FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into
as of November 1, 1996, by and between MOTORCAR PARTS & ACCESSORIES, INC., a New
York corporation ("Borrower"), and XXXXX FARGO BANK, NATIONAL ASSOCIATION
("Bank").
RECITALS
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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 by deleting "Fifteen Million Dollars
($15,000,000.00)" as the maximum principal amount available under the Line of
Credit, and by substituting for said amount "Twenty-five Million Dollars
($25,000,000.00)," with such change 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. Section 1.2(c) is hereby deleted in it's entirety and the following
substituted therefor:
"Borrower shall pay to Bank a non-refundable annual commitment fee for
the Line of Credit equal to Twenty-five Thousand Dollars ($25,000.00),
which fee shall be due and payable in full upon execution of this
Amendment, and in June of each following year if and only if the Line
of Credit is renewed by Bank for an additional year."
3. Section 4.9(e) is hereby deleted in it's entirety and the following
substituted therefor:
"(e) Ratio of Funded Debt to EBITDA not greater than 30 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;"
4. The following is hereby added to the Credit Agreement as Sections 4.9(f)
and (g):
"(f) EBITDA Coverage Ratio not less than 5.0 to 1.0 to be
calculated on a rolling four quarter basis, with "EBITDA" as defined
above and "EBITDA Coverage Ratio" defined as EBITDA divided by the
aggregate of total interest expense plus the prior period current
maturity of long-term debt and the prior period current maturity of
subordinated debt;
(g) from time to time such other information as Bank may
reasonably request."
5. The following is hereby added to the Credit Agreement as Section 7.10:
"SECTION 7.10. ARBITRATION.
(a) Arbitration. Upon the demand of any party, any Dispute shall
be resolved by binding arbitration (except as set forth in (e) below)
in accordance with the terms of this Agreement. A "Dispute" shall mean
any action, dispute, claim or controversy of any kind, whether in
contract or tort, statutory or common law, legal or equitable, now
existing or hereafter arising under or in connection with, or in any
way pertaining to, any of the Loan Documents, or any past, present or
future extensions of credit and other activities, transactions or
obligations of any kind related directly or indirectly to any of the
Loan Documents, including without limitation, any of the foregoing
arising in connection with the exercise of any self-help, ancillary or
other remedies pursuant to any of the Loan Documents. Any party may by
summary proceedings bring an action in court to compel arbitration of
a Dispute. Any party who fails or refuses to submit to arbitration
following a lawful demand by any other party shall bear all costs
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and expenses incurred by such other party in compelling arbitration of
any Dispute.
(b) Governing Rules. Arbitration proceedings shall be
administered by the American Arbitration Association ("AAA") or such
other administrator as the parties shall mutually agree upon in
accordance with the AAA Commercial Arbitration Rules. All Disputes
submitted to arbitration shall be resolved in accordance with the
Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the
Loan Documents. The arbitration shall be conducted at a location in
California selected by the AAA or other administrator. If there is any
inconsistency between the terms hereof and any such rules, the terms
and procedures set forth herein shall control. All statutes of
limitation applicable to any Dispute shall apply to any arbitration
proceeding. All discovery activities shall be expressly limited to
matters directly relevant to the Dispute being arbitrated. Judgment
upon any award rendered in an arbitration may be entered in any court
having jurisdiction; provided however, that nothing contained herein
shall be deemed to be a waiver by any party that is bank of the
protections afforded to it under 12 U.S.C. ss.91 or any similar
applicable state law.
(c) No Waiver; Provisional Remedies, Self-Help and Foreclosure.
No provision hereof shall limit the right of any party to exercise
self-help remedies such as setoff, foreclosure against or sale of any
real or personal property collateral or security, or to obtain
provisional or ancillary remedies, including without limitation
injunctive relief, sequestration, attachment, garnishment or the
appointment of a receiver, from a court of competent jurisdiction
before, after or during the pendency of any arbitration or other
proceeding. The exercise of any such remedy shall not waive the right
of any party to compel arbitration or reference hereunder.
(d) Arbitrator Qualifications and Powers; Awards. Arbitrators
must be active members of the California State Bar or retired judges
of the state or federal judiciary of California, with expertise in the
substantive laws applicable to the subject matter of the Dispute.
Arbitrators are empowered to resolve Disputes by summary rulings in
response to motions filed prior to the final arbitration hearing.
Arbitrators (i) shall resolve all Disputes in accordance with the
substantive law of the state of California, (ii)
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may grant any remedy or relief that a court of the state of California
could order or grant within the scope hereof and such ancillary relief
as is necessary to make effective any award, and (iii) shall have the
power to award recovery of all costs and fees, to impose sanctions and
to take such other actions as they deem necessary to the same extent a
judge could pursuant to the Federal Rules of Civil Procedure, the
California Rules of Civil Procedure or other applicable law. Any
Dispute in which the amount in controversy is $5,000,000 or less shall
be decided by a single arbitrator who shall not render an award of
greater than $5,000,000 (including damages, costs, fees and expenses).
By submission to a single arbitrator, each party expressly waives any
right or claim to recover more than $5,000,000. Any Dispute in which
the amount in controversy exceeds $5,000,000 shall be decided by
majority vote of a panel of three arbitrators; provided however, that
all three arbitrators must actively participate in all hearings and
deliberations.
(e) Judicial Review. Notwithstanding anything herein to the
contrary, in any arbitration in which the amount in controversy
exceeds $25,000,000, the arbitrators shall be required to make
specific, written findings of fact and conclusions of law. In such
arbitrations (i) the arbitrators shall not have the power to make any
award which is not supported by substantial evidence or which is based
on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and
the conclusions of law are not erroneous under the substantive law of
the state of California, and (iii) the parties shall have in addition
to the grounds referred to in the Federal Arbitration Act for
vacating, modifying or correcting an award the right to judicial
review of (A) whether the findings of fact rendered by the arbitrators
are supported by substantial evidence, and (B) whether the conclusions
of law are erroneous under the substantive law of the state of
California. Judgment confirming an award in such a proceeding may be
entered only if a court determines the award is supported by
substantial evidence and not based on legal error under the
substantive law of the state of California.
(f) Real Property Collateral; Judicial Reference. Notwithstanding
anything herein to the contrary, no Dispute shall be submitted to
arbitration if the Dispute concerns indebtedness secured directly or
indirectly, in whole or in part, by any real property unless (i) the
holder of the mortgage, lien or security interest specifically elects
in writing to proceed with the arbitration,
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or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single action rule statute
of California, thereby agreeing that all indebtedness and obligations
of the parties, and all mortgages, liens and security interests
securing such indebtedness and obligations, shall remain fully valid
and enforceable. If any such Dispute is not submitted to arbitration,
the Dispute shall be referred to a referee in accordance with
California Code of Civil Procedure Section 638 et seq., and this
general reference agreement is intended to be specifically enforceable
in accordance with said Section 638. A referee with the qualifications
required herein for arbitrators shall be selected pursuant to the
AAA's selection procedures. Judgment upon the decision rendered by a
referee shall be entered in the court in which such proceeding was
commenced in accordance with California Code of Civil Procedure
Sections 644 and 645.
(g) Miscellaneous. To the maximum extent practicable, the AAA,
the arbitrators and the parties shall take all action required to
conclude any arbitration proceeding within 180 days of the filing of
the Dispute with the AAA. No arbitrator or other party to an
arbitration proceeding may disclose the existence, content or results
thereof, except for disclosures of information by a party required in
the ordinary course of its business, by applicable law or regulation,
or to the extent necessary to exercise any judicial review rights set
forth herein. If more than one agreement for arbitration by or between
the parties potentially applies to a Dispute, the arbitration
provision most directly related to the Loan Documents or the subject
matter of the Dispute shall control. This arbitration provision shall
survive termination, amendment or expiration of any of the Loan
Documents or any relationship between the parties."
6. 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.
7. 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
which with the giving of notice or the passage of time or both would constitute
any such Event of Default.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first written above.
MOTORCAR PARTS & XXXXX FARGO BANK,
ACCESSORIES, INC. NATIONAL ASSOCIATION
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Vice President
Title: President
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By: /s/ Xxxxx Xxxxxxxx
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Title: CFO
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