Exhibit 10.2

EXECUTION COPY

KEYSTONE AUTOMOTIVE HOLDINGS, INC.

BACKSTOP STOCK PURCHASE AGREEMENT

Dated as of January 10, 2011

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TABLE OF CONTENTS

 

               Page   1.   

Rights Offering and Backstop

     2       1.1.   

The Rights Offering

     2       1.2.   

Backstop

     2       1.3.   

Backstop Commitment Fee

     4       1.4.   

Transaction Expenses

     5    2.   

Representations and Warranties of the Debtors

     6       2.1.   

Organization of the Company

     6       2.2.   

Capitalization of the Company

     6       2.3.   

Organization and Capitalization of the Subsidiaries

     6       2.4.   

Authority; No Conflict

     7       2.5.   

Legal Proceedings

     8       2.6.   

Compliance with Laws

     8       2.7.   

Brokers or Finders

     9       2.8.   

Exemption from Registration

     9       2.9.   

Issuance

     9       2.10.   

Bankruptcy Documents and Exchange Act Documents

     9       2.11.   

No Violation or Default

     10       2.12.   

Title to Intellectual Property

     10       2.13.   

Licenses and Permits

     10       2.14.   

Compliance With Environmental Laws

     10       2.15.   

Employee Benefit Plans

     11       2.16.   

Material Contracts

     12       2.17.   

No Unlawful Payments

     12       2.18.   

No Restrictions on Subsidiaries

     13       2.19.   

Absence of Certain Changes or Events

     13       2.20.   

Title to Property; Leases

     13       2.21.   

Financial Statements

     13       2.22.   

Tax Matters

     14       2.23.   

Labor and Employment Compliance

     14       2.24.   

Product Liability

     15       2.25.   

Arm’s Length

     15       2.26.   

Product Design; Warranties

     16       2.27.   

No Product Recalls

     16       2.28.   

Investment Company Act

     16       2.29.   

Accounting Controls

     16       2.30.   

Insurance

     16       2.31.   

Transactions with Related Parties

     17       2.32.   

Customers and Suppliers

     17       2.33.   

Fees

     17    3.   

Representations and Warranties of the Backstop Equity Investors

     18       3.1.   

Organization of Such Backstop Equity Investor

     18       3.2.   

Authority; No Conflict

     18   

 

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   3.3.   

Shares Not Registered

     19       3.4.   

Acquisition for Own Account

     19       3.5.   

Accredited Investor

     19       3.6.   

Access to Information

     19       3.7.   

Brokers or Finders

     20       3.8.   

Legal Proceedings

     20       3.9.   

Financial Ability to Fund Backstop Commitment

     20       3.10.   

Arm’s Length

     20    4.   

Covenants of the Debtors

     20       4.1.   

Agreement Motion and Agreement Order

     20       4.2.   

Rights Offering

     21       4.3.   

Conditions Precedent

     21       4.4.   

Notification

     21       4.5.   

Use of Proceeds

     21       4.6.   

HSR Act

     22       4.7.   

Access

     22       4.8.   

Stockholders Agreement and Registration Rights Agreement

     22       4.9.   

Exit Facility

     22       4.10.   

Specified Issuances

     22       4.11.   

Conduct of the Business

     23    5.   

Covenants of the Backstop Equity Investors

     25       5.1.   

Conditions Precedent

     25       5.2.   

HSR Act and Competition Act (Canada)

     25       5.3.   

Financing

     25       5.4.   

Information

     26    6.   

Conditions to Closing

     26       6.1.   

Conditions Precedent to Obligations of the Backstop Equity Investors

     26       6.2.   

Conditions Precedent to Obligations of the Company

     29    7.   

Termination

     30    8.   

Indemnification

     31    9.   

Survival of Representations and Warranties

     33    10.   

Amendments and Waivers

     33    11.   

Notices, etc.

     34    12.   

Miscellaneous

     34       12.1.   

Assignments

     34       12.2.   

Severability

     35       12.3.   

Entire Agreement

     35       12.4.   

Counterparts

     35       12.5.   

Governing Law

     35       12.6.   

Submission to Jurisdiction

     35       12.7.   

Waiver of Trial by Jury

     36       12.8.   

Further Assurances

     36       12.9.   

Specific Performance

     36   

 

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     12.10.    Headings    36      12.11.   

Interpretation; Rules of Construction

     36       12.12.   

Non-Recourse

     37       12.13.   

Several, Not Joint, Obligations

     37       12.14.   

Disclosure

     37    13.   

Definitions

     37       13.1.   

Certain Defined Terms

     37   

 

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THIS BACKSTOP STOCK PURCHASE AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this “Agreement”) is entered into as of January 10,
2011, by and among (a) Keystone Automotive Holdings, Inc., a Delaware
corporation (as in existence on the date hereof, as a debtor-in-possession and a
reorganized debtor, as applicable, the “Company”), (b) each of the Affiliates of
the Company listed on the signature pages hereto under the title “Debtors” (such
Affiliates, each as in existence on the date hereof, as a debtor-in possession
in the Chapter 11 Cases and as a reorganized debtor, as applicable, together
with the Company, each a “Debtor” and, collectively, the “Debtors”) and (c) each
of the undersigned entities listed on the signature pages hereto under the title
“Backstop Equity Investors” (each, a “Backstop Equity Investor” and,
collectively, the “Backstop Equity Investors”). Capitalized terms used in this
Agreement are defined in Section 13.1 hereof.

RECITALS

WHEREAS, the Debtors intend to restructure pursuant to a plan under Chapter 11
of the Bankruptcy Code (as it may be amended, supplemented or otherwise modified
from time to time, together with any plan supplement, the “Plan”) that will be
filed by the Debtors in connection with contemplated voluntary filings (the
“Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code, 11
U.S.C. §§ 101, et seq. (as amended, the “Bankruptcy Code”) in the United States
Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”);

WHEREAS, pursuant to the terms of the Plan, the Company will conduct a rights
offering, on the terms set forth in the Plan and this Agreement (the “Rights
Offering”), by distributing to certain holders of allowed claims under the Plan
(“Eligible Holders”) non-transferable, non-certificated rights (“Rights”) to
acquire shares of New Common Stock (the “Rights Offering Shares”) in the
relative amounts and subject to the restrictions set forth in the Plan;

WHEREAS, the aggregate amount of the Rights Offering shall be $60.0 million;

WHEREAS, in order to facilitate the Rights Offering, pursuant to this Agreement,
and subject to the terms, conditions and limitations set forth herein, each of
the Backstop Equity Investors, severally and not jointly, has agreed to purchase
on the Effective Date, and the Company agrees to sell to such Backstop Equity
Investor on the Effective Date, at the exercise price applicable to the purchase
of Rights Offering Shares in the Rights Offering (the “Exercise Price”), such
Backstop Equity Investor’s Total Commitment Percentage of the Rights Offering
Shares that have not been subscribed for by Eligible Holders by the Rights
Offering Deadline (the “Unsubscribed Shares”);

WHEREAS, in the event that the restructuring contemplated by the Restructuring
Support Agreement is to be consummated pursuant to the out-of-court
restructuring contemplated by the Restructuring Support Agreement, the parties
hereto agree that this Agreement will be amended, modified or supplemented, on
otherwise the same terms and conditions herein contained, to reflect such
out-of-court restructuring;

 

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NOW, THEREFORE, in consideration of the foregoing, and the representations,
warranties and covenants set forth herein, and other good and valuable
consideration, the Debtors and the Backstop Equity Investors agree as follows:

1. Rights Offering and Backstop.

1.1. The Rights Offering.

(a) The Company will commence the Rights Offering contemporaneously with, and as
part of, the solicitation process for the Plan. The Rights Offering shall be
conducted and consummated on the terms, subject to the conditions and in
accordance with procedures satisfactory to both the Debtors and the Backstop
Equity Investors (the “Rights Offering Procedures”).

(b) On the terms, subject to the conditions, and in reliance on the
representations and warranties set forth in this Agreement, each of the Backstop
Equity Investors hereby agrees, severally and not jointly, to exercise in full
all Rights distributed to such Backstop Equity Investor in the Rights Offering
on the terms set forth in the Plan and the Rights Offering Procedures.

(c) The Company hereby agrees and undertakes to give the Backstop Equity
Investors, by facsimile transmission or electronic mail, a certification by an
executive officer of the Company (including any supporting information
reasonably requested by the Backstop Equity Investors) of either (i) a true and
accurate calculation, as determined in good faith by the Company in consultation
with the official committee of unsecured creditors appointed by the Bankruptcy
Court, if such an appointment occurs, of the number of Unsubscribed Shares and
the aggregate Exercise Price therefor (a “Purchase Notice”), or (ii) in the
absence of any Unsubscribed Shares, the fact that there are no Unsubscribed
Shares and that the Commitments are terminated (a “Satisfaction Notice”), in
either case as soon as practicable after the Rights Offering Deadline and, in
any event, at least five (5) Business Days prior to the Effective Date (the date
of transmission of a Purchase Notice or a Satisfaction Notice, the
“Determination Date”).

1.2. Backstop.

(a) On the terms, subject to the conditions and in reliance on the
representations and warranties set forth in this Agreement (including, without
limitation, the entry of the Agreement Order by the Bankruptcy Court and the
Agreement Order becoming a Final Order), each of the Backstop Equity Investors
hereby agrees, severally and not jointly, to purchase on the Effective Date, and
the Company hereby agrees to sell and issue to such Backstop Equity Investor, at
the aggregate Exercise Price therefor, its Total Commitment Percentage of all
Unsubscribed Shares as of the Rights Offering Deadline. The Unsubscribed Shares
that each of the Backstop Equity Investors is required to purchase pursuant to
this Section 1.2(a) are referred to herein as such Backstop Equity Investor’s
“Equity Investor Shares.”

(b) In the event that a Backstop Equity Investor defaults on its obligation to
purchase Unsubscribed Shares under Section 1.2(a) hereof (each such Backstop
Equity Investor,

 

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a “Defaulting Backstop Equity Investor” and each such default, a “Backstop
Default”), each Backstop Equity Investor that is not a Defaulting Backstop
Equity Investor (each, a “Non-Defaulting Backstop Equity Investor”) has the
right (the “Default Purchase Right”), but not the obligation, to purchase, and
the Company hereby agrees to sell and issue to such Non-Defaulting Backstop
Equity Investor, at the aggregate Exercise Price therefor, its Adjusted
Commitment Percentage of all Unsubscribed Shares required to be purchased by all
Defaulting Backstop Equity Investors pursuant to Section 1.2(a) and not so
purchased (the “Default Shares” and, together with the Equity Investor Shares,
the “Backstop Shares”). As soon as practicable after a Backstop Default, the
Company shall send a written notice to each Non-Defaulting Backstop Equity
Investor, specifying (i) the number of Default Shares subject to the Backstop
Default and (ii) the maximum number of Default Shares such Non-Defaulting
Backstop Equity Investor is entitled to purchase (determined in accordance with
the first sentence of this Section 1.2(b)). Each Non-Defaulting Backstop Equity
Investor shall have three (3) Business Days after receipt of such notice to
elect to exercise its Default Purchase Right by notifying the Company in writing
of its election and specifying the number of Default Shares that it is electing
to purchase (up to the maximum number of Default Shares such Non-Defaulting
Backstop Equity Investor is entitled to purchase pursuant to the first sentence
of this Section 1.2(b)). If any Non-Defaulting Backstop Equity Investor wishes
to purchase less than the maximum number of Default Shares such Non-Defaulting
Backstop Equity Investor is entitled to purchase pursuant to the first sentence
of this Section 1.2(b), the Default Shares that such Non-Defaulting Backstop
Equity Investor does not elect to purchase shall be allocated among the
Non-Defaulting Backstop Equity Investors who wish to commit to purchase such
Default Shares on a pro rata basis based on the respective Adjusted Commitment
Percentages of such Non-Defaulting Backstop Equity Investors (such allocation
and commitment to purchase to be made by utilizing the same procedures set forth
in this Section 1.2(b)). For the avoidance of doubt, the election by any
Non-Defaulting Backstop Equity Investor to purchase Default Shares pursuant to
this Section 1.2(b) shall not release the applicable Defaulting Backstop Equity
Investor from any breach of any provision of this Agreement except to the extent
cured by the purchase of Default Shares by the Non-Defaulting Backstop Equity
Investor.

(c) The closing of the purchase and sale of Backstop Shares hereunder (the
“Closing”) will occur at 10:00 a.m., New York City time, on the Effective Date;
provided, however, that the closing of the purchase and sale of any Default
Shares that became Default Shares five (5) Business Days or less prior to the
Effective Date shall occur at 10:00 a.m., New York City time, on a Business Day
mutually agreed upon between the Company and the Backstop Equity Investors (not
to exceed five (5) Business Days following the Effective Date). At the Closing,
(i) each Backstop Equity Investor shall pay to the Company an amount equal to
the product of (A) the number of Backstop Shares to be purchased by such
Backstop Equity Investor (as determined by Sections 1.2(a) and 1.2(b) hereof)
and (B) the Exercise Price, by wire transfer of immediately available funds to
an account designated by the Company at least two (2) Business Days prior to the
anticipated Effective Date, and (ii) the Company shall deliver to each Backstop
Equity Investor (x) a certificate or certificates duly executed on behalf of the
Company registered in the name of such Backstop Equity Investor (or its
designee) representing the number of Shares to be issued to such Backstop Equity
Investor by the Company pursuant to this Agreement and (y) such other
certificates, counterparts to agreements, documents or instruments required by
it to be delivered to such Backstop Equity Investor pursuant to Section 6.1
hereof. The agreements, instruments, certificates and other documents to be
delivered on the Effective Date by or on behalf of the Company will be delivered
to the Backstop Equity Investors at the offices of Willkie Farr & Gallagher LLP,
787 Seventh Avenue, New York, New York 10019.

 

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(d) All Shares will be delivered with any and all issue, stamp, transfer or
similar taxes or duties payable in connection with such delivery duly paid by
the Company to the extent required under the Confirmation Order or applicable
law.

(e) Anything in this Agreement to the contrary notwithstanding (but without
limiting the provisions of Section 12.1 hereof), any Backstop Equity Investor,
in its sole discretion, may designate in writing at least five (5) Business Days
prior to the Effective Date that some or all of the Shares be issued in the name
of, and delivered to, one or more of its Affiliates, provided that such Backstop
Equity Investor provides to the Company information reasonably requested to
establish such Affiliate as an “accredited investor” as such term is used in
Section 3.5 herein.

1.3. Backstop Commitment Fee.

(a) To compensate the Backstop Equity Investors for the risk of their
undertakings herein, the Company shall pay to the Backstop Equity Investors, in
the aggregate and in accordance with the terms of the Plan, on the Effective
Date, a backstop commitment fee (the “Backstop Commitment Fee”) of such number
of additional shares of New Common Stock equal to 6% of the Rights Offering
Shares eligible to be purchased in the Rights Offering (the “Commitment Fee
Shares”) provided that, if the Effective Date shall not occur and/or this
Agreement is terminated prior to the Effective Date in accordance with the
provisions hereof, then the Backstop Commitment Fee shall not be paid and the
Company shall have no further liability with respect to the Backstop Commitment
Fee. The Backstop Commitment Fee shall be paid to the Backstop Equity Investors
on a ratable basis in accordance with their respective Total Commitment
Percentages; provided, however, that any Backstop Equity Investor who is a
Defaulting Backstop Equity Investor shall be deemed to irrevocably waive any
right or entitlement to any portion of the Backstop Commitment Fee and the
portion of the Backstop Commitment Fee otherwise payable to such Defaulting
Backstop Equity Investor pursuant to its Total Commitment Percentage shall be
paid to the Non-Defaulting Backstop Equity Investors on a pro rata basis based
on the number of Default Shares (if any) such Non-Defaulting Backstop Equity
Investors have elected to purchase pursuant to Section 1.2(b) over the total
number of Default Shares available. Subject to Section 1.3(b) and in accordance
with the Agreement Order, the Backstop Commitment Fee shall be paid on the
Effective Date without any further action required of or entertained by the
Bankruptcy Court.

(b) In the event that a Non-Defaulting Equity Investor purchases Default Shares
within five (5) Business Day or less prior to the Effective Date, the portion of
the Backstop Commitment Fee payable in respect of those Default Share pursuant
to the proviso in the first sentence of Section 1.3(a), shall instead be payable
by the Debtors on the closing of the purchase and sale of such Default Shares.

(c) The Backstop Commitment Fee shall be earned and payable without regard to
whether the Rights Offering is fully subscribed. The provision for payment of
the Backstop Commitment Fee is an integral part of the transactions contemplated
by this Agreement and without this provision, the Backstop Equity Investors
would not have entered into this Agreement.

 

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1.4. Transaction Expenses.

(a) Subject to the professionals for the Backstop Equity Investors providing to
the Company reasonably detailed invoices (provided that, with respect to the
reimbursement of fees of legal counsel, the reasonably detailed invoices need
not include any attorney time descriptions of work performed or any other
information that, in the good faith judgment of the Backstop Equity Investors,
is protected by the attorney client privilege), whether or not the transactions
contemplated by this Agreement are consummated, the Debtors hereby agree to
reimburse or pay, as the case may be, the Transaction Expenses as follows:
(a) all accrued and unpaid Transaction Expenses incurred up to (and including)
the date (the “Execution Date”) this Agreement is duly executed and delivered by
the parties hereto shall be paid in full within five (5) Business Days after an
invoice is presented to the Company, (b) after the Execution Date and prior to
the Petition Date, all accrued and unpaid Transaction Expenses shall be paid on
a regular and continuing basis promptly (but in any event within five
(5) Business Days) after invoices are presented to the Company, (c) after the
Petition Date, all accrued and unpaid Transaction Expenses incurred up to (and
including) the date of the entry by the Bankruptcy Court of the Agreement Order
shall be paid in full on the date of the entry by the Bankruptcy Court of the
Agreement Order, (d) after the date of the entry by the Bankruptcy Court of the
Agreement Order, all accrued and unpaid Transaction Expenses shall be paid on a
regular and continuing basis promptly (but in any event within five (5) Business
Days) after invoices are presented to the Company without Bankruptcy Court
review or further Bankruptcy Court order, and (e) upon termination of this
Agreement, all accrued and unpaid Transaction Expenses incurred up to (and
including) the date of such termination shall be paid in full promptly (but in
any event within five (5) Business Days) after invoices are presented to the
Company without Bankruptcy Court review or further Bankruptcy Court order,
provided, that, notwithstanding any other provision herein, the Company shall
not be responsible for the fees or expenses of any financial advisor other than
the financial advisor selected by Sphere Capital LLC - Series A or legal counsel
other than Willkie Farr & Gallagher LLP and Stikeman Elliot LLP. All Transaction
Expenses of a Backstop Equity Investor shall be paid to such Backstop Equity
Investor (or its designee) by wire transfer of immediately available funds to
the account(s) specified by such Backstop Equity Investor. The terms set forth
in this Section 1.4 shall survive termination of this Agreement and shall remain
in full force and effect. The obligations set forth in this Section 1.4 are in
addition to, and do not limit, the Debtors’ obligations under Sections 1.3 and 8
hereof. Amounts required to be paid by the Debtors pursuant to this Section 1.4
shall constitute allowed administrative expenses under the Bankruptcy Code.

(b) Notwithstanding anything to the contrary contained herein, in the event that
(i) the transactions contemplated by this Agreement are not consummated as a
result of the material breach of any provision of this Agreement by a Backstop
Equity Investor or (ii) any Backstop Equity Investor is a Defaulting Backstop
Equity Investor, the Transaction Expenses incurred solely and exclusively by,
but not yet reimbursed to, such Backstop Equity Investor shall not be
reimbursable pursuant to this Section 1.4. For the avoidance of doubt, the
immediately preceding sentence shall not affect the ability of any Backstop
Equity Investor to receive full reimbursement of Transaction Expenses incurred
pursuant to the joint representation of the Backstop Equity Investors and there
shall be no proportionate reduction in such Transaction Expenses.

 

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2. Representations and Warranties of the Debtors. The Debtors jointly and
severally represent and warrant to the Backstop Equity Investors as set forth
below. Except for representations and warranties that are expressly limited as
to a particular date, each representation and warranty is made as of the date
hereof and as of the Effective Date:

2.1. Organization of the Company. The Company is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Delaware
and has all requisite corporate power and authority to conduct its business as
it is now conducted and is presently contemplated to be conducted. The Company
is duly qualified or registered to do business as a foreign corporation and is
in good standing under the Laws of each jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification or registration, except
where the failure to do so would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.

2.2. Capitalization of the Company. As of the Effective Date, the authorized
capital stock of the Company will consist entirely of shares of New Common
Stock, the number of which shall be as set forth in the amended and restated
Certificate of Incorporation of Reorganized Keystone. As of the Effective Date,
the only shares of New Common Stock that shall be issued and outstanding shall
be those shares of New Common Stock that shall have been issued in accordance
with the Plan and this Agreement. Except as set forth on Schedule 2.2 hereto, or
as expressly contemplated by this Agreement, as of the Effective Date, there
will be no options, warrants, securities or rights that are or may become
exercisable or exchangeable for, convertible into, or that otherwise give any
Person any right to acquire, shares of capital stock or other securities of the
Company. As of the Effective Date, and except as provided hereunder or
contemplated by the Plan, there will be no Contracts relating to the issuance,
grant, sale or transfer of any equity securities, options, warrants, convertible
securities or other securities of the Company. Except as contemplated by the
Plan, as of the Effective Date, there will be no Contracts of the Company to
repurchase, redeem or otherwise acquire any of its equity securities, options,
warrants, convertible securities or other securities and, other than pursuant to
the New Registration Rights Agreement, the Company will not have granted any
registration rights with respect to any of its securities or any securities of
any of its Subsidiaries. As of the Effective Date, all of the outstanding shares
of New Common Stock (including, without limitation, the Shares) will have been
duly authorized and validly issued, fully paid and nonassessable, and will not
be issued in violation of the Securities Act or any other applicable laws
(including state “blue sky” laws).

2.3. Organization and Capitalization of the Subsidiaries.

(a) Schedule 2.3(a) hereto sets forth the name and jurisdiction of incorporation
or organization (as applicable) of each Subsidiary of the Company. The Company
or one or more of its Subsidiaries, as the case may be, beneficially owns all of
the outstanding shares of capital stock or other equity securities (or any
securities convertible into or exercisable for any such securities) of each of
its Subsidiaries. Except for the Company’s Subsidiaries set

 

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forth on Schedule 2.3(a), the Company does not have any direct or indirect
equity or ownership interest of any corporation, partnership, limited liability
company or other Person or business. Neither the Company nor any of its
Subsidiaries has any Contract to directly or indirectly acquire any equity or
other ownership interest in any Person or business.

(b) Each Subsidiary is a corporation, partnership, limited liability company or
foreign entity (as applicable), duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization (as
applicable), with necessary power and authority to conduct its business as it is
now or presently contemplated to be conducted, and to own or use the properties
and assets that it purports to own or use. Each Subsidiary is duly qualified or
registered to do business and is in good standing under the laws of each
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification or registration, except where the failure to do so would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

(c) Except as set forth in Schedule 2.3(c), all of the outstanding capital stock
or other securities of each Subsidiary directly or indirectly owned by the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and the Company has good title to such capital stock or other
equity securities, free and clear of all Encumbrances. There are, and there will
be on the Effective Date, no options, warrants, securities or rights that are or
may become exercisable or exchangeable for, convertible into, or that otherwise
give any Person any right to acquire shares of capital stock or other securities
of any Subsidiary. There are no Contracts relating to the prospective issuance,
grant, sale or transfer of any equity securities, options, warrants, convertible
securities or other securities of any Subsidiary. There are, and there will be
on the Effective Date, no outstanding Contracts of the Company or any Subsidiary
to repurchase, redeem or otherwise acquire any equity securities, options,
warrants, convertible securities or other securities of any Subsidiary and no
Subsidiary will have granted any registration rights with respect to any of its
securities.

2.4. Authority; No Conflict.

(a) Each Debtor has the requisite corporate, partnership, or limited liability
company (as applicable) power and authority (i) to enter into, execute and
deliver this Agreement and the Plan and (ii) subject to entry by the Bankruptcy
Court of the Agreement Order and the Confirmation Order, to consummate the
Contemplated Transactions, and has taken all necessary corporate, partnership or
limited liability action required for (x) the due authorization, execution and
delivery of this Agreement and (y) the due authorization, execution and filing
with the Bankruptcy Court of the Plan and (z) the performance and consummation
of the Contemplated Transactions. This Agreement has been duly executed and
delivered by each Debtor, and, subject to the entry of the Agreement Order, and
due execution of this Agreement by the Backstop Equity Investors, this Agreement
constitutes the legal, valid and binding obligation of the Company, enforceable
against each Debtor in accordance with its terms. The Plan has been duly
executed and delivered by each Debtor, and, subject to entry of the Confirmation
Order, the Plan constitutes the legal, valid and binding obligation of each
Debtor, enforceable against it in accordance with its terms.

 

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(b) Neither the execution and delivery of this Agreement or the Plan nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time or both):

(i) contravene, conflict with, or result in a violation of (1) any provision of
the Organizational Documents of the Company or any of its Subsidiaries, or
(2) any resolution adopted by the board of directors (or similar governing body)
or the stockholders of the Company or any of its Subsidiaries;

(ii) contravene, conflict with or result in a violation of any existing Law as
in effect on the date of this Agreement and/or as in effect on the Effective
Date to which the Company or any of its Subsidiaries, or any of the properties,
assets, rights or interests owned or used by the Company or any of its
Subsidiaries, may be subject;

(iii) contravene, conflict with or result in a violation or breach of any
provision of, or give rise to any right of termination, acceleration or
cancellation under, any Contract to which the Company or any of its Subsidiaries
is a party or which any of the Company’s or any of its Subsidiaries’ properties
or assets are bound; or

(iv) result in the imposition or creation of any Encumbrance upon or with
respect to any of the assets, properties, rights or businesses owned or used by
the Company or any of its Subsidiaries;

except, in the case of clauses (ii), (iii) and (iv) above, where such
occurrence, event or result would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.

(c) Except as set forth on Schedule 2.4(c), neither the Company nor any of its
Subsidiaries will be required to give any notice to, make any filing with or
obtain any Consent from, any Person in connection with the execution and
delivery of this Agreement or the execution and filing with the Bankruptcy Court
of the Plan, or the performance or consummation of any of the Contemplated
Transactions, except in any such case where the failure to obtain such notice,
consent or filing would not individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.

2.5. Legal Proceedings. Except as set forth on Schedule 2.5 hereto, and
following the Petition Date, claims of creditors or other parties in the Chapter
11 Cases, there are no pending, outstanding or, to the knowledge of any of the
Debtors, threatened material Proceedings (a) to which the Company or any of its
Subsidiaries is a party or to which any property, rights, or interests of any of
them is subject, or (b) that challenges, or that seeks to have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
Contemplated Transactions.

2.6. Compliance with Laws. The Company and each of its Subsidiaries is in
compliance in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which

 

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(a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted or
(b) the failure to comply therewith, either individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect.

2.7. Brokers or Finders. Except as set forth on Schedule 2.7 hereto, neither the
Company, any of its Subsidiaries nor any of their respective agents has incurred
any obligation or liability, contingent or otherwise, for brokerage or finders’
fees or agents’ commissions or other similar payments in connection with this
Agreement, the Plan or the Contemplated Transactions.

2.8. Exemption from Registration. Assuming the accuracy of the Backstop Equity
Investors’ representations set forth in Section 3 hereof, the offer, sale and
issuance of the Shares by the Company in the manner contemplated by this
Agreement will be exempt from the registration requirements of the Securities
Act.

2.9. Issuance. Subject to entry by the Bankruptcy Court of the Agreement Order
and the Confirmation Order, the distribution of the Rights, the issuance of the
Rights Offering Shares pursuant to the Rights Offering, and the issuance of the
Backstop Shares and the Commitment Fee Shares to be issued by the Company to the
Backstop Equity Investors hereunder and pursuant to the Plan, have been duly and
validly authorized and, when (a) the Rights Offering Shares are issued and
delivered against payment therefor in the Rights Offering, (b) the Backstop
Shares are issued and delivered against payment therefor as provided herein, and
(c) the Commitment Fee Shares are issued as provide herein, all such Rights
Offering Shares and Shares will be duly and validly issued, fully paid and
non-assessable, and free and clear of all taxes, liens, pre-emptive rights,
rights of first refusal, subscription and similar rights.

2.10. Bankruptcy Documents and Exchange Act Documents. The Disclosure Statement,
the monthly operating reports and the other pleadings filed with the Bankruptcy
Court (collectively, the “Bankruptcy Documents”), when filed with the Bankruptcy
Court, and the documents filed by the Company under the Exchange Act with the
Commission (collectively, the “Exchange Act Documents”), when they became
effective or were filed with the Commission, as the case may be, conformed in
all material respects, in the case of the Bankruptcy Documents, with the
requirements of the Bankruptcy Code, and in the case of the Exchange Act
Documents, with the requirements of the Securities Act or the Exchange Act, as
applicable, and none of such Bankruptcy Documents or Exchange Act Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
and any further documents so filed and incorporated by reference in the
Bankruptcy Documents, when such documents are filed with the Bankruptcy Court or
the Commission, as the case may be, will conform in all material respects to, in
the case of the Bankruptcy Documents, the requirements of the Bankruptcy Code,
and in the case of documents filed under the Exchange Act, the requirements of
the Securities Act or the Exchange Act, as applicable, and will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.

 

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2.11. No Violation or Default. Neither the Company nor any of its Subsidiaries
is in violation of its Organizational Documents. Neither the Company nor any of
its Subsidiaries is, except as a result of the Chapter 11 Cases, in default, and
no event has occurred that, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any term,
covenant or condition contained in any Contract to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound or to which any of the properties or assets of the Company or any of
its Subsidiaries is subject, except for matters which would not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect.

2.12. Title to Intellectual Property. Except as described on Schedule 2.12, the
Company and its Subsidiaries own or possess adequate rights to use all patents,
trademarks, service marks, trade names, trade dress, internet domain names,
software, copyrights, and all registrations, recordations and applications of
the foregoing and know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures) and
licenses related to any of the foregoing (“IP Rights”) used in the conduct of
their respective businesses (“Company IP Rights”), except where the failure to
own or possess any such rights would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. Since January 1,
2008, the Company and its Subsidiaries have not received any notice of any claim
of infringement or conflict with any IP Rights of any Person. To the Company’s
knowledge, the Company IP Rights comprise sufficient IP Rights to conduct the
Company and its Subsidiaries respective businesses as presently conducted. To
the knowledge of the Debtors, (i) since January 1, 2008, no third party has
infringed, misappropriated or otherwise conflicted with any material Company IP
Rights, and the Company is not aware of any facts indicating the likelihood of
any of the foregoing or of any current or anticipated claims against a third
party relating to the foregoing, and (ii) the conduct of the business of the
Company does not conflict in any material respect with any IP Rights of any
Person.

2.13. Licenses and Permits. The Company and its Subsidiaries possess all
licenses, certificates, permits and other authorizations issued by, have made
all declarations, payments and filings with, and have given all notices to, the
appropriate Governmental Bodies that are necessary or required for the ownership
or lease of their respective properties or assets, or the conduct of their
respective businesses, except as would not individually, or in the aggregate,
reasonably expected to result in a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries has received written notice of any revocation or
modification of any such license, certificate, permit or authorization or has
any reason to believe that any such license, certificate, permit or
authorization will not be renewed in the ordinary course.

2.14. Compliance With Environmental Laws. Except as described on Schedule 2.14,
to the knowledge of the Debtors and except for matters which would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect, the Company and its Subsidiaries: (i) are, and since January 1,
2008 have been, in compliance with any and all applicable Environmental Laws;
(ii) have received and are in compliance with all permits, licenses or Consents
required of them under applicable Environmental Laws to conduct their respective
businesses; (iii) have not, since January 1, 2008, received written notice of
any unresolved (A) violations of, or liabilities under, any Environmental
Law, or (B) actual or

 

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potential liabilities for the investigation or remediation of any disposal or
release of hazardous or toxic substances, petroleum products, asbestos,
asbestos-containing material, or any other wastes, pollutants or contaminants.
Except as set forth on Schedule 2.14, there have not been any pending or, to the
knowledge of the Debtors, threatened Proceedings against the Company or any of
its Subsidiaries arising from or relating to products sold, distributed,
fabricated, designed, manufactured, transported, marketed, serviced, or
otherwise used by the Company and its Subsidiaries that contained asbestos
containing materials or parts that contained asbestos.

2.15. Employee Benefit Plans.

(a) Except as listed on Schedule 2.15(a), each employee benefit plan, within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”), and each other material deferred compensation, incentive
compensation, pension, retiree medical, disability or life insurance, and
supplemental plan, program or arrangement that is maintained, administered or
contributed to by the Company or any of its Subsidiaries for employees or former
employees of the Company and its affiliates (each, a “Company Benefit Plan”) has
been maintained in compliance with its terms and the requirements of any
applicable Law, including but not limited to ERISA and the Internal Revenue Code
of 1986, as amended (the “Code”), except for instances that would not reasonably
be expected to have a Material Adverse Effect. No prohibited transaction, within
the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred
with respect to any such plan excluding transactions effected pursuant to a
statutory or administrative exemption, except such transactions that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; and no Company Benefit Plan is subject to Section 412 of the
Code or Section 302 of ERISA.

(b) Except as listed on Schedule 2.15(b) hereto, each Company Benefit Plan is in
writing and the Company has made available to the Backstop Equity Investors a
true and complete copy of each Company Benefit Plan.

(c) Except as listed on Schedule 2.15(c) hereto, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby, either alone or together with another event, will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute, forgiveness of indebtedness or otherwise) becoming due under
any Company Benefit Plan, whether or not such payment is contingent,
(ii) increase any benefits otherwise payable under any Company Benefit Plan or
other arrangement or (iii) result in the acceleration of the time of payment,
vesting or funding of any benefits.

(d) Each Company Benefit Plan intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service with respect to each such Company Benefit Plan as to its qualified
status under the Code.

(e) No Company Benefit Plan is a “registered pension plan” as such term is
defined in the Income Tax Act (Canada).

 

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2.16. Material Contracts. Schedule 2.16 sets forth a true and complete list
(including a summary of material terms for any oral Contract), as of the date of
this Agreement, of each Contract (other than purchase orders and standard sales
contracts in the ordinary course of business consistent with past practice) of
the Company and its Subsidiaries currently in effect which by its terms (i) is
not terminable at will within 12 months and requires future expenditures or
receipts or other performance with respect to goods or services having an annual
value in excess of $250,000, (ii) limits or purports to limit the ability of the
Company or any of its Subsidiaries to compete in any line of business or in any
geographic area, (iii) requires any capital commitment or capital expenditure,
individually or in the aggregate, by the Company or its Subsidiaries of greater
than $250,000, (iv) relates to the acquisition or disposition of any business or
assets or under which the Company or any of its Subsidiaries has any future
liability greater than $250,000 with respect to an “earn-out”, contingent
purchase price, deferred purchase price or similar contingent payment
obligation, or any indemnification obligation, (v) reflects any partnership,
joint venture, limited liability company or similar agreement or arrangement,
(vi) provides for change in control payments in excess of $100,000, (vii) grants
a license with respect to material IP Rights (other than licenses with annual
license or maintenance fees of less than $100,000), (viii) employment,
severance, retention, or similar agreements to which the Company or any of its
Subsidiaries are a party providing for annual compensation or payments in excess
of $100,000, (ix) relates to the provision of legal, accounting, tax, investment
banking, restructuring, investment advisory, public relations, consulting, or
other advisory services to, or on behalf of the Company or any of its
Subsidiaries, and for which the Company or any of its Subsidiaries is obligated
to make any payment to any Person, or (x) involves payment of greater than
$250,000 by any vendor to the Company or any of its Subsidiaries, other than for
payments earned in the ordinary course of business, (the types of Contracts
described in clauses (i) through (x), “Material Contracts”). True and complete
copies of all written Material Contracts have previously been made available to
each of the Backstop Equity Investors, together with all amendments, waivers or
other changes thereto prior to the date hereof. Each Material Contract is in
full force and effect and is valid, binding and enforceable against the Company
or its applicable Subsidiary and, to the knowledge of any of the Debtors, each
other party thereto, and is enforceable against the Company or its applicable
Subsidiary and, to the knowledge of any of the Debtors, each other party
thereto, in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws of general applicability relating to or affecting creditor’s rights
generally and by the application of general principles of equity. Neither the
Company nor any of its Subsidiaries nor, to the knowledge of any of the Debtors,
any other party to such Material Contracts is in breach of or default under any
obligation thereunder or has given notice of default to any other party
thereunder, in each case which breach or default would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect and, to the
knowledge of any of the Debtors, no condition exists that with notice or lapse
of time or both would constitute a material default thereunder.

2.17. No Unlawful Payments. Neither the Company nor any of its Subsidiaries nor,
to the knowledge of the Debtors, any current or former director, officer or
employee of the Company or any of its Subsidiaries has, directly or indirectly:
(i) offered, paid, delivered or otherwise used any funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) offered, delivered or made any direct or indirect
unlawful payment to any official or employee of a Governmental Body;
(iii) violated or is in

 

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violation of any provision of the Foreign Corrupt Practices Act of 1977 or any
comparable legislation applicable under Canadian or other Law; or (iv) offered,
delivered, made or received any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment.

2.18. No Restrictions on Subsidiaries. Subject to the Bankruptcy Code, except as
set forth on Schedule 2.18, no Subsidiary of the Company is prohibited or
otherwise restricted, directly or indirectly, under any agreement, instrument or
other Contract from paying any dividends to the Company, from making any other
distribution on such Subsidiary’s capital stock or other securities, from
repaying any loans or advances to such Subsidiary from the Company or any other
Subsidiary, or from transferring any of such Subsidiary’s properties or assets
to the Company or any other Subsidiary.

2.19. Absence of Certain Changes or Events. Since January 2, 2009, (i) the
Company and its Subsidiaries have conducted their respective businesses in the
ordinary course of business consistent with past practices and (ii) neither the
Company nor any of its Subsidiaries has incurred any damage, destruction, loss
or casualty (whether or not covered by insurance) to its property or assets with
a value, individually or in the aggregate, in excess of $250,000. Since
January 2, 2009, there has not been any Material Adverse Effect, other than any
effect resulting from the Contemplated Transactions.

2.20. Title to Property; Leases. Subject to entry of the Confirmation Order, on
the Effective Date, the Company and each of its Subsidiaries will have good,
valid and legal title to (or, in the case of leased assets or property
(including, without limitation, all real property leased by the Company or any
of its Subsidiaries (the “Leased Real Property”)), a valid leasehold interest in
and, in the case of IP Rights licensed from a third party, a valid license with
respect to) all assets and properties that, individually or in the aggregate,
are material to the conduct of the business of each Debtor and its Subsidiaries
as conducted on the date of this Agreement and as of the Effective Date, free
and clear of all Encumbrances (other than those permitted by the Exit Facility)
and otherwise have the right to use their respective properties.

2.21. Financial Statements. Each of (i) the audited consolidated balance sheet
of the Company as of January 2, 2010, and the related consolidated statements of
operations, stockholders’ equity (deficiency) and cash flows for the
twelve-month period then ended, included in the Annual Report on Form 10-K of
the Company for the year ended January 2, 2010 (the “Audited Financial
Statements”), and (ii) the condensed consolidated balance sheet of the Company
as of October 2, 2010, and the related condensed consolidated statements of
operations and cash flows for the nine month period then ended, included in the
Quarterly Report on Form 10-Q of the Company for the quarter ended October 2,
2010 (the “Unaudited Financial Statements” and, together with the Audited
Financial Statements, the “Financial Statements”), (a) comply as to form in all
material respects with applicable accounting requirements and published rules
and regulations of the Commission with respect thereto; (b) have been prepared
in accordance with GAAP (subject, in the case of the Unaudited Financial
Statements to normal recurring year end adjustments (that will not, individually
or in the aggregate, be material in amount or effect) and the absence of all
required footnotes thereto (that, if presented, would not, individually or in
the aggregate, differ materially from those included in the Audited Financial
Statements); and (c) fairly present in all material respects the consolidated
financial condition, stockholders’ equity and results of operations and cash
flows (as applicable) of the Company and

 

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its Subsidiaries as of the respective dates thereof and for the periods referred
to therein. Neither the Company nor any of its Subsidiaries has any material
liabilities or obligations (whether accrued, absolute, contingent or otherwise),
other than for liabilities and obligations (i) reflected on the face of the
consolidated balance sheet included in the Audited Financial Statements
(ii) that were incurred after January 2, 2010 in the ordinary course of business
consistent with past practice and that are not, individually or in the
aggregate, material to the Company or any of its Subsidiaries or (iii) set forth
on Schedule 2.21.

2.22. Tax Matters.

(a) Except as set forth on Schedule 2.22(a), (i) all tax returns required to be
filed by or on behalf of the Company or any of its Subsidiaries have been
properly prepared and duly and timely filed with the appropriate taxing
authorities in all jurisdictions in which such tax returns are required to be
filed (after giving effect to any valid extensions of time in which to make such
filings); (ii) all income and other material taxes payable by or on behalf of
the Company or any of its Subsidiaries have been fully and timely paid except to
the extent such taxes are being contested by appropriate proceedings and are
identified on Schedule 2.22(a), and adequate reserves or accruals for taxes have
been provided in the balance sheet included as part of the Unaudited Financial
Statements in respect of any period for which tax returns have not yet been
filed or for which taxes are not yet due and owing; and (iii) no agreement,
waiver or other document or arrangement extending or having the effect of
extending the period for assessment or collection of a material amount of taxes
(including any applicable statute of limitation), has been executed or filed
with the IRS or any other taxing authority by or on behalf of the Company or any
of its Subsidiaries.

(b) The Company and its Subsidiaries have complied in all material respects with
all applicable Laws relating to the payment and withholding of taxes and have
duly and timely withheld from employee salaries, wages, and other compensation
and have paid over to the appropriate taxing authorities all amounts required to
be so withheld and paid over for all periods under all applicable Laws.

(c) Except as set forth on Schedule 2.22(c), all deficiencies asserted or
assessments made as a result of any examinations by the IRS or any other taxing
authority of the tax returns of or covering or including the Company or any of
its Subsidiaries have been fully paid, and there are no other audits or
investigations by any taxing authority in progress, nor has the Company or any
of its Subsidiaries received notice from any taxing authority that it intends to
conduct such an audit or investigation. No issue has been raised by a federal,
state, local, or foreign taxing authority in any current or prior examination
that, by application of the same or similar principles, could reasonably be
expected to result in a material proposed deficiency for any subsequent taxable
period.

2.23. Labor and Employment Compliance. To the knowledge of the Debtors, the
Company and each of its Subsidiaries is in compliance with all applicable Law
respecting employment and employment practices, including those related to
wages, hours, eligibility for and payment of overtime compensation, worker
classification (including the proper classification of independent contractors
and consultants), Tax withholding, collective bargaining, unemployment
insurance, workers’ compensation, immigration, harassment and discrimination

 

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in employment, disability rights and benefits, affirmative action, plant closing
and mass layoff issues, pay equity, occupational safety and health Laws. There
is no Proceeding pending or, to the knowledge of any of the Debtors, threatened
against the Company or any of its Subsidiaries alleging a violation of such Law
or unlawful discrimination in employment before any Governmental Body and there
is no Proceeding with regard to any unfair labor practice against the Company or
any of its Subsidiaries pending before the National Labor Relations Board or any
other Governmental Body or, to the knowledge of any of the Debtors, threatened
against the Company or any of its Subsidiaries, except for any such Proceedings
that would not, individually or in the aggregate, reasonably be expected to be
adverse in any material respect to the Company or any of its Subsidiaries. No
trade union, council of trade unions, employee bargaining agency or affiliated
bargaining agency holds bargaining rights with respect to any employees of the
Company or any of its Subsidiaries by way of certification, interim
certification, voluntary recognition or succession rights. Except as set forth
on Schedule 2.23, there is no labor strike, work slow-down, work stoppage or
other material labor dispute actually pending or, to the Debtors’ knowledge,
threatened against or involving any employees of the Company or any of its
Subsidiaries. None of the employees of the Company or any of its Subsidiaries is
covered by any collective bargaining agreement, and no collective bargaining
agreement is currently being negotiated by the Company or any of its
Subsidiaries. To the Debtors’ knowledge, since January 1, 2001 no union
organizing or decertification activities are, or have been, underway or
threatened with respect to any employees of the Company or any of its
Subsidiaries. To the knowledge of the Debtors, since January 1, 2001 no trade
union has applied to have the Company or any of its Subsidiaries declared a
common or related employer pursuant to applicable Law.

2.24. Product Liability. Neither the Company nor any of its Subsidiaries has
received any notice or otherwise has knowledge relating to any claim or
potential claim which is likely to have a Material Adverse Effect on the Company
and its Subsidiaries as a whole, involving use of or exposure to any of the
products (or any part or component) designed, manufactured, transported,
marketed, serviced or sold, or services performed, by the Company or any of its
Subsidiaries, including for negligence, strict liability, design or
manufacturing defect, conspiracy, failure to warn, or breach of express or
implied warranties of merchantability or fitness for any purpose of use, or from
any alleged breach of implied warranties or representations, or any alleged
noncompliance with any applicable Laws pertaining to products liability matters.

2.25. Arm’s Length. The Debtors acknowledge and agree that the Backstop Equity
Investors are acting solely in the capacity of arm’s length contractual
counterparties to the Company with respect to the transactions contemplated
hereby (including in connection with determining the terms of the Rights
Offering) and not as financial advisors or fiduciaries to, or agents of, the
Company or any other Person. Additionally, the Backstop Equity Investors are not
advising the Company or any other Person as to any legal, tax, investment,
accounting or regulatory matters in any jurisdiction. The Company has had the
opportunity to consult with its own advisors concerning such matters and the
Backstop Equity Investors shall have no responsibility or liability to the
Company with respect thereto. Any review by the Backstop Equity Investors of the
Company, the Contemplated Transactions or other matters relating to the
Contemplated Transactions will be performed solely for the benefit of the
Backstop Equity Investors and shall not be on behalf of the Company.

 

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2.26. Product Design; Warranties. Schedule 2.26 includes a copy of the current
standard warranty of the Company and its Subsidiaries and the current warranty
policy with respect to products (or any part or component) designed,
manufactured, transported, marketed, serviced or sold, or services performed by
the Company or any of its Subsidiaries, other than any such implied by law.
Except as described on Schedule 2.26, to the Debtors’ knowledge, no products (or
any part or component) have been designed, manufactured, transported, marketed,
serviced or sold, or services performed by the Company under an understanding or
agreement by the Company that such products are returnable (or services
refundable) except pursuant to such warranties. To the knowledge of any of the
Debtors, there are no material, manufacturing or other defects, latent or
otherwise, with respect to any such products.

2.27. No Product Recalls. Except as described on Schedule 2.27, since January 1,
2009, no product (or any part or component) transported, marketed, serviced or
sold by Company or Subsidiaries has been the subject of any recall or similar
action undertaken by the Company or its Subsidiaries on a voluntary basis or, to
the knowledge of the Debtors, instituted by any other Person or as a result of
any Law.

2.28. Investment Company Act.

(a) Neither the Company nor any Subsidiary is an “investment company” within the
meaning of the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder.

(b) The book value of the assets of the Company and its Subsidiaries located in
Canada, calculated in accordance with the Investment Canada Act and the
regulations thereto, is less than C$50 million.

2.29. Accounting Controls. The Company maintains a system of internal accounting
controls (as such term is defined in Rule 13a-15 under the Exchange Act)
sufficient to provide assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

2.30. Insurance. Schedule 2.30 sets forth a description of all material
insurance policies maintained by or on behalf of the Company and its
Subsidiaries as of the date hereof. As of the date hereof, all premiums due and
payable in respect of such material insurance policies have been paid. As of the
date hereof, to the knowledge of any of the Debtors, neither the Company nor any
of its Subsidiaries has received written notice from any insurer or agent of
such insurer with respect to any material insurance policies of the Company and
its Subsidiaries of cancellation or termination of such policies, other than
such notices which are received in the ordinary course of business or for
policies that have expired on their terms.

 

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2.31. Transactions with Related Parties. Except as set forth in Schedule 2.31 or
in the Company’s filings with the Exchange Act Documents filed prior to the date
hereof, there are no Contracts between the Company or any of its Subsidiaries,
on the one hand, and any executive officer, director or Affiliate of the Company
or any of its Subsidiaries, or any Affiliate, relative or spouse of any such
officer, director or Affiliate or any greater than 5% stockholder of the
Company, on the other hand, except with respect to compensation for services
rendered by employees in the ordinary course of employment.

2.32. Customers and Suppliers.

(a) Schedule 2.32(a) sets forth a true and complete list of the Company’s twenty
(20) largest customers based on total sales in its most recently completed
fiscal year by the Company and its Subsidiaries. Except as described thereon,
none of the customers listed on Schedule 2.32(a) has materially reduced the
volume of business that it does with the Company or any of its Subsidiaries
since December 31, 2009 or given written notice to the Company or any of its
Subsidiaries that such customer intends to materially reduce the volume of
business that it does with the Company or any of its Subsidiaries. There are no
pending disputes or disagreements with any of the customers set forth on
Schedule 2.32(a) the result of which, if determined in a manner unfavorable to
the Company, would result in a Material Adverse Effect.

(b) Schedule 2.32(b) sets forth a true and complete list of the Company’s twenty
(20) largest suppliers based on total cost of products purchased by the Company
and its Subsidiaries in the most recently completed fiscal year. Except as
described thereon, none of the suppliers listed on Schedule 2.32(b) has
materially reduced the volume of business that it does with the Company or any
of its Subsidiaries since December 31, 2009 or notified the Company or any of
its Subsidiaries in writing that such supplier intends to materially reduce the
volume of business that it does with the Company or any of its Subsidiaries.
There are no material pending disputes or disagreements with any of the
suppliers set forth on Schedule 2.32(b) the result of which, if determined in a
manner unfavorable to the Company, would result in a Material Adverse Effect.

(c) Neither the Company nor any of its Subsidiaries is party to any Contract
with any Person pursuant to which the Company and its Subsidiaries, in the
aggregate, spend more than $10,000,000 in any fiscal year to obtain inventory
for the Company or its Subsidiaries.

2.33. Fees. Since September 30, 2010, neither the Company nor any of its
Subsidiaries have paid or committed to pay any management fees, management
services fees or similar fees, including “advisory services fees” or any similar
fees contemplated by the Advisory Agreement, dated as of October 30, 2003, by
and between Keystone Automotive Operations, Inc. and Bain Capital LLC (as
amended, supplemented or modified, the “Advisory Agreement”).

 

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3. Representations and Warranties of the Backstop Equity Investors. Each
Backstop Equity Investor, severally and not jointly, hereby represents and
warrants to the Company as set forth below. Except for representations and
warranties that are expressly limited as to a particular date, each
representation and warranty is made as of the date hereof and as of the
Effective Date:

3.1. Organization of Such Backstop Equity Investor. Such Backstop Equity
Investor is duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization (as applicable), with full
corporate, partnership or limited liability company (as applicable) power and
authority to conduct its business as it is now or currently proposed to be
conducted, and to own or use the properties and assets that it purports to own
or use.

3.2. Authority; No Conflict.

(a) Such Backstop Equity Investor has the requisite corporate, partnership or
limited liability company (as applicable) power and authority to enter into,
execute and deliver this Agreement and to consummate the transactions
contemplated hereby, and has taken all necessary corporate, partnership or
limited liability company (as applicable) action required for the due
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by such Backstop Equity Investor, and this Agreement constitutes the
legal, valid and binding obligation of such Backstop Equity Investor,
enforceable against such Backstop Equity Investor in accordance with its terms.

(b) Neither the execution and delivery by such Backstop Equity Investor of this
Agreement nor the consummation or performance on the part of such Backstop
Equity Investor of any of the transactions contemplated hereby will, directly or
indirectly (with or without notice or lapse of time or both):

(i) contravene, conflict with, or result in a violation of (1) any provision of
the Organizational Documents of such Backstop Equity Investor, or (2) any
resolution adopted by the board of directors (or similar governing body) or the
stockholders of any Debtor; or

(ii) contravene, conflict with or result in a violation of any existing Law as
in effect on the date of this Agreement and/or as in effect on the Effective
Date to which such Backstop Equity Investor, or any of the properties, assets,
rights or interests owned or used by such Backstop Equity Investor, may be
subject; or

(iii) contravene, conflict with or result in a violation or breach of any
provision of, or give rise to any right of termination, acceleration or
cancellation under, any Contract to which such Backstop Equity Investor is a
party.

except, in the case of clauses (ii) and (iii) above, where such occurrence,
event or results would not reasonably be expected to prohibit, materially delay
or materially and adversely impact such Backstop Equity Investor’s performance
of its obligations under this Agreement.

 

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Except (x) for Consents that have been obtained, notices which have been given
and filings which have been made, (y) where the failure to give any notice,
obtain any Consent or make any filing would not, indirectly or in the aggregate,
reasonably be expected to prevent or materially delay the consummation of any of
the transactions contemplated by this Agreement and (z) compliance with the
applicable requirements of the HSR Act or Competition Act (Canada), if required,
such Backstop Equity Investor is not and will not be required to give any notice
to, make any filing with or obtain any Consent from, any Person in connection
with the execution and delivery by such Backstop Equity Investor of this
Agreement or the consummation or performance by such Backstop Equity Investor of
any of the transactions contemplated hereby.

3.3. Shares Not Registered. Such Backstop Equity Investor understands that the
Shares have not been registered under the Securities Act and that, except as
provided in the Registration Rights Agreement, the Company shall not be required
to effect any registration or qualification under the Securities Act or any
state securities law. Such Backstop Equity Investor also understands that the
Shares are, to the extent not acquired pursuant to section 1145 of the
Bankruptcy Code, being offered and sold pursuant to an exemption from
registration contained in the Securities Act, based in part upon such Backstop
Equity Investor’s representations contained in this Agreement and cannot be sold
unless subsequently registered under the Securities Act or an exemption from
registration is available.

3.4. Acquisition for Own Account. Such Backstop Equity Investor is acquiring the
Shares for its own account (or for the accounts for which it is acting as
investment advisors or manager) for investment and not with a present view
toward distribution, within the meaning of the Securities Act.

3.5. Accredited Investor. Such Backstop Equity Investor is an “accredited
investor” as that term is defined in Regulation D promulgated under the
Securities Act and has such knowledge and experience in financial and business
matters that such Backstop Equity Investor is capable of evaluating the merits
and risks of its investment. Such Backstop Equity Investor understands and is
able to bear any economic risks with such investment. Such Backstop Equity
Investor acknowledges that the Company will rely upon the truth and accuracy of
the representations and warranties contained in this Section 3.5 as well as the
other representations, warranties and other agreements of such Backstop Equity
Investor in connection with the transactions described in this Agreement. No
Backstop Equity Investor has used or will use any form of general solicitation
or general advertising in connection with the offering or sale of the Rights or
the Shares.

3.6. Access to Information. Such Backstop Equity Investor acknowledges that it
has been afforded the opportunity to ask questions and receive answers
concerning the Company and to obtain additional information that it has
requested to verify the accuracy of the information contained herein. Such
Backstop Party has had the opportunity to consult with its own tax advisors with
regard to its participation in the Rights Offering and the tax consequences
thereof, and has not relied on any advice from the Company or its
representatives regarding the tax consequences of an investment in the Rights
Offering Shares.

 

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3.7. Brokers or Finders. Such Backstop Equity Investor has not, and its agents
have not, incurred any obligation or liability, contingent or otherwise, for
brokerage or finders’ fees or agents’ commissions or other similar payments in
connection with this Agreement, for which the Company may be liable.

3.8. Legal Proceedings. There is no pending, outstanding or, to the knowledge of
such Backstop Equity Investor, threatened Proceedings against such Backstop
Equity Investor that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the transactions
contemplated by this Agreement, which, if adversely determined, would reasonably
be expected to have a material adverse effect on the ability of such Backstop
Equity Investor to consummate the transactions contemplated by this Agreement.

3.9. Financial Ability to Fund Backstop Commitment. Such Backstop Equity
Investor has, or will have on the Effective Date, sufficient available funds to
consummate its purchase of a number of Backstop Shares equal to its Total
Commitment Percentage or its Adjusted Commitment Percentage, as the case may be.
For the avoidance of doubt, and without any limitation on any of the conditions
set forth in Section 6.1, such Backstop Equity Investor acknowledges that its
obligations under this Agreement are not conditioned in any manner upon its
obtaining financing.

3.10. Arm’s Length. Such Backstop Equity Investor acknowledges and agrees that
the Company is acting solely in the capacity of an arm’s length contractual
counterparty to such Backstop Equity Investor with respect to the acquisition of
Backstop Shares hereunder and the transactions contemplated hereby (including in
connection with determining the terms of the Rights Offering). Additionally,
such Backstop Party is not relying on the Company for any legal, tax,
investment, accounting or regulatory advice in any jurisdiction. Such Backstop
Party shall consult with its own advisors concerning such matters and shall be
responsible for making its own independent investigation and appraisal of the
transactions contemplated hereby.

4. Covenants of the Debtors. The Debtors hereby agree with the Backstop Equity
Investors as set forth in this Section 4.

4.1. Agreement Motion and Agreement Order. Prior to or concurrently with the
filing by the Debtors of a motion seeking entry of the Disclosure Statement
Order (the “Disclosure Statement Motion”), the Debtors shall file a motion and
supporting papers (the “Agreement Motion”) seeking an order of the Bankruptcy
Court, in form and substance acceptable to the Backstop Equity Investors,
approving the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby (the “Agreement Order”), including without
limitation, the payment by the Debtors of the Backstop Commitment Fee, the
Transaction Expenses on the terms set forth herein and therein and the
indemnification provisions in favor of the Indemnified Parties set forth herein
and therein; provided, that the signature pages, exhibits and schedules to any
copy of this Agreement and/or the Commitment Letter that is filed with the
Bankruptcy Court shall, subject to Bankruptcy Court approval, be subject to
redaction as the Backstop Equity Investors determine to be reasonably necessary
and appropriate, including, without limitation, redacting the names of the
Backstop Equity Investors and the Total Commitment Percentage of each Backstop
Equity Investor. The Debtors agree that

 

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they shall use their commercially reasonable efforts to (a) obtain a waiver of
Bankruptcy Rule 6004(h) and request that the Agreement Order be effective
immediately upon its entry by the Bankruptcy Court, which Agreement Order shall
not be revised, modified or amended by the Confirmation Order or any other
further order of the Bankruptcy Court, (b) fully support the Agreement Motion
and any application seeking Bankruptcy Court approval and authorization to pay
the fees and expenses under this Agreement and/or the Commitment Letter,
including the Transaction Expenses and the Backstop Commitment Fee, as an
administrative expense of the Debtors’ estates and (c) obtain approval of the
Agreement Order as soon as practicable after the Petition Date. The Debtors may,
and shall be permitted to, (i) file the Agreement Motion as part of, and include
the Agreement Motion directly in, the Disclosure Statement Motion and (ii) seek
to have the Agreement Order be part of, and be included directly in, the
Disclosure Statement Order, and, in any such case of clause (i) or clause (ii),
all provisions of this Agreement that apply to the Agreement Motion or the
Agreement Order shall be deemed to apply to the Disclosure Statement Motion or
the Disclosure Statement Order, respectively.

4.2. Rights Offering.

(a) The Debtors shall promptly provide copies of all documents, instruments,
agreements and other materials to be entered into, delivered, distributed or
otherwise used in connection with the Rights Offering (the “Rights Offering
Documentation”) for review and comment by the Backstop Equity Investors.

(b) No later than five (5) calendar days prior to the Disclosure Statement
Hearing, the Debtors shall file with the Bankruptcy Court, as an exhibit to the
Disclosure Statement, a copy of the Rights Offering Procedures. Subject to
obtaining approval of the Agreement Order, the Company shall conduct and
consummate the Rights Offering as provided herein and use commercially
reasonable efforts to seek entry of an order of the Bankruptcy Court (either in
connection with the approval of the Disclosure Statement or otherwise), prior to
the commencement of the Rights Offering, authorizing the Company to conduct the
Rights Offering.

4.3. Conditions Precedent. The Debtors shall use commercially reasonable efforts
to satisfy or cause to be satisfied all the conditions precedent set forth in
Section 6.1 hereof and to procure and obtain all Consents, authorizations and
waivers of, make all filings with, and give all notices to, third parties
(including Governmental Bodies) that may be necessary or required on its part in
order to effect the Contemplated Transactions.

4.4. Notification. The Debtors shall: on request by any of the Backstop Equity
Investors, notify the Backstop Equity Investors, or cause the applicable
subscription agent for the Rights Offering (the “Subscription Agent”) to notify
the Backstop Equity Investors, of the aggregate number of Rights known by the
Company or the Subscription Agent to have been exercised pursuant to the Rights
Offering as of the close of business on the preceding Business Day or the most
recent practicable time before such request, as the case may be.

4.5. Use of Proceeds. The Debtors shall apply the net proceeds from the sale of
the Rights Offering Shares from the Rights Offering and the sale of the Backstop
Shares pursuant to this Agreement as provided in the Plan and the Disclosure
Statement.

 

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4.6. HSR Act. The Debtors shall promptly prepare and file all necessary
documentation and effect all applications that are necessary under the HSR Act
so that all applicable waiting periods shall have expired, been waived or been
terminated thereunder with respect to the purchase of Backstop Shares hereunder,
and not take any action that is intended or reasonably likely to materially
impede or delay the ability of the parties to obtain any necessary approvals
required for the transactions contemplated by this Agreement. Anything herein to
the contrary notwithstanding, none of the Backstop Equity Investors (nor their
respective ultimate parent entities, as such term is used in the HSR Act) shall
be required to (i) disclose to any other party hereto any information contained
in its HSR Notification and Report Form, which such party, in its sole
discretion, deems confidential as a condition to the expiration or termination
of all applicable waiting periods under the HSR Act, with respect to the
purchase of the Backstop Shares hereunder, (ii) agree to any condition,
restraint or limitation relating to its ability to freely own or operate all or
a portion of its business or assets, (iii) hold separate (including by trust or
otherwise) or divest any of its businesses or assets or (iv) hold separate
(including by trust or otherwise) or divest any assets of the Company or any of
its Subsidiaries. Without limiting the provisions of Section 1.4 hereof, the
Debtors shall bear all costs and expenses of the Debtors and the Backstop Equity
Investors in connection with the preparation or the making of any filing under
the HSR Act (including any filing fees thereunder).

4.7. Access. Promptly following the date of this Agreement through the Effective
Date, the Debtors will, and will use commercially reasonable efforts to cause
their employees, officers, directors, accountants, attorneys and other advisors
(collectively, “Representatives”) to, provide each of the Backstop Equity
Investors and its Representatives with reasonable access, upon reasonable prior
notice, during normal business hours, to officers, management and key employees
and other Representatives of any of the Company and any of its Subsidiaries and
to assets, properties, contracts, books, records and any other information
concerning the business and operations of any of the Company and its
Subsidiaries as any of the Backstop Equity Investors or any of its
Representatives may reasonably request; provided that the foregoing shall not
require the Company (i) to permit any inspection, or to disclose any
information, that in the reasonable judgment of the Company would cause the
Debtors to violate any of their obligations with respect to confidentiality to a
third party if the Debtors shall have used commercially reasonable efforts to
obtain the consent of such third party to such inspection or disclosure, (ii) to
disclose any privileged information of the Company or any of its Subsidiaries or
(iii) to violate any Laws.

4.8. Stockholders Agreement and Registration Rights Agreement. On the Effective
Date, the Company shall execute and deliver the New Stockholders Agreement and
the New Registration Rights Agreement.

4.9. Exit Facility. The Debtors shall promptly provide copies of all material
drafts and final execution copies of all documents, instruments, agreements and
other materials to be entered into, delivered or otherwise used in connection
with the Exit Facility (the “Exit Facility Documentation”) for review and
comment by the Backstop Equity Investors.

4.10. Specified Issuances. The Debtors shall (a) consult with the Backstop
Equity Investors with respect to the steps (the “Specified Issuance Steps”) to
be taken by the Debtors to ensure that (i) each of the Specified Issuances
described in clauses (a)-(c) of the

 

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definition of Specified Issuances are exempt from the registration and
prospectus delivery requirements of Section 5 of the Securities Act pursuant to
section 1145(a) of the Bankruptcy Code and/or Section 4(2) of the Securities Act
and (ii) the Specified Issuances described in clause (d) of the definition of
Specified Issuances are exempt from the registration and prospectus delivery
requirements of Section 5 of the Securities Act pursuant to Section 4(2) of the
Securities Act, and (b) promptly provide copies of all documents, instruments,
questionnaires, agreements and other materials to be entered into, delivered,
distributed or otherwise used in connection with the Specified Issuances (the
“Specified Issuance Documentation”) for review and comment by the Backstop
Equity Investors. Any comments received by the Debtors from the Backstop Equity
Investors or their respective Representatives with respect to the Specified
Issuance Steps or the Specified Issuance Documentation shall be considered by
them in good faith and, to the extent the Debtors disagree with any such
comments, they shall inform the Backstop Equity Investors thereof and discuss
the same with the Backstop Equity Investors prior to taking such Specified
Issuance Steps or entering into, delivering, distributing or using any such
Specified Issuance Documentation.

4.11. Conduct of the Business. Except as expressly set forth in this Agreement
or the Restructuring Support Agreement, or as required by applicable Law, during
the period from the date of this Agreement to the Effective Date, the Company
shall, and shall cause each of its Subsidiaries to, operate in the ordinary
course of business consistent with past practices and, to the extent consistent
therewith, use their commercially reasonable efforts to preserve intact in all
material respects their existing business operations, keep available the
services of their current officers and key employees and maintain a workforce
sufficient to support on-going business operations and preserve in all material
respects their relationships with customers, suppliers, licensors, licensees,
distributors and others having material business dealings with the Company or
its Subsidiaries. Without limiting the generality of the foregoing, and except
as otherwise expressly provided by this Agreement or the Restructuring Support
Agreement or expressly required by the Credit Agreement or the Indenture, prior
to the Effective Date, the Company shall not, and shall cause its Subsidiaries
not to, take any of the following actions without the prior written consent of
the Backstop Equity Investors, which consent shall not be unreasonably withheld,
conditioned or delayed (other than with respect to clauses (a) and (b) below,
which consent may be granted or withheld in the sole discretion of the Backstop
Equity Investors):

(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of the capital stock of the Company,
(ii) purchase, redeem or otherwise acquire any shares of capital stock of the
Company or any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities or (iii) pay or commit to pay any
management fees, management services fees or similar fees, including “advisory
services fees” or any similar fees accrued under the Advisory Agreement;

(b) adjust, split, combine or reclassify any capital stock or equity interests
or issue or propose or authorize the issuance of any other securities (including
options, profit interest, warrants or any similar security exercisable for, or
convertible into, such other security);

 

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(c) incur or commit to incur any capital expenditure or authorization or
commitment with respect thereto in excess of $2.4 million individually or $6
million in the aggregate;

(d) acquire or agree to acquire by merging or consolidating with, or purchase
any portion of the stock of, or other ownership interests in, or substantial
portion of assets of, or by any other manner, any business or any corporation,
partnership, association, joint venture, limited liability company;

(e) sell, lease, mortgage, pledge, grant any Encumbrance on or otherwise
encumber or dispose of any of its properties or assets including on the capital
stock or equity interests of any Subsidiary of the Company; provided , that, the
Company may extend or replace any liens in existence as of the date hereof and
listed on Schedule 4.11(e) and complete the asset sales listed on
Schedule 4.11(e) hereto;

(f) incur or permit to exist or guarantee any Indebtedness after the date hereof
in excess of $3.7 million in the aggregate, and not including, for the sake of
clarity, (i) the ABL Loan Facility, the Term Loan Facility, the Senior Notes,
the Reliable Notes and current trade debt, in each case, as existing on the date
of this Agreement and (ii) the Indebtedness reflected on Schedule 4.11(f);

(g) (i) enter into, assume or reject or amend, restate, supplement, modify,
waive or terminate any Material Contract, material permit or unexpired lease,
other than in the ordinary course of business (ii) enter into any settlement of
any Action relating to a Material Contract or (iii) enter into any Contract that
would not be a Material Contract, that delays or is reasonably expected to delay
the Effective Date;

(h) adopt or propose any amendments to any of the Company’s or its Subsidiaries’
Organizational Documents; except, in furtherance of the Plan or the transactions
contemplated hereby;

(i) except (A) as required by the terms of an existing Contract, agreement,
arrangement, plan or policy disclosed to the Backstop Equity Investors on a
Schedule to this Agreement, (B) as required to comply with Law or (C) in the
case of (y), below, in the ordinary course of business consistent with past
practice, (w) enter into, adopt, amend or terminate any Company Benefit Plan,
(x) increase in any manner the compensation or fringe benefits of any director
or officer of the Company or any of its Subsidiaries, (y) enter into, renew
(other than Contracts, agreements, commitments or arrangements that by their
terms renew automatically without action by either party) or terminate any
Contract, agreement, commitment or arrangement providing for the payment of
compensation or benefits to any director or officer of the Company, or
(z) terminate the employment of or hire any officer or director of the Company
(other than termination for cause);

(j) commence any Action, (other than an Action as a result of an Action
commenced against the Company or any of its Subsidiaries), or compromise, settle
or agree to settle any Action other than compromises, settlements or agreements
in the ordinary course of business consistent with past practice that involve
only the payment of money damages not in excess of $100,000 individually or
$1,000,000 in the aggregate, in any case without the imposition of any equitable
relief;

 

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(k) change materially its financial or tax accounting methods, principles or
practices, except insofar as may have been required by a change in GAAP or
applicable Law, or revalue any of its material assets;

(l) take any action inconsistent with this Agreement or the transactions
contemplated hereby; or

(m) commit or agree to take any of the foregoing.

5. Covenants of the Backstop Equity Investors. Each of the Backstop Equity
Investors hereby agrees, severally and not jointly, with the Company as set
forth in this Section 5.

5.1. Conditions Precedent. Each Backstop Equity Investor shall use its
commercially reasonable efforts to satisfy or cause to be satisfied all the
conditions precedent applicable to such Backstop Equity Investor set forth in
Section 6.2 hereof.

5.2. HSR Act and Competition Act (Canada). Each Backstop Equity Investor shall
promptly prepare and file all necessary documentation and effect all
applications that are necessary under the HSR Act and the Competition Act
(Canada) so that all applicable waiting periods shall have expired, been waived
or been terminated thereunder with respect to the purchase of Backstop Shares
hereunder, and not take any action that is intended or reasonably likely to
materially impede or delay the ability of the parties to obtain any necessary
approvals required for the transactions contemplated by this Agreement. Anything
herein to the contrary notwithstanding, none of the Backstop Equity Investors
(nor their respective ultimate parent entities, as such term is used in the HSR
Act) shall be required to (i) disclose to any other party hereto any information
contained in its HSR Notification and Report Form or filings under the
Competition Act (Canada) which such party, in its sole discretion, deems
confidential as a condition to the expiration or termination of all applicable
waiting periods under the HSR Act and the Competition Act (Canada) with respect
to the purchase of the Backstop Shares hereunder, (ii) agree to any condition,
restraint or limitation relating to its ability to freely own or operate all or
a portion of its business or assets, (iii) hold separate (including by trust or
otherwise) or divest any of its businesses or assets, (iv) hold separate
(including by trust or otherwise) or divest any assets of the Company or any of
its Subsidiaries. Without limiting the provisions of Section 1.4 hereof, the
Debtors shall bear all costs and expenses of the Debtors and the Backstop Equity
Investors in connection with the preparation or the making of any filing under
the HSR Act or the Competition Act (Canada) (including any filing fees
thereunder).

5.3. Financing. Each Backstop Equity Investor shall use its commercially
reasonable efforts, at the sole cost and expense of the Debtors, to assist in
the documentation and consummation of the Exit Facility; provided, however, that
no Backstop Equity Investor shall be required to (a) disclose to any Person any
information which such Backstop Equity Investor, in its sole and reasonable
discretion, deems confidential or (b) expend any funds, make any payments or
provide any indemnities, reimbursement obligations, commitments, guarantees or

 

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any other form of credit support. Notwithstanding the foregoing, each Debtor
acknowledges and agrees that neither the Backstop Equity Investors nor any of
their respective Affiliates or Representatives shall be liable or otherwise
responsible for any statements, assertions, facts, projections, forecasts, data
or other information contained or referred to in any offering memorandum,
bankers’ book or other materials prepared by or on behalf of the Debtors, the
agents or lenders under the Exit Facility, or any of their respective Affiliates
or Representatives in connection with the Exit Facility, except for such
statements, assertions, facts, projections, forecasts, data or other information
as may be provided by any Backstop Equity Investor or their respective
Affiliates or Representatives.

5.4. Information. Each Backstop Equity Investor shall promptly provide the
Company with such information as the Company reasonably requests regarding such
Backstop Equity Investor which is required to be included in the Disclosure
Statement pursuant to applicable Law.

6. Conditions to Closing.

6.1. Conditions Precedent to Obligations of the Backstop Equity Investors. The
obligations of the Backstop Equity Investors to subscribe for and purchase
Backstop Shares pursuant to their respective Commitments are subject to the
following conditions precedent, each of which may be waived in writing by the
Backstop Equity Investors (acting together):

(a) Agreement Order. The Agreement Order shall have been entered by the
Bankruptcy Court in a form satisfactory to the Backstop Equity Investors, and
the Agreement Order shall have become a Final Order.

(b) Material Adverse Effect. Since the date of this Agreement, there shall not
have occurred any changes or events that, individually or in the aggregate, have
had or would reasonably be expected to result in a Material Adverse Effect.

(c) Inconsistent Transaction. The Company shall not have made a public
announcement, entered into an agreement, or filed any pleading or document with
the Bankruptcy Court, evidencing its intention to support, or otherwise agreed
to, consented to, supported or encouraged the formulation of, any Inconsistent
Transaction.

(d) Confirmation Order. The Confirmation Order, in form and substance acceptable
to the Backstop Equity Investors, shall have been entered by the Bankruptcy
Court and such order shall have become a Final Order. Without limiting the
generality of the foregoing, the Confirmation Order shall contain the following
specific findings of fact, conclusions of law and orders: (i) each of the
Specified Issuances are exempt from the registration and prospectus delivery
requirements of Section 5 of the Securities Act; (ii) the solicitation of
acceptance or rejection of the Plan by the Backstop Equity Investors, and/or any
of their respective Affiliates (if any such solicitation was made) was done in
good faith and in compliance with the applicable provisions of the Bankruptcy
Code and, as such, the Backstop Equity Investors and any of their respective
Affiliates are entitled to the benefits and protections of Section 1125(e) of
the Bankruptcy Code; and (iii) the participation by the Backstop Equity
Investors and/or any of their respective Affiliates in the offer, issuance, sale
or purchase of any

 

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security offered or sold under the Plan (if any such participation was made) was
done in good faith and in compliance with the applicable provisions of the
Bankruptcy Code and, as such, the Backstop Equity Investors and any of their
respective Affiliates are entitled to the benefits and protections of section
1125(e) of the Bankruptcy Code.

(e) Plan. The Plan, as approved by the Bankruptcy Court, shall be consistent
with the Restructuring Support Agreement and otherwise acceptable in form and
substance to the Back Stop Equity Investors.

(f) Disclosure Statement. The Disclosure Statement, as approved by the
Bankruptcy Court, shall be consistent with the Restructuring Support Agreement
and otherwise acceptable in form and substance to the Back Stop Equity
Investors, and the Bankruptcy Court shall have entered the order in form and
substance acceptable to the Back Stop Equity Investors approving the Disclosure
Statement (the “Disclosure Statement Order”) and the Disclosure Statement Order
shall be a Final Order.

(g) Definitive Documents. All Definitive Documents shall be consistent with the
Restructuring Support Agreement and otherwise acceptable in form and substance
to the Backstop Equity Investors and shall have been executed by the parties
thereto.

(h) Conditions to Confirmation. The conditions to confirmation and the
conditions to the Effective Date set forth in the Plan shall have been satisfied
(or waived with the consent of the Backstop Equity Investors) in accordance with
the Plan, and the Effective Date shall have occurred.

(i) Rights Offering. The Company shall have commenced the Rights Offering, the
Rights Offering shall have been conducted in accordance with the Rights Offering
Procedures and in accordance with this Agreement, and the Rights Offering
Deadline shall have occurred.

(j) Purchase Notice. The Backstop Equity Investors shall have received a
Purchase Notice in accordance with Section 1.1(c) hereof from the Company, dated
as of the Determination Date, certifying as to the number of Unsubscribed Shares
to be purchased pursuant to Section 1.2(a) hereof.

(k) No Injunctions or Restraints; Illegality. No temporary restraining order,
preliminary or permanent injunction or other Order preventing the consummation
of the transactions contemplated hereby or any of the other Contemplated
Transactions shall have been entered, issued, rendered or made, nor shall any
Proceeding brought by a Governmental Body seeking any of the foregoing be
pending or threatened; nor shall there be any Law promulgated, enacted, entered,
enforced or deemed applicable to the parties hereto which makes the consummation
of the transactions contemplated by this Agreement or any of the other
Contemplated Transactions illegal, void or rescinded.

(l) HSR Act and Competition Act (Canada). If the purchase of the Backstop Shares
by the Backstop Equity Investors pursuant to this Agreement is subject to the
provisions of the HSR Act or Part IX of the Competition Act (Canada), the
applicable waiting periods shall have expired, been waived or been terminated
thereunder with respect to such purchase.

 

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(m) Notices and Consents. All other governmental and third party notifications,
filings, waivers, authorizations and Consents necessary or required for the
consummation of the Contemplated Transactions shall have been made or received
and shall be in full force and effect.

(n) Representations and Warranties and Covenants. (i) Each of (x) the
representations and warranties of the Debtors set forth in Sections 2.1, 2.2,
2.3, 2.4, 2.7, 2.8, 2.9 and 2.33 (the “Fundamental Representations”) of this
Agreement shall be true and correct in all respects at and as of the date hereof
and as of the Effective Date as if made at and as of the Effective Date (except
for representations and warranties made as of a specified date, which shall be
true and correct only as of the specified date) and (y) the representations and
warranties of the Debtors set forth in this Agreement other than Fundamental
Representations, which are qualified by materiality or Material Adverse Effect
shall be true and correct in all respects and the representations and warranties
in such Sections which are not so qualified shall be true and correct in all
material respects, in each case, at and as of the date hereof and as of the
Effective Date as if made at and as of the Effective Date (except for
representations and warranties made as of a specified date, which shall be true
and correct in all material respects only as of the specified date) and (ii) the
Company shall have complied in all material respects with all covenants in this
Agreement applicable to it.

(o) Exit Facility. The Debtors shall have entered into and consummated the Exit
Facility on Exit Facility Documentation consistent with the Restructuring
Support Agreement and otherwise acceptable in form and substance to the Backstop
Equity Investors.

(p) Transaction Expenses. The Company shall have paid all Transaction Expenses
that have accrued and remain unpaid as of the Effective Date.

(q) Backstop Commitment Fee. The Company shall have paid the Backstop Commitment
Fee accordance with Section 1.3 hereof.

(r) Restructuring Support Agreement. The Restructuring Support Agreement shall
not have been terminated.

(s) Assumption of Agreement. The Company shall have assumed this Agreement
pursuant to section 365 of the Bankruptcy Code.

(t) Agreements. The Company shall have executed and delivered the New
Stockholders Agreement and the New Registration Rights Agreement.

(u) Organizational Documents. The Organizational Documents of each of the
Debtors shall have been amended to reflect terms consistent with this Agreement
and the Plan and are otherwise satisfactory to the Backstop Equity Investors.

(v) Advisory Agreement. The Advisory Agreement shall have been terminated and
the Company shall have received an unconditional release (in form and substance
reasonably satisfactory to the Backstop Parties) of all amounts owed under, and
claims arising in respect of, such agreements.

 

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(w) Existing Equity. All equity interests in the Company existing as of
immediately prior to the Closing (including any options, warrants, rights to
acquire equity interests or other securities exercisable for, or convertible
into, equity interests in the Company) shall have been cancelled and
extinguished, effective upon the Closing, and the Debtors shall have provided
documentation satisfactory to the Backstop Equity Investors evidencing the
foregoing

(x) Officer’s Certificate. The Backstop Equity Investors shall have received on
and as of the Effective Date a certificate of the chief financial officer or
chief accounting officer of the Company confirming that the conditions set forth
in Sections 6.1(b) and 6.1(w) hereof have been satisfied.

6.2. Conditions Precedent to Obligations of the Company. The obligations of the
Company to issue and sell the Backstop Shares to each of the Backstop Equity
Investors pursuant to this Agreement are subject to the following conditions
precedent, each of which may be waived in writing by the Company:

(a) Agreement Order. The Agreement Order shall have been entered by the
Bankruptcy Court and the Agreement Order shall have become a Final Order.

(b) Confirmation Order. The Confirmation Order shall have been entered by the
Bankruptcy Court and such order shall have become a Final Order.

(c) Conditions to Confirmation. The conditions to confirmation and the
conditions to the Effective Date set forth in the Plan shall have been satisfied
(or waived with the consent of the Backstop Equity Investors) in accordance with
the Plan, and the Effective Date shall have occurred.

(d) Rights Offering. The Rights Offering shall have been consummated.

(e) No Injunctions or Restraints; Illegality. No temporary restraining order,
preliminary or permanent injunction or other Order preventing the consummation
of the transactions contemplated hereby or any of the other Contemplated
Transactions shall have been entered, issued, rendered or made, nor shall any
Proceeding brought by a Governmental Body seeking any of the foregoing be
pending or threatened; nor shall there be any Law promulgated, enacted, entered,
enforced or deemed applicable to the parties hereto which makes the consummation
of the transactions contemplated by this Agreement or any of the other
Contemplated Transactions illegal, void or rescinded.

(f) HSR Act and Competition Act (Canada). If the purchase of the Backstop Shares
by the Backstop Equity Investors pursuant to this Agreement is subject to the
provisions of the HSR Act or Part IX of the Competition Act (Canada), the
applicable waiting periods shall have expired, been waived or been terminated
thereunder with respect to such purchase.

(g) Representations and Warranties and Covenants. (i) Each of (x) the
representations and warranties of each Backstop Equity Investor in this
Agreement that shall be true and correct at and as of the date hereof and as of
the Effective Date as if made at and as of the Effective Date (except for
representations and warranties made as of a specified date, which shall be true
and correct only as of the specified date) and (ii) each Backstop Equity
Investor shall have complied in all material respects with all covenants in this
Agreement applicable to it.

 

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7. Termination.

(a) This Agreement (including the Commitments) shall automatically terminate,
unless waived in writing by the Company and the Backstop Equity Investors:

(i) if the Effective Date shall not have occurred on or prior to June 15, 2011
(the “End Date”);

(ii) if the Restructuring Support Agreement is terminated;

(b) This Agreement (including the Commitments) may be terminated and the
transactions contemplated hereby may be abandoned at any time by the Backstop
Equity Investors:

(i) if the Petition Date (or, if consummated out-of-court, the date of
effectiveness of the Restructuring) shall not have a occurred on or prior to
March 15, 2011;

(ii) if the Company does not file an executed copy of this Agreement, together
with all of the exhibits and schedules hereto (as redacted pursuant to
Section 4.1 hereof), with the Bankruptcy Court within two (2) Business Days of
the later to occur of (A) the Petition Date and (B) the date of this Agreement;

(iii) if any of the Debtors shall have breached or failed to perform any of its
representations, warranties, covenants or other agreements contained in this
Agreement or the Restructuring Support Agreement, or if any representation or
warranty of any of the Debtors in such agreements shall have become untrue, in
either case which breach, failure to perform or occurrence is not cured within
five (5) Business Days after written notice of such breach, failure or
occurrence is given to the Company by any Backstop Equity Investor;

(iv) if any of the conditions set forth in Section 6.1 hereof become incapable
of fulfillment (other than through the failure of the Backstop Equity Investors
to comply with their obligations) and such condition is not able to be fulfilled
within five (5) days, or, if able to be fulfilled within five (5) days, is not
fulfilled prior to the earlier of (x) the End Date and (y) five (5) days after
written notice of such condition is given to the Company by any Backstop Equity
Investor;

(v) if an order converting the Chapter 11 Case of any Debtor to a case under
chapter 7 of the Bankruptcy Code or dismissing such Chapter 11 Case is entered
by the Bankruptcy Court; or

(vi) if the Company makes a public announcement, enters into an agreement, or
files any pleading or document with the Bankruptcy Court, evidencing its
intention to support, or otherwise supports, any Inconsistent Transaction.

 

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(c) This Agreement may be terminated and the transactions contemplated hereby
may be abandoned at any time by the Debtors:

(i) if any Backstop Equity Investor shall have materially breached or failed to
perform any of its representations, warranties, covenants or other agreements
contained in this Agreement, or if any representation or warranty of any
Backstop Equity Investor in such agreements shall have become untrue, in either
case which breach, failure to perform or occurrence is not cured within five
(5) Business Days after written notice of such breach, failure or occurrence is
given by the Company to the applicable Backstop Equity Investor;

(ii) if any of the conditions set forth in Section 6.2 hereof become incapable
of fulfillment (other than through the failure of any of the Debtors to comply
with their obligations) and such condition is not able to be fulfilled within
five (5) days, or, if able to be fulfilled within five (5) days, is not
fulfilled prior to the earlier of (x) the End Date and (y) five (5) days after
written notice of such condition is given to the Backstop Equity Investors by
the Company.

(d) This Agreement may be terminated at any time by written consent of the
Company and the Backstop Equity Investors.

(e) In the event of termination of this Agreement in accordance with this
Section 7, the provisions of this Agreement shall immediately become void and of
no further force or effect (other than Sections 1.4, 7, 8, 10, 11, 12 and 13
hereof, and other than in respect of any liability of any party for any breach
of this Agreement prior to such termination, which shall in each case expressly
survive any such termination).

8. Indemnification.

(a) Subject to Section 9 and whether or not the Rights Offering is consummated
or this Agreement is terminated, the Debtors (in such capacity, the
“Indemnifying Parties”) shall jointly and severally indemnify and hold harmless
the Backstop Equity Investors and each of their respective Affiliates, members,
partners, officers, directors, employees, Representatives, agents, advisors and
controlling persons (each, in such capacity, an “Indemnified Person”) from and
against any and all losses, claims, damages, liabilities and expenses (including
counsel fees), joint or several, to which any such Indemnified Person may become
subject arising out of or in connection with any claim, challenge, litigation,
investigation or Proceeding (collectively, “Actions”) with respect to the Rights
Offering, this Agreement, the Commitments, the Definitive Documents, the Plan
(or the solicitation thereof), the Chapter 11 Cases or the transactions
contemplated hereby or thereby, including without limitation, payment of the
Backstop Commitment Fee or the Transaction Expenses, if any, distribution of the
Rights, purchase and sale of Rights Offering Shares in the Rights Offering and
purchase and sale of Backstop Shares pursuant to this Agreement, or any breach
by the Debtors of this Agreement, regardless of whether any of such Indemnified
Persons is a party hereto, and to reimburse such

 

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Indemnified Persons for any reasonable and documented legal or other reasonable
and documented out-of-pocket expenses in connection with investigating,
responding to or defending any of the foregoing; provided that the foregoing
indemnification will not, as to any Indemnified Person, apply to losses, claims,
damages, liabilities or expenses to the extent that they are finally judicially
determined to have resulted primarily and directly from fraud, bad faith, gross
negligence, willful breach of this Agreement or willful misconduct on the part
of such Indemnified Person.

(b) If for any reason the foregoing indemnification is unavailable to any
Indemnified Person or insufficient to hold it harmless, then the Indemnifying
Parties shall contribute to the amount paid or payable by such Indemnified
Person as a result of such loss, claim, damage, liability or expense in such
proportion as is appropriate to reflect not only the relative benefits received
by the Indemnifying Parties on the one hand and such Indemnified Person on the
other hand but also the relative fault of the Indemnifying Parties, on the one
hand, and such Indemnified Person, on the other hand, as well as any relevant
equitable considerations. It is hereby agreed that the relative benefits to the
Indemnifying Parties on the one hand and all Indemnified Persons on the other
hand shall be deemed to be in the same proportion as (i) the total value
received or proposed to be received by the Company pursuant to the sale of
Rights Offering Shares to (ii) the Backstop Commitment Fee paid or proposed to
be paid to the Backstop Equity Investors.

(c) The indemnity and reimbursement obligations of the Indemnifying Parties
under this Section 8 are in addition to, and do not limit, the Company’s
obligations under Sections 1.3, 1.4, and 12.9 hereof, shall be in addition to
any liability that the Indemnifying Parties may otherwise have to an Indemnified
Person (including as a result of any breach of this Agreement) and shall be
binding upon and inure to the benefit of any successors, assigns, heirs and
personal representatives of the Indemnifying Parties and any Indemnified Person.

(d) An Indemnified Person shall give written notice to the Indemnifying Parties
of any claim with respect to which indemnification under this Section 8 is
sought promptly after discovery by such Indemnified Person of the matters giving
rise to such claim for indemnification; provided, that the omission so to notify
the Indemnifying Parties will not relieve the Indemnifying Parties from any
liability that it may have hereunder except to the extent it has been materially
prejudiced by such failure. In case any Actions are brought against any
Indemnified Person the Indemnifying Parties will be entitled to participate in
such Actions, and, to the extent that such Indemnifying Parties may elect by
written notice delivered to such Indemnified Person, to assume the defense
thereof, with counsel reasonably satisfactory to such Indemnified Person,
provided that if the defendants in any such Actions include both such
Indemnified Person and the Indemnifying Parties and such Indemnified Person
shall have, on the advice of counsel, concluded that there may be legal defenses
available to it that are different from or additional to those available to the
Indemnifying Parties, such Indemnified Person shall have the right to select
separate counsel to assert such legal defenses and to otherwise participate in
the defense of such Actions on behalf of such Indemnified Person. Following the
date of receipt of such indemnification commitment from the Indemnifying Parties
and notice from the Indemnifying Parties to such Indemnified Person of its
election so to assume the defense of such Actions and approval by such
Indemnified Person of counsel, the Indemnifying Parties shall not be liable to
such Indemnified Person for expenses incurred by such Indemnified Person in

 

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connection with the defense thereof after such date (other than reasonable costs
of investigation and monitoring) unless (w) such Indemnified Person shall have
employed separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the immediately preceding sentence, (x) the
Indemnifying Parties shall not have employed counsel satisfactory to such
Indemnified Person to represent such Indemnified Person at the Indemnifying
Parties’ expense within a reasonable time after notice of commencement of the
Actions, (y) after the Indemnifying Parties assumes the defense of such Actions,
such Indemnified Person determines that the Indemnifying Parties is failing to
diligently defend against such Actions in good faith or (z) the Indemnifying
Parties shall have authorized in writing the employment of counsel for such
Indemnified Person.

(e) The Indemnifying Parties shall not, without the prior written consent of an
Indemnified Person, which consent shall not be unreasonably withheld,
conditioned or delayed, effect any settlement of any pending or threatened
Actions in respect of which indemnity has been sought hereunder by such
Indemnified Person unless (i) such settlement includes an unconditional release
of such Indemnified Person in form and substance satisfactory to such
Indemnified Person from all liability on the claims that are the subject matter
of such Actions and (ii) does not include any statement as to or any admission
of fault, culpability or a failure to act by or on behalf of any Indemnified
Person.

9. Survival of Representations and Warranties. Notwithstanding anything
contained herein, the representations and warranties made in this Agreement
shall terminate on the earlier of (i) the Closing or (ii) the date this
Agreement is terminated pursuant to its terms.

10. Amendments and Waivers. Any term of this Agreement may be amended or
modified and the compliance with any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only if such amendment, modification or waiver is signed, in the
case of an amendment or modification, by the Backstop Equity Investors and the
Company, or in the case of a waiver, by the party waiving compliance; provided,
however, that Schedule 1 hereto may be amended in accordance with the terms of
Section 12.1. No delay on the part of any party in exercising any right, power
or privilege pursuant to this Agreement will operate as a waiver thereof, nor
will any waiver on the part of any party of any right, power or privilege
pursuant to this Agreement, or any single or partial exercise of any right,
power or privilege pursuant to this Agreement, preclude any other or further
exercise thereof or the exercise of any other right, power or privilege pursuant
to this Agreement. The rights and remedies provided pursuant to this Agreement
are cumulative and are not exclusive of any rights or remedies which any party
otherwise may have at law or in equity.

 

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11. Notices, etc. Except as otherwise provided in this Agreement, all notices,
demands and other communications hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if delivered
personally or if mailed by certified mail, return receipt requested, postage
prepaid, or if sent by overnight courier, or sent by written telecommunication,
as follows:

(a) if to a Backstop Equity Investor, to the mailing address or facsimile number
set forth on Schedule 1 hereto or to such other mailing address or facsimile
number as such Backstop Equity Investor shall have furnished to the Company in
writing:

 

with a copy to: Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, NY
10019 Attention:    Matthew A. Feldman, Esq.    Cristopher Greer, Esq. Fax:   
(212) 728-8111

(b) If to the Company at:

 

Keystone Automotive Operations, Inc.

44 Tunkahannock Avenue

Exeter, Pennsylvania 18643

Attention:    Ed Orzetti, Chief Executive Officer Fax:    (570) 655-8203   
eorzetti@key-stone.com With a copy to: Kirkland & Ellis LLP 601 Lexington Avenue
New York, New York 10022 Attention:    Jonathan S. Henes, Esq. and Joshua A.
Sussberg, Esq. Fax:    212-446-4900   

jonathan.henes@kirkland.com

joshua.sussberg@kirkland.com

Any such notice, demand or other communication shall be effective (i) if
delivered personally, when received, (ii) if sent by overnight courier, when
receipted for, (iii) if mailed, three (3) days after being mailed as described
above, and (iv) if sent by written telecommunication, when dispatched.

12. Miscellaneous.

12.1. Assignments. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Neither this Agreement nor any of the rights, interests or obligations under
this Agreement will be assigned by any of the parties (whether by operation of
law or otherwise) without the prior written consent of the other parties.
Notwithstanding the previous sentence, any Backstop Equity Investor’s rights,
obligations or interests hereunder may be assigned, delegated or transferred, in
whole or in part, by such Backstop Equity Investor to (i) any other Backstop
Equity Investor or (ii) any

 

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Affiliate of a Backstop Equity Investor over which such Backstop Equity Investor
or any of its Affiliates exercises investment authority (including any Related
Fund of such Backstop Equity Investor), including, without limitation, with
respect to voting and dispositive rights; provided, that any such assignee
assumes the obligations of the assigning Backstop Equity Investor hereunder and
agrees in writing prior to such assignment to be bound by the terms of this
Agreement in the same manner as the assigning Backstop Equity Investor.
Following any assignment described in the immediately preceding sentence,
Schedule 1 hereto shall be updated by the Company (in consultation with the
assigning Backstop Equity Investor and the assignee) solely to reflect the name
and address of the applicable assignee or assignees and the Total Commitment
Percentage that shall apply to such assignee or assignees, and any changes to
the Total Commitment Percentage applicable to the assigning Backstop Equity
Investor. Any update to Schedule 1 hereto described in the immediately preceding
sentence shall not be deemed an amendment to this Agreement. Notwithstanding the
foregoing or any other provisions herein, no such assignment will relieve the
assigning Backstop Equity Investor of its obligations hereunder if any such
assignee fails to perform such obligations.

12.2. Severability. Any provision of this Agreement 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 provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

12.3. Entire Agreement. Except as expressly set forth herein, this Agreement and
the Restructuring Support Agreement (and the agreements referenced therein)
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof and replaces and supersedes all prior agreements and
understandings (including the Commitment Letter, except as expressly set forth
herein), both written and oral, among the parties hereto with respect to the
subject matter hereof.

12.4. Counterparts. This Agreement may be executed in any number of counterparts
(including by facsimile or portable document format (PDF) signatures), each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.

12.5. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of New York, without giving effect to the conflicts of law principles
thereof except Sections 5-1401 and 5-1402 of the General Obligations Law of the
State of New York.

12.6. Submission to Jurisdiction. Each party to this Agreement hereby
(a) consents to submit itself to the personal jurisdiction of the federal court
of the Southern District of New York or any state court located in New York
County, State of New York in the event any dispute arises out of or relates to
this Agreement or any of the transactions contemplated by this Agreement,
(b) agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court, including, without
limitation, a motion to dismiss on the grounds of forum non conveniens, and
(c) agrees that it

 

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will not bring any action arising out of or relating to this Agreement or any of
the transactions contemplated by this Agreement in any court other than the
federal court of the Southern District of New York or any state court located in
New York County, State of New York; provided, however, that during the pendency
of the Chapter 11 Cases, all such actions shall be brought in the Bankruptcy
Court.

12.7. Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH
PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION,
SUIT, PROCEEDING OR COUNTERCLAIM, ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY MATTER ARISING HEREUNDER.

12.8. Further Assurances. From time to time after the date of this Agreement,
the parties hereto will execute, acknowledge and deliver to the other parties
hereto such other documents, instruments and certificates, and will do and
perform, or cause to be done and performed, all such further acts and things, as
any other party hereto may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

12.9. Specific Performance. The Debtors and the Backstop Equity Investors
acknowledge and agree that (a) irreparable damage would occur in the event that
any of the provisions of this Agreement are not performed in accordance with
their specific terms or are otherwise breached, and (b) remedies at law would
not be adequate to compensate the non-breaching party. Accordingly, the Debtors
and the Backstop Equity Investors agree that each of them shall have the right,
in addition to any other rights and remedies existing in its favor, to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce its rights and obligations hereunder not only by an
action or actions for damages but also by an action or actions for specific
performance, injunctive and/or other equitable relief. The right to equitable
relief, including specific performance or injunctive relief, shall exist
notwithstanding, and shall not be limited by, any other provision of this
Agreement. Each of the Debtors and the Backstop Equity Investors hereby waives
any defense that a remedy at law is adequate and any requirement to post bond or
other security in connection with actions instituted for injunctive relief,
specific performance or other equitable remedies.

12.10. Headings. The headings in this Agreement are for reference purposes only
and will not in any way affect the meaning or interpretation of this Agreement.

12.11. Interpretation; Rules of Construction. When a reference is made in this
Agreement to Section, Exhibit or Schedule, such reference shall be to a Section,
Exhibit or Schedule, respectively, unless otherwise indicated. Unless the
context of this Agreement otherwise requires, (i) words of any gender include
each other gender; (ii) words using the singular or plural number also include
the plural or singular number, respectively; (iii) the terms “hereof,” “herein,”
“hereby” and derivative or similar words refer to this entire Agreement; and
(v) the words “include”, “includes” and “including” when used herein shall be
deemed in each case to be followed by the words “without limitation”. Unless
expressly set forth herein to the contrary, any provision of this Agreement
granting a party the right to approve, accept, adopt or consent to any action or
document shall be deemed to grant to such party the right to do so in

 

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such party’s sole and absolute discretion. If any payment or other obligation is
due on any day which is not a Business Day, such obligation shall be
automatically extended to the next Business Day. The parties hereto agree that
they have been represented by legal counsel during the negotiation and execution
of this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document shall be construed against the party drafting such agreement or
document.

12.12. Non-Recourse. Except in the case of fraud or willful misconduct, no past,
present or future director, manager, officer, employee, incorporator, authorized
representative, member, partner, stockholder, Affiliate, agent, attorney or
representative of any party hereto shall have any liability for any obligations
or liabilities of such party under this Agreement or in connection with any of
the Contemplated Transactions, or for any claim based on, or in respect of, or
by reason of, the transactions contemplated hereby or any of the other
Contemplated Transactions.

12.13. Several, Not Joint, Obligations. The agreements, representations and
obligations of the Backstop Equity Investors under this Agreement are, in all
respects, several and not joint.

12.14. Disclosure. Unless otherwise required by applicable Law, the Debtors will
not, without each of the Backstop Equity Investors’ prior written consent,
disclose to any Person any of the information set forth on Schedule 1 hereto
(including the identities of the Backstop Equity Investors and the Total
Commitment Percentage of each Backstop Equity Investor), other than to the
Debtors’ Representatives, in each case in connection with the transactions
contemplated hereby and subject to their agreement to be bound by the
confidentiality provisions hereof.

13. Definitions.

13.1. Certain Defined Terms. As used in this Agreement the following terms have
the following respective meanings:

Adjusted Commitment Percentage: means, with respect to any Non-Defaulting
Backstop Equity Investor, a percentage expressed as a fraction, the numerator of
which is the Total Commitment Percentage of such Non-Defaulting Backstop Equity
Investor and the denominator of which is the Total Commitment Percentages of all
Non-Defaulting Backstop Equity Investors.

Affiliate: means, with respect to any Person, any other Person that directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, “control” (including with its correlative
meanings, “controlled by” and “under common control with”) shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person (whether through ownership
of securities or partnership or other ownership interests, by contract or
otherwise).

Agreement: has the meaning given to such term in the preamble hereof.

 

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Agreement Motion: means the motion to be filed by the Debtors with the
Bankruptcy Court requesting (among other things) that the Bankruptcy Court
approve the Debtors’ entry into and performance under this Agreement and
authorizing the Debtors to pay all fees and expenses in connection with this
Agreement, as such motion may be amended, supplemented or otherwise modified
from time to time.

Agreement Order: means an order entered by the Bankruptcy Court granting the
Agreement Motion, which shall be in form and substance acceptable to the
Backstop Equity Investors.

Audited Financial Statements: has the meaning given to such term in Section 2.20
hereof.

Backstop Commitment Fee: has the meaning given to such term in Section 1.3
hereof.

Backstop Equity Investor(s): has the meaning given to such term in the preamble
of this Agreement.

Backstop Shares: has the meaning given to such term in Section 1.2(b) hereof.

Bankruptcy Code: has the meaning given to such term in the recitals hereof.

Bankruptcy Court: has the meaning given to such term in the recitals of this
Agreement.

Bankruptcy Documents: has the meaning given to such term in Section 2.9 hereof.

Bankruptcy Rules: means the Federal Rules of Bankruptcy Procedure, as
promulgated by the United States Supreme Court under section 2075 of title 28 of
the United States Code, as amended from time to time, applicable to the Chapter
11 Cases and/or the transactions contemplated by this Agreement, and any Local
Rules of the Bankruptcy Court.

Business Day: means any day other than a Saturday, Sunday, or a “legal holiday,”
as defined in Bankruptcy Rule 9006(a).

Chapter 11 Cases: has the meaning given to such term in the recitals hereof.

Closing: has the meaning given to such term in Section 1.2(c) hereof.

Code: has the meaning given to such term in Section 2.15 hereof.

Commission: means the United States Securities and Exchange Commission.

Commitment: means, with respect to any Backstop Equity Investor, the commitment
of such Backstop Equity Investor, subject to the terms and conditions set forth
in this Agreement, to purchase Unsubscribed Shares pursuant to, and on the terms
set forth in, Section 1.1(a) hereof.

 

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Company: has the meaning given to such term in the preamble hereof.

Company Benefit Plan: has the meaning given to such term in Section 2.14 hereof.

Company IP Rights: has the meaning given to such term in Section 2.12 hereof.

Confirmation Order: means the order of the Bankruptcy Court confirming the Plan
pursuant to section 1129 of the Bankruptcy Code.

Consent: means any approval, consent, ratification, waiver or other
authorization of any Person (including any Governmental Body).

Contemplated Transactions: means all of the transactions contemplated by this
Agreement and the Plan, including without limitation, the issuance of the Rights
Offering Shares, the Backstop Shares and the Commitment Fee Shares.

Contract: means any agreement, contract, obligation or promise, whether written
or oral.

Debtors: has the meaning given to such term in the recitals hereof.

Defaulting Backstop Equity Investor: has the meaning given to such term in
Section 1.2(b) hereof.

Definitive Documents: means the definitive documents implementing, achieving and
relating to the Plan and the transactions contemplated thereby and by this
Agreement.

Determination Date: has the meaning given to such term in Section 1.1(c) hereof.

Disclosure Statement: means the disclosure statement that relates to the Plan,
as such disclosure statement may be amended, modified or supplemented (including
all exhibits and schedules annexed thereto or referred to therein).

Disclosure Statement Hearing: means the hearing held by the Bankruptcy Court to
consider approval of the Disclosure Statement as containing adequate information
as required by section 1125 of the Bankruptcy Code, as the same may be adjourned
or continued from time to time.

Effective Date: means the first Business Day on which all conditions to the
“Effective Date” set forth in the Plan have been satisfied or waived, and no
stay of the Confirmation Order is in effect.

Eligible Holders: has the meaning given to such term in the recitals hereof.

 

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Encumbrance: means any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of ownership.

End Date: has the meaning given to such term in Section 7(a) hereof.

Environmental Laws: means all Laws applicable to the Company or any of its
Subsidiaries relating to pollution or the regulation and protection of human
health, safety from environmental hazards, or protection of the environment or
natural resources, including without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. § 9601
et seq.); the Hazardous Materials Transportation Uniform Safety Act, as amended
(49 U.S.C. 5101 et seq.); the National Traffic and Motor Vehicle Safety Act, as
amended (49 U.S.C. § 30101 et seq.); Commercial Motor Safety Act, as amended (49
U.S.C. § 31101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide
Act, as amended (7 U.S.C. § 136 et seq.); the Resource Conservation and Recovery
Act, as amended (42 U.S.C. § 6901 et seq.); the Toxic Substances Control Act, as
amended (15 U.S.C. § 2601 et seq.); the Clean Air Act, as amended (42 U.S.C. §
7401 et seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. §
1251 et seq.); the Occupational Safety and Health Act, as amended (29 U.S.C. §
651 et seq.); the Safe Drinking Water Act, as amended (42 U.S.C. § 300f et
seq.); the rules and regulations promulgated by the Federal Motor Carrier Safety
Administration, and, in each case, their foreign, state, provincial, municipal
and local counterparts or equivalents as in effect on or prior to the date
hereof.

Equity Investor Shares: has the meaning given to such term in Section 1.2(a)
hereof.

ERISA: has the meaning given to such term in Section 2.14 hereof.

Exchange Act: means the Securities Exchange Act of 1934, as amended, and the
rules promulgated pursuant thereto.

Exchange Act Documents: has the meaning given to such term in Section 2.9
hereof.

Exercise Price: has the meaning given to such term in the recitals hereof.

Exit Facility: means (i) an asset based revolving loan/letter of credit facility
and (ii) term loan credit agreement in the amount of approximately $120 million
each to be entered into by the Debtors on the Effective Date with financials
institutions acceptable to the Backstop Equity Investors on terms and conditions
materially consistent with the terms and conditions set forth in the
Restructuring Support Agreement and otherwise satisfactory to the Backstop
Equity Investors.

Exit Facility Documentation: has the meaning set forth in Section 4.9.

Final Order: means an order, ruling or judgment of the Bankruptcy Court (or
other court of competent jurisdiction) entered by the Clerk of the Bankruptcy
Court on the

 

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docket in the Chapter 11 Cases (or by the clerk of such other court of competent
jurisdiction on the docket of such court) that: (a) is in full force and effect;
(b) is not stayed; and (c) is no longer subject to review, reversal,
modification or amendment, by appeal or writ of certiorari; provided, however,
that the possibility that a motion under Rule 50 or 60 of the Federal Rules of
Civil Procedure, or any analogous rule under the Federal Rules of Civil
Procedure or Bankruptcy Rules, may be filed relating to such order, ruling or
judgment shall not cause such order, ruling or judgment not to be a Final Order.

Financial Statements: has the meaning given to such term in Section 2.19 hereof.

GAAP: means generally accepted accounting principles in the United States.

Governmental Body: means any federal, state, provincial, local or foreign
government or any agency, bureau, board, commission, court, department,
political subdivision, tribunal or other instrumentality thereof, or any
federal, state, local or foreign court or arbitrator.

HSR Act: means the Hart Scott Rodino Antitrust Improvement Act of 1976.

Inconsistent Transaction: means any transaction that is inconsistent with this
Agreement, the Plan or the Restructuring Support Agreement, including without
limitation, (a) a merger, consolidation, business combination, recapitalization
or refinancing of either of the Debtors (in one or a series of related
transactions) on terms other than as set forth in the Plan, (b) the issuance,
sale, transfer, exchange or other disposition by either of the Debtors of any
equity interests (other than common stock issued in respect of any employee
stock options), or all or substantially all of its assets, on terms other than
as set forth in the Plan, (c) the filing of a plan of reorganization that does
not contemplate a reorganization of the Debtors on the terms set forth in the
Plan, (d) the acceptance of the Company of parties (other than the Backstop
Equity Investors) as “backstop equity investors” for the Rights Offering or
(e) any other transaction or transactions rendering the Rights Offering no
longer practicable.

Indebtedness: shall mean, without duplication, (A) all indebtedness for borrowed
money, (B) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services, including, without limitation, “capital
leases” in accordance with GAAP (other than trade payables entered into in the
ordinary course of business), (C) all reimbursement or payment obligations with
respect to letters of credit, surety bonds and other similar instruments,
(D) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses, (E) all indebtedness created or
arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to any property or assets
acquired with the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of default are
limited to repossession or sale of such property), (F) all monetary obligations
under any leasing or similar arrangement which, in connection with GAAP
consistently applied for the periods covered thereby, is classified as a capital
lease, (G) all indebtedness referred to in clauses (A) through (F) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person,
even though the Person which owns such assets or property has not

 

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assumed or become liable for the payment of such indebtedness, and (H) all
contingent obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (A) through (G) above.

Indemnified Person: has the meaning given to such term in Section 8(a) hereof.

Indemnifying Person: has the meaning given to such term in Section 8(a) hereof.

IP Rights: has the meaning given to such term in Section 2.12 hereof.

IRS: means the Internal Revenue Service and any Governmental Body succeeding to
the functions thereof.

knowledge: (and other words of similar import) means, with respect to the
Company or any of its Subsidiaries, the actual knowledge after a reasonable
inquiry of Edward Orzetti, Richard Paradise, Patrick Judge, William Brady, Lou
Houck, Rudy Esteves, Kevin Canavan and MK Sathya.

Law: means any federal, state, local, municipal, foreign, international,
multinational, provincial or other statute, law (including common law), writ,
Order, decree, guideline, policy, ordinance, rule, treaty, constitution, code,
judicial or administrative doctrine, rule or regulation enacted, promulgated,
issued, entered or enforced by any Governmental Body.

Lien means any mortgage, deed of trust, hypothecation, contractual restriction,
pledge, lien, encumbrance, interest, charge, security interest, put, call, other
option, right of first refusal, right of first offer, servitude, right of way,
easement, lease, license, tenancy, occupancy, covenant, condition, restriction,
royalty, conditional sale or installment contract, finance lease involve
substantially the same effect, security agreement or other encumbrance or
restriction on the use, transfer or ownership of any property of any type
(including real property, tangible property and intangible property, including
IP Rights). For the avoidance of doubt, the definition of Lien shall not be
deemed to include the grant of any license by any the Company or its
Subsidiaries of IP Rights.

Material Adverse Effect: means any event, change, effect, occurrence,
development, circumstance or change of fact occurring after the date hereof that
has had, or would reasonably be expected to have, a material adverse effect on
the business, results of operations or condition (financial or otherwise), of
the Company and its Subsidiaries taken as a whole; provided, however, that
“Material Adverse Effect” shall not include any event, effect, occurrence,
development, circumstance or change of fact arising out of, resulting from or
attributable to (a) conditions or effects that generally affect the industries
and markets in which the Company operates, (b) general economic conditions
affecting the United States, (c) effects resulting from changes generally
affecting financial, banking, credit, securities, or commodities markets, the
economy in general, prevailing interest rates or general capital market
conditions in the United States or those countries in which the Company
operates, (d) any act of war or terrorism (or, in each case, escalation thereof)
or declaration of a national emergency (except if the Company or any of its
Subsidiaries are disproportionately affected thereby relative to Persons engaged
in the industry in which the Company and its Subsidiaries operate).

 

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New Common Stock: means shares of common stock, par value $0.01 per share, of
Reorganized Keystone.

New Stockholders Agreement: means a stockholders agreement, consistent with the
terms set forth in the Restructuring Support Agreement and otherwise acceptable
to the Backstop Equity Investors, to be entered into on the Effective Date by
and among the Company and the Backstop Equity Investors.

New Registration Rights Agreement: means a stockholders agreement, consistent
with the terms set forth in the Restructuring Support Agreement and otherwise
acceptable to the Backstop Equity Investors, to be entered into on the Effective
Date by and among the Company and the Backstop Equity Investors.

Non-Defaulting Backstop Equity Investor: has the meaning given to such term in
Section 1.2(b) hereof.

Order: means any award, decision, injunction, judgment, order, ruling, subpoena
or verdict entered, issued, made, or rendered by any court, administrative
agency or other Governmental Body.

Organizational Documents: means, with respect to any Person other than a natural
person, the documents by which such Person was organized (such as a certificate
of incorporation, certificate of limited partnership or articles of
organization, and including, without limitation, any certificates of designation
for preferred stock or other forms of preferred equity) or which relate to the
internal governance of such Person (such as by-laws, a partnership agreement or
an operating, limited liability or members agreement).

Permitted Liens means:

(a) Liens in favor of the secured parties under the Revolving Credit Facility or
the Term Loan Facility;

(b) Liens for taxes not yet due or, if due, if obligations with respect to such
taxes are being contested in good faith by appropriate proceedings and reserves
in accordance with GAAP with respect thereto have been provided on the
consolidated books of the Company;

(c) statutory Liens of landlords, banks (and rights of set-off), of carriers,
warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens
imposed by Law (other than any such Lien imposed pursuant to Section 430(k) of
the Internal Revenue Code or ERISA or a violation of Section 436 of the Internal
Revenue Code), in each case incurred in the ordinary course of business (i) for
amounts not yet overdue or (ii) for amounts that are overdue and that (in the
case of any such amounts overdue for a period in excess of five days) are being
contested in good faith by appropriate proceedings, so long as such reserves or
other appropriate provisions, if any, as shall be required by GAAP shall have
been made for any such contested amounts;

(d) Liens incurred in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of social
security, or to secure

 

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the performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money or other indebtedness), so long as no
foreclosure, sale or similar proceedings have been commenced with respect to any
portion of the secured assets on account thereof;

(e) easements, rights-of-way, restrictions, encroachments, and other minor
defects or irregularities in title, in each case which do not and will not
interfere in any material respect with the ordinary conduct of the business of
the Company or any of its Subsidiaries;

(f) any interest or title of a lessor or sublessor under any lease of real
estate permitted under the Revolving Credit Facility or the Term Loan Facility;

(g) Liens solely on any cash earnest money deposits made by the Company or any
of its Subsidiaries in connection with any letter of intent or purchase
agreement permitted under the Revolving Credit Facility or the Term Loan
Facility;

(h) Liens in favor of customs and revenue authorities arising as a matter of Law
to secure payment of customs duties in connection with the importation of goods;

(i) any zoning or similar Law or right reserved to or vested in any governmental
office or agency to control or regulate the use of any real property;

(j) non-exclusive outbound licenses of patents, copyrights, trademarks and other
Intellectual Property rights granted by the Company or any of its Subsidiaries
in the ordinary course of business consistent with past practice;

(k) Liens consisting of customary rights of set-off for bankers liens on amounts
on deposit at banks or other financial institutions, to the extent arising by
operation of Law or otherwise, incurred in the ordinary course of business;

(l) judgment Liens in respect of judgments that do not constitute an Event of
Default under the Revolving Credit Facility or the Term Loan Facility;

(m) Liens of a collection bank arising in the ordinary course of business under
§4-208 of the Uniform Commercial Code in effect in the relevant jurisdiction;
and

(n) Liens otherwise permitted under the Exit Facility.

Person: means an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization or a
government or any department or agency thereof.

Petition Date: means the date that the Chapter 11 Cases are commenced.

Plan: has the meaning given to such term in the recitals hereof.

 

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Proceeding: means any action, arbitration, audit, hearing, investigation,
inquiry, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard by or before,
or otherwise involving, any Governmental Body.

Purchase Notice: has the meaning given to such term in Section 1.1(c) hereof.

Related Fund: means, with respect to any Backstop Equity Investor, any fund,
account or investment vehicle that is controlled or managed by (a) such Backstop
Equity Investor, (b) an Affiliate of such Backstop Equity Investor, or (c) the
same investment manager or advisor as such Backstop Equity Investor or an
Affiliate of such investment manager or advisor.

Reorganized Keystone: means Keystone Automotive Holdings, Inc., or any successor
thereto, on or after the Effective Date.

Restructuring Support Agreement: means the Restructuring Support Agreement,
dated as of the date of this Agreement, by and among the Debtors and the holders
of the Senior Notes parties thereto from time to time, as amended, supplemented
or otherwise modified from time to time.

Rights: has the meaning given to such term in the recitals hereof.

Rights Offering: has the meaning given to such term in the recitals hereof.

Rights Offering Deadline: has the meaning given to such term on the Rights
Offering Procedures.

Rights Offering Procedures: has the meaning given to such term in Section 1.1(a)
hereof.

Rights Offering Shares: has the meaning given to such term in the recitals
hereof.

Satisfaction Notice: has the meaning given to such term in Section 1.1(c)
hereof.

Securities Act: means the Securities Act of 1933, as amended, and the rules
promulgated pursuant thereto.

Shares: means, collectively, the Backstop Shares and the Commitment Fee Shares.

Specified Issuances: means, collectively, (a) the distribution by Reorganized
Keystone of the Rights to the Eligible Holders pursuant to the Plan, (b) the
distribution by the Debtors of the New Common Stock to (subject to the terms of
the Plan) the holders of Allowed Senior Subordinated Notes Claims, (c) the
issuance and sale by Reorganized Keystone of Rights Offering Shares to the
holder of a Right upon exercise of such Right, and (d) the issuance and sale by
Reorganized Keystone of the Shares to the Backstop Equity Investors pursuant to
this Agreement.

 

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Subsidiary: means, with respect to any Person (the “Owner”), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation’s or other Person’s board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred), are held by the Owner or one or more of its Subsidiaries. Unless
otherwise qualified, all references to a “Subsidiary” in this Agreement shall
refer to the Subsidiary of the Company.

Subscription Agent: has the meaning given to such term in Section 4.4 hereof.

Term Loan Facility: means the term loan agreement dated as of January 12, 2007,
by and among, the Company, Bank of America N.A. (as administrative agent,
syndication agent and documentation agent) and the lenders from time to time
party thereto (as amended, restated, supplemented or otherwise modified from
time to time).

Total Commitment Percentage: means, with respect to any Backstop Equity
Investor, the percentage set forth opposite the name of such Backstop Equity
Investor under the heading “Total Commitment Percentage” on Schedule 1 hereto,
as such percentage may be modified from time to time in accordance with the
terms hereof.

Transaction Expenses: means the reasonable and documented out-of-pocket fees
(other than the Backstop Commitment Fee), costs, expenses, disbursements and
charges of each of the Backstop Equity Investors incurred in connection with or
relating to the diligence, negotiation, preparation and/or implementation of
this Agreement, the Rights Offering and/or any of the transactions contemplated
by the foregoing or by the Plan, which shall include but is not limited to,
(a) the reasonable and documented out-of-pocket fees, costs and expenses of the
advisors and agents for each of the Backstop Equity Investors and (b) filing
fees (if any) required by the HSR Act and any expenses related thereto.

Unaudited Financial Statements: has the meaning given to such term in
Section 2.19 hereof.

Unsubscribed Shares: has the meaning given to such term in the recitals hereof.

Any of the above-defined terms may, unless the context otherwise requires, be
used in the singular or plural depending on the reference.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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

 

COMPANY:       KEYSTONE AUTOMOTIVE HOLDINGS, INC.   By:   /s/ Richard Paradise  
        Name:   Richard Paradise           Title:   Executive Vice President and
Chief Financial Officer         DEBTORS:         KEYSTONE AUTOMOTIVE OPERATIONS,
INC.   KAO MANAGEMENT SERVICES, LLC By:   /s/ Richard Paradise     By:   /s/
Richard Paradise   Name:   Richard Paradise       Name:   Richard Paradise  
Title:   Executive Vice President and Chief Financial Officer       Title:  
Executive Vice President and Chief Financial Officer A&A AUTO PARTS STORES, INC.
  KEYCOMP, INC. By:   /s/ Richard Paradise     By:   /s/ Richard Paradise  
Name:   Richard Paradise       Name:   Richard Paradise   Title:   Executive
Vice President and Chief Financial Officer       Title:   Executive Vice
President and Chief Financial Officer

[Signature Page to Backstop Stock Purchase Agreement]

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ARROW SPEED ACQUISITION LLC   KEYSTONE AUTOMOTIVE OPERATIONS OF CANADA, INC. By:
  /s/ Richard Paradise     By:   /s/ Richard Paradise   Name:   Richard Paradise
      Name:   Richard Paradise  

Title:

 

Executive Vice President and

Chief Financial Officer

     

Title:

 

Executive Vice President and

Chief Financial Officer

DRIVERFX.COM, INC.   KEYSTONE AUTOMOTIVE OPERATIONS MIDWEST, INC. By:   /s/
Richard Paradise     By:   /s/ Richard Paradise   Name:   Richard Paradise      
Name:   Richard Paradise   Title:  

Executive Vice President and

Chief Financial Officer

      Title:  

Executive Vice President and

Chief Financial Officer

AMERICAN SPECIALTY EQUIPMENT CORP.   KEYSTONE AUTOMOTIVE DISTRIBUTORS COMPANY,
LLC By:   /s/ Richard Paradise     By:   /s/ Richard Paradise   Name:   Richard
Paradise       Name:   Richard Paradise  

Title:

 

Executive Vice President and

Chief Financial Officer

      Title:   Executive Vice President and Chief Financial Officer

[Signature Page to Backstop Stock Purchase Agreement]

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SPHERE CAPITAL, LLC – SERIES A By:   /s/ Jacob Kotzubei   Name:   Jacob Kotzubei
  Title:   Partner   Sphere Capital, LLC – Series A   360 N. Crescent Dr.  
South Building   Beverly Hills, CA 90210

[Signature Page to Backstop Stock Purchase Agreement]

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CETUS CAPITAL, LLC By:   /s/ Robert E. Davis   Name:   Robert E. Davis   Title:
  Managing Director   Cetus Capital, LLC   8 Sound Shore Drive   Suite 303  
Greenwich, CT 06830

[Signature Page to Backstop Stock Purchase Agreement]