October 1, 2007 CONFIDENTIAL Pioneer Holding Corp. 456 Montgomery St., 19th Floor San Francisco, California 94104 Re: Equity Rollover Commitment Gentlemen:
EXHIBIT
99.2
October 1, 2007
Re: Equity Rollover Commitment
Gentlemen:
Reference is made to the Agreement and Plan of Merger, dated as of October 1, 2007 (as it may
be amended from time to time, the “Merger Agreement”), by and among Pioneer Holding Corp., a
Delaware corporation (“Parent”), Pioneer Sub Corp., a Delaware corporation (“Merger Sub”) and
Printronix, Inc., a Delaware corporation (the “Company”), pursuant to which Merger Sub will be
merged into the Company (the “Merger”). Capitalized terms used but not defined herein have
the meanings ascribed to such terms under the Merger Agreement. As used herein, the terms “Parent”
and “Merger Sub” shall include any entity to which Parent or Merger Sub, as applicable, shall
assign their respective rights, interests and obligations under the Merger Agreement in accordance
with Section 11.05 thereof. The undersigned and Vector Capital Partners IV, L.P. (the party to the
Equity Commitment Letter) (“Vector Capital”) and any other Affiliates of Vector Capital who invest
in Parent are collectively referred to herein as the “Investors”. This letter is being delivered to
Parent in connection with the execution of the Merger Agreement by Xxxxxx, Merger Sub and the
Company.
1. Equity Rollover Commitment. This letter confirms the commitment of the undersigned,
subject to the conditions set forth herein, to transfer, contribute and deliver to Parent
immediately prior to the Effective Time a number shares of Company Stock in the aggregate (the
"Rollover Contribution Shares”) such that the undersigned, together with any permitted assignee of
the undersigned pursuant to fourth paragraph hereof and any other current officers or directors of
the Company, would beneficially own 9.9% of the outstanding equity of Parent immediately after the
Effective Time in exchange for a pro rata (in kind and amount) share of the equity of Parent (which
equity shall be of the same class and series as that issued to all of the Investors) based on the
value of the aggregate equity commitments of all the Investors and assuming that the value of each
Rollover Contribution Share is equal to the Merger Consideration (such share of the equity of
Parent, the “Subject Equity Securities”) provided that the undersigned’s right to contribute the
Rollover Contribution Shares in exchange for equity of Parent shall be subject to the undersigned
executing a stockholders’ agreement with Vector Capital and any other Investor, which stockholders’
agreement shall be acceptable to Vector Capital; and provided further that the undersigned’s
obligation to contribute the Rollover Contribution Shares in exchange for equity of Parent shall be
subject to the Company and the undersigned executing and employment agreement containing
substantially the terms and conditions set forth on Exhibit A hereto. For the purpose of
clarity, the undersigned (together with any permitted assignee of the undersigned pursuant to
fourth paragraph hereof and any other current officers or directors of the Company) shall not,
under any circumstances, contribute
to Parent a number of Shares such that the undersigned would beneficially own more than 9.9% of the
outstanding equity of Parent immediately after the Effective Time. The undersigned’s obligation to
transfer, contribute and deliver the Rollover Contribution Shares to Parent is subject to the
satisfaction or waiver by Parent of the conditions precedent to Parent’s and Xxxxxx Sub’s
obligation to effect the Closing and the terms of this letter, and will occur contemporaneous with
the Closing and immediately prior to the Effective Time and the simultaneous issuance to the
undersigned of the Subject Equity Securities. The number of Shares to be contributed to Parent
under this Agreement will be reduced (a) to the extent required to ensure that the undersigned
(together with any permitted assignee of the undersigned pursuant to fourth paragraph hereof and
any other current officers or directors of the Company) will not beneficially own more than 9.9% of
the outstanding equity of Parent immediately following the Effective Time, and (b) in the manner
agreed by the undersigned and Vector Capital in the event Parent does not require all of the equity
with respect to which the Investors have made commitments.
The undersigned’s obligation to transfer, contribute and deliver the Rollover Contribution
Shares will terminate automatically and immediately upon the earliest to occur of (a) the
termination of the Merger Agreement in accordance with the terms thereof, and (b) if the
undersigned and Vector Capital agree to terminate this letter.
The undersigned’s obligation to transfer, contribute and deliver the Rollover Contribution
Shares may not be assigned, except as permitted in this paragraph. The undersigned may assign all
or a portion of its obligations to transfer, contribute and deliver the Rollover Contribution
Shares to its Affiliates or any heir, legatees, beneficiaries and or/devisees of any individual who
is an Affiliate of the undersigned; provided, however that, except to the extent otherwise agreed
to by Parent, any such assignment shall not relieve the undersigned of its obligations under this
letter.
Notwithstanding anything that may be expressed or implied in this letter, Parent, by its
acceptance of the benefits of the undersigned’s commitment to contribute and deliver the Rollover
Contribution Shares, covenants, agrees and acknowledges that no Person other than the undersigned
and its successors and permitted assigns shall have any obligation hereunder and that,
notwithstanding that the undersigned or its successors or permitted assigns may be a partnership or
limited liability company, no recourse hereunder or under any documents or instruments delivered in
connection herewith shall be had against any former, current or future director, officer, agent,
Affiliate, employee, general or limited partner, member, manager or stockholder of the undersigned
or any of its successors or permitted assigns or any former, current or future director, officer,
agent, Affiliate, employee, general or limited partner, member, manager, stockholder, heir,
legatee, beneficiary, devisee or estate of any of the foregoing, whether by the enforcement of any
assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or
other Applicable Law, it being expressly agreed and acknowledged that no personal liability
whatsoever shall attach to, be imposed on or otherwise be incurred by any former, current or future
director, officer, agent, Affiliate, employee, general or limited partner, member, manager or
stockholder of the undersigned or any former, current or future director, officer, agent,
Affiliate, employee, general or limited partner, member, manager, stockholder, heir, legatee,
beneficiary, devisee or estate of any of the foregoing, as such, for any obligations of the
undersigned or any of its successors or permitted assigns under this letter or
any documents or instrument delivered in connection herewith or for any claim based on, in respect
of, or by reason of such obligation or their creation.
2. Non-Competition; No Solicitation. The Company is engaged in the business of
developing, designing, manufacturing, marketing, selling and/or distributing printing solutions and
developing, designing, manufacturing, licensing, marketing, selling and/or distributing printer
management software (such business, being collectively referred to herein as the “Business”). For
the purposes of this letter, a “Competing Business” means any business, activity or Person in
direct or indirect competition (or seeking or contemplating to compete, directly or indirectly)
with the Business.
The undersigned acknowledges that the relevant market for the Business is worldwide in scope
and that there exists intense worldwide competition for the products and services of the Business.
The undersigned is a shareholder of the Company and one of its key executive and managerial
employees. The undersigned acknowledges that he has detailed knowledge of Company Intellectual
Property, trade secrets and other confidential and proprietary information of the Company. The
undersigned acknowledges that by virtue of his position with the Company, he has special influence
over the Company’s customers and has developed significant and unique contacts in the Business.
As an inducement for Parent to enter into the Merger Agreement and consummate the Merger, to
protect the Company Intellectual Property, trade secrets and other confidential and proprietary
information of the Company, to preserve the goodwill in the Company acquired by Parent, and in
connection with the contribution of the Rollover Contribution Shares, the undersigned agrees that
for a period ending on the later of (x) the date that is five (5) years after the Effective Time of
the Merger and (y) that date that is two (2) years after the date on which the undersigned ceases
to be employed by or serve on the Board of Directors of the Company (but in no event later than
such date as Parent and the Company cease to operate the Business in the Restricted Territory (as
defined below)) (such period, the “Non-Competition Period”):
(a) Employee shall not, in any city, county or country outside the United States, directly or
indirectly, engage, without the express prior written consent of Parent, in any Competing Business,
whether as an employee, consultant, partner, principal, agent, representative, equity holder or in
any other individual, corporate or representative capacity (without limitation by specific
enumeration of the foregoing), or render any services or provide any advice to any Competing
Business.
(b) Employee shall not, anywhere in the United States, directly or indirectly, engage, without
the express prior written consent of Parent, in any Competing Business, whether as an employee,
consultant, partner, principal, agent, representative, equity holder or in any other individual,
corporate or representative capacity (without limitation by specific enumeration of the foregoing),
or render any services or provide any advice to any Competing Business.
(c) Employee shall not, anywhere in the State of California, directly or indirectly, engage,
without the express prior written consent of Parent, in any Competing Business, whether as an
employee, consultant, partner, principal, agent, representative, equity holder or in any other
individual, corporate or representative capacity (without limitation by
specific enumeration of the foregoing), or render any services or provide any advice to any
Competing Business.
(d) Employee shall not, in any of the counties in the State of California, directly or
indirectly, engage, without the express prior written consent of Parent, in any business or
activity in direct or indirect competition with the Business, whether as an employee, consultant,
partner, principal, agent, representative, equity holder or in any other individual, corporate or
representative capacity (without limitation by specific enumeration of the foregoing), or render
any services or provide any advice to any Competing Business.
The geographic locations set forth in paragraph’s (a) through (d) shall be collectively
referred to as the “Restricted Territory.”
As an inducement for Parent to enter into the Merger Agreement and consummate the Merger, to
protect the Company Intellectual Property, trade secrets and other confidential and proprietary
information of the Company, to preserve the goodwill in the Company acquired by Parent, and in
connection with the contribution of the Rollover Contribution Shares, the undersigned agrees that
during the Non-Competition Period, at any time or for any reason, the undersigned shall not,
directly or indirectly, (a) with respect to the Business, solicit or divert or attempt to solicit
or divert any business or clients or customers made known to the undersigned during his employment
with the Company or Parent away from Parent and/or its Affiliates, (b) with respect to the
Business, induce or attempt to induce customers, clients, suppliers, agents or other Persons under
contract or otherwise associated or doing business with Parent and/or its Affiliates who are made
known to the undersigned during his employment with the Company or Parent or an Affiliate, to
reduce or alter any such association or business with Parent and/or its Affiliates, and/or (c)
knowingly solicit or attempt to solicit any Person employed by Parent and/or its Affiliates to (i)
terminate such employment, and/or (ii) accept employment, or enter into any consulting arrangement,
with any Person other than Parent and/or its Affiliates.
Nothing in this letter is intended to alter any of Parent’s or the Company’s policies and
procedures applicable to its employees generally, all of which shall apply to the undersigned
during the term of the undersigned’s employment with Parent or one of its Subsidiaries, or the
at-will nature of the undersigned’s employment with Parent or one of its Subsidiaries.
3. Miscellaneous. The undersigned represents and warrants that this letter is a legal,
valid and binding obligation, enforceable against the undersigned in accordance with its terms to
the fullest extent permitted under Applicable Law.
To the extent any provision of this letter, including without limitation the provisions
related to non-competition and non-solicitation, shall be determined to be unlawful or otherwise
unenforceable, in whole or in part, such determination shall not affect the validity of the
remainder of this letter, and this letter shall be reformed to the extent necessary to carry out
its provisions to the greatest extent possible and to insure that the resolution of all conflicts
between the parties, including those arising out of statutory claims, shall be resolved by neutral,
binding arbitration. In the absence of such reformation, such part of such provision shall be
considered deleted from this letter and the remainder of such provision and of this letter shall be
unaffected and shall continue in full force and effect. In furtherance and not in limitation of
the foregoing,
should the duration or geographical extent of, or business activities covered by any provision of
this letter be in excess of that which is valid and enforceable under applicable law, then such
provision shall be construed to cover only that duration, extent or activities which may validly
and enforceably be covered. To the extent any provision of this letter shall be declared invalid
or unenforceable for any reason by any Governmental Authority in any jurisdiction, this letter (or
provision thereof) shall remain valid and enforceable in each other jurisdiction where it applies.
The undersigned acknowledges the uncertainty of the law in this respect and expressly stipulates
that this letter shall be given the construction which renders its provisions valid and enforceable
to the maximum extent (not exceeding its express terms) possible under Applicable Law.
The undersigned represents and warrants that the undersigned has carefully read this letter;
that the undersigned executes this letter with full knowledge of the contents of this letter, the
legal consequences thereof, and any and all rights which each party may have with respect to one
another; that the undersigned has had the opportunity to receive independent legal advice with
respect to the matters set forth in this letter and with respect to the rights and asserted rights
arising out of such matters; that the undersigned has been advised to, and has had the opportunity
to, consult with the undersigned’s personal attorney prior to entering into this letter; and that
the undersigned is entering into this letter of the undersigned’s own free will. The undersigned
expressly agrees that he or she has no expectations or understandings contrary to this letter and
no usage of trade or regular practice in the industry shall be used to modify this letter. The
parties agree that this letter shall not be construed for or against either party in any
interpretation thereof.
This letter shall be binding solely on, and inure solely to the benefit of, the undersigned
and Parent and their respective successors and permitted assigns, and nothing set forth in this
letter shall be construed to confer upon or give to any Person other than the undersigned and
Parent and their respective successors and permitted assigns any benefits, rights or remedies under
or by reason of, or any rights to enforce or cause Parent to enforce, the obligation to transfer,
contribute and deliver the Rollover Contribution Shares or any provisions of this letter.
This letter may only be enforced by Parent at the direction of Vector Capital in its sole
discretion. Parent shall have no right to enforce this letter unless directed to do so by Vector
Capital in its sole discretion. Parent’s creditors shall have no right to enforce this letter or to
cause Parent to enforce this letter.
This letter shall be governed and construed in accordance with the laws of the State of New
York without regard to its conflict of laws provisions.
EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS LETTER OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
This letter may be signed in two or more counterparts, any one of which need not contain the
signature of more than one party, but all such counterparts taken together shall constitute one
and the same agreement. The obligations of the undersigned under this Commitment Letter may not be
assigned in any manner except as expressly set forth herein.
| Sincerely, | ||||||
| /s/ XXXXXX X. XXXXXX | ||||||
| Name: Xxxxxx X. Xxxxxx |
Accepted and Agreed to as of the date first above written.
By:
|
/S/ XXXXXXXXX X. XXXXXX | |||
| Name: Xxxxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer |
[Signature page to Equity Rollover Commitment Letter]
Exhibit A
Term Sheet
Title:
|
Chief Executive Officer of Printronix, Inc. (the “Company”) | |
Salary:
|
Initial base salary of $337,000, which base salary shall be reviewed each year in relation to the average base salary paid to Chief Executive Officers of other companies of similar size and industry as the Company; provided, however, that Xx. Xxxxxx’x salary shall not decrease so long as he is serving in a full-time capacity (i.e. 100% of his time) as Chief Executive Officer of the Company. | |
Bonus:
|
Xx. Xxxxxx shall have the right to participate in any annual bonus plan for the Company’s management team each year. | |
Term:
|
No specified term of employment | |
Severance:
|
If Xx. Xxxxxx is terminated by the Company without “Cause” (to be defined) and he is not offered the role of Chairman of the Board of Directors of the Company, he will receive 12 months of base salary as severance (and for the purposes of clarity, Xx. Xxxxxx will not be entitled to any severance in the event that he is offered the role of Chairman of the Board of Directors upon such termination). | |
Chairman Position:
|
If Xx. Xxxxxx is offered and accepts the role of Chairman of the Board of Directors of the Company, he will be paid the same salary he would have made as Chief Executive Officer so long as he is serving in a full-time capacity (i.e. 100% of his time) as Chairman of the Board of Directors of the Company. |
