FIRST AMENDMENT
TO
AGREEMENT AND PLAN OF MERGER
This First Amendment to Agreement and Plan of Merger, dated as
of May 14, 1999 (this "Amendment"), is by and among PIA Merchandising Services,
Inc., a Delaware corporation ("PIA Delaware"), SG Acquisition, Inc., a Nevada
corporation ("PIA Acquisition"), PIA Merchandising Co., Inc., a California
corporation ("PIA California"), SPAR Acquisition, Inc., a Nevada corporation
("SAI"), SPAR Marketing, Inc., a Delaware corporation ("SMI"), SPAR Marketing
Force, Inc., a Nevada corporation ("SMF"), SPAR, Inc., a Nevada corporation
("SINC"), SPAR/Xxxxxxxx Retail Services, Inc., an Ohio corporation ("SBRS"),
SPAR Marketing, Inc., a Nevada corporation ("SMNEV"), SPAR Incentive Marketing,
Inc., a Delaware corporation ("SIM"), SPAR MCI Performance Group, Inc., a
Delaware corporation ("SMCI"), and SPAR Trademarks, Inc., a Nevada corporation
("STM"). SMF, SINC, SMNEV and SBRS are sometimes referred to herein individually
as a "SPAR Marketing Company" and collectively as the "SPAR Marketing
Companies". SMI and the SPAR Marketing Companies are sometimes referred to
herein individually as a "SPAR Marketing Party" and collectively as the "SPAR
Marketing Parties". SIM and SMCI are sometimes referred to herein individually
as a "SPAR Incentive Party" and collectively as the "SPAR Incentive Parties".
SAI, STM, the SPAR Marketing Parties and the SPAR Incentive Companies are
sometimes referred to herein individually as a "SPAR Party" and collectively as
the "SPAR Parties". PIA Delaware, PIA Acquisition and PIA California are
sometimes referred to herein individually as a "PIA Party" and collectively as
the "PIA Parties". The PIA Parties and the SPAR Parties are sometimes referred
to herein individually as a "Party" and collectively as the "Parties".
Recitals
The PIA Parties and the SPAR Parties are parties to that
certain Agreement and Plan of Merger dated as of February 28, 1999, which
includes modifications made pursuant to the Page Substitution Amendment to
Merger Agreement and Merger Documents among the Parties dated as of March 1,
1999 (as so modified, the "Existing Merger Agreement", and as modified by this
Amendment, and as the same may be supplemented, modified, amended, restated or
replaced from time to time in the manner provided therein, the "Merger
Agreement"). Capitalized terms used and not otherwise defined or amended in this
Amendment shall have the meanings respectively assigned to them in the Merger
Agreement or other "Merger Documents" (as defined in the Merger Agreement).
The Parties have each determined that it is in its best
interest to amend the Existing Merger Agreement as provided below, and have
entered into this Amendment in order to do so, all upon the terms and provisions
and subject to the conditions hereinafter set forth.
Agreement
In consideration of the foregoing, the mutual covenants and
agreements hereinafter set forth and other good and valuable consideration (the
receipt and adequacy of which are hereby acknowledged by the Parties), the
Parties hereto hereby agree as follows:
Section 1. Amendment to Existing Merger Agreement. The
Existing Merger Agreement is hereby amended as follows, effective as of the date
first written above:
(A) Recital E of the Existing Merger Agreement is hereby
deleted in its entirety, and the following new Recital E is hereby inserted in
its place:
E. Pursuant to the SPAR Reorganization Agreement, SAI will
issue to the SPAR Principals sufficient additional shares of SAI Stock
such that (after such issuance and including shares previously issued
to them) they will then together own shares of SAI Stock equal in
number to (i) the product of (A) two and one-third (2 1/3) times (B)
the total number of shares of PIA Delaware Stock (as hereinafter
defined) issued and outstanding as of the close of business on the
Business Day preceding the Closing Date (as defined in the
Reorganization Agreement), minus (ii) the sum of the number of shares
of SAI Stock
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issuable upon exercise of the SAI Options (without regard to the
vesting provisions thereof) plus shares of SAI Stock owned by
stockholders other than the SPAR Principals.
(B) Recital I of the Existing Merger Agreement is hereby
deleted in its entirety, and the following new Recital I is hereby inserted in
its place:
I. As provided herein, (i) as a result of the Merger, each
outstanding share of SAI Common Stock will be converted into the right
to receive one share of common stock of PIA Delaware, par value $0.01
per share ("PIA Delaware Stock"), and (ii) following the Merger, each
SAI Option Holder will receive a Substitute Option (as hereinafter
defined) to purchase the same number of shares of PIA Delaware Stock on
the same terms as the number of shares of SAI Stock that such SAI
Option Holder was entitled to purchase under such SAI Option.
Immediately following the Merger, (A) the SPAR Stockholders will hold
and the SAI Option Holders will have the right to acquire upon exercise
(without regard to vesting) shares of PIA Delaware Stock that, in the
aggregate, will represent approximately 70% of the sum of (1) the total
number of shares of PIA Delaware Stock issued and outstanding
immediately after the Merger plus (2) the total number of shares of PIA
Delaware Stock issuable upon exercise of the Substitute Options
(without regard to vesting), and (B) the shares of PIA Delaware Stock
held by stockholders of PIA Delaware immediately prior to the Merger
will represent approximately 30% of such post-Merger sum.
(C) In Section 4.03 of the Existing Merger Agreement,
subsection (b) is hereby deleted in its entirety, and the following new
subsection (b) is hereby inserted in its place:
(b) The Board of Directors of PIA Delaware (the "PIA Delaware
Board") (i) has authorized and approved the adoption of an amendment to
PIA Delaware's certificate of incorporation in the form annexed hereto
as Exhibit E (together with such changes as may be made therein in
accordance with the PIA Delaware Board's approval, but subject to the
consent of the SPAR Parties, the "Charter Amendment"), which (among
other things) provides for an increase in the authorized number of
shares of PIA Delaware Stock to 47,000,000 shares, changes the name of
PIA Delaware to "SPAR Group, Inc." (or such other name as the Parties
may mutually agree prior to the mailing of the PIA Proxy Materials),
and deletes Article Tenth containing the prohibition against actions by
stockholders without a meeting (i.e., Charter Amendment Xx. 0, Xxxxxxx
Xxxxxxxxx Xx. 0, Charter Amendment No. 3 as defined in the PIA Proxy
Statement); (ii) has authorized for inclusion in the proxy statement, a
proposal to authorize the PIA Delaware Board, if deemed necessary in
its sole discretion (after obtaining the consent of the SPAR Parties,
if such amendment is to be effected prior to the Merger or the
termination of this Agreement), to amend PIA Delaware's certificate of
incorporation (in the form annexed hereto as Exhibit E-1) to effect a
reverse stock split of the issued and outstanding shares of PIA
Delaware Stock on the basis of one of the following ratios: one new
share in exchange for every two issued and outstanding shares, one new
share in exchange for every three issued and outstanding shares, or one
new share in exchange for every four issued and outstanding shares,
with the PIA Delaware Board having the discretion to determine the
appropriate ratio to use immediately prior to effecting the reverse
stock split (the "Reverse Split Proposal" and together with the Charter
Amendment, the "Proposed PIA Certificate of Amendment"), and (iii) has
directed that the Proposed PIA Certificate of Amendment be submitted to
PIA Delaware's stockholders at the PIA Stockholders Meeting (as such
term is defined in Section 5.01). Upon the approval of the Proposed PIA
Certificate of Amendment by the stockholders of PIA Delaware as
required by the Delaware General Corporation Law (the "DGCL") and the
filing thereof with the Secretary of State of the State of Delaware,
the shares of PIA Delaware Stock to be issued in connection with the
Merger will be duly authorized and, when issued as contemplated hereby
at and after the Effective Time, will be validly issued, fully paid and
nonassessable and free of all Restrictions.
(D) In Section 7.01 of the Existing Merger Agreement,
subsection (b) is hereby deleted in its entirety, and the following new
subsection (b) is hereby inserted in its place:
(b) Promptly after such calculation of the Closing Net Worth,
the Surviving Corporation shall deliver to the SPAR Principals written
notice of the Closing Net Worth as so calculated (the "Closing Net
Worth Notice"). Following the delivery of the Closing Net Worth Notice,
the SPAR Principals shall have the right to review the calculation
thereof for a period of thirty (30) days after the delivery of the
Closing Net Worth Notice to the SPAR Principals (the "Review Period").
If, the SPAR Principals do not provide PIA Delaware with written
objection to the calculation of the Closing Net Worth prior to the
expiration of the Review Period, then, (i) to the extent that the
Closing Net Worth, as set forth in the Closing Net Worth
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Notice, is greater than one million four hundred thirty-six thousand
dollars ($1,436,000) (the "Target Amount"), no adjustment will be made,
and the SPAR Principals will have no further obligations hereunder; and
(ii) to the extent the Closing Net Worth, as set forth in the Closing
Net Worth Notice, is less than the Target Amount, the SPAR Principals
shall pay to PIA Delaware, within five (5) business days after the last
day of the Review Period, the amount of such shortfall, such payment
obligation to be borne by the SPAR Principals pro rata (44/72 by Xx.
Xxxxx and 28/72 by Xx. Xxxxxxx), and to be satisfied either (at the
election of the SPAR Principals) (A) by wire transfer of immediately
available funds to such account as PIA Delaware may designate or (B) by
corresponding reductions in the loans owed to the SPAR Principals from
SMCI.
(E) Exhibit E-1 to the Existing Merger Agreement is hereby
inserted in the form annexed hereto as Exhibit 1.
(F) Each of the Parties hereto hereby acknowledges and, to the
extent such Party's consent may be required under the Merger Agreement, consents
to the First Amendment to Reorganization Agreement, dated as of the date hereof,
a copy of which is annexed hereto as Exhibit 2.
Section 2. Counterparts. This Amendment may be signed in two
or more counterpart copies of the entire document or of signature pages to the
document, each of which may be executed by one or more of the Parties hereto,
but all of which, when taken together, shall constitute a single agreement
binding upon all of the Parties hereto.
Section 3. Governing Law, Etc. This Amendment is a Merger
Document and shall be governed by and construed in accordance with the
applicable terms and provisions of Article IX (as well as any applicable
definitions or provisions appearing elsewhere) of the Merger Agreement as if
this Amendment were the Agreement referred to therein, which terms and
provisions are incorporated herein by reference.
Section 4. Agreement to Continue as Amended. The Merger
Agreement, as supplemented, modified and amended by this Amendment, shall remain
and continue in full force and effect after the date hereof.
[END OF PAGE]
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Section 5. Entire Agreement. This Amendment contains the
entire agreement of the Parties and supersedes all other representations,
warranties, agreements and understandings, oral or otherwise, among the parties
with respect to the matters contained herein.
In Witness Whereof, the Parties hereto have executed and
delivered this Amendment as of the date first written above.
PIA Merchandising Services, Inc. SPAR Acquisition, Inc.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------- ----------------------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive Title: Chairman, Chief Executive Officer
Officer and President
SG Acquisition, Inc. SPAR Marketing Force, Inc.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------- ----------------------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive Title: Chairman, Chief Executive Officer
Officer and President
PIA Merchandising Co., Inc. SPAR, Inc.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------- ----------------------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive Title: Chairman, Chief Executive Officer
Officer and President
SPAR/Xxxxxxxx Retail Services, Inc. SPAR Marketing, Inc.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------- ----------------------------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxx
Title: Chairman, Chief Executive Officer Title: Chairman, Chief Executive Officer
and President and President
SPAR MCI Performance Group, Inc. SPAR Trademarks, Inc.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------- ----------------------------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxx
Title: Chairman, Chief Executive Officer Title: Chairman, Chief Executive Officer
and President
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SPAR Marketing, Inc., a Nevada corporation
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman, Chief Executive Officer
and President
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EXHIBIT 1 TO FIRST AMENDMENT TO MERGER AGREEMENT
Exhibit E-1
FORM OF REVERSE SPLIT AMENDMENT TO PIA DELAWARE CERTIFICATE OF INCORPORATION
Upon this Certificate of Amendment to the Certificate
of Incorporation of the Corporation becoming effective pursuant
to the General Corporation Law of the State of Delaware (the
"Effective Time"), each share of the Corporation's common
stock, par value $.01 per share (the "Old Common Stock"),
issued and outstanding immediately prior to the Effective Time,
will be automatically reclassified as and converted into
[_________] of a share of common stock, par value $.01 per
share, of the Corporation (the "New Common Stock"). Any stock
certificate that, immediately prior to the Effective Time,
represented shares of the Old Common Stock will, from and after
the Effective Time, automatically and without the necessity of
presenting the same for exchange, represent the number of
shares of the New Common Stock as equals the product obtained
by multiplying the number of shares of Old Common Stock
represented by such certificate immediately prior to the
Effective Time by [________]. No fractional shares of New
Common Stock will be issued in connection with the
reclassification and conversion of the Old Common Stock into
the New Common Stock. In lieu of any fractional shares, each
holder of Old Common Stock who would otherwise receive a
fractional share of New Common Stock will be entitled to
receive cash in an amount equal to the product obtained by
multiplying (1) the closing sales price of the Corporation's
Common Stock at the Effective Time as reported on the Nasdaq
National Market (or, if applicable, the Nasdaq SmallCap Market
or any exchange that the PIA Common Stock may be traded on at
the Effective Time) by (2) the number of shares of Old Common
Stock held by such holder that would otherwise have been
exchanged for such fractional share interest.
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