Document:

exv10w1

 

Exhibit 10.1

Execution Copy

AMENDMENT NO. 1 TO CREDIT AGREEMENT

     This Amendment (this “Amendment”) is entered into as of May 17, 2007 by and among Wm.
Wrigley Jr. Company, a Delaware corporation (the “Borrower”), JPMorgan Chase Bank, N. A.,
individually and as administrative agent (the “Administrative Agent”), and the other financial
institutions signatory hereto.

RECITALS

     A. The Borrower, the Administrative Agent and the Lenders are party to that certain
credit agreement dated as of July 14, 2005 (the “Credit Agreement”). Unless otherwise
specified
herein, capitalized terms used in this Amendment shall have the meanings ascribed to them by
the Credit Agreement.

     B. The Borrower, the Administrative Agent and the Lenders wish to amend the
Credit Agreement on the terms and conditions set forth below.

     Now, therefore, in consideration of the mutual execution hereof and other good and valuable
consideration, the parties hereto agree as follows:

          1. Amendment of Credit Agreement. The Credit Agreement is hereby
amended as follows:

          (a) Section 5.4 of the Credit Agreement is amended in its entirety to read
as follows:

Financial Statements. The December 31, 2006 consolidated financial
statements of the Borrower and its Subsidiaries heretofore delivered to the Lenders
were prepared in accordance with generally accepted accounting principles in effect
on the date such statements were prepared and fairly present in all material
respects the consolidated financial conditions and their operations of the Borrower
and its Subsidiaries at such date and the consolidated results of their operation
for the period then ended.

          (b) Section 6.13 of the Credit Agreement is amended in its entirety to read
as follows:

Leverage Ratio. The Borrower will not permit the Leverage Ratio at any time
to be greater than 0.65 to 1.00.

          (c) The Pricing Schedule is hereby amended in its entirety to read as the pricing
schedule attached hereto.

          (d) Schedule 1 to the Credit Agreement is hereby amended in its entirety to
read as attached hereto.

          2. Representations and Warranties of the Borrower. The Borrower
represents and warrants that:

 

 

          (a) The Borrower has the corporate power and authority and legal right to execute and
deliver this Amendment and to perform its obligations hereunder. The execution and delivery
by the Borrower of this Amendment and the performance of its obligations hereunder have
been duly authorized by proper corporate proceedings, and this Amendment constitutes the
legal, valid and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles (whether enforcement is sought by proceedings in equity or at
law);

          (b) Treating this Amendment and the Credit Agreement as amended hereby as “Loan
Documents” for purposes thereof, each of the representations and warranties contained in
Article V of the Credit Agreement is true and correct in all material respects on and as of
the date hereof as if made on the date hereof; and

          (c) No Default or Unmatured Default has occurred and is continuing.

          3. Effective Date. This Amendment shall become effective upon the execution and
delivery hereof by the Borrower, the Administrative Agent and the Lenders identified on the
signature pages hereto.

          4. Reference to and Effect Upon the Credit Agreement.

          (a) Except as specifically amended above, the Credit Agreement and the other Loan
Documents shall remain in full force and effect and are hereby ratified and confirmed.

          (b) The execution, delivery and effectiveness of this Amendment shall not operate as a
waiver of any right, power or remedy of the Administrative Agent or any Lender under the
Credit Agreement or any Loan Document, nor constitute a waiver of any provision of the
Credit Agreement or any Loan Document, except as specifically set forth herein. Upon the
effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”,
“hereunder”, “hereof, “herein” or words of similar import shall mean and be a reference to
the Credit Agreement as amended hereby.

          5. Costs and Expenses. The Borrower hereby affirms its obligation to reimburse the
Administrative Agent for all reasonable out-of-pocket expenses incurred by the Administrative
Agent in connection with this Amendment as set forth in Section 9.5 of the Credit Agreement.

          6. Exiting Lender Consent. Dresdner Bank AG (the “Exiting Lender”) hereby consents to
the foregoing Amendment solely for purposes of meeting the requirements of Section 8.2 of the
Credit Agreement. Exiting Lender agrees that, upon the effectiveness of this Amendment and the
payment to the Exiting Lender of all Obligations due it, the Commitment of the Exiting Lender shall
be reduced to zero and the Exiting Lender shall cease to have any rights or duties as a Lender
under either the Credit Agreement or this Amendment except for rights or

2

 

duties in respect of indemnification obligations which by their terms would survive termination of
the Credit Agreement.

          7.
Governing Law. This Agreement shall be construed in accordance with and governed
by the laws (without regard to choice of law rules, other than section 5-1401 of the New York
General Obligations Law) of the State of New York.

          8. Headings. Section headings in this Amendment are included herein for convenience
of reference only and shall not constitute a part of this Amendment for any other purposes.

          9. Counterparts. This Amendment may be executed in any number of counterparts, each of
which when so executed shall be deemed an original but all such counterparts shall constitute one
and the same instrument.

[signature pages follow]

3

 

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

	 	 	 	 	 	 	 
	 	 	WM. WRIGLEY JR. COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By :
	 	/s/ Alan J. Schneider
 

	 	 
	 	 	Name: Alan J. Schneider	 	 
	 	 	Title: Vice President
and Treasurer	 	 

[SIGNATURE PAGE TO WM. WRIGLEY JR. COMPANY AMENDMENT NO. 1]

 

 

	 	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A., Individually
and as Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jason A. Rastovski
 

	 	 
	 	 	Name: Jason A. Rastovski	 	 
	 	 	Title: Vice President	 	 

[SIGNATURE PAGE TO WM. WRIGLEY JR. COMPANY AMENDMENT NO. 1]

 

 

	 	 	 	 	 	 	 
	 	 	WILLIAM STREET COMMITMENT CORPORATION (Recourse
only to assets of William Street Commitment Corporation)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mark Walton
 

	 	 
	 	 	Name: Mark Walton	 	 
	 	 	Title: Assistant Vice-President	 	 

[SIGNATURE PAGE TO WM. WRIGLEY JR. COMPANY AMENDMENT NO. 1]

 

 

	 	 	 	 	 	 	 
	 	 	MERRILL LYNCH BANK USA	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Louis Alder
 

	 	 
	 	 	Name: Louis Alder	 	 
	 	 	Title: Director	 	 

[SIGNATURE PAGE TO WM. WRIGLEY JR. COMPANY AMENDMENT NO. 1]

 

 

	 	 	 	 	 	 	 
	 	 	CITIBANK, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Andrew Kreeger
 

	 	 
	 	 	Name: Andrew Kreeger	 	 
	 	 	Title: Vice President	 	 

[SIGNATURE PAGE TO WM. WRIGLEY JR. COMPANY AMENDMENT NO. 1]

 

 

	 	 	 	 	 	 	 
	 	 	THE NORTHERN TRUST COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Peter J. Hallan
 

	 	 
	 	 	Name: Peter J. Hallan	 	 
	 	 	Title: Vice President	 	 

[SIGNATURE
PAGE TO WM. WRIGLEY JR. COMPANY AMENDMENT NO. 1]

 

 

	 	 	 	 	 	 	 
	 	 	DRESDNER BANK AG, NEW YORK
 AND GRAND CAYMAN BRANCHES, as

Exiting Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Brian M. Smith
 

	 	 
	 	 	Name: Brian M. Smith	 	 
	 	 	Title: Managing Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas R. Brady
 

	 	 
	 	 	Name: Thomas R. Brady	 	 
	 	 	Title: Director	 	 

[SIGNATURE PAGE TO WM. WRIGLEY JR. COMPANY AMENDMENT NO. 1]

 

 

PRICING SCHEDULE

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable	 	 	 	 	 	Level II	 	Level III	 	 
	Margin	 	Level I Status	 	Status	 	Status	 	Level IV Status
	Eurodollar Loans
	 	 	.135	%	 	 	.155	%	 	 	.19	%	 	 	.23	%
	Floating Rate
Loans
	 	 	0	%	 	 	0	%	 	 	0	%	 	 	0	%

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Applicable Facility	 	 	 	 	 	 	 	 	 	 
	Fee Rates	 	 	 	 	 	Level II	 	Level III	 	Level IV
	 	 	Level I Status	 	Status	 	Status	 	Status
	Facility Fee
	 	 	.04	%	 	 	.045	%	 	 	.06	%	 	 	.07	%
	Utilization Fee
	 	 	.05	%	 	 	.05	%	 	 	.05	%	 	 	.05	%

For the purposes of this Schedule, the following terms have the following meanings, subject to
the final paragraph of this Schedule:

     “Level I Status” exists at any date if, on such date, the Borrower’s Moody’s Rating is Aa3
or better or the Borrower’s S&P Rating is AA- or better.

     “Level II Status” exists at any date if, on such date, (i) the Borrower has not qualified
for Level I Status and (ii) the Borrower’s Moody’s Rating is Al or better or the Borrower’s S&P
Rating is A+ or better.

     “Level III Status” exists at any date if, on such date, (i) the Borrower has not qualified
for Level I Status or Level II Status and (ii) the Borrower’s Moody’s Rating is A2 or better or
the Borrower’s S&P Rating is A or better.

     “Level IV Status” exists at any date if, on such date, the Borrower has not qualified for
Level I Status, Level II Status or Level III Status.

     “Moody’s Rating” means, at any time, the rating issued by Moody’s and then in effect with
respect to the Borrower’s senior unsecured long-term debt securities without third-party credit
enhancement.

     “S&P Rating” means, at any time, the rating issued by S&P and then in effect with respect to
the Borrower’s senior unsecured long-term debt securities without third-party credit enhancement.

     “Status” means Level I Status, Level II Status, Level III Status or Level IV Status.

     The Applicable Margin and Applicable Facility Fee Rate shall be determined in accordance
with the foregoing table based on the Borrower’s Status as determined from its then-current
Moody’s and S&P Ratings. The credit rating in effect on any date for the purposes of this
Schedule is that in effect at the close of business on such date. If at any time the Borrower has
no

 

 

Moody’s Rating or no S&P Rating, Level IV Status shall exist. In the event of a difference in the
equivalent “rating level” from S&P and Moody’s resulting in a split of only one level, then the
Level Status shall be determined by reference to the higher of the two ratings. In the event of a
difference in the equivalent “rating level” from S&P and Moody’s resulting in a split of greater
than one level, then the Level Status shall be that Level Status one below the Level Status
determined by reference to the higher of the two ratings.

 

 

SCHEDULE 1

COMMITMENTS

	 	 	 	 	 
	Lender	 	Commitment	 
	JPMorgan Chase Bank, N.A.
	 	$	150,000,000	 
	William Street Commitment Corporation
	 	$	150,000,000	 
	Merrill Lynch Bank USA
	 	$	150,000,000	 
	Citibank, N.A.
	 	$	75,000,000	 
	The Northern Trust Company
	 	$	75,000,000	 
	 
	Total
	 	$	600,000,000exv10w1

 

Exhibit
10.1

EXECUTION COPY

SECURITIES PURCHASE AGREEMENT

     This Securities Purchase Agreement (this “Agreement”) is dated as of
May ___, 2007,
among Motorcar Parts of America, Inc., a New York corporation (the “Company”), and the
investors identified on the signature pages hereto (each, an “Investor” and collectively, the
“Investors”).

     Whereas, subject to the terms and conditions set forth in this Agreement and pursuant
to Section 4(2) of the Securities Act (as defined below) and Rule 506 promulgated thereunder, the
Company desires to issue and sell to each Investor, and each Investor, severally and not jointly,
desires to purchase from the Company certain securities of the Company, as more fully described in
this Agreement.

     Now, Therefore, in Consideration of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Company and the Investors agree as follows:

ARTICLE I.

DEFINITIONS

     1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms shall have the meanings indicated in this
Section 1.1:

          “Action” means any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or threatened in writing against
or affecting the Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency, regulatory authority (federal, state,
county, local or foreign), stock market, stock exchange or trading facility.

          “Affiliate” means any Person that, directly or indirectly through one or more
intermediaries,
controls or is controlled by or is under common control with a Person, as such terms are used in
and construed under Rule 144.

          “Business Day” means any day except Saturday, Sunday and any day which is a federal legal
holiday or a day on which banking institutions in the State of California are authorized or
required by law or other governmental action to close.

          “Closing” means the closing of the purchase and sale of the Securities pursuant to
Article II.

          “Closing Date” means the Business Day on which all of the conditions set forth in
Sections 5.1
and 5.2 hereof are satisfied, or such other date as the parties may agree.

 

 

          “Commission” means the Securities and Exchange Commission.

          “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.

          “Common Stock Equivalents” means any securities of the Company or any Subsidiary which
entitle
the holder thereof to acquire Common Stock at any time, including without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is at any time convertible into
or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock or other
securities that entitle the holder to receive, directly or indirectly, Common Stock.

          “Company Counsel” means Dreier Stein & Kahan LLP and Dreier LLP.

          “Company Deliverables” has the meaning set forth in Section 2.2(a).

          “Disclosure Materials” has the meaning set forth in Section 3.1(h).

          “Effective Date” means the date that the Registration Statement required by Section 2(a) of
the Registration Rights Agreement is first declared effective by the Commission.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “GAAP” means U.S. generally accepted accounting principles.

          “Intellectual Property Rights” has the meaning set forth in Section 3.1(n).

          “Investment Amount” means, with respect to each Investor, the Investment Amount indicated on
such Investor’s signature page to this Agreement.

          “Investor Deliverables” has the meaning set forth in Section 2.2(b).

          “Investor Party” has the meaning set forth in Section 4.7.

          “Lien” means any lien, charge, encumbrance, security interest, right of first refusal or
other
restrictions of any kind.

          “Material Adverse Effect” means any of (i) a material and adverse effect on the
legality,
validity or enforceability of any Transaction Document, (ii) a material and adverse effect on the
results of operations, assets, business or condition (financial or other) of the Company and the
Subsidiaries, taken as a whole, or (iii) an adverse impairment to the Company’s ability to perform
on a timely basis its obligations under any Transaction Document.

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

          “Outside Date” means June 1, 2007.

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          “Per Share Purchase Price” equals $11.00.

          “Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind.

          “Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition), whether commenced or
threatened.

          “Registration Rights Agreement” means the Registration Rights Agreement, dated as of the
date
of this Agreement, among the Company and the Investors, in the form of Exhibit B hereto.

          “Registration Statement” means a registration statement meeting the requirements set forth
in
the Registration Rights Agreement and covering the resale by the Investors of the Shares and the
Warrant Shares.

          “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.

          “SEC Reports” has the meaning set forth in Section 3.1(h).

          “Securities” means the Shares, the Warrants and the Warrant Shares.

          “Securities Act” means the Securities Act of 1933, as amended.

          “Shares” means the shares of Common Stock issued or issuable to the Investors pursuant to
this
Agreement.

          “Short Sales” include, without limitation, all “short sales” as defined in
Rule 200
promulgated under Regulation SHO under the Exchange Act and all types of direct and indirect stock
pledges, forward sale contracts, options, puts, calls, swaps and similar arrangements (including on
a total return basis), and sales and other transactions through non-US broker dealers or foreign
regulated brokers.

          “Subsidiary” means any “significant subsidiary” as defined in Rule 1-02(w) of
the Regulation
S-X promulgated by the Commission under the Exchange Act.

          “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,

3

 

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 whichever of the New York Stock Exchange, the American Stock
Exchange,
the NASDAQ Global Market, the NASDAQ Capital Market, or OTC Bulletin Board on which the Common
Stock is listed or quoted for trading on the date in question.

          “Transaction Documents” means this Agreement, the Warrants, the Registration Rights
Agreement,
and any other documents or agreements executed in connection with the transactions contemplated
hereunder.

          “Warrants” means the Common Stock purchase warrants in the form of Exhibit A,
which
are issuable to the Investors at the Closing.

          “Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.

ARTICLE II.

PURCHASE AND SALE

     2.1 Closing. Subject to the terms and conditions set forth in this Agreement, at the
Closing the Company shall issue and sell to each Investor, and each Investor shall, severally and
not jointly, purchase from the Company, the Shares and the Warrants representing such Investor’s
Investment Amount. The aggregate Investment Amount is $___. The Closing shall take place at
the offices of Dreier Stein & Kahan LLP, The Water Garden 1620 26th Street Sixth Floor,
North Tower, Santa Monica, CA 90404 on the Closing Date or at such other location or time as the
parties may agree.

     2.2 Closing Deliveries.

          (a) At the Closing, the Company shall deliver or cause to be delivered to each Investor the
following (the “Company Deliverables”):

               (i) a certificate evidencing a number of Shares equal to such Investor’s Investment Amount
divided by the Per Share Purchase Price, registered in the name of such Investor;

               (ii) a Warrant, registered in the name of such Investor, pursuant to which such Investor shall
have the right to acquire the number of shares of Common Stock equal to 15% of the number of Shares
issuable to such Investor pursuant to Section 2.2(a)(i);

               (iii) a certificate of the Transfer Agent with respect to the outstanding Common Stock number
of the Company as of the most recent practicable date;

               (iv) an Officer’s Certificate and Secretary Certificate, in agreed form, duly executed by
such
officers of the Company;

4

 

               (v) certificates of good standing of the Company in its jurisdiction of incorporation and in
each jurisdiction in which qualification to do business as a foreign corporation is required,
except where failure to so qualify would not have a Material Adverse Effect;

               (vi) the legal opinion of Company Counsel, in agreed form, addressed to the Investors; and

               (vii) the Registration Rights Agreement, duly executed by the Company.

          (b) At the Closing, each Investor shall deliver or cause to be delivered to the Company the
following (the “Investor Deliverables”):

               (i) its Investment Amount, in United States dollars and in immediately available funds, by
wire transfer to an account designated in writing by the Company for such purpose; and

               (ii) the Registration Rights Agreement, duly executed by such Investor.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

     3.1 Representations and Warranties of the Company. The Company hereby makes the
following representations and warranties to each Investor:

          (a) Subsidiaries. The Company has no direct or indirect Subsidiaries other than as
specified in the SEC Reports. Except as specified in Schedule 3.1(a) attached hereto, the
Company owns, directly or indirectly, all of the capital stock of each Subsidiary free and clear of
any and all Liens, and all the issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid, non-assessable and free of preemptive and similar rights.
Neither the Company nor any Subsidiary is party to any material joint venture, nor has any
ownership interest in any entity that is material to the Company except as disclosed in the SEC
Reports.

          (b) Organization and Qualification. The Company and each Subsidiary are duly
incorporated or otherwise organized and validly existing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently conducted. Neither the
Company nor any Subsidiary is in violation of any of the material provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or charter documents. The
Company and each Subsidiary are duly qualified to conduct its respective businesses and are in good
standing as a foreign corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not,

5

 

individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect.

          (c) Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations thereunder. The execution and delivery of
each of the Transaction Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the part of the Company
and no further action is required by the Company in connection therewith. Each Transaction
Document has been (or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application.

          (d) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions contemplated
thereby do not and will not (i) conflict with or violate any provision of the Company’s or any
Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) to
which the Company or any Subsidiary is a party or by which any property or asset of the Company or
any Subsidiary is bound, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary is bound or
affected; except in the case of each of clauses (ii) and (iii), such as could not, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

          (e) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or registration
with, any court or other federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the Transaction
Documents, other than (i) the filing with the Commission of one or more Registration Statements in
accordance with the requirements of the Registration Rights Agreement, (ii) filings required by
federal or state securities laws, (iii) the filing of a Notice of Sale of Securities on Form D with
the Commission under Regulation FD of the Securities Act, (iv) the filings required in accordance
with Section 4.5, (v) such consents or waivers as may be required under registration rights
agreements entered into in connection with business acquisitions effected prior to the date of this
Agreement, (vi) the filing of any requisite notices

6

 

with the Trading Market and (vii) those that have been made or obtained prior to the date of
this Agreement.

          (f) Issuance of the Securities. The Securities have been duly authorized and, when
issued and paid for in accordance with the Transaction Documents, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens. The Company has reserved from its duly
authorized capital stock the shares of Common Stock issuable pursuant to this Agreement and upon
the exercise of the Warrants in order to issue the Shares and the Warrant Shares.

          (g) Capitalization. The number of shares and type of all authorized, issued and
outstanding capital stock of the Company, and all shares of Common Stock reserved for issuance
under the Company’s various option and incentive plans as of December 31, 2006, is accurately set
forth in the SEC Reports. Except as specified in the SEC Reports, no securities of the Company are
entitled to preemptive or similar rights. No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the transactions contemplated
by the Transaction Documents. Except as specified in the SEC Reports, and other than stock options
granted pursuant to the Company’s stock option plans following December 31, 2006, there are no
outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for,
or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or
may become bound to issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. The issue and sale of the Securities will not,
immediately or with the passage of time, obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Investors) and will not result in a right of any
holder of Company securities to adjust the exercise, conversion, exchange or reset price under such
securities.

          (h) SEC Reports; Financial Statements. Except as disclosed or reflected in the SEC
Reports or press releases and except as specified on Schedule 3.1(h), the Company has filed
all reports, forms and schedules required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding
the date hereof (or such shorter period as the Company was required by law to file such reports)
(the foregoing materials being collectively referred to herein as the “SEC Reports” and, together
with the Schedules to this Agreement (if any), the “Disclosure Materials”) on a timely basis or has
timely filed a valid extension of such time of filing and has filed any such SEC Reports prior to
the expiration of any such extension. Except as disclosed or reflected in the SEC Reports or press
releases and except as specified on Schedule 3.1(h), the SEC Reports, as amended, when
filed, complied in all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of
the SEC Reports, as amended, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading.
Except as disclosed or reflected in the SEC Reports or press releases and except as specified on
Schedule 3.1(h), the financial statements of the Company included in

7

 

the SEC Reports, as amended, comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect thereto as in effect at
the time of filing. Except as disclosed or reflected in the SEC Reports or press releases and
except as specified on Schedule 3.1(h), such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved, except as may be
otherwise specified in such financial statements or the notes thereto, and fairly present in all
material respects the financial position of the Company and its consolidated Subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, year-end audit adjustments.

          (i) Material Changes. Since the date of the latest audited financial statements
included within the SEC Reports, except as disclosed or reflected in the SEC Reports, (i) there has
been no event, occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent
or otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the
ordinary course of business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in
filings made with the Commission, (iii) the Company has not altered its method of accounting or the
identity of its auditors, (iv) the Company has not declared or made any dividend or distribution of
cash or other property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock (other than in connection with repurchases of
unvested stock issued to employees of the Company), and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing Company stock option
plans.

          (j) Litigation. Except as specified on Schedule 3.1(j), there is no Action
which (i) adversely affects or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Securities or (ii) except as specifically disclosed in the SEC
Reports, could, if there were an unfavorable decision, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any
Subsidiary, nor any director or officer thereof (in his or her capacity as such), is or has been
the subject of any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty, except as specifically disclosed in the SEC
Reports. Except as disclosed in the Company’s filings with the Commission, there has not been, and
to the knowledge of the Company, there is not pending any investigation by the Commission involving
the Company or any current or former director or officer of the Company (in his or her capacity as
such). The Commission has not issued any stop order or other order suspending the effectiveness of
any registration statement filed by the Company or any Subsidiary under the Exchange Act or the
Securities Act.

          (k) Compliance. Except as specified in Schedule 3.1(k), neither the Company
nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has
not been waived that, with notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim
that it is in default under or that it is in violation of, any indenture, loan or credit agreement
or any other agreement or instrument to which it is a party or by which it or any of its properties

8

 

is bound (whether or not such default or violation has been waived), (ii) is in violation of,
or in receipt of notice that it is in violation of, any order of any court, arbitrator or
governmental body, or (iii) is or has been in violation of, or in receipt of notice that it is in
violation of, any statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to taxes, environmental protection,
occupational health and safety, product quality and safety, employment and labor matters and, to
its knowledge, privacy, except in each case as could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect. The Company is in compliance with
all effective requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and
regulations thereunder, that are applicable to it, except where such noncompliance could not have
or reasonably be expected to result in a Material Adverse Effect.

          (l) Regulatory Permits. The Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not, individually or in the aggregate, have
or reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or modification of any
such permits.

          (m) Title to Assets. Neither the Company nor any of the Subsidiaries own any real
property. The Company and the Subsidiaries have good and marketable title in all personal property
owned by them that is material to their respective businesses, in each case free and clear of all
Liens, except for the Union Bank Lien and Liens as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries. Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under leases valid, subsisting and enforceable
against the Company and the Subsidiaries, and the Company and the Subsidiaries are in compliance
with such leases, except as could not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect.

          (n) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to
use, all patents, patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, licenses and other similar rights that are necessary or material for use in
connection with their respective businesses as described in the SEC Reports and which the failure
to so have could, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect (collectively, the “Intellectual Property Rights”). Except as specified on
Schedule 3.1(n), neither the Company nor any Subsidiary has received a written notice that
the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon
the rights of any Person and the Company has no knowledge of any such violation or infringement, in
each case which could reasonably be expected to result in a Material Adverse Effect. Except as set
forth in the SEC Reports, to the knowledge of the Company, all such Intellectual Property Rights
are enforceable.

          (o) Insurance. The Company and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as are

9

 

prudent and customary for enterprises of similar size and stage of development in the
businesses in which the Company and the Subsidiaries are engaged. The Company has no reason to
believe that it will not be able to renew its and the Subsidiaries’ existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business on terms consistent with market for the Company’s and such
Subsidiaries’ respective lines of business.

          (p) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports, none of the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction with the Company or
any Subsidiary required to be disclosed in the SEC Reports (other than for services as employees,
consultants, officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any entity in which any officer, director, or any
such employee has a substantial interest or is an officer, director, trustee or partner.

          (q) Internal Accounting Controls. Except as disclosed in the SEC Reports, the Company
and the Subsidiaries maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific authorization, and
(iv) the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. Except as disclosed in
the SEC Reports, the Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls
and procedures to ensure that material information relating to the Company, including its
Subsidiaries, is made known to the certifying officers by others within those entities. The
Company’s certifying officers have evaluated the effectiveness of the Company’s controls and
procedures in accordance with Item 307 of Regulation S-K under the Exchange Act for the Company’s
fiscal quarter ended December 31, 2006 (such date, the “Evaluation Date”). The Company presented
in its most recently filed Form 10-Q the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant changes in the
Company’s internal controls (as such term is defined in Item 308(c) of Regulation S-K under the
Exchange Act) or, to the Company’s knowledge, in other factors that could significantly affect the
Company’s internal controls which was required to be disclosed in the SEC Reports and was not so
disclosed.

          (r) Certain Fees. Roth Capital Partners, LLC will receive brokerage or finder fees or
commissions payable by the Company with respect to the transactions contemplated by this Agreement.
The Investors shall have no obligation with respect to any fees or with respect to any claims
(other than such fees or commissions owed by an Investor pursuant to written agreements executed by
such Investor which fees or commissions shall be the sole responsibility

10

 

of such Investor) made by or on behalf of other Persons for fees of a type contemplated in
this Section that may be due in connection with the transactions contemplated by this Agreement.

          (s) Certain Registration Matters. Assuming the accuracy of the Investors’
representations and warranties set forth in Section 3.2(b)-(e), no registration under the
Securities Act is required for the offer and sale of the Shares and Warrants and the offer of
Warrant Shares by the Company to the Investors under the Transaction Documents. The Company is
eligible to register its Common Stock for resale by the Investors under Form S-1 promulgated under
the Securities Act. The Company has not granted or agreed to grant to any Person any rights
(including “piggy-back” registration rights) to have any securities of the Company registered with
the Commission or any other governmental authority that have not been satisfied.

          (t) Shareholder Approval. No approval of the shareholders of the Company thereunder
is required for the Company to issue and deliver to the Investors the Securities contemplated by
Transaction Documents.

          (u) Investment Company. The Company is not, and is not an Affiliate of, and
immediately following the Closing will not have become, an “investment company” within the meaning
of the Investment Company Act of 1940, as amended.

          (v) Application of Takeover Protections. The Company has taken all necessary action,
if any, in order to render inapplicable any control share acquisition, business combination, poison
pill (including any distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Investors as a result of the
Investors and the Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation the Company’s issuance of the Securities and
the Investors’ ownership of the Securities.

          (w) No Additional Agreements. The Company does not have any agreement or
understanding with any Investor with respect to the transactions contemplated by the Transaction
Documents other than as specified in the Transaction Documents.

          (x) Disclosure. Except to any Investor that has executed a non-disclosure agreement
with the Company, the Company confirms that neither it nor any Person acting on its behalf (as such
term is used in Regulation D) has provided any Investor or its respective agents or counsel with
any information that the Company believes constitutes material, non-public information except
insofar as the existence and terms of the proposed transactions hereunder may constitute such
information. The Company understands and confirms that the Investors will rely on the foregoing
representations and covenants in effecting transactions in securities of the Company. All written
disclosure provided to the Investors regarding the Company, its business and the transactions
contemplated hereby, furnished by or on behalf of the Company (including the Company’s
representations and warranties set forth in this Agreement) are true and correct and do not contain
any untrue statement of a material fact or omit to state any material fact necessary in order to
make the statements made therein, in light of the circumstances under which they were made, not
misleading.

11

 

          (y) Insolvency. The Company is not as of the date hereof (subject to the statements
set forth on Schedule 3.1(y)), and after giving effect to the transactions contemplated
hereby to occur at the Closing will not, be Insolvent. For purposes of this Agreement, “Insolvent”
shall mean, with respect to any Person, that (i) such Person is unable to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute
and matured or (ii) such Person intends to incur or believes that it will incur debts that would be
beyond its ability to pay as such debts mature.

          (z) Tax Status. The Company and each of its Subsidiaries (i) has made or filed all
foreign, federal and state income and all other tax returns, reports and declarations required by
any jurisdiction to which it is subject, and (ii) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith, except where the failure to
do so could not have or reasonably be expected to result in a Material Adverse Effect. There are
no unpaid taxes in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any such claim.

          (aa) Undisclosed Liabilities. No event, liability, development or circumstance has
occurred or exists with respect to the Company or its respective business, properties, prospects,
operations or financial condition, that, as of the date hereof, would be required to be disclosed
by the Company under the Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder relating to an issuance and sale by the Company of its securities
and which has not been reported in accordance with such rules and regulations of the Commission.

          (bb) Employee Relations. Other than with respect to the hourly employees of the
Company’s Subsidiary located in Tijuana, Mexico, neither Company nor any of its Subsidiaries is a
party to any collective bargaining agreement or employs any member of a union. The Company and its
Subsidiaries believe that their relations with their employees are satisfactory. No executive
officer of the Company or any of its Subsidiaries (as defined in Rule 501(f) of the Securities Act)
has notified the Company or any such Subsidiary that such officer intends to leave the Company or
any such Subsidiary or otherwise terminate such officer’s employment with the Company or any such
Subsidiary. No executive officer of the Company or any of its Subsidiaries, to the knowledge of
the Company or any such Subsidiary, is now, or expects to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract, agreement or any restrictive covenant, and the
continued employment of each such executive officer does not subject the Company or any such
Subsidiary to any liability with respect to any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all federal, state and local laws and regulations respecting
labor, employment and employment practices and benefits, terms and conditions of employment and
wages and hours, except where failure to be in compliance would not, either individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect. There are no complaints
or charges against the Company or its Subsidiaries pending or, to the knowledge of the Company and
its Subsidiaries, threatened to be filed with any Governmental Authority or arbitrator based

12

 

on, arising out of, in connection with, or otherwise relating to the employment or termination
of employment by the Company or its Subsidiaries of any individual, that would be reasonably likely
to result in a Material Adverse Effect.

          (cc) Subsidiary Rights. The Company or one of its Subsidiaries has the unrestricted
right to vote, and (subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by the Company or such
Subsidiary.

          (dd) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other
relationship between the Company and an unconsolidated or other off balance sheet entity that is
required to be disclosed by the Company in its SEC Reports and is not so disclosed or that
otherwise would be reasonably likely to have a Material Adverse Effect.

          (ee) D&O Insurance. The Company has in effect directors’ and officers’ insurance
coverage providing total coverage of not less than $20,000,000.00.

     3.2 Representations and Warranties of the Investors. Each Investor hereby, for itself
and for no other Investor, represents and warrants to the Company as follows:

          (a) Organization; Authority. Such Investor is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization with the
requisite corporate or partnership power and authority to enter into and to consummate the
transactions contemplated by the applicable Transaction Documents and otherwise to carry out its
obligations thereunder. The execution, delivery and performance by such Investor of the
transactions contemplated by this Agreement has been duly authorized by all necessary corporate or,
if such Investor is not a corporation, such partnership, limited liability company or other
applicable like action, on the part of such Investor. Each of this Agreement and the Registration
Rights Agreement has been duly executed by such Investor, and when delivered by such Investor in
accordance with terms hereof, will constitute the valid and legally binding obligation of such
Investor, enforceable against it in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.

          (b) Investment Intent. Such Investor is acquiring the Securities as principal for its
own account for investment purposes only and not with a view to or for distributing or reselling
such Securities or any part thereof, without prejudice, however, to such Investor’s right at all
times to sell or otherwise dispose of all or any part of such Securities in compliance with
applicable federal and state securities laws. Subject to the immediately preceding sentence,
nothing contained herein shall be deemed a representation or warranty by such Investor to hold the
Securities for any period of time. Such Investor is acquiring the Securities hereunder in the
ordinary course of its business. Such Investor does not have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the Securities.

13

 

          (c) Investor Status. At the time such Investor was offered the Securities, it was,
and at the date hereof it is, and at the Closing and on each date on which it exercises Warrants it
will be, an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8)
under the Securities Act. Such Investor is not a registered broker-dealer under Section 15 of the
Exchange Act or an entity engaged in a business that would require it to be so registered.

          (d) General Solicitation. Such Investor is not purchasing the Securities as a result
of any advertisement, article, notice or other communication regarding the Securities published in
any newspaper, magazine or similar media or broadcast over television or radio or presented at any
seminar or any other general solicitation or general advertisement.

          (e) Access to Information. Such Investor acknowledges that it has reviewed the
Disclosure Materials and has been afforded (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries and their respective
financial condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without unreasonable effort or
expense that is necessary to make an informed investment decision with respect to the investment.
Neither such inquiries nor any other investigation conducted by or on behalf of such Investor or
its representatives or counsel shall modify, amend or affect such Investor’s right to rely on the
truth, accuracy and completeness of the Disclosure Materials and the Company’s representations and
warranties contained in the Transaction Documents.

          (f) Certain Trading Activities. Such Investor has not directly or indirectly, nor has
any Person acting on behalf of or pursuant to any understanding with such Investor, engaged in any
transactions in the securities of the Company (including, without limitations, any Short Sales
involving the Company’s securities) or otherwise sought to hedge its position in the Securities
since the earlier of (i) the time that such Investor was first contacted by the Company or Roth
Capital Partners, LLC regarding the investment in the Company contemplated by this Agreement, or
(ii) thirty (30) days prior to the date hereof. Such Investor covenants that neither it nor any
Person acting on its behalf or pursuant to any understanding with it will engage in any
transactions in the securities of the Company (including Short Sales) prior to the time that the
transactions contemplated by this Agreement are publicly disclosed by the Company. Such Investor
has maintained, and covenants that until such time as the transactions contemplated by this
Agreement are publicly disclosed by the Company such Investor will maintain, the confidentiality of
any disclosures made to it in connection with this transaction (including the existence and terms
of this transaction). Such Investor understands and acknowledges, that the Commission currently
takes the position that coverage of Short Sales “against the box” prior to the Effective Date of
the Registration Statement is a violation of Section 5 of the Securities Act, as set forth in Item
65, Section A, of the Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance.

          (g) Independent Investment Decision. Such Investor has independently evaluated the
merits of its decision to purchase Securities pursuant to the Transaction

14

 

Documents, and such Investor confirms that it has not relied on the advice of any other
Investor’s business and/or legal counsel in making such decision. Such Investor has not relied on
the business or legal advice of counsel to the Company or Roth Capital Partners, LLC or any of its
agents, counsel or Affiliates in making its investment decision hereunder, and confirms that none
of such Persons has made any representations or warranties to such Investor in connection with the
transactions contemplated by the Transaction Documents.

          (h) Limited Ownership. The purchase by such Investor of the Securities issuable to it
at the Closing will not result in such Investor (individually or together with any other Person
with whom such Investor has identified, or will have identified, itself as part of a “group” in a
public filing made with the Commission involving the Company’s securities) acquiring, or obtaining
the right to acquire, in excess of 19.999% of the outstanding shares of Common Stock or the voting
power of the Company on a post transaction basis that assumes that the Closing shall have occurred.
Such Investor does not presently intend to, alone or together with others, make a public filing
with the Commission to disclose that it has (or that it together with such other Persons have)
acquired, or obtained the right to acquire, as a result of the Closing (when added to any other
securities of the Company that it or they then own or have the right to acquire), in excess of
19.999% of the outstanding shares of Common Stock or the voting power of the Company on a post
transaction basis that assumes that the Closing shall have occurred.

          (i) Reliance on Exemptions. Such Investor understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying upon the truth and
accuracy of such Investor’s representations and warranties set forth herein in order to determine
the availability of such exemptions and the eligibility of such Investor to acquire the Securities.

          (j) No Governmental Review. Such Investor understands that no United States federal
or state agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability of the investment in
the Securities nor have such authorities passed upon or endorsed the merits of the offering of the
Securities.

          (k) Transfer or Resale. Such Investor understands that except as provided in the
Registration Rights Agreement: (i) the Securities have not been and are not being registered under
the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) such Investor shall have delivered
to the Company an opinion of counsel, in a form, scope and substance reasonably acceptable to the
Company, to the effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration, or (C) such Investor
provides the Company with reasonable assurance that such Securities can be sold, assigned or
transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act, as amended, (or
a successor rule thereto) (collectively, “Rule 144"); (ii) any sale of the Securities made in
reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule
144 is not applicable, any resale of the Securities under circumstances in which the seller (or the
Person) through whom the sale is made) may be deemed to be an

15

 

underwriter (as that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the Commission thereunder;
and (iii) neither the Company nor any other Person is under any obligation to register the
Securities under the Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.

          (l) No Conflicts. The execution, delivery and performance by such Investor of this
Agreement and the Registration Rights Agreement and the consummation by such Investor of the
transactions contemplated hereby and thereby will not (i) result in a violation of the
organizational documents of such Investor or (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Investor is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities laws) applicable to
such Investor, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of such Investor to perform its obligations
hereunder.

          (m) Residency. Such Investor is a resident of that jurisdiction specified below its
address on the Schedule of Investors.

          (n) Experience of Such Investor. Such Investor, either alone or together with its
representatives, has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment. Such Investor is able to
bear the economic risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.

          (o) Brokers and Finders. Except for compensation payable to Roth Capital Partners,
LLC, no Person will have, as a result of the transactions contemplated by the Transaction
Documents, any valid right, interest or claim against or upon the Company, any Subsidiary or an
Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of such Investor.

          (p) Acknowledgement. Such Investor acknowledges and agrees that the foregoing
representations and warranties are made by it with the intention that they may be relied upon by
the Company and its agents and legal counsel in determining its eligibility to purchase the
Securities under applicable securities law. Such Investor further agrees that by accepting
delivery of the Securities at the Closing Date, it shall be representing and warranting that the
foregoing representations and warranties are true and correct, in all material respects, as at the
Closing Date with the same force and effect as if they had been made by such Investor at the
Closing Date and that they shall survive the purchase by such Investor of the Securities and
continue in full force and effect notwithstanding any subsequent disposition by such Investor of
the Securities.

16

 

The Company acknowledges and agrees that no Investor has made or makes any representations or
warranties with respect to the transactions contemplated hereby other than those specifically set
forth in this Section 3.2.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

     4.1 (a) The Securities may only be disposed of in compliance with state and federal securities
laws. In connection with any transfer of the Securities other than pursuant to an effective
registration statement, to the Company, to an Affiliate of an Investor or in connection with a
pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide
to the Company an opinion of counsel selected by the transferor, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not
require registration of such transferred Securities under the Securities Act.

          (b) Certificates evidencing the Securities will contain the following legend, until such time
as they are not required under Section 4.1(c):

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.

          The Company acknowledges and agrees that an Investor may from time to time pledge, and/or
grant a security interest in some or all of the Securities pursuant to a bona fide margin agreement
in connection with a bona fide margin account and, if required under the terms of such agreement or
account, such Investor may transfer pledged or secured Securities to the pledgees or secured
parties. Such a pledge or transfer would not be subject to approval or consent of the Company and
no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in
connection with the pledge, but such legal opinion may be required in connection with a subsequent
transfer following default by the Investor transferee of the

17

 

pledge. No notice shall be required of such pledge. At the appropriate Investor’s expense, the
Company will execute and deliver such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer of the Securities
including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of
the Securities Act or other applicable provision of the Securities Act to appropriately amend the
list of Selling Stockholders thereunder.

          (c) Certificates evidencing the Shares and Warrant Shares shall not contain any legend
(including the legend set forth in Section 4.1(b)): (i) following a sale or transfer of such Shares
or Warrant Shares pursuant to an effective registration statement (including the Registration
Statement), or (ii) following a sale or transfer of such Shares or Warrant Shares pursuant to Rule
144 (assuming the transferor is not an Affiliate of the Company), or (iii) while such Shares or
Warrant Shares are eligible for sale under Rule 144(k), or (iv) if in the opinion of counsel to the
Company such legend is not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the Commission). Upon the
earlier of (i) the Effective Date or (ii) Rule 144(k) becoming available for the resale of
Registrable Securities, Company shall (A) deliver to the transfer agent for the Common Stock (the
“Transfer Agent”) irrevocable instructions that the Transfer Agent shall reissue a certificate
representing shares of Common Stock without legends upon receipt by such Transfer Agent of the
legended certificates for such shares, together with either (1) a customary representation by the
Investor in a form reasonably acceptable to counsel to the Company that Rule 144(k) applies to the
shares of Common Stock represented thereby or (2) a statement by the Investor that such Investor
has sold the shares of Common Stock represented thereby in accordance with the Plan of Distribution
contained in the Registration Statement, and (B) cause its counsel to deliver to the Transfer Agent
one or more blanket opinions to the effect that the removal of such legends in such circumstances
may be effected under the Securities Act. From and after the earlier of such dates, upon an
Investor’s written request, the Company shall promptly cause certificates evidencing the Investor’s
Shares to be replaced with certificates which do not bear such restrictive legends. When the
Company is required to cause unlegended certificates to replace previously issued legended
certificates under this Section, if unlegended certificates are not delivered to an Investor within
three (3) Trading Days of submission by that Investor of legended certificate(s) to the Transfer
Agent as provided above (the “Delivery Date”), and if after such Delivery Date and prior to the
receipt of such unlegended certificates, the Investor or the Investor’s broker purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale
by the Investor of the Shares which the Investor anticipated receiving upon such request (a “Buy
In”), then the Company shall (1) pay in cash to the Investor the amount by which (x) the Investor’s
total purchase price (including reasonable brokerage commissions, if any) for the shares of Common
Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Shares that the
Company was required to deliver to the Investor on the Delivery Date by (B) the closing bid price
of the Common Stock on the Delivery Date and (2) deliver to such Investor the number of shares of
Common Stock that would have been issued had the Company timely complied with its delivery
obligations hereunder. The Investor shall provide the Company written notice indicating the
amounts payable to the Investor in respect of the Buy In.

18

 

     4.2 Furnishing of Information. As long as any Investor owns the Securities, the
Company covenants to use its commercially reasonable efforts to timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act. As long as any Investor owns
Securities, if the Company is not required to file reports pursuant to such laws, it will prepare
and furnish to the Investors and make publicly available in accordance with Rule 144(c) such
information as is required for the Investors to sell the Shares and Warrant Shares under Rule 144.
The Company further covenants that it will take such further action as any holder of Securities may
reasonably request, all to the extent required from time to time to enable such Person to sell the
Shares and Warrant Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144.

     4.3 Integration. The Company shall not, and shall use its commercially reasonable
efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Securities to the Investors,
or that would be integrated with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market in a manner that would require stockholder approval of the sale
of the securities to the Investors.

     4.4 Subsequent Registrations. Other than pursuant to the Registration Statement,
prior to the Effective Date, the Company may not file any registration statement (other than on
Form S-8) with the Commission with respect to any securities of the Company.

     4.5 Securities Laws Disclosure; Publicity. By 9:30 a.m. (New York time) on the
Trading Day following the execution of this Agreement, and by 9:30 a.m. (New York time) on the
Trading Day following the Closing Date, the Company shall issue press releases disclosing the
transactions contemplated hereby and the Closing. On the Trading Day following the execution of
this Agreement the Company will file a Current Report on Form 8-K disclosing the material terms of
the Transaction Documents (and attach as exhibits thereto the Transaction Documents), and on the
Trading Day following the Closing Date the Company will file an additional Current Report on Form
8-K to disclose the Closing. In addition, the Company will make such other filings and notices in
the manner and time required by the Commission and the Trading Market on which the Common Stock is
listed. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any
Investor, or include the name of any Investor in any filing with the Commission (other than the
Registration Statement and any exhibits to filings made in respect of this transaction in
accordance with periodic filing requirements under the Exchange Act) or any regulatory agency or
Trading Market, without the prior written consent of such Investor, except to the extent such
disclosure is required by law or Trading Market regulations.

     4.6 Limitation on Issuance of Future Priced Securities. During the six months
following the Closing Date, the Company shall not issue any “Future Priced Securities” as such term
is described by Nasdaq IM-4350-1.

19

 

     4.7 Indemnification of Investors. In addition to the indemnity provided in the
Registration Rights Agreement, the Company will indemnify and hold the Investors and their
directors, officers, shareholders, partners, employees, Affiliates and agents (each, an “Investor
Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages,
costs and expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation (collectively, “Losses”) that any such
Investor Party may suffer or incur as a result of or relating to any misrepresentation, breach or
inaccuracy of any representation, warranty, covenant or agreement made by the Company in any
Transaction Document. In addition to the indemnity contained herein, the Company will reimburse
each Investor Party for its reasonable legal and other expenses (including the cost of any
investigation, preparation and travel in connection therewith) incurred in connection therewith, as
such expenses are incurred.

     4.8 Certain Trading Activities. Prior to the earliest to occur of (a) the termination
of this Agreement or (b) the earlier of (i) the Effective Date, or (ii) the Effectiveness Date (as
defined in the Registration Rights Agreement), no Investor will, nor will any Person acting on such
Investor’s behalf or pursuant to any understanding with it, engage, directly or indirectly, in any
transaction in the Securities involving (A) any Short Sales, whether or not against the box, the
establishment of any “put equivalent position” (as defined in Rule 16a-1(h) under the Exchange Act)
with respect to the Securities, the borrowing or pre-borrowing of any shares of Common Stock, or
the granting of any other right (including, without limitation, any put or call option) with
respect to Securities, or the hedging of its position in the Securities, or (B) any sale,
assignment, pledge, hypothecation, put, call, or other transfer of any of the Securities acquired
hereunder.

     4.9 Non-Public Information. The Company covenants and agrees that it shall not and
shall use commercially reasonable efforts to cause any other Person acting on its behalf not to
provide any Investor or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto such Investor shall have executed
a written agreement regarding the confidentiality and use of such information. The Company
understands and confirms that each Investor shall be relying on the foregoing covenant and
agreement in effecting transactions in securities of the Company.

     4.10 Listing of Securities. The Company agrees, (i) if the Company applies to have
the Common Stock traded on any other Trading Market, it will include in such application the Shares
and Warrant Shares, and will take such other action as is necessary or desirable to cause the
Shares and Warrant Shares to be listed on such other Trading Market as promptly as possible, and
(ii) it will take all action reasonably necessary to continue the listing and trading of its Common
Stock on a Trading Market and will comply in all material respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Trading Market.

     4.11 Use of Proceeds. The Company will use the net proceeds from the sale of the
Securities hereunder for general corporate purposes, which may include working capital and
reduction of contractual obligations.

20

 

     4.12 Form D; Blue Sky Filings. The Company will file a Form D with respect to the
offering and sale of the Securities contemplated hereby with the Commission in accordance with
applicable securities law. The Company will make such filings with respect to the offering and
sale of the Securities contemplated hereby under applicable “blue sky” laws as determined by the
Company in consultation with its blue sky counsel.

ARTICLE V.

CONDITIONS PRECEDENT TO CLOSING

     5.1 Conditions Precedent to the Obligations of the Investors to Purchase Securities.
The obligation of each Investor to acquire Securities at the Closing is subject to the satisfaction
or waiver by such Investor, at or before the Closing, of each of the following conditions:

          (a) Representations and Warranties. The representations and warranties of the Company
contained herein shall be true and correct in all material respects as of the date when made and as
of the Closing as though made on and as of such date;

          (b) Performance. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by it at or prior to the Closing;

          (c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents;

          (d) Adverse Changes. Since the date of execution of this Agreement, no event or
series of events shall have occurred that reasonably could have or result in a Material Adverse
Effect;

          (e) No Suspensions of Trading in Common Stock; Listing. Trading in the Common Stock
shall not have been suspended by the Commission or any Trading Market (except for any suspensions
of trading of not more than one Trading Day solely to permit dissemination of material information
regarding the Company) at any time since the date of execution of this Agreement, and the Common
Stock shall have been at all times since such date listed for trading on a Trading Market;

          (f) Company Deliverables. The Company shall have delivered the Company Deliverables
in accordance with Section 2.2(a);

          (g) No Governmental Prohibition. The sale of the Securities by the Company shall not
be prohibited by any law or governmental order or regulation;

          (h) No Stop Order. No stop order or suspension of trading shall have been imposed by
the Trading Market, the SEC or any other government or regulatory body with respect to public
trading in the Common Stock; and

21

 

          (i) Termination. This Agreement shall not have been terminated as to such Investor in
accordance with Section 6.5 herein.

     5.2 Conditions Precedent to the Obligations of the Company to sell Securities. The
obligation of the Company to sell Securities at the Closing is subject to the satisfaction or
waiver by the Company, at or before the Closing, of each of the following conditions:

          (a) Representations and Warranties. The representations and warranties of each
Investor contained herein shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made on and as of such date;

          (b) Performance. Each Investor shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by such Investor at or prior to the Closing;

          (c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents;

          (d) Investors Deliverables. Each Investor shall have delivered its Investors
Deliverables in accordance with Section 2.2(b);

          (e) No Governmental Prohibition. The sale of the Securities by the Company shall not
be prohibited by any law or governmental order or regulation;

          (f) No Stop Order. No stop order or suspension of trading shall have been imposed by
the Trading Market, the SEC or any other government or regulatory body with respect to public
trading in the Common Stock; and

          (g) Termination. This Agreement shall not have been terminated as to such Investor in
accordance with Section 6.5 herein.

ARTICLE VI.

MISCELLANEOUS

     6.1 Fees and Expenses. Each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and performance of the Transaction
Documents. The Company shall pay all stamp and other taxes and duties levied in connection with
the sale of the Shares.

     6.2 Entire Agreement. The Transaction Documents, together with the Exhibits and
Schedules thereto, contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements, understandings, discussions and

22

 

representations, oral or written, with respect to such matters, which the parties acknowledge
have been merged into such documents, exhibits and schedules.

     6.3 Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of (a) the date of transmission, if such notice or communication is delivered via
facsimile (provided the sender receives a machine-generated confirmation of successful transmission
and reasonably promptly following such transmission sends such notice or communication via U.S.
mail or overnight courier) at the facsimile number specified in this Section prior to 5:00 p.m.
(New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number specified in this
Section on a day that is not a Trading Day or later than 5:00 p.m. (New York City time) on any
Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice
is required to be given. The address for such notices and communications shall be as follows:

	 	 	 
	If to the Company:

	 	Motorcar Parts of America, Inc.
	 

	 	2929 California Street
	 

	 	Torrance, California 90503
	 

	 	Facsimile No.: (310) 943-1630
	 

	 	Telephone No.: (310) 972-4015
	 

	 	Attention: Michael Umansky, Vice President and General
	 

	 	Counsel
	 
	 	 
	With a copy to:

	 	Dreier Stein & Kahan, LLP
	 

	 	The Water Garden
	 

	 	1620 26th Street Sixth Floor, North Tower
	 

	 	Santa Monica, CA 90404
	 

	 	Facsimile No.: (310) 828-9101
	 

	 	Attention: Robert L. Kahan
	 
	 	 
	and to:

	 	Dreier LLP
	 

	 	499 Park Avenue
	 

	 	New York, NY 10022
	 

	 	Facsimile No.: (212) 328-6101
	 

	 	Attention: Glenn Burlingame
	 
	 	 
	If to an Investor:

	 	To the address set forth under such Investor’s name
	 

	 	on the signature pages hereof;

or such other address as may be designated in writing hereafter, in the same manner, by such
Person.

     6.4 Amendments; Waivers; No Additional Consideration. No provision of this Agreement
may be waived or amended except in a written instrument signed by the Company

23

 

and the Investors holding a majority of the Securities. No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either party to exercise any
right hereunder in any manner impair the exercise of any such right. No consideration shall be
offered or paid to any Investor to amend or consent to a waiver or modification of any provision of
any Transaction Document unless the same consideration is also offered to all Investors who then
hold Shares.

     6.5 Termination. This Agreement may be terminated prior to Closing:

          (a) by written agreement of the Investors and the Company; and

          (b) by the Company or an Investor (as to itself but no other Investor) upon written notice to
the other, if the Closing shall not have taken place by 5:00 p.m. (New York City time) on the
Outside Date; provided, that the right to terminate this Agreement under this Section
6.5(b) shall not be available to any Person whose failure to comply with its obligations under this
Agreement has been the cause of or resulted in the failure of the Closing to occur on or before
such time.

     In the event of a termination pursuant to this Section, the Company shall promptly notify all
non-terminating Investors. Upon a termination in accordance with this Section 6.5, the Company and
the terminating Investor(s) shall not have any further obligation or liability (including as
arising from such termination) to the other and no Investor will have any liability to any other
Investor under the Transaction Documents as a result therefrom.

     6.6 Construction. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.
This Agreement shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement or any of the Transaction Documents.

     6.7 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. Other than in connection with a
merger, consolidation, sale of all or substantially all of the Company’s assets or other similar
change in control transaction, the Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investors holding a majority of the
Shares. Any Investor may assign any or all of its rights under this Agreement to any Person to whom
such Investor assigns or transfers any Securities, provided such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions hereof that apply to the
“Investors.”

     6.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,

24

 

nor may any provision hereof be enforced by, any other Person, except as otherwise set forth
in Section 4.7 (as to each Investor Party).

     6.9 Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the principles of conflicts of
law thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents
(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 (including with
respect to the enforcement of the any of the Transaction Documents), 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 such New York Court, or that such Proceeding has been commenced in an improper
or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a Proceeding to enforce any
provisions of a Transaction Document, then the prevailing party in such Proceeding shall be
reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such Proceeding.

     6.10 Survival. The agreements, covenants, representation and warranties contained
herein shall survive the Closing and the delivery of the Securities.

     6.11 Execution. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission, such signature shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the same force and
effect as if such facsimile signature page were an original thereof.

     6.12 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt
to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this Agreement.

25

 

     6.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction Documents, whenever
any Investor exercises a right, election, demand or option under a Transaction Document and the
Company does not timely perform its related obligations within the periods therein provided, then
such Investor may rescind or withdraw, in its sole discretion from time to time upon written notice
to the Company, any relevant notice, demand or election in whole or in part without prejudice to
its future actions and rights.

     6.14 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued
in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with the issuance of such
replacement Securities. If a replacement certificate or instrument evidencing any Securities is
requested due to a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a replacement.

     6.15 Remedies. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Investors and the Company will be
entitled to specific performance under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in any action for
specific performance of any such obligation the defense that a remedy at law would be adequate.

     6.16 Payment Set Aside. To the extent that the Company makes a payment or payments to
any Investor pursuant to any Transaction Document or an Investor enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent
of any such restoration the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

     6.17 Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor under any Transaction Document are several and not joint with the obligations of any other
Investor, and no Investor shall be responsible in any way for the performance of the obligations of
any other Investor under any Transaction Document. The decision of each Investor to purchase
Securities pursuant to the Transaction Documents has been made by such Investor independently of
any other Investor. Each Investor’s obligations hereunder are expressly not conditioned on the
purchase by any or all of the other Investors of the Shares and the Warrants. Nothing contained
herein or in any Transaction Document, and no action taken by

26

 

any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership,
an association, a joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. Each Investor acknowledges that no other
Investor has acted as agent for such Investor in connection with making its investment hereunder
and that no Investor will be acting as agent of such Investor in connection with monitoring its
investment in the Securities or enforcing its rights under the Transaction Documents. Each
Investor shall be entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other Transaction Documents, and
it shall not be necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the Investors has been provided
with the same Transaction Documents for the purpose of closing a transaction with multiple
Investors and not because it was required or requested to do so by any Investor. The Company’s
obligations to each Investor under this Agreement are identical to its obligations to each other
Investor other than such differences resulting solely from the number of Securities purchased by
each Investor, but regardless of whether such obligations are memorialized herein or in another
agreement between the Company and an Investor.

     6.18 Limitation of Liability. Notwithstanding anything herein to the contrary, the
Company acknowledges and agrees that the liability of an Investor arising directly or indirectly,
under any Transaction Document of any and every nature whatsoever shall be satisfied solely out of
the assets of such Investor, and that no trustee, officer, other investment vehicle or any other
Affiliate of such Investor or any investor, shareholder or holder of shares of beneficial interest
of such a Investor shall be personally liable for any liabilities of such Investor.

[Remainder of Page Intentionally Left Blank]

27

 

     In Witness Whereof, the parties hereto have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date first indicated
above.

	 	 	 	 	 	 	 
	 	 	Motorcar Parts of America, Inc. 	 	  
	 
	 	 	 	 	 	 
	 

	 	By: 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	Name:	 	 	 
	 

	 	 	Title:	 	 	 

[Signature Pages For Investors Follows]

28

 

     In Witness Whereof, the parties hereto have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date first indicated
above.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Name of Investor	 	  
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Investment Amount: $	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Tax ID No.:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	  

	 	 	 	 	 	 	 
	 	 	Address For Notice	 	 
	 
	 	 	 	 	 	 
	 

	 	c/o:	 	 	 	 
	 

	 	 	 	 

	 	  
	 
	 	 	 	 	 	 
	 

	 	Street:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	City/State/Zip:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Attention:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Tel:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Fax:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 	 	 
	 	 	Delivery Instructions 

(if different from above)	 	  
	 
	 	 	 	 	 	 
	 

	 	c/o:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Street:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	City/State/Zip:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Attention:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Tel:	 	 	 	 
	 

	 	 	 	 	 	 

29

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