AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement"), is made and
entered into as of March 17, 1997, by and between WMT Acquisition Corp., a
California corporation ("WMT Acquisition") and Target Solutions, Inc., a
California corporation ("TSI"). WMT Acquisition and TSI are sometimes referred
to in this Merger Agreement as the "Constituent Corporations".
W I T N E S S E T H:
WHEREAS, the Boards of Directors of the Constituent Corporations have
each determined that it is in the best interests of their respective
shareholders for TSI to merge with and into WMT Acquisition in a forward
triangular merger (the "Merger"), with WMT Acquisition to be the surviving
corporation of the Merger, pursuant to the terms and conditions as set forth in
this Merger Agreement and the applicable provisions of the laws of the State of
California; and
WHEREAS, the authorized capital stock of WMT Acquisition consists of
One Million (1,000,000) shares of no par value Common Stock, of which, One
Thousand (1,000) shares are issued and outstanding. The authorized capital stock
of TSI consists of One Million (1,000,000) shares of no par value Common stock,
of which, Two Thousand Five Hundred (2,500) shares are issued and outstanding;
and
WHEREAS, upon the effectiveness of the Merger, all of the outstanding
Common Stock of TSI will be converted into Common Stock of WMT Acquisition's
parent corporation, Western Micro Technology, Inc., a California corporation
("WMT"); and
WHEREAS, the Merger is intended to be treated as a reorganization
pursuant to the provisions of Section 368(a)(1)(A) of the Internal Revenue Code
of 1986, as amended (the "Code"), by virtue of the provisions of Section
368(a)(2)(D) of the Code.
NOW, THEREFORE, the parties do hereby adopt the plan of reorganization
encompassed by this Merger Agreement and do hereby promise and agree that TSI
shall merger with and into WMT Acquisition on the following terms, conditions
and other provisions:
ARTICLE 1 TERMS AND CONDITIONS
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1.1 The Merger. TSI shall be merged with and into WMT Acquisition, and
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WMT Acquisition shall be the surviving corporation (the "Surviving
Corporation"), effective upon the date when this Merger Agreement is filed with
the Secretary of State of the State of California (the "Effective Date").
1.2 Succession. On the Effective Date, WMT Acquisition shall succeed to
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all of the rights, privileges, powers and property, including without limitation
all rights, privileges,
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franchises, patents, trademarks, licenses, registrations and other assets of
every kind and description and all of the debts, liabilities and duties of TSI
in the manner as provided in the applicable provisions of the California
Corporation Code.
1.3 Common Stock of TSI. Upon the Effective Date, by virtue of the
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Merger and without any action on the part of the holder thereof, each share of
Common Stock, no par value, of TSI issued and outstanding immediately prior
thereto shall be changed and converted automatically into 88.1092 shares (the
"Exchange Ratio") of Common Stock, no par value, of WMT ("WMT Common Stock") for
an aggregate of Two Hundred Twenty Thousand Two Hundred Seventy Three (220,273)
fully paid and nonassessable shares. Upon surrender of the certificate or
certificates representing the TSI Common Stock at the closing (the "Closing") of
the Agreement and Plan of Reorganization (the "Reorganization Agreement"), dated
as of March 17, 1997, by and among WMT, WMT Acquisition, TSI and ▇▇▇ ▇▇▇▇▇, new
certificates for WMT Common Stock shall be issued in accordance with the
Exchange Ratio calculation. Such certificates shall include an appropriate
securities law legend, providing, among other things, that the shares evidenced
by the certificates are being acquired for investment purposes and are
restricted securities. The Exchange Ratio reflects an aggregate of Two Million
Two Hundred Thousand Dollars ($2,200,000) worth of newly issued shares of WMT
Common Stock initially being issued as consideration for the outstanding TSI
Common Stock. Additional consideration shall be paid pursuant to Section
2.15(a), Section 2.15(b) and Section 2.15(e) hereof. Ten percent (10%) of the
initial consideration of WMT Common Stock will be held by the escrow agent
pursuant to the terms of Article 8 hereof. The price used to determine the
number of shares of WMT Common Stock to be issued at Closing shall be the
average closing price of the WMT Common Stock (as quoted in the Wall Street
Journal) for the five (5) trading days from March 3, 1997 to March 7, 1997,
subject to adjustment as provided in Section 2.6(c) and Section 2.13 of the
Reorganization Agreement.
1.4 Common Stock of WMT Acquisition. Upon the Effective Date, by virtue
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of the Merger and without any action on the part of the holder thereof, each
share of Common Stock, no par value, of WMT Acquisition issued and outstanding
immediately prior thereto shall after the Effective Date continue to constitute
one validly issued, fully paid and nonassessable share of Common Stock, no par
value, of WMT Acquisition. Each stock certificate of WMT Acquisition evidencing
ownership of any such shares shall continue to evidence ownership of such shares
of capital stock of WMT Acquisition.
1.5 Adjustments to Exchange Ratio. Upon the first year anniversary of
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the Closing, the Exchange Ratio shall be adjusted to reflect a new price (the
"New Price") to determine if additional shares of WMT Common Stock shall be
issued to ▇▇▇▇▇. The New Price shall be the average closing price of the WMT
Common Stock (as quoted in the Wall Street Journal) for the five (5) trading
days up to, but excluding, the second trading day before the first year
anniversary of the Closing. If the New Price is lower than the original price
used on the date of the Closing, WMT shall recalculate the Exchange Ratio and
issue additional shares of WMT Common Stock to ▇▇▇▇▇. If the New Price is higher
than the original price, WMT, WMT Acquisition and TSI shall have no duties or
obligations hereunder.
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In addition, the Exchange Ratio shall be adjusted to reflect fully the
effect of any stock split, reverse split, stock dividend (including any dividend
or distribution of securities convertible into WMT Common Stock or TSI Common
Stock), reorganization, recapitalization or other like change with respect to
WMT Common Stock or TSI Common Stock, occurring after the date hereof and prior
to the Effective Date.
1.6 Stock Certificates. On and after the Effective Date, all of the
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outstanding certificates which prior to the Effective Date represented shares of
TSI Common Stock shall be deemed for all purposes to evidence ownership of and
to represent the shares of WMT into which the shares of TSI Common Stock
represented by such certificates have been converted as herein provided. The
registered owner on the books and records of WMT or its transfer agents of any
such outstanding stock certificates, shall until such certificates shall have
been surrendered for transfer or conversion or otherwise accounted for to WMT or
its transfer agent, have and be entitled to exercise any voting and other rights
with respect to and to receive any dividend and other distributions upon the
shares of WMT evidenced by such outstanding certificate as provided above.
1.7 Lost, Stolen or Destroyed Certificates. In the event any
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certificates evidencing shares of TSI Common Stock shall have been lost, stolen
or destroyed, WMT shall issue 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 WMT Common Stock.
1.8 Fractional Shares. No fraction shares of WMT Common Stock will be
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issued, but in lieu thereof each holder of shares of TSI Common Stock who would
otherwise be entitled to a fraction of a share of WMT Common Stock (after
aggregating all fractional shares of WMT Common Stock to be received by such
holder) shall receive from WMT, promptly after the Effective Date, an amount of
cash equal to the cash value of such fractional share as determined by WMT.
1.9 No Further Ownership Rights in TSI Common Stock. All shares of WMT
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Common Stock issued upon the surrender for exchange of shares of TSI Common
Stock in accordance with the terms of this Merger Agreement shall be deemed to
have been issued in full satisfaction of all rights pertaining to such shares of
TSI Common Stock. There shall be no further registration of transfers on the
record of WMT Acquisition of shares of TSI Common Stock which were outstanding
immediately prior to the Effective Date. If, after the Effective Date,
certificates evidencing shares of TSI Common Stock are presented to WMT
Acquisition for any reason, such shares of TSI Common Stock shall be deemed void
and canceled.
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ARTICLE II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
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2.1 Articles of Incorporation and Bylaws.
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(a) The Articles of Incorporation of WMT Acquisition, in effect
immediately prior to the Effective Date, shall be and may be certified as the
Articles of Incorporation of the Surviving Corporation.
(b) The Bylaws of WMT Acquisition in effect on the Effective Date shall
continue to be the Bylaws of the Surviving Corporation without change or
amendment until further amended in accordance with the provisions thereof and
applicable California law.
2.2 Directors. P. ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇, directors of WMT
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Acquisition shall remain the directors of the Surviving Corporation to serve
until the expiration of their current terms and until their successors have been
duly elected and qualified.
2.3 Officers. The officers of WMT Acquisition immediately preceding the
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Effective Date shall remain the officers of the Surviving Corporation on the
Effective Date to serve at the pleasure of its Board of Directors and in each
case, until their respective successors have been duly appointed, qualified and
elected.
ARTICLE III. MISCELLANEOUS
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3.1 Further Assurances. From time to time, as and when required by the
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Surviving Corporation or by its successors and assignees, there shall be
executed and delivered on behalf of TSI such deeds and other instruments, and
there shall be taken or caused to be taken by it such further and other action,
as shall be appropriate or necessary in order to vest or perfect in order to
conform of record or otherwise, in the Surviving Corporation the title to and
possession of all the property, interests, assets, rights, privileges,
immunities, powers, franchises, and authority of TSI and otherwise to carry out
the purposes of this Merger Agreement, and the officers and directors of the
Surviving Corporation are fully authorized in the name and on behalf of TSI or
otherwise to take any and all such action and to execute and deliver any and all
such deeds and other instruments.
3.2 Amendment. At any time before or after approval by the shareholders
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of the Constituent Corporations, this Merger Agreement may be amended in any
manner (except that any of the principal terms may not be amended without the
approval of the shareholders of the Constituent Corporations) as may be
determined in the judgment of the respective Board of Directors of TSI and WMT
Acquisition to be necessary, desirable or expedient in order to clarify the
intention of the parties hereto or to effect or facilitate the purpose and
intent of this Merger Agreement.
3.3 Abandonment. At any time before the Effective Date, this Merger
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Agreement may be terminated and the merger may be abandoned by the Board of
Directors of either
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TSI, WMT Acquisition or WMT or all, notwithstanding the approval of the Merger
Agreement by the shareholders of the Constituent Corporations.
3.4 Counterparts. In order to facilitate the filing and certification
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of this Merger Agreement, the same may be executed in any number of
counterparts, each of which shall be deemed to be an original.
IN WITNESS WHEREOF, this Merger Agreement, having first been duly
approved by the Board of Directors of WMT Acquisition and TSI, is hereby
executed on behalf of each said corporation by their respective officers, as of
the date first written above.
WMT ACQUISITION CORP.,
a California corporation
By _____________________________________
P. ▇▇▇▇▇ ▇▇▇▇▇, President
By _____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Assistant Secretary
TARGET SOLUTIONS, INC.,
a California corporation
By _____________________________________
▇▇▇▇▇ ▇▇▇▇▇, President
By _____________________________________
▇▇▇ ▇▇▇▇▇, Secretary
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