EX-10.32 9 bankamend11.txt BANK AMENDMENT 11 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. Page 1 Page 92 of 104 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." Page 2 Page 93 of 104 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. Page 3 Page 94 of 104 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 ------------------------ ------------------------- 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 Page 4 Page 95 of 104