Exhibit 10.13
(ROTH CAPITAL PARTNERS LOGO) [v30465v3046501.gif]
May 17, 2007
Mr. Selwyn Joffe
Chief Executive Officer
Motorcar Parts of America, Inc.
2929 California Street
Torrance, CA 90503

         
 
  Re:   Engagement Letter

Dear Mr. Joffe:
     Roth Capital Partners, LLC (“we” or “Roth”) is pleased to act as the
exclusive financial advisor and placement agent for Motorcar Parts of America,
Inc. (“you” or the “Company”) in connection with your proposed private
placement. The terms of our engagement are set forth below. We look forward to
working with you.
     1. The Offering.
     (a) We currently anticipate raising approximately $40 million through a
“PIPE” transaction involving the sale of securities to institutional investors
(the “Offering”). The actual terms of the Offering will depend on market
conditions, and will be subject to negotiation between the Company and Roth and
prospective investors.
     (b) Although we cannot guarantee you that we will be able to raise new
capital, we will conduct the Offering on a best efforts basis.
     (c) In turn, during the term of our engagement, you agree not to use any
other investment banking firm or placement agent to raise capital (including
debt) for you.
     2. Fees and Expenses.
     (a) Concurrently with the closing of the Offering, the Company will pay
Roth a cash fee equal to 7% of the gross proceeds received from the sale of
securities less any fees paid to Roth prior to the closing in connection with
Roth acting as a Dedicated Advisor for Disclosure for the OTCQX.
     (b) In addition, the Company agrees that, whether or not the Offering
closes, it will reimburse Roth upon request for its reasonable and documented
out-of-pocket expenses, including the fees and disbursements of Roth’s legal
counsel, up to an aggregate of $35,000.
     (c) If agreed to in writing by the Company in its sole discretion after the
date hereof and prior to the Closing, then upon the closing of the Offering, the
Company will issue to Roth warrants for the purchase of an amount up to 10% of
the securities issued in the Offering. The Warrants will be exercisable into the
same class of common stock as issued as part of the Offering, have a
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Motorcar Parts of America, Inc.
May 17, 2007
Page 2
strike price equal to $15.00 per share and have a term of five years. The
Warrants will provide for cashless or “net” exercise.
     3. Term of Engagement.
     (a) The term of our engagement will be three months from the date of this
engagement letter; however, either party may terminate our engagement at any
time upon 10 days written notice to the other party. Upon termination, we will
be entitled to collect all fees earned and covered expenses incurred through the
date of termination.
     (b) If the Offering is not consummated during the term, for reasons other
than termination of this engagement by us, and during the six months following
termination of this Agreement, the Company completes an Offering of its
securities to any person which we introduced to the Company or with which we
have had substantive discussions or negotiations during the term on behalf of
the Company (other than through a underwritten public Offering) and, in either
instance, which person is identified on a list of “Contacted Parties” which Roth
will prepare and deliver to the Company within seven days following termination
of this Agreement, you agree to pay us upon the closing a cash fee in the amount
that would otherwise have been payable to Roth had the purchase by such person
occurred during the term.
     4. Offering Memorandum; Representations and Warranties of the Company.
     (a) You hereby authorize Roth to transmit to the prospective investors in
the Offering a private placement memorandum prepared by the Company with such
exhibits and supplements as may from time to time be required or appropriate or,
alternatively as determined by the Company in consultation with Roth, copies of
the Company’s most recent filings with the Securities and Exchange Commission,
together with summary materials prepared by the Company, if we deem them
appropriate (as the case may be, the “Memorandum”). The Company represents and
warrants that the Memorandum (i) will be prepared by the management of the
Company and reviewed and approved by its Board of Directors; and (ii) will not
contain any 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 or
previously made, in light of the circumstances under which they were made, not
misleading. The Company will advise Roth immediately of the occurrence of any
event or any other change known to the Company which results in the Memorandum
containing an untrue statement of a material fact or omitting to state a
material fact required to be stated therein or necessary to make the statements
therein or previously made, in light of the circumstances under which they were
made, not misleading.
24 CORPORATE PLAZA, NEWPORT BEACH, CA 926600 800.678.9147 www.rothcp.com
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Motorcar Parts of America, Inc.
May 17, 2007
Page 3
     (b) You agree that you will enter into subscription, registration rights
and other customary agreements, and that your counsel will supply an opinion
letter on the transaction all of which will be in form and substance reasonably
acceptable to, and addressed to, us and the investors.
     (c) You further agree that we may rely upon, and are a third party
beneficiary of, the representations and warranties, and applicable covenants,
set forth in any agreements with investors in the Offering.
     (d) In conjunction with the filing of a resale registration statement for
investors pursuant to the Registration Rights Agreement, if the Company does not
meet the requirements for S-3 eligibility that existed in October 1992
(essentially, that it have a non-affiliate float of $150 million, or a
non-affiliate float of $100 million and $3 million share annual trading volume,
within 60 days of filing, and that it have been subject to the reporting
requirements of the Securities Exchange Act of 1934 for 3 years, and current in
that reporting for one year), the Company will file with the NASD, via the COBRA
desk filing system, for approval of underwriting compensation under Section 2710
of the rules and regulations of the NASD, obtain from the NASD a standard
clearance letter, and coordinate with the placement agent on filings it will be
required to make upon sales under the registration statement.
     (e) You represent, as of the date hereof, that (i) any contract between the
Company and AutoZone Parts, Inc. and any of its related affiliates (“AutoZone”)
has not been cancelled or otherwise terminated prior to the expiration of the
contract term and AutoZone continues to be a significant customer of the Company
and its subsidiaries (ii) there has not been any meaningful reduction in the
level of Company sales to AutoZone in the last three quarters and, based upon
the Company’s best estimate, it does not anticipate any meaningful reduction in
the future, (iii) AutoZone has not returned, or expressed their intent to
return, other than in the ordinary course of business, a substantial amount of
any of the products, equipment, goods and services purchased from the Company or
any subsidiary, and (iv) to the best of the Company’s knowledge, AutoZone has
not threatened, or indicated its intention, to cancel or otherwise terminate its
relationship with the Company or its subsidiaries or to reduce substantially its
purchase from or sale to the Company or any subsidiary of any products,
equipment, goods or services. You also represent that, to the best of the
Company’s knowledge, neither the Company nor AutoZone (i) has breached, in any
material respect, any agreement between the two parties or (ii) engaged in any
fraudulent conduct with respect to each other.
5. Representations and Warranties of Roth.
     Roth hereby represents, warrants and covenants to, and agrees with, the
Company as follows:
     (a) No General Solicitation. The Placement Agent will not solicit offers
for the Company for the Shares and any Warrants by means of any form of general
solicitation or general advertising in violation of the Securities Act
(including, without limitation, Rule 502(c) of Regulation D thereunder) in
connection with the offering of the Shares and Warrants or in any
24 CORPORATE PLAZA, NEWPORT BEACH, CA 926600 800.678.9147 www.rothcp.com
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Motorcar Parts of America, Inc.
May 17, 2007
Page 4
manner involving a public offering within the meaning of Section 4(2). The
Placement Agent will conduct the Placement in accordance with all federal and
state securities laws applicable to the offering of the Shares and Warrants, and
the Placement Agent will not distribute any written information that has not
been furnished to it, and approved in writing, by the Company; provided that for
the purposes hereof, the Offering documents and the term sheets relating thereto
will be deemed furnished by the Company.
     (b) Limitation on Offerees. Roth will solicit offers for the Company for
the Shares and any Warrants only from persons whom it reasonably believes to be
(i) a QIB or (ii) an “accredited investor.”
     (c) This Agreement has been duly authorized, executed and delivered by Roth
and constitutes a valid and binding obligation of Roth, enforceable against it
in accordance with its terms, subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors’ rights generally and to general principles of equity and except as
rights to indemnity or contribution hereunder may be limited by federal or state
securities laws.
     (d) Roth shall not deliver to any offeree, without the written consent of
the Company, any information concerning the Offering other than the Transaction
Documents and the term sheet relating thereto. Roth shall deliver, or cause to
be delivered, the Transaction Documents to each offeree prior to the sale of any
Shares and Warrants to such offeree.
     (e) Roth is a registered broker dealer in good standing in every state in
which offers and sales of the Shares and Warrants will be made.
     (f) Roth acknowledges that the Company has the right, in its sole
discretion, to reject any Purchaser.
     6. Indemnification, Contribution, and Confidentiality. The Company agrees
to indemnify Roth and its controlling persons, representatives and agents in
accordance with the indemnification provisions set forth in Appendix I, and the
parties agree to the confidentiality provisions of Appendix II, all of which are
incorporated herein by this reference. These provisions will apply regardless of
whether the Offering is consummated.
     7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of California applicable to contracts
executed and to be wholly performed therein without giving effect to its
conflicts of laws principles or rules. The Company and Roth agree that any
dispute concerning this Agreement this Agreement shall be resolved through
binding arbitration before the NASD pursuant to its arbitration rules.
Arbitration will be venued in Los Angeles County.
     8. Announcement of Offering. If the Offering is consummated, Roth may, at
its expense, place an announcement in such newspapers and periodicals as Roth
may desire.
24 CORPORATE PLAZA, NEWPORT BEACH, CA 926600 800.678.9147 www.rothcp.com
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Motorcar Parts of America, Inc.
May 17, 2007
Page 5
     9. Advice to the Board. The Company acknowledges that any advice given by
us to you is solely for benefit and use of the Board of Directors of the Company
and may not be used, reproduced, disseminated, quoted or referred to, without
our prior written consent.
     10. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties and supersedes and cancels any and all prior or
contemporaneous arrangements, understandings and agreements, written or oral,
between them relating to the subject matter hereof.
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24 CORPORATE PLAZA, NEWPORT BEACH, CA 926600 800.678.9147 www.rothcp.com
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Motorcar Parts of America, Inc.
May 17, 2007
Page 6
     We look forward to working with you toward the successful conclusion of
this engagement, and developing a long-term relationship with the Company.

          Very truly yours,    
 
        ROTH CAPITAL PARTNERS, LLC    
 
       
By:
       
 
       
 
  Aaron M. Gurewitz    
 
  Managing Director    
 
        Confirmed and accepted as of
this 18th day of May, 2007:    
 
        MOTORCAR PARTS OF AMERICA, INC.    
 
       
By:
       
 
       
 
  Michael M. Umansky    
 
  Vice President    

24 CORPORATE PLAZA, NEWPORT BEACH, CA 926600 800.678.9147 www.rothcp.com
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Motorcar Parts of America, Inc.
May 17, 2007
Page 7
APPENDIX I
INDEMNIFICATION AND CONTRIBUTION
     The Company agrees to indemnify and hold harmless Roth and its affiliates
(as defined in Rule 405 under the Securities Act of 1933, as amended) and their
respective directors, officers, employees, agents and controlling persons (Roth
and each such person being an “Indemnified Party”) from and against all losses,
claims, damages and liabilities (or actions, including shareholder actions, in
respect thereof), joint or several, to which such Indemnified Party may become
subject under any applicable federal or state law, or otherwise, which are
related to or result from the performance by Roth of the services contemplated
by or the engagement of Roth pursuant to, this Agreement and will promptly
reimburse any Indemnified Party for all reasonable expenses (including
reasonable counsel fees and expenses) as they are incurred in connection with
the investigation of, preparation for or defense arising from any threatened or
pending claim, whether or not such Indemnified Party is a party and whether or
not such claim, action or proceeding is initiated or brought by the Company. The
Company will not be liable to any Indemnified Party under the foregoing
indemnification and reimbursement provisions, (i) for any settlement by an
Indemnified Party effected without its prior written consent (not to be
unreasonably withheld); or (ii) to the extent that any loss, claim, damage or
liability is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted primarily from Roth’s willful misconduct or gross
negligence. The Company also agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company or its security holders or creditors related to or arising out of the
engagement of Roth pursuant to, or the performance by Roth of the services
contemplated by, this Agreement except to the extent that any loss, claim,
damage or liability is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted primarily from Roth’s willful misconduct
or gross negligence.
     Promptly after receipt by an Indemnified Party of notice of any intention
or threat to commence an action, suit or proceeding or notice of the
commencement of any action, suit or proceeding, such Indemnified Party will, if
a claim in respect thereof is to be made against the Company pursuant hereto,
promptly notify the Company in writing of the same. In case any such action is
brought against any Indemnified Party and such Indemnified Party notifies the
Company of the commencement thereof, the Company may elect to assume the defense
thereof, with counsel reasonably satisfactory to such Indemnified Party, and an
Indemnified Party may employ counsel to participate in the defense of any such
action provided, that the employment of such counsel shall be at the Indemnified
Party’s own expense, unless (i) the employment of such counsel has been
authorized in writing by the Company, (ii) the Indemnified Party has reasonably
concluded (based upon advice of counsel to the Indemnified Party) that there may
be legal defenses available to it or other Indemnified Parties that are
different from or in addition to those available to the Company, or that a
conflict or potential conflict exists (based upon advice of counsel to the
Indemnified Party) between the Indemnified Party and the Company that makes it
impossible or inadvisable for counsel to the Indemnifying Party to conduct the
defense of both
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Motorcar Parts of America, Inc.
May 17, 2007
Page 8
the Company and the Indemnified Party (in which case the Company will not have
the right to direct the defense of such action on behalf of the Indemnified
Party), or (iii) the Company has not in fact employed counsel reasonably
satisfactory to the Indemnified Party to assume the defense of such action
within a reasonable time after receiving notice of the action, suit or
proceeding, in each of which cases the reasonable fees, disbursements and other
charges of such counsel will be at the expense of the Company; provided,
further, that in no event shall the Company be required to pay fees and expenses
for more than one firm of attorneys representing Indemnified Parties unless the
defense of one Indemnified Party is unique or separate from that of another
Indemnified Party subject to the same claim or action. Any failure or delay by
an Indemnified Party to give the notice referred to in this paragraph shall not
affect such Indemnified Party’s right to be indemnified hereunder, except to the
extent that such failure or delay causes actual harm to the Company, or
prejudices its ability to defend such action, suit or proceeding on behalf of
such Indemnified Party.
     If the indemnification provided for in this Agreement is for any reason
held unenforceable by an Indemnified Party, the Company agrees to contribute to
the losses, claims, damages and liabilities for which such indemnification is
held unenforceable (i) in such proportion as is appropriate to reflect the
relative benefits to the Company, on the one hand, and Roth on the other hand,
of the Offering as contemplated whether or not the Offering is consummated or,
(ii) if (but only if) the allocation provided for in clause (i) is for any
reason unenforceable, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) but also the relative fault of
the Company, on the one hand and Roth, on the other hand, as well as any other
relevant equitable considerations. The Company agrees that for the purposes of
this paragraph the relative benefits to the Company and Roth of the Offering as
contemplated shall be deemed to be in the same proportion that the total value
received or contemplated to be received by the Company or its shareholders, as
the case may be, as a result of or in connection with the Offering bear to the
fees paid or to be paid to Roth under this Agreement. Notwithstanding the
foregoing, the Company expressly agrees that Roth shall not be required to
contribute any amount in excess of the amount by which fees paid Roth hereunder
(excluding reimbursable expenses), exceeds the amount of any damages which Roth
has otherwise been required to pay.
     The Company agrees that without Roth’s prior written consent, which shall
not be unreasonably withheld, it will not settle, compromise or consent to the
entry of any judgment in any pending or threatened claim, action or proceeding
in respect of which indemnification could be sought under the indemnification
provisions of this Agreement (in which Roth or any other Indemnified Party is an
actual or potential party to such claim, action or proceeding), unless such
settlement, compromise or consent includes an unconditional release of each
Indemnified Party from all liability arising out of such claim, action or
proceeding.
     In the event that an Indemnified Party is requested or required to appear
as a witness in any action brought by or on behalf of or against the Company in
which such Indemnified Party is not named as a defendant, the Company agrees to
promptly reimburse Roth on a monthly basis for all expenses incurred by it in
connection with such Indemnified Party’s appearing and
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Motorcar Parts of America, Inc.
May 17, 2007
Page 9
preparing to appear as such a witness, including, without limitation, the
reasonable fees and disbursements of its legal counsel.
     If multiple claims are brought with respect to at least one of which
indemnification is permitted under applicable law and provided for under this
Agreement, The Company agrees that any judgment or arbitrate award shall be
conclusively deemed to be based on claims as to which indemnification is
permitted and provided for, except to the extent the judgment or arbitrate award
expressly states that it, or any portion thereof, is based solely on a claim as
to which indemnification is not available.
24 CORPORATE PLAZA, NEWPORT BEACH, CA 926600 800.678.9147 www.rothcp.com
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Motorcar Parts of America, Inc.
May 17, 2007
Page 10
APPENDIX II
INFORMATION TO BE SUPPLIED; CONFIDENTIALITY.
     In connection with Roth’s activities on behalf of the Company, the Company
will furnish Roth with all financial and other information regarding the Company
that Roth reasonably believes appropriate to its assignment (all such
information so furnished by the Company, whether furnished before or after the
date of this Agreement, being referred to herein as the “Information”). The
Company will provide Roth with access to the officers, directors, employees,
independent accountants, legal counsel and other advisors and consultants of the
Company. The Company recognizes and agrees that Roth (i) will use and rely
primarily on the Information and information available from generally recognized
public sources in performing the services contemplated by this Agreement without
independently verifying the Information or such other information, (ii) does not
assume responsibility for the accuracy of the Information or such other
information, and (iii) will not make an appraisal of any assets or liabilities
owned or controlled by the Company or its market competitors.
     Roth will maintain the confidentiality of the Information and, unless and
until such information shall have been made publicly available by the Company or
by others without breach of a confidentiality agreement, shall disclose the
Information only as authorized by the Company or as required by law or by order
of a governmental authority or court of competent jurisdiction. In the event
that Roth is legally required to make disclosure of any of the Information, Roth
will give notice to the Company prior to such disclosure, to the extent that
Roth can practically do so.
The foregoing paragraph shall not apply to information that:

  (i)   at the time of disclosure by the Company is, or thereafter becomes,
generally available to the public or within the industries in which the Company
or Roth or its affiliates conduct business, other than as a direct result of a
breach by Roth of its obligations under this Agreement;     (ii)   prior to or
at the time of disclosure by the Company, was already in the possession of, or
conceived by, Roth or any of its affiliates, or could have been developed by
them from information then in their possession, by the application of other
information or techniques in their possession, generally available to the
public, or available to Roth or its affiliates other than from the Company;    
(iii)   at the time of disclosure by the Company or thereafter, is obtained by
Roth or any of its affiliates from a third party who Roth reasonably believes to
be in possession of the information not in violation of any contractual, legal
or fiduciary obligation to the Company with respect to that information; or    
(iv)   is independently developed by Roth or its affiliates.

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Motorcar Parts of America, Inc.
May 17, 2007
Page 11
     Nothing in this Agreement shall be construed to limit the ability of Roth
or its affiliates to pursue, investigate, analyze, invest in, or engage in
investment banking, financial advisory or any other business relationship with
entities other than the Company, notwithstanding that such entities may be
engaged in a business which is similar to or competitive with the business of
the Company, and notwithstanding that such entities may have actual or potential
operations, products, services, plans, ideas, customers or supplies similar or
identical to the Company’s, or may have been identified by the Company as
potential merger or acquisition targets or potential candidates for some other
business combination, cooperation or relationship. The Company expressly
acknowledges and agrees that it does not claim any proprietary interest in the
identity of any other entity in its industry or otherwise, and that the identity
of any such entity is not confidential information.
24 CORPORATE PLAZA, NEWPORT BEACH, CA 926600 800.678.9147 www.rothcp.com
Member SIPC/NASD