AMENDED AND RESTATED CREDITFACILITY AGREEMENT

EXHIBIT 10.1

 

 

This AMENDED AND RESTATED CREDIT FACILITY AGREEMENT (“Agreement”) is made as of December 16, 2009 by and among IEC ELECTRONICS CORP., a corporation formed under the laws of the State of Delaware (“Borrower”) and MANUFACTURERS AND TRADERS TRUST COMPANY (“Lender”), a New York banking corporation, with offices at 255 East Avenue, Rochester, New York 14604.  This Agreement evidences in part obligations evidenced by, and amends and restates in its entirety, the Credit Facility Agreement dated May 30, 2008, as amended, made between the Borrower and Lender (“Prior Agreement”).  All references to the Prior Agreement in any Loan Document made or delivered in connection with the Prior Agreement shall be deemed to be references to the Prior Agreement as amended and restated by this Agreement.

 

ARTICLE 1 - - DEFINITIONS

 

1.1           Definitions.  The following terms shall have the following meanings unless otherwise expressly stated herein:

 

“2008 Term Loan” means the $1,700,000 aggregate original outstanding principal balance term loan described in Article 3 hereof.

 

“2008 Term Loan Maturity Date” means May 30, 2013.

 

“2008 Term Loan Note” means the Amended and Restated Term Loan Note described in Section 3.2.

 

“Affiliate” means any Person which directly or indirectly, or through one or more intermediaries, Controls or is Controlled By or is Under Common Control with Borrower; provided, however, that the neither Lender, nor any its Affiliate, shall be considered an Affiliate of any Credit Party.

 

“Agreement” means this Amended and Restated Credit Facility Agreement.

 

“Applicable Margin” means, with respect to the applicable facility, the per annum percentage points shown in the applicable column of the table below based on the applicable Debt to EBITDARS Ratio, calculated for Borrower on a consolidated basis and without duplication in accordance with GAAP:

 

 

The Applicable Margin shall be fixed at Level III on the date of this Agreement.  Effective on the tenth (10th) day following the date on which the Borrower’s QCC Sheet is required to be delivered to the Lender pursuant to Section 13.5 for the period ended June 30, 2010, the Applicable Margin will be adjusted based upon the Debt to EBITDARS ratio shown therein.  Thereafter, changes, if any, in the Level applicable to Loans will be effective on the tenth (10th) day following each date on which the Borrower’s QCC Sheet is required to be delivered to the Lender pursuant to Section 13.5, based upon the Debt to EBITDARS ratio shown therein.  In the event that any QCC Sheet is not delivered by the date required, pricing will revert to Level I until the tenth (10th) day following the date of delivery of the delayed QCC Sheet, on which tenth day pricing will be adjusted to the applicable level shown by the QCC Sheet.  Upon the occurrence of a Default or Event of Default, the Applicable Margin shall immediately be adjusted to Level I and no reduction shall occur thereafter unless the Default or Event of Default is waived in writing by the Lender.

 

“Applicable Unused Fee” means the per annum rate (calculated based upon days elapsed over a 360 day year) shown in the table below based on the applicable Debt to EBITDARS Ratio, calculated for Borrower on a consolidated basis and without duplication in accordance with GAAP:

 

 

The Applicable Unused Fee shall be fixed at Level III on the date of this Agreement.  Effective on the tenth (10th) day following the date on which the Borrower’s QCC Sheet is required to be delivered to the Lender pursuant to Section 13.5 for the period ended June 30, 2010, the Unused Fee will be adjusted based upon the Debt to EBITDARS ratio shown therein.  Thereafter, changes, if any, in the Level applicable will be effective on the tenth (10th) day following each date on which the Borrower’s QCC Sheet is required to be delivered to the Lender pursuant to Section 13.5, based upon the Debt to EBITDARS ratio shown therein.  In the event that any QCC Sheet is not delivered by the date required, the unused fee will revert to Level I until the tenth (10th) day following the date of delivery of the delayed QCC Sheet, on which tenth day the unused fee will be adjusted to the applicable level shown by the QCC Sheet.  Upon the occurrence of a Default or Event of Default, the unused fee shall immediately be adjusted to Level I and no reduction shall occur thereafter unless the Default or Event of Default is waived in writing by the Lender.

 

 

“Asset Disposition” means any sale, assignment, transfer, lease, or other disposition by a Person to any other Person, whether in one transaction or in a series of related transactions, of any of its assets, business units or other properties (including (i) any interest in property, whether tangible or intangible, (ii) Capital Securities of Subsidiaries, and (iii) any sale-leaseback transaction), provided, however, that “Asset Disposition” shall not include (a) the sale of inventory in the ordinary course of business, and (b) the disposition of any obsolete or retired property not used or useful in the business of any of the Credit Parties in return for a fair market value.

 

“Automatic Adjustment Rate Determination Date” means, with respect to LIBOR Loans other than Daily LIBOR Loans, two (2) LIBOR Business Days before the first day of the applicable Interest Period.

 

“Automatic Continuation Option” shall, with respect to any LIBOR Loan, mean the option to have the then-current Interest Period duration, as previously selected by Borrower, remain the same for the succeeding Interest Period.

 

“Base Rate” means the higher of (i) the Prime Rate, and (ii) the Federal Funds Rate plus one-half percentage point (.5%), but in no case less than a floor Base Rate of one and one-fourth percent (1.25%), plus the Applicable Margin.

 

“Base Rate Loan” means any Loan when and to the extent that the interest rate for such Loan is determined by reference to the Base Rate.

 

“BOA Mortgage” means the Mortgage made by GTC in favor of NationsBank, N.A. dated March 1, 1999 and recorded April 1, 1999 in Book 9905, Page 3972, records of Bernalillo County, New Mexico (the “BOA Mortgage”).

 

“Borrower” means IEC Electronics Corp. and its successors, legal representatives and assigns.

 

“Borrowing Base” means the sum of the following:

 

(a)           85% of the Eligible Accounts of the Credit Parties; plus

 

(b)           35% of the Eligible Inventories of the Credit Parties up to a maximum of $3,000,000, or if the Inventory Overline Advance Rate has been elected pursuant to Section 2.2, 70% of the Borrower’s Eligible Inventories up to a maximum of $4,000,000.

 

“Borrowing Base Report” means a report described in Section 11.1 of this Agreement.

 

“Breakage Costs” means amounts covered by Section 8.7.

 

 

“Business Day” means any day other than a Saturday, Sunday, or other day on which commercial banking institutions in New York, New York are authorized or required by law or other governmental action to remain closed for business.

 

“Capital Security” means, (a) with respect to any Person that is a corporation, any and all shares, interests or equivalents in capital stock (without limitation whether voting or nonvoting, and whether common or preferred) of such corporation, and (b) with respect to any Person that is not a corporation, any and all partnership, membership, limited liability company or other equity interests of such Person; and (c) in each case, any and all warrants, rights or options to purchase any of the foregoing with respect to any Person, any security convertible into any of the foregoing, participations, and any other equity interests or equity equivalents, including stock appreciation rights or phantom stock, with respect to such Person.

 

“Casualty Event” means, with respect to any property (including any interest in property) of any Credit Party, any loss of, theft of, damage to, or condemnation or other taking of, such property for which any of the Credit Parties receives insurance proceeds, proceeds of a condemnation award, or other compensation, which proceeds are not used to replace or restore such property.

 

“Change in Control” means the acquisition of ownership, directly or indirectly, beneficially or of record, by any person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of shares representing more than twenty-five percent (25%) of the aggregate ordinary voting power in the election of Borrower’s directors represented by the issued and outstanding capital stock of Borrower.

 

“Closing Date” means the date of this Agreement.

 

“Commitment” means the Revolving Line Commitment and the Equipment Line Commitment.

 

“Continuation Date” means the date that Borrower’s election to continue a LIBOR Loan for another Interest Period becomes effective in accordance with this Agreement.

 

“Controls” (including the terms “Controlled By” or “Under Common Control”) means, but not be limited to, the ownership of ten percent (10%) or more of the outstanding shares of capital stock of any corporation having voting power for the election of directors, whether or not at the same time stock of any other class or classes has or might have voting power by reason of the happening of any contingency, or ownership of ten percent (10%) or more of any interest in any Person or any other interest by reason of which a controlling influence over the affairs of the Person may be exercised.

 

“Copyright Security Agreements” means the Copyright Security Agreement listed on Schedule 1.1(A), and any similar document delivered by any Credit Party, and, as amended, modified or restated from time to time.

 

“Credit Party(ies)” means the Borrower and each Guarantor.

 

 

“Current Assets” means as of the date of measurement current assets of the applicable Person on a consolidated basis determined in accordance with GAAP.

 

“Current Liabilities” means all liabilities of the applicable Person treated as current liabilities in accordance with GAAP, including all obligations payable on demand or within one year after the applicable measurement date as well as installment, reimbursement, or sinking fund payments payable within one year after the applicable measurement date.  Current Liabilities shall include outstanding principal amounts under the Revolving Credit Facility.

 

“Daily LIBOR Loan” means a LIBOR Loan with respect to which the rate is adjusted and determined daily.

 

“Debt” means, as of the measurement date, without duplication, on a consolidated basis, Borrower’s and its Subsidiaries’:

 

(a)           indebtedness or liability for borrowed money, including without limitation Obligations under the Loan Documents, IECW&C Subordinated Debt, the M&T Sale-Leaseback, synthetic leases and any other off-balance sheet financing (but except for the M&T Sale-Leaseback not including true operating leases);

 

(b)           obligations evidenced by bonds, debentures, notes, or other similar instruments;

 

(c)           obligations for the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business);

 

(d)           obligations as lessee under capital leases;

 

(e)           current liabilities in respect of unfunded vested benefits under Plans covered by ERISA;

 

(f)            obligations as an account party under letters of credit and letters of guaranty;

 

(g)           obligations under acceptance facilities;

 

(h)           all guaranties, endorsements (other than for collection or deposit in the ordinary course of business), and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any Person, or otherwise to assure a creditor against loss, including Debt of any other Person (including any partnership in which such Person is a general partner) to the extent such person is liable therefor as a result of such Person’s ownership interest in or other relationship with such Person;

 

(i)            obligations secured by (or for which the holder of the obligations has an existing right, contingent or otherwise to be secured by) any Liens on property owned or acquired, whether or not the obligations secured thereby have been assumed;

 

 

(j)            all purchase money mortgages, and obligations under asset securitization vehicles, conditional sales contracts and similar title retention debt instruments; and

 

(k)           obligations of a Person to purchase securities or other property that arise out of or in connection with the sale of the same or substantially similar securities or property, such as Capital Securities that are subject to mandatory redemption requirements.

 

“Debt to EBITDARS Ratio” means as of the applicable measurement date, the Debt as of such date divided by EBITDARS for the twelve (12) Fiscal Month period ended as of such date.

 

“Default” means any event, action, inaction, occurrence or condition that with notice or passage of time, or both, would constitute an Event of Default.

 

“Default Rate” means, (i) in the case of LIBOR Loans and Base Rate Loans, three (3) percentage points above the LIBOR Rate or the Base Rate, respectively, and (ii) with respect to other Obligations, three (3) percentage points above the interest rate otherwise in effect.

 

“Distributions” means (i) dividends, payments, or distributions of any kind (including without limitation cash or property or the setting aside for payment of either) in respect of Capital Securities of the applicable Person except distributions in the form of such Capital Securities, and (ii) repurchases, redemptions, or acquisitions of Capital Securities.

 

“Draw Date” means in relation to each Loan, the date that such Loan is made or deemed to be made to Borrower pursuant to this Agreement.

 

“EBITDA” means, for the applicable period, Net Income plus interest expense, cash Taxes paid, depreciation and amortization of intangible assets, all on a consolidated basis and determined in accordance with GAAP on a consistent basis.

 

“EBITDARS” means, for the applicable period, EBITDA, plus payments due under the M&T Sale-Leaseback and non-cash stock option expense, all on a consolidated basis and determined in accordance with GAAP on a consistent basis.

 

 

“Eligible Accounts” means and includes only accounts receivable of a Credit Party (“Accounts”), the records and accounts of which are located in all places at which Borrower maintains, or will maintain, records relating to the Accounts, are acceptable to Lender in Lender’s reasonable discretion, arise out of sales in the ordinary course of the business of a Credit Party made by a Credit Party to a Person which is not an Affiliate nor an employee of a Credit Party nor controlled by an Affiliate, which are not in dispute and which do not then violate any warranty with respect to Accounts set forth in any security agreement made by any Credit Party in favor of Lender (“Lender Security Agreement”).  No Account shall be an Eligible Receivable if more than 90 days have passed since the original invoice date and the inventory covered by such Account was shipped to the customer on or prior to the invoice date, or the services described in such invoice were provided on or prior to the invoice date.  Accounts must not be owing by an Account debtor or a group of affiliated Account debtors whose then existing Accounts owing to the Credit Parties individually exceed in aggregate face amount twenty percent (20)%) of the Credit Parties’ total Eligible Receivables and are not owing by an Account debtor or a group of affiliated Account debtors whose then existing Accounts to any or all of the Credit Parties collectively exceed in aggregate face amount twenty percent (20%) of the total Eligible Receivables of all the Credit Parties; provided that the Lender may from time to time, in the exercise of its sole and absolute discretion, consent to a higher concentration limit and provided further that any such Account shall be a non-Eligible Receivable only to the extent of such excess.  Lender may treat any Account as ineligible if: (a) any warranty contained in this Agreement or in any Lender Security Agreement with respect to Accounts has been breached; or (b) the Account debtor or any affiliate of the Account debtor has disputed the liability, or made any claim with respect to such Account or with respect to any other Account due from such customer or account debtor to any Credit Party; provided, however, only such portion of the Account which is disputed or subject to a claim shall be treated as ineligible unless Lender reasonably determines in its discretion that there is a material risk of nonpayment (or Lender is unable to assess the risk of nonpayment) of the entire Account or any other Account pending resolution of such dispute or claim, in which case Lender may treat the entire Account or such other Account as ineligible; or (c) the Account debtor or an affiliate of the Account debtor has filed a case for bankruptcy or reorganization under the Bankruptcy Code, or if any case under the Bankruptcy Code has been filed against the Account debtor or any affiliate of the Account debtor, or if the Account debtor or any Affiliate of the account debtor has assigned for the benefit of creditors, or if the Account debtor or any affiliate of the Account debtor has failed, suspended business operations, become insolvent, or had or suffered a receiver or a trustee to be appointed for all or a significant portion of its assets or affairs; or (d) if the Account debtor is also a supplier to or creditor of a Credit Party or if the Account debtor has or asserts any right of offset with respect to any Account or asserts any claim or counterclaim against any Credit Party with respect to any Account or otherwise (the Accounts due from the Account debtor will only be reduced to the extent of the claim or counter claim); or (e) the sale is to an Account debtor outside the United States or Canada, unless the sale is on letter of credit, acceptance or other terms acceptable to Lender; or (f) 50% or more of the Accounts of any Account debtor and its affiliates is ineligible, then all the Accounts of such Account debtor and its affiliates may be deemed ineligible by Lender; (g) it relates to a sale of goods or services to the United States, or any agency or department thereof, unless the applicable Credit Party assigns its right to payment of such Account to Lender in form and substance satisfactory to Lender, so as to comply with the Assignment of Claims Act of 1940, as amended; or (h) it relates to sale of goods or services to a state or local governmental authority or an agency or department thereof; or (i) it relates to intercompany sales, employee sales or is due from an Affiliate; or (j) it consists of a sale to an Account debtor on consignment, bill and hold, guaranteed sale, sale or return, sale on approval, payment plan, scheduled installment plan, extended payment terms or any other repurchase or return basis; or (k) the Account debtor is located in a state in which the applicable Credit Party is deemed to be doing business under the laws of such state and which denies creditors access to its courts in the absence of qualification to transact business in such state or of the filing of any reports with such state, unless the applicable Credit Party has qualified as a foreign corporation authorized to do business in such state or has filed all required reports; or (l) the Account is evidenced by chattel paper or an instrument of any kind, or has been reduced to judgment; or (m) the Account arises from a sale of goods or services to an individual who is purchasing such goods primarily for personal, family or household purposes; or (n) if Lender believes, in its reasonable discretion, that collection of such Account is insecure or that such Account may not be paid by reason of the Account debtor’s financial inability to pay (should availability under the Revolving Line Facility be an issue, the Lender will allow the Borrower thirty (30) days prior to the removal from the Borrowing Base, provided that the Accounts from such Account debtor do not collectively exceed ten percent (10%) of the total Eligible Receivables).

 

 

“Eligible Inventories” means inventory owned by a Credit Party (“Inventory”) which has been identified and described to the Lender’s reasonable satisfaction, and is represented by the Borrower as meeting all of the following criteria on the date any Revolving Credit Loan based thereon is outstanding:  (a) a Credit Party is the sole owner of the Inventory, none of the Inventory is being held or shipped by such Credit Party on a consignment or approval basis, such Credit Party has not sold, assigned or otherwise transferred all or any portion thereof, and none of the Inventory is subject to any claim, lien, or security interest other than in favor of Lender; (b) if any of the Inventory is represented or covered by any document of title, instrument or chattel paper, a Credit Party is the sole owner of all such documents, instruments, and chattel paper, all of which are in the possession of such Credit Party, none thereof has been sold, assigned, or otherwise transferred, and none thereof is subject to any claim, lien or security interest other than in favor of Lender; and (c) the Inventory consists of saleable non-obsolete, commodity type raw materials that are earmarked for specific orders and is not excess as shown on the Borrower’s Excess Stock Report or determined by the Lender’s collateral audits, and finished goods manufactured or acquired by a Credit Party in the ordinary course of such Credit Party’s business, as conducted on the date hereof, subject to its contract or sole possession and located in places where Credit Parties maintain, or will maintain, Inventory, and at locations for which landlord or bailee waivers in form and substance acceptable to Lender have been executed and delivered by such landlord or bailee to Lender; and any Inventory which the Lender in the good faith exercise of its sole discretion from time to time has deemed to be ineligible because the Lender otherwise considers the collateral value to the Lender to be impaired or its ability to realize such value to be insecure.

 

“Energy Loan” means the term loan made by the Lender to fund energy-related expenditures, referenced in Article 4 hereof.

 

“Energy Loan Maturity Date” means April 2, 2013.

 

“Energy Loan Note” means the Energy Loan Note evidencing the Energy Loan, as such note may be amended, modified or restated from time to time.

 

“Environment” means any water, including, but not limited to, surface water and ground water or water vapor: any land, including land surface or subsurface; stream sediments; air; fish; wildlife; plants; and all other natural resources or environmental media.

 

“Environmental Laws” means all present and future federal, state and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances, regulations, codes and rules relating to the protection of the Environment and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the regulations, rules, ordinances, bylaws, policies, guidelines, procedures, interpretations, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto.

 

 

“Environmental Permits” means all licenses, permits, approvals, authorizations, consents or registrations required by any applicable Environmental Laws and all applicable judicial and administrative orders in connection with ownership, lease, purchase, transfer, closure, use and/or operation of the Improvements and/or as may be required for the storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances.

 

“Environmental Report” means written reports, if any, prepared for the Lender by an environmental consulting or environmental engineering firm.

 

“Equipment Line Commitment” means the discretionary commitment related to the Equipment Line described in Section 5.1.

 

“Equipment Line Facility” means the equipment line facility established pursuant to Section 5.1 of this Agreement.

 

“Equipment Line Loan(s)” means a loan or loans made by the Lender to Borrower under the Equipment Line Facility.

 

“Equipment Line Maturity Date” means December 16, 2010, or such later date as may be agreed by the Bank in its sole discretion in writing.

 

“Equipment Line Notes” means the Equipment Line Notes made from time to time by Borrower in favor of Lender pursuant to Section 5.4 of this Agreement, as such notes may be amended, modified or restated from time to time.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” means any trade or business (whether incorporated or unincorporated) which together with the Borrower is treated as a single employer under Section 414(b), (c), (m) or (o) of the Internal Revenue Code.

 

“Event of Default” means the occurrence of any event described in Section 15.1.

 

“Excess Cash Flow” means, for the applicable period, the sum of:

 

(a)           EBITDA, minus

 

(b)           Taxes based upon income to the extent that such Taxes are paid in cash, minus

 

(c)           Interest Expense to the extent such Interest Expense is paid in cash during such period or within fifteen (15) days after the end of such period, minus

 

(d)           all principal payments (whether scheduled, voluntary prepayments, or mandatory prepayments) of Debt other than Revolving Credit Loans, minus

 

(e)           all Unfinanced Capital Expenditures, minus

 

 

(f)           any losses or expenses (or gains or income) which are cash items and were added back for the purpose of determining EBITDA, minus (or plus)

 

(h)           plus non-cash stock compensation expense.

 

“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period determined by the Lender to equal the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. for such day on such transactions received by the Lender from three Federal funds brokers of recognized standing selected by it.

 

“Financial Statements” means Borrower’s audited consolidated financial statements described in Section 9.6.

 

“Fiscal Month” means a period that constitutes Borrower’s monthly accounting period.

 

“Fiscal Quarter” means any of the quarterly accounting periods of Borrower ending on December 31, March 31, June 30, and September 30 of any Fiscal Year.

 

“Fiscal Year” means the annual accounting period of Borrower ending on September 30 of each year.

 

“Fixed Charge Coverage Ratio” means, as of the applicable measurement date, the ratio of (i) EBITDA, plus non-cash stock option expense, minus Unfinanced Capital Expenditures, minus cash Taxes paid for the four Fiscal Quarters just ended, to (ii) the sum of Interest Expense, plus principal payments due or paid with respect to Debt, plus Distributions during the four Fiscal Quarters just ended.

 

“Fixed Rate” means, with respect to any particular Loan, the Cost of Funds for five years, or such shorter period matching any shorter original length to maturity of any loan made under the Equipment Line Facility (the “Base Term”), plus three percentage points (3%), but not less than a floor Fixed Rate of six percent (6%) per annum.  “Cost of Funds’ means the most recent yield on United States Treasury Obligations adjusted to a constant maturity to match the Base Term in effect two (2) Business Days prior to the date on which the Fixed Rate will first be applicable to the respective Loan, as published by the Board of Governors of the Federal Reserve System in the Federal Reserve Statistical Release H.15(519), or by such other quoting service, index, or commonly available source utilized by the Lender, plus the “ask” side of the like term swap spread.

 

“Fixed Rate Loan” means any Loan when and to the extent that the interest rate for such Loan is determined by reference to a Fixed Rate.

 

“Fixed Rate Period” means the period selected by the Borrower during which a particular Fixed Rate shall be applicable.

 

 

“Forfeiture Action” means any action, including investigations, hearings, and other legal proceedings, before any court, tribunal, commission, or governmental authority, agency, or instrumentality, whether domestic or foreign, that may result in seizure of any property or asset.

 

“GAAP” and “Generally Accepted Accounting Principles” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession in the United States of America, which are applicable to the circumstances as of the date of determination.

 

“GTC” means General Technology Corporation.

 

“GTC Term Loan” means the $5,000,000 aggregate original outstanding principal balance term loan described in Article 6 hereof.

 

“GTC Term Loan Maturity Date” means December 16, 2014.

 

“GTC Term Loan Note” means the Term Loan Note evidencing the GTC Term Loan

 

“GTC Transaction” means the acquisition by Borrower of the Capital Securities of GTC pursuant to the Stock Purchase Agreement, dated as of December 16, 2009, made among Borrower, Crane International Holdings, Inc., and GTC.

 

“Guarantor(s)” means IECW&C, GTC, and each Subsidiary which becomes a Guarantor pursuant to Section 11.12.

 

“Guaranties” means, collectively, the continuing guaranties executed and delivered to Lender by each Guarantor which guaranty payment of the Obligations, as amended, modified or restated from time to time, and “Guaranty” means any of the Guaranties.

 

“Hazardous Substances” means, without limitation, any explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, hazardous wastes, hazardous or toxic substances and any other material defined as a hazardous substance in any Environmental Laws, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601, et. seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Sections 1801, et. seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Sections 6901, et. seq.; Articles 15 and 27 of the New York State Environmental Conservation Law or any other federal, state, or local law, regulation, rule, ordinance, by-law, policy, guideline, procedure, interpretation, decision, order, or directive, whether existing as of the date hereof, previously enforced or subsequently enacted.

 

“IECW&C” means IEC Electronics Wire and Cable, Inc., formerly known as Val-U-Tech, Inc.

 

 

“IECW&C Subordinated Debt” means Debt incurred to the Shareholder of IECW&C in connection with the closing of the acquisition by the Borrower of the stock of Val-U-Tech Corp. pursuant to the Agreement and Plan of Merger among Borrower, VUT Merger Corp., Val-U-Tech, Inc. and the Shareholders of Val-U-Tech, Inc. dated May 23, 2008.

 

“Improvements” means any and all real property and improvements owned or used by any of the Credit Parties.

 

“Intellectual Property” means the property described in Section 9.13.

 

“Interest Expense” means, for the applicable period, all interest paid, capitalized, or accrued, and amortization of debt discount with respect to all Debt determined after giving effect to the net cost associated with Rate Management Transactions.

 

“Interest Period” means, (i) with respect to any LIBOR Loan other than a Daily LIBOR Loan, the period commencing on the Draw Date or Continuation Date for such LIBOR Loan and ending on the date that shall be the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) of the calendar month that is one (1), two (2), three (3) or six (6) months after the commencement of such period, in accordance with Borrower’s election made pursuant to the terms of this Agreement; provided, however, that if an Interest Period would end on a day that is not a LIBOR Business Day, such Interest Period shall be extended to the next succeeding LIBOR Business Day, unless such next succeeding LIBOR Business Day would fall in the next calendar month, in which case such Interest Period shall end on the immediately preceding LIBOR Business Day, and (ii) with respect to a Daily LIBOR Loan, one day, provided, however, that if an Interest Period would end on a day that is not a LIBOR Business Day, such Interest Period shall be extended to the next succeeding LIBOR Business Day.

 

“Inventory Overline Advance Rate” means 70% of Borrower’s Eligible Inventory.

 

“Investment” of any Person means (a) acquisition of any Capital Security, evidence of Debt or other security or instrument issued by any other Person, (b) any loan, advance or extension of credit to (including guaranties of liabilities of), or any contribution to the capital of, any other Person, (c) any acquisition of assets (other than inventory or Capital Expenditures in the ordinary course of business) or business from or Capital Security of any other Person, (d) acquisition of a futures contract, or becoming liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract, and (e) any other investment in any other Person.  An Investment shall be deemed to be “outstanding”, except to the extent that it has been paid or otherwise satisfied in cash or the Person making such Investment has received cash in consideration for the sale thereof, notwithstanding the fact that such Investment may otherwise have been forgiven, released, canceled or otherwise nullified.

 

“Lender” means Manufacturers and Traders Trust Company, and its successors, legal representatives, and assigns

 

 

“LIBOR” means, the rate per annum (rounded upward, if necessary, to the nearest 1/16th of 1%) obtained by dividing (i) the London Interbank Offered Rate, as applicable in accordance with the LIBOR Rate selected by Borrower for each Loan, or in the case of Daily LIBOR each day (or if such day is not a LIBOR Business Day, as fixed in the same manner on the immediately preceding LIBOR Business Day, which day’s rate shall, unless otherwise provided for, apply to the immediately succeeding non-LIBOR Business Days), fixed by the British Bankers Association for United States dollar deposits in the London interbank market at approximately 11:00 a.m. London, England time (or as soon thereafter as practicable) as determined by the Lender from any broker, quoting service or commonly available source utilized by the Lender by (ii) a percentage equal to 100% minus the stated maximum rate of all reserves required to be maintained against “Eurocurrency Liabilities” as specified in Regulation D (or against any other category of liabilities which includes deposits by reference to which the interest rate on LIBOR Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States’ office of a bank to United States residents) on such date to any member bank of the Federal Reserve System.  Notwithstanding any provision above, the practice of rounding to determine LIBOR may be discontinued at any time in the Lender’s sole discretion.

 

“LIBOR Business Day” means any day on which dealings in United States dollar deposits are carried on by banking institutions in London that is also a Business Day.

 

“LIBOR Loan” means any Loan when and to the extent that the interest rate for such Loan is determined by reference to LIBOR.

 

“LIBOR Rate” means, as selected by the Borrower for the respective LIBOR Loan, the one-month, two-month, three-month, or six-month LIBOR, each with an Interest Period of equal duration, or for Daily LIBOR Loans, one-month LIBOR, adjusting daily, but in no case less than a floor LIBOR rate of one and one-fourth percent (1.25%), and then in each case plus the Applicable Margin.

 

“Lien” means any mortgage, pledge, security interest, encumbrance, lien, assignment or charge of any kind or description and shall include, without limitation, any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof including any lease or similar arrangement with a public authority executed in connection with the issuance of industrial development revenue bonds or pollution control revenue bonds, and the filing of or agreement to give any financing statement under the Uniform Commercial Code (or comparable law) of any jurisdiction naming the owner of the asset to which such lien applies as a debtor (other than a filing which does not evidence an outstanding secured obligation, or a commitment to make advances or to incur any other obligation of any kind).

 

“Linked Deposit Program” shall mean the Empire State Development Linked Deposit Program, in which the Lender is, as of the date hereof, a participant.

 

“Loan(s)” means, (without duplication) any amount disbursed by Lender to or on behalf of the Borrower under the Loan Documents, whether such amount constitutes an original disbursement of funds, or the continuation of any amount outstanding, under the Revolving Credit Facility, the 2008 Term Loan Facility, the Energy Loan Note, the GTC Term Loan Facility, the Mortgage Secured Term Loan Facility, or the Equipment Line Facility.

 

 

“Loan Documents” means the Agreement, the Notes, the Security Documents, all documents and agreements related to the M&T Sale-Leaseback, and all other agreements, documents and certificates executed with or in favor of the Lender in connection with the Agreement or any amendment to the Agreement or to any other Loan Document.

 

“M&T Sale-Leaseback” means the sale-leaseback arrangement between the Lender and the Borrower evidenced in part by the Master Equipment Lease dated May 30, 2008.

 

“Mandatory Prepayment” means a prepayment required by Section 8.13(d) or 8.13(e).

 

“Material Adverse Effect” means (i) a material adverse effect on the financial condition, performance, business, operations or prospects of the Credit Parties, taken as a whole, (ii) material impairment of the legal ability of any of the Credit Parties to perform their obligations under this Agreement or any of the Loan Documents in any material respect, (iii) any material adverse effect on the binding nature, validity or enforceability of any Loan Document as an obligation of any Credit Party that is a party thereto, and (iv) material impairment of the rights and remedies of the Lender under this Agreement or any of the Loan Documents, including without limitation impairment or unenforceability of the perfection or priority of any Lien held by the Lender.

 

“Minimum Loan Amount” shall mean (i) for any Daily LIBOR Loan, any whole dollar increment, (ii) for Equipment Line Loans, $100,000, with minimum increments thereafter of $100,000, and (iii) for other LIBOR Loans, $1,000,000, with minimum increments thereafter of $500,000.

 

“Money Market Investments” means (a) any security issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof or having a remaining maturity of not more than 270 days, (b) any certificate of deposit, eurodollar time deposit and banker’s acceptance with remaining maturity of not more than 270 days, any overnight bank deposit, any demand deposit account, in each case with Lender or with any United States commercial bank having capital and surplus in excess of $500,000,000 and rated B or better by Thomson Bankwatch Inc., (c) any repurchase obligation with a term of not more than seven days for underlying securities of the types described in clauses (a) and (b) above entered into with any financial institution meeting the qualifications specified in clause (b) above, and (d) any commercial paper issued by Lender and any other commercial paper rated A-1 by Standard & Poor’s Rating Group of Prime-1 by Moody’s Investors Service, Inc. and in any case having a remaining maturity of not more than 270 days.

 

“Mortgage” means the mortgage in favor of the Lender made by GTC covering its interest in property and improvements located at premises commonly known as 1450 Mission Avenue NE, Albuquerque, New Mexico held pursuant to a Lease Agreement between the City of Albuquerque, New Mexico and GTC dated as of March 1, 1999.

 

“Mortgage Secured Term Loan” means the $4,000,000 aggregate original outstanding principal balance term loan described in Article 7 hereof.

 

“Mortgage Secured Term Loan Maturity Date” means December 16, 2014.

 

 

“Mortgage Secured Term Loan Note” means the Term Loan Note evidencing the Mortgage Secured Term Loan.

 

“Mortgaged Property” means the property and improvements covered by the Mortgage.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA as to which any of the Credit Parties or any ERISA Affiliate is obligated to make, has made, or will be obligated to make contributions on behalf of participants who are or were employed by any of them.

 

“Net Cash Proceeds” shall mean (a) in the case of any Casualty Event, the aggregate cash proceeds of insurance, condemnation awards and other compensation received by any Person in respect of such Casualty Event less (i) reasonable fees and expenses incurred by such Person in connection therewith, and (ii) contractually required payments of Debt to the extent secured by Liens on the property subject to such Casualty Event and any income or transfer Taxes paid or reasonably estimated by such Person to be payable by such Person as a result of such Casualty Event, and (b) in the case of any Asset Disposition, the aggregate amount of all cash payments and proceeds (including any cash payments made from time to time in respect to the principal amount of any note or similar instrument or agreement providing for or evidencing debt as the deferred purchase price owing from the purchaser of such asset to the applicable Person) received by any Person in connection therewith less (i) reasonable fees and expenses incurred by such Person in connection therewith, (ii) Debt to the extent the amount thereof is secured by a Lien on the property that is the subject of such Asset Disposition and the transferee (or holder of the Lien on) such property requires that such Debt be repaid as a condition of such Asset Disposition, and (iii) any income or transfer Taxes paid or reasonably estimated by the Person to be payable by such Person as a result of such Asset Disposition.

 

“Net Income” means for the applicable period, the net earnings of the Borrower on a consolidated basis, determined in accordance with GAAP on a consistent basis, but excluding:

 

(a)           any gain or loss arising from the sale of capital assets;

 

(b)           any non-cash gain or non-cash loss arising from any write-up of assets;

 

(c)           net earnings or losses of any Subsidiary of Borrower accrued prior to the date it became a Subsidiary;

 

(d)           net earnings or losses of any Person, substantially all the assets of which have been acquired in any manner by Borrower, realized by such Person prior to the date of such acquisition;

 

(e)           net earnings or losses of any Person in which Borrower has an ownership interest, except any such net earnings which have actually been received by Borrower in the form of cash distributions and except the net earnings or losses of any Guarantor;

 

(f)            any portion of the net earnings of any Subsidiary of Borrower which for any reason is unavailable for payment of dividends to Borrower;

 

 

(g)           the net earnings or losses of any Person to which any assets of Borrower shall have been sold, transferred or disposed of after the date of such transaction,

 

(h)           the net earnings or losses of any Person into which Borrower shall have merged, or been a party to any consolidation or other form of reorganization, prior to the date of such transaction;

 

(i)            any gain arising from the acquisition of any securities of Borrower; and

 

(j)            any gain or loss arising from extraordinary items.

 

“Note(s)” means the Revolving Credit Note, the 2008 Term Loan Note, the Energy Loan Note, the GTC Term Loan Note, the Mortgage Secured Term Loan Note, and the Equipment Line Notes, and “Note” means any of the Notes.

 

“Obligations” means and shall include all of the Credit Parties’ obligations to the Lender and/or to any of Lender’s affiliates of any kind or nature, arising now or in the future under or related to this Agreement and/or the Loan Documents including obligations related to the Notes, the M&T Sale-Leaseback, overdrafts, obligations related to Rate Management Transactions, credit card transactions, automated transfer transactions, electronic funds transfers, other transactions related to the Credit Parties’ dealings with the Lender, interest accruing after the filing of any petition or assignment in bankruptcy or for reorganization by or against the Credit Parties (whether or not such a claim for such post-petition interest is allowed in the proceedings), fees, charges, expenses, and amount payable with respect to guaranties.

 

“Organizational Documents” means, as applicable to the particular Person, the certificate or articles of incorporation or formation, bylaws, operating agreement, certificate of partnership, partnership agreement, and other similar documents and agreements related to formation and governance.

 

“Overline Advance” means any portion of a Loan under the Revolving Line Facility that is available under the Borrowing Base only if the Inventory Overline Advance Rate is in effect.

 

“PBGC” means the Pension Benefit Guarantee Corporation and any successor thereto.

 

“Permitted Debt” means Debt described in Section 12.1.

 

“Permitted Liens” means the following Liens:

 

(a)           liens imposed by any governmental authority for Taxes or charges not yet due or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Borrower subject to such lien in accordance with GAAP on a consistent basis, provided no tax lien filing, levy, or execution exists in connection therewith;

 

(b)           carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like liens arising in the ordinary course of business which are not overdue for a period of more than thirty (30) days, or which are being contested in good faith and by appropriate proceedings;

 

 

(c)           pledges or deposits under workers’ compensation, unemployment insurance and other social security legislation;

 

(d)           deposits to secure the performance of bids, trade contracts (other than borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; and

 

(e)           Liens in favor of Lender.

 

“Person” means any individual, sole proprietorship, or other entity of any kind or nature including any corporation, partnership, trust, unincorporated organization, limited liability company, unlimited liability company, mutual company, joint stock company, estate, union, employee organization, government or any agency or political subdivision thereof.

 

“Plan” means any employee benefit plan, program, arrangement, practice or contract, maintained by or on behalf of a Borrower or an ERISA Affiliate, which provides benefits or compensation to or on behalf of employees or former employees, whether formal or informal, whether or not written, including but not limited to the following types of plans:

 

(a)           Executive Arrangements - any bonus, incentive compensation, stock option, deferred compensation, commission, severance, “golden parachute”, “rabbi trust”, or other executive compensation plan, program, contract, arrangement or practice;

 

(b)           ERISA Plans - any “employee benefit plan” as defined in ERISA, including, but not limited to, any defined benefit pension plan, profit sharing plan, money purchase pension plan, savings or thrift plan, stock bonus plan, employee stock ownership plan, Multiemployer Plan, or any plan, fund, program, arrangement or practice providing for medical (including post-retirement medical), hospitalization, accident, sickness, disability, or life insurance benefits; and

 

(c)           Other Employee Fringe Benefits - any stock purchase, vacation, scholarship, day care, prepaid legal services, severance pay or other fringe benefit plan, program, arrangement, contract or practice.

 

“Prepayment Premium” means a payment by the Borrower with respect to any prepayment in whole or in part of any Fixed Rate Loan equal to the greater of (a) one percent (1%) of the principal sum prepaid, or (b) an amount equal to the present value of the difference between (i) the amount of interest that would have accrued on the principal sum prepaid from the date of the prepayment to the end of the applicable Fixed Rate Period, at the interest rate applicable to the Note in effect on the date of prepayment and (ii) the amount of interest that would have accrued on the principal sum prepaid from the date of the prepayment to the end of the applicable Fixed Rate Period of the applicable Note at the Current Market Rate.  “Current Market Rate” shall mean the most recent yield on United States Treasury Obligations adjusted to a constant maturity having a term most nearly corresponding to Fixed Rate Period remaining from the date of prepayment to the last day of the applicable Fixed Rate Period, in effect two (2) Business Days prior to the prepayment date as published by the Board of Governors of the Federal Reserve System in the Federal reserve Statistical Release H.15 (519), or by such other quoting service, index, or commonly available source utilized by the Lender.  The “present value” calculation shall use the Current Market Rate as the discount rate and shall be calculated as if each installment of the principal sum had been made when due during the remainder of the applicable Fixed Rate Period.

 

 

“Prime Rate” means the rate of interest announced by the Lender from time to time at its Principal Office as its prime commercial lending rate, which rate is not intended to be the lowest rate of interest charged by Lender to its borrowers.

 

“Principal Office” means the Lender’s office at 255 East Avenue, Rochester, New York 14604.

 

“Quarterly Covenant Compliance Sheet” or “QCC Sheet” means the covenant compliance sheet delivered on a quarterly basis by Borrower to Lender, in substantially the form of Exhibit A attached hereto, including a certificate of the Chief Financial Officer of Borrower certifying that no Event of Default or Default has occurred and certifying to the accuracy of an attached schedule showing computation of financial covenants contained in Article 13 hereof.

 

“Rate Management Transaction” means any transaction (including an agreement with respect thereto) now existing or hereafter entered into by any Credit Party which is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.

 

“Release” has the same meaning as given to that term in Section 101(22) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601(22), and the regulations promulgated thereunder.

 

“Revolving Credit Commitment” means the Revolving Credit Commitment described in Section 2.1.

 

“Revolving Credit Facility” means the revolving credit facility established pursuant to Section 2.1 of this Agreement.

 

“Revolving Credit Loan(s)” means a Loan or Loans made by the Lender to Borrower under the Revolving Credit Facility.

 

“Revolving Credit Note” means the Amended and Restated Revolving Credit Note described in Section 2.4.

 

“Revolving Credit Termination Date” means December 16, 2012.

 

 

“Security Agreement” means the General Security Agreement made by each Credit Party in favor of Lender.

 

“Security Documents” means those documents set forth on Schedule 1.1(A).

 

“Subsidiary” means any Person, the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements in accordance with GAAP (including among others consolidated subsidiaries of consolidated subsidiaries).

 

“Tax” means any federal, state, provincial, or foreign tax (including withholding tax), assessment, or other governmental charge (including penalties and interest) upon a Person or upon its assets, revenues, income, or profits.

 

“Trademark Security Agreements” means the Trademark Collateral Security and Pledge Agreement listed on Schedule 1.1(A), and any similar document delivered by any Credit Party, and, as amended, modified or restated from time to time.

 

“Unfinanced Capital Expenditures” means all capital expenditures other than (i) capital expenditures financed by the Lender (but excluding for this definition any capital expenditures financed with the proceeds of a Revolving Credit Loan), and (ii) capital expenditures financed with Debt (other than the Loans) permitted under this Agreement or Debt to which the Lender consents in writing.

 

1.2         Interpretation.  This Agreement has been prepared in cooperation of counsel for each of the parties, and shall not be construed as against any particular party as drafter.  Unless otherwise expressly provided in this Agreement, the following interpretations shall apply:

 

(a)           references in this Agreement to statutes shall include any amendments of the same and any rules and regulations promulgated thereunder,

 

(b)           references to Persons include their permitted successors and assigns, and in the case of any governmental authority, any Person succeeding to its functions and capacities,

 

(c)           references to agreements (including exhibits and schedules thereto) include amendments, assignments, and restatements provided that such amendments, assignments, and restatements are not prohibited by the Loan Documents,

 

(d)           references to specific sections, articles, annexes, schedules, and exhibits are to this Agreement,

 

(e)           words importing gender include the other gender,

 

(f)           the singular includes the plural and the plural includes the singular,

 

(g)           the words, “including”, “include”, and “includes” shall be deemed to be followed by the words “without limitation”,

 

 

(h)           each authorization herein shall be deemed irrevocable and coupled with an interest,

 

(i)            obligations or liabilities of the Credit Parties, or any of them, to which this Agreement makes reference shall be joint and several,

 

(j)            accounting terms shall be interpreted, and all determinations relating thereto shall be made, in accordance with GAAP, and

 

(k)           captions and headings are for ease of reference only and shall not affect the construction hereof.

 

ARTICLE 2 - - REVOLVING CREDIT FACILITY

 

2.1         Revolving Credit Commitment.  The Lender agrees, subject to Section 2.2 and the other terms and conditions hereinafter set forth, to make Revolving Credit Loans to the Borrower from time to time during the period from the Closing Date up to but not including the Revolving Credit Termination Date in an aggregate principal amount not to exceed at any time outstanding the amount of $15,000,000 (the “Revolving Credit Commitment”).  During the period from the Closing Date to the Revolving Credit Termination Date, within the limits of the Revolving Credit Commitment and subject to Section 2.2, the Borrower may borrow, prepay pursuant to Section 2.5, and reborrow under this Section 2.1.  Except as otherwise provided in this Agreement, the Revolving Credit Loans will be outstanding as LIBOR Loans.

 

2.2         Borrowing Base; Overline Advances.  Notwithstanding the provisions of Section 2.1, the aggregate principal amount of all outstanding Revolving Credit Loans shall not exceed the lesser of the Borrowing Base and the Revolving Credit Commitment.

 

Upon Borrower’s request the Inventory Overline Advance Rate shall apply and the Lender will make Overline Advances from time to time; provided, however no new Overline Advance shall be available unless no Overline Advances have been outstanding in the immediately prior thirty (30) consecutive days and no Default then exists.

 

At any time that the aggregate principal amount of all outstanding Revolving Credit Loans exceeds the lesser of the Borrowing Base and the Revolving Credit Commitment, the Borrower shall immediate prepay a portion of the Revolving Credit Loans that is at least the amount of such excess pursuant to Section 2.5 hereof.

 

2.3         Interest.

 

(a)           Interest shall accrue each day on each LIBOR Loan from and including the first day of each Interest Period applicable thereto until, but not including, the last day of each such Interest Period or the day the LIBOR Loan is paid in full (if sooner) at a rate per annum equal to the LIBOR Rate, as determined using LIBOR in effect on the following dates, as applicable:

 

 

(i)           for LIBOR Loans other than Daily LIBOR Loans, (A) for new LIBOR Loans, two (2) LIBOR Business Days before the Draw Date; (B) for continuations of and conversions to LIBOR Loans, the LIBOR Business Day the Lender receives (or is deemed to receive) the required Notice in accordance with the terms of this Agreement; (C) for LIBOR Loans where the Automatic Continuation Option is in effect, the applicable Automatic Adjustment Rate Determination Date for such LIBOR Loan, and

 

(ii)          for Daily LIBOR Loans, at a rate per annum equal to the LIBOR Rate in effect each day (or if such day is not a LIBOR Business Day, as fixed in the same manner on the immediately preceding LIBOR Business Day, which day’s rate shall, unless otherwise provided for, apply to the immediately succeeding non-LIBOR Business Days).

 

(b)           After any conversion to a Base Rate Loan, interest shall accrue on the Base Rate Loan from and including the first date a Loan becomes a Base Rate Loan to, but not including, the day such Base Rate Loan is paid in full or converted back to a LIBOR Loan, at the rate per annum equal to the Base Rate.  Any change in the Base Rate shall be effective on the date of such change.

 

2.4         Revolving Credit Note.  Borrower’s obligation to repay the Revolving Credit Loans shall be evidenced by a Revolving Credit Note in substantially the form of Exhibit B to this Agreement, in favor of Lender in the aggregate principal amount of Lender’s Revolving Credit Commitment.

 

2.5         Payments.

 

(a)           Interest shall be paid, in the case of LIBOR Loans other than Daily LIBOR Loans on the last day of the applicable Interest Period, but no less often than every three months, and in the case of Daily LIBOR Loans and Base Rate Loans on the first day of every month.  Interest on any Base Rate Loans shall be paid on the first day of each month.  All accrued and unpaid interest shall be due and payable on the Termination Date.

 

(b)           Each Overline Advance shall be repaid in full no later than the sixtieth (60th) day after the making of such Overline Advance.

 

(c)           All Revolving Credit Loans shall be repaid in full on the Revolving Credit Termination Date.

 

(d)           At any time that the Borrower becomes aware or receives notice (oral or written) that the outstanding principal amount of all Revolving Credit Loans exceeds the Borrowing Base, Borrower shall immediately prepay that portion of the Revolving Credit Loans that is necessary to comply with the provisions of Section 2.2.

 

2.6         Unused Commitment Fee.  Borrower agrees to pay to the Lender the Applicable Unused Fee on the average amount of the Revolving Credit Commitment unused during each Fiscal Quarter.  Such fee shall be payable quarterly and the Lender is hereby authorized to charge Borrower’s account with Lender for the amount of such fee.  The Lender will send Borrower an invoice setting forth the amount of such fee and the basis upon which it was calculated, and will send such invoice within two (2) Business Days after such fee is so charged.

 

 

2.7         Use of Proceeds.  Proceeds of the Revolving Credit Loans shall be used for the Borrower’s general corporate purposes including purchase of the stock of GTC.

 

ARTICLE 3 – 2008 TERM LOAN FACILITY

 

3.1         2008 Term Loan.  Lender previously made, and shall continue, a term loan (the “2008 Term Loan”) in the original principal amount of $1,700,000 and a principal balance on the Closing Date of $$689,988, for the benefit of Borrower on the terms and conditions hereinafter set forth.

 

3.2         2008 Term Loan Note.  Borrower’s obligation to repay the 2008 Term Loan shall be evidenced by its promissory note in substantially the form of Exhibit C to this Agreement, with blanks appropriately completed.

 

3.3         Principal Payments on 2008 Term Loan.  Borrower agrees to pay the principal amount of the 2008 Term Loan in consecutive installments on the first day of each month in the amount of $28,334 each.  The entire unpaid principal amount of the 2008 Term Loan shall be due and payable on the 2008 Term Loan Maturity Date.

 

3.4         Interest.

 

(a)           Borrower shall pay interest on the outstanding principal amount of the 2008 Term Loan at the Fixed Rate of six and seven-tenths percent (6.7%) per annum.  Interest on the 2008 Term Loan shall be calculated on the basis of a year of 360 days for the actual number of days elapsed.

 

(b)           Interest on the 2008 Term Loan shall be paid in immediately available funds to the Lender on the first day of each month.  All remaining accrued interest shall be due and payable on the 2008 Term Loan Maturity Date.

 

ARTICLE 4 - - ENERGY LOAN

 

4.1         Energy Loan Note.  Borrower’s obligation to repay the Energy Loan is evidenced by its promissory note with attached rider in substantially the form of Exhibit D to this Agreement.

 

4.2         Energy Loan Payments.  Borrower shall make payments of principal and interest as provided in the Energy Loan Note.  All remaining unpaid principal and accrued interest on the Energy Loan shall be due and payable in full on the Energy Loan Maturity Date.

 

4.3         Interest.  Borrower shall pay interest on the outstanding principal amount of the Energy Loan as provided in the Energy Loan Note.

 

4.4         Energy Loan Documents.  The provisions of this Agreement supersede and replace the Agreement (Affirmative Agreements) containing financial covenants executed by and between the Borrower and Lender in connection with closing of the Energy Loan.

 

 

ARTICLE 5 - - EQUIPMENT LINE OF CREDIT FACILITY

 

5.1         Equipment Line of Credit.  Subject to Section 5.2 and the other terms and conditions hereinafter set forth, the Lender has established the Equipment Line Facility, available in the discretion of the Lender to the Borrower from time to time during the period from the Closing Date up to but not including the Equipment Line Maturity Date, in an aggregate principal amount of $1,500,000, less the amount of Equipment Line Loans made under the Prior Agreement (the “Equipment Line Commitment”).  No reborrowing is available under the Equipment Line Facility.  The Lender will consider Borrower’s requests for Equipment Line Loans, but shall have the sole and absolute discretion whether to make any Loan (or any portion of any Loan) requested by Borrower, regardless of any general availability under the Equipment Line Facility.

 

5.2         Notice and Manner of Borrowing.  Borrower may make requests for Equipment Line Loans, in minimum amounts of $100,000, to the Lender specifying: (a) the date of each such Loan; (b) the amount of such Loan; (c) whether such Loan will be a Fixed Rate Loan or LIBOR Loan; (d) in the case of a LIBOR Loan, the duration of the Interest Period applicable thereto, and (e) the purpose of the Loan including copies of invoices for equipment being purchased and other supporting documentation reasonably requested by Lender.  Subject to the terms of this Agreement including Section 5.1, and upon fulfillment of the applicable conditions set forth in Article 10, the Lender shall credit the amount of such Equipment Line Loan, in immediately available funds, to the account of the Borrower maintained with the Lender for that purpose.

 

5.3         Interest.

 

(a)           The Equipment Line Loans may be outstanding as LIBOR Loans or Fixed Rate Loans (in which case the rate shall be fixed for the duration of the term of the Equipment Line Loan), as elected with respect to each Equipment Line Loan at least three (3) Business Days before the date on which such Equipment Line Loan is made.  Borrower shall pay interest to the Lender on the outstanding and unpaid principal amount of the each Equipment Line Loan at the LIBOR Rate or the Fixed Rate, whichever may have been elected by the Borrower.  Each LIBOR Rate shall be effective for the applicable Interest Period.  Interest on each Equipment Line Loan shall be calculated on the basis of a year of 360 days for the actual number of days elapsed.

 

(b)           Provided that the Lender remains a participant in the Linked Deposit Program and approval is received from New York Empire State Development for Borrower’s participation in such program at the level provided herein, the Lender will provide the Borrower with the interest rate benefit under the Linked Deposit Program for up to an aggregate of $1,000,000 in Equipment Line Loans.  Borrower must elect a Fixed Rate for any Equipment Line Loan for the period in which Linked Deposit Program benefits are received, which period may not exceed forty-eight months, and the other terms and conditions of general application to the Linked Deposit Program must be satisfied.

 

(c)           Interest shall accrue each day on each LIBOR Loan from and including the first day of each Interest Period applicable thereto until, but not including, the last day of each such Interest Period or the day the LIBOR Loan is paid in full (if sooner) at a rate per annum equal to the LIBOR Rate, as determined using LIBOR in effect on the following dates, as applicable:

 

 

  (i)           for LIBOR Loans other than Daily LIBOR Loans, (A) for new LIBOR Loans, two (2) LIBOR Business Days before the Draw Date; (B) for continuations of and conversions to LIBOR Loans, the LIBOR Business Day the Lender receives (or is deemed to receive) the required Notice in accordance with the terms of this Agreement; (C) for LIBOR Loans where the Automatic Continuation Option is in effect, the applicable Automatic Adjustment Rate Determination Date for such LIBOR Loan, and

 

  (ii)          for Daily LIBOR Loans, at a rate per annum equal to the LIBOR Rate in effect each day (or if such day is not a LIBOR Business Day, as fixed in the same manner on the immediately preceding LIBOR Business Day, which day’s rate shall, unless otherwise provided for, apply to the immediately succeeding non-LIBOR Business Days).

 

(d)           After any conversion to a Base Rate Loan, interest shall accrue on the Base Rate Loan from and including the first date a Loan becomes a Base Rate Loan to, but not including, the day such Base Rate Loan is paid in full or converted back to a LIBOR Loan, at the rate per annum equal to the Base Rate.  Any change in the Base Rate shall be effective on the date of such change.

 

5.4         Equipment Line Notes.  Borrower’s obligation to repay each Equipment Line Loan shall be evidenced by an Equipment Line Note in substantially the form of Exhibit E to this Agreement, with blanks appropriately completed, in favor of Lender in the principal amount of such Equipment Line Loan.  In addition, for any Equipment Line Note to which the Linked Deposit Program will apply, the Borrower will execute and deliver to Lender a Linked Deposit Program Equipment Line Note Rider in substantially the form of Exhibit F to this Agreement, with blanks appropriately completed.

 

5.5         Payments.

 

(a)           Interest on outstanding Equipment Line Loans shall be paid in immediately available funds to the Lender, in the case of LIBOR Loans on the last day of the applicable Interest Period but no less often than every three months, and in the case of Base Rate Loans or Fixed Rate Loans, on the first day of each month.  All accrued and unpaid interest shall be due and payable on the Revolving Credit Termination Date.

 

(b)           The principal of each Equipment Line Loan shall be repaid in consecutive monthly installments on the first day of each month, each equal to one-sixtieth of the original principal amount of the particular Equipment Line Loan.  All Equipment Line Loans shall be repaid in full on the Revolving Credit Termination Date.

 

5.6         Use of Proceeds.  Proceeds of the Equipment Line Loans shall be used to finance the purchase price of capital equipment.

 

 

ARTICLE 6 – GTC TERM LOAN FACILITY

 

6.1         GTC Term Loan.  Lender agrees, on the Closing Date, on the terms and conditions hereinafter set forth, to make a term loan (the “GTC Term Loan”) to Borrower in the principal amount of Five Million Dollars ($5,000,000).

 

6.2         Interest.

 

(a)           The GTC Term Loan shall be outstanding and bear interest as a LIBOR Loan, initially as a Daily Rate LIBOR Loan.  Each LIBOR Rate shall be effective for the applicable Interest Period.  Interest on the GTC Term Loan shall be calculated on the basis of a year of 360 days for the actual number of days elapsed.

 

(b)           Interest shall accrue each day on each LIBOR Loan from and including the first day of each Interest Period applicable thereto until, but not including, the last day of each such Interest Period or the day the LIBOR Loan is paid in full (if sooner) at a rate per annum equal to the LIBOR Rate, as determined using LIBOR in effect on the following dates, as applicable:

 

  (i)           for LIBOR Loans other than Daily LIBOR Loans, (A) for new LIBOR Loans, two (2) LIBOR Business Days before the Draw Date; (B) for continuations of and conversions to LIBOR Loans, the LIBOR Business Day the Lender receives (or is deemed to receive) the required Notice in accordance with the terms of this Agreement; (C) for LIBOR Loans where the Automatic Continuation Option is in effect, the applicable Automatic Adjustment Rate Determination Date for such LIBOR Loan, and

 

  (ii)          for Daily LIBOR Loans, at a rate per annum equal to the LIBOR Rate in effect each day (or if such day is not a LIBOR Business Day, as fixed in the same manner on the immediately preceding LIBOR Business Day, which day’s rate shall, unless otherwise provided for, apply to the immediately succeeding non-LIBOR Business Days).

 

(c)           After any conversion to a Base Rate Loan, interest shall accrue on the Base Rate Loan from and including the first date a Loan becomes a Base Rate Loan to, but not including, the day such Base Rate Loan is paid in full or converted back to a LIBOR Loan, at the rate per annum equal to the Base Rate.  Any change in the Base Rate shall be effective on the date of such change.

 

6.3         Payments on GTC Term Loan.

 

(a)           The Borrower shall repay the principal amount of the GTC Term Loan in consecutive monthly principal installments of $83,333 each.

 

(b)           Interest on the GTC Term Loan shall be paid to the Lender, in the case of LIBOR Loans on the last day of the applicable Interest Period but no less often than every three months, and in the case of Base Rate Loans on the first day of each month.

 

 

(c)           The entire remaining unpaid principal amount of the GTC Term Loan and all accrued interest thereon shall be due and payable on the GTC Term Loan Maturity Date, or sooner as otherwise provided in this Agreement.

 

6.4         GTC Term Loan Note.  Borrower’s obligation to repay the GTC Tem Loan shall be evidenced by the GTC Term Loan Note in substantially the form of Exhibit G to this Agreement, with blanks appropriately completed.

 

6.5         Use of Proceeds.  The proceeds of the GTC Term Loan shall be used by Borrower for the GTC Transaction.

 

ARTICLE 7 – MORTGAGE SECURED TERM LOAN FACILITY

 

7.1         Mortgage Secured Term Loan.  Lender agrees, on the Closing Date, on the terms and conditions hereinafter set forth, to make a term loan (the “Mortgage Secured Term Loan”) to Borrower in the principal amount of Four Million Dollars ($4,000,000).

 

7.2         Interest.

 

(a)           The Mortgage Secured Term Loan shall be outstanding and bear interest as a LIBOR Loan, initially as a Daily Rate LIBOR Loan.  Each LIBOR Rate shall be effective for the applicable Interest Period.  Interest on the Mortgage Secured Term Loan shall be calculated on the basis of a year of 360 days for the actual number of days elapsed.

 

(b)           Interest shall accrue each day on each LIBOR Loan from and including the first day of each Interest Period applicable thereto until, but not including, the last day of each such Interest Period or the day the LIBOR Loan is paid in full (if sooner) at a rate per annum equal to the LIBOR Rate, as determined using LIBOR in effect on the following dates, as applicable:

 

  (i)           for LIBOR Loans other than Daily LIBOR Loans, (A) for new LIBOR Loans, two (2) LIBOR Business Days before the Draw Date; (B) for continuations of and conversions to LIBOR Loans, the LIBOR Business Day the Lender receives (or is deemed to receive) the required Notice in accordance with the terms of this Agreement; (C) for LIBOR Loans where the Automatic Continuation Option is in effect, the applicable Automatic Adjustment Rate Determination Date for such LIBOR Loan, and

 

  (ii)          for Daily LIBOR Loans, at a rate per annum equal to the LIBOR Rate in effect each day (or if such day is not a LIBOR Business Day, as fixed in the same manner on the immediately preceding LIBOR Business Day, which day’s rate shall, unless otherwise provided for, apply to the immediately succeeding non-LIBOR Business Days).

 

(c)           After any conversion to a Base Rate Loan, interest shall accrue on the Base Rate Loan from and including the first date a Loan becomes a Base Rate Loan to, but not including, the day such Base Rate Loan is paid in full or converted back to a LIBOR Loan, at the rate per annum equal to the Base Rate.  Any change in the Base Rate shall be effective on the date of such change.