Asset Purchase Agreement

ASSET PURCHASE AGREEMENT


This Asset Purchase Agreement (this "Agreement") is entered into as of October 1, 1999 by and among All Transmission Parts, Inc., an Oregon corporation ("All Trans"), All Automatic Transmission Parts, Inc., an Oregon corporation ("AATP"), David E. Helm, an individual, Barry C. Helm, an individual, Aftermarket Technology Corp., a Delaware corporation ("ATC"), and ATC Distribution Group, Inc., a Delaware corporation ("Buyer"). All Trans and AATP are hereinafter referred to individually as a "Seller" and collectively as "Sellers." David E. Helm and Barry C. Helm are hereinafter referred to individually as a "Stockholder" and collectively as "Stockholders."


R E C I T A L S


A. Sellers are engaged in the remanufacture and/or distribution of standard and automatic transmissions and related components and parts for the automotive aftermarket (the "Business");


B. Stockholders collectively own all of the issued and outstanding shares of the capital stock of each Seller; and


C. Buyer (a wholly owned subsidiary of ATC) desires to purchase the Business and substantially all the assets of Sellers, and Stockholders and Sellers desire to sell the Business and such assets to Buyer on the terms and conditions set forth herein.


A G R E E M E N T


NOW, THEREFORE, in consideration of the foregoing recitals and the mutual representations, warranties, covenants and agreements set forth below, the parties hereto agree as follows.


ARTICLE I
DEFINITIONS


1.01 DEFINITIONS. The following terms, as used herein, have the following meanings:


"ACCOUNTS RECEIVABLE" means all accounts receivable and notes receivable (including, without limitation, any gainsharing payments from customers and rebates from suppliers), together with any unpaid interest or fees accrued thereon or other amounts due with respect thereto. An Account Receivable will not be deemed to have been paid until the payment thereof is actually received by the payee, without regard to when the payor deposited such payment in the mail or with a third party delivery service.


"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Act of 1934, as amended.


"APPLICABLE LAW" means, with respect to any Person, any domestic or foreign, federal, state, provincial, territorial, county or local statute, law, ordinance, rule, administrative interpretation, regulation, policy, guidance, order, writ, injunction, directive, judgment, decree or other requirement of any Governmental Authority (including any Environmental Law) applicable to such Person or any of its properties, assets, officers, directors, employees, consultants or agents (in connection with such officer's, director's, employee's, consultant's or agent's activities on behalf of such Person).


"ASSOCIATE" or "ASSOCIATED WITH" means, when used to indicate a relationship with any Person, (i) any other Person of which such Person is an officer or partner or is, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities issued by such other Person, (ii) any trust or other estate in which such Person has a beneficial interest of more than 50% or as to which such Person serves as trustee or in a similar fiduciary capacity, and (iii) any parent, grandparent, aunt, uncle, sibling, child, grandchild or spouse of such Person, or any relative of such spouse who has the same home as such Person or who is a director or officer of such Person or any Affiliate thereof.


"BENEFIT ARRANGEMENT" means any material benefit arrangement, other than an Employee Benefit Plan, maintained by the Company or any ERISA Affiliate, including, without limitation, the following: (i) each material employment or consulting agreement; (ii) each arrangement providing for material insurance coverage for employees or workers' compensation benefits; (iii) each material incentive bonus or deferred bonus arrangement; (iv) each arrangement providing material termination allowance, severance or similar benefits; (v) each material equity compensation plan; (vi) each material deferred compensation plan; and (vii) each material compensation policy and practice.


"BENEFIT PLAN" means an Employee Benefit Plan or Benefit Arrangement.


"BUSINESS DAY" means a day other than a Saturday, Sunday or other day on which commercial banks in Chicago, Illinois are authorized or required by law to close.


"BUYER ENVIRONMENTAL LIABILITY" means Environmental Liabilities arising as a result of the actions of Buyer after the Closing Date.


"COMPANY" means All Trans and AATP, as Sellers, individually and collectively.


"CODE" means the Internal Revenue Code of 1986, as amended.


"DAMAGES" means, with respect to any Person, all assessments, losses, damages, costs, expenses, liabilities, judgments, awards, fines, sanctions, penalties, charges and amounts paid in settlement, net of insurance proceeds and indemnification proceeds actually received, including without limitation, (i) interest on any of the foregoing, at the Reference Rate in effect from time to time, from the date of incurrence thereof until such Person shall have been indemnified in respect thereof and (ii) reasonable costs, fees and expenses of attorneys, accountants and other agents of such Person, but excluding any consequential, incidental or special damages.


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"EMPLOYEE BENEFIT PLAN" means any employee benefit plan, as defined in Section 3(3) of ERISA, that is sponsored or contributed to by the Company or any ERISA Affiliate.


"EMPLOYEE PENSION BENEFIT PLAN" means any employee pension benefit plan, as defined in Section 3(2) of ERISA, that is subject to Title IV of ERISA, including a multiemployer plan as defined in Section 3(37) and 4001(a)(3) of ERISA.


"ENVIRONMENTAL LAWS" means all Applicable Laws relating to Hazardous Substances, occupational health and safety, or the environment including, without limitation, (i) all Applicable Laws pertaining to reporting, licensing, permitting, controlling, investigating or remediating emissions, discharges, releases or threatened releases of Hazardous Substances, chemical substances, pollutants, contaminants or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature, into the air, surface water, groundwater or land, (ii) all Applicable Laws relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances, chemical substances, pollutants, contaminants or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature, and (iii) the Resource Conservation and Recovery Act (RCRA), the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the Clean Air Act, the Water Pollution Control Act, the Safe Drinking Water Act, the Toxic Substance Control Act (TSCA) and all requirements promulgated pursuant to any of these or analogous domestic or foreign, federal, state, provincial, territorial, county or local statutes.


"ENVIRONMENTAL LIABILITIES" means Liabilities of a Person that arise under any Environmental Law.


"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.


"ERISA AFFILIATE" means any Person that, together with the Company as of the relevant measuring date under ERISA, was or is required to be treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.


"GAAP" means generally accepted accounting principles in the United States as in effect at the time the relevant financial statement is prepared, applied on a consistent basis.


"GOVERNMENTAL AUTHORITY" means any foreign or domestic, federal, territorial, state, provincial, county or local governmental authority, quasi-governmental authority, instrumentality, court, government or self-regulatory organization, commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the foregoing.


"GROUP HEALTH PLAN" means any group health plan, as defined in Section 5000(b)(1) of the Code.


"HAZARDOUS SUBSTANCE" means any substance or material (i) the presence of which requires investigation or remediation under any Applicable Law, (ii) the generation, storage, treatment, transportation, disposal, remediation, removal, handling or management of which is


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regulated by any Environmental Law, (iii) that is defined as a "hazardous waste" or "hazardous substance" under any Applicable Law, (iv) that is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic or mutagenic or otherwise hazardous and is regulated by any Governmental Authority, (v) the presence of which constitutes a nuisance, trespass or other tortious condition, or (vi) without limitation, that contains gasoline, diesel fuel or other petroleum hydrocarbons, polychlorinated biphenols (PCBs) or asbestos.


"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.


"INDEBTEDNESS" means all liabilities and obligations, contingent or otherwise, of the Company (i) in respect of borrowed money, (ii) evidenced by bonds, notes, debentures or similar instruments, (iii) representing the balance deferred and unpaid of the purchase price of any property or services, other than those incurred in the ordinary course of its business that constitute trade payables to trade creditors, (iv) evidenced by a bankers' acceptance or similar instrument issued or accepted by banks, (v) for the capitalized amount of a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, (vi) evidenced by a letter of credit or a reimbursement obligation of the Company with respect to any letter of credit, and (vii) any of the foregoing of another Person as to which the Company is a guarantor or otherwise liable (except endorsements of customer checks in the ordinary course of business). "Indebtedness" shall also include any interest on, or prepayment penalty or redemption premium with respect to, any Indebtedness.


"INDEMNIFYING PARTY" means (i) Stockholders or Sellers when any Buyer Indemnitee is asserting a claim under Sections 9.01(a), or (ii) ATC and Buyer when any Seller Indemnitee is asserting a claim under Sections 9.01(b).


"INDEMNITEE" means (i) each of ATC, Buyer and their respective Affiliates with respect to any claim for which Stockholders and Sellers are Indemnifying Parties under Sections 9.01(a), or (ii) Stockholders, Sellers and their respective Affiliates with respect to claims for which ATC and Buyer are Indemnifying Parties under Sections 9.01(b).


"IRS" means the Internal Revenue Service.


"KNOWLEDGE" means, with respect to any Person that is a legal entity, all things actually known, after due inquiry, by any director or executive officer of such Person. The Knowledge of any Seller or Stockholder will be imputed to all the Sellers and Stockholders.


"LANDLORD" means Helm Brothers, an Oregon partnership, or such other Person controlled by Stockholders that owns the facilities used by All Trans as of the date hereof.


"LIABILITY" means, with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, whether or


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not the same is required to be accrued on the financial statements of such Person and, in the case of the Company, whether or not the same is disclosed on any schedule to this Agreement.


"LIEN" means, with respect to any asset, any mortgage, title defect or objection, lien, pledge, charge, security interest, hypothecation, restriction, encumbrance or charge of any kind in respect of such asset, but excluding liens for taxes not yet due and payable.


"MATERIAL ADVERSE EFFECT" means a change in, or effect on, the operations, affairs, prospects, financial condition, results of operations, assets, Liabilities, reserves or any other aspect of the Company or the Business that results in a material adverse effect on, or a material adverse change in, the Transferred Assets or the Business taken as a whole.


"MATERIAL TITLE DEFECT" means any condition of title that will materially interfere with Buyer's operation of a Transferred Asset in the manner in which the Company has historically operated such asset. Without limiting the generality of the foregoing, "Material Title Defect" shall include any of the following to the extent that it will materially interfere with Buyer's operation of a Transferred Asset in the manner in which the Company has historically operated such asset: (i) lack of access to any Real Property for the benefit of Buyer, (ii) material violations of zoning laws or regulations, (iii) zoning or building restrictions, and (iv) easements, rights of way and servitudes for the benefit of third Persons.


"OUTSIDE DATE" means December 2, 1999.


"PERMITTED LIENS" means those Liens listed on SCHEDULE 1.01 hereto.


"PERSON" means an individual, corporation, limited liability company, partnership, association, trust, estate or other entity or organization, including a Governmental Authority.


"PLAN AFFILIATE" means, with respect to any Person, any Benefit Plan sponsored by, maintained by or contributed to by such Person, and with respect to any Benefit Plan, any Person sponsoring, maintaining or contributing to such Benefit Plan.


"PROHIBITED TRANSACTION" means a transaction that is prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt under Section 4975 of the Code or Section 408 of ERISA, respectively.


"REFERENCE RATE" means the per annum rate of interest publicly announced from time to time by The Chase Manhattan Bank as its prime rate (or reference rate). Any change in the Reference Rate shall take effect at the opening of business on the day specified in the public announcement of such change.


"TAX" means all taxes imposed of any nature including foreign or domestic, federal, state, provincial, territorial, county or local net income tax, alternative or add-on minimum tax, profits or excess profits tax, franchise tax, gross income, adjusted gross income or gross receipts tax, employment related tax (including employee withholding or employer payroll tax, FICA, FUTA or SUTA), real or personal property tax or ad valorem tax, sales or use tax, excise tax, stamp tax


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or duty, any withholding or back up withholding tax, value added tax, severance tax, prohibited transaction tax, premiums tax, occupation tax, together with any interest or any penalty, addition to tax or additional amount imposed by any Governmental Authority responsible for the imposition of any such tax.


"TAX RETURN" means all returns, reports, forms or other information required to be filed with respect to any Tax.


1.02 ADDITIONAL DEFINED TERMS. The following terms are defined in the Sections referred to below:


"1999 Balance Sheet"...........................................Section 3.08(a) "AAA Rules"...................................................Section 11.11(a) "AATP"................................................................Preamble "Agreement"...........................................................Preamble "All Trans"...........................................................Preamble "Assumed Liabilities".............................................Section 2.03 "ATC".................................................................Preamble "Business"...........................................................Recital A "Buyer"...............................................................Preamble "Buyer Indemnitees"............................................Section 9.01(a) "Buyer's Benefit Plans.........................................Section 7.08(b) "Closing Date".................................................Section 2.06(a) "Closing"......................................................Section 2.06(a) "Contracts"....................................................Section 2.01(d) "Equipment"....................................................Section 2.01(b) "Excluded Assets".................................................Section 2.02 "Excluded Liabilities"............................................Section 2.04 "Existing Facility"............................................Section 7.07(b) "Hired Employees"..............................................Section 7.08(a) "Insurance Policies"...........................................Section 3.20(a) "Intellectual Property Rights".................................Section 3.18(a) "Inventory"....................................................Section 2.01(c) "Leases".......................................................Section 3.09(b) "Master Lease".................................................Section 7.07(d) "New Facility".................................................Section 7.07(b) "Permits".........................................................Section 3.14 "Personal Property Leases".....................................Section 3.09(a) "Proceedings".....................................................Section 3.12 "Real Property"................................................Section 3.09(a) "Required Approvals and Consent"..................................Section 3.04 "Scheduled Contracts"..........................................Section 3.13(a) "Seller"..............................................................Preamble "Seller Indemnitees"...........................................Section 9.01(b) "Stockholder".........................................................Preamble


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"Subsequent Material Contract".............................Section 5.01(b)(iv) "Suitable Location"............................................Section 7.07(b) "Transferred Assets"..............................................Section 2.01


ARTICLE II
TRANSFER OF ASSETS


2.01 TRANSFER OF ASSETS BY SELLER. Upon the terms and subject to the conditions of this Agreement and in reliance upon the representations, warranties and agreements herein set forth, Buyer agrees to purchase from Sellers and each Seller agrees to sell or cause to be sold to Buyer at the Closing, free and clear of all Liens other than Permitted Liens, all the assets, properties, rights, licenses, permits, contracts, causes of action and claims, of every kind and description (other than the Excluded Assets) as the same shall exist on the Closing Date, wherever located, whether tangible or intangible, real, personal or mixed, that are used by, owned by, leased by or in the possession of such Seller in connection with the Business, whether or not reflected on the books and records of such Seller, including all assets shown on the 1999 Balance Sheet and not disposed of in the ordinary course of business or as permitted by this Agreement prior to the Closing Date (the collective assets, properties, rights, licenses, permits, contracts, causes of action and claims to be transferred to Buyer by Sellers pursuant hereto are referred to collectively herein as the "Transferred Assets") and including without limitation all right, title and interest of the Company in, to and under the following, to the extent owned or leased by the Company at the time of Closing:


(a) all real property leases (whether capitalized or operating), all fixtures and improvements on and appurtenances to leased real property, and all leasehold improvements relating to any leased real property, including the foregoing listed on SCHEDULE 3.09(a)(i);


(b) all machinery, equipment, furniture, office equipment, computer equipment (including all hardware and software), communications equipment, vehicles, storage tanks, spare and replacement parts, fuel and other tangible property ("Equipment") including any of the foregoing listed on SCHEDULE 2.01;


(c) all items of inventory notwithstanding how or if classified in the financial records of the Company, including all raw materials, cores, purchased parts, work-in-process, finished goods, supplies, spare parts and samples ("Inventory");


(d) all contracts, agreements, options, licenses, sales and purchase orders, commitments and other instruments of any kind, whether written or oral, to which the Company is a party, including the Scheduled Contracts and the Subsequent Material Contracts (the "Contracts");


(e) all books, records, files and papers, whether in hard copy or computer format, including books of account, invoices, engineering information, sales and promotional literature, manuals and data, sales and purchase correspondence, lists of present and former suppliers, personnel and employment records of present and former employees, and


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documentation developed or used for accounting, marketing, engineering, manufacturing or any other purpose;


(f) all prepaid charges and expenses other than prepaid insurance, including any such charges and expenses with respect to ad valorem taxes, leases and rentals and utilities;


(g) all rights, claims, credits, causes of action or rights of set-off against third parties, whether liquidated or unliquidated, fixed or contingent, including claims pursuant to all warranties, representations and guarantees made by suppliers, manufacturers, contractors and other third parties in connection with products or services purchased by or furnished to the Company;


(h) all Accounts Receivable and any security or collateral therefor;


(i) all patents, copyrights, trademarks, trade names, service marks, service names, designs, know-how, processes, trade secrets, inventions, and other proprietary data, including any of the foregoing listed on SCHEDULE 3.18;


(j) all transferable franchises, licenses, permits or other authorizations issued or granted by any Governmental Authority, whether or not actually utilized by the Company;


(k) all lists of present customers and lists of former customers;


(l) all goodwill associated with the Business or the Transferred Assets; and


(m) all product designations used in the Company's catalogs.


2.02 EXCLUDED ASSETS. Buyer expressly understands and agrees that those assets listed on Schedule 2.02 (the "Excluded Assets") shall be excluded from the Transferred Assets and shall be retained by the relevant Seller.


2.03 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the conditions of this Agreement and in reliance upon the representations, warranties and agreements herein set forth, Buyer agrees, effective at the time of Closing, to assume and in due course perform, pay and discharge each of the following (the "Assumed Liabilities"):


(a) all Liabilities and obligations of the Company arising after the Closing under Contracts and Leases included in the Transferred Assets;


(b) all trade payables of the Business arising in the ordinary course of business as of the Closing Date that are not then past due; and


(c) warranty claims with respect to the products of the Business sold prior to the Closing Date that do not exceed $75,000 in the aggregate.


2.04 EXCLUDED LIABILITIES. Buyer does not hereby assume, and shall not at any time hereafter (including on or after the Closing Date) become liable for, any of the Liabilities of the


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Company or any of its Affiliates or ERISA Affiliates other than the Assumed Liabilities (the "Excluded Liabilities"). The Excluded Liabilities shall include, without limitation, the following Liabilities:


(a) any Liability of the Company or any of its Affiliates or ERISA Affiliates, whether currently in existence or arising hereafter, that is not attributable to, or that does not arise out of the conduct of, the Business;


(b) any Liability whether presently in existence or arising hereafter relating to an Excluded Asset;


(c) any Environmental Liability, whether presently in existence or arising hereafter, other than Buyer Environmental Liabilities;


(d) any Liability whether currently in existence or arising hereafter relating to fees, commissions or expenses owed to any broker, finder, investment banker, attorney, accountant or other intermediary or advisor employed by either Stockholder or Seller or any of their respective Affiliates in connection with the transactions contemplated hereby or otherwise;


(e) any Liability the existence of which constitutes a breach of any representation or warranty of Stockholders and Sellers hereunder;


(f) any contingent Liabilities of the Company related to any transactions by the Company prior to the date hereof except Liabilities that Buyer has expressly agreed to assume pursuant to the terms of this Agreement;


(g) any Liability related to Indebtedness;


(h) any Liability for Taxes relating to the Company's operations;


(i) any Liability arising under any of Seller's Benefit Plans;


(j) any Liability of the Company for accrued payroll for its employees;


(k) warranty claims with respect to the products of the Business sold prior to the Closing Date that exceed $75,000 in the aggregate; and


(l) any Liability of either Seller arising under this Agreement.


Any Liability that is listed in both Section 2.03 and Section 2.04 shall be deemed an Excluded Liability.


2.05. ASSIGNMENT OF CONTRACTS AND RIGHTS.


(a) With respect to any material Contract and any claim, right or benefit arising thereunder or resulting therefrom that constitute Transferred Assets, promptly after the date hereof, to the extent requested by Buyer, Stockholders and Sellers will use their respective


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best efforts to obtain the written consent of the other parties to any such Contract to the assignment thereof to Buyer or written confirmation from such parties reasonably satisfactory in form and substance to Buyer confirming that such consent is not required. In this regard, Stockholders' and Sellers' best efforts will not include the payment of money.


(b) If such consent, waiver or confirmation is not obtained with respect to any such Contract and notwithstanding the provisions of Section 8.01(b) Buyer elects to consummate the Closing, Sellers and Buyer shall cooperate in an arrangement reasonably satisfactory to Buyer and Sellers under which (i) Buyer will obtain, to the extent practicable, the claims, rights and benefits under such Contact and assume the corresponding obligations thereunder in accordance with this Agreement, including subcontracting, sub-licensing or sub-leasing to Buyer, or (ii) Sellers will enforce for the benefit of Buyer, with Buyer assuming Sellers' obligations to be performed after the Closing Date, any and all claims, rights and benefits of Sellers against a third party thereto. Sellers will promptly pay to Buyer when received all monies received by Sellers under or with regard to any Transferred Asset or any claim, right or benefit arising thereunder not transferred to Buyer pursuant to this ...