Document:

Exhibit 10.7.2

 

Execution Copy

 

 

 

 

 

 

 

 

 

 

 

First Amendment to Combination Agreement

 

entered into by

 

F5 Finishes, Inc., 

 

Kurt Zanelotti

 

and

 

Contract Carpet Systems, Incorporated

 

February 6, 2020

 

 

 

 

 

 

 

 

 

 

 

 

     

     

    

 

First Amendment to

Combination Agreement

 

This First Amendment to Combination Agreement
(this “First Amendment”) is entered into as of February 6, 2020, by and among F5 Finishes, Inc. (“F5
Finishes”), Kurt Zanelotti (“Shareholder”), and Contract Carpet Systems, Incorporated, a Maryland
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, Shareholder shall receive that number of shares of F5 Finishes Stock equal to 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, Shareholder
shall receive a convertible, subordinated promissory note substantially in the form as set forth in Exhibit A (the
“IPO Note”) with the principal amount equal to the Price Differential multiplied by the number of shares 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.”

 

    1

     

    

 

(b) Section
2.1(a)(4) shall be deleted in its entirety and replaced with the following:

 

“(4) 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 Note”). With respect to the RE Equity, within three Business Days after
Closing, Shareholder will receive that number of shares of F5 Finishes Stock equal to twenty-five percent (25%) 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 Shareholder in the principal amount equal to fifty percent
(50%) of the Retained Earnings Distribution. The Shareholder shall be entitled to the payment of any Closing Date Working Capital
Surplus or any Final Working Capital Surplus if and only to the extent that such Closing Date Working Capital Surplus or Final
Working Capital Surplus exceeds the aggregate amount of the Retained Earnings Distributions. For the avoidance of doubt, the Cash
Consideration shall be reduced by the amount of the Closing Date Working Capital Deficit or the Final Working Capital Deficit,
if any.”

 

(c) 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;”

 

(d) 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).”

 

“RE Equity is defined in Section
2.1(a)(4).”

 

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.

 

    2

     

    

 

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]

 

    3

     

    

 

In witness, the Parties have executed this
First Amendment.

 

	 	F5 Finishes, Inc.
	 	 	 
	 	By	/s/ Stephen P. Colmar
	 	 	Steven P. Colmar, Chief Executive Officer

 

	 	Contract Carpet Systems, Incorporated
	 	 	 
	 	By:	/s/ Kurt Zanelotti
	 	 	Kurt Zanelotti
	 	 	President and Chief Executive Officer
	 	 	 
	 	/s/ Kurt Zanelotti
	 	Kurt Zanelotti

 

 

 

First Amendment to DSB Combination Agreement
Signature PageExhibit 10.8.2

 

Execution Copy

 

 

 

 

 

 

 

 

 

 

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, 

 

C & C Preston Family Trust, Cory
G. Preston and Christine B. Preston, Trustees

 

and

 

D.S. Baxley, Inc. d/b/a DSB+

 

February 6, 2020

 

 

 

 

 

 

 

 

 

 

     

     

    

 

First Amendment to

Combination Agreement

 

This First Amendment to Combination Agreement
(this “First Amendment”) is entered into as of February 6, 2020, by F5 Finishes, Inc. (“F5 Finishes”),
Patton 2013 Living Trust, Michael Patton and Lynn Anne Patton, Trustees, Baxley Family Trust, Daniel S. Baxley and Rochelle H.
Baxley, Trustees, and C & C Preston Family Trust, Cory G. Preston and Christine B. Preston, Trustees (each a “Shareholder”
and together the “Shareholders”), and D. S. Baxley, 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.”

 

    1

     

    

 

(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).”

 

    2

     

    

 

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]

 

    3

     

    

 

In witness, the Parties have executed this
First Amendment.

 

	 	F5 Finishes, Inc.
	 	 	 
	 	By	/s/ Steven P. Colmar
	 	 	Steven P. Colmar, Chief Executive Officer
	 	 	 
	 	D.S. Baxley, Inc. d/b/a DSB+
	 	 	 
	 	By	/s/ Michael Patton
	 	 	Michael Patton
	 	 	Chief Executive Officer
	 	 	 
	 	Patton 2013 Living Trust
	 	 	 
	 	/s/ Michael Patton
	 	Michael Patton, Trustee
	 	 
	 	/s/ Lynn Anne Patton
	 	Lynn Anne Patton, Trustee
	 	 	 
	 	Baxley Family Trust
	 	 	 
	 	/s/ Daniel S. Baxley
	 	Daniel S. Baxley, Trustee
	 	 
	 	/s/ Rochelle H. Baxley
	 	Rochelle H. Baxley, Trustee
	 	 	 
	 	C & C Preston Family Trust
	 	 	 
	 	/s/ Cory G. Preston
	 	Cory G. Preston, Trustee
	 	 
	 	/s/ Christine B. Preston
	 	Christine B.  Preston, Trustee

 

First Amendment to DSB Combination Agreement
Signature Page

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