EXHIBIT 10.37
SEVENTH AMENDMENT AND WAIVER
TO CREDIT AGREEMENT
THIS SEVENTH AMENDMENT AND WAIVER
TO CREDIT AGREEMENT (“Seventh Amendment”), dated as
of June 27, 2007, is made and entered into by and between
MOTORCAR PARTS OF AMERICA, INC. , a New York corporation
(“Borrower”), and UNION BANK OF CALIFORNIA, N.A.
, a national banking association (“Bank”).
RECITALS :
A. Borrower and Bank are parties
to that certain Credit Agreement dated as of May 28, 2004, as
amended or otherwise modified by (i) that certain First
Amendment dated as of November 8, 2005, (ii) that certain
Second Amendment dated as of April 5, 2006, (iii) that
certain Third Amendment dated as of April 10, 2006,
(iv) that certain Fourth Amendment dated as of August 8,
2006, (v) that certain Fifth Amendment dated as of
November 10, 2006, (vi) that certain Sixth Amendment
dated as of March 21, 2007 and (vii) that certain side
letter dated March 21, 2007 (as so amended, the
“Agreement”), pursuant to which Bank agreed to make
various credit facilities available to Borrower, all as more
specifically provided for in the Agreement.
B. Pursuant to Section 6.5
of the Agreement, Borrower agreed, among other things, that as of
the last day of each fiscal quarter, commencing with the fiscal
quarter ended June 30, 2004, Borrower and its Subsidiaries
would achieve Tangible Net Worth that increased from the minimum
Tangible Net Worth required under the Agreement as of the last day
of the prior fiscal quarter by an amount not less than seventy-five
percent (75%) of the positive Net Profit After Taxes of Borrower
and its Subsidiaries for such prior fiscal quarter. Borrower and
its Subsidiaries failed to achieve Tangible Net Worth of not less
than Forty-Eight Million Six Hundred Eighty-Two Thousand Dollars
($48,682,000) for the fiscal quarter ended March 31, 2007,
which failure constituted an Event of Default under
Section 8.1(c) of the Agreement.
C. Pursuant to
Section 6.6(a) of the Agreement, Borrower agreed that Borrower
and its Subsidiaries would achieve EBITDA of not less than Three
Million Dollars ($3,000,000) for each fiscal quarter of each fiscal
year. Borrower and its Subsidiaries failed to achieve EBITDA of not
less than Three Million Dollars ($3,000,000) for the fiscal quarter
ended March 31, 2007, which failure constituted an Event of
Default under Section 8.1(c) of the Agreement.
D. Pursuant to
Section 6.6(b) of the Agreement, Borrower agreed that Borrower
and its Subsidiaries would achieve EBITDA, as of the last day of
each fiscal quarter for the four (4) consecutive fiscal quarters
ended on such date, of not less than Thirteen Million Dollars
($13,000,000). Borrower and its Subsidiaries failed to achieve
EBITDA, as of the last day of the fiscal quarter (and fiscal year)
ended March 31, 2007, for the four (4) consecutive fiscal
quarters ended on such date, of not less than Thirteen Million
Dollars ($13,000,000), which failure constituted an Event of
Default under Section 8.1(c) of the Agreement.
E. Pursuant to Section 6.8
of the Agreement, Borrower agreed that Borrower and its
Subsidiaries would maintain a ratio of Current Assets to Current
Liabilities of not less than 1.20 to 1.00 as of the close of each
fiscal quarter, commencing with the fiscal quarter ended September
30, 2006. Borrower and its Subsidiaries failed to maintain a ratio
of Current Assets to Current Liabilities of not less than 1.20 to
1.00 as of the close of the fiscal quarter (and fiscal year) ended
March 31, 2007, which failure constituted an Event of Default
under Section 8.1(c) of the Agreement.
F. Pursuant to
Section 6.19(c) of the Agreement, Borrower agreed that
Borrower and its Subsidiaries would maintain a Leverage Ratio as of
the last day of the fiscal quarter ended March 31, 2007 of not
greater than 2.25 to 1.00. Borrower and its Subsidiaries failed to
maintain a Leverage Ratio as of the last day of the fiscal quarter
ended March 31, 2007 of not greater than 2.25 to 1.00, which
failure constituted an Event of Default under Section 8.1(c)
of the Agreement.
