Exhibit 10.2

 

Execution Version

 

TENTH AMENDMENT TO LOAN AGREEMENT

 

This TENTH AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is dated as of the
31st day of March, 2004, 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 WELLS FARGO FOOTHILL, INC.
f/k/a FOOTHILL CAPITAL CORPORATION, in its capacity as agent (the “Agent”) for
the Lenders,

 

WITNESSETH:

 

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 as further amended by that certain Seventh Amendment to Loan
Agreement dated as of February 28, 2003, as further amended by that certain
Eighth Amendment and Waiver to Loan and Security Agreement dated as of May 31,
2003, and as further amended by that certain Consent and Waiver and Ninth
Amendment to Loan and Security Agreement dated as of February 24, 2004 (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, 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 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:

 

1. Amendments to Section 1.1 of the Loan Agreement.

 

(a) Section 1.1 of the Loan Agreement, “Definitions”, is hereby modified and
amended by deleting clause (i) from the definition of “Eligible Accounts” as set
forth therein in its entirety and by inserting the following clause (i) in
substitution thereof:

 

“(i) Accounts, to the extent such Accounts, together with all other Accounts
owing by such Account Debtor to Borrowers, exceed in the aggregate (i) 20% of
all Eligible Accounts (without giving effect to this clause) in the case of
Cricket, (ii) 25% of all Eligible Accounts (without giving effect to this
clause) in the case of Lock\Line, and (iii) 10% of all Eligible Accounts
(without giving effect to this clause) in all other cases, provided, however,
(a) the foregoing percentages may be revised from time to time by Agent in its
Permitted Discretion, and (b) Accounts of the applicable Account Debtor which in
the aggregate exceed the limits set forth shall be deemed to constitute Eligible
Accounts (subject to compliance with all other standards of Eligible Accounts)
if the Accounts exceeding such limits are backed or secured by a letter of
credit reasonably satisfactory to Agent in all respects and such letter of
credit has been assigned to Agent upon terms acceptable to Agent in its
discretion,”

 

--------------------------------------------------------------------------------

(b) 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, (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 (I) principal payments on any
foreign accounts receivable factoring facility or other credit facility of
CellStar Ltd. and/or National Auto Center, Inc. to the extent such facility is
with recourse to CellStar Ltd. and/or National Auto Center, Inc.), and (ii) cash
interest expense (other than interest expense on a principal amount of up

 

2

--------------------------------------------------------------------------------

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.”

 

(c) Section 1.1 of the Loan Agreement, “Definitions”, is hereby modified and
amended by deleting the word “and” before clause (g) thereof from the definition
of “Permitted Dispositions” and by inserting the following new clauses (h) and
(i) to end of the definition of “Permitted Dispositions”:

 

“(h) dispositions of Accounts of CellStar Mexico in an aggregate amount not
exceeding $30,000,000 outstanding at any time pursuant to a factoring facility
permitted by Section 7.1(e)(ii) hereof, and (i) disposition of Accounts of
CellStar Ltd. and/or National Auto Center, Inc. owed by non-U.S. Account Debtors
pursuant to a factoring facility or other credit facility permitted by Section
7.1(e)(iii) hereof.”

 

2. Amendment to Section 2.1 of the Loan Agreement. Section 2.1 of the Loan
Agreement, “Revolver Advances,” is hereby modified and amended by deleting
clause (y) as set forth in paragraph (a) therein in its entirety and by
inserting the following clause (y) in substitution thereof:

 

“(y) the lowest of

 

(i) $42,500,000,

 

(ii) the sum of

 

(A) the lesser of (1) 60% of the value of Eligible Inventory consisting of
digital handsets, or (2) 85% times the then extant Net Liquidation Percentage
(as calculated by Agent), times the book value of such Eligible Inventory
consisting of digital handsets, plus

 

(B) the lowest of (1) 45% of the value of Eligible Inventory consisting of
two-way radios, (2) 80% times the then extant Net Liquidation Percentage (as
calculated by Agent), times the book value of such Eligible Inventory consisting
of two-way radios, or (3) $3,000,000, or

 

(iii) 100% of the amount of credit availability created by clause (x) above,
minus”

 

3. Amendment to Section 7.1 of the Loan Agreement. Section 7.1 of the Loan
Agreement, “Indebtedness”, is hereby modified and amended by deleting subsection
7.1(e) in its entirety and by inserting the following in substitution thereof:

 

“(e) (i) any Permitted Foreign Subsidiary Credit Facility, (ii) any accounts
receivable factoring facility entered into by CellStar Mexico for general
working

 

3

--------------------------------------------------------------------------------

capital needs in an aggregate amount not exceeding $30,000,000 outstanding at
any time; provided such factoring facility (x) is not guaranteed by any
Borrower; provided, such factoring facility may be guaranteed by a Borrower if
such guaranty is unsecured and subject to a subordination agreement satisfactory
to Agent, and (y) does not limit or prohibit the payment of any Management Fees
to any Borrower, and (iii) any accounts receivable factoring facility or other
credit facility for the Miami, Florida based Accounts owed by non-U.S. Account
Debtors entered into by CellStar Ltd. and/or National Auto Center, Inc. for
general working capital needs; provided such factoring facility or other credit
facility (x) is not guaranteed by or with recourse to any Borrower; provided,
such factoring facility may be guaranteed by or with recourse to a Borrower if
such guaranty or other liability is unsecured and subject to a subordination
agreement satisfactory to Agent, (y) does not limit or prohibit the payment of
any Management Fees to any Borrower, and (z) is on terms satisfactory to Agent;”

 

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

 

“(b) Fixed Charge Coverage Ratio for Asia and Latin America. Fail to maintain a
Fixed Charge Coverage Ratio of at least the required ratio set forth in the
following table as of the last day of each fiscal quarter beginning November 30,
2001, calculated for the immediately preceding four fiscal quarter period for
the applicable region, on an individual basis:

 

Required Ratio

--------------------------------------------------------------------------------

  

Applicable Region

--------------------------------------------------------------------------------

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

 

4

--------------------------------------------------------------------------------

Notwithstanding the foregoing, for any period in which a Fixed Charge Coverage
Ratio is calculated hereunder for the Asia and Latin America regions, if, for
any region on an individual basis, the result of the calculation set forth in
clause (b) of the definition of Fixed Charge Coverage Ratio hereunder for the
Asia and Latin America regions, respectively is less than or equal to zero, no
Fixed Charge Coverage Ratio will be tested pursuant to this subsection (b).”

 

5. No Other Amendments. 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 set forth above, the text
of the Loan Agreement and all other Loan Documents shall remain unchanged and in
full force and 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.

 

6. 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 Lenders and the Agent

 

(b) payment of a Lenders’ amendment fee from the Borrowers in the amount of
$100,000 (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.

 

7. 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;

 

5

--------------------------------------------------------------------------------

(b) The execution, delivery, and performance by each Borrower of this Amendment
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;

 

(c) The execution, delivery, and performance by each Borrower of this Amendment
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 all other documents contemplated hereby, 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 is existing.

 

8. 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.

 

9. 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.

 

10. 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.

 

11. 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

 

6

--------------------------------------------------------------------------------

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.

 

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

 

[Signature pages follow]

 

7

--------------------------------------------------------------------------------

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            

--------------------------------------------------------------------------------

   

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            

--------------------------------------------------------------------------------

   

By:

  Elaine Flud Rodriguez    

Title:

  Sr. VP and General Counsel    

NATIONAL AUTO CENTER, INC.,

a Delaware corporation

         /s/    ELAINE FLUD RODRIGUEZ            

--------------------------------------------------------------------------------

   

By:

  Elaine Flud Rodriguez    

Title:

  Sr. VP and General Counsel    

CELLSTAR AIR SERVICES, INC.,

a Delaware corporation

         /s/    ELAINE FLUD RODRIGUEZ            

--------------------------------------------------------------------------------

   

By:

  Elaine Flud Rodriguez    

Title:

  Sr. VP and General Counsel

 

TENTH AMENDMENT TO LOAN AGREEMENT    S-1     

--------------------------------------------------------------------------------

   

CELLSTAR TELECOM, INC.,

a Delaware corporation

         /s/    ELAINE FLUD RODRIGUEZ            

--------------------------------------------------------------------------------

   

By:

  Elaine Flud Rodriguez    

Title:

  Sr. VP and General Counsel    

CELLSTAR FINANCO, INC.,

a Delaware corporation

         /s/    ELAINE FLUD RODRIGUEZ            

--------------------------------------------------------------------------------

   

By:

  Elaine Flud Rodriguez    

Title:

  Sr. VP and General Counsel    

A&S AIR SERVICE, INC.,

a Delaware Corporation

         /s/    ELAINE FLUD RODRIGUEZ            

--------------------------------------------------------------------------------

   

By:

  Elaine Flud Rodriguez    

Title:

  Sr. VP and General Counsel    

CELLSTAR INTERNATIONAL CORPORATION/SA,

a Delaware corporation

         /s/    ELAINE FLUD RODRIGUEZ            

--------------------------------------------------------------------------------

   

By:

  Elaine Flud Rodriguez    

Title:

  Sr. VP and General Counsel    

CELLSTAR FULFILLMENT, INC.,

a Delaware corporation

         /s/    ELAINE FLUD RODRIGUEZ            

--------------------------------------------------------------------------------

   

By:

  Elaine Flud Rodriguez    

Title:

  Sr. VP and General Counsel

 

TENTH AMENDMENT TO LOAN AGREEMENT    S-2     

--------------------------------------------------------------------------------

   

CELLSTAR INTERNATIONAL CORPORATION/ASIA,

a Delaware Corporation

         /s/    ELAINE FLUD RODRIGUEZ            

--------------------------------------------------------------------------------

   

By:

  Elaine Flud Rodriguez    

Title:

  Sr. VP and General Counsel    

AUDIOMEX EXPORT CORP.,

a Texas corporation

         /s/    ELAINE FLUD RODRIGUEZ            

--------------------------------------------------------------------------------

   

By:

  Elaine Flud Rodriguez    

Title:

  Sr. VP and General Counsel    

NAC HOLDINGS, INC., a Nevada corporation

         /s/    ELAINE FLUD RODRIGUEZ            

--------------------------------------------------------------------------------

   

By:

  Elaine Flud Rodriguez    

Title:

  President    

CELLSTAR GLOBAL SATELLITE SERVICES, LTD.,

a Texas limited partnership

    By:  

National Auto Center, Inc.

    Title:  

General Partner

         /s/    ELAINE FLUD RODRIGUEZ            

--------------------------------------------------------------------------------

   

By:

  Elaine Flud Rodriguez    

Title:

  Sr. VP and General Counsel

 

TENTH AMENDMENT TO LOAN AGREEMENT    S-3     

--------------------------------------------------------------------------------

   

CELLSTAR FULFILLMENT LTD.,

a Texas limited partnership

    By:  

CellStar Fulfillment, Inc.

    Title:  

General Partner

         /s/    ELAINE FLUD RODRIGUEZ            

--------------------------------------------------------------------------------

   

By:

  Elaine Flud Rodriguez    

Title:

  Sr. VP and General Counsel    

FLORIDA PROPERTIES, INC.,

a Texas corporation

         /s/    ELAINE FLUD RODRIGUEZ            

--------------------------------------------------------------------------------

   

By:

  Elaine Flud Rodriguez    

Title:

  Sr. VP and General Counsel AGENT AND LENDERS:  

WELLS FARGO FOOTHILL, INC.,

a California corporation, as Agent and as a Lender

         /s/    ROBERT BERNIER            

--------------------------------------------------------------------------------

   

By:

  Robert Bernier    

Title:

  Vice President    

FLEET CAPITAL CORPORATION,

as a Lender

         /s/    DENNIS M. HANSEN            

--------------------------------------------------------------------------------

   

By:

  Dennis M. Hansen    

Title:

  Senior Vice President

 

TENTH AMENDMENT TO LOAN AGREEMENT    S-4     

--------------------------------------------------------------------------------

   

TEXTRON FINANCIAL CORPORATION,

as a Lender

         /s/    ERIC R. HUBBARD            

--------------------------------------------------------------------------------

   

By:

  Eric R. Hubbard    

Title:

  Vice President    

PNC BANK NATIONAL ASSOCIATION,

as a Lender

         /s/    ROBIN L. ARRIOLA            

--------------------------------------------------------------------------------

   

By:

  Robin L. Arriola    

Title:

  Vice President

 

TENTH AMENDMENT TO LOAN AGREEMENT    S-5