AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
This Amendment No. 1 (this "Amendment") to the Agreement and Plan of Merger
(the "Agreement"), dated as of June 10, 1999, by and among Xxxx.xxx, Inc., a
Delaware corporation (the "Purchaser"), Paralogic Software Corporation, a
California corporation (the "Company"), XMCM Sub, Inc., a California corporation
and a wholly-owned subsidiary of Xxxx.xxx, Inc. ("Merger Sub"), and the Selling
Shareholders named therein is executed and effective this 14th day of June,
1999. Capitalized terms not otherwise defined herein shall have the meanings
set forth in the Agreement.
WHEREAS, the parties entered into the Agreement pursuant to which the
Purchaser has agreed to acquire the Company by the merger of Merger Sub with and
into the Company; and
WHEREAS, the parties wish to enter into this Amendment and thereby amend
the Agreement, in accordance with the terms and provisions set forth herein;
NOW, THEREFORE, the parties, intending to be legally bound, hereby agree as
follows:
1. Section 14 of the Agreement is hereby amended to read in its entirety
as set forth below:
"Purchaser's Tax Indemnity.
(a) Within 10 business days following a Final Determination that the
Merger does not qualify as a "reorganization," within the meaning of
Section 368(a) of the Code, Purchaser shall pay to each Selling
Shareholder, in cash, the Additional Amount applicable to such Selling
Shareholder, provided that this amount will be paid only if (i) the
Merger does not so qualify solely by reason of changes or
modifications to the NBC Agreements after the date hereof (other than
any changes or modifications to the NBC Transactions reflected in,
otherwise taken account in, or contemplated by the Restated
Documents); (ii) the Merger would have qualified as a "reorganization"
within the meaning of Section 368(a) if the NBC Transactions were
consummated pursuant to the NBC Agreements and would have so qualified
if the NBC Transactions were consummated pursuant to such agreements
as changed or modified by changes or modifications to the NBC
Transactions reflected in, otherwise taken account in, or contemplated
by the Restated Documents; and (iii) such Selling Shareholder has not
taken a position on any Tax Return that
the Merger does not so qualify or otherwise breached a representation,
covenant or warranty provided under Section 10.7 of this Agreement.
(b) Notwithstanding anything herein to the contrary, Purchaser shall
have the right at its own expense, to control, defend, settle,
compromise or prosecute in any manner any audit, examination,
investigation, hearing or other proceeding involving a Selling
Shareholder which could give rise to liability to Purchaser pursuant
to Section 14(a) of this Agreement. A Selling Shareholder shall notify
Purchaser in writing within ten days of the commencement of such an
audit, examination, investigation, hearing or other proceeding,
provided that no such notification shall be required prior to the time
when a taxing authority has asserted that the Merger does not qualify
as a "reorganization," within the meaning of Section 368(a) of the
Code.
(c) Notwithstanding the foregoing, the indemnity provided in this
Section 14 shall not exceed $7,000,000. If this limit shall apply,
then the indemnity paid to each Selling Shareholder shall be limited
to such Selling Shareholder's pro rata share of $7,000,000. Such pro
rata share shall be determined based on the amount of each Selling
Shareholder's Additional Amount."
2. Exhibit A of the Agreement is hereby amended to revise the following
definitions to read as follows:
"Additional Amount" for any Selling Shareholder shall mean the excess,
if any, of (a) the product of (i) the "Gain Amount" and (ii) seventy
percent (70%) of the tax rate applicable to the Selling Shareholder
with respect to the Purchaser Stock acquired in the Merger, over (b)
the product of (i) any cash received (or other proceeds from
disposition) and any taxable loss recognized by a Selling Shareholder,
in respect of its Purchaser Stock acquired in the Merger, on or before
a Final Determination that the Merger does not qualify as a
"reorganization," within the meaning of Section 368(a) of the Code,
and (ii) the tax rate applicable to the Selling Shareholder. For
purposes of the preceding sentence, the "Gain Amount" for any Selling
Shareholder shall be the excess of (a) the product of the (i) Merger
Consideration received by such Selling Shareholder and (ii) the price
of Purchaser Stock as shown in the Wall Street Journal for the day in
which the Effective Time falls, over (b) the tax basis of the Selling
Shareholder in the stock of the Seller immediately prior to the
Merger. The Additional Amount shall include any penalty imposed on a
Selling Shareholder by a taxing authority which is imposed only
because the Merger does not qualify as a "reorganization," within the
meaning of Section 368(a) of the Code by reason of material changes or
modifications to the NBC Agreements (other than any changes or
modifications to the NBC
Transactions reflected in, otherwise taken account in, or contemplated
by the Restated Documents).
"Final Determination" shall mean an unappealable judgment of a
competent federal judicial authority, a final settlement which has
been agreed to by Purchaser, or a determination by Purchaser that the
Purchaser does not wish to contest the imposition of the tax, provided
that Selling Shareholder does not contest the tax. In the event a
Selling Shareholder tenders written notice to Purchaser that there is
an audit, examination, investigation, hearing or other proceeding
involving a Selling Shareholder which could give rise to liability to
Purchaser pursuant to Section 14 of the Agreement and Purchaser does
not respond within thirty days of receipt by Purchaser of such written
notice that Purchaser elects to assume the defense of such action
under Section 14(b), then Purchaser shall be deemed to have elected
not to contest the imposition of the tax, provided that the Selling
Shareholder does not contest the tax. Notwithstanding the foregoing,
no Selling Shareholder may tender notice pursuant to the preceding
sentence prior to the time when a taxing authority has asserted that
the Merger does not qualify as a "reorganization," within the meaning
of Section 368(a) of the Code.
"NBC Agreements" shall mean the Agreement and Plan of Contribution and
Merger, dated as of May 9, 1999, with the Purchaser and others and an
Agreement and Plan of Contribution, Investment and Merger dated as of
May 9, 1999, with National Broadcasting Corporation ("NBC") and others
pursuant to which the existing businesses of Purchaser and certain
assets of NBC and others will be combined.
"NBC Transactions" shall mean those transactions contemplated by the
NBC Agreements.
"Restated Documents" shall mean those drafts of documents related to
the NBC Transactions attached hereto as Exhibit 1.
3. All other terms and conditions of the Agreement shall remain in full
force and effect.
4. This Amendment may be executed in two or more counterparts, each of
which shall be considered an original, but each of which together shall
constitute the same instrument.
IN WITNESS WHEREOF, this Amendment has been duly executed by the parties as
of the date first above written.
The Purchaser: XXXX.xxx, Inc.
a Delaware corporation
By: /s/ RAJESH AJI
---------------------------------------------------
Name:
Title:
The Company: Paralogic Software Corporation
a California corporation
By: /s/ XXXXX XXXXXXXXXXXX
---------------------------------------------------
Name: Xxxxx Xxxxxxxxxxxx
Title: President and Chairman
Merger Sub: XMCM Sub, Inc.
a California corporation
By: /s/ RAJESH AJI
--------------------------------------------------
Name:
Title:
Selling Shareholder:
By: /s/ RAJESH AJI
--------------------------------------------------
Name:
Title:
Selling Shareholder:
By: /s/ XXXXXX XXXXXX
--------------------------------------------------
Name:
Title:
Selling Shareholder:
By: /s/ XXXXXX XXXXXXXXXXXX
--------------------------------------------------
Name:
Title:
Selling Shareholder:
By: /s/ XXXXXX XXXXXXXXX
--------------------------------------------------
Name:
Title:
Selling Shareholder:
By: /s/ XXXXXXX XXXXX
--------------------------------------------------
Name:
Title:
Selling Shareholder:
By: /s/ XXXXX XXXXXXXXXXXX
--------------------------------------------------
Name:
Title:
Selling Shareholder:
By: /s/ XXXXX XXXXXXXXXXXX
--------------------------------------------------
Name:
Title:
Selling Shareholder:
By: /s/ XXXXXX X. XXXXX, TRUSTEE
--------------------------------------------------
Name: Xxxxxx X. Xxxxx Revocable Trust
Title: Xxxxxx X. Xxxxx, Trustee
