EXHIBIT 10.1
AMENDMENT NO. 7
TO
LOAN AND SECURITY AGREEMENT
Amendment No. 7 dated as of March 15, 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 and 6 thereto
dated as of March 30, 2000, December 1, 2000, April 24, 2001, December 21, 2001,
February 15, 2002 and February 28, 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 April 8, 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 continuing agreement, evidenced by Debtor's signature on
this Amendment, that Debtor will deliver to the Agent and the Lenders:
(a) A weekly 6-week rolling cash flow forecast and variance
analysis report covering the business of Debtor and its
Affiliates, such report to be in form and context satisfactory
to the Agent and the Lenders, and to be delivered not later
than one Business Day after the end of each calendar week
while this Agreement is in effect;
(b) A weekly analysis of the effect of the implementation of
Debtor's cost reduction plan, such analysis to be in form and
content satisfactory to the Agent and the Lenders, and to be
delivered not later than one Business Day after the end of
each calendar week while this Agreement is in effect; and
(c) Such other reports and analyses as Agent and the Lenders may
request from time to time regarding the financial condition,
business and business plans of Debtor and its Affiliates.
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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.
4. Payment to Agent for the account of the Lenders of a $30,000
extension fee, such fee to be paid to Agent not later than March 20, 2002 in
immediately available funds.
5. Debtor's payment by April 8, 2002 of the following bills presented
to Debtor by Agent:
(a) Xxxxxxx and Company, Inc. ("Xxxxxxx") in connection with the
consulting work performed through March 10, 2002 by Xxxxxxx at
the request of counsel to the Agent;
(b) Counsel to the Agent in connection with the work performed
from January 31, 2002 through March 14, 2002 by such counsel
in connection with the Agreement and in drafting Amendments 5,
6 and 7; and
(c) Counsel to GE Capital in connection with the work performed
through March 14, 2002 by such counsel in connection with the
Agreement and the negotiation of Amendment 7.
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. The definition of Eligible Inventory on page 2 of the Agreement is
hereby amended by deleting clause (ii) of the first paragraph
thereof regarding Inventory produced under a HUB Agreement, and
deleting the term "Hub Finished Goods" from subsection "x"
thereof.
2. Item 1 of the Schedule to the Agreement is hereby deleted in its
entirety as of the date hereof and replaced by the following:
"1. Borrowing Capacity 1.1(e))
Borrowing Capacity at any time shall be the net amount
determined by taking the lesser of the following amounts:
(A) The applicable Maximum Limit of $5,000,000;
or
(B) The amount equal to the sum of the IEC Borrowing Capacity (as
defined below)
and subtracting from the lesser of (A) and (B) above, the sum of
(a) banker's acceptances, plus (b) letters of guaranty, plus (c)
Letters of Credit.
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'IEC Borrowing Capacity' at any time shall be the amount equal
to the sum of:
(i) up to 85% of the IEC Receivables Borrowing Base; and
(ii) the amount of the IEC Inventory Borrowing Base; provided
however, for calculation purposes, in no event shall the
amount of the IEC Inventory Borrowing Base be greater
than $1,000,000.
Nothing herein shall detract from the discretionary nature of
any Advances requested, or made, under this Agreement."
3. Item 2 of the Schedule to the Agreement is hereby deleted in its
entirety and replaced with the following new text:
"2. Inventory Borrowing Base Percentages ( 1.1(bb))
The following percentages of dollar value (calculated at the
lower of actual cost or market value) are applicable to the
following categories of Eligible Inventory:
[X] raw materials, to the extent of up to 15% on the date
hereof through March 24, 2002; 10% from March 25 through
March 31, 2002; and 5% from April 1 through April 7, 2002;
and 0% from April 8, 2002 and thereafter.
[X] work in process, to the extent of up to 0%.
4. 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
------ ----------------- -----------------
3/15/02 - 4/8/02 Prime Rate plus 2% None
B. TERM LOAN
Period Prime Rate Option Libor Rate Option
------ ----------------- -----------------
3/15/02 - 4/8/02 Prime Rate plus 21/2% None
5. 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 Xxxxx 0, 0000
Xxxxxxx Xxxx: NONE"
6. 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.
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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, 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
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxxx
By:________________________________ By:_________________________________
Xxxxxxx X. Xxxxx, Vice President Xxxxxxx X. Xxxxxx
nd Chief Financial Officer First Vice President
GENERAL ELECTRIC CAPITAL HSBC BANK USA, as a Lender
CORPORATION, as a Lender
/s/ Xxxxxx X. Xxxxxxxx /s/ Xxxxxxx X. Xxxxxx
By:____________________________ By:________________________________
Xxxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxx
Duly Authorized Signatory First Vice President
CONSENTED TO AND AGREED AS OF THIS 15th DAY OF MARCH, 2002.
IEC ELECTRONICOS, S. de X.X. de C.V. IEC ELECTRONICS FOREIGN SALES
as Guarantor CORPORATION, as Guarantor
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxx
By:________________________________ By:________________________________
Xxxxxxx X. Xxxxx, Director Xxxxxxx X. Xxxxx, Vice President
and Chief Financial Officer
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BFLO Doc. No. 1180286.8
