AMENDMENT TO AGREEMENT AND PLAN OF MERGER BY AND AMONG AFFINITY MEDIA INTERNATIONAL CORP. AFFINITY ACQUISITION SUBSIDIARY CORP. AND HOTELS AT HOME, INC. DATED AS OF JANUARY 14, 2008
EXHIBIT
2.1
AMENDMENT
TO
BY
AND AMONG
AFFINITY
MEDIA INTERNATIONAL CORP.
AFFINITY
ACQUISITION SUBSIDIARY CORP.
AND
HOTELS
AT HOME, INC.
DATED
AS OF JANUARY 14, 2008
AMENDMENT
TO AGREEMENT AND PLAN OF MERGER
THIS
AMENDMENT (this “Amendment”)
to the
Agreement and Plan of Merger dated as of July 24, 2007 by and among Hotels
at
Home, Inc., a Delaware corporation (the “Company”),
Xxxxx
Xxxx, in her capacity as a shareholder and representative of the shareholders
of
the Company (the “Stockholders’
Representative”),
Xxxxxxx Xxxx, a shareholder of the Company, Xxxxxxx Xxxxxx, a shareholder of
the
Company, Affinity Media International Corp., a Delaware corporation
(“Parent”),
and
Affinity Acquisition Subsidiary Corp., a Delaware corporation and wholly-owned
subsidiary of Parent (the “Merger
Subsidiary”)
(the
“Initial
Merger Agreement”)
is
entered into by the parties hereto as of this 14th
day of
January, 2008.
RECITALS:
A. Parent,
the Merger Subsidiary, the Company, Stockholders’ Representative, Xxxxxxx Xxxx,
Xxxxx Xxxx and Xxxxxxx Xxxxxx entered into the Initial Merger Agreement pursuant
to which Parent will acquire all of the issued and outstanding stock of the
Company as a result of the merger of the Company with and into the Merger
Subsidiary as a result of which the Merger Subsidiary will be the surviving
company and a direct, wholly-owned subsidiary of Parent.
B. Parent,
the Merger Subsidiary, the Company, Stockholders’ Representative, Xxxxxxx Xxxx,
Xxxxx Xxxx and Xxxxxxx Xxxxxx desire to amend and modify the Initial Merger
Agreement as set forth in this Amendment.
C. The
boards of directors of each of Parent, the Merger Subsidiary and the Company
have determined that it is advisable and in the best interests of each of
Parent, the Merger Subsidiary and the Company, and their respective
shareholders, that the Initial Merger Agreement be amended and modified as
set
forth in this Amendment.
NOW,
THEREFORE, in consideration of the premises, the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. All
capitalized terms used and not defined herein shall have the meanings ascribed
thereto in the Initial Merger Agreement.
2. Section
1.1 of the Initial Merger Agreement is hereby amended by adding the following
new definitions:
“Earn-out
Shares”
means
up to 1,500,000 shares of Parent Common Stock as determined in accordance with
Section 9.8 hereof.
“Net
Income”
shall be
defined as net income from the Company and Merger Subsidiary including the
Company’s existing wholly-owned subsidiaries Xxxx Associates Interactive, Inc.
and Hotels At Home S.A.S. calculated in accordance with GAAP, applied on a
consistent basis but excluding the following: (1) allocated corporate expenses
incurred relating to Parent, (2) net income (losses) from any acquired business,
(3) one time charges (non-recurring) agreed upon by Parent and Merger
Subsidiary, provided that the parties hereto agree that the fees and expenses
paid or to be paid by the Company in connection with the Merger including,
but not limited to, legal and accounting fees and expenses, shall be added
back
to Net Income for purposes of this definition, (4) non-cash charges related
to
equity and/or financing arrangements, and (5) non-cash stock based compensation
expenses. An assumed tax rate of 40% or the actual tax rate, whichever is less,
shall be used in the calculation of Net Income. If Parent is entitled to
indemnification by the Stockholders as a result of an indemnification claim
made
by Parent or Merger Subsidiary pursuant to and in accordance with Article 11
of
the Initial Merger Agreement and the basis of such indemnification claim
adversely affects Net Income of the Company, then to the extent that the
Stockholders pay any such claim so that the Net Income of the Company satisfies
the levels set forth in Section 9.8, the amount of such payment shall be
included in the calculation of Net Income.
1
3. The
definition of “Stock
Consideration”
in
Section 1.1 of the Initial Merger Agreement is hereby amended in its entirety
to
read as follows:
“Stock
Consideration”
shall
mean 2,456,571 shares of Parent Common Stock.
4. Section
3.3(f)(vi) of the Initial Merger Agreement is hereby amended in its entirety
to
read as follows:
(vi)
Lockup Agreement.
Each of
the Stockholders and all officers and directors of the Company shall have
executed a Lockup Agreement in substantially the form attached hereto as
Exhibit
G
(the
“Lockup
Agreement”),
that
such person shall not sell, pledge, transfer, assign or engage in any hedging
transaction with respect to Parent Common Stock issued to such stockholders
as
part of the Merger Consideration commencing upon the Effective Time, and all
Stock Consideration shall be released from the Lock-Up Agreement eighteen (18)
months following the Effective Time;
5. The
Lockup Agreement in the form of Exhibit
G
to the
Initial Merger Agreement is hereby amended to provide for a lock-up period
of
eighteen (18) months.
6. Article
9
of the Initial Merger Agreement is hereby amended by adding a new Section 9.8
to
read in its entirety as follows:
9.8 Earn-out
Shares to the Stockholders.
(a) In
the
event that the Surviving Company shall achieve Net Income for its fiscal years
ending December 31, 2008, 2009 and 2010 as set forth below, then the Surviving
Company shall deliver, on or before one hundred twenty (120) days after the
end
of each such fiscal year, to the Stockholders a number of shares of Parent
Common Stock, allocated to each Stockholder in accordance with the Allocation
Agreement as amended as of the date hereof, equal to the applicable amount
of
the Earn-out Shares as set forth below:
|
Fiscal
Year Ending
|
Net
Income
|
Earn-out
Shares Payable
|
|
|
December
31, 2008
|
at
least $2,500,000
|
500,000
shares of Parent Common Stock
|
|
|
December
31, 2009
|
at
least $3,000,000 for fiscal year 2009 or at least $5,500,000 for
fiscal
years 2008 and 2009 on a cumulative basis
|
500,000
shares of Parent Common Stock1
|
|
|
December
31, 2010
|
at
least $3,600,000 for fiscal year 2010 or at least $9,100,000 for
fiscal
years 2008, 2009 and 2010 on a cumulative basis
|
500,000
shares of Parent Common Stock2
|
____________________
1.
1,000,000
shares of Parent Common Stock if Net Income is at least $5,500,000 for fiscal
years 2008 and 2009 on a cumulative basis and no Earn Out Shares have been
issued to date.
2.
1,500,000
shares of Parent Common Stock, less any Earn Out Shares that have been issued
to
date, if Net Income is at least $9,100,000 for fiscal years 2008, 2009 and
2010
on a cumulative basis.
2
(b) Notwithstanding
the foregoing, in the event that the Stockholders shall not have been paid
in
accordance with Section 9.8(a) above, in the aggregate, Earn-out Shares in
the
amount of 1,000,000 shares of Parent Common Stock, then the Surviving Company
shall cause, on or before one hundred twenty (120) days after the fiscal year
ending December 31, 2010, the below-named stockholders of the Surviving Company
(“Transferors”)
to
convey and transfer, free and clear of any liens and encumbrances, to the
Stockholders an aggregate of 500,000 shares of Parent Common Stock (the
“Founders
Shares”),
on a
pro-rata basis allocated to each Stockholder in accordance with the Allocation
Agreement, as amended as of the date hereof.
The
Founders Shares shall be allocated to each Stockholder as follows:
|
Transferor
|
Number
of Shares
of
Parent Common Stock
|
|
Xxxxx
Xxxxx
|
263,800
|
|
Xxxxxx
Xxxx
|
176,550
|
|
Xxxxx
Xxxxxxxxxx
|
29,800
|
|
Xxxxxxx
Xxxxxx
|
9,950
|
|
Xxxx
Xxxxx
|
9,950
|
|
Xxxx
Xxxxxx
|
9,950
|
(c)
Upon
the date that the Founders Shares are released from escrow (the “Release Date”)
pursuant to the Stock Escrow Agreement dated June 5, 2006, such shares shall
be
deposited into escrow to be held during the period commencing on the Release
Date and ending on the earlier of (i) the date that an aggregate of 1,000,000
Earn-out shares have been paid to the Stockholders pursuant to Section 9.8(a)
or
(ii) the date which is one hundred twenty (120) days after the fiscal year
ending December 31, 2010. Any of the Founders Shares deposited in escrow which
have not been paid to the Stockholders on
or
before the date which is one hundred twenty (120) days after the end of the
fiscal year ending December 31, 2010 in
accordance with this Article 9.8 shall be released to the Founders.
7. Article
2(c) of each of the Employment Agreements in the form of Exhibits
B,
C
and
D
to the
Initial Merger Agreement is hereby amended to provide that each Employee shall
be eligible to receive an annual performance bonus of up to 50% of the Base
Salary for each year of the term of such Employment Agreement.
3
8.
Parent
has obtained the consent of Maxim to reduce the Maxim Advisory Fee by $100,000
such that the Maxim Advisory Fee is $200,000, payable fifty percent (50%) in
cash and fifty percent (50%) in shares of Parent Common Stock.
9. The
parties hereto hereby ratify and reaffirm the Initial Merger Agreement, as
amended and modified by this Amendment.
10. The
parties hereto agree that all of the provisions of Article 10 - General
Provisions of the Initial Merger Agreement are hereby incorporated by reference
into this Amendment and shall fully apply to this Amendment as if such
provisions were set forth in this Amendment.
*
* *
*
[Remainder
of Page Left Blank - Signature Page Follows]
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IN
WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date
first above-written.
COMPANY:
Hotels
At Home, Inc.
By:
/s/
Xxxxxxx Xxxx
Name:
Xxxxxxx Xxxx
Title:
President
STOCKHOLDERS’
REPRESENTATIVE:
/s/
Xxxxx Xxxx
Xxxxx
Xxxx
STOCKHOLDERS:
/s/
Xxxxx Xxxx
Xxxxx
Xxxx
/s/
Xxxxxxx Xxxx
Xxxxxxx
Xxxx
/s/
Xxxxxxx Xxxxxx
Xxxxxxx
Xxxxxx
[Signature
Page to Amendment to Merger Agreement]
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PARENT:
Affinity
Media International Corp.
By:
/s/
Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
Title:
Chief Executive Officer
MERGER
SUBSIDIARY:
Affinity
Acquisition Subsidiary Corp.
By:
/s/
Xxxxxx Xxxx
Name:
Xxxxxx Xxxx
Title:
President
The
undersigned hereby acknowledge and agree to the provisions of Article 6 of
the
foregoing Amendment:
|
/s/
Xxxxx Xxxxx
|
/s/
Xxxxxxx Xxxxxx
|
|
Xxxxx
Xxxxx
|
Xxxxxxx
Xxxxxx
|
|
/s/
Xxxxxx Xxxx
|
/s/
Xxxx Xxxxx
|
|
Xxxxxx
Xxxx
|
Xxxx
Xxxxx
|
|
/s/
Xxxxx Xxxxxxxxxx
|
/s/
Xxxx Xxxxxx
|
|
Xxxxx
Xxxxxxxxxx
|
Xxxx
Xxxxxx
|
[Signature
Page to Amendment to Merger Agreement]
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