EXHIBIT 2.2
EXECUTION COPY
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
This FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (this "First
Amendment"), dated as of May 3, 2004, is entered into by and among Quiksilver,
Inc., a Delaware corporation ("Buyer"), DC Shoes, Inc., a California corporation
("Company"), the shareholders of the Company listed on the signature pages of
this Agreement, Damon Way (such shareholders and Damon Way are each referred to
individually as a "Seller," and collectively as the "Sellers") and the DC Shoes,
Inc. Employee Share Trust entered into on November 21, 2003, as amended.
RECITALS
A. WHEREAS, Buyer, the Company, Sellers and the Employee Trust
entered into a Stock Purchase Agreement dated as of March 8, 2004 (the
"Agreement");
B. WHEREAS, on April 27, 2004, the Employee Trust contributed all
of its shares of Company Stock to the Company and therefore is no longer a
"Seller" under the Agreement.
C. WHEREAS, the parties hereto desire to amend the Agreement as
set forth herein and, except as otherwise expressly provided in this First
Amendment, all capitalized terms used herein shall have the same meanings as set
forth in the Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
AGREEMENT
1. Elimination of Employee Trust as Seller. Sellers and the
Company represent to Buyer that the Employee Trust has been terminated, and all
shares of Company Stock held by the Employee Trust have been transferred to the
Company. The parties agree that the Employee Trust shall no longer be a party to
the Agreement or one of the "Sellers" under the Agreement.
2. Amendment to Sections 1.2(a), (b) and (c) and New 1.2(d) and
(e). Sections 1.2(a), (b) and (c) of the Agreement are hereby amended to read,
and a new Section 1.2(d) and (e) is added, as follows:
"(a) Total Purchase Price. The aggregate consideration
payable to the Sellers and the Payees for the purchase and sale of
Sellers' Shares and the contractual payments owed to the Payees
pursuant to the Phantom Share Payment Agreements shall be the sum of
the following:
(i) $55,636,000 (the "Cash Payment"), as
adjusted pursuant to Section 1.3; plus
(ii) the Stock Payment; plus
(iii) the aggregate Earnout Amounts payable as
provided in Sections 1.4 through 1.7.
The amount of the consideration set forth above paid to the
Sellers for the purchase and sale of their Shares and to the Payees
with respect to the Phantom Share Payment Agreements shall be the
"Purchase Price."
(b) Payments to Sellers at Closing. Each Seller will
receive the following at Closing:
(i) a cash payment which shall equal the
difference of (A) the product of (x) such Seller's Cash Participating
Percentage, times (y) the Closing Payment, minus the Transaction
Expenses, minus the Tax Reimbursements, minus the Xxxxx Payment, minus
(B) Additional Payee Cash Amount multiplied by such Seller's Stock
Participating Percentage; and
(ii) the number of shares of Buyer Stock equal to
such (x) Seller's Stock Participating Percentage, times (y) the Stock
Payment.
(c) Rider Payments. Certain individuals listed on
APPENDIX I hereto (collectively, the "Riders") will each receive the
payments set forth on APPENDIX I (such payments in the aggregate shall
be the "Rider Payments").
(d) Payments Pursuant to Phantom Share Payment
Agreements. The former beneficiaries of the Employee Trust listed on
APPENDIX II hereto, each of whom has executed a Phantom Share Payment
Agreement (collectively, the "Payees") will each receive the following
at Closing:
(i) a cash payment, which shall equal the
product of such Payee's Phantom Share Participating Percentage times
the Phantom Share Pool; and
(ii) a cash payment equal to the product of such
Payee's Phantom Share Participating Percentage times the Additional
Payee Cash Amount.
Notwithstanding anything to the contrary herein, the payments
to the Payees under this Agreement shall be reduced by any Taxes owed
by the Company as a result of the payments made by the Company pursuant
to this Agreement.
The Company and the Principal Sellers represent and warrant
that the payment in this Section 1.2(d), taken together with any
portion of the Holdback Amount, the Xxxxx Tax Benefit and any Earnout
Amounts payable to the Payees pursuant to this Agreement, are in full
satisfaction of the Company's obligations under the Phantom Share
Payment Agreements.
2
(e) Xxxxx Payment. Immediately prior to the Closing,
Buyer shall pay to Xxxxxxx Xxxxx, on behalf of the Company, the Xxxxx
Payment in consideration for Xxxxxxx Xxxxx'x transfer to the Company
certain shares of Company Stock owned by Xxxxxxx Xxxxx and for other
consideration.
(f) Tax Reimbursements. Immediately prior to the Closing,
Buyer shall pay to (a) Xxxxx XxXxx $375,000 and to (b) Xxxxxx Xxx
$625,000, representing obligations of the Company.
3. Amendment to Section 1.3(c). Section 1.3(c) of the Agreement
is hereby amended to read as follows:
"(c) Holdback. $6,000,000 of the Cash Payment (the
"Holdback Amount") shall be withheld from the Sellers and the Payees in
proportion to their respective Cash Participating Percentages. To the
extent the Cash Payment is reduced pursuant to this Section 1.3 but not
by the entire Holdback Amount, the Holdback Amount less the amount of
such reduction shall be paid to the Sellers and the Payees, as
applicable in proportion to their respective Cash Participating
Percentages within fifteen (15) days of the final determination of the
Closing Working Capital. If the Cash Payment is reduced by more than
the Holdback Amount, the amount of any reduction of the Cash Payment in
excess of the Holdback Amount shall be set-off against the Earnout
Amounts owed to the Sellers and the Payees that are entitled to Earnout
Amounts in proportion to their Cash Participating Percentages, and
Buyer shall retain the entire Holdback Amount. If on the other hand,
the Cash Payment was increased as a result of such final determination,
then the Buyer shall pay the Sellers and the Payees in proportion to
their Cash Participating Percentages the entire Holdback Amount plus
the amount of such increase within fifteen (15) days of such
determination."
4. Amendment to Section 1.4. Section 1.4 of the Agreement is
hereby amended by replacing each reference to "the Sellers" in such section with
"the Sellers and the Payees."
5. Amendment to Section 1.5. The first sentence of Section 1.5 of
the Agreement is hereby amended by replacing "the Sellers" in such section with
"the Sellers and the Payees."
6. Amendment to Section 1.5(e). Section 1.5(e) of the Agreement
is hereby amended to read as follows:
"(e) Within fifteen (15) days after determination of an
Earnout Amount pursuant to this Section 1.5, Buyer shall pay to each
Seller and Payee such Seller's or Payee's Cash Participating Percentage
of such Earnout Amount by bank cashiers, certified check (or Company
checks of Buyer in the case of Payees) or wire transfer (at the
discretion of the Sellers, or, with respect to the Payees, at the
discretion of Buyer). If only a portion of the Earnout Amount is under
dispute, Buyer shall pay to the Sellers and Payees in accordance with
the prior sentence the amount that is not being disputed. The Sellers'
and Payees' rights to receive the Earnout Amount under this Agreement
are non-assignable;
3
provided, however, that the Sellers shall be allowed to transfer the
right to a trust that is disregarded for tax purposes."
7. Amendment to Section 1.6. Section 1.6 of the Agreement is
hereby amended to read as follows:
"1.6 Payment of Earnout Amounts. Within the later of (i)
one hundred twenty (120) days from the end of each Earnout Period, or
(ii) if applicable, fifteen (15) days of the decision by the designated
accountant pursuant to Section 1.5 with respect to such Earnout Period,
the Buyer shall pay to each of the Sellers and Payees in cash the
amount equal to the product of (x) the aggregate Earnout Amount payable
for such Earnout Period as determined above, times (y) such Seller's or
Payee's Cash Participating Percentage."
8. Amendment to Sections 1.8(c) and (d). Sections 1.8(c) and (d)
of the Agreement are hereby amended to read as follows:
"(c) In the event that substantially all of the assets or
stock of the Company are sold, transferred or otherwise disposed of by
the Buyer (other than a sale of inventory of the Company in the
ordinary course of business) (a "Sale Transaction") prior to October
31, 2007 to any Person other than a wholly-owned Subsidiary of the
Buyer, the Buyer shall, on the date of the consummation of such Sale
Transaction, deliver written notice of such Sale Transaction to the
Sellers' Representatives (such notice, the "Sale Notice"). On the date
of such Sale Transaction, the Buyer shall pay to each Seller and Payee
such Seller's or Payee's Cash Participating Percentage of any Earnout
Amounts for any Earnout Period not then completed (the "Accelerated
Payment"). Notwithstanding the foregoing, if the Company has not been
achieving at least 75% of the Company Sales and EBITDA Target Levels
for the Earnout Period immediately prior to the Earnout Period in which
the Sale Notice is delivered, the Accelerated Payment shall be zero.
(d) On the date of a Sale Transaction, the Buyer shall
pay to each of the Sellers and Payees in cash, by bank cashiers,
certified check (or company checks of Buyer in the case of Payee's) or
wire transfer (as determined by the Seller, or, with respect to the
Payees, as determined by Buyer) the amount equal to the product of (x)
Accelerated Payment, times (y) such Seller's or Payee's Cash
Participating Percentage."
9. Amendment to Section 1.10(b). The first sentence of Section
1.10(b) of the Agreement is hereby amended by replacing "Sellers" in such
sentence with "Sellers and the Payees." Section 1.10(b)(i) of the Agreement is
hereby amended to read as follows:
"a bank cashier's or certified check (or company checks of
Buyer in the case of Payee's) payable to each Seller and Payee (or wire
transfer if the Sellers' Representatives deliver on behalf of a Seller
or Payee wire transfer instructions to the Buyer prior to Closing) in
an amount equal to their share of the payment
4
pursuant to Section 1.2(b)(i) or the payments pursuant to Section
1.2(d), as applicable;"
10. Amendment to Section 2.3. The second sentence of Sections 2.3
of the Agreement is hereby amended to read as follows:
"Sellers will be, immediately prior to the Closing, the record and
beneficial owners and holders of all of the issued and outstanding
Company Stock, free and clear of all Encumbrances."
11. Addition of New Section 3.8. A new Section 3.8 is hereby added
to the Agreement as follows:
"3.8 Capitalization. Immediately prior to the Closing, the
issued and outstanding Company Stock of the Company will be held of
record by the following persons:
(i) Xxxxxxx Xxxxx, 2,600,000 shares of Company
Stock;
(ii) the Damon Way Revocable Trust u/a May 2,
1999, 2,600,000 shares of Company Stock;
(iii) Xxxxxx Xxx, 500,000 shares of Company Stock;
and
(iv) Xxxxx XxXxx, 300,000 shares of Company
Stock."
12. Amendment to Section 7.5. Section 7.5 of the Agreement is
hereby amended to read as follows:
"Payment of Xxxxx Tax Benefit. To the extent that the Company
actually receives a tax benefit ("Actual Benefit") from the Xxxxx Tax
Benefit, after either the earlier of an audit of the Xxxxx Tax Benefit
or the statute of limitations for the tax returns related to the Tax
Xxxxx Benefit have expired, Buyer shall pay to each Seller and Payee
the product of one-half of such Actual Benefit times such Cash
Participating Percentage of each Seller and Payee.
13. Amendment to Section 11.2. The following clauses are hereby
added to Section 11.2 of the Agreement:
"(g) any claim or action involving or relating to Xxxx
Xxxxx (or any affiliate of Xxxx Xxxxx) against the Company or Buyer
relating to the period prior to Closing or the transactions
contemplated by this Agreement; or
(h) any claim or action involving, or relating to, Xxx
Xxxxxxxxx against the Company related to (A) the termination of his
employment by the Company, or (B) payment from the Employee Trust."
5
14. Amendment to Section 11.4. Section 11.4 of the Agreement is
hereby amended to read as follows:
"11.4 Indemnification and Payment of Damages by Buyer.
Buyer will indemnify and hold harmless the Company and Sellers and
their respective Representatives and affiliates, and will pay to
Sellers the amount of any Damages arising, directly or indirectly, from
or in connection with (a) any Breach of any representation or warranty
made by Buyer in this Agreement or in any certificate delivered by
Buyer pursuant to this Agreement, (b) any Breach by Buyer of any
covenant or obligation of Buyer in this Agreement, (c) any claim by any
Person for brokerage or finder's fees or commissions or similar
payments based upon any agreement or understanding alleged to have been
made by such Person with Buyer (or any Person acting on its behalf) in
connection with any of the Contemplated Transactions, (d) as set forth
in Section 7.2 hereof related to the Buyer Registration Statement, or
(e) any failure of Buyer to pay any amounts due to any Payee or Rider
under this Agreement."
15. Amendment to Section 11.5. Section 11.5 of the Agreement is
hereby amended to read as follows:
"11.5 Time Limitation. "If the Closing occurs, Sellers will
have no liability (for indemnification or otherwise) with respect to
any representation or warranty, or covenant or obligation, other than
those in Sections 2.3, 2.11, 2.13, 2.19, 3.1, 11.2(g) or 11.2(h),
unless on or before February 1, 2006, Buyer notifies Sellers of a claim
specifying the factual basis of that claim in reasonable detail to the
extent then known by Buyer; a claim with respect to Sections 2.3, 2.13,
2.19 or 3.1 may be made at any time; a claim with respect to Sections
11.2(g) or 11.2(h) may be made until the expiration of the applicable
statute of limitations; and a claim with respect to Section 2.11 may be
made at any time until all tax liabilities of the Company are decided
by final determination of the Internal Revenue Service, judicial
decision or upon thirty (30) days after the expiration of the statute
of limitations, taking into account any waiver or extension of such
applicable statute of limitation. If the Closing occurs, Buyer will
have no liability (for indemnification or otherwise) with respect to
any representation or warranty, or covenant or obligation to be
performed and complied with prior to the Closing Date, unless on or
before February 1, 2006 Sellers notify Buyer of a claim specifying the
factual basis of that claim in reasonable detail to the extent then
known by Sellers."
16. Amendments to Section 11.6. Clause (i) in Section 11.6(a) of
the Agreement is hereby amended to read as follows:
"(i) until the total of all Damages with respect to such
matters exceeds $3,000,000, and then only for the amount by which such
Damages exceed $3,000,000 (the "Deductible")"
6
The following sentence is hereby added to the end of Section 11.6(a) of
the Agreement:
"Additionally, the Deductible shall not apply to any claim for Damages
under Sections 11.2(g) or 11.2(h) hereto."
17. Addition of New Section 11.14. A new Section 11.14 is hereby
added to the Agreement as follows:
"11.14 Indemnity Holdback.
(a) The Buyer shall retain, for the benefit of the
Sellers and Payees, $1,500,000 (the "Indemnity Holdback Amount"). The
Company, the Buyer and the Sellers agree that the Indemnity Holdback
Amount will be available, as provided in this Article XI, to satisfy
the indemnification obligations pursuant to Sections 11.2(g) and
11.2(h) of this Agreement. The Buyer acknowledges that it is holding
the Indemnity Holdback Amount for the benefit of the Payees and Sellers
solely for the purposes of the indemnity obligations set forth in
Sections 11.2(g) and 11.2(h) hereof.
(b) Subject to the following requirements:
(i) $1,000,000 of the Indemnity Holdback Amount
shall be held by the Buyer until the earlier to occur of (i)
final settlement or judgment of the claims or actions, if any,
described under Section 11.2(g) hereof or (ii) the expiration
of the applicable statute of limitations related to all claims
or actions described under Section 11.2(g) hereof; and
(ii) $500,000 of the Indemnity Holdback Amount
shall be held by the Buyer until the earlier to occur of (i)
final settlement or judgment of the claims or actions, if any,
described under Section 11.2(h) hereof or (ii) the expiration
of the applicable statute of limitations related to all claims
or actions described under Section 11.2(h) hereof.
The remaining balance of the portion of the Indemnity
Holdback Amount held by Buyer and not used to pay any Damages
related to all claims, actions or settlements related to the
indemnification obligations set forth in Sections 11.2(g) or
11.2(h), respectively, shall be delivered promptly by Buyer to
each of the Sellers and Payees, in cash, by bank cashiers,
certified check (or company checks of Buyer in the case of
Payee's) or wire transfer, pursuant to their respective Cash
Participating Percentages.
18. Amendment to Section 12.1. Section 12.1 of the Agreement is
hereby amended to read as follows:
"12.1 Expenses. Except as otherwise expressly provided in
this Agreement, each party to this Agreement will bear its respective
expenses incurred in connection with the preparation, execution, and
performance of this
7
Agreement and the Contemplated Transactions, including all fees and
expenses of agents, representatives, counsel, and accountants.
Notwithstanding the foregoing, in the event the Closing occurs, Sellers
will be liable for the Company's portion of such expenses, except that
the fees and expenses of the Company set forth on APPENDIX III hereto
shall be assumed by the Buyer as of the Closing (such assumed fees and
expenses, the "Transaction Expenses"). In the event of termination of
this Agreement, the obligation of each party to pay its own expenses
will be subject to any rights of such party arising from a breach of
this Agreement by another party."
19. Amendment to Section 12.10. The last two sentences of Section
12.10 of the Agreement are hereby amended to read as follows:
"Nothing expressed or referred to in this Agreement will be construed
to give any Person other than the parties to this Agreement any legal
or equitable right, remedy or claim under or with respect to this
Agreement or any provision of this Agreement; provided, however, that
the Payees shall be third-party beneficiaries of this Agreement as of
the Closing with respect to Sections 1.2, 1.3, 1.4, 1.5, 1.6, 1.7, 1.8
and 7.5 hereof to the extent applicable to them. Except to the extent
otherwise provided in the preceding sentence, this Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns. The
Payees' rights to payments under the Phantom Share Payment Agreements
and this Agreement may not be sold, pledged, assigned or transferred in
any manner and will not be subject to disposition by transfer,
assignment, anticipation, pledge, encumbrance or any other means,
whether voluntary or involuntary or by operation of law, and any
attempted disposition of the Payees' rights will not be effective.
However, such rights may be transferred by the laws of descent and
distribution."
20. New Definition of Additional Payee Cash Amount. A definition
of the term "Additional Payee Cash Amount" for purposes of Exhibit 1 to the
Agreement is hereby added as follows:
"ADDITIONAL PAYEE CASH AMOUNT" -- means an amount equal to (a) the
closing price of Buyer's Stock on the New York Stock Exchange the last
trading day prior to the Closing, multiplied by (b) the Phantom Share
Discount Percentage, multiplied by (c) 14.29%, multiplied by (d) the
Stock Payment."
21. Amendment to Definition of Adjusted Audited EBITDA. The
definition of the term "Adjusted Audited EBITDA" set forth in Exhibit 1 to the
Agreement is hereby amended to read as follows:
"ADJUSTED AUDITED EBITDA" -- the Company's EBITDA as derived from the
Audited Financial Statements adding back (i) any excess of total
compensation expense for Xxxxxxx Xxxxx and Damon Way (including, but
not limited to, salary, bonus and travel and entertainment expenses)
over $1,400,000, and (ii) any (a) investment banking fees (estimated to
be $75,000), (b) legal expenses relating to
8
the Company's settlement with Xxxx Xxxxx or Internal Revenue Service
audits and (c) any settlement payments (or charges related thereto) to
Xxxx Xxxxx, but only to the extent that such items in (i) and (ii) were
deducted in arriving at the Company's EBITDA as derived from the
Audited Financial Statements.
22. New Definition of Xxxxx Payment. A new definition of the term
"Xxxxx Payment" is hereby added to Exhibit 1 to the Agreement as follows:
"XXXXX PAYMENT" -- means $10,826,444.
23. New Definition of Closing Payment. A new definition of the
term "Closing Payment" is hereby added to Exhibit 1 to the Agreement as follows:
"CLOSING PAYMENT" -- the Cash Payment, minus the Holdback Amount, minus
the Indemnity Holdback Amount."
24. New Definition of Cash Participating Percentage. A new
definition of the term "Cash Participating Percentage" set forth in Exhibit 1 to
the Agreement is hereby added as follows:
"CASH PARTICIPATING PERCENTAGE" -- each Sellers' and Payees' Cash
Participating Percentage shall be as set forth on APPENDIX II attached
hereto."
25. Amendment to Definition of Closing Working Capital. The
definition of the term "Closing Working Capital" set forth in Exhibit 1 to the
Agreement is hereby amended to read as follows:
"CLOSING WORKING CAPITAL" -- the Working Capital as of the Closing less
(i) the Funded Debt as of the Closing and (ii) one-half (1/2) of any
net tax benefit to the Company related to the payments made to the
Payees pursuant to the Phantom Share Payment Agreements (assuming such
tax benefit is included in Working Capital as of the Closing);
provided, that if such tax benefit is not included in Closing Working
Capital, then one-half (1/2) of any such tax benefit shall be added to
Working Capital to determine Closing Working Capital.
26. Amendment of Definition of Earnout Amount. The definition of
the term "Earnout Amount" set forth in Exhibit 1 to the Agreement is hereby
amended to read as follows:
"EARNOUT AMOUNT" -- the amount of the Purchase Price to be paid to the
Sellers and Payees after the Closing in accordance with Sections 1.4
and 1.5.
27. Deletion of Definition of Participating Percentage. The
definition of the term "Participating Percentage" set forth in Exhibit 1 to the
Agreement is hereby deleted.
28. New Definition of Phantom Share Discount Percentage. A new
definition of the term "Phantom Share Discount Percentage" is hereby added to
Exhibit 1 to the Agreement as follows:
9
"PHANTOM SHARE DISCOUNT PERCENTAGE" -- means 89%"
29. New Definition of Indemnity Holdback Amount. A new definition
of the term "Indemnity Holdback Amount" set forth in Exhibit 1 to the Agreement
is hereby added as follows:
"INDEMNITY HOLDBACK AMOUNT" -- as defined in Section 11.14 of the
Agreement."
30. New Definition of Payee. A new definition of the term "Payee
forth in Exhibit 1 to the Agreement is hereby added as follows:
"PAYEE" -- as defined in Section 1.2(d) of the Agreement."
31. New Definition of Phantom Share Participating Percentage. A
new definition of the term "Phantom Share Participating Percentage" set forth in
Exhibit 1 to the Agreement is hereby added as follows:
"PHANTOM SHARE PARTICIPATING PERCENTAGE" -- each Payees' Phantom Share
Participating Percentage shall be as set forth on APPENDIX I attached
hereto."
32. New Definition of Phantom Share Payment Agreements. A new
definition of the term "Phantom Share Payment Agreements" is hereby added to
Exhibit 1 to the Agreement as follows:
"PHANTOM SHARE PAYMENT AGREEMENTS" -- those certain Trust Termination
Consents and Deferred Payment Agreements executed by the Company, Damon
Way and Xxxxxxx Xxxxx, as trustees of the Employee Trust, and the
beneficiaries of the Employee Trust."
33. New Definition of Phantom Share Pool. A new definition of the
term "Phantom Share Pool" is hereby added to Exhibit 1 to the Agreement as
follows:
"PHANTOM SHARE POOL" -- means an amount equal to (i) (a) 14.29% times
(b) the Closing Payment, minus the Transaction Expenses, minus the Tax
Reimbursements, minus the Xxxxx Payment, minus (ii) the Rider
Payments."
34. New Definition of Riders. A new definition of the term
"Riders" set forth in Exhibit 1 to the Agreement is hereby added as follows:
"RIDERS" -- as defined in Section 1.2(c) of the Agreement."
35. New Definition of Rider Payments. A new definition of the term
"Rider Payments" set forth in Exhibit 1 to the Agreement is hereby added as
follows:
"RIDER PAYMENTS" -- as defined in Section 1.2(c) of the Agreement."
10
36. New Definition of Stock Participating Percentage. A new
definition of the term "Stock Participating Percentage" set forth in Exhibit 1
to the Agreement is hereby added as follows:
"STOCK PARTICIPATING PERCENTAGE" -- each Sellers' Stock Participating
Percentage shall be as set forth on APPENDIX II attached hereto."
37. New Definition of Phantom Tax Reimbursements. A new definition
of the term "Tax Reimbursements" set forth in Exhibit 1 to the Agreement is
hereby added as follows:
"TAX REIMBURSEMENTS" -- $1,000,000."
38. New Definition of Transaction Expenses. A new definition of
the term "Stock Participating Percentage" set forth in Exhibit 1 to the
Agreement is hereby added as follows:
"TRANSACTION EXPENSES" -- as defined in Section 12.1 of the Agreement."
39. Amendment to Definition of Working Capital. The definition of
the term "Working Capital" set forth in Exhibit 1 to the Agreement is hereby
amended to read as follows:
"WORKING CAPITAL" -- means the following, determined in accordance with
GAAP: (i) total consolidated current assets of the Company, excluding
any Xxxxx Tax Benefit, less (ii) total consolidated current liabilities
of the Company, excluding (a) any portion of the Term Loan Balance, (b)
any indebtedness of the Company related to professional fees, including
legal, accounting and investor advisor fees, associated with the
Contemplated Transactions, and (c) any Xxxxx Tax Benefit.
Notwithstanding the foregoing, no indebtedness owed (i) by the Company
to any Seller or a Related Person thereof, (ii) by any Seller or a
Related Person thereof to the Company (iii) by the Company to any
Xxxxxxx Xxxxx, FDC Investments, Inc. or a Related Person thereof, or
(iv) by Xxxxxxx Xxxxx, FDC Investments, Inc. or a Related Person
thereof to the Company, shall be included in the definition of "Working
Capital."
40. Amendment to Exhibit 1.4(a). A new footnote is hereby added to
Exhibit 1.4(a) as follows:
"*** When determining the EBITDA results for the 2004 Earnout
Period, the results shall not include any of the expenses set forth in
APPENDIX III hereto assumed by Buyer pursuant to Section 12.1 hereto,
and thus such expenses shall have no effect on EBITDA during the 2004
Earnout Period."
41. Addition of Appendix I. A new Appendix I is hereby added to
the Agreement in the form attached as APPENDIX I attached hereto.
11
42. Addition of Appendix II. A new Appendix II is hereby added to
the Agreement in the form attached as APPENDIX II attached hereto.
43. Addition of Appendix III. A new Appendix II is hereby added to
the Agreement in the form attached as APPENDIX III attached hereto.
44. Buyer's Acknowledgment. Buyer hereby acknowledges the
termination of the Employee Trust, the surrender of the shares previously held
by the Employee Trust to the Company and the execution by the Company, the
trustees of the Employee Trust and the beneficiaries of the Employee Trust of
the Phantom Share Payment Agreements. Such transactions shall not be deemed a
breach of any of the representations and warranties contained in Article II of
the Agreement and Buyer hereby acknowledges that the Company's obligations under
Section 5.2(e) with respect to the Employee Trust have been satisfied.
45. Assumption of Obligations Under Phantom Share Payment
Agreements. Effective as of and conditioned upon the Closing, Buyer hereby
agrees to undertake and assume all obligations of the Company to make the
payments referenced under the Phantom Share Payment Agreements and agrees to
pay, or to cause the Company to pay, such amounts to the Payees under such
Phantom Share Payment Agreements. The obligations of Buyer and the Company to
make payments to the Payees under the Phantom Share Payment Agreements and under
this Agreement will be unsecured, unfunded obligations of the Company and Buyer
and the Payees will only have rights as an unsecured, general creditor of the
Company or Buyer in the event of its bankruptcy or insolvency.
46. Effect of First Amendment. Except to the extent modified by
this First Amendment, the Agreement remains in full force and effect. If any
provisions of this First Amendment contradicts or is inconsistent with any
provision of the Agreement, then the provisions of this First Amendment shall
prevail.
47. Miscellaneous. This Amendment, and all disputes between the
parties under or related to this Amendment or the facts and circumstances
leading to its execution, whether in contract, tort or otherwise, will be
governed by and construed in accordance with the laws of the State of California
without regard to conflicts of laws principles. This Amendment and the Agreement
constitute the full and entire understanding and agreement among the parties
with regard to the subjects hereof and supersedes all prior written and oral
agreements, representations and commitments, if any, among the parties with
respect to such subjects. This Amendment may be executed in any number of
counterparts, each of which will be an original, but all of which together will
constitute one instrument. Any provision of this Amendment may be waived or
modified only in accordance with the provisions set forth in Section 12.7 or
12.8 of the Agreement.
[Signature Page Follows]
12
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the date first written above.
"BUYER"
QUIKSILVER, INC., a Delaware corporation
By: /s/ Xxxxxxx X. Exon
--------------------------------------
Name: Xxxxxxx X. Exon
Title: Executive Vice President and Secretary
"COMPANY"
DC SHOES INC., a California corporation
By: /s/ Xxxxx Xxxxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Executive Officer
SIGNATURE PAGE TO
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
"SELLERS"
/s/ Xxxxxxx Xxxxx /s/ Damon Way
-------------------------------------- -----------------------------------
Xxxxxxx Xxxxx Damon Way
None /s/ Xxxxxxx Way
-------------------------------------- -----------------------------------
Signature of Seller's Spouse Signature of Seller's Spouse
(Xxxxxxx Way)
/s/ Xxxxx Xxx /s/ Xxxxx XxXxx
-------------------------------------- -----------------------------------
Xxxxx Xxx Xxxxx XxXxx
/s/ Xxxx Way None
-------------------------------------- -----------------------------------
Signature of Seller's Spouse (Xxxx Way) Signature of Seller's Spouse
The Damon Way Revocable Trust u/a
May 20, 1999
By: /s/ Damon Way
----------------------------------
Damon Way, Trustee
SIGNATURE PAGE TO
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
DC SHOES, INC., EMPLOYEE SHARE TRUST:
/s/ Xxxxxxx Xxxxx
--------------------------------------
Xxxxxxx Xxxxx, Trustee
/s/ Damon Way
--------------------------------------
Damon Way, Trustee
SIGNATURE PAGE TO
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
LIST OF APPENDICES
Appendix I Rider Payments ($1,685,000)
Appendix II Cash Participating Percentages, Stock Participating Percentages
and Phantom Share Participating Percentages
Appendix III Fees and Expenses of the Company to be assumed by the Buyer
($2,649,633)
