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EXHIBIT 2.2
AMENDMENT TO THE AGREEMENT AND PLAN OF MERGER
DATED OCTOBER 14, 1999
BY AND AMONG
A.I.N. CORPORATION,
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ III, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ FAMILY PARTNERSHIP,
AUTOBYTEL ACQUISITION II CORP.
AND
▇▇▇▇▇▇▇▇▇.▇▇▇ INC.
This Amendment, dated January 25, 2000 is entered into by and among
A.I.N. Corporation, a California corporation, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ III, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ Family Partnership,
Autobytel Acquisition II Corp., a California corporation, and ▇▇▇▇▇▇▇▇▇.▇▇▇
inc., a Delaware corporation.
RECITALS
A. The parties entered into an Agreement and Plan of Merger dated
October 14, 1999 (the "Agreement") under which Autobytel Acquistion II Corp. was
to be merged with and into A.I.N. Corporation.
B. Any capitalized term in this Amendment that is not defined in this
Amendment shall have the meaning ascribed to such term in the Agreement.
C. Pursuant to due diligence conducted by ▇▇▇▇▇▇▇▇▇.▇▇▇ inc., the
parties to the Agreement believe that certain amendments to the Agreement are
necessary to properly effectuate the intentions, and protect the interests, of
the parties.
D. The parties intend for the Agreement to remain in full force and
effect, and unchanged except for the amendments to those sections as provided
herein:
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree to amend
and restate the following provisions of the Agreement as follows:
1. The Definitions section of Article I of the Agreement is amended to remove
the definitions for "Escrowed Shares," "Escrowed Property" and "Escrow
Termination
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Date." In addition, the Definitions section is amended to include the following
definitions:
Amendment: Shall mean this Amendment to the Agreement.
Consumer Car Club Amount: Shall have the meaning set forth in Section
2.6(f).
Consumer Car Club Parties: Shall mean Auto Insider Services, Inc.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Consumer Car Club, ▇▇▇▇▇▇▇ ▇. London and American
Information Services (collectively, the "Consumer Car Club Parties").
Escrowed Consideration: Shall have the meaning set forth in Section
2.11.
Martins Claim: Shall mean any claim, loss, damage or liability related
or connected to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, including, but not limited to, the lawsuit filed
by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ against the Company on September 1, 1999 or any claim by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or its affiliates with respect to the assets, equity or any
partnership or equity interest in the Company or the Cash Payment or Stock
Payment.
2. The following sections of the Agreement are amended and restated in their
entirety.
Section 2.6 Effect on Capital Stock. By virtue of the Merger and
without any action on the part of the Merger Sub, the Company or the holders of
any of the following securities, the following shall occur with respect to the
Company's Common Stock:
(a) Conversion of Company Common Stock. At the Effective Time, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time will be canceled, extinguished and converted automatically into
the right to receive (i) in cash, the dollar amount per share equal to the
quotient of (x) $3 million less the sum of the Aggregate Employee Bonus Amount
and the Consumer Car Club Amount divided by (y) the number of shares of Company
Common Stock outstanding immediately prior to the Effective Time (the "Cash
Payments"), and (ii) shares of Parent Common Stock equal to the quotient of
1,800,000 shares of Parent Common Stock divided by the number of shares of
Company Common Stock outstanding immediately prior to the Effective Time (the
"Stock Payments"). The shares of Parent Common Stock to be issued in connection
with the Merger will not be registered under the Securities Act and will be
subject to the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ISSUED
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SECTION
3(a)(10) OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THESE SECURITIES MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS (A) AS PERMITTED
UNDER RULES 144 AND 145(d) OF THE SECURITIES ACT, (B)
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THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
COVERING SUCH SECURITIES OR (C) THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE
SECURITIES ACT.
(b) Capital Stock of Merger Sub. At the Effective Time, each share of
common stock of Merger Sub ("Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time shall be converted into and exchanged
for one validly issued, fully paid and nonassessable share of Common Stock of
the Surviving Corporation, and the Surviving Corporation shall be a wholly-owned
subsidiary of Parent.
(c) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted
to reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Parent
Common Stock or Company Common Stock), reorganization, recapitalization or other
like change with respect to Parent Common Stock or Company Common Stock
occurring after the date hereof and prior to the Effective Time.
(d) Company Employee Bonus Amount. Upon the Closing, (i) the Company
shall pay to those Company employees listed on Schedule 2.6(d) the amounts set
forth opposite their respective names on such Schedule (less applicable federal
and California income tax, FICA and other applicable withholdings) and (ii) the
Parent shall deposit in the Company's payroll account an amount equal to the
aggregate employee bonus amounts set forth on Schedule 2.6(d), ("Aggregate
Employee Bonus Amount"). Schedule 2.6(d) may be amended by the Company prior to
the Closing Date provided that no employee shall receive a bonus greater than
$50,000 and the Aggregate Employee Bonus Amount shall not exceed $450,000.
(e) Fractional Shares. No fractional shares of Parent Common Stock will
be issued. The number of shares of Parent Common Stock awardable to each holder
of shares of Company Common Stock (after aggregating all fractional shares of
Parent Common Stock awardable to each such holder) shall be rounded down to the
nearest whole share of Parent Common Stock, unless such fraction is .5 or above,
in which case the number of shares of Parent Common Stock awardable shall be
rounded up to the nearest whole share of Parent Common Stock.
(f) Consumer Car Club Matter Settlement Amount. Upon the Closing, the
Parent shall deposit $500,000.00 (the "Consumer Car Club Amount") in the
Company's general bank account, the proceeds of which shall be used solely for
use in the settlement of the Consumer Car Club Matter. All or a portion of the
Consumer Car Club Amount shall be paid, at such times, as directed by ▇▇▇▇▇▇▇
▇▇▇▇▇ as the "Selling Shareholder Representative" to such Persons as reasonably
determined by ▇▇▇▇▇▇▇ ▇▇▇▇▇
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to further settlement of the Consumer Car Club Matter. Any amounts of the
Consumer Car Club Amount not used to pay or settle any claims, or liabilities
arising from the Consumer Car Club Matter under this Section 2.6(f) within
thirty (30) days following the Closing shall be deposited into, and become part
of, the Escrow Fund, and shall be become subject to the terms of the Escrow
Agreement.
Section 2.11 Escrow. At the Effective Time, $250,000 and 450,000 shares
of Parent Common Stock (the "Escrowed Consideration") to be delivered to, and
received by, the Selling Shareholders as part of the Cash Payment and Stock
Payment shall be delivered or issued (as the case may be), segregated and
deposited with an escrow agent reasonably satisfactory to Company and Parent
(the "Escrow Account") for the purpose of securing and funding part of the
obligations of the Selling Shareholders under this Agreement. The Escrowed
Consideration shall be deducted pro rata from the Cash Payment and Stock Payment
allocable to each Selling Shareholder. The Escrowed Consideraton shall be held
and disbursed by such escrow agent in accordance with the form of escrow
agreement (the "Escrow Agreement") attached to this Amendment.
Section 5.6 No Solicitation. Effective the date of this Amendment, each
Selling Shareholder, the Company, their respective Affiliates and their
respective officers, directors, employees, representatives and agents shall
immediately cease any existing discussions, communications or negotiations, if
any, with any Persons, other than the Parent and the Parent Representatives,
conducted heretofore with respect to any direct or indirect acquisition of any
material portion of the assets or Properties of, or any of the capital stock of
or other equity interest in, the Company or any business combination with the
Company (whether by merger, consolidation or otherwise) or any other transaction
inconsistent with consummation of, or similar in whole or in part to, the
transactions contemplated herein (any of the foregoing, an "Alternative
Transaction"), and will not, directly or indirectly, solicit, encourage,
participate in or initiate discussions or negotiations with, or provide any
information or documents to, or cooperate in any way with, any Person (other
than the Parent and the Parent Representatives) concerning any Alternative
Transaction or consummate any such Alternative Transaction. In the event that
any Selling Shareholder or the Company receives any oral or written proposal
relating to an Alternative Transaction (an "Alternative Transaction Proposal"),
or any inquiry is received by, any information is requested from, or any
discussions or negotiations are sought to be initiated or continued with any
Selling Shareholder or the Company in connection with an Alternative Transaction
or Alternative Transaction Proposal, such Selling Shareholder shall:
(i) not respond or inform the Person making such Alternative
Transaction Proposal that such Selling Shareholder is required by
contract to refrain from discussing any Alternative Transaction or
Alternative Transaction Proposal,
(ii) not make any other statement or engage in any other
discussions with such Person concerning any Alternative Transaction or
Alternative Transaction Proposal, and
(iii) promptly, after requested by Parent, notify the Parent
of the Alternative Transaction Proposal.
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Section 8.1 Survival. The representations and warranties of the parties
contained in this Agreement, or in any Schedule or Exhibit hereto or any
certificate delivered pursuant hereto, shall survive until the third anniversary
of the Closing Date hereunder; provided, however, that (a) the representations
and warranties contained in Sections 3.5 and 3.6 shall survive indefinitely, (b)
the representations and warranties contained in Sections 3.21 and 3.24 shall
survive for the applicable statute of limitations periods subsequent to the
Closing Date, (c) any representations and warranties implicated due to any claim
for Losses related or connected to, or arising under, the Consumer Car Club
Matter or ▇▇▇ ▇▇▇▇▇▇▇ Claim shall survive indefinitely and (d) any
representations and warranties contained in Article IX shall survive as provided
therein. The period of survival of the respective representations and warranties
provided for in this Section is referred to herein as the "Indemnity Period." No
claim for indemnification for breach of a representation or warranty may be
asserted after the expiration of the applicable Indemnity Period; provided that
the written assertion of any claim by a party against another hereunder with
respect to the breach or alleged breach of any representation or warranty (or a
series of facts which would support such breach) shall extend the applicable
Indemnity Period with respect to such claim through the date such claim is
conclusively resolved. No investigation by a party shall relieve another party
from any Liability for any misrepresentation or breach of warranty made by such
other party in this Agreement, or in any Schedule or Exhibit hereto or any
certificate delivered pursuant hereto.
Section 8.2 Indemnification. The Selling Shareholders and, until such
time as the Parent owns all of the capital stock of the Company, the Company
shall unconditionally and jointly and severally indemnify, defend and hold
harmless the Parent and the Merger Sub (and their directors, officers,
employees, representatives, agents, Affiliates, successors and assigns) from and
against any losses, Liabilities, damages, expenses, claims, fines, penalties,
interest, costs of investigation, assessments, judgments, actions, proceedings
and suits of whatever kind and nature and all costs and expenses relating
thereto (including, without limitation, reasonable attorneys' and accountants'
fees and expenses) incurred in connection with the investigation or defense
thereof or in asserting rights hereunder (collectively, "Losses"), based upon,
arising out of or otherwise resulting from (i) any inaccuracy in any
representation or breach of any warranty of any Selling Shareholder or the
Company (without regard to any limitation or qualification as to knowledge or
materiality set forth in such representation, warranty or certificate on the
scope, accuracy or completeness thereof) contained in this Agreement, any
Transaction Document or in any Exhibit, Schedule or certificate delivered
pursuant hereto or thereto, (ii) the breach or nonfulfillment of any covenant,
agreement or other obligation of the Selling Shareholders or the Company under
this Agreement or any Transaction Document (other than the Employment Agreement)
which breach or nonfulfillment remains uncured for thirty (30) days after the
date of written notice of the breach or nonfulfillment, (iii) all compensation
due or payable to any officers, employees or agents of the Company arising or
related to services or activities prior to the Closing, (iv) the conduct of
business on or prior to the Closing, and (v) any Loss related or connected to,
or arising under, the Consumer Car Club Matter or ▇▇▇ ▇▇▇▇▇▇▇ Claim.
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Notwithstanding anything herein to the contrary, in the event the
Merger is consummated, the Selling Shareholders hereby irrevocably and
unconditionally waive and agree never to assert or exercise any rights of
contribution against the Company in respect of their indemnification obligations
or any Liabilities for breach of any representation, warranty, covenant,
agreement or obligation concerning pre-Closing matters hereunder.
The Parent hereby agrees to indemnify, defend and hold harmless the
Selling Shareholders and, until such time as the Parent owns all of the capital
stock of the Company, the Company, (and their respective successors and assigns)
from and against any Losses based upon, arising out of or otherwise resulting
from (i) any inaccuracy in any representation or breach of any warranty of the
Parent or Merger Sub (without regard to any limitation or qualification as to
knowledge or materiality set forth in such representation, warranty, or
certificate on the scope, accuracy or completeness thereof) contained in this
Agreement, any Transaction Document or in any Exhibit, any or in any Schedule or
certificate delivered pursuant hereto or thereto, (ii) the breach or
nonfulfillment of any covenant, agreement or other obligation of the Parent or
Merger Sub under this Agreement or any Transaction Documents (other than the
Employment Agreement) which breach or nonfulfillment remains uncured for thirty
(30) days after the date of written notice of the breach or nonfulfillment or
(iii) the conduct of business after the Closing Date (but only to the extent
that any such Loss (x) relates to a third party claim which is brought against,
or involves, any of the Selling Shareholders and (y) does not relate to the
conduct of the business on or prior to the Closing Date).
Promptly after the receipt by any party hereto of notice of any third
party claim or the commencement of any third party action, suit or proceeding
subject to indemnification hereunder (a "Third Party Claim"), such party (the
"Indemnified Party") will, if a claim in respect thereto is to be made against
any party obligated to provide indemnification hereunder (the "Indemnifying
Party"), give such Indemnifying Party reasonable written notice of such Third
Party Claim; provided, however, that the failure to provide such notice will not
relieve the Indemnifying Party of any of its or his obligations, or impair the
right of the Indemnified Party to indemnification, pursuant to this Section 8.2
unless, and only to the extent that, such failure materially prejudices the
Indemnifying Party's opportunity to defend or compromise the Third Party Claim.
Such Indemnifying Party shall have the right, at its or his option, to defend at
its or his own expense and by its or his own counsel any Third Party Claim,
provided that (i) the Indemnifying Party acknowledges in writing (at the time
such Indemnifying Party elects to assume such defense) its or his obligation
under this Section 8.2 to indemnify the Indemnified Party with respect to such
Third Party Claim, (ii) such counsel is reasonably satisfactory to the
Indemnified Party, (iii) the Indemnified Party is kept fully informed of all
developments, and is furnished with copies of all documents and papers, related
thereto and is given the right to participate in the defense and investigation
thereof as provided below, and (iv) such counsel proceeds with diligence and in
good faith with respect thereto. If any Indemnifying Party shall undertake to
defend any Third Party Claim, such Indemnifying Party shall notify the
Indemnified Party of its or his intention to do so promptly (and in any event no
later than twenty (20) days) after receipt of notice of the Third Party Claim,
and the Indemnified Party agrees to cooperate in good faith with the
Indemnifying Party and its counsel in the defense of such Third Party Claim.
Notwithstanding the foregoing, the Indemnified Party shall have the right to
participate in the defense and investigation of any Third Party Claim with its
own counsel at its or his
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own expense, except that the Indemnifying Party shall bear the expense of such
separate counsel if (A) in the view of counsel to the Indemnified Party
reasonably acceptable to the Indemnifying Party, use of counsel of the
Indemnifying Party's choice would be expected to give rise to a conflict of
interest, (B) there are or may be legal defenses available to the Indemnified
Party that are different from or additional to those available to the
Indemnifying Party, (C) the Indemnifying Party shall not have employed counsel
to represent the Indemnified Party within 20 days after notice of the Third
Party Claim is given to the Indemnifying Party or notice that the Indemnifying
Party intends to assume the defense of the Third Party Claim is given to the
Indemnified Party or (D) the Indemnifying Party shall authorize the Indemnified
Party to employ separate counsel at the expense of the Indemnifying Party. The
Indemnifying Party shall not settle any Third Party Claim without the prior
written consent of the Indemnified Party, which shall not be unreasonably
withheld; provided, however, that an Indemnified Party shall not be required to
consent to any settlement involving the imposition of equitable remedies; and,
provided, further, that in no circumstances shall the Indemnifying Party consent
to the entry of a judgment with respect to any Third Party Claim or enter into
any settlement which does not include a provision whereby the plaintiff or
claimant in such matter unconditionally releases the Indemnified Party from all
Liability with respect thereto.
Section 8.4 Limitation on Indemnification. The right to indemnification
under this Article VIII and Article IX shall be subject to the following terms:
(a) Except with respect to any claim for Losses arising with respect to
the Consumer Car Club Matter or ▇▇▇ ▇▇▇▇▇▇▇ Claim, no indemnification shall be
payable pursuant to this Agreement unless and until the amount of all claims for
indemnification exceeds $100,000 in the aggregate (the "Basket"), whereupon
indemnification pursuant to this Agreement shall be payable for all such claims
including the claims included in the Basket.
(b) The maximum liability of ▇▇▇▇ ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Family
Partnership for any breach of a representation, warranty or covenant of the
Company or a Selling Shareholder shall be limited to those shares of Parent
Common Stock in which ▇▇▇▇ ▇▇▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Family Partnership has an
interest that are held pursuant to the Escrow Agreement.
(c) Except with respect to any claim for Losses arising with respect to
the Consumer Car Club Matter or ▇▇▇ ▇▇▇▇▇▇▇ Claim, none of the Parent, the
Company or the Principal Shareholders shall be liable for any amount in excess
of $30 million.
(d) In determining the amount of any indemnity, there shall be taken
into account any tax benefit, insurance proceeds or other similar recovery or
offset realized, directly or indirectly, by the party to be indemnified.
Section 10.4 Termination.
(a) This Agreement may be terminated and the transactions contemplated
hereby abandoned (i) by the written consent of the Parent and the Company; (ii)
by the Parent if there has been a material misrepresentation or material
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breach on the part of Selling Shareholder or the Company in the representations,
warranties or covenants of any Selling Shareholder or the Company set forth
herein, or if there has been any material failure on the part of a Selling
Shareholder or the Company to comply with his or its obligations hereunder;
(iii) by the Company if there has been a material misrepresentation or material
breach on the part of the Parent in the representations, warranties or covenants
of the Parent set forth herein, or if there has been any material failure on the
part of the Parent to comply with its obligations hereunder; (iv) by the Parent
or the Company if any court of competent jurisdiction shall have issued an
order, decree or ruling or taken any other action enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and nonappealable or (v)
by the Parent or the Company if the Closing has not occurred by February 11,
2000 and the party attempting to terminate this Agreement has used its or their
best efforts to cause the Closing conditions applicable to it to have been
satisfied as promptly as possible.
(b) If this Agreement is terminated and the transactions contemplated
by this Agreement are abandoned pursuant to Section 10.4(a)(i) or (a)(iv) other
than Parent's obligations under Section 5.14(b), this Agreement shall become
void and of no further force and effect and no party hereto shall have any
Liability or obligation to any other party hereto hereunder, except the
obligations of the parties pursuant to Sections 10.2, 10.3, 10.5, 10.6, 10.7,
10.8, 10.9, 10.10 and 10.20.
3. The following new section shall be incorporated into the Agreement.
Section 7.13 Release for Consumer Car Club Matter. The Company shall
have delivered to Parent a full release, in a form and substance acceptable to
the Parent, executed by the Consumer Car Club Parties releasing the Company from
any and all claims, losses, liabilities, damages, expenses or costs asserted by
or related to the Consumer Car Club Parties.
IN WITNESS WHEREOF, each of the Company, the Selling Shareholders, the
Merger Sub and the Parent have caused their names to be signed hereto as of the
day and year first above written.
THE COMPANY:
A.I.N. CORPORATION,
A California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Secretary
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THE SELLING SHAREHOLDERS
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ III
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ III
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ Family Partnership
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
MERGER SUB:
AUTOBYTEL ACQUISITION II CORP.
A California corporation
By: /s/ Hoshi Printer
--------------------------------
Name: Hoshi Printer
Title: Senior VP, CFO
By: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: VP and General Counsel
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THE PARENT:
▇▇▇▇▇▇▇▇▇.▇▇▇ INC.
a Delaware corporation
By: /s/ Hoshi Printer
-----------------------------------
Name: Hoshi Printer
Title: Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President and
Secretary
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