<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 6)*
THE ARNOLD PALMER GOLF COMPANY
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(Name of Issuer)
COMMON STOCK, PAR VALUE $0.50 PER SHARE
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(Title of Class of Securities)
696765 10 06
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(CUSIP Number)
HUGH F. SHARBER, ESQ., MILLER & MARTIN LLP
SUITE 1000, VOLUNTEER BUILDING,
832 GEORGIA AVENUE, CHATTANOOGA, TN 37402
(423) 756-6600
-----------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
APRIL 29, 1999
--------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. [__]
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The infromation required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only):
John T. Lupton
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2. Check the Appropriate Box if a Member of a Group.
(a) X
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(b)
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3. SEC Use Only
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4. Source of funds: PF, AF
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5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e)
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6. Citizenship or place of organization: United States of
America
Number of shares beneficially owned by each reporting person with:
7. Sole voting power - 0
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8. Shared voting power - 1,343,272
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9. Sole dispositive power - 890,000
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10. Shared dispositive power - 1,343,272
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11. Aggregate Amount Beneficially Owned by Each Reporting Person:
2,233,272
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12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares X
----
13. Percent of Class Represented by Amount in Row (11) - 46.1%
--------
14. Type of reporting person - IN
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ITEM 1. SECURITY AND ISSUER
a. Class of Securities: Common Stock, par value
$0.50 per share ("Common Stock")
b. Issuer: The Arnold Palmer Golf Company
6201 Mountain View Road
Ooltewah, Tennessee 37363
ITEM 2. IDENTITY AND BACKGROUND
a. Name: John T. Lupton
b. Address: Suite 702, Tallan Building
Two Union Square
Chattanooga, Tennessee 37402
c. Business or Private investor
occupation:
d. Mr. Lupton has not been convicted in a criminal proceeding
during the past five years.
e. During the last five years, Mr. Lupton has not been a
party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a
judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding
any violations with respect to such laws.
f. Citizenship
or Place of
Organization: United States of America
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On November 3, 1994, Mr. Lupton purchased $2,400,000 aggregate
principal amount of Subordinated Notes Due 1999, with
detachable warrants to purchase 480,000 shares of Common Stock
of the Issuer. The $2,400,000 necessary to purchase such notes
and warrants was obtained from Mr.
Lupton's personal funds.
On January 27, 1995, Mr. Lupton acquired $850,000
aggregate principal amount of Convertible Subordinated
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Notes Due August 30, 1996, convertible into 136,000 shares of
Common Stock of the Issuer (the "Convertible Notes"), with
detachable warrants to purchase 390,000 shares of Common Stock
of the Issuer, in exchange for Mr. Lupton's guaranty of
certain indebtedness of the Company.
On July 18, 1995, Mr. Lupton purchased from another
shareholder additional Subordinated Notes due 1999 in the
aggregate principal amount of $500,000 and additional Warrants
to purchase 100,000 shares of Common Stock of the Issuer. The
$500,000 necessary to purchase such notes and warrants was
obtained from Mr. Lupton's personal funds.
On September 27, 1995, Mr. Lupton purchased in the open market
6,000 shares of Common Stock of the Issuer. On September 28,
1995, he purchased 9,000 shares. On September 29, 1995, he
purchased 12,000 shares. On October 2, 1995, he purchased
30,000 shares. On October 4, 1995, he purchased 21,000 shares.
On October 5, 1995, he purchased 15,000 shares. On October 6,
1995, he purchased 1,000 shares. The $373,750 required to
purchase these 94,000 shares was obtained from Mr.
Lupton's personal funds.
On November 27, 1995, Mr. Lupton purchased in the open market
20,000 shares of Common Stock of the Issuer. The $80,000.00
required to purchase these 20,000 shares was obtained from Mr.
Lupton's personal funds.
On April 1, 1996, Mr. Lupton converted the entire outstanding
principal of and accrued but unpaid interest on the
Convertible Note into 191,814 shares of Common Stock of the
Issuer at a conversion price of $5.00 per share.
On August 21, 1996, the Thomas Cartter Lupton Trust f/b/o John
T. Lupton and issue purchased 833,333 shares of Series NB
Preferred Stock from the Issuer. The $5,000,000 required to
purchase these shares was obtained from funds of the Trust.
On October 7, 1998, the Trust converted the 833,333 shares of
Series NB Preferred Stock into 833,333 shares of Common Stock
in accordance with the terms of the Series NB Preferred Stock.
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On April 28, 1999, APGC Holdings Company, LLC ("Holdings"), a
Delaware limited liability company, was formed for the express
purpose of acquiring all of the outstanding shares of the
Issuer not held by Holdings or its members or their
affiliates. Mr. Lupton is a member and director of Holdings.
On April 29, 1999, Holdings made a proposal to the Board of
Directors of the Issuer to acquire all of the outstanding
shares of the Common Stock not owned by Holdings or its
affiliates at a cash price per share of $1.20 pursuant to a
cash-out merger (the "Proposed Transaction"). A copy of the
letter setting forth Holdings proposal is filed as Exhibit A
to this Schedule 13D. Also on April 29, 1999, Holdings
received commitments from its members to contribute 1,597,717
shares of the outstanding Common Stock of the Issuer to
Holdings upon the consummation of the Proposed Transaction as
capital contributions. No funds or other consideration will be
transferred to the members in connection with the
contributions. If the transaction is consummated, the purchase
price for the shares to be acquired in the Proposed
Transaction is to be funded from additional cash contributions
from personal funds of the members of Holdings or their
affiliates.
ITEM 4. PURPOSE OF TRANSACTION
Mr. Lupton initially acquired all the securities of the
Issuer that he beneficially owns for investment.
Holdings has been formed for the express purpose of acquiring
all of the outstanding shares of the Issuer not held by
Holdings or its members or their affiliates. Consummation of
the acquisition would be subject to the negotiation and
execution of a merger agreement, approval of the Board of
Directors and shareholders of the Issuer, certain other
conditions imposed by Holdings, as well as other customary
conditions in a transaction of this nature, including receipt
of all necessary regulatory approvals. Holdings anticipates
that upon completion of the acquisition, the registration of
the Common Stock of the Company will be terminated and the
Issuer will no longer be a publicly-traded reporting company
under the Securities Exchange Act of 1934, as amended.
Holdings reserves the right to withdraw the proposal in its
discretion at any time.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
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Mr. Lupton currently beneficially owns: (1) 1,343,272
shares of Common Stock of the Issuer, and (2) currently
vested warrants to purchase 890,000 shares of Common
Stock of the Issuer.
On November 2, 1999, warrants to acquire 500,000 shares of
Common Stock of the Issuer, to the extent not already
exercised, will expire. On January 27, 2000, Warrants to
acquire 390,000 shares of Common Stock of the Issuer, to the
extent not already exercised, will expire.
If the currently vested portion of Mr. Lupton's warrants were
exercised in whole, he would beneficially own 46.7% of the
outstanding shares of Common Stock of the Issuer.
As of April 29, 1999, Mr. Lupton and certain other persons
have agreed to become members and directors of Holdings which
was formed for the express purpose of acquiring all of the
outstanding shares of the Issuer not held by Holdings or its
affiliates. As a result of the commitments of other members to
contribute shares of Common Stock to Holdings, Mr. Lupton may
also be deemed the beneficial owner of an additional 254,445
shares that have been agreed to be contributed to Holdings. If
these shares are included, Mr. Lupton would be deemed to
beneficially own 52.1% of the outstanding shares of Common
Stock of the Issuer. Mr. Lupton expressly disclaims beneficial
ownership of any of the shares of Common Stock committed to
Holdings by other members.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER
As of April 29, 1999, Mr. Lupton and an affiliate, pursuant to
Contribution Agreements with Holdings attached as Exhibit B,
have agreed to contribute 1,343,272 outstanding shares of
Common Stock of the Issuer beneficially owned by Mr. Lupton to
Holdings in the event the acquisition is consummated. Also as
of April 29, 1999, Arnold Palmer Enterprises, Inc. pursuant to
a Contribution Agreement with Holdings attached as Exhibit B,
has also agreed to contribute 254,445 outstanding shares of
Common Stock of the Issuer to Holdings in the event the
acquisition is consummated.
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ITEM 7. MATERIAL FILED AS EXHIBITS
Exhibit A: Proposal Letter dated April 29, 1999
Exhibit B: Contribution Agreements dated April 29, 1999
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After reasonable inquiry and to the best of our knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
4/30/99 /s/ John T. Lupton
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Date John T. Lupton
-8-
<PAGE> 9
EXHIBIT A
APGC HOLDINGS COMPANY, LLC
THE LUPTON COMPANY, LLC
702 TALLAN BUILDING
CHATTANOOGA, TN 37402
April 29, 1999
Board of Directors
The Arnold Palmer Golf Company
6201 Mountain View Road
Ooltewah, Tennessee 37363
Re: Proposal for Acquisition
-------------------------
Dear Board of Directors:
APGC Holdings Company, LLC, ("Holdings") is pleased to submit
a proposal to acquire The Arnold Palmer Golf Company (the "Company") in a
cash-out merger transaction in which the Company will merge with Holdings or a
wholly-owned subsidiary of Holdings (the "Merger"). The President and Chief
Executive Officer of the Company, Ms. Cindy L. Davis, and certain shareholders
and directors of the Company, including Messrs. John T. Lupton and Arnold D.
Palmer, have formed Holdings for the purpose of acquiring the Company. These
individuals or their affiliates have agreed to contribute approximately 41
percent of the issued and outstanding shares of common stock of the Company to
Holdings.
Holdings hereby proposes to pay, upon the consummation of the
Merger, $1.20 per share to the holders of the issued and outstanding shares of
the Company which are not then owned by Holdings. All such shares shall be
canceled in the Merger. Upon the consummation of the Merger, the registration of
the Company as a publicly-traded reporting company under the Securities Exchange
Act of 1934, as amended, shall be terminated.
This proposal is subject to the negotiation of a definitive
merger agreement and other documentation of the Merger which are, in form and
substance, satisfactory to Holdings and which include customary representations,
warranties, covenants and conditions. Moreover, this proposal is subject to the
following additional conditions:
<PAGE> 10
1. Holdings shall have made arrangements for the satisfactory
restructuring of the Company's outstanding indebtedness on
terms acceptable to Holdings including the Company's short-
and long-term debt and the Company's outstanding subordinated
debentures whether held by affiliates of Holdings or others.
2. No litigation or other challenge to the proposal shall have
been commenced or threatened whether by the existing
shareholders of the Company or others.
3. The Company shall not have entertained proposals or entered
discussions with any other persons regarding the acquisition
of all of the stock or substantially all of the assets of the
Company.
4. The Company shall not have suffered, or expect to suffer, a
material adverse change in its business, operations,
properties or financial condition arising from any cause
whatsoever.
5. The Company shall have received no indication that it will be
unable to obtain any necessary consents or approvals from
third parties necessary for the consummation of the Merger
including consents from third- parties that have existing
contractual relationships with the Company or governmental
approvals or authorizations for the form or substance of the
transaction.
6. The Merger can be structured in a fashion to obtain the most
favorable tax treatment possible for Holdings and the Company
including fully utilizing the net operating loss carry
forwards of the Company to offset income of the Company to the
extent permitted under the Internal Revenue Code of 1986, as
amended.
7. There shall be no indication that the execution of a
definitive merger agreement shall be delayed beyond June 30,
1999, or that closing of the Merger shall be delayed beyond
September 30, 1999.
Please note that this proposal is preliminary in nature and
may be withdrawn by Holdings by notice provided to the Company at any time prior
to the execution of a definitive merger agreement notwithstanding the continued
satisfaction of the conditions enumerated above.
Please note as well that this proposal is being made solely to
you in your capacity as representatives of the Company
<PAGE> 11
and is not to be construed as a proposal to purchase on any terms other than as
specifically set forth herein or as a proposal to anyone other than the Company.
This proposal is further to be treated as confidential pending agreement by the
Company and Holdings of an appropriate public announcement.
Yours very truly,
APGC HOLDINGS COMPANY, LLC
/s/ Cindy L. Davis
Cindy L. Davis
President and Chief Executive Officer
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EXHIBIT B-1
CONTRIBUTION AGREEMENT
This Contribution Agreement is made and entered into as of the
29th day of April, 1999, by and between John T. Lupton Trust (the
"Contributor"), and APGC Holdings Company, LLC, a Delaware limited liability
company (the "Company").
The Contributor has agreed to make contributions to the
capital of the Company in accordance with the terms and conditions described in
this Agreement.
NOW, THEREFORE, for and in consideration of the premises and
the mutual promises and covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Subscription and Contribution. The Contributor hereby
subscribes for a Membership Interest (the "Membership Interest") in the Company
on the terms and conditions described herein. As consideration for the
Membership Interest, the Contributor agrees to contribute:
(a) Upon the capital call set forth in Section 2 below:
(i) 833,333 shares of common stock of the Arnold
Palmer Golf Company, a Tennessee corporation
("APGC"); and
(ii) any additional shares of APGC common stock
or other securities to be issued to
Contributor in connection with the
conversion of APGC indebtedness into equity.
The consideration described in Section 1(b) above shall
be referred to as the "Contribution Amount."
The parties agree and acknowledge that the Membership Interest
will have the financial and governance rights prescribed by the Delaware Limited
Liability Company Act (the "Act"), and the Company's Certificate of Formation
and the Limited Liability Company Agreement. The Membership Interest allocated
to the Contributor upon receipt by the Company of the Contribution Amount shall
be determined by the Board of Managers.
<PAGE> 13
2. Capital Call. The Contributor agrees to deliver to the
Company the Contribution Amount upon the call by the Company's Board of Managers
at the closing of the merger pursuant to which the Company or a wholly-owned
subsidiary of the Company will merge with APGC in accordance with the terms of,
and subject to the conditions set forth in, the Proposal for Acquisition in the
form attached hereto as Appendix 1 , as such terms may hereafter be amended or
modified by the Board of Managers of the Company.
3. Representations. The Contributor represents, warrants and
acknowledges to the Company that:
(a) The Contributor understands and agrees that the Membership
Interest is subject to certain restrictions set forth in the Limited
Liability Company Agreement, which the Contributor agrees to be bound
by;
(b) The Contributor is aware that (i) no registration
statement relating to the Membership Interest has been filed under the
Securities Act of 1933, as amended (the "Securities Act") or the
securities laws of any state, (ii) the Membership Interest may not be
transferred or resold except as permitted under applicable securities
laws, including the Securities Act and such state securities laws,
pursuant to registration or exemption therefrom and (iii) the Company
will refuse to allow any transfer of the Membership Interest in
violation of applicable securities laws, including the Securities Act
or such state securities laws;
(c) The Contributor understands that the Company is not
obligated to register the Membership Interest under the Securities Act
or under any state securities laws. The Contributor further understands
that the Company is not obligated to take any action, except as may be
required by law, necessary to make Rule 144 under the Securities Act or
any other method available for resales of the Membership Interest by
the Contributor;
(d) The Contributor acknowledges that the Company has not
prepared, and that it has not been requested by the Contributor to
prepare, a comprehensive written prospectus or disclosure statement in
connection with the issuance of the Membership Interest to the
Contributor, covering the business, operations, management, financial
condition or prospects of the Company of the nature that otherwise
might be required if the sale of the Membership Interest to the
Contributor were required to be registered under the Act. The
Contributor further acknowledges that the Company, prior to the date
hereof, has furnished the Contributor the opportunity to ask
<PAGE> 14
questions of and receive answers from the Company concerning the
financial and business affairs of the Company and has afforded the
Contributor the opportunity to verify the accuracy of all information
provided or made available to the Contributor by the Company;
(e) The Contributor is acquiring the Membership Interest
for investment, for the Contributor's own account and not with
a view to the distribution thereof; and
(f) The Contributor understands that the foregoing
representations, warranties, acknowledgments and agreements will be
relied upon by the Company as a basis for exemption of the issuance of
the Interest from the registration requirements of the Securities Act
and any applicable state securities law.
4. Assignment. With the prior written approval of the Company,
the Contributor's obligation to contribute cash to the Company in accordance
with Section 1(b) (iii) of this Agreement may be assigned to a third party or
third parties. In the absence of such prior written approval by the Company, any
such assignment shall be null and void.
5. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Contributor and the Contributor's heirs, executors,
administrators, successors, legal representatives and assigns. This Agreement
shall be binding upon and inure to the benefit of the Company and its successors
and assigns.
IN WITNESS WHEREOF, the Contributor has executed and delivered
this Agreement, effective as of the day and year first above written.
CONTRIBUTOR:
JOHN T. LUPTON TRUST
By: /s/ Joel W. Richardson, Jr.
------------------------------
Accepted:
APGC HOLDING COMPANY, LLC
/s/ Cindy L. Davis
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Cindy L. Davis
President
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EXHIBIT B-2
CONTRIBUTION AGREEMENT
This Contribution Agreement is made and entered into as of the
29th day of April, 1999, by and between Arnold Palmer Enterprises, Inc. a
Delaware corporation (the "Contributor"), and APGC Holdings Company, LLC, a
Delaware limited liability company (the "Company").
The Contributor has agreed to make contributions to the
capital of the Company in accordance with the terms and conditions described in
this Agreement.
NOW, THEREFORE, for and in consideration of the premises and
the mutual promises and covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Subscription and Contribution. The Contributor hereby
subscribes for a Membership Interest (the "Membership Interest") in the Company
on the terms and conditions described herein. As consideration for the
Membership Interest, the Contributor agrees to contribute:
(a) $450 upon the date hereof; and
(b) Upon the capital call set forth in Section 2 below:
(i) 254,445 shares of common stock of the Arnold
Palmer Golf Company, a Tennessee corporation
("APGC");
(ii) any additional shares of APGC common stock
or other securities to be issued to
Contributor in connection with the
conversion of APGC indebtedness into equity;
and
(ii) an aggregate of $________________ (to be
determined).
The consideration described in Section 1(b) above shall
be referred to as the "Contribution Amount."
The parties agree and acknowledge that the Membership Interest
will have the financial and governance rights prescribed by the Delaware Limited
Liability Company Act (the "Act"), and the
<PAGE> 16
Company's Certificate of Formation and the Limited Liability Company Agreement.
The Membership Interest allocated to the Contributor upon receipt by the Company
of the Contribution Amount shall be determined by the Board of Managers.
2. Capital Call. The Contributor agrees to deliver to the
Company the Contribution Amount upon the call by the Company's Board of Managers
at the closing of the merger pursuant to which the Company or a wholly-owned
subsidiary of the Company will merge with APGC in accordance with the terms of,
and subject to the conditions set forth in, the Proposal for Acquisition in the
form attached hereto as Appendix 1 , as such terms may hereafter be amended or
modified by the Board of Managers of the Company.
3. Representations. The Contributor represents, warrants and
acknowledges to the Company that:
(a) The Contributor understands and agrees that the Membership
Interest is subject to certain restrictions set forth in the Limited
Liability Company Agreement, which the Contributor agrees to be bound
by;
(b) The Contributor is aware that (i) no registration
statement relating to the Membership Interest has been filed under the
Securities Act of 1933, as amended (the "Securities Act") or the
securities laws of any state, (ii) the Membership Interest may not be
transferred or resold except as permitted under applicable securities
laws, including the Securities Act and such state securities laws,
pursuant to registration or exemption therefrom and (iii) the Company
will refuse to allow any transfer of the Membership Interest in
violation of applicable securities laws, including the Securities Act
or such state securities laws;
(c) The Contributor understands that the Company is not
obligated to register the Membership Interest under the Securities Act
or under any state securities laws. The Contributor further understands
that the Company is not obligated to take any action, except as may be
required by law, necessary to make Rule 144 under the Securities Act or
any other method available for resales of the Membership Interest by
the Contributor;
(d) The Contributor acknowledges that the Company has not
prepared, and that it has not been requested by the Contributor to
prepare, a comprehensive written prospectus or disclosure statement in
connection with the issuance of the Membership Interest to the
Contributor, covering the business, operations, management, financial
condition or prospects of
<PAGE> 17
the Company of the nature that otherwise might be required if the sale
of the Membership Interest to the Contributor were required to be
registered under the Act. The Contributor further acknowledges that the
Company, prior to the date hereof, has furnished the Contributor the
opportunity to ask questions of and receive answers from the Company
concerning the financial and business affairs of the Company and has
afforded the Contributor the opportunity to verify the accuracy of all
information provided or made available to the Contributor by the
Company;
(e) The Contributor is acquiring the Membership Interest
for investment, for the Contributor's own account and not with
a view to the distribution thereof; and
(f) The Contributor understands that the foregoing
representations, warranties, acknowledgments and agreements will be
relied upon by the Company as a basis for exemption of the issuance of
the Interest from the registration requirements of the Securities Act
and any applicable state securities law.
4. Assignment. With the prior written approval of the
Company, the Contributor's obligation to contribute cash to the Company in
accordance with Section 1(b) (iii) of this Agreement may be assigned to a third
party or third parties. In the absence of such prior written approval by the
Company, any such assignment shall be null and void.
5. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Contributor and the Contributor's heirs, executors,
administrators, successors, legal representatives and assigns. This Agreement
shall be binding upon and inure to the benefit of the Company and its successors
and assigns.
IN WITNESS WHEREOF, the Contributor has executed and delivered
this Agreement, effective as of the day and year first above written.
CONTRIBUTOR:
ARNOLD PALMER ENTERPRISES, INC.
By: /s/ Arnold D. Palmer
----------------------------
Accepted:
APGC HOLDING COMPANY, LLC
/s/ Cindy L. Davis
- --------------------------------
Cindy L. Davis
President
<PAGE> 18
EXHIBIT B-3
CONTRIBUTION AGREEMENT
This Contribution Agreement is made and entered into as of the
29th day of April, 1999, by and between John T. Lupton, an individual (the
"Contributor"), and APGC Holdings Company, LLC, a Delaware limited liability
company (the "Company").
The Contributor has agreed to make contributions to the
capital of the Company in accordance with the terms and conditions described in
this Agreement.
NOW, THEREFORE, for and in consideration of the premises and
the mutual promises and covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Subscription and Contribution. The Contributor hereby
subscribes for a Membership Interest (the "Membership Interest") in the Company
on the terms and conditions described herein. As consideration for the
Membership Interest, the Contributor agrees to contribute:
(a) $450 upon the date hereof; and
(b) Upon the capital call set forth in Section 2 below:
(i) 509,939 shares of common stock of the Arnold
Palmer Golf Company, a Tennessee corporation
("APGC");
(ii) any additional shares of APGC common stock
or other securities to be issued to
Contributor in connection with the
conversion of APGC indebtedness into equity;
(iii) an aggregate of $1,350,000; and
(iv) such additional amounts of cash up to an
additional $1,650,000 as may be required in
order to effectuate the merger pursuant to
which the Company or a wholly-owned subsidiary
of the Company will merge with APGC in
accordance with the terms of, and subject to
the conditions set forth in, the Proposal for
Acquisition in the form attached hereto as
<PAGE> 19
Appendix 1 , as such terms may hereafter be
amended or modified by the Board of Managers
of the Company.
The consideration described in Section 1(b) above shall
be referred to as the "Contribution Amount."
The parties agree and acknowledge that the Membership Interest
will have the financial and governance rights prescribed by the Delaware Limited
Liability Company Act (the "Act"), and the Company's Certificate of Formation
and the Limited Liability Company Agreement. The Membership Interest allocated
to the Contributor upon receipt by the Company of the Contribution Amount shall
be determined by the Board of Managers.
2. Capital Call. The Contributor agrees to deliver to the
Company the Contribution Amount upon the call by the Company's Board of Managers
at the closing of the merger pursuant to which the Company or a wholly-owned
subsidiary of the Company will merge with APGC in accordance with the terms of,
and subject to the conditions set forth in, the Proposal for Acquisition in the
form attached hereto as Appendix 1 , as such terms may hereafter be amended or
modified by the Board of Managers of the Company.
3. Representations. The Contributor represents, warrants and
acknowledges to the Company that:
(a) The Contributor understands and agrees that the Membership
Interest is subject to certain restrictions set forth in the Limited
Liability Company Agreement, which the Contributor agrees to be bound
by;
(b) The Contributor is aware that (i) no registration
statement relating to the Membership Interest has been filed under the
Securities Act of 1933, as amended (the "Securities Act") or the
securities laws of any state, (ii) the Membership Interest may not be
transferred or resold except as permitted under applicable securities
laws, including the Securities Act and such state securities laws,
pursuant to registration or exemption therefrom and (iii) the Company
will refuse to allow any transfer of the Membership Interest in
violation of applicable securities laws, including the Securities Act
or such state securities laws;
(c) The Contributor understands that the Company is not
obligated to register the Membership Interest under the Securities Act
or under any state securities laws. The Contributor further understands
that the Company is not obligated to take any action, except as may be
required by
<PAGE> 20
law, necessary to make Rule 144 under the Securities Act or any other
method available for resales of the Membership Interest by the
Contributor;
(d) The Contributor acknowledges that the Company has not
prepared, and that it has not been requested by the Contributor to
prepare, a comprehensive written prospectus or disclosure statement in
connection with the issuance of the Membership Interest to the
Contributor, covering the business, operations, management, financial
condition or prospects of the Company of the nature that otherwise
might be required if the sale of the Membership Interest to the
Contributor were required to be registered under the Act. The
Contributor further acknowledges that the Company, prior to the date
hereof, has furnished the Contributor the opportunity to ask questions
of and receive answers from the Company concerning the financial and
business affairs of the Company and has afforded the Contributor the
opportunity to verify the accuracy of all information provided or made
available to the Contributor by the Company;
(e) The Contributor is acquiring the Membership Interest
for investment, for the Contributor's own account and not with
a view to the distribution thereof; and
(f) The Contributor understands that the foregoing
representations, warranties, acknowledgments and agreements will be
relied upon by the Company as a basis for exemption of the issuance of
the Interest from the registration requirements of the Securities Act
and any applicable state securities law.
4. Assignment. With the prior written approval of the Company,
the Contributor's obligation to contribute cash to the Company in accordance
with Section 1(b) (iii) of this Agreement may be assigned to a third party or
third parties. In the absence of such prior written approval by the Company, any
such assignment shall be null and void.
5. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Contributor and the Contributor's heirs, executors,
administrators, successors, legal representatives and assigns. This Agreement
shall be binding upon and inure to the benefit of the Company and its successors
and assigns.
<PAGE> 21
IN WITNESS WHEREOF, the Contributor has executed and delivered
this Agreement, effective as of the day and year first above written.
CONTRIBUTOR:
/s/ John T. Lupton
------------------------------
John T. Lupton
Accepted:
APGC HOLDING COMPANY, LLC
/s/ Cindy L. Davis
- --------------------------------
Cindy L. Davis
President
