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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (EVENT): October 13, 1998
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RANKIN AUTOMOTIVE GROUP, INC.
(Exact name of registrant as specified in its charter)
COMMISSION FILE NO: 0-28812
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Louisiana 72-0838383
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(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
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3709 S. MacArthur Drive
Alexandria, LA 71302
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(Address of principal executive offices) (Zip code)
(318) 487-1081
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Registrant's telephone number, including Area Code
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Item 2. Acquisition of Assets
On October 13, 1998, the Company acquired the auto parts
distribution center operated by A.P.S., Inc. in Monroe, Louisiana. The total
purchase price approximated $7.3 million consisting of approximately $5.4
million of inventory, $300 thousand of notes receivables, $120 thousand of fixed
assets and $1.5 million in accounts receivables. The purchase price, for all of
the assets except accounts receivables, totaling $5.8 million was paid in cash
at closing from the Company's cash reserves and credit facility. A.P.S., Inc.
financed the accounts receivables totaling $1.5 million at 10% interest for 30
business days.
The Company intends to continue using this facility as an
automotive distribution center for its auto parts business and for other auto
parts suppliers covering the States of Louisiana and Mississippi.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
a. Financial Statements of Businesses Acquired.
It is impracticable at this time to provide the required
financial statements for the businesses acquired in the
acquisition described in Item 2 above. The Company is in the
process of preparing the appropriate financial statements. It
is anticipated that such financial statements will be
available within 60 days from the date of this report, and
will be filed as an amendment to this report as soon as
practicable, but no later than 60 days after this report has
been filed.
b. Pro Forma Financial Information
No pro forma financial information with respect to the
acquisition described in Item 2 above is available at this
time. It is anticipated that the required proforma financial
information will be available within 60 days from the date of
this report, and will be filed as an amendment to this report
as soon as practicable, but no later than 60 days after this
report has been filed.
c. Exhibits.
10.(p) Asset Purchase Agreement between A.P.S., Inc. and
Rankin Automotive Group, Inc. dated as of
September 17, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereto duly authorized.
Rankin Automotive Group, Inc.
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(Registrant)
Dated: October 28, 1998 /s/ Randall B. Rankin
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Randall B. Rankin, Chief Executive Officer
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INDEX TO EXHIBITS
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EXHIBIT
NO. DESCRIPTION
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10.(p) Asset Purchase Agreement between American Parts Systems, Inc.
and Rankin Automotive Group, Inc. dated as of September 17, 1998
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EXHIBIT 10(p)
ASSET PURCHASE AGREEMENT
BETWEEN
AMERICAN PARTS SYSTEMS, INC.
AND
RANKIN AUTOMOTIVE GROUP, INC.
Dated as of September 17, 1998
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TABLE OF CONTENTS
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Page No.
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ARTICLE I. DEFINITIONS 2
Section 1.1. Definitions 2
ARTICLE II. SALE AND PURCHASE OF PURCHASED ASSETS AND ASSUMPTION OF
ASSUMED LIABILITIES.........................................10
Section 2.1. Purchase and Sale of Purchased Assets.......................10
Section 2.2. Assumption of Obligations and Liabilities...................10
Section 2.3. Inventory Levels and Purchase Price.........................11
Section 2.4. Physical Inventory; Determination of
Purchased Inventory......................................16
Section 2.5. Condition of Purchased Assets; Return of Inventory;
Inventory in Transit.....................................16
Section 2.6. Allocation of Purchase Price................................18
Section 2.7. Sale at Closing Date........................................19
Section 2.8. Apportionments..............................................19
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER.......................19
Section 3.1. Authority of Seller.........................................19
Section 3.2. No Conflict or Violation....................................20
Section 3.3. Consents and Approvals......................................20
Section 3.4. Compliance with Law.........................................20
Section 3.5. Permits.....................................................20
Section 3.6. Ownership of Purchased Assets...............................21
Section 3.7. Assigned Contracts..........................................21
Section 3.8. Labor Relations.............................................21
Section 3.9. Litigation..................................................21
Section 3.10. Brokers....................................................22
Section 3.11. Disclaimer of Additional Representations and Warranties;
Schedules..................................................22
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER.....................23
Section 4.1. Authority of Purchaser......................................23
Section 4.2. No Conflict or Violation....................................23
Section 4.3. Consents and Approvals......................................23
Section 4.4. Availability of Funds.......................................24
Section 4.5. Litigation..................................................24
Section 4.6. Brokers.....................................................24
Section 4.7. Adequate Assurances Regarding Executory
Contracts................................................24
Section 4.8. Good Faith Dispute..........................................24
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Section 4.9. Security Interest...........................................24
ARTICLE V. CERTAIN COVENANTS OF SELLER......................................25
Section 5.1. Conduct of Business Before the Closing Date.................25
Section 5.2. Consents and Approvals......................................25
Section 5.3. Information and Access......................................25
Section 5.4. Further Assurances..........................................26
Section 5.5. Reasonable Efforts..........................................26
Section 5.6. Assignment of Contracts.....................................26
Section 5.7. Services to be provided by Seller...........................26
Section 5.8. Cure of Defaults............................................26
Section 5.9. Bankruptcy Actions..........................................26
Section 5.10. Audit of Operations at Business Location...................27
Section 5.11. Severance; Vacation and Sick Leave.........................27
ARTICLE VI. CERTAIN COVENANTS OF PURCHASER..................................27
Section 6.1. Reasonable Efforts..........................................27
Section 6.2. Consents and Approvals......................................27
Section 6.3. Adequate Assurances Regarding Executory
Contracts................................................28
Section 6.4. Performance Under Assigned Contracts........................28
Section 6.5. Further Assurances..........................................28
Section 6.6. Purchaser Financing.........................................28
Section 6.7. Recording of Lease..........................................29
Section 6.8. Payment of Outstanding Accounts Receivable..................29
ARTICLE VII. CONDITIONS TO SELLER'S OBLIGATIONS.............................29
Section 7.1. Representations and Warranties..............................29
Section 7.2. Compliance with Agreement...................................30
Section 7.3. Consents....................................................30
Section 7.4. Purchaser's Closing Deliveries and
Obligations..............................................30
Section 7.5. Availability of Purchaser Financing.........................30
Section 7.6. Entry of the Order..........................................30
Section 7.7. No Adverse Proceeding.......................................30
Section 7.8. Assignment of Contracts.....................................30
Section 7.9. Payment of Outstanding Accounts Receivable..................30
ARTICLE VIII. CONDITIONS TO PURCHASER'S OBLIGATIONS.........................31
Section 8.1. Representations and Warranties..............................31
Section 8.2. Compliance with Agreement...................................31
Section 8.3. No Adverse Proceeding.......................................31
Section 8.4. Consents....................................................31
Section 8.5. Seller's Closing Deliveries and Obligations.................32
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Section 8.6. Entry of the Order..........................................32
Section 8.7. Assignment of Contracts.....................................32
ARTICLE IX. THE CLOSING; BREAK-UP FEE; TERMINATION..........................32
Section 9.1. The Closing 32
Section 9.2. Break-up Fee 34
Section 9.3. Termination 35
Section 9.4. Effects of Termination......................................36
ARTICLE X. TAXES............................................................36
Section 10.1. Taxes Related to Purchase of Assets........................36
Section 10.2. Proration of Real and Personal Property
Taxes...................................................37
Section 10.3. Cooperation on Tax Matters.................................37
ARTICLE XI. EMPLOYEES AND EMPLOYEE BENEFIT PLANS............................38
Section 11.1. Current Intent Regarding Business
Employees; WARN.........................................38
ARTICLE XII. MISCELLANEOUS PROVISIONS.......................................38
Section 12.1. Representations and Warranties.............................38
Section 12.2. Notices....................................................39
Section 12.3. Amendments.................................................40
Section 12.4. Assignment.................................................40
Section 12.5. Announcements..............................................40
Section 12.6. Expenses...................................................40
Section 12.7. Entire Agreement...........................................40
Section 12.8. Descriptive Headings.......................................41
Section 12.9. Counterparts...............................................41
Section 12.10. Governing Law; Jurisdiction...............................41
Section 12.11. Construction..............................................41
Section 12.12. Severability..............................................42
Section 12.13. Confidentiality...........................................42
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SCHEDULE
LETTER/NUMBER SCHEDULE NAME
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Schedule A Fixed Assets
Schedule B-1 Inventory
Schedule B-2 Purchased Inventory
Schedule B-3 In-transit Inventory Purchase Orders
Schedule B-4 In-transit Inventory
Schedule C Other Contracts
Schedule D Auto Parts Finance Company Notes
Schedule E Accounts Receivable
2.3 Deposits
3.3 Consents and Approvals
3.7 Assigned Contracts
3.5 Permits
3.8 Collective Bargaining Agreements
3.10 Litigation
4.4 Financing Agreements
4.8 Disputed Purchaser Obligations
EXHIBIT EXHIBIT NAME
A Assignment and Assumption Agreement
B Bill of Sale and Assumption Agreement
C Order
D Form of Services Agreement
E Form of Note
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of September 17, 1998 between American Parts Systems, Inc., a
Delaware corporation, and a debtor and debtor-in-possession in a case pending
under chapter 11 of the Bankruptcy Code, and its affiliates Autoparts Finance
Company, Inc. ("AFCO"), A.P.S., Inc., APS Management Services, Inc. and Parts,
Inc.(all such entities collectively, "Seller") a Delaware corporation and a
debtor and debtor-in-possession in a case pending under chapter 11 of the
Bankruptcy Code, and Rankin Automotive Group, Inc., a Louisiana corporation
("Purchaser").
RECITALS
WHEREAS, Seller is engaged in the business of selling and
distributing automotive replacement parts, accessories and supplies and operates
a distribution center located in leased premises in Monroe, Louisiana (the
"Business Location");
WHEREAS, AFCO is engaged in the business of providing
financing to Seller's customers and is the owner of certain notes associated
with loans made to customers of the Business Location;
WHEREAS, on February 2, 1998, Seller filed a voluntary
petition with the Bankruptcy Court initiating a case under chapter 11 of the
Bankruptcy Code and has continued in the possession of its assets and in the
management of its business pursuant to sections 1107 and 1008 of the Bankruptcy
Code;
WHEREAS, Purchaser desires to purchase from Seller, and Seller
desires to sell to Purchaser, certain of the assets associated with the Seller's
operations at the Business Location, subject to certain liabilities, all on the
terms and subject to the conditions set forth herein; and
WHEREAS, in connection with its contemplated purchase of
assets, Purchaser desires to conduct business at the Business Location and: (i)
to hire substantially all of Seller's employees currently employed at the
Business Location; and (ii) for a limited time after the Closing Date, to (a)
obtain limited access to Seller's Parts Information Management System and (b)
obtain certain related services from Seller, all on the terms and subject to the
conditions set forth herein and in the Ancillary Agreements.
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NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 DEFINITIONS. Unless otherwise defined herein, the
terms defined in the introductory paragraph and the Recitals to this Agreement
shall have the respective meanings specified therein, and the following terms
shall have the meanings specified below:
"ACCOUNTS RECEIVABLE" means all customer accounts receivable
allocable to the Business, as well as all customer accounts receivable
assigned to the Business from the Seller's Jackson, Mississippi
Distribution Center and all rights to bill customers for products
shipped or services rendered on or prior to the Closing Date, as
described in Schedule E annexed hereto, provided, however that Accounts
Receivable shall not include: (i) any accounts receivable owing from
Purchaser to Seller or its affiliates; or (ii) any accounts receivable
that are allocable to jobbers that, as of the Closing Date, no longer
purchase their inventory from Seller.
"AFCO" has the meaning set forth in the preamble.
"AFFILIATE" means "affiliate" as defined in Rule 405
promulgated under the Securities Act of 1933, as amended.
"AGREEMENT" has the meaning set forth in the preamble and
shall include all Schedules and Exhibits hereto.
"ALTERNATIVE TRANSACTION" has the meaning set forth in
SECTION 9.2.
"ANCILLARY AGREEMENTS" means, collectively, the Assignment and
Assumption Agreements, the Bill of Sale and Assumption Agreement the
Services Agreement and the Note.
"APPORTIONMENT DATE" has the meaning set forth in SECTION 2.8.
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"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the form of
Assignment and Assumption Agreement to be executed at Closing by
Purchaser and Seller for each of the Assigned Contracts, in
substantially the form attached hereto as EXHIBIT A.
"ASSIGNED CONTRACTS" means the Lease and the Other Contracts
to be assigned by Seller to Purchaser and set forth on Schedule 3.7.
"ASSUMED LIABILITIES" has the meaning set forth in
SECTION 2.2.
"AUDIT" has the meaning set forth in SECTION 5.10.
"AUTO PARTS FINANCE COMPANY NOTES" means those notes listed on
SCHEDULE D annexed to this Agreement that are current and performing.
"BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, and codified as 11 U.S.C. Section
101, et seq.
"BANKRUPTCY COURT" means the United States Bankruptcy Court
for the District of Delaware, or any other court, having jurisdiction
over the Cases from time to time.
"BILL OF SALE AND ASSUMPTION AGREEMENT" means the Bill of Sale
and Assumption Agreement to be executed at Closing by Purchaser and
Seller in substantially the form attached hereto as EXHIBIT B.
"BOOK VALUE" with respect to Accounts Receivable, means the
net book value of an Account Receivable, as reflected on Seller's books
and records relating to such Account Receivable, including all interest
or finance charges allocable thereto, provided, however that Book Value
shall not include any finance charges allocable to past due Accounts
Receivable as reflected in Seller's records.
"BREAK-UP FEE" has the meaning set forth in Section 9.2.
"BUSINESS" means Seller's business operations conducted at the
Business Location.
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"BUSINESS DAY" means a day, other than a Saturday or a Sunday,
on which commercial banks are not required or authorized to close in
The City of New York.
"BUSINESS EMPLOYEES" means employees of the Seller whose
duties relate primarily to the Business.
"BUSINESS LOCATION" has the meaning set forth in the Recitals
hereto.
"CASES" means the Chapter 11 cases of Seller pending in the
Bankruptcy Court and being jointly administered for procedural purposes
as In re APS Holding Corporation, et. al., Case No. 98-197 (PJW).
"CLOSING" has the meaning set forth in SECTION 9.1.
"CLOSING DATE" has the meaning set forth in SECTION 9.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTED FINANCING" means funds available pursuant to a
written commitment letter or other similar documentation from a
commercial bank or other lending institution, which lender, commitment
letter and other documentation are acceptable to Seller.
"DIP LENDERS" means the financial institutions from time to
time party to the Revolving Credit, Term Loan and Guaranty Agreement.
"DIRTY CORE AND WARRANTY INVENTORY" means any and all used
cores and warranty inventory present at the Business Location on
various specified dates as contemplated by this Agreement.
"ELIGIBLE RECEIVABLES" shall mean all Accounts Receivable
purchased by the Purchaser pursuant to this Agreement and all accounts
receivable generated by Purchaser at the Business Location or otherwise
from the Purchased Assets, on and after the Closing Date and up to and
including the later of the Note Maturity Date or the date on which
Purchaser has paid to Seller all amounts payable by it under the terms
of the Note.
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"EVENT OF DEFAULT" has the meaning assigned to it in the Note.
"EXCESS INVENTORY" means: (i) any New Inventory in excess of
$5,650,000, based on PIMS Inventory Value, on hand at the Business
Location as of the Closing Date; (ii) any Dirty Core and Warranty
Inventory in excess of $350,000, based on PIMS Inventory Value, on hand
at the Business Location as of the Closing Date; and (iii) any
In-transit Inventory in excess of $600,000, based on PIMS Inventory
Value, all as designated by mutual agreement of the Purchaser and the
Seller in the manner described in SECTION 2.3.
"EXCLUDED ASSETS" means all of Seller's assets other than
those specifically defined as Purchased Assets.
"EXECUTORY CONTRACTS" means all Assigned Contracts entered
into by or assigned to Seller before February 2, 1998 and which are
executory or unexpired as of the Closing Date.
"FIXED ASSETS" means, to the extent used in the Business, (i)
all of the machinery, equipment, furniture, fixtures, signs, vehicles
and leasehold improvements located at the Business Location on the
Closing Date and which are owned by Seller, a list of which is attached
as SCHEDULE A, which list shall be updated on the Closing Date, and
(ii) to the extent assignable, any rights of Seller to the warranties,
licenses and other similar rights with respect thereto.
"GAAP" means United States generally accepted accounting
principles, applied on a consistent basis and consistent with Seller's
historical practices, as in effect from time to time.
"GOVERNMENTAL AGENCY" means (a) any international, foreign,
federal, state, county, local or municipal governmental or
administrative agency or political subdivision thereof, (b) any
governmental authority, board, bureau, commission, department or
instrumentality, or (c) any court or administrative tribunal.
"HIGHER OR BETTER OFFER" has the meaning set forth in SECTION
9.2.
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"INVENTORY" means all items of New Inventory and Dirty Core
and Warranty Inventory. SCHEDULE B-1, which shall be prepared in
accordance with SECTION 2.4 hereof and annexed to this Agreement on the
Closing Date, shall set forth a description of the Inventory.
"IN-TRANSIT INVENTORY" means all automotive inventory subject
to open purchase orders relating to the Business (including back
orders) of Seller as of the Closing Date. SCHEDULE B-4 hereto, which
shall be prepared in accordance with SECTION 2.5(c) and annexed hereto
on the Closing Date, shall set forth a description of: (i) all items of
In-transit Inventory; and (ii) the PIMS Inventory Value for each item
of In-transit Inventory, as indicated on the In-transit Inventory
Purchase Orders or on other purchase orders for In-transit Inventory
which may be provided by Seller to Purchaser.
"IN-TRANSIT INVENTORY PURCHASE ORDERS" means: (a) the open
purchase orders annexed to this Agreement as SCHEDULE B-3 on the
Closing Date and relating to In-transit Inventory; and (b) all back
orders of In-transit Inventory received after the Closing Date.
"IRS" means the Internal Revenue Service of the United States
Department of the Treasury.
"KNOWLEDGE" as applied to Seller means the actual knowledge of
the President, Chief Executive Officer or the Chief Financial Officer
of Seller and as applied to Purchaser means the actual knowledge of the
President, the Chief Executive Officer, the Chairman of the Board or
the Chief Financial Officer.
"LEASED PROPERTY" means the premises subject to the Lease.
"LEASE" means the warehouse lease for premises located at 2200
Booth Street, Monroe, Louisiana, 71201 dated as of August 24, 1984
between Seller, as tenant, and Campco of Monroe, Inc., as landlord.
"LIEN" means any mortgage, pledge, security interest, charge
or other encumbrance.
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"MRA" means a merchandise repurchase agreement among Seller,
independent jobbers and a lender, pursuant to which MRA the independent
jobber may return items of Inventory to Seller, typically at a discount
to purchase price. A list of MRAs relating to the Business customers is
included in the schedule of Other Contracts annexed hereto as SCHEDULE
C.
"NEW INVENTORY" means all items of new automotive inventory,
including core charges associated with such inventory, if applicable,
owned by Seller and on hand at the Business Location on various
specified dates as contemplated by this Agreement.
"NOTE" shall have the meaning set forth in Section 2.3(g).
"NOTE MATURITY DATE" shall have the meaning set forth in
Section 2.3(g).
"ORDER" means an order of the Bankruptcy Court, in
substantially the form attached hereto as EXHIBIT C, which order shall
not have been stayed, vacated or otherwise rendered ineffective,
authorizing, among other things, the sale of the Purchased Assets to
Purchaser, the assumption and assignment of the Assigned Contracts to
Purchaser, the transactions contemplated by the Services Agreement, and
all other transactions and agreements contemplated hereby.
"OTHER CONTRACTS" means the contracts which are listed on the
OTHER CONTRACTS SCHEDULE attached hereto as SCHEDULE C, provided,
however that Other Contracts shall not include any product purchase
agreement.
"PERMIT" means any permit, approval, authorization, license,
variance or permission required by a Governmental Agency under any
applicable law.
"PERSON" means any individual, partnership, corporation,
trust, association, limited liability company, Governmental Agency or
other entity.
"PHYSICAL INVENTORY DATE" means the last day of the Physical
Inventory Period.
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"PHYSICAL INVENTORY PERIOD" has the meaning set forth in
SECTION 2.4(a).
"PIMS" means the Parts Information Management System, the
information management system used in operating the Business, limited
access to which may be granted to Purchaser pursuant to the Services
Agreement.
"PIMS INVENTORY VALUE" means the invoice cost to Seller per
item of Inventory (excluding any early payment, cash discount, or
vendor rebate) as shown on PIMS on the Physical Inventory Date.
"PLAN" or "PLANS" has the meaning set forth in SECTION 3.9(a).
"Proceeds Account" has the meaning set forth in
SECTION 2.3(h).
"PURCHASE PRICE" has the meaning set forth in SECTION 2.3.
"PURCHASED ASSETS" means all of the Seller's right, title and
interest in and to the following:
(a) the Purchased Inventory;
(b) the Fixed Assets;
(c) the Assigned Contracts;
(d) records relating primarily to the Purchased
Assets, and copies of personnel files for Business Employees;
(e) to the extent legally assignable, all Permits
required to conduct business at the Business Location;
(f) independent customer lists and other information
and data relating to the independent customers of the Business
at the Business Location;
(g) all deposits (including security deposits) and
prepayments made by Seller under any of the Assigned
Contracts;
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(h) all of the Auto Parts Finance Company Notes;
(i) all of the Accounts Receivable; and
(j) no less than $600,000 of PIMS Inventory Value of
In-transit Inventory;
provided, however, that notwithstanding any of the foregoing provisions
of this definition, the Purchased Assets shall not include any Excluded
Assets.
"PURCHASED INVENTORY" has the meaning set forth in SECTION
2.4(b), a complete list of which Purchased Inventory shall be annexed
to this Agreement as SCHEDULE B-2 on the Closing Date.
"PURCHASER'S OUTSTANDING ACCOUNTS RECEIVABLE" means any and
all obligations, including contingent obligations, and obligations not
due until after the Closing Date of Purchaser to Seller arising under
accounts or agreements entered between Purchaser and Seller, other than
those Accounts Receivable or portions of Accounts Receivable
specifically scheduled on Schedule 4.8 hereto, which items the
Purchaser hereby certifies that it disputes in good faith.
"REJECTED INVENTORY" means those items of New Inventory, the
aggregate value of which shall not exceed $300,000 in PIMS Inventory
Value, that Purchaser in good faith rejects, elects not to purchase and
returns to Seller in the manner contemplated by SECTION 2.3(c) hereof.
"REVOLVING CREDIT, TERM LOAN AND GUARANTY AGREEMENT" means the
Revolving Credit, Term Loan and Guaranty Agreement, dated as of
February 2, 1998, as the same has been and may be amended, among APS
Holding Corporation, Seller, Seller's subsidiaries and the DIP Lenders.
"SCHEDULES" means the various Schedules referred to in this
Agreement delivered separately to Purchaser on or before the date of
this Agreement, except as otherwise specified in this Agreement.
"SERVICES AGREEMENT" means the Services Agreement to be
entered into by Purchaser and Seller at Closing, pursuant to
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which Services Agreement Seller shall render certain services relating
to PIMS to Purchaser for a limited time following the Closing Date, as
contemplated by SECTION 5.7 and substantially in the form attached
hereto as EXHIBIT D.
"TAX RETURN" means any report, return, information return,
filing, claim for refund or other information, including any schedules
or attachments thereto, and any amendments to any of the foregoing
required to be supplied to a taxing authority in connection with Taxes.
"TAXES" means all federal, state, local and foreign taxes,
including income, gross receipts, excise, employment, sales, use,
transfer, license, payroll, franchise, severance, stamp, withholding,
Social Security, unemployment, disability, real property, personal
property, registration, alternative or add-on minimum, estimated or
other tax, including any interest, penalties or additions thereto,
whether disputed or not.
"TRANSACTION TAXES" has the meaning set forth in SECTION 10.1.
ARTICLE III.
SALE AND PURCHASE OF
PURCHASED ASSETS AND
ASSUMPTION OF ASSUMED LIABILITIES
SECTION 2.1. PURCHASE AND SALE OF PURCHASED ASSETS. On the
terms and subject to the conditions set forth in this Agreement, at the Closing
Purchaser shall purchase from Seller and Seller shall sell, transfer, assign,
convey and deliver to Purchaser at the Business Location, all of Seller's right,
title and interest in and to the Purchased Assets provided, however, that Seller
shall be entitled to retain copies of all books and records, in whatever form,
included in the Purchased Assets.
SECTION 2.2. ASSUMPTION OF OBLIGATIONS AND LIABILITIES. On the
terms and subject to the conditions set forth in this Agreement, from and after
the Closing, Purchaser will assume and pay, perform, discharge and be
responsible for all of the following liabilities of Seller (collectively, the
"ASSUMED LIABILITIES"):
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(a) all obligations and liabilities of Seller under the
Assigned Contracts which accrue on and after the Closing Date; and
(b) all obligations and liabilities of Seller relating to the
Leased Property which accrue on and after the Closing Date; and
(c) all obligations and liabilities set forth in Article XI.
Purchaser shall not assume or pay, perform, discharge or be responsible for any
of the obligations or liabilities of Seller other than the Assumed Liabilities.
Without limiting any of Purchaser's obligations under ARTICLE XI hereof with
respect to the Business Employees, Purchaser expressly does not assume any
obligations or liabilities of Seller that arise prior to the Closing Date with
respect to the Business Employees. Seller shall not assume or be responsible for
any obligations or liabilities of Purchaser that arise from and after the
Closing Date with respect to the Business Employees. In addition, Purchaser does
not assume and Seller remains responsible for all obligations and liabilities
related to all rebate and incentive programs established by or for national
accounts, manufacturers, or customers and relating to sales by Seller prior to
the Closing Date.
SECTION 2.3. INVENTORY LEVELS AND PURCHASE PRICE.
(a) On the terms and subject to the conditions set forth in
this Agreement, the purchase price payable by Purchaser to Seller for the
Purchased Assets shall be an aggregate amount equal to the sum of the following,
payable on various dates as described in this SECTION 2.3:
(i) eighty-two percent (82%) of the PIMS Inventory
Value for all of the items of New Inventory to be purchased by
Purchaser in accordance with the terms of this Agreement; plus
(ii) one hundred percent (100%) of the depreciated
book value for the Fixed Assets; plus
(iii) deposits, including security deposits (and
prepayments made by Seller under the Assigned Contracts) as
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set forth in SECTION 2.8 and as specifically described in SCHEDULE 2.3;
plus
(iv) an amount equal to eighty percent (80%) of the
Book Value of any and all of those Accounts Receivable that are less
than thirty-one (31) days old as of the Closing Date; plus
(v) an amount equal to sixty percent (60%) of the
Book Value of any and all of those Accounts Receivable that are greater
than thirty (30) days but less than sixty-one (61) days old as of the
Closing Date; plus
(vi) an amount equal to ten percent (10%) of the
Book Value of any and all of those Accounts Receivable that are greater
than sixty (60) days but less than ninety-one (91) days old as of the
Closing Date; plus
(vii) an amount equal to one hundred percent (100%)
of the outstanding principal balance of the Auto Parts Finance Company
Notes as of the Closing Date, and all accrued interest on the Auto
Parts Finance Company Notes outstanding as of the Closing Date,; plus
(viii) an amount equal to one hundred percent (100%)
of the PIMS Inventory Value for the Dirty Core and Warranty Inventory
to be purchased by Purchaser in accordance with the terms of this
Agreement; plus
(ix) an amount equal to one hundred percent (100%)
of the PIMS Inventory Value for each item of the In-transit Inventory
to be purchased by Purchaser in accordance with the terms of this
Agreement and paid for as contemplated by Section 2.5(c) (the aggregate
of such amounts described in subsections (i) through (ix) hereof
inclusive, the "PURCHASE PRICE").
Purchaser shall receive any and all of those Accounts Receivable that are
greater than ninety (90) days old as of the Closing Date at no cost to the
Purchaser.
(b) On the Closing Date, Purchaser shall pay to Seller an
amount of the Purchase Price in cash, by wire transfer of immediately available
funds (pursuant to written instructions to be provided by Seller to Purchaser),
equal to the sum of those portions of the Purchase Price provided for in
SECTIONS
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2.3(a)(i), 2.3(a)(ii), 2.3(a)(iii), 2.3(a)(vii), 2.3(a)(viii) and 2.3(a)(ix)
hereof (such amount, the "CLOSING DATE PAYMENT").
The Closing Date Payment shall be adjusted, and the remainder of the Purchase
Price shall be paid by the Purchaser, pursuant to SECTIONS 2.3(d), 2.3(e),
2.3(g), 2.3(h), 2.3(j), 2.3(k), 2.4, AND 2.5 hereof.
(c) All Inventory values described in this section are
calculated based on PIMS Inventory Value. On the Closing Date, Purchaser shall
purchase the following Inventory:
(i) subject to the provisions of SECTION 2.3(d)
hereof, no less than $5,650,000 in PIMS Inventory Value of New
Inventory (assuming the existence of sufficient inventories at the
Business Location), at a purchase price equal to eighty-two percent
(82%) of PIMS Inventory Value, provided, however that if there is less
than $5,650,000 of PIMS Inventory Value in New Inventory on hand at the
Business Location as of the Closing Date, Purchaser shall purchase all
items of New Inventory on hand at the Business Location as of the
Closing Date, and Seller shall not have: (x) any liability as a result
of any such shortfall in the amount of New Inventory; or (y) any
obligation to provide Purchaser with additional items of New Inventory;
and
(ii) no less than $350,000 in PIMS Inventory Value
of Dirty Core and Warranty Inventory on hand at the Business Location
as of the Closing Date, at a purchase price equal to one hundred
percent (100%) of PIMS Inventory Value thereof;
(iii) no less than $600,000 in PIMS Inventory Value
of the In-transit Inventory at a purchase price equal to one hundred
percent (100%) of the PIMS Inventory Value in the manner provided for
in SECTION 2.5(c) hereof.
(d) During the Physical Inventory Period, Purchaser may
designate an amount no greater than $300,000 of New Inventory as Rejected
Inventory, provided, however that Purchaser may not designate any item of New
Inventory as Rejected Inventory to the extent that such designation would result
in Purchaser purchasing less than $5,350,000 in PIMS Inventory Value of New
Inventory as required by SECTION 2.3(c)(i) hereof.
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(e) At its sole discretion, Purchaser may purchase any or all
of the Excess Inventory. Purchaser's right to purchase any or all of the Excess
Inventory shall not imply that Purchaser is required to purchase any Inventory
in excess of the Inventory amounts described in SECTION 2.3(c) hereof.
(f) The Closing Date Payment shall be payable on the Closing
Date by wire transfer of immediately available funds, pursuant to written
instructions to be provided by Seller to Purchaser.
(g) On or prior to the Closing Date, Purchaser shall execute a
note, substantially in the form set forth in EXHIBIT E attached hereto, in an
aggregate principal amount equal to the sum of the amounts described in SECTIONS
2.3(a)(iv), 2.3 (a)(v), and 2.3(a)(vi) hereof (the "Note"), which Note shall:
(i) be secured by a first lien on the Accounts Receivable pursuant to the terms
of the Note; (ii) be payable without defense, offset or counterclaim of any kind
including claims arising under this Agreement and irrespective of any inability
of Purchaser to collect payment in connection with any or all of the Accounts
Receivable; (iii) bear interest at a rate of ten percent (10%) on the
outstanding principal amount per annum; (iv) be amortized by any and all amounts
received by Seller on Eligible Receivables pursuant to SECTION 2.3(h), 2.3(i)
and 2.3(j) hereof, according to the terms of the Note; and (v) mature no later
than thirty (30) Business Days from the Closing Date of this Agreement (the
"Note Maturity Date").
(h) No later than five (5) Business Days prior to the Closing
Date, the parties shall cooperate in good faith to invoice all account debtors
liable for Eligible Receivables with respect to Eligible Receivables by
utilizing invoices containing a legend instructing such account debtors to make
all payments on account of Eligible Receivables to Purchaser at 2200 Booth
Street, Monroe, Louisiana 71201, as of the proposed Closing Date, and for a
period ending on the Note Maturity Date. During the period beginning on the
Closing Date and ending on the later of the Note Maturity Date or the date on
which Purchaser has paid to Seller all amounts payable by it under the terms of
the Note, the Seller shall on each Business Day: (i) account to the Purchaser
for any amounts received by Purchaser with respect to Eligible Receivables
during such Business Day; and (ii) shall pay to Seller by bank check all such
amounts received on such Business Day by delivering such payment to Seller via
overnight courier.
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Purchaser shall deposit any and all amounts it receives that relate to Eligible
Receivables in a separate, segregated account, which Purchaser shall establish
no later than five (5) Business Days prior to the Closing Date of the Asset
Purchase Agreement and which shall not contain any funds other than amounts that
relate to Eligible Receivables (the "Proceeds Account"). No later than
twenty-four hours after Purchaser's establishment of the Proceeds Account,
Purchaser shall provide Seller with any and all information necessary for Seller
to identify the Proceeds Account and the name, address, telephone number and ABA
number of the bank in which the Proceeds Account is held.
(i) Throughout the period from the Closing Date to the later
of the Note Maturity Date or the date on which Purchaser has paid to Seller all
amounts payable by it under the terms of the Note, Purchaser shall afford to one
representative of Seller, as designated by Seller in it sole discretion, full
access to all books, records and all other information or data relating to the
Eligible Receivables and proceeds thereof, including, but not limited to, the
payment and collection thereof, held by the Purchaser relating to the Eligible
Receivables and proceeds thereof.
(j) On the occurrence of an Event of Default (as defined in
the Note), Seller shall have the right to: (i) notify all account debtors liable
for Eligible Receivables to make all payments with respect to such Eligible
Receivables to Seller; and (ii) receive, endorse, assign and/or deliver in the
name of Seller or the Purchaser any and all checks, drafts and other instruments
for the payment of money relating to the Eligible Receivables and the Purchaser
hereby waives notice of presentment, protest and non-payment of any instrument
so endorsed. The Purchaser hereby constitutes Seller or Seller's designee as the
Purchaser's attorney with power at any time: (i) to endorse the Purchaser's name
upon any notes, acceptances, checks, drafts, money orders or other evidences of
payment with respect to the Eligible Receivables; (ii) to sign the Purchaser's
name on any invoice or bill of lading relating to any of the Eligible
Receivables, drafts against account debtors under the Eligible Receivables,
assignments and verifications of Eligible Receivables; and (iii) to do all other
acts and things necessary to carry out the terms of this Agreement. All acts of
said attorney or designee are hereby ratified and approved, and said attorney or
designee shall not be liable for any acts of omission or commission nor for any
error of judgment or mistake of fact or
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of law, unless done maliciously or with gross (not mere) negligence; this power
being coupled with an interest is irrevocable while any portion of the Note
remains outstanding.
(k) Subject to the provisions of SECTION 2.3(j) hereof, in the
event any proceeds of Accounts Receivable are received by Seller subsequent to
the Closing Date, Seller shall promptly credit such proceeds against any amounts
due and owing from Purchaser to Seller under the terms of the Note, provided,
however that, to the extent Seller receives proceeds of Accounts Receivable in
excess of the aggregate of all amounts payable under the Note from Purchaser to
Seller, Seller shall promptly deliver such excess proceeds to Purchaser. In
connection therewith, within twenty-four (24) hours of Seller's receipt of any
such proceeds, Seller shall fax to Purchaser a copy of the check or other
payment instrument, as well as a copy of any and all accompanying documentation.
(l) Nothing in this Agreement shall relieve, or be construed
as relieving, Purchaser from its obligation to make payments to Seller under
Purchaser's Outstanding Accounts Receivable on such dates and in such amounts as
provided in the instruments or invoices governing Purchaser's Outstanding
Accounts Receivable. On or prior to the Closing Date, Purchaser shall have made
all payments due to Seller on or prior to the Closing Date under Purchaser's
Outstanding Accounts Receivable on such dates and in such amounts as provided in
the instruments or invoices governing Purchaser's Outstanding Accounts
Receivable. Purchaser hereby affirms that Purchaser shall make payments to
Seller of any and all amounts due after the Closing Date under Purchaser's
Outstanding Accounts Receivable on the dates prescribed in the instruments
governing Purchaser's Outstanding Accounts Receivable.
SECTION 2.4. PHYSICAL INVENTORY; DETERMINATION OF PURCHASED
INVENTORY.
(a) Commencing on or about 5:00 p.m. on the Friday immediately
preceding the date on which the Bankruptcy Court is scheduled to hold a hearing
on the motion seeking entry of the Order and continuing over the next two days
(the "PHYSICAL INVENTORY PERIOD"), employees or representatives of Seller and
Purchaser will jointly conduct a physical inventory count of the Inventory and
the Fixed Assets at the Business Location. A written, itemized list setting
forth specifically all such items
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of Inventory physically accounted for shall be prepared by Seller with the
assistance of Purchaser, and shall, on the Closing Date, be attached hereto as
SCHEDULE B-1, with such revisions made by Seller with the assistance of
Purchaser as are necessary to reflect any changes in the Inventory that occur
during the period commencing immediately after the Physical Inventory Date and
ending on the Closing Date. Seller and Purchaser shall each bear their own costs
associated with conducting the Physical Inventory.
(b) At the completion of the physical inventory conducted
pursuant to SECTION 2.4(a), Purchaser shall prepare a list of Inventory to be
purchased in accordance with the provisions of this Agreement, including any
Excess Inventory that it intends to purchase in accordance with the provisions
of this Agreement (such items of Inventory, collectively, the "PURCHASED
INVENTORY"), which list shall be: (i) adjusted as of the Closing Date by Seller
with the assistance of Purchaser to reflect changes in the Purchased Inventory
that occur during the period commencing immediately after the Physical Inventory
Date and ending on the Closing Date; and (ii) attached to this Agreement on the
Closing Date as SCHEDULE B-2.
SECTION 2.5. CONDITION OF PURCHASED ASSETS; RETURN OF
INVENTORY; INVENTORY IN TRANSIT
(a) Except for the warranty of title set forth in SECTION 3.6,
the Purchased Assets are being sold "AS IS," "WHERE IS" and "WITH ALL FAULTS"
and Seller hereby expressly disclaims any and all other warranties both express
and implied.
(b) The Rejected Inventory and Excess Inventory not purchased
by Purchaser shall be removed from the Business Location by Seller within ten
(10) Business Days after the Closing Date at the Seller's expense.
(c) At least five (5) Business Days prior to the Closing Date,
Seller shall present to Purchaser a written itemized list setting forth a
description of: (i) all items of In-transit Inventory; and (ii) the PIMS
Inventory Value for each item of In-transit Inventory, as indicated on the
In-transit Inventory Purchase Orders or on other purchase orders for In-transit
Inventory which may be provided by Seller to Purchaser (the "IN-TRANSIT
INVENTORY SCHEDULE"). THE In-transit Inventory Schedule shall be: (i) adjusted
as of the Closing Date to reflect
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any changes to the In-transit Inventory that occur after the preparation of the
In-transit Inventory Schedule but prior to the Closing Date; and (ii) attached
to this Agreement as SCHEDULE B-4. On the Closing Date, Purchaser shall remit to
Seller an amount equal to one hundred percent (100%) of the PIMS Inventory Value
for each item of In-transit Inventory.
(d) Purchaser shall allow employees or representatives
designated by Seller to be present at the Business Location during normal
business hours for a period of thirty (30) Business Days following the Closing
Date for the purpose of determining items of In-transit Inventory which arrive
at the Business Location after the Closing Date. At any time after the Closing
Date, upon its receipt of any item of In-transit Inventory that is also an item
of Excess Inventory under this Agreement, Purchaser shall: (i) no later than
twenty-four (24) hours after its receipt of such item, notify Seller of such
receipt; and (ii) no later than forty-eight (48) hours after its receipt of such
item, deliver such item to Seller at such address and in such manner as set
forth in written instructions provided by a representative or employee of Seller
to Purchaser.
(e) No later than forty (40) Business Days after the Closing
Date, Purchaser and Seller shall in good faith jointly determine, and Seller
shall pay to Purchaser, the excess, if any, of the purchase price of (i)
In-Transit Inventory set forth on the In-Transit Inventory Schedule, as adjusted
as of the Closing Date, over (ii) (a) In-Transit Inventory actually received at
the Business Location as of such date plus (b) any items of In-Transit Inventory
reasonably expected to be received at the Business Location within a reasonable
period of time thereafter.
SECTION 2.6. ALLOCATION OF PURCHASE PRICE. To the extent
required by law after the Closing Date, Purchaser and Seller shall prepare and
file those statements or forms (including Form 8594) required by Section 1060 of
the Code and the Treasury regulations thereunder and shall file such statements
or forms with their respective federal income Tax Returns. The parties shall
prepare such statements or forms consistently with any agreed allocation of all
or a portion of the Purchase Price to the Purchased Assets. Each party shall
provide the other party with a copy of such statements or forms as filed. Such
allocation of the Purchase Price will not be binding in the Cases upon the
Seller's creditors or other parties in interest and will not have precedential
value with respect to
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any allocations of value contained in a plan or plans under chapter 11 of the
Bankruptcy Code involving Seller.
SECTION 2.7. SALE AT CLOSING DATE. The sale, transfer,
assignment and delivery by Seller of the Purchased Assets to Purchaser, and the
assumption by Purchaser of the Assumed Liabilities, as herein provided shall be
effected on the Closing Date by (a) the execution and delivery by Seller and
Purchaser of an Assignment and Assumption Agreement for the Lease and each of
the Other Contracts substantially in the form of EXHIBIT A, pursuant to which
Assignment and Assumption Agreements Purchaser shall be subject to all
liabilities and obligations under the Assigned Contracts which accrue after the
Closing Date, and (b) with respect to the other Purchased Assets and Assumed
Liabilities, by the execution and delivery by the Seller and Purchaser of the
Bill of Sale and Assumption Agreement substantially in the form of EXHIBIT B.
SECTION 2.8. APPORTIONMENTS. The following amounts are to be
apportioned as of 12:00 midnight on the day preceding the Closing Date (the
"APPORTIONMENT DATE") to the extent such are valid post-petition claims or are
subject to non-avoidable liens: (i) water, sewer and utility charges and real
estate taxes, to the extent all or any are payable under the Lease; and (ii)
such other apportionments and adjustments as are customarily apportioned in
transactions of this nature. Except as otherwise provided herein, all prorations
shall be made on the basis of actual bills, to the extent available, or, in the
absence of such actual bills, on good faith estimates of Seller based on the
most recent bill received by Seller. All prorations shall be adjusted within ten
(10) Business Days of Seller's receipt of the final bills.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to SECTION 3.12, the Seller represents and warrants to
Purchaser as follows:
SECTION 3.1. AUTHORITY OF SELLER. Seller is a corporation
validly existing and in good standing under the laws of the State of Delaware.
Seller has full corporate power and authority to execute and deliver this
Agreement and each of the Ancillary Agreements, and the execution and delivery
by each
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Seller of this Agreement and the Ancillary Agreements and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Seller, and this
Agreement constitutes, and each of the Ancillary Agreements upon its execution
will constitute, the legal, valid and binding obligation of Seller enforceable
in accordance with its terms, subject to receipt of the Order and the receipt of
the consents, waivers and approvals specified on SCHEDULE 3.3. Subject to any
necessary authorization from the Bankruptcy Court, Seller has full corporate
power and authority to own its properties and to carry on the Business at the
Business Location presently being conducted by it.
SECTION 3.2. NO CONFLICT OR VIOLATION. The execution, delivery
and performance by Seller of this Agreement and the Ancillary Agreements do not
and will not violate or conflict with any provision of the Certificate of
Incorporation or By-laws of Seller and, assuming that the consents, waivers,
authorizations, approvals, declarations, filings and registrations referred to
in SECTION 3.3 are obtained or made, do not and will not violate or result in a
material breach of or constitute (with due notice or lapse of time or both) a
material default under any Assigned Contract.
SECTION 3.3. CONSENTS AND APPROVALS. Schedule 3.3 sets forth a
true and complete list of each material consent, waiver, authorization or
approval of any Person in connection with any Assigned Contract that, to the
extent the requirements of Section 365 of the Bankruptcy Code are not met in
connection with the assignment of any Assigned Contract, is required for the
execution and delivery of this Agreement by Seller or the performance by Seller
of its obligations hereunder.
SECTION 3.4. COMPLIANCE WITH LAW. Except as set forth on
SCHEDULE 3.4, to Seller's Knowledge Seller has not received written notice of
any violation of any law, regulation, order or other legal requirement, and is
not in default in any material respect under any order, writ, judgment, award,
injunction or decree of any Governmental Agency, applicable to the Purchased
Assets.
SECTION 3.5. PERMITS. Set forth on SCHEDULE 3.5 is a list of
permits relating to the operation of Seller's business at
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the Business Location, which permits have been provided or made available to
Purchaser by Seller.
SECTION 3.6. OWNERSHIP OF PURCHASED ASSETS. Other than the
real property subject to the Lease and any items of property subject to the
Other Contracts, Seller is the owner of the Purchased Assets. Subject to the
issuance of the Order, Seller has, and, subject to the Seller's lien on the
Accounts Receivable as described in SECTION 2.3(g) hereof and EXHIBIT A attached
hereto, at the Closing Buyer will receive, good title to all such Purchased
Assets, free and clear of any Liens, provided however, that Seller makes no
representation or warranty as to the existence or absence of any Lien: (i) on
the real property subject to the Lease; (ii) on any items of property subject to
the Other Contracts.
SECTION 3.7. ASSIGNED CONTRACTS. True and complete copies of
the Assigned Contracts listed on SCHEDULE 3.7 have been provided or made
available by Seller to Purchaser. Other than as set forth on SCHEDULE 3.7 or in
motions filed with the Bankruptcy Court, neither Seller nor, to Seller's
Knowledge, any other party under any of the Assigned Contracts, has commenced
any action against the other or given or received any written notice of any
material default or violation under any Assigned Contract which was not
withdrawn or dismissed, except only for those defaults which will be cured in
accordance with the Order (or which need not be cured under the Bankruptcy Code
to permit the assumption and assignment of Executory Contracts). The Lease and
each of the other Assigned Contracts listed on SCHEDULE 3.7 is or will be at the
Closing valid, binding and in full force and effect as against Seller, except as
otherwise set forth on SCHEDULE 3.7 or SCHEDULE C.
SECTION 3.8. LABOR RELATIONS. Except as set forth on SCHEDULE
3.8, Seller is not party to any collective bargaining agreement covering
Business Employees. To Seller's Knowledge, no organizational effort is presently
being made or threatened in writing by or on behalf of any labor union with
respect to Business Employees.
SECTION 3.9. LITIGATION. Other than in connection with the
Cases and except as set forth on SCHEDULE 3.9, there are no actions, causes of
action, claims, suits or proceedings pending or, to Seller's Knowledge,
threatened against Seller
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which seek to restrain or enjoin the consummation of the transactions
contemplated hereby.
SECTION 3.10. BROKERS. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
Seller without the intervention of any other Person acting on Seller's behalf in
such manner as to give rise to any valid claim by any such Person against
Purchaser for a finder's fee, brokerage commission or other similar payment
based on an arrangement with Seller.
SECTION 3.11. DISCLAIMER OF ADDITIONAL REPRESENTATIONS AND
WARRANTIES; SCHEDULES.
(a) Except as expressly set forth in this Agreement, the
Schedules and Exhibits hereto, the Ancillary Agreements, and any certificate or
instrument delivered pursuant to the terms hereof or thereof, Seller makes no
representations or warranties with respect to the Business, or its operations,
assets (including, without limitation, the Purchased Assets), liabilities
(including, without limitation, the Assumed Liabilities) or conditions,
including, with respect to the Purchased Assets, any representation or warranty
of merchantability, suitability or fitness for a particular purpose, or quality
as to the Purchased Assets, or any part thereof, or as to the condition or
workmanship thereof, or the absence of any defects therein, whether latent or
patent. Except as provided in this Agreement, the Schedules and Exhibits hereto,
the Ancillary Agreements, and any other certificate or instrument delivered
pursuant to the terms hereof or thereof, the Purchased Assets are to be conveyed
hereunder "AS IS," "WHERE IS" and "WITH ALL FAULTS" on the date hereof and in
their present condition, subject to reasonable use, wear and tear between the
date hereof and the Closing Date, and Purchaser shall rely upon its own
examination thereof.
(b) Any item disclosed on any one Schedule shall be deemed to
be disclosed on each Schedule, where relevant. Disclosure of an item in any
Schedule shall not be deemed to be an admission that such item is material.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
SECTION 4.1. AUTHORITY OF PURCHASER. Purchaser is a
corporation, validly existing, and in good standing under the laws of the State
of Louisiana. Purchaser has full corporate power and authority to execute and
deliver this Agreement, and the execution and delivery by Purchaser of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of
Purchaser, and this Agreement constitutes the legal, valid and binding
obligation of Purchaser enforceable in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium, or
similar laws from time to time in effect which affect creditors' rights
generally, and by legal and equitable limitations on the enforceability of
specific remedies. Purchaser has full corporate power and authority to own its
properties and to carry on the business presently being conducted by it.
SECTION 4.2. NO CONFLICT OR VIOLATION. The execution, delivery
and performance by Purchaser of this Agreement and the Ancillary Agreements do
not and will not violate or conflict with any provision of the Certificate of
Incorporation or By-laws of Purchaser and do not and will not violate any
provision of law, or any order, judgment or decree of any court or other
Governmental Agency applicable to Purchaser, or violate or result in a material
breach of or constitute (with due notice or lapse of time or both) a default
under any loan agreement, mortgage, security agreement, indenture or other
instrument to which Purchaser is a party or by which it is bound.
SECTION 4.3. CONSENTS AND APPROVALS. The execution, delivery
and performance by Purchaser of this Agreement do not require the consent or
approval of, or filing with, any Governmental Agency or other entity or person
except: (i) as may be required to effect the transfer of any Permits; or (ii)
such consents, approvals and filings, the failure to obtain or make which would
not, individually or in the aggregate, have a material adverse effect on its
ability to consummate the transactions contemplated hereby.
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SECTION 4.4. AVAILABILITY OF FUNDS. Purchaser has obtained
Committed Financing as described on SCHEDULE 4.4 hereto, sufficient to allow it
to pay the Purchase Price at the times and in the manner set forth in this
Agreement and to satisfy all its other obligations under this Agreement, and on
the date of this Agreement Purchaser has provided Seller with all documentation
relating to such Committed Financing.
SECTION 4.5. LITIGATION. There are no actions, causes of
action, claims, suits, proceedings, orders, writs, injunctions, or decrees
pending or, to the knowledge of Purchaser, threatened against Purchaser at law
or in equity or before or by any governmental agency, which seek to restrain or
enjoin the consummation of the transactions contemplated hereby or that could
otherwise adversely affect the ability of Purchaser to perform its obligations
hereunder.
SECTION 4.6. BROKERS. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
Purchaser without the intervention of any other person acting on its behalf in
such manner as to give rise to any valid claim by any such person against the
Seller or their Affiliates for a finder's fee, brokerage commission or other
similar payment based on an arrangement with Purchaser.
SECTION 4.7. ADEQUATE ASSURANCES REGARDING EXECUTORY
CONTRACTS. Purchaser is and will be capable of satisfying the conditions
contained in sections 365(b)(1)(c) and (f) of the Bankruptcy Code with respect
to the Executory Contracts.
SECTION 4.8. GOOD FAITH DISPUTE. All obligations of Purchaser
to Seller listed on Schedule 4.8 hereto are disputed by Purchaser in good faith.
Schedule 4.8 shall be revised as of the Closing Date solely to include such
further obligations, if any, arising only from accounts receivable which arise
subsequent to the date of this Agreement, as to which the Purchaser shall
further certify that it disputes in good faith.
SECTION 4.9. SECURITY INTEREST. The Note is effective to
create in favor of the Seller legal, valid and enforceable security interests in
the Accounts Receivable and the proceeds thereof, and when financing statements
in appropriate form are filed according to applicable state law, each such
security interest will constitute a fully perfected lien on, and security
interest in, all right, title and interest of the Purchaser in
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the Accounts Receivable and the proceeds thereof, as security for the
obligations of the Purchaser under the Note, in each case prior and superior in
right to any other Person.
ARTICLE V.
CERTAIN COVENANTS OF SELLER
Seller covenants with Purchaser that from and after the date
hereof through the Closing Date:
SECTION 5.1. CONDUCT OF BUSINESS BEFORE THE CLOSING DATE.
Unless otherwise ordered by the Bankruptcy Court sua sponte or on motion by a
third party, Seller shall not, except as required or expressly permitted
pursuant to the terms hereof, make any material change in the Fixed Assets or
enter into any transaction respecting the Purchased Assets, other than (a) sales
of Inventory in the ordinary course of the Business in the Cases, or (b) other
transactions in the ordinary course of the Business in the Cases, in either case
substantially consistent with Seller's past practices or as otherwise
contemplated by this Agreement.
SECTION 5.2. CONSENTS AND APPROVALS. Subject to Section 9.2
and Seller's right to accept a higher or otherwise better offer, Seller shall
use commercially reasonable efforts to obtain (i) entry of the Order by the
Bankruptcy Court and (ii) the requisite consent or consents of the DIP Lenders
to this Agreement and the transactions contemplated hereby.
SECTION 5.3. INFORMATION AND ACCESS. Seller will permit
representatives of Purchaser to have reasonable access during normal business
hours after reasonable notice from Purchaser to Seller, and in a manner so as
not to interfere with the normal operations, to all premises, properties,
personnel, accountants, books, records, contracts and documents of or pertaining
to the Purchased Assets. Purchaser and each of its representatives will treat
and hold such information as confidential. Purchaser shall indemnify, defend and
hold harmless Seller, the lessor under the Lease and their respective Affiliates
from and against any and all claims, demands, causes of action, losses, damages,
liabilities, cost and expenses (including, without limitation, attorneys' fees
and disbursements), suffered or incurred by such Persons in
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connection with (i) Purchaser's and/or Purchaser's representatives' entry upon
the Leased Property, or (ii) any and all other activities undertaken by
Purchaser or Purchaser's representatives pursuant to this SECTION 5.3. The
parties hereto agree and acknowledge that the Purchaser's obligations hereunder
shall not be subject to any "due diligence" condition.
SECTION 5.4. FURTHER ASSURANCES. Upon the request of Purchaser
at any time after the Closing Date, to the extent that Seller is able to comply
with the requirements of this section, Seller shall forthwith execute and
deliver such documents as Purchaser or its counsel may reasonably request to
effectuate the purposes of this Agreement.
SECTION 5.5. REASONABLE EFFORTS. Upon the terms and subject to
the conditions of this Agreement, Seller will use commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary or proper consistent with applicable law to
consummate and make effective in the most expeditious manner practicable the
transactions contemplated hereby.
SECTION 5.6. ASSIGNMENT OF CONTRACTS. Seller shall use
commercially reasonable efforts to obtain from the Bankruptcy Court an order
authorizing Seller, effective on the Closing Date, to assume, cure all defaults,
and assign the Assigned Contracts to Purchaser.
SECTION 5.7. SERVICES TO BE PROVIDED BY SELLER. On the Closing
Date, Seller shall enter into the Services Agreement with Purchaser, pursuant to
which Services Agreement, among other things, Purchaser shall be licensed, for a
limited time, to use the PIMS.
SECTION 5.8. CURE OF DEFAULTS. Seller shall (i) cure any
default in base rental payments arising under the Lease and outstanding as of
the Closing Date; and (ii) use commercially reasonable efforts to cure any and
all other defaults with respect to the Assigned Contracts, as provided in
Section 365 of the Bankruptcy Code, so that such Assigned Contracts may be
assigned to Purchaser in accordance with the provisions of section 365 of the
Bankruptcy Code.
SECTION 5.9. BANKRUPTCY ACTIONS. No later than five (5)
Business Days after the date hereof, Seller will file a motion with an attached
proposed order, reasonably acceptable to
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Seller and Purchaser seeking approval of the terms of this Agreement.
SECTION 5.10. AUDIT OF OPERATIONS AT BUSINESS LOCATION. No
later than sixty-five (65) days following the Closing Date Seller shall obtain
from its accounting firm an audit of the business operations relating
exclusively to the Business Location (separate from Seller's other business
operations), and including profit and loss statements and balance sheets and
such other documentation and financial information regarding Seller's operations
related to the Business Location to the extent necessary to allow Purchaser to
include in its Form 8K, Form 8K-A and a registration statement filed by the
Purchaser pursuant to the Securities Act of 1933 the financial statements of the
Business to the extent required by the federal securities laws (the "AUDIT").
All costs arising in connection with the Audit shall be borne equally between
Purchaser and Seller. Within ten (10) days of the completion of the Audit,
Purchaser shall pay Seller in full its share of such costs.
SECTION 5.11. SEVERANCE; VACATION AND SICK LEAVE. Seller shall
otherwise indemnify and hold Purchaser harmless, to the extent Purchaser is not
otherwise liable, on account of any claim by any Business Employees with respect
to any amounts owed to such Business Employees for severance or unused vacation
and sick leave earned as of the Closing Date.
ARTICLE VI.
CERTAIN COVENANTS OF PURCHASER
SECTION 6.1. REASONABLE EFFORTS. Upon the terms and subject to
the conditions of this Agreement, Purchaser will use commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary or proper consistent with applicable law to
consummate and make effective in the most expeditious manner practicable the
transactions contemplated hereby.
SECTION 6.2. CONSENTS AND APPROVALS. Purchaser shall use
commercially reasonable efforts to (i) provide, at Seller's request, assistance
in obtaining the Order and (ii) assist Seller in obtaining Bankruptcy Court
approval for assignment of the Assigned Contracts.
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SECTION 6.3. ADEQUATE ASSURANCES REGARDING EXECUTORY
CONTRACTS. With respect to each Executory Contract, Purchaser shall provide
adequate assurance as required under the Bankruptcy Code of the future
performance of such Executory Contract by Purchaser. Purchaser agrees that it
will promptly take all actions as are reasonably required by Seller to assist in
obtaining the Bankruptcy Court's entry of the Order, such as furnishing
affidavits, non-confidential financial information or other documents or
information for filing with the Bankruptcy Court and making Purchaser's
employees and representatives available to testify before the Bankruptcy Court,
with respect to demonstrating adequate assurance of future performance by
Purchaser under the Executory Contracts.
SECTION 6.4. PERFORMANCE UNDER ASSIGNED CONTRACTS. Purchaser
agrees that from and after the Closing Date it shall (i) assume all obligations
and liabilities under the Assigned Contracts which accrue after the Closing
Date, (ii) take all actions necessary to satisfy its obligations under the terms
and conditions of each of the Assigned Contracts and (iii) indemnify and hold
harmless Seller for any damages arising out of a breach of this covenant.
SECTION 6.5. FURTHER ASSURANCES. Upon the request of Seller at
any time after the Closing Date, Purchaser shall forthwith execute and deliver
such documents as Seller or its counsel may reasonably request to effectuate the
purposes of this Agreement. Purchaser shall: (i) no later than five (5) Business
Days prior to the Closing Date of the Asset Purchase Agreement, deliver and
execute or cause to be delivered and executed, in form and content satisfactory
to the Seller, any financing statements, notices, and other documents required
to create and perfect a first priority security interest in the Accounts
Receivable; (ii) pay the costs, on or prior to the times such amounts are due,
of filing or recording any financing statements, notices, and other documents in
all public offices deemed necessary by the Seller, as well as any recordation,
documentary, or transfer taxes required by law to be paid in connection with
such filing or recording; and (iii) do such other acts as the Seller may
reasonably request in order to perfect, preserve, maintain, or continue the
perfection of the Seller's security interest in the Accounts Receivable and / or
its first priority.
SECTION 6.6. PURCHASER FINANCING. Purchaser shall, from the
date of this Agreement until and including the Closing
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Date, maintain the availability of funds pursuant to the Committed Financing set
forth on SCHEDULE 4.4, and, in the event that such financing becomes
unavailable, shall (i) obtain alternative Committed Financing and (ii) in the
event that Purchaser is unable to obtain such alternative Committed Financing,
accept such alternative financing as may be arranged by Seller, provided that
such Seller arranged financing is on terms no less favorable to Purchaser than
the Committed Financing set forth on SCHEDULE 4.4 (it being understood that
Seller shall be under no obligation to obtain alternative financing for
Purchaser).
SECTION 6.7. RECORDING OF LEASE. Within ten (10) Business Days
after the Closing Date, Purchaser shall file a copy of the Lease for recording
with the District Court Clerk of Ouachita, Louisiana in accordance with the
relevant laws of Louisiana governing assignment of real property leases and
shall request that a confirmation copy of such filing be delivered to Seller.
SECTION 6.8. PAYMENT OF OUTSTANDING ACCOUNTS RECEIVABLE.
Following the Closing Date, Purchaser shall pay Seller any and all amounts due
under Purchaser's Outstanding Accounts Receivable on such dates and in such
amounts as prescribed in the instruments governing Purchaser's Outstanding
Accounts Receivable.
ARTICLE VII.
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions
contemplated by this Agreement are subject to the satisfaction (unless waived in
writing by Seller upon consultation with, and with the consent of, the required
DIP Lenders) of each of the following conditions on or prior to the Closing
Date:
SECTION 7.1. REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Purchaser contained in this Agreement shall be
true on and as of the Closing Date in all material respects as though such
representations and warranties were made on and as of the Closing Date.
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SECTION 7.2. COMPLIANCE WITH AGREEMENT. Purchaser shall have
performed and complied in all material respects (and in all respects in the case
of Article II hereof) with all covenants and conditions to be performed or
complied with by it on or prior to the Closing Date.
SECTION 7.3. CONSENTS. Other than the Bankruptcy Court's entry
of the Order (which is addressed in SECTION 7.6), (i) the consent of the DIP
Lenders as required by the terms of the Revolving Credit, Term Loan and Guaranty
Agreement, (ii) any consent required in connection with the assignment to
Purchaser of the Lease, and (iii) any consents required in connection with the
assignment of those other Assigned Contracts listed in SCHEDULE 8.4 hereto shall
have been duly obtained and shall be in full force and effect on the Closing
Date.
SECTION 7.4. PURCHASER'S CLOSING DELIVERIES AND OBLIGATIONS.
Purchaser shall have delivered all items and satisfied all obligations pursuant
to SECTION 9.1(c).
SECTION 7.5. AVAILABILITY OF PURCHASER FINANCING. The
Committed Financing set forth on SCHEDULE 4.4 shall be available to Purchaser on
the Closing Date, or alternate financing is available to Purchaser to the
satisfaction of Seller.
SECTION 7.6. ENTRY OF THE ORDER. (i) The Bankruptcy Court
shall have entered the Order and (ii) the Order, as entered by the Bankruptcy
Court, shall not be stayed or modify the terms and conditions of this Agreement
or the transactions contemplated hereby in any way that adversely affects
Seller.
SECTION 7.7. NO ADVERSE PROCEEDING. As of the Closing Date,
there shall not have been instituted or be pending or threatened any suit,
action or other proceeding by any Governmental Agency or any other Person in
which it is sought to restrain or prohibit the transactions contemplated by this
Agreement.
SECTION 7.8. ASSIGNMENT OF CONTRACTS. The Bankruptcy Court
shall have entered the Order, or some additional order that expressly authorizes
the assumption and assignment of the Assigned Contracts, effective on the
Closing Date.
SECTION 7.9. PAYMENT OF OUTSTANDING ACCOUNTS RECEIVABLE. On or
prior to the Closing Date, Purchaser shall have paid to Seller any and all
amounts due on or prior to the
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Closing Date on such dates and in such amounts as provided in the instruments or
invoices governing Purchaser's Outstanding Accounts Receivable under Purchaser's
Outstanding Accounts Receivable.
ARTICLE VIII.
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the transactions
contemplated by this Agreement is subject to the satisfaction (unless waived in
writing by Purchaser) of each of the following conditions on or prior to the
Closing Date:
SECTION 8.1. REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained in this Agreement shall be
true on and as of the Closing Date in all material respects.
SECTION 8.2. COMPLIANCE WITH AGREEMENT. Seller shall have
performed and complied in all material respects with all covenants and
conditions to be performed or complied with by it on or prior to the Closing
Date.
SECTION 8.3. NO ADVERSE PROCEEDING. As of the Closing Date,
there shall not have been instituted or be pending or threatened any suit,
action or other proceeding by any Governmental Agency or any other Person in
which it is sought to restrain or prohibit the transactions contemplated by this
Agreement.
SECTION 8.4. CONSENTS. Other than obtaining the Order (which
is addressed in Section 8.6), the following consents shall have been duly
obtained and shall be in full force and effect on the Closing Date: (i) the
consent of the lenders under the Revolving Credit, Term Loan and Guaranty
Agreement as required by the terms thereof; and, as to clauses (x) and (y)
below, to the extent required under Section 365 of the Bankruptcy Code, (x) the
consent, if any, required in connection with the assignment to Purchaser of the
Lease; and (y) the consents, if any, required in connection with the assignment
of those other Assigned Contracts listed in SCHEDULE 8.4 hereto.
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SECTION 8.5. SELLER'S CLOSING DELIVERIES AND OBLIGATIONS.
Seller shall have delivered all items and satisfied all obligations pursuant to
SECTION 9.1(b).
SECTION 8.6. ENTRY OF THE ORDER. (i) The Bankruptcy Court
shall have entered the Order and (ii) the Order, as entered by the Bankruptcy
Court, shall not be stayed or modify the terms and conditions of this Agreement
or the transactions contemplated hereby in any way that adversely affects
Purchaser.
SECTION 8.7. ASSIGNMENT OF CONTRACTS. The Bankruptcy Court
shall have entered the Order, or some additional order that expressly authorizes
the assumption and assignment of the Assigned Contracts, effective on the
Closing Date.
ARTICLE IX.
THE CLOSING; BREAK-UP FEE; TERMINATION
SECTION 9.1. THE CLOSING. (a) The Closing of the purchase and
sale of the Purchased Assets (the "CLOSING") shall be held two Business Days
following entry of the Order. (the "CLOSING DATE"). The Closing shall be held at
the New York office of Willkie Farr & Gallagher. At the Closing, all of the
transactions provided for in ARTICLE II hereof shall be consummated on a
substantially concurrent basis.
(a)(b) Seller's Deliveries and Obligations at Closing. At the
Closing, Seller shall deliver (or cause to be delivered) to Purchaser the
following (in form and substance reasonably satisfactory to counsel for
Purchaser):
(i) a duly executed Assignment and Assumption
Agreement assigning to Purchaser the rights, title, interest, and
obligations in, under, and to each of the Other Contracts being
assigned to Purchaser, substantially in the form attached hereto as
EXHIBIT A;
(ii) a duly executed Bill of Sale and Assumption
Agreement and such other documents or instruments of transfer necessary
to vest in Purchaser full and complete title to the Purchased Inventory
and Fixed Assets, free and clear of all liens, pledges, security
interests, and encumbrances (all other than Seller's lien on the
Accounts Receivable as described in SECTION 2.3(g) hereof and EXHIBIT
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E attached hereto), on the Closing Date, substantially in the form
attached hereto as EXHIBIT B;
(iii) a duly executed Services Agreement,
substantially in the form attached hereto as EXHIBIT D;
(iv) A duly executed Assignment and Assumption of
Lease assigning the rights, title, interest, and obligations in, under,
and to the Lease to Purchaser, substantially in the form attached
hereto as EXHIBIT A;
(v) certified resolutions of the directors of
Seller approving and authorizing the transactions contemplated by this
Agreement;
(vi) a certificate, executed by a duly authorized
officer of Seller, to the effect that all conditions to closing set
forth in SECTION 8.1 and SECTION 8.2 have been satisfied; and
(vii) such other instruments, documents, and
considerations which may be reasonably required by Purchaser or
Purchaser's counsel to effectuate the transaction contemplated by this
Agreement.
(c) Purchaser's Deliveries and Obligations at Closing. At the
Closing, Purchaser shall deliver (or cause to be delivered) to Seller the
following (in form and substance reasonably satisfactory to counsel for Seller):
(i) payment of the Purchase Price and other amounts
in accordance with the terms and conditions set forth in SECTION 2.3
and other applicable provisions of this Agreement;
(ii) a duly executed Assignment and Assumption
Agreement accepting the assignment of the rights, title, interest, and
obligations in, under, and to each of the Other Contracts being
assigned to Purchaser, substantially in the form attached hereto as
EXHIBIT A;
(iii) a duly executed Assignment and Assumption of
Lease accepting the assignment of the rights, title, interest, and
obligations in, under, and to the Lease, substantially in the form
attached hereto as EXHIBIT A;
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(iv) a duly executed Services Agreement,
substantially in the form attached hereto as EXHIBIT D;
(v) certified resolutions of the directors of
Purchaser approving and authorizing the transactions contemplated by
this Agreement;
(vi) a certificate, executed by a duly authorized
officer of Purchaser, to the effect that all the conditions to closing
set forth in SECTION 7.1 and SECTION 7.2 have been satisfied;
(vii) a duly executed Note substantially in the form
attached hereto as Exhibit E;
(viii) a duly executed Security Agreement
substantially in the form attached hereto as Exhibit F; and
(ix) such other instruments, documents, and
considerations which may be reasonably required by Buyer or Buyer's
counsel to effectuate the transaction contemplated by this Agreement.
SECTION 9.2. BREAK-UP FEE. In the event that, prior to entry
of the Order, Seller shall accept an offer embodying a "HIGHER OR BETTER OFFER"
(as defined below) (the "ALTERNATIVE TRANSACTION") and terminate this Agreement
pursuant to SECTION 9.3(b), then Purchaser shall, without further court order,
be entitled to receive, as its sole and exclusive remedy and as liquidated
damages and not as a penalty, a break-up fee equal to $100,000 (the "BREAK-UP
FEE") in lieu of any and all damages Purchaser may suffer as a result of
termination of this Agreement pursuant to SECTION 9.3(b). Purchaser shall not be
entitled to receive the Break-up Fee if: (i) the Agreement is terminated
pursuant to SECTIONS 9.3(a), 9.3(c), 9.3(d), 9.3(e), or 9.3(f) hereof; (ii) the
Bankruptcy Court has not approved the terms and conditions of the provisions set
forth in this SECTION 9.2; or (iii) despite its commercially reasonable efforts,
Seller is unable consummate the Closing of the transactions provided for in
Article II hereof. "HIGHER OR BETTER OFFER" shall mean an offer to purchase
substantially all of the Purchased Assets for consideration greater than an
amount equal to (i) the Purchase Price, as determined by The Blackstone Group in
good faith, plus (ii) $300,000, or an offer that is otherwise on terms and
conditions more favorable to Seller as determined by Seller in its sole
discretion. Notwithstanding anything contained in this
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Agreement, Seller retains the right to solicit a Higher or Better Offer from any
party at any time prior to the Closing Date. Seller agrees that it will use its
commercially reasonable efforts, including its recommendation to the Bankruptcy
Court, to conduct any such solicitation in accordance with the bidding
procedures set forth above and in its motion to be submitted to the Bankruptcy
Court as described in SECTION 5.9 hereof.
SECTION 9.3. TERMINATION. Anything in this Agreement to the
contrary notwithstanding, this Agreement and the transactions contemplated
hereby may be terminated in any of the following ways at any time before the
Closing and in no other manner:
(a) by mutual written consent of Purchaser and Seller (in the
case of Seller, upon consultation with, and with the consent of, the DIP
Lenders); or
(b) by Seller, if Seller receives and accepts a Higher and
Better Offer; or
(c) by Seller if Purchaser is in breach in any material
respect of any of its representations made in this Agreement, or is in violation
or default of any of its covenants or agreements in this Agreement if the breach
or default is not cured within five (5) days after written notice by Seller;
(d) by Purchaser, if Seller is in breach in any material
respect of any of its representations made in this Agreement or is in violation
or default of any of its covenants or agreements in this Agreement which breach
or default is not cured within five (5) Business Days after written notice by
Purchaser.
(e) by Seller, if at any point up until and including the
Closing Date, Purchaser does not have available Committed Financing.
(f) in the event that Seller uses commercially reasonable
efforts to obtain the Order and the Bankruptcy Court has not entered the Order
by October 15, 1998 then, except as otherwise provided in Section 9.4 hereof,
this Agreement shall terminate without further liability or obligation of either
party.
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SECTION 9.4. EFFECTS OF TERMINATION. (a) In the event this
Agreement is terminated pursuant to SECTION 9.3, except as provided in SECTION
9.2 or in this SECTION 9.4, all further obligations of the parties hereunder
shall terminate. If this Agreement is terminated as permitted by SECTION 9.3,
termination shall be without liability of any party (or any stockholder,
director, officer, employee, agent, consultant or representative of such party)
to any other party to this Agreement; provided, however, that: (i) if such
termination shall result from the willful failure of Purchaser to perform a
covenant of this Agreement or from a breach of its representations in SECTION
4.4, Purchaser shall be liable for any and all losses, damages and expenses
incurred or suffered by Seller as a result of such breach or failure to perform;
(ii) if such termination shall result from the willful failure of Seller to
perform a covenant of this Agreement, Purchaser shall be entitled to receive
from Seller, as its sole and exclusive remedy, the sum of $100,000 as liquidated
damages, and not as a penalty; (iii) if this Agreement is terminated by Seller
pursuant to SECTION 9.3(b), Seller shall pay to Purchaser as its sole and
exclusive remedy the Break-up Fee pursuant to the provisions of SECTION 9.2; and
(iv) if this Agreement is terminated by Seller pursuant to SECTION 9.3(e),
Purchaser shall be liable for any and all losses, damages and expenses incurred
or suffered by Seller as a result of such failure to perform. The provisions of
this SECTION 9.4 shall survive any termination hereof pursuant to SECTION 9.3.
(a)(b) The foregoing provisions of this SECTION 9.4 shall not
limit the rights of the parties hereto to seek specific performance of any
obligation hereunder of any other party.
ARTICLE X.
TAXES
The parties hereto hereby covenant and agree as follows:
SECTION 10.1. TAXES RELATED TO PURCHASE OF ASSETS. The parties
recognize and acknowledge that, because the sale, transfer, assignment and
delivery of the Purchased Assets is being made in contemplation of Seller's plan
of reorganization, they may be exempt under section 1146(c) of the Bankruptcy
Code and the Order from all state and local transfer, recording, stamp or other
similar transfer taxes (collectively, "TRANSACTION
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TAXES") that may be imposed by reason of the sale, transfer, assignment and
delivery of the Purchased Assets; provided, however, that if Transaction Taxes
are assessed for any reason, then Purchaser shall pay such Transaction Taxes
along with any recording and filing fees. Purchaser and Seller agree to
cooperate to determine the amount of Transaction Taxes payable in connection
with the transactions contemplated under this Agreement. Transaction Taxes shall
not include any Taxes for which Seller is responsible under SECTION 10.2. At the
Closing, Purchaser shall remit to the Seller such properly completed resale
exemption certificates and other similar certificates or instruments as are
applicable to claim available exemptions from the payment of sales, transfer,
use or other similar taxes under applicable law. Purchaser and Seller shall
cooperate in preparing such forms and will execute and deliver such affidavits
and forms as are reasonably requested by the other party.
SECTION 10.2. PRORATION OF REAL AND PERSONAL PROPERTY TAXES.
Personal and real property taxes and assessments on the Purchased Assets shall
be prorated between Purchaser and Seller as of the Apportionment Date, provided,
however, that Seller shall not be responsible for any increased assessments on
real and personal property resulting from the transactions contemplated hereby.
All such prorations shall be allocated so that items relating to time periods
ending prior to the Closing Date shall be allocated to Seller and items related
to time periods beginning on or after the Closing Date shall be allocated to
Purchaser The amount of all such prorations shall be settled and paid on the
Closing Date unless, with respect to Seller's obligations hereunder, otherwise
ordered by the Bankruptcy Court or as otherwise required by applicable
Bankruptcy Law.
SECTION 10.3. COOPERATION ON TAX MATTERS. Purchaser and Seller
agree to furnish or cause to be furnished to each other, as promptly as
practicable, such information and assistance relating to the Purchased Assets as
is reasonably necessary for the preparation and filing of any return, claim for
refund or other required or optional filings relating to tax matters, for the
preparation for and proof of facts during any tax audit, for the preparation for
any tax protest, for the prosecution or defense of any suit or other proceeding
relating to tax matters and for the answer of any governmental or regulatory
inquiry relating to tax matters.
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Purchaser agrees to retain possession of all files and records
delivered to Purchaser by Seller for a period of at least six years from the
Closing Date. In addition, from and after the Closing Date, Purchaser agrees
that it will provide access to Seller and its attorneys, accountants and other
representatives (after reasonable notice and during normal business hours and
without charge) to such files and records as Seller may reasonably deem
necessary to properly prepare for, file, prove, answer, prosecute and/or defend
any such return, filing, audit, protest, claim, suit, inquiry or other
proceeding.
ARTICLE XII.
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
SECTION 11.1. CURRENT INTENT REGARDING BUSINESS EMPLOYEES;
WARN
Without making any other commitment regarding the Business
Employees, Purchaser commits to hire, as of the Closing Date, no fewer than
twenty-five (25) of the current Business Employees. Purchaser also states that
its current intent is to hire most or all of the current Business Employees on
or following the Closing Date. Purchaser assumes no obligation, liability, or
responsibility of Seller with respect to the Business Employees. Purchaser's
obligation with respect to the Business Employees who accept employment with
Purchaser shall commence as of the Closing Date. Purchaser shall be responsible
for any obligations or Liabilities to the Business Employees under the Worker
Adjustment and Retraining Notification Act and any similar state or local "plant
closing" law ("WARN") to the extent WARN thresholds are exceeded as a result of
actions taken by the Purchaser on or after the Closing Date with respect to the
Business Employees. Seller shall be responsible for any obligations or
Liabilities to the Business Employees under WARN as a result of actions taken by
Seller prior to the Closing Date.
ARTICLE XII.
MISCELLANEOUS PROVISIONS
SECTION 12.1. REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties to this Agreement made in this
Agreement, subject to the exceptions thereto, will not be affected by any
information furnished to, or any
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investigation conducted by, any of them or their representatives in connection
with the subject matter of this Agreement. None of the representations and
warranties contained in this Agreement shall survive the Closing.
SECTION 12.2. NOTICES. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given (a)
when delivered personally to the recipient, (b) when sent to the recipient by
telecopy (receipt electronically confirmed by sender's telecopy machine) if
during normal business hours of the recipient, otherwise on the next Business
Day, (c) one (1) Business Day after the date when sent to the recipient by
reputable express courier service (charges prepaid) or (d) seven (7) Business
Days after the date when mailed to the recipient by certified or registered
mail, return receipt requested and postage prepaid. Such notices, demands and
other communications will be sent to the Seller and to Purchaser at the
addresses indicated below:
<TABLE>
<S> <C>
If to Purchaser: Rankin Automotive Group, Inc.
3709 S. MacArthur Drive
Alexandria, LA 71302
Attention: Randall B. Rankin
Facsimile No. 318-443-9952
With a copy Michael Glass, Esq.
(which shall not 1735 White Street
constitute notice) to: Alexandria, Louisiana 71301
Facsimile No. 318-473-4062
If to Seller: APS Holding Corporation
15710 John F. Kennedy Blvd.
Suite 700
Houston, Texas 77032-2347
Attention: Bettina Whyte
Facsimile No. 713-507-1323
With a copy Willkie Farr & Gallagher
(which shall not 787 Seventh Avenue
constitute notice) to: New York, New York 10019-6099
Attention: Cornelius T.
Finnegan III, Esq.
Facsimile No. (212) 728-8111
</TABLE>
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or to such other address as any party hereto may, from time to time, designate
in writing delivered pursuant to the terms of this Section.
SECTION 12.3. AMENDMENTS. The terms, provisions and conditions
of this Agreement may not be changed, modified or amended in any manner except
by an instrument in writing duly executed by each of the parties hereto.
SECTION 12.4. ASSIGNMENT. This Agreement is binding upon and
inures to the benefit of the successors and assigns of each party to this
Agreement (including any trustee appointed in respect of Seller under the
Bankruptcy Code), but no rights, obligations or liabilities under this Agreement
may be assigned by any party without the prior written consent of the other
parties hereto.
SECTION 12.5. ANNOUNCEMENTS. All press releases, notices to
customers and suppliers and other announcements prior to the Closing Date with
respect to this Agreement and the transactions contemplated by this Agreement
shall be approved by both Purchaser and Seller prior to the issuance thereof;
provided that any party may make any public disclosure it believes in good faith
is required by law or regulation (in which case the disclosing party shall
advise the other party (which shall be Seller in the case of disclosure proposed
to be made by Purchaser and Purchaser in the case of disclosure proposed to be
made by Seller) prior to making such disclosure and provide such other party an
opportunity to review the proposed disclosure).
SECTION 12.6. EXPENSES. Except as otherwise set forth in this
Agreement, each party to this Agreement shall bear all of its legal, accounting,
investment banking and other expenses incurred by it or on its behalf in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated.
SECTION 12.7. ENTIRE AGREEMENT. Other than the obligations set
forth in the Confidentiality Agreements entered in contemplation of this
Agreement, this Agreement and the Ancillary Agreements constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersede and are in full substitution for any and all prior agreements and
understandings between them relating to such subject matter. The Exhibits and
Schedules to this Agreement are
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hereby incorporated and made a part hereof and are an integral part of this
Agreement.
SECTION 12.8. DESCRIPTIVE HEADINGS. The descriptive headings
of the several sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
SECTION 12.9. COUNTERPARTS. For the convenience of the
parties, any number of counterparts of this Agreement may be executed by any one
or more parties hereto, and each such executed counterpart shall be, and shall
be deemed to be, an original, but all of which shall constitute, and shall be
deemed to constitute, in the aggregate but one and the same instrument.
SECTION 12.10. GOVERNING LAW; JURISDICTION. This Agreement
shall be construed, performed and enforced in accordance with, and governed by,
the laws of the State of Delaware, without giving effect to the conflict of laws
principles thereof. For so long as Seller is subject to the jurisdiction of the
Bankruptcy Court, the parties hereto irrevocably elect as the sole judicial
forum for the adjudication of any matters arising under or in connection with
this Agreement, and consent to the jurisdiction of, the Bankruptcy Court. After
Seller is no longer subject to the jurisdiction of the Bankruptcy Court, the
parties hereto irrevocably elect as the sole judicial forum for the adjudication
of any matters arising under or in connection with this Agreement, and consent
to the jurisdiction of, the courts of the County of New Castle, State of
Delaware or of the United States of America for the District of Delaware.
SECTION 12.11. CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rule of strict construction will be applied against
any party. Any references to any federal, state, local or foreign statute or law
will also refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. Unless the context otherwise requires: (a) a term
has the meaning assigned to it by this Agreement; (b) an accounting term not
otherwise defined has the meaning assigned to by GAAP; (c) the word "or" is not
exclusive; (d) the words "include", "includes" and "including" shall be deemed
to be followed by the words "without limitation"; (e) words in the singular
include the plural and in the plural
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include the singular; (f) provisions apply to successive events and
transactions; and (g) "$" means the currency of the United States of America.
SECTION 12.12. SEVERABILITY. In the event that any one or more
of the provisions contained in this Agreement or in any other instrument
referred to herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other such instrument. Furthermore, in lieu of any such
invalid or unenforceable term or provision, the parties hereto intend that there
shall be added as a part of this Agreement a provision as similar in terms to
such invalid or unenforceable provision as may be possible and be valid and
enforceable.
SECTION 12.13. CONFIDENTIALITY. Seller and Purchaser agree to
keep, and to cause each of their affiliates, directors, officers, and employees
to keep, confidential any and all confidential information of the other party
that either receives in the course of performing its obligations hereunder
(except that such information may be shared, on a confidential basis, with the
party's attorneys and auditors) and will not, without the other party's written
consent, use any of such confidential information except as reasonably necessary
to perform its duties under this or another of its agreements with the other
party. Upon termination of this Agreement, each party will return, and will
cause its affiliates to return, to the other party, all original documents and
copies of the confidential information which are in its possession.
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IN WITNESS WHEREOF, Seller and Purchaser have executed and
delivered this Agreement as of the day and year first written above.
<TABLE>
<S> <C>
SELLER: PURCHASER:
AMERICAN PARTS SYSTEMS, INC. RANKIN AUTOMOTIVE GROUP, INC.
BY: /s/ BETTINA WHYTE BY: /s/ RANDALL B. RANKIN
------------------------- -------------------------
Name: Bettina Whyte Name: Randall B. Rankin
Title: President & CEO Title: President
AUTOPARTS FINANCE COMPANY, INC.
BY: /s/ BETTINA WHYTE
-------------------------
Name: Bettina Whyte
Title: President & CEO
A.P.S., INC.
BY: /s/ BETTINA WHYTE
-------------------------
Name: Bettina Whyte
Title: President & CEO
APS MANAGEMENT SERVICES, INC.
BY: /s/ BETTINA WHYTE
-------------------------
Name: Bettina Whyte
Title: President & CEO
PARTS, INC.
BY: /s/ BETTINA WHYTE
-------------------------
Name: Bettina Whyte
Title: President & CEO
</TABLE>
