Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this “AGREEMENT”), dated as of
December 31, 2008, is entered into by and between MOTORCAR PARTS OF AMERICA,
INC., a New York corporation formerly known as MOTORCAR PARTS & ACCESSORIES,
INC. and currently having an address at 2929 California Street, Torrance,
California 90503 (the “COMPANY”), and Selwyn Joffe, an individual residing at
2687 Cordelia Road, Los Angeles, California 90049 (“EXECUTIVE”).
WITNESSETH:
WHEREAS, the COMPANY and EXECUTIVE have previously entered into an Employment
Agreement dated as of February 14, 2003, which was subsequently amended by that
certain Amendment No. 1 dated as of April 22, 2005, Amendment No. 2 dated as of
October 31, 2006 and Amendment No. 3 dated as of March 27, 2008 (as amended, the
“Original Agreement”), pursuant to which the COMPANY employed EXECUTIVE as its
Chairman of the Board, President and Chief Executive Officer; and
WHEREAS, the COMPANY and EXECUTIVE desire to amend and restate the Original
Agreement and to continue to employ EXECUTIVE as the COMPANY’S Chairman of the
Board, President and Chief Executive officer upon the terms and subject to the
conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1.   EMPLOYMENT. Subject to and upon the terms and conditions contained in this
AGREEMENT, the COMPANY hereby agrees to employ EXECUTIVE and EXECUTIVE agrees to
be employed by the COMPANY, for the period set forth in Paragraph 2 hereof, to
render the services to the COMPANY, its affiliates and/or subsidiaries as
described in Paragraph 3 hereof.   2.   TERM. EXECUTIVE’S term of employment
under this AGREEMENT shall commence on the COMMENCEMENT DATE and shall continue
for a period through and including August 31, 2012 (the “EMPLOYMENT TERM”),
unless extended in writing by both parties or earlier terminated pursuant to the
terms and conditions set forth herein.   3.   DUTIES.

  (a)   EXECUTIVE shall be employed as the COMPANY’S Chairman of the Board,
President and Chief Executive Officer and shall report to the COMPANY’S Board of
Directors. It is agreed that EXECUTIVE shall perform his service in the
COMPANY’S Torrance, California, facilities, or any other facilities mutually
agreeable to the parties.

- 1 -

--------------------------------------------------------------------------------

 

  (b)   EXECUTIVE agrees to abide by all By-Laws and applicable policies of the
Company promulgated from time to time by the Board of Directors of the COMPANY
and its constituent committees (together with its appropriate committees, the
“BOARD OF DIRECTORS”).

4.   EXCLUSIVE SERVICES AND BEST EFFORTS. EXECUTIVE shall devote all of his
working time, attention, best efforts and ability to the service of the COMPANY,
its affiliates and subsidiaries during the term of this AGREEMENT; provided that
the foregoing shall not prohibit EXECUTIVE from serving on the boards of
directors of any other company, whether for-profit or not-for-profit.   5.  
COMPENSATION. As compensation for his services and covenants hereunder, the
COMPANY shall pay EXECUTIVE the following:

  (a)   Base Salary; Benefits. The COMPANY shall pay EXECUTIVE a base salary
(“SALARY”) of Five Hundred Thousand Dollars ($500,000) per year. The EXECUTIVE
shall receive such additional benefits as are usually provided from time to time
to senior executives of the COMPANY.     (b)   Bonus. EXECUTIVE shall
participate in the COMPANY’S Executive Bonus Program as adopted and amended from
time to time by the COMPANY’S Board of Directors.     (c)   Stock Options. As
additional consideration for the services performed by EXECUTIVE, the COMPANY
has granted EXECUTIVE options to purchase shares of the COMPANY’S common stock
and may in the future grant EXECUTIVE additional options (collectively, all
options granted to EXECUTIVE by the COMPANY at any time before or after the date
hereof are referred to herein as the “OPTIONS”). Upon the termination of this
AGREEMENT for any reason other than termination by the COMPANY for Cause or
termination by EXECUTIVE without Good Reason, any OPTIONS which are not fully
vested shall immediately vest and remain exercisable by EXECUTIVE for a period
of two years or, if shorter, until the ten year anniversary of the date of grant
of each such OPTION.     (d)   Certain Transaction Fees. In the event of one or
more “PROPOSED TRANSACTIONS” (as defined in Exhibit A hereto) occurring during
the term of this AGREEMENT, EXECUTIVE shall receive, as additional compensation
with respect to each PROPOSED TRANSACTION, a fee as set forth in Exhibit A
hereto (the “TRANSACTION FEES”).

6.   BUSINESS EXPENSES. EXECUTIVE shall be reimbursed for, and entitled to
advances (subject to repayment to the COMPANY if not actually incurred by
EXECUTIVE) with respect to, only those business expenses incurred by him which
are reasonable and

- 2 -

--------------------------------------------------------------------------------

 

    necessary for EXECUTIVE to perform his duties under this AGREEMENT in
accordance with policies established from time to time by the COMPANY.   7.  
EXECUTIVE BENEFITS.

  (a)   EXECUTIVE shall be entitled to four weeks paid vacation each year during
the EMPLOYMENT TERM.     (b)   The COMPANY may withhold from any benefits
payable to EXECUTIVE all federal, state, local and other taxes and amounts as
shall be required pursuant to law, rule or regulation. All of the benefits to
which EXECUTIVE may be entitled which are not specifically described herein may
be changed from time to time or withdrawn at any time in the sole discretion of
the COMPANY, so long as any such change or withdrawal are applicable to all of
the relevant COMPANY executives and to the relevant executives of any company
which may control the COMPANY.     (c)   During the EMPLOYMENT TERM the COMPANY
shall provide to EXECUTIVE an automobile allowance in the amount of Fifteen
Hundred Dollars ($1500.00) per month, payable monthly. In addition, all costs of
operating the automobile, including fuel, oil, insurance, repairs, maintenance
and other expenses, shall be the responsibility of the COMPANY.     (d)   During
the EMPLOYMENT TERM, if EXECUTIVE does not elect medical insurance coverage for
himself and his eligible family through the COMPANY, he shall receive as an
allowance for such medical insurance an amount equal to the then cost which
would be incurred by the COMPANY in supplying such coverage for EXECUTIVE and
his eligible family.

8.   DEATH AND DISABILITY.

  (a)   The EMPLOYMENT TERM shall terminate on the date of EXECUTIVE’S death, in
which event EXECUTIVE’S accrued SALARY, BONUS and TRANSACTION FEES, if any,
reimbursable expenses and benefits, including accrued but unused vacation time,
owing to EXECUTIVE through the date of EXECUTIVE’S death, shall be paid to the
EXECUTIVE’S estate, and EXECUTIVE’S estate shall assume EXECUTIVE’S rights under
the 1994 Stock Option Plan and the related rights under this AGREEMENT.
EXECUTIVE’S estate will not be entitled to any other compensation upon
termination of this AGREEMENT pursuant to this Paragraph 8(a).     (b)   If,
during the EMPLOYMENT TERM, in the opinion of a duly licensed physician selected
by COMPANY and reasonably acceptable to the EXECUTIVE, EXECUTIVE, because of
physical or mental illness or

- 3 -

--------------------------------------------------------------------------------

 

      incapacity, shall become substantially unable to perform the duties and
services required of him under this AGREEMENT for a period of 180 consecutive
days, the COMPANY may, upon at least ten days’ prior written notice given at any
time after the expiration of such 180-day period to EXECUTIVE of its intention
to do so, terminate this AGREEMENT as of such date as may be set forth in the
notice. In case of such termination, EXECUTIVE shall be entitled to receive his
accrued SALARY, BONUS and TRANSACTION FEES, if any, reimbursable expenses and
benefits owing to EXECUTIVE through the date of termination. In addition,
EXECUTIVE shall be entitled to receive the benefits payable pursuant to the
POLICY described in Paragraph 8(c) below. EXECUTIVE will not be entitled to any
other compensation upon termination of this AGREEMENT pursuant to this Paragraph
8(b).     (c)   During the EMPLOYMENT TERM, the COMPANY will pay EXECUTIVE
$24,000 per annum to be used by EXECUTIVE to purchase disability insurance for
EXECUTIVE’S benefit.

9.   TERMINATION.

  (a)   The COMPANY may terminate the employment of EXECUTIVE for Cause (as
hereinafter defined); provided, however, that such termination shall only become
effective if the COMPANY (acting upon duly adopted resolutions of the Board)
shall first give EXECUTIVE written notice of the material breach or default,
which notice shall (i) identify in reasonable detail the manner in which the
COMPANY believes that EXECUTIVE has breached or defaulted under this AGREEMENT
or in the performance of his duties and (ii) indicate the steps required to cure
such breach or default, and EXECUTIVE shall fail within 20 business days after
receipt of such notice to substantially remedy or correct the same. Upon any
such termination, the COMPANY shall be released from any and all further
obligations under this AGREEMENT, except that the COMPANY shall be obligated to
pay EXECUTIVE his accrued SALARY, BONUS and TRANSACTION FEES, if any,
reimbursable expenses and benefits owing to EXECUTIVE through the day on which
EXECUTIVE is terminated. EXECUTIVE will not be entitled to any other
compensation upon termination of this AGREEMENT pursuant to this Paragraph 9(a).
    (b)   As used in this AGREEMENT, the term “Cause” shall mean: (i) the
willful failure of EXECUTIVE to perform his duties pursuant to Paragraph 3
hereof, which failure is not cured by EXECUTIVE as described in subparagraph (a)
above, or (ii) the commission by EXECUTIVE of an act involving moral turpitude,
dishonesty, theft or fraudulent business conduct in connection with EXECUTIVE’S
performance of his duties for COMPANY.

- 4 -

--------------------------------------------------------------------------------

 

  (c)   EXECUTIVE may voluntarily terminate this AGREEMENT for Good Reason. For
purposes of this AGREEMENT, “Good Reason” shall mean: (i) any reduction of
EXECUTIVE’S title, status, authority, responsibilities or compensation;
(ii) relocation of EXECUTIVE’S principal place of work by a distance of 50 miles
or more; or (iii) the COMPANY’S breach of this AGREEMENT. Following the
occurrence of any Good Reason, EXECUTIVE may voluntarily terminate this
AGREEMENT if the circumstances constituting the Good Reason have not been cured
within 30 days after EXECUTIVE provides written notice thereof to the COMPANY.  
  (d)   If EXECUTIVE shall voluntarily terminate this AGREEMENT pursuant to the
provisions of Paragraph 9(c) or if the COMPANY shall terminate EXECUTIVE without
Cause, then the COMPANY shall pay EXECUTIVE’S SALARY (at the annual rate in
effect immediately prior to the Termination Date), EXECUTIVE’S average bonus
earned for the two years immediately prior to the year in which this AGREEMENT
is so terminated or, if such termination occurs within the first three months of
the COMPANY’S fiscal year, for the second and third years preceding the year in
which such termination occurs (in either case, payable by no later than
January 31 of each year), and all benefits identified in Paragraphs 7 and 8(c)
(including without limitation EXECUTIVE’S automobile allowance) through the
later of that date which is two years after the Termination Date or August 31,
2012. The COMPANY shall also pay EXECUTIVE any accrued TRANSACTION FEES and any
reimbursable expenses owed to EXECUTIVE through the Termination Date. For the
purposes of the foregoing payments, the foregoing annual SALARY rate shall be
the rate paid to EXECUTIVE without regard to any purported reduction or
attempted reduction of such rate by the COMPANY. EXECUTIVE shall not be required
to mitigate the amount of any payment provided for in this Paragraph 9 by
seeking employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Paragraph 9 be reduced by any compensation earned by
EXECUTIVE as the result of consultancy with or employment by another entity, by
retirement benefits, by offset against any amount claimed to be owed by
EXECUTIVE to the COMPANY, or otherwise.     (e)   For purposes of this
AGREEMENT, a “Change in Control” shall have occurred if:

  (i)   any “person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than the
COMPANY, any trustee or other fiduciary holding securities under an employee
benefit plan of the COMPANY, any corporation owned, directly or indirectly, by
the stockholders of the COMPANY in substantially the same proportions as their
ownership of stock of the COMPANY, Mel

- 5 -

--------------------------------------------------------------------------------

 

      Marks, Richard Marks or any affiliate or family relative of either of
them, or any trust for the benefit thereof), individually or as a group, is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the COMPANY representing more
than 50% of the combined voting power of the COMPANY’S then outstanding
securities;     (ii)   the shareholders of the COMPANY approve a merger or
consolidation of the COMPANY with any other corporation, other than (A) a merger
or a consolidation which would result in the voting securities of the COMPANY
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the COMPANY or such surviving entity outstanding immediately after
such merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the COMPANY (or similar transaction) in which no
“person” (as hereinabove defined) acquires more than 50% of the combined voting
power of the COMPANY’S then outstanding securities; or     (iii)   the
shareholders of the COMPANY approve an agreement for the sale or disposition by
the COMPANY of all or substantially all of the COMPANY’S assets.

  (f)   If a Change in Control of the COMPANY shall occur, then EXECUTIVE shall
be entitled to receive a “Sale Bonus” equal to the sum of (i) two times
EXECUTIVE’S SALARY (at the annual rate in effect immediately prior to the date
of the Change in Control), plus (ii) two times EXECUTIVE’S average bonus earned
for the two years immediately prior to the year in which the Change in Control
occurs. For the purposes of the foregoing payments, the foregoing annual SALARY
rate shall be the rate paid to EXECUTIVE without regard to any purported
reduction or attempted reduction of such rate by the COMPANY. The Sale Bonus
shall be paid to EXECUTIVE in a lump sum on the closing date of the Change in
Control transaction.     (g)   If a Change in Control shall occur, then
EXECUTIVE shall have the right to voluntarily terminate this AGREEMENT with
effect on or after the one year anniversary of the Change in Control upon the
giving of at least 90 days’ prior written notice to the COMPANY delivered at any
time. In such event, the COMPANY shall pay EXECUTIVE’S SALARY (at the annual
rate in effect immediately prior to the Termination Date), EXECUTIVE’S average
bonus earned for the two years immediately prior to the year in which EXECUTIVE
terminates this AGREEMENT (payable by no later than January 31 of each year),
and all benefits

- 6 -

--------------------------------------------------------------------------------

 

      identified in Paragraphs 7 and 8(c) (including without limitation
EXECUTIVE’S automobile allowance) through that date which is one year after the
Termination Date. The COMPANY shall also pay EXECUTIVE any accrued TRANSACTION
FEES and any reimbursable expenses owed to EXECUTIVE through the Termination
Date. EXECUTIVE shall not be required to mitigate the amount of any payment
provided for in this Paragraph 9 by seeking employment or otherwise, nor shall
the amount of any payment or benefit provided for in this Paragraph 9 be reduced
by any compensation earned by EXECUTIVE as the result of consultancy with or
employment by another entity, by retirement benefits, by offset against any
amount claimed to be owed by EXECUTIVE to the COMPANY, or otherwise.     (h)  
In the event that the benefits provided for in this Agreement or otherwise
payable to EXECUTIVE constitute “parachute payments” within the meaning of
Section 280G of the Internal Revenue Code (the “Code”) and will be subject to
the excise tax imposed by Section 4999 of the Code, then EXECUTIVE shall
receive: (i) a payment from the COMPANY sufficient to pay the excise tax, if
any, incurred with respect to the first Three Million Dollars ($3,000,000) of
such parachute payments, and (ii) an additional payment from the COMPANY (the
“gross-up”) sufficient to pay the excise tax and federal and state income taxes
arising from the payments by the COMPANY to EXECUTIVE pursuant to this sentence.
By way of example, if the aggregate amount of “parachute payments” (within the
meaning of Section 280G of the Code) paid to EXECUTIVE is Three Million Five
Hundred Thousand Dollars ($3,500,000) and EXECUTIVE’S “base amount” (within the
meaning of Section 280G of the Code) is Seven Hundred Fifty Thousand Dollars
($750,000), then the COMPANY shall pay the excise tax and gross-up on Two
Million Two Hundred Fifty Thousand Dollars ($3,000,000 — $750,000 = $2,250,000)
since no excise tax would be payable on the first Seven Hundred Fifty Thousand
Dollars ($750,000) and EXECUTIVE would be responsible to pay the excise tax on
the Five Hundred Thousand Dollars ($500,000) in excess of Three Million Dollars
($3,000,000). The determination of EXECUTIVE’S excise tax liability and the
amount, if any, required to be paid to EXECUTIVE under this Paragraph 9(h) shall
be made in writing by the COMPANY’S independent auditors (the “Accountants”).
For purposes of making the calculations required by this Paragraph 9(h), the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. The COMPANY
and EXECUTIVE shall furnish to the Accountants such information and documents as
the Accountants may reasonably request in order to make a determination under
this Paragraph. The COMPANY shall bear all costs the Accountants may reasonably
incur in connection with any calculations contemplated by this Paragraph 9(h).

- 7 -

--------------------------------------------------------------------------------

 

  (i)   Section 409A Compliance.

  (i)   To the fullest extent applicable, amounts and other benefits payable
under this AGREEMENT are intended to be exempt from the definition of
“nonqualified deferred compensation” under Section 409A of the Code
(“Section 409A”) in accordance with one or more of the exemptions available
under the final Treasury regulations promulgated under Section 409A and, to the
extent that any such amount or benefit is or becomes subject to Section 409A due
to a failure to qualify for an exemption from the definition of nonqualified
deferred compensation in accordance with such final Treasury regulations, this
AGREEMENT is intended to comply with the applicable requirements of Section 409A
with respect to such amounts or benefits. This AGREEMENT shall be interpreted
and administered to the extent possible in a manner consistent with the
foregoing statement of intent. In this regard, notwithstanding anything in this
AGREEMENT to the contrary, the following provisions shall apply.     (ii)   To
the extent that any bonus becomes payable pursuant to Paragraph 5(b), then such
bonus shall be paid no later than two and one-half months after the end of the
COMPANY’S taxable year in which the bonus was earned (or if later, two and
one-half months after the end of the calendar year in which the bonus was
earned). To the extent that any taxable reimbursement of expenses or benefits
becomes payable pursuant to Paragraphs 6, 7, 8(c), 24 or any other provision of
this AGREEMENT, then such taxable reimbursements shall be paid no later than
March 15 of the calendar year following the calendar year in which the
reimbursed costs were incurred.     (iii)   In the event EXECUTIVE becomes
entitled to reimbursement of taxes and a gross-up payment under Paragraph 9(h),
such reimbursement and gross-up payment shall in no event be made later than
December 31 of the year following the year during which the related taxes are
remitted to the Internal Revenue Service, and all payments to the Accountants
pursuant to Paragraph 9(h) shall be made no later than the end of the calendar
year following the calendar year in which the related work is performed by the
Accountants.     (iv)   For purposes of clarification, in the event EXECUTIVE
becomes entitled to receive continued payment of EXECUTIVE’S SALARY and average
bonus following the Termination Date pursuant to Paragraphs 9(d) or (g), the
SALARY shall be payable in accordance with the COMPANY’S normal payroll
procedures through the applicable date specified in Paragraphs 9(d) or (g), and

- 8 -

--------------------------------------------------------------------------------

 

      the average bonus shall be paid in each month of January occurring through
the applicable date specified in Paragraphs 9(d) or (g).     (v)   The
Termination Date for purposes of determining the date that any payment or
benefit which is treated as nonqualified deferred compensation under
Section 409A is to be paid or provided (or in determining whether an exemption
to such treatment applies), and for purposes of determining whether EXECUTIVE is
a Specified Employee (as defined below) on the Termination Date, shall be the
date on which EXECUTIVE has incurred a “separation from service” within the
meaning of Treasury Regulation Section 1.409A-1(h), or in subsequent IRS
guidance under Section 409A.     (vi)   If EXECUTIVE is a “specified employee”
within the meaning of Section 409A(a)(2)(B)(i) of the Code as determined by the
Compensation Committee (“Specified Employee”) on the Termination Date and, due
to the failure of an amount or other benefit that is payable under this
AGREEMENT on account of EXECUTIVE’S “separation from service,” within the
meaning of Section 409A(a)(2)(A)(i) of the Code (other than a separation from
service as a result of EXECUTIVE’S death), to qualify for any of the exemptions
from the definition of nonqualified deferred compensation available under
Section 1.409A-1(b) of the Treasury Regulations, the COMPANY reasonably
determines that such amount or other benefit constitutes nonqualified deferred
compensation that will subject EXECUTIVE to “additional tax” under
Section 409A(a)(1)(B) of the Code (together with any interest or penalties
imposed with respect to, or in connection with, such tax, a “409A Tax”) with
respect to the payment of such amount or benefit if paid at the time specified
in the AGREEMENT, then notwithstanding any contrary provision of this AGREEMENT
(including the other subparagraphs of this Paragraph 9(i)), the payment thereof
shall be postponed to the first business day of the seventh month following the
Termination Date or, if earlier, the date of EXECUTIVE’S death (the “Delayed
Payment Date”). In the event that this subparagraph (vi) requires a delay of any
payment, such payment shall be accumulated and paid in a single lump sum on the
Delayed Payment Date together with interest for the period of delay, compounded
monthly, equal to the prime lending rate then used by CitiBank, N.A., in New
York City and in effect as of the date the payment would otherwise have been
provided and any remaining payments and benefits due under the AGREEMENT shall
be paid in accordance with the normal payment dates specified for them herein.
In the event that this subparagraph (vi) requires a delay in the provision of
any in-kind benefit, then continuation of such benefit during the delay period
is conditioned on pre-payment by EXECUTIVE to the COMPANY

- 9 -

--------------------------------------------------------------------------------

 

      of the full taxable value of the benefit, and the COMPANY shall repay
EXECUTIVE for the payments made by EXECUTIVE pursuant to the terms of this
sentence on the Delayed Payment Date.     (vii)   Any series of payments
(including in-kind benefits) provided under this AGREEMENT shall for all
purposes of Section 409A be treated as a series of separate payments and not as
a single payment.     (viii)   The COMPANY and EXECUTIVE agree to cooperate and
work together to avoid the imposition of a 409A Tax, and may take such other
mutually agreeable actions at such times and in such manners as are permitted
under Section 409A.

10.   DISCLOSURE OF INFORMATION AND RESTRICTIVE COVENANT. EXECUTIVE acknowledges
that, by his employment, he has been and will be in a confidential relationship
with the COMPANY and will have access to confidential information and trade
secrets of the COMPANY, its subsidiaries and affiliates. Confidential
information and trade secrets include, but are not limited to, customer,
supplier, and client lists, marketing, distribution and sales strategies and
procedures, operational and equipment techniques, business plans and system,
quality control procedures and systems, special projects and technological
research, including projects, research and reports for any entity or client or
any project, research, report or the like concerning sales or manufacturing or
new technology, EXECUTIVE compensation plans and any other information relating
thereto, and any other records, files, drawings, inventions, discoveries,
applications, processes, data, and information concerning the business of the
COMPANY which are not in the public domain. EXECUTIVE agrees that in
consideration of the execution of this AGREEMENT by the COMPANY:

  (a)   EXECUTIVE will not, during the term of this AGREEMENT or at any time
thereafter, use, or disclose to any third party, trade secrets or confidential
information of the COMPANY, including but not limited to, confidential
information or trade secrets belonging or relating to the COMPANY, its
subsidiaries, affiliates, customers and clients or proprietary processes or
procedures of the COMPANY, its subsidiaries, affiliates, customers and clients.
Proprietary processes and procedures shall include, but shall not be limited to,
all information which is known or intended to be known only to executives of the
COMPANY or others in a confidential relationship with the COMPANY or its
respective subsidiaries and affiliates which relates to business matters.    
(b)   EXECUTIVE will not, during the term of this AGREEMENT, directly or
indirectly, under any circumstance other than at the direction and for the
benefit of the COMPANY, engage in or participate in any business activity,
including, but not limit to, acting as a director, franchiser or franchisee,
proprietor, syndicate member, shareholder or creditor or with a

- 10 -

--------------------------------------------------------------------------------

 

      person having any other relationship with any other business, company,
firm occupation or business activity, in any geographic area within the United
States that is, directly or indirectly, competitive with any business completed
by the COMPANY or any of its subsidiaries or affiliates during the term of this
AGREEMENT. Should EXECUTIVE own 5% or less of the issued and outstanding shares
of a class of securities of a corporation the securities of which are traded on
a national securities exchange or in the over-the-counter market, such ownership
shall not cause EXECUTIVE to be deemed a shareholder under this Paragraph 10(b).
    (c)   EXECUTIVE will not, during the term of this AGREEMENT, on his behalf
or on behalf of any other business enterprise, directly or indirectly, under any
circumstance other than at the direction and for the benefit of the COMPANY,
solicit or induce any creditor, customer, supplier, officer, EXECUTIVE or agent
of the COMPANY or any of its subsidiaries or affiliates to sever its
relationship with or leave the employ of any such entities.     (d)   This
Paragraph 10 and Paragraphs 11, 12 and 13 hereof shall survive the expiration or
termination of this AGREEMENT for any reason.     (e)   It is expressly agreed
by EXECUTIVE that the nature and scope of each of the provisions set forth above
in this Paragraph 10 are reasonable and necessary. If, for any reason, any
aspect of the above provisions as it applies to EXECUTIVE is determined by a
court of competent jurisdiction to be unreasonable, or unenforceable, the
provision shall only be modified to the minimum extent required to make the
provisions reasonable and/or enforceable, as the case may be. EXECUTIVE
acknowledges and agrees that his services are of a unique character and
expressly grants to the COMPANY or any subsidiary, successor or assignee of the
COMPANY, the right to enforce the provisions above through the use of all
remedies available at law or in equity, including, but not limited to,
injunctive relief.

11.   COMPANY PROPERTY.

  (a)   Any patents, inventions, discoveries, applications or process, designs,
devised, planned, applied, created, discovered or invented by EXECUTIVE in the
course of EXECUTIVE’S employment under this AGREEMENT and which pertain to any
aspect of the COMPANY’S or its respective subsidiaries’ or affiliates’ business
shall be the sole and absolute property of the COMPANY, and EXECUTIVE shall make
prompt report thereof to the COMPANY and promptly execute any and all documents
reasonably requested to assure the COMPANY the full and complete ownership
thereof.     (b)   All records, files, lists, including computer generated
lists, drawings, documents, equipment and similar items relating to the
COMPANY’S

- 11 -

--------------------------------------------------------------------------------

 

      business which EXECUTIVE shall prepare or receive from the COMPANY shall
remain the COMPANY’S sole and exclusive property. Upon termination of this
AGREEMENT, EXECUTIVE shall promptly return to the COMPANY all property of the
COMPANY in his possession. EXECUTIVE further represents that he will not copy or
cause to be copied, print out or cause to be printed out any software, documents
or other materials originating with or belonging to the COMPANY. EXECUTIVE
additionally represents that, upon termination of his employment with the
COMPANY, he will not retain in his possession any such software, documents or
other materials.

12.   REMEDY. It is mutually understood and agreed that EXECUTIVE’S services are
special, unique, unusual, extraordinary and of an intellectual character giving
them a peculiar value, the loss of which cannot be reasonably or adequately
compensated in damages in an action at law. Accordingly, in the event of any
breach of this AGREEMENT by EXECUTIVE, including but not limited to, the breach
of the non-disclosure, non-solicitation and non-compete clauses of Paragraph 10
hereof, the COMPANY shall be entitled to equitable relief by way of injunction
or otherwise in addition to damages the COMPANY may be entitled to recover.  
13.   REPRESENTATIONS AND WARRANTIES OF EXECUTIVE. In order to induce the
COMPANY to enter into this AGREEMENT, EXECUTIVE hereby represents and warrants
to the COMPANY as follows: (i) EXECUTIVE hereby has the legal capacity and
unrestricted right to execute and deliver this AGREEMENT and to perform all of
his obligations hereunder; (ii) the execution and delivery of this AGREEMENT by
EXECUTIVE and the performance of his obligations hereunder will not will not
violate or be in conflict with any fiduciary or other duty, instrument,
agreement, document, arrangement or other understanding to which EXECUTIVE is a
party or by which he is or may be bound or subject; and (iii) EXECUTIVE is not a
party to any instrument, agreement, document, arrangement or other understanding
with any person (other than the COMPANY) requiring or restricting the use or
disclosure of any confidential information or the provision of any employment,
consulting or other services, except any confidentiality agreements unrelated to
the COMPANY’S industry and having no relationship or impact of any kind
whatsoever with respect to this AGREEMENT and the transactions contemplated
hereby.   14.   NOTICES. All notices given hereunder shall be in writing and
shall be deemed effectively given when hand-delivered or mailed, if sent by
registered or certified mail, return receipt requested, addressed to EXECUTIVE
at his address set forth on the first page of this AGREEMENT or to the COMPANY
at its address set forth on the first page of this AGREEMENT or to such changed
address as may be properly noticed hereunder.   15.   ENTIRE AGREEMENT. This
AGREEMENT constitutes the entire understanding of the parties with respect to
its subject matter and no change, alteration or modification hereof may be made
except in writing signed by the parties hereto. Any prior or other agreements,
promises, negotiations or representations not expressly set forth in this
AGREEMENT are of no force or effect.

- 12 -

--------------------------------------------------------------------------------

 

16.   SEVERABILITY. If any provision of the Agreement shall be unenforceable
under any applicable law, then notwithstanding such unenforceability, the
remainder of this AGREEMENT shall continue in full force and effect.   17.  
WAIVERS, MODIFICATIONS. No amendment, modification or waiver of any provision of
this AGREEMENT shall be effective unless the same shall be in writing and signed
by each of the parties hereto, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.   18.   INDEMNIFICATION. COMPANY shall indemnify EXECUTIVE against any
and all claims of third parties arising out of his earlier services to the
COMPANY and out of the performance of his duties pursuant to this AGREEMENT to
the fullest extent permitted by law.   19.   ASSIGNMENT. Neither this AGREEMENT,
nor any of EXECUTIVE’S rights, powers, duties or obligation hereunder, may be
assigned by EXECUTIVE. This AGREEMENT shall be binding upon and inure to the
benefit of EXECUTIVE and his heirs and legal representatives and the COMPANY and
its successors and assigns.   20.   APPLICABLE LAW. This AGREEMENT shall be
deemed to have been made, drafted, negotiated and the transactions contemplated
hereby consummated and fully performed in the State of California, without
regard to the conflicts of law rules thereof. Nothing contained in this
AGREEMENT shall be construed so as to require the commission of any act contrary
to law, and whenever there is any conflict between any provision of this
AGREEMENT and any statue, law, ordinance, order or regulation, contrary to which
the parties hereto have no legal right to contract, the latter shall prevail,
but in such event any provision of this AGREEMENT so affected shall be curtailed
and limited only to the extent necessary to bring it within applicable legal
requirements.   21.   ARBITRATION; JURISDICTION AND VENUE; PREVAILING PARTY. All
disputes or controversies between COMPANY and EXECUTIVE arising out of, in
connection with or relating to this AGREEMENT shall be exclusively heard,
settled and determined by arbitration before a retired Federal or California
judge to be held in the City of Los Angeles, County of Los Angeles. The
arbitration shall be administered by JAMS pursuant to its Comprehensive
Arbitration Rules and Procedures. The parties also agree that judgment may be
entered on the arbitrator’s award by any court having jurisdiction thereof and
the parties consent to the jurisdiction of any court located in the City of Los
Angeles, County of Los Angeles, for this purpose. The arbitrator shall allocate
all of the costs of the arbitration, including the fees of the arbitrator and
the reasonable attorneys’ fees and expenses of the prevailing party, against the
party who did not prevail.   22.   FULL UNDERSTANDING. EXECUTIVE represents and
agrees that he fully understands his rights to discuss all aspects of this
AGREEMENT with his private attorney, that to the extent, if any, that he
desires, he availed himself of this right, that he has carefully read and fully
understands all of the provisions of this AGREEMENT, that he is competent to
execute this AGREEMENT, that his agreement to execute the Agreement has not been
obtained by any duress and that he freely and voluntarily enters

- 13 -

--------------------------------------------------------------------------------

 

    into it, and that he has read this document in its entirety and fully
understands the meaning, intent and consequences of this document.   23.  
COUNTERPARTS. This AGREEMENT may be executed in any number of counterparts, each
of which shall be deemed an original and all of which taken together shall
constitute one and the same agreement.   24.   LEGAL REPRESENTATION AND LEGAL
EXPENSES. The parties hereto acknowledge that each has been represented by
independent counsel of such party’s own choice throughout all of the
negotiations which preceded the execution of this AGREEMENT and in connection
with the preparation and execution of this AGREEMENT or has had the opportunity
to do so and has not availed himself of it. The COMPANY shall reimburse
EXECUTIVE for all reasonable legal fees and disbursements incurred by EXECUTIVE
in connection with the negotiation, preparation and execution of this AGREEMENT.

[SIGNATURE PAGE FOLLOWS]

- 14 -

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the parties have executed this AGREEMENT as of the date
first above written.

            THE COMPANY:

MOTORCAR PARTS OF AMERICA, INC.
      By:   /s/ Michael M. Umansky        Michael M. Umansky        Vice
President, General Counsel & Secretary       
 
EXECUTIVE:    
 
          /s/ Selwyn Joffe   
 
 
SELWYN JOFFE  

- 15 -

--------------------------------------------------------------------------------

 

EXHIBIT A
As part of EXECUTIVE’S obligations to the COMPANY, EXECUTIVE will identify
prospective buyers and sellers who may be interested in acquiring or selling
businesses or lines of businesses upon terms and conditions and in a form
satisfactory to COMPANY (including any transaction resulting in a change of
control, and without regard to form, sometimes described herein as a “PROPOSED
TRANSACTION”).
In the event of a closing of any PROPOSED TRANSACTION(s) at any time during the
term of this AGREEMENT, EXECUTIVE shall be entitled to a fee as provided in this
Paragraph. In any such event, the COMPANY shall pay EXECUTIVE a transaction fee
upon the closing of a PROPOSED TRANSACTION in an amount (the “TRANSACTION FEE”)
equal to 1% of the “total consideration.” The “total consideration” shall equal
(a) the sum of all cash consideration paid by the acquirer plus all Non-Cash
Consideration (as defined below) received as consideration for the transaction,
including any contingent payments of cash or securities and the aggregate amount
of any dividends (other than normal quarterly or annual cash dividends) or other
distributions declared by the acquired entity in connection with a PROPOSED
TRANSACTION, reduced by (b) any cash payments or any Non-Cash Consideration
subsequently returned to the acquirer pursuant to the agreement (the “Purchase
Agreement”) out of an escrow account, through an offset against an earn-out
amount or through another holdback arrangement, regardless of the reason for
such return. “Non-Cash Consideration” shall have the following meaning:
(i) publicly traded securities shall be valued at the average of their closing
prices (as reported in The Wall Street Journal), for the five trading days
immediately prior to closing of the transaction between COMPANY and the other
party and (ii) any other non-cash consideration shall be valued at the fair
market value thereof as determined in good faith by the Board of Directors of
COMPANY. Debt assumed by the acquirer shall not constitute consideration or
Non-Cash Consideration for purposes of calculating the TRANSACTION FEE.
Subject to the terms and conditions of this paragraph, the TRANSACTION FEE shall
be deemed earned and payable upon receipt of the total consideration at the
closing with respect to a PROPOSED TRANSACTION and, with respect to contingent
or deferred payments, whether pursuant to promissory notes or other securities,
if any, from time to time, only upon the receipt thereof by the seller or holder
of its equity interests. If for any reason whatsoever, including, without
limitation, the act, omission, negligence or willful default of any party,
including the COMPANY, a PROPOSED TRANSACTION is not consummated, then EXECUTIVE
shall not be entitled to any TRANSACTION FEE. The TRANSACTION FEE shall, at
COMPANY’S sole option, be payable in kind, depending upon the form of
consideration paid by the acquirer, in the same proportions of cash and
securities as paid by the acquirer. In the event that the Purchase Agreement
provides that all or any part of the total consideration paid shall be deposited
into an escrow account at closing (the “ESCROWED PORTION”), then the amount of
the TRANSACTION FEE proportional to the ESCROWED PORTION shall not be payable
until the ESCROWED PORTION is released. If the ESCROWED PORTION is released in
installments, then a portion of EXECUTIVE’S TRANSACTION FEE will be payable in
proportion to each installment released and EXECUTIVE shall not be entitled to
receive any amount with respect to any ESCROWED PORTION which is returned to the
acquirer. However, in any instance where any cash or securities which have
previously been distributed to
EXHIBIT A-1

 

--------------------------------------------------------------------------------

 

the seller or holder of its equity interests are required to be returned to the
acquirer for any reason, EXECUTIVE shall not be required to return any portion
of the TRANSACTION FEE. EXECUTIVE hereby agrees that any securities received by
him as part of the TRANSACTION FEE hereunder shall be acquired and held subject
to the same restrictions, if any, applicable to the securities issued by the
acquirer or any affiliate thereof and that securities delivered to EXECUTIVE may
bear an appropriate legend with respect to any such restrictions.
EXHIBIT A-2