EXHIBIT 10.29
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of February 1, 2002, by and between
KEYSTONE AUTOMOTIVE INDUSTRIES, INC., a California corporation ("Borrower"), and
XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank").
RECITALS
--------
Borrower has requested that Bank extend or continue credit to Borrower as
described below, and Bank has agreed to provide such credit to Borrower on the
terms and conditions contained herein.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Bank and Borrower hereby agree as follows:
ARTICLE I
---------
CREDIT TERMS
------------
SECTION 1.1. DEFINED TERMS. The following terms shall have the meanings
set forth below:
"Acquisition" means the purchase by Borrower or by any Subsidiary of all or
substantially all of the assets, business, stock, partnership interests or
membership interests, as the case may be, of any Target, or the acquisition by
Borrower or any Subsidiary of any Target which is a corporation, partnership, or
limited liability company, through a merger or consolidation in which the
surviving entity is Borrower or such Subsidiary;
"Business Day" means any day except a Saturday, Sunday or any other day on
which commercial banks in California are authorized or required by law to close.
"Guarantor Subsidiaries" shall mean those Subsidiaries of Borrower, now
existing or hereafter acquired, required by Bank to execute guaranties of all
indebtedness of Borrower to Bank hereunder.
"Non-Guarantor Subsidiaries" shall mean those Subsidiaries of Borrower, now
existing or hereafter acquired, not required by Bank to execute guaranties of
all indebtedness of Borrower to Bank hereunder.
"Permitted Acquisition" means an Acquisition which satisfies the following
conditions, as determined by Bank in its sole discretion:
(i) the purpose of the Acquisition shall be to acquire a business in a
similar or related line of business to that of Borrower;
(ii) Bank shall have received from Borrower such information regarding the
terms and conditions of such Acquisition as it shall reasonably require;
-1-
(iii) with respect to Acquisitions involving purchase prices of greater
than $2,000,000.00, the Target shall have had a positive EBITDA (as defined in
Section 4.9(a) below) during the twelve months prior to the Acquisition;
(iv) Borrower shall provide to Bank a certification from one of Borrower's
senior financial officers, in form and substance satisfactory to Bank,
certifying that after giving effect to the Acquisition, no covenant of this
Agreement shall be violated;
(v) concurrently with the closing of the Acquisition, Bank shall have
received from each Borrower, Subsidiary and Target participating in the
Acquisition, (A) such duly executed and delivered guaranties, pledge agreements,
assignments, security agreements, financing statements and other documents as
Bank may require in its sole discretion, and (B) if requested by Bank, with
respect to Acquisitions involving purchase prices of greater than
$10,000,000.00, such legal opinions, from counsel acceptable to Bank, with
respect to such matters as Bank may require in its sole discretion, which shall
include, without limitation, an opinion that the Acquisition will comply with or
be exempted from any applicable bulk sale or transfer law;
(vi) the Acquisition shall comply with all applicable laws.
"Person" means any natural person, corporation, limited partnership,
general partnership, joint venturer, association, company, trust, business or
other organization, whether or not legal entities.
"Subsidiary" means any corporation, wholly-owned, directly or indirectly,
by Borrower and/or by one or more Subsidiaries of Borrower.
"Target" means the Person whose stock, assets or business shall be acquired
by, merged into or with, or consolidated with Borrower or any Subsidiary in an
Acquisition.
SECTION 1.2. LINE OF CREDIT.
(a) Line of Credit. Subject to the terms and conditions of this Agreement,
--------------
Bank hereby agrees to make advances to Borrower from time to time up to and
including February 1, 2005, not to exceed at any time the aggregate principal
amount of Thirty-Five Million Dollars ($35,000,000.00) or such lesser amount as
shall from time to time be available ("Line of Credit"), the proceeds of which
shall be used to (i) refinance existing indebtedness of Borrower; (ii) finance
Permitted Acquisitions, (iii) finance advances to Guarantor Subsidiaries, (iv)
finance advances to Non-Guarantor Subsidiaries not to exceed One Million Dollars
($1,000,000.00) in the aggregate, and (v) finance Borrower's working capital
requirements. Borrower's obligation to repay advances under the Line of Credit
shall be evidenced by a promissory note substantially in the form of Exhibit A
---------
attached hereto ("Line of Credit Note"), all terms of which are incorporated
herein by this reference.
(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 or cause an
affiliate to issue standby letters of credit and sight commercial letters of
credit for the account of Borrower (each, a "Letter of Credit" and collectively,
"Letters of Credit"); provided however, that the aggregate undrawn amount of all
outstanding Letters of Credit shall not at any time exceed Ten Million Dollars
($10,000,000.00). The form and substance of each Letter of Credit shall be
subject to approval by Bank, in its sole discretion. Each standby Letter of
Credit shall be issued for a term not to exceed three hundred sixty-five (365)
days, as designated by Borrower; provided however, that
-2-
no standby Letter of Credit shall have an expiration date more than one hundred
twenty (120) days beyond the maturity date of the Line of Credit. No Standby
Letter of Credit shall contain an automatic extension clause. Each commercial
Letter of Credit shall be issued for a term not to exceed three hundred sixty-
five (365) days, as designated by Borrower, provided, however, that no
commercial Letter of Credit shall have an expiration date subsequent to the
maturity date of the Line of Credit. The undrawn amount of all Letters of Credit
shall be reserved under the Line of Credit and shall not be available for
borrowings thereunder. Each Letter of Credit shall be subject to the additional
terms and conditions of the Letter of Credit agreements, applications and any
related documents reasonably required by Bank in connection with the issuance
thereof. Each draft paid 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 advances under the Line of Credit are not available, for any
reason, at the time any draft is paid, then Borrower shall pay to Bank within
five (5) Business Days if no Event of Default has occurred hereunder, and
immediately if an Event of Default has occurred hereunder, the full amount of
such draft, together with interest thereon from the date such draft is paid 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, in its sole discretion, may debit any account maintained by Borrower
with Bank for the amount of any such draft.
(c) Borrowing and Repayment. Borrower may from time to time during the
-----------------------
term of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided however,
that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above and as reduced in accordance with the terms of the Line of Credit Note.
SECTION 1.3. INTEREST/FEES.
(a) Interest. The outstanding principal balance of the Line of Credit shall
--------
bear interest at the rates of interest set forth in the Line of Credit Note.
(b) Computation and Payment. Interest shall be computed on the basis of a
-----------------------
360-day year, actual days elapsed. Interest shall be payable at the times and
place set forth in each promissory note or other instrument required hereby.
(c) Unused Commitment Fee. Borrower shall pay to Bank a fee equal to the
---------------------
percentage per annum listed below (computed on the basis of a 360-day year,
actual days elapsed) set forth opposite the ratio of Funded Debt to EBITDA (as
defined in Section 4.9(a) below) of the average daily unused amount of the Line
of Credit, which fee shall be calculated on a quarterly basis by Bank and shall
be due and payable by Borrower in arrears within ten (10) days after each
billing is sent by Bank. Adjustments to the Unused Commitment Fee to reflect
changes in this ratio, if any, shall be effective on the first Business Day (as
defined in the Line of Credit Note) of the fiscal quarter following the quarter
during which Bank receives and reviews Borrower's most current fiscal quarter-
end financial statements in accordance with Section 4.3(b) below.
Funded Debt to EBITDA Percentage
--------------------- ----------
Less than 1.5 to 1.0 .250
-3-
Greater than or equal to 1.5
to 1.0 but less than 1.75 to 1.0 .375
Greater than or equal to 1.75
to 1.0 but less than 2.0 to 1.0 .500
(d) Letter of Credit Fees. Borrower shall pay to Bank (i) fees upon the
---------------------
issuance of each standby Letter of Credit equal to a percentage of the face
amount thereof, which percentage shall be equal to the Libor Margin (as defined
in the Line of Credit Note) in effect at the time a Letter of Credit is issued,
(ii) fees upon the issuance of each commercial Letter of Credit determined in
accordance with Bank's standard fees and charges then in effect for such
activity, and (iii) fees upon the payment or negotiation of each draft under any
Letter of Credit and upon the occurrence of any other activity with respect to
any Letter of Credit (including without limitation, the transfer, amendment or
cancellation of any Letter of Credit) determined in accordance with Bank's
standard fees and charges then in effect for such activity.
(e) Documentation Fee. Borrower shall pay to Bank a documentation fee
-----------------
equal to $20,000.00, which fee shall be due and payable in full upon execution
of this Agreement.
SECTION 1.4. COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect
all principal, interest and fees due under the Line of Credit by charging
Borrower's deposit account number 4132050139 with Bank, or any other deposit
account maintained by Borrower with Bank, for the full amount thereof. Should
there be insufficient funds in any such deposit account to pay all such sums
when due, the full amount of such deficiency shall be immediately due and
payable by Borrower.
SECTION 1.5. COLLATERAL.
As security for all indebtedness of Borrower to Bank subject hereto,
Borrower hereby grants to Bank security interests of first priority in all
Borrower's accounts receivable and other rights to payment, general intangibles,
inventory and equipment.
As security for all indebtedness of Borrower to Bank subject hereto,
Borrower shall cause each Guarantor Subsidiary to grant to Bank security
interests of first priority in all of their respective accounts receivable and
other rights to payment, general intangibles, inventory and equipment.
All of the foregoing shall be evidenced by and subject to the terms of such
security agreements, financing statements and other documents as Bank shall
reasonably require, all in form and substance satisfactory to Bank. Borrower
shall reimburse Bank immediately upon demand for all costs and expenses incurred
by Bank in connection with any of the foregoing security, including without
limitation, filing fees and costs of appraisals and audits.
SECTION 1.6. GUARANTIES. All indebtedness of Borrower to Bank shall be
guaranteed by each Guarantor Subsidiary in the principal amount of Thirty-Five
Million Dollars ($35,000,000.00) each, as evidenced by and subject to the terms
of guaranties in form and substance satisfactory to Bank. As of the date
hereof, the Guarantor Subsidiaries are Keystone Automotive Industries MN, Inc.,
a Minnesota corporation, Keystone Automotive Industries FL, Inc., a Florida
corporation, Republic Automotive Parts, Inc., a Delaware corporation, Keystone
Automotive Industries TN, Inc., a Tennessee corporation, P-G Products, Inc., an
Ohio corporation and Keystone Automotive Industries Nevada, Inc., a Nevada
corporation.
-4-
ARTICLE II
----------
REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this Agreement.
SECTION 2.1. LEGAL STATUS.
(a) Borrower is a corporation, duly organized and existing and in good
standing under the laws of the State of California, and is qualified or licensed
to do business (and is in good standing as a foreign corporation, if applicable)
in all jurisdictions in which such qualification or licensing is required or in
which the failure to so qualify or to be so licensed could have a material
adverse effect on Borrower.
(b) Each Subsidiary is a corporation duly organized and existing and in
good standing under the laws of the State of its incorporation, and is qualified
or licensed to do business (and is in good standing as a foreign corporation, if
applicable) in all jurisdictions in which such qualification or licensing is
required or in which the failure to so qualify or to be so licensed could have a
material adverse effect on such Subsidiary.
SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement and each
promissory note, contract, instrument and other document required hereby or at
any time hereafter delivered to Bank in connection herewith (collectively, the
"Loan Documents") have been duly authorized, and upon their execution and
delivery in accordance with the provisions hereof will constitute legal, valid
and binding agreements and obligations of Borrower or the party which executes
the same, enforceable in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability.
SECTION 2.3. NO VIOLATION. The execution, delivery and performance by
Borrower and each Guarantor Subsidiary of each of the Loan Documents to which it
is a party do not violate any provision of any law or regulation, or contravene
any provision of the Articles of Incorporation or By-Laws of Borrower or such
Guarantor Subsidiary, or result in any breach of or default under any contract,
obligation, indenture or other instrument to which Borrower or such Guarantor
Subsidiary is a party or by which Borrower or such Guarantor Subsidiary may be
bound.
SECTION 2.4. LITIGATION. There are no pending, or to the best of
Borrower's knowledge threatened, actions, claims, investigations, suits or
proceedings by or before any governmental authority, arbitrator, court or
administrative agency which could have a material adverse effect on the
financial condition or operation of Borrower or any Subsidiary other than those
disclosed by Borrower to Bank in writing prior to the date hereof.
SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT. The consolidated
financial statement of Borrower dated December 28, 2001, a true copy of which
has been delivered by Borrower to Bank prior to the date hereof, (a) is complete
and correct and presents fairly the financial condition of Borrower and its
Subsidiaries on a consolidated basis,
-5-
(b) discloses all liabilities of Borrower and its Subsidiaries that are required
to be reflected or reserved against under generally accepted accounting
principles, whether liquidated or unliquidated, fixed or contingent, and (c) has
been prepared in accordance with generally accepted accounting principles
consistently applied. Since the date of such financial statement there has been
no material adverse change in the financial condition of Borrower and its
Subsidiaries on a consolidated basis, nor has Borrower or any of its
Subsidiaries mortgaged, pledged, granted a security interest in or otherwise
encumbered any of its assets or properties except in favor of Bank or as
otherwise permitted by Bank in writing, including as permitted under Section
4.7, Section 5.8 and Section 6.1 (e) below.
SECTION 2.6. INCOME TAX RETURNS. Borrower has no knowledge of any pending
assessments or adjustments of its or any Subsidiary's income tax payable with
respect to any year.
SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture, contract
or instrument to which Borrower is a party or by which Borrower may be bound
that requires the subordination in right of payment of any of Borrower's
obligations subject to this Agreement to any other obligation of Borrower.
SECTION 2.8. PERMITS, FRANCHISES. Borrower and each Subsidiary possesses,
and will hereafter possess, all permits, consents, approvals, franchises and
licenses required and rights to all trademarks, trade names, patents, and
fictitious names, if any, necessary to enable it to conduct in all material
respects the business in which it is now engaged in compliance with applicable
law.
SECTION 2.9. ERISA. Borrower and each Subsidiary is in compliance in all
material respects with all applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended or recodified from time to time
("ERISA"); neither Borrower nor any Subsidiary has violated any provision of any
defined employee pension benefit plan (as defined in ERISA) maintained or
contributed to by Borrower or any such Subsidiary (each, a "Plan"); no
Reportable Event as defined in ERISA has occurred and is continuing with respect
to any Plan initiated by Borrower or any Subsidiary; Borrower and each
Subsidiary has met its minimum funding requirements under ERISA with respect to
each Plan; and each Plan will be able to fulfill its benefit obligations as they
come due in accordance with the Plan documents and under generally accepted
accounting principles.
SECTION 2.10. OTHER OBLIGATIONS. Neither Borrower nor any Subsidiary is
in default on any obligation for borrowed money, any purchase money obligation
or any other material lease, commitment, contract, instrument or obligation.
SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to
Bank in writing prior to the date hereof, Borrower and each Subsidiary is in
compliance in all material respects with all applicable federal or state
environmental, hazardous waste, health and safety statutes, and any rules or
regulations adopted pursuant thereto, which govern or affect any of Borrower's
or any such Subsidiary's operations and/or properties, including without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the
Federal Resource Conservation and Recovery Act of 1976, and the Federal Toxic
Substances Control Act, as any of the same may be amended, modified or
supplemented from time to time. None of the operations of Borrower or any
Subsidiary is the subject of any federal or state investigation evaluating
whether any remedial action involving a material expenditure is needed to
respond to
-6-
a release of any toxic or hazardous waste or substance into the environment.
Neither Borrower nor any Subsidiary has any material contingent liability in
connection with any release of any toxic or hazardous waste or substance into
the environment.
ARTICLE III
-----------
CONDITIONS
----------
SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of
Bank to extend any credit contemplated by this Agreement is subject to the
fulfillment to Bank's satisfaction of all of the following conditions:
(a) Approval of Bank Counsel. All legal matters incidental to the
------------------------
extension of credit by Bank shall be satisfactory to Bank's counsel.
(b) Documentation. Bank shall have received, in form and substance
-------------
satisfactory to Bank, each of the following, duly executed:
(i) This Agreement and each promissory note or other instrument
required hereby.
(ii) Corporate Resolution: Borrowing.
(iii) Certificates of Incumbency.
(iv) Security Agreement: Equipment.
(v) Continuing Security Agreement: Rights to Payment and Inventory.
(vi) Third Party Security Agreements.
(vii) UCC Financing Statements.
(viii) Continuing Guaranties.
(ix) Corporate Resolution: Guaranty.
(x) Corporate Resolution: Third Party Collateral.
(xi) Such other documents as Bank may require under any other Section
of this Agreement.
(c) Financial Condition. There shall have been no material adverse change,
-------------------
as determined by Bank, in the financial condition or business of Borrower and
its Subsidiaries on a consolidated basis, nor any material decline, as
determined by Bank, in the market value of the collateral required hereunder or
a substantial or material portion of the assets of Borrower or its Subsidiaries.
(d) Insurance. Borrower shall have delivered to Bank evidence of insurance
---------
coverage on all Borrower's and its Subsidiaries' property, in form, substance,
amounts, covering risks and issued by companies satisfactory to Bank, and where
required by Bank, with loss payable endorsements in favor of Bank.
SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of
Bank to make each extension of credit requested by Borrower hereunder shall be
subject to the fulfillment to Bank's satisfaction of each of the following
conditions:
(a) Compliance. The representations and warranties contained herein and in
----------
each of the other Loan Documents shall be true on and as of the date of the
signing of this Agreement and on the date of each extension of credit by Bank
pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date, no
Event of Default as defined herein, and no condition, event or act which
-7-
with the giving of notice or the passage of time or both would constitute such
an Event of Default, shall have occurred and be continuing or shall exist.
(b) Documentation. Bank shall have received all additional documents which
-------------
may be required in connection with such extension of credit.
ARTICLE IV
----------
AFFIRMATIVE COVENANTS
---------------------
Borrower covenants that so long as Bank remains committed to extend credit
to Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:
SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all principal, interest,
fees or other liabilities due under any of the Loan Documents at the times and
place and in the manner specified therein.
SECTION 4.2. ACCOUNTING RECORDS. Maintain, and cause each Subsidiary to
maintain, adequate books and records in accordance with generally accepted
accounting principles consistently applied, and permit any representative of
Bank, at any reasonable time, to inspect, audit and examine such books and
records, to make copies of the same, and to inspect the properties of Borrower
and of each Subsidiary.
SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of the following,
in form and detail satisfactory to Bank:
(a) not later than 90 days after and as of the end of each fiscal year, a
consolidated financial statement of Borrower, prepared by an independent
certified public accountant acceptable to Bank, to include a balance sheet and
consolidated statements of income, retained earnings and cash flow, together
with all footnotes and a copy of Borrower's filed10-K report, an unqualified
opinion from Borrower's independent certified public accountant, and a
calculation of Borrower's compliance with all financial covenants set forth
herein, certified as true and correct by one of Borrower's senior financial
officers;
(b) not later than 45 days after and as of the end of each fiscal quarter,
a consolidated financial statement of Borrower, prepared by Borrower, to include
a balance sheet and consolidated statements of income, retained earnings and
cash flow, together with a copy of Borrower's filed 10-Q report and a
calculation of Borrower's compliance with all financial covenants set forth
herein, certified as true and correct by one of Borrower's senior financial
officers;
(c) not later than 30 days before the end of each fiscal year, projections
of Borrower's consolidated financial statements for the next fiscal year;
(d) from time to time such other information as Bank may reasonably
request.
SECTION 4.4. COMPLIANCE. Preserve and maintain, and cause each Subsidiary
to preserve and maintain, all licenses, permits, governmental approvals, rights,
privileges and
-8-
franchises necessary for the conduct of its business; and comply, and cause each
Subsidiary to comply in all material respects with the provisions of all
documents pursuant to which Borrower or such Subsidiary is organized and/or
which govern Borrower's or such Subsidiary's continued existence and in all
material respects with the requirements of all laws, rules, regulations and
orders of any governmental authority applicable to Borrower and each Subsidiary
and/or its respective business.
SECTION 4.5. INSURANCE. Maintain and keep in force, and cause each
Subsidiary to maintain and keep in force, insurance of the types and in amounts
customarily carried in lines of business similar to that of Borrower or such
Subsidiary, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers' compensation, with all such
insurance carried with companies and in amounts satisfactory to Bank, and
deliver to Bank, and cause each Subsidiary to deliver to Bank, from time to time
at Bank's request schedules setting forth all insurance then in effect.
SECTION 4.6. FACILITIES. Keep, and cause each Subsidiary to keep in all
material respects all properties useful or necessary to Borrower's or such
Subsidiary's business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements thereto so that such properties
shall be fully and efficiently preserved and maintained.
SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due, and
cause each Subsidiary to pay and discharge when due, any and all indebtedness,
obligations, assessments and taxes, both real or personal, including without
limitation federal and state income taxes and state and local property taxes and
assessments, except such (a) as Borrower or a Subsidiary may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower
or a Subsidiary has made provision, to Bank's satisfaction, for eventual payment
thereof in the event Borrower or such Subsidiary is obligated to make such
payment.
SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower or any Subsidiary with an
uninsured claim in excess of $500,000.00.
SECTION 4.9. FINANCIAL CONDITION. Maintain Borrower's consolidated
financial condition as follows using generally accepted accounting principles
consistently applied and used consistently with prior practices (except to the
extent modified by the definitions herein):
(a) Funded Debt to EBITDA not greater than 2.0 to 1.0, measured on a
rolling four quarter basis. "Funded Debt" is defined as all interest bearing
debt plus letter of credit obligations of Borrower or any Subsidiary. "EBITDA"
is defined as net profit before tax plus interest expense (net of capitalized
interest expense), depreciation expense and amortization expense.
Notwithstanding the foregoing, for purposes of calculating Borrower's and the
Subsidiaries' EBITDA, a $6,800,000.00 computer software expense shown on the
financial statements for the fiscal quarter ending September 30, 2001 shall not
be included.
(b) Fixed Charge Coverage Ratio not less than 1.50 to 1.0, measured on a
rolling four quarter basis, with "Fixed Charge Coverage Ratio" defined as (a)
the aggregate of EBITDA (as defined above) minus (i) cash taxes, (ii)
maintenance capital expenditures, (iii) dividends and distributions, (iv)
withdrawals, and (v) treasury stock purchases, divided by (b) the aggregate of
interest, lease payments, and scheduled principal payments.
-9-
(c) Tangible Net Worth not at any time less than $110,000,000.00 as of
Borrower's fiscal year ended March 31/st/, 2002, and as of each fiscal quarter
end thereafter not less than $110,000,000.00 adjusted upward as of each fiscal
quarter end on a cumulative basis by an amount equal to the sum of 75% of net
income reported in each fiscal quarter plus 90% of equity offerings made during
such fiscal quarter, commencing with the fiscal quarter ending June 30, 2002,
but not including in such calculation net income for any fiscal quarter if the
net income is a negative number, with "Tangible Net Worth" defined as the
aggregate of total stockholders' equity plus subordinated debt less any
intangible assets less any amounts due from affiliated entities.
(d) Maximum Funded Debt to Capital not at any time greater than .30 to 1.0,
measured on a quarterly basis, with "Maximum Funded Debt to Capital" defined as
(a) all interest bearing debt plus letter of credit obligations of Borrower or
any Subsidiary divided by (b) stockholders' equity minus any treasury stock plus
interest bearing debt plus letter of credit obligations of Borrower or any
Subsidiary.
(e) Current Ratio not less than 2.0 to 1.0 as of each fiscal quarter end,
with "Current Ratio" defined as total current assets divided by total current
liabilities (including without limitation the balance outstanding under the Line
of Credit).
SECTION 4.10. NOTICE TO BANK. Promptly (but in no event more than five
(5) Business Days after the occurrence of each such event or matter) give
written notice to Bank in reasonable detail of: (a) the occurrence of any Event
of Default, or any condition, event or act which with the giving of notice or
the passage of time or both would constitute an Event of Default; (b) any change
in the name or the organizational structure of Borrower or any Subsidiary; (c)
the occurrence and nature of any Reportable Event or Prohibited Transaction,
each as defined in ERISA, or any funding deficiency with respect to any Plan; or
(d) any termination or cancellation of any insurance policy which Borrower or
any Subsidiary is required to maintain, or any uninsured or partially uninsured
loss in excess of $500,000.00 in the aggregate through liability or property
damage, or through fire, theft or any other cause affecting Borrower's or any
Subsidiary's property.
ARTICLE V
---------
NEGATIVE COVENANTS
------------------
Borrower further covenants that so long as Bank remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not without Bank's prior written
consent:
SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any credit extended
hereunder except for the purposes stated in Article I hereof.
SECTION 5.2. CAPITAL EXPENDITURES. Make, or permit any Subsidiary to
make, any additional investment in fixed assets in any fiscal year in excess of
an aggregate of $10,000,000.00.
SECTION 5.3. LEASE EXPENDITURES. Incur, or permit any Subsidiary to
incur, operating lease expense in any fiscal year in excess of an aggregate of
$20,000,000.00.
-10-
SECTION 5.4. OTHER INDEBTEDNESS. Create, incur, assume or permit to
exist, or permit any Subsidiary to create, incur, assume or permit to exist, any
indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except (a) the liabilities of Borrower to Bank, and (b) any
other liabilities of Borrower or any Subsidiary existing as of, and disclosed to
Bank prior to, the date hereof, and (c) new purchase money debt not to exceed an
aggregate of $1,000,000.00 for Borrower and Subsidiaries combined.
SECTION 5.5. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Except in
connection with a Permitted Acquisition, merge into or consolidate with any
other entity, or permit any Subsidiary to merge into or consolidate with any
other entity; make any substantial change in the nature of Borrower's or any
Guarantor Subsidiary's business as conducted as of the date hereof; acquire all
or substantially all of the assets of any other entity except for Permitted
Acquisitions; nor sell, lease, transfer or otherwise dispose of all or a
substantial or material portion of Borrower's or any Subsidiary's assets except
in the ordinary course of its business.
SECTION 5.6. GUARANTIES. Guarantee or become liable, or permit any
Subsidiary to guarantee or become liable, in any way as surety, endorser (other
than as endorser of negotiable instruments for deposit or collection in the
ordinary course of business), accommodation endorser or otherwise for, nor
pledge or hypothecate or permit any Subsidiary to pledge or hypothecate, any of
its assets as security for, any liabilities or obligations of any other person
or entity, except any of the foregoing in favor of Bank.
SECTION 5.7. LOANS, ADVANCES, INVESTMENTS. Make, or permit any Subsidiary
to make, any loans or advances to or investments in any person or entity, except
(a) any of the foregoing existing as of, and disclosed to Bank prior to, the
date hereof, (b) advances by Borrower to Guarantor Subsidiaries, (c) advances by
Borrower to non-Guarantor Subsidiaries not to exceed $1,000,000.00 in the
aggregate, and (d) investments in entities unaffiliated with Borrower or any
Subsidiary not to exceed $1,000,000.00 in the aggregate for Borrower and all
Subsidiaries combined.
SECTION 5.8. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to
exist, or permit any Subsidiary to mortgage, pledge, grant or permit to exist, a
security interest in, or lien upon, all or any portion of its assets now owned
or hereafter acquired, except any of the foregoing in favor of Bank or which is
existing as of, and disclosed to Bank in writing prior to, the date hereof, and
except purchase money liens to the extent they secure purchase money debt
permitted under Section 5.4 above.
ARTICLE VI
----------
EVENTS OF DEFAULT
-----------------
SECTION 6.1. The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement:
(a) Borrower shall fail to pay within two (2) Business Days of when due any
principal, interest, fees or other amounts payable under any of the Loan
Documents.
-11-
(b) Any financial statement or certificate furnished to Bank in connection
with, or any representation or warranty made by Borrower or any other party
under this Agreement or any other Loan Document shall prove to be incorrect,
false or misleading in any material respect when furnished or made.
(c) Any default in the performance of or compliance with any obligation,
agreement or other provision contained herein or in any other Loan Document
(other than those referred to in subsections (a) and (b) above), and with
respect to any such default which by its nature can be cured, such default shall
continue for a period of twenty (20) days from its occurrence.
(d) Any default in the payment or performance of any obligation, or any
defined event of default, under the terms of any contract or instrument (other
than any of the Loan Documents) pursuant to which Borrower, any Subsidiary or
any guarantor hereunder has incurred any debt or other liability to Bank. Any
default in the payment or performance of any obligation, or any defined event of
default, under the terms of any contract or instrument (other than any of the
Loan Documents) pursuant to which Borrower, any Subsidiary or any guarantor
hereunder has incurred any debt or other liability to any person or entity other
than Bank in excess of $500,000.00 individually or in the aggregate for all such
defaults by Borrower, any Subsidiary and any guarantor hereunder combined.
(e) The filing of a notice of judgment lien against Borrower, any
Subsidiary or any guarantor hereunder; or the recording of any abstract of
judgment against Borrower, any Subsidiary or any guarantor hereunder in any
county in which it has an interest in real property; or the service of a notice
of levy and/or of a writ of attachment or execution, or other like process,
against the assets of Borrower, any Subsidiary or any guarantor hereunder; or
the entry of a judgment against Borrower, any Subsidiary or any guarantor
hereunder; provided, however, that such judgments, liens, levies, writs,
executions and other process involve debts of or claims against Borrower, any
Subsidiary or any guarantor hereunder in excess of $500,000.00, individually or
in the aggregate for all such judgments, liens, levies, writs, executions and
other process against Borrower, any Subsidiary or any guarantor hereunder
combined, and within twenty (20) days after the creation thereof, or at least
ten (10) days prior to the date on which any assets could be lawfully sold in
satisfaction thereof, such debt or claim is not satisfied or stayed pending
appeal and insured against in a manner satisfactory to Bank.
(f) Borrower, any Subsidiary or any guarantor hereunder shall become
insolvent, or shall suffer or consent to or apply for the appointment of a
receiver, trustee, custodian or liquidator of itself or any of its property, or
shall generally fail to pay its debts as they become due, or shall make a
general assignment for the benefit of creditors; Borrower, any Subsidiary or any
guarantor hereunder shall file a voluntary petition in bankruptcy, or seeking
reorganization, in order to effect a plan or other arrangement with creditors or
any other relief under the Bankruptcy Reform Act, Title 11 of the United States
Code, as amended or recodified from time to time ("Bankruptcy Code"), or under
any state or federal law granting relief to debtors, whether now or hereafter in
effect; or any involuntary petition or proceeding pursuant to the Bankruptcy
Code or any other applicable state or federal law relating to bankruptcy,
reorganization or other relief for debtors is filed or commenced against
Borrower, any Subsidiary or any guarantor hereunder, or Borrower, any Subsidiary
or any guarantor hereunder shall file an answer admitting the jurisdiction of
the court and the material allegations of any involuntary petition; or Borrower,
any Subsidiary or any guarantor hereunder shall be adjudicated a bankrupt, or an
order for relief shall be entered against Borrower, any Subsidiary or any
guarantor hereunder by any court of competent jurisdiction under the Bankruptcy
Code or any other applicable state or federal law relating to bankruptcy,
reorganization or other relief for debtors.
-12-
(g) The dissolution or liquidation of Borrower, any Guarantor Subsidiary or
any guarantor hereunder; or Borrower, any Guarantor Subsidiary or any guarantor
hereunder, or any of their respective directors, stockholders or members, shall
take action seeking to effect the dissolution or liquidation of Borrower, any
Guarantor Subsidiary or any guarantor hereunder.
SECTION 6.2. REMEDIES. Upon the occurrence of any Event of Default: (a)
all indebtedness of Borrower under each of the Loan Documents, any term thereof
to the contrary notwithstanding, shall at Bank's option and without notice
become immediately due and payable without presentment, demand, protest or
notice of dishonor, all of which are hereby expressly waived by Borrower; (b)
the obligation, if any, of Bank to extend any further credit under any of the
Loan Documents shall immediately cease and terminate; and (c) Bank shall have
all rights, powers and remedies available under each of the Loan Documents, or
accorded by law, including without limitation the right to resort to any or all
security for any credit subject hereto and to exercise any or all of the rights
of a beneficiary or secured party pursuant to applicable law. All rights,
powers and remedies of Bank may be exercised at any time by Bank and from time
to time after the occurrence of an Event of Default, are cumulative and not
exclusive, and shall be in addition to any other rights, powers or remedies
provided by law or equity. In addition to the foregoing, Bank shall have no
obligation to extend credit to Borrower during the two (2) Business Day period
referred to in Section 6.1 (a) above.
ARTICLE VII
-----------
MISCELLANEOUS
-------------
SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.
SECTION 7.2. NOTICES. All notices, requests and demands which any party
is required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:
BORROWER: KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
000 X. Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Chief Financial Officer
BANK: XXXXX FARGO BANK, NATIONAL ASSOCIATION
San Xxxxxxx Valley Regional Commercial Banking Xxxxxx
0000 Xxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxxxx 00000
or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3)
-13-
days after deposit in the U.S. mail, first class and postage prepaid; and (c) if
sent by telecopy, upon receipt.
SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to
Bank immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel), expended or
incurred by Bank in connection with (a) Bank's continued administration of this
Agreement and the other Loan Documents, and the preparation of any amendments
and waivers hereto and thereto, (b) the enforcement of Bank's rights and/or the
collection of any amounts which become due to Bank under any of the Loan
Documents, and (c) the prosecution or defense of any action in any way related
to any of the Loan Documents, including without limitation, any action for
declaratory relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing incurred
in connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to Borrower or any other person or entity.
SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interest hereunder without Bank's prior
written consent. Bank reserves the right to sell, assign, transfer, negotiate
or grant participations in all or any part of, or any interest in, Bank's rights
and benefits under each of the Loan Documents. In connection therewith, Bank
may disclose all documents and information which Bank now has or may hereafter
acquire relating to any credit subject hereto, Borrower or its business, any
Subsidiary or any guarantor hereunder, or the business of any such Subsidiary or
guarantor, or any collateral required hereunder.
SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
Loan Documents constitute the entire agreement between Borrower and Bank with
respect to each credit subject hereto and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Agreement may be amended or modified only in writing signed by
each party hereto.
SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.
SECTION 7.7. TIME. Time is of the essence of each and every provision of
this Agreement and each other of the Loan Documents.
SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or any remaining provisions
of this Agreement.
SECTION 7.9. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be deemed to be
an original, and all of which when taken together shall constitute one and the
same Agreement.
-14-
SECTION 7.10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
SECTION 7.11. ARBITRATION.
(a) Arbitration. The parties hereto agree, upon demand by any party, to
-----------
submit to binding arbitration all claims, disputes and controversies between or
among them (and their respective employees, officers, directors, attorneys, and
other agents), whether in tort, contract or otherwise arising out of or relating
to in any way (i) the loan and related Loan Documents which are the subject of
this Agreement and its negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination; or (ii) requests for additional
credit.
(b) Governing Rules. Any arbitration proceeding will (i) proceed in a
---------------
location in California selected by the American Arbitration Association ("AAA");
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA's commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA's optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to, as applicable, as the "Rules"). If there
is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. (S)91 or any
similar applicable state law.
(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
------------------------------------------------------------
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.
(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in
------------------------------------
which the amount in controversy is $5,000,000.00 or less will be decided by a
single arbitrator selected according to the Rules, and who shall not render an
award of greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 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. The arbitrator will be a neutral
attorney licensed in the State of California or a neutral retired judge of the
state or federal judiciary of California, in either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the
-15-
arbitrator's discretion) any pre-hearing motions which are similar to motions to
dismiss for failure to state a claim or motions for summary adjudication. The
arbitrator shall resolve all disputes in accordance with the substantive law of
California and may grant any remedy or relief that a court of such state could
order or grant within the scope hereof and such ancillary relief as is necessary
to make effective any award. The arbitrator shall also have the power to award
recovery of all costs and fees, to impose sanctions and to take such other
action as the arbitrator deems 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. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction. The institution and
maintenance of an action for judicial relief or pursuit of a provisional or
ancillary remedy shall not constitute a waiver of the right of any party,
including the plaintiff, to submit the controversy or claim to arbitration if
any other party contests such action for judicial relief.
(e) Discovery. In any arbitration proceeding discovery will be permitted
---------
in accordance with the Rules. All discovery shall be expressly limited to
matters directly relevant to the dispute being arbitrated and must be completed
no later than 20 days before the hearing date and within 180 days of the filing
of the dispute with the AAA. Any requests for an extension of the discovery
periods, or any discovery disputes, will be subject to final determination by
the arbitrator upon a showing that the request for discovery is essential for
the party's presentation and that no alternative means for obtaining information
is available.
(f) Class Proceedings and Consolidations. The resolution of any dispute
------------------------------------
arising pursuant to the terms of this Agreement shall be determined by a
separate arbitration proceeding and such dispute shall not be consolidated with
other disputes or included in any class proceeding.
(g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all
-------------------------------------
costs and expenses of the arbitration proceeding.
(h) 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, 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.
(i) 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 or by applicable law or
regulation. If more than one agreement for arbitration by or between the
parties potentially applies to a dispute, the
-16-
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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
XXXXX FARGO BANK,
KEYSTONE AUTOMOTIVE INDUSTRIES, INC. NATIONAL ASSOCIATION
By:________________________________ By:________________________________
Xxxxxxx X. Xxxx
Title:_____________________________ Vice President
-17-
REVOLVING LINE OF CREDIT NOTE
$35,000,000.00 West Covina, California
February 1, 2002
FOR VALUE RECEIVED, the undersigned KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
("Borrower") promises to pay to the order of XXXXX FARGO BANK, NATIONAL
ASSOCIATION ("Bank") at its office at San Xxxxxxx Valley RCBO, 0000 Xxxxx Xxxxx,
Xxxxx 000, Xxxx Xxxxxx, Xxxxxxxxxx, or at such other place as the holder hereof
may designate, in lawful money of the United States of America and in
immediately available funds, the principal sum of Thirty Five Million Dollars
($35,000,000.00), or so much thereof as may be advanced and be outstanding, with
interest thereon, to be computed on each advance from the date of its
disbursement as set forth herein.
DEFINITIONS:
As used herein, the following terms shall have the meanings set forth after
each, and any other term defined in this Note shall have the meaning set forth
at the place defined:
(a) "Business Day" means any day except a Saturday, Sunday or any other day
on which commercial banks in California are authorized or required by law to
close.
(b) "Fixed Rate Term" means a period commencing on a Business Day and
continuing for 1, 2, 3 or 6 months, as designated by Borrower, during which all
or a portion of the outstanding principal balance of this Note bears interest
determined in relation to LIBOR; provided however, that no Fixed Rate Term may
be selected for a principal amount less than One Hundred Thousand Dollars
($100,000.00); and provided further, that no Fixed Rate Term shall extend beyond
the scheduled maturity date hereof. If any Fixed Rate Term would end on a day
which is not a Business Day, then such Fixed Rate Term shall be extended to the
next succeeding Business Day.
(c) "LIBOR" means the rate per annum (rounded upward, if necessary, to the
nearest whole 1/16 of 1%) and determined pursuant to the following formula:
LIBOR = Base LIBOR
------------------------------------------
100% - LIBOR Reserve Percentage
(i) "Base LIBOR" means the rate per annum for United States dollar
deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the
understanding that such rate is quoted by Bank for the purpose of calculating
effective rates of interest for loans making reference thereto, on the first day
of a Fixed Rate Term for delivery of funds on said date for a period of time
approximately equal to the number of days in such Fixed Rate Term and in an
amount approximately equal to the principal amount to which such Fixed Rate Term
applies. Borrower understands and agrees that Bank may base its quotation of
the Inter-Bank Market Offered Rate upon such offers or other market indicators
of the Inter-Bank Market as Bank in its discretion deems appropriate including,
but not limited to, the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.
(ii) "LIBOR Reserve Percentage" means the reserve percentage prescribed
by the Board of Governors of the Federal Reserve System (or any successor) for
"Eurocurrency
-1-
Liabilities" (as defined in Regulation D of the Federal Reserve Board, as
amended), adjusted by Bank for expected changes in such reserve percentage
during the applicable Fixed Rate Term.
(d) "Prime Rate" means at any time the rate of interest most recently
announced within Bank at its principal office as its Prime Rate, with the
understanding that the Prime Rate is one of Bank's base rates and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.
INTEREST:
(a) Interest. The outstanding principal balance of this Note shall bear
--------
interest (computed on the basis of a 360-day year, actual days elapsed) either
(i) at a fluctuating rate per annum equal to the Prime Rate in effect from time
to time, or (ii) at a fixed rate per annum determined by Bank to be one percent
(1.00%) above LIBOR in effect on the first day of the applicable Fixed Rate
Term. When interest is determined in relation to the Prime Rate, each change in
the rate of interest hereunder shall become effective on the date each Prime
Rate change is announced within Bank. With respect to each LIBOR selection
hereunder, Bank is hereby authorized to note the date, principal amount,
interest rate and Fixed Rate Term applicable thereto and any payments made
thereon on Bank's books and records (either manually or by electronic entry)
and/or on any schedule attached to this Note, which notations shall be prima
facie evidence of the accuracy of the information noted.
(b) Selection of Interest Rate Options. At any time any portion of this
----------------------------------
Note bears interest determined in relation to LIBOR, it may be continued by
Borrower at the end of the Fixed Rate Term applicable thereto so that all or a
portion thereof bears interest determined in relation to the Prime Rate or to
LIBOR for a new Fixed Rate Term designated by Borrower. At any time any portion
of this Note bears interest determined in relation to the Prime Rate, Borrower
may convert all or a portion thereof so that it bears interest determined in
relation to LIBOR for a Fixed Rate Term designated by Borrower. At such time as
Borrower requests an advance hereunder or wishes to select a LIBOR option for
all or a portion of the outstanding principal balance hereof, and at the end of
each Fixed Rate Term, Borrower shall give Bank notice specifying: (i) the
interest rate option selected by Borrower; (ii) the principal amount subject
thereto; and (iii) for each LIBOR selection, the length of the applicable Fixed
Rate Term. Any such notice may be given by telephone (or such other electronic
method as Bank may permit) so long as, with respect to each LIBOR selection, (A)
if requested by Bank, Borrower provides to Bank written confirmation thereof not
later than three (3) Business Days after such notice is given, and (B) such
notice is given to Bank prior to 10:00 a.m. on the first day of the Fixed Rate
Term, or at a later time during any Business Day if Bank, at it's sole option
but without obligation to do so, accepts Borrower's notice and quotes a fixed
rate to Borrower. If Borrower does not immediately accept a fixed rate when
quoted by Bank, the quoted rate shall expire and any subsequent LIBOR request
from Borrower shall be subject to a redetermination by Bank of the applicable
fixed rate. If no specific designation of interest is made at the time any
advance is requested hereunder or at the end of any Fixed Rate Term, Borrower
shall be deemed to have made a Prime Rate interest selection for such advance or
the principal amount to which such Fixed Rate Term applied.
(c) Taxes and Regulatory Costs. Borrower shall pay to Bank immediately
--------------------------
upon demand, in addition to any other amounts due or to become due hereunder,
any and all (i) withholdings, interest equalization taxes, stamp taxes or other
taxes (except income and franchise taxes) imposed by any domestic or foreign
governmental authority and related in any
-2-
manner to LIBOR, and (ii) future, supplemental, emergency or other changes in
the LIBOR Reserve Percentage, assessment rates imposed by the Federal Deposit
Insurance Corporation, or similar requirements or costs imposed by any domestic
or foreign governmental authority or resulting from compliance by Bank with any
request or directive (whether or not having the force of law) from any central
bank or other governmental authority and related in any manner to LIBOR to the
extent they are not included in the calculation of LIBOR. In determining which
of the foregoing are attributable to any LIBOR option available to Borrower
hereunder, any reasonable allocation made by Bank among its operations shall be
conclusive and binding upon Borrower.
(d) Payment of Interest. Interest accrued on this Note shall be payable on
-------------------
the first day of each month commencing March 1, 2002.
(e) Default Interest. From and after the maturity date of this Note, or
----------------
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to four percent (4%) above
the rate of interest from time to time applicable to this Note.
BORROWING AND REPAYMENT:
(a) Borrowing and Repayment. Borrower may from time to time during the
-----------------------
term of this Note borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions of this
Note and of any document executed in connection with or governing this Note;
provided however, that the total outstanding borrowings under this Note shall
not at any time exceed the principal amount stated above. The unpaid principal
balance of this obligation at any time shall be the total amounts advanced
hereunder by the holder hereof less the amount of principal payments made hereon
by or for Borrower, which balance may be endorsed hereon from time to time by
the holder. The outstanding principal balance of this Note shall be due and
payable in full on February 1, 2005.
(b) Reduction in Availability. Notwithstanding the maximum principal
-------------------------
amount set forth above, the maximum principal amount available under this Note
shall be reduced automatically and without further notice on February 1, 2003 by
the amount of Five Million Dollars ($5,000,000.00). If the outstanding
principal balance of this Note on such date is greater than the new maximum
principal amount then available hereunder, Borrower shall make a principal
reduction on this Note on such date in an amount sufficient to reduce the then
outstanding principal balance hereof to an amount not greater than said new
maximum principal amount.
(c) Advances. Advances hereunder, to the total amount of the principal sum
--------
stated above, may be made by the holder at the oral or written request of
Xxxxxxx Xxxxxxx, Xxxx Xxxxxxx or Xxxxx Xxxxxx, any one acting alone, who are
authorized to request advances until written notice of the revocation of such
authority is received by the holder at the office designated above. Advances
hereunder shall be deposited to the credit of any deposit account of Borrower,
which advances, when so deposited, shall be conclusively presumed to have been
made to or for the benefit of Borrower.
(d) Application of Payments. Each payment made on this Note shall be
-----------------------
credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be applied
first, to the outstanding principal balance of this
-3-
Note which bears interest determined in relation to the Prime Rate, if any, and
second, to the outstanding principal balance of this Note which bears interest
determined in relation to LIBOR, with such payments applied to the oldest Fixed
Rate Term first.
PREPAYMENT:
(a) Prime Rate. Borrower may prepay principal on any portion of this Note
----------
which bears interest determined in relation to the Prime Rate at any time, in
any amount and without penalty.
(b) LIBOR. Borrower may prepay principal on any portion of this Note which
-----
bears interest determined in relation to LIBOR at any time and in the minimum
amount of One Hundred Thousand Dollars ($100,000.00); provided however, that if
the outstanding principal balance of such portion of this Note is less than said
amount, the minimum prepayment amount shall be the entire outstanding principal
balance thereof. In consideration of Bank providing this prepayment option to
Borrower, or if any such portion of this Note shall become due and payable at
any time prior to the last day of the Fixed Rate Term applicable thereto by
acceleration or otherwise, Borrower shall pay to Bank immediately upon demand a
fee which is the sum of the discounted monthly differences for each month from
the month of prepayment through the month in which such Fixed Rate Term matures,
calculated as follows for each such month:
(i) Determine the amount of interest which would have accrued each month on
---------
the amount prepaid at the interest rate applicable to such amount had
it remained outstanding until the last day of the Fixed Rate Term
applicable thereto.
(ii) Subtract from the amount determined in (i) above the amount of interest
--------
which would have accrued for the same month on the amount prepaid for
the remaining term of such Fixed Rate Term at LIBOR in effect on the
date of prepayment for new loans made for such term and in a principal
amount equal to the amount prepaid.
(iii) If the result obtained in (ii) for any month is greater than zero,
discount that difference by LIBOR used in (ii) above.
Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Borrower, therefore, agrees to pay the above-described prepayment
fee and agrees that said amount represents a reasonable estimate of the
prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to pay
any prepayment fee when due, the amount of such prepayment fee shall thereafter
bear interest until paid at a rate per annum two percent (2.0%) above the Prime
Rate in effect from time to time (computed on the basis of a 360-day year,
actual days elapsed). Each change in the rate of interest on any such past due
prepayment fee shall become effective on the date each Prime Rate change is
announced within Bank.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and conditions of
that certain Credit Agreement between Borrower and Bank dated as of February 1,
2002, as amended from time to time (the "Credit Agreement"). Any default in the
payment or performance of any
-4-
obligation under this Note, or any defined event of default under the Credit
Agreement, shall constitute an "Event of Default" under this Note.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default, the holder of
--------
this Note, at the holder's option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate. Borrower shall pay to the holder immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of the holder's in-house counsel), expended or incurred
by the holder in connection with the enforcement of the holder's rights and/or
the collection of any amounts which become due to the holder under this Note,
and the prosecution or defense of any action in any way related to this Note,
including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
Borrower or any other person or entity.
(b) Obligations Joint and Several. Should more than one person or entity
-----------------------------
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.
(c) Governing Law. This Note shall be governed by and construed in
-------------
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
By:_____________________________________
Title:__________________________________
-5-
ADDENDUM TO LINE OF CREDIT NOTE
(PRIME/LIBOR PRICING ADJUSTMENTS)
THIS ADDENDUM is attached to and made a part of that certain line of credit
promissory note executed by KEYSTONE AUTOMOTIVE INDUSTRIES, INC. ("Borrower")
and payable to XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank"), or order, dated
as of February 1, 2002, in the maximum principal amount of Thirty-Five Million
Dollars ($35,000,000.00) (the "Note").
The following provisions are hereby incorporated into the Note to reflect
the interest rate adjustments agreed to by Bank and Borrower:
INTEREST RATE ADJUSTMENTS:
(a) Initial Interest Rates. The initial interest rates applicable to this
----------------------
Note shall be the rates set forth in the "Interest" paragraph herein.
--------
(b) Interest Rate Adjustments. In addition to any interest rate
-------------------------
adjustments resulting from changes in the Prime Rate, Bank shall adjust the
Prime Rate and LIBOR margins used to determine the rates of interest applicable
to this Note on a quarterly basis, commencing with Borrower's fiscal quarter
ending March 31, 2002, if required to reflect a change in Borrower's ratio of
Funded Debt to EBITDA (as defined in the Credit Agreement referenced herein), in
accordance with the following grid:
Applicable Applicable
Prime Rate LIBOR
Funded Debt to EBITDA Margin Margin
--------------------- ------ ------
Less than 1.25 to 1.0 0% 1.00%
Greater than or equal to 1.25 to
1.0 but less than 1.5 to 1.0 0% 1.25%
Greater than or equal to 1.5 to
1.0 but less than 1.75 to 1.0 .250% 1.50%
Greater than or equal to 1.75 to
1.0 but less than 2.0 to 1.0 .500% 1.75%
Each such adjustment shall be effective on the first Business Day of Borrower's
fiscal quarter following the quarter during which Bank receives and reviews
Borrower's most current fiscal quarter-end financial statements in accordance
with any requirements established by Bank for the preparation and delivery
thereof.
-1-
IN WITNESS WHEREOF, this Addendum has been executed as of the same date as
the Note.
KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
By:_____________________________________
Title:__________________________________
-2-
