Exhibit 10.3
AMENDMENT
TO
AGREEMENT FOR SALE AND PURCHASE OF ASSETS
This Amendment is made and entered into this 4th day of June, 1998, by and among
Strategic Distribution, Inc., a Delaware corporation ("Strategic"); American
Technical Services Group, Inc., a Delaware corporation ("ATSG"); ATS Phoenix,
Inc., a Delaware corporation ("ATS"; ATSG and ATS are hereinafter referred to as
"Sellers"); SPEC/ATS, Inc. a Pennsylvania corporation ("Purchaser"); and SPEC
Group Holdings, Inc. ("SPEC").
RECITALS
A. On April 22, 1998, Strategic, ATSG, ATS, Purchaser and SPEC (the "Parties")
entered into Agreement for Sale and Purchase of Assets (the "Agreement");
B. Certain conditions to the Closing of the transactions contemplated by the
Agreement have not occurred.
C. The Parties wish to amend the Agreement upon the terms set forth herein.
Now, therefore, in consideration of the mutual representations, warranties,
covenants and agreements contained in this Amendment, and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Section 1.01 is hereby amended to change the Closing Date from May 19,
1998, to the date of execution of this Amendment.
2. The second sentence of Section 14.09 is hereby amended and restated as
follows: "The parties agree that the Closing shall be deemed to be
effective for all purposes as of 12:01 a.m. on June 1, 1998.
3. Section 3.02(1) is hereby amended and restated in its entirety as follows:
"1. Cash at Closing. A payment of $700,000 shall be made in cash at
Closing (as adjusted, the "Base Purchase Price"), such amount to be
subsequently adjusted as provided in Section 3.05 below."
4. Section 3.02(2) is hereby amended and restated in its entirety.
"2. Earn-Out Payment. In addition to the Base Purchase Price, an
Earn-Out Payment ("Earn-Out Payment"), if any, shall be determined
based on Gross Profit of the Business for the twelve month period
beginning June 1, 1998 and ending May 31, 1999 (the "Earn-Out
Period") as follows: (i) if Gross Profit of the Post-Closing
Business during the Earn-Out
Period is less than $1,300,000, no Earn-Out Payment will be payable; (ii)
if Gross Profit of the Post-Closing Business during the Earn-Out Period is
greater than $1,300,000 and less than or equal to $1,750,000, the Earn-Out
Payment will be an amount equal to 25% of the total Gross Profit; and
(iii) if Gross Profit of the Post-Closing Business during the Earn-Out
Period is greater than $1,750,000, the Earn-Out Payment will be an amount
equal to 40% of the total Gross Profit; provided that the aggregate amount
of the Earn-Out Payment shall not exceed $1,500,000. For purposes of this
Agreement, "Gross Profit" shall mean the gross profit of the Post-Closing
Business calculated in accordance with generally accepted accounting
principles applied on a basis consistent with historic practices of SPEC.
For purposes of this Agreement, "Post-Closing Business" shall mean the
Business acquired by the Purchaser hereunder plus any business generated
by those current employees of Sellers who are employed by Purchaser. As
soon as practicable and in any event within sixty (60) days following the
end of the Earn-Out Period, Purchaser shall prepare and deliver to Sellers
a statement (the "Earn-Out Statement") setting forth the Gross Profit of
the Post-Closing Business for the Earn-Out Period, together with a
calculation of the amount of any Earn-Out Payment payable by the
Purchaser. Any Earn-Out Payment shall be payable by the Purchaser within
15 days of the day that Sellers notify Purchaser that they agree with the
Earn-Out Statement. In the event of any dispute or failure to reach
agreement with respect to the amount of the Earn-Out Payment, if any, the
applicable Earn-Out Payment shall be determined by the Arbiter (as
defined in Section 3.04). Notwithstanding anything to the contrary
contained herein, Purchaser shall have no liability or obligation to
Sellers or Strategic of any nature whatsoever related to or arising from
its operation of the Post-Closing Business, including with respect to the
effect of the operation of the Post-Closing Business on the Gross Profit
or the amount of any Earn-Out Payment, provided, however, that the
foregoing shall in no way prevent Sellers from contesting the preparation
of the Earn-Out Statement and the calculation of the Earn-Out Payment
pursuant to the foregoing provisions of this Section 3.02(2)."
5. Section 12.01(6) is amended to delete the name "Xxxxxx Xxxxxxxx."
6. Sellers and Strategic acknowledge and agree that it is a condition to
Purchaser's obligation to close the transaction that Xxxxxxx X. Xxxxxxxx
("Xxxxxxxx"), Xxxxxx X. Xxxxx ("Xxxxx"), Xxxxxxx X. Xxxxxx ("Xxxxxx"),
Xxxxxx Gentilellia ("Gentilellia") (Lonergan, Bhatt, Xxxxxx and Gentilellia
are collectively referred to herein as the "Designated Philadelphia
Employees"), Xxxx X. Xxxxxx, Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxx and Xxxx X.
Xxxxx, Xx. shall have executed employment agreements in form and substance
satisfactory to Purchaser and by executing this Amendment Purchaser
acknowledges that this condition has been satisfied or waived. Purchaser
acknowledges that the written consents of Amoco and Ashland contemplated by
Section 12.01(5) have not been obtained and by executing this Agreement
acknowledges that obtaining such written consents has been waived as a
condition to Closing.
7. The parties acknowledge that the Services Agreement has been amended by
Letter Amendment of even date herewith.
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8. Section 14.16 Merck Jobs:
"If the total of Purchaser's direct costs incurred in
connection with the completion of Merck Job #2F530 exceeds the
sum of (i) 60% of the liability attributable to Merck Job
#2F530 as reflected on the Closing Date Balance Sheet, and
(ii) 60% of that portion of the $32,171 to be billed to Merck
after the closing date in connection with Merck Job #2F530
which is collected from Merck by Purchaser (such sum being
referred to herein as the "Estimated 2F530 Cost"), then
Sellers shall, subject to Section 9.04, promptly pay to
Purchaser an amount equal to the amount by which such direct
costs exceed the Estimated 2F350 Cost. If the total of
Purchaser's direct costs incurred in connection with the
completion of Merck Job #2F531 exceeds 70% of the liability
attributable to Merck Job #2F531 as reflected on the Closing
Date Balance Sheet (the "Estimate 2F531 Cost"), then Sellers
shall, subject to Section 9.04, promptly pay to Purchaser an
amount equal to the amount by which such direct costs exceed
the Estimated 2F531 Cost. In the event of any dispute
concerning Seller's obligation under this Section 14.16 such
dispute shall be submitted to the Arbiter in accordance with
Section 3.04. The Arbiter shall resolve the dispute and such
resolution shall be final and binding for all purposes of this
Agreement."
9. Schedule 7.08(2) is hereby amended and restated as set forth in the
attachment to this Amendment.
10. Strategic has agreed to pay to the employees of the Philadelphia branch a
$2,000 ($4,000 for the Designated Philadelphia Employees) (in each case
less applicable withholding), bonus upon Closing and to fund a bonus in the
amount of $2,000 ($4,000 for the Designated Philadelphia Employees) (in
each case less applicable withholding) payable to such employees who
continue in the employment of Purchaser through December 31, 1998.
Strategic shall fund the payment of the bonuses described in the preceding
sentence, including, to the extent such bonuses are funded by Strategic and
paid by Purchaser, any taxes payable and other out-of-pocket compensation
related expenses incurred by Purchaser as a result of the Purchaser's
payment of such bonuses.
11. Except as expressly amended herein, the Agreement shall remain unchanged
and in full force and effect. Without limiting the foregoing, Strategic
acknowledges that nothing contained in the third party consents or any
other transaction documents shall limit the indemnification obligations of
Sellers and Strategic under Section 9 of the Agreement. All of the
undersigned ratify the within changes and agree to be bound by the
Agreement as amended herein.
12. The Agreement, as amended by this Amendment, contains the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes any prior or contemporaneous contracts, agreements,
understandings and/or negotiations, whether oral or written with respect to
the subject matter hereof.
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13. This Amendment may be executed in two or more counterparts, all of which
together shall constitute one and the same instrument.
[signatures on the following page]
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Executed the day and year first above written.
SELLERS:
AMERICAN TECHNICAL SERVICES GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Its: Chairman
---------------------------------
ATS PHOENIX, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Its: Chairman
---------------------------------
GUARANTOR:
STRATEGIC DISTRIBUTION, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Its: Chairman
---------------------------------
PURCHASER:
SPEC/ATS, INC.
By:
---------------------------------
Its: Chairman
---------------------------------
GUARANTOR:
SPEC GROUP HOLDINGS, INC.
By:
---------------------------------
Its: President
---------------------------------
Executed the day and year first above written
SELLERS:
AMERICAN TECHNICAL SERIVCE GROUP, INC.
By:
----------------------------------
Its: Chairman
----------------------------------
ATS PHOENIX, INC.
By:
----------------------------------
Its: Chairman
----------------------------------
GUARANTOR:
STRATEGIC DISTRIBUTION, INC.
By:
----------------------------------
Its: Chairman
----------------------------------
PURCHASER:
SPEC/ATS, INC.
By: /s/ Xxxx-Xxxxxx Xxxxx
---------------------------------
Its: Chairman
---------------------------------
GUARANTOR:
SPEC GROUP HOLDINGS, INC.
By: /s/ Xxxx-Xxxxxx Xxxxx
---------------------------------
Its: President
---------------------------------
