Exhibit 2.2
FIRST AMENDMENT
TO
AGREEMENT AND PLAN OF REORGANIZATION
This First Amendment to the Agreement and Plan of Reorganization (the
"First Amendment") is made as of August 1, 2001, between Alloy Online, Inc.
("Alloy"), CASS Communications, Inc. ("CASS") and Xxxx X. Xxxxxxx
("Stockholder"). Alloy, CASS, and Xxxxxxx may hereinafter be collectively
referred to as the "Parties." All capitalized terms used but not defined herein
shall have the meanings given to them in the Agreement and Plan of
Reorganization, dated July 3, 2001, by and among the Parties (the
"Reorganization Agreement").
WHEREAS, CASS and Stockholder are engaged in discussions to settle the
CPN Litigation and the Parties wish to facilitate settlement of the CPN
Litigation; and
WHEREAS, the Parties have determined that it is in each of their best
interest to amend certain sections of the Reorganization Agreement in order to
reflect certain changes which have occurred between signing the Reorganization
Agreement and the Closing Date.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties hereby agree as follows:
1. Amendment. The Reorganization Agreement is hereby amended as
follows:
(a) The following are inserted as new paragraphs of Section
2.1(f):
"(vii) The CASS EBIT shall not include any Unused Portion (as
defined in Section 2.2(b) herein) of the Settlement Fund (as
defined in Section 2.2(b) herein) that is distributed or
credited to, or received by New CASS in accordance with the
Cash Escrow Agreement (as defined in Section 2.2(b) herein).
(viii) In the event that the New CASS Chief Financial Officer,
who shall be hired after the Effective Time and determined by
mutual agreement of Alloy and Stockholder (the "New CASS
CFO"), is on the New CASS payroll, the CASS EBIT shall not
include any expenses for any amount of compensation, benefits
and any standard reimbursable expenses paid by New CASS to the
New CASS CFO or earned by the New CASS CFO and not yet paid by
New CASS prior to the 12 month anniversary of the Effective
Time."
(b) The following is inserted as a new paragraph of Section
2.2(b): "(iv) Settlement Cash Deposit. Prior to the Effective
Time, CASS shall have deposited $1,700,000 in cash (the
"Settlement Fund") with State Street Bank and Trust Company or
such other mutually agreed upon escrow agent acting as escrow
agent pursuant to
that certain escrow agreement (the "Cash Escrow Agreement") to
be dated as of July 31, 2001 among CASS, Alloy and State
Street Bank and Trust Company (the "Settlement Escrow Agent")
in form and substance mutually agreeable to Alloy, CASS, and
the Settlement Escrow Agent, to be held by the Settlement
Escrow Agent in accordance with the provisions of the Cash
Escrow Agreement to be used exclusively to settle, compromise
or satisfy (in full or in part) any judgment in the CPN
Litigation. The Parties acknowledge and agree that Stockholder
has made a capital contribution of cash to CASS in the amount
of one million seven hundred thousand dollars ($1,700,000),
which was used by CASS to fund the Settlement Fund and
therefore Alloy and New CASS have no interest in the
Settlement Fund other than a contingent remainder interest in
the Settlement Fund in the event that all of the payments from
the Settlement Fund to satisfy the CPN Litigation are less
than the amount of the Settlement Fund in accordance with the
provisions of Section 461(f) of the Internal Revenue Code of
1986, as amended. In the event that the CPN Litigation is
settled, compromised, or a judgment thereunder is satisfied,
in an amount less than the then-existing balance in the
Settlement Fund, the Settlement Escrow Agent is instructed,
pursuant to the terms of the Cash Escrow Agreement, to return
such unused portion (the "Unused Portion") to Alloy, and Alloy
shall cause New CASS to remit the full amount of any Unused
Portion of the Settlement Fund received by Alloy to
Stockholder promptly and without claim or demand by
Stockholder.
(c) The following is inserted before the end of the first sentence
of Section 2.5, after "(the "S Corp Earnings)": ", as set
forth on Exhibit D."
(d) The following is inserted after phrase (v) of clause (A) of
Section 8.2(e): "or (vi) any Liability resulting from (x)
CASS' failure to maintain good standing status as a foreign
corporation qualified to do business in the State of New York
as described in Section 3.1(a) of the Disclosure Schedule, (y)
CASS' failure to obtain any landlord consent to any lease
assignment by CASS required in connection with the Merger on
or before the Closing Date, or (z) any amounts paid to the
landlord of the leased premises located at 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx (as identified on Section 3.1(j) of the
Disclosure Schedule) in connection with the dispute between
CASS and such landlord, which is the subject matter of that
certain "Three Day Notice" issued by the landlord on July 12,
2001, a copy of which is attached hereto as Exhibit E;
provided that Alloy shall use commercially reasonable efforts
to minimize or eliminate the amount to be paid in connection
with such dispute, and further that Alloy agrees to accept the
recommendation of the real estate agent representing the
premises on any settlement of such dispute provided that such
recommendation is reasonable,"
(e) All references to "this Agreement" or "the Agreement" shall be
deemed to refer to the Reorganization Agreement as amended
hereby.
2. Waiver of Certain Closing Conditions by Alloy. In consideration of
the additional indemnification provided to Alloy pursuant to Section 1(d) of
this First Amendment, Alloy hereby waives the closing condition under (i)
Section 6.2(a) of the Reorganization Agreement to the extent that CASS' and
Stockholder's representations with respect to the CASS' good standing as a
foreign corporation qualified to do business in New York were incorrect as of
July 3, 2001 (the date the Reorganization Agreement was executed) and (ii)
Section 6.2(e) of the Reorganization Agreement with respect to any consents and
approvals of any landlords to any lease assignment by CASS.
3. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Delaware without reference to its
conflict of laws provision.
4. Counterparts. This Agreement may be executed in any number of
counterparts by original or facsimile signature, each such counterpart shall be
an original instrument, and all such counterparts together shall constitute one
and the same agreement.
5. Ratification. Except as otherwise provided for herein, the
Reorganization Agreement shall remain unchanged and in full force and effect.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized representatives as of the date first written
above.
ALLOY ONLINE, INC.
/s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
CASS COMMUNICATIONS, INC.
/s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: President
/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
