SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered
into as of August 8, 1997, by and between MOTORCAR PARTS & ACCESSORIES, INC., a
New York corporation ("Borrower"), and XXXXX FARGO BANK, NATIONAL ASSOCIATION
("Bank").
RECITALS
WHEREAS, Borrower is currently indebted to Bank pursuant to the terms
and conditions of that certain Credit Agreement between Borrower and Bank dated
as of June 1, 1996, as amended from time to time ("Credit Agreement").
WHEREAS, Bank and Borrower have agreed to certain changes in the terms
and conditions set forth in the Credit Agreement and have agreed to amend the
Credit Agreement to reflect said changes.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree that the Credit
Agreement shall be amended as follows:
1. Section 1.1(a) is hereby amended (a) by deleting "June 1, 1998" as
the last day on which Bank will make advances under the Line of Credit, and by
substituting for said date "June 1, 1999," and (b) by deleting "Twenty-Five
Million Dollars ($25,000,000.00)" as the maximum principal amount available
under the Line of Credit, and by substituting for said amount "Thirty Million
Dollars ($30,000,000.00)" from August 8, 1997 through December 31, 1997,
reducing to "Twenty-Five Million Dollars ($25,000,000.00)" on January 1, 1998,
with such changes to be effective upon the execution and delivery to Bank of a
promissory note substantially in the form of Exhibit A attached hereto (which
promissory note shall replace and be deemed the Line of Credit Note defined in
and made pursuant to the Credit Agreement) and all other contracts, instruments
and documents required by Bank to evidence such change.
2. Sections 1.1(b) and (c) are hereby deleted in their entirety, and the
following substituted therefor:
"(b) Letter of Credit Subfeature. As a subfeature under the
Line of Credit, Bank agrees from time to time during the term
thereof, to issue sight commercial and usance commercial letters
of credit for the account of Borrower and in favor of
beneficiaries acceptable to Bank to finance transactions
acceptable to Bank (each, a "Letter of Credit" and collectively,
"Letters of Credit"); provided however, that the form and
substance of each Letter of Credit shall be subject to approval
by Bank, in its sole discretion; and provided further, that the
aggregate undrawn amount of all outstanding Letters of Credit
plus the aggregate amount of all outstanding drafts accepted by
Bank under usance Letters of Credit plus the aggregate amount of
all Acceptances shall not at any time exceed Two Million Five
Hundred Thousand Dollars ($2,500,000.00). Each Letter of Credit
shall be issued for a term not to exceed ninety (90) days, as
designated by Borrower; provided however, that no Letter of
Credit shall have an expiration date subsequent to September 1,
1999. The undrawn amount of all Letters of Credit shall be
reserved under the Line of Credit and shall not be available for
advances thereunder. Each Letter of Credit shall be subject to
the additional terms and conditions of the Letter of Credit
Agreement and related documents, if any, required by Bank in
connection with the issuance thereof (each, a "Letter of Credit
Agreement" and collectively, "Letter of Credit Agreements").
Each draft paid by Bank under a Letter of Credit shall be deemed
an advance under the Line of Credit and shall be repaid by
Borrower in accordance with the terms and conditions of this
Agreement applicable to such advances; provided however, that if
the Line of Credit is not available, for any reason whatsoever,
at the time any draft is paid by Bank, or if advances are not
available under the Line of Credit at such time due to any
limitation on borrowings set forth herein, then the full amount
of such draft shall be immediately due and payable, together
with interest thereon, from the date such amount is paid by Bank
to the date such amount is fully repaid by Borrower, at the rate
of interest applicable to advances under the Line of Credit. In
such event, Borrower agrees that Bank, at Bank's sole
discretion, may debit any demand deposit account maintained by
Borrower with Bank for the full amount of any such draft.
Notwithstanding the foregoing, usance commercial Letters of
Credit shall be issued
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only to finance the importation of goods into the United States,
and shall contain such provisions and be issued in such manner
as to satisfy Bank that any banker's acceptance created by
Bank's acceptance of a draft thereunder shall be eligible for
discount by a Federal Reserve Bank, will not result in a
liability of Bank subject to reserve requirements under any law,
regulation or administrative order, and will not cause Bank to
violate any lending limit imposed upon Bank by any law,
regulation or administrative order. Usance commercial Letters of
Credit shall provide for drafts thereunder with terms which do
not exceed the lesser of ninety (90) days or such other period
of time as may be necessary for the acceptance created
thereunder to be eligible for discount and otherwise comply with
this Agreement; provided however, that no usance commercial
Letter of Credit shall provide for drafts with a term which ends
subsequent to September 1, 1999. The amount of each matured
bankers' acceptance created by Bank's acceptance of a draft
under a usance commercial Letter of Credit shall be deemed an
advance under the Line of Credit and shall be repaid by Borrower
in accordance with the terms and conditions of this Agreement
applicable to such advances; provided however, that if the Line
of Credit is not available, for any reason whatsoever, at the
time any such acceptance matures, or if advances are not
available under the Line of Credit at such time due to any
limitation on borrowings set forth herein, then Borrower shall
immediately pay to Bank the full amount of such matured
acceptance, together with interest thereon from the date such
acceptance matures to the date such amount is fully paid by
Borrower, at the rate of interest applicable to advances under
the Line of Credit. In such event, Borrower agrees that Bank, at
Bank's sole discretion, may debit any demand deposit account
maintained by Borrower with Bank for the full amount of any such
acceptance.
(c) Acceptance Subfeature. As a subfeature under the Line of
Credit, Bank agrees to create banker's acceptances (each
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an "Acceptance" and collectively, "Acceptances") for the account
of Borrower by accepting drafts drawn on Bank by Borrower from
time to time during the term thereof, and by accepting time
drafts presented under usance commercial Letters of Credit
issued by Bank for the account of Borrower, for the purpose of
financing the importation of goods into the United States;
provided however, that the form and substance of each Acceptance
shall be subject to approval by Bank, in its sole discretion;
and provided further, that the aggregate amount of all
outstanding Acceptances plus the aggregate undrawn amount of all
outstanding Letters of Credit plus the aggregate amount of all
outstanding drafts accepted by Bank under usance Letters of
Credit shall not at any time exceed Two Million Five Hundred
Thousand Dollars ($2,500,000.00). Each Acceptance created by
Bank's acceptance of a draft drawn on Bank by Borrower shall be
in the minimum amount of Two Hundred Fifty Thousand Dollars
($250,000.00). Each Acceptance shall be subject to the
additional terms and conditions of an Acceptance Agreement in
form and substance satisfactory to Bank ("Acceptance
Agreement"). Each Acceptance shall be granted for a term not to
exceed the lesser of ninety (90) days, as designated by
Borrower, or such period of time as may be necessary to comply
with the Acceptance Agreement; provided however, that no
Acceptance shall have an expiration date subsequent to September
1, 1999. The outstanding amount of all Acceptances shall be
reserved under the Line of Credit and shall not be available for
advances thereunder. The amount of each Acceptance which matures
shall be deemed an advance under the Line of Credit and shall be
repaid by Borrower in accordance with the terms and conditions
of this Agreement applicable to such advances; provided however,
that if the Line of Credit is not available, for any reason
whatsoever, at the time any Acceptance matures, or if advances
are not available under the Line of Credit at such time due to
any limitation on borrowings set forth herein, then Borrower
shall immediately pay to Bank the full amount of such matured
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Acceptance, together with interest thereon from the date such
Acceptance matures to the date such amount is fully paid by
Borrower, at the rate of interest applicable to advances under
the Line of Credit. In such event, Borrower agrees that Bank, at
Bank's sole discretion, may debit any demand deposit account
maintained by Borrower with Bank for the full amount of any such
Acceptance. All Acceptances created hereunder by Bank's
acceptance of drafts drawn on Bank by Borrower shall be
discounted with Bank. Bank shall not be obligated hereunder to
discount Acceptances created by Bank's acceptance of time drafts
presented under usance commercial Letters of Credit."
3. Section 1.1(d) is hereby deleted in its entirety, without
substitution.
4. Section 1.2(c) is hereby deleted in its entirety, and the following
substituted therefor:
"Borrower has paid to Bank a non-refundable commitment fee for
the Line of Credit equal to Twenty-five Thousand Dollars
($25,000.00)."
5. Section 1.2(e)(i) is hereby deleted in its entirety, and the
following substituted therefor:
"(i) fees upon the issuance of each Letter of Credit equal to
the greater of one-eighth percent (1/8%) of the face amount
thereof or $105.00,"
6. Sections 4.9(a), (b), and (e) are hereby deleted in their entirety,
and the following substituted therefor:
"(a) Tangible Net Worth initially not at any time less than
$40,000,000.00, with said minimum to increase as of each
September 30 and March 31, commencing September 30, 1997, by an
amount equal to 50% of Borrower's net income after taxes for the
immediately preceding six (6) months, and with "Tangible Net
Worth" defined as the aggregate of total stockholders' equity
plus subordinated debt less any intangible assets.
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(b) Total Liabilities divided by Tangible Net Worth not at any time
greater than 1.20 to 1.0 at fiscal quarters ending September 30, 1997 and
December 31, 1997; and 1.0 to 1.0 at fiscal quarter end March 31, 1998 and at
all times thereafter, with "Total Liabilities" defined as the aggregate of
current liabilities and non-current liabilities less subordinated debt, and with
"Tangible Net Worth" as defined above.
(e) Ratio of Funded Debt to EBITDA not greater than 3.0 to 1.0, with
"Funded Debt" defined as the principal balance outstanding under the Line of
Credit as of any given calculation date, and with "EBITDA" defined as net profit
before tax plus interest expense (net of capitalization interest expense),
depreciation expense and amortization expense, calculated on a rolling
four-quarter basis as of any given calculation date;"
7. The following is hereby added to the Credit Agreement as Section 5.7:
"SECTION 5.7. DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or
distribution either in cash, stock or any other property on Borrower's stock now
or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire
any shares of any class of Borrower's stock now or hereafter outstanding."
8. Bank hereby confirms that it has waived the defaults under
Sections 4.9(b) and (c) that occurred as of June 30, 1997.
9. Except as specifically provided herein, all terms and conditions of
the Credit Agreement remain in full force and effect, without waiver or
modification. All terms defined in the Credit Agreement shall have the same
meaning when used in this Amendment. This Amendment and the Credit Agreement
shall be read together, as one document.
10. Borrower hereby remakes all representations and warranties contained
in the Credit Agreement and reaffirms all covenants set forth therein. Borrower
further certifies that as of the date of this Amendment there exists no Event of
Default as defined in the Credit Agreement, nor any condition, act or event
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which with the giving of notice or the passage of time or both would constitute
any such Event of Default.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first written above.
XXXXX FARGO BANK,
MOTORCAR PARTS & ACCESSORIES, NATIONAL ASSOCIATION
INC.
By: /s/ Xxxxx Xxxxxxxx By:
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Xxxx X. Xxxxxxx
Vice President
Title: CFO
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By: /s/ Xxxxxxx Xxxxx
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Title: President
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