First Amendment to Combination Agreement entered into by F5 Finishes, Inc., Patton 2013 Living Trust, Michael Patton and Lynn Anne Patton, Trustees, Baxley Family Trust, Daniel S. Baxley and Rochelle H. Baxley, Trustees,
Exhibit 10.8.2
Execution Copy
First Amendment to Combination Agreement
entered into by
▇▇▇▇▇▇ 2013 Living Trust, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Trustees,
▇▇▇▇▇▇ Family Trust, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustees,
C & C Preston Family Trust, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustees
and
▇.▇. ▇▇▇▇▇▇, Inc. d/b/a DSB+
February 6, 2020
First Amendment to
This First Amendment to Combination Agreement (this “First Amendment”) is entered into as of February 6, 2020, by F5 Finishes, Inc. (“F5 Finishes”), ▇▇▇▇▇▇ 2013 Living Trust, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Trustees, ▇▇▇▇▇▇ Family Trust, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustees, and C & C Preston Family Trust, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustees (each a “Shareholder” and together the “Shareholders”), and ▇. ▇. ▇▇▇▇▇▇, Inc. d/b/a DSB+, a California corporation (the “Company”).
Background:
A. On September 16, 2019, F5 Finishes entered into combination agreements for the combination of several companies (the “Combining Companies”) engaged in the business of selling, installing and maintaining flooring for commercial enterprises (the “Business”), in exchange for cash and shares of F5 Finishes common stock (the “Consideration”). The Company is one of the Combining Companies and entered that certain Combination Agreement between F5 Finishes and the Company dated as of September 16, 2019 (the “Company’s Combination Agreement”)
B. The Company, and each of the other Combining Companies, and F5 Finishes now desire to amend the combination agreements to make certain changes to the Combination Agreements.
Now, therefore, in consideration of their mutual promises and intending to be legally bound, the Parties agree as follows:
1. Definitions
Capitalized terms used, but not defined, in this First Amendment (including in the Background) are defined in the Company’s Combination Agreement.
2. Amendments
(a) Section 2.1(a)(3)(ii) shall be deleted in its entirety and replaced with the following:
“(ii) With respect to the Equity Consideration, each Shareholder shall receive that number of shares of F5 Finishes Stock equal to his, her or its Percentage Interest of seventy-five percent (75%) of the Base Consideration divided by 10. In the event that the actual per share price of the F5 Finishes Stock is less than Nine Dollars ($9.00) per share, in addition to that number of shares of the F5 Finishes Stock described in the previous sentence, each Shareholder shall receive a convertible, subordinated promissory note substantially in the form as set forth in Exhibit A (each an “IPO Note”) with the principal amount equal to the Price Differential multiplied by the number of shares such Shareholder is entitled to as Equity Consideration as described in this paragraph. “Price Differential” shall mean the difference between (i) Nine Dollars ($9.00) per share and (ii) the greater of (x) Seven Dollars ($7.00) per share and (y) the actual IPO Share Price of the F5 Finishes Stock.”
(b) Section 2.1(a)(4)(i) shall be deleted in its entirety and replaced with the following:
“(4) (i) Twenty-five percent (25%) of the Retained Earnings Distribution will be paid in cash at Closing (“RE Cash Consideration”), twenty-five percent (25%) of the Retained Earnings Distribution will consist of F5 Finishes Stock (“RE Equity”) and fifty percent (50%) of the Retained Earnings Distribution will consist of a subordinated promissory note, substantially in the form as set forth as Exhibit B (the “RE Notes”). At Closing, F5 Finishes shall pay each Shareholder his, her or its Percentage Interest of the RE Cash Consideration. With respect to the RE Equity, within three Business Days after Closing, each Shareholder will receive that number of shares of F5 Finishes Stock equal to twenty-five percent (25%) of his, her or its Percentage Interest of Retained Earnings Distribution divided by the IPO Share Price. With respect to the RE Note, within three Business Days after Closing (but in force and effect as of Closing), F5 Finishes will deliver a RE Note payable to each Shareholder in the principal amount equal to his, her or its Percentage Interest of fifty percent (50%) of the Retained Earnings Distribution.”
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(c) Section 2.1(a)(4)(ii) shall be deleted in its entirety and replaced with the following:
“(4) (ii) As of June 30, 2019, the Company owed affiliates of its Shareholders (each a “Lender”) $1,965,000.00 (the “Principal Amount”) for certain loans previously made by the Lenders to the Company, with interest accruing annually at the rate of 12.3%, which has been paid to the Lenders each month. The Principal Amount owed to each Lender is set forth on Schedule 2.1(a)(4). The Loan Distribution Amount for each Lender payable at Closing shall equal each Lender’s Principal Amount: F5 Finishes shall pay to each Lender in cash twenty-five percent (25%) of his, her or its Loan Distribution Amount. Within three Business Days after Closing, each Lender will receive that number of shares of F5 Finishes Stock equal to twenty-five percent (25%) of his, her or its Loan Distribution Amount divided by the IPO Share Price. Within three Business Days after Closing (but in force and effect as of Closing), F5 Finishes will deliver to each Lender a subordinated promissory note, substantially in the form as set forth as Exhibit DSB (the “Loan Distribution Notes”), payable to such Lender in the principal amount equal to his, her or its Percentage Interest of fifty percent (50%) of such Lender’s Loan Distribution Amount.”
(d) Section 8.1(k) shall be deleted in its entirety and replaced with the following:
“(k) the actual IPO Share Price of F5 Finishes Stock is at least Five Dollars ($5.00) per share;”
(e) Section 8.2(f) shall be deleted in its entirety and replaced with the following:
“(f) the actual IPO Share Price of F5 Finishes Stock is at least Five Dollars ($5.00) per share;”
3. Annex I - Definitions
The following definitions shall be deleted in their entirety from Annex I – Definitions attached to the Company Combination Agreement.
“Baseline IPO Share Price is defined in Section 2.1(a)(3)(ii).”
“IPO Valuation is defined in Section 2.1(a)(3)(ii).”
4. Annex I – Definitions
The following definitions shall be added, alphabetically, to the definitions set forth in Annex I – Definitions attached to the Company Combination Agreement.
“RE Cash Consideration is defined in Section 2.1(a)(4)(i).”
“RE Equity is defined in Section 2.1(a)(4)(i).”
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5. No Further Modification.
Except as specifically modified or amended by this First Amendment, all other terms and provisions of the Company Combination Agreement and all Exhibits and Annexes thereto are incorporated by reference in this First Amendment and in all respects continue in full force and effect.
6. Counterparts
This First Amendment may be signed in any number of counterparts (including by facsimile or portable document format (pdf)), all of which together shall constitute one and the same instrument.
7. Governing Law
This First Amendment shall be governed by the internal Laws of the State of Delaware, without giving effect to any choice of law provision or rule (whether of the State of Delaware or any other state) that would cause the laws of any state other than the State of Delaware to govern this First Amendment.
8. Binding Effect
This First Amendment shall apply to, be binding in all respects upon and inure to the benefit of Parties and their respective heirs, legal representatives, successors and permitted assigns.
[Signature Pages to Follow]
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In witness, the Parties have executed this First Amendment.
| F5 Finishes, Inc. | ||
| By | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer | ||
| ▇.▇. ▇▇▇▇▇▇, Inc. d/b/a DSB+ | ||
| By | /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | |
| ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| Chief Executive Officer | ||
| ▇▇▇▇▇▇ 2013 Living Trust | ||
| /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustee | ||
| /s/ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ | ||
| ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Trustee | ||
| Baxley Family Trust | ||
| /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee | ||
| /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
| ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee | ||
| C & C Preston Family Trust | ||
| /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||
| ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee | ||
| /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||
| ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee | ||
First Amendment to DSB Combination Agreement Signature Page