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EXECUTION COPY
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this
"Amendment"), dated as of December 15, 1999, is by and among (i) American
Medical Systems, Inc., a Delaware corporation ("Parent"), (ii) Persuade Merger
Corp., a Delaware corporation and a wholly-owned subsidiary of Parent ("Merger
Subsidiary"), (iii) Influence, Inc., a Delaware corporation ("Company"), (iv)
Xxxxxxxxx Engineering Ltd., an Israeli company, Urotek Ltd., an Israeli company,
Katsumi Oneda, an individual residing in the State of New Jersey, and Xxxxx X.
Xxxx, an individual residing in the State of New York (collectively referred to
herein as the "Principal Stockholders") and (v) the Stockholders Representatives
(as defined in the Merger Agreement).
WHEREAS, the parties have entered into an Agreement and Plan of Merger,
dated as of November 12, 1999 (the "Merger Agreement").
WHEREAS, the parties, together with the Stockholders Representatives,
desire to amend the Merger Agreement as set forth herein.
ACCORDINGLY, the parties and the Stockholders Representatives hereby
agree as follows:
1. Reduction of Merger Consideration. As a result of the proposed
execution of the Exchange Agreement, dated as of December 15, 1999,
between Parent and Urotek Ltd., (the "Exchange Agreement") the parties
agree that Section 2.8 is hereby amended as follows:
A. By deleting the first part of Section 2.8, before paragraph
(a) of Section 2.8, and inserting in lieu thereof the
following:
"Subject to adjustment pursuant to Sections 2.8(a) and 2.8(e),
the Side Letter, as defined in Section 2.8(b), Section 2.10
(Contingent Merger Consideration), Section 2.12 (Dissenting
Shares) and Section 9.6 (Right of Off-Set), the consideration
to be paid for all of the Company Common Stock and Company
Preferred Stock issued and outstanding immediately prior to
the Effective Time will consist of Forty-Six Million U.S.
Dollars ($46,000,000), which shall be payable as follows:"
and;
B. By adding a new subparagraph (e), as follows:
(e) The amount of Merger Consideration to be paid by
Parent in connection with the Merger consisting of the Initial
Merger Consideration, Contingent Merger Consideration and
Holdback Merger Consideration shall be
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reduced and retained by Parent by an amount equal to the
product of (x) the amount of the Merger Consideration payable
pursuant to this Agreement, multiplied by (y) the Retained
Percentage. The "Retained Percentage" for purposes of this
Section 2.8(d) shall mean: (i) with respect to the Initial
Merger Consideration, a fraction equal to 0.022507 or such
other amount as AMS and the Stockholders Representative shall
agree represents that portion of the Initial Merger
Consideration that would have been distributable pursuant to
the Escrow Agreement to Urotek Ltd. ("Urotek") in respect of
the 225,000 shares of Company Common Stock owned by Urotek
that is subject to the Exchange Agreement (the "Urotek
Retained Shares"); (ii) with respect to the Contingent Merger
Consideration, a fraction equal to 0.025797; and (iii) with
respect to the Holdback Merger Consideration, a fraction equal
to 0.022879.
and;
C. Section 2.8(a) of the Merger Agreement is hereby amended to
the extent necessary to provide that, in addition to the
deductions set forth therein, an aggregate of $560.590.70
shall be deducted from the initial payment of Twenty-Five
Million U.S. Dollars ($25,000,000) to satisfy withholding
obligations for federal, state and local income and
employment-related taxes ("Withholding Obligations") arising
from the exercise or conversion of Company Stock Options held
by U.S. employees into shares of Company Common Stock and the
subsequent conversion thereof into the right to receive Merger
Consideration. Parent shall cause such amounts to be paid to
the appropriate taxing authorities through Company's payroll
service.
2. Cancellation and Conversion of Company Common Stock. Sections 2.9(a)
and 2.9(d) of the Merger Agreement are hereby amended in their entirety
to read as follows:
(a) Subject to the terms and conditions of Section 2.12, each
share of Company Common Stock, issued and outstanding
immediately prior to the Effective Time (other than (1)
Company Common Stock held in the Company's treasury or by any
of the Company's Subsidiaries, (2) Company Common Stock held
by Parent, Merger Subsidiary or any other Subsidiary of
Parent, (3) Dissenting Shares and (4) the Urotek Retained
Shares) shall automatically be converted into the right to
receive (x) a Pro Rata Share of the Initial Merger
Consideration, (less the amount of such Initial Merger
Consideration payable, before expenses, to holders of Company
Preferred Stock pursuant to Section 2.9(b) below) and (y) a
Pro Rata Share of any Holdback Merger Consideration and
Contingent Merger Consideration, if any, which becomes payable
under this Agreement, less any portion of the Contingent
Merger Consideration off-set by Parent pursuant to Section
9.6, and, in each case, less a Pro Rata Share of any
Stockholder Expenses;
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(d) Each share of the common stock, par value $.01 per share, of
Merger Subsidiary ("Merger Subsidiary Common Stock"), issued
and outstanding at the Effective Time of the Merger shall be
converted into Ten Thousand (10,000) shares of common stock,
par value $.001 per share, of the Surviving Corporation
("Surviving Corporation Common Stock").
3. Exchange Agreement. Section 2.9 of the Merger Agreement is hereby
amended by adding a new Section 2.9(f) at the end thereof as follows:
(f) The Urotek Retained Shares shall be exchangeable into shares
of Series A Non-Voting Preferred Stock, par value $.01 per
share, of Parent and Series D Convertible Voting Preferred
Stock, par value $.01 per share, of Parent pursuant to the
Exchange Agreement.
4. Tax Matters.
(a) Section 5.12(b) of the Merger Agreement is hereby amended to
the extent necessary to provide that notwithstanding any other
provision of Section 5.12(b), Parent shall be entitled to
retain any Tax refund or Tax benefit arising from amendments
to any Tax Return for the years ended December 31, 1997 and
1998 and the Tax period ending on the Closing Date.
(b) Section 5.12(c)(x) is hereby amended in its entirety to read
as follows: "Notwithstanding any provision in this Section
5.12 to the contrary, the terms and conditions of Sections
9.3, 9.4, 9.5 and 9.6 (to the extent not inconsistent with
this Section 5.12) shall apply to any indemnification
obligation of the Principal Stockholders with respect to the
Tax Matters described in this Section 5.12."
(c) The parties acknowledge and agree that for purposes of
calculating the cashless exercise of Company Stock Options and
the amount of Withholding Obligations, the fair market value
of the Merger Consideration payable for the outstanding shares
of Company Common Stock and Company Preferred Stock is equal
to Thirty-Five Million U.S. Dollars ($35,000,000). Such fair
market value shall also be used for calculating the
compensation deduction related to the cashless exercise of
Company Stock Options and subsequent conversion into a Pro
Rata Share of Merger Consideration to which the Company will
be entitled for the Tax period ending on Closing Date. An
aggregate of 1,210,257 shares of Company Common Stock will be
issued in connection with the cashless exercise of all
outstanding Company Stock Options.
5. Indemnification by Principal Stockholders. Section 9.3 of the Merger
Agreement is hereby amended to the extent necessary to provide that,
notwithstanding any other provision of the Merger Agreement, the
Principal Stockholders shall not be subject to any claim for
indemnification by the Parent under Section 9.3(iii) or arising out of
or based upon any Tax Liability arising from the amendments prior to
the Closing as reflected in
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that certain Amendment No. 1 to Services Agreement, dated effective
January 1, 1998, between the Company and IMT.
6. Parent Loans. Parent will offer to provide loans ("Loans") to the U.S.
employees of Company that Parent intends to retain to cover the
estimated Tax Liability (assuming a combined federal and state income
tax rate of 35%) incurred by such employees in connection with the
cashless exercise of Company Stock Options into shares of Company
Common Stock and the subsequent conversion thereof into the right to
receive a Pro Rata Share of Merger Consideration, but only to the
extent that such liability relates to the difference between the fair
market value of Merger Consideration established pursuant to Section
4(c) above and the Initial Merger Consideration paid at Closing.
7. Milestones. The parties agree that due to the need for additional time
by the parties to determine whether or not the Milestone described in
Section 2.10(c)(iv) has been satisfied, the parties agree that the
completion date for the satisfaction of such Milestone shall be
extended to December 23, 1999; provided that AMS shall provide prompt
notice of any deficiency in such Milestone after the date hereof.
8. Defined Terms. Capitalized words that are not defined herein shall have
the meaning given to them in the Merger Agreement.
9. No Other Amendments. Except as amended herein, the Merger Agreement
shall remain in full force and effect in accordance with its original
terms.
10. Counterparts. This Amendment may be signed in any number of
counterparts and the signatures delivered by facsimile, each of which
shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
(Following Page is the Signature Page)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and
year first above written.
AMERICAN MEDICAL SYSTEMS, INC. INFLUENCE, INC.
a Delaware corporation a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxx Xxxx
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Name: Xxxxxxx X. Xxxxx Name: Xxxxx Xxxx
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Title: President and CEO Title: President and CEO
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PERSUADE MERGER CORP. XXXXXXXXX ENGINEERING LTD.
a Delaware corporation an Israeli company
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxx Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxx Name: Xxxx Xxxxxxxxx
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Title: President and CEO Title: Director
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UROTEK LTD.
an Israeli company
/s/ Katsumi Oneda
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By: /s/ Xxxxxxxxx Xxxxx Katsumi Oneda
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Name: Xxxxxxxxx Xxxxx
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Title: Director /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
STOCKHOLDERS REPRESENTATIVES:
The Stockholder's Representatives consent to and
adopt the foregoing Amendment to the Merger Agreement
on and as of the date first above written
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx,
as Stockholders Representative
/s/ Xxxxxxxxx Xxxxx
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Xxxxxxxxx Xxxxx,
as Stockholders Representative
/s/ Xxxx Xxxxxxxxx
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Xxxx Xxxxxxxxx,
as a Stockholders' Representative
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