Document:

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

 

 

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

  	
   

  
				

 

i

 

	
  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

  	
   

  
				

 

ii

 

	
  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

  	
   

  
				

 

iii

 

	
  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

  	
   

  

 

iv

 

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:

 

 

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:

 

2

 

(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

 

3

 

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

 

4

 

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,

 

5

 

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

 

6

 

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

 

7

 

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 

 

8

 

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

 

9

 

(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

 

10

 

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

 

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.

 

12

 

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.

 

13

 

(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

 

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

 

15

 

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

 

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

 

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

 

18

 

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.

 

19

 

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

 

20

 

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.

 

21

 

(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.

 

22

 

(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,

 

23

 

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:

 

24

 

(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,

 

25

 

(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

 

26

 

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.

 

27

 

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).

 

28

 

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

 

29

 

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.

 

30

 

(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.

 

31

 

(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);

 

32

 

(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

 

33

 

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.

 

34

 

(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.

 

35

 

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

 

36

 

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

 

37

 

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

 

38

 

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.

 

39

 

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.

 

40

 

“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.]

 

41

 

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

  
	
   

  	
   

  	
  PresidentAmendment No. 1

                                       To

                                   AGREEMENT,
                             Dated January 18, 2004,
                           (the "Original Agreement")

                                  By and among

                       World Information Technology, Inc.,
                                 (the "Company")

                                       And
                                 Gary D. Morgan
                                   ("Morgan"),

                             Dated this June 3, 2004

<PAGE>

                               AMENDMENT NO. 1 TO
                                    AGREEMENT

      This Agreement, made this 3rd day of June, 2004, by and among World
Information Technology, Inc., (the "Company"), and Gary D. Morgan ("Morgan"),
collectively the "Parties".

      WHEREAS, an Agreement dated January 18, 2004, relating to Morgan's
employment and financing activities of the Company (the "Original Agreement")
was executed by the Parties,

      WHEREAS, under the Original Agreement the Company issued a Promissory Note
to Morgan, dated January 26, 2004, in the amount of $370,500.00, plus interest,
and due on April 30, 2004 (the "Original Note") and issued a Warrant to purchase
common stock of the Company to Morgan on January 25, 2004 (the "Warrant"),

      WHRERAS, The Original Note and Warrant were a significant part of the
inducement for Morgan to enter into the Original Agreement,

      WHEREAS, Morgan believes that the shareholder representatives of the
Company, negotiating with him on behalf of the Company had knowledge and belief
of certain facts relating to the Company's affairs were misrepresented to him
and the Company's Board of Directors, at the benefit for their own interests,
during the negotiations relating to the signing of the Original Agreement, and

      WHEREAS, the parties desire to modify the terms and conditions and to add
or delete certain other terms and conditions to the "Original Agreement"
including the Original Note and Warrant.

      NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, the parties hereby agree
as follows:

The Parties agree to cancel the Original Note in exchange for the Company
signing a Promissory Note dated June 3, 2004 in the principal amount of
$370,500.00, plus 4% annual interest from January 26, 2004, with repayment in
eight equal payments of $53,413.46, paid semi-annually, with the first payment
due December 11, 2004, with all contingencies and representations relating to
the potential Company financing removed and an option for Morgan to convert the
principal and interest at any time, in whole or part to common stock of the
Company at the last sale price per share on the same day as Morgan shall give
notice to the Company of Morgan's desire to covert ("Revised Note"). A copy of
the Revised Note is attached hereto as Exhibit A.

The Parties agree to modify the Exercise Price of the Warrant to the closing
price of the Company's stock on the date of this agreement.

The Company hereby acknowledges and agrees that it now or never will have any
basis for filing and adverse claim against Morgan and that all Morgan's rights
remain in full force. The Company further acknowledges and agrees that there is
no other agreement or understanding between Morgan and the Company that would
prevent exercising it full rights to the Revised Note or the Warrant.

Subject to the modifications set forth in this Amendment, the above referenced
Original Agreement dated January 18, 2004, between the parties is hereby
ratified and confirmed. All other terms and conditions of the Original Agreement
remain in full force and effect.

                (remainder of this page intentionally left blank)

<PAGE>

            IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first above written.

                                       WORLD INFORMATION TECHNOLOGY, INC.
                                       "Company"

                                       By:   /s/ Parsh Patel
                                       ----------------------------------------
                                       Name: Parsh Patel
                                       Title: President

                                       By:   /s/ Shing Lin
                                       ----------------------------------------
                                       Name: Shing Lin
                                       Title: Secretary

                                       GARY D. MORGAN
                                       "Morgan"

                                       By:  /s/ Gary D. Morgan
                                       ----------------------------------------
                                       Gary D. Morgan

                                       2
<PAGE>

                                   CERTIFICATE

The undersigned, being the Secretary of World Information Technology, Inc., a
Nevada Corporation (the " Company"), does hereby certify that the following
resolutions were approved at a meeting of the Board of Directors of the Company
dully held on June 3, 2004 and are in full force and effect on this date.

RESOLVED, that Amendment 1, dated June 3, 2004 to the Agreement dated as of
January 18, 2004, between this Company and Gary D. Morgan., together with each
of the exhibits thereto, including the Convertible Note dated June 3, 2004 are
approved and a copy of the same be filed in the minute book of the Company.

This Certificate is executed this the 15th day of June, 2004.

                                       By:   /s/ Shing Lin
                                       ----------------------------------------
                                       Name: Shing Lin
                                       Title: Secretary

                                       By:   /s/ Parsh Patel
                                       ----------------------------------------
                                       Name: Parsh Patel
                                       Title: President

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