EXHIBIT 10.30
AMENDMENT NO. 9
TO
LOAN AND SECURITY AGREEMENT
Amendment No. 9 dated as of June 20, 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, 7 and 8
thereto dated as of March 30, 2000, December 1, 2000, April 24, 2001, December
21, 2001, February 15, 2002, February 28, 2002, March 15, 2002 and April 8,
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 September 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 to Agent and the Lenders under the
Agreement ("Indebtedness"), and that Debtor expects such efforts to result in
the repayment in full of the Indebtedness on or before September 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
R.L. 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: (i) continue to cooperate with Getzler & Company,
Inc. ("Getzler") so that Getzler may review Debtor's business and business plans
in order to report thereon to Agent's counsel and the Lenders; (ii) permit
Getzler 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 Getzler; 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.
3. Payment on the date hereof by Debtor to Agent, for the account of the
Lenders, of the $80,000 unpaid portion of the extension fee earned under the
terms of Amendment No. 8.
4. Debtor's agreement evidenced by Debtor's signature on this Amendment, to
pay to Agent, for the account of the Lenders, an additional $100,000 extension
fee, with such fee being earned upon execution of this Agreement by all parties,
and payable in the amounts and on the due dates listed below:
Amount Due Date
$15,000 7/15/02;
$15,000 8/15/02;
$15,000 9/15/02; and
$55,000 9/30/02.
In the event the Indebtedness is fully and irrevocably paid in full ("Full
Payment"), then any of the above amounts which are due and payable after the
date of such Full Payment shall be waived.
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5. Debtor's agreement evidenced by Debtor's signature on this Amendment to
the reduction from $350,000 to $175,000 of Debtor's ACH facility with HSBC Bank
USA effective as of the date of this Agreement.
6. Debtor's agreement evidenced by Debtor's signature on this Amendment to
diligently pursue the sale of Debtor's property in Arab, Alabama and obtain and
deliver to Agent by August 1, 2002 a copy of either: (i) an executed written
bona fide purchase offer from a qualified purchaser, such offer and such
purchaser to be acceptable to Debtor, Agent and the Lenders, or (ii) an executed
written auction agreement with a qualified auctioneer to conduct a commercially
reasonable auction of such property by September 13, 2002, such auction
agreement and auctioneer to be acceptable to the Debtor, Agent and the Lenders.
7. Debtor's agreement evidenced by Debtor's signature on this Amendment
that Agent may hire an appraiser and an environmental consultant satisfactory to
Agent to appraise and conduct an environmental review of the Edinburg, Texas
assets and real property of Debtor, and that the fees and expenses of such
appraiser and environmental consultant shall be for the account of Debtor and
shall be paid by Debtor, or reimbursed by Debtor to Agent, upon Agent's demand.
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. Part (A) of Item 1 of the Schedule to the Agreement is hereby deleted in
its entirety and replaced with the following new text:
"(A) The applicable Maximum Limit of $3,500,000;"
2. 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
---------------------------------------------------------------------
6/1/02 - 6/30/02 Prime Rate plus 2-3/4% None
7/1/02 - 7/31/02 Prime Rate plus 3% None
8/1/02 - 8/31/02 Prime Rate plus 3-1/4% None
9/1/02 - 9/30/02 Prime Rate plus 3-1/2% None
B.TERM LOAN
Period Prime Rate Option Libor Rate Option
-----------------------------------------------------------------------
6/1/02 - 6/30/02 Prime Rate plus 3-1/4% None
7/1/02 - 7/31/02 Prime Rate plus 3-1/2% None
8/1/02 - 8/31/02 Prime Rate plus 3-3/4% None
9/1/02 - 9/30/02 Prime Rate plus 4% None."
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 September 30, 2002 Renewal Term: NONE"
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4. The following new negative covenants are added to Article 10 of the
Agreement:
"10.17. MEXICO ASSET SALE. Debtor will cause substantially all of the
assets of IEC and IEC-Mexico located in IEC-Mexico's facility in Reynosa, Mexico
to be sold pursuant to that certain Asset Purchase Agreement dated as of June
18, 2002 between IEC and Electronic Product Integration Corporation ("Asset
Purchase Agreement") providing for a cash sale price (the "Cash Price") as set
forth in paragraph 3.2 of the Asset Purchase Agreement payable in accordance
with paragraph 3.5 thereof. The balance of the sale price may be payable to
Debtor over time based on various factors including a percentage of future
orders received by the purchaser from certain former customers of Debtor or
IEC-Mexico ("Earn-out Amount") and additional compensation may be paid to Debtor
under paragraph 8.4 of the Asset Purchase Agreement in the form of commissions
based on future sales volume from certain customers ("Commission Payments", and
together with the Earn-out Amount, the "Earnout Proceeds"). Immediately upon
receipt of that portion of the Cash Price described at section 3.5(a)(ii) of the
Asset Purchase Agreement, Debtor will pay an amount not less than $125,000 to
Agent to be applied as follows: $75,000 to unpaid Advances under the Revolving
Credit and $50,000 to installments of principal of the Term Notes in inverse
order of maturity, and in conjunction therewith a new Reserve in the amount of
$75,000 will be established under the Revolving Credit with respect to certain
potential litigation expenses of Debtor heretofore disclosed to Agent with such
Reserve to remain in place at the discretion of Agent until such time as Agent
is paid $200,000 in total hereunder or Debtor reaches a settlement in full of
certain litigation heretofore disclosed to Agent or such Reserve is used to fund
all or part of the balance of the $200,000 due Agent under the terms of this
Section 10.17; and immediately upon receipt of that portion of the Cash Price
described at section 3.5(a)(iii) of the Asset Purchase Agreement, Debtor will
pay to Agent to be applied to installments of principal of the Term Notes in
inverse order of maturity an amount equal to the greater of $75,000 or the
amount necessary to bring the total of the payments hereunder to Agent from the
Cash Price to $200,000 in the aggregate.
10.18. ASSIGNMENT OF EARNOUT PROCEEDS. Promptly upon execution of the Asset
Purchase Agreement, Debtor will execute and deliver to Agent, for the benefit of
the Agent and the Lenders, a first lien assignment of the Earnout Proceeds (as
defined in Section 10.17 hereof), such assignment to be in form and content
satisfactory to Agent. Immediately upon receipt of any Earnout Proceeds, Debtor
will pay the amount thereof to Agent to be applied to installments of principal
of the Term Notes in inverse order of maturity.
10.19. SALE OF DEBTOR'S BUSINESS OR STOCK. Debtor will obtain and deliver
to Agent and the Lenders by July 26, 2002 an executed letter of intent from a
satisfactory purchaser to purchase substantially all of the assets or business
or stock of Debtor ("Sale"); Debtor will cause such Sale to be closed on or
before August 30, 2002; and Debtor will immediately upon such closing pay to
Agent, for the benefit of the Agent and the Lenders, a sufficient amount of the
net proceeds from such Sale to repay in full all of the Indebtedness."
5. 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.
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.
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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, successors 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. Debtor affirms that Debtor has completed a management restructuring and
that (a) W. Barry Gilbert has been duly appointed and is acting as Chief
Executive Officer replacing Thomas W. Lovelock and has been duly appointed and
is acting as an officer of IEC-Mexico and IEC Electronics Foreign Sales
Corporation; (b) Bill R. Anderson has been duly appointed and is acting as Chief
Operating Officer; (c) Richard L. Weiss is no longer Chief Financial Officer and
is no longer employed by Debtor; and (d) Thomas W. Lovelock and Debtor have
entered into a consulting agreement.
3. 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/ W. Barry Gilbert By: /s/ Vincent J. Harper
- ------------------------ -------------------------
W. Barry Gilbert Vincent J. Harper
Chief Executive Officer First Vice President
GENERAL ELECTRIC CAPITAL HSBC BANK USA, as a Lender
CORPORATION, as a Lender
By: /s/ Donald J. Cavanagh By: /s/ Vincent J. Harper
- -------------------------- -------------------------
Donald J. Cavanagh Vincent J. Harper
Duly Authorized Signatory First Vice President
CONSENTED TO AND AGREED AS OF THIS 20TH DAY OF JUNE, 2002.
IEC ELECTRONICOS, S. de R.L. de C.V. IEC ELECTRONICS FOREIGN SALES
as Guarantor CORPORATION, as Guarantor
By: /s/ W. Barry Gilbert By: /s/ W. Barry Gilbert
- ------------------------ ------------------------
W. Barry Gilbert W. Barry Gilbert
Chief Executive Officer Chief Executive Officer
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August 9, 2002
IEC Electronics Corp.
105 Norton Street
Newark, NY 14513
Attn: W. Barry Gilbert, Chief Executive Officer
Re: Loan and Security Agreement
Gentlemen:
Pursuant to your request, we are willing to modify certain of the deadlines
set forth in Amendment No. 9 dated June 20, 2002 ("Amendment No. 9") to the Loan
and Security Agreement dated as of December 28, 1999 with the present parties
thereto being you, HSBC Bank USA as Agent, and HSBC Bank USA and General
Electric Capital Corporation as the Lenders (as amended prior to the date
hereof, the "LSA"), and we are also willing to temporarily modify one of the
reserves established under the LSA.
As Agent, we agree that Amendment No. 9 is hereby modified as follows:
1. The existing Section A.6 is hereby deleted and replaced with the
following new Section A.6:
"6. Debtor's agreement to diligently pursue the sale of Debtor's property
in Arab, Alabama and obtain and deliver to Agent by August 16, 2002 a copy of
either: (i) an executed written bona fide purchase offer from a qualified
purchaser, such offer and such purchaser to be acceptable to Debtor, Agent and
the Lenders, or (ii) an executed written auction agreement with a qualified
auctioneer to conduct a commercially reasonable auction of such property by
September 13, 2002, such auction agreement and auctioneer to be acceptable to
the Debtor, Agent and the Lenders."
2. Section 10.19 is hereby deleted and replaced with the following new
Section 10.19:
"10.19 SALE OF DEBTOR'S BUSINESS OR STOCK.
Debtor will obtain and deliver to Agent and the Lenders by September 20,
2002 an executed definitive sale agreement from a satisfactory purchaser
to purchase substantially all of the assets or business or stock of
Debtor ("Sale"), and providing for such Sale to be closed on or before
October 30, 2002; and will immediately upon such closing pay to Agent,
for the benefit of the Agent and the Lenders, a sufficient amount of the
net proceeds from such Sale to repay in full all of the Indebtedness."
We also hereby temporarily modify the existing $1,000,000 Term Loan Reserve
under the LSA by reducing the amount thereof to $800,000 for the period from
August 9, 2002 through August 16, 2002 with such Term Loan Reserve to be
restored to $1,000,000 as of August 19, 2002.
This letter replaces in its entirety our letter of August 5, 2002 which
never was fully executed and is null and void.
In order to signify your agreement to, and acceptance of, the above
modifications, please sign and return to us today the enclosed duplicate
original of this letter whereupon this letter shall become effective as of the
date hereof.
HSBC BANK USA, as Agent
By:/s/Gary T. Fowler
---------------------
Gary T. Fowler
Senior Vice President
Accepted and Agreed as of
August 9, 2002
IEC ELECTRONICS CORP., as Debtor
By: /s/ W. Barry Gilbert
- ------------------------
W. Barry Gilbert
Chief Executive Officer
IEC ELECTRONICS S. de. R.L. de C.V.
By: /s/ W. Barry Gilbert
- ------------------------
W. Barry Gilbert
Chief Executive Officer
IEC ELECTRONICS FOREIGN SALES
CORPORATION, as Guarantor
By: /s/ W. Barry Gilbert
- ------------------------
W. Barry Gilbert
Chief Executive Officer
Page 5
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August 23, 2002
IEC Electronics Corp.
105 Norton Street
Newark, NY 14513
Attn: W. Barry Gilbert, Chief Executive Officer
Re: Amendment No. 9 Second Modification
Gentlemen:
Pursuant to your request, we are willing to further modify one of the
deadlines set forth in Amendment No. 9 dated June 20, 2002 ("Amendment No. 9")
to the Loan and Security Agreement dated as of December 28, 1999 with the
present parties thereto being you, HSBC Bank USA as Agent, and HSBC Bank USA and
General Electric Capital Corporation as the Lenders (as amended prior to the
date hereof, the "LSA").
As Agent, we agree that Amendment No. 9 is hereby modified as follows:
1. The existing Section A.6 is hereby deleted and replaced with the
following new Section A.6:
"6. Debtor's agreement to diligently pursue the sale of Debtor's
property in Arab, Alabama and obtain and deliver to Agent by September
20, 2002 a copy of either: (i) an executed written bona fide purchase
offer from a qualified purchaser, such offer and such purchaser to be
acceptable to Debtor, Agent and the Lenders, or (ii) an executed
written auction agreement with a qualified auctioneer to conduct a
commercially reasonable auction of such property by November 1, 2002,
such auction agreement and auctioneer to be acceptable to the Debtor,
Agent and the Lenders."
In order to signify your agreement to, and acceptance of, the above
modifications, please sign and return to us today the enclosed four duplicate
originals of this letter whereupon this letter shall become effective as of the
date hereof.
HSBC BANK USA, as Agent
By /s/ Vincent J. Harper
- ------------------------
Vincent J. Harper
First Vice President
Accepted and Agreed as of
August 23, 2002
IEC ELECTRONICS CORP., as Debtor
By: /s/ W. Barry Gilbert
- ------------------------
W. Barry Gilbert
Chief Executive Officer
IEC ELECTRONICS S. de. R.L. de C.V.
By: /s/ W. Barry Gilbert
- ------------------------
W. Barry Gilbert
Chief Executive Officer
IEC ELECTRONICS FOREIGN SALES
CORPORATION, as Guarantor
By: /s/ W. Barry Gilbert
- ------------------------
W. Barry Gilbert
Chief Executive Officer
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IEC Electronics Corp.
105 Norton Street
Newark, NY 14513
Attn: W. Barry Gilbert, Chief Executive Officer
Re: Acterna Settlement
Gentlemen:
In conjunction with your proposed settlement of the action IEC Electronics
Corp. ("IEC") commenced against Acterna Corporation in New York State Supreme
Court, Wayne County under Index No. 50447 ("Action"), you have requested that
the Secured Parties under the Loan and Security Agreement among IEC and the
Secured Parties dated as of December 28, 1999, as amended ("LSA") agree to
certain modifications under the LSA.
The Secured Parties are willing to make the modifications set forth herein
on the following conditions:
1. The Agent receives funds in the amount of not less than $1,940,063.09
from the proceeds paid by Acterna Corporation in settlement of the Action with
such funds to be applied to prepay principal installments of the Term Loans in
inverse order of maturity.
2. As additional collateral security for the indebtedness of IEC under the
LSA, IEC pledges to the Agent, for the benefit of the Agent and the Secured
Parties, the Promissory Note of Acterna Corporation payable to the order of IEC
dated August 23, 2002 in the face principal amount of $1,113,996, such pledge to
be evidenced by a pledge security agreement in form and content acceptable to
the Agent, and such original note to be endorsed in blank by IEC and delivered
to Agent.
3. The Agent receives a complete copy of the executed settlement agreement
with respect to the Action and also receives four executed originals of this
letter signed by IEC and the Guarantors.
Provided the above conditions are satisfied, the Secured Parties agree
that:
A. (i) A $500,000 portion of the $1,000,000 Term Loan Reserve against the
Revolving Credit will be cancelled upon the Agent's receipt and review of
satisfactory evidence confirming that IEC has: (a) adopted the proposed trade
creditor settlement program in the form shared with the Agent and the Secured
Parties on the date hereof ("Vendor Program"); and (b) sent notice of the Vendor
Program to all vendors classified as Group 1 or 2 under the Vendor Program; and
(ii) the remaining $500,000 portion of the Term Loan Reserve will be
cancelled upon the Agent's receipt and review of satisfactory evidence
confirming that IEC has received acceptances of the Vendor Program from vendors
holding not less than fifty percent (50%) of the aggregate outstanding dollar
amount of balances due all Group 1 and Group 2 vendors under the Vendor Program.
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B. (i) upon the cancellation of the first $500,000 portion of the Term Loan
Reserve as set forth in "A(i)" above, and provided IEC has sufficient
availability under the Borrowing Capacity at the applicable time and is
otherwise in compliance with the terms of the LSA, then up to $500,000 can be
borrowed by IEC under the Revolving Credit to fund working capital needs and to
fund the cash payments provided for in the Vendor Program to vendors owed less
than $5,000 other than cash payments to any Director for Director fees;
(ii) upon cancellation of the second $500,000 portion of the Term Loan
Reserve as set forth in "A (ii)" above and provided IEC has sufficient
availability under the Borrowing Capacity at the applicable time and is
otherwise in compliance with the LSA, then up to $500,000 can be borrowed by IEC
under the Revolving Credit to fund the cash payments provided for in the Vendor
Program to vendors owed $5,000 or more but no one vendor may be paid more than
ten percent (10%) of the outstanding dollar amount of the balance owed any such
vendor as reflected in the Vendor Program unless consented to in writing by the
Agent.
Nothing herein shall limit or impair the ability of the Agent and the
Secured Parties to require such reserves as they deem appropriate from time to
time in accordance with the terms of the LSA.
In order to signify your agreement to, and acceptance of, the above terms
and LSA modifications, please sign and return to us the enclosed duplicate
original of this letter whereupon this letter shall become effective as of the
date hereof.
HSBC BANK USA, as Agent
By /s/ Vincent J. Harper
------------------------
Vincent J. Harper
First Vice President
Accepted and Agreed as of
August 22, 2002
IEC ELECTRONICS CORP., as Debtor
By: /s/ W. Barry Gilbert
- ------------------------
W. Barry Gilbert
Chief Executive Officer
IEC ELECTRONICS S. de. R.L. de C.V., as Guarantor
By: /s/ W. Barry Gilbert
- ------------------------
W. Barry Gilbert
Chief Executive Officer
IEC FOREIGN SALES CORPORATION, as Guarantor
By: /s/ W. Barry Gilbert
- ------------------------
W. Barry Gilbert
Chief Executive Officer
Page 8
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September 17, 2002
IEC Electronics Corp.
105 Norton Street
Newark, NY 14513
Attn: W. Barry Gilbert, Chief Executive Officer
Re: Loan and Security Agreement Modifications
Gentlemen:
Pursuant to our discussions with you, we are willing to modify certain of
the provisions set forth in the Loan and Security Agreement dated as of December
28, 1999 with the present parties thereto being you, HSBC Bank USA as Agent, and
HSBC Bank USA and General Electric Capital Corporation as the Lenders (as
amended and modified prior to the date hereof, the "LSA"), and we are also
willing to temporarily modify one of the reserves established under the LSA.
Capitalized terms used in this letter and not otherwise defined are used with
the defined meanings set forth in the LSA.
As a condition to the modifications made herein, you and we agree to the
revocation of the provisions regarding the Vendor Payment Program and the Term
Loan Reserve as set forth in Parts A(ii) and B(ii) of the Acterna Settlement
letter dated August 22, 2002 between the Agent and you.
As Agent, we agree that the LSA is hereby modified as follows:
1. Part (A) of Item 1 of the Schedule regarding the Maximum Limit of the
Borrowing Capacity is hereby deleted and replaced with the following new Part
(A):
"(A) The applicable Maximum Limit of $2,000,000;"
2. Section A.6 of Amendment 9 is hereby deleted and two new Negative
Covenants are hereby added to the LSA as Sections 10.20 and 10.21 as follows:
"10.20 Sale of Alabama Property. Debtor shall not fail to sell the
Debtor's property in Arab, Alabama by September 30, 2002 for a purchase
price of approximately $600,000 and wire the net proceeds of
approximately $550,000 to the Agent by September 30, 2002 as a
prepayment on the Term Loans to be applied to installments thereof in
inverse order of maturity."
"10.21 Sale of Texas Property. Debtor shall not fail to diligently
pursue the sale of Debtor's property in Edinburgh, Texas and obtain and
deliver to Agent by October 18, 2002 a copy of either (i) an executed
bona fide purchase offer from a qualified purchaser, such offer and
purchaser to be acceptable to Debtor, Agent and the Lenders, or (ii) an
executed written auction agreement with a qualified auctioneer to
conduct a commercially reasonable auction of such property by December
31, 2002, such auction agreement and auctioneer to be acceptable to the
Debtor, Agent and the Lenders."
We also hereby temporarily modify the existing $500,000 Term Loan Reserve
under the LSA by reducing the amount thereof to $300,000 for the period from the
date hereof through September 23, 2002. Assuming delivery by the Debtor to the
Agent and the Lenders on or before September 23, 2002 of a satisfactory letter
of intent or complete refinancing with a new lender for the sale of Debtor's
business and the absence of any Event of Default under the LSA, Agent and the
Lenders will further reduce the Term Loan Reserve to $100,000 as of September
24, 2002, and provided the Renewal Term of the LSA is extended past September
30, 2002, the Term Loan Reserve will be increased to $300,000 as of October 7,
2002, and restored to $500,000 as of October 14, 2002.
Nothing herein shall limit or impair the ability of the Agent and the
Secured Parties to require such reserves in such amounts as they deem
appropriate, in their sole discretion, from time to time.
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In order to signify your agreement to, and acceptance of, the above
modifications, please sign and return to us today the enclosed duplicate
original of this letter whereupon this letter shall become effective as of the
date hereof.
HSBC BANK USA, as Agent
By /s/ Vincent J. Harper
------------------------
Vincent J. Harper
First Vice President
Accepted and Agreed as of
September 17, 2002
IEC ELECTRONICS CORP., as Debtor
By: /s/ W. Barry Gilbert
- ------------------------
W. Barry Gilbert
Chief Executive Officer
IEC ELECTRONICS S. de. R.L. de C.V.
By: /s/ W. Barry Gilbert
- ------------------------
W. Barry Gilbert
Chief Executive Officer
IEC ELECTRONICS FOREIGN SALES
CORPORATION, as Guarantor
By: /s/ W. Barry Gilbert
- ------------------------
W. Barry Gilbert
Chief Executive Officer
Page 10
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September 24, 2002
IEC Electronics Corp.
105 Norton Street
Newark, NY 14513
Attn: W. Barry Gilbert, Chief Executive Officer
Re: Amendment 9 Further Modification
Gentlemen:
Pursuant to your request, we are willing to modify certain of the deadlines
set forth in Amendment No. 9 dated June 20, 2002 ( as modified prior to the date
hereof, "Amendment No. 9") to the Loan and Security Agreement dated as of
December 28, 1999 with the present parties thereto being you, HSBC Bank USA as
Agent, and HSBC Bank USA and General Electric Capital Corporation as the Lenders
(as amended prior to the date hereof, the "LSA").
As a condition to the modification made herein, we require your affirmation
evidenced by your signature hereon that the approximately $21,000 on deposit in
your account with the Texas State Bank will be used by you only to pay severance
due Robert Norris in connection with the closing of the IEC-Mexico facility in
Reynosa, Mexico.
As Agent, we agree that Amendment No. 9 is hereby modified as follows:
1. Section 10.19 is hereby deleted and replaced with the following new
Section 10.19:
"10.19 SALE OF DEBTOR'S BUSINESS OR STOCK.
Unless the Indebtedness is sooner repaid in its entirety through a
refinancing with third party lenders or otherwise, Debtor will obtain
and deliver to Agent and the Lenders by October 7, 2002 a satisfactory
executed letter of intent from a satisfactory purchaser to purchase
substantially all of the assets or business or stock of Debtor ("Sale"),
and providing for such Sale to be closed on or before November 29, 2002;
and will immediately upon such closing pay to Agent, for the benefit of
the Agent and the Lenders, a sufficient amount of the net proceeds from
such Sale to repay in full all of the Indebtedness, if any, which
remains unpaid."
If you deliver to the Agent and the Lenders by October 7, 2002 a letter of
intent that satisfies the requirements of Section 10.19, the Lenders would then
be willing to amend Item 32 of the Schedule to extend the Initial Term of the
LSA from September 30, 2002 until October 31, 2002.
In order to signify your agreement to, and acceptance of, the above
modification, please sign and return to us today the enclosed duplicate original
of this letter whereupon this letter shall become effective as of the date
hereof.
HSBC BANK USA, as Agent
By /s/ Vincent J. Harper
------------------------
Vincent J. Harper
First Vice President
Accepted and Agreed as of
September 24, 2002
IEC ELECTRONICS CORP., as Debtor
By: /s/ W. Barry Gilbert
- ------------------------
W. Barry Gilbert
Chief Executive Officer
IEC ELECTRONICS S. de. R.L. de C.V.
By: /s/ W. Barry Gilbert
- ------------------------
W. Barry Gilbert
Chief Executive Officer
IEC ELECTRONICS FOREIGN SALES
CORPORATION, as Guarantor
By: /s/ W. Barry Gilbert
- ------------------------
W. Barry Gilbert
Chief Executive Officer
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