Document:

exv10w4

 

Exhibit
10.4

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 OR SOLD 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. [___]

	 	Original Issue Date: [                    ]

     MOTORCAR PARTS OF AMERICA, INC., a New York corporation (the
“Company”), hereby
certifies that, for value received,
[                                       
 ] or its registered assigns (the “Holder”),
is entitled to purchase from the Company up to a total of [                    ] 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 [                     ___,]
2012 (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 Purchase Agreement (as defined below) shall have
the respective definitions set forth in the Purchase Agreement.

     “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 California are
authorized or required by law or other government action to close.

     “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.

     “Exercise Price” means $15.00, subject to adjustment in accordance with Section 9.

 

 

     “Fundamental Transaction” means any of the following: (1) the Company effects any merger or
consolidation of the Company with or into 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, (2) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (3) 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 (4) the Company effects any 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.

     “New York Courts” means the state and federal courts sitting in the City of New York, Borough
of Manhattan.

     “Original Issue Date” means the Original Issue Date first set forth on the first page of this
Warrant.

     “Purchase Agreement” means the Securities Purchase Agreement, dated [ ___], 2007, to
which the Company and the original Holder are parties.

     “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 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.

     “VWAP” means on any particular Trading Day or for any particular period, the volume weighted
average trading price per share of Common Stock on such date or for such period as reported by the
Bloomberg L.P., or by any successor performing similar functions.

     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

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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.

          (a) 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.

          (b) Subject to the provisions of this Section 4(b), if at any time following the date the
Registration Statement is declared effective: (i) the VWAP of the Common Stock for each of 10
consecutive Trading Days, each following the date the Registration Statement is declared effective,
is greater than $22.50 (subject to adjustment pursuant to Section 9), (ii) the Warrant Shares are
either registered for resale pursuant to an effective registration statement naming the Holder as a
selling stockholder thereunder (and the prospectus thereunder is available for use by the Holder as
to all Warrant Shares) or freely transferable without volume restrictions pursuant to Rule 144(k)
promulgated under the Securities Act, as determined by counsel to the Company pursuant to a written
opinion letter addressed and in form and substance reasonably acceptable to the Holder, (iii) the
Company shall have complied in all material respects with its obligations under this Warrant and
the Transaction Documents and (iv) the Common Stock shall at all times be listed or quoted on a
Trading Market, then, subject to the conditions set forth in this Section, the Company may, in its
sole discretion, elect to require the exercise of all or a portion of the then unexercised portion
of this Warrant, on the date that is the 30th calendar day after written notice thereof (a “Call
Notice”) is received by the Holder (such 30th calendar day shall be known as the “Call Date”) at
the address last shown on the records of the Company for the Holder or given by the Holder to the
Company for the purpose of notice; provided, that the conditions to giving such notice in Sections
4(b)(ii)-(iv) must be in effect at all times during the entire 10 Trading Day period referenced in
(i) above through the expiration of the Call Date as set forth in the Company’s notice pursuant to
this Section (the “Call Condition Period”), or any such Call Notice shall be null and void. The
Company and the Holder agree that, if and to the extent Section 11 of this Warrant would restrict
the ability of the Holder to exercise this Warrant in the event of a delivery of a Call Notice,
then notwithstanding anything to the contrary set forth in the Call Notice, the Call Notice shall
be deemed automatically amended to apply only to such portion of this Warrant as may be exercised
by the Holder by the Call Date in accordance with such Section. The Holder will promptly (and, in
any event, prior to the Call Date) notify the Company in writing following receipt of a Call Notice
if Section 11 would restrict its exercise of the Warrant, specifying therein the number of Warrant
Shares so restricted. The Company covenants and agrees that it will honor all Exercise Notices
tendered through 6:30 p.m. (New York City time) on the Call Date. This Warrant shall be cancelled
as to any Warrant Shares for which an Exercise Notice has not been tendered by 6:30 p.m. (New York
City time) on the Call Date.

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     5. Delivery of Warrant Shares.

          (a) 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 and upon
payment of the Exercise Price multiplied by the number of Warrant Shares that the Holder intends to
purchase hereunder, the Company shall promptly (but in no event later than three 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 the Purchase
Agreement, shall be free of restrictive legends. The Company shall, upon request of the Holder and
subsequent to the date on which a registration statement covering the resale of the Warrant Shares
has been declared effective by the Securities and Exchange Commission, use its commercially
reasonable efforts to deliver Warrant Shares following the 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 this Warrant, payment of the Exercise Price for the number of
Warrant Shares so indicated by the Holder to be purchased.

          (b) 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.

          (c) 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 shall (1) pay in cash to the Holder the amount by
which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) 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 and (2) at the option of the Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was not honored or deliver to the
Holder the number of shares of Common Stock that would have been issued had the Company timely
complied with its exercise and delivery obligations hereunder. 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, evidence of the amount of such loss.

          (d) 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

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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. 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.

     7. 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.

     8. 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 9). 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.

     9. 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
9.

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          (a) 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 after
the effective date of such dividend or distribution, subdivision or combination.

          (b) Fundamental Transactions. If, at any time while 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 Option Pricing Model obtained from the
“OV” function on Bloomberg L.P. using (i) a price per share of Common Stock equal to the VWAP of
the common Stock for the Trading Day immediately preceding the date of consummation of the
applicable Fundamental Transaction, (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)

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an expected volatility equal to 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 applicable Fundamental Transaction.

          (c) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to this Section 9, 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.

          (d) Calculations. All calculations under this Section 9 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.

          (e) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this
Section 9, the Company at its expense will promptly 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 promptly deliver a copy of each such notice to the Holder and to the
Company’s Transfer Agent.

          (f) Notice of Corporate Events. If the Company (i) 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, (ii) authorizes or approves, enters into any agreement
contemplating or solicits stockholder approval for any Fundamental Transaction or (iii) 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.

     10. Payment of Exercise Price. The Holder may pay the Exercise Price in one of the
following manners:

          (a) Cash Exercise. The Holder may deliver immediately available funds; or

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          (b) Cashless Exercise. If an Exercise Notice is delivered at a time when a
registration statement permitting the Holder to resell the Warrant Shares is not then effective or
the prospectus forming a part thereof is not then available to the Holder for the resale of the
Warrant Shares, then 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.

     11. Limitations
on Exercise*. Notwithstanding anything to the contrary contained
herein, the number of Warrant Shares that may be acquired by the Holder upon any exercise of this
Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that,
following such exercise (or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its Affiliates and any other Persons whose beneficial
ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of
the Exchange Act, does not exceed 9.999%** of the total number of issued and outstanding shares of
Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise).
For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the
Holder that the Company is not representing to the Holder that such calculation is in compliance
with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules
required to be filed in accordance therewith. To the extent that the limitation contained in this
Section 11 applies, the determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates) and of which a portion of this Warrant
is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of
Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with any Affiliates) and of which
portion of this Warrant is exercisable, subject to such aggregate percentage limitation, and the
Company shall have no obligation to verify or confirm the accuracy of such determination. This
provision shall not restrict the number of shares of Common Stock which a Holder may receive or
beneficially own in order to determine

	*	 	For certain investors this section will be deleted in its
entirety.
	**	 	For one investor this percentage will be 4.999%.

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the amount of securities or other consideration that such Holder may receive in the event of a
Fundamental Transaction as contemplated in Section 9 of this Warrant. This Section 11 shall not
apply to Holders who as of the Closing Date beneficially own in excess of 10% of the total number
of issued and outstanding shares of Common Stock.

     12. 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.

     13. 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 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 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) 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)                     ), 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.

     14. 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.

     15. Miscellaneous.

          (a) 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

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amended only in writing signed by the Company and the Holder and their successors and assigns.

          (b) 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.

          (c) 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
Purchase Agreement; provided, however, that (x) any such amendment or waiver must apply to all
Warrants issued pursuant to the Purchase 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 Purchase
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.

          (d) 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.

          (e) 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

10

 

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.

          (f) 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]

11

 

     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:	 	 	 	 
	 

	 	 	 	 	 	 

12

 

Exercise Notice

Motorcar Parts of America, Inc.

Warrant Dated [                    ], 2007

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.

	(1)	 	The undersigned Holder hereby exercises its right to purchase                      Warrant
Shares pursuant to the Warrant.

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

	 	o	 	“Cash Exercise” under Section 10.
	 
	 	o	 	“Cashless Exercise” under Section 10.

	(3)	 	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.

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

	(5)	 	By its delivery of this Exercise Notice, the undersigned represents and warrants to the
Company that in giving effect to the exercise evidenced hereby the Holder will not
beneficially own in excess of the number of shares of Common Stock (determined in accordance
with Section 13(d) of the Securities Exchange Act of 1934) permitted to be owned under Section
11 of this Warrant to which this notice relates.

	 	 	 	 	 	 	 
	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)	 	 

13

 

Warrant Shares Exercise Log

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

14

 

Motorcar Parts of America, Inc. 

Warrant Originally Issued [                    ],
2007

Warrant No. [___]

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:
	 	 	 	 
	 
	 	 	 	 
	 

	 	  	 	 

15Exhibit 10.4

 

FIRST AMENDMENT TO  SECOND AMENDED AND

RESTATED LOAN AND SECURITY AGREEMENT

This FIRST AMENDMENT TO  SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “First Amendment”) is made as of this 17th day of May, 2007 by and among 

BANK OF AMERICA, N.A. (the “Lender”), a national banking association and successor by merger to Fleet Retail Finance, Inc., with offices at 40 Broad Street, Boston, Massachusetts 02109,

and

BAKERS FOOTWEAR GROUP, INC., f/k/a Weiss and Neuman Shoe Co. (the “Borrower”), a Missouri corporation with its principal executive offices at 2815 Scott Avenue, Suite C,  St. Louis, Missouri  63103, 

in consideration of the mutual covenants contained herein and benefits to be derived herefrom, 

RECITALS:

A.       Reference is made to that certain Second Amended and Restated Loan and Security Agreement (as amended to date, the “Loan Agreement”) dated as of August 31, 2006 between the Borrower and the Lender.

B.            The Borrower has requested that the Lender agree to amend the Loan Agreement in certain respects and the Lender has agreed to do so on the terms and conditions set forth herein. 

Accordingly, the Borrower and the Lender agree as follows:

1.            Definitions.  Terms defined in the Recitals shall be incorporated herein as therein defined.  Capitalized terms used herein and not  otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement.

2.            Consent.  Subject to satisfaction of the conditions to effectiveness set forth in Section 6 below, the Lender hereby agrees that solely for the period from the date hereof through and including June 15, 2007, the Borrower shall be required to maintain Availability at all times of not less than $250,000.00.  On and after June 16th, 2007, the Borrower shall be required to comply with Exhibit 5.11(a) as in effect prior to this Agreement.

	
            3.
 	
            Amendments To Loan Agreement.
 

 

 

3.1          The definition “Increased Reporting Event” shall be deleted in its entirety from Section 1 of the Loan Agreement and the following shall be substituted thereof:

“Increased Reporting Event”.  Availability at any time is less than the greater of (i) $10,000,000.00 and (ii) fifty percent (50%) of the then current Borrowing Base.  For purposes hereof, the occurrence of an Increased Reporting Event shall be deemed continuing notwithstanding that Availability may thereafter exceed the amounts set forth in the preceding sentence unless and until Availability exceeds such amount for sixty (60) consecutive days, in which case an Increased Reporting Event shall no longer be deemed to be continuing for purposes hereof.”

3.2          Section 2.14(a) of the Loan Agreement shall be deleted in its entirety and the following shall be substituted therefor:

“(a)         In the event that the Termination Date occurs for any reason prior to August 31, 2008, the Borrower shall pay to the Lender the “Revolving Credit Early Termination Fee” (so referred to herein) equal to 0.50% of the Revolving Credit Ceiling (based upon the highest amount of the Revolving Credit Ceiling during the six (6) month period immediately preceding the Termination Date as determined by Lender) and payable on the Termination Date.”

3.3          Section 5.9(f) of the Loan Agreement is hereby amended by adding the following sentence at the end thereof:

“In addition, in the event that Availability at any time is less than the greater of (i) $3,000,000.00 and (ii) fifteen percent (15%) of the then current Borrowing Base, the maximum amount of third party fees for which the Borrower shall be obligated to reimburse the Lender, cumulatively in any twelve (12) month period shall increase to $37,500 with respect to any audits performed in such twelve (12) month period and $67,500 with respect to any appraisals performed in such twelve (12) month period.”

4.            Additional Acknowledgments And Representations.   As an inducement for the Lender to execute this First Amendment, the Borrower hereby represents and warrants that as of the date hereof no Suspension Event has occurred and is continuing.

5.            Ratification Of Loan Documents; No Claims Against Lender.      Except as provided herein, all terms and conditions of the Loan Agreement and of the other Loan Documents remain in full force and effect.  The Borrower hereby ratifies, confirms, and re-affirms all and singular the terms and conditions, including execution and delivery, of the Loan Documents.  There is no basis nor set of facts on which any amount (or any portion thereof) owed by the Borrower to the Lender could be reduced, offset, waived, or forgiven, by rescission or otherwise; nor is there any claim, counterclaim, off set, or defense (or other right, remedy, or basis having a similar effect) available to the
Borrower with regard to the Liabilities of the Borrower to the Lender; nor is there any basis on which the terms and conditions of any of the Liabilities of the Borrower to the Lender could be claimed to be other than as stated on the written instruments which evidence such Liabilities.  To the extent that the Borrower has (or ever had) any such claims against the Lender, it hereby affirmatively WAIVES and RELEASES same. 

 

2

 

 

6.            Conditions To Effectiveness.  This First Amendment shall not be effective until each of the following conditions precedent have been fulfilled to the satisfaction of the Lender:

6.1          This First Amendment shall have been duly executed and delivered by the respective parties hereto, shall be in full force and effect and shall be in form and substance satisfactory to the Lender;

6.2          All action on the part of the Borrower necessary for the valid execution, delivery and performance by the Borrower of this First Amendment shall have been duly and effectively taken and evidence thereof satisfactory to the Lender shall have been provided to the Lender;

6.3          The Borrower shall have paid to the Lender all fees and expenses then due and owing pursuant to the Loan Agreement including, without limitation, the amendment fee pursuant to that certain Amendment Fee Letter dated as of even date herewith; and

6.4          The Borrower shall have provided such additional instruments and documents to the Lender as the Lender and Lender’s counsel may have reasonably requested, each in form and substance satisfactory to the Lender.

 

3

 

 

7.       Miscellaneous.

7.1          This First Amendment  may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, and all of which together shall constitute one instrument.

7.2          This First Amendment expresses the entire understanding of the parties with respect to the transactions contemplated hereby.  No prior negotiations or discussions shall limit, modify, or otherwise affect the provisions hereof. 

7.3          Any determination that any provision of this First Amendment or any application hereof is invalid, illegal, or unenforceable in any respect and in any instance shall not affect the validity, legality, or enforceability of such provision in any other instance, or the validity, legality, or enforceability of any other provisions of this First Amendment.

7.4          The Borrower shall pay on demand all reasonable costs and expenses of the Lender, including, without limitation, reasonable attorneys’ fees in connection with the preparation, negotiation, execution, and delivery of this First Amendment. 

7.5          THIS FIRST AMENDMENT SHALL BE CONSTRUED, GOVERNED, AND ENFORCED PURSUANT TO THE INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL TAKE EFFECT AS SEALED INSTRUMENT.

[SIGNATURE PAGES FOLLOW]

 

4

 

 

IN WITNESS WHEREOF, the parties have hereunto caused this First Amendment to be executed and their seals to be hereto affixed as of the date first above written.

 

	
             
 	
            BAKERS FOOTWEAR GROUP, INC.,
 
	
             
 	
             
 	
             
 
	
             
 	
            By
 	
            /s/ Lawrence L. Spanley, Jr.
 
	
             
 	
             
 	
             
 
	
             
 	
            Name
 	
            Lawrence L. Spanley, Jr.
 
	
             
 	
             
 	
             
 
	
             
 	
            Title
 	
            Executive Vice President, CFO
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
            BANK OF AMERICA, N.A.
 
	
             
 	
             
 	
             
 
	
             
 	
            By:
 	
            /s/ David C. Storer
 
	
             
 	
             
 	
             
 
	
             
 	
            Name
 	
            David C. Storer
 
	
             
 	
             
 	
             
 
	
             
 	
            Title
 	
            Vice President
 

 

 

S/1

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