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EXHIBIT 2.2
AMENDMENT NO. 1 TO MEMBERSHIP INTEREST PURCHASE AGREEMENT
This AMENDMENT NO. 1 TO MEMBERSHIP INTEREST PURCHASE AGREEMENT is dated
as of January 31, 2001 (this "AMENDMENT"), by and among Converge, Inc., a
Delaware corporation ("CONVERGE"), ▇▇▇▇.▇▇▇ LLC, a Delaware limited liability
company (the "COMPANY"), VerticalNet, Inc., a Pennsylvania corporation
("VERTICALNET" and, together with Converge and the Company, the "PARTIES"), and
Converge International Ltd., an international business company incorporated in
the British Virgin Islands and wholly owned subsidiary of Converge ("CIL").
WHEREAS, the Parties are each a party to that certain Membership
Interest Purchase Agreement dated December 19, 2000, by and among Converge, the
Company, and VerticalNet (the "AGREEMENT"); and
WHEREAS, Converge desires to cause its wholly owned subsidiary, CIL, to
acquire from the Company all the Company's direct ownership rights and direct
licenses in, to, and under the Proprietary Rights and Software Products outside
of the United States of America, whether such ownership rights and licenses are
owned by or licensed to the Company prior to the Closing or acquired by or
licensed to the Company pursuant to the Agreement at or after the Closing,
including the assets listed in Sections 4 and 5 of Schedule 4.22(a)(i) of
APPENDIX II to the Agreement; and
WHEREAS, the Parties desire to amend the Agreement pursuant to Sections
12.3 and 12.7 of the Agreement, upon the terms and conditions contained in this
Amendment; and
WHEREAS, the Parties desire to join CIL to the Agreement as set forth
herein and CIL wishes to accept and adopt the provisions of the Agreement; and
WHEREAS, capitalized terms used in this Amendment shall have the
meanings ascribed to them in the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, for the covenants and agreements set forth in the Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and intending to be legally bound hereby, the
Parties and CIL hereby agree as follows:
1. JOINDER BY CIL. CIL hereby irrevocably agrees that, upon execution
of this Amendment, CIL shall join in the execution and delivery of the Agreement
and shall be bound by and a party to the Agreement in accordance with its
provisions. Furthermore, CIL hereby agrees to perform all of its duties and
obligations under the Agreement from and after the date hereof. From and after
the date of this Amendment, CIL shall be considered a Party for the purposes of
the Agreement.
2. AMENDMENTS TO THE AGREEMENT. The Agreement shall be amended as set
forth below:
(a) Section 2.5 of the Agreement is deleted in its entirety.
(b) Section 2.6 of the Agreement is stricken in its entirety.
(c) The following Sections are hereby added to Article 2 of
the Agreement:
2.7 Assignment of Offshore Assets. Immediately prior
to the Closing, (i) to the extent that the Company then
directly owns or has a direct license for Offshore Assets, the
Company shall transfer, sell, assign, and convey beneficial
ownership of
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such Offshore Assets to CIL, and (ii) to the extent that the
Company expects to acquire direct ownership of or a direct
license for Offshore Assets at the Closing pursuant to the
Agreement, the Company shall on or after the Closing, as the
case may be, transfer, sell, assign, and convey beneficial
ownership of all of such Offshore Assets to CIL. The Company
and VerticalNet have no other obligations or liabilities
regarding the transfer of the Offshore Assets other than as
set forth in this Sections 2.7 and 12.14.
2.8 Consideration for Offshore Assets. In
consideration for the conveyance of the Offshore Assets
pursuant to Section 2.7, CIL shall deliver to the Company
3,439,821 shares of Converge's Series B Preferred Stock (the
"CIL SHARES"). The Stock Consideration issuable by Converge
pursuant to Section 2.4 shall be reduced by the number of
shares of Series B Preferred Stock issued under this Section
2.8. Immediately prior to the Closing, CIL shall deliver to
the Company (a) the share certificates evidencing the CIL
Shares together with stock powers endorsed in blank sufficient
to vest in the Company all right and title to the CIL Shares,
free and clear of any Encumbrances and (b) an opinion of
counsel to CIL reasonably satisfactory in form and substance
to VerticalNet.
2.9 Transfer of Consideration to VerticalNet.
Notwithstanding anything herein to the contrary, the Company
shall transfer the CIL Shares to VNI immediately prior to the
Closing. Any actions taken by the Company pursuant to Sections
2.7 and 2.8 and this Section 2.9 shall not be deemed to be a
violation of any provision of this Agreement by either the
Company or VerticalNet.
2.10 Converge Actions. Any actions taken by Converge
pursuant to Sections 2.7, 2.8 and 2.9, including the issuance
of the CIL Shares to CIL, shall not be deemed to violate any
provision of this Agreement by Converge.
(d) Sections 3.1(a) and 3.1(b) shall be deleted in their
entirety and the following Sections are hereby inserted:
(a) "CLOSING DATE NET BOOK VALUE" shall be an amount
equal to (i) the sum of the Company's total member's capital
and intercompany debt, each as of the Closing Date, plus (ii)
the sum of the Company's goodwill amortization expense, other
intangible amortization expense and depreciation expense
during the period beginning November 1, 2000 and ending on the
Closing Date.
(b) "CLOSING DATE NET WORKING CAPITAL" shall be an
amount equal to the sum of (i) the Company's current assets,
less current liabilities (excluding intercompany debt), each
as of the Closing Date, plus (ii) the Company's cumulative
capital expenditures during the period beginning November 1,
2000 and ending on the Closing Date.
(e) The following Section 3.1(e) shall be added at the end of
Section 3.1:
(e) Any amounts paid or payable (i) to PNC Capital
Markets, Inc., by the Company as amendment fees in connection
with the engagement letter dated January 29, 2001 by and
between PNC Capital Markets, Inc., and the Company or (ii) for
bona fide expenses incurred by the Company (or VerticalNet on
behalf of the Company) in connection with the transactions
contemplated hereby, shall be
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excluded from such calculation and shall not adversely affect
VerticalNet or the amount of Cash Consideration to be received
by it.
(f) The following Section 3.3A is hereby added to the
Agreement immediately following Section 3.3:
3.3A Closing Date Adjustment of Cash Consideration.
(a) On the Closing Date, the Vice President --
Finance of the Company shall deliver separate schedules
setting forth the calculation of the (i) Closing Date Net
Working Capital, estimated as of the day immediately preceding
the Closing Date (the "ESTIMATED CLOSING DATE NET WORKING
CAPITAL") and (ii) the Closing Date Net Book Value, estimated
as of the day immediately preceding the Closing Date (the
"ESTIMATED CLOSING DATE NET BOOK VALUE").
(b) If either (i) the Balance Sheet Date Net Working
Capital exceeds the Estimated Closing Date Net Working Capital
or (ii) the Balance Sheet Date Net Book Value exceeds the
Estimated Closing Date Net Book Value, then the Cash
Consideration to be paid at Closing under Section 2.4 hereof
shall be decreased on a dollar-for-dollar basis by an amount
(the "ESTIMATED DEFICIENCY") equal to the greater of (i) the
difference between the Balance Sheet Date Net Working Capital
and the Estimated Closing Date Net Working Capital, or (ii)
the difference between the Balance Sheet Date Net Book Value
and the Estimated Closing Date Net Book Value. If the
Estimated Deficiency exceeds the Cash Consideration, then
VerticalNet shall pay Converge an amount equal to such excess
in immediately available funds on the Closing Date (the
"DEFICIENCY PAYMENT").
(g) Section 3.4(b) is deleted in its entirety and the
following is hereby added:
(b) Within 15 Business Days of Converge's receipt of
the Audited Closing Date Consolidated Balance Sheet and the
Closing Schedules, the following payments shall be paid by
wire transfer of immediately available funds:
(i) If the Deficiency is greater than the
Estimated Deficiency, then VerticalNet shall pay to
Converge an amount equal to the difference between
the Deficiency and the Estimated Deficiency; or
(ii) If the Deficiency is less than the
Estimated Deficiency, then Converge shall pay to
VerticalNet an amount equal to the difference between
the Estimated Deficiency and the Deficiency;
provided, however, that in no event shall Converge be
obligated to make a payment in excess of the sum of
the Cash Consideration and the Deficiency Payment.
provided, however, that if any disagreement with respect to the Audited
Closing Date Consolidated Balance Sheet or the Closing Schedules
remains unresolved as of the date of payment under this Section 3.4(b),
then any amounts to be paid to either VerticalNet or Converge under
this Section 3.4(b) shall not be made until the final resolution of
such disagreement between the Parties in accordance with Section 3.3
above, at which time any payments shall be made in accordance with such
final resolution.
(h) Section 6.5 of the Agreement shall be amended in its
entirety to read as follows:
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6.5 CIL.
(a) Organization. CIL is duly organized, validly
existing and in good standing under the laws of its
jurisdiction of organization, with all requisite power and
authority to conduct its business as it is presently being
conducted, and to own or lease, as applicable, the assets
owned or leased by it.
(b) Capitalization of CIL
(i) Authorized Capitalization. As of January
31, 2001, CIL has authorized 50,000 shares of common
stock, par value US$1.00 all of which are issued and
outstanding and owned of record by Converge. As of
the date of this Agreement, CIL has no other equity
securities authorized, issued or outstanding. There
are no outstanding options, warrants, convertible
securities or rights of any kind to purchase or
otherwise acquire any shares of capital stock or
other securities of CIL. No shares of capital stock
of CIL are reserved for issuance.
(ii) Valid Issuances. The CIL Shares will be
validly issued, and when delivered to the Company
shall be fully paid and non-assessable and not
subject to any preemptive rights or rights of first
refusal that have not been properly waived, or
restriction on transfer (other than applicable
federal or state securities laws) created by statute,
CIL's Memorandum and Articles of Association, or any
Contract. The CIL Shares that have been issued by
Converge to CIL before the Closing Date have been
granted or issued in compliance with all federal and
state corporate and securities laws and when
transferred to the Company shall have been
transferred in compliance with all federal, state or
other corporate securities laws.
(iii) Other Transactions. There is no
outstanding vote, plan or pending proposal of any
merger or consolidation of CIL with or into any other
entity.
(iv) Agreements. There are no Contracts
among any Persons which affect or relate to the
voting or giving of written consents with respect to
any security of CIL.
(c) Authorization. CIL has all necessary corporate
power and authority to enter into this Agreement and any
Ancillary Agreements to which it is a party, and has taken, or
will take all action prior to the Closing necessary to
consummate the transactions contemplated hereby and thereby
and to perform its obligations hereunder and thereunder. This
Agreement has been duly executed and delivered by CIL, and
this Agreement is, and upon execution and delivery each of the
Ancillary Agreements to which CIL is a party will be, a valid
and binding obligation of CIL enforceable against CIL in
accordance with its terms, subject to the Enforceability
Exceptions.
(d) Liabilities. Except as set forth in Section
6.5(d) of APPENDIX III, CIL has no Liabilities.
(e) Conflicts. Neither the execution, delivery or
performance of this Agreement or any Ancillary Agreement, the
consummation of the transactions
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contemplated hereby or thereby, nor compliance by CIL with any
of the applicable provisions hereof or thereof, will violate
(i) or conflict with any provision of the governing documents
of CIL, (ii) conflict with, or result in a Default under, or
result in the creation of any Encumbrance, other than
Permitted Encumbrances, upon any of the CIL's Assets under,
any Contract to which CIL is a party or by which CIL is bound
or (c) any material Regulation or Court Order applicable to
CIL.
(f) Officers and Directors. Section 6.5(f) of
APPENDIX III contains a true, correct and complete list of all
the officers and directors of CIL.
(g) Subsidiaries, Etc. Other than the CIL Shares, as
of the date hereof, CIL does not own, directly or indirectly,
any interest or investment (whether equity or debt) in any
Person.
(i) Section 7.3(a) of the Agreement is stricken in its
entirety and replaced with the following:
(a) transfer or assign to the Company, or shall cause
its Affiliates to transfer to the Company, ownership, free and
clear of any Encumbrances, other than Permitted Encumbrances,
of all of the Proprietary Rights listed in Section 4.22(a)(i),
4.22(a)(ii), 4.22(a)(iii), 4.22(a)(iv), 4.22(a)(vi), and
4.22(d) of APPENDIX II to the extent necessary to provide the
Company with all of VerticalNet's right, title and interest
set forth in the listed Proprietary Rights;
(j) Section 7.7 of the Agreement is stricken in its entirety
and replaced with the following:
7.7 Board of Directors. On or before June 19, 2001,
Converge shall use its best efforts to obtain all necessary
approvals needed to adopt the Amended and Restated Certificate
of Incorporation and the Amended and Restated Bylaws in
substantially the form attached hereto as EXHIBIT F and
EXHIBIT G, respectively. Irrespective of whether the Amended
and Restated Certificate of Incorporation and/or Amended and
Restated Bylaws are adopted in substantially the form attached
hereto as EXHIBIT F and EXHIBIT G, on or before June 19, 2001,
Converge shall nevertheless take such action as VerticalNet
may reasonably deem appropriate to increase the number of
Converge's directors to seven.
(k) Section 10.1(f) of the Agreement is stricken in its
entirety and replaced with the following:
(f) evidence of the release of any intercompany
indebtedness owed to VerticalNet by the Company; evidence that
the intercompany account balance, immediately following
Closing, will be $0; and evidence that the intercompany
indebtedness owed to the Company by VerticalNet was discharged
by payment of immediately available funds and not by means of
a bookkeeping entry or conversion of indebtedness to equity.
(l) The last sentence of Section 11.3(a) of the Agreement is
stricken in its entirety and replaced with the following:
Notwithstanding the foregoing, the maximum amount of
Damages claimed by the Converge Indemnified Parties, in the
aggregate, shall not exceed $26 million.
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(m) The last sentence of Section 11.3(b) of the Agreement is
stricken in its entirety and replaced with the following sentence:
Notwithstanding the foregoing, the maximum amount of
Damages claimed by the VerticalNet Indemnified Parties, in the
aggregate, shall not exceed $26 million.
(n) A new Section 11.4 shall be added to the Agreement which
shall read in its entirety as follows:
11.4 Indemnification for CIL Restructuring. Converge
shall indemnify and hold harmless (on an after-Tax basis using
an assumed Tax rate of 40%) all of the VerticalNet Indemnified
Parties from and against all Damages that any such VerticalNet
Indemnified Party may sustain, suffer or incur and that result
from, arise out of or relate to any (a) of the transactions
relating to CIL, including those transactions contemplated in
Sections 2.7, 2.8 and 2.9 or (b) breach of the representations
and warranties contained in Section 6.5. Notwithstanding
anything herein to the contrary, the indemnification
obligations of Converge contained in this Section 11.4 shall
be from dollar one and shall not be subject to any of the
limitations contained in Section 11.3(a).
(o) A new Section 12.14 shall be added to the Agreement that
shall read in its entirety as follows:
12.14. Post-Closing Covenant. After the Closing,
VerticalNet shall use its commercially reasonable efforts to
assist Converge as reasonably requested by Converge to (a)
obtain record title in the trademarks set forth in Schedule
4.22(e) of APPENDIX II, and (b) record title to the Offshore
Assets as may be necessary; provided, however, that in
performing this covenant VerticalNet shall not be obligated to
expend any cash whatsoever.
(p) APPENDIX I of the Agreement shall be amended to add the
following definitions:
(i) "CIL" shall mean Converge International Ltd., an
international business company incorporated in the British
Virgin Islands.
(ii) "OFFSHORE ASSETS" shall mean all the Company's
direct ownership rights and direct licenses in, to, and under
the Proprietary Rights and Software Products outside of the
United States of America, whether such ownership rights and
licenses are owned by or licensed to the Company prior to the
Closing or acquired by or licensed to the Company pursuant to
the Agreement at or after the Closing, including the assets
listed in Sections 4 and 5 of Schedule 4.22(a)(i) of APPENDIX
II.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND VERTICALNET.
VerticalNet and the Company hereby represent and warrant to Converge and CIL
that, as of the date hereof, each of the Company and VerticalNet have all
necessary corporate power and authority, as applicable, to enter into this
Amendment. This Amendment has been duly executed and delivered by each of the
Company and VerticalNet, and this Amendment is a valid and binding obligation of
each of the Company and VerticalNet enforceable against each of the Company and
VerticalNet in accordance with its terms, subject to the Enforceability
Exceptions.
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4. REPRESENTATIONS AND WARRANTIES OF CIL. CIL hereby represents and
warrants to the Company and VerticalNet that it has all necessary corporate
power and authority to enter into this Amendment. This Amendment has been duly
executed and delivered by CIL, and this Amendment is a valid and binding
obligation of CIL enforceable against CIL in accordance with its terms, subject
to the Enforceability Exceptions.
5. REPRESENTATIONS AND WARRANTIES OF CONVERGE. Converge hereby
represents and warrants to the Company and VerticalNet that it has all necessary
corporate power and authority to enter into this Amendment. This Amendment has
been duly executed and delivered by Converge, and this Amendment is a valid and
binding obligation of Converge enforceable against Converge in accordance with
its terms, subject to the Enforceability Exceptions.
6. ACKNOWLEDGEMENTS AND FURTHER AMENDMENTS. All terms of the Agreement
not amended by this Amendment shall remain in full force and effect. The
Agreement shall be amended such that Exhibit A and Exhibit B hereto shall be
deemed to be Exhibit F and G, respectively, to the Agreement.
7. CHOICE OF LAW. This Amendment shall be construed and interpreted and
the rights of the Parties determined in accordance with the laws of the State of
Delaware, without regard to its conflicts of laws provisions.
8. REPRESENTATION BY COUNSEL. Each Party hereby acknowledges with each
other that it has been represented by or had the opportunity to be represented
by, independent counsel of its own choosing, and that it has had the full right
and opportunity to consult with its respective attorney(s), that to the extent,
if any, that it desired, it availed itself of this right and opportunity, that
it or its authorized officers (as the case may be) have carefully read and fully
understand this Amendment in its entirety and have had it fully explained to
them by such Party's respective counsel, that each is fully aware of the
contents thereof and its meaning, intent and legal effect, and that it or its
authorized officer (as the case may be) is competent to execute this Amendment
and has executed this Amendment free from coercion, duress or undue influence.
9. ENTIRE AMENDMENT; AMENDMENTS AND WAIVERS. This Amendment, together
with the Agreement, the Ancillary Agreements and all exhibits and schedules
hereto and thereto, constitute the entire agreement among the Parties pertaining
to the subject matter hereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written.
10. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Each such counterpart
shall be deemed an original, and it shall not be necessary in making proof of
this Amendment to produce or account for more than one such counterpart.
11. CONFLICTS. In the event of any discrepancy between the provisions
of this Amendment and any provision of the Agreement, then such provisions of
the Agreement shall control.
[Signature pages to follow]
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IN WITNESS WHEREOF, each of the undersigned has caused this Amendment to be duly
executed on its behalf by its representative thereunto duly authorized, as of
the day and year first above written.
VERTICALNET, INC.,
a Pennsylvania corporation
By: /s/ ▇▇▇▇▇ ▇. Mirage
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▇▇▇▇▇ ▇. Mirage
Vice President - Mergers & Acquisitions
CONVERGE, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President and Treasurer
▇▇▇▇.▇▇▇ LLC,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President, Finance and
Assistant Treasurer
CONVERGE INTERNATIONAL LTD.,
a British Virgin Islands corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
Director