FIRST AMENDMENT
TO
AGREEMENT AND PLAN OF
MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF
MERGER (the “Amendment”) is entered into as of December
18, 2006, by and among FILTERING ASSOCIATES, INC.,
(“FAI”), a Nevada corporation, and Kevin Frost and
Edward Wiggins, individual stockholders of FAI (the “FAI
Stockholders”), on the one hand, and MATINEE MEDIA
CORPORATION, a Texas corporation (the “Company”), on
the other hand.
BACKGROUND
A.
FAI, the FAI Stockholders and the
Company entered into an Agreement and Plan of Merger (the
“Agreement”) on April 13, 2006. All capitalized terms
used herein have the same meanings given to them in the
Agreement.
B.
On October 5, 2006, the Company
executed a non-binding letter of intent with US Farm & Ranch
Supply Company, Inc. (d/b/a USFR Media Group) (“USFR”),
regarding a merger of USFR with and into the Company (the
“USFR Merger”).
C.
On November 10, 2006, USFR borrowed
$28.0 million for the purchase of KTBU Television, Conroe, Texas
and, in connection with that loan, the Company executed a security
agreement for the benefit of the USFR lenders, pursuant to which
the Company pledged all of its interests in the option agreements
under which the Company has the exclusive right to purchase 24 FM
radio permits, subject to prior FCC approval (the “USFR
Pledge”).
D.
The Company and USFR have executed,
or expect to execute, an agreement and plan of merger (the
“USFR Merger Agreement”), pursuant to which, upon the
closing of the USFR Merger, the shareholders of USFR (including the
holders of options, warrants or convertible securities of USFR)
will receive shares of Company Stock (or options, warrants or
convertible securities of the Company with terms similar to those
of the securities of USFR held by such holders) representing 55% of
the shares of Company Stock that will be outstanding, on a fully
diluted basis (including shares of FAI to be outstanding
immediately prior to the Effective Time of the Merger). The Company
expects that the USFR Merger will be consummated prior to the
Effective Time of the Merger.
E.
Each of FAI, the FAI Stockholders
and the Company desires to amend the Agreement by entering into
this Amendment.
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1.
Section 1.08 of the Agreement is
hereby amended to read in its entirety as follows:
“1.08 Stock Cancellation. On or before the Closing, FAI shall cause to be
cancelled 1,662,214 shares of its outstanding Common Stock held by
certain of its stockholders who hold restricted Common Stock and it
shall transfer to such stockholders its existing business and
related assets and liabilities in consideration of the cancellation
of their FAI Common Stock. After the cancellation of these shares,
the total outstanding shares of FAI as of immediately prior to the
Effective Time of the Merger shall not exceed 1,210,786 shares of
Common Stock.”
2.
Section 2.03(a) of the Agreement is
hereby amended to read in its entirety as follows:
“(a) Assumption of
Company Derivatives. At the Effective Time of the Merger, each
outstanding warrant or option to purchase Company Stock (each a
“Company Warrant”) shall by virtue of the Merger be
assumed by Public FAI and each employee stock incentive plan of the
Company under which any Company Warrant may be granted (the
“Company Plans”) shall by virtue of the Merger be
assumed by Public FAI, and each outstanding promissory note
convertible into Company Stock (each a “Company Convertible
Note”) shall by virtue of the Merger be assumed by Public
FAI. Each Company Warrant and Company Convertible Note so assumed
by Public FAI will (i) continue to have, and be subject
to,
