AMENDMENT
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The undersigned hereby amend the Asset Purchase Agreement, dated as of July
19, 1997 (the "Agreement"), by and among Figgie International Inc. ("Seller"),
SKL Lift, Inc. ("Buyer") and the other parties named therein, pursuant to and in
accordance with Section 7.3 thereof. All capitalized terms not defined herein
are used as defined in the Agreement.
FIRST, Section 1.2(a) of the Agreement is hereby amended to read as
follows:
(a) Those current liabilities of Seller relating to the Business set
forth on Exhibit A hereto;
SECOND, Section 1.2(b) of the Agreement is hereby amended to read as
follows:
(b) All liabilities, obligations and costs of Seller arising after the
Closing Date under any Contract assigned to Buyer pursuant to Section
1.1(a)(v) hereof or as to which arrangements have been made pursuant to
Section 5.4 hereof which is set forth in the Seller Disclosure Schedule (or
which is not required to be set forth thereon), or which was entered into
after the date hereof and prior to the Closing Date in accordance with the
provisions of this Agreement;
THIRD, Section 1.2(e) of the Agreement is hereby amended to read as
follows:
(e) Except as provided in Section 1.3(g) hereof, liabilities and
obligations attributable to or incurred in connection with the Business
prior to, on or after the Closing Date with respect to Affected Employees
(as hereafter defined) arising from, or relating to, any incentive (other
than bonuses referred to in Section 1.3(m) hereof), de-
ferred compensation, insurance, employment, performance, vacation, retiree
benefit plan, program, agreement or arrangement for the benefit of any
Affected Employee, including obligations under clause 4 of the Xxxxx
Service Agreement;
FOURTH, Section 1.3 of the Agreement is hereby amended to add the following
new subsections:
(m) All bonuses to employees of the Business for periods of service
ending on or prior to the Closing Date; and
(n) All liabilities, obligations and costs from or relating to the
matters described in the first sentence of Section 5.7(h).
FIFTH, Section 1.4 of the Agreement is hereby amended to read as follows:
SECTION 1.4. Consideration.
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(a) The amount payable at Closing shall be $100,000,000 in cash (the
"Closing Cash Payment"), payable in immediately available funds. The
purchase price for the Assets (the "Purchase Price") shall be the Closing
Cash Payment plus an additional amount, if any, (the "Earn-Out Amount") to
be calculated as provided in subsection (b) of this Section 1.4.
(b) The Earn-Out Amount will be determined as follows:
(i) The Earn-Out Amount will be equal to the sum of (A) the
amount of Net Sales (as hereafter defined) of Snorkel Products (as
hereafter defined) during the twelve-month period commencing on April
1, 1998 and ending on March 31, 1999 (the "Earn-Out Period") in excess
of the First Threshold Amount (as hereafter defined), such amount not
to exceed $20,000,000, plus (B) 70% of the amount of
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Net Sales of Snorkel Products during the Earn-Out Period in excess of
the Second Threshold Amount (as hereafter defined), such amount not to
exceed $30,000,000. "Net Sales" means the gross sales of Snorkel
Products less rebates, discounts, invoice corrections, commissions,
freight-out, returns and allowances completed in the ordinary course
of business. "Snorkel Products" means products manufactured and sold
by the Division on the Closing Date and any successors to, or
replacements of, such products manufactured and sold by Buyer after
the Closing Date. The "First Threshold Amount" shall be equal to
$140,000,000, less the Firefighting Adjustment (as hereafter defined),
if any, and the "Second Threshold Amount" shall be equal to
$160,000,000, less the Firefighting Adjustment, if any. The
"Firefighting Adjustment" shall be equal to the aggregate Net Sales of
Snorkel Products used for firefighting in the period commencing on
November 1, 1996 and ending on October 31, 1997 times the quotient of
the number of days, if any, during the Earn-Out Period that the
Division no longer owns its firefighting business, over 365.
(ii) In the event that (i) Omniquip Products (as hereinafter
defined) and Snorkel Products are sold together during the Earn-Out
Period to National Account Customers (as hereafter defined) pursuant
to the same purchase order or sale agreement (each, a "Bundled Sale"),
(ii) the weighted-average discount, including rebate, from list prices
in effect on February 1, 1998 provided to National Account Customers
for Omniquip Products included in the Bundled Sale is less than the
weighted-average of the discount rates for such Omniquip Products set
forth in the Omniquip National Account Discount Schedule (as hereafter
defined) and (iii) the weighted-average discount, including rebates,
from list prices in effect on February 1, 1998 on Snorkel Products
sold in Bundled Sales during the Earn-Out Period are greater than the
weighted-average discount, including rebates, set forth in the Snorkel
National Account Discount Schedule (as hereafter defined) then the
discount, including rebates, from
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list prices in effect on February 1, 1998 used for the purpose of
calculating Net Sales of Snorkel Products included in such Bundled
Sale shall be equal to (x) the discount, including rebates, set forth
in the Snorkel National Account Discount Schedule increased by (y) the
percentage increase in the weighted-average discount, including
rebates, from list prices in effect on February 1, 1998 on such
Bundled Sale for Omniquip Products over the weighted-average discount,
including rebates, set forth in the Omniquip National Account Discount
Schedule. An example of the application of the provisions of the
preceding sentence to a hypothetical Bundled Sale is attached as
Exhibit B hereto. For purposes of this Agreement: the term "National
Account Customers" shall mean any national account of Omniquip
Products and Snorkel Products, during the Earn-Out Period, which are
sold as a Bundled Sale; the term "Snorkel National Account Discount
Schedule" shall mean the discounts, including rebates, for each of the
Snorkel Products offered to National Account Customers for calendar
year 1998 set forth on a schedule to be delivered by Seller to Buyer
on or prior to the date hereof; the term "Omniquip National Account
Discount Schedule" shall mean the discounts, including rebates, for
each of the Omniquip Products offered to National Account Customers
for calendar year 1998 set forth in a schedule to be delivered by
Buyer to Seller on or prior to the date hereof; and the term "Omniquip
Products" shall mean products manufactured and sold by Omniquip
International, Inc. and its Subsidiaries on the Closing Date and any
successors to, or replacements of, such products manufactured and sold
by Omniquip International, Inc. and its subsidiaries (other than
Buyer) after the Closing Date.
(iii) For purposes of determining the amount of Net Sales of
Snorkel Products during the month of April 1998, the actual Net Sales
of Snorkel Products during the months of March and April 1998 shall be
added and such sum shall be divided by two, with the resulting number
being deemed the amount of Net Sales of Snorkel Products
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during the month of April 1998. For purposes of determining the amount
of Net Sales of Snorkel Products during the month of March 1999, the
actual Net Sales of Snorkel Products during the months of March and
April 1999 shall be added and such sum shall be divided by two, with
the resulting number being deemed the amount of Net Sales of Snorkel
Products during the month of March 1999.
(iv) As promptly as practicable after the Earn-Out Period, Buyer
shall prepare, and Price Waterhouse LLP, independent auditors for
Buyer ("Price Waterhouse") shall examine a Statement of Net Sales of
Snorkel Products for the Earn-Out Period and shall calculate the
Earn-Out Amount in accordance with the Earn-Out Principles and
Procedures attached as Exhibit C. Price Waterhouse shall deliver a
report setting forth the Earn-Out Amount (the "Earn-Out Report") to
Seller as soon as possible after the end of the Earn-Out Period, but
in no event later than thirty (30) days after the end of the Earn-Out
Period. Seller and its independent auditors ("Seller's Auditors")
shall have the opportunity to (a) review records of the Division,
including sales journals, sales registers, invoices, credit invoices,
shipping records, backlog reports and customer purchase orders, (b)
review such of the worksheets and other documents created or utilized
by Price Waterhouse in connection with the preparation of the Earn-Out
Report as Seller shall reasonably request and (c) be present at,
observe and make inquiry as to the production, fulfillment and
shipping activities of the Division during the periods of March 15,
1998 through April 15, 1998 and March 15, 1999 through April 15, 1999.
Seller shall have 30 days following delivery to Seller of the Earn-Out
Report during which to notify Buyer of any dispute of the Earn-Out
Amount, which notice shall set forth in reasonable detail the basis
for such dispute. If Seller fails to notify Buyer of any such dispute
within such 30-day period, Price Waterhouse's calculation of the
Earn-Out Amount shall be deemed to be the agreed upon Earn-Out Amount
and such amount shall be paid to Seller not later than five (5) days
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following the end of such 30-day period. In the event that Seller
shall so notify Buyer of any dispute, Seller and Buyer shall cooperate
in good faith to resolve such dispute as promptly as possible.
(v) If Seller and Buyer are unable to resolve any such dispute
within 15 days (or such longer period as Seller and Buyer shall
mutually agree in writing) of Seller's delivery of such notice, such
dispute shall be resolved by the Independent Accounting Firm (as
hereafter defined), and such determination shall be final and binding
on the parties. Seller and Buyer shall mutually select the Independent
Accounting Firm, but if Seller and Buyer cannot mutually agree on the
identity of the Independent Accounting Firm, then Seller and Buyer
shall each submit to the other party's independent auditor the name of
a national accounting firm other than any firm that has in the prior
two years provided services to Seller, Buyer or any of their
respective Affiliates, and the Independent Accounting Firm shall be
selected by lot from these two firms by the independent auditors of
the two parties. (If no national accounting firm shall be willing to
serve as the Independent Accounting Firm, then an arbitrator shall be
selected to serve as such, such selection to be according to the above
procedures.) Any expenses relating to the engagement of the
Independent Accounting Firm shall be shared equally by Buyer and
Seller. The Earn-Out Amount shall then be determined by the
Independent Accounting Firm, which shall be instructed to use every
reasonable effort to perform its services within 15 days of submission
of the dispute to it and, in any case, as promptly as practicable
after such submission. Not later than five (5) days following such
determination by the Independent Accounting Firm, the Earn-Out Amount
shall be paid to Seller in cash.
(c) Any payments to Seller of the Earn-Out Amount shall be by wire
transfer in immediately available funds together with interest thereon at a
rate equal to the prime rate per annum on a date immediately preceding the
date on which payment is
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to be made, as quoted by First Union Bank, N.A., from the date which is 30
days after the end of the Earn-Out Period to the date of payment.
SIXTH, Section 1.6 of the Agreement is hereby amended to read as follows:
SECTION 1.6 Closing. Subject to the terms and conditions of this
Agreement, the Closing shall occur not later than November 19, 1997
(provided that Buyer shall use its best efforts to close not later than
noon on November 17, 1997), at the offices of Skadden, Arps, Slate, Xxxxxxx
& Xxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, (or at such other
place as the parties may mutually agree). If the Closing has not occurred
by November 19, 1997, it shall, subject to the conditions hereof, occur as
soon as practicable thereafter. If the Closing has not theretofore
occurred, it shall occur on December 1, 1997, subject to the conditions
hereof.
SEVENTH, Section 2.4 of the Agreement is hereby amended to read as follows:
SECTION 2.4. Intercompany Accounts. On the Closing Date, all
intercompany account balances including all accrued general liability
insurance, accrued worker's compensation insurance and accrued benefit plan
items then outstanding between the Division, on the one hand, and Seller
and its Affiliates (other than the Division), on the other hand, shall be
cancelled without any payment being made with respect thereto. No
adjustment shall be made to the Purchase Price as a result of any such
cancellation.
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EIGHTH, Section 2.6 of the Agreement is hereby amended to read as follows:
SECTION 2.6. Miscellaneous Purchase Price Matters.
(a) (i) Seller agrees that the Accounts Payable, as defined in
item A of Exhibit A, of the Division shall not exceed $10,000,000 at
Closing. In the event that Accounts Payable as of the Closing Date
exceed $10,000,000, the Purchase Price shall be reduced on a
dollar-for-dollar basis by the amount of such excess.
(ii) As promptly as practicable after the Closing Date, Buyer
will prepare a list of Accounts Payable as of the Closing Date,
supporting documentation and a statement of the corresponding
reduction of the Purchase Price, if any, and furnish such materials to
Seller. Seller shall have the opportunity to review records and
details supporting the list of Accounts Payable. Seller shall have 30
days following delivery of the list of Accounts Payable and statement
of corresponding reduction of the Purchase Price, if any, during which
to notify Buyer of any dispute in the reduction of the Purchase Price,
which notice shall set forth in reasonable detail the basis for such
dispute. If Seller fails to notify Buyer of any such dispute within
such 30-day period, Buyer's calculation of the reduction of the
Purchase Price shall be deemed to be agreed upon and such amount shall
be paid to Buyer not later than five (5) days following the end of
such 30-day period. In the event that Seller shall so notify Buyer of
any dispute, Seller and Buyer shall cooperate in good faith to resolve
such dispute as promptly as possible.
(iii) If Seller and Buyer are unable to resolve any such dispute
within 15 days (or such longer period as Seller and Buyer shall
mutually agree in writing) of Seller's delivery of such notice, such
dispute shall be resolved by the Independent Accounting Firm (as
hereafter defined), and
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such determination shall be final and binding on the parties. Seller
and Buyer shall mutually select the Independent Accounting Firm, but
if Seller and Buyer cannot mutually agree on the identity of the
Independent Accounting Firm, then Seller and Buyer shall each submit
to the other party's independent auditor the name of a national
accounting firm other than any firm that has in the prior two years
provided services to Seller, Buyer or any of their respective
Affiliates, and the Independent Accounting Firm shall be selected by
lot from these two firms by the independent auditors of the two
parties. (If no national accounting firm shall be willing to serve as
the Independent Accounting Firm, then an arbitrator shall be selected
to serve as such, such selection to be according to the above
procedures.) Any expenses relating to the engagement of the
Independent Accounting Firm shall be shared equally by Buyer and
Seller. The amount of Accounts Payable shall then be determined by the
Independent Accounting Firm, which shall be instructed to use every
reasonable effort to perform its services within 15 days of submission
of the dispute to it and, in any case, as promptly as practicable
after such submission. Not later than five (5) days following such
determination by the Independent Accounting Firm, any amount required
to be paid under subsection (a)(i) of this Section 2.6 shall be paid
to Seller in cash.
(iv) Any payments to Buyer of any amount required to be paid
under subsection (a)(i) of this Section 2.6 shall be by wire transfer
in immediately available funds together with interest thereon at a
rate equal to the prime rate per annum on a date immediately preceding
the date on which payment is to be made, as quoted by First Union
Bank, N.A., from the Closing Date.
(b) Recording fees, transfer taxes, and escrow fees incurred in
connection with the conveyance of the Shares, Property, Real Property
Leases, Subsidiary Real Property Leases (as hereafter defined) or personal
property, including such taxes as
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are imposed by the Australian and New Zealand taxing authorities, shall be
borne equally by Buyer and Seller. Costs associated with obtaining title
insurance of the Property shall be the responsibility of Buyer. Sales and
use taxes and all other similar taxes (other than income and franchise
taxes) and all interest and penalties thereon incurred in connection with
conveyance of the Property, Real Property Leases, Subsidiary Real Property
Leases or personal property shall be borne equally by Buyer and Seller.
Seller shall provide copies of the current or most recent property tax
bills for the Property and, if available, for any leased properties, to
Buyer prior to the Closing Date. After the Closing Date, any bills or
requests for payment received by either Seller or Buyer in connection with
the Business attributable to Taxes which reflect in whole or part
liabilities retained or assumed, respectively, by Seller on the one hand,
or Buyer on the other, shall be allocated between Buyer and Seller in the
manner described in Sections 1.2(a) and 5.9 hereof, or as otherwise
appropriate under the terms of this Agreement; provided, however, that
neither party shall pay such xxxx without the prior written consent of the
other party, which consent shall not be unreasonably withheld.
NINTH, Clause (a) of Section 3.6 of the Agreement is hereby amended to read
as follows:
(a) there has not been any material adverse change in the Assets,
liabilities, business, operations or condition (financial or otherwise) of
the Division (other than (i) changes resulting from changes in general
economic or financial conditions, (ii) changes affecting generally the
industry in which the Business operates and (iii) changes in the financial
and operating condition of the Business between June 30, 1997 and October
30, 1997);
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TENTH, Section 5.7 of the Agreement is hereby amended to add the following
subsection (h):
(h) Seller shall be liable for all severance payments due under plans,
policies, agreements or laws in effect on the Closing Date with respect to
employees of the Division laid off prior to the Closing Date by Seller,
other than any such employees who are recalled from layoff by the Division
after the Closing Date. Seller has delivered to Buyer a list of all
employees of the Business who have been laid off since June 30, 1997.
ELEVENTH, Article V of the Agreement is hereby amended to add the following
Section 5.16:
SECTION 5.16. Dismissal of Action. Seller will dismiss (without
prejudice, with each party to bear its own fees and expenses) the complaint
filed in that certain action in the Chancery Court of the State of Delaware
in and for New Castle County entitled Figgie International Inc. v. Omniquip
International Inc. and SKL Lift, Inc. (Civil Action No. 16006) (the
"Action") no later than November 12, 1997. Seller agrees that such
dismissal shall be conclusively deemed for all purposes to be "with
prejudice", subject to, and effective upon the occurrence of, the Closing.
At Closing, Seller will deliver to Buyer a release, irrevocably releasing
Buyer from the claims set forth in the Action.
TWELFTH, Section 6.2(c) of the Agreement is hereby amended to read as
follows:
(c) During the period from July 19, 1997 to the Closing Date, there
shall not have occurred a Material Adverse Effect (other than the change in
the financial and operating condition of the Business between July 19, 1997
and October 30, 1997).
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THIRTEENTH, Section 7.1(c) of the Agreement is hereby amended so that the
reference to "October 31, 1997" is changed to "the close of business on December
1, 1997".
FOURTEENTH, the following clause (C) is hereby added to the end of Section
7.5(b)(iv):
or (C) any matter relating to the operations or financial condition of
the business as of October 30, 1997 of which any of the persons listed
in Section 7.5(b)(iv) of the Seller Disclosure Schedule had actual and
specific knowledge.
FIFTEENTH, a substantially final update of the Seller Disclosure Schedule
proposed to be delivered at the Closing shall be delivered two calendar days
prior to Closing.
This Amendment may be executed in any number of counterparts, each of which
shall be deemed an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Amendment shall become effective
when each party hereto shall have received a counterpart hereof signed by the
other party hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
November 9, 1997.
FIGGIE INTERNATIONAL INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
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Name: Xxxxxx X. Xxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
SKL LIFT, INC.
By: /s/ X. Xxxxx Stiff
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Name: X. Xxxxx Stiff
Title: President and Chief
Executive Officer
