hereof. In addition, the Borrower shall reimburse the Bank for any
out-of-pocket expenses incurred by the Bank in connection with the loan
evidenced hereby, including without limitation, any documentary stamp tax or
other taxes levied or charged in connection with this transaction, any taxes
assessed in connection with the filing of the Financing Statements and any
Uniform Commercial Code search or other related costs or expenses incurred by
the Bank.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the day and year first above written.
Address for Notices:
IEC Electronics Corp.
000 Xxxxxx Xxxxxx Xxxxxx, XX 00000
/s/W. Xxxxx Xxxxxxx
-------------------
W. Xxxxx Xxxxxxx Chairman
SunTrust Bank
000 Xxxxxxxxx Xx., X.X. Xxxxxxx. Xxxxxxx 00000
Attention: Center No. 1923
/s/SUNTRUST BANK
----------------
By:
Name:
Title:
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