AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (the "Agreement") is made and entered into as
of September 30, 1996, by and between FTI Acquisition Corporation, a Maryland
corporation ("Newco"), a newly-formed, wholly-owned subsidiary of Forensic
Technologies International Corporation, a Maryland corporation ("FTI"), and
Teklicon, Inc., a California corporation (the "Company"). Capitalized terms not
defined in this Agreement shall have their defined meanings as set forth in the
Agreement and Plan of Reorganization dated as of September 30, 1996 (the
"Plan"), entered into by and among FTI, Newco, the Company and Xxxx X. Xxxxxxx
and Xxxxx Xxxxxxx, Trustees of The Xxxxxxx 1992 Trust (the "Sole Stockholder").
NOW THEREFORE, in consideration of the premises and mutual covenants
and agreements contained herein, Newco and the Company agree as follows.
ARTICLE I
THE MERGER
1.1 Merger of Newco With and Into the Company.
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(a) Agreement to Acquire the Company. Subject to the terms of
this Agreement and the Plan, the Company shall be acquired by FTI through a
merger (the "Merger") of Newco with and into the Company.
(b) Effective Time of the Merger. The Merger shall become
effective upon the filing with the Secretary of State of California.
(c) Surviving Corporation. At the Effective Time, Newco shall
be merged with and into the Company pursuant to this Agreement and the Plan
separate corporate existence of Newco shall cease. The Company, as it exists
from and after the Effective Time, is sometimes referred to as the "Surviving
Corporation."
1.2 Effect of the Merger; Additional Actions.
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(a) Effects. The Merger shall have the effects provided
therefor by the Maryland General Corporation Code ("MGCL") and the California
Corporations Code ("CCL"). Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time (i) all the rights, privileges, powers
and franchises, of a public as well as of a private nature, and all property,
real, personal and mixed, and all debts due on whatever account, including
without limitation subscriptions to shares, and all other choses in action, and
all and every other interest of or belonging to or due to the Company or Newco
shall be taken and deemed to be transferred to, and vested in, the Surviving
Corporation without further act or deed; and all property, rights
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and privileges, powers and franchises and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation, as they
were of the Company and Newco, and (ii) all debts, liabilities, duties and
obligations of the Company and Newco shall become the debts, liabilities and
duties of the Surviving Corporation and the Surviving Corporation shall
thenceforth be responsible and liable for all the debts, liabilities, duties and
obligations of the Company and Newco and neither the rights of creditors nor any
liens upon the property of the Company or Newco shall be impaired by the Merger,
and may be enforced against the Surviving Corporation.
(b) Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable (i) to vest, perfect or confirm of record or otherwise in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of either Constituent Corporation acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or (ii) to otherwise carry out the purposes of this Agreement,
each Constituent Corporation and its officers and directors shall be deemed to
have granted to the Surviving Corporation an irrevocable power of attorney to
execute and deliver all such deeds, bills of sale, assignments and assurances
and to take and do all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to and under such rights, properties or assets in the Surviving Corporation and
otherwise to carry out the purposes of this Agreement; and the officers and
directors of the Surviving Corporation are fully authorized in the name of each
Constituent Corporation or otherwise to take any and all such actions.
ARTICLE II
THE CONSTITUENT CORPORATIONS
2.1 Organization of the Company. The Company was incorporated under the
laws of the State of California. The Company is authorized to issue an aggregate
of 15,000,000 shares of common stock, no par value per share, (the "Company
Common Stock") and no shares of preferred stock. As of September 30, 1996,
7,100,000 shares of the Company Common Stock are outstanding, all of which are
held by the Sole Stockholder, and no shares of preferred stock were outstanding.
Sole Stockholder approval of the Merger was required. The Sole Stockholder vote
was as follows:
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Class or Series of Number of Shares Number of Votes Number of Number of Votes
Shares Outstanding Entitled to be Cast Votes Cast for Cast Against
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Common Stock 7,100,000 7,100,000 7,100,000 0
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2.2 Organization of Newco. Newco was incorporated under the laws of the
State of Maryland on September 24, 1996. Newco is authorized to issue an
aggregate of 1,000 shares of Common Stock, $0.0l par value per share ("Newco
Stock"), of which 100 shares are outstanding as of September 24, 1996.
Stockholder approval of the Merger was required. The stockholder vote was as
follows:
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Class or Series of Number of Shares Number of Votes Number of Number of Votes
Shares Outstanding Entitled to be Cast Votes Cast for Cast Against
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Common Stock 100 100 100 0
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ARTICLE III
ARTICLES OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
3.1 Articles of Incorporation; Bylaws; Directors and Officers The
Articles of Incorporation of the Surviving Corporation from and after the
Effective Time shall be the Articles of Incorporation of the Company until
thereafter amended in accordance with the provisions therein and as provided by
the CCL. The By-laws of the Surviving Corporation from and after the Effective
Time shall be the By-laws of the Company as in effect immediately prior to the
Effective Time, continuing until thereafter amended in accordance with their
terms and the Articles of Incorporation of the Surviving Corporation and as
provided by CCL. The directors of the Surviving Corporation shall be Xxxx X.
Xxxx, XX, Xxxx X. Xxxxxxx and Xxxxxxx X. Xxxxx, in each case until their
successors are elected and qualified, and the officers of the Surviving
Corporation shall be elected by the Directors following the effective time of
the merger.
ARTICLE IV
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
4.1 Effect on Capital Stock. At the Effective Time, subject and
pursuant to the terms of this Agreement and the Plan, by virtue of the Merger
and without any action on the part of FTI, Newco, the Company or the Sole
Stockholder, the shares of capital stock of the Constituent Corporations shall
be converted as follows:
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(a) Capital Stock of Newco. Each issued and outstanding share
of capital stock of Newco shall be cancelled and shall be converted into Capital
Stock of the Company pursuant to Section 4.1(c) below.
(b) Cancellation of Certain Shares of Company Common Stock.
All shares of capital stock of the Company that are owned directly or indirectly
by the Company shall be canceled and no stock of FTI or other consideration
shall be delivered in exchange therefor.
(c) Conversion of Capital Stock of the Company. Subject to
Section 4.1(d), (e), (f) and (g) below, the aggregate number of shares of
Company Common Stock (other than shares to be canceled pursuant to Section
4.1(b)) that is issued and outstanding immediately prior to the Effective Time
shall automatically be canceled and extinguished and converted, without any
action on the part of the holders thereof, into the right to receive that number
of shares of common stock, $0.01 par value, of FTI ("FTI Common Stock") that is
equal to the Merger Consideration (as defined in Section 4.1(d) of the
Agreement). All such shares of Company Common Stock, when so converted, shall no
longer be outstanding and shall be automatically canceled and retired and shall
cease to exist, and each holder of a certificate representing any such shares
shall cease to have any rights with respect thereto, except the right to receive
the shares of FTI Common Stock to be issued or paid in consideration therefor
upon the surrender of such certificate in accordance with Section 4.2 of this
Agreement. The ratio pursuant to which each share of Company Common Stock will
be exchanged for shares of FTI Common Stock will be determined by dividing
415,000 shares of FTI Common Stock to be issued as the Merger Consideration by
7,100,000, which is the number of shares of Company Common Stock outstanding
(referred to hereafter as the "Exchange Ratio").
(d) Merger Consideration. The consideration to be paid by FTI
pursuant to the merger is 415,000 shares of FTI Common Stock (the "Merger
Consideration"). Such shares of FTI Common Stock will not be registered under
the Securities Act of 1933, as amended (the "1933 Act"), but will be issued in
reliance upon an exemption from the registration requirements of the "1933 Act".
Such shares of FTI Common Stock will be "Restricted Securities" within the
meaning of Rule 144 of the Securities Act of 1933, as amended (the "Act"), and
may not be offered, transferred, sold or otherwise disposed of except if
registered under the Act and applicable state securities laws or if exemptions
is available thereunder.
(e) Adjustment of Exchange Ratio. If between the date of the
Plan and the Effective Time, the outstanding shares of FTI Common Stock (or,
subject to compliance with Section 5.3 of the Agreement, Company Common Stock)
shall have been changed into a different number of shares or a different class
by reason of any reclassification, split-up, stock dividend, or stock
combination, then the Exchange Ratio shall be correspondingly adjusted. In
addition, the Exchange Ratio is based on the assumption that there are 7,100,000
shares of Company Common Stock outstanding, and no other shares or options,
warrants, convertible
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securities or other rights to acquire shares of capital stock of the Company
outstanding. To the extent that there are more shares of capital stock of the
Company or options, warrants, convertible securities or other rights therefor
outstanding at the Effective Time, the Exchange Ratio shall be correspondingly
adjusted downward.
(f) Fractional Shares. No fractional shares of FTI Common
Stock shall be issued.
(g) Withheld Amount. Upon closing, and as collateral security
for the payment of any post-Closing adjustment to the Merger Consideration or
any indemnification obligations of the Sole Stockholder pursuant to Sections 8
or 10.2 of the Agreement, the Sole Stockholder transfers, pledges and assigns to
FTI, for the benefit of FTI, a security interest in ten percent (10%) of the
number of shares of FTI Common Stock issuable to the Stockholders pursuant to
this Section 4.1 (the "Withheld Amount").
4.2 Exchange of Certificates.
(a) FTI to Provide Common Stock. Promptly after the Effective
Time, FTI shall cause to be made available the shares of FTI Common Stock
issuable pursuant to Section 4.l and the Agreement in exchange for all
outstanding shares of capital stock and securities of the Company.
(b) Certificate Delivery Requirements. At the Effective Time,
the Sole Stockholder shall deliver to FTI the certificates (the "Certificates")
representing Company Common Stock, duly endorsed in blank by the Sole
Stockholder, or accompanied by blank stock powers, and with all necessary
transfer tax and other revenue stamps, acquired at the Sole Stockholder's
expense, affixed and canceled. The Sole Stockholder shall promptly cure any
deficiencies with respect to the endorsement of the Certificates or other
documents of conveyance with respect to the stock powers accompanying such
Certificates. The Certificates so delivered shall be deemed at any time after
the Effective Time to represent the right to receive upon such surrender the
number of shares of FTI Common Stock as provided by this Section 4 and Section l
of the Plan and the provisions of the MGCL.
(c) No Further Ownership Rights in Capital Stock of the
Company. All FTI Common Stock delivered upon the surrender for exchange of
shares of Company Common Stock in accordance with the terms hereof shall be
deemed to have been delivered in full satisfaction of all rights pertaining to
such shares of Company Common Stock, and following the Effective Time, the
Certificates shall have no further rights to, or ownership in, shares of capital
stock of the Company. There shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Company
Common Stock which were outstanding immediately prior to the Effective Time. If
after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
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this Section 4.2 subject to Section 4.1(e).
(d) Lost, Stolen or Destroyed Certificates. In the event any
certificates evidencing shares of Company Common Stock shall have been lost,
stolen or destroyed, FTI shall cause payment to be made in exchange for such
lost, stolen or destroyed certificates, upon the making of an affidavit of that
fact by the holder thereof, such shares of FTI Common Stock, as may be required
pursuant to Section 4.1(f); provided, however, that FTI may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against FTI
with respect to the certificates alleged to have been lost, stolen or destroyed
(e) No Liability. Notwithstanding anything to the contrary in
this Section 4.2, none of the Surviving Corporation or any party hereto shall be
liable to a holder of shares of Company Common Stock for any amount paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
ARTICLE V
TERMINATION
5.1 Termination by Mutual Agreement. Notwithstanding the approval of
this Agreement by the Stockholders and Newco, this Agreement may be terminated
at any time prior to the Effective Time by mutual agreement of the Boards of
Directors of the Company and Newco.
5.2 Termination of Plan. Notwithstanding the approval of this Agreement
by the Stockholders and Newco, this Agreement shall terminate forthwith in the
event that the Plan shall be terminated as therein provided.
5.3 Effects of Termination. In the event of the termination of this
Agreement, this Agreement shall forthwith become void and there shall be no
liability on the part of FTI, Newco or the Company or their respective officers
or directors, except to the extent otherwise provided in the Plan.
ARTICLE VI
GENERAL PROVISIONS
6.1 Amendment. This Agreement may be amended prior to the Effective
Time by the parties hereto, by any action taken by their respective Boards of
Directors, at any time before or after approval of the Merger by the Sole
Stockholder, the Company and Newco but, after any
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such approval, no amendment shall be made which by law requires the further
approval of the Sole Stockholder, the Company or Newco without obtaining such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
6.2 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
6.3 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
California (without regard to conflict of law provisions).
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
FTI ACQUISITION CORPORATION
By:/S/Xxxx X. Xxxx, XX
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Name: Xxxx X. Xxxx, XX
Title: Chief Executive Officer and President
By:/S/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
Title: Secretary
TEKLICON, INC.
By:/S/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: President and Secretary
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