<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 12, 1996
REGISTRATION NO. 333-3982
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
APS HOLDING CORPORATION
A.P.S., INC.
AMERICAN PARTS SYSTEM, INC.
BIG A AUTO PARTS, INC.
AUTOPARTS FINANCE COMPANY, INC.
APS SUPPLY, INC.
PRESATT, INC.
A.P.S. MANAGEMENT SERVICES, INC.
PARTS, INC.
INSTALLERS' SERVICE WAREHOUSE, INC.
(Exact name of Registrants as specified in their charter)
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<S> <C> <C>
DELAWARE 5013 76-0306940
DELAWARE 5013 74-1653270
DELAWARE 5013 95-2221166
DELAWARE 5013 47-0469815
DELAWARE 5013 76-0446426
TEXAS 5013 74-1396931
DELAWARE 5013 51-0001902
DELAWARE 5013 74-1908966
TENNESSEE 5013 62-0429926
DELAWARE 5013 76-0496088
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Numbers) Identification Nos.)
</TABLE>
15710 JOHN F. KENNEDY BOULEVARD, SUITE 700
HOUSTON, TEXAS 77032-2347
(713) 507-1100
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
------------------------------
E. EUGENE LAUVER, ESQ.
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
APS HOLDING CORPORATION
15710 JOHN F. KENNEDY BOULEVARD, SUITE 700
HOUSTON, TEXAS 77032-2347
(713) 507-1100
(Address, including zip code, and telephone number, including area code, of
agent for service of process)
------------------------------
Please address a copy of all communications to:
DAVID A. BRITTENHAM, ESQ.
DEBEVOISE & PLIMPTON
875 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 909-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
APS HOLDING CORPORATION
A.P.S., INC.
AMERICAN PARTS SYSTEM, INC.
BIG A AUTO PARTS, INC.
AUTOPARTS FINANCE COMPANY, INC.
APS SUPPLY, INC.
PRESATT, INC.
A.P.S. MANAGEMENT SERVICES, INC.
PARTS, INC.
INSTALLERS' SERVICE WAREHOUSE, INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING
LOCATION IN PROSPECTUS OF ITEMS OF FORM S-4
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<CAPTION>
FORM S-4 ITEM NO. CAPTION IN PROSPECTUS
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<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of
Prospectus............................. Facing Page, Outside Front Cover Page;
Cross Reference Sheet; Inside Front
Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus.................... Inside Front Cover Page; Table of
Contents; Available Information
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.......... Prospectus Summary; Risk Factors;
Selected Historical Consolidated
Financial Information of APS Holding
Corporation
4. Terms of the Transaction................ Prospectus Summary; The Exchange Offer;
Description of the Notes; Certain
Federal Tax Consequences
5. Pro Forma Financial Information......... Pro Forma Combined Condensed Statement
of Operations
6. Material Contacts with the Company Being
Acquired............................... Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters.............. Inside Front Cover Page; Prospectus
Summary; The Exchange Offer; Plan of
Distribution
8. Interests of Named Experts and
Counsel................................ Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................ Part II -- Indemnification of Directors
and Officers
10. Information with Respect to S-3
Registrants............................ Incorporation of Certain Documents by
Reference
11. Incorporation of Certain Information by
Reference.............................. Incorporation of Certain Documents by
Reference
</TABLE>
<PAGE>
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<CAPTION>
FORM S-4 ITEM NO. CAPTION IN PROSPECTUS
---------------------------------------- ----------------------------------------
<C> <S> <C>
12. Information with Respect to S-2 or S-3
Registrants............................ Not Applicable
13. Incorporation of Certain Information by
Reference.............................. Not Applicable
14. Information with Respect to Registrants
Other than S-3 or S-2 Registrants...... Not Applicable
15. Information With Respect to S-3
Companies.............................. Not Applicable
16. Information with Respect to S-2 or S-3
Companies.............................. Not Applicable
17. Information with Respect to Companies
Other Than S-3 or S-2 Companies........ Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited..... Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited
or in an Exchange Offer................ Certain Relationships and Related
Transactions; Incorporation of Certain
Documents by Reference
20. Indemnification of Directors and
Officers............................... Part II -- Indemnification of Directors
and Officers
21. Exhibits and Financial Statement
Schedules.............................. Part II -- Exhibits and Financial
Statement Schedules Index
22. Undertakings............................ Part II -- Undertakings
</TABLE>
<PAGE>
PROSPECTUS
[LOGO]
A.P.S., INC.
OFFER TO EXCHANGE
11 7/8% SENIOR SUBORDINATED
NOTES DUE 2006 FOR ANY AND ALL
EXISTING NOTES (AS DEFINED BELOW)
AS DESCRIBED HEREIN, WITHDRAWAL RIGHTS WITH
RESPECT TO THE EXCHANGE OFFER ARE EXPECTED TO
EXPIRE AT THE EXPIRATION OF THE EXCHANGE OFFER
------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON JULY 18, 1996, UNLESS EXTENDED.
--------------------------
A.P.S., Inc., a Delaware corporation ("APS"), hereby offers (the "Exchange
Offer") upon the terms and subject to the conditions set forth in this
Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), to exchange up to $100,000,000 aggregate principal
amount of its 11 7/8% Senior Subordinated Notes Due 2006 (the "New Notes"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which this Prospectus
is a part, for a like principal amount of its outstanding 11 7/8% Senior
Subordinated Notes Due 2006 (the "Existing Notes" and, together with the New
Notes, the "Notes"). The Existing Notes were originally issued in a transaction
that was exempt from registration under the Securities Act and since such
issuance have been resold to (i) qualified institutional buyers in reliance on,
and subject to the restrictions imposed pursuant to, Rule 144A under the
Securities Act ("Rule 144A"), (ii) institutional investors that are "accredited
investors" within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Securities Act, and (iii) non-U.S. persons outside the United
States of America in accordance with Regulation S under the Securities Act
("Regulation S"). The terms of the New Notes are identical in all material
respects to the terms of the Existing Notes that are to be exchanged therefor
except that the New Notes have been registered under the Securities Act and will
not bear legends restricting the transferability thereof, certain registration
rights relating to the Existing Notes will terminate upon completion of the
Exchange Offer, and, if the Exchange Offer is not consummated by July 23, 1996,
the rate at which the Existing Notes bear interest will be 12 3/8% per annum
from and including July 24, 1996 until but not including the date the Exchange
Offer is consummated. See "Description of the Notes" and "Registration Rights."
For federal income tax purposes, an exchange made pursuant to the Exchange Offer
should not constitute a taxable exchange. See "Certain Federal Tax
Consequences."
Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission" or "SEC"), as set forth in no-action letters issued
to third parties, APS believes the New Notes issued pursuant to the Exchange
Offer may be offered for resale, resold and otherwise transferred by holders
thereof (other than any such holder that is an "affiliate" of APS within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such New Notes are acquired in the ordinary course of such holders'
business, such holders are not engaged in and do not intend to engage in, a
distribution of such Notes and such holders have no arrangement or understanding
with any person to participate in the distribution of such New Notes. However,
the Commission has not considered the Exchange Offer in the context of a
no-action letter and therefore there can be no assurance that the staff of the
Commission would make a similar determination with respect to the Exchange Offer
as in such other circumstances.
SEE "RISK FACTORS" ON PAGE 15 FOR A DESCRIPTION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER AND AN INVESTMENT IN
THE NEW NOTES OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS JUNE 12, 1996.
<PAGE>
Each holder of Existing Notes that desires to participate in the Exchange
Offer, other than a broker-dealer, must acknowledge that it is not engaged in,
and does not intend to engage in, a distribution of New Notes and has no
arrangement or understanding to participate in a distribution of New Notes. Each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Existing Notes where such Existing Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. As described more fully herein, for a period of one year after the
Expiration Date (as defined herein), APS will make this Prospectus available to
any Participating Broker-Dealer (as defined herein) for use in connection with
any such resale. See "The Exchange Offer" and "Plan of Distribution."
EXCEPT AS DESCRIBED IN THE PRECEDING PARAGRAPH, THIS PROSPECTUS MAY NOT BE
USED FOR AN OFFER TO RESELL, A RESALE OR ANY OTHER RETRANSFER OF NEW NOTES.
The Exchange Offer is not conditioned upon any minimum number of Existing
Notes being tendered. The Exchange Offer will expire at 5:00 p.m., New York City
time, on July 18, 1996, unless extended (the "Expiration Date"). Subject to the
terms and conditions of the Exchange Offer, including the reservation of certain
rights by APS and the right of holders of Existing Notes to withdraw tenders
prior to the acceptance thereof, Existing Notes validly tendered prior to the
Expiration Date will be accepted on or promptly after the Expiration Date. New
Notes to be issued in exchange for properly tendered Existing Notes will be
mailed by the Exchange Agent (as defined herein) promptly after the acceptance
thereof. In the event APS terminates the Exchange Offer and does not accept for
exchange any Existing Notes, APS will promptly return the Existing Notes to the
holders thereof. See "The Exchange Offer."
The Notes will mature on January 15, 2006 (the "Maturity Date"). Interest on
the Notes will accrue from the date of issue and will be payable on January 15
and July 15 of each year at a rate of 11 7/8% per annum, commencing July 15,
1996. The Existing Notes are, and the New Notes will be, redeemable at the
option of APS at any time on or after January 15, 2001, in whole or in part, at
the redemption prices set forth herein, plus accrued and unpaid interest, if
any, to the date of redemption. In addition, up to an aggregate of 33 1/3% of
the original aggregate principal amount of the Notes may be redeemed at any time
prior to January 15, 1999, at the option of APS, with the proceeds of one or
more public offerings by APS Holding Corporation ("Holding") of its common
stock, at a redemption price of 111.875% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of redemption; PROVIDED,
HOWEVER, that after giving effect to any such redemption, at least 66 2/3% of
the original aggregate principal amount of the Notes remain outstanding. In the
event of a Change of Control (as defined herein) occurring prior to January 15,
2001, the Notes will be subject to redemption, at the option of APS, in whole or
in part, at a redemption price equal to the sum of (i) the principal amount
thereof, plus (ii) the Applicable Premium (as defined herein), plus (iii)
accrued and unpaid interest, if any, to the date of redemption. In the event of
a Change of Control occurring at any time, holders of the Notes will also have
the right to require APS to repurchase all or part of the Notes at a purchase
price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase. There can be no assurance that
APS will have the financial resources necessary to repurchase the Notes in such
circumstances. See "Description of the Notes -- Optional Redemption" and
"Description of the Notes -- Change of Control."
The Existing Notes are, and the New Notes will be, unsecured obligations of
APS and subordinated in right of payment to all existing and future Senior
Indebtedness of APS (as defined herein). The Existing Notes are, and the New
Notes will be, guaranteed on a senior subordinated basis by Holding (the
"Holding Guarantee") and each of its existing and future Restricted Subsidiaries
(as defined herein) other than APS (each such guarantee, a "Restricted
Subsidiary Guarantee" and each
2
<PAGE>
such guarantor, a "Restricted Subsidiary Guarantor"). The Holding Guarantee and
Restricted Subsidiary Guarantees rank subordinate in right of payment to all
existing and future Senior Indebtedness of Holding (as defined herein) and
Senior Indebtedness of the Restricted Subsidiary Guarantors (as defined herein),
respectively, including guarantees of the New Credit Agreement (as defined
herein). The obligations of APS under the New Credit Agreement are guaranteed by
Holding and certain of the subsidiaries of APS and are secured by pledges of the
capital stock of APS and such subsidiaries, by security interests in
substantially all of their personal property and by mortgages on certain of
their owned real property.
There has not previously been any public market for the Existing Notes or
the New Notes. APS does not intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system. There can be no assurance that an active market for the New Notes will
develop. See "Risk Factors -- Absence of a Public Market for the Notes."
Moreover, to the extent that Existing Notes are tendered and accepted in the
Exchange Offer, the trading market, if any, for untendered and tendered but
unaccepted Existing Notes could be adversely affected.
APS will not receive any proceeds from the Exchange Offer, but will bear
certain offering expenses pursuant to the Registration Agreement, dated January
19, 1996 (the "Registration Agreement"), among APS and the original purchasers
of the Existing Notes. The Exchange Offer is intended to satisfy certain of
APS's obligations under the Registration Agreement, including the obligation to
register the exchanged Existing Notes under the Securities Act. Upon the
completion of the Exchange Offer, certain special rights under the Registration
Agreement will terminate with respect to Existing Notes, and holders of New
Notes will not be entitled to such rights. See "The Exchange Offer --
Termination of Certain Rights." No dealer manager is being utilized in
connection with the Exchange Offer.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. These documents are available upon request from
APS or Holding, 15710 John F. Kennedy Boulevard, Suite 700, Houston, Texas
77032-2347, Attention: Corporate Secretary (telephone: (713) 507-1100). In order
to ensure timely delivery of the documents, any request should be made no later
than five business days prior to the Expiration Date.
3
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS,
INCLUDING THE RELATED NOTES, APPEARING ELSEWHERE IN THIS PROSPECTUS OR
INCORPORATED HEREIN BY REFERENCE. UNLESS THE CONTEXT OTHERWISE REQUIRES, THE
TERM "COMPANY" AS USED IN THIS PROSPECTUS MEANS HOLDING AND APS AND ITS
SUBSIDIARIES. THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY ARE LOCATED AT
WORLD HOUSTON PLAZA, 15710 JOHN F. KENNEDY BOULEVARD, SUITE 700, HOUSTON, TEXAS
77032-2347, AND ITS TELEPHONE NUMBER IS (713) 507-1100.
THE COMPANY
The Company is a leading warehouse distributor of automotive replacement
parts in the United States, supplying over 1,900 parts stores owned by
independent operators ("jobbers") and approximately 325 Company-owned stores as
of April 25, 1996. The Company principally serves the wholesale segment of the
automotive parts aftermarket. Through the Company's network of 35 distribution
centers in 30 states, the Company offers over 160,000 stock keeping units
("SKUs"), including a broad array of nationally recognized replacement parts,
tools, equipment, supplies and accessories under its Big A-Registered Trademark-
brand name as well as manufacturers' brands and, for a limited time through the
distribution centers owned by Parts, Inc. ("PI"), under the Parts
Plus-Registered Trademark- group of brand names. See " -- The Acquisition,"
"Risk Factors -- Realization of Benefits from the Acquisition; Integration of
PI" and "Business -- Company Overview." In addition, as of April 25, 1996, the
Company operated more than 250 Installers' Service Warehouses ("ISWs"), which
directly serve the needs of the professional installer by stocking a select
number of high demand products and emphasizing availability and quick delivery.
The Company had net sales and income before interest expense and income taxes,
plus depreciation and amortization ("EBITDA") of $603.7 million and $38.7
million, respectively, for the fiscal year ended January 27, 1996 and $217.6
million and $11.9 million, respectively, for the three months ended April 25,
1996. Excluding the $11.2 million asset impairment and restructuring charge
recorded by the Company in the fourth quarter of fiscal 1996, the Company would
have had EBITDA of $50.0 million for the fiscal year ended January 27, 1996. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations" in Holding's Annual Report on Form 10-K for
the fiscal year ended January 27, 1996 (the "Form 10-K"), and in Holding's
Quarterly Report on Form 10-Q for the fiscal quarter ended April 25, 1996 (the
"Form 10-Q"), each of which is incorporated herein by reference, and "Selected
Historical Consolidated Financial Information of APS Holding Corporation."
The Company's Big A program offers a number of benefits to the associated
jobbers that participate in the program, including (i) a broad selection of
product lines; (ii) brand name identity, including national advertising
programs; (iii) access to flexible purchasing programs; (iv) overnight delivery
of parts; and (v) a comprehensive package of services, including assistance in
marketing, cataloging, inventory control, accounting, management and employee
training. Approximately two-thirds of the Company's associated jobbers and
Company-owned stores are located in communities with populations of less than
25,000 people. The Company believes that jobbers located in smaller communities
are well suited to the Big A program because the customer base within these
communities generally is not large enough to support the investment necessary to
enable a jobber to obtain on its own the benefits of the Big A program. In
contrast, ISWs target customers in larger metropolitan areas typically not
served by the Company's associated jobbers or Company-owned stores by focusing
on a select number of high demand products (typically undercar products such as
chassis, suspension, steering and brake parts) and emphasizing availability and
quick delivery.
THE ACQUISITION
Pursuant to a purchase agreement dated as of December 5, 1995 (the "Purchase
Agreement"), on January 25, 1996 (the "Acquisition Closing Date"), APS acquired
all of the outstanding stock of PI, an automotive parts distributor, from GKN
Parts Industries Corporation ("GKN Parts") for a cash closing purchase price of
$79.7 million (the "Acquisition"), which purchase price was adjusted to
4
<PAGE>
$74.9 million after the closing. As of the Acquisition Closing Date, the PI
distribution network was comprised of approximately 850 parts stores owned by
PI's associated jobbers and more than 125 company-owned stores operating under
the Parts Plus group of marks, which were serviced through PI's 14 distribution
centers. As of the Acquisition Closing Date, PI's customer base was primarily
located in markets where the Company had a relatively minor presence, including
Arkansas, Oklahoma, Texas, Tennessee, Kentucky, Mississippi, Alabama, West
Virginia and Michigan. Based on the Company's review of PI's store base, the
Company believes that, at the time of the Acquisition, there was less than a 5%
overlap between the Company's and PI's associated jobbers and company-owned
stores. The Company believes that opportunities exist to achieve significant
ongoing purchasing and other cost savings in connection with the Acquisition,
including through volume discounts from suppliers, the closure (as of the date
of this Prospectus) of four of the Company's distribution centers (including two
PI distribution centers) and the anticipated closure of seven additional PI
distribution centers, and the consolidation of these operations into the
combined companies' remaining facilities. PI had net sales and EBITDA of $224.8
million and $5.0 million, respectively, for the year ended December 31, 1995.
See "Business" in the Form 10-K, which is incorporated herein by reference, and
"Risk Factors -- Realization of Benefits from the Acquisition; Integration of
PI," "Pro Forma Combined Condensed Statement of Operations" and the Financial
Statements of PI and the related notes thereto for the year ended December 31,
1995.
RISK FACTORS
Before exchanging Existing Notes for the New Notes offered hereby, holders
of Existing Notes should consider carefully the factors described in "Risk
Factors" and all other information set forth in this Prospectus.
SUMMARY OF TERMS OF THE EXCHANGE OFFER
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REGISTRATION AGREEMENT...................... The Existing Notes were sold by APS on the
Acquisition Closing Date to Salomon Brothers
Inc and Chemical Securities Inc. (the "Initial
Purchasers"), which resold the Existing Notes
to certain institutional investors in reliance
on Rule 144A under the Securities Act. In
connection therewith, APS executed and
delivered, for the benefit of the holders of
the Existing Notes, the Registration Agreement
providing for, among other things, the
Exchange Offer. See "The Exchange Offer --
General," "Registration Rights" and "Plan of
Distribution."
THE EXCHANGE OFFER.......................... APS is offering to exchange up to $100,000,000
aggregate principal amount of the New Notes
for a like principal amount of Existing Notes.
APS will issue the New Notes to holders on the
earliest practicable date following the
Expiration Date.
Based on interpretations by the staff of the
Commission, as set forth in several no-action
letters issued to third parties, the Company
believes that the New Notes issued pursuant to
the Exchange Offer in exchange for Existing
Notes may be offered for resale, resold and
otherwise transferred by any holder thereof
(other than any such holder that is an
"affiliate" of APS within the meaning of Rule
405 under the Securities Act)
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5
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without compliance with the registration and
prospectus delivery provisions of the
Securities Act, provided that such New Notes
are acquired in the ordinary course of such
holder's business and that such holder is not
engaged in, and does not intend to engage in,
a distribution of such New Notes and has no
arrangement or understanding with any person
to participate in the distribution of such New
Notes. The Commission, however, has not
considered the Exchange Offer in the context
of a no-action letter and there can be no
assurance that the staff of the Commission
would make a similar determination with
respect to the Exchange Offer as in such other
circumstances.
Each broker-dealer that receives New Notes for
its own account in exchange for Existing Notes
pursuant to the Exchange Offer must
acknowledge that such Existing Notes were
acquired by such broker-dealer as a result of
market-making activities or other trading
activities and that it will deliver a
prospectus in connection with any resale of
such New Notes. The Letter of Transmittal
states that by so acknowledging and by
delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may
be used by a broker-dealer for a period of one
year after the Expiration Date in connection
with resales of New Notes received in exchange
for Existing Notes where such Existing Notes
were acquired by such broker-dealer as a
result of market-making activities or other
trading activities. APS has agreed that, for a
period of one year after the Expiration Date,
it will make this Prospectus available to any
broker-dealer (which may include the Initial
Purchasers) that elects to exchange Existing
Notes, acquired for its own account as a
result of market-making activities or other
trading activities, for New Notes
(collectively, "Participating Broker-Dealers")
for use in connection with any such resale.
See "Plan of Distribution."
Each holder of Existing Notes that desires to
participate in the Exchange Offer, other than
a broker-dealer, must acknowledge that it is
not engaged in, and does not intend to engage
in, a distribution of New Notes and has no
arrangement or understanding to participate in
a distribution of New Notes. See "The Exchange
Offer" and "Plan of Distribution."
</TABLE>
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EXPIRATION DATE............................. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on July 18, 1996, unless
the Exchange Offer is extended by APS in its
sole discretion, in which case the term
"Expiration Date" means the latest date and
time to which the Exchange Offer is extended.
ACCRUED INTEREST ON THE NEW Holders of Existing Notes that are accepted
NOTES AND EXISTING NOTES................... for exchange will not receive any accrued
interest thereon. However, each New Note will
bear interest from the most recent date on
which interest has been paid on the
corresponding Existing Note, or, if no
interest has been paid, from January 25, 1996.
CONDITIONS TO THE EXCHANGE OFFER............ The Exchange Offer is subject to certain
customary conditions, which may be waived by
APS. See "The Exchange Offer -- Conditions."
The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Existing
Notes being tendered for exchange.
WITHDRAWAL RIGHTS........................... Subject to the conditions set forth herein,
tenders of Existing Notes may be withdrawn
prior to 5:00 p.m., New York City time, on the
Expiration Date. See "The Exchange Offer --
Withdrawal Rights."
ACCEPTANCE OF EXISTING NOTES Subject to the terms and conditions of the
AND DELIVERY OF NEW NOTES.................. Exchange Offer, including the reservation of
certain rights by APS, APS will accept for
exchange any and all Existing Notes that are
properly tendered in the Exchange Offer, and
not withdrawn, prior to 5:00 p.m., New York
City time, on the Expiration Date. Subject to
such terms and conditions, the New Notes
issued pursuant to the Exchange Offer will be
delivered on the earliest practicable date
following the Expiration Date. Any Existing
Notes not accepted for exchange for any reason
will be returned without cost to the tendering
holder thereof promptly after the Expiration
Date. See "The Exchange Offer -- Acceptance of
Tenders."
CERTAIN FEDERAL INCOME TAX For federal income tax purposes, the exchange
CONSEQUENCES............................... of an Existing Note for a New Note should not
constitute a taxable exchange by its holder.
Accordingly, the holders should not recognize
any taxable gain or loss upon such exchange.
See "Certain Federal Tax Consequences."
UNTENDERED EXISTING NOTES................... Holders of Existing Notes who do not tender
their Existing Notes in the Exchange Offer or
whose Existing Notes are not accepted for
exchange will continue to hold such Existing
Notes and will be entitled to all the rights
and preferences and will
</TABLE>
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be subject to the limitations applicable
thereto under the Indenture (as defined
herein), except for any such rights,
preferences or limitations which, by their
terms, terminate or cease to be effective as a
result of this Exchange Offer. All untendered
and tendered but unaccepted Existing Notes
will continue to be subject to certain
restrictions on transfer provided therein. See
"Risk Factors -- Restrictions on Transfer." To
the extent that Existing Notes are tendered
and accepted in the Exchange Offer, the
trading market, if any, for untendered and
tendered but unaccepted Existing Notes could
be adversely affected. See "Risk Factors --
Absence of a Public Market for the Notes" and
"The Exchange Offer -- Certain Effects of the
Exchange Offer."
BROKER-DEALERS.............................. Each broker-dealer that receives New Notes for
its own account in exchange for Existing
Notes, where such Existing Notes were acquired
by such broker-dealer as a result of
market-making activities or other trading
activities, must acknowledge that it will
deliver a prospectus in connection with any
resale of such New Notes. See "Plan of
Distribution."
EXCHANGE AGENT/TRUSTEE...................... The Bank of New York is serving as Exchange
Agent (the "Exchange Agent") in connection
with the Exchange Offer and as Trustee under
the Indenture.
</TABLE>
SUMMARY OF TERMS OF THE NEW NOTES
The terms of the New Notes and the Existing Notes are identical in all
material respects, except for certain transfer restrictions and registration
rights relating to the Existing Notes and except that, if the Exchange Offer is
not consummated by July 23, 1996, the rate at which the Existing Notes bear
interest will be 12 3/8% per annum from and including July 24, 1996 until but
excluding the date of consummation of the Exchange Offer.
<TABLE>
<S> <C>
NEW NOTES................................... Up to $100 million in aggregate principal
amount of APS's 11 7/8% Senior Subordinated
Notes Due 2006, which have been registered
under the Securities Act.
MATURITY DATE............................... January 15, 2006.
INTEREST PAYMENT DATES...................... January 15 and July 15, commencing July 15,
1996.
NOTE GUARANTEES............................. The New Notes will be unconditionally
guaranteed on a senior subordinated basis by
Holding under the Holding Guarantee and by
each of the existing and future Restricted
Subsidiary Guarantors under the Restricted
Subsidiary Guarantees. See "Description of the
Notes -- Note Guarantees."
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
SUBORDINATION OF NEW NOTES.................. The New Notes will be subordinated in right of
payment to all existing and future Senior
Indebtedness of APS. As of April 25, 1996,
assuming the full availability and incurrence
by APS of all borrowings available under the
New Credit Agreement (as defined herein),
there would have been $299.3 million of Senior
Indebtedness of APS. See "Description of the
Notes -- Subordination of Notes."
SUBORDINATION OF NOTE GUARANTEES............ The Holding Guarantee and the Restricted
Subsidiary Guarantees (the "Note Guarantees")
are subordinated in right of payment to all
existing and future Senior Indebtedness of
Holding and Senior Indebtedness of the
Restricted Subsidiary Guarantors,
respectively, including guarantees of the New
Credit Agreement. As of April 25, 1996,
assuming the full availability and incurrence
by APS of all borrowings available under the
New Credit Agreement, there would have been
outstanding $297.8 million of Senior
Indebtedness of Holding and $298.7 million of
Senior Indebtedness of the Restricted
Subsidiary Guarantors. See "Description of the
Notes -- Subordination of Note Guarantees;
Release of Restricted Subsidiary Guarantees."
MANDATORY SINKING FUND...................... None.
OPTIONAL REDEMPTION......................... The New Notes may be redeemed at the option of
APS, in whole or in part, at any time on or
after January 15, 2001, at the redemption
prices set forth herein, plus accrued and
unpaid interest, if any, to the redemption
date. In addition, prior to January 15, 1999,
up to an aggregate of 33 1/3% of the original
aggregate principal amount of the Notes may be
redeemed at the option of APS with the
proceeds of one or more public offerings by
Holding of its common stock, at a redemption
price of 111.875% of the principal amount
thereof plus accrued and unpaid interest, if
any, to the date of redemption; PROVIDED,
HOWEVER, that after giving effect to any such
redemption, at least 66 2/3% of the original
aggregate principal amount of the Notes remain
outstanding. Upon a Change of Control
occurring prior to January 15, 2001, the New
Notes will be subject to redemption at the
option of APS, in whole or in part, at a
redemption price equal to the sum of (i) the
principal amount thereof, plus (ii) the
Applicable Premium, plus (iii) accrued and
unpaid interest, if any, to the date of
redemption. See "Description of the Notes --
Optional Redemption."
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
CHANGE OF CONTROL........................... In the event of a Change of Control occurring
at any time, each holder of New Notes will
have the right to require APS to purchase all
or part of such holder's New Notes at a price
equal to 101% of the aggregate principal
amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase;
PROVIDED, HOWEVER, that notwithstanding the
occurrence of a Change of Control, APS shall
not be obligated to repurchase such New Notes
if it has exercised its rights to redeem all
of the Notes as described above under
"Description of the Notes -- Optional
Redemption." There can be no assurance that
APS will have the financial resources
necessary or that it will be able to obtain
the necessary consents under Senior
Indebtedness of Holding, Senior Indebtedness
of APS and Senior Indebtedness of the
Restricted Subsidiary Guarantors to permit the
purchase of the New Notes upon a Change of
Control. In particular, the New Credit
Agreement prohibits APS from so purchasing the
New Notes without first obtaining the consent
of the Banks (as defined herein). See
"Description of the Notes -- Optional
Redemption" and "Description of the Notes --
Change of Control."
PRINCIPAL COVENANTS......................... The Indenture, dated as of January 25, 1996
(the "Indenture"), among APS, as issuer,
Holding and the Restricted Subsidiary
Guarantors, as guarantors, and The Bank of New
York, as trustee, pursuant to which the
Existing Notes were issued and the New Notes
will be issued, contains certain covenants
that, among other things, limit the ability of
Holding and its Restricted Subsidiaries,
including APS, to incur additional
indebtedness, pay dividends or make other
distributions, make investments, repurchase
subordinated obligations or capital stock,
create certain liens (except, among others,
liens securing senior indebtedness), enter
into certain transactions with affiliates,
sell assets of Holding or its Restricted
Subsidiaries, issue or sell Re-stricted
Subsidiary stock, incur layered indebtedness,
create or permit to exist restrictions on
distributions from subsidiaries or enter into
certain mergers and consolidations. See
"Description of the Notes -- Certain
Covenants" and "Description of the Notes --
Merger, Consolidation and Sale of Assets."
EVENTS OF DEFAULT........................... An event of default will occur under the
Indenture in the event of: (i) a default in
any payment of interest on any Note when due
and payable and such default continues for a
period of 30 days; (ii) (a) a default in the
payment of the principal of
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
(or premium, if any, on) any Note when due and
payable at its stated maturity, upon
redemption, declaration or otherwise, or (b) a
failure to redeem or purchase Notes when
required pursuant to the Indenture or the
Notes; (iii) a failure to comply with certain
covenants and, in the case of certain of these
covenants, such failure continues for 30 days
after notice; (iv) a failure to comply with
certain agreements in the Notes or the
Indenture, and such failure continues for 60
days after notice; (v) violation of certain
bankruptcy-related covenants; (vi) the
principal, any premium or accrued and unpaid
interest of Indebtedness (as defined herein)
of Holding or any Restricted Subsidiary is not
paid within any applicable grace period after
final maturity or acceleration and such unpaid
or accelerated principal, premium and interest
exceeds $7.5 million; or (vii) the occurrence
of certain other events. See "Description of
the Notes Events of Default and Remedies."
FORM AND DENOMINATION....................... At the option of the holder of a New Note,
such New Note may be held in the form of
either (i) a certificated New Note or (ii) a
beneficial interest in one or more fully
registered global securities (the "New Global
Certificates"), which will be deposited with
or on behalf of The Depository Trust Company
("DTC" or the "Depositary") and registered in
the name of Cede & Co., its nominee.
Beneficial interests in the New Global
Certificates will be shown on, and transfers
thereof will be effected only through, records
maintained by DTC and its participants. See
"Description of the Notes -- General" and "--
Form, Denomination and Book-Entry Procedures."
REGISTRATION RIGHTS......................... The Company has filed a registration statement
on Form S-4 (together with any amendments
thereto, the "Registration Statement") with
respect to the Exchange Offer made hereby, and
has agreed to use its best efforts to cause
the Registration Statement to become effective
on or prior to June 23, 1996. In the event
that any changes in law or the applicable
interpretations of the staff of the Commission
do not permit APS to effect the Exchange Offer
made hereby, if the Registration Statement is
not declared effective on or prior to June 23,
1996, if the Exchange Offer is not consummated
on or prior to July 23, 1996 for any reason
attributable to actions or inactions of APS,
or under certain other circumstances, APS
will, as promptly as practicable, file with
the Commission a shelf registration statement
with respect to the
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
resale of the Existing Notes (the "Shelf
Registration Statement"), use its best efforts
to cause such Shelf Registration Statement to
become effective generally within 30 days
after the date on which APS is required to
file the Shelf Registration Statement, and to
keep the Shelf Registration Statement
effective until three years after the
effective date thereof (or until one year
after such effective date if the Shelf
Registration Statement is filed at the request
of an Initial Purchaser). Upon consummation of
the Exchange Offer, APS generally will have no
further obligation to register the Existing
Notes. See "Registration Rights."
TERMINATION OF CERTAIN RIGHTS............... Holders of New Notes will not be entitled to
certain rights under the Registration
Agreement, including the right to require APS
to file a registration statement with respect
to the New Notes, and to file a Shelf
Registration Statement, except in certain
limited circumstances. See "The Exchange Offer
-- Termination of Certain Rights."
ABSENCE OF A PUBLIC MARKET The New Notes will be new securities for which
FOR THE NEW NOTES.......................... there currently is no market. Although the
Initial Purchasers have informed the Company
that they currently intend to make a market in
the New Notes, they are not obligated to do
so, and any such market making may be
discontinued at any time without notice.
Accordingly, there can be no assurance as to
the development or liquidity of any market for
the New Notes. The Company does not intend to
apply for listing of the New Notes on any
securities exchange or for quotation through
the National Association of Securities Dealers
Automated Quotation System.
USE OF PROCEEDS............................. APS will not receive any proceeds from the
Exchange Offer. The net proceeds to APS from
the sale of the Existing Notes were used to
pay the $79.7 million closing purchase price
for PI (which was subsequently adjusted to
$74.9 million) and to pay related fees and
expenses, and the remainder was used to repay
certain bank borrowings under the Prior Credit
Agreement (as defined herein).
</TABLE>
For further information regarding the New Notes, see "Description of the
Notes."
12
<PAGE>
SUMMARY FINANCIAL INFORMATION AND PRO FORMA INFORMATION
The following tables present summary historical financial data derived from
the consolidated financial statements of Holding and summary unaudited pro forma
combined data of Holding and PI for the periods indicated. PI's results of
operations for the two days between the consummation of the Acquisition on
January 25, 1996 and Holding's fiscal year end on January 27, 1996 are
immaterial to Holding's results of operations for the fiscal year ended January
27, 1996. The pro forma data was prepared to illustrate, in accordance with SEC
Regulation S-X, Article 11, the estimated effect of the Acquisition and related
transactions, including the issuance of the Existing Notes and borrowings under
the New Credit Agreement, as if the Acquisition and related transactions had
occurred as of January 29, 1995. The pro forma data does not purport to be
indicative of the results of operations or financial position of Holding and PI
that actually would have been obtained if the Acquisition and related
transactions had in fact been completed as of such date or to project the
results of operations or financial position of Holding for any future date or
period. The information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements of Holding and related notes thereto
included in the Form 10-K and the Form 10-Q, each of which is incorporated
herein by reference, and "Pro Forma Combined Condensed Statement of Operations"
and the Financial Statements of PI and the related notes thereto with respect to
the fiscal year ended December 31, 1995.
APS HOLDING CORPORATION
SUMMARY HISTORICAL CONSOLIDATED AND PRO FORMA COMBINED FINANCIAL DATA
<TABLE>
<CAPTION>
PRO FORMA
(1)(2) THREE MONTHS ENDED
FISCAL YEAR ENDED ------------
----------------------------------------------------- FISCAL YEAR --------------------
JAN. 25, JAN. 30, JAN. 29, JAN. 28, JAN. 27, ENDED JAN. APRIL 25, APRIL 25,
1992 1993 1994 1995 1996 27, 1996 1995 1996
--------- --------- --------- --------- --------- ------------ --------- ---------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................... $ 399,384 $ 409,381 $ 438,298 $ 523,508 $ 603,737 $ 828,498 $ 137,949 $ 217,566
Gross profit................. 122,666 127,386 141,148 178,663 211,353 291,216 48,069 75,831
Operating income (3)......... 7,662 15,744 21,844 32,941 24,139 32,756 8,092 7,551
Interest income.............. 2,434 2,435 3,023 3,896 5,265 5,884 1,261 1,363
Other income (4)............. 2,847 2,298 1,277 1,535 1,535 2,060 383 273
Income before interest
expense, income taxes,
extraordinary item and
cumulative effect of
accounting change........... 12,943 20,477 26,144 38,372 30,939 40,700 9,736 9,187
Interest expense............. 27,922 25,875 22,039 10,500 16,256 27,336 3,684 7,001
Provision (benefit) for
income taxes (5)............ 100 285 (1,550) (4,495) 5,447 4,945 2,294 831
Income (loss) before
extraordinary item and
cumulative effect of
accounting change........... (15,079) (5,683) 5,655 32,367 9,236 8,419 3,758 1,355
Net income (loss)............ $ (17,906) $ (5,683) $ (11,079) $ 32,367 $ 6,768 $ 5,951 $ 3,758 $ 1,355
BALANCE SHEET DATA
(end of period):
Cash and cash equivalents.... $ 2,618 $ 1,346 $ 653 $ 15 $ 7,886 $ 4,485 $ 10,744
Accounts and notes
receivable, net............. 59,883 65,688 77,494 102,991 147,083 113,043 147,768
Inventories.................. 78,099 76,342 93,407 177,328 295,379 196,471 308,430
Total assets................. 215,351 215,752 251,224 387,062 600,159 422,517 611,178
Total debt................... 177,248 176,857 121,724 170,533 315,965 196,603 304,346
Total common stockholders'
equity (deficit)............ $ (20,659) $ (18,430) $ 76,761 $ 117,218 $ 124,030 $ 120,976 $ 125,385
OTHER DATA:
EBITDA (6)................... $ 21,089 $ 27,450 $ 32,888 $ 45,063 $ 38,733 $ 49,840 $ 11,642 $ 11,943
Ratio of earnings to fixed
charges (7)................. 0.5x 0.8x 1.2x 3.0x 1.7x 1.4x 2.2x 1.2x
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
13
<PAGE>
(1) The pro forma combined financial data have been prepared assuming the
retention of all of the Company's and PI's sales following the Acquisition.
Management anticipates, however, that it will retain significantly less than
100% of PI's sales as a result of the expected loss of certain associated
jobbers and the closure of certain company-owned stores. The lower retention of
sales will result in lower operating results of the combined companies than are
reflected in such pro forma combined financial data. See "Pro Forma Combined
Condensed Statement of Operations."
(2) For purposes of the pro forma data, PI's historical statement of
operations for the fiscal year ended December 31, 1995 was combined with the
Company's historical statement of operations for the fiscal year ended January
27,1996. Pro forma adjustments to the combined results of operations of the
Company and PI arising as a result of the Acquisition include:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
JANUARY 27, 1996
-----------------
<S> <C>
Pro forma adjustments:
Cost of goods sold (a)........................................................ $ 2,872
Selling, general and administrative (b)....................................... 3,246
Depreciation and amortization (c)............................................. 51
Interest expense (c).......................................................... (8,412)
Income tax provision (c)...................................................... (726)
-------
Total decrease to net income................................................ $ (2,969)
-------
-------
</TABLE>
(a) Consists primarily of estimated savings resulting from incremental
purchasing economies that the Company believes can be realized in connection
with the Acquisition, based on arrangements the Company negotiated with its
major suppliers following the Acquisition.
(b) Consists primarily of estimated savings resulting from reductions in
payroll, benefits and occupancy costs as the result of the closure and
consolidation of eleven of the Company's distribution centers (including
nine PI distribution centers) and the consolidation of certain
administrative functions.
(c) Adjustments have been made (i) to depreciation and amortization to
conform PI's accounting policies and practices to those of the Company, (ii)
to interest expense to reflect the issuance of the Existing Notes and
borrowings under the New Credit Agreement, and (iii) to reflect the tax
impact of the above adjustments.
There can be no assurance that the Company will in fact realize any of the
cost savings reflected in these adjustments, or that expenses will not be
materially higher than the levels reflected in the pro forma data.
The Acquisition was accounted for by the purchase method of accounting,
pursuant to which the purchase price was allocated among the acquired tangible
and intangible assets and assumed liabilities in accordance with estimates of
their fair values on the date of the Acquisition.
(3) Operating income for fiscal 1996 reflects the impact of an $11,224
pre-tax charge related to a facility rationalization and restructuring program
undertaken in conjunction with the Acquisition, the adoption of Statement of
Financial Accounting Standards No. 121 (entitled, "Accounting for the Impairment
of Long-lived Assets and for Long-lived Assets to be Disposed of") ("SFAS No.
121") relating to the impairment and disposal of long-lived assets, and the
write-down of certain assets.
(4) Other income (expense) in fiscal 1993 includes a non-recurring gain on
pension curtailment of $3,288.
(5) The benefit for income taxes in fiscal 1995 includes a non-recurring
benefit of $14,802, recognized as a result of the Company's ability to utilize
its net operating loss carryforwards.
(6) Excluding the $11,224 asset impairment and restructuring charge recorded
by the Company in the fourth quarter of fiscal 1996, the Company would have had
EBITDA of $49,957 for the fiscal year ended January 27, 1996. EBITDA represents
the sum of income before interest expense and income taxes, plus depreciation
and amortization. EBITDA should not be construed as a substitute for income from
operations, net income or cash flow from operating activities, for the purpose
of analyzing the Company's operating performance, financial position and cash
flows. The Company has presented EBITDA because it is commonly used by investors
to analyze and compare companies on the basis of operating performance and to
determine a company's ability to service debt.
(7) For purposes of computing the ratio of earnings to fixed charges,
earnings consist of income from continuing operations before income taxes and
fixed charges. Fixed charges include interest expense and the portion of
operating rents that is deemed representative of an interest factor.
14
<PAGE>
RISK FACTORS
HOLDERS OF EXISTING NOTES SHOULD CONSIDER CAREFULLY ALL OF THE INFORMATION
SET FORTH IN THIS PROSPECTUS AND, IN PARTICULAR, SHOULD EVALUATE THE FOLLOWING
RISKS BEFORE TENDERING THEIR EXISTING NOTES IN THE EXCHANGE OFFER, ALTHOUGH THE
RISK FACTORS SET FORTH BELOW ARE GENERALLY APPLICABLE TO THE EXISTING NOTES AS
WELL AS THE NEW NOTES.
RESTRICTIONS ON TRANSFER
Holders of Existing Notes who do not exchange them for New Notes pursuant to
the Exchange Offer will continue to be subject to certain restrictions on
transfer of such Existing Notes. In general, the Existing Notes may not be
reoffered or resold by their holders except pursuant to an effective
registration statement under the Securities Act or pursuant to an applicable
exemption from such registration, and the Existing Notes are legended to so
restrict their transfer. Based on interpretations by the staff of the SEC, as
set forth in no-action letters issued to third parties, the Company believes
that each holder (other than any holder who is an "affiliate" of APS within the
meaning of Rule 405 under the Securities Act) who duly exchanges Existing Notes
for New Notes in the Exchange Offer will receive New Notes that are freely
tradeable under the Securities Act, PROVIDED THAT such New Notes are acquired in
the ordinary course of such holder's business and that such holder is not
engaged in, and does not intend to engage in, a distribution of such New Notes
and has no arrangement or understanding with any person to participate in the
distribution of such New Notes. The SEC, however, has not considered the
Exchange Offer in the context of a no-action letter, and therefore there can be
no assurance that the staff of the SEC would make a similar determination with
respect to the Exchange Offer as in such other circumstances. Holders of
Existing Notes who participate in such Exchange Offer should be aware, however,
that, except in the case of certain broker-dealers as described below, if they
accept New Notes in the Exchange Offer for the purpose of engaging in secondary
resales, such New Notes may not be publicly reoffered or resold without
complying with the registration and prospectus delivery requirements of the
Securities Act. Each broker-dealer that receives New Notes for its own account
in exchange for Existing Notes, where such Existing Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. See "The Exchange Offer," "Description of the
Notes -- Registration Covenant; Exchange Offer" and "Plan of Distribution."
The Existing Notes may be sold pursuant to the restrictions set forth in
Rule 144A, Regulation D under the Securities Act or Regulation S without
registration under the Securities Act.
LEVERAGE; RESTRICTIVE COVENANTS
The Company incurred significant indebtedness in connection with the
financing of the Acquisition. As a result, the Company is highly leveraged and
has substantial repayment obligations as well as significant interest expenses.
As of April 25, 1996, the Company's total indebtedness (including short-term
debt) and its ratio of total indebtedness to total capitalization were $304.3
million and 70.8%, respectively. See "Capitalization." The Amended and Restated
Credit Agreement, dated as of the Acquisition Closing Date (the "New Credit
Agreement"), among APS, as borrower, Holding and certain of the subsidiaries of
APS, as guarantors, and a syndicate of banks led by Chemical Bank ("Chemical"),
provides for a $65 million term loan facility (the "Term Loan Facility") and a
$235 million revolving credit facility (the "Revolving Credit Facility"). The
New Credit Agreement requires the Company to make quarterly principal payments
on the term loans thereunder. Scheduled annual term loan principal payments will
equal $13 million in 1996, $15 million in 1997, $17 million in 1998 and $20
million in 1999, and all outstanding revolving credit loans will become due on
December 31, 2000. See "Description of New Credit Agreement."
The Company's ability to make scheduled payments of principal or interest
on, or to refinance, its indebtedness will depend on its future operating
performance and cash flow, which are subject to prevailing economic conditions,
prevailing interest rate levels, and financial, competitive, business and other
factors beyond its control. The degree to which the Company is leveraged could
have
15
<PAGE>
important consequences to the holders of the Notes, including: (i) the Company's
future ability to obtain additional financing for working capital or other
purposes may be limited; (ii) a substantial portion of the Company's cash flow
from operations will be dedicated to the payment of principal and interest on
its indebtedness, thereby reducing funds available for operations; (iii) certain
of the Company's borrowings, including all borrowings under the New Credit
Agreement, will be at variable rates of interest, which could cause the Company
to be vulnerable to increases in interest rates; (iv) all of the indebtedness
incurred in connection with the New Credit Agreement will become due prior to
the time any principal payment on the Notes is due; and (v) the Company may be
more vulnerable to economic downturns and may be limited in its ability to
withstand competitive pressures. The Company has entered into certain interest
rate protection arrangements, which are a type of financial derivative
instrument and cover a portion of the borrowings under the New Credit Agreement
and are for a limited duration.
The Company believes that, based upon anticipated levels of operations
(assuming the timely integration of PI's business into that of the Company's
business; see "-- Realization of Benefits from the Acquisition; Integration of
PI"), it should be able to meet its regularly scheduled debt service
obligations, including principal repayments under the Term Loan Facility and
interest payments on the Notes when due, prior to maturity of the loans
outstanding under the Revolving Credit Facility. If the Company cannot generate
sufficient cash flow from operations to meet such obligations, however, the
Company might be required to refinance its debt or to dispose of assets to
obtain funds for such purpose. In addition, the Company currently does not
expect to generate sufficient cash flow to fund the repayment of loans under the
Revolving Credit Facility that will become due upon the maturity of such
facility on December 31, 2000 and, accordingly, expects that it will seek to
refinance such amounts prior to such maturity. There is no assurance that
refinancings or asset dispositions could be effected on satisfactory terms or
would be permitted by the terms of the New Credit Agreement or the Indenture.
The New Credit Agreement and the Indenture contain numerous operating
covenants that limit the discretion of the Company's management with respect to
certain business matters. These covenants place significant restrictions on,
among other things, the ability of the Company to incur additional indebtedness,
to create liens or other encumbrances, to make certain payments, investments,
loans and guarantees and to sell or otherwise dispose of assets and merge or
consolidate with another entity. See "Description of New Credit Agreement" and
"Description of the Notes -- Certain Covenants." The New Credit Agreement also
contains a number of financial covenants that require the Company to meet
certain financial ratios and tests, including maintenance of the Company's net
worth and maintenance of consolidated fixed charge to interest expense and
consolidated leverage ratios. A failure to comply with the obligations contained
in the New Credit Agreement or the Indenture could result in an event of default
under the New Credit Agreement or an Event of Default under the Indenture that,
if not cured or waived, could permit acceleration of the relevant debt and
acceleration of debt under other instruments that may contain cross-acceleration
or cross-default provisions. Other indebtedness of the Company could contain
amortization and other prepayment provisions, or financial or other covenants,
more restrictive than those applicable to the Notes.
SUBORDINATION OF THE NOTES AND THE GUARANTEES; ASSET ENCUMBRANCES
The payment of principal of, premium, if any, and interest on, and any other
amounts owing in respect of, the Notes is subordinated to the prior payment in
full in cash or cash equivalents of all existing and future Senior Indebtedness
of APS, which includes all indebtedness under the New Credit Agreement.
Therefore, in the event of the bankruptcy, liquidation, dissolution,
reorganization or any similar proceeding regarding APS, the assets of APS will
be available to pay obligations on the Notes only after Senior Indebtedness of
APS has been paid in full in cash or cash equivalents or in any other manner
acceptable to the holders of such Senior Indebtedness, and there may not be
sufficient assets remaining to pay amounts due on all or any of the Notes. In
addition, APS may not pay principal of, premium, if any, or interest on or any
other amounts owing in respect of the Notes or make any deposit for the purpose
of the discharge of its liabilities under the Indenture and may not repurchase,
16
<PAGE>
redeem or otherwise retire any Notes, if any Senior Indebtedness of APS is not
paid when due or any other default on such Senior Indebtedness occurs and the
maturity of such Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, such default has been cured or waived and such
acceleration has been rescinded or such Senior Indebtedness has been repaid in
full. In addition, during the continuance of any default (other than a default
described in the preceding sentence) with respect to Designated Senior
Indebtedness of APS (as defined herein), as a result of which the maturity
thereof may then be accelerated immediately, APS may be prevented from making
any payments on the Notes for a specified period of time unless such default is
no longer continuing, the blockage of payments on the Notes is rescinded or such
indebtedness has been repaid in full. See "Description of the Notes --
Subordination of Notes."
The Note Guarantees are subordinated to the existing and future Senior
Indebtedness of Holding and the Senior Indebtedness of the Restricted Subsidiary
Guarantors, as applicable, including their respective guarantees of APS's
obligations under the New Credit Agreement. See "Description of the Notes --
Subordination of Note Guarantees; Release of Restricted Subsidiary Guarantees."
Neither the Notes nor the Note Guarantees are secured by any of the
Company's assets. The obligations of APS under the New Credit Agreement are
secured by pledges of the capital stock of APS and certain of its subsidiaries,
by a security interest in substantially all of the personal property of APS and
such subsidiaries, including intangible assets, such as licenses, trademarks and
customer lists, and by mortgages on certain of their owned real property. If APS
becomes insolvent or is liquidated, or if payment under the New Credit Agreement
is accelerated, the lenders under the New Credit Agreement would be entitled to
exercise the remedies available to a secured lender under applicable law and
pursuant to the New Credit Agreement. Accordingly, such lenders will have a
prior claim on such assets of APS and such subsidiaries.
Holding is a holding company with no independent operations and no
significant assets other than its ownership of the capital stock of APS.
Holding, therefore, is dependent upon the receipt of dividends or other
distributions from APS to fund any obligations that it incurs, including
obligations under the Holding Guarantee. The New Credit Agreement contains
restrictions on distributions from APS to Holding, other than for certain
specified purposes. See "Description of New Credit Agreement." Accordingly, if
APS should at any time be unable to pay interest on or principal of the Notes,
it is unlikely that it will be permitted to distribute to Holding the funds
necessary to enable Holding to meet its obligations under the Holding Guarantee.
LIQUIDITY
Since the completion of the Company's initial public offering and debt
refinancing in 1993, the Company has pursued more aggressive acquisition and ISW
expansion programs, resulting in increased funding requirements. The Company
expects that the principal sources of liquidity for the Company's future
operating requirements and business expansion will be cash flows from operations
and borrowings under the New Credit Agreement. In addition, the Company has
negotiated deferred payment terms and other changeover and acquisition
incentives with its major suppliers in order to offset the costs of integrating
PI and to improve the Company's liquidity during such integration. While the
Company expects that such sources will provide sufficient working capital to
meet the Company's regularly scheduled debt service obligations (which increased
significantly as a result of the Acquisition and related financings) prior to
the maturity of the loans outstanding under the Revolving Credit Facility,
operate its business and finance the integration of PI into the Company's
distribution network and the Company's currently planned expansion efforts,
there can be no assurance that such sources will prove to be sufficient. A
failure to realize a substantial portion of the benefits of the Acquisition
within the time frame expected by the Company could result in significant
additional working capital requirements. The Company expects to satisfy its
trade payables upon the expiration of deferred payment terms using cash flow
from operations and borrowings under the Revolving Credit Facility. The
satisfaction of such trade payables could, depending on the Company's
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cash flow from operations at the time of payment, significantly reduce
availability under the Revolving Credit Facility for other purposes. Borrowings
under the Revolving Credit Facility are subject to the maintenance of a
borrowing base consisting of eligible inventory and accounts receivable.
The Company increased the total number of ISW locations from 150 to 252
during the fiscal year ended January 27, 1996, and to 255 during the three
months ended April 25, 1996. The Company plans to open between 40 and 50 new
ISWs during fiscal 1997. Operating results have experienced and are expected to
continue to experience earnings and cash flow pressure due to the large number
of less mature ISWs and the rapid growth of the ISW base, the costs of opening
additional ISWs and the expiration, generally after a period of six to fifteen
months, of deferred payment terms extended to the Company in connection with the
opening of new ISW locations.
REALIZATION OF BENEFITS FROM THE ACQUISITION; INTEGRATION OF PI
Full realization of the potential benefits of the Acquisition will be
dependent upon a variety of factors, including (i) retention of a substantial
portion of PI's sales, particularly sales to higher volume associated jobbers;
(ii) achieving sales volumes sufficient to utilize the reductions in cost of
goods sold (as a percentage of net sales) resulting from purchasing economies
extended to the Company by its suppliers; (iii) achieving significant reductions
in selling, general and administrative expenses through the closure (as of the
date of this Prospectus) of four of the Company's distribution centers
(including two PI distribution centers) and the anticipated closure of seven
additional PI distribution centers, and consolidation of these operations into
the combined companies' remaining facilities, as well as consolidation of
certain administrative functions; and (iv) obtaining deferred payment terms and
other one-time changeover incentives from suppliers that will be sufficient to
offset certain significant one-time cash costs and expenses that the Company
incurred in connection with the Acquisition and expects to incur in connection
with the integration of PI's business in the Company's business. There can be no
assurance as to the extent to which the Company will be able to realize the
potential benefits of the Acquisition or the timing of any such realization.
Failure to achieve a substantial portion of these benefits within the time frame
expected by the Company could materially and adversely affect the Company's
future results of operations and financial position. See "Business" in the Form
10-K and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Form 10-Q, each of which is incorporated herein by
reference, and "Pro Forma Combined Condensed Statement of Operations" (including
the notes thereto).
RETAINING A SUBSTANTIAL PORTION OF PI'S SALES. The Company believes that it
will retain significantly less than 100% of PI's sales and that the actual
amount of sales that will be retained will not be known until the process of
converting PI's distribution centers, associated jobbers and company-owned
stores to the Big A program has been completed. The Company's competitors may
seek to obtain certain of PI's or the Company's existing customers during the
period of the integration of PI, including through the use of purchasing
discounts or other incentives. The Company's assessment of the anticipated
benefits of the Acquisition assumes retention of at least a majority of PI's
sales, particularly from PI's larger customers. While substantially all of PI's
larger customers have indicated to the Company that they intend to change over
to the Big A program, there can be no assurance that such changeovers will
actually occur. If the Company retains a materially smaller percentage of PI's
sales, particularly those made to larger customers, than it has assumed, the
benefits of the Acquisition to the Company could be materially diminished and
its future results of operations could be materially and adversely affected.
OBTAINING SIGNIFICANT PURCHASING ECONOMIES. The Company's estimates
regarding the purchasing economies that it expects to achieve as a result of the
Acquisition are based upon a variety of assumptions derived from arrangements
that the Company has negotiated with its major suppliers and its preliminary
estimates regarding sales volumes over the next several years. These assumptions
may not prove to be accurate and are subject to a number of factors beyond the
Company's control, including those described under "-- Product Demand," as well
as the level of retention by the Company of sales from existing PI customers.
The volume discounts that were extended to the
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Company by its suppliers at the time of the Acquisition will be earned as
additional inventory is purchased by the Company subsequent to the Acquisition.
The Company has also negotiated additional incentives from its suppliers as a
result of, among other things, the consolidation of PI and APS product lines
into single suppliers. The aggregate amount of such purchasing economies will be
dependent upon the amount and character of PI's sales that the Company is able
to retain. A failure by the Company to obtain significant purchasing economies
could materially diminish the benefits of the Acquisition and materially and
adversely affect the Company's future results of operations.
ACHIEVING SIGNIFICANT REDUCTIONS IN SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES. The Company's estimates regarding cost savings resulting from the
closure (as of the date of this Prospectus) of four of the Company's
distribution centers (including two PI distribution centers) and the anticipated
closure of seven additional PI distribution centers are based upon a variety of
assumptions, including with respect to the cost of terminating leases for and/or
subleasing the closed properties, the magnitude of the Company's employee
severance obligations and the number of additional employees that the Company
will add to the remaining distribution centers following the closure of such PI
and Company facilities. The Company's assumptions may not prove to be accurate
and are subject to a number of factors beyond its control.
OBTAINING SUPPLIER INCENTIVES TO OFFSET ONE-TIME COSTS AND EXPENSES. The
Company expects to incur significant costs and expenses during fiscal 1997 in
connection with the Acquisition and the integration of PI's business into the
Company's distribution network, including those associated with the closure and
consolidation of certain PI distribution centers, employee severance
obligations, product changeovers and customer retention incentives. The
estimated costs to close certain PI distribution centers and terminate certain
PI employees have been recognized as a liability assumed in the purchase of PI
and included in the allocation of cost pursuant to the purchase method of
accounting for business combinations. APS has negotiated changeover incentives
and deferred payment terms from its major suppliers in order to help offset its
product changeover and customer retention expenses and reduce the impact of such
costs and expenses on its operating results and liquidity; no assurance,
however, can be given that such incentives and terms will be sufficient to
substantially offset such costs and expenses. If the integration of PI's
business with the business of the Company is more costly or takes longer than
anticipated, the Company's results of operations could be materially and
adversely affected.
The Company took a pre-tax asset impairment and restructuring charge of
$11.2 million in the fourth quarter of fiscal 1996, which primarily related to
closures and consolidations of certain APS facilities, the adoption of SFAS 121
relating to the impairment and disposal of long-lived assets, and the write-down
of certain intangible and other assets. The Company also took an extraordinary
pre-tax charge of $3.9 million in connection with the write-off of unamortized
debt issuance costs related to the substantive modification of the terms of the
Company's prior credit agreement with a lending syndicate (the "Prior Credit
Agreement") as a result of the execution of the New Credit Agreement, which
charge was accounted for as an extinguishment of debt. The Company also incurred
substantial debt issuance costs in connection with the issuance of the Existing
Notes and the execution of the New Credit Agreement. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Form 10-K and in the Form 10-Q, each of which is incorporated herein by
reference, and "Pro Forma Combined Condensed Financial Statement of Operations."
COMPETITION
The Company operates in a highly competitive environment. It competes
directly and indirectly with numerous distributors, retailers and manufacturers
of automotive aftermarket products, some of which distribute in channels that
may be expanding in terms of market share relative to the channels in which the
Company distributes its products. In addition, some of the Company's current and
potential competitors are larger, may have greater financial resources and may
be less leveraged than the Company. Furthermore, particularly in light of the
trend in the automotive parts industry
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toward increasing consolidation at the warehouse and jobber levels, the
Company's financial performance may be significantly affected by the Company's
ability to compete successfully for associated jobber customers, and otherwise
take advantage of consolidation opportunities and other industry trends.
PRODUCT DEMAND
The demand for automotive products is affected by a number of factors beyond
the Company's control, including economic conditions, vehicle quality and
maintenance, vehicle scrappage rates and weather conditions. Weather conditions
cause seasonal variations in the Company's results of operations, and the
occurrence of extreme weather or mild weather may result in significant
fluctuations in such results. Temperature extremes tend to enhance sales by
causing a higher incidence of parts failure and increasing sales of seasonal
products, while milder weather tends to depress sales. In addition, in recent
years there have been, and in the future there are likely to continue to be,
significant improvements in the quality of new vehicles and vehicle parts and
extensions of manufacturers' warranties that may reduce demand for the Company's
products. The Company believes that the unseasonably mild weather conditions
that occurred during the winter of 1994-1995 throughout most of the United
States contributed, together with other factors, to an industry-wide market
softness, especially with respect to the sale of seasonal products, and
adversely affected the Company's operating results for the first quarter of
fiscal 1996. The Company continued to experience, along with other industry
participants, a general softness in product demand through the fourth quarter of
fiscal 1996. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Form 10-K and in the Form 10-Q, each of which
is incorporated herein by reference.
MAJOR STOCKHOLDER
Approximately 30% of the outstanding Class A Common Stock, par value $.01
per share (the "Class A Common Stock"), of Holding is owned by The Clayton &
Dubilier Private Equity Fund IV Limited Partnership ("Fund IV"), an investment
partnership managed by Clayton, Dubilier & Rice, Inc. ("CD&R"). Two of the nine
current members of the Board of Directors of the Company are employees of CD&R.
As a result, Fund IV is in a position to significantly influence the management
and affairs of the Company.
FRAUDULENT CONVEYANCE CONSIDERATIONS
In connection with the Acquisition, APS, Holding and each Restricted
Subsidiary Guarantor incurred substantial indebtedness, including the
indebtedness under the Notes and the New Credit Agreement and the issuance of
the Note Guarantees. If, under relevant federal and state fraudulent conveyance
statutes in a bankruptcy, reorganization or rehabilitation case or similar
proceeding or a lawsuit by or on behalf of unpaid creditors of APS, Holding or
any such Restricted Subsidiary Guarantor, a court were to find that, at the time
the Notes or the Note Guarantees were issued, (i) APS, Holding or such
Restricted Subsidiary Guarantor, as the case may be, issued the Notes or the
applicable Note Guarantee, as the case may be, with the actual intent of
hindering, delaying or defrauding current or future creditors or (ii) (a) APS,
Holding or such Restricted Subsidiary Guarantor, as the case may be, received
less than reasonably equivalent value or fair consideration for issuing the
Notes or the applicable Note Guarantee, as the case may be, and (b) APS, Holding
or such Restricted Subsidiary Guarantor, as the case may be, (1) was insolvent
or was rendered insolvent by reason of the Acquisition and/or such related
transactions, including the incurrence of the indebtedness to fund the
Acquisition, (2) was engaged, or about to engage, in a business or transaction
for which its remaining assets constituted unreasonably small capital, (3)
intended to incur, or believed that it would incur, debts beyond its ability to
pay as such debts matured (as all of the foregoing or similar terms are defined
in or interpreted under such fraudulent conveyance statutes) or (4) was a
defendant in an action for money damages, or had a judgment for money damages
docketed against it (if, in either case, after final judgment, the judgment is
unsatisfied), such court could avoid or subordinate the Notes and the applicable
Note Guarantee to presently existing and future indebtedness of APS, Holding or
such Restricted Subsidiary Guarantor, as the case may be (in addition to the
Senior Indebtedness to which the Notes are expressly subordinated and the Senior
Indebtedness to
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which the applicable Note Guarantee is expressly subordinated) and take other
action detrimental to the holders of the Notes and the Note Guarantees,
including, under certain circumstances, invalidating the Notes and the Note
Guarantees.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the federal or local law that is being applied in any such
proceeding. Generally, however, APS, Holding or such Restricted Subsidiary
Guarantor, as the case may be, would be considered insolvent if, at the time it
incurs the indebtedness constituting the Notes or the applicable Note Guarantee
or as a result of the issuance of the Notes or the applicable Note Guarantee,
either (i) the fair market value (or fair saleable value or fair value) of its
assets (exclusive of any property transferred with intent to hinder, delay or
defraud) is less than the amount required to pay the probable amount of its
total existing debts and liabilities (including contingent liabilities) as they
become absolute and matured or (ii) it is incurring debt beyond its ability to
pay as such debt matures.
The Board of Directors and management of each of Holding, APS and each
Restricted Subsidiary Guarantor believe that at the time of its issuance of the
Notes and the applicable Note Guarantee, as the case may be, APS, Holding and
each Restricted Subsidiary Guarantor (i) were (a) neither insolvent nor rendered
insolvent thereby, (b) in possession of sufficient capital to operate their
respective businesses effectively and (c) incurring debts within their
respective abilities to pay as the same mature or become due and (ii) had
sufficient assets to satisfy any probable money judgment against them in any
pending action. In reaching the foregoing conclusions, Holding, APS and each
Restricted Subsidiary Guarantor relied upon their analyses of internal cash flow
projections and estimated values of their assets and liabilities. There can be
no assurance, however, that a court passing on such questions would reach the
same conclusions.
ABSENCE OF A PUBLIC MARKET FOR THE NOTES
The New Notes are being offered to the holders of Existing Notes. The
Existing Notes were originally issued on the Acquisition Closing Date to the
Initial Purchasers pursuant to Section 4(2) of the Securities Act. The Existing
Notes subsequently have been resold to (i) qualified institutional buyers (as
defined in Rule 144A) in reliance on, and subject to the restrictions imposed
pursuant to, Rule 144A, (ii) institutional investors that were "accredited
investors" within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Securities Act, and (iii) certain non-U.S. persons outside the
United States of America in accordance with Regulation S. The Existing Notes
beneficially owned by qualified institutional buyers are eligible for trading in
the Private Offering, Resale and Trading through Automated Linkages ("PORTAL")
Market, the National Association of Securities Dealers' screen-based automated
market for trading of securities eligible for resale under Rule 144A.
To the extent that Existing Notes are tendered and accepted in the Exchange
Offer, the trading market for the remaining untendered or tendered but not
accepted Existing Notes could be adversely affected. The New Notes will
constitute a new issue of securities, have no established trading market and may
not be widely distributed. Although the Initial Purchasers have informed the
Company that they currently intend to make a market in the New Notes, they are
not obligated to do so and may discontinue market making at any time without
notice. The Company does not intend to list the Notes on any national securities
exchange or to seek the admission thereof to trading in the Nasdaq National
Market. Accordingly, there can be no assurance as to the development or
liquidity of any market for either New Notes or the Existing Notes. If a market
does develop, the Notes may trade at a discount from their principal amount, and
the price of the Notes may fluctuate depending on many factors including, but
not limited to, prevailing interest rates, the Company's operating results and
the market for similar securities, and liquidity may therefore be limited. If a
market for the Notes does not develop, purchasers may be unable to resell such
securities for an extended period of time, if at all.
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THE EXCHANGE OFFER
PURPOSE
In connection with the initial sale of the Existing Notes, APS agreed,
subject to certain conditions, to use its best efforts to conduct the Exchange
Offer. APS's purpose in making the Exchange Offer is to comply with such
agreement and to avoid the increase in the interest rate borne by the Existing
Notes which would occur if the Exchange Offer were not duly and timely
consummated. See "Registration Rights." The full terms of APS's obligations with
respect to the Exchange Offer are set forth in the Registration Agreement which
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The Exchange Offer should provide holders of Existing
Notes, which are subject to trading limitations, with the ability to effect, for
federal income tax purposes, a tax-free exchange of such Existing Notes for New
Notes that should not be subject to such restrictions.
Based on interpretations by the staff of the Commission, as set forth in
no-action letters issued to third parties, the Company believes that the
Exchange Offer will provide holders of Existing Notes with New Notes that will
generally be freely transferable by holders thereof (other than any holder who
is an "affiliate" of APS within the meaning of Rule 405 under the Securities
Act), who may offer for resale, resell or otherwise transfer such New Notes
without complying with the registration and prospectus delivery provisions of
the Securities Act, provided that such New Notes are acquired in the ordinary
course of each such holder's business and such holders are not engaged in, and
do not intend to engage in, a distribution of such New Notes and have no
arrangement or understanding with any person to participate in a distribution of
such New Notes. APS has not sought, and does not intend to seek, a no-action
letter from the Commission with respect to the effects of the Exchange Offer. By
tendering Existing Notes and executing the Letter of Transmittal, the holder
thereof shall represent and agree that (i) it is neither an affiliate of APS nor
a broker-dealer tendering Existing Notes acquired directly from APS for its own
account, (ii) it acquired the New Notes in the ordinary course of its business
and (iii) it is not engaged in, and does not intend to engage in, a distribution
of the New Notes and it has no arrangement or understanding to participate in a
distribution of New Notes. Holders of Existing Notes who participate in the
Exchange Offer should be aware that, except in the case of certain
broker-dealers as described below, if they accept the Exchange Offer for the
purpose of participating in a distribution of the New Notes, they cannot rely on
such interpretations by the staff of the Commission and must comply with the
registration and prospectus delivery requirements of the Securities Act.
Each broker-dealer that receives New Notes for its own account in exchange
for Existing Notes, where such Existing Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus with any resale
of such New Notes. See "Plan of Distribution."
TERMS OF THE OFFER
APS hereby offers, upon the terms and conditions set forth herein and in the
related Letter of Transmittal, to exchange New Notes for a like principal amount
of outstanding Existing Notes. An aggregate of $100 million principal amount of
Existing Notes are outstanding. The Exchange Offer is not conditioned upon any
minimum principal amount of Existing Notes being tendered.
The Exchange Offer will expire at 5:00 p.m., New York City time, on July 18,
1996 unless extended. The term "Expiration Date" means 5:00 p.m., New York City
time, on July 18, 1996, unless APS, in its sole discretion, notifies the
Exchange Agent that the period of the Exchange Offer has been extended, in which
case the term "Expiration Date" means the latest time and date on which the
Exchange Offer is so extended will expire. See "-- Expiration and Extension."
Holders of Existing Notes who wish to exchange Existing Notes for New Notes
and who validly tender Existing Notes to the Exchange Agent or validly tender
Existing Notes by complying with the book-entry transfer procedures described
below and, in each case, who furnish the Letter of Transmittal and any other
required documents to the Exchange Agent, at such holders' option may either
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(i) have certificated New Notes mailed to them by the Exchange Agent or (ii)
hold a beneficial interest in one or more New Global Certificates that will be
deposited with the Depositary, in each case promptly after such tender is
accepted by APS. Subject to the terms and conditions of the Exchange Offer,
Existing Notes which have been validly tendered prior to the Expiration Date
will be accepted on or promptly after the Expiration Date, subject to the
applicable rules of the Commission. APS, however, reserves the right, prior to
the first acceptance of tendered Existing Notes, to delay acceptance of tendered
Existing Notes, or to terminate the Exchange Offer, subject to the provisions of
Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which requires that a tender offeror pay the consideration
offered or return the tendered securities promptly after the termination or
withdrawal of a tender offer.
In addition, APS reserves the right to waive any condition or otherwise
amend the Exchange Offer prior to the acceptance of tendered Existing Notes. If
any amendment by APS of the Exchange Offer or waiver by APS of any condition
thereto constitutes a material change in the information previously disclosed to
the holders of Existing Notes, APS will, in accordance with the applicable rules
of the Commission, promptly disseminate disclosure of such change in a manner
reasonably calculated to inform such holders of such change. If it is necessary
to permit an adequate dissemination of information regarding such material
change, APS will extend the Exchange Offer to permit an adequate time for
holders of Existing Notes to consider the additional information.
CERTAIN EFFECTS OF THE EXCHANGE OFFER
Because the Exchange Offer is for any and all Existing Notes, the number of
Existing Notes tendered and exchanged in the Exchange Offer will reduce the
principal amount of Existing Notes outstanding. As a result, the liquidity of
any remaining Existing Notes may be substantially reduced. The Existing Notes
beneficially owned by QIBs (as defined herein) are currently eligible for sale
pursuant to Rule 144A through the PORTAL System of the National Association of
Securities Dealers, Inc. Because APS anticipates that most holders of Existing
Notes will elect to exchange such Existing Notes for New Notes due to the
absence of restrictions on the resale of New Notes under the Securities Act, APS
anticipates that the liquidity of the market for any Existing Notes remaining
after the consummation of the Exchange Offer may be substantially limited.
The Existing Notes that are not exchanged for New Notes pursuant to the
Exchange Offer will remain restricted securities under the Securities Act.
Accordingly, such Existing Notes may be resold only (i) to APS , (ii) pursuant
to a registration statement that has been declared effective under the
Securities Act, (iii) for so long as the Existing Notes are eligible for resale
pursuant to Rule 144A, to a person it reasonably believes is a qualified
institutional buyer (as defined in Rule 144A and referred to in this Prospectus
as a "Qualified Institutional Buyer" or "QIB") that purchases for its own
account or for the account of a Qualified Institutional Buyer to whom notice is
given that the transfer is being made in reliance on Rule 144A, (iv) pursuant to
offers and sales to non-U.S. persons that occur outside the United States within
the meaning of Regulation S, (v) to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act and referred to in this Prospectus as an "Institutional Accredited
Investor") that is acquiring the security for its own account or for the account
of such an Institutional Accredited Investor for investment purposes and not
with a view to, or for offer or sale in connection with, any distribution in
violation of the Securities Act or (vi) pursuant to any other available
exemption from the registration requirements of the Securities Act, subject in
each of the foregoing cases (a) to any requirement of law that the disposition
of its property or the property of such investor account or accounts be at all
times within its or their control and (b) to compliance with any applicable
state or other securities laws. After the Exchange Offer is completed, holders
of Existing Notes will not have certain registration rights under the
Registration Agreement. See "-- Termination of Certain Rights."
EXPIRATION AND EXTENSION
The Exchange Offer will expire at 5:00 p.m., New York City time, on July 18,
1996, unless extended by APS. The Exchange Offer may be extended by oral or
written notice from APS to the
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Exchange Agent at any time or from time to time, on or prior to the date then
fixed for the expiration of the Exchange Offer. Notwithstanding any extension of
the Exchange Offer, if the Exchange Offer is not consummated by July 23, 1996,
Special Interest (as defined herein) will accrue. See "Registration Rights."
Public announcement of any extension of the Exchange Offer will be timely made
by APS, but, unless otherwise required by law or regulation, APS will not have
any obligation to communicate such public announcement other than by making a
release to the Dow Jones News Service.
ACCRUED INTEREST
Holders of Existing Notes that are accepted for exchange will not receive
any accrued interest thereon. However, each New Note will bear interest from the
most recent date on which interest has been paid on the corresponding Existing
Note, or, if no interest has been paid, from January 25, 1996.
CONDITIONS
Notwithstanding any other provisions of the Exchange Offer, or any extension
of the Exchange Offer, APS will not be required to cause the issuance of New
Notes in respect of any validly tendered Existing Notes not accepted and, prior
to the acceptance of tendered Existing Notes, may terminate the Exchange Offer
(by oral or written notice to the Exchange Agent and by timely public
announcement communicated, unless otherwise required by applicable law or
regulation, by making a release to the Dow Jones News Service) or, subject to
compliance with the applicable rules of the Commission, delay the acceptance of
the tendered Existing Notes, if any material change occurs which is likely to
affect the Exchange Offer, including, but not limited to, the following:
(i) there shall occur (a) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market, (b) any limitation by
any governmental agency or authority which may adversely affect the ability
of the Company to complete the transactions contemplated by the Exchange
Offer, (c) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or any limitation by any
governmental agency or authority which adversely affects the extension of
credit or (d) a commencement of a war, armed hostilities or other similar
international calamity directly or indirectly involving the United States,
or, in the case of any of the foregoing existing at the time of the
commencement of the Exchange Offer, a material acceleration or worsening
thereof;
(ii) any statute, rule or regulation shall have been proposed or
enacted, or any action shall have been taken or proposed to be taken by any
governmental authority which, in the sole judgment of the Company, would or
might prohibit, restrict or delay completion of the Exchange Offer;
(iii) there shall be instituted or threatened any action or proceeding
before any court or governmental agency challenging the Exchange Offer or
otherwise directly or indirectly relating to the Exchange Offer;
(iv) there shall occur any development in any pending action or
proceeding which, in the sole judgment of the Company, would or might
prohibit, restrict or delay consummation of the Exchange Offer;
(v) there exists, in the sole judgment of the Company, any actual or
threatened legal impediment (including a default or prospective default
under an agreement, indenture or other instrument or obligation to which the
Company is a party or by which it is bound) to the completion of the
Exchange Offer; or
(vi) prior to the completion of the Exchange Offer, the Company
determines there has been a change in law or applicable interpretation
thereof by the staff of the Commission such that the New Notes that would be
received by holders in the Exchange Offer in exchange for Existing Notes
would not be transferable, upon receipt, by each such holder (other than a
holder that is an affiliate of APS, a holder who acquires the New Notes
outside the ordinary course of such holder's
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business, a holder who is engaged in or intends to engage in a distribution
of such New Notes or a holder who has arrangements or understandings with
any person to participate in the Exchange Offer for the purpose of
distributing the New Notes) without restriction under the Securities Act.
Subject to the obligations under the Registration Agreement to use its best
efforts to complete the Exchange Offer, the Company expressly reserves the
right, at any time prior to the acceptance of tendered Existing Notes, to
terminate the Exchange Offer and not accept for exchange any Existing Notes upon
the occurrence of any of the foregoing conditions. In addition, APS may amend
the Exchange Offer at any time prior to the acceptance of tendered Existing
Notes if any of the conditions set forth above occur. Moreover, regardless of
whether any of the foregoing conditions has occurred, APS reserves the right, in
its reasonable discretion, to amend the Exchange Offer in any manner prior to
the acceptance of tendered Existing Notes, although it has no current intention
to do so.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company, in whole or in part, at any time and
from time to time in its sole discretion. Any determination made by the Company
concerning an event, development or circumstance described or referred to above
will be final and binding on all parties to the Exchange Offer.
In addition, the Company will not accept for exchange any Existing Notes
tendered, and no New Notes will be issued in exchange for any such Existing
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or the qualification of the Indenture under the Trust Indenture Act of
1939, as amended.
If the event referred to in clause (vi), above, shall occur, APS shall be
under no continuing obligation under the Registration Agreement to complete the
Exchange Offer, but in lieu thereof will be obligated to file and use its best
efforts to secure and maintain the effectiveness under the Securities Act of a
"shelf" registration statement providing for the resale of Existing Notes. See
"Registration Rights."
HOW TO TENDER
A holder of Existing Notes may tender Existing Notes by (i) properly
completing and signing the Letter of Transmittal or a facsimile thereof (all
references in this Prospectus to the Letter of Transmittal shall be deemed to
include a facsimile thereof), having their signatures guaranteed if required,
and delivering the same, together with the Existing Notes being tendered (or a
confirmation of an appropriate book-entry transfer), to the Exchange Agent on or
prior to the Expiration Date, or (ii) requesting a broker, dealer, bank, trust
company or other nominee to effect the transaction for such holder prior to the
Expiration Date.
New Notes will not be issued in the name of a person other than that of a
registered holder of the Existing Notes appearing on the note register.
The Exchange Agent will establish an account with respect to the Existing
Notes at DTC for purposes of the Exchange Offer promptly after the date of this
Prospectus, and any financial institution which is a participant in DTC may make
book-entry delivery of the Existing Notes by causing DTC to transfer such
Existing Notes into the Exchange Agent's account in accordance with DTC's
procedure for such transfer. Although delivery of Existing Notes may be effected
through book-entry transfer into the Exchange Agent's account at DTC, the Letter
of Transmittal, with any required signature guarantees and any other required
documents, must in any case be transmitted to and received by the Exchange Agent
on or prior to the Expiration Date at the address set forth below under "--
Exchange Agent," or the guaranteed delivery procedure described below must be
complied with. Delivery of documents to DTC does not constitute delivery to the
Exchange Agent. See "-- Exchanging Book-Entry Notes."
25
<PAGE>
THE METHOD OF DELIVERY OF EXISTING NOTES AND ALL OTHER DOCUMENTS, INCLUDING
DELIVERY THROUGH DTC, IS AT THE ELECTION AND RISK OF THE HOLDER. IF SENT BY
MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED,
AND PROPER INSURANCE BE OBTAINED.
If a holder desires to tender Existing Notes pursuant to the Exchange Offer
and such holder's Existing Notes are not immediately available or time will not
permit all of the above documents to reach the Exchange Agent prior to the
Expiration Date, or such holder cannot complete the procedure of book-entry
transfer on a timely basis, such tender may be effected if the following
conditions are satisfied:
(i) such tenders are made by or through an eligible guarantor
institution which is a member of one of the following Signature Guarantee
Programs: The Securities Transfer Agents Medallion Program (STAMP); The New
York Stock Exchanges Medallion Signature Program (MSP) and The Stock
Exchanges Medallion Program (SEMP) (each, an "Eligible Institution");
(ii) a properly completed and duly executed notice of guaranteed
delivery ("Notice of Guaranteed Delivery"), in substantially the form
provided by the Company, is received by the Exchange Agent as provided below
on or prior to the Expiration Date; and
(iii) the Existing Notes, in proper form for transfer (or confirmation of
book-entry transfer of such Existing Notes into the Exchange Agent's account
at DTC as described above), together with a properly completed and duly
executed Letter of Transmittal and all other documents required by the
Letter of Transmittal, are received by the Exchange Agent within five New
York Stock Exchange, Inc. trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery.
A tender will be deemed to have been received as of the date when the
tendering holder's duly signed Letter of Transmittal accompanied by Existing
Notes (or a timely confirmation received of a book-entry transfer of Existing
Notes into the Exchange Agent's account at DTC) or a Notice of Guaranteed
Delivery from an Eligible Institution is received by the Exchange Agent.
Issuances of New Notes in exchange for Existing Notes tendered pursuant to a
Notice of Guaranteed Delivery by an Eligible Institution will be made only
against delivery of the Letter of Transmittal (and any other required documents)
and the tendered Existing Notes (or a timely confirmation received of a book-
entry transfer of Existing Notes into the Exchange Agent's account at DTC) to
the Exchange Agent or confirmation of the Book-Entry Transfer Facility Automated
Tender Offer Program ("ATOP") procedures set forth below. See "-- Exchanging
Book-Entry Notes."
Partial tenders of Existing Notes may be made only if (i) the principal
amount tendered is equal to $1,000 or an integral multiple thereof and (ii) the
remaining untendered portion of such Existing Notes is in a principal amount of
$250,000, or any integral multiple of $1,000 in excess of such amount. Holders
tendering less than the entire principal amount of any Existing Note they hold
in accordance with the foregoing restrictions must appropriately indicate such
fact on the Letter of Transmittal accompanying the tendered Existing Note.
With respect to tenders of Existing Notes, APS reserves full discretion to
determine whether the documentation is complete and generally to determine all
questions as to tenders, including the date of receipt of a tender, the
propriety of execution of any document, and any other questions as to the
validity, form, eligibility or acceptability of any tender. APS reserves the
right to reject any tender not in proper form or otherwise not valid or the
acceptance of exchange of which, in the opinion of APS's counsel, may be
unlawful or to waive any irregularities or conditions, and APS's interpretation
of the terms and conditions of the Exchange Offer (including the instructions on
the Letter of Transmittal) will be final. APS shall not be obligated to give
notice of any defects or irregularities in tenders and shall not incur any
liability for failure to give any such notice. The Exchange Agent may, but shall
not be obligated to, give notice of any irregularities or defects in tenders,
and shall not incur any liability
26
<PAGE>
for any failure to give any such notice. Existing Notes shall not be deemed to
have been duly or validly tendered unless and until all defects and
irregularities have been cured or waived. All improperly tendered Existing
Notes, as well as Existing Notes in excess of the principal amount tendered for
exchange, will be returned (unless irregularities and defects are timely cured
or waived), without cost to the tendering holder (or, in the case of Existing
Notes delivered by book-entry transfer within DTC, will be credited to the
account maintained within DTC by the participant in DTC which delivered such
shares), promptly after the Expiration Date.
If the Letter of Transmittal is signed by a person or persons other than the
registered holder or holders of Existing Notes, such Existing Notes must be
endorsed or accompanied by appropriate powers of attorney, in either case signed
exactly as the name or names of the registered holder or holders that appear on
the Existing Notes.
If the Letter of Transmittal or any Existing Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted.
EXCHANGING BOOK-ENTRY NOTES
The Exchange Agent and DTC have confirmed that any financial institution
that is a participant in DTC may utilize ATOP to tender Existing Notes.
Any DTC participant may make book-entry delivery of Existing Notes by
causing DTC to transfer such Existing Notes into the Exchange Agent's account in
accordance with DTC's ATOP procedures for transfer. However, the exchange for
the Existing Notes so tendered will only be made after timely confirmation (a
"Book-Entry Confirmation") of such book-entry transfer of Existing Notes into
the Exchange Agent's account, and timely receipt by the Exchange Agent of an
Agent's Message (as such term is defined in the next sentence) and any other
documents required by the Letter of Transmittal. The term "Agent's Message"
means a message, transmitted by DTC and received by the Exchange Agent and
forming part of a Book-Entry Confirmation, which states that DTC has received an
express acknowledgment from a participant tendering Existing Notes that are the
subject of such Book-Entry Confirmation that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal, and that the
Company may enforce such agreement against such participant.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, certain terms and
conditions which are summarized below and are part of the Exchange Offer.
Each holder who tenders Existing Notes (other than certain broker-dealers)
and executes the Letter of Transmittal will be required to represent and agree
that such tendering holder is neither an affiliate of APS nor a broker-dealer
tendering Existing Notes acquired directly from APS for its own account, has
acquired the New Notes in the ordinary course of its business, is not engaged
in, and does not intend to engage in, the distribution of the New Notes and has
no arrangement or understanding to participate in a distribution of New Notes.
Each broker-dealer that receives New Notes for its own account in exchange for
Existing Notes, where such Existing Notes were acquired by such broker-dealer as
a result of market-making activities or other trading activities, must
acknowledge, among other things, that it will deliver a prospectus in connection
with any resale of such New Notes. See "Plan of Distribution." The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
Existing Notes tendered in exchange for New Notes (or a timely confirmation
of a book-entry transfer of such Existing Notes into the Exchange Agent's
account at DTC) must be received by the Exchange Agent, with the Letter of
Transmittal and any other required documents, by 5:00 p.m., New York City time,
on or prior to July 18, 1996, unless extended, or within the time periods set
forth above
27
<PAGE>
in "-- How to Tender" pursuant to a Notice of Guaranteed Delivery from an
Eligible Institution. The party tendering the Existing Notes for exchange (the
"Holder") shall be deemed to have sold, assigned and transferred the Existing
Notes to the Exchange Agent, as agent of APS, and irrevocably constituted and
appointed the Exchange Agent as the Holder's agent and attorney-in-fact to cause
the Existing Notes to be transferred and exchanged. The Holder shall also
warrant that it has full power and authority to tender, exchange, sell, assign,
and transfer the Existing Notes and to acquire the New Notes issuable upon the
exchange of such tendered Existing Notes, that the Exchange Agent, as agent of
APS, will acquire good and unencumbered title to the tendered Existing Notes,
free and clear of all liens, restrictions, charges and encumbrances, and that
the Existing Notes tendered for exchange are not subject to any adverse claims
when accepted by the Exchange Agent, as agent of APS. The Holder shall also
warrant that it will, upon request, execute and deliver any additional documents
deemed by APS or the Exchange Agent to be necessary or desirable to complete the
exchange, sale, assignment and transfer of the Existing Notes. All authority
conferred or agreed to be conferred in the Letter of Transmittal by the Holder
will survive the death or incapacity of the Holder and any obligation of the
Holder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, legal representatives, successors and
assigns of such Holder.
Signature(s) on the Letter of Transmittal will be required to be guaranteed
as set forth above in "-- How to Tender." All questions as to the validity,
form, eligibility (including time of receipt) and acceptability of any tender
will be determined by APS, in its sole discretion, and such determination will
be final and binding. Unless waived by APS, irregularities and defects must be
cured by the Expiration Date.
WITHDRAWAL RIGHTS
All tenders of Existing Notes may be withdrawn at any time prior to the
Expiration Date. To be effective, a notice of withdrawal must be timely received
by the Exchange Agent at the address set forth below under "-- Exchange Agent."
Any notice of withdrawal must specify the person named in the Letter of
Transmittal as having tendered the Existing Notes to be withdrawn. If the
Existing Notes have been physically delivered to the Exchange Agent, the
tendering holder must also submit the serial number shown on the particular
Existing Notes to be withdrawn. If the Existing Notes have been delivered
pursuant to the book-entry procedures set forth above under "-- How to Tender,"
any notice of withdrawal must specify the name and number of the participant's
account at DTC to be credited with the withdrawn Existing Notes. The Exchange
Agent will return the properly withdrawn Existing Notes as soon as practicable
following receipt of the notice of withdrawal. All questions as to the validity,
including time of receipt, of notices and withdrawals will be determined by APS,
and such determination will be final and binding on all parties.
ACCEPTANCE OF TENDERS
Subject to the terms and conditions of the Exchange Offer, including the
reservation of certain rights by APS, Existing Notes tendered (either physically
or through book-entry delivery as described in "-- How to Tender") with a
properly executed Letter of Transmittal and all other required documentation,
and not withdrawn, will be accepted on or promptly after the Expiration Date. At
the option of the holder of a New Note, such New Note may be held in the form of
either (i) a certificated New Note or (ii) a beneficial interest in one or more
of the New Global Certificates. Beneficial interests in the New Global
Certificates will be shown on, and transfers thereof will be effected only
through, records maintained by DTC and its participants. Subject to the terms
and conditions of the Exchange Offer, certificated New Notes to be issued in
exchange for properly tendered Existing Notes will be mailed by the Exchange
Agent promptly after the acceptance of such tendered Existing Notes and the New
Notes to be issued in the form of New Global Certificates will be deposited with
DTC promptly after acceptance of the related tendered Existing Notes. Acceptance
of tendered Existing Notes will be effected by the delivery of a notice to that
effect by APS to the Exchange Agent. Subject to the applicable rules of the
Commission, APS, however, reserves the right, prior to the acceptance of
tendered Existing Notes, to delay acceptance of tendered Existing Notes upon the
occurrence of any of the conditions set forth above under the caption "--
Conditions." APS confirms that its reservation of
28
<PAGE>
the right to delay acceptance of tendered Existing Notes is subject to the
provisions of Rule 14e-1(c) under the Exchange Act which requires that a tender
offeror pay the consideration offered or return the tendered securities promptly
after the termination or withdrawal of a tender offer.
Although APS does not currently intend to do so, if it modifies the terms of
the Exchange Offer, such modified terms will be available to all holders of
Existing Notes, whether or not their Existing Notes have been tendered prior to
such modification. Any material modification will be disclosed in accordance
with the applicable rules of the Commission and, if required, the Exchange Offer
will be extended to permit holders of Existing Notes adequate time to consider
such modification.
The tender of Existing Notes pursuant to any one of the procedures set forth
in "-- How to Tender" will constitute an agreement between the tendering holder
and APS upon the terms and subject to the conditions of the Exchange Offer.
EXCHANGE AGENT
The Bank of New York has agreed to provide certain services as Exchange
Agent for the Exchange Offer. Owners of Existing Notes who require assistance
should contact the Exchange Agent. Letters of Transmittal and any inquiries with
respect to the Exchange Offer must be addressed to the Exchange Agent as
follows:
<TABLE>
<S> <C> <C>
FACSIMILE TRANSMISSION ADDRESS FOR MAILING: ADDRESS FOR HAND/OVERNIGHT
TELEPHONE NUMBER: The Bank of New York DELIVERY:
(212) 571-3080 101 Barclay Street - 7E The Bank of New York
CONFIRM BY TELEPHONE: New York, New York 10286 101 Barclay Street
(FOR ELIGIBLE INSTITUTIONS Attention: Reorganization New York, New York 10286
ONLY) Section Corporate Trust Service
(212) 815-2742 Window
FOR INFORMATION: Ground Level
(212) 815-6333 Attention: Reorganization
Section
</TABLE>
Delivery to other than the above address will not constitute valid delivery.
SOLICITATION OF TENDERS; EXPENSES
Except as described above under "-- Exchange Agent," APS has not retained
any agent in connection with the Exchange Offer and will not make any payments
to brokers, dealers or other persons for soliciting or recommending acceptances
of the Exchange Offer. APS, will, however, reimburse the Exchange Agent for its
reasonable out-of-pocket expenses in connection therewith. APS will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of the Existing Notes and in
handling or forwarding tenders for their customers.
TRANSFER TAXES
APS will pay all transfer taxes, if any, applicable to the transfer of
Existing Notes to it or its order pursuant to the Exchange Offer. If, however,
New Notes and/or substitute Existing Notes not exchanged are to be delivered to,
or are to be registered or issued in the name of, any person other than the
registered holder of the Existing Notes tendered, or if tendered Existing Notes
are registered in the name of any person other than the person signing the
Letter of Transmittal, or if a transfer tax is imposed for any reason other than
the transfer of Existing Notes to the Company or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
registered holder or any other person) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
29
<PAGE>
ACCOUNTING TREATMENT
The carrying value of the Existing Notes is expected to become the carrying
value of the New Notes at the time of the Exchange Offer. Accordingly, no gain
or loss for accounting purposes will be recognized. The expenses of the Exchange
Offer will be amortized over the term of the New Notes.
TERMINATION OF CERTAIN RIGHTS
Holders of the New Notes will not be entitled to certain special rights
under the Registration Agreement, which rights will terminate when the Exchange
Offer is completed. Pursuant to the Registration Agreement, the Exchange Offer
shall be deemed to be "completed" upon the occurrence of (i) the filing and
effectiveness under the Securities Act of a registration statement relating to
the New Notes to be issued in the Exchange Offer, (ii) the maintenance of such
registration statement continuously effective for a period of not less than 30
days after notice has been sent to holders of Existing Notes and (iii) the
delivery by APS in exchange for all Existing Notes that have been duly tendered
and not validly withdrawn on or prior to the Expiration Date of New Notes
transferable by each holder thereof (other than a holder that is an affiliate of
APS within the meaning of Rule 405 under the Securities Act, a broker-dealer
tendering Existing Notes acquired directly from APS for its own account, a
holder who acquires the New Notes outside the ordinary course of such holder's
business or a holder who is engaged in or who intends to engage in a
distribution of the New Notes or who has arrangements or understandings with any
person to participate in the Exchange Offer for the purpose of distributing the
New Notes) without restrictions under the Securities Act. The rights that will
terminate include the right to require the Company (i) to file with the
Commission, and use its best efforts to cause to become effective under the
Securities Act, a registration statement with respect to the New Notes and (ii)
other than in certain limited circumstances, to file with the Commission, use
its best efforts to cause to become effective under the Securities Act and keep
continuously effective for a period of up to three years a "shelf" registration
statement providing for the registration of, and the sale on a continuous or
delayed basis by the holders of, Existing Notes.
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of APS's obligations under
the Registration Agreement. APS will not receive any cash proceeds from the
issuance of the New Notes offered hereby. In consideration for issuing the New
Notes as contemplated in this Prospectus, APS will receive in exchange Existing
Notes in like principal amount, the form and terms of which are identical in all
material respects to the form and terms of the New Notes, except as otherwise
described herein. The Existing Notes surrendered in exchange for the New Notes
will be retired and canceled and cannot be reissued. Accordingly, issuance of
the New Notes will not result in any increase in the indebtedness of APS.
The proceeds to APS for the sale of the Existing Notes were approximately
$96.25 million, net of Initial Purchasers' discount and certain fees and
expenses relating to the offering of the Existing Notes. Such proceeds were used
to pay the closing cash purchase price for the Acquisition of PI of $79.7
million (which was subsequently adjusted to $74.9 million), to repay a portion
of the borrowings then outstanding under the Prior Credit Agreement and to pay
fees and expenses incurred in connection with the Acquisition.
30
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at April
25, 1996. See "Use of Proceeds." This table should be read in conjunction with
the Consolidated Financial Statements of Holding, including the related notes
thereto, included in the Form 10-K and in the Form 10-Q, each of which is
incorporated herein by reference, and "Selected Historical Consolidated
Financial Information of APS Holding Corporation" and "Pro Forma Combined
Condensed Statement of Operations."
<TABLE>
<CAPTION>
APRIL 25,
1996
-------------
(IN
THOUSANDS)
<S> <C>
Short-term debt:
Current maturities of Term Loan Facility............................................... $ 13,500
Current maturities of other long-term debt............................................. 452
-------------
Total short-term debt.................................................................... 13,952
-------------
Long-term debt, less current maturities:
Term Loan Facility..................................................................... 48,250
Revolving Credit Facility.............................................................. 140,100
11.875% Senior Subordinated Notes Due 2006............................................. 100,000
Note payable, related party............................................................ 984
Other.................................................................................. 1,060
-------------
Total long-term debt..................................................................... 290,394
-------------
Common stockholders' equity:
Class A common stock, par value $.01, authorized 20,000,000 shares;
issued and outstanding, 13,727,961 shares............................................. 137
Class B common stock, par value $.01, authorized 20,000,000 shares;
no shares issued and outstanding...................................................... --
Additional paid in capital............................................................. 154,889
Accumulated deficit.................................................................... (29,521)
Treasury stock, at cost................................................................ (120)
-------------
Total common stockholders' equity........................................................ 125,385
-------------
Total capitalization (including short-term debt)......................................... $ 429,731
-------------
-------------
</TABLE>
31
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
OF APS HOLDING CORPORATION
The following table sets forth historical financial information of Holding
as of and for the five years ended January 27, 1996, January 28, 1995, January
29, 1994, January 30, 1993 and January 25, 1992 and as of and for the three
months ended April 25, 1996 and 1995. The balance sheet and statement of
operations information as of and for the fiscal years ended January 27, 1996,
January 28, 1995, January 29, 1994, January 30, 1993 and January 25, 1992 have
been derived from audited consolidated financial statements of Holding. The
balance sheet and statement of operations information as of and for the three
months ended April 25, 1996 and 1995 were derived fom the unaudited consolidated
financial statements of Holding, which include all adjustments which management
considers necessary for a fair presentation of the information for such periods,
all of which were of a normal recurring nature. The results of operations for
the three-month periods are not necessarily indicative of the results to be
expected for the full year. The table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements of Holding and related
notes and the other financial information included in the Form 10-K and in the
Form 10-Q, each of which is incorporated herein by reference.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
------------------------------------------------ ---------------------
JAN. 25, JAN. 30, JAN. 29, JAN. 28, JAN. 27, APRIL 25, APRIL 25,
1992 1993 1994 1995 1996 1995 1996
-------- -------- -------- -------- -------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................................... $399,384 $409,381 $438,298 $523,508 $603,737 $ 137,949 $ 217,566
Cost of goods sold...................................... 276,718 281,995 297,150 344,845 392,384 89,880 141,735
-------- -------- -------- -------- -------- --------- ---------
Gross profit............................................ 122,666 127,386 141,148 178,663 211,353 48,069 75,831
Selling, general and administrative expenses............ 103,358 104,669 112,560 139,031 168,196 38,071 65,524
Depreciation and amortization........................... 8,146 6,973 6,744 6,691 7,794 1,906 2,756
Asset impairment and restructuring charge............... 3,500 11,224
-------- -------- -------- -------- -------- --------- ---------
Operating income (1).................................... 7,662 15,744 21,844 32,941 24,139 8,092 7,551
Interest income......................................... 2,434 2,435 3,023 3,896 5,265 1,261 1,363
Other income (2)........................................ 2,847 2,298 1,277 1,535 1,535 383 273
-------- -------- -------- -------- -------- --------- ---------
Income before interest expense, income taxes,
extraordinary item and cumulative effect of accounting
change................................................. 12,943 20,477 26,144 38,372 30,939 9,736 9,187
Interest expense........................................ 27,922 25,875 22,039 10,500 16,256 3,684 7,001
-------- -------- -------- -------- -------- --------- ---------
Income (loss) before income taxes, extraordinary item
and cumulative effect of accounting change............. (14,979) (5,398) 4,105 27,872 14,683 6,052 2,186
Provision (benefit) for income taxes (3)................ 100 285 (1,550) (4,495) 5,447 2,294 831
-------- -------- -------- -------- -------- --------- ---------
Income (loss) before extraordinary item and cumulative
effect of accounting change............................ (15,079) (5,683) 5,655 32,367 9,236 3,758 1,355
Extraordinary item...................................... (2,827) (14,404) (2,468)
Cumulative effect of accounting change.................. (2,330)
-------- -------- -------- -------- -------- --------- ---------
Net income (loss)....................................... (17,906) (5,683) (11,079) 32,367 6,768 3,758 1,335
Less preferred stock dividends.......................... 240
-------- -------- -------- -------- -------- --------- ---------
Net income (loss) to common stockholders................ $(18,146) $ (5,683) $(11,079) $ 32,367 $ 6,768 $ 3,758 $ 1,355
-------- -------- -------- -------- -------- --------- ---------
-------- -------- -------- -------- -------- --------- ---------
Income (loss) per common share:
Before extraordinary item and cumulative effect of
accounting change...................................... $ (3.34) $ (0.97) $ 0.65 $ 2.36 $ 0.67 $ 0.27 $ 0.10
Extraordinary item...................................... (0.62) (1.65) (0.18)
Cumulative effect of accounting change.................. (0.27)
-------- -------- -------- -------- -------- --------- ---------
$ (3.96) $ (0.97) $ (1.27) $ 2.36 $ 0.49 $ 0.27 $ 0.10
-------- -------- -------- -------- -------- --------- ---------
-------- -------- -------- -------- -------- --------- ---------
BALANCE SHEET DATA
(end of period):
Cash and cash equivalents............................... $ 2,618 $ 1,346 $ 653 $ 15 $ 7,886 $ 4,485 $ 10,744
Accounts and notes receivable, net...................... 59,883 65,688 77,494 102,991 147,083 113,043 147,768
Inventories............................................. 78,099 76,342 93,407 177,328 295,379 196,471 308,430
Total assets............................................ 215,351 215,752 251,224 387,062 600,159 422,517 611,178
Total debt.............................................. 177,248 176,857 121,724 170,533 315,965 196,603 304,346
Total common stockholders' equity (deficit)............. $(20,659) $(18,430) $ 76,761 $117,218 $124,030 $ 120,976 $ 125,385
OTHER DATA:
EBITDA (4).............................................. $ 21,089 $ 27,450 $ 32,888 $ 45,063 $ 38,733 $ 11,642 $ 11,943
Ratio of earnings to fixed charges (5).................. 0.5x 0.8x 1.2x 3.0x 1.7x 2.2x 1.2x
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
32
<PAGE>
- ------------------------
(1) Operating income for fiscal 1996 reflects the impact of an $11,224 pretax
charge related to a facility rationalization and restructuring program
undertaken in conjunction with the Acquisition, the adoption of SFAS No. 121
relating to the impairment and disposal of long-lived assets, and the
write-down of certain assets.
(2) Other income in fiscal 1993 includes a non-recurring gain on pension
curtailment of $3,288.
(3) The benefit for income taxes in fiscal 1995 includes a non-recurring benefit
of $14,802, recognized as a result of the Company's ability to utilize its
net operating loss carryforwards.
(4) Excluding the $11,224 asset impairment and restructuring charge recorded by
the Company in the fourth quarter of fiscal 1996, the Company would have had
EBITDA of $49,957 for the fiscal year ended January 27, 1996. EBITDA
represents the sum of income before interest expense and income taxes, plus
depreciation and amortization. EBITDA should not be construed as a
substitute for income from operations, net income or cash flow from
operating activities, for the purpose of analyzing the Company's operating
performance, financial position and cash flows. The Company has presented
EBITDA because it is commonly used by investors to analyze and compare
companies on the basis of operating performance and to determine a company's
ability to service debt.
(5) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income from continuing operations before income taxes and fixed
charges. Fixed charges include interest expense and the portion of operating
rents which is deemed representative of an interest factor.
33
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
The unaudited pro forma combined condensed statement of operations of
Holding for the fiscal year ended January 27, 1996 (the "Pro Forma Statement of
Operations") has been prepared to illustrate the estimated effect of the
Acquisition and related transactions, including the issuance of the Existing
Notes and borrowings under the New Credit Agreement, described elsewhere in this
Prospectus and in the accompanying notes to the Pro Forma Statement of
Operations. The Pro Forma Statement of Operations does not purport to be
indicative of the results of operations or financial position of Holding and PI
that would have actually been obtained had such transactions been completed as
of the assumed date and for the period presented, or which may be obtained in
the future.
The Pro Forma Statement of Operations gives pro forma effect to the
Acquisition and related transactions, including the issuance of the Existing
Notes and borrowings under the New Credit Agreement, as if they had occurred on
January 29, 1995, and includes the following as if they were realized during the
applicable period: (i) reductions in cost of goods sold resulting from
purchasing economies to be extended to the Company by its existing suppliers
based on arrangements the Company has negotiated with such suppliers; (ii)
reductions in selling, general and administrative expenses through the closure
(as of the date of this Prospectus) of four of the Company's distribution
centers (including two PI distribution centers) and the anticipated closure of
seven additional PI distribution centers, and consolidation of these operations
into the combined companies' remaining facilities, as well as consolidation of
certain administrative functions; (iii) net increase in interest expense to
reflect the issuance of the Existing Notes and borrowings under the New Credit
Agreement; and (iv) adjustments to conform PI's accounting policies and
practices to those of the Company with respect to inventory and depreciation.
The Company believes that it can complete the steps required to fully realize
the benefits reflected in the pro forma adjustments to the Pro Forma Statement
of Operations within one year following the Acquisition, with partial
realization of such benefits prior to that time. However, unanticipated factors
may delay the realization of such benefits, and there can be no assurances that
such benefits will be realized.
The Pro Forma Statement of Operations has been prepared assuming the
retention of all of the Company's and PI's sales following the Acquisition.
Management anticipates, however, that it will retain significantly less than
100% of PI's sales as a result of the loss of certain associated jobbers and the
closure of certain Company-owned stores. The lower retention of sales will
result in lower operating results of the combined companies than are reflected
in the Pro Forma Statement of Operations. See Note 1 to the Pro Forma Statement
of Operations.
The Pro Forma Statement of Operations should be read in conjunction with the
audited Consolidated Financial Statements of Holding for the fiscal year ended
January 27, 1996, including the notes thereto, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Form 10-K and
in the Form 10-Q, each of which is incorporated herein by reference, "Risk
Factors" and the audited Financial Statements of PI for the fiscal year ended
December 31, 1995, including the notes thereto, set forth on pages F-1 through
F-10.
34
<PAGE>
APS HOLDING CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------
HISTORICAL PI PRO FORMA (1)
HISTORICAL HOLDING DECEMBER 31, ----------------------------------------
JANUARY 27, 1996 1995 ADJUSTMENTS COMBINED
------------------ ---------------- ------------------- ------------------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............................. $603,737 $224,761 $ 0 $ 828,498
Cost of goods sold.................... 392,384 147,770 (2,872)(2) 537,282
---------- ---------------- ------- ----------
Gross profit.......................... 211,353 76,991 2,872 291,216
Selling, general and administrative
expenses............................. 168,196 73,146 (3,246)(3) 238,096
Asset impairment and restructuring
charge............................... 11,224 0 0 11,224
Depreciation and amortization......... 7,794 1,397 (51)(4) 9,140
---------- ---------------- ------- ----------
Operating income...................... 24,139 2,448 6,169 32,756
Interest income....................... 5,265 619 0 5,884
Other income.......................... 1,535 525 0 2,060
---------- ---------------- ------- ----------
Income before interest expense and
income taxes......................... 30,939 3,592 6,169 40,700
Interest expense...................... 16,256 2,668 8,412(5) 27,336
---------- ---------------- ------- ----------
Income (loss) before income taxes..... 14,683 924 (2,243) 13,364
Provision (benefit) for income
taxes................................ 5,447 (1,228) 726(6) 4,945
---------- ---------------- ------- ----------
Income before extraordinary item...... 9,236 2,152 (2,969) 8,419
Extraordinary item.................... (2,468) 0 0 (2,468)
---------- ---------------- ------- ----------
Net income (loss)..................... $ 6,768 $ 2,152 $ (2,969) $ 5,951
---------- ---------------- ------- ----------
---------- ---------------- ------- ----------
OTHER DATA:
EBITDA(7)............................. $ 38,733(8) $ 4,989 $ 6,118 $ 49,840(8)
Ratio of earnings to fixed charges
(9).................................. 1.7 1.4
</TABLE>
See accompanying notes to unaudited pro forma combined condensed statement of
operations.
35
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
(1) The Pro Forma Statement of Operations assumes that the Acquisition and
related transactions, including the issuance of the Existing Notes and
borrowings under the New Credit Agreement, occurred on January 29, 1995. For
purposes of the Pro Forma Statement of Operations, PI's historical statement of
operations for the fiscal year ended December 31, 1995 was combined with the
Company's historical statement of operations for the fiscal year ended January
27, 1996.
The Pro Forma Statement of Operations has been prepared assuming retention
of all of the Company's and PI's sales following the Acquisition. Management
anticipates, however, that it will retain significantly less than 100% of PI's
sales. The lower retention of sales will result in lower operating income, net
income, cost of goods sold, selling, general and administrative expenses and
provision for income taxes than are reflected in the Pro Forma Statement of
Operations.
(2) Cost of goods sold adjustments include the following:
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
JANUARY 27, 1996
----------------
<S> <C>
Cost of goods sold adjustments:
Application of the first-in, first-out (FIFO) method of accounting to the PI
inventories................................................................ $ 267
Purchasing savings (a)...................................................... (3,139)
--------
Total decrease............................................................ $ (2,872)
--------
--------
</TABLE>
(a) The savings reflected above represent amounts resulting from
incremental purchasing economies arising from the Acquisition, and are based
on arrangements the Company has negotiated with its major suppliers.
Management believes that approximately half of the total annual purchasing
savings of $6,278 resulting from these purchasing economies will be realized
in the first year following the Acquisition, and, accordingly, 50% of these
purchasing savings have been reflected in the fiscal year ended January 27,
1996.
(3) A summary of the components of the estimated cost savings related to
selling, general and administrative expenses are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
JANUARY 27, 1996
----------------
<S> <C>
Selling, general and administrative adjustments:
Payroll and benefits (a):
Distribution center cost reductions....................................... $ (2,090)
Distribution center cost increases........................................ 1,478
Administrative office reductions.......................................... (1,108)
Distribution center occupancy costs (b)..................................... (740)
Benefits for active employees (c)........................................... (786)
--------
Total decrease.......................................................... $ (3,246)
--------
--------
</TABLE>
(a) The Company (as of the date of this Prospectus) has closed four
distribution centers (including two PI distribution centers), and is
committed to closing seven additional PI distribution centers and
consolidating sales from all of the closed distribution centers into the
remaining facilities of the combined group. In addition, the Company is
committed to consolidating certain administrative functions. For purposes of
the Pro Forma Statement of Operations, adjustments relating to the closure
of the PI distribution centers are reflected on a phased-in basis in the
fiscal year ended January 27, 1996. Adjustments relating to the closure of
the two Company distribution centers are not reflected in the fiscal year
ended January 27, 1996. The Company expects to
36
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED STATEMENT OF OPERATIONS (CONTINUED)
(DOLLARS IN THOUSANDS)
realize significant cost savings related to headcount reductions from the
closure of these distribution centers offset, in part, by incremental
personnel requirements necessary to support the operations of the combined
businesses. The number of incremental distribution center personnel needed
was calculated (i) assuming retention of 100% of PI's historical sales
volume and number of customers; (ii) using actual productivity levels at
each respective distribution center expected to receive the additional sales
and customers; and (iii) assumes the incremental employees are added in
accordance with the timing of the existing consolidation plan. The number of
incremental administrative employees was determined on a departmental basis
by management of the Company who identified the number of individuals needed
to effectively handle the increased workload. The Company began the process
of closing the nine PI distribution centers in April, 1996, and expects to
begin closing the last of such distribution centers by October, 1996.
(b) These cost savings are directly associated with the distribution
centers and other facilities expected to be closed subsequent to the
Acquisition. Such cost savings relate primarily to rent, utilities, repairs
and maintenance, property taxes and other direct costs associated with the
closed facilities.
(c) In May, 1996, the Company plans to discontinue PI's benefit plans
and to allow active PI employees to enroll in the Company's benefit plans,
which have lower per participant costs.
(4) Depreciation and amortization expense adjustments include the following:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
JANUARY 27, 1996
-----------------
<S> <C>
Depreciation and amortization expense adjustments:
Adjustment to conform PI's depreciation policy (generally declining balance)
to the Company's depreciation policy (straight-line)....................... $ (465)
Elimination of historical PI amortization expense for intangible assets..... (194)
Recording of amortization expense for intangible assets resulting from the
Acquisition principally over 30 years...................................... 608
------
Total increase (decrease)................................................. $ (51)
------
------
</TABLE>
(5) Interest expense adjustments include the following:
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
JANUARY 27, 1996
----------------
<S> <C>
Interest expense adjustments:
Elimination of PI interest expense on debt owed to its parent company....... $ (2,562)
Recording of interest expense on the Existing Notes......................... 11,875
Elimination of cash interest expense on the Prior Credit Agreement (a)...... (15,009)
Recording of cash interest expense on the New Credit Agreement reflecting
revised borrowings, terms and pricing (a).................................. 14,267
Elimination of amortization expense for debt issuance costs relating to the
Prior Credit Agreement..................................................... (955)
Recording of amortization expense for debt issuance costs relating to the
Existing Notes and the New Credit Agreement................................ 796
----------------
Total increase............................................................ $ 8,412
----------------
----------------
</TABLE>
37
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED STATEMENT OF OPERATIONS (CONTINUED)
(DOLLARS IN THOUSANDS)
(a) The change in cash interest expense reflects a weighted average
interest rate for the fiscal year ended January 27, 1996 of 7.63% under the
New Credit Agreement, versus a weighted average interest rate for the fiscal
year ended January 27, 1996 of 7.53% under the Prior Credit Agreement. The
weighted average principal amount outstanding for the fiscal year ended
January 27, 1996 was assumed to be $187.0 million under the New Credit
Agreement, versus $199.3 million under the Prior Credit Agreement.
(6) Provision for income tax adjustments include the following:
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
JANUARY 27, 1996
----------------
<S> <C>
Provision for income tax adjustments:
Elimination of historical Holding income tax provision...................... $ (5,447)
Elimination of historical PI income tax benefit............................. 1,228
Recording of income tax provision based on pro forma pre-tax income,
assuming the Company's effective tax rate of approximately 37%............. 4,945
--------
Total increase............................................................ $ 726
--------
--------
</TABLE>
(7) EBITDA represents the sum of income before interest expense and income
taxes, plus depreciation and amortization. EBITDA should not be construed as a
substitute for income from operations, net income or cash flow from operating
activities, for the purpose of analyzing the Company's operating performance,
financial position and cash flows. The Company has presented EBITDA because it
is commonly used by investors to analyze and compare companies on the basis of
operating performance and to determine a company's ability to service debt.
(8) Excluding the $11,224 asset impairment and restructuring charge recorded
by the Company in the fourth quarter of fiscal 1996, Holding would have had
historical EBITDA of $49,957, and the combined companies (on a pro forma basis)
would have had EBITDA of $61,064, for the fiscal year ended January 27, 1996.
(9) For purposes of computing the ratio of earnings to fixed charges,
earnings consist of income from continuing operations before income taxes and
fixed charges. Fixed charges include interest expense and the portion of
operating rents which is deemed representative of an interest factor.
38
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations" in the Form 10-K and in the Form 10-Q, each of which is
incorporated herein by reference.
FORWARD-LOOKING STATEMENTS
This Prospectus contains, or incorporates by reference, forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act, including statements regarding, among other items, (i)
the realization of benefits from the Acquisition and the integration of PI's
business into the Company's business, (ii) the sufficiency of cash flow to fund
the Company's debt service requirements and working capital needs, and (iii)
anticipated trends in the Company's business and the automotive replacement
parts industry. Forward-looking statements are typically identified by the words
"believe," "expect," "anticipate," "intend," "estimate" and similar expressions.
These forward-looking statements are based largely on the Company's expectations
and are subject to a number of risks and uncertainties, certain of which are
beyond the Company's control. Actual results could differ materially from those
contemplated by these forward-looking statements as a result of the factors
described in "Risk Factors," including, among other matters, the possible
failure by the Company to retain a substantial portion of PI's sales
(particularly those made to larger customers), a failure to achieve significant
purchasing economies and other cost savings as a result of the Acquisition and
integration of PI's business into the Company's business, changes in the demand
for automotive products and changes in the automotive replacement parts industry
generally, including pricing and other changes by the Company's competitors. In
light of these risks and uncertainties, there can be no assurance that the
results and events contemplated by the forward-looking information contained in
this Prospectus will in fact transpire. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of their
dates. The Company undertakes no obligation to publicly update or revise any
forward-looking statements.
BUSINESS
COMPANY OVERVIEW
The Company is a leading warehouse distributor of automotive replacement
parts in the United States, supplying over 1,900 parts stores owned by
associated jobbers and approximately 325 Company-owned stores as of April 25,
1996. The Company principally serves the wholesale segment of the automotive
parts aftermarket. Through the Company's network of 35 distribution centers in
30 states, the Company offers over 160,000 SKUs, including a broad array of
nationally recognized replacement parts, tools, equipment, supplies and
accessories under its Big A brand name as well as manufacturers' brands and, for
a limited time through the distribution centers owned by PI, under the Parts
Plus group of brand names. In addition, as of April 25, 1996, the Company
operated more than 250 ISWs, which directly serve the needs of the professional
installer by stocking a select number of high demand products and emphasizing
availability and quick delivery. The Company had net sales and EBITDA of $603.7
million and $38.7 million, respectively, for the fiscal year ended January 27,
1996 and $217.6 million and $11.9 million, respectively, for the three months
ended April 25, 1996. Excluding the $11.2 million asset impairment and
restructuring charge recorded by the Company in the fourth quarter of fiscal
1996, the Company would have had EBITDA of $50.0 million for the fiscal year
ended January 27, 1996. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Results of Operations" in the Form 10-K
and in the Form 10-Q, each of which is incorporated herein by reference and
"Selected Historical Consolidated Financial Information of APS Holding
Corporation."
The Company's Big A program offers a number of benefits to the associated
jobbers that participate in the program, including (i) a broad selection of
product lines; (ii) brand name identity, including national advertising
programs; (iii) access to flexible purchasing programs; (iv) overnight delivery
of parts; and (v) a comprehensive package of services, including assistance in
marketing, cataloging,
39
<PAGE>
inventory control, accounting, management and employee training. Approximately
two-thirds of the Company's associated jobbers and Company-owned stores are
located in communities with populations of less than 25,000 people. The Company
believes that jobbers located in smaller communities are well suited to the Big
A program because the customer base within these communities generally is not
large enough to support the investment necessary to enable a jobber to obtain on
its own the benefits of the Big A program. In contrast, ISWs target customers in
larger metropolitan areas typically not served by the Company's associated
jobbers or Company-owned stores by focusing on a select number of high demand
products (typically undercar products such as chassis, suspension, steering and
brake parts) and emphasizing availability and quick delivery.
On the Acquisition Closing Date, APS acquired all of the outstanding capital
stock PI, an automotive parts distributor, from GKN Parts for a cash closing
purchase price of $79.7 million, which purchase price was adjusted to $74.9
million after the closing. As of the Acquisition Closing Date, the PI
distribution network was comprised of approximately 850 parts stores owned by
PI's associated jobbers and more than 125 company-owned stores operating under
the Parts Plus group of marks, which were serviced through PI's 14 distribution
centers. As of the Acquisition Closing Date, PI's customer base was primarily
located in markets where the Company had a relatively minor presence, including
Arkansas, Oklahoma, Texas, Tennessee, Kentucky, Mississippi, Alabama, West
Virginia and Michigan. Based on the Company's review of PI's store base, the
Company believes that as of such date, there was less than a 5% overlap between
the Company's and PI's associated jobbers and company-owned stores. The Company
believes that opportunities exist to achieve significant ongoing purchasing and
other cost savings in connection with the Acquisition, including through the
closure (as of the date of this Prospectus) of four of the Company's
distribution centers (including two PI distribution centers) and the anticipated
closure of seven additional PI distribution centers, and the consolidation of
these operations into the combined companies' remaining facilities. PI had net
sales and EBITDA of $224.8 million and $5.0 million, respectively, for the
fiscal year ended December 31, 1995. See "Risk Factors -- Realization of
Benefits from the Acquisition; Integration of PI," "Pro Forma Combined Condensed
Statement of Operations" and the Financial Statements of PI and the related
notes thereto for the fiscal year ended December 31, 1995.
In February 1996, the Company sold its interest in the Parts Plus group of
marks, which had been acquired by the Company in the Acquisition, to the
Association of Automobile Aftermarket Distributorships ("AAAD"), a programmed
distribution group that markets automotive replacement parts under the Parts
Plus program, for cash consideration of $3.5 million. PI had previously licensed
the same marks to AAAD for a small yearly license fee. Pursuant to the sale
agreement, PI associated jobbers who have not yet changed over to the Big A
program will be entitled to continue to use the Parts Plus group of marks on a
royalty free basis, and to receive all of the economic benefits of the Parts
Plus program, for 450 days following the closing of the Acquisition. The Company
intends to gradually change over PI's distribution centers, associated jobbers
and company-owned stores to the Big A program during fiscal 1997, beginning with
the PI distribution centers, and the associated jobbers serviced by those
distribution centers, that the Company expects to close.
For further information with respect to the business of the Company, see
"Business" in the Form 10-K, which is incorporated herein by reference.
MANAGEMENT
See "Directors and Executive Officers of the Registrant" and "Executive
Compensation" in the Form 10-K, which is incorporated herein by reference.
OWNERSHIP OF CAPITAL STOCK
See "Security Ownership of Certain Beneficial Owners and Management" in the
Form 10-K, which is incorporated herein by reference.
40
<PAGE>
DESCRIPTION OF NEW CREDIT AGREEMENT
In connection with the Acquisition, the Company entered into the New Credit
Agreement with Chemical and certain other lenders. The New Credit Agreement
replaced the credit facilities that were available to the Company under the
Prior Credit Agreement. The New Credit Agreement provides for a Term Loan
Facility of $65 million and a Revolving Credit Facility of $235 million, with a
final maturity date of December 31, 1999 for the Term Loan Facility and of
December 31, 2000 for the Revolving Credit Facility (collectively, the
"Facilities"). Up to $20 million of Revolving Credit Facility availability may
be used for standby and commercial letters of credit, and $10 million of
Revolving Credit Facility availability may be used for swing line loans. The
Facilities were used to replace the Prior Credit Agreement and finance the
working capital and business requirements of the Company following the
Acquisition. See "Use of Proceeds." Borrowings under the Revolving Credit
Facility are subject to a borrowing base limitation based on eligible accounts
receivable and inventory.
Pursuant to the New Credit Agreement, the Company is required to make
quarterly principal payments on the term loan borrowings thereunder in an
aggregate amount of $13 million in 1996, $15 million in 1997, $17 million in
1998 and $20 million in 1999. The Facilities are also subject to mandatory
prepayments and reductions, subject to certain exceptions, in an amount equal to
100% of the net proceeds of certain permitted asset sales and certain issuances
of debt obligations of the Company. Such net proceeds will be applied first to
prepay term loans and then to prepay swing line loans and revolving credit loans
(and cash collateralize or replace outstanding letters of credit) and
simultaneously reduce the Revolving Credit Facility. On December 31, 2000, all
remaining amounts then outstanding under the New Credit Agreement will become
due.
Loans under the Facilities generally bear interest, at the Company's option,
at a rate equal to either (i) the rate that is the highest of Chemical's prime
rate or certain alternative rates ("Base Rate"), in each case plus a margin of
up to 0.75% per annum, or (ii) the rate at which certain Eurodollar deposits are
offered in the interbank Eurodollar market ("LIBOR") plus a margin of up to
2.00% per annum. The margin applicable to the Base Rate loans currently is 0.25%
per annum, while the margin applicable to LIBOR loans currently is 1.50% per
annum.
The Company's obligations under the New Credit Agreement are guaranteed by
Holding and certain of the subsidiaries of APS and secured by pledges of the
capital stock of APS and such subsidiaries, by security interests in
substantially all of their personal property and by mortgages on certain of
their owned real property.
The New Credit Agreement contains (i) customary or otherwise appropriate
default provisions, including provisions for default if CD&R and its affiliates
transfer to a third party any of the shares of the common stock of Holding
currently held by Fund IV, or if any other person or group acquires more than
30% of the outstanding shares of the common stock of Holding, and (ii) customary
or otherwise appropriate affirmative and negative covenants, including a
negative pledge with respect to unencumbered assets, and restrictions on the
ability of APS and its subsidiaries to incur indebtedness, incur liens and other
encumbrances, pay dividends or make other restricted payments, become liable on
guarantees and other contingent obligations, enter into agreements with respect
to mergers or consolidations, sell or transfer assets, make investments or
capital expenditures, make acquisitions, make loans and advances, enter into
transactions with affiliates, and create subsidiaries or engage in new types of
business. In addition, the New Credit Agreement contains financial covenants
requiring the maintenance of certain financial ratios and tests, including
maintenance of the Company's net worth and maintenance of consolidated fixed
charge to interest expense and consolidated leverage ratios, as well as a
limitation on capital expenditures.
DESCRIPTION OF THE NOTES
The Existing Notes were, and the New Notes will be, issued pursuant to the
Indenture. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture of 1939 as
in effect on the date the Indenture is qualified under the Trust
41
<PAGE>
Indenture Act (the "Trust Indenture Act"; PROVIDED, HOWEVER, that in the event
that the Trust Indenture Act is amended after such date, "Trust Indenture Act"
means, to the extent required by any such amendment, the Trust Indenture Act of
1939 as so amended). The Notes are subject to all such terms, and holders of
Notes are referred to the Indenture and the Trust Indenture Act for a statement
of those terms.
For purposes of this description, the term Holding refers to APS Holding
Corporation and does not include its Subsidiaries, and APS refers to A.P.S.,
Inc. and does not include its Subsidiaries, in each case, except for purposes of
financial data determined on a consolidated basis.
The following summary of certain provisions of the Indenture does not
purport to be complete and is subject to the provisions of the Indenture and the
Notes, including the definitions therein of certain terms used below.
Capitalized terms used in this section and not otherwise defined in this section
have the respective meanings assigned to them in the Indenture. Certain defined
terms are set forth below under " -- Certain Definitions."
GENERAL
The Existing Notes are, and the New Notes will be, general unsecured
obligations of APS and together will be limited to $100 million aggregate
principal amount. The payment of principal, premium, if any, and interest on the
Existing Notes is, and in the New Notes will be, unconditionally guaranteed on a
senior subordinated and unsecured basis by Holding and by each existing and
future Restricted Subsidiary Guarantor (Holding and the existing and future
Restricted Subsidiary Guarantors of Holding are referred to collectively as the
"Note Guarantors"), and Holding will cause each future Restricted Subsidiary
Guarantor to enter into a supplemental indenture providing for a Restricted
Subsidiary Guarantee as required in the Indenture.
FORM, DENOMINATION AND BOOK-ENTRY PROCEDURES
The Existing Notes held by Qualified Institutional Buyers pursuant to Rule
144A are represented by a fully registered global note (the "Existing Global
Note" and, together with the New Global Certificates, the "Global Notes"). The
Existing Global Note has been deposited with a Participant (as defined below) as
custodian for DTC and registered in the name of Cede & Co., DTC's nominee.
Except as set forth below, the Existing Global Note may be transferred, in whole
and in part, only to another nominee of the Depositary or to a successor of the
Depositary or its nominee.
The Existing Notes held by Institutional Accredited Investors and by
non-U.S. persons who purchased such Notes outside the United States pursuant to
Regulation S are represented by Existing Notes in registered, certificated form
without interest coupons. Such Existing Notes are subject to certain
restrictions on transfer as described under "Risk Factors -- Restrictions on
Transfer."
At the option of the holder of a New Note, such New Note may be held in the
form of either (i) a certificated New Note or (ii) a beneficial interest in one
or more New Global Certificates. The New Notes initially represented by one or
more fully registered New Global Certificates will be deposited with the
Depositary and registered in the name of the Depositary or its nominee (the
"Global Certificate Registered Owner"). Except in the limited circumstances
described below, the New Global Certificate may be transferred, in whole and not
in part, only to another nominee of the Depositary or to a successor of the
Depositary or its nominee.
The Depositary is a limited-purpose trust company created to hold securities
for its participating organizations (collectively, the "Participants") and to
facilitate the clearance and settlement of transactions in those securities
between Participants through electronic book-entry changes in accounts of its
Participants. The Participants include securities brokers and dealers (including
the Initial Purchasers of the Existing Notes), banks (including The Bank of New
York), trust companies, clearing corporations and certain other organizations.
Indirect access to the Depositary's system is also available to other entities
such as banks, brokers, dealers and trust companies that clear through or
maintain custodial relationship with a Participant (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only
42
<PAGE>
through the Participants or the Indirect Participants. The ownership interest
and transfer of ownership interest of each actual purchaser of each security
held by or on behalf of the Depositary are recorded on the records of the
Participants and Indirect Participants.
The Depositary will take any action permitted to be taken by a holder of
Notes (including the presentation of Notes for exchange as described below) only
at the direction of one or more Participants to whose accounts interests in the
Global Note are credited and only in respect of such portion of the aggregate
principal amount of Notes as to which such Participant or Participants has or
have given such direction.
APS expects that the Depositary or its nominee, upon receipt of any payment
of principal, premium or interest in respect of the Global Note, will credit
Participants' accounts with payments in amounts proportionate to such
Participants' respective beneficial interests in the principal amount of the
Global Note, as shown on the records of the Depositary or its nominee. APS also
expects that payments by Participants to owners of beneficial interests in the
Global Note held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such Participants. The
laws of some states require that certain persons take physical delivery in
definitive form of securities that they own. Consequently, the ability to
transfer Notes will be limited to that extent.
Except as described below, owners of interests in a Global Note will not
have Notes registered in their names, will not receive physical delivery of
Notes in definitive form and will not be considered the Global Certificate
Registered Owners thereof under the Indenture for any purpose.
Although the Depositary and its Participants are expected to follow the
foregoing procedures in order to facilitate transfers of interests in the Global
Note among Participants, they are under no obligation to perform or continue to
perform such procedures, and such procedures may be discontinued at any time.
None of the Company, the Trustee, the Paying Agent, nor any agent of the
Company, the Trustee or the Paying Agent will have any responsibility or
liability for (i) any aspect of the Depositary's records or any Participant's
records relating to or payments made on account of beneficial ownership
interests in a Global Note, or for maintaining, supervising or reviewing any of
the Depositary's records or any Participant's records relating to the beneficial
ownership interests in a Global Note or (ii) any other matter relating to the
actions and practices of the Depositary, of any of its Participants, or of any
of the Indirect Participants.
Payments in respect of the principal of and interest on any New Notes
registered in the name of the Global Certificate Registered Owner on the
relevant record date will be payable by the Trustee to the Global Certificate
Registered Owner in its capacity as the registered owner under the Indenture.
Under the terms of the Indenture, the Company, the Trustee and the Paying Agent
will treat the person in whose names the Notes, including a Global Note, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither the Company,
the Trustee, the Paying Agent nor any agent of the Company, of the Trustee, or
of the Paying Agent has or will have any responsibility or liability for the
payment of such amounts to beneficial owners of Notes or for any other matter
relating to actions or practices of the Depositary or any of its Participants.
None of the Company, the Trustee or the Paying Agent will be liable for any
delay by the Depositary or any of its Participants in identifying the beneficial
owners of the Notes, and the Company, the Trustee and the Paying Agent may
conclusively rely on and will be protected in relying on instructions from the
Global Certificate Registered Owner for all purposes.
Owners of beneficial interests in the Global Note will be entitled to
receive certificated Notes, if (i) the Depositary is at any time unwilling or
unable to continue as, or ceases to be, a "clearing agency" registered under
Section 17A of the Exchange Act, and a successor to the Depositary registered as
a "clearing agency" under Section 17A of the Exchange Act is not appointed by
APS within 90 days or
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(ii) in the case of the Existing Global Note only, as provided in the following
paragraph. In addition to the foregoing, on or after the occurrence of an Event
of Default under the Indenture, owners of beneficial interests in the Global
Note will be entitled to request and receive certificated Notes.
Subject to the restrictions on the transferability of the Existing Notes
described in "Risk Factors -- Restrictions on Transfer," an Existing Note in
definitive form will be issued upon the resale, pledge or other transfer of any
Existing Note or interest therein to any person or entity that is not a
Qualified Institutional Buyer pursuant to Rule 144A or that does not participate
in the Depositary.
The information in this section concerning the Depositary and its book-entry
system has been obtained from sources that the Company believes to be reliable,
but the Company takes no responsibility for the accuracy thereof.
NOTE GUARANTEES
The Holding Guarantee and the Restricted Subsidiary Guarantees irrevocably
and unconditionally guarantee the performance and punctual payment when due,
whether at Stated Maturity, by acceleration, in connection with a Change of
Control Offer, an Excess Proceeds Offer or redemption, or otherwise, of all
obligations of APS under the Indenture and the Notes, whether for payment of
principal of, premium, if any, or interest on the Notes, expenses,
indemnification or otherwise. Each of the Note Guarantors has agreed to pay, in
addition to any amount stated above, any and all expenses (including reasonable
counsel fees and expenses) incurred by the Trustee or the Holders in enforcing
any rights under the Holding Guarantee or the Restricted Subsidiary Guarantees.
Each of the Note Guarantees are limited in amount to an amount not to exceed the
maximum amount that can be guaranteed by Holding or the applicable Restricted
Subsidiary Guarantor without rendering such Note Guarantee as it relates to such
Note Guarantor voidable under applicable law relating to fraudulent conveyance
or fraudulent transfer or similar laws affecting the rights of creditors
generally.
Each of the Holding Guarantee and the Restricted Subsidiary Guarantees is a
continuing Guarantee and (a) shall remain in full force and effect until payment
in full of the aggregate outstanding principal amount of the Notes and all of
APS's other obligations then due and payable under the Indenture and the Notes
or, in the case of a Restricted Subsidiary Guarantee, upon such Restricted
Subsidiary Guarantor no longer being a Restricted Subsidiary Guarantor, (b) is
binding upon each of the Note Guarantors and (c) is granted for the benefit of
and be enforceable by the Trustee and the holders of Notes.
PAYMENT TERMS
The Notes will mature on January 15, 2006 and bear interest at a rate of
11 7/8 % per annum until maturity, payable semiannually on January 15 and July
15 of each year, commencing July 15, 1996, to the Persons who are registered
Holders of Notes at the close of business on the January 1 or July 1 immediately
preceding such interest payment date.
The Indenture provides that interest on the Notes is to be computed on the
basis of a 360-day year of twelve 30-day months. Initially, the Trustee will act
as Paying Agent and Registrar. Principal and interest will be payable initially
at the offices of the Paying Agent but, at the option of APS, interest may be
paid by check mailed to the Persons who are registered holders of Notes at their
registered addresses, except that payments in respect of the Global Note (as
defined below) will be made to the Depositary in next-day funds. Holding or any
of its Subsidiaries or Affiliates may act as Paying Agent and Registrar,
PROVIDED that Holding shall, or shall cause such Subsidiary or Affiliate to,
segregate and hold in trust for the benefit of the Holders all funds held by
such Person as Paying Agent. APS may change the Paying Agent or Registrar
without prior notice to holders of Notes.
SUBORDINATION OF NOTES
The Existing Notes are, and the New Notes will be, subordinated in right of
payment, as set forth in the Indenture, to the prior payment in full in cash or
cash equivalents of all existing and future Senior Indebtedness of APS. The
Notes shall in all respects rank PARI PASSU with all other Senior
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Subordinated Indebtedness of APS, and only Indebtedness of APS that is Senior
Indebtedness of APS shall rank senior to the Notes. Although the Indenture
limits the aggregate amount of additional Indebtedness that APS may Incur, the
Indenture does not limit the amount of such Indebtedness that may be Senior
Indebtedness of APS. In the event of bankruptcy, liquidation, dissolution,
reorganization or any similar proceeding of APS, the assets of APS will be
available to make payments on the Notes only after all Senior Indebtedness of
APS has been paid in full in cash or cash equivalents or in any other manner
acceptable to the holders of Senior Indebtedness, and there may not be
sufficient assets remaining to pay amounts due on all or any of the Notes. As of
April 25, 1996, there was $204.4 million of Senior Indebtedness of APS, no
Senior Subordinated Indebtedness of APS (other than the Existing Notes) and no
Subordinated Obligations of APS outstanding; and assuming the full availability
and incurrence by APS of the full $94.9 million that was then available to be
borrowed under the New Credit Agreement, there would have been $299.3 million of
Senior Indebtedness of APS outstanding.
Upon any payment or distribution of the assets of APS to creditors upon a
total or partial liquidation or a total or partial dissolution of APS or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to APS or its property: (i) holders of Senior Indebtedness of APS shall
be entitled to receive payment in full of the Senior Indebtedness of APS before
holders of Notes shall be entitled to receive any payment of principal of or
interest on the Notes; and (ii) until the Senior Indebtedness of APS is paid in
full, any distribution to which holders of Notes would be entitled but for this
provision shall be made to holders of Senior Indebtedness of APS as their
interests may appear, except that holders of Notes may receive Permitted Junior
Securities.
In the event that (i) any Senior Indebtedness of APS is not paid when due or
(ii) any other default on Senior Indebtedness of APS occurs and the Stated
Maturity of such Senior Indebtedness of APS is accelerated in accordance with
its terms, then, APS may not pay the principal of, premium, if any, interest on
or any other amounts owing in respect of the Notes or make any deposit for the
purpose of the discharge of its liabilities under the Indenture and may not
repurchase, redeem or otherwise retire any Notes (collectively, "pay the Notes")
unless, in either case, (a) the default has been cured or waived and any such
acceleration has been rescinded or (b) such Senior Indebtedness of APS has been
paid in full. In addition, during the continuance of any default (other than a
default described in clause (i) or (ii) of the preceding sentence) with respect
to any Designated Senior Indebtedness of APS as a result of which the Stated
Maturity thereof may then be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, APS may not pay the Notes for a
period (a "Payment Blockage Period") commencing upon the receipt by APS and the
Trustee of written notice of such default from the Representative of any
Designated Senior Indebtedness of APS specifying an election to effect a Payment
Blockage Period (a "Blockage Notice") and ending 179 days thereafter (or earlier
if such Payment Blockage Period is terminated (i) by written notice to the
Trustee and APS from the Representative who gave such Blockage Notice, (ii) by
repayment in full of such Designated Senior Indebtedness of APS or (iii) because
the default giving rise to such Blockage Notice is no longer continuing).
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the next preceding sentence), unless
the holders of such Designated Senior Indebtedness of APS or the Representative
of such holders shall have accelerated the Stated Maturity of such Designated
Senior Indebtedness of APS, APS may resume payments on the Notes after such
Payment Blockage Period. Not more than one Blockage Notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness of APS during such period.
The provisions described in the two preceding paragraphs shall not prevent
or delay the receipt by the holders of Notes of payments of principal and
interest on the Notes, as described below under "-- Satisfaction and Discharge;
Defeasance," from the application of any cash or U.S. Government Obligations
held in trust by the Trustee.
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In the event of APS's insolvency, liquidation, reorganization, dissolution
or other similar proceedings, funds that would otherwise be payable to holders
of Notes will be paid to the holders of Senior Indebtedness to the extent
necessary to pay the Senior Indebtedness of APS in full. Moreover, creditors of
APS pursuant to obligations (such as accounts payable or tax liabilities) that
are neither Senior Indebtedness of APS nor Senior Subordinated Indebtedness of
APS may recover less, ratably, than the holders of Senior Indebtedness of APS
but may recover more, ratably, than holders of Senior Subordinated Indebtedness
of APS, including the holders of Note.
In addition to ranking senior in right of payment to the Notes, the New
Credit Agreement is secured by substantially all the assets of APS. In the event
of any payment or distribution of the assets of APS in any foreclosure,
dissolution, winding up, liquidation or reorganization, the lenders under the
New Credit Agreement and any other secured Senior Indebtedness of APS will have
a secured prior claim to such assets of APS. The Indenture does not restrict
Liens granted by APS to secure Senior Indebtedness.
SUBORDINATION OF NOTE GUARANTEES; RELEASE OF RESTRICTED SUBSIDIARY GUARANTEES
The Holding Guarantee and each Restricted Subsidiary Guarantee are
subordinated in right of payment, as set forth in the Indenture, to the prior
payment in full of all existing and future Senior Indebtedness of the Holding or
such Restricted Subsidiary Guarantor, as the case may be. The Holding Guarantee
and each Restricted Subsidiary Guarantee, in all respects, rank PARI PASSU with
all other Senior Subordinated Indebtedness of Holding or such Restricted
Subsidiary Guarantor, as the case may be, and only Indebtedness of such Note
Guarantor that is Senior Indebtedness of Holding or such Restricted Subsidiary
Guarantor, as the case may be, rank senior to the Holding Guarantee or the
relevant Restricted Subsidiary Guarantee, as the case may be. Although the
Indenture limits the aggregate amount of additional Indebtedness that the Note
Guarantors may Incur, the Indenture does not limit the amount of such
Indebtedness that may be Senior Indebtedness of a Holding or such Restricted
Subsidiary Guarantor, as the case may be. In the event of bankruptcy,
liquidation or reorganization of a Note Guarantor, the assets of such Note
Guarantor will be available to make payments under the Holding Guarantee or the
relevant Restricted Subsidiary Guarantee, as the case may be, only after all
Senior Indebtedness of Holding or such Restricted Subsidiary Guarantor, as the
case may be, has been paid in full, and there may not be sufficient assets
remaining to pay amounts due on the Holding Guarantee and the Restricted
Subsidiary Guarantees. As of April 25, 1996, there was $202.9 million of Senior
Indebtedness of Holding (including Holding's guarantee of the New Credit
Agreement) and $203.8 million in the aggregate of Senior Indebtedness of
Restricted Subsidiary Guarantors (including their guarantee of the New Credit
Agreement) outstanding to which the Holding Guarantee and the Restricted
Subsidiary Guarantees, as the case may be, was subordinated, no Senior
Subordinated Indebtedness of Holding (other than the Holding Guarantee) or of
the Restricted Subsidiary Guarantors (other than the Restricted Subsidiary
Guarantees) and no Subordinated Obligations of Holding or the Restricted
Subsidiary Guarantors outstanding; and assuming the full availability and
incurrence by APS of the full $94.9 million that was then available to be
borrowed under the New Credit Agreement as of such date, the Holding Guarantee
would have been subordinated to $297.8 million of Senior Indebtedness of Holding
(including Holding's guarantee of the New Credit Agreement) and the Restricted
Subsidiary Guarantees would have been subordinated to $298.7 million in the
aggregate of Senior Indebtedness of Restricted Subsidiary Guarantors (including
their guarantee of the New Credit Agreement).
Upon any payment or distribution of the assets of any Note Guarantor to
creditors upon a total or partial liquidation or a total or partial dissolution
of such Note Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Note Guarantor or its
property: (i) holders of Senior Indebtedness of Holding or such Restricted
Subsidiary Guarantor, as the case may be, shall be entitled to receive payment
in full of the Senior Indebtedness of Holding or such Restricted Subsidiary
Guarantor, as the case may be, before holders of Notes shall be entitled to
receive any payment under the Holding Guarantee or the relevant Restricted
Subsidiary Guarantee,
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as the case may be; and (ii) until the Senior Indebtedness of Holding or such
Restricted Subsidiary Guarantor, as the case may be, is paid in full, any
distribution to which Noteholders would be entitled but for this provision shall
be made to holders of Senior Indebtedness of Holding or such Restricted
Subsidiary Guarantor, as the case may be, as their interests may appear, except
that Noteholders may receive Permitted Junior Securities.
In the event that (i) any Senior Indebtedness of Holding or such Restricted
Subsidiary Guarantor, as the case may be, is not paid when due or (ii) any other
default on Senior Indebtedness of Holding or such Restricted Subsidiary
Guarantor, as the case may be, occurs and the Stated Maturity of such Senior
Indebtedness of Holding or such Restricted Subsidiary Guarantor, as the case may
be, is accelerated in accordance with its terms, then, such Note Guarantor may
not pay the Notes pursuant to the Holding Guarantee or such Restricted
Subsidiary Guarantee, as the case may be unless, in either case, (a) the default
has been cured or waived and any such acceleration has been rescinded or (b)
such Senior Indebtedness has been paid in full. In addition, during the
continuance of any default (other than a default described in clause (i) or (ii)
of the preceding sentence) with respect to any Designated Senior Indebtedness of
Holding or such Restricted Subsidiary Guarantor, as the case may be, as a result
of which the Stated Maturity thereof may then be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, such Note
Guarantor may not pay the Notes for a Payment Blockage Period commencing upon
the receipt by such Note Guarantor and the Trustee of a Blockage Notice and
ending 179 days thereafter (or earlier if such Payment Blockage Period is
terminated (i) by written notice to the Trustee and such Note Guarantor from the
Representative who gave such Blockage Notice, (ii) by repayment in full of such
Designated Senior Indebtedness of such Guarantor or (iii) because the default
giving rise to such Blockage Notice is no longer continuing). Notwithstanding
the provisions described in the immediately preceding sentence (but subject to
the provisions contained in the next preceding sentence), unless the holders of
such Designated Senior Indebtedness of Holding or such Restricted Subsidiary
Guarantor, as the case may be, or the Representative of such holders shall have
accelerated the Stated Maturity of such Designated Senior Indebtedness of
Holding or such Restricted Subsidiary Guarantor, as the case may be, such Note
Guarantor may resume payments under the Holding Guarantee or such Restricted
Subsidiary Guarantee, as the case may be, after such Payment Blockage Period.
Not more than one Blockage Notice may be given in any consecutive 360-day
period, irrespective of the number of defaults with respect to Designated Senior
Indebtedness of Holding or such Restricted Subsidiary Guarantor, as the case may
be, during such period.
In the event of insolvency, liquidation, reorganization, dissolution or
other similar proceedings with respect to any Note Guarantor, funds that would
otherwise be payable to Noteholders will be paid to the holders of Senior
Indebtedness of Holding or such Restricted Subsidiary Guarantor, as the case may
be, to the extent necessary to pay such Senior Indebtedness in full. Moreover,
creditors of such Note Guarantor pursuant to obligations (such as accounts
payable or tax liens) that are neither Senior Indebtedness nor Senior
Subordinated Indebtedness of Holding or such Restricted Subsidiary Guarantor, as
the case may be, may recover less, ratably, than holders of Senior Indebtedness
of Holding or such Restricted Subsidiary Guarantor, as the case may be, but may
recover more, ratably, than holders of Senior Subordinated Indebtedness of
Holding or such Restricted Subsidiary Guarantor, as the case may be, including
the Noteholders.
In addition to ranking senior in right of payment to the Note Guarantees,
the Senior Indebtedness of the Note Guarantors under the New Credit Agreement is
secured by substantially all the assets of Holding (principally the Capital
Stock of APS) and its Restricted Subsidiaries (including APS). In the event of
any payment or distribution of the assets of any Note Guarantor in any
foreclosure, dissolution, winding up, liquidation or reorganization, holders of
secured Senior Indebtedness of such guarantor will have a secured prior claim to
such assets of such guarantor.
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Any claims by Noteholders against the assets of Subsidiaries of Holding
(other than Restricted Subsidiaries by reason of their being Restricted
Subsidiary Guarantors) would be structurally subordinated to all existing and
future obligations (including trade payables and preferred stock, if any) of
such Subsidiaries.
In the event of a sale or other disposition of all of the assets of any
Restricted Subsidiary Guarantor, by way of merger, consolidation or otherwise,
or a sale or other disposition of all of the Capital Stock of any Restricted
Subsidiary Guarantor, by way of merger, consolidation or otherwise, such
Restricted Subsidiary Guarantor (in the event of a sale or other disposition of
all of the Capital Stock of such Restricted Subsidiary Guarantor) will be
released and relieved of its obligations under its Restricted Subsidiary
Guarantee or the Person acquiring the property (in the event of a sale or other
disposition of all of the assets of such Restricted Subsidiary Guarantor) will
not be required to enter into a Restricted Subsidiary Guarantee, PROVIDED, in
each case, that such transaction is carried out pursuant to and in accordance
with "-- Certain Covenants -- Limitation on Sales of Assets and Restricted
Subsidiary Stock" and, if applicable, "-- Merger, Consolidation and Sale of
Assets" below.
OPTIONAL REDEMPTION
Except as described below, the Notes will not be redeemable at the option of
APS prior to January 15, 2001. On and after that date, the Notes will be
redeemable at the option of APS, in whole at any time or in part from time to
time, on at least 30 but not more than 60 days' prior notice, mailed by
first-class mail to the Noteholders' registered addresses, at the redemption
prices (expressed in percentages of principal amount) specified below plus
accrued and unpaid interest (if any) to the redemption date (subject to the
right of each Holder of record on the relevant record date to receive interest
due on the relevant interest payment date), if redeemed during the 12-month
period beginning January 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- ----------
<S> <C>
2001.............................................................................. 105.94%
2002.............................................................................. 104.45%
2003.............................................................................. 102.97%
2004.............................................................................. 101.48%
2005 and thereafter............................................................... 100.00%
</TABLE>
In addition, at any time and from time to time prior to January 15, 1999,
APS may redeem in the aggregate up to 33 1/3% of the original aggregate
principal amount of the Notes with the proceeds of one or more Public Equity
Offerings by Holding, on at least 30 but not more than 60 days' prior notice,
mailed by first-class mail to the Noteholders' registered addresses, at a
redemption price (expressed as a percentage of principal amount thereof) of
111.875%, plus, in each case, accrued and unpaid interest, if any, to the
redemption date (subject to the right of each Holder of record on the relevant
record date to receive interest due on the relevant interest payment date);
PROVIDED, HOWEVER, that at least 66 2/3% of the original aggregate principal
amount of the Notes must remain outstanding after each such redemption.
The Notes will be subject to redemption at the option of APS prior to
January 15, 2001, in whole or in part, at any time within 180 days after a
Change of Control on not less than 30 nor more than 60 days' prior notice to
each Holder of Notes to be redeemed, at a redemption price equal to the sum of
(i) the principal amount thereof plus (ii) the Applicable Premium plus (iii)
accrued and unpaid interest, if any, to the redemption date (subject to the
right of each Holder of record on the relevant record date to receive interest
due on the relevant interest payment date). Each Noteholder will also have
certain rights to require the Company to purchase such Notes upon the occurrence
of a Change of Control. See "-- Change of Control" below.
If fewer than all the Notes are to be redeemed, selection of Notes for
redemption will be made by the Trustee, on a pro rata basis or by lot or by any
other means the Trustee determines to be fair and appropriate and that complies
with applicable legal and securities exchange requirements.
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The provisions of the New Credit Agreement prohibit APS from repurchasing
the Notes pursuant to any of the redemption provisions described herein without
first obtaining the consent of the Banks.
MANDATORY SINKING FUND
There are no mandatory sinking fund payments for the Notes.
CHANGE OF CONTROL
Upon a Change of Control occurring at any time, each Holder shall have the
right to require that APS purchase all or part of such Holder's Notes at a
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase (subject to the
right of each Holder of record on the relevant record date to receive interest
due on the relevant interest payment date) (the "Change of Control Purchase
Price"), in accordance with the terms contemplated below; PROVIDED, HOWEVER,
that notwithstanding a Change of Control, APS shall not be obligated to purchase
the Notes pursuant to this covenant in the event that it has exercised its
rights to redeem all of the Notes as described above under "-- Optional
Redemption." In the event that at the time of such Change of Control, the terms
of the New Credit Agreement or other Senior Indebtedness of Holding, APS or any
Restricted Subsidiary Guarantor restrict or prohibit the purchase of the Notes
pursuant to this provision, then prior to the mailing of the notice to Holders
provided for in the next paragraph below, but in any event within 30 days
following any Change of Control, Holding, APS or such Restricted Subsidiary
Guarantor, as applicable, shall (i) repay or cause to be repaid in full the New
Credit Agreement or such other Senior Indebtedness or offer to repay in full the
New Credit Agreement or such other Senior Indebtedness and repay or cause to be
repaid the New Credit Agreement or such other Senior Indebtedness of each lender
who has accepted such offer or (ii) obtain the requisite consent under the
agreements governing the New Credit Agreement or such other Senior Indebtedness,
in each case in order to permit the purchase of the Notes as provided for below.
The provisions of the New Credit Agreement prohibit APS from purchasing the
Notes pursuant to this section. Although the requirement to purchase Notes upon
a Change of Control as described in the next paragraph is absolute whether or
not Holding, APS or such Restricted Subsidiary Guarantor, as applicable,
complies with the covenant set forth in the second preceding sentence, and
failure to purchase Notes would constitute an Event of Default under the
Indenture, the terms described above in "-- Subordination of Notes" and "--
Subordination of Note Guarantees; Release of Restricted Subsidiary Guarantees"
may prevent payment of the Change of Control Purchase Price (whether at the date
of purchase or upon acceleration of the Notes), depending upon the funds
available to APS at such time. There can be no assurance that Holding, APS or
such Restricted Subsidiary Guarantor, as applicable, will be able, as required
by the Indenture, to repay the New Credit Agreement or such other Senior
Indebtedness or obtain the necessary consents thereunder to permit the purchase
of the Notes upon a Change of Control.
Within 30 days following any Change of Control (except as provided in the
proviso to the first sentence of the preceding paragraph), APS shall send, by
first-class mail to each Holder, a notice (with a copy to the Trustee) stating:
(i) that a Change of Control has occurred, that such Holder has the
right to require APS to purchase such Holder's Notes at the Change of
Control Purchase Price and that all Notes timely tendered will be accepted
for payment;
(ii) the circumstances and relevant facts regarding such Change of
Control, including, to the extent available, information with respect to pro
forma historical income, cash flow and capitalization, each after giving
effect to such Change of Control, events causing such Change of Control and
the date such Change of Control is deemed to have occurred;
(iii) the purchase date (which shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed); and
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<PAGE>
(iv) the instructions and relevant information determined by APS,
consistent with this provision, that a Holder must follow or consider in
order to have its Notes purchased, together with the information contained
in the next paragraph (and including any related materials).
Holders electing to have a Note purchased will be required to surrender the
Note, with an appropriate form duly completed, to the Paying Agent at the
address specified in the notice at least five Business Days prior to the
purchase date. Holders will be entitled to withdraw their election if the Paying
Agent receives not later than three Business Days prior to the purchase date, a
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Note that was delivered for purchase by the Holder and a
statement that such Holder is withdrawing such Holder's election to have such
Note purchased.
On the purchase date, all Notes purchased by APS under this provision shall
be delivered to the Trustee for cancellation, and APS shall pay the Change of
Control Purchase Price to the Holders entitled thereto.
APS shall comply, to the extent applicable, with the requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations in
connection with the repurchase of Notes pursuant to this provision. To the
extent that the provisions of any securities laws or regulations conflict with
this provision, APS shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
provision by virtue thereof.
The occurrence of certain of the events that would constitute a Change of
Control could constitute a default under the New Credit Agreement and might
constitute a default under future Indebtedness of APS, Holding and the
Restricted Subsidiary Guarantors. In addition, the exercise by the Holders of
the Notes of their right to require APS to repurchase the Notes could cause a
default under such Indebtedness even if the Change of Control itself does not,
due to the financial effect of such repurchase on APS. Finally, if a Change of
Control Offer is made, there can be no assurance that APS will have sufficient
funds or other resources to pay the Change of Control Purchase Price for all the
Notes that might be delivered by Holders thereof seeking to require APS to
purchase Notes. See "Risk Factors -- Leverage; Restrictive Covenants."
The conveyance, transfer or lease of all or substantially all of Holding's
assets, among other things, may constitute a Change of Control. The Indenture is
governed by New York law, and there is no established quantitative definition
under New York law of "substantially all" of the assets of a corporation.
Accordingly, if Holding or APS were to dispose of less than all of its assets,
it might be unclear whether a Change of Control has occurred and whether APS may
be required to make a Change of Control Offer. In any particular transfer, the
determination as to whether a Change of Control has occurred will depend on the
percentage of operating assets and total assets transferred, among other
measurements, and the other facts and circumstances of the transaction and will
be made by APS, and APS shall give notice to the Holders of the Notes of the
occurrence of a Change of Control.
APS's obligations to repurchase the Notes upon a Change of Control are
guaranteed on a senior subordinated basis by Holding pursuant to the Holding
Guarantee and by the other Restricted Subsidiary Guarantors pursuant to the
Restricted Subsidiary Guarantees. Such Note Guarantees are subordinated to
Senior Indebtedness of Holding or such Restricted Subsidiaries, as the case may
be, to the same extent described above under "-- Subordination of Guarantees;
Release of Restricted Subsidiary Guarantees."
CERTAIN COVENANTS
The Indenture contains covenants, including, among others, the following:
LIMITATION ON INDEBTEDNESS. Holding shall not, and shall not permit any
Restricted Subsidiary to, Incur any Indebtedness; PROVIDED, HOWEVER, that
Holding or any Restricted Subsidiary may Incur
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Indebtedness if on the date thereof the Consolidated Interest Coverage Ratio
would, after giving pro forma effect to such proposed Incurrence and the receipt
and application of the proceeds thereof, be greater than 2.25:1.00.
Notwithstanding the foregoing limitation, Holding and its Restricted
Subsidiaries may Incur the following Indebtedness: (i) Indebtedness under the
New Credit Agreement of (a) up to $65 million in term loan borrowings (less the
amount of any permanent reductions in such borrowings thereunder) and (b) the
greater of (x) $235 million in revolving credit borrowings (less the amount of
any permanent repayments of principal or other permanent reductions in the
amount of available borrowings thereunder) and (y) the sum of 90% of the book
value of the accounts receivable of Holding and its Restricted Subsidiaries,
which do not constitute Receivables Collateral for any Qualified Receivables
Transaction, and 60% of the book value of the inventory of Holding and its
Restricted Subsidiaries, in each case calculated in accordance with GAAP and net
of any reserves established or required under GAAP; (ii) Indebtedness of Holding
owing to and held by any Wholly Owned Restricted Subsidiary or Indebtedness of a
Restricted Subsidiary owing to and held by Holding or any Wholly Owned
Restricted Subsidiary; PROVIDED, HOWEVER, that any subsequent issuance or
transfer of any Capital Stock that results in any such Wholly Owned Restricted
Subsidiary ceasing to be a Wholly Owned Restricted Subsidiary or any subsequent
transfer of any such Indebtedness (except to Holding or a Wholly Owned
Restricted Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the issuer thereof; (iii) Indebtedness
represented by the Notes, the Holding Guarantee and the Restricted Subsidiary
Guarantees, and any Indebtedness (other than the Indebtedness described in
clauses (i) or (ii) above) outstanding on the Issue Date; (iv) Indebtedness
under any Interest Rate Agreement or Currency Agreement; PROVIDED, HOWEVER, that
the obligations created by (a) any such Interest Rate Agreement or Currency
Agreement are related to payment obligations on Indebtedness otherwise permitted
under the Indenture or (b) any such Currency Agreement is designed to protect
Holding and its Restricted Subsidiaries against fluctuations in foreign currency
exchange rates and does not increase Indebtedness of Holding or any of its
Restricted Subsidiaries except to the extent of any such fluctuations, and, in
each case, such Interest Rate Agreement or Currency Agreement is not for
speculative purposes; (v) Indebtedness in connection with one or more standby
letter of credit reimbursement obligations with respect to lease obligations and
loans to jobbers issued in the ordinary course of business, including letters of
credit of PI or an Affiliate of PI assumed by APS in connection with the
Acquisition, in an aggregate face amount at any one time not to exceed $10
million; (vi) Indebtedness in connection with one or more commercial documentary
letters of credit or bankers' acceptances issued for the account of Holding or
any Restricted Subsidiary for the purchase of goods and services in the ordinary
course of business; (vii) Refinancing Indebtedness Incurred in respect of
Indebtedness Incurred pursuant to the provisions of the immediately preceding
paragraph or clause (iii) or (xvii) of this paragraph; (viii) Indebtedness of
Holding or any Restricted Subsidiary arising from the honoring of a check, draft
or similar instrument drawn against insufficient funds, PROVIDED that such
Indebtedness is extinguished within three days of its Incurrence; (ix)
non-interest bearing Indebtedness pursuant to a promissory note that may be
issued by APS to GKN Parts (or its assignee) of up to $3 million related to
purchase price adjustments pursuant to the Purchase Agreement; (x) Indebtedness
of APS or any Restricted Subsidiary consisting of Guarantees, indemnities or
other obligations, in each case in respect of purchase price adjustments, in
connection with the acquisition or disposition of assets permitted under the
Indenture; (xi) Guarantees of up to $5 million in the aggregate outstanding at
any time under a Qualified Receivables Transaction; (xii) Indebtedness of a
Receivables Subsidiary in respect of any Qualified Receivables Transaction that
at all times enables such Receivables Subsidiary to qualify as a Receivables
Subsidiary; (xiii) Indebtedness under Inventory and Merchandise Repurchase
Agreements; (xiv) Guarantees of up to an aggregate principal amount of $10
million at any one time outstanding of Indebtedness Incurred by Management
Investors in connection with any Management Subscription Agreement or Incurred
by management employees in respect of relocation loans extended to such
employees, and any refinancings, refundings, extensions or renewals thereof;
(xv) Indebtedness of Holding or any of its Restricted Subsidiaries of up to an
aggregate principal amount of $10 million at any one time
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outstanding Incurred to finance the purchase price of any acquisition of
Additional Assets other than from Holding or its Restricted Subsidiaries,
PROVIDED that if such Indebtedness is owed to a Person, other than the Person
from whom such acquisition is made or any Affiliate thereof, such Indebtedness
shall not exceed 60% of the purchase price of such Additional Assets; (xvi)
Guarantees in connection with sales or other dispositions permitted under the
Indenture, including Guarantees with respect to indemnification and
then-existing lease obligations; (xvii) Indebtedness of a Restricted Subsidiary
Incurred and outstanding on or prior to the date on which such Restricted
Subsidiary was acquired by Holding or a Restricted Subsidiary and Indebtedness
of a Person assumed by Holding or a Restricted Subsidiary in connection with the
acquisition of assets from such Person, PROVIDED that at the time such assets
were owned by such other Person such Indebtedness was either secured by such
assets or related to the acquisition, ownership, improvement or use of such
assets by such other Person (in each case, other than Indebtedness Incurred as
consideration in, in contemplation of, or to provide all or any portion of the
funds or credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or such assets were acquired by Holding or a Restricted
Subsidiary, as applicable); PROVIDED, HOWEVER, that at the time such Restricted
Subsidiary is acquired by Holding or a Restricted Subsidiary or such assets are
acquired by Holding or a Restricted Subsidiary, as applicable, Holding and its
Restricted Subsidiaries would have been able to Incur $1.00 of additional
Indebtedness pursuant to the preceding paragraph after giving effect to the
Incurrence of such Indebtedness pursuant to this clause (xvii); (xviii)
Indebtedness in respect of judgment, appeal, surety, performance and other like
bonds provided by Holding or any of its Restricted Subsidiaries in the ordinary
course of business; (xix) Indebtedness of Holding or any of its Restricted
Subsidiaries in respect of the financing of insurance premiums in the ordinary
course of business, or representing obligations in respect of deductibles,
self-insured retention amounts, amounts required in connection with worker's
compensation and other insurance coverage Incurred in the ordinary course of
business or reimbursement obligations in respect of amounts Incurred or paid by
an insurance company under any insurance program in effect on the Issue Date or
instituted after the Issue Date in the ordinary course of business; (xx)
Guarantees relating to obligations of Jobber Subsidiaries under operating leases
in an aggregate amount not to exceed $5 million at any one time outstanding; and
(xxi) Indebtedness not otherwise permitted to be Incurred pursuant to this
covenant in an aggregate principal amount at any one time outstanding not to
exceed $35 million.
LIMITATION ON RESTRICTED PAYMENTS. Holding shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, (i) declare or pay any
dividend or make any distribution on or in respect of its Capital Stock
(including any payment in connection with any merger or consolidation involving
Holding or APS) except dividends or distributions payable solely in Capital
Stock (other than Redeemable Stock) of Holding or in options, warrants or other
rights to purchase such Capital Stock and except dividends or distributions
payable solely to Holding or a Wholly Owned Restricted Subsidiary, (ii)
purchase, redeem, retire or otherwise acquire for value any Capital Stock of
Holding or any Restricted Subsidiary held by Persons other than Holding or a
Wholly Owned Restricted Subsidiary, (iii) purchase, repurchase, redeem, defease
or otherwise acquire or retire for value, prior to Stated Maturity or scheduled
sinking fund payment, any Subordinated Obligations (other than the purchase,
repurchase or other acquisition of Subordinated Obligations purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of acquisition) or
(iv) make any Investment other than a Permitted Investment in any Person (any
such dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition, retirement or Investment being herein referred to as a "Restricted
Payment") if at the time of and after giving effect to such Restricted Payment:
(a) a Default or an Event of Default shall have occurred and be continuing or
would result therefrom; (b) Holding and its Restricted Subsidiaries could not
Incur at least $1.00 of additional Indebtedness under the Consolidated Interest
Coverage Ratio limitation set forth in "-- Limitation on Indebtedness" above; or
(c) the aggregate amount of such Restricted Payment and all other Restricted
Payments (the amount so expended, if other than in cash, to be determined in
good faith by the Board of Directors, whose determination shall be evidenced by
a
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Board Resolution) declared or made subsequent to the Issue Date, would exceed,
without duplication, the sum of: (1) 50% of the Consolidated Net Income (or, in
case such Consolidated Net Income shall be a deficit, minus 100% of such
deficit) accrued during the period (treated as one accounting period) beginning
on the first day of the fiscal quarter following the Issue Date to the end of
the most recent fiscal quarter ending at least 45 days prior to the date of such
Restricted Payment; (2) 100% of the aggregate Net Cash Proceeds received by
Holding subsequent to the Issue Date from (i) capital contributions from
stockholders and (ii) the issue or sale of its Capital Stock (other than an
issuance or sale to a Subsidiary of Holding or an employee stock ownership plan
or other trust established by Holding or any of its Subsidiaries or to
Management Investors; PROVIDED, HOWEVER, that the amount by which the aggregate
proceeds of the issuance or sale of Capital Stock to Management Investors
exceeds the aggregate repurchases of Capital Stock made pursuant to subparagraph
(xiii) of the definition of "Permitted Investments" shall be included in the
calculation of the Net Cash Proceeds under this clause (2)), including an
issuance or sale upon conversion of Indebtedness convertible into Capital Stock
of Holding (other than Redeemable Stock) and from the exercise of options,
warrants or rights to purchase Capital Stock of Holding (but excluding
Redeemable Stock); (3) the amount equal to the net reduction in Investments
resulting from (A) payments of dividends, repayments of loans or advances or
other transfers of assets to Holding or any Restricted Subsidiary or (B) the
redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in
each case as provided in the definition of "Investment") not to exceed the
amount of any such Investment previously made by Holding or any Restricted
Subsidiary, which amount was treated as a Restricted Payment, in each case to
the extent not included in Consolidated Net Income; (4) the amount (accreted
value in the case of Indebtedness issued with original issue discount) by which
Senior Indebtedness, Senior Subordinated Indebtedness or Subordinated
Indebtedness of Holding, APS or any Restricted Subsidiary Guarantor issued after
the Issue Date is reduced on the balance sheet of Holding and its consolidated
Subsidiaries upon the conversion or exchange (other than by a Subsidiary)
subsequent to the Issue Date, of such Indebtedness for Capital Stock (other than
Redeemable Stock) of Holding (less the amount of any cash or other property
distributed by Holding, APS or such Restricted Subsidiary Guarantor upon such
conversion or exchange); and (5) $15 million.
The provisions of this section shall not prohibit: (i) any purchase or
redemption of Capital Stock of Holding or Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Capital Stock of Holding (other than Redeemable Stock and other than Capital
Stock issued or sold to a Subsidiary or an employee stock ownership plan or
other trust established by Holding or any of its Subsidiaries); PROVIDED,
HOWEVER, that (a) such purchase or redemption shall be excluded from the
calculation of the amount of Restricted Payments and (b) the Net Cash Proceeds
from such sale shall be excluded from clause (c)(2) of the preceding paragraph
to the extent such Net Cash Proceeds are applied to purchase or redeem such
shares of Capital Stock or Subordinated Obligations; (ii) any purchase or
redemption of Subordinated Obligations made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Refinancing Indebtedness or by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Indebtedness of Holding or its Subsidiaries that is permitted to be incurred
pursuant to "-- Limitation on Indebtedness;" PROVIDED, HOWEVER, that such
purchase or redemption shall be excluded from the calculation of the amount of
Restricted Payments; (iii) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would have
complied with the preceding paragraph; PROVIDED, HOWEVER, that at the time of
payment of such dividend, no other Default shall have occurred and be continuing
(or result therefrom); PROVIDED FURTHER, HOWEVER, that such dividend shall be
included in the calculation of the amount of Restricted Payments from and after
the date of declaration of such dividends; or (iv) the repurchase of Notes
pursuant to the covenant described under "-- Change of Control" above; PROVIDED,
HOWEVER, that such repurchases will be excluded in the calculation of the
amounts of Restricted Payments.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED
SUBSIDIARIES. Holding shall not, and shall not permit any Restricted Subsidiary
to, create or otherwise cause or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to
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(i) pay dividends or make any other distributions on its Capital Stock or pay
any Indebtedness owed to Holding or any other Restricted Subsidiary, (ii) make
any loans or advances to Holding or any other Restricted Subsidiary or (iii)
transfer any of its property or assets to Holding or any other Restricted
Subsidiary, except: (a) any encumbrance or restriction pursuant to an agreement
in effect at or entered into on the Issue Date; (b) any encumbrance or
restriction with respect to a Restricted Subsidiary pursuant to an agreement
relating to any Indebtedness (1) Incurred by such Restricted Subsidiary prior to
the date on which such Restricted Subsidiary was acquired by Holding or a
Restricted Subsidiary or (2) of a Person assumed by Holding or a Restricted
Subsidiary in connection with the acquisition of assets from such Person,
PROVIDED that at the time such assets were owned by such other Person such
Indebtedness was either secured by such assets or related to the acquisition,
ownership, improvement or use of such assets (in each case, other than
Indebtedness Incurred as consideration in, in contemplation of, or to provide
all or any portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or such assets were acquired by
Holding or a Restricted Subsidiary, as applicable) and outstanding on such date;
(c) any encumbrance or restriction pursuant to an agreement effecting a
refinancing of Indebtedness Incurred pursuant to an agreement referred to in
clause (a) or (b) of this provision or contained in any amendment to an
agreement referred to in clause (a) or (b) of this provision; PROVIDED, HOWEVER,
that the encumbrances and restrictions contained in any such refinancing
agreement or amendment are not materially less favorable to the Noteholders than
encumbrances and restrictions contained in such agreements; (d) in the case of
clause (iii), any encumbrance or restriction (1) that restricts in a customary
manner the subletting, assignment or transfer of any property or asset that is a
lease, license, conveyance or contract or similar property or asset, (2) arising
by virtue of any transfer of, agreement to transfer, option or right with
respect to, or Lien on, any property or assets of Holding or any Restricted
Subsidiary not otherwise prohibited by the Indenture, or (3) arising or agreed
to in the ordinary course of business and that does not, individually or in the
aggregate, detract from the value of property or assets of Holding or any
Restricted Subsidiary, in each case in any manner material to Holding or such
Restricted Subsidiary; (e) any encumbrance or restriction pursuant to an
agreement relating to an acquisition of property, so long as such encumbrance or
restriction relates solely to the property so acquired; (f) any encumbrances or
restrictions pursuant to the New Credit Agreement so long as such encumbrances
or restrictions permit the payment of interest on, and principal of, the Notes,
except as otherwise provided above under " -- Subordination of Notes" and " --
Subordination of Note Guarantees; Release of Restricted Subsidiary Guarantees;"
(g) any restriction with respect to a Restricted Subsidiary imposed pursuant to
an agreement entered into for the sale or disposition of all or substantially
all the Capital Stock or assets of such Restricted Subsidiary pending the
closing of such sale or disposition; and (h) any restrictions imposed on assets
or Capital Stock of a Receivables Subsidiary in connection with a Qualified
Receivables Transaction that are customary for transactions of such kind.
LIMITATION ON SALES OF ASSETS AND RESTRICTED SUBSIDIARY STOCK. Holding
shall not, and shall not permit any Restricted Subsidiary to, make any Asset
Disposition unless (i) Holding or such Restricted Subsidiary, as the case may
be, receives consideration substantially concurrent with such Asset Disposition
at least equal to the Fair Market Value, as determined in good faith by the
Board of Directors, the determination of which shall be evidenced by a Board
Resolution (including as to the value of all non-cash consideration), of the
shares and assets subject to such Asset Disposition; (ii) at least 75% of the
consideration thereof received by Holding or such Restricted Subsidiary is in
the form of (a)(x) cash or Temporary Cash Investments or (y) Senior Indebtedness
of APS, Holding or any Restricted Subsidiary Guarantor assumed by a transferee
(in respect of which APS, Holding or such Restricted Subsidiary Guarantor, as
the case may be, has no further obligations), which assumption permanently
reduces the amount of Indebtedness permitted pursuant to clause (i)(a) or clause
(xxi) of " -- Limitation on Indebtedness;" plus (b) other consideration;
PROVIDED, HOWEVER, that the aggregate amount of such other consideration
received by Holding and its Restricted Subsidiaries from the Issue Date shall
not exceed $10 million plus the cash proceeds realized from the disposition of
any such
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other consideration, which cash proceeds shall be applied in accordance with
this covenant; and PROVIDED, FURTHER, that any consideration received by Holding
or any Restricted Subsidiary pursuant to any disposition by Holding or any such
Restricted Subsidiary of any property, stock or assets of AFCO at Fair Market
Value shall not be subject to this clause (ii); and (iii) APS or Holding
delivers an Officers' Certificate to the Trustee certifying that such Asset
Disposition complies with clauses (i) and (ii) (if applicable).
Net Available Cash (or any portion thereof) from any permitted Asset
Disposition may be applied by Holding (or such Restricted Subsidiary, as the
case may be) within 365 days from the receipt of such Net Available Cash (a) to
prepay, repay or purchase Senior Indebtedness of Holding, Senior Indebtedness of
APS or Senior Indebtedness of a Restricted Subsidiary Guarantor (in each case,
other than Indebtedness owed to Holding or an Affiliate of Holding); (b) to
reinvest in Additional Assets (including by means of an Investment in Additional
Assets by a Restricted Subsidiary with Net Available Cash received by Holding or
another Restricted Subsidiary) and/or (c) to purchase and retire Notes;
PROVIDED, HOWEVER, that in connection with any prepayment, repayment or purchase
of Indebtedness pursuant to clause (a) or (c) above, Holding, APS or such
Restricted Subsidiary Guarantor shall retire such Indebtedness and shall cause
the related loan commitment (if any) to be permanently reduced in an amount
equal to the principal amount so prepaid, repaid or purchased. Any Net Available
Cash that is not applied by Holding or its Restricted Subsidiaries in the manner
and in the relevant time period described in the preceding sentence shall,
immediately upon expiration of such time period, become and be added to any
then-existing "Excess Proceeds." Holding and its Restricted Subsidiaries may use
Net Available Cash to repay borrowings under the Revolving Credit Facility
(without permanent reduction in available borrowing thereunder) pending
application in accordance with this paragraph and prior to such Net Available
Cash becoming Excess Proceeds. When the aggregate amount of Excess Proceeds
(together with income earned thereon) exceeds $5 million, APS shall make an
offer (an "Excess Proceeds Offer") to purchase Notes pursuant to and subject to
the conditions of the following paragraph. Pending application of Net Available
Cash pursuant to the preceding sentence, such Net Available Cash shall be
invested in Temporary Cash Investments.
In the event APS is required to make an Excess Proceeds Offer, it will make
an offer in accordance with the procedures set forth in the next paragraph to
purchase from all Holders on a pro rata basis the Notes at a purchase price in
cash of 100% of their principal amount plus accrued and unpaid interest to the
date of purchase (subject to the right of each Holder of record on the relevant
record date to receive interest due on the relevant interest payment date) and
shall purchase from Holders accepting such Excess Proceeds Offer the maximum
principal amount of Notes that may be purchased from funds in an amount equal to
all then-existing Excess Proceeds. Upon completion of an Excess Proceeds Offer
(including payment of the purchase price for Notes duly tendered) the Excess
Proceeds that were the subject of such offer shall cease to be Excess Proceeds
and APS may use the remaining Excess Proceeds in its general operations.
Promptly, and in any event within 30 days after APS becomes obligated to
make an Excess Proceeds Offer, APS shall be obligated to deliver to the Trustee
and send, by first-class mail to each Holder, a written notice stating that the
Holder may elect to have such Holder's Notes purchased by APS either in whole or
in part subject to proration in integral multiples of $1,000 of principal
amount, at the applicable purchase price. The notice shall specify a purchase
date not less than 30 days or more than 60 days after the date of such notice
(the "Excess Proceeds Purchase Date") and shall contain information concerning
the Excess Proceeds Offer (including, to the extent available, appropriate pro
forma financial information) and all instructions and materials necessary to
tender Notes pursuant to the Excess Proceeds Offer, together with the
information contained in the next following paragraph.
Not later than the date upon which written notice of an Excess Proceeds
Offer is delivered to the Trustee as provided above, APS shall deliver to the
Trustee an Officers' Certificate as to (i) the amount of the Excess Proceeds
Offer (the "Excess Proceeds Offer Amount"), (ii) the allocation of the Net
Available Cash from the Asset Disposition pursuant to which such Excess Proceeds
Offer is being made and (iii) the compliance of such allocation with the
provisions of the next preceding paragraph.
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On such date, APS shall also deposit irrevocably with the Trustee or with the
Paying Agent (or, if Holding or any of its Subsidiaries is acting as Paying
Agent, Holding shall, or shall cause its Subsidiary to, segregate and hold in
trust) in cash or Temporary Cash Investments an amount equal to the Excess
Proceeds Offer Amount to be held for payment in accordance with the provisions
of this provision. On the Excess Proceeds Purchase Date, APS shall deliver, or
cause to be delivered, to the Trustee the Notes or portions thereof that have
been tendered properly to and are to be accepted by APS. The Paying Agent shall
promptly mail or deliver payment to each tendering Holder in the amount of the
purchase price. In the event that the aggregate purchase price of the Notes
delivered to the Trustee is less than the Excess Proceeds Offer Amount, the
excess shall be delivered to APS immediately after expiration of the Excess
Proceeds Offer Period.
A Holder electing to have a Note purchased will be required to surrender the
Note, with an appropriate form duly completed, to the Paying Agent at the
address specified in the notice at least five Business Days prior to the Excess
Proceeds Purchase Date. A Holder will be entitled to withdraw his election if
the Paying Agent receives not later than three Business Days prior to the Excess
Proceeds Purchase Date, a facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note that was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Note purchased. If the aggregate purchase price of Notes
surrendered by Holders exceeds the Excess Proceeds Offer Amount, the Trustee
shall select the Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Trustee so that only Notes in
denominations of $1,000 or integral multiples thereof, shall be purchased).
Holders whose Notes are purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered.
At the time APS delivers, or causes to be delivered, Notes to the Trustee
that are to be accepted for purchase, APS will also deliver an Officers'
Certificate stating that such Notes are to be accepted by APS pursuant to and in
accordance with the terms of this provision. A Note shall be deemed to have been
accepted for purchase at the time the Paying Agent mails or delivers payment
therefor to the surrendering Holder.
APS shall comply, to the extent applicable, with the requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations in
connection with the repurchase of Notes pursuant to this provision. To the
extent that the provisions of any securities laws or regulations conflict with
this provision, APS shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
provision by virtue thereof.
LIMITATION ON TRANSACTIONS WITH AFFILIATES. (a) Holding shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, conduct
any business, enter into or permit to exist any transaction or series of
transactions (including the purchase, conveyance, disposition, sale, lease or
exchange of any property or the rendering of any service) with any Affiliate of
Holding (an "Affiliate Transaction") unless the terms of such Affiliate
Transaction are (i) as favorable to Holding or such Restricted Subsidiary, as
the case may be, as those that could be obtained at the time of such transaction
for a similar transaction in arm's-length dealings with a Person who is not such
an Affiliate and (ii) with respect to an Affiliate Transaction involving
aggregate payments or value of $5.0 million or greater, a majority of the
Independent Directors have determined in good faith that the criteria set forth
in clause (i) are satisfied and have approved the relevant Affiliate
Transaction, such approval to be evidenced by a Board Resolution, or, in the
event there are no such Independent Directors, a fairness opinion is provided by
a nationally recognized appraisal or investment banking firm with respect to
such Affiliate Transaction.
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(b) The provisions of the preceding paragraph shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to "-- Limitation on Restricted
Payments" above or any Indebtedness to be Incurred pursuant to clause (xiv) of
the second paragraph of the covenant described under "-- Limitation on
Indebtedness," or any payments in respect thereof, (ii) any issuance of
securities, or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment arrangements, stock options and stock
ownership plans approved by the Board of Directors of Holding, (iii) loans or
advances to employees in the ordinary course of business, (iv) the payment of
reasonable fees to directors of Holding and its Restricted Subsidiaries who are
not employees of Holding or its Restricted Subsidiaries, (v) any transaction
between Holding and a Restricted Subsidiary or between Restricted Subsidiaries,
(vi) reasonable and customary fees and expenses paid to CD&R for financial
advisory and similar services provided to Holding and its Subsidiaries; (vii)
any transaction with an officer or member of the Board of Directors of APS or
Holding not covered by clause (ii) or (iii) above entered into in the ordinary
course of business involving compensation, indemnity or employee benefit
arrangements; or (viii) any transaction arising out of agreements as in
existence on the Issue Date, including, without limitation, the Indemnification
Agreement referred to under "Certain Relationships and Related Transactions" and
any payments made pursuant thereto.
LIMITATION ON LAYERED INDEBTEDNESS. Holding shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, Incur any Indebtedness
that is subordinate in right of payment to any other Indebtedness, unless such
Indebtedness is subordinate in right of payment to, or ranks PARI PASSU with,
the Holding Guarantee, in the case of Holding, the Notes, in the case of APS, or
the relevant Restricted Subsidiary Guarantee, in the case of a Restricted
Subsidiary Guarantor.
LIMITATION ON SUBORDINATED LIENS. Holding shall not, and shall not permit
any Restricted Subsidiary to, directly or indirectly, create or permit to exist
any Lien (other than Permitted Liens and Liens securing Senior Indebtedness of
Holding, in the case of Holding, of APS, in the case of APS, or of a Restricted
Subsidiary Guarantor, in the case of a Restricted Subsidiary Guarantor) on or
with respect to any of its property or assets (including Capital Stock), whether
owned on the Issue Date or thereafter acquired, or any income or profits
therefrom securing any obligation unless contemporaneously therewith effective
provision is made to secure the Holding Guarantee, in the case of Holding, the
Notes, in the case of APS, or the relevant Restricted Subsidiary Guarantee, in
the case of any Restricted Subsidiary Guarantor, equally and ratably with (or
prior to) such obligation for so long as such obligation is so secured.
LIMITATION ON OWNERSHIP OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES. Holding shall not (a) permit any Restricted Subsidiary to issue
any Capital Stock other than to Holding or one of its Wholly Owned Restricted
Subsidiaries or (b) permit any Person (other than Holding or any Wholly Owned
Restricted Subsidiary) to own any Capital Stock of any Restricted Subsidiary
(other than directors' qualifying shares), except, in each case, (x) as a result
of the sale of up to 49% of the shares of a Restricted Subsidiary other than
APS, the Net Available Cash from which is applied in accordance with "--
Limitation on Sales of Assets and Restricted Subsidiary Stock" above and (y) the
Capital Stock of a Restricted Subsidiary outstanding at the time such Restricted
Subsidiary became a Restricted Subsidiary and at such time not acquired by
Holding or another Restricted Subsidiary.
MERGER, CONSOLIDATION AND SALE OF ASSETS
Each of Holding and APS shall not consolidate with or merge with or into, or
convey, transfer or lease all or substantially all its assets to (or permit,
directly or through a Restricted Subsidiary, the sale of substantially all of
the assets of Holding and its Restricted Subsidiaries taken as a whole), any
Person, unless: (i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation organized and existing under the
laws of the United States of America, any State thereof or the District of
Columbia, and the Successor Company (if not Holding or APS, as the case may be)
shall expressly assume, by indentures supplemental to the Indenture, executed
and delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of APS under the Notes and the Indenture or Holding under the
Holding Guarantee and the Indenture, as the case may be;
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(ii) immediately after giving effect to such transaction or series of
transactions on a pro forma basis (and treating any Indebtedness that becomes an
obligation of the Successor Company or any Restricted Subsidiary as a result of
such transaction as having been Incurred by the Successor Company or such
Restricted Subsidiary at the time of such transaction), no Default or Event of
Default shall have occurred and be continuing; (iii) immediately after giving
effect to such transaction or series of transactions on a pro forma basis (and
treating any Indebtedness that becomes an obligation of the Successor Company or
any Restricted Subsidiary as a result of such transaction as having been
Incurred by the Successor Company or such Restricted Subsidiary at the time of
such transaction), the Successor Company would be able to incur an additional
$1.00 of Indebtedness in compliance with the Consolidated Interest Coverage
Ratio limitations set forth in the first paragraph of "-- Certain Covenants --
Limitation on Indebtedness" above; (iv) immediately after giving effect to such
transaction or series of transactions on a pro forma basis (and treating any
Indebtedness that becomes an obligation of the Successor Company or any
Restricted Subsidiary as a result of such transaction as having been Incurred by
the Successor Company or such Restricted Subsidiary at the time of such
transaction), the Successor Company shall have Consolidated Net Worth in an
amount that is not less than the Consolidated Net Worth of Holding or APS, as
the case may be, immediately prior to such transaction or series of
transactions; (v) immediately after giving effect to such transaction, Holding
(or the Successor Company to Holding) holds or continues to hold 100% of the
Capital Stock of APS (or the Successor Company to APS) and (vi) Holding or APS,
as the case may be, shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger or
transfer and such supplemental indenture (if any) comply with the Indenture and
that all conditions precedent relating to such transaction have been met.
The Successor Company shall succeed to, and be substituted for, and may
exercise every right and power of, Holding or APS, as the case may be, under the
Indenture, but the predecessor Company in the case of a lease shall not be
released from the obligation to pay the principal of and interest on the Notes.
Notwithstanding the foregoing, Holding and APS may consolidate with, merge
into or transfer all or part of its properties and assets to each other or any
other Wholly Owned Restricted Subsidiary.
Holding shall not permit any Restricted Subsidiary Guarantor to consolidate
with or merge with or into (whether or not such Restricted Subsidiary Guarantor
is the surviving Person) another Person other than Holding, APS or any Wholly
Owned Restricted Subsidiary or in a transaction involving an Asset Disposition
carried out pursuant to and in accordance with "-- Certain Covenants --
Limitation on Sales of Assets and Restricted Subsidiary Stock" above unless: (i)
the Person formed by or surviving any such consolidation or merger (the
"Successor Guarantor"), if other than such Restricted Subsidiary Guarantor,
assumes all obligations of such Restricted Subsidiary Guarantor under the
relevant Restricted Subsidiary Guarantee and the Indenture pursuant to a
supplemental indenture as required in the Indenture; (ii) immediately after
giving effect to such transaction, such Successor Guarantor is or becomes a
Restricted Subsidiary; (iii) immediately after giving effect to such transaction
on a pro forma basis (and treating any Indebtedness that becomes an obligation
of the Successor Guarantor or any Restricted Subsidiary as a result of such
transaction as having been Incurred by the Successor Guarantor or such
Restricted Subsidiary at the time of such transaction), (a) no Default or Event
of Default shall have occurred and be continuing and (b) Holding and its
Restricted Subsidiaries (including the Successor Guarantor and its Restricted
Subsidiaries) would be able to Incur an additional $1.00 of Indebtedness in
compliance with the Consolidated Interest Coverage Ratio limitations set forth
in the first paragraph of "-- Certain Covenants -- Limitation on Indebtedness;"
and (iv) the Trustee receives an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation or merger complies with the
Indenture and that all conditions precedent relating to such transaction have
been met.
EVENTS OF DEFAULT AND REMEDIES
An "Event of Default" will occur under the Indenture in the event of: (i) a
default in any payment of interest on any Note when the same becomes due and
payable, whether or not such payments shall
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be prohibited as described above under "-- Subordination of Notes," and such
default continues for a period of 30 days; (ii) (a) a default in the payment of
the principal of (or premium, if any, on) any Note when the same becomes due and
payable at its Stated Maturity, upon redemption, declaration or otherwise,
whether or not such payments shall be prohibited as described above under "--
Subordination of Notes" or "-- Subordination of Note Guarantees; Release of
Restricted Subsidiary Guarantees" or (b) a failure to redeem or purchase Notes
when required pursuant to the Indenture or the Notes, whether or not such
payments shall be prohibited as described above under "-- Subordination of
Notes" or "-- Subordination of Note Guarantees; Release of Restricted Subsidiary
Guarantees"; (iii) a failure to comply with the provisions of "-- Merger,
Consolidation and Sale of Assets" above or "-- Change of Control" above; (iv) a
failure to comply with the provisions of "-- Limitation on Indebtedness," "--
Limitation on Restricted Payments," "-- Limitation on Restrictions on
Distributions from Restricted Subsidiaries," "-- Limitation on Sales of Assets
and Restricted Subsidiary Stock," "-- Limitation on Layered Indebtedness," "--
Limitation on Subordinated Liens," "-- Limitation on Transactions with
Affiliates" or "-- Limitation on Ownership of Capital Stock of Restricted
Subsidiaries" in "-- Certain Covenants" (other than a failure to purchase Notes
when required under "-- Change of Control" or "-- Certain Covenants --
Limitation on Sale of Assets and Restricted Subsidiary Stock") or a failure to
cause a Restricted Subsidiary, upon its becoming a Restricted Subsidiary, to
enter into a supplemental indenture providing for a Restricted Subsidiary
Guarantee as required in the Indenture, and such failure continues for 30 days
after the notice specified below or APS fails to give the notice specified
below; (v) a failure to comply with any of the agreements in the Notes or the
Indenture (other than those referred to in (i), (ii), (iii) or (iv) above), and
such failure continues for 60 days after the notice specified below or APS fails
to give the notice specified below; (vi) the principal, any premium or accrued
and unpaid interest of Indebtedness of Holding or any Restricted Subsidiary is
not paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default, and the total amount of
such Indebtedness unpaid or accelerated exceeds $7.5 million at the time; (vii)
Holding or any Restricted Subsidiary pursuant to or within the meaning of any
Bankruptcy Law: (a) commences a voluntary case; (b) consents to the entry of an
order for relief against it in an involuntary case; (c) consents to the
appointment of a Custodian of it or for any substantial part of its property;
(d) makes a general assignment for the benefit of its creditors; or (e) takes
any comparable action under any foreign laws relating to insolvency; (viii) a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that: (a) is for relief against Holding or any Restricted Subsidiary in an
involuntary case; (b) appoints a Custodian of Holding or any Restricted
Subsidiary or for any substantial part of its property; (c) orders the winding
up or liquidation of Holding or any Restricted Subsidiary; or (d) grants any
similar relief under any foreign laws, and, in each case, the order or decree
remains unstayed and in effect for 60 days; or (ix) any judgment or decree for
the payment of money in excess of $7.5 million at the time is entered against
Holding or any Restricted Subsidiary and is not discharged and either (a) an
enforcement proceeding has been commenced by any creditor upon such judgment or
decree or (b) there is a period of 60 days following the entry of such judgment
or decree during which such judgment or decree is not discharged, waived or the
execution thereof stayed and, in the case of (a) or (b), such default continues
for 10 days.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
A Default under clause (iv) or (v) is not an Event of Default until the
Trustee or the Holders of at least 25% in principal amount of the Notes notify
APS of the Default and Holding or APS does not cure such Default within the time
specified (if any) after receipt of such notice. Such notice must specify the
Default, demand that it be remedied and state that such notice is a "Notice of
Default."
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APS shall deliver to the Trustee, within 30 days after the occurrence
thereof, written notice in the form of an Officers' Certificate of any event
that with the giving of notice and the lapse of time would become an Event of
Default, its status and what action APS, Holding or any Restricted Subsidiary
Guarantor is taking or proposes to take with respect thereto.
If an Event of Default (other than an Event of Default specified in clauses
(vii) or (viii) above) occurs and is continuing, the Trustee by notice to APS,
or the Holders of at least 25% in principal amount of the Notes by notice to APS
and the Trustee, may declare the principal of and accrued interest on all the
Notes to be due and payable. Upon such a declaration, such principal and
interest shall be due and payable immediately. If an Event of Default specified
in clause (vii) or (viii) above occurs, the principal of and interest on all the
Notes shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Noteholders. The
Holders of a majority in principal amount of the Notes by notice to the Trustee
may rescind any such acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto.
A Noteholder may not pursue any remedy with respect to the Indenture or the
Notes unless: (i) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing; (ii) the Holders of at least 25% in principal
amount of the Notes make a written request to the Trustee to pursue the remedy;
(iii) such Holder or Holders offer to the Trustee reasonable security or
indemnity against any loss, liability or expense; (iv) the Trustee does not
comply with the request within 60 days after receipt of the request and the
offer of security or indemnity; and (v) the Holders of a majority in principal
amount of the Notes do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Noteholder may not use the Indenture to prejudice the rights of another
Noteholder or to obtain a preference or priority over another Noteholder.
AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the Indenture, the Notes, the Holding
Guarantee or the Restricted Subsidiary Guarantees may be amended or supplemented
by APS, Holding, the relevant Restricted Subsidiary Guarantor and the Trustee
with the consent of the Holders of at least a majority in principal amount of
such then outstanding Notes. Without notice to or the consent of any Noteholder,
APS, Holding, the Restricted Subsidiary Guarantors and the Trustee may amend the
Indenture, the Notes or the Note Guarantees, among other things, to cure any
ambiguity, defect or inconsistency; to provide for the assumption of APS's,
Holding's or a Restricted Subsidiary Guarantor's obligations to Noteholders by a
Successor Company or Successor Guarantor or a supplemental indenture in respect
of a Restricted Subsidiary Guarantee as contemplated above under "-- General" or
"-- Merger, Consolidation and Sale of Assets;" to provide for uncertificated
Notes in addition to or in place of certificated Notes; or to make any change
that does not adversely affect the rights of any Noteholder. Without the consent
of each Noteholder affected, Holding or APS may not reduce the principal amount
of Notes the Holders of which must consent to an amendment of the Indenture;
reduce the rate or extend the time for payment of interest on any Note; reduce
the principal of or extend the Stated Maturity of any Note; reduce the premium
payable upon the redemption of any Note or change the time at which any Note may
or shall be redeemed; reduce the premium payable upon the purchase of any Note
upon a Change of Control or upon an Excess Proceeds Offer or modify the terms
pursuant to which APS is obligated to make a Change of Control or Excess
Proceeds Offer; make any Note payable in money other than that stated in the
Note; make any change in the provisions concerning waiver of Defaults or Events
of Default by Holders of the Notes or rights of Holders to receive payment of
principal or interest; make any change in the subordination provisions in the
Indenture that affects the right of any Holder; or release APS or any Note
Guarantor from its obligations under the Notes, the Holding Guarantee or any
Restricted Subsidiary Guarantee (except pursuant to the provisions
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described above in "-- Subordination of Note Guarantees; Release of Restricted
Subsidiary Guarantees" and "-- Merger, Consolidation and Sale of Assets") and
below in "-- Satisfaction and Discharge; Defeasance."
SATISFACTION AND DISCHARGE; DEFEASANCE
When (i) APS delivers to the Trustee all outstanding Notes (other than Notes
replaced because of mutilation, loss, destruction or wrongful taking) for
cancellation or (ii) all outstanding Notes have become due and payable, whether
at maturity or as a result of the mailing of a notice of redemption as described
above and APS irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Notes, including interest thereon,
and if in either case APS pays all other sums payable hereunder by APS, then the
Indenture shall, subject to certain surviving provisions, cease to be of further
effect. The Trustee shall acknowledge satisfaction and discharge of the
Indenture on demand of APS accompanied by an Officers' Certificate and an
Opinion of Counsel and at the cost and expense of APS.
Subject to conditions to defeasance described below and the survival of
certain provisions, APS at any time may terminate (i) all the obligations of
APS, Holding and each Restricted Subsidiary Guarantor under the Notes, the Note
Guarantees and the Indenture ("legal defeasance option") or (ii) the obligations
of Holding and each Restricted Subsidiary (including APS) under certain
restrictive covenants and the related Events of Default ("covenant defeasance
option"). APS may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option.
If APS exercises its legal defeasance option, payment of the Notes may not
be accelerated because of an Event of Default. If APS exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (ii) of the immediately preceding
paragraph.
APS may exercise its legal defeasance option or its covenant defeasance
option only if:
(a) APS irrevocably deposits in trust with the Trustee cash or U.S.
Government Obligations for the payment of principal and interest on the
Notes to maturity or redemption, as the case may be;
(b) APS delivers to the Trustee a certificate from a nationally
recognized firm of independent certified public accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment will provide cash at such times and in such amounts as will be
sufficient to pay principal, premium and interest when due on all the Notes
to maturity or redemption, as the case may be;
(c) 91 days pass after the deposit is made and during the 91-day period
no Default described in clause (vii) or (viii) under "-- Events of Default
and Remedies" above occurs that is continuing at the end of the period;
(d) the deposit does not constitute a default under any other agreement
or instrument binding on Holding or any Restricted Subsidiary and is not
prohibited by the provisions described above under "-- Subordination of
Notes" or "-- Subordination of Note Guarantees; Release of Restricted
Subsidiary Guarantees;"
(e) APS delivers to the Trustee an Opinion of Counsel to the effect that
the trust resulting from the deposit does not constitute, and is not
qualified as, a regulated investment company under the Investment Company
Act of 1940;
(f) in the case of the legal defeasance option, APS delivers to the
Trustee an Opinion of Counsel stating that (i) APS has received from the
Internal Revenue Service a ruling, or (ii) since the date of the Indenture
there has been a change in the applicable Federal income tax law, to the
effect, in either case, that, and based thereon such Opinion of Counsel
shall confirm that, the
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holders of the Notes will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would be the case if such defeasance were not to occur;
(g) In the case of the covenant defeasance option, APS delivers to the
Trustee an Opinion of Counsel to the effect that the Holders of such Notes
will not recognize income, gain or loss for Federal income tax purposes as a
result of such defeasance and will be subject to Federal income tax on the
same amounts, in the same manner and at the same times as would be the case
if such defeasance were not to occur; and
(h) APS delivers to the Trustee an Officers' Certificate and an Opinion
of Counsel, each stating that all conditions precedent to the defeasance and
discharge of the Notes have been complied with as required by the Indenture.
REPORTS TO HOLDERS OF THE NOTES
Holding and APS shall each file with the Trustee and provide Noteholders,
within 15 days after they file them with the Commission, copies of their annual
reports and the information, documents and other reports that they are required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
Notwithstanding that Holding may not be required to remain subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, to the extent
permitted by the Exchange Act, Holding shall continue to file with the
Commission and provide the Trustee and Noteholders with the annual reports and
the information, documents and other reports that are specified in Sections 13
and 15(d) of the Exchange Act. In the event that Holding is not permitted to
file such reports, documents and information with the Commission or Holding has
Subsidiaries other than APS and its Subsidiaries that, individually or in the
aggregate, would be deemed to be "substantial subsidiaries" (as defined in Rule
1-02 of Regulation S-X, as in effect at the Issue Date), APS will provide
substantially similar information with respect to itself and its Subsidiaries to
the Trustee, the Noteholders and prospective Noteholders (upon written request)
as if APS were subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act, except that APS shall not be required to provide separate
financial statements for any of its Subsidiaries. Without limiting the
foregoing, Holding, APS and the Restricted Subsidiary Guarantors shall comply
with the other provisions of Trust Indenture Act Section 314(a).
NO PERSONAL LIABILITY OF STOCKHOLDERS, OFFICERS, DIRECTORS
No director, officer, employee, incorporator or stockholder, as such, of
Holding, APS or any Restricted Subsidiary Guarantor shall have any personal
liability in respect of the obligations of Holding, APS or such Restricted
Subsidiary Guarantor, as the case may be, under the Notes, the Note Guarantees
or the Indenture by reason of his or its status as such.
THE TRUSTEE
The Bank of New York is the Trustee under the Indenture.
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are set forth specifically
in the Indenture. During the existence of an Event of Default, the Trustee will
exercise such of the rights and powers vested in it under the Indenture and use
the same degree of care and skill in its exercise as a prudent Person would
exercise under the circumstances in the conduct of such Person's own affairs.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
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"ADDITIONAL ASSETS" means (i) any property or assets (other than
Indebtedness and Capital Stock) of a kind used or usable in a Related Business
and (ii) Capital Stock of a Person that becomes a Restricted Subsidiary as a
result of the acquisition of such Capital Stock by Holding or a Restricted
Subsidiary, PROVIDED that such Restricted Subsidiary is primarily engaged in a
Related Business.
"AFFILIATE" of any specified Person means (i) any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person or (ii) any other Person who is a director or
officer (a) of such specified Person, (b) of any Subsidiary of such specified
Person or (c) of any Person described in clause (i) above. For the purposes of
this definition, "control" when used with respect to any Person means the power
to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of the section "-- Certain Covenants Limitation on
Transactions with Affiliates" and "-- Certain Covenants Limitation on Sales of
Assets and Restricted Subsidiary Stock" only, "Affiliate" shall also mean any
beneficial owner of shares representing 10% or more of the total voting power of
the Voting Stock (on a fully diluted basis) of Holding or of rights or warrants
to purchase such Voting Stock (whether or not currently exercisable) and any
Person who would be an Affiliate of any such beneficial owner pursuant to the
first sentence hereof.
"APPLICABLE PREMIUM" means, with respect to a Note, the greater of (i) 1.0%
of the then-outstanding principal amount of such Note and (ii) the excess of (A)
the present value of all remaining required interest and principal payments due
on such Note, computed using a discount rate equal to the Treasury Rate plus 75
basis points, over (B) the then-outstanding principal amount of such Note.
"ASSET DISPOSITION" means any sale, lease, transfer, or other disposition of
shares of Capital Stock of a Restricted Subsidiary (other than directors'
qualifying shares), property or other assets (each referred to for the purposes
of this definition as a "disposition") by Holding or any of its Restricted
Subsidiaries (including any disposition by means of a merger, consolidation or
similar transaction) other than (i) a disposition by a Restricted Subsidiary to
Holding or by Holding or a Restricted Subsidiary to a Wholly Owned Restricted
Subsidiary, (ii) a disposition of inventory in the ordinary course of business,
(iii) a disposition pursuant to any accounts receivable securitization program
carried out on commercially reasonable terms, (iv) a disposition with a sale
price of less than $1 million, (v) a disposition of properties and assets that
is governed by the provisions under the first paragraph of " -- Merger,
Consolidation and Sale of Assets" above, and (vi) for purposes of the provisions
of " -- Certain Covenants -- Limitation on Sales of Assets and Restricted
Subsidiary Stock" only, a disposition made in accordance with " -- Certain
Covenants -- Limitation on Restricted Payments."
"AVERAGE LIFE" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"BANKRUPTCY LAW" means Title 11, United States Code, or any similar Federal
or state law for the relief of debtors.
"BANKS" means the Lenders (as defined in the New Credit Agreement).
"BOARD OF DIRECTORS" means the Board of Directors of Holding or the
applicable Restricted Subsidiary, as the case may be, or any committee thereof
duly authorized to act on behalf of such Board.
"BOARD RESOLUTION" means a duly adopted resolution of the Board of Directors
in full force and effect at the time of determination and certified as such by
the Secretary or an Assistant Secretary of Holding or the applicable Restricted
Subsidiary, as the case may be.
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"CD&R FUND V" means Clayton, Dubilier & Rice Fund V Limited Partnership, a
Connecticut limited partnership.
"CAPITALIZED LEASE OBLIGATIONS" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP; and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the stated maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"CAPITAL STOCK" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) equity of such Person, including any Preferred Stock,
but excluding any debt securities convertible or exchangeable into such equity.
"CHANGE OF CONTROL" means the occurrence of any of the following events: (i)
(A) any "person" or "group" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or becomes (as a
result of the issuance of securities, by merger or otherwise) the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a Person shall not be deemed to have "beneficial ownership" of all shares that
any such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 35% of the total voting power of the Voting Stock of Holding and (B) the
Permitted Holders "beneficially own" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly, in the aggregate a lesser percentage
of the total voting power of the Voting Stock of Holding than such other Person
or group "beneficially owns" and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a majority of
the Board of Directors of Holding (for the purposes of this clause (i), such
other Person shall be deemed to beneficially own any Voting Stock of a specified
corporation held by a parent corporation, if such other Person "beneficially
owns" (as defined in this clause (i)), directly or indirectly, more than 35% of
the voting power of the Voting Stock of such parent corporation and the
Permitted Holders "beneficially own" (as defined in this clause (i)), directly
or indirectly, in the aggregate a lesser percentage of the voting power of the
Voting Stock of such parent corporation and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the board of directors of such parent corporation); (ii) the merger
or consolidation of Holding with or into another Person or the sale of all or
substantially all the assets of Holding to another Person (a "Transferee"), in
each case, other than a Person that is controlled by the Permitted Holders, and,
in the case of any such merger or consolidation, the securities of Holding that
are outstanding immediately prior to such transaction and that represent 100% of
the aggregate voting power of the Voting Stock of Holding are changed into or
exchanged for cash, securities or property, unless either (x) pursuant to such
transaction such securities are changed into or exchanged for, in addition to
any other consideration (or following consummation of such transaction the
"beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act)
of such securities otherwise are beneficial owners of), securities of the
surviving corporation or Transferee (or another Person of which the surviving
corporation or Transferee is a Subsidiary) that represent immediately after such
transaction, at least a majority of the aggregate voting power of the Voting
Stock of the surviving corporation or Transferee or such other Person, or (y)
pursuant to any such transaction (A) no "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted
Holders, is or becomes (as a result of the issuance of securities, by merger or
otherwise, as described in clause (i) above), the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of
more than 35% of the total voting power of the Voting Stock of the surviving
corporation or Transferee, as the case may be, or (B) the Permitted Holders
"beneficially own" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, in the aggregate an equal or greater percentage of the
total voting power of the Voting Stock of the surviving corporation or
Transferee, as the case may be, than any such other person or have the
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right or ability by voting power, contract or otherwise to elect or designate
for election a majority of the board of directors of the surviving corporation
or Transferee, as the case may be (for purposes of this clause (ii), such other
person shall be deemed to beneficially own any Voting Stock of a specified
corporation held by a parent corporation, if such other person "beneficially
owns" (as defined in this clause (ii)), directly or indirectly, more than 35% of
the voting power of the Voting Stock of such parent corporation and the
Permitted Holders "beneficially own" (as defined in this clause (ii)) directly
or indirectly, in the aggregate a lesser percentage of the voting power of the
Voting Stock of such parent corporation and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the board of directors of such parent corporation); or (iii) during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of Holding (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of Holding was approved by a vote of 66 2/3% of the
directors of Holding then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of Holding then in office.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the Securities and Exchange Commission.
"CONSOLIDATED INTEREST COVERAGE RATIO" as of any date of determination means
the ratio of (i) the aggregate amount of EBITDA for Holding and its consolidated
Subsidiaries for the period of the most recent four consecutive fiscal quarters
ending at least 45 days prior to the date of such determination to (ii)
Consolidated Interest Expense for such four fiscal quarters; provided, however,
that:
(a) if Holding or any Restricted Subsidiary (x) has Incurred any
Indebtedness since the beginning of such period that remains outstanding on
such date of determination or if the transaction giving rise to the need to
calculate the Consolidated Interest Coverage Ratio is an Incurrence of
Indebtedness, EBITDA and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to such Indebtedness
and the application of the proceeds thereof as if such Indebtedness had been
Incurred on the first day of such period or (y) has repaid, repurchased,
defeased or otherwise discharged any Indebtedness since the beginning of the
period that is no longer outstanding on such date of determination, or if
the transaction giving rise to the need to calculate the Consolidated
Interest Coverage Ratio involves a discharge of Indebtedness, EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving effect to such discharge of such Indebtedness, including with the
proceeds of such new Indebtedness, as if such discharge had occurred on the
first day of such period (except that, in making such computation, the
amount of Indebtedness under a revolving credit facility shall be computed
based upon the average daily balance of such Indebtedness during such
four-quarter period);
(b) if since the beginning of such period Holding or any Restricted
Subsidiary shall have disposed of any company or any business or any group
of assets constituting an operating unit in the ordinary course of business
(a "Disposal"), the EBITDA for such period shall be reduced by an amount
equal to the EBITDA (if positive) directly attributable to the assets that
are the subject of such Disposal for such period or increased by an amount
equal to the EBITDA (if negative) directly attributable thereto for such
period and Consolidated Interest Expense for such period shall be reduced by
an amount equal to the Consolidated Interest Expense directly attributable
to any indebtedness of Holding or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect to Holding and
its continuing Restricted Subsidiaries in connection with such Disposal for
such period (or, if the Capital Stock of any Restricted Subsidiary is sold,
the Consolidated Interest Expense for such period directly attributable to
the Indebtedness of such Restricted Subsidiary to the extent Holding and its
continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale);
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(c) if since the beginning of such period, Holding or any Restricted
Subsidiary (by merger or otherwise) shall have acquired any company or any
business or any group of assets constituting an operating unit in the
ordinary course of business (an "Acquisition Transaction"), EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any
Indebtedness) as if such Acquisition Transaction occurred on the first day
of such period; and
(d) if since the beginning of such period, any Person (that subsequently
became a Restricted Subsidiary or was merged with or into Holding or any
Restricted Subsidiary since the beginning of such period) shall have made
any Disposal or Acquisition Transaction that would have required an
adjustment pursuant to clause (b) or (c) above if made by Holding or a
Restricted Subsidiary during such period, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto as if such Disposal or Acquisition Transaction occurred on the first
day of such period.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest expense on such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term as at the date of determination in excess of 12 months). If any
Indebtedness bears, at the option of Holding or a Restricted Subsidiary, a fixed
or floating rate of interest and is being given pro forma effect, the interest
expense on such Indebtedness shall be computed by applying, at the option of
Holding or such Restricted Subsidiary, either a fixed or floating rate. If any
Indebtedness that is being given pro forma effect was Incurred under a revolving
credit facility, the interest expense on such Indebtedness shall be computed
based upon the average daily balance of such Indebtedness during the applicable
period.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the total interest
expense of Holding and its consolidated Subsidiaries as determined in accordance
with GAAP, net of any interest income of Holding and its consolidated
Subsidiaries other than in respect of notes receivable from associated jobbers
and net of non-cash deferred issuance costs, plus, to the extent not included in
such interest, (i) the interest component of Capitalized Lease Obligations,
whether paid or accrued, (ii) amortization of debt discount, (iii) accrued
interest, (iv) interest actually paid by Holding or any such Subsidiary under
any Guarantee of Indebtedness or other obligation of any other Person, (v) net
costs associated with Interest Rate Agreements or Currency Agreements (including
amortization of fees), (vi) the interest portion of any deferred obligation,
(vii) Preferred Stock dividends in respect of all Preferred Stock of
Subsidiaries and Redeemable Stock of Holding held by Persons other than Holding
or a Wholly Owned Restricted Subsidiary, (viii) the cash contributions to any
employee stock ownership plan or similar trust to the extent such contributions
are used by such plan or trust to pay interest or fees to any Person (other than
Holding) in connection with Indebtedness Incurred by such plan or trust;
provided, however, that there shall be excluded therefrom any such interest
expense of any Unrestricted Subsidiary to the extent the related Indebtedness is
not Guaranteed or paid by Holding or any Restricted Subsidiary and (ix) earned
discount or yield with respect to the sale of accounts receivable.
"CONSOLIDATED NET INCOME" means, for any period, the net income or loss of
Holding and its consolidated Subsidiaries as determined in accordance with GAAP;
PROVIDED, HOWEVER, that there shall not be included in such Consolidated Net
Income (i) any net income of any Person if such Person is not a Restricted
Subsidiary, except that, subject to the limitations contained in (iv) below,
Holding's equity in the net income of any such Person for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to Holding or a
Restricted Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution to a Restricted Subsidiary, to the
limitations contained in clause (iii) below), (ii) any net income or loss of any
Person acquired by Holding or a Subsidiary in a pooling of interests transaction
for any period prior to the date of such acquisition, (iii) any net income or
loss of
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any Restricted Subsidiary if such Subsidiary is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of
distributions by such Restricted Subsidiary, directly or indirectly, to Holding,
except that subject to the limitations contained in (iv) below, Holding's equity
in the net income of any such Restricted Subsidiary for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash that
could have been distributed by such Restricted Subsidiary during such period to
Holding or another Restricted Subsidiary as a dividend (subject, in the case of
a dividend to another Restricted Subsidiary, to the limitation contained in this
clause), (iv) any gain or loss realized upon the sale or other disposition of
any asset of Holding or its consolidated Subsidiaries (including pursuant to any
Sale/Leaseback Transaction) that is not sold or otherwise disposed of in the
ordinary course of business and any gain or loss realized upon the sale or other
disposition of any Capital Stock of any Person, (v) any extraordinary gain or
loss and (vi) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purpose of " -- Certain Covenants --
Limitation on Restricted Payments" above only, there shall be excluded from
Consolidated Net Income any dividends, repayments of loans or advances or other
transfers of assets from Unrestricted Subsidiaries to Holding or a Restricted
Subsidiary to the extent such dividends, repayments or transfers increase the
amount of Restricted Payments permitted under such covenant pursuant to clause
(iv)(c)(3)(A) thereof.
"CONSOLIDATED NET WORTH" means the total of the amounts shown on the balance
sheet of Holding and its Restricted Subsidiaries, determined on a consolidated
basis in accordance with GAAP, as of the end of the most recent fiscal quarter
of Holding ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as (i) the par or stated value
of all outstanding Capital Stock of Holding plus (ii) paid-in capital or capital
surplus relating to such Capital Stock plus (iii) any retained earnings or
earned surplus less (A) any accumulated deficit and (B) any amounts attributable
to Redeemable Stock of Holding.
"CONSOLIDATED NON-CASH CHARGES" of any Person means, for any period, the
aggregate depreciation, amortization and other non-cash charges of such Person
and its consolidated Subsidiaries for such period, on a consolidated basis, as
determined in accordance with GAAP (excluding any non-cash charge that requires
an accrual or reserve for cash charges for any future period, other than
accruals for future retiree medical obligations made pursuant to Statement of
Financial Accounting Standards No. 87, No. 112 and No. 106, as amended or
modified, and including any non-cash charges resulting from any write-up of
assets of such Person or any of its consolidated Subsidiaries in connection with
an acquisition).
"CURRENCY AGREEMENT" means, in respect of a Person, any foreign exchange
currency futures or options, currency swap agreements, forward exchange rate
agreements, exchange rate collar agreements, exchange rate insurance or other
agreements or arrangements, or combination thereof, designed to provide
protection against fluctuations in currency exchange rates, as to which such
Person is a party or a beneficiary.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
"DEFAULT" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"DESIGNATED SENIOR INDEBTEDNESS OF APS" means (i) Indebtedness under the New
Credit Agreement and (ii) any other Senior Indebtedness of APS that, at the date
of determination, has an aggregate principal amount outstanding of, or under
which, at the date of determination, the holders thereof, are committed to lend
up to, at least $25 million and is specifically designated by APS in the
instrument evidencing or governing such Senior Indebtedness of APS as
"Designated Senior Indebtedness of APS" for purposes of the Indenture and has
been designated as "Designated Senior Indebtedness of APS" for purposes of the
Indenture in an Officers' Certificate received by the Trustee.
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"DESIGNATED SENIOR INDEBTEDNESS OF HOLDING" means (i) Indebtedness under the
New Credit Agreement and (ii) any other Senior Indebtedness of Holding that, at
the date of determination, has an aggregate principal amount outstanding of, or
under which, at the date of determination, the holders thereof are committed to
lend up to, at least $25 million and is specifically designated by Holding in
the instrument evidencing or governing such Senior Indebtedness of Holding as
"Designated Senior Indebtedness of Holding" for purposes of the Indenture and
has been designated as "Designated Senior Indebtedness of Holding" for purposes
of the Indenture in an Officers' Certificate received by the Trustee.
"DESIGNATED SENIOR INDEBTEDNESS OF A RESTRICTED SUBSIDIARY GUARANTOR" means,
in respect of any Restricted Subsidiary Guarantor, (i) Indebtedness under the
New Credit Agreement and (ii) any other Senior Indebtedness of such Restricted
Subsidiary Guarantor that, at the date of determination, has an aggregate
principal amount outstanding of, or under which, at the date of determination,
the holders thereof are committed to lend up to, at least $25 million and is
specifically designated by such Restricted Subsidiary Guarantor in the
instrument evidencing or governing such Senior Indebtedness as "Designated
Senior Indebtedness of such Restricted Subsidiary Guarantor" for purposes of the
Indenture and has been designated as "Designated Senior Indebtedness of such
Restricted Subsidiary Guarantor" for purposes of the Indenture in an Officers'
Certificate received by the Trustee.
"EBITDA" for any period means the sum of Consolidated Net Income, income tax
expense, Consolidated Interest Expense and Consolidated Non-Cash Charges
deducted in computing Consolidated Net Income, without duplication, in each case
for such period, of such Person and its consolidated Subsidiaries on a
consolidated basis, all determined in accordance with GAAP.
"FAIR MARKET VALUE" means, with respect to any asset or property, the price
that could be negotiated in an arms'-length free market transaction, for cash,
between an informed and willing seller and an informed and willing buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, consistently applied, including
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
the Indenture shall be computed in conformity with GAAP consistently applied.
"GUARANTEE" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person,
including any such obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation of such other Person
(whether arising by agreement to purchase assets, goods, securities or services,
to take-or-pay, or to maintain financial statement conditions or otherwise) or
(ii) entered into for purposes of assuring in any other manner the obligee of
such Indebtedness or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part); provided,
however, that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business. The terms "Guarantee,"
"Guaranteed," "Guaranteeing" and "Guarantor" shall each have a correlative
meaning.
"HOLDER" or "NOTEHOLDER" means the Person in whose name a Note is registered
on the Registrar's books.
"INCUR" means issue, assume, Guarantee, incur or otherwise become liable
for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary, provided that neither the
accrual of
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interest nor the accretion of original issue discount shall be considered an
Incurrence of Indebtedness. The terms "Incurrable," "Incurred," "Incurrence" and
"Incurring" shall each have a correlative meaning.
"INDEBTEDNESS" means, with respect to any Person on any date of
determination (without duplication),
(i) the principal (accreted value in the case of Indebtedness Incurred
with original issue discount) of and premium (if any) in respect of
indebtedness of such Person for borrowed money;
(ii) the principal of and premium (if any) in respect of obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments;
(iii) all Capitalized Lease Obligations of such Person;
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except Trade Payables), which
purchase price is due more than one year after the date of placing such
property in service or taking delivery and title thereto or the completion
of such services;
(v) all obligations of such Person in respect of letters of credit,
bankers' acceptances or other similar instruments or credit transactions
(including reimbursement obligations with respect thereto), other than
obligations with respect to letters of credit securing obligations (other
than obligations described in clauses (i) through (iv) of this sentence)
entered into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if and to the extent drawn
upon, such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement following
payment on the letter of credit;
(vi) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Redeemable Stock of such
Person or any Redeemable Stock or Preferred Stock of such Person's
Subsidiaries (but excluding, in each case, any accrued dividends);
(vii) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person;
provided, however, that if such Indebtedness is not assumed by such Person,
the amount of such Indebtedness shall be the lesser of (a) the Fair Market
Value of such asset at such date of determination and (b) the amount of such
Indebtedness of such other Person;
(viii) all Indebtedness of other Persons to the extent Guaranteed by such
Person; and
(ix) to the extent not otherwise included in this definition, obligations
in respect of Interest Rate Agreements and Currency Agreements.
For purposes of this definition, the maximum fixed redemption, repayment or
repurchase price of any Redeemable Stock that does not have a fixed redemption,
repayment or repurchase price shall be calculated in accordance with the terms
of such Redeemable Stock as if such Redeemable Stock were redeemed, repaid or
repurchased on any date on which Indebtedness shall be required to be determined
pursuant to the Indenture; PROVIDED, HOWEVER, that if such Redeemable Stock is
not then permitted to be redeemed, repaid or repurchased, the redemption,
repayment or repurchase price shall be the book value of such Redeemable Stock
as reflected in the most recent financial statements of such Person. The amount
of Indebtedness of any Person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date.
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"INDEPENDENT DIRECTOR" means a director of Holding other than a director who
is a party, or who is a director, officer, employee or Affiliate (or is related
by blood or marriage to any such person) of a party, to the transaction in
question, and who is, in fact, independent in respect of such transaction.
"INTEREST RATE AGREEMENT" means, in respect of a Person, any interest rate
swap agreement, interest rate option agreement, interest rate cap agreement,
interest rate collar agreement, interest rate floor agreement or other similar
agreement or arrangement entered into in the ordinary course of business and
designed to protect such Person against fluctuations in interest rates.
"INVENTORY AND MERCHANDISE REPURCHASE AGREEMENTS" means agreements entered
into by Holding or any of its Restricted Subsidiaries in the ordinary course of
business and consistent with past practice to repurchase from lenders (or their
assignees) to operators of automotive parts warehouses or stores (including
Jobber Subsidiaries) or from such operators themselves, under certain
circumstances, inventory sold by Holding and its Restricted Subsidiaries or
inventory (of the type sold by Holding and its Restricted Subsidiaries) sold by
third parties at prices not to exceed 90% of the manufacturers' published jobber
blue sheet price for such products offered generally to jobbers at the time of
repurchase.
"INVESTMENT" in any Person means any direct or indirect advance, loan (other
than advances to customers in the ordinary course of business that are recorded
as accounts receivable on the balance sheet of such Person) or other extension
of credit (including by way of Guarantee or similar arrangement) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, Indebtedness or other similar
instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary" and the limitations set forth in " -- Certain
Covenants -- Limitation on Restricted Payments," (i) "Investment" shall include
the portion (proportionate to Holding's direct or indirect equity interest in
such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of
Holding at the time that such Subsidiary is designated an Unrestricted
Subsidiary; PROVIDED, HOWEVER, that upon a redesignation of such Subsidiary as a
Restricted Subsidiary, Holding shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to
(x) Holding's "Investment" in such Subsidiary at the time of such redesignation
less (y) Holding's portion (proportionate to Holding's direct or indirect equity
interest in such Subsidiary) of the Fair Market Value of the net assets of such
Subsidiary at the time that such Subsidiary is so redesignated a Restricted
Subsidiary; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its Fair Market Value at the time of such
transfer. In determining the amount of any Investment in respect of any property
or assets other than cash, such property or asset shall be valued at its Fair
Market Value at the time of such Investment (unless otherwise specified in this
definition), as determined in good faith by the Board of Directors, whose
determination shall be evidenced by a Board Resolution.
"ISSUE DATE" means the date of original issuance of the Existing Notes under
the Indenture.
"JOBBER SUBSIDIARIES" means any existing or future Unrestricted Subsidiary
of Holding whose principal business activity is the operation of one or more
automotive parts stores, the minority stockholders of which are involved,
directly or indirectly, in the management of such Unrestricted Subsidiary.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"MANAGEMENT INVESTORS" means the officers, directors, employees and other
members of the management of Holding, APS or a Subsidiary, or family members or
relatives thereof or trusts for the benefit of any of the foregoing, who at any
particular date shall beneficially own or have the right to acquire, directly or
indirectly, Holding common stock.
"MANAGEMENT STOCK" means Holding common stock, or options, warrants or
rights to purchase Holding common stock, held by any of the Management
Investors.
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"MANAGEMENT SUBSCRIPTION AGREEMENT" means one or more stock subscription or
stock option agreements that have been or may be entered into between Holding
and certain directors, officers, employees or managers of, or consultants to,
Holding, APS or any of their respective Subsidiaries (or trusts for the benefit
of relatives of such persons), with respect to the issuance to such parties of
common stock of Holding or options, warrants or other rights in respect of
common stock of Holding, any agreements entered into from time to time by
transferees of any such stock, options, warrants or other rights in connection
with the sale, transfer or reissuance thereof, and any assumptions of any of the
foregoing by third parties.
"NET AVAILABLE CASH" from an Asset Disposition means cash payments or
Temporary Cash Investments received (including any cash payments received by way
of deferred payment of principal pursuant to a note or installment receivable or
otherwise, but only as and when received, but excluding any other consideration
received in the form of assumption by the acquiring person of Indebtedness or
other obligations relating to such properties or assets or received in any other
non-cash form) therefrom, in each case net of (i) all legal, title and recording
tax expenses, commissions and other fees and expenses Incurred, and all Federal,
state, provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP, as a consequence of such Asset Disposition, (ii) all
payments made on any Indebtedness that is secured by any assets subject to such
Asset Disposition, in accordance with the terms of any Lien upon such assets, or
that must by its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law be repaid out of the proceeds from such Asset
Disposition, (iii) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of such
Asset Disposition and (iv) the deduction of appropriate amounts provided or to
be provided by the seller, in accordance with GAAP, against any liabilities
associated with the assets disposed of in such Asset Disposition and retained by
Holding or any Restricted Subsidiary after such Asset Disposition, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Disposition.
"NET CASH PROCEEDS," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"NEW CREDIT AGREEMENT" means the amended and restated credit agreement
entered into on the Issue Date among APS, and Holding and each of its Restricted
Subsidiaries other than APS, as guarantors, and a syndicate of Banks led by
Chemical Bank, and any amendments, extensions, revisions, increases,
refinancings or replacements thereof by a Bank or a syndicate of Banks.
"OFFICER" means the Chairman of the Board, President, Chief Financial
Officer, Treasurer or Secretary of Holding or the relevant Restricted
Subsidiary, as the case may be.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers at least
one of whom shall be the Chairman of the Board, President or Chief Financial
Officer of Holding or the relevant Restricted Subsidiary, as the case may be.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to
Holding, APS or the Trustee.
"PARI PASSU," as applied to the ranking of any Indebtedness of a Person in
relation to other Indebtedness of such Person, means that each such Indebtedness
either (i) is not subordinate in right of payment to any Indebtedness or (ii) is
subordinate in right of payment to the same Indebtedness as is the other, and is
so subordinate to the same extent, and is not subordinate in right of payment to
each other or to any Indebtedness as to which the other is not so subordinate.
"PERMITTED HOLDER" means any of Fund IV, CD&R Fund V, any other investment
fund or vehicle managed, sponsored or advised by CD&R or any Affiliate of or
successor to Fund IV or CD&R Fund V.
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"PERMITTED INVESTMENT" means an Investment by Holding or any Restricted
Subsidiary in (i) a Restricted Subsidiary or a Person that will, upon the making
of such Investment, become a Restricted Subsidiary; (ii) another Person if as a
result of such Investment such other Person is merged or consolidated with or
into, or transfers or conveys all or substantially all its assets to, Holding or
a Restricted Subsidiary; (iii) Temporary Cash Investments; (iv) receivables
owing to Holding or any Restricted Subsidiary, if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; PROVIDED, HOWEVER, that such trade terms may include such
concessionary trade terms as Holding or any such Restricted Subsidiary deems
reasonable under the circumstances; (v) loans or loan Guarantees made by AFCO to
customers of Holding and its Restricted Subsidiaries, in the ordinary course of
business, designed to assist customers to purchase inventory and related assets
from Holding and its Restricted Subsidiaries; (vi) payroll, travel and similar
advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses for accounting purposes and that are made
in the ordinary course of business; (vii) loans or advances to employees of
Holding or such Restricted Subsidiary made in the ordinary course of business
consistent with past practices of Holding or such Restricted Subsidiary, as the
case may be; (viii) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to Holding or any
Restricted Subsidiary or in satisfaction of judgments; (ix) non-cash
consideration received in connection with an Asset Disposition consummated in
compliance with " --Certain Covenants -- Limitation on Sale of Assets and
Restricted Subsidiary Stock;" (x) Investments described in clause (b) of " --
Certain Covenants -- Limitation on Transactions with Affiliates;" (xi)
Investments in Jobber Subsidiaries (including Investments therein existing on
the Issue Date), net of reductions in any such Investments attributable to
payments of dividends, repayments of loans or advances or other transfers of
assets to Holding or any Restricted Subsidiary up to the total amount of such
Investments that were made pursuant to this clause (xi); provided that the
aggregate amount of such Investments shall not exceed $10 million at any one
time; (xii) Inventory and Merchandise Repurchase Agreements; (xiii) repurchases
of shares of common stock of Holding from Management Investors in connection
with repurchase provisions under employee stock option and stock purchase
agreements or plans or other agreements to compensate such Management Investors
for consideration not to exceed $10 million in the aggregate from the Issue
Date; (xiv) equity interests of a trust or other Person established by a
Receivables Subsidiary held by such Receivables Subsidiary in order to effect a
Qualified Receivables Transaction; (xv) Investments in notes receivable in
connection with the sale or discount without recourse in the ordinary course of
business of accounts receivable or notes receivable, or the conversion or
exchange of accounts receivable in the ordinary course of business into or for
notes receivable, in connection with the compromise or collection thereof; (xvi)
evidences of Indebtedness, securities or other property received from another
Person by Holding or any Restricted Subsidiary in connection with any bankruptcy
proceeding or other reorganization of such other Person as a result of
foreclosure, perfection or enforcement of any Lien in exchange for evidences of
Indebtedness, securities or other property of such other Person held by Holding
or any Restricted Subsidiary in accordance with the terms of the Indenture;
(xvii) deposits with respect to leases or utilities provided to third parties in
the ordinary course of business, or otherwise described in clause (a) of the
definition of "Permitted Liens;" and (xviii) bonds secured by assets leased to
and operated by Holding or any Restricted Subsidiary that were issued in
connection with the financing of such assets so long as Holding or such
Restricted Subsidiary may obtain title to such assets at any time by canceling
such bonds and terminating the transaction.
"PERMITTED JUNIOR SECURITIES" means debt or equity securities of Holding,
APS or any Restricted Subsidiary Guarantor or any successor corporation issued
pursuant to a plan of reorganization or readjustment of Holding, APS or any
Restricted Subsidiary Guarantor that are subordinated at least to the same
extent that the Notes (or the relevant Note Guarantee) are subordinated to the
payment of all then outstanding Senior Indebtedness of Holding, APS or such
Restricted Subsidiary Guarantor, as the case may be, so long as the effect of
any exclusions employing this definition in the Indenture is not to cause the
Notes (or the relevant Note Guarantee) to be treated as part of the same class
of claims as such Senior Indebtedness or any class of claims PARI PASSU with, or
senior to, such Senior
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Indebtedness, for any payment or distribution in any case or proceeding or
similar event relating to the liquidation, insolvency, bankruptcy, dissolution,
winding up or reorganization of Holding, APS or any Restricted Subsidiary
Guarantor, PROVIDED that (i) if a new or successor corporation results from such
reorganization or readjustment, such corporation assumes any such Senior
Indebtedness not paid or deemed by the relevant court to be satisfied in full
prior to or in connection with such reorganization or readjustment and (ii) the
rights of the holders of such Senior Indebtedness are not altered or impaired
pursuant to any such plan of reorganization or readjustment except with the
consent of the holders thereof or through the offering to such holders of Senior
Indebtedness securities which are deemed by the relevant court to constitute
satisfaction in full in money or money's worth of any such Senior Indebtedness
not otherwise paid or satisfied.
"PERMITTED LIENS" means, with respect to any Person, (a) pledges or deposits
by such Person under workmen's compensation laws, unemployment insurance laws or
similar legislation, or good faith deposits in connection with bids, tenders,
contracts (other than for the payment of Indebtedness) or leases to which such
Person is a party, or deposits to secure public or statutory obligations of such
Person or deposits of cash or United States government bonds to secure surety or
appeal bonds to which such Person is a party, or deposits as security for
contested taxes or import duties or for the payment of rent or deposits as
security for the payment of insurance-related obligations (including, but not
limited to, in respect of deductibles, self-insured retention amounts and
premiums and adjustments thereto), in each case Incurred in the ordinary course
of business; (b) Liens imposed by law, such as carriers', warehousemen's,
mechanics', landlords', materialmen's, employees', laborers', employers',
suppliers', banks', repairmen's and other like Liens, in each case for sums not
yet due or being contested in good faith by appropriate proceedings, or other
Liens arising out of any judgment, award; decree or order of any court or other
governmental authority against such Person with respect to which such Person
shall then be prosecuting an appeal or other proceedings for review or the
period within which such proceedings may be instituted shall not have expired;
(c) Liens for taxes not yet due or payable or subject to penalties for
non-payment and that are being contested in good faith by appropriate
proceedings; (d) Liens in favor of issuers of surety, performance, judgment,
appeal and like bonds or letters of credit issued pursuant to the request of and
for the account of such Person in the ordinary course of its business; (e) Liens
existing on the Issue Date; (f) Liens on property or shares of stock of a Person
at the time such Person becomes a Restricted Subsidiary; PROVIDED, HOWEVER, that
any such Lien may not extend to any other property owned by Holding or any
Restricted Subsidiary; PROVIDED FURTHER, however, that such Lien was not
incurred in anticipation of or in connection with the transaction or series of
related transactions pursuant to which such Person became a Restricted
Subsidiary; (g) Liens on property at the time Holding or a Restricted Subsidiary
acquired the property, including any acquisition by means of a merger or
consolidation with or into Holding or any Restricted Subsidiary; PROVIDED,
HOWEVER, that any such Lien may not extend to any other property owned by
Holding or any Restricted Subsidiary; (h) Liens securing an Interest Rate
Agreement or Currency Agreement so long as the related Indebtedness is permitted
to be Incurred under the Indenture; (i) Liens on Receivables Collateral included
in a Qualified Receivables Transaction; (j) Liens to secure any refinancing,
refunding, extension, renewal or replacement (or successive refinancings,
refundings, extensions, renewals or replacements) as a whole, or in part, of any
Indebtedness secured by any Lien referred to in clauses (e), (f) or (g) of this
definition; PROVIDED, HOWEVER, that (x) such new Lien shall be limited to all or
part of the same property that secured the original Lien (plus improvements on
such property) and (y) the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (A) the outstanding principal
amount or, if greater, committed amount of the Indebtedness described under
clauses (e), (f) or (g) at the time the original Lien became a Permitted Lien
under the Indenture and (B) an amount necessary to pay any fees and expenses,
including premiums, related to such refinancing, refunding, extension, renewal
or replacement; (k) zoning restrictions, easements, rights-of-way, restrictions
on the use of property, other similar encumbrances incurred in the ordinary
course of business and minor irregularities of title that do not materially
interfere with the ordinary conduct of the business of Holding and its
Restricted Subsidiaries taken as a whole; (l) pledges of or Liens on raw
materials or on manufactured products as security
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for any drafts or bills of exchange drawn in connection with the importation of
such raw materials or manufactured products; (m) Liens securing Indebtedness or
other obligations of a Restricted Subsidiary owing to APS or a Restricted
Subsidiary; and (n) any Lien on stock or other securities of an Unrestricted
Subsidiary that secures Indebtedness of such Subsidiary.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"PREFERRED STOCK," as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) that is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.
"PRINCIPAL" of a Note means the principal of the Note plus the premium, if
any, payable on the Note that is due or overdue or is to become due at the
relevant time.
"PRO FORMA" means, with respect to any calculation made or required to be
made pursuant to the terms hereof, a calculation in accordance with Article 11
of Regulation S-X promulgated under the Securities Act (to the extent
applicable), as interpreted in good faith by the Board of Directors after
consultation with the independent certified public accountants of APS, or
otherwise a calculation made in good faith by the Board of Directors after
consultation with the independent certified public accountants of APS, as the
case may be.
"PUBLIC EQUITY OFFERING" means an underwritten primary public offering of
common stock of Holding pursuant to an effective registration statement under
the Securities Act (whether alone or in conjunction with a secondary public
offering).
"QUALIFIED RECEIVABLES TRANSACTION" means any transaction or series of
transactions that may be entered into by Holding or any of its Restricted
Subsidiaries in order to provide financing for Holding and its Restricted
Subsidiaries pursuant to which Holding or any of its Restricted Subsidiaries may
(a) sell, convey or otherwise transfer to a Receivables Subsidiary or any other
Person (in the case of a transfer by a Receivables Subsidiary) or (b) grant a
security interest in any Receivables Collateral (whether now existing or arising
in the future).
"RECEIVABLES COLLATERAL" means, in respect of any Qualified Receivables
Transaction, accounts receivable of Holding or any of its Restricted
Subsidiaries included in such Qualified Receivables Transaction, and any assets
relating thereto, including, without limitation, any collateral securing such
accounts receivables or contracts, Guarantees (granted by Persons other than
Holding and its Restricted Subsidiaries) or other obligations relating thereto
and proceeds thereof, that are customarily transferred or in respect of which
security interests are customarily granted in connection with asset
securitization transactions involving such accounts receivable.
"RECEIVABLES SUBSIDIARY" means a Wholly Owned Restricted Subsidiary of
Holding that engages in no other activities other than in connection with the
financing of notes or accounts receivable and that is designated by or pursuant
to the authority of the Board of Directors of Holding as a Receivables
Subsidiary (i) no portion of the Indebtedness or any other obligations
(contingent or otherwise) of which (a) is Guaranteed by Holding or any of its
Restricted Subsidiaries, (b) is recourse to or obligates Holding or any of its
Restricted Subsidiaries (other than such Receivables Subsidiary) in any way or
(c) subjects any property or asset (other than the relevant Receivables
Collateral) of Holding or any of its Restricted Subsidiaries (directly or
indirectly, contingent or otherwise) to the satisfaction thereof, except (x) as
permitted by clause (xi) of the second paragraph under the "Limitation on
Indebtedness" covenant and clause (i) of the definition of "Permitted Liens" or
(y) pursuant to representations, warranties, covenants and indemnities related
to Receivables Collateral included in a Qualified Receivables Transaction
customarily granted in connection with such a Qualified Receivables Transaction
by the originator of the relevant accounts receivable or, in the case of such
Receivables Subsidiary, by a special purpose asset securitization entity and
(ii) for which neither Holding nor any
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Restricted Subsidiary has any obligation to maintain or preserve such Wholly
Owned Restricted Subsidiary's financial condition (other than by accepting
restrictions on dividends and distributions by such Wholly Owned Restricted
Subsidiary) or cause such Wholly Owned Restricted Subsidiary to achieve certain
levels of operating results or obtain certain levels of accounts receivable. Any
such designation shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the resolution of the Board of Directors of Holding giving
effect to or authorizing such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.
"REDEEMABLE STOCK" means, with respect to any Person, any Capital Stock that
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable) or upon the happening of any event (i) matures or
is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(ii) is convertible or exchangeable for Indebtedness (other than Preferred
Stock), or (iii) is redeemable at the option of the holder thereof, in whole or
in part.
"REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances,
replaces, renews, repays or extends (including pursuant to any defeasance or
discharge mechanism) (collectively, "refinances," "refinanced" and "refinancing"
shall have correlative meanings) any Indebtedness existing on the date of the
Indenture or Incurred in compliance with the Indenture (including Indebtedness
of Holding that refinances Indebtedness of any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary that refinances Indebtedness of
another Restricted Subsidiary), including Indebtedness that refinances
Refinancing Indebtedness; PROVIDED, HOWEVER, that (i) the Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being refinanced, (ii) the Refinancing Indebtedness has an Average
Life at the time such Refinancing Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being refinanced, (iii) such
Refinancing Indebtedness is Incurred in an aggregate principal amount (or if
issued with original issue discount, an aggregate issue price) that is equal to
or less than (x) the aggregate principal amount (or if issued with original
issue discount, the aggregate accreted value) then outstanding of the
Indebtedness being refinanced plus (y) the amount of premium or other amounts
paid and fees and expenses incurred in connection with such refinancing, and
(iv) if the Indebtedness of Holding or a Restricted Subsidiary being refinanced
is subordinated to other Indebtedness of Holding or a Restricted Subsidiary in
any respect, such Refinancing Indebtedness is subordinated at least to the same
extent; PROVIDED FURTHER, however, that Refinancing Indebtedness shall not
include (a) Indebtedness of a Subsidiary that refinances Indebtedness of Holding
or APS or (b) Indebtedness of Holding, APS or a Restricted Subsidiary that
refinances Indebtedness of an Unrestricted Subsidiary.
"RELATED BUSINESS" means the automotive parts sales and distribution
business conducted by APS and its Subsidiaries as of the Issue Date and any and
all reasonably related businesses necessary for, in support or anticipation of
and ancillary to or in preparation for, such business.
"REPRESENTATIVE" means the trustee, agent or representative (if any) for an
issue of Senior Indebtedness or, if no such trustee, agent or representative
exists, the holder thereof.
"RESTRICTED SUBSIDIARY" means (a) APS, (b) each of American Parts Systems,
Inc., Big A Auto Parts, Inc., AFCO, APS Supply, Presatt Inc., A.P.S. Management
Services, Inc. and PI (or their successors in accordance with the provisions of
the Indenture) and (c) any other Subsidiary of Holding that is not an
Unrestricted Subsidiary.
"SALE/LEASEBACK TRANSACTION" means an arrangement relating to property now
owned or hereafter acquired whereby Holding or a Restricted Subsidiary transfers
such property to a Person and Holding or a Restricted Subsidiary leases it from
such Person.
"SENIOR INDEBTEDNESS OF APS" means (i) Indebtedness under the New Credit
Agreement (including principal, premium (if any), interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to APS whether or not allowable as a claim under
applicable bankruptcy law), fees, charges, expenses, reimbursement obligations,
guarantees and all
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other amounts payable thereunder or in respect thereof) and (ii) all other
Indebtedness of APS, including interest thereon, whether outstanding on the
Issue Date or thereafter issued, unless in the instrument creating or evidencing
the same or pursuant to which the same is outstanding it is provided that such
obligations are not superior in right of payment to the Notes; PROVIDED,
HOWEVER, that Senior Indebtedness of APS shall not include (a) any obligation of
APS to any Subsidiary, (b) any liability for Federal, state, local or other
taxes owed or owing by APS, (c) any accounts payable or other liability to trade
creditors arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities), (d) any Indebtedness,
Guarantee or obligation of APS which is subordinate or junior in any respect to
any other Indebtedness, Guarantee or obligation of APS, including any Senior
Subordinated Indebtedness of APS and any Subordinated Obligations, (e) any
obligations with respect to any Capital Stock or (f) any Indebtedness Incurred
in violation of the Indenture.
"SENIOR INDEBTEDNESS OF HOLDING" means (i) Indebtedness under the New Credit
Agreement (including principal, premium (if any), interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to Holding), fees, charges, expenses, reimbursement
obligations, guarantees and all other amounts payable thereunder or in respect
thereof) and (ii) all other Indebtedness of Holding, including interest thereon,
whether outstanding on the Issue Date or thereafter issued, unless in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding it is provided that such obligations are not superior in right of
payment to the Holding Guarantee; PROVIDED, HOWEVER, that Senior Indebtedness of
Holding shall not include (a) any obligation of Holding to any Subsidiary, (b)
any liability for Federal, state, local or other taxes owed or owing by Holding,
(c) any accounts payable or other liability to trade creditors arising in the
ordinary course of business (including Guarantees thereof or instruments
evidencing such liabilities), (d) any Indebtedness, Guarantee or obligation of
Holding that is subordinate or junior in any respect to any other Indebtedness,
Guarantee or obligation of Holding, including Senior Subordinated Indebtedness
of Holding and any Subordinated Obligations, (e) any obligations with respect to
any Capital Stock or (f) any Indebtedness Incurred in violation of the
Indenture.
"SENIOR INDEBTEDNESS OF A RESTRICTED SUBSIDIARY GUARANTOR" means, in respect
of any Restricted Subsidiary Guarantor, (i) Indebtedness under the New Credit
Agreement (including principal, premium (if any), interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the relevant Restricted Subsidiary Guarantor), fees,
charges, expenses, reimbursement obligations, guarantees and all other amounts
payable thereunder or in respect thereof) and (ii) all other Indebtedness of
such Restricted Subsidiary Guarantor, including interest thereon, whether
outstanding on the Issue Date or thereafter issued, unless in the instrument
creating or evidencing the same or pursuant to which the same is outstanding it
is provided that such obligations are not superior in right of payment to the
relevant Restricted Subsidiary Guarantee; PROVIDED, HOWEVER, that Senior
Indebtedness of such Restricted Subsidiary Guarantor shall not include (a) any
obligation of such Restricted Subsidiary Guarantor to any Subsidiary, (b) any
liability for Federal, state, local or other taxes owed or owing by such
Restricted Subsidiary Guarantor, (c) any accounts payable or other liability to
trade creditors arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities), (d) any Indebtedness,
Guarantee or obligation of such Restricted Subsidiary Guarantor that is
subordinate or junior in any respect to any other Indebtedness, Guarantee or
obligation of such Restricted Subsidiary Guarantor, including Senior
Subordinated Indebtedness of such Restricted Subsidiary Guarantor and any
Subordinated Obligations, (e) any obligations with respect to any Capital Stock
or (f) any Indebtedness Incurred in violation of the Indenture.
"SENIOR SUBORDINATED INDEBTEDNESS OF APS" means the Notes and any other
Indebtedness of APS that specifically provides that such Indebtedness is to rank
pari passu with the Notes and is not subordinated by its terms to any
Indebtedness of APS or other obligation of APS which is not Senior Indebtedness
of APS.
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"SENIOR SUBORDINATED INDEBTEDNESS OF HOLDING" means the Holding Guarantee
and any other Indebtedness of Holding that specifically provides that such
Indebtedness is to rank pari passu with the Holding Guarantee and is not
subordinated by its terms to any Indebtedness of Holding or other obligation of
Holding which is not Senior Indebtedness of Holding.
"SENIOR SUBORDINATED INDEBTEDNESS OF A RESTRICTED SUBSIDIARY GUARANTOR"
means, in respect of a Restricted Subsidiary Guarantor, the relevant Restricted
Subsidiary Guarantee and any other Indebtedness of such Restricted Subsidiary
Guarantor that specifically provides that such Indebtedness is to rank PARI
PASSU with such Restricted Subsidiary Guarantee and is not subordinated by its
terms to any Indebtedness of such Restricted Subsidiary Guarantor or other
obligation of such Restricted Subsidiary Guarantor which is not Senior
Indebtedness of such Restricted Subsidiary Guarantor.
"STATED MATURITY" means, with respect to any security, the date specified in
such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).
"SUBORDINATED OBLIGATION" means (i) any Indebtedness of APS (whether
outstanding on the date of the Indenture or thereafter Incurred) which is
subordinate or junior in right of payment to the Notes, (ii) any Indebtedness of
Holding (whether outstanding on the Issue Date or thereafter Incurred) that is
subordinate or junior in right of payment to the Holding Guarantee or (ii) any
Indebtedness of a Restricted Subsidiary Guarantor (whether outstanding on the
Issue Date or thereafter Incurred) that is subordinate or junior in right of
payment to the relevant Restricted Subsidiary Guarantee.
"SUBSIDIARY" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person, (ii) such Person and one
or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such
Person.
"TEMPORARY CASH INVESTMENTS" means any of the following: (i) investments in
U.S. Government Obligations maturing within 90 days of the date of acquisition
thereof, (ii) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company that is organized under the laws of
the United States or any state thereof having capital, surplus and undivided
profits aggregating in excess of $250,000,000 and whose long-term debt is rated
"A" or higher according to Moody's Investors Service, Inc. or Standard and
Poor's Corporation (or such similar equivalent rating by at least one
"nationally recognized statistical rating organization" (as defined in Rule 436
under the Securities Act)(an "Equivalent Rating")), (iii) repurchase obligations
with a term of not more than 30 days for underlying securities of the types
described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) investments in commercial
paper, maturing not more than 90 days after the date of acquisition, issued by a
corporation (other than an Affiliate of APS) organized and in existence under
the laws of the United States of America with a rating at the time as of which
any Investment therein is made of "P-1" (or higher) according to Moody's
Investors Service, Inc. or "A-1" (or higher) according to Standard and Poor's
Corporation (or such Equivalent Rating) and (v) investments in securities with
maturities of six months or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
"A" by Standard & Poor's Corporation or "A" by Moody's Investors Service, Inc.
(or such Equivalent Rating).
"TRADE PAYABLES" means, with respect to any Person, any accounts payable or
any Indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by such Person arising in the ordinary course of business of such
Person in connection with the acquisition of goods or services.
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"TREASURY RATE" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled by, and
published in, the most recent Federal Reserve Statistical Release H.15 (519)
that has become publicly available at least two business days prior to the date
fixed for redemption of the Notes following a Change of Control (or, if such
Statistical Release is no longer published, any publicly available source of
similar market data)) most nearly equal to the then remaining Average Life to
Stated Maturity of the Notes; PROVIDED, HOWEVER, that if the Average Life to
Stated Maturity of the Notes is not equal to the constant maturity of a United
States Treasury security for which a weekly average yield is given, the Treasury
Rate shall be obtained by linear interpolation (calculated to the nearest
one-twelfth of a year) from the weekly average yields of United States Treasury
securities for which such yields are given, except that if the Average Life to
Stated Maturity of the Notes is less than one year, the weekly average yield on
actually traded United States Treasury securities adjusted to a constant
maturity of one year shall be used.
"TRUSTEE" means the party named as such in the Indenture until a successor
replaces it in accordance with the provisions of the Indenture and, thereafter,
means the successor.
"UNIFORM COMMERCIAL CODE" means the New York Uniform Commercial Code as in
effect from time to time.
"UNRESTRICTED SUBSIDIARY" means (i) each Jobber Subsidiary existing on the
Issue Date, (ii) any other Subsidiary of Holding other than APS or PI that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors of Holding in the manner provided below and (iii) any other
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of Holding may
designate any Subsidiary of Holding (including any newly acquired or newly
formed Subsidiary of Holding) other than APS or PI to be an Unrestricted
Subsidiary unless such Subsidiary or any Subsidiary of such Subsidiary owns any
Capital Stock or Indebtedness of, or owns or holds any Lien on any property of,
Holding or any other Subsidiary of Holding that is not a Subsidiary of the
Subsidiary to be so designated; PROVIDED, HOWEVER, that either (a) the
Subsidiary to be so designated has total assets of $1,000 or less or (b) if such
Subsidiary has assets greater than $1,000, then such designation would be
permitted under " -- Certain Covenants -- Limitation on Restricted Payments" as
a "Restricted Payment" after giving effect to the designation. The Board of
Directors of Holding may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; PROVIDED, HOWEVER, that immediately after giving pro
forma effect to such designation (1) Holding could incur $1.00 of additional
Indebtedness pursuant to the Consolidated Interest Coverage Ratio limitation in
" -- Certain Covenants -- Limitation on Indebtedness" and (2) no Default or
Event of Default shall have occurred and be continuing. Any such designation by
the Board of Directors of Holding shall be evidenced to the Trustee by promptly
filing with the Trustee a copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complies with the foregoing provisions.
"U.S. GOVERNMENT OBLIGATIONS" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
that are not callable or redeemable at the issuer's option.
"VOTING STOCK" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" means a Restricted Subsidiary of
Holding, all the Capital Stock of which (other than directors' qualifying
shares) is owned by Holding or another Wholly Owned Restricted Subsidiary.
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REGISTRATION RIGHTS
In connection with the issuance of the Existing Notes, APS entered into a
Registration Agreement with the Initial Purchasers pursuant to which APS agreed,
for the benefit of the holders of the Existing Notes, at APS's cost, to use its
best efforts to cause the Registration Statement to be declared effective under
the Securities Act within 150 days after the date of original issuance of the
Existing Notes. APS shall keep the Exchange Offer open for acceptance for not
less than 30 days after the date notice thereof is mailed to holders of Existing
Notes.
In the event that any changes in law or applicable interpretations of the
staff of the Commission do not permit APS to effect the Exchange Offer, if for
any reason the Registration Statement is not declared effective within 150 days
following the date of original issuance of the Existing Notes, if the Exchange
Offer is not consummated within 180 days following the date of issuance of the
Existing Notes, or under certain other circumstances, APS will, in lieu of, or
upon the request of an Initial Purchaser under certain circumstances, APS will,
in addition to, effecting the registration of the New Notes pursuant to the
Registration Statement and at its cost, (i) as promptly as practicable, file
with the Commission the Shelf Registration Statement covering resales of the
Existing Notes, (ii) use its best efforts to cause the Shelf Registration
Statement to be declared effective under the Securities Act by the 180th day
after the original issuance of the Existing Notes (or promptly in the event of a
request by an Initial Purchaser) and (iii) keep effective the Shelf Registration
Statement until three years after its effective date (or until one year after
its effective date if such Shelf Registration Statement is filed at the request
of an Initial Purchaser). APS will, in the event of the filing of a Shelf
Registration Statement, provide to each holder of the Existing Notes covered by
the Shelf Registration Statement copies of the prospectus that is a part of the
Shelf Registration Statement, notify each such holder when the Shelf
Registration Statement for the Existing Notes has become effective and take
certain other actions as are required to permit unrestricted resales of the
Existing Notes. A holder of Existing Notes that sells such Existing Notes
pursuant to the Shelf Registration Statement generally will be required to be
named as a selling securityholder in the related prospectus and to deliver a
prospectus to the purchaser, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Agreement that are applicable to
such holder (including certain indemnification obligations). In addition, each
holder of the Existing Notes will be required to deliver information to be used
in connection with the Shelf Registration Statement and to benefit from the
provisions regarding Special Interest set forth in the following paragraph.
In the event that either (a) the Registration Statement is not declared
effective prior to the 150th day following the date of original issuance of the
Existing Notes or (b) the Exchange Offer is not consummated or a Shelf
Registration Statement with respect to the Existing Notes is not declared
effective on or prior to the 180th day following the date of original issuance
of the Existing Notes, interest will accrue (in addition to the stated interest
on the Existing Notes) from and including the next day following each of (i)
such 150-day period in the case of clause (a) above, and (ii) such 180-day
period in the case of clause (b) above. In each case such additional interest
(the "Special Interest") will be payable in cash semiannually in arrears each
January 15 and July 15, at a rate per annum equal to 0.5% of the principal
amount of the Existing Notes (determined daily). The aggregate amount of Special
Interest payable pursuant to the above provisions will in no event exceed 1.5%
per annum of the principal amount (determined daily). Upon (x) the effectiveness
of the Registration Statement after the 150-day period described in clause (a)
above or (y) the consummation of the Exchange Offer or the effectiveness of a
Shelf Registration Statement, as the case may be, after the 180-day period
described in clause (b) above, the Special Interest on the Existing Notes from
the date of such effectiveness or consummation, as the case may be, will cease
to accrue and all accrued and unpaid Special Interest as of the occurrence of
(x) or (y) shall be paid to the holders of the Existing Notes promptly
thereafter. Following the occurrence of (x) or (y) above, as the case may be,
the terms of the Existing Notes shall revert to the original terms.
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In the event that a Shelf Registration Statement is declared effective
pursuant to the paragraph preceding the immediately preceding paragraph, APS
shall use its best efforts to keep such Shelf Registration Statement
continuously effective in order to permit the prospectus contained therein to be
usable by holders of Existing Notes for a period of three years from the date of
the Shelf Registration Statement is declared effective by the Commission (or one
year from the date such Shelf Registration Statement is declared effective if
such Shelf Registration Statement is filed upon the request of an Initial
Purchaser) or such shorter period that will terminate when all the Notes covered
by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement.
Upon consummation of the Exchange Offer, APS will have no further obligation
to register the Existing Notes, except in the event that an Initial Purchaser
determines that it is not eligible to participate in the Exchange Offer and only
with respect to Existing Notes (if any) owned by the Initial Purchasers and
acquired directly from APS.
The summary herein of certain provisions of the Registration Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Registration Agreement, a copy of
which has been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part.
CERTAIN FEDERAL TAX CONSEQUENCES
In the view of the Company, which is based on the advice of Debevoise &
Plimpton, special counsel to the Company, the principal United States federal
income tax consequences of the acquisition, ownership and disposition of the New
Notes to the initial acquirors thereof and the principal United States federal
estate tax consequences of the ownership of the New Notes to such acquirors who
are Foreign Holders (as defined below) are as set forth in the following
discussion. This discussion is based on currently existing provisions of the
Code, existing and proposed Treasury regulations promulgated thereunder, and
administrative and judicial interpretations thereof, all as in effect or
proposed on the date hereof and all of which are subject to change, possibly
with retroactive effect, or different interpretations. This discussion does not
address the tax consequences to subsequent purchasers of New Notes, and is
limited to acquirors who hold the New Notes as capital assets. Moreover, the
discussion is for general information only, and does not address all of the tax
consequences that may be relevant to particular acquirors in light of their
personal circumstances, or to certain types of acquirors (such as certain
financial institutions, insurance companies, tax-exempt entities, dealers in
securities or persons who have hedged the interest rate on the New Notes).
PROSPECTIVE ACQUIRORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF THE ACQUISITION, OWNERSHIP AND
DISPOSITION OF THE NEW NOTES, INCLUDING THE APPLICABILITY OF ANY FEDERAL ESTATE
OR GIFT TAX LAWS OR ANY STATE, LOCAL OR FOREIGN TAX LAWS, ANY CHANGES IN
APPLICABLE TAX LAWS AND ANY PENDING OR PROPOSED LEGISLATION OR REGULATIONS.
EXCHANGE OFFER
The exchange of an Existing Note for a New Note should not constitute a
taxable exchange of the Existing Note if the interest rate on the New Note is
equal to the interest rate on the Existing Note. Although there is no definitive
guidance on the issue, even if the interest rate on the New Note is not equal to
the interest rate on the Existing Note because Special Interest is payable on
the Existing Notes as described under "Registration Rights," but not payable on
the New Note, the exchange should not constitute a taxable exchange of the
Existing Note. As a result, the New Notes should have the same issue price (and
adjusted issue price immediately after the exchange) and the same amount of
original issue discount, if any, as the Existing Notes, and each holder should
have the same adjusted basis and holding period in the New Notes as it had in
the Existing Notes immediately before the exchange. The following discussion
assumes that the exchange of Existing Notes for New Notes
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pursuant to the Exchange Offer will not be treated as an exchange for federal
income tax purposes, and that the Existing Notes and the New Notes will be
treated as the same security for federal income tax purposes.
UNITED STATES TAXATION OF UNITED STATES HOLDERS
As used herein, the term "United States Holder" means a holder of a New Note
that is, for United States federal income tax purposes, (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof or (iii) an estate or trust the income of which is
subject to United States federal income taxation regardless of its source.
PAYMENT OF INTEREST ON NEW NOTES
In general, interest paid or payable on a New Note will be taxable to a
United States Holder as ordinary interest income as received or accrued, in
accordance with such holder's method of accounting for federal income tax
purposes. Assuming that original issue discount on the Existing Note is not
greater than a de minimis amount equal to 0.25% of its stated principal amount
multiplied by the number of complete years to its maturity, any such discount
will be deemed to be equal to zero, and a holder will not be required to accrue
a portion of such discount as income in each taxable year.
There is no definitive guidance with respect to the treatment of debt
instruments providing for payments such as Special Interest. Holders should
consult their tax advisors as to the tax considerations relating to debt
instruments providing for payments such as Special Interest. In June, 1996, the
Internal Revenue Service ("IRS") issued final regulations relating to contingent
payment debt instruments (the "Contingent Payment Regulations"). The Contingent
Payment Regulations provide that a payment under a debt instrument payable on
the occurrence of a remote or incidental contingency will not be treated as a
contingent payment. The Contingent Payment Regulations would require holders of
a contingent payment debt instrument to accrue all payments thereon (including
de minimis original issue discount and projected contingent payments) on a
constant yield basis, and in certain circumstances to include market discount in
income sooner than otherwise required and treat gain recognized on the
disposition of the debt instrument as interest income. The Contingent Payment
Regulations would apply to contingent payment debt instruments issued sixty days
or more after such regulations are published in the Federal Register and thus
would not apply, by their terms, to the New Notes, assuming that the New Notes
are issued prior to such time. The Contingent Payment Regulations are currently
scheduled for publication in the Federal Register on June 14, 1996. The preamble
to the Contingent Payment Regulations provides that a holder of a contingent
payment debt instrument which is issued prior to the effective date of the
Contingent Payment Regulations may use any reasonable method to account for the
debt instrument, including a method that would have been required under proposed
regulations that were issued by the IRS in December, 1994. Under those proposed
regulations, which were outstanding when the Existing Notes were issued, the
treatment of contingent payment debt instruments would generally be the same as
the treatment under the Contingent Payment Regulations, described above.
SALE, EXCHANGE OR RETIREMENT OF THE NEW NOTES
Upon the sale, exchange, redemption, retirement at maturity or other
disposition of a New Note, a United States Holder will generally recognize
taxable gain or loss equal to the difference between the sum of cash plus the
fair market value of all other property received on such disposition (except to
the extent such cash or property is attributable to accrued interest, which will
be taxable as ordinary income) and such holder's adjusted tax basis in the New
Note.
Gain or loss recognized on the disposition of a New Note generally will be
capital gain or loss (except to the extent the gain is attributable to accrued
market discount, as described below) and will be long-term capital gain or loss
if, at the time of such disposition, the United States Holder's holding period
for the New Note is more than one year.
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MARKET DISCOUNT
Generally, the market discount provisions of the Code require the holder of
a New Note that is a market discount bond (as defined in the Code) to treat any
gain realized upon the disposition of such New Note as interest income to the
extent of the market discount that accrued during the period such holder held
such New Note. (For this purpose a person disposing of a market discount New
Note in a transaction other than a sale, exchange or involuntary conversion
generally is treated as realizing an amount equal to the fair market value of
the New Note.) A holder may also be required to recognize as ordinary income any
principal payments with respect to a New Note to the extent such payments do not
exceed the accrued market discount on the New Note. For these purposes, market
discount generally equals the excess of the stated redemption price of the New
Note over the basis of the New Note in the hands of the holder immediately after
its acquisition. However, market discount is deemed not to exist if the market
discount is less than a statutorily defined de minimis amount equal to 1/4 of 1
percent of the New Note's contract redemption price at maturity multiplied by
the number of complete years to the New Note's maturity after the holder
acquired the New Note.
The market discount rules also provide that any holder of New Notes that
were acquired at a market discount may be required to defer the deduction of a
portion of the interest on any indebtedness incurred or maintained to acquire or
carry the New Notes, until the New Notes are disposed of.
A holder of a New Note acquired at a market discount may elect to include
market discount in income as the discount accrues. In such a case, the foregoing
rules with respect to the recognition of ordinary income on dispositions and
with respect to the deferral of interest deductions on indebtedness related to
such New Note would not apply.
AMORTIZABLE BOND PREMIUM
Generally, if the tax basis of an obligation held as a capital asset exceeds
the amount payable at maturity of the obligation, such excess may constitute
amortizable bond premium that the holder of such obligation may elect to
amortize under the constant interest rate method and deduct over the period from
the holder's acquisition date to the obligation's maturity date. A holder that
elects to amortize bond premium must reduce its tax basis in the related
obligation by the amount of the aggregate deductions allowable for the
amortizable bond premium. Any election to amortize bond premium shall apply to
all bonds (other than bonds on which the interest is excludible from gross
income) held by the holder at the beginning of the first taxable year to which
the election applies or thereafter acquired by the holder. The election is
irrevocable without the consent of the IRS.
In the case of an obligation, such as a New Note, that may be called at a
premium prior to maturity, an earlier call date is treated as its maturity date,
and the amount of bond premium is determined by treating the amount payable on
such call date as the amount payable at maturity if such a calculation produces
a smaller amortizable bond premium than any other call date or the method
described in the preceding paragraph. If a holder of a New Note is required to
amortize and deduct bond premium by reference to a call date, the New Note will
be treated as maturing at such date for the amount payable, and, if not redeemed
on such date, the New Note will be treated as reissued on such date for the
amount so payable. If a New Note purchased at a premium is redeemed pursuant to
a call prior to such early call date or its maturity, a purchaser who has
elected to deduct bond premium may deduct the excess of its adjusted basis in
the New Note over the amount received on redemption (or, if greater, the amount
payable at maturity) as an ordinary loss in the taxable year of redemption.
The amortizable bond premium deduction is treated as a reduction of interest
on the bond instead of as a deduction, except as Treasury regulations may
otherwise provide.
TRANSFER
The New Notes have been issued in registered form and will be transferable
only upon their surrender for registration of transfer. Under proposed Treasury
regulations, a holder (other than an
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individual) who transfers a New Note through another method may be subject to an
excise tax equal to the product of (i) 1% of the principal amount of the
obligation transferred and (ii) the number of calendar years (or portions
thereof) remaining until the maturity of such obligation.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, a United States Holder of a New Note will be subject to backup
withholding at the rate of 31% with respect to interest, principal and premium,
if any, paid on a New Note, unless the holder (i) is an entity (including
corporations, tax-exempt organizations and certain qualified nominees) which is
exempt from withholding and, when required, demonstrates this fact, or (ii)
provides the Company with its Taxpayer Identification Number ("TIN") (which for
an individual would be the holder's Social Security number), certifies that the
TIN provided to the Company is correct and that the holder has not been notified
by the IRS that it is subject to backup withholding due to underreporting of
interest or dividends, and otherwise complies with applicable requirements of
the backup withholding rules. In addition, such payments of principal, premium
and interest to United States Holders that are not corporations, tax-exempt
organizations or qualified nominees will generally be subject to information
reporting requirements.
The amount of any backup withholding from a payment to a holder will be
allowed as a credit against such holder's federal income tax liability and may
entitle such holder to a refund, PROVIDED that the required information is
furnished to the IRS.
UNITED STATES TAXATION OF FOREIGN HOLDERS
PAYMENT OF INTEREST ON NEW NOTES
In general, payments of interest received by any holder that is not a United
States Holder (a "Foreign Holder") will not be subject to a United States
federal withholding tax, PROVIDED that (i)(a) the Foreign Holder does not
actually or constructively own 10% or more of the total combined voting power of
all classes of stock of the Company entitled to vote, (b) the Foreign Holder is
not a controlled foreign corporation that is related to the Company actually or
constructively through stock ownership and (c) either (1) the beneficial owner
of the New Note, under penalties of perjury, provides the Company or its agent
with the beneficial owner's name and address and certifies that it is not a
United States Holder on IRS Form W-8 (or a suitable substitute form) or (2) a
securities clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business holds the
New Notes and certifies to the Company or its agent under penalties of perjury
that such a Form W-8 (or suitable substitute) has been received by it from the
beneficial owner or qualifying intermediary and furnishes the payor a copy
thereof, (ii) the Foreign Holder is subject to United States federal income tax
with respect to the New Note on a net basis because payments received with
respect to the New Note are effectively connected with a U.S. trade or business
of the Foreign Holder (in which case the Foreign Holder may also be subject to
"branch profits tax" under section 884 of the Code) and provides the Company
with a properly executed IRS Form 4224, or (iii) the Foreign Holder is entitled
to the benefits of an income tax treaty under which the interest is exempt from
United States withholding tax and the Foreign Holder or such holder's agent
provides a properly executed IRS Form 1001 claiming the exemption. Payments of
interest not exempt from U.S. federal withholding tax as described above will be
subject to such withholding tax at the rate of 30% (subject to reduction under
an applicable income tax treaty).
In April 1996, the IRS issued proposed regulations that would change certain
of the certification and other procedures described in the preceding paragraph
("1996 Proposed Regulations.") The changes set forth in the 1996 Proposed
Regulations would not materially affect a Foreign Holder's ability to qualify
for an exemption from withholding tax with respect to payments of interest on
the New Note. Under the 1996 Proposed Regulations, a Foreign Holder claiming the
benefit of an income tax treaty as described in clause (iii) of the preceding
paragraph (but not a Foreign Holder claiming the portfolio interest exemption
described in clause (i)) would be required to provide its TIN to the payor. The
1996 Proposed Regulations would apply to payments of interest made after
December 31, 1997.
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SALE, EXCHANGE OR RETIREMENT OF THE NEW NOTES
A Foreign Holder generally will not be subject to United States federal
income tax (and generally no tax will be withheld) with respect to gain realized
on the sale, exchange, redemption, retirement at maturity or other disposition
of New Notes, unless (i) the gain is effectively connected with a United States
trade or business conducted by the Foreign Holder, or (ii) the Foreign Holder is
an individual who is present in the United States for a period or periods
aggregating 183 or more days in the taxable year of the disposition and certain
other conditions are met.
With respect to a Foreign Holder subject to United States federal income tax
as described in the preceding paragraph, an exchange of an Existing Note for a
New Note should not constitute a taxable exchange of the Existing Note if the
interest rate on the New Note is equal to the interest rate on the Existing
Note. Although there is no definitive guidance on the issue, even if the
interest rate on the New Note is not equal to the interest rate on the Existing
Note because Special Interest is payable on the Existing Note, as described
under "Registration Rights," but not payable on the New Note, the exchange
should not constitute a taxable exchange of the Existing Note. As described
under "United States Taxation of United States Holders -- Payment of Interest on
New Notes," there is no definitive guidance with respect to the treatment of
debt instruments providing for payments such as Special Interest, and the
Contingent Payment Regulations may affect the treatment of the disposition of
certain contingent payment instruments issued sixty days or more after such
regulations are published in the Federal Register. The Contingent Payment
Regulations are currently scheduled for publication in the Federal Register on
June 14, 1996. Holders should consult their tax advisors as to the tax
considerations relating to the treatment of debt instruments providing for
payments such as Special Interest.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current Treasury regulations, backup withholding and information
reporting on IRS Form 1099 do not apply to payments made by the Company or a
paying agent to Foreign Holders if the certification described under "United
States Taxation of Foreign Holders -- Payment of Interest on New Notes" is
received, provided that the payor does not have actual knowledge that the holder
is a United States Holder. If any payments of principal and interest are made to
the beneficial owner of a New Note by or through the foreign office of a foreign
custodian, foreign nominee or other foreign agent of such beneficial owner, or
if the foreign office of a foreign "broker" (as defined in applicable United
States Treasury Department regulations) pays the proceeds of the sale of a New
Note to the seller thereof, backup withholding and information reporting will
not apply. Information reporting requirements (but not backup withholding) will
apply, however, to a payment by a foreign office of a broker that is a United
States person, that derives 50% or more of its gross income for certain periods
from the conduct of a trade or business in the United States, or that is a
"controlled foreign corporation" (generally, a foreign corporation controlled by
United States shareholders) with respect to the United States, unless the broker
has documentary evidence in its records that the holder is a Foreign Holder and
certain other conditions are met, or the holder otherwise establishes an
exemption. Payment by a United States office of a broker is subject to both
backup withholding at a rate of 31% and information reporting unless the holder
certifies under penalties of perjury that it is a Foreign Holder, or otherwise
establishes an exemption. A Foreign Holder may obtain a refund or a credit
against such Holder's U.S. federal income tax liability of any amounts withheld
under the backup withholding rules, provided the required information is
furnished to the IRS.
In addition, in certain circumstances interest on a New Note owned by a
Foreign Holder will be required to be reported annually on IRS Form 1042S, in
which case such form will be filed with the IRS and furnished to the Foreign
Holder.
FEDERAL ESTATE TAXES
Subject to applicable estate tax treaty provisions, New Notes held at the
time of death (or theretofore transferred subject to certain retained rights or
powers) by an individual who at the time of death is a Foreign Holder will not
be included in such holder's gross estate for United States federal
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estate tax purposes, PROVIDED that (a) the individual does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of the Company entitled to vote and (b) the income and the New Notes
are not effectively connected with the conduct of a United States trade or
business by the individual.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CD&R was paid a management fee by the Company of $300,000 for the fiscal
year ended January 27, 1996, for financial advisory and management consulting
services. The Company expects to continue to pay CD&R similar fees for such
services in the future. The amount of such fees will be determined with
reference to (i) the size of the Company's revenues and profits, (ii) the type
and magnitude of such advisory and management consulting services then being
provided, (iii) the fees then being paid to CD&R by other companies for which it
provides similar services and (iv) the fees then being charged by other managers
with comparable organizations for similar services provided to companies in
which investment funds managed by such managers have invested. Although there is
no specific formula for determining the fees to be paid to CD&R for advisory and
management consulting services in the future and there is no agreement with CD&R
that the fee be limited to a specific amount, all such future fees are subject
to approval of the Company's Board of Directors and are limited to $500,000 per
year under the New Credit Agreement.
The Company has entered into an Indemnification Agreement in favor of CD&R,
Fund IV and Associates (together with their respective directors, officers,
partners, employees, agents and controlling persons, the "Indemnitees") pursuant
to which the Company has agreed, subject to certain exceptions, to indemnify and
hold harmless the members of the boards of directors of Holding and APS, to the
full extent permitted by Delaware law, and to indemnify the Indemnitees from and
against any suits, claims, damages or expenses that may be made against or
incurred by them under applicable securities laws in connection with offerings
of securities of the Company, including the Exchange Offer, liabilities to third
parties arising out of any action or failure to act by the Company and, except
in the case of gross negligence or intentional misconduct, the provision by CD&R
of management consulting and financial advisory services.
MANAGEMENT AND DIRECTORS
Holding and APS have guaranteed bank loans used by employees of the Company
to purchase Class A Common Stock of Holding. The aggregate amount of such loans
outstanding at January 29, 1994, January 28, 1995 and January 27, 1996 was
approximately $1,434,000, $633,000 and $505,000, respectively.
In March 1993, the Company entered into an asset purchase agreement with
Prince-Oracle Auto Parts and Equipment, Inc. ("Prince-Oracle") for the purchase
of the assets of six automotive parts stores in Arizona for a purchase price of
approximately $2.9 million, consisting of $1.8 million in cash and a twenty-year
promissory note issued to Prince-Oracle in the principal amount of $1.1 million.
Subsequent to such purchase, Stephen H. Sattinger, the owner of Prince-Oracle,
joined the Company as an executive officer. The promissory note bears interest
at a rate of 7.5% per annum and is payable over twenty years in equal monthly
installments of principal and interest. The promissory note is collateralized by
a security interest in certain assets relating to the former Prince-Oracle
stores. Interest expense on the Prince-Oracle note was $75,000, $80,000 and
$78,000 for the years ended January 29, 1994, January 28, 1995 and January 27,
1996, respectively.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer in exchange for Existing Notes, where such Existing Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge and agree that it will deliver a
prospectus in connection with any resale of such New Notes. This Prospectus, as
it may be amended or supplemented from time to time, may be used for a period of
one year after the Expiration
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Date by a broker-dealer in connection with resales of New Notes received in
exchange for Existing Notes where such Existing Notes were acquired as a result
of market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of business one
year after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through broker-dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any person that participates in the distribution of such
New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging and agreeing that it will deliver and by delivering
this Prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of one year after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
By acceptance of this Exchange Offer, each broker-dealer agrees that, upon
receipt of notice from the Company of the happening of any event which makes any
statement in the Prospectus untrue in any material respect or which requires the
making of any changes in the Prospectus in order to make the statements therein
not misleading, such broker-dealer will suspend use of the Prospectus until (i)
the Company has amended or supplemented the Prospectus to correct such
misstatement or omission and (ii) either the Company has furnished copies of the
amended or supplemented Prospectus to such broker-dealer or, if the Company has
not otherwise agreed to furnish such copies and declines to do so after such
broker-dealer so requests, such broker-dealer has obtained a copy of such
amended or supplemented Prospectus as filed with the Commission. The Company has
agreed to deliver such notice and such amended or supplemented Prospectus
promptly to any Participating Broker-Dealer that has so notified the Company.
Pursuant to the Registration Agreement, APS and Holding have jointly and
severally agreed to indemnify the Initial Purchasers against certain
liabilities, including certain liabilities incurred in connection with the
offering of the Existing Notes, and contribute to payments the Initial
Purchasers may be required to make in respect thereof.
LEGAL MATTERS
The validity of the Notes offered hereby will be passed upon for the Company
by Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022. Franci J.
Blassberg, Esq., a member of Debevoise & Plimpton, is married to Joseph L. Rice,
III, who is a general partner of Clayton & Dubilier Associates IV Limited
Partnership, the general partner of Fund IV and a principal of CD&R.
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EXPERTS
The consolidated financial statements and consolidated financial statement
schedules of APS Holding Corporation and subsidiaries as of January 27, 1996 and
January 28, 1995, and for the years ended January 27, 1996, January 28, 1995 and
January 29, 1994, have been incorporated by reference herein and in the
Registration Statement in reliance on the report of Coopers & Lybrand L.L.P.
("C&L"), independent accountants, given on the authority of such firm as experts
in accounting and auditing.
The consolidated financial statements of Parts, Inc. as of (i) December 31,
1993 and December 31, 1994 and for the years then ended, incorporated herein and
elsewhere in the Registration Statement by reference to the Form 8-K (as defined
herein) and (ii) as of and for the year ended December 31, 1995 presented
elsewhere in this Prospectus, have been so incorporated in reliance on the
report of C&L, independent accountants, given on the authority of such firm as
experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 under the Securities Act for the registration of the New Notes offered
hereby. This Prospectus, which constitutes a part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement,
and certain information contained in the Registration Statement has been
omitted, as permitted by the rules and regulations of the Commission. For
further information with respect to the Company and the New Notes offered
hereby, reference is made to the Registration Statement, including the exhibits
and financial statements, notes and schedules thereto filed as a part thereof or
incorporated by reference therein. This Prospectus contains summaries of
material terms and provisions of certain documents, including the Registration
Agreement and the Indenture. With respect to each such document filed with the
Commission as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved. The Registration
Statement and the exhibits and schedules thereto may be inspected without charge
and copied at prescribed rates at the Public Reference Section maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, the
Commission's regional offices located at Seven World Trade Center, 13th Floor,
New York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street
(Suite 1400), Chicago, Illinois 60661-2511.
Holding is subject to the reporting requirements of Section 13(a) or 15(d)
of the Exchange Act, and in accordance therewith files periodic reports, proxy
statements and other information with the Commission relating to its business,
financial statements and other matters. Reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549 and at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, New York, New York 10048 and Suite 1400,
Northwestern Atrium Center, 14th Floor, 500 West Madison Street, Chicago,
Illinois 60661-2511. Copies of such material can also be obtained at prescribed
rates by writing to the Commission, Public Reference Section, 450 Fifth Street,
N.W., Washington, D.C. 20549. Copies of such material, as well as of the
Indenture and the Registration Agreement, can also be obtained from APS or
Holding upon request. The principal executive offices of APS and Holding are
located at World Houston Plaza, 15710 John F. Kennedy Boulevard, Suite 700,
Houston, Texas 77032-2347, and the telephone number is (713) 507-1100.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
1. Holding's Annual Report on Form 10-K for the fiscal year ended
January 27, 1996, as filed with the Commission on April 24, 1996.
87
<PAGE>
2. The Current Report of Holding on Form 8-K, as filed with the
Commission on February 12, 1996, as amended by Form 8-K/A as filed with the
Commission on March 29, 1996 (the "Form 8-K").
3. Holding's Quarterly Report on Form 10-Q for the fiscal quarter ended
April 25, 1996, as filed with the Commission on June 10, 1996.
All documents or reports filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of the offering of the securities offered hereby shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated herein by reference shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified and superseded, to constitute a part of
this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. These documents are available upon request from
APS or Holding, 15710 John F. Kennedy Boulevard, Suite 700, Houston, Texas
77032-2347, Attention: Corporate Secretary (telephone: (713) 507-1100). In order
to ensure timely delivery of the documents, any request should be made no later
than five business days prior to the Expiration Date.
88
<PAGE>
PARTS, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants..................................................... F-2
Balance Sheet at December 31, 1995.................................................... F-3
Statement of Income and Accumulated Deficit for the year ended December 31, 1995...... F-4
Statement of Cash Flows for the year ended December 31, 1995.......................... F-5
Notes to Financial Statements......................................................... F-6
</TABLE>
F-1
<PAGE>
[Letterhead of Coopers & Lybrand]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Parts, Inc.
We have audited the accompanying balance sheet of Parts, Inc. as of December
31, 1995 and the related statements of income and accumulated deficit and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides reasonable basis for our opinion.
As discussed in Note 1 to the financial statements, the Parent Company sold
its investment in the Company.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Parts, Inc. as of December
31, 1995, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Memphis, Tennessee
March 22, 1996
F-2
<PAGE>
PARTS, INC.
BALANCE SHEET
DECEMBER 31, 1995
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
1995
-----------
<S> <C>
Current assets:
Cash............................................................................................... $ 234
Accounts receivable, less allowance for returns and doubtful accounts of $1,070.................... 29,835
Inventories........................................................................................ 63,301
Prepaid expenses and other current assets.......................................................... 193
Deferred income taxes, net of valuation allowance.................................................. 303
-----------
Total current assets............................................................................. 93,866
-----------
Property, plant and equipment, at cost:
Land and land improvements......................................................................... 49
Buildings and leasehold improvements............................................................... 7,261
Data processing equipment.......................................................................... 1,712
Warehouse and shop equipment....................................................................... 9,229
Furniture, fixtures and other equipment............................................................ 4,622
-----------
22,873
Less accumulated depreciation...................................................................... (17,988)
-----------
4,885
Intangible assets, net of accumulated amortization................................................... 597
Deferred income taxes, net of valuation allowance.................................................... 2,069
Other assets......................................................................................... 145
-----------
$ 101,562
-----------
-----------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable................................................................................... $ 38,260
Accrued expenses................................................................................... 8,327
Current maturities of long-term debt............................................................... 74
Due to Parent Company.............................................................................. 58,199
-----------
Total current liabilities........................................................................ 104,860
-----------
Deferred gain on sale/leaseback of property.......................................................... 778
Post-retirement benefits other than pension.......................................................... 770
Long-term debt, less current maturities.............................................................. 230
-----------
Total liabilities................................................................................ 106,638
-----------
Commitments and contingencies
Stockholder's equity:
Capital stock, $1 par value; 750,000 shares authorized, 536,812 shares issued and outstanding...... 537
Additional paid-in capital......................................................................... 1,931
Accumulated deficit................................................................................ (7,544)
-----------
(5,076)
-----------
$ 101,562
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
PARTS, INC.
STATEMENT OF INCOME AND ACCUMULATED DEFICIT
FOR THE YEAR DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995
-----------
<S> <C>
Net sales.................................................................................. $ 224,761
Cost of goods sold......................................................................... 147,770
-----------
Gross profit............................................................................. 76,991
-----------
Operating expenses:
Selling, general and administrative...................................................... 73,146
Depreciation and amortization............................................................ 1,397
-----------
74,543
-----------
Operating income......................................................................... 2,448
Interest income............................................................................ 619
Other income............................................................................... 525
-----------
Income before interest expense and income taxes.......................................... 3,592
Interest expense........................................................................... 2,668
-----------
Income before income taxes............................................................... 924
Benefit for income taxes................................................................... 1,228
-----------
Net income............................................................................... 2,152
Accumulated deficit beginning of year...................................................... (9,696)
-----------
Accumulated deficit, end of year........................................................... $ (7,544)
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
PARTS, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995
---------
<S> <C>
Cash flows from operating activities:
Net income................................................................................. $ 2,152
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization............................................................ 1,397
Provision for doubtful accounts.......................................................... 1,558
Deferred income taxes.................................................................... (1,038)
(Gain) loss on disposal of property, plant and equipment................................. (30)
Changes in assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable.................................................................... (94)
Inventories............................................................................ 2,702
Prepaid expenses and other current assets.............................................. 132
Income tax receivable from parent......................................................
Accounts payable and accrued expenses.................................................. (5,561)
Deferred gain on sale/leaseback of property............................................ (90)
Other assets........................................................................... 15
Post-retirement benefits other than pension............................................ (768)
---------
Net cash provided by operating activities............................................ 375
---------
Cash flows from investing activities:
Purchase of property, plant and equipment.................................................. (857)
Proceeds from sale of property, plant and equipment........................................ 381
---------
Net cash used by investing activities................................................ (476)
---------
Cash flows from financing activities:
Principal payments on long-term debt....................................................... (45)
Payments to/receipts from Parent Company, net.............................................. 184
---------
Net cash provided by financing activities............................................ 139
---------
Net increase in cash......................................................................... 38
Cash at beginning of year.................................................................... 196
---------
Cash at end of year.......................................................................... $ 234
---------
---------
Supplemental disclosures of cash flow information --
Cash paid during the year for:
Interest................................................................................... $ 2,668
---------
---------
Income taxes............................................................................... $ 22
---------
---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
PARTS, INC.
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Parts, Inc. (the "Company") is a wholly-owned subsidiary of GKN Parts
Industries Corporation (the "Parent Company"), which in turn is a wholly-owned
subsidiary of GKN North America, Inc., which in turn is a wholly-owned
subsidiary of GKN plc, a publicly traded company headquartered in the United
Kingdom. The Company distributes and sells automotive replacement parts in the
automotive after-market in the United States.
Pursuant to a purchase agreement dated December 5, 1995 between the Parent
Company and an unrelated third party (the "Purchaser"), the Parent Company sold
its investment in the Company to the Purchaser on January 25, 1996, for a
purchase price in excess of the net book value of the Company.
INVENTORIES
Inventories, which consist principally of replacement automobile parts and
accessories, are stated at the lower of cost or market. Cost is determined using
the last-in, first-out (LIFO) method. The first-in, first-out (FIFO) cost of
LIFO valued inventories exceeds their LIFO basis by $14,403 as of December 31,
1995. During 1995 inventory was reduced resulting in a liquidation of LIFO
inventory quantities. The effect of the 1995 liquidation decreased cost of goods
sold approximately $267 for the year ended December 31, 1995.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost and are depreciated using
the declining balance method for warehouse, shop equipment, furniture and
equipment, and the straight-line method for the other categories over the
estimated useful lives of the assets.
<TABLE>
<CAPTION>
CLASSIFICATION ESTIMATED USEFUL LIVES
- ----------------------------------------- -------------------------------------------
<S> <C>
Buildings................................ 50 years
Data Processing Equipment................ 5 years
Warehouse and Shop Equipment............. 7 years
Furniture and Equipment.................. 4-7 years
the lesser of useful life
Leasehold Improvements................... or lease term
</TABLE>
Major renewals and betterments are capitalized while replacements,
maintenance and repairs which do not improve or extend the lives of the
respective assets are expensed currently. Gain or loss on retirement or disposal
of individual assets is recorded as income or expense.
INTANGIBLE ASSETS
Intangible assets are recorded at cost, less accumulated amortization, and
represents the unamortized excess of cost over the net tangible assets of
businesses acquired. Amortization is provided using the straight-line method
over various periods not exceeding forty years. Amortization expense of
intangibles was $194 for 1995.
INCOME TAXES
Deferred income tax assets and liabilities are recognized for the tax
consequences of "temporary differences" by applying enacted statutory tax rates
applicable to future years to differences between
F-6
<PAGE>
PARTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
INCOME TAXES, CONTINUED
the financial carrying amounts and the tax basis of existing assets and
liabilities. The effect on deferred taxes of a change in tax rates is recognized
in income in the period that includes the enactment date.
Recognition of deferred tax assets is based on management's belief that it
is more likely than not that the tax benefit associated with temporary
differences will be realized.
The Company is included in a consolidated federal income tax return with its
ultimate U.S. parent company. The tax sharing agreement between the Company and
its Parent Company provides for reimbursement when losses of one member reduce
the tax liability of another member. Current and deferred taxes are calculated
by the Company as if it were a separate taxpayer.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statement. Actual results could differ from those estimates.
2. INCOME TAXES:
The income tax benefit for the year ended December 31, 1995, is as follows:
<TABLE>
<CAPTION>
1995
---------
<S> <C>
State income tax.................................................................... $ (22)
Current federal income tax benefit.................................................. 212
Deferred federal income tax benefit................................................. 1,038
---------
Total income tax benefit........................................................ $ 1,228
---------
---------
</TABLE>
Deferred income taxes resulting from the differences between the treatment
for income tax return purposes and financial reporting purposes are as follows:
<TABLE>
<CAPTION>
1995
---------
<S> <C>
Tax expense (greater) than less than book expense:
Change in inventory reserves and capitalization................................... $ (163)
Post retirement benefits other than pensions...................................... (287)
Change in insurance reserves...................................................... 55
Depreciation...................................................................... 82
Capital/operating leases.......................................................... --
Net operating losses.............................................................. (63)
Valuation allowance............................................................... 1,351
Other miscellaneous............................................................... (98)
Deferred gains.................................................................... (31)
Change in allowance for doubtful accounts......................................... 192
---------
$ 1,038
---------
---------
</TABLE>
At December 31, 1995, the Company had federal net operating loss
carryforwards of approximately $1,491 expiring in tax year 2003. The Company had
state net operating loss carryforwards of approximately $37,283 expiring in tax
years 1996 through 2009.
F-7
<PAGE>
PARTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
2. INCOME TAXES: (CONTINUED)
A reconciliation of the federal statutory and effective income tax rates is
as follows:
<TABLE>
<CAPTION>
1995
-------------
<S> <C>
Statutory federal income tax rate.............................................. 35.00%
Effect of:
Nondeductible expenses..................................................... 10.60
Change in valuation allowance.............................................. (146.21)
State tax, net of federal benefit.......................................... 1.51
Other (net)................................................................ (33.80)
-------------
Effective tax rate....................................................... (132.90)%
-------------
-------------
</TABLE>
The components of the net deferred tax asset recognized in the Company's
financial statements are:
<TABLE>
<CAPTION>
1995 CURRENT NONCURRENT
- ---------------------------------------------------------------------- --------- -----------
<S> <C> <C>
Total deferred tax assets............................................. $ 2,723 $ 3,404
Valuation allowance................................................... -- (1,335)
Total deferred tax liabilities........................................ (2,420) --
--------- -----------
Net deferred tax assets............................................... $ 303 $ 2,069
--------- -----------
--------- -----------
</TABLE>
The tax effects of the temporary differences giving rise to the Company's
deferred tax assets and liabilities are as follows:
ASSETS
<TABLE>
<CAPTION>
1995
---------
<S> <C>
Inventory reserves and capitalization........................................................ $ 1,788
Post retirement benefits other than pensions................................................. 269
Deferred gains............................................................................... 272
Allowance for doubtful accounts.............................................................. 375
Insurance reserves........................................................................... 430
Depreciation................................................................................. 239
Capital/operating leases..................................................................... --
Net operating losses......................................................................... 2,623
Other miscellaneous.......................................................................... 131
Valuation allowance.......................................................................... (1,335)
---------
Gross deferred tax assets.................................................................. $ 4,792
---------
---------
LIABILITIES
LIFO reserves................................................................................ $ (2,420)
---------
Gross deferred tax liabilities............................................................. $ (2,420)
---------
---------
Net deferred tax asset....................................................................... $ 2,372
---------
---------
</TABLE>
F-8
<PAGE>
PARTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
3. POST-RETIREMENT BENEFITS OTHER THAN PENSIONS:
The Company offers a Medicare supplement plan to substantially all retirees
after the age of 65 if they are active full-time employees on the day they
retire (and have 10 years of service for employees hired after January 1, 1993)
and a post-retirement life insurance plan to all retirees on the Medicare plan
after the age of 65.
The supplement plan covers Medicare co-pays and coinsurance. The
post-retirement life plan provides an insurance benefit of $10 ($5 for certain
grandfathered retirees). Neither plan covers spouses or dependents. The Company
has reserved the right to change the benefits and eligibility rules.
Summary information on the Company's plans is as follows:
Financial status of plans:
Accumulated post-retirement benefit obligation (APBO) as of December 31,
1994:
<TABLE>
<S> <C>
Retirees........................................................... $ 609
Fully eligible, active plan participants........................... 224
Other active plan participants..................................... 432
---------
$ 1,265
---------
---------
Accumulated post-retirement benefit obligation in excess of plan
assets............................................................ $ 1,265
Unrecognized net gain from past experience......................... 30
Prior service cost not yet recognized in net periodic
post-retirement benefit cost...................................... 243
---------
$ 1,538
---------
---------
</TABLE>
The components of net periodic post-retirement benefit cost for the years
ended December 31, 1994 are as follows:
<TABLE>
<S> <C>
Service cost......................................................... $ 63
Interest cost........................................................ 95
---------
$ 158
---------
---------
</TABLE>
At December 5, 1995 the Company decided to terminate the plans. The $770
liability represents the amount incurred as full settlement in lieu of the
vested benefits at date of plan termination.
4. EMPLOYEE BENEFIT PLANS:
The employees of the Company and its subsidiaries are eligible to
participate in a defined contribution retirement savings plan sponsored by the
Company. Generally, an employee becomes eligible to participate in and
contribute to the plan after one year of service and the attainment of age
twenty-one. The Company's contributions to the plan are based on a percentage of
the participant's compensation. During 1995, the Company's contribution expense
to the plan totaled $828.
5. LEASES:
Certain lease buildings, warehouses, stores and equipment are under
non-cancelable operating lease agreements which expire at various dates through
2004. The leases generally provide that the company pay the taxes, insurance and
maintenance expenses related to the leased assets. In many cases, the leases
provide for renewal options of 5 to 10 years.
F-9
<PAGE>
PARTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS)
5. LEASES: (CONTINUED)
Future minimum lease payments for all leases at December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
OPERATING
---------
<S> <C>
1996............................................................................... $ 6,689
1997............................................................................... 6,321
1998............................................................................... 5,289
1999............................................................................... 3,604
2000............................................................................... 2,414
Thereafter......................................................................... 2,289
---------
Total minimum lease payments....................................................... $ 26,606
---------
---------
</TABLE>
Rent expense charged to continuing operations in 1995 was $9,142.
6. RELATED PARTY:
The Company has an informal loan agreement with its Parent Company, for up
to $125 million in advances. The parent company has stated that, so long as the
Company remains a wholly owned subsidiary, sufficient funds will continue to be
made available to the business such that the obligations of the Company can be
met. All amounts due to the Parent Company have been classified as short-term
debt at December 31, 1995.
Interest on the portion of the advance from parent deemed to be interest
bearing ($32,266 at December 31, 1995) accrues at a rate equal to the prime
commercial rate (8.5% at December 31, 1995) less 2%. Interest expense of $2,562
in 1995 was incurred relating to indebtedness to the Parent Company.
7. COMMITMENTS AND CONTINGENCIES:
Legal actions incident to the ordinary course of business are pending
against the Company. In the opinion of management, the eventual disposition of
these matters will have no material adverse effect on the financial position or
results of operations of the Company.
Certain of the Company's customers finance a portion of their inventories
through financial institutions. Under the terms of the arrangements with these
financial institutions, the Company may be required, in limited circumstances,
to repurchase inventory collateralizing the borrowings.
F-10
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO EXCHANGE, OR A SOLICITATION OF
AN OFFER TO EXCHANGE, ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT
RELATES OR AN OFFER TO EXCHANGE OR A SOLICITATION OF AN OFFER TO EXCHANGE SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUMMARY............................. 4
The Company.................................. 4
The Acquisition.............................. 4
Risk Factors................................. 5
Summary of Terms of The Exchange Offer....... 5
Summary of Terms of the New Notes............ 8
Summary Financial Information and Pro Forma
Information................................. 13
RISK FACTORS................................... 15
THE EXCHANGE OFFER............................. 22
USE OF PROCEEDS................................ 30
CAPITALIZATION................................. 31
SELECTED HISTORICAL CONSOLIDATED FINANCIAL
INFORMATION OF APS HOLDING CORPORATION........ 32
PRO FORMA COMBINED CONDENSED STATEMENT OF
OPERATIONS.................................... 34
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.................................... 40
BUSINESS....................................... 40
MANAGEMENT..................................... 41
OWNERSHIP OF CAPITAL STOCK..................... 41
DESCRIPTION OF NEW CREDIT AGREEMENT............ 41
DESCRIPTION OF THE NOTES....................... 42
REGISTRATION RIGHTS............................ 80
CERTAIN FEDERAL TAX CONSEQUENCES............... 81
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.................................. 85
PLAN OF DISTRIBUTION........................... 86
LEGAL MATTERS.................................. 87
EXPERTS........................................ 87
AVAILABLE INFORMATION.......................... 88
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE..................................... 88
PARTS, INC.
INDEX TO FINANCIAL STATEMENTS................. F-1
</TABLE>
[LOGO]
A.P.S., INC.
$100,000,000
11 7/8% SENIOR SUBORDINATED NOTES
DUE 2006
--------------
PROSPECTUS
--------------
JUNE 12, 1996
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, as amended, provides in
regards to indemnification of directors and officers as follows:
145. Indemnification of Officers, Directors, Employees and Agents;
Insurance.
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by a majority vote of directors
who are not parties to such action, suit or proceeding, even though less than a
quorum, or (2) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (3) by the stockholders.
II-1
<PAGE>
(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnity him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Article VI of the Holding By-Laws provides in regard to indemnification
of directors and officers as follows:
Section 6.01. NATURE OF INDEMNITY. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or
she is or was or has agreed to become a director or officer of the
Corporation, or is or was serving or has agreed to serve at the request of
the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably
II-2
<PAGE>
incurred by him or on his behalf in connection with such action, suit or
proceeding and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful; except that in
the case of an action or suit by or in the right of the Corporation to
procure a judgment in its favor (1) such indemnification shall be limited to
expenses (including attorneys' fees) actually and reasonably incurred by
such person in the defense or settlement of such action or suit, and (2) no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Delaware Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the Delaware Court of Chancery or such
other court shall deem proper.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent
shall not, of itself, create a presumption that the person did not act in
good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
Section 6.02. SUCCESSFUL DEFENSE. To the extent that a director,
officer, employee or agent of the Corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to
in Section 6.01 hereof or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Section 6.03. DETERMINATION THAT INDEMNIFICATION IS PROPER. Any
indemnification of a director or officer of the Corporation under Section
6.01 hereof (unless ordered by a court) shall be made by the Corporation
unless a determination is made that indemnification of the director or
officer is not proper in the circumstances because he has not met the
applicable standard of conduct set forth in Section 6.01 hereof. Any
indemnification of an employee or agent of the Corporation under Section
6.01 hereof (unless ordered by a court) may be made by the Corporation upon
a determination that indemnification of the employee or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in Section 6.01 hereof. Any such determination shall be made (1) by
the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
Section 6.04. ADVANCE PAYMENT OF EXPENSES. Expenses (including
attorney' fees) incurred by a director or officer in defending any civil,
criminal, administrative or investigative action, suit or proceeding shall
be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
the director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article. Such expenses (including attorneys' fees)
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board of Directors may authorize the
Corporation's counsel to represent such director, officer, employee or agent
in any action, suit or proceeding, whether or not the Corporation is a party
to such action, suit or proceeding.
Section 6.05. PROCEDURE FOR INDEMNIFICATION OF DIRECTORS AND
OFFICERS. Any indemnification of a director or officer of the Corporation
under Sections 6.01 and 6.02, or advance of costs, charges and expenses to a
director or officer under Section 6.04 of this Article, shall be made
promptly, and in any event within 30 days, upon the written request of the
director or officer. If a determination by the Corporation that the director
or officer is entitled to indemnification
II-3
<PAGE>
pursuant to this Article is required, and the Corporation fails to respond
within sixty days to a written request for indemnity, the Corporation shall
be deemed to have approved such request. If the Corporation denies a written
request for indemnity or advancement of expenses, in whole or in part, or if
payment in full pursuant to such request is not made within thirty days, the
right to indemnification or advances as granted by this Article shall be
enforceable by the director or officer in any court of competent
jurisdiction. Such person's costs and expenses incurred in connection with
successfully establishing his right to indemnification, in whole or in part,
in any such action shall also be indemnified by the Corporation. It shall be
a defense to any such action (other than an action brought to enforce a
claim for the advance of costs, charges and expenses under Section 6.04 of
this Article where the required undertaking, if any, has been received by
the Corporation) that the claimant has not met the standard of conduct set
forth in Section 6.01 of this Article, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, its independent legal counsel, and its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in Section
6.01 of this Article, nor the fact that there has been an actual
determination by the Corporation (including its Board of Directors, its
independent legal counsel, and its stockholders) that the claimant has not
met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard
of conduct.
Section 6.06. SURVIVAL; PRESERVATION OF OTHER RIGHTS. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware General Corporation Law are in effect, and any
repeal or modification thereof shall not affect any right or obligation then
existing with respect to any state of facts then or previously existing or
any action, suit or proceeding previously or thereafter brought or
threatened based in whole or in part upon any such state of facts. Such a
"contract right" may not be modified retroactively without the consent of
such director, officer, employee or agent.
The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled
under any by-law, agreement, vote of stockholders or disinterested directors
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
Section 6.07. INSURANCE. The Corporation shall purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
director of officer of the Corporation, or is or was serving at the request
of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him or on his behalf in any such
capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability
under the provisions of this Article, provided that such insurance is
available on acceptable terms, which determination shall be made by a vote
of a majority of the entire Board of directors.
Section 6.08. SEVERABILITY. If this Article or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction,
then the Corporation shall nevertheless indemnify each director or officer
and may indemnify each employee or agent of the Corporation as to costs,
charges and expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, including an
action by or in the right of the Corporation, to the fullest extent
permitted by any applicable portion of this Article that shall not have been
invalidated and to the fullest extent permitted by applicable law.
II-4
<PAGE>
Section 102(b)(7) of the Delaware General Corporation Law, as amended,
provides in regard to the limitation of liability of directors and officers
as follows:
(b) In addition to the matters required to be set forth in the
certificate of incorporation by subsection (a) of this section, the
certificate of incorporation may also contain any or all of the following
matters:
* * * *
(7) A provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such provision shall
not eliminate or limit the liability of a director: (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders; (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) under section 174 of this
title; or (iv) for any transaction from which the director derived an
improper personal benefit. No such provision shall eliminate or limit the
liability of a director for any act or omission occurring prior to the date
when such provision becomes effective. All references in this Paragraph to a
director shall also be deemed to refer (x) to a member of the governing body
of a corporation which is not authorized to issue capital stock, and (y) to
such other person or persons, if any, who, pursuant to a provision of the
certificate of incorporation in accordance with Section141(a) of this title,
exercise or perform any of the powers or duties otherwise conferred or
imposed upon the board of directors by this title.
Article FIFTH (e) of the Holding's Certificate of Incorporation, as amended,
provides in regard to the limitation of liability of directors and officers
as follows:
(e) No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of his fiduciary duty as a
director, provided that nothing contained in this Article shall eliminate or
limit the liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware or (iv) for any transaction from
which the director derived an improper personal benefit.
The By-Laws and the certificates of incorporation of APS and of the
Restricted Subsidiaries are similar to those of Holding in all material
respects.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
EXHIBIT IN SEQUENTIAL NUMBER
NUMBER DESCRIPTION OF DOCUMENTS SYSTEM
- ------------ -------------------------------------------------- --------------------
<S> <C> <C>
2.1 Purchase Agreement between APS and GKN Parts,
dated December 5, 1995 (the "Purchase Agreement").
(Certain portions of the Purchase Agreement have
been omitted and filed separately with the
Securities and Exchange Commission pursuant to
Rule 24b-2 under the Securities Exchange Act of
1934.) (4)
3.1 Second Restated Certificate of Incorporation of
Holding, dated September 20, 1993. (1)
3.2 Amended By-Laws of Holding, dated November 22,
1993. (2)
4.1.1 Indenture, dated as of January 25, 1996, among
APS, as Issuer, Holding and certain of its
subsidiaries, as Guarantors, and the Trustee. (3)
4.1.2 Supplemental Indenture, dated as of March 8, 1996,
between Installers' Service Warehouse, Inc. and
the Trustee.
4.2 Registration Agreement, dated January 19, 1996,
among APS, Salomon Brothers Inc and Chemical
Securities Inc. (3)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
EXHIBIT IN SEQUENTIAL NUMBER
NUMBER DESCRIPTION OF DOCUMENTS SYSTEM
- ------------ -------------------------------------------------- --------------------
<S> <C> <C>
4.3 Purchase Agreement, dated January 19, 1996, among
APS, Holding, Salomon Brothers Inc and Chemical
Securities Inc. (3)
5.1 Opinion of Debevoise & Plimpton regarding the
legality of the Notes being registered.
12.1 Computation of ratio of earnings to fixed charges.
(5)
23.1.1 Consents of Independent Accountants -- C&L
(Houston, Texas).
23.1.2 Consents of Independent Accountants -- C&L
(Memphis, Tennessee).
23.2 Consent of Debevoise & Plimpton (included in
Exhibit 5.1).
24.1 Powers of Attorney of certain officers and
directors of the Company. (6)
25.1 Statement on Form T-1 of the Eligibility of The
Bank of New York, as Trustee under the Indenture
relating to the Notes. (6)
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Instruction to Registered Holder and/or
Book-Entry Transfer Facility Participant from
Beneficial Owner.
</TABLE>
- ------------------------
(1) Incorporated by reference to the Exhibits filed with Holding's Form 10-Q for
the fiscal quarter ended October 25, 1993.
(2) Incorporated by reference to the Exhibits filed with Holding's Annual Report
on Form 10-K for the fiscal year ended January 29, 1994.
(3) Incorporated by reference to the Exhibits filed with Holding's Current
Report on Form 8-K, filed with the Commission on February 12, 1996.
(4) Incorporated by reference to the Exhibits filed with Holding's Current
Report on Form 8-K/A, filed with the Commission on March 29, 1996.
(5) Incorporated by reference to Holding's Annual Report on Form 10-K for fiscal
year ended January 27, 1996, filed with the Commission on April 24, 1996.
(6) Previously filed.
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes:
(1) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of Holding's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be the initial bona
fide offering thereof.
(2) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and persons
controlling the Registrants pursuant to the foregoing provisions or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrants of expenses incurred or paid by a
director, officer or person controlling the Registrants in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer, or person in connection with the securities
II-6
<PAGE>
being registered, the Registrants will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(3) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Item 4, 10(b), 11 or 13 of Form
S-4, within one business day of receipt of such request, and to send the
incorporated documents by first-class mail or equally prompt means. This
includes information contained in documents filed subsequent to the
effective date of the registration statement through the date responding to
the request.
(4) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
II-7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, APS HOLDING
CORPORATION HAS DULY CAUSED THIS AMENDMENT NO. 1 TO ITS REGISTRATION STATEMENT
ON FORM S-4 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS, ON THIS 12TH DAY OF JUNE,
1996.
By /s/ MARK S. HOFFMAN
- --------------------------------------------------------------------------------
Name: Mark S. Hoffman
Title: President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to its Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------------------- -----------------
<C> <S> <C>
PRINCIPAL EXECUTIVE OFFICER OF
APS HOLDING CORPORATION:
/s/ MARK S. HOFFMAN President, Chief Executive Officer and June 12, 1996
------------------------------------------- Director
Mark S. Hoffman
PRINCIPAL ACCOUNTING OFFICER
/s/ THOMAS MCENTIRE Controller June 12, 1996
-------------------------------------------
Thomas McEntire
BOARD OF DIRECTORS OF APS
HOLDING CORPORATION
* Chairman of the Board and Director June 12, 1996
-------------------------------------------
Hubbard C. Howe
* Director June 12, 1996
-------------------------------------------
Theodore Barry
* Director June 12, 1996
-------------------------------------------
Wiley N. Caldwell
* Director June 12, 1996
-------------------------------------------
Michael J. Dubilier
* Director June 12, 1996
-------------------------------------------
Joseph P. Flannery
* Director June 12, 1996
-------------------------------------------
Donald J. Gogel
Director June 12, 1996
-------------------------------------------
Jerry K. Myers
* Director June 12, 1996
-------------------------------------------
H. Jack Meany
By /s/ MARK S. HOFFMAN
---------------------------------------
Attorney-in-Fact
</TABLE>
II-8
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, A.P.S. INC. HAS
DULY CAUSED THIS AMENDMENT NO. 1 TO ITS REGISTRATION STATEMENT ON FORM S-4 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF HOUSTON, STATE OF TEXAS, ON THIS 12TH DAY OF JUNE, 1996.
By /s/ MARK S. HOFFMAN
- --------------------------------------------------------------------------------
Name: Mark S. Hoffman
Title: President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to its Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------------------- -----------------
<C> <S> <C>
PRINCIPAL EXECUTIVE OFFICER OF
A.P.S., INC.:
/s/ MARK S. HOFFMAN President, Chief Executive Officer and June 12, 1996
------------------------------------------- Director
Mark S. Hoffman
PRINCIPAL ACCOUNTING OFFICER
/s/ THOMAS MCENTIRE Controller June 12, 1996
-------------------------------------------
Thomas McEntire
BOARD OF DIRECTORS
* Chairman of the Board and Director June 12, 1996
-------------------------------------------
Hubbard C. Howe
* Director June 12, 1996
-------------------------------------------
Theodore Barry
* Director June 12, 1996
-------------------------------------------
Wiley N. Caldwell
* Director June 12, 1996
-------------------------------------------
Michael J. Dubilier
* Director June 12, 1996
-------------------------------------------
Joseph P. Flannery
* Director June 12, 1996
-------------------------------------------
Donald J. Gogel
Director June 12, 1996
-------------------------------------------
Jerry K. Myers
* Director June 12, 1996
-------------------------------------------
H. Jack Meany
By /s/ MARK S. HOFFMAN
---------------------------------------
Attorney-in-Fact
</TABLE>
II-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AMERICAN PARTS
SYSTEM, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO ITS REGISTRATION STATEMENT
ON FORM S-4 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS, ON THIS 12TH DAY OF JUNE,
1996.
By /s/ MARK S. HOFFMAN
- --------------------------------------------------------------------------------
Name: Mark S. Hoffman
Title: President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to its Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------------------- -----------------
<C> <S> <C>
PRINCIPAL EXECUTIVE OFFICER OF
American Parts System, Inc.
/s/ MARK S. HOFFMAN President, Chief Executive Officer, Chairman June 12, 1996
------------------------------------------- of the Board and Director
Mark S. Hoffman
PRINCIPAL ACCOUNTING OFFICER:
/s/ THOMAS MCENTIRE Controller June 12, 1996
-------------------------------------------
Thomas McEntire
BOARD OF DIRECTORS
/s/ E. EUGENE LAUVER Director June 12, 1996
-------------------------------------------
E. Eugene Lauver
</TABLE>
II-10
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, BIG A AUTO
PARTS, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO ITS REGISTRATION STATEMENT
ON FORM S-4 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS, ON THIS 12TH DAY OF JUNE,
1996.
By /s/ MARK S. HOFFMAN
- --------------------------------------------------------------------------------
Name: Mark S. Hoffman
Title: President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to its Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------------------- -----------------
<C> <S> <C>
PRINCIPAL EXECUTIVE OFFICER OF
Big A Auto Parts, Inc.
/s/ MARK S. HOFFMAN President, Chief Executive Officer, Chairman June 12, 1996
------------------------------------------- of the Board and Director
Mark S. Hoffman
PRINCIPAL ACCOUNTING OFFICER:
/s/ THOMAS MCENTIRE Controller June 12, 1996
-------------------------------------------
Thomas McEntire
BOARD OF DIRECTORS
/s/ E. EUGENE LAUVER Director June 12, 1996
-------------------------------------------
E. Eugene Lauver
</TABLE>
II-11
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AUTOPARTS
FINANCE COMPANY, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO ITS REGISTRATION
STATEMENT ON FORM S-4 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS, ON THIS 12TH DAY OF
JUNE, 1996.
By /s/ MARK S. HOFFMAN
-----------------------------------
Name: Mark S. Hoffman
Title: President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to its Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------- -----------------------
PRINCIPAL EXECUTIVE OFFICER OF
Autoparts Finance Company, Inc.
/s/ MARK S. HOFFMAN President, Chief Executive June 12, 1996
------------------------------------------- Officer, Chairman of the Board
Mark S. Hoffman and Director
PRINCIPAL ACCOUNTING OFFICER:
/s/ THOMAS MCENTIRE Controller June 12, 1996
-------------------------------------------
Thomas McEntire
BOARD OF DIRECTORS
/s/ E. EUGENE LAUVER Director June 12, 1996
-------------------------------------------
E. Eugene Lauver
</TABLE>
II-12
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, A.P.S.
MANAGEMENT SERVICES, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO ITS
REGISTRATION STATEMENT ON FORM S-4 TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS,
ON THIS 12TH DAY OF JUNE, 1996.
By /s/ MARK S. HOFFMAN
-----------------------------------
Name: Mark S. Hoffman
Title: President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to its Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------- -----------------------
PRINCIPAL EXECUTIVE OFFICER OF
A.P.S. Management Services, Inc.
/s/ MARK S. HOFFMAN President, Chief Executive June 12, 1996
------------------------------------------- Officer, Chairman of the Board
Mark S. Hoffman and Director
PRINCIPAL ACCOUNTING OFFICER:
/s/ THOMAS MCENTIRE Controller June 12, 1996
-------------------------------------------
Thomas McEntire
BOARD OF DIRECTORS
/s/ E. EUGENE LAUVER Director June 12, 1996
-------------------------------------------
E. Eugene Lauver
</TABLE>
II-13
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, PRESATT, INC.
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO ITS REGISTRATION STATEMENT ON FORM S-4
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF HOUSTON, STATE OF TEXAS, ON THIS 12TH DAY OF JUNE, 1996.
By /s/ MARK S. HOFFMAN
-----------------------------------
Name: Mark S. Hoffman
Title: President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to its Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------- -----------------------
PRINCIPAL EXECUTIVE OFFICER OF
Presatt, Inc.
/s/ MARK S. HOFFMAN President, Chief Executive June 12, 1996
------------------------------------------- Officer, Chairman of the Board
Mark S. Hoffman and Director
PRINCIPAL ACCOUNTING OFFICER:
/s/ THOMAS MCENTIRE Controller June 12, 1996
-------------------------------------------
Thomas McEntire
BOARD OF DIRECTORS
/s/ E. EUGENE LAUVER Director June 12, 1996
-------------------------------------------
E. Eugene Lauver
</TABLE>
II-14
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, APS SUPPLY, INC.
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO ITS REGISTRATION STATEMENT ON FORM S-4
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF HOUSTON, STATE OF TEXAS, ON THIS 12TH DAY OF JUNE, 1996.
By /s/ MARK S. HOFFMAN
-----------------------------------
Name: Mark S. Hoffman
Title: President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to its Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------- -----------------------
PRINCIPAL EXECUTIVE OFFICER OF
APS Supply, Inc.
/s/ MARK S. HOFFMAN President, Chief Executive June 12, 1996
------------------------------------------- Officer, Chairman of the Board
Mark S. Hoffman and Director
PRINCIPAL ACCOUNTING OFFICER:
/s/ THOMAS MCENTIRE Controller June 12, 1996
-------------------------------------------
Thomas McEntire
BOARD OF DIRECTORS
/s/ E. EUGENE LAUVER Director June 12, 1996
-------------------------------------------
E. Eugene Lauver
</TABLE>
II-15
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, PARTS, INC. HAS
DULY CAUSED THIS AMENDMENT NO. 1 TO ITS REGISTRATION STATEMENT ON FORM S-4 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF HOUSTON, STATE OF TEXAS, ON THIS 12TH DAY OF JUNE, 1996.
By /s/ MARK S. HOFFMAN
-----------------------------------
Name: Mark S. Hoffman
Title: President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to its Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------- -----------------------
PRINCIPAL EXECUTIVE OFFICER OF
Parts, Inc.
/s/ MARK S. HOFFMAN President, Chief Executive June 12, 1996
------------------------------------------- Officer, Chairman of the Board
Mark S. Hoffman and Director
PRINCIPAL ACCOUNTING OFFICER:
/s/ THOMAS MCENTIRE Controller June 12, 1996
-------------------------------------------
Thomas McEntire
BOARD OF DIRECTORS
/s/ E. EUGENE LAUVER Director June 12, 1996
-------------------------------------------
E. Eugene Lauver
</TABLE>
II-16
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, INSTALLERS'
SERVICE WAREHOUSE, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO ITS REGISTRATION
STATEMENT ON FORM S-4 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS, ON THIS 12TH DAY OF
JUNE, 1996.
By /s/ MARK S. HOFFMAN
-----------------------------------
Name: Mark S. Hoffman
Title: President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to its Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
SIGNATURE TITLE DATE
- ------------------------------------------------------ -------------------------------- -----------------------
PRINCIPAL EXECUTIVE OFFICER OF
Installers' Service Warehouse, Inc.
/s/ MARK S. HOFFMAN President, Chief Executive June 12, 1996
------------------------------------------- Officer, Chairman of the Board
Mark S. Hoffman and Director
PRINCIPAL ACCOUNTING OFFICER:
/s/ THOMAS MCENTIRE Controller June 12, 1996
-------------------------------------------
Thomas McEntire
BOARD OF DIRECTORS
/s/ E. EUGENE LAUVER Director June 12, 1996
-------------------------------------------
E. Eugene Lauver
</TABLE>
II-17
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
EXHIBIT IN SEQUENTIAL NUMBER
NUMBER DESCRIPTION OF DOCUMENTS SYSTEM
- ------------ -------------------------------------------------- --------------------
<S> <C> <C>
2.1 Purchase Agreement between APS and GKN Parts,
dated December 5, 1995 (the "Purchase Agreement").
(Certain portions of the Purchase Agreement have
been omitted and filed separately with the
Securities and Exchange Commission pursuant to
Rule 24b-2 under the Securities Exchange Act of
1934.) (4)
3.1 Second Restated Certificate of Incorporation of
Holding, dated September 20, 1993. (1)
3.2 Amended By-Laws of Holding, dated November 22,
1993. (2)
4.1.1 Indenture, dated as of January 25, 1996, among
APS, as Issuer, Holding and certain of its
subsidiaries, as Guarantors, and the Trustee. (3)
4.1.2 Supplemental Indenture, dated as of March 8, 1996,
between Installers' Service Warehouse, Inc. and
the Trustee.
4.2 Registration Agreement, dated January 19, 1996,
among APS, Salomon Brothers Inc and Chemical
Securities Inc. (3)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
EXHIBIT IN SEQUENTIAL NUMBER
NUMBER DESCRIPTION OF DOCUMENTS SYSTEM
- ------------ -------------------------------------------------- --------------------
<S> <C> <C>
4.3 Purchase Agreement, dated January 19, 1996, among
APS, Holding, Salomon Brothers Inc and Chemical
Securities Inc. (3)
5.1 Opinion of Debevoise & Plimpton regarding the
legality of the Notes being registered.
12.1 Computation of ratio of earnings to fixed charges.
(5)
23.1.1 Consents of Independent Accountants -- C&L
(Houston, Texas).
23.1.2 Consents of Independent Accountants -- C&L
(Memphis, Tennessee).
23.2 Consent of Debevoise & Plimpton (included in
Exhibit 5.1).
24.1 Powers of Attorney of certain officers and
directors of the Company. (6)
25.1 Statement on Form T-1 of the Eligibility of The
Bank of New York, as Trustee under the Indenture
relating to the Notes. (6)
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Instruction to Registered Holder and/or
Book-Entry Transfer Facility Participant from
Beneficial Owner.
</TABLE>
- ------------------------
(1) Incorporated by reference to the Exhibits filed with Holding's Form 10-Q for
the fiscal quarter ended October 25, 1993.
(2) Incorporated by reference to the Exhibits filed with Holding's Annual Report
on Form 10-K for the fiscal year ended January 29, 1994.
(3) Incorporated by reference to the Exhibits filed with Holding's Current
Report on Form 8-K, filed with the Commission on February 12, 1996.
(4) Incorporated by reference to the Exhibits filed with Holding's Current
Report on Form 8-K/A, filed with the Commission on March 29, 1996.
(5) Incorporated by reference to Holding's Annual Report on Form 10-K for fiscal
year ended January 27, 1996, filed with the Commission on April 24, 1996.
(6) Previously filed.
<PAGE>
EXHIBIT 4.1.2
SUPPLEMENTAL INDENTURE, dated as of March 8, 1996, by and between
INSTALLERS' SERVICE WAREHOUSE, INC., a Delaware corporation ("ISW"), as an
additional Restricted Subsidiary Guarantor (as defined in the Indenture (as
defined below)), and THE BANK OF NEW YORK, a New York banking corporation, as
trustee (the "Trustee") under the Indenture, dated as of January 25, 1996 (the
"Indenture"; capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Indenture) among A.P. S., Inc., a
Delaware corporation ("APS"), as Issuer, APS Holding Corporation, a Delaware
corporation ("Holding"), American Parts System, Inc., a Delaware corporation,
Big A Auto Parts, Inc., a Delaware corporation, Autoparts Finance Company, Inc.,
a Delaware corporation, APS Supply, Inc., a Texas corporation, Presatt, Inc., a
Delaware corporation, A.P. S. Management Services, Inc., a Delaware corporation
and Parts, Inc., a Tennessee corporation, as Guarantors, and the Trustee.
WHEREAS, APS, the Initial Note Guarantors and the Trustee previously
executed, and APS and the Initial Note Guarantors duly delivered to the Trustee,
the Indenture relating to $100 million aggregate principal amount of APS's
11 7/8% Senior Subordinated Notes Due 2006 (the "Initial Notes"), and, if and
when issued in exchange for such Initial Notes, APS's registered 11 7/8% Senior
Subordinated Notes Due 2006 (the "Exchange Notes" and, together with the Initial
Notes, the "Notes").
WHEREAS, as of the date first written, ISW became and continues to be an
indirect subsidiary of Holding;
WHEREAS, pursuant to the Indenture, ISW, as an indirect subsidiary of
Holding that has not been designated by the Board of Directors of Holding as an
Unrestricted Subsidiary, is a Restricted Subsidiary of Holding and, accordingly,
is required to become a Restricted Subsidiary Guarantor;
WHEREAS, pursuant to Section 9.01(b) of the Indenture, the Trustee may enter
into this Supplemental Indenture without notice to, or consent from, any Holder;
and
WHEREAS, pursuant to Section 4.16 of the Indenture, Holding and APS have
caused ISW to enter into this Supplemental Indenture;
NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, ISW and the Trustee hereby mutually covenant and agree for
the equal and proportionate benefit of all Holders of the Notes, as follows:
1. ISW hereby acknowledges for all purposes of the Indenture that it is a
Restricted Subsidiary Guarantor, and as such, its obligations thereunder
include, but are not limited to, its obligations pursuant to Article XI of the
Indenture, which include, but are not limited to, ISW's obligation, jointly and
severally, irrevocably and unconditionally to guarantee to each Holder and to
the Trustee on behalf of the Holders (i) the due and punctual payment of
principal of, premium, if any, and interest (including Special Interest) in full
on each Note when and as the same shall become due and payable whether at Stated
Maturity, by declaration of acceleration, in connection with a Change of Control
Offer, Excess Proceeds Offer or redemption, or otherwise, (ii) the due and
punctual payment of interest on the overdue principal of, premium, if any, and
interest, if any, in full on the Notes, to the extent permitted by law, and
(iii) the due and punctual performance of all other obligations of APS and the
other Note Guarantors to the Holders or the Trustee, including without
limitation the payment of fees, expenses, indemnification or other, all in
accordance with the terms of the Notes and the Indenture. ISW further
acknowledges that such guarantee is junior and subordinated to its Senior
Indebtedness in accordance with and to the extent set forth in such Article XI.
2. Upon execution of this Supplemental Indenture, the Indenture shall be
modified in accordance herewith, but except as expressly supplemented
hereby, the Indenture is in all respects ratified and confirmed and all the
terms, conditions and provisions thereof shall remain in full force and effect.
3. This Supplemental Indenture shall become effective as of the date first
written above.
<PAGE>
4. The Trustee accepts the supplement to the Indenture effected by this
Supplemental Indenture and agrees to execute the trust created by the
Indenture, as hereby supplemented, but only upon the terms and conditions set
forth in the Indenture, as hereby supplemented, including the terms and
provisions defining and limiting the liabilities and responsibilities of the
Trustee, which terms and provisions shall in like manner define and limit the
Trustee's liabilities in the performance of the trust created by the Indenture,
as hereby supplemented.
5. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED IN SAID STATE.
6. This Supplemental Indenture may be executed in any number of counterparts
and by the parties thereto in separate counterparts, each of which when
so executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the day and year first above written.
INSTALLERS' SERVICE WAREHOUSE, INC.
By: __________________________________
Name:
Title:
THE BANK OF NEW YORK
By: __________________________________
Name:
Title:
<PAGE>
ACKNOWLEDGMENT
The undersigned, each of which is a party to the Indenture (as described in
the foregoing Supplemental Indenture), acknowledges that for all purposes of the
Indenture, Installers' Service Warehouse, Inc. is a Restricted Subsidiary
Guarantor, as such term is defined in the Indenture.
APS HOLDING CORPORATION
By: __________________________________
Name:
Title:
A.P. S., INC.
By: __________________________________
Name:
Title:
AMERICAN PARTS SYSTEM, INC.
By: __________________________________
Name:
Title:
BIG A AUTO PARTS, INC.
By: __________________________________
Name:
Title:
<PAGE>
AUTOPARTS FINANCE COMPANY, INC.
By: __________________________________
Name:
Title:
APS SUPPLY, INC.
By: __________________________________
Name:
Title:
PRESATT, INC.
By: __________________________________
Name:
Title:
A.P. S. MANAGEMENT SERVICES, INC.
By: __________________________________
Name:
Title:
PARTS, INC.
By: __________________________________
Name:
Title:
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF DEBEVOISE & PLIMPTON]
June 12, 1996
A.P.S., Inc.
15710 John F. Kennedy Boulevard
Suite 700
Houston, Texas 77032-2347
Offer to Exchange $100,000,000 Senior
Subordinated Notes of A.P.S., Inc.
-------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to A.P.S., Inc., a Delaware corporation
("APS"), in connection with the preparation and filing with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), of a Registration Statement on Form S-4 (as amended, the
"Registration Statement"), which includes a form of prospectus (the
"Prospectus") relating to the proposed offering of $100,000,000 aggregate
principal amount of APS's 11 7/8% Senior Subordinated Notes Due 2006 (the "New
Notes"), which are to be registered under the Act, in exchange for an equal
principal amount of its outstanding 11 7/8% Senior Subordinated Notes Due 2006
(the "Existing Notes").
In so acting, we have examined and relied upon the originals, or copies
certified or otherwise identified to our satisfaction, of such corporate
records, documents, certificates and other instruments as in our judgment are
necessary or appropriate to enable us to render the opinion expressed below.
We are of the opinion that the New Notes to be offered pursuant to the
Registration Statement have been duly authorized by all necessary corporate
action on the part of APS and, upon the issuance of the New Notes by APS and
authentication by The Bank of New York (the "Trustee") pursuant to the
Indenture, dated as of January 25, 1996, among APS, as issuer, APS Holding
Corporation, American Parts System, Inc., Big A Auto Parts, Inc., Autoparts
Finance Company, Inc., APS Supply, Inc., A.P.S. Management Services, Inc. and
Parts, Inc., as Guarantors, and the Trustee, the New Notes will be validly
issued and will be legal, valid and binding obligations of APS, enforceable
against APS in accordance with their terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in an action at law or
in equity).
We express no opinion as to the effect of any Federal or state laws
regarding fraudulent transfers or conveyances.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of our name under the headings "Legal Matters" and
"Certain Federal Tax Consequences" in the Prospectus. In giving such consent, we
do not hereby concede that we are within the category of persons whose consent
is required under Section 7 of the Act or the rules and regulations of the
Commission thereunder.
Very truly yours,
<PAGE>
EXHIBIT 23.1.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
of APS Holding Corporation on Form S-4 of our report dated March 16, 1996, on
our audits of the consolidated financial statements and financial statement
schedules of APS Holding Corporation and Subsidiaries as of January 27, 1996 and
January 28, 1995, and for the years ended January 27, 1996, January 28, 1995 and
January 29, 1994, which report is included in the Company's Annual Report on
Form 10-K for the year ended January 27, 1996. We also consent to the reference
to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Houston, Texas
June 12, 1996
<PAGE>
EXHIBIT 23.1.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 of
our report dated March 22, 1996, on our audits of the financial statements of
Parts, Inc. We also consent to the reference to our firm under the caption
"Experts."
/s/ Coopers & Lybrand L.L.P.
Memphis, Tennessee
June 12, 1996
<PAGE>
LETTER OF TRANSMITTAL
A.P.S., INC.
OFFER TO EXCHANGE ITS
11 7/8% SENIOR SUBORDINATED NOTES DUE 2006
("NEW NOTES") THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 FOR ANY AND ALL OF ITS OUTSTANDING
11 7/8% SENIOR SUBORDINATED NOTES DUE 2006 ("EXISTING NOTES")
PURSUANT TO THE PROSPECTUS DATED JUNE 13, 1996
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 PM., NEW YORK CITY TIME, ON JULY 18, 1996
OR SUCH LATER DATE AND TIME TO WHICH THE EXCHANGE OFFER MAY BE EXTENDED (THE
"EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO THE EXPIRATION DATE.
TO: THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
BY REGISTERED OR CERTIFIED FACSIMILE TRANSMISSION NUMBER: BY HAND/OVERNIGHT DELIVERY:
MAIL:
(212) 571-3080
The Bank of New York The Bank of New York
101 Barclay Street - 7E (For Eligible Institutions 101 Barclay Street
New York, New York 10286 Only) New York, New York 10286
Attn: Reorganization Section Confirm by Telephone: Corporate Trust Services
(212) 815-2742 Window
Ground Level
For Information Call: Attn: Reorganization Section
(212) 815-6333
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OR INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX BELOW
------------------------
List below the Existing Notes to which this Letter of Transmittal relates.
If the space provided below is inadequate, the certificate numbers and principal
amount of Existing Notes should be listed on a separate signed schedule affixed
thereto.
<TABLE>
<CAPTION>
DESCRIPTION OF EXISTING NOTES (1) (2) (3) (4)
PRINCIPAL
AMOUNT
OF EXISTING
PRINCIPAL NOTES
AGGREGATE AMOUNT OF TENDERED IN
PRINCIPAL EXISTING NOTES EXCHANGE FOR
NAME(S) AND ADDRESS(ES) OF AMOUNT TENDERED IF CERTIFICATED
REGISTERED HOLDER(S) CERTIFICATE OF EXISTING LESS THAN NEW
(PLEASE FILL IN, IF BLANK) NUMBER(S)* NOTES ALL** NOTES***
<S> <C> <C> <C> <C>
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the full aggregate
principal amount represented by such Existing Notes. Partial tenders of Existing Notes
may be made only if (i) the principal amount tendered is equal to $1,000 or an integral
multiple thereof and (ii) the remaining untendered portion is in a principal amount of
$250,000 or any integral multiple of $1,000 in excess thereof.
*** Unless otherwise indicated, the holder will be deemed to have tendered Existing Notes in
exchange for a beneficial interest in one or more fully registered global certificates,
which will be deposited with, or on behalf of, The Depository Trust Company and
registered in the name of Cede & Co., its nominee.
</TABLE>
<PAGE>
The undersigned acknowledges that he, she or it has received and reviewed
the Prospectus, dated June 13, 1996 (the "Prospectus"), of A.P.S., Inc., a
Delaware corporation (the "Company" or "APS"), and this Letter of Transmittal
(the "Letter of Transmittal"), which together constitute the Company's offer
(the "Exchange Offer") to exchange up to $100,000,000 aggregate principal amount
of its 11 7/8% Senior Subordinated Notes Due 2006 (the "New Notes") that have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), for a like principal amount of its outstanding 11 7/8% Senior
Subordinated Notes Due 2006 (the "Existing Notes").
This Letter of Transmittal is to be used either if certificates of Existing
Notes are to be forwarded herewith or if delivery of Existing Notes is to be
made by book-entry transfer to an account maintained by the Exchange Agent at
The Depository Trust Company ("DTC"), pursuant to the procedures set forth in
"The Exchange Offer--How to Tender" and "The Exchange Offer--Exchanging
Book-Entry Notes" in the Prospectus. Delivery of this Letter of Transmittal and
any other required documents should be made to the Exchange Agent. Delivery of
documents to the book-entry transfer facility does not constitute delivery to
the Exchange Agent.
Holders whose Existing Notes are not immediately available or who cannot
deliver their Existing Notes and all other documents required hereby to the
Exchange Agent on or prior to the Expiration Date must tender their Existing
Notes according to the guaranteed delivery procedure set forth in the Prospectus
under the caption "The Exchange Offer--How to Tender." See Instruction 1.
The undersigned must complete the appropriate boxes above and below and sign
this Letter of Transmittal to indicate the action the undersigned desires to
take with respect to the Exchange Offer.
/ / CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED TO THE
EXCHANGE AGENT IN EXCHANGE FOR CERTIFICATED NEW NOTES.
Unless the undersigned (i) has completed item (4) in the box entitled
"Description of Existing Notes" and (ii) has checked the box above, the
undersigned will be deemed to have tendered Existing Notes in exchange for a
beneficial interest in one or more fully registered global securities, which
will be deposited with, or on behalf of, DTC and registered in the name of Cede
& Co., its nominee. Beneficial interests in such registered global securities
will be shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. See "Description of the Notes--Form,
Denomination and Book-Entry Procedures" as set forth in the Prospectus.
/ / CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH A
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution _______________ / / The Depository Trust Company
Account Number ________________________________________________________________
Transaction Code Number ________________________________________________________
/ / CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name of Registered Holder(s) ___________________________________________________
Window Ticket Number (if any) __________________________________________________
Date of Execution of Notice of Guaranteed Delivery _____________________________
Name of Eligible Institution that Guaranteed Delivery __________________________
If delivered by book-entry transfer:
Account Number ___________________ Transaction Code Number ___________________
<PAGE>
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL COPIES
OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO THAT
ARE DISTRIBUTED DURING THE ONE-YEAR PERIOD FOLLOWING THE EXPIRATION DATE.
Name ___________________________________________________________________________
Address ________________________________________________________________________
Number of copies _______________________________________________________________
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Existing Notes indicated above. Subject to, and effective upon, the acceptance
for exchange of the Existing Notes tendered hereby, the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Exchange Agent as
agent of the Company all right, title and interest in and to such Existing Notes
as are being tendered hereby, and irrevocably constitutes and appoints the
Exchange Agent as the agent and attorney in fact of the undersigned to cause the
Existing Notes to be transferred and exchanged.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, sell, assign and transfer the Existing
Notes tendered hereby and to acquire the New Notes issuable upon the exchange of
such tendered Existing Notes, and that the Exchange Agent, as agent of the
Company, will acquire good and unencumbered title thereto, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim when the same are accepted by the Exchange Agent, as agent of the Company.
The undersigned will, upon request, execute and deliver any additional documents
deemed by the Company or the Exchange Agent to be necessary or desirable to
complete the sale, exchange, assignment and transfer of the Existing Notes
tendered hereby.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on an interpretation by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the New Notes issued in exchange for the Existing Notes pursuant
to the Exchange Offer may be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act or a broker-dealer tendering Existing Notes acquired directly from the
Company for its own account) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such holders' business and such
holders are not engaged in and do not intend to engage in a distribution of New
Notes and have no arrangement or understanding with any person to participate in
a distribution of New Notes. If the undersigned is not a broker-dealer, the
undersigned represents that it is not engaged in, and does not intend to engage
in, a distribution of New Notes and has no arrangement or understanding with any
person to participate in a distribution of the New Notes. If the undersigned is
a broker-dealer that will receive New Notes for its own account in exchange for
Existing Notes that were acquired as a result of market-making activities or
other trading activities, it acknowledges that it will deliver a prospectus in
connection with any resale of such New Notes; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
By acceptance of the Exchange Offer, each broker-dealer that receives New
Notes pursuant to the Exchange Offer hereby acknowledges and agrees that, upon
receipt of notice by the Company of the happening of any event which makes any
statement in the Prospectus untrue in any material respect or which requires the
making of any changes in the Prospectus in order to make the statements therein
not misleading (which notice the Company agrees to deliver promptly to such
broker-dealer), such broker-dealer will suspend use of the Prospectus until the
Company has amended or supplemented the Prospectus to correct such misstatement
or omission and has furnished copies of the amended or supplemented prospectus
to such broker-dealer.
<PAGE>
The undersigned represents that (i) such holder is neither an "affiliate,"
as defined in Rule 405 under the Securities Act, of the Company nor a
broker-dealer tendering Existing Notes acquired directly from the Company for
its account or, if such holder is an affiliate, that such holder will comply
with the registration and prospectus delivery requirements of the Securities Act
to the extent applicable and (ii) the New Notes acquired pursuant to the
Exchange Offer are being acquired in the ordinary course of such holder's
business.
All authority conferred or agreed to be conferred in this Letter of
Transmittal and every obligation of the undersigned hereunder shall be binding
upon the successors, assigns, heirs, executors, administrators, personal
representatives, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in the instructions contained in this Letter of
Transmittal.
The undersigned understands that tenders of the Existing Notes pursuant to
any one of the procedures described under "The Exchange Offer--How to Tender" as
set forth in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company in accordance with the
terms and subject to the conditions of the Exchange Offer.
The undersigned understands that if its Existing Notes are accepted for
exchange, such holder will not receive accrued interest thereon on the date of
exchange. Instead, interest accruing from the most recent date on which interest
has been paid on the corresponding Existing Note, or, if no interest has been
paid, from January 25, 1996, will be payable on the New Notes on the next
scheduled interest payment date.
The undersigned recognizes that unless the holder of Existing Notes (i)
completes item (4) of the Box entitled "Description of Existing Notes" above and
(ii) checks the box entitled "Check here if tendered Existing Notes are being
delivered to the Exchange Agent in exchange for certificated New Notes" above,
such holder, when tendering such Existing Notes, will be deemed to have tendered
such Existing Notes in exchange for a beneficial interest in one or more fully
registered global securities, which will be deposited with, or on behalf of, DTC
and registered in the name of Cede & Co., its nominee. Beneficial interests in
such registered global securities will be shown on, and transfers thereof will
be effected only through, records maintained by DTC and its participants. See
"Description of the Notes--Form, Denomination and Book-Entry Procedures" in the
Prospectus.
The undersigned recognizes that, under certain circumstances set forth in
the Prospectus under "The Exchange Offer--Conditions," the Company may not be
required to accept for exchange any of the Existing Notes tendered. Existing
Notes not accepted for exchange or withdrawn will be returned to the undersigned
at the address set forth below unless otherwise indicated under "Special
Delivery Instructions" below.
<PAGE>
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF EXISTING
NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
EXISTING NOTES AS SET FORTH IN SUCH BOX ABOVE.
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING INTERNAL REVENUE SERVICE FORM W-9)
X _____________________________________ _____________________________________
X __ ________________________________________________________________________
Date
(Signature(s) of Owner(s))
Area Code and Telephone Number _________________________________________________
If a holder is tendering any Existing Notes, this Letter of Transmittal must be
signed by the registered holder(s) as the name(s) appear(s) on the
certificate(s) for the Existing Notes or by any person(s) authorized to become
registered holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth full
title below. See Instruction 3.
Name(s) ________________________________________________________________________
________________________________________________________________________________
(Please Type or Print)
Capacity: ______________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution: _______________________________________________________
(Authorized Signature)
________________________________________________________________________________
(Title)
________________________________________________________________________________
(Name of Firm)
Dated: _________________________________________________________________________
IMPORTANT: UNLESS GUARANTEED DELIVERY PROCEDURES ARE COMPLIED WITH, THIS
LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATE(S)
FOR EXISTING NOTES OR A CONFIRMATION OF BOOK-ENTRY TRANSFER OF SUCH EXISTING
NOTES AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE EXCHANGE AGENT
ON OR PRIOR TO THE EXPIRATION DATE.
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND EXISTING NOTES; GUARANTEED
DELIVERY PROCEDURE
The Letter of Transmittal is to be used to forward, and must accompany, all
certificates representing Existing Notes tendered pursuant to the Exchange
Offer. Certificates representing the Existing Notes in proper form for transfer
(or a confirmation of book-entry transfer of such Existing Notes into the
Exchange Agent's account at DTC) as well as a properly completed and duly
executed copy of this Letter of Transmittal and all other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth herein on or before the Expiration Date. Existing Notes
tendered hereby must be in denominations of principal amount of maturity of
$1,000 and any integral multiple thereof. Partial tenders of Existing Notes may
be made only if (i) the principal amount tendered is equal to $1,000 or an
integral multiple thereof and (ii) the remaining untendered portion is in a
principal amount of $250,000 or any integral multiple of $1,000 in excess
thereof.
The method of delivery of this Letter of Transmittal, the Existing Notes and
all other required documents is at the election and risk of the tendering
holders, but the delivery will be deemed made only when actually received or
confirmed by the Exchange Agent. If such delivery is by mail, it is recommended
that registered mail properly insured, with return receipt requested, be used.
In all cases, sufficient time should be allowed to permit timely delivery.
If a holder desires to tender Existing Notes and such holder's Existing
Notes are not immediately available or time will not permit such holder's Letter
of Transmittal, Existing Notes (or a confirmation of book-entry transfer of
Existing Notes into the Exchange Agent's account at DTC) or other required
documents to reach the Exchange Agent on or before the Expiration Date, such
holders may nevertheless tender Existing Notes, if:
(a) such tender is made by or through an Eligible Institution (as
defined below);
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, in substantially the form provided by APS, is received by the
Exchange Agent as provided below on or prior to the Expiration Date; and
(c) the Existing Notes, in proper form for transfer (or confirmation of
book-entry transfer of such Existing Notes into the Exchange Agent's account
at DTC as described above), together with a properly completed and duly
executed Letter of Transmittal and all other documents required by the
Letter of Transmittal, are received by the Exchange Agent within five New
York Stock Exchange, Inc. trading days after the date of execution of such
Notice of Guaranteed Delivery.
2. WITHDRAWALS
Any holder who had tendered Existing Notes may withdraw the tender by
delivering written notice of withdrawal to the Exchange Agent prior to the
Expiration Date. For a withdrawal to be effective, a written notice of
withdrawal must be received by the Exchange Agent at its address set forth
herein. Any such notice of withdrawal must (i) specify the name of the person
having tendered the Existing Notes to be withdrawn (the "Depositor"), (ii) (a)
if the Existing Notes have been physically delivered to the Exchange Agent,
identify the Existing Notes to be withdrawn (including the serial number and the
principal amount), or (b) if the Existing Notes have been delivered pursuant to
book-entry procedures, identify the name and number of the holder's account at
DTC to be credited with such Existing Notes and (iii) be signed by the holder in
the same manner as the original signature on the Letter of Transmittal by which
such Existing Notes were tendered or as otherwise set forth in Instruction 3
below (including any required signature guarantees), or be accompanied by
documents of transfer sufficient to have the Trustee (as defined in the
Prospectus) register the transfer of such Existing Notes into the name of the
person withdrawing the tender. If Existing Notes have been tendered pursuant to
the procedure for book-entry transfer, any notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawn Existing
Notes or otherwise comply with DTC's procedures. See "The Exchange
Offer--Withdrawal Rights" in the Prospectus.
<PAGE>
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES
If this Letter of Transmittal is signed by the registered holder of the
Existing Notes tendered hereby, the signature must correspond exactly with
the name as written on the face of the certificates without any change
whatsoever.
If any tendered Existing Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If any tendered Existing Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Existing Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should indicate when signing, and unless waived by the
Company, proper evidence satisfactory to the Company of their authority so to
act must be submitted.
The signatures on this Letter of Transmittal or a notice of withdrawal, as
the case may be, must be guaranteed unless the Existing Notes surrendered for
exchange pursuant hereto are tendered (i) by a registered holder of the Existing
Notes or (ii) for the account of an Eligible Institution. In the event that the
signatures in this Letter of Transmittal or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantees must be by an eligible
guarantor institution which is a member of The Securities Transfer Agents
Medallion Program (STAMP), The New York Stock Exchanges Medallion Signature
Program (MSP) or The Stock Exchanges Medallion Program (SEMP) (collectively,
"Eligible Institutions"). If Existing Notes are registered in the name of a
person other than the signer of this Letter of Transmittal, the Existing Notes
surrendered for exchange must be endorsed by, or be accompanied by a written
instrument or instruments of transfer or exchange, in satisfactory form as
determined by the Company in its sole discretion, duly executed by, the
registered holder with the signature thereon guaranteed by an Eligible
Institution.
4. BACKUP FEDERAL INCOME TAX WITHHOLDING AND INTERNAL REVENUE SERVICE FORM W-9
Under the federal income tax laws, payments that may be made by the Company
on account of New Notes issued pursuant to the Exchange Offer may be subject to
backup withholding at the rate of 31%. In order to avoid such backup
withholding, each tendering holder should complete and sign the Internal Revenue
Service Form W-9 (the "IRS Form W-9") included with this Letter of Transmittal
and either (a) provide the correct taxpayer identification number ("TIN") and
certify, under penalties of perjury, that the TIN provided is correct and that
(i) the holder has not been notified by the Internal Revenue Service (the "IRS")
that the holder is subject to backup withholding as a result of failure to
report all interest or dividends or (ii) the IRS has notified the holder that
the holder is no longer subject to backup withholding; or (b) provide an
adequate basis for exemption. If the tendering holder has not been issued a TIN
and has applied for one, or intends to apply for one in the near future, such
holder should write "Applied For" in the space provided for the TIN in Part 1 of
the IRS Form W-9 and sign and date the IRS Form W-9. If "Applied For" is written
in Part 1, the Company (or the Paying Agent under the Indenture governing the
New Notes) shall retain 31% of payments made to the tendering holder during the
sixty (60) day period following the date of the IRS Form W-9. If the holder
furnishes the Exchange Agent or the Company with its TIN within sixty (60) days
after the date of the IRS Form W-9, the Company (or the Paying Agent) shall
remit such amounts retained during the sixty (60) day period to the holder and
no further amounts shall be retained or withheld from payments made to the
holder thereafter. If, however, the holder has not provided the Exchange Agent
or the Company with its TIN within such sixty (60) day period, the Company (or
the Paying Agent) shall remit such previously retained amounts to the IRS as
backup withholding. In general, if a holder is an individual, the taxpayer
identification number is the Social Security number of such individual. If the
Exchange Agent or the Company is not provided with the correct TIN, the holder
may be subject to a $50 penalty imposed by the IRS. Certain holders (including,
among others, all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. In order for a foreign
individual to qualify as an exempt recipient, such holder must submit an IRS
Form W-8, signed under penalties of perjury, attesting to that individual's
exempt status. An IRS Form
<PAGE>
W-8 can be obtained from the Exchange Agent. For further information concerning
backup withholding and instructions for completing the IRS Form W-9 (including
how to obtain a TIN if you do not have one and how to complete the IRS Form W-9
if Existing Notes are registered in more than one name), consult the enclosed
instructions to the IRS Form W-9.
Failure to complete the IRS Form W-9 will not, by itself, cause Existing
Notes to be deemed invalidly tendered, but may require the Company (or the
Paying Agent) to withhold 31% of the amount of any payments made on account of
the New Notes. Backup withholding is not an additional federal income tax.
Rather, the federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the IRS.
5. TRANSFER TAXES
The Company will pay all transfer taxes, if any, applicable to the transfer
of Existing Notes to it or its order pursuant to the Exchange Offer. If,
however, New Notes and/or substitute Existing Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person other
than the registered holder of the Existing Notes tendered hereby, or if tendered
Existing Notes are registered in the name of any person other than the person
signing this Letter of Transmittal, or if a transfer tax is imposed for any
reason other than the transfer of Existing Notes to the Company or its order
pursuant to the Exchange Offer, the amount of any such transfer taxes (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed directly to such tendering holder.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Existing Notes specified in this Letter
of Transmittal.
6. WAIVER OF CONDITIONS
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
7. NO CONDITIONAL TENDERS
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Existing Notes, by execution of this Letter
of Transmittal, shall waive any right to receive notice of the acceptance of
their Existing Notes for exchange.
Neither the Company nor any other person is obligated to give notice of
defects or irregularities in any tender, nor shall any of them incur any
liability for failure to give any such notice.
8. INADEQUATE SPACE
If the space provided herein is inadequate, the aggregate principal amount
of Existing Notes being tendered and the certificate number or numbers (if
available) should be listed on a separate schedule attached hereto and
separately signed by all parties required to sign this Letter of Transmittal.
9. MUTILATED, LOST, STOLEN OR DESTROYED EXISTING NOTES
Any holder whose Existing Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at the address and telephone number indicated
above.
<PAGE>
<TABLE>
<CAPTION>
Form W-9 REQUEST FOR TAXPAYER Give form to the
IDENTIFICATION NUMBER AND CERTIFICATION requester. Do NOT
(Rev. March 1994) send to the IRS.
Department of the Treasury
Internal Revenue Service
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C>
PLEASE PRINT OR TYPE
Name (If joint names, list first and circle the name of the person or entity whose number you enter in Part I below. SEE
INSTRUCTIONS ON PAGE 2 IF YOUR NAME HAS CHANGED.)
-------------------------------------------------------------------------------------------------------------------------------
Business name (Sole proprietors see instructions on page 2.)
-------------------------------------------------------------------------------------------------------------------------------
Please check appropriate box: / / Individual/Sole proprietor / / Corporation / / Partnership / / Other-->
----------
-------------------------------------------------------------------------------------------------------------------------------
Address (number, street, and apt. or suite no.) Requester's name and address (optional)
------------------------------------------------------------------------------------
City, state, and ZIP code
-------------------------------------------------------------------------------------------------------------------------------
PART I TAXPAYER IDENTIFICATION NUMBER (TIN) List account number(s) here (optional)
- -----------------------------------------------------------------------------------------
Enter your TIN in the appropriate box. For ------------------------------
individuals, this is your social security number SOCIAL SECURITY NUMBER
(SSN). For sole proprietors, see the instructions
on page 2. For other entities, it is your employer ------------------------------
identification number (EIN). If you do not have -----------------------------------------
a number, see HOW TO GET A TIN BELOW. OR PART II FOR PAYEES EXEMPT FROM BACKUP
WITHHOLDING (SEE PART II
------------------------------ INSTRUCTIONS ON PAGE 2)
NOTE: IF THE ACCOUNT IS IN MORE THAN ONE NAME, EMPLOYER IDENTIFICATION NUMBER -----------------------------------------
SEE THE CHART ON PAGE 2 FOR GUIDELINES ON WHOSE -->
NUMBER TO ENTER. ------------------------------ -----------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PART III CERTIFICATION
- ------------------------------------------------------------------------------------------------------------------------------------
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), AND
2. I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the
Internal Revenue Service that I am subject to backup withholding as a result of a failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS.--You must cross out item 2 above if you have been notified by the IRS that you are currently subject to
backup withholding because of underreporting interest or dividends on your tax return. For real estate transactions, item 2 does not
apply. For mortgage interest paid, the acquisition or abandonment of secured property, cancellation of debt, contributions to an
individual retirement arrangement (IRA), and generally payments other than interest and dividends, you are not required to sign the
Certification, but you must provide your correct TIN. (Also see PART III INSTRUCTIONS on page 2.)
- ------------------------------------------------------------------------------------------------------------------------------------
SIGN
HERE SIGNATURE--> DATE-->
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.
PURCHASE OF FORM.--A person who is required to file an information return with
the IRS must get your correct TIN to report income paid to you, real estate
transactions, mortgage interest you paid, the acquisition or abandonment of
secured property, cancellation of debt, or contributions you made to an IRA. Use
Form W-9 to give your correct TIN to the requester (the person requesting your
TIN) and, when applicable, (1) to certify the TIN you are giving is correct (or
you are waiting for a number to be issued), (2) to certify you are not subject
to backup withholding, or (3) to claim exemption from backup withholding if you
are an exempt payee. Giving your correct TIN and making the appropriate
certifications will prevent certain payments from being subject to backup
withholding.
NOTE: IF A REQUESTER GIVES YOU A FORM OTHER THAN A W-9 TO REQUEST YOUR TIN, YOU
MUST USE THE REQUESTER'S FORM IF IT IS SUBSTANTIALLY SIMILAR TO THIS FORM W-9.
WHAT IS BACKUP WITHHOLDING?--Persons making certain payments to you must
withhold and pay to the IRS 31% of such payments under certain conditions. This
is called "backup withholding." Payments that could be subject to backup
withholding include interest, dividends, broker and barter exchange
transactions, rents, royalties, nonemployee pay, and certain payments from
fishing boat operators. Real estate transactions are not subject to backup
withholding.
If you give the requester your correct TIN, make the proper certifications,
and report all your taxable interest and dividends on your tax return, your
payments will not be subject to backup withholding. Payments you receive will be
subject to backup withholding if:
1. You do not furnish your TIN to the requester, or
2. The IRS tells the requester that you furnished an incorrect TIN, or
3. The IRS tell you that you are subject to backup withholding because you
did not report all your interest and dividends on your tax return (for
reportable interest and dividends only), or
4. You do not certify to the requester that you are not subject to backup
withholding under 3 above (for reportable interest and dividend accounts opened
after 1983 only), or
5. You do not certify your TIN. See the Part III instructions for
exceptions.
Certain payees and payments are exempt from backup withholding and
information reporting. See the Part II instructions and the separate
INSTRUCTIONS FOR THE REQUESTER OF FORM W-9
HOW TO GET A TIN.--If you do not have a TIN, apply for one immediately. To
apply, get FORM SS-5, Application for a Social Security Number Card (for
individuals), from your local office of the Social Security Administration, or
FORM SS-4, Application for Employer Identification Number (for businesses and
all other entities), from your local IRS office.
If you do not have a TIN, write "Applied For" in the space for the TIN in
Part I, sign and date the form and give it to the requester. Generally, you will
then have 60 days to get a TIN and give it to the requester. If the requester
does not receive your TIN within 60 days, backup withholding, if applicable,
will begin and continue until you furnish your TIN.
- --------------------------------------------------------------------------------
Form W-9 (Rev. 3-94)
<PAGE>
Form W-9 (Rev. 3-94) Page 2
- --------------------------------------------------------------------------------
NOTE: WRITING "APPLIED FOR" ON THE FORM MEANS THAT YOU HAVE ALREADY APPLIED FOR
A TIN OR THAT YOU INTEND TO APPLY FOR ONE SOON.
AS SOON AS YOU RECEIVE YOUR TIN, COMPLETE ANOTHER FORM W-9, INCLUDE YOUR
TIN, SIGN AND DATE THE FORM, AND GIVE IT TO THE REQUESTER.
PENALTIES
FAILURE TO FURNISH TIN.--If you fail to furnish your correct TIN to a requester,
you are subject to a penalty of $50 for each such failure unless your failure is
due to reasonable cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a
false statement with no reasonable basis that results in no backup withholding,
you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
MISUSE OF TINS.--If the requester discloses or uses TINs in violation of Federal
law, the requester may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
NAME.--If you are an individual, you must generally enter the name shown on your
social security card. However, if you have changed your last name, for instance,
due to marriage, without informing the Social Security Administration of the
name change, please enter your first name, the last name shown on your social
security card, and your new last name.
SOLE PROPRIETOR.--You must enter your individual name. (Enter either your
SSN or EIN in Part I.) You may also enter your business name or "doing business
as" name on the business name line. Enter your name as shown on your social
security card and business name as it was used to apply for your EIN on Form
SS-4.
PART I--TAXPAYER IDENTIFICATION NUMBER (TIN)
You must enter your TIN in the appropriate box. If you are a sole proprietor,
you may enter your SSN or EIN. Also see the chart on this page for further
clarification of name and TIN combinations. If you do not have a TIN, follow the
instructions under HOW TO GET A TIN on page 1.
PART II--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING
Individuals (including sole proprietors) are not exempt from backup withholding.
Corporations are exempt from backup withholding for certain payments, such as
interest and dividends. For a complete list of exempt payees, see the separate
Instructions for the Requester of Form W-9.
If you are exempt from backup withholding, you should still complete this
form to avoid possible erroneous backup withholding. Enter your correct TIN in
Part I, write "Exempt" in Part II, and sign and date the form. If you are a
nonresident alien or a foreign entity not subject to backup withholding, give
the requester a completed FORM W-8, Certificate of Foreign Status.
PART III--CERTIFICATION
For a joint account, only the person whose TIN is shown in Part I should sign.
1. INTEREST, DIVIDEND, AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE 1984 AND
BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983. You must give your correct TIN,
but you do not have to sign the certification.
2. INTEREST, DIVIDEND, BROKER, AND BARTER EXCHANGE ACCOUNTS OPENED AFTER
1983 AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983. You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item 2 in the certification before signing the form.
3. REAL ESTATE TRANSACTIONS. You must sign the certification. You may cross
out item 2 of the certification.
4. OTHER PAYMENTS. You must give your correct TIN, but you do not have to
sign the certification unless you have been notified of an incorrect TIN. Other
payments include payments made in the course of the requester's trade or
business for rents, royalties, goods (other than bills for merchandise), medical
and health care services, payments to a nonemployee for services (including
attorney and accounting fees), and payments to certain fishing boat crew
members.
5. MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF SECURED
PROPERTY, CANCELLATION OF DEBT, OR IRA CONTRIBUTIONS. You must give your correct
TIN, but you do not have to sign the certification.
PRIVACY ACT NOTICE
Section 6109 requires you to give your correct TIN to persons who must file
information returns with the IRS to report interest, dividends, and certain
other income paid to you, mortgage interest you paid, the acquisition or
abandonment of secured property, cancellation of debt, or contributions you made
to an IRA. The IRS uses the numbers for identification purposes and to help
verify the accuracy of your tax return. You must provide your TIN whether or not
you are required to file a tax return. Payers must generally withhold 31% of
taxable interest, dividend, and certain other payments to a payee who does not
give a TIN to a payer. Certain penalties may also apply.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<S> <C> <C>
FOR THIS TYPE OF ACCOUNT : GIVE NAME AND SSN OF :
1. Individual The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable The grantor-trustee(1)
savings trust (grantor
is also trustee)
b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under state law
5. Sole proprietorship. The owner(3)
FOR THIS TYPE OF ACCOUNT : GIVE NAME AND SSN OF:
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or Legal entity(4)
pension trust
8. Corporate The corporation
9. Association, club, The organization
religious, charitable,
educational, or other
tax-exempt organization
10. Partnership The partnership
11. A broker or registered The broker or nominee
nominee
12. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a state
or local government,
school district, or
prison) that receives
agricultural program
payments
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's SSN.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title.)
NOTE: IF NO NAME IS CIRCLED WHEN MORE THAN ONE NAME IS LISTED, THE NUMBER WILL
BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE>
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
A.P.S., INC.
11 7/8% SENIOR SUBORDINATED NOTES DUE 2006
This form, or one substantially equivalent hereto, must be used by a holder
of the 11 7/8% Senior Subordinated Notes Due 2006 (the "Existing Notes") of
A.P.S., Inc. ("APS") who wishes to tender Existing Notes to The Bank of New
York, as Exchange Agent (the "Exchange Agent") pursuant to the guaranteed
delivery procedures described in "The Exchange Offer--How to Tender" of the
Prospectus, dated June 13, 1996 (the "Prospectus"), relating to the offer by APS
to exchange its 11 7/8% Senior Subordinated Notes Due 2006 that have been
registered pursuant to the Securities Act of 1933 for Existing Notes and in
Instruction 1 to the related Letter of Transmittal. Any holder who wishes to
tender Existing Notes pursuant to such guaranteed delivery procedures must
ensure that the Exchange Agent receives this Notice of Guaranteed Delivery prior
to the Expiration Date of the Exchange Offer. Capitalized terms not defined
herein have the meanings ascribed to them in the Prospectus or the Letter of
Transmittal.
<TABLE>
<S> <C> <C>
The Bank of New York
BY REGISTERED OR CERTIFIED FACSIMILE TRANSMISSION NUMBER: BY HAND/OVERNIGHT DELIVERY:
MAIL: (212)571-3080
101 Barclay Street - 7E (For Eligible Institutions 101 Barclay Street
New York, New York 10286 Only) Corporate Trust Services
Attn: Reorganization Section Confirm by Telephone: Window
(212) 815-2742 Ground Level
New York, New York 10286
Attn: Reorganization Section
For Information Call:
(212)815-6333
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to A.P.S., Inc., upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Existing Notes specified below pursuant to the guaranteed delivery procedures
set forth in the Prospectus and in Instruction 1 of the Letter of Transmittal.
The undersigned hereby tenders the Existing Notes listed below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
CERTIFICATE NUMBER(S)(IF KNOWN) EXISTING NOTES
OF EXISTING NOTES OR AGGREGATE PRINCIPAL TENDERED
ACCOUNT NUMBER AT THE BOOK-ENTRY FACILITY AMOUNT REPRESENTED IF LESS THAN ALL*
<S> <C> <C>
* Unless otherwise indicated, the holder will be deemed to have tendered the full aggregate
principal amount represented by such Existing Notes. Partial tenders of Existing Notes may
be made only if (i) the principal amount tendered is equal to $1,000 or an integral multiple
thereof and (ii) the remaining untendered portion is in a principal amount of $250,000 or
any integral multiple of $1,000 in excess thereof.
</TABLE>
1
<PAGE>
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All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
- --------------------------------------------------------------------------------
SIGN HERE
NAME OF REGISTERED OR ACTING HOLDER: ___________________________________________
SIGNATURE(S): __________________________________________________________________
NAME(S) (PLEASE PRINT): ________________________________________________________
Address: _______________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
Telephone Number: ______________________________________________________________
Date: __________________________________________________________________________
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, an eligible guarantor institution which is a member of The
Securities Transfer Agents Medallion Program (STAMP), The New York Stock
Exchanges Medallion Signature Program (MSP) or The Stock Exchange Medallion
Program (SEMP), guarantees deposit with the Exchange Agent of the Letter of
Transmittal (or a manually signed facsimile thereof), together with the Existing
Notes tendered hereby in proper form for transfer (or timely confirmation of the
book-entry transfer of such Existing Notes into the Exchange Agent's account at
the book-entry transfer facility described in the Prospectus under the caption
"The Exchange Offer--How to Tender" and in the Letter of Transmittal) and any
other required documents, all by 5:00 p.m., New York City time, within five New
York Stock Exchange, Inc. trading days after the date of execution of this
Notice of Guaranteed Delivery.
2
<PAGE>
SIGN HERE
Name of firm: ________________________________________________________________
Authorized Signature: ________________________________________________________
Name (PLEASE PRINT): _________________________________________________________
Address: _____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
Telephone Number: ____________________________________________________________
Date: ________________________________________________________________________
DO NOT SEND EXISTING NOTES WITH THIS FORM. ACTUAL SURRENDER OF EXISTING NOTES
MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF
TRANSMITTAL.
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery and any other documents
required by this Notice of Guaranteed Delivery must be received by the Exchange
Agent at its address set forth herein on or prior to the Expiration Date. The
method of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and risk of the holder, and
the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. Instead of delivery by mail, it is recommended
that the holder use an overnight or hand delivery service. In all cases
sufficient time should be allowed to assure timely delivery. For a description
of the guaranteed delivery procedures, see Instruction 1 of the Letter of
Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Existing Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Existing Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of
the book-entry transfer facility whose name appears on a security position
listing as the owner of Existing Notes, the signature must correspond with the
name shown on the security position listing as the owner of the Existing Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Existing Notes listed or a participant of the
book-entry transfer facility, this Notice of Guaranteed Delivery must be
accompanied by appropriate bond powers, signed as the name of the registered
holder(s) appears on the Existing Notes or signed as the name of the participant
shown on the book-entry transfer facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing.
3. Requests for Assistance or Additional Copies. Questions and requests for
assistance and requests for additional copies of the Prospectus may be directed
to the Exchange Agent at the address specified in the Prospectus. Holders may
also contact their broker, dealer, commercial bank, trust company or other
nominee for assistance concerning the Exchange Offer.
3
<PAGE>
INSTRUCTION TO REGISTERED HOLDER AND/OR
PARTICIPANT OF THE DEPOSITORY TRUST COMPANY
FROM OWNER OF
A.P.S., INC.'S
11 7/8% SENIOR SUBORDINATED NOTES DUE 2006 (THE "EXISTING NOTES")
To Registered Holder and/or Participant of The Depository Trust Company:
The undersigned hereby acknowledges receipt of the Prospectus dated June 13,
1996 (the "Prospectus") of A.P.S., Inc., a Delaware corporation (the "Company"),
and the accompanying Letter of Transmittal (the "Letter of Transmittal"), that
together constitute the Company's exchange offer (the "Exchange Offer").
Capitalized terms used but not defined herein have the meanings ascribed to them
in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Existing Notes held by you for the account of
the undersigned.
The aggregate face amount of the Existing Notes held by you for the account
of the undersigned is (FILL IN AMOUNT):
$ of the 11 7/8% Senior Subordinated Notes Due 2006.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK THE APPROPRIATE BOX):
/ / To TENDER the following Existing Notes held by you for the account of
the undersigned (INSERT PRINCIPAL AMOUNT OF EXISTING NOTES TO BE SO
TENDERED, IF ANY):
$ of the 11 7/8% Senior Subordinated Notes due 2006.
/ / To TENDER the following Existing Notes held by you for the account of
the undersigned in exchange for certificated New Notes (INSERT PRINCIPAL
AMOUNT OF EXISTING NOTES TO BE SO TENDERED, IF ANY):
$ of the 11 7/8% Senior Subordinated Notes due 2006.
/ / NOT to TENDER any Existing Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Existing Notes held by you
for the account of the undersigned, it is understood that you are authorized (a)
to make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representations and warranties contained in the
Letter of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations that (i) the
undersigned's principal residence is in the state of (fill in state)
, (ii) the undersigned is neither an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act of 1933, as amended (the
"Securities Act"), nor a broker-dealer tendering Existing Notes acquired
directly from the Company for its own account, (iii) the undersigned is
acquiring the New Notes in the undersigned's ordinary course of business, (iv)
the undersigned is not engaged in, and does not intend to engage in, a
distribution of New Notes, and has no arrangement or understanding with any
person to participate in a distribution of the New Notes, and (v) the
undersigned acknowledges that any person participating in the Exchange Offer for
the purpose of distributing the New Notes must comply with the
<PAGE>
registration and prospectus delivery requirements of the Securities Act, in
connection with a secondary resale transaction of the New Notes acquired by such
person and cannot rely on the interpretations of the staff of the Securities and
Exchange Commission as set forth in no-action letters issued to third parties;
(b) to agree, on behalf of the undersigned, as set forth in the Letter of
Transmittal; and (c) to take such other actions as may be necessary or desirable
under the Prospectus or the Letter of Transmittal to effect the valid tender of
such Existing Notes.
SIGN HERE
Name of beneficial owner(s): _________________________________________________
Signature(s): ________________________________________________________________
Name(s) (PLEASE PRINT): ______________________________________________________
Address: _____________________________________________________________________
_____________________________________________________________________
Telephone Number: ____________________________________________________________
Taxpayer identification or Social Security Number: ___________________________
Date: ________________________________________________________________________
