Exhibit 10.1

 

EIGHTH AMENDMENT AND WAIVER TO LOAN AGREEMENT

 

This EIGHTH AMENDMENT AND WAIVER TO LOAN AGREEMENT (this “Amendment”) is entered
into this 31st day of May, 2003, by and among CELLSTAR CORPORATION, a Delaware
corporation (“Parent”), each of Parent’s Subsidiaries signatory hereto (together
with Parent, each an individual “Borrower,” and collectively, the “Borrowers”),
the lenders signatory hereto (the “Lenders”), and FOOTHILL CAPITAL CORPORATION,
in its capacity as agent (the “Agent”) for the Lenders,

 

W I T N E S S E T H:

 

WHEREAS, the Borrowers, the Lenders and the Agent have entered into that certain
Loan and Security Agreement dated as of September 28, 2001, as amended by that
certain First Amendment to Loan Agreement dated as of October 12, 2001, as
further amended by that certain Second Amendment to Loan Agreement dated as of
February 11, 2002, as further amended by that certain Third Amendment and Waiver
to Loan Agreement dated as of May 9, 2002, as further amended by that certain
Fourth Amendment to Loan Agreement dated as of May 9, 2002, as further amended
by that certain Fifth Amendment to Loan Agreement dated as of November 13, 2002,
as further amended by that certain Sixth Amendment to Loan Agreement dated as of
February 6, 2003 and as further amended by that certain Seventh Amendment to
Loan Agreement dated as of February 28, 2003 (as the same may be further
modified, amended, restated or supplemented from time to time, the “Loan
Agreement”), pursuant to which the Lenders have agreed to make loans and other
financial accommodations to the Borrowers from time to time; and

 

WHEREAS, Section 7.20(b) of the Loan Agreement requires the Borrowers to meet
certain financial tests for the Subsidiaries operating within the geographic
area comprising Asia (the “Asia Fixed Charge Covenant”); and

 

WHEREAS, the Borrowers believe that they may be unable to meet the Asia Fixed
Charge Covenant test for the period ending May 31, 2003; and

 

WHEREAS, the Borrowers have requested that the Agent and the Lenders waive any
Default which may arise as a result of such failure to meet the Asia Fixed
Charge Covenant test for the period ending May 31, 2003, and forbear from
exercising their rights and remedies arising under the Loan Agreement which may
arise as a result of such failure; and

 

WHEREAS, the Borrowers have requested that the Agent and the Lenders amend
certain terms of the Loan Agreement; and

 

WHEREAS, the Agent and the Lenders have agreed to the requested amendments and
waiver on the terms and conditions set forth herein;

 

NOW THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree that all capitalized terms not
otherwise defined herein shall have the meanings ascribed to such terms in the
Loan Agreement and further agree as follows:

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1. Amendments to Section 1.11 of the Loan Agreement.

 

(a) Section 1.1 of the Loan Agreement, “Definitions,” is hereby modified and
amended by deleting the existing definition of “Fixed Charge Coverage Ratio” set
forth therein and inserting the following definition in substitution thereof:

 

““Fixed Charge Coverage Ratio” means, with respect to any Person during any
fiscal period and without duplication, the ratio for such Person during such
fiscal period, of (a) EBITDA, minus (i) cash capital expenditures, minus (ii)
tax expense (excluding amounts to be offset by any net operating losses) for
such Person during such fiscal period, plus cash tax refunds received in such
period, plus (iii) Restructuring Expenses incurred during such fiscal period,
plus (iv) to the extent deducted in calculating net earnings for the
Subsidiaries operating within the geographic area comprising Asia, expenses in
an aggregate amount of up to $5,000,000 incurred prior to March 31, 2004, in
connection with the initial public offering of the Stock of any such
Subsidiaries, to (b) (i) principal payments made by such Person on any
Indebtedness during such fiscal period (other than (A) refinancings permitted by
Section 7.1(d), (B) payments on Advances, (C) payments on revolving loans under
any Permitted Foreign Subsidiary Credit Facility to the extent available to be
reborrowed under such facility or to the extent cash collateral is released as a
result thereof, (D) payments under any Permitted Foreign Subsidiary Credit
Facility with an initial term, including any permitted extensions thereof, of
six (6) months or less, (E) cash payments on the Convertible Subordinated Debt
required by Section 6.16, (F) refinancings of debt of a Foreign Subsidiary with
the proceeds of a credit facility obtained by another Foreign Subsidiary within
the same non-U.S. geographic region, (G) principal payments on a revolving
credit facility of CellStar-Intercall AB (Cellstar Sweden) in an aggregate
amount not exceeding $10,000,000 during any fiscal year, and (H) principal
payments on any accounts receivable factoring facility of CellStar Mexico to the
extent such facility is with recourse to CellStar Mexico in an aggregate amount
not exceeding $30,000,000 during any fiscal year, and (ii) cash interest expense
(other than interest expense on a principal amount of up to (A) $10,000,000
borrowed by CellStar-Intercall AB (Cellstar Sweden) under a revolving credit
facility, (B) $30,000,000 borrowed by CellStar Mexico under an accounts
receivable factoring facility, and (C) $30,000,000 borrowed by CellStar Mexico
under a revolving credit facility) minus cash interest income during such fiscal
period.”

 

(b) Section 1.1 of the Loan Agreement, “Definitions,” is hereby further modified
and amended by deleting subsection (a) of the definition of “Permitted Affiliate
Transaction” set forth therein in its entirety and by inserting the following in
substitution thereof:

 

“(a) Transactions between Parent and its Subsidiaries (including Borrowers).
Parent may, provided that no Event of Default exists or will result therefrom
(i) guarantee obligations of any Subsidiary, including any Borrower, with
respect to (A) trade payables consisting of goods or materials purchased in the
ordinary course of business of such Subsidiary for which payment is not more
than 90 days past due (unless subject to a dispute being diligently contested),
(B) real property operating leases, (C) personal property operating leases not
to exceed $5 Million in the aggregate outstanding

 

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at any one time, (D) a Permitted Foreign Subsidiary Credit Facility, provided
that (X) such guarantee is unsecured, and in the case of Parent’s guarantee of
any Permitted Foreign Subsidiary Credit Facility entered into after the Closing
Date, such guarantee is also subordinated to the Obligations under this
Agreement, (Y) no default has occurred pursuant to such guarantee obligation,
(Z) no demand for payment has resulted from any such guarantee obligation, and
(E) a performance bond issued in connection with tax claims of such Subsidiary,
provided such guarantees under this clause (E) do not exceed $5,000,000 in the
aggregate; and (ii) make capital contributions pursuant to subsection (h) below,
for the benefit of any Subsidiary, including any Borrower;”

 

(c) Section 1.1 of the Loan Agreement, “Definitions,” is hereby further modified
and amended by deleting the period after subsection (i) of the definition of
“Permitted Affiliate Transaction” and substituting “; and” and by adding the
following subsection (j) to the definition of “Permitted Affiliate Transaction”:

 

“(j) Capital Contribution by CellStar (Asia) Corporation Limited to CellStar
Telecommunication Taiwan Co. Ltd. CellStar (Asia) Corporation Limited (“CellStar
Hong Kong “) may make a capital contribution to CellStar Telecommunication
Taiwan Co. Ltd. (“CellStar Taiwan”) in an amount not to exceed Six Million
Dollars ($6,000,000) (the “CellStar Taiwan Contribution”); provided, that the
CellStar Taiwan Contribution shall be used solely for the purpose of purchasing
non-voting stock of CellStar Taiwan; provided, further that CellStar Taiwan
shall repay to CellStar Hong Kong on or before thirty (30) days after the
consummation of the CellStar Taiwan Contribution, Six Million Dollars
($6,000,000) of its intercompany payable to CellStar Hong Kong. The CellStar
Taiwan Contribution shall not be deemed to be a capital contribution for
purposes of calculating a “Permitted Affiliate Transaction” under subsection (h)
of the definition of “Permitted Affiliate Transaction.”

 

2. Amendments to Section 7.20 of the Loan Agreement.

 

(a) Section 7.20 of the Loan Agreement, “Financial Covenants,” is hereby
modified and amended by deleting subsection 7.20 (a) in its entirety and
inserting the following in substitution thereof:

 

“(a) Consolidated Tangible Net Worth. Parent and its Subsidiaries, taken as a
whole, shall not permit Consolidated Tangible Net Worth to be less than the
required amount set forth in the following table as of the last day of each
fiscal quarter as set forth below, and for

 

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each month following such quarter-end date until the next fiscal quarter-end
calculation:

 

Applicable Amount   Applicable Period

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Initial Consolidated Tangible Net Worth, plus (a) 100% of the gain or loss, if
any, realized as a result of forgiveness of any Convertible Subordinated Debt
(after taxes), plus (b) 100% of the additional paid-in capital resulting from
the conversion of the Convertible Subordinated Debt, plus (c) 80% of net income
of the Parent and its Subsidiaries on a consolidated basis (without any
deduction for losses) on a cumulative basis from September 1, 2001 to, and
including February 28, 2002, plus (d) 75% of net income of the Parent and its
Subsidiaries, on a consolidated basis (without any deduction for losses) on a
cumulative basis from March 1, 2002 for each quarter ended thereafter through
such date of determination, minus (e) 100% of the Restructuring Expenses on a
cumulative basis through such date of determination not to exceed $30 Million,
minus (f) 100% of the Undistributed Earnings Charge not to exceed $55 Million,
minus (g) expenses in an aggregate amount of up to $5,000,000 incurred by
Borrowers prior to March 31, 2004, in connection with the initial public
offering of the Stock of any Subsidiaries operating within the geographic area
comprising Asia   Beginning with the fiscal quarter ended November 30, 2002
through the Maturity Date.

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(b) Section 7.20 of the Loan Agreement, “Financial Covenants,” is hereby
modified and amended by deleting the table in subsection 7.20 (b) in its
entirety and inserting the

 

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following in substitution thereof:

 

Required Ratio   Applicable Region

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0.00:1.0 for the fiscal quarter ending on or about August 31, 2003;

 

(0.75):1.0 for the fiscal quarter ending on or about November 30, 2003;

 

(1.50):1.0 for the fiscal quarter ending on or about February 28, 2004; and

 

for each fiscal quarter end thereafter, 2.0:1.0

  Subsidiaries operating within the geographic area comprising Asia

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2.0:1.0   Subsidiaries operating within the geographic area comprising Latin
America

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2.0:1.0   Subsidiaries operating within the geographic area comprising Europe
(excluding the income statement effect of up to $10,000,000 of outstanding
Indebtedness under any Permitted Foreign Subsidiary Credit Facility of CellStar
Netherlands B.V. or CellStar Netherlands Holdings B.V., on an aggregate basis)

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3. Waiver. The Agent and the Lenders hereby waive compliance with the Asia Fixed
Charge Covenant for the period ending May 31, 2003, and their respective rights
and remedies under the Loan Agreement which may arise as a result of any failure
to comply with the Asia Fixed Charge Covenant for such period; providedhowever,
that such waiver shall not waive any other requirement or hinder, restrict or
otherwise modify the rights and remedies of the Agent and the Lenders following
the occurrence of any other failure to comply with Section 7.20, or the
occurrence of any Event of Default under the Loan Agreement.

 

4. No Other Amendments or Waivers. Except as set forth in Section 3 above, the
execution, delivery and effectiveness of this Amendment shall not operate as a
waiver of any right, power or remedy of the Agent or the Lenders under the Loan
Agreement or any of the other Loan Documents, nor constitute a waiver of any
provision of the Loan Agreement or any of the other Loan Documents. Except for
the amendments and waiver set forth above, the text of the Loan Agreement and
all other Loan Documents shall remain unchanged and in full force and

 

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effect and each Borrower hereby ratifies and confirms its obligations
thereunder. This Amendment shall not constitute a modification of the Loan
Agreement or a course of dealing with the Agent or the Lenders at variance with
the Loan Agreement such as to require further notice by the Agent or the Lenders
to require strict compliance with the terms of the Loan Agreement and the other
Loan Documents in the future, except as expressly set forth herein. Each
Borrower acknowledges and expressly agrees that the Agent and the Lenders
reserve the right to, and do in fact, require strict compliance with all terms
and provisions of the Loan Agreement and the other Loan Documents. The Borrowers
have no knowledge of any challenge to the Agent’s or any Lenders’ claims arising
under the Loan Documents, or to the effectiveness of the Loan Documents.

 

5. Conditions Precedent to Effectiveness. This Amendment shall become effective
as of the date hereof when, and only when, the Agent shall have received each of
the following:

 

(a) fully executed and delivered counterparts of this Amendment by the
Borrowers, the Required Lenders and the Agent;

 

(b) payment of a Lenders’ amendment fee from the Borrowers in the amount of
$200,000 (it being understood that, by execution and delivery of this Amendment,
the Borrowers authorize the Agent to charge the Borrowers’ Loan Account for such
fee and such amount shall thereafter accrue interest at the rate applicable to
Advances under the Loan Agreement in accordance with Section 2.6 of the Loan
Agreement) which shall be for the benefit of the Lenders in accordance with each
Lender’s Pro Rata Share; and

 

(c) such other information, documents, instruments or approvals as the Agent or
the Agent’s counsel may reasonably require.

 

6. Representations and Warranties of Borrowers. Each Borrower represents and
warrants to the Agent and the Lenders as follows:

 

(a) Each Borrower is a corporation or limited partnership organized or formed,
as the case may be, validly existing and in good standing under the laws of the
jurisdiction indicated on the signature pages hereto and in all other
jurisdictions in which the failure to be so qualified reasonably could be
expected to constitute a Material Adverse Change;

 

(b) The execution, delivery, and performance by each Borrower of this Amendment
and the Loan Documents to which it is a party, as amended hereby, are within
such Borrower’s corporate or partnership authority, have been duly authorized by
all necessary corporate or partnership action and do not and will not (i)
violate any provision of federal, state, or local law or regulation applicable
to such Borrower, the Governing Documents of any Borrower, or any order,
judgment, or decree of any court or other Governmental Authority binding on any
Borrower, (ii) conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any material contractual
obligation of any Borrower, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
any Borrower, other than Permitted Liens, or (iv) require any approval of any
Borrower’s shareholders, partners, or members or any approval or consent of any
Person under any material contractual obligation of any Borrower;

 

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(c) The execution, delivery, and performance by each Borrower of this Amendment
and the Loan Documents to which it is a party, as amended hereby, do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority or other Person;

 

(d) This Amendment and each other Loan Document to which each Borrower is a
party, and all other documents contemplated hereby and thereby, when executed
and delivered by each Borrower will be the legally valid and binding obligations
of such Borrower, enforceable against each Borrower in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors’ rights generally; and

 

(e) No Default or Event of Default, other than the Covenant Default set forth
herein, is existing.

 

7. Counterparts. This Amendment may be executed in multiple counterparts, each
of which shall be deemed to be an original and all of which, taken together,
shall constitute one and the same agreement. In proving this Amendment in any
judicial proceedings, it shall not be necessary to produce or account for more
than one such counterpart signed by the party against whom such enforcement is
sought. Any signatures delivered by a party by facsimile transmission shall be
deemed an original signature hereto.

 

8. Reference to and Effect on the Loan Documents. Upon the effectiveness of this
Amendment, on and after the date hereof each reference in the Loan Agreement to
“this Agreement,” “hereunder,” “hereof” or words of like import referring to the
Loan Agreement, and each reference in the other Loan Documents to “the Loan
Agreement” “thereunder,” “thereof” or words of like import referring to the Loan
Agreement, shall mean and be a reference to the Loan Agreement as amended
hereby.

 

9. Costs, Expenses and Taxes. The Borrowers agree to pay on demand all
reasonable costs and expenses in connection with the preparation, execution, and
delivery of this Amendment and the other instruments and documents to be
delivered hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent with respect thereto and with
respect to advising the Agent as to its rights and responsibilities hereunder
and thereunder.

 

10. Governing Law. This Amendment shall be deemed to be made pursuant to the
laws of the State of Georgia with respect to agreements made and to be performed
wholly in the State of Georgia, and shall be construed, interpreted, performed
and enforced in accordance therewith, without reference to the conflict or
choice of laws provisions thereof.

 

11. Loan Document. This Amendment shall be deemed to be a Loan Document for all
purposes.

 

[REMAINDER OF THE PAGE IS INTENTIONALLY BLANK]

 

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the day and year first written above.

 

BORROWERS:      

CELLSTAR CORPORATION,

a Delaware corporation

           

/s/ Elaine Flud Rodriguez        

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By: Elaine Flud Rodriguez

Title: Sr. VP and General Counsel

        CELLSTAR, LTD., a Texas limited
partnership             By:  

National Auto Center, Inc.

its General Partner

           

/s/ Elaine Flud Rodriguez        

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By: Elaine Flud Rodriguez

Title: Sr. VP and General Counsel

        NATIONAL AUTO CENTER,
INC., a Delaware corporation            

/s/ Elaine Flud Rodriguez        

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By: Elaine Flud Rodriguez

Title: Sr. VP and General Counsel

        CELLSTAR AIR SERVICES,
INC., a Delaware corporation            

/s/ Elaine Flud Rodriguez        

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By: Elaine Flud Rodriguez

Title: Sr. VP and General Counsel

 

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CELLSTAR TELECOM, INC.,

a Delaware corporation

           

/s/ Elaine Flud Rodriguez        

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By: Elaine Flud Rodriguez

Title: Sr. VP and General Counsel

       

CELLSTAR FINANCO, INC., a

Delaware corporation

           

/s/ Elaine Flud Rodriguez        

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By: Elaine Flud Rodriguez

Title: Sr. VP and General Counsel

       

A&S AIR SERVICE, INC., a

Delaware Corporation

           

/s/ Elaine Flud Rodriguez        

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By: Elaine Flud Rodriguez

Title: Sr. VP and General Counsel

       

CELLSTAR INTERNATIONAL

CORPORATION/SA, a Delaware

corporation

           

/s/ Elaine Flud Rodriguez        

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By: Elaine Flud Rodriguez

Title: Sr. VP and General Counsel

       

CELLSTAR FULFILLMENT, INC.,

a Delaware corporation

           

/s/ Elaine Flud Rodriguez        

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By: Elaine Flud Rodriguez

Title: Sr. VP and General Counsel

 

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CELLSTAR INTERNATIONAL

CORPORATION/ASIA, a

Delaware Corporation

           

/s/ Elaine Flud Rodriguez        

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By: Elaine Flud Rodriguez

Title: Sr. VP and General Counsel

       

AUDIOMEX EXPORT CORP.,

a Texas corporation

           

/s/ Elaine Flud Rodriguez        

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By: Elaine Flud Rodriguez

Title: Sr. VP and General Counsel

       

NAC HOLDINGS, INC., a Nevada

corporation

           

/s/ Elaine Flud Rodriguez        

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By: Elaine Flud Rodriguez

Title: President

       

CELLSTAR GLOBAL

SATELLITE SERVICES, LTD., a

Texas limited partnership

           

By:

Title:

 

National Auto Center, Inc.

General Partner

           

/s/ Elaine Flud Rodriguez        

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By: Elaine Flud Rodriguez

Title: Sr. VP and General Counsel

 

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CELLSTAR FULFILLMENT

LTD., a Texas limited partnership

           

By:

Title:

 

CellStar Fulfillment, Inc.

General Partner

           

/s/ Elaine Flud Rodriguez        

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By: Elaine Flud Rodriguez

Title: Sr. VP and General Counsel

       

FLORIDA PROPERTIES, INC.,

a Texas corporation

           

/s/ Elaine Flud Rodriguez        

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By: Elaine Flud Rodriguez

Title: Sr. VP and General Counsel

AGENT AND LENDERS:      

FOOTHILL CAPITAL

CORPORATION, a California

corporation, as Agent and as a

Lender

           

/s/ Robert Bernier        

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By: Robert Bernier

Title: Vice President

       

FLEET CAPITAL

CORPORATION, as a

Lender

           

/s/ Joy L. Bartholomew        

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By: Joy L. Bartholomew

Title: Senior Vice President

 

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TEXTRON FINANCIAL

CORPORATION, as a Lender

           

/s/ Eric R. Hubbard        

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By: Eric R. Hubbard

Title: Vice President

       

PNC BANK NATIONAL

ASSOCIATION, as a Lender

           

/s/ Robin L. Arriola        

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By: Robin L. Arriola

Title: Vice President

 

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