EXHIBIT 2.1
Amendment No. 2
to
Agreement and Plan of Merger
This is AMENDMENT NO. 2 (this "Amendment") to that certain Agreement and
Plan of Merger (as amended by Amendment No. 1 thereto, dated as of March 19,
1999, and in effect on the date hereof, the "Agreement") and is made as of
September 27, 1999, by and among Xxxxx Communications, Inc., a Delaware
corporation ("Xxxxx"), ACI Telecommunications Financial Services Corporation, a
Delaware corporation and wholly owned subsidiary of Xxxxx ("Merger Sub"), Primal
Systems, Inc., a California corporation ("Primal"), Xxxx X. Xxxxxxx, an
individual resident in San Juan Capistrano, California ("Xxxxxxx"), Xxxx Xxxxxx,
an individual resident in Orange, California ("Xxxxxx"), Xxxxxx X. Xxxxxxx, an
individual resident in Aliso Viejo, California ("Xxxxxxx"), and Xxxxx Xxxxxx, an
individual resident in Irvine, California ("Xxxxxx," and, collectively with
Nielsen, Faltys, and Xxxxxxx, the "Stockholders"). All terms not defined herein
are used with the same meanings as defined in the Agreement.
Recitals
A. Pursuant to the Merger for which provision is made in the Agreement,
Primal will merge with and into Merger Sub and Merger Sub will survive as the
Surviving Corporation.
B. On the date of the Agreement Primal had, and on the date hereof Primal
has, no Subsidiaries other than WBS.
C. The parties hereto desire to amend the Agreement to provide that, in
determining whether any Escrow Shares or Additional Merger Consideration is due
to the holders of the Primal Common Stock pursuant to the terms of the
Agreement, the calculations and computations referred to in Sections 3.3 and 3.4
of the Agreement will be based on the consolidated revenues and earnings or
losses of the Surviving Corporation and its Subsidiary, WBS, to make a
conforming change to the Investors Rights Agreement, and to correct certain
typographical errors in the Agreement and Annex B thereto.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto,
intending to be legally bound, agree as follows:
1. Sections 1, 2, 3 and 4 of Amendment No. 1 to Agreement and Plan of
Merger, dated as of March 19,1999, are hereby deleted therefrom, and such
Sections shall hereafter be of no force or effect whatsoever.
2. The first two paragraphs of Section 3.3 are hereby amended to read in
their entirety as follows:
3.3 Adjustment of Merger Consideration; Contingent Merger Consideration
In addition to the Merger Consideration, the holders of Primal Common Stock
at the Effective Time shall be entitled to a release of the Escrow Shares
and to receive additional merger consideration consisting of shares of the
Xxxxx Preferred Stock (the "Additional Merger Consideration") based upon
the aggregate consolidated revenues and earnings or losses of the Surviving
Corporation and its Subsidiary, WBS, for the period commencing August 1,
1999, and ending on July 31, 2000 (the "Earn-Out Period"), as follows:
August 1, 1999 to July 31, 2000
---------------------------------
Loss Shares of
Differential Xxxxx Preferred Stock/1/
Revenues Base Loss Multiplier (Subject to Adjustment/2/)
----------- ---------- ------------ --------------------------
$ 5,550,000 $1,082,000 100% 0
$ 6,660,000 $1,082,000 120% 300,000
$ 8,325,000 $1,082,000 150% 850,000
$ 8,880,000 $1,082,000 160% 1,250,000
$ 9,990,000 $1,082,000 180% 2,000,000
$11,100,000 $1,082,000 200% $1,250,000
$11,877,000 $1,122,000 214% $2,250,000
$12,987,000 $1,275,000 234% $4,000,000
$13,764,000 $1,377,000 248% $5,250,000
$14,874,000 $1,530,000 268% $6,900,000
$15,540,000 $1,632,000 280% $8,000,000
/1/ Numbers expressed in shares in this column represent shares that will be
released from the Escrow Shares. Numbers expressed in dollars in this
column will be paid in additional shares of Xxxxx Preferred Stock,
such number of shares being determined as provided below.
/2/ The shares of Xxxxx Preferred Stock are subject to reduction as provided
below.
-2-
The number of shares of Xxxxx Preferred Stock eligible for release from the
Escrow Agreement or that may be issued as Additional Merger Consideration,
in each case as set forth in the table above, will be reduced if the
consolidated loss of the Surviving Corporation and its Subsidiary, WBS, for
the Earn-Out Period, determined without any reduction for taxes,
depreciation or amortization (the "Actual Operating Loss"), were to be more
than the Base Loss. If the Actual Operating Loss is greater than the Base
Loss, then the amount by which the Actual Operating Loss exceeds the Base
Loss shall be multiplied by the "Loss Differential Multiplier" specified in
the table above. The resulting dollar amount will be deducted from the
earn-out amounts expressed in dollars in the table above, or reduce the
number of Escrow Shares eligible for release from the Escrow Agreement set
forth in the table above, such number of shares being determined by first
dividing (i) the resulting dollar amount by (ii) the Value of a share of
Xxxxx Common Stock on the Determination Date, and then multiplying that
result by the "Current Conversion Price" for the Xxxxx Preferred Stock on
the Determination Date.
3. The first three sentences of Section 3.4(a) of the Agreement are
hereby amended to read in their entirety as follows:
3.4 Contingent Pay-Out Procedures
(a) Xxxxx will prepare and will cause Xxxxx'x certified public
accountants to review the consolidated financial statements of the
Surviving Corporation and its Subsidiary, WBS, for the Earn-Out Period (the
"Closing Financial Statements"). Xxxxx will deliver the Closing Financial
Statements to the Stockholders within forty-five days after the last day of
the Earn-Out Period. If within thirty days following delivery of the
Closing Financial Statements the Stockholders have not given Xxxxx notice
of their objection to the Closing Financial Statements (such notice must
contain a statement of the basis of such objection), then the consolidated
revenues and earnings or losses of the Surviving Corporation and its
Subsidiary, WBS, reflected in the Closing Financial Statements will be used
in computing the Additional Merger Consideration.
4. The first sentence of Section 3.2.1 of the Investors Rights Agreement,
which is attached as Exhibit 3.2(d) to the Agreement, is hereby amended to
conform Section 3.2.1 of the Investors Rights Agreement with the foregoing
amendments to Section 3.3 of the Agreement by the changing the dollar amount of
"$3,825,000" in the first line thereof to "$8,325,000."
5. The first sentence of Section 11.3 of the Agreement is hereby amended
to correct a typographical error therein by inserting the words "20% of" between
the words "equal" and "the quotient" in the fourth line thereof.
-3-
6. The second sentence of Section 5(a) of the Certificate of Designations
of Series F Junior Participating Convertible Preferred Stock, which is attached
as Annex B to the Agreement, is hereby amended to correct a typographical error
therein to reflect properly that the price at which shares of Xxxxx Common Stock
shall be deliverable upon conversion of shares of Series F should initially be
$1.00 by changing the dollar amount in such sentence from "$1.290323" to
"$1.00."
7. Except as expressly modified hereby, each of the other terms and
provisions of the Agreement are hereby ratified and confirmed in all respects
and shall remain in full force and effect in accordance with their respective
terms.
8. This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Amendment and all of which,
when taken together, will be deemed to constitute one and the same agreement.
[The remainder of this page has been left blank intentionally.
Signatures of the parties appear on the following page.]
-4-
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
XXXXX COMMUNICATIONS, INC.
By: /s/ Xxxx X. XxXxxxxxx
------------------------------
Xxxx X. XxXxxxxxx
Vice President
ACI TELECOMMUNICATIONS FINANCIAL
SERVICES CORPORATION
By: /s/ Xxxx X. XxXxxxxxx
------------------------------
Xxxx X. XxXxxxxxx
Vice President
PRIMAL SYSTEMS, INC.
By: /s/ Xxxx Xxxxxx
------------------------------
Xxxx Xxxxxx
President
S-1
STOCKHOLDERS:
/s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
/s/ Xxxx Xxxxxx
-----------------------------------
Xxxx Xxxxxx
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxx Xxxxxx
-----------------------------------
Xxxxx Xxxxxx
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