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AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER
AND INTERESTS PURCHASE AGREEMENT
This
Amendment (this “
Amendment ”)
is entered into as of May 12, 2008, by and among FORTISSIMO
ACQUISITION CORP., a Delaware corporation (“
Parent ”);
FAC ACQUISITION SUB CORP., a New York corporation and a
wholly-owned subsidiary of Parent (“
Merger Sub ”);
PSYOP, INC., a New York corporation (the “
Company ”);
PSYOP SERVICES, LLC, dba Blacklist (“
Blacklist ”);
JUSTIN BOOTH-CLIBBORN, HEJUNG MARIE HYON, JUSTIN LANE, KYLIE
MATULICK, EBEN MEARS, ROBERT TODD MUELLER, SAMUEL SELINGER,
MARCO SPIER AND CHRISTOPHER STAVES (individually, a “
Stockholder ”
and collectively, the “
Stockholders ”);
and JUSTIN BOOTH-CLIBBORN (the “
Stockholders’ Representative ”)
as agent and attorney-in-fact for each Stockholder.
WHEREAS,
the parties to this Amendment are parties to the Agreement and
Plan of Merger and Interests Purchase Agreement, dated as of
January 15, 2008 (the “
Merger Agreement ”),
by and among Parent, Merger Sub, the Company, Blacklist, the
Stockholders and the Stockholders’
Representative;
WHEREAS,
the parties to this Amendment wish to make certain
modifications to the Merger Agreement as set forth
herein;
NOW,
THEREFORE, in consideration of the premises, covenants and
representations set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereby agree to amend the
Merger Agreement as set forth below:
1.
Definitions .
Unless otherwise specified, capitalized terms used and not
otherwise defined in this Amendment shall have the same meanings as
set forth in the Merger Agreement.
2.
Interpretation .
The rules of construction set forth in Section 1.02 of the Merger
Agreement shall apply
mutatis
mutandis
to
this Amendment as if set forth in full in this Section
2.
3.
Amendment to Section 1.01; Definition of Blacklist Interests
Amount .
The definition of Blacklist Interests Amount is hereby replaced in
its entirety with the following:
“
Blacklist Interests Amount
” means
$1,500,000.
4.
Amendment to Section 1.01; Definition of Cash Escrow
Amount .
The definition of Cash Escrow Amount is hereby replaced in its
entirety with the following:
“
Cash Escrow Amount
” means
Four Hundred Fourteen Thousand and Eight Dollars ($414,008) to be
deposited with the Escrow Agent to be held in escrow subject to the
terms and conditions of the Escrow Agreement.
5.
Amendment to Section 1.01; Definition of Cash Merger
Consideration .
The definition of Cash Merger Consideration is hereby replaced in
its entirety with the following:
“
Cash Merger Consideration
” means
$2,640,079.
6.
Amendment to Section 2.04(a) .
Section 2.04(a) of the Merger Agreement is hereby replaced in its
entirety with the following:
(a)
Consideration .
The aggregate consideration to be paid by Parent and Merger Sub in
respect of the Subsidiary Merger and the Upstream Merger hereunder
shall consist of (i) the Stock Merger Consideration, and (ii) the
Cash Merger Consideration (collectively, the “
Merger Consideration ”),
(iii) the Cash Bonus Consideration, if any, as described in Section
2.07, (iv) the Contingent Consideration, if any, as described in
Section 2.13, and (v) the Additional Consideration, if any, as
described in Section 2.14. Each share of Company Common Stock and
Company Class B Common Stock issued and outstanding immediately
prior to the Effective Time (excluding treasury stock and those
owned by any wholly-owned subsidiary of the Company) and all right
in respect thereof shall automatically be canceled and retired and
shall forthwith cease to exist, and each holder of a certificate
which immediately prior to the Effective Time represented any such
shares of Company Common Stock or Company Class B Common Stock
shall cease to have any rights with respect thereto, except, in the
case of Company Common Stock and Company Class B Common Stock, the
right to receive a portion of the Merger Consideration as provided
in Section 2.04(c) and Section 2.04(d) below, the right to
potentially receive a portion of the Cash Bonus Consideration as
provided in Section 2.07 below, the right to potentially receive a
portion of the Contingent Consideration as described in Section
2.13 below and the right to potentially receive a portion of the
Additional Consideration as described in Section 2.14
below.
7.
Amendment to Section 2.04(c) .
Section 2.04(c) of the Merger Agreement is hereby replaced in its
entirety with the following:
(c)
Company Common Stock .
At the Effective Time and on the terms and subject to the
conditions of this Agreement, each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Subsidiary Merger and without any action on
the part of Parent, Merger Sub, or the Company, be cancelled and
shall be converted into the right to receive the portions of the
Merger Consideration, the Cash Bonus Consideration, the Contingent
Consideration and the Additional Consideration as set forth in the
Merger Consideration Allocation Certificate.
8.
Amendment to Section 2.04(d) .
Section 2.04(d) of the Merger Agreement is hereby replaced in its
entirety with the following:
(d)
Company Class B Common Stock .
At the Effective Time and on the terms and subject to the
conditions of this Agreement, each share of Company Class B Common
Stock issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Subsidiary Merger and without any
action on the part of Parent, Merger Sub, or the Company, be
converted into the right to receive the portions of the Merger
Consideration, the Cash Bonus Consideration, the Contingent
Consideration and the Additional Consideration as set forth in the
Merger Consideration Allocation Certificate.
9.
Amendment to Section 2.04(f) .
Section 2.04(f) of the Merger Agreement is hereby replaced in its
entirety with the following:
(f)
Company Capitalization Schedules .
On the Closing Date, the Company shall deliver to Parent and Merger
Sub separate schedules reflecting (i) a true and complete list of
record holders of the issued and outstanding Company Common Stock,
including the number of shares of Common Stock held by such record
holders, and (ii) a true and complete list of record holders of the
issued and outstanding Company Class B Common Stock, including the
number of shares of each series of Company Class B Common Stock
held by such record holders. Prior to Parent making payment of the
Merger Consideration, the Company shall execute and deliver to
Parent a certificate setting forth the good faith calculation of
the Company of the Per Share Merger Consideration, the aggregate
Per Share Merger Consideration, the percentage of the Cash Bonus
Consideration, the percentage of the Contingent Consideration and
the percentage of the Additional Consideration payable to each of
the holders of Company Common Stock and Company Class B Common
Stock (the “ [
Merger Consideration Allocation
Certificate ”).
The Merger Consideration Allocation Certificate shall be deemed to
be a representation and warranty of the Company hereunder. In no
event shall Parent be required to transfer the Merger Consideration
unless and until the Merger Consideration Allocation Certificate
has been executed and delivered by the Company and approved by
Parent. Parent shall be entitled to rely entirely upon the Merger
Consideration Allocation Certificate in connection with making
payment of the Merger Consideration and no holder of Company Common
Stock or Company Class B Common Stock shall be entitled to make any
claim in respect of the allocation of the Merger Consideration made
by Parent to or for the benefit of any holder of Company Common
Stock or Company Class B Common Stock to the extent that the
payment is made in a manner consistent with the Merger
Consideration Allocation Certificate.
10.
Amendment to Section 2.07 .
Section 2.07 of the Merger Agreement is hereby replaced in its
entirety with the following:
Section
2.07.
Cash Bonus Consideration .
In addition to the Merger Consideration, Parent shall pay to the
Stockholders, on a pro rata basis, a cash bonus relating to the
financial performance of the Company for each of the fiscal years
ended December 31, 2008 and December 31, 2009 of up to $3,000,000,
respectively. With respect to each of these fiscal years, each
Stockholder shall be eligible to receive a cash bonus calculated as
follows (terms not defined in the Merger Agreement itself are
defined in Exhibit A hereto):
(a)
If
the Actual EBITDA Percentage for such fiscal year equals or
exceeds 100% of the Annual EBITDA Target for such fiscal year,
then such Stockholder shall receive an amount in cash equal to
such Stockholder’s pro rata share of $3,000,000 for such
fiscal year.
(b)
If
the Actual EBITDA Percentage for such fiscal year equals or
exceeds 90% and is less than 100% of the Annual EBITDA Target
for such fiscal year, then such Stockholder shall receive an
amount in cash equal to such Stockholders’ pro rata
share of the product of (A) $3,000,000 and (B) (i) the Actual
EBITDA for such fiscal year divided by (ii) the Annual EBITDA
Target for such fiscal year.
(c)
If
the Actual EBITDA Percentage for such fiscal year is less than
90% of the Annual EBITDA Target for such fiscal year, then
such Stockholder shall receive no cash bonus for such fiscal
year.
(d)
Notwithstanding the foregoing, if the Company achieves
more than 50% but less than 100% of the specified EBITDA milestone
for 2008, and if the Company achieves in excess of 100% of the
specified EBITDA milestone for 2009, then such Stockholder will
receive his or her pro rata share of a “catch-up” bonus
payment for 2008, calculated as described below. The
“catch-up pro rata percentage” shall be equal to a
fraction, the numerator of which is the dollar amount by which the
Company’s 2009 actual EBIDTA exceeds the specified EBITDA
milestone for 2009 and the denominator of which shall be the dollar
amount by which the Company’s 2008 actual EBIDTA falls short
of the specified EBITDA milestone for 2008, provided, however, that
under no circumstances shall the “catch-up pro rata
percentage” exceed 100%. If the Company achieves more than
50%, but less than 75%, of the specified EBITDA milestone for 2008,
and if the Company achieves in excess of 100% of the specified
EBITDA milestone for 2009, then such Stockholder will receive his
or her pro rata share, following the determination of the
Company’s 2009 year-end financial results, of a cash bonus
payment in an amount equal to the product of (A) the catch-up pro
rata percentage and (B) $3,000,000, up to a maximum of $2,250,000.
If the Company achieves 75% or more, but less than 100%, of the
specified EBITDA milestone for 2008, and if the Company achieves in
excess of 100% of the specified EBITDA milestone for 2009, then
such Stockholder will receive his or her pro rata share, following
the determin
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