Exhibit 10.1
SECOND AMENDMENT to LOAN AGREEMENT
This Second Amendment to Loan Agreement (this "Amendment") is entered into
as of January 7, 2005, between IEC ELECTRONICS CORP., a corporation organized
and existing pursuant to the laws of the State of Delaware, with its principal
executive office and place of business at 105 Norton Street, Newark, New York
14513 (the "Borrower") and KELTIC FINANCIAL PARTNERS, LP, a Delaware limited
partnership, with a place of business at 555 Theodore Fremd Avenue, Suite C-207,
Rye, New York 10580 (the "Lender") to amend a Loan Agreement, dated January 14,
2003, between the Borrower and the Lender, as amended by First Amendment to Loan
Agreement, dated March 23, 2004, between the Borrower and the Lender (the "Loan
Agreement").
BACKGROUND
The Borrower has requested that the Lender provide a new $750,000 term
loan, extend the maturity date of the Loan Agreement and modify certain other
terms contained in the Loan Agreement, and the Lender is willing to do so,
subject to the terms hereafter set forth.
Now, therefore, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Borrower and the Lender agree as follows:
1. Recitals. The above recitals are true and correct in all respects and
form an integral part of this Amendment.
2. Definitions. Unless otherwise defined in this Amendment, all
capitalized terms will have the meanings given them in the Loan Agreement.
3. Arrow Indebtedness. The Borrower acknowledges and agrees that (1) at
the request of Borrower, the Lender is purchasing for $544,576.53 the Arrow
Indebtedness and taking an assignment of the Assigned Mortgage, (2) $544,576.53
of the Borrower's obligations under the Loan Agreement, as amended by this
Amendment (the "Amended Agreement"), constitute an amendment and restatement of
the obligations of the Borrower in connection with the Arrow Indebtedness, (3)
the Borrower ratifies and reaffirms the Arrow Indebtedness, as amended and
restated by the Amended Agreement, (4) there are no setoffs, defenses or
counterclaims against payment of the Arrow Indebtedness as amended and restated
by the Amended Agreement, and (5) the Obligations (including those constituting
an amendment and restatement of the Arrow Indebtedness) to the extent of the
principal amount of $1,500,000, plus interest, are secured by the Assigned
Mortgage as consolidated and modified on the date hereof pursuant to a Mortgage
Consolidation and Modification Agreement entered into between the Lender and the
Borrower. "Arrow Indebtedness" means the obligations owing by the Borrower to
Arrow Electronics, Inc. ("Arrow") and Suntrust Bank ("Suntrust") arising out of
a promissory note dated January 13, 2003, in the original principal amount of
$2,200,000 and in the outstanding principal amount of $541,088.10 payable to
Suntrust, together with accrued interest as of the date hereof of $3,438.43 and
guarantied by Arrow. The "Assigned Mortgage" means the mortgage assigned by
Arrow to the Lender pursuant to an Assignment of Mortgage dated as of the date
hereof.
4. Amendments. The Borrower and the Lender agree to amend the Loan
Agreement as follows:
(a) The current definition of "Termination Date" in the Loan
Agreement is deleted and replaced with the following:
"Termination Date" shall mean the earlier of (a) January 14, 2009 or (b)
the date on which Lender terminates this Agreement pursuant to Section 12.1 of
this Agreement.
(b) The current definition of "Total Facility" in the Loan Agreement
is deleted and replaced with the following:
"Total Facility" shall mean $5,000,000.00.
(c) Advances of the Revolving Loan. Section 2.1(b)(ii) of the Loan
Agreement is amended by deleting "25% of the Value" and replacing it with "35%
of the Value."
(d) Term Loans. Section 2.2 of the Loan Agreement is amended by
deleting the last two sentences thereof and replacing them with the following:
"As of January 7, 2005, a loan in the amount of $750,000 (the "Real Estate
Loan") shall be payable by Borrower in accordance with the terms of a term note
attached hereto as Exhibit B-2."
(e) Collections/Balance/Statements/etc. Section 2.8(b)(iv) of the
Loan Agreement is amended by deleting it in its entirety and replacing it with
the following:
"for the purpose of computing interest on the Loans and other Obligations,
interest shall continue to accrue on the amount of any payment applied to
Borrower's Loans by Lender, for a period of 2 Banking Days through January 14,
2005 and for a period of 1 Banking Day after January 14, 2005."
(f) Liquidated Damages. Section 3.6 of the Loan Agreement is amended
by deleting it in its entirety and replacing it with the following:
"If Borrower prepays the principal of the Revolving Loan to Lender (other
than from time to time from working capital) or if the outstanding Obligations
become due prior January 14, 2009 because of a payment or other material default
of Borrower, Borrower shall pay to Lender at the time of such prepayment,
liquidated damages in an amount equal to: (a) four percent (4%) of the Total
Facility if the prepayment is made prior to January 14, 2005 or (b) two percent
(2%) of the Total Facility if the prepayment is made on or after January 14,
2005. Borrower shall give Lender at least ninety (90) days' advance written
notice ("Termination Notice") of Borrower's election to terminate the
availability of the Revolving Loans under this Agreement prior to January 14,
2009. The Termination Notice shall be irrevocable and shall specify the
effective date of such termination, which effective date shall not be less than
ninety (90) days after the giving of the Termination Notice and shall be in no
event later than January 14, 2009. All the Obligations shall become due and
payable on such effective date specified in the Termination Notice, and after
such effective date, Lender shall have no obligation to make any Advance(s) to
Borrower."
(g) Proceeds of Collateral. Section 8.15 of the Loan Agreement is
amended by adding at the end thereof the phrase "except as specifically set
forth in Section 9.3 of this Agreement."
(h) Sale or Disposition. Section 9.3 of the Loan Agreement is
amended by adding the following language at the end thereof:
"Notwithstanding the foregoing or anything to the contrary set forth in
the General Security Agreement or this Agreement, and so long as no Default or
Event of Default has occurred, the Borrower may sell in any transaction for cash
any item or group of items listed on Schedule 9.3 of this Agreement provided
that (a) the proceeds of the sale of such item or group of items sold in a
single transaction are no less than the aggregate sale price on Schedule 9.3 for
such item or items minus the greater of (i) 10% of the aggregate sale price on
Schedule 9.3 for such item or items or (ii) $200 and (b) 50% of the sale
proceeds are paid to the Lender for application to the outstanding Obligations
under the Equipment Loan. The Lender waives any prepayment premium under the
note evidencing the Equipment Loan which would otherwise result in connection
with such prepayment of the Equipment Loan. Upon any such sale effected in
compliance with the foregoing, the Lender's security interest in such sold
equipment is terminated."
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(i) Fixed Charge Coverage Ratio. Section 9.19 of the Loan
Agreement is amended by adding at the end thereof the phrase "other than with
respect to the fiscal quarter ended December 31, 2004 for which the Lender is
not requiring Borrower's compliance with a minimum Fixed Charge Coverage Ratio."
(j) EBITDA. Section 9.21 of the Loan Agreement is amended by
deleting it in its entirety and replacing it with the following:
"Permit Borrower's EBITDA, calculated for each fiscal quarter on an
individual, non-cumulative basis, to be less than the following amounts for the
time periods set forth below:
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Amount Time Period
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$(75,000) For the fiscal quarter ended 12/31/04
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$125,000 For the fiscal quarter ended 3/31/05
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$225,000 For the fiscal quarter ended 6/30/05
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$300,000 For the fiscal quarter ended 9/30/05
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$400,000 For each fiscal quarter ended after 9/30/05
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(k) Exhibits. Exhibit B-1 of the Loan Agreement is replaced by the
Replacement Term Note in the form of Exhibit B-1 attached to this Amendment.
Exhibit B-2 of the Loan Agreement is replaced by the Term Note in the form of
Exhibit B-2 attached to this Amendment.
(l) Schedules. Schedule 5.17 of the Loan Agreement is replaced by
Schedule 5.17 to this Amendment. Schedule 9.3 to this Amendment is added as
Schedule 9.3 of the Loan Agreement.
5. Additional Fee. Borrower shall pay to the Lender on or before the date
of this Amendment an additional closing and commitment fee in the amount of
$11,250 in consideration of the Lender agreeing to amend the Loan Agreement on
the terms set forth herein.
6. No Claims. The Borrower acknowledges that it does not have any claim,
counterclaim, cause of action, defense, recoupment or right of offset (each a
"Claim" and collectively "Claims") relating in any way to (i) this Amendment,
the Obligations or the Loan Documents , (ii) the enforceability of the Loan
Documents, (iii) the validity or enforceability of any of the Loan Documents or
(iv) any act, claim or statement of fact that would or might lessen, eliminate
or modify any of the Lender's rights or remedies pursuant to any of the Loan
Documents or in connection with any of the Collateral; provided, however, that
if notwithstanding the foregoing, the Borrower shall purport to have any such
Claim, the Borrower hereby irrevocably and forever waives such Claim.
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7. No Waivers. Nothing in this Amendment shall constitute a waiver by the
Lender of any of default or event of default or any of the Lender's rights
arising as a result of the such default or event of default or other rights or
remedies arising pursuant to any of the Loan Documents or in connection with any
of the Obligations or the Collateral and the rights and remedies of the Lender
shall remain for all purposes in full force and effect. Except as expressly
amended by this Amendment, the Loan Agreement and the other Loan Documents
remain in full force and effect
8. Miscellaneous. This Amendment is governed by and is to be construed in
accordance with the internal laws of the State of New York.
IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto
as of the day and year first above written.
IEC ELECTRONICS CORP.
By: /S/ Brian H. Davis
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Brian H. Davis, Vice President and
Chief Financial Officer
KELTIC FINANCIAL PARTNERS, LP
By: KELTIC FINANCIAL SERVICES LLC,
its general partner
By: /S/ John P. Reilly
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John P. Reilly, Managing Partner
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