THIRD AMENDED AND RESTATED MASTER LINE OF CREDIT NOTE
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THIS THIRD AMENDED AND RESTATED MASTER LINE OF CREDIT NOTE (this
"Agreement") is entered into as of this 15th day of August 1997, by COMARCO,
INC., a corporation organized under the laws of the State of California (the
"Borrower") in favor of NATIONSBANK, N.A., a national banking association, its
successors and assigns (the "Lender").
RECITALS
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A. The Lender made a secured revolving loan (the "Master Line of
Credit") to the Borrower in the maximum principal amount of $8,000,000, which
Master Line of Credit is evidenced by that certain Master Line of Credit Note
(the "Original Master Line of Credit Note") dated September 26, 1994 from the
Borrower to the Lender in the maximum principal amount of $8,000,000, as amended
and restated in its entirety pursuant to the provisions of that certain Amended
and Restated Master Line of Credit Note dated October 31, 1995 from the Borrower
in favor of the Lender in the maximum principal amount of $8,000,000 (the "First
Replacement Master Line of Credit Note"), and as further amended and restated in
its entirety pursuant to the provisions of that certain Second Amended and
Restated Master Line of Credit Note dated August 30, 1996 from the Borrower in
favor of the Lender in the maximum principal amount of $8,000,000 (the "Second
Replacement Master Line of Credit Note").
B. The Master Line of Credit is governed by the provisions of that
certain Loan Agreement of even date with the Original Master Line of Credit Note
by and among the Borrower, the Guarantors named therein and the Lender, as
amended by that certain First Amendment to Loan Agreement dated September 26,
1995 by and among the Borrower, the Guarantors named therein and the Lender, and
as further amended by that certain Second Amendment to Loan Agreement dated
August 30, 1996, by and among the Borrower, the guarantors named therein and
the Lender (the same as may be amended from time to time is hereafter called the
"Loan Agreement"). All capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Loan Agreement.
C. The Borrower has requested that the Lender extend the maturity date
of the Master Line of Credit and the Lender has agreed to on the condition,
among others, that the Borrower execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Lender and the Borrower covenant and agree as follows:
1. The Recitals. The parties hereto acknowledge and agree that the
above Recitals are true and correct in all respects and that the same are
incorporated herein and made a part hereof by reference.
2. The Master Line of Credit Note. The Second Replacement Master Line
of Credit Note is hereby amended and restated in its entirety as follows:
MASTER LINE OF CREDIT NOTE
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$8,000,000 McLean, Virginia
FOR VALUE RECEIVED, COMARCO, INC., a corporation organized
under the laws of the State of California (the "Borrower")promises to
pay to the order of NATIONSBANK, N.A., a national banking association,
its successors and assigns (the "Lender"), the principal sum of EIGHT
MILLION DOLLARS ($8,000,000) (the "Principal Sum"), or so much thereof
as has been or may be advanced or readvanced to or for the account of
the Borrower, together with interest thereon at the rate or rates
hereinafter provided, in accordance with the following:
1. Interest. Except as otherwise expressly set forth below,
amounts outstanding hereunder shall bear interest at the Prime Rate (as
hereinafter defined, plus the Additional Percentage (hereinafter
defined).
For purposes hereof, the "Prime Rate" means the fluctuating
prime rate of interest established and declared by the Lender from time
to time. The Prime Rate does not necessarily represent the lowest rate
of interest charged by the Lender to its borrowers.
For purposes hereof, the "Additional Percentage" shall mean
the percentage applicable to this Note in accordance with the
following:
(i) If the Borrower's ratio of Total Liabilities to
Tangible Net Worth is less than or equal to 1.50 to 1.00, the
Additional Percentage shall be zero percent (0%);
(ii) If the Borrower's ratio of Total Liabilities to
Tangible Net Worth is greater than 1.50 to 1.00, but less than or equal
to 2.00 to 1.00, the Additional Percentage shall be one quarter of one
percent (.25%); and
(iii) If the Borrower's ratio of Total Liabilities to
Tangible Net Worth is greater than 2.00 to 1.00, the Additional
Percentage shall be one half of one percent (.50%).
The initial Additional Percentage shall be calculated based on the
Borrower's consolidated financial statements for the quarter ending
April 30, 1997. Thereafter, the applicable Additional Percentage
shall be calculated and adjusted quarterly, based on the quarterly
financial statements required to be submitted to the Lender pursuant to
paragraph 4(a) of Article VI of the Loan Agreement. Such quarterly
changes shall be effective commencing five (5) Banking Days after
submission by the Borrower of the required financial statements; it
being understood, however, that in the event the quarterly financial
statements are not submitted when due, the Applicable Percentage shall
be one-half of one percent (.50%) until such financials are submitted
as required, at which time the Applicable Percentage (for the balance
of the quarterly period) shall be determined as set forth above.
In addition, so long as no event of default or any act, event or
condition which, with notice or the passage of time or both, would
constitute an event of default under any Loan Document has occurred and
is continuing, the Borrower shall have the right to elect that
specified amounts advanced under this Note, bear interest for specified
periods (each being herein referred to as a "LIBOR Rate Funding
Period"), at the LIBOR Rate, plus the Additional LIBOR Rate Percentage
(as hereinafter defined) in effect at the commencement of the LIBOR
Rate Funding Period. Election by the Borrower of a LIBOR Rate interest
rate as herein provided shall be made in a writing delivered to the
Lender not less than three (3) Banking Days prior to the date of on
which the LIBOR Rate is to begin, and shall specify (1) the banking day
on which the LIBOR Rate is to be effective and the period for which the
LIBOR Rate shall be applicable (which shall be only 30, 60, 90 or 180
days and the expiration of which may not be later than the "Maturity
Date"); and (2) the principal amount of this Note which shall bear
interest at the LIBOR Rate, plus the Applicable LIBOR Rate Percentage
(each being herein referred to as a "LIBOR Rate Funding Segment"). The
Borrower may not revoke any such election without the Lender's written
consent. Upon the expiration of an applicable LIBOR Rate Funding
Period, unless notice of LIBOR Rate election from the Borrower, the
rate of interest applicable to any LIBOR Rate Funding Segment (after
the expiration thereof) shall automatically convert at the end of the
applicable LIBOR Rate Funding Period, to the Prime Rate, plus the
Applicable Percentage.
For purposes hereof, the "LIBOR Rate" shall mean the per annum rate of
interest, as determined by the Lender in its sole discretion, at which
deposits in United States Dollars in an amount approximately equal to
the amount for which the rate is to be fixed and with maturities
comparable to the interest period selected by the Borrower, to be the
averages of rates per annum for 11:00 a.m. (London, time), two (2)
Banking Days prior to the first day of such LIBOR Rate Funding Period
for delivery on the first such day of such LIBOR Rate Funding Period,
in amounts comparable to the applicable LIBOR Rate Funding Segment, as
adjusted for Federal Reserve Board reserve requirements and similar
assessments, if any, imposed upon the Lender.
For purposes hereof, the "Additional LIBOR Rate Percentage" shall mean
the percentage applicable to this Note in accordance with the
following:
(i) If the Borrower's ratio of Total Liabilities to Tangible
Net Worth is less than or equal to 1.50 to 1.00, the Additional LIBOR
Rate Percentage shall be one and one half percent (1.50%);
(ii) If the Borrower's ratio of Total Liabilities to Tangible
Net Worth is greater than 1.50 to 1.00, but less than or equal to 2.00
to 1.00, the Additional LIBOR Rate Percentage shall be one and three
quarters of one percent (1.75%); and
(iii) If the Borrower's ratio of Total Liabilities to Tangible
Net Worth is greater than 2.00 to 1.00, the Additional LIBOR Rate
Percentage shall be two percent (2.00%).
The initial Additional LIBOR Rate Percentage shall be calculated based
on the Borrower's consolidated financial statements for the quarter
ending April 30, 1997. Thereafter, the applicable Additional LIBOR
Rate Percentage shall be calculated and adjusted quarterly, based
on the quarterly financial statements required to be submitted to the
Lender pursuant to paragraph 4(a) of Article VI of the Loan Agreement.
Such quarterly changes shall be effective commencing five (5) Banking
Days after submission by the Borrower of the required financial
statements; it being understood, however, that in the event the
quarterly financial statements are not submitted when due, the
Applicable LIBOR Rate Percentage shall be two percent (2.00%) until
such financial statements are submitted as required, at which time the
Applicable LIBOR Rate Percentage (for the balance of the quarterly
period) shall be determined as set forth above. It is expressly
understood, however, that once the additional LIBOR Rate Percentage is
determined in connection with any particular LIBOR Rate Funding
Segment, such Additional LIBOR Rate Percentage shall remain in effect
for the period for which the applicable LIBOR Rate election is made.
All interest payable under the terms of this Note shall be
calculated on the basis of a 360-day year and the actual number of days
elapsed.
2. Payments and Maturity. The unpaid Principal Sum, together
with interest thereon at the rate or rates provided above, shall be
payable as follows:
(a) Except as otherwise provided in this Note, this
Note shall be payable in successive monthly installments of accrued and
unpaid interest only, on the last day of each month commencing July 31,
1997, and on the last day of each month thereafter to maturity;
(b) Unless sooner paid, the unpaid Principal Sum,
together with all accrued and unpaid interest thereon shall be due and
payable in full on May 31, 1999.
The fact that the balance hereunder may be reduced to
zero from time to time pursuant to the Loan Agreement will not affect
the continuing validity of this Note or the Loan Agreement, and the
balance may be increased to the Principal Sum after any such reduction
to zero.
3. Default Interest. Upon the occurrence of an Event of
Default (as hereinafter defined), the unpaid Principal Sum shall bear
interest thereafter at a rate two percent (2%) per annum in excess of
the then highest current rate or rates of interest hereunder until such
Event of Default is cured.
4. Late Charges. If the Borrower shall fail to make any
payment under the terms of this Note within five (5) days after the
date such payment is due, the Borrower shall pay to the Lender on
demand a late charge equal to five percent (5%) of such payment.
5. Application and Place of Payments. All payments hereunder
shall be applied first to the payment of any late charges and costs of
collections then due hereunder, second to the payment of accrued and
unpaid interest then due hereunder, and the remainder, if any, shall be
applied to the unpaid Principal Sum. Notwithstanding the foregoing,
accrued and unpaid interest on amounts outstanding hereunder bearing
interest on a LIBOR Rate basis shall be due and payable on the last day
of the applicable LIBOR Rate Funding Period (as herein defined) and if
such LIBOR Rate Funding Period is longer than ninety (90) days, on the
ninetieth (90th) day of each LIBOR Rate Funding Period. All payments on
account of this Note shall be paid in lawful money of the United States
of America in immediately available funds on or before 11:00 a.m.
(Washington, D.C. time) at its principal office in McLean, Virginia or
at such other times and places as the Lender may at any time and from
time to time designate in writing to the Borrower.
6. Prepayment. The Borrower may prepay amounts accruing
interest based on the Prime Rate, in whole or in part, at any time
without notice to the Lender without premium or penalty. No prepayment
of any other amounts outstanding hereunder shall be permitted without
the prior written consent of the Lender.
7. Loan Agreement and Other Loan Documents. This Note is the
"Master Line of Credit Note" described in a Loan Agreement dated as of
September 26, 1994 by and among the Borrower and Comarco Wireless
Technologies, Inc., International Business Services, Inc., Decisions
and Designs, Inc., LCTI, Inc. (the "Original Guarantors") and the
Lender, as amended by that certain First Amendment to Loan Agreement
dated September 26, 1995, by and among the Borrower, the Original
Guarantors and the Lender, as further amended by that certain Second
Amendment to Loan Agreement dated August 30, 1996, by and among the
Borrower, the Original Guarantors, Manufacturing Training Technology,
Center, Inc. ("MTTCI"), Comarco Staffing, Inc. (formerly known as
CoSource Solutions, Inc.) ("CSI") and the Lender, and as further
amended by that certain Third Amendment to Loan Agreement dated of even
date herewith by and among the Borrower, the Original Guarantors,
MTTCI, CSI, Comarco Systems, Inc., Comarco Wireless International, Inc.
and the Lender (as amended, modified, restated, substituted, extended
and renewed at any time and from time to time, the "Loan Agreement").
The indebtedness evidenced by this Note is included within the meaning
of the term "Obligations" as defined in the Security Agreement. This
Note amends and restates in its entirety that certain Second Amended
and Restated Master Line of Credit Note dated August 30, 1996 in the
maximum principal amount of $8,000,000 from the Borrower in favor of
the Lender. The term "Loan Documents" as used in this Note shall mean
collectively this Note, the Third Amended and Restated Guidance Line of
Credit Note, any Acquisition Term Note, the Loan Agreement and any
other instrument, agreement, or document previously, simultaneously, or
hereafter executed and delivered by the Borrower, the Guarantors and/or
any other person, singularly or jointly with any other person,
evidencing, securing, guaranteeing, or in connection with the Principal
Sum, this Note and/or the Loan Agreement. All capitalized terms used
herein and not otherwise defined shall have the meanings given to such
terms in the Loan Agreement.
8. Events of Default. The occurrence of any one or more of the
following events shall constitute an event of default (individually, an
"Event of Default" and collectively, the "Events of Default") under the
terms of this Note:
(a) The failure of the Borrower to pay to the Lender
within five (5) days of when due any and all amounts payable by the
Borrower to the Lender under the terms of this Note; or
(b) The occurrence of an event of default (as defined
therein) under the terms and conditions of any of the other Loan
Documents, including, but not limited to the Loan Agreement.
9. Remedies. Upon the occurrence of an Event of Default, at
the option of the Lender, all amounts payable by the Borrower to the
Lender under the terms of this Note shall immediately become due and
payable by the Borrower to the Lender without notice to the Borrower,
or any other person, and the Lender shall have all of the rights,
powers, and remedies available under the terms of this Note, any of the
other Loan Documents and all applicable laws. The Borrower, the
Guarantors and all endorsers, guarantors, and other parties who may now
or in the future be primarily or secondarily liable for the payment of
the indebtedness evidenced by this Note hereby severally waive
presentment, protest and demand, notice of protest, notice of demand
and of dishonor and non-payment of this Note and expressly agree that
this Note or any payment hereunder may be extended from time to time
without in any way affecting the liability of the Borrower, and any
guarantors and endorsers.
10. Expenses. The Borrower promises to pay to the Lender on
demand by the Lender all costs and expenses incurred by the Lender in
connection with the collection and enforcement of this Note, including,
without limitation, reasonable attorneys' fees and expenses and all
court costs.
11. Notices. Any notice, request, or demand to or upon the
Borrower or the Lender shall be deemed to have been properly given or
made when delivered in accordance with the Loan Agreement.
12. Miscellaneous. Each right, power, and remedy of the Lender
as provided for in this Note or any of the other Loan Documents, or now
or hereafter existing under any applicable law or otherwise shall be
cumulative and concurrent and shall be in addition to every other
right, power, or remedy provided for in this Note or any of the other
Loan Documents or now or hereafter existing under any applicable law,
and the exercise or beginning of the exercise by the Lender of any one
or more of such rights, powers, or remedies shall not preclude the
simultaneous or later exercise by the Lender of any or all such other
rights, powers, or remedies. No failure or delay by the Lender to
insist upon the strict performance of any term, condition, covenant, or
agreement of this Note or any of the other Loan Documents, or to
exercise any right, power, or remedy consequent upon a breach thereof,
shall constitute a waiver of any such term, condition, covenant, or
agreement or of any such breach, or preclude the Lender from exercising
any such right, power, or remedy at a later time or times. By accepting
payment after the due date of any amount payable under the terms of
this Note, the Lender shall not be deemed to waive the right either to
require prompt payment when due of all other amounts payable under the
terms of this Note or to declare an Event of Default for the failure to
effect such prompt payment of any such other amount. No course of
dealing or conduct shall be effective to amend, modify, waive, release,
or change any provisions of this Note.
13. Partial Invalidity. In the event any provision of this
Note (or any part of any provision) is held by a court of competent
jurisdiction to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect any
other provision (or remaining part of the affected provision) of this
Note; but this Note shall be construed as if such invalid, illegal, or
unenforceable provision (or part thereof) had not been contained in
this Note, but only to the extent it is invalid, illegal, or
unenforceable.
14. Captions. The captions herein set forth are for
convenience only and shall not be deemed to define, limit, or describe
the scope or intent of this Note.
15. Applicable Law. The Borrower acknowledges and agrees that
this Note shall be governed by the laws of the Commonwealth of
Virginia, even though for the convenience and at the request of the
Borrower, this Note may be executed elsewhere.
16. Arbitration. Any controversy or claim between or among the
parties hereto including but not limited to those arising out of or
relating to this Agreement or any of the other Loan Documents ,
including any claim based on or arising from any alleged tort, shall be
determined by binding arbitration in accordance with the Federal
Arbitration Act (or if not applicable, the applicable state law), the
rules of practice and procedure for the arbitration of commercial
disputes of Judicial Arbitration and Mediation Services, Inc.
(J.A.M.S.) and the "special rules" set forth below. In the event of any
inconsistency, the special rules shall control. Judgment upon any
arbitration award may be entered in any court having jurisdiction. Any
party to this agreement may bring an action, including a summary or
expedited proceeding, to compel arbitration of any controversy or claim
to which this Agreement applies in any court having jurisdiction over
such action.
(a) Special Rules. The arbitration shall be conducted
in the city of the Borrower's domicile at time of this Agreement's
execution and administered by J.A.M.S. who will appoint an arbitrator;
if J.A.M.S. is unable or legally precluded from administering the
arbitration, then the American Arbitration Association will serve. All
arbitration hearings will be commenced within 90 days of the demand for
arbitration; further, the arbitrator shall only, upon a showing of
cause, be permitted to extend the commencement of such hearing for up
to an additional 60 days.
(b) Reservation of Rights. Nothing in this Agreement
shall be deemed to (i) limit the applicability of any otherwise
applicable statutes of limitation or repose and any waivers contained
in this Note or (ii) be a waiver by the Lender of the protection
afforded to it by 12 U.S.C. Section 91 or any substantially equivalent
state law; or (iii) limit the right of the Lender (a) to exercise self
help remedies such as (but not limited to) setoff, or (b) to foreclose
against any real or personal property collateral, or (c) to obtain from
a court provisional or ancillary remedies such as (but not limited to)
injunctive relief, writ of possession or the appointment of a receiver.
Lender may exercise such self help rights, foreclosure upon such
property, or obtain such provisional or ancillary remedies before,
during or after the pendency of any arbitration proceeding brought
pursuant to this Agreement. Neither the exercise of self help remedies
nor the institution or maintenance of an action for foreclosure or
provisional or ancillary remedies shall constitute a waiver of the
right of any party, including the claimant in any such action, to
arbitrate the merits of the controversy or claim occasioning resort to
such remedies.
3. Governing Law, Etc. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia and shall
be deemed to be an instrument under seal pursuant to said law. The headings used
in this Agreement are for the convenience of the parties and shall not be used
to interpret or construe the provisions hereof.
4. Not A Novation. It is expressly understood and agreed that the
indebtedness evidenced by the Second Replacement Master Line of Credit Note has
not been extinguished or discharged hereby. The Borrower and the Lender agree
that the execution of this Agreement is not intended and shall not cause or
result in a novation with regard to the Second Replacement Master Line of Credit
Note.
WITNESS the signature and seal of the Borrower by its duly auathorized
officer as of the day and year first above written.
WITNESS OR ATTEST: COMARCO, INC.
______________________________ By:_____________________________(SEAL)
Name:
Title:
