EXHIBIT 10.32
AMENDMENT NO. 11
TO
LOAN AND SECURITY AGREEMENT
Amendment No. 11 dated as of November 12, 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 ("LSA") and Amendment Nos. 1 through 10 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, April 8, 2002, June 20,
2002 and October 1, 2002, respectively, ("Amendments"), and certain modification
letters to Amendment 9 dated August 9, 2002, August 23, 2002, September 17, 2002
and September 24, 2002 ("Modifications"), (collectively, the LSA, the Amendments
and the Modifications are referred to herein as 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 revising certain
terms of the Agreement to provide the Debtor with increased Borrowing Capacity;
has represented to the Lenders that the Debtor is actively pursuing with
third-party lenders a refinancing of all of the indebtedness of Debtor to Agent
and the Lenders under the Agreement ("Indebtedness"); and has delivered to Agent
and the Lenders a Term Sheet from Keltic Financial Partners LP ("Keltic") which
was accepted by Debtor after approval by Debtor's Board of Directors and was
acceptable to Agent and the Lenders.
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 on
a weekly basis 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) agrees that such Investment Bankers
provide such information to the Agent and the Lenders, and 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, and
deliver to Agent and the Lenders duplicate copies of any proposal letters, term
sheets or written communications received from any prospective purchaser of any
of IEC's assets when any such documents are delivered to Debtor by or on behalf
of such Investment Bankers.
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3. Debtor's agreement evidenced by Debtor's signature on this Amendment, to
pay to Agent, for the account of the Lenders, an additional $25,000 amendment
fee, with such fee being earned upon execution of this Agreement by all parties,
and payable on December 31, 2002 or such earlier date as the Lenders are paid in
full, at which time the Base Fee earned in connection with Amendment No. 10
shall also be payable. The Additional Fee provided for in Amendment No. 10 has
been waived by the Agent and the Lenders.
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 1 of the Schedule to the Agreement regarding Borrowing Capacity
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 $2,000,000 which amount may be:
(i)increased to $2,300,000 on November 15, 2002 provided:(a) Debtor
obtains and delivers to Agent and the Lenders satisfactory written
evidence from Keltic Financial Partners LP ("Keltic") confirming that
Keltic has completed its due diligence review of the assets and
records of the Debtor, is satisfied with the results thereof, and is
continuing to proceed with its credit underwriting toward a loan
commitment for a $4,700,000 senior secured facility to refinance all
of the Revolving Loan and part of the Term Loans ("Keltic
Refinancing"), and (b) Debtor obtains and delivers to Agent and the
Lenders from other third-party lenders a satisfactory confirmation
that such lenders are proceeding to document a loan to Debtor to
refinance the balance of the Term Loans not being refinanced in the
Keltic Refinancing ("Third-Party Confirmation"); and (ii) decreased
to (a) $1,750,000 on November 22, 2002 if on or before November 22,
2002, the Company has not obtained and delivered to Agent and the
Lenders: (x) a commitment letter from Keltic for the Keltic
Refinancing providing for a Closing not later than December 31, 2002
with such commitment to be satisfactory to Debtor and its Board of
Directors and to Agent and the Lenders, and to have been accepted by
Debtor, and (y) an updated Third-Party Confirmation; and (b)
decreased to $2,000,000 as of December 2, 2002 if not sooner
decreased below such amount as a result of (b)(ii) above or
otherwise; and (c) decreased to $1,750,000 as of December 9, 2002 in
any event.
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.
'IEC Borrowing Capacity' at any time shall be the amount equal to
the sum of up to 85% of the IEC Receivables Borrowing Base.
Nothing herein shall detract from the discretionary nature of any
Advances requested, or made, under this Agreement."
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2. Item 18(g) of the Schedule to the Agreement regarding Pricing Grids 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 Notes are listed below:
PRICING GRIDS
A. ADVANCES
Period Prime Rate Option Libor Rate Option
11/7/02 - 12/31/02 Prime Rate plus 6.0% None
B. TERM LOAN
Period Prime Rate Option Libor Rate Option
11/7/02 - 12/31/02 Prime Rate plus 6.0% None."
3. The existing Section 10.19 of the Agreement regarding Sale of Debtor's
Business or Stock is hereby deleted in its entirety.
4. The existing Section 10.21 of the Agreement regarding Sale of Texas
Property is hereby deleted and replaced with the following new text:
"10.21. SALE OF TEXAS PROPERTY. Debtor shall not fail to diligently
pursue the sale of Debtor's property in Edinburgh, Texas and cause Michael
J. Fox International to conduct a commercially reasonable auction of such
property by December 17, 2002, pursuant to the accepted auction agreement
heretofore delivered by Debtor to Agent and the Lenders."
5. The Term Loan Reserve and the Principal Payment Reserve will be
cancelled upon execution of this Amendment by all parties hereto.
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. Debtor reaffirms 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 of the Agreement, 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.
3. 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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4. 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. 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
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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 12th DAY OF NOVEMBER, 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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