AMENDMENT TO THE
AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT TO THE AGREEMENT AND PLAN OF MERGER is made by
and among EARTH SEARCH SCIENCES INC., a Utah corporation (the "Parent"), ESS
ACQUISITION CORP., a Virginia corporation (the "Acquisition Sub"), SPACE
TECHNOLOGY DEVELOPMENT CORPORATION, a Virginia corporation (the "Company") and
Bruce D. Berkowitz, Burton Edelson, Craig E. Musick, Lloyd Preslar, Lenore M.
Rumpf, Paul C. and Patricia J. Setze, and Helmut Sonnenfeldt as trustee, the
Shareholders of Space Technology Development Corporation (the "Shareholders"),
and dated as of December 14, 1999 (the "Amendment").
This Amendment is made to the Agreement and Plan of Merger,
dated as of November 15, 1999 (the "Merger Agreement"), by and among the parties
hereto and any capitalized terms used and not defined herein shall have the
meaning ascribed to them in the Merger Agreement.
The parties have worked together to satisfy the conditions
precedent in the Merger Agreement, but it has become apparent that several of
the conditions cannot be completed by December 31, 1999. Accordingly, intending
to be legally bound, the parties hereby amend the Merger Agreement as follows:
1. Section 1.2 of the Merger Agreement is amended to replace the date
"December 15, 1999" with "December 21, 1999".
2. Section 1.5(a)(i) of the Merger Agreement is amended by inserting after the
words "the right" the parenthetical expression "(subject in part to certain
conditions described in clause (b) below)", and by replacing the term "Effective
Date", with the term "Effective Time".
3. Section 1.5(a)(ii) of the Merger Agreement is amended by replacing the
parenthetical expression after the words "the right" with the parenthetical
expression "(subject in part to certain conditions described in clause (b) below
and as more fully described in a separate agreement among the Parent or the
Acquisition Sub and the Shareholders)", and by replacing the term "Effective
Date", with the term "Effective Time".
4. Section 1.5(b) of the Merger Agreement is hereby amended to state:
(b) Each of the Shareholders shall deliver to the
Parent all of the certificates for Company Shares held by it on the
Closing Date. The Parent shall deliver to each of the Shareholders or
their designees certificates, duly endorsed in blank, and shall grant
purchase options under the separate agreement referenced in Section
1.5(a)(ii) ("Options"), evidencing the number of Parent Shares and
Options into which the Company Shares held by such Shareholder are
convertible under this Section 1.5, in such percentages and upon the
occurrence of such conditions as are set forth below:
(i) Parent shall deliver certificates for
34% of such Parent Shares and grant 34% of the Options for
Parent Shares on the Closing Date;
(ii) Parent shall deliver certificates for
33% of such Parent Shares and grant 33% of the Options for
Parent Shares upon the occurrence of the following: the
parties to each Subcontract shall have entered into
modifications, amendments or renewals of each Subcontract
satisfactory to Parent such that neither the Company nor any
other party is in default thereunder and the terms of each
Subcontract are consistent with the terms of the Contract as
amended, modified or renewed and the Parent shall have
received certificates and opinions of other parties to the
Subcontracts to that effect satisfactory to Parent; and
(iii) Parent shall deliver certificates for
33% of such Parent Shares and grant 33% of the Options for
Parent Shares upon the later to occur of the following two
events: (A) the United States Office of Naval Research shall
have entered into modifications, amendments or renewals of the
Contract satisfactory to the Parent such that, among other
things, the NEMO project is restarted, neither the Company nor
any other party is in default thereunder and the Parent shall
have received a certificate and opinion of such other parties
to the Contract to that effect satisfactory to the Parent; and
(B) the Parent or the Acquisition Sub shall have arranged for
suitable financing or other arrangements satisfactory to the
Parent to fund the completion of the Subcontracts and the
Contract including but not limited to obtaining equity
investments in NEMOCo from Boeing or others."
Notwithstanding the foregoing, the conditions set forth in
clauses (ii) and (iii) above shall be deemed satisfied on February 28, 2000,
unless the Parent notifies the Shareholders on or before that date that, in its
judgment, one or more of those conditions cannot be satisfied and it will not
pursue the restart of the NEMO project.
Section 4.1(f) of the Merger Agreement regarding "Renegotiation of Contract;
Permits" is renamed "Permits" and the first sentence thereof is deleted.
Section 4.1(g) of the Merger Agreement regarding "Renegotiation of Subcontracts"
is deleted in its entirety.
Section 4.1(h) of the Merger Agreement regarding "Financing Arrangements" is
deleted in its entirety.
Section 4.3(b) of the Merger Agreement is amended to delete the language
"contemplated by Sections 4.1(f) and (g)".
Section 5.2(b) of the Merger Agreement is amended by adding the following
language before the period at the end of the Section: "; provided, that the
Shareholders' indemnification obligation with respect to Damages arising from
the agreements referenced on Schedule 4.1(d)(ii) as (i) item 2, shall be limited
to 50% of all such Damages, but shall not exceed $100,000, and (ii) item 4,
shall be limited to 50% of all such Damages, but shall not exceed $25,000;
provided further, that the Indemnified Persons shall have the right to employ
counsel separate from the Indemnifying Party's counsel (at the sole cost of the
Indemnified Person, except as provided in the third sentence of Section 5.4) and
all such counsel shall collaborate in the defense of any claims, actions or
proceedings arising under such agreements."
5. All other provisions of the Merger Agreement shall remain in full force and
effect.
Each party has caused this Amendment to be executed on its behalf by
its duly authorized representative this 14th day of December, 1999.
The Parent:
EARTH SEARCH SCIENCES INC.
By: /s/ John W. Peel, III
Name: John W. Peel, III
Title: Chief Executive Officer
The Acquisition Sub:
ESS ACQUISITION CORP.
By: /s/ John W. Peel, III
Name: John W. Peel, III
Title: President
The Company:
SPACE TECHNOLOGY DEVELOPMENT CORPORATION
By: /s/ Paul C. Setze
Name: Paul C. Setze
Title: CEO
The Shareholders:
By: /s/ Paul C. Setze
Paul C. Setze
And Spouse:*
By: /s/ Patricia J. Setze
Patricia J. Setze
By: /s/ Bruce D. Berkowitz
Bruce D. Berkowitz
By: /s/ Lloyd Preslar
Lloyd Preslar
By: /s/ Craig E. Musick
Craig E. Musick
By:/s/ Helmut Sonnenfeldt
Helmut Sonnenfeldt, trustee, under the
Helmut Sonnenfeldt Trust dated
November 15, 1988
By: /s/ Burton Edelson
Burton Edelson
By: /s/ Lenore M. Rumpf
Lenore M. Rumpf
- --------
* The spouse of Paul C. Setze joins in the Amendment only for the purpose
of binding any interest, community or otherwise, said spouse may now or
hereafter have in the Company Shares.