EXHIBIT 2.16
ACCOUNTING SERVICES AGREEMENT
THIS ACCOUNTING SERVICES AGREEMENT (this "AGREEMENT") is made and entered
into as of February 1, 1999 between A.P.S., INC., a Delaware corporation ("APS")
and a debtor and debtor-in possession in a case pending under chapter 11 of the
Bankruptcy Code, and AUTO PARTS EXPRESS, LLC, a Delaware limited liability
company ("AUTO PARTS"). Capitalized terms used but not otherwise defined in this
Agreement have the meanings given in the Asset Purchase Agreement (as defined in
the first Recitals clause).
RECITALS
WHEREAS, APS, certain of its Affiliates and Auto Parts have entered into
an Asset Purchase Agreement, dated as of January 11, 1999 (the "ASSET PURCHASE
AGREEMENT"), pursuant to which Auto Parts has agreed to purchase substantially
all of the business assets located at the Purchased Locations;
WHEREAS, following the consummation of the transactions contemplated by
the Asset Purchase Agreement, Auto Parts will conduct business at certain of the
Purchased Locations and, in connection therewith, Auto Parts desires to receive
limited accounting services from APS, as more fully described herein; and
WHEREAS, APS, as an accommodation to Auto Parts and at the request of Auto
Parts, desires to provide Auto Parts with such limited accounting services,
subject, in the sole discretion of APS, to the availability of the employees,
business locations, funding and equipment required therefor, as more fully
described herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. ACCOUNTING RELATED SERVICES TO BE PERFORMED.
1.1. GENERAL LIMITATION ON SERVICES AND ACCESS. All services and access to APS
facilities to be provided by APS pursuant to this Agreement shall be required to
be performed by APS only to the extent that the provision of such services and
access is feasible and shall also be subject to the availability of the APS
employees, business locations, funding and equipment necessary therefor. Auto
Parts expressly acknowledges and agrees that the determination of APS as to such
availability shall be dispositive on this issue.
1.2. ACCOUNTS PAYABLE SERVICES: APS hereby agrees to make available to Auto
Parts a total of three (3) APS clerks at APS' Memphis, Tennessee accounting
office (the "Memphis Office") to process Auto Parts' accounts payable allocable
to the Purchased
Locations (the "Accounts Payable Clerks") for the period beginning on the day
immediately following the Closing Date and ending at the close of business on
March 31, 1999 (the "Accounting Services Period"). The scope of the services to
be provided by the Accounts Payable Clerks to Auto Parts shall be as set forth
on EXHIBIT A attached hereto, with all Auto Parts checks to be manually signed
by a representative or agent of Auto Parts designated in advance in writing to
APS (the "Accounts Payable Services"), PROVIDED, HOWEVER that the Accounts
Payable Services shall in no event include any services associated with the
review and follow up of invoice purchase price variances, and FURTHER PROVIDED,
that the scope of the Accounts Payable Services to be provided by the Accounts
Payable Clerks at the Memphis Office shall be limited to accounts payable
allocable to the Purchased Locations that were APS distribution centers
immediately prior to the Closing. During the Accounting Services Period, APS
shall use commercially reasonable efforts to provide reasonable supervision of
(i) the Accounts Payable Clerks at the Memphis Office and (ii) Auto Parts'
accounts payable personnel at APS' Houston, Texas accounting office (the
"Houston Office," and, together with the Memphis Office, the "Accounting
Offices").
1.3. ACCOUNTS RECEIVABLE SERVICES: Auto Parts intends to hire its own personnel
to process Auto Parts' accounts receivable allocable to the Purchased Locations.
During the Accounting Services Period, APS shall use commercially reasonable
efforts to provide reasonable supervision of the functions of the Auto Parts'
accounts receivable personnel set forth on EXHIBIT B attached hereto at the
Houston Office (the "Accounts Receivable Services").
1.4. GENERAL LEDGER SERVICES: From time to time during the Accounting Services
Period, as necessary, APS shall balance the "General Ledger" postings of the
"Accounts Payable System" for the purpose of updating such "General Ledger"
postings to reflect the changes set forth in the information provided to APS by
Auto Parts.
1.5. AUTO PARTS OBLIGATIONS AND ACKNOWLEDGMENTS: Auto Parts hereby agrees that
it will promptly provide APS, without requiring any request therefor from APS,
with any and all materials required by APS to provide the services contemplated
by this Agreement, including, but not limited to, data and records relating to
Auto Parts sales, cash flows, pricing, purchases, borrowings, and employees.
Auto Parts hereby acknowledges and agrees that the services to be provided by
APS under this Agreement shall in no event include any services not expressly
described herein or on the exhibits hereto, including, but not limited to, all
of the following: manual runs of checks for accounts payable, payroll processing
or accounting, inventory accounting, bank account reconciliation, month-end
financial statement reviews, credit and collections services or treasury
services. Auto Parts hereby agrees and acknowledges that the
time for performance for any and all services to be performed by APS and/or its
employees under this Agreement shall, in all cases, be within such commercially
reasonable time as shall be determined by APS in good faith and in its sole and
exclusive discretion. Auto Parts hereby agrees and acknowledges that APS makes
no representation, warranty, agreement, commitment or covenant whatsoever as to:
(a) its ability to perform any services requested by Auto Parts at any time or
within the time desired by Auto Parts for completion of the performance of such
services; and (b) the accuracy or completeness or adequacy of any services or
information to be performed or provided by APS and/or its employees under this
Agreement. As a result, Auto Parts hereby expressly understands and acknowledges
that APS may fail to complete the accounting services necessary to be completed
for the operation of the business of Auto Parts by the time or in the manner
necessary for the performance of such services, and that neither APS nor its
employees shall have any liability whatsoever for such failure or for any other
reason under this Agreement.
1.6. ACCOUNTING SERVICES DEPOSIT: On the date of this Agreement, Auto Parts
shall deposit, by irrevocable wire transfer pursuant to written instructions
provided to Auto Parts by APS, an amount equal to $20,000 to be held by APS as
security for any amounts to be paid by Auto Parts for accounting services under
this Agreement (the "Accounting Services Deposit"). Auto Parts hereby
acknowledges and agrees that APS shall have the right at any time to withdraw
funds from the Accounting Services Deposit as contemplated by Section 3.2, and
at the end of the Accounting Services Period, APS shall return the unused
portion of the Accounting Services Deposit to Auto Parts .
1.7. DISCLAIMER OF WARRANTY: APS EXPRESSLY DISCLAIMS ALL WARRANTIES WITH RESPECT
TO THE ACCOUNTING SERVICES AND ACCESS TO ITS PREMISES TO BE PROVIDED UNDER THIS
AGREEMENT, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE,
OR ARISING BY USAGE OF TRADE OR COURSE OF DEALING. APS SHALL NOT BE LIABLE FOR
ANY PUNITIVE, SPECIAL, DIRECT, INDIRECT, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL
DAMAGES (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS,
BUSINESS INTERRUPTION OR ANY OTHER LOSS) ARISING FROM OR RELATING TO THE
PROVISION OF, OR FAILURE TO PROVIDE, ACCOUNTING SERVICES OR ACCESS TO ITS
PREMISES TO BE PROVIDED UNDER THIS AGREEMENT, WHETHER CLAIMED UNDER CONTRACT,
TORT OR ANY OTHER LEGAL THEORY.
1.8. AUTO PARTS ACCESS TO ACCOUNTING FACILITIES: APS shall, to the extent APS
retains rights in the premises of the Accounting Offices and subject to the sole
control of APS, allow employees of Auto Parts reasonable access during normal
business hours to the Accounting Offices for the sole purpose of processing
accounts receivable and accounts payable as contemplated by this Agreement. APS
hereby expressly reserves the sole and exclusive right to refuse to allow Auto
Parts employees access at any time and without notice if, in the reasonable
judgment of APS, allowing such access to the Auto Parts employees would
materially
-3-
interfere with the business or operations of APS or create any liability for
APS.
1.9 INDEMNIFICATION: Auto Parts hereby agrees to defend, indemnify and hold
harmless each of APS, its employees and its subsidiaries and Affiliates, for any
and all damages, liability, loss, cost, claim, cause of action or expense
(including, but not limited to, all attorneys', consultants', and experts' fees,
including, but not limited to, any such fees incurred in any action or
proceeding between APS and Auto Parts) (each, a "Loss") arising out of, relating
to or resulting from any and all services contemplated to be performed by APS
hereunder, or access to APS facilities to be provided hereunder, that Auto Parts
and / or APS, or any of their respective subsidiaries, Affiliates, shareholders,
employees or principals, as applicable, shall at any time, or from time to time,
suffer or incur, including, but not limited to, any and all Losses attributable
to the negligence or recklessness of APS or its employees in performing services
or providing access to its facilities under this Agreement.
SECTION 2. FEES; PAYMENT FOR ACCOUNTING SERVICES
2.1. (a) In the manner and according to the schedule set forth in SECTION 2.2
hereof, Auto Parts shall pay APS a fee equal to twenty dollars ($20.00) per hour
worked by each Accounts Payable Clerk (the "SERVICES HOURLY FEE") for any and
all services to be provided by Accounts Payable Clerks hereunder, plus any
expenses as set forth in Section 2.3. To the extent any work performed in
connection with the accounting services to provided by an APS employee does not
require a full hour, then Auto Parts shall pay APS a portion of the Services
Hourly Fee equal to the product of the fractional portion of an hour actually
worked by an APS employee times the Services Hourly Fee. All Services Hourly
Fees and expenses incurred by Auto Parts shall be paid to APS in accordance with
Section 2.2.
(b) In addition to any and all other fees and expenses payable under this
Agreement, Auto Parts shall pay APS, in the manner and according to the schedule
set forth in SECTION 2.2 hereof, each of the following fees and costs: (i)
$1000.00 per month for access to and use of the Houston Office; (ii) $1000.00
per month for access to and use of the Memphis Office; (iii) $1000.00 per month
for supervisory services to be provided in connection with the Accounts Payable
Services at each of the Accounting Offices; and (iv) $1000.00 per month for
supervisory services to be provided in connection with the Accounts Receivable
Services at the Houston Office (such fees and costs set forth in clauses (i),
(ii), (iii) and (iv) collectively, the "Monthly Fees"). To the extent that APS
does not provide one full month of supervisory services or access to the
Accounting Offices, then Auto Parts shall pay APS a portion of the Monthly Fees
equal to the product of the fractional portion of the month
-4-
for which supervisory services or access to the Accounting Offices was actually
provided times the applicable Monthly Fees.
2.2. APS shall separately provide Auto Parts with invoices, reflecting all fees
and expenses payable by Auto Parts pursuant to this Agreement for the prior
month and, Auto Parts shall pay APS the full amounts of such fees or expenses
described in such invoices, no later than five (5) business days after each
invoice date. All payments under this Agreement, including, but not limited to,
drawings on the Accounting Services Deposit, shall be made without deduction
(except for charges billed in error), set off, recoupment or counterclaim. In
the case of charges believed to be billed in error, Auto Parts shall timely pay
the undisputed portion of the invoice, on or before the due date for payment of
the charges. All overdue amounts payable under this Agreement shall bear
interest, from the time such amounts are due until such amounts are actually
paid (including any period in which such amounts are in dispute), at a rate
equal to the lower of: (i) three percentage points above the prime rate in
effect at the time payment was due as reported in the WALL STREET JOURNAL for
the applicable dates; or (ii) the highest rate permitted by law.
2.3. In addition to any and all other amounts payable by Auto Parts to APS, Auto
Parts shall pay to APS an amount equal to the sum of (i) all reasonable direct
out-of-pocket fees and expenses incurred by APS in rendering any and all
services pursuant to this Agreement (including, but not limited to, travel,
messenger, courier, postage, copying, and facsimile expenses) and (ii) any and
all taxes (other than taxes based on APS' net income or gross income) assessed
on the provision of services pursuant to this Agreement without any offset or
deduction of any nature whatsoever. Such costs, expenditures and taxes will be
billed to Auto Parts in the monthly invoices in accordance with SECTION 2.2.
SECTION 3. TERMINATION; REMEDIES
3.1. The obligations of APS to provide services pursuant to this Agreement shall
terminate at the end of the Accounting Services Period. This Agreement is
subject to termination or modification as may be necessary to comply with the
provision of any decree or order of the Bankruptcy Court. Upon termination of
this Agreement, pursuant to SECTIONS 3.1 or 3.2, or by operation of law or
otherwise, all fees owed to APS hereunder through the date of termination shall
become immediately due and payable and all other obligations granted hereunder
shall terminate, except as provided in SECTIONS 1.9, 3.3 and 4.
3.2. In the event that Auto Parts fails to make any payment when due or
otherwise fails to perform any of its material obligations or breaches any of
its material covenants under this Agreement, the Asset Purchase Agreement or any
of the Ancillary Agreements,
-5-
and such default is not cured within five (5) business days of APS giving Auto
Parts notice of such default, (i) APS may terminate this Agreement, and (ii) all
amounts owing by Auto Parts to APS under this Agreement as of the date of such
default, and all amounts owing by Auto Parts to APS under the Asset Purchase
Agreement and under the Ancillary Agreements shall become immediately due and
payable. In the event that Auto Parts fails to make any payment payable to APS
under this Agreement, the Asset Purchase Agreement, any of the Ancillary
Agreements, or any other agreement between APS and Auto Parts, in such amounts
and at such times as provided for herein or therein (including any applicable
cure periods), then any and all such amounts payable by Auto Parts to APS under
this Agreement, the Asset Purchase Agreement, the Ancillary Agreements and any
other agreement between APS and Auto Parts may, without prejudice to any other
rights or remedies APS may have against Auto Parts, be drawn by APS from the
Accounting Services Deposit (with appropriate invoices sent to Auto Parts
pursuant to SECTION 2.2) and/or from any deposit under the Asset Purchase
Agreement and the Ancillary Agreements, PROVIDED that with respect to amounts
payable under this Agreement, such amounts shall first be drawn from the
Accounting Services Deposit until the same is depleted, and then from any and
all deposits under the Asset Purchase Agreement and the Ancillary Agreements.
3.3. The sole and exclusive remedy available to Auto Parts in the event that APS
does not satisfy any of its obligations under this Agreement (other than by a
willful breach of this Agreement by APS), shall be addressed to correcting such
failure of APS to satisfy such obligations, and not to penalizing APS. In
recognition of this aim, Auto Parts' sole and exclusive remedy for such a
failure by APS to satisfy its obligations under this Agreement shall be that APS
shall, if and to the extent feasible, use commercially reasonable efforts to
satisfy such obligations within a commercially reasonable time, subject, in the
sole discretion of APS, to the availability of APS employees, funding, business
locations and equipment needed to allow APS to satisfy such obligations. APS
shall be excused from the corrective remedy set forth in this SECTION 3.3 if and
to the extent that: (i) APS' failure to satisfy its obligations pursuant to this
Agreement is a direct or indirect result of Auto Parts' breach of any agreement
in this Agreement or failure to timely and accurately perform its
responsibilities as set forth in this Agreement; or (ii) Auto Parts fails to
provide reasonable cooperation in completing performance and correcting the
problems that led to the failure at issue.
SECTION 4. CONFIDENTIALITY.
Each of Auto Parts and APS agrees to keep, and to cause each of its affiliates,
directors, officers, and employees to keep, confidential any and all
confidential information of the other party that it receives in the course of
performing its
-6-
obligations hereunder (except that such information may be shared, on a
confidential basis, with the party's professionals and agents) and each will
not, without the other party's written consent, use any of such confidential
information except as reasonably necessary to perform its duties under this or
another of its agreements with the other party. Upon termination of this
Agreement, each party will return, and will cause its affiliates to return, to
the other party, all original documents and copies of the confidential
information which are in its possession. Notwithstanding the foregoing, APS
shall be permitted to provide copies of this Agreement to its lenders and the
Bankruptcy Court. This SECTION 4 shall survive the termination of this
Agreement.
SECTION 5. RELATIONSHIP OF THE PARTIES.
It is expressly understood and agreed that, in rendering services hereunder, APS
is acting as an independent contractor and that this Agreement does not
constitute either party, or any of the employees of either party, as an
employee, partner, joint venturer, agent or other representative of the other
party for any purpose whatsoever. Neither party has the right or authority to
enter into any contract, warranty, guarantee or other undertaking in the name of
or for the account of the other party, or for any of the employees of the other
party, or to assume or create an obligation or liability of any kind, express or
implied, on behalf of the other party, or for any of the employees of the other
party, or to bind the other party in any manner whatsoever, or hold itself out
as having any right, power or authority to create any such obligation or
liability on behalf of the other or to bind the other party in any manner
whatsoever (except as to any actions taken by either party at the express
written request and direction of the other party).
SECTION 6. MISCELLANEOUS.
6.1. SEVERABILITY. If any term or provision of this Agreement or the application
thereof with respect to any Person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
that term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
6.2. GOVERNING LAW. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the United States and
the State of Delaware without giving effect to the principles of conflict or
choice of laws thereof.
6.3. HEADINGS. The caption headings in this Agreement are for reference purposes
only, and do not constitute a part of this Agreement and shall not affect its
meaning or interpretation.
-7-
6.4. NOTICES. All notices, requests, demands and other communications required
or permitted under this Agreement shall be made in the same manner as is set
forth in the Asset Purchase Agreement.
6.5. ACCESS. To the extent reasonably required for APS to perform its
obligations under this Agreement, Auto Parts shall provide APS personnel with
reasonable access to the Purchased Locations, including, without limitation,
office space, and telecommunications and computer equipment, systems and
software.
6.6. FORCE MAJEURE. Neither party shall be liable for its failure or delay in
fulfilling its obligations hereunder, if such failure or delay is caused by
fire, flood, weather conditions or other Act of God, invasions, insurrections,
riots, closing of the public highways, strike, lockout or other labor dispute,
civil unrest, war or any other reason beyond the reasonable control of the
party. In the case of strikes, lockouts or other labor disputes, it is
understood that such event is beyond the reasonable control of the party
suffering the event unless and until the party is able to resolve it in a manner
which such party deems reasonable and appropriate.
6.7. NO THIRD PARTY RIGHTS. The provisions of this Agreement shall not entitle
any person not a signatory hereto to any rights hereunder or in respect hereof,
as a third party beneficiary or otherwise, it being the specific intention of
the parties herein to preclude any and all such persons from such rights.
This Agreement shall enter into full force and effect as of the date first set
forth above upon its execution below by both of the parties.
-8-
A.P.S., INC.
By: /s/ XXXXXXX X. XXXXX
Xxxxxxx X. Xxxxx, President
AUTO PARTS EXPRESS, LLC.
By: /s/ E. XXXXXX XXXXXX
E. Xxxxxx Xxxxxx
Executive Vice President
-9-
