EXHIBIT A-1
EXECUTION
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of March 19, 1996
("Agreement"), by and between Megamation Inc., a Delaware corporation (the
"Company"), and MI Merger Corp., a Delaware corporation ("Mergerco").
WHEREAS, the respective Boards of Directors of the Company and
Mergerco deem it advisable and in the best interests of each corporation that
Mergerco be merged with and into the Company (the "Merger"); and
WHEREAS, the respective Boards of Directors of the Company and
Mergerco (i) have approved the Merger pursuant to and subject to the terms and
conditions of this Agreement and (ii) have recommended approval of the Merger to
the stockholders of each corporation; and
WHEREAS, for federal income tax purposes, it is intended that Mergerco
will be viewed as a transitory corporation and the Merger will be viewed as a
purchase of Megamation shares by the Principal Shareholders.
NOW THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, representations, warranties and agreements herein contained,
the parties, intending to be legally bound hereby, agree as follows:
1. THE MERGER AND RELATED MATTERS
------------------------------
1.1 The Merger.
----------
(a) Upon the terms and subject to the conditions of this Agreement,
and in accordance with the Delaware General Corporation Law (the "DGCL"), at the
Effective Time (as defined in Section 1.1(b) hereof) Mergerco shall be merged
with and into the Company and the separate corporate existence of Mergerco shall
cease, and the Company shall continue as the surviving corporation of the Merger
to be governed by the laws of the State of Delaware (the "Surviving
Corporation").
(b) Subject to the provisions of this Agreement, the parties hereto
shall cause the Merger to be consummated by duly filing a certificate of merger
(the "Certificate of Merger") in the form attached hereto as Exhibit A and
---------
acknowledged by Mergerco and the Company with the Secretary of State of the
State of Delaware, as provided by the DGCL, as soon as practicable on or after
the Closing Date (as defined in Section 3 hereof). The Merger shall become
effective upon such filing or at such time thereafter as is provided in the
Certificate of Merger (the "Effective Time").
(c) At the Effective Time, the effect of the Merger shall be as
provided in Section 251 of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, the Surviving Corporation shall thereupon and
thereafter possess all the rights, privileges, immunities, powers and
franchises, of a public as well as of a private nature, of the Company and
Mergerco; and all property, real, personal and mixed, and all debts due on
whatever account and all other causes of action and all and every other interest
of, or belonging to or due to, Company or Mergerco, shall be deemed to be
transferred to and vested in such Surviving Corporation without further act or
deed; and the title to any real estate, or any interest therein, vested in
either of the merged companies shall not revert or in any way be impaired by
reason of the Merger. The Surviving Corporation shall thereafter be responsible
and liable for all of the liabilities and obligations of the Company and
Mergerco; any claim existing or action or proceeding pending by or against
either of the merged companies may be prosecuted to judgement as if such Merger
had not taken place, or the Surviving Corporation may be substituted in the
place of the Company or Mergerco.
1.2 Certificate of Incorporation. The Certificate of Incorporation
----------------------------
of Mergerco as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until duly amended in
accordance with the terms thereof and the DGCL.
1.3 By-Laws. The By-Laws of Mergerco as in effect immediately prior
-------
to the Effective Time shall be the By-Laws of the Surviving Corporation until
duly amended in accordance with the terms thereof and the DGCL.
1.4 Directors and Officers. Mr. Tristram C. Colket, Jr. and Mr. Max
----------------------
Cooper, the directors of Mergerco immediately prior to the Effective Time, shall
be, from and after the Effective Time, together with Mr. Joel S. Lawson, III,
the initial directors of the Surviving Corporation, and the executive officers
of the Company immediately prior to the Effective Time will be the initial
officers of the Surviving Corporation, in each case until their successors have
been duly elected or appointed and qualified in the manner provided in the
Certificate of Incorporation and By-Laws of the Surviving Corporation, or as
otherwise provided by law.
2. CONVERSION OF SHARES
--------------------
2.1 Conversion of Shares. At the Effective Time, by virtue of the
--------------------
Merger and without any action on the part of the holders of any shares of Common
Stock, $.01 par value, of the Company
-2-
("Company Common Stock") or the holder of any shares of Common Stock, $.01 par
value, of Mergerco ("Mergerco Common Stock"):
(a) Each share of Mergerco Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into and exchanged
for one newly and validly issued, fully paid and nonassessable share of common
stock, $.01 par value, of the Surviving Corporation ("Surviving Corporation
Common Stock").
(b) Each share of Company Common Stock owned by Mergerco and all
other shares of capital stock of the Company that are held in the treasury of
the Company immediately prior to the Effective Time, if any, shall be canceled
and extinguished without any conversion right thereof and no consideration shall
be delivered or deliverable in exchange therefor.
(c) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of Company Common
Stock described in Subsection (b) above or held by Dissenting Stockholders, as
defined in Section 2.2 hereof) shall be converted into and represent the right
to receive an amount in cash equal to $.10, payable to the holder thereof,
without any interest thereon, less any required back-up withholding taxes (the
"Merger Consideration"). At and after the Effective Time, all such shares of
Company Common Stock, when converted as provided in this Section 2.1(c), no
longer shall be outstanding and shall automatically be canceled and retired and
shall cease to exist, and certificates previously evidencing shares of Company
Common Stock immediately prior to the Effective Time, taking into account all
certificates of a holder of Company Common Stock delivered by such holder at any
one time (taken together, a "Company Certificate" or "Company Certificates")
shall thereafter represent only the right to receive the Merger Consideration.
2.2 Dissenting Stockholders. Notwithstanding anything in this
-----------------------
Agreement to the contrary, but only to the extent required by Section 262 of the
DGCL, shares of Company Common Stock that are issued and outstanding immediately
prior to the Effective Time and are held by holders who comply with all the
provisions of the DGCL concerning the right of holders of Company Common Stock
to dissent from the Merger and require appraisal of their shares of Company
Common Stock ("Dissenting Stockholders") shall not be converted into the Merger
Consideration but, instead, shall become the right to receive such consideration
as may be determined to be due such Dissenting Stockholders pursuant to the
DGCL; provided, however, that shares of Company Common Stock outstanding
-------- -------
immediately prior to the Effective Time and held by a Dissenting Stockholder who
shall, after the Effective Time, withdraw his or her demand for appraisal or
lose his or her right
-3-
of appraisal, in either case pursuant to the DGCL, shall thereupon be deemed to
have been converted, as of the Effective Time, into the Merger Consideration,
without interest. The Company shall give the Surviving Corporation: (i) prompt
notice of any written demands for appraisal, withdrawals of demands for
appraisal and any other related instruments received by the Company, and (ii)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under Delaware law.
2.3 Payment Procedures.
------------------
(a) As of the Effective Time, the Surviving Corporation shall deposit
or cause to be deposited with a paying agent to be selected by Mergerco as
paying agent (the "Paying Agent"), in a separate fund established for the
benefit of the holders of shares of Company Common Stock, for payment in
accordance with this Section 2.3 (the "Payment Fund"), immediately available
funds in amounts necessary to make the payments pursuant to Section 2.1(c) to
the holders of Company Common Stock entitled thereto pursuant to Section 2.1(c).
As soon as reasonably practicable after the Effective Time, the Surviving
Corporation shall mail to each holder of record entitled to the Merger
Consideration, (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Company
Certificates shall pass, only upon proper delivery of the Company Certificates
to the Surviving Corporation, and shall be in such form and have such other
provisions as the Surviving Corporation reasonably may specify) and (ii)
instructions for use in effecting the surrender of the Company Certificates in
exchange for payment therefor. Upon the proper surrender of a Company
Certificate to the Surviving Corporation, together with such letter of
transmittal and any additional documentation as the Surviving Corporation may
reasonably require, the holder of such Company Certificate shall be entitled to
receive in exchange therefor a check representing the amount of cash equal to
the product of: (x) the number of shares of Company Common Stock represented by
such Company Certificate and (y) the Merger Consideration, and the Company
Certificate so surrendered shall forthwith be canceled. If payment is to be made
to a person other than the person whose name the surrendered Company Certificate
is registered, it shall be a condition of payment that the Certificate so
surrendered shall be promptly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the surrendered Company Certificate or established to the satisfaction
of the Surviving Corporation that such tax has been paid or is not applicable.
-4-
(b) Until surrendered in accordance with the provisions of this
Section 2.3, from and after the Effective Time, each Company Certificate (other
than Certificates representing shares held in the treasury of the Company) shall
represent for all purposes only the right to receive the Merger Consideration
and shall cease to have any rights with respect to the shares of Company Common
Stock formerly represented thereby, except as otherwise provided herein or by
law.
(c) Any portion of the Payment Fund which remains undistributed to
the holders of Company Common Stock for six months after the Effective Time will
be returned to the Surviving Corporation and any stockholder who has not
exchanged his shares of Company Common Stock for the Merger Consideration prior
to such time shall look thereafter only to the Surviving Corporation for payment
of the Merger Consideration in respect of his shares. Any amounts remaining
unclaimed by stockholders of the Company one year after the Effective Time
shall, to the extent permitted by abandoned property and any other applicable
law, become the property of the Surviving Corporation, free and clear of all
claims or interest of any person previously entitled to such claims. All
interest accrued in respect of the Payment Fund shall inure to the benefit of
and be paid to the Surviving Corporation. Notwithstanding the foregoing, the
Surviving Corporation shall not be liable to any former holder of Company
Common Stock for any amount delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(d) The Surviving Corporation shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of shares of Company Common Stock such amounts as the Surviving
Corporation is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by the Surviving Corporation,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Company Common Stock in respect
of which such deduction and withholding was made by the Surviving Corporation.
(e) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall be no further registration of transfers of
shares of Company Common Stock thereafter on the records of the Company.
2.4 Options and Warrants.
--------------------
(a) At the Effective Time, except as otherwise provided in this
Section 2.4, each option and warrant granted by the Company to purchase shares
of Company Common Stock, which is
-5-
outstanding immediately prior thereto (an "Option" or, collectively, the
"Options"), shall be canceled and retired and shall cease to exist and no
consideration shall be delivered or deliverable in exchange therefor, except to
the extent that any such Option granted by the Company to purchase shares of
Company Common Stock has vested and is exercisable immediately prior to the
Effective Time, whether as a result of the passage of time, the Merger or
otherwise. In such event, each holder of such an Option shall, individually, in
settlement thereof, receive from the Surviving Corporation for each share
subject to such an Option an amount (subject to any applicable back-up
withholding taxes) in cash equal to the difference between: (i) the Merger
Consideration and (ii) the per share exercise price of such Option, to the
extent such difference is a positive number (the "Option Consideration").
(b) Upon receipt of the Option Consideration, the Option shall be
canceled. The surrender of an Option to the Surviving Company in exchange for
the Option Consideration shall be deemed a release of any and all rights the
holder had or may have had in respect of such Option.
(c) Prior to the Effective Time, the Company shall use its best
efforts to obtain all necessary consents or releases from holders of Options
under any and all Company stock option plan(s) and take all such other lawful
action as may be necessary to give effect to the transactions contemplated by
this Section (except for such action that may require the approval of the
Company's stockholders). Except as otherwise agreed to by the parties: (i) any
and all Company stock option plan(s) shall terminate as of the Effective Time
and the provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company shall be canceled as of the Effective Time and (ii) the Company shall
take all commercially reasonable action in an effort to provide that following
the Effective Time no participant in stock option plan(s) or other plans,
programs or arrangements shall have any right thereunder to acquire equity
securities of the Company or the Surviving Corporation and to terminate all such
plans.
3. CLOSING
-------
3.1 Closing. The closing of the Merger (the "Closing") shall take
-------
place at the offices of Pepper, Hamilton & Scheetz, 3000 Two Logan Square,
Philadelphia, Pennsylvania, at 10:00 A.M., local time, on the day which is the
third business day after the day on which the last of the conditions set forth
in Section 5 hereof is fulfilled or waived (subject to applicable law), or at
-6-
such other time and place and on such other date as Mergerco and the Company
shall mutually agree (the "Closing Date").
4. REPRESENTATIONS AND WARRANTIES
------------------------------
4.1 Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to Mergerco as follows:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified and in good standing to
conduct business in each jurisdiction in which the business it is conducting, or
the operation, ownership or leasing of its properties, makes such qualification
necessary, other than in such jurisdictions where the failure so to qualify
could not reasonably be expected to have a Material Adverse Effect (as defined
below) with respect to the Company. The Company further represents that it does
not have any subsidiaries. As used in this Agreement, a "Material Adverse
Effect" shall mean, with respect to a particular party, the result of one or
more events, changes or effects which, individually or in the aggregate, would
have a material adverse effect on the business, results of operations, assets or
financial condition of such party.
(b) The Company has hereto made available to Mergerco complete and
correct copies of its Certificate of Incorporation and By-Laws. The Company is
not in violation of any provisions of its Certificate of Incorporation or By-
Laws except that the Company currently only has two directors.
(c) As of the date hereof, the authorized capital stock of the
Company consists of 25,000,000 shares of Common Stock and 1,000,000 shares of
Preferred Stock. At the close of business on March 18, 1996: (i) 14,358,666
shares of Company Common Stock and no shares of Preferred Stock were issued and
outstanding, pursuant to the exercise of options provided under the Company's
stock option plans, there are no employment, executive termination or similar
agreements providing for the issuance of Shares, and (ii) no bonds, debentures,
notes or other instruments or evidence of indebtedness having the right to vote
(or convertible into, or exercisable or exchangeable for, securities having the
right to vote) on any matters on which the Company stockholders may vote
("Company Voting Debt") were issued or outstanding. All outstanding shares of
Company Common Stock are validly issued, fully paid and nonassessable and are
not subject to preemptive or other similar rights. Except as set forth in this
Section, or as otherwise disclosed on Schedule 4.1(c), there are outstanding:
-7-
(i) no shares of capital stock, Company Voting Debt or other voting securities
of the Company; (ii) no securities of the Company convertible into, or
exchangeable or exercisable for, shares of capital stock, Company Voting Debt or
other voting securities of the Company; and (iii) no options, warrants, calls,
rights (including preemptive rights), commitments or agreements to which the
Company is a party or by which it is bound, in any case obligating the Company
to issue, deliver, sell, purchase, redeem or acquire, or cause to be issued,
delivered, sold, purchased, redeemed or acquired, additional shares of capital
stock or any Company Voting Debt or other voting securities of the Company, or
obligating the Company to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. Between January 1, 1996 and the date
hereof, the Company has not: (i) granted any options, warrants or rights to
purchase shares of Company Common Stock or (ii) amended or repriced any Option
or Company stock option plan. There are not as of the date hereof and there will
not be at the Effective Time any stockholder agreements, voting trusts or other
agreements or understandings to which the Company is a party or by which it is
bound relating to the voting of any shares of the capital stock of the Company
which will limit in any way the solicitation of proxies by or on behalf of the
Company from, or the casting of votes by, the stockholders of the Company with
respect to the Merger.
(d)(i) The Company has all requisite corporate power and authority to
enter into this Agreement and, subject to the Company Stockholder Approval (as
defined in Section 4.1(d)(iii)), to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to the Company Stockholder
Approval. This Agreement has been duly executed and delivered by the Company
and, subject to the Company Stockholder Approval, and assuming that this
Agreement constitutes the valid and binding agreement of Mergerco, constitutes a
valid and binding obligation of the Company enforceable in accordance with its
terms except that the enforcement hereof may be limited by: (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (b) general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by the Company will not
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or
-8-
acceleration of any obligation or the creation of a lien, pledge, security
interest or other encumbrance on assets or property,or right of first refusal
with respect to any asset or property (any such conflict, violation, default,
right of termination, cancellation or a "Violation"), pursuant to any provision
of the Certificate of Incorporation or By-Laws of the Company or, except as to
which requisite waivers or consents have been obtained, and except as disclosed
on Schedule 4.1(d), and assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in paragraph (iii) of this
Section 4.1(d) are duly and timely obtained or made and, if required, the
Company Stockholder Approval has been obtained, result in any Violation of any
loan or credit agreement, note, mortgage, indenture, lease, Company employee
benefit plan or other agreement, obligation, instrument, Company permit,
concession, franchise, license (collectively, "Company Agreements") to which the
Company is a party, or any judgment, order, decree, statute, law, ordinance,
rule or regulation (collectively, "Laws") applicable to the Company or its
respective properties or assets, in each case which could reasonably be expected
to have a Material Adverse Effect with respect to the Company.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), including such
other such filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification, disclosure or
required approval necessitated by the Merger or the transactions contemplated by
this Agreement, is required by or with respect to the Company in connection with
the execution and delivery of this Agreement by the Company or the consummation
by the Company of the transactions contemplated hereby, which if not obtained or
made could reasonably be expected to have a Material Adverse Effect with respect
to the Company, except for: (a) the filing with and clearance by the United
States Securities and Exchange Commission ("SEC") of: (x) a Transaction
Statement on Schedule 13E-3 and Proxy Statement on Schedule 14A in definitive
form relating to a special meeting of the holders of Company Common Stock
("Company's Stockholders Meeting") to approve the Merger ("Company Stockholder
Approval") (such Schedule 13E-3 and Proxy Statement as amended or supplemented
from time to time being hereinafter collectively referred to as the "Proxy
Statement"), and (y) such reports under and such other compliance with the
Exchange Act and the rules and regulations thereunder, as may be required in
connection with this Agreement and the transactions contemplated hereby; (b) the
filing of the Certificate of Merger with the Secretary of State of the State of
-9-
Delaware; and (c) such filings and approvals as may be required by any
applicable state securities, "blue sky" or takeover laws.
(e)(i) The Company has made available to Mergerco a true and complete
copy of each report, schedule, effective registration statement (other than
preliminary registration statements which later became effective) and definitive
proxy statement filed by the Company with the SEC since January 1, 1993 and
prior to the date of this Agreement (the "Company SEC Documents") which are all
the documents (other than preliminary material) that the Company was required to
file with the SEC since such date. As of their respective dates, the Company
SEC Documents complied in all material respects with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Company SEC Documents, and
none of the Company SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of the Company
included in the Company SEC Documents complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC)
and fairly present in accordance with applicable requirements of GAAP (subject,
in the case of the unaudited statements, to normal, recurring adjustments, none
of which will be material) the consolidated financial position of the Company as
of their respective dates and the consolidated results of operations and the
consolidated cash flows of the Company for the periods presented therein.
(ii) None of the information supplied or to be supplied by the
Company in writing expressly for inclusion or incorporation by reference in the
Proxy Statement, on the date it is first mailed to the holders of the Company
Common Stock or at the time of the Company's Stockholders Meeting, will contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(f) Subject to the rights and obligations set forth in Section 7.6
hereof, the Company hereby consents to the Merger and represents that: (a) its
Board of Directors (at a meeting duly called and held) has (i) unanimously
determined that each of this Agreement and the Merger are fair to and in the
best interests of the stockholders of the Company, (ii) approved this Agreement
and
-10-
the transactions contemplated hereby and thereby, including the Merger, and
such approval constitutes approval of this Agreement and the transactions
contemplated hereby and thereby, including the Merger, and such approval is
sufficient to render inapplicable to this Agreement and the transactions
contemplated hereby and thereby, the provisions of any anti-takeover laws of the
State of Delaware, (iii) resolved to elect not to be subject to any applicable
state takeover law, and (iv) resolved to recommend the approval and adoption of
this Agreement and approval of the Merger by the holders of Company Common
Stock, and (b) TM Capital Corp. has delivered to the Board of Directors of the
Company its written opinion that each of the Merger Consideration to be received
by the holders of Company Common Stock is fair, from a financial point of view,
to such holders, a signed, true and complete copy of which has been delivered to
Mergerco and is attached hereto as Exhibit B, and such opinion has not been
---------
withdrawn or modified.
(g) Since December 31, 1995, the business of the Company has been
carried on only in the ordinary and usual course and there has not been any
adverse change in its business, operations or financial condition (other than
such adverse changes consistent with events occurring in 1995) which has
resulted in or reasonably could be expected to result in a Material Adverse
Effect with respect to the Company.
(h) The Company has filed all United States federal income tax
returns and all other material tax returns required to be filed by it, and the
Company has paid and discharged all taxes shown as due on such returns or
assessed on the Company by the relevant taxing authority in connection with or
with respect to the periods or transactions covered by such tax returns, except
such as are being contested in good faith by appropriate proceedings (to the
extent that any such proceedings are required), and there are no other material
taxes that would be due if asserted by a taxing authority, except with respect
to which the Company is maintaining materially sufficient reserves. Except as
does not involve or would not result in liability to the Company that could
reasonably be expected to have a Material Adverse Effect on the Company, (i)
there are no tax liens on any assets of the Company; and (ii) the Company has
not been granted any waiver of any statute of limitations with respect to, or
any extension of a period for the assessment of, any tax. The accruals and
reserves for taxes (including deferred taxes) reflected in the balance sheet
contained in Company's Form 10-K for the fiscal year ended June 30, 1995 are
adequate in all material respects to cover all taxes accruable through the date
thereof (including interest and penalties, if any, thereon and taxes being
contested) in accordance with GAAP. The Company has previously delivered or made
available to Mergerco true and complete copies of its federal income tax returns
for each of the
-11-
fiscal years ended June 30, 1993 through June 30, 1995. The Company is not a
party to or bound by any agreement providing for the allocation or sharing of
taxes with any entity which is not, either directly or indirectly, a subsidiary
of the Company. The Company has not filed a consent pursuant to or agreed to the
application of Section 341(f) of the Code. The Company is not a "United States
real property holding corporation" as defined in Section 897(c) (2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
For the purpose of this Agreement, (i) the term "tax" (and, with correlative
meaning, the terms "taxes" and "taxable") shall include all federal, state,
local and foreign income, profits franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise and other taxes, duties or
assessments of any nature whatsoever, together with all interest, penalties and
additions imposed with respect to such amounts, and (ii) the term "tax returns"
shall mean returns, reports and information statements with respect to taxes to
be filed with Internal Revenue Service or any other taxing authority, domestic
or foreign, including without limitation consolidated combined and unitary tax
returns.
4.2 Representations and Warranties of Mergerco. Mergerco represents and
------------------------------------------
warrants to the Company as follows:
(a) Mergerco is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now conducted, and is duly qualified and in good standing to conduct
business in each jurisdiction in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such qualification
necessary, other than in such jurisdictions where the failure so to qualify
could not reasonably be expected to have a Material Adverse Effect with respect
to Mergerco.
(b) Mergerco has hereto made available to the Company complete and
correct copies of its Certificate of Incorporation and By-Laws. Mergerco is not
in violation of any provisions of its Certificate of Incorporation or By-Laws.
(c)(i) Mergerco has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Mergerco. This Agreement has been duly executed
and delivered by Mergerco and, assuming this Agreement constitutes the valid and
binding agreement of the Company, constitutes a valid and binding obligation of
Mergerco
-12-
enforceable in accordance with its terms except that the enforcement hereof may
be limited by: (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (b) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Mergerco will not
conflict with, or result in any Violation pursuant to any provision of the
Certificate of Incorporation or By-Laws of Mergerco or, except as to which
requisite waivers or consents have been obtained, and assuming the consents,
approvals, authorizations or permits and filings or notifications referred to in
paragraph (iii) of this Section 4.2(c) are duly and timely obtained or made,
result in any Violation of any Agreements to which Mergerco is a party, or any
Laws applicable to Mergerco or its respective properties or assets, in each case
which could reasonably be expected to have a Material Adverse Effect with
respect to Mergerco.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity, including such other such filings and consents as may be
required under any environmental, health or safety law or regulation pertaining
to any notification, disclosure or required approval necessitated by the Merger
or the transactions contemplated by this Agreement, is required by or with
respect to Mergerco in connection with the execution and delivery of this
Agreement by Mergerco or the consummation by Mergerco of the transactions
contemplated hereby, which if not obtained or made could reasonably be expected
to have a Material Adverse Effect with respect to Mergerco, except for: (a) the
filing with and clearance by the SEC of such reports under and such other
compliance with the Exchange Act and the rules and regulations thereunder, as
may be required in connection with this Agreement and the transactions
contemplated hereby; (b) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware; and (c) such filings and approvals
as may be required by any applicable state securities, "blue sky" or takeover
laws.
(d) None of the information supplied or to be supplied by Mergerco in
writing expressly for inclusion or incorporation by reference in the Proxy
Statement, on the date it is first mailed to the holders of the Company Common
Stock or at the time of the Company's Stockholders Meeting, will contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the
-13-
statements therein, in light of the circumstances under which they are made, not
misleading.
(e) Mergerco hereby consents to the Merger and represents that (a)
its Board of Directors (at a meeting duly called and held) has (i) unanimously
determined that each of this Agreement and the Merger are fair to and in the
best interests of the stockholders of Mergerco; and (ii) approved this Agreement
and the transactions contemplated hereby and thereby, including the Merger; and
(b) its Stockholders have by written consent, unanimously determined that each
of this Agreement and the Merger are fair to and in the best interest of
Mergerco and has approved the same.
(f) Mergerco was formed solely for the purpose of effecting the
Merger, and has undertaken no other business than in connection with the
transactions contemplated by this Agreement. Prior to the Closing Date, the
stockholders of Mergerco shall have sufficiently capitalized Mergerco such that
the monies available to Mergerco are sufficient in amount to make the payment of
all Merger Consideration.
5. CONDITIONS PRECEDENT TO MERGER.
------------------------------
5.1 Conditions Precedent to Obligations of Mergerco and the Company.
---------------------------------------------------------------
The respective obligations of Mergerco and the Company to effect the Merger are
subject to the satisfaction or waiver (subject to applicable law) at or prior to
the Closing Date of each of the following conditions:
(a) This Agreement and the Merger shall have been approved and
adopted by the affirmative vote of the holders of a majority of the shares of
the Company Common Stock entitled to vote thereon if such vote is required by
applicable law.
(b) No claim, action, suit, proceeding, arbitration or litigation has
been threatened to be filed, has been filed or is proceeding which has arisen in
whole or in part out of, or pertaining to the approval of the Board of Directors
of either party of this Agreement and the transactions contemplated hereby, the
negotiation, execution or delivery of this Agreement, the performance of
obligations hereunder or the consummation of the transactions contemplated
hereby.
(c) No statute, rule, regulation, executive order, decree, injunction
or order of any kind shall have been enacted, issued, entered, promulgated or
enforced by any Governmental Entity which prohibits the consummation of the
Merger and which is in effect at the Effective Time.
-14-
(d) The Company shall have received SEC clearance of the Proxy
Statement, all state securities laws and "Blue Sky" permits and other necessary
consents, approvals and authorizations of Governmental Entities.
(e) The recommendation of the Company's Board of Directors that the
Company's stockholders approve the Merger or the opinion from TM Capital Corp to
the effect that the Merger Consideration is fair to the Company's Stockholders
from a financial point of view, shall not have been withdrawn or modified.
(f) The holders of no more than 10% of Common Shares entitled to vote
thereon shall exercise their dissenters rights and become Dissenter
Stockholders.
(g) The holders of all Options, the per share exercise price of which
is greater than the Merger Consideration, shall have entered into written
agreements terminating such Options as set forth in Section 2.4 hereof.
5.2 Conditions of Obligations of Mergerco. The obligations of Mergerco
-------------------------------------
to effect the Merger are subject to the satisfaction or waiver (subject to
applicable law) at or prior to the Closing Date of each of the following
conditions:
(a) The representations and warranties of the Company set forth in
this Agreement shall be true and correct, in all material respects, as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date, except as otherwise contemplated by, this Agreement, and
Mergerco shall have received a certificate signed on behalf of the Company by
the chief executive officer or by the chief financial officer of the Company to
such effect.
(b) The Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date, and Mergerco shall have received a certificate signed on
behalf of the Company by the chief executive officer or by the chief financial
officer of the Company to such effect.
(c) From and after the date hereof, the Company shall have carried on
its business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted between February 2 and the date hereof and, from
and after February 2, 1996, there shall not be any adverse change to the
Company's business, operations or financial condition which has resulted in a
Material Adverse Effect with respect to the Company (other than adverse changes
consistent with events occurring in 1995).
-15-
5.3 Conditions of Obligations of the Company. The obligations of
----------------------------------------
Mergerco to effect the Merger are subject to the satisfaction or waiver (subject
to applicable law) at or prior to the Closing Date of each of the following
conditions:
(a) The representations and warranties of Mergerco set forth in this
Agreement shall be true and correct, in all material respects, as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement, and the
Company shall have received a certificate signed on behalf of the Mergerco by
the chief executive officer or by the chief financial officer of the Mergerco
to such effect.
(b) Mergerco shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date, and the Company shall have received a certificate signed on
behalf of Mergerco by the President of Mergerco to such effect.
6. COVENANTS RELATING TO THE CONDUCT OF THE BUSINESS
-------------------------------------------------
6.1 Covenants of the Company. During the period from the date of
------------------------
this Agreement and continuing until the Effective Time, the Company agrees that,
except as expressly contemplated or permitted by this Agreement:
(a) The Company shall carry on its business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and
shall use commercially reasonable efforts to preserve substantially intact its
present business organizations, keep available the services of its current
officers and employees and preserve its relationships with customers, suppliers
and others having business dealings with it.
(b) The Company shall not: (i) declare or pay any dividends on or
make other distributions in respect of any of its capital stock; (ii) split,
combine or reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; or (iii) repurchase or otherwise
acquire any shares of its capital stock, except as required by the terms of its
securities outstanding or contractual obligations in effect on the date hereof,
as contemplated by this Agreement.
(c) The Company shall use its best efforts to obtain the written
agreements from holders of Options referenced in Section 5.1(g) hereof and shall
not: (i) grant any options,
-16-
warrants or rights, to purchase shares of Company Common Stock, (ii) amend or
reprice any Option or the Stock Option Plan, or (iii) issue, deliver or sell, or
authorize or propose to issue, deliver or sell, any shares of its capital stock
of any class or series, any Company Voting Debt or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, Company
Voting Debt or convertible securities.
(d) The Company shall not amend or propose to amend its Certificate
of Incorporation or By-Laws.
(e) Subject to the rights and obligations of the Company set forth in
Section 7.6 hereof, the Company shall not acquire or agree to acquire by merging
or consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof.
(f) Subject to the rights and obligations of the Company set forth in
Section 7.6 hereof, other than dispositions, sales, leases or encumbrances in
the ordinary course of business consistent with past practice, the Company shall
not sell, lease, encumber or otherwise dispose of, or agree to sell, lease
(whether such lease is an operating or capital lease), encumber or otherwise
dispose of, any of its assets.
(g) Subject to the rights and obligations of the Company set forth in
Section 7.6 hereof, the Company shall not authorize, recommend, propose or
announce an intention to adopt a plan of complete or partial liquidation or
dissolution of the Company.
(h) The Company will not take or agree or commit to take any action
that is reasonably likely to result in any of the Company's representations or
warranties hereunder being untrue in any material respect or in any of the
Company's covenants hereunder or any of the conditions to the Merger not being
satisfied in all material respects.
(i) The Company shall not: (i) grant any increases in the
compensation of any of its directors, executive officers or key employees,
except, other than with respect to directors or officers, for annual increases
in salary or wages consistent with past practices, those required pursuant to
the terms of any existing agreement or those contemplated by this Agreement;
(ii) pay or agree to pay any pension, retirement allowance or other
employee benefit not required by law or required or contemplated by any of the
existing Company employee
-17-
benefit plans as in effect on the date hereof to any such director, officer or
key employee, whether past or present;
(iii) enter into any new, or materially amend any existing,
employment or severance or termination agreement with any such director,
executive officer or key employee; or
(iv) except as may be required to comply with applicable law, become
obligated under any new Company employee benefit plan which was not in existence
on the date hereof, or amend any such plan or arrangement in existence on the
date hereof if such amendment would have the effect of materially enhancing any
benefits thereunder.
(j) Other than any indebtedness incurred in connection with any
interim financing commitment provided to the Company by Tristram C. Colket Jr.
and/or Max Cooper, the Company shall not assume or incur any indebtedness for
borrowed money or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities of such party or
guarantee any debt securities of others or, other than an extension of its lease
with its present landlord specifically approved by the Board of Directors to
retain the Company's current space, enter into any lease (whether such lease is
an operating or capital lease) or create any mortgages, liens, security
interests or other encumbrances on the property of the Company in connection
with any indebtedness described above, or enter into any "keep well" or other
agreement or arrangement to maintain the financial condition of another person.
(k) The Company shall not take any action, other than in the ordinary
course of business, consistent with past practice or as required by the SEC or
by law, with respect to accounting policies, procedures and practices.
(l) The Company shall promptly notify Mergerco of: (i) notice or
other communication from any person alleging that the consent of such person is
or may be required in connection with the transactions contemplated by this
Agreement; (ii) any notice or other communication from any Governmental Entity
in connection with the transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or proceedings commenced or, to
the Company's knowledge overtly threatened against the Company which, if pending
on the date of this Agreement, would have been required to have been disclosed
pursuant to this Agreement or which relate to the consummation of the
transactions contemplated by this Agreement.
-18-
7. ADDITIONAL AGREEMENTS
---------------------
7.1 Preparation of Proxy Statement. As soon as practicable after the
------------------------------
date hereof, the Company, with the cooperation of Mergerco, shall prepare and
file with the SEC the Proxy Statement. The Company shall use commercially
reasonable efforts to respond to all SEC comments with respect to the Proxy
Statement and to cause the Proxy Statement to be mailed to the Company's
stockholders at the earliest practicable date. The Company will, as soon as
practicable, use commercially reasonable efforts to duly call, give notice of,
convene and hold the Company's Stockholders Meeting for the purpose of approving
this Agreement and the transactions contemplated hereby.
7.2 Further Assistance. After the Effective Time, from time to time,
------------------
as and when required by the Surviving Corporation or by its successors or
assigns, there shall be executed and delivered on behalf of the Company such
deeds and other instruments, and there shall be taken or caused to be taken by
all such further and other action, as shall be appropriate, advisable or
necessary in order to vest, perfect or confirm, or record or otherwise, in the
Surviving Corporation the title to and possession of all property interests,
assets, rights, privileges, immunities, powers, franchises and authority of the
Company and Mergerco, and otherwise to carry out the purposes of these
resolutions. The officers and directors of the Surviving Corporation are fully
authorized in the name and on behalf of the Company and Mergerco or otherwise,
to take any and all such action and to execute and deliver any and all such
deeds and other instruments.
7.3 Agreements. The Company will take such commercially reasonable
----------
steps as are appropriate, including the giving of required notices, to preserve
its rights under the Company Agreements and to ensure that such rights will be
transferred to the Surviving Corporation.
7.4 Fees and Expenses. All fees and expenses (including attorneys'
-----------------
and consultants' fees and expenses) incurred by the parties hereto in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement and all other matters related to the closing of
the transactions contemplated hereby shall be borne solely and entirely by the
party which has incurred the same. Notwithstanding the foregoing, in the event
that the transactions contemplated hereby are consummated, all of such fees and
expenses will be paid by the Surviving Corporation from the funds provided by
the stockholders of Mergerco for such purpose.
7.5 Confidentiality. From and after the date hereof and until the
---------------
Effective Time, and for a period of two years after the
-19-
effective date of any termination of this Agreement, Mergerco: (i) shall use
commercially reasonable efforts (x) to maintain the confidentiality and (y) not
disclose to any person or entity other than its employees, agents, attorneys and
financial advisors who are participating in the transactions contemplated by
this Agreement, and (ii) shall not, use other than in connection with this
Agreement, any proprietary and confidential information of the Company.
Notwithstanding the foregoing, Mergerco may make such disclosures if and to the
extent required by applicable law, legal process or other regulatory
requirements.
7.6 Right to Solicit Alternative Proposals. From and after the date
--------------------------------------
hereof until the Closing Date, Mergerco hereby grants the Company and any of its
officers, directors, employees, representatives, agents or affiliates
(including, without limitation, any investment banker, attorney or accountant
retained by the Company), the right to, directly or indirectly, initiate,
solicit and encourage (including by way of furnishing non-public information or
assistance), or take any other action to facilitate, any inquiries or the making
of any proposal as an alternative to the Merger ("Alternative Proposal") (as
defined below), or enter into or maintain or continue discussions or negotiate
with any person or entity in furtherance of such inquiries to obtain an
Alternative Proposal or agree to or endorse any Alternative Proposal, or
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative to take any such action. The Company will promptly notify
Mergerco after receipt of any Alternative Proposal or any indication that any
person or entity is considering making an Alternative Proposal or any request
for non-public information relating to the Company or for access to the
properties, books or records of the Company by any person considering making, or
has made, an Alternative Proposal, and the Company will keep Mergerco fully
informed of the status and details of any such Alternative Proposal (unless the
Board of Directors of the Company determines in good faith after consultation
with and based on the advice of legal counsel that giving such notice would
breach the fiduciary duties of the Board of Directors in connection with an
Alternative Proposal). For purposes of this Agreement, "Alternative Proposal"
shall mean any proposal with respect to any of the following (other than the
transactions between the Company and Mergerco contemplated hereunder) involving
the Company: (i) any merger, consolidation, share exchange, recapitalization,
business combination, or other similar transaction; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 10% or more of the
assets of the Company, taken as a whole, in a single transaction or series of
transactions; (iii) any tender offer or exchange offer for 10% or more of the
outstanding shares of capital stock of the Company or
-20-
the filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
8. INDEMNIFICATION
---------------
8.1 Subject to applicable law, the Surviving Corporation will indemnify,
defend and hold harmless the present and former directors, officers, employees
and agents of the Company to the extent provided in its Certificate of
Incorporation or By-laws, by agreement or otherwise in effect on the date
hereof, with respect to any action or omission occurring prior to the Effective
Time and will not amend, reduce or limit rights of indemnity afforded to them or
the ability of the Surviving Corporation to indemnify them, nor hinder, delay or
make more difficult the exercise of such rights of indemnity.
8.2 Any indemnified party wishing to claim indemnification under this
Section, upon learning of any indemnifiable action, suit, claim, proceeding or
investigation (an "Indemnifiable Claim"), shall promptly notify the Surviving
Corporation thereof; provided, however, that any failure so to notify the
Surviving Corporation of any obligation to indemnify such indemnified party or
of any other obligation imposed by this Article 8 shall not affect such
obligation except to the extent Surviving Corporation is prejudiced thereby.
The indemnified parties as a group shall retain only one counsel in each
jurisdiction to represent them with respect to any such matter (which counsel
shall be reasonably acceptable to the Surviving Corporation); provided, however,
in the event that there is, under applicable standards of professional conduct,
a conflict on any significant issue between the positions of any two or more
indemnified parties, the Surviving Corporation and such indemnified parties may
retain, at the expense of the Surviving Corporation, such number of additional
counsel as are necessary to eliminate all conflicts of the type referred to
above. The Surviving Corporation shall periodically advance to such indemnified
party all reasonable out-of-pocket and other expenses incurred by the
indemnified party in respect of such Indemnifiable Claim, including the
reasonable fees and expenses of the counsel described above.
8.3 Notwithstanding anything to the contrary contained in this Article 8,
the Surviving Corporation will have no obligation to indemnify a present or
former director, officer, employee or agent of the Company against any loss,
cost, liability or expense arising out of or in connection with any action or
claim asserted by the Surviving Corporation against such director, officer,
employee or agent for fraud, provided that the Surviving Corporation prevails in
such action or claim.
-21-
8.4 The provisions of this Article 8 shall be binding on any successor
entity to the Surviving Corporation.
9. TERMINATION AND AMENDMENT
-------------------------
9.1 Abandonment and Termination.
---------------------------
(a) This Agreement may be terminated and the Merger may be abandoned
at any time prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the stockholders of the
Company or Mergerco:
(i) by either the Company or Mergerco if either: (a) the Merger
Agreement and the Merger fail to receive the requisite vote for approval and
adoption by the stockholders of the Company at the Company's Stockholders
Meeting or (b) the holders of 10% of Common Shares entitled to vote thereon
exercise their dissenters rights and are Dissenter Stockholders;
(ii) by mutual written consent of the Company and Mergerco if
authorized or taken by mutual action of their respective Boards of Directors;
(iii) by either the Company or Mergerco: (a) if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of the other set forth in this Agreement which breach has not been cured
within five (5) business days following receipt by the breaching party of notice
of such breach, or (b) if a claim, action, suit, proceeding, arbitration or
litigation has been threatened to be filed, has been filed or is proceeding
which has arisen in whole or in part out of, or pertaining to the approval of
the Board of Directors of either party of this Agreement and the transactions
contemplated hereby, the negotiation, execution or delivery of this Agreement,
the performance of obligations hereunder or the consummation of the transactions
contemplated hereby;
(iv) by either the Company or Mergerco, so long as such party has not
breached its obligations hereunder, if the Merger shall not have been
consummated on or before June 30, 1996; provided, that the right to terminate
--------
this Agreement under this subsection shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date; or
(v) by the Company, if its Board of Directors, in the good faith
exercise of its judgment reasonably determines after consultation with and based
upon the advice of independent legal counsel (who may be the Company's regularly
engaged independent
-22-
legal counsel), to enter into an agreement regarding an Alternative Proposal
because such action is reasonably necessary for the Board of Directors of the
Company to comply with its fiduciary duties to the stockholders of the Company
under applicable law.
(b) In the event of termination of this Agreement by either the
Company or Mergerco as provided in this Agreement, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of Mergerco or the Company or their respective affiliates, officers, directors
or stockholders except (i) the provisions of Section 7.5 and Article 8 shall
continue in full force and effect, and (ii) to the extent that such termination
results from the willful breach by a party hereto of any of its representations
or warranties, or of any of its covenants or agreements, in each case, as set
forth in this Agreement.
9.2 Waiver; Amendment. At any time prior to the Effective Time, any
-----------------
provision of this Agreement may be: (i) waived by the party benefitted by the
provision or by both parties by a writing executed by an executive officer of
such party, or (ii) amended or modified at any time (including the structure of
the transaction) by an agreement in writing between the parties hereto approved
by their respective Boards of Directors.
10. MISCELLANEOUS
-------------
10.1 Survival. Only those agreements and covenants of the parties
--------
that are applicable in whole or in part after the Effective Time shall survive
the Effective Time. All representations and warranties and other agreements and
covenants shall be deemed to be conditions of this Agreement and shall not
survive the Effective Time.
10.2 Entire Agreement; Etc. This Agreement represents the entire
----------------------
understanding of the parties hereto with reference to the transactions
contemplated hereby and supersedes any and all other oral or written agreements
heretofore or contemporaneously made. All terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
10.3 Assignment. Neither this Agreement nor any rights, interests or
----------
obligations hereunder may be assigned by any party hereto (whether by operation
of law or otherwise) without the prior written consent of the other party.
10.4 Headings. The descriptive headings of the several Articles and
--------
Sections of this Agreement are inserted for
-23-
convenience only, do not constitute a part of this Agreement and shall not
affect in any way the meaning or interpretation of this Agreement.
10.5 Counterparts. This Agreement may be executed in two (2) or more
------------
counterparts, and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, and all of which taken together shall
be deemed to be one and the same instrument.
10.6 Applicable Law. This Agreement and the legal relations between
--------------
the parties hereto shall be governed by and construed in accordance with the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts laws thereof. Each party hereby
agrees that any dispute arising out of this Agreement or the Merger shall be
heard in the Courts of the State of Delaware or the United States District Court
for the District of Delaware and, in connection therewith, each party hereby
consents to the jurisdiction of such courts and agrees that any service of
process in connection with any dispute arising out of this Agreement or the
Merger may be given to any other party hereto at the respective addresses and
pursuant to the notice provisions set forth in Section 10.8 below.
10.7 Severability. If any term, provision, covenant or restriction
------------
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
10.8 Notices. Any notice or communication required or permitted
-------
hereunder shall be in writing and wither delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received when so delivered personally,
telegraphed or telecopied or, if mailed, five (5) business days after the date
of mailing to the following address or telecopy number, or to such other address
or addresses as such person may subsequently designate by notice given
hereunder:
(a) if to Mergerco, to:
MI Merger Corp
c/o Tekloc Enterprises
500 Chester Field Parkway
Suite 170
Malvern, PA 19355
Attn: President
Telephone: (610) 647-7475
Facsimile: (610) 889-0383
-24-
with copies to:
Pepper, Hamilton & Scheetz
3000 Two Logan Square
18th & Arch Streets
Philadelphia, Pennsylvania 19103-2799
Attn: James D. Epstein, Esq.
Telephone: (215) 981-4000
Facsimile: (215) 981-4750
(b) if to the Company, to:
Megamation Inc.
51 Everett Drive
Building #B4
Lawrenceville, NJ 08648
Attn: Mr. Edward Borkowski, President
Telephone: (609) 799-7711
Facsimile: (609) 799-4780
with copies to:
Edmond M. Coller, Esquire
Goodkind Labaton Rudoff & Sucharow LLP
100 Park Avenue
New York, NY 10017-5563
Telephone: (212) 901-0753
Facsimile: (212) 818-0477
-25-
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed as of this day and year first
above written.
MEGAMATION INC.
By: /s/ Edward Borkowski
----------------------
Name: Edward Borkowski
Title: President
MI Merger Corp.
By: /s/ Tristram C. Colket, Jr.
---------------------------
Name: Tristram C. Colket, Jr.
Title: President