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Exhibit 99.1
EXECUTION COPY
PURCHASE AGREEMENT
Among
CSK AUTO, INC.
and
TRAK AUTO CORPORATION,
TRAK CORPORATION D/B/A TRAK AUTO CORPORATION I
and
SUPER TRAK CORPORATION
October 6, 1997
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PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement") is made and entered into as of
October 6, 1997 among CSK Auto, Inc., an Arizona corporation ("Buyer"), Trak
Auto Corporation, a Delaware corporation ("Trak"), Trak Corporation D/B/A Trak
Auto Corporation I, a Delaware corporation and a wholly-owned subsidiary of Trak
("Trak Co"), and Super Trak Corporation, a Delaware corporation and a
wholly-owned subsidiary of Trak ("Super Trak" and collectively with Trak Co,
"Seller").
RECITALS
WHEREAS, prior to the Closing (as defined below) Seller will form, and
own all of the membership interests (the "Interests") of, Newco L.L.C., a
California limited liability company (the "Company");
WHEREAS, Seller operates retail discount auto parts stores under the
Trak Auto, Super Trak and Super Trak Warehouse names;
WHEREAS, Seller currently operates the 80 Trak Auto, Super Trak and
Super Trak Warehouse stores in the Los Angeles metropolitan area that are
identified on Schedule A hereto (the "LA Stores");
WHEREAS, Seller also currently operates 12 other retail discount auto
parts stores in the Los Angeles metropolitan area that are identified on
Schedule B hereto, the leases for which will expire, without right to renew,
within 8 months hereof (the "Non-Renewal Stores");
WHEREAS, prior to the Closing, Seller shall transfer to the Company
certain assets relating to the business conducted at the LA Stores and the
Non-Renewal Stores (the "Business") consisting primarily of "Inventory",
"Leases" and "Fixtures" as such terms are defined herein;
WHEREAS, Seller desires to assign to Buyer, and Buyer desires to acquire
and assume from Seller, the Interests; and
WHEREAS, it is expressly understood that, except as expressly herein
provided to the contrary, neither the Company nor Buyer shall assume or
otherwise be liable with respect to Excluded Liabilities (as defined below);
AGREEMENT
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements, and upon the terms and subject to the conditions,
hereinafter set forth, the parties hereby agree as follows:
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ARTICLE I
TERMS OF PURCHASE AND SALE
1.01. ASSIGNMENT AND ACQUISITION OF THE INTERESTS.
At the Closing, upon the terms and subject to the conditions set forth herein,
Seller shall assign to Buyer, and Buyer shall acquire and assume from Seller,
all of the Interests.
1.02. THE CLOSING.
(a) The closing of the transactions contemplated hereby (the "Closing")
shall take place at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxxx Xxxxx
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx, commencing at 10:00 a.m. local time, on
December 8, 1997, or at such other time and/or place, as the parties may
mutually agree (the "Closing Date").
(b) On the business day immediately preceding the Closing Date, the
parties shall conduct a pre-closing at the offices of Xxxxxx, Xxxx & Xxxxxxxx
LLP, commencing at 10:00 a.m., at which each party shall present for review by
the other party copies, in execution form, of all documents required to be
delivered by such party at the Closing.
(c) At the Closing, upon the terms and subject to the conditions set
forth herein, Seller shall deliver or cause to be delivered to Buyer:
(i) certificates representing the Interests, duly endorsed in
blank for transfer or accompanied by duly executed stock powers
assigning the Interests in blank;
(ii) resignations of the managers of the Company;
(iii) originally executed versions of the Leases if possessed by
Seller, and true and complete copies of the other Leases, and originally
executed versions of all documents relating to the contribution of the
Assets (as defined below) to the Company; and
(iv) such other documents and instruments as Buyer or its
counsel deems reasonably necessary or desirable to effectuate the
transactions contemplated by this Agreement.
(d) At the Closing, upon the terms and subject to the conditions of this
Agreement, Buyer shall deliver to Seller:
(i) the Closing Payment (as defined in Section 1.03); and
(ii) such other documents and instruments as Seller or its
counsel deem reasonably necessary or desirable to effectuate the
transactions contemplated hereby.
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1.03. PURCHASE PRICE AND PAYMENT.
(a) The aggregate purchase price to be paid by Buyer to Seller for the
Interests shall be equal to Thirty-Eight Million Dollars ($38,000,000), subject
to reduction (but not increase) as provided below (the "Purchase Price"). Buyer
shall pay $34,200,000 (or such lesser amount as may be determined pursuant to
the Estimated Inventory Statement (as defined below)) to Seller on the Closing
Date (the "Closing Payment") by wire transfer of immediately available funds to
an account or accounts of Seller at a bank or banks specified by Seller no later
than three business days prior to the Closing Date. Upon determination of the
Purchase Price as hereinafter provided, Buyer shall pay to Seller, or Seller
shall pay to Buyer, as the case may be, the amount owing (the "Final Payment").
(b) Not more than three weeks prior to the Closing, Seller shall be
responsible for the conduct of a physical inventory count of each LA Store,
which physical inventory count shall be conducted by Inventory Auditors (the
"Inventory Consultant"), provided that the Inventory Consultant will be able to
provide sufficient personnel to conduct the physical inventory counts in the
specified time frame. The fees and disbursements of the Inventory Consultant
shall be paid 50% by Seller and 50% by Buyer. Buyer shall be entitled to have
loss prevention and inventory management personnel monitor each of the LA Stores
for purposes of loss-prevention and inventory management between the times that
the physical inventory count is conducted at such store and the Closing. Upon
completion of the physical inventory count of all of the LA Stores, and
immediately prior to the Closing, the Seller shall conduct a physical inventory
count of the Distribution Center. Representatives of both Seller and Buyer shall
be entitled to monitor the physical inventory count at the LA Stores and the
Distribution Center, and each shall confirm by signature their respective
concurrence with such physical inventory counts. On the day immediately
preceding the Closing Date, Seller shall deliver to Buyer a detailed estimated
statement of the physical count of the Inventory as of the close of business on
the Saturday preceding the Closing Date, based upon the physical inventory count
of the LA Stores conducted by the Inventory Consultant, as adjusted in
accordance with the terms set forth in Schedule C, and upon the physical
inventory count of the Distribution Center conducted by Seller (the "Estimated
Inventory Statement"). The Estimated Inventory Statement shall also set forth
the estimated Inventory Value (as defined in Schedule D) and the estimated
Purchase Price determined pursuant to Schedule D. If the estimated Purchase
Price is less than $38,000,000, then the Closing Payment shall equal 90% of the
estimated Purchase Price rather than $34,200,000.
(c) Within fifteen (15) days of the Closing, Seller shall finalize its
determination of the Inventory in the LA Stores and the Distribution Center as
of the close of business on the Saturday preceding the Closing Date based on the
physical inventory counts conducted pursuant to paragraph (b) above, and shall
deliver to Buyer a detailed statement of such Inventory (the "Final Inventory
Statement"). The Final Inventory Statement shall also set forth the Inventory
Value, and the Purchase Price and the resulting Final Payment amount determined
pursuant to Schedule D. The Purchase Price determined based on the Inventory
Value shall be binding upon each of Buyer and Seller for all purposes, and
Seller shall pay to Buyer or Buyer shall pay to Seller, the Final Payment in
immediately available funds within fifteen (15) days after the delivery of such
Final Inventory Statement, unless, within such fifteen-day period, Buyer gives
written notice of disagreement specifying in reasonable detail the nature and
extent of such disagreement, at which time Buyer shall pay to Seller the portion
(if any) of the remaining Purchase Price
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that is not in dispute. If Buyer and Seller are unable to resolve any such
disagreement within thirty (30) days after Buyer gives Seller notice thereof,
the disagreement shall be referred for final determination to KPMG Peat Marwick
or, if such firm declines to act, to any other accounting firm of national
reputation as may be reasonably acceptable to Buyer and Seller. Buyer and Seller
may submit to such accounting firm any facts which they deem relevant to the
determination, and the determination of such accounting firm shall be
conclusive, non-appealable and binding upon Buyer and Seller for all purposes.
Such accounting firm shall resolve any disputes in an informal proceeding with
rules to be established by such firm. Buyer and Seller agree that judgment may
be entered upon the determination of such accounting firm in any court having
jurisdiction over the party against which such determination is to be enforced.
Seller and Buyer shall each pay the fees and disbursements of their respective
internal and independent accountants, counsel and other personnel incurred in
the initial preparation, review and final determination of the Purchase Price.
The fees and disbursements of the accounting firm to which any disagreement is
referred to shall be borne 50% by Seller and 50% by Buyer.
1.04. CERTAIN DEFINED TERMS.
The following terms shall have the following meanings:
(a) "Assets" means the Inventory, Leases, Fixtures and any other rights
and assets to be owned by the Company as of the Closing;
(b) "Distribution Center" means Seller's distribution center located in
Ontario, California;
(c) "Fixtures" means all furniture, trade fixtures and equipment located
in the LA Stores and the Non-Renewal Stores as of the date hereof (or in the
case of store No. 154, "Fixtures" heretofore delivered to the Distribution
Center), together with any additional furniture, trade fixtures and equipment
installed in the LA Stores prior to the Closing;
(d) "Inventory" means all inventory that is present in the LA Stores or
in the Distribution Center as of the Closing;
(e) "Leases" means the agreements under which the LA Stores are used by
Seller in the Business together with all related rights of Seller, including any
deposits and rights in any improvements; and
(f) "Regional Office" means Seller's regional office located in Ontario,
California.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TRAK AND SELLER
Trak and Seller hereby represent and warrant to Buyer as follows:
2.01. ORGANIZATION.
Upon its formation, the Company will be a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
California and will have all requisite power and authority to own its properties
and carry on its activities as will be conducted prior to Closing.
2.02. POWER AND AUTHORITY; EFFECT OF AGREEMENT.
Each of Trak and Seller have, and the Company will have, all requisite
power and authority to execute, deliver and perform this Agreement and all other
agreements, certificates, instruments and other documents to be executed and
delivered by it in connection herewith (collectively, the "Ancillary
Documents"), as the case may be, and to consummate the transactions contemplated
hereby and thereby. This Agreement has been duly and validly executed and
delivered by each of Trak and Seller and constitutes the valid and binding
obligation of Trak and Seller, and each such Ancillary Document, upon execution
and delivery by Trak, Seller or the Company, will constitute the valid and
binding obligation of Trak, Seller or the Company, as the case may be, in each
case enforceable against Trak, Seller or the Company, as the case may be, in
accordance with its terms, except to the extent that such enforceability (i) may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally and (ii) is subject to
general principles of equity. The execution, delivery and performance by Trak
and Seller of this Agreement, the execution, delivery and performance by Trak,
Seller or the Company of such Ancillary Documents to which it is a party, and
the consummation by each of Trak, Seller and the Company of the transactions
contemplated hereby and thereby will not, with or without the giving of notice
or the lapse of time, or both, (A) subject to compliance with the applicable
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), violate or conflict with any provision of law, rule or
regulation to which Trak, Seller or the Company is subject or by which any of
the property of Trak, Seller or the Company is bound, (B) violate or conflict
with any order, judgment or decree applicable to Seller or the Company, or (C)
violate or conflict with any provision of the organizational documents of Trak,
Seller or the Company.
2.03. CONSENTS.
No consent, approval or authorization of, or exemption by, or filing
with, any governmental department, bureau or agency or other public board or
authority is required in connection with the execution, delivery and performance
by Trak, Seller or the Company of this Agreement or the Ancillary Agreements, or
the taking of any other action contemplated hereby and thereby, excluding,
however, compliance with the HSR Act and consents, approvals, authorizations,
exemptions and filings, if any, that Buyer is required to obtain or make.
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2.04. CAPITALIZATION.
Upon the formation of the Company, one hundred percent of the membership
interests of the Company will be owned of record and beneficially by Seller; all
of the Interests will have been duly authorized and will be validly issued,
fully paid and non-assessable; and there will be outstanding no securities
convertible into, exchangeable for, or carrying the right to acquire, membership
interests or other equity interests in the Company, or subscriptions, warrants,
options, rights, calls, agreements, demands or other arrangements or commitments
of any character obligating the Company to issue or dispose of any of its
membership interests or other equity interests or any ownership interest therein
or otherwise relating to the membership interests of the Company.
2.05. TITLE TO INTERESTS.
The assignment of the Interests by Seller and the acquisition and
assumption of the Interests by Buyer pursuant to this Agreement will vest in
Buyer legal and valid title to such Interests, free and clear of any and all
liens, security interests, pledges, mortgages, charges, limitation, claims,
restrictions, rights of first refusal, rights of first offer, rights of first
negotiation or other encumbrances of any kind or nature whatsoever
(collectively, "Encumbrances"), other than Encumbrances (if any) created by
Buyer.
2.06. ASSETS AND LIABILITIES OF THE COMPANY.
(a) On the date hereof, the Company has no assets or liabilities of any
nature, has no employees, and has not conducted any business.
(b) Immediately prior to and as of the Closing, the Company shall (i)
have good and valid title to the Assets, free and clear of any and all
Encumbrances, except (A) liens for Taxes not yet due or being contested in good
faith by appropriate proceedings, and (B) such Encumbrances relating to the
Leases of the LA Stores as (x) are set forth in the Leases themselves, (y)
consist of deeds of trust or other Encumbrances on the fee interests or, where
applicable, master leasehold interests from which the Leases were derived, or
(z) are not substantial in amount, character or extent and do not detract from
the value, or interfere with the use, of the LA Stores in any material respect
("Permitted Encumbrances"); (ii) have no assets other than the Assets; (iii)
have no liabilities or obligations of any nature (absolute, accrued, contingent
or otherwise), whether due or to become due (including, without limitation, any
liability for taxes and interest, penalties or other charges payable with
respect to any such liability or obligation), whether or not required to be
reflected or reserved against on a balance sheet prepared in accordance with
GAAP, other than the obligations under the Leases; (iv) have no employees; and
(v) conduct no business other than the Business.
2.07. LEASEHOLD INTERESTS.
Seller has previously delivered to Buyer a true, correct and complete
copy of each of the Leases, as amended to date. Each of the Leases is in full
force and effect. With respect to each of the Leases, there exists no default by
Seller or, to the knowledge of Seller, by any lessor or third party thereunder,
that has affected or could reasonably be expected to materially affect the
rights and privileges thereunder of Seller or upon assignment to it, the
Company. No party to any Lease has given Seller written or, to the knowledge of
Seller, oral notice of or made any claim with respect to any breach or default
with respect
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to any such Lease, except such as have been cured or waived. Seller has not
entered into any sublease, license or other agreement granting to any person or
entity any right to the use, occupancy or enjoyment of, or the right to
purchase, any LA Store or any portion thereof. To the knowledge of Seller, the
current use and operation of the LA Stores is in material compliance with all
applicable laws (including, without limitation, laws relating to zoning and land
use and to the protection of human health and the environment) and public and
private covenants and restrictions, and Seller has not received any notice of
material non-compliance with any applicable laws, nor, to the knowledge of
Seller, is there any valid basis for such a notice. All material certificates of
occupancy, permits and licenses of all governmental authorities having
jurisdiction over the LA Stores required to have been issued to enable the LA
Stores to be lawfully occupied and used for all of the purposes for which the LA
Stores are currently occupied and used have been lawfully issued and are in full
force and effect. To the knowledge of Seller, there exists no restrictive
covenant, ordinance or land use restriction that could reasonably be expected to
materially detract from the use or value of the LA Stores and the Leases. Seller
has not received any written notification of any pending, threatened or
contemplated condemnation proceeding affecting the LA Stores or any portion
thereof. For the purposes of this Agreement, "the knowledge of Seller" shall
refer to actual knowledge of any of the individuals listed in Schedule 2.07.
2.08. INVENTORY.
Except for Non-Salable Inventory (as defined in Schedule D), all
Inventory which is reflected on the inventory statement related to the Business
prepared by Seller as of August 2, 1997 and attached hereto as part of Schedule
2.08 (the "August Inventory Statement") consisted of, and all Inventory which
will be reflected on the Final Inventory Statement will consist of, items of a
quantity and quality normally salable in the ordinary course of operation of the
Business. The value at which the Inventory is reflected on the August Inventory
Statement was determined in accordance with GAAP in a manner consistent with
previous years. All current orders for Inventory were made in the ordinary
course of business and represent quantities typically ordered for sale by the
Business in the ordinary course. As of the date hereof and as of the Closing
Date, all of the Inventory will be owned by Seller and the Company,
respectively, and none of such Inventory is or will be held on consignment.
2.09. FINANCIAL INFORMATION.
Schedule 2.09 sets forth the sales and profit contributions for the LA
Stores as a group for the fiscal periods set forth therein, as well as the fixed
asset accounts of the LA Stores as a group and the Non-Renewal Stores as a group
as of the end of said fiscal periods. The financial information set forth on
Schedule 2.09 is accurate in all material respects.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
3.01. ORGANIZATION.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the state of Arizona, and has all requisite corporate
power and authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby, and is duly qualified to
transact business as a foreign corporation and is in good standing in the State
of California.
3.02. CORPORATE POWER AND AUTHORITY; EFFECT OF AGREEMENT.
The execution, delivery and performance by Buyer of this Agreement and
all other agreements, certificates, instruments and other documents to be
executed and delivered by it in connection herewith (the "Buyer Ancillary
Documents") and the consummation by Buyer of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Buyer. This Agreement has been duly and validly executed and
delivered by Buyer and constitutes a valid and binding obligation of Buyer, and
the Buyer Ancillary Documents, upon execution and delivery by Buyer, will
constitute valid and binding obligations of Buyer, in each case enforceable
against Buyer in accordance with its terms, except to the extent that such
enforceability (i) may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally and
(ii) is subject to general principles of equity. The execution, delivery and
performance by Buyer of this Agreement and the Buyer Ancillary Documents and the
consummation by Buyer of the transactions contemplated hereby and thereby will
not, with or without the giving of notice or the lapse of time, or both, (A)
subject to compliance with the HSR Act, violate or conflict with any provision
of law, rule or regulation to which Buyer is subject, (B) violate or conflict
with any order, judgment or decree applicable to Buyer or (C) violate or
conflict with any provision of the Certificate of Incorporation or the Bylaws of
Buyer.
3.03. CONSENTS.
No consent, approval or authorization of, or exemption by, or filing
with, any governmental department, bureau or agency or other public board or
authority is required in connection with the execution, delivery and performance
by Buyer of this Agreement or the Buyer Ancillary Agreements, or the taking of
any other action contemplated hereby or thereby, excluding, however, compliance
with the HSR Act and consents, approvals, authorizations, exemptions and
filings, if any, that Seller or the Company is required to obtain or make.
3.04. STATUS OF BUYER.
Buyer is an "accredited investor" as defined in Rule 501(a) promulgated
under the Securities Act of 1933, as amended, and is acquiring and assuming the
Interests for investment, and not with a view to a distribution in violation of
the Securities Act of 1933, as amended.
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ARTICLE IV
COVENANTS OF TRAK AND SELLER
4.01. COOPERATION BY TRAK, SELLER AND THE COMPANY.
From the date hereof until the Closing, Trak and Seller will, and will
cause the Company to, use all reasonable efforts, and cooperate with Buyer, to
secure all necessary consents, approvals, authorizations, exemptions and waivers
from third parties as shall be required in order to effectuate the transactions
contemplated hereby, and will otherwise use all reasonable efforts to cause the
consummation of such transactions in accordance with the terms and conditions
hereof.
4.02. CONDUCT OF BUSINESS.
Except with the prior written consent of Buyer, from the date hereof
through the Closing, Trak and Seller will, and, to the extent applicable, will
cause the Company to: (a) operate the Business only in the ordinary course
consistent with past practice, including the maintenance of an inventory mix
consistent with past practice, provided that nothing herein shall preclude
Seller from closing the Non-Renewal Stores; (b) use all reasonable efforts to
preserve intact the Business and the Assets (other than the sale of Inventory in
the normal course), including the continued purchase of advertising relating to
the Business in the ordinary course consistent with past practice; (c) use all
reasonable efforts to preserve relationships with lessors, suppliers, customers,
licensors and licensees and others having business dealings with the Business or
the Company; (d) not terminate, amend or alter in any way any of the Leases; and
(e) notify Buyer in writing at least 10 days prior to the expiration thereof of
any option, renewal or other right under any of the Leases as to which the right
to exercise will expire prior to or within 10 days following the Closing Date,
and exercise (or decline to exercise) such right as directed by Buyer.
4.03. ACCESS.
From the date hereof and prior to the Closing, Trak, Seller and the
Company shall (a) provide Buyer and its representatives with such information as
Buyer or its representatives may from time to time reasonably request with
respect to the Assets, the Business and the Company and the transactions
contemplated by this Agreement, (b) provide Buyer and its representatives
reasonable access during regular business hours and upon reasonable notice to
the properties, books and records of Seller and the Company as Buyer or its
representatives may from time to time reasonably request, (c) cooperate in
providing access to all information necessary or advisable in order to permit
Buyer and its representatives to examine the pre-Closing physical count of the
Inventory, and (d) permit Buyer and its representatives to discuss the Business
with Trak and Seller's officers, employees and suppliers; provided, however,
that Buyer will hold in confidence all documents and information so furnished in
accordance with the confidentiality agreement between Buyer and Trak dated March
25, 1997 (the "Confidentiality Agreement").
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4.04. TRANSFER OF INVENTORY AND LEASES AND CERTAIN RELATED ASSETS TO
COMPANY.
Prior to the Closing, Trak and Seller shall contribute and transfer to
the Company, free and clear of any Encumbrances, all: (a) of the Inventory,
Leases and Fixtures; (b) licenses, permits, franchises and other authorizations
relating to the foregoing which can be transferred to the Company; and (c)
employee records (subject to compliance with privacy laws), Lease files,
customer records and summary historical store and Distribution Center financial
records to the extent relating to the Business. Prior to the Closing, Trak and
Seller shall deliver to the Distribution Center and shall appropriately
segregate all of the Fixtures in the aggregate from the Non-Renewal Stores.
4.05. FURTHER ASSURANCES.
At any time or from time to time after the Closing, Seller shall, at the
request of Buyer or Buyer's counsel, execute and deliver any further instruments
or documents and take all such further action as Buyer or Buyer's counsel may
reasonably request in order to evidence or otherwise facilitate the consummation
of the transactions contemplated hereby.
4.06. TERMINATION AND SOLICITATION OF EMPLOYEES.
Seller agrees that it will terminate, effective the Closing Date, all of
its employees who work at the LA Stores or the Regional Office (but excluding
employees at the Distribution Center) and will pay all amounts due such
employees as a result of such termination. Seller agrees that, commencing upon
the execution of this Agreement, Buyer may solicit such employees of the
Business with respect to possible employment by Buyer or the Company after the
Closing, and in connection therewith that Buyer may interview each such employee
and conduct related drug tests. It is understood, however, that Buyer is not
obligated to offer employment to any employee of Seller.
4.07. COVENANT NOT TO COMPETE.
Each of Trak and Seller agree that for a period of three (3) years
following the Closing it will not directly or indirectly engage in the sale of
automobile parts through retail or commercial outlets located in southern
California, except that, for so long as Seller maintains the Distribution
Center, Seller may utilize the Distribution Center to store and ship automobile
parts to outlets located outside of southern California.
ARTICLE V
COVENANTS OF BUYER
5.01. COOPERATION BY BUYER.
From the date hereof until the Closing, Buyer shall use all reasonable
efforts, and will cooperate with Seller and the Company, to secure all necessary
consents, approvals, authorizations, exemptions and waivers from third parties
as shall be required in order to effectuate the transactions contemplated
hereby, and shall otherwise use all reasonable efforts to cause the consummation
of such transactions in accordance with the terms and conditions hereof. Buyer
specifically agrees that it will take such actions as may be
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necessary to obtain the requisite approval under the HSR Act.
5.02. FURTHER ASSURANCES.
At any time or from time to time after the Closing, Buyer shall, at the
request of Seller or Seller's counsel, execute and deliver any further
instruments or documents and take all such further action as Seller or Seller's
counsel may reasonably request in order to evidence or otherwise facilitate the
consummation of the transactions contemplated hereby.
5.03. BUYER EMPLOYEES.
Buyer agrees that each employee of Seller who is terminated by Seller pursuant
to Section 4.06 and is hired by Buyer or the Company on the Closing Date will:
(i) be credited for benefit program purposes with the same number of
years of service as such employee had with Seller as of the Closing
Date; and
(ii) be provided the health care benefits, without regard to any
applicable waiting period, then currently available to similarly
situated employees of Buyer.
Buyer also agrees that it shall indemnify Seller with respect to any losses
Seller may incur attributable to a post-Closing termination by Buyer of any such
employee of Seller so hired by Buyer or the Company on or after the Closing
Date.
5.04. PERFORMANCE UNDER LEASES.
Subject to Section 6.03 hereof, the accuracy (to the extent relevant in
a given case) of Section 2.07 hereof, and the terms and conditions of the
Leases, Buyer agrees that after the Closing Date it will, or will cause the
Company to, honor the terms of the Leases in effect on such date.
ARTICLE VI
ADDITIONAL COVENANTS
6.01. TRANSITION ARRANGEMENTS.
Seller and Buyer agree as follows with respect to certain post-Closing
transition arrangements:
(a) Seller shall maintain the Regional Office premises for ninety (90)
days following the Closing (or such shorter period as Buyer may specify upon ten
(10) days prior notice to Seller) and Buyer and the Company shall be entitled to
use said premises at no additional cost to Buyer, other than any increase in the
operating costs of the Regional Office occasioned by Buyer's use, which shall be
paid by Buyer.
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(b) The Company and Buyer shall have the right to operate the LA Stores
under the "TRAK," "SUPER TRAK" and "SUPER TRAK WAREHOUSE" names and to use such
logos, business forms and stationery in connection therewith for 90 days
following the Closing at no additional cost to Buyer, provided that Buyer agrees
to indemnify Seller for any loss, damage or expense incurred by Seller
attributable to such post-Closing use by Buyer or the Company.
(c) The Company and Buyer shall have the right to display and sell from
the LA Stores all "TRAK" private label products that are part of the inventory
acquired hereunder until the supply of such products is exhausted.
(d) Buyer and Seller shall implement an employee incentive program, the
principal elements of which are set forth on Schedule 6.01(d), and shall share
the cost thereof as provided in Schedule 6.01(d).
(e) As soon as practical after the date hereof, Seller and Buyer shall
enter into an operating agreement relating to the Distribution Center (the
"Operating Agreement") which will reflect the following basic understandings:
(i) the term of the Operating Agreement shall be for the period
of 135 days following the Closing Date, subject to the right of Buyer to
terminate the Operating Agreement upon not less than ten (10) days prior
notice to Seller;
(ii) the purpose of the Operating Agreement is to enable Buyer
to implement the continuous operation of the LA Stores from the Closing
until Buyer is able to receive and ship products from its own
distribution facilities, it being understood that Seller shall exercise
reasonable efforts to operate the Distribution Center in accordance with
substantially the same standards, systems and procedures as it has
heretofore operated the Distribution Center in connection with the
Business, it being understood, however, that Seller shall not be
required to hire new employees for the Distribution Center;
(iii) during the period of the Operating Agreement, Buyer will
be responsible for placing purchase orders for inventory and paying for
such inventory, and Seller will be responsible for quantity integrity;
(iv) during the period of the Operating Agreement, Buyer shall
be required to have certain of its personnel present at the Distribution
Center at Buyer's expense;
(v) Buyer will pay for all normal operating costs (including
depreciation) incurred by Seller for providing services to Buyer
pursuant to the Operating Agreement, except that such costs shall not
include (w) severance, accrued vacation (other than vacation accrued
during the period of the Operating Agreement) or other costs associated
with the voluntary or involuntary termination of Seller's employees at
the Distribution Center, whether any such termination occurs before,
during or after the term of the Operating Agreement, (x) rent, taxes,
insurance required under the lease of the Distribution Center, common
area charges and other real estate occupancy costs, (y) payments under
equipment leases that would be incurred by Seller even if Buyer were not
utilizing the Distribution Center pursuant to the Operating Agreement,
and (z) costs (or portions of costs) relating to any activities
conducted at the Distribution Center that are not related to the
receipt,
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storage and delivery of inventory for the LA Stores;
(vi) during the period of the Operating Agreement, Trak and
Seller shall provide or make available to Buyer at no additional cost
Trak's and Seller's financial and management information systems and
similar services and support to enable the continuous operation of the
business through the termination of the Operating Agreement; and
(vii) Buyer shall indemnify Seller for any liability incurred by
Seller as a result of Buyer's use of the Distribution Center pursuant to
the Operating Agreement.
6.02. PRORATION.
As soon as practicable after the Closing, the parties shall pro-rate all
property taxes and other amounts prepaid or accrued as of the Closing under the
Leases, and Buyer shall pay to Seller, or Seller shall pay to Buyer, the net
amount owing.
6.03. EXCLUDED LIABILITIES.
For the avoidance of doubt (and anything herein to the contrary
notwithstanding), it is understood and agreed that Seller shall retain and/or
assume all liability and responsibility for (and shall indemnify Buyer and the
Company with respect to) any and all liabilities or obligations of Seller, the
Company or the Business which arise out of or relate to the Leases, the Business
or the Assets and which have accrued or are in existence (i.e., all events or
circumstances giving rise to the liability or obligation have occurred,
regardless of whether a claim or liability has been asserted with respect
thereto) at any time prior to the Closing ("Excluded Liabilities"), including,
without limiting the generality of the foregoing, (a) claims for personal injury
or damages based on allegedly defective products including, without limitation,
claims based on negligence, breach of implied or express warranty, strict
liability, defective product or product in an unreasonably dangerous condition,
failure to warn or inadequate warning (except that Buyer agrees that it shall
assume responsibility for all ordinary course defective product returns relating
to products sold from the LA Stores prior to the Closing); (b) taxes; (c)
accounts payable; (d) any liabilities relating to the Non-Renewal Stores; (e)
any liabilities relating to unpaid benefits, salary or other claims or
obligations arising prior to the Closing with respect to any employees of
Seller; and (f) any severance, accrued vacation and other payments due to
employees who leave or are terminated by Seller pursuant to Section 4.06 or
otherwise prior to, on or after the Closing Date.
6.04. CONFIDENTIALITY.
Prior to and for a period of five (5) years following the Closing, Trak
and Seller shall keep confidential and not disclose (other than to its
attorneys, accountants and advisers) or use (except in connection with preparing
tax returns, conducting proceedings relating to taxes and, prior to the Closing
Date, as required in the conduct of the Business in the ordinary course and
consistent with past practice) any non-public information relating to the
Business or the Company, whether or not obtained pursuant to or in connection
with the transactions contemplated by this Agreement. This Section 6.04 shall
not be
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violated by disclosure pursuant to court order or as otherwise required by law
or in any other proceeding, on condition that notice of the requirement for such
disclosure is given to Buyer prior to making any disclosure. Each of Trak and
Seller shall cause its respective representatives, employees, attorneys,
accountants and advisers to whom information is disclosed pursuant to this
Section 6.04 to comply with the provisions of this Section.
6.05. NON-RENEWAL STORES.
Seller agrees that Buyer may engage in discussions with the lessors of
the Non-Renewal Stores numbered 188 and 572 pertaining to the possible extension
or renewal of the existing leases thereof. Upon written notice from Buyer to
Seller delivered at any time prior to the close of business on Friday, October
10, 1997, Buyer may designate one or both of these two Non-Renewal Stores to be
an "LA Store" hereunder, and in such event the Non-Renewal Store(s) so
designated shall be deemed LA Store(s) hereunder.
6.06 NEW STORES.
Seller shall provide Buyer all relevant information as to leases which
have been entered into prior to the date hereof and which relate to stores not
yet opened in the Los Angeles Metropolitan Area (the "New Leases") (it being
understood that Seller shall not enter into any such leases after the date
hereof). Buyer shall have the right, by written notice to Seller delivered at
any time before the Closing Date, to cause Seller to assign to the Company any
or all such New Leases at no additional cost to Buyer, except that Buyer shall
be responsible for the performance of said leases subsequent to the Closing as
provided in Section 5.04. Seller agrees with respect to any such store under
development that such store will be developed in accordance with a format, and
with decor, provided by Buyer and that Seller shall not install fixtures or
inventory in such store prior to the Closing.
6.07 PURCHASE OF INVENTORY; ASSIGNMENT AND ASSUMPTION OF CERTAIN
AGREEMENTS.
Seller agrees that it shall continue to purchase Inventory for the LA
Stores in the ordinary course of business, of such type and in sufficient
quantity that there will be adequate Inventory available in the LA Stores (and
in the Distribution Center for delivery to the LA Stores) through the Closing
Date, and Buyer will be responsible for issuing purchase orders for Inventory to
be delivered to the Distribution Center after the Closing Date. Seller shall be
responsible for the cancellation or termination of any purchase orders for
inventory placed by it which is not delivered prior to the Closing. Seller shall
cooperate with Buyer and its representatives in identifying third-party service
and maintenance agreements applicable to some or all of the LA Stores and, if so
requested by Buyer, will use its best efforts to assign such agreements to the
Company, in which event the Company shall assume the obligations thereunder.
6.08 CHANGE IN FORM OF THE COMPANY.
If requested by Buyer not later than 20 days prior to the Closing, the
"Company" shall be formed as a corporation under California law (rather than a
limited liability company), the voting stock of which shall be owned 79% by
Seller and 21% by Buyer and this Agreement shall be deemed amended as
appropriate to reflect such change in form, it being understood that if the
transaction were not to close, the corporation would be dissolved. If Buyer does
not request a change in the form of the Company, Buyer
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shall indemnify Seller for any liability incurred by Seller under
anti-assignment or similar provisions of the Leases attributable to the Company
being a limited liability company as opposed to a corporation. If Buyer does
request a change in the form of the Company, and if either Buyer or Seller so
elects, the Company shall be owned 100% by Seller (rather than 79%-21% as
referred to above), in which event Seller shall (i) indemnify the Company and
Buyer against any tax liability of the Trak consolidated group, and (ii) make a
Section 338(h)(10) election with respect to the sale of the Company to Buyer.
ARTICLE VII
CONDITIONS TO CLOSING
7.01. CONDITIONS TO BUYER'S OBLIGATIONS.
The obligation of Buyer to acquire and assume the Interests shall be
subject to the satisfaction (or waiver) on or prior to the Closing Date of all
of the following conditions:
(a) Representations, Warranties and Covenants of Seller. Each of Trak
and Seller shall have complied in all material respects with each of its
agreements and covenants contained herein to be performed on or prior to the
Closing Date, and all the representations and warranties of Trak and Seller
contained herein shall be true in all material respects on and as of the Closing
Date with the same effect as though made on and as of the Closing Date;
provided, however, that with respect to representations and warranties contained
in Section 2.07, such representations and warranties shall also be true in all
material respects as if made by the Company on and as of the Closing Date with
the same effect as though made on and as of the Closing Date. Buyer shall have
received a certificate of each of Trak and Seller, dated the Closing Date,
certifying as to the fulfillment of the conditions set forth in this Section
7.01(a).
(b) No Order. No order of any court or administrative agency shall be in
effect that temporarily, provisionally or permanently prohibits Buyer from
consummating the transactions contemplated hereby, or that provides for an award
of damages against Buyer in connection therewith, and no claim, action, suit or
other proceeding shall be pending which presents a substantial risk that such an
order will become effective.
(c) HSR Act. Approval of the acquisition and assumption of the Interests
by Buyer shall have been obtained under the HSR Act or the applicable waiting
period shall have terminated.
7.02. CONDITIONS TO SELLER'S OBLIGATIONS.
The obligation of Seller to assign the Interests shall be subject to the
satisfaction (or waiver) on or prior to the Closing Date of all of the following
conditions:
(a) Representations, Warranties and Covenants of Buyer. Buyer shall have
complied in all material respects with each of its agreements and covenants
contained herein to be performed on or prior to the Closing Date, and all of the
representations and warranties of Buyer contained herein shall be true
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in all material respects on and as of the Closing Date with the same effect as
though made on and as of the Closing Date. Seller shall have received a
certificate of Buyer, dated the Closing Date, certifying as to the fulfillment
of the conditions set forth in this Section 7.02(a).
(b) No Order. No order of any court or administrative agency shall be in
effect that temporarily, provisionally or permanently prohibits Seller from
consummating the transaction contemplated hereby, or that provides for an award
of damages against Seller in connection therewith, and no claim, action, suit or
other proceeding shall be pending which presents a substantial risk that such an
order will become effective.
(c) HSR Act. The condition set forth in Section 7.01(c) shall have been
satisfied.
ARTICLE VIII
TERMINATION PRIOR TO CLOSING
8.01. TERMINATION.
This Agreement may be terminated at any time prior to the Closing:
(a) by the mutual written consent of Buyer and Seller; or
(b) by either Seller or Buyer by written notice, without liability to
the terminating party on account of such termination (provided the terminating
party is not otherwise in default or in breach of this Agreement), if the
Closing shall not have occurred on or before January 31, 1998; or
(c) by either Seller or Buyer by written notice, without liability to
the terminating party on account of such termination (provided the terminating
party is not otherwise in default or in breach of this Agreement), if there
shall have been a material breach by the other party of any of its
representations, warranties, covenants or agreements contained herein, which
breach is not cured within five (5) days after receipt of notice thereof.
8.02. EFFECT ON OBLIGATIONS.
Termination of this Agreement pursuant to this Article VIII shall
terminate all obligations of the parties hereunder, except for their obligations
under Sections 9.06 and 9.11 and the Confidentiality Agreement; provided,
however, that termination pursuant to clause (b) or (c) of Section 8.01 shall
not relieve a defaulting or breaching party from any liability to the other
party hereto.
ARTICLE IX
MISCELLANEOUS
9.01. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
The representations and warranties of the parties shall terminate upon
the first anniversary of the Closing, except to the extent that written notice
has been given by the party seeking indemnification to the
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party from whom indemnification is sought prior to the expiration of such
one-year period specifying with reasonable particularity the incorrect
representation or warranty giving rise to such claim for indemnification. Each
party shall indemnify the other party for all liability, damage and expense
(including reasonable attorneys' fees) incurred as a result of the breach or
inaccuracy of the representations and warranties of such first party or the
failure of such first party to perform any of its covenants herein. However,
with respect to liability, damage or expense attributable to the breach or
inaccuracy of representations and warranties, neither party shall have liability
for the first $150,000 of such liability, damage and expense, and in computing
such liability, damage and expense, such amounts shall be computed net of any
related recoveries by the indemnitee under insurance policies or other related
payments received from third parties and net of any tax benefits actually
received by the indemnitee taking into account the income tax treatment of the
receipt of indemnification. The parties agree that no party has made any
representation or warranty in connection with the transactions contemplated
hereby except for those representations and warranties set forth herein or in
any of the Ancillary Agreements or Buyer Ancillary Agreements.
9.02. ENTIRE AGREEMENT.
Except for the Confidentiality Agreement and the Ancillary Documents,
this Agreement (including the Schedules hereto) constitutes the sole and entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements and all contemporaneous oral
agreements between the parties with respect to the subject matter hereof.
9.03. SUCCESSORS AND ASSIGNS.
This Agreement may not be assigned by any party hereto without the prior
written consent of the other parties hereto; provided, however, that Buyer may
assign this Agreement to any direct or indirect wholly-owned subsidiary;
provided, however, that any such assignment shall not relieve Buyer of its
obligations hereunder. The terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors, and permitted
assigns of the parties hereto.
9.04. HEADINGS.
The headings of the articles, sections and paragraphs of this Agreement
are inserted for convenience of reference only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
9.05. MODIFICATION AND WAIVER.
No amendment, modification, alteration or supplement of the terms or
provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by the parties hereto, except that any of the terms or
provisions of this Agreement may be waived in writing at any time by the party
that is entitled to the benefits of such waived terms or provisions. No waiver
of any of the provisions of this Agreement shall be deemed to or shall
constitute a waiver of any other provision hereof (whether or not
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similar). No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof.
9.06. EXPENSES.
Except as otherwise provided herein, Buyer shall pay all costs and
expenses incurred by or on behalf of Buyer, and Seller shall pay all costs and
expenses incurred by or on behalf of Trak, Seller or the Company, in connection
with the negotiation of this Agreement and the performance of the transactions
contemplated hereby, including, without limiting the generality of the
foregoing, fees and expenses of its and their financial consultants, accountants
and legal counsel.
9.07. NOTICES.
Any notice, request, instruction or other document to be given hereunder
by any party hereto to any other party shall be in writing and shall be given
(and will be deemed to have been duly given upon receipt) by delivery in person,
by electronic facsimile transmission, cable, telegram, telex or other standard
forms of written telecommunications, by overnight courier or by registered or
certified mail, postage prepaid,
if to Trak, Seller or the Company, to:
Trak Auto Corporation
0000 00xx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
ATTN: Xxxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
in each case, with a copy to:
Xxxxxx, Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxx. 0000
Xxx Xxxxxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
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if to Buyer, to:
CSK Auto, Inc.
000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
ATTN: President
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
ATTN: Xxxxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
or at such other address for a party as shall be specified by like notice.
9.08. GOVERNING LAW.
This Agreement shall be construed in accordance with and governed by the
laws of the State of California applicable to agreements made and to be
performed wholly within such jurisdiction.
9.09. PUBLIC ANNOUNCEMENTS.
Prior to the Closing, neither Seller nor Buyer shall make any public
statements, including, without limitation, any press releases, with respect to
this Agreement and the transactions contemplated hereby without the prior
written consent of the other party hereto (which consent shall not be
unreasonably withheld) except as may be required by law. If a public statement
is required to be made by law, the parties shall consult with each other in
advance as to the contents and timing thereof; provided, however, that a press
release or other public announcement, statement or comment made without such
joint approval shall not be in violation of this Section if it is made in order
to comply with applicable securities laws or stock exchange policies and, in the
reasonable judgment of the party making such release or announcement, based upon
advice of independent counsel, prior review and joint approval, despite the
making of reasonable efforts to obtain the same, would prevent dissemination of
such release or announcement in a timely enough fashion to comply with such laws
or policies; provided, however, that in all instances prompt notice from one
party to the other shall be given with respect to any such release,
announcement, statement or comment.
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9.10. THIRD PARTY BENEFICIARIES.
Nothing herein expressed or implied is intended to or shall be construed
to confer upon or give any person or entity, other than the parties hereto, and
their respective successors and permitted assigns, any rights or remedies under
or by reason of this Agreement.
9.11. JURISDICTION.
Any action or proceeding arising out of or relating to this Agreement
may be brought in any state or federal court sitting in the County of Los
Angeles, State of California, and each of the parties hereto irrevocably submits
to the jurisdiction of any such court in any such action or proceeding. Each of
the parties hereto irrevocably waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought.
9.12. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall for all purposes be deemed to be an original and all of which shall
together constitute one and the same instrument.
9.13. PARTIES.
References to the "parties" hereto shall mean Trak and Seller, on the
one hand, and Buyer, on the other hand.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Purchase
Agreement as of the date first above written.
CSK AUTO, INC.
By: XXXXX X. XXXXXX
-----------------------------
Xxxxx X. Xxxxxx
TRAK AUTO CORPORATION
By: R. XXXXX XXXXX
-----------------------------
R. Xxxxx Xxxxx
TRAK CORPORATION D/B/A/ TRAK AUTO
CORPORATION I
By: R. XXXXX XXXXX
-----------------------------
R. Xxxxx Xxxxx
SUPER TRAK CORPORATION
By: R. XXXXX XXXXX
-----------------------------
R. Xxxxx Xxxxx
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SCHEDULE A
LIST OF LA STORES
=========================================================
St CSK
# Store Name #
=========================================================
=========================================================
151 San Bernadino 55
---------------------------------------------------------
156 West Covina 92
---------------------------------------------------------
158 San Xxxxx 3
---------------------------------------------------------
159 Maywood 35
---------------------------------------------------------
166 Xxxxxxx Heights 56
---------------------------------------------------------
167 Camarillo 41
---------------------------------------------------------
168 Tustin 30
---------------------------------------------------------
000 Xxxxxxxx Xxxxxxxxx 18
---------------------------------------------------------
170 Lakewood 27
---------------------------------------------------------
172 La Xxxxxx 63
---------------------------------------------------------
174 Riverside 64
---------------------------------------------------------
000 Xxxx Xxxxxxx 15
---------------------------------------------------------
000 Xxxx Xxxxx Xxxx 77
---------------------------------------------------------
178 Paramount 70
---------------------------------------------------------
179 Gardena 83
---------------------------------------------------------
190 Venice & Western 71
---------------------------------------------------------
191 Panorama City 7
---------------------------------------------------------
194 North Torrance 31
---------------------------------------------------------
195 Redlands 28
---------------------------------------------------------
000 Xxxxx Xxxx 2
---------------------------------------------------------
197 Montabello 8
---------------------------------------------------------
198 Willowbrook 88
---------------------------------------------------------
199 Alhambra 9
---------------------------------------------------------
000 Xxxxxxxxxx Xxxx 24
---------------------------------------------------------
000 Xx Xxxxx 65
---------------------------------------------------------
204 Santa Fe Springs 90
---------------------------------------------------------
206 Norwalk / Imperial 84
---------------------------------------------------------
209 Arleta 76
---------------------------------------------------------
211 Inglewood 93
---------------------------------------------------------
502 Slauson 45
---------------------------------------------------------
503 La Mirada 81
---------------------------------------------------------
504 La Cienega 62
---------------------------------------------------------
505 Xxxxxx 78
---------------------------------------------------------
508 Northridge 4
---------------------------------------------------------
509 El Monte 87
---------------------------------------------------------
510 Simi Valley 47
---------------------------------------------------------
511 Altadena 12
---------------------------------------------------------
512 Gardena 51
---------------------------------------------------------
513 Chino 82
---------------------------------------------------------
514 Rosemead 43
=========================================================
=========================================================
St CSK
# Store Name #
=========================================================
=========================================================
517 Torrance 37
---------------------------------------------------------
518 Oxnard 49
---------------------------------------------------------
523 Pico Xxxxxx 25
---------------------------------------------------------
000 Xxxxxx Xxxxx 1
---------------------------------------------------------
526 West Carson 85
---------------------------------------------------------
528 Fountain Valley 66
---------------------------------------------------------
529 Xxxx 29
---------------------------------------------------------
000 Xx Xxxxxxx 21
---------------------------------------------------------
531 Inglewood 89
---------------------------------------------------------
532 Burbank 16
---------------------------------------------------------
000 Xxxxxxxx Xxxxxxx 86
---------------------------------------------------------
536 Arcadia 40
---------------------------------------------------------
539 Canyon Country 57
---------------------------------------------------------
543 Glendora 34
---------------------------------------------------------
546 Azusa 44
---------------------------------------------------------
548 Xxxxxxxx / Compton 72
---------------------------------------------------------
549 North Hollywood 20
---------------------------------------------------------
551 San Xxxxx 6
---------------------------------------------------------
553 Huntington Beach 14
---------------------------------------------------------
554 Pacoima 80
---------------------------------------------------------
555 Walnut 60
---------------------------------------------------------
000 Xxxxxxx Xxxx 75
---------------------------------------------------------
560 Xxxxxx City 39
---------------------------------------------------------
565 Santa Xxxxxx 59
---------------------------------------------------------
566 Lawndale 73
---------------------------------------------------------
000 Xx Xxxxxxxxx 50
---------------------------------------------------------
569 Compton 79
---------------------------------------------------------
570 Pomona 69
---------------------------------------------------------
000 Xxxxx Xxxx Xxxxxxxxx 38
---------------------------------------------------------
573 Long Beach - Spring 22
---------------------------------------------------------
574 Santa Xxx 52
---------------------------------------------------------
576 Anaheim 54
---------------------------------------------------------
579 Washington / Maple 36
---------------------------------------------------------
581 Torrance 48
---------------------------------------------------------
582 Van Nuys 17
---------------------------------------------------------
584 Monrovia 23
---------------------------------------------------------
587 Vermont & M.L.K. 91
---------------------------------------------------------
590 Hacienda Heights 68
---------------------------------------------------------
591 Hollywood 33
---------------------------------------------------------
598 Xxxxxxxx & Vermont 13
=========================================================
S-1
24
SCHEDULE B
LIST OF NON-RENEWAL STORES
=======================================================
St CSK
# Store Name #
=======================================================
=======================================================
152 Ontario, G St. 53
-------------------------------------------------------
000 Xxxxxx Xxxx 19
-------------------------------------------------------
173 Wilmington 46
-------------------------------------------------------
188 Compton 58
-------------------------------------------------------
506 Ontario, S. Euclid 61
-------------------------------------------------------
525 Fullerton 74
-------------------------------------------------------
540 Riverside 32
-------------------------------------------------------
542 Rodeo & Xxxxxxxx 42
-------------------------------------------------------
556 Commerce 26
-------------------------------------------------------
564 Orange 67
-------------------------------------------------------
567 Upland 10
-------------------------------------------------------
572 Xxxxxx 11
=======================================================
S-2
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SCHEDULE C
ADJUSTMENTS TO PHYSICAL INVENTORY COUNT
1. The physical inventory shall account for inventory utilizing
Seller's retail method.
2. The Inventory of each LA Store, as determined by the physical
inventory conducted by the Inventory Consultant, shall be rolled forward to the
close of business on the Saturday immediately preceding the Closing Date, based
upon Seller's retail method of accounting for inventories.
3. After the close of business each business day between the
commencement of the physical inventory and the Closing Date, Seller will update
its perpetual inventory system for all item movements for the purpose of
replenishing the LA Stores, and Seller will update its retail accounting system
on a basis consistent with prior practices and procedures for the purpose of
valuing of the LA Store inventories as of the Closing Date.
4. The rollforward will adjust for the shrinkage of inventory, on a
store-by-store basis, from the date on which its inventory is physically
counted at such store through the close of business on the Saturday immediately
preceding the Closing Date, at the rate of 150% of Seller's actual shrinkage
rate, on a store-by-store basis, from the start of Seller's fiscal year through
August 2, 1997.
5. Buyer shall be entitled to have its independent auditors test the
inventory rollforward described above for purchases and sales.
6. There will not be any activity following the taking of the
Distribution Center physical inventory through the Closing Date. Therefore,
there will be no adjustment to the Distribution Center physical inventory.
S-3
26
SCHEDULE D
CALCULATION OF THE INVENTORY VALUE AND
DETERMINATION OF PURCHASE PRICE REDUCTION (IF ANY)
The value of the LA Stores' Inventory shall be calculated using
Seller's retail method as prepared by Seller based on Seller's actual cost
factors for merchandise categories accumulated on a basis consistent with prior
practices and procedures, as of the close of business on the Saturday
immediately preceding the Closing Date, in a manner consistent with the
preparation of the August Inventory Statement (as defined in Section 2.08). The
value of the Distribution Center Inventory shall be calculated based on the
physical counts of items (Stock Keeping Units, "SKU's") on hand as of the close
of business on the day immediately preceding the Closing Date multiplied by the
weighted average cost for each SKU. Weighted average cost shall be based upon
Seller's invoice records, adjusted for ordinary volume discounts but not
adjusting for any special promotions or similar arrangements between Seller and
vendors that were not generally available to the customers of such vendor.
Buyer shall be entitled to have its independent auditors test the accuracy of
the weighted average cost of each SKU based upon samples of Seller's vendor
records.
In addition, at the time of the inventory, the Inventory Consultant
will provide Buyer and Seller unit count by universal product code to be
multiplied times Seller's weighted average cost file to validate Seller's
retail inventory method. To the extent that the two methods result in
materially ($1 million in aggregate) different Inventory values, then Buyer
reserves the right to have the independent accounting firm determine which
method is more accurate. The Inventory Value (as defined below) will be
determined in accordance with the recommendation of the independent accounting
firm.
"Ordinary Inventory" means all Inventory, excluding Liquidation
Inventory (as defined below) and Non-Salable Inventory (as defined below).
"Liquidation Inventory" means all Inventory identified on the attached
Schedule D-1 which are (i) not a product sold by Buyer in the ordinary course
of its business, (ii) not sold by a vendor with whom Buyer deals in the
ordinary course of its business or (iii) not able to be re-labeled by Buyer and
sold through the LA Stores in the ordinary course of Buyer's business.
"Non-Salable Inventory" means all Inventory which consists of cores,
warranty items, recalled items, damaged or defective items and items in transit
at Closing.
"Inventory Value" means the sum of the values, determined as
aforesaid, of all (i) Ordinary Inventory, plus (ii) all Liquidation Inventory
not to exceed $2.0 million, plus 50% of Liquidation Inventory (not to exceed
$1.0 million) in excess of $2.0 million, plus (iii) all Non-Salable Inventory
not to exceed $3.5 million.
The Purchase Price shall be reduced by the amount (if any) by which
the Inventory Value is less than $37.0 million.
The Final Payment shall equal the Purchase Price, determined as
aforesaid, minus the Closing Payment.
X-0
00
XXXXXXXX X-0
INVENTORY REPORT
DESCRIPTION VENDOR NAME
-------------------------------------------------------------------------------
---------------------------------
No Disposition / Liquidate
---------------------------------
Accessories
Air Freshners
-------------------------------------------------
Xxxxxxx Corp
Car Freshner
E Xxxxx Inc.
Nouvelle Xxxxxxx Hills
Car Covers (IMP)
-------------------------------------------------
IMR (Hong Kong)
Checkland Mdse
-------------------------------------------------
Arnsco
Car Freshner
Checklane Mdse
-------------------------------------------------
3R Industries Inc.
Xxxxxxx Corp
Blue Ridge The Item
Broadway Electronics
Buffalo Tool Corporat
Duracell Inc.
E Xxxxx Inc.
Enginuity, Inc.
Go Jo Industries
IMR (Roc/Taiwan)
Xxxxxx-Xxxxx
Memtek Prod (Memor
Penguin Auto Mfg. In
Personal Safety Corp
Qualco
Sell It Yourself Inc.
The Lanechanger Inc.
Vermont American T
Checklane Mdse.
-------------------------------------------------
ACME Division
Meg Instrument Inc.
Exterior Access
-------------------------------------------------
Xxxxxxx Corp
Floor Mats/Carp
-------------------------------------------------
Kraco Inc.
-------------------------------------------------------------------------------
Rpt by PRubin Friday, October 03, 1997
S-5
28
INVENTORY REPORT
DESCRIPTION VENDOR NAME
-------------------------------------------------------------------------------
---------------------------------
No Disposition / Liquidate
---------------------------------
Ozita
Front End Cover
-------------------------------------------------
Custom Accessories
Import Car Fres
-------------------------------------------------
IMR (Roc/Taiwan)
Interior Access
-------------------------------------------------
Xxxxxxx Corp
Xxxxxxx Worldwide
Keychains
-------------------------------------------------
Xxxxxxx Corp
Glenncraft
Highland Xxxx
Penguin Auto Mfg. In
Lighting
-------------------------------------------------
Design Tech
Optronics Inc
Pacific Electricord
Xxxxx Fu Co., of Ame
Other
-------------------------------------------------
Custom Accessories
Reliable Catalo
-------------------------------------------------
Reliable Automotive
Seat Cushions
-------------------------------------------------
Honor Trading
IMR (Hong Kong)
Tire Repair
-------------------------------------------------
ACME Division
Wheel Covers
-------------------------------------------------
IMR (Roc/Taiwan)
Chemicals
Additives
-------------------------------------------------
Xxxx Chemical Co.
Xxxx Labs/Media Xx
Xxxxx Petrochemical
Sunshine Makers Inc.
Trak Transfer Mercha
-------------------------------------------------------------------------------
Rpt by PRubin Friday, October 03, 1997
S-6
29
INVENTORY REPORT
DESCRIPTION VENDOR NAME
-------------------------------------------------------------------------------
---------------------------------
No Disposition / Liquidate
---------------------------------
Xxxx'x Oil Company
Adhesives
-------------------------------------------------
Krazy Glue/Bordens
Qualco
Air Cond/Freon
-------------------------------------------------
Technical Chemical
Body Repair
-------------------------------------------------
Devcon
Chems Bonus End
-------------------------------------------------
Xxxx Labs/Media Xx
Xxxxx Petrochemical
Cleaners
-------------------------------------------------
Bissell Inc.
Xxxx Labs/Media Gr
Lexol Division of Sum
Mothers Polish and
Total Action
Dressings
-------------------------------------------------
Lexal Division of Sum
Mothers Polish and
Xxxx Union Corporati
Total Action
Fluids
-------------------------------------------------
Tradco Chemical Cor
Import Seasonal
-------------------------------------------------
IMR (Roc/Taiwan)
Lubricants
-------------------------------------------------
Qualitee International
Synco Chemical Corp
Xxxxxx Made Product
Other
-------------------------------------------------
Xxxx Chemical Co.
Famous Ramone Wa
Go Jo Industries
Xxxx Labs/Media Gr
Nationwide
-------------------------------------------------------------------------------
Rpt by PRubin Friday, October 03, 1997
S-7
30
INVENTORY REPORT
DESCRIPTION VENDOR NAME
-------------------------------------------------------------------------------
---------------------------------
No Disposition / Liquidate
---------------------------------
Qualco
Sierra
Sunshine Makers Inc.
Xxxxxx Made Product
Penetrants
-------------------------------------------------
American Grease Sti
Polishes
-------------------------------------------------
Auto Chic/Liquid
Auto Wax Company,
Xxxx Labs/Media Gr
Liquid Lustre
Mothers Polish and
Xxxx Union Corporati
Total Action
Seasonal
-------------------------------------------------
Vermont American T
Summer Seasonal
-------------------------------------------------
IMR (Roc/Taiwan)
Lexol Division of Sum
Prepco Performances
Wash Aids
-------------------------------------------------
Delta Industries
Detailed Designs (4)
Xxxx Precision Produ
Xxxxxxx Manufacturin
Mallory USA Inc.
Electronics/Ser
CB's/Radar/Horn
-------------------------------------------------
Signaltone, Inc.
Security-Other
-------------------------------------------------
Kraco Inc
Sound Accessori
-------------------------------------------------
Dynasound Organizer
Engine Parts
ATK PWRTEST ENG
-------------------------------------------------
ATK North America /
-------------------------------------------------------------------------------
Rpt by PRubin Friday, October 03, 1997
S-8
31
INVENTORY REPORT
DESCRIPTION VENDOR NAME
-------------------------------------------------------------------------------
---------------------------------
No Disposition / Liquidate
---------------------------------
Carburetor Kits
-------------------------------------------------
AllParts
Engine Gaskets
-------------------------------------------------
JPI
Fuel Pumps-Elec
-------------------------------------------------
Walbro Corporation
Phoenix Engine
-------------------------------------------------
Phoenix Industries (
Rack & Pinion
-------------------------------------------------
Xxxxx Fu Co., of Ame
Ignition/Filtra
Battery Accesso
-------------------------------------------------
Qualco
Battery Cables
-------------------------------------------------
Web Wire & Cable
Filters-Misc
-------------------------------------------------
Champion Laboratori
Filters/Air-OE
-------------------------------------------------
Ford Motor Company
Trak Transfer Mercha
Filters/Oil-Fra
-------------------------------------------------
Champ Labs (oil filter
Filters/Oil-Xxx
-------------------------------------------------
Champion Laboratori
Filters/Oil-OE
-------------------------------------------------
Ford Motor Company
Modules/Coils/R
-------------------------------------------------
Ford Motor Company
Spark Plugs-AC
-------------------------------------------------
Trak Transfer Mercha
Wire Sets-TRBFR
-------------------------------------------------
Web, Wire & Cable
Wires-Individua
-------------------------------------------------
Web, Wire & Cable M
-------------------------------------------------------------------------------
Rpt by PRubin Friday, October 03, 1997
S-9
32
INVENTORY REPORT
DESCRIPTION VENDOR NAME
-------------------------------------------------------------------------------
---------------------------------
No Disposition / Liquidate
---------------------------------
Motor Oil
Private Label
-------------------------------------------------
The Sun Company
Utility Oils
-------------------------------------------------
The Sun Company
Non-Engine Part
Anco Wipers
-------------------------------------------------
Pylon Mfg. Corp.
Brake Hydraulic
-------------------------------------------------
Repair-It Industries
Royal Tool
Exhaust/Hardwar
-------------------------------------------------
Qualco
The Pullover Corpora
Hologens H/L
-------------------------------------------------
GE Lighting
Tools
12V Air Compres
-------------------------------------------------
IMR (Hong Kong)
IMR (Roc/Taiwan)
Xxxxx Fu Co., of Ame
Air Tools
-------------------------------------------------
Trade Associates, Inc
Body Tools
-------------------------------------------------
Wilmar
Gas Cans/Spouts
-------------------------------------------------
Dipstick Cleaner LTD
Grease Guns
-------------------------------------------------
KP Industries
Hand Tools
-------------------------------------------------
Allied Ineternational
Amsco
Amsco Tool
Buffalo Tool Corporat
Custom Accessories
-------------------------------------------------------------------------------
Rpt by PRubin Friday, October 03, 1997
S-10
33
INVENTORY REPORT
DESCRIPTION VENDOR NAME
-------------------------------------------------------------------------------
---------------------------------
No Disposition / Liquidate
---------------------------------
Xxxxxxx Tool Group
Flambeau Products
X.X Xxxxxxx
X.X. Xxxxxxx
IMR (Roc/Taiwan)
Xxxxxxxx Automotive
Xxxxx Fu Co. of Ame
Sidewinder Products
SK Hand Tools
Vermont American T
Wilmar
Import Hand Too
-------------------------------------------------
IMR (Roc/Taiwan)
Imports Misc
-------------------------------------------------
IMR (Hong Kong)
IMR (Roc/Taiwan)
Jacks
-------------------------------------------------
Xxxxxxxx Automotive
Oil Accessories
-------------------------------------------------
Xxxxxxx Corp
Custom Accessories
Detailed Designs (4)
Hose Central
Other
-------------------------------------------------
Helicoil
Xxxxxxxx Automotive
Wilmar
Power Tools
-------------------------------------------------
Xxxxxxx Tool Group
Wen Products Inc.
Rental Tools
-------------------------------------------------
Xxxxxxx Tool Group
Excalibur Mfg. Co.
Repair Manuals
-------------------------------------------------
Shop Xxxxxxx Diagn
Specialty Tools
-------------------------------------------------
ACME Division
-------------------------------------------------------------------------------
Rpt by PRubin Friday, October 03, 1997
S-11
34
INVENTORY REPORT
DESCRIPTION VENDOR NAME
-------------------------------------------------------------------------------
---------------------------------
No Disposition / Liquidate
---------------------------------
Amsco
Amsco Tool
Buffalo Tool Corporat
Custom Accessories
Helicoil
Xxxxxxx Manufacturin
Qualco
SK Hand Tools
Vermont American T
Wilmar
-------------------------------------------------------------------------------
Rpt by PRubin Friday, October 03, 1997
S-12
35
SCHEDULE 2.07
R. Xxxxx Xxxxx
Xxxxx X. XxxXxxxxxx
Xxxxxx Xxxxxxx
S-13
36
SCHEDULE 2.08
INVENTORY
AS OF 8/02/97
TOTAL INVENTORY $37,359,000
S-14
37
SCHEDULE 2.09
FINANCIAL INFORMATION
(000's)
================================================== ==============================================
Fiscal Year Ended 2/01/97 Seven Fiscal Periods Ended 8/30/97
-------------------------------------------------- ----------------------------------------------
Contribution Fixed Assets Contribution Fixed Assets
Sales (1) NBV Sales (1) NBV
================================================== ==============================================
======================== ================================================== ==============================================
LA Stores $92,010 $10,452 $4,409 $51,582 $4,937 $4,359
------------------------ -------------------------------------------------- ----------------------------------------------
Non-Renewal Stores $9,980 $863 $320 $5,434 $354 $293
======================== ================================================== ==============================================
(1) Store Contribution excludes charges for Direct Division, Distribution and
Corporate Overhead expenses.
S-15
38
SCHEDULE 6.01(D)
TRANSITION INCENTIVE PLAN
POSITION NO. AMOUNT TOTAL TRAK CSK
-------- --- ------ ----- ---- ---
STORE OPERATIONS
----------------
General Manager 1 $25,000 $25,000 $12,500 $12,500
Regional Managers 2 $15,000 $30,000 $15,000 $15,000
District Managers 9 $7,500 $67,500 $33,750 $33,750
Loss Prevention 3 $5,000 $15,000 $7,500 $7,500
Training Manager 1 $2,500 $2,500 $1,250 $1,250
Set-up Manager 1 $2,500 $2,500 $1,250 $1,250
Recruiter 1 $2,500 $2,500 $1,250 $1,250
Merchandise Manager 1 $2,500 $2,500 $1,250 $1,250
Inventory Control Mgr. 1 $2,500 $2,500 $1,250 $1,250
Office Manager 1 $2,000 $2,000 $1,000 $1,000
Store Managers 80 $1,000 $80,000 $40,000 $40,000
------- ------- -------
Total Store Operations $232,000 $116,000 $116,000
-------- -------- --------
DISTRIBUTION CENTER
-------------------
D/C Manager 1 $20,000 $20,000 $5,000 $15,000
Data Center Manager 1 $7,500 $7,500 $1,875 $5,625
D/C Supervisors 4 $7,500 $30,000 $7,500 $22,500
Drivers 8 $5,000 $40,000 $10,000 $30,000
Inventory Control Mgr. 1 $5,000 $5,000 $1,250 $3,750
------ ------ ------
Total Distribution Center $102,500 $25,625 $76,875
-------- ------- -------
Total Incentive Program $334,500 $141,625 $192,875
-------- -------- --------
S-16
39
SCHEDULE 6.01(d)
TRANSITION INCENTIVE PLAN
Each employee holding one of the above listed positions on the date of the
public announcement of Trak's disposition of the LA Stores who meets the
eligibility criteria set forth below shall be paid the amount of the incentive
bonus listed in the "Amount" column. The amount of the incentive bonus to be
paid to any employee shall not be increased if one or more of the other
employees holding the same position is not eligible to receive the incentive
bonus.
The foregoing incentive bonus will be mailed by Seller to eligible Store
Operations employees ten days following the Closing, and to eligible
Distribution Center employees ten days following the earliest of the expiration
of 135 days after the Closing, or the last day that Seller provides
Distribution Center Services to Buyer in accordance with the Operating
Agreement referred to in section 6.01(e) ("DC Termination"). Buyer shall pay
its share of such incentive bonuses as stated on the Schedule attached hereto,
within 15 days after receipt of a written statement from Seller specifying the
amounts owed to each eligible employee.
Prior to mailing any incentive bonus, Seller and Buyer shall review the list of
the employees holding the listed positions on the date of the public
announcement and mutually agree which employees are eligible to receive the
incentive bonus. If the parties can not agree on whether an employee is
eligible to receive an incentive bonus, the party believing that the employee
is legally entitled to receive the bonus shall not be restricted from paying
the employee all or part of the incentive bonus it believes is due.
Prior to paying the bonus, Seller shall deduct all statutory payroll
deductions, including, but not limited to federal and state tax withholding,
FICA and SDI. Seller shall timely transmit the withholding and any "employer's
contribution", if any, due with respect to the bonus to the appropriate
government agency.
To be eligible to receive the foregoing incentive bonus, a Store Operations
employee must:
- Be actively employed by Seller or the Company on the date
of the Closing. Actively employed includes being on an
approved leave of absence, or a vacation approved prior to
October 6, 1997, but does not include any unexcused absence.
- Have maintained acceptable attendance between the date of
the announcement of Trak's disposition of the LA Stores and
the Closing. More than one unexcused absence will be deemed
unacceptable attendance in the discretion of Buyer and
Seller.
S-17
40
To be eligible to receive the foregoing incentive bonus, a Distribution Center
employee must:
- Be actively employed by Seller on the date of the DC
Termination, unless sooner terminated by Seller due to lack
of work. Actively employed includes being on an approved
leave of absence, or a vacation approved prior to October 6,
1997, but does not include any unexcused absence.
- Have maintained acceptable attendance between the
date of the announcement of Trak's disposition of
the LA Stores and the DC Termination. More than one
unexcused absence will be deemed unacceptable
attendance in the discretion of Buyer and Seller.
Buyer and Seller reserve the right in their mutual discretion to determine that
an employee holding one of the listed positions is eligible to receive an
incentive bonus, where the employee fails to satisfy the above criteria.
S-18
