Exhibit 10.1

 

EXECUTION COPY

 

AGREEMENT AND PLAN OF MERGER

 

BY AND AMONG

 

HAKO-WERKE INTERNATIONAL GMBH,

 

MINUTEMAN INTERNATIONAL, INC.

 

AND

 

MMAN ACQUISITION CORP.

 

DATED AS OF JULY 8, 2004

 

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TABLE OF CONTENTS

 

Article I

The Merger

 

 

 

Section 1.01

The Merger

 

 

 

 

Section 1.02

Effective Time

 

 

 

 

Section 1.03

Closing

 

 

 

 

Section 1.04

Effects of the Merger

 

 

 

 

Section 1.05

Articles of Incorporation; Bylaws; Officers and Directors

 

 

 

 

Section 1.06

Effect of the Merger on Capital Stock of the Company and Merger Sub

 

 

 

 

Section 1.07

Dissenting Shares

 

 

 

Article II

Exchange of Certificates

 

 

 

Section 2.01

Exchange Agent

 

 

 

 

Section 2.02

Exchange Procedures

 

 

 

 

Section 2.03

No Further Ownership Rights in Shares

 

 

 

 

Section 2.04

Termination of Exchange Fund

 

 

 

 

Section 2.05

No Liability

 

 

 

 

Section 2.06

Lost Certificates

 

 

 

 

Section 2.07

Withholding Rights

 

 

 

Article III

Representations and Warranties of the Company

 

 

 

Section 3.01

Organization, Standing, and Power

 

 

 

 

Section 3.02

Capitalization

 

 

 

 

Section 3.03

Authorization and Related Matters

 

 

 

 

Section 3.04

Fairness Opinion, Recommendation by the Special Committee and Approval by the
Company Board

 

 

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Section 3.05

SEC Reports; Financial Statements; No Undisclosed Liabilities

 

 

 

 

Section 3.06

Schedule 13E-3; Proxy Statement

 

 

 

 

Section 3.07

Absence of Certain Changes of Events

 

 

 

 

Section 3.08

Title to Property

 

 

 

 

Section 3.09

Compliance with Applicable Laws; Permits

 

 

 

 

Section 3.10

Intellectual Property

 

 

 

 

Section 3.11

Environmental Matters

 

 

 

 

Section 3.12

Employee Benefit Plans

 

 

 

 

Section 3.13

Litigation

 

 

 

 

Section 3.14

Labor Matters

 

 

 

 

Section 3.15

Tax Matters

 

 

 

 

Section 3.16

Brokers and Finders

 

 

 

Article IV

Representations and Warranties of Parent and Merger Sub

 

 

 

Section 4.01

Organization

 

 

 

 

Section 4.02

Authorization

 

 

 

 

Section 4.03

No Violations; Consents and Approvals

 

 

 

 

Section 4.04

Disclosure Documents; Proxy Statement

 

 

 

 

Section 4.05

Brokers and Finders

 

 

 

 

Section 4.06

Litigation

 

 

 

 

Section 4.07

Financing

 

 

 

 

Section 4.08

Share Ownership

 

 

 

 

Section 4.09

Not an Interested Shareholder

 

 

 

Article V

Certain Covenants and Agreements

 

 

 

Section 5.01

Conduct of Business

 

 

 

 

Section 5.02

Shareholder Meeting

 

 

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Section 5.03

Other Offers

 

 

 

 

Section 5.04

Announcement

 

 

 

 

Section 5.05

Notification of Certain Matters

 

 

 

 

Section 5.06

Access

 

 

 

 

Section 5.07

Reasonable Best Efforts

 

 

 

 

Section 5.08

Merger Sub Compliance

 

 

 

 

Section 5.09

Obligation of Parent

 

 

 

 

Section 5.10

Financing

 

 

 

 

Section 5.11

State Takeover Laws

 

 

 

 

Section 5.12

Further Assurances

 

 

 

 

Section 5.13

Indemnification and Insurance

 

 

 

 

Section 5.14

Advisor’s Fairness Opinion

 

 

 

Article VI

Conditions Precedent

 

 

 

Section 6.01

Conditions to Each Party’s Obligation to Effect the Merger

 

 

 

 

Section 6.02

Conditions to the Obligations of Parent and Merger Sub to Effect the Merger

 

 

 

 

Section 6.03

Conditions to the Obligations of the Company to Effect the Merger

 

 

 

Article VII

Termination, Amendment, and Waiver

 

 

 

Section 7.01

Termination

 

 

 

 

Section 7.02

Effect of Termination

 

 

 

 

Section 7.03

Amendment

 

 

 

 

Section 7.04

Waiver

 

 

 

Article VIII

Miscellaneous

 

 

 

Section 8.01

Nonsurvival of Representations and Warranties

 

 

 

 

Section 8.02

Expenses

 

 

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Section 8.03

Applicable Law

 

 

 

 

Section 8.04

Jurisdiction

 

 

 

 

Section 8.05

Notices

 

 

 

 

Section 8.06

Entire Agreement

 

 

 

 

Section 8.07

Assignment

 

 

 

 

Section 8.08

Headings; References

 

 

 

 

Section 8.09

Counterparts; Effectiveness

 

 

 

 

Section 8.10

No Third-Party Beneficiaries

 

 

 

 

Section 8.11

Severability; Enforcement

 

 

 

 

Section 8.12

Special Enforcement

 

 

 

 

Section 8.13

Certain Definitions

 

 

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AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT AND PLAN OF MERGER dated as of July 8, 2004 (this “Agreement”) by
and among Hako-Werke International GmbH, a limited liability entity organized
under the laws of Germany (“Parent”), Minuteman International, Inc., an Illinois
corporation (the “Company”), and MMAN Acquisition Corp., an Illinois corporation
and a wholly owned Subsidiary of Parent (“Merger Sub”).

 

WHEREAS, Parent beneficially owns approximately 68% of the common stock, no par
value per share, of the Company (the “Company Common Stock”);

 

WHEREAS, Parent has proposed to acquire beneficial ownership of all of the
issued and outstanding shares of the Company Common Stock not beneficially owned
by Parent (the “Shares”);

 

WHEREAS, the Board of Directors of Parent, the sole shareholder of Merger Sub,
has approved and adopted this Agreement and the transactions contemplated
hereby, including the Merger (as defined below in Section 1.01), subject to the
terms and conditions set forth in this Agreement;

 

WHEREAS, the Board of Directors of the Company (the “Company Board”), based in
part upon the recommendation of a committee comprised of two independent members
of the Company Board (the “Special Committee”), has approved this Agreement and
the transactions contemplated hereby, including the Merger, the consideration to
be paid for each Share in the Merger, and certain other matters, in accordance
with the Business Corporation Act of 1983, as amended, of the State of Illinois
(the “IBCA”), and directed that this Agreement and the Merger be submitted to a
vote at a meeting of the Company’s shareholders;

 

WHEREAS, the parties hereto desire to make certain representations, warranties,
covenants, and agreements in connection with the Merger and also to prescribe
various conditions to the Merger as set forth in this Agreement; and

 

WHEREAS, Parent agrees, pursuant to the terms below, to cause to be voted the
shares of Company Common Stock beneficially owned by it in favor of the adoption
of this Agreement and the Merger at any meeting of the Company shareholders
called for the purpose of adopting this Agreement and approving the Merger.

 

NOW, THEREFORE, in consideration of the foregoing, and of the respective
representations, warranties, and agreements contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

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ARTICLE I

THE MERGER

 

SECTION 1.01  THE MERGER.

 

At the Effective Time (as defined below in Section 1.02), upon the terms and
subject to the conditions in this Agreement and in accordance with the IBCA,
Merger Sub shall be merged with and into the Company (the “Merger”), the
separate existence of Merger Sub shall cease and the Company shall continue
under Illinois law as the surviving corporation (the “Surviving Corporation”). 
The Merger shall have the effects as provided by the IBCA and other applicable
Law (as defined below in Section 8.13).

 

SECTION 1.02  EFFECTIVE TIME.

 

On the Closing Date (as defined below in Section 1.03), the parties shall file
with the Secretary of State of the State of Illinois, articles of merger (the
“Articles of Merger”) executed in accordance with the relevant provisions of the
IBCA and shall make all other filings or recordings and take all other actions
required under the IBCA in connection therewith.  The Merger shall become
effective at such time as the Articles of Merger are duly filed with the
Secretary of State of the State of Illinois or at such subsequent date and time
as is permissible under the IBCA and as Parent and the Company shall agree and
as specified in the Articles of Merger (the time the Merger becomes effective
being the “Effective Time”).

 

SECTION 1.03  CLOSING.

 

Unless this Agreement shall have been terminated in accordance with
Section 7.01, the closing of the Merger (the “Closing”) will take place at the
offices of Jenner & Block LLP, One IBM Plaza, Chicago, Illinois, as promptly as
practicable following (and in any event within two Business Days following) the
satisfaction (or waiver in accordance with this Agreement) of the conditions
provided in Article VI, or at such other date and place as the Company and
Parent shall agree (the “Closing Date”).

 

SECTION 1.04  EFFECTS OF THE MERGER.

 

At and after the Effective Time, the Merger will have the effects set forth
herein and in the applicable provisions of the IBCA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, and powers of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities, and duties of the
Company and Merger Sub shall become the debts, liabilities, and duties of the
Surviving Corporation.

 

SECTION 1.05  ARTICLES OF INCORPORATION; BYLAWS; OFFICERS AND DIRECTORS.

 

Pursuant to the Merger:

 

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(a)           the Articles of Incorporation and Bylaws of the Company as in
effect immediately prior to the Effective Time shall be the Articles of
Incorporation and Bylaws of the Surviving Corporation from and after the
Effective Time until thereafter changed or amended as provided therein and in
accordance with applicable Law;

 

(b)           the directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation from and after the
Effective Time and until the earlier of their death, resignation, or removal or
until their respective successors are duly elected or appointed and qualified;
and

 

(c)           the officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation until the earlier of
their death, resignation, or removal or until their respective successors are
duly elected or appointed and qualified.

 

SECTION 1.06  EFFECT OF THE MERGER ON CAPITAL STOCK OF THE COMPANY AND MERGER
SUB.

 

As of the Effective Time, by virtue of the Merger and without any action on the
part of the Company, Parent, Merger Sub, or the holders of any shares of the
capital stock of Merger Sub or the Company:

 

(a)           Conversion of Capital Stock of Merger Sub.  Each share of common
stock of Merger Sub, par value $.01 per share, that is issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
fully paid and nonassessable share of common stock, no par value per share, of
the Surviving Corporation.

 

(b)           Conversion of Capital Stock of the Company.  Subject to Sections
1.06(c) and 1.07, each Share that is issued and outstanding immediately prior to
the Effective Time shall be converted into and become a right to receive $13.75
in cash, without interest (the “Merger Consideration”), and shall automatically
be canceled and retired and shall cease to exist.  Each holder of a certificate
which immediately prior to the Effective Time represented any such Shares shall
cease to have any rights with respect to such Shares, except the right to
receive the Merger Consideration allocable to such Shares upon surrender of such
certificate in accordance with Section 2.02.

 

(c)           Cancellation of Treasury Stock and Parent-Owned Stock.  Any shares
of the Company Common Stock that are owned immediately prior to the Effective
Time by the Company as treasury stock and each share of Company Common Stock
owned by Parent, Merger Sub, or any other wholly owned Subsidiary of Parent,
shall automatically be canceled and retired and shall cease to exist, and no
consideration shall be payable or delivered in exchange for such shares.  Each
holder of a certificate representing any such shares shall cease to have any
rights with respect to such shares.

 

SECTION 1.07  DISSENTING SHARES.

 

Notwithstanding anything in this Agreement to the contrary, including, without
limitation, Section 1.06(b), Shares issued and outstanding immediately prior to
the Effective Time and that are held by a shareholder who has properly exercised
dissenter’s rights thereto, in

 

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accordance with Section 5/11.70 of the IBCA (“Dissenting Shares”), shall not by
virtue of the Merger be converted into or represent a right to receive the
Merger Consideration, unless such holder fails to perfect or withdraws or
otherwise loses such holder’s right to dissent, if any.  With respect to any
Dissenting Shares, a dissenting shareholder shall have solely the appraisal
rights provided under Section 5/11.70 of the IBCA, provided such dissenting
shareholder complies with the provisions thereof.  If, after the Effective Time,
such holder fails to perfect or withdraws or loses any such right to dissent,
each such Share of such holder shall be treated as a Share that had been
converted as of the Effective Time into the right to receive the Merger
Consideration, without interest, in accordance with Section 1.06(b).  The
Company shall give Parent:

 

(a)           prompt notice of any demands for appraisal of any Shares received
by the Company and any withdrawals of such demands; and

 

(b)           the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands.  The Company shall not, without
the prior written consent of Parent, make any payment with respect to, or
settle, offer to settle, or otherwise negotiate, any such demands.

 

ARTICLE II

EXCHANGE OF CERTIFICATES

 

SECTION 2.01  EXCHANGE AGENT.

 

Prior to the mailing of the Proxy Statement (as defined below in Section 3.03),
Merger Sub shall, with the Company’s prior approval, which approval will not be
unreasonably withheld or delayed, appoint an exchange agent (the “Exchange
Agent”) for the payment of the Merger Consideration for the holders of the
Shares and enter into a customary form of exchange agent agreement with the
Exchange Agent, the terms and conditions of which shall be reasonably
satisfactory to Parent and the Company.  As of the Effective Time, Parent shall
have deposited with the Exchange Agent, for the benefit of the holders of
outstanding Shares, the aggregate amount of cash payable pursuant to
Section 1.06(b) hereof (the “Aggregate Merger Consideration”), upon exchange of
such Shares in accordance with Section 2.02 (the “Exchange Fund”).

 

SECTION 2.02  EXCHANGE PROCEDURES.

 

Promptly after the Effective Time (but no later than three (3) Business Days
therefrom), the Surviving Corporation shall mail or cause to be mailed to each
holder of record of a certificate or certificates that immediately prior to the
Effective Time represented outstanding Shares (a “Certificate” or
“Certificates”) that were converted by virtue of the Merger into the right to
receive cash pursuant to Section 1.06(b) (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in customary form and have such other provisions as the
Surviving Corporation and Exchange Agent may reasonably specify), and
(ii) instructions for use in effecting the surrender of the Certificates, in
exchange for the Merger Consideration.  Upon surrender to the Exchange Agent of
a Certificate or Certificates, together with a duly executed letter of
transmittal and any other documents reasonably required by the

 

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Exchange Agent, and acceptance thereof by the Exchange Agent, the holder thereof
shall be entitled to an amount of cash equal to the Merger Consideration
(without interest) multiplied by the number of Shares previously represented by
such Certificate or Certificates surrendered less any required withholding of
any amounts therefrom in accordance with Section 2.07.  The Exchange Agent shall
accept such Certificates and documents upon compliance with such customary and
reasonable terms and conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange practices.  After
the Effective Time, there shall be no further transfer on the records of the
Company or its transfer agent of Certificates and if such Certificates are
presented to the Company for transfer, they shall be canceled against delivery
of the Merger Consideration in cash (without interest) allocable to the Shares
previously represented by such Certificate or Certificates to the record holder.
 If any Merger Consideration is to be remitted to a name other than that in
which the Certificate surrendered for exchange is registered, it shall be a
condition of such exchange that the Certificate so surrendered shall be properly
endorsed, with signature guaranteed, or otherwise in proper form for transfer
and that the person requesting such exchange shall pay to the Company or its
transfer agent any transfer or other taxes required by reason of the payment of
the Merger Consideration to a name other than that of the registered holder of
the Certificate surrendered, or establish to the satisfaction of the Company or
its transfer agent that the tax has been paid or is not applicable.  Until
surrendered as contemplated by this Section 2.02, and except as contemplated in
Section 1.07, each Certificate previously representing Shares shall be deemed at
any time after the Effective Time to represent only the right to receive upon
surrender the Merger Consideration allocable to the Shares previously
represented by such Certificates as contemplated by Section 1.06(b).  No
interest will be paid or will accrue on any amount payable as Merger
Consideration.

 

SECTION 2.03  NO FURTHER OWNERSHIP RIGHTS IN SHARES.

 

The Merger Consideration paid upon the surrender for exchange of Certificates in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the Shares previously
represented by such Certificates.

 

SECTION 2.04  TERMINATION OF EXCHANGE FUND.

 

Any portion of the Exchange Fund (including any interest and other income
received by the Exchange Agent in respect of all such funds) that remains
undistributed to the holders of the Certificates for twelve (12) months after
the Effective Time shall be delivered to the Surviving Corporation, upon demand,
and any holders of Shares prior to the Merger who have not theretofore complied
with this Article II shall thereafter look only to the Surviving Corporation and
only as general creditors thereof for payment of their claim for the Merger
Consideration to which they may be entitled.

 

SECTION 2.05  NO LIABILITY.

 

No party to this Agreement shall be liable to any Person (as defined below in
this Section 2.05), including, without limitation, any holder of Certificates,
in respect of any amount from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat, or similar Law.  The
term “Person” means any individual, corporation,

 

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partnership, limited liability company, trust, or unincorporated organization or
a government or any agency or political subdivision thereof.

 

SECTION 2.06  LOST CERTIFICATES.

 

In the event any Certificate or Certificates shall have been lost, stolen, or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate or Certificates to be lost, stolen, or destroyed, the Exchange
Agent will issue in exchange for such lost, stolen, or destroyed Certificate the
Merger Consideration payable in respect thereof as determined in accordance with
Section 2.02, provided that the Person to whom the Merger Consideration is paid
shall, as a condition precedent to payment, deliver a bond to Parent in a form
and amount reasonably satisfactory to Parent as indemnity against any claim that
may be made against Parent or the Company with respect to the Certificate
claimed to have been lost, stolen, or destroyed.

 

SECTION 2.07  WITHHOLDING RIGHTS.

 

The Surviving Corporation or the Exchange Agent, as applicable, shall be
entitled to deduct and withhold from the Merger Consideration otherwise payable
pursuant to this Agreement to any holder of Shares such amounts as the Surviving
Corporation or the Exchange Agent, as the case may be, may be required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the “Code”), or any other applicable provision
of tax Law.  To the extent withheld by the Surviving Corporation or the Exchange
Agent, such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of Shares in respect of which such deduction
and withholding was made.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as set forth in the disclosure schedules provided by the Company to
Parent and Merger Sub contemporaneously with the execution and delivery of this
Agreement by the Company (the “Disclosure Schedules”), the Company represents
and warrants to Parent and Merger Sub as follows:

 

SECTION 3.01  ORGANIZATION, STANDING, AND POWER.

 

Each of the Company and its Subsidiaries has been duly organized and is validly
existing and in good standing under the Laws of its respective jurisdiction of
incorporation or organization and has the corporate power and authority to carry
on its business as presently being conducted and to own, operate, and lease its
properties.  Each of the Company and its Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, except where the failure to be so
qualified or licensed, either individually or in the aggregate, has not had, and
would not reasonably be expected to have, a Material Adverse Effect (as defined
below in Section 8.13).  The Company has made available to the Parent copies of
the organizational documents of each of the Company and its Subsidiaries that
are true, complete, and correct copies of such documents.  All of such

 

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organizational documents are in full force and effect.  None of the Company or
any of its Subsidiaries is in violation of any of the provisions of its
organizational documents.  The Subsidiaries set forth in the SEC Reports
constitute all of the Company’s Subsidiaries.

 

SECTION 3.02  CAPITALIZATION.

 

(a)           The authorized capital stock of the Company consists of 10,000,000
shares of the Company Common Stock, of which 3,586,068 shares are issued and
outstanding as of the date hereof.

 

(b)           All issued and outstanding shares of capital stock or other
ownership interests of the Company and its Subsidiaries are duly authorized,
validly issued, fully paid, and nonassessable, and no class of capital stock or
ownership interest is entitled to preemptive rights.

 

(c)           (i) No bonds, notes, debentures, or other indebtedness of the
Company having the right to vote on any matters on which shareholders may vote
are issued and outstanding, (ii) there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements, or undertakings of any
kind to which the Company is a party or by which the Company is bound obligating
the Company to issue, deliver, or sell, or cause to be issued, delivered, or
sold, additional shares of capital stock or other voting securities of the
Company or obligating the Company to issue, grant, extend, or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement,
or undertaking, and (iii) there are no outstanding obligations of the Company to
repurchase, redeem, or otherwise acquire any shares of capital stock of the
Company.

 

(d)           All of the issued and outstanding shares of capital stock or other
ownership interests of each of the Company’s Subsidiaries are owned directly or
indirectly by the Company and are owned free and clear of any liens, security
interests, pledges, claims, encumbrances, restrictions, preemptive rights, or
any other claims of any third party (“Liens”).  There are no outstanding
options, warrants, or other rights of any kind to acquire any additional shares
of capital stock or other ownership interests of any of the Company’s
Subsidiaries or securities convertible into or exchangeable for, or that
otherwise confer on the holder thereof any right to acquire, any such additional
shares or ownership interests, nor is the Company or any Subsidiary of the
Company committed to issue any such option, warrant, right, or security.  There
are no outstanding obligations of the Company or any Subsidiary to repurchase,
redeem, or otherwise acquire any shares of capital stock or other ownership
interests of any of the Company’s Subsidiaries.

 

SECTION 3.03  AUTHORIZATION AND RELATED MATTERS.

 

(a)           The Company has all requisite corporate power and authority to
enter into this Agreement and, subject to the approval of the Merger by the
shareholders of the Company in accordance with the IBCA, to carry out its
obligations under this Agreement and to consummate the transactions contemplated
by this Agreement.  The execution, delivery, and performance by the Company of
this Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all requisite corporate action
on the part of the Company (including the approval of at least two-thirds of the
disinterested directors, as

 

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defined in Section 5/7.85 of the IBCA, of the Company), other than the approval
of this Agreement and the Merger by the shareholders of the Company.  This
Agreement has been duly executed and delivered by the Company and, assuming the
due authorization, execution, and delivery hereof by Parent and Merger Sub,
constitutes the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, or similar Laws
affecting creditors’ rights generally or by general equitable principles
(regardless of whether enforceability is considered in a proceeding in equity or
at law).

 

(b)           The affirmative votes of at least two-thirds of the votes of the
outstanding shares of Company Common Stock (the “Required Shareholder Vote”) in
favor of the approval of this Agreement and the Merger is the only vote of the
holders of any class or series of the Company’s capital stock necessary to
approve this Agreement, the Merger, and the other transactions contemplated
hereby.

 

(c)           The execution and delivery of this Agreement by the Company,
compliance with the provisions of this Agreement by the Company, and the
consummation of the Merger and the other transactions contemplated by this
Agreement 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 or acceleration of any obligation or to loss of any
material rights under, or result in the acceleration or trigger of any payment,
time of payment, vesting, or increase in the amount of any compensation or
benefit payable pursuant to, or result in the creation of any Lien upon any of
the properties or assets of the Company or any of its Subsidiaries under,
(i) the organizational documents of the Company or any of its Subsidiaries,
(ii) any contract, permit, license, loan or credit agreement, note, bond,
mortgage, indenture, lease or other property agreement, partnership or joint
venture agreement, or other legally binding agreement, whether oral or written
(a “Contract”), applicable to the Company or any of its Subsidiaries or their
respective properties or assets or (iii) subject to the filings with the
Governmental Entities (as defined below in this Section 3.03(c)) and other
matters referred to in the following sentence and the approval of this Agreement
and the Merger by the shareholders of the Company, any judgment, order, decree,
or Law applicable to the Company or any of its Subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, violations, defaults, rights or Liens that, individually or in
the aggregate, have not had, and would not reasonably be expected to have, a
Material Adverse Effect.  No consent, approval, order, or authorization of, or
registration or filing with, any Federal, state, or local government or any
court, administrative agency, or commission or other governmental authority or
agency, domestic or foreign (any of the foregoing, a “Governmental Entity”) is
required by or with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated by this
Agreement, except for (i) the filing with the Securities and Exchange Commission
(“SEC”) of (A) a proxy statement for the Shareholder Meeting (as defined below
in Section 5.02) (such proxy statement, including any preliminary version
thereof, in either case as amended, modified, or supplemented from time to time,
the “Proxy Statement”), (B) a Rule 13e-3 Transaction Statement on Schedule 13E-3
(as amended, modified, or supplemented from time to time, the “Schedule 13E-3”)
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
(C) such reports under Section 12 or 13(a) of the Exchange Act, as may be
required in connection with this Agreement and the transactions contemplated by
this

 

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Agreement; (ii) the filing of the Articles of Merger with the Illinois Secretary
of State and appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business and such filings, if any, with
any Governmental Entities to satisfy the applicable requirements of state
securities or “blue sky” Laws; (iii) notifications to the Nasdaq Stock Market;
(iv) those consents, approvals, orders, or authorizations or registrations or
filings that may be required solely by reason of Parent’s or Merger Sub’s (as
opposed to any other third party’s) participation in the Merger or the other
transactions contemplated by this Agreement; and (v) those consents, approvals,
orders, or authorizations or registrations or filings that, if not obtained or
made, individually or in the aggregate, have not had, and would not reasonably
be expected to have, a Material Adverse Effect.

 

(d)           The Company has heretofore provided to Parent and Merger Sub
copies of all Contracts that provide for payments or the acceleration of
benefits with respect to any “change of control” or other ownership change with
respect to the Company or any of its Subsidiaries that would be triggered by the
transactions contemplated by this Agreement.

 

SECTION 3.04  FAIRNESS OPINION, RECOMMENDATION BY THE SPECIAL COMMITTEE AND
APPROVAL BY THE COMPANY BOARD.

 

(a)           On or prior to the date hereof, the Special Committee:

 

(i)            determined that this Agreement, the Merger and the other
transactions contemplated hereby, taken together, are advisable, fair to, and in
the best interests of the shareholders (other than Parent, Merger Sub, or any
wholly owned Subsidiary of either of them) of the Company (the “Public
Shareholders”); and

 

(ii)           voted to recommend to the Company Board that the Company Board
(1) approve and authorize this Agreement, the Merger, and the other transactions
contemplated by this Agreement and (2) recommend that the Public Shareholders
vote in favor of the approval and adoption of this Agreement and the Merger.

 

The Special Committee has received the opinion (the “Fairness Opinion”), dated
as of July 7, 2004, of Houlihan Lokey Howard & Zukin Financial Advisors, Inc.
(“Advisor”) to the effect that based on, and subject to the various assumptions
and qualifications set forth in, such Fairness Opinion, as of the date of such
Fairness Opinion, the consideration to be received by the Public Shareholders in
the Merger is fair to such shareholders from a financial point of view.

 

(b)           On or prior to the date hereof, the Company Board, based in part
on the recommendation of the Special Committee:

 

(i)            determined that this Agreement, the Merger, and the other
transactions contemplated hereby, taken together, are advisable, fair to, and in
the best interests of the Public Shareholders;

 

(ii)           approved and authorized this Agreement, the Merger, and the other
transactions contemplated by this Agreement, and recommended that the Public
Shareholders vote in favor of the approval and adoption of this Agreement and
the Merger; and

 

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(iii)          approved, for purposes of Section 5/11.75 of the IBCA, to the
extent applicable, the formation and capitalization of Merger Sub in connection
with the transactions contemplated by this Agreement.

 

SECTION 3.05  SEC REPORTS; FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES.

 

(a)           The Company has filed all reports and schedules required to be
filed with the SEC since January 1, 2001 (collectively, the “SEC Reports”). 
Except for SEC Reports that were amended following their initial filing (and
then only with respect to the portion of such SEC Reports that were so amended),
none of the SEC Reports, nor any amendments thereto, as of their respective
report dates, or in the case of amendments, dates of amendment, contained any
untrue statement of material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.  Each of such
SEC Reports, as so amended, complied as to form as of their respective report
dates, or in the case of amendments, dates of amendment, in all material
respects with the Exchange Act and the rules and regulations promulgated
thereunder.  None of the Company’s Subsidiaries is required to file any forms,
reports, or other documents with the SEC or any other comparable Governmental
Entity, or any securities exchange.

 

(b)           The financial statements (including the related notes) of the
Company and its Subsidiaries included in the SEC Reports, as amended through the
date of this Agreement (including, in each case, where applicable, balance
sheets, statements of operations, and statements of cash flows) (collectively,
the “Company Financial Statements”):  (i) complied as to form in all material
respects with the accounting requirements and the published rules and
regulations of the SEC applicable at the time such SEC Reports were filed with
the SEC; (ii) were prepared in accordance with United States generally accepted
accounting principles (“GAAP”) (except, in the case of unaudited statements, as
permitted by Form 10-Q), applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto); (iii) are consistent
with the books and records of the Company in all material respects; (iv) fairly
present in all material respects the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal and recurring year-end
audit adjustments that are immaterial in amount); and (v) disclose all
liabilities of the Company, whether absolute, contingent, accrued, or otherwise,
existing as of the date thereof that are of a nature required to be reflected in
financial statements prepared in accordance with GAAP, except for liabilities
that, individually or in the aggregate, have not had, and would not reasonably
be expected to have, a Material Adverse Effect.

 

(c)           Neither the Company nor any of its Subsidiaries has any
liabilities (absolute, accrued, contingent, or otherwise), except liabilities
(i) adequately provided for in the balance sheet included in the Company’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 (the “Most
Recent Balance Sheet”), (ii) incurred in the ordinary course of business and not
required under GAAP to be reflected in the Most Recent Balance Sheet, (iii)
incurred since the date of the Most Recent Balance Sheet in the ordinary course
of business consistent with past practice, (iv) incurred in connection with this
Agreement, or (v) that, individually or in the

 

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aggregate, have not had, and would not reasonably be expected to have, a
Material Adverse Effect.

 

SECTION 3.06  SCHEDULE 13E-3; PROXY STATEMENT.

 

The Proxy Statement and the Schedule 13E-3 will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder.  None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i) the
Proxy Statement, at the date such Proxy Statement is first mailed to the
Company’s shareholders or at the time of the Shareholder Meeting, or (ii) the
Schedule 13E-3, at the time of filing with the SEC (and at any time such Proxy
Statement or Schedule 13E-3 is amended or supplemented), will contain any untrue
statement of a material fact or omit 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 are made, not misleading.  Notwithstanding the
foregoing provisions of this Section 3.06, no representation or warranty is made
by the Company with respect to statements made or incorporated by reference in
the Proxy Statement or the Schedule 13E-3 upon the basis of information supplied
in writing by Parent or Merger Sub or any of their representatives specifically
for inclusion or incorporation by reference therein.

 

SECTION 3.07  ABSENCE OF CERTAIN CHANGES OF EVENTS.

 

Except as disclosed in the SEC Reports, since December 31, 2003, each of the
Company and each Subsidiary of the Company has conducted business only in the
ordinary course of such business and neither the Company nor any Subsidiary of
the Company has:  (i) suffered, and would not reasonably be expected to suffer,
a Material Adverse Effect, or suffered any material casualty loss to its assets
(regardless of whether such assets are insured), except for losses that,
individually or in the aggregate, have not had, and would not reasonably be
expected to have, a Material Adverse Effect; (ii) incurred any material
liabilities or obligations, except in the ordinary course of business consistent
with past practices; (iii) permitted or allowed any assets to be mortgaged,
pledged, or subjected to any Lien, except for Liens for taxes not yet due and
payable and Liens that, individually or in the aggregate, have not had, and
would not reasonably be expected to have, a Material Adverse Effect;
(iv) written down the value of any inventory, contract, or other intangible
asset, or written off as uncollectible any notes or accounts receivable or any
portion thereof, except for write-downs and write-offs in the ordinary course of
business, consistent with past practice, or cancelled any other debts or claims,
or waived any rights of substantial value, except in any such case in the
ordinary course of business and consistent with past practice; (v) sold,
licensed, or transferred or agreed to sell, license, or transfer, any of its
material assets, except in the ordinary course of business and consistent with
past practice; (vi) received written notice of any pending or threatened adverse
claim with respect to, or an alleged infringement of, proprietary material,
whether such claim or infringement is based on trademark, copyright, patent,
license, trade secret, contract, or other restrictions on the use or disclosure
of proprietary materials; (vii) incurred obligations to refund money to
customers, except in the ordinary course of business, and that, individually and
in the aggregate, have not had, and would not reasonably be expected to have, a
Material Adverse Effect; (viii) made any capital expenditures or commitments,
any one of which is more than $500,000, for additions to property, plant, or
equipment without prior approval of the Company Board; (ix) made any

 

11

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material change in any method of accounting or accounting practice; (x)  entered
into any agreement, arrangement, or transaction with any of its officers or
directors (other than as described in clause (xii) below), or any business or
entity in which any officer or director of the Company, or any affiliate or
associate of any of such Persons has any direct or indirect interest other than
this Agreement; (xi) granted any severance or termination pay to any director or
officer of the Company or any Subsidiary, or entered into any employment,
deferred compensation or other similar agreement (or any amendment to any such
existing agreement) with any director or officer of the Company or any
Subsidiary; (xii) increased the compensation, bonus, or other benefits payable
to directors (other than any compensation that may become payable to the Special
Committee members as a result of their service as members of the Special
Committee), officers, or employees of the Company, other than in the ordinary
course of business consistent with past practice; (xiii) received notice of any
labor dispute, other than routine individual grievances; or (xiv) agreed to take
any action described in this Section 3.07.

 

SECTION 3.08  TITLE TO PROPERTY.

 

The Company and its Subsidiaries have good and marketable title to all of their
respective assets, including the assets reflected on the Most Recent Balance
Sheet and all of the assets thereafter acquired by them (except to the extent
that such assets have thereafter been disposed of for fair value in the ordinary
course of business), free and clear of Liens except for (i) Liens for taxes not
yet due and payable, (ii) Liens that do not materially detract from the value or
interfere with the present use of the asset affected thereby, and (iii) Liens
that, individually or in the aggregate, have not had, and would not reasonably
be expected to have, a Material Adverse Effect.

 

SECTION 3.09  COMPLIANCE WITH APPLICABLE LAWS; PERMITS..

 

(a)           Except as disclosed in the SEC Reports, the businesses of the
Company and its Subsidiaries are not being conducted in violation of any Law,
order, judgment, or decree of any Governmental Entity, except for possible
violations that, individually or in the aggregate, have not had, and would not
reasonably be expected to have, a Material Adverse Effect.  No investigation or
review by any Governmental Entity with respect to the Company or any of its
Subsidiaries is pending or, to the Company’s knowledge, threatened, nor has any
Governmental Entity indicated an intention to conduct the same, except for
investigations or reviews that, individually or in the aggregate, have not had,
and would not reasonably be expected to have, a Material Adverse Effect.

 

(b)           The Company and its Subsidiaries hold all permits, licenses,
easements, variances, exemptions, consents, certificates, orders, and approvals
from Governmental Entities that are necessary to the operation of the businesses
of the Company and its Subsidiaries as they are now being conducted
(collectively, the “Company Permits”), except where the failure to have such
Company Permits, individually or in the aggregate, has not had, and would not
reasonably be expected to have, a Material Adverse Effect.  The Company and its
Subsidiaries are in compliance with the terms of the Company Permits, except for
any failures to comply that, individually or in the aggregate, have not had, and
would not reasonably be expected to have, a Material Adverse Effect.

 

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SECTION 3.10  INTELLECTUAL PROPERTY.

 

The Company and its Subsidiaries own or possess adequate licenses or other
rights to use all Intellectual Property Rights (as defined below in this
Section 3.10) necessary to conduct the business now operated by them, except
where the failure to own or possess such licenses or rights has not had, and
would not reasonably be expected to have, a Material Adverse Effect.  To the
knowledge of the Company, the Intellectual Property Rights of the Company and
its Subsidiaries do not conflict with or infringe upon any Intellectual Property
Rights of others in any manner that has had, or would reasonably be expected to
have, a Material Adverse Effect.  For purposes of this Agreement, “Intellectual
Property Right” means any trademark, service mark, trade name, domain name, mask
work, copyright, patent, software license, other data base, invention, trade
secret, know-how (including any registrations or applications for registration
of any of the foregoing), or any other similar type of proprietary intellectual
property right.

 

SECTION 3.11  ENVIRONMENTAL MATTERS.

 

(a)           Except for such matters, individually or in the aggregate, as have
not had, and would not reasonably be expected to have, a Material Adverse Effect
or as set forth in SEC Reports:

 

(i)            no notice, notification, demand, request for information,
citation, summons, or order has been received, and no penalty has been assessed
under or in respect of any Environmental Law (as defined below in this
Section 3.11) with respect to any matter relating to the Company or any
Subsidiary; and to the knowledge of the Company or any Subsidiary, no complaint
has been filed, and no investigation, action, claim, suit, proceeding, or review
is pending or is threatened by any Governmental Entity or other Person under or
in respect of any Environmental Law with respect to any matter relating to the
Company or any Subsidiary;

 

(ii)           to the knowledge of the Company, there are no liabilities of or
relating to the Company or any Subsidiary of any kind whatsoever whether
accrued, contingent, absolute, determined, determinable, or otherwise, arising
under or relating to any Environmental Law, and there are no facts, conditions,
situations, or set of circumstances that could reasonably be expected to result
in or be the basis for any such liability;

 

(iii)          the Company and its Subsidiaries are and have been in compliance
with all Environmental Laws and have obtained and are in compliance with all
Environmental Permits (as defined below in this Section 3.11); and

 

(iv)          to the knowledge of the Company, no Hazardous Substance (as
defined below in this Section 3.11) has been discharged, disposed of, dumped,
injected, pumped, deposited, spilled, leaked, emitted, released or otherwise
come to be located at or below any property now or previously owned, leased, or
operated by the Company or any Subsidiary.

 

For purposes of this Section 3.11(a), the “Company” and “Subsidiary” shall
include any entity which is, in whole or in part, a predecessor of the Company
or any Subsidiary.

 

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(b)           Neither the Company nor any Subsidiary owns, leases, or operates
any real property, or conducts any operations at a facility, located in New
Jersey, Connecticut, Massachusetts, Indiana or California.

 

(d)           For purposes of this Section 3.11, the following terms shall have
the meanings set forth below:

 

(i)            “Environmental Laws” means any Law (including, without
limitation, common law), treaty, judicial decision, judgment, order, decree,
injunction, permit, or governmental restriction or requirement or any agreement
or contract with any Governmental Entity or other third party, relating to human
health and safety, the environment or to pollutants, contaminants, wastes or
chemicals, or any toxic, radioactive, ignitable, corrosive, reactive, or
otherwise Hazardous Substances, wastes, or materials.

 

(ii)           “Environmental Permits” means all permits, licenses, franchises,
certificates, approvals, and other similar authorizations of Governmental
Entities relating to or required by Environmental Laws and affecting the
business of the Company or any of its Subsidiaries as currently conducted.

 

(iii)          “Hazardous Substances” means any pollutant, contaminant, waste,
or chemical or any toxic, radioactive, ignitable, corrosive, reactive, or
otherwise hazardous substance, waste, or material, or any substance, waste, or
material having any constituent elements displaying of the foregoing
characteristics, that is regulated under Environmental Laws, including but not
limited to “Hazardous Substances” as that term is defined under 42 U.S.C.
Section 9601(14), and also including petroleum, its derivatives, by-products,
and other hydrocarbons.

 

SECTION 3.12  EMPLOYEE BENEFIT PLANS.

 

(a)           Except for such matters, individually or in the aggregate, as have
not had, and would not reasonably be expected to have, a Material Adverse Effect
or as set forth in SEC Reports:

 

(i)            Each Employee Benefit Plan (as defined below in this
Section 3.12) of the Company or any of its Subsidiaries is and at all times has
been in compliance with all applicable Laws (including ERISA (as defined below
in this Section 3.12)).

 

(ii)           Neither the Company nor any of its Subsidiaries is contributing
to, and has not contributed to, any multiemployer plan, as defined in ERISA
Section 3(37)(A).

 

(iii)          Any Employee Benefit Plan of the Company or any of its
Subsidiaries that has been terminated was done so in full compliance with all
applicable Laws, and there is no basis for further liability or obligation of
the Company or any of its Subsidiaries with respect to any such Employee Benefit
Plan.

 

(iv)          Except as required by Internal Revenue Code Section 4980B and
ERISA Section 602, no Employee Benefit Plan provides or has any obligation to
provide (or contribute to the cost of) post-retirement welfare benefits with
respect to current or former employees of the

 

14

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Company or any of its Subsidiaries, including without limitation,
post-retirement medical, dental, life insurance, severance, or any similar
benefit, whether provided on an insured or self-insured basis.

 

(v)           Each of the Company and its Subsidiaries has performed all of its
obligations under each Employee Benefit Plan, has made appropriate entries in
its financial records and statements for all obligations and liabilities under
each Employee Benefit Plan, and has complied with ERISA’s reporting and
disclosure requirements applicable to each Employee Benefit Plan.

 

(b)           For purposes of this Section 3.12, the following terms shall have
the meanings set forth below:

 

(i)            “Employee Benefit Plan” means any (i) nonqualified deferred
compensation or retirement plan or arrangement that is an Employee Pension
Benefit Plan, (ii) qualified defined contribution retirement plan or arrangement
that is an Employee Pension Benefit Plan, (iii) qualified defined benefit
retirement plan or arrangement that is an Employee Pension Benefit Plan
(including any multiemployer plan), or (iv) Employee Welfare Benefit Plan.

 

(ii)           “Employee Pension Benefit Plan” has the meaning set forth in
ERISA Section 3(2).

 

(iii)          “Employee Welfare Benefit Plan” has the meaning set forth in
ERISA Section 3(1).

 

(iv)          “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended.

 

SECTION 3.13  LITIGATION.

 

Except as set forth in the SEC Reports, there is no action, suit, investigation,
or proceeding (or any basis therefor) pending against, or to the knowledge of
the Company threatened against or affecting, the Company or any Subsidiary or
any of their respective properties before any court or arbitrator or any other
Governmental Entity that has had, or would reasonably be expect to have, a
Material Adverse Effect, or which as of the date hereof in any manner challenges
or seeks to prevent enjoin, alter or materially delay the Merger or any of the
other transactions contemplated hereby.

 

SECTION 3.14  LABOR MATTERS.

 

(a)           Except for such matters, individually or in the aggregate, as have
not had, and would not reasonably be expected to have, a Material Adverse
Effect, there are no (i) labor strikes, disputes, slowdowns, representation or
certification campaigns, or work stoppages or other concerted activities with
respect to employees of any of the Company or any of its Subsidiaries pending
or, to the knowledge of the Company, threatened against or affecting the Company
or any of its Subsidiaries, (ii) grievance or arbitration proceedings,
decisions, side letters, letter agreements, letters of understanding, or
settlement agreements arising out of

 

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collective-bargaining agreements to which the Company or any of its Subsidiaries
is a party, (iii) unfair labor practice complaints pending or, to the knowledge
of the Company, threatened against the Company or any of its Subsidiaries, or
(iv) activities or proceedings of any labor union or employee association to
organize any such employees.

 

(b)           Except for such matters, individually or in the aggregate, as have
not had, and would not reasonably be expected to have, a Material Adverse
Effect, the Company and its Subsidiaries are in compliance with all applicable
Laws respecting employment and employment practices, terms, and conditions of
employment and wages and hours.

 

(c)           Except for such matters, individually or in the aggregate, as have
not had, and would not reasonably be expected to have, a Material Adverse
Effect, there are no administrative matters pending with any Governmental Entity
regarding (i) violations or alleged violations of any wage and hour Law or any
Law with respect to discrimination on the basis of race, color, creed, national
origin, religion, or any other basis under such Law, (ii) any claimed violation
of Title VII of the 1964 Civil Rights Act, as amended, (iii) any allegation or
claim arising out of Executive Order 11246 or any other applicable order
relating to governmental contractors or state contractors, or (iv) any violation
or alleged violation of the Age Discrimination and Employment Act, as amended,
or any other applicable Laws with respect to wages, hours, employment practices,
and terms and conditions of employment.

 

SECTION 3.15  TAX MATTERS.

 

(a)           Except for such matters, individually or in the aggregate, as have
not had, and would not reasonably be expected to have, a Material Adverse
Effect:

 

(i)            all Tax (as defined below in this Section 3.15) returns,
statements, reports, and forms (including estimated Tax returns and reports and
information returns and reports) required to be filed with any Tax authority
with respect to any Tax period (or portion thereof) ending on or before the
Effective Time (a “Pre-Closing Tax Period”) by or on behalf of the Company or
any Subsidiary of the Company (collectively, the “Returns”), were filed when due
(including any applicable extension periods) in accordance with all applicable
Laws; and as of the time of filing, the Returns were true and complete in all
material respects;

 

(ii)           the Company and its Subsidiaries have timely paid, or withheld
and remitted to the appropriate Tax authority, all Taxes shown as due and
payable on the Returns that have been filed;

 

(iii)          the charges, accruals, and reserves for Taxes with respect to the
Company and any Subsidiary for any Pre-Closing Tax Period (including any
Pre-Closing Tax Period for which no Return has yet been filed) reflected on the
Most Recent Balance Sheet (excluding any provision for deferred income taxes)
are adequate to cover such Taxes as of the date of the Most Recent Balance
Sheet;

 

(iv)          there is no claim (including under any indemnification or
Tax-sharing agreement with a Person other than Parent (or an Affiliate of
Parent) and Company or any Subsidiary), audit, action, suit, proceeding, or
investigation now pending or threatened in writing

 

16

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against or in respect of any Tax or Tax Asset (as defined below in this
Section 3.15) of the Company or any Subsidiary;

 

(v)           there are no Liens for Taxes upon the assets of the Company or its
Subsidiaries except for Liens for current Taxes not yet due or being contested
in good faith in accordance with applicable procedures; and

 

(vi)          neither the Company nor any Subsidiary is currently under any
obligation to pay any amounts of the type described in clause (ii) or (iii) of
the definition of “Tax” below, regardless of whether such Tax is imposed on the
Company or any Subsidiary.

 

For purposes of this Section 3.15, the term “Tax Asset” shall include any net
operating loss, net capital loss, investment Tax credit, foreign Tax credit,
charitable deduction, or any other credit or Tax attribute that could be carried
forward or back to reduce Taxes.

 

(b)           For purposes of this Section 3.15, “Tax” means (i) any tax,
governmental fee, or other like assessment or charge of any kind whatsoever
(including, but not limited to, withholding on amounts paid to or by any
Person), together with any interest, penalty, addition to tax, or additional
amount imposed by any Governmental Entity responsible for the imposition of any
such tax (domestic or foreign), (ii) in the case of the Company or any of its
Subsidiaries, liability for the payment of any amount of the type described in
clause (i) as a result of being or having been before the Effective Time a
member of an affiliated, consolidated, combined, or unitary group (other than
such a group of which the Company or any of its Subsidiaries is the common
parent), or a party to any agreement or arrangement, as a result of which
liability of the Company or any Subsidiary to a taxing authority is determined
or taken into account with reference to the liability of any other Person (other
than Parent (or its Affiliates), the Company or any Subsidiary), and (iii)
liability of the Company or any Subsidiary for the payment of any amount as a
result of being party to any tax sharing agreement (other than with Parent (or
its Affiliates), the Company or any Subsidiary) or with respect to the payment
of any amount of the type described in clause (i) or (ii) as a result of any
existing express obligation (other than to Parent (or its Affiliates), the
Company or any Subsidiary) (including, but not limited to, an indemnification
obligation).

 

SECTION 3.16  BROKERS AND FINDERS.

 

Other than Advisor, the Company has not employed any broker, finder, advisor, or
intermediary in connection with the transactions contemplated by this Agreement
that would be entitled to a broker’s, finder’s, or similar fee or commission in
connection therewith or upon the consummation thereof.  The Company shall pay
any fees due to Advisor.

 

17

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB

 

Parent and Merger Sub jointly and severally represent and warrant to the Company
as follows:

 

SECTION 4.01  ORGANIZATION.

 

Parent is a limited liability entity duly formed, validly existing, and in good
standing under the Laws of Germany.  Merger Sub is a corporation duly
incorporated, validly existing, and in good standing under the Laws of the State
of Illinois.  Each of Parent and Merger Sub has all limited liability entity or
corporate, as applicable, power and authority to carry on its business as
presently being conducted and to own, operate and lease its properties.

 

SECTION 4.02  AUTHORIZATION.

 

Each of Parent and Merger Sub has all limited liability entity or corporate, as
applicable, power and authority to enter into this Agreement and to carry out
its respective obligations hereunder and to consummate the Merger and the other
transactions contemplated hereby.  The execution, delivery and performance by
Parent and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly authorized by
all requisite limited liability company or corporate, as applicable, action on
the part of Parent and Merger Sub, and no other limited liability entity or
corporate proceedings, as applicable, on the part of Parent or Merger Sub are
necessary to authorize the execution, delivery and performance by Parent and
Merger Sub of this Agreement and the consummation by Parent and Merger Sub of
the transactions contemplated hereby.  The Boards of Directors of each of Parent
and Merger Sub have approved this Agreement and the Merger.  This Agreement has
been duly executed and delivered by each of Parent and Merger Sub and, assuming
the due authorization, execution, and delivery hereof by the Company,
constitutes the valid and binding obligation of each of Parent and Merger Sub,
enforceable against each of Parent and Merger Sub in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, or similar Laws affecting creditors’ rights
generally or by general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law).

 

SECTION 4.03  NO VIOLATIONS; CONSENTS AND APPROVALS.

 

The execution and delivery of this Agreement by Parent and Merger Sub,
compliance with the provisions of this Agreement by Parent and Merger Sub, and
the consummation of the Merger and the other transactions contemplated by this
Agreement 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 or acceleration of any obligation or to loss of any
material rights under, or result in the acceleration or trigger of any payment,
time of payment, vesting or increase in the amount of any compensation or
benefit payable pursuant to, or result in the creation of any lien upon any of
the properties or assets of Parent or Merger Sub under, (i) the organizational
documents of Parent or Merger Sub, (ii) any Contract applicable to

 

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Parent or Merger Sub or their respective properties or assets, or (iii) subject
to the filings with Governmental Entities and other matters referred to in the
following sentence, and the approval of this Agreement and the Merger by the
shareholders of the Company, any judgment, order, decree, or Law applicable to
Parent or Merger Sub or their respective properties or assets, other than, in
the case of clauses (ii) and (iii), any such conflicts, violations, defaults,
rights, or Liens that individually or in the aggregate would not have a material
adverse effect on Parent and Merger Sub (considered as one entity) or their
ability to consummate the Merger and the other transactions contemplated by this
Agreement.  No consent, approval, order, or authorization of, or registration or
filing with, any Governmental Entity is required by or with respect to Parent or
Merger Sub in connection with the execution and delivery of this Agreement by
Parent or Merger Sub or the consummation by Parent or Merger Sub of the
transactions contemplated by this Agreement, except for (i) the filing with the
SEC of (A) the Schedule 13E-3 (including amendments or supplements thereto), and
(B) such reports under Section 12 or 13(a) of the Exchange Act, as may be
required in connection with this Agreement and the transactions contemplated by
this Agreement (including amendments or supplements thereto), (ii) the filing of
the Articles of Merger with the Illinois Secretary of State and appropriate
documents with the relevant authorities of other jurisdictions in which Parent
or Merger Sub is qualified to do business and such filings, if any, with any
Governmental Entities to satisfy the applicable requirements of state securities
or “blue sky” Laws, (iii) those consents, approvals, orders, or authorizations
of, or registrations or filings, that may be required solely by reason of the
Company’s (as opposed to any other third party’s) participation in the Merger
and the other transactions contemplated by this Agreement, and (iv) those
consents, approvals, orders, or authorizations of, or registrations or filings,
that, if not obtained or made, would not, individually or in the aggregate, have
a material adverse effect on Parent and Merger Sub (considered as one entity).

 

SECTION 4.04  DISCLOSURE DOCUMENTS; PROXY STATEMENT.

 

None of the information supplied or to be supplied by Parent or Merger Sub for
inclusion or incorporation by reference in (i) the Proxy Statement, at the date
such Proxy Statement is first mailed to the Company’s shareholders or at the
time of the Shareholder Meeting, or (ii) the Schedule 13E-3, at the time of
filing with the SEC (and at any time such Proxy Statement or Schedule 13E-3 is
amended or supplemented), will contain any untrue statement of a material fact
or omit to state a 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.  No representation is made by Parent or Merger
Sub with respect to any information supplied by the Company for inclusion in the
Schedule 13E-3, Proxy Statement, or other documents filed with the SEC or any
other Governmental Entity.

 

SECTION 4.05  BROKERS AND FINDERS.

 

Except for Marshall & Stevens Incorporated, neither Parent nor Merger Sub has
employed any broker, finder, advisor, or intermediary in connection with the
transactions contemplated by this Agreement that would be entitled to a
broker’s, finder’s, or similar fee or commission in connection therewith or upon
the consummation thereof.  Parent shall pay any fees due to Marshall & Stevens
Incorporated.

 

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SECTION 4.06  LITIGATION.

 

There is no action, suit, or proceeding pending or, to the knowledge of Parent
or Merger Sub, threatened against Parent or Merger Sub at law, in equity or
otherwise, in, before or by any court or other Governmental Entity that,
individually or in the aggregate, would reasonably be likely to have a material
adverse effect on the ability of Parent or Merger Sub to perform their
respective obligations under this Agreement.

 

SECTION 4.07  FINANCING.

 

Subject to the Company’s compliance with its covenants set forth in Section 5.10
and the satisfaction of the conditions to Parent’s and Merger Sub’s obligations
set forth in Sections 6.01 and 6.02, Parent will have available to it, at the
Effective Time, sufficient funds to (i) deposit in the Exchange Fund an amount
equal to the Aggregate Merger Consideration and (ii) pay the Expenses to be paid
by it.

 

SECTION 4.08  SHARE OWNERSHIP.

 

None of Parent, Merger Sub or any of their respective “affiliates” or
“associates” (as those terms are defined in Rule 12b-2 under the Exchange Act)
“beneficially owns” (as defined in Rule 13d-3 under the Exchange Act) any shares
of Company Common Stock other than 2,434,950 shares of Company Common Stock, as
reported in Parent’s Schedule 13G dated January 28, 2004.

 

SECTION 4.09  NOT AN “INTERESTED SHAREHOLDER”.

 

Neither Parent nor RZ-Service GmbH, the record owner of the shares of Company
Common Stock beneficially owned by Parent, is an “interested shareholder” for
purposes of Sections 5/7.85 or 5/11.75 of the IBCA.

 

ARTICLE V

CERTAIN COVENANTS AND AGREEMENTS

 

SECTION 5.01  CONDUCT OF BUSINESS.

 

From the date of this Agreement to the earlier of the Effective Time or the
termination of this Agreement, the Company covenants and agrees to do, and to
cause each of its Subsidiaries to do, except as otherwise expressly contemplated
by this Agreement or consented to in writing by Parent, the following:

 

(a)           Ordinary Course.  The Company and each of its Subsidiaries shall
operate the businesses conducted by them in the ordinary and usual course and
shall use their commercially reasonable best efforts to preserve intact their
present business organizations, keep available the services of their present
officers and key employees and preserve their relationships with material
customers and suppliers and others having business dealings with them to the end
that their goodwill and on-going businesses shall be unimpaired at the Effective
Time; provided, however, that no action by the Company or any of its
Subsidiaries shall be deemed to be in

 

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breach of this Section 5.01(a) with respect to matters specifically addressed by
any other provision of this Section 5.01 unless such action would constitute a
breach of one or more of such other provisions.

 

(b)           Accounting Principles; Liabilities.  The Company shall not, and
shall not permit any of its Subsidiaries to:

 

(i)            change any of the accounting principles or practices used by it,
except as may be required as a result of a change in Law or in generally
accepted accounting principles; or

 

(ii)           pay, discharge, or satisfy any claims, liabilities, or
obligations (absolute, accrued, asserted, or unasserted, contingent or
otherwise), other than the payment, discharge, or satisfaction in the ordinary
course of business and consistent with past practice.

 

(c)           Employee Matters; Executive Compensation.  Except for actions made
in the ordinary course of business consistent with past practice, the Company
shall not, and shall not permit any of its Subsidiaries to (i) increase the
compensation payable to or to become payable to its directors, officers,
employees, or consultants; (ii) pay any bonus, grant any severance or
termination pay to, or enter into or amend any employment or severance agreement
with, any director, officer, or other employee or consultant of the Company or
any of its Subsidiaries; (iii) establish, adopt, enter into, or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy, or arrangement for the benefit of any current or former directors,
officers, employees, or consultants; (iv) materially change any actuarial
assumption or other assumption used to calculate funding obligations with
respect to any pension or retirement plan; (v) change the manner in which
contributions to any such plan are made or the basis on which such contributions
are determined; or (vi) plan, announce, implement, or effect any reduction in
force, lay-off, early retirement program, severance program, or other program
concerning the termination of employees of the Company or any of its
Subsidiaries, except, in each case, as may be required by Law or contractual
commitments that are existing as of the date of this Agreement.

 

(d)           Other Business.  Except for such actions as may be required by
Law, the Company shall not, and shall not permit any of its Subsidiaries to,
take any action that will result in any of the representations and warranties of
the Company set forth in this Agreement becoming untrue or in any of the
conditions set forth in Article VI not being satisfied.

 

(e)           Dividends; Changes in Capital Stock.  The Company shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare, set aside or pay any dividends on or make any other distributions
(whether cash, stock, or property) in respect of any of its capital stock
(except for the Company’s regular quarterly dividend of $0.09 per share);
(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,
redeem, or otherwise acquire any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock.

 

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(f)            Issuance of Securities.  The Company shall not, and shall cause
its Subsidiaries not to, issue, sell, grant, pledge, or otherwise encumber, or
authorize or propose the issuance, grant, sale, or encumbrance of, any shares of
its capital stock of any class, any other voting securities, or any securities
convertible into or exercisable for, or any rights, warrants, or options to
acquire, any such shares, voting securities, or convertible securities, or
accelerate the vesting of, or the lapsing of restrictions with respect to, or
enter into any agreement with respect to any of the foregoing.

 

(g)           Organization Documents.  Except to the extent required to comply
with their respective obligations hereunder or as required by Law, the Company
and its Subsidiaries shall not amend or propose to amend their respective
organizational documents.

 

(h)           Extraordinary Transactions.  The Company shall not, and shall not
permit any of its Subsidiaries to, (i) merge, amalgamate, or consolidate with
any other Person, (ii) sell any of its assets (other than sales of assets in the
ordinary course of business consistent with past practice or the disposition of
obsolete or worthless assets), or (iii) acquire (by merger, consolidation, or
acquisition of stock or assets) any material property or assets (other than
inventory or equipment acquired in the ordinary course of business consistent
with past practice).

 

(i)            Indebtedness.  The Company shall not, and shall not permit any of
its Subsidiaries to, (i) incur any indebtedness for borrowed money, other than
pursuant to the Credit Facility (as defined below in Section 5.10), or guarantee
any such indebtedness of another Person or issue or sell any debt securities or
warrants or rights to acquire any debt securities of the Company or its
Subsidiaries; (ii) make any loans, advances, or capital contributions to, or
investments in, any other Person, other than by the Company or its Subsidiaries
to or in the Company or its Subsidiaries or routine advances to employees; or
(iii) pay, discharge, or satisfy any claims, liabilities, or obligations
(absolute, accrued, asserted, unasserted, contingent, or otherwise), other than
in the case of clauses (ii) or (iii) above, loans, advances, capital
contributions, investments, payments, discharges, or satisfactions entered into,
incurred or committed to in accordance with Section 5.01(m) below or otherwise
in the ordinary course of business consistent with past practice.

 

(j)            Certain Agreements.  The Company shall not, and shall not permit
any of its Subsidiaries to, enter into any agreement or arrangement that limits
or otherwise restricts the Company or any of its Subsidiaries or any of their
respective Affiliates or any successor thereto, or that could, after the
Closing, limit or restrict the Surviving Corporation or any of its Affiliates or
any successor thereto, from engaging or competing in any line of business or in
any geographic area, other than any such agreement or arrangement (i) entered
into in the ordinary course of business consistent with past practice and (ii)
terminable (including the limitations and restrictions thereunder) within 12
months or less.

 

(k)           Capital Expenditures.  The Company shall not, and shall not permit
any of its Subsidiaries to, make any capital expenditures or commitments, other
than in the ordinary course of business consistent with past practice or
pursuant to any contractual commitments that are existing as of the date of this
Agreement.

 

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(l)            Tax Matters.  The Company shall not, and shall not permit any of
its Subsidiaries to, make any material Tax election inconsistent with past
practice or settle or compromise any material federal, state, local, or foreign
Tax liability or agree to an extension of a statute of limitations.

 

(m)          Certain Liabilities.  The Company shall not, and shall not permit
any of its Subsidiaries to, enter into any compromise or settlement of, or take
any material action with respect to, any litigation, action, suit, claim,
proceeding or investigation other than the prosecution or defense thereof in the
ordinary course of business or the settlement thereof (provided that the
aggregate of all settlements by the Company during the period that the
provisions of this Section 5.01(m) are in effect shall not exceed $500,000).

 

(n)           Commitments.  The Company shall not, and shall not permit any of
its Subsidiaries to, commit or agree to take any of the actions prohibited by
this Section 5.01.

 

SECTION 5.02  SHAREHOLDER MEETING.

 

(a)           Except as otherwise provided in Section 5.03, the Company shall,
as soon as practicable following the date of this Agreement, duly call, give
notice of, convene, and hold a meeting of its shareholders (the “Shareholder
Meeting”) for the purpose of approving this Agreement and the Merger by the
Required Shareholder Vote.  Except as otherwise provided in Section 5.03, the
Company Board shall declare the advisability of this Agreement, the Merger and
the other transactions contemplated by this Agreement, and recommend to the
Company’s shareholders the approval of this Agreement and the Merger, shall
include such declaration and recommendation in the Proxy Statement, and shall
take all lawful and commercially reasonable action to solicit such approval and
to otherwise comply with all legal requirements applicable to the Shareholder
Meeting.

 

(b)           As soon as practicable following the date of this Agreement, the
Company, Merger Sub, and Parent shall jointly prepare, and the Company shall
file with the SEC, the Proxy Statement, in preliminary form.  Merger Sub and
Parent will cooperate with the Company in connection with the preparation and
filing with the SEC of the Proxy Statement, including, but not limited to,
furnishing the Company upon request with any and all information regarding
Merger Sub, Parent, or their respective Affiliates, the plans of such Persons
for the Surviving Company after the Effective Time, and all other matters and
information as may be required to be set forth therein under the Exchange Act or
the rules and regulations promulgated thereunder.  Prior to the filing of the
Proxy Statement, in preliminary form, the parties shall each approve (which
approval, with respect to any party, shall not be unreasonably withheld,
delayed, or conditioned) the form and content of the Proxy Statement.  The
Company shall use its reasonable best efforts, after consultation with the
Parent and the Merger Sub, (i) to respond to the comments of the SEC staff
concerning the Proxy Statement as promptly as practicable, and (ii) to cause the
final, definitive Proxy Statement to be filed with the SEC and mailed to the
Company’s shareholders not later than five (5) Business Days after receipt of
clearance from the SEC staff.  The Company shall pay the filing fees for the
Proxy Statement.  Merger Sub and Parent shall be given a reasonable opportunity
to review and comment upon all filings with the SEC and all mailings to the
Company’s shareholders in connection with the Merger and the other transactions
contemplated by this Agreement prior to the filing or mailing thereof.  Each of
the Company,

 

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Parent, and Merger Sub agree to promptly supplement, update, and correct any
information provided by such party for use in the Proxy Statement which becomes
incomplete, false, or misleading.  The Company shall cause the Fairness Opinion
of the Advisor to be included as an annex to the Proxy Statement.

 

(c)           Concurrently with the preparation and filing of the Proxy
Statement, the Company, Merger Sub, and Parent shall jointly prepare and file
with the SEC the Schedule 13E-3.  Each of the Company, Parent, and Merger Sub
shall promptly furnish to the other parties all information concerning such
party as may reasonably be requested in connection with the preparation of the
Schedule 13E-3.  Each of the Company, Parent, and Merger Sub shall promptly
supplement, update, and correct any information provided by such party for use
in the Schedule 13E-3 which becomes incomplete, false, or misleading.  The
Company shall cause the Fairness Opinion to be included as an exhibit to the
Schedule 13E-3.

 

(d)           Each party shall notify the other parties promptly of (i) the
receipt of any notices, comments, or other communications from the SEC or any
other Governmental Entity, and (ii) any requests by the SEC for amendments or
supplements to the Proxy Statement or the Schedule 13E-3 or for additional
information, and will promptly provide the other parties with copies of all
correspondence between such party or its representatives, on the one hand, and
the SEC or members of its staff, on the other hand, with respect to the Proxy
Statement or the Schedule 13E-3.

 

(e)           If, at any time prior to the Shareholder Meeting, any event should
occur relating to the Company or its Subsidiaries which should be set forth in
an amendment of, or a supplement to, the Proxy Statement or the Schedule 13E-3,
the Company will promptly inform Parent and Merger Sub.  If, at any time prior
to the Shareholder Meeting, any event should occur relating to Parent or Merger
Sub, which should be set forth in an amendment of, or a supplement to, the Proxy
Statement or the Schedule 13E-3, Parent and Merger Sub will promptly inform the
Company.  In any such case, the Company, with the cooperation of Parent and
Merger Sub shall, upon learning of such event, promptly prepare, file and, if
required, mail such amendment or supplement to the Company’s shareholders;
provided that, prior to such filing or mailing, the parties shall approve (which
approval, with respect to any party, shall not be unreasonably withheld,
delayed, or conditioned) the form and content of such amendment or supplement.

 

(f)            At the Shareholder Meeting (including any adjournment thereof),
Parent will, and will cause each of its Subsidiaries and Affiliates to, vote any
and all Company Common Stock owned by them in favor of the Merger and the
adoption of the Agreement.

 

SECTION 5.03  OTHER OFFERS.

 

(a)           Except as provided in Sections 5.03(c) and 5.03(d), from the date
of this Agreement to the earlier of the Effective Time or the termination of
this Agreement, the Company covenants and agrees that the Company shall not, nor
shall it authorize or permit any of its Subsidiaries or any officer, director,
employee, investment banker, attorney, or other advisor or representative of the
Company or any of its Subsidiaries (the “Company Representatives”) to, directly
or indirectly:

 

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(i)            solicit, initiate, or encourage the submission of, or approve or
recommend, or propose publicly to approve or recommend any Acquisition Proposal
(as defined below in this Section 5.03);

 

(ii)           enter into any agreement with respect to any Acquisition
Proposal; or

 

(iii)          solicit, initiate, participate in, or encourage any discussions
or negotiations regarding, or furnish to any Person (other than Parent or any of
its Affiliates or representatives) any information for the purpose of
facilitating the making of, or take any other action to facilitate any inquiries
or the making of, any proposal that constitutes, or may reasonably be expected
to lead to, any Acquisition Proposal.

 

Without limiting the foregoing, it is understood that any violation, of which
the Company or any of its Subsidiaries had prior knowledge, of the restrictions
set forth in the immediately preceding sentence by any Company Representative,
whether or not such Person is purporting to act on behalf of the Company or any
of its Subsidiaries or otherwise, shall be deemed to be a breach of this
Section 5.03 by the Company.

 

(b)           For purposes of this Agreement, “Acquisition Proposal” means any
proposal for a merger or other business combination involving the Company or any
proposal or offer to acquire in any manner, directly or indirectly, securities
representing more than 50% of the voting power of the Company or a significant
portion of the assets of the Company.

 

(c)           Notwithstanding the foregoing provisions of this Section 5.03, the
Company may, and may direct any Company Representative acting on behalf of the
Company Board or the Special Committee to, (i) engage in discussions or
negotiations regarding an Acquisition Proposal, (ii) furnish or provide
non-public information, or (iii) afford access to the properties, books,
records, and Company Representatives, with or to any Person that has made a bona
fide written Acquisition Proposal that has not been solicited, initiated, or
encouraged by the Company, its Subsidiaries, or any of the Company
Representatives in violation of this Section 5.03 and which the Special
Committee and the Company Board have each determined in good faith may
constitute a Superior Proposal (as defined below in this Section 5.03) from such
Person; provided, however, that, prior to taking any action described in any of
the foregoing clauses (i), (ii), or (iii), the Person making the Acquisition
Proposal has entered into a confidentiality agreement for the benefit of the
Company on customary terms satisfactory to the Special Committee and its
counsel.  The Company or the Special Committee, as applicable, shall promptly
notify Parent of the Company’s or the Special Committee’s, as applicable, first
receipt of any Acquisition Proposal (but in no event later than 48 hours after
the receipt thereof), and of the material terms and conditions thereof and, to
the extent not prohibited by such Acquisition Proposal, the identity of the
Person making any such Acquisition Proposal.  The Company or the Special
Committee, as applicable, shall further promptly notify or update Parent on the
status of discussions or negotiations (including the status of such Acquisition
Proposal or any amendments or proposed amendments thereto) between the Company
or the Special Committee, as applicable, and such Person.

 

(d)           Subject to Section 7.01 hereof, at any time prior to the approval
of the Merger and this Agreement by the shareholders of the Company,

 

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(i)            either the Company Board or the Special Committee may withdraw or
modify in a manner adverse to Parent and Merger Sub its approval and
recommendation of the Merger and this Agreement so long as the Company Board or
the Special Committee, as applicable, shall have determined in its good faith
judgment, after consultation with independent legal counsel, that its failure to
take such action is reasonably likely to be inconsistent with its fiduciary
duties under applicable Law, and/or

 

(ii)           the Company Board, upon the recommendation of the Special
Committee, may accept a Superior Proposal and cause the Company to enter into a
definitive agreement with respect to a Superior Proposal, provided that nothing
in this Section 5.03(d) will permit the Company to enter into a definitive
agreement for a Superior Proposal unless this Agreement has been terminated as
provided in Section 7.01 and all amounts required to be paid under Section 7.02
shall have been paid or provision for such payment shall have been made to the
reasonable satisfaction of Parent.

 

A “Superior Proposal” means an Acquisition Proposal which each of the Special
Committee and the Board of Directors determines in good faith, after
consultation with and giving due consideration to the advice of its legal and
financial advisors, (x) is reasonably capable of being completed, including a
determination that its financing, to the extent required, is then committed or
is reasonably likely to be obtained without material delay, and (y) would, if
consummated, result in a transaction more favorable to the Company’s
shareholders from a financial point of view than the Merger contemplated by this
Agreement.

 

(e)           The Company shall immediately cease and terminate, as of the date
hereof, all existing discussions or negotiations with any Person conducted
heretofore in respect of any Acquisition Proposal.

 

SECTION 5.04  ANNOUNCEMENT.

 

Neither the Company, on the one hand, nor Parent or Merger Sub, on the other
hand, shall issue any press release or otherwise make any public statement with
respect to this Agreement and the transactions contemplated hereby without the
prior consent of the other (which consent shall not be unreasonably withheld,
delayed, or conditioned); provided, however, that a party may, without the prior
consent of the other party, issue such press release or make such public
statement as may upon the advice of counsel be required by Law or the rules and
regulations of The Nasdaq Stock Market, if it has used its reasonable best
efforts to consult with the other party, and to provide the other party the
opportunity to review and comment upon such press release or public statement,
before issuing any such press release or making any such public statement.  The
parties agree that the initial press release(s) to be issued with respect to the
Merger shall be mutually agreed upon prior to the issuance thereof.

 

SECTION 5.05  NOTIFICATION OF CERTAIN MATTERS.

 

The Company shall give prompt notice to Parent, and Parent shall give prompt
notice to the Company, of:

 

(i)            the occurrence, or nonoccurrence, of any event the occurrence, or
nonoccurrence, of which would be reasonably likely to cause any representation
or warranty contained in this

 

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Agreement to be untrue or inaccurate in any material respect at or prior to the
Effective Time; and

 

(ii)           any material failure to comply with or satisfy any covenant,
condition, or agreement to be complied with or satisfied by it hereunder,
provided, however, that the delivery of any notice pursuant to this Section 5.05
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.

 

SECTION 5.06  ACCESS.

 

Between the date of this Agreement and the Effective Time or the earlier
termination of this Agreement, subject to the Company obtaining a
confidentiality agreement from Parent in form and substance reasonably
satisfactory to the Company, the Company shall (and shall cause each of its
Subsidiaries to) afford the officers, employees, accountants, counsel, financing
sources, and other representatives of Parent, full access during normal business
hours to all of its properties, books, contracts, commitments, and records and,
during such period, the Company shall (and shall cause each of its Subsidiaries
to) furnish promptly to Parent:

 

(i)            a copy of each report, schedule, registration statement, and
other document filed or received by it during such period pursuant to the
requirements of federal securities Laws; and

 

(ii)           all other information concerning its business, properties, and
personnel as Parent may reasonably request, provided that the furnishing of such
documents or other information does not constitute a breach of the provisions
hereof or of any agreement to which the Company (or any of its Subsidiaries) is
a party or by which the Company (or any of its Subsidiaries) is bound, and is
not restricted by any Governmental Entity or applicable Law.

 

SECTION 5.07  REASONABLE BEST EFFORTS.

 

Before Closing, upon the terms and subject to the conditions of this Agreement,
each of Parent, Merger Sub, and the Company agrees to use its reasonable best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper, or advisable (subject to applicable Laws)
with respect to its obligations to consummate and make effective the Merger and
other transactions contemplated by this Agreement as promptly as practicable
including, but not limited to:

 

(i)            the preparation and filing of all forms, registrations, and
notices required to be filed to consummate the Merger; the obtaining of any
other approvals, consents, orders, exemptions, or waivers from any third party
or Governmental Entity required in connection with the transactions contemplated
by this Agreement; and the vacating or lifting of any order, injunction, legal
restraint, or prohibition described in Section 6.01(a);

 

(ii)           the preparation of any disclosure and other documents requested
to facilitate the financing of any of the transactions contemplated by this
Agreement; and

 

(iii)          the satisfaction of the conditions to Closing.

 

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The provisions of this Section 5.07 shall not relieve a party from a breach of
its other obligations set forth in this Agreement that are not qualified by an
obligation to use reasonable best efforts, even if such party used reasonable
best efforts with respect to the breached obligation.

 

SECTION 5.08  MERGER SUB COMPLIANCE.

 

Parent shall cause Merger Sub to comply with all of its obligations under this
Agreement.

 

SECTION 5.09  OBLIGATION OF PARENT.

 

Parent shall not take any action, and it shall use its reasonable best efforts
not to permit any director of the Company who is an employee of Parent to take
any action, that would cause the Company to breach any of the representations,
warranties, or agreements made by the Company in this Agreement.

 

SECTION 5.10  FINANCING.

 

(a)           Immediately following the execution and delivery by the parties of
this Agreement, the Company shall enter into a credit facility (the “Credit
Facility”) on terms that have been agreed to by Parent, Merger Sub, and the
Company, which Credit Facility shall provide for a $10,750,000 term loan (the
“Merger Loan”).  Subject to the Merger becoming effective, the proceeds of the
Merger Loan, a portion of the Company’s available cash on hand, and certain
additional funds made available to Merger Sub from Parent shall be used to fund
the payment of the Aggregate Merger Consideration and Expenses incident to this
Agreement and the transactions contemplated hereby.

 

(b)           The Company agrees to provide reasonable cooperation in connection
with the arrangement of any financing to be used in connection with the Merger
and the other transactions contemplated hereby, including (i) allowing the
participation of its officers in meetings or due diligence sessions, and (ii)
causing its officers to execute and deliver on behalf of the Company any
agreements, documents, or certificates reasonably required in connection with
the Credit Facility or, subject to the Merger becoming effective, any financing
to be obtained by Parent and Merger Sub to fund the payment of the Aggregate
Merger Consideration and Expenses incident to this Agreement and the
transactions contemplated hereby.  Without limiting the generality of the
foregoing, the Company will use its reasonable best efforts to take all
necessary actions to be taken by it to satisfy, at the Effective Time, the
Company’s obligations which are conditions to the borrowing of the Merger Loan
set forth in the Credit Facility.

 

(c)           The Company also agrees to allow Parent, Merger Sub, and their
respective representatives to participate in discussions and negotiations with
the lender under, and to review and comment on, any agreements, documents, or
certificates required in connection with, the Credit Facility.

 

(d)           If the Credit Facility is withdrawn or otherwise unavailable, and
if the other conditions to Parent’s and Merger Sub’s obligation to consummate
the Merger have nonetheless been satisfied, Parent, Merger Sub and the Company
will each use reasonable best efforts, and will cooperate with each other, to
arrange alternative financing for the Merger (provided that the terms thereof
are not materially less favorable than those contemplated by the Credit
Facility).

 

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SECTION 5.11  STATE TAKEOVER LAWS.

 

If any “fair price,” “business combination,” or “control share acquisition”
statute or other similar statute or regulation shall become applicable to the
transactions contemplated hereby, Parent, Merger Sub, and the Company and their
respective boards of directors shall use their reasonable best efforts to grant
such approvals and take such actions as are necessary and lawful so that the
transactions contemplated hereby and thereby may be consummated as promptly as
practicable on the terms contemplated hereby and thereby and otherwise act to
minimize the effects of any such statute or regulation on the transactions
contemplated hereby and thereby.

 

SECTION 5.12  FURTHER ASSURANCES.

 

The proper officers of the Company and Merger Sub shall take any reasonably
necessary actions if, at any time after the Effective Time, any further action
is reasonably necessary to carry out the purposes of this Agreement.  Without
limiting the generality of the foregoing, if, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised of any deeds, bills
of sale, assignments, assurances, or any other actions or things that are
necessary or desirable 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 the Company or Merger Sub or otherwise to
carry out this Agreement, the officers of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of the Company or
Merger Sub, as the case may be, all such deeds, bills of sale, assignments, and
assurances and take and do, in the name and on behalf of the Company or Merger
Sub, as the case may be, 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
or otherwise to carry out this Agreement.

 

SECTION 5.13  INDEMNIFICATION AND INSURANCE.

 

(a)           The articles of incorporation and bylaws of the Surviving
Corporation shall contain provisions with respect to indemnification and
exculpation at least as protective to any director or officer as those set forth
in the articles of incorporation and bylaws of the Company on the date hereof,
which provisions shall not be amended, repealed, or otherwise modified for a
period of six years from the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who at or prior to the Effective
Time were directors or officers of the Company, unless such modification is
required by Law.

 

(b)           The Surviving Corporation (or any successor to the Surviving
Corporation) shall, to the fullest extent permitted under the IBCA or under the
Surviving Corporation’s articles of incorporation or bylaws, whichever
provisions are most beneficial to an applicable indemnitee to the extent
permitted by applicable Law, indemnify and hold harmless, for a period of six
years after the Effective Time, each Person who is now, or has been at any time
prior to the date hereof, or becomes prior to the Effective Time, a director or
officer of the Company against all losses, claims, damages, liabilities, costs,
fees, expenses (including attorneys’ fees and expenses), judgments, fines,
losses and amounts paid in settlement incurred in connection with any actual or
threatened action, suit, claim, proceeding or investigation (each, a “Claim”) to
the extent that any such Claim is based on, or arises out of, (i) the fact that
such person is or was a

 

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director or officer of the Company or is or was serving at the request of the
Company as a director or officer or agent of another corporation, partnership,
joint venture, trust, or other enterprise or (ii) this Agreement, or any of the
transactions contemplated hereby, in each case to the extent that any such Claim
pertains to any matter or fact arising, existing, or occurring prior to or at
the Effective Time.

 

(c)           At or prior to the Effective Time, the Company shall obtain and
pay for, at the Company’s expense, a fully paid policy or policies of directors’
and officers’ liability insurance providing ‘tail’ coverage for the Persons
currently covered by the Company’s existing policy for a period of six years
from and after the Effective Time with respect to claims arising from facts or
events that occurred at or prior to the Effective Time, and providing at least
the same coverage and amounts as, and containing terms and conditions which are
not less advantageous to the covered Persons in any material respect than, the
Company’s current policy, provided, such coverage can be provided at a total
cost of no greater than $225,000, and provided, further, if such coverage cannot
be provided at a total cost of no greater than $225,000, then the Company shall
obtain and pay for as much insurance as can be purchased for such amount.

 

SECTION 5.14  ADVISOR’S FAIRNESS OPINION.

 

Promptly upon execution of this Agreement, the Company shall provide Parent with
a true and complete copy of the Fairness Opinion.

 

ARTICLE VI

CONDITIONS PRECEDENT

 

SECTION 6.01  CONDITIONS TO EACH PARTY’S OBLIGATION TO EFFECT THE MERGER.

 

The respective obligation of each party to effect the Merger shall be subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions (any of which may be waived by the parties hereto in writing, in
whole or in part, to the extent permitted by this Agreement and applicable Law):

 

(a)           No Injunction or Proceeding.  No order or injunction of a court of
competent jurisdiction or other legal restraint or prohibition shall be in
effect and have the effect of prohibiting or making illegal the consummation of
the Merger; and no statute, rule, or regulation shall have been enacted,
entered, enforced, or deemed applicable to the Merger that prohibits or makes
illegal the consummation of the Merger; provided, however, that prior to
invoking this condition, a party shall have complied with its obligations under
Section 5.07.

 

(b)           Consents.  Other than the filing of the Articles of Merger, and
except as has not had, and would not reasonably be expected to have, a Material
Adverse Effect, all consents, approvals, and authorizations of and filings with
Governmental Entities or other Persons required for execution, delivery, and
performance of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby, or which are identified on Schedule 6.01(b),
shall have been obtained or effected or filed.

 

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(c)           Shareholder Approval.  This Agreement and the Merger shall have
been duly adopted by the Required Shareholder Vote in accordance with the IBCA.

 

SECTION 6.02  CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB TO EFFECT
THE MERGER.

 

In addition to the conditions set forth in Section 6.01, the obligations of
Parent and Merger Sub to effect the Merger are further subject to the
satisfaction or waiver of each of the following conditions prior to or on the
Closing Date:

 

(a)           Representations and Warranties.  The representations and
warranties of the Company contained in this Agreement shall be true and correct
at and as of the Effective Time as though made at and as of the Effective Time,
except to the extent that any such representation or warranty is made as of a
specified date, in which case such representation or warranty shall have been
true and correct as of such date, and except to the extent the inaccuracies
under such representations and warranties, individually or in the aggregate,
have not had, and would not reasonably be expected to have, a Material Adverse
Effect (provided that, solely for the purposes of this Section 6.02(a), any
representation or warranty of the Company that is qualified by materiality or
Material Adverse Effect shall be read as if such qualification were not
present); provided, however, that if the failure of a representation or warranty
to be true and correct was caused by any action or omission by Parent or Merger
Sub or any agent or employee of Parent or Merger Sub, Parent and Merger Sub may
not rely upon such failure as a basis for not proceeding in any manner with the
Closing.

 

(b)           Agreements.  The Company shall have performed and complied in all
material respects with all of its undertakings and agreements required by this
Agreement to be performed or complied with by it prior to or on the Closing
Date; provided, however, that if the failure to perform or comply was caused by
any action or omission by Parent or Merger Sub, Parent and Merger Sub may not
rely upon such failure as a basis for not proceeding in any manner with the
Closing.

 

(c)           Recommendation; Fairness Opinion.  Neither the Company Board nor
any committee thereof shall have withdrawn or adversely modified in a manner
adverse to Parent and Merger Sub its approval or recommendation of this
Agreement or the Merger or, as applicable, its recommendation that the
shareholders of the Company adopt and approve this Agreement and the Merger;
shall not have recommended the approval or acceptance of a Superior Proposal;
and shall not have publicly disclosed any intention to do any of the foregoing;
and the Fairness Opinion shall not have been withdrawn or modified.

 

(d)           Dissenting Shares.  Immediately prior to the Effective Time,
Dissenting Shares shall not exceed ten percent (10%) of the issued and
outstanding shares of Company Common Stock.

 

(e)           Certificate.  The Company shall have delivered to Merger Sub duly
adopted resolutions of the Company Board approving the execution, delivery, and
performance of this Agreement, and resolutions of the shareholders of the
Company approving the Merger, in each case certified by the Secretary or
Assistant Secretary of the Company.

 

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(f)            Material Adverse Effect.  From the date of this Agreement until
the Closing Date, there shall not have occurred any Material Adverse Effect or
any change, effect, or circumstance that would reasonably be expected to have a
Material Adverse Effect.

 

SECTION 6.03  CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO EFFECT THE MERGER.

 

In addition to the conditions set forth in Section 6.01, the obligations of the
Company to effect the Merger are further subject to the satisfaction or waiver
of each of the following conditions prior to or at the Closing Date:

 

(a)           Representations and Warranties.  The representations and
warranties of the Parent and Merger Sub contained in this Agreement shall be
true and correct at and as of the Effective Time as though made at and as of the
Effective Time, except to the extent that any such representation or warranty is
made as of a specified date, in which case such representation or warranty shall
have been true and correct as of such date, and except to the extent the
inaccuracies under such representations and warranties, individually or in the
aggregate, have not had, and would not reasonably be expected to have, a
material adverse effect on Parent and Merger Sub, considered as one entity
(provided that, solely for the purposes of this Section 6.03(a), any
representation or warranty of the Parent and Merger Sub that is qualified by
materiality or material adverse effect shall be read as if such qualification
were not present); provided, however, that if the failure of a representation or
warranty to be true and correct was caused by any action or omission by the
Company, or any agent or employee of the Company, the Company may not rely upon
such failure as a basis for not proceeding in any manner with the Closing.

 

(b)           Agreements.  The Parent and Merger Sub shall have performed and
complied in all material respects with all of its undertakings and agreements
required by this Agreement to be performed or complied with by it prior to or at
the Closing Date; provided, however, that if the failure to perform or comply
was caused by any action or omission by the Company, the Company may not rely
upon such failure as a basis for not proceeding in any manner with the Closing.

 

(c)           Exchange Fund Deposit.  The Aggregate Merger Consideration shall
have been deposited into the Exchange Fund in the manner contemplated by
Section 2.01.

 

ARTICLE VII

TERMINATION, AMENDMENT, AND WAIVER

 

SECTION 7.01  TERMINATION.

 

This Agreement may be terminated and the Merger may be abandoned at any time
prior to the Effective Time:

 

(a)           by the mutual written consent of the Boards of Directors of
Parent, Merger Sub, and the Company (in the case of the Company, upon
recommendation of the Special Committee);

 

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(b)           by either the Company upon the recommendation of the Special
Committee, on the one hand, or Parent and Merger Sub, on the other hand, if:

 

(i)            any Governmental Entity shall have issued an order, decree, or
ruling or taken any other action (which order, decree, ruling, or other action
the parties to this Agreement shall have used their reasonable efforts to lift)
that permanently restrains, enjoins, or otherwise prohibits Parent, Merger Sub,
or the Company from consummating the transactions contemplated by this
Agreement, including the Merger, and such order, decree, ruling, or other action
shall have become final and nonappealable; or

 

(ii)           approval by the shareholders of the Company required for the
consummation of the Merger and the other transactions contemplated hereby shall
not have been obtained at the Shareholder Meeting or any adjournment thereof by
reason of the failure to obtain the Required Shareholder Vote; or

 

(iii)          prior to the approval of this Agreement and the Merger by the
shareholders of the Company, the Company Board or Special Committee shall have
resolved to accept a Superior Proposal; or

 

(iv)          the Merger shall not have been consummated by the date that is
nine months after the date of this Agreement (the “Outside Date”); provided,
however, the right to terminate this Agreement under this Section 7.01(b)(iv)
shall not be available to any party whose breach of any representation,
warranty, covenant, or agreement under this Agreement has been the cause of, or
resulted in, the failure of the Merger to occur on or before the Outside Date.

 

(c)           by the Company, if, prior to the Effective Time, Parent or Merger
Sub shall have breached in any material respect any of their respective
representations, warranties, covenants, or other agreements contained in this
Agreement that (x) would give rise to the failure of a condition set forth in
Section 6.03(a) or 6.03(b) and (y) cannot be or has not been cured within 15
days after the giving of written notice by the Company to Parent and Merger Sub;
provided, however, that the Company may not terminate this Agreement if any
affirmative action by the Company or any agent or employee of the Company was
the cause of the breach by Parent or Merger Sub that would otherwise give rise
to the termination right of the Company under this Section 7.01(c); or

 

(d)           by Parent, if:

 

(i)            prior to the Effective Time, (A) the Company Board or the Special
Committee shall have withdrawn or modified in a manner adverse to Parent and
Merger Sub its approval (in the case of the Company Board) or recommendation of
this Agreement or the Merger or, in the case of the Company Board, its
recommendation that the shareholders of the Company adopt and approve the
Agreement or the Merger, or (B) the Company Board or the Special Committee shall
have recommended the approval or acceptance of a Superior Proposal, or (C) the
Company Board or the Special Committee shall have publicly disclosed any
intention to take any of the actions described in clauses (A) or (B), or (D) the
Company has failed to call the Shareholder Meeting or failed to mail the final,
definitive Proxy Statement to the Company’s shareholders within 20 days after
clearing any comments made by the SEC staff or failed to

 

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include in the Proxy Statement the recommendations described in clause (A) or
the Fairness Opinion, and in any such case (A) through (D) the Company Board or
Special Committee shall have first determined in its good faith judgment after
consultation with independent legal counsel that its failure to take or taking
of such action, as applicable, is reasonably likely to be inconsistent with its
fiduciary duties under applicable Law; or

 

(ii)           prior to the Effective Time, the Fairness Opinion shall have been
withdrawn or adversely modified by the Advisor; or

 

(iii)          the Company shall have breached in any material respect any
representation, warranty, covenant, or other agreement contained in this
Agreement that (x) would give rise to the failure of a condition set forth in
Section 6.02(a) or 6.02(b) and (y) cannot be or has not been cured within 15
days after the giving of written notice by Parent to the Company; provided,
however, that Parent may not terminate this Agreement if any affirmative action
by Parent or any agent or employee of Parent was the cause of the breach by the
Company that would otherwise give rise to the termination right of Parent under
this Section 7.01(d)(iii).

 

SECTION 7.02  EFFECT OF TERMINATION.

 

(a)           If this Agreement is terminated as provided in Section 7.01,
written notice of such termination shall be given by the terminating party or
parties to the other party or parties specifying the provision of this Agreement
pursuant to which such termination is made, this Agreement shall become null and
void and there shall be no liability on the part of Parent, Merger Sub or the
Company (except as set forth in this Section 7.02 and Section 7.01 of this
Agreement, each of which Sections shall survive any termination of this
Agreement); provided, however, that nothing in this Agreement shall relieve any
party from any liability or obligation with respect to any willful breach of any
of its representations or warranties or the breach of any of its covenants or
agreements set forth in this Agreement.

 

(b)           If this Agreement is terminated by Parent or the Merger Sub
pursuant to Section 7.01(d)(i) or 7.01(d)(ii) or by the Parent or the Company
pursuant to Section 7.01(b)(iii), the Company shall pay Parent and Merger Sub
the actual out-of-pocket Expenses (not to exceed $500,000 in the aggregate) of
Parent and Merger Sub and their Subsidiaries and Affiliates (other than the
Company and its Subsidiaries) incurred in connection with this Agreement and the
transactions contemplated hereby (the “Break-Up Expenses”), by wire transfer of
immediately available funds promptly upon termination of this Agreement.  Parent
and Merger Sub will supply to the Company any reasonable and customary
documentation supporting the incurrence of such Break-Up Expenses that is
reasonably requested by the Company.  Parent and Merger Sub agree that with
respect to any termination of this Agreement pursuant to Section 7.01(b)(iii) or
7.01(d)(i) or 7.01(d)(ii) involving no breach of this Agreement by the Company,
the payment of the Break-Up Expenses will be the sole and exclusive remedy of
Parent and Merger Sub with respect thereto and shall constitute liquidated
damages with respect to any claim for damages or other claim which Parent or
Merger Sub might otherwise be entitled to assert against the Company or any of
its assets, or against any of its directors, officers, employees, or
stockholders with respect to this Agreement and the transactions contemplated
hereby.

 

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(c)           If (i) the Credit Facility or any other financing for the Merger
of Parent and Merger Sub shall have been withdrawn or otherwise become
unavailable other than as a result of (x) a breach by the Company of any of its
representations, warranties, covenants, or other agreements contained in this
Agreement, or (y) the failure of any of the conditions contained in Section 6.01
(other than a failure of the condition set forth in Section 6.01(c) as a result
of the breach by Parent of the provisions of Section 5.02(f)) or Section 6.02(f)
(other than a failure resulting solely from the Credit Facility having been
withdrawn or otherwise becoming unavailable) to have been satisfied, and (ii)
this Agreement shall have been terminated, Parent shall pay the Company the
actual out-of-pocket Expenses (not to exceed $500,000 in the aggregate) of the
Company and its Subsidiaries and Affiliates incurred in connection with this
Agreement and the transactions contemplated hereby (the “Financing Failure
Expenses”), by wire transfer of immediately available funds promptly upon
termination of this Agreement.  The Company will supply to Parent any reasonable
and customary documentation supporting the incurrence of such Financing Failure
Expenses that is reasonably requested by Parent.  The Company agrees that with
respect to any termination of this Agreement in such circumstances, the payment
of the Financing Failure Expenses will be the sole and exclusive remedy of the
Company with respect thereto and shall constitute liquidated damages with
respect to any claim for damages or other claim which the Company might
otherwise be entitled to assert against Parent, Merger Sub, or any of their
respective assets, or against any of their respective directors, officers,
employees, or stockholders with respect to this Agreement and the transactions
contemplated hereby.

 

(d)           If this Agreement is terminated by either the Company pursuant to
Section 7.01(c) on the one hand, or the Parent pursuant to Section 7.01(d)(iii)
on the other hand, the non-terminating party shall pay the terminating party,
the actual out-of-pocket Expenses (not to exceed $500,000 in the aggregate) of
the terminating party and its Subsidiaries and Affiliates incurred in connection
with this Agreement and the transactions contemplated hereby (the “Transaction
Expenses”), by wire transfer of immediately available funds promptly upon
termination of this Agreement.  The terminating party will supply to the
non-terminating party any reasonable and customary documentation supporting the
incurrence of such Transaction Expenses that is reasonably requested by the
non-terminating party.  A party’s right to receive the Transaction Expenses
shall be in addition to any other claim for damages or other claim which such
terminating party might otherwise be entitled to assert against the
non-terminating party or any of its assets, or against any of its directors,
officers, employees, or stockholders, with respect to this Agreement and the
transactions contemplated hereby.

 

SECTION 7.03  AMENDMENT.

 

The parties hereto may amend this Agreement in writing signed by each party
hereto at any time before or after approval of matters presented in connection
with the Merger by the shareholders of the Company, but after any such
shareholder approval, no amendment shall be made which by Law requires the
further approval of the shareholders without obtaining such further approval;
provided, that, any amendment of this Agreement on behalf of the Company shall
be subject to the approval of the Company Board and that approval shall be given
only if recommended by the Special Committee.

 

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SECTION 7.04  WAIVER.

 

At any time before the Effective Time, Parent or the Company, in the case of the
Company by action taken by the Company Board upon the recommendation of the
Special Committee, may:

 

(i)            extend the time for the performance of any of the obligations or
other acts of any other party to this Agreement; or

 

(ii)           waive compliance with any of the agreements of any other party or
with any conditions to its own obligations.  Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party by a duly authorized
officer.

 

ARTICLE VIII

MISCELLANEOUS

 

SECTION 8.01  NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.

 

None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time.  All such representations and warranties will be extinguished upon the
Effective Time of the Merger and neither the Company, any of its Subsidiaries,
nor any of their respective officers, directors, employees, or shareholders
shall be under any liability whatsoever with respect to any such representation
or warranty after such time.  This Section 8.01 shall not limit any covenant or
agreement of the parties that by its terms contemplates performance after the
Effective Time.

 

SECTION 8.02  EXPENSES.

 

Except as otherwise specifically contemplated by this Agreement, all Expenses
incurred in connection with this Agreement and the consummation of the
transactions contemplated by this Agreement shall be paid by the party incurring
such Expenses.

 

SECTION 8.03  APPLICABLE LAW.

 

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF ILLINOIS, WITHOUT REGARD TO LAWS THAT MIGHT BE APPLICABLE UNDER
CONFLICTS OF LAWS PRINCIPLES.

 

SECTION 8.04  JURISDICTION.

 

Parent, Merger Sub, and the Company each hereby irrevocably submit in any suit,
action or proceeding arising out of or related to this Agreement and all or any
of the transactions contemplated hereby to the exclusive jurisdiction of either
(a) the United States District Court for the Northern District of Illinois or
(b) any court of the State of Illinois located in Cook County, Illinois, and
waive any and all objections to such jurisdiction that they may have under the
laws of the State of Illinois or the United States.  Parent, Merger Sub, and the
Company each

 

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irrevocably consent to service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, or by recognized international
express courier or delivery service, to the Parent, Merger Sub, and the Company
at their respective addresses referred to in Section 8.05 hereof.

 

SECTION 8.05  NOTICES.

 

ALL NOTICES AND OTHER COMMUNICATIONS UNDER THIS AGREEMENT SHALL BE IN WRITING
AND SHALL BE DEEMED TO HAVE BEEN DULY GIVEN OR MADE AS FOLLOWS:

 

(a)           if sent by registered or certified mail in the United States,
return receipt requested, upon receipt;

 

(b)           if sent by reputable overnight air courier, one Business Day after
being sent;

 

(c)           if sent by facsimile transmission, when transmitted and
appropriate confirmation is received; or

 

(d)           if otherwise actually personally delivered, when delivered.

 

All notices and other communications under this Agreement shall be sent or
delivered as follows:

 

If to the Company, to:

 

Minuteman International, Inc.

111 South Rohlwing Road

Addison, Illinois 60101

Telephone:  630.627.6900

Fax:  630.627.1173

Attention:  Gregory J. Rau

 

with a copy to:

 

Reynolds & Reynolds, Ltd.

111 West Washington Street

Suite 1631

Chicago, Illinois 60602

Telephone:  312.332.4312

Fax:  312.419.0547

Attention:  Frank R. Reynolds, Esq.

 

and also to:

 

Jenner & Block LLP

One IBM Plaza

Chicago, Illinois 60611

 

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Telephone:  312.840.7296

Fax:  312.840.7396

Attention:  John F. Cox, Esq.

 

and also to:

 

Winston & Strawn LLP

35 West Wacker Drive

Chicago, Illinois 60601

Telephone:  312.558.5882

Fax:  312.558.5700

Attention:  Wayne D. Boberg, Esq.

 

If to Parent or Merger Sub, to:

 

Hako-Werke International GmbH

Hamburger Str. 209-239

D-23843 Bad Oldesloe

Germany

Telephone:  (+49) 4531/806-200

Fax:  (+49) 4531/806-739

Attention:  Prof. Dr. Eckart Kottkamp

 

with a copy to:

 

Bell, Boyd & Lloyd LLC

70 West Madison St., Suite 3100

Chicago, Illinois 60602

Telephone:  312. 807.4265

Fax:  312.827.8037

Attention:  Patrick J. Maloney, Esq.

 

Each party may change its address by written notice in accordance with this
Section 8.05.

 

SECTION 8.06  ENTIRE AGREEMENT.

 

This Agreement (including the documents and instruments referred to in this
Agreement) contains the entire understanding of the parties hereto with respect
to the subject matter contained in this Agreement, and supersedes and cancels
all prior agreements, negotiations, correspondence, undertakings, and
communications of the parties, oral or written, respecting such subject matter.

 

SECTION 8.07  ASSIGNMENT.

 

Neither this Agreement nor any of the rights, interests, or obligations under
this Agreement shall be assigned by any of the parties hereto (whether by
operation of Law or otherwise) without the prior written consent of the other
parties; provided, however, that Parent

 

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or Merger Sub may assign this Agreement to any wholly owned Subsidiary of Parent
or Merger Sub.  No such assignment shall relieve Parent or Merger Sub of its
obligations under this Agreement.  Subject to the first sentence of this
Section 8.07, this Agreement will be binding upon, inure to the benefit of, and
be enforceable by, the parties hereto and their respective successors and
permitted assigns.

 

SECTION 8.08  HEADINGS; REFERENCES.

 

The article, section, and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.  All references herein to “Articles” or
“Sections” shall be deemed to be references to Articles or Sections of this
Agreement unless otherwise indicated.  Whenever the words “include,” “includes,”
or “including” are used in this Agreement, they shall be deemed to be followed
by the words “without limitation”.  The parties hereto have participated jointly
in the negotiation and drafting of this Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden or proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.  Any reference to any Law shall be deemed also
to refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise.

 

SECTION 8.09  COUNTERPARTS; EFFECTIVENESS.

 

This Agreement may be executed in one or more counterparts (including by means
of executed signature pages transmitted by facsimile), each of which shall be
deemed to be an original but all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties hereto and delivered to the other parties, it
being understood that all parties need not sign the same counterpart.

 

SECTION 8.10  NO THIRD-PARTY BENEFICIARIES.

 

This Agreement shall be binding upon and inure solely to the benefit of each
party hereto and its successors and permitted assigns, and except as set forth
in Sections 1.06(b), 1.07 and 5.13 (which are intended to and shall create third
party beneficiary rights if the Merger is consummated), nothing in this
Agreement, express or implied, is intended to confer upon any person or entity
not a party to this Agreement any rights or remedies under or by reason of this
Agreement.

 

SECTION 8.11  SEVERABILITY; ENFORCEMENT.

 

Any term or provision of this Agreement that is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction.  If any provision of this Agreement is so broad as to be
unenforceable, the provisions shall be interpreted to be only so broad as is
enforceable.

 

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SECTION 8.12  SPECIAL ENFORCEMENT.

 

The parties hereto agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached.  It is accordingly agreed that each
of the parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement, this being in addition to any other remedy to which any of
the parties hereto is entitled at law or in equity.

 

SECTION 8.13  CERTAIN DEFINITIONS.

 

As used in this Agreement, the following terms shall have the meanings set forth
in this section:

 

“Affiliate” means a Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, the
first mentioned Person; and “control” (including the terms “controlled by” and
“under common control with”) means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
credit arrangement, or otherwise.

 

“Business Day” means any day other than a day on which banks in Chicago,
Illinois or Hamburg, Germany are required or authorized to be closed.

 

“Expenses” means and includes all out-of-pocket costs and expenses (including,
without limitation, all fees and expenses (including commitment fees) of
counsel, accountants, banks, investment bankers, experts, and consultants to a
party hereto and its Affiliates) actually incurred by a party or on its behalf,
whenever incurred, in connection with or related to the authorization,
preparation, negotiation, execution, and performance of this Agreement and the
transactions contemplated hereby.

 

“Law” means all provisions of any federal, state, foreign, local, or other law,
ordinance, rule, regulation, or governmental requirement or restriction of any
kind, including any rules, regulations, and orders promulgated thereunder, and
any final orders, decrees, consents, or judgments of any regulatory agency or
court.

 

“Material Adverse Effect” means any change, effect or circumstance that (i) is
materially adverse to the businesses, assets, operations, property, condition
(financial or otherwise), or results of operations of the Company and its
Subsidiaries, taken as a whole, excluding changes, effects or circumstances
between the date of this Agreement and the Effective Time resulting primarily
from (w) general economic or business conditions, (x) conditions that affect the
cleaning equipment industry generally (including, without limitation, those
resulting from war or terrorist incident), (y) changes in financial or
securities markets generally (including changes in the trading price of the
Company Common Stock or in interest rates), and (z) the public announcement or
pendency of the transactions contemplated by this Agreement or (ii) prevents or
materially delays the performance by the Company of any of its obligations under
this Agreement, including the funding of the Merger Loan, or the consummation of
the Merger.

 

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“Subsidiary” means, with respect to any Person, any other Person of which the
first mentioned Person, directly or indirectly, owns or controls capital stock
(or other equity interests) representing more than fifty percent of the general
voting power under ordinary circumstances of such entity.

 

[Signature Page Follows.]

 

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.

 

 

HAKO-WERKE INTERNATIONAL GMBH

 

 

 

 

 

By

 

 

 

Prof. Dr. Eckart Kottkamp

 

 

Managing Director

 

 

 

 

 

MINUTEMAN INTERNATIONAL, INC.

 

 

 

 

 

By

 

 

 

Gregory J. Rau

 

 

President and Chief Executive Officer

 

 

 

 

 

MMAN ACQUISITION CORP.

 

 

 

 

 

By

 

 

 

Prof. Dr. Eckart Kottkamp

 

 

President

 

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