Document:

daneexh10_3.htm

Exhibit 10.3 - Site Service Agreement 

 

 

JUDY 1 and McDAME MOUNTAIN CLAIMS

SITE SERVICE AGREEMENT

THIS AGREEMENT made effective as of the 8th day of July, 2011.

BETWEEN:

 

S.G. DIAKOW, -----------------------------------------------------------------------

 

(the "Contractor")

OF THE FIRST PART

AND:

 

DANE EXPLORATION INC., 3577 - 349 West Georgia Street, Vancouver,

British Columbia, Canada, V6B 3Y4

 

(the "Client")

OF THE SECOND PART

 

W H E R E A S:

 

	
A.

	
The Client is the owner or has an interest in the land/mineral claims described in Schedule "A" hereto (herein called the "Property");

 

	
B.

	
The Client requires the services of a contractor to perform the work and services outlined in outlined in Schedule "B" herein (herein called the "Work Program");

 

	
C.

	
The Contractor has agreed with the Client to undertake the Work Program on the terms and conditions herein contained, or to arrange for an alternate service provider to be contracted on the on the same, or similar, terms to those included in this Service Agreement.

	
 

 

NOW THEREFORE THIS AGREEMENT WITNESSETH that the consideration of the covenants and agreements herein contained the parties hereto agree as follows:

 

	
 1.

	
Definitions:

 

	
  

	
(a)

	
“AGREEMENT” shall mean this Service Agreement between Mr. S.G. Diakow and Dane Exploration Inc. dated July 8, 2011, as amended from time to time, including all attachments, exhibits, and schedules hereto.

 

	
  

	
(b)

	
“BUDGET” shall mean the estimated cost of the Work Program.

 

	
  

	
(c)

	
“EFFECTIVE DATE” shall be a mutually agreed date to be determined after the Client has successfully raised a minimum of US$50,000 through the sale of common shares of the Client, subsequent to July 8, 2011, and shall mean the date this Agreement becomes effective.

 

 

  

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(d)

	
“PERSONNEL” shall mean S.G. Diakow’s permanent and temporary employees, officers and subcontractors involved in the execution and performance of the present Agreement.

 

	
  

	
(e)

	
“PROPERTY” shall mean the Judy 1 and McDame Mountain Claims, as specified in Schedule ‘A’ hereto.

 

	
  

	
(f)

	
“SERVICE FEE” shall mean fee incurred by the Contractor for personnel, equipment, and services provided or supplied with respect to the Work Program plus an administration fee of 15%.

 

	
  

	
(g)

	
“WORK PROGRAM” shall mean all of the services to be performed by S.G. Diakow as designated in Schedule “B” as the work and services to be performed by the Contractor.

2.           Contractor's Services

	
  

	
(a)

	
The Contractor shall perform the work and provide the services with respect to the Work Program as designated in the Budget as the work and services to be performed by the Contractor and, such additional work and services as may from time to time be mutually agreed to by the Contractor and the Client.

	
  

	
(b)

	
In the event that the Contractor is requested to perform any services or work which falls outside of the scope of the Work Program defined herein, it shall forthwith perform the same and the Client agrees to compensate the Contractor for such additional work and services performed.

	
  

	
(c)

	
The Contractor shall, in addition to the Work Program defined herein, perform the following duties:

	
  

	
(i)

	
at the cost of the Client, apply for and maintain in full force and effect any and all governmental permits and approvals required for the lawful undertaking of the Work Program;

	
  

	
(ii)

	
comply with all terms and conditions applicable to the Client or the Work Program contained in any governmental permit or approval required or obtained for the lawful prosecution of the Work Program, or in any insurance policy affecting or covering the Work Program, or in any surety bond obtained in connection with the Work Program;

	
  

	
(iii)

	
furnishing such consultation and advice relating to the Work Program as may be reasonably requested from time to time by the Client;

	
  

	
(iv)

	
keeping the Client fully informed on a regular basis of the progress of the Work Program, including the preparation of such reports as are provided for herein or as may reasonably be requested by the Client and which are of a nature generally requested or expected of contractors on similar projects;

 

 

  

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(d)

	
The Contractor shall report on the progress of the Work Program every two weeks, which report shall include:

	
  

	
(i)

	
the cost incurred to date of the report for the Work Program;

	
  

	
(ii)

	
comparison of the costs of the Work Program contained in the budget with the actual costs of the Work Program to the date of the report;

	
  

	
(iii)

	
an estimate of any anticipated cost over-runs for any item contained in the Budget.

	
  

	
(e)

	
The Contractor shall hire and retain at the expense of the Contractor and as employees of the Contractor, and not as employees of the Client, such personnel as may be required to properly perform the Contractor's function hereunder.  The compensation, retention and performance of employees hired by the Contractor at its own expense shall be controlled exclusively by the Contractor, and the Contractor shall be responsible for complying with all laws and regulations affecting such employment, including the provision of any benefits or compensation requested by statute or contract.

3.           Budget

 

	
  

	
As soon as practicable after minimum funding of US$50,000 has been secured by the Client through sales of its shares subsequent to July 8, 2011 and the Work Program has been determined, and in any event prior to commencement of the Work Program, the Contractor shall prepare and submit to the Client for its review and approval a budget for the Work Program (herein the "Budget") showing the estimated cost of the Work Program broken down by line item, including a reasonable allowance for contingencies and reserves.  The Contractor shall update the Budget as and when any material change occurs in the Work Program or in the assumptions of the items contained in the Budget.  The approval by the client of the Budget, including any amended Budget, shall constitute approval to the Contractor to make any expenditures described therein or actions reasonably necessary to carry out such budgeted expenditures.  However, this shall not preclude the Contractor from performing services and incurring expenses under the Work Program whether original or amended, prior to approval of the Budget by the Client, and any such expenditure by the Contractor shall be reimbursed by the Client as per Paragraph 4 of the Contract.

4.           Compensation

	
  

	
(a)

	
As compensation for the services to be provided by the Contractor hereunder, the Client shall pay to the Contractor a "Service Fee" for the personnel, equipment and services provided or supplied with respect to the Work Program at the rates equal to the Contractor's charge out rates for such personnel, equipment and services, plus a 15% fee. The Contractor shall prepare and deliver to the Client bi-monthly statements showing the amount of the Contractor's Service Fee for the preceding bi-monthly period and the Client shall cause the Contractor's Service to be paid within fifteen (15) days of the receipt of the said statement setting forth the Contractor's Service Fee.

 

 

 

  

3

  

 

	
  

	
(b)

	
In the event that the Client directs or instructs the Contractor to perform or furnish any services or work which falls outside the scope of the Work Program and/or the services to be provided herein, the Contractor shall be entitled to receive such additional compensation as shall be mutually agreed upon, or in the absence of such agreement as shall be reasonable and equitable under the circumstances.

	
5.

	
Duration and Termination

(i).      Initial Term and Renewal

	
  

	
The initial term during which S.G. Diakow shall be obligated to perform the work and services under the present agreement shall commence on the Effective Date and end upon final Completion of the Work Program.

(ii).      Early Termination

 

	
  

	

This Agreement shall terminate and be at an end in the event that:

 

	
  

	
(a)

	
Termination by Mutual Agreement

 

	
  

	

The Parties may mutually agree to terminate this Agreement;

 

	
  

	
(b)

	
Termination for Contractor’s bankruptcy or insolvency

 

	
  

	
The Client shall have the right to terminate the present Agreement upon 30 (thirty) days written notice to the Contractor in the event the Contractor files a voluntary assignment in bankruptcy or is to be adjudicated as bankrupt or insolvent, or files any petition seeking a reorganization arrangement, liquidation, dissolution or similar relief under any present or future law relating to bankruptcy, insolvency or other relief for debtors or shall seek, consent to or acquiesce in the appointment of any trustee, receiver, conservator or liquidator of the Contractor, or of all or a substantial part of its assets;

 

	 	
(c)

	
Termination for non-performance of work and services by Contractor

 

	
  

	
(i)

	
In the event the Contractor fails to perform the Work Program in the manner or within the time required or commits or permits a breach of or default in any of its duties, liabilities or obligations hereunder and fails to fully cure or remedy such failure, breach or default within thirty (30) days after written notice specifying the nature of such failure, breach or default by the Contractor, or if such breach or default cannot be reasonably cured within the said thirty (30) days, fails to commence such cure or remedy within the said thirty (30) day period or at any time thereafter fails to diligently prosecute such cure or remedy to completion, the Client shall have the right to terminate the Agreement upon 30 (thirty) days written notice to the Contractor. If the Contractor fails repeatedly to perform its

 

 

  

4

  

 

	
  

	
obligations under this Agreement in a timely or satisfactory fashion and thereby materially interferes with the Client's schedule for completion of the Work Program, provided that the Client has previously notified the Contractor in writing of one or more prior failures to perform in a timely or satisfactory fashion and the Contractor has failed to or could not correct such prior failure, and, in one or more subsequent instances, has failed to perform its obligations in a timely or satisfactory fashion, the Client shall have the right to terminate the Agreement upon 30 (thirty) days written notice to the Contractor.

	
  

	
(d)

	
Termination for non-payment of Service Fee by Client

	
  

	
In the event the Client fails to pay the Contractor's Service Fee from time to time as and when the Service Fee shall be due and payable, the Contractor shall have the right to terminate the Agreement upon 30 (thirty) days notice to the Client.

	
  

	
(e)

	
Termination for change in control

	
  

	
In the event of the Client disposing of all or any part of its interest in the Property prior to the completion of the Work Program by the Contractor without the prior consent of the Contractor, the Contractor shall have the right to terminate the Agreement upon 30 (thirty) days written notice.

	
  

	
(f)

	
Termination for non-approval for Amended Budget, Excessive, Unnecessary or Unreasonable Costs

 

	
  

	
The client shall have the right to terminate the Agreement upon 30 (thirty) days written notice in the event that:

 

	
  

	
(i)

	
the Client does not approve any amended Budget or Work Program submitted to it by the Contractor;

	
  

	
(ii)

	
the cost of carrying out the Work Program exceeds the Budget by an amount exceeding fifteen (15%) percent of the Budget;

	
  

	
(iii)

	
the contractor incurs costs which are unnecessary or unreasonable and not in accordance with prudent and generally accepted industry practices.

6.           Ownership of Information and Material

	
  

	
The Contractor shall, upon completion of the Work Program or any sooner termination of this Agreement, deliver to the Client all written data and information generated by or for the Client in connection with the Work Program, and all drawings, plans, books, records, contracts, agreements and all other data, information and documents in its possession relating to its services or the Work Program, and the Client shall have the right to use the same without further compensation to the Contractor.  The Contractor agrees, for itself and all personnel retained or employed by the Contractor in

  

5

  

	
  

	
performing its services, to hold in confidence and not to use or disclose to others any confidential or proprietary information or data of the Client which came within the knowledge of the Contractor as a result of its services, except where (i) the Client specifically authorizes the Contractor to disclose any of the foregoing to others or such disclosure reasonably results from the performance of the Contractor's services hereunder, or (ii) such data or information shall have theretofore been made publicly available by parties other than the Contractor or any such persons.

7.           Licenses

	
  

	
The Contractor shall, at its own expense, qualify to do business and obtain and maintain such licenses as may be required for the performance by the Contractor of its services.

9.           Indemnity

	
  

	
(a)

	
The Contractor hereby agrees to indemnify, defend and hold harmless the Client from and against any and all claims, demands, losses, liabilities, actions, lawsuits and other proceedings, judgments and awards, and costs and expenses (including reasonable legal fees), arising directly or indirectly, in whole or in part, out of the negligence or any willful act or omission of the Contractor, or any of its officers, directors, agents or employees in connection with this Agreement or the Contractor's services or work hereunder,  within the scope of its duties or authority hereunder.  The provisions of this paragraph shall survive the termination of this Agreement.

	
  

	
(b)

	
The Client hereby agrees to indemnify, defend and hold harmless the Contractor, its officers, directors and employees, from and against any and all claims, demands, losses, liabilities, actions, lawsuits and other proceedings, judgments and awards, and costs and expenses (including reasonable legal fees), arising directly or indirectly in whole or in part, out of any action taken by the Contractor within the scope of its duties or authority hereunder, excluding only such of the foregoing as result from the negligent or willful act of the Contractor, its officers, directors, agents and employees.  The provisions of this paragraph shall survive the completion of the Contractor's services hereunder or any earlier termination of this Agreement.

10.           Independent Contractor

	
  

	
In performing its services hereunder, the Contractor shall be an independent contractor and not an employee or agent of the Client.

11.           Severability

	
  

	
Each provision of this Agreement is intended to be severable.  If any term or provision hereof shall be determined by a court of competent jurisdiction to be illegal or invalid for any reason whatsoever, such provision shall be severed from this Agreement and shall not affect the validity of the remainder of this Agreement.

 

 

  

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15.

	
Governing Law

	
  

	
This Agreement is entered into in the Province of British Columbia, Canada and shall be governed by the laws thereof.

16.           Time of Essence

	
  

	
Subject to the provision of Paragraph 17, time is of the essence in the performance of this Agreement.

17.           Force Majeure

	
  

	
A delay in or failure of performance by either party hereto other than the payment of money, shall not constitute a default, nor shall the Client or the Contractor be held liable for loss or damage, if and to the extent that such delay, failure, loss or damage is caused by occurrences beyond the reasonable control of such party, and its agents, employees, contractors, subcontractors and consultants, including but not limited to Acts of God, expropriation or confiscation of facilities, compliance with any order or request of any governmental authority or person purporting to act therefore, acts of declared or undeclared war, weapon of war employing atomic fission or radioactive force, whether in the time of peace or war, public disorders, rebellion, sabotage, revolution, earthquake, floods, riots, strikes, labour or employment difficulties, delays in transportation, inability of a party to obtain necessary materials or equipment or permits due to existing or future laws, rules or regulations of governmental authorities, or any other causes, whether direct or indirect, and whether or not of the same class or kind as those specifically above named, not within the reasonable control of such party, or its agents, employees, contractors, subcontractors and consultants, and which by the exercise of reasonable diligence the said party is unable to prevent.  However, (i) the Contractor shall not be entitled to the benefits of this Paragraph 17 unless it gives prompt written notice to the Client of the existence of any event, occurrence or condition which it believes permits a delay in the performance of its obligations pursuant to this Paragraph 17, and (ii) no such event, occurrence or condition referred to in this Paragraph 17 shall prevent the parties from terminating this Agreement pursuant to Paragraph 5.

	
20.

	
Modification of Agreement

	
  

	
This Agreement constitutes the entire agreement between the parties hereto.  To be effective any modifications of this Agreement must be in writing and signed by the party to be charged thereby.

21.           Headings

	
  

	
The headings of the Paragraphs of this Agreement are inserted for convenience of reference only and shall not in any manner affect the construction or meaning of anything herein contained or govern the rights or liabilities of the parties hereto.

 

 

 

  

7

  

 

 

	
22.

	
Interpretation

	
  

	
Whenever the content requires, all words used in the singular number shall be deemed to include the plural and vice versa, and each gender shall include any other gender.

23.           Notices

 

	
  

	
All notices, requests and communications required or permitted hereunder shall be in writing and shall be sufficiently given and deemed to have been received upon personal delivery or, if mailed, upon the first to occur of actual receipt of forty-eight (48) hours after being placed in a regularly maintained receptacle for the deposit of mail, postage prepaid, registered or certified mail, with return receipt requested, addressed to the above parties as follows:

CLIENT:                                DANE EXPLORATION INC.

3577 - 349 West Georgia Street

Vancouver, British Columbia, Canada, V6B 3Y4

Tel:   604.805.7292

Fax:  604.241.8411

 

CONTRACTOR:                S.G. DIAKOW

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

 

Notice of a change in address of one of the parties shall be given in writing to the other party as provided above, but shall be effective only upon actual receipt.

IN WITNESS WHEREOF, the parties have hereunto set their hands as of the day and year first above written.

DANE EXPLORATION INC.,

/s/ David Christie

David Christie, President & CEO

Contractor:

/s/ S.G. Diakow

S.G. Diakow

 

 

 

  

8

  

SCHEDULE "A"

PROPERTY DESCRIPTION: Judy 1 and McDame Mountain Claims

'Property' shall mean British Columbia Mineral Tenure 735182 (the “Judy 1 Claim”) and British Columbia Mineral Tenure 821402 (the “McDame Mountain Claim”), both located 2 kilometres (1.5 miles) northeast of Cassiar, British Columbia, Canada, comprising an area of 627.96 hectares (1551.68 acres) on McDame Mountain, British Columbia, Canada.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

9

  

SCHEDULE "B"

 

DESCRIPTION OF WORK AND SERVICES

TO BE PERFORMED BY CONTRACTOR AND CHARGES

It appears the Judy 1 and McDame Mountain claims (the 'Judy Claims'), are underlain by both Sylvester and McDame Group rocks in proximity to a granitic pluton (Cassiar intrusive) and a major fault zone, the area has attractive mineral potential that should be investigated by reference to various data sources and by field work. Of particular interest will be the publications, both historic and recent, of the provincial Ministry of Energy and Mines. Review of the regional geochemical data may help focus exploration initiatives but will not take the place of ground-based prospecting efforts. A suitably equipped experienced prospecting team should spend about one week performing a reconnaissance survey of the entire claim. They should record the various rock types, structures and any mineral zones and submit appropriate rock, soil and stream sediment samples for analysis. The cost of this program of Phase 1 work will be approximately US$11,500 and when completed the results of the work should be considered with reference to the regional database to determine if further work is justified.

A second program of work should be undertaken if sufficient encouragement is obtained from the prospecting and reconnaissance survey work. It can be anticipated that the program if justified, will include further rock and soil geochemistry sampling, a limited amount of trenching using hand tools and dynamite, additional geochemical sampling, and simple geophysical survey methods. A Phase 2 budget of  US$36,000 is recommended, but is likely scalable down to $17,500. This would include four person crew to prospect, sample and, possibly, trenching and geophysical surveys. Allow for two weeks field work, 50 rock samples. 150 samples, rental of portable rock drill, explosives.

Completion of Phase 2 should be followed again by a thorough review of data obtained. One or more areas of mineral potential should have been recognized and at least partially defined.

A Phase 3 program is speculative, depending upon the location and configuration of the mineral zones. It is likely that further geophysical surveys with different techniques or more densely spaced observations, will be required to assist in designing a program of diamond drill holes to test the deeper potential of the “best” parts of the area. Costs, including the cost of a limited drilling campaign, are difficult to estimate but in a somewhat remote area such as McDame Mountain are likely to be fairly high. Phase 3 should be expected to cost a scalable total of up to US$350,000.

  

10

  

 

 

SCHEDULE "B"

BUDGET (US Dollars) – all cost estimates include 15% Service Fee component

	(a)   Phase 1 – Preliminary Work  – Review of Regional Database:	 	 	 
	 	
allowance for purchase of maps, air photographs, publications

	 	$	500.00	 
	 	
review files at Geological Survey Branch, Victoria and

	 	 	 	 
	 	
Vancouver, allowance for travel and living expenses

	 	$	500.00	 
	 	
wages

	 	$	600.00	 
	(b)  Phase 1  - Field Work  –  Two person prospecting crew, five days in the field:	 	 	 	 
	 	
mobilization to Cassiar district, travel costs, et al., allow

	 	$	1,500.00	 
	 	
prospecting and camping gear

	 	$	200.00	 
	 	
groceries and other supplies

	 	$	500.00	 
	 	
analytical costs, including freight, 80 samples

	 	$	1,600.00	 
	 	
wages – for two persons for five days @ $800/day

	 	$	4,000.00	 
	 	
assembling and reporting results of field work allow

	 	$	600.00	 
	Anticipated Cost of Preliminary Review and Field Work	 	$	10,000.00	 
	Allowance for unscheduled expenses @ 15%	 	$	1,500.00	 
	 	  	 	 	 	 
	PHASE 1 - Anticipated Cost of Preliminary Phase 1 Review and Field Work: 	 	$	11,500.00	 

Phase 2 – Follow- up Work

 

	 Phase 2 – Initial Drilling and Trenching  – Four person crew to prospect, sample and, possibly, trenching and geophysical surveys. Allow for two weeks field work, 50 rock samples. 150 samples, rental of portable rock drill, explosives:	 	 	 
	  	
mobilization to Cassiar district, including travel

	 	$	2,500.00	 
	  	
equipment & provisions

	 	$	4,900.00	 
	  	
drill and backhoe rentals, based on a small Kabota type tracked

	 	 	 	 
	  	
backhoe and use of ATV’s to access target zones

	 	$	10,100.00	 
	  	
assays, including freight costs

	 	$	2,000.00	 
	  	
wages

	 	$	14,000.00	 
	  	
reports to analyze results of chip samples produced from trenching

	 	$	500.00	 
	
Anticipated Cost of Initial Drilling and Trenching Work

	 	$	34,000.00	 
	
Allowance for unscheduled expenses @ 15%

	 	$	2,000.00	 
	  	  	 	 	 	 
	
PHASE 2 - Anticipated Cost of Initial Drilling and Trenching Work:

	 	$	36,000.00	 

Phase 3 – More surveys, followed by diamond drilling

 

Selected target areas will have to be more carefully detailed in order to identify drill sites. Geophysical surveys, either of a different method or on a more dense grid, should clarify the type of structure being investigated and will ensure that diamond drill holes are placed in the most prospective areas. Speculatively, an initial drill program of 1500 to 2000 meters is likely to be required.  Drilling costs in the Cassiar area are in the range of $60 to $70 per foot of drilling. All-in costs, based on using a light weight helicopter portable drill rig, are estimated in the range of $60,000 to $70,000 per 1,000 feet of drilling.

	
PHASE 3 - Anticipated Cost of More surveys, followed by diamond

	 	 	 	 
	
drilling are estimated at:

	 	 	US$	45,000	 
	  	to	 	US$	350,000	 

 

 

 

11ex10_1.htm

Exhibit 10.1

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has been filed with the Securities and Exchange Commission.

SECOND AMENDMENT TO FINANCING AGREEMENT

SECOND AMENDMENT, dated as of May 24, 2012 (this "Second Amendment"), to the Financing Agreement, dated as of January 18, 2012 (as amended by First Amendment to Financing Agreement, dated as of March 18, 2012, and as further amended, restated, supplemented, modified or otherwise changed from time to time, the "Financing Agreement"), by and among Motorcar Parts of America, Inc., a New York corporation (the "Borrower"), the lenders from time to time party thereto (each a "Lender" and collectively, the "Lenders"), Cerberus Business Finance, LLC, a Delaware limited liability company ("Cerberus"), as collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the "Collateral Agent"), and PNC Bank, National Association ("PNC"), as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the "Administrative Agent" and together with the Collateral Agent, each an "Agent" and collectively, the "Agents").

 

WHEREAS, the Borrower, the Agents and the Lenders wish to amend certain terms and provisions of the Financing Agreement as hereafter set forth.

 

NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the parties hereto hereby agree as follows:

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

2.             Amendments.

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

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

 

  

  

  

 

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

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

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

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

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

 

""Second Amendment" means the Second Amendment to this Agreement, dated as of May __, 2012, among the Borrower, the Agents and the Lenders."

 

""Second Amendment Effective Date" means the date on which the Second Amendment shall become effective in accordance with its terms."

 

""Total Additional Term Loan Commitment" means the sum of the amounts of the Lenders' Additional Term Loan Commitments."

 

""Total Initial Term Loan Commitment" means the sum of the amounts of the Lenders' Initial Term Loan Commitments."

 

[***]

 

*** Confidential material redacted and filed separately with the Securities and Exchange Commission.

  

  

  

 

""Warrant" means the warrant certificate covering the purchase of shares of common stock of the Borrower substantially in the form of Exhibit H hereto, together with the rights to purchase such common stock of the Borrower provided thereby and all warrant certificates covering such common stock issued upon transfer, division or combination of, or in substitution for, any thereof. For the avoidance of doubt, the Warrant is not a "Loan Document" and the Borrower's obligations thereunder shall not constitute "Obligations.""

 

(c)           Existing Definitions.

 

(i)           The definition of "Affiliate" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

 

""Affiliate" means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person.  For purposes of this definition, "control" of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the Equity Interests having ordinary voting power for the election of members of the Board of Directors of such Person or (b) direct or cause the direction of the management and policies of such Person whether by contract or otherwise.  Notwithstanding anything herein to the contrary, in no event shall any Agent, any Lender or any of their respective Affiliates be considered an "Affiliate" of any Loan Party."

 

(ii)           The definition of "Applicable EBITDA Multiple" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

 

""Applicable EBITDA Multiple" means, 3.00, on and as of the Effective Date, which multiple will be subsequently adjusted as of the end of each fiscal quarter thereafter of the Borrower and its Subsidiaries as set forth below for the immediately succeeding fiscal quarter.

 

	
Fiscal Quarter Ended

	
Applicable EBITDA Multiple

	
March 31, 2012

	
3.20

	
June 30, 2012

	
3.30

	
September 30, 2012

	
3.40

	
December 31, 2012

	
3.20

	
March 31, 2013

	
3.10

	
June 30, 2013

	
3.10

	
September 30, 2013

	
2.85

	
December 31, 2013

	
2.85

	
March 31, 2014

	
2.85

	
June 30, 2014

	
2.60

	
September 30, 2014

	
2.60

	
December 31, 2014

	
2.60

	
March 31, 2015 and each fiscal quarter ended thereafter

	
2.35"

  

  

  

 

(iii)           The definition of "Applicable Margin" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

 

""Applicable Margin" means, as of any date of determination, (a) with respect to the interest rate of a Revolving Loan that is (i) a Reference Rate Loan or any portion thereof, 2.50% and (ii) a Eurodollar Rate Loan or any portion thereof, 3.00% and (b) with respect to the interest rate of a Term Loan that is (i) a Reference Rate Loan or any portion thereof, 7.50% and (ii) a Eurodollar Rate Loan or any portion thereof, 8.50%."

 

(iv)           The definition of "Fee Letter" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

 

""Fee Letter" means the amended and restated fee letter, dated as of the Second Amendment Effective Date, among the Borrower and the Collateral Agent."

 

(v)           The definition of "Material Contracts" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

 

""Material Contract" means, with respect to any Person, (a) each contract or agreement to which such Person or any of its Subsidiaries is a party involving aggregate consideration payable to or by such Person or such Subsidiary of $1,000,000 or more in any Fiscal Year (other than (i) purchase orders in the ordinary course of the business of such Person or such Subsidiary and (ii) contracts that by their terms may be terminated by such Person or Subsidiary in the ordinary course of its business upon less than 60 days' notice without penalty or premium), (b) [***] and (c) all other contracts or agreements material to the business, operations, condition (financial or otherwise), performance, prospects or properties of such Person or such Subsidiary."

 

*** Confidential material redacted and filed separately with the Securities and Exchange Commission.

 

  

  

  

 

(vi)           Clause (e) of the definition of "Permitted Indebtedness" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

 

"(e)           (i) Permitted Intercompany Advances and (ii) Investments permitted by clause (g) or (h) of the definition of Permitted Investments;"

 

(vii)           Clauses (g) and (h) of the definition of "Permitted Investment" in Section 1.01 of the Financing Agreement are hereby amended and restated in their entirety to read as follows:

 

"(g)           Investments in Fenwick and its Subsidiaries pursuant to [***] solely to the extent the aggregate amount of such Investment does not exceed $10,000,000 at any time outstanding; provided, that if [***] is amended to decrease the undrawn amount of [***] (such amendment to be in form and substance reasonably satisfactory to each Agent), the amount by which the [***] is reduced pursuant to such amendment will be added to the basket for Investments in the Excluded Subsidiaries described in clause (h) below;

 

(h)           Investments in the Excluded Subsidiaries (other than the Investment described in clause (g) above) in an aggregate amount not to exceed $10,000,000 at any time outstanding; provided, that such amount may be increased pursuant to the proviso in clause (g) above; provided, further that the aggregate amount of Investments made pursuant to clauses (g) and (h) shall not exceed $20,000,000 at any time;"

 

(viii)           The definition of "Term Loan" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

 

""Term Loan" means, collectively, the loans made by the Term Loan Lenders to the Borrower on the Effective Date and the Second Amendment Effective Date pursuant to Sections 2.01(a)(ii) and (a)(iii)."

 

(ix)           The definition of "Term Loan Commitment" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

 

""Term Loan Commitment" means an Initial Term Loan Commitment and/or an Additional Term Loan Commitment."

 

*** Confidential material redacted and filed separately with the Securities and Exchange Commission.

  

  

  

 

(x)           The definition of "Total Term Loan Commitment" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

 

""Total Term Loan Commitment" means the sum of (a) the amount of the Lenders' Initial Term Loan Commitments and (b) the amount of the Lenders' Additional Term Loan Commitments."

 

	
  

	
[***]

 

(d)           Section 2.01(a) (Commitments).  Section 2.01(a) of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

 

"(a)           Subject to the terms and conditions and relying upon the representations and warranties herein set forth:

 

  (i)           each Revolving Loan Lender severally and not jointly agrees to make Revolving Loans to the Borrower at any time and from time to time after the Effective Date to the Final Maturity Date, or until the earlier reduction of its Revolving Credit Commitment to zero in accordance with the terms hereof, in an aggregate principal amount of Revolving Loans at any time outstanding not to exceed the amount of such Lender's Revolving Credit Commitment;

 

  (ii)          each Term Loan Lender severally agrees to make a Term Loan to the Borrower on the Effective Date, in an aggregate principal amount not to exceed the amount of such Lender's Initial  Term Loan Commitment;

 

  (iii)         each Term Loan Lender severally agrees to make a Term Loan to the Borrower on the Second Amendment Effective Date, in an aggregate principal amount not to exceed the amount of such Lender's Additional Term Loan Commitment; and

 

  (iv)         notwithstanding anything to the contrary contained in this Section 2.01(a), the Loan Parties hereby acknowledge, confirm and agree that (A) immediately prior to the Second Amendment Effective Date, the outstanding principal amount of the Term Loan is equal to $75,000,000 (such Indebtedness being hereinafter referred to as the "Existing Term Loan Indebtedness"), (B) such Existing Term Loan Indebtedness shall not be repaid on the Second Amendment Effective Date, but rather shall be re-evidenced by this Agreement as a portion of the Term Loan outstanding hereunder, (C) the additional Term Loan made on the Second Amendment Effective Date shall be an amount equal to the

 

*** Confidential material redacted and filed separately with the Securities and Exchange Commission.

  

  

  

 

Total Additional Term Loan Commitment, and (D) for all purposes of this Agreement and the other Loan Document, the sum of the Existing Term Loan Indebtedness immediately prior to the Second Amendment Effective Date ($75,000,000) and the additional Term Loan made on the Second Amendment Effective Date ($10,000,000) shall constitute the Term Loan outstanding on the Second Amendment Effective Date in the aggregate principal amount of $85,000,000."

 

(e)           Section 2.01(b)(ii) (Term Loan Commitments).  Section 2.01(b)(ii) of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

 

"(ii)           The aggregate principal amount of the Term Loan made on the Effective Date shall not exceed the Total Initial Term Loan Commitment.  The aggregate principal amount of the Term Loan made on the Second Amendment Effective Date shall not exceed the Total Additional Term Loan Commitment.  Any principal amount of the Term Loan which is repaid or prepaid may not be reborrowed."

 

(f)           Section 2.02(a)(ii) (Making the Loans).  Section 2.02(a)(ii) of the Financing Agreement is hereby amended by replacing the reference therein to "with respect to the Term Loan, must be the Effective Date", with "with respect to the Term Loan, must be either the Effective Date or the Second Amendment Effective Date."

 

(g)           Section 2.03(b) (Repayment of Loans; Evidence of Debt).  Section 2.03(b) of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

 

"(b)           The outstanding unpaid principal amount of the Term Loan shall be repayable in consecutive quarterly installments on the first day of each calendar quarter commencing on October 1, 2012, and ending on the Final Maturity Date, as set forth below:

 

	
Payment Date

	 	
Installment

	 
	
October 1, 2012

	 	$	250,000	 
	
January 1, 2013

	 	$	250,000	 
	
April 1, 2013

	 	$	600,000	 
	
July 1, 2013

	 	$	600,000	 
	
October 1, 2013, and the first day of each calendar quarter thereafter

	 	$	1,350,000	 

 

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

 

  

  

  

 

(h)           Section 2.05(a)(ii) (Reduction of Term Loan Commitments).  Section 2.05(a)(ii) of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

 

"(ii)           Term Loan.  The Total Initial Term Loan Commitment shall terminate at 5:00 p.m. (New York time) on the Effective Date.  The Total Additional Term Loan Commitment shall terminate at 5:00 p.m. (New York time) on the Second Amendment Effective Date."

 

(i)           Section 5.03 (Conditions Subsequent to Effectiveness).  Section 5.03 of the Financing Agreement is hereby amended by (i) deleting "and" at the end of Section 5.03(d), (ii) replacing the period at the end of Section 5.03(e) with "; and" and (iii) inserting the following clause (f) after Section 5.03(e):

 

"(f)           on or before the date that is 30 days after the Second Amendment Effective Date, a certificate of the appropriate official(s) of the State of Tennessee certifying as of a recent date as to the subsistence in good standing of, and, to the extent obtainable with the use of commercially reasonable efforts, the payment of taxes by, of the Borrower in such jurisdiction."

 

(j)           Section 7.02(b) (Indebtedness).  Section 7.02(b) of the Financing Agreement is hereby amended and restated to read as follows:

 

"(b)           Indebtedness.  Create, incur, assume, guarantee or suffer to exist, or otherwise become or remain liable with respect to, or permit any of its Subsidiaries to create, incur, assume, guarantee or suffer to exist or otherwise become or remain liable with respect to, any Indebtedness other than Permitted Indebtedness. For the avoidance of doubt, the Loan Parties shall not guarantee any Indebtness of the Excluded Subsidiaries, [***]."

 

(k)           Section 7.02(h) (Restricted Payments).  Section 7.02(h) of the Financing Agreement is hereby amended by (i) deleting "and" at the end of clause (D) of the proviso, (ii) replacing the period at the end of clause (E) of the proviso with "; and" and (iii) inserting the following clause (F) after clause (E) thereof:

 

"(F) except as provided in the Warrant."

 

(l)           Section 7.02(v) (Minimum Cash Requirement).  Section 7.02 is hereby amended by adding the following clause (v) at the end of Section 7.02:

 

*** Confidential material redacted and filed separately with the Securities and Exchange Commission.

  

  

  

 

"(v)           Minimum Cash Requirement.  Fail to maintain cash and Cash Equivalents in Controlled Deposit Accounts in an aggregate amount of at least $10,000,000 [***]."

 

(m)           Section 7.03(a) (Senior Leverage Ratio).  Section 7.03(a) of the Financing Agreement is hereby amended and restated to read as follows:

 

"(a)           Senior Leverage Ratio.  Permit the Senior Leverage Ratio of the Borrower and its Subsidiaries for any period of 4 consecutive fiscal quarters of the Borrower and its Subsidiaries for which the last fiscal quarter ends on a date set forth below to be greater than the ratio set forth opposite such date:

 

*** Confidential material redacted and filed separately with the Securities and Exchange Commission.

  

  

  

 

	
Fiscal Quarter End

	 	
Senior Leverage Ratio

	
March 31, 2012

	 	
3.00:1.00

	
June 30, 2012

	 	
3.30:1.00

	
September 30, 2012

	 	
3.40:1.00

	
December 31, 2012

	 	
3.30:1.00

	
March 31, 2013

	 	
3.05:1.00

	
June 30, 2013

	 	
3.05:1.00

	
September 30, 2013

	 	
3.05:1.00

	
December 31, 2013

	 	
2.80:1.00

	
March 31, 2014

	 	
2.80:1.00

	
June 30, 2014

	 	
2.80:1.00

	
September 30, 2014

	 	
2.80:1.00

	
December 31, 2014

	 	
2.55:1.00

	
March 31, 2015

	 	
2.55:1.00

	
June 30, 2015

	 	
2.30:1.00

	
September 30, 2015

	 	
2.30:1.00

	
December 31, 2015

	 	
2.30:1.00

	
March 31, 2016 and each fiscal quarter ended thereafter

	 	
2.30:1.00"

 

(n)           Section 7.03(b) (Fixed Charge Coverage Ratio).  Section 7.03(b) of the Financing Agreement is hereby amended and restated to read as follows:

 

"(b)           Fixed Charge Coverage Ratio.  Permit the Fixed Charge Coverage Ratio of the Borrower and its Subsidiaries for any period of 4 consecutive fiscal quarters of the Borrower and its Subsidiaries for which the last fiscal quarter ends on a date set forth below to be less than the ratio set forth opposite such date:

 

  

  

  

 

	
Fiscal Quarter End

	 	
Fixed Charge Coverage Ratio

	
March 31, 2012

	 	
1.20:1.00

	
June 30, 2012

	 	
1.10:1.00

	
September 30, 2012

	 	
1.10:1.00

	
December 31, 2012

	 	
1.10:1.00

	
March 31, 2013

	 	
1.15:1.00

	
June 30, 2013

	 	
1.15:1.00

	
September 30, 2013

	 	
1.15:1.00

	
December 31, 2013

	 	
1.15:1.00

	
March 31, 2014

	 	
1.05:1.00

	
June 30, 2014

	 	
1.05:1.00

	
September 30, 2014

	 	
1.05:1.00

	
December 31, 2014

	 	
1.05:1.00

	
March 31, 2015

	 	
1.10:1.00

	
June 30, 2015

	 	
1.15:1.00

	
September 30, 2015

	 	
1.15:1.00

	
December 31, 2015

	 	
1.15:1.00

	
March 31, 2016 and each fiscal quarter ended thereafter

	 	
1.15:1.00"

 

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

 

	  	
"if to the Collateral Agent, to it at the following address:

	 	 
	  	
Cerberus Business Finance, LLC

	  	
875 Third Avenue

	  	
New York, New York 10022

	  	
Attention:  Daniel Wolf

 

  

  

  

 

	  	
Telephone:  212-891-1550

	  	
Telecopier:  212-891-1541

	 	 
	  	
with a copy to:

	 	 
	  	
Cerberus California, LLC

	  	
11812 San Vicente Blvd., Suite 300

	  	
Los Angeles, California 90049

	  	
Attention:  Kevin Cross and Christopher Hebble

	  	
Telephone:  310-826-9200

	  	
Telecopier:  310-826-9203

	 	 
	  	
and

	 	 
	  	
Schulte Roth & Zabel LLP

	  	
919 Third Avenue

	  	
New York, New York  10022

	  	
Attention:  Frederic L. Ragucci, Esq.

	  	
Telephone:  212-756-2000

	  	
Telecopier:  212-593-5955"

 

(p)           Schedules to Financing Agreement.  Schedule 1.01(A) of the Financing Agreement is hereby replaced in its entirety with the new Schedule 1.01(A) attached as Annex I hereto.

 

(q)           Exhibits to Financing Agreement.  Exhibit H of the Financing Agreement is attached as Annex II hereto.

 

3.             Conditions to Effectiveness.  The effectiveness of this Second Amendment is subject to the fulfillment, in a manner satisfactory to the Agents, of each of the following conditions precedent (the date such conditions are fulfilled or waived by the Agents is hereinafter referred to as the "Second Amendment Effective Date"):

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

 

  

  

  

 

(b)           Execution of Amendment.  The Agents and the Lenders shall have executed this Second Amendment and shall have received a counterpart to this Second Amendment, duly executed by each Loan Party.

 

(c)           Payment of Fees, Etc.  The Borrower shall have paid on or before the Second Amendment Effective Date all fees and invoiced costs and expenses then payable by the Borrower pursuant to the Loan Documents, including, without limitation, Sections 2.06 and 12.04 of the Financing Agreement.

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

(i)          certified copies of request for copies of information on Form UCC-11, listing all effective financing statements which name as debtor any Loan Party, together with copies of such financing statements, none of which, except as otherwise agreed in writing by the Collateral Agent, shall cover any of the Collateral and the results of searches for any tax Lien and judgment Lien filed against such Person or its property, which results, except as otherwise agreed to in writing by the Collateral Agent, shall not show any such Liens, other than Permitted Liens;

 

(ii)         a copy of the resolutions of each Loan Party, certified as of the Second Amendment Effective Date by an Authorized Officer thereof, authorizing (A) the additional borrowings and transactions contemplated hereby and (B) the execution, delivery and performance by such Loan Party of this Second Amendment, the performance of the Loan Documents as amended thereby, and the execution and delivery of the other documents to be delivered by such Loan Party in connection herewith and therewith, including, without limitation, in the case of the Borrower, the Warrant;

 

(iii)        a certificate of an Authorized Officer of each Loan Party, certifying the names and true signatures of the representatives of such Loan Party authorized to sign this Second Amendment and the other documents to be executed and delivered by such Loan Party in connection herewith and therewith, together with evidence of the incumbency of such authorized officers;

 

(iv)        a certificate of the appropriate official(s) of the jurisdiction of organization and, except to the extent such failure to be so qualified could not reasonably be expected to have a Material Adverse Effect, each jurisdiction of foreign qualification of each Loan Party (other than the State of Tennessee) certifying as of a recent date not more than 30 days prior to the Second Amendment Effective Date as to the subsistence in good standing of, and, to the extent obtainable with the use of commercially reasonable efforts, the payment of taxes by, such Loan Party in such jurisdictions;

 

(v)         a true and complete copy of the charter, certificate of formation, certificate of limited partnership or other publicly filed organizational document of each Loan Party certified as of a recent date not more than 30 days prior to the Second Amendment Effective Date by an appropriate official of the jurisdiction of organization of such Loan Party which shall set forth the same complete name of such Loan Party as is set forth herein and the organizational number of such Loan Party, if an organizational number is issued in such jurisdiction (or, to the extent the charter, certificate of formation, certificate of limited partnership or other publicly filed organizational document of such Loan Party has not been amended, modified or supplemented since the Effective Date, a certificate from an Authorized Officer of such Loan Party certifying that such charter, certificate of formation, certificate of limited partnership or other publicly filed organizational document of such Loan Party not been amended, modified or supplemented since the Effective Date);

 

  

  

  

 

(vi)        a copy of the Governing Documents of each Loan Party, together with all amendments thereto, certified as of the Second Amendment Effective Date by an Authorized Officer of such Loan Party (or, to the extent the Governing Documents of such Loan Party have not been amended, modified or supplemented since the Effective Date, a certificate from an Authorized Officer of such Loan Party certifying that the Governing Documents have not been amended, modified or supplemented since the Effective Date);

 

(vii)       an opinion of Latham & Watkins LLP, counsel to the Loan Parties, in form and substance satisfactory to the Collateral Agent and as to such matters as the Collateral Agent may reasonably request, including, without limitation, the Warrant;

 

(viii)      a certificate of an Authorized Officer of each Loan Party, certifying as to the matters set forth in subsection (a) of this Section 3;

 

(ix)         a certificate of the chief financial officer of each Loan Party, certifying as to the solvency of such Loan Party, after giving effect to the consummation of the transactions contemplated hereby, which certificate shall be satisfactory in form and substance to the Collateral Agent;

 

(x)          copy of [***], as in effect on the Second Amendment Effective Date, certified as a true and correct copy thereof by an Authorized Officer of the Borrower, together with a certificate of an Authorized Officer of the Borrower stating that such agreement remains in full force and effect and that the Borrower and Fenwick have not breached or defaulted in any of their obligations under such agreement;

 

(xi)         the Warrant, duly executed by the Borrower;

 

(xii)        the Fee Letter, duly executed by the Borrower; and

 

(xiii)       such other agreements, instruments, approvals, opinions and other documents, each satisfactory to the Agents in form and substance, as any Agent may reasonably request.

 

(e)           Legality.  The making of the Term Loan shall not contravene any law, rule or regulation applicable to any Agent or any Lender.

 

*** Confidential material redacted and filed separately with the Securities and Exchange Commission.

  

  

  

 

(f)           Notices.  The Administrative Agent shall have received a Notice of Borrowing pursuant to Section 2.02 of the Financing Agreement.

 

(g)           Proceedings; Receipt of Documents.  All proceedings in connection with the making of the Term Loan and the other transactions contemplated by this Second Amendment, the Financing Agreement, as amended hereby, and the other Loan Documents, and all documents incidental hereto and thereto, shall be satisfactory to the Agents and their counsel, and the Agents and such counsel shall have received all such information and such counterpart originals or certified or other copies of such documents, in form and substance satisfactory to the Agents, as the Agents or such counsel may reasonably request.

 

4.             Representations and Warranties.  Each Loan Party represents and warrants as follows:

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

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

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

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

 

  

  

  

 

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

5.             Release.  Each Loan Party hereby acknowledges and agrees that:  (a) neither it nor any of its Affiliates has any claim or cause of action against any Agent or any Lender (or any of their respective Affiliates, officers, directors, employees, attorneys, consultants or agents) and (b) each Agent and each Lender has heretofore properly performed and satisfied in a timely manner all of its obligations to the Loan Parties and their Affiliates under the Financing Agreement and the other Loan Documents that are required to have been performed on or prior to the date hereof.  Notwithstanding the foregoing, the Agents and the Lenders wish (and the Loan Parties agree) to eliminate any possibility that any past conditions, acts, omissions, events or circumstances would impair or otherwise adversely affect any of the Agents' and the Lenders' rights, interests, security and/or remedies under the Financing Agreement and the other Loan Documents.  Accordingly, for and in consideration of the agreements contained in this Second Amendment and other good and valuable consideration, each Loan Party (for itself and its Affiliates and the successors, assigns, heirs and representatives of each of the foregoing) (collectively, the "Releasors") does hereby fully, finally, unconditionally and irrevocably release and forever discharge each Agent, each Lender and each of their respective Affiliates, officers, directors, employees, attorneys, consultants and agents (collectively, the "Released Parties") from any and all debts, claims, obligations, damages, costs, attorneys' fees, suits, demands, liabilities, actions, proceedings and causes of action, in each case, whether known or unknown, contingent or fixed, direct or indirect, and of whatever nature or description, and whether in law or in equity, under contract, tort, statute or otherwise, which any Releasor has heretofore had or now or hereafter can, shall or may have against any Released Party by reason of any act, omission or thing whatsoever done or omitted to be done on or prior to the Second Amendment Effective Date directly arising out of, connected with or related to this Second Amendment, the Financing Agreement or any other Loan Document, or any act, event or transaction related or attendant thereto, or the agreements of any Agent or any Lender contained therein, or the possession, use, operation or control of any of the assets of any Loan Party, or the making of any Loans or other advances, or the management of such Loans or advances or the Collateral.

 

6.             Reaffirmation.  The Borrower hereby confirms its grant of a security interest and other obligations under and subject to the terms of the Security Agreement, and agrees that, notwithstanding the effectiveness of this Second Amendment or any of the transactions contemplated hereby, such grant of security interest and other obligations are not impaired or adversely affected in any manner whatsoever and shall continue to be in full force and effect and shall continue to secure all the Secured Obligations (as defined in the Security Agreement), as amended, increased and/or extended pursuant to this Second Amendment.

 

  

  

  

7.            Miscellaneous.

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

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

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

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

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

 

  

  

  

 

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

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

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

 

[Remainder of page intentionally left blank]

 

  

  

  

 

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

 

	 	BORROWER:
	 	 	 
	 	MOTORCAR PARTS OF AMERICA, INC.
	 	 	 
	 	By:  	
/s/ Selwyn Joffe

	 
	 	  	Name: 	
Selwyn Joffe

	 
	 	 	Title: 	
Chairman, President and CEO

	 

 

  

  

  

 

	 	
COLLATERAL AGENT:

	 	 	 
	 	
CERBERUS BUSINESS FINANCE, LLC

	 	 	 
	 	By:  	
/s/ Daniel Wolf

	 
	 	  	Name: 	
Daniel Wolf

	 
	 	 	Title: 	
President

	 

 

SECOND AMENDMENT

 

 

 

 

	 	

ADMINISTRATIVE AGENT AND LENDER:

	 	 	 
	 	

PNC BANK, NATIONAL ASSOCIATION

	 	 	 
	 	By:  	
/s/ Fred Kienhe

	 
	 	  	Name: 	
Fred Kienhe

	 
	 	 	Title: 	
Vice President

	 

 

SECOND AMENDMENT

 

 

 

 

	 	

LENDER:

	 	 	 
	 	

COREPOINTE LOAN SPV LLC

	 	 
	 	
By: COREPOINTE GROUP LLC, its managing member

	 	 	 
	 	By:  	
/s/ Seth Fink

	 
	 	  	Name: 	
Seth Fink

	 
	 	 	Title: 	
Vice President

	 

 

SECOND AMENDMENT

 

 

 

	 	

LENDER:

	 	 	 
	 	

ABLECO FINANCE LLC

	 	 	 
	 	By:  	
/s/ Daniel Wolf

	 
	 	  	Name: 	
Daniel Wolf

	 
	 	 	Title: 	
President

	 

 

SECOND AMENDMENT

 

 

 

 

	 	

LENDER:

	 	 	 
	 	

A5 FUNDING L.P.

	 	 
	 	
By:  A5 Fund Management LLC, its General Partner

	 	 	 
	 	By:  	
/s/ Daniel Wolf

	 
	 	  	Name: 	
Daniel Wolf

	 
	 	 	Title: 	
Vice President

	 

 

SECOND AMENDMENT

  

  

  

 

	 	

LENDER:

	 	 	 
	 	

CERBERUS LEVERED LOAN OPPORTUNITIES FUND I, L.P.

	 	 
	 	
By:  Cerberus Levered Opportunities GP, LLC, its General Partner

	 	 	 
	 	By:  	
/s/ Daniel Wolf

	 
	 	  	Name: 	
Daniel Wolf

	 
	 	 	Title: 	
Managing Director

	 

 

SECOND AMENDMENT

  

  

  

 

	 	

LENDER:

	 	 	 
	 	

CERBERUS NJ CREDIT OPPORTUNITIES FUND, L.P.

	 	 
	 	

By:  Cerberus NJ Credit Opportunities GP, LLC, its General Partner

	 	 	 
	 	By:  	
/s/ Daniel Wolf

	 
	 	  	Name: 	
Daniel Wolf

	 
	 	 	Title: 	
Senior Managing Director

	 

 

SECOND AMENDMENT

  

  

  

 

	 	

LENDER:

	 	 	 
	 	

COREPOINTE CAPITAL FINANCE LLC

	 	 	 
	 	By:  	
/s/ Seth Fink

	 
	 	  	Name: 	
Seth Fink

	 
	 	 	Title: 	
Managing Director

	 

 

SECOND AMENDMENT

 

 

 

 

ANNEX I

 

SCHEDULE 1.01(A)

LENDERS AND LENDERS' COMMITMENTS

	
Lender

	 	
Initial Term Loan 

Commitment

	 	 	
Additional 

Term Loan 

Commitment

	 	 	
Revolving 

Credit 

Commitment

	 	 	
Total 

Commitment

	 
	
ABLECO FINANCE LLC

	 	$	15,440,918.28	 	 	$	1,673,918.99 	 	 	$	0	 	 	$	17,114,837.27	 
	
A5 FUNDING L.P.

	 	$	24,999,999.99	 	 	$	0	 	 	$	0	 	 	$	24,999,999.99	 
	
CERBERUS NJ CREDIT OPPORTUNITIES FUND, L.P.

	 	$	0	 	 	$	1,390,473.89	 	 	$	0	 	 	$	1,390,473.89	 
	
CERBERUS LEVERED LOAN OPPORTUNITIES FUND I, L.P

	 	$	4,559,081.73	 	 	$	2,935,607.12	 	 	$	0	 	 	$	7,494,688.85	 
	
COREPOINTE LOAN SPV LLC

	 	$	30,000,000.00	 	 	$	0	 	 	$	0	 	 	$	30,000,000.00	 
	
COREPOINTE CAPITAL FINANCE LLC

	 	$	0	 	 	$	4,000,000.00	 	 	$	0	 	 	$	4,000,000.00	 
	
PNC BANK, NATIONAL ASSOCIATION

	 	$	0	 	 	$	0	 	 	$	20,000,000.00	 	 	$	20,000,000.00	 
	
Total

	 	$	75,000,000	 	 	$	10,000,000	 	 	$	20,000,000	 	 	$	105,000,000	 

  

  

  

 

ANNEX I

FORM OF WARRANT

[see attached]

 

  

  

  

 

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

MOTORCAR PARTS OF AMERICA, INC.

 

WARRANT

 

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

 

MOTORCAR PARTS OF AMERICA, INC., a New York corporation (the “Company”), hereby certifies that, for value received, Cerberus Business Finance, LLC, or its registered assigns (the “Holder”), is entitled to purchase from the Company up to a total of 100,000 shares of Common Stock (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”), at any time and from time to time from and after the Original Issue Date and through and including May 23, 2017 (the “Expiration Date”), and subject to the following terms and conditions:

 

1.             Definitions.  As used in this Warrant, the following terms shall have the respective definitions set forth in this Section 1.  Capitalized terms that are used and not defined in this Warrant that are defined in the Financing Agreement (as defined below) shall have the respective definitions set forth in the Financing Agreement.

 

“Approved Stock Plan” means any employee benefit plan which has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued to any employee, officer or director for services provided to the Company.

 

“Black Scholes Value” means value of this Warrant based on the Black Scholes Option Pricing Model obtained from the “OV”  function on Bloomberg L.P. using (i) a price per share of Common Stock equal to (a) in the event of a Fundamental Transaction, the sum of the price per share being offered in cash, if any, plus the per-share value of any non-cash consideration, if any, being offered in such Fundamental Transaction or (b) in the event of a Put Option Event, the VWAP of the Common Stock for the Trading Day immediately preceding the date of such Put Option Event, (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as of the date of consummation of the applicable Fundamental Transaction and (iii) an expected volatility equal to the greater of 50% and the 100 day volatility obtained from the “HVT” function on Bloomberg L.P. determined as of the Trading Day immediately following the public announcement of the such Fundamental Transaction or Put Option Event, as applicable.

 

  

  

  

 

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

 

“Change of Control” has the meaning set forth in the Financing Agreement.

 

“Closing Sale Price” means, for any security as of any date, the last closing bid price or last closing trade price, respectively, for such security on the applicable Trading Market, as reported by Bloomberg, or, if such Trading Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or the last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if such Trading Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices and the ask prices of any market makers for such security as reported in the OTC Link or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.).  If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as reasonably determined in good faith by the Board of Directors of the Company.  All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

“Common Stock” means the common stock of the Company, par value $0.01 per share, and any securities into which such common stock may hereafter be reclassified.

 

“Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.

 

“Excluded Securities” means any Common Stock issued or issuable: (i) in connection with any Approved Stock Plan and (ii) upon exercise of any Options or Convertible Securities which are outstanding on the day immediately preceding the Original Issue Date; provided that the terms of such Options or Convertible Securities are not amended, modified or changed on or after the Original Issue Date.

 

  

  

  

 

“Exercise Price” means $17.00, subject to adjustment in accordance with Section 10.

 

“Financing Agreement” means the Financing Agreement, dated as of January 18, 2012, as amended, restated, supplemented or otherwise changed from time to time, by and among the Company, the lenders party thereto, Cerberus Business Finance, LLC, as collateral agent, and PNC Bank National Association, as administrative agent.

 

“Fundamental Transaction” means any of the following: (1) the Company or any of its Subsidiaries effects any merger or consolidation of the Company (whether or not the Company or any of its Subsidiaries is the surviving corporation) with or into another Person, (2) the Company consummates a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person in which the stockholders of the Company immediately before such transaction do not hold more than 50% of the voting power of the surviving corporation immediately after such transaction, (3) the Company effects any sale, transfer or conveyance or otherwise disposes of all or substantially all of its assets in one or a series of related transactions, (4) other than any tender offer or exchange offer relating to the Company’s stock option plans and/or any stock options thereunder, any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (5) the Company (a) effects any reorganization, recapitalization or reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property or (b) effects or consummates, or make any public announcement or disclosure with respect to, any stock combination, reverse stock split or other similar transaction involving the Common Stock.

 

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

 

“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

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

 

“Put Option Event” means the earliest to occur of the following events: (i) the Final Maturity Date (as defined in the Financing Agreement) or any date thereafter and (ii) the date upon which a Change in Control occurs.

 

“Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting prices); provided, that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time); provided, further, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.

 

  

  

  

 

“Trading Market” means The NASDAQ Global Market, The NASDAQ Global Select Market, The NASDAQ Capital Market, The NYSE Amex Equities, or The New York Stock Exchange, Inc.

 

“VWAP” means, for any security as of any date, the dollar volume-weighted average price for such security on the applicable Trading Market during the period beginning at 9:30:01 a.m., New York time (or such other time as such Trading Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as such Trading Market publicly announces is the official close of trading), as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time (or such other time as such Trading Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as such Trading Market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the OTC Link or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.).  If the VWAP cannot be calculated for a security on a particular date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.

 

2.             Registration of Warrant.  The Company shall register this Warrant upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

3.             Registration of Transfers.  This Warrant may be transferred only pursuant to a registration statement filed under the Securities Act or an exemption from such registration.  Subject to such restrictions, the Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Company at its address specified herein.  Upon any such registration or transfer, a new Warrant to purchase Common Stock, in substantially the form of this Warrant (any such new Warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

 

  

  

  

 

4.             Exercise and Duration of Warrants.  This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after the Original Issue Date through and including the Expiration Date.  At 6:30 p.m., New York City time on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value.

 

5.             Delivery of Warrant Shares.

 

Upon delivery of the Exercise Notice (in the form attached hereto) to the Company (with the attached Warrant Shares Exercise Log) at its address for notice set forth herein, the Company shall promptly (but in no event later than three (3) Trading Days after the Date of Exercise (as defined herein)) issue and deliver to the Holder a certificate for the Warrant Shares issuable upon such exercise, which, unless otherwise required by law, shall be free of restrictive legends.  The Company shall, upon request of the Holder use its commercially reasonable efforts to deliver the applicable number of Warrant Shares within three (3) Trading Days after a Date of Exercise electronically through the Depository Trust Corporation or another established clearing corporation performing similar functions, if available; provided, that, the Company may, but will not be required to, change its transfer agent if its current transfer agent cannot deliver Warrant Shares electronically through the Depository Trust Corporation.  A “Date of Exercise” means the date on which the Holder shall have delivered to the Company: (i) the Exercise Notice (with the Warrant Exercise Log attached to it), appropriately completed and duly signed and (ii) if such Holder is not utilizing the cashless exercise provisions set forth in Section 11(b), payment of the Exercise Price for the number of Warrant Shares so indicated by the Holder to be purchased.

 

If by the third Trading Day after a Date of Exercise the Company fails to deliver the required number of Warrant Shares in the manner required pursuant to Section 5(a), then the Holder will have the right to rescind such exercise.  If by the third Trading Day after a Date of Exercise the Company fails to deliver the required number of Warrant Shares in the manner required pursuant to Section 5(a), and if after such third Trading Day and prior to the receipt of such Warrant Shares, the Holder or the Holder’s broker purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company, at the discretion of such Holder, shall pay in cash to the Holder the amount by which the Holder’s total purchase price (including brokerage commissions and other reasonable out-of-pocket expenses, if any) for the shares of Common Stock so purchased, exceeds the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue by (B) the price at which the sell order giving rise to such obligation was executed, at which point the Company’s obligation to deliver such certificate (and to issue the Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue) or credit such Holder’s balance account with DTC shall terminate.  The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, reasonable evidence of the amount of such loss.

 

  

  

  

 

The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Warrant Shares upon exercise of the Warrant as required pursuant to the terms hereof.

 

6.             Put Option.

 

At any time following a Put Option Event, if a registration statement is not available for the resale of the Warrant Shares and the Warrant Shares are not otherwise freely tradable under the Securities Act as of such date, the Holder shall have an irrevocable right and option (the “Put Option”), to exercise the Put Option, at its sole discretion, to require the Company to purchase, out of funds lawfully available therefor, all or any portion of this Warrant (including any warrants issued upon assignments of this Warrant), and in the event the Holder has exercised all or any portion of this Warrant prior such Put Option Event, all or any portion of the Warrant Shares issued upon exercise hereof, at the Black Scholes Value thereof (the “Put Option Price”).  The Company shall notify the Holder in writing of the date upon which any Put Option Event shall occur at least ten (10) Business Days prior to such date.

 

If the Holder wishes to exercise the Put Option, in whole or in part, it shall furnish to the Company a written notice notifying the Company of its election to exercise the Put Option and specifying the number of Warrant Shares for which it is exercising the Put Option and identifying the Business Day after the date of delivery of such written notice as the date of purchase (the “Put Date”) (provided, that the Company shall have at least three (3) Business Days after the of Put Date to purchase the Warrant and Warrant Shares set forth in the notice).  Upon receipt by the Company of such written notice, the Company shall be obligated to purchase from the Holder, and the Company shall purchase from the Holder, the Warrant and the Warrant Shares set forth in the notice at the Put Option Price on the Put Date; provided, however, that if and to the extent this Warrant has not been fully exercised prior to receipt by the Company of such written notice, then the Put Option Price shall be reduced by the Exercise Price for such unexercised portion of the Warrant Shares set forth in the notice.  On the Business Day three (3) Business days after the Put Date (the “Put Closing Date”), the Holder exercising the Put Option shall deliver to the Company this Warrant and, if applicable, certificate(s) or other documentation evidencing the Warrant Shares subject to such Put Option to be purchased on the Put Date against payment by the Company of the aggregate Put Option Price by wire transfer in immediately available funds to a bank account designated by the Holder. Notwithstanding the foregoing, if the Company does not have sufficient funds legally available to purchase on the Put Closing Date the portion of the Warrant and/or Warrant Shares set forth in the notice or is restricted by any loan or financing agreement to which the Company is a party or by which the Company is bound from making such payments, the Company shall not be required to purchase hereunder but instead shall purchase on such date the maximum amount of the Warrant and/or the Warrant Shares legally permissible and shall thereafter purchase the remainder of the Warrant and/or Warrant Shares (or the maximum portion thereof that can be purchased with then legally available funds) as soon as additional funds become legally available for such purchase, together with interest accrued on the purchase price for such remaining amount of the Warrant and/or the Warrant Shares from Put Closing Date through the date of actual purchase at a rate of twelve percent (12.0%) per annum, compounding monthly. In addition, the Company shall not make any cash dividends or distributions to its stockholders from the Put Closing Date through the date of the actual purchase of the entire portion of the Warrant and/or the Warrant Shares specified in the notice delivered by the Holder to the Company pursuant to this Section 6(b).  In the event the Holder exercises the Put Option for less than the entire Warrant or less than all of the Warrant Shares, the Company shall cancel this Warrant, and execute and deliver to the Holder a New Warrant evidencing the unexercised portion of this Warrant.

 

  

  

  

 

(a)             The closing of the purchase by the Company of this Warrant and/or the Warrant Shares, if applicable, pursuant to the exercise of the Put Option shall occur on the Put Closing Date. At the closing, the Holder shall deliver to the Company this Warrant and, if this Warrant has previously been exercised in part, the Warrant Shares issued upon such exercise, against payment by the Company of the Put Option Price by wire transfer in immediately available funds to a bank account designated by the Holder.

 

(b)             The Company shall bear all reasonable fees, costs, expenses and charges incurred in connection with the determination of the Put Option Price, including, without limitation, all reasonable fees and expenses of any investment banking firm, valuation or accounting firm(s) engaged in connection with such determination and any reasonable legal fees and expenses incurred by the Holder in connection with such determination.

 

 No Representations. In no event shall the Holder be obligated to (i) make any representations or warranties as to this Warrant or the Warrant Shares or the business of the Company with respect to the transactions contemplated by this Section 6 other than with respect to the Holder’s organization, good standing and authority, its title to this Warrant and the Warrant Shares, if any, no consents and no conflicts with the Holder’s organizational documents and material agreements or (ii) enter into or be bound by any non-solicitation or non-competition covenants that purport to bind the Holder or any of its affiliates unless otherwise agreed by the Holder.

 

7.             Charges, Taxes and Expenses.  Issuance and delivery of Warrant Shares upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder.  The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

 

  

  

  

 

8.             Replacement of Warrant.  If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested.  Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe.  If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company’s obligation to issue the New Warrant.

 

9.             Reservation of Warrant Shares.  The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of Persons other than the Holder (taking into account the adjustments and restrictions of Section 10). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.

 

10.           Certain Adjustments.  The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 10.

 

Issuance of Common Stock.  From and after the Original Issue Date, if the Company issues or sells, or in accordance with this Section 10 is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock deemed to have been issued by the Company in connection with any Excluded Securities) for a consideration per share (the “New Issuance Price”) less than a price (the “Applicable Price”) equal to the Exercise Price in effect immediately prior to such issue or sale or deemed issuance or sale (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price.  For purposes of determining the adjusted Exercise Price under this Section 10(a), the following shall be applicable:

 

(a)             Issuance of Options.  If the Company in any manner grants any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share.  For purposes of this Section 10(a)(i), the “lowest price per share for which one share of Common Stock is issuable upon exercise of such Options or upon conversion, exercise or exchange of such Convertible Securities issuable upon exercise of any such Option” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise of the Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option less any consideration paid or payable by the Company with respect to such one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion exercise or exchange of any Convertible Security issuable upon exercise of such Option.  No further adjustment of the Exercise Price or number of Warrant Shares shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.

 

  

  

  

 

(b)             Issuance of Convertible Securities.  If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share.  For the purposes of this Section 10(a)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security less any consideration paid or payable by the Company with respect to such one share of Common Stock upon the issuance or sale of such Convertible Security and upon conversion, exercise or exchange of such Convertible Security.  No further adjustment of the Exercise Price or number of Warrant Shares shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 10(a), no further adjustment of the Exercise Price or number of Warrant Shares shall be made by reason of such issue or sale.

 

(c)             Change in Option Price or Rate of Conversion.  If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the Exercise Price and the number of Warrant Shares in effect at the time of such increase or decrease shall be adjusted to the Exercise Price and the number of Warrant Shares which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold.  For purposes of this Section 10(a)(iii), if the terms of any Option or Convertible Security that was outstanding as of the date of issuance of this Warrant are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease.

 

  

  

  

 

(d)             Calculation of Consideration Received.  If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor.  If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Closing Sale Price of such security on the date of receipt by the Company.  If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be.  The fair value of any consideration other than cash or securities will be determined jointly by the Company and the Holder.  If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder.  The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

 

Stock Dividends and Splits.  If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock (and not to the Holder hereof), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment pursuant to clause (i), (ii) or (iii) of this paragraph shall become effective immediately upon the effective date of such dividend or distribution, subdivision or combination.

 

  

  

  

 

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

 

Number of Warrant Shares.  Simultaneously with any adjustment to the Exercise Price pursuant to this Section 10, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.

 

Calculations.  All calculations under this Section 10 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable.  The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

 

  

  

  

 

Other Events.  If any event occurs of the type contemplated by the provisions of this Section 10 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company will make an appropriate adjustment in the Exercise Price and the number of Warrant Shares, as mutually determined by the Company and the Holder, so as to protect the rights of the Holder; provided that no such adjustment pursuant to this Section 10(f) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 10.

 

Notice of Adjustments.  Upon the occurrence of each adjustment pursuant to this Section 10, the Company at its expense will within five (5) Business Days compute such adjustment in accordance with the terms of this Warrant and prepare a notice setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based.  Upon written request, the Company will deliver within three (3) Business Days a copy of each such notice to the Holder and to the Company’s Transfer Agent.

 

Notice of Corporate Events.  If the Company (i) authorizes or approves a Dilutive Issuance, (ii) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any Subsidiary, (iii) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Transaction or (iv) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction (but only to the extent such disclosure would not result in the dissemination of material, non-public information to the Holder) at least 10 calendar days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.

 

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

 

Cash Exercise.  The Holder may deliver immediately available funds, by wire transfer to the account designated by the Company or cashier’s check drawn on a United States bank made payable to the order of the Company; or

 

  

  

  

 

Cashless Exercise.  The Holder may notify the Company in an Exercise Notice of its election to utilize cashless exercise, in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows:

 

X = Y(A-B)/A

 

where:

 

X = the number of Warrant Shares to be issued to the Holder.

 

Y = the number of Warrant Shares with respect to which this Warrant is being exercised.

 

A = the average of the closing prices for the five Trading Days immediately prior to (but not including) the Exercise Date.

 

B = the Exercise Price.

 

For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued.

 

12.           Representations of Holder.

 

Accredited Investor.  Holder is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act or a Qualified Institutional Buyer within the meaning of Rule 144A promulgated under the Securities Act.

 

Acquisition of Warrant for Personal Account. The Holder represents and warrants that it is acquiring the Warrant solely for its account for investment and not with a present view toward the public distribution of said Warrant or any part thereof and has no intention of selling or distributing said Warrant or any arrangement or understanding with any other persons regarding the sale or distribution of said Warrant, and except as would not result in a violation of the Securities Act. The Holder will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) the Warrant except in accordance with the Securities Act.

 

Securities Are Not Registered.

 

(a)            The Holder understands that this Warrant and the Warrant Shares are characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations this Warrant and the Warrant Shares may be resold without registration under the Securities Act only in certain limited circumstances.

 

  

  

  

 

(b)            Prior and as a condition to any exercise of this Warrant or the sale or transfer of the Warrant Shares issuable upon exercise of this Warrant, the Holder shall furnish to the Company such certificates, representations, agreements and other information, including an opinion of counsel, as the Company or the Company’s transfer agent reasonably may require to confirm that such exercise, sale or transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act unless such Warrant Shares are being sold or transferred pursuant to an effective registration statement.

 

(c)            The Holder acknowledges that, in the event that the Warrant Shares issuable upon exercise of the Warrant are not freely tradable under the Securities Act, the Company may place a restrictive legend upon such Warrant Shares issuable upon exercise of this Warrant in order to comply with securities laws.

 

13.           Representations of Company.  The Company hereby represents and warrants the following.

 

The Company is not, and has not been at any time preceding the date hereof, an issuer identified in Rule 144(i)(1).

 

The issuance and sale of this Warrant to the Holder do not as of the date hereof (i) result in a breach, constitute a default (or an event which, with the giving of notice or lapse of time or both, constitutes or would constitute a default) under or give rise to any material right of termination, cancelation or acceleration under any of the Company’s Material Contracts and (ii) result in or require the creation of any lien, security interest or other charge or encumbrance (other than pursuant to the Financing Agreement) upon or with respect to any of the Company’s assets or properties.

 

There are no securities or instruments of the Company containing anti-dilution or similar provisions that will be triggered by the issuance and sale of this Warrant or the issuance of the Warrant Shares.

 

14.           Public Information.  At any time during the period commencing from the six (6) month anniversary of the Original Issue Date and ending at such time that all of the Warrant Shares are no longer held by the Holder, if a registration statement is not available for the resale of all of the Warrant Shares to be sold without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1), if the Company shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1) including, without limitation, the failure to satisfy the current public information requirements contained in Rule 144(c) or (ii) if the Company has ever been an issuer in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (each, a “Public Information Failure”) then, as partial relief for the damages to any Holder by reason of any such delay in or reduction of its ability to sell the Warrant Shares (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to each such Holder an amount in cash equal to one percent (1.0%) of the aggregate Exercise Price of such Holder’s Warrant Shares on the day of a Public Information Failure and on every thirtieth day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (i) the date such Public Information Failure is cured and (ii) such time that such Public Information Failure no longer prevents a Holder from selling such Securities pursuant to Rule 144 without any restrictions or limitations.  The payments to which a Holder shall be entitled pursuant to this Section 14 are referred to herein as “Public Information Failure Payments.”  Public Information Failure Payments shall be paid on the earlier of (I) the last day of the calendar month during which such Public Information Failure Payments are incurred and (II) the third Business Day after the event or failure giving rise to the Public Information Failure Payments is cured.  In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of one percent (1.0%) per month (prorated for partial months) until paid in full.

 

  

  

  

 

15.           No Fractional Shares.  No fractional shares of Warrant Shares will be issued in connection with any exercise of this Warrant.  In lieu of any fractional shares which would otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the closing price of one Warrant Share as reported by the applicable Trading Market on the Date of Exercise.

 

16.           Notices.  Any and all notices or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 15 prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 15 on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.  The addresses for such communications shall be:  (i) if to the Company, to Motorcar Parts of America, Inc., Attn each of the Chairman and Chief Executive Officer and the VP and General Counsel (if sent by facsimile, to facsimile no.:  (310) 943-1630) (or such other address as the Company shall indicate in writing in accordance with this Section 15) with a copy (as to Exercise Notices only) to Continental Stock Transfer, 17 Battery Place, New York, NY 10004 (if sent by facsimile, to facsimile no.: (212) 616-7616, or (ii) if to the Holder, to the address or facsimile number appearing on the Warrant Register or such other address or facsimile number as the Holder may provide to the Company in accordance with this Section 15.

 

17.           Warrant Agent.  The Company shall serve as warrant agent under this Warrant.  Upon 10 days’ notice to the Holder, the Company may appoint a new warrant agent.  Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or shareholders services business shall be a successor warrant agent under this Warrant without any further act.  Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.

 

  

  

  

 

18.           Miscellaneous.

 

This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns.  Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant.  This Warrant may be amended only in writing signed by the Company and the Holder and their successors and assigns.

 

All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of this Warrant and the transactions herein contemplated (“Proceedings”) (whether brought against a party hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the New York Courts.  Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any New York Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Warrant or the transactions contemplated hereby.  If either party shall commence a Proceeding to enforce any provisions of this Warrant, then the prevailing party in such Proceeding shall be reimbursed by the other party for its reasonable attorney’s fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.

 

Any term of this Warrant may be amended and the observance of any other term of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and holders of a majority in interest of the Warrant Shares issuable upon exercise of then outstanding Warrants issued pursuant to the Financing Agreement; provided, however, that (x) any such amendment or waiver must apply to all Warrants issued pursuant to the Financing Agreement; and (y) neither the number of Warrant Shares subject to this Warrant, the Exercise Price nor the Expiration Date may be amended without the written consent of the Holder.  Any amendment or waiver effected in accordance with this paragraph shall be binding upon each Holder of any Warrant Shares issued or issuable pursuant to the Financing Agreement.  No consideration shall be offered or paid to any Holder to amend or consent to a waiver or modification of any provision of this Warrant unless the same consideration is also offered to all Holders who then hold Warrants.

 

  

  

  

 

The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

 

In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

 

Prior to exercise of this Warrant, the Holder hereof shall not, by reason of being a Holder, be entitled to any rights of a stockholder with respect to the Warrant Shares.

 

[Remainder of Page Intentionally Left Blank]

 

  

  

  

 

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

 

	  	
Motorcar Parts of America, Inc.

	  	  	  	 
	  	
By:  

	  	 
	  	
Name: 

	  	 
	  	
Title: 

	  	 

 

  

  

  

 

EXERCISE NOTICE

 

MOTORCAR PARTS OF AMERICA, INC.

 

WARRANT DATED MAY 24, 2012

 

i.

 

The undersigned Holder hereby irrevocably elects to purchase  _____________ shares of Common Stock pursuant to the above referenced Warrant.  Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.

 

	
(2)

	
The undersigned Holder hereby exercises its right to purchase _________________ Warrant Shares pursuant to the Warrant.

 

	
(3)

	

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

 

	
  

	
q

	
“Cash Exercise” under Section 11.

 

	
  

	
q

	
“Cashless Exercise” under Section 11.

 

	
(4)

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

 

	
(5)

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

 

	
(5)

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

 

	
Dated: _,

	 	
Name of Holder:

	 
	 	 	           	 	  	  	 
	  	 	
(Print)

	 	 
	  	 	  	  	 
	  	 	
By:                             

	 	 
	  	 	
Name: 

	 	 
	  	 	
Title:  

	 	 
	  	 	  	  	 
	  	 	(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

 

  

  

  

 

Warrant Shares Exercise Log

 

	
Date

	
Number of Warrant 

Shares Available to be 

Exercised

	
Number of Warrant 

Shares Exercised

	
Number of Warrant

Shares Remaining to be 

Exercised

	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	  	  	  	  

  

  

  

 

MOTORCAR PARTS OF AMERICA, INC.

 

WARRANT ORIGINALLY ISSUED MAY       , 2012

 

WARRANT NO. 2012-

 

FORM OF ASSIGNMENT

 

[To be completed and signed only upon transfer of Warrant]

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

 

	 	
Dated:  _______________, ____

	 	 
	 	 	 	

(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

	 	 	 	 
	 	 	 	 
	 	 	 	
Address of Transferee

	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
In the presence of:

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