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

Exhibit 10.6
 
SECOND AMENDMENT TO FINANCING AGREEMENT

SECOND AMENDMENT, dated as of May 24, 2012 (this "Second Amendment"), to the
Financing Agreement, dated as of January 18, 2012 (as amended by First Amendment
to Financing Agreement, dated as of March 18, 2012, and as further amended,
restated, supplemented, modified or otherwise changed from time to time, the
"Financing Agreement"), by and among Motorcar Parts of America, Inc., a New York
corporation (the "Borrower"), the lenders from time to time party thereto (each
a "Lender" and collectively, the "Lenders"), Cerberus Business Finance, LLC, a
Delaware limited liability company ("Cerberus"), as collateral agent for the
Lenders (in such capacity, together with its successors and assigns in such
capacity, the "Collateral Agent"), and PNC Bank, National Association ("PNC"),
as administrative agent for the Lenders (in such capacity, together with its
successors and assigns in such capacity, the "Administrative Agent" and together
with the Collateral Agent, each an "Agent" and collectively, the "Agents").
 
WHEREAS, the Borrower, the Agents and the Lenders wish to amend certain terms
and provisions of the Financing Agreement as hereafter set forth.
 
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the parties hereto hereby agree as follows:

1.             Defined Terms.  Any capitalized term used herein and not defined
shall have the meaning assigned to it in the Financing Agreement.

2.             Amendments.

(a)           Recitals.  The recitals of the Financing Agreement are hereby
amended and restated in its entirety to read as follows:

"The Borrower has asked the Lenders to extend credit to the Borrower consisting
of (a) one or more term loans in the aggregate principal amount of $85,000,000
and (b) a revolving credit facility in an aggregate principal amount not to
exceed $20,000,000 at any time outstanding, which will include a subfacility for
the issuance of letters of credit.  The proceeds of the term loans and the loans
made under the revolving credit facility shall be used (i) to refinance existing
indebtedness of the Borrower, (ii) to fund general working capital purposes of
the Borrower and for other general corporate purposes and (iii) to pay fees and
expenses related to this Agreement.  The letters of credit will be used for
general working capital purposes.  The Lenders are severally, and not jointly,
willing to extend such credit to the Borrower subject to the terms and
conditions hereinafter set forth.
 
 
 

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

 
 
In consideration of the premises and the covenants and agreements contained
herein, the parties hereto agree as follows:"

(b)           New Definitions.  Section 1.01 of the Financing Agreement is
hereby amended by adding the following definitions, in appropriate alphabetical
order:

""Additional Term Loan Commitment" means, with respect to each Lender, the
commitment of such Lender to make a Term Loan to the Borrower on the Second
Amendment Effective Date in the amount set forth in Schedule 1.01(A) hereto or
in the Assignment and Acceptance pursuant to which such Lender became a Lender
under this Agreement, as the same may be terminated or reduced from time to time
in accordance with the terms of this Agreement."

""Existing Term Loan Indebtedness" has the meaning specified therefor in Section
2.01(a)(iv)."

""Initial Term Loan Commitment" means, with respect to each Lender, the
commitment of such Lender to make the Term Loan to the Borrower on the Effective
Date (or the applicable assignment date) in the amount set forth in Schedule
1.01(A) hereto or in the Assignment and Acceptance pursuant to which such Lender
became a Lender under this Agreement, as the same may be terminated or reduced
from time to time in accordance with the terms of this Agreement."
 
""Second Amendment" means the Second Amendment to this Agreement, dated as of
May __, 2012, among the Borrower, the Agents and the Lenders."
 
""Second Amendment Effective Date" means the date on which the Second Amendment
shall become effective in accordance with its terms."
 
""Total Additional Term Loan Commitment" means the sum of the amounts of the
Lenders' Additional Term Loan Commitments."
 
""Total Initial Term Loan Commitment" means the sum of the amounts of the
Lenders' Initial Term Loan Commitments."
 
""Wanxiang Letter Agreement" means that certain letter agreement, dated as of
May 23, 2012, among the Borrower, Fenwick and Wanxiang."
 
 
 

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

 
 
""Warrant" means the warrant certificate covering the purchase of shares of
common stock of the Borrower substantially in the form of Exhibit H hereto,
together with the rights to purchase such common stock of the Borrower provided
thereby and all warrant certificates covering such common stock issued upon
transfer, division or combination of, or in substitution for, any thereof. For
the avoidance of doubt, the Warrant is not a "Loan Document" and the Borrower's
obligations thereunder shall not constitute "Obligations.""
 
(c)           Existing Definitions.
 
(i)           The definition of "Affiliate" in Section 1.01 of the Financing
Agreement is hereby amended and restated in its entirety to read as follows:
 
""Affiliate" means, with respect to any Person, any other Person that directly
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person.  For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (a)
vote 10% or more of the Equity Interests having ordinary voting power for the
election of members of the Board of Directors of such Person or (b) direct or
cause the direction of the management and policies of such Person whether by
contract or otherwise.  Notwithstanding anything herein to the contrary, in no
event shall any Agent, any Lender or any of their respective Affiliates be
considered an "Affiliate" of any Loan Party."
 
(ii)           The definition of "Applicable EBITDA Multiple" in Section 1.01 of
the Financing Agreement is hereby amended and restated in its entirety to read
as follows:
 
""Applicable EBITDA Multiple" means, 3.00, on and as of the Effective Date,
which multiple will be subsequently adjusted as of the end of each fiscal
quarter thereafter of the Borrower and its Subsidiaries as set forth below for
the immediately succeeding fiscal quarter.
 
Fiscal Quarter Ended
Applicable EBITDA Multiple
March 31, 2012
3.20
June 30, 2012
3.30
September 30, 2012
3.40
December 31, 2012
3.20
March 31, 2013
3.10
June 30, 2013
3.10
September 30, 2013
2.85
December 31, 2013
2.85
March 31, 2014
2.85
June 30, 2014
2.60
September 30, 2014
2.60
December 31, 2014
2.60
March 31, 2015 and each fiscal quarter ended thereafter
2.35"

 
 

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

 
 
(iii)           The definition of "Applicable Margin" in Section 1.01 of the
Financing Agreement is hereby amended and restated in its entirety to read as
follows:
 
""Applicable Margin" means, as of any date of determination, (a) with respect to
the interest rate of a Revolving Loan that is (i) a Reference Rate Loan or any
portion thereof, 2.50% and (ii) a Eurodollar Rate Loan or any portion thereof,
3.00% and (b) with respect to the interest rate of a Term Loan that is (i) a
Reference Rate Loan or any portion thereof, 7.50% and (ii) a Eurodollar Rate
Loan or any portion thereof, 8.50%."
 
(iv)           The definition of "Fee Letter" in Section 1.01 of the Financing
Agreement is hereby amended and restated in its entirety to read as follows:
 
""Fee Letter" means the amended and restated fee letter, dated as of the Second
Amendment Effective Date, among the Borrower and the Collateral Agent."
 
(v)           The definition of "Material Contracts" in Section 1.01 of the
Financing Agreement is hereby amended and restated in its entirety to read as
follows:
 
""Material Contract" means, with respect to any Person, (a) each contract or
agreement to which such Person or any of its Subsidiaries is a party involving
aggregate consideration payable to or by such Person or such Subsidiary of
$1,000,000 or more in any Fiscal Year (other than (i) purchase orders in the
ordinary course of the business of such Person or such Subsidiary and (ii)
contracts that by their terms may be terminated by such Person or Subsidiary in
the ordinary course of its business upon less than 60 days' notice without
penalty or premium), (b) the Wanxiang Letter Agreement and (c) all other
contracts or agreements material to the business, operations, condition
(financial or otherwise), performance, prospects or properties of such Person or
such Subsidiary."
 
 
 

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

 
 
(vi)           Clause (e) of the definition of "Permitted Indebtedness" in
Section 1.01 of the Financing Agreement is hereby amended and restated in its
entirety to read as follows:
 
"(e)           (i) Permitted Intercompany Advances and (ii) Investments
permitted by clause (g) or (h) of the definition of Permitted Investments;"
 
(vii)           Clauses (g) and (h) of the definition of "Permitted Investment"
in Section 1.01 of the Financing Agreement are hereby amended and restated in
their entirety to read as follows:
 
"(g)           Investments in Fenwick and its Subsidiaries pursuant to the
Wanxiang Letter Agreement solely to the extent the aggregate amount of such
Investment does not exceed $10,000,000 at any time outstanding; provided, that
if the Wanxiang Letter Agreement is amended to decrease the undrawn amount
of the guarantee provided therein (such amendment to be in form and substance
reasonably satisfactory to each Agent), the amount by which the undrawn
guarantee is reduced pursuant to such amendment will be added to the basket for
Investments in the Excluded Subsidiaries described in clause (h) below;
 
(h)           Investments in the Excluded Subsidiaries (other than the
Investment described in clause (g) above) in an aggregate amount not to exceed
$10,000,000 at any time outstanding; provided, that such amount may be increased
pursuant to the proviso in clause (g) above; provided, further that the
aggregate amount of Investments made pursuant to clauses (g) and (h) shall not
exceed $20,000,000 at any time;"
 
(viii)           The definition of "Term Loan" in Section 1.01 of the Financing
Agreement is hereby amended and restated in its entirety to read as follows:
 
""Term Loan" means, collectively, the loans made by the Term Loan Lenders to the
Borrower on the Effective Date and the Second Amendment Effective Date pursuant
to Sections 2.01(a)(ii) and (a)(iii)."
 
(ix)           The definition of "Term Loan Commitment" in Section 1.01 of the
Financing Agreement is hereby amended and restated in its entirety to read as
follows:
 
""Term Loan Commitment" means an Initial Term Loan Commitment and/or an
Additional Term Loan Commitment."
 
 
 

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

 
 
(x)           The definition of "Total Term Loan Commitment" in Section 1.01 of
the Financing Agreement is hereby amended and restated in its entirety to read
as follows:
 
""Total Term Loan Commitment" means the sum of (a) the amount of the Lenders'
Initial Term Loan Commitments and (b) the amount of the Lenders' Additional Term
Loan Commitments."
 
(xi)          The definition of "Wanxiang" in Section 1.01 of the Financing
Agreement is hereby amended and restated in its entirety to read as follows:
 
""Wanxiang" means Wanxiang America Corporation, a Kentncky corporation."
 

(d)           Section 2.01(a) (Commitments).  Section 2.01(a) of the Financing
Agreement is hereby amended and restated in its entirety to read as follows:
 
"(a)           Subject to the terms and conditions and relying upon the
representations and warranties herein set forth:
 
  (i)           each Revolving Loan Lender severally and not jointly agrees to
make Revolving Loans to the Borrower at any time and from time to time after the
Effective Date to the Final Maturity Date, or until the earlier reduction of its
Revolving Credit Commitment to zero in accordance with the terms hereof, in an
aggregate principal amount of Revolving Loans at any time outstanding not to
exceed the amount of such Lender's Revolving Credit Commitment;
 
  (ii)          each Term Loan Lender severally agrees to make a Term Loan to
the Borrower on the Effective Date, in an aggregate principal amount not to
exceed the amount of such Lender's Initial  Term Loan Commitment;
 
  (iii)         each Term Loan Lender severally agrees to make a Term Loan to
the Borrower on the Second Amendment Effective Date, in an aggregate principal
amount not to exceed the amount of such Lender's Additional Term Loan
Commitment; and
 
  (iv)         notwithstanding anything to the contrary contained in this
Section 2.01(a), the Loan Parties hereby acknowledge, confirm and agree that (A)
immediately prior to the Second Amendment Effective Date, the outstanding
principal amount of the Term Loan is equal to $75,000,000 (such Indebtedness
being hereinafter referred to as the "Existing Term Loan Indebtedness"), (B)
such Existing Term Loan Indebtedness shall not be repaid on the Second Amendment
Effective Date, but rather shall be re-evidenced by this Agreement as a portion
of the Term Loan outstanding hereunder, (C) the additional Term Loan made on the
Second Amendment Effective Date shall be an amount equal to the
 
 
 

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

 
 
Total Additional Term Loan Commitment, and (D) for all purposes of this
Agreement and the other Loan Document, the sum of the Existing Term Loan
Indebtedness immediately prior to the Second Amendment Effective Date
($75,000,000) and the additional Term Loan made on the Second Amendment
Effective Date ($10,000,000) shall constitute the Term Loan outstanding on the
Second Amendment Effective Date in the aggregate principal amount of
$85,000,000."
 
(e)           Section 2.01(b)(ii) (Term Loan Commitments).  Section 2.01(b)(ii)
of the Financing Agreement is hereby amended and restated in its entirety to
read as follows:
 
"(ii)           The aggregate principal amount of the Term Loan made on the
Effective Date shall not exceed the Total Initial Term Loan Commitment.  The
aggregate principal amount of the Term Loan made on the Second Amendment
Effective Date shall not exceed the Total Additional Term Loan Commitment.  Any
principal amount of the Term Loan which is repaid or prepaid may not be
reborrowed."
 
(f)           Section 2.02(a)(ii) (Making the Loans).  Section 2.02(a)(ii) of
the Financing Agreement is hereby amended by replacing the reference therein to
"with respect to the Term Loan, must be the Effective Date", with "with respect
to the Term Loan, must be either the Effective Date or the Second Amendment
Effective Date."
 
(g)           Section 2.03(b) (Repayment of Loans; Evidence of Debt).  Section
2.03(b) of the Financing Agreement is hereby amended and restated in its
entirety to read as follows:
 
"(b)           The outstanding unpaid principal amount of the Term Loan shall be
repayable in consecutive quarterly installments on the first day of each
calendar quarter commencing on October 1, 2012, and ending on the Final Maturity
Date, as set forth below:
 
Payment Date
 
Installment
 
October 1, 2012
  $ 250,000  
January 1, 2013
  $ 250,000  
April 1, 2013
  $ 600,000  
July 1, 2013
  $ 600,000  
October 1, 2013, and the first day of each calendar quarter thereafter
  $ 1,350,000  

 
; provided, however, that the last such installment shall be in the amount
necessary to repay in full the unpaid principal amount of the Term Loan.  The
outstanding unpaid principal amount of the Term Loan, and all accrued and unpaid
interest thereon, shall be due and payable on the earliest of (i) the
termination of the Total Revolving Credit Commitment, (ii) the date of the
acceleration of the Term Loan in accordance with the terms hereof and (iii) the
Final Maturity Date."
 
 
 

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

 
 
(h)           Section 2.05(a)(ii) (Reduction of Term Loan Commitments).  Section
2.05(a)(ii) of the Financing Agreement is hereby amended and restated in its
entirety to read as follows:
 
"(ii)           Term Loan.  The Total Initial Term Loan Commitment shall
terminate at 5:00 p.m. (New York time) on the Effective Date.  The Total
Additional Term Loan Commitment shall terminate at 5:00 p.m. (New York time) on
the Second Amendment Effective Date."
 
(i)           Section 5.03 (Conditions Subsequent to Effectiveness).  Section
5.03 of the Financing Agreement is hereby amended by (i) deleting "and" at the
end of Section 5.03(d), (ii) replacing the period at the end of Section 5.03(e)
with "; and" and (iii) inserting the following clause (f) after Section 5.03(e):
 
"(f)           on or before the date that is 30 days after the Second Amendment
Effective Date, a certificate of the appropriate official(s) of the State of
Tennessee certifying as of a recent date as to the subsistence in good standing
of, and, to the extent obtainable with the use of commercially reasonable
efforts, the payment of taxes by, of the Borrower in such jurisdiction."
 
(j)           Section 7.02(b) (Indebtedness).  Section 7.02(b) of the Financing
Agreement is hereby amended and restated to read as follows:
 
"(b)           Indebtedness.  Create, incur, assume, guarantee or suffer to
exist, or otherwise become or remain liable with respect to, or permit any of
its Subsidiaries to create, incur, assume, guarantee or suffer to exist or
otherwise become or remain liable with respect to, any Indebtedness other than
Permitted Indebtedness. For the avoidance of doubt, the Loan Parties shall not
guarantee any Indebtness of the Excluded Subsidiaries, other than the guarantee
pursuant to the Wanxiang Letter Agreement."
 
(k)           Section 7.02(h) (Restricted Payments).  Section 7.02(h) of the
Financing Agreement is hereby amended by (i) deleting "and" at the end of clause
(D) of the proviso, (ii) replacing the period at the end of clause (E) of the
proviso with "; and" and (iii) inserting the following clause (F) after clause
(E) thereof:
 
"(F) except as provided in the Warrant."
 
(l)           Section 7.02(v) (Minimum Cash Requirement).  Section 7.02 is
hereby amended by adding the following clause (v) at the end of Section 7.02:
 
 
 

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

 
 
"(v)           Minimum Cash Requirement.  Fail to maintain cash and Cash
Equivalents in Controlled Deposit Accounts in an aggregate amount of at least
$10,000,000 (or if the Wanxiang Letter Agreement is amended to decrease the
undrawn amount of the guarantee provided therein and such amendment is in form
and substance reasonably satisfactory to each Agent, the amount of guarantee) at
any time prior to the termination of the Wanxiang Letter Agreement."
 
(m)           Section 7.03(a) (Senior Leverage Ratio).  Section 7.03(a) of the
Financing Agreement is hereby amended and restated to read as follows:
 
"(a)           Senior Leverage Ratio.  Permit the Senior Leverage Ratio of the
Borrower and its Subsidiaries for any period of 4 consecutive fiscal quarters of
the Borrower and its Subsidiaries for which the last fiscal quarter ends on a
date set forth below to be greater than the ratio set forth opposite such date:
 
 
 

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

 
 
Fiscal Quarter End
 
Senior Leverage Ratio
March 31, 2012
 
3.00:1.00
June 30, 2012
 
3.30:1.00
September 30, 2012
 
3.40:1.00
December 31, 2012
 
3.30:1.00
March 31, 2013
 
3.05:1.00
June 30, 2013
 
3.05:1.00
September 30, 2013
 
3.05:1.00
December 31, 2013
 
2.80:1.00
March 31, 2014
 
2.80:1.00
June 30, 2014
 
2.80:1.00
September 30, 2014
 
2.80:1.00
December 31, 2014
 
2.55:1.00
March 31, 2015
 
2.55:1.00
June 30, 2015
 
2.30:1.00
September 30, 2015
 
2.30:1.00
December 31, 2015
 
2.30:1.00
March 31, 2016 and each fiscal quarter ended thereafter
 
2.30:1.00"

 
(n)           Section 7.03(b) (Fixed Charge Coverage Ratio).  Section 7.03(b) of
the Financing Agreement is hereby amended and restated to read as follows:
 
"(b)           Fixed Charge Coverage Ratio.  Permit the Fixed Charge Coverage
Ratio of the Borrower and its Subsidiaries for any period of 4 consecutive
fiscal quarters of the Borrower and its Subsidiaries for which the last fiscal
quarter ends on a date set forth below to be less than the ratio set forth
opposite such date:
 
 
 

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

 
 
Fiscal Quarter End
 
Fixed Charge Coverage Ratio
March 31, 2012
 
1.20:1.00
June 30, 2012
 
1.10:1.00
September 30, 2012
 
1.10:1.00
December 31, 2012
 
1.10:1.00
March 31, 2013
 
1.15:1.00
June 30, 2013
 
1.15:1.00
September 30, 2013
 
1.15:1.00
December 31, 2013
 
1.15:1.00
March 31, 2014
 
1.05:1.00
June 30, 2014
 
1.05:1.00
September 30, 2014
 
1.05:1.00
December 31, 2014
 
1.05:1.00
March 31, 2015
 
1.10:1.00
June 30, 2015
 
1.15:1.00
September 30, 2015
 
1.15:1.00
December 31, 2015
 
1.15:1.00
March 31, 2016 and each fiscal quarter ended thereafter
 
1.15:1.00"

 
(o)           Section 12.01(a) (Notices Generally).  The Collateral Agent's
address in Section 12.01(a) of the Financing Agreement is amended and restated
in its entirety to read as follows:
 

 
"if to the Collateral Agent, to it at the following address:
     
Cerberus Business Finance, LLC
 
875 Third Avenue
 
New York, New York 10022
 
Attention:  Daniel Wolf

 
 
 

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

 
 

 
Telephone:  212-891-1550
 
Telecopier:  212-891-1541
     
with a copy to:
     
Cerberus California, LLC
 
11812 San Vicente Blvd., Suite 300
 
Los Angeles, California 90049
 
Attention:  Kevin Cross and Christopher Hebble
 
Telephone:  310-826-9200
 
Telecopier:  310-826-9203
     
and
     
Schulte Roth & Zabel LLP
 
919 Third Avenue
 
New York, New York  10022
 
Attention:  Frederic L. Ragucci, Esq.
 
Telephone:  212-756-2000
 
Telecopier:  212-593-5955"

 
(p)           Schedules to Financing Agreement.  Schedule 1.01(A) of the
Financing Agreement is hereby replaced in its entirety with the new Schedule
1.01(A) attached as Annex I hereto.
 
(q)           Exhibits to Financing Agreement.  Exhibit H of the Financing
Agreement is attached as Annex II hereto.
 
3.             Conditions to Effectiveness.  The effectiveness of this Second
Amendment is subject to the fulfillment, in a manner satisfactory to the Agents,
of each of the following conditions precedent (the date such conditions are
fulfilled or waived by the Agents is hereinafter referred to as the "Second
Amendment Effective Date"):

(a)           Representations and Warranties; No Event of Default.  The
following statements shall be true and correct:  (i) the representations and
warranties contained in this Second  Amendment, ARTICLE VI of the Financing
Agreement and in each other Loan Document, certificate or other writing
delivered to any Agent or any Lender pursuant hereto or thereto on or prior to
the Second Amendment Effective Date are true and correct on and as of the Second
Amendment Effective Date as though made on and as of such date, except to the
extent that any such representation or warranty expressly relates solely to an
earlier date (in which case such representation or warranty shall be true and
correct on and as of such earlier date) and (ii) no Default or Event of Default
shall have occurred and be continuing on the Second Amendment Effective Date or
would result from this Second Amendment becoming effective in accordance with
its terms.
 
 
 

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

 
 
(b)           Execution of Amendment.  The Agents and the Lenders shall have
executed this Second Amendment and shall have received a counterpart to this
Second Amendment, duly executed by each Loan Party.
 
(c)           Payment of Fees, Etc.  The Borrower shall have paid on or before
the Second Amendment Effective Date all fees and invoiced costs and expenses
then payable by the Borrower pursuant to the Loan Documents, including, without
limitation, Sections 2.06 and 12.04 of the Financing Agreement.

(d)           Delivery of Documents.  The Collateral Agent shall have received
on or before the Second Amendment Effective Date the following, each in form and
substance reasonably satisfactory to the Collateral Agent and, unless indicated
otherwise, dated the Second Amendment Effective Date:

(i)          certified copies of request for copies of information on Form
UCC-11, listing all effective financing statements which name as debtor any Loan
Party, together with copies of such financing statements, none of which, except
as otherwise agreed in writing by the Collateral Agent, shall cover any of the
Collateral and the results of searches for any tax Lien and judgment Lien filed
against such Person or its property, which results, except as otherwise agreed
to in writing by the Collateral Agent, shall not show any such Liens, other than
Permitted Liens;
 
(ii)         a copy of the resolutions of each Loan Party, certified as of the
Second Amendment Effective Date by an Authorized Officer thereof, authorizing
(A) the additional borrowings and transactions contemplated hereby and (B) the
execution, delivery and performance by such Loan Party of this Second Amendment,
the performance of the Loan Documents as amended thereby, and the execution and
delivery of the other documents to be delivered by such Loan Party in connection
herewith and therewith, including, without limitation, in the case of the
Borrower, the Warrant;
 
(iii)        a certificate of an Authorized Officer of each Loan Party,
certifying the names and true signatures of the representatives of such Loan
Party authorized to sign this Second Amendment and the other documents to be
executed and delivered by such Loan Party in connection herewith and therewith,
together with evidence of the incumbency of such authorized officers;
 
(iv)        a certificate of the appropriate official(s) of the jurisdiction of
organization and, except to the extent such failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect, each jurisdiction of
foreign qualification of each Loan Party (other than the State of Tennessee)
certifying as of a recent date not more than 30 days prior to the Second
Amendment Effective Date as to the subsistence in good standing of, and, to the
extent obtainable with the use of commercially reasonable efforts, the payment
of taxes by, such Loan Party in such jurisdictions;
 
(v)         a true and complete copy of the charter, certificate of formation,
certificate of limited partnership or other publicly filed organizational
document of each Loan Party certified as of a recent date not more than 30 days
prior to the Second Amendment Effective Date by an appropriate official of the
jurisdiction of organization of such Loan Party which shall set forth the same
complete name of such Loan Party as is set forth herein and the organizational
number of such Loan Party, if an organizational number is issued in such
jurisdiction (or, to the extent the charter, certificate of formation,
certificate of limited partnership or other publicly filed organizational
document of such Loan Party has not been amended, modified or supplemented since
the Effective Date, a certificate from an Authorized Officer of such Loan Party
certifying that such charter, certificate of formation, certificate of limited
partnership or other publicly filed organizational document of such Loan Party
not been amended, modified or supplemented since the Effective Date);
 
 
 

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

 
 
(vi)        a copy of the Governing Documents of each Loan Party, together with
all amendments thereto, certified as of the Second Amendment Effective Date by
an Authorized Officer of such Loan Party (or, to the extent the Governing
Documents of such Loan Party have not been amended, modified or supplemented
since the Effective Date, a certificate from an Authorized Officer of such Loan
Party certifying that the Governing Documents have not been amended, modified or
supplemented since the Effective Date);
 
(vii)       an opinion of Latham & Watkins LLP, counsel to the Loan Parties, in
form and substance satisfactory to the Collateral Agent and as to such matters
as the Collateral Agent may reasonably request, including, without limitation,
the Warrant;
 
(viii)      a certificate of an Authorized Officer of each Loan Party,
certifying as to the matters set forth in subsection (a) of this Section 3;
 
(ix)         a certificate of the chief financial officer of each Loan Party,
certifying as to the solvency of such Loan Party, after giving effect to the
consummation of the transactions contemplated hereby, which certificate shall be
satisfactory in form and substance to the Collateral Agent;
 
(x)          copy of the Wanxiang Letter Agreement, as in effect on the Second
Amendment Effective Date, certified as a true and correct copy thereof by an
Authorized Officer of the Borrower, together with a certificate of an Authorized
Officer of the Borrower stating that such agreement remains in full force and
effect and that the Borrower and Fenwick have not breached or defaulted in any
of their obligations under such agreement;
 
(xi)         the Warrant, duly executed by the Borrower;
 
(xii)        the Fee Letter, duly executed by the Borrower; and
 
(xiii)       such other agreements, instruments, approvals, opinions and other
documents, each satisfactory to the Agents in form and substance, as any Agent
may reasonably request.
 
(e)           Legality.  The making of the Term Loan shall not contravene any
law, rule or regulation applicable to any Agent or any Lender.
 
 
 

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

 
 
(f)            Notices.  The Administrative Agent shall have received a Notice
of Borrowing pursuant to Section 2.02 of the Financing Agreement.
 
(g)           Proceedings; Receipt of Documents.  All proceedings in connection
with the making of the Term Loan and the other transactions contemplated by this
Second Amendment, the Financing Agreement, as amended hereby, and the other Loan
Documents, and all documents incidental hereto and thereto, shall be
satisfactory to the Agents and their counsel, and the Agents and such counsel
shall have received all such information and such counterpart originals or
certified or other copies of such documents, in form and substance satisfactory
to the Agents, as the Agents or such counsel may reasonably request.
 
4.             Representations and Warranties.  Each Loan Party represents and
warrants as follows:

(a)           Organization, Good Standing, Etc.  Each Loan Party (i) is a
corporation, limited liability company or limited partnership duly organized,
validly existing and in good standing under the laws of the state or
jurisdiction of its organization, (ii) has all requisite power and authority to
conduct its business as now conducted and as presently contemplated, and to
execute and deliver this Second Amendment, and to consummate the transactions
contemplated hereby and by the Financing Agreement, as amended hereby, and (iii)
is duly qualified to do business and is in good standing in each jurisdiction in
which the character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary, except (solely
for the purposes of this subclause (iii)) where the failure to be so qualified
or in good standing could not reasonably be expected to result in a Material
Adverse Effect.

(b)           Authorization, Etc.  The execution, delivery and performance by
each Loan Party of this Second Amendment, and the performance of the Financing
Agreement, as amended hereby, (i) have been duly authorized by all necessary
action, (ii) do not and will not contravene any of its Governing Documents or
any applicable Requirement of Law in any material respect or any material
Contractual Obligation binding on or otherwise affecting it or any of its
properties, (iii) do not and will not result in or require the creation of any
Lien (other than pursuant to any Loan Document) upon or with respect to any of
its properties, and (iv) do not and will not result in any default,
noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of
any permit, license, authorization or approval applicable to its operations or
any of its properties.

(c)           Governmental Approvals.  No authorization or approval or other
action by, and no notice to or filing with, any Governmental Authority is
required in connection with the due execution, delivery and performance of this
Second Amendment by the Loan Parties, and the performance of the Financing
Agreement, as amended hereby.

(d)           Enforceability of the Second Amendment.  This Second Amendment and
the Financing Agreement, as amended hereby, when delivered hereunder, will be a
legal, valid and binding obligation of each Loan Party, enforceable against such
Loan Party in accordance with the terms thereof, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally.
 
 
 

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

 
 
(e)           Representations and Warranties; No Event of Default.  The
following statements shall be true and correct:  (i) the representations and
warranties contained in this Second Amendment, ARTICLE VI of the Financing
Agreement and in each other Loan Document, certificate or other writing
delivered to any Agent or any Lender pursuant hereto or thereto on or prior to
the Second Amendment Effective Date are true and correct on and as of the Second
Amendment Effective Date as though made on and as of such date, except to the
extent that any such representation or warranty expressly relates solely to an
earlier date (in which case such representation or warranty shall be true and
correct on and as of such earlier date) and (ii) no Default or Event of Default
has occurred and is continuing on the Second Amendment Effective Date or would
result from this Second Amendment becoming effective in accordance with its
terms.

5.             Release.  Each Loan Party hereby acknowledges and agrees
that:  (a) neither it nor any of its Affiliates has any claim or cause of action
against any Agent or any Lender (or any of their respective Affiliates,
officers, directors, employees, attorneys, consultants or agents) and (b) each
Agent and each Lender has heretofore properly performed and satisfied in a
timely manner all of its obligations to the Loan Parties and their Affiliates
under the Financing Agreement and the other Loan Documents that are required to
have been performed on or prior to the date hereof.  Notwithstanding the
foregoing, the Agents and the Lenders wish (and the Loan Parties agree) to
eliminate any possibility that any past conditions, acts, omissions, events or
circumstances would impair or otherwise adversely affect any of the Agents' and
the Lenders' rights, interests, security and/or remedies under the Financing
Agreement and the other Loan Documents.  Accordingly, for and in consideration
of the agreements contained in this Second Amendment and other good and valuable
consideration, each Loan Party (for itself and its Affiliates and the
successors, assigns, heirs and representatives of each of the foregoing)
(collectively, the "Releasors") does hereby fully, finally, unconditionally and
irrevocably release and forever discharge each Agent, each Lender and each of
their respective Affiliates, officers, directors, employees, attorneys,
consultants and agents (collectively, the "Released Parties") from any and all
debts, claims, obligations, damages, costs, attorneys' fees, suits, demands,
liabilities, actions, proceedings and causes of action, in each case, whether
known or unknown, contingent or fixed, direct or indirect, and of whatever
nature or description, and whether in law or in equity, under contract, tort,
statute or otherwise, which any Releasor has heretofore had or now or hereafter
can, shall or may have against any Released Party by reason of any act, omission
or thing whatsoever done or omitted to be done on or prior to the Second
Amendment Effective Date directly arising out of, connected with or related to
this Second Amendment, the Financing Agreement or any other Loan Document, or
any act, event or transaction related or attendant thereto, or the agreements of
any Agent or any Lender contained therein, or the possession, use, operation or
control of any of the assets of any Loan Party, or the making of any Loans or
other advances, or the management of such Loans or advances or the Collateral.
 
6.             Reaffirmation.  The Borrower hereby confirms its grant of a
security interest and other obligations under and subject to the terms of the
Security Agreement, and agrees that, notwithstanding the effectiveness of this
Second Amendment or any of the transactions contemplated hereby, such grant of
security interest and other obligations are not impaired or adversely affected
in any manner whatsoever and shall continue to be in full force and effect and
shall continue to secure all the Secured Obligations (as defined in the Security
Agreement), as amended, increased and/or extended pursuant to this Second
Amendment.
 
 
 

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

 

7.            Miscellaneous.

(a)           Continued Effectiveness of the Financing Agreement and the Other
Loan Documents.  Except as otherwise expressly provided herein, the Financing
Agreement and the other Loan Documents are, and shall continue to be, in full
force and effect and are hereby ratified and confirmed in all respects, except
that on and after the Second Amendment Effective Date (i) all references in the
Financing Agreement to "this Agreement", "hereto", "hereof", "hereunder" or
words of like import referring to the Financing Agreement shall mean the
Financing Agreement as amended by this Second Amendment, and (ii) all references
in the other Loan Documents to the "Financing Agreement", "thereto", "thereof",
"thereunder" or words of like import referring to the Financing Agreement shall
mean the Financing Agreement as amended by this Second Amendment.  To the extent
that the Financing Agreement or any other Loan Document purports to pledge to
the Collateral Agent, or to grant to the Collateral Agent, a security interest
or lien, such pledge or grant is hereby ratified and confirmed in all
respects.  Except as expressly provided herein, the execution, delivery and
effectiveness of this Second Amendment shall not operate as an amendment of any
right, power or remedy of the Agents and the Lenders under the Financing
Agreement or any other Loan Document, nor constitute an amendment of any
provision of the Financing Agreement or any other Loan Document.

(b)           Counterparts.  This Second Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.  Delivery of an executed
counterpart of this Second Amendment by telefacsimile or electronic mail shall
be equally as effective as delivery of an original executed counterpart of this
Second Amendment.

(c)           Headings.  Section headings herein are included for convenience of
reference only and shall not constitute a part of this Second Amendment for any
other purpose.

(d)           Costs and Expenses.  The Borrower agrees to pay on demand all
fees, costs and expenses of the Agents and the Lenders in connection with the
preparation, execution and delivery of this Second Amendment.

(e)           Second Amendment as Loan Document.  Each Loan Party hereby
acknowledges and agrees that this Second Amendment constitutes a "Loan Document"
under the Financing Agreement.  Accordingly, it shall be an Event of Default
under the Financing Agreement if (i) any representation or warranty made by any
Loan Party under or in connection with this Second Amendment, which
representation or warranty is (A) subject to a materiality or a Material Adverse
Effect qualification, shall have been incorrect in any respect when made or
deemed made, or (B) not subject to a materiality or a Material Adverse Effect
qualification, shall have been incorrect in any material respect when made or
deemed made or (ii) any Loan Party shall fail to perform or observe any term,
covenant or agreement contained in this Second Amendment.
 
 
 

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

 
 
(f)            Severability .   Any provision of this Second Amendment that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

(g)           Governing Law.  This Second Amendment shall be governed by the
laws of the State of New York.

(h)           Waiver of Jury Trial.  THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS SECOND AMENDMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
 
[Remainder of page intentionally left blank]
 
 
 

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

 
 
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be
executed and delivered by their respective duly authorized officers as of the
date first written above.
 

  BORROWER:         MOTORCAR PARTS OF AMERICA, INC.         By:  
/s/ Selwyn Joffe
      Name: 
Selwyn Joffe
      Title: 
Chairman, President and CEO
 

 
 
 

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

 
 

 
COLLATERAL AGENT:
       
CERBERUS BUSINESS FINANCE, LLC
        By:  
/s/ Daniel Wolf
      Name: 
Daniel Wolf
      Title: 
President
 

 
SECOND AMENDMENT
 
 

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

 
 

 
ADMINISTRATIVE AGENT AND LENDER:
       
PNC BANK, NATIONAL ASSOCIATION
        By:  
/s/ Fred Kienhe
      Name: 
Fred Kienhe
      Title: 
Vice President
 

 
SECOND AMENDMENT
 
 

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

 
 

 
LENDER:
       
COREPOINTE LOAN SPV LLC
     
By: COREPOINTE GROUP LLC, its managing member
        By:  
/s/ Seth Fink
      Name: 
Seth Fink
      Title: 
Vice President
 

 
SECOND AMENDMENT
 
 

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

 

 
LENDER:
       
ABLECO FINANCE LLC
        By:  
/s/ Daniel Wolf
      Name: 
Daniel Wolf
      Title: 
President
 

 
SECOND AMENDMENT
 
 

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

 
 

 
LENDER:
       
A5 FUNDING L.P.
     
By:  A5 Fund Management LLC, its General Partner
        By:  
/s/ Daniel Wolf
      Name: 
Daniel Wolf
      Title: 
Vice President
 

 
SECOND AMENDMENT
 
 

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

 
 

 
LENDER:
       
CERBERUS LEVERED LOAN OPPORTUNITIES FUND I, L.P.
     
By:  Cerberus Levered Opportunities GP, LLC, its General Partner
        By:  
/s/ Daniel Wolf
      Name: 
Daniel Wolf
      Title: 
Managing Director
 

 
SECOND AMENDMENT
 
 

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

 
 

 
LENDER:
       
CERBERUS NJ CREDIT OPPORTUNITIES FUND, L.P.
     
By:  Cerberus NJ Credit Opportunities GP, LLC, its General Partner
        By:  
/s/ Daniel Wolf
      Name: 
Daniel Wolf
      Title: 
Senior Managing Director
 

 
SECOND AMENDMENT
 
 

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

 
 

 
LENDER:
       
COREPOINTE CAPITAL FINANCE LLC
        By:  
/s/ Seth Fink
      Name: 
Seth Fink
      Title: 
Managing Director
 

 
SECOND AMENDMENT
 
 

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

 
 
ANNEX I
 
SCHEDULE 1.01(A)

LENDERS AND LENDERS' COMMITMENTS

Lender
 
Initial Term Loan
Commitment
   
Additional
Term Loan
Commitment
   
Revolving
Credit
Commitment
   
Total
Commitment
 
ABLECO FINANCE LLC
  $ 15,440,918.28     $ 1,673,918.99     $ 0     $ 17,114,837.27  
A5 FUNDING L.P.
  $ 24,999,999.99     $ 0     $ 0     $ 24,999,999.99  
CERBERUS NJ CREDIT OPPORTUNITIES FUND, L.P.
  $ 0     $ 1,390,473.89     $ 0     $ 1,390,473.89  
CERBERUS LEVERED LOAN OPPORTUNITIES FUND I, L.P
  $ 4,559,081.73     $ 2,935,607.12     $ 0     $ 7,494,688.85  
COREPOINTE LOAN SPV LLC
  $ 30,000,000.00     $ 0     $ 0     $ 30,000,000.00  
COREPOINTE CAPITAL FINANCE LLC
  $ 0     $ 4,000,000.00     $ 0     $ 4,000,000.00  
PNC BANK, NATIONAL ASSOCIATION
  $ 0     $ 0     $ 20,000,000.00     $ 20,000,000.00  
Total
  $ 75,000,000     $ 10,000,000     $ 20,000,000     $ 105,000,000  

 
 

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

 
 
ANNEX I

FORM OF WARRANT

[see attached]
 
 
 

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

 
 
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED, HYPOTHECATED, OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED
BY SUCH SECURITIES.

MOTORCAR PARTS OF AMERICA, INC.
 
WARRANT
 

Warrant No. 2012-__
Original Issue Date: May __, 2012

 
MOTORCAR PARTS OF AMERICA, INC., a New York corporation (the “Company”), hereby
certifies that, for value received, Cerberus Business Finance, LLC, or its
registered assigns (the “Holder”), is entitled to purchase from the Company up
to a total of 100,000 shares of Common Stock (each such share, a “Warrant Share”
and all such shares, the “Warrant Shares”), at any time and from time to time
from and after the Original Issue Date and through and including May 23,
2017 (the “Expiration Date”), and subject to the following terms and conditions:
 
1.             Definitions.  As used in this Warrant, the following terms shall
have the respective definitions set forth in this Section 1.  Capitalized terms
that are used and not defined in this Warrant that are defined in the Financing
Agreement (as defined below) shall have the respective definitions set forth in
the Financing Agreement.
 
“Approved Stock Plan” means any employee benefit plan which has been approved by
the Board of Directors of the Company, pursuant to which the Company’s
securities may be issued to any employee, officer or director for services
provided to the Company.
 
“Black Scholes Value” means value of this Warrant based on the Black Scholes
Option Pricing Model obtained from the “OV”  function on Bloomberg L.P. using
(i) a price per share of Common Stock equal to (a) in the event of a Fundamental
Transaction, the sum of the price per share being offered in cash, if any, plus
the per-share value of any non-cash consideration, if any, being offered in such
Fundamental Transaction or (b) in the event of a Put Option Event, the VWAP of
the Common Stock for the Trading Day immediately preceding the date of such Put
Option Event, (ii) a risk-free interest rate corresponding to the U.S. Treasury
rate for a period equal to the remaining term of this Warrant as of the date of
consummation of the applicable Fundamental Transaction and (iii) an expected
volatility equal to the greater of 50% and the 100 day volatility obtained from
the “HVT” function on Bloomberg L.P. determined as of the Trading Day
immediately following the public announcement of the such Fundamental
Transaction or Put Option Event, as applicable.
 
 
 

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

 
 
“Business Day” means any day except Saturday, Sunday and any day that is a
federal legal holiday in the United States or a day on which banking
institutions in the State of New York are authorized or required by law or other
government action to close.
 
“Change of Control” has the meaning set forth in the Financing Agreement.
 
“Closing Sale Price” means, for any security as of any date, the last closing
bid price or last closing trade price, respectively, for such security on the
applicable Trading Market, as reported by Bloomberg, or, if such Trading Market
begins to operate on an extended hours basis and does not designate the closing
bid price or the closing trade price, as the case may be, then the last bid
price or the last trade price, respectively, of such security prior to 4:00:00
p.m., New York time, as reported by Bloomberg, or, if such Trading Market is not
the principal securities exchange or trading market for such security, the last
closing bid price or last trade price, respectively, of such security on the
principal securities exchange or trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the average of the bid
prices and the ask prices of any market makers for such security as reported in
the OTC Link or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC
Markets Inc.).  If the Closing Sale Price cannot be calculated for a security on
a particular date on any of the foregoing bases, the Closing Sale Price of such
security on such date shall be the fair market value as reasonably determined in
good faith by the Board of Directors of the Company.  All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable calculation
period.
 
“Common Stock” means the common stock of the Company, par value $0.01 per share,
and any securities into which such common stock may hereafter be reclassified.
 
“Convertible Securities” means any stock or securities (other than Options)
directly or indirectly convertible into or exercisable or exchangeable for
shares of Common Stock.
 
“Excluded Securities” means any Common Stock issued or issuable: (i) in
connection with any Approved Stock Plan and (ii) upon exercise of any Options or
Convertible Securities which are outstanding on the day immediately preceding
the Original Issue Date; provided that the terms of such Options or Convertible
Securities are not amended, modified or changed on or after the Original Issue
Date.
 
 
 

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

 
 
“Exercise Price” means $17.00, subject to adjustment in accordance with Section
10.
 
“Financing Agreement” means the Financing Agreement, dated as of January 18,
2012, as amended, restated, supplemented or otherwise changed from time to time,
by and among the Company, the lenders party thereto, Cerberus Business Finance,
LLC, as collateral agent, and PNC Bank National Association, as administrative
agent.
 
“Fundamental Transaction” means any of the following: (1) the Company or any of
its Subsidiaries effects any merger or consolidation of the Company (whether or
not the Company or any of its Subsidiaries is the surviving corporation) with or
into another Person, (2) the Company consummates a stock purchase agreement or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person in
which the stockholders of the Company immediately before such transaction do not
hold more than 50% of the voting power of the surviving corporation immediately
after such transaction, (3) the Company effects any sale, transfer or conveyance
or otherwise disposes of all or substantially all of its assets in one or a
series of related transactions, (4) other than any tender offer or exchange
offer relating to the Company’s stock option plans and/or any stock options
thereunder, any tender offer or exchange offer (whether by the Company or
another Person) is completed pursuant to which holders of Common Stock are
permitted to tender or exchange their shares for other securities, cash or
property, or (5) the Company (a) effects any reorganization, recapitalization or
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property or (b) effects or consummates, or make any public
announcement or disclosure with respect to, any stock combination, reverse stock
split or other similar transaction involving the Common Stock.
 
“New York Courts” means the state and federal courts sitting in the City of New
York, Borough of Manhattan.
 
“Options” means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.
 
“Original Issue Date” means the Original Issue Date first set forth on the first
page of this Warrant.
 
“Put Option Event” means the earliest to occur of the following events: (i) the
Final Maturity Date (as defined in the Financing Agreement) or any date
thereafter and (ii) the date upon which a Change in Control occurs.
 
“Trading Day” means (i) a day on which the Common Stock is traded on a Trading
Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not
listed on a Trading Market (other than the OTC Bulletin Board), a day on which
the Common Stock is traded in the over-the-counter market, as reported by the
OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any Trading
Market, a day on which the Common Stock is quoted in the over-the-counter market
as reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding to its functions of reporting prices);
provided, that “Trading Day” shall not include any day on which the Common Stock
is scheduled to trade on such exchange or market for less than 4.5 hours or any
day that the Common Stock is suspended from trading during the final hour of
trading on such exchange or market (or if such exchange or market does not
designate in advance the closing time of trading on such exchange or market,
then during the hour ending at 4:00:00 p.m., New York time); provided, further,
that in the event that the Common Stock is not listed or quoted as set forth in
(i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.
 
 
 

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

 
 
“Trading Market” means The NASDAQ Global Market, The NASDAQ Global Select
Market, The NASDAQ Capital Market, The NYSE Amex Equities, or The New York Stock
Exchange, Inc.
 
“VWAP” means, for any security as of any date, the dollar volume-weighted
average price for such security on the applicable Trading Market during the
period beginning at 9:30:01 a.m., New York time (or such other time as such
Trading Market publicly announces is the official open of trading), and ending
at 4:00:00 p.m., New York time (or such other time as such Trading Market
publicly announces is the official close of trading), as reported by Bloomberg
through its “Volume at Price” function or, if the foregoing does not apply, the
dollar volume-weighted average price of such security in the over-the-counter
market on the electronic bulletin board for such security during the period
beginning at 9:30:01 a.m., New York time (or such other time as such Trading
Market publicly announces is the official open of trading), and ending at
4:00:00 p.m., New York time (or such other time as such Trading Market publicly
announces is the official close of trading), as reported by Bloomberg, or, if no
dollar volume-weighted average price is reported for such security by Bloomberg
for such hours, the average of the highest closing bid price and the lowest
closing ask price of any of the market makers for such security as reported in
the OTC Link or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC
Markets Inc.).  If the VWAP cannot be calculated for a security on a particular
date on any of the foregoing bases, the VWAP of such security on such date shall
be the fair market value as mutually determined by the Company and the Holder.
 
2.             Registration of Warrant.  The Company shall register this Warrant
upon records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time.  The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.
 
3.             Registration of Transfers.  This Warrant may be transferred only
pursuant to a registration statement filed under the Securities Act or an
exemption from such registration.  Subject to such restrictions, the Company
shall register the transfer of any portion of this Warrant in the Warrant
Register, upon surrender of this Warrant, with the Form of Assignment attached
hereto duly completed and signed, to the Company at its address specified
herein.  Upon any such registration or transfer, a new Warrant to purchase
Common Stock, in substantially the form of this Warrant (any such new Warrant, a
“New Warrant”), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued to the transferring
Holder. The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance by such transferee of all of the rights and obligations of
a holder of a Warrant.
 
 
 

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

 
 
4.             Exercise and Duration of Warrants.  This Warrant shall be
exercisable by the registered Holder at any time and from time to time on or
after the Original Issue Date through and including the Expiration Date.  At
6:30 p.m., New York City time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value.
 
5.             Delivery of Warrant Shares.
 
Upon delivery of the Exercise Notice (in the form attached hereto) to the
Company (with the attached Warrant Shares Exercise Log) at its address for
notice set forth herein, the Company shall promptly (but in no event later than
three (3) Trading Days after the Date of Exercise (as defined herein)) issue and
deliver to the Holder a certificate for the Warrant Shares issuable upon such
exercise, which, unless otherwise required by law, shall be free of restrictive
legends.  The Company shall, upon request of the Holder use its commercially
reasonable efforts to deliver the applicable number of Warrant Shares within
three (3) Trading Days after a Date of Exercise electronically through the
Depository Trust Corporation or another established clearing corporation
performing similar functions, if available; provided, that, the Company may, but
will not be required to, change its transfer agent if its current transfer agent
cannot deliver Warrant Shares electronically through the Depository Trust
Corporation.  A “Date of Exercise” means the date on which the Holder shall have
delivered to the Company: (i) the Exercise Notice (with the Warrant Exercise Log
attached to it), appropriately completed and duly signed and (ii) if such Holder
is not utilizing the cashless exercise provisions set forth in Section 11(b),
payment of the Exercise Price for the number of Warrant Shares so indicated by
the Holder to be purchased.
 
If by the third Trading Day after a Date of Exercise the Company fails to
deliver the required number of Warrant Shares in the manner required pursuant to
Section 5(a), then the Holder will have the right to rescind such exercise.  If
by the third Trading Day after a Date of Exercise the Company fails to deliver
the required number of Warrant Shares in the manner required pursuant to Section
5(a), and if after such third Trading Day and prior to the receipt of such
Warrant Shares, the Holder or the Holder’s broker purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a “Buy-In”), then the Company, at the discretion of such
Holder, shall pay in cash to the Holder the amount by which the Holder’s total
purchase price (including brokerage commissions and other reasonable
out-of-pocket expenses, if any) for the shares of Common Stock so purchased,
exceeds the amount obtained by multiplying (A) the number of Warrant Shares that
the Company was required to deliver to the Holder in connection with the
exercise at issue by (B) the price at which the sell order giving rise to such
obligation was executed, at which point the Company’s obligation to deliver such
certificate (and to issue the Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue) or credit such
Holder’s balance account with DTC shall terminate.  The Holder shall provide the
Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In and, upon request of the Company, reasonable evidence of the
amount of such loss.
 
 
 

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

 
 
The Company’s obligations to issue and deliver Warrant Shares in accordance with
the terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation of
law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the
Holder in connection with the issuance of Warrant Shares.  Nothing herein shall
limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to
timely deliver certificates representing Warrant Shares upon exercise of the
Warrant as required pursuant to the terms hereof.
 
6.             Put Option.
 
At any time following a Put Option Event, if a registration statement is not
available for the resale of the Warrant Shares and the Warrant Shares are not
otherwise freely tradable under the Securities Act as of such date, the Holder
shall have an irrevocable right and option (the “Put Option”), to exercise the
Put Option, at its sole discretion, to require the Company to purchase, out of
funds lawfully available therefor, all or any portion of this Warrant (including
any warrants issued upon assignments of this Warrant), and in the event the
Holder has exercised all or any portion of this Warrant prior such Put Option
Event, all or any portion of the Warrant Shares issued upon exercise hereof, at
the Black Scholes Value thereof (the “Put Option Price”).  The Company shall
notify the Holder in writing of the date upon which any Put Option Event shall
occur at least ten (10) Business Days prior to such date.
 
If the Holder wishes to exercise the Put Option, in whole or in part, it shall
furnish to the Company a written notice notifying the Company of its election to
exercise the Put Option and specifying the number of Warrant Shares for which it
is exercising the Put Option and identifying the Business Day after the date of
delivery of such written notice as the date of purchase (the “Put Date”)
(provided, that the Company shall have at least three (3) Business Days after
the of Put Date to purchase the Warrant and Warrant Shares set forth in the
notice).  Upon receipt by the Company of such written notice, the Company shall
be obligated to purchase from the Holder, and the Company shall purchase from
the Holder, the Warrant and the Warrant Shares set forth in the notice at the
Put Option Price on the Put Date; provided, however, that if and to the extent
this Warrant has not been fully exercised prior to receipt by the Company of
such written notice, then the Put Option Price shall be reduced by the Exercise
Price for such unexercised portion of the Warrant Shares set forth in the
notice.  On the Business Day three (3) Business days after the Put Date (the
“Put Closing Date”), the Holder exercising the Put Option shall deliver to the
Company this Warrant and, if applicable, certificate(s) or other documentation
evidencing the Warrant Shares subject to such Put Option to be purchased on the
Put Date against payment by the Company of the aggregate Put Option Price by
wire transfer in immediately available funds to a bank account designated by the
Holder. Notwithstanding the foregoing, if the Company does not have sufficient
funds legally available to purchase on the Put Closing Date the portion of the
Warrant and/or Warrant Shares set forth in the notice or is restricted by any
loan or financing agreement to which the Company is a party or by which the
Company is bound from making such payments, the Company shall not be required to
purchase hereunder but instead shall purchase on such date the maximum amount of
the Warrant and/or the Warrant Shares legally permissible and shall thereafter
purchase the remainder of the Warrant and/or Warrant Shares (or the maximum
portion thereof that can be purchased with then legally available funds) as soon
as additional funds become legally available for such purchase, together with
interest accrued on the purchase price for such remaining amount of the Warrant
and/or the Warrant Shares from Put Closing Date through the date of actual
purchase at a rate of twelve percent (12.0%) per annum, compounding monthly. In
addition, the Company shall not make any cash dividends or distributions to its
stockholders from the Put Closing Date through the date of the actual purchase
of the entire portion of the Warrant and/or the Warrant Shares specified in the
notice delivered by the Holder to the Company pursuant to this Section 6(b).  In
the event the Holder exercises the Put Option for less than the entire Warrant
or less than all of the Warrant Shares, the Company shall cancel this Warrant,
and execute and deliver to the Holder a New Warrant evidencing the unexercised
portion of this Warrant.
 
 
 

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

 
 
(a)             The closing of the purchase by the Company of this Warrant
and/or the Warrant Shares, if applicable, pursuant to the exercise of the Put
Option shall occur on the Put Closing Date. At the closing, the Holder shall
deliver to the Company this Warrant and, if this Warrant has previously been
exercised in part, the Warrant Shares issued upon such exercise, against payment
by the Company of the Put Option Price by wire transfer in immediately available
funds to a bank account designated by the Holder.
 
(b)             The Company shall bear all reasonable fees, costs, expenses and
charges incurred in connection with the determination of the Put Option Price,
including, without limitation, all reasonable fees and expenses of any
investment banking firm, valuation or accounting firm(s) engaged in connection
with such determination and any reasonable legal fees and expenses incurred by
the Holder in connection with such determination.
 
 No Representations. In no event shall the Holder be obligated to (i) make any
representations or warranties as to this Warrant or the Warrant Shares or the
business of the Company with respect to the transactions contemplated by this
Section 6 other than with respect to the Holder’s organization, good standing
and authority, its title to this Warrant and the Warrant Shares, if any, no
consents and no conflicts with the Holder’s organizational documents and
material agreements or (ii) enter into or be bound by any non-solicitation or
non-competition covenants that purport to bind the Holder or any of its
affiliates unless otherwise agreed by the Holder.
 
7.             Charges, Taxes and Expenses.  Issuance and delivery of Warrant
Shares upon exercise of this Warrant shall be made without charge to the Holder
for any issue or transfer tax, transfer agent fee or other incidental tax or
expense in respect of the issuance of such certificates, all of which taxes and
expenses shall be paid by the Company; provided, however, that the Company shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the registration of any certificates for Warrant Shares or Warrants
in a name other than that of the Holder.  The Holder shall be responsible for
all other tax liability that may arise as a result of holding or transferring
this Warrant or receiving Warrant Shares upon exercise hereof.
 
 
 

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

 
 
8.             Replacement of Warrant.  If this Warrant is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation hereof, or in lieu of and
substitution for this Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested.  Applicants for a New Warrant
under such circumstances shall also comply with such other reasonable
regulations and procedures and pay such other reasonable third-party costs as
the Company may prescribe.  If a New Warrant is requested as a result of a
mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant
to the Company as a condition precedent to the Company’s obligation to issue the
New Warrant.
 
9.             Reservation of Warrant Shares.  The Company covenants that it
will at all times reserve and keep available out of the aggregate of its
authorized but unissued and otherwise unreserved Common Stock, solely for the
purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as
herein provided, the number of Warrant Shares which are then issuable and
deliverable upon the exercise of this entire Warrant, free from preemptive
rights or any other contingent purchase rights of Persons other than the Holder
(taking into account the adjustments and restrictions of Section 10). The
Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable.
 
10.           Certain Adjustments.  The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 10.
 
Issuance of Common Stock.  From and after the Original Issue Date, if the
Company issues or sells, or in accordance with this Section 10 is deemed to have
issued or sold, any shares of Common Stock (including the issuance or sale of
shares of Common Stock owned or held by or for the account of the Company, but
excluding shares of Common Stock deemed to have been issued by the Company in
connection with any Excluded Securities) for a consideration per share (the “New
Issuance Price”) less than a price (the “Applicable Price”) equal to the
Exercise Price in effect immediately prior to such issue or sale or deemed
issuance or sale (the foregoing a “Dilutive Issuance”), then immediately after
such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an
amount equal to the New Issuance Price.  For purposes of determining the
adjusted Exercise Price under this Section 10(a), the following shall be
applicable:
 
(a)             Issuance of Options.  If the Company in any manner grants any
Options and the lowest price per share for which one share of Common Stock is
issuable upon the exercise of any such Option or upon conversion, exercise or
exchange of any Convertible Securities issuable upon exercise of any such Option
is less than the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Company at the
time of the granting or sale of such Option for such price per share.  For
purposes of this Section 10(a)(i), the “lowest price per share for which one
share of Common Stock is issuable upon exercise of such Options or upon
conversion, exercise or exchange of such Convertible Securities issuable upon
exercise of any such Option” shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to any
one share of Common Stock upon the granting or sale of the Option, upon exercise
of the Option and upon conversion, exercise or exchange of any Convertible
Security issuable upon exercise of such Option less any consideration paid or
payable by the Company with respect to such one share of Common Stock upon the
granting or sale of such Option, upon exercise of such Option and upon
conversion exercise or exchange of any Convertible Security issuable upon
exercise of such Option.  No further adjustment of the Exercise Price or number
of Warrant Shares shall be made upon the actual issuance of such shares of
Common Stock or of such Convertible Securities upon the exercise of such Options
or upon the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities.
 
 
 

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

 
 
(b)             Issuance of Convertible Securities.  If the Company in any
manner issues or sells any Convertible Securities and the lowest price per share
for which one share of Common Stock is issuable upon the conversion, exercise or
exchange thereof is less than the Applicable Price, then such share of Common
Stock shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such Convertible Securities for
such price per share.  For the purposes of this Section 10(a)(ii), the “lowest
price per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof” shall be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by the Company
with respect to one share of Common Stock upon the issuance or sale of the
Convertible Security and upon conversion, exercise or exchange of such
Convertible Security less any consideration paid or payable by the Company with
respect to such one share of Common Stock upon the issuance or sale of such
Convertible Security and upon conversion, exercise or exchange of such
Convertible Security.  No further adjustment of the Exercise Price or number of
Warrant Shares shall be made upon the actual issuance of such shares of Common
Stock upon conversion, exercise or exchange of such Convertible Securities, and
if any such issue or sale of such Convertible Securities is made upon exercise
of any Options for which adjustment of this Warrant has been or is to be made
pursuant to other provisions of this Section 10(a), no further adjustment of the
Exercise Price or number of Warrant Shares shall be made by reason of such issue
or sale.
 
(c)             Change in Option Price or Rate of Conversion.  If the purchase
price provided for in any Options, the additional consideration, if any, payable
upon the issue, conversion, exercise or exchange of any Convertible Securities,
or the rate at which any Convertible Securities are convertible into or
exercisable or exchangeable for shares of Common Stock increases or decreases at
any time, the Exercise Price and the number of Warrant Shares in effect at the
time of such increase or decrease shall be adjusted to the Exercise Price and
the number of Warrant Shares which would have been in effect at such time had
such Options or Convertible Securities provided for such increased or decreased
purchase price, additional consideration or increased or decreased conversion
rate, as the case may be, at the time initially granted, issued or sold.  For
purposes of this Section 10(a)(iii), if the terms of any Option or Convertible
Security that was outstanding as of the date of issuance of this Warrant are
increased or decreased in the manner described in the immediately preceding
sentence, then such Option or Convertible Security and the shares of Common
Stock deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such increase or decrease.
 
 
 

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

 
 
(d)             Calculation of Consideration Received.  If any shares of Common
Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor will be deemed
to be the net amount received by the Company therefor.  If any shares of Common
Stock, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of such consideration received by the Company will
be the fair value of such consideration, except where such consideration
consists of securities, in which case the amount of consideration received by
the Company will be the Closing Sale Price of such security on the date of
receipt by the Company.  If any shares of Common Stock, Options or Convertible
Securities are issued to the owners of the non-surviving entity in connection
with any merger in which the Company is the surviving entity, the amount of
consideration therefor will be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is attributable to
such shares of Common Stock, Options or Convertible Securities, as the case may
be.  The fair value of any consideration other than cash or securities will be
determined jointly by the Company and the Holder.  If such parties are unable to
reach agreement within ten (10) days after the occurrence of an event requiring
valuation (the “Valuation Event”), the fair value of such consideration will be
determined within five (5) Trading Days after the tenth (10th) day following
such Valuation Event by an independent, reputable appraiser jointly selected by
the Company and the Holder.  The determination of such appraiser shall be final
and binding upon all parties absent manifest error and the fees and expenses of
such appraiser shall be borne by the Company.
 
Stock Dividends and Splits.  If the Company, at any time while this Warrant is
outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a
distribution on any class of capital stock that is payable in shares of Common
Stock (and not to the Holder hereof), (ii) subdivides outstanding shares of
Common Stock into a larger number of shares, or (iii) combines outstanding
shares of Common Stock into a smaller number of shares, then in each such case
the Exercise Price shall be multiplied by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event.  Any adjustment pursuant to
clause (i), (ii) or (iii) of this paragraph shall become effective immediately
upon the effective date of such dividend or distribution, subdivision or
combination.
 
 
 

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

 
 
Fundamental Transactions.  If, at any time while any portion of this Warrant is
outstanding there is a Fundamental Transaction, then the Holder shall have the
right thereafter to receive, upon exercise of this Warrant, the same amount and
kind of securities, cash or property as it would have been entitled to receive
upon the occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the holder of the number of Warrant
Shares then issuable upon exercise in full of this Warrant (the “Alternate
Consideration”).  For purposes of any such exercise, the determination of the
Exercise Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration.  If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction.  Any successor to the Company or surviving entity in such
Fundamental Transaction shall issue to the Holder a new warrant substantially in
the form of this Warrant and consistent with the foregoing provisions and
evidencing the Holder’s right to purchase the Alternate Consideration for the
aggregate Exercise Price upon exercise thereof.  The terms of any agreement
pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the provisions
of this paragraph (b) and insuring that the Warrant (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous
to a Fundamental Transaction.  Notwithstanding anything to the contrary, in the
event of a Fundamental Transaction that is (1) an all cash transaction, (2)
a  “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Securities
Exchange Act of 1934, as amended, or (3) a Fundamental Transaction involving a
person or entity not traded on a national securities exchange, the Nasdaq Global
Select Market, the Nasdaq Global Market, or the Nasdaq Capital market, the
Company or any successor entity shall pay at the Holder’s option, exercisable at
any time concurrently with or within 30 days after the consummation of the
Fundamental Transaction, an amount of cash equal to the value of this Warrant as
determined in accordance with the Black Scholes Value.
 
Number of Warrant Shares.  Simultaneously with any adjustment to the Exercise
Price pursuant to this Section 10, the number of Warrant Shares that may be
purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the adjusted number of Warrant Shares shall be the same as
the aggregate Exercise Price in effect immediately prior to such adjustment.
 
Calculations.  All calculations under this Section 10 shall be made to the
nearest cent or the nearest 1/100th of a share, as applicable.  The number of
shares of Common Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Company, and the disposition of any
such shares shall be considered an issue or sale of Common Stock.
 
 
 

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

 
 
Other Events.  If any event occurs of the type contemplated by the provisions of
this Section 10 but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights, phantom stock
rights or other rights with equity features), then the Company will make an
appropriate adjustment in the Exercise Price and the number of Warrant Shares,
as mutually determined by the Company and the Holder, so as to protect the
rights of the Holder; provided that no such adjustment pursuant to this Section
10(f) will increase the Exercise Price or decrease the number of Warrant Shares
as otherwise determined pursuant to this Section 10.
 
Notice of Adjustments.  Upon the occurrence of each adjustment pursuant to this
Section 10, the Company at its expense will within five (5) Business Days
compute such adjustment in accordance with the terms of this Warrant and prepare
a notice setting forth such adjustment, including a statement of the adjusted
Exercise Price and adjusted number or type of Warrant Shares or other securities
issuable upon exercise of this Warrant (as applicable), describing the
transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based.  Upon written request, the Company will
deliver within three (3) Business Days a copy of each such notice to the Holder
and to the Company’s Transfer Agent.
 
Notice of Corporate Events.  If the Company (i) authorizes or approves a
Dilutive Issuance, (ii) declares a dividend or any other distribution of cash,
securities or other property in respect of its Common Stock, including without
limitation any granting of rights or warrants to subscribe for or purchase any
capital stock of the Company or any Subsidiary, (iii) authorizes or approves,
enters into any agreement contemplating or solicits stockholder approval for any
Fundamental Transaction or (iv) authorizes the voluntary dissolution,
liquidation or winding up of the affairs of the Company, then the Company shall
deliver to the Holder a notice describing the material terms and conditions of
such transaction (but only to the extent such disclosure would not result in the
dissemination of material, non-public information to the Holder) at least 10
calendar days prior to the applicable record or effective date on which a Person
would need to hold Common Stock in order to participate in or vote with respect
to such transaction, and the Company will take all steps reasonably necessary in
order to insure that the Holder is given the practical opportunity to exercise
this Warrant prior to such time so as to participate in or vote with respect to
such transaction; provided, however, that the failure to deliver such notice or
any defect therein shall not affect the validity of the corporate action
required to be described in such notice.
 
11.           Payment of Exercise Price. The Holder may pay the Exercise Price
in one of the following manners:
 
Cash Exercise.  The Holder may deliver immediately available funds, by wire
transfer to the account designated by the Company or cashier’s check drawn on a
United States bank made payable to the order of the Company; or
 
 
 

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

 
 
Cashless Exercise.  The Holder may notify the Company in an Exercise Notice of
its election to utilize cashless exercise, in which event the Company shall
issue to the Holder the number of Warrant Shares determined as follows:
 
X = Y(A-B)/A
 
where:
 
X = the number of Warrant Shares to be issued to the Holder.
 
Y = the number of Warrant Shares with respect to which this Warrant is being
exercised.
 
A = the average of the closing prices for the five Trading Days immediately
prior to (but not including) the Exercise Date.
 
B = the Exercise Price.
 
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued.
 
12.           Representations of Holder.
 
Accredited Investor.  Holder is an “accredited investor” within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act or a Qualified
Institutional Buyer within the meaning of Rule 144A promulgated under the
Securities Act.
 
Acquisition of Warrant for Personal Account. The Holder represents and warrants
that it is acquiring the Warrant solely for its account for investment and not
with a present view toward the public distribution of said Warrant or any part
thereof and has no intention of selling or distributing said Warrant or any
arrangement or understanding with any other persons regarding the sale or
distribution of said Warrant, and except as would not result in a violation of
the Securities Act. The Holder will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) the Warrant except in accordance with
the Securities Act.
 
Securities Are Not Registered.
 
(a)            The Holder understands that this Warrant and the Warrant Shares
are characterized as “restricted securities” under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
this Warrant and the Warrant Shares may be resold without registration under the
Securities Act only in certain limited circumstances.
 
 
 

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

 
 
(b)            Prior and as a condition to any exercise of this Warrant or the
sale or transfer of the Warrant Shares issuable upon exercise of this Warrant,
the Holder shall furnish to the Company such certificates, representations,
agreements and other information, including an opinion of counsel, as the
Company or the Company’s transfer agent reasonably may require to confirm that
such exercise, sale or transfer is being made pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the Securities
Act unless such Warrant Shares are being sold or transferred pursuant to an
effective registration statement.
 
(c)            The Holder acknowledges that, in the event that the Warrant
Shares issuable upon exercise of the Warrant are not freely tradable under the
Securities Act, the Company may place a restrictive legend upon such Warrant
Shares issuable upon exercise of this Warrant in order to comply with securities
laws.
 
13.           Representations of Company.  The Company hereby represents and
warrants the following.
 
The Company is not, and has not been at any time preceding the date hereof, an
issuer identified in Rule 144(i)(1).
 
The issuance and sale of this Warrant to the Holder do not as of the date hereof
(i) result in a breach, constitute a default (or an event which, with the giving
of notice or lapse of time or both, constitutes or would constitute a default)
under or give rise to any material right of termination, cancelation or
acceleration under any of the Company’s Material Contracts and (ii) result in or
require the creation of any lien, security interest or other charge or
encumbrance (other than pursuant to the Financing Agreement) upon or with
respect to any of the Company’s assets or properties.
 
There are no securities or instruments of the Company containing anti-dilution
or similar provisions that will be triggered by the issuance and sale of this
Warrant or the issuance of the Warrant Shares.
 
14.           Public Information.  At any time during the period commencing from
the six (6) month anniversary of the Original Issue Date and ending at such time
that all of the Warrant Shares are no longer held by the Holder, if a
registration statement is not available for the resale of all of the Warrant
Shares to be sold without restriction or limitation pursuant to Rule 144 and
without the requirement to be in compliance with Rule 144(c)(1), if the Company
shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1)
including, without limitation, the failure to satisfy the current public
information requirements contained in Rule 144(c) or (ii) if the Company has
ever been an issuer in Rule 144(i)(1)(i) or becomes such an issuer in the
future, and the Company shall fail to satisfy any condition set forth in Rule
144(i)(2) (each, a “Public Information Failure”) then, as partial relief for the
damages to any Holder by reason of any such delay in or reduction of its ability
to sell the Warrant Shares (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Company shall pay to each such
Holder an amount in cash equal to one percent (1.0%) of the aggregate Exercise
Price of such Holder’s Warrant Shares on the day of a Public Information Failure
and on every thirtieth day (pro rated for periods totaling less than thirty
days) thereafter until the earlier of (i) the date such Public Information
Failure is cured and (ii) such time that such Public Information Failure no
longer prevents a Holder from selling such Securities pursuant to Rule 144
without any restrictions or limitations.  The payments to which a Holder shall
be entitled pursuant to this Section 14 are referred to herein as “Public
Information Failure Payments.”  Public Information Failure Payments shall be
paid on the earlier of (I) the last day of the calendar month during which such
Public Information Failure Payments are incurred and (II) the third Business Day
after the event or failure giving rise to the Public Information
Failure Payments is cured.  In the event the Company fails to make Public
Information Failure Payments in a timely manner, such Public Information
Failure Payments shall bear interest at the rate of one percent (1.0%) per month
(prorated for partial months) until paid in full.
 
 
 

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

 
 
15.           No Fractional Shares.  No fractional shares of Warrant Shares will
be issued in connection with any exercise of this Warrant.  In lieu of any
fractional shares which would otherwise be issuable, the Company shall pay cash
equal to the product of such fraction multiplied by the closing price of one
Warrant Share as reported by the applicable Trading Market on the Date of
Exercise.
 
16.           Notices.  Any and all notices or other communications or
deliveries hereunder (including, without limitation, any Exercise Notice) shall
be in writing and shall be deemed given and effective on the earliest of (i) the
date of transmission, if such notice or communication is delivered via facsimile
at the facsimile number specified in this Section 15 prior to 6:30 p.m. (New
York City time) on a Trading Day, (ii) 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 15 on a day that is not a Trading Day
or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the
Trading Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.  The addresses for such communications shall
be:  (i) if to the Company, to Motorcar Parts of America, Inc., Attn each of the
Chairman and Chief Executive Officer and the VP and General Counsel (if sent by
facsimile, to facsimile no.:  (310) 943-1630) (or such other address as the
Company shall indicate in writing in accordance with this Section 15) with a
copy (as to Exercise Notices only) to Continental Stock Transfer, 17 Battery
Place, New York, NY 10004 (if sent by facsimile, to facsimile no.: (212)
616-7616, or (ii) if to the Holder, to the address or facsimile number appearing
on the Warrant Register or such other address or facsimile number as the Holder
may provide to the Company in accordance with this Section 15.
 
17.           Warrant Agent.  The Company shall serve as warrant agent under
this Warrant.  Upon 10 days’ notice to the Holder, the Company may appoint a new
warrant agent.  Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act.  Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last
address as shown on the Warrant Register.
 
 
 

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

 
 
18.           Miscellaneous.
 
This Warrant shall be binding on and inure to the benefit of the parties hereto
and their respective successors and assigns.  Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant.  This Warrant may be amended only in writing signed by the
Company and the Holder and their successors and assigns.
 
All questions concerning the construction, validity, enforcement and
interpretation of this Warrant 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 legal
proceedings concerning the interpretations, enforcement and defense of this
Warrant and the transactions herein contemplated (“Proceedings”) (whether
brought against a party hereto or its respective Affiliates, employees or
agents) shall be commenced exclusively 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 Warrant 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 legal proceeding arising out of
or relating to this Warrant or the transactions contemplated hereby.  If either
party shall commence a Proceeding to enforce any provisions of this Warrant,
then the prevailing party in such Proceeding shall be reimbursed by the other
party for its reasonable attorney’s fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such Proceeding.
 
Any term of this Warrant may be amended and the observance of any other term of
this Warrant may be waived (either generally or in a particular instance and
either retroactively or prospectively), only with the written consent of the
Company and holders of a majority in interest of the Warrant Shares issuable
upon exercise of then outstanding Warrants issued pursuant to the Financing
Agreement; provided, however, that (x) any such amendment or waiver must apply
to all Warrants issued pursuant to the Financing Agreement; and (y) neither the
number of Warrant Shares subject to this Warrant, the Exercise Price nor the
Expiration Date may be amended without the written consent of the Holder.  Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each Holder of any Warrant Shares issued or issuable pursuant to the
Financing Agreement.  No consideration shall be offered or paid to any Holder to
amend or consent to a waiver or modification of any provision of this Warrant
unless the same consideration is also offered to all Holders who then hold
Warrants.
 
 
 

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

 
 
The headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions hereof.
 
In case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
 
Prior to exercise of this Warrant, the Holder hereof shall not, by reason of
being a Holder, be entitled to any rights of a stockholder with respect to the
Warrant Shares.
 
[Remainder of Page Intentionally Left Blank]
 
 
 

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

 
 
In Witness Whereof, the Company has caused this Warrant to be duly executed by
its authorized officer as of the date first indicated above.
 

 
Motorcar Parts of America, Inc.
         
By:  
     
Name:
     
Title:
   

 
 
 

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

 
 
EXERCISE NOTICE
 
MOTORCAR PARTS OF AMERICA, INC.
 
WARRANT DATED MAY 24, 2012
 
i.
 
The undersigned Holder hereby irrevocably elects to purchase  _____________
shares of Common Stock pursuant to the above referenced Warrant.  Capitalized
terms used herein and not otherwise defined have the respective meanings set
forth in the Warrant.
 
(2)
The undersigned Holder hereby exercises its right to purchase _________________
Warrant Shares pursuant to the Warrant.

 
(3)
The Holder intends that payment of the Exercise Price shall be made as (check
one):

 
 
q
“Cash Exercise” under Section 11.

 
 
q
“Cashless Exercise” under Section 11.

 
(4)
If the holder has elected a Cash Exercise, the holder shall pay the sum of
$____________ to the Company in accordance with the terms of the Warrant.

 
(5)
Pursuant to this Exercise Notice, the Company shall deliver to the holder
_______________ Warrant Shares in accordance with the terms of the Warrant.

 
(5)
The undersigned by its signature below it hereby represents and warrants that it
is an “accredited investor” as defined in Rule 501 of Regulation D promulgated
under the Securities Act of 1933, as amended, and agrees to be bound by the
terms and conditions of the attached Warrant as of the date hereof, including
Section 12 thereof.

 
Dated: _,
 
Name of Holder:
                             
(Print)
                 
By:                             
       
Name: 
       
Title:  
                  (Signature must conform in all respects to name of holder as
specified on the face of the Warrant)

 
 
 

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

 
 
Warrant Shares Exercise Log
 
Date
Number of Warrant
Shares Available to be
Exercised
Number of Warrant
Shares Exercised
Number of Warrant
Shares Remaining to be
Exercised
                                               

 
 

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

 
 
MOTORCAR PARTS OF AMERICA, INC.
 
WARRANT ORIGINALLY ISSUED MAY       , 2012
 
WARRANT NO. 2012-
 
FORM OF ASSIGNMENT
 
[To be completed and signed only upon transfer of Warrant]

For Value Received, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the above-captioned
Warrant to purchase  ____________ shares of Common Stock to which such Warrant
relates and appoints ________________ attorney to transfer said right on the
books of the Company with full power of substitution in the premises.
 

 
Dated:  _______________, ____
         
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant)
                     
Address of Transferee
                                 
In the presence of:
           

 
 

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