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Exhibit 10.1
TERM SHEET AND OPTION AGREEMENT
FOR
ACQUISITION OF AMPERSAND'S AC TECH EQUITY AND DEBT
Automotive Performance Group (APG) proposes to acquire Loctite's
automotive aftermarket business (Loctite). For purposes of this term sheet, the
combined company will be designated APG/Loctite. Concurrent with this
acquisition, APG/Loctite proposes to acquire Xxxxxxxxx's investment interest in
AC Tech. To facilitate this transaction, Ampersand and APG have reached the
following agreement:
- FORM OF TRANSACTION: In return for an option payment (see Option
Consideration paragraph below). APG/Loctite will have the right to acquire
Ampersand's AC Tech equity ownership and $1.0 million note in return for
three elements of consideration: (1) $10 million of stock (see Stock
Consideration paragraph below); (2) a put which guarantees that Ampersand can
exchange this stock position for $10 million in cash (see Put Consideration
paragraph below); and (3) a warrant to purchase APG/Loctite shares (see
Warrant paragraph below).
- STOCK CONSIDERATION: Ampersand will receive $10 million of APG/Loctite stock
on the same terms and at the same price that is paid by independent, third
party, institutional investors (i.e., the potential investors that Xxxx
Xxxxxxx has described to Xxxxxxxxx who will be investing roughly $45 million
in equity in the Loctite acquisition).
- PUT CONSIDERATION: Ampersand will receive a put to APG/Loctite for $10
million in cash on the aforementioned Stock Consideration. Xxxxxxxxx's put
will be exercisable during the 90 day period beginning 12 months after the
closing of the Loctite acquisition.
- WARRANT: Ampersand will receive a 5-year warrant for shares equal to 1% of
APG/Loctite's fully diluted shares outstanding at an exercise price equal to
the price paid by the independent, third party, institutional investors
described above.
- OPTION CONSIDERATION: Concurrent with execution of this Term Sheet and
Option Agreement, in return for Ampersand's grant of a purchase option along
the preceding lines, APG will make a non-refundable, $1.0 million option
payment to Ampersand. Ampersand, in turn, will invest this $1.0 million as an
unsecured, subordinated loan to AC Tech. The term of this purchase option
will be coterminous with the 13 week period in the Loctite Letter of Intent
(LOI).
- MANAGEMENT: Xxxx Xxxxxxx and Xxxxxxxxx will support AC Tech's immediate
initiation of a search for a new COO for AC Tech. In the event that APG
chooses to exercise its option to acquire Ampersand's AC Tech ownership, APG
would then be free to complete or cease the COO search.
Agreed and accepted by:
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx, Managing General Partner Xxxx X. Xxxxxxx, Chairman
for Ampersand Ventures of the Board for APG, Inc.
Date: 2/8/99 2/8/99
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