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APG AGREEMENT
AMONG
AUTOMOTIVE PERFORMANCE GROUP, INC.,
PBT BRANDS, INC.,
AND
THE APG PARTIES NAMED HEREIN
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions................................................... 1
ARTICLE II
REPRESENTATIONS OF APG AND
THE APG PARTIES
SECTION 2.1 Due Incorporation............................................. 3
SECTION 2.2 Due Authorization............................................. 3
SECTION 2.3 Consents and Approvals; Authority Relative to This Agreement.. 4
SECTION 2.4 Brokers; Equity Participants.................................. 4
SECTION 2.5 Capitalization; Subsidiaries.................................. 4
SECTION 2.6 Accuracy of Information....................................... 5
SECTION 2.7 Other Matters................................................. 5
ARTICLE III
COVENANTS AND AGREEMENTS
SECTION 3.1 Formation of Special Purpose Subsidiary....................... 6
SECTION 3.2 Subsidiary Contribution of All Existing Assets and Liabilities 7
SECTION 3.3 Redemption and Conversion of APG Preferred Stock.............. 7
SECTION 3.4 Exchange of Bridge Debt and Other Debt; Issuance of Preferred
Stock......................................................... 8
SECTION 3.5 Employment and Stock Matters.................................. 8
SECTION 3.6 APG Stock Option Grants....................................... 9
SECTION 3.7 Contingent Stock Grants and Amendments........................ 9
SECTION 3.8 Opinion of Counsel to APG..................................... 10
ARTICLE IV
BENEFITS, RELEASE AND INDEMNITIES
SECTION 4.1 APG Reimbursements, Payments and Investment................... 10
SECTION 4.2 Release....................................................... 10
SECTION 4.3 Indemnification by APG........................................ ▇▇
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SECTION 5.1 Expenses...................................................... 12
SECTION 5.2 Amendment..................................................... 12
SECTION 5.3 Notices....................................................... 12
SECTION 5.4 Waivers....................................................... 13
SECTION 5.5 Counterparts.................................................. 13
SECTION 5.6 Interpretation................................................ 13
SECTION 5.7 APPLICABLE LAW................................................ 13
SECTION 5.8 Binding Agreement............................................. 14
SECTION 5.9 Third Party Beneficiaries..................................... 14
SECTION 5.10 Entire Understanding.......................................... 14
SECTION 5.11 JURISDICTION OF DISPUTES; WAIVER OF JURY TRIAL................ 14
SECTION 5.12 Severability.................................................. 15
SECTION 5.13 Construction.................................................. 15
EXHIBITS
EXHIBIT A - APG Subscription Agreement
EXHIBIT B - APG Stockholders Agreement
EXHIBIT C - Form of Option Agreement
EXHIBIT D - Certified APG Board Resolutions
EXHIBIT E - Contingent Stock Arrangements
EXHIBIT F - Terms of Series B Preferred Stock
Schedules
Schedule I - APG Parties
Schedule 2.3 - Consents, Filings
Schedule 2.4 - Brokers
Schedule 2.5 - Capitalization
Schedule 2.6 - SEC Filings
Schedule 3.3 - Preferred Stock
Schedule 3.4 - Bridge Debt
Schedule 3.5 - Shared Employees
Schedule 3.6 - Stock Option Grants
Schedule 4.1 - Reimbursed Expense Invoices
Schedule 6.4 - APG Parties Notice Information
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APG AGREEMENT
THIS APG AGREEMENT (this "Agreement"), is made as of August 2, 1999, by
and among Automotive Performance Group, Inc., a Delaware corporation ("APG"),
the shareholders of APG listed on Schedule I (the "APG Parties") and PBT Brands,
Inc., a Delaware corporation, together with its subsidiaries ("PBT").
R E C I T A L S
WHEREAS, APG and PBT are party to that certain Letter of Intent, dated
July 13, 1999, (the "PBT Letter of Intent") relating to the acquisition by PBT
of the net assets and business of the Automotive Aftermarket Division of Loctite
("Permatex");
WHEREAS, APG and Loctite are party to that certain Letter of Intent,
dated February 1999 (the "APG Letter of Intent") relating to the acquisition by
APG of Permatex;
WHEREAS, PBT's wholly-owned subsidiary Permatex Acquisition, Inc.
("Permatex Acquisition") has entered into that certain Asset Purchase Agreement,
dated the date hereof, with Loctite Corporation and Manco, Inc. (the "Permatex
Asset Purchase Agreement");
WHEREAS, APG has made certain loans and deposits in respect of certain
proposed transactions which in consideration of the agreements set forth herein,
PBT shall reimburse as set forth herein;
WHEREAS, as a condition to the closing of the transactions contemplated
by the PBT Letter of Intent and the Permatex Asset Purchase Agreement, PBT
requires that each of APG and the APG Parties provide a release in favor of PBT
and its affiliates for certain liabilities as set forth herein, that APG provide
an indemnity in favor of PBT as set forth herein, and agree to perform the
covenants set forth herein;
NOW, THEREFORE, in consideration of the agreements set forth herein,
including the release contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. The following terms shall have the following
meanings for the purposes of this Agreement:
"AC Tech" means Advanced Chemistry & Technology, Inc., a Delaware
corporation.
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"AC Tech Letter of Intent" means that certain letter dated February 8,
1999 between Ampersand and APG relating to the sale of the capital Stock of AC
Tech.
"AC Tech Stock Purchase Agreement" means the Stock Purchase Agreement,
dated as of the date hereof, among Permatex Acquisition, Advanced Chemistry &
Technology, Inc. ("AC Tech") and the stockholders named therein.
"Agreement" has the meaning set forth in the preamble.
"Ampersand" means Ampersand Specialty Materials and Chemicals III
Limited Partnership and Ampersand Specialty Materials and Chemicals III
Companion Fund Limited Partnership, their successors and assigns.
"APG" has the meaning set forth in the preamble.
"APG Newco" has the meaning set forth in Section 3.2.
"APG Reimbursement" has the meaning set forth in Section 4.1(a).
"APG Special Purpose Sub" has the meaning set forth in Section 3.1.
"APG Subscription Agreement" has the meaning set forth in Section 3.1.
"APG 1998 Stock Option Plan" means the 1998 Stock Option Plan of APG as
duly adopted by the board of directors and stockholders of APG as in effect on
the date hereof, a copy of which has been furnished to PBT.
"Bridge Notes" has the meaning set forth in Section 3.4.
"Closing" means the closing of PBT's acquisition of the Automotive
Aftermarket Division of Loctite Corporation and of Advanced Chemistry and
Technology, Inc. and related financing and transactions.
"Common Stock" means the Common Stock, par value $0.0001 per share, of
APG.
"Downstream Assets" has the meaning set forth in Section 4.2.
"Loctite" means Loctite Corporation, a Delaware corporation.
"Loss" or "Losses" shall mean any and all damages, liabilities,
judgments, penalties, fines, losses, taxes and reasonable costs and expenses,
including but not limited to, attorneys' fees and accounting fees, consulting
fees and related disbursements.
"Other Debt" has the meaning set forth in Section 3.4(c).
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"PBT" has the meaning set forth in the preamble.
"PBT Investment" has the meaning set forth in Section 2.7.
"PBT Letter of Intent" has the meaning set forth in the recitals.
"PBT Stockholders Agreement" has the meaning set forth in Section 4.1.
"Permatex" has the meaning set forth in the recitals.
"Permatex Acquisition" means PBT's acquisition of the Automotive
Aftermarket Division of Loctite Corporation.
"Permatex Asset Purchase Agreement" has the meaning set forth in the
recitals.
"Related Agreements" means, with respect to any party hereto, the
agreements which are exhibits hereto, together with all other agreements
contemplated hereby and thereby.
"Preferred Stock" means the Preferred Stock, par value of $0.0001 per
share, of APG.
"Series B Preferred Stock" means the Series B Convertible Redeemable
Preferred Stock, par value $0.0001 per share, of APG having the terms set forth
on Exhibit F hereto.
"Subsidiary Contribution" has the meaning set forth in Section 4.2.
ARTICLE II
REPRESENTATIONS OF APG AND
THE APG PARTIES
SECTION 2.1 Due Incorporation. APG is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with all requisite power and authority to own and operate its assets and
properties as they are now being owned and operated.
SECTION 2.2 Due Authorization. Each of APG and the APG Parties has full
power and authority to enter into this Agreement and its Related Agreements and
to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by each APG and the APG Parties of this Agreement and
its Related Agreements have been duly and validly approved by the board of
directors of APG, and equivalent body of the APG Parties, and no other corporate
or other actions or proceedings on the part of APG and the APG Parties are
necessary to authorize this Agreement, its Related Agreements and the
transactions contemplated hereby and thereby. Each of APG and the APG Parties
has duly and validly executed and delivered this Agreement and has duly and
validly executed and delivered its Related
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Agreements. This Agreement constitutes the legal, valid and binding obligation
of each of APG and the APG Parties and such party's Related Agreements, upon
execution and delivery by such party, will constitute legal, valid and binding
obligations of each of APG and the APG Parties, in each case, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect which affect the enforcement of creditors' rights
generally and by equitable principles.
SECTION 2.3 Consents and Approvals; Authority Relative to This
Agreement. The execution, delivery and performance by each of APG and the APG
Parties of this Agreement and its Related Agreements will not (i) violate any
law, regulation or order of any governmental authority applicable to such party;
(ii) except as set forth on Schedule 2.3 all of which have been made or will be
timely made, require any filing or registration by such party with, or consent
or approval with respect to such party of, any governmental authority; (iii)
violate or conflict with or result in a breach or default under any contract to
which such party is a party or by which such party or any of its assets or
properties are bound; or (iv) violate or conflict with their charter, by-laws or
other organizational documents.
SECTION 2.4 Brokers; Equity Participants.
(a) Neither APG nor any APG Party has used any broker or finder in
connection with the transactions contemplated by the PBT Letter of Intent, the
Permatex Asset Purchase Agreement, the AC Tech Stock Purchase Agreement, this
Agreement or the Related Agreements, nor entered into negotiations or agreements
with any equity participant other than those listed on Schedule 2.4 hereto, and
APG represents, warrants and confirms that neither PBT, nor any Released Party
(as defined in Section 4.2) has or shall have any liability or otherwise suffer
or incur any Loss as a result of or in connection with any brokerage, finder's
fee, other commission or other liability or payment of any Person retained by
APG or an APG Party in connection with any of the transactions contemplated by
the PBT Letter of Intent, this Agreement, the Permatex Acquisition, the AC Tech
Acquisition or the Related Agreements. Each of the brokers, finders and
financiers listed on Schedule 2.4 has executed and delivered a Pay-Off and
Release letter in form and substance satisfactory to PBT, unless and to the
extent waived by PBT. With regard to such brokers, finders and financiers, PBT
has either paid or will pay at the direction of APG, on behalf of APG, and/or
reimbursed APG for the amounts (collectively, the "Pay-Off Amount"), set forth
on Schedule 2.4, but in each such case only to the extent that Pay-Off and
Release letters in form and substance satisfactory to PBT have been executed and
delivered by such parties. The Pay-Off Amount shall not exceed $4.8 million in
the aggregate.
SECTION 2.5 Capitalization; Subsidiaries. Each beneficial holder of
Preferred Stock as of immediately prior to the date hereof is listed on Schedule
2.5. Schedule 2.5 lists entire authorized capital stock of the Company as of the
date immediately prior to the date hereof and, on a pro forma basis giving
effect to the conversion of Bridge Debt and Preferred Stock contemplated hereby.
There are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights or other contracts or
commitments that would require APG to issue, sell, or otherwise cause to become
outstanding any of its capital
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stock other than set forth on Schedule 2.5, there are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or similar
rights with respect to APG, there are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of capital stock of APG,
except in each such case as disclosed on Schedule 2.5. The beneficial ownership
percentage of all 5% or greater stockholders, officers, directors, including
▇▇▇▇ ▇▇▇▇▇▇▇ and all recipients of stock options and restricted stock as
described in Sections 4.6 and 4.7 as of the date hereof, after giving effect to
the Transactions and the conversion of all outstanding shares of Preferred Stock
and Series B Preferred Stock are set forth on Schedule 2.5.
SECTION 2.6 Accuracy of Information. All forms, reports, statements
(including without limitation any financial statements and schedules) and
documents filed with the SEC by APG (the "SEC Documents"), have complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act, as applicable, and the laws, regulations and rules relating
thereto. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and none of the SEC Documents, at the time of their
filing, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading. The Company has timely filed all registration statements, reports
and other filings required to be filed with the Securities and Exchange
Commission under its rules and regulations except as set forth on Schedule 2.6.
No material developments have occurred since the date of APG's last report on
Form 10-Q which have not been disclosed to PBT, including any such material
development which would be required to be disclosed in a 10-Q or Report on 8-K.
SECTION 2.7 Other Matters.
(a) APG represents, warrants and confirms to PBT that it is not as of
the date hereof, or after giving effect to the transactions contemplated hereby,
by the Related Agreements and the Permatex Acquisition and the AC Tech
Acquisition (the "Transactions"), an affiliate, joint venturer or partner of PBT
or any of its subsidiaries or affiliates.
(b) Each of APG and the APG Parties acknowledges that such person has
received and has had ample opportunity to review and understand the current form
of this Agreement, all of the exhibits and schedules hereto, and all of its
Related Agreements including the terms of the investment by APG in PBT capital
stock (the "APG PBT Investment") pursuant to the APG Subscription Agreement,
including the PBT repurchase rights set forth therein, the PBT Stockholders
Agreement and the other documents made available pursuant to the PBT
Subscription Agreement (collectively, the "Operative Documents"). PBT has
afforded each of APG and each APG Party and such party's advisors, if any, the
opportunity to discuss the Transactions and to ask questions of representatives
of PBT concerning the terms and conditions of the Transactions and the Operative
Documents, and such representatives have provided answers to all such questions
concerning the Transactions and the Operative Documents satisfactory to such
party. Each of APG and the APG Parties has consulted its own financial,
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tax, accounting and legal advisors, if any, as to such party's participation in
the Transactions and the consequences thereof and risks associated therewith and
the Operative Documents. Each of APG and the APG Parties and such party's
advisors, if any, have examined or have had the opportunity to examine before
the date hereof the Operative Documents and all information that such party
deems to be material to an understanding of the Operative Documents and the
Transactions.
(c) APG certifies and acknowledges that its board of directors,
including its independent and disinterested director acting in accordance with
applicable law, have determined, after full deliberation that the Transactions
are fair to and in the best interest of APG and its stockholders and provide
fair and adequate consideration to APG, after taking into account the
transactions contemplated by the APG Letter of Intent and the AC Tech Letter of
Intent, the pace of such transactions, the status of financing, issues and
possibility of timely (if any) closure, and APG investment returns, among other
things. The resolutions, duly certified, of APG's board of directors to the
effect of the foregoing and to approve the Transactions are attached hereto as
Exhibit D.
ARTICLE III
COVENANTS AND AGREEMENTS
SECTION 3.1 Formation of Special Purpose Subsidiary.
(a) Prior to the date hereof, APG has formed a wholly-owned,
"bankruptcy remote", special purpose subsidiary, APG Special Purpose
Sub, under the laws of Delaware ("APG Special Purpose Sub"), pursuant
to a certificate of incorporation, by-laws, and other customary
organizational documents and resolutions in form and substance
reasonably satisfactory to PBT. APG's investment in PBT capital stock
as contemplated by the PBT Letter of Intent has been made by APG
Special Purpose Sub which, as of the date hereof, has executed and
delivered (i) the APG Subscription Agreement, dated the date hereof,
with PBT, substantially in the form attached as Exhibit A ("APG
Subscription Agreement"), and (ii) the PBT Stockholders Agreement,
dated the date hereof, substantially in the form attached as Exhibit B
("PBT Stockholders Agreement").
(b) APG represents, warrants, covenants and agrees to and with
PBT that APG Special Purpose Sub has and will have no obligations or
liabilities of any kind, directly or indirectly, except as set forth in
its organizational documents as of the date hereof and in the APG
Subscription Agreement and the PBT Stockholders Agreement and except as
arise by applicable law and that its only business will be to hold its
PBT Stock.
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(c) APG represents, warrants, covenants and agrees to and with
PBT that APG will not directly or indirectly, (i) amend or modify in
any respect the certificate of incorporation, by-laws or other
organizational documents of APG Special Purpose Sub, (ii) transfer,
sell or dispose any stock, ownership, interest or rights in respect of
APG Special Purpose Sub and its stock assets or rights, or (iii)
transfer, assign or contract the management or administration of APG
Special Purpose Sub, in each case, without the prior written approval
of PBT.
SECTION 3.2 Subsidiary Contribution of All Existing Assets and
Liabilities.
(a) APG has formed a wholly-owned subsidiary, ▇▇▇▇▇▇▇▇▇.▇▇▇,
Inc., under the laws of Delaware ("APG Newco"), and has at its own
expense transferred all properties, assets, rights, obligations and
liabilities, and all contingent liabilities, known and unknown, of APG,
including, but not limited to, the stock of ▇▇▇▇▇ Engines and
Competition Components, Inc., Automotive Specialty Chemicals Group,
Inc., Royal Purple Motor Oil, Inc., D3 Design Works, Inc., IMSG
Properties, D'Artagnan Associates, Inc. and ▇▇▇▇'▇ Wheels, Inc. and the
member interests of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Enterprises (the "Downstream
Assets"), to APG Newco (the "Subsidiary Contribution"), provided, that
the Subsidiary Contribution does not involve or transfer APG's
ownership of APG Special Purpose Sub. Upon completion of the Subsidiary
Contribution, APG represents, warrants and confirms to PBT that APG
will be a holding company, owning shares of APG Special Purpose Sub and
APG Newco, with no other properties, assets, rights, interests,
obligations or liabilities.
(b) APG represents, warrants and confirms to PBT that (i)
after the Subsidiary Contribution, APG will be solvent, and will have
sufficient cash, capital and financial resources to conduct its
business and pay its debts, obligations and liabilities when due, and
(ii) its determination to organize APG Newco and pursue the Subsidiary
Contribution has been separately considered, analyzed and pursued by
APG, apart from the other transactions contemplated by this Agreement,
and that PBT has not been involved with, participated in, structured or
directed the Subsidiary Contribution.
SECTION 3.3 Redemption and Conversion of APG Preferred Stock.
(a) APG has duly redeemed and converted in full its Series A
Preferred Stock from the holders thereof and will issue shares of
Common Stock in exchange for the redeemed and converted shares in the
amounts and to the persons set forth on Schedule 3.3. APG represents,
warrants and confirms to PBT that such redemption and conversion was
completed in accordance with the terms and provisions of the Series A
Preferred Stock and any agreements and instruments relating thereto and
applicable law.
(b) All APG Parties which were holders of Series A Preferred
Stock acknowledge and agree that they have received payment in full for
the Series A Preferred
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Stock and all rights with respect to the Series A Preferred Stock have
been terminated, including any rights pursuant to the terms of the
Series A Preferred Stock and under any agreements, instruments,
documents, commitments or promises relating thereto.
SECTION 3.4 Exchange of Bridge Debt and Other Debt; Issuance of
Preferred Stock.
(a) APG has duly redeemed and exchanged in full the $2 million
aggregate principal amount of bridge notes issued to the persons set
forth on Schedule 3.4 (the "Bridge Notes") from the holders thereof and
has issued shares of Series B Preferred Stock in exchange for the
redeemed and exchanged Bridge Notes in the amounts set forth in
Schedule 3.4. APG represents, warrants and confirms to PBT that such
exchange was completed in accordance with the terms and provisions of
the Bridge Notes and agreements and instruments relating thereto and
applicable law.
(b) All APG Parties which were holders of Bridge Notes
acknowledge and agree that they have received payment in full for the
Bridge Notes and all rights with respect to the Bridge Notes have been
terminated, including any rights pursuant to the terms of the Bridge
Notes and under agreements, instruments, documents, commitments or
promises relating thereto.
(c) APG has duly issued to ▇▇▇▇ ▇▇▇▇▇ in consideration of the
assumption of $1.48 million of indebtedness of APG (the "Other Debt"),
$1.48 million aggregate amount of its Series B Preferred Stock. APG
represents, warrants and confirms to PBT that the assumption of the
Other Debt was completed in accordance with the terms and provisions of
the Other Debt and agreements and instruments relating thereto and
applicable law.
SECTION 3.5 Employment and Stock Matters.
(a) APG acknowledges and agrees that certain of its officers and
employees, including ▇▇▇▇ ▇▇▇▇▇▇▇ and the employees listed on Schedule 3.5 (the
"Shared Employees"), will also be employed from the date hereof by, and will
receive compensation and benefits from, PBT and its subsidiaries, and in certain
cases, receive PBT employment agreements which have been separately disclosed to
APG. APG hereby consents to the employment and service of all such Shared
Employees for PBT and its subsidiaries. APG also acknowledges that substantially
all of the business time and efforts of the Shared Employees shall be devoted to
the business of PBT and its subsidiaries.
(b) APG acknowledges and agrees that ▇▇▇▇ ▇▇▇▇▇▇▇ and certain other
officers and employees of APG will (i) directly invest in PBT capital stock, as
contemplated by the PBT Stockholders Agreement, will own such PBT capital stock
in addition to and separate from their investment in APG, and (ii) will receive
options pursuant to Section 3.6 as an incentive for them in their capacity as
employees of PBT.
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(c) APG acknowledges and agrees that PBT officers and employees who are
also associated with APG, including the recipients of the New Options referenced
below, will also have the right, under the APG Subscription Agreement, under
certain circumstances, to participate in the PBT repurchase and call rights in
respect of the PBT capital stock acquired by APG pursuant to the APG
Subscription Agreement.
SECTION 3.6 APG Stock Option Grants. APG has authorized and will grant
effective the close of business on Monday, August 2, 1999, options to purchase
an aggregate of 2,325,000 shares of Common Stock pursuant to the APG 1998 Stock
Option Plan to the persons set forth on Schedule 3.6 (the "New Options");
provided, however that the Option Agreements have not yet been executed by the
recipients thereof. The New Options are exercisable for shares of Common Stock,
which together with shares of Common Stock (including contingent stock) held by
▇▇▇▇ ▇▇▇▇▇▇▇, represent approximately 18.5% of the outstanding shares of Common
Stock on a fully diluted basis at the date hereof, giving effect to the exchange
and conversion of the Preferred Stock and the exchange of the Bridge Notes and
Other Debt contemplated by Sections 3.3 and 3.4. The grant of the options has
been duly authorized by APG and each New Option has been issued pursuant to an
Option Agreement in accordance with the APG 1998 Stock Option Plan and
substantially in the form of Exhibit C. The shares of Common Stock for which the
New Options may be exercised have been duly authorized by APG and when issued
upon the due exercise of the New Options will be fully paid and non-assessable.
APG agrees not to amend or modify, directly or indirectly, the terms and
provisions of the New Options or the terms of the APG 1998 Stock Option Plan in
any material respect or in any respect detrimental to the holders without the
written consent of PBT. APG shall not authorize for issuance under the APG 1998
Stock Option Plan additional shares of Common Stock or additional options if the
effect of any such issuance would alter the percentage ownership of the New
Options. APG covenants and agrees that if APG issues any capital stock or
instruments convertible into APG capital stock at an effective purchase price
below the exercise price of the New Options or below the then prevailing fair
market value of the Common Stock, it shall amend the terms of the New Options to
make equitable adjustments thereto in order to maintain the beneficial ownership
of the New Options.
SECTION 3.7 Contingent Stock Grants and Amendments. APG has duly issued
to ▇▇▇▇ ▇▇▇▇▇▇▇ contingent stock grants in respect of 2,000,000 shares of Common
Stock pursuant to contingent stock agreements attached hereto as Exhibit E and
all of such shares are subject to further restriction and vesting, as confirmed
in documentation also attached as Exhibit F hereto. APG agrees not to amend the
terms of the contingent stock issued to ▇▇▇▇ ▇▇▇▇▇▇▇ described herein in any
material respect or in any respect detrimental to ▇▇▇▇ ▇▇▇▇▇▇▇ without the
written consent of PBT. APG covenants and agrees that if APG issues any capital
stock or instruments convertible into APG capital stock at an effective purchase
price below the then prevailing fair market value of the Common Stock, it shall
amend the terms of the contingent stock granted to ▇▇▇▇ ▇▇▇▇▇▇▇ hereunder to
make equitable adjustments thereto in order to maintain the beneficial ownership
of APG of ▇▇▇▇ ▇▇▇▇▇▇▇ relating to the contingent stock on the date hereof.
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SECTION 3.8 Opinion of Counsel to APG. Counsel to APG has delivered to
PBT on the date hereof a legal opinion covering the legal matters set forth in
Sections 2.1, 2.2, 2.3 and 2.5 on behalf of APG in form reasonably acceptable to
PBT.
ARTICLE IV
BENEFITS, RELEASE AND INDEMNITIES
SECTION 4.1 APG Reimbursements, Payments and Investment.
(a) At the Closing, PBT will pay or arrange for the payment to
APG of (i) APG's $3 million deposit to CoAmerica, as escrow agent, in
connection with the proposed Permatex Acquisition, (ii) APG's $1
million deposit to Ampersand in connection with the proposed AC Tech
Acquisition, the proceeds of which were contributed to AC Tech by
Ampersand, (iii) up to $4.8 million in connection with the Pay-Off
Amount, (iv) reasonable and documented APG third party out-of-pocket
expenses (invoices of which have been delivered to PBT) incurred by APG
in connection with the Permatex Acquisition, the AC Tech Acquisition
and the APG investment contemplated by this Agreement, but no other
purpose, provided, that such expenses do not exceed $800,000 in the
aggregate (the amounts described in clauses (i) through (iv) are
referred to as the "APG Reimbursement"), and (v) reasonable and
documented APG third party out-of-pocket expenses in respect of
counsel, auditors and environmental consultants in excess of $800,000
incurred by APG in connection with the Permatex Acquisition by PBT and,
the AC Tech Acquisition by PBT, provided, that such expenses do not
exceed $880,400 in the aggregate.
(b) At the Closing, APG Special Purpose Sub will purchase PBT
capital stock pursuant to the APG Subscription Agreement and subject to
the PBT Stockholders Agreement.
SECTION 4.2 Release. In consideration of Section 4.1, the investment
opportunity in PBT, and the benefits and opportunities for APG contemplated
hereby, and as a condition of PBT entering into this Agreement and the
agreements and transactions contemplated hereby making the foregoing available
to APG and closing the Permatex Acquisition and the AC Tech Acquisition, each of
APG and the APG Parties hereby irrevocably and unconditionally releases, acquits
and forever discharges on behalf of itself and any person acting by, through, or
under or in concert with any of APG or the APG Parties and all persons acting
by, through, under or in concert with any of them (collectively the
"Releasees"), or any of them, each of PBT, The Jordan Company LLC, and ▇▇▇▇
▇▇▇▇▇▇▇, and their respective subsidiaries, officers, directors, members,
partners, employees, agents, advisors, affiliates, stockholders, divisions,
predecessors, successors, assigns, representatives, attorneys, and all persons
acting by, through, under or in concert with any of them (collectively, the
"Released Parties") from any and all charges, complaints, claims, suits,
judgments, demands, actions, obligations or liabilities, damages, causes of
action (including attorneys' and litigation fees and costs) of any nature
whatsoever,
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including all Losses, known or unknown, emanating from, arising out of, or in
any way whatsoever arising or resulting from any action relating to APG, the PBT
Letter of Interest, the Permatex Acquisition, the AC Tech Letter of Intent, the
AC Tech Acquisition, the Operative Agreements and all transactions contemplated
hereby and thereby, including, without limitation, all Transactions, and all
historical and current activities of APG, including, without limitation, its
organization and formation, its business and operations, its investments, debt
and equity financing, acquisitions and related efforts and activities and all
transactions contemplated herein, or any action taken by, or any action failed
to be taken by the Released Parties or the Releasees in connection therewith,
and each of APG and the APG Parties agrees that neither it, nor any person
acting by, through, or under such party shall institute or pursue any action or
actions, cause or causes of action (in law or in equity), suits, or claims in
state or federal court against or adverse to the Released Parties, or directly
or indirectly assist or cooperate with any person to institute or pursue any
such action or proceeding, arising from or attributable to the Releasees in
connection with the foregoing.
SECTION 4.3 Indemnification by APG.
(a) APG agrees to indemnify and hold harmless, PBT, its
subsidiaries, The Jordan Company LLC and each of their respective
affiliates, and their respective officers, directors, members,
partners, employees, stockholders, representatives and agents, against,
and agree to hold it and them harmless from, any and all Losses
incurred or suffered by PBT or any of the foregoing persons (or any
combination thereof) arising out of or in connection with any of the
following: (i) any breach of or any inaccuracy in any representation or
warranty made by APG or the APG Parties pursuant to this Agreement or
any Related Agreement, (ii) any breach of or failure by APG or the APG
Parties to perform any covenant, agreement or obligation of such
parties in this Agreement or any Related Agreement, (iii) this
Agreement, the PBT Letter of Interest, the Permatex Acquisition, the AC
Tech Letter of Intent, the AC Tech Acquisition, the Operative
Agreements and all agreements, instruments and transactions
contemplated hereby or thereby, all historical and current activities
of APG, including, without limitation, its organization and formation,
its business and operations, its investments, debt and equity
financing, acquisitions and related efforts and activities and all
transactions contemplated herein, (iv) any lawsuits, claims or other
litigation, known or unknown, by, on behalf of or involving APG
stockholders, lenders, directors, officers, employees, advisors, agents
or other persons associated with APG, (v) any broker, finder, investor,
advisor or financier engaged by APG, AC Tech or the APG Parties,
including, without limitation, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. and Inc., Wm.
Sword & Co., Inc., Triumph Capital Group, Inc. and Triumph Partners
III, L.P.
(b) In connection with the foregoing indemnification, counsel
selected by PBT will be entitled to conduct and lead the defense,
including any settlement or compromise, provided that subject to the
absence of any conflict or other ethical or professional reason, APG
may (at its own expense) designate counsel to participate in such
defense.
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(c) APG agrees to indemnify the Shared Employees to the
fullest extent permitted by Delaware law by reason of the fact that
such Shared Employee was serving as an officer, director, employee or
agent of APG.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Expenses. Except as expressly provided herein, each party
hereto shall bear its own expenses (including legal fees and expenses) with
respect to this Agreement and the transactions contemplated hereby; provided,
however, that if any party hereto incurs any legal fees, expenses or other
amounts to enforce the obligations of the other parties hereto, the losing
parties shall reimburse the prevailing parties for all such fees and expenses.
SECTION 5.2 Amendment. This Agreement may be amended, modified or
supplemented but only in writing signed by the APG, the APG Parties and PBT.
SECTION 5.3 Notices. Any notice, request, instruction or other document
to be given hereunder by a party hereto shall be in writing and shall be deemed
to have been given, (a) when received if given in person or by courier or a
courier service, (b) on the date of transmission if sent by telex, facsimile or
other wire transmission or (c) five Business Days after being deposited in the
U.S. mail, certified or registered mail, postage prepaid:
(i) If to PBT, addressed as follows:
c/o ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
The Jordan Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to APG, addressed as follows:
c/o ▇▇▇▇ ▇▇▇▇▇▇▇ and Board of Directors
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇, West & Chodorow, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) If to an APG Party, addressed as set forth on Schedule 6.4.
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
SECTION 5.4 Waivers. The failure of a party hereto at any time or times
to require performance of any provision hereof shall in no manner affect its
right at a later time to enforce the same. No waiver by a party of any condition
or of any breach of any term, covenant, representation or warranty contained in
this Agreement shall be effective unless in writing, and no waiver in any one or
more instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.
SECTION 5.5 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 5.6 Interpretation. The headings preceding the text of Articles
and Sections included in this Agreement and the headings to Sections of the
disclosure schedule are for convenience only and shall not be deemed part of
this Agreement or the disclosure schedules or be given any effect in
interpreting this Agreement or the Disclosure Schedule. The use of the
masculine, feminine or neuter gender herein shall not limit any provision of
this Agreement. The use of the terms "including" or "include" shall in all cases
herein mean "including, without limitation" or "include, without limitation,"
respectively. Underscored references to Articles, Sections, Paragraphs,
Subsections, Exhibits or Schedules shall refer to those portions of this
Agreement. Time is of the essence of each and every covenant, agreement and
obligation in this Agreement.
SECTION 5.7 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
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SECTION 5.8 Binding Agreement. This Agreement and the Related
Agreements shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns notwithstanding if certain APG
Parties listed on Schedule 1 hereto do not execute this Agreement on the date
hereof. No party may assign its rights or obligations under this Agreement
without the prior written consent of the other parties. The parties hereto agree
that each such party shall be entitle to equitable remedies, including specific
performance, of the obligations hereunder.
SECTION 5.9 Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and the Released Parties and no provision of this
Agreement shall be deemed to confer upon third parties any remedy, claim,
liability, reimbursement, cause of action or other right.
SECTION 5.10 Entire Understanding. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof. This Agreement and the Related Agreements set forth the entire
agreement and understanding of the parties hereto and supersede any and all
prior agreements, arrangements and understandings among the parties.
SECTION 5.11 JURISDICTION OF DISPUTES; WAIVER OF JURY TRIAL. IN THE
EVENT ANY PARTY TO THIS AGREEMENT COMMENCES ANY LITIGATION, PROCEEDING OR OTHER
LEGAL ACTION IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY RELATED
AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, WITH
RESPECT TO ANY OF THE MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, THE
PARTIES TO THIS AGREEMENT HEREBY (A) AGREE UNDER ALL CIRCUMSTANCES ABSOLUTELY
AND IRREVOCABLY TO INSTITUTE ANY LITIGATION, PROCEEDING OR OTHER LEGAL ACTION IN
A COURT OF COMPETENT JURISDICTION LOCATED WITHIN THE CITY OF NEW YORK, NEW YORK,
WHETHER A STATE OR FEDERAL COURT; (B) AGREE THAT IN THE EVENT OF ANY SUCH
LITIGATION, PROCEEDING OR ACTION, SUCH PARTIES WILL CONSENT AND SUBMIT TO
PERSONAL JURISDICTION IN ANY SUCH COURT DESCRIBED IN CLAUSE (A) OF THIS SECTION
AND TO SERVICE OF PROCESS UPON THEM IN ACCORDANCE WITH THE RULES AND STATUTES
GOVERNING SERVICE OF PROCESS (IT BEING UNDERSTOOD THAT NOTHING IN THIS SECTION
SHALL BE DEEMED TO PREVENT ANY PARTY FROM SEEKING TO REMOVE ANY ACTION TO A
FEDERAL COURT IN NEW YORK, NEW YORK); (C) AGREE TO WAIVE TO THE FULL EXTENT
PERMITTED BY LAW ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE VENUE
OF ANY SUCH LITIGATION, PROCEEDING OR ACTION IN ANY SUCH COURT OR THAT ANY SUCH
LITIGATION, PROCEEDING OR ACTION WAS BROUGHT IN AN INCONVENIENT FORUM; (D)
DESIGNATE, APPOINT AND DIRECT CT CORPORATION SYSTEM AS ITS AUTHORIZED AGENT TO
RECEIVE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS AND DOCUMENTS IN ANY LEGAL
PROCEEDING IN THE STATE OF NEW YORK; (E) AGREE TO NOTIFY THE OTHER PARTIES TO
THIS AGREEMENT IMMEDIATELY IF SUCH AGENT SHALL REFUSE TO ACT, OR BE
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PREVENTED FROM ACTING, AS AGENT AND, IN SUCH EVENT, PROMPTLY TO DESIGNATE
ANOTHER AGENT IN THE CITY OF NEW YORK, SATISFACTORY TO SELLERS AND PURCHASER, TO
SERVE IN PLACE OF SUCH AGENT AND DELIVER TO THE OTHER PARTY WRITTEN EVIDENCE OF
SUCH SUBSTITUTE AGENT'S ACCEPTANCE OF SUCH DESIGNATION; (F) AGREE AS AN
ALTERNATIVE METHOD OF SERVICE TO SERVICE OF PROCESS IN ANY LEGAL PROCEEDING BY
MAILING OF COPIES THEREOF TO SUCH PARTY AT ITS ADDRESS SET FORTH IN THIS
AGREEMENT FOR COMMUNICATIONS TO SUCH PARTY; (G) AGREE THAT ANY SERVICE MADE AS
PROVIDED HEREIN SHALL BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (H)
AGREE THAT NOTHING HEREIN SHALL AFFECT THE RIGHTS OF ANY PARTY TO EFFECT SERVICE
OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. EACH PARTY HERETO WAIVES THE
RIGHT TO A TRIAL BY JURY IN ANY DISPUTE IN CONNECTION WITH OR RELATING TO THIS
AGREEMENT, ANY RELATED AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN
OR THEREIN, AND AGREE TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO
EFFECT SUCH WAIVER.
SECTION 5.12 Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity of enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other situation or in any other jurisdiction. If
the final judgement of a court of competent jurisdiction declares that any term
or provision hereof is invalid or unenforceable, the Parties agree that the
court making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.
SECTION 5.13 Construction. The language used in this Agreement will be
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against any Party. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
AUTOMOTIVE PERFORMANCE
GROUP, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
APG SPECIAL PURPOSE SUBSIDIARY, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
PBT BRANDS, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Title: Vice President
--------------------------------------
APG Agreement
20
APG PARTIES:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
▇▇▇ ▇▇▇▇▇
DOMINION INCOME
MANAGEMENT CORP.
By: /s ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Title: President
--------------------------------------
DOMINION INCOME MANAGEMENT CORP.
PROFIT SHARING PLAN
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Title: CEO
--------------------------------------
MARITIME CAPITAL PARTNERS
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Title: Managing Partner
--------------------------------------
APG Agreement
21
LANCER OFFSHORE INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
Title: Investment Manager
--------------------------------------
LANCER PARTNERS L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
Title: General Partner
--------------------------------------
LANCER VOYAGER FUND
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
Title: Investment Manager
--------------------------------------
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
FOUNDERS MEZZANINE INC. III
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
APG Agreement
22
FOUNDERS EQUITY GROUP, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
BEACON HOLDINGS
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
APG Agreement
23
--------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇
THE ORBITER FUND, LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
Title: Investment Manager
--------------------------------------
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
APG Agreement
