exv10w3





	 	 	 	 	 



Exhibit 10.3


REVOLVING NOTE



	 	 	 	 	 
	Borrower’s Name: Motorcar Parts of America, Inc.
	 	 	 	 
	 
	 	 	 	 
	Borrower’s Address:

	 	Office: #30361
	 	Loan Number:
	 
	 	 	 	 
	2929 California Avenue

	 	 
	 	639-182-630-8
	Torrance, California 90503
	 	 	 	 
	 
	 	 	 	 
	 

	 	Termination Date:
	 	           Amount:
	 
	 	 	 	 
	 

	 	April 15, 2010
	 	           $40,000,000






	 	 	 
	$40,000,000

	 	Date: January 30, 2009





FOR VALUE RECEIVED, on April 15, 2010 (the “Revolving Credit Commitment Termination Date”), the
undersigned (“Borrower”) promises to pay to the order of UNION BANK, N.A., a national banking
association formerly known as Union Bank of California, N.A. (“Bank”), as indicated below, the
principal sum of Forty Million Dollars ($40,000,000), or so much thereof as may be disbursed under
the Credit Agreement (as such term is defined hereinbelow), together with interest on the balance
of such principal from time to time outstanding, at the per annum rate or rates and at the times
set forth below. This Revolving Note (“Note”) is the replacement Revolving Note referred to in the
Credit Agreement (as such term is defined hereinbelow) and is governed by the terms and conditions
thereof. Initially capitalized terms used herein which are not otherwise defined herein shall have
the meanings assigned to such terms in the Credit Agreement.


1. INTEREST PAYMENTS. Borrower shall pay interest on the first day of each month, commencing
February 1, 2009. Should interest not be paid when due, it shall become part of the principal and
bear interest as herein provided. All computations of interest under this Note shall be made on
the basis of a year of 360 days, for actual days elapsed. If any interest rate defined in this
Note ceases to be available from Bank for any reason, then said interest rate shall be replaced by
the rate then offered by Bank, which, in the sole discretion of Bank, most closely approximates the
unavailable rate.


     (a) BASE INTEREST RATE. At Borrower’s option, amounts outstanding hereunder in increments of
at least Five Hundred Thousand Dollars ($500,000) shall bear interest at a rate, based on an index
selected by Borrower, equal to Bank’s LIBOR Rate for the Interest Period selected by Borrower plus
the Applicable Margin.


     No Base Interest Rate may be changed, altered or otherwise modified until the expiration of
the Interest Period selected by Borrower. The exercise of interest rate options by Borrower shall
be as recorded in Bank’s records, which records shall be prima facie evidence of the amount
borrowed under either interest rate option and the interest rate; provided, however, that the
failure of Bank to make any such notation in its records shall not discharge Borrower from its
obligation to repay in full with interest all amounts borrowed hereunder. In no event shall any
Interest Period extend beyond the Revolving Credit Commitment Termination Date.


 








 





     To exercise this option, Borrower may, from time to time with respect to principal outstanding
on which the Base Interest Rate is not accruing, and on the expiration of any Interest Period with
respect to principal outstanding on which the Base Interest Rate has been accruing, select an index
offered by Bank for a Base Interest Rate Loan and an Interest Period by telephoning an authorized
lending officer of Bank located at the banking office identified below prior to 10:00 a.m., Pacific
time, on any Business Day and advising that lending officer of the selected index, the Interest
Period and the Origination Date selected (which Origination Date, for a Base Interest Rate Loan
based on the LIBOR Rate, shall follow the date of such selection by no more than two (2) Business
Days).



     Bank will mail a written confirmation of the terms of the selection to Borrower promptly after
the selection is made. Failure to send such confirmation shall not affect Bank’s rights to collect
interest at the rate selected. If, on the date of the selection, the index is unavailable for any
reason, the selection shall be void. Bank reserves the right to fund the principal from any source
of funds, notwithstanding any Base Interest Rate selected by Borrower.



     (b) VARIABLE INTEREST RATE. All principal outstanding hereunder which is not bearing
interest at a Base Interest Rate shall bear interest at a rate per annum equal to the Reference
Rate plus the Applicable Margin, which rate shall vary as and when the Reference Rate or the
Applicable Margin, as the case may be, changes.



     At any time prior to the Revolving Credit Commitment Termination Date, subject to the
provisions of paragraph 4 of this Note, Borrower may borrow, repay and reborrow hereon so long as
the total outstanding at any one time does not exceed the maximum principal amount of this Note.
Borrower shall pay all amounts due under this Note in lawful money of the United States at Bank’s
San Fernando Valley Commercial Banking Office, or such other office as may be designated by Bank,
from time to time.


2. LATE PAYMENTS. If any payment required by the terms of this Note shall remain unpaid ten days
after same is due, at the option of Bank, Borrower shall pay a fee of $100 to Bank.



3. INTEREST RATE FOLLOWING DEFAULT. In the event of default, at the option of Bank, and, to the
extent permitted by law, interest shall be payable on the outstanding principal under this Note at
a per annum rate equal to three percent (3%) in excess of the applicable interest rate provided for
in paragraph 1(b) of this Note, calculated from the date of default until all amounts payable under
this Note are paid in full.



4. PREPAYMENT.




     (a) Amounts outstanding under this Note bearing interest at a rate based on the Reference
Rate may be prepaid in whole or in part at any time, without penalty or premium. Borrower may
prepay amounts outstanding under this Note bearing interest at the Base Interest Rate in whole or
in part, provided that Borrower has given Bank not less than five (5) Business Days’ prior written
notice of Borrower’s intention to make such prepayment and pays to Bank the prepayment fee due as a
result. The prepayment fee shall also be paid if Bank, for any other reason, including
acceleration or foreclosure, receives all or any portion of principal bearing interest at the Base
Interest Rate prior to its scheduled payment date. The prepayment fee shall be an amount equal to
the present value of the product of: (i) the difference (but not less than zero) between (a) the
Base Interest Rate applicable to the principal amount which is being prepaid and (b) the return
which Bank



 









 







could obtain if it used the amount of such prepayment of principal to purchase at bid price
regularly quoted securities issued by the United States having a maturity date most closely
coinciding with the relevant Base Rate Maturity Date and such securities were held by Bank until
the relevant Base Rate Maturity Date (“Yield Rate”); (ii) a fraction, the numerator of which is the
number of days in the period between the date of prepayment and the relevant Base Rate Maturity
Date and the denominator of which is 360; and (iii) the amount of the principal so prepaid (except
in the event that principal payments are required and have been made as scheduled under the terms
of the Base Interest Rate Loan being prepaid, then an amount equal to the lesser of (A) the amount
prepaid or (B) fifty percent (50%) of the sum of (1) the amount prepaid and (2) the amount of
principal scheduled under the terms of the Base Interest Rate Loan being prepaid to be outstanding
at the relevant Base Rate Maturity Date). Present value under this Note is determined by
discounting the above product to present value using the Yield Rate as the annual discount factor.



     (b) In no event shall Bank be obligated to make any payment or refund to Borrower, nor shall
Borrower be entitled to any setoff or other claim against Bank, should the return which Bank could
obtain under the above prepayment formula exceed the interest that Bank would have received if no
prepayment had occurred. All prepayments shall include payment of accrued interest on the
principal amount so prepaid and shall be applied to payment of interest before application to
principal. A determination by Bank as to the prepayment fee amount, if any, shall be conclusive.



     (c) Bank shall provide Borrower a statement of the amount payable on account of prepayment.
Borrower acknowledges that (i) Bank establishes a Base Interest Rate upon the understanding that it
apply to the Base Interest Rate Loan for the entire Interest Period, and (ii) Bank would not lend
to Borrower without Borrower’s express agreement to pay Bank the prepayment fee described above.



     Borrower Initial Here: /s/ SHJ                    


5. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall mean the occurrence of an Event of
Default under and as defined in the Credit Agreement. Upon the occurrence of any such Event of
Default, Bank, in its discretion, may cease to advance funds hereunder and may declare all
obligations under this Note immediately due and payable; provided, however, that upon the
occurrence of an Event of Default under Section 8.1(d), (e) or (f) of the Credit Agreement, all
outstanding principal and accrued but unpaid interest hereunder shall automatically become
immediately due and payable.



6. ADDITIONAL AGREEMENTS OF BORROWER. If any amounts owing under this Note are not paid when due,
Borrower promises to pay all costs and expenses, including reasonable attorneys’ fees (including
the allocated costs of Bank’s in-house counsel and legal staff) incurred by Bank in the collection
or enforcement of any amount outstanding hereunder. Borrower and any Obligor, for the maximum
period of time and the full extent permitted by law, (a) waive diligence, presentment, demand,
notice of nonpayment, protest, notice of protest, and notice of every kind; (b) waive the right to
assert the defense of any statute of limitations to any debt or obligation hereunder; and (c)
consent to renewals and extensions of time for the payment of any amounts due under this Note. The
receipt of any check or other item of payment by Bank, at its option, shall not be considered a
payment on account until such check or other item of payment is honored when presented for payment
at the drawee bank. Bank may delay the credit of such payment based upon Bank’s schedule of funds
availability, and interest under this Note shall accrue until the funds are deemed collected. In
any action brought under or arising out of this Note, Borrower and any Obligor, including their
successors and assigns, hereby consent to the jurisdiction of any competent court within the State
of California, as provided in any


 









 






alternative dispute resolution agreement executed between Borrower and Bank, and consent to service
of process by any means authorized by said state’s law. The term “Bank” includes, without
limitation, any holder of this Note. This Note shall be construed in accordance with and governed
by the laws of the State of California. This Note hereby incorporates any alternative dispute
resolution agreement previously, concurrently or hereafter executed between Borrower and Bank.



7. DEFINITIONS. As used herein, the following terms shall have the meanings respectively set forth
below: “Applicable Margin” shall mean, (a) in the case of a Base Interest Rate Loan, (i) two and
one-half percent (2-1/2%) per annum, if the Leverage Ratio as of the last day of the most recent
fiscal quarter in respect of which Borrower has furnished a Financial Statement (as such term is
defined in the Credit Agreement) to Bank as required by the Credit Agreement (the “Reported
Period”) is greater than or equal to 1.50 to 1.00 or (ii) two and one-quarter percent (2-1/4%) per
annum, if the Leverage Ratio as of the last day of the most recent Reported Period is less than
1.50 to 1.00, and (b) in the case of a Reference Rate Loan, (i) one and one-quarter percent
(1-1/4%) per annum, if the Leverage Ratio as of the last day of the most recent Reported Period is
greater than or equal to 1.50 to 1.00 or (ii) one percent (1%) per annum, if the Leverage Ratio as
of the last day of the most recent Reported Period is less than 1.50 to 1.00. A change to the
Applicable Margin resulting from a change in the Leverage Ratio shall be implemented quarterly on a
prospective basis (1) for each Base Interest Rate Loan, on the first day of any Interest Period and
(2) for each Reference Rate Loan, on the first day of the calendar month after the date of delivery
by Borrower to Bank of the Financial Statements evidencing the need for an adjustment. The failure
of Borrower to deliver to Bank any of the Financial Statements in accordance with the Credit
Agreement shall, in addition to any other remedy provided for in the Credit Agreement, result in an
increase in the Applicable Margin to the highest level set forth in this definition. If an Event
of Default has occurred and is continuing at the time any reduction in the Applicable Margin is to
be implemented, no reduction may occur until the first day of the calendar month following the date
on which such Event of Default is cured or waived by Bank. “Base Interest Rate” shall mean a rate
of interest based on the LIBOR Rate. “Base Interest Rate Loan” shall mean amounts outstanding
under this Note that bear interest at the Base Interest Rate. “Base Rate Maturity Date” shall mean
the last day of the Interest Period with respect to principal outstanding under a Base Interest
Rate Loan. “Business Day” shall mean a day on which Bank is open for the funding of corporate
loans, and, with respect to the rate of interest based on the LIBOR Rate, on which dealings in U.S.
Dollar deposits outside of the United States may be carried on by Bank. “Credit Agreement” shall
mean that certain Amended and Restated Credit Agreement dated as of October 24, 2007, by and
between Borrower and Bank, as amended and as at any time further amended, supplemented or otherwise
modified or restated. “Interest Period” shall mean, with respect to any Base Interest Rate Loan,
any calendar period of one (1) month, three (3) months, six (6) months, nine (9) months or, subject
to availability, twelve (12) months. In determining an Interest Period, a month means a period
that starts on one Business Day in a month and ends on and includes the day preceding the
numerically corresponding day in the next month. For any month in which there is no such
numerically corresponding day, then as to that month, such day shall be deemed to be the last
calendar day of such month. Any Interest Period which would otherwise end on a non-Business Day
shall end on the next succeeding Business Day, unless that is the first day of a month, in which
event such Interest Period shall end on the next preceding Business Day. In no event shall any
Interest Period extend beyond the Revolving Credit Commitment Termination Date. “Leverage Ratio”
shall
 have the meaning assigned to such term in the Credit Agreement. “LIBOR Rate” shall mean
the greater of (a) one percent (1%) per annum or (b) a per annum rate of
interest (rounded upward, if necessary, to the nearest 1/100 of 1%) at which Dollar deposits, in
immediately available funds and in lawful money of the United States would be offered to Bank,
outside of the United States, for a term coinciding with the Interest Period selected by Borrower
and for an amount equal to the amount of principal covered by Borrower’s interest rate selection,
plus,


 









 






in the case of either subsection (a) or (b) of this definition, Bank’s costs, including the cost,
if any, of reserve requirements. “Obligor” shall mean Borrower and any guarantor, co-maker,
endorser or any person or entity other than Borrower providing security for this Note under any
security agreement, guaranty or other agreement between Bank and such guarantor, co-maker, endorser
or person or entity, including their successors and assigns. “Origination Date” shall mean the
first day of any Interest Period. “Reference Rate” shall mean the rate announced by Bank from time
to time at its corporate headquarters as its Reference Rate. The Reference Rate is an index rate
determined by Bank from time to time as a means of pricing certain extensions of credit and is
neither directly tied to any external rate of interest or index nor necessarily the lowest rate of
interest charged by Bank at any given time. “Reference Rate Loan” shall mean amounts outstanding
under this Note that bear interest at the Reference Rate.




	 	 	 	 	 
	 	MOTORCAR PARTS OF AMERICA, INC.

 	 
	 	By  	/s/ Selwyn H. Joffe 	 
	 	 	     Selwyn H. Joffe 	 
	 	 	     Chairman, President and

     Chief Executive Officer