AMENDMENT NO. 1
TO CONTRIBUTION AGREEMENT
THIS AMENDMENT NO. 1 TO CONTRIBUTION AGREEMENT (this
"Amendment") is entered into as of March 2, 2000 by and among SUNSOURCE INC., a
Delaware corporation ("SunSource"), SUNSOURCE INDUSTRIAL SERVICES COMPANY, INC.,
a Delaware corporation ("Parent"), KAR PRODUCTS LLC (as successor by merger to
Kar Products, Inc.), a Delaware limited liability company ("Kar Products"),
SUNSOURCE CANADA INVESTMENT COMPANY, an unlimited liability company organized
under the laws of the Province of Nova Scotia ("SunSource Canada"), A&H HOLDING
COMPANY, INC., a Michigan corporation ("A&H Holding"), A. & H. BOLT & NUT
COMPANY LIMITED, a company organized under the laws of the Province of Ontario
("A&H Bolt"), and GC-SUN HOLDINGS, L.P., a Delaware limited partnership (the
"Partnership"). Capitalized terms used in this Amendment and not otherwise
defined herein shall have the meanings ascribed to them in the Contribution
Agreement (as defined below).
RECITALS
WHEREAS, SunSource, Parent, Kar Products, SunSource Canada,
A&H Holding, A&H Bolt and the Partnership entered into that certain Contribution
Agreement, dated as of February 10, 2000 (as further amended, supplemented,
restated or otherwise modified from time to time, the "Contribution Agreement");
and
WHEREAS, the parties signatory hereto desire to amend the
Contribution Agreement as set forth herein;
NOW THEREFORE, in consideration of the mutual covenants herein
and other good and valuable consideration, the parties hereto agree as follows:
Section 1 Amendments to the Contribution Agreement.
As of the date hereof and prior to the Closing, the parties
hereby amend the Contribution Agreement and the Exhibits and Schedules thereto
as follows:
(a) Section 1.1 (Certain Defined Terms) of the Contribution
Agreement is hereby amended:
(i) by inserting the following definition immediately
after the definition of "Ancillary Agreements":
"Assignment Agreement" shall mean that certain
Assignment Agreement to be executed by SunSource Industrial as
of the Closing Date effecting the Contribution and assignment
of the Kar Interest to the Partnership pursuant to this
Agreement."
(ii) by inserting the following sentence at the end
of the definition of "Current Liabilities":
"The parties hereto acknowledge and agree that the
term "Current Liabilities" shall not include the Intercompany
Indebtedness."
(iii) by inserting the following definition
immediately after the definition of "Environmental Laws":
"Equity Holders Agreement" shall mean that certain
Equity Holders Agreement to be entered into by the
Partnership, SunSource, the Contributors and the other parties
signatory thereto as of the Closing Date in substantially the
form attached hereto as Exhibit O".
(iv) by inserting the phrase "the Partnership and/or"
immediately after the phrase "entered into by" in the second line of
the definition of "Fee Agreements".
(v) by (x) deleting the word "and" in the last line
of the definition of "Ancillary Agreements", and (y) inserting the
phrase ", (vii) the Assignment Agreement and the other instruments,
certificates, assignment agreements, bills of sale and other documents
effecting the Contributions delivered pursuant to Section 2.5(a)(i) of
this Agreement, and (viii) the Equity Holders Agreement" immediately
prior to the period at the end of such definition.
(b) Section 1.2 (Other Defined Terms) is hereby amended to
insert a reference to "UPS Rates" under the column heading "Term" and a
corresponding reference thereto to "9.2(a)(x)" under the column heading
"Section", in each case immediately after the respective references to "Unit
Pledge Agreement" and the corresponding section reference thereto.
(c) Section 2.6 (Adjustment to Intercompany Indebtedness) of
the Contribution Agreement is hereby deleted in its entirety and the phrase
"[Intentionally deleted]" is substituted therefor (and the corresponding
reference to Section 2.6 in the Table of Contents to the Contribution Agreement
is hereby deleted and the phrase "[Intentionally deleted]" is substituted
therefor).
(d) Section 8.2 (Conditions to Obligations of the Partnership)
of the Contribution Agreement is hereby amended:
(i) by deleting the phrase "the conditions specified
in Sections 8.2(a), (b), (e) and (g) of this Agreement" in the third
line of subsection (i) thereof and substituting therefor "the
conditions specified in Sections 8.2(a), (b) and (e) of this
Agreement".
(ii) by deleting subsection (r) thereof in its
entirety.
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(e) Section 9.1 (Survival of Representations, Etc.) of the
Contribution Agreement is hereby amended by deleting the phrase "without giving
effect to any consensual extension of such period" at the end of subsection (b)
thereof and substituting therefor "without giving effect to any consensual
extension of such period by the Partnership or its subsidiaries after the
Closing".
(f) Section 9.2 (Indemnification) of the Contribution
Agreement is amended (i) by deleting the word "and" at the end of paragraph
(viii) of subsection (a) thereof and (ii) by inserting the following immediately
after paragraph (ix) of subsection (a) thereof:
"(x) the aggregate difference in each fiscal quarter
between (A) the actual freight costs incurred by the
Partnership and its subsidiaries for shipping packages
(internally or to customers) and (B) the freight costs which
would have been incurred by the Partnership and its
subsidiaries had they received a 27.5% discount from the
United Parcel Service's published UPS Commercial Ground
Service Rate Chart in effect at that time ("UPS Rates") on
such shipping; provided, however, (1) such indemnity shall
expire with respect to shipping occurring on and after August
23, 2003 and (2) the difference calculated in any fiscal
quarter shall in no event be less than zero or exceed the
lesser of (x) the amount which would have been calculated
(under clause (A) above) had the Partnership and its
subsidiaries received a 23% discount from UPS Rates on such
shipping and (y)(I) during calendar year 2000, $55,000 per
fiscal quarter (or prorated portion thereof based on calendar
days), (II) during calendar year 2001, $60,500 per fiscal
quarter (or prorated portion thereof based upon calendar
days), (III) during calendar year 2002, $66,500 per fiscal
quarter (or prorated portion thereof based upon calendar days)
and (IV) during calendar year 2003, $73,150 per fiscal quarter
(or prorated portion thereof based upon calendar days); and
(xi) any and all Liabilities arising out of or
relating to the Xxxx Oil Service, Inc. site in Downers Grove
Township, Du Page County, Illinois."
(g) Section 9.4 (Tax Indemnification) of the Contribution
Agreement is hereby amended:
(i) by deleting the word "or" immediately after the
comma at the end of clause (ii) of subsection (a) thereof and by
inserting the following language at the end of the first sentence of
subsection (a) thereof:
", or (iv) imposed under Section 116(5) of the Income
Tax Act (Canada) in respect of the contribution and transfer
of the Canada Shares to the Partnership pursuant to Section
2.1(a)(ii) of this Agreement in the event that: (A) A&H
Holding fails to deliver to the Partnership the Tax Compliance
Certificate referred to in Section 5.3(c)(i) of this Agreement
on or before the last business day that is not more than
3
thirty (30) days after the end of the month in which the
effective date of such contribution and transfer occurred or
(B) the fair market value of the Canada Shares at the
effective date of such contribution and transfer is determined
to be an amount in excess of the certificate limit fixed by a
certificate issued under Section 116 by A&H Holding and the
Partnership or by the Canada Customs and Revenue Agency and
agreed to by A&H Holding and the Partnership, or in the event
of their disagreement, by a tribunal or court of competent
jurisdiction (after all appeal rights have been exhausted or
all times for appeal have expired without appeals having been
taken)."
(ii) by deleting the phrase "without giving effect to
any consensual extension of such period" at the end of subsection (c)
thereof and substituting therefor "without giving effect to any
consensual extension of such period by the Partnership or its
subsidiaries after the Closing".
(h) Section 9.5 (Security; Partnership's Right to Withhold and
Set-Off) of the Contribution Agreement is hereby amended:
(i) by inserting the phrase "the amount of any
Damages" immediately after the word "apply" in the fifth line of
subsection (b) thereof.
(ii) by inserting the following immediately after
subsection (b) thereof:
"(c) Notwithstanding anything to the contrary in this
Agreement and without limiting the terms of Section 9.5(b) of
this Agreement, and regardless of other means of obtaining
payment, the Partnership is hereby authorized at any time and
from time to time to withhold and set-off and apply Damages
arising under Section 9.2(a)(x) of this Agreement against any
amounts owing or that may be owed to any of the SunSource
Entities pursuant to the Fee Agreements. Any such withholding,
set-off, retention or application by the Partnership shall not
constitute a default under, or give any right of dissolution,
amendment or other similar rights under the Fee Agreements.
Absent fraud or manifest error, the calculation by the
Partnership's outside auditor, if requested, of amounts to be
calculated under Section 9.2(a)(x) shall be final and binding
upon the Indemnifying Party in such circumstances."
(i) Section 11.2 (Notices) of the Contribution Agreement is
hereby amended by deleting the phrase "Suite 2330" in subsection (b) thereof and
substituting the phrase "Suite 2830" therefor.
(j) Exhibit M to the Contribution Agreement is hereby deleted
in its entirety and the phrase "[Intentionally deleted]" is substituted therefor
(and the corresponding reference to "Exhibit M - Designated Consent" in the List
of Exhibits to the Contribution Agreement is hereby deleted and the phrase
"[Intentionally deleted]" is substituted therefor).
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(k) The Contribution Agreement is hereby amended by adding as
Exhibit O to the Contribution Agreement the "Form of Equity Holders Agreement"
attached hereto as Annex I. The List of Exhibits in the Contribution Agreement
is hereby amended by inserting a reference at the end thereof to "Exhibit O -
Form of Equity Holders Agreement".
(l) Schedule 3.17(b) of the Disclosure Schedule is hereby
amended to add the following at the end of the disclosure:
"10. Letter from the Office of the Attorney General of the
State of Illinois dated February 9, 2000 relating to the Xxxx Oil
Service, Inc. site in Du Page County, Illinois."
Section 2 Reference to and Effect Upon the Contribution Agreement.
(a) Except as expressly set forth in this Amendment, the
Contribution Agreement (including all Exhibits and Schedules thereto) shall
remain in full force and effect in all respects and is hereby ratified and
confirmed.
(b) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of any of
the parties under the Contribution Agreement, nor constitute a waiver of any
provision of the Contribution Agreement (including the Exhibits and Schedules
thereto) or any Ancillary Agreement, except as expressly set forth in this
Amendment. Upon the effectiveness of this Amendment, each reference in the
Contribution Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of similar import shall mean and refer to the Contribution Agreement as
amended hereby.
Section 3 GOVERNING LAW.
THIS AMENDMENT SHALL BE SUBJECT TO SECTION 11.11 OF THE
CONTRIBUTION AGREEMENT AS IF IT WERE PART OF SUCH CONTRIBUTION AGREEMENT.
Section 4 Headings.
Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this amendment
for any other purposes.
Section 5 Counterparts.
This Amendment may be executed in any number of counterparts,
each of which when so executed shall be deemed an original but all such
counterparts shall constitute one and the same instrument.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the date first written above by their respective
officers thereunto duly authorized.
GC-SUN HOLDINGS, L.P.
By: GC-SUN G.P., Inc., its general partner
By: /s/ Xxxxxx X. Xxxx
--------------------------------
Name: Xxxxxx X. Xxxx
Title: President
SUNSOURCE INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President-Finance
SUNSOURCE INDUSTRIAL SERVICES COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Secretary
KAR PRODUCTS, LLC (as successor by
merger to Kar Products, Inc.)
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Manager
A&H HOLDING COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxxx*
----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President-Finance
SUNSOURCE CANADA INVESTMENT COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
A. & H. BOLT & NUT COMPANY LIMITED
By: /s/ Xxxxxx X. Xxxxxxx*
---------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Secretary
