EXHIBIT
99.1
Execution Copy
AGREEMENT AND PLAN OF MERGER
by and among
ILLINOIS TOOL WORKS INC.,
HEADLINER ACQUISITION CORPORATION
and
QUIPP, INC.
Dated as of March 26, 2008
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this “
Agreement”) is entered into as of March 26,
2008 by and among Illinois Tool Works Inc., a
Delaware corporation (“
Parent”), Headliner
Acquisition Corporation, a Florida corporation and wholly owned subsidiary of Parent
(“
MergerCo”), and Quipp, Inc., a Florida corporation (the “
Company”). Capitalized
terms used but not otherwise defined herein shall have the meanings set forth in
Appendix A
attached hereto.
WHEREAS, the Board of Directors of the Company (the “Company Board”), acting upon the
unanimous recommendation of the Special Committee, has, by unanimous vote of all of the directors,
(i) determined that it is in the best interests of the Company and its shareholders, and declared
it advisable, to enter into this Agreement with Parent and MergerCo, (ii) adopted this Agreement,
(iii) approved the execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, including the Merger, and (iv) resolved to recommend approval
of this Agreement by the shareholders of the Company;
Section 1.1
The Merger. On the terms and subject to the conditions set forth in this Agreement, and in accordance
with the applicable terms of the FBCA, at the Effective Time, (a) MergerCo will merge with and into
the Company (the “
Merger”), (b) the separate corporate existence of MergerCo will cease and
(c) the Company will continue its corporate existence as the surviving corporation in the Merger
(the “
Surviving Corporation”) and a wholly owned subsidiary of Parent.
Section 1.2
Closing. Unless otherwise mutually agreed in writing by the Company and Parent, the closing of the
Merger (the “
Closing”) will take place at the offices of Xxxxxx Xxxxxx Xxxxxxxx LLP, 000
Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, at 9:00 a.m. local time on a date selected by Parent, but not
later than the second Business Day following the day (the “
Satisfaction Date”) on which all
of the conditions set forth in
Article VI (other than those conditions that by their nature
are to be satisfied by actions taken at the Closing, but subject to the satisfaction or waiver of
those conditions) are satisfied or, if permissible, waived in accordance with this Agreement. The
date on which the Closing actually occurs is hereinafter referred to as the “
Closing Date.”
Section 1.3
Effective Time. Subject to the provisions of this Agreement, at the Closing, the Company will cause the
articles of merger (the “
Articles of Merger”) to be executed, acknowledged and filed with
the Department of State of the State of Florida in accordance with Sections 607.0120 and 607.1105
of the FBCA. The Merger will become effective at such time as the Articles of Merger have been
duly filed with the Department of State of the State of Florida, or at such later date or time as
may be agreed by Parent and the Company in writing and specified in the Articles of Merger in
accordance with the FBCA (the effective time of the Merger being hereinafter referred to as the
“
Effective Time”).
Section 1.4
Effects of the Merger. The Merger will have the effects set forth in this Agreement and the applicable provisions
of the FBCA.
(a) the Company Articles, as in effect immediately prior to the Effective Time, shall be the
articles of incorporation of the Surviving Corporation until thereafter amended as provided therein
or by applicable Law; and
(b) the bylaws of the Company, as in effect immediately prior to the Effective Time, shall be
the bylaws of the Surviving Corporation until thereafter amended as provided therein or by
applicable Law.
Section 1.6
Directors and Officers of Surviving Corporation. Unless otherwise determined by Parent prior to the Effective Time, the initial directors of
the Surviving Corporation shall be the directors of MergerCo immediately prior to the Effective
Time, until their respective successors are duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the articles of incorporation or bylaws of
the Surviving Corporation. Unless otherwise determined by Parent prior to the Effective Time, the
initial officers of the Surviving Corporation shall be the officers of MergerCo immediately prior
to the Effective Time, until their respective successors are duly
appointed or until their earlier death, resignation or removal in accordance with the
certificate of incorporation or bylaws of the Surviving Corporation. In addition, unless otherwise
determined by Parent prior to the Effective Time, Parent and the Surviving Corporation shall cause
the directors and officers of the Surviving Corporation immediately after the Effective time, each
to hold office as a director, officer or limited liability company manager, as the case may be, of
each Subsidiary of the Surviving Corporation in accordance with the provisions of the laws of the
respective jurisdiction of organization and the respective organizational documents of such
Subsidiary.
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Section 2.1
Effect of the Merger on Capital Stock. At the Effective Time, as a result of the Merger and without any action on the part of
MergerCo or the Company or the holder of any capital stock of MergerCo or the Company:
(a)
Cancellation of Certain Common Stock. Each share of Common Stock that is owned by
MergerCo, Parent or the Company (as treasury stock or otherwise) or any of their respective direct
or indirect wholly owned Subsidiaries will automatically be cancelled and will cease to exist, and
no consideration will be delivered in exchange therefor.
(b)
Conversion of Common Stock. Each share of Common Stock issued and outstanding
immediately prior to the Effective Time (each, a “
Share” and collectively, the
“
Shares”) (other than (i) Shares to be cancelled in accordance with
Section 2.1(a)
and (ii) Dissenting Shares (each, an “
Excluded Share” and collectively, the “
Excluded
Shares”)), will be converted into the right to receive in cash, without interest, an amount per
Share (the “
Per Share Merger Consideration”) equal to $5.65;
provided,
however, that the Per Share Merger Consideration is subject to adjustment as set forth in
Sections 2.4 and
2.6.
(c)
Cancellation of Shares. At the Effective Time, all Shares will no longer be
outstanding, will be cancelled and will cease to exist, and, in the case of non-certificated shares
represented by book-entry (“
Book-Entry Shares”), the names of the former registered holders
shall be removed from the registry of holders of such shares, and, subject to
Section 2.3,
each holder of a certificate formerly representing any such Shares (each, a “
Certificate”)
and each holder of a Book-Entry Share, other than Dissenting Shares, will cease to have any rights
with respect thereto, except the right to receive the Per Share Merger Consideration, without
interest, in accordance with
Section 2.2.
(d)
Conversion of MergerCo Capital Stock. Each share of common stock, par value $0.01
per share, of MergerCo issued and outstanding immediately prior to the Effective Time will be
converted into one share of common stock, par value $0.01 per share, of the Surviving Corporation.
(a)
Paying Agent. Prior to the Effective Time, for the benefit of the holders of
Shares (other than Excluded Shares), Parent will (i) designate, or cause to be designated,
Computershare Inc. and Computershare Trust Company, N.A. (collectively, the “
Paying Agent”)
and (ii) enter into a paying agent agreement, in form and substance reasonably acceptable to the
Company, with such Paying Agent to act as agent for the payment of the Per Share Merger
Consideration in respect of Certificates upon surrender of such Certificates (or effective
affidavits of loss in lieu thereof and a bond, if required, pursuant to
Section 2.2(f)) and
the Book-Entry Shares in accordance with this
Article II from time to time after the
Effective Time. On or prior to the Closing Date, Parent will deposit, or cause to be deposited,
with the Paying Agent, in trust for the benefit of the holders of the Shares, cash necessary for
the payment of the Per Share Merger Consideration pursuant to
Section 2.1(b) (such cash
being herein referred to as the “
Payment Fund”). The Payment
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Fund shall not be used for
any other purpose. The Payment Fund shall be invested by the Paying Agent as directed by Parent;
provided, however, that such investments shall be (i) in obligations of, or
guaranteed by, the United States of America or any agency or instrumentality thereof and backed by
the full faith and credit of the United States of America, (ii) in commercial paper obligations
rated A-1 or P-1 or better by Xxxxx’x Investors Service, Inc. or Standard & Poor’s Corporation,
respectively, or (iii) in certificates of deposit, bank repurchase agreements or banker’s
acceptances of commercial banks with capital exceeding $1 billion (based on the most recent
financial statements of such bank which are then publicly available). Any net profit resulting
from, or interest or income produced by, such investments shall be the property of and payable to
Parent.
(b)
Payment Procedures. The Company shall prepare a transmittal form (the “
Letter
of Transmittal”) which shall have been approved by Parent prior to distribution to any holder
of Shares, advising such holders of the procedure for surrendering to the Paying Agent Certificates
and Book-Entry Shares in exchange for the Per Share Merger Consideration payable with respect to
each such Share. The Letter of Transmittal shall provide, among other things, that delivery will
be effected, and risk of loss and title to Certificates and Book-Entry Shares will pass, only upon
proper delivery of Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry
Shares, as the case may be, to the Paying Agent and instructions for use in effecting the surrender
of the Certificates (or effective affidavits of loss in lieu thereof) and Book-Entry Shares in
exchange for the Per Share Merger Consideration. Upon the proper surrender of a Certificate
(or effective affidavit of loss in lieu thereof) or Book-Entry Share to the Paying Agent, together
with a properly completed letter of transmittal, duly executed, and such other documents as
reasonably may be requested by the Paying Agent, the holder of such Certificate or Book-Entry Share
will be entitled to receive in exchange therefor cash in the amount (after giving effect to any
required tax withholdings) that such holder has the right to receive pursuant to this
Article II, and the Certificate or Book-Entry Share so surrendered will be cancelled
forthwith. No interest will be paid or accrued on any amount payable upon due surrender of the
Certificates or Book-Entry Shares. In the event of a transfer of ownership of Shares that is not
registered in the transfer records of the Company, cash to be paid upon due surrender of the
Certificate or Book-Entry Share may be paid to such a transferee if the Certificate or Book-Entry
Share formerly representing such Shares is presented to the Paying Agent, accompanied by all
documents required to evidence and effect such transfer and to evidence that any applicable stock
transfer Taxes have been paid or are not applicable.
(c)
Withholding Taxes. The Surviving Corporation and the Paying Agent will be
entitled to deduct and withhold from amounts otherwise payable pursuant to this Agreement to any
holder of Shares or holder of Company Stock Rights any amounts required to be deducted and withheld
with respect to such payments under the Code, or any provision of state, local or foreign Tax Law.
Any amounts so deducted and withheld will be timely paid to the applicable Tax authority and will
be treated for all purposes of this Agreement as having been paid to the holder of the Shares or
holder of Company Stock Rights, as the case may be, in respect of which such deduction and
withholding was made.
(d)
No Further Transfers. At the Effective Time, the stock transfer books of the
Company shall be closed with respect to shares of capital stock of the Company issued and
outstanding immediately prior to the Effective Time and no further transfers on the stock transfer
books of the Company of Shares that were outstanding immediately prior to the Effective Time
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shall
be made other than to settle transfers of Shares that occurred prior to the Effective Time. If,
after the Effective Time, Certificates or Book-Entry Shares are presented to the Paying Agent, they
will be cancelled and exchanged for the Per Share Merger Consideration as provided in this
Article II.
(e)
Termination of Payment Fund. Any portion of the Payment Fund that remains
undistributed to the holders of the Certificates or Book-Entry Shares six months after the
Effective Time will be delivered to Parent, on demand, and any holder of a Certificate or
Book-Entry Share who has not theretofore complied with this
Article II thereafter will look
only to Parent for payment of his, her or its claims for Per Share Merger Consideration.
Notwithstanding the foregoing, none of Parent, MergerCo, the Company, the Surviving Corporation,
the Paying Agent or any other Person will be liable to any former holder of Shares for any amount
delivered to a public official pursuant to applicable abandoned property, escheat or similar Laws.
(f)
Lost, Stolen or Destroyed Certificates. In the event any Certificate has been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the
posting by such Person of a bond in customary amount and upon such terms as the Surviving
Corporation may determine are necessary as indemnity against any claim that may be made against it
with respect to such Certificate, the Paying Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Per Share Merger Consideration pursuant to this Agreement.
Section 2.3
Dissenting Shares. Notwithstanding any provision of this Agreement to the contrary and to the extent provided
under the FBCA, any Shares outstanding immediately prior to the Effective Time that are held by a
Person who has neither voted in favor of the approval of this Agreement nor consented thereto in
writing and who has demanded properly in writing appraisal for such Shares (the “
Dissenting
Shares”) and otherwise properly perfected and not withdrawn or lost his, her or its rights in
accordance with Section 607.1321 of the FBCA will not be converted into, or represent the right to
receive, the Per Share Merger Consideration (with each such Person being referred to herein as a
“
Dissenting Shareholder”). Such Dissenting Shareholders will be entitled to receive
payment of the appraised value of Dissenting Shares held by them in accordance with
the provisions of Sections 607.1302 and 607.1324 of the FBCA, except that all Dissenting
Shares held by shareholders who have failed to perfect or who effectively have withdrawn or lost
their rights to appraisal of such Dissenting Shares pursuant to Section 607.1323 of the FBCA will
thereupon be deemed to have been converted into, and represent the right to receive, the Per Share
Merger Consideration in the manner provided in this
Article II and will no longer be
Excluded Shares. The Company will give Parent prompt notice within one Business Day after receipt
by the Company of any written demands for appraisal, attempted withdrawals of such demands, and any
other instruments or documents received by the Company relating to shareholders’ rights of
appraisal. The Company will give Parent the opportunity to participate in and direct all
negotiations and proceedings with respect to demands for appraisal. The Company will not, except
with the prior written consent of Parent, make any payment with respect to any demands for
appraisals of Dissenting Shares, offer to settle or settle any such demands or approve any
withdrawal or other treatment of any such demands.
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Section 2.4
Adjustments to Prevent Dilution. In the event that the Company changes the number of Shares, or securities convertible or
exchangeable into or exercisable for Shares, issued and outstanding prior to the Effective Time as
a result of a reclassification, stock split (including a reverse stock split), stock dividend or
distribution, recapitalization, merger, subdivision, issuer tender or exchange offer, or other
similar transaction, the Per Share Merger Consideration will be equitably adjusted to reflect such
change;
provided that nothing herein shall be construed to permit the Company to take any
action with respect to its securities that is prohibited by the terms of this Agreement.
(a) At the Effective Time, each outstanding and unexercised option, warrant, right, call,
convertible security, right to subscribe, conversion right or other agreement or commitment to
which the Company is a party or which is binding upon the Company providing for the issuance or
transfer by the Company of additional shares of capital stock of the Company, whether vested or
unvested (collectively, the “Company Stock Rights”), automatically shall be canceled and
extinguished and no payment shall be made in respect thereof.
(b) Prior to the Effective Time, the Company Board (or a committee thereof) will adopt such
resolutions and will take such other actions as shall be required to effectuate the actions
contemplated by Section 2.5(a), without paying any consideration or incurring any debts or
obligations on behalf of the Company or the Surviving Corporation including, but not limited to,
terminating all Company Stock Award Plans.
Section 2.6
Adjustment to Per Share Merger Consideration. Each of Parent, MergerCo
and the Company agrees and acknowledges that the Per Share Merger Consideration was calculated such
that the aggregate Per Share Merger Consideration payable to all holders of Shares (other than
Shares to be canceled in accordance with
Section 2.1(a)) (the “
Purchase Price”)
would equal $8,350,000 (i.e. $8,500,000 minus the Estimated Closing Indebtedness). In
the event that, immediately prior to the Closing, the Company is unable to demonstrate to the
reasonable satisfaction of Parent that:
(a) the Closing Cash is at least $1,500,000, then the Purchase Price shall be reduced by the
amount by which $1,500,000 exceeds the Closing Cash; and/or
(b) the Closing Indebtedness is less than or equal to the Estimated Closing Indebtedness, then
the Purchase Price shall be reduced by the amount by which the Closing Indebtedness exceeds the
Estimated Closing Indebtedness; and
in the case of a reduction of the Purchase Price pursuant to Section 2.6(a) and/or
Section 2.6(b), the Per Share Merger Consideration shall be reduced accordingly.
Notwithstanding any other provision of this Agreement, the amendment or modification of the
Company Disclosure Letter by the Company after the time Parent has signed this Agreement shall have
no effect with respect to the agreements, covenants and obligations of the Company pursuant to
Article V or the conditions to be satisfied pursuant to Section 6.2.
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Except as set forth in the letter (the “Company Disclosure Letter”) delivered by the
Company to Parent and MergerCo concurrently with the execution of this Agreement (each section of
which, to the extent specified therein, qualifies the correspondingly numbered representation and
warranty or covenant of the Company contained herein together with any other representation and
warranty or covenant where its relevance is reasonably apparent), the Company hereby represents and
warrants to Parent and MergerCo as follows:
Section 3.1
Organization; Power; Qualification. The Company and each of its Subsidiaries is a corporation, limited liability
company or other legal entity duly organized, validly existing and in good standing (to the extent
such concept is legally recognized) under the Laws of its jurisdiction of organization. Each of
the Company and its Subsidiaries has the requisite corporate or similar power and authority to own,
lease and operate its assets and to carry on its business as now conducted and as it will be
conducted through the Effective Time. Each of the Company and its Subsidiaries is duly qualified
or licensed to do business as a foreign corporation, limited liability company or other legal
entity and is in good standing (to the extent such concept is legally recognized) in each
jurisdiction where the character of the assets and properties owned, leased or operated by it or
the nature of its business makes such qualification or license necessary, except where the failure
to be so qualified or licensed or in good standing would not reasonably be expected to have a
Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries is in violation
of its Company Organizational Documents.
(a) The Company has all requisite corporate power and authority to enter into and to perform
its obligations under this Agreement and, subject to approval of this Agreement by the Requisite
Company Vote, to consummate the transactions contemplated by this
Agreement, including the Merger. The Company Board, acting upon the unanimous recommendation
of the Special Committee, at a duly held meeting has, by unanimous vote of all of the directors,
(i) determined that it is in the best interests of the Company and its shareholders, and declared
it advisable, to enter into this Agreement with Parent and MergerCo, (ii) approved the execution,
delivery and performance of this Agreement and the consummation of the transactions contemplated
hereby, including the Merger, and (iii) resolved to recommend that the shareholders of the Company
approve this Agreement (collectively with the recommendation of the Special Committee, the
“Company Board Recommendation”) and directed that such matter be submitted for
consideration of the shareholders of the Company at the Company Shareholders Meeting. The
execution, delivery and performance of this Agreement by the Company and the consummation by the
Company of the transactions contemplated by this Agreement (including the Merger) have been duly
and validly authorized by all necessary corporate action on the part of the Company and no further
action is required on the part of the Company to authorize the execution and delivery of this
Agreement or to consummate the Merger and the other transactions contemplated hereby, subject only
to the Requisite Company Vote and the filing of the Articles of Merger.
(b) This Agreement has been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery of this Agreement by Parent and MergerCo, constitutes a valid
and binding agreement of the Company, enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, reorganization,
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moratorium and similar Laws of general
applicability relating to or affecting creditor’s rights and to general principles of equity.
(a) The Company’s authorized capital stock consists solely of 8,000,000 shares of Common
Stock. As of the close of business on March 25, 2008 (the “Measurement Date”), 1,477,746
shares of Common Stock were issued and outstanding, including 5,000 shares of restricted Common
Stock. As of the Measurement Date, no shares of Common Stock were held in the treasury of the
Company. No Shares are held by any Subsidiary of the Company. Since the Measurement Date, there
has been no change in the number of outstanding shares of capital stock of the Company or the
number of shares issuable upon the exercise of outstanding Company Stock Rights. As of the
Measurement Date, Stock Options to purchase 45,000 shares of Common Stock were issued and
outstanding and no other Company Stock Rights were issued and outstanding. Section
3.3(a)(i) of the Company Disclosure Letter sets forth a complete and correct list of all Stock
Options that are outstanding as of the Measurement Date, and with respect to each Stock Option: (i)
the name of the holder of the Stock Option, (ii) the number of shares of Common Stock subject to
the Stock Option, (iii) the exercise price, (iv) the date on which the Stock Option was granted or
issued, (v) the name of the Company Benefit Plan under which the Stock Option was issued and
whether the Stock Option is an “incentive stock option” (as defined in Section 422 of the Code) or
a nonqualified stock option, (vi) whether or not the Stock Option will be canceled and
extinguished, by its terms, at or immediately prior to the Effective Time, and (vii) the date on
which the Stock Option expires. Except as specifically set forth in Section 3.3(a)(ii) of
the Company Disclosure Letter, all Stock Options shall, by virtue of the Merger and without any
action on the part of Parent, the Company or any holder of any Stock Option, terminate and be
canceled and extinguished and no payment shall be made in respect
thereof. No bonds, debentures, notes or other indebtedness of the Company or any of its
Subsidiaries (i) having the right to vote on any matters on which shareholders may vote (or which
is convertible into or exchangeable for securities having such right) or (ii) the value of which is
in any way based upon or derived from capital or voting stock of the Company, are issued or
outstanding (collectively, the “Voting Debt”). Other than the Stock Options, there are no
shares of capital stock or securities or other rights convertible or exchangeable into or
exercisable for shares of capital stock or Voting Debt of the Company or such securities or other
rights (which term, for purposes of this Agreement, will be deemed to include stock appreciation
rights, “phantom stock” or other commitments or arrangements that provide any right to receive
value or benefits similar to such capital stock, securities or other rights or that are based upon
the book value, income or other attribute of the Company). Since the Measurement Date, there have
been no issuances of any securities of the Company or any of its Subsidiaries.
(b) All Shares are, and all shares of Common Stock reserved for issuance upon the exercise of
Stock Options, when issued in accordance with the respective terms thereof, will be, duly
authorized, validly issued, fully paid and non-assessable and are not and will not be subject to
any pre-emptive rights.
(c) Except as set forth in Section 3.3(c) of the Company Disclosure Letter, there are
no outstanding contractual obligations of the Company or any of its Subsidiaries to issue, sell, or
otherwise transfer to any Person, or to repurchase, redeem or otherwise acquire
8
from any Person,
any Shares, Stock Options, capital stock of any Subsidiary of the Company, Voting Debt, other
voting securities, or securities or other rights convertible or exchangeable into or exercisable
for shares of capital stock or Voting Debt of the Company or any Subsidiary of the Company or such
securities or other rights.
(d) Except as set forth in Section 3.3(d) of the Company Disclosure Letter, since
December 31, 2007 and through the date of this Agreement, the Company has not declared or paid any
dividend or distribution in respect of any of the Company’s securities, and neither the Company nor
any Subsidiary of the Company has issued, sold, repurchased, redeemed or otherwise acquired any of
the Company’s securities, and their respective boards of directors have not authorized any of the
foregoing.
(e) Each Company Benefit Plan providing for the grant of Shares or of awards denominated in,
or otherwise measured by reference to, Shares (each, a “Company Stock Award Plan”) is set
forth (and identified as a Company Stock Award Plan) in Section 3.14(a) of the Company
Disclosure Letter. The Company has provided to Parent correct and complete copies of all Company
Stock Award Plans under which awards are currently outstanding and all forms of options and other
equity based awards (including award agreements) issued and outstanding under such Company Stock
Award Plans.
(f) Neither the Company nor any Subsidiary of the Company has entered into any commitment,
arrangement or agreement, or is otherwise obligated, to contribute capital, loan money or otherwise
provide funds or make investments in any Person other than (i) any such commitments, arrangements,
or agreements in the ordinary course of business consistent with past practice or (ii) pursuant to
Disclosed Contracts.
Section 3.4
Subsidiaries and Company Joint Ventures.
Section 3.4 of the
Company Disclosure Letter sets forth a complete and correct list of all of the Company’s
Subsidiaries and all Company Joint Ventures. The Company is the direct or indirect owner of all of
the outstanding shares of capital stock of, or other equity or voting interests in, each of the
Company’s Subsidiaries. All equity interests of the Subsidiaries and the Company Joint Ventures
held by the Company or any other Subsidiary of the Company are validly issued, fully paid and
non-assessable and were not issued in violation of any preemptive or similar rights, purchase
option, call or right of first refusal or similar rights. All such equity interests owned by the
Company or another Subsidiary of the Company are free and clear of any Liens or any other
limitations or restrictions on such equity interests (including any limitation or restriction on
the right to vote, pledge or sell or otherwise dispose of such equity interests) other than any
Permitted Liens or restrictions contained in the Joint Venture Agreements related thereto. The
Company has provided Parent with true, complete and correct copies of the Company Organizational
Documents and the joint venture agreements of the Company Joint Ventures. Other than the
Subsidiaries and the Company Joint Ventures listed in
Section 3.4 of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries owns any capital stock of, or other equity
or voting interests of any nature in, or any interest convertible, exchangeable or exercisable for,
capital stock of, or other equity or voting interests of any nature in, any other Person.
Section 3.4 of the Company Disclosure Letter sets forth for each Subsidiary of the Company
and Company Joint Venture: (i) its name and the jurisdiction of its organization, (ii) the number
of shares of authorized capital stock or each class of its capital
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stock (or comparable information
for membership interests, partnership interests or other equity interests), (iii) the number of
issued and outstanding shares of each class of its capital stock (or comparable information for
membership interests, partnership interests or other equity interests), (iv) the number of shares
of its capital stock (or other equity interests) held in treasury, (v) its directors, officers,
managers, or general partners, as the case may be, and (vi) all the jurisdictions in which it is
qualified to do business as a foreign entity, and such Subsidiary of the Company or Company Joint
Venture is in good standing in each of such jurisdictions.
Section 3.5
Required Filings and Consents. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the transactions contemplated
by this Agreement, including the Merger, do not and will not require any consent, approval,
authorization or permit of, or filing with or notification to, any international, foreign,
supranational, national, federal, state, provincial or local governmental, regulatory or
administrative authority, agency, commission, court, tribunal, arbitral body, self regulated entity
or similar body, whether domestic or foreign (each, a “
Governmental Entity”) other than:
(i) the filing and recordation of the Articles of Merger with the Department of State of the State
of Florida; (ii) the filing with the Securities and Exchange Commission (the “
SEC”) of a
proxy statement (the “
Company Proxy Statement”) relating to the special meeting of the
shareholders of the Company to be held to consider the approval of this Agreement (the “
Company
Shareholders Meeting”); (iii) any filings required by, and any approvals required under, the
rules and regulations of the NASDAQ Stock Market (the “
NASDAQ”); and (iv) any consent,
approval or other authorization of, or filing with or notification to, any Governmental Entity
identified in
Section 3.5(iv) of the Company Disclosure Letter.
Section 3.6
Non-Contravention. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions contemplated by
this Agreement, including the Merger, do not and will not:
(a) contravene or conflict with, or result in any violation or breach of, any provision of (i)
any of the Company Organizational Documents or (ii) any of the organizational or governing
documents of any Company Joint Venture;
(b) assuming that all consents, approvals, authorizations, filings and notifications described
in Section 3.5 have been obtained or made (i) contravene or conflict with, or result in any
violation or breach of, any Laws or Orders applicable to the Company or any of its Subsidiaries or
by which any assets of the Company or any of its Subsidiaries (“Company Assets”) are bound
or affected; (ii) result in any violation or breach of or loss of a benefit under, or constitute a
default (with or without notice or lapse of time or both) under, any Disclosed Contract; (iii)
except as set forth on Section 3.6(b) of the Company Disclosure Letter, require any
consent, approval or other authorization of, or filing with or notification to, any Person under
any Company Contract; (iv) give rise to any termination, cancellation, amendment, modification or
acceleration of any rights or obligations under any Company Contract; (v) cause the creation or
imposition of any Liens on any Company Assets, except for Permitted Liens; or (vi) contravene or
conflict with, or result in any violation or breach of, any permit, license, accreditation,
consent, certificate, approval, exemption, Order, franchise, permission, agreement, qualification,
authorization or registration (each, a “Permit”) of the Company or any of its Subsidiaries
or any Law applicable to the Company or any of its Subsidiaries.
10
(a)
Permits. Each of the Company and its Subsidiaries is in possession of all material
Permits necessary to own, lease and operate their respective properties and assets or to carry on
their respective businesses as now being conducted in compliance with applicable Laws, which
Permits are listed in
Section 3.7(a) of the Company Disclosure Letter, and all such Permits
are in full force and effect. No suspension or cancellation of any of the Permits so listed is
pending or, to the Knowledge of the Company, threatened. Each of the Company and its Subsidiaries
is in material compliance with each of the Permits listed in
Section 3.7(a) of the Company
Disclosure Letter.
(b)
Compliance with Law. Since 2002, except as disclosed on
Section 3.7(b) of
the Company Disclosure Letter, each of the Company and its Subsidiaries has not violated in any
material respect and is in material compliance with all applicable Laws and all Orders relating to
the business or operations of the Company or any of its Subsidiaries, including Laws relating to
the import and export of all products used, distributed, sold, resold, licensed or sublicensed in
connection with the business of the Company and its Subsidiaries. Since 2002, none of the Company
and its Subsidiaries has received any written notice to the effect that it is not in material
compliance with any Law. Each of the Company and its Subsidiaries has filed in a timely manner all
reports, documents and other materials it was required to file under applicable Laws other than
filings that have not had and will not have a Company Material Adverse Effect.
(a) The Requisite Company Vote is the only vote of the holders of any class or series of the
capital stock of the Company or any of its Subsidiaries necessary to approve this Agreement and
approve the Merger and the other transactions contemplated thereby.
(b) Except as set forth in Section 3.8(b) of the Company Disclosure Letter, there are
no voting trusts, proxies or similar agreements, arrangements or commitments to which the Company
or any of its Subsidiaries is a party with respect to the voting of any shares of capital stock of
the Company or any of its Subsidiaries, other than the Support Agreement. There are no bonds,
debentures, notes or other instruments of indebtedness of the Company or any of its Subsidiaries
that have the right to vote, or that are convertible or exchangeable into or exercisable for
securities or other rights having the right to vote, on any matters on which shareholders of the
Company may vote.
Section 3.9
Financial Reports and SEC Documents; Accounts Receivable. (a) The Company has filed or furnished all forms, statements, reports and documents required
to be filed or furnished by it with the SEC pursuant to the Exchange Act or other applicable
securities statutes, regulations, policies and rules since December 31, 2005 (the forms,
statements, reports and documents filed or furnished with the SEC since December 31, 2005,
including any exhibits and amendments thereto, the “
Company SEC Documents”). Each of the
Company SEC Documents, at the time of its filing (except as and to the extent such Company SEC
Document has been specifically modified or superseded in any subsequent Company SEC Document filed
and publicly available at least one Business Day prior to the date of this Agreement), complied in
11
all material respects with the applicable requirements of each of the Exchange Act and the
Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the
“Securities Act”). As of their respective dates, except as and to the extent specifically
modified or superseded in any subsequent Company SEC Document filed and publicly available at least
one Business Day prior to the date of this Agreement, the Company SEC Documents did not 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 made therein, in light of the circumstances in which they were
made, not misleading. The Company SEC Documents included all certifications required to be
included therein pursuant to Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act of 2002, as amended,
and the rules and regulations promulgated thereunder (“SOX”). The Company has not received
any written comments from the SEC staff that are not resolved. Except as set forth in Section
3.9(a) of the Company Disclosure Letter, there have been no internal or SEC investigations
regarding accounting or revenue recognition discussed with, reviewed by or initiated at the
direction of the Company’s chief executive officer, principal financial officer, the Company Board
or any committee (or any chair of any such committee) thereof.
(b) Each of the consolidated balance sheets included in or incorporated by reference into the
Company SEC Documents (including the related notes and schedules) fairly presents in all material
respects the consolidated assets, liabilities and financial position of the Company and its
Subsidiaries as of its date, and each of the consolidated statements of income, changes in
shareholders’ equity and cash flows included in or incorporated by reference into the
Company SEC Documents (including any related notes and schedules), except and to the extent
any Company SEC Document has been specifically modified or superseded in any subsequent Company SEC
Document filed and publicly available at least one Business Day prior to the date of this
Agreement, fairly presents in all material respects the results of operations and cash flows, as
the case may be, of the Company and its Subsidiaries for the periods set forth therein (subject, in
the case of unaudited statements, to the absence of notes and normal year-end audit adjustments
that are not expected to be material in amount or effect). To the Company’s Knowledge, the
reserves shown on the Interim Financial Statements will be sufficient to satisfy in full the
contingent obligations and liabilities of the Company and its Subsidiaries as of the date thereof.
(c) Each of the consolidated balance sheets included in or incorporated by reference into the
Company SEC Documents (including the related notes and schedules), and each of the consolidated
statements of income, changes in shareholders’ equity and cash flows included in or incorporated by
reference into the Company SEC Documents (including any related notes and schedules), have, except
and to the extent any Company SEC Document has been specifically modified or superseded in any
subsequent Company SEC Document filed and publicly available at least one Business Day prior to the
date of this Agreement, in each case been prepared in accordance with U.S. generally accepted
accounting principles (“GAAP”) consistently applied during the periods involved, except as
may be noted therein.
(d) The Company and each of its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP
12
and to maintain accountability
for assets, (iii) access to assets is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences. The Company has timely filed and made publicly available on the SEC’s XXXXX system no
less than one Business Day prior to the date of this Agreement, all certifications and statements
required by (A) Rule 13a-14 or Rule 15d-14 under the Exchange Act and (B) Section 906 of Sarbanes
Oxley with respect to any Company SEC Documents. The Company maintains disclosure controls and
procedures required by Rule 13a-15 or Rule 15d-15 under the Exchange Act; such controls and
procedures are effective to provide reasonable assurance that the information required to be
disclosed by the Company in the reports filed with the SEC (x) is recorded, processed, summarized
and reported accurately within the time periods specified in the SEC’s rules and forms and (y) is
accumulated and communicated to the Company’s management, including its principal executive officer
and principal financial officer, as appropriate to allow timely decisions regarding required
disclosure. Except as set forth on Section 3.9(d) of the Company Disclosure Letter, the
Company maintains internal control over financial reporting as defined by Rule 13a-15 or Rule
15d-15 under the Exchange Act; as of December 31, 2007, such internal control over financial
reporting is effective (and, for the avoidance of doubt, does not contain any material weaknesses).
(e) Except as set forth on Section 3.9(e) of the Company Disclosure Letter, to the
Company’s Knowledge, (x) from December 31, 2005 through the date of this Agreement, none of the
Company or any of its Subsidiaries, or any director, officer or independent auditor of
the Company or any of its Subsidiaries, has received or otherwise had or obtained Knowledge of
any material complaint, allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of the Company or any of its
Subsidiaries or their respective internal accounting controls, and (y) since December 31, 2005
through the date of this Agreement, no attorney representing the Company or any of its Subsidiaries
has reported “evidence of a material violation” (as defined in Rule 2 of the Standards of
Professional Conduct for Attorneys appearing and practicing before the Securities and Exchange
Commission in the representation of an issuer) relating to periods after December 31, 2005, by the
Company (or any of its Subsidiaries) or any of their respective officers, directors, employees or
agents to the Company Board or any committee thereof or, to the Knowledge of the Company, to any
director or officer of the Company.
(f) Section 3.9(f) of the Company Disclosure Letter sets forth a list, as of a recent
date as set forth therein, of all accounts receivable of the Company and its Subsidiaries. All
such accounts receivable arose from bona fide transactions in the ordinary course of business.
None of such accounts receivable is subject to any counterclaims or setoffs for which adequate
reserves have not been established in accordance with GAAP. All such accounts receivable, net of
the reserve for doubtful accounts, are collectible in the ordinary course of business within 180
days of the invoice date.
13
(a) All Company Indebtedness and the amount thereof, by item, is described in Section
3.10 of the Company Disclosure Letter.
(b) Except (i) as and to the extent disclosed or reserved against on the Interim Financial
Statements or (ii) as incurred since the date thereof in the ordinary course of business consistent
with past practice (none of which relates in any material respect to any breach of Contract, breach
of warranty, tort, infringement or violation of any Law or any Order), neither the Company, any of
its Subsidiaries nor, to the Knowledge of the Company, any Company Joint Venture has any
liabilities or obligations of any nature, whether known or unknown, absolute, accrued, contingent
or otherwise and whether due or to become due.
(a) Except as disclosed in Section 3.11(a) of the Company Disclosure Letter, since
December 31, 2007, there has not been any Company Material Adverse Effect or any change, event or
development that, individually or in the aggregate, would reasonably be expected to have a Company
Material Adverse Effect.
(b) Except as disclosed in Section 3.11(b) of the Company Disclosure Letter, since
December 31, 2007, the Company and each of its Subsidiaries have conducted their business only in
the ordinary course of business consistent with past practice, and there has not been any (i)
action or event that, if taken on or after the date of this Agreement without Parent’s consent,
would violate the provisions of any of Sections 5.1(a), (b), (c)(i)-(ii),
(c)(iv)-(v), (d), (e), (f) (except with respect to dispositions of
assets having an aggregate value not in excess of
$50,000 for all such dispositions), (h), (k), (l), (m),
(n), (o) or (q) or (ii) agreement or commitment to do any of the foregoing.
Section 3.12
Litigation. There are no claims, actions, suits, demand letters, judicial, administrative or regulatory
proceedings, or hearings, notices of violation, or investigations before any Governmental Entity
(each, a “
Legal Action”) pending or, to the Knowledge of the Company, threatened, against
the Company or any of its Subsidiaries or any executive officer or director of Company or any of
its Subsidiaries in connection with his or her status as a director or executive officer of the
Company or any of its Subsidiaries. There is no outstanding Order against the Company or any of
its Subsidiaries or by which any property, asset or operation of the Company or any of its
Subsidiaries is bound or affected. To the Knowledge of the Company, neither the Company, any
Subsidiary of the Company, nor any executive officer or director of the Company or any such
Subsidiary is under investigation by any Governmental Entity related to the conduct of the
Company’s or any such Subsidiary’s business.
(a) Except as set forth in Section 3.13(a) of the Company Disclosure Letter, neither
the Company nor any of its Subsidiaries is a party to or bound by any Contract: (i) which is a
“material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K promulgated under
the Securities Act) to be performed in full or in part after the date of this Agreement; (ii) which
is a Company Joint Venture Agreement; (iii) which constitutes a contract
14
or commitment relating to
Company Indebtedness or the deferred purchase price of property (in either case, whether incurred,
assumed, guaranteed or secured by any asset) in excess of $50,000; or (iv) which contains any
provision that would restrict or limit, in any material respect, the conduct of business of the
Company, any Subsidiary of the Company or any of their respective Affiliates (or any Affiliate of
any such Affiliate thereof) after the Effective Time. Each contract, arrangement, commitment or
understanding of the type described in clause (i) of this Section 3.13(a) has been filed in
the Company SEC Documents. Each Contract listed in Section 3.13(a) of the Company
Disclosure Letter is referred to herein as a “Disclosed Contract” and correct and complete
copies thereof have been provided to Parent by the Company.
(b) (i) Each Company Contract is valid and binding on the Company and any of its Subsidiaries
that is a party thereto, as applicable, and in full force and effect, other than any such Company
Contract that expires or is terminated after the date hereof in accordance with its terms or
amended by agreement with the counterparty thereto (provided that, if any such Company
Contract is so amended in accordance with its terms after the date hereof (provided such
amendment is not prohibited by the terms of this Agreement), then to the extent the representation
and warranty contained in this sentence is made or deemed made as of any date that is after the
date of such amendment, the reference to “Company Contract” in the first clause of this
sentence shall be deemed to be a reference to such contract as so amended), (ii) the Company and
each of its Subsidiaries has in all respects performed all obligations required to be performed by
it to date under each Company Contract, except where such noncompliance would not reasonably be
expected to have a Company Material Adverse Effect, and (iii) neither the Company nor any of its
Subsidiaries knows of, or has received notice of, the existence of any
event or condition which constitutes, or, after notice or lapse of time or both, will
constitute, a default on the part of the Company or any of its Subsidiaries under any such Company
Contract, except where such default would not reasonably be expected to have a Company Material
Adverse Effect.
(a) Section 3.14(a) of the Company Disclosure Letter contains a correct and complete
list of each Company Benefit Plan. For purposes of each Company Benefit Plan, no entity is a member
of the Company’s “controlled group” (within the meaning of Section 414 of the Code) other than the
Company and its Subsidiaries.
(b) With respect to each Company Benefit Plan, the Company has made available to Parent
correct and complete copies of (i) all plan texts, amendments through the Closing Date, agreements
and related trust agreements (or other funding vehicles); (ii) the most recent summary plan
descriptions, all summaries of material modifications, and summaries of all material employee
communications concerning the extent of the benefits provided under a Company Benefit Plan since
December 31, 2006; (iii) the three most recent annual reports (including all schedules); (iv) the
three most recent annual audited financial statements and opinions; (v) if the plan is intended to
qualify under Section 401(a) of the Code, the most recent determination letter received from the
Internal Revenue Service (the “IRS”); and (vi) all material communications to or from any
Governmental Entity given or received since December 31, 2005. There is no present intention of the
Company that any Company Benefit Plan be materially amended, suspended or terminated, or otherwise
modified to adversely change benefits (or the
15
level thereof) under any Company Benefit Plan at any
time within the 12 months immediately following the date of this Agreement.
(c) Since December 31, 2006, there has not been any amendment or change in interpretation
relating to any Company Benefit Plan that would materially increase the cost of such Company
Benefit Plan.
(d) Neither the Company nor any member of the Company’s “controlled group” (within the meaning
of Section 414 of the Code) has at any time participated in or made contributions to or had any
other liability with respect to a plan that is (i) a Multiemployer Plan, (ii) a Multiple Employer
Plan, (iii) a Multiple Employer Welfare Arrangement, or (iv) subject to Section 302 or Title IV of
ERISA or Section 412 of the Code.
(e) Except as set forth in Section 3.14(e) of the Company Disclosure Letter, each
Company Benefit Plan intended to qualify under Section 401(a) of the Code has been issued a
favorable determination letter by the IRS, or has a favorable determination letter pending or has
time remaining in which to file an application for such determination from the IRS, with respect to
such qualification, and its related trust has been determined to be exempt from taxation under
Section 501(a) of the Code, and no event has occurred since the date of such qualification or
exemption that would reasonably be expected to materially adversely affect such qualification or
exemption. Each Company Benefit Plan has been and is established and administered in material
compliance with its terms and with the applicable provisions of ERISA, the Code and other
applicable Laws. Each Company Benefit Plan has been and is operated in
material respects in accordance with its terms and has been operated and funded in such a
manner as to qualify, where appropriate, for both federal and state purposes, for income tax
exclusions to its participants, tax-exempt income for its funding vehicle, and the allowance of
deductions and credits with respect to contributions thereto. No event has occurred and no
condition exists that would subject the Company by reason of its affiliation with any current or
former member of its “controlled group” (within the meaning of Section 414 of the Code) to any
material (i) Tax, penalty or fine, (ii) Lien (other than a Permitted Lien) or (iii) other liability
imposed by ERISA, the Code or other applicable Laws.
(f) Except as set forth in Section 3.14(f) of the Company Disclosure Letter, there are
no (i) Company Benefit Plans under which welfare benefits are provided to past or present employees
of the Company or its Subsidiaries beyond their retirement or other termination of service, other
than coverage mandated by the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”), Section 4980B of the Code, Title I of ERISA or any similar state group health
coverage continuation Laws, the cost of which is fully paid by such employees or their dependents;
or (ii) unfunded Company Benefit Plan obligations with respect to any past or present employees of
the Company and its Subsidiaries that are not fairly reflected by reserves shown on the most recent
financial statements contained in the Company SEC Documents, to the extent required by GAAP, except
as would not have, or would not reasonably be expected to have, a Company Material Adverse Effect.
(g) Except as set forth in Section 3.14(g) of the Company Disclosure Letter, neither
the execution and delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (either alone or in combination with another event) (i) result in any
16
payment becoming
due, or increase the amount of any compensation or benefits due, to any current or former employee
of the Company or its Subsidiaries or with respect to any Company Benefit Plan; (ii) increase any
benefits otherwise payable under any Company Benefit Plan; (iii) result in the acceleration of the
time of payment or vesting of any such compensation or benefits; (iv) result in a non-exempt
“prohibited transaction” within the meaning of Section 406 of ERISA or Section 4975 of the Code;
(v) limit or restrict the right of the Company to merge, amend or terminate any of the Company
Benefit Plans; or (vi) result in the payment of any amount that would, individually or in
combination with any other such payment, reasonably be expected to constitute an “excess parachute
payment,” as defined in Section 280G(b)(1) of the Code.
(h) None of the Company or any of its Subsidiaries or any Company Benefit Plan, or, to the
Knowledge of the Company, any “disqualified person” (as defined in Section 4975 of the Code) or
“party in interest” (as defined in Section 3(18) of ERISA), has engaged in any non-exempt
prohibited transaction (within the meaning of Section 4975 of the Code or Section 406 of ERISA)
which has resulted or would reasonably be expected to result in any material Liability to the
Company or its Subsidiaries, taken as a whole. With respect to any Company Benefit Plan, (i) no
Legal Actions (including any administrative investigation, audit or other proceeding by the
Department of Labor or the IRS but other than routine claims or appeals for benefits in the
ordinary course) are pending or, to the Knowledge of the Company, threatened, and (ii) to the
Knowledge of the Company, no events or conditions have occurred or exist that would reasonably be
expected to give rise to any such Legal Actions, except in each case such as would not reasonably
be expected to have a Company Material Adverse Effect.
(i) Except as would not reasonably be expected to have a Company Material Adverse Effect, all
Company Benefit Plans subject to the Laws of any jurisdiction outside of the United States (i) have
been maintained in accordance with all applicable requirements, (ii) if they are intended to
qualify for special tax treatment, meet all requirements for such treatment, and (iii) if they are
intended to be funded and/or book-reserved, are fully funded and/or book-reserved, as appropriate,
based upon reasonable actuarial assumptions.
(j) Each “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the
Code) of the Company (i) has been operated since January 1, 2005 in good faith compliance with
Section 409A of the Code and, effective January 1, 2008, in compliance with the final regulations
issued under Section 409A of the Code or (ii) is grandfathered from the application of Section 409A
of the Code and has not been “materially modified” (within the meaning of the final regulations
under Section 409A of the Code) at any time after October 3, 2004. With respect to each Stock
Option: (i) each Stock Option has been granted with an exercise price no lower than “fair market
value” (within the meaning of Section 409A of the Code) as of the grant date of such option; (ii)
no term of exercise of a Stock Option has been extended after the grant date of such Stock Option
in violation of Section 409A of the Code; and (iii) the grantee cannot otherwise defer recognition
of income after the Stock Option exercise date or, in the case of a qualifying disposition of an
incentive stock option, upon the sale of the stock received at the time of Stock Option exercise.
(k) Every outstanding Stock Option issued by the Company (i) has an exercise price equal to or
greater than the fair market value per share of the Common Stock on the date of grant of such Stock
Option, (ii) was issued in compliance with the terms of the plan under which
17
it was issued and in
compliance with applicable laws, rules and regulations, including the rules and regulations of the
NASDAQ, and (iii) has been accounted for in accordance with GAAP and otherwise been disclosed
accurately and completely and in accordance with the requirements of the Securities Act and the
Exchange Act and the rules and regulations thereunder, including Item 402 of Regulation S-K, and
the Company has paid, or properly reserved for, all taxes payable with respect to each such Stock
Option (including the issuance and exercise thereof), and has not deducted any amounts from its
taxable income that it is not entitled to deduct with respect to any such Stock Option (including
the issuance and exercise thereof).
(l) With respect to all periods from January 1, 2002 to the Effective Date, the requirements
of the Health Insurance Portability and Accountability Act of 1996, as amended, and COBRA (or any
similar applicable state law) have been satisfied in all material respects with respect to each
Company Benefit Plan.
(m) Each Company Benefit Plan may be amended, terminated, modified or otherwise revised by the
Company or the Surviving Corporation, on and after the Effective Date, without further liability to
the Company or the Surviving Corporation, except for liability for benefits payable under the terms
of such Company Benefit Plan.
(n) To the Knowledge of the Company, after due inquiry, no communication or disclosure has
been made that, at the time made, did not accurately reflect the terms and operations of any
Company Benefit Plan.
(a) No employees of the Company or any of its Subsidiaries are covered by collective
bargaining or similar agreements of the Company or its Subsidiaries.
(b) There is no labor strike or similar dispute, slowdown or stoppage pending or, to the
Knowledge of the Company, threatened against the Company or any of its Subsidiaries.
(c) There is no unfair labor practice complaint against the Company pending or, to the
Knowledge of the Company, threatened before the National Labor Relations Board.
(d) Since January 1, 2006, neither the Company nor any of its Subsidiaries has implemented any
plant closing or layoff of employees that would reasonably be expected to require notification
under the WARN Act or any similar foreign, state or local law or regulation.
(e) Section 3.15 of the Company Disclosure Letter contains a true, complete and
correct list of:
(i) the employees (other than directors and senior executives) employed by the Company or any
of the Company’s Subsidiaries: (a) who individually earned in excess of $100,000 in base salary for
the year ended December 31, 2007, or (b) who individually are expected to earn in excess of
$100,000 in base salary for the year ending December 31, 2008, and the rate of all current base
compensation payable by the Company and the Company’s Subsidiaries to each such employee, together
with their actual bonus for the year ended December 31, 2007 and their target bonus for the year
ended December 31, 2008;
18
(ii) the directors and senior executives of the Company and the Company’s Subsidiaries,
including compensation (current and previous year); and
(iii) all agreements containing obligations regarding severance, change of control or similar
payments to which the Company or any Subsidiary thereof is party (copies of which have been made
available to Parent prior to the date hereof).
(f) To the Company’s Knowledge, there is no pending application for certification of a
collective bargaining agent involving the Company or any of the Company’s Subsidiaries.
(g) All employees have been properly classified, and no person is treated as an independent
contractor or third party agency employee who should be treated as an employee under the laws of
the country in which such individual performs services. The Company has not, and none of the
Company’s Subsidiaries has, leased employees in the United States within the meaning of Section
414(N) of the Code without regard to subsection (2)(b) thereof.
(h) For each employee of the Company or any of its Subsidiaries on a leave of absence,
Section 3.15 of the Company Disclosure Letter indicates the nature of the leave of
absence and (to the extent known), the employee’s anticipated date of return to active
employment.
Section 3.16
Taxes. Except as disclosed on
Section 3.16 of the Company
Disclosure Letter:
(a) The Company and its Subsidiaries have properly prepared and timely filed all income and
material Tax Returns they were required to have filed, and all such Tax Returns are correct and
complete in all material respects;
(b) The Company or its Subsidiaries have fully and timely paid, or are contesting in good
faith by appropriate proceedings, all Taxes (whether or not shown to be due on the Tax Returns)
required to be paid by any of them. The Company and its Subsidiaries have made adequate provision
for any Taxes that are not yet due and payable for all taxable periods ending on or before
September 30, 2007 on the Interim Financial Statements to the extent required by GAAP;
(c) There are no outstanding agreements extending or waiving, or have the effect of extending
or waiving, the statutory period of limitations applicable to any claim for, or the period for the
collection, assessment or reassessment of, Taxes due from the Company or any of its Subsidiaries
for any taxable period and, to the Knowledge of the Company, no request for any such waiver or
extension is currently pending;
(d) No audit or other proceeding by any Governmental Entity is ongoing, pending or, to the
Knowledge of the Company, threatened with respect to any Taxes due from or with respect to the
Company or any of its Subsidiaries;
(e) Neither the Company nor any of its Subsidiaries is a party to any Tax sharing or similar
Tax agreement (other than an agreement exclusively between or among the
19
Company and its
Subsidiaries) pursuant to which it has or will have any obligation to make any payments on account
of indemnification for Taxes on or after the Closing Date;
(f) Neither the Company nor any of its Subsidiaries has distributed stock of another Person or
had its stock distributed by another Person in a transaction that was intended to be governed in
whole or in part by Section 355 or 361 of the Code in the two years prior to the date of this
Agreement;
(g) Neither the Company nor any of its Subsidiaries will be required to include any item of
income in, or exclude any item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any (A) change in method of accounting made
by either the Company or any of its Subsidiaries on or prior to the Closing Date, (B) “closing
agreement” as described in Section 7121 of the Code and any applicable regulation promulgated
thereunder (or any corresponding or similar provision of state, local or foreign income Tax Law)
executed on or prior to the Closing Date, (C) intercompany transactions or any excess loss account
described in the regulations promulgated under Section 1502 of the Code (or any corresponding or
similar provision of state, local or foreign income Tax law), (D) installment sale or open
transaction disposition made on or prior to the Closing Date, or (E) prepaid amount received on or
prior to the Closing Date;
(h) Neither the Company nor any of its Subsidiaries has engaged in any transaction that has
given rise to a disclosure obligation as a “reportable transaction” as defined in Code regulation
Section 1.6011-4(b);
(i) The Company has provided to Parent correct and complete copies of (A) all material Tax
Returns (including all schedules or attachments thereto and any amendments thereof) filed by the
Company or any of its Subsidiaries for Tax years ending in 2005 and thereafter and (B) all ruling
requests, private letter rulings, notices of proposed deficiencies, closing agreements, settlement
agreements, and similar documents sent to or received by the Company or any of its Subsidiaries
relating to Taxes;
(j) No claim has ever been made by any authority in a jurisdiction where the Company or any of
its Subsidiaries does not file Tax Returns that the Company or any of its Subsidiaries is or may be
subject to taxation by that jurisdiction;
(k) There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the
assets of the Company or any of its Subsidiaries;
(l) All Taxes required to be withheld or paid by the Company and its Subsidiaries in
connection with any amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party have been timely paid to the proper Governmental Entity or set
aside in accounts for such purpose and the Company and its Subsidiaries have each complied with all
material information reporting and backup withholding requirements, including maintenance of
required records with respect thereto, in connection with amounts paid or owing to any such
employee, independent contractor, creditor, stockholder, or other third party;
20
(m) Except with respect to any Affiliated Group of which the Company is the common parent
identified in Section 3.16 of the Company Disclosure Letter, the Company (i) has not been a
member of any Affiliated Group, (ii) does not have any liability for Taxes of any Person as a
transferee or successor, by contract, or otherwise, or (iii) has not been a member of any
partnership, limited liability company, joint venture or any other entity treated as a partnership
for federal income tax purposes;
(n) To the Knowledge of the Company, the Company and its Subsidiaries have disclosed on their
federal income and state income and franchise Tax Returns all positions taken therein that could
give rise to a substantial understatement of federal income tax within the meaning of Section 6662
of the Code or any corresponding or similar provision of state Tax Law.
Section 3.17
Environmental Compliance. Since January 1, 2003, except to the extent
identified on any environmental assessments conducted by or on behalf of Parent:
(a) neither the Company nor any of its Subsidiaries has generated, treated, stored or
Released, and has not authorized anyone else to generate, treat, store or Release, any Hazardous
Material in violation of any Environmental Health and Safety Laws;
(b) there has not been any generation, treatment, storage or Release of any Hazardous Material
in connection with the business of the Company or any of its Subsidiaries or the use of any real
property or facility leased or owned by the Company or any of its Subsidiaries, which has created
any liability under any Environmental Health and Safety Law or which would require reporting to or
notification of any Governmental Entity;
(c) no asbestos which is friable or polychlorinated biphenyls or underground storage tank is
contained in or located at, in or under any facility leased or owned by the Company or any of its
Subsidiaries;
(d) any Hazardous Material generated, treated, stored or Released by the Company or any of its
Subsidiaries in connection with the business of the Company or any of its Subsidiaries has been and
is being generated, treated, stored or Released in all material respects in compliance with
Environmental Health and Safety Law;
(e) the Company and its Subsidiaries have complied, and are in compliance, in all material
respects with all applicable requirements under Environmental Health and Safety Laws, and possess,
and at all times have possessed and been in compliance with, all permits and certificates required
under Environmental Health and Safety Laws, and have filed all notices or applications, required
thereby;
(f) neither the Company nor its Subsidiaries have been subject to, and have not received any
notice (written or oral) of, any private, administrative or judicial Order or Legal Action or any
notice (written or oral) of any intended private, administrative, or judicial Order or Legal Action
relating to any violation of Environmental Health and Safety Laws or the presence or alleged
presence of Hazardous Materials in, under, upon, or migrating to or from any real or immovable
property now or previously owned or used by the Company or its Subsidiaries or any offsite
location, and to the Knowledge of the Company there is no reasonable basis in fact or law
21
for any
such notice or action; and there are no pending or threatened Orders or Legal Actions (or notices
of potential Orders or Legal Actions) from any Governmental Entity or any other Person regarding
any matter relating to Environmental Health and Safety Laws; and
(g) the Company and its Subsidiaries have provided Parent with copies of all final engineering
or environmental studies in their possession or control with respect to the Company, the
Subsidiaries, and all properties at which the Company or any of its Subsidiaries has conducted
business, including the Owned Real Property; and Section 3.17 of the Company Disclosure
Letter sets forth and describes all material response actions, investigations, removal actions,
remedial actions, compliance and/or corrective actions currently or previously conducted at the
Owned Real Property or leased property (“Environmental Actions”), including, without
limitation, (i) Environmental Actions that have received closure, no further action status or other
similar final approval from a Governmental Entity (“Regulatory Closure”), and (ii)
Environmental Actions that have not received Regulatory Closure.
Section 3.18
Intellectual Property Rights.
Section 3.18 of the Company
Disclosure Letter contains a true and complete list of all patents, patent applications, trademark
and service xxxx registrations and applications, material unregistered trademarks and service
marks, domain names, copyright registrations and applications, and material software products or
functionality,
in each case owned by the Company or any of its Subsidiaries or exclusively licensed to the
Company or any of its Subsidiaries for use in their businesses.
Section 3.18 of the Company
Disclosure Letter shall set forth with respect to each item listed therein, to the extent
applicable, the jurisdiction where registered, the name of the registered owner, the date of
registration or application, the name of the registration body where the registration or
application was made and the registration or application number. All of the Intellectual Property
purported to be owned by the Company or any of its Subsidiaries (“Owned Intellectual Property”) and
which is registered (“Registered Intellectual Property”) is in full force and effect, none of the
Registered Intellectual Property has been canceled, abandoned, adjudicated invalid, or otherwise
terminated and all renewal and maintenance fees in respect of such Registered Intellectual Property
(if applicable) have been duly paid. Except as identified in
Sections 3.18(a)-(j) of the
Company Disclosure Letter (with each such subsection of Section 3.18 of the Company Disclosure
Letter corresponding to subsections (a)-(j) below):
(a) the Company and each of its Subsidiaries owns all right, title and interest, or is
licensed in writing to use in the matter and extent it is being used (in each case, free and clear
of any Liens), all Intellectual Property used in or necessary for the conduct of its business as
currently conducted, and neither the Company nor any of its Subsidiaries has received any written
notice or other communication, or otherwise has Knowledge of any information that would render or
indicate that such Intellectual Property is or may be invalid or unenforceable;
(b) neither Company nor its Subsidiaries has infringed, misappropriated or otherwise violated
the Intellectual Property rights of any Person;
(c) to the Knowledge of the Company, no Person has challenged, infringed, misappropriated or
otherwise violated any Intellectual Property right owned by and/or licensed to the Company or its
Subsidiaries;
22
(d) neither the Company nor any of its Subsidiaries has received any written notice or
otherwise has Knowledge of any pending claim, action, suit, order or proceeding with respect to any
Intellectual Property owned or used by the Company or any of its Subsidiaries or alleging that any
services provided, processes used or products manufactured, used, imported, offered for sale or
sold by the Company or any of its Subsidiaries infringes, misappropriates or otherwise violates any
Intellectual Property rights of any Person;
(e) the consummation of the transactions contemplated by this Agreement will not alter,
encumber, impair or extinguish any Intellectual Property right of the Company or any of its
Subsidiaries or impair the right of Parent to develop, use, sell, license or dispose of, or to
bring any action for the infringement of, any Intellectual Property right of the Company or any of
its Subsidiaries;
(f) the Company and its Subsidiaries have taken reasonable steps in accordance with normal
industry practice to maintain the confidentiality of all material Trade Secrets owned, used or held
for use by the Company or any of its Subsidiaries and, to the Knowledge of the Company, no such
Trade Secrets have been disclosed other than to employees, representatives and agents of the
Company or any of its Subsidiaries, in each case subject to reasonable and appropriate
confidentiality efforts under the circumstances;
(g) neither the Company nor any of its Subsidiaries has granted any licenses or other rights,
of any kind or nature, in or to any of the Intellectual Property owned by the Company or any of its
Subsidiaries to any third party (“Company Licenses”), neither the Company nor any of its
Subsidiaries uses or pays any compensation, fees or royalties with respect to, and no third party
has granted any licenses or other rights, of any kind or nature, to the Company or any of its
Subsidiaries for, any third party Intellectual Property (“Third Party Licenses”). Neither
the Company, its Subsidiaries nor, to the Company’s Knowledge, and any third party is in breach of
any Company Licenses or Third Party Licenses;
(h) neither the Company nor any of its Subsidiaries is obligated to pay any continuing fees,
royalties or other compensation or consideration to any third party with respect to any Owned
Intellectual Property, and all Owned Intellectual Property was developed, created and designed by
employees of the Company or one of its Subsidiaries acting within the scope of their employment or
by consultants or contractors who have assigned all of their rights in and to such Owned
Intellectual Property to the Company or any of its Subsidiaries pursuant to agreements listed in
Section 3.18(h) of the Company Disclosure Letter;
(i) the Company Products do not contain any open source or public library software (such as,
but not limited to, software licensed under the GNU General Public License, BSD License, Apache or
Open LDAP Public License), and no government funding or university or college facilities were used
in the development of any of the Company’s products or other Owned Intellectual Property; and
(j) the Company and its Subsidiaries have not suffered any failures, errors or breakdowns in
their computer systems within the past 12 months which have caused any substantial disruption or
interruption in the business of the Company or any of its Subsidiaries.
23
(a)
Owned Real Property. The Company owns that certain parcel of land and
improvements thereon located at 0000 X.X. 000xx Xxxxxx, Xxxxx, Xxxxxxx (the “
Owned Real
Property”). Neither the Company nor any of the Company’s Subsidiaries owns a fee interest in
any real property other than the Owned Real Property, and neither the Company nor any of the
Company’s Subsidiaries owns any other interest in real property except for the leasehold interests
that are the subject of the Real Estate Leases. Except as set forth on
Section 3.19(a) of
the Company Disclosure Letter, the Company has fee simple title to the Owned Real Property, free
and clear of all Liens. The Owned Real Property is not subject to any covenants, rights of way,
building or use restrictions, easements, exceptions, variances, reservations or other matters or
limitations that do or would reasonably be expected to materially detract from the Company’s
ability to use the Owned Real Property. With respect to the Owned Real Property:
(i) there is no condemnation proceeding, eminent domain proceeding or compulsory acquisition
order, as applicable, pending or threatened against the Owned Real Property;
(ii) all buildings, structures and appurtenances situated on the Owned Real Property are in a
state of good maintenance and repair (normal wear and tear excepted), are
adequate and suitable for the purposes for which they are presently used and, with respect to
each, the Company or one of its Subsidiaries has adequate rights of ingress and egress for
operation of the business of the Company or such Subsidiary in the ordinary course;
(iii) the Owned Real Property is not subject to any lease, sublease or other agreement
granting any third party the right to occupy or use any part of the Owned Real Property;
(iv) the current use of the buildings, structures and improvements located on the Owned Real
Property, and the construction of the improvements, are in compliance in all material respects with
all applicable federal, state or local statutes, Laws, codes, Orders or requirements (including,
without limitation, any building, zoning, fire or Environmental Health and Safety Laws), and no
written notice of a violation of such Laws, codes, Orders or requirements or of any covenant,
condition, easement or restriction affecting the Owned Real Property or relating to its use or
occupancy has been given nor, to the Company’s Knowledge, does any such violation exist;
(v) all applicable and required licenses, permits, building permits and occupancy permits with
respect to the Owned Real Property have been duly obtained by the Company or its Subsidiaries and
are in full force and effect;
(vi) the Owned Real Property is occupied under valid and current certificates of occupancy,
and other entitlements or the like, and the Merger will not require the issuance of any new or
amended certificates of occupancy, entitlements or the like; there are no facts known to the
Company which would prevent the Owned Real Property from being occupied after the Closing in
substantially the same manner as before the Closing;
24
(vii) there are no outstanding variances or special use permits affecting the Owned Real
Property or its uses and none of the Owned Real Property constitutes an existing non-conforming use
under the applicable zoning code;
(viii) no buildings, structures or improvements located on the Owned Real Property encroach on
to any adjoining land owned by third parties and there is no encroachment on to the Owned Real
Property by buildings, structures or improvements situated on adjoining premises;
(ix) to the Company’s Knowledge, the Owned Real Property has, and will have as of Closing,
water supply, storm and sanitary sewage facilities, telephone, gas, electricity, fire protection,
ingress and egress to and from public streets and, without limitation, other required public
utilities, all of which are adequate for the current use of the Owned Real Property. To the
Company’s Knowledge, all utility lines and facilities are serviced and maintained by the
appropriate entity. To the Company’s Knowledge, all utilities enter the Owned Real Property
through adjoining public streets or, if they pass through adjoining private land, they do so in
accordance with valid public easements;
(x) the Company has no Knowledge of improvements made or contemplated to be made by any public
or private authority, the costs of which are to be assessed
as special Taxes or charges against the Owned Real Property, and there are no special
assessments;
(xi) the Owned Real Property is freely accessible directly from all public streets on which it
abuts, or uses adjoining private land to access the same in accordance with valid public easements.
To the Company’s Knowledge, there is no condition that would result in the termination of such
access; and
(xii) the Company has no Knowledge of any boundary or water drainage disputes with the owners
of any premises adjacent to the Owned Real Property or of any such dispute involving former owners
of the Owned Real Property.
(b)
Leased Real Property.
Section 3.19(b) of the Company Disclosure Letter
sets forth a true and complete list of each lease (each a “
Real Estate Lease”) under which
the Company or any of its Subsidiaries is a lessee or lessor of real property. With respect to
each parcel that is the subject of a Real Estate Lease,
Section 3.19(b) of the Company
Disclosure Letter sets forth the location, landlord’s name and address, purpose, square footage,
lease expiration date, and the approximate number of employees working at such location. The
Company has made available to Parent a true and complete copy of each Real Estate Lease. The
Company or the applicable Subsidiary of the Company enjoys peaceful and undisturbed possession
under each Real Estate Lease to which it is a party-lessee and there is not, with respect to any
Real Estate Lease, any material event of default, or event which with notice or lapse of time or
both would constitute a material event of default, existing on the part of the Company or such
Subsidiary or, to the Knowledge of the Company, on the part of any other party thereto. None of
the rights of the Company or any applicable Subsidiary of the Company under any Real Estate Lease
will be subject to termination, default, acceleration or modification, and no consent or approval
of any third party is required under any Real Estate Lease, as a result
25
of the consummation of the
Merger. No Person other than the Company and its employees has the right of use or occupancy of
any portion of the real property owned or leased by the Company or any of its Subsidiaries.
(c)
Personal Property.
Section 3.19(c) sets forth a true and complete list of
each lease (each a “
Personal Property Lease”) under which the Company or any of its
Subsidiaries is a lessee or lessor of personal property that provides for payments of more than
$50,000 per year, has a term exceeding one year and may not be canceled upon 90 or fewer days’
notice without any liability, penalty or premium (other than a nominal cancellation fee or charge).
The Company has made available to Parent a true and complete copy of each Personal Property Lease.
The Company or the applicable Subsidiary of the Company enjoys peaceful and undisturbed possession
of the personal property that is the subject of each Personal Property Lease, and there is not,
with respect to any Personal Property Lease, any material event of default, or event which with
notice or lapse of time or both would constitute a material event of default, existing on the part
of the Company or such Subsidiary or, to the Knowledge of the Company, on the part of any other
party thereto. None of the rights of the Company or any applicable Subsidiary of the Company under
any Personal Property Lease will be subject to termination or modification, and no consent or
approval of any third party is required under any Personal Property Lease, as a result of the
consummation of the Merger. Except for Permitted Liens, the Company or its Subsidiaries have good
title to all of the material personal property
reflected as being owned by it in the Interim Financial Statements (except for personal
property sold or otherwise disposed of in the ordinary course of business). The personal property
owned or leased by the Company and its Subsidiaries, taken as a whole, is adequate and in a
condition sufficient to permit the Company and its Subsidiaries to conduct its business in all
material respects in the same manner as it is being conducted as of the date of this Agreement,
subject to ordinary wear and tear and routine maintenance. Except as disclosed on
Section
3.19(c) of the Company Disclosure Letter, all of the personal property owned or leased by the
Company or its Subsidiaries is located at the Owned Real Property or on the real estate that is the
subject of a Real Estate Lease. All of the personal property located at the Owned Real Property or
on the real estate that is the subject of the Real Estate Leases is owned or leased by the Company
or one of the Company’s Subsidiaries.
(a) Section 3.20 of the Company Disclosure Letter sets forth a true, correct and
complete list of all insurance policies maintained by or on behalf of the Company or any of its
Subsidiaries, indicating the type of coverage, the amount and duration of the coverage, the name of
insurance carrier or underwriter and any pending claims thereunder. All such insurance policies
are in full force and effect, and neither the Company nor any of its Subsidiaries is in default
with respect to its respective material obligations under any such insurance policy.
(b) Section 3.20 of the Company Disclosure Letter contains all claims for insurance
losses in excess of $25,000 per occurrence, filed by the Company or any of its Subsidiaries since
January 1, 2006. The Company has not, and none of its Subsidiaries has, received written notice
that it failed to give any notice or present any pending claim thereunder in due and timely fashion
and, none of the Company nor any of its Subsidiaries is in default with respect to any such
policies. To the Company’s Knowledge, there has been no occurrence that
26
may result in a claim in
excess of $25,000 against or by the Company or any of its Subsidiaries with respect to which such
claim has not been asserted. Reserves, if any, required by GAAP to be included in the Interim
Financial Statements with respect to any self-insured claims pending and any such claims which may
be reasonably expected based upon the prior experience of the Company and its Subsidiaries were
included in accordance with such principles.
(a) Set forth in Section 3.21(a) of the Company Disclosure Letter is a list of the 10
largest suppliers of goods or services to the Company and its Subsidiaries (based upon aggregate
payments by the Company to such Persons for the 12 months ended December 31, 2007) and the
aggregate amount of payments made by the Company and its Subsidiaries to such Person for such
period. To the Company’s Knowledge, no such supplier intends to discontinue or materially and
adversely modify its relationship with the Company and its Subsidiaries, whether by reason of the
Merger or otherwise.
(b) Set forth in Section 3.21(b) of the Company Disclosure Letter is a list of the 10
largest customers of the Company and its Subsidiaries for the 12 months ended December 31, 2007,
based on and listing the gross sales (rounded to the nearest $1,000) for such period. To the
Company’s Knowledge, no such customer intends to cease or materially and
adversely modify its relationship with, the Company and its Subsidiaries, whether by reason of
the Merger or otherwise.
(a) The Company and its Board have taken all necessary action, if any, in order to render the
provisions of any control share acquisition, business combination or other similar anti-takeover
provision under the Company Articles or the FBCA (including Sections 607.0901 and 607.0902)
inapplicable to Parent and MergerCo as a result of the transactions contemplated by this Agreement
and the Support Agreement, including the Merger.
(b) The Company’s Rights Agreement, dated as of March 3, 2003, as amended by the First
Amendment to Rights Agreement, dated as of February 28, 2006, and the Second Amendment to Rights
Agreement, dated as of August 31, 2007 (the “Company Rights Agreement”), expired by its
terms on March 4, 2008 and the Company has not adopted and is not bound by any shareholder rights
plan, anti-takeover plan or similar arrangement relating to accumulations of beneficial ownership
of Common Stock or a change in control of the Company.
Section 3.23
Interested Party Transactions.
Section 3.23 of the Company Disclosure Letter (i) sets forth a correct and complete
list of the contracts or arrangements under which the Company has any existing or future
Liabilities of the type required to be reported by the Company pursuant to Item 404 of Regulation
S-K promulgated by the SEC (an “
Affiliate Transaction”), and (ii) identifies each Affiliate
Transaction that is in existence as of the date of this Agreement. The Company has provided or made
available to Parent correct and complete copies of each Contract or other relevant documentation
(including any amendments or modifications thereto) providing for each Affiliate Transaction.
27
Section 3.24
Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries, nor to the Company’s Knowledge, any
director, officer, agent, employee or other Person acting on behalf of the Company or any of its
Subsidiaries has, in the course of its actions for, or on behalf of, the Company or any of its
Subsidiaries, used any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate funds; violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or made
any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.
Section 3.25
Information Supplied. The Company Proxy Statement and any amendments or supplements thereto will, when filed,
comply as to form in all material respects with the applicable requirements of the 1934 Act. At the
time the Company Proxy Statement or any amendment or supplement thereto is first
mailed to stockholders of the Company, and at the time such stockholders vote on approval of
this Agreement and at the Effective Time, the Company Proxy Statement, as supplemented or amended,
if applicable, will not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The representations and warranties
contained in this
Section 3.25 will not apply to statements or omissions included in the
Company Proxy Statement based upon information furnished to the Company in writing by Parent
specifically for use therein.
Section 3.26
Opinion of Financial Advisor. Ladenburg Xxxxxxxx & Co. Inc. (the “
Company Financial Advisor”) has delivered to
the Special Committee its written opinion (or oral opinion to be confirmed in writing) to the
effect that, as of the date of this Agreement, the Per Share Merger Consideration is fair to the
shareholders of the Company from a financial point of view (the “
Fairness Opinion”).
Section 3.27
Brokers and Finders. Other than the Company Financial Advisor, no broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission in connection with the Merger or the
other transactions contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or any of its Subsidiaries. The Company has provided to Parent a correct and complete
copy of all agreements between the Company and the Company Financial Advisor under which a Company
Financial Advisor would be entitled to any payment relating to the Merger or such other
transactions.
Section 3.28
Inventory. Except as set forth in
Section 3.28 of the Company
Disclosure Letter, all items included in the inventory of the Company and its Subsidiaries are the
property of the Company or one of its Subsidiaries, as the case may be, free and clear of any
Liens. Except as set forth in
Section 3.28 of the Company Disclosure Letter, the
inventory, net of applicable reserves, (i) was acquired or
produced in the ordinary course of
business, (ii) is in the physical possession of the Company or one of its Subsidiaries or is in
transit to or from a customer or supplier of the Company or such Subsidiary, (iii) is merchantable
and is of a quality presently useable and saleable in the ordinary
course of business, consistent
with past practice. Items of below-standard quality and items not previously readily saleable in
the ordinary course
28
of business have been written down in value in accordance with GAAP estimated
market values. The value at which the inventory is carried on the books of the Company and such
Subsidiaries reflects the lower of cost or estimated market value, and is based on quantities
determined by physical count, in accordance with GAAP applied on a basis consistent with the
Interim Financial Statements.
Section 3.29
Bank and Brokerage Accounts; Investment Assets.
Section 3.29 of
the Company Disclosure Letter sets forth (a) a true and complete list of the names and locations of
all banks, trust companies, securities brokers and other financial institutions at which the
Company or any of its Subsidiaries has an account or safe deposit box or maintains a banking,
custodial, trading or other similar relationship; and (b) a true and complete list and description
of
each such account, box and relationship, indicating in each case the account number thereof
and the authorized signatories therefore.
Section 3.30
Product Warranties. A copy of the standard product warranty of the
Company and each of its Subsidiaries (other than warranties under applicable Law) has been
delivered to Parent. Except as set forth on
Section 3.30 of the Company Disclosure Letter,
the Company has not, and none of its Subsidiaries has, made any enforceable oral or written product
warranties or similar obligations with respect to any products sold by any of them under which
there are any outstanding obligations, other than pursuant to the standard form so delivered to
Parent (collectively, the “
Non-Standard Warranty Obligations”).
Section 3.30 of
the Company Disclosure Letter sets forth, with respect to all products shipped by the Company after
November 30, 2007 that are subject to any Non-Standard Warranty Obligation, (i) a listing of
material differences between the terms of the Non-Standard Warranty Obligations and the Standard
Warranty Obligation, and (ii) whether any claim is pending, or to the Company’s Knowledge, has been
threatened under any such Non-Standard Warranty Obligation.
(a) The Company has not, and none of the Company’s Subsidiaries has, been suspended or barred
from bidding on contracts or subcontracts for any agency or instrumentality of any Governmental
Entity, nor, to the Company’s Knowledge, has any suspension or debarment action been threatened or
commenced.
(b) To the Company’s Knowledge, except for audits that are required by Law, (i) the Company
has not been, and none of the Company’s Subsidiaries has been, nor are any of them now being,
audited, or investigated by any Governmental Entity and (ii) no such audit or investigation has
been threatened.
(c) To the Company’s Knowledge, the Company does not have, and none of the Company’s
Subsidiaries has, a dispute pending before a contracting office of, nor any current claim (other
than accounts receivable) pending against any Governmental Entity.
(d) To the Company’s Knowledge, the Company has not, and none of the Subsidiaries of the
Company has, submitted any inaccurate or untruthful cost or pricing data, certification, bid,
proposal, report, claim or any other information to any agency or instrumentality of any
Governmental Entity.
29
(e) Section 3.31(e) of the Company Disclosure Letter sets forth any and all Contracts
between the Company or any of its Subsidiaries and any Governmental Entity, under which the
undelivered balance of products or services sold by the Company and its Subsidiaries is in excess
of $50,000.
Parent and MergerCo hereby represent and warrant to the Company as follows:
Section 4.1
Organization and Power. Parent is a corporation, duly organized, validly existing and in good standing under the
Laws of the State of
Delaware and has the requisite corporate power and authority to own, lease and
operate its assets and properties and to carry on its business as now conducted. MergerCo is a
corporation, duly organized, validly existing and in good standing under the Laws of the State of
Florida and has the requisite corporate power and authority to own, lease and operate its assets
and to carry on its business as now conducted.
Section 4.2
Corporate Authorization. Parent and MergerCo each have all requisite corporate power and authority to enter into and
to perform their respective obligations under this Agreement and to consummate the transactions
contemplated hereby, including the Merger. The execution, delivery and performance of this
Agreement by each of Parent and MergerCo and the consummation by each of Parent and MergerCo of the
transactions contemplated hereby (including the Merger) have been duly and validly authorized by
all necessary corporate action on the part of each of Parent and MergerCo.
Section 4.3
Enforceability. This Agreement has been duly executed and delivered by each of Parent and MergerCo and,
assuming the due authorization, execution and delivery of this Agreement by the Company,
constitutes a valid and binding agreement of each of Parent and MergerCo, enforceable against each
of Parent and MergerCo in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar Laws of general applicability relating to or affecting
creditor’s rights and to general principles of equity.
Section 4.4
Required Filings and Consents. The execution, delivery and performance of this Agreement by each of Parent and MergerCo
and the consummation by each of Parent and MergerCo of the transactions contemplated by this
Agreement, including the Merger, do not and will not require any consent, approval or other
authorization of, or filing with or notification to, any Governmental Entity other than: (i) the
filing of the Articles of Merger with the Department of State of the State of Florida; (ii)
applicable requirements of the Exchange Act; (iii) the filing with the SEC of the Company Proxy
Statement and the Other Filings; (iv) any filings required by, and any approvals required under,
the rules and regulations of the NASDAQ; and (v) any consent, approval or other authorization of,
or filing with or notification to, any Governmental Entity identified in
Section 3.5(iv) of
the Company Disclosure Letter or
Schedule 6.1(b) to this Agreement.
Section 4.5
Non-Contravention. The execution, delivery and performance of this Agreement by each of Parent and MergerCo
and the consummation by each of Parent and MergerCo of the transactions contemplated by this
Agreement, including the Merger, do not and will not:
30
(i) contravene or conflict with, or result in any violation or breach of, any provision of the
organizational documents of either Parent or MergerCo; or
(ii) contravene or conflict with, or result in any violation or breach of, any Laws or Orders
applicable to either Parent or MergerCo or by which any assets of either Parent or MergerCo
(“Acquiror Assets”) are bound (assuming that all consents, approvals, authorizations,
filings and notifications described in Section 4.4 have been obtained or made), except as
would not reasonably be expected to have a MergerCo Material Adverse Effect.
Section 4.6
Information Supplied. None of the information provided by Parent for inclusion in the Company Proxy Statement or
any amendment or supplement thereto, at the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to shareholders of the Company and at the time the shareholders
vote on approval of this Agreement, will contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
Section 4.7
Interim Operations of MergerCo. MergerCo was formed solely for the purpose of engaging in the transactions contemplated by
this Agreement and has not engaged in any business activities or conducted any operations other
than in connection with the transactions contemplated by this Agreement.
Section 4.8
Financing. Parent has, or will have prior to the Effective Time, sufficient cash, available lines of
credit or other sources of immediately available funds to enable it to pay the aggregate Per Share
Merger Consideration pursuant to
Section 2.1(b).
Section 4.9
No Ownership of Stock of the Company. None of Parent or any of its Subsidiaries beneficially own as of the date of this Agreement
any shares of Company Common Stock, and none of Parent or any of its Subsidiaries is, or, to the
knowledge of Parent, has ever been deemed to be, an “interested stockholder” of the Company as
defined in Section 607.0901 of the FBCA.
Section 5.1
Conduct of Business of the Company. Except as expressly required or expressly contemplated by this Agreement or as set forth in
Section 5.1 of the Company Disclosure Letter, from the date of this Agreement through the
Effective Time, the Company will, and will cause each of its Subsidiaries to, (x) conduct its
operations only in the ordinary course of business consistent with past practice and (y) use all
reasonable efforts to maintain and preserve intact its business organization, including the
services of its key employees and the goodwill of its customers, franchisees, lenders,
distributors, suppliers, regulators and other Persons with whom it has material business
relationships. Without limiting the generality of the foregoing, except with the prior written
consent of Parent, as expressly contemplated by this Agreement or as set forth in
Section
5.1 of the Company
Disclosure Letter, from the date of this Agreement through the Effective Time, the Company
will not, and will cause each of its Subsidiaries not to, take any of the following actions:
(a) propose or adopt any changes to the Company Organizational Documents;
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(b) make, declare, set aside, or pay any dividend or distribution on any shares of its capital
stock, other than dividends paid by a wholly owned Subsidiary to its parent corporation in the
ordinary course of business;
(c) (i) adjust, split, combine or reclassify or otherwise amend the terms of its capital
stock, (ii) repurchase, redeem, purchase, acquire, encumber, pledge, dispose of or otherwise
transfer, directly or indirectly, any shares of its capital stock or any securities or other rights
convertible or exchangeable into or exercisable for any shares of its capital stock or such
securities or other rights, or offer to do the same, (iii) issue, grant, deliver or sell any shares
of its capital stock, any Voting Debt or any securities or other rights convertible or exchangeable
into or exercisable for any shares of its capital stock, any Voting Debt or such securities or
rights (which term, for purposes of this Agreement, will be deemed to include stock appreciation
rights, “phantom stock” or other commitments that provide any right to receive value or benefits
similar to such capital stock, securities or other rights), other than pursuant to the exercise of
Stock Options outstanding as of the date of this Agreement, in all cases in accordance with the
terms of the applicable award or Company Benefit Plan as in effect on the date of this Agreement,
(iv) enter into any contract, understanding or arrangement with respect to the sale, voting,
pledge, encumbrance, disposition, acquisition, transfer, registration or repurchase of its capital
stock or such securities or other rights, except in each case as permitted under Section
5.1(d), or (v) register for sale, resale or other transfer any Shares under the Securities Act
on behalf of the Company or any other Person;
(d) (i) increase the compensation or benefits payable or to become payable to, or make any
payment not otherwise due to, any of its past or present directors, officers, employees, or other
service providers, except for increases in the ordinary course of business consistent with past
practice in timing and amount, (ii) grant any severance or termination pay to any of its past or
present directors or officers, (iii) enter into any new employment or severance agreement with any
of its past or present directors, officers or employees, (iv) establish, adopt, enter into, amend
or take any action to accelerate rights under any Company Benefit Plan or any plan, agreement,
program, policy, trust, fund or other arrangement that would be a Company Benefit Plan if it were
in existence as of the date of this Agreement, (v) contribute any funds to a “rabbi trust” or
similar grantor trust, (vi) change any actuarial assumptions currently being utilized with respect
to Company Benefit Plans, except as required by applicable Law or by GAAP, or (vii) grant any
equity or equity-based awards to directors, officers or employees;
(e) merge or consolidate the Company or any of its Subsidiaries with any Person;
(f) sell, lease or otherwise dispose of any assets or securities, including by merger,
consolidation, asset sale or other business combination (including formation of a Company Joint
Venture) or by property transfer, other than sales of inventory in the ordinary course of business
consistent with past practice;
(g) other than in the ordinary course of business consistent with past practice, mortgage or
pledge any material assets (tangible or intangible), or create, assume or suffer to exist any Liens
thereupon, other than Permitted Liens;
32
(h) make any acquisitions, by purchase or other acquisition of stock or other equity
interests, or by merger, consolidation or other business combination (including formation of a
Company Joint Venture) or make any purchases of any property or assets from any Person (other than
a wholly owned Subsidiary of the Company), in all such cases other than acquisitions or purchases
in the ordinary course of business operations consistent with past practice;
(i) enter into, renew, extend, amend or terminate any Contract or Contracts that, individually
or in the aggregate with other such entered, renewed, extended, amended or terminated Contracts,
would reasonably be expected to have a Company Material Adverse Effect or MergerCo Material Adverse
Effect;
(j) other than Permitted Borrowings, incur, assume, guarantee or prepay any Company
Indebtedness or offer, place or arrange any issue of debt securities or commercial bank or other
credit facilities;
(k) make any loans, advances or capital contributions to, or investments in, any other Person;
(l) authorize or make any capital expenditure, other than capital expenditures during the
period from the date hereof through December 31, 2008 as would not, in the aggregate, cause the
total amount of the Company’s capital expenditures for fiscal 2008 to exceed the capital
expenditures provided for in the Company’s projections for the full fiscal year 2008 (a copy of
which projections has been provided to Parent);
(m) change its financial accounting policies or procedures, other than as required by Law or
GAAP, or write up, write down or write off the book value of any assets of the Company and its
Subsidiaries, other than (i) in the ordinary course of business consistent with past practice or
(ii) as may be required by Law or GAAP;
(n) waive, release, assign, settle or compromise any Legal Action, other than waivers,
releases, assignments, settlements or compromises that involve only the payment of monetary damages
not in excess of $50,000 with respect to any individual case or series of related cases, or
$100,000 in the aggregate, in any case without the imposition of any restrictions on the business
and operations of the Company or any of its Subsidiaries;
(o) adopt a plan of complete or partial liquidation or resolutions providing for a complete or
partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries;
(p) settle or compromise any Tax claim, audit or assessment relating to the Company or any of
its Subsidiaries, make or change any Tax election or file any amendment to a Tax Return, change any
annual Tax accounting period or adopt or change any Tax accounting method, enter into any closing
agreement, surrender any right to claim a refund of Taxes or consent to any extension or waiver of
the limitation period applicable to any Tax claim or
assessment relating to the Company or its Subsidiaries, or take any other similar action
relating to the filing of any Tax Return of the payment of any Tax, if such election, adoption,
change, amendment, agreement, settlement, surrender, consent or other action would have the effect
of increasing the Tax liability of the Company or any of its Subsidiaries for any period after the
33
Closing Date or decreasing any Tax attribute of the Company or any of its Subsidiaries existing on
the Closing Date;
(q) enter into, amend, waive or terminate (other than terminations in accordance with their
terms) any Affiliate Transaction; or
(r) agree or commit to do any of the foregoing.
Section 5.2
Other Actions. Parent and MergerCo each agrees that, from the date of this Agreement to the Effective
Time, it shall not take any action or fail to take any action that is intended to, or would
reasonably be expected to, result in any of the conditions to the Merger set forth in
Article VI of this Agreement not being satisfied or the satisfaction of those conditions
being materially delayed.
(a) Subject to applicable Law, the Company will provide and will cause its Subsidiaries and
its and their respective Representatives to provide Parent and its Representatives, at Parent’s
expense, during normal business hours and upon reasonable advance notice (i) such access to the
officers, management employees, offices, properties, books and records of the Company and such
Subsidiaries (so long as such access does not unreasonably interfere with the operations of the
Company) as Parent reasonably may request and (ii) all documents that Parent reasonably may
request.
(b) No investigation by any of the parties or their respective Representatives shall affect
the representations, warranties, covenants or agreements of the other parties set forth herein.
(c) All information obtained pursuant to this Section 5.3 shall be kept confidential
in accordance with the Confidentiality Agreement.
(d) The Company shall provide Parent with a correct and complete copy of the Fairness Opinion
no later than one Business Day after it has been delivered in writing to the Special Committee.
(a) From the date of this Agreement until the Effective Time, except as specifically permitted
in Section 5.4(d), the Company agrees that neither it nor any of its Subsidiaries nor any
of the officers or directors of it or any of its Subsidiaries shall, and that it shall cause its
and its Subsidiaries’ Representatives not to, directly or indirectly:
(i) initiate, solicit or encourage (including by way of providing information) or facilitate
any inquiries, proposals or offers with respect to, or the making, or the completion of, a Takeover
Proposal;
34
(ii) participate or engage in any discussions or negotiations with, or furnish or disclose any
non-public information relating to the Company or any of its Subsidiaries to, or otherwise
cooperate with or assist, any Person in connection with a Takeover Proposal;
(iii) withdraw, modify or amend the Company Board Recommendation;
(iv) approve, endorse or recommend any Takeover Proposal;
(v) enter into any letter of intent, agreement in principle,
merger agreement, acquisition
agreement, option agreement or other agreement or arrangement relating to a Takeover Proposal; or
(vi) resolve, propose or agree to do any of the foregoing.
(b) The Company shall, and shall cause each of its Subsidiaries and Representatives to,
immediately cease any solicitations, discussions or negotiations existing on the date of this
Agreement with any Person (other than the parties hereto) that has made, or indicated an intention
to make, a Takeover Proposal. The Company shall promptly inform its Representatives of the
Company’s obligations under this Section 5.4.
(c) The Company shall notify Parent promptly (and in any event within one Business Day) upon
receipt by it or its Subsidiaries or Representatives of (i) any Takeover Proposal, (ii) any request
for non-public information relating to the Company or any of its Subsidiaries other than requests
for information in the ordinary course of business and unrelated to a Takeover Proposal or (iii)
any inquiry or request for discussions or negotiations regarding any Takeover Proposal. The
Company shall notify Parent promptly (and in any event within one Business Day) with the identity
of such Person and a copy of such Takeover Proposal, indication, inquiry or request (or, where no
such copy is available, a written description of the material terms and conditions of such Takeover
Proposal, indication, inquiry or request), including any material modifications thereto. The
Company shall keep Parent reasonably informed on a current basis (and in any event within one
Business Day of the occurrence of any changes, developments, discussions or negotiations) of the
status of any such Takeover Proposal, indication, inquiry or request (including the material terms
and conditions thereof and of any modification thereto), including furnishing copies of any written
revised proposals. Without limiting the foregoing, the Company shall promptly (and in any event
within one Business Day) notify Parent orally and in writing if it determines to begin providing
information or to engage in discussions or negotiations concerning a Takeover Proposal pursuant to
Section 5.4(d). The Company shall not, and shall cause its Subsidiaries not to, enter into
any confidentiality
agreement with any Person subsequent to the date of this Agreement, and neither the Company
nor any of its Subsidiaries is party to any agreement, which prohibits the Company from providing
such information to Parent.
35
(d) Notwithstanding the foregoing, the Company shall be permitted, if it has otherwise
complied with its obligations under this Section 5.4, but only prior to the satisfaction of
the condition set forth in Section 6.1(a), to:
(i) engage in discussions or negotiations with a Person who has made a written Takeover
Proposal not solicited in violation of this Section 5.4 if, prior to taking such action,
(A) the Company enters into an Acceptable Confidentiality Agreement with such Person and (B) the
Company Board (including through action of the Special Committee, if then in existence) determines
in good faith (1) after consultation with the Company Financial Advisor and outside legal counsel,
that such Takeover Proposal constitutes a Superior Proposal and (2) after consultation with its
outside legal counsel, that the failure to take such action would be inconsistent with its
fiduciary obligations to the shareholders of the Company under applicable Laws;
(ii) furnish or disclose any non-public information relating to the Company or any of its
Subsidiaries to a Person who has made a written Takeover Proposal not solicited in violation of
this Section 5.4 if, prior to taking such action, the Company Board (including through
action of the Special Committee, if then in existence) determines in good faith (A) after
consultation with the Company Financial Advisor and outside legal counsel, that such Takeover
Proposal constitutes a Superior Proposal and (B) after consultation with its outside legal counsel,
that the failure to take such action would be inconsistent with its fiduciary obligations to the
shareholders of the Company under applicable Laws, but only so long as the Company (x) has caused
such Person to enter into an Acceptable Confidentiality Agreement and (y) concurrently discloses
the same such non-public information to Parent if such non-public information has not previously
been disclosed to Parent;
(iii) withdraw, modify or amend the Company Board Recommendation in a manner adverse to Parent
and MergerCo (a “Recommendation Change”), if the Company Board (including through action of
the Special Committee, if then in existence) has determined in good faith, after consultation with
outside legal counsel, that the failure to take such action would be inconsistent with its
fiduciary obligations to the shareholders of the Company under applicable Laws; provided
that if such action is in response to or relates to a Takeover Proposal, then the Recommendation
Change shall be taken only in compliance with Section 5.4(d)(iv);
(iv) in response to a Takeover Proposal not solicited in violation of this Section 5.4
which the Company Board (including through action of the Special Committee, if then in existence)
has determined in good faith, after consultation with the Company Financial Advisor and outside
legal counsel, constitutes a Superior Proposal after giving effect to all of the adjustments which
may be offered by Parent and MergerCo pursuant to the provisos to this paragraph, (x) effect a
Recommendation Change or (y) terminate this Agreement to enter into a definitive agreement with
respect to such Superior Proposal, such termination to be effective only if in advance of or
concurrently with such termination the Company pays the Company’s Termination Payment in the manner
provided for in Section 7.6(a); provided that neither the
Company nor the Company Board (including through action of the Special Committee, if then in
existence) shall make a Recommendation Change or terminate this Agreement unless: (1) the Company
Board (including through action of the Special Committee, if then in existence) has determined in
good faith, after consultation with outside legal counsel, that the failure to take
36
such action
would be inconsistent with its fiduciary obligations to the shareholders of the Company under
applicable Laws, (2) the Company shall have given Parent and MergerCo prompt written notice
advising Parent and MergerCo of (A) the decision of the Company Board (including through action of
the Special Committee, if then in existence) to take such action and (B) the material terms and
conditions of the Takeover Proposal, including the identity of the party making such Takeover
Proposal and copies of any relevant proposed transaction agreements with such party and other
material documents, (3) the Company shall have given Parent and MergerCo five Business Days (or
three Business Days in the event of each subsequent material revision to such Takeover Proposal)
after delivery of such notice to propose revisions to the terms of this Agreement (or make another
proposal) and shall have negotiated in good faith with Parent and MergerCo with respect to such
proposed revisions or other proposal, if any, and (4) at the end of such period, the Company Board
(including through action of the Special Committee, if then in existence) shall have determined in
good faith, after considering the results of such negotiations and giving effect to the revisions
or other proposals made by Parent and MergerCo, if any, that (A) after consultation with outside
legal counsel, in the case of a Recommendation Change, failure to take such action would be
inconsistent with its fiduciary obligations to the shareholders of the Company under applicable
Laws and (B) after consultation with the Company Financial Advisor and outside legal counsel, in
the case of a termination of this Agreement, that such Takeover Proposal remains a Superior
Proposal relative to the Merger, as supplemented by any revisions or counterproposals made by
Parent and MergerCo; provided that in the event the Company Board (including through action
of the Special Committee, if then in existence) does not make the determination referred to in
clause (4) of this paragraph but thereafter determines to effect a Recommendation Change or to
terminate this Agreement pursuant to this Section 5.4(d)(iv), the procedures referred to in
clauses (1) –(4) above shall apply anew and shall also apply to any subsequent withdrawal,
amendment or modification.
(e) Nothing herein shall limit or restrict the Company Board from disclosing to the
shareholders of the Company a position contemplated by Rule 14e-2(a) and Rule 14d-9 promulgated
under the Exchange Act (other than any disclosure prohibited by Section 5.4(d));
provided, however, that any disclosure other than a “stop, look and listen” or
similar communication of the type contemplated by Rule 14d-9(f) under the Exchange Act shall be
deemed to be a withdrawal, modification or amendment of the Company Board Recommendation in a
manner adverse to Parent and MergerCo unless the Company Board (x) expressly reaffirms its
recommendation to its shareholders in favor of approval of this Agreement or (y) rejects such other
Takeover Proposal.
(f) The Company shall not take any action to exempt any Person, agreement or transaction
(other than Parent, Merger Co, this Agreement, the Support Agreement and the transactions
contemplated hereby) from the Company Rights Agreement or the restrictions contained in any state
takeover or similar laws, including in Sections 607.0901 and 607.0902 of the FBCA or otherwise
cause the Company Rights Agreement or such restrictions not to apply to any such Person, agreement
or transaction; in each case, unless such actions are taken after a termination of this Agreement
in accordance with its terms.
(g) Any withdrawal, modification or amendment by the Special Committee of its recommendation
that forms a part of the Company Board Recommendation in any manner adverse to Parent and MergerCo
or that is inconsistent with the Company Board
37
Recommendation, and any approval, endorsement or
recommendation by the Special Committee of any Takeover Proposal, and any resolution or
announcement of an intention of the Special Committee with respect to any of the foregoing, shall
be deemed and treated for all purposes of this Agreement as if such action were taken by the
Company Board with respect to the Company Board Recommendation or any such Takeover Proposal, as
applicable.
(a) The Company will notify Parent and MergerCo promptly, and in any event, within one
Business Day, of (i) any written or, to the Knowledge of the Company, oral communication from (A)
any Governmental Entity, (B) any counterparty to any Company Joint Venture or (C) any counterparty
to any Contract alleging that the consent of such Person (or another Person) is or may be required
in connection with the transactions contemplated by this Agreement, including the Merger (and the
response thereto from the Company, its Subsidiaries or its Representatives), (ii) any communication
from any Governmental Entity in connection with the transactions contemplated by this Agreement,
including the Merger (and the response thereto from the Company, its Subsidiaries or its
Representatives), (iii) any Legal Actions commenced against or otherwise affecting the Company or
any of its Subsidiaries that are related to the transactions contemplated by this Agreement,
including the Merger (and the response thereto from the Company, its Subsidiaries or its
Representatives), and (iv) any event, change, occurrence, circumstance or development between the
date of this Agreement and the Effective Time which causes or is reasonably likely to cause any of
the conditions set forth in Section 6.2(a) or 6.2(b) of this Agreement not to be
satisfied or result in such satisfaction being delayed. With respect to any of the foregoing, the
Company will consult with Parent and MergerCo and their Representatives so as to permit the Company
and Parent and their respective Representatives to cooperate to take appropriate measures to avoid
or mitigate any adverse consequences that may result from any of the foregoing.
(b) Parent will notify the Company promptly, and in any event, within one Business Day, of (i)
any written or, to the Knowledge of Parent, oral communication from any Governmental Entity
alleging that the consent of such Person (or another Person) is or may be required in connection
with the transactions contemplated by this Agreement, including the Merger (and the response
thereto from Parent and MergerCo or their Representatives), (ii) any communication from any
Governmental Entity in connection with the transactions contemplated by this Agreement, including
the Merger (and the response thereto from Parent and MergerCo or their Representatives), (iii) any
Legal Actions commenced against or otherwise affecting Parent or any of its Affiliates that are
related to the transactions contemplated by this Agreement, including the Merger (and the response
thereto from Parent and MergerCo or their Representatives), and (iv) any event, change, occurrence,
circumstance or development between the date of this Agreement and the Effective Time which causes
or is reasonably likely to cause any condition set forth in Section 6.3(a) or
6.3(b) of this Agreement not to be satisfied or result in such satisfaction being delayed.
With respect to any of the foregoing, Parent and MergerCo
will consult with the Company and its Representatives so as to permit the Company and Parent
and MergerCo and their respective Representatives to cooperate to take appropriate measures to
avoid or mitigate any adverse consequences that may result from any of the foregoing.
38
(a) In connection with the Company Shareholders Meeting, the Company will (i) as promptly as
reasonably practicable after the date of this Agreement, prepare and file with the SEC the Company
Proxy Statement, (ii) respond as promptly as reasonably practicable to any comments received from
the SEC with respect thereto and will provide copies of such comments to Parent and MergerCo
promptly upon receipt, (iii) as promptly as reasonably practicable prepare and file (after Parent
and MergerCo have had a reasonable opportunity to review and comment on) any amendments or
supplements necessary to be filed in response to any SEC comments or as required by Law, (iv) use
all reasonable efforts to have cleared by the SEC the Company Proxy Statement and all other
customary proxy or other materials for meetings such as the Company Shareholders Meeting, (v) to
cause the Company Proxy Statement and all required amendments and supplements thereto to be mailed
to the holders of Shares entitled to vote at the Company Shareholders Meeting as promptly as
reasonably practicable after the later of (A) the 10th day after the filing of the
preliminary Proxy Statement with the SEC or (B) the day the Company is notified by the SEC that (1)
it will not be reviewing the Proxy Statement or (2) that it has no further comments on the
preliminary Proxy Statement, (vi) to the extent required by applicable Law, as promptly as
reasonably practicable prepare, file and distribute to the Company shareholders (in the case of the
Company Proxy Statement) any supplement or amendment to the Company Proxy Statement if any event
shall occur which requires such action at any time prior to the Company Shareholders Meeting, and
(vii) otherwise use all reasonable efforts to comply with all requirements of Law applicable to the
Company Shareholders Meeting and the Merger. Parent and MergerCo shall cooperate with the Company
in connection with the preparation and filing of the Company Proxy Statement, including promptly
furnishing the Company upon request with any and all information as may be required to be set forth
in the Company Proxy Statement under the Exchange Act. The Company will provide Parent and
MergerCo a reasonable opportunity to review and comment upon the Company Proxy Statement, or any
amendments or supplements thereto, prior to filing the same with the SEC. If, at any time prior to
the Effective Time, any information relating to the Company, Parent or MergerCo or any of their
respective Affiliates should be discovered by the Company, Parent or MergerCo which should be set
forth in an amendment or supplement to the Company Proxy Statement so that the Company Proxy
Statement shall not contain any untrue statement of a material fact or omit to state any 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, the party that discovers such
information shall promptly notify the other parties and, to the extent required by applicable Law,
the Company shall disseminate an appropriate amendment thereof or supplement thereto describing
such information to the Company’s shareholders.
(b) The Company Proxy Statement will include the Company Board Recommendation unless the
Company Board (including through action of the Special
Committee, if then in existence) has withdrawn, modified or amended the Company Board
Recommendation to the extent permitted under Section 5.4(d).
(c) The Company shall, in accordance with applicable Law and the Company Articles and the
Company’s bylaws, call and hold the Company Shareholders Meeting as promptly as practicable
following the date of this Agreement for the purpose of obtaining the vote of the shareholders of
the Company necessary to satisfy the condition set forth in Section 6.1(a).
39
The Company
will, subject to Section 5.4(d), (i) use all reasonable efforts to solicit or cause to be
solicited from its shareholders proxies in favor of approval of this Agreement and (ii) take all
other reasonable action necessary to secure the vote of the shareholders of the Company necessary
to satisfy the condition set forth in Section 6.1(a) (including postponing or adjourning
such meeting if necessary to solicit additional votes). Notwithstanding anything herein to the
contrary, unless this Agreement is terminated in accordance with Section 7.1, 7.2,
7.3 or 7.4, the Company will take all of the actions contemplated by this
Section 5.6 regardless of whether the Company Board (including through action of the
Special Committee, if then in existence) has approved, endorsed or recommended another Takeover
Proposal or has withdrawn, modified or amended the Company Board Recommendation, and will submit
this Agreement for approval by the shareholders of the Company at such meeting. The parties agree
that, in the event that there is present at any such meeting, in person or by proxy, sufficient
favorable voting power to secure the vote of the shareholders of the Company necessary to satisfy
the condition set forth in Section 6.1(a), it will not be deemed reasonable for the Company
to adjourn or postpone such Company Shareholders Meeting.
(a) Parent shall cause the Surviving Corporation, and the Surviving Corporation hereby agrees,
to do the following:
(i) For six years after the Effective Time, the Surviving Corporation shall indemnify and hold
harmless the present and former officers and directors of the Company (each an “Indemnified
Person”) in respect of acts or omissions occurring at or prior to the Effective Time to the
fullest extent permitted by the FBCA or provided under the Company’s articles of incorporation and
bylaws in effect on the date of this Agreement;
(ii) If Parent, the Surviving Corporation or any of its successors or assigns (A) consolidates
with or merges into any other Person and shall not be the continuing or the surviving corporation
or entity of such consolidation or merger, or (B) transfers or conveys all or substantially all of
its properties and assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent or the Surviving
Corporation, as the case may be, shall assume the obligations set forth in this Section
5.7.
(b) Prior to the Closing Date, the Company shall, pursuant to the proposal attached to
Schedule 5.7(b) hereto, purchase a non-cancelable “tail” coverage insurance policy under
the Company’s current officers’ and directors’ liability insurance policy and fiduciary
liability insurance policy (in each case, providing coverage comparable to that provided by
such insurance in effect on the date hereof) (collectively, the “Tail Policies”), which
Tail Policies shall be effective for a period from the Effective Time through and including the
date six years from the Closing Date, covering each Indemnified Person covered as of the date of
this Agreement by the Company’s officers’ and directors’ liability insurance policies in respect of
acts or omissions occurring prior to the Effective Time. Notwithstanding the provisions of
Section 5.11 of this Agreement, the amount of Closing Cash shall be deemed to include the
amount paid by the Company for the Tail Policies. For the avoidance of doubt, the Tail Policies
shall not include the employment practices coverage included in the proposal attached to
Schedule 5.7(b) hereto.
40
(c) The Indemnified Persons to whom this Section 5.7 applies shall be third party
beneficiaries of this Section 5.7. The provisions of this Section 5.7 are intended
to survive consummation of the Merger and are intended to be for the benefit of, and shall be
enforceable by, each Indemnified Person, his or her successors, heirs or representatives.
(a) Upon the terms and subject to the conditions set forth in this Agreement and in accordance
with applicable Laws, each of the parties to this Agreement will 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 to ensure that the conditions set forth in Article VI are satisfied and
to consummate the transactions contemplated by this Agreement as promptly as practicable, including
(i) obtaining all necessary actions or non-actions, waivers, consents and approvals from any
Governmental Entity and making all necessary registrations and filings and taking all steps as may
be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) obtaining all consents, approvals or waivers from, or taking other
actions with respect to, third parties necessary or advisable to be obtained or taken in connection
with the transactions contemplated by this Agreement; provided, however, that
without the prior written consent of Parent, the Company and its Subsidiaries may not commit to pay
any amount of cash or other consideration that would be payable on or after the Closing Date, or
incur or commit to incur any Liability that would survive the Closing Date, in connection with
obtaining such consent, approval or waiver, (iii) subject to first having used its reasonable best
efforts to negotiate a reasonable resolution of any objections underlying such lawsuits or other
legal proceedings, defending and contesting any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of the transactions
contemplated by this Agreement, including seeking to have any stay or temporary restraining order
entered by any Governmental Entity vacated or reversed, and (iv) executing and delivering any
additional instruments necessary to consummate the transactions contemplated hereby, and to fully
carry out the purposes of this Agreement.
(b) Parent and MergerCo and the Company will cooperate and consult with each other in
connection with the making of all such filings, notifications and any other material actions
pursuant to this Section 5.8, subject to applicable Law, by permitting counsel for the
other party to review in advance, and consider in good faith the views of the other party in
connection with, any proposed material written communication to any Governmental Entity and
by providing counsel for the other party with copies of all filings and submissions made by
such party and all correspondence between such party (and its advisors) with any Governmental
Entity and any other information supplied by such party and such party’s Affiliates to or received
from any Governmental Entity in connection with the transactions contemplated by this Agreement;
provided, however, that material may be redacted (x) as necessary to comply with
contractual arrangements, and (y) as necessary to address good faith legal privilege or
confidentiality concerns. Except as otherwise required by Law, neither party shall file any such
document or take such action if the other party has reasonably objected (and not withdrawn its
objection) to the filing of such document or the taking of such action on the grounds that such
filing or action would reasonably be expected to either (i) prevent, materially delay or materially
impede the consummation of the transactions contemplated hereby, including the Merger, or (ii)
cause a condition set forth in Article VI to not be satisfied in a timely manner. Neither
Parent and
41
MergerCo nor the Company shall consent to any voluntary extension of any statutory
deadline or waiting period or to any voluntary delay of the consummation of the transactions
contemplated by this Agreement at the behest of any Governmental Entity without the consent of the
other party (which consent shall not be unreasonably withheld or delayed).
(c) Each of Parent and MergerCo and the Company will promptly inform the other party upon
receipt of any material communication from any Governmental Entity regarding any of the
transactions contemplated by this Agreement. If Parent and MergerCo or the Company (or any of their
respective Affiliates) receives a request for additional information or documentary material from
any such Person that is related to the transactions contemplated by this Agreement, then such party
will endeavor in good faith to make, or cause to be made, as soon as reasonably practicable and
after consultation with the other party, an appropriate response in compliance with such request.
The parties agree not to participate, or to permit their Affiliates to participate, in any
substantive meeting or discussion with any Governmental Entity in connection with the transactions
contemplated by this Agreement unless it so consults with the other party in advance and, to the
extent not prohibited by such Governmental Entity, gives the other party the opportunity to attend
and participate. Each party will advise the other party promptly of any understandings,
undertakings or agreements (oral or written) which the first party proposes to make or enter into
with any Governmental Entity in connection with the transactions contemplated by this Agreement. In
furtherance and not in limitation of the foregoing, each party will use its reasonable best efforts
(i) to resolve any objections that may be asserted with respect to the transactions contemplated by
this Agreement under any antitrust, competition, premerger notification, trade regulation or merger
control Law, including (subject to first having used reasonable best efforts to negotiate a
resolution to any such objections) contesting and resisting any action or proceeding, and (ii) to
have vacated, lifted, reversed or overturned any decree, judgment, injunction or other Order,
whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the Merger or the other transactions contemplated by this Agreement and
to have such statute, rule, regulation, decree, judgment, injunction or other Order repealed,
rescinded or made inapplicable so as to permit consummation of the transactions contemplated by
this Agreement.
Section 5.9
Public Announcements. Parent and the Company will consult with each other
before issuing any press release or otherwise making any public statements about this Agreement or
any of the transactions
contemplated by this Agreement, including the Merger. Neither Parent nor the Company will
issue any such press release or make any such public statement prior to such consultation, except
to the extent that the disclosing party determines in good faith, after consultation with legal
counsel, it is required to do so by applicable Laws or NASDAQ requirements, in which case that
party will use all reasonable efforts to consult with the other party before issuing any such
release or making any such public statement.
Section 5.10
Stock Exchange Listing Deregistration. Promptly following the Effective
Time, the Surviving Corporation will cause the Shares to be delisted from the NASDAQ and
deregistered under the Exchange Act.
Section 5.11
Fees and Expenses. Whether or not the Merger is consummated, (i) all
expenses (including those payable to Representatives) incurred by any party to this Agreement or on
its behalf in connection with this Agreement and the transactions contemplated by this
42
Agreement
(“Expenses”) will be paid by the party incurring those Expenses, except as otherwise
provided in Section 7.6, and (ii) the Company shall be responsible for (y) all printing and
mailing costs incurred in connection with the Company Shareholders Meeting and the Company Proxy
Statement (such costs, together with the other Expenses incurred by the Company, being collectively
referred to herein as the “Company Expenses”). The Company shall cause all Company
Expenses to be paid prior to the Closing Date.
Section 5.12
Takeover Statutes. If any takeover statute is or becomes applicable to
this Agreement, the Support Agreement, the Merger or the other transactions contemplated by this
Agreement or the Support Agreement, each of MergerCo and the Company and their respective boards of
directors will (a) take all necessary action to ensure that such transactions may be consummated as
promptly as practicable upon the terms and subject to the conditions set forth in this Agreement
and (b) otherwise act to eliminate or minimize the effects of such takeover statute.
Section 5.13
Rule 16b-3. Prior to the Effective Time, the Company shall take such
steps as may be reasonably requested by any party hereto to cause dispositions of Company equity
securities (including derivative securities) pursuant to the transactions contemplated by this
Agreement by each individual who is a director or officer of the Company to be exempt under Rule
16b-3 promulgated under the Exchange Act in accordance with that certain No-Action Letter dated
January 12, 1999 issued by the SEC regarding such matters.
Section 5.14
Resignations. The Company shall obtain and deliver to Parent at the
Closing evidence reasonably satisfactory to Parent of the resignation, effective as of the
Effective Time, of those officers of the Company or officers and directors of any Subsidiary of the
Company designated by Parent to the Company in writing prior to the Closing.
Section 5.15
Landlord Estoppel. The Company shall use commercially reasonable
efforts, with out having to expend any funds, to obtain and deliver to Parent from each landlord
that is party to a Real Estate Lease a landlord’s estoppel containing such certifications as are
customarily requested of landlords in transactions similar in nature to the Merger and otherwise in
such form as Parent may reasonably request.
(b)
Regulatory Approvals. Any applicable Governmental Entity shall have given all such
approvals or consents identified in
Schedule 6.1(b). In the case of the obligations of
Parent and MergerCo, the consents, approvals, decisions or waiting period expirations or
terminations shall have occurred or been obtained free of any condition, limitation, requirement or
Order that would reasonably be expected to have a Company Material Adverse Effect.
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(c)
No Injunctions or Restraints. No Governmental Entity will have enacted, issued,
promulgated, enforced or entered any Laws or Orders (whether temporary, preliminary or permanent)
then in effect that enjoin or otherwise prohibit consummation of the Merger or the other
transactions contemplated by this Agreement.
(a)
Representations and Warranties. (i) The representations and warranties of the
Company contained in
Section 3.2 (Corporate Authority and Enforceability),
Section 3.3
(Capitalization),
Section 3.8(a) (Vote Required) and
Section 3.11(a) (Absence
of Material Adverse Effect) shall be true and correct in all respects (except, in the case of
Section 3.3 for de minimis inaccuracies, and, in the case of
Section 3.8(a) for
such inaccuracies as are actually cured by the vote received at the Company Shareholders Meeting),
in each case both when made and at and as of the Closing Date, as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case as of such date) and (ii)
all other representations and warranties of the Company set forth herein (without regard to
“material,” “materiality,” “Company Material Adverse Effect” or similar qualifiers contained
therein) shall be true and correct at and as of the date of this Agreement and the Effective Time
as if made at and as of such time (other than representations and warranties made as of a specified
date, which shall be true and correct as of such specified date), except where the failure to be so
true and
correct individually or in the aggregate (together with any failure to perform any obligation
or to comply with any covenant or agreement required to be performed by or complied with by the
Company hereunder on or prior to the Effective Time) has not had and would not reasonably be
expected to have a Material Impact.
(b)
Performance of Covenants. (i) Except as otherwise set forth in clause (ii) of this
paragraph, the Company shall have performed all obligations, and complied with the agreements and
covenants required to be performed by or complied with by it hereunder on or prior to the Effective
Time, except where the failure to so perform or comply individually or in the aggregate has not had
and would not be reasonably expected to have a Material Impact, and (ii) the Company shall have
prior to the Effective Time complied in all respects with the covenant contained in
Section
5.1(j) of this Agreement.
(d)
Dissenting Shares Condition. The Dissenting Shareholders (if any) at and as of
the Closing Date shall collectively hold no more than five percent (5%) of the issued and
outstanding Shares as of such time.
(e)
Officer’s Certificate. Parent will have received a certificate, signed by an
executive officer of the Company, certifying as to the matters set forth in
Section 6.2(a),
Section 6.2(b),
Section 6.2(c),
Section 6.2(d) and
Section 6.2(h).
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(f)
Governmental Consents. All consents, approvals, orders, or authorizations of, or
registrations, declarations or filings with, any Governmental Entity required to be obtained or
made prior to the Closing by or with respect to the Company, Parent, MergerCo, or any of their
respective Subsidiaries in connection with the execution and delivery of this Agreement or the
consummation of the Merger and the other transactions contemplated hereby shall have been obtained
or made.
(g)
Resignations. Any resignations requested by Parent pursuant to
Section
5.14 shall have been obtained and delivered to Parent.
(h)
Closing Cash. The Company shall have delivered to Parent a certificate signed by
the Company’s principal financial officer and chief executive officer listing all Company Expenses,
certifying that all Company Expenses have been paid in full, certifying to the amount of Closing
Cash and a reasonably detailed itemization and explanation of the calculation of the Closing Cash,
and providing such evidence of payment of the Company Expenses and the calculation of the Closing
Cash as Parent reasonably may require. To the extent that after taking into account any Company
Expenses have not been paid in full, the Closing Cash is less than $1,500,000; then the Purchase
Price shall be reduced, dollar-for-dollar, by the amount by which $1,500,000 exceeds the Closing
Cash (after taking into account the satisfaction in full of all Company Expenses), and the Per
Share Merger Consideration shall be reduced accordingly.
(i)
Closing Indebtedness. The Company shall have delivered to Parent a certificate
signed by the Company’s principal financial officer and chief executive officer
certifying as to the amount of the Closing Indebtedness. If the Closing Indebtedness is
greater than the Estimated Closing Indebtedness, then the Purchase Price shall be reduced by the
amount by which the Closing Indebtedness exceeds the Estimated Closing Indebtedness and the Per
Share Merger Consideration shall be reduced accordingly.
(k)
Fairness Opinion. Parent shall have received a correct and complete copy of the
Fairness Opinion.
(l)
Tail Policy. The Company shall have delivered to Parent a true and complete copy
of the Tail Policies (or fully executed binders for the Tail Policies) together with evidence
reasonably satisfactory to Parent that the premiums for the Tail Policies have been paid in full.
(m)
Termination Agreement. Parent shall have received the termination agreement
substantially in the form of
Exhibit C hereto (the “
JDL Termination Agreement”),
duly executed by each party thereto, and the JDL Termination Agreement shall not have been amended,
modified or rescinded.
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Section 6.3
Conditions to Obligation of the Company. The obligation of the Company to
effect the Merger is also subject to the satisfaction or waiver by the Company on or prior to the
Closing Date of the following conditions:
(a)
Representations and Warranties. The representations and warranties of Parent and
MergerCo set forth herein shall be true and correct in all material respects (except in each case
for those representations and warranties that are qualified as to “material,” “materiality,”
“MergerCo Material Adverse Effect” or similar expressions, which shall be true and correct in all
respects) both when made and at and as of the Closing Date, as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case as of such date).
(b)
Performance of Covenants. Parent and MergerCo each shall have performed in all
material respects all obligations, and complied in all material respects with the agreements and
covenants, required to be performed by or complied with by them hereunder on or prior to the
Effective Time (except in each case for those agreements and covenants that are qualified as to
“material,” “materiality,” “MergerCo Material Adverse Effect” or similar expressions, which shall
have been performed or complied with in all respects).
(c)
Officer’s Certificate. The Company will have received certificates, signed by an
executive officer of each of Parent and MergerCo, certifying as to the matters set forth in
Section 6.3(a) and
Section 6.3(b).
(d)
Per Share Merger Consideration. After taking into account any adjustments thereto
contemplated by
Section 2.6,
Section 6.2(h) and
Section 6.2(i), the Per
Share Merger Consideration shall not be less than $4.30.
Section 7.1
Termination by Mutual Consent. This Agreement may be terminated, whether
before or after satisfaction of the condition set forth in
Section 6.1(a), at any time
prior to the Effective Time, by mutual written consent of Parent and the Company.
(a) whether before or after satisfaction of the condition set forth in Section 6.1(a),
if the Merger has not been consummated by June 30, 2008 (the “Outside Date”), except that
the right to terminate this Agreement under this clause will not be available to any party to this
Agreement whose failure to fulfill any of its obligations under this Agreement has been a principal
cause of, or resulted in, the failure to consummate the Merger by such date;
(b) if this Agreement has been submitted to the shareholders of the Company for approval at a
duly convened Company Shareholders Meeting and the vote required by the condition set forth in
Section 6.1(a) shall not have been obtained at such Company Shareholders Meeting (including
any adjournment or postponement thereof); or
46
(c) whether before or after satisfaction of the condition set forth in Section 6.1(a),
if any Law, Governmental Entity prohibits consummation of the Merger or if any Order restrains,
enjoins or otherwise prohibits consummation of the Merger, and such Order has become final and
nonappealable.
Section 7.3
Termination by Parent. This Agreement may be terminated by Parent at any
time prior to the Effective Time:
(a) if the Company fails to deliver to Parent within one hour after the execution and delivery
by the Company of this Agreement:
(i) a Stock Option Cancellation and Custody Agreement substantially in the form of Exhibit
A hereto (each, a “Stock Option Cancellation and Custody Agreement”) executed by the
record and beneficial owner of each Stock Option that is not canceled and extinguished by its terms
at or prior to the Effective Time; and
(ii) an agreement substantially in the form of Exhibit B hereto (the “Support
Agreement”) executed by each shareholder listed in Schedule A to the Support
Agreement committing to vote his, her or its Shares in favor of approval of this Agreement and
the transactions contemplated hereby, including the Merger;
(b) if (i) the Company Board (or the Special Committee) withdraws, modifies or amends the
Company Board Recommendation in any manner adverse to Parent, (ii) the Company Board (or the
Special Committee) approves, endorses or recommends any Takeover Proposal other than the Merger, or
(iii) the Company or the Company Board (or the Special
Committee) resolves or publicly announces its intention to do any of
the foregoing, in any case whether or not permitted by Section
5.4;
(c) if, at anytime after the Company Shareholders Meeting (including any adjournment or
postponement thereof), the Dissenting Shareholders collectively hold greater than five percent (5%)
of the issued and outstanding Shares as of such time;
(d) if the Company (i) materially breaches its obligations under Section 5.4,
5.6(b) or 5.6(c), or the Company Board or any committee thereof shall resolve to do
any of the foregoing or (ii) (A) materially breaches its obligations under Section 5.6(a)
and (B) such breach is not cured within 10 Business Days after the Company’s receipt of written
notice asserting such breach or failure from Parent; or
(e) provided that neither Parent nor MergerCo is in material breach of its obligations
under this Agreement, if a breach or failure of any representation, warranty or covenant of the
Company contained in this Agreement shall have occurred, which breach (i) would give rise to the
failure of a condition set forth in Section 6.2(a) or Section 6.2(b) and (ii) as a
result of such breach, such condition would not be capable of being satisfied prior to the Outside
Date.
47
(a) provided that the Company is not in material breach of its obligations under this
Agreement, if a breach or failure of any representation, warranty or covenant of Parent or MergerCo
contained in this Agreement shall have occurred, which breach (i) would give rise to the failure of
a condition set forth in Section 6.3(a) or Section 6.3(b) and (ii) as a result of
such breach, such condition would not be capable of being satisfied prior to the Outside Date; or
(b) pursuant to and in accordance with Section 5.4(d)(iv); provided,
however, that the Company shall not terminate this Agreement pursuant to this paragraph,
and any purported termination pursuant to this paragraph shall be void and of no force or effect,
unless in advance of or concurrently with such termination the Company makes the Company’s
Termination Payment in the manner provided for in Section 7.6(a).
Section 7.5
Effect of Termination. If this Agreement is terminated pursuant to this
Article VII, it will become void and of no further force and effect, with no liability on
the part of any party to this Agreement (or any of
their respective former, current, or future general or limited partners, shareholders,
managers, members, directors, officers, Affiliates or agents), except that the indemnity and
reimbursement provisions of this
Section 7.5 and
Section 7.6 and
Article VIII (other than
Section 8.12) will survive any termination of this
Agreement;
provided,
however, that nothing herein shall relieve any party to this
Agreement from liability for damages incurred or suffered by the other parties hereto as a result
of any willful breach by a party of any of its representations, warranties, covenants or other
agreements set forth in this Agreement that would reasonably be expected to cause any of the
conditions set forth in (i)
Section 6.1,
6.2(a),
6.2(b) or
6.2(c),
in the case of the Company, or (ii)
Section 6.1(b),
6.1(c),
6.3(a) or
6.3(b), in the case of Parent or MergerCo, not to be satisfied.
(a) The Company will pay, or cause to be paid, to an account or accounts designated by Parent,
by wire transfer of immediately available funds an amount equal to the aggregate Expenses up to but
not in excess of $225,000 that are incurred by Parent and MergerCo in connection with this
Agreement and the transactions contemplated hereby (the “Company’s Termination Payment”)
under the following circumstances:
(i) if this Agreement is terminated by Parent pursuant to Section 7.3, in which event
payment will be made within two Business Days after such termination; and
(ii) if this Agreement is terminated by the Company pursuant to Section 7.4(b), in
which event payment must be made in advance of or concurrent with such termination.
(b) If this Agreement is terminated by the Company pursuant to Section 7.4(a), Parent
will pay, or cause to be paid, to an account or accounts designated by the Company, by wire
transfer of immediately available funds, an amount equal to the Company Expenses up to but not in
excess of $50,000 that are incurred by the Company in connection with this Agreement and the
transactions contemplated hereby (the “Parent’s Termination Payment”). Any Parent’s
Termination Payment payable pursuant to this paragraph shall be paid within two Business Days after
such termination.
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Section 7.7
Amendment. This Agreement may be amended by the parties to this Agreement
at any time prior to the Effective Time, whether before or after shareholder approval hereof, so
long as (a) no amendment that requires further shareholder approval under applicable Laws after
shareholder approval hereof will be made without such required further approval and (b) such
amendment has been duly authorized or approved by each of Parent and the Company. This Agreement
may not be amended except by an instrument in writing signed by each of the parties to this
Agreement.
Section 7.8
Extension; Waiver. At any time prior to the Effective Time, Parent, on the one hand, and the Company, on the
other hand, may (a) extend the time for the performance of any of the obligations of the other
party, (b) waive any inaccuracies in the representations and warranties of the other party
contained in this Agreement or in any document delivered under this Agreement, or (c) unless
prohibited by applicable Laws, waive compliance with any of the covenants or conditions contained
in this Agreement. Any agreement on the part of a party to any extension or waiver will be valid
only if set forth in an instrument in writing signed by such party. The failure of any party to
assert any of its rights under this Agreement or otherwise will not constitute a waiver of such
rights.
Section 8.1
Interpretation. The headings in this Agreement are for reference only and
do not affect the meaning or interpretation of this Agreement. Definitions will apply equally to
both the singular and plural forms of the terms defined. Whenever the context may require, any
pronoun will include the corresponding masculine, feminine and neuter forms. All references in this
Agreement and the Company Disclosure Letter to Articles, Sections and Annexes refer to Articles and
Sections of, and Annexes to, this Agreement unless the context requires otherwise. The words
“
include,” “
includes” and “
including” are not limiting and will be deemed
to be followed by the phrase “
without limitation.” The words “
herein,”
“
hereof,” “
hereunder” and words of similar import will be deemed to refer to this
Agreement as a whole, including the Annexes and Schedules hereto, and not to any particular
provision of this Agreement. The word “
or” will be inclusive and not exclusive unless the
context requires otherwise. Unless the context requires otherwise, any agreements, documents,
instruments or Laws defined or referred to in this Agreement will be deemed to mean or refer to
such agreements, documents, instruments or Laws as from time to time amended, modified or
supplemented, including (a) in the case of agreements, documents or instruments, by waiver or
consent, and (b) in the case of Laws, by succession of comparable successor statutes. All
references in this Agreement to any particular Law will be deemed to refer also to any rules and
regulations promulgated under that Law. References to a Person also refer to its predecessors and
successors and permitted assigns.
Section 8.2
Survival. None of the representations and warranties contained in this
Agreement or in any instrument delivered under this Agreement will survive the Effective Time. The
covenants and agreements of the parties contained in
Sections 7.5 (and the Sections
referred to therein) and
7.6 and
Article VIII of this Agreement shall survive
termination of this Agreement in accordance with their terms. The Confidentiality Agreement will
(a) survive termination of this Agreement in accordance with its terms and (b) terminate as of the
Effective Time.
49
Section 8.3
Governing Law. Except for matters of corporate law required to be
governed by the laws of the state of incorporation of the Company and MergerCo, which shall be
governed by the FBCA, this Agreement will be governed by, and construed in accordance with, the
Laws of the State of
Delaware, without giving effect to any applicable principles of conflict of laws that would
cause the Laws of another State to otherwise govern this Agreement.
Section 8.4
Submission to Jurisdiction. Each of the parties hereto irrevocably agrees
that any legal action or proceeding with respect to this Agreement and the rights and obligations
arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement
and the rights and obligations arising hereunder brought by the other party hereto or its
successors or assigns shall be brought and determined exclusively in the United States District
Court for the District of
Delaware. Each of the parties hereto agrees that mailing of process or
other papers in connection with any such action or proceeding in the manner provided in
Section
8.6 or in such other manner as may be permitted by applicable Laws, will be valid and
sufficient service thereof. Each of the parties hereto hereby irrevocably submits with regard to
any such action or proceeding for itself and in respect of its property, generally and
unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not
bring any action relating to this Agreement or any of the transactions contemplated by this
Agreement in any court or tribunal other than the aforesaid courts. Each of the parties hereto
hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim
or otherwise, in any action or proceeding with respect to this Agreement and the rights and
obligations arising hereunder, or for recognition and enforcement of any judgment in respect of
this Agreement and the rights and obligations arising hereunder (i) any claim that it is not
personally subject to the jurisdiction of the above named courts for any reason other than the
failure to serve process in accordance with this
Section 8.4, (ii) any claim that it or its
property is exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to the
fullest extent permitted by the applicable Law, any claim that (x) the suit, action or proceeding
in such court is brought in an inconvenient forum, (y) the venue of such suit, action or proceeding
is improper or (z) this Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
Section 8.5
Waiver of Jury Trial. Each party acknowledges and agrees that any
controversy which may arise under this Agreement is likely to involve complicated and difficult
issues and, therefore, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. Each party to this Agreement certifies and
acknowledges that (a) no Representative of any other party has represented, expressly or otherwise,
that such other party would not seek to enforce the foregoing waiver in the event of a Legal
Action, (b) such party has considered the implications of this waiver, (c) such party makes this
waiver voluntarily, and (d) such party has been induced to enter into this Agreement by, among
other things, the mutual waivers and certifications in this
Section 8.5.
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Section 8.6
Notices. Any notice, request, instruction or other communication under
this Agreement will be in writing and delivered by hand or overnight courier service or by
facsimile:
If to Parent or MergerCo, to:
Illinois Tool Works Inc.
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with copies (which will not constitute notice to Parent or MergerCo) to:
Xxxxxx Xxxxxx Xxxxxxxx LLP
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
If to the Company, to:
Quipp, Inc.
0000 X.X. 000xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
with a copy (which will not constitute notice to the Company) to:
Xxxxxx, Xxxxx & Bockius LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx, Esq.
or to such other Persons, addresses or facsimile numbers as may be designated in writing by the
Person entitled to receive such communication as provided above. Each such communication will be
effective (a) if delivered by hand or overnight courier, when such delivery is made at the address
specified in this Section 8.6, or (b) if delivered by facsimile, when such facsimile is
transmitted to the facsimile number specified in this Section 8.6 and appropriate
confirmation is received.
Section 8.7
Entire Agreement. This Agreement (including the Annexes to this
Agreement), the Company Disclosure Letter and the Confidentiality Agreement constitutes the entire
agreement and supersede all other
prior agreements, understandings, representations and warranties, both written and oral, among
the parties to this Agreement with respect to the subject matter of this Agreement, including that
certain letter agreement dated January 21, 2008 to which
51
the Company is party. No representation,
warranty, inducement, promise, understanding or condition not set forth in this Agreement has been
made or relied upon by any of the parties to this Agreement.
Section 8.8
No Third-Party Beneficiaries. Except as provided in
Section 5.7,
this Agreement is not intended to confer any rights or remedies upon any Person other than the
parties to this Agreement.
Section 8.9
Severability. The provisions of this Agreement are severable and the
invalidity or unenforceability of any provision will not affect the validity or enforceability of
the other provisions of this Agreement. If any provision of this Agreement, or the application of
that provision to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision will be substituted for that provision in order to carry out, so far as may be
valid and enforceable, the intent and purpose of the invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of that provision to other Persons or circumstances
will not be affected by such invalidity or unenforceability, nor will such invalidity or
unenforceability affect the validity or enforceability of that provision, or the application of
that provision, in any other jurisdiction.
Section 8.10
Rules of Construction. The parties to this Agreement have been
represented by counsel during the negotiation and execution of this Agreement and waive the
application of any Laws or rule of construction providing that ambiguities in any agreement or
other document will be construed against the party drafting such agreement or other document.
Section 8.11
Assignment. This Agreement may not be assigned by operation of Law or
otherwise, except that each of Parent and MergerCo may assign its rights and obligations under this
Agreement, in whole or from time to time in part, to (i) one or more of their Affiliates at any
time and (ii) after the Effective Time, to any Person; provided that such transfer or assignment
shall not relieve Parent or Merger Subsidiary of its obligations hereunder or enlarge, alter or
change any obligation of any other party hereto or due to Parent or Merger Subsidiary. Subject to
the preceding sentence, 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. Any
purported assignment not permitted under this
Section 8.11 will be null and void.
Section 8.12
Specific Performance. The parties to this Agreement agree that
irreparable damage would occur if any provision of this Agreement were not performed in accordance
with the terms hereof and that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement or
to enforce specifically the performance of the terms and provisions hereof in any court
specified in
Section 8.4, in addition to any other remedy to which they are entitled at law
or in equity.
Section 8.13
Counterparts; Effectiveness. This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered to each other
party. In the event that any signature to this Agreement or any amendment hereto is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall
create a valid and binding obligation of the party executing (or on whose behalf
52
such signature is
executed) with the same force and effect as if such facsimile or “.pdf” signature page were an
original thereof. No party hereto shall raise the use of a facsimile machine or e-mail delivery of
a “.pdf” format data file to deliver a signature to this Agreement or any amendment hereto or the
fact that such signature was transmitted or communicated through the use of a facsimile machine or
e-mail delivery of a “.pdf” format data file as a defense to the formation or enforceability of a
contract and each party hereto forever waives any such defense.
[Signature page follows.]
53
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
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ILLINOIS TOOL WORKS INC. |
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By:
Name:
Title:
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/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Attorney-in-fact
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HEADLINER ACQUISITION CORPORATION |
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By:
Name:
Title:
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/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Attorney-in-fact
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QUIPP, INC. |
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By:
Name:
Title:
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/s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
President & CEO
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Appendix A
For purposes of this Agreement, the following terms will have the following meanings when used
herein with initial capital letters:
“Acceptable Confidentiality Agreement” means a confidentiality agreement that contains
confidentiality, standstill and non-solicitation provisions that are no less favorable in the
aggregate to the Company than those contained in the Confidentiality Agreement.
“Acquiror Assets” has the meaning set forth in Section 4.5(ii).
“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly controls, is controlled by or is under common control with, such first Person. For the
purposes of this definition, “control” (including, with correlative meanings, the terms
“controlling,” “controlled by” and “under common control with”), as applied to any Person, means
the possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting securities, by
Contract or otherwise.
“Affiliate Transaction” has the meaning set forth in Section 3.23.
“Affiliated Group” means an affiliated group as defined in Section 1504 of the Code
(or any analogous combined, consolidated or unitary group defined under state, local or foreign
income Tax Law).
“Agreement” has the meaning set forth in the Preamble.
“Articles of Merger” has the meaning set forth in Section 1.3.
“Book-Entry Shares” has the meaning set forth in Section 2.1(c).
“Business Day” means any day, other than Saturday, Sunday or a day on which banking
institutions in Chicago, Illinois are generally closed.
“Cash” means, as of any date, the sum of all U.S. dollar equivalents (using the
currency exchange rates published by the Wall Street Journal, as in effect at 5:00 p.m. (Miami
time) on such date) of all worldwide cash and cash equivalents of the Company and its Subsidiaries
reported by the Company based on its bank account balances as of 5:00 p.m. (Miami time) on such
date. For the avoidance of doubt, Cash will be net of (i.e., reduced by) all outstanding checks
and drafts issued or electronic funds transfers in transit made by the Company or any of its
Subsidiaries at or before 5:00 p.m. (Miami time) on such date.
“Certificate” has the meaning set forth in Section 2.1(c).
“Closing” has the meaning set forth in Section 1.2.
“Closing Cash” means (i) Cash as of the Closing Cash Measurement Time, minus
(ii) the amount of any Company Expenses that have not been paid prior to the Closing Cash
Measurement Time, minus (iii) the amount of any disbursements in excess of $50,000 in the
aggregate made following the Closing Cash Measurement Time and prior to the Closing Date,
plus (iv) the amount paid by the Company for the Tail Policies to the extent the costs
thereof are consistent with the proposal attached to Schedule 5.7(b).
“Closing Cash Measurement Time” means 5 p.m. (Miami time) on the third Business Day
prior to the Closing.
“Closing Date” has the meaning set forth in Section 1.2.
“Closing Indebtedness” means the Company Indebtedness as of the close of business on
the last Business Day immediately preceding the Closing Date.
“COBRA” has the meaning set forth in Section 3.14(f).
“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
“Common Stock” means the Company’s common stock, par value $0.01 per share.
“Company” has the meaning set forth in the Preamble.
“Company Articles” means the Company’s Articles of Incorporation.
“Company Assets” has the meaning set forth in Section 3.6(b).
“Company Benefit Plan” means each “employee benefit plan” within the meaning of
Section 3(3) of ERISA, including Multiemployer Plans, Multiple Employer Plans, Multiple Employer
Welfare Arrangements, and each other stock purchase, stock option, restricted stock, severance,
retention, employment, consulting, change-of-control, bonus, incentive, deferred compensation,
employee loan, fringe benefit and other benefit plan, agreement, program, policy, commitment or
other arrangement, whether or not subject to ERISA (including any related funding mechanism now in
effect or required in the future), whether formal or informal, oral or written, in each case under
which any past or present director, officer, employee, consultant or independent contractor of the
Company or any of its Subsidiaries has any present or future right to benefits.
“Company Board” has the meaning set forth in the Recitals.
“Company Board Recommendation” has the meaning set forth in Section 3.2(a).
“Company Contract” means any Contract to which the Company or any of its Subsidiaries
is a party or by which any of them is otherwise bound.
“Company Disclosure Letter” has the meaning set forth in Article III.
Appendix A-2
“Company Expenses” has the meaning set forth in Section 5.11.
“Company Financial Advisor” has the meaning set forth in Section 3.26.
“Company Indebtedness” shall mean all indebtedness of the Company and its Subsidiaries
for borrowed money (expressly excluding capital leases and excluding trade payables constituting
current liabilities that either (i) are less than 60 days outstanding or (ii) have been disputed by
the Company in good faith (and the Company shall have advised Parent of such dispute prior to the
time such trade payable has been outstanding for 60 days)), together with all accrued interest
thereon and applicable prepayment premiums, if any. For the avoidance of doubt, to the extent any
Cash is included in Closing Cash, such Cash shall not be netted against or used to offset Company
Indebtedness for the purpose of determining Closing Indebtedness.
“Company Joint Venture” means any Person in which the Company or any of its
Subsidiaries, directly or indirectly, owns an equity interest that does not have voting power under
ordinary circumstances to elect a majority of the board of directors or other Person performing
similar functions but in which the Company or any of its Subsidiaries has rights with respect to
the management of such Person.
“Company Licenses” has the meaning set forth in Section 3.18(b).
“Company Material Adverse Effect” means any event, state of facts, circumstance,
development, change or effect (including those affecting or relating to any Company Joint Venture)
that, individually or in the aggregate with all other events, states of fact, circumstances,
developments, changes and effects, is or could reasonably be expected to be materially adverse to
the business, assets, liabilities, condition (financial or otherwise) or results of operations of
the Company and its Subsidiaries, taken as a whole, or on the ability of the Company to consummate
the Merger and the other transactions contemplated hereby; provided, however, that,
to the extent that any event, state of facts, circumstance, development, change or effect directly
results from any of the following, alone or in combination, it shall not be taken into account in
determining whether there has been a Company Material Adverse Effect: (A) (1) changes in U.S.
general economic conditions or changes affecting the securities or financial markets in general or
(2) a material worsening of current conditions caused by an act of terrorism or war (whether
declared or not declared) occurring after the date of this Agreement, except, in the case of either
clause (1) or (2), to the extent such changes or developments have a disproportionate or unique
impact on the Company and its Subsidiaries, taken as a whole, relative to other participants in the
industries in which the Company conducts its businesses; (B) any adverse change, effect,
occurrence, state of facts or development attributable to or resulting from the identity of Parent;
(C) any action taken at the written request of Parent; (D) any change in the market price or
trading volume of securities of the Company in and of itself; (E) general changes in the industries
in which the Company and its Subsidiaries operate, except to the extent such changes or
developments have a disproportionate or unique impact on the Company and its Subsidiaries, taken as
a whole, relative to other participants in such industries; (F) any failure by the Company to meet
any internal projections or forecasts for any period beginning on or after the date of this
Agreement (but not the event, state of facts, circumstance, development, change or effect
underlying such failure); or (G) any changes (after the date hereof) in GAAP or Laws.
Appendix A-3
“Company Organizational Documents” means the articles of incorporation and bylaws (or
the equivalent organizational documents) of the Company and each of its Subsidiaries, in each case
(unless otherwise indicated) as in effect on the date of this Agreement.
“Company Products” shall mean all products or services developed, in whole or in part,
or in the process of being developed, by or for the Company or any of its Subsidiaries.
“Company Proxy Statement” has the meaning set forth in Section 3.5.
“Company Rights Agreement” has the meaning set forth in Section 3.22(c).
“Company SEC Documents” has the meaning set forth in Section 3.9(a).
“Company Shareholders Meeting” has the meaning set forth in Section 3.5.
“Company Stock Award Plan” has the meaning set forth in Section 3.3(e).
“Company Stock Rights” has the meaning set forth in Section 2.5(a).
“Company’s Termination Payment” has the meaning set forth in Section 7.6(a).
“Confidentiality Agreement” means that certain confidentiality letter agreement by and
between the Company and Parent or Affiliate thereof, dated as of April 20, 2006.
“Consulting Agreements” has the meaning set forth in Section 3.18(b).
“Contracts” means any contracts, agreements, licenses, notes, bonds, mortgages,
indentures, commitments, leases or other instruments or obligations, whether written or oral.
“Disclosed Contract” has the meaning set forth in Section 3.13(a).
“Dissenting Shareholder” has the meaning set forth in Section 2.3.
“Dissenting Shares” has the meaning set forth in Section 2.3.
“Effective Time” has the meaning set forth in Section 1.3.
“Environmental Actions” has the meaning set forth in Section 3.17(g).
“Environmental Health and Safety Laws” means all foreign, federal, state and local
laws, statutes, codes, regulations, rules, ordinances, orders, standards, permits, licenses,
actions, policies, principles of common law (including but not limited to all such principles under
which claims may be alleged for any type of injury or damage relating to contamination related to
Hazardous Materials as defined herein), and requirements (including consent decrees, judicial
decisions, administrative orders and self-implementing closure requirements) relating to the
protection, preservation or conservation of the environment and to public or worker health and
safety, all as amended, hereafter amended or reauthorized, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the Emergency
Appendix A-4
Planning and Community Right to Xxxx Xxx, 00 X.X.X. § 00000 et seq., the Clean Air Act, 42
U.S.C. § 7401 et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the Toxic
Substances Control Act, 15 U.S.C. § 2601 et seq., the Safe Drinking Water Act, 42 U.S.C. § 300f et
seq., and the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.
“Environmental Permits” means all permits, licenses, registrations and other
governmental authorizations required under applicable Environmental Health and Safety Laws.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated and in effect thereunder.
“Estimated Closing Indebtedness” means $150,000, which amount represents the Company’s
good faith estimate of the Closing Indebtedness.
“Exchange Act” means the Securities Exchange Act of 1934, as amended and the rules and
regulations promulgated thereunder.
“Excluded Share(s)” has the meaning set forth in Section 2.1(b).
“Expenses” has the meaning set forth in Section 5.11.
“FBCA” means the Florida Business Corporation Act.
“GAAP” has the meaning set forth in Section 3.9(c).
“Governmental Entity” has the meaning set forth in Section 3.5.
“Hazardous Materials” means (i) any substance that is listed, classified or regulated
as hazardous or toxic or a pollutant or contaminant under any Environmental Health and Safety Laws;
or (ii) any petroleum product or by-product, asbestos-containing material, lead-containing paint or
plumbing, polychlorinated biphenyls, radioactive material, toxic molds or radon.
“Indemnified Person” has the meaning set forth in Section 5.7.
“Intellectual Property” shall mean shall mean (i) trademarks, service marks, brand
names, certification marks, trade dress, domain names and other indications of origin, the goodwill
associated with the foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension, modification or renewal of any
such registration or application; (ii) inventions and discoveries, whether patentable or not, in
any jurisdiction; patents, applications for patents (including, without limitation, divisions,
continuations, continuations-in-part and renewal applications), and any renewals, reexaminations,
extensions or reissues thereof, in any jurisdiction; (iii) trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure thereof by any person
(the “Trade Secrets”); (iv) writings and other works of authorship, whether copyrightable
or not, in any jurisdiction, and any and all copyright rights, whether registered or not, and
registrations or applications for registration of copyrights in any jurisdiction, and any renewals
or extensions thereof; (v) computer software (in object code and source code formats), technical
information, data, designs, algorithms, drawings, schematics, specifications and know-
Appendix A-5
how, and (vi) moral rights, database rights, shop rights, design rights, industrial property
rights, publicity rights and privacy rights.
“Interim Financial Statements” means the consolidated balance sheet of the Company and
its Subsidiaries dated as of September 30, 2007 (including the notes thereto) and the consolidated
statements of income for the periods then ended, in each case as included in the Company SEC
Documents.
“IRS” has the meaning set forth in Section 3.14(b).
“JDL Termination Agreement” has the meaning set forth in Section 6.2(m).
“Joint Venture Agreements” means Contracts with respect to Company Joint Ventures.
“Knowledge” means, when used with respect to Parent, MergerCo or the Company, the
actual knowledge, after reasonable inquiry and investigation, of any executive officer of Parent,
MergerCo or the Company, as applicable.
“Laws” means any domestic or foreign laws, statutes, ordinances, rules (including
rules of common law), regulations, codes, executive orders or legally enforceable requirements
enacted, issued, adopted, promulgated or applied by any Governmental Entity.
“Legal Action” has the meaning set forth in Section 3.12.
“Letter of Transmittal” has the meaning set forth in Section 2.2(b).
“Liabilities” means any losses, liabilities, claims, damages or expenses, including
reasonable legal fees and expenses.
“Liens” means any mortgages, deeds of trust, liens (statutory or other), pledges,
security interests, collateral security arrangements, conditional and installment agreements,
claims, covenants, conditions, restrictions, reservations, options, rights of first offer or
refusal, charges, easements, rights-of-way, encroachments, third party rights or other encumbrances
or title imperfections or defects of any kind or nature.
“Material Impact” means (i) any adverse change in the condition (financial or
otherwise) of the assets, liabilities, indebtedness, earnings, obligations or business of the
Company or any of its Subsidiaries that has an aggregate value of at least $500,000 and (ii) a
material impairment of the ability of Parent or the Company to consummate the transactions
contemplated hereby, or the ability of the Company or the Surviving Corporation to operate the
Company’s business after the Closing in the manner operated on the date hereof.
“Measurement Date” has the meaning set forth in Section 3.3(a).
“Merger” has the meaning set forth in Section 1.1.
“MergerCo” has the meaning set forth in the Preamble.
Appendix A-6
“MergerCo Material Adverse Effect” means any event, state of facts, circumstance,
development, change or effect that, individually or in the aggregate with all other events, states
of fact, circumstances, developments, changes and effects, would materially adversely affect
MergerCo’s ability to consummate the Merger.
“Multiemployer Plan” has the meaning set forth in Section 3(37) or 4001(a)(3) of
ERISA.
“Multiple Employer Plan” has the meaning set forth in Section 413(c) of the Code.
“Multiple Employer Welfare Arrangement” has the meaning set forth in Section 3(40) of
ERISA.
“NASDAQ” has the meaning set forth in Section 3.5.
“Non-Standard Warranty Obligation” has the meaning set forth in Section 3.30.
“Owned Intellectual Property” has the meaning set forth in Section 3.18.
“Orders” means any orders, judgments, injunctions, awards, decrees or writs handed
down, adopted or imposed by, including any consent decree, settlement agreement or similar written
agreement with, any Governmental Entity.
“Other Filings” has the meaning set forth in Section 3.25.
“Outside Date” has the meaning set forth in Section 7.2(a).
“Owned Real Property” has the meaning set forth in Section 3.19(a).
“Parent” has the meaning set forth in the Preamble.
“Parent’s Termination Payment” has the meaning set forth in Section 7.6(b).
“Paying Agent” has the meaning set forth in Section 2.2(a).
“Payment Fund” has the meaning set forth in Section 2.2(a).
“PBGC” has the meaning set forth in Section 3.14(d).
“Per Share Merger Consideration” has the meaning set forth in Section 2.1(b).
“Permits” has the meaning set forth in Section 3.6(b).
“Permitted Borrowings” means the incurrence by the Company of Company Indebtedness
following the date hereof only if each of the following is true: (i) such Company Indebtedness is
incurred pursuant to the Company’s existing credit facility with Xxxxxxx Xxxxx or any extension
thereof or successor thereto on terms similar in all material respects to the Company’s existing
credit facility on the date of this Agreement (other than (a) aggregate principal amount, which may
be less than the $3,000,000 principal amount in such existing credit facility, (b) interest rate,
provided such interest rate is no more than 9% per annum, (c) amount of
Appendix A-7
cash and cash equivalents and marketable securities securing the Company’s obligations and (d)
type of security), (ii) Company Indebtedness incurred following the date hereof and until the
seventh calendar day prior to the Company Shareholders Meeting does not at any time exceed
$3,000,000 less the amount by which Cash is less than $1,000,000, in the aggregate, (iii) Company
Indebtedness incurred after the seventh day prior to the Company Shareholders Meeting does not
exceed $1,500,000 less the amount by which Cash is less than $1,000,000, in the aggregate and (iv)
such Company Indebtedness is incurred in the ordinary course of business consistent with past
practice.
“Permitted Liens” means (i) Liens for Taxes, assessments and governmental charges or
levies not yet due and payable or that are being contested in good faith and by appropriate
proceedings for which the Company has established a reasonable reserve; (ii) mechanics, carriers’,
workmen’s, repairmen’s, materialmen’s or other Liens or security interests that secure a liquidated
amount that are being contested in good faith and by appropriate proceedings; (iii) leases,
subleases and licenses (other than capital leases and leases underlying sale and leaseback
transactions); (iv) pledges or deposits to secure obligations under workers’ compensation Laws or
similar legislation or to secure public or statutory obligations; (v) pledges and deposits to
secure the performance of bids, trade contracts, leases, surety and appeal bonds, performance bonds
and other obligations of a similar nature, in each case in the ordinary course of business; (vi)
easements, covenants and rights of way (unrecorded and of record) and other similar restrictions of
record, and zoning, building and other similar restrictions, in each case that do not adversely
affect in any material respect the current use of the applicable property leased, used or held for
use by the Company or any of its Subsidiaries; and (vii) any other Liens that do not secure a
liquidated amount, that have been incurred or suffered in the ordinary course of business and that
would not, individually or in the aggregate, have a material effect on, or materially affect the
use or benefit to the owner of, the assets or properties to which they specifically relate.
“Person” means any individual, corporation, limited or general partnership, limited
liability company, limited partnership, trust, association, joint venture, Governmental Entity or
other entity or group (which term will include a “group” as such term is defined in Section
13(d)(3) of the Exchange Act).
“Personal Property Lease” has the meaning set forth in Section 3.19(c).
“Purchase Price” has the meaning set forth in Section 2.6.
“Real Estate Lease” has the meaning set forth in Section 3.19(b).
“Release” means any release, spill, emission, leaking, dumping, injection, pouring,
deposit, disposal, discharge, dispersal, leaching or migration into the environment.
“Recommendation Change” has the meaning set forth in Section 5.4(d)(iii).
“Regulatory Closure” has the meaning set forth in Section 3.17(g).
“Representatives” means, when used with respect to Parent, MergerCo or the Company,
the directors, officers, members, managers, employees, consultants, accountants, legal counsel,
investment bankers, agents and other representatives of Parent, MergerCo or the Company, as
Appendix A-8
applicable, and their respective Subsidiaries.
“Requisite Company Vote” means the approval of this Agreement by the holders of a
majority of the Common Stock.
“Satisfaction Date” has the meaning set forth in Section 1.2.
“SEC” has the meaning set forth in Section 3.5.
“Securities Act” has the meaning set forth in Section 3.9(a).
“Share(s)” has the meaning set forth in Section 2.1(b).
“SOX” has the meaning set forth in Section 3.9(a).
“Special Committee” means a committee of the Company’s Board of Directors, the members
of which are not members of the Company’s management, formed for the purpose of, among other
things, evaluating, and making a recommendation to the full Board of Directors of the Company with
respect to, this Agreement and the transactions contemplated hereby, including the Merger, and
shall include any successor committee to the Special Committee existing as of the date of this
Agreement or any reconstitution thereof.
“Stock Option” means an option to purchase Shares issued pursuant to the Company
Benefit Plans.
“Stock Option Cancellation and Custody Agreement” has the meaning set forth in
Section 7.3(a)(i).
“Subsidiary” means, when used with respect to Parent, MergerCo or the Company, any
other Person (whether or not incorporated) that Parent, MergerCo or the Company, as applicable,
directly or indirectly owns or has the power to vote or control more than 50% of any class or
series of capital stock or other equity interests of such Person.
“Superior Proposal” means any bona fide written Takeover Proposal that the Company
Board (including through action of the Special Committee, if then in existence) determines in good
faith (after consultation with the Company Financial Advisor or another financial advisor of
nationally recognized reputation) to be more favorable (taking into account (i) any legal,
financial, regulatory and other aspects of such Takeover Proposal and the Merger and other
transactions contemplated by this Agreement deemed relevant by the Company Board (or the Special
Committee, as applicable), and (ii) the anticipated timing, conditions and prospects for completion
of such Takeover Proposal) to the Company’s shareholders than the Merger and the other transactions
contemplated by this Agreement (taking into account all of the terms of any proposal by Parent to
amend or modify the terms of the Merger and the other transactions contemplated by this Agreement),
except that the reference to “15%” in the definition of “Takeover Proposal” shall be deemed to be a
reference to “50%”.
“Support Agreements” has the meaning set forth in Section 7.3(a)(ii).
Appendix A-9
“Surviving Corporation” has the meaning set forth in Section 1.1.
“Tail Policies” has the meaning set forth in Section 5.7(b).
“Takeover Proposal” means any proposal or offer from any Person or group of Persons
other than Parent or its Affiliates relating to any direct or indirect acquisition or purchase of
(i) a business or division (or more than one of them) that in the aggregate constitutes 15% or more
of the net revenues, net income or assets of the Company and its Subsidiaries, taken as a whole,
(ii) 15% or more of the equity interest in the Company (by vote or value), (iii) any tender offer
or exchange offer that if consummated would result in any Person or group of Persons beneficially
owning 15% or more of the equity interest (by vote or value) in the Company, or (iv) any merger,
reorganization, consolidation, share exchange, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company (or any Subsidiary or Subsidiaries of the
Company whose business constitutes 15% or more of the net revenues, net income or assets of the
Company and its Subsidiaries, taken as a whole).
“Tax Returns” means any and all reports, returns, declarations, claims for refund,
elections, disclosures, estimates, information reports or returns or statements relating to Taxes,
including any schedule or attachment thereto or amendment thereof.
“Taxes” means (i) any and all federal, state, provincial, local, foreign and other
taxes, levies, fees, imposts, duties, and similar governmental charges (including any interest,
fines, assessments, penalties or additions to tax imposed in connection therewith or with respect
thereto) including (x) taxes imposed on, or measured by, income, franchise, profits or gross
receipts, and (y) ad valorem, value added, capital gains, sales, goods and services, use, real or
personal property, capital stock, license, branch, payroll, estimated, withholding, employment,
social security (or similar), unemployment, compensation, utility, severance, production, excise,
stamp, occupation, premium, windfall profits, transfer and gains taxes, and customs duties, (ii)
any liability for payment of amounts described in clause (i) whether as a result of transferee
liability, joint and several liability for being a member of an affiliated, consolidated, combined,
unitary or other group for any period, or otherwise by operation of law, and (iii) any liability
for the payment of amounts described in clause (i) or (ii) as a result of any tax sharing, tax
indemnity or tax allocation agreement or similar agreements to pay or indemnify any other Person on
account of Taxes.
“Third Party Licenses” has the meaning set forth in Section 3.18(g).
“Use” shall mean to use, reproduce, make, have made, incorporate, embed, prepare
derivative works based upon, offer to sell, sell, resell, export, import, distribute, license,
sublicense or otherwise exploit.
“Voting Debt” has the meaning set forth in Section 3.3(a).
“Warranty” has the meaning set forth in Section 3.30.
“Withdrawal Liability” has the meaning specified in Section 3.14(d).
Appendix A-10
Execution Copy
EXHIBIT A
FORM OF STOCK OPTION CANCELLATION AND CUSTODY AGREEMENT
[Attached]
Execution Copy
STOCK OPTION CANCELLATION AND CUSTODY AGREEMENT
THIS STOCK OPTION CANCELLATION AND CUSTODY AGREEMENT (this “
Agreement”) is delivered
by the undersigned holder (the “
Holder”) of certain Stock Options of Quipp, Inc., a Florida
corporation (the “
Company”), which Stock Options are more particularly described on
Annex I hereto. Capitalized terms used and not otherwise defined in this Agreement have
the respective meanings assigned to those terms in the Agreement and Plan of Merger (the
“
Merger Agreement”), dated March ___, 2008, by and among the Company, Illinois Tool Works
Inc., a
Delaware corporation (“
Parent”), and Headliner Acquisition Corporation, a Florida
corporation and wholly-owned subsidiary of Parent (“
MergerCo”).
The undersigned acknowledges and understands that, pursuant to the
Merger Agreement, MergerCo
will be merged with and into the Company, with the Company as the Surviving Corporation. A copy of
the
Merger Agreement is attached hereto as
Exhibit A.
The undersigned acknowledges and understands that (i) Persons owning Shares (including the
undersigned) will receive cash consideration for any Shares that they own upon the closing of the
Merger and (ii) the execution and delivery of this Agreement by the undersigned is a condition to
the obligations of Parent, MergerCo and the Company under the
Merger Agreement. The undersigned
desires that the Company consummate the Merger and has determined that the consummation of the
Merger is in the best interests of the Company and its shareholders, including the undersigned.
The undersigned has further determined that (i) the Stock Options being cancelled pursuant
hereto are “underwater” as described below and (ii) it is in his or her best interests to cancel
such Stock Options in order to effect the closing of the Merger.
1. Representations and Warranties. The Holder represents and warrants that the Holder
is, and immediately prior to the Effective Time the Holder shall be, the record holder and full
beneficial owner of all of the Stock Options indicated as being owned by the Holder on Annex
I hereto, free and clear of all Liens, including, without limitation, free and clear of any
spousal interest in such Stock Options which may arise under any Laws. The Holder has all the
requisite contractual capacity, power and authority, and has taken all action necessary, to execute
and deliver this Agreement, to consummate the transactions contemplated hereby and to perform the
Holder’s obligations hereunder. The Holder has reviewed the Merger Agreement and has had the
opportunity to ask questions and receive answers concerning (i) the terms and conditions of this
Agreement and the
Merger Agreement and (ii) the terms and conditions of the transactions
contemplated by this Agreement and the
Merger Agreement, including the Merger. The Holder has had
full access to such other information concerning this Agreement, the
Merger Agreement and the
Merger as the Holder has requested, and has had the opportunity to consult with the Holder’s legal
and financial advisors regarding this Agreement, the
Merger Agreement and the Merger and the
Holder’s obligations hereunder. The Holder acknowledges that this Agreement and the Merger
Agreement provide for the termination, cancellation and
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extinguishment of the Holder’s Stock Options, and that such termination, cancellation and
extinguishment is a condition to the willingness of Parent and MergerCo to consummate the Merger.
By reason of the Holder’s business and financial experience and the business and financial
experience of those Persons retained to advise the Holder with respect to such transactions, the
Holder has such knowledge, sophistication and experience in business and financial matters that the
Holder is capable of evaluating the merits and consequences of the contemplated transactions.
Neither the execution, delivery or performance of this Agreement nor the consummation of the
transactions contemplated hereby, nor compliance by the Holder with any of the provisions hereof,
with or without the giving of notice or the lapse of time, or both, shall result in (a) a breach
of, or a default under, any term or provision of any Contract to which the Holder is a party or by
which the Holder’s assets (including any Stock Options owned beneficially or of record by the
Holder) are bound, (b) a violation by the Holder of any Law, or (c) an imposition of any Lien on
the Stock Options owned beneficially or of record by such Holder. This Agreement has been duly
executed and delivered by the Holder and is a legal, valid and binding obligation of the Holder,
enforceable against the Holder in accordance with its terms.
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9. Submission to Jurisdiction. The Holder irrevocably agrees that any legal action or
proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for
recognition and enforcement of any judgment in respect of this Agreement and the rights and
obligations arising hereunder brought by any party entitled to enforce this Agreement pursuant to
Section 4 or its successors or assigns shall be brought and determined exclusively in the
United States District Court for the District of Delaware. The Holder agrees that mailing of
process or other papers in connection with any such action or proceeding in the manner provided in
Section 14 or in such other manner as may be permitted by applicable Laws, will be valid
and sufficient service thereof. The Holder hereby irrevocably submits with regard to any such
action or proceeding for himself or herself and in respect of his or her property, generally and
unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that he or she
will not bring any action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court or tribunal other than the aforesaid courts. The Holder hereby
irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or
otherwise, in any action or proceeding with respect to this Agreement and the rights and
obligations arising hereunder, or for recognition and enforcement of any judgment in respect of
this Agreement and the rights and obligations arising hereunder (i) any claim that he or she is not
personally subject to the jurisdiction of the above named courts for any reason other than the
failure to serve process in accordance with this
Section 9, (ii) any claim that he or she
or his or her property is exempt or immune from jurisdiction of any such court or from any legal
process commenced in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to the
fullest extent permitted by the applicable Law, any claim that (x) the suit, action or proceeding
in such court is brought in an inconvenient forum, (y) the venue of such suit, action or proceeding
is improper or (z) this Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
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valid and enforceable, the intent and purpose of the invalid or unenforceable provision and
(b) the remainder of this Agreement and the application of that provision to other Persons or
circumstances will not be affected by such invalidity or unenforceability, nor will such invalidity
or unenforceability affect the validity or enforceability of that provision, or the application of
that provision, in any other jurisdiction.
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If to Parent or MergerCo, to:
Illinois Tool Works Inc.
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with copies (which will not constitute notice to Parent or MergerCo) to:
Xxxxxx Xxxxxx Xxxxxxxx LLP
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
If to the Company, to:
Quipp, Inc.
0000 X.X. 000xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
with a copy (which will not constitute notice to the Company) to:
Xxxxxx, Xxxxx & Bockius LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx, Esq.
If to the Holder, to:
the address or facsimile number set forth on the signature page hereto,
or to such other Persons, addresses or facsimile numbers as may be designated in
writing by the Person entitled to receive such communication as provided above.
Each such communication will be effective (a) if delivered by hand or overnight
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courier, when such delivery is made at the address specified in this Section
14, or (b) if delivered by facsimile, when such facsimile is transmitted to the
facsimile number specified in this Section 14 and appropriate confirmation
is received.
15.
Interpretation. The headings in this Agreement are for reference only
and do not affect the meaning or interpretation of this Agreement. Definitions will
apply equally to both the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun will include the corresponding masculine,
feminine and neuter forms. All references in this Agreement to Articles, Sections
and Annexes refer to Articles and Sections of, and Annexes to, this Agreement
unless the context requires otherwise. The words “
include,”
“
includes” and “
including” are not limiting and will be deemed to
be followed by the phrase “
without limitation.” The words “
herein,”
“
hereof,” “
hereunder” and words of similar import will be deemed to
refer to this Agreement as a whole, including the Annexes and Schedules hereto, and
not to any particular provision of this Agreement. The word “
or” will be
inclusive and not exclusive unless the context requires otherwise. Unless the
context requires otherwise, any agreements, documents, instruments or Laws defined
or referred to in this Agreement will be deemed to mean or refer to such
agreements, documents, instruments or Laws as from time to time amended, modified
or supplemented, including (a) in the case of agreements, documents or instruments,
by waiver or consent, and (b) in the case of Laws, by succession of comparable
successor statutes. All references in this Agreement to any particular Law will be
deemed to refer also to any rules and regulations promulgated under that Law.
References to a Person also refer to its predecessors and successors and permitted
assigns.
[Signature page follows.]
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SIGNATURE PAGE TO STOCK OPTION
CANCELLATION AND CUSTODY AGREEMENT
Respectfully,
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Execution Copy
Annex I
The Stock
Option, dated as of , issued by the Company for ___ shares of Common
Stock at an exercise price of $ per share.
Execution Copy
Exhibit A
Merger Agreement
See attached.
Execution Copy
EXHIBIT B
FORM OF SUPPORT AGREEMENT
[Attached]
Support Agreement
This Support Agreement (this “
Agreement”) is dated as of March 26, 2008, by and among
Headliner Acquisition Corporation, a Florida corporation (“
MergerCo”), Illinois Tool Works
Inc., a
Delaware corporation (“
Parent”, and together with MergerCo, the “
Purchaser
Parties”), and the Persons executing this Agreement as “
Shareholders” on the signature
page hereto (each a “
Shareholder” and collectively the “
Shareholders”).
WHEREAS, the Purchaser Parties and Quipp, Inc., a Florida corporation (the “Company”),
have entered into an Agreement and Plan of Merger, as it may be amended, supplemented, modified or
waived from time to time (the “Merger Agreement”), which provides, among other things, for
the merger of MergerCo with and into the Company, upon the terms and subject to the conditions set
forth therein (the “Merger”);
19. “Beneficial Owner” or “Beneficial Ownership” with respect to any
securities means having “beneficial ownership” of such securities (as determined pursuant to
Rule 13d-3 under the Exchange Act).
20. “Expiration Time” has the meaning set forth in Section 2.1.
21. “Legal Actions” means any claims, actions, suits, demand letters, judicial,
administrative or regulatory proceedings, or hearings, notices of violation, or
investigations.
22. “Owned Shares” has the meaning set forth in Section 2.1.
23. “Permits” means all authorizations, licenses, consents, certificates,
registrations, approvals, orders and other permits of any Governmental Entity.
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24. “Shares” has the meaning ascribed thereto in the Merger Agreement, and will
also include for purposes of this Agreement all shares or other voting securities into which
Shares may be reclassified, sub-divided, consolidated or converted and any rights and
benefits arising therefrom, including any dividends or distributions of securities which may
be declared in respect of the Shares and entitled to vote in respect of the matters
contemplated by Article II.
25. “Transfer” means, with respect to a security, the sale, grant, assignment,
transfer, pledge, encumbrance, hypothecation or other disposition of such security or the
Beneficial Ownership thereof (including by operation of Law), or the entry into any Contract
to effect any of the foregoing, including, for purposes of this Agreement, the transfer or
sharing of any voting power of such security or other rights in or of such security, the
granting of any proxy with respect to such security, depositing such security into a voting
trust or entering into a voting agreement with respect to such security.
27. Agreement to Vote. Subject to the terms and conditions hereof, each Shareholder
irrevocably and unconditionally agrees that from and after the date hereof and until the earliest
to occur of (i) the Effective Time; (ii) the termination of the Merger Agreement in accordance with
its terms; and (iii) the written agreement of the Purchaser Parties to terminate this Agreement
(such earliest occurrence being the “Expiration Time”), at any meeting (whether annual or
special, and at each adjourned or postponed meeting) of the Company’s shareholders, however called,
or in any other circumstances (including any action sought by written consent) upon which a vote or
other consent or approval is sought (any such meeting or other circumstance, a “Shareholder
Meeting”), each Shareholder will (y) appear, unless otherwise expressly consented to in writing
by the Purchaser Parties, in their sole and absolute discretion, at such a meeting, or otherwise
cause his or her Owned Shares to be counted as present thereat, for purposes of calculating a
quorum and respond to any request by the Company for written consent, if any, and (z) vote, or
cause to be voted (including by written consent, if applicable) all of the Shares Beneficially
Owned by such Shareholder as of the relevant time (collectively, the “Owned Shares”):
(A) in favor of the approval of the Merger Agreement (whether or not recommended by the
Company Board or any committee thereof) and the approval of the transactions contemplated
thereby, including the Merger;
(B) in favor of the approval of any other matter to be approved by the shareholders of
the Company to facilitate the transactions contemplated by the Merger Agreement, including
the Merger;
(C) against any Takeover Proposal or any transaction contemplated by such Takeover
Proposal;
(D) against any proposal made in opposition to, or in competition or inconsistent with,
the Merger or the Merger Agreement, including the adoption thereof or the consummation
thereof;
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(E) against any extraordinary dividend, distribution or recapitalization by the Company
or change in the capital structure of the Company (other than pursuant to or as explicitly
permitted by the Merger Agreement); and
(F) against any action or agreement that would reasonably be expected to prevent or
delay the Merger or result in any condition to the consummation of the Merger set forth in
Article VI of the Merger Agreement not being fulfilled.
30. Proxy. Each Shareholder hereby revokes any and all previous proxies granted with
respect to its Owned Shares. By entering into this Agreement, each Shareholder hereby grants a
proxy appointing Parent, with full power of substitution, as such Shareholder’s attorney-in-fact
and proxy, for and in such Shareholder’s name, to be counted as present and to vote (including by
written consent, if applicable) or otherwise to act on behalf of the Shareholder with respect to
the Shareholder’s Owned Shares, solely with respect to the matters set forth in, and in the manner
contemplated by, Section 2.1 as such proxy or its substitutes shall, in Parent’s sole and
absolute discretion, deem proper with respect to such Owned Shares. The proxy granted by each
Shareholder pursuant to this Section 2.4 is, subject to the penultimate sentence of this
Section 2.4, irrevocable and is coupled with an interest, in accordance with Section
607.0722(2)(b)(5) of the Florida Business Corporation Act and is granted in order to secure such
Shareholder’s performance under this Agreement and also in consideration of the Purchaser Parties
entering into this Agreement and the Merger Agreement. If any Shareholder fails for any reason to
be counted as present or to vote (including by written consent, if applicable) such Shareholder’s
Owned Shares in accordance with the requirements of Section 2.1 above (or
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anticipatorily breaches such Section), then the Parent shall have the right to cause to be
present or vote such Shareholder’s Owned Shares in accordance with the provisions of Section
2.1. The proxy granted by each Shareholder shall be automatically revoked upon termination of
this Agreement in accordance with its terms. Each Shareholder agrees, from the date hereof until
the Expiration Time, not to attempt to revoke, frustrate the exercise of, or challenge the validity
of, the irrevocable proxy granted pursuant to this Section 2.4.
33. Such Shareholder has the requisite capacity and authority to execute and deliver
this Agreement and to fulfill and perform such Shareholder’s obligations hereunder. This
Agreement has been duly and validly executed and delivered by such Shareholder and
constitutes a legal, valid and binding agreement of such Shareholder enforceable by the
Purchaser Parties against such Shareholder in accordance with its terms.
34. The number of Shares constituting Owned Shares of such Shareholder as of the date
hereof, and the number of votes which the holder of such Shares shall be entitled to cast in
respect of any matter as to which holders of Shares are entitled to cast votes, are set
forth next to such Shareholder’s name on Schedule A of this Agreement. Such
Shareholder is the record and Beneficial Owner of, and has good, valid and marketable title,
free and clear of any Liens (other than those arising under this Agreement) to, the Owned
Shares, and, except as provided in this Agreement and subject to the provisions of the
Securities Act of 1933, as amended, has full and unrestricted power to dispose of and vote
all of such Shareholder’s Owned Shares without the consent or approval of, or any other
action on the part of, any other Person, and has not granted any proxy inconsistent with
this Agreement that is still effective or entered into any voting or similar agreement with
respect to, such Shareholder’s Owned Shares. The Owned Shares set forth next to such
Shareholder’s name on Schedule A hereto constitute all of the capital stock of the
Company that is Beneficially Owned by such Shareholder as of the date hereof, and, except
for such Shareholder’s Owned Shares, such Shareholder and such Shareholder’s Affiliates do
not Beneficially Own or have any right to acquire (whether currently, upon lapse of time,
following the satisfaction of any conditions, upon the occurrence of any event or any
combination of the foregoing) any Shares or any securities convertible into Shares
(including Company Stock Rights).
35. Other than the filing by a Shareholder of any reports with the SEC required by
Sections 13(d) or 16(a) of the Exchange Act, none of the execution and delivery of this
Agreement by a Shareholder, the consummation by a Shareholder of the actions contemplated
hereby or compliance by a Shareholder with any of the provisions hereof (i) requires any
consent or other Permit of, or filing with or notification to, any Governmental Entity or
any other Person by such Shareholder, (ii) results in a violation
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or breach of, or constitutes (with or without notice or lapse of time or both) a
default (or gives rise to any third party right of termination, cancellation, modification
or acceleration) under any of the terms, conditions or provisions of any Contract to which
such Shareholder is a party or by which such Shareholder or any of such Shareholder’s
properties or assets (including such Shareholder’s Owned Shares) may be bound, (iii)
violates any Order or Law applicable to such Shareholder or any of such Shareholder’s
properties or assets (including such Shareholder’s Owned Shares), or (iv) results in a Lien
upon any of such Shareholder’s properties or assets (including such Shareholder’s Owned
Shares).
36. Such Shareholder has reviewed the Merger Agreement and has had the opportunity to
ask questions and receive answers concerning (i) the terms and conditions of this Agreement
and (ii) the terms and conditions of the transactions contemplated by the Merger Agreement,
including the Merger, has had full access to such other information concerning this
Agreement, the Merger Agreement and the Merger as the Shareholder has requested, and has had
the opportunity to consult with the Shareholder’s legal and financial advisors regarding
this Agreement, the Merger Agreement and the Merger and the Shareholder’s obligations
hereunder.
42. each Shareholder agrees that he or she shall not, directly or indirectly, (i)
initiate, solicit or encourage (including by way of providing information) or facilitate any
inquiries, proposals or offers with respect to, or the making, or the completion of, a
Takeover Proposal, (ii) participate or engage in any discussions or negotiations with, or
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furnish or disclose any non-public information relating to the Company or any of its
Subsidiaries to, or otherwise cooperate with or assist, any Person in connection with a
Takeover Proposal, (iii) approve, endorse or recommend any Takeover Proposal, (iv) enter
into any letter of intent, agreement in principle, merger agreement, acquisition agreement,
option agreement or other agreement or arrangement relating to a Takeover Proposal, or (v)
resolve, propose or agree to do any of the foregoing; and
43. if, prior to the Expiration Time, a Shareholder receives a proposal with respect to
the sale of Shares in connection with an Takeover Proposal, then such Shareholder shall
notify the Purchaser Parties promptly (and in any event within one Business Day) upon
receipt of (i) any Takeover Proposal, (ii) any request for non-public information relating
to the Company or any of its Subsidiaries other than requests for information in the
ordinary course of business and unrelated to a Takeover Proposal, or (iii) any inquiry or
request for discussions or negotiations regarding any Takeover Proposal, including in each
case the identity of such Person and a copy of such Takeover Proposal, indication, inquiry
or request (or, where no such copy is available, a written description of the material terms
and conditions of such Takeover Proposal, indication, inquiry or request), including any
material modifications thereto.
For the avoidance of doubt, the fact that the Company Board (or any committee thereof) shall
determine that a Takeover Proposal is a Superior Proposal shall in no way affect or limit
the obligations of any of the Shareholders, in their capacity as such, under this Agreement,
including Section 2.1 and this Section 4.4.
If to the Purchaser Parties, to:
Illinois Tool Works Inc.
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
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with copies (which will not constitute notice to Parent or MergerCo) to:
Xxxxxx Xxxxxx Xxxxxxxx LLP
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
If to a Shareholder, to:
The respective address or facsimile number set forth on Schedule A attached hereto,
or to such other Persons, addresses or facsimile numbers as may be designated in
writing by the Person entitled to receive such communication as provided above.
Each such communication will be effective (a) if delivered by hand or overnight
courier, when such delivery is made at the address specified in this Section
6.1, or (b) if delivered by facsimile, when such facsimile is transmitted to
the facsimile number specified in this Section 6.1 and appropriate
confirmation is received.
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or unenforceability affect the validity or enforceability of that provision, or the
application of that provision, in any other jurisdiction.
54. Interpretation. The headings in this Agreement are for reference only and do not
affect the meaning or interpretation of this Agreement. Definitions apply equally to both the
singular and plural forms of the terms defined. Whenever the context may require, any pronoun
includes the corresponding masculine, feminine and neuter forms. All references in this Agreement
to Articles and Sections refer to Articles and Sections of this Agreement unless the context
requires otherwise. The words “include,” “includes” and “including” are
not limiting and will be deemed to be followed by the phrase “without limitation.” The
words “herein,” “hereof,” “hereunder” and words of similar import shall be
deemed to refer to this Agreement as a whole and not to any particular provision of this Agreement.
The word “or” shall be inclusive and not exclusive unless the context requires otherwise.
Unless the context requires otherwise, any agreements, documents, instruments or Laws defined or
referred to in this Agreement will be deemed to mean or refer to such agreements, documents,
instruments or Laws as from time to time amended, modified or supplemented, including (a) in the
case of agreements, documents or instruments, by waiver or consent and (b) in the case of Laws, by
succession of comparable successor statutes. References herein to federal, state, local or other
applicable Laws refer to the laws of the United States and all other applicable jurisdictions. All
references in this Agreement to any particular Law will be deemed to refer also to (i) any rules
and regulations promulgated under that Law and (ii) any comparable Law of any other jurisdiction
addressing the same subject matter and any rules and regulations promulgated under such comparable
Law. References to a Person also refer to its predecessors and successors and permitted assigns.
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contained in this Agreement. Any agreement on the part of a party to any extension or waiver
will be valid only if set forth in an instrument in writing signed by such party. The failure of
any party to assert any of its rights under this Agreement or otherwise will not constitute a
waiver of such rights.
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bond or other security or showing actual damages, this being in addition to any other remedy
to which they are entitled at law or in equity.
63. Submission to Jurisdiction. Each of the parties hereto irrevocably agrees that
any Legal Action or proceeding with respect to this Agreement and the rights and obligations
arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement
and the rights and obligations arising hereunder brought by the other party hereto or its
successors or assigns, shall be brought and determined exclusively in the state or federal courts
for the State of Delaware. Each of the parties hereto hereby irrevocably submits with regard to
any such action or proceeding for itself, himself or herself and in respect of its, his or her
property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and
agrees that it, he or she will not bring any action relating to this Agreement or any of the
actions contemplated by this Agreement in any court or tribunal other than the aforesaid courts.
Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion,
as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement
and the rights and obligations arising hereunder or for recognition and enforcement of any judgment
in respect of this Agreement and the rights and obligations arising hereunder, (a) any claim that
it, he or she is not personally subject to the jurisdiction of the above named courts for any
reason other than the failure to serve process in accordance with this
Section 6.16, (b)
any claim that it, he or she or its, his or her property is exempt or immune from jurisdiction of
any such court or from any legal process commenced in such courts (whether through service of
notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of
judgment or otherwise) and (c) to the fullest extent permitted by the applicable Law, any claim
that (i) the suit, action or proceeding in such court is brought in an inconvenient forum, (ii) the
venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts. Each of the parties hereto agrees that delivery
of process or other papers in connection with any such action or proceeding in the manner provided
in
Section 6.1 or in such other manner as may be permitted by applicable Laws, will be
valid and sufficient service thereof.
64. Waiver of Jury Trial. Each party acknowledges and agrees that any
controversy that may arise under this Agreement is likely to involve complicated and difficult
issues and, therefore, each such party irrevocably and unconditionally waives any right it, he or
she may have to a trial by jury in respect of any litigation, controversy or other Legal Action
directly or indirectly arising out of or relating to this Agreement or the actions contemplated by
this Agreement. Each party to this Agreement certifies and acknowledges that (a) no Representative
of any other party has represented, expressly or otherwise, that such other party would not seek to
enforce the foregoing waiver in the event of a Legal Action, (b) such party has considered the
implications of this waiver, (c) such party makes this waiver voluntarily and (d) such party has
been induced to enter into this Agreement by, among other things, the mutual waivers and
certifications in this Section 6.17.
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Company (but not on his or her own behalf as a shareholder) and the taking of any actions (or
failure to act) solely in his or her capacity as an officer or director of the Company will not be
deemed to constitute a breach of this Agreement.
[Remainder of Page Intentionally Left Blank.
Signature Pages Follow.]
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SIGNATURE PAGE TO SUPPORT AGREEMENT
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be signed as of the date
first above written.
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PURCHASER PARTIES: |
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ILLINOIS TOOL WORKS INC. |
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HEADLINER ACQUISITION CORPORATION |
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Xxxxxxx X. Xxxx
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Xxxxxxxx X. Xxxxxx |
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Xxxxxxx X. Xxxxxxxxxx |
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Xxxxxxxx X. Xxxxxx |
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SIGNATURE PAGE TO SUPPORT AGREEMENT
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JDL PARTNERS, LP |
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By:
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JDL CAPITAL, LLC, |
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its General Partner |
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By:
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Xxxx X. Xxxx, |
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its Managing Member |
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Xxxxxx X. Xxxx |
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Xxxxxx X. Xxxxxxxxxx |
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Execution Copy
SCHEDULE A
BENEFICIAL OWNERSHIP OF SHARES
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Name of Shareholder: |
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Number of Shares: |
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Xxxxxxx X. Xxxx
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13,159.642 |
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0000 Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000 |
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Xxxxxxxx X. Xxxxxx
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16,174 |
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00 Xxxxxxxxxx Xxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000 |
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Xxxxxxx X. Xxxxxxxxxx
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— |
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Avocent
Xxx Xxxxxxxxxx Xxx
Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000 |
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Xxxxxxxx X. Xxxxxx
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X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000 |
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JDL Partners, LP
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142,000 |
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00 Xxxxxxxxx Xxxxxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxx
Facsimile: (000) 000-0000 |
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Xxxxxx X. Xxxx
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100 |
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00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000 |
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Xxxxxx X. Xxxxxxxxxx
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— |
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0000 Xxx Xxxxx Xxxxx
Xxxxxxx, XX 00000
Cell Phone: (000) 000-0000 |
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EXHIBIT C
FORM OF JDL TERMINATION AGREEMENT
[Attached]
Termination Agreement
This
TERMINATION AGREEMENT (this “
Agreement”) is executed as of the date set forth on the
signature page hereto by and between Quipp, Inc., a Florida corporation (the “
Company”),
JDL Capital, LLC, a
Delaware limited liability company (“
JDL Capital”), JDL Partners, LP, a
Delaware limited partnership (“
JDL Partners”), Xxxx X. Xxxx, Xxxxx X. Xxxxxxxxx, Xxxx X.
Xxxxxxx, Xxxx XxXxxxxx, Xxxxxx XxXxxx and Xxxxxxx XxXxx (JDL Capital, JDL Partners and the
foregoing individuals are collectively referred to herein as the “
JDL Group”). Capitalized
terms not defined herein shall have the meaning ascribed to them in the Voting Agreement (as
defined below).
WHEREAS, the Company is a party that certain Agreement and Plan of Merger (the “Merger
Agreement”), dated as of March ___, 2008, by and among the Company, [Parent], a Delaware
corporation (“Parent”), and Headliner Acquisition Corporation, a Delaware corporation and
wholly-owned subsidiary of Parent (“MergerCo”), pursuant to which MergerCo shall be merged
with and into the Company (the “Transaction”), subject to the terms and conditions set
forth in the Merger Agreement;
In consideration of the mutual covenants of the parties set forth in this Agreement and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
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75. Submission to Jurisdiction. Each of the parties hereto irrevocably agrees that
any legal action or proceeding with respect to this Agreement and the rights and obligations
arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement
and the rights and obligations arising hereunder brought by the other parties hereto or their
successors or assigns shall be brought and determined exclusively in the United States District
Court for the District of Delaware. Each of the parties hereto agrees that mailing of process or
other papers in connection with any such action or proceeding in the manner provided in Section 16
of the Voting Agreement or in such other manner as may be permitted by applicable laws, will be
valid and sufficient service thereof. Each of the parties hereto hereby irrevocably submits with
regard to any such action or proceeding for itself or himself and in respect of its or his
property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and
agrees that it or he will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court or tribunal other than the aforesaid
courts. Each of the parties hereto hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this
Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of
any judgment in
respect of this Agreement and the rights and obligations arising hereunder (i) any claim that
it or he is not personally subject to the jurisdiction of the above named courts for any
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reason
other than the failure to serve process in accordance with this Section 8, (ii) any claim
that it or its property is exempt or immune from jurisdiction of any such court or from any legal
process commenced in such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to the
fullest extent permitted by the applicable law, any claim that (x) the suit, action or proceeding
in such court is brought in an inconvenient forum, (y) the venue of such suit, action or proceeding
is improper or (z) this Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
[Remainder of Page Intentionally Left Blank.]
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