REGISTRATION RIGHTS AGREEMENT
Exhibit 10.2
EXECUTION COPY
This Registration Rights Agreement (this
“Agreement”) is made and entered into as of
May ___, 2007, by and among Motorcar Parts of America, Inc., a New York corporation (the
“Company”), and the investors signatory hereto (each an “Investor” and collectively, the
“Investors”).
This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date
hereof among the Company and the Investors (the “Purchase Agreement”).
The Company and the Investors hereby agree as follows:
“Advice” has the meaning set forth in Section 6(d).
“Effective Date” means, as to a Registration Statement, the date on which such Registration
Statement is first declared effective by the Commission.
“Effectiveness Date” means (a) with respect to the initial Registration Statement
required to
be filed under Section 2(a), the earlier of: (a)(i) the 150th day following the Closing Date, and
(ii) the fifth Trading Day following the date on which the Company is notified by the Commission
that the initial Registration Statement will not be reviewed or is no longer subject to further
review and comments; and (b) with respect to any additional Registration Statements that may be
required pursuant to Section 2(b), the earlier of (i) the 150th day following (x) if such
Registration Statement is required because the Commission shall have notified the Company in
writing that certain Registrable Securities were not eligible for inclusion on a previously filed
Registration Statement, the date or time on which the Commission shall indicate as being the first
date or time that such Registrable Securities may then be included in a Registration Statement, or
(y) if such Registration Statement is required for a reason other than as described in (x) above,
the date on which the Company first knows, or reasonably should have known, that such additional
Registration Statement(s) is required, and (ii) the fifth Trading Day following the date on which
the Company is notified by the Commission that such additional Registration Statement will not be
reviewed or is no longer subject to further review and comments.
“Effectiveness Period” has the meaning set forth in Section 2(a).
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Filing Date” means (a) with respect to the initial Registration Statement required to
be
filed under Section 2(a), a date which is on or prior to July 31, 2007; and (b) with
respect to any additional Registration Statements that may be required pursuant to Section
2(b), the 60th day following (x) if such Registration Statement is required because the Commission
shall have notified the Company in writing that certain Registrable Securities were not eligible
for inclusion on a previously filed Registration Statement, the date or time on which the
Commission shall indicate as being the first date or time that such Registrable Securities may then
be included in a Registration Statement, or (y) if such Registration Statement is required for a
reason other than as described in (x) above, the date on which the Company first knows, or
reasonably should have known, that such additional Registration Statement(s) is required.
“Holder” or “Holders” means the holder or holders, as
the case may be, from time to time of
Registrable Securities.
“Indemnified Party” has the meaning set forth in Section 5(c).
“Indemnifying Party” has the meaning set forth in Section 5(c).
“Losses” has the meaning set forth in Section 5(a).
“New York Courts” means the state and federal courts sitting in the City of New York,
Borough
of Manhattan.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition), whether commenced or
threatened.
“Prospectus” means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a prospectus 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, with respect to the terms
of the offering of any portion of the Registrable Securities covered by a Registration Statement,
and all other amendments and supplements to the Prospectus, including post-effective amendments,
and all material incorporated by reference or deemed to be incorporated by reference in such
Prospectus.
“Registrable Securities” means: (i) the Shares, (ii) the Warrant Shares, and
(iii) any
securities issued or issuable upon any stock split, dividend or other distribution,
recapitalization or similar event, or any conversion price adjustment with respect to any of the
securities referenced in (i) or (ii) above.
“Registration Statement” means the initial registration statement required to be filed in
accordance with Section 2(a) and any additional registration statement(s) required to be filed
under Section 2(b), including (in each case) the Prospectus, amendments and supplements to such
registration statements or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference or deemed to be incorporated by reference
therein.
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“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.
“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities
Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities
Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.
“Securities Act” means the Securities Act of 1933, as amended.
“Shares” means the shares of Common Stock issued or issuable to the Investors pursuant to
the
Purchase Agreement.
“Warrants” means the Common Stock purchase warrants issued or issuable to the Investors
pursuant to the Purchase Agreement.
“Warrant Shares” means the shares of Common Stock issued or issuable upon exercise of the
Warrants.
(a) On or prior to each Filing Date, the Company shall use its commercially reasonable efforts
to prepare and file with the Commission a Registration Statement covering the resale of all
Registrable Securities not already covered by an existing and effective Registration Statement for
an offering to be made on a continuous basis pursuant to Rule 415, on Form S-1 (or on such other
form appropriate for such purpose). Such Registration Statement shall contain (except if otherwise
required pursuant to written comments received from the Commission upon a review of such
Registration Statement) the “Plan of Distribution” attached hereto as Annex A. The Company
shall use its commercially reasonable efforts to cause such Registration Statement to be declared
effective under the Securities Act as soon as possible but, in any event, no later than its
Effectiveness Date, and shall use its commercially reasonable efforts to keep the Registration
Statement continuously effective under the Securities Act until the date which is the earlier of
(i) five years after its Effective Date, (ii) such time as all of the Registrable Securities
covered by such Registration Statement have been publicly sold by the Holders, or (iii) such time
as all of the Registrable Securities covered by such Registration Statement may be sold by the
Holders pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to a written
opinion letter to such effect, addressed and reasonably acceptable to the Company’s transfer agent
and the affected Holders (the “Effectiveness Period”).
(b) If for any reason the Commission does not permit all of the Registrable Securities to be
included in the Registration Statement filed pursuant to Section 2(a), or for any other reason any
outstanding Registrable Securities are not then covered by an effective Registration Statement,
then the Company shall prepare and file by the Filing Date for such Registration Statement, an
additional Registration Statement covering the resale of all
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Registrable Securities not already covered by an existing and effective Registration Statement
for an offering to be made on a continuous basis pursuant to Rule 415, on Form S-3 (or on such
other form appropriate for such purpose). Each such Registration Statement shall contain (except
if otherwise required pursuant to written comments received from the Commission upon a review of
such Registration Statement) the “Plan of Distribution” attached hereto as Annex A. The
Company shall use its commercially reasonable efforts to cause each such Registration Statement to
be declared effective under the Securities Act as soon as reasonably possible but, in any event, by
its Effectiveness Date, and shall use its commercially reasonable efforts to keep such Registration
Statement continuously effective under the Securities Act during the entire Effectiveness Period.
(c) If: (i) a Registration Statement is not filed on or prior to its Filing Date (if the
Company files a Registration Statement without affording the Holders the opportunity to review and
comment on the same as required by Section 3(a) hereof, the Company shall not be deemed to have
satisfied this clause (i)), or (ii) a Registration Statement is not declared effective by the
Commission on or prior to its required Effectiveness Date, or (iii) after its Effective Date,
without regard for the reason thereunder or efforts therefore, such Registration Statement ceases
for any reason to be effective and available to the Holders as to all Registrable Securities to
which it is required to cover at any time prior to the expiration of its Effectiveness Period for
more than an aggregate of 20 Trading Days (which need not be consecutive) (any such failure or
breach being referred to as an “Event,” and for purposes of clauses (i) or (ii) the date on which
such Event occurs, or for purposes of clause (iii) the date which such 20 Trading Day-period is
exceeded, being referred to as “Event Date”), then in addition to any other rights the Holders may
have hereunder or under applicable law, subject to Section 2(d) hereof: (x) on each such Event Date
the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a
penalty, equal to 1% of the aggregate Investment Amount paid by such Holder for the Registrable
Securities included on such Registration Statement and which have not otherwise been sold as of
such Event Date; and (y) on each monthly anniversary of each such Event Date (if the applicable
Event shall not have been cured by such date) until the applicable Event is cured, the Company
shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty,
equal to 1% of the aggregate Investment Amount paid by such Holder for the Registrable Securities
included on such Registration Statement and which have not otherwise been sold as of such Event
Date. Notwithstanding anything to the contrary in this Section 2(c), in no event shall the Company
be obligated to pay any liquidated damages to any Holder pursuant to this Section 2(c) in an
aggregate amount that exceeds 19% of the aggregate Investment Amount paid by such Holder for Shares
pursuant to the Purchase Agreement. If the Company fails to pay any partial liquidated damages
pursuant to this Section in full within seven days after the date payable, the Company will pay
interest thereon at a rate of 10% per annum (or such lesser maximum amount that is permitted to be
paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages
are due until such amounts, plus all such interest thereon, are paid in full. The partial
liquidated damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any
portion of a month prior to the cure of an Event, except in the case of the first Event Date.
(d) Each Holder agrees to furnish to the Company a completed Questionnaire in the form
attached to this Agreement as Annex B (a “Selling Holder Questionnaire”). The Company
shall not be required to include the Registrable Securities of a Holder in a Registration
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Statement and shall not be required to pay any liquidated or other damages under Section 2(c)
to any Holder who fails to furnish to the Company a fully completed Selling Holder Questionnaire at
least two Trading Days prior to the Filing Date (subject to the requirements set forth in Section
3(a)).
In connection with the Company’s registration obligations hereunder, the Company shall:
(a) Not less than four Trading Days prior to the filing of a Registration Statement or any
related Prospectus or any amendment or supplement thereto, the Company shall furnish to each Holder
copies of the “Selling Stockholders” section of such document, the “Plan of Distribution” and any
risk factor contained in such document that addresses specifically this transaction or the Selling
Stockholders, as proposed to be filed which documents will be subject to the review of such Holder.
The Company shall not file a Registration Statement, any Prospectus or any amendments or
supplements thereto in which the “Selling Stockholder” section thereof differs from the disclosure
received from a Holder in its Selling Holder Questionnaire (as amended or supplemented).
(b) (i) Prepare and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in connection therewith as may
be necessary to keep such Registration Statement continuously effective as to the applicable
Registrable Securities for its Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under the Securities Act all of
the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424;
provided, however, that on the Business Day following the Effectiveness Date, the Company shall
file with the Commission in accordance with Rule 424 the final prospectus to be used in connection
with sales pursuant to the Registration Statement (a “Final Prospectus Filing”); provided, further,
however, that any advance notification provisions set forth in this Agreement, including without
limitation Sections 3(a) and 3(c), shall not apply to the extent that such provisions would render
impracticable the Final Prospectus Filing within the period specified in this Section 3(b)(ii);
(iii) respond as promptly as reasonably possible to any comments received from the Commission with
respect to each Registration Statement or any amendment thereto and, as promptly as reasonably
possible provide the Holders true and complete copies of all correspondence from and to the
Commission relating to such Registration Statement that would not result in the disclosure to the
Holders of material and non-public information concerning the Company; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange Act with respect to
the Registration Statements, the delivery of the Prospectus or Prospectuses and the disposition of
all Registrable Securities covered by each Registration Statement.
(c) Notify the Holders as promptly as reasonably possible (and, in the case of (i)(A) below,
not less than three Trading Days prior to such filing) and (if requested by any such Person)
confirm such notice in writing as promptly as reasonably possible (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to a Registration
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Statement is proposed to be filed; (B) when the Commission notifies the Company whether there
will be a “review” of such Registration Statement and whenever the Commission comments in writing
on such Registration Statement (the Company shall provide true and complete copies thereof and all
written responses thereto to each of the Holders that pertain to the Holders as a Selling
Stockholder or to the Plan of Distribution, but not information which the Company believes would
constitute material and non-public information); and (C) with respect to each Registration
Statement or any post-effective amendment, when the same has become effective; (ii) of any request
by the Commission or any other Federal or state governmental authority for amendments or
supplements to a Registration Statement or Prospectus or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation of any Proceedings
for that purpose; (iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for
such purpose; and (v) of the occurrence of any event or passage of time that makes the financial
statements included in a Registration Statement ineligible for inclusion therein or any statement
made in such Registration Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that requires any revisions to
such Registration Statement, Prospectus or other documents so that, in the case of such
Registration Statement or the Prospectus, as the case may be, it 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. All information disclosed in the notices contemplated in this Section 3(c) shall
be kept confidential by the recipient thereof until such information is publicly disclosed by the
Company unless disclosure by the recipient is required by law.
(d) Use its commercially reasonable efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of (i) any order suspending the effectiveness of a Registration Statement, or (ii)
any suspension of the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.
(e) Furnish to each Holder, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto and all exhibits to the extent requested by such Person
(including those previously furnished) promptly after the filing of such documents with the
Commission.
(f) Promptly deliver to each Holder, without charge, as many copies of each Prospectus or
Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such
Persons may reasonably request. The Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders in connection with the offering and
sale of the Registrable Securities covered by such Prospectus and any amendment or supplement
thereto.
(g) Prior to any public offering of Registrable Securities, use its commercially reasonable
efforts to register or qualify or cooperate with the selling Holders in connection with the
registration or qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws of all
jurisdictions
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within the United States, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statements.
(h) Cooperate in all reasonable respects with the Holders and use commercially reasonable
efforts to facilitate the timely preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to the Registration Statements, which
certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such denominations and registered in
such names as any such Holders may request.
(i) Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to
the affected Registration Statements or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, no Registration Statement nor any Prospectus will
contain an untrue statement of a material fact or omit to state a 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.
(j) The Company shall effect, if necessary, a filing with respect to the public offering
contemplated by each Registration Statement (an “Issuer Filing”) with the National
Association of Securities Dealers, Inc. (“NASD”) Corporate Financing Department pursuant to
NASD Rule 2710 as described in proposed NASD Rule 2710(b)(10)(A)(i) within one Trading Day of the
date that the Registration Statement is first filed with the Commission and pay the filing fee
required by such Issuer Filing. If such filing is made, the Company shall use commercially
reasonable efforts to pursue the Issuer Filing until the NASD issues a letter confirming that it
does not object to the terms of the offering contemplated by the Registration Statement as
described in the Plan of Distribution attached hereto as Annex A. A copy of the Issuer
Filing and all related correspondence to or from the NASD with respect thereto shall be provided to
the placement agent for the transaction and their counsel.
(a) The Holder, by its acceptance of the Registrable Securities, agrees to cooperate with the
Company as reasonably requested by the Company in connection with the preparation and filing of any
Registration Statement hereunder, unless the Holder has notified the Company in writing of its
election to exclude all of its Registrable Securities from such Registration Statement.
(b) The Holder agrees that, upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 3(c)(iii), (iv) or (v), the Holder will immediately
discontinue disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until the Holder’s receipt of the copies of the supplemented
or amended prospectus contemplated by Section 3(c) or receipt of notice that no supplement or
amendment is required. Notwithstanding anything to the contrary, the Company
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shall use commercially reasonable efforts to cause its transfer agent to deliver unlegended
shares of Common Stock to a transferee of an Investor in accordance with the terms of the Purchase
Agreement in connection with any sale of Registrable Securities with respect to which a Holder has
entered into a contract for sale prior to the Holder’s receipt of a notice from the Company of the
happening of any event of the kind described in Section 3(c) and for which the Holder has not yet
settled.
(c) The Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it or an exemption therefrom (including, without
limitation, an exemption pursuant to Rule 172) in connection with sales of Registrable Securities
pursuant to the Registration Statement and if such Registrable Securities are to be sold by any
method or in any transaction other than on a national securities exchange or in the
over-the-counter market, in privately negotiated transactions, or in any method described in the
“Plan of Distribution” included in the applicable Registration Statement or any combination of such
methods, to notify the Company at least five Trading Days prior to the date on which the Holder
first offers to sell any such Registerable Securities.
(d) The Holder acknowledges and agrees that the Registerable Securities sold pursuant to the
Registration Statement are not transferable on the books of the Company unless (i) the Registerable
Securities have been sold in accordance with such Registration Statement and (ii) the requirement
of delivering a current prospectus has been satisfied.
(e) The Holder agrees not to take any action with respect to any distribution deemed to be
made pursuant to such Registration Statement which would constitute a violation any applicable
rule, regulation or law.
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(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors,
agents, investment advisors, partners, members and employees of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) and the officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, reasonable costs of preparation
and reasonable attorneys’ fees) and expenses (collectively, “Losses”) (Losses shall not include any
diminution in value of the Registrable Securities), as incurred, arising out of or relating to any
untrue or alleged untrue statement of a material fact contained in any Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements therein (in the
case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances
under which they were made) not misleading, except to the extent, but only to the extent, that (1)
such untrue statements or omissions are based solely upon information regarding such Holder
furnished in writing to the Company by such Holder expressly for use therein, or to the extent that
such information relates to such Holder or such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly
for use in the Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto
for this purpose) or (2) in the case of an occurrence of an event of the type specified in Section
3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and prior to the
receipt by such Holder of an Advice or an amended or supplemented Prospectus, but only if and to
the extent that following the receipt of the Advice or the amended or supplemented Prospectus the
misstatement or omission giving rise to such Loss would have been corrected. The Company shall
notify the Holders promptly of the institution, threat or assertion of any Proceeding of which the
Company is aware in connection with the transactions contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as incurred, arising
solely out of or based solely upon: (x) such Holder’s failure to comply with the prospectus
delivery requirements of the Securities Act or (y) any untrue statement of a material fact
contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto, or arising solely out of or based solely upon any omission of a
material fact required to be stated therein or necessary to make the statements therein not
misleading to the extent, but only to the extent that, (1) such untrue statements or omissions are
based solely upon information regarding such Holder furnished in writing to the Company by such
Holder expressly for use therein, or to the extent that such information relates to such Holder or
such Holder’s proposed method of distribution of
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Registrable Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement (it being understood that the Holder has approved
Annex A hereto for this purpose), such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section
3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and prior to the
receipt by such Holder of an Advice or an amended or supplemented Prospectus, but only if and to
the extent that following the receipt of the Advice or the amended or supplemented Prospectus the
misstatement or omission giving rise to such Loss would have been corrected. In no event shall the
liability of any selling Holder hereunder be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees
and expenses incurred in connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations
or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed reasonably
promptly to assume the defense of such Proceeding and such failure has compromised the defense of
such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall
have been advised by counsel in writing that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate
counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right
to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party).
The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected
without its written consent, which consent shall not be unreasonably withheld. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect any settlement of
any pending Proceeding in respect of which any Indemnified Party is a 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.
All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the
extent incurred in connection with investigating or preparing to defend such
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Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party
(regardless of whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that such Indemnified Party shall reimburse all such fees and
expenses to the extent it is finally judicially determined that such Indemnified Party is not
entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys’ or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided for in this Section
was available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 5(d) were determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually
received by such Holder from the sale of the Registrable Securities subject to the Proceeding
exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
The indemnity and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.
(a) Remedies. In the event of a breach by the Company or by a Holder, of any of their
obligations under this Agreement, each Holder or the Company, as the case may be, in addition to
being entitled to exercise all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate compensation for any
losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby
further agrees that, in the event of any action for
11
specific performance in respect of such breach, it shall waive the defense that a remedy at
law would be adequate.
(b) No Piggyback on Registrations. Except as and to the extent specified in
Schedule 3.1(s) to the Purchase Agreement, neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include securities of the
Company in a Registration Statement other than the Registrable Securities, and the Company shall
not enter into any agreement providing any such right to any of its security holders prior to the
Effective Date.
(c) Compliance. Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.
(d) Discontinued Disposition. Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any
event of the kind described in Section 3(c), such Holder will forthwith discontinue disposition of
such Registrable Securities under the Registration Statement until such Holder’s receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised
in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed,
and, in either case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or Registration
Statement. The Company may provide appropriate stop orders to enforce the provisions of this
paragraph.
(e) Piggy-Back Registrations. If at any time during the Effectiveness Period there
is not an effective Registration Statement covering all of the Registrable Securities and the
Company shall determine to prepare and file with the Commission a registration statement relating
to an offering for its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in connection with stock
option or other employee benefit plans, then the Company shall send to each Holder written notice
of such determination and, if within fifteen days after receipt of such notice, any such Holder
shall so request in writing, the Company shall include in such registration statement all or any
part of such Registrable Securities such holder requests to be registered, subject to customary
underwriter cutbacks applicable to all holders of registration rights.
(f) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this Section 6(f), may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the same shall be in
writing and signed by the Company and the Holders of no less than a majority in interest of the
then outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates exclusively to the rights
of certain Holders and that does not directly or indirectly affect the rights of other Holders may
12
be given by Holders of at least a majority of the Registrable Securities to which such waiver
or consent relates.
Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of (a) the date of transmission, if such notice or communication is delivered via
facsimile (provided the sender receives a machine-generated confirmation of successful transmission
and reasonably promptly following such transmission sends such notice or communication via U.S.
mail or overnight courier) at the facsimile number specified in this Section prior to 6:30 p.m.
(New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number specified in this
Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any
Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice
is required to be given. The address for such notices and communications shall be as follows:
If to the Company:
|
Motorcar Parts of America, Inc. | |
| 0000 Xxxxxxxxxx Xxxxxx | ||
| Xxxxxxxx, Xxxxxxxxxx 00000 | ||
| Facsimile No.: (000) 000-0000 | ||
| Telephone No.: (000) 000-0000 | ||
| Attention: Xxxxxxx Xxxxxxx, Vice President and | ||
| General Counsel | ||
With a copy to:
|
Xxxxxx Xxxxx & Xxxxx, LLP | |
| The Water Garden | ||
| 0000 00xx Xxxxxx Xxxxx Xxxxx, Xxxxx Xxxxx | ||
| Xxxxx Xxxxxx, XX 00000 | ||
| Facsimile No.: (000) 000-0000 | ||
| Attention: Xxxxxx X. Xxxxx | ||
and to:
|
Xxxxxx LLP | |
| 000 Xxxx Xxxxxx | ||
| Xxx Xxxx, XX 00000 | ||
| Facsimile No.: (000) 000-0000 | ||
| Attention: Xxxxx Xxxxxxxxxx | ||
If to an Investor:
|
To the address set forth under such Investor’s name | |
| on the signature pages hereof; | ||
| If to any other Person who is then the registered Holder: | ||
| To the address of such Holder as it appears in the stock transfer | ||
| books of the Company or such other address as may be designated in | ||
| writing hereafter, in the same manner, by such Person. | ||
13
(g) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and shall inure to the
benefit of each Holder. Other than in connection with a merger, consolidation, sale of all or
substantially all of the Company’s assets or other similar change in control transaction, the
Company may not assign this Agreement or any rights or obligations hereunder without the prior
written consent of each Holder. Each Holder may assign their respective rights hereunder in the
manner and to the Persons as permitted under the Purchase Agreement.
(h) Execution and Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original and, all of which
taken together shall constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof.
(i) Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the principles of conflicts of
law thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement (whether brought against a party
hereto or its respective Affiliates, employees or agents) will be commenced in the New York Courts.
Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any Proceeding, any claim that it is not personally subject to the jurisdiction of any New York
Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to process being served
in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury in any Proceeding
arising out of or relating to this Agreement or the transactions contemplated hereby. If either
party shall commence a Proceeding to enforce any provisions of this Agreement, then the prevailing
party in such Proceeding shall be reimbursed by the other party for its attorney’s fees and other
costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.
(j) Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
(k) Severability. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
14
alternative means to achieve the same or substantially the same result as that contemplated by
such term, provision, covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms, provisions, covenants
and restrictions without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.
(l) Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(m) Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor under this Agreement are several and not joint with the obligations of each other
Investor, and no Investor shall be responsible in any way for the performance of the obligations of
any other Investor under this Agreement. The Company’s obligations to each Investor under this
Agreement are identical to its obligations to each other Investor other than such differences
resulting solely from the number of Securities purchased by each Investor, but regardless of
whether such obligations are memorialized herein or in another agreement between the Company and an
Investor. Nothing contained herein or in any Transaction Document, and no action taken by any
Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such obligations or the
transactions contemplated by this Agreement or any other Transaction Document. Each Investor
acknowledges that no other Investor will be acting as agent of such Investor in enforcing its
rights under this Agreement. Each Investor shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this Agreement, and it shall not
be necessary for any other Investor to be joined as an additional party in any Proceeding for such
purpose. The Company acknowledges that each of the Investors has been provided with the same
Registration Rights Agreement for the purpose of closing a transaction with multiple Investors and
not because it was required or requested to do so by any Investor.
[Remainder of Page Intentionally Left Blank]
15
In Witness Whereof, the parties have executed this Registration Rights Agreement as
of the date first written above.
| Motorcar Parts of America, Inc. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
[Signature Pages of Investors to Follow]
In Witness Whereof, the parties have executed this Registration Rights Agreement as
of the date first written above.
| Name of Investing Entity | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| Address For Notice | ||||
| c/o: | ||||
| Street: | ||||
| City/State/Zip: | ||||
| Attention: | ||||
| Tel: | ||||
| Fax: | ||||
| Email: | ||||
Annex A
Plan of Distribution
The Selling Stockholders and any of their pledgees, donees, transferees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on
any stock exchange, market or trading facility on which the shares are traded or in private
transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use
any one or more of the following methods when selling shares:
| • | ordinary brokerage transactions and transactions in which the broker-dealer solicits Investors; | |
| • | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; | |
| • | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; | |
| • | an exchange distribution in accordance with the rules of the applicable exchange; | |
| • | privately negotiated transactions; | |
| • | to cover short sales made after the date that this Registration Statement is declared effective by the Commission; | |
| • | broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share; | |
| • | a combination of any such methods of sale; and | |
| • | any other method permitted pursuant to applicable law. |
The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if
available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from the Selling
Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions involved.
The Selling Stockholders may from time to time pledge or grant a security interest in some or
all of the Shares owned by them and, if they default in the performance of their secured
obligations, the pledgees or secured parties may offer and sell shares of Common Stock from time to
time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933 amending the list of selling stockholders to
include the pledgee, transferee or other successors in interest as selling stockholders under this
prospectus.
Upon the Company being notified in writing by a Selling Stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of Common Stock through a block
trade, special offering, exchange distribution or secondary distribution or a purchase by a broker
or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b)
under the Securities Act,
disclosing (i) the name of each such Selling Stockholder and of the participating
broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of
Common Stock were sold, (iv)the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in this prospectus,
and (vi) other facts material to the transaction. In addition, upon the Company being notified in
writing by a Selling Stockholder that a donee or pledgee intends to sell more than 500 shares of
Common Stock, a supplement to this prospectus will be filed if then required in accordance with
applicable securities law.
The Selling Stockholders also may transfer the shares of Common Stock in other circumstances,
in which case the transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.
The Selling Stockholders and any broker-dealers or agents that are involved in selling the
shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection
with such sales. In such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the shares purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act. Discounts, concessions, commissions and similar selling
expenses, if any, that can be attributed to the sale of Securities will be paid by the Selling
Stockholder and/or the purchasers. Each Selling Stockholder has represented and warranted to the
Company that it acquired the securities subject to this registration statement in the ordinary
course of such Selling Stockholder’s business and, at the time of its purchase of such securities
such Selling Stockholder had no agreements or understandings, directly or indirectly, with any
person to distribute any such securities.
The Company has advised each Selling Stockholder that it may not use shares registered on this
Registration Statement to cover short sales of Common Stock made prior to the date on which this
Registration Statement shall have been declared effective by the Commission. In addition, the
Company has advised each Selling Stockholder that the Commission currently takes the position that
coverage of short sales “against the box” prior to the effective date of the registration statement
of which this prospectus is a part would be a violation of Section 5 of the Securities Act, as
described in Item 65, Section A, of the Manual of Publicly Available Telephone Interpretations,
dated July 1997, compiled by the Office of Chief Counsel, Division of Corporate Finance.
If a Selling Stockholder uses this prospectus for any sale of the Common Stock, it will be
subject to the prospectus delivery requirements of the Securities Act. The Selling Stockholders
will be responsible to comply with the applicable provisions of the Securities Act and Exchange
Act, and the rules and regulations thereunder promulgated, including, without limitation,
Regulation M, as applicable to such Selling Stockholders in connection with resales of their
respective shares under this Registration Statement.
The Company is required to pay all fees and expenses incident to the registration of the
shares, but the Company will not receive any proceeds from the sale of the Common Stock. The
Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages
and liabilities, including liabilities under the Securities Act.
2
Annex B
Motorcar Parts of America, Inc.
Selling Securityholder Notice and Questionnaire
The undersigned beneficial owner of common stock (the “Common Stock”), of Motorcar Parts of
America, Inc. (the “Company”) understands that the Company has filed or intends to file with the
Securities and Exchange Commission (the “Commission”) a Registration Statement for the registration
and resale of the Registrable Securities, in accordance with the terms of the Registration Rights
Agreement, dated as of [ ], 2007 (the “Registration Rights Agreement”),
among the
Company and the Investors named therein. A copy of the Registration Rights Agreement is available
from the Company upon request at the address set forth below. All capitalized terms used and not
otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights
Agreement.
The undersigned hereby provides the following information to the Company and represents and
warrants that such information is accurate:
Questionnaire
1. Name.
| (a) | Full Legal Name of Selling Securityholder | ||
| (b) | Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities Listed in Item 3 below are held: | ||
| (c) | Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by the questionnaire): | ||
2. Address for Notices to Selling Securityholder:
| Telephone: | ||
| Facsimile: | ||
| Contact Person: |
3. Beneficial Ownership of Registrable Securities:
| Type and Principal Amount of Registrable Securities beneficially owned: | ||
4. Broker-Dealer Status:
| (a) | Are you a broker-dealer? |
Yes o No o
| Note: If yes, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. |
| (b) | Are you an affiliate of a broker-dealer? |
Yes o Noo
| (c) | If you are an affiliate of a broker-dealer, do you certify that you bought the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities? |
Yes o No o
| Note: If no, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement. |
5. Beneficial Ownership of Other Securities of the Company Owned by the Selling Securityholder.
| Except as set forth below in this Item 5, the undersigned is not the beneficial or registered owner of any securities of the Company other than the Registrable Securities listed above in Item 3. |
| Type and Amount of Other Securities beneficially owned by the Selling Securityholder: | |||
2
6. Relationships with the Company:
| Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years. | ||
| State any exceptions here: | ||
The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the
information provided herein that may occur subsequent to the date hereof and prior to the Effective
Date for the Registration Statement.
By signing below, the undersigned consents to the disclosure of the information contained herein in
its answers to Items 1 through 6 and the inclusion of such information in the Registration
Statement and the related prospectus. The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or amendment of the Registration
Statement and the related prospectus.
In Witness Whereof the undersigned, by authority duly given, has caused this Notice and
Questionnaire to be executed and delivered either in person or by its duly authorized agent.
| Dated: | Beneficial Owner: | |||||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
Please Fax a Copy of the Completed and Executed Notice and Questionnaire, and Return the
Original by Overnight Mail, to:
Xxxxxx Xxxxx & Xxxxx, LLP
The Water Garden 1600
00xx Xxxxxx Xxxxx Xxxxx, Xxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
Xacsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
The Water Garden 1600
00xx Xxxxxx Xxxxx Xxxxx, Xxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
Xacsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
3