Amendment No. 2 to the Amended and Restated Credit Agreement, dated as of August 22, 2012, by and among Fenwick Automotive Products Limited, Introcan Inc., Manufacturers and Traders Trust Company, as lead arranger, and M&T Bank, as administrative agent and a lender

 

(a)

the representations and warranties set forth in Section 4.01 of the Credit Agreement are true and correct as if made on and as of the date hereof, provided that, to the extent such representations and warranties specifically refer to an earlier date, they shall be true and correct as of such earlier date;

 

(b)

the Borrower and each of its respective Subsidiaries are in compliance with all covenants set forth in Section 5.01, Section 5.02 and Section 5.03 of the Credit Agreement, save and except where compliance with such covenants have been specifically waived in writing by the Agent and the Lenders on or prior to the date hereof; and

 

(c)

no Default or Event of Default has occurred and is continuing as of the date hereof, save and except for those Events of Default that have been specifically waived in writing by the Agent and Lenders on or prior to the date hereof.

 

(a)

 

(i)

Inserting the following as definitions in Section 1.01 of the Credit Agreement:

 

(i)

Carrying rights to participate in the profits of such Person and/or rights to participate in the distribution of the remaining property of such Person upon liquidation or dissolution, and/or

 

(ii)

Carrying voting rights either under all circumstances or under some circumstances that have occurred and continuing to elect, appoint or remove directors, general partners, trustees or other Persons performing similar functions for the first mentioned Person,

 

(i)

Amounts paid upon issued and outstanding Capital;

 

(ii)

Contributed surplus;

 

(iii)

Retained earnings, of such Person; plus,

 

(iv)

The principal amount outstanding in respect of subordinated Debt of such Person,

 

(ii)

Deleting the definition of "EBITDA" in Section 1.01 and inserting the following in place thereof:

 

(iii)

Deleting the definition of “Fixed Charges” and inserting the following in place thereof:

 

(iv)

deleting the definition of "Maturity Date" in Section 1.01 and inserting the following in place thereof:

 

(v)

deleting the definition of “Revolving Facility Maximum Amount” in Section 1.01 and inserting the following in place thereof:

 

(b)

 

(c)

 

(d)

 

“(b) the lesser of:

 

(x)

for the period starting August 18, 2012 up to and including December 31, 2012, fifty-five percent (55%) of Eligible Inventory for raw materials inventory  and at all other times, both before and after such period, fifty percent (50%) of Eligible Inventory for raw materials inventory, all on a FIFO basis; plus, for the period starting August 18, 2012 up to and including December 31, 2012, sixty-five percent (65%) for Eligible Inventory for finished goods inventory and at all other times, both before and after such period, sixty percent (60%) for Eligible Inventory for finished goods inventory, all on a FIFO basis and valued at the lower of cost or market in accordance with GAAP; plus, for the period starting August 18, 2012 up to and including December 31, 2012, thirty percent (30%) of Eligible Inventory comprising cores and at all other times, both before and after such period, twenty-five percent (25%) of Eligible Inventory comprising cores (provided that the Borrower can elect, on written notice to the Administrative Agent, to increase such advance rates for any one thirty day period that ends on or prior to December 31, 2012 (the “Increased Advance Rate Period”), such election and Increased Advance Rate Period to be, for greater certainty, available for only one thirty day period between August 18, 2012 and December 1, 2012, and during such Increased Advance Rate Period the advance rate in respect of Eligible Inventory for raw material inventory shall be sixty percent (60%) of such Eligible Inventory, the advance rate in respect of Eligible Inventory for finished goods shall be seventy percent (70%) of such Eligible Inventory, and the advance rate for Eligible Inventory comprising cores shall be thirty five percent (35%) of such Eligible Inventory); and

 

(y)

for the period starting August 18, 2012 up to and including December 31, 2012, ninety percent (90%) of the net orderly liquidation value of the Eligible Inventory and at all other times, both before and after such period, eighty-five percent (85%) of the net orderly liquidation value of the Eligible Inventory, including, at all times, owned cores but excluding, at all times, non-owned cores, as determined by the most recent appraisal obtained by the Agent (provided that during any Increased Advance Rate Period the advance rate of the net orderly liquidation value of Eligible Inventory (including, at all times, owned cores but excluding, at all times, non-owned cores, as determined by the most recent appraisal obtained by the Agent) shall be ninety five percent (95%) of such Eligible Inventory), less”

 

(e)

 

(f)

 

(g)

 

(h)

 

(i)

“(d) 

The Borrowers shall maintain at all times from and after January 1, 2013 excess unused borrowing availability under the Revolving Facility in an amount of at least $1,000,000.00; for the purpose of this Section 5.03(d) "availability" shall mean (A) the sum of 100% of Eligible Accounts Receivable plus the lesser of (i) fifty percent (50%) of Eligible Inventory for raw materials inventory, all on a FIFO basis; plus sixty percent (60%) for Eligible Inventory for finished goods inventory, all on a FIFO basis and valued at the lower of cost or market in accordance with GAAP; plus twenty-five percent (25%) of Eligible Inventory comprising cores; and (ii) eighty-five percent (85%) of the net orderly liquidation value of the Eligible Inventory, including, at all times, owned cores but excluding, at all times, non-owned cores, as determined by the most recent appraisal obtained by the Agent less (B) the full amount of all Advances under the Revolving Facility, including all issued Letters of Credit, as at the date of such calculation.

 

(j)

a consent to this agreement and confirmation of the security from each Material Company in form and substance satisfactory to the Agent;

 

(k)

all documents required to be provided to the Agent in connection with this agreement, which documents shall have been executed and delivered and for which all registrations necessary or desirable in connection therewith shall have been made and for which all legal opinions and other documentation required by the Agent in connection therewith shall have been executed and delivered, all in form and substance satisfactory to the Agent in its sole discretion;

 

(l)

an officer’s certificate and certified copies of resolutions of the board of directors of the Borrower concerning the due authorization, execution and delivery of this Agreement and any documents delivered in connection therewith;

 

(m)

a certificate of status, certificate of compliance or similar certificate for the Borrower issued by the applicable governing jurisdiction;

 

(n)

an opinion from solicitors for the Borrower regarding its corporate status, due authorization, execution, delivery, enforceability of this agreement and agreements delivered in connection therewith, and such other matters as the Agent may reasonably require;

 

(o)

payment of all amounts and fees (including reasonable fees of Lenders’ counsel and Agent’s counsel) payable to the Lenders or Agent in connection with the agreement;

 

(p)

a Borrowing Base Certificate for the for the Borrower calculating the Borrowing Base as at August 18, 2012;

 

(q)

a certificate of an officer of the Borrower certifying that (i) save and except for any Defaults and/or Events of Default which have been specifically waived in writing by the Agent and Lenders, no Default or Event of Default has occurred or is continuing or will result from the entering into of this agreement and all agreements delivered in respect thereof and (ii) all conditions precedent under and pursuant to this agreement have been delivered to the Agent or otherwise satisfied in accordance with the terms hereof;

 

(r)

evidence satisfactory to the Agent, acting reasonably, that from May 24, 2012 to the date of this agreement Motorcar has advanced at least an additional US$20,000,000 in Debt to the Borrower, all on terms and conditions consistent with Motorcar’s prior advances to the Borrower, such that as of the date of this agreement the Borrower shall owe (other than in respect of payments or reimbursement obligations in respect of consignment arrangements), in the aggregate, US$44,863,155 to Motorcar for borrowed money (the “Motorcar Subordinated Debt”);

 

(s)

all Motorcar Subordinated Debt shall have been postponed and subordinated to and in favour of the Obligations under the Credit Agreement, such postponement and subordination to be in form and substance satisfactory to the Agent; and

 

(t)

the Agent and the Lenders shall have received such additional information and documents as they may reasonably require.

 

(u)

deleting Exhibit “A” thereto and replacing such exhibit with the exhibit attached hereto as Schedule “A”; and

 

(v)

adding Schedule “B” attached hereto as Schedule 1.01 (Adjusted EBITDA).

 

(i)

if the Borrower has Adjusted  EBITDA in excess of U.S.$5,500,000 for its Fiscal Year ending March 31, 2013, the Borrower shall pay to the Agent, on or prior to June 30, 2013, the U.S. Dollar amount equal to 5% of any Adjusted EBITDA of the Borrower in excess of U.S.$5,500,000 for such period, provided that the maximum amount payable by the Borrower to the Agent as a Success Fee for such period shall be 5% of U.S.$3,000,000; and

 

(ii)

if the Borrower has Adjusted EBITDA in excess of U.S.$13,500,000 for its Fiscal Year ending March 31, 2014, the Borrower shall pay to the Agent, on or prior to June 30, 2014, the U.S. Dollar amount equal to 5% of any Adjusted EBITDA of the Borrower in excess of U.S.$13,500,000 for such period, provided that the maximum amount payable by the Borrower to the Agent as a Success Fee for such period shall be 5% of U.S.$6,000,000.

By:

/s/ Selwyn Joffe

Authorized Signing Officer

By:

/s/ Michael Umansky

Authorized Signing Officer

By:

/s/ Selwyn Joffe

Authorized Signing Officer

By:

/s/ Michael Umansky

Authorized Signing Officer

By:

/s/ William J. Linthicum, Jr.

Authorized Signing Officer

By:

Authorized Signing Officer

By:

/s/ William J. Linthicum, Jr.

Authorized Signing Officer

By:

Authorized Signing Officer

As Lender

By:

Robert Loughrey

Authorized Signing Officer

By:

Authorized Signing Officer

 

$55,000,000 and reducing in accordance with

the definition of Revolving Facility Maximum

Amount

$10,000,000