AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER DATED AS OF JULY 27, 2005 AMONG INPLAY TECHNOLOGIES, INC. FP INNOVATIONS ACQUISITION, INC. (f/k/a FPI ACQUISITION, INC.) FINEPOINT INNOVATIONS, INC. AND STEPHEN CALDWELL
Exhibit 2.3
AMENDMENT NO. 1
TO
DATED AS OF JULY 27, 2005
AMONG
FP INNOVATIONS ACQUISITION, INC.
(f/k/a FPI ACQUISITION, INC.)
(f/k/a FPI ACQUISITION, INC.)
FINEPOINT INNOVATIONS, INC.
AND
XXXXXXX XXXXXXXX
AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER dated as of August 31, 2005 (the
“Amendment to Agreement”), by and among INPLAY TECHNOLOGIES, INC., a Nevada corporation
(“Buyer”); FP INNOVATIONS ACQUISITION, INC. (f/k/a FPI ACQUISITON, INC., a Delaware
corporation, which is a wholly-owned subsidiary of Buyer (“Merger Subsidiary”); FINEPOINT
INNOVATIONS, INC., a Delaware corporation (“Company”); XXXXXXX XXXXXXXX, in his individual
capacity (“Xxxxxxxx”). For purposes of this Amendment to Agreement, Buyer, Merger
Subsidiary, Company, and Xxxxxxxx are sometimes individually referred to as a “Party” and
collectively as the “Parties.”
RECITALS
WHEREAS, the Parties desire to modify the Agreement and Plan of Merger, dated as of July 27,
2005 (the “Merger Agreement”) in accordance with Section 6.2 thereof; and
WHEREAS, the Parties desire to clarify certain matters with respect to the earnout set forth
in Section 1.7(g) of the Merger Agreement and the Litigation Consideration as set forth in Section
1.7(h) of the Merger Agreement.
NOW, THEREFORE, the Parties hereby approve and adopt this Amendment to Agreement as set forth
below:
SECTION 1
AMENDMENT
AMENDMENT
1. Amendment to Section 1.7(g). Section 1.7(g) – “Earnout” of the Merger Agreement is
hereby amended in its entirety as follows:
(g) Earnout. If Company achieves the Accumulated EBIT calculated during the period
commencing on the Merger Date through and including December 31, 2007 (the “Earnout
Period”), Company Stockholders shall be entitled to receive additional consideration consisting
of a cash payment and up to 360,000 shares of Buyer Common Stock (the “Earnout Payment”).
The Earnout Payment shall be equal to an amount of shares of Buyer Common Stock equal to (a) the
First Target Value Earned or Second Target Value Earned, as applicable; divided by (b) the
Applicable Buyer Common Stock Price. The Earnout Payment shall be payable (i) first, in shares of
Buyer Common Stock up to a total of 360,000 shares, and (ii) thereafter, the balance of the amount
owed to Company Stockholders under this Section 1.7(g) shall be payable in a cash payment equal to
the total number of shares of Buyer Common Stock owed to Company Stockholders multiplied by the
value of the average Buyer’s Common Stock price as quoted for the 10 days preceding such payment in
The Wall Street Journal. The Earnout Payment shall be payable after receipt of the audited
financials for Earnout Period unless there is an accelerated payment, as defined below. For
purposes of this Section 1.7(g), the following definitions shall apply:
1. “Accumulated EBIT” shall mean the Company‘s Accumulated Earnings Before
Interest and Taxes calculated as follows: net income, plus interest and taxes, plus overhead
recorded by Company attributable to general corporate expenses of Buyer, less proceeds recorded by
the Company from legal settlements, all components of which shall be recorded in accordance with
generally accepted accounting principles.
2. “Average Buyer Common Stock Price” shall mean the average closing price of Buyer’s
Common Stock, as quoted on the NASDAQ SmallCap Market or other applicable exchange or quotation
bureau, for the ten trading days preceding (and including) the last day of the Earnout Period.
3. “First Target Value Earned” shall only apply in the event the Average Buyer Common
Stock Price is less than or equal to $5.00 per share, and shall be equal to: (i) (a) Accumulated
EBIT, divided by (b) $4,000,000, multiplied by $1,000,000, if Accumulated EBIT during the Earnout
Period is equal to or greater than $3,200,000 and less than $4,000,000; or (ii) $1,000,000 if
Accumulated EBIT during the Earnout Period is greater than or equal to $4,000,000.
4. “Second Target Value Earned” shall only apply in the event the Average Buyer Common
Stock Price is greater than $5.00 per share, and shall be equal to: (i) (a) Accumulated EBIT,
divided by (b) $4,000,000, multiplied by $1,500,000, if Accumulated EBIT during the Earnout Period
is equal to or greater than $3,200,000 and less than $4,000,000; or (ii) $1,500,000 if Accumulated
EBIT during the Earnout Period is greater than or equal to $4,000,000.
If earned, the Earnout Payment shall be issued or paid, as the case may be, by Buyer to Company
Stockholders on a pro rata basis based upon such stockholders’ ownership of Company Common Stock
immediately prior to the Merger Date (the “Allocation Portion”).
5. “Accelerated Payments.” In the event of a Change of Control (as defined below),
then within 15 business days after the occurrence of such Change of Control, Buyer shall issue
and/or pay to Company Stockholders the maximum amount of Earnout Payment that could
otherwise be earned by Company Stockholders during the Earnout Period, regardless of whether
Company achieved the Accumulated EBIT targets set forth above. For purposes of this Section
1.7(g), a “Change of Control” shall mean:
(a) the approval by a majority of Buyer’s Board of Directors of (A) any merger or
consolidation in which Buyer is not the surviving entity; or (B) any transaction involving the sale
of all or substantially all of Buyer’s assets to any person other than a wholly or majority owned
direct or indirect subsidiary of Buyer; or
(b) Buyer causes Company to dissolve or terminate its existence as a going business concern
without cause based upon the economic condition of the Company.
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In the event that a Change of Control occurs, Buyer shall promptly notify Xxxxxxxx in writing,
which notice shall include a description of such event in reasonable detail and anticipated timing
relating thereto.
2. Amendment to Section 1.7(h). Section 1.7(h) – “Litigation Consideration” of the
Merger Agreement is hereby amended by adding the following sentence:
Notwithstanding the terms and conditions in (y) above, Buyer may, at its
sole option, pay the Litigation Consideration to Company Stockholders in
the form of a cash payment equal to the total number of shares of Buyer
Common Stock owed to Company Stockholders under Section 1.7(h) multiplied
by the value of the average Buyer’s Common Stock price as quoted for the
10 days preceding such payment in The Wall Street Journal.
3. Replacement of Earnout Shares Definition. The Parties hereby agree that all
references in the Merger Agreement to “Earnout Shares” shall be replaced with references to
“Earnout Payment.” The Parties further agree that the context and use of the terms “Earnout
Payment” throughout the Merger Agreement shall mean the “Earnout Payment” as defined in Section 1
of this Amendment to Agreement.
4. Ratification; Conflicting and Capitalized Terms. Except as expressly provided
herein, all the terms and conditions of the Merger Agreement remain unchanged and are reaffirmed
hereby. If any conflict arises between the terms of this Amendment to Agreement and the terms of
the Merger Agreement, this Amendment to Agreement shall govern as to the conflicting terms. All
capitalized terms used but not otherwise defined in this Amendment to Agreement shall have the
meanings ascribed to such terms as set forth in the Merger Agreement.
5. Counterparts; Facsimile. This Amendment to Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of which shall
constitute one and the same agreement and this Amendment to Agreement may be executed by facsimile
counterparts.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment to Agreement as of the
date and year first above written.
INPLAY TECHNOLOGIES, INC. |
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By: | /s/Xxxxxx X. Xxxxxx | |||
Name: | Xxxxxx X. Xxxxxx | |||
Title: | Chief Executive Officer | |||
FP INNOVATIONS ACQUISITION, INC. (f/k/a FPI Acquisition, Inc.) |
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By: | /s/Xxxxxx X. Xxxxxx | |||
Name: | Xxxxxx X. Xxxxxx | |||
Title: | President | |||
FINEPOINT INNOVATIONS, INC. |
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By: | /s/Xxxxxxx Xxxxxxxx | |||
Name: | Xxxxxxx Xxxxxxxx | |||
Title: | President | |||
/s/ Xxxxxxx Xxxxxxxx | ||||
Xxxxxxx Xxxxxxxx, Individually | ||||
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