EXHIBIT 2.6
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 BWP DISTRIBUTORS, INC., a New York corporation ("BWP").
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 BWP have entered into an Asset Purchase Agreement (the
"ASSET PURCHASE AGREEMENT"), pursuant to which BWP 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, BWP will conduct business at certain of the
Purchased Locations and, in connection therewith, BWP 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 BWP limited access to PIMS and to provide
BWP 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 BWP 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 BWP notifies APS that it no longer requires PIMS access. BWP
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. BWP's access to PIMS shall be limited to information
which pertains to the Purchased Locations, and BWP 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 BWP 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, BWP'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 BWP 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 BWP 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. BWP shall not be granted access
to the source code underlying PIMS software programs, and BWP shall not
attempt to obtain such access. However, should it become necessary for BWP to
restore PIMS access as provided in SECTION 3.4, APS agrees to disclose to BWP
whatever proprietary information as may be necessary, including, but not
limited to, programs, know-how, operating procedures or source code, to
enable BWP to restore such access. BWP 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 BWP
with the same standard of care as it treats its own confidential information.
PIMS shall be used exclusively by BWP and its employees, and BWP shall not
allow others to use or have access to PIMS, directly or indirectly. BWP
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. BWP shall maintain the confidential nature of all PIMS data
(other than data input by BWP) and operating procedures, and shall not
disseminate PIMS data (other than data input by BWP) 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 BWP, and shall not
disseminate such PIMS data to any third party without the prior written
consent of BWP.
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
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consulting services may include: (i) requirements analysis and initial and
follow-up customized programming or reporting necessary for any interface
of BWP'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 BWP 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 BWP 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 BWP 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 BWP 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. BWP 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 BWP monthly in arrears for all charges for
consulting services pursuant to SECTIONS 1.5(A) and 1.5(B), which invoice
shall be accompanied by reasonable documentation or explanation supporting
such charges, and BWP 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
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to be billed in error, BWP shall timely pay the undisputed portion of the
invoice, on or before the due date for payment of the charges. All overdue
amounts shall bear interest, from the time such amounts are due until such
amounts are actually paid (including any period in which such amounts are in
dispute), at a rate equal to the lower of: (i) three percentage points above
the prime rate in effect at the time payment was due or (ii) the highest rate
permitted by law.
2.3. BWP 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 BWP 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 BWP 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 BWP 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 BWP; and (ii)
all amounts owed by BWP to APS under this Agreement as of the date of such
default shall become due and payable. BWP 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 BWP 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, BWP's sole and exclusive remedy for such a failure
shall be that APS shall use commercially
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reasonable efforts to restore PIMS access to BWP within a commercially
reasonable time. In the event that APS is unable to restore PIMS access, APS
shall permit BWP 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 BWP in
restoring PIMS access, PROVIDED, THAT 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 BWP'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) BWP 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 BWP with PIMS access pursuant to
this Agreement during the Access Period, APS shall be obligated to indemnify
BWP 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 BWP for damages to the extent that such damages
exceed $250,000 in the aggregate, and FURTHER PROVIDED that BWP 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.
BWP 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
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and that this Agreement does not constitute either party as an employee,
partner, joint venturer, agent or other representative of the other party for
any purpose whatsoever. Neither party has the right or authority to enter
into any contract, warranty, guarantee or other undertaking in the name of or
for the account of the other party, or to assume or create an obligation or
liability of any kind, express or implied, on behalf of the other party, or
to bind the other party in any manner whatsoever, or hold itself out as
having any right, power or authority to create any such obligation or
liability on behalf of the other or to bind the other party in any manner
whatsoever (except as to any actions taken by either party at the express
written request and direction of the other party).
SECTION 6. MISCELLANEOUS.
6.1. SEVERABILITY. If any term or provision of this Agreement or the
application thereof with respect to any Person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement, or the
application of that term or provision to persons or circumstances other than
those as to 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, BWP 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 BWP shall be bound by all such
requirements and restrictions.
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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 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
BWP DISTRIBUTORS, INC.
By: /s/ XXXX XXXXXXX
Xxxx Xxxxxxx, President
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SCHEDULE B TO BWP SERVICES AGREEMENT
List of accounting services for BWP Distributors, Inc. ("BWP") from APS, Inc.
("APS")
1. Processing assistance by APS personnel at APS' facilities are to be made
available to BWP personnel for the purpose of processing BWP financial
information for the payments set forth below, subject to the conditions
set forth in Paragraph 2 below.
Omaha--an APS employee to be made available to provide consulting services
with respect to accounts receivable, accounts payable and general ledger
processing.
Memphis--an APS employee to be made available to provide consulting
services with respect to accounts receivable.
The services listed above are to be billed at $150 per hour for
professional personnel, and $50 per hour for clerical personnel.
2. The accounting services to be provided by APS as described above are
subject to the following conditions:
The availability of APS personnel to provide consulting services set forth
in Paragraph 1 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.
