Exhibit 10.31
INVESTOR RIGHTS AGREEMENT
This INVESTOR RIGHTS AGREEMENT dated as of April 20, 2000 (this
"AGREEMENT") between MOTORCAR PARTS & ACCESSORIES, INC., a New York corporation
(the "COMPANY") and XXXXX FARGO BANK, N.A. (the "HOLDER").
W I T N E S S E T H:
WHEREAS, the Company and Holder have entered into that certain Credit
Agreement dated as of April 20, 2000, pursuant to which the Company agreed to
issue a warrant (the "WARRANT") to purchase up to 400,000 shares of its common
stock to Holder; and
WHEREAS, the Company wishes to grant certain registration rights to Holder
with respect to the shares issued pursuant thereto.
NOW, THEREFORE, in consideration for the foregoing and of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. As used herein, the following terms shall have the
following meanings:
"ADVICE" has the meaning set forth in Section 5.
"AFFILIATE" means, with respect to any Person, (a) any Person or entity
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person, (b) any spouse or non-adult child (including by
adoption) of any natural person described in clause (a) above, (c) any relative
other than a spouse or non-adult child (including by adoption) who has the same
principal residence of any natural person described in clause (a) above, (d) any
trust in which any such Persons described in clause (a), (b) or (c) above has a
beneficial interest and (e) any corporation, partnership, limited liability
company or other organization of which any such Persons described in clause (a),
(b) or (c) above collectively own more than fifty percent (50%) of the equity of
such entity. For purposes of this definition, beneficial ownership of more than
ten percent (10%) of the voting common equity of a Person shall be deemed to be
control of such Person.
"AGREEMENT" means this Investor Rights Agreement dated as of April 20, 2000
between the Company and Holder.
"BUSINESS DAY" means any day other than a day on which banks are authorized
or required to be closed in the State of New York.
"CERTIFICATE OF INCORPORATION" means the Certificate of Incorporation of
the Company as filed with the Secretary of State of the State of New York, as
amended through and including the date hereof.
"COMMISSION" means the Securities and Exchange Commission or any other
similar or successor agency of the Federal government administering the
Securities Act and/or the Exchange Act from time to time.
"COMMON STOCK" means the common stock, no par value per share, of the
Company.
"COMPANY" has the meaning set forth in the first paragraph hereof.
"CONTROLLING PERSONS" has the meaning set forth in Section 7(a).
"EFFECTIVE PERIOD" has the meaning set forth in Section 4(b).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor statute, and the rules and regulations of the
Commission promulgated thereunder.
"HOLDER" shall have the meaning set forth in the first paragraph hereof.
"INSPECTORS" has the meaning set forth in Section 4(j).
"MARKET VALUE" means the number of shares of Common Stock to be registered
(or issuable upon the conversion or exchange of other securities to be
registered) pursuant to the demand for registration provided in Section 2 below
multiplied by the then Per Share Price of the Common Stock.
"NASD" means the National Association of Securities Dealers, Inc.
"PER SHARE PRICE" means the daily closing price of the Common Stock on the
Nasdaq National Market (or other exchange or quotation system which the Common
Stock is traded on) on the trading day before the Company receives the written
demand for registration.
"PERSON" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"PIGGY-BACK REGISTRATION" has the meaning set forth in Section 3(a).
"PROSPECTUS" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus
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filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, including a prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by a
shelf registration statement, and by all other amendments and supplements to the
prospectus, including post-effective amendments, and in each case including all
material incorporated by reference or deemed to be incorporated by reference in
such prospectus.
"RECORDS" has the meaning set forth in Section 4(m).
"REGISTRABLE SECURITIES" means the Shares unless such securities have been
(a) effectively registered under Section 5 of the Securities Act and disposed of
pursuant to an effective Registration Statement, or (b) such securities have
been transferred pursuant to Rule 144 under the Securities Act as amended from
time to time or any successor rule such that, after any such transfer referred
to in this clause (b), such securities may be freely transferred without
restriction under the Securities Act.
"REGISTRATION STATEMENT" means any registration statement of the Company
that covers any of the Registrable Securities pursuant to the provisions of this
Agreement, and all amendments and supplements to any such registration
statement, including post-effective amendments, in each case including the
Prospectus, all exhibits, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement
"RESALE REGISTRATION STATEMENT" has the meaning set forth in Section 2(a).
"SECTION 7(a) INDEMNITEE" has the meaning set forth in Section 7(a).
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time, or any successor statute, and the rules and regulations of the Commission
promulgated thereunder.
"SHARES" means the shares of Common Stock issuable or issued, as the case
may be, to Holder upon exercise of the Warrant.
"SUSPENSION NOTICE" has the meaning set forth in Section 5(a).
"SUSPENSION PERIOD" means the period from the date on which Holder receive
a Suspension Notice to the date on which Holder receives either the Advice or
copies of the supplemented or amended Prospectus contemplated by Section 4(e).
"WARRANT" has the meaning set forth in the Recitals hereof.
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SECTION 2. DEMAND REGISTRATION.
i. DEMAND FOR REGISTRATION. The Holder may, at its option, at any
time, require the Company to use its best efforts to effect a registration
of Registrable Securities under the Securities Act (the "Demand
Registration"); PROVIDED, HOWEVER, that (i) the Company shall not be
required to effect such Demand Registration unless the Company is requested
to do so with respect to Registrable Securities having a Market Value of
not less than $1,000,000; (ii) at its option, the Company shall not be
required to effect such registration prior to six (6) months immediately
following the date on which an underwritten public offering of equity
securities (pursuant to an effective registration statement under the
Securities Act) is commenced, if such public offering is commenced prior to
the date of a request for the Demand Registration; PROVIDED, FURTHER that,
if in the Company's opinion such registration, if not deferred, materially
and adversely would affect its business or financial condition, the Company
may defer such registration for a single period (specified in such notice)
of not more than 180 days; and (iii) the Company shall not be required to
use its best efforts to effect a registration of Registrable Securities
under this Section 2 more than twice. At the election of Holder requesting
a Demand Registration, such registration statement shall be filed under
Rule 415 promulgated under the Securities Act (a "Resale Registration
Statement"), and the Company shall use its best efforts to keep a Resale
Registration Statement continuously effective until the earlier of two (2)
years from the date of Holder's request and the date on which there are no
more Registrable Securities remaining unsold thereunder. The Company shall
cause a Resale Registration Statement to be amended to remove Holder's
Registrable Securities upon notice to the Company from Holder. The Company
shall not be required to file and effect more than one (1) Resale
Registration Statements pursuant to this Section 2(a). If, after a Demand
Registration becomes effective, the offering of securities thereunder is or
becomes subject to any stop order, injunction or other order or requirement
of the Commission that prevents or limits the sale of securities thereunder
for a period of more than five (5) Business Days, then such Demand
Registration shall be deemed not to have been effected for purposes of this
Section 2(a).
ii. UNDERWRITTEN OFFERINGS. If a Demand Registration is underwritten,
the underwriter must be reasonably acceptable to the Company. In connection with
any Demand Registration, in the event that such Demand Registration involves an
underwritten offering and the managing underwriter or underwriters participating
in such offering advise Holder in writing that the total number of Registrable
Shares to be included in such offering exceeds the amount that can be sold in
(or during the time of) such offering without delaying or jeopardizing the
success of such offering (including the price per share of the Registrable
Shares to be sold), then the amount of Registrable Shares to be offered for the
account of Holder shall be reduced by an amount recommended by such underwriter.
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SECTION 3. PIGGY-BACK REGISTRATION.
i. REQUEST FOR REGISTRATION. Subject to Section 5(b), each time the
Company proposes to file a registration statement under the Securities Act
with respect to an offering by the Company for its own account, (except,
(i) a registration statement on Form S-4 or S-8 (or any substitute form
that is adopted by the Commission), (ii) a registration statement filed in
connection with a dividend reinvestment plan, stock option plan or unit
investment trusts, or (iii) a registration statement filed in connection
with an exchange offer or offering of securities solely to the Company's
existing security holders), and the form of registration statement to be
used permits the registration of Registrable Securities, then the Company
shall give written notice of such proposed filing to Holder as soon as
reasonably practicable (but in no event less than 30 days before the
anticipated filing date and no less than 40 days before the anticipated
effective date), and such notice shall offer Holder the opportunity to
register such Registrable Securities as Holder may request (which request
shall specify the Registrable Securities intended to be disposed of by
Holder and the intended method of distribution thereof) up to 20 days
before the anticipated effective date (a "Piggy-Back Registration"). The
Company shall cause the managing underwriter or underwriters of a proposed
underwritten offering to permit the Registrable Securities requested to be
included in a Piggy-Back Registration to be included on substantially the
same terms and conditions as any similar securities of the Company or any
other securityholder included therein and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. Holder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any Registration
Statement pursuant to this Section 3 by giving written notice to the
Company of such withdrawal no later than 2 Business Days prior to the
anticipated effective date. The Company may withdraw a Piggy-Back
Registration at any time prior to the time it becomes effective, PROVIDED,
THAT the Company shall give prompt notice of such withdrawal to Holder if
requested to be included in such Piggy-Back Registration.
ii. REDUCTION OF OFFERING. If the managing underwriter or underwriters
of an underwritten offering with respect to which Piggy-Back Registration
has been requested as provided in Section 3(a) hereof shall have informed
the Company, in writing, that in the opinion of such underwriter or
underwriters the total number of shares which the Company, Holder and any
other Persons participating in such registration intend to include in such
offering is such as to materially and adversely affect the success of such
offering (including without limitation any material decrease in the
proposed public offering price), then the number of shares to be offered
for the account of all Persons and Holder (other than the Company)
participating in such registration shall be reduced or limited pro rata in
proportion to the respective number of shares requested to be registered by
such Persons to the extent necessary to reduce the total number of shares
requested to be included in such offering to the number of shares, if any,
recommended by such managing underwriter or underwriters; PROVIDED,
HOWEVER, that the number of
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shares to be offered for the account of the Holder shall in no case be
reduced to a quantity less than 6 and 2/3% of the total number of shares to
be offered for the account of all Persons and Holder (including the
Company) participating in such registration.
iii. UNDERWRITING. In the case of a Piggy-Back Registration, if the
Company has determined to enter into an underwriting agreement in
connection therewith, all Registrable Securities to be included in such
Registration Statement shall be subject to such underwriting agreement, and
Holder may not participate in such Registration unless such Holder agrees
to sell its Registrable Securities on the basis provided for in such
underwriting arrangements approved by the Company and completes and/or
executes all reasonable and customary questionnaires, powers of attorney,
indemnities, underwriting agreements and other reasonable documents which
must be executed under the terms of such underwriting arrangements.
SECTION 4. REGISTRATION PROCEDURES. In connection with the obligations of
the Company to effect or cause the registration of any Registrable Securities
pursuant to the terms and conditions of this Agreement, the Company shall use
its best efforts to effect the registration and sale of such Registrable
Securities in accordance with the terms of this Agreement as quickly as
reasonably practicable, and in connection therewith:
i. Prior to filing a Registration Statement or Prospectus or any
amendments or supplements thereto, excluding for purposes of this Section
4(a) documents incorporated by reference after the initial filing of the
Registration Statement, the Company will furnish to Holder covered by such
Registration Statement and the underwriters, if any, draft copies of all
such documents proposed to be filed upon request.
ii. The Company shall prepare and file with the Commission such
amendments and post-effective amendments to each Registration Statement as
may be necessary to keep such Registration Statement effective for a period
of not more than 60 days or (in the case of a Resale Registration
Statement) up to the earlier of two (2) years after the date Holder
requests such Resale Registration Statement and the date on which there are
no Registrable Securities unsold thereunder (as applicable, the "Effective
Period"); shall cause the Prospectus to be supplemented by any required
Prospectus supplements, and, as so supplemented, to be filed pursuant to
Rule 424 under the Securities Act; and shall comply with the provisions of
the Securities Act applicable to it with respect to the disposition of all
Registrable Securities covered by such Registration Statement during the
Effective Period in accordance with the intended methods of disposition by
Holder set forth in such Registration Statement or supplement to the
Prospectus.
iii. The Company shall furnish to Holder and the underwriters, if any,
without charge, a copy of each Registration Statement and any
post-effective amendment thereto and such number of copies of the
Prospectus (including each preliminary Prospectus) and
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any amendments or supplements thereto and such other documents as such
Holder or underwriter reasonably may request in order to facilitate the
public sale or other disposition of the Registrable Securities being sold
by Holder.
iv. The Company shall, (i) on or prior to the date on which a
Registration Statement is declared effective, use its reasonable best
efforts to cooperate with Holder's efforts to register or qualify the
Registrable Securities covered by such Registration Statement under such
other securities or "blue sky" laws of such states of the United States as
Holder or underwriter reasonably requests; (ii) do any and all other acts
and things which may be reasonably necessary to enable Holder to consummate
the disposition of such Registrable Securities owned by Holder in
accordance with the intended methods for distribution set forth therein;
and (iii) use its reasonable best efforts to keep each such registration or
qualification (or exemption therefrom) effective during the Effective
Period; PROVIDED, HOWEVER, that the Company shall not be required (A) to
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify or (B) to file any general consent to
service of process.
v. The Company shall notify Holder and any underwriter (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has
been filed and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the Commission or any state securities authority for amendments
and supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement or the initiation
of any proceedings for that purpose, (iv) of the issuance by any state
securities commission or other regulatory authority of any order suspending
the qualification or exemption from qualification of any of the Registrable
Securities under state securities or "blue sky" laws or the initiation of
any proceedings for that purpose, and (v) of the happening of any event
which makes any statement made in a Registration Statement or related
Prospectus untrue or which requires the making of any changes in such
Registration Statement or Prospectus so that they will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
vi. The Company shall use its reasonable best efforts to prevent the
issuance of any order suspending the effectiveness of a Registration
Statement, and in the event a stop order is issued, use its reasonable best
efforts to obtain the withdrawal of any order suspending the effectiveness
of a Registration Statement at the earliest possible moment.
vii. If requested by the managing underwriter or underwriters, if any,
or Holder, the Company shall incorporate in a Prospectus supplement or
post-effective amendment such information as such managing underwriter or
underwriters or Holder
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reasonably requests to be included therein, including, without limitation,
with respect to the Registrable Securities being sold by Holder to such
underwriter or underwriters, the purchase price being paid therefor by such
underwriter or underwriters and with respect to any other terms of an
underwritten offering of the Registrable Securities to be sold in such
offering, and make all required filings of such Prospectus supplement or
post-effective amendment.
viii. The Company shall cooperate with Holder and the managing
underwriter or underwriters, if any, to facilitate the timely preparation
and delivery of certificates (which shall not bear any restrictive legends
unless required under applicable law or agreement) representing securities
sold under a Registration Statement, and enable such securities to be in
such denominations and registered in such names as Holder and the managing
underwriter or underwriters, if any, reasonably may request and keep
available and make available to the Company's transfer agent prior to the
effectiveness of such Registration Statement a supply of such certificates.
ix. The Company shall enter into such customary agreements (including,
if applicable, an underwriting agreement in customary form) and take such
other actions as Holder, or the underwriters retained by Holder
participating in an underwritten public offering, if any, reasonably may
request in order to expedite or facilitate the disposition of Registrable
Securities.
x. The Company shall make available to Holder, any underwriter
participating in any disposition pursuant to a Registration Statement, and
any attorney, accountant or other agent or representative retained by
Holder or underwriter (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably requested to enable
them to exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any such Inspector in connection with such
Registration Statement; PROVIDED THAT unless the disclosure of such Records
is necessary to avoid or correct a misstatement or omission in such
Registration Statement or the release of such Records is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction, the
Company shall not be required to provide any information under this
paragraph if (i) the Company believes, after consultation with counsel for
the Company, that to do so would cause the Company to forfeit an
attorney-client privilege that was applicable to such information or (ii)
either (A) the Company has requested and been granted from the Commission
confidential treatment of such information contained in any filing with the
Commission or documents provided supplementally or otherwise or (B) the
Company reasonably determines in good faith that such Records are
confidential and so notifies the Inspectors unless, prior to furnishing any
such information with respect to (A) or (B), Holder agrees to enter into a
confidentiality agreement and, PROVIDED, FURTHER, that Holder agrees that
it will, upon learning that disclosure of such
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Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company, at its expense, to undertake appropriate
action and to prevent disclosure of the Records deemed confidential.
xi. The Company shall cause the Registrable Securities to be
authorized for quotation and/or listing, as applicable, on such exchange or
quotation system as the Common Stock is listed or quoted.
xii. The Company shall provide a CUSIP number for all Registrable
Securities covered by a Registration Statement not later than the effective
date of such Registration Statement.
xiii. The Company shall cooperate with Holder and each underwriter
participating in the disposition of Registrable Securities and their
respective counsel in connection with any filings required to be made with
the NASD or any "blue sky" laws.
xiv. The Company shall appoint a transfer agent and registrar for all
the shares of Common Stock covered by a Registration Statement not later
than the effective date of such Registration Statement.
The Company shall have no obligation to file a registration statement pursuant
to this Agreement unless and until Holder shall have furnished the Company all
information and statements about or pertaining to Holder in such reasonable
detail and on such timely basis as is reasonably required by the Company in
connection with the preparation of a Registration Statement.
SECTION 5. LIMITATIONS ON SALE.
i. SUSPENSION PERIOD. Holder, upon receipt of any notice (a
"Suspension Notice") from the Company of the happening of any event of the
kind described in Section 4(e)(v), forthwith shall discontinue disposition
of the Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 4(e) or
until it is advised in writing (the "Advice") by the Company that the use
of the Prospectus may be resumed and, if so directed by the Company, Holder
will, or will request the managing underwriter or underwriters, if any, to
deliver to the Company (at the Company's expense) all copies then in such
Holder's or underwriter's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. In
the event that the Company shall give any Suspension Notice, (i) the
Company shall use its reasonable best efforts and take such actions as are
reasonably necessary to end the Suspension Period as promptly as
practicable and (ii) immediately following expiration of the Suspension
Period, the Company shall, to the extent it deems necessary, prepare and
file with the Commission and furnish a supplement or amendment to such
Prospectus so that, as thereafter deliverable to the Holders of such
Registrable Securities,
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such Prospectus will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
ii. LOCK-UP. If on any occasion of registration in which the Company
proposes to file a Registration Statement under the Securities Act with
respect to the proposed sale of Common Stock pursuant to a
fully-underwritten public offering, and the managing underwriter or
underwriters shall request an agreement by Holder not to sell any of the
Registrable Securities so held by Holder for a period of 180 days after the
date of the underwriting agreement in order to effect an orderly public
distribution thereof, then Holder shall enter into and execute such an
agreement with such managing underwriter or underwriters and the Company
pertaining to a restriction on the transfer of any equity securities of the
Company during such period. Holder further agrees, upon request of the
managing underwriter or underwriters, to enter into and execute an
agreement with such managing underwriter or underwriters and the Company
pursuant to the terms of which Holder will agree not to transfer any
securities of the Company during the seven-day period immediately preceding
the effectiveness of such registration statement to the extent necessary to
avoid violation of the Exchange Act.
SECTION 6. REGISTRATION EXPENSES. With respect to any Demand Registration,
all expenses incurred in connection with registering the Registrable Securities
hereunder including, without limitation, all registration and filing fees, fees
and disbursements of counsel and independent public accountants for the Company,
fees and expenses incurred in connection with complying with state securities or
"blue sky" laws, few of the Nasdaq National Market or other exchange on which
the Common Stock is listed, transfer taxes and fees of transfer agents and
registrars, underwriting fees, discounts and commissions attributable to the
sale or disposition or Registrable Securities, the fees and expenses of legal
counsel and accountants retained by Holder shall be paid by the Company, and the
Holder shall pay any underwriting discounts and commissions attributable to the
sale or disposition of Registrable Securities. With respect to each Piggy-Back
Registration, Holder shall pay all underwriting discounts and commissions
attributable to the sale or disposition of Registrable Securities, and the
Company shall pay all underwriting fees and all fees and expenses of legal
counsel and accountants retained by Holder.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
i. INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless, to the fullest extent permitted by law, Holder, its
officers, directors, stockholders, employees, agents and underwriters (each
a "Section 7(a) Indemnitee") and each Person who controls Holder within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, or is under common control with, or is controlled by, Holder,
together with the partners, officers, directors, trustees, stockholders,
employees and agents of such controlling Person (collectively, the
"Controlling Persons"), from and against all losses, claims, damages,
liabilities and
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expenses (including without limitation any reasonable legal or other fees
and expenses actually incurred in connection with defending or
investigating any action or claim in respect thereof, PROVIDED, HOWEVER,
that such legal fees shall be limited to those incurred by one individual
counsel for all Section 7(a) (collectively, the "Damages")) to which such
Section 7(a) Indemnitee may become subject under the Securities Act,
insofar as such Damages (or proceedings in respect thereof) arise out of
any untrue or alleged untrue statement of material fact contained in any
Registration Statement or Prospectus (or any amendment thereto) pursuant to
which Registrable Securities were registered under the Securities Act or
caused by any omission or alleged omission to state therein a material fact
necessary to make the statements therein in light of the circumstances
under which they were made not misleading, or caused by any untrue
statement or alleged untrue statement of a material fact contained in such
Prospectus (as amended or supplemented only if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact necessary to make the
statements therein in light of the circumstances under which they were made
not misleading; PROVIDED, HOWEVER, that the Company shall not be liable in
any such case to the extent that Damages arise out of or are based upon any
such untrue statement or omission based upon information relating to such
Section 7(a) Indemnitee furnished in writing to the Company by such Section
7(a) Indemnitee (or by a Person authorized to provide such information on
behalf of such Section 7(a) Indemnitee) for use therein.
ii. INDEMNIFICATION BY HOLDER. Holder agrees to indemnify and hold
harmless, to the fullest extent permitted by law the Company, its
directors, officers, stockholders, employees, agents, attorneys,
underwriters and investment advisers and each of their employees and
agents, and each Person, if any, who controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, or is under common control with, or is controlled by, the
Company, together with its Controlling Person, from and against all Damages
to which the Company and any Controlling Persons may become subject under
the Securities Act insofar as such Damages (or proceedings in respect
thereof) arise out of or are based upon any untrue or alleged untrue
statement of material fact contained in any Registration Statement (or any
amendment thereto) pursuant to which Registrable Securities were registered
under the Securities Act, or caused by any omission or alleged omission to
state therein a material fact necessary to make the statements therein in
light of the circumstances under which they were made not misleading, or
caused by any untrue statement or alleged untrue statement of a material
fact contained in any Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto), or caused by
any omission or alleged omission to state therein a material fact necessary
to make the statements therein in light of the circumstances under which
they were made not misleading, to the extent, but only if and to the extent
that such Damages arise out of or are based upon any such untrue statement
or alleged untrue statement or omission or alleged omission based upon
information relating to Holder furnished in writing to the Company by
Holder (or by a Person authorized to provide such
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information on behalf of Holder) for inclusion therein; PROVIDED, HOWEVER,
that Holder shall not be liable in any case to the extent that such Damages
result from the failure of the Company to amend or take action to correct
or supplement any such Registration Statement or Prospectus on the basis of
corrected or supplemented information provided in writing by Holder to the
Company expressly for such purpose.
iii. INDEMNIFICATION PROCEDURES. In case any proceeding (including any
governmental investigation) shall be instituted involving any Person in
respect of which indemnity may be sought pursuant to either paragraph (a)
or (b) above, such Person (the "indemnified party") promptly shall notify
the Person against whom such indemnity may be sought (the "indemnifying
party") in writing and the indemnifying party shall retain counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in
such proceedings and shall pay the reasonable fees and disbursements of
such counsel relating to such proceeding; PROVIDED, HOWEVER that (i) in the
case of any proceeding in respect of which indemnity may be sought pursuant
to both paragraphs (a) and (b) above, the Company shall not be required to
assume the defense thereof and each party shall bear its own fees and
expenses of such counsel and (ii) the Company shall not be obligated to pay
the fees and expenses of more than one individual counsel (together with
any appropriate or necessary local counsel, if any) for all indemnified
parties, including the Company. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel, or (ii) the indemnifying
party fails promptly to assume the defense of such proceeding or fails to
employ counsel reasonably satisfactory to such indemnified party or
parties, or (iii) (A) the named parties to any such proceeding (including
any impleaded parties) include both such indemnified party or parties and
any indemnifying party or an Affiliate of such indemnified party or parties
or of any indemnifying party, (B) there may be one or more legal defenses
available to such indemnified party or parties or such Affiliate of such
indemnified party or parties that are different from or additional to those
available to any indemnifying party or such Affiliate of any indemnifying
party and (C) such indemnified party or parties shall have been advised by
such counsel that there may exist a legal conflict of interest between or
among such indemnified party or parties or such Affiliate of such
indemnified party or parties and any indemnifying party or such Affiliate
of any indemnifying party, in which case, if such indemnified party or
parties notifies the indemnifying party or parties in writing that it
elects to employ separate counsel of its choice at the reasonable expense
of the indemnifying parties, the indemnifying parties shall not have the
right to assume the defense thereof and such counsel shall be at the
reasonable expense of the indemnifying parties, it being understood,
however, that unless there exists a conflict among indemnified parties, the
indemnifying parties shall not, in connection with any one such proceeding
or separate but substantially similar or related proceedings in the same
jurisdiction, arising out of the same general allegations or circumstances,
be liable for the
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fees and expenses of more than one firm of attorneys at any time for such
indemnified party or parties. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent
(which will not be unreasonably withheld) but, if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party or parties from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent (which will not be
unreasonably withheld) of the indemnified party, effect any settlement of
any pending or threatened proceeding in respect of which such indemnified
party is a party, and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such proceeding.
iv. CONTRIBUTION. To the extent that the indemnification provided for
in paragraph (a) or (b) of this Section 7 is unavailable to an indemnified
party or insufficient in respect of any Damages, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such Damages in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand
and Holder on the other hand in connection with the statements or omissions
that resulted in such Damages, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of
Holder on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or Holder and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
If indemnification is available under paragraph (a) or (b) of this Section
7, the indemnifying parties shall indemnify each indemnified party to the full
extent provided in such paragraphs without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this Section 7(d).
The Company and Holder agree that it would not be just or equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the Damages referred to in this Section 7
shall be deemed to include, subject to the limitations set forth above, any
reasonable legal or other expenses incurred (and not otherwise reimbursed) by
such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution or indemnification from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 7 are
not exclusive and shall not
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limit any rights or remedies which may otherwise be available to any indemnified
party at law or in equity.
v. SURVIVAL. The parties' indemnification and contribution obligations
pursuant to this Section 7 shall survive the sale, transfer, assignment or other
disposition of any Registrable Securities and shall survive any termination of
this Agreement.
SECTION 8. FINANCIAL INFORMATION; VOTING RIGHTS.
i. The Company shall provide to Holder unaudited annual statements of
income, statements of cash flows and changes in stockholders' equity, and
an unaudited balance sheet, all prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied, dated as of
the fiscal year end within ninety (90) days after the end of the applicable
fiscal year. The Company shall provide to Holder unaudited quarterly
statements of income, statements of cash flows and changes in stockholders'
equity, and unaudited balance sheets, all prepared in accordance with GAAP
consistently applied, dated as of the fiscal quarter end within forty-five
(45) days after the end of the applicable fiscal quarter. The Company shall
also timely provide to Holder any other interim financial statements or
balance sheets prepared by or at the request of the Company.
ii. Until the earlier of (i) the expiration of the Warrant and (ii)
the sale or disposition by the Holder and/or its Affiliates of 50% of the
Registrable Shares, the Company shall not, without obtaining the prior
written consent of the Holder, consolidate with or merge with or into, or
convey or transfer or lease all or substantially all of its assets to,
another Person.
SECTION 9. MISCELLANEOUS.
i. AMENDMENTS AND WAIVERS. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given unless the same are in writing and signed by Holder
and the Company.
ii. ASSIGNMENT. Holder may assign to any Affiliate all, but not less
than all, of its rights hereunder with respect to the Registrable
Securities. Holder shall promptly notify the Company in writing of any such
assignment.
iii. NOTICES. All notices, requests and other communications provided
for herein shall be given or made in writing:
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if to the Company: Motorcar Parts & Accessories, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
with copies to: Xxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention:Xxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
if to Holder: Xxxxx Fargo Bank, N.A.
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxx, Vice President
Facsimile: (000) 000-0000
with copies to: Xxxxxx, Xxxx & Xxxxxxxx LLP
Xxx Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
All such notices, requests and other communications shall be: (i)
personally delivered, sent by courier guaranteeing overnight delivery or
sent by registered or certified mail, return receipt requested, postage
prepaid, or by facsimile in each case given or addressed as aforesaid; and
(ii) effective upon receipt.
iv. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
v. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to
principles of conflicts of law.
vi. SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in
any way impaired thereby, it being intended that all of the rights and
privileges of Holder shall be enforceable to the fullest extent permitted
by law.
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vii. ATTORNEY'S FEES. In any action or proceeding brought to enforce
any provision of this Agreement or where any provision hereof is validly
asserted as a defense, the successful party shall, to the extent permitted
by applicable law, be entitled to recover reasonable attorneys' fees and
expenses in addition to any other available remedy.
viii. FURTHER ASSURANCES. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement and the transactions
contemplated hereby.
ix. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall
constitute one and the same instrument, binding on all parties hereto.
[the remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
MOTORCAR PARTS & ACCESSORIES, INC.
By: ____________________________________
Xxxxxxx Xxxxx
President/Chief Operating Officer
By: ____________________________________
Xxxxxxx Xxxxxx
Chief Financial Officer
Assistant Secretary
XXXXX FARGO BANK, N.A.
By: ____________________________________
Xxxxx Xxxxxx
Vice President
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