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EXHIBIT 2.06
SECOND AMENDMENT TO MERGER AGREEMENT
THIS SECOND AMENDMENT TO MERGER AGREEMENT dated April 24,
1998, by and among OFFICE CENTRE CORPORATION, a Delaware corporation ("Buyer"),
OFFICE CENTRE FORT WORTH, a Texas corporation and a wholly-owned subsidiary of
Buyer ("Acquisition"), GREENWOOD OUTFITTERS, INC., a Texas corporation (the
"Company"), XXXXXX XXXX, an individual resident in Texas ("Wood") and RALEIGH
GREEN, an individual resident in Texas ("Green") (Wood and Green each a "Seller"
and, collectively the "Sellers or Shareholders").
RECITALS
WHEREAS, the parties have entered into a Merger Agreement
dated as of October 24, 1997, as amended on December __, 1997 (the "Merger
Agreement") and have agreed to amend certain provisions of the Merger Agreement
as set forth below.
NOW, THEREFORE, in consideration of the agreements contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are conclusively acknowledged, the parties intending to be legally bound,
agree as follows:
0.0.1 The provisions of this Second Amendment shall govern and
control over any conflicting or inconsistent provisions in the Merger Agreement,
but except as modified hereby, all provisions of the Merger Agreement remain
unmodified and in full force and effect and are hereby reaffirmed by each of the
parties hereto. Unless otherwise defined herein, all capitalized terms shall
have the meanings as provided therefor in the Merger Agreement.
0.0.2 Section 2.5 of the Merger Agreement is amended to read
as follows:
2.5 DIRECTORS AND OFFICERS
Acquisition and Buyer shall, at Closing,
cause Xxxxxx X. Xxxxxx, Xx., Xxxxxxx X. Case, Xxxxxx Xxxx, and Xxxxx Xxxx to be
appointed as Directors of the Surviving Corporation. Xxxxxx Xxxx, Raleigh Green,
Xxxxxx X. Xxxxxx, Xx., Xxxxx Xxxx, and Xxxxx Xxxx shall serve as the officers of
the Surviving Corporation until their successors have been elected or appointed
and shall have been qualified in accordance with applicable law.
0.0.3 Section 2.7 of the Merger Agreement is amended to read
as follows:
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2.7 CONVERSION OF COMPANY COMMON STOCK
At the Effective Time, by virtue of the
Merger and without any action on the part of any holder of capital stock of
Buyer, Acquisition, Company or Sellers: (i) the shares of Common Stock of
Acquisition purchased, issued and outstanding immediately prior to the Effective
Time shall be converted as a result of the Merger and without any action on the
part of the holder thereof, into 100 shares of capital stock of the Surviving
Corporation and shall represent all the issued and outstanding shares of the
Surviving Corporation; and (ii) the shares of the Company held by Sellers shall
be converted into and shall become, without further action on the part of the
Sellers, the right to receive, at Closing and on a pro rata basis, the
following: (a) Two Million Six Hundred Fifty Thousand Dollars ($2,650,000) by
wire transfer or certified check; (b) the number of shares of restricted Common
Stock of Buyer having a value of Six Million Five Hundred Fifty Thousand Dollars
($6,550,000), which number of shares of Common Stock shall be determined by
dividing such dollar amount by the initial public offering price of Buyer's
Common Stock (the "IPO Price"), and; (c) the contingent right to receive
additional consideration as follows:
(1) As promptly as practicable
following December 31, 1998, the independent public accounting firm then
employed by Buyer shall determine, in accordance with GAAP except for the
guidelines set forth in clause (2) below, the Company's earnings before
interest, taxes, depreciation and amortization ("EBITDA") for the year ended
December 31, 1998 (the "1998 EBITDA"). Buyer shall notify Sellers of the
determination of the 1998 EBITDA as soon as it is received.
(2) The EBITDA determination
provided for in clause (1) above shall be done in such a way as to simulate that
the merger transaction provided for in this Agreement ("Transaction") had not
occurred and that the Company had remained a separately owned enterprise. For
example, it is intended that such determination will, whether or not recorded on
the financial statements of Company, Acquisition or Buyer, disregard and exclude
(A) all costs associated with the consummation of the Transaction, (B) all
general and administrative, overhead and other costs and expenses over and above
those customarily incurred by the Company in the period preceding the
Transaction, and (C) all net income resulting from the integration of the
operations of other enterprises with those of the Company after the Transaction.
In addition, in order to facilitate comparison of the two periods, the EBITDA
determinations for the periods ending December 31, 1997 and December 31, 1998
will be adjusted in regard to compensation, bonuses, and distributions paid to
Sellers during such periods as follows:
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(A) The 1997 EBITDA (as
defined below) has been adjusted to eliminate as costs all compensation, bonuses
and distributions paid by the Company to Sellers in excess of $300,000.
(B) In determining the
1998 EBITDA, if compensation, bonuses and distributions paid to Sellers exceed
$300,000, the amount of such excess will be added back as an increase to the
1998 EBITDA.
(3) It is stipulated that,
solely for the purposes hereof, the EBITDA of the Company for the year ended
December 31,1997 (taking into account the provisions of clause (2) above), was
$1,231,000 (the "1997 EBITDA"). The EBITDA determination for the year ended
December 31, 1998, shall be done in a manner consistent with the determination
for the year ended December 31, 1997.
(4) If the 1998 EBITDA exceeds
the 1997 EBITDA, the amount of such excess shall be multiplied by 3.05 and the
resulting sum shall be the "Difference," provided, however, that in no event
shall the Difference exceed $3,500,000. If, in calculating the 1998 EBITDA, an
adjustment was made as provided in clause (2)(B) above in regard to
compensation, bonuses and distributions paid to Sellers, then the amount so
added back as an increase to the 1998 EBITDA will be subtracted from the
Difference, and the resulting sum shall be the "Adjustment Amount." If no such
adjustment was made, the Difference shall be the Adjustment Amount.
(5) The Adjustment Amount shall
be paid to Sellers (one-half thereof to each of Sellers) within ten (10) days
after the determination of the 1998 EBITDA as follows: (A) by the issuance to
Sellers (one-half to each of Sellers) of the number of shares of restricted
Common Stock of Buyer having a value equal to seventy percent (70%) of the
Adjustment Amount, which number of shares of Common Stock shall be determined by
dividing 70% of the Adjustment Amount by the IPO Price, provided, however, that
the number of shares so issued shall not exceed the number of shares issued to
Sellers at Closing, and (B) by the payment to Sellers (one-half to each of
Sellers) of an amount in cash equal to the Adjustment Amount LESS the value (at
the IPO Price) of the shares of Common Stock of Buyer issued to Sellers pursuant
to clause (A) above.
0.0.4 The first sentence of Section 9.1 of the Merger
Agreement is amended to read as follows:
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9.1 RIGHT TO INCLUDE SHARES
If at any time after the first anniversary
of Buyer's Initial Public Offering but before the third anniversary of the
Closing, the Buyer proposes to register any of its securities under the
Securities Act of 1933 (other than by registration in connection with an
acquisition in a manner which would not permit registration of the Shares for
sale to the public, on Form S-4 or any successor form thereto, or on Form S-8 or
any successor form thereto), the Buyer will each such time give prompt written
notice to Sellers of its intention to do so and of Sellers' rights under this
Section 9.1.
0.0.5 Section 10.1(d) of the Merger Agreement is amended to
read as follows:
(d) by either Buyer and Acquisition or
Sellers and the Company if the Closing has not occurred (other than through the
failure of any party seeking to terminate this Agreement to comply with the
obligations under this Agreement) on or before September 1, 1998, or such later
date as the parties may agree in writing.
0.0.6 The definition of "Employment Agreements" in Section 1.
of the Merger Agreement is amended by changing the reference from Section 6.2 to
Section 7.2 and the forms of the Employment Agreements attached hereto shall
replace those attached to the Merger Agreement as Exhibit 7.2(b)(i).
0.0.7 The number, but not the exercise price, of the options
to be granted to each Seller under their Employment Agreements is subject to
adjustment (prior to Closing) based upon any stock split, combinations or
subdivisions of Buyer's Common Stock, provided that Seller's options shall be
adjusted no less favorably than any other "founding dealers." Provided, further,
that in no event shall the number of options be reduced by more than forty
percent (40%).
0.0.8 Each party represents and warrants to the others as
follows:
(a) The execution, delivery and performance of
this Second Amendment
(i) has been duly authorized by all
necessary or appropriate acts or proceedings, corporate or
otherwise; and
(ii) does not violate or result in a
breach or default under any contract, understanding judgment, order writ, law
regulation that is applicable to the representing party or its assets.
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(b) This Second Amendment is a valid, legal and
binding obligation and agreement of the representing party, and is enforceable
against it in accordance with its terms.
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IN WITNESS WHEREOF, the parties hereto have executed this
Second Amendment to the Merger Agreement this _____ day of April, 1998.
BUYER: SELLERS:
OFFICE CENTRE CORPORATION
/s/ Xxxxxx Xxxx
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XXXXXX XXXX
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Name: Xxxxxx X. Xxxxxx, Xx. /s/ Raleigh Green
Title: CEO ----------------------------
RALEIGH GREEN
ACQUISITION: COMPANY:
OFFICE CENTRE FORT WORTH GREENWOOD OUTFITTERS, INC.
By: /s/Xxxxxx X. Xxxxxx, Xx. /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxxxx, Xx. Name: Xxxxxx Xxxx
Title: Title: Vice President
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