WAREHOUSE SERVICES AGREEMENT
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This Warehouse Services Agreement (this "Agreement") is made and
entered into on April 28, 1997 by and between American Recreation Company, Inc.,
a Delaware corporation ("Provider"), and Brunswick Corporation, a Delaware
corporation ("Brunswick").
RECITALS
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A. Pursuant to that certain Asset Purchase Agreement dated April 1,
1997 (the "Purchase Agreement"), Brunswick is purchasing Provider's business of
designing, developing, distributing, marketing, sourcing and selling bicycles
and bicycle components and bicycle accessories.
B. Brunswick has requested that Provider enter into this Agreement to
provide Brunswick with the (1) use of certain of Provider's Distribution
Facilities (as defined below) and (2) assistance of Provider personnel at such
facilities in managing, documenting, shipping, receiving, packing, repacking,
repairing and safeguarding Brunswick's inventory of bicycles and bicycle
components, service parts and bicycle accessories.
C. This Agreement is a material inducement to Brunswick entering into
the Purchase Agreement and consummating the transactions contemplated therein.
AGREEMENT
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NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth below, the parties agree as follows:
1. Preamble; Recitals. The preamble and recitals set forth above are
incorporated into and form a part of this Agreement.
2. Definitions. The following terms have the meanings set forth:
(a) "Distribution Facilities" shall mean Provider's
distribution centers located at 0000 Xxxxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxx 00000 ("Fairfield"); 0000 Xxxxxxxx, Xxxxxxx, Xxxxxxxxx 00000
("Memphis"); and 00 Xxxxxxxxxx Xxxx, Xxxx, Xxxxxxxxxxxx 00000 ("York").
(b) "Inventory" shall mean Brunswick's inventory of bicycles,
bicycle components, service parts and bicycle accessories (including,
without limitation, raw materials, work in process, supplies and
finished goods inventory). Inventory shall include the inventory of
bicycles, bicycle components, service parts and bicycle accessories
acquired on the date hereof pursuant to the Purchase Agreement and all
additional inventory of bicycles, bicycle components, service parts and
bicycle accessories whenever and however acquired by Brunswick.
(c) "Storage Term" shall mean, with respect to each
Distribution Facility, the period beginning on the date of this
Agreement and ending on (a) September 30, 1997, or (b) such earlier
date as stated upon at least 30 days' prior written notice from
Brunswick to Provider (which date may vary by Distribution Facility).
Any other capitalized term not otherwise defined herein shall have the same
meaning as in the Purchase Agreement.
3. Warehouse Space. During the Storage Term, Provider shall permit
Brunswick to store the Inventory at one or more of the Distribution Facilities,
as designated by Brunswick. Provider shall designate part of each of the
Distribution Facilities as a storage area for the Inventory. Such designated
storage areas shall be sufficient to satisfy Brunswick's storage requirements
for the Inventory; however, not to exceed approximately (a) 125,000 square feet
of storage space at York, (b) 70,000 square feet of storage space at Memphis,
and (c) 80,000 square feet of storage space at Fairfield.
Provider acknowledges possession, on behalf of and as agent of
Brunswick, of the Inventory listed on Schedule 3.10 of the Purchase Agreement,
adjusted as of the date hereof in accordance with Purchaser's physical
inventory. Brunswick shall have the right to cause to be deposited with Provider
additional Inventory to be
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stored and serviced in accordance with this Agreement during the Storage Term.
Provider shall keep all Inventory in a neat and orderly condition, dry,
protected from the elements and at a temperature set to maintain the Inventory
in good condition.
Brunswick shall cause the Inventory to be removed from the Distribution
Facilities no later than the last day of the Storage Term.
4. Reports. During the Storage Term, Provider shall keep accurate and
complete perpetual records of the Inventory. Such records shall indicate (i) the
quantity of the Inventory (by sku), (ii) the date of delivery of the Inventory,
(iii) the date of shipment of the Inventory from the applicable Distribution
Facility, (iv) all damaged goods, (v) all inventory balances and any inventory
shortages, and (vi) such other matters as are reasonably requested by Brunswick
to verify Inventory, quantity, quality or disposition. Provider shall promptly
report to Brunswick any Inventory delivered to Provider that is of a defective
or deficient quality or quantity.
5. No Lien. Provider shall execute such standard financing statement
forms (UCC-1) as Brunswick may reasonably request to be filed with the
appropriate state and county officials evidencing Brunswick's ownership of the
Inventories stored at the Distribution Facilities. Provider waives any lien that
it may now or subsequently have against the Inventory (whether now existing or
subsequently acquired by Brunswick), whether arising by custom or common or
statutory law or otherwise, including any lien arising by reason of Provider's
performance of this Agreement. Provider shall execute, deliver and file all
public notices reasonably required by Brunswick to evidence Brunswick's
ownership of the Inventory. Provider shall use commercially reasonable best
efforts to cause each of its secured creditors and its lessors' mortgagees to
deliver acknowledgements and waivers in form satisfactory to Brunswick
acknowledging Brunswick's ownership of the Inventory, free of any lien. Provider
shall take all other actions reasonably requested by Brunswick to ensure that no
lien attaches to the Inventory at the Distribution Facilities. Brunswick shall
pay all filing fees and any document processing fees relating to any filing to
be made, or waiver to be obtained, hereunder.
6. Stocking Inventories. Provider shall stock all Inventory received
for storage consistent with sound commercial practice.
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7. Shipment of Inventories. Provider shall not permit shipment of any
Inventory except in strict compliance with the terms of this Agreement. Upon
Brunswick's written instructions (and only upon such instructions), Provider
shall pick Inventory from storage and pack and ship such Inventory in accordance
with such instructions and sound commercial practices. Time is of the essence in
these shipments and Provider shall make all reasonable efforts to meet shipment
schedules. Provider shall distribute the inventory consistent with its past
practices. Provider shall perform these services consistent with the performance
expected by customers of the Business prior to the date of this Agreement.
Provider shall be solely responsible for any mistakes made in shipping any
Inventory except to the extent that mistakes result from following the specific
instructions of Brunswick regarding the manner of shipment of Inventory.
Provider shall promptly remit to Brunswick any payment received for any
Inventory, and such payments shall not be subject to any off-set by Provider
(other than offsets for amounts that are due from Brunswick under this Agreement
and not in dispute).
8. Reimbursement for Materials. Brunswick shall promptly reimburse
Provider for the cost of all packaging materials, forms and supplies necessary
for Provider to carry out its obligations hereunder upon receipt of appropriate
documentation therefor.
9. Fees. Brunswick shall pay Provider an amount equal to Brunswick's
allocable share of Provider's monthly costs in providing storage and services at
each Distribution Facility. Provider's "monthly cost" shall mean salaries,
labor, fringes, rent, depreciation, utilities, insurance and related overhead
costs (but excluding, in any case, pre-pricing costs, child seat assembly costs
and costs of supplies) recorded monthly as a part of the Provider's monthly
internal warehouse department financial report, an example of which is attached
as Schedule 1. "Brunswick's allocable share" shall be calculated by comparing
the sales value of Brunswick Inventory shipped from the Distribution Facility in
question to the total sales value shipped from such facility. In no event shall
Brunswick's allocable share (a) with respect to the Distribution Facility at
York, be less than 30% or exceed 40%; (b) with respect to the Distribution
Facility at Fairfield, be less than 30% or exceed 40%; and (c) with respect to
the Distribution Facility at Memphis, be less than 20% and shall not exceed 40%.
If Brunswick's use of a Distribution Facility ends before calendar
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month end, Brunswick's allocable share shall be appropriately prorated.
10. Agreements and Warranties.
10.1 Customs. Provider shall make all necessary filings and
payments in connection with the export of any Inventories. Brunswick
shall promptly reimburse Provider for these payments.
10.2 Warranties.
(a) Provider shall comply with all Laws in connection
with the receiving, safeguarding, storing, handling and
shipping of Inventory and otherwise carrying out its
obligations under this Agreement.
(b) Provider shall not move the Inventory to another
location without prior written instructions from Brunswick.
(c) Provider shall hire, employ and supervise a
sufficient number of employees to accurately and efficiently
carry out its obligations in accordance with the terms of this
Agreement. Except as otherwise expressly contemplated herein,
Provider shall pay and be solely responsible for the payment
of all costs and expenses related to the operation of the
Distribution Facilities and storage of the Inventory,
including, without limitation, all salary, benefits, workers
compensation insurance and other expenses of its employees.
Provider shall maintain insurance covering the full
replacement value of the Inventory (subject to a $25,000
deductible), the Distribution Facilities and Provider's
employees, including, without limitation, general liability
and workers compensation insurance, in such minimum amounts as
are reasonable under the circumstances or as required by law.
Provider shall deliver certificates of insurance evidencing
such coverage and, with respect to coverage for casualty or
damage to or loss or theft of the Inventory, showing Brunswick
as an additional named insured thereon.
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11. Access. During the term of this Agreement, Provider shall permit
such employees and agents of Brunswick as Brunswick desires to have access at
reasonable times to (a) the Distribution Facilities for the purpose of
inspecting the Inventory, and (b) Provider's records and files (wherever
located) for purposes of verifying receipt, disposition and condition of the
Inventory and compliance with this Agreement. Until the end of the Storage Term,
Provider shall permit Brunswick and its agents access at reasonable times to the
Premises for purposes of enabling Brunswick to take possession of and remove the
inventory from the Distribution Facilities, at no additional charge to
Brunswick. Provider shall take all actions reasonably requested by Brunswick to
assist Brunswick, at the expense of Brunswick, in any physical count required by
Brunswick for the Inventory.
12. No Termination. Provider's storage and service obligations
hereunder are unconditional and shall not be affected by Brunswick's failure to
perform any obligation owed to Provider (whether hereunder or otherwise) or any
claim or action Provider may have against Brunswick, other than a failure by
Brunswick to pay any amount due under this Agreement and not in dispute. The
Storage Term shall not be shortened or terminated before the date contemplated
by Section 2(a) above without Brunswick's written consent, notwithstanding any
provision of law to the contrary, except that Storage Term with respect to any
particular Distribution Facility may be shortened, on written notice to
Brunswick from Provider, due to Brunswick's failure to pay any amount due under
this Agreement that is not in dispute with respect to such Distribution
Facility.
13. Indemnification by Provider. Provider agrees to indemnify, defend
and hold harmless Brunswick, its affiliates and successors and assigns against
any loss, liability, damage (including any damage incurred by Brunswick),
expense, cost, fee, loss in value or other matter (whether or not covered by
insurance) arising from or related to (a) any failure by Provider or its
personnel to comply with the terms of this Agreement; (b) any damage to, or loss
or theft of, the Inventory while located at any of the Distribution Facilities,
whatever the cause, including causes beyond the control of Provider (Provider
acknowledges that liability may be imposed under this Section 13 without any
fault on the part of Provider or its personnel); (c) any personal injury,
including, without limitation, death to any of Provider's personnel; or (d) the
physical condition of or operations at the Distribution Facilities.
Notwithstanding
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anything to the contrary contained herein or in the Purchase Agreement, Provider
shall not be responsible for, and shall not be required to indemnify, defend or
hold harmless Brunswick, its affiliates or successors and assigns against any
loss, liability, damage (including any damage incurred by Brunswick), expense,
cost, fee, loss in value or other matter (whether or not covered by insurance)
to the extent that any of the foregoing results from (i) any actions taken or
not taken on the specific instructions of Brunswick regarding the manner of
shipping, receiving, packing or storing the Inventory, or (ii) any acts of
Brunswick's employees taken at any Distribution Facility.
14. Miscellaneous.
14.1 Independent Contractor. The relationship that Provider
holds as to Brunswick is that of an independent contractor. This
Agreement is not intended to create and does not create between
Brunswick and Provider the relationship of principal and agent, joint
venturers, partners or any other similar relationship, the existence of
which is hereby expressly denied. Neither party shall be liable to any
third party in any way for any engagement, obligation, commitment,
contract or representation of the other party.
14.2 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns; provided, that no assignment of any rights or
obligations by law or otherwise shall be made without the consent of
the other party hereto except that Brunswick may assign its rights
hereunder to a subsidiary or an affiliate, but no such assignment by
Brunswick shall relieve Brunswick of its obligations hereunder.
14.3 Severability. Each of the provisions contained in this
Agreement shall be severable, and the unenforceability of one shall not
affect the enforceability of any others or of the remainder of this
Agreement.
14.4 Waiver. The failure of any party to enforce any condition
or part of this Agreement at any time shall not be construed as a
waiver of that condition or part, nor shall it forfeit any rights to
future enforcement thereof.
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14.5 Governing Law. This Agreement shall be construed and
enforced in accordance with and governed by the laws of Illinois
without regard to the conflicts of laws provisions thereof.
14.6 Headings. The headings of the sections and subsections of
this Agreement are inserted for convenience only and shall not be
deemed to constitute a part hereof.
14.7 Counterparts. More than one counterpart of this Agreement
may be executed by the parties hereto, and each fully executed
counterpart shall be deemed an original.
14.8 Further Assurances. Brunswick and Provider shall, at the
request of another party, execute and deliver to such other party all
such further instruments, assignments, assurances and other documents
as such other party may reasonably request in connection with the
carrying out of this Agreement and the transactions contemplated
hereby.
14.9 Notices. All communications, notices and consents
provided for herein shall be in writing and be deemed given (a) on
delivery if given in person, (b) on the date of transmission if sent by
telex, facsimile or other means of wire transmission (receipt
confirmed), (c) one (1) day after being delivered to a nationally
recognized overnight courier or (d) three (3) business days after being
deposited in the United States mails, with proper postage and
documentation, for first-class registered or certified mail, prepaid.
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Notices shall be addressed as follows:
If to Brunswick, to:
Brunswick Corporation
Xxx Xxxxx Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Facsimile No.: (000) 000-0000
with a copy to:
Brunswick Outdoor Recreation Group
0000 X. Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: President
Facsimile No.: 000-000-0000
If to Provider, to:
American Recreation Company, Inc.
c/x Xxxx Sports Corp.
00000 X. Xxxxxx Xxxx
Xxxxx 0
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Chief Financial Officer
Facsimile Number: (000) 000-0000
with a copy to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
provided, that if any party shall have designated a different address by notice
to the others, then to the last address so designated.
14.10 Construction. The language in all parts of this Agreement shall
be construed, in all cases, according to its fair meaning. The parties
acknowledge that each party and its counsel have reviewed and revised this
Agreement and that any rule of
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construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement.
14.11 Amendments. This Agreement may not be amended, supplemented or
otherwise modified except by an instrument in writing signed by all of the
parties hereto.
14.12 Obligations. Xxxx Sports Corp. shall be jointly and severally
obligated with respect to the representations, warranties, covenants and
indemnities of Provider hereunder.
* * * * * * *
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IN WITNESS WHEREOF, Provider and Brunswick have each caused this
Agreement to be entered into and signed, effective and delivered as of the date
and year first above written.
XXXX SPORTS CORP.
By: Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
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Title: Chief Financial Officer
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BRUNSWICK CORPORATION
By: Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
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Title: Assistant Secretary
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AMERICAN RECREATION COMPANY, INC.
By: Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
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Title: Chief Financial Officer
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