FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
Exhibit
10.1
FIRST
AMENDMENT TO
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 Xxxxx Xxxxx and Xxxxxx Xxxxxxx, 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.”
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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, the same terms and conditions of such Company Warrant or Company
Convertible Note immediately prior to the Effective Time of the Merger and
will
be exercisable for or convertible into a number of shares of Public FAI Common
Stock equal the number of shares of Company Stock that were issuable upon
exercise of such Company Warrant or conversion of such Company Convertible
Note
immediately prior to the Effective Time of the Merger, (ii) the total
exercise price for the shares of Public FAI Common Stock issuable upon exercise
of each such assumed Company Warrant will be equal to the total exercise
price
that would have been paid prior to the Effective Time of the Merger if such
Company Warrant were exercised in full prior to the Effective Time of the
Merger, and (iii) the conversion price for the shares of Public FAI Common
Stock
issuable upon conversion of each such assumed Company Convertible Notes will
be
equal to the conversion price that would have been applicable prior to the
Effective Time of the Merger if such Company Convertible Note were converted
in
full prior to the Effective Time of the Merger. Public FAI shall comply with
the
terms of all such Company Warrants, Company Convertible Notes and Company
Plans.
Public FAI shall take all corporate actions necessary to reserve for issuance
a
sufficient number of shares of Public FAI Common Stock for delivery upon
exercise of all Company Warrants and conversion of all Company Convertible
Notes
outstanding at the Effective Time of the Merger on the terms set forth in
this
Section 2.03 and all other shares of Public FAI Common Stock issuable under
the Company Plans.”
3. Section
2.03(c) of the Agreement is hereby amended to read in its entirety as
follows:
“(c) Adjustment
to Exchange Ratios.
The FAI
Exchange Ratio and the Company Exchange Ratio set forth above in Section
2.01(b)
are based on the assumption that the shareholders of FAI will own 8% of the
outstanding Common Stock of Public FAI as of immediately after the Effective
Time of the Merger, without taking into consideration the shares of Company
Stock that may be issued in the USFR Merger. If necessary to maintain this
percentage ownership immediately after the Effective Time of the Merger,
the
Company Exchange Ratio set forth in Section 2.01(b) or the FAI Exchange Ratio
set forth in Section 2.01(a) shall be proportionately adjusted so as to achieve
this 8% target for the FAI shareholders in the Merger.”
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4. The
first
sentence of Section 3.01(c) of the Agreement is hereby amended to read in
its
entirety as follows:
“The
authorized capital stock of the Company consists of 25,000,000 shares of
Company
Stock, of which 13,924,041 shares are issued and outstanding, including the
securities issued in the Company Funding, as described in Schedule 3.01(c)
of
the Company Disclosure Schedule.”
5. Section
6.03(g) of the Agreement is hereby amended to read in its entirety as
follows:
“(g) Cancellation
of Stock.
At
Closing, FAI shall have cancelled 1,662,214 shares of its outstanding restricted
common stock from the FAI Stockholders as provided in Section 1.08 and provide
evidence of cancellation of those shares satisfactory to counsel for the
Company.”
6. Section
7.01(c) of the Agreement is hereby amended to read in its entirety as
follows:
“(c) by
either
FAI or the Company, so long as such party is not in breach hereunder, if
the
Merger shall not have been consummated on or before June 1, 2007 (other than
as
a result of the failure of the party seeking to terminate this Agreement
to
perform its obligations under this Agreement required to be performed at,
or
prior to, the Effective Time of the Merger, in which event such party may
not
terminate this Agreement pursuant to this provision for a period of ten days
following such party’s cure of such failure); provided,
however,
that if
either FAI or Company requests an extension of the Closing after this date
and
the other party consents in writing, then neither party may terminate this
Agreement under this provision until the expiration of such extension
period;”
7. FAI
and
the FAI Stockholders acknowledge that the Company has entered into an agreement
and plan of merger with USFR pursuant to which, prior to the Effective Time
of
the Merger, the Company may issue to the securityholders of USFR, upon the
consummation of the USFR Merger, shares of Company Stock, Company Warrants
and
Company Convertible Notes. FAI and the FAI Stockholders hereby agree, approve
and consent to the USFR Pledge, the execution of the USFR Merger Agreement
and
the consummation of the USFR Merger prior to the Effective Time of the Merger,
and acknowledge that the consummation of the USFR Merger will not result
in an
adjustment to the FAI Exchange Ratio, except as set forth in this
Amendment.
8. For
purposes of Section 6.02 of the Agreement, prior to the Closing Date, the
Company will deliver to FAI and the FAI Stockholders an updated Company
Disclosure Schedule reflecting, among other things, the effects of the USFR
Merger, if consummated prior to the Closing Date.
9. Except
as
and to the extent expressly amended by this Amendment, the Agreement remains
in
full force and effect in accordance with its terms.
10. This
Amendment may be executed by the parties hereto in separate counterparts,
each
of which when so executed and delivered will be an original, but all such
counterparts will together constitute one and the same instrument.
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IN
WITNESS WHEREOF, the undersigned have caused their duly authorized officers
to
execute this Amendment as of the date first above written.
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FAI
STOCKHOLDERS:
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FILTERING
ASSOCIATES, INC.
|
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| /s/ Xxxxx Xxxxx | /s/ Xxxxx Xxxx | ||
|
Xxxxx
Xxxxx
|
Name: Xxxxx Xxxx Its: President |
|
|
|||
| /s/ Xxxxxx Xxxxxxx | |||
|
Xxxxxx Xxxxxxx |
|
MATINEE
MEDIA CORPORATION
|
|||
| /s/ Xxxxxx Xxxxxx | |||
|
Name: Xxxxxx Xxxxxx Its: President |
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