EXHIBIT 2.2.1
FIRST AMENDMENT TO AMENDED AND RESTATED STOCK PURCHASE
AGREEMENT AND AGREEMENT REGARDING EARNOUT AMOUNTS FOR BONUS
YEAR 2004 AND INDEMNIFICATION CLAIM
This FIRST AMENDMENT TO AMENDED AND RESTATED STOCK PURCHASE AGREEMENT AND
AGREEMENT REGARDING EARNOUT AMOUNTS FOR BONUS YEAR 2004 AND INDEMNIFICATION
CLAIM (the "First Amendment") is entered into as of November 10, 2004 by and
among Delta Apparel, Inc., a Georgia corporation ("Delta"), ▇. ▇. ▇▇▇▇▇ Co., a
North Carolina corporation (the "Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇,
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (collectively, the "Shareholders").
WHEREAS, Delta, the Company, and the Shareholders entered into that
certain Amended and Restated Stock Purchase Agreement (the "Stock Purchase
Agreement"), dated as of October 3, 2003, pursuant to which the Shareholders
agreed to sell, and Delta agreed to purchase (through a wholly-owned subsidiary
of Delta), all of the outstanding shares of capital stock of ▇.▇. ▇▇▇▇▇ Co.; and
WHEREAS, Delta, the Company, and the Shareholders desire to amend the
definition of EBITDA contained in the Stock Purchase Agreement and to make an
adjustment to the EBITDA calculation with respect to Bonus Year 2004 (as such
term is defined in the Stock Purchase Agreement); and
WHEREAS, Delta, the Company, and the Shareholders desire to resolve
Delta's claim for indemnification by the Shareholders with respect to the
understatement of current accrued liabilities set forth on the Closing Financial
Information (as such term is defined in the Stock Purchase Agreement); and
WHEREAS, capitalized terms used herein, unless otherwise defined herein,
shall have the same meanings as given such terms in the Stock Purchase
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
set forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Delta, the Company, and the
Shareholders hereby agree as follows:
1. The definition of "EBITDA" contained in Exhibit L to the Stock
Purchase Agreement is hereby deleted in its entirety and replaced with the
following, effective as of October 3, 2003:
"EBITDA means the earnings of the Company (including income received in
the Ordinary Course of Business from sources other than sales of
inventory) before interest expense and income Taxes, plus depreciation and
amortization (including the addition of depreciation expense that is
capitalized in inventory owned by the Company on the Closing Date and sold
by the Company during the applicable
period, but not including any depreciation expense that is capitalized in
any other inventory), determined in accordance with GAAP consistently
applied and using methodologies that are consistent with those used on the
Company's opening balance sheet (which opening balance sheet shall be
prepared in accordance with the methodologies set forth on Schedule X
attached hereto and made a part hereof)."
2. Delta hereby agrees that EBITDA with respect to Bonus Year 2004
shall be increased (from the amount it otherwise would have been) by the amount
of $26,000 for purposes of calculating the EBITDA Earnout Amount and the Return
Rate Earnout Amount with respect to Bonus Year 2004 (together, the "2004 Earnout
Amounts").
3. The Shareholders acknowledge and agree that the current accrued
liabilities of ▇.▇. ▇▇▇▇▇ Co. at Closing, as reflected in the Closing Financial
Information, were understated by an amount equal to $1,541,090, as further
described in Exhibit A attached hereto, and that such understatement constituted
a breach by the Shareholders of Section 8.11 of the Stock Purchase Agreement
(the "Breach"). The Shareholders further acknowledge and agree that, pursuant to
the terms of the Stock Purchase Agreement, Delta is entitled to assert a Claim
for indemnification with respect to the Breach in the amount of $1,541,090 (the
"Closing Financial Information Claim"). Pursuant to the terms of the Stock
Purchase Agreement, the Shareholders are obligated to indemnify Delta from and
against Losses in excess of an aggregate of $600,000 (the "Threshold Amount").
Delta acknowledges and agrees that the Shareholders would be entitled to deduct
the Threshold Amount from the amount due and owing to Delta with respect to the
Closing Financial Information Claim. However, in consideration of the agreements
contained in Sections 1 and 2 of this First Amendment, the Shareholders hereby
waive their right to deduct the Threshold Amount from the amount due and owing
to Delta with respect to the Closing Financial Information Claim and agree to
pay to Delta the amount of $1,541,090 by allowing Delta to offset such amount
against the 2004 Earnout Amounts in accordance with Section 4 of this First
Amendment.
4. Each Shareholder hereby agrees that Delta shall deduct the amount of
$1,541,090 (the "Agreed Amount") from the 2004 Earnout Amounts to be paid by
Delta to the Shareholders pursuant to the Stock Purchase Agreement. The
Shareholders hereby also acknowledge that they owe to Delta, in addition to the
Agreed Amount, the amount of $512,000 (the "Delta Receivable Amount"). Each
Shareholder hereby agrees that, in addition to deducting the Agreed Amount from
the 2004 Earnout Amounts to be paid by Delta to the Shareholders pursuant to the
Stock Purchase Agreement, Delta shall deduct the Delta Receivable Amount from
the 2004 Earnout Amounts to be paid by Delta to the Shareholders pursuant to the
Stock Purchase Agreement. Payment of the 2004 Earnout Amounts shall otherwise be
made in accordance with the terms and conditions of the Stock Purchase
Agreement. Delta agrees that, upon payment by it to the Shareholders of the 2004
Earnout Amounts, reduced by the Agreed Amount and by the Delta Receivable
Amount, the Closing Financial Information Claim shall have been satisfied and
Delta shall have no further right to assert any Claim under the Stock Purchase
Agreement with respect to the Breach. The Shareholders hereby waive any and all
claims regarding the deduction of the Agreed Amount or the deduction of the
Delta Receivable Amount from the 2004 Earnout Amounts.
5. Except as expressly set forth above, all terms and conditions of the
Stock Purchase Agreement shall remain in full force and effect. In the event of
any conflict between the terms and conditions of this First Amendment and any of
the terms and conditions of the Stock Purchase Agreement, the terms and
conditions of this First Amendment shall control.
6. This First Amendment shall be governed by, construed, and applied in
accordance with the laws of the State of North Carolina, without giving effect
to any conflict of laws rules that would refer the matter to the laws of another
jurisdiction. The parties hereto agree to submit any and all matters in dispute
or controversy among them concerning the terms and conditions of this First
Amendment to non-binding mediation for a period of no more than thirty (30)
days. After mediation, each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the United States District Court for the Western
District of North Carolina and, if such court does not have jurisdiction, of the
courts of the State of North Carolina in Mecklenburg County, for the purposes of
any action arising out of the First Amendment, or the subject matter hereof,
brought by any other party. Subject to the foregoing provisions of this Section
6, to the extent permitted by applicable law, each party hereby waives and
agrees not to assert, by way of motion, as a defense or otherwise in any such
action, any claim (i) that it is not subject to the jurisdiction of the
above-named courts, (ii) that the action is brought in an inconvenient forum,
(iii) that it is immune from any legal process with respect to itself or its
property, (iv) that the venue of the suit, action or proceeding is improper or
(v) that this First Amendment, or the subject matter hereof, may not be enforced
in or by such courts.
7. This First Amendment and the Stock Purchase Agreement constitute the
full and entire understanding and agreement between the parties and supersede
any other negotiations, commitments, writings, and agreements, written or oral,
with regard to the subject matter hereof.
8. This First Amendment may not be released, waived, changed, or
modified in any manner, except by an instrument in writing signed on behalf of
each of the parties hereto or by their duly authorized representatives. The
failure of any party hereto to enforce at any time any of the provisions of this
First Amendment shall in no way be construed to be a waiver of any such
provision, nor in any way be construed to affect the validity of this First
Amendment or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this First Amendment
shall be held to be a waiver of any other or subsequent breach.
9. Wherever possible, each provision hereof shall be interpreted in
such manner as to be effective and valid under applicable law, but if any one or
more of the provisions contained herein shall, for any reason, be held to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provisions of this First
Amendment, and this First Amendment shall be construed as if such invalid,
illegal, or unenforceable provision or provisions had never been contained
herein.
IN WITNESS WHEREOF, the parties have duly executed this First Amendment as of
the date first set forth above.
DELTA:
DELTA APPAREL, INC.
By:_________________________
Name:
Title:
THE COMPANY:
▇. ▇. ▇▇▇▇▇ CO.
By:_________________________
Name:
Title:
THE SHAREHOLDERS:
____________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________
▇▇▇▇ ▇. ▇▇▇▇▇
____________________________
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