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EXHIBIT 10.5
FOURTH AMENDED AND RESTATED LOAN AGREEMENT
This Fourth Amended and Restated Loan Agreement (this "Agreement") is
entered into as of August 29, 1997 by and between BEARCOM OPERATING, L.P. (the
"Company") and XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION, formerly First
Interstate Bank of Texas, N.A. (the "Bank").
Recitals
WHEREAS, the Company and the Bank have been parties to that certain
Third Amended and Restated Loan Agreement dated as of November 1, 1996 (the "Old
Agreement"), under which the Bank made certain loans and advances to the Company
secured by all or substantially all of the Company's assets; and
WHEREAS, the Company has requested additional financial accommodations,
and the Company and the Bank have agreed to amend and restate the terms and
conditions of the Old Agreement, as set forth hereinafter.
Agreements
In consideration of the Bank's making the following described loans,
the mutual covenants herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged by each of the
parties hereto, the Company and the Bank agree as follows:
i. The $15,000,000 Revolving Line of Credit.
(a) Subject to, and upon the terms, conditions, covenants and
agreements contained herein, the Bank agrees to loan the Company, at any time,
and from time to time prior to the maturity of the Company's promissory note
executed in conjunction with this Agreement, such amounts as the Company may
request up to but not exceeding an aggregate principal sum at any time
outstanding equal to $15,000,000 (the "Revolving Line of Credit"); within such
limits and during such period, the Company may borrow, repay, and re-borrow
hereunder. All loans under the Revolving Line of Credit shall be evidenced by
the Company's Renewal Master Revolving Credit Note dated the date hereof (the
"Revolving Note"), in form and substance satisfactory to the Bank, payable to
the order of the Bank, and bearing interest upon the terms provided therein (but
in no event to exceed the maximum non-usurious interest rate permitted by law).
The principal of and interest on the Revolving Note shall be due and payable as
set forth on the face of the Revolving Note. Notation by the Bank on its records
shall constitute prima facie evidence of the amount and date of any payment or
borrowing thereunder. The Revolving Line of Credit shall be used by the Company
for its ordinary working capital needs, or for general corporate purposes, or
for its acquisition of all or substantially all of the assets or capital stock
of one or more operating businesses (each such acquisition a "Revolver
Acquisition").
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 1
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(b) Advances Related to Letters of Credit. Advances under the
Revolving Line of Credit may also be made to fund Letters of Credit (as
hereinafter defined) that are issued under the Revolving Note and are drawn
upon, provided, the Bank may, in its own discretion, advance funds under the
Revolving Line of Credit to fund such Letters of Credit (as hereinafter defined)
when the Company does not reimburse the Bank for such funding. All such advances
shall be added to the principal amount of the Revolving Note and shall be
reimbursable to the Bank by the Company upon demand therefor.
ii. The $5,000,000 Acquisition Line of Credit. Subject
to, and upon the terms, conditions, covenants and
agreements contained herein, at the Company's request
the Bank has agreed to loan the Company up to the sum of
$5,000,000 to be utilized by the Company solely for its
acquisition of all or substantially all of the assets or
capital stock of one or more operating businesses (each
an "Acquisition"); within such limits and until October
31, 1997 (but not thereafter), the Company may borrow,
repay and reborrow hereunder. Such loans (the
"Acquisition Indebtedness") are evidenced by the
Company's Acquisition Note dated November 1, 1996 (the
"Acquisition Note"), executed concurrently with the
execution of the Old Agreement, payable to the order of
the Bank, and bearing interest upon the terms provided
therein (but in no event to exceed the maximum
non-usurious interest rate permitted by law). The
Acquisition Indebtedness shall convert from a line of
credit to a term repayment on November 1, 1997 in
accordance with the terms of the Acquisition Note. The
principal of and interest on the Acquisition Note shall
be due and payable as set forth on the face of the
Acquisition Note. Notation by the Bank on its records
shall constitute prima facie evidence of the amount and
date of any payment or borrowing thereunder.
iii. Renewals and Extensions. All renewals, extensions,
modifications and rearrangements of the Revolving Note
and the Acquisition Note, if any, shall be deemed to be
made pursuant to this Agreement, and accordingly, shall
be subject to the terms and provisions hereof, and the
Company shall be deemed to have ratified, as of such
renewal, extension, modification or rearrangement date,
all of the representations, covenants and agreements
herein set forth.
iv. Old Agreement Superseded. This Agreement supersedes
and replaces the Old Agreement in its entirety;
provided, that the Company's liability to the Bank for
outstanding loans and other indebtedness under the Old
Agreement and its predecessors (the amount of which the
Company acknowledges is, as of August 28, 1997,
$8,934,300 under the Revolving Note and $5,000,000 under
the Acquisition Note), shall continue in full force and
effect under the terms hereof. The foregoing amounts of
indebtedness shall constitute the initial outstanding
principal amount under the Revolving Note and the
Acquisition Note, respectively.
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 2
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v. Letters of Credit. Subject to the conditions herein,
the Bank shall from time to time, at the request of the
Company, issue Letters of Credit (herein so called) to
Company's vendors for the acquisition of inventory for
the Company. The aggregate outstanding amount of any
Letters of Credit issued by Bank hereunder shall
constitute a portion of the Revolving Line of Credit,
and shall in no event exceed the sum of $2,000,000. The
fees for such issuance shall be in accordance with the
Bank's then existing fee schedule therefor. Such Letters
of Credit shall be considered in computing the amount of
funds available to the Company, as provided in Section 6
herein. The Bank shall not be obligated: (a) to issue
Letters of Credit if the issuance of same would cause
the Outstanding Credit (as hereinafter defined) to
exceed the Borrowing Base (as hereinafter defined); (b)
to issue such Letters of Credit with an expiration date
after the maturity date of the Revolving Note; and (c)
to extend the expiration date of such Letters of Credit
to a date after the maturity date of the Revolving Note.
vi. Availability Under Revolving Note.
(i) Revolving Note. The aggregate
principal amount at any time outstanding
under the Revolving Note and the
Acquisition Note, including without
limitation the face amount of all
outstanding Letters of Credit issued
for the account of the Company (said
principal amount collectively being
referred to herein as the "Outstanding
Credit") shall not at any time exceed
the Borrowing Base, as hereinafter
defined.
(ii) Borrowing Base Compliance. In the
event the Outstanding Credit at any time
exceeds the Borrowing Base, then the
Company shall immediately make such
payments to the Bank necessary to reduce
the Outstanding Credit to an amount such
that the Outstanding Credit is less than
or equal to the amount of the Borrowing
Base.
vii. Borrowing Base.
(a) The "Borrowing Base" shall be equal to an amount that is 5.50 times
the Free Cash Flow of the Company; calculated on a rolling, preceding 12-month
basis. The term "Free Cash Flow" means the Company's net income plus
depreciation and amortization, less any non- discretionary, maintenance capital
expenditures (which shall include, without limitation, all amounts spent for the
purchase and replacement of rental equipment). The Free Cash Flow, and all
components thereof, shall be computed by the Company and reported to the Bank in
accordance with generally accepted accounting principles, consistently applied
("GAAP").
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 3
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(b) For purposes of determining the Borrowing Base upon, or
following, an Acquisition or a Revolver Acquisition by the Company, the Company
shall include in the calculation in Subsection 7(a) hereinabove the Free Cash
Flow for the division, corporation or other entity that is the subject of such
acquisition, to be computed by the Company and reported to the Bank in
accordance with GAAP, but without any adjustments for efficiencies that the
Company might realize in its operations after the acquisition.
(c) In the event that the Bank disputes the amount of the Borrowing
Base as calculated and reported by the Company, the Bank may, upon notice to the
Company, make any reasonable adjustment to the Borrowing Base for purposes of
determining availability under the Revolving Note and the Acquisition Note.
viii. Requests for Advances. Advances under the Revolving Line
of Credit may be made by telephonic oral request,
written request signed by an authorized officer of the
Company or by telephonic facsimile request, provided
that any such advance shall be deposited in an account
of the Company, unless such authority for telephonic
oral requests or telephonic facsimile requests is
revoked in writing by Xxxx X. Xxxxxx, as designated
agent of the Company (or such other designated agent as
the Bank approves in writing), and such revocation is
actually received by the Bank (the "Revocation"). Any
telephonic oral request shall be followed with a written
request for an advance in accordance with this Agreement
within twenty- four (24) hours. In consideration of the
Bank's permitting the Company to make telephonic oral
requests and telephonic facsimile requests for advances
under the Revolving Note until Revocation, the Company
covenants and agrees to assume liability for and to
protect, indemnify and hold the Bank harmless from any
and all liabilities, obligations, damages, penalties,
claims, causes of action, costs, charges and expenses,
including attorneys' fees and expenses of employees,
which may be imposed, incurred by or asserted against
the Bank (other than that caused by Bank's willful
misconduct) by reason of any loss, damage or claim
howsoever arising or incurred because of or out of or in
connection with (i) any action of the Bank pursuant to
telephonic oral requests and telephonic facsimile
requests for advances under the Revolving Line of
Credit, (ii) the breach of any provisions of this
Agreement by the Company, (iii) the transfer of funds
pursuant to such telephonic oral requests and telephonic
facsimile requests, or (iv) the Bank's honoring or
failing to honor any telephonic oral request or
telephonic facsimile request for any reason. The Bank is
entitled to rely upon and act upon telephonic oral
requests and telephonic facsimile requests made or
purportedly made by any of the officers or employees
specified in the resolutions delivered to the Bank of
even date herewith, as supplemented in writing from time
to time and accepted by the Bank, and the Company shall
be unconditionally and absolutely estopped from denying
(i) the authenticity and validity of any such
transaction so acted upon by the Bank once the Bank has
advanced funds under the Revolving Line of Credit and
deposited or
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 4
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transferred such funds as requested in any such
telephonic oral request or telephonic facsimile request,
and (ii) the Company's liability and responsibility
therefor.
ix. Prepayments. Any prepayment on the Revolving Note
and the Acquisition Note (collectively, the "Notes")
shall be paid at the offices of the Bank. The Company
shall be entitled to prepay the Notes from time to time
and at any time, in whole or in part, without notice or
penalty except as set forth in the Notes. All
prepayments on the Notes shall be applied as set forth
in the Notes. No prepayment shall relieve the Company of
the obligation to pay the principal and interest on the
Notes until such time as all obligations are paid in
full.
x. Collateral for the Loans. The Outstanding Credit and
any and all other indebtedness of any kind whatsoever
now owing or hereafter arising under this Agreement
(which shall collectively be referred to herein as the
"Bank Indebtedness") shall be secured by the following
(hereinafter called the "Collateral"), as to which the
Company hereby grants to the Bank a security interest:
(i) All accounts now owned or existing
as well as any and all that may
hereafter arise or be acquired by the
Company, and all proceeds and products
thereof, including without limitation,
all notes, drafts, acceptances,
instruments, general intangibles
(including tax refunds) and chattel
paper arising therefrom, and all
returned or repossessed goods arising
from or relating to any such accounts or
other proceeds of any sale or other
disposition of inventory; and all
interests of the Company in any goods,
the sale or lease of which shall have
given rise to any of the foregoing;
(ii) All of the Company's inventory,
including goods, merchandise, raw
materials, goods in process, and
finished goods now owned or hereafter
acquired and held for sale or lease or
furnished or to be furnished under
contracts for service or used or
consumed in the Company's business and
all additions and accessions thereto and
contracts with respect thereto and all
documents of title evidencing or
representing any part thereof, and all
products and proceeds thereof,
including, without limitation, all of
such whether now or hereafter in the
possession of the Company, warehouseman,
bailee or any other person;
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 5
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(iii) All of the Company's equipment of
every nature and description whatsoever
now owned or hereafter acquired
including all appurtenances and
additions thereto and substitutions
therefor, wheresoever located, including
all tools, parts and accessories used in
connection therewith;
(iv) All of the Company's general
intangibles (including, without
limitation, the Company's service marks
and trademarks) and other personal
property now owned or hereafter
acquired, including but not limited to
the Company's mailing lists; and
(v) Such other property of the Company
as may be included within the definition
of "Collateral" in the Amended and
Restated Commercial Security Agreement
dated as of March 1, 1996 (the "Security
Agreement") executed by the Company in
favor of the Bank.
xi. Execution of Loan Documents. The Company shall
execute and deliver, or cause to be executed and
delivered, to Bank the following described documents:
(i) As a condition precedent to the
effectiveness of this Agreement and the
right of the Company to request any
advance hereunder, the Company shall
execute and deliver to the Bank the
following documents and instruments (or
shall obtain execution and delivery by
any applicable third party), in form and
substance satisfactory to the Bank:
1) This Agreement;
2) The Revolving Note;
3) Security agreements, financing
statements, and all other documents
or instruments described or
contemplated herein or otherwise
required by the Bank to secure the
payment of the Notes and the
performance by the Company of its
obligations hereunder and thereunder
(the "Security Instruments")
evidencing a first priority security
interest in
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 6
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favor of the Bank in all property of
the Company;
4) The resolutions of
the board of directors of the
general partner of the Company
approving the Company's execution
and performance of this Agreement,
as certified by the general
partner's corporate secretary;
5) A Consent and Reaffirmation of
Guarantors executed by BearCom,
Inc., Page- Com GP, Inc. and Bear
Communications, Inc., in form and
substance satisfactory to the Bank,
reaffirming their respective
guarantees and the other documents
and instruments executed and
delivered to the Bank in connection
with the Old Agreement; and
6) The Company's attorneys shall
execute and deliver to the Bank, in
form and substance satisfactory to
the Bank, an opinion letter
supporting the validity and
enforceability of the Loan Documents
(as defined hereinafter) and the
debt and liens evidenced thereby;
7) all other documents or
instruments requested by the Bank to
be executed concurrently herewith.
(ii) In connection with the Bank's
issuance of each Letter of Credit, the
Company shall, in addition to the
documents required in Section 11(a)
above, execute and deliver to the Bank
a Letter of Credit Application and
Agreement (herein so called), provided
the Bank shall have no obligation to
issue a Letter of Credit for the
account of the Company until a Letter
of Credit Application and Agreement has
been executed by the Company and
delivered to the Bank.
xii. Use of Proceeds. The proceeds of the Revolving Note
shall be used by the Company solely to provide for the
ordinary working capital needs of the Company, for
general corporate purposes or for Revolver Acquisitions.
The proceeds of the Acquisition Note shall be used by
the Company solely for Acquisitions. No part of the
proceeds received hereunder will be used,
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 7
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directly or indirectly, for the working capital needs of
any partner in, or affiliates of, the Company, nor for
the purpose of purchasing or carrying, or the payment in
full or in part, of indebtedness which was incurred for
the purposes of purchasing or carrying margin of stock,
as such term is defined in Section 221.3 of Regulation U
of the Board of Governors of the Federal Reserve System
12 C.F.R., Chapter II, Part 221.
xiii. Representations and Warranties. Until payment and
performance in full of the Notes, unless the Company
receives prior written approval of a deviation therefrom
from the Bank, the Company represents, warrants and
covenants that:
(i) The Company is a limited partnership
duly registered, validly existing and in
good standing under the laws of the
state of its registration and is duly
licensed, qualified to do business and
in good standing in each jurisdiction in
which the ownership of its property or
the conduct of its business requires
such licensing and qualification and has
all powers and all permits, consents and
authorizations necessary to own and
operate its properties and to carry on
its business as presently conducted. The
execution, delivery and performance of
this Agreement by the Company, the
borrowings hereunder and the execution
and delivery of the Revolving Note, the
Acquisition Note, the Security
Instruments, the Letter of Credit
Applications and Agreements, the
Company's Amended and Restated
Repurchase Agreement with Motorola, Inc.
dated March 1, 1996 (the "Repurchase
Agreement"), and the several agreements
and instruments contemplated thereby,
(i) have been duly authorized by proper
partnership proceedings and (ii) will
not contravene, or constitute a default
under, any provision of applicable law
or regulation or of the partnership
agreement of the Company, or of any
mortgage, indenture, contract, agreement
or other instrument, or any judgment,
order or decree, binding upon the
Company. No consents of the Company's
limited partner(s) or any holder of any
indebtedness of the Company are required
as a condition to the validity of this
Agreement. This Agreement, the Notes,
the Security Instruments, the Letter of
Credit Applications and Agreements, the
Repurchase Agreement and any agreements,
documents and instruments contemplated
herein and
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 8
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thereby, or in any way related thereto
whether executed prior hereto,
simultaneously herewith or hereafter
(all of same being hereinafter sometimes
called the "Loan Documents"), when duly
executed and delivered in accordance
with this Agreement, will constitute
legal, valid and binding obligations of
the Company in accordance with their
respective terms.
(ii) The unaudited balance sheet of the
Company at July 31, 1997, the related
statement of income and retained
earnings for the period then ended,
copies of which have been delivered to
the Bank, accurately represent the
financial position of the Company at
July 31, 1997 and the results of its
operations for the periods then ended in
conformity with GAAP applied on a basis
consistent with the preceding year. No
material adverse change has occurred
since July 31, 1997 in the financial
position or in the results of operations
of the Company or in its business.
(iii) No approvals or consents of any
governmental department, administrative
agency or instrumentality having
jurisdiction over the Company are
necessary to permit the Company to enter
into the Loan Documents or to make any
Acquisition or Revolver Acquisition,
except as previously expressly disclosed
to the Bank in writing before such
Acquisition or Revolver Acquisition
becomes effective.
(iv) There is no action, suit or
proceeding pending or, to the
knowledge of the Company, threatened
against the Company or the Collateral
before any court, governmental
department, administrative agency or
instrumentality which, if such action,
suit or proceeding were adversely
determined, would adversely affect the
financial position or the results of
operations of the Company or its
business or the ability of the Company
to perform its obligations under the
Loan Documents.
(v) No Default or Event of Default
(hereinafter defined) has occurred and
is continuing.
(vi) The Company has good and
indefeasible title to all of its
assets and properties, free and clear of
all
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 9
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security interests, mortgages, liens or
encumbrances, except as otherwise
permitted under this Agreement or
reflected in the Company's financial
statements submitted to the Bank and
dated as of July 31, 1997.
(vii) The Company is not an investment
company within the meaning of the
Investment Company Act of 1940.
(viii) All United States tax returns and
all required State and foreign tax
returns relating to the Company have
been filed by it or on its behalf and
all taxes due thereunder have been paid,
except such amounts which are the
subject of a bona fide dispute which the
Company is diligently pursuing in good
faith. All other tax returns required to
be filed by the Company or on the
Company's behalf with any taxing
jurisdiction have been filed and all tax
liabilities shown thereon to be due have
been paid and such returns properly
reflect the taxes of the Company for the
periods covered thereby.
(ix) The security interests, mortgages
and liens attaching to the Collateral
will at all times constitute valid,
perfected and enforceable first
priority security interests, mortgages
and liens in favor of the Bank, and the
Collateral is and shall be at all times
subject to no other security interests,
mortgages, liens or encumbrances, except
as otherwise permitted under this
Agreement. Before any further funding
under the Notes, the Company will have
taken, or will have participated with
the Bank in taking, all necessary action
and will have made all necessary filings
to provide the Bank with perfected,
first priority (except as otherwise
permitted under this Agreement) security
interests, mortgages and liens in the
Collateral under the laws of all
appliable jurisidctions.
xiv. Affirmative Covenants. Until payment and performance
in full of the Notes, unless the Company receives prior
written approval of a deviation therefrom from the Bank,
the Company covenants and agrees to:
(i) Annual Statements. Furnish the Bank,
within one hundred (100) days after the
end of the fiscal year of BearCom, Inc.,
a copy of BearCom, Inc.'s
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 10
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consolidated audited financial
statements (which shall include the
Company), consisting of at least a
balance sheet and related statement of
income, retained earnings and changes
in financial condition of BearCom, Inc.
and the Company prepared in conformity
with GAAP, applied on a basis consistent
with that of the preceding year (if
applicable), and certified by an
independent certified public accountant
selected by BearCom, Inc. and
satisfactory to the Bank.
(ii) Consolidating Statements. Furnish
the Bank, within one hundred (100) days
after the end of the fiscal year of
BearCom, Inc., a copy of its
consolidating financial statements
including all of BearCom, Inc.'s
subsidiaries and affiliates, including
without limitation, the Company.
(iii) Monthly Statements. Furnish the Bank
within thirty (30) days after the end of
each calendar month during the term
hereof, a copy of BearCom, Inc.'s
consolidated unaudited financial
statements for such calendar month,
consisting of at least a balance sheet
and related statement of income,
retained earnings and a statement of
cash flow of BearCom, Inc. and the
Company, prepared in conformity with
GAAP and certified by the chief
financial officer of BearCom, Inc.
(iv) Compliance Certificate. Furnish the
Bank concurrently with the delivery of
the financial statements required to be
delivered pursuant to subsection (c)
above, a Compliance Certificate in the
form of the Compliance Certificate
attached hereto as Exhibit A, signed by
an authorized officer or agent of the
Company.
(v) Borrowing Base Certificate. Furnish
the Bank a Borrowing Base Certificate in
the form of the Borrowing Base
Certificate attached hereto as Exhibit
B-1, signed by an authorized officer or
agent of the Company, not later than
thirty (30) days after the end of each
calendar month during the term hereof,
with regard to and as of the end of
such calendar month, in order to
evidence Borrowing Base compliance under
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 11
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Section 5 hereof. Company will further
furnish the Bank with a Draw Request
Form in the form attached hereto as
Exhibit B-2 not later than 1:00 p.m. on
any business day on which the Company
is requesting an advance under the
Revolving Line of Credit.
(vi) Accounts Receivable Listing and
Aging. Furnish the Bank a current
listing and aging of the Company's
accounts receivable within ten (10) days
of a written request therefor by the
Bank, with aging of accounts receivable
on the basis of current, 30, 60, and
over 90 days from date of original
invoice.
(vii) Accounts Payable Listing and Aging.
Furnish the Bank a current listing and
aging of the Company's accounts payable
within ten (10) days from a written
request therefor by the Bank, with aging
of accounts payable on the basis of
current, 30, 60, and over 90 days.
(viii) Inventory Summaries. Furnish the
Bank a current, detailed listing
of inventory in form and detail
acceptable to the Bank within ten (10)
days of a written request therefor by
the Bank.
(ix) Insurance. Maintain, in amounts
satisfactory to the Bank, liability,
property, casualty and business
interruption insurance with generally
recognized reputable companies in the
amounts and types and against the risks,
liabilities and contingencies as is
usually carried by a similar business in
the same general area and of similar
size to the Company, with the Bank named
as loss payee as its interest may
appear, such policies to be
non-cancelable without thirty (30) days
prior written notice to the Bank.
(x) Taxes. Pay and discharge all taxes,
assessments and governmental charges or
levies imposed on the Company or on its
income or profits or on any of its
property prior to the date on which
penalties or liens attached thereto and
become of public record, except such
amounts which are the subject of a bona
fide dispute which the Company is
diligently pursuing in good faith.
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 12
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(xi) Litigation. Promptly give notice to
the Bank of all litigation and all
proceedings before governmental or
regulatory agencies affecting the
Company except litigation or proceedings
not materially affecting the financial
condition of the Company.
(xii) Future Subsidiaries. Cause any
corporation or entity which shall
hereafter become a subsidiary of the
Company to execute and deliver a
guaranty of the Bank Indebtedness and
such other documents and instruments as
the Bank shall deem advisable or
necessary.
(xiii) Further Assurances. At any time and
from time to time, execute and deliver
such further instruments and take such
further action as may reasonably be
requested by the Bank, in order to cure
any defects in the execution and
delivery of, or to comply with or
accomplish the covenants and agreements
contained in, the Loan Documents.
(xiv) Liens. Subordinate any purchase
money liens to Bank by a Subordination
Agreement in substance and form
satisfactory to the Bank.
(xv) Books and Records. Make available
to the Bank the books and records
of BearCom, Inc. and its subsidiaries
and affiliates, including without
limitation, the Company, including, but
not limited to, the subsidiary journals,
accounts receivable files, inventory
records, general ledger, and
correspondence files. Bank shall have
the right to examine the Collateral at
any reasonable time upon prior notice.
(xvi) Existence. Continue to be a limited
partnership duly registered and existing
in good standing under the law of the
jurisdiction under which it is
registered and continue to be duly
licensed or qualified as a foreign
partnership in all jurisdictions wherein
the character of the property owned or
leased by it or the nature of the
business transacted by it makes
licensing or qualification necessary by
a foreign partnership.
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 13
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(xvii) Expenses. Pay reasonable expenses,
including reasonable legal expenses and
attorney's fees, of the Bank which have
been or may be incurred by the Bank in
connection with the preparation of
future documentation deemed necessary by
the Bank, the lending and incurring of
obligations or liabilities hereunder,
the collection of any note authorized
hereby, or for the enforcement of any of
the Company's obligations hereunder and
under any document executed to secure
the payment of any note authorized
hereunder and for the recording and
filing and recording and refiling of any
such document.
(xviii) Default. Give notice immediately
upon the knowledge or awareness of
senior management of the Company to Bank
in writing of the occurrence of any
Default.
(xix) Name Change, Casualty. Give notice
of any change in the name of the
Company, any change in identity or the
Company's structure, and any uninsured
or partially uninsured loss through
fire, theft, liability or property
damage.
(xx) Audits. The Company will permit
Bank's Commercial Finance Department
to perform audits of the Company in
accordance with the Bank's internal
policies. The costs of all such annual
audits, up to an amount of $2,500
per year, shall be borne by the Company.
(xxi) Banking Relationship. As additional
Collateral, the Company will maintain
its primary depository relationship with
the Bank.
(xxii) Lock-box. As additional Collateral,
the Company will maintain its existing
Lock-box arrangement for the benefit of
the Bank.
(xxiii) Unused Commitment Fee. The Company
will pay to the Bank, upon quarterly
invoice from the Bank, an unused
commitment fee equal to 0.25% of the
average daily unused balance of the
Revolving Line of Credit during the
preceding three (3) month period.
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 14
15
xv. Negative Covenants. The Company covenants and agrees
that so long as the Notes are outstanding and unpaid,
without the written consent of the Bank, it shall not:
(i) Debt. Create, incur, assume or
suffer to exist any debt, whether by way
of loan, or the issuance or sale of
bonds, debentures, notes or securities,
including deferred debt for the purchase
price, leases, or otherwise, except (i)
the loans described herein, (ii) current
accounts payable and other current
obligations (other than for borrowed
money) arising out of transactions in
the ordinary course of business, (iii)
purchase money acquisitions or
capitalized leases of fixed assets up to
the amount of $500,000 in the aggregate;
provided, that no such debt shall
involve financial covenants on the part
of the Company more restrictive than
those contained in this Agreement, or
(iv) a $300,000 note payable to Raycom,
Inc. or its shareholders.
(ii) Liabilities. Assume, guarantee,
endorse, suffer to exist or otherwise
become liable upon, or agree to purchase
or otherwise furnish funds for the
payment of, the obligations of any
person, firm or corporation, except (i)
for the obligations hereunder, and (ii)
endorsement of negotiable instruments
for deposit or collection or similar
transactions in the ordinary course of
business.
(iii) Encumbrances. Create, incur, assume
or suffer to exist any mortgage,
deed of trust, pledge, encumbrance, lien
or security interest of any kind, upon
any of its property now owned or
hereafter acquired, except (i) liens,
mortgages, encumbrances or security
interest to secure payment of the
borrowings authorized hereunder; (ii)
pledges or deposits to secure
obligations under workmen's compensation
laws or of similar legislation; (iii)
deposits to secure public or statutory
obligations, statutory mechanics',
carriers', workmen's, repairmen's liens
or other like items in the ordinary
course of business in respect to
obligations which are not overdue or are
being contested in good faith; and (iv)
existing liens not contemplated under
this Agreement as reflected by the
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 15
16
financial statements submitted to the
Bank or disclosed in writing to Bank in
connection with the execution of this
Agreement.
(iv) Acquisitions. Without prior written
approval from the Bank, make any
Acquisition or Revolving Acquisition or
otherwise acquire the assets of another
person or entity for consideration in
excess of $500,000.
(v) Subsidiaries. Form any new
subsidiary or merge or invest in or
consolidate with any corporation or
other entity, or sell, lease, assign,
transfer, or otherwise dispose of
(whether in one transaction or as a
series of related transactions) all or
substantially all of its assets, whether
now owned or hereafter acquired.
(vi) Business. Without prior notice to
the Bank, change the nature of business
conducted by the Company or engage in a
kind of business different from that
which the Company presently conducts.
(vii) Distributions. Declare or pay any
distribution (other than a distribution
payable to partners in the amount of
their liability for federal income taxes
as a result of the Company's income) or
make any other distribution on account
of, or purchase, acquire, redeem or
retire, any interest in the Company
whether now or hereafter outstanding.
(viii) Loans to Officers. Make any
additional loans or advances to partners
or management of the Company, or to the
officer or directors of any partner in
the Company or of affiliate thereof,
which in the aggregate exceed the sum of
$100,000.
(ix) Sale of Fixed Assets. Sell in excess
of $250,000 in the aggregate, during
any fiscal year of the Company
during the term hereof, of the Company's
fixed assets, provided, however, with
respect to those sales which in the
aggregate are less than $250,000 for any
fiscal year, the Company shall replace
the assets sold with those of equal or
greater value.
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 16
17
(x) Management. Make any change in the
senior management of the Company which
the Bank, in its sole discretion, deems
significant; provided, however, that a
breach of this covenant will not be an
Event of Default unless the change in
senior management of the Company is
unsatisfactory to the Bank and the
Company fails to make remedial changes
to the senior management of the Company
within thirty (30) days after notice
thereof to the Company.
(xi) Control. Make any change in the
control of the Company which the
Bank, in its sole discretion, deems
significant.
(xii) Pledges. Pledge any assets of
Company without prior consent of
the Bank, including, but not limited to,
any purchase money liens not already
disclosed to Bank.
xvi. Financial Covenants. The Company covenants and
agrees that so long as the Notes are outstanding and
unpaid, without the written consent of the Bank, the
Company will:
(i) Working Capital. Maintain minimum
working capital of not less than
$3,000,000. Working capital is defined
as current assets less current
liabilities, with the exception that
current assets will exclude prepaid
assets other than prepaid catalog
expenses and current liabilities will
include all of the outstanding Revolving
Line of Credit.
(ii) Structured Debt/Tangible Net Worth.
Maintain a ratio of "Total Structured
Indebtedness" to "Tangible Net Worth" of
not greater than 2.0 to 1.0. "Total
Structured Indebtedness" is defined as
all obligations which would be
classified on a balance sheet as debt
for borrowed money (including, without
limitation, all Bank Indebtedness) or
debt for the deferred purchase price of
property (including, without limitation,
all capital lease obligations) in
accordance with GAAP, but excluding
trade payables, accrued liabilities or
other operating liabilities. "Tangible
Net Worth" is defined as the total
assets of the Company, less the total
liabilities of the Company
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 17
18
as set forth on its balance sheet at
such date, plus indebtedness of
the Company subordinated to the Bank,
less contingent liabilities of the
Company, except that the sum of the
following shall be excluded from the
determination of total assets: (i)
goodwill, including any amounts (however
designated on such balance sheet)
representing the cost of acquisition of
subsidiaries in excess of underlying
tangible assets; (ii) patents,
trademarks, copyrights, deferred charges
(including, but not limited to,
unamortized discount and expenses, but
excluding prepaid expenses), intangible
and other similar assets; (iii) advances
to, and notes receivable from,
stockholders, officers, employees and
other related parties of the Company;
(iv) the Company's mailing lists; and
(v) other assets that are classified as
"intangible" assets in accordance with
GAAP.
(iii) Minimum Quarterly Income. Maintain
minimum net income, calculated in
accordance with GAAP, of at least $1,000
for each fiscal quarter of the Company.
xvii. Default. The Company shall be in default hereunder
if any one of the following events of default
("Events of Default") shall occur and be continuing,
namely:
(i) Default by the Company in the
payment of any sums owing to the Bank
(including, without limitation, under
the Revolving Note, Acquisition Note or
other Bank Indebtedness); or
(ii) Default by the Company in the
payment of any sums owing to creditors
other than the Bank, or if the holder
of any such indebtedness declares or
may declare such indebtedness due
prior to the stated maturity because of
any default thereunder; provided, that
such default shall involve at least the
sum of $1,000 and shall have continued
for a period of seven (7) days; or
(iii) Any representation, statement,
warranty or certificate made by the
Company in the Loan Documents, or in any
agreement, document or
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 18
19
instrument executed pursuant hereto or
concurrently herewith, or hereafter
furnished to the Bank in connection with
any loan or loans hereunder, shall prove
to have been incorrect in any material
respect at the time of making or
issuance thereof; or
(iv) Default by the Company or any other
party to the Loan Documents in the
performance of any of the covenants or
agreements set forth in the Loan
Documents or in any other agreement,
document or instrument executed pursuant
hereto provided, however, that the
provisions of this Agreement shall
control in the event that any of such
provisions are in conflict with the
provisions of any other agreement,
mortgage, indenture or instrument
executed pursuant hereto and all of such
provisions in such other instruments
shall be deemed to be cumulative of the
provisions hereof to the extent such
provisions are not inconsistent
herewith; or
(v) The Company or any guarantor shall
apply for or consent to, or acquiesce
in the appointment of a receiver,
trustee, or liquidator of itself or
himself or of its or his property, or
admit in writing its or his inability to
pay its or his debts as they mature, or
make a general assignment for the
benefit of creditors or an Order of
Relief be entered with respect to the
Company by any court having competent
jurisdiction in the premises, or file a
voluntary petition in bankruptcy or a
petition or answer seeking
reorganization, composition,
readjustment or arrangement, or similar
relief with creditors, under any present
or future statute, law or regulation, or
otherwise, or take advantage of any
insolvency law or file an answer
admitting the material allegations of a
petition filed against it or him in
bankruptcy, reorganization, or
insolvency proceedings, or corporate
action shall be taken by it or him for
the purpose of affecting any of the
foregoing, or it or he shall have a
receiver or trustee or assignee in
bankruptcy or insolvency appointed for
it or him, or its or his property,
without its or his application or
consent; or
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 19
20
(vi) Except for the contingent
liabilities previously disclosed
to the Bank or other contingent
liabilities not contemplated by this
Agreement which are incurred by the
Company in the ordinary course of
business, the Company becomes or remains
liable, directly or indirectly, for or
in connection with the obligations,
stock or dividends of any other person
or entity, whether by guaranty,
endorsement, agreement to purchase or
repurchase, agreement to lease,
agreement to supply or advance funds
(including, without limitation,
agreements to maintain working capital,
solvency or other balance sheet
conditions or agreements to purchase
stocks or make capital contributions),
or otherwise;
(vii) The Bank determines in the exercise
of its judgment that the Company's
financial condition has deteriorated,
the prospect of repayment of the Bank
Indebtedness is impaired or that the
value of the Collateral has lessened
materially;
(viii) The Repurchase Agreement is
terminated by a party thereto other
than the Bank; or
(ix) An event of default or Event of
Default occurs under any guaranty
executed in connection with this
Agreement or the Old Agreement, or under
any security agreement in favor of the
Bank executed by any guarantor of
Company's obligations to the Bank.
Thereupon, in any such case, the obligation of the Bank to make any
advance or extend credit hereunder (including the issuance of Letters of Credit)
to or for the account of the Company pursuant hereto shall immediately terminate
and the Bank shall be entitled to each and every remedy and to take each and
every action permitted by the Loan Documents.
xviii. Reporting Procedures. The Company agrees from time to time
to execute and deliver to the Bank such reasonable evidence of
the existence and identity of the Collateral and of its
availability as security pursuant hereto, as the Bank may
reasonably request.
xix. Notice. All notices and other communications given to any
party hereto, in accordance with the provisions of this
Agreement, shall be deemed to have been given to any party when
sent by registered or certified mail, if by mail, or when sent
by telecopy, when and as reflected in the telecopy
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 20
21
confirmation, in each case addressed to the party as provided
herein, or in accordance with the latest unrevoked direction
from such party.
xx. Waiver. No failure to exercise and no delay in exercising on
the part of the Bank of any right, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege
hereunder, preclude any other or further exercise thereof, or
the exercise of any other right, power or privilege. The rights
and remedies herein provided are cumulative and not exclusive of
any rights or remedies provided by law or in any other
agreement.
xxi. Survival of Agreements. All agreements, representations and
warranties herein made, shall survive the execution and delivery
of the Revolving Note, the Acquisition Note, the Security
Instruments and the other Loan Documents, and the making and
renewal thereof.
xxii. Amendment. This Agreement may not be amended except in
writing signed by the Company and the Bank.
xxiii. Successors. This Agreement shall be binding upon and inure
to the benefit of the Company, the Bank and the successors and
assigns of each party hereto.
xxiv. Severability. In the case any one or more of the provisions
contained in the Loan Documents should be invalid, illegal, or
unenforceable, in any respect, the validity, legality, and
enforceability of the remaining provisions contained therein
shall not in any way be affected thereby.
xxv. Interest. It is the intention of the parties hereto to
comply with the laws of the State of Texas. Accordingly, it
is agreed that, notwithstanding any provisions to the contrary
in the Loan Documents, in no event shall said Loan Documents
require the payment or permit the collection of interest, as
defined under the laws of the State of Texas, in excess of the
maximum amount permitted by such laws. If any such excess of
interest is contracted for, charged or received, under the Loan
Documents, or in the event the maturity of the indebtedness
evidenced by the Notes is accelerated in whole or in part, or in
the event that all or part of the principal or interest of the
Notes shall be prepaid, so that under any of such circumstances
the amount of interest contracted for, charged, or received
under the Loan Documents on the amount of principal actually
outstanding from time to time thereunder shall exceed the
maximum amount of interest permitted by the laws of the State of
Texas, then in any such event (a) the provisions of this section
shall govern and control, (b) neither the Company nor any other
person or entity now or hereafter liable for the payment of the
Notes shall be obligated to pay the amount of such interest to
the extent that it is in excess of the maximum
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 21
22
amount of interest permitted to be contracted for by, charged to
or received from the party obligated thereon under the laws
of the State of Texas, (c) any such excess which may have
been collected shall be either applied as a credit against the
then unpaid principal amount on the Notes or refunded to the
person paying the same, at the holder's option, and (d) the
effective rate of interest shall be automatically reduced to the
maximum lawful rate of interest permitted to be contracted for
by, charged to or received from the party obligated thereon
under the laws of the State of Texas as now or hereafter
construed by the courts having jurisdiction thereof. It is
further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or
received under the Loan Documents, for the purpose of
determining whether such rate exceeds the maximum lawful rate of
interest, shall be made, to the extent permitted by the laws of
the State of Texas, by amortizing, prorating, allocating and
spreading in equal parts during the period of the full stated
terms of the Notes all interest at any time contracted for,
charged or received from the undersigned or otherwise by the
holder or holders thereof in connection with such Notes.
xxvi. Participations, Etc. The Company expressly recognizes and
agrees that the Bank may sell to other lenders participations
in the loans incurred by the Company pursuant hereto and,
therefore, as security for the due payment and performance of
all indebtedness and other liabilities and obligations of the
Company to the Bank under the Loan Documents and an other
obligation of the Company to the Bank, whether now existing or
hereafter arising, and to such lenders arising now by reason of
such participations or otherwise, the Company hereby grants to
the Bank and to such lenders, a lien on and security interest in
any and all deposits or other sums at any time credited by or
due from the Bank and such lenders or either or any of them to
the Company, whether in regular or special depository accounts
or otherwise, and any and all monies, securities and other
property of the Company, and the proceeds thereof now or
hereafter held or received by or in transit to the Bank and such
lenders or either or any of them, from or for the Company
whether for safekeeping, custody, pledge, transmission,
collection or otherwise and any such deposit, sums, monies,
securities and other property may at any time after Default be
set-off, appropriated and applied by the Bank and by such
lenders, or either or any of them, against any indebtedness,
liabilities or other obligations, whether now existing or
hereafter arising, of the Company or any of them, under this
Agreement and the Notes, or otherwise whether or not such
indebtedness, liabilities or other obligation is then due or
secured by any indebtedness, liabilities or other obligation is
then due or secured by any collateral or if it is so secured
whether or not such collateral held by the Bank or such lenders
is considered to be adequate.
xxvii. AGREEMENT FOR BINDING ARBITRATION. THE PARTIES AGREE TO BE
BOUND BY THE TERMS AND PROVISIONS OF THE ARBITRATION
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 22
23
PROGRAM (DATED 9/23/94) WHICH IS ATTACHED HERETO AS EXHIBIT C
AND INCORPORATED BY REFERENCE HEREIN AND IS ACKNOWLEDGED AS
RECEIVED BY THE PARTIES PURSUANT TO WHICH ANY AND ALL DISPUTES
SHALL BE RESOLVED BY MANDATORY BINDING ARBITRATION UPON THE
REQUEST OF ANY PARTY.
xxviii. Reaffirmation of Security Agreement. The Company hereby
reaffirms in all respects the validity, effectiveness and
enforceability of the Security Agreement, and agrees that the
Bank Indebtedness hereunder shall constitute a part of the
"obligations" thereunder for all purposes.
xxix. AMENDMENT, ASSUMPTION AND RESTATEMENT. THIS AGREEMENT
CONSTITUTES AN AMENDMENT AND RESTATEMENT OF THAT CERTAIN THIRD
AMENDED AND RESTATED LOAN AGREEMENT, DATED AS OF NOVEMBER 1,
1996, BY AND BETWEEN THE COMPANY AND THE BANK.
xxx. NOTICE OF NO ORAL AGREEMENTS. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS CONSTITUTE A WRITTEN AGREEMENT WHICH REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES RELATING TO THE LOANS.
EXECUTED as of the day and year first above written.
XXXXX FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By:
-------------------------------------
Xxxxxx Xxxxx, Banking Officer
BEARCOM OPERATING, L.P.
By:
-------------------------------------
Printed Name:
---------------------------
--------of Page-Com GP., Inc.,
its general partner
FOURTH AMENDED AND RESTATED LOAN AGREEMENT - PAGE 23
