EXHIBIT 2.2
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF REORGANIZATION
This Amendment No. 1 to Agreement and Plan of Reorganization (the
"Amendment") is made and entered into as of January 13, 2000, by and among
eMachines, Inc., a Delaware Corporation ("Parent"), eMachines Acquisition Corp.,
a Delaware corporation ("Merger Sub") and a wholly-owned subsidiary of Parent,
and FreePC, Inc., a Delaware corporation (the "Company"). All capitalized terms
used herein but not otherwise defined herein shall have the meanings given to
them in the Merger Agreement.
RECITALS
1. Each of Parent, Merger Sub and Company is a party to an Agreement and
Plan of Reorganization, dated as of November 24, 1999 (the "Merger Agreement").
2. Parent, Sub and the Company wish to amend certain provisions of the
Merger Agreement.
AGREEMENT
NOW THEREFORE, the parties hereby agree as follows:
1. Definitions. All capitalized terms used herein but not otherwise defined
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herein shall have the meanings given to them in the Merger Agreement.
2. Amendment of the Merger Agreement. Section 5.10 of the Merger Agreement is
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hereby amended and restated in its entirety to read as follows:
5.10 Stock Options
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(a) At the Effective Time, each outstanding option to purchase
shares of Company Common Stock (each a "Company Option") under the
Company's Stock Option Plans, whether vested or unvested, will be assumed
by Parent. Each Company Option so assumed by Parent under this Agreement
shall continue to have, and be subject to, the same terms and conditions
set forth in the Company's Stock Option Plans pursuant to which such
Company Option was issued and as provided in the respective option
agreements immediately prior to the Effective Time, except as otherwise
agreed by Parent and the holder of such Company Option, and except that:
(i) subject to applicable vesting, such Company Option will be
exercisable for (x) that number of shares of Parent Common Stock (rounded
down to the nearest whole number of shares of Parent Common Stock) equal to
the product of (1) 0.7 multiplied by the number of shares of Company Common
Stock that were issuable upon exercise of such Company Option
immediately prior to the Effective Time multiplied by (2) the Exchange
Ratio, and (y) a warrant to purchase a number of shares of Parent Common
Stock (rounded down to the nearest whole number of shares of Parent Common
Stock) equal to the product of (1) 0.3 multiplied by the number of shares
of Company Common Stock that were issuable upon exercise of such Company
Option immediately prior to the Effective Time multiplied by (2) the
Exchange Ratio, such that upon exercise of such Company Option, the holder
will receive for each share of Company Common Stock that the holder
otherwise would be entitled to receive upon such exercise 1.10005585 shares
of Parent Common Stock (the "Exercise Shares") and a right to purchase
0.47145251 shares of Parent Common Stock (the "Warrant Right" and together
with the Exercise Shares, the "Exercise Security"), which rights shall be
evidenced collectively by a warrant to purchase such number of shares of
Parent Common Stock (rounded down to the nearest whole number of shares of
Parent Common Stock) as is equal to the product of 0.47145251 multiplied by
the number of shares of Company Common Stock for which such Company Option
is exercised, which Warrant shall be in the form attached hereto as Exhibit
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D (except that if any portion of such Company Option vests after the
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"Expiration Date" determined in accordance with Section 1 of such Warrant,
such "Expiration Date" for purposes of the portion of the Warrant that
relates to such portion of the Company Option that has just then vested
shall be the date that is 30 days after the date the right to purchase such
portion of the Company Option first vests); and
(ii) the exercise price for each Exercise Security shall be equal
to the per share exercise price under the Company Options for the Company
Common Stock, all in accordance with the rules of Section 424(a) of the
Code, and the regulations promulgated thereunder, and such rules shall
apply even with respect to options that are not "incentive stock options"
(within the meaning of Section 424 of the Code).
(b) As soon as practicable after the Effective Time, Parent shall
deliver to each holder of Company Options, an appropriate notice regarding
the assumption by Parent of the holder's Company Options and stating that
(x) the agreements evidencing the grants of such Company Options (the
"Stock Option Agreements") shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 5.10 after
giving effect to the Merger or to those terms and conditions otherwise
agreed to by Parent and the holder of such Company Option); and (y) if any
portion of a Company Option vests after the "Expiration Date" determined in
accordance with Section 1 of the form of Warrant, the "Expiration Date" for
purposes of Section 1 of any Warrant issued upon exercise of the Company
Option will be the date that is 30 days after the date the right to
purchase such portion of the Company Option first vests but such extended
Expiration Date shall only apply to the portion of the Warrant that
corresponds to the portion of the Company Option that has just vested.
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(c) Parent shall comply with the terms of the Company Stock Option
Plans (subject to the adjustments required by this Section 5.10 after
giving effect to the Merger and to the amendments in employment agreements
to be agreed, as set forth below) and shall use its reasonable efforts to
ensure, to the extent required by and subject to the provisions of such
plans, that Company Options which qualified as incentive stock options
prior to the Effective Time continue to qualify as incentive stock options
of Parent after the Effective Time.
(d) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery
upon exercise of Company Options assumed in accordance with this Agreement.
Parent shall use reasonable efforts to amend each option agreement under
the Company's Stock Option Plans as promptly as practicable after the
Effective Time in accordance with the foregoing.
3. Effect of Amendment. Except as otherwise specifically provided herein, the
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Merger Agreement shall remain in full force and effect.
4. Governing Law. This Amendment shall be governed in all respects, including
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validity, interpretation and effect, by the laws of the State of California.
5. Counterparts. This Amendment may be executed in one or more counterparts,
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all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other party, it being understood that all parties need not
sign the same counterpart.
[This space intentionally left blank. Signatures follow on the next page.]
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IN WITNESS WHEREOF, each of Parent, Merger Sub and the Company have caused
this Amendment No. 1 to Agreement and Plan of Reorganization to be signed below
on its behalf by a duly authorized representative thereof as of the date first
above written.
EMACHINES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
EMACHINES ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
FREEPC, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇,
Chief Executive Officer
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