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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date
of Report (Date of earliest event reported): February 1, 1999
APS HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 0-22318 76-0306940
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
15710 JOHN F. KENNEDY BLVD., SUITE 700
HOUSTON, TEXAS 77032-2347
(Address of Principal Executive Offices) (Zip Code)
(713) 507-1100
(Registrant's telephone number, including area code)
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Item 2. Acquisition Or Disposition Of Assets
On January 29, 1999 ("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 four distribution centers and
seventy-six associated company-owned stores to Auto Parts Express, LLC ("APE").
APE was formed by three former senior management employees of the Company for
the purpose of acquiring certain assets of the Company.
The purchased assets included inventory, accounts and notes receivable,
equipment trademarks and service marks, and other fixed assets and contract
rights. Additionally, APE assumed leases with respect to the distribution
centers and certain of the stores, and entered into a sublease with respect to
one of the stores. APE has also agreed to purchase a specified amount of its
merchandise requirements from the Company after the Closing Date, for so long as
the Company is able to timely supply such merchandise.
The purchase price paid by APE on the Closing Date was approximately $27 million
in cash. 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 the asset sale transaction described above, the Company entered
into agreements with APE with respect to the provision by the Company of certain
information and accounting services. Additionally, the Company has agreed
pursuant to a Technology Transfer Agreement, to sell or assign certain
management information software systems and related hardware (the "Technology")
to APE, subject to any pre-existing rights of third parties pursuant to service
agreements with the Company. The transfer of the Technology to APE will be
consummated on the earlier to occur of May 1, 1999 or the date on which the
Company ceases operating its management information systems. APE has granted the
Company a limited license-back to use the trademarks and service marks assigned
to APE by the Company in the asset sale transaction.
The proceeds from the asset sale and the related transactions have been or will
be used to reduce the Company's bank debt, to pay expenses related to the
transactions, and to fund continuing working capital requirements of the
Company.
The assets sold or to be sold as reported in this Item 2 and in Item 5 below
represent most of the Company's remaining assets. The Company is in the process
of closing its remaining stores and distribution centers and anticipates that it
will seek to liquidate the balance of its assets 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, since October
10, 1998, the Company has effected the sales to purchasers other than APE of
assets associated with 3 of its distribution centers, 38 of its stores, and 26
of its Installers' Service Warehouses, for an aggregate amount of
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approximately $27 million in cash. Additionally, as of the date of this form,
the Company has entered into agreements to sell assets associated with 1 of its
stores and 2 of its Installers' Service Warehouses, for an aggregate amount of
approximately $400,000 in cash.
EXHIBITS
2.11 Asset Purchase Agreement between APS Holding Corporation and
its subsidiaries and Auto Parts Express, LLC, dated as of
January 11, 1999.
2.12 Technology Transfer Agreement between A.P.S., Inc. and Auto
Parts Express, LLC, dated as of February 1, 1999.
2.13 Service Agreement between A.P.S., Inc. and Auto Parts
Express, LLC, dated as of February 1, 1999.
2.14 Trademark Assignment Agreement between APS Management
Services, Inc. and Auto Parts Express, LLC, dated as of
February 1, 1999.
2.15 Merchandise Purchase Agreement between A.P.S., Inc. and
Auto Parts Express, LLC, dated as of February 1, 1999.
2.16 Accounting Services Agreement between A.P.S., Inc. and Auto
Parts Express, LLC, dated as of February 1, 1999.
2.17 Trademark License Agreement between APS Management
Services, Inc. and Auto Parts Express, LLC, dated as of
February 1, 1999.
10.1.35 Consent, dated as of January 26, 1999 under the Revolving
Credit, Term Loan and Guarantee Agreement, dated as of
February 2, 1998.
10.1.36 Fourth Amendment, Sixth Waiver and Agreement dated as of
January 26, 1999 to the Revolving Credit, Term Loan and
Guarantee Agreement dated as of February 2, 1998.
99.7 Press Release issued by the Company on January 11, 1999.
The schedules and exhibits to the Agreements listed as Exhibits 2.11, 2.12, 2.13
and 2.16 are not included with these exhibits. Certain of the schedules to the
Agreements listed as Exhibits 2.14 and 2.17 are not included with these
exhibits. Such schedules and exhibits are in certain cases identified in the
Table of Contents contained in such Agreements, and in other cases are
identified in the text of the Agreements. The Company will furnish to the
Commission supplementally upon request a copy of any such schedule or exhibit.
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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.
Date: March 3, 1999 APS HOLDING CORPORATION
By: /s/ BETTINA M. WHYTE
Bettina M. Whyte, President
and Chief Executive Officer
Date: March 3, 1999 By: /s/ REBECCA A. ROOF
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Rebecca A. Roof,
Chief Financial Officer
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EXHIBIT 2.11
ASSET PURCHASE AGREEMENT
BETWEEN
APS HOLDING CORPORATION AND CERTAIN SUBSIDIARIES
OF APS HOLDING CORPORATION,
AS DESCRIBED ON SCHEDULE A HERETO
AS SELLER
AND
AUTO PARTS EXPRESS, LLC
AS PURCHASER
DATED AS OF JANUARY 11, 1999
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TABLE OF CONTENTS
PAGE NO.
ARTICLE I. DEFINITIONS.....................................................2
Section 1.1. Definitions.................................................2
Section 1.2. Accounting Terms and Determinations........................14
ARTICLE II. PURCHASE AND SALE OF PURCHASED ASSETS AND ASSUMPTION OF
ASSUMED LIABILITIES.....................................14
Section 2.1. Purchase and Sale of Purchased Assets......................14
Section 2.2. Assumption of Obligations and Liabilities..................14
Section 2.3. Purchase Price; Payment of Purchase Price..................15
Section 2.4. Limitations on Purchase of Inventory and Atlanta DC
Inventory..............................................16
Section 2.5. Physical Inventory; Inventory True-Up.......................16
Section 2.6. Accounts Receivable True-Up................................17
Section 2.7. Condition of Purchased Assets; Return of Rejected
Inventory; Inventory in Transit........................18
Section 2.8. Allocation of Purchase Price...............................18
Section 2.9. Sale at Closing Date.......................................19
Section 2.10. Apportionments.............................................19
Section 2.11. Use of Office Space........................................20
Section 2.12. Lease for Thomas Corners Store.............................20
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER......................21
Section 3.1. Authority of Seller........................................21
Section 3.2. No Conflict or Violation...................................21
Section 3.3. Compliance with Law........................................21
Section 3.4. Permits....................................................22
Section 3.5. Ownership of Purchased Assets..............................22
Section 3.6. Assigned Contracts.........................................22
Section 3.7. Labor Relations............................................22
Section 3.8. Litigation.................................................22
Section 3.9. Brokers....................................................22
Section 3.10. Disclaimer of Additional Representations and
Warranties; Schedules..................................23
Section 3.11. Disclaimer of Additional Representations and
Warranties; Schedules..................................23
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER....................24
Section 4.1. Authority of Purchaser.....................................24
Section 4.2. No Conflict or Violation...................................24
Section 4.3. Consents and Approvals.....................................24
Section 4.4. Availability of Funds......................................25
Section 4.5. Litigation.................................................25
Section 4.6. Brokers....................................................25
Section 4.7. Adequate Assurances Regarding Executory Contracts..........25
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Section 4.8. Management Employees' Knowledge and Control................25
Section 4.9. Hart-Scott-Rodino..........................................26
ARTICLE V. CERTAIN COVENANTS OF SELLER.....................................26
Section 5.1. Consents and Approvals.....................................26
Section 5.2. Further Assurances.........................................26
Section 5.3. Assignment of Contracts....................................26
Section 5.4. Transfer of Technology and Services to be Provided
by Seller..............................................26
Section 5.5. Cure of Defaults...........................................27
Section 5.6. Bankruptcy Actions.........................................27
Section 5.7. Indemnification for Access.................................27
Section 5.8. Indemnification for Access.................................27
ARTICLE VI. CERTAIN COVENANTS OF PURCHASER.................................27
Section 6.1. Consents and Approvals.....................................27
Section 6.2. Adequate Assurances Regarding Executory Contracts..........27
Section 6.3. Performance under Assigned Contracts.......................28
Section 6.4. Further Assurances.........................................28
Section 6.5. Purchaser Financing........................................28
Section 6.6. Indemnification for Access.................................28
Section 6.7. Indemnification for Access.................................29
Section 6.8. Certain Agreements and Indemnification Related to
the POS System and Autopoint...........................29
Section 6.9. Transfer of Technology and Services to be Provided
by Seller..............................................31
Section 6.10. Procedures With Respect to Trademarks......................31
ARTICLE VII. CONDITIONS TO SELLER'S OBLIGATIONS............................32
Section 7.1. Representations and Warranties.............................32
Section 7.2. Compliance with Agreement..................................32
Section 7.3. Consents...................................................33
Section 7.4. Purchaser's Closing Deliveries and Obligations.............33
Section 7.5. Entry of the Order.........................................33
ARTICLE VIII. CONDITIONS TO PURCHASER'S OBLIGATIONS........................33
Section 8.1. Representations and Warranties.............................33
Section 8.2. Compliance with Agreement..................................33
Section 8.3. Consents...................................................33
Section 8.4. Seller's Closing Deliveries and Obligations................34
Section 8.5. Entry of the Order.........................................34
ARTICLE IX. THE CLOSING; OTHER BIDS; TERMINATION...........................34
Section 9.1. The Closing................................................34
Section 9.2. Other Bids; Fees...........................................36
Section 9.3. Termination................................................38
Section 9.4. Effects of Termination.....................................39
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Section 9.5. Effects of Purchaser Default..............................39
ARTICLE X. TAXES 38
Section 10.1. Taxes Related to Purchase of Assets.......................40
Section 10.2. Proration of Real and Personal Property Taxes.............40
Section 10.3. Cooperation...............................................41
ARTICLE XI. EMPLOYEES AND EMPLOYEE BENEFIT PLANS...........................41
Section 11.1. Employment................................................41
Section 11.2. Employee Welfare Benefit Plans............................42
Section 11.3. COBRA.....................................................43
Section 11.4. A.P.S., Inc. Partnership Plan.............................43
ARTICLE XII. MISCELLANEOUS PROVISIONS......................................44
Section 12.1. Representations and Warranties............................44
Section 12.2. Notices...................................................44
Section 12.3. Amendments................................................45
Section 12.4. Assignment................................................45
Section 12.5. Announcements.............................................45
Section 12.6. Expenses..................................................45
Section 12.7. Entire Agreement..........................................46
Section 12.8. Descriptive Headings......................................46
Section 12.9. Counterparts..............................................46
Section 12.10. Governing Law; Jurisdiction...............................46
Section 12.11. Construction..............................................46
Section 12.12. Severability..............................................47
Section 12.13. Confidentiality...........................................47
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SCHEDULE
LETTER/NUMBER SCHEDULE NAME
Schedule A Certain Affiliates
Schedule B AFCO Notes
Schedule C Assigned Leases
Schedule D Corporate Assets
Schedule E Fixed Assets
Schedule F Intentionally Omitted
Schedule G In-transit Inventory
Schedule H Other Contracts
Schedule I Purchased Locations
Schedule J Warehouse Notes
Schedule K Big-A Stores
Schedule L Trademarks
Schedule M Beck Arnley / Hy-Test Inventory
Schedule N Deposits and Prepaid Expenses
Schedule O Owned Vehicles
3.3 Compliance with Laws
3.4 Permits
3.7 Collective Bargaining Agreements
3.8 Litigation
4.4 Purchaser Capitalization
EXHIBIT EXHIBIT NAME
A Assignment and Assumption Agreement
B Bill of Sale and Assumption Agreement
C Technology Transfer Agreement
D Lease Assignment and Assumption Agreement
E Order
F Services Agreement
G Bidding Protections Order
H Trademark Assignment Agreement
I Merchandise Purchase Agreement
J Accounting Services Agreement
K Trademark License Agreement
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made and entered
into as of January 11, 1999 by and among APS HOLDING CORPORATION, a Delaware
corporation ("APS") and a debtor and debtor-in-possession in a case pending
under chapter 11 of the Bankruptcy Code, the subsidiaries of APS set forth on
SCHEDULE A hereto (together with APS, "SELLER"), which subsidiaries are debtors
and debtors-in-possession in cases pending under chapter 11 of the Bankruptcy
Code, and AUTO PARTS EXPRESS, LLC, a Delaware limited liability company
("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 1108 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
corporate offices and with operations at certain Stores, ISWs and DCs, and
certain intellectual property owned by Seller, subject to certain liabilities,
all on the terms and subject to the conditions set forth herein;
WHEREAS, in connection with its contemplated purchase of assets,
Purchaser desires (i) to conduct business at certain Stores, DCs and ISWs and
offer employment to certain employees of Seller, (ii) to obtain, for a limited
time from and after the Closing Date, access to Seller's Parts Information
Management System and certain other technology and services from Seller, and
(iii) to have Seller assign certain real property lease agreements and other
material agreements to 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 sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
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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:
"ACCOUNTING SERVICES AGREEMENT" means the agreement substantially in
the form attached hereto as EXHIBIT J, pursuant to which Seller will
provide Purchaser with certain accounting services for a limited period of
time after the Closing Date.
"ACCOUNTS RECEIVABLE" means the accounts receivable (including all
rights to bill customers for products shipped or services rendered on or
prior to the Effective Date) which are allocable to Seller's business
operations conducted at the Purchased Locations, at the Hartford DC, and
associated with the Atlanta DC which have not otherwise been transferred
to the Charlotte DC. 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.
"ADDITIONAL INVENTORY" means Dirty Core Inventory and Two Year
Inventory.
"AFCO NOTES" means the notes owned by Autoparts Finance Company,
Inc., a subsidiary of Seller, and identified as AFCO Notes on SCHEDULE B
attached hereto, together with all security for the payment of such notes
and all documents and agreements evidencing such security.
"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 Agreement, the Assignment and Assumption Agreement, the Bill of
Sale and Assumption Agreement, the Accounting Services Agreement, the
Technology Transfer Agreement, the Services Agreement, the Trademark
License Agreement, the Trademark Assignment Agreement and the Merchandise
Purchase Agreement.
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"APPORTIONMENT DATE" has the meaning set forth in SECTION 2.10.
"APS" has the meaning set forth in the introductory paragraph.
"ASSIGNED CONTRACTS" means the Assigned Leases and the Other
Contracts relating to the Purchased Locations to be assigned by Seller to
Purchaser, excluding any repurchase agreements with Associate Jobbers.
"ASSIGNED LEASES" means those leases to be assigned to Purchaser at
Closing, a schedule of which is attached hereto as SCHEDULE C.
"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.
"ASSOCIATE JOBBER ELIGIBLE ACCOUNTS" means Eligible Accounts
Receivable which arise out of sales to Associate Jobbers.
"ASSOCIATE JOBBERS" means the independent auto parts jobbing
customers of the DCs that are included in the Purchased Locations.
"ASSUMED LIABILITIES" has the meaning set forth in SECTION 2.2.
"AUTHORIZED OCCUPANTS" has the meaning set forth in SECTION 2.11.
"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.
"BECK ARNLEY/HY-TEST INVENTORY" means all items of automotive
inventory owned by Seller and on hand at or on consignment from the
Purchased Locations on the Closing Date, and from each of the product
lines identified on SCHEDULE M attached hereto.
"BID" has the meaning set forth in SECTION 9.2(B).
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"BIDDERS" has the meaning set forth in SECTION 9.2(B) hereof.
"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 or at
Seller's corporate offices, subject to the letter agreement between
A.P.S., Inc. and Purchaser to be entered into promptly after the date
hereof, but in any event no later than the Closing.
"CASES" means the chapter 11 cases of Seller pending in the
Bankruptcy Court and being jointly administered for procedural purposes
as IN RE APS HOLDING CORPORATION, ET. AL., Case No. 98-197 (PJW).
"CLOSING" has the meaning set forth in SECTION 9.1.
"CLOSING DATE" has the meaning set forth in SECTION 9.1.
"CLOSING DATE PAYMENT" has the meaning set forth in SECTION
2.3(B).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTED FINANCING" means funds available pursuant to a written
commitment letter of a U.S.-based bank acceptable to Seller, or a standby
letter of credit confirmed by a U.S.-based bank acceptable to Seller,
providing for financing for Purchaser sufficient to allow it to pay the
Purchase Price and perform its other obligations under this
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Agreement and the Ancillary Documents, a copy of which letter or other
documentation has been delivered to Seller prior to the date hereof.
"CORPORATE ASSETS" means the furniture, furnishings and equipment
set forth on SCHEDULE D hereto.
"DC" has the meaning set forth in the Recitals hereto.
"DEPOSITS AND PREPAID EXPENSES" means all of Seller's deposits and
prepaid expenses relating to the Purchased Locations and to the Assigned
Contracts, other than utility deposits, a list of which Deposits and
Prepaid Expenses is to be attached hereto at the Closing as SCHEDULE N.
"DIP LENDERS" means the financial institutions from time to time
party to the Revolving Credit, Term Loan and Guarantee Agreement.
"DIRTY CORE INVENTORY" means items of used cores returned by
customers and on hand at the Purchased Locations on the Effective Date.
"DISCOUNT PERCENTAGE" means:
(a) 60% with respect to Eligible Inventory
(b) 30% with respect to the Beck Arnley/Hy-Test Inventory;
(c) 80% with respect to Dirty Core Inventory;
(d) 37.5% with respect to Two Year Inventory;
(e) 75% with respect to Associate Jobber Eligible Accounts
which are current or deferred;
(f) 60% with respect to Associate Jobber Eligible Accounts
which are aged up to and including sixty days;
(g) 50% with respect to Store Customer Eligible Accounts;
(h) 30% with respect to the Fixed Assets;
(i) 85% with respect to the AFCO Notes;
(j) 85% with respect to the Warehouse Notes; and
(k) 30% with respect to the Owned Vehicles.
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"DONLEN BOOK VALUE" means the fair market value of the Owned
Vehicles, calculated by Seller with reference to prices realized by The
Donlen Corporation, in wholesale sales of vehicles of similar age, make,
model, and / or condition leased previously by Seller from Donlen
Corporation.
"EFFECTIVE DATE" has the meaning set forth in SECTION 2.3(A)
hereof.
"EFFECTIVE DATE ACCOUNTS RECEIVABLE STATEMENT" has the meaning set
forth in SECTION 2.6(A) hereof.
"ELIGIBLE ACCOUNTS RECEIVABLE" means all Accounts Receivable arising
from sales on or prior to the Effective Date in the normal course of
business, excluding Accounts Receivable (i) arising from sales to
customers which are not customers of Seller on the Effective Date, and
(ii) arising from sales to a customer whose total Accounts Receivable
dollar balance on the Effective Date includes twenty-five percent (25%) or
more Accounts Receivable which are ninety-one (91) days or more past due.
For purposes of this Agreement, "customers which are not customers of
Seller on the Effective Date" shall mean all historical customers of
Seller which at that date (i) have not purchased products from Seller
during the preceding 90 days, (ii) have ceased business operations, or are
in the process of liquidation, (iii) have had a receiver appointed for
their business or assets, (iv) are the subject of an order for relief
filed under the Bankruptcy Code, or (v) have otherwise notified Seller
that they have terminated their customer relationship with Seller.
"ELIGIBLE INVENTORY" means items of automotive inventory, other than
Additional Inventory, Warranty Inventory and Beck Arnley/Hy-Test
Inventory, in good and salable condition, including core charges
associated with such inventory, if applicable, owned by Seller and on hand
at or on consignment from the Purchased Locations on the Effective Date,
excluding (i) all inventory which is the subject of a claim against GKN
PLC, (ii) items whose part numbers do not appear in the relevant
manufacturer's most recently published catalogs and price sheets, and
(iii) obsolete items.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ESTIMATED ACCOUNTS RECEIVABLE" means the total Eligible Accounts
Receivable estimated by Seller to be outstanding, as to DCs, on the
Effective Date, and as to
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Stores and ISWs, on the Business Day prior to the Effective Date.
"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).
"FINAL INVENTORY SCHEDULE" has the meaning set forth in SECTION
2.5.
"FIXED ASSETS" means (i) all of the machinery, equipment, furniture,
fixtures, and computers, located at the Purchased Locations or used
primarily 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 Fixed Asset Book Value allocated by item or groups of
items as of the date of this Agreement (the "FIXED ASSETS SCHEDULE"), is
attached hereto as SCHEDULE E, which Fixed Assets Schedule shall be
updated to reflect acquisitions, dispositions and depreciation as of the
Closing Date; and (ii) to the extent assignable, any rights of Seller to
the warranties, licenses and other similar rights with respect thereto,
PROVIDED that Fixed Assets shall not include any leasehold improvements
or Owned Vehicles.
"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).
"GAAP" has the meaning set forth in SECTION 1.2.
"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.
"HARTFORD DC" means the DC located in Hartford, Connecticut.
"HSR ACT" has the meaning set forth in SECTION 4.9.
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"INTENT TO USE MARK" has the meaning set forth in SECTION 6.10.
"INTENT TO USE MARK LICENSE" has the meaning set forth in SECTION
6.10.
"INTENT TO USE REGISTRATION" has the meaning set forth in SECTION
6.10.
"IN-TRANSIT INVENTORY" means automotive inventory subject to open
purchase orders (excluding back orders) of Seller as of the Effective
Date, an estimated list of which In-transit Inventory (with respect to DCs
only) as of the Effective Date is to be attached to this Agreement on the
Closing Date as SCHEDULE G.
"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, and as applied to Purchaser or the Management Employees
for purposes of this Agreement, means the actual knowledge of Michael
L. Preston, David C. Barbeau or E. Eugene Lauver.
"LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT" means the Assignment and
Assumption Agreement to be executed at Closing for the Assigned Leases, in
substantially the form attached hereto as EXHIBIT D.
"LEASE" has the meaning set forth in SECTION 2.11.
"LEASED PREMISES" has the meaning set forth in SECTION 2.11.
"LICENSED SPACE" has the meaning set forth in SECTION 2.11.
"LIEN" means any mortgage, pledge, security interest, charge or
other encumbrance, other than (i) liens on property underlying any of the
Assigned Leases; (ii) 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; (iii) 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
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occupancy, use or marketability of such asset; and (iv) liens for Taxes
not yet delinquent or which are being contested in good faith through
appropriate proceedings and for which proper reserves have been
established on the books of Seller.
"MANAGEMENT EMPLOYEES" means Michael L. Preston, David C. Barbeau
and E. Eugene Lauver, individually, current and former senior
management employees of Seller and officers and managers of Purchaser.
"NON-COVERED ASSETS " has the meaning set forth in SECTION 9.2(C).
"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 CONTRACTS" means the contracts which are listed on SCHEDULE H
attached hereto.
"OWNED VEHICLES" means the cars and trucks owned by Seller and
listed on SCHEDULE O attached hereto.
"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" has the meaning set forth in SECTION
2.5.
"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 and subject to the conditions of the Services Agreement.
"PIMS INVENTORY VALUE" means the invoice cost to Seller per item of
inventory as shown on PIMS as of the Effective Date.
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"POS SYSTEMS" has the meaning set forth in SECTION 6.8.
"PURCHASE PRICE" has the meaning set forth in SECTION 2.3(A).
"PURCHASED ASSETS" means all of the Seller's right, title and
interest as of the Closing Date in and to the following:
(a) all automotive inventory, including, without limitation,
the Eligible Inventory, Additional Inventory, Warranty
Inventory and Beck Arnley/Hy-Test Inventory on hand at
or on consignment from the Purchased Locations on the
Closing Date;
(b) the In-transit Inventory;
(c) the Fixed Assets;
(d) the Corporate Assets;
(e) the Accounts Receivable, together with all related
Security Documents (subject to the limitations set forth
at the end of this definition);
(f) the AFCO Notes, together with all related Security
Documents (subject to the limitations set forth at the
end of this definition);
(g) the Warehouse Notes, together with all related Security
Documents (subject to the limitations set forth at the
end of this definition);
(h) the Assigned Contracts;
(i) all Deposits and Prepaid Expenses;
(j) all brochures, catalogs, price lists, specifications,
manuals, books, records, correspondence, reports,
analyses, summaries and other written or printed
materials relating to the Purchased Assets, and copies
of personnel files for the Purchaser's Employees;
(k) to the extent legally assignable, Permits required to
conduct business at the Purchased Locations as conducted
prior to the Closing Date;
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(l) customer lists and other information and data relating
to third party customers of the Purchased Locations; and
(m) the Trademarks.
With respect to Accounts Receivable whose obligors are also obligors
under any AFCO Notes and/or Warehouse Notes, Security Documents which
secure such Accounts Receivable shall not be included in the Purchased
Assets or otherwise transferred to Purchaser unless all AFCO Notes and/or
Warehouse Notes payable by such Accounts Receivable obligors are purchased
by Purchaser, PROVIDED that Seller will release the liens arising under
such Security Documents when the principal and all accrued interest on
such AFCO Notes and/or Warehouse Notes is paid in full. With respect to
AFCO Notes and/or Warehouse Notes whose obligors are also obligors under
accounts receivable of Seller, which accounts receivable are not included
in the Accounts Receivable purchased by Purchaser, Security Documents
which secure such AFCO Notes and/or Warehouse Notes shall not be included
in the Purchased Assets or otherwise transferred to Purchaser, PROVIDED
that Seller will release the liens arising under such Security Documents
when all amounts under such accounts receivable are paid in full.
"PURCHASED LOCATIONS" means DCs, ISWs and Stores listed on SCHEDULE
I attached hereto.
"PURCHASER" has the meaning set forth in the preamble.
"PURCHASER'S EMPLOYEES" has the meaning set forth in SECTION 11.1.
"QUALIFYING BID" has the meaning set forth in SECTION 9.2(C).
"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 and its subsidiaries, the DIP Lenders and The Chase Manhattan
Bank, as agent for the DIP Lenders.
"SECURITY DOCUMENTS" means security agreements, pledge agreements,
UCC financing statements, and other documents and interests securing
Accounts Receivable, AFCO Notes or Warehouse Notes as applicable.
"SCHEDULES" means the various Schedules identified in this Agreement
and delivered separately to Purchaser on or before the date of this
Agreement, except as otherwise
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specified in this Agreement, which schedules shall be corrected by the
Parties prior to the Closing by mutual agreement of Purchaser and Seller.
"SELLER" has the meaning set forth in the preamble.
"SERVICES AGREEMENT" means the Services Agreement to be entered into
by Purchaser and Seller at Closing, pursuant to which Services Agreement
Seller shall provide Purchaser with limited access to and the use of PIMS
and certain other information management systems, and render certain
related services, for a limited time following the Closing Date, which
Services Agreement is to be substantially in the form attached hereto as
EXHIBIT F.
"STORE CUSTOMER ELIGIBLE ACCOUNTS" means Eligible Accounts
Receivable which arise out of Sales by Big-A Stores and ISWs.
"STORES" has the meaning set forth in the Recitals hereto.
"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.
"TECHNOLOGY TRANSFER AGREEMENT" means the Technology Transfer
Agreement to be entered into by Purchaser and Seller at Closing, pursuant
to which Technology Transfer Agreement Seller shall transfer certain
management information systems to Purchaser on the date specified in such
Technology Transfer Agreement (subject to certain conditions), which
Technology Transfer Agreement is to be substantially in the form attached
hereto as EXHIBIT C.
"TRADEMARKS" means the trademarks and service marks (registered or
unregistered) and trade names, and all
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goodwill associated therewith, listed on SCHEDULE L attached hereto.
"TRADEMARK ASSIGNMENT AGREEMENT" means the agreement, substantially
in the form attached hereto as EXHIBIT H, pursuant to which Seller will,
on the Closing Date, sell and assign all of its right, title and interest
in and to the Trademarks to Purchaser, subject to Seller's existing
contractual restrictions and provisions.
"TRADEMARK LICENSE AGREEMENT" means the agreement substantially in
the form attached hereto as EXHIBIT K, pursuant to which Purchaser will,
on the Closing Date, grant Seller and certain of its assignees and
sublicensees a license to use the Trademarks for a limited time after the
Closing Date.
"TRANSACTION TAXES" has the meaning set forth in SECTION 10.1.
"TRUE-UP DATE" means the date which is fifteen (15) days after the
Closing Date.
"TWO YEAR INVENTORY" means inventory within any SKU at any Purchased
Location on January 22, 1999 for which there has been no demand at such
Purchased Location during the 24-month period ending on such 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 receivable from certain customers
of the DCs which are not more than ninety (90) days past due as of the
Effective Date and identified as Warehouse Notes on SCHEDULE J attached
hereto, together with all security for the payment of such notes and all
documents and agreements evidencing such security.
"WARN" has the meaning set forth in SECTION 11.1.
"WARRANTY INVENTORY" means items of warranty inventory returned by
customers and on hand at the Purchased Locations on the Closing Date.
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"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 Corporate
Assets shall be delivered at the Corporate Offices and 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, including rights of Seller to any vendor discounts, credits, or rebates,
and claims of Seller against third parties in respect thereof (other than
warranty claims, indemnity rights and other common law rights relating to the
inventory).
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 obligations and liabilities of Seller under the Assigned Contracts which
accrue from and after the Effective Date (collectively, the "ASSUMED
LIABILITIES"). Purchaser shall not assume or pay, perform, discharge or be
responsible for any of the obligations or liabilities of Seller of any nature,
whether or not known, presently existing, absolute, accrued, contingent
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or otherwise, other than the Assumed Liabilities or liabilities assumed,
incurred or created under the Ancillary Agreements.
SECTION 2.3. 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, each to be determined as of 11:59 p.m.
January 29, 1999 (the "EFFECTIVE DATE"), except as otherwise provided herein
(the "PURCHASE PRICE"):
(i) the applicable Discount Percentage of the
Warehouse Distributor Cost of the Eligible Inventory;
(ii) the applicable Discount Percentage of the Warehouse
Distributor Cost of the Beck Arnley/Hy-Test Inventory determined as
of the close of business on January 22, 1999;
(iii) the applicable Discount Percentage of the Warehouse
Distributor Cost of the Dirty Core Inventory, subject to SECTION
2.4;
(iv) the applicable Discount Percentage of the Warehouse
Distributor Cost of the Two Year Inventory, subject to SECTION 2.4
and determined as of the close of business on January 22, 1999;
(v) the applicable Discount Percentage of the Fixed
Asset Book Value of the Fixed Assets, determined as of the
Closing Date;
(vi) the applicable Discount Percentage of principal amounts
outstanding under the AFCO Notes, plus all interest accrued to the
Effective Date;
(vii) the applicable Discount Percentage of principal amounts
outstanding under the Warehouse Notes, plus all interest accrued to
the Effective Date;
(viii) the applicable Discount Percentage of the outstanding
balance, determined as of the close of business on the Effective
Date of: (A) Associate Jobber Eligible Accounts which are current or
deferred; (B) Associate Jobber Eligible Accounts which are aged up
to and including sixty days; and (C)
Store Customer Eligible Accounts.
(ix) one hundred percent (100%) of the amount of the Deposits
and Prepaid Expenses;
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(x) a fixed amount for the Corporate Assets, in
accordance with SCHEDULE D;
(xi) the applicable Discount Percentage of the Donlen Book
Value of the Owned Vehicles; and
(xii) an amount for the In-transit Inventory determined in
accordance with SECTION 2.7(B).
(b) On the Closing Date, Purchaser shall pay to Seller an amount of
the Purchase Price in cash, by wire transfer of immediately available funds
(pursuant to written instructions to be provided by Seller to Purchaser), equal
to the sum of those portions of the Purchase Price provided for in SECTIONS
2.3(A)(I), 2.3(A)(II), 2.3(A)(III), 2.3(A)(IV), 2.3(A)(V), 2.3(A)(VI),
2.3(A)(VII), 2.3(A)(IX), 2.3(A)(X), 2.3(A)(XI) and an amount for the Eligible
Accounts Receivable determined in accordance with SECTION 2.3(A)(VIII) but based
upon the Estimated Accounts Receivable (the "CLOSING DATE PAYMENT").
The Closing Date Payment shall be adjusted pursuant to SECTION 2.6,
and Purchaser shall pay the remainder of the Purchase Price pursuant to SECTIONS
2.6(B) and 2.7(B).
SECTION 2.4. ADDITIONAL INVENTORY. Purchaser shall purchase all of
the Additional Inventory located at the Purchased Locations at the purchase
prices specified in Sections 2.3(a)(iii) and (iv), PROVIDED that Purchaser shall
not be required to pay more than $2,870,000 in the aggregate for the Additional
Inventory.
SECTION 2.5. PHYSICAL INVENTORY .
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. Employees or representatives of Seller and
Purchaser will jointly conduct a physical inventory count of, or other testing
procedures for, the inventory at Purchased Locations, or mutually agree that
Seller's inventory at a Purchased Location is accurate, in accordance with
physical inventory procedures generally used in the industry, which physical
inventory shall take place during the period prior to the Closing Date mutually
agreed to by Purchaser and Seller (the "PHYSICAL INVENTORY PERIOD"). During the
Physical Inventory Period, (i) Purchaser shall identify to Seller those items of
inventory which Purchaser believes do not meet the criteria of Eligible
Inventory, which designation shall be subject to Seller's confirmation, and (ii)
Seller, with the assistance of Purchaser, shall prepare a written, itemized list
of all inventory at Purchased Locations
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(the "FINAL INVENTORY SCHEDULE"), which Final Inventory Schedule shall designate
items of inventory as Eligible Inventory, Additional Inventory, or Beck
Arnley/Hy-Test Inventory and identify items of inventory which are not listed on
PIMS, and which shall be completed not later than the Effective Date. The Final
Inventory Schedule shall be adjusted as of the Effective Date by Seller with the
assistance of Purchaser to reflect changes in inventory that occur during the
period commencing immediately after the end of the Physical Inventory Period and
ending on the Effective Date. Purchaser and Seller shall share equally all
actual out-of-pocket expenses associated with the physical inventories taken and
the preparation of schedules pursuant to this SECTION 2.5.
SECTION 2.6. ACCOUNTS RECEIVABLE TRUE-UP
(a) On the True-Up Date, Seller shall prepare and deliver to
Purchaser a final statement of Eligible Accounts Receivable outstanding as of
the close of business on the Effective Date (the "EFFECTIVE DATE ACCOUNTS
RECEIVABLE STATEMENT").
(b) In the event that the Eligible Accounts Receivable shown on the
Effective 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 the applicable Discount
Percentage of such excess. In the event that the Estimated Accounts Receivable
are greater than the Eligible Accounts Receivable shown on the Effective Date
Accounts Receivable Statement, Seller shall refund to Purchaser, on the first
Business Day following the True-Up Date, an amount equal to the applicable
Discount Percentage of such excess.
(c) If any party receives or otherwise acquire funds (including, but
not limited to, rebates, warranty proceeds, incentives, Accounts Receivable,
deposits and asset dispositions, in any form whatsoever), which are properly due
and payable to any other party to this Agreement, the recipient of such funds
shall immediately (and within three business days following the receipt thereof)
forward such funds to the other party at the address provided in SECTION 12.2
hereof.
SECTION 2.7. CONDITION OF PURCHASED ASSETS; INVENTORY IN
TRANSIT; WARRANTY INVENTORY.
(a) Except for the warranty of title set forth in SECTION 3.5, 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) Purchaser shall allow employees or representatives designated by
Seller to be present at each Purchased Location during normal business hours for
a period of thirty (30) Business Days following the Closing Date for the purpose
of confirming items of In-transit Inventory which arrive at the Purchased
Locations 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. For a period of six (6) months following the
Closing Date, Purchaser shall provide Seller with weekly updates of all
In-transit Inventory received at the Purchased Locations, and shall pay Seller,
by wire transfer within five (5) days after the end of each week in which any
In-transit Inventory is received, one-hundred percent of the PIMS Inventory
Value (or other invoice cost if no PIMS Inventory Value is available) for each
item of In-transit Inventory received.
(c) Purchaser shall return all items of Warranty Inventory to the
manufacturer not later than ninety (90) days after the Closing Date. Commencing
on the second Friday following the Closing Date, and on each Friday thereafter,
Purchaser shall provide Seller with an update of all cash or credits in respect
of Warranty Inventory received during the week ended on the previous Friday, and
shall pay Seller, by wire transfer on each such Friday, the full amount of all
such cash or credits received.
(d) Purchaser shall permit employees and representatives of Seller
to inspect and audit Purchaser's books and records at all reasonable times
during normal business hours with reasonable prior notice to Purchaser and at
Seller's sole cost and expense in order to confirm Purchaser's compliance with
SECTIONS 2.7(B) and 2.7(C).
SECTION 2.8. ALLOCATION OF PURCHASE PRICE. To the extent required by
law from and 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 Assets to Purchaser, and the assumption
by Purchaser of the
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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 D, for the Assigned
Leases, pursuant to which Lease Assignment and Assumption Agreement Purchaser
shall confirm its assumption of all liabilities and obligations under the
Assigned Leases which accrue from and after the Effective Date; (ii) an
Assignment and Assumption Agreement for the Other Contracts, substantially in
the form of EXHIBIT A; and (iii) 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 11:59 P.M., New York City time, on the Effective Date (the
"APPORTIONMENT DATE") to the extent such are valid post-petition claims or are
subject to non-avoidable Liens: under the Assigned Leases, (i) water and sewer
charges and real estate taxes, to the extent all or any are due and payable
under the 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.
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.
SECTION 2.11. USE OF OFFICE SPACE. Seller hereby grants to Purchaser
a non-transferable license, subject to Seller obtaining any applicable required
consents, commencing upon the Closing Date and expiring on February 28, 1999,
for the Authorized Occupants (as hereinafter defined), to use, occupy and access
the Licensed Space (as hereinafter defined) located in the premises currently
leased by Seller at 15710 John F. Kennedy Boulevard, Houston, Texas (the "LEASED
PREMISES"). As used herein, "AUTHORIZED OCCUPANTS" means those employees of
Seller to whom Purchaser makes, and who accept, offers of employment with
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Purchaser. As used herein, "LICENSED SPACE" means those certain offices within
the Leased Premises currently designated for use by the Authorized Occupants.
Purchaser shall have no right to assign such license. In addition, the
Authorized Occupants shall be permitted access to the Leased Premises for the
sole purpose of using the facilities of the Leased Premises, including any
bathroom or kitchen facilities as well as copying machines located therein and
local fax and telephone services, but shall not be entitled to use office
related services (such as long distance fax and telephone and overnight and U.S.
postal mail services) without reimbursing Seller for such services. In no event
shall any or all Authorized Occupants of the Licensed Space permit or create a
default under the existing lease (the "LEASE") for the Leased Premises.
Purchaser represents and warrants that (i) it has received and reviewed the
Lease and that it will advise each Authorized Occupant of the terms and
conditions of the Lease that relate to the use and occupancy of the Leased
Premises and (ii) Purchaser shall cause Seller to be named as an additional
insured on Purchaser's general liability insurance policy so long as any of the
Authorized Occupants occupy the Leased Premises, the limits of which policy
shall be reasonably acceptable to Seller. At the Closing, Purchaser shall
provide Seller with written certification of Purchaser's compliance with the
foregoing sentence. Purchaser shall indemnify, defend and hold Seller harmless
from and against any and all damages incurred by or on behalf of Seller as a
result of any breach of the terms of the license granted hereby, any negligence
or any wrongful acts or omissions of any of the Authorized Occupants in respect
of the Licensed Space or the license granted hereby. On the Closing Date,
Purchaser shall pay to Seller, an amount equal to eight thousand dollars
($8,000.00) in consideration of the license granted hereby,. The parties agree
that it is their express intention that no landlord-tenant relationship is or
shall be deemed to be created by virtue of the license granted hereby.
SECTION 2.12. LEASE FOR THOMAS CORNERS STORE. Seller shall lease the
Thomas Corners, Virginia Store, which is owned by Seller, to Purchaser pursuant
to a triple net lease which shall provide for total rental payments at
prevailing market rates, plus ordinary and customary expenses, not including
extraordinary repair, and a term of sixty (60) days, and which shall be in a
form to be mutually agreed upon in good faith by Seller and Purchaser.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to SECTION 3.12, Seller represents and warrants to Purchaser
as follows:
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SECTION 3.1. AUTHORITY OF SELLER. APS and its subsidiaries listed on
SCHEDULE A hereto are corporations validly existing and in good standing under
the laws of their respective states of incorporation. 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 the receipt of the Order. 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.
SECTION 3.3. COMPLIANCE WITH LAW. Except as set forth on SCHEDULE
3.3, 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 or the Purchased
Locations.
SECTION 3.4. PERMITS. Set forth on SCHEDULE 3.4 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 3.5. 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 3.6. ASSIGNED CONTRACTS. True and complete copies (including
all modifications and amendments) of the Assigned Contracts have been provided
or made available by Seller to Purchaser. Other than as set forth 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
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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).
SECTION 3.7. LABOR RELATIONS. Except as set forth on SCHEDULE 3.7,
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 3.8. LITIGATION. Other than in connection with the Cases and
except as set forth on SCHEDULE 3.8, 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 3.9. 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 3.10. 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,
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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.
SECTION 3.11. DISCLAIMER OF ADDITIONAL REPRESENTATIONS AND
WARRANTIES; SCHEDULES. Notwithstanding the foregoing provisions of this Article
III or any provision of this Agreement, Seller shall not have any liability to
Purchaser for or in respect of any representation or warranty made in this
Article III, and the Seller shall not be deemed to have breached or violated any
such representation or warranty, if, as of the date hereof, any of the
Management Employees has Knowledge of the facts or circumstances causing such
representation or warranty not to be true and correct.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
SECTION 4.1. AUTHORITY OF PURCHASER. Purchaser is a limited
liability company, validly existing, and in good standing under the laws of the
State of Delaware. Purchaser has full limited liability company 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
action on the part of Purchaser and its members, 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 limited liability company 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
Formation or Operating Agreement of Purchaser and do not and will not violate
any provision of law, or any order, judgment or decree of any court
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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; and (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'S CAPITALIZATION.
Purchaser has and will have at the Closing the Committed Financing.
Additionally, Purchaser's equity capitalization is as set forth on SCHEDULE 4.4,
and Purchaser shall not distribute or permit to be withdrawn any amounts from
its equity capitalization from the date of this Agreement to the date which is
six months from the Closing Date. Purchaser's equity investors, by signing this
Agreement, agree to be bound by the terms of the second sentence of this SECTION
4.4.
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 or any of its
Affiliates 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. Purchaser has delivered to Seller prior to the date hereof
true, correct and accurate copies of its balance sheets and other evidence of
its financial condition sufficient to show that
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Purchaser is and will be able to comply with the representations and warranties
made by it in this SECTION 4.7.
SECTION 4.8. MANAGEMENT EMPLOYEES' KNOWLEDGE AND CONTROL. Purchaser
acknowledges that the Management Employees are or have been senior executives of
Seller and (i) have had full and complete access to information relating to the
Purchased Assets and the transactions contemplated by this Agreement and the
Ancillary Agreements, (ii) overseen the composition, condition and disposition
of the Purchased Assets prior to the date hereof, and (iii) will be in a
position from the date hereof until the Closing Date to oversee and affect the
composition, condition and disposition of the Purchased Assets.
SECTION 4.9. HART-SCOTT-RODINO. For purposes of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules, regulations,
statements and interpretations promulgated thereunder (collectively, the "HSR
ACT"), in connection with the consummation of the transactions contemplated
hereby: (i) the Purchaser's "total assets" and "annual net sales" are each less
than $10,000,000.00, as such terms are defined in the HSR Act; and (ii) the
Purchaser is its own "ultimate parent entity," as such term is defined in the
HSR Act.
ARTICLE V.
CERTAIN COVENANTS OF SELLER
SECTION 5.1. 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 5.2. FURTHER ASSURANCES. Upon the request of Purchaser at
any time from and 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 5.3. ASSIGNMENT OF CONTRACTS; PHONE NUMBERS. Seller shall
use commercially reasonable efforts to (i) 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 and (ii)
assign to Purchaser all of Seller's rights (if any) in and to the telephone and
facsimile numbers and listings for the Purchased Locations, and all voice and
data transmission lines and facilities at the Purchased Locations, including all
contract rights associated therewith.
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SECTION 5.4. TRANSFER OF TECHNOLOGY AND SERVICES TO BE PROVIDED BY
SELLER. On the Closing Date, Seller shall enter into the Technology Transfer
Agreement, the Services Agreement and the Accounting Services Agreement with
Purchaser.
SECTION 5.5. CURE OF DEFAULTS. Seller shall, subject to the
occurrence of the Closing, (i) cure any default in base rental payments arising
under the Lease and outstanding as of the Closing Date; and (ii) use
commercially reasonable efforts to cure any and all other defaults with respect
to the Assigned Contracts, as provided in Section 365 of the Bankruptcy Code, so
that such Assigned Contracts may be assigned to Purchaser in accordance with the
provisions of Section 365 of the Bankruptcy Code.
SECTION 5.6. BANKRUPTCY ACTIONS. No later than five (5) Business
Days after the date hereof, Seller will file a motion with attached proposed
orders, reasonably acceptable to Seller and Purchaser, seeking approval of the
terms of this Agreement.
SECTION 5.7. MERCHANDISE PURCHASE AGREEMENT. On the Closing Date,
Seller shall enter into a Merchandise Purchase Agreement with Purchaser in
substantially the form attached hereto as EXHIBIT I.
SECTION 5.8. ACCOUNTS. After the Closing Date, Seller shall promptly
remit to Purchaser all payments it receives on Accounts Receivable, AFCO Notes
or Warehouse Notes which are included in the Purchased Assets.
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
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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 . 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 Effective Date, (ii) take all actions necessary to satisfy its obligations
and liabilities under the terms and conditions of each of the Assigned
Contracts, and (iii) indemnify and hold harmless Seller for any damages, losses
and liabilities arising out of a breach of this covenant.
SECTION 6.4. FURTHER ASSURANCES. Upon the request of Seller at any
time from and 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, the adequacy of which Committed
Financing shall be subject to the continuing review of and approval by Seller,
in its sole discretion. Additionally, Purchaser shall at all times from the date
hereof through the date occurring six (6) months following the Closing Date, not
distribute or permit to be withdrawn any amounts from its equity capitalization,
shall notify the Seller if and when it ascertains that Purchaser's equity
capitalization falls below such level, and shall, in any event, provide Seller
with monthly statements setting forth the level and form of Purchaser's equity
capitalization. Purchaser's equity investors, by signing this Agreement, agree
to be bound by the terms of the second sentence of this SECTION 6.5.
SECTION 6.6. INDEMNIFICATION FOR ACCESS. Purchaser shall indemnify,
defend and hold harmless (i) Seller, (ii) the lessors under the Assigned Leases,
and (iii) Seller's and such Lessors' 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 premises subject to the Assigned
Leases (other than any Management Employee's entry upon such premises in
connection with their current duties with Seller), or (ii) any and all other
activities undertaken by Purchaser or Purchaser's representatives with respect
to the premises subject to the Assigned Leases.
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SECTION 6.7. MERCHANDISE PURCHASE AGREEMENT. On the Closing Date,
Purchaser shall enter into a Merchandise Purchase Agreement with Seller in
substantially the form attached hereto as EXHIBIT I.
SECTION 6.8. CERTAIN AGREEMENTS AND INDEMNIFICATION RELATED TO
THE POS SYSTEMS AND AUTOPOINT.
(a) Purchaser acknowledges that (i) the Fixed Assets located at the
Stores include point-of-sale computer systems, which computer systems are
pre-loaded with various information management software including, but not
limited to "AUTOEASE," "AUTO-LOG/BIG-A TECHNOLOGY," "CCI," "TRIAD," "LODESTAR"
AND "AUTOPOINT" (such software, collectively, the "POS SYSTEMS"); (ii) Seller
does not own the POS Systems (other than Autopoint) and operates the POS Systems
under license, lease agreements or other arrangements with third parties, and,
except as set forth in SECTION 6.8(C), Seller is not transferring or assigning
its rights in the POS Systems to Purchaser.
(b) In connection with its acquisition of the Fixed Assets and its
use of the POS Systems (other than Autopoint), Purchaser:
(i) shall use its best efforts to obtain any requisite
consents from any third party licensor, lessor or developer which
may have any proprietary right, title or interest in or to the POS
Systems, PROVIDED, THAT Seller shall not be required to obtain any
such consent but shall use commercially reasonable efforts to assist
Purchaser in obtaining such consents (provided that such efforts are
at no cost to Seller); and
(ii) hereby acknowledges that Seller shall have no liability
whatsoever in the event that Purchaser is unable to use the POS
Systems due to the failure of Purchaser to obtain any requisite
consents; and
(iii) shall defend, indemnify and hold Seller and its
Affiliates, officers, directors, employees and agents harmless for
any damages, liabilities, costs and expenses (including, but not
limited to, reasonable attorney's fees incurred by Seller) which
arise as a result of all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever claimed or recovered by any
third party which may at any time be imposed on, incurred by or
asserted against Seller or its Affiliates, officers, directors,
employees and agents in any way relating to or arising out of the
agreements set forth in this Section 6.8, or
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the transactions contemplated hereby, including, without limitation,
any claim or claims by third parties of infringement or other
violation of their rights in the POS Systems.
(c) With respect to Autopoint, Seller hereby grants Purchaser a
limited royalty-free license to use Autopoint at the Stores which currently use
Autopoint for a period of three (3) years after the Closing Date, provided, THAT
Purchaser:
(i) hereby acknowledges that the know-how and operating
procedures associated with Autopoint are proprietary to and
constitute trade secret information of Seller;
(ii) hereby acknowledges that Seller does not intend to grant,
and Purchaser is not obtaining hereby, any title to or right or
interest in, by way of license or otherwise, Autopoint operating
procedures or know-how, Autopoint software or the source code
underlying such software;
(iii) hereby acknowledges that the limited license granted
hereby entitles only Purchaser and its employees to use Autopoint at
the Stores listed above in this SECTION 6.8(C), and Purchaser shall
not copy Autopoint or allow others to use or have access to
Autopoint, directly or indirectly;
(iv) hereby acknowledges that it shall cease using Autopoint
after the end of the three year license period granted hereby, at
which time Seller shall be entitled to retrieve the Autopoint
software in Purchaser's possession; and
(v) hereby acknowledges and agrees that notwithstanding
anything to the contrary herein, Seller is not granting, and will
not be in any way obligated to grant: (i) any license or right
whatsoever to use or access Autopoint anywhere at all within Canada;
and (ii) any other right whatsoever in or to Seller's rights in or
to Autopoint anywhere at all within Canada.
SECTION 6.9. TRANSFER OF TECHNOLOGY AND SERVICES TO BE PROVIDED BY
SELLER. On the Closing Date, Purchaser shall enter into the Technology Transfer
Agreement, the Services Agreement and the Accounting Services Agreement with
Seller.
SECTION 6.10. PROCEDURES WITH RESPECT TO TRADEMARKS.
(a) Purchaser and Seller hereby acknowledge and agree that the
Trademarks to be assigned to Purchaser pursuant to the
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Trademark Assignment Agreement shall not include Seller's service mark,
"America's Parts ProsSM" and service mark application Serial No. 74/591,655 on
the Principal Register of the United States Patent and Trademark Office ("PTO")
pertaining thereto, which Purchaser and Seller acknowledge is an "intent-to-use"
service mark application filed at the PTO under 15 U.S.C. 1051(b) (the "Intent
to Use Mark"), for which Seller has not previously filed and had accepted an
Amendment to Allege Use under 37 C.F.R. ss. 2.76 or Statement of Use under 37
C.F.R. ss. 2.88 (the "Statement of Use"). After the Closing Date, Seller shall
use commercially reasonable efforts to file with the PTO: (i) a Statement of Use
with appropriate specimens showing use of the Intent to Use Mark for the
services contained in the above-identified application and/or (ii) Request(s)
for Extension of Time to File the Statement of Use under 37 C.F.R. ss. 2.89, as
appropriate. Any and all costs and fees associated with the preparation, filing
and acceptance by the PTO of the Statement of Use and Request(s) for Extension
of Time to File the Statement of Use (including attorneys' fees) shall be borne
solely by Purchaser, such that Seller will be permitted under all applicable
laws, rules and regulations, to assign all its right, title and interest in the
Intent to Use Mark following the acceptance by the PTO of the Statement of Use.
Anything herein to the contrary notwithstanding, Purchaser hereby agrees and
acknowledges that Seller shall have no liability to Purchaser in connection with
the failure of the PTO to accept the Statement of Use or the inability of Seller
to assign or license the Intent to Use Mark to Purchaser for any reason
whatsoever including, but not limited to, any inability of Seller to make any
filing contemplated by this paragraph. At the Closing, Purchaser and Seller
shall execute a non-exclusive royalty-free license, the terms of which license
shall be reached by mutual agreement between Purchaser and Seller (the "Intent
to Use Mark License"), pursuant to which Seller shall grant Purchaser a
non-exclusive royalty-free license to use the Intent to Use Marks, within a
defined territory determined by reference to the market areas of the Purchased
Locations, for the period commencing on the Closing Date and ending on the date
on which the Intent to Use Mark is assigned to Purchaser. On the Seller's
receipt of any notice from the PTO of the acceptance of the Statement of Use,
Seller shall assign all of its right, title and interest, if any, in and to the
Intent to Use Mark to Purchaser, subject to Purchaser's grant-back to Seller of:
(i) an exclusive royalty-free license to use the Intent to Use Mark for a
limited period of time; and (ii) a non-exclusive royalty-free license to use the
Intent to Use Mark for a limited period of time, all on terms substantially
equivalent in all material respects to the terms of the Trademark Assignment
Agreement and the Trademark License Agreement. On the date of the assignment
contemplated by the immediately previous sentence, the Intent to Use Mark
License shall terminate.
(b) Purchaser and Seller hereby acknowledge and agree that, as of
the date hereof, the assignment of the Trademarks to APS Management Services,
Inc. has not been recorded with the PTO,
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thereby giving rise to potential legal challenges to the ability of such entity
to assign its interest in the Trademarks to Purchaser pursuant to the Trademark
Assignment Agreement, the validity of the Trademarks, as well as the ability of
Purchaser to grant-back exclusive and non-exclusive licenses to use the
Trademarks pursuant to the Trademark License Agreement. Seller shall, at the
sole expense of Purchaser (including attorneys' fees), as soon as practicable
after the date hereof, file appropriate documents with the PTO to record the
assignment of the Trademarks to APS Management Services, Inc. Purchaser hereby
agrees and acknowledges that Seller shall have no liability whatsoever to
Purchaser in connection with Seller's failure to record the assignment of its
interest in the Trademarks to APS Management Services, Inc.
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. The consent of the DIP Lenders 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. 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.
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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. The consent of the DIP Lenders 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. 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.
ARTICLE IX.
THE CLOSING; OTHER BIDS; TERMINATION
SECTION 9.1. THE CLOSING. The Closing of the purchase and sale of
the Purchased Assets (the "CLOSING") shall be held on February 1, 1999, or such
other date as Purchaser and Seller may agree (the "CLOSING DATE"), but shall be
deemed to be effective as of the Effective Date. Representatives of Seller and
Purchaser shall attend the Closing which shall be held at the offices of Willkie
Farr & Gallagher, 787 Seventh Avenue, New York, New York 10019 or at such other
location as the parties shall agree to in writing. At the Closing, all of the
transactions provided for in ARTICLE II hereof shall be consummated on a
substantially concurrent basis.
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(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
and Assignment and Assumption Agreement for the Assigned Contracts;
(ii) the duly executed Bill of Sale and Assumption Agreement;
(iii) the duly executed Technology Transfer Agreement;
(iv) the duly executed Trademark Assignment Agreement;
(v) a certificate, executed by the Secretary of Seller,
certifying that the Board of Directors of Seller has approved and
authorized the transactions contemplated by this Agreement or that
the transactions contemplated by this Agreement have otherwise been
authorized by all requisite corporate action;
(vi) a certificate, executed by a duly authorized officer of
Seller, to the effect that all conditions to closing set forth in
SECTION 8.1 and SECTION 8.2 have been satisfied;
(vii) the duly executed Merchandise Purchase Agreement;
(viii) the duly executed Accounting Services Agreement;
(ix) the duly executed Services Agreement;
(x) the lease for the Thomas Corners, Virginia Store; and
(xi) the duly executed Trademark License Agreement.
(c) PURCHASER'S DELIVERIES AT CLOSING. At the Closing, Purchaser
shall deliver (or cause to be delivered) to Seller the following:
(i) payment by wire transfer of (a) the Purchase Price and
other amounts in accordance with the terms and conditions set forth
in SECTION 2.3(B), (b) any and all amounts due for the Leased
Premises and the lease of the Thomas Corners, Virginia Store, (c)
all apportionment and proration amounts, and (d) any and
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all other amounts which are due and payable by the Purchaser on the
Closing Date pursuant to this Agreement and the Ancillary
Agreements;
(ii) a duly executed Lease Assignment and Assumption
Agreement and Assignment and Assumption Agreement for the Assigned
Contracts;
(iii) the duly executed Bill of Sale;
(iv) the duly executed Technology Transfer Agreement;
(v) the duly executed Trademark Assignment Agreement;
(vi) a certificate, executed by the managing member(s) of
Purchaser, attaching certified resolutions of such managing
member(s) (or all the members if required by Purchaser's certificate
of formation or operating agreement) of Purchaser approving and
authorizing the transactions contemplated by this Agreement;
(vii) a certificate, executed by a duly authorized managing
member of Purchaser, to the effect that all conditions to closing
set forth in SECTION 7.1 and SECTION 7.2 have been satisfied;
(viii) the duly executed Merchandise Agreement;
(ix) the duly executed Accounting Services Agreement;
(x) the duly executed Services Agreement;
(xi) the lease for the Thomas Corners, Virginia store;
(xii) the duly executed Trademark License Agreement;
(xiii) the certification referred to in SECTION 2.11.
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),
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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 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 $100,000 more than the sum of (x) the
Purchase Price (including any fees under the Services Agreement and the
Accounting Services Agreement) set forth in this Agreement as such amounts are
determined in good faith by Blackstone, (y) the Breakup Fee (as defined in
SECTION 9.2(D)) and (z) the Expense Reimbursement (as
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defined in SECTION 9.2(D)); and (ii) any bids thereafter must be at least
$50,000 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) to immediate reimbursement of its actual reasonable and
documented out-of-pocket expenses incurred in connection with the transactions
contemplated by this Agreement, including professional fees, in an amount not to
exceed for this $175,000 (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").
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 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 Seller, if at any time to and including the Closing Date,
Purchaser does not have available Committed Financing; and
(f) by Seller or Purchaser if the Closing has not occurred on or
before February 8, 1999, unless such failure to close is due to the fault of the
terminating party.
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 and covenants 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; (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; and (iv) if this Agreement is
terminated by Seller pursuant to SECTION 9.3(E), Purchaser shall be liable for
any and all losses, damages and expenses incurred or suffered by Seller as a
result of such failure to perform. The provisions of this SECTION 9.4 shall
survive any termination hereof pursuant to SECTION 9.3.
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(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.
SECTION 9.5. EFFECTS OF PURCHASER DEFAULT. In the event that
Purchaser fails to make any payment when due or otherwise fails to perform any
of its material obligations or breaches any of its material covenants under this
Agreement or any of the Ancillary Agreements, and such default is not cured
within five (5) Business Days of Seller giving Purchaser notice of such default,
(i) Seller may terminate this Agreement without any liability of Seller, and
(ii) all amounts owing by Purchaser to Seller under this Agreement as of the
date of such default, and all amounts owing by Purchaser to Seller under this
Agreement and under the Ancillary Agreements shall become immediately due and
payable. In the event that Purchaser fails to make any payment payable to Seller
under this Agreement, any of the Ancillary Agreements, or any other agreement
between Seller and Purchaser, in such amounts and at such times as provided for
herein or therein (including any applicable cure periods), then any and all such
amounts payable by Purchaser to Seller under this Agreement, the Ancillary
Agreements and any other agreement between Seller and Purchaser may, without
prejudice to any other rights or remedies Seller may have against Purchaser, be
drawn by Seller from the Services Deposit made by Purchaser with Seller pursuant
to the Accounting Services Agreement (with appropriate invoices sent to
Purchaser pursuant to Section 2.2 of the Accounting Services Agreement) and/or
from any deposit under this Agreement and the Ancillary Agreements.
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
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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 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 Effective Date shall be allocated
to Seller and items related to time periods beginning from and after the
Effective 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.
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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 "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
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(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 and, with
respect to a medical claim relating to a claimant's hospitalization, on the date
each hospitalization service was provided to the claimants; 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 from and 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 from and 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. A.P.S., INC. PARTNERSHIP PLAN. A.P.S., Inc. currently
sponsors and maintains a qualified defined contribution profit sharing plan
known as the A.P.S., Inc. Partnership Plan (the "401(K) PLAN") which provides
certain retirement benefits for certain eligible employees of Seller, including
certain of Purchaser's Employees. Effective as of the Closing Date, Seller and
Purchaser shall take all necessary and appropriate action to cause Purchaser to
assume the sponsorship of the 401(k) Plan, PROVIDED THAT Seller has made such
additional contributions, at its option, as are necessary to fully vest and fund
the account balances of those 401(k) Plan participants that have been affected
by a "partial termination" of the 401(k) Plan, as defined in Section 411(d)(3)
of the Code. Purchaser and Seller agree that the Purchaser shall be deemed the
successor to and assignee of A.P.S., Inc. for purposes of determining the date
on which a termination of employment, separation from service or other similar
event has occurred under the 401(k) Plan. As of the Closing Date, Seller and its
respective Affiliates shall have no liability for the payment of benefits to any
participants accrued under the 401(k) Plan before or after the Closing Date, and
Purchaser shall indemnify and hold Seller and its respective Affiliates harmless
from and against any liability as a result of
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any claim against Seller or its Affiliates for the payment of benefits under the
401(k) Plan. Nothing contained herein shall interfere with Purchaser's right to
amend or terminate the 401(k) Plan, in accordance with its terms and applicable
law, following its assumption.
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: Auto Parts Express, LLC
c/o Douglas M. Kratz
P.O. Box 3813
Rock Island, Illinois 61204-3813
and
c/o E. Eugene Lauver
22003 Chesterwick
Katy, Texas 77450
With a copy Verner, Liipfert, Bernhard,
(which shall not McPherson and Hand
constitute notice) to: 1111 Bagby, Suite 4700
Houston, Texas 77002
Attention: Steven Buxbaum
Facsimile No.: (713) 752-2199
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If to Seller: APS Holding Corporation
15710 John F. Kennedy Blvd.
Suite 700
Houston, Texas 77032-2347
Attention: Bettina M. 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: Marc Abrams, 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
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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 conflict or choice of
laws principles thereof. For so long as Seller is subject to the jurisdiction of
the Bankruptcy Court, the parties hereto irrevocably elect as the sole judicial
forum for the adjudication of any matter arising under or in connection with
this Agreement, and consent to the jurisdiction of, the Bankruptcy Court.
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.
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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. This SECTION 12.13 shall supplement but
shall not supersede, amend or modify any confidentiality agreements previously
entered into by Purchaser, the Management Employees or their representatives,
which prior confidentiality agreements shall remain in effect in accordance with
their respective terms.
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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.
APS HOLDING CORPORATION
By: /s/ BETTINA M. WHYTE
Bettina M. Whyte,
Chief Executive Officer
and President
APS, INC.
By: /s/ BETTINA M. WHYTE
Bettina M. Whyte,
Chief Executive Officer
and President
AMERICAN PARTS SYSTEM, INC.
By: /s/ BETTINA M. WHYTE
Bettina M. Whyte, President
APS MANAGEMENT SERVICES, INC.
By: /s/ BETTINA M. WHYTE
Bettina M. Whyte, President
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APS SUPPLY, INC.
By: /s/ BETTINA M. WHYTE _
Bettina M. Whyte, President
AUTOPARTS FINANCE COMPANY, INC.
By: /s/ BETTINA M. WHYTE
Bettina M. Whyte, President
BIG A AUTO PARTS, INC.
By: /s/ BETTINA M. WHYTE
Bettina M. Whyte, President
INSTALLERS' SERVICE WAREHOUSE, INC.
By: /s/ BETTINA M. WHYTE
Bettina M. Whyte, President
PARTS, INC.
By: /s/ BETTINA M. WHYTE
Bettina M. Whyte, President
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PRESATT, INC.
By: /s/ BETTINA M. WHYTE
Bettina M. Whyte, President
AUTO PARTS EXPRESS, LLC
By: /s/ DOUGLAS M. KRATZ
Name:
Title:
THE UNDERSIGNED ACKNOWLEDGE THEIR OBLIGATIONS
UNDER SECTIONS 4.4 AND 6.5 OF THIS AGREEMENT AND
AGREE TO BE BOUND BY THE TERMS THEREOF
/s/ DOUGLAS M. KRATZ
Douglas M. Kratz
/s/ PERRY B. HANSEN
Perry B. Hansen
/s/ DAVID C. BARBEAU
David C. Barbeau
/s/ EUGENE E. LAUVER
Eugene E. Lauver
/s/ MICHAEL PRESTON
Michael Preston
48
EXHIBIT 2.12
TECHNOLOGY TRANSFER AGREEMENT
THIS TECHNOLOGY TRANSFER AGREEMENT (this "AGREEMENT") is made and entered
into as of February 1, 1999 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 AUTO PARTS EXPRESS, LLC, a Delaware limited liability
company ("AUTO PARTS"). 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, certain APS Affiliates and Auto Parts have entered into an
Asset Purchase Agreement, dated as of January 11, 1999 (the "ASSET PURCHASE
AGREEMENT"), pursuant to which Auto Parts is purchasing on the date hereof
substantially all of the business assets located at the Purchased Locations;
WHEREAS, following the consummation of the transactions contemplated by
the Asset Purchase Agreement, Auto Parts will conduct business at certain of the
Purchased Locations and, in connection therewith and in furtherance thereof,
Auto Parts is obtaining from APS a Services Agreement, dated as of the date
hereof (the "SERVICES AGREEMENT"), between APS and Auto Parts, for a limited
period of time to assist in the orderly transition of ownership of the Purchased
Assets, with (i) limited access to PIMS and certain other management information
systems; (ii) certain data processing services utilizing "Tomax," "Oracle" and
certain other management information systems; and (iii) certain related limited
administrative and technical support services as provided for in the Services
Agreement; and
WHEREAS, on May 1, 1999, or earlier if APS ceases operating PIMS, Auto
Parts desires to acquire, and APS desires to transfer to Auto Parts, (i) all of
APS' right, title and interest in Tomax, Oracle, and the other management
information systems and other software described on EXHIBIT "A-1" attached
hereto (collectively, the "APS TECHNOLOGY"), if and to the extent that the APS
Technology is legally transferable, and (ii) certain hardware and other fixed
assets, if and to the extent owned by APS, that are associated with the APS
Technology and listed on EXHIBIT A-2 (the "TECHNOLOGY FIXED ASSETS") as more
fully described herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
<PAGE>
SECTION 1. TRANSFER OF THE APS TECHNOLOGY AND TECHNOLOGY FIXED ASSETS.
1.1. Subject to the provisions hereof, on the first to occur of: (a) 12:01 a.m.
on May 1, 1999; or (b) the date on which APS ceases operating PIMS (the first to
occur of such dates, the "TRANSFER DATE"), APS shall irrevocably transfer and
assign, if and to the extent legally transferable, all of its right, title and
interest in and to the APS Technology to Auto Parts (the "TECHNOLOGY TRANSFER")
pursuant to one or more Assignment and Assumption Agreements, as necessary,
substantially in the form attached as EXHIBIT "B" hereto, PROVIDED, HOWEVER
that:
(i) APS shall give Auto Parts notice of APS' of the shutdown of PIMS
as promptly as reasonably possible after APS determines that it will
cease or has ceased operating PIMS;
(ii) in the event that Auto Parts remains obligated as of the
Transfer Date to APS for any fees payable or obligations due under
the Services Agreement or the Asset Purchase Agreement, then APS
shall have no obligation to consummate the Technology Transfer until
after such time that Auto Parts has paid to APS all such fees and
performed such obligations in full, PROVIDED, THAT the foregoing
shall not limit APS' ability to terminate this Agreement pursuant to
Section 3.1 hereof;
(iii) Auto Parts shall use its best efforts to obtain any legally
required consents to the Technology Transfer, PROVIDED, THAT APS
shall have no obligation to obtain any such consent but shall use
commercially reasonable efforts (at no cost to APS) to assist Auto
Parts in obtaining such consents;
(iv) in the event that the Technology Transfer would: (a) violate,
or result in a violation, material breach or default by APS under
any loan agreement, security agreement, or other instrument to which
it is a party or otherwise bound; (b) violate, or result in a
violation by APS of, any provision of law, or any order, judgment or
decree of any court or other governmental agency applicable to APS;
or (c) violate, result in a default under or breach of, or conflict
with, any contract, license, lease or any other agreement relating
to the APS Technology to which APS is a party or otherwise bound,
then APS shall have no obligation under this Agreement to consummate
the Technology Transfer to the extent that the Technology Transfer
would result in such violation, conflict, default or breach, in
which case APS shall have no liability hereunder;
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<PAGE>
(v) after the Transfer Date, Auto Parts shall grant APS reasonable
access to the APS Technology, at no cost to APS, to the extent that
such access is required by APS in the winding-up of its businesses
or performance of any agreements to which it is bound; and
(vi) any costs associated with the Technology Transfer, including,
but not limited to, cure costs which must be paid and non-monetary
cures which must be performed pursuant to Section 365 of the
Bankruptcy Code, transfer taxes, filing fees, and expenses shall be
borne by Auto Parts.
1.2. APS shall, at the request of Auto Parts, provide Auto Parts with copies of
documents or agreements in the possession of APS which relate to APS' rights in
the APS Technology.
1.3. Auto Parts hereby acknowledges and agrees that from and after the Transfer
Date, Auto Parts shall assume each and every obligation of APS relating to the
APS Technology to the extent such is transferred to Auto Parts, including, but
not limited to:
(i) all obligations of APS to provide third parties (including, but
not limited to, General Parts, Inc., BWP Distributors, Inc., The
Parts Source, Inc. and W.E.Lahr Company, Inc.) ("THIRD PARTY
TECHNOLOGY USERS"), with access to the APS Technology, use of the
APS Technology, services relating to the APS Technology, or other
similar rights with respect to the APS Technology;
(ii) all obligations of APS to other parties with interests in the
APS Technology, whether such parties have interests in the APS
Technology by ownership, license, sub-license or otherwise, whether
such obligations are monetary or non-monetary in nature.
The Third Party Technology Users shall be third party beneficiaries with
respect to the provisions of sub-clause (i) above.
1.4. Auto Parts shall defend, indemnify and hold APS and its affiliates,
officers, directors, employees and agents harmless for any damages, liabilities,
costs and expenses (including, but not limited to, reasonable attorney's fees
incurred by APS) which arise as a result of all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever claimed or recovered by any third party
which may at any time be imposed on, incurred by or asserted against APS or its
affiliates, officers, directors, employees and agents in any way relating to or
arising out of this Agreement, or the transactions contemplated hereby,
including, without limitation, any claim or claims by (i) third
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<PAGE>
parties of infringement or other violation of their rights in the APS Technology
or (ii) Third Party Technology Users of their rights to use the APS Technology
or obtain services related thereto.
1.5. On the Transfer Date, subject to the terms and conditions set forth herein,
Auto Parts shall purchase from APS, and APS shall sell, transfer, assign, convey
and deliver to Auto Parts at the locations set forth on EXHIBIT "A-2", all of
APS' right, title and interest in and to the Technology Fixed Assets, to the
extent such Technology Fixed Assets are owned by APS. On the Transfer Date, Auto
Parts shall pay APS for the Technology Fixed Assets a dollar amount equal to
thirty percent (30%) of the aggregate value (as set forth on EXHIBIT "A-2") of
the Technology Fixed Assets (the "PURCHASE PRICE"), which Purchase Price shall
be payable by wire transfer pursuant to wire instructions to be provided by APS
to Auto Parts. Notwithstanding the foregoing, APS shall not be required to sell,
and Auto Parts shall not be required to purchase the Technology Fixed Assets in
the event that the Technology Transfer is not consummated.
SECTION 2. LIMITATION OF WARRANTIES
2.1. APS EXPRESSLY DISCLAIMS ALL WARRANTIES WITH RESPECT TO THE OWNERSHIP OR
OPERATION OF THE APS TECHNOLOGY, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED,
STATUTORY OR OTHERWISE, OR ARISING BY USAGE OF TRADE OR COURSE OF DEALING,
INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, TITLE, AND NO MISAPPROPRIATION AND NONINFRINGEMENT. APS
SHALL NOT BE LIABLE FOR ANY PUNITIVE, SPECIAL, DIRECT, INDIRECT, INCIDENTAL,
EXEMPLARY 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 THE APS TECHNOLOGY BY AUTO PARTS, WHETHER CLAIMED
UNDER CONTRACT, TORT OR ANY OTHER LEGAL THEORY.
SECTION 3. TERMINATION; REMEDIES
3.1. In the event that Auto Parts materially fails to perform its obligations or
materially breaches any of its covenants under the Asset Purchase Agreement or
the Services Agreement and such default is not cured within five (5) business
days after APS give Auto Parts notice of such default, APS may terminate this
Agreement. 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.
3.2. In the event of a willful breach by APS of its obligations hereunder, APS
shall be obligated to indemnify Auto Parts for documented commercially
reasonable damages (including claims, liabilities, expenses, reasonable
out-of-pocket costs and other legally recoverable damages) resulting from such
breach,
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<PAGE>
PROVIDED, HOWEVER that APS shall not have any obligation to indemnify Auto Parts
for damages of any kind whatsoever to the extent that such damages exceed
$50,000, less any amounts payable under the Services Agreement in the aggregate.
SECTION 4. CONFIDENTIALITY.
Each of Auto Parts and APS agrees 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
each 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, PROVIDED, THAT, after
consummation of the Technology Transfer, Auto Parts shall be entitled to retain
the copies of the documents and agreements referenced in SECTION 1.2.
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 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
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<PAGE>
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 United States and
the State of Delaware without giving effect to the principles of conflict or
choice of laws thereof. For so long as APS 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.
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. 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 Act 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.
6.6. NO THIRD PARTY RIGHTS. Except as set forth in SECTION 1.3, 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 from such rights.
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<PAGE>
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
AUTO PARTS EXPRESS, LLC
By: /s/ E. EUGENE LAUVER
E. Eugene Lauver,
Executive Vice President
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EXHIBIT 2.13
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "AGREEMENT") is made and entered into as of
February 1, 1999 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 AUTO PARTS EXPRESS, LLC, a Delaware limited liability
company ("AUTO PARTS"). 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, certain Affiliates of APS and Auto Parts have entered into
an Asset Purchase Agreement, dated as of January 11, 1999 (the "ASSET PURCHASE
AGREEMENT"), pursuant to which Auto Parts is purchasing substantially all of the
business assets located at the Purchased Locations;
WHEREAS, following the consummation of the transactions contemplated by
the Asset Purchase Agreement, Auto Parts will conduct business at certain of the
Purchased Locations and, in connection therewith and in furtherance thereof,
Auto Parts desires to obtain from APS and APS desires to provide Auto Parts, for
a limited period of time to assist in the orderly transition of ownership of the
Purchased Assets, with (i) limited access to and use of PIMS; (ii) data
processing services performed by APS and utilizing the "Tomax" and "Oracle"
management information systems and certain other management information systems;
and (iii) certain related limited administrative and technical support, as
provided for herein; and
WHEREAS, on May 1, 1999, or earlier if APS ceases operating PIMS, Auto
Parts desires to acquire, and APS desires to grant to Auto Parts, an assignment
of all of APS' right, title in Tomax, Oracle and certain other management
information systems, if and to the extent legally transferable, and certain
related hardware and other fixed assets as more fully described in a Technology
Transfer Agreement of even date herewith (the "TECHNOLOGY TRANSFER AGREEMENT"),
subject to the conditions set forth in such agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. ACCESS TO PIMS AND THE OTHER MIS SYSTEMS; RELATED TECHNICAL AND
CONSULTING SERVICES.
1.1. GENERAL LIMITATION ON SERVICES AND ACCESS. All services and access to APS
facilities to be provided by APS pursuant to
<PAGE>
this Agreement shall be required to be performed by APS only to the extent that
providing such services and access is feasible and shall also be subject to the
availability of the APS employees, business locations, funding and equipment
necessary therefor. Auto Parts expressly acknowledges and agrees that the
determination of APS as to such availability shall be dispositive on this issue.
1.2. APS hereby grants Auto Parts a limited access to PIMS and the other
management information described on EXHIBIT "A" attached hereto (the "OTHER MIS
SYSTEMS"), 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 "Transfer
Date" (as defined in the Technology Transfer Agreement). Auto Parts' access to
PIMS and the Other MIS Systems shall be limited to information which pertains to
the Purchased Locations, and Auto Parts acknowledges that such information will
relate only to product lines sold at the Purchased Locations prior to the
Closing Date.
1.3. On the Closing Date, APS shall provide Auto Parts with PIMS and the Other
MIS Systems access codes sufficient to access PIMS and the Other MIS Systems at
the Purchased Locations utilizing currently available ports, and commencing on
the Closing Date and during the PIMS Access Period, Auto Parts' personnel shall
be permitted to log-on to PIMS and the Other MIS Systems from terminals located
at the Purchased Locations and dial-up ports during normal PIMS operating hours.
1.4. During the PIMS Access Period, APS shall provide the following services
relating to PIMS and the Other MIS Systems:
(a) routine maintenance and technical support at APS headquarters;
(b) the services set forth on EXHIBIT "B" attached hereto, which services
shall be provided at no additional charge; PROVIDED, HOWEVER, that APS shall not
be responsible for the link-up and interface of PIMS or the Other MIS Systems
with any Auto Parts management information 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 1.4(C)); and
(c) consulting services ("CONSULTING SERVICES") on a per request basis and
billed at an hourly rate of $150 plus expenses, which consulting services may
include: (i) requirements analysis and initial and follow-up customized
programming or reporting necessary for any interface of Auto Parts' management
information system with PIMS or the Other MIS Systems; (ii) on site maintenance
by APS personnel at the Purchased Locations of terminals, printers, or other
hardware; (iii) training of Auto
<PAGE>
Parts personnel in the operation of PIMS and/or the Other MIS Systems; and (iv)
parts/product line changeover services.
All Consulting Services provided pursuant to this SECTION 1.4 shall be payable
in accordance with SECTION 3.3.
1.5. 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 Auto Parts 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. Auto Parts shall not be granted access
to the source code underlying PIMS software programs, and Auto Parts shall not
attempt to obtain such access. The limited access granted hereby entitles only
Auto Parts and its employees to access PIMS, and Auto Parts shall not allow
others to use or have access to PIMS, directly or indirectly, during the PIMS
Access Period. Auto Parts recognizes and acknowledges that PIMS operating
procedures and data contained on PIMS are confidential and trade secrets. Auto
Parts shall maintain the confidential nature of all PIMS data (other than data
input by Auto Parts) and operating procedures, and shall not disseminate PIMS
data (other than data input by Auto Parts) 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 Auto Parts, and shall not
disseminate such PIMS data to any third party without the prior written consent
of Auto Parts.
SECTION 2. DATA PROCESSING SERVICES UTILIZING THE OTHER MIS SYSTEMS
2.1. During the PIMS Access Period, APS shall provide Auto Parts with data
processing services (the "OTHER MIS SERVICES")] described on EXHIBIT "B"
attached hereto, utilizing the Other MIS Systems, as reasonably requested by
Auto Parts.
2.2. In connection with the access to the Other MIS Systems provided pursuant to
SECTION 1 hereof and with the Other MIS Services which may be provided by APS,
Auto Parts:
(a) shall use its best efforts to obtain any requisite consents from any
third party licensor, lessor or developer which may have any proprietary
right, title or interest in or to the Other MIS Systems, PROVIDED, THAT
APS shall not be required to obtain any such consent but shall use
commercially reasonable efforts to assist Auto Parts in obtaining such
consents (provided that such efforts are at no cost to APS); and
<PAGE>
(b) acknowledges that APS shall have no liability whatsoever in the event
that APS is unable to provide access to the MIS Systems or Other MIS
Services due to the failure of Auto Parts to obtain any requisite
consents.
SECTION 3. DEPOSIT AND FEES FOR PIMS AND OTHER MIS SYSTEMS ACCESS,
CONSULTING SERVICES AND OTHER MIS SERVICES.
3.1. On the date of this Agreement, Auto Parts shall deposit with APS, by
irrevocable wire transfer pursuant to written instructions provided to Auto
Parts by APS, an amount equal to $20,000 to be held by APS as security for any
amounts to be paid by Auto Parts for Consulting Services under this Agreement
(the "SERVICES AGREEMENT DEPOSIT"). Auto Parts hereby acknowledges and agrees
that APS shall have the right at any time to withdraw funds from the Services
Agreement Deposit as contemplated by SECTION 5.2, and at the end of the PIMS
access period, APS shall return the unused portion of the Services Agreement
Deposit to Auto Parts .
3.2. For access to PIMS and the Other MIS Systems, and for Other MIS Services,
Auto Parts shall pay to APS a monthly fee equal to $100,000 ($25,000 per DC),
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.
3.3. APS shall separately invoice Auto Parts monthly in arrears for all charges
for Consulting Services rendered by APS pursuant to SECTION 1.4(C), which
invoices shall be accompanied by reasonable documentation or explanation
supporting such charges, and Auto Parts shall pay APS the full amounts of such
invoices, no later than five (5) business days after each invoice date. Auto
Parts 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 any
services pursuant to this Agreement without any offset or deduction of any
nature whatsoever. Such costs, expenditures and taxes will be billed to Auto
Parts in the monthly invoices in accordance with this SECTION 3.3.
3.4. 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, Auto Parts 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
<PAGE>
the prime rate in effect at the time payment was due or (ii) the highest rate
permitted by law.
SECTION 4. LIMITATION OF WARRANTIES
4.1. APS EXPRESSLY DISCLAIMS ALL WARRANTIES WITH RESPECT TO THE OWNERSHIP OR
OPERATION OF PIMS OR THE OTHER MIS SYSTEMS, DATA CONTAINED ON PIMS OR THE OTHER
MIS SYSTEMS, AND SERVICES PROVIDED BY APS IN CONNECTION WITH PIMS OR THE OTHER
MIS SYSTEMS, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED, STATUTORY OR
OTHERWISE, OR ARISING BY USAGE OF TRADE OR COURSE OF DEALING, INCLUDING, WITHOUT
LIMITATION, THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
TITLE, AND NO MISAPPROPRIATION AND NONINFRINGEMENT. APS SHALL NOT BE LIABLE FOR
ANY PUNITIVE, SPECIAL, DIRECT, INDIRECT, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL
DAMAGES (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS,
BUSINESS INTERRUPTION OR ANY OTHER LOSS) ARISING FROM OR RELATING TO THE MIS
SERVICES, THE USE OF PIMS BY AUTO PARTS OR THE MALFUNCTION OR TEMPORARY OR
PERMANENT SHUTDOWN OF PIMS OR THE OTHER MIS SYSTEMS, WHETHER CLAIMED UNDER
CONTRACT, TORT OR ANY OTHER LEGAL THEORY.
SECTION 5. TERMINATION; REMEDIES
5.1. The obligation of, APS to provide access to PIMS and the Other MIS Systems,
and to provide services pursuant to this Agreement, shall terminate at the end
of the PIMS Access Period. 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. Upon termination of this Agreement as provided in
SECTIONS 5.1 or 5.2, or by operation of law or otherwise, all fees owed to APS
hereunder through the date of termination shall become immediately due and
payable and all other obligations hereunder shall terminate, except as provided
in SECTIONS 5.3, 6 and 7.
5.2. In the event that Auto Parts fails to make any payment when due or
otherwise fails to perform any of its material obligations or breaches any of
its material covenants under this Agreement, the Asset Purchase Agreement or any
of the Ancillary Agreements, and such default is not cured within five (5)
business days of APS giving Auto Parts notice of such default, (i) APS may
terminate this Agreement, and (ii) all amounts owing by Auto Parts to APS under
this Agreement as of the date of such default, and all amounts owing by Auto
Parts to APS under the Asset Purchase Agreement and under the Ancillary
Agreements shall become immediately due and payable. In the event that Auto
Parts fails to make any payment payable to APS under this Agreement, the Asset
Purchase Agreement, any of the Ancillary Agreements, or any other agreement
between APS and Auto Parts, in such amounts and at such times as provided for
herein or therein (including any applicable cure periods), then any and all such
amounts payable by Auto Parts to APS under this Agreement, the Asset
<PAGE>
Purchase Agreement, the Ancillary Agreements or any other agreement between APS
and Auto Parts may, without prejudice to any other rights or remedies APS may
have against Auto Parts, be drawn by APS from the Services Agreement Deposit
(with appropriate invoices sent to Auto Parts pursuant to SECTION 3.3) and/or
from any deposit under the Asset Purchase Agreement and the Ancillary
Agreements, PROVIDED that with respect to amounts payable under this Agreement,
such amounts shall first be drawn from the Services Agreement Deposit until the
same is depleted, and then from any and all deposits under the Asset Purchase
Agreement and the Ancillary Agreements.
5.3. The sole and exclusive remedy available to Auto Parts in the event that APS
does not satisfy any of its obligations under this Agreement (other than by a
willful breach of this Agreement by APS), shall be addressed to correcting such
failure of APS to satisfy such obligations, and not to penalizing APS. In
recognition of this aim, Auto Parts' sole and exclusive remedy for such a
failure by APS to satisfy its obligations under this Agreement shall be that APS
shall use commercially reasonable efforts to satisfy such obligations within a
commercially reasonable time. APS shall be excused from the corrective remedy
set forth in this SECTION 5.4 if and to the extent that: (i) APS' failure to
satisfy its obligations pursuant to this Agreement is a direct or indirect
result of Auto Parts' breach of any covenant in this Agreement or failure to
timely and accurately perform its responsibilities as set forth in this
Agreement; or (ii) Auto Parts 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 Auto Parts with access to PIMS or the Other MIS Systems or to provide
the Other MIS Services pursuant to SECTIONS 1 and 2 of this Agreement during the
PIMS Access Period, APS shall be obligated to indemnify Auto Parts for
documented commercially reasonable damages of any kind (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 Auto Parts for damages to the extent
that such damages exceed $50,000 in the aggregate, less any amounts payable
under the Transfer Agreement in the aggregate, and FURTHER PROVIDED that Auto
Parts acknowledges that APS may cease operating PIMS and/or the Other MIS
Systems and that such event shall not constitute a "willful failure" under this
SECTION 5.3.
SECTION 6. CONFIDENTIALITY.
Each of Auto Parts and APS agrees 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
<PAGE>
auditors) and each 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 6 shall survive the termination
of this Agreement.
SECTION 7. INDEMNITY.
Auto Parts shall defend, indemnify and hold APS and its affiliates, officers,
directors, employees and agents harmless for any damages, liabilities, costs and
expenses (including, but not limited to, reasonable attorney's fees incurred by
APS) which arise as a result of all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever claimed or recovered by any third party which may at any time be
imposed on, incurred by or asserted against APS or its affiliates, officers,
directors, employees and agents in any way relating to or arising out of this
Agreement, or the transactions contemplated hereby, including, without
limitation, any claim or claims by third parties of infringement or other
violation of their rights in PIMS and/or the Other MIS Systems as a result of
the limited right to use PIMS granted, or any of the Other MIS Services provided
to Auto Parts pursuant to this Agreement.
SECTION 8. 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 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 9. MISCELLANEOUS.
9.1. 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,
<PAGE>
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.
9.2. GOVERNING LAW. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the United States and
the State of Delaware without giving effect to the principles of conflict or
choice of laws thereof. For so long as APS 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.
9.3. 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.
9.4. 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.
9.5. ACCESS. To the extent reasonably required for APS to perform its
obligations under this Agreement, Auto Parts 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 Auto Parts shall be bound by all such
requirements and restrictions.
9.6. 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 Act 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.
9.7. 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
<PAGE>
otherwise, it being the specific intention of the parties herein to preclude any
and all such persons from such rights.
<PAGE>
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
AUTO PARTS EXPRESS, LLC
By: /s/ E. EUGENE LAUVER
Name: E. Eugene Lauver
Title: Executive Vice
President
EXHIBIT 2.14
TRADEMARK ASSIGNMENT
This Assignment is made on this 1st day of February, 1999 between APS
Management Services, Inc., a corporation organized and existing under the laws
of the State of Delaware, with offices at 15710 John F. Kennedy Blvd., Suite
700, Houston, Texas 77032, and a debtor and debtor-in-possession in a case
pending under Chapter 11 of the Bankruptcy Code, (hereinafter "Assignor"), and
Auto Parts Express, LLC, a limited liability company organized and existing
under the laws of the State of Delaware, with offices at c/o 15710 John F.
Kennedy Blvd., Suite 700, Houston, Texas 77032 (hereinafter "Assignee").
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Asset Purchase Agreement (the "Asset Purchase Agreement"),
dated as of January 11, 1999 by and among Assignor, certain affiliates of
Assignor signatory thereto, and Assignee.
WHEREAS, pursuant to the terms of the Asset Purchase Agreement, Assignee
has agreed to purchase substantially all of the assets of Assignor and its
affiliates used in or relating to the Purchased Locations and to assume certain
liabilities relating thereto;
WHEREAS, Assignor owns the trademarks listed on Schedule A hereto, subject
to certain rights and interests of parties other than Assignor in the Marks, and
the trademark registrations and applications on the Principal Register of the
United States Patent and Trademark Office and the common law rights pertaining
thereto and all goodwill associated therewith (collectively the "Marks") and, in
connection with the consummation of the transactions contemplated by the Asset
Purchase Agreement, wishes to assign the Marks to the Assignee, subject to the
grant-back to Assignor, pursuant to that certain Trademark License Agreement
(the "Trademark License Agreement"), dated as of even date herewith, between
Assignor as Licensee and Assignee as Licensor, of: (a) an exclusive,
transferable, royalty free license to use the Marks for a period of six months
from the date hereof, pursuant to which license Assignor shall be entitled to
sublicense its interest in the Marks, all on the terms set forth in the
Trademark License Agreement (the "Exclusive License"); and (b) a non-exclusive,
transferable, royalty free license to use the Marks for a period of eighteen
months from the date on which Assignor's exclusive license described in clause
(a) hereof terminates, pursuant to which license Assignor shall be entitled to
sublicense its interest in the Marks, all on the terms set forth in the
Trademark License Agreement (the "Non-Exclusive License"); and
WHEREAS, Assignee wishes to take assignment of the Marks, subject to the
grant-back to Assignor of the Exclusive License and the Non-Exclusive License
pursuant to the Trademark License Agreement.
NOW THEREFORE, in consideration of payment of the sum of ten dollars
($10.00) and other good and valuable consideration, the
<PAGE>
sufficiency and receipt of which is hereby acknowledged, Assignor does hereby
assign, sell and transfer to Assignee, its successors and assigns, all its
right, title and interest in and to the Marks and, all of the goodwill
associated therewith, together with the right to recover damages and profits and
all other remedies for past infringements thereof, subject to: (a) the
grant-back to Assignor of the Exclusive License and the Non-Exclusive License
pursuant to the Trademark License Agreement, which such Trademark License
Agreement is incorporated by reference herein as if set forth IN EXTENSO herein;
and (b) any and all rights or interests whatsoever of any parties other than
Assignor in the Marks, which such interests and rights may have arisen by prior
grants, including licenses, by Assignor or otherwise.
IN WITNESS WHEREOF, the undersigned has executed this Assignment as of the
date first above written.
Assignor:
APS MANAGEMENT SERVICES, INC.
By:/s/ BETTINA M. WHYTE
Name: Bettina M. Whyte
Title: President
Assignee:
AUTO PARTS EXPRESS, LLC
By:/s/ E. EUGENE LAUVER
Name: E. Eugene Lauver
Title: Executive Vice President
<PAGE>
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
On this 31 day of January, 1999, personally appeared Bettina M. Whyte to
me known and known to me to be President of APS Management Services, Inc., the
Assignor named above, and acknowledged that executed the foregoing Assignment on
behalf of said Assignor and pursuant to authority duly received.
/s/ KATJA LIEDTKE
Notary Public
[SEAL]
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
On this 31 day of January, 1999, personally appeared E. Eugene Lauver to
me known and known to me to be Executive Vice President of Auto Parts Express,
LLC, the Assignee named above, and acknowledged that executed the foregoing
Assignment on behalf of said Assignee and pursuant to authority duly received.
/S/ KATJA LIEDTKE
Notary Public
[SEAL]
<PAGE>
SCHEDULE A
TRADEMARK REGISTRATIONS
MARK REG. NO. REG. DATE
- ---- -------- ---------
FREEZE-TEST 882,122 December 9, 1969
POWER 90 and Design 1,653,852 August 13, 1991
BIG A PLUS 1,709,036 August 18, 1992
"HUSKY" (Stylized) 559,898 June 10, 1952
A AMERICAN PARTS (Stylized) 776,950 September 15, 1964
VALU-TEST 864,239 January 28, 1969
BIG A 1,140,510 October 14, 1980
GENERAL SERVICE LINE 1,088,954 April 4, 1978
POWERREADY 1,332,869 April 30, 1985
STRAIGHT AWAY (Stylized) 1,541,510 May 30, 1989
BIG A (Stylized) 1,388,039 April 1, 1986
THE FIRST LETTER IN AUTO 1,374,295 December 3, 1985
PARTS
AUTOPRO 1,122,026 July 10, 1979
INSTALLERS' EXPRESS 1,840,109 June 14, 1994
AUTOPRO 1,869,237 December 27, 1994
A and Design 1,014,372 June 24, 1975
INSTALLERS' SERVICE WAREHOUSE 1,945,971 January 2, 1996
and Design
INSTALLERS' SERVICE WAREHOUSE 1,962,687 March 19, 1999
and Design
TIME IS THE NEW MONEY 2,010,795 October 22, 1996
I S W 2,021,267 December 3, 1996
HERO TEAM (Stylized) 2,010,023 October 22, 1996
TECHKNOWLEDGE (Stylized) 2,125,540 December 30, 1997
APS 1,341,411 June 11, 1985
<PAGE>
COMMON LAW TRADEMARKS
MARK DESCRIPTION OF MARK
CARRYALL
TRAIL BLAZER
AUTOPRO PROFESSIONAL PARTS
PEOPLE and Design [GRAPHIC OMITTED - The graphic
depicts the image subject to the
common law trademark]
BIG A (Stylized) [GRAPHIC OMITTED - The graphic
depicts the image subject to the
common law trademark]
ISW UNDERCAR PARTS SPECIALISTS
and Design [GRAPHIC OMITTED - The graphic
depicts the image subject to
the common law trademark]
EXHIBIT 2.15
February 1, 1999
Auto Parts Express, LLC
c/o 15710 John F. Kennedy Blvd.
Suite 700
Houston, TX 77032-2347
and
A.P.S., Inc.
15710 John F. Kennedy Blvd.
Suite 700
Houston, TX 77032-2347
Gentlemen:
This letter agreement (this "AGREEMENT") sets forth our
understanding with respect to the details of the agreement of Auto Parts
Express, LLC ("Auto Parts") to purchase merchandise from A.P.S., Inc. ("APS").
1. Subsequent to and subject to the closing under that certain Asset
Purchase Agreement (the "ASSET PURCHASE AGREEMENT"), dated as of January 11,
1999 by and among APS Holding Corporation, certain of its subsidiaries, and Auto
Parts, Auto Parts agrees to purchase from APS, and APS agrees to sell to the
Auto Parts, Auto Parts' requirements for merchandise (the "MERCHANDISE") that
APS has on hand, subject to, with respect to any Merchandise order from Auto
Parts: (i) APS' ability to ship the Merchandise within the standard APS internal
replenishment cycle of ten (10) days (the "APS REPLENISHMENT CYCLE"); and (ii)
the inventory mix being acceptable to both parties . The Company will continue
to purchase its requirements of Merchandise from APS for as long as APS has
Merchandise on hand that it can ship within the APS Replenishment Cycle. Auto
Parts hereby acknowledges and agrees that APS shall have no liability if it is
unable to fulfill any of Auto Parts's requirements hereunder.
2. Auto Parts shall pay to APS eighty percent (80%) of the PIMS
Inventory Value (the "PURCHASE PRICE") for each item of Merchandise purchased by
the Company pursuant to this Agreement. APS shall bill Auto Parts for the
Merchandise in accordance with APS' normal billing cycle on APS' normal terms of
2% ten days, net thirty, and Auto Parts shall pay by wire transfer for the
Merchandise in accordance with such terms. Auto Parts shall pay all amounts owed
to APS hereunder without offset or counterclaim for any amounts which Auto Parts
may claim is owed to it under the Asset Purchase Agreement or any of the
Ancillary Agreements. Auto Part's failure to pay for any Merchandise within the
terms set forth herein shall be deemed to
<PAGE>
be a material breach and trigger APS' termination rights under the applicable
Ancillary Documents.
3. All Merchandise purchased by Auto Parts pursuant to this
Agreement shall be shipped freight prepaid by APS.
4. Both parties to this Agreement understand that, based upon the
inventory mix in the APS inventory system as of the date of this Agreement and
Auto Parts' forecasted purchase requirements, and pursuant to the terms of this
Agreement, Auto Parts would purchase approximately $4,000,000 of Merchandise at
PIMS Inventory Value. Notwithstanding the foregoing, both parties to this
Agreement further understand that this estimate of the amount of Merchandise
that will be purchased by Auto Parts represents merely a good faith estimate.
5. Capitalized terms used herein and not otherwise defined have the
respective meanings assigned to them in the Asset Purchase Agreement.
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<PAGE>
If this correctly reflects your understanding of this Agreement, please so
indicate by signing below.
Very truly yours,
A.P.S., INC.
By: /s/ BETTINA M. WHYTE
Name: Bettina M. Whyte
Title: President and Chief
Executive Officer
ACCEPTED AND AGREED:
AUTO PARTS EXPRESS, LLC
By: /s/ E. EUGENE LAUVER
Name: E. Eugene Lauver
Title: Executive Vice President
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EXHIBIT 2.16
ACCOUNTING SERVICES AGREEMENT
THIS ACCOUNTING SERVICES AGREEMENT (this "AGREEMENT") is made and entered
into as of February 1, 1999 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 AUTO PARTS EXPRESS, LLC, a Delaware limited liability
company ("AUTO PARTS"). 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, certain of its Affiliates and Auto Parts have entered into
an Asset Purchase Agreement, dated as of January 11, 1999 (the "ASSET PURCHASE
AGREEMENT"), pursuant to which Auto Parts 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, Auto Parts will conduct business at certain of the
Purchased Locations and, in connection therewith, Auto Parts desires to receive
limited accounting services from APS, as more fully described herein; and
WHEREAS, APS, as an accommodation to Auto Parts and at the request of Auto
Parts, desires to provide Auto Parts with such limited accounting services,
subject, in the sole discretion of APS, to the availability of the employees,
business locations, funding and equipment required therefor, as more fully
described 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. ACCOUNTING RELATED SERVICES TO BE PERFORMED.
1.1. GENERAL LIMITATION ON SERVICES AND ACCESS. All services and access to APS
facilities to be provided by APS pursuant to this Agreement shall be required to
be performed by APS only to the extent that the provision of such services and
access is feasible and shall also be subject to the availability of the APS
employees, business locations, funding and equipment necessary therefor. Auto
Parts expressly acknowledges and agrees that the determination of APS as to such
availability shall be dispositive on this issue.
1.2. ACCOUNTS PAYABLE SERVICES: APS hereby agrees to make available to Auto
Parts a total of three (3) APS clerks at APS' Memphis, Tennessee accounting
office (the "Memphis Office") to process Auto Parts' accounts payable allocable
to the Purchased
<PAGE>
Locations (the "Accounts Payable Clerks") for the period beginning on the day
immediately following the Closing Date and ending at the close of business on
March 31, 1999 (the "Accounting Services Period"). The scope of the services to
be provided by the Accounts Payable Clerks to Auto Parts shall be as set forth
on EXHIBIT A attached hereto, with all Auto Parts checks to be manually signed
by a representative or agent of Auto Parts designated in advance in writing to
APS (the "Accounts Payable Services"), PROVIDED, HOWEVER that the Accounts
Payable Services shall in no event include any services associated with the
review and follow up of invoice purchase price variances, and FURTHER PROVIDED,
that the scope of the Accounts Payable Services to be provided by the Accounts
Payable Clerks at the Memphis Office shall be limited to accounts payable
allocable to the Purchased Locations that were APS distribution centers
immediately prior to the Closing. During the Accounting Services Period, APS
shall use commercially reasonable efforts to provide reasonable supervision of
(i) the Accounts Payable Clerks at the Memphis Office and (ii) Auto Parts'
accounts payable personnel at APS' Houston, Texas accounting office (the
"Houston Office," and, together with the Memphis Office, the "Accounting
Offices").
1.3. ACCOUNTS RECEIVABLE SERVICES: Auto Parts intends to hire its own personnel
to process Auto Parts' accounts receivable allocable to the Purchased Locations.
During the Accounting Services Period, APS shall use commercially reasonable
efforts to provide reasonable supervision of the functions of the Auto Parts'
accounts receivable personnel set forth on EXHIBIT B attached hereto at the
Houston Office (the "Accounts Receivable Services").
1.4. GENERAL LEDGER SERVICES: From time to time during the Accounting Services
Period, as necessary, APS shall balance the "General Ledger" postings of the
"Accounts Payable System" for the purpose of updating such "General Ledger"
postings to reflect the changes set forth in the information provided to APS by
Auto Parts.
1.5. AUTO PARTS OBLIGATIONS AND ACKNOWLEDGMENTS: Auto Parts hereby agrees that
it will promptly provide APS, without requiring any request therefor from APS,
with any and all materials required by APS to provide the services contemplated
by this Agreement, including, but not limited to, data and records relating to
Auto Parts sales, cash flows, pricing, purchases, borrowings, and employees.
Auto Parts hereby acknowledges and agrees that the services to be provided by
APS under this Agreement shall in no event include any services not expressly
described herein or on the exhibits hereto, including, but not limited to, all
of the following: manual runs of checks for accounts payable, payroll processing
or accounting, inventory accounting, bank account reconciliation, month-end
financial statement reviews, credit and collections services or treasury
services. Auto Parts hereby agrees and acknowledges that the
<PAGE>
time for performance for any and all services to be performed by APS and/or its
employees under this Agreement shall, in all cases, be within such commercially
reasonable time as shall be determined by APS in good faith and in its sole and
exclusive discretion. Auto Parts hereby agrees and acknowledges that APS makes
no representation, warranty, agreement, commitment or covenant whatsoever as to:
(a) its ability to perform any services requested by Auto Parts at any time or
within the time desired by Auto Parts for completion of the performance of such
services; and (b) the accuracy or completeness or adequacy of any services or
information to be performed or provided by APS and/or its employees under this
Agreement. As a result, Auto Parts hereby expressly understands and acknowledges
that APS may fail to complete the accounting services necessary to be completed
for the operation of the business of Auto Parts by the time or in the manner
necessary for the performance of such services, and that neither APS nor its
employees shall have any liability whatsoever for such failure or for any other
reason under this Agreement.
1.6. ACCOUNTING SERVICES DEPOSIT: On the date of this Agreement, Auto Parts
shall deposit, by irrevocable wire transfer pursuant to written instructions
provided to Auto Parts by APS, an amount equal to $20,000 to be held by APS as
security for any amounts to be paid by Auto Parts for accounting services under
this Agreement (the "Accounting Services Deposit"). Auto Parts hereby
acknowledges and agrees that APS shall have the right at any time to withdraw
funds from the Accounting Services Deposit as contemplated by Section 3.2, and
at the end of the Accounting Services Period, APS shall return the unused
portion of the Accounting Services Deposit to Auto Parts .
1.7. DISCLAIMER OF WARRANTY: APS EXPRESSLY DISCLAIMS ALL WARRANTIES WITH RESPECT
TO THE ACCOUNTING SERVICES AND ACCESS TO ITS PREMISES TO BE PROVIDED UNDER THIS
AGREEMENT, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE,
OR ARISING BY USAGE OF TRADE OR COURSE OF DEALING. APS SHALL NOT BE LIABLE FOR
ANY PUNITIVE, SPECIAL, DIRECT, INDIRECT, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL
DAMAGES (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS,
BUSINESS INTERRUPTION OR ANY OTHER LOSS) ARISING FROM OR RELATING TO THE
PROVISION OF, OR FAILURE TO PROVIDE, ACCOUNTING SERVICES OR ACCESS TO ITS
PREMISES TO BE PROVIDED UNDER THIS AGREEMENT, WHETHER CLAIMED UNDER CONTRACT,
TORT OR ANY OTHER LEGAL THEORY.
1.8. AUTO PARTS ACCESS TO ACCOUNTING FACILITIES: APS shall, to the extent APS
retains rights in the premises of the Accounting Offices and subject to the sole
control of APS, allow employees of Auto Parts reasonable access during normal
business hours to the Accounting Offices for the sole purpose of processing
accounts receivable and accounts payable as contemplated by this Agreement. APS
hereby expressly reserves the sole and exclusive right to refuse to allow Auto
Parts employees access at any time and without notice if, in the reasonable
judgment of APS, allowing such access to the Auto Parts employees would
materially
-3-
<PAGE>
interfere with the business or operations of APS or create any liability for
APS.
1.9 INDEMNIFICATION: Auto Parts hereby agrees to defend, indemnify and hold
harmless each of APS, its employees and its subsidiaries and Affiliates, for any
and all damages, liability, loss, cost, claim, cause of action or expense
(including, but not limited to, all attorneys', consultants', and experts' fees,
including, but not limited to, any such fees incurred in any action or
proceeding between APS and Auto Parts) (each, a "Loss") arising out of, relating
to or resulting from any and all services contemplated to be performed by APS
hereunder, or access to APS facilities to be provided hereunder, that Auto Parts
and / or APS, or any of their respective subsidiaries, Affiliates, shareholders,
employees or principals, as applicable, shall at any time, or from time to time,
suffer or incur, including, but not limited to, any and all Losses attributable
to the negligence or recklessness of APS or its employees in performing services
or providing access to its facilities under this Agreement.
SECTION 2. FEES; PAYMENT FOR ACCOUNTING SERVICES
2.1. (a) In the manner and according to the schedule set forth in SECTION 2.2
hereof, Auto Parts shall pay APS a fee equal to twenty dollars ($20.00) per hour
worked by each Accounts Payable Clerk (the "SERVICES HOURLY FEE") for any and
all services to be provided by Accounts Payable Clerks hereunder, plus any
expenses as set forth in Section 2.3. To the extent any work performed in
connection with the accounting services to provided by an APS employee does not
require a full hour, then Auto Parts shall pay APS a portion of the Services
Hourly Fee equal to the product of the fractional portion of an hour actually
worked by an APS employee times the Services Hourly Fee. All Services Hourly
Fees and expenses incurred by Auto Parts shall be paid to APS in accordance with
Section 2.2.
(b) In addition to any and all other fees and expenses payable under this
Agreement, Auto Parts shall pay APS, in the manner and according to the schedule
set forth in SECTION 2.2 hereof, each of the following fees and costs: (i)
$1000.00 per month for access to and use of the Houston Office; (ii) $1000.00
per month for access to and use of the Memphis Office; (iii) $1000.00 per month
for supervisory services to be provided in connection with the Accounts Payable
Services at each of the Accounting Offices; and (iv) $1000.00 per month for
supervisory services to be provided in connection with the Accounts Receivable
Services at the Houston Office (such fees and costs set forth in clauses (i),
(ii), (iii) and (iv) collectively, the "Monthly Fees"). To the extent that APS
does not provide one full month of supervisory services or access to the
Accounting Offices, then Auto Parts shall pay APS a portion of the Monthly Fees
equal to the product of the fractional portion of the month
-4-
<PAGE>
for which supervisory services or access to the Accounting Offices was actually
provided times the applicable Monthly Fees.
2.2. APS shall separately provide Auto Parts with invoices, reflecting all fees
and expenses payable by Auto Parts pursuant to this Agreement for the prior
month and, Auto Parts shall pay APS the full amounts of such fees or expenses
described in such invoices, no later than five (5) business days after each
invoice date. All payments under this Agreement, including, but not limited to,
drawings on the Accounting Services Deposit, 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, Auto Parts shall timely pay
the undisputed portion of the invoice, on or before the due date for payment of
the charges. All overdue amounts payable under this Agreement 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 as reported in the WALL STREET JOURNAL for
the applicable dates; or (ii) the highest rate permitted by law.
2.3. In addition to any and all other amounts payable by Auto Parts to APS, Auto
Parts shall pay to APS an amount equal to the sum of (i) all reasonable direct
out-of-pocket fees and expenses incurred by APS in rendering any and all
services pursuant to this Agreement (including, but not limited to, travel,
messenger, courier, postage, copying, and facsimile expenses) 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 Auto Parts in the monthly invoices in accordance with SECTION 2.2.
SECTION 3. TERMINATION; REMEDIES
3.1. The obligations of APS to provide services pursuant to this Agreement shall
terminate at the end of the Accounting Services Period. 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. Upon termination of
this Agreement, pursuant to SECTIONS 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 immediately due and payable and all other obligations granted hereunder
shall terminate, except as provided in SECTIONS 1.9, 3.3 and 4.
3.2. In the event that Auto Parts fails to make any payment when due or
otherwise fails to perform any of its material obligations or breaches any of
its material covenants under this Agreement, the Asset Purchase Agreement or any
of the Ancillary Agreements,
-5-
<PAGE>
and such default is not cured within five (5) business days of APS giving Auto
Parts notice of such default, (i) APS may terminate this Agreement, and (ii) all
amounts owing by Auto Parts to APS under this Agreement as of the date of such
default, and all amounts owing by Auto Parts to APS under the Asset Purchase
Agreement and under the Ancillary Agreements shall become immediately due and
payable. In the event that Auto Parts fails to make any payment payable to APS
under this Agreement, the Asset Purchase Agreement, any of the Ancillary
Agreements, or any other agreement between APS and Auto Parts, in such amounts
and at such times as provided for herein or therein (including any applicable
cure periods), then any and all such amounts payable by Auto Parts to APS under
this Agreement, the Asset Purchase Agreement, the Ancillary Agreements and any
other agreement between APS and Auto Parts may, without prejudice to any other
rights or remedies APS may have against Auto Parts, be drawn by APS from the
Accounting Services Deposit (with appropriate invoices sent to Auto Parts
pursuant to SECTION 2.2) and/or from any deposit under the Asset Purchase
Agreement and the Ancillary Agreements, PROVIDED that with respect to amounts
payable under this Agreement, such amounts shall first be drawn from the
Accounting Services Deposit until the same is depleted, and then from any and
all deposits under the Asset Purchase Agreement and the Ancillary Agreements.
3.3. The sole and exclusive remedy available to Auto Parts in the event that APS
does not satisfy any of its obligations under this Agreement (other than by a
willful breach of this Agreement by APS), shall be addressed to correcting such
failure of APS to satisfy such obligations, and not to penalizing APS. In
recognition of this aim, Auto Parts' sole and exclusive remedy for such a
failure by APS to satisfy its obligations under this Agreement shall be that APS
shall, if and to the extent feasible, use commercially reasonable efforts to
satisfy such obligations within a commercially reasonable time, subject, in the
sole discretion of APS, to the availability of APS employees, funding, business
locations and equipment needed to allow APS to satisfy such obligations. APS
shall be excused from the corrective remedy set forth in this SECTION 3.3 if and
to the extent that: (i) APS' failure to satisfy its obligations pursuant to this
Agreement is a direct or indirect result of Auto Parts' breach of any agreement
in this Agreement or failure to timely and accurately perform its
responsibilities as set forth in this Agreement; or (ii) Auto Parts fails to
provide reasonable cooperation in completing performance and correcting the
problems that led to the failure at issue.
SECTION 4. CONFIDENTIALITY.
Each of Auto Parts and APS agrees 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
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<PAGE>
obligations hereunder (except that such information may be shared, on a
confidential basis, with the party's professionals and agents) and each 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, or any of the employees of 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 for any of the employees 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 for any of the employees 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 United States and
the State of Delaware without giving effect to the principles of conflict or
choice of laws thereof.
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.
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<PAGE>
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, Auto Parts shall provide APS personnel with
reasonable access to the Purchased Locations, including, without limitation,
office space, and telecommunications and computer equipment, systems and
software.
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 Act 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 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.
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<PAGE>
A.P.S., INC.
By: /s/ BETTINA M. WHYTE
Bettina M. Whyte, President
AUTO PARTS EXPRESS, LLC.
By: /s/ E. EUGENE LAUVER
E. Eugene Lauver
Executive Vice President
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EXHIBIT 2.17
TRADEMARK LICENSE AGREEMENT
TRADEMARK LICENSE AGREEMENT (this "Agreement") is entered into as of
February 1, 1999, by and between APS Management Services, Inc., a Delaware
corporation, with offices at 15710 John F. Kennedy Blvd., Suite 700, Houston,
Texas 77032, and a debtor and debtor-in-possession in a case pending under
Chapter 11 of the Bankruptcy Code ("Licensee"), and Auto Parts Express, LLC, a
Delaware limited liability company, with offices at c/o 15710 John F. Kennedy
Blvd., Suite 700, Houston, Texas 77032 ("Licensor"). Capitalized terms used but
not otherwise defined in this Agreement have the meanings given in the Asset
Purchase Agreement.
RECITALS
WHEREAS, in connection with the sale of certain assets (the
"Purchased Assets") by Licensee to Licensor pursuant to that certain asset
purchase agreement (the "Asset Purchase Agreement") dated as of January 11,
1999, and the assignment of the right, title and interest in and to the Marks,
subject to any and all rights of any parties other than Licensee in the Marks,
which such interests and rights may have arisen by prior grants by Licensee or
otherwise, by Licensee to Licensor pursuant to that certain Trademark Assignment
dated as of even date herewith (the "Trademark Assignment"), 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/or sale and leasing of automotive
replacement parts, accessories, supplies and other inventory, property, business
locations and fixed assets owned by Licensee on the Closing Date (the
"Business");
WHEREAS, as a result of the assignment by Licensee pursuant to the
Trademark Assignment of all of its right, title and interest in and to the
Marks, subject to any and all rights of any parties other than Licensee in the
Marks, Licensor is the owner of all right, title and interest in and to the
trademarks set forth on Schedule "A" attached hereto (the "Marks");
WHEREAS, Licensee wishes to use the Marks in connection with sales
of automotive parts inventory and other property of Licensee by methods
including, but not limited to, sales of business locations of Licensee,
liquidation or going out of business sales or other dispositions of inventory
and other goods of Licensee in bulk or in or outside of the ordinary course of
business; and
WHEREAS, Licensor wishes to grant Licensee a license to use the
Marks for the purposes set forth herein, including, but not limited to, sales of
automotive parts inventory and other property of Licensee by methods including,
but not limited to, sales of business locations of Licensee, liquidation or
going out of business sales and other dispositions of inventory and other goods
of Licensee in bulk or in or outside of the ordinary course of business.
<PAGE>
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, the parties 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 and Licensee's
subsidiaries and Affiliates: (a) a transferable, exclusive and royalty-free
license to use and sublicense the Marks for a period of six (6) months,
commencing on the date of this Agreement and terminating on the date occurring
six (6) months from the date of this Agreement (the "Licensee Exclusive
Period"), in those market areas for each location where Licensee, its
subsidiaries or Affiliates continues to conduct business or own or lease real
property in such market areas immediately following the Closing (the "Defined
Territory"); and (b) a transferable, non-exclusive and royalty-free license to
use and sublicense the Marks anywhere in the Defined Territory for a period of
eighteen (18) months, commencing on the termination of the Licensee Exclusive
Period and ending on the date occurring twenty four (24) months from the date of
this Agreement, with the option to extend the non-exclusive license for an
additional twelve (12) months upon thirty (30) days prior written notice to
Licensor given at any time prior to three hundred sixty (360) days after the
commencement of the Licensee Non-Exclusive Period as defined herein (the
"Licensee Non-Exclusive Period"); PROVIDED, HOWEVER that the exclusive license
granted herein shall not prohibit or restrict the use of the Marks by Licensor:
(i) in the Houston, Texas market area in connection with Licensor's corporate
office operations; (ii) in connection with sales to associate jobbers of the
Hartford Distribution Center, (iii) in any territory solely in connection with
the collection of the accounts allocable to (a) the Hartford Distribution Center
or (b) the Purchased Locations; or (iv) in connection with national advertising
or marketing efforts.
1.2. PERMITTED USE OF MARKS. Licensee's license to use the Marks
shall be limited to: (a) uses by Licensee, its agents or sublicensees relating
to the carrying on of the Business (including, without limitation, acquisitions
of inventory in the ordinary course of business) by Licensee and / or by such
agent or sublicensee who, by means of sales or transfers of assets or the
business locations of Licensee may, at any time within the Licensee Exclusive
Period or the Licensee Non-Exclusive Period, sell or otherwise dispose of assets
acquired from Licensee and / or conduct business at the business locations at
which Licensee continues to conduct business or own or lease real property
immediately following the Closing Date; and (b) any uses for which Licensee, its
agents or sublicensees may require use of the
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<PAGE>
Marks in connection with sales of automotive inventory or other property of
Licensee, by means of, including but not limited to, sales of the business
locations of Licensee, liquidation or going out of business sales, or other
dispositions in bulk or in the ordinary course of business of automotive
inventory or other property of Licensee (including, but not limited to,
dispositions by way of assignment, consignment or sales to third parties for the
purposes of liquidation and / or resale), PROVIDED, HOWEVER that so long as a
purchaser of Licensee's or any sublicensee's inventory is not conducting
business under any APS trade name or name of Licensor or holding itself out to
be an authorized agent of Licensor or Licensee, nothing contained in this
Agreement or the Trademark Assignment shall prohibit any such purchaser from
reselling or disposing of such property worldwide or require the grant of a
license hereunder for such purposes. Except as otherwise provided herein,
Licensee shall not use the Marks in a manner inconsistent with Licensee's past
practices in using the Marks or in a manner which materially disparages or is
materially detrimental to Licensor's assets or business. Licensee shall have the
right to sublicense and assign all, or any part, of its rights in the Marks
under this Agreement to any third party it reasonably and in good faith believes
will uphold the terms of this Agreement, PROVIDED, however that any such
sublicense or assignment shall: (i) provide for a right of termination and
recovery of damages from the respective sublicensee or assignee in the event of
a breach of the terms of this Agreement by such sublicensee or assignee; and
(ii) be enforceable by Licensor in the event Licensee fails or refuses to
enforce such sublicense or assignment. Licensor hereby acknowledges and agrees
that it hereby irrevocably waives any and all right of Licensor to object to the
assignment or sublicense by Licensee on such terms of all, or any part, of its
rights in the Marks under this Agreement to any third party that Licensee
reasonably and in good faith believes will uphold the terms of this Agreement.
Licensor hereby further acknowledges and agrees that nothing contained within
this Agreement shall entitle, or shall be construed to entitle, Licensor to any
portion of the proceeds of any sales or transfers by Licensee or any third party
of products or assets bearing the Marks.
2. RESERVATION OF LICENSOR'S RIGHTS. All rights in and to the Marks not
specifically granted to Licensee by this Agreement are reserved to Licensor.
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<PAGE>
3. OWNERSHIP OF MARKS.
3.1. RIGHTS IN MARKS. Licensee hereby acknowledges that the Marks
are the exclusive property of Licensor, subject to any and all rights or
interests of any parties other than Licensor in the Marks, which such rights or
interests may have arisen by prior grants by Licensee or otherwise and, except
as provided in or contemplated by this Agreement, none of Licensee, and, to the
extent their actions are within the control of Licensee, its subsidiaries or its
Affiliates, shall manufacture, market, advertise, promote, ship, distribute or
sell (or permit, to the extent that granting such permission is within the
control of Licensee, 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. None of Licensee, or any of its subsidiaries,
Affiliates, sublicensees, agents or subcontractors, has any right, title or
interest in or to the Marks other than the rights granted herein or authorized
hereby. Licensee agrees that it shall not take (or permit, to the extent that
granting such permission is within the control of Licensee, or cause to be
taken) any action to impair, attack or interfere with Licensor's rights in the
Marks and that all use of the Marks under or contemplated by this Agreement
shall inure solely to the benefit of Licensor. Licensee shall not seek to
register any of the Marks anywhere in the world.
During the Licensee Exclusive Period, Licensor shall not grant to
any third party any rights to use the Marks in the Defined Territory.
4. QUALITY CONTROL.
All goods and services distributed, sold and provided by Licensee
bearing the Marks shall be of standards of quality which are equivalent to those
standards used by Licensee in connection with the Business at the Closing Date.
Any private label goods which Licensee purchased from its customary
manufacturers, vendors or sources, prior to the Closing Date, which are in
Licensee's inventory prior to the Closing Date or which are returned to Licensee
or its agent by a third party for any reason other than the quality of such
goods after the Closing Date shall be deemed to meet Licensor's quality
standards. Subject to Paragraph 15(h), to the extent that sales and promotional
materials are not generally of the same kind or quality as those used by
Licensee prior to the Closing, all sales and promotional materials produced or
distributed by Licensee or its agents that include any of the Marks shall be
approved in advance by Licensor, which approval shall not be unreasonably
withheld. Any sales and promotional materials submitted to Licensor for approval
or disapproval shall be deemed approved if Licensor neither approves or
disapproves such material within five (5) business days after receipt by
Licensor.
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<PAGE>
5. ENFORCEMENT; INDEMNIFICATION.
5.1. LICENSOR REPRESENTATIONS; INDEMNIFICATION. Licensor represents
and warrants that: (i) it owns all right, title and interest in and to the
Marks, subject to any and all rights or interests whatsoever of any parties
other than Licensor in the Marks, which such rights or interests may have arisen
by prior grants by Licensee or otherwise; (ii) it has the right to grant to
Licensee the license of the Marks hereunder; (iii) 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 (iv), to its knowledge, the rights licensed
hereunder do not violate any obligations of Licensor to any third parties.
Licensor shall defend, indemnify and hold harmless Licensee and its
subsidiaries, Affiliates, sublicensees, subcontractors and officers, directors
and employees of each of the foregoing and each of them, against any and all
claims, demands, damages, losses and expenses in any amounts or of any nature
(including reasonable attorney's fees) which arise from or in connection with
any inaccuracy in or in connection with the breach of any of Licensor's
warranties, representations or obligations under this Agreement.
6. TERMINATION. This Agreement shall automatically terminate without prior
notice to Licensee at 5:00 p.m. Eastern time on the last day of the Licensee
Non-Exclusive Period. Solely as to any assignee or sublicensee that acquires
rights in the Marks subsequent to the date hereof (other than a Plan Assignee,
as hereinafter defined), Licensor shall have the right to terminate any
sublicense or assignment made pursuant to this Agreement if the respective
sublicensee or assignee is in material breach of any of the terms or conditions
of this Agreement and fails to cure such breach within twenty (20) days of
receipt of written notice of such breach from Licensor.
7. EFFECTS OF TERMINATION. Upon termination of this Agreement, all rights,
licenses and privileges granted hereunder to Licensee, its agents, subsidiaries
and its Affiliates shall automatically terminate and Licensee shall promptly:
(a) cease all use of the Marks in any form;
(b) cease representing itself as a licensee of Licensor; and
(c) promptly (or as soon as is practicable) 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 in its possession or control that contain any of the
Marks.
-5-
<PAGE>
8. 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 Licensor: Auto Parts Express, LLC
c/o 15710 John F. Kennedy Blvd.
Suite 700
Houston, Texas 77032-2347
Attention: E. Eugene Lauver
Facsimile No.: (713) 507-1326
With a copy Verner, Liipfert, Bernhard,
(which shall not McPherson and Hand, Chartered
constitute notice) 1111 Bagby, Suite 4700
to: Houston, Texas 77002
Attention: Keith Spickelmier
Facsimile No.: (713) 752-2199
If to Licensee: 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) New York, New York 10019-6099
to: Attention: Marc Abrams, Esq.
Facsimile No. (212) 728-8111
9. CONFIDENTIALITY. Each of Licensor and Licensee agrees 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
professionals and agents) and each 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
-6-
<PAGE>
which are in its possession. Notwithstanding the foregoing, Licensee shall be
permitted to provide copies of this Agreement to its lenders and the Bankruptcy
Court and to prospective sublicensees. This Paragraph 9 shall survive the
termination of this Agreement.
10. 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.
11. ASSIGNMENT. This Agreement shall be binding on the parties hereto and
on their respective successors and permitted assigns. Licensor hereby
acknowledges and agrees that Licensee may, upon five (5) days' notice to
Licensor, assign, transfer and / or hypothecate its obligations and / or rights
under this Agreement in whole or in part, directly or indirectly, by operation
of law or otherwise. Licensee shall give Licensor notice of all executed
sublicenses within twenty (20) days of execution thereof. Licensor hereby
expressly acknowledges and agrees that Licensee shall have the right to assign
all, or any part of, its rights and obligations hereunder to a liquidating trust
or other vehicle created pursuant to a plan of reorganization (such liquidating
trust or other vehicle, a "Plan Assignee").
12. GOVERNING LAW; VENUE. 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. For so long as
Licensee is subject to the jurisdiction of the Bankruptcy Court, the parties
hereto and all assignees and sublicensees permitted hereunder 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.
13. BREACH AND OPPORTUNITY TO CURE. Licensor hereby agrees and
acknowledges that it will promptly provide written notice to Licensee of any
breach or suspected breach by Licensee of the terms of this Agreement. Licensor
hereby agrees and acknowledges that Licensee shall have thirty (30) days' time
from the date of Licensee's receipt of such notice to cure any breach of this
Agreement before Licensor shall have any right to seek the remedies allotted
Licensor under the terms of this Agreement.
14. REMEDIES. Licensor expressly acknowledges and agrees that,
notwithstanding anything to the contrary contained in this Agreement, in the
event of Licensee's breach of this Agreement and subsequent failure to cure such
breach in the time allotted
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<PAGE>
Licensee to cure such breach under the terms of this Agreement, Licensor's sole
and exclusive remedy shall be: (a) to seek appropriate specific performance of
Licensee's obligations hereunder and; (b) solely to the extent that such breach
and continued use of the Marks would materially and adversely affect the
business of Licensor, to seek injunctive relief to prevent Licensee's continued
use of the Marks. Licensor hereby expressly acknowledges and agrees that
Licensee shall not be liable for any monetary damages, to which Licensor might
otherwise be entitled, as a result of any conduct by Licensee or its agents,
sublicensees or assigns under this Agreement, including, but not limited to,
sales of property of Licensee bearing the Marks following termination of this
Agreement. The limitations set forth in this Section 14 shall not apply to the
remedies of Licensor against any assignees or sublicensees of Licensee, other
than a Plan Assignee.
15. 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 5, 7, 9, 11, 12, 13, 14 and 15 hereof 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>
(h) Licensor hereby agrees and acknowledges that nothing in this
agreement shall, or shall be construed or interpreted to, limit or restrict in
any way the (1) price, quantity, and, except as to sales and promotional
materials, to the extent otherwise required by Paragraph 4 hereof, method or
means by which or in which Licensee may sell, assign or otherwise dispose of any
property of Licensee bearing the Marks and (2) the use of the Marks in legal
proceedings including the Chapter 11 cases of Licensee and its Affiliates.
Licensor hereby expressly agrees and acknowledges that nothing herein shall
prohibit Licensee or its agents from conducting "going out of business" or
similar type sales at business locations in the Defined Territory following the
Closing Date.
IN WITNESS WHEREOF, the authorized representatives of the Parties have
signed this Agreement as of the Closing Date:
AUTO PARTS EXPRESS, LLC, as Licensor
By: /s/ E. EUGENE LAUVER
Name: E. Eugene Lauver
Title: Executive Vice President
APS MANAGEMENT SERVICES, INC., as Licensee
By: /s/ BETTINA M. WHYTE
Name: Bettina M. Whyte
Title: President
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<PAGE>
SCHEDULE A
TRADEMARK REGISTRATIONS
MARK REG. NO. REG. DATE
- ---- -------- ---------
FREEZE-TEST 882,122 December 9, 1969
POWER 90 and Design 1,653,852 August 13, 1991
BIG A PLUS 1,709,036 August 18, 1992
"HUSKY" (Stylized) 559,898 June 10, 1952
A AMERICAN PARTS (Stylized) 776,950 September 15, 1964
VALU-TEST 864,239 January 28, 1969
BIG A 1,140,510 October 14, 1980
GENERAL SERVICE LINE 1,088,954 April 4, 1978
POWERREADY 1,332,869 April 30, 1985
STRAIGHT AWAY (Stylized) 1,541,510 May 30, 1989
BIG A (Stylized) 1,388,039 April 1, 1986
THE FIRST LETTER IN AUTO 1,374,295 December 3, 1985
PARTS
AUTOPRO 1,122,026 July 10, 1979
INSTALLERS' EXPRESS 1,840,109 June 14, 1994
AUTOPRO 1,869,237 December 27, 1994
A and Design 1,014,372 June 24, 1975
INSTALLERS' SERVICE WAREHOUSE 1,945,971 January 2, 1996
and Design
INSTALLERS' SERVICE WAREHOUSE 1,962,687 March 19, 1999
and Design
TIME IS THE NEW MONEY 2,010,795 October 22, 1996
I S W 2,021,267 December 3, 1996
HERO TEAM (Stylized) 2,010,023 October 22, 1996
TECHKNOWLEDGE (Stylized) 2,125,540 December 30, 1997
APS 1,341,411 June 11, 1985
<PAGE>
COMMON LAW TRADEMARKS
MARK DESCRIPTION OF MARK
---- -------------------
CARRYALL
TRAIL BLAZER
AUTOPRO PROFESSIONAL PARTS
PEOPLE and Design [GRAPHIC OMITTED - The graphic depicts
the image subject to the common
law trademark]
BIG A (Stylized) [GRAPHIC OMITTED - The graphic
depicts the image subject to the
common law trademark]
ISW UNDERCAR PARTS SPECIALISTS
and Design [GRAPHIC OMITTED - The graphic
depicts the image subject to
the common law trademark]
EXHIBIT 10.1.35
CONSENT, dated as of January 26, 1999 (this "CONSENT"), under 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 Borrower, the Guarantors, the Lenders and the Agent
are parties to the Credit Agreement;
WHEREAS, on January 11, 1999 the Debtors filed with the Bankruptcy
Court a "Motion For Orders: (A) Authorizing Sale of Certain Fixtures, Inventory,
Receivables, Equipment, Trademarks, and Other Assets Free and Clear of Liens and
Encumbrances, Pursuant to Section 363 of the Bankruptcy Code; (B) Authorizing
Assumption and Assignment of Certain Nonresidential Real Property Leases and
Other Executory Contracts Pursuant to Section 365 of the Bankruptcy Code; (C)
Approving Agreements to Provide Limited Services to the Purchaser Pursuant to
Section 363 of the Bankruptcy Code; (D) Approving Break-Up Fee and Expense
Reimbursement; (E) Approving Terms for Submission of Competing Offers; and (F)
Granting Related Relief" (the "AUTO PARTS EXPRESS SALE MOTION");
WHEREAS, pursuant to, and as more fully described in, the Auto Parts
Express Sale Motion, the Debtors propose to sell (the "AUTO PARTS EXPRESS SALE")
certain of their assets related to four (4) of the Debtors' regional
distribution centers and approximately 71 of the Debtors' stores and installers
service warehouses associated with such distribution centers, including without
limitation, inventory, accounts receivable, equipment and fixtures, pursuant to
an Asset Purchase Agreement, dated as of January 11, 1999 (including any
non-material amendment thereof, the "AUTO PARTS EXPRESS ASSET PURCHASE
AGREEMENT"), among certain of the Debtors and Auto Parts Express, LLC;
WHEREAS, in connection with the Auto Parts Express Sale Motion and
the Bankruptcy Court hearing to be held on January 29, 1999 to consider the Auto
Parts Express Sale, the Borrower has requested that the Lenders consent under
subsection 8.6 of the Credit Agreement to permit the Auto Parts Express Sale
pursuant to the Auto Parts Express Asset Purchase Agreement;
<PAGE>
WHEREAS, on October 9, 1998, the Bankruptcy Court entered an order
(the "STORE SALES ORDER"), approving the establishment of certain notice and
other procedures in connection with the potential sale of assets (including
without limitation, certain joint venture interests held by the Debtors)
associated with certain of the Debtors' store locations ("STORE SALES");
WHEREAS, pursuant to a Consent, dated as of October 8, 1998 (the
"EXISTING STORE SALES CONSENT"), the Lenders consented under subsection 8.6 of
the Credit Agreement to permit Store Sales, subject to the Borrower's compliance
with certain minimum price and other conditions as set forth in the Existing
Store Sales Consent;
WHEREAS, based upon the terms negotiated or being negotiated with
respect to several potential Store Sales, the Borrower has requested that the
Lenders modify the minimum price and other conditions to Store Sales set forth
in the Existing Store Sales Consent;
WHEREAS, pursuant to the Store Sales Order, the Borrower and General
Parts, Inc. have entered into a Stock and Asset Purchase Agreement, dated as of
January 14, 1999 (including any non-material amendment thereof, the "JOINT
VENTURE SALE AGREEMENT"), with respect to the sale of the Capital Stock owned by
the Debtors of certain corporations relating to the operation of approximately
seven (7) store locations, together with certain promissory notes payable by
such corporations to the Debtors (the "JOINT VENTURE SALE");
WHEREAS, the Borrower has requested that the Lenders consent under
subsection 8.6 of the Credit Agreement to permit the Joint Venture Sale pursuant
to the Joint Venture Sale Agreement because the nature of the assets being sold
pursuant to the Joint Venture Sale was not contemplated by the Existing Store
Sales Consent; and
WHEREAS, the Lenders are willing to agree to such requested
modification and consents, 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
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.CONSENTS UNDER SUBSECTION 8.6 (LIMITATION ON SALE OF ASSETS).
(a) Effective as of the date hereof, but subject to clauses (b) and (c) below,
the Lenders hereby consent under subsection 8.6 of the Credit Agreement solely
to the extent necessary to permit the Borrower:
(i) to consummate (A) the Auto Parts Express Sale in accordance with
the terms of the Auto Parts Express Asset Purchase Agreement and (B) the
Joint Venture Sale in accordance with the terms of the Joint Venture Sale
Agreement; and
<PAGE>
(ii) 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 Store Sales Order and as set forth below.
(b) The consents set forth in clause (a) above are conditioned upon
the following: (i) within one Business Day after the receipt of the Net Cash
Proceeds of the Auto Parts Express Sale, the Joint Venture Sale or any Store
Sale, as the case may be, the Borrower shall apply an amount equal to such Net
Cash Proceeds in accordance with subsection 4.8(d) of the Credit Agreement,
PROVIDED that any Excess Amounts generated from the Auto Parts Express Sale, the
Joint Venture Sale or any such Store Sale shall be used to fund the Cash Account
and repay the Tranche B Loans in accordance with Section 7 of the Fourth
Amendment, Sixth Waiver and Agreement, dated as of the date hereof, to the
Credit Agreement and (ii) no Default or Event of Default shall then have
occurred and be continuing or would result from consummation of the Auto Parts
Express Sale, the Joint Venture Sale or such Store Sale, as the case may be.
(c) The consent to Store Sales set forth in clause (a)(ii) above is
further conditioned upon the following: notwithstanding anything to the contrary
contained in the Existing Store Sales Consent, (i) the aggregate purchase price
for all Store Sales, inclusive of Store Sales permitted under the Existing Store
Sales Consent and consummated prior to the date hereof, shall not exceed
$12,000,000 and (ii) for any Store Sale consummated on or after the date hereof,
the purchase price for such Store Sale shall be payable in cash at closing and
shall not be less than the greater of (A) the sum of (x) 50% of the book value
of all inventory sold pursuant to such Store Sale, (y) 45% 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) 30% of the
book value of all fixed assets sold pursuant to such Store Sale and (B) with
respect to any such Store Sale set forth on Schedule I attached hereto, the sum
of the percentages of the book value (or the stated dollar amounts, as the case
may be) for such inventory, accounts receivable and fixed assets set forth for
such Store Sale on such Schedule I in the column entitled "Pricing".
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 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.
4. 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 Borrower, the Guarantors and the Required
Tranche A Lenders.
5. 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
<PAGE>
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.
6. MISCELLANEOUS.
(a) 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.
(b) This Consent shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
<PAGE>
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>
BANK ONE, N.A.
By:_________________________
Title:
CHASE SECURITIES INC., AS AGENT FOR
THE CHASE MANHATTAN BANK
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>
PPM AMERICA, INC., AS AGENT FOR
PPM AMERICA SPECIAL INVESTMENT
FUND, L.P.
By:_________________________
Title:
QUANTUM PARTNERS LDC
By:_________________________
Title:
SOCIETE GENERALE
By:_________________________
Title:
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By:_________________________
Title:
EXHIBIT 10.1.36
FOURTH AMENDMENT, SIXTH WAIVER AND AGREEMENT, dated as of January
26, 1999 (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 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 Borrower, the Guarantors, the Lenders and the Agent
are parties to the Credit Agreement;
WHEREAS, in connection with the occurrence of the Maturity Date
under the Credit Agreement on January 31, 1999, the Borrower has requested that
the Agent and the Lenders confirm and/or waive satisfaction of the conditions
contained in the definition of the term "Maturity Date" set forth in subsection
1.1 of the Credit Agreement to the extension to July 31, 1999 of the Maturity
Date;
WHEREAS, pursuant to the Fifth Waiver, Consent and Agreement, dated
as of January 15, 1999 (the "FIFTH WAIVER"), the Lenders agreed, among other
things, to waive until January 31, 1999 (a) Events of Default arising by reason
of the failure by the Borrower to comply with (i) subsection 8.1(a) (EBITDA) of
the Credit Agreement with respect to the months of September, October and
November, 1998 and (ii) subsection 8.1(b) (Excess Working Capital) of the Credit
Agreement with respect to the months of October, November and December, 1998 and
(b) any Default or Event of Default arising by reason of any failure by the
Borrower to comply with (i) subsection 8.1(a) (EBITDA) of the Credit Agreement
with respect to the month of December, 1998 and (ii) subsection 8.1(b) (Excess
Working Capital) of the Credit Agreement with respect to the month of January,
1999;
WHEREAS, in connection with the extension of the Maturity Date under
the Credit Agreement, the Borrower has requested that the Agent and the Lenders
agree (a) to waive until March 12, 1999 compliance by the Borrower with
subsections 8.1(a) and 8.1(b) of the Credit Agreement and (b) to amend certain
provisions of the Credit Agreement; and
WHEREAS, the Lenders are willing to agree to such requests, but only
upon the terms and conditions of this Amendment;
<PAGE>
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. EXTENSION OF MATURITY DATE. The Maturity Date under the Credit
Agreement is hereby extended to July 31, 1999 in accordance with the terms and
conditions contained in the definition of the term "Maturity Date" set forth in
subsection 1.1 of the Credit Agreement, PROVIDED that to the extent any such
conditions have not been satisfied, the Lenders hereby waive such conditions.
3. WAIVERS UNDER SUBSECTION 8.1 (FINANCIAL CONDITION Covenants).
(a) The Lenders hereby waive until March 12, 1999 (i) the Events of
Default arising by reason of the 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, October, 1998, November, 1998 and December 1998
fiscal months of the Borrower and (ii) 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 period ending on the last day of the
January, 1999 fiscal month of the Borrower.
(b) The Lenders hereby waive until March 12, 1999 the Events of
Default arising by reason of the failure by the Borrower to comply with
subsection 8.1(b) (Excess Working Capital) of the Credit Agreement during the
months of October, November and December, 1998 and January, 1999.
4. AMENDMENT TO SUBSECTION 1.1 (DEFINED TERMS). Subsection 1.1 of
the Credit Agreement is hereby amended by deleting the reference to "$3,000,000"
contained in the definition of the term "Letter of Credit Sublimit" and by
substituting in lieu thereof a reference to "$1,900,000".
5. AMENDMENT TO SUBSECTION 3.1 (LETTERS OF CREDIT). Subsection
3.1(a) of the Credit Agreement is hereby amended by deleting the reference to
"$3,000,000" contained in such subsection and by substituting in lieu thereof a
reference to "$1,900,000".
6. SUBSECTION 4.7 (OPTIONAL TERMINATION OR REDUCTION OF TRANCHE A
COMMITMENT). The Total Tranche A Commitment shall be permanently reduced to
$10,000,000 on the first Business Day after the Cash Account is fully funded in
accordance with the terms of Section 7(b) of this Amendment, which reduction
shall be applied on a PRO RATA basis to reduce the Tranche A Commitment of each
Tranche A Lender.
7. AMENDMENTS AND AGREEMENT WITH RESPECT TO SUBSECTION 4.8
(MANDATORY PREPAYMENT; COMMITMENT TERMINATION; USE OF CASH). (a) The paragraph
with respect to the establishment of the Cash Account added to subsection 4.8(a)
of the Credit
<PAGE>
Agreement pursuant to the Third Amendment, Consent and Second Waiver, dated as
of October 9, 1998, is hereby amended by (i) deleting the reference to
"$5,000,000" contained therein and by substituting in lieu thereof a reference
to "$15,000,000" and (ii) deleting the phrase "for general corporate purposes
and Inventory purchases" contained therein and by substituting in lieu thereof
the phrase "for general corporate purposes in connection with the orderly
wind-down of the Borrower and its Subsidiaries".
(b) Pursuant and subject to the terms of the Consent, dated as of
the date hereof (the "CONSENT"), under the Credit Agreement, the Lenders are
consenting to the consummation of the Auto Parts Express Sale, the Joint Venture
Sale and Store Sales (as each such capitalized term is defined in the Consent
and, collectively, the "PERMITTED ASSET SALES"). 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, the Required Tranche A Lenders hereby
consent (i) to the application of all Excess Amounts generated from the
Permitted Asset Sales as follows: (A) FIRST, to the deposit in the Cash Account
of an aggregate amount equal to $10,400,000 (the "DEPOSIT Amount"; representing
the difference between $15,000,000 and the $4,600,000 on deposit in the Cash
Account on the date hereof) and (B) SECOND, to the prepayment of the Tranche B
Loans with all Excess Amounts generated from the Permitted Assets Sales in
excess of the Deposit Amount and (ii) to the prepayment of the Tranche B Loans
with any Excess Amount generated on or before March 12, 1999 from funds on
deposit in the Cash Account in excess of $15,000,000.
8. AMENDMENTS TO SUBSECTION 7.2 (CERTIFICATES; OTHER INFORMATION ).
Subsection 7.2(d) of the Credit Agreement is hereby amended by:
(a) deleting the following clauses contained in such subsection:
", (ii) a Jobber count report, and (iii) for the week ending the
prior Saturday (A) a net sales flash report, (B) a Distribution
Center service level report and (C) a post-Petition Date trade
payables report, in each case with respect to this clause (iii),
substantially in the form delivered to the Financial Advisor prior
to the Petition Date."; and
(b) substituting in lieu thereof the following: "and (ii) a payroll
and personnel status report, in form and substance reasonably satisfactory to
the Financial Advisor".
9. AMENDMENT TO SUBSECTION 8.2 (LIMITATION ON INDEBTEDNESS). (a)
Subsection 8.2(c) of the Credit Agreement (permitted purchase money
Indebtedness) is hereby amended by deleting such subsection in its entirety and
by substituting in lieu thereof the following:
"(c) [Intentionally Omitted];".
(b) Subsection 8.2(d) of the Credit Agreement (permitted
insurance premium Indebtedness) is hereby amended by deleting the dollar amount
referenced therein and by substituting in lieu thereof a reference to
"$1,700,000".
<PAGE>
10. AMENDMENT TO SUBSECTION 8.9 (LIMITATION ON CAPITAL
EXPENDITURES). Subsection 8.9 of the Credit Agreement is hereby amended by
deleting the reference to "January 25, 1999" contained in such subsection and by
substituting in lieu thereof a reference to "July 25, 1999".
11. AMENDMENT TO SUBJECTION 8.11 (LOANS AND OTHER INVESTMENTS BY
AFCO). Subsection 8.11 of the Credit Agreement is hereby amended by deleting the
reference to "January 25, 1999" contained in such subsection and by substituting
in lieu thereof a reference to "July 25, 1999".
12. AMENDMENT TO SECTION 9 (EVENTS OF DEFAULT). Section 9 of the
Credit Agreement is hereby amended by adding immediately after paragraph (r) of
such Section the word "or" and the following new paragraph (s):
"(s) The Auto Parts Express Sale (as defined in the Consent
dated as of January 26, 1999 under this Agreement) shall not have
been consummated on or prior to February 8, 1999;".
13. ADDITIONAL LIMITATIONS ON BORROWING AND WITHDRAWAL FROM CASH
ACCOUNT; COMPLIANCE WITH DISBURSEMENTS BUDGET.
(a) Notwithstanding anything to the contrary contained in the Credit
Agreement, but subject to paragraphs (b) and (c) below, the Borrower shall not
have the right to, and shall not, request a borrowing of Tranche A Loans, a
withdrawal of funds from the Cash Account, or the issuance of a Letter of Credit
if, after giving effect to such borrowing, withdrawal or issuance, as the case
may be, the sum of the Aggregate Tranche A Outstandings PLUS the aggregate
amount of all funds withdrawn from the Cash Account on or after January 26, 1999
(other than funds constituting Excess Amounts withdrawn and applied to the
prepayment of the Tranche B Loans in accordance with subsection 4.8(d) of the
Credit Agreement) shall exceed $9,000,000.
(b) Nothing contained in this Waiver shall be deemed to affect the
obligations of the Borrower to comply with all of the terms and conditions of
the Credit Agreement, including without limitation, the requirement contained in
subsection 4.8(a) of the Credit Agreement that the Borrower utilize all funds
from time to time on deposit in the Cash Account prior to the borrowing of any
Tranche A Loan.
(c) The Borrower shall not permit the total of all cash
disbursements (such cash disbursements, exclusive of professional fees and
expenditures on account of severance, vacation and retention programs approved
by the Bankruptcy Court, "TOTAL CASH DISBURSEMENTS") by the Borrower and the
Guarantors during any week covered by the disbursements budget, attached hereto
as Exhibit A (the "DISBURSEMENTS BUDGET"), to exceed an amount (the "PERMITTED
DISBURSEMENTS AMOUNT") equal to the sum of (i) the amount for such week set
forth on the Disbursements Budget (A) in the column entitled "Total Operating
Expenses", PLUS (B) in the column entitled "Permitted Variance", PLUS (ii) the
amount, if any, by
<PAGE>
which "Total Operating Expenses" set forth on the Disbursements Budget for each
of the immediately preceding two weeks exceeds the Total Cash Disbursements
during such week.
(d) Simultaneously with the delivery on Wednesday of each calendar
week to the Agent and each Lender of the financial and other reports required to
be delivered pursuant to subsection 7.2(d) of the Credit Agreement, the Borrower
shall furnish to the Agent and each Lender, a compliance certificate, certified
by a Responsible Officer of the Borrower as true and correct, certifying
compliance with paragraph (c) of this Section 13 for the immediately preceding
week, together with a comparison of Total Cash Disbursements for such week to
the Permitted Disbursements Amount for such week.
(e) The Borrower and the Guarantors hereby agree that the failure of
the Borrower to comply with its obligations set forth in this Section 13 shall
constitute an immediate Event of Default under paragraph (c) of Section 9 of the
Credit Agreement.
14. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. After giving effect
to this Amendment, the Borrower and the Guarantors 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.
15. CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT. This Amendment
shall become effective as of the date hereof upon receipt by the Agent of
counterparts of this Amendment duly executed by the Borrower, the Guarantors and
the Supermajority Tranche A Lenders.
16. 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.
17. 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>
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>
BANK ONE, N.A.
By:_____________________________
Title:
CHASE SECURITIES INC., AS AGENT FOR
THE CHASE MANHATTAN BANK
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>
PPM AMERICA, INC., AS AGENT FOR
PPM AMERICA SPECIAL INVESTMENT
FUND, L.P.
By:__________________________
Title:
QUANTUM PARTNERS LDC
By:__________________________
Title:
SOCIETE GENERALE
By:__________________________
Title:
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By:__________________________
Title:
EXHIBIT 99.7
APS 15710 JOHN F. KENNEDY BLVD.
SUITE 700
HOUSTON, TX 77032-2347
(713) 507-1100
FOR IMMEDIATE RELEASE
APS HOLDING CORPORATION ANNOUNCES
SALE OF CERTAIN ASSETS TO AUTO PARTS EXPRESS, LLC
SALE WILL FURTHER REDUCE BANK DEBT
Houston, TX (January 11, 1999) -- APS Holding Corporation (OTC-BB: APSIQ)
announced today that it has entered into an agreement with Auto Parts Express,
LLC, for the sale of 4 distribution centers and the assets of 76 company-owned
stores. The proposed transaction, which is subject to bankruptcy court approval
and certain other conditions, is expected to realize approximately $30 million
and is anticipated to close by the end of January. The funds will be used by APS
to further reduce its bank debt.
The purchaser for the proposed sale, Auto Parts Express, LLC ("Auto Parts
Express"), will operate under the Big A brand name. The newly formed company
represents a team of current and former APS management, led by Mike Preston
Senior Vice President Sales/Company Stores/Marketing; Dave Barbeau - Senior Vice
President Operations; and Gene Lauver - former Senior Vice President and General
Counsel. The distribution centers to be acquired are located in Albany, New
York; Boston, Massachusetts; Charlotte, North Carolina; and East Moline,
Illinois.
According to Bettina M. Whyte, Chief Executive Officer of APS, "During the
pre-closing period, APS will continue to operate the assets and will operate its
business at these locations in the normal manner. Additionally, APS expects that
most of the affected employees will be offered positions with the acquiring
company."
APS 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.
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. It sells to approximately 600 associated auto parts
stores through 9 distribution centers (including the 4 being sold as discussed
above) and operates approximately 153 company-owned stores (including the 76
being sold as discussed above) under the Big A and Big A Express trade names.
<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
