EXHIBIT 2.8
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "AGREEMENT") is made and entered into as of
October 9, 1998 between A.P.S., INC., a Delaware corporation ("APS") and a
debtor and debtor-in possession in a case pending under chapter 11 of the
Bankruptcy Code, and GENERAL PARTS, INC., a North Carolina corporation ("GPI").
Capitalized terms used but not otherwise defined in this Agreement have the
meanings given in the Asset Purchase Agreement (as defined in the first Recitals
clause).
RECITALS
WHEREAS, APS and GPI have entered into an Asset Purchase Agreement (the
"ASSET PURCHASE AGREEMENT"), pursuant to which GPI has agreed to purchase
substantially all of the business assets located at the Purchased Locations;
WHEREAS, following the consummation of the transactions contemplated by
the Asset Purchase Agreement, GPI will conduct business at certain of the
Purchased Locations and, in connection therewith, GPI desires to obtain limited
access to PIMS and certain related limited administrative and technical support
as provided for herein; and
WHEREAS, APS desires to grant GPI limited access to PIMS and to provide
GPI with certain related limited administrative and technical support, as
provided for herein
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. PIMS ACCESS AND RELATED TECHNICAL AND CONSULTING SERVICES.
1.1. APS shall grant GPI limited access to PIMS, subject to the conditions set
forth herein, for a period of time (the "PIMS ACCESS PERIOD") commencing on the
Closing Date and ending on the earlier to occur of (i) the date which is six (6)
months after the end of the month following the Closing Date; (ii) the date that
APS ceases operation of PIMS; or (iii) ten (10) days after the date on which GPI
notifies APS that it no longer requires PIMS access. GPI acknowledges that APS
shall not be required to provide, and does not currently contemplate providing
PIMS access following the expiration of the PIMS Access Period. GPI's access to
PIMS shall be limited to information which pertains to the Purchased Locations,
and GPI acknowledges that such information will relate only to product lines
sold at the Purchased Locations prior to the Closing Date.
1.2. On the Closing Date, APS shall provide GPI with PIMS access codes
sufficient to access PIMS at the Purchased Locations utilizing currently
available ports, and commencing on the
Closing Date and until the expiration of the PIMS Access Period, GPI's personnel
shall be permitted to log-on to PIMS from terminals located at the Purchased
Locations and dial-up ports during normal PIMS operating hours.
1.3. During the PIMS Access Period, APS shall provide (i) routine PIMS
maintenance and technical support at APS headquarters; and (ii) the services
associated with PIMS as set forth on SCHEDULE A attached hereto; PROVIDED,
HOWEVER, that APS shall not be responsible for the link-up and interface of PIMS
with GPI information management systems, for any on site maintenance at the
Purchased Locations or for any custom programming (except as such services may
be provided by APS' consultants as provided in SECTION 1.5).
1.4. The software programs utilized by, and the know-how and operating
procedures associated with PIMS are proprietary to and constitute trade secret
information of APS. APS does not intend to grant, and GPI acknowledges that it
is not obtaining hereby, any title to or right or interest in, by way of license
or otherwise, PIMS operating procedures or know-how, PIMS software or the source
code underlying such software. GPI shall not be granted access to the source
code underlying PIMS software programs, and GPI shall not attempt to obtain such
access. However, should it become necessary for GPI to restore PIMS access as
provided in SECTION 3.4, APS agrees to disclose to GPI whatever proprietary
information as may be necessary, including, but not limited to, programs,
know-how, operating procedures or source code, to enable GPI to restore such
access. GPI agrees that if such disclosure of APS's proprietary information
becomes necessary, the information will be provided only to those persons
directly involved in the restoration of PIMS access, and the confidentiality of
the information will be treated by GPI with the same standard of care as it
treats its own confidential information. PIMS shall be used exclusively by GPI
and its employees, and GPI shall not allow others to use or have access to PIMS,
directly or indirectly. GPI recognizes and acknowledges that PIMS operating
procedures and data contained on PIMS are confidential and trade secrets and are
the sole and exclusive property of APS. GPI shall maintain the confidential
nature of all PIMS data (other than data input by GPI) and operating procedures,
and shall not disseminate PIMS data (other than data input by GPI) or operating
procedures to any third party without the prior written consent of APS. APS
shall maintain the confidential nature of all PIMS data input by GPI, and shall
not disseminate such PIMS data to any third party without the prior written
consent of GPI.
1.5. During the PIMS Access Period, APS shall provide:
(a) consulting services pertaining to PIMS on a per request basis, subject
to the availability of APS consultants, which consulting services may
include: (i) requirements analysis and initial and follow-up customized
programming or
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reporting necessary for any interface of GPI's information management
system with PIMS; (ii) on site maintenance by APS personnel at the
Purchased Locations of any PIMS terminals, printers, or other hardware;
(iii) training of GPI personnel in PIMS operation; and (iv) parts /
product line changeover services, which consulting services provided by
APS pursuant to this SECTION 1.5(a) shall be billed to GPI at an hourly
rate of $150 plus expenses; and
(b) accounting consulting services as described in and for the periods set
forth on SCHEDULE B attached hereto, which consulting services shall be
billed to GPI as set forth on such SCHEDULE B.
All consulting services provided pursuant to this SECTION 1.5 shall be payable
in accordance with SECTION 2.2.
1.6. APS EXPRESSLY DISCLAIMS ALL WARRANTIES WITH RESPECT TO THE OPERATION OF
PIMS, DATA CONTAINED ON PIMS, AND SERVICES PROVIDED BY APS IN CONNECTION WITH
PIMS, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED, OR ARISING BY USAGE OF TRADE
OR COURSE OF DEALING, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND, EXCEPT TO THE
EXTENT THAT ANY EXECUTIVE OFFICER OF APS HAS ACTUAL KNOWLEDGE THEREOF, NO
MISAPPROPRIATION AND NONINFRINGEMENT. APS SHALL NOT BE LIABLE FOR PUNITIVE,
SPECIAL, DIRECT, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING,
WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION
OR ANY OTHER LOSS) ARISING FROM OR RELATING TO THE USE OF PIMS BY GPI OR THE
MALFUNCTION OR TEMPORARY OR PERMANENT SHUTDOWN OF PIMS, WHETHER CLAIMED UNDER
CONTRACT, TORT OR ANY OTHER LEGAL THEORY.
SECTION 2. FEES; PAYMENT FOR CONSULTING SERVICES
2.1. GPI shall pay to APS a monthly fee equal to $18,500 per DC servicing the
stores at the Purchased Locations, payable in advance on the first day of each
calendar month during the PIMS Access Period which fee shall be paid on a pro
rata basis for any period shorter than a month during which this Agreement is in
effect for a DC.
2.2. APS shall separately invoice GPI monthly in arrears for all charges for
consulting services pursuant to SECTIONS 1.5(A) and 1.5(B), which invoices shall
be accompanied by reasonable documentation or explanation supporting such
charges, and GPI shall pay APS the full amounts of such invoices, no later than
twenty (20) days after each invoice date. All payments under this Agreement
shall be made without deduction (except for charges billed in error), set off,
recoupment or counterclaim. In the case of charges believed to be billed in
error, GPI shall timely pay the undisputed portion of the invoice, on or before
the due date for payment of the charges. All overdue amounts shall bear
interest, from the time such amounts are due until such amounts are actually
paid (including any period in which
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such amounts are in dispute), at a rate equal to the lower of: (i) three
percentage points above the prime rate in effect at the time payment was due or
(ii) the highest rate permitted by law.
2.3. GPI shall reimburse to APS an amount equal to the sum of (i) all reasonable
direct out-of-pocket fees and expenses incurred by APS in rendering consulting
services pursuant to this Agreement and (ii) any and all taxes (other than taxes
based on APS' net income or gross income) assessed on the provision of services
pursuant to this Agreement without any offset or deduction of any nature
whatsoever. Such costs, expenditures and taxes will be billed to GPI in the
monthly invoices in accordance with SECTION 2.2.
SECTION 3. TERMINATION; REMEDIES
3.1. This Agreement shall terminate at the end of the PIMS Access Period,
PROVIDED, HOWEVER, that APS shall use reasonable efforts to the extent
practicable to provide GPI with timely written notice of the date on which APS
expects that it will cease operating PIMS, if and when a voluntary and final
decision is made by APS to cease operating PIMS.
3.2. In the event that GPI fails to make any payment hereunder when due or
otherwise fails to perform its obligations or breaches any of its covenants
hereunder and such default is not cured within ten (10) days, (i) APS may
terminate this Agreement upon ten (10) days' written notice to GPI; and (ii) all
amounts owed by GPI to APS under this Agreement as of the date of such default
shall become due and payable. GPI may terminate this Agreement on ten (10) days'
written notice to APS. This Agreement is subject to termination or modification
as may be necessary to comply with the provision of any decree or order of the
Bankruptcy Court.
3.3. Upon termination of this Agreement as provided in SECTION 3.1 or 3.2, or by
operation of law or otherwise, all fees owed to APS hereunder through the date
of termination shall become due and payable and all other obligations granted
hereunder shall terminate, except as provided in SECTIONS 3.4 and 4.
3.4. The sole remedy available to GPI in the event of a material failure of APS
to provide PIMS access pursuant to this Agreement during the Access Period
(other than by a willful breach of this Agreement by APS) shall be addressed to
correcting said failure, rather than to penalizing APS. In recognition of this
aim, GPI's sole and exclusive remedy for such a failure shall be that APS shall
use commercially reasonable efforts to restore PIMS access to GPI within a
commercially reasonable time. In the event that APS is unable to restore PIMS
access, APS shall permit GPI to attempt to restore PIMS access and shall use
reasonable commercial efforts not requiring additional expenditures (other than
making a motion or motions to the Bankruptcy Court, if necessary, to assist GPI
in restoring PIMS access, PROVIDED, THAT
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such PIMS access must be provided on a fair and equitable basis to all parties
then having PIMS access rights. APS shall be excused from the corrective remedy
set forth in this SECTION 3.4 if and to the extent that: (i) APS' failure to
provide PIMS access pursuant to this Agreement is a direct or indirect result of
GPI's breach of any covenant in this Agreement or failure to timely and
accurately perform its responsibilities as set forth in this Agreement or (ii)
GPI fails to provide reasonable cooperation in completing performance and
correcting the problems that led to the failure at issue. Notwithstanding the
foregoing, in the event of the willful failure of APS to provide GPI with PIMS
access pursuant to this Agreement during the Access Period, APS shall be
obligated to indemnify GPI for documented damages (including claims,
liabilities, expenses, reasonable out-of-pocket costs and other legally
recoverable damages) resulting from such breach, PROVIDED, HOWEVER that APS
shall not have any obligation to indemnify GPI for damages to the extent that
such damages exceed $250,000 in the aggregate, and FURTHER PROVIDED that GPI
acknowledges that APS may cease operating PIMS and that such event shall not
constitute a "willful failure" under this SECTION 3.4.
SECTION 4. CONFIDENTIALITY.
GPI and APS agree to keep, and to cause each of its affiliates, directors,
officers, and employees to keep, confidential any and all confidential
information of the other party that it receives in the course of performing its
obligations hereunder (except that such information may be shared, on a
confidential basis, with the party's attorneys and auditors) and will not,
without the other party's written consent, use any of such confidential
information except as reasonably necessary to perform its duties under this or
another of its agreements with the other party. Upon termination of this
Agreement, each party will return, and will cause its affiliates to return, to
the other party, all original documents and copies of the confidential
information which are in its possession. Notwithstanding the foregoing, APS
shall be permitted to provide copies of this Agreement to its lenders and the
Bankruptcy Court. This SECTION 4 shall survive the termination of this
Agreement.
SECTION 5. RELATIONSHIP OF THE PARTIES.
It is expressly understood and agreed that in rendering services hereunder, APS
is acting as an independent contractor and that this Agreement does not
constitute either party as an employee, partner, joint venturer, agent or other
representative of the other party for any purpose whatsoever. Neither party has
the right or authority to enter into any contract, warranty, guarantee or other
undertaking in the name of or for the account of the other party, or to assume
or create an obligation or liability of any kind, express or implied, on behalf
of the other party, or to bind the other party in any manner whatsoever, or hold
itself out as having any right, power or authority to create
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any such obligation or liability on behalf of the other or to bind the other
party in any manner whatsoever (except as to any actions taken by either party
at the express written request and direction of the other party).
SECTION 6. MISCELLANEOUS.
6.1. SEVERABILITY. If any term or provision of this Agreement or the application
thereof with respect to any Person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
that term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
6.2. GOVERNING LAW. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the State of Delaware.
6.3. HEADINGS. The caption headings in this Agreement are for reference purposes
only, and do not constitute a part of this Agreement and shall not affect its
meaning or interpretation.
6.4. NOTICES. All notices, requests, demands and other communications required
or permitted under this Agreement shall be made in the same manner as is set
forth in the Asset Purchase Agreement.
6.5. ACCESS. To the extent reasonably required for APS to perform its
obligations under this Agreement, GPI shall provide APS personnel with
reasonable access to the Purchased Locations, including, without limitation,
office space, and telecommunications and computer equipment, systems and
software. As a condition to providing services pursuant to this Agreement, APS
may restrict or prohibit any changes in the location of certain
telecommunications and computer equipment and systems owned by APS and located
at the Purchased Locations, and GPI shall be bound by all such requirements and
restrictions.
6.6. FORCE MAJEURE. Neither party shall be liable for its failure or delay in
fulfilling its obligations hereunder, if such failure or delay is caused by
fire, flood, weather conditions or other Acts of God, invasions, insurrections,
riots, closing of the public highways, strike, lockout or other labor dispute,
civil unrest, war or any other reason beyond the reasonable control of the
party. In the case of strikes, lockouts or other labor disputes, it is
understood that such event is beyond the reasonable control of the party
suffering the event unless and until the party is able to resolve it in a manner
which such party deems reasonable and appropriate.
6.7. NO THIRD PARTY RIGHTS. The provisions of this Agreement shall not entitle
any person not a signatory hereto to any rights
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hereunder or in respect hereof, as a third party beneficiary or otherwise, it
being the specific intention of the parties herein to preclude any and all such
persons non-signatory hereto from such rights.
This Agreement shall enter into full force and effect as of the date first set
forth above upon its execution below by both of the parties.
A.P.S., INC.
By: /s/ XXXXXXX X. XXXXX
Xxxxxxx X. Xxxxx, President
GENERAL PARTS, INC.
By: /s/ XXXX XXXXXXXXXX
Xxxx Xxxxxxxxxx, V.P. of Finance
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SCHEDULE B TO GPI SERVICE AGREEMENT
List of accounting services for General Parts, Inc. ("GPI") to process
business units being purchased from APS, Inc. ("APS").
1. Office space - Omaha, Memphis & Houston - needs to be made available for
General Parts, Inc. to process financial information.
a. Omaha--at existing APS accounting office for a period of 90 days
from the date of first closing, to be billed at $1,000 per month.
b. Memphis--at existing APS accounting office for a period of 60 days
from the date of first closing, to be billed at $1,000 per month.
x. Xxxxxxx--at existing APS accounting office (ISW & payroll) until
December 31, 1998, to be billed at $1,000 per month.
2. Processing assistance and consulting services, including training in APS
accounting systems - Omaha, Memphis, & Houston - needs to be made
available for GPI to process financial information.
a. Omaha--portion of one person for accounts receivable, accounts
payable, general ledger for a period of 30 days.
b. Memphis--Same as Omaha.
x. Xxxxxxx--Same as Omaha. In addition, portion of one person for
payroll for a period of 30 days.
d. Omaha--GPI hires current staff performing independent jobber
accounting for customers of DCs being purchased by GPI.
The services listed above are to be billed at $150 per hour for professional
personnel, and $50 per hour for clerical personnel.
3. Office equipment currently in place - Omaha, Memphis, & Houston - needs to
be made available to GPI during the periods set forth in Section 1 hereof,
in order to process financial information.
a. CRT's, printers, etc. connected to the PIMS system.
b. PCs, copiers, desks, etc. that are currently used to process the
locations being purchased by GPI.
c. Any third party software being used to process financial
information associated with the locations being purchased by GPI;
provided, however, that access by GPI to the ISW Oracle Accounts
Receivable System shall not be included except that APS will
process accounts receivable associated with the ISW's locations
being purchased by GPI for GPI through and until October 25,
1998, which processing shall include producing statements
required for accounting purposes as of October 25, 1998. GPI and
APS shall, in good faith and within seven days from the signing
of this agreement, work towards creating a viable alternative by
which GPI will be able to continue to process its ISW accounts
receivable.
4. The accounting services to be provided by APS as described above are
subject to the following conditions:
a. The availability of office space pursuant to Paragraph 1 is subject
to (i) the continued operation of the Omaha, Memphis and Houston
facilities by APS, which continued operation shall be at the sole
discretion of APS and (ii) the elimination of accounting services at
those facilities, which shall be at the sole discretion of APS. APS
reserves the right to limit GPI's use of office equipment pursuant
to Paragraph 3 to a reasonable level.
b. The availability of APS personnel to provide processing assistance
and consulting services pursuant to Paragraph 2 shall be limited to
16 hours per week per consultant and shall be subject to the
availability of adequate personnel to first meet APS' accounting
requirements. The continued employment of employees providing
consulting services shall be at the sole discretion of APS.
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