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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: October 9, 1998
APS HOLDING CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 0-22318 76-0306940
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification No.)
15710 JOHN F. KENNEDY BLVD., SUITE 700
HOUSTON, TEXAS 77032-2347
(Address of Principal Executive Offices)
(713) 507-1100
(Registrant's telephone number, including area code)
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<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 9, 1998 ("the Closing Date"), the United States Bankruptcy Court for
the District of Delaware gave approval to APS Holding Corporation and its direct
and indirect subsidiaries ("the Company") to sell nine distribution centers and
148 company-owned stores in two transactions.
On the Closing Date, General Parts, Inc. ("GPI"), which operates under the name
CarQuest, purchased certain assets of eight distribution centers and 132
company-owned stores. The distribution centers are located in Albuquerque, New
Mexico; Phoenix, Arizona; Salt Lake City, Utah; Denver, Colorado; Great Bend,
Kansas; Omaha, Nebraska; Indianapolis, Indiana; and Winchester, Virginia. GPI
also acquired assets of certain additional stores in Arkansas, Pennsylvania,
Oklahoma and Texas.
The purchased assets included inventory, accounts receivable, equipment and
other fixed assets and contract rights. GPI purchased the real property
constituting the distribution centers in Albuquerque and Denver and the
company-owned store in Warrenton, Virginia. Additionally, GPI assumed leases or
entered into subleases with respect to the other distribution centers and
certain of the stores.
The purchase price paid by GPI on the Closing Date was approximately $80 million
in cash, of which approximately $4.0 million is held in escrow for possible
post-closing adjustments. The agreement provides for additional payments after
the Closing Date and for other post-closing adjustments resulting from physical
counts of inventory and other post-closing determinations. The purchase price is
less than the carrying value of the tangible and related intangible assets that
were sold, resulting in a loss for financial reporting purposes.
On the Closing Date, BWP Distributors, Inc. ("BWP"), which also operates under
the name CarQuest, purchased certain assets of one distribution center in
Philadelphia, Pennsylvania and 16 company-owned stores serviced by this
distribution center.
The purchased assets included inventory, accounts receivable, equipment and
other fixed assets and contract rights. BWP purchased the real property
constituting the company-owned store in Bethlehem, Pennsylvania. Additionally,
BWP assumed leases relating to the Philadelphia distribution center and assumed
leases or entered into subleases with respect to certain of the stores.
The purchase price paid by BWP on the Closing Date was approximately $10 million
in cash, of which approximately $.5 million is held in escrow for possible
post-closing adjustments. The agreement provides for additional payments after
the Closing Date and for other post-closing adjustments resulting from physical
counts of inventory and other post-closing determinations. The purchase price is
less than the carrying value of the tangible and related intangible assets that
were sold, resulting in a loss for financial reporting purposes.
With respect to each of the asset sale transactions described above, the Company
entered into an agreement with the purchaser with respect to the provision by
the Company of certain
2
<PAGE>
information services, and an affiliate of the Company entered into an agreement
with the purchaser with respect to the license of certain trade names and
related rights to the purchaser.
The proceeds from these asset sales have been or will be used to reduce the
Company's bank debt and to pay expenses related to the transactions.
Certain pro forma financial information with respect to these transactions is
provided pursuant to Item 7 below. In view of the matters set forth below and in
Item 5, the Company makes no representation as to the materiality of such
information.
The assets sold or to be sold as reported in this Item 2 and in Item 5 represent
a substantial portion of the Company's assets. The Company is continuing to seek
purchasers for its remaining assets and anticipates filing a Plan of
Reorganization that will seek to wind down the business in an orderly fashion
under Chapter 11 of the Bankruptcy Code.
ITEM 5. OTHER EVENTS
In addition to the sales of assets reported under Item 2 above, the Company has
effected the following sales of assets:
(i) On September 18, 1998, the Company sold certain assets of its
distribution center in Ocala, Florida to The Parts Source, Inc. for
approximately $5.9 million in cash, subject to provisions for
additional post-closing payments and other post-closing adjustments;
and
(ii) On October 13, 1998, the Company sold certain assets of its
distribution center in Monroe, Louisiana to Rankin Automotive Group,
Inc. for approximately $5.8 million in cash, subject to provisions
for additional post-closing payments and other post-closing
adjustments.
On October 22, 1998, the Company entered into an agreement with W.E. Lahr
Company for the sale of certain assets of the Company's distribution center in
Minneapolis, Minnesota for a cash purchase price estimated to be approximately
$7.0 million. This sale is subject to approval of the Bankruptcy Court and
certain other conditions.
On October 29, 1998, the Company entered into a letter of intent with David C.
Barbeau and Michael L. Preston, who are Senior Vice Presidents of the Company,
and E. Eugene Lauver, formerly a Senior Vice President and the General Counsel
of the Company, with respect to the sale to a group to be formed by such
individuals of the assets of approximately eight distribution centers and 132
stores. Any such transaction would be subject to the negotiation and execution
of definitive agreements, the approval of the Bankruptcy Court and the Company's
lenders, negotiation by such group of financing for the transaction and other
conditions, and, accordingly, there can be no assurance that such transaction
will be consummated.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(B) PRO FORMA FINANCIAL INFORMATION
F-1 Introduction
F-2 Balance Sheet at July 25, 1998 (unaudited)
F-3 Statements of Operations for the year ended January 31,
1998 and the six months ended July 25, 1998 (unaudited).
F-5 Notes to unaudited Pro Forma Financial Statements
(C) EXHIBITS
2.3 Asset Purchase Agreement between A.P.S., Inc. as seller
and General Parts, Inc. as purchaser dated as of
September 9, 1998.
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2.4 Asset Purchase Agreement between A.P.S., Inc. as seller
and BWP Distributors, Inc. as purchaser dated as of
September 9, 1998.
2.5 Trademark License Agreement between APS Management
Services, Inc. and BWP Distributors, Inc. dated as of
October 9, 1998.
2.6 Services Agreement between A.P.S., Inc. and BWP
Distributors, Inc. dated as of October 9, 1998
2.7 Trademark License Agreement between APS Management
Services, Inc. and General Parts, Inc. dated as of
October 9, 1998.
2.8 Services Agreement between A.P.S., Inc. and General
Parts, Inc. dated as of October 9, 1998.
2.9 Amendment dated as of October 8, 1998 to the Asset
Purchase Agreement between A.P.S., Inc. as seller and
General Parts, Inc. as purchaser dated as of September 9,
1998.
2.10 Amendment dated as of October 8, 1998 to the Asset
Purchase Agreement between A.P.S., Inc. as seller and BWP
Distributors, Inc. as purchaser dated as of September 9,
1998.
10.1.33 Consent, dated as of October 8, 1998 to the Revolving
Credit, Term Loan and Guarantee Agreement, dated as of
February 2, 1998.
10.1.34 Third Amendment, Consent and Second Waiver dated as of
October 9, 1998 to the Revolving Credit, Term Loan and
Guarantee Agreement dated as of February 2, 1998.
99.6 Press Release issued by the Company on October 9, 1998.
The schedules to the Agreements listed as Exhibits 2.3 and 2.4 are not included
with these exhibits. Such schedules are identified in the Table of Contents
contained in each of such Agreements. The Company will furnish to the Commission
supplementally upon request a copy of any such schedule.
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<PAGE>
APS HOLDING CORPORATION
(OPERATING AS A DEBTOR-IN-POSSESSION)
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The unaudited pro forma consolidated balance sheet as of July 25, 1998 (the "Pro
Forma Balance Sheet") and the unaudited pro forma consolidated statements of
operations for the year ended January 31, 1998 and the six months ended July 25,
1998 (the "Pro Forma Statements of Operations") have been prepared to illustrate
the estimated effect of the sale of nine distribution centers and 148
company-owned stores by the Company to GPI and BWP and related transactions, as
if such transactions had occurred on July 25, 1998 for purposes of the Pro Forma
Balance Sheet and as of the beginning of the year ended January 31, 1998 for
purposes of the Pro Forma Statement of Operations. The adjustments include the
use of approximately $90 million in proceeds to paydown borrowings outstanding
under the Debtor in Possession Financing Facility ("DIP Financing") and the
related reduction in interest expense. An additional $17 million in total
proceeds is anticipated to be received from GPI and BWP for additional assets to
be purchased as agreed upon on the Closing Date. The $17 million in proceeds is
also shown as a paydown on the DIP Financing. The Pro Forma Balance Sheet has
been adjusted to eliminate assets sold. Accordingly, the Pro Forma Statements of
Operations also show the elimination of all revenues and expenses related to the
sold locations. The loss presented on the Statement of Operations for the year
ended January 31, 1998 may change as a result of potential post-closing
adjustments to be made at a later date. The unaudited Pro Forma Financial
Statements do not purport to be indicative of the results of operations or
financial position of the Company that would have actually been obtained had
such transactions been completed as of the assumed dates and for the periods
presented.
F-1
<PAGE>
APS HOLDING CORPORATION
(OPERATING AS DEBTOR-IN-POSSESSION)
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
------
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
JULY 25, 1998 ADJUSTMENTS JULY 25, 1998
------------- ------------- -------------
(Note 1)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .............................. $ 11,832 $ -- $ 11,832
Accounts and notes receivable, less allowance of $18,383 98,792 (27,777) 71,015
Inventories ............................................ 243,715 (76,005) 167,710
Prepaid expenses and other current assets .............. 36,334 -- 36,334
------------- ------------- -------------
Total current assets ............................... 390,673 (103,782) 286,891
Property and equipment, less accumulated
depreciation of $36,150 ................................ 41,723 (10,864) 30,859
Notes receivable, less current portion ................... 19,966 (8,133) 11,833
Intangible assets, net ................................... 31,611 (11,748) 19,863
Deferred costs and other assets .......................... 11,402 -- 11,402
------------- ------------- -------------
$ 495,375 $ (134,527) $ 360,848
============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Book overdrafts ........................................ $ 10,682 $ -- $ 10,682
Current maturities of long-term debt ................... 263,034 (107,003) 156,031
Accounts payable ....................................... 3,408 -- 3,408
Accrued liabilities .................................... 47,740 -- 47,740
------------- ------------- -------------
Total current liabilities .......................... 324,864 (107,003) 217,861
------------- ------------- -------------
Long-term debt, less current maturities .................. 1,043 -- 1,043
Deferred income and other liabilities .................... 2,843 -- 2,843
------------- ------------- -------------
Total long-term liabilities ........................ 3,886 -- 3,886
------------- ------------- -------------
Liabilities subject to settlement under the
reorganization case .................................... 195,179 -- 195,179
------------- ------------- -------------
Commitments and contingencies ............................ -- -- --
Redeemable preferred stock ............................... -- -- --
Stockholders' equity (deficit):
Class A common stock ................................... 138 -- 138
Class B common stock ................................... -- -- --
Additional paid-in capital ............................. 155,601 -- 155,601
Accumulated deficit .................................... (184,027) (27,524) (211,551)
Treasury stock, at cost ................................ (120) -- (120)
Unrealized loss on available-for-sale securities ....... (146) -- (146)
------------- ------------- -------------
Total stockholders' equity (deficit) ............... (28,554) (27,524) (56,078)
------------- ------------- -------------
$ 495,375 $ (134,527) $ 360,848
============= ============= =============
</TABLE>
The accompanying notes are an integral part of the unaudited
pro forma consolidated financial statements.
F-2
<PAGE>
APS HOLDING CORPORATION
(OPERATING AS DEBTOR-IN-POSSESSION)
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PRO FORMA PRO FORMA
JULY 25, 1998 ADJUSTMENTS JULY 25, 1998
------------- ------------- -------------
(Note 1)
<S> <C> <C> <C>
Net sales ................................... $ 337,332 $ (132,902) $ 204,430
Cost of goods sold .......................... 240,689 (98,304) 142,385
------------- ------------- -------------
Gross profit ................................ 96,643 (34,598) 62,045
Selling, general and administrative expenses 118,470 (35,410) 83,060
Reorganization expenses ..................... 6,358 -- 6,358
Asset impairment and restructuring charge ... 9,435 -- 9,435
------------- ------------- -------------
Operating loss .............................. (37,620) 812 (36,808)
Interest income ............................. 1,838 (1,171) 667
Other income ................................ 100 -- 100
------------- ------------- -------------
Loss before interest expense and income taxes (35,682) (359) (36,041)
Interest expense ............................ 11,270 (4,569) 6,701
------------- ------------- -------------
Loss before income taxes .................... (46,952) 4,210 (42,742)
Income tax provision ........................ 70 -- 70
------------- ------------- -------------
Net loss .................................... $ (47,022) $ 4,210 $ (42,812)
============= ============= =============
Basic and diluted loss per share ............ $ (3.41) $ (3.10)
============= =============
Basic weighted average shares outstanding ... 13,790 13,790
Dilutive impact of stock options ............ -- --
------------- -------------
Dilutive weighted average shares outstanding 13,790 13,790
============= =============
</TABLE>
The accompanying notes are an integral part of the unaudited
pro forma consolidated financial statements
F-3
<PAGE>
APS HOLDING CORPORATION
(OPERATING AS DEBTOR-IN-POSSESSION)
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED PRO FORMA PRO FORMA
JANUARY 31, 1998 ADJUSTMENTS JANUARY 31, 1998
--------------- ------------- ---------------
(Note 1)
<S> <C> <C> <C>
Net sales ........................................... $ 812,942 $ (293,760) $ 519,182
Cost of goods sold .................................. 553,596 (212,930) 340,666
--------------- ------------- ---------------
Gross profit .................................. 259,346 (80,830) 178,516
Selling, general and administrative expenses ........ 276,943 (83,928) 193,015
Asset impairment and restructuring charge ........... 28,969 -- 28,969
--------------- ------------- ---------------
Operating loss ................................ (46,566) 3,098 (43,468)
Interest income ..................................... 5,300 (1,452) 3,848
Other income ........................................ 200 -- 200
--------------- ------------- ---------------
Loss before writedown on available-for- sale
securities, loss on disposal of assets,
interest expense and income taxes ............. (41,066) 1,646 (39,420)
Writedown on available-for-sale securities .......... 1,916 -- 1,916
Loss on disposal of assets .......................... -- 36,539 36,539
Interest expense .................................... 32,590 (9,149) 23,441
--------------- ------------- ---------------
Loss before income taxes and extraordinary item (75,572) (25,744) (101,316)
Provision for income taxes .......................... 19,721 -- 19,721
--------------- ------------- ---------------
Net loss ............................................ $ (95,293) $ (25,744) $ (121,037)
=============== ============= ===============
Basic and diluted loss per share .................... $ (6.91) $ (8.78)
=============== ===============
Basic weighted average shares outstanding ........... 13,782 13,782
Dilutive impact of stock options .................... -- --
--------------- ---------------
Dilutive weighted average shares outstanding ........ 13,782 13,782
=============== ===============
</TABLE>
The accompanying notes are an integral part of the
unaudited pro forma consolidated financial statements.
F-4
<PAGE>
APS HOLDING CORPORATION
(OPERATING AS A DEBTOR-IN-POSSESSION)
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. PRO FORMA ADJUSTMENTS:
The Pro Forma Balance Sheet is adjusted to reflect the sale of
inventory, accounts receivable, notes receivable, equipment and other
fixed assets to GPI and BWP. The use of approximately $107 million in
proceeds received is shown as a pay down on current maturities of
long-term debt. In addition, goodwill has been reduced by approximately
$11.7 million for amounts associated with these sold locations.
The Pro Forma Statement of Operations for the six months ended July
25, 1998 shows the elimination of revenues and expenses related to the
sold locations. The Pro Forma Statement of Operations for the year ended
January 31, 1998 also shows the elimination of revenues and expenses
related to the sold locations as well as the estimated loss on the
disposal of assets. The preliminary loss calculated on the disposal of
assets includes the $11.7 million writedown of goodwill, as discussed
above. In addition, the Pro Forma Statement of Operations for both periods
presented shows the savings in interest expense associated with the
repayment of debt.
F-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
APS HOLDING CORPORATION
Date: October 30, 1998 By: /s/ BETTINA M. WHYTE
Bettina M. Whyte, President
and Chief Executive Officer
Date: October 30,1998 By: /s/ PETER D. FITZSIMMONS
Peter D. Fitzsimmons, Chief
Financial Officer and Acting
Chief Operating Officer
EXHIBIT 2.3
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BETWEEN
A.P.S., INC.
AS SELLER
AND
GENERAL PARTS, INC.
AS PURCHASER
DATED AS OF SEPTEMBER 9, 1998
<PAGE>
TABLE OF CONTENTS
PAGE NO.
ARTICLE I. DEFINITIONS..................................................2
Section 1.1. Definitions...........................................2
Section 1.2. Accounting Terms and Determinations..................11
ARTICLE II. PURCHASE AND SALE OF PURCHASED ASSETS AND ASSUMPTION OF
ASSUMED LIABILITIES.........................................11
Section 2.1. Purchase and Sale of Purchased Assets................11
Section 2.2. Assumption of Obligations and Liabilities............11
Section 2.3. Provisions with respect to Assigned Lottes
Leases and Lottes Subleases..........................12
Section 2.4. Purchase Price; Payment of Purchase Price............12
Section 2.5. Physical Inventory; Inventory True-Up................14
Section 2.6. Accounts Receivable True-Up..........................15
Section 2.7. Condition of Purchased Assets; Return of
Inventory; Inventory in Transit; Payment for
Dirty Core and Warranty Inventory....................15
Section 2.8. Allocation of Purchase Price.........................16
Section 2.9. Sale at Closing Date.................................16
Section 2.10. Apportionments.......................................17
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER....................19
Section 3.1. Authority of Seller..................................19
Section 3.2. No Conflict or Violation.............................19
Section 3.3. Consents and Approvals...............................20
Section 3.4. Compliance with Law..................................20
Section 3.5. Permits..............................................20
Section 3.6. Ownership of Purchased Assets........................20
Section 3.7. Assigned Contracts...................................20
Section 3.8. Labor Relations......................................21
Section 3.9. Litigation...........................................21
Section 3.10. Brokers..............................................21
Section 3.11. Disclaimer of Additional Representations and
Warranties; Schedules................................21
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER.................22
Section 4.1. Authority of Purchaser...............................22
Section 4.2. No Conflict or Violation.............................22
Section 4.3. Consents and Approvals...............................22
Section 4.4. Availability of Funds................................23
Section 4.5. Litigation...........................................23
Section 4.6. Brokers..............................................23
Section 4.7. Adequate Assurances Regarding Executory Contracts....23
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ARTICLE V. CERTAIN COVENANTS OF SELLER.................................23
Section 5.1. Conduct of Business Before the Closing Date..........23
Section 5.2. Consents and Approvals...............................24
Section 5.3. Information and Access...............................24
Section 5.4. Further Assurances...................................24
Section 5.5. Assignment of Contracts..............................24
Section 5.6. Services to be provided by Seller....................24
Section 5.7. Cure of Defaults.....................................25
Section 5.8. Bankruptcy Actions...................................25
Section 5.9. Closed Locations' Transfer of Inventory From
Closed Locations.....................................25
Section 5.10. Vacation and Sick Leave..............................25
ARTICLE VI. CERTAIN COVENANTS OF PURCHASER..............................25
Section 6.1. Consents and Approvals...............................26
Section 6.2. Adequate Assurances Regarding Executory
Contracts............................................26
Section 6.3. Performance under Assigned Contracts.................26
Section 6.4. Further Assurances...................................26
Section 6.5. Purchaser Financing..................................26
Section 6.6. Collection of Accounts Receivable....................26
Section 6.7. Guarantee of Other Asset Purchase Agreement..........27
ARTICLE VII. CONDITIONS TO SELLER'S OBLIGATIONS..........................27
Section 7.1. Representations and Warranties.......................27
Section 7.2. Compliance with Agreement............................27
Section 7.3. Consents.............................................27
Section 7.4. Purchaser's Closing Deliveries and Obligations.......28
Section 7.5. Closing under Other Asset Purchase Agreement.........28
Section 7.6. Closings under Real Property Purchase Agreements.....28
Section 7.7. Entry of the Order...................................28
ARTICLE VIII. CONDITIONS TO PURCHASER'S OBLIGATIONS.......................28
Section 8.1. Representations and Warranties.......................28
Section 8.2. Compliance with Agreement............................28
Section 8.3. Consents.............................................28
Section 8.4. Seller's Closing Deliveries and Obligations..........29
Section 8.5. Closings under Real Property Purchase Agreements.....29
Section 8.6. Entry of the Order...................................29
Section 8.7. Assignment of Contracts..............................29
ARTICLE IX. THE CLOSING; OTHER BIDS; TERMINATION........................29
Section 9.1. The Closing..........................................29
Section 9.2. Other Bids; Fees.....................................31
Section 9.3. Termination..........................................33
Section 9.4. Effects of Termination...............................34
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<PAGE>
ARTICLE X. TAXES.......................................................35
Section 10.1. Taxes Related to Purchase of Assets..................35
Section 10.2. Proration of Real and Personal Property Taxes........35
Section 10.3. Cooperation..........................................35
ARTICLE XI. EMPLOYEES AND EMPLOYEE BENEFIT PLANS........................36
Section 11.1. Employment...........................................36
Section 11.2. Employee Welfare Benefit Plans.......................36
Section 11.3. COBRA................................................37
Section 11.4. 401(k) Savings Plan..................................37
ARTICLE XII. MISCELLANEOUS PROVISIONS....................................38
Section 12.1. Representations and Warranties.......................38
Section 12.2. Notices..............................................38
Section 12.3. Amendments...........................................39
Section 12.4. Assignment...........................................39
Section 12.5. Announcements........................................39
Section 12.6. Expenses.............................................39
Section 12.7. Entire Agreement.....................................39
Section 12.8. Descriptive Headings.................................40
Section 12.9. Counterparts.........................................40
Section 12.10. Governing Law; Jurisdiction..........................40
Section 12.11. Construction.........................................40
Section 12.12. Severability.........................................40
Section 12.13. Confidentiality......................................41
iii
<PAGE>
SCHEDULE
LETTER/NUMBER SCHEDULE NAME
Schedule A Certain Affiliates
Schedule B Assigned Leases
Schedule C Assigned GPI Affiliate Leases/Lottes Subleases
Schedule D Fixed Assets
Schedule E Lease Terms
Schedule F Notes Receivable
Schedule G Other Contracts
Schedule H Purchased Locations
Schedule I Purchased Real Properties
Schedule J Sublease Terms
Schedule K Big-A Stores
2.5(a) Inventory Procedures
3.3 Consents and Approvals
3.4 Compliance with Laws
3.5 Permits
3.7 Assigned Contracts
3.8 Collective Bargaining Agreements
3.9 Litigation
5.9 Closed Locations
EXHIBIT EXHIBIT NAME
A Assignment and Assumption Agreement
B Bill of Sale and Assumption Agreement
C Lease Assignment and Assumption Agreement
D License Agreement
E Order
F Services Agreement
G Bidding Protections Order
iv
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made and entered
into as of September 9, 1998 by and among A.P.S., INC., a Delaware corporation
("APS") and a debtor and debtor-in-possession in a case pending under chapter 11
of the Bankruptcy Code, certain Affiliates of APS set forth on SCHEDULE A hereto
(together with APS, "SELLER"), which Affiliates are debtors and
debtors-in-possession in cases pending under chapter 11 of the Bankruptcy Code,
and GENERAL PARTS, INC., a North Carolina corporation ("PURCHASER").
RECITALS
WHEREAS, Seller is engaged in the business of selling and
distributing automotive replacement parts, accessories and supplies and conducts
its business through a network of company-owned stores ("STORES"), installers
service warehouses ("ISWS") and distribution centers ("DCS");
WHEREAS, on February 2, 1998, Seller filed voluntary petitions with
the Bankruptcy Court initiating cases under chapter 11 of the Bankruptcy Code
and has continued in the possession of its assets and in the management of its
business pursuant to sections 1107 and 1008 of the Bankruptcy Code;
WHEREAS, Purchaser desires to purchase from Seller, and Seller
desires to sell to Purchaser, certain of the assets associated with the Seller's
operations at certain Stores, ISWs and DCs, subject to certain liabilities, all
on the terms and subject to the conditions set forth herein;
WHEREAS, as a condition to its contemplated purchase of assets,
Purchaser will require that Seller close certain Stores and ISWs and that
certain assets located at such Stores and ISWs be transferred to certain DCs
concurrently with or as soon as practicable after the closing of the
transactions provided for in this Agreement; and
WHEREAS, in connection with its contemplated purchase of assets,
Purchaser desires (i) to conduct business at certain Stores, DCs and ISWs and
retain certain employees of Seller, (ii) to obtain, for a limited time after the
Closing Date, access to Seller's Parts Information Management System and certain
other services from Seller, and (iii) to have Seller assign or sublease certain
real property lease agreements and sell and lease certain real property to
Purchaser and certain Affiliates of Purchaser, all on the terms and subject to
the conditions set forth herein and in the Ancillary Agreements.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements herein contained, and other good and
valuable consideration, the receipt
<PAGE>
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINITIONS. Unless otherwise defined herein, the terms
defined in the introductory paragraph and the Recitals to this Agreement shall
have the respective meanings specified therein, and the following terms shall
have the meanings specified below:
"ACCOUNTS RECEIVABLE" means the accounts receivable (including all
rights to bill customers for products shipped or services rendered prior
to the Closing Date but excluding the Notes Receivable) which are
allocable to Seller's business operations conducted at the Purchased
Locations (but not the Closed Locations), excluding those accounts
receivable (i) which are more than 90 days past due as of the Closing Date
(as shown on the accounts receivable aging statement prepared as of the
end of the fiscal month prior to the Closing Date) or (ii) the obligor on
which is the subject of a pending bankruptcy proceeding. In determining
the amount of any Account Receivable hereunder, the amount of any unearned
advertising fee or other similar charge allocable thereto shall be
excluded.
"AFCO NOTES" means the notes owned by Autoparts Finance Company,
Inc., a subsidiary of Seller, and identified as AFCO Notes on the NOTES
RECEIVABLE SCHEDULE attached hereto.
"AFFILIATE" means "affiliate" as defined in Rule 405 promulgated
under the Securities Act of 1933, as amended.
"AGREEMENT" has the meaning set forth in the introductory paragraph
and shall include all Schedules and Exhibits hereto.
"ANCILLARY AGREEMENTS" means, collectively, the Lease Assignment and
Assumption Agreements, the Assignment and Assumption Agreement, the Bill
of Sale and Assumption Agreement, the Services Agreement, the License
Agreement and the Real Property Lease Agreements.
"APPORTIONMENT DATE" has the meaning set forth in SECTION 2.10.
"AR DISCOUNTS" has the meaning set forth in SECTION 2.4(A).
"ASSIGNED CONTRACTS" means the Assigned Leases, the Assigned GPI
Affiliate Leases and the Other Contracts
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relating to the Purchased Locations to be assigned by Seller to Purchaser
and set forth on SCHEDULE 3.7.
"ASSIGNED LEASES" means those leases to be assigned to Purchaser at
Closing, a schedule of which is attached hereto as SCHEDULE B.
"ASSIGNED GPI AFFILIATE LEASES" means the leases identified as
"Assigned GPI Affiliate Leases " on SCHEDULE C hereto, to be assigned by
Seller to Lottes and Strafco, respectively.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and
Assumption Agreement to be executed at Closing for the Other Contracts, in
substantially the form attached hereto as EXHIBIT A.
"ASSUMED LIABILITIES" has the meaning set forth in SECTION 2.2.
"BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, and codified as 11 U.S.C. Section
101, ET SEQ.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for the
District of Delaware, or any other court, having jurisdiction over the
Cases from time to time.
"BID" has the meaning set forth in SECTION 9.2(B).
"BIG A STORES" means the Stores listed on Schedule K attached
hereto.
"BILL OF SALE AND ASSUMPTION AGREEMENT" means the Bill of Sale and
Assumption Agreement to be executed at Closing by Purchaser and Seller in
substantially the form attached hereto as EXHIBIT B.
"BLACKSTONE" has the meaning set forth in SECTION 9.2(B).
"BREAKUP FEE" has the meaning set forth in SECTION 9.2(D).
"BUSINESS DAY" means a day, other than a Saturday or a Sunday, on
which commercial banks are not required or authorized to close in The City
of New York.
"BUSINESS EMPLOYEES" means employees of Seller whose duties relate
primarily to Seller's business operations at the Purchased Locations.
"BWP" means BWP Distributors, Inc., a New York corporation.
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"CASES" means the chapter 11 cases of Seller pending in the
Bankruptcy Court and being jointly administered for procedural purposes
as IN RE APS HOLDING CORPORATION, ET. AL., Case No. 98-197 (PJW).
"CLOSED LOCATIONS" means the Stores and ISWs listed on SCHEDULE 5.9
hereto which are to be closed prior to, concurrently with or after the
Closing Date in accordance with SECTION 5.9.
"CLOSING" has the meaning set forth in SECTION 9.1.
"CLOSING DATE" has the meaning set forth in SECTION 9.1.
"CLOSING DATE PAYMENT" has the meaning set forth in SECTION
2.4(B).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTED FINANCING" means funds available pursuant to a written
commitment letter or other documentation from a commercial bank or other
lending institution, a copy of which letter or other documentation has
been delivered to Seller prior to the date hereof.
"CURRENT INVENTORY AMOUNT" means the aggregate dollar amount of New
Inventory, based upon 100% of the Warehouse Distributor Cost of such New
Inventory, owned by Seller and located at each of the Purchased Locations
and each of the Closed Locations as shown on Seller's August 25, 1998
general ledger.
"DC" has the meaning set forth in the Recitals hereto.
"DIP LENDERS" means the financial institutions from time to time
party to the Revolving Credit, Term Loan and Guarantee Agreement.
"DIRTY CORE AND WARRANTY INVENTORY" means items of used cores and
warranty inventory returned by customers in amounts customarily found in
the applicable Purchased Locations and Closed Locations.
"ESTIMATED ACCOUNTS RECEIVABLE" means the total Accounts Receivable
estimated by Seller to be outstanding on the Business Day prior to the
Closing Date.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXECUTORY CONTRACTS" means all Assigned Contracts entered into by
or assigned to Seller before February 2,
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1998 and which are executory or unexpired as of the Closing Date.
"EXPENSE REIMBURSEMENT" has the meaning set forth in SECTION
9.2(D).
"FIXED ASSETS" means (i) all of the machinery, equipment, furniture,
fixtures, computers and vehicles used in the operation of the business at
the Purchased Locations on the Closing Date and which are owned by
Seller, a list of which Fixed Assets, and certain exclusions therefrom,
with the purchase price allocated by item or groups of items as of the
date of this Agreement (the "FIXED ASSETS SCHEDULE"), is attached hereto
as SCHEDULE D, which Fixed Assets Schedule shall be updated to reflect
acquisitions and dispositions which are acceptable to Purchaser and
depreciation as of the Closing Date; (ii) leasehold improvements as
approved by Purchaser and located at certain of the Purchased Locations
as set forth on the Fixed Assets Schedule; and (iii) to the extent
assignable, any rights of Seller to the warranties, licenses and other
similar rights with respect thereto. The inclusion of items on the Fixed
Assets Schedule shall be subject to audit by Purchaser prior to the
Closing Date for in place and normal serviceable condition by location.
"FIXED ASSET BOOK VALUE" means the book value net of accumulated
depreciation of the Fixed Assets as of the Closing Date as determined in
accordance with the Fixed Assets Schedule.
"FORM AGREEMENT" has the meaning set forth in SECTION 9.2(B).
"GOVERNMENTAL AGENCY" means (a) any federal, state, county, local or
municipal governmental or administrative agency or political subdivision
thereof, (b) any governmental authority, board, bureau, commission,
department or instrumentality and (c) any court or administrative
tribunal.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"IN-TRANSIT INVENTORY" means automotive inventory subject to open
purchase orders (including back orders) of Seller as of the Closing Date.
"INVENTORY" means New Inventory, Rejected Inventory and Dirty
Core and Warranty Inventory.
"INVENTORY REPRESENTATIVES" has the meaning set forth in SECTION
2.5(A).
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"IRS" means the Internal Revenue Service of the United States
Department of the Treasury.
"ISW" has the meaning set forth in the Recitals hereto.
"KNOWLEDGE" as applied to Seller means the actual knowledge of the
President, the Chief Executive Officer or the Chief Financial Officer of
APS, Inc. or of any of the persons specified in the letter of Seller dated
the date hereof and delivered to Purchaser with respect to this definition
and as applied to Purchaser means the actual knowledge of its President,
Chief Executive Officer or Chief Financial Officer.
"LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and
Assumption Agreements to be executed at Closing for the Assigned Leases
and the Assigned GPI Affiliate Leases, in substantially the form attached
hereto as EXHIBIT C.
"LEASED PROPERTIES" means the premises subject to the Leases.
"LEASES" means the leases for the premises to remain owned by Seller
after Closing and to be leased by Seller to Purchaser, the terms of which
leases are attached hereto as SCHEDULE E.
"LICENSE AGREEMENT" means the License Agreement to be executed by
Purchaser and Seller at Closing, pursuant to which License Agreement
Seller shall grant to Purchaser certain rights to use trademarks and trade
names of Seller for the periods and on the terms set forth therein, such
Agreement to be substantially in the form attached hereto as EXHIBIT D.
"LIEN" means any mortgage, pledge, security interest, charge or
other encumbrance, other than (i) with respect to Purchased Real
Properties, liens provided for in reports obtained as part of the due
diligence procedures set forth in SECTION 2.11; (ii) liens on property
underlying any of the Leases, Assigned Leases or Subleases; (iii) any
imperfection of title with respect to any asset which does not materially
interfere with the present occupancy, use or marketability of such asset
and the continuation of the present occupancy or use of such asset; (iv)
such covenants, conditions, restrictions, easements, encroachments or
encumbrances that are not created pursuant to mortgages or other financing
or security documents, and any other state of facts, which do not,
individually or in the aggregate, materially interfere with the present
occupancy, use or marketability of such asset; and (v) liens for Taxes not
yet delinquent or which are being contested in good faith through
appropriate proceedings.
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"LOTTES" means A.E. Lottes Co., a Missouri corporation.
"LOTTES SUBLEASES" means those sublease agreements pursuant to which
certain leases are to be sublet to Lottes by Seller, as set forth on
SCHEDULE C attached hereto.
"NEW INVENTORY" means items of automotive inventory in good, salable
condition, listed in the manufacturer's current price sheet, including
core charges associated with such inventory, if applicable, and subject to
manufacturers' obsolescence and returned goods policies of the kinds
normally extended to customers for a particular product line on an
industry-wide basis, owned by Seller and on hand at the Purchased
Locations or the Closed Locations at the Closing Date. New Inventory shall
not include Dirty Core and Warranty Inventory. New Inventory (excluding
In-transit Inventory) determined on the True-Up Date to be in excess of
105% of amounts as at June 25, 1998 heretofore disclosed by Seller to
Purchaser shall be subject to renegotiation or return to Seller. Consigned
goods owned by Seller shall be included in New Inventory only after
confirmation of the amount and verification of the consignment in writing
by the consignee.
"NON-COVERED ASSETS " has the meaning set forth in SECTION 9.2(C).
"NOTES RECEIVABLE" means receivables of Seller or its Affiliates
under the AFCO Notes and Warehouse Notes being purchased by Purchaser and
identified in the NOTES RECEIVABLE SCHEDULE attached hereto as SCHEDULE F.
"ORDER" means an order of the Bankruptcy Court, in substantially the
form attached hereto as EXHIBIT E, which order, as of the Closing Date,
shall not have been stayed, vacated or otherwise rendered ineffective,
authorizing, among other things, the sale of the Purchased Assets to
Purchaser, the assignment of the Assigned Contracts to, and the assumption
of the Assigned Contracts by, Purchaser, the transactions contemplated by
the Ancillary Agreements and all other transactions and agreements
contemplated hereby.
"OTHER ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement
dated as of the date hereof between Seller and BWP.
"OTHER CONTRACTS" means the contracts which are listed on the OTHER
CONTRACTS SCHEDULE attached hereto as SCHEDULE G.
"PERMIT" means any permit, approval, authorization, license,
variance or permission required by a Governmental Agency under any
applicable law.
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"PERSON" means any individual, partnership, corporation, trust,
association, limited liability company, Governmental Agency or other
entity.
"PHYSICAL INVENTORY PERIOD" means the time period or periods during
which the physical inventory is taken pursuant to SECTION 2.5(A).
"PIMS" means the Parts Information Management System, the
information management system used in operating the business carried on at
the Purchased Locations, access to which is to be granted to Purchaser
pursuant to the Services Agreement.
"PIMS INVENTORY VALUE" means the invoice cost to Seller per item of
Inventory as shown on PIMS (subject to verification by Purchaser) as of
the Business Day prior to the Closing Date.
"PURCHASE PRICE" has the meaning set forth in SECTION 2.4(A).
"PURCHASED ASSETS" means all of the Seller's right, title and
interest as of the Closing Date in and to the following:
(a) the Accounts Receivable;
(b) the Assigned Contracts;
(c) the Dirty Core and Warranty Inventory;
(d) the Fixed Assets;
(e) the In-transit Inventory;
(f) the New Inventory;
(g) the Notes Receivable;
(h) the Purchased Real Properties;
(i) records relating primarily to the Purchased Assets, and
copies of personnel files for the Purchaser's Employees;
(j) to the extent legally assignable, Permits required to
conduct business at the Purchased Locations as conducted prior to
the Closing Date; and
(k) independent customer lists and other information and data
relating to independent customers of the Purchased Locations.
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"PURCHASED LOCATIONS" means DCs, ISWs and Stores listed on the
SCHEDULE H attached hereto.
"PURCHASED REAL PROPERTIES" means the real properties to be
purchased by Purchaser on the Closing Date (subject to the provisions of
SECTION 2.11), as set forth on SCHEDULE I attached hereto.
"PURCHASER'S EMPLOYEES" has the meaning set forth in SECTION 11.1.
"QUALIFYING BID" has the meaning set forth in SECTION 9.2(C).
"REAL PROPERTY LEASE AGREEMENTS" means each of the Leases,
Subleases and Lottes Subleases.
"REAL PROPERTY PURCHASE PRICE " means the purchase price for each of
the Purchased Real Properties, as set forth on SCHEDULE I attached hereto.
"REJECTED INVENTORY" means all items of automotive inventory, other
than Dirty Core and Warranty Inventory, not meeting the definition of New
Inventory and owned by Seller and on hand at the Purchased Locations or
the Closed Locations at the Closing Date, PROVIDED, THAT, for purposes of
this definition of Rejected Inventory, sales of Inventory occurring
between the Closing Date and the date that the Inventory is rejected shall
be applied first to Inventory which was on hand at the Closing Date.
"REVOLVING CREDIT, TERM LOAN AND GUARANTEE AGREEMENT" means the
Revolving Credit, Term Loan and Guarantee Agreement, dated as of February
2, 1998, as the same has been and may be amended, among APS Holding
Corporation, Seller, Seller's subsidiaries, the DIP Lenders and The Chase
Manhattan Bank, as agent for the DIP Lenders.
"SALT LAKE CITY LEASE" means that lease for the Salt Lake City, Utah
DC to be assigned to Purchaser at Closing, subject to the terms and
conditions of SECTION 2.11 and SCHEDULE B hereof.
"SCHEDULES" means the various Schedules referred to in this
Agreement delivered separately to Purchaser on or before the date of this
Agreement, except as otherwise specified in this Agreement.
"SELLER SAVINGS PLAN" has the meaning set forth in SECTION 11.4.
"SERVICES AGREEMENT" means the Services Agreement to be entered into
by Purchaser and Seller at Closing, pursuant to which Services Agreement
Seller shall render certain
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services to Purchaser for a limited time following the Closing Date, as
contemplated by SECTION 5.7 and substantially in the form attached hereto
as EXHIBIT F.
"SERVICING DCS" means DCs which are listed on SCHEDULE 5.9 hereto.
"STORES" has the meaning set forth in the Recitals hereto.
"STRAFCO" means Strafco, Inc., a Texas corporation.
"SUBLEASED PROPERTIES" means the premises subject to the
Subleases and the Lottes Subleases.
"SUBLEASES" means those sublease agreements pursuant to which
certain leases are to be sublet by Seller to Purchaser, the terms of which
subleases are attached hereto as SCHEDULE J.
"SUPERIOR BID" has the meaning set forth in SECTION 9.2(B).
"TAX RETURN" means any report, return, information return, filing,
claim for refund or other information, including any schedules or
attachments thereto, and any amendments to any of the foregoing required
to be supplied to a taxing authority in connection with Taxes.
"TAXES" means all federal, state, local and foreign taxes, including
income, gross receipts, excise, employment, sales, use, transfer, license,
payroll, franchise, severance, stamp, withholding, Social Security,
unemployment, disability, real property, personal property, registration,
alternative or add-on minimum, estimated or other tax, including any
interest, penalties or additions thereto, whether disputed or not.
"TRANSACTION TAXES" has the meaning set forth in SECTION 10.1.
"TRUE-UP DATE" , means the date which is ninety (90) Business Days
after the Closing Date.
"WAREHOUSE DISTRIBUTOR COST" means PIMS Inventory Value (with
respect to Inventory not located at Big-A Stores) or other applicable
point-of-sale inventory value (with respect to Inventory located at Big-A
Stores), less 4.9%, PROVIDED, HOWEVER, that with respect to Inventory
located at Big-A Stores, Warehouse Distributor Cost shall be further
reduced by 13.2%.
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"WAREHOUSE NOTES" means the notes identified as Warehouse Notes on
the NOTES RECEIVABLE SCHEDULE attached hereto.
"WARN" has the meaning set forth in SECTION 11.1.
"WELFARE TYPE PLANS" has the meaning set forth in SECTION 11.2.
SECTION 1.2. ACCOUNTING TERMS AND DETERMINATIONS. All references in
this Agreement to "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" shall
mean generally accepted accounting principles in effect in the United States of
America at the time of application thereof. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made and all financial
statements and certificates and reports as to financial matters required to be
furnished hereunder shall be prepared, in accordance with generally accepted
accounting principles, consistent with Seller's historical practices, applied on
a consistent basis.
ARTICLE II.
PURCHASE AND SALE OF
PURCHASED ASSETS AND
ASSUMPTION OF ASSUMED LIABILITIES
SECTION 2.1. PURCHASE AND SALE OF PURCHASED ASSETS. On the terms and
subject to the conditions set forth in this Agreement, at the Closing Purchaser
shall purchase from Seller, and Seller shall sell, transfer, assign, convey and
deliver to Purchaser at the Purchased Locations, all of Seller's right, title
and interest in and to the Purchased Assets, PROVIDED, HOWEVER, that Seller
shall be entitled to retain copies of all books and records, in whatever form,
included in the Purchased Assets.
Purchaser acknowledges that it shall not acquire any right, title or
interest in any property, asset or right of Seller that is not a Purchased Asset
or other asset acquired by Purchaser hereunder, including rights of Seller to
any vendor discounts, credits, rebates or other amounts, and claims of Seller
against third parties in respect thereof.
SECTION 2.2. ASSUMPTION OF OBLIGATIONS AND LIABILITIES. On the terms
and subject to the conditions set forth in this Agreement, from and after the
Closing, Purchaser will assume and pay, perform, discharge and be responsible
for all of the following liabilities of Seller (collectively, the "ASSUMED
LIABILITIES"):
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(a) all obligations and liabilities of Seller under the Assigned
Contracts which accrue from and after the Closing Date; and
(b) all obligations and liabilities of Seller relating to the Leased
Properties, the Subleased Properties and the Purchased Real Properties which
accrue from and after the Closing Date.
Purchaser shall not assume or pay, perform, discharge or be responsible for any
of the obligations or liabilities of Seller other than the Assumed Liabilities
or liabilities assumed, incurred or created under the Ancillary Agreements.
Without limiting the generality of the foregoing provisions of this
SECTION 2.2, Purchaser shall not assume or pay, perform, discharge or be
responsible for any of the obligations or liabilities of Seller pursuant to any
contract or agreement that is not an Assigned Contract, including customer
product purchase agreements.
In addition, Purchaser does not assume and Seller remains
responsible for all obligations and liabilities related to all rebate and
incentive programs established by or for national accounts, manufacturers or
customers and relating to sales by Seller prior to the Closing Date.
SECTION 2.3. PROVISIONS WITH RESPECT TO ASSIGNED GPI AFFILIATE
LEASES AND LOTTES SUBLEASES. (a) Notwithstanding the provisions of SECTIONS 2.1
AND 2.2, the right, title and interest of Seller in and to the Assigned GPI
Affiliate Leases shall be assigned by Seller at Closing to Lottes and Strafco as
set forth on SCHEDULE C, and the obligations and liabilities of Seller under the
Assigned GPI Affiliate Leases, and relating to the properties subject to such
leases, in each case which accrue from and after the Closing Date, shall be
assumed hereunder by Lottes and Strafco, without effecting any change in the
provisions of SECTION 2.4; PROVIDED, HOWEVER, that if Lottes or Strafco breach
any of their respective representations or warranties or fail to comply with any
of the respective agreements set forth above their respective signatures hereto,
Purchaser shall acquire the right, title and interest of Seller in and to the
Assigned GPI Affiliate Leases which were to be assigned to such breaching party,
and shall assume the obligations and liabilities of Seller thereunder, in each
case pursuant to SECTIONS 2.1 AND 2.2, as if this SECTION 2.3 were not part of
this Agreement.
(b) On the Closing Date, Seller shall execute the Lottes Subleases.
SECTION 2.4. PURCHASE PRICE; PAYMENT OF PURCHASE PRICE.
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(a) On the terms and subject to the conditions set forth in this
Agreement, the purchase price for the Purchased Assets shall be an aggregate
amount equal to the sum of the following, less $450,000:
(i) eighty-five percent (85%) of the Warehouse Distributor
Cost of the New Inventory;
(ii) an amount equal to the value realized by Purchaser for
Dirty Core and Warranty Inventory determined in accordance with
actual receipts or credits received less, for items delayed beyond
Purchaser's normal practice in return to the manufacturer, 20% for
handling;
(iii) one hundred percent (100%) of the Fixed Asset Book Value
of the Fixed Assets;
(iv) one hundred percent (100%) of principal amounts
outstanding under the Notes Receivable, plus interest accrued to
date of purchase, subject to SECTION 2.4(D);
(v) one hundred percent (100%) of the Warehouse Distributor
Cost of the In-transit Inventory, subject to SECTION 2.7(C);
(vi) one hundred percent (100%) of the face amount of the
Accounts Receivable, less "prompt payment" discounts actually earned
and taken ("AR DISCOUNTS"); and
(vii) the aggregate price for the Purchased Real Property, in
accordance with Section 2.11 and the price for the assignment of the
Salt Lake City Lease as set forth in Schedule B.
The aggregate of the amounts determined pursuant to items (i) through (vii)
above, less $450,000, is referred to herein as the "PURCHASE PRICE."
(b) On the Closing Date, Purchaser shall pay to Seller an amount of
the Purchase Price in cash by wire transfer of immediately available funds
(pursuant to written instructions to be provided by Seller to Purchaser), equal
to the sum of the following (less $450,000) (the "CLOSING DATE PAYMENT"):
(i) eighty-five percent (85%) of the Current Inventory
Amount;
(ii) the portions of the Purchase Price provided for in
SECTIONS 2.4(A)(III) and 2.4(A)(IV);
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(iii) an amount equal to sixty-five percent (65%) of the
Estimated Accounts Receivable (determined without regard to AR
Discounts); and
(iv) the aggregate price for the Purchased Real Properties, as
provided in SECTION 2.11, and the price for the Salt Lake City
Lease, as provided for in and SCHEDULE B.
The Closing Date Payment shall be adjusted pursuant to SECTIONS 2.5 and 2.6.
Purchaser shall pay the remainder of the Purchase Price pursuant to SECTIONS
2.4(C), 2.4(D), 2.5(B), 2.6(B), 2.7(C), 2.7(D) and 2.11.
(c) For a period of 180 days following the Closing Date, and after
Purchaser has collected Accounts Receivable equal to the amount paid by
Purchaser under SECTION 2.4(B)(III), as adjusted pursuant to SECTION 2.6,
Purchaser shall remit to Seller on the first and fifteenth days of each month
all Accounts Receivable collected by it, PROVIDED THAT, if Purchaser has
complied with the covenants contained in SECTION 6.6, Purchaser shall not be
obligated to remit any Accounts Receivable to Seller after such 180-day period,
but shall reassign to Seller, at the end of such period, any remaining Accounts
Receivable and all security therefor and rights with respect thereto.
(d) Notwithstanding the foregoing provisions, Purchaser will
purchase Notes Receivable upon conversion of such obligor to Carquest jobber
status. Upon such purchase, Seller will assign to Purchaser all security
agreements and related instruments with respect to each such Note, and Purchaser
will pay to Seller, in cash, the amount then outstanding under such Note,
together with accrued interest to date of purchase.
SECTION 2.5. PHYSICAL INVENTORY; INVENTORY TRUE-UP. Unless otherwise
noted, all references in this SECTION 2.5 to "aggregate dollar amount" mean the
aggregate dollar amount based upon 100% of the Warehouse Distributor Cost.
(a) Employees or representatives of Seller and Purchaser ("INVENTORY
REPRESENTATIVES") will jointly conduct a physical inventory count of, or other
testing procedures for, the Inventory at Purchased Locations and Closed
Locations, or mutually agree that Seller's Inventory at a Purchased Location or
Closed Location is accurate, in accordance with physical inventory procedures
generally used in the industry and pursuant to the timetables and for the
periods set forth on SCHEDULE 2.5(A) attached hereto (the "PHYSICAL INVENTORY
PERIOD"). During the Physical Inventory Period, Seller, with the assistance of
Purchaser, shall prepare a list of Inventory at Purchased Locations and Closed
Locations (the "FINAL INVENTORY SCHEDULE"), which Final Inventory Schedule shall
be completed not later than the True-Up Date. The Final Inventory Schedule shall
be prepared in accordance with the criteria set forth on SCHEDULE 2.5(A).
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Purchaser and Seller shall perform an audit of Seller's computer system price
file as part of the physical inventory procedures and prior to completion of the
Final Inventory Schedule. Purchaser shall be responsible for the costs
associated with its own employees and representatives. Seller shall be
responsible for all other costs associated with conducting the physical
inventory and preparing the Final Inventory Schedule pursuant to this SECTION
2.5(A).
(b) In the event that the aggregate dollar amount of New Inventory
shown on the Final Inventory Schedule is less than the Current Inventory Amount,
Seller shall refund to Purchaser, on the first Business Day following the
True-Up Date, an amount equal to eighty-five percent (85%) of the difference
between (x) the Current Inventory Amount and (y) the aggregate dollar amount of
New Inventory shown on the Final Inventory Schedule. In the event that the
aggregate amount of New Inventory shown on the Final Inventory Schedule is
greater than the Current Inventory Amount, Purchaser shall pay to Seller, on the
fist Business Day following the True-Up Date, an amount equal to eighty-five
percent (85%) of the Warehouse Distributor Cost of the additional New Inventory.
SECTION 2.6. ACCOUNTS RECEIVABLE TRUE-UP
(a) On the True-Up Date, Seller shall prepare and deliver to
Purchaser a final statement of Accounts Receivable outstanding as of the close
of business on the Closing Date (the "CLOSING DATE ACCOUNTS RECEIVABLE
STATEMENT") showing the outstanding Accounts Receivable as of the Closing Date,
determined after deduction of applicable AR Discounts.
(b) In the event that the Accounts Receivable shown on the Closing
Date Accounts Receivable Statement are greater than the Estimated Accounts
Receivable, Purchaser shall pay to Seller, on the first Business Day following
the True-Up Date, an amount equal to sixty-five percent (65%) of such excess. In
the event that the Estimated Accounts Receivable are greater than the Accounts
Receivable shown on the Closing Date Accounts Receivable Statement, Seller shall
refund to Purchaser, on the first Business Day following the True-Up Date, an
amount equal to sixty-five percent (65%) of such excess. The provisions of this
SECTION 2.6 shall not affect the rights of Seller to receive payments pursuant
to SECTION 2.4(C).
SECTION 2.7. CONDITION OF PURCHASED ASSETS; RETURN OF INVENTORY;
INVENTORY IN TRANSIT; PAYMENT FOR DIRTY CORE AND WARRANTY INVENTORY.
(a) Except for the warranty of title set forth in SECTION 3.6, the
Purchased Assets are being sold "AS IS," "WHERE IS" and "WITH ALL FAULTS" and
Seller hereby expressly disclaims any and all other warranties both express and
implied.
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(b) Rejected Inventory shall be returned to the reclamation centers
or other facilities as shall be specified by Seller, at the sole expense of
Seller, with shipment of such Rejected Inventory to take place by five (5)
Business Days after the True-Up Date. Purchaser shall be liable for any loss of
or damage to Rejected Inventory prior to its delivery to such appropriate
Reclamation Center or other facilities.
(c) Purchaser shall allow employees or representatives designated by
Seller to be present at each Purchased Location during normal business hours for
a period of twenty (20) Business Days following the Closing Date for the purpose
of determining items of In-transit Inventory which arrive at the Business
Location during that period. At least five (5) Business Days prior to the
Closing Date, Seller shall present Purchaser with an itemized list of an
estimate of In-transit Inventory. Purchaser shall pay Seller, by wire transfer
within twenty (20) Business Days after receipt of any In-transit Inventory as
noted on the manufacturer's invoice, one hundred percent (100%) of Seller's
Warehouse Distributor Cost for each item of In-transit Inventory.
(d) Purchaser shall remit to Seller on the first and fifteenth days
of each month the value of cash or credits actually received, less any handling
charge, in respect of Dirty Core and Warranty Inventory, as provided in SECTION
2.4(A)(II).
(e) Purchaser shall permit employees and representatives of Seller
to inspect and audit Purchaser's books and records in order to confirm
Purchaser's compliance with SECTIONS 2.7(C) and 2.7(D).
SECTION 2.8. ALLOCATION OF PURCHASE PRICE. To the extent required by
law after the Closing Date, Purchaser and Seller shall prepare and file those
statements or forms (including Form 8594) required by Section 1060 of the Code
and the Treasury regulations thereunder and shall file such statements or forms
with their respective federal income Tax Returns. The parties shall prepare such
statements or forms consistently with any agreed allocation of all or a portion
of the Purchase Price to the Purchased Assets. Each party shall provide the
other party with a copy of such statements or forms as filed. Such allocation of
the Purchase Price will not be binding in the Cases upon the Seller's creditors
or other parties in interest and will not have precedential value with respect
to any allocations of value contained in a plan or plans under chapter 11 of the
Bankruptcy Code involving Seller.
SECTION 2.9. SALE AT CLOSING DATE . (a) The sale, transfer,
assignment and delivery by Seller of the Purchased Assets, Leased Properties and
Subleased Properties to Purchaser, and the assumption by Purchaser of the
Assumed Liabilities as herein provided, shall be effected on the Closing Date by
the execution and delivery by Seller and Purchaser of (i) a Lease Assignment and
Assumption Agreement, substantially in the form of
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EXHIBIT C, for the Assigned Leases, pursuant to which Lease Assignment and
Assumption Agreements Purchaser shall confirm its assumption of all liabilities
and obligations under the Assigned Leases which accrue from and after the
Closing Date; (ii) a Lease with respect to each Leased Property, (iii) a
Sublease with respect to each Subleased Property being sublet to Purchaser; (iv)
limited warranty deeds with respect to the Purchased Real Properties and (v) an
Assignment and Assumption Agreement for the Other Contracts, substantially in
the form of EXHIBIT A. With respect to the other Purchased Assets and Assumed
Liabilities, Seller shall execute and deliver to Purchaser a Bill of Sale and
Assumption Agreement substantially in the form of EXHIBIT B.
(b) The transfer and assignment by Seller of the Assigned GPI
Affiliate Leases shall be effected on the Closing Date by the execution and
delivery by Seller and each of Lottes and Strafco of a Lease Assignment and
Assumption Agreement, substantially in the form of EXHIBIT C, pursuant to which
Lease Assignment and Assumption Agreements Lottes and Strafco, as applicable,
shall confirm their resepective assumption of all liabilities and obligations
under the Assigned GPI Affiliate Leases which accrue from and after the Closing
Date. The sublease of the Subleased Properties being sublet to Lottes shall be
effected on the Closing Date by the execution and delivery by Seller and Lottes
of the Lottes Subleases.
SECTION 2.10. APPORTIONMENTS. The following amounts are to be
apportioned as of 12:00 midnight on the day preceding the Closing Date (the
"APPORTIONMENT DATE") to the extent such are valid post-petition claims or are
subject to non-avoidable Liens: under the Real Property Lease Agreements, Real
Property Purchase Agreements, Assigned Leases, and Assigned GPI Affiliate
Leases, (i) water, sewer and utility charges and real estate taxes, to the
extent all or any are due and payable under the Real Property Purchase
Agreements, Assigned Leases, or Assigned GPI Affiliate Leases, and (ii) such
other apportionments and adjustments as are customarily apportioned in
transactions of this nature. Except as otherwise provided herein, all such
prorations shall be verified by Purchaser, Lottes or Strafco, as applicable, and
shall be made on the basis of actual bills, to the extent available, or, in the
absence of such actual bills, on good faith estimates of Seller based on the
most recent bills received by Seller.
SECTION 2.11. PURCHASE OF CERTAIN REAL PROPERTY.
References in this SECTION 2.11 to "Purchaser" shall be deemed to
include any Affiliate of Purchaser which may be designated by Purchaser to
Purchase the Purchased Real Properties.
A. Due Diligence.
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On the Closing Date, Seller shall sell to Purchaser, and Purchaser
shall purchase from Seller, for the prices set forth on SCHEDULE I hereto, each
of the Purchased Real Properties; PROVIDED, HOWEVER, that Purchaser shall not be
required to purchase any one or more of the Purchased Real Properties if
Purchaser shall (i) determine in good faith that, as a result of diligence
conducted by or on behalf of Purchaser after the date hereof and prior to
October 2, 1998, matters relating to title to or condition of or liabilities
(including environmental liabilities) associated therewith materially and
adversely affect the benefits to be obtained by Purchaser from its acquisition
of such Purchased Real Properties and (ii) notify Seller of such determination
in writing, prior to October 8, 1998, specifying the reasons therefor in
reasonable detail. If any one or more of the Purchased Real Properties is not to
be purchased by Purchaser as a result of the operation of the foregoing
provisions, Purchaser and Seller shall, at Closing, enter into a Lease with
respect to such property substantially in accordance with the terms set forth on
SCHEDULE I hereto. Purchaser shall follow the same due diligence procedures set
forth herein, subject to the same good faith standard, with respect to the Salt
Lake City Lease, subject to the terms and conditions set forth on SCHEDULE B
hereto.
B. Damage to or Taking of the Property.
If, prior to the Closing, (i) (x) any portion of a Purchased Real
Property is damaged by fire, vandalism, acts of God, or other casualty or cause
and (y) such damage can be repaired within 6 months, then Purchaser shall accept
the property as is together with Seller's rights, if any, to any insurance
proceeds, in which case, Seller shall cooperate with Purchaser in any loss
adjustment negotiations, legal actions and agreements with the insurance company
and Seller shall assign to Purchaser at the Closing its rights, if any, to such
insurance proceeds (and pay over to Purchaser any such proceeds already
received, but not yet expended). If there shall occur an uninsured casualty to
the property that does not otherwise result in the termination of the sale of
such Purchased Real Property pursuant to this section or if Seller's insurance
proceeds due to a casualty shall be subject to Seller's deductible under its
insurance policies, Seller may (x) elect not to sell such Purchased Real
Property to Purchaser, in which case the Purchase Price shall be reduced by the
amount allocated to such Purchased Real Property on Schedule I attached hereto,
with respect to the Purchase thereof, or (y) elect to sell such Purchased Real
Property to Purchaser at the Closing and give Purchaser a credit against the
Purchase Price in an amount equal to the cost of repairing the damage resulting
from such casualty remaining as of the Closing Date. The computation of the cost
of repair under the preceding sentence shall take into account Purchaser's
anticipated renovations to the property which may in some instances render such
repairs unnecessary. Seller will not settle any claims or legal actions relating
thereto without
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Purchaser's prior written consent, which consent shall not be unreasonably
withheld or delayed. If such damage cannot be repaired within 6 months, then
Seller shall promptly notify Purchaser of such damage and either Seller or
Purchaser shall have 10 days after Purchaser's receipt of such notification to
elect not to purchase such Purchased Real Property. In the event of an eminent
domain taking or the issuance of a notice of an eminent domain taking with
respect to all or substantially all of a Purchased Real Property, such Purchased
Real Property shall not be transferred to Purchaser and Seller shall be entitled
to receive all eminent domain awards and shall control all condemnation award
proceedings. In the event of an eminent domain taking or the issuance of a
notice of an eminent domain taking with respect to less than all or
substantially all of one or more parcels of Purchased Real Property, this
Agreement shall remain in full force and effect, Purchaser shall be obligated to
consummate this transaction for the full Purchase Price and Purchaser shall be
entitled to receive all eminent domain awards and shall control all condemnation
award proceedings. To the extent the same may be necessary and appropriate,
Seller shall assign to Purchaser at Closing, Seller's rights to such awards.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to SECTION 3.12, Seller represents and warrants to Purchaser
as follows:
SECTION 3.1. AUTHORITY OF SELLER. Seller is a corporation validly
existing and in good standing under the laws of the State of Delaware. Seller
has full corporate power and authority to execute and deliver this Agreement and
each of the Ancillary Agreements, and the execution and delivery by Seller of
this Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Seller, and this
Agreement constitutes, and each of the Ancillary Agreements upon its execution
will constitute, the legal, valid and binding obligation of Seller enforceable
in accordance with its terms, subject to receipt of the Order and the receipt of
the consents, waivers and approvals specified on SCHEDULE 3.3. Subject to any
necessary authorization from the Bankruptcy Court, Seller has full corporate
power and authority to own its properties and to carry on its business
operations at the Purchased Locations presently being conducted by it, and upon
the entry of the Order, Seller will have all power and authority to take all
actions necessary or appropriate to close the transactions contemplated by this
Agreement.
SECTION 3.2. NO CONFLICT OR VIOLATION. The execution, delivery and
performance by Seller of this Agreement and the Ancillary Agreements do not and
will not violate or conflict with any provision of the Certificate of
Incorporation or By-laws of
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Seller and, assuming that the consents, waivers, authorizations, approvals,
declarations, filings and registrations referred to in SECTION 3.3 are obtained
or made, do not and will not violate or result in a material breach of or
constitute (with notice or lapse of time or both) a material default under any
Assigned Contract.
SECTION 3.3. CONSENTS AND APPROVALS. SCHEDULE 3.3 sets forth a true
and complete list of each material consent, waiver, authorization or approval of
any Person in connection any Assigned Contract involving the payment by Seller
of more than $30,000 in any calendar year (but not including for purposes of
such Schedule contracts or agreements, such as agreements for maintenance,
security, clerical, office supply and other services, that are typically
terminable upon short notice or that otherwise can be replaced without material
cost or difficulty) that is required for the execution and delivery of this
Agreement by Seller or the performance by Seller of its obligations hereunder.
SECTION 3.4. COMPLIANCE WITH LAW. Except as set forth on SCHEDULE
3.4, to Seller's Knowledge, Seller has not received written notice of any
material violation of any law, regulation or order, and is not in default in any
material respect under any order, writ, judgment, award, injunction or decree of
any Governmental Agency, applicable to the Purchased Assets.
SECTION 3.5. PERMITS. Set forth on SCHEDULE 3.5 is a list of permits
relating to the operation of Seller's business at the Purchased Locations, which
permits have been provided or made available to Purchaser by Seller.
SECTION 3.6. OWNERSHIP OF PURCHASED ASSETS. Seller is the owner of
the Purchased Assets existing as of the date hereof. Subject to the issuance of
the Order, Seller will have, and at the Closing Buyer will receive, good and
valid title to the Purchased Assets, free and clear of any Liens.
SECTION 3.7. ASSIGNED CONTRACTS. True and complete copies (including
all modifications and amendments) of the Assigned Contracts listed on SCHEDULE
3.7 have been provided or made available by Seller to Purchaser. Other than as
set forth on SCHEDULE 3.7 or in motions filed with the Bankruptcy Court, neither
Seller nor, to Seller's Knowledge, any other party under any of the Assigned
Contracts, has commenced any action against the other or given or received any
written notice of any material default or violation under any Assigned Contract
which was not withdrawn or dismissed, except only for those defaults which will
be cured in accordance with the Order (or which need not be cured under the
Bankruptcy Code to permit the assumption and assignment of Executory Contracts).
The Assigned Leases and each of the other Assigned Contracts listed on SCHEDULE
3.7 is or will be at the Closing valid, binding and in full force and effect as
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against Seller, except as otherwise set forth on SCHEDULE 3.7 or SCHEDULE B.
SECTION 3.8. LABOR RELATIONS. Except as set forth on SCHEDULE 3.8,
Seller is not party to any collective bargaining agreement covering Business
Employees. To Seller's Knowledge, no organizational effort is presently being
made or threatened in writing by or on behalf of any labor union with respect to
Business Employees.
SECTION 3.9. LITIGATION. Other than in connection with the Cases and
except as set forth on SCHEDULE 3.9, there are no actions, causes of action,
claims, suits or proceedings pending or, to Seller's Knowledge, threatened
against Seller which (i) seek to restrain or enjoin the consummation of the
transactions contemplated hereby or (ii) could reasonably be expected to have a
material adverse effect with respect to the Purchased Assets.
SECTION 3.10. BROKERS. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by Seller without
the intervention of any other Person acting on Seller's behalf in such manner as
to give rise to any valid claim by any such Person against Purchaser for a
finder's fee, brokerage commission or other similar payment based on an
arrangement with Seller.
SECTION 3.11. DISCLAIMER OF ADDITIONAL REPRESENTATIONS AND
WARRANTIES; SCHEDULES.
(a) Except as expressly set forth in this Agreement, the Schedules
and Exhibits hereto, the Ancillary Agreements, and any certificate or instrument
delivered pursuant to the terms hereof or thereof, Seller makes no
representations or warranties with respect to its business or its operations,
assets (including, without limitation, the Purchased Assets), liabilities
(including, without limitation, the Assumed Liabilities) or conditions,
including, with respect to the Purchased Assets, any representation or warranty
of merchantability, suitability or fitness for a particular purpose, or quality
as to the Purchased Assets, or any part thereof, or as to the condition or
workmanship thereof, or the absence of any defects therein, whether latent or
patent. Except as provided in this Agreement, the Schedules and Exhibits hereto,
the Ancillary Agreements, and any other certificate or instrument delivered
pursuant to the terms hereof or thereof, the Purchased Assets are to be conveyed
hereunder "AS IS," "WHERE IS," and "WITH ALL FAULTS" on the date hereof and in
their present condition, subject to reasonable use, wear and tear between the
date hereof and the Closing Date, and Purchaser shall rely upon its own
examination thereof.
(b) Any item disclosed on any one Schedule shall be deemed to be
disclosed on each Schedule, where relevant.
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Disclosure of an item on any Schedule shall not be deemed to be an admission
that such item is material. The parties hereto (i) acknowledge that certain
Schedules are subject to revision until the earilier to occur of (x) seven (7)
Business Days following the date of this Agreement and (y) the date that the
Bidding Protections Order is entered; and (ii) shall negotiate in good faith to
amend this Agreement as necessary to incorporate such revised Schedules, to the
extent that such revised Schedules do not materially affect the Purchase Price.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrant to Seller as follows:
SECTION 4.1. AUTHORITY OF PURCHASER. Purchaser is a corporation,
validly existing, and in good standing under the laws of the state of its
incorporation. Purchaser has full corporate power and authority to execute and
deliver this Agreement, and the execution and delivery by Purchaser of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of
Purchaser, and this Agreement constitutes, and the Ancillary Agreements when
executed will constitute, the legal, valid and binding obligations of Purchaser
enforceable in accordance with their terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium, or similar laws from
time to time in effect which affect creditors' rights generally and by legal and
equitable limitations on the enforceability of specific remedies. Purchaser has
full corporate power and authority to own its properties and to carry on the
business presently being conducted by it.
SECTION 4.2. NO CONFLICT OR VIOLATION. The execution, delivery and
performance by Purchaser of this Agreement and the Ancillary Agreements do not
and will not violate or conflict with any provision of the Certificate of
Incorporation or By-laws of Purchaser and do not and will not violate any
provision of law, or any order, judgment or decree of any court or other
Governmental Agency applicable to Purchaser, or violate or result in a material
breach of or constitute (with notice or lapse of time or both) a material
default under any loan agreement, mortgage, security agreement, indenture or
other instrument to which Purchaser is a party or by which it is bound.
SECTION 4.3. CONSENTS AND APPROVALS. The execution, delivery and
performance by Purchaser of this Agreement do not require the consent or
approval of, or filing with, any Governmental Agency or other Person except: (i)
as may be required to effect the transfer to Purchaser of any Permits; (ii) as
required pursuant to the HSR Act; or (iii) such consents, approvals and filings,
the failure to obtain or make which would
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not, individually or in the aggregate, have a material adverse effect on its
ability to consummate the transactions contemplated hereby.
SECTION 4.4. AVAILABILITY OF FUNDS. Purchaser has and will have at
the Closing the Committed Financing, which will be sufficient to allow it to pay
the Purchase Price at the times and in the manner set forth in this Agreement
and to satisfy all its other obligations under this Agreement.
SECTION 4.5. LITIGATION. There are no actions, causes of action,
claims, suits, proceedings, orders, writs, injunctions, or decrees pending or,
to the Knowledge of Purchaser, threatened against Purchaser at law or in equity
or before or by any Governmental Agency, which seeks to restrain or enjoin the
consummation of the transactions contemplated hereby or that could otherwise
materially and adversely affect the ability of Purchaser to perform its
obligations hereunder.
SECTION 4.6. BROKERS. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by Purchaser
without the intervention of any other Person acting on its behalf in such manner
as to give rise to any valid claim by any such Person against Seller or its
Affiliates for a finder's fee, brokerage commission or other similar payment
based on an arrangement with Purchaser.
SECTION 4.7. ADEQUATE ASSURANCES REGARDING EXECUTORY CONTRACTS.
Purchaser is and will be capable of satisfying the conditions contained in
sections 365(b)(1)(c) and (f) of the Bankruptcy Code with respect to the
Executory Contracts.
ARTICLE V.
CERTAIN COVENANTS OF SELLER
Seller covenants with Purchaser that from and after the date hereof
through the Closing Date:
SECTION 5.1. CONDUCT OF BUSINESS BEFORE THE CLOSING DATE. Unless
otherwise ordered by the Bankruptcy Court SUA SPONTE or on motion by a third
party, Seller shall not, except as required or contemplated by this Agreement,
make any material change in the Fixed Assets or enter into any transaction
respecting the Purchased Assets, other than sales of Inventory in the ordinary
course of Seller's business or other transactions in the ordinary course of
Seller's business in the Cases consistent with Seller's past practices or as
otherwise contemplated by this Agreement. Without limiting the generality of the
foregoing provisions, Seller will maintain New Inventory only in amounts and mix
generally consistent with its practices prior to the Closing Date.
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SECTION 5.2. CONSENTS AND APPROVALS. Subject to SECTION 9.2 and
Seller's right to accept a higher or otherwise better offer, Seller shall use
commercially reasonable efforts to obtain (i) entry of the Order by the
Bankruptcy Court and (ii) the requisite consent or consents of the DIP Lenders
to this Agreement and the transactions contemplated hereby.
SECTION 5.3. INFORMATION AND ACCESS. Seller will permit
representatives of Purchaser to have reasonable access during normal business
hours after reasonable notice from Purchaser to Seller, and in a manner so as
not to interfere with normal operations, to all premises, properties, personnel,
accountants, books, records, contracts and documents of or pertaining to the
Purchased Assets. Purchaser and each of its representatives will treat and hold
such information as confidential. Purchaser shall indemnify, defend and hold
harmless (i) Seller; (ii) the lessors under the Assigned Leases and the Assigned
GPI Affiliate Leases; (iii) the overlandlords under the Subleases and the Lottes
Subleases; (iv) and Seller's and such landlords' respective Affiliates from and
against any and all claims, demands, causes of action, losses, damages,
liabilities, cost and expenses (including, without limitation, attorneys' fees
and disbursements) suffered or incurred by such Persons in connection with (i)
Purchaser's and/or Purchaser's representatives' entry upon the Leased
Properties, the Subleased Properties, and the premises subject to the Assigned
GPI Affiliate Leases and the Assigned Leases, or (ii) any and all other
activities undertaken by Purchaser or Purchaser's representatives with respect
to the Leased Properties, the Subleased Properties, and the premises subject to
the Assigned GPI Affiliate Leases and the Assigned Leases, pursuant to this
SECTION 5.3. The parties hereto agree and acknowledge that the obligations of
Purchaser under this Agreement are not subject to any "due diligence" condition
(except as set forth in SECTION 2.11) and that the provisions of this SECTION
5.3 shall in no way affect the conditions set forth in Article VIII of this
Agreement, which shall be effective in accordance with their terms.
SECTION 5.4. FURTHER ASSURANCES. Upon the request of Purchaser at
any time after the Closing Date, Seller shall, at Purchaser's expense, forthwith
execute and deliver such documents as Purchaser or its counsel may reasonably
request to effectuate the purposes of this Agreement.
SECTION 5.5. ASSIGNMENT OF CONTRACTS. Seller shall use commercially
reasonable efforts to obtain from the Bankruptcy Court an order authorizing
Seller, effective on the Closing Date, to assume, cure all defaults with respect
to and assign the Assigned Contracts to Purchaser.
SECTION 5.6. SERVICES TO BE PROVIDED BY SELLER. On the Closing Date,
Seller shall enter into the Services Agreement with Purchaser, pursuant to which
Services Agreement, among other
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things, Purchaser shall be granted access, for a limited time, to use PIMS.
SECTION 5.7. CURE OF DEFAULTS. Seller shall, on or prior to the
Closing, at its expense cure any and all defaults, with respect to the Assigned
Contracts as provided in Section 365 of the Bankruptcy Code, so that such
Assigned Contracts may be assigned to Purchaser in accordance with the
provisions of Section 365 of the Bankruptcy Code, PROVIDED THAT Seller shall not
be obligated to cure any such default that is in dispute as of the Closing Date
if an escrow or other arrangement with respect thereto shall have been
established pursuant to order of the Bankruptcy Court.
SECTION 5.8. BANKRUPTCY ACTIONS. No later than five (5) Business
Days after the date hereof, Seller will file a motion with an attached proposed
order, reasonably acceptable to Seller and Purchaser, seeking approval of the
terms of this Agreement.
SECTION 5.9. CLOSED LOCATIONS; TRANSFER OF INVENTORY FROM CLOSED
LOCATIONS.
(a) Set forth on SCHEDULE 5.9 hereto is a list of Closed Locations,
which Seller shall have closed prior to, concurrently with or as soon as
practicable after the Closing.
(b) Inventory from the Closed Locations shall be transferred, at the
expense of Seller, to the appropriate Servicing DC (being a Purchased Location)
set forth on SCHEDULE 5.9 hereto, from which Servicing DC Purchaser shall
purchase the New Inventory and Dirty Core Inventory (but not the Fixed Assets,
Accounts Receivable or other assets) originating from the Closed Locations.
SECTION 5.10. VACATION AND SICK LEAVE. Seller shall indemnify and
hold Purchaser harmless on account of any claim by any of Purchaser's Employees
with respect to any amounts owed to such Employees for unused vacation and sick
leave earned as of the Closing Date.
SECTION 5.11. FORM OF LEASE AND SUBLEASE; SERVICES AGREEMENT. Seller
shall negotiate in good faith with Purchaser to complete, not later than the
date of the Bidding Protections Order hearing, (i) the form of Lease and
Sublease, which Lease and Sublease shall reflect the terms set forth on SCHEDULE
E and SCHEDULE J, respectively and (ii) the final form of Services Agreement,
including the description of, and fee for, accounting services to be provided
thereunder.
ARTICLE VI.
CERTAIN COVENANTS OF PURCHASER
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SECTION 6.1. CONSENTS AND APPROVALS. Purchaser shall use
commercially reasonable efforts to assist Seller in obtaining the Order and in
obtaining Bankruptcy Court approval for assignment of the Assigned Contracts,
including providing testimony as required at any hearing before the Bankruptcy
Court.
SECTION 6.2. ADEQUATE ASSURANCES REGARDING EXECUTORY CONTRACTS. With
respect to each Executory Contract, Purchaser shall make commercially reasonable
efforts to provide adequate assurance as required under the Bankruptcy Code of
the future performance of such Executory Contract by Purchaser. Purchaser agrees
that it will promptly take all actions reasonably required by Seller to assist
in obtaining the Bankruptcy Court's entry of the Order, such as furnishing
affidavits, non-confidential financial information or other documents or
information for filing with the Bankruptcy Court and making Purchaser's
employees and representatives available to testify before the Bankruptcy Court,
with respect to demonstrating adequate assurance of future performance by
Purchaser under the Executory Contracts.
SECTION 6.3. PERFORMANCE UNDER ASSIGNED CONTRACTS; PURCHASED REAL
PROPERTIES. Purchaser agrees that from and after the Closing Date it shall (i)
assume all obligations and liabilities of Seller under the Assigned Contracts
which accrue from and after the Closing Date, (ii) take all actions necessary to
satisfy its obligations and liabilities under the terms and conditions of each
of the Assigned Contracts and the Real Property Lease Agreements, (iii)
indemnify and hold harmless Seller for any damages, losses and liabilities
arising out of a breach of this covenant, and (iv) indemnify and hold harmless
Seller for any damages, losses and liabilities arising out of or relating to the
Purchased Real Properties that arise or accrue after the Closing Date.
SECTION 6.4. FURTHER ASSURANCES. Upon the request of Seller at any
time after the Closing Date, Purchaser shall, at Seller's expense, forthwith
execute and deliver such documents as Seller or its counsel may reasonably
request to effectuate the purposes of this Agreement.
SECTION 6.5. PURCHASER FINANCING. Purchaser shall, from the
date of this Agreement until and including the Closing Date, maintain the
availability of funds pursuant to the Committed Financing.
SECTION 6.6. COLLECTION OF ACCOUNTS RECEIVABLE. Following the
Closing Date, Purchaser shall follow its customary collection procedures for its
existing jobbers (and for existing jobbers of Purchaser's Affiliates) (which do
not include litigation or use of collection agencies) to effect collection of
the Accounts Receivable and, for a period of 180 days following the Closing
Date, Seller shall remit to Purchaser amounts owed pursuant to SECTION 2.4(C).
For purposes of this SECTION 6.6, all collections (except C.O.D. payments and
payments by customers
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who pay by invoice) shall be applied, for each account obligor, first to the
oldest balances of any accounts of such obligor. Any New Inventory returned by a
jobber or customer to Purchaser for payment against Accounts Receivable (based
on specified invoices) will be charged a 30% handling and restocking fee.
Purchaser shall (i) deliver to Seller, beginning at the end of the month in
which the Closing Date occurs and on a monthly basis for a nine-month period
thereafter, statements setting forth the status of payment of the Accounts
Receivable and (ii) permit employees or representatives of Seller, for a period
of one year after the Closing Date, to inspect and audit Purchaser's books and
records in order to confirm Purchaser's compliance with SECTION 2.4(C) and this
SECTION 6.6.
SECTION 6.7. GUARANTEE OF OTHER ASSET PURCHASE AGREEMENT. Purchaser
hereby guarantees the full and timely payment and performance by BWP of its
obligations under the Other Asset Purchase Agreement, including without
limitation BWP's obligations to pay the Purchase Price under the Other Asset
Purchase Agreement.
SECTION 6.8. FORM OF LEASE AND SUBLEASE; SERVICES AGREEMENT.
Purchaser shall negotiate in good faith with Seller to complete, not later than
the date of the Bidding Protections Order hearing, (i) the form of Lease and
Sublease, which Lease and Sublease shall reflect the terms set forth on SCHEDULE
E and SCHEDULE J, respectively and (ii) the final form of Services Agreement,
including the description of, and fee for, accounting services to be provided
thereunder.
ARTICLE VII.
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions
contemplated by this Agreement are subject to the satisfaction (unless waived in
writing by Seller upon consultation with, and with the consent of, the DIP
Lenders) of each of the following conditions on or prior to the Closing Date:
SECTION 7.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser contained in this Agreement shall be true in all
material respects on and as of the Closing Date as though such representations
and warranties were made on and as of the Closing Date.
SECTION 7.2. COMPLIANCE WITH AGREEMENT. Purchaser shall have
performed and complied in all material respects (and in all respects in the case
of Article II hereof) with all covenants and conditions to be performed or
complied with by it on or prior to the Closing Date.
SECTION 7.3. CONSENTS. (i) The consent of the DIP Lenders, (ii) any
consent required in connection with the
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assignment of the Assigned Leases and the Assigned GPI Affiliate Leases or in
connection with the Subleases or Lottes Subleases and (iii) other consents
listed on SCHEDULE 3.3 hereto, (except, in the case of any Assigned Contract, to
the extent that such Assigned Contract is a "Master Contract" which relates to
assets other than the Purchased Assets or if no such consent is required as a
result of the Order), shall have been obtained and shall be in full force and
effect on the Closing Date.
SECTION 7.4. PURCHASER'S CLOSING DELIVERIES AND OBLIGATIONS.
Purchaser shall have delivered all items and satisfied all obligations
pursuant to SECTION 9.1(C).
SECTION 7.5. CLOSING UNDER OTHER ASSET PURCHASE AGREEMENT. The
Closing under the Other Asset Purchase Agreement shall occur concurrently
with the Closing hereunder.
SECTION 7.6. PURCHASED REAL PROPERTIES. Purchaser shall,
concurrently with the Closing hereunder, purchase and pay the purchase price
of the Purchased Real Properties to the extent required by SECTION 2.11.
SECTION 7.7. ENTRY OF THE ORDER. (i) The Bankruptcy Court shall have
entered the Order and (ii) the Order, as entered by the Bankruptcy Court, shall
not be stayed and shall not modify the terms and conditions of this Agreement or
the transactions contemplated hereby in any way that materially and adversely
affects Seller.
ARTICLE VIII.
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the transactions
contemplated by this Agreement is subject to the satisfaction (unless waived in
writing by Purchaser) of each of the following conditions on or prior to the
Closing Date:
SECTION 8.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in this Agreement shall be true in all material
respects on and as of the Closing Date as though such representations and
warranties were made on and as of the Closing Date.
SECTION 8.2. COMPLIANCE WITH AGREEMENT. Seller shall have performed
and complied in all material respects with all covenants and conditions to be
performed or complied with by it on or prior to the Closing Date.
SECTION 8.3. CONSENTS. (i) The consent of the DIP Lenders (which
consent shall include an arrangement, reasonably satisfactory to Purchaser, that
will provide Seller with access to funds sufficient to allow Seller to meet its
obligations, if any, under SECTIONS 2.5(B) and 2.6(B)), (ii) any consent
required
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in connection with the assignment of the Assigned Leases and the
Assigned GPI Affiliate Leases and (iii) other consents listed on SCHEDULE 3.3
hereto, (except, in the case of any Assigned Contract, to the extent that such
Assigned Contract is a "Master Contract" which relates to assets other than the
Purchased Assets or if no such consent is required as a result of the Order),
shall have been obtained and shall be in full force and effect on the Closing
Date.
SECTION 8.4. SELLER'S CLOSING DELIVERIES AND OBLIGATIONS.
Seller shall have delivered all items and satisfied all obligations pursuant
to SECTION 9.1(B).
SECTION 8.5. PURCHASED REAL PROPERTIES. Seller shall,
concurrently with the Closing hereunder, sell the Purchased Real Properties
to Purchaser to the extent required by SECTION 2.11.
SECTION 8.6. ENTRY OF THE ORDER. (i) The Bankruptcy Court shall have
entered the Order and (ii) the Order, as entered by the Bankruptcy Court, shall
not be stayed or modify the terms and conditions of this Agreement or the
transactions contemplated hereby in any way that adversely affects Purchaser.
SECTION 8.7. ASSIGNMENT OF CONTRACTS. The Bankruptcy Court shall
have entered the Order, or an additional order that expressly authorizes the
assumption and assignment of the Assigned Contracts, effective on the Closing
Date. In addition, Seller shall cure all defaults under the Assigned Contracts
and pay all liabilities and obligations accrued prior to the Closing Date,
subject to SECTION 5.7.
SECTION 8.8. TERMINATION OF OTHER ASSET PURCHASE AGREEMENT.
Seller shall not have terminated the other Asset Purchase Agreement pursuant
to Section 9.3(b) of that agreement.
ARTICLE IX.
THE CLOSING; OTHER BIDS; TERMINATION
SECTION 9.1. THE CLOSING. (a) The Closing of the purchase and sale
of the Purchased Assets (the "CLOSING") shall be held on the second Business Day
after the later to occur of (i) the date of entry of the Order and (ii) the date
of termination or expiration of the waiting period under the HSR Act (the
"CLOSING DATE"). The Closing shall be held at the offices of Willkie Farr &
Gallagher, 787 Seventh Avenue, New York, New York 10019. At the Closing, all of
the transactions provided for in ARTICLE II hereof shall be consummated on a
substantially concurrent basis.
(b) SELLER'S DELIVERIES AT CLOSING. At the Closing, Seller shall
deliver (or cause to be delivered) to Purchaser the following:
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(i) a duly executed Lease Assignment and Assumption Agreement
or an Assignment and Assumption Agreement, as applicable, for each
Assigned Contract;
(ii) the duly executed Bill of Sale and Assumption Agreement;
(iii) the duly executed Services Agreement;
(iv) the duly executed Real Property Lease Agreements;
(v) limited warranty deeds for each of the Purchased Real
Properties;
(vi) FIRPTA Affidavit;
(vii) 1099-S Certificate;
(viii) Environmental Transfer Form for each Purchased Real
Property (if required pursuant to the laws of the state in which the
property is located);
(ix) any transfer tax forms required by the laws of the
municipality and/or state in which the property is located, and
other forms and documents reasonably required by the title company;
(x) the duly executed License Agreement;
(xi) certified resolutions of the Board of Directors of Seller
approving and authorizing the transactions contemplated by this
Agreement; and
(xii) a certificate, executed by a duly authorized officer of
Seller, to the effect that all conditions to closing set forth in
SECTION 8.1 and SECTION 8.2 have been satisfied.
(c) PURCHASER'S DELIVERIES AT CLOSING. At the Closing, Purchaser
shall deliver (or cause to be delivered) to Seller the following:
(i) payment of the Purchase Price and other amounts in
accordance with the terms and conditions set forth in SECTION
2.4(B);
(ii) a duly executed Lease Assignment and Assumption Agreement
or Assignment and Assumption Agreement, as applicable, for each
Assigned Contract;
(iii) the duly executed Bill of Sale;
(iv) the duly executed Services Agreement;
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(v) any transfer tax forms required by the laws of the
municipality and/or state in which the property is located, and
other forms and documents reasonably required by the title company;
(vi) the duly executed Real Property Lease Agreements;
(vii) the duly executed License Agreement;
(viii) certified resolutions of the Board of Directors of
Purchaser approving and authorizing the transactions contemplated by
this Agreement; and
(ix) a certificate, executed by a duly authorized officer of
Purchaser, to the effect that all conditions to closing set forth in
SECTION 7.1 and SECTION 7.2 have been satisfied.
SECTION 9.2. OTHER BIDS; FEES.
(a) BANKRUPTCY COURT APPROVAL. Upon the execution of this Agreement,
Seller will seek Bankruptcy Court approval of (i) the definition of "Superior
Bid" set forth in SECTION 9.2(B); (ii) the overbid protections set forth in
SECTION 9.2(C); and (iii) bid incentives and protections set forth in SECTION
9.2(D), and the parties acknowledge that such provisions are subject to any
required approval of the DIP Lenders and to approval of the Bankruptcy Court and
that such provisions shall not be binding and shall have no force or effect
unless and until such Bankruptcy Court approval is obtained. Purchaser
acknowledges that auction rules to be contained in a Bidding Protections Order
shall be in the form set forth in EXHIBIT G, subject to Bankruptcy Court
approval.
(b) OTHER BIDS. Purchaser acknowledges that Seller, through The
Blackstone Group L.P. ("BLACKSTONE") as its agent, will solicit bids ("BIDS")
from other prospective purchasers ("BIDDERS")for the sale of the Purchased
Assets (as such or in combination with other assets of Seller) and/or other
assets owned by Seller in accordance with auction procedures to be established
by Blackstone in consultation with Seller's creditor constituencies, subject to
bid incentives and protections set forth in SECTION 9.2(D) and overbid
protections set forth in SECTION 9.2(C). All Bids (other than Bids submitted by
Purchaser) will be submitted with two copies of the Seller's form of purchase
agreement (the "FORM AGREEMENT"), marked to show changes requested by the
Bidder.
Seller shall have the right to select the highest or otherwise
better Bid or Bids (the "SUPERIOR BID"), which will be determined by
considering, among other things, (i) the number, type and nature of any changes
to the Form Agreement requested by each Bidder; (ii) the extent to which such
modifications are
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likely to delay closing of the sale of Purchased Assets to such Bidder and the
cost to Seller of such modifications or delay; (iii) the extent to which such
Bid covers less than or more than all of the Purchased Assets; and (iv) the
total consideration to be received by Seller. Purchaser acknowledges that Seller
will strongly favor Bids for all of Seller's assets or for such assets which
Seller determines, in its sole discretion, cannot otherwise be easily sold.
Seller reserves the right to accept a Bid or Bids which contain a purchase price
which is less than the Purchase Price set forth in this Agreement but which, in
Seller's sole discretion, otherwise constitutes a Superior Bid. Seller shall
have the right to aggregate separate Bids for different assets to determine
whether one or more combinations of Bids constitute a Superior Bid.
(c) OVERBID PROTECTION. Seller will seek Bankruptcy Court approval
of the following overbid protections: (i) a higher Bid will not be considered by
Seller unless such Bid is at least $500,000 more than the sum of (x) the
Purchase Price (including any consideration under the Services Agreement) set
forth in this Agreement and in the Other Asset Purchase Agreement as such
amounts are determined in good faith by Blackstone, (y) the Breakup Fee (as
defined in SECTION 9.2(D)) under this Agreement and the Other Asset Purchase
Agreement and (z) the Expense Reimbursement (as defined in SECTION 9.2(D)) under
this Agreement and the Other Asset Purchase Agreement; and (ii) any bids
thereafter must be at least $500,000 higher than the then existing highest or
better bid ((i) and (ii) constituting, as applicable, a "QUALIFYING BID").
The value of a Bid for purposes of this SECTION 9.2(C) shall be
determined by combining (i) the consideration to be received by Seller pursuant
to such Bid for all assets covered by such Bid and (ii) the value of the
Purchased Assets that are not covered by such Bid ("NON-COVERED ASSETS"), such
value to be determined in good faith by Seller on the basis of, for Purchased
Assets that are covered by other Bids or by proposals reasonably likely to
result in a sale of such Purchased Assets, the proposed consideration payable
pursuant to such other Bid or proposal, and, for other Non-Covered Assets, the
projected value thereof in the context of the most commercially reasonable
disposition of such property.
Seller shall have the right pursuant to this SECTION 9.2(C) to
aggregate separate Bids for different assets in determining whether one or more
combinations of Bids constitute a Qualifying Bid.
(d) EXPENSE REIMBURSEMENT; BREAKUP FEE. In the event that this
Agreement is terminated by Seller in breach of this Agreement, Purchaser shall
be entitled, as its sole and exclusive remedy (except as provided in the
following paragraph or in SECTION 9.4(III)) to immediate reimbursement of its
actual reasonable and documented out-of-pocket expenses incurred in
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connection with the transactions contemplated by this Agreement, including
professional fees, in an amount not to exceed for this Agreement $350,000 (the
"EXPENSE REIMBURSEMENT").
If Seller, after consultation with its creditor constituencies,
determines that a Qualifying Bid (or Bids) (which is not Purchaser's Bid) is the
Superior Bid and subsequently consummates an agreement with respect thereto,
Purchaser will receive a break-up fee equal to 2.5% of the Purchase Price (the
"BREAKUP FEE").
(e) OTHER ASSET PURCHASE AGREEMENT. References in SECTION 9.2(C) to
"Purchased Assets" and "Purchase Price" shall be deemed to include the Purchased
Assets and the Purchase Price provided for in the Other Asset Purchase
Agreement, as well as the Purchased Assets and Purchase Price hereunder.
SECTION 9.3. TERMINATION. Anything in this Agreement to the
contrary notwithstanding, this Agreement and the transactions contemplated
hereby may be terminated in any of the following ways at any time before the
Closing and in no other manner:
(a) by mutual written consent of Purchaser and Seller;
(b) by Seller, if Seller accepts a Superior Bid;
(c) by Seller if Purchaser is in breach in any material respect of
any of its representations made in this Agreement, or is in violation or default
in any material respect of any of its covenants or agreements in this Agreement,
if the breach, violation or default is not cured within five (5) days after
written notice by Seller;
(d) by Purchaser, if Seller is in breach in any material respect of
any of its representations made in this Agreement, or is in violation or default
in any material respect of any of its covenants or agreements in this Agreement,
if the breach, violation or default is not cured within five (5) Business Days
after written notice by Purchaser;
(e) by Purchaser, if, as a result of an order of the Bankruptcy
Court, any material change referred to IN SECTION 5.1 occurs, or Seller enters
into any transaction referred to in such Section (other than those permitted by
such Section), and such change or transaction materially and adversely affects
the benefits to be obtained by Purchaser pursuant to this Agreement; or
(f) by Seller, if at any time to and including the Closing Date,
Purchaser does not have available Committed Financing.
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Notwithstanding anything to the contrary in this Agreement, in the event that
Seller uses commercially reasonable efforts to obtain the Order and the
Bankruptcy Court refuses to enter the Order, this Agreement shall terminate
without liability or obligation of Seller to Buyer.
SECTION 9.4. EFFECTS OF TERMINATION. (a) In the event that this
Agreement is terminated pursuant to SECTION 9.3, except as provided in SECTION
9.2 or in this SECTION 9.4, all further obligations of the parties hereunder
shall terminate. If this Agreement is terminated as permitted by SECTION 9.3,
termination shall be without liability of any party (or any stockholder,
director, officer, employee, agent, consultant or representative of such party)
to the other party to this Agreement; PROVIDED, HOWEVER, that (i) if such
termination shall result under SECTION 9.3(C) from the willful failure of
Purchaser to perform a covenant of this Agreement or from a breach of its
representations contained in SECTION 4.4, Purchaser shall be liable for any and
all losses, damages and expenses incurred or suffered by Seller as a result of
such failure to perform or breach, including but not limited to losses, damages
and expenses associated with the closing of Closed Stores; (ii) if this
Agreement is terminated by Seller pursuant to SECTION 9.3(B), Seller shall pay
to Purchaser the Expense Reimbursement and the Breakup Fee pursuant to the
provisions of SECTION 9.2; (iii) if this Agreement is terminated by Purchaser
pursuant to SECTION 9.3(D), Purchaser shall be entitled, as its sole and
exclusive remedy, to the Expense Reimbursement except that, if (x) the Order has
been entered, (y) SECTION 9.3(E) is not applicable, and (z) Seller's breach of
this Agreement or inability to perform hereunder is not the result of an order
of the Bankruptcy Court, Purchaser shall be entitled to liquidated damages of
$350,000 in addition to the Expense Reimbursement; PROVIDED, HOWEVER, that if
Seller accepts a Superior Bid within six months of the date of termination of
this Agreement pursuant to SECTION 9.3(D), Purchaser shall also be entitled to
the Breakup Fee if and to the extent provided for in SECTION 9.2(D); and (iv) if
this Agreement is terminated by Seller pursuant to SECTION 9.3(F), Purchaser
shall be liable for any and all losses, damages and expenses incurred or
suffered by Seller as a result of such failure to perform, including but not
limited to losses, damages and expenses associated with the closing of Closed
Stores. Payment of the Expense Reimbursement or liquidated damages, if required
pursuant to this Section 9.4, shall be made to Purchaser, and it shall be the
responsibility of Purchaser to allocate the Expense Reimbursement and the
liquidated damages payment, if any, between Purchaser and BWP. The provisions of
this SECTION 9.4 shall survive any termination hereof pursuant to SECTION 9.3.
(a)(b) Except as specifically provided in SECTION 9.4(A), this
SECTION 9.4 shall not limit the rights of the parties hereto to seek specific
performance of any obligation hereunder of any other party.
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ARTICLE X.
TAXES
The parties hereto hereby covenant and agree as follows:
SECTION 10.1. TAXES RELATED TO PURCHASE OF ASSETS. The parties
recognize and acknowledge that, because the sale, transfer, assignment and
delivery of the Purchased Assets is being made in connection with Seller's plan
of reorganization, they may be exempt under section 1146(c) of the Bankruptcy
Code and the Order from state and local transfer, recording, stamp or other
similar transfer taxes (collectively "TRANSACTION TAXES") that may be imposed by
reason of the sale, transfer, assignment and delivery of the Purchased Assets;
provided, however, that if Transaction Taxes are assessed for any reason,
Purchaser and Seller shall each pay one-half of such Transaction Taxes along
with any recording and filing fees. Purchaser and Seller agree to cooperate to
determine the amount of Transaction Taxes payable in connection with the
transactions contemplated under this Agreement. Transaction Taxes shall not
include any Taxes for which Seller is responsible under SECTION 10.2. At the
Closing, Purchaser shall remit to Seller such properly completed resale
exemption certificates and other similar certificates or instruments as are
applicable to claim available exemptions from the payment of sales, transfer,
use or other similar taxes under applicable law. Purchaser and Seller will
cooperate in preparing such forms and will execute and deliver such affidavits
and forms as are reasonably requested by the other party.
SECTION 10.2. PRORATION OF REAL AND PERSONAL PROPERTY TAXES. Real
and personal property taxes and assessments relating to Purchased Real
Properties, Leased Properties, Subleased Properties, properties subject to
Assigned Leases or Assigned GPI Affiliate Leases, or leases of personal property
that are assigned to Purchaser, Lottes or Strafco hereunder shall be prorated
between Seller and Purchaser, Lottes or Strafco, as applicable, as of the
Apportionment Date, provided, however, that Seller shall not be responsible for
any increased assessments on real and personal property resulting from the
transactions contemplated hereby. All such prorations shall be allocated so that
items relating to time periods ending prior to the Closing Date shall be
allocated to Seller and items related to time periods beginning after the
Closing Date shall be allocated to Purchaser, Lottes or Strafco, as applicable.
The amount of all such prorations shall be settled and paid on the Closing Date
unless, with respect to Seller's obligations hereunder, otherwise ordered by the
Bankruptcy Court or as otherwise required by applicable bankruptcy law.
SECTION 10.3. COOPERATION. Purchaser and Seller agree to furnish or
cause to be furnished to each other, as promptly as practicable, such
information and assistance relating to the
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Purchased Assets as is reasonably necessary for the preparation and filing of
any Tax Return, for the preparation for and proof of facts during any tax audit,
for the preparation for any tax protest, for the prosecution or defense of any
suit or other proceeding relating to tax matters and for the answer of any
governmental or regulatory inquiry relating to tax matters.
Purchaser agrees to retain possession of all files and records
delivered to Purchaser by Seller for a period of at least three years from the
Closing Date. If Purchaser determines to destroy or discard any of such files or
records after the end of such three-year period, Purchaser will give Seller
reasonable notice thereof and will allow Seller to take possession of such files
and records at Seller's expense. In addition, from and after the Closing Date,
Purchaser agrees that it will provide access to Seller and its attorneys,
accountants and other representatives (after reasonable notice and during normal
business hours and without charge) to such files and records as Seller may
reasonably deem necessary to prepare for, file, prove, answer, prosecute or
defend any claim, suit, inquiry or other proceeding, whether related to Taxes or
otherwise.
ARTICLE XI.
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
SECTION 11.1. EMPLOYMENT. The Business Employees who are offered and
accept employment with Purchaser are referred to herein as "PURCHASER'S
EMPLOYEES". The Purchaser's Employees' employment with Purchaser shall be upon
such terms and conditions as Purchaser, in its sole discretion, shall determine,
and nothing expressed or implied by this Agreement shall confer upon any
Business Employee, or legal representative thereof, any rights or remedies,
including any right to employment, or for any specified period, of any nature or
kind whatsoever, under or by reason of this Agreement.
Purchaser shall be responsible for any obligations or liabilities to
Business Employees under the Worker Adjustment and Retraining Notification Act
and any similar state or local "plant closing" law ("WARN") to the extent WARN
thresholds are exceeded as a result of actions taken by Purchaser on or after
the Closing Date with respect to Business Employees. Seller shall be responsible
for any obligations or liabilities to Business Employees under WARN as a result
of actions taken by Seller prior to the Closing Date.
SECTION 11.2. EMPLOYEE WELFARE BENEFIT PLANS. Except with respect to
any claim that is covered by an Assigned Contract or otherwise constitutes an
Assumed Liability, Seller shall retain responsibility for all hospital, medical,
life insurance, disability and other welfare plan expenses and benefits, and for
all workers' compensation, unemployment compensation and other government
mandated benefits (collectively referred to herein as
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"WELFARE TYPE PLANS"), in respect of claims covered by any Welfare Type Plans
maintained by Seller and which are incurred by Purchaser's Employees and their
dependents prior to the Closing Date. Purchaser shall be responsible for all
claims incurred on or after the Closing Date by Purchaser's Employees and their
dependents under all Welfare Type Plans that are maintained by Purchaser for
Purchaser's employees generally and their dependents. For purposes of this
SECTION 11.2, claims shall be deemed to have been incurred:
(a) with respect to all death or dismemberment claims, on the actual
date of death or dismemberment;
(b) with respect to all disability claims, other than for short-term
disability benefits, on the date the claimant became unable to
(i) perform his or her regular duties of employment, in the
case of an employee claimant, or
(ii) perform the normal day-to-day responsibilities that would
reasonably be expected of someone of similar age and lifestyle, in
the case of a dependent claimant;
(c) with respect to short-term disability claims, the date the
incident first occurred that gave rise to such claims;
(d) with respect to all medical, drug or dental claims, on the date
the service was received or the supply was purchased by the claimant; PROVIDED,
HOWEVER, that a medical claim relating to a claimant's hospitalization shall be
deemed to be incurred on the date the claimant was first hospitalized; and
(e) with respect to workers' compensation claims, on the date the
incident occurred.
SECTION 11.3. COBRA. Purchaser shall have sole responsibility for
"continuation coverage" benefits provided after the Closing Date under
Purchaser's group health plans to all Purchaser's Employees, and "qualified
beneficiaries" of Purchaser's Employees, for whom a "qualifying event" has
occurred after the Closing Date. Seller shall have sole responsibility for
"continuation coverage" benefits provided under Seller's group health plans to
all employees of Seller, and "qualified beneficiaries" of employees of Seller,
for whom a "qualifying event" has occurred on or prior to the Closing Date. The
terms "continuation coverage", "qualified beneficiaries" and "qualifying event"
shall have the meanings ascribed to them under Section 4980B of the Code and
Sections 601-608 of ERISA.
SECTION 11.4. 401(K) SAVINGS PLAN. Seller currently maintains a
401(k) savings plan (the "SELLER SAVINGS PLAN") which is in compliance in all
material respects with applicable law,
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including ERISA. The Seller Savings Plan is intended to meet the requirements of
Section 401(a) of the Code and has been determined by the Internal Revenue
Service to be "qualified" within the meaning of such section of the Code. Seller
does not know or have reason to know of any act which would adversely affect the
qualified status of said plan. Seller and all agents or representatives
appointed by Seller or working as a result of appointment by Seller have
fulfilled in all material respects any and all responsibilities they have or may
have under applicable law, including ERISA, in connection with the Seller
Savings Plan.
ARTICLE XII.
MISCELLANEOUS PROVISIONS
SECTION 12.1. REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the parties to this Agreement made in this Agreement, subject
to the exceptions thereto, will not be affected by any information furnished to,
or any investigation conducted by, any of them or their representatives in
connection with the subject matter of this Agreement. All representations and
warranties contained in this Agreement shall not survive the Closing.
SECTION 12.2. NOTICES. All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given (a) when delivered
personally to the recipient, (b) when sent to the recipient by telecopy (receipt
electronically confirmed by sender's telecopy machine) if during normal business
hours of the recipient, otherwise on the next Business Day, (c) one (1) Business
Day after the date when sent to the recipient by reputable express courier
service (charges prepaid) or (d) seven (7) Business Days after the date when
mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
will be sent to Seller and to Purchaser at the addresses indicated below:
If to Purchaser: General Parts, Inc.
P.O. Box 26006
Raleigh, NC 27611
Attention: O. Temple Sloan, Jr.
Facsimile No.: 919-573-3551
With a copy Manning, Fulton & Skinner, P.A.
(which shall not P.O. Box 20389
constitute notice) to: Raleigh, NC 27619-0389
Attention: W. Gerald Thornton
Facsimile No.: 919-571-2504
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If to Seller: APS Holding Corporation
15710 John F. Kennedy Blvd.
Suite 700
Houston, Texas 77032-2347
Attention: Bettina Whyte
Facsimile No. 713-507-1323
With a copy Willkie Farr & Gallagher
(which shall not 787 Seventh Avenue
constitute notice) to: New York, New York 10019-6099
Attention: Cornelius T.
Finnegan III, Esq.
Facsimile No. (212) 728-8111
or to such other address as either party hereto may, from time to time,
designate in writing delivered pursuant to the terms of this Section.
SECTION 12.3. AMENDMENTS. The terms, provisions and conditions
of this Agreement may not be changed, modified or amended in any manner
except by an instrument in writing duly executed by each of the parties
hereto.
SECTION 12.4. ASSIGNMENT. This Agreement is binding upon and inures
to the benefit of the successors and assigns of each party to this Agreement
(including any trustee appointed in respect of Seller under the Bankruptcy
Code), but no rights, obligations or liabilities under this Agreement may be
assigned by either party without the prior written consent of the other party
hereto.
SECTION 12.5. ANNOUNCEMENTS. All press releases, notices to
customers and suppliers and other announcements prior to the Closing Date with
respect to this Agreement and the transactions contemplated by this Agreement
shall be approved by both Purchaser and Seller prior to the issuance thereof;
provided that either party may make any public disclosure that it believes in
good faith is required by law or regulation (in which case the disclosing party
shall advise the other party prior to making such disclosure and provide such
other party an opportunity to review the proposed disclosure).
SECTION 12.6. EXPENSES. Except as otherwise set forth in this
Agreement, each party to this Agreement shall bear all of its own legal,
accounting, investment banking and other expenses incurred by it or on its
behalf in connection with the transactions contemplated by this Agreement,
whether or not such transactions are consummated.
SECTION 12.7. ENTIRE AGREEMENT. This Agreement and the Ancillary
Agreements constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede and are in full substitution
for any and all prior agreements and understandings between them relating to
such
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subject matter, PROVIDED HOWEVER, that any confidentiality agreements between
Seller and Purchaser shall remain in full force and effect. The Exhibits and
Schedules to this Agreement are hereby incorporated into and made a part hereof
and are an integral part of this Agreement.
SECTION 12.8. DESCRIPTIVE HEADINGS. The descriptive headings of
the several sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
SECTION 12.9. COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by any one or more
parties hereto, and each such executed counterpart shall be, and shall be deemed
to be, an original, but all of which together shall constitute one and the same
instrument.
SECTION 12.10. GOVERNING LAW; JURISDICTION. This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the laws
of the State of Delaware, without giving effect to the principles of conflicts
of laws thereof. For so long as Seller is subject to the jurisdiction of the
Bankruptcy Court, the parties hereto irrevocably elect as the sole judicial
forum for the adjudication of any matter arising under or in connection with
this Agreement, and consent to the jurisdiction of, the Bankruptcy Court. After
Seller is no longer subject to the jurisdiction of the Bankruptcy Court, the
parties hereto irrevocably elect as the sole judicial forum for the adjudication
of any matters arising under or in connection with this Agreement, and consent
to the jurisdiction of, the courts of the County of New Castle, State of
Delaware or of the United States of America for the District of Delaware.
SECTION 12.11. CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against either party.
Any references to any federal, state, local or foreign statute or law will also
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Unless the context otherwise requires: (a) a term has the
meaning assigned to it by this Agreement; (b) an accounting term not otherwise
defined herein has the meaning assigned to it by GAAP; (c) the word "or" is not
exclusive; (d) the words "include", "includes" and "including" shall be deemed
to be followed by the words "without limitation"; (e) words in the singular
include the plural and in the plural include the singular; (f) provisions apply
to successive events and transactions; and (g) "$" means the currency of the
United States of America.
SECTION 12.12. SEVERABILITY. In the event that any one or more of
the provisions contained in this Agreement or in any other instrument referred
to herein shall, for any reason, be
40
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held to be invalid, illegal or unenforceable in any respect, then to the maximum
extent permitted by law, such invalidity, illegality or unenforceability shall
not affect any other provisions of this Agreement or any other such instrument.
Furthermore, in lieu of any such invalid or unenforceable term or provision, the
parties hereto intend that there shall be added as a part of this Agreement a
provision as similar in terms to such invalid or unenforceable provision as may
be possible and be valid and enforceable.
SECTION 12.13. CONFIDENTIALITY. Seller and Purchaser agree to keep,
and to cause each of their affiliates, directors, officers, and employees to
keep, confidential any and all confidential information of the other party that
either receives in connection herewith or in the course of performing its
obligations hereunder (except that such information may be shared, on a
confidential basis, with the party's attorneys and auditors) and will not,
without the other party's written consent, use any of such confidential
information except as reasonably necessary to perform its duties under this or
another of its agreements with the other party. Upon termination of this
Agreement, each party will return, and will cause its affiliates to return, to
the other party all original documents and copies of the confidential
information which are in its possession.
41
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IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered
this Agreement as of the day and year first written above.
A.P.S., INC.
By: /s/ BETINA M. WHYTE
Name: Bettina M. Whyte
Title: President
GENERAL PARTS, INC.
By: /s/ O. TEMPLE SLOAN, JR.
Name: O. Temple Sloan, Jr.
Title: Chairman
A.E. LOTTES CO., a Missouri corporation ("LOTTES"), hereby joins in
the execution of this Agreement for the sole purposes of (i) making the
representations and warranties, with respect to itself and the transactions
contemplated hereby with respect to itself, made in ARTICLE IV (other than
SECTIONS 4.4 and 4.7 (which SECTION 4.7 shall apply to Lottes to the extent that
Assigned GPI Affiliate Leases assigned to Lottes are Executory Contracts), to
the same extent as if Lottes were the Purchaser named therein; (ii) agreeing,
with respect to itself, the Assigned GPI Affiliate Leases being assigned to
Lottes and the Lottes Subleases, to the provisions of SECTIONS 6.2, 6.3 AND 6.4,
to the same extent as if Lottes were the "Purchaser" named therein; (iii)
agreeing to the provisions of SECTIONS 2.10 AND 10.2, and (iv) agreeing to
execute and deliver at Closing (x) a Lease Assignment and Assumption Agreement
with respect to the Assigned GPI Affiliate Leases being assigned to Lottes and
(y) Lottes Subleases.
A.E. LOTTES CO.
By: /s/ ARTHUR E. LOTTES, III
Name: Arthur E. Lottes, III
Title: President
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STRAFCO, INC., a Texas corporation ("STRAFCO"), hereby joins in the
execution of this Agreement for the sole purposes of (i) making the
representations and warranties, with respect to itself and the transactions
contemplated hereby with respect to itself, made in ARTICLE IV (other than
SECTION 4.4 and 4.7 (which SECTION 4.7 shall apply to Strafco to the extent that
Assigned GPI Affiliate Leases assigned to Strafco are Executory Contracts),), to
the same extent as if Strafco were the Purchaser named therein; (ii) agreeing,
with respect to itself and the Assigned GPI Affiliate Leases being assigned to
Strafco, to the provisions of SECTIONS 6.2, 6.3 AND 6.4, to the same extent as
if Strafco were the "Purchaser" named therein; (iii) agreeing to the provisions
of SECTIONS 2.10 AND 10.2, and (iv) agreeing to execute and deliver at Closing a
Lease Assignment and Assumption Agreement with respect to the Assigned GPI
Affiliate Leases being assigned to Strafco.
STRAFCO, INC.
By: /s/ JACK D. TRAWICK
Name: Jack D. Trawick
Title: President
43
EXHIBIT 2.4
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BETWEEN
A.P.S., INC.
AS SELLER
AND
BWP DISTRIBUTORS, INC.
AS PURCHASER
DATED AS OF SEPTEMBER 9, 1998
<PAGE>
TABLE OF CONTENTS
PAGE NO.
ARTICLE I. DEFINITIONS.....................................................2
Section 1.1. Definitions.................................................2
Section 1.2. Accounting Terms and Determinations........................10
ARTICLE II. PURCHASE AND SALE OF PURCHASED ASSETS AND ASSUMPTION OF
ASSUMED LIABILITIES.........................................11
Section 2.1. Purchase and Sale of Purchased Assets......................11
Section 2.2. Assumption of Obligations and Liabilities..................11
Section 2.3. [RESERVED].................................................12
Section 2.4. Purchase Price; Payment of Purchase Price..................12
Section 2.5. Physical Inventory; Inventory True-Up.......................13
Section 2.6. Accounts Receivable True-Up................................14
Section 2.7. Condition of Purchased Assets; Return of Inventory;
Inventory in Transit; Payment for Dirty Core and
Warranty Inventory...................................14
Section 2.8. Allocation of Purchase Price...............................15
Section 2.9. Sale at Closing Date.......................................15
Section 2.10. Apportionments............................................16
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER......................18
Section 3.1. Authority of Seller........................................18
Section 3.2. No Conflict or Violation...................................18
Section 3.3. Consents and Approvals.....................................18
Section 3.4. Compliance with Law........................................19
Section 3.5. Permits....................................................19
Section 3.6. Ownership of Purchased Assets..............................19
Section 3.7. Assigned Contracts.........................................19
Section 3.8. Labor Relations............................................19
Section 3.9. Litigation.................................................19
Section 3.10. Brokers....................................................19
Section 3.11. Disclaimer of Additional Representations and
Warranties; Schedules................................20
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER....................20
Section 4.1. Authority of Purchaser.....................................20
Section 4.2. No Conflict or Violation...................................21
Section 4.3. Consents and Approvals.....................................21
Section 4.4. Availability of Funds......................................21
Section 4.5. Litigation.................................................21
Section 4.6. Brokers....................................................21
Section 4.7. Adequate Assurances Regarding Executory Contracts..........22
ARTICLE V. CERTAIN COVENANTS OF SELLER.....................................22
Section 5.1. Conduct of Business Before the Closing Date................22
Section 5.2. Consents and Approvals.....................................22
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Section 5.3. Information and Access.....................................22
Section 5.4. Further Assurances.........................................23
Section 5.5. Assignment of Contracts....................................23
Section 5.6. Services to be provided by Seller..........................23
Section 5.7. Cure of Defaults...........................................23
Section 5.8. Bankruptcy Actions.........................................23
Section 5.9. Closed Locations' Transfer of Inventory From Closed
Locations............................................23
Section 5.10. Vacation and Sick Leave...................................24
Section 5.11. Form of Lease and Sublease; Services Agreement............24
ARTICLE VI. CERTAIN COVENANTS OF PURCHASER.................................24
Section 6.1. Consents and Approvals.....................................24
Section 6.2. Adequate Assurances Regarding Executory Contracts..........24
Section 6.3. Performance under Assigned Contracts.......................24
Section 6.4. Further Assurances.........................................25
Section 6.5. Purchaser Financing........................................25
Section 6.6. Collection of Accounts Receivable..........................25
Section 6.7. [RESERVED].................................................25
Section 6.8. Form of Lease and Sublease; Services Agreement.............25
ARTICLE VII. CONDITIONS TO SELLER'S OBLIGATIONS............................25
Section 7.1. Representations and Warranties.............................26
Section 7.2. Compliance with Agreement..................................26
Section 7.3. Consents...................................................26
Section 7.4. Purchaser's Closing Deliveries and Obligations.............26
Section 7.5. Closing under Other Asset Purchase Agreement...............26
Section 7.6. Closings under Real Property Purchase Agreements...........26
Section 7.7. Entry of the Order.........................................26
ARTICLE VIII. CONDITIONS TO PURCHASER'S OBLIGATIONS........................26
Section 8.1. Representations and Warranties.............................27
Section 8.2. Compliance with Agreement..................................27
Section 8.3. Consents...................................................27
Section 8.4. Seller's Closing Deliveries and Obligations................27
Section 8.5. Closings under Real Property Purchase Agreements...........27
Section 8.6. Entry of the Order.........................................27
Section 8.7. Assignment of Contracts....................................27
Section 8.8. Termination of Other Asset Purchase Agreement..............27
ARTICLE IX. THE CLOSING; OTHER BIDS; TERMINATION...........................28
Section 9.1. The Closing................................................28
Section 9.2. Other Bids; Fees...........................................29
Section 9.3. Termination................................................31
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Section 9.4. Effects of Termination.....................................32
ARTICLE X. TAXES...........................................................33
Section 10.1. Taxes Related to Purchase of Assets.......................33
Section 10.2. Proration of Real and Personal Property Taxes.............34
Section 10.3. Cooperation...............................................34
ARTICLE XI. EMPLOYEES AND EMPLOYEE BENEFIT PLANS...........................34
Section 11.1. Employment................................................34
Section 11.2. Employee Welfare Benefit Plans............................35
Section 11.3. COBRA.....................................................36
Section 11.4. 401(k) Savings Plan.......................................36
ARTICLE XII. MISCELLANEOUS PROVISIONS......................................36
Section 12.1. Representations and Warranties............................36
Section 12.2. Notices...................................................36
Section 12.3. Amendments................................................37
Section 12.4. Assignment................................................37
Section 12.5. Announcements.............................................38
Section 12.6. Expenses..................................................38
Section 12.7. Entire Agreement..........................................38
Section 12.8. Descriptive Headings......................................38
Section 12.9. Counterparts..............................................38
Section 12.10. Governing Law; Jurisdiction...............................38
Section 12.11. Construction..............................................39
Section 12.12. Severability..............................................39
Section 12.13. Confidentiality...........................................39
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SCHEDULE
LETTER/NUMBER SCHEDULE NAME
Schedule A Certain Affiliates
Schedule B Assigned Leases
Schedule C [RESERVED]
Schedule D Fixed Assets
Schedule E Lease Terms
Schedule F Notes Receivable
Schedule G Other Contracts
Schedule H Purchased Locations
Schedule I Purchased Real Properties
Schedule J Sublease Terms
Schedule K Big-A Stores
2.5(a) Inventory Procedures
3.3 Consents and Approvals
3.4 Compliance with Laws
3.5 Permits
3.7 Assigned Contracts
3.8 Collective Bargaining Agreements
3.9 Litigation
5.9 Closed Locations
EXHIBIT EXHIBIT NAME
A Assignment and Assumption Agreement
B Bill of Sale and Assumption Agreement
C Lease Assignment and Assumption Agreement
D License Agreement
E Order
F Services Agreement
G Bidding Protections Order
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made and entered
into as of September 9, 1998 by and among A.P.S., INC., a Delaware corporation
("APS") and a debtor and debtor-in-possession in a case pending under chapter 11
of the Bankruptcy Code, certain Affiliates of APS set forth on SCHEDULE A hereto
(together with APS, "SELLER"), which Affiliates are debtors and
debtors-in-possession in cases pending under chapter 11 of the Bankruptcy Code,
and BWP DISTRIBUTORS, INC., a New York corporation ("PURCHASER").
RECITALS
WHEREAS, Seller is engaged in the business of selling and
distributing automotive replacement parts, accessories and supplies and conducts
its business through a network of company-owned stores ("STORES"), installers
service warehouses ("ISWS") and distribution centers ("DCS");
WHEREAS, on February 2, 1998, Seller filed voluntary petitions with
the Bankruptcy Court initiating cases under chapter 11 of the Bankruptcy Code
and has continued in the possession of its assets and in the management of its
business pursuant to sections 1107 and 1008 of the Bankruptcy Code;
WHEREAS, Purchaser desires to purchase from Seller, and Seller
desires to sell to Purchaser, certain of the assets associated with the Seller's
operations at the Malvern, Pennsylvania DC (the "MALVERN DC") and at certain
associated Stores and ISWs, subject to certain liabilities, all on the terms and
subject to the conditions set forth herein;
WHEREAS, as a condition to its contemplated purchase of assets,
Purchaser will require that Seller close certain Stores and ISWs and that
certain assets located at such Stores and ISWs be transferred to the Malvern DC
concurrently with or as soon as practicable after the closing of the
transactions provided for in this Agreement;
WHEREAS, in connection with its contemplated purchase of assets,
Purchaser desires (i) to conduct business at the Malvern DC and certain
associated Stores and ISWs and retain certain employees of Seller, (ii) to
obtain, for a limited time after the Closing Date, access to Seller's Parts
Information Management System and certain other related services from Seller,
and (iii) to have Seller assign or sublease certain real property lease
agreements and sell certain real property to Purchaser and certain Affiliates of
Purchaser, all on the terms and subject to the conditions set forth herein and
in the Ancillary Agreements.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements herein contained, and other good and
valuable consideration, the receipt and
<PAGE>
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINITIONS. Unless otherwise defined herein, the terms
defined in the introductory paragraph and the Recitals to this Agreement shall
have the respective meanings specified therein, and the following terms shall
have the meanings specified below:
"ACCOUNTS RECEIVABLE" means the accounts receivable (including all
rights to bill customers for products shipped or services rendered prior
to the Closing Date but excluding the Notes Receivable) which are
allocable to Seller's business operations conducted at the Purchased
Locations (but not the Closed Locations), excluding those accounts
receivable (i) which are more than 90 days past due as of the Closing Date
(as shown on the accounts receivable aging statement prepared as of the
end of the fiscal month prior to the Closing Date) or (ii) the obligor on
which is the subject of a pending bankruptcy proceeding. In determining
the amount of any Account Receivable hereunder, the amount of any unearned
advertising fee or other similar charge allocable thereto shall be
excluded.
"AFCO NOTES" means the notes owned by Autoparts Finance Company,
Inc., a subsidiary of Seller, and identified as AFCO Notes on the NOTES
RECEIVABLE SCHEDULE attached hereto.
"AFFILIATE" means "affiliate" as defined in Rule 405 promulgated
under the Securities Act of 1933, as amended.
"AGREEMENT" has the meaning set forth in the introductory paragraph
and shall include all Schedules and Exhibits hereto.
"ANCILLARY AGREEMENTS" means, collectively, the Lease Assignment and
Assumption Agreements, the Assignment and Assumption Agreement, the Bill
of Sale and Assumption Agreement, the Services Agreement, the License
Agreement and the Real Property Lease Agreements.
"APPORTIONMENT DATE" has the meaning set forth in SECTION 2.10.
"AR DISCOUNTS" has the meaning set forth in SECTION 2.4(A).
"ASSIGNED CONTRACTS" means the Assigned Leases and the Other
Contracts relating to the Purchased Locations to be assigned by Seller to
Purchaser and set forth on SCHEDULE 3.7.
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"ASSIGNED LEASES" means those leases to be assigned to Purchaser at
Closing, a schedule of which is attached hereto as SCHEDULE B.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and
Assumption Agreement to be executed at Closing for the Other Contracts, in
substantially the form attached hereto as EXHIBIT A.
"ASSUMED LIABILITIES" has the meaning set forth in SECTION 2.2.
"BANKRUPTCY CODE" means The Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, and codified as 11 U.S.C. Section
101, ET SEQ.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for the
District of Delaware, or any other court, having jurisdiction over the
Cases from time to time.
"BID" has the meaning set forth in SECTION 9.2(B).
"BIG A STORES" means the Stores listed on Schedule K attached
hereto.
"BILL OF SALE AND ASSUMPTION AGREEMENT" means the Bill of Sale and
Assumption Agreement to be executed at Closing by Purchaser and Seller in
substantially the form attached hereto as EXHIBIT B.
"BLACKSTONE" has the meaning set forth in SECTION 9.2(B).
"BREAKUP FEE" has the meaning set forth in SECTION 9.2(D).
"BUSINESS DAY" means a day, other than a Saturday or a Sunday, on
which commercial banks are not required or authorized to close in The City
of New York.
"BUSINESS EMPLOYEES" means employees of Seller whose duties relate
primarily to Seller's business operations at the Purchased Locations.
"CASES" means the chapter 11 cases of Seller pending in the
Bankruptcy Court and being jointly administered for procedural purposes
as IN RE APS HOLDING CORPORATION, ET. AL., Case No. 98-197 (PJW).
"CLOSED LOCATIONS" means the Stores and ISWs listed on SCHEDULE 5.9
hereto which are to be closed prior to,
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<PAGE>
concurrently with or after the Closing Date in accordance with SECTION
5.9.
"CLOSING" has the meaning set forth in SECTION 9.1.
"CLOSING DATE" has the meaning set forth in SECTION 9.1.
"CLOSING DATE PAYMENT" has the meaning set forth in SECTION
2.4(B).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTED FINANCING" means funds available pursuant to a written
commitment letter or other documentation from a commercial bank or other
lending institution, a copy of which letter or other documentation has
been delivered to Seller prior to the date hereof.
"CURRENT INVENTORY AMOUNT" means the aggregate dollar amount of New
Inventory, based upon 100% of the Warehouse Distributor Cost of such New
Inventory, owned by Seller and located at each of the Purchased Locations
and each of the Closed Locations as shown on Seller's August 25, 1998
general ledger.
"DC" has the meaning set forth in the Recitals hereto.
"DIP LENDERS" means the financial institutions from time to time
party to the Revolving Credit, Term Loan and Guarantee Agreement.
"DIRTY CORE AND WARRANTY INVENTORY" means items of used cores and
warranty inventory returned by customers in amounts customarily found in
the applicable Purchased Locations and Closed Locations.
"ESTIMATED ACCOUNTS RECEIVABLE" means the total Accounts Receivable
estimated by Seller to be outstanding on the Business Day prior to the
Closing Date.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXECUTORY CONTRACTS" means all Assigned Contracts entered into by
or assigned to Seller before February 2, 1998 and which are executory or
unexpired as of the Closing Date.
"EXPENSE REIMBURSEMENT" has the meaning set forth in SECTION
9.2(D).
4
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"FIXED ASSETS" means (i) all of the machinery, equipment, furniture,
fixtures, computers and vehicles used in the operation of the business at
the Purchased Locations on the Closing Date and which are owned by
Seller, a list of which Fixed Assets, with the purchase price allocated
by item or groups of items as of the date of this Agreement (the "FIXED
ASSETS SCHEDULE"), is attached hereto as SCHEDULE D, which Fixed Assets
Schedule shall be updated to reflect acquisitions and dispositions which
are acceptable to Purchaser and depreciation as of the Closing Date; (ii)
leasehold improvements as approved by Purchaser and located at certain of
the Purchased Locations as set forth on the Fixed Assets Schedule; and
(iii) to the extent assignable, any rights of Seller to the warranties,
licenses and other similar rights with respect thereto. The inclusion of
items on the Fixed Assets Schedule shall be subject to audit by Purchaser
prior to the Closing Date for in place and normal serviceable condition
by location.
"FIXED ASSET BOOK VALUE" means the book value net of accumulated
depreciation of the Fixed Assets as of the Closing Date as determined in
accordance with the Fixed Assets Schedule, provided that general ledger
codes 1313B, 1326O and 1324I shall be deemed to have a Fixed Asset Book
Value of zero.
"FORM AGREEMENT" has the meaning set forth in SECTION 9.2(B).
"GOVERNMENTAL AGENCY" means (a) any federal, state, county, local or
municipal governmental or administrative agency or political subdivision
thereof, (b) any governmental authority, board, bureau, commission,
department or instrumentality and (c) any court or administrative
tribunal.
"GPI" means General Parts, Inc., a North Carolina corporation.
"IN-TRANSIT INVENTORY" means automotive inventory subject to open
purchase orders (including back orders) of Seller as of the Closing Date.
"INVENTORY" means New Inventory, Rejected Inventory and Dirty
Core and Warranty Inventory.
"INVENTORY REPRESENTATIVES" has the meaning set forth in SECTION
2.5(A).
"IRS" means the Internal Revenue Service of the United States
Department of the Treasury.
"ISW" has the meaning set forth in the Recitals hereto.
5
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"KNOWLEDGE" as applied to Seller means the actual knowledge of the
President, the Chief Executive Officer or the Chief Financial Officer of
APS, Inc. or of any of the persons specified in the letter of Seller dated
the date hereof and delivered to Purchaser with respect to this definition
and as applied to Purchaser means the actual knowledge of its President,
Chief Executive Officer or Chief Financial Officer.
"LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and
Assumption Agreements to be executed at Closing for the Assigned Leases,
in substantially the form attached hereto as EXHIBIT C.
"LEASED PROPERTIES" means the premises subject to the Leases.
"LEASES" means the leases for the premises to remain owned by Seller
after Closing and to be leased by Seller to Purchaser, the terms of which
leases are attached hereto as SCHEDULE E.
"LICENSE AGREEMENT" means the License Agreement to be executed by
Purchaser and Seller at Closing, pursuant to which License Agreement
Seller shall grant to Purchaser certain rights to use trademarks and trade
names of Seller for the periods and on the terms set forth therein, such
Agreement to be substantially in the form attached hereto as EXHIBIT D.
"LIEN" means any mortgage, pledge, security interest, charge or
other encumbrance, other than (i) with respect to Purchased Real
Properties, liens provided for in reports obtained as part of the due
diligence procedures set forth in SECTION 2.11; (ii) liens on property
underlying any of the Leases, Assigned Leases or Subleases; (iii) any
imperfection of title with respect to any asset which does not materially
interfere with the present occupancy, use or marketability of such asset
and the continuation of the present occupancy, use or marketability of
such asset; (iv) such covenants, conditions, restrictions, easements,
encroachments or encumbrances that are not created pursuant to mortgages
or other financing or security documents, and any other state of facts,
which do not, individually or in the aggregate, materially interfere with
the present occupancy or use of such asset; and (v) liens for Taxes not
yet delinquent or which are being contested in good faith through
appropriate proceedings.
"MALVERN DC" has the meaning set forth in the Recitals hereto.
"NEW INVENTORY" means items of automotive inventory in good, salable
condition, listed in the manufacturer's
6
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current price sheet, including core charges associated with such
inventory, if applicable, and subject to manufacturers' obsolescence and
returned goods policies of the kinds normally extended to customers for a
particular product line on an industry-wide basis, owned by Seller and on
hand at the Purchased Locations or the Closed Locations at the Closing
Date. New Inventory shall not include Dirty Core and Warranty Inventory.
New Inventory (excluding In-transit Inventory) determined on the True-Up
Date to be in excess of 105% of amounts as at June 25, 1998 heretofore
disclosed by Seller to Purchaser shall be subject to renegotiation or
return to Seller. Consigned goods owned by Seller shall be included in New
Inventory only after confirmation of the amount and verification of the
consignment in writing by the consignee.
"NON-COVERED ASSETS " has the meaning set forth in SECTION 9.2(C).
"NOTES RECEIVABLE" means receivables of Seller or its Affiliates
under the AFCO Notes and Warehouse Notes being purchased by Purchaser and
identified in the NOTES RECEIVABLE SCHEDULE attached hereto as SCHEDULE F.
"ORDER" means an order of the Bankruptcy Court, in substantially the
form attached hereto as EXHIBIT E, which order, as of the Closing Date,
shall not have been stayed, vacated or otherwise rendered ineffective,
authorizing, among other things, the sale of the Purchased Assets to
Purchaser, the assignment of the Assigned Contracts to, and the assumption
of the Assigned Contracts by, Purchaser, the transactions contemplated by
the Ancillary Agreements and all other transactions and agreements
contemplated hereby.
"OTHER ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement
dated as of the date hereof between Seller and GPI.
"OTHER CONTRACTS" means the contracts which are listed on the OTHER
CONTRACTS SCHEDULE attached hereto as SCHEDULE G.
"PERMIT" means any permit, approval, authorization, license,
variance or permission required by a Governmental Agency under any
applicable law.
"PERSON" means any individual, partnership, corporation, trust,
association, limited liability company, Governmental Agency or other
entity.
"PHYSICAL INVENTORY PERIOD" means the time period or periods during
which the physical inventory is taken pursuant to SECTION 2.5(A).
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"PIMS" means the Parts Information Management System, the
information management system used in operating the business carried on at
the Purchased Locations, access to which is to be granted to Purchaser
pursuant to the Services Agreement.
"PIMS INVENTORY VALUE" means the invoice cost to Seller per item of
Inventory as shown on PIMS (subject to verification by Purchaser) as of
the Business Day prior to the Closing Date.
"PURCHASE PRICE" has the meaning set forth in SECTION 2.4(A).
"PURCHASED ASSETS" means all of the Seller's right, title and
interest as of the Closing Date in and to the following:
(a) the Accounts Receivable;
(b) the Assigned Contracts;
(c) the Dirty Core and Warranty Inventory;
(d) the Fixed Assets;
(e) the In-transit Inventory;
(f) the New Inventory;
(g) the Notes Receivable;
(h) the Purchased Real Property;
(i) records relating primarily to the Purchased Assets, and
copies of personnel files for the Purchaser's Employees;
(j) to the extent legally assignable, Permits required to
conduct business at the Purchased Locations as conducted prior to
the Closing Date; and
(k) independent customer lists and other information and data
relating to independent customers of the Purchased Locations.
"PURCHASED LOCATIONS" means the Malvern DC and the ISWs and Stores
listed on SCHEDULE H attached hereto.
"PURCHASED REAL PROPERTIES" means the real properties to be
purchased by Purchaser on the Closing Date (subject to the provisions of
SECTION 2.11), as set forth on SCHEDULE I attached hereto.
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"PURCHASER'S EMPLOYEES" has the meaning set forth in SECTION 11.1.
"QUALIFYING BID" has the meaning set forth in SECTION 9.2(C).
"REAL PROPERTY LEASE AGREEMENTS" means each of the Leases and
Subleases.
"REAL PROPERTY PURCHASE PRICE " means the purchase price for each of
the Purchased Real Properties, as set forth on SCHEDULE I attached hereto.
"REJECTED INVENTORY" means all items of automotive inventory, other
than Dirty Core and Warranty Inventory, not meeting the definition of New
Inventory and owned by Seller and on hand at the Purchased Locations or
the Closed Locations at the Closing Date, PROVIDED, THAT, for purposes of
this definition of Rejected Inventory, sales of Inventory occurring
between the Closing Date and the date that the Inventory is rejected shall
be applied first to Inventory which was on hand at the Closing Date.
"REVOLVING CREDIT, TERM LOAN AND GUARANTEE AGREEMENT" means the
Revolving Credit, Term Loan and Guarantee Agreement, dated as of February
2, 1998, as the same has been and may be amended, among APS Holding
Corporation, Seller, Seller's subsidiaries, the DIP Lenders and The Chase
Manhattan Bank, as agent for the DIP Lenders.
"SCHEDULES" means the various Schedules referred to in this
Agreement delivered separately to Purchaser on or before the date of this
Agreement, except as otherwise specified in this Agreement.
"SELLER SAVINGS PLAN" has the meaning set forth in SECTION 11.4.
"SERVICES AGREEMENT" means the Services Agreement to be entered into
by Purchaser and Seller at Closing, pursuant to which Services Agreement
Seller shall render certain services to Purchaser for a limited time
following the Closing Date, as contemplated by SECTION 5.7 and
substantially in the form attached hereto as EXHIBIT F.
"STORES" has the meaning set forth in the Recitals hereto.
"SUBLEASED PROPERTIES" means the premises subject to the
Subleases.
"SUBLEASES" means those sublease agreements pursuant to which
certain leases are to be sublet by Seller to
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Purchaser, the terms of which subleases are attached hereto as SCHEDULE J.
"SUPERIOR BID" has the meaning set forth in SECTION 9.2(B).
"TAX RETURN" means any report, return, information return, filing,
claim for refund or other information, including any schedules or
attachments thereto, and any amendments to any of the foregoing required
to be supplied to a taxing authority in connection with Taxes.
"TAXES" means all federal, state, local and foreign taxes, including
income, gross receipts, excise, employment, sales, use, transfer, license,
payroll, franchise, severance, stamp, withholding, Social Security,
unemployment, disability, real property, personal property, registration,
alternative or add-on minimum, estimated or other tax, including any
interest, penalties or additions thereto, whether disputed or not.
"TRANSACTION TAXES" has the meaning set forth in SECTION 10.1.
"TRUE-UP DATE" , means the date which is ninety (90) Business Days
after the Closing Date.
"WAREHOUSE DISTRIBUTOR COST" means PIMS Inventory Value (with
respect to Inventory not located at Big-A Stores) or other applicable
point-of-sale inventory value (with respect to Inventory located at Big-A
Stores), less 4.9%, provided, however, that with respect to Inventory
located at Big-A Stores, Warehouse Distributor Cost shall be further
reduced by 13.2%.
"WAREHOUSE NOTES" means the notes identified as Warehouse Notes on
the NOTES RECEIVABLE SCHEDULE attached hereto.
"WARN" has the meaning set forth in SECTION 11.1.
"WELFARE TYPE PLANS" has the meaning set forth in SECTION 11.2.
SECTION 1.2. ACCOUNTING TERMS AND DETERMINATIONS. All references in
this Agreement to "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" shall
mean generally accepted accounting principles in effect in the United States of
America at the time of application thereof. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made and all financial
statements and certificates and reports as to financial matters required to be
furnished hereunder shall be prepared, in accordance with generally
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accepted accounting principles, consistent with Seller's historical practices,
applied on a consistent basis.
ARTICLE II.
PURCHASE AND SALE OF
PURCHASED ASSETS AND
ASSUMPTION OF ASSUMED LIABILITIES
SECTION 2.1. PURCHASE AND SALE OF PURCHASED ASSETS. On the terms and
subject to the conditions set forth in this Agreement, at the Closing Purchaser
shall purchase from Seller, and Seller shall sell, transfer, assign, convey and
deliver to Purchaser at the Purchased Locations, all of Seller's right, title
and interest in and to the Purchased Assets, PROVIDED, HOWEVER, that Seller
shall be entitled to retain copies of all books and records, in whatever form,
included in the Purchased Assets.
Purchaser acknowledges that it shall not acquire any right, title or
interest in any property, asset or right of Seller that is not a Purchased Asset
or other asset acquired by Purchaser hereunder, including rights of Seller to
any vendor discounts, credits, rebates or other amounts, and claims of Seller
against third parties in respect thereof.
SECTION 2.2. ASSUMPTION OF OBLIGATIONS AND LIABILITIES. On the terms
and subject to the conditions set forth in this Agreement, from and after the
Closing, Purchaser will assume and pay, perform, discharge and be responsible
for all of the following liabilities of Seller (collectively, the "ASSUMED
LIABILITIES"):
(a) all obligations and liabilities of Seller under the Assigned
Contracts which accrue from and after the Closing Date; and
(b) all obligations and liabilities of Seller relating to the Leased
Properties, the Subleased Properties and the Purchased Real Properties
which accrue from and after the Closing Date.
Purchaser shall not assume or pay, perform, discharge or be responsible for any
of the obligations or liabilities of Seller other than the Assumed Liabilities
or liabilities assumed, incurred or created under the Ancillary Agreements.
Without limiting the generality of the foregoing provisions of this
SECTION 2.2, Purchaser shall not assume or pay, perform, discharge or be
responsible for any of the obligations or liabilities of Seller pursuant to any
contract or agreement that is not an Assigned Contract, including customer
product purchase agreements.
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In addition, Purchaser does not assume and Seller remains
responsible for all obligations and liabilities related to all rebate and
incentive programs established by or for national accounts, manufacturers or
customers and relating to sales by Seller prior to the Closing Date.
SECTION 2.3. [RESERVED].
SECTION 2.4. PURCHASE PRICE; PAYMENT OF PURCHASE PRICE.
(a) On the terms and subject to the conditions set forth in this
Agreement, the purchase price for the Purchased Assets shall be an aggregate
amount equal to the sum of the following:
(i) eighty-five percent (85%) of the Warehouse Distributor
Cost of the New Inventory;
(ii) an amount equal to the value realized by Purchaser for
Dirty Core and Warranty Inventory determined in accordance with
actual receipts or credits received less, for items delayed beyond
Purchaser's normal practice in return to the manufacturer, 20% for
handling;
(iii) fifty percent (50%) of the Fixed Asset Book Value of the
Fixed Assets at the Malvern DC and one hundred percent (100%) of the
Fixed Asset Book Value of the other Fixed Assets;
(iv) one hundred percent (100%) of principal amounts
outstanding under the Notes Receivable, plus interest accrued to
date of purchase, subject to SECTION 2.4(D);
(v) one hundred percent (100%) of the Warehouse Distributor
Cost of the In-transit Inventory, subject to SECTION 2.7(C);
(vi) one hundred percent (100%) of the face amount of the
Accounts Receivable, less "prompt payment" discounts actually earned
and taken ("AR DISCOUNTS"); and
(vii) the aggregate price for the Purchased Real Property, in
accordance with SECTION 2.11.
The aggregate of the amounts determined pursuant to items (i) through (vii)
above is referred to herein as the "PURCHASE PRICE."
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(b) On the Closing Date, Purchaser shall pay to Seller an amount of
the Purchase Price in cash, by wire transfer of immediately available funds
(pursuant to written instructions to be provided by Seller to Purchaser), equal
to the sum of the following (the "CLOSING DATE PAYMENT"):
(i) eighty-five percent (85%) of the Current Inventory
Amount;
(ii) the portions of the Purchase Price provided for in
SECTIONS 2.4(A)(III) and 2.4(A)(IV);
(iii) an amount equal to sixty-five percent (65%) of the
Estimated Accounts Receivable (determined without regard to AR
Discounts); and
(iv) the aggregate price for the Purchased Real Property, as
provided in SECTION 2.11.
The Closing Date Payment shall be adjusted pursuant to SECTIONS 2.5 and 2.6.
Purchaser shall pay the remainder of the Purchase Price pursuant to SECTIONS
2.4(C), 2.4(D), 2.5(B), 2.6(B), 2.7(C), 2.7(D) and 2.11.
(c) For a period of 180 days following the Closing Date, and after
Purchaser has collected Accounts Receivable equal to the amount paid by
Purchaser under SECTION 2.4(B)(III), as adjusted pursuant to SECTION 2.6,
Purchaser shall remit to Seller on the first and fifteenth days of each month
all Accounts Receivable collected by it.
(d) Notwithstanding the foregoing provisions, Purchaser will
purchase Notes Receivable upon conversion of such obligor to Carquest jobber
status. Upon such purchase, Seller will assign to Purchaser all security
agreements and related instruments with respect to each such Note, and Purchaser
will pay to Seller, in cash, the amount then outstanding under such Note,
together with accrued interest to date of purchase.
SECTION 2.5. PHYSICAL INVENTORY; INVENTORY TRUE-UP. Unless otherwise
noted, all references in this SECTION 2.5 to "aggregate dollar amount" mean the
aggregate dollar amount based upon 100% of the Warehouse Distributor Cost.
(a) Employees or representatives of Seller and Purchaser ("INVENTORY
REPRESENTATIVES") will jointly conduct a physical inventory count of, or other
testing procedures for, the Inventory at Purchased Locations and Closed
Locations, or mutually agree that Seller's Inventory at a Purchased Location or
Closed Location is accurate, in accordance with physical inventory procedures
generally used in the industry and pursuant to the timetables and for the
periods set forth on SCHEDULE 2.5(A) attached hereto (the "PHYSICAL INVENTORY
PERIOD"). During the Physical Inventory Period, Seller, with the assistance of
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Purchaser, shall prepare a list of Inventory at Purchased Locations and Closed
Locations (the "FINAL INVENTORY SCHEDULE"), which Final Inventory Schedule shall
be completed not later than the True-Up Date. The Final Inventory Schedule shall
be prepared in accordance with the criteria set forth on SCHEDULE 2.5(A).
Purchaser and Seller shall perform an audit of Seller's computer system price
file as part of the physical inventory procedures and prior to completion of the
Final Inventory Schedule. Purchaser shall be responsible for the costs
associated with its own employees and representatives. Seller shall be
responsible for all other costs associated with conducting the physical
inventory and preparing the Final Inventory Schedule pursuant to this SECTION
2.5(A).
(b) In the event that the aggregate dollar amount of New Inventory
shown on the Final Inventory Schedule is less than the Current Inventory Amount,
Seller shall refund to Purchaser, on the first Business Day following the
True-Up Date, an amount equal to eighty-five percent (85%) of the difference
between (x) the Current Inventory Amount and (y) the aggregate dollar amount of
New Inventory shown on the Final Inventory Schedule. In the event that the
aggregate amount of New Inventory shown on the Final Inventory Schedule is
greater than the Current Inventory Amount, Purchaser shall pay to Seller, on the
fist Business Day following the True-Up Date, an amount equal to eighty-five
percent (85%) of the Warehouse Distributor Cost of the additional New Inventory.
SECTION 2.6. ACCOUNTS RECEIVABLE TRUE-UP
(a) On the True-Up Date, Seller shall prepare and deliver to
Purchaser a final statement of Accounts Receivable outstanding as of the close
of business on the Closing Date (the "CLOSING DATE ACCOUNTS RECEIVABLE
STATEMENT") showing the outstanding Accounts Receivable as of the Closing Date,
determined after deduction of applicable AR Discounts.
(b) In the event that the Accounts Receivable shown on the Closing
Date Accounts Receivable Statement are greater than the Estimated Accounts
Receivable, Purchaser shall pay to Seller, on the first Business Day following
the True-Up Date, an amount equal to sixty-five percent (65%) of such excess. In
the event that the Estimated Accounts Receivable are greater than the Accounts
Receivable shown on the Closing Date Accounts Receivable Statement, Seller shall
refund to Purchaser, on the first Business Day following the True-Up Date, an
amount equal to sixty-five percent (65%) of such excess. The provisions of this
SECTION 2.6 shall not affect the rights of Seller to receive payments pursuant
to SECTION 2.4(C).
SECTION 2.7. CONDITION OF PURCHASED ASSETS; RETURN OF INVENTORY;
INVENTORY IN TRANSIT; PAYMENT FOR DIRTY CORE AND WARRANTY INVENTORY.
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(a) Except for the warranty of title set forth in SECTION 3.6, the
Purchased Assets are being sold "AS IS," "WHERE IS" and "WITH ALL FAULTS" and
Seller hereby expressly disclaims any and all other warranties both express and
implied.
(b) Rejected Inventory shall be returned to the reclamation centers
or other facilities as shall be specified by Seller, at the sole expense of
Seller, with shipment of such Rejected Inventory to take place by five (5)
Business Days after the True-Up Date. Purchaser shall be liable for any loss of
or damage to Rejected Inventory prior to its delivery to such appropriate
Reclamation Center or other facilities.
(c) Purchaser shall allow employees or representatives designated by
Seller to be present at each Purchased Location during normal business hours for
a period of twenty (20) Business Days following the Closing Date for the purpose
of determining items of In-transit Inventory which arrive at the Business
Location during that period. At least five (5) Business Days prior to the
Closing Date, Seller shall present Purchaser with an itemized list of an
estimate of In-transit Inventory. Purchaser shall pay Seller, by wire transfer
within twenty (20) Business Days after receipt of any In-transit Inventory as
noted on the manufacturer's invoice, one hundred percent (100%) of Seller's
Warehouse Distributor Cost for each item of In-transit Inventory.
(d) Purchaser shall remit to Seller on the first and fifteenth days
of each month the value of cash or credits actually received, less any handling
charge, in respect of Dirty Core and Warranty Inventory, as provided in SECTION
2.4(A)(II).
(e) Purchaser shall permit employees and representatives of Seller
to inspect and audit Purchaser's books and records in order to confirm
Purchaser's compliance with SECTIONS 2.7(C) and 2.7(D).
SECTION 2.8. ALLOCATION OF PURCHASE PRICE. To the extent required by
law after the Closing Date, Purchaser and Seller shall prepare and file those
statements or forms (including Form 8594) required by Section 1060 of the Code
and the Treasury regulations thereunder and shall file such statements or forms
with their respective federal income Tax Returns. The parties shall prepare such
statements or forms consistently with any agreed allocation of all or a portion
of the Purchase Price to the Purchased Assets. Each party shall provide the
other party with a copy of such statements or forms as filed. Such allocation of
the Purchase Price will not be binding in the Cases upon the Seller's creditors
or other parties in interest and will not have precedential value with respect
to any allocations of value contained in a plan or plans under chapter 11 of the
Bankruptcy Code involving Seller.
SECTION 2.9. SALE AT CLOSING DATE . The sale, transfer, assignment
and delivery by Seller of the Purchased
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Assets, Leased Properties and Subleased Properties to Purchaser, and the
assumption by Purchaser of the Assumed Liabilities, as herein provided shall be
effected on the Closing Date by the execution and delivery by Seller and
Purchaser of (i) a Lease Assignment and Assumption Agreement substantially in
the form of EXHIBIT C, for the Assigned Leases, pursuant to which Lease
Assignment and Assumption Agreements Purchaser shall confirm its assumption of
all liabilities and obligations under the Assigned Leases which accrue from and
after the Closing Date; (ii) a Lease with respect to each Leased Property, (iii)
a Sublease with respect to each Subleased Property being sublet to Purchaser;
(iv) a limited warranty deed for each of the Purchased Real Properties; and (v)
an Assignment and Assumption Agreement for the Other Contracts, substantially in
the form of EXHIBIT A. With respect to the other Purchased Assets and Assumed
Liabilities, Seller shall execute and deliver to Purchaser a Bill of Sale and
Assumption Agreement substantially in the form of EXHIBIT B.
SECTION 2.10. APPORTIONMENTS. The following amounts are to be
apportioned as of 12:00 midnight on the day preceding the Closing Date (the
"APPORTIONMENT DATE") to the extent such are valid post-petition claims or are
subject to non-avoidable Liens: under the Real Property Lease Agreements, Real
Property Purchase Agreements and Assigned Leases, (i) water, sewer and utility
charges and real estate taxes, to the extent all or any are due and payable
under the Real Property Purchase Agreements or Assigned Leases, and (ii) such
other apportionments and adjustments as are customarily apportioned in
transactions of this nature. Except as otherwise provided herein, all such
prorations shall be verified by Purchaser and shall be made on the basis of
actual bills, to the extent available, or, in the absence of such actual bills,
on good faith estimates of Seller based on the most recent bills received by
Seller.
SECTION 2.11. PURCHASE OF CERTAIN REAL PROPERTY.
A. Due Diligence.
On the Closing Date, Seller shall sell to Purchaser, and Purchaser
shall purchase from Seller, for the prices set forth on SCHEDULE I hereto, each
of the Purchased Real Properties; PROVIDED, HOWEVER, that Purchaser shall not be
required to purchase any one or more of the Purchased Real Properties if
Purchaser shall (i) determine in good faith that, as a result of diligence
conducted by or on behalf of Purchaser after the date hereof and prior to
October 2, 1998, matters relating to title to or condition of or liabilities
(including environmental liabilities) associated therewith materially and
adversely affect the benefits to be obtained by Purchaser from its acquisition
of such Purchased Real Property and (ii) notify Seller of such determination in
writing, prior to October 8, 1998, specifying the reasons therefor in reasonable
detail. If any one or more of the Purchased Real Properties is not to be
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purchased by Purchaser as a result of the operation of the foregoing provisions,
Purchaser and Seller shall, at Closing, enter into a Lease with respect to such
property substantially in accordance with the terms set forth on SCHEDULE I
hereto.
B. Damage to or Taking of the Property.
If, prior to the Closing, (i) (x) any portion of a Purchased Real
Property is damaged by fire, vandalism, acts of God, or other casualty or cause
and (y) such damage can be repaired within 6 months, then Purchaser shall accept
the property as is together with Seller's rights, if any, to any insurance
proceeds, in which case, Seller shall cooperate with Purchaser in any loss
adjustment negotiations, legal actions and agreements with the insurance company
and Seller shall assign to Purchaser at the Closing its rights, if any, to such
insurance proceeds (and pay over to Purchaser any such proceeds already
received, but not yet expended). If there shall occur an uninsured casualty to
the property that does not otherwise result in the termination of the sale of
such Purchased Real Property pursuant to this section or if Seller's insurance
proceeds due to a casualty shall be subject to Seller's deductible under its
insurance policies, Seller may (x) elect not to sell such Purchased Real
Property to Purchaser, in which case the Purchase Price shall be reduced by the
amount allocated to such Purchased Real Property on Schedule I attached hereto,
with respect to the Purchase thereof, or (y) elect to sell such Purchased Real
Property to Purchaser at the Closing and give Purchaser a credit against the
Purchase Price in an amount equal to the cost of repairing the damage resulting
from such casualty remaining as of the Closing Date. The computation of the cost
of repair under the preceding sentence shall take into account Purchaser's
anticipated renovations to the property which may in some instances render such
repairs unnecessary. Seller will not settle any claims or legal actions relating
thereto without Purchaser's prior written consent, which consent shall not be
unreasonably withheld or delayed. If such damage cannot be repaired within 6
months, then Seller shall promptly notify Purchaser of such damage and either
Seller or Purchaser shall have 10 days after Purchaser's receipt of such
notification to elect not to purchase such Purchased Real Property. In the event
of an eminent domain taking or the issuance of a notice of an eminent domain
taking with respect to all or substantially all of a Purchased Real Property,
such Purchased Real Property shall not be transferred to Purchaser and Seller
shall be entitled to receive all eminent domain awards and shall control all
condemnation award proceedings. In the event of an eminent domain taking or the
issuance of a notice of an eminent domain taking with respect to less than all
or substantially all of one or more parcels of Purchased Real Property, this
Agreement shall remain in full force and effect, Purchaser shall be obligated to
consummate this transaction for the full Purchase Price and Purchaser shall be
entitled to receive all eminent domain awards and shall control all condemnation
award proceedings. To the
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extent the same may be necessary and appropriate, Seller shall assign to
Purchaser at Closing, Seller's rights to such awards.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to SECTION 3.12, Seller represents and warrants to Purchaser
as follows:
SECTION 3.1. AUTHORITY OF SELLER. Seller is a corporation validly
existing and in good standing under the laws of the State of Delaware. Seller
has full corporate power and authority to execute and deliver this Agreement and
each of the Ancillary Agreements, and the execution and delivery by Seller of
this Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Seller, and this
Agreement constitutes, and each of the Ancillary Agreements upon its execution
will constitute, the legal, valid and binding obligation of Seller enforceable
in accordance with its terms, subject to receipt of the Order and the receipt of
the consents, waivers and approvals specified on SCHEDULE 3.3. Subject to any
necessary authorization from the Bankruptcy Court, Seller has full corporate
power and authority to own its properties and to carry on its business
operations at the Purchased Locations presently being conducted by it, and upon
the entry of the Order, Seller will have all power and authority to take all
actions necessary or appropriate to close the transactions contemplated by this
Agreement.
SECTION 3.2. NO CONFLICT OR VIOLATION. The execution, delivery and
performance by Seller of this Agreement and the Ancillary Agreements do not and
will not violate or conflict with any provision of the Certificate of
Incorporation or By-laws of Seller and, assuming that the consents, waivers,
authorizations, approvals, declarations, filings and registrations referred to
in SECTION 3.3 are obtained or made, do not and will not violate or result in a
material breach of or constitute (with notice or lapse of time or both) a
material default under any Assigned Contract.
SECTION 3.3. CONSENTS AND APPROVALS. SCHEDULE 3.3 sets forth a true
and complete list of each material consent, waiver, authorization or approval of
any Person in connection any Assigned Contract involving the payment by Seller
of more than $30,000 in any calendar year (but not including for purposes of
such Schedule contracts or agreements, such as agreements for maintenance,
security, clerical, office supply and other services, that are typically
terminable upon short notice or that otherwise can be replaced without material
cost or difficulty) that is required for the execution and delivery of this
Agreement by Seller or the performance by Seller of its obligations hereunder.
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SECTION 3.4. COMPLIANCE WITH LAW. Except as set forth on SCHEDULE
3.4, to Seller's Knowledge, Seller has not received written notice of any
material violation of any law, regulation or order, and is not in default in any
material respect under any order, writ, judgment, award, injunction or decree of
any Governmental Agency, applicable to the Purchased Assets.
SECTION 3.5. PERMITS. Set forth on SCHEDULE 3.5 is a list of permits
relating to the operation of Seller's business at the Purchased Locations, which
permits have been provided or made available to Purchaser by Seller.
SECTION 3.6. OWNERSHIP OF PURCHASED ASSETS. Seller is the owner of
the Purchased Assets existing as of the date hereof. Subject to the issuance of
the Order, Seller will have, and at the Closing Buyer will receive, good and
valid title to the Purchased Assets, free and clear of any Liens.
SECTION 3.7. ASSIGNED CONTRACTS. True and complete copies (including
all modifications and amendments) of the Assigned Contracts listed on SCHEDULE
3.7 have been provided or made available by Seller to Purchaser. Other than as
set forth on SCHEDULE 3.7 or in motions filed with the Bankruptcy Court, neither
Seller nor, to Seller's Knowledge, any other party under any of the Assigned
Contracts, has commenced any action against the other or given or received any
written notice of any material default or violation under any Assigned Contract
which was not withdrawn or dismissed, except only for those defaults which will
be cured in accordance with the Order (or which need not be cured under the
Bankruptcy Code to permit the assumption and assignment of Executory Contracts).
The Assigned Leases and each of the other Assigned Contracts listed on SCHEDULE
3.7 is or will be at the Closing valid, binding and in full force and effect as
against Seller, except as otherwise set forth on SCHEDULE 3.7 or SCHEDULE B.
SECTION 3.8. LABOR RELATIONS. Except as set forth on SCHEDULE 3.8,
Seller is not party to any collective bargaining agreement covering Business
Employees. To Seller's Knowledge, no organizational effort is presently being
made or threatened in writing by or on behalf of any labor union with respect to
Business Employees.
SECTION 3.9. LITIGATION. Other than in connection with the Cases and
except as set forth on SCHEDULE 3.9, there are no actions, causes of action,
claims, suits or proceedings pending or, to Seller's Knowledge, threatened
against Seller which (i) seek to restrain or enjoin the consummation of the
transactions contemplated hereby or (ii) could reasonably be expected to have a
material adverse effect with respect to the Purchased Assets.
SECTION 3.10. BROKERS. All negotiations relative to this Agreement
and the transactions contemplated hereby have been
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carried on by Seller without the intervention of any other Person acting on
Seller's behalf in such manner as to give rise to any valid claim by any such
Person against Purchaser for a finder's fee, brokerage commission or other
similar payment based on an arrangement with Seller.
SECTION 3.11. DISCLAIMER OF ADDITIONAL REPRESENTATIONS AND
WARRANTIES; SCHEDULES.
(a) Except as expressly set forth in this Agreement, the Schedules
and Exhibits hereto, the Ancillary Agreements, and any certificate or instrument
delivered pursuant to the terms hereof or thereof, Seller makes no
representations or warranties with respect to its business or its operations,
assets (including, without limitation, the Purchased Assets), liabilities
(including, without limitation, the Assumed Liabilities) or conditions,
including, with respect to the Purchased Assets, any representation or warranty
of merchantability, suitability or fitness for a particular purpose, or quality
as to the Purchased Assets, or any part thereof, or as to the condition or
workmanship thereof, or the absence of any defects therein, whether latent or
patent. Except as provided in this Agreement, the Schedules and Exhibits hereto,
the Ancillary Agreements, and any other certificate or instrument delivered
pursuant to the terms hereof or thereof, the Purchased Assets are to be conveyed
hereunder "AS IS," "WHERE IS," and "WITH ALL FAULTS" on the date hereof and in
their present condition, subject to reasonable use, wear and tear between the
date hereof and the Closing Date, and Purchaser shall rely upon its own
examination thereof.
(b)...Any item disclosed on any one Schedule shall be deemed to be
disclosed on each Schedule, where relevant. Disclosure of an item on any
Schedule shall not be deemed to be an admission that such item is material. The
parties hereto (i) acknowledge that certain Schedules are subject to revision
until the earlier to occur of (x) seven (7) Business Days following the date of
this Agreement and (y) the date that the Bidding Protections Order is entered;
and (ii) shall negotiate in good faith to amend this Agreement as necessary to
incorporate such revised Schedules, to the extent that such revised Schedules do
not materially affect the Purchase Price.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrant to Seller as follows:
SECTION 4.1. AUTHORITY OF PURCHASER. Purchaser is a corporation,
validly existing, and in good standing under the laws of the state of its
incorporation. Purchaser has full corporate power and authority to execute and
deliver this Agreement, and the execution and delivery by Purchaser of this
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Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of
Purchaser, and this Agreement constitutes, and the Ancillary Agreements when
executed will constitute, the legal, valid and binding obligations of Purchaser
enforceable in accordance with their terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium, or similar laws from
time to time in effect which affect creditors' rights generally and by legal and
equitable limitations on the enforceability of specific remedies. Purchaser has
full corporate power and authority to own its properties and to carry on the
business presently being conducted by it.
SECTION 4.2. NO CONFLICT OR VIOLATION. The execution, delivery and
performance by Purchaser of this Agreement and the Ancillary Agreements do not
and will not violate or conflict with any provision of the Certificate of
Incorporation or By-laws of Purchaser and do not and will not violate any
provision of law, or any order, judgment or decree of any court or other
Governmental Agency applicable to Purchaser, or violate or result in a material
breach of or constitute (with notice or lapse of time or both) a material
default under any loan agreement, mortgage, security agreement, indenture or
other instrument to which Purchaser is a party or by which it is bound.
SECTION 4.3. CONSENTS AND APPROVALS. The execution, delivery and
performance by Purchaser of this Agreement do not require the consent or
approval of, or filing with, any Governmental Agency or other Person except: (i)
as may be required to effect the transfer to Purchaser of any Permits; or (ii)
such consents, approvals and filings, the failure to obtain or make which would
not, individually or in the aggregate, have a material adverse effect on its
ability to consummate the transactions contemplated hereby.
SECTION 4.4. AVAILABILITY OF FUNDS. Purchaser has and will have at
the Closing the Committed Financing, which will be sufficient to allow it to pay
the Purchase Price at the times and in the manner set forth in this Agreement
and to satisfy all its other obligations under this Agreement.
SECTION 4.5. LITIGATION. There are no actions, causes of action,
claims, suits, proceedings, orders, writs, injunctions, or decrees pending or,
to the Knowledge of Purchaser, threatened against Purchaser at law or in equity
or before or by any Governmental Agency, which seeks to restrain or enjoin the
consummation of the transactions contemplated hereby or that could otherwise
materially and adversely affect the ability of Purchaser to perform its
obligations hereunder.
SECTION 4.6. BROKERS. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by Purchaser
without the intervention of any other
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Person acting on its behalf in such manner as to give rise to any valid claim by
any such Person against Seller or its Affiliates for a finder's fee, brokerage
commission or other similar payment based on an arrangement with Purchaser.
SECTION 4.7. ADEQUATE ASSURANCES REGARDING EXECUTORY CONTRACTS.
Purchaser is and will be capable of satisfying the conditions contained in
sections 365(b)(1)(c) and (f) of the Bankruptcy Code with respect to the
Executory Contracts.
ARTICLE V.
CERTAIN COVENANTS OF SELLER
Seller covenants with Purchaser that from and after the date hereof
through the Closing Date:
SECTION 5.1. CONDUCT OF BUSINESS BEFORE THE CLOSING DATE. Unless
otherwise ordered by the Bankruptcy Court SUA SPONTE or on motion by a third
party, Seller shall not, except as required or contemplated by this Agreement,
make any material change in the Fixed Assets or enter into any transaction
respecting the Purchased Assets, other than sales of Inventory in the ordinary
course of Seller's business or other transactions in the ordinary course of
Seller's business in the Cases consistent with Seller's past practices or as
otherwise contemplated by this Agreement. Without limiting the generality of the
foregoing provisions, Seller will maintain New Inventory only in amounts and mix
generally consistent with its practices prior to the Closing Date.
SECTION 5.2. CONSENTS AND APPROVALS. Subject to SECTION 9.2 and
Seller's right to accept a higher or otherwise better offer, Seller shall use
commercially reasonable efforts to obtain (i) entry of the Order by the
Bankruptcy Court and (ii) the requisite consent or consents of the DIP Lenders
to this Agreement and the transactions contemplated hereby.
SECTION 5.3. INFORMATION AND ACCESS. Seller will permit
representatives of Purchaser to have reasonable access during normal business
hours after reasonable notice from Purchaser to Seller, and in a manner so as
not to interfere with normal operations, to all premises, properties, personnel,
accountants, books, records, contracts and documents of or pertaining to the
Purchased Assets. Purchaser and each of its representatives will treat and hold
such information as confidential. Purchaser shall indemnify, defend and hold
harmless (i) Seller, (ii) the lessors under the Assigned Leases; (iii) the
overlandlords under the Subleases; and (iv) Seller's and such landlords'
respective Affiliates from and against any and all claims, demands, causes of
action, losses, damages, liabilities, cost and expenses (including, without
limitation, attorneys' fees and disbursements) suffered or incurred by such
Persons in connection with (i) Purchaser's and/or Purchaser's
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representatives' entry upon the Leased Properties and the Subleased Properties,
and the premises subject to the Assigned Leases or (ii) any and all other
activities undertaken by Purchaser or Purchaser's representatives with respect
to the Leased Properties, the Subleased Properties and the premises subject to
the Assigned Leases pursuant to this SECTION 5.3. The parties hereto agree and
acknowledge that the obligations of Purchaser under this Agreement are not
subject to any "due diligence" condition (except as set forth in SECTION 2.11)
and that the provisions of this SECTION 5.3 shall in no way affect the
conditions set forth in Article VIII of this Agreement, which shall be effective
in accordance with their terms.
SECTION 5.4. FURTHER ASSURANCES. Upon the request of Purchaser at
any time after the Closing Date, Seller shall, at Purchaser's expense, forthwith
execute and deliver such documents as Purchaser or its counsel may reasonably
request to effectuate the purposes of this Agreement.
SECTION 5.5. ASSIGNMENT OF CONTRACTS. Seller shall use commercially
reasonable efforts to obtain from the Bankruptcy Court an order authorizing
Seller, effective on the Closing Date, to assume, cure all defaults with respect
to and assign the Assigned Contracts to Purchaser.
SECTION 5.6. SERVICES TO BE PROVIDED BY SELLER. On the Closing Date,
Seller shall enter into the Services Agreement with Purchaser, pursuant to which
Services Agreement, among other things, Purchaser shall be granted access, for a
limited time, to use the PIMS.
SECTION 5.7. CURE OF DEFAULTS. Seller shall, on or prior to the
Closing, at its expense cure any and all defaults, with respect to the Assigned
Contracts as provided in Section 365 of the Bankruptcy Code, so that such
Assigned Contracts may be assigned to Purchaser in accordance with the
provisions of Section 365 of the Bankruptcy Code, PROVIDED THAT Seller shall not
be obligated to cure any such default that is in dispute as of the Closing Date
if an escrow or other arrangement with respect thereto shall have been
established pursuant to order of the Bankruptcy Court.
SECTION 5.8. BANKRUPTCY ACTIONS. No later than five (5) Business
Days after the date hereof, Seller will file a motion with an attached proposed
order, reasonably acceptable to Seller and Purchaser, seeking approval of the
terms of this Agreement.
SECTION 5.9. CLOSED LOCATIONS; TRANSFER OF INVENTORY FROM CLOSED
LOCATIONS.
(a) Set forth on SCHEDULE 5.9 hereto is a list of Closed Locations,
which Seller shall have closed prior to, concurrently with or as soon as
practicable after the Closing.
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(b) Inventory from the Closed Locations shall be transferred, at the
expense of Seller, to the Malvern DC, from which DC Purchaser shall purchase the
New Inventory and Dirty Core Inventory (but not the Fixed Assets, Accounts
Receivable or other assets) originating from the Closed Locations.
SECTION 5.10. VACATION AND SICK LEAVE. Seller shall indemnify and
hold Purchaser harmless on account of any claim by any of Purchaser's Employees
with respect to any amounts owed to such Employees for unused vacation and sick
leave earned as of the Closing Date.
SECTION 5.11. FORM OF LEASE AND SUBLEASE; SERVICES AGREEMENT. Seller
shall negotiate in good faith with Purchaser to complete, not later than the
date of the Bidding Protections Order hearing, (i) the form of Lease and
Sublease, which Lease and Sublease shall reflect the terms set forth on SCHEDULE
E and SCHEDULE J, respectively and (ii) the final form of Services Agreement,
including the description of, and fee for, accounting services to be provided
thereunder.
ARTICLE VI.
CERTAIN COVENANTS OF PURCHASER
SECTION 6.1. CONSENTS AND APPROVALS. Purchaser shall use
commercially reasonable efforts to assist Seller in obtaining the Order and in
obtaining Bankruptcy Court approval for assignment of the Assigned Contracts,
including providing testimony as required at any hearing before the Bankruptcy
Court.
SECTION 6.2. ADEQUATE ASSURANCES REGARDING EXECUTORY CONTRACTS. With
respect to each Executory Contract, Purchaser shall make commercially reasonable
efforts to provide adequate assurance as required under the Bankruptcy Code of
the future performance of such Executory Contract by Purchaser. Purchaser agrees
that it will promptly take all actions reasonably required by Seller to assist
in obtaining the Bankruptcy Court's entry of the Order, such as furnishing
affidavits, non-confidential financial information or other documents or
information for filing with the Bankruptcy Court and making Purchaser's
employees and representatives available to testify before the Bankruptcy Court,
with respect to demonstrating adequate assurance of future performance by
Purchaser under the Executory Contracts.
SECTION 6.3. PERFORMANCE UNDER ASSIGNED CONTRACTS; PURCHASED REAL
PROPERTIES. Purchaser agrees that from and after the Closing Date it shall (i)
assume all obligations and liabilities of Seller under the Assigned Contracts
which accrue from and after the Closing Date, (ii) take all actions necessary to
satisfy its obligations and liabilities under the terms and conditions of each
of the Assigned Contracts and the Real Property Lease Agreements, (iii)
indemnify and hold harmless Seller for any damages, losses and liabilities
arising out of a
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breach of this covenant, and (iv) indemnify and hold harmless
Seller for any damages, losses and liabilities arising out of or relating to the
Purchased Real Properties that arise or accrue after the Closing Date.
SECTION 6.4. FURTHER ASSURANCES. Upon the request of Seller at any
time after the Closing Date, Purchaser shall, at Seller's expense, forthwith
execute and deliver such documents as Seller or its counsel may reasonably
request to effectuate the purposes of this Agreement.
SECTION 6.5. PURCHASER FINANCING. Purchaser shall, from the
date of this Agreement until and including the Closing Date, maintain the
availability of funds pursuant to the Committed Financing.
SECTION 6.6. COLLECTION OF ACCOUNTS RECEIVABLE. Following the
Closing Date, Purchaser shall follow its customary collection procedures for its
existing jobbers (and for existing jobbers of Purchaser's Affiliates) (which do
not include litigation or use of collection agencies) to effect collection of
the Accounts Receivable and, for a period of 180 days following the Closing
Date, Seller shall remit to Purchaser amounts owed pursuant to SECTION 2.4(C).
For purposes of this SECTION 6.6, all collections (except C.O.D. payments and
payments by customers who pay by invoice) shall be applied, for each account
obligor, first to the oldest balances of any accounts of such obligor. Any New
Inventory returned by a jobber or customer to Purchaser for payment against
Accounts Receivable (based on specified invoices) will be charged a 30% handling
and restocking fee. Purchaser shall (i) deliver to Seller, beginning at the end
of the month in which the Closing Date occurs and on a monthly basis for a
nine-month period thereafter, statements setting forth the status of payment of
the Accounts Receivable and (ii) permit employees or representatives of Seller,
for a period of one year after the Closing Date, to inspect and audit
Purchaser's books and records in order to confirm Purchaser's compliance with
SECTION 2.4(C) and this SECTION 6.6.
SECTION 6.7. [RESERVED].
SECTION 6.8. FORM OF LEASE AND SUBLEASE; SERVICES AGREEMENT.
Purchaser shall negotiate in good faith with Seller to complete, not later than
the date of the Bidding Protections Order hearing, (i) the form of Lease and
Sublease, which Lease and Sublease shall reflect the terms set forth on SCHEDULE
E and SCHEDULE J, respectively and (ii) the final form of Services Agreement,
including the description of, and fee for, accounting services to be provided
thereunder.
ARTICLE VII.
CONDITIONS TO SELLER'S OBLIGATIONS
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The obligations of Seller to consummate the transactions
contemplated by this Agreement are subject to the satisfaction (unless waived in
writing by Seller [upon consultation with, and with the consent of, the DIP
Lenders)] of each of the following conditions on or prior to the Closing Date:
SECTION 7.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser contained in this Agreement shall be true in all
material respects on and as of the Closing Date as though such representations
and warranties were made on and as of the Closing Date.
SECTION 7.2. COMPLIANCE WITH AGREEMENT. Purchaser shall have
performed and complied in all material respects (and in all respects in the case
of Article II hereof) with all covenants and conditions to be performed or
complied with by it on or prior to the Closing Date.
SECTION 7.3. CONSENTS. (i) The consent of the DIP Lenders, (ii) any
consent required in connection with the assignment of the Assigned Leases or the
Subleases and (iii) other consents listed on SCHEDULE 3.3 hereto, (except, in
the case of any Assigned Contract, to the extent that such Assigned Contract is
a "Master Contract" which relates to assets other than the Purchased Assets or
if no such consent is required as a result of the Order), shall have been
obtained and shall be in full force and effect on the Closing Date.
SECTION 7.4. PURCHASER'S CLOSING DELIVERIES AND OBLIGATIONS.
Purchaser shall have delivered all items and satisfied all obligations
pursuant to SECTION 9.1(C).
SECTION 7.5. CLOSING UNDER OTHER ASSET PURCHASE AGREEMENT. The
Closing under the Other Asset Purchase Agreement shall occur concurrently
with the Closing hereunder.
SECTION 7.6. CLOSINGS UNDER REAL PROPERTY PURCHASE AGREEMENTS.
Purchaser shall, concurrently with the closing hereunder, purchase and pay the
purchase price of the Purchased Real Properties to the extent required by
SECTION 2.11.
SECTION 7.7. ENTRY OF THE ORDER. (i) The Bankruptcy Court shall have
entered the Order and (ii) the Order, as entered by the Bankruptcy Court, shall
not be stayed and shall not modify the terms and conditions of this Agreement or
the transactions contemplated hereby in any way that materially and adversely
affects Seller.
ARTICLE VIII.
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the transactions
contemplated by this Agreement is subject to the
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satisfaction (unless waived in writing by Purchaser) of each of the following
conditions on or prior to the Closing Date:
SECTION 8.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in this Agreement shall be true in all material
respects on and as of the Closing Date as though such representations and
warranties were made on and as of the Closing Date.
SECTION 8.2. COMPLIANCE WITH AGREEMENT. Seller shall have performed
and complied in all material respects with all covenants and conditions to be
performed or complied with by it on or prior to the Closing Date.
SECTION 8.3. CONSENTS. (i) The consent of the DIP Lenders (which
consent shall include an arrangement, reasonably satisfactory to Purchaser, that
will provide Seller with access to funds sufficient to allow Seller to meet its
obligations, if any, under SECTIONS 2.5(B) and 2.6(B)), (ii) any consent
required in connection with the assignment of the Assigned Leases and (iii)
other consents listed on SCHEDULE 3.3 hereto, (except, in the case of any
Assigned Contract, to the extent that such Assigned Contract is a "Master
Contract" which relates to assets other than the Purchased Assets or if no such
consent is required as a result of the Order), shall have been obtained and
shall be in full force and effect on the Closing Date.
SECTION 8.4. SELLER'S CLOSING DELIVERIES AND OBLIGATIONS.
Seller shall have delivered all items and satisfied all obligations pursuant
to SECTION 9.1(B).
SECTION 8.5. CLOSINGS UNDER REAL PROPERTY PURCHASE AGREEMENTS.
Seller shall, concurrently with the Closing hereunder, sell the Purchased Real
Property to Purchaser to the extent required by SECTION 2.11.
SECTION 8.6. ENTRY OF THE ORDER. (i) The Bankruptcy Court shall have
entered the Order and (ii) the Order, as entered by the Bankruptcy Court, shall
not be stayed or modify the terms and conditions of this Agreement or the
transactions contemplated hereby in any way that adversely affects Purchaser.
SECTION 8.7. ASSIGNMENT OF CONTRACTS. The Bankruptcy Court shall
have entered the Order, or an additional order that expressly authorizes the
assumption and assignment of the Assigned Contracts, effective on the Closing
Date. In addition, Seller shall cure all defaults under the Assigned Contracts
and pay all liabilities and obligations accrued prior to the Closing Date,
subject to SECTION 5.7.
SECTION 8.8. TERMINATION OF OTHER ASSET PURCHASE AGREEMENT.
Seller shall not have terminated the Other Asset Purchase Agreement pursuant
to Section 9.3(b) of that agreement.
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ARTICLE IX.
THE CLOSING; OTHER BIDS; TERMINATION
SECTION 9.1. THE CLOSING. (a) The Closing of the purchase and sale
of the Purchased Assets (the "CLOSING") shall be held on the "CLOSING DATE" for
the transactions under the Other Asset Purchase Agreement. The Closing shall be
held at the offices of Willkie Farr & Gallagher, 787 Seventh Avenue, New York,
New York 10019. At the Closing, all of the transactions provided for in ARTICLE
II hereof shall be consummated on a substantially concurrent basis.
(a)(b) SELLER'S DELIVERIES AT CLOSING. At the Closing,
Seller shall deliver (or cause to be delivered) to Purchaser the following:
(i) a duly executed Lease Assignment and Assumption Agreement
or an Assignment and Assumption Agreement, as applicable, for each
Assigned Contract;
(ii) the duly executed Bill of Sale and Assumption Agreement;
(iii) the duly executed Services Agreement;
(iv) the duly executed Real Property Lease Agreements;
(v) limited warranty deeds for each of the parcels of
Purchased Real Property;
(vi) FIRPTA Affidavit;
(vii) 1099-S Certificate;
(viii) Environmental Transfer Form for each Purchased Real
Property (if required pursuant to the laws of the state in which the
property is located);
(ix) any transfer tax forms required by the laws of the
municipality and/or state in which the property is located, and
other forms and documents reasonably required by the title company;
(x) the duly executed License Agreement;
(xi) certified resolutions of the Board of Directors of Seller
approving and authorizing the transactions contemplated by this
Agreement; and
(xii) a certificate, executed by a duly authorized officer of
Seller, to the effect that all conditions to closing set forth in
SECTION 8.1 and SECTION 8.2 have been satisfied.
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(c) PURCHASER'S DELIVERIES AT CLOSING. At the Closing, Purchaser
shall deliver (or cause to be delivered) to Seller the following:
(i) payment of the Purchase Price and other amounts in
accordance with the terms and conditions set forth in SECTION
2.4(B);
(ii) a duly executed Lease Assignment and Assumption Agreement
or Assignment and Assumption Agreement, as applicable, for each
Assigned Contract;
(iii) the duly executed Bill of Sale;
(iv) the duly executed Services Agreement;
(v) any transfer tax forms required by the laws of the
municipality and/or state in which the property is located, and
other forms and documents reasonably required by the title company;
(vi) the duly executed Real Property Lease Agreements;
(vii) the duly executed License Agreement;
(viii) certified resolutions of the Board of Directors of
Purchaser approving and authorizing the transactions contemplated by
this Agreement; and
(ix) a certificate, executed by a duly authorized officer of
Purchaser, to the effect that all conditions to closing set forth in
SECTION 7.1 and SECTION 7.2 have been satisfied.
SECTION 9.2. OTHER BIDS; FEES.
(a) BANKRUPTCY COURT APPROVAL. Upon the execution of this Agreement,
Seller will seek Bankruptcy Court approval of (i) the definition of "Superior
Bid" set forth in SECTION 9.2(B); (ii) the overbid protections set forth in
SECTION 9.2(C); and (iii) bid incentives and protections set forth in SECTION
9.2(D), and the parties acknowledge that such provisions are subject to any
required approval of the DIP Lenders and to approval of the Bankruptcy Court and
that such provisions shall not be binding and shall have no force or effect
unless and until such Bankruptcy Court approval is obtained. Purchaser
acknowledges that auction rules to be contained in a Bidding Protections Order
shall be in the form set forth in EXHIBIT G, subject to Bankruptcy Court
approval.
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(b) OTHER BIDS. Purchaser acknowledges that Seller, through The
Blackstone Group L.P. ("BLACKSTONE") as its agent, will solicit bids ("BIDS")
from other prospective purchasers ("BIDDERS") for the sale of the Purchased
Assets (as such or in combination with other assets of Seller) and/or other
assets owned by Seller in accordance with auction procedures to be established
by Blackstone in consultation with Seller's creditor constituencies, subject to
bid incentives and protections set forth in SECTION 9.2(D) and overbid
protections set forth in SECTION 9.2(C). All Bids (other than Bids submitted by
Purchaser) will be submitted with two copies of the Seller's form of purchase
agreement (the "FORM AGREEMENT"), marked to show changes requested by the
Bidder.
Seller shall have the right to select the highest or otherwise
better Bid or Bids (the "SUPERIOR BID"), which will be determined by
considering, among other things, (i) the number, type and nature of any changes
to the Form Agreement requested by each Bidder; (ii) the extent to which such
modifications are likely to delay closing of the sale of Purchased Assets to
such Bidder and the cost to Seller of such modifications or delay; (iii) the
extent to which such Bid covers less than or more than all of the Purchased
Assets; and (iv) the total consideration to be received by Seller. Purchaser
acknowledges that Seller will strongly favor Bids for all of Seller's assets or
for such assets which Seller determines, in its sole discretion, cannot
otherwise be easily sold. Seller reserves the right to accept a Bid or Bids
which contain a purchase price which is less than the Purchase Price set forth
in this Agreement but which, in Seller's sole discretion, otherwise constitutes
a Superior Bid. Seller shall have the right to aggregate separate Bids for
different assets to determine whether one or more combinations of Bids
constitute a Superior Bid.
(c) OVERBID PROTECTION. Seller will seek Bankruptcy Court approval
of the following overbid protections: (i) a higher Bid will not be considered by
Seller unless such Bid is at least $500,000 more than the sum of (x) the
Purchase Price (including any consideration under the Services Agreement) set
forth in this Agreement and in the Other Asset Purchase Agreement as such
amounts are determined in good faith by Blackstone, (y) the Breakup Fee (as
defined in SECTION 9.2(D)) under this Agreement and the Other Asset Purchase
Agreement and (z) the Expense Reimbursement (as defined in SECTION 9.2(D)) under
this Agreement and the Other Asset Purchase Agreement; and (ii) any bids
thereafter must be at least $500,000 higher than the then existing highest or
better bid ((i) and (ii) constituting, as applicable, a "QUALIFYING BID").
The value of a Bid for purposes of this SECTION 9.2(C) shall be
determined by combining (i) the consideration to be received by Seller pursuant
to such Bid for all assets covered by such Bid and (ii) the value of the
Purchased Assets that are not covered by such Bid ("NON-COVERED ASSETS"), such
value to be
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determined in good faith by Seller on the basis of, for Purchased
Assets that are covered by other Bids or by proposals reasonably likely to
result in a sale of such Purchased Assets, the proposed consideration payable
pursuant to such other Bid or proposal, and, for other Non-Covered Assets, the
projected value thereof in the context of the most commercially reasonable
disposition of such property.
Seller shall have the right pursuant to this SECTION 9.2(C) to
aggregate separate Bids for different assets in determining whether one or more
combinations of Bids constitute a Qualifying Bid.
(d) EXPENSE REIMBURSEMENT; BREAKUP FEE. In the event that this
Agreement is terminated by Seller in breach of this Agreement, Purchaser shall
be entitled, as its sole and exclusive remedy (except as provided in the
following paragraph or in SECTION 9.4(III)) to immediate reimbursement of its
actual reasonable and documented out-of-pocket expenses incurred in connection
with the transaction contemplated by this Agreement, including professional
fees, in an amount not to exceed, for this Agreement and the Other Asset
Purchase Agreement together, $350,000 (the "EXPENSE Reimbursement"), PROVIDED
HOWEVER that Purchaser shall not be entitled to seek its share of the Expense
Reimbursement from Seller, and Seller shall not be required to pay any portion
of the Expense Reimbursement to Purchaser, and that the allocation of the
Expense Reimbursement shall be agreed upon by Purchaser and GPI.
If Seller, after consultation with its creditor constituencies,
determines that a Qualifying Bid (or Bids) (which is not Purchaser's Bid) is the
Superior Bid and subsequently consummates an agreement with respect thereto,
Purchaser will receive a break-up fee equal to 2.5% of the Purchase Price (the
"BREAKUP FEE").
(e) OTHER ASSET PURCHASE AGREEMENT. References in SECTION 9.2(C) to
"Purchased Assets" and "Purchase Price" shall be deemed to include the Purchased
Assets and the Purchase Price provided for in the Other Asset Purchase
Agreement, as well as the Purchased Assets and Purchase Price hereunder.
SECTION 9.3. TERMINATION. Anything in this Agreement to the
contrary notwithstanding, this Agreement and the transactions contemplated
hereby may be terminated in any of the following ways at any time before the
Closing and in no other manner:
(a) by mutual written consent of Purchaser and Seller;
(b) by Seller, if Seller accepts a Superior Bid;
(c) by Seller if Purchaser is in breach in any material respect of
any of its representations made in this
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Agreement, or is in violation or default in any material respect of any of
its covenants or agreements in this Agreement, if the breach, violation or
default is not cured within five (5) days after written notice by Seller;
(d) by Purchaser, if Seller is in breach in any material respect of
any of its representations made in this Agreement, or is in violation or
default in any material respect of any of its covenants or agreements in
this Agreement, if the breach, violation or default is not cured within
five (5) Business Days after written notice by Purchaser;
(e) by Purchaser, if, as a result of an order of the Bankruptcy
Court, any material change referred to in SECTION 5.1 occurs, or Seller
enters into any transaction referred to in such Section (other than those
permitted by such Section), and such change or transaction materially and
adversely affects the benefits to be obtained by Purchaser pursuant to
this Agreement; or
(f) by Seller, if at any time up to and including the Closing Date,
Purchaser does not have available Committed Financing.
Notwithstanding anything to the contrary in this Agreement, in the event that
Seller uses commercially reasonable efforts to obtain the Order and the
Bankruptcy Court refuses to enter the Order, this Agreement shall terminate
without liability or obligation of Seller to Buyer.
SECTION 9.4. EFFECTS OF TERMINATION. (a) In the event that this
Agreement is terminated pursuant to SECTION 9.3, except as provided in SECTION
9.2 or in this SECTION 9.4, all further obligations of the parties hereunder
shall terminate. If this Agreement is terminated as permitted by SECTION 9.3,
termination shall be without liability of any party (or any stockholder,
director, officer, employee, agent, consultant or representative of such party)
to the other party to this Agreement; PROVIDED, HOWEVER, that (i) if such
termination shall result under SECTION 9.3(C) from the willful failure of
Purchaser to perform a covenant of this Agreement or from a breach of its
representations contained in SECTION 4.4, Purchaser shall be liable for any and
all losses, damages and expenses incurred or suffered by Seller as a result of
such failure to perform or breach, including but not limited to losses, damages
and expenses associated with the closing of Closed Stores; (ii) if this
Agreement is terminated by Seller pursuant to SECTION 9.3(B), Seller shall pay
to Purchaser the Expense Reimbursement and the Breakup Fee pursuant to the
provisions of SECTION 9.2; (iii) if this Agreement is terminated by Purchaser
pursuant to SECTION 9.3(D), Purchaser shall be entitled, as its sole and
exclusive remedy, to the Expense Reimbursement (except to the extent that
Purchaser and GPI may agree to allocate between them any
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liquidated damages payment made to GPI pursuant to SECTION 9.4(A)(III) of the
Other Asset Purchase Agreement) in addition to the Expense Reimbursement;
PROVIDED, HOWEVER, that if Seller accepts a Superior Bid within six months of
the date of termination of this Agreement pursuant to SECTION 9.3(D), Purchaser
shall also be entitled to the Breakup Fee if and to the extent provided for in
SECTION 9.2(D); and (iv) if this Agreement is terminated by Seller pursuant to
SECTION 9.3(F), Purchaser shall be liable for any and all losses, damages and
expenses incurred or suffered by Seller as a result of such failure to perform,
including but not limited to losses, damages and expenses associated with the
closing of Closed Stores. Payment of the Expense Reimbursement, if required
pursuant to this Section 9.4, shall be made to GPI, and it shall be the sole
responsibility of GPI to allocate the Expense Reimbursement between GPI and
Purchaser. The provisions of this SECTION 9.4 shall survive any termination
hereof pursuant to SECTION 9.3.
(a)(b) Except as specifically provided in SECTION 9.4(A), this
SECTION 9.4 shall not limit the rights of the parties hereto to seek specific
performance of any obligation hereunder of any other party.
ARTICLE X.
TAXES
The parties hereto hereby covenant and agree as follows:
SECTION 10.1. TAXES RELATED TO PURCHASE OF ASSETS. The parties
recognize and acknowledge that, because the sale, transfer, assignment and
delivery of the Purchased Assets is being made in connection with Seller's plan
of reorganization, they may be exempt under section 1146(c) of the Bankruptcy
Code and the Order from state and local transfer, recording, stamp or other
similar transfer taxes (collectively "TRANSACTION TAXES") that may be imposed by
reason of the sale, transfer, assignment and delivery of the Purchased Assets;
provided, however, that if Transaction Taxes are assessed for any reason,
Purchaser and Seller shall each pay one-half of such Transaction Taxes along
with any recording and filing fees. Purchaser and Seller agree to cooperate to
determine the amount of Transaction Taxes payable in connection with the
transactions contemplated under this Agreement. Transaction Taxes shall not
include any Taxes for which Seller is responsible under SECTION 10.2. At the
Closing, Purchaser shall remit to Seller such properly completed resale
exemption certificates and other similar certificates or instruments as are
applicable to claim available exemptions from the payment of sales, transfer,
use or other similar taxes under applicable law. Purchaser and Seller will
cooperate in preparing such forms and will execute and deliver such affidavits
and forms as are reasonably requested by the other party.
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SECTION 10.2. PRORATION OF REAL AND PERSONAL PROPERTY TAXES. Real
and personal property taxes and assessments relating to Purchased Real
Properties, Leased Properties, Subleased Properties, properties subject to
Assigned Leases, or leases of personal property, that are assigned to Purchaser
hereunder shall be prorated between Seller and Purchaser as of the Apportionment
Date, provided, however, that Seller shall not be responsible for any increased
assessments on real and personal property resulting from the transactions
contemplated hereby. All such prorations shall be allocated so that items
relating to time periods ending prior to the Closing Date shall be allocated to
Seller and items related to time periods beginning after the Closing Date shall
be allocated to Purchaser. The amount of all such prorations shall be settled
and paid on the Closing Date unless, with respect to Seller's obligations
hereunder, otherwise ordered by the Bankruptcy Court or as otherwise required by
applicable bankruptcy law.
SECTION 10.3. COOPERATION. Purchaser and Seller agree to furnish or
cause to be furnished to each other, as promptly as practicable, such
information and assistance relating to the Purchased Assets as is reasonably
necessary for the preparation and filing of any Tax Return, for the preparation
for and proof of facts during any tax audit, for the preparation for any tax
protest, for the prosecution or defense of any suit or other proceeding relating
to tax matters and for the answer of any governmental or regulatory inquiry
relating to tax matters.
Purchaser agrees to retain possession of all files and records
delivered to Purchaser by Seller for a period of at least three years from the
Closing Date. If Purchaser determines to destroy or discard any of such files or
records after the end of such three-year period, Purchaser will give Seller
reasonable notice thereof and will allow Seller to take possession of such files
and records at Seller's expense. In addition, from and after the Closing Date,
Purchaser agrees that it will provide access to Seller and its attorneys,
accountants and other representatives (after reasonable notice and during normal
business hours and without charge) to such files and records as Seller may
reasonably deem necessary to prepare for, file, prove, answer, prosecute or
defend any claim, suit, inquiry or other proceeding, whether related to Taxes or
otherwise.
ARTICLE XI.
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
SECTION 11.1. EMPLOYMENT. The Business Employees who are offered and
accept employment with Purchaser are referred to herein as "PURCHASER'S
EMPLOYEES". The Purchaser's Employees' employment with Purchaser shall be upon
such terms and conditions as Purchaser, in its sole discretion, shall determine,
and nothing expressed or implied by this Agreement shall confer upon any
Business Employee, or legal representative thereof, any
34
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rights or remedies, including any right to employment, or for any specified
period, of any nature or kind whatsoever, under or by reason of this Agreement.
Purchaser shall be responsible for any obligations or liabilities to
Business Employees under the Worker Adjustment and Retraining Notification Act
and any similar state or local "plant closing" law ("WARN") to the extent WARN
thresholds are exceeded as a result of actions taken by Purchaser on or after
the Closing Date with respect to Business Employees. Seller shall be responsible
for any obligations or liabilities to Business Employees under WARN as a result
of actions taken by Seller prior to the Closing Date.
SECTION 11.2. EMPLOYEE WELFARE BENEFIT PLANS. Except with respect to
any claim that is covered by an Assigned Contract or otherwise constitutes an
Assumed Liability, Seller shall retain responsibility for all hospital, medical,
life insurance, disability and other welfare plan expenses and benefits, and for
all workers' compensation, unemployment compensation and other government
mandated benefits (collectively referred to herein as "WELFARE TYPE PLANS"), in
respect of claims covered by any Welfare Type Plans maintained by Seller and
which are incurred by Purchaser's Employees and their dependents prior to the
Closing Date. Purchaser shall be responsible for all claims incurred on or after
the Closing Date by Purchaser's Employees and their dependents under all Welfare
Type Plans that are maintained by Purchaser for Purchaser's employees generally
and their dependents. For purposes of this SECTION 11.2, claims shall be deemed
to have been incurred:
(a) with respect to all death or dismemberment claims, on the
actual date of death or dismemberment;
(b) with respect to all disability claims, other than for short-term
disability benefits, on the date the claimant became unable to
(i) perform his or her regular duties of employment, in the
case of an employee claimant, or
(ii) perform the normal day-to-day responsibilities that would
reasonably be expected of someone of similar age and lifestyle, in
the case of a dependent claimant;
(c) with respect to short-term disability claims, the date the
incident first occurred that gave rise to such claims;
(d) with respect to all medical, drug or dental claims, on the date
the service was received or the supply was purchased by the claimant;
PROVIDED, HOWEVER, that a medical claim relating to a claimant's
hospitalization shall be deemed to be incurred on the date the claimant
was first hospitalized; and
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(e) with respect to workers' compensation claims, on the date the
incident occurred.
SECTION 11.3. COBRA. Purchaser shall have sole responsibility for
"continuation coverage" benefits provided after the Closing Date under
Purchaser's group health plans to all Purchaser's Employees, and "qualified
beneficiaries" of Purchaser's Employees, for whom a "qualifying event" has
occurred after the Closing Date. Seller shall have sole responsibility for
"continuation coverage" benefits provided under Seller's group health plans to
all employees of Seller, and "qualified beneficiaries" of employees of Seller,
for whom a "qualifying event" has occurred on or prior to the Closing Date. The
terms "continuation coverage", "qualified beneficiaries" and "qualifying event"
shall have the meanings ascribed to them under Section 4980B of the Code and
Sections 601-608 of ERISA.
SECTION 11.4. 401(K) SAVINGS PLAN. Seller currently maintains a
401(k) savings plan (the "SELLER SAVINGS PLAN") which is in compliance in all
material respects with applicable law, including ERISA. The Seller Savings Plan
is intended to meet the requirements of Section 401(a) of the Code and has been
determined by the Internal Revenue Service to be "qualified" within the meaning
of such section of the Code. Seller does not know or have reason to know of any
act which would adversely affect the qualified status of said plan. Seller and
all agents or representatives appointed by Seller or working as a result of
appointment by Seller have fulfilled in all material respects any and all
responsibilities they have or may have under applicable law, including ERISA, in
connection with the Seller Savings Plan.
ARTICLE XII.
MISCELLANEOUS PROVISIONS
SECTION 12.1. REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the parties to this Agreement made in this Agreement, subject
to the exceptions thereto, will not be affected by any information furnished to,
or any investigation conducted by, any of them or their representatives in
connection with the subject matter of this Agreement. All representations and
warranties contained in this Agreement shall not survive the Closing.
SECTION 12.2. NOTICES. All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given (a) when delivered
personally to the recipient, (b) when sent to the recipient by telecopy (receipt
electronically confirmed by sender's telecopy machine) if during normal business
hours of the recipient, otherwise on the next
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Business Day, (c) one (1) Business Day after the date when sent to the recipient
by reputable express courier service (charges prepaid) or (d) seven (7) Business
Days after the date when mailed to the recipient by certified or registered
mail, return receipt requested and postage prepaid. Such notices, demands and
other communications will be sent to Seller and to Purchaser at the addresses
indicated below:
If to Purchaser: BWP Distributor, Inc.
215 Business Park Drive
Armonk, NY 10504
Attention: Neil Stockel
Facsimile No.: 914-765-8555
With a copy Greene & Zinner
(which shall not 202 Mamaroneck Avenue
constitute notice) to: White Plains, NY 10601
Attention: Andrew Greene, Esq.
Facsimile No.: 914-948-4936
If to Seller: APS Holding Corporation
15710 John F. Kennedy Blvd.
Suite 700
Houston, Texas 77032-2347
Attention: Bettina Whyte
Facsimile No. 713-507-1323
With a copy Willkie Farr & Gallagher
(which shall not 787 Seventh Avenue
constitute notice) to: New York, New York 10019-6099
Attention: Cornelius T.
Finnegan III, Esq.
Facsimile No. (212) 728-8111
or to such other address as either party hereto may, from time to time,
designate in writing delivered pursuant to the terms of this Section.
SECTION 12.3. AMENDMENTS. The terms, provisions and conditions
of this Agreement may not be changed, modified or amended in any manner
except by an instrument in writing duly executed by each of the parties
hereto.
SECTION 12.4. ASSIGNMENT. This Agreement is binding upon and inures
to the benefit of the successors and assigns of each party to this Agreement
(including any trustee appointed in respect of Seller under the Bankruptcy
Code), but no rights, obligations or liabilities under this Agreement may be
assigned by either party without the prior written consent of the other party
hereto.
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SECTION 12.5. ANNOUNCEMENTS. All press releases, notices to
customers and suppliers and other announcements prior to the Closing Date with
respect to this Agreement and the transactions contemplated by this Agreement
shall be approved by both Purchaser and Seller prior to the issuance thereof;
provided that either party may make any public disclosure that it believes in
good faith is required by law or regulation (in which case the disclosing party
shall advise the other party prior to making such disclosure and provide such
other party an opportunity to review the proposed disclosure).
SECTION 12.6. EXPENSES. Except as otherwise set forth in this
Agreement, each party to this Agreement shall bear all of its own legal,
accounting, investment banking and other expenses incurred by it or on its
behalf in connection with the transactions contemplated by this Agreement,
whether or not such transactions are consummated.
SECTION 12.7. ENTIRE AGREEMENT. This Agreement and the Ancillary
Agreements constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede and are in full substitution
for any and all prior agreements and understandings between them relating to
such subject matter, PROVIDED HOWEVER, that any confidentiality agreements
between Seller and Purchaser shall remain in full force and effect. The Exhibits
and Schedules to this Agreement are hereby incorporated into and made a part
hereof and are an integral part of this Agreement.
SECTION 12.8. DESCRIPTIVE HEADINGS. The descriptive headings of
the several sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
SECTION 12.9. COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by any one or more
parties hereto, and each such executed counterpart shall be, and shall be deemed
to be, an original, but all of which together shall constitute one and the same
instrument.
SECTION 12.10. GOVERNING LAW; JURISDICTION. This Agreement shall be
construed, performed and enforced in accordance with, and governed by, the laws
of the State of Delaware, without giving effect to the principles of conflicts
of laws thereof. For so long as Seller is subject to the jurisdiction of the
Bankruptcy Court, the parties hereto irrevocably elect as the sole judicial
forum for the adjudication of any matter arising under or in connection with
this Agreement, and consent to the jurisdiction of, the Bankruptcy Court. After
Seller is no longer subject to the jurisdiction of the Bankruptcy Court, the
parties hereto irrevocably elect as the sole judicial forum for the adjudication
of any matters arising under or in connection with this Agreement, and consent
to the jurisdiction
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of, the courts of the County of New Castle, State of Delaware or of the United
States of America for the District of Delaware.
SECTION 12.11. CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against either party.
Any references to any federal, state, local or foreign statute or law will also
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Unless the context otherwise requires: (a) a term has the
meaning assigned to it by this Agreement; (b) an accounting term not otherwise
defined herein has the meaning assigned to it by GAAP; (c) the word "or" is not
exclusive; (d) the words "include", "includes" and "including" shall be deemed
to be followed by the words "without limitation"; (e) words in the singular
include the plural and in the plural include the singular; (f) provisions apply
to successive events and transactions; and (g) "$" means the currency of the
United States of America.
SECTION 12.12. SEVERABILITY. In the event that any one or more of
the provisions contained in this Agreement or in any other instrument referred
to herein shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Agreement or any other such instrument. Furthermore, in lieu of any such invalid
or unenforceable term or provision, the parties hereto intend that there shall
be added as a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be valid and
enforceable.
SECTION 12.13. CONFIDENTIALITY. Seller and Purchaser agree to keep,
and to cause each of their affiliates, directors, officers, and employees to
keep, confidential any and all confidential information of the other party that
either receives in connection herewith or in the course of performing its
obligations hereunder (except that such information may be shared, on a
confidential basis, with the party's attorneys and auditors) and will not,
without the other party's written consent, use any of such confidential
information except as reasonably necessary to perform its duties under this or
another of its agreements with the other party. Upon termination of this
Agreement, each party will return, and will cause its affiliates to return, to
the other party all original documents and copies of the confidential
information which are in its possession.
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<PAGE>
IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered
this Agreement as of the day and year first written above.
A.P.S., INC.
By: /s/ BETTINA M. WHYTE
Name: Bettina M. Whyte
Title: President
BWP DISTRIBUTORS, INC.
By: /s/ NEIL STOCKEL
Name: Neil Stockel
Title: President
40
EXHIBIT 2.5
TRADEMARK LICENSE AGREEMENT
TRADEMARK LICENSE AGREEMENT (this "Agreement") is entered into as of
__________, __ 1998, by and between APS Management Services, Inc., a Delaware
corporation ("Licensor") and a debtor and debtor-in-possession in a case pending
under Chapter 11 of the Bankruptcy Code, and BWP Distributors, Inc., a New York
corporation ("Licensee"). Capitalized terms used but not otherwise defined in
this Agreement have the meanings given in the Asset Purchase Agreement.
RECITALS
WHEREAS, Licensor is the owner of the trademarks (the "Marks")
set forth on Schedule "A" attached hereto; and
WHEREAS, in connection with the sale of certain assets (the
"Purchased Assets") to Licensee pursuant to that certain asset purchase
agreement (the "Asset Purchase Agreement") dated as of even date herewith,
Licensor and Licensee wish to enter into this Agreement to set forth the terms
and conditions upon which Licensor will grant a license to Licensee to use the
Marks in connection with the distribution and sale of automotive replacement
parts, accessories and supplies (the "Business").
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Licensor and Licensee agree as follows:
1. GRANT OF LICENSE.
1.1. GRANT AND TERMS OF LICENSE. Subject to the terms and conditions
of this Agreement, Licensor hereby grants to Licensee a non-transferable,
limited and royalty-free license to use the Marks for a period of twenty-four
(24) months from the date of this Agreement (the "Defined Term") in the limited
geographical areas in which, immediately prior to the Closing Date, Licensor
conducted the Business from the Purchased Locations (excluding Closed Locations)
(such areas, collectively, the "Defined Territory"). This license shall be
exclusive to Licensee within the Defined Territory for the Defined Term, except
to the extent provided in Paragraph 2.2 of this Agreement. Such use shall
include the use of the Marks by wholly-owned subsidiaries of Licensee.
1.2. PERMITTED USE OF MARKS. Licensee's right to use the Marks
shall be limited: (i) to uses relating to the Licensee's use of the Purchased
Assets; and (ii) to uses relating
<PAGE>
to Licensee's carrying on of the Business conducted by Licensor at the Purchased
Locations prior to the date hereof. Licensee shall not use the Marks in a manner
inconsistent with Licensor's past practices in using the Marks at or in
connection with the Purchased Locations, or in a manner which disparages or is
detrimental to Licensor's assets or business.
1.3. RESERVATION OF LICENSOR'S RIGHTS. All rights in and to the
Marks not specifically granted to Licensee by this Agreement are reserved to
Licensor for Licensor's own use and benefit.
2. OWNERSHIP OF MARKS.
2.1. RIGHTS IN MARKS. The Marks are the exclusive property of
Licensor and, except as provided in Section 1.2, Licensee shall not manufacture,
market, advertise, promote, ship, distribute or sell (or permit or cause any
such actions by others, within its control with respect to) any goods or
materials bearing any of the Marks or any services associated with the Marks.
Neither Licensee nor any of its Affiliates or subcontractors, nor any third
parties related in any way to any of the foregoing persons or entities, has any
right, title or interest in or to the Marks other than the limited rights
granted herein.
2.2. PROHIBITED ACTIONS. Licensee shall not take (or permit or cause
to be taken) any action to impair, attack or interfere with Licensor's exclusive
rights in the Marks. In its use of the Marks, Licensee shall not make or allow
to be made any alterations or changes to the appearance of the Marks, including,
but not limited to, any changes to the graphic representation of the Marks, the
color scheme of the Marks, or the font or type face in which the Marks are
portrayed. Licensee shall not seek to register any of the Marks anywhere in the
world or use the Marks in any manner that may lead to a material loss of the
value of the Marks. Licensee will give Licensor notice of any claim made by any
third party of which Licensor has knowledge, that would adversely affect the
Marks.
During the Defined Term, Licensor shall not grant to any third party
any rights to use the Marks in the Defined Territory, PROVIDED, HOWEVER that
this limitation shall in no way affect grants, if any, of rights in the Marks
made by Licensor or any of its affiliates to third parties in the Defined
Territory prior to the date hereof.
3. WARRANTY DISCLAIMER; INDEMNIFICATION.
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<PAGE>
3.1. WARRANTY DISCLAIMER. LICENSOR MAKES NO WARRANTIES OF ANY KIND,
WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO ANY PRODUCT'S FITNESS FOR A
PARTICULAR PURPOSE. Licensee shall not make any statements, representations or
warranties whatsoever to any third party which are in any way inconsistent with
this Section 3.1.
3.2. LICENSOR REPRESENTATIONS; INDEMNIFICATION. Licensor represents
and warrants that (i) it has the right to grant to Licensee the license of the
Marks hereunder; (ii) it has no knowledge or notice of any actions pending or
threatened which impair its right to grant the rights in the Marks licensed
hereunder; and (iii), to its knowledge, the rights licensed hereunder do not
violate any obligations of Licensor to any third parties. Licensor hereby
indemnifies Licensee and parent, subsidiary and affiliated companies, and
officers, directors and employees of each of the foregoing and each of them, and
undertakes to hold them harmless against any and all claims, demands, damages,
losses and expenses of any nature (including reasonable attorney's fees) which
arise solely in connection with the breach by Licensor of any warranty or
representation made by Licensor hereunder, including but not limited to loss or
damage resulting from copyright, design patent and trademark infringement,
provided that said breach does not occur as a result of the negligence of
Licensee or the breach by Licensee of any of its representations or obligations
hereunder, that prompt notice is given to Licensor of any such claim or suit
and, provided further, that Licensor shall have the option to undertake and
conduct the defense of any suit so brought.
3.3 LICENSEE INDEMNIFICATION. Licensee shall defend, indemnify and
hold harmless Licensor and each of its Affiliates, employees, and agents from
and against any and all claims, demands, damages, losses and expenses of any
nature (including reasonable attorneys' fees), including, without limitation,
those related to death, personal injury, property damage and product liability,
which arise from or in connection with Licensee's use of the Marks, (i) in a
manner not consistent with: (a) Licensee's normal business practices or (b) any
known right of a third party; or (ii) in a manner which disparages or is
detrimental to Licensor's assets or business.
4. TERMINATION. This Agreement shall automatically terminate without prior
notice to Licensee:
(a) at 5:00 p.m. Eastern time on the last day of the Defined
Term; or
(b) if Licensee is in material breach of any of the terms or
conditions of this Agreement, and Licensee fails to cure
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<PAGE>
such breach within ten (10) days from Licensee's receipt of written notice of
such breach from Licensor.
5. EFFECTS OF TERMINATION. Upon termination of this Agreement, all rights
granted hereunder to Licensee shall terminate and Licensee shall immediately:
(a) cease all use of the Marks in any form;
(b) cease representing itself as a licensee of Licensor; and
(c) promptly take such actions as may be necessary to cease doing
business under the Marks, including, but not limited to, (i) modifying the name
of Licensee or any of its subsidiaries, (ii) removing, modifying or destroying
all signs, advertising, packaging and promotional materials containing any of
the Marks.
Licensee agrees to furnish evidence reasonably satisfactory to
Licensor of compliance with Licensee's obligations under this Agreement within
fifteen (15) Business Days after termination of this Agreement.
6. NOTICES. All notices, requests, demands, consents and other
communications required or permitted hereunder shall be in writing and shall be
delivered personally or by overnight mail with a reputable courier service or by
telecopy. If notice is sent by telecopy, notices shall be deemed given upon
confirmation at the sender's telecopy machine of receipt at the recipient's
telecopy machine. All communications hereunder shall be delivered to the
respective parties at the following addresses (or to such other person or at
such other address for a party as shall be specified by like notice, provided
that notices of a change of address shall be effective only upon receipt
thereof):
If to Purchaser: BWP Distributors, Inc.
215 Business Park Drive
Armonk, New York 10504
Attention: Neil Stockel
Facsimile No.: (914) 765-8555
With a copy Greene & Zinner
(which shall not 202 Mamaroneck Avenue
constitute notice) White Plains, New York 10601
to: Attention: Andrew Greene, Esq.
Facsimile No.: (914) 948-4936
If to Seller: APS Holding Corporation
15710 John F. Kennedy Blvd.
Suite 700
Houston, Texas 77032-2347
Attention: Bettina Whyte
Facsimile No. 713-507-1323
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<PAGE>
With a copy Willkie Farr & Gallagher
(which shall not 787 Seventh Avenue
constitute notice) New York, New York 10019-6099
to: Attention: Cornelius T.
Finnegan III, Esq.
Facsimile No. (212) 728-8111
7. CONFIDENTIALITY. Other than as may be required by any applicable law,
government order or regulation, or by order or decree of any court of competent
jurisdiction, Licensee shall not publicly divulge or announce, or in any manner
disclose to any third party, any information or matters revealed to Licensee
pursuant hereto, or any of the specific terms and conditions of this Agreement.
8. RELATIONSHIP OF PARTIES. Licensee's relationship with Licensor is
solely as an independent contractor, and Licensee shall have no legal power or
authority, express or implied, to act for, bind or commit Licensor in any manner
or to anything whatsoever. Licensor and Licensee agree that nothing in this
Agreement shall make Licensee an agent of Licensor or create or evidence a joint
venture or partnership between the parties or any relationship other than that
of independent contractors.
9. ASSIGNMENT. This Agreement shall be binding on the parties hereto and
on their respective successors and permitted assigns; PROVIDED, HOWEVER, that
Licensee may not assign, transfer or hypothecate its obligations under this
Agreement or sub-license or grant any right, title or interest in any of its
rights hereunder in whole or in part, directly or indirectly, by operation of
law or otherwise, except as expressly agreed in writing in advance by Licensor.
10. GOVERNING LAW. This Agreement and any dispute between the parties
arising from this Agreement or the subject matter hereof, shall be governed by
the laws of the State of Delaware, without regard to its conflict or choice of
laws principles, and of the United States of America.
11. REMEDIES. Notwithstanding anything to the contrary contained in this
Agreement, Licensee acknowledges that its failure to comply with its obligations
under this Agreement could cause immediate and irreparable harm to Licensor for
which money damages would be inadequate. Accordingly, in the event of Licensee's
breach of this Agreement, Licensor may seek equitable relief, including, but not
limited to, specific performance of Licensee's obligations hereunder, and
injunctive relief to prevent Licensee's continued use of the Marks. Any remedies
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<PAGE>
contemplated by this Section 11 shall not be deemed to be an exclusive remedy
for breach of this Agreement, but shall be in addition to all other remedies
available at law or in equity.
12. MISCELLANEOUS.
(a) Paragraph headings contained in this Agreement are included for
convenience only and shall not be considered for any purpose in governing,
limiting, modifying, construing or affecting the provisions of this Agreement
and shall not otherwise be given any legal effect.
(b) The determination that any provision of this Agreement is
invalid or unenforceable shall not invalidate this Agreement, and the remainder
of this Agreement shall be valid and enforceable to the fullest extent permitted
by law.
(c) This Agreement represents the entire understanding between the
Parties with respect to the subject matter hereof and supersedes all previous
representations, understandings or agreements, oral or written, between the
Parties with respect to the subject matter hereof.
(d) Paragraphs 3, 5, 7 and 9 shall survive termination of this
Agreement.
(e) The Schedules attached to this Agreement and the limitations
described therein constitute an integral part of the Agreement.
(f) No waiver, modification or cancellation of any term or condition
or this Agreement shall be effective unless executed in writing by both Licensee
and Licensor. No waiver by either party of any breach of this Agreement shall be
deemed to be a waiver of any preceding or succeeding breach of the same or any
other provision hereof.
(g) This Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the authorized representatives of the Parties have
signed this Agreement:
APS MANAGEMENT SERVICES, INC., as Licensor
By: /s/ BETTINA M. WHYTE
Name: Bettina M. Whyte
Title: President
BWP DISTRIBUTORS, INC., as Licensee
By: /s/ NEIL STOCKEL
Name: Neil Stockel
Title: President
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EXHIBIT 2.6
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "AGREEMENT") is made and entered into as of
October 9, 1998 between A.P.S., INC., a Delaware corporation ("APS") and a
debtor and debtor-in possession in a case pending under chapter 11 of the
Bankruptcy Code, and BWP DISTRIBUTORS, INC., a New York corporation ("BWP").
Capitalized terms used but not otherwise defined in this Agreement have the
meanings given in the Asset Purchase Agreement (as defined in the first Recitals
clause).
RECITALS
WHEREAS, APS and BWP have entered into an Asset Purchase Agreement (the
"ASSET PURCHASE AGREEMENT"), pursuant to which BWP has agreed to purchase
substantially all of the business assets located at the Purchased Locations;
WHEREAS, following the consummation of the transactions contemplated by
the Asset Purchase Agreement, BWP will conduct business at certain of the
Purchased Locations and, in connection therewith, BWP desires to obtain limited
access to PIMS and certain related limited administrative and technical support
as provided for herein; and
WHEREAS, APS desires to grant BWP limited access to PIMS and to provide
BWP with certain related limited administrative and technical support, as
provided for herein
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. PIMS ACCESS AND RELATED TECHNICAL AND CONSULTING SERVICES.
1.1. APS shall grant BWP limited access to PIMS, subject to the conditions
set forth herein, for a period of time (the "PIMS ACCESS Period") commencing
on the Closing Date and ending on the earlier to occur of (i) the date which
is six (6) months after the end of the month following the Closing Date; (ii)
the date that APS ceases operation of PIMS; or (iii) ten (10) days after the
date on which BWP notifies APS that it no longer requires PIMS access. BWP
acknowledges that APS shall not be required to provide, and does not
currently contemplate providing PIMS access following the expiration of the
PIMS Access Period. BWP's access to PIMS shall be limited to information
which pertains to the Purchased Locations, and BWP acknowledges that such
information will relate only to product lines sold at the Purchased Locations
prior to the Closing Date.
1.2. On the Closing Date, APS shall provide BWP with PIMS access codes
sufficient to access PIMS at the Purchased
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Locations utilizing currently available ports, and commencing on the Closing
Date and until the expiration of the PIMS Access Period, BWP's personnel
shall be permitted to log-on to PIMS from terminals located at the Purchased
Locations and dial-up ports during normal PIMS operating hours.
1.3. During the PIMS Access Period, APS shall provide (i) routine PIMS
maintenance and technical support at APS headquarters; and (ii) the services
associated with PIMS as set forth on SCHEDULE A attached hereto; PROVIDED,
HOWEVER, that APS shall not be responsible for the link-up and interface of
PIMS with BWP information management systems, for any on site maintenance at
the Purchased Locations or for any custom programming (except as such
services may be provided by APS' consultants as provided in SECTION 1.5).
1.4. The software programs utilized by, and the know-how and operating
procedures associated with PIMS are proprietary to and constitute trade
secret information of APS. APS does not intend to grant, and BWP acknowledges
that it is not obtaining hereby, any title to or right or interest in, by way
of license or otherwise, PIMS operating procedures or know-how, PIMS software
or the source code underlying such software. BWP shall not be granted access
to the source code underlying PIMS software programs, and BWP shall not
attempt to obtain such access. However, should it become necessary for BWP to
restore PIMS access as provided in SECTION 3.4, APS agrees to disclose to BWP
whatever proprietary information as may be necessary, including, but not
limited to, programs, know-how, operating procedures or source code, to
enable BWP to restore such access. BWP agrees that if such disclosure of
APS's proprietary information becomes necessary, the information will be
provided only to those persons directly involved in the restoration of PIMS
access, and the confidentiality of the information will be treated by BWP
with the same standard of care as it treats its own confidential information.
PIMS shall be used exclusively by BWP and its employees, and BWP shall not
allow others to use or have access to PIMS, directly or indirectly. BWP
recognizes and acknowledges that PIMS operating procedures and data contained
on PIMS are confidential and trade secrets and are the sole and exclusive
property of APS. BWP shall maintain the confidential nature of all PIMS data
(other than data input by BWP) and operating procedures, and shall not
disseminate PIMS data (other than data input by BWP) or operating procedures
to any third party without the prior written consent of APS. APS shall
maintain the confidential nature of all PIMS data input by BWP, and shall not
disseminate such PIMS data to any third party without the prior written
consent of BWP.
1.5. During the PIMS Access Period, APS shall provide:
(a) consulting services pertaining to PIMS on a per request basis, subject
to the availability of APS consultants, which
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consulting services may include: (i) requirements analysis and initial and
follow-up customized programming or reporting necessary for any interface
of BWP's information management system with PIMS; (ii) on site maintenance
by APS personnel at the Purchased Locations of any PIMS terminals,
printers, or other hardware; (iii) training of BWP personnel in PIMS
operation; and (iv) parts / product line changeover services, which
consulting services provided by APS pursuant to this SECTION 1.5(A) shall
be billed to BWP at an hourly rate of $150 plus expenses; and
(b) accounting consulting services as described in and for the periods set
forth on SCHEDULE B attached hereto, which consulting services shall be
billed to BWP as set forth on such SCHEDULE B.
All consulting services provided pursuant to this SECTION 1.5 shall be
payable in accordance with SECTION 2.2.
1.6. APS EXPRESSLY DISCLAIMS ALL WARRANTIES WITH RESPECT TO THE OPERATION OF
PIMS, DATA CONTAINED ON PIMS, AND SERVICES PROVIDED BY APS IN CONNECTION WITH
PIMS, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED, OR ARISING BY USAGE OF
TRADE OR COURSE OF DEALING, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND, EXCEPT TO THE
EXTENT THAT ANY EXECUTIVE OFFICER OF APS HAS ACTUAL KNOWLEDGE THEREOF, NO
MISAPPROPRIATION AND NONINFRINGEMENT. APS SHALL NOT BE LIABLE FOR PUNITIVE,
SPECIAL, DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING,
WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS
INTERRUPTION OR ANY OTHER LOSS) ARISING FROM OR RELATING TO THE USE OF PIMS
BY BWP OR THE MALFUNCTION OR TEMPORARY OR PERMANENT SHUTDOWN OF PIMS, WHETHER
CLAIMED UNDER CONTRACT, TORT OR ANY OTHER LEGAL THEORY.
SECTION 2. FEES; PAYMENT FOR CONSULTING SERVICES
2.1. BWP shall pay to APS a monthly fee equal to $18,500 per DC servicing the
stores at the Purchased Locations, payable in advance on the first day of
each calendar month during the PIMS Access Period which fee shall be paid on
a pro rata basis for any period shorter than a month during which this
Agreement is in effect for a DC.
2.2. APS shall separately invoice BWP monthly in arrears for all charges for
consulting services pursuant to SECTIONS 1.5(A) and 1.5(B), which invoice
shall be accompanied by reasonable documentation or explanation supporting
such charges, and BWP shall pay APS the full amounts of such invoices, no
later than twenty (20) days after each invoice date. All payments under this
Agreement shall be made without deduction (except for charges billed in
error), set off, recoupment or counterclaim. In the case of charges believed
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to be billed in error, BWP shall timely pay the undisputed portion of the
invoice, on or before the due date for payment of the charges. All overdue
amounts shall bear interest, from the time such amounts are due until such
amounts are actually paid (including any period in which such amounts are in
dispute), at a rate equal to the lower of: (i) three percentage points above
the prime rate in effect at the time payment was due or (ii) the highest rate
permitted by law.
2.3. BWP shall reimburse to APS an amount equal to the sum of (i) all
reasonable direct out-of-pocket fees and expenses incurred by APS in
rendering consulting services pursuant to this Agreement and (ii) any and all
taxes (other than taxes based on APS' net income or gross income) assessed on
the provision of services pursuant to this Agreement without any offset or
deduction of any nature whatsoever. Such costs, expenditures and taxes will
be billed to BWP in the monthly invoices in accordance with SECTION 2.2.
SECTION 3. TERMINATION; REMEDIES
3.1. This Agreement shall terminate at the end of the PIMS Access Period,
PROVIDED, HOWEVER, that APS shall use reasonable efforts to the extent
practicable to provide BWP with timely written notice of the date on which
APS expects that it will cease operating PIMS, if and when a voluntary and
final decision is made by APS to cease operating PIMS.
3.2. In the event that BWP fails to make any payment hereunder when due or
otherwise fails to perform its obligations or breaches any of its covenants
hereunder and such default is not cured within ten (10) days, (i) APS may
terminate this Agreement upon ten (10) days' written notice to BWP; and (ii)
all amounts owed by BWP to APS under this Agreement as of the date of such
default shall become due and payable. BWP may terminate this Agreement on ten
(10) days' written notice to APS. This Agreement is subject to termination or
modification as may be necessary to comply with the provision of any decree
or order of the Bankruptcy Court.
3.3. Upon termination of this Agreement as provided in SECTION 3.1 or 3.2, or
by operation of law or otherwise, all fees owed to APS hereunder through the
date of termination shall become due and payable and all other obligations
granted hereunder shall terminate, except as provided in SECTIONS 3.4 and 4.
3.4. The sole remedy available to BWP in the event of a material failure of
APS to provide PIMS access pursuant to this Agreement during the Access
Period (other than by a willful breach of this Agreement by APS) shall be
addressed to correcting said failure, rather than to penalizing APS. In
recognition of this aim, BWP's sole and exclusive remedy for such a failure
shall be that APS shall use commercially
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reasonable efforts to restore PIMS access to BWP within a commercially
reasonable time. In the event that APS is unable to restore PIMS access, APS
shall permit BWP to attempt to restore PIMS access and shall use reasonable
commercial efforts not requiring additional expenditures (other than making a
motion or motions to the Bankruptcy Court, if necessary, to assist BWP in
restoring PIMS access, PROVIDED, THAT such PIMS access must be provided on a
fair and equitable basis to all parties then having PIMS access rights. APS
shall be excused from the corrective remedy set forth in this SECTION 3.4 if
and to the extent that: (i) APS' failure to provide PIMS access pursuant to
this Agreement is a direct or indirect result of BWP's breach of any covenant
in this Agreement or failure to timely and accurately perform its
responsibilities as set forth in this Agreement or (ii) BWP fails to provide
reasonable cooperation in completing performance and correcting the problems
that led to the failure at issue. Notwithstanding the foregoing, in the event
of the willful failure of APS to provide BWP with PIMS access pursuant to
this Agreement during the Access Period, APS shall be obligated to indemnify
BWP for documented damages (including claims, liabilities, expenses,
reasonable out-of-pocket costs and other legally recoverable damages)
resulting from such breach, PROVIDED, HOWEVER that APS shall not have any
obligation to indemnify BWP for damages to the extent that such damages
exceed $250,000 in the aggregate, and FURTHER PROVIDED that BWP acknowledges
that APS may cease operating PIMS and that such event shall not constitute a
"willful failure" under this SECTION 3.4.
SECTION 4. CONFIDENTIALITY.
BWP and APS agree to keep, and to cause each of its affiliates, directors,
officers, and employees to keep, confidential any and all confidential
information of the other party that it receives in the course of performing
its obligations hereunder (except that such information may be shared, on a
confidential basis, with the party's attorneys and auditors) and will not,
without the other party's written consent, use any of such confidential
information except as reasonably necessary to perform its duties under this
or another of its agreements with the other party. Upon termination of this
Agreement, each party will return, and will cause its affiliates to return,
to the other party, all original documents and copies of the confidential
information which are in its possession. Notwithstanding the foregoing, APS
shall be permitted to provide copies of this Agreement to its lenders and the
Bankruptcy Court. This SECTION 4 shall survive the termination of this
Agreement.
SECTION 5. RELATIONSHIP OF THE PARTIES.
It is expressly understood and agreed that in rendering services hereunder,
APS is acting as an independent contractor
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and that this Agreement does not constitute either party as an employee,
partner, joint venturer, agent or other representative of the other party for
any purpose whatsoever. Neither party has the right or authority to enter
into any contract, warranty, guarantee or other undertaking in the name of or
for the account of the other party, or to assume or create an obligation or
liability of any kind, express or implied, on behalf of the other party, or
to bind the other party in any manner whatsoever, or hold itself out as
having any right, power or authority to create any such obligation or
liability on behalf of the other or to bind the other party in any manner
whatsoever (except as to any actions taken by either party at the express
written request and direction of the other party).
SECTION 6. MISCELLANEOUS.
6.1. SEVERABILITY. If any term or provision of this Agreement or the
application thereof with respect to any Person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement, or the
application of that term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be valid and be
enforced to the fullest extent permitted by law.
6.2. GOVERNING LAW. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the State of
Delaware.
6.3. HEADINGS. The caption headings in this Agreement are for reference
purposes only, and do not constitute a part of this Agreement and shall not
affect its meaning or interpretation.
6.4. NOTICES. All notices, requests, demands and other communications
required or permitted under this Agreement shall be made in the same manner
as is set forth in the Asset Purchase Agreement.
6.5. ACCESS. To the extent reasonably required for APS to perform its
obligations under this Agreement, BWP shall provide APS personnel with
reasonable access to the Purchased Locations, including, without limitation,
office space, and telecommunications and computer equipment, systems and
software. As a condition to providing services pursuant to this Agreement,
APS may restrict or prohibit any changes in the location of certain
telecommunications and computer equipment and systems owned by APS and
located at the Purchased Locations, and BWP shall be bound by all such
requirements and restrictions.
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6.6. FORCE MAJEURE. Neither party shall be liable for its failure or delay in
fulfilling its obligations hereunder, if such failure or delay is caused by
fire, flood, weather conditions or other Acts of God, invasions,
insurrections, riots, closing of the public highways, strike, lockout or
other labor dispute, civil unrest, war or any other reason beyond the
reasonable control of the party. In the case of strikes, lockouts or other
labor disputes, it is understood that such event is beyond the reasonable
control of the party suffering the event unless and until the party is able
to resolve it in a manner which such party deems reasonable and appropriate.
6.7. NO THIRD PARTY RIGHTS. The provisions of this Agreement shall not
entitle any person not a signatory hereto to any rights hereunder or in
respect hereof, as a third party beneficiary or otherwise, it being the
specific intention of the parties herein to preclude any and all such persons
non-signatory hereto from such rights.
This Agreement shall enter into full force and effect as of the date first set
forth above upon its execution below by both of the parties.
A.P.S., INC.
By: /s/ BETTINA M. WHYTE
Bettina M. Whyte, President
BWP DISTRIBUTORS, INC.
By: /s/ NEIL STOCKEL
Neil Stockel, President
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SCHEDULE B TO BWP SERVICES AGREEMENT
List of accounting services for BWP Distributors, Inc. ("BWP") from APS, Inc.
("APS")
1. Processing assistance by APS personnel at APS' facilities are to be made
available to BWP personnel for the purpose of processing BWP financial
information for the payments set forth below, subject to the conditions
set forth in Paragraph 2 below.
Omaha--an APS employee to be made available to provide consulting services
with respect to accounts receivable, accounts payable and general ledger
processing.
Memphis--an APS employee to be made available to provide consulting
services with respect to accounts receivable.
The services listed above are to be billed at $150 per hour for
professional personnel, and $50 per hour for clerical personnel.
2. The accounting services to be provided by APS as described above are
subject to the following conditions:
The availability of APS personnel to provide consulting services set forth
in Paragraph 1 shall be limited to 16 hours per week per consultant and
shall be subject to the availability of adequate personnel to first meet
APS' accounting requirements. The continued employment of employees
providing consulting services shall be at the sole discretion of APS.
EXHIBIT 2.7
EXECUTION COPY
TRADEMARK LICENSE AGREEMENT
TRADEMARK LICENSE AGREEMENT (this "Agreement") is entered into as of
October 9, 1998, by and between APS Management Services, Inc., a Delaware
corporation ("Licensor") and a debtor and debtor-in-possession in a case pending
under Chapter 11 of the Bankruptcy Code, and General Parts, Inc., a North
Carolina corporation ("Licensee"). Capitalized terms used but not otherwise
defined in this Agreement have the meanings given in the Asset Purchase
Agreement.
RECITALS
WHEREAS, Licensor is the owner of the trademarks (the "Marks")
set forth on Schedule "A" attached hereto; and
WHEREAS, in connection with the sale of certain assets (the
"Purchased Assets") to Licensee pursuant to that certain asset purchase
agreement (the "Asset Purchase Agreement") dated as of even date herewith,
Licensor and Licensee wish to enter into this Agreement to set forth the terms
and conditions upon which Licensor will grant a license to Licensee to use the
Marks in connection with the distribution and sale of automotive replacement
parts, accessories and supplies (the "Business").
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Licensor and Licensee agree as follows:
1. GRANT OF LICENSE.
1.1. GRANT AND TERMS OF LICENSE. Subject to the terms and conditions
of this Agreement, Licensor hereby grants to Licensee a non-transferable,
limited and royalty-free license to use the Marks for a period of twenty-four
(24) months from the date of this Agreement (the "Defined Term") in the limited
geographical areas in which, immediately prior to the Closing Date, Licensor
conducted the Business from the Purchased Locations (excluding Closed Locations)
(such areas, collectively, the "Defined Territory"). This license shall be
exclusive to Licensee within the Defined Territory for the Defined Term, except
to the extent provided in Paragraph 2.2 of this Agreement. Such use shall
include the use of the Marks by wholly-owned subsidiaries of Licensee.
1.2. PERMITTED USE OF MARKS. Licensee's right to use the Marks shall
be limited: (i) to uses relating to the Licensee's use of the Purchased Assets;
and (ii) to uses relating to Licensee's carrying on of the Business conducted by
Licensor
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at the Purchased Locations prior to the date hereof. Licensee shall not use the
Marks in a manner inconsistent with Licensor's past practices in using the Marks
at or in connection with the Purchased Locations, or in a manner which
disparages or is detrimental to Licensor's assets or business.
1.3. RESERVATION OF LICENSOR'S RIGHTS. All rights in and to the
Marks not specifically granted to Licensee by this Agreement are reserved to
Licensor for Licensor's own use and benefit.
2. OWNERSHIP OF MARKS.
2.1. RIGHTS IN MARKS. The Marks are the exclusive property of
Licensor and, except as provided in Section 1.2, Licensee shall not manufacture,
market, advertise, promote, ship, distribute or sell (or permit or cause any
such actions by others, within its control with respect to) any goods or
materials bearing any of the Marks or any services associated with the Marks.
Neither Licensee nor any of its Affiliates or subcontractors, nor any third
parties related in any way to any of the foregoing persons or entities, has any
right, title or interest in or to the Marks other than the limited rights
granted herein.
2.2. PROHIBITED ACTIONS. Licensee shall not take (or permit or cause
to be taken) any action to impair, attack or interfere with Licensor's exclusive
rights in the Marks. In its use of the Marks, Licensee shall not make or allow
to be made any alterations or changes to the appearance of the Marks, including,
but not limited to, any changes to the graphic representation of the Marks, the
color scheme of the Marks, or the font or type face in which the Marks are
portrayed. Licensee shall not seek to register any of the Marks anywhere in the
world or use the Marks in any manner that may lead to a material loss of the
value of the Marks. Licensee will give Licensor notice of any claim made by any
third party of which Licensor has knowledge, that would adversely affect the
Marks.
During the Defined Term, Licensor shall not grant to any third party
any rights to use the Marks in the Defined Territory, PROVIDED, HOWEVER that
this limitation shall in no way affect grants, if any, of rights in the Marks
made by Licensor or any of its affiliates to third parties in the Defined
Territory prior to the date hereof, and FURTHER PROVIDED that Licensor
represents that it has not previously granted a license to use the Marks in the
Defined Territory to any warehouse distributor of automotive parts.
3. WARRANTY DISCLAIMER; INDEMNIFICATION.
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3.1. WARRANTY DISCLAIMER. LICENSOR MAKES NO WARRANTIES OF ANY KIND,
WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO ANY PRODUCT'S FITNESS FOR A
PARTICULAR PURPOSE. Licensee shall not make any statements, representations or
warranties whatsoever to any third party which are in any way inconsistent with
this Section 3.1.
3.2. LICENSOR REPRESENTATIONS; INDEMNIFICATION. Licensor represents
and warrants that (i) it has the right to grant to Licensee the license of the
Marks hereunder; (ii) it has no knowledge or notice of any actions pending or
threatened which impair its right to grant the rights in the Marks licensed
hereunder; and (iii), to its knowledge, the rights licensed hereunder do not
violate any obligations of Licensor to any third parties. Licensor hereby
indemnifies Licensee and parent, subsidiary and affiliated companies, and
officers, directors and employees of each of the foregoing and each of them, and
undertakes to hold them harmless against any and all claims, demands, damages,
losses and expenses of any nature (including reasonable attorney's fees) which
arise solely in connection with the breach by Licensor of any warranty or
representation made by Licensor hereunder, including but not limited to loss or
damage resulting from copyright, design patent and trademark infringement,
provided that said breach does not occur as a result of the negligence of
Licensee or the breach by Licensee of any of its representations or obligations
hereunder, that prompt notice is given to Licensor of any such claim or suit
and, provided further, that Licensor shall have the option to undertake and
conduct the defense of any suit so brought.
3.3 LICENSEE INDEMNIFICATION. Licensee shall defend, indemnify and
hold harmless Licensor and each of its Affiliates, employees, and agents from
and against any and all claims, demands, damages, losses and expenses of any
nature (including reasonable attorneys' fees), including, without limitation,
those related to death, personal injury, property damage and product liability,
which arise from or in connection with Licensee's use of the Marks, (i) in a
manner not consistent with: (a) Licensee's normal business practices or (b) any
known right of a third party; or (ii) in a manner which disparages or is
detrimental to Licensor's assets or business.
4. TERMINATION. This Agreement shall automatically terminate without prior
notice to Licensee:
(a) at 5:00 p.m. Eastern time on the last day of the Defined Term;
or
(b) if Licensee is in material breach of any of the terms or
conditions of this Agreement, and Licensee fails to cure
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such breach within ten (10) days from Licensee's receipt of written notice of
such breach from Licensor.
5. EFFECTS OF TERMINATION. Upon termination of this Agreement, all rights
granted hereunder to Licensee shall terminate and Licensee shall immediately:
(a) cease all use of the Marks in any form;
(b) cease representing itself as a licensee of Licensor; and
(c) promptly take such actions as may be necessary to cease doing
business under the Marks, including, but not limited to, (i) modifying the name
of Licensee or any of its subsidiaries, (ii) removing, modifying or destroying
all signs, advertising, packaging and promotional materials containing any of
the Marks.
Licensee agrees to furnish evidence reasonably satisfactory to
Licensor of compliance with Licensee's obligations under this Agreement within
fifteen (15) Business Days after termination of this Agreement.
6. NOTICES. All notices, requests, demands, consents and other
communications required or permitted hereunder shall be in writing and shall be
delivered personally or by overnight mail with a reputable courier service or by
telecopy. If notice is sent by telecopy, notices shall be deemed given upon
confirmation at the sender's telecopy machine of receipt at the recipient's
telecopy machine. All communications hereunder shall be delivered to the
respective parties at the following addresses (or to such other person or at
such other address for a party as shall be specified by like notice, provided
that notices of a change of address shall be effective only upon receipt
thereof):
If to Purchaser: General Parts, Inc.
P.O. Box 26006
Raleigh, NC 27611
Attention: O. Temple Sloan, Jr.
Facsimile No.: 919-573-3551
With a copy Manning, Fulton & Skinner, P.A.
(which shall not P.O. Box 20389
constitute notice) Raleigh, NC 27619-0389
to: Attention: W. Gerald Thornton
Facsimile No.: 919-571-2504
If to Seller: APS Holding Corporation
15710 John F. Kennedy Blvd.
Suite 700
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Houston, Texas 77032-2347
Attention: Bettina Whyte
Facsimile No. 713-507-1323
With a copy Willkie Farr & Gallagher
(which shall not 787 Seventh Avenue
constitute notice) New York, New York 10019-6099
to: Attention: Cornelius T.
Finnegan III, Esq.
Facsimile No. (212) 728-8111
7. CONFIDENTIALITY. Other than as may be required by any applicable law,
government order or regulation, or by order or decree of any court of competent
jurisdiction, Licensee shall not publicly divulge or announce, or in any manner
disclose to any third party, any information or matters revealed to Licensee
pursuant hereto, or any of the specific terms and conditions of this Agreement.
8. RELATIONSHIP OF PARTIES. Licensee's relationship with Licensor is
solely as an independent contractor, and Licensee shall have no legal power or
authority, express or implied, to act for, bind or commit Licensor in any manner
or to anything whatsoever. Licensor and Licensee agree that nothing in this
Agreement shall make Licensee an agent of Licensor or create or evidence a joint
venture or partnership between the parties or any relationship other than that
of independent contractors.
9. ASSIGNMENT. This Agreement shall be binding on the parties hereto and
on their respective successors and permitted assigns; PROVIDED, HOWEVER, that
Licensee may not assign, transfer or hypothecate its obligations under this
Agreement or sub-license or grant any right, title or interest in any of its
rights hereunder in whole or in part, directly or indirectly, by operation of
law or otherwise, except as expressly agreed in writing in advance by Licensor.
Notwithstanding the foregoing, Licensee may grant to Lottes and Strafco rights
to use the Marks upon and subject to the terms of, and the obligations contained
in, this Agreement (but the Marks may be so used only with respect to the
business conducted at Purchased Locations that are subject to the Assigned GPI
Affiliate Leases and Lottes Subleases), provided that such assignment shall not
relieve Licensee from any of its obligations under this Agreement, and Licensee
shall remain liable for any breach of this Agreement by Lottes or Strafco.
10. GOVERNING LAW. This Agreement and any dispute between the parties
arising from this Agreement or the subject matter hereof, shall be governed by
the laws of the State of Delaware, without regard to its conflict or choice of
laws principles, and of the United States of America.
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11. REMEDIES. Notwithstanding anything to the contrary contained in this
Agreement, Licensee acknowledges that its failure to comply with its obligations
under this Agreement could cause immediate and irreparable harm to Licensor for
which money damages would be inadequate. Accordingly, in the event of Licensee's
breach of this Agreement, Licensor may seek equitable relief, including, but not
limited to, specific performance of Licensee's obligations hereunder, and
injunctive relief to prevent Licensee's continued use of the Marks. Any remedies
contemplated by this Section 11 shall not be deemed to be an exclusive remedy
for breach of this Agreement, but shall be in addition to all other remedies
available at law or in equity.
12. MISCELLANEOUS.
(a) Paragraph headings contained in this Agreement are included for
convenience only and shall not be considered for any purpose in governing,
limiting, modifying, construing or affecting the provisions of this Agreement
and shall not otherwise be given any legal effect.
(b) The determination that any provision of this Agreement is
invalid or unenforceable shall not invalidate this Agreement, and the remainder
of this Agreement shall be valid and enforceable to the fullest extent permitted
by law.
(c) This Agreement represents the entire understanding between the
Parties with respect to the subject matter hereof and supersedes all previous
representations, understandings or agreements, oral or written, between the
Parties with respect to the subject matter hereof.
(d) Paragraphs 3, 5, 7 and 9 shall survive termination of this
Agreement.
(e) The Schedules attached to this Agreement and the limitations
described therein constitute an integral part of the Agreement.
(f) No waiver, modification or cancellation of any term or condition
or this Agreement shall be effective unless executed in writing by both Licensee
and Licensor. No waiver by either party of any breach of this Agreement shall be
deemed to be a waiver of any preceding or succeeding breach of the same or any
other provision hereof.
(g) This Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the authorized representatives of the Parties have
signed this Agreement:
APS MANAGEMENT SERVICES, INC., as Licensor
By: /s/ BETTINA M. WHYTE
Name: Bettina M. Whyte
Title: President
GENERAL PARTS, INC., as Licensee
By: /s/ BILL KUYKENDALL
Name: Bill Kuykendall
Title: V.P. of Finance
S
EXHIBIT 2.8
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "AGREEMENT") is made and entered into as of
October 9, 1998 between A.P.S., INC., a Delaware corporation ("APS") and a
debtor and debtor-in possession in a case pending under chapter 11 of the
Bankruptcy Code, and GENERAL PARTS, INC., a North Carolina corporation ("GPI").
Capitalized terms used but not otherwise defined in this Agreement have the
meanings given in the Asset Purchase Agreement (as defined in the first Recitals
clause).
RECITALS
WHEREAS, APS and GPI have entered into an Asset Purchase Agreement (the
"ASSET PURCHASE AGREEMENT"), pursuant to which GPI has agreed to purchase
substantially all of the business assets located at the Purchased Locations;
WHEREAS, following the consummation of the transactions contemplated by
the Asset Purchase Agreement, GPI will conduct business at certain of the
Purchased Locations and, in connection therewith, GPI desires to obtain limited
access to PIMS and certain related limited administrative and technical support
as provided for herein; and
WHEREAS, APS desires to grant GPI limited access to PIMS and to provide
GPI with certain related limited administrative and technical support, as
provided for herein
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. PIMS ACCESS AND RELATED TECHNICAL AND CONSULTING SERVICES.
1.1. APS shall grant GPI limited access to PIMS, subject to the conditions set
forth herein, for a period of time (the "PIMS ACCESS PERIOD") commencing on the
Closing Date and ending on the earlier to occur of (i) the date which is six (6)
months after the end of the month following the Closing Date; (ii) the date that
APS ceases operation of PIMS; or (iii) ten (10) days after the date on which GPI
notifies APS that it no longer requires PIMS access. GPI acknowledges that APS
shall not be required to provide, and does not currently contemplate providing
PIMS access following the expiration of the PIMS Access Period. GPI's access to
PIMS shall be limited to information which pertains to the Purchased Locations,
and GPI acknowledges that such information will relate only to product lines
sold at the Purchased Locations prior to the Closing Date.
1.2. On the Closing Date, APS shall provide GPI with PIMS access codes
sufficient to access PIMS at the Purchased Locations utilizing currently
available ports, and commencing on the
<PAGE>
Closing Date and until the expiration of the PIMS Access Period, GPI's personnel
shall be permitted to log-on to PIMS from terminals located at the Purchased
Locations and dial-up ports during normal PIMS operating hours.
1.3. During the PIMS Access Period, APS shall provide (i) routine PIMS
maintenance and technical support at APS headquarters; and (ii) the services
associated with PIMS as set forth on SCHEDULE A attached hereto; PROVIDED,
HOWEVER, that APS shall not be responsible for the link-up and interface of PIMS
with GPI information management systems, for any on site maintenance at the
Purchased Locations or for any custom programming (except as such services may
be provided by APS' consultants as provided in SECTION 1.5).
1.4. The software programs utilized by, and the know-how and operating
procedures associated with PIMS are proprietary to and constitute trade secret
information of APS. APS does not intend to grant, and GPI acknowledges that it
is not obtaining hereby, any title to or right or interest in, by way of license
or otherwise, PIMS operating procedures or know-how, PIMS software or the source
code underlying such software. GPI shall not be granted access to the source
code underlying PIMS software programs, and GPI shall not attempt to obtain such
access. However, should it become necessary for GPI to restore PIMS access as
provided in SECTION 3.4, APS agrees to disclose to GPI whatever proprietary
information as may be necessary, including, but not limited to, programs,
know-how, operating procedures or source code, to enable GPI to restore such
access. GPI agrees that if such disclosure of APS's proprietary information
becomes necessary, the information will be provided only to those persons
directly involved in the restoration of PIMS access, and the confidentiality of
the information will be treated by GPI with the same standard of care as it
treats its own confidential information. PIMS shall be used exclusively by GPI
and its employees, and GPI shall not allow others to use or have access to PIMS,
directly or indirectly. GPI recognizes and acknowledges that PIMS operating
procedures and data contained on PIMS are confidential and trade secrets and are
the sole and exclusive property of APS. GPI shall maintain the confidential
nature of all PIMS data (other than data input by GPI) and operating procedures,
and shall not disseminate PIMS data (other than data input by GPI) or operating
procedures to any third party without the prior written consent of APS. APS
shall maintain the confidential nature of all PIMS data input by GPI, and shall
not disseminate such PIMS data to any third party without the prior written
consent of GPI.
1.5. During the PIMS Access Period, APS shall provide:
(a) consulting services pertaining to PIMS on a per request basis, subject
to the availability of APS consultants, which consulting services may
include: (i) requirements analysis and initial and follow-up customized
programming or
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<PAGE>
reporting necessary for any interface of GPI's information management
system with PIMS; (ii) on site maintenance by APS personnel at the
Purchased Locations of any PIMS terminals, printers, or other hardware;
(iii) training of GPI personnel in PIMS operation; and (iv) parts /
product line changeover services, which consulting services provided by
APS pursuant to this SECTION 1.5(a) shall be billed to GPI at an hourly
rate of $150 plus expenses; and
(b) accounting consulting services as described in and for the periods set
forth on SCHEDULE B attached hereto, which consulting services shall be
billed to GPI as set forth on such SCHEDULE B.
All consulting services provided pursuant to this SECTION 1.5 shall be payable
in accordance with SECTION 2.2.
1.6. APS EXPRESSLY DISCLAIMS ALL WARRANTIES WITH RESPECT TO THE OPERATION OF
PIMS, DATA CONTAINED ON PIMS, AND SERVICES PROVIDED BY APS IN CONNECTION WITH
PIMS, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED, OR ARISING BY USAGE OF TRADE
OR COURSE OF DEALING, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND, EXCEPT TO THE
EXTENT THAT ANY EXECUTIVE OFFICER OF APS HAS ACTUAL KNOWLEDGE THEREOF, NO
MISAPPROPRIATION AND NONINFRINGEMENT. APS SHALL NOT BE LIABLE FOR PUNITIVE,
SPECIAL, DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING,
WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION
OR ANY OTHER LOSS) ARISING FROM OR RELATING TO THE USE OF PIMS BY GPI OR THE
MALFUNCTION OR TEMPORARY OR PERMANENT SHUTDOWN OF PIMS, WHETHER CLAIMED UNDER
CONTRACT, TORT OR ANY OTHER LEGAL THEORY.
SECTION 2. FEES; PAYMENT FOR CONSULTING SERVICES
2.1. GPI shall pay to APS a monthly fee equal to $18,500 per DC servicing the
stores at the Purchased Locations, payable in advance on the first day of each
calendar month during the PIMS Access Period which fee shall be paid on a pro
rata basis for any period shorter than a month during which this Agreement is in
effect for a DC.
2.2. APS shall separately invoice GPI monthly in arrears for all charges for
consulting services pursuant to SECTIONS 1.5(A) and 1.5(B), which invoices shall
be accompanied by reasonable documentation or explanation supporting such
charges, and GPI shall pay APS the full amounts of such invoices, no later than
twenty (20) days after each invoice date. All payments under this Agreement
shall be made without deduction (except for charges billed in error), set off,
recoupment or counterclaim. In the case of charges believed to be billed in
error, GPI shall timely pay the undisputed portion of the invoice, on or before
the due date for payment of the charges. All overdue amounts shall bear
interest, from the time such amounts are due until such amounts are actually
paid (including any period in which
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<PAGE>
such amounts are in dispute), at a rate equal to the lower of: (i) three
percentage points above the prime rate in effect at the time payment was due or
(ii) the highest rate permitted by law.
2.3. GPI shall reimburse to APS an amount equal to the sum of (i) all reasonable
direct out-of-pocket fees and expenses incurred by APS in rendering consulting
services pursuant to this Agreement and (ii) any and all taxes (other than taxes
based on APS' net income or gross income) assessed on the provision of services
pursuant to this Agreement without any offset or deduction of any nature
whatsoever. Such costs, expenditures and taxes will be billed to GPI in the
monthly invoices in accordance with SECTION 2.2.
SECTION 3. TERMINATION; REMEDIES
3.1. This Agreement shall terminate at the end of the PIMS Access Period,
PROVIDED, HOWEVER, that APS shall use reasonable efforts to the extent
practicable to provide GPI with timely written notice of the date on which APS
expects that it will cease operating PIMS, if and when a voluntary and final
decision is made by APS to cease operating PIMS.
3.2. In the event that GPI fails to make any payment hereunder when due or
otherwise fails to perform its obligations or breaches any of its covenants
hereunder and such default is not cured within ten (10) days, (i) APS may
terminate this Agreement upon ten (10) days' written notice to GPI; and (ii) all
amounts owed by GPI to APS under this Agreement as of the date of such default
shall become due and payable. GPI may terminate this Agreement on ten (10) days'
written notice to APS. This Agreement is subject to termination or modification
as may be necessary to comply with the provision of any decree or order of the
Bankruptcy Court.
3.3. Upon termination of this Agreement as provided in SECTION 3.1 or 3.2, or by
operation of law or otherwise, all fees owed to APS hereunder through the date
of termination shall become due and payable and all other obligations granted
hereunder shall terminate, except as provided in SECTIONS 3.4 and 4.
3.4. The sole remedy available to GPI in the event of a material failure of APS
to provide PIMS access pursuant to this Agreement during the Access Period
(other than by a willful breach of this Agreement by APS) shall be addressed to
correcting said failure, rather than to penalizing APS. In recognition of this
aim, GPI's sole and exclusive remedy for such a failure shall be that APS shall
use commercially reasonable efforts to restore PIMS access to GPI within a
commercially reasonable time. In the event that APS is unable to restore PIMS
access, APS shall permit GPI to attempt to restore PIMS access and shall use
reasonable commercial efforts not requiring additional expenditures (other than
making a motion or motions to the Bankruptcy Court, if necessary, to assist GPI
in restoring PIMS access, PROVIDED, THAT
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<PAGE>
such PIMS access must be provided on a fair and equitable basis to all parties
then having PIMS access rights. APS shall be excused from the corrective remedy
set forth in this SECTION 3.4 if and to the extent that: (i) APS' failure to
provide PIMS access pursuant to this Agreement is a direct or indirect result of
GPI's breach of any covenant in this Agreement or failure to timely and
accurately perform its responsibilities as set forth in this Agreement or (ii)
GPI fails to provide reasonable cooperation in completing performance and
correcting the problems that led to the failure at issue. Notwithstanding the
foregoing, in the event of the willful failure of APS to provide GPI with PIMS
access pursuant to this Agreement during the Access Period, APS shall be
obligated to indemnify GPI for documented damages (including claims,
liabilities, expenses, reasonable out-of-pocket costs and other legally
recoverable damages) resulting from such breach, PROVIDED, HOWEVER that APS
shall not have any obligation to indemnify GPI for damages to the extent that
such damages exceed $250,000 in the aggregate, and FURTHER PROVIDED that GPI
acknowledges that APS may cease operating PIMS and that such event shall not
constitute a "willful failure" under this SECTION 3.4.
SECTION 4. CONFIDENTIALITY.
GPI and APS agree to keep, and to cause each of its affiliates, directors,
officers, and employees to keep, confidential any and all confidential
information of the other party that it receives in the course of performing its
obligations hereunder (except that such information may be shared, on a
confidential basis, with the party's attorneys and auditors) and will not,
without the other party's written consent, use any of such confidential
information except as reasonably necessary to perform its duties under this or
another of its agreements with the other party. Upon termination of this
Agreement, each party will return, and will cause its affiliates to return, to
the other party, all original documents and copies of the confidential
information which are in its possession. Notwithstanding the foregoing, APS
shall be permitted to provide copies of this Agreement to its lenders and the
Bankruptcy Court. This SECTION 4 shall survive the termination of this
Agreement.
SECTION 5. RELATIONSHIP OF THE PARTIES.
It is expressly understood and agreed that in rendering services hereunder, APS
is acting as an independent contractor and that this Agreement does not
constitute either party as an employee, partner, joint venturer, agent or other
representative of the other party for any purpose whatsoever. Neither party has
the right or authority to enter into any contract, warranty, guarantee or other
undertaking in the name of or for the account of the other party, or to assume
or create an obligation or liability of any kind, express or implied, on behalf
of the other party, or to bind the other party in any manner whatsoever, or hold
itself out as having any right, power or authority to create
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<PAGE>
any such obligation or liability on behalf of the other or to bind the other
party in any manner whatsoever (except as to any actions taken by either party
at the express written request and direction of the other party).
SECTION 6. MISCELLANEOUS.
6.1. SEVERABILITY. If any term or provision of this Agreement or the application
thereof with respect to any Person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
that term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
6.2. GOVERNING LAW. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the State of Delaware.
6.3. HEADINGS. The caption headings in this Agreement are for reference purposes
only, and do not constitute a part of this Agreement and shall not affect its
meaning or interpretation.
6.4. NOTICES. All notices, requests, demands and other communications required
or permitted under this Agreement shall be made in the same manner as is set
forth in the Asset Purchase Agreement.
6.5. ACCESS. To the extent reasonably required for APS to perform its
obligations under this Agreement, GPI shall provide APS personnel with
reasonable access to the Purchased Locations, including, without limitation,
office space, and telecommunications and computer equipment, systems and
software. As a condition to providing services pursuant to this Agreement, APS
may restrict or prohibit any changes in the location of certain
telecommunications and computer equipment and systems owned by APS and located
at the Purchased Locations, and GPI shall be bound by all such requirements and
restrictions.
6.6. FORCE MAJEURE. Neither party shall be liable for its failure or delay in
fulfilling its obligations hereunder, if such failure or delay is caused by
fire, flood, weather conditions or other Acts of God, invasions, insurrections,
riots, closing of the public highways, strike, lockout or other labor dispute,
civil unrest, war or any other reason beyond the reasonable control of the
party. In the case of strikes, lockouts or other labor disputes, it is
understood that such event is beyond the reasonable control of the party
suffering the event unless and until the party is able to resolve it in a manner
which such party deems reasonable and appropriate.
6.7. NO THIRD PARTY RIGHTS. The provisions of this Agreement shall not entitle
any person not a signatory hereto to any rights
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<PAGE>
hereunder or in respect hereof, as a third party beneficiary or otherwise, it
being the specific intention of the parties herein to preclude any and all such
persons non-signatory hereto from such rights.
This Agreement shall enter into full force and effect as of the date first set
forth above upon its execution below by both of the parties.
A.P.S., INC.
By: /s/ BETTINA M. WHYTE
Bettina M. Whyte, President
GENERAL PARTS, INC.
By: /s/ BILL KUYKENDALL
Bill Kuykendall, V.P. of Finance
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<PAGE>
SCHEDULE B TO GPI SERVICE AGREEMENT
List of accounting services for General Parts, Inc. ("GPI") to process
business units being purchased from APS, Inc. ("APS").
1. Office space - Omaha, Memphis & Houston - needs to be made available for
General Parts, Inc. to process financial information.
a. Omaha--at existing APS accounting office for a period of 90 days
from the date of first closing, to be billed at $1,000 per month.
b. Memphis--at existing APS accounting office for a period of 60 days
from the date of first closing, to be billed at $1,000 per month.
c. Houston--at existing APS accounting office (ISW & payroll) until
December 31, 1998, to be billed at $1,000 per month.
2. Processing assistance and consulting services, including training in APS
accounting systems - Omaha, Memphis, & Houston - needs to be made
available for GPI to process financial information.
a. Omaha--portion of one person for accounts receivable, accounts
payable, general ledger for a period of 30 days.
b. Memphis--Same as Omaha.
c. Houston--Same as Omaha. In addition, portion of one person for
payroll for a period of 30 days.
d. Omaha--GPI hires current staff performing independent jobber
accounting for customers of DCs being purchased by GPI.
The services listed above are to be billed at $150 per hour for professional
personnel, and $50 per hour for clerical personnel.
3. Office equipment currently in place - Omaha, Memphis, & Houston - needs to
be made available to GPI during the periods set forth in Section 1 hereof,
in order to process financial information.
a. CRT's, printers, etc. connected to the PIMS system.
b. PCs, copiers, desks, etc. that are currently used to process the
locations being purchased by GPI.
<PAGE>
c. Any third party software being used to process financial
information associated with the locations being purchased by GPI;
provided, however, that access by GPI to the ISW Oracle Accounts
Receivable System shall not be included except that APS will
process accounts receivable associated with the ISW's locations
being purchased by GPI for GPI through and until October 25,
1998, which processing shall include producing statements
required for accounting purposes as of October 25, 1998. GPI and
APS shall, in good faith and within seven days from the signing
of this agreement, work towards creating a viable alternative by
which GPI will be able to continue to process its ISW accounts
receivable.
4. The accounting services to be provided by APS as described above are
subject to the following conditions:
a. The availability of office space pursuant to Paragraph 1 is subject
to (i) the continued operation of the Omaha, Memphis and Houston
facilities by APS, which continued operation shall be at the sole
discretion of APS and (ii) the elimination of accounting services at
those facilities, which shall be at the sole discretion of APS. APS
reserves the right to limit GPI's use of office equipment pursuant
to Paragraph 3 to a reasonable level.
b. The availability of APS personnel to provide processing assistance
and consulting services pursuant to Paragraph 2 shall be limited to
16 hours per week per consultant and shall be subject to the
availability of adequate personnel to first meet APS' accounting
requirements. The continued employment of employees providing
consulting services shall be at the sole discretion of APS.
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EXHIBIT 2.9
AMENDMENT
TO
ASSET PURCHASE AGREEMENT
(General Parts, Inc.)
This AMENDMENT, dated as of October 8, 1998, to Asset Purchase
Agreement, dated as of September 9, 1998, is made and entered into by and among
A.P.S., Inc., a Delaware corporation ("APS"), the Affiliates of APS party hereto
and General Parts, Inc., a North Carolina corporation ("Purchaser").
RECITALS
WHEREAS, the parties hereto have entered into an Asset Purchase
Agreement dated as of September 9, 1998 (the "Asset Purchase Agreement"); and
WHEREAS, such parties desire to amend the Asset Purchase
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. DEFINITIONS. Capitalized terms used herein that
are defined in the Asset Purchase Agreement are used herein as so defined.
ARTICLE II.
AMENDMENTS
The Asset Purchase Agreement is hereby amended as follows:
(a) Section 1.1 is amended by adding thereto, in appropriate
alphabetical order, the following new definitions:
"Estimated Petty Cash" means the amount of Petty Cash as
estimated by Seller and set forth in a report delivered by Seller to
Purchaser on the Business Day prior to the Closing Date."
"Petty Cash" means cash held at the Stores as of the close
of business on the Closing Date."
"RDC Inventory" means New Inventory that has been moved, not
more than 45 days prior to the Closing Date,
<PAGE>
from a Closed Location to one of Seller's redistribution centers."
"Rejected Inventory Reserve" means an amount equal to
$450,000."
(b) The definition of the term "Accounts Receivable" contained in
Section 1.1 is amended by (i) deleting the word "or" appearing at the end of
clause (i) thereof and replacing it with a comma and (ii) adding immediately
after such clause (ii) the following:
"or (iii) the obligors on which are the persons identified in
a letter delivered by Seller to Purchaser with respect to this
clause (iii)".
(c) The definition of the term "Other Asset Purchase Agreement"
contained in Section 1.1 is amended in its entirety to read as follows:
"Other Asset Purchase Agreement" means the Asset
Purchase Agreement dated as of September 9, 1998, as amended
by an Amendment dated as of October 8, 1998, between Seller
and BWP."
(d) The definition of the term "Purchased Assets" contained in
Section 1.1 is amended by (i) deleting the word "and" appearing at the end of
item (j) thereof; (ii) deleting the period appearing at the end of item (k)
thereof and replacing it with a semi-colon and the word "and"; and (iii) adding
thereto the following new item (l):
"(l) the Petty Cash.".
(e) The definition of the term "True-Up Date" contained in Section
1.1 is amended in its entirety to read as follows:
"True-Up Date" means the date which is ninety
(90) days after the Closing Date."
(f) Section 2.4(a) is amended by (i) amending item (ii) thereof in
its entirety to read as follows:
"(ii) an amount equal to the value realized by Purchaser for
Dirty Core and Warranty Inventory determined in accordance with
actual receipts or credits received less (x) for items in any Store
in excess of 1/2% of the total of all such items in such Store and
(y) for items in any DC in excess of 2% of the total of all such
items in such DC, 20% for handling;";
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(ii) deleting the word "and" appearing at the end of item (vi) thereof; (iii)
deleting the period appearing at the end of item (vii) thereof and replacing it
with a semi-colon; (iv) adding thereto the following new items (viii) and (ix):
"(viii) one hundred percent (100%) of the amount of
the Petty Cash; and
(ix) $400,000 in respect of RDC Inventory.";
and (v) changing the reference to item (vii) in the last sentence thereof to be
a reference to item (ix).
(g) Section 2.4(b) is amended in its entirety to read as follows:
"(b) On the Closing Date, Purchaser shall pay to Seller an
amount of the Purchase Price in cash by wire transfer of
immediately available funds (pursuant to written instructions to be
provided by Seller to Purchaser), or, if requested by Seller, by
delivery of one or more bank cashier's checks, equal to the sum of
the following (less $450,000) (the "CLOSING DATE Payment"):
(i) eighty-five percent (85%) of the Current Inventory
Amount, less the Rejected Inventory Reserve;
(ii) the portions of the Purchase Price provided for in
SECTIONS 2.4(A)(III) and 2.4 (A)(IV);
(iii) an amount equal to sixty-five percent (65%) of the
Estimated Accounts Receivable (determined without regard to AR
Discounts);
(iv) the aggregate price for the Purchased Real
Properties, as provided in SECTION 2.11, and the price for the
Salt Lake City Lease, as provided for in SCHEDULE B;
(v) an amount equal to one hundred percent (100%) of the
Estimated Petty Cash; and
(vi) $400,000 in respect of RDC Inventory.
The Closing Date Payment shall be adjusted pursuant to
SECTIONS 2.5, 2.6 AND 2.7. Purchaser shall pay the remainder
of the Purchase Price pursuant to SECTIONS 2.4(C), 2.4(D),
2.5(B), 2.6(B), 2.7(C), 2.7(D), 2.7(F) AND
2.11.
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Seller and Purchaser agree that if the amount of any bank
cashier's checks delivered pursuant to this Section 2.4(b)
does not equal the Closing Date Payment (because, for example,
the components thereof cannot be or are incorrectly calculated
at the time the checks are issued), they will cooperate to
correct such errors as promptly as possible after the Closing
Date, by arranging for new cashier's checks or wire transfer
in the correct amount."
(h) Section 2.4(d) is amended by adding to the end thereof the
following:
"For purposes of implementing the foregoing provisions, Seller
agrees that Purchaser may, prior to the Closing Date, enter
into agreements with obligors under Notes Receivable providing
for such conversion, provided that (i) such agreements shall
by their terms be effective only if the Closing has occurred
and (ii) Purchaser shall purchase on the Closing Date,
pursuant to Section 2.4(a)(iv), all Notes Receivable of
obligors who have entered into such agreements."
(i) Section 2.5(a) is amended by (i) adding thereto, immediately
after the first sentence thereof, the following:
"The physical inventories required during the Physical
Inventory Period for Stores as set forth on Schedule 2.5(a)
may be performed on a cycle count basis over a period of
several days or, alternatively, as a wall-to-wall count on one
day.";
and (ii) adding to the end thereof the following new paragraph:
"For purposes of the counts and procedures referred to
in the preceding paragraph, if the test count conducted at any
Store indicates a variance (that cannot be reconciled or
explained) from shelf to perpetual inventory record of 5% or
more, the Inventory Representatives of Seller and Purchaser
involved in the test count shall notify Carolyn McKay, in the
case of Seller, and Rick Guirlinger, in the case of Purchaser,
and those individuals shall agree, on behalf of Seller and
Purchaser, on a schedule for the conduct of wall-to-wall
physical inventories for such Store."
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(j) Section 2.5(b) is amended by adding to the end thereof the
following:
"Determinations and calculations made pursuant to this Section
2.5(b) shall be made without duplication of determinations and
calculations made pursuant to Section 2.7(b)."
(k) Section 2.6 is amended by (i) adding to the end of the caption
thereof the following:
"; Petty Cash True-Up.";
and (ii) adding to the end thereof the following new subsection (c):
"(c) Prior to October 30, 1998, Seller and Purchaser shall
cooperate in determining the amount of the Petty Cash. In the event
that the amount of the Petty Cash as so determined is greater than
the amount of the Estimated Petty Cash, Purchase shall pay to
Seller, on the first Business Day after October 30, 1998, the amount
of such excess. In the event that the amount of the Estimated Petty
Cash is greater than the amount of the Petty Cash as so determined
pursuant to this Section 2.6(c), Seller shall pay to Purchaser, on
the first Business Day after October 30, 1998, the amount of such
excess."
(l) Section 2.7 is amended by replacing the period at the end of the
caption thereof with a semi-colon and adding to the end of such caption the
following:
"Consigned Goods.".
(m) Section 2.7(b) is amended in its entirety to read as follows:
"(b)(i) From the Closing Date until payment thereof as
provided in Section 2.7(b)(ii), the amount of the Rejected
Inventory Reserve shall be deposited by Purchaser and held in
a bank account (the "Rejected Inventory Account") established
jointly by Seller and Purchaser. Payments from such account
shall be made as provided in Section 2.7(b)(ii).
(ii) As part of the physical inventory counts and
procedures conducted pursuant to Section 2.5(a), Seller and
Purchaser shall, prior to October 30, 1998, prepare a list of
Rejected Inventory, itemized separately for Stores and DCs,
and shall calculate the amount that would have been payable to
Seller
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<PAGE>
on the Closing Date pursuant to Section 2.4(b)(i) (without
deduction for the Rejected Inventory Reserve) if the aggregate
dollar amount of such Rejected Inventory had been deducted
from the Current Inventory Amount for purposes of such
payment. If the amount that would have been payable to Seller
on the Closing Date based upon the calculation made pursuant
to the preceding sentence (and without deduction for the
Rejected Inventory Reserve) (the "Adjusted Payment") is
greater than the amount actually paid pursuant to Section
2.4(b)(i) (the "Closing Date Inventory Payment"), Purchaser
shall pay to Seller, on the first Business Day after October
30, 1998, from funds in the Rejected Inventory Account, an
amount equal to the excess of the Adjusted Payment over the
Closing Date Inventory Payment, and the balance, if any, of
the amount held in the Rejected Inventory Account shall be
simultaneously paid to Purchaser. If the Closing Date
Inventory Payment exceeds the Adjusted Payment, the amount
held in the Rejected Inventory Account shall be paid to
Purchaser on the first Business Day after October 30, 1998,
and the excess of the Closing Date Inventory Payment over the
Adjusted Payment shall be paid by Seller to Purchaser on the
first Business Day after the True-Up Date (in addition to any
other amounts payable by Seller on such date pursuant to
Section 2.5).
(iii) Rejected Inventory shall be returned to the
reclamation centers or other facilities as shall be specified
by Seller, at the sole expense of Seller, with shipment of
such Rejected Inventory to take place no later than five (5)
Business Days after October 30, 1998. Purchaser shall be
liable for any loss of or damage to Rejected Inventory prior
to its delivery to such reclamation centers or other
facilities."
(n) Section 2.7 is amended by adding to the end thereof the
following new subsection (f):
"(f) Seller and Purchaser acknowledge that the Current
Inventory Amount does not include the value of any consigned
goods. Prior to October 30, 1998, Seller and Purchaser shall
cooperate in determining the amount of consigned goods and
obtaining written verification of the consignment
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<PAGE>
by the consignor, and Purchaser shall give Seller prompt
notice of all verifications so obtained. On the first Business
Day after October 30, 1998, Purchaser shall pay to Seller an
amount equal to 85% of the Warehouse Distributor Cost of New
Inventory consisting of consigned goods as to which the amount
thereof has been determined, and verification obtained, in
accordance with the provisions of the preceding sentence. In
the event that any consigned goods have been sold prior to
payment to Seller therefor pursuant to this Section 2.7(f),
Purchaser shall bill such sale and shall pay Seller for such
consigned goods in accordance with the provisions of the
preceding sentence (without regard to any requirement for
verification)."
(o) Section 2.9 is amended by adding to the end of the first
sentence thereof the following:
"and, with respect to the RDC Inventory, by the issuance of a
credit memorandum in the amount of $400,000 for the purchase
of inventory (based upon 85% of Warehouse Distributor Cost)
from one of Seller's redistribution centers."
(p) Section 2.10 is amended by (i) deleting the expression "12:00
midnight on the day preceding the Closing Date" and inserting in lieu thereof
the following:
"11:59 P.M., New York City time, on the Closing Date";
and (ii) adding to the end thereof the following new paragraph:
"Prior to the True-Up Date, Seller and Purchaser shall
determine, based on actual bills or other applicable
documentation, the actual apportionment amounts required by
this Section 2.10. In the event that such actual apportionment
amounts as so determined are greater than the apportionment
amounts paid to Seller on the Closing Date, Purchaser shall
pay to Seller, on the first Business Day after the True-Up
Date, the amount of such excess, and, in the event that the
apportionment amounts paid to Seller on the Closing Date are
greater than such actual apportionment amounts as so
determined, Seller shall pay to Purchaser, on the first
Business Day after the True-Up Date, the amount of such
excess. The provisions of
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<PAGE>
this paragraph shall also apply to apportionments pursuant to
Section 10.2."
(q) Exhibit D to the Asset Purchase Agreement is amended by adding
to the end of Section 9 thereof the following:
"Notwithstanding the foregoing, Licensee may grant to
Lottes and Strafco rights to use the Marks upon and subject to
the terms of, and the obligations contained in, this Agreement
(but the Marks may be so used only with respect to the
business conducted at Purchased Locations that are subject to
the Assigned GPI Affiliate Leases and Lottes Subleases),
provided that such assignment shall not relieve Licensee from
any of its obligations under this Agreement, and Licensee
shall remain liable for any breach of this Agreement by Lottes
or Strafco."
ARTICLE III.
MISCELLANEOUS PROVISIONS
Section 4. COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Amendment may be executed by any one or more of
the parties hereto, and each such executed counterpart shall be, and shall be
deemed to be, an original, but all of which together shall constitute one and
the same instrument.
Section 5. RATIFICATION. The Asset Purchase Agreement, as
amended hereby, is hereby ratified and confirmed.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed to be effective as of the 9th day of October, 1998.
A.P.S. Inc.
By: /s/ BETTINA M. WHYTE
Name: Bettina M. Whyte
Title: President
GENERAL PARTS, INC.
By: /s/ BILL KUYKENDALL
Name: Bill Kuykendall
Title:Vice President of Finance
EXHIBIT 2.10
AMENDMENT
TO
ASSET PURCHASE AGREEMENT
(BWP Distributors, Inc.)
This AMENDMENT, dated as of October 8, 1998, to Asset Purchase
Agreement, dated as of September 9, 1998, is made and entered into by and among
A.P.S., Inc., a Delaware corporation ("APS"), the Affiliates of APS party hereto
and BWP Distributors, Inc., a New York corporation ("Purchaser").
RECITALS
WHEREAS, the parties hereto have entered into an Asset Purchase
Agreement dated as of September 9, 1998 (the "Asset Purchase Agreement"); and
WHEREAS, such parties desire to amend the Asset Purchase
Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. DEFINITIONS. Capitalized terms used herein that
are defined in the Asset Purchase Agreement are used herein as so defined.
ARTICLE II.
AMENDMENTS
The Asset Purchase Agreement is hereby amended as follows:
(a) Section 1.1 is amended by adding thereto, in appropriate
alphabetical order, the following new definitions:
"Estimated Petty Cash" means the amount of Petty Cash as
estimated by Seller and set forth in a report delivered by Seller to
Purchaser on the Business Day prior to the Closing Date."
"Petty Cash" means cash held at the Stores as of the close
of business on the Closing Date."
"Rejected Inventory Reserve" means an amount equal to
$50,000."
<PAGE>
(b) The definition of the term "Other Asset Purchase Agreement"
contained in Section 1.1 is amended in its entirety to read as follows:
"Other Asset Purchase Agreement" means the Asset
Purchase Agreement dated as of September 9, 1998, as amended
by an Amendment dated as of October 8, 1998, between Seller
and GPI."
(c) The definition of the term "Purchased Assets" contained in
Section 1.1 is amended by (i) deleting the word "and" appearing at the end of
item (j) thereof; (ii) deleting the period appearing at the end of item (k)
thereof and replacing it with a semi-colon and the word "and"; and (iii) adding
thereto the following new item (l):
"(l) the Petty Cash.".
(d) The definition of the term "True-Up Date" contained in Section
1.1 is amended in its entirety to read as follows:
"True-Up Date" means the date which is ninety
(90) days after the Closing Date."
(e) Section 2.4(a) is amended by (i) amending item (ii) thereof in
its entirety to read as follows:
"(ii) an amount equal to the value realized by Purchaser for
Dirty Core and Warranty Inventory determined in accordance with
actual receipts or credits received less (x) for items in any Store
in excess of 1/2% of the total of all such items in such Store and
(y) for items in the DC in excess of 2% of the total of all such
items in such DC, 20% for handling;";
(ii) deleting the word "and" appearing at the end of item (vi) thereof; (iii)
deleting the period appearing at the end of item (vii) thereof and replacing it
with a semi-colon and the word "and"; (iv) adding thereto the following new item
(viii):
"(viii) one hundred percent (100%) of the amount of
the Petty Cash."
and (v) changing the reference to item (vii) in the last sentence thereof to be
a reference to item (vii).
(f) Section 2.4(b) is amended in its entirety to read as follows:
"(b) On the Closing Date, Purchaser shall pay to Seller an
amount of the Purchase Price in cash by wire transfer of
immediately available funds (pursuant to
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<PAGE>
written instructions to be provided by Seller to Purchaser), or, if
requested by Seller, by delivery of one or more bank cashier's
checks, equal to the sum of the following (the "CLOSING DATE
PAYMENT"):
(i) eighty-five percent (85%) of the Current Inventory
Amount, less the Rejected Inventory Reserve;
(ii) the portions of the Purchase Price provided for in
SECTIONS 2.4(A)(III) and 2.4 (A)(IV);
(iii) an amount equal to sixty-five percent (65%) of the
Estimated Accounts Receivable (determined without regard to AR
Discounts);
(iv) the aggregate price for the Purchased Real
Property, as provided in SECTION 2.11; and
(v) an amount equal to one hundred percent (100%) of the
Estimated Petty Cash.
The Closing Date Payment shall be adjusted pursuant to
SECTIONS 2.5, 2.6 AND 2.7. Purchaser shall pay the remainder
of the Purchase Price pursuant to SECTIONS 2.4(C), 2.4(D),
2.5(B), 2.6(B), 2.7(C), 2.7(D), 2.7(F) AND
2.11.
Seller and Purchaser agree that if the amount of any bank
cashier's checks delivered pursuant to this Section 2.4(b)
does not equal the Closing Date Payment (because, for example,
the components thereof cannot be or are incorrectly calculated
at the time the checks are issued), they will cooperate to
correct such errors as promptly as possible after the Closing
Date, by arranging for new cashier's checks or wire transfer
in the correct amount."
(g) Section 2.4(d) is amended by adding to the end thereof the
following:
"For purposes of implementing the foregoing provisions, Seller
agrees that Purchaser may, prior to the Closing Date, enter
into agreements with obligors under Notes Receivable providing
for such conversion, provided that (i) such agreements shall
by their terms be effective only if the Closing has occurred
and (ii) Purchaser shall purchase on the Closing Date,
pursuant to Section 2.4(a)(iv), all Notes Receivable of
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<PAGE>
obligors who have entered into such agreements."
(h) Section 2.5(a) is amended by (i) adding thereto, immediately
after the first sentence thereof, the following:
"The physical inventories required during the Physical
Inventory Period for Stores as set forth on Schedule 2.5(a)
may be performed on a cycle count basis over a period of
several days or, alternatively, as a wall-to-wall count on one
day.";
and (ii) adding to the end thereof the following new paragraph:
"For purposes of the counts and procedures referred to
in the preceding paragraph, if the test count conducted at any
Store indicates a variance (that cannot be reconciled or
explained) from shelf to perpetual inventory record of 5% or
more, the Inventory Representatives of Seller and Purchaser
involved in the test count shall notify Carolyn McKay, in the
case of Seller, and Neil Stockel, in the case of Purchaser,
and those individuals shall agree, on behalf of Seller and
Purchaser, on a schedule for the conduct of wall-to-wall
physical inventories for such Store."
(i) Section 2.5(b) is amended by adding to the end thereof the
following:
"Determinations and calculations made pursuant to this Section
2.5(b) shall be made without duplication of determinations and
calculations made pursuant to Section 2.7(b)."
(j) Section 2.6 is amended by (i) adding to the end of the caption
thereof the following:
"; Petty Cash True-Up.";
and (ii) adding to the end thereof the following new subsection (c):
"(c) Prior to October 30, 1998, Seller and Purchaser shall
cooperate in determining the amount of the Petty Cash. In the event
that the amount of the Petty Cash as so determined is greater than
the amount of the Estimated Petty Cash, Purchase shall pay to
Seller, on the first Business Day after October 30, 1998, the amount
of such excess. In the event that the
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<PAGE>
amount of the Estimated Petty Cash is greater than the amount of the
Petty Cash as so determined pursuant to this Section 2.6(c), Seller
shall pay to Purchaser, on the first Business Day after October 30,
1998, the amount of such excess."
(k) Section 2.7 is amended by replacing the period at the end of the
caption thereof with a semi-colon and adding to the end of such caption the
following:
"Consigned Goods.".
(l) Section 2.7(b) is amended in its entirety to read as follows:
"(b)(i) From the Closing Date until payment thereof as
provided in Section 2.7(b)(ii), the amount of the Rejected
Inventory Reserve shall be deposited by Purchaser and held in
a bank account (the "Rejected Inventory Account") established
jointly by Seller and Purchaser. Payments from such account
shall be made as provided in Section 2.7(b)(ii).
(ii) As part of the physical inventory counts and
procedures conducted pursuant to Section 2.5(a), Seller and
Purchaser shall, prior to October 30, 1998, prepare a list of
Rejected Inventory, itemized separately for Stores and the DC,
and shall calculate the amount that would have been payable to
Seller on the Closing Date pursuant to Section 2.4(b)(i)
(without deduction for the Rejected Inventory Reserve) if the
aggregate dollar amount of such Rejected Inventory had been
deducted from the Current Inventory Amount for purposes of
such payment. If the amount that would have been payable to
Seller on the Closing Date based upon the calculation made
pursuant to the preceding sentence (and without deduction for
the Rejected Inventory Reserve) (the "Adjusted Payment") is
greater than the amount actually paid pursuant to Section
2.4(b)(i) (the "Closing Date Inventory Payment"), Purchaser
shall pay to Seller, on the first Business Day after October
30, 1998, from funds in the Rejected Inventory Account, an
amount equal to the excess of the Adjusted Payment over the
Closing Date Inventory Payment, and the balance, if any, of
the amount held in the Rejected Inventory Account shall be
simultaneously paid to Purchaser. If the Closing Date
Inventory Payment exceeds the
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<PAGE>
Adjusted Payment, the amount held in the Rejected Inventory
Account shall be paid to Purchaser on the first Business Day
after October 30, 1998, and the excess of the Closing Date
Inventory Payment over the Adjusted Payment shall be paid by
Seller to Purchaser on the first Business Day after the
True-Up Date (in addition to any other amounts payable by
Seller on such date pursuant to Section 2.5).
(iii) Rejected Inventory shall be returned to the
reclamation centers or other facilities as shall be specified
by Seller, at the sole expense of Seller, with shipment of
such Rejected Inventory to take place no later than five (5)
Business Days after October 30, 1998. Purchaser shall be
liable for any loss of or damage to Rejected Inventory prior
to its delivery to such reclamation centers or other
facilities."
(m) Section 2.7 is amended by adding to the end thereof the
following new subsection (f):
"(f) Seller and Purchaser acknowledge that the Current
Inventory Amount does not include the value of any consigned
goods. Prior to October 30, 1998, Seller and Purchaser shall
cooperate in determining the amount of consigned goods and
obtaining written verification of the consignment by the
consignor, and Purchaser shall give Seller prompt notice of
all verifications so obtained. On the first Business Day after
October 30, 1998, Purchaser shall pay to Seller an amount
equal to 85% of the Warehouse Distributor Cost of New
Inventory consisting of consigned goods as to which the amount
thereof has been determined, and verification obtained, in
accordance with the provisions of the preceding sentence. In
the event that any consigned goods have been sold prior to
payment to Seller therefor pursuant to this Section 2.7(f),
Purchaser shall bill such sale and shall pay Seller for such
consigned goods in accordance with the provisions of the
preceding sentence (without regard to any requirement for
verification)."
(n) Section 2.10 is amended by (i) deleting the expression "12:00
midnight on the day preceding the Closing Date" and inserting in lieu thereof
the following:
"11:59 P.M., New York City time, on the Closing Date";
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<PAGE>
and (ii) adding to the end thereof the following new paragraph:
"Prior to the True-Up Date, Seller and Purchaser shall
determine, based on actual bills or other applicable
documentation, the actual apportionment amounts required by
this Section 2.10. In the event that such actual apportionment
amounts as so determined are greater than the apportionment
amounts paid to Seller on the Closing Date, Purchaser shall
pay to Seller, on the first Business Day after the True-Up
Date, the amount of such excess, and, in the event that the
apportionment amounts paid to Seller on the Closing Date are
greater than such actual apportionment amounts as so
determined, Seller shall pay to Purchaser, on the first
Business Day after the True-Up Date, the amount of such
excess. The provisions of this paragraph shall also apply to
apportionments pursuant to Section 10.2."
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<PAGE>
ARTICLE III.
MISCELLANEOUS PROVISIONS
Section 4. COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Amendment may be executed by any one or more of
the parties hereto, and each such executed counterpart shall be, and shall be
deemed to be, an original, but all of which together shall constitute one and
the same instrument.
Section 5. RATIFICATION. The Asset Purchase Agreement, as
amended hereby, is hereby ratified and confirmed.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed to be effective as of the 9th day of October, 1998.
A.P.S. Inc.
By: /s/ BETTINA M. WHYTE
Name: Bettina M. Whyte
Title: President
BWP DISTRIBUTORS, INC.
By: /s/ NEIL STOCKEL
Name: Neil Stockel
Title: President
EXHIBIT 10.1.33
CONSENT, dated as of October 8, 1998 (this "CONSENT"), to the
Revolving Credit, Term Loan and Guarantee Agreement, dated as of February 2,
1998 (as heretofore amended, supplemented or otherwise modified, the "CREDIT
AGREEMENT"), among A.P.S., Inc., a Delaware corporation and debtor-in-possession
(the "COMPANY"), APS Holding Corporation, a Delaware corporation ("HOLDING"),
each of the direct and indirect Subsidiaries of the Company party thereto
(together with Holding, the "GUARANTORS"), each of which Guarantors is a
debtor-in- possession (the Company and the Guarantors, collectively, the
"DEBTORS"), the several banks and other financial institutions from time to time
party thereto (collectively, the "LENDERS"), and The Chase Manhattan Bank, as
agent for the Lenders (in such capacity, the "AGENT").
W I T N E S S E T H :
WHEREAS, the Company, the Guarantors, the Lenders and the Agent
are parties to the Credit Agreement;
WHEREAS, on September 18, 1998 the Debtors filed with the Bankruptcy
Court a "Motion for Order: (A) Authorizing Assumption and Assignment of (1) a
Lease Relating to Certain Nonresidential Real Property in Monroe, Louisiana and
(2) Certain Executory Contracts Pursuant to Section 365 of the Bankruptcy Code;
(B) Authorizing Sale of Certain Assets in Monroe, Louisiana Free and Clear of
Liens and Encumbrances, Pursuant to Section 363 of the Bankruptcy Code; (C)
Approving Agreement to Provide Limited Services to the Purchaser Pursuant to
Section 363 of the Bankruptcy Code; (D) Approving Break-Up Fee; and (E) Granting
Related Relief" (the "MONROE SALE MOTION");
WHEREAS, pursuant to, and as more fully described in, the Monroe
Sale Motion, the Debtors propose to sell (the "MONROE SALE") certain of their
assets related to the operation of the Debtors' regional distribution center
located in Monroe, Louisiana, including without limitation, inventory, equipment
and fixtures, pursuant to an Asset Purchase Agreement dated as of September 17,
1998 (the "MONROE ASSET PURCHASE AGREEMENT"), among certain of the Debtors and
Rankin Automotive Group, Inc.;
WHEREAS, in connection with the Monroe Sale Motion, the Company has
requested that the Lenders consent under subsection 8.6 of the Credit Agreement
to permit the Company to consummate the Monroe Sale pursuant to the Monroe Asset
Purchase Agreement;
WHEREAS, also on September 18, 1998 the Debtors filed with the
Bankruptcy Court a "Motion For Order Establishing Procedures for Future Asset
Sales" (the "SALE PROCEDURES MOTION");
WHEREAS, pursuant to, and as more fully described in, the Sale
Procedures Motion, the Debtors seek entry of an order of the Bankruptcy Court
(substantially in the form attached as Exhibit A to the Sale Procedures Motion,
the "SALE PROCEDURES ORDER"), approving the establishment of certain notice and
other procedures in connection with the potential sale(s) of assets associated
with the Debtors' store locations (the "STORE SALES");
<PAGE>
2
WHEREAS, in connection with the Sale Procedures Motion, the Company
has requested that the Lenders consent under subsection 8.6 of the Credit
Agreement to permit the Debtors to consummate Store Sales in accordance with the
procedures set forth in the Sale Procedures Order; and
WHEREAS, the Lenders are willing to agree to such requests, but only
upon the terms and conditions of this Consent;
NOW THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt of which is hereby acknowledged, the
Company, the Guarantors, the Lenders and the Agent hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used herein and not otherwise
defined shall have their respective meanings set forth in the Credit Agreement.
2. CONSENT UNDER SUBSECTION 8.6 (LIMITATION ON SALE OF ASSETS).
Effective as of the date hereof, the Lenders hereby consent under subsection 8.6
of the Credit Agreement solely to the extent necessary to permit the Company:
(a) to consummate the Monroe Sale in accordance with the terms
of the Monroe Asset Purchase Agreement; and
(b) to consummate Store Sales (exclusive of the Asset Sales
otherwise permitted under subsection 8.6(c) of the Credit Agreement) in
accordance with the terms of the Sale Procedures Order;
PROVIDED that (i) the consent contained in clauses (a) and (b) above is
conditioned upon the following: (A) within one Business Day after the receipt of
the Net Cash Proceeds of the Monroe Sale or any Store Sale, as the case may be,
the Company shall apply an amount equal to such Net Cash Proceeds in accordance
with subsection 4.8(d) of the Credit Agreement and (B) no Default or Event of
Default shall then have occurred and be continuing or would result from
consummation of the Monroe Sale or such Store Sale, as the case may be and (ii)
the consent contained in clause (b) above is further conditioned upon the
following: (A) the aggregate purchase price for all Store Sales shall not exceed
$6,000,000 and (B) the purchase price for any Store Sale shall be payable in
cash at closing and shall not be less than the sum of (x) 75% of the book value
of all inventory sold pursuant to such Store Sale, (y) 70% of the book value of
all accounts receivable sold pursuant to such Store Sale which are outstanding
less than 60 days as of the closing date of such Store Sale and (z) 50% of the
book value of all fixed assets sold pursuant to such Store Sale.
3. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. After giving effect
to this Consent, the Debtors hereby represent and warrant that all
representations and warranties contained in the Credit Agreement are true and
correct as of the date hereof (unless stated to relate to a specific earlier
date, in which case, such representations and warranties shall be true
<PAGE>
3
and correct in all material respects as of such earlier date) and that no
Default or Event of Default shall have occurred and be continuing or would
result from the execution and delivery of this Consent.
CONDITIONS TO EFFECTIVENESS OF THIS CONSENT. This Consent shall
become effective as of the date hereof upon receipt by the Agent of counterparts
of this Consent duly executed by the Company, the Guarantors and the Required
Tranche A Lenders.
CONTINUING EFFECT; NO OTHER AMENDMENTS OR WAIVERS. Except as
expressly amended or waived pursuant to this Consent, the Credit Agreement is
and shall continue to be in full force and effect in accordance with its terms,
and this Consent shall not constitute the Lenders' consent or indicate their
willingness to consent to any other amendment, modification or waiver of the
Credit Agreement or the other Loan Documents, including without limitation, any
further amendment, modification or waiver of subsection 8.6 of the Credit
Agreement.
MISCELLANEOUS. This Consent may be executed by the parties hereto
on one or more counterparts, and all of such counterparts shall be deemed to
constitute one and the same instrument. This Consent may be delivered by
facsimile transmission of the relevant signature pages hereof.
This Consent shall be governed by, and construed and interpreted
in accordance with, the law of the State of New York.
<PAGE>
4
IN WITNESS WHEREOF, the parties hereto have caused this Consent to
be executed and delivered by their respective duly authorized officers as of the
date first above written.
A.P.S., INC.
By:
Title:
GUARANTORS:
APS HOLDING CORPORATION
BIG A AUTO PARTS, INC.
AUTOPARTS FINANCE COMPANY, INC.
APS SUPPLY, INC.
AMERICAN PARTS SYSTEM, INC.
A.P.S. MANAGEMENT SERVICES, INC.
INSTALLERS' SERVICE WAREHOUSE, INC.
PARTS, INC.
PRESATT, INC.
By:
Title:
THE CHASE MANHATTAN BANK, AS LENDER,
ISSUING BANK AND AGENT
By:
Title:
<PAGE>
5
BANK ONE, N.A.
By:
Title:
D.K. ACQUISITION PARTNERS, L.P.
BY: M.H. DAVIDSON & CO., ITS GENERAL
PARTNER
By:
Title:
FOOTHILL CAPITAL CORPORATION
By:
Title:
GOLDMAN SACHS CREDIT PARTNERS
L.P.
By:
Title:
<PAGE>
6
ATIONAL BANK OF CANADA
By:
Title:
By:
Title:
PPM AMERICA, INC., AS AGENT FOR
PPM AMERICA SPECIAL INVESTMENT
FUND, L.P.
By:
Title:
QUANTUM PARTNERS LDC
By:
Title:
SOCIETE GENERALE
By:
Title:
<PAGE>
7
UBS AG, LONDON BRANCH
By:
Title:
By:
Title:
WAYLAND INVESTMENT FUND LLC
BY: CFSC WAYLAND ADVISERS, INC.,
ITS MANAGER
By:
Title:
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
By:
Title:
EXHIBIT 10.1.34
THIRD AMENDMENT, CONSENT AND SECOND WAIVER, dated as of October 9,
1998 (this "AMENDMENT") to the Revolving Credit, Term Loan and Guarantee
Agreement, dated as of February 2, 1998 (as heretofore amended, supplemented or
otherwise modified, the "CREDIT AGREEMENT"), among A.P.S., Inc., a Delaware
corporation and debtor-in- possession (the "BORROWER"), APS Holding Corporation,
a Delaware corporation ("HOLDING"), each of the direct and indirect Subsidiaries
of the Borrower party thereto (together with Holding, the "GUARANTORS"), each of
which Guarantors is a debtor-in-possession (the Borrower and the Guarantors,
collectively, the "DEBTORS"), the several banks and other financial institutions
from time to time party thereto (collectively, the "LENDERS"), and The Chase
Manhattan Bank, as agent for the Lenders (in such capacity, the "AGENT").
W I T N E S S E T H :
WHEREAS, the Debtors, the Lenders and the Agent are parties to
the Credit Agreement;
WHEREAS, on September 11, 1998 the Debtors filed with the Bankruptcy
Court a "Motion for Orders: (A) Approving Terms for Submission of Competing
Offers Over-Bid Procedures, Break-Up Fees and Notice Requirements; (B)
Authorizing Sale of Certain Fixtures, Inventory, Receivables, Equipment and
Other Assets Free and Clear of Liens and Encumbrances, Pursuant to Section 363
of the Bankruptcy Code; (C) Authorizing Assumption and Assignment of Certain
Non-Residential Real Property Leases and Other Executory Contracts Pursuant to
Section 365 of the Bankruptcy Code; (D) Extending Time To Assume or Reject
Non-Residential Real Property Leases Pursuant to Section 365 of the Bankruptcy
Code; (E) Approving Agreements to License Certain Trademarks and to Provide
Limited Services to Purchasers Pursuant to Section 363 of the Bankruptcy Code;
(F) Approving Lease and Sublease Agreements; (G) Approving Break-Up Fee and
Proposed Bidding Procedures; and (H) Granting Related Relief" (the "CARQUEST
SALE MOTION");
WHEREAS, pursuant to, and as more fully described in, the CarQuest
Sale Motion, the Debtors propose to sell (the "CARQUEST SALE") certain of their
assets related to the operation of nine (9) of the Debtors' regional
distribution centers and approximately 169 of the Debtors' stores associated
with such distribution centers, including without limitation, inventory,
equipment and fixtures, pursuant to an Asset Purchase Agreement dated as of
September 9, 1998 (including any non-material amendment thereof, the "GENERAL
PARTS ASSET PURCHASE AGREEMENT"), among certain of the Debtors and General
Parts, Inc. ("GENERAL PARTS"), and an Asset Purchase Agreement dated as of
September 9, 1998 (including any non-material amendment, the "BWP ASSET PURCHASE
AGREEMENT", collectively, the "ASSET PURCHASE AGREEMENTS"), among certain of the
Debtors and BWP Distributors, Inc. ("BWP");
WHEREAS, in connection with the CarQuest Sale Motion, the Borrower
has requested that the Lenders consent under the applicable subsections of the
Credit Agreement to permit the Borrower to consummate the CarQuest Sale pursuant
to the Asset Purchase Agreements;
<PAGE>
2
WHEREAS, in addition to the above-described consent, the Borrower
has also requested that the Lenders agree to waive compliance by the Debtors
with certain covenants contained in the Credit Agreement and, in connection
therewith, amend certain provisions of the Credit Agreement; and
WHEREAS, the Lenders are willing to agree to such requested consent,
waivers and amendments, but only upon the terms and conditions of this
Amendment;
NOW THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt of which is hereby acknowledged, the
Borrower, the Guarantors, the Lenders and the Agent hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used herein and not otherwise
defined shall have their respective meanings set forth in the Credit Agreement.
2. CONSENT TO THE CARQUEST SALE. (a) Effective as of the date
hereof, the Lenders hereby consent under subsection 8.6 of the Credit Agreement
solely to the extent necessary to permit the Borrower to consummate the CarQuest
Sale in accordance with the terms of the Asset Purchase Agreements, PROVIDED
that the foregoing consent is conditioned upon the following: (i) within one
Business Day after the receipt of the Net Cash Proceeds of the CarQuest Sale,
the Borrower shall apply an amount equal to such Net Cash Proceeds FIRST, in
accordance with Section 2(b) of this Amendment and SECOND, in accordance with
subsection 4.8(d) of the Credit Agreement and Section 7(c) of this Amendment and
(ii) no Default or Event of Default shall then have occurred and be continuing
or would result from consummation of the CarQuest Sale.
(b) Effective as of the date hereof, the Lenders hereby consent
under subsection 4.8(d) and subsection 8.14 of the Credit Agreement solely to
the extent necessary to permit the Borrower to utilize a portion of the Net Cash
Proceeds of the CarQuest Sale to deposit up to an aggregate of $4,500,000 into
one or more segregated accounts (collectively, the "SALE ACCOUNT") to be
established and maintained by the Borrower with the Agent, which funds shall be
available for withdrawal by the Borrower for the sole purpose of satisfying its
obligations, if any, to General Parts and/or BWP in respect of potential
post-closing adjustments under Sections 2.5, 2.6, 2.7 and 2.10 of the Asset
Purchase Agreements (the "POST-CLOSING OBLIGATIONS"). The Borrower's only right
of withdrawal with respect to the Sale Account shall be to satisfy the Post-
Closing Obligations, if any, in accordance with the terms of the Asset Purchase
Agreements, the order of the Bankruptcy Court approving the CarQuest Sale and
any further order(s) of the Bankruptcy Court. The foregoing right of withdrawal
shall continue to exist notwithstanding (i) the Lien of the Agent and the
Lenders on the Sale Account and the funds from time to time on deposit therein,
(ii) any inability of the Borrower to satisfy the conditions to borrowing under
the Credit Agreement, (iii) the occurrence and continuance of a Default or Event
of Default or (iv) the occurrence of the Termination Date. In addition, and
notwithstanding any exercise of rights and remedies by the Agent and the
Lenders, the Agent and the Lenders shall not have the right to set-off against
funds on deposit in the Sale Account prior to the Borrower's satisfaction in
full of the Post-Closing Obligations, if any. All funds on deposit in the Sale
Account after the Borrower's satisfaction of the Post-Closing Obligations, if
any, shall constitute Net Cash
<PAGE>
3
Proceeds of the CarQuest Sale and shall be applied in accordance with subsection
4.8(d) of the Credit Agreement and Section 7(c) of this Amendment.
3. WAIVERS UNDER SECTION 8 (NEGATIVE COVENANTS). (a) The Lenders
hereby waive, until November 30, 1998, any Default or Event of Default arising
by reason of any failure by the Borrower to comply with subsection 8.1(a)
(EBITDA) of the Credit Agreement for the periods ending on the last day of the
September, 1998 and October, 1998 fiscal months of the Borrower.
(b) The Lenders hereby waive, until November 30, 1998, any Default
or Event of Default arising by reason of any failure by the Borrower to comply
with subsection 8.1(b) (Excess Working Capital) of the Credit Agreement during
the months of October and November, 1998, PROVIDED that such waiver is
conditioned upon Excess Working Capital not being less than (i) $90,000,000 at
any time during October, 1998 and (ii) $85,000,000 at any time during November,
1998.
4. SUBSECTION 4.7 (OPTIONAL TERMINATION OR REDUCTION OF TRANCHE A
COMMITMENT). After giving effect to the reduction of the Total Tranche A
Commitment by reason of the application of the Net Cash Proceeds of the CarQuest
Sale in accordance with subsection 4.8(d) of the Credit Agreement, the Total
Tranche A Commitment shall be further and permanently reduced on the first
Business Day after the closing of the CarQuest Sale to $20,000,000, which
reduction shall be applied on a PRO RATA basis to reduce the Tranche A
Commitment of each Lender.
5. AMENDMENTS TO SUBSECTION 1.1 (DEFINED TERMS). (a) Subsection 1.1
of the Credit Agreement is hereby amended by adding the following new defined
term in its proper alphabetical order in said subsection:
"CASH ACCOUNT": the meaning set forth in subsection 4.8(a).".
(b) Subsection 1.1 of the Credit Agreement is hereby amended by
deleting the reference to "$20,000,000" contained in the definition of the term
"Letter of Credit Sublimit" and by substituting in lieu thereof a reference to
"$3,000,000".
(c) Subsection 1.1 of the Credit Agreement is hereby further amended
by adding the phrase ", the Cash Account" immediately after the reference to
"Concentration Account" contained in the definition of the term "Excess Working
Capital".
6. AMENDMENT TO SUBSECTION 3.1 (LETTERS OF CREDIT). Subsection
3.1(a) of the Credit Agreement is hereby amended by deleting the reference to
"$10,000,000" contained in such subsection and by substituting in lieu thereof a
reference to "$3,000,000".
7. AMENDMENTS AND AGREEMENT WITH RESPECT TO SUBSECTION 4.8
(MANDATORY PREPAYMENT; COMMITMENT TERMINATION; USE OF CASH). (a) Subsection
4.8(a) of the Credit Agreement is hereby amended by deleting the reference
contained therein to "$5,000,000" and by substituting in lieu thereof a
reference to "$3,000,000".
<PAGE>
4
(b) Subsection 4.8(a) of the Credit Agreement is hereby further
amended by adding the following at the end of such subsection:
"If the remaining balance of funds on deposit in the
Concentration Account exceeds $3,000,000 after the application of funds on
deposit in the Concentration Account in accordance with clauses FIRST and
SECOND of the immediately preceding sentence, any such excess shall be
deposited in a cash collateral account (the "CASH ACCOUNT") to be
established and maintained by the Borrower with the Agent. Subject to the
terms and conditions of this Agreement, amounts on deposit in the Cash
Account shall be made available to the Borrower (after utilization and
application of the Borrower's and the Guarantor's other available cash)
for general corporate purposes and Inventory purchases until the
Termination Date. In accordance with subsection 6.2(e), the Borrower shall
utilize all funds from time to time on deposit in the Cash Account prior
to the borrowing of any Tranche A Loan. If the Borrower determines to
utilize funds on deposit in the Cash Account, the Borrower shall comply
with the notice procedures for borrowing set forth in subsection 2.2 and
shall satisfy all of the conditions for borrowing set forth in subsection
6.2 as if such drawdown on the Cash Account were a borrowing of a Tranche
A Loan. Notwithstanding subsection 8.14, funds on deposit in the Cash
Account shall not be concentrated in the Concentration Account. Any funds
on deposit in the Cash Account in excess of $5,000,000 shall constitute
Excess Amounts to be treated in accordance with subsection 4.8(d).".
(c) In accordance with the first proviso contained in subsection
4.8(d) of the Credit Agreement, but subject to subsection 4.8(e) of the Credit
Agreement (after giving effect to this Amendment) and Section 7(e) below, the
Required Tranche A Lenders hereby consent to the prepayment of the Tranche B
Loans with any Excess Amount generated from (i) the CarQuest Sale, (ii) the
Monroe Sale or any Store Sale (as such terms are defined in the Consent dated
October 8, 1998 under the Credit Agreement) and (iii) on or before November 30,
1998, funds on deposit in the Cash Account in excess of $5,000,000.
(d) Subsection 4.8(e) of the Credit Agreement is hereby amended by
(i) deleting the word "Prior" at the beginning of such subsection and by
substituting in lieu thereof the words "With respect", (b) deleting the phrase
"such Tranche B Lender shall have entered into indemnity, reimbursement and
other agreements reasonably satisfactory to the Agent (or an order of the
Bankruptcy Court shall have been entered reasonably satisfactory to the Agent)
such that" contained in the first sentence of such subsection and (iii) by
adding the following new sentence at the end of such subsection: "The obligation
of each Tranche B Lender to repay Excess Amount prepayments to the Agent in
accordance with the terms of this subsection 4.8(e) shall survive and remain in
full force and effect with respect to any Excess Amount prepayments received by
such Tranche B Lender notwithstanding any sale by such Tranche B Lender of all
or any part of its rights and obligations under this Agreement pursuant to
subsection 13.6 of this Agreement.".
<PAGE>
5
(e) By its execution of this Amendment, each Tranche B Lender
acknowledges and consents to the terms of subsection 4.8(e) (after giving effect
to this Amendment) of the Credit Agreement. If a Tranche B Lender does not
execute this Amendment, then the Agent shall hold for the account of such
Tranche B Lender, until the Tranche A Repayment Date, any Excess Amount
prepayments that would otherwise be payable to such Tranche B Lender.
8. AMENDMENT TO SUBSECTION 4.22 (SECURITY INTEREST IN CONCENTRATION
ACCOUNT AND L/C CASH COLLATERAL ACCOUNT). Subsection 4.22 of the Credit
Agreement is hereby amended by adding the phrase ", the Cash Account and any
direct investment of the funds contained therein" immediately after the phrase
"the Concentration Account and any direct investment of the funds contained
therein" contained in such subsection.
9. AMENDMENT TO SUBSECTION 5.19 (YEAR 2000 COMPLIANCE Program).
Subsection 5.19 of the Credit Agreement is hereby amended by deleting such
subsection in its entirety.
10. AMENDMENTS TO SUBSECTION 6.2 (CONDITIONS TO EACH LOAN AND EACH
LETTER OF CREDIT) AND EXHIBIT E (FORM OF BORROWING CERTIFICATE). (a) Subsection
6.2(e) (Borrowing Certificate) of the Credit Agreement and Exhibit E to the
Credit Agreement are each hereby amended by adding the phrase "(and any funds on
deposit in the Cash Account)" immediately after the phrase "after utilization
and application of the Borrower's and the Guarantors' available cash" contained
in clause (i) of such subsection and paragraph (a) of such Exhibit.
(b) Subsection 6.2(h) (Year 2000 Compliance Program) of the Credit
Agreement is hereby amended by deleting said subsection in its entirety.
11. AMENDMENTS TO SUBSECTION 7.2 (CERTIFICATES; OTHER INFORMATION ).
(a) Subsection 7.2(d) of the Credit Agreement is hereby amended by adding the
phrase "(the period of thirteen consecutive calendar weeks for each forecast
delivered after November 9, 1998)" immediately after the phrase "the period of
four consecutive calendar weeks" contained in such subsection.
(b) Subsection 7.2(f) of the Credit Agreement is hereby amended by
(i) deleting the word "and" immediately before the reference to "(iv)" contained
in such subsection and by substituting in lieu thereof ";" and (ii) by adding
the following new phrase immediately before the semi-colon at the end of such
subsection: "and (v) a report setting forth the amount of Net Cash Proceeds
applied in accordance with subsection 4.8(d) during such month and reconciled to
the amount of Net Cash Proceeds generated from any sale or other disposition of
any Collateral outside the ordinary course of business during such month".
12. AMENDMENT TO SUBSECTION 8.9 (LIMITATION ON CAPITAL
EXPENDITURES). Subsection 8.9 of the Credit Agreement is hereby amended by
deleting the reference to $7,800,000 contained in such subsection and by
substituting in lieu thereof a reference to "$2,250,000".
<PAGE>
6
13. AMENDMENT TO SUBJECTION 8.11 (LOANS AND OTHER INVESTMENTS BY
AFCO). Subsection 8.11 of the Credit Agreement is hereby amended by deleting the
references to "$2,250,000" and "$7,000,000" contained in such subsection and by
substituting in lieu thereof references to "$800,000" and "$800,000",
respectively.
14. AMENDMENT TO SUBSECTION 8.17 (USE OF PROCEEDS). Subsection 8.17
of the Credit Agreement is hereby amended by adding the phrase "or funds on
deposit in the Cash Account" immediately after the phrase "or the Tranche B
Loans" contained in such subsection.
15. AMENDMENT TO SUBSECTION 8.19 (BUSINESS PLAN). Subsection 8.19 of
the Credit Agreement is hereby amended by deleting such subsection in its
entirety and by substituting in lieu thereof the following:
"8.19. BUDGET. Fail to furnish to the Agent, with a copy for
each Lender, on or before November 9, 1998, a comprehensive receipts and
disbursements budget for the Borrower and its Restricted Subsidiaries
covering at least the one-year period commencing on October 26, 1998 and
addressing, among other things, all material expenditures proposed to be
made and projected cash flows and financial and operating performance on a
fiscal month-by-month basis, and detailing facility closures, assets
sales, cost reduction initiatives and inventory reduction initiative, all
in form and substance reasonably satisfactory to the Required Tranche A
Lenders.".
16. AMENDMENT TO SECTION 9 (EVENTS OF DEFAULT). Section 9 of the
Credit Agreement is hereby amended by adding the phrase ", the Cash Account" in
clause (iv) of paragraph A and clause (iii) of paragraph (B) of such Section.
17. AMENDMENT TO SUBSECTION 12.1 (REMEDIES; OBTAINING THE COLLATERAL
UPON DEFAULT). Subsection 12.1(c) of the Credit Agreement is hereby amended by
adding the phrase ", the Cash Account" immediately after the phrase "the
Concentration Account" contained in such subsection.
18. AMENDMENT AND AGREEMENT WITH RESPECT TO SCHEDULE 2.1 (MAXIMUM
OUTSTANDING AMOUNT OF TRANCHE A LOANS). (a) After giving effect to the required
reduction of the Maximum Outstanding Amounts in accordance with subsection
4.8(d) of the Credit Agreement by reason of the application of the Net Cash
Proceeds of the CarQuest Sale, Schedule 2.1 of the Credit Agreement is hereby
amended by deleting the information contained in such Schedule for the months of
October, November and December of 1998 and by substituting in lieu thereof the
following:
"MAXIMUM OUTSTANDING AMOUNTS
MONTH PEAK FISCAL MONTH END
----- ---- ----------------
October $12,000,000 $5,000,000
November $12,000,000 $5,000,000
December $12,000,000 $5,000,000".
<PAGE>
7
(b) Notwithstanding the amendment of Schedule 2.1 of the Credit
Agreement set forth in Section 18(a) above, if the Closing Date under, and as
defined in, the Asset Purchase Agreements occurs on or before October 15, 1998,
then the references to "$12,000,000" and "$5,000,000" contained in such Section
18(a) shall be deemed amended to be references to "$10,000,000" and "$0 (not
including up to $5,000,000 on deposit in the Cash Account)", respectively.
(c) If the aggregate outstanding amount of the Tranche A Loans as of
the last day of any fiscal month set forth on Schedule 2.1 exceeds the Maximum
Outstanding Amount for the end of such fiscal month, the Maximum Outstanding
Amount shall not be increased to the "Peak" amount for the next fiscal month
unless and until (and without prejudice to the Agent's and the Lenders' other
rights and remedies) the Borrower makes the mandatory prepayment required
pursuant to subsection 4.8(c).
19. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. After giving effect
to this Amendment, the Debtors hereby represent and warrant that all
representations and warranties contained in the Credit Agreement are true and
correct as of the date hereof (unless stated to relate to a specific earlier
date, in which case, such representations and warranties shall be true and
correct in all material respects as of such earlier date) and that no Default or
Event of Default shall have occurred and be continuing or would result from the
execution and delivery of this Amendment.
20. CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT. This Amendment
shall become effective as of the date hereof upon (a) receipt by the Agent of
counterparts of this Amendment duly executed by the Borrower, the Guarantors and
the Supermajority Tranche A Lenders and (b) the occurrence of the Closing Date
under, and as defined in, each of the Asset Purchase Agreements.
21. CONTINUING EFFECT; NO OTHER AMENDMENTS OR WAIVERS. Except as
expressly amended or waived pursuant to this Amendment, the Credit Agreement is
and shall continue to be in full force and effect in accordance with its terms,
and this Amendment shall not constitute the Lenders' consent or indicate their
willingness to consent to any other amendment, modification or waiver of the
Credit Agreement or the other Loan Documents, including without limitation, any
amendment, modification or waiver of any subsection amended or waived pursuant
to this Amendment for any other date or time period or in connection with any
other transaction.
<PAGE>
8
22. MISCELLANEOUS.
(a) This Amendment may be executed by the parties hereto on one or
more counterparts, and all of such counterparts shall be deemed to constitute
one and the same instrument. This Amendment may be delivered by facsimile
transmission of the relevant signature pages hereof.
(b) This Amendment shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
<PAGE>
9
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed and delivered by their respective duly authorized officers as of the
date first above written.
A.P.S., INC.
By:
Title:
GUARANTORS:
APS HOLDING CORPORATION
BIG A AUTO PARTS, INC.
AUTOPARTS FINANCE COMPANY, INC.
APS SUPPLY, INC.
AMERICAN PARTS SYSTEM, INC.
A.P.S. MANAGEMENT SERVICES, INC.
INSTALLERS' SERVICE WAREHOUSE, INC.
PARTS, INC.
PRESATT, INC.
By:
Title:
THE CHASE MANHATTAN BANK, AS LENDER,
ISSUING BANK AND AGENT
By:
Title:
<PAGE>
10
BANK ONE, N.A.
By:
Title:
BANKERS TRUST COMPANY
By:
Title:
BEAR, STEARNS & CO. INC.
By:
Title:
CITIBANK, N.A.
By:
Title:
D.K. ACQUISITION PARTNERS, L.P.
BY: M.H. DAVIDSON & CO., ITS GENERAL
PARTNER
By:
Title:
FOOTHILL CAPITAL CORPORATION
By:
Title:
<PAGE>
11
GOLDMAN SACHS CREDIT PARTNERS L.P.
By:
Title:
HOUR L.L.C.
BY: SUNRISE PARTNERS L.L.C.
By:
Title:
MUTUAL SHARES FUND
BY: FRANKLIN MUTUAL ADVISORS, INC.
By:
Title:
NATIONAL BANK OF CANADA
By:
Title:
By:
Title:
PPM AMERICA, INC., AS AGENT FOR
PPM AMERICA SPECIAL INVESTMENT
FUND, L.P.
By:
Title:
<PAGE>
12
QUANTUM PARTNERS LDC
By:
Title:
SOCIETE GENERALE
By:
Title:
SPS TRADES
By:
Title:
UBS AG, LONDON BRANCH
By:
Title:
By:
Title:
WAYLAND INVESTMENT FUND LLC
BY: CFSC WAYLAND ADVISERS, INC., ITS MANAGER
By:
Title:
<PAGE>
13
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By:
Title:
EXHIBIT 99.6
FOR IMMEDIATE RELEASE
APS HOLDING CORPORATION ANNOUNCES
COMPLETION OF ASSET SALES TO GENERAL PARTS, INC.
AND BWP DISTRIBUTORS, INC.
ASSET SALE TO RANKIN AUTOMOTIVE ALSO APPROVED BY U.S. BANKRUPTCY COURT
Houston, TX (October 9, 1998) - APS Holding Corporation (OTC-BB: APSIQ)
announced today that it has received bankruptcy court approval for the sale of
10 distribution centers and 148 company-owned stores in three separate
transactions. The two largest of these transactions were closed on October 9,
1998.
GPI, in the largest of the three transactions, has purchased 8 distribution
centers and 132 company-owned stores. The distribution centers acquired by GPI
are located in Albuquerque, NM, Phoenix, AZ, Salt Lake City, UT, Denver, CO,
Great Bend, KS, Omaha, NE, Indianapolis, IN and Winchester, VA. While most of
the stores acquired by GPI are located in these areas, the company has also
purchased certain stores in Arkansas, Pennsylvania, Oklahoma and Texas. BWP has
acquired APS' Philadelphia, PA distribution center and 16 Big-A company-owned
stores serviced by this distribution center.
The third transaction, the sale of APS' Monroe, LA distribution center to Rankin
Automotive Group, Inc., is anticipated to close within the next week.
"The proceeds from these three transactions, which total in excess of $120
million, will be used to pay bankruptcy court approved expenses associated with
the assets sold and to reduce the Company's bank debt," stated Bettina Whyte,
Chief Executive Officer of APS.
Customers in locations unaffected by the purchases will continue to be served in
the normal course. APS will continue to operate 12 distribution centers and
approximately 200 company-owned stores under the Big-A and Big-A Express
banners. Additionally, APS will continue to provide service to approximately 750
associated jobbers.
APS Holding Corporation is a national distributor of Big-A brand and
manufacturer branded automotive replacement parts, as well as tools, equipment,
supplies and accessories.
<PAGE>
This news release contains forward-looking statements that involve risks and
uncertainties. Actual results, events and performance could differ materially
from those contemplated by these forward-looking statements. Among the factors
that could cause actual results, events and performance to differ materially are
risks and uncertainties discussed in this news release and those detailed from
time to time in the Company's filings with the Securities and Exchange
Commission, including the Company's annual report on Form 10-K for the
fiscal-year ended January 31, 1998 and the Company's quarterly report on Form
10-Q for the quarterly periods ended April 25, 1998 and July 25, 1998 and in the
Company's other public reports and statements.
CONTACT:
BSMG Worldwide
Mark Valenta
(212) 445-8263
