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EXHIBIT 2.2
AMENDMENT TO MERGER AGREEMENT
This Amendment to Merger Agreement (this "Amendment") is made and
entered into as of July 20, 2000 by and among MarketFirst Software, Inc., a
Delaware corporation ("Parent"), FusionDM, Inc., a Delaware corporation, a
wholly owned subsidiary of Parent ("Merger Sub"), Times Direct Marketing, Inc.,
a California corporation (the "Company"), and Christopher E. Peterson and
Thierry Zamora (individually, a "Shareholder", and collectively the
"Shareholders").
WHEREAS, that certain Agreement and Plan of Merger and Reorganization
(the "Agreement") was entered into as of April 14, 2000 by and among Parent,
Merger Sub, the Company and the Shareholders.
WHEREAS, the parties desire to amend the Agreement as set forth below.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise defined herein, capitalized terms used herein
shall have the same meanings as those terms are defined in the Agreement.
ARTICLE II
AMENDMENTS
2.1 Paragraph (a)(ii) of Section 1.7 of the Agreement is hereby amended
and restated in its entirety to read as follows:
"(ii) One Million Seven Hundred Forty-Two Thousand One Hundred Sixty
(1,742,160) shares of Parent Common Stock; and "
2.2 Paragraph (c)(ii) of Section 1.7 of the Agreement is hereby amended
and restated in its entirety to read as follows:
"(ii) Eleven Dollars and Forty-Eight Cents ($11.48)."
2.3 Paragraph (a) of Section 1.8 of the Agreement is hereby amended and
restated in its entirety to read as follows:
"(a) Delivery of Initial Merger Consideration. Immediately following
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the Merger, upon surrender by the Shareholders of the certificates
representing the Company Common Stock, Parent shall (i) pay each
Shareholder, by wire transfer to such Shareholder's bank account of
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immediately available funds, his proportionate share of cash pursuant to
Section 1.7(a)(i) above based upon the number of such Shareholder's shares
of Company Common Stock (i.e., $2,125,000 to Christopher E. Peterson and
$375,000 to Thierry Zamora), and (ii) cause to be issued to each
Shareholder shares of Parent Common Stock represented by certificates
evidencing his proportionate share of Parent Common Stock pursuant to
Section 1.7(a)(ii) above based upon the number of such Shareholder's shares
of Company Common Stock (i.e., 740,418 shares of Parent Common Stock issued
to Christopher E. Peterson and 130,662 shares of Parent Common Stock issued
to Thierry Zamora) (the consideration provided in clauses (i) and (ii) is
sometimes hereinafter collectively referred to as the "Initial Merger
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Consideration"), and (iii) cause to be issued to each Shareholder shares of
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Parent Common Stock ("Earnout Shares") represented by 3 certificates (the
"Earnout Certificates") issued to such Shareholder, evidencing, in the
aggregate, the maximum number of shares of Parent Common Stock which such
Shareholder would be entitled to receive from the Escrow (as defined below)
under the First Earnout, the Second Earnout, and the Third Earnout,
pursuant to Section 2.1(a)(ii), 2.1(b)(ii), and 2.1(c) based on the number
of such Shareholder's shares of Company Common Stock (i.e., an aggregate of
740,418 Earnout Shares issued to Christopher E. Peterson, with each of his
three Earnout Certificates representing one-third (each) of his Earnout
Shares, and an aggregate of 130,662 Earnout Shares issued to Thierry
Zamora, with each of his three Earnout Certificates representing one-third
(each) of his Earnout Shares). All of the shares of Parent Common Stock
issued to the Shareholders, pursuant to clauses (ii) and (iii) of this
Section 1.8(a), immediately following the Merger, shall be legally
outstanding Parent Common Stock under applicable state law. Upon issuance,
immediately following the Merger, of the Earnout Shares described in clause
(iii) of this Section 1.8(a), each Shareholder shall deposit each of his
Earnout Certificates, representing the Earnout Shares issued to him, with
the Escrow Agent to be held in escrow (the "Escrow") in accordance with the
terms and conditions of the Escrow Agreement attached hereto as Exhibit A
(the "Escrow Agreement")."
2.4 Paragraph (c) of Section 1.8 of the Agreement is hereby amended and
restated in its entirety to read as follows:
"(c) Common Stock Value. For all purposes of this Agreement and the
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Escrow Agreement, subject to the provisions of Section 1.8(d), the term
"Parent Common Stock Value" shall mean and refer to $11.48 per share of
Parent Common Stock."
2.5 Paragraph (d) of Section 1.8 of the Agreement is hereby amended and
restated in its entirety to read as follows:
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"(d) Adjustments.
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(i) Dividends and Combinations. For all purposes of this Agreement
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and the Escrow Agreement, the specified number of shares of Parent Common Stock
to be issued hereunder, the specified number of such shares of Parent Common
Stock to be released from escrow to the Shareholders, and the Parent Common
Stock Value (as defined in Section 1.8(c)) shall each be proportionately
adjusted for any increase or decrease in the number of outstanding shares of
Parent Common Stock resulting from any split-up, stock dividend, subdivision,
combination, spin-off, recapitalization or similar event.
(ii) Mergers and Reorganizations. In the case of any merger,
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reorganization, reclassification, recapitalization, consolidation, exchange of
shares or other transaction ("Capital Transaction") in which Parent Common Stock
(or any other shares or securities received in connection with a previous
Capital Transaction) is exchanged for other shares, securities, or other
consideration in connection with such Capital Transaction, then, for all
purposes of this Agreement and the Escrow Agreement, references to the specified
number of shares of Parent Common Stock and the Parent Common Stock Value shall
be modified and adjusted to reflect the kind and amount of such other shares,
securities, or other consideration received by holders of Parent Common Stock in
connection with such Capital Transaction".
2.6 Section 2.1 of the Agreement is hereby amended and restated in its
entirety to read as follows:
"2.1 Earnouts. In addition to the cash amounts and shares of Parent
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Common Stock to be paid to the Shareholders immediately following the Merger
pursuant to Article I, each Shareholder shall be entitled to receive as
additional consideration for such Shareholder's shares of Company Common Stock a
share of the following contingent payments equal to such Shareholder's
percentage ownership interest in the outstanding Company Common Stock (a
"Prorata Share"):
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(a) First Earnout. Upon completion of the twelve months ended
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December 31, 2000 ("FY 2000"), and contingent on the Company's Net Income (as
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defined below) for FY2000 being at least breakeven, the Shareholders in the
aggregate shall be entitled to receive the following cash payment and to receive
the following shares of Parent Common Stock from Escrow (the "First Earnout"):
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(i) Cash equal to the product of (A) $1,250,000 multiplied by
(B) the Gross Revenue (as defined below) in FY2000, divided by the projected
Gross Revenue for FY2000 as provided in Schedule 2.1 (the "Projected 2000
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Revenue"); and
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(ii) The number of shares of Parent Common Stock equal to the
product of (A) the Gross Revenue for FY2000 divided by the Projected 2000
Revenue, times (B) 290,360; provided, however, in no event shall the quotient
determined in clause (A) be greater than 1.
All of the Gross Revenue in FY2000 is used in determining the earnout payments
for each of Sections 2.1(a)(i) and 2.1(a)(ii).
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(b) Second Earnout. Upon completion of the twelve months ended
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December 31, 2001 ("FY 2001"), and contingent on the Company's Net Income for
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FY2001 being at least breakeven, the Shareholders shall be entitled to receive
the following cash payment and to receive the following shares of Parent Common
Stock from Escrow (the "Second Earnout"):
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(i) Cash equal to the product of (A) $1,250,000 multiplied by
(B) the Gross Revenue in FY2001, divided by the projected Gross Revenue for
FY2001 as provided in Schedule 2.1 (the "Projected 2001 Revenue"); and
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(ii) the number of shares of Parent Common Stock equal to the
product of (A) the Gross Revenue for FY2001 divided by the Projected 2001
Revenue, times (B) 290,360; provided, however, in no event shall the quotient
determined in Clause (A) exceed 1.
All of the Gross Revenue in FY2001 is used in determining the earnout payments
for each of Sections 2.1(b)(i) and 2.1(b)(ii).
(c) Third Earnout. Upon completion of the twelve months ended
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December 31, 2002 ("FY 2002"), and contingent on the Company's Net Income for
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FY2002 being at least breakeven, the Shareholders shall be entitled to receive
from Escrow the number of shares of Parent Common Stock equal to the product of
(A) the Gross Revenue for FY2002 divided by the projected Gross Revenue for
FY2002 as provided in Schedule 2.1, times (B) 290,360; provided, however, in no
event shall the quotient determined in clause (A) exceed 1 (the "Third
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Earnout").
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No cash payments under this Section 2.1 shall be made and no shares
shall be released from Escrow for any fiscal year if the Company's Net Income
for that year is less than zero."
2.7 Subparagraph (A) of paragraph (a)(i) of Section 4.3 is hereby
amended and restated in its entirety to read as follows:
"(A) 5,330,128 shares are issued and outstanding,"
2.8 Section 6.3 of the Agreement is hereby amended and restated
in its entirety to read as follows:
"6.3 Consents: Cooperation. Except as provided herein, each of
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Parent, Merger Sub and the Company shall (i) promptly apply for or otherwise
seek, and use its best efforts to obtain, all consents and approvals required to
be obtained by it for the consummation of the Merger, and (ii) use commercially
reasonable efforts to obtain all necessary consents, waivers and approvals under
any of its material contracts in connection with the Merger for the assignment
thereof or otherwise. The failure of the Company and the Shareholders to obtain
consents or approvals to the transactions contemplated hereby with respect to
the agreements listed on Section 6.3 of the Company Disclosure Schedule (the
"Listed Agreements") shall not constitute a breach of any of the Company's or
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the Shareholders' representations, warranties, covenants and agreements
(including, but not limited to, for purposes of the indemnification provisions
of Article IX) set forth in this Agreement, and such consents or approvals shall
not be
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a condition to the obligations of Parent and Merger Sub under Section 7.2(e).
Each of the Company and the Shareholders hereby represent and warrant to Parent
and Merger Sub that the failure of the Company to obtain any consents with
respect to the Listed Agreements, individually or taken as a whole, would not
have a Material Adverse Effect on the Company. The failure to obtain such
consents, waivers, or approvals with respect to the agreements set forth in
Section 3.3(b) of the Company Disclosure Schedule, other than the Listed
Agreements ("Non-Listed Agreements") in connection with the Merger for the
assignment thereof or otherwise is only a Closing condition, which will be
satisfied or waived at or before the Closing; however, under no circumstances
shall the failure to obtain such consents, waivers, or approvals with respect to
such Non-Listed Agreements constitute a breach of any of the Company's or the
Shareholders' representations, warranties, covenants, and agreements (including,
but not limited to, for purposes of the indemnification provisions of Article
IX) set forth in this Agreement. The Parent and Merger Sub hereby
unconditionally waive any requirement that the Company or its Shareholders
obtain consents, waivers, or approvals, with respect to the following Non-Listed
Agreements, in connection with the Merger for the assignment thereof or
otherwise: (i) all Company client agreements, other than the 21st Century
Agreement, (ii) the MCI Agreement, (iii) the UUNET Agreement, (iv) the Prodigy
Agreement, (v) the Petstore.com Satisfaction Agreement, (iv) the Stars & Stripes
Lease and Supplement, and (vii) the Automobile Lease."
2.9 Section 6.8 of the Agreement is hereby amended and restated
in its entirety to read as follows:
"6.8 Distribution of 1999 Profits. The parties agree that on
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March 28, 2000 the Company distributed to the Shareholders (prorata to their
shareholdings) cash of the Company in a total amount equal to $327,001,
representing the portion of the undistributed retained earnings of the Company
to which Shareholders were entitled for 1999. The parties agree that,
notwithstanding any other provision of this Agreement to the contrary, the
distribution provided for in this Section 6.8, the bonus paid to Thierry Zamora
on March 15, 2000 in the amount of $82,493.61, Christopher E. Peterson's March
28, 2000 loan of $280,700 to the Company, and the Company's or FusionDM, Inc.'s
future repayment of such loan in accordance with its terms (i.e., on or before
December 31, 2000) shall not give rise to any adjustment of the Merger
Consideration or constitute a breach of any of the Company's or Shareholders'
representations, warranties, covenants and agreements (including, but not
limited to, for purposes of the indemnification provisions of Article IX) set
forth in this Agreement.
The parties agree that the $327,001 distribution may be attributable
in part to 1999 and/or 2000 profits, but in any case is a distribution to which
the Shareholders are entitled (prorata to their shareholdings), and the fact
that any portion of that amount is attributable to 2000 shall not give rise to
any adjustment of the Merger Consideration or constitute a breach of any of the
Company's or Shareholders' representations, warranties, covenants, and
agreements (including, but not limited to, for purposes of the indemnification
provisions of Article IX) set forth in this Agreement."
2.10 Section 6.10 of the Agreement is hereby amended and
restated in its entirety to reads as follows:
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"6.10 Release From Guarantees. Parent shall use its commercially
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reasonable efforts to have Christopher E. Peterson ("Peterson") released from
the personal guarantees of the Company's obligations identified in Section 6.10
of the Company Disclosure Schedule on the Closing Date and will continue such
efforts after the Closing if not released prior thereto; provided, however, with
respect to the Line of Credit referenced in Section 3.3(b)C.1 of the Company
Disclosure Schedule, Parent shall cause Peterson to be released prior to
September 18, 2000 from any guarantees with respect to such Line of Credit.
Parent and Merger Sub hereby, jointly and severally, agree to indemnify, defend
and hold Peterson harmless for any amounts that Peterson is required to pay in
connection with the enforcement of any obligations under such personal
guarantees after the Closing, including without limitation any reasonable
attorneys' fees and expenses incurred in connection therewith."
2.11 A new Section 6.12 is hereby added to the Agreement as follows:
"6.12 Pre-Effective Time Year 2000 Shareholder-Level Taxes. The parties
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expressly agree that as soon as practicable after the Closing Date (but no later
than five (5) days before the Company is required to file its tax returns for
the period from January 1, 2000 through the Effective Time ("Stub Period")), the
Parent shall pay to the Shareholders (prorata to their shareholdings), in
addition to the Merger Consideration provided for in Section 1.7(a), an amount
equal to the Shareholders' federal, state, and local taxes on the pass-through
taxable income and gain of the Company for the Stub Period. This payment shall
also be in addition to any payment the Surviving Corporation is required to make
(with respect to corporate-level taxes) pursuant to Section 6.11."
2.12 The address for Parent and Merger Sub under Section 10.2(a) is hereby
amended and restated in its entirety to read as follows:
MarketFirst Software, Inc.
2061 Stierlin Court
Mountain View, CA 94043
Fax: (650) 962-7891
Attention: Peter R. Tierney
2.13 Disclosure Schedules.
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(a) Company. The Company Disclosure Schedule is hereby amended
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and restated in its entirety to read as set forth on Exhibit A attached hereto.
(b) Parent. The Parent Disclosure Schedule is hereby amended and
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restated in its entirety to read as set forth on Exhibit B attached hereto.
2.14 Except as set forth above, the terms and conditions of the Agreement
shall remain in full force and effect.
2.15 Each of the Shareholders and Parent acknowledges and agrees that the
letter agreement (a copy of which is attached hereto as Exhibit C) dated April
14, 2000 among the Shareholders and Parent is hereby terminated, and such letter
agreement is no longer of any force or effect.
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IN WITNESS WHEREOF, the parties have entered into this Amendment as of
the date first written above.
PARENT
MARKETFIRST SOFTWARE, INC., a Delaware corporation
By: /s/ Peter R. Tierney
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Name: Peter Tierney
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Title: Chief Executive Officer
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MERGER SUB
FUSIONDM, INC., a Delaware corporation
By: /s/ Peter R. Tierney
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Name: Peter R. Tierney
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Title: President
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COMPANY
TIMES DIRECT MARKETING, INC., a California
corporation
By: /s/ Christopher E. Peterson
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Name: Christopher E. Peterson
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Title: President
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SHAREHOLDERS
/s/ Christopher E. Peterson
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Christopher E. Peterson
/s/ Thierry Zamora
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Thierry Zamora
