Document:

Exhibit 10.38.2

 

ENTERPRISE BANCORP, INC.

 

Nonqualified Stock Option Agreement

 

This Agreement made as of this (xx) day of (mmmmmm, yyyy) by and
between Enterprise Bancorp, Inc., a Massachusetts corporation (the “Company”),
and «FirstName» «EmployeeName» (the “Optionee”).

 

WITNESSETH THAT:

 

WHEREAS, the Company has instituted a program entitled “Enterprise
Bancorp, Inc. [Amended and Restated 1998] [2003] Stock Incentive Plan” (the “Plan”);
and

 

WHEREAS, the Compensation Committee of the Board of Directors, or the
full Board of Directors, as the case may be, of the Company has authorized the
grant of stock options upon the terms and conditions set forth below; and

 

WHEREAS, the Compensation Committee or the full Board of Directors, as
the case may be, has authorized the grant of this stock option pursuant and
subject to the terms of the Plan, a copy of which is attached hereto and
incorporated herein; and

 

WHEREAS, the Compensation Committee or the full Board of Directors, as
the case may be, has designated this stock option a nonqualified stock option
in accordance with Section 5 of the Plan;

 

NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and the Optionee agree
as follows.

 

1.             Grant.  Subject to the terms of the Plan and this
Agreement, the Company hereby grants to the Optionee a stock option (the “Option”)
to purchase from the Company «M_2004grant_»
shares of its common stock, $0.01 par value per share (“Stock”). This Option is
not intended to be an incentive stock option or to qualify for special federal
income tax treatment under Section 422 of the Code.

 

2.             Exercise Price.  This Option may be exercised at the exercise
price of $xx.xx per share of Stock, subject to adjustment as provided herein
and in the Plan.

 

3.             Term and
Exercisability of Option.  This
Option shall expire on the earlier of mmmm dd, yyyy or the last day of the
exercise period determined pursuant to subsection (c) of this Section 3. At any
time before its expiration, this Option may be exercised to the extent set
forth in the following schedule, provided that:

 

(a)           at
the time of exercise the Optionee is not in violation of any employee
confidentiality, noncompetition or other agreement with the Company or a
Subsidiary;

 

(b)           the
Optionee’s employment, contractual or other service relationship with the
Company or a Subsidiary (“Relationship”) must be in effect on the relevant date

 

 

under the schedule set forth after subparagraph (c) below in order for
any scheduled increment in the exercisable portion of the Option to become
effective; and

 

(c)           this
Option may not be exercised if two months or more have elapsed following the
date of termination of the Relationship between the Optionee and the Company or
a Subsidiary; provided, however, that if the Relationship terminates as a
result of the Optionee’s retirement, “thirty-six months” shall be substituted
for “two months” in this sentence; and provided, further, that if the
Relationship terminates by reason of the Optionee’s permanent and total
disability (as determined by the Compensation Committee or the full Board of
Directors, as the case may be, on the basis of medical advice satisfactory to
it) or death, the Option must be exercised within twelve months of the Optionee’s
death or disability.

 

4.             Method
of Exercise.  Prior to its expiration
and to the extent that the right to purchase shares of Stock has vested
hereunder, this Option may be exercised from time to time by written notice to
the Company, substantially in the form attached hereto as Exhibit 1, stating
the number of shares with respect to which this Option is being exercised and
accompanied by either (a) payment in full of the exercise price for the number
of shares to be delivered, by means of payment acceptable to the Company in
accordance with Section 5(c) of the Plan, or (b) a description of a “cashless
exercise” procedure and such other documents and undertakings as are necessary
to satisfy that procedure. As soon as practicable after its receipt of such notice,
the Company shall, without transfer or issue tax to the Optionee (or other
person entitled to exercise this Option), deliver to the Optionee (or other
person entitled to exercise this Option), at the principal executive offices of
the Company or such other place as shall be mutually acceptable, a stock
certificate or certificates for such shares out of theretofore authorized but
unissued shares or reacquired shares of its Stock as the Company may elect;
provided, however, that the time of such delivery may be postponed by the
Company for such period as may be required for it with reasonable diligence to
comply with any applicable requirements of law. Payment of the exercise price
may be made in cash or cash equivalents or, in accordance with the terms and
conditions of Section 5(c) of the Plan, in whole or in part in shares of Common
Stock of the Company; provided, however, that the Compensation Committee or the
full Board of Directors, as the case may be, reserves the right upon receipt of
any written notice of exercise from the Optionee to require payment in cash
with respect to the shares contemplated in such notice; and provided, further,
that the Optionee may not make payment in shares of Stock that he acquired upon
the earlier exercise of any incentive stock option, unless he has held the
shares until at least two years after the date the incentive stock option was
granted and at least one year after the date the incentive stock option was
exercised. If the Optionee (or other person entitled to exercise this Option)
fails to pay for and accept delivery of all of the shares specified in such
notice upon tender of delivery thereof, his right to exercise this Option with
respect to such shares not paid for may be terminated by the Company.

 

5.             Withholding Taxes.  The Optionee hereby agrees, as a condition to
any exercise of this Option, to provide to the Company an amount sufficient to
satisfy the Company’s obligation to withhold certain federal, state and local
taxes arising by reason of such exercise (the “Withholding Amount”), if any, by
(a) authorizing the Company and/or a Subsidiary to withhold the Withholding
Amount from his cash compensation or (b) remitting the Withholding Amount to
the Company in cash; provided, however, that to the extent that the Withholding
Amount is

 

2

 

not provided by one or a combination of such methods, the Company may
at its election withhold from the Stock that would otherwise be delivered upon
exercise of this Option that number of shares having a Fair Market Value, on
the date of exercise, sufficient to eliminate any deficiency in the Withholding
Amount.

 

6.             Nonassignability
of Option.  This Option shall not be
assignable or transferable by the Optionee except by will or by the laws of
descent and distribution.  During the
life of the Optionee, this Option shall be exercisable only by him, by a
conservator or guardian duly appointed for him by reason of his incapacity or
by the person appointed by the Optionee in a durable power of attorney
acceptable to the Company’s counsel.

 

6.              Nonassignability
of Option.  Except as otherwise
provided in this Section 6, this Option shall not be assignable or transferable
by the Optionee except by will or by the laws of descent and distribution.  Except as otherwise provided in this Section
6, during the life of the Optionee, this Option shall be exercisable only by
him, by a conservator or guardian duly appointed for him by reason of his
incapacity or by the person appointed by the Optionee in a durable power of
attorney acceptable to the Company’s counsel. 
In addition to the foregoing, the Optionee may transfer this Option to a
member of the Immediate Family (as hereinafter defined) of the Optionee, to a
trust solely for the benefit of the Optionee and the Optionee’s Immediate
Family or to a partnership or limited liability company whose only partners or
members are the Optionee and members of the Optionee’s Immediate Family.  For purposes of this Section 6, “Immediate
Family” shall mean, with respect to any Optionee, the Optionee’s child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law,
and shall include adoptive relationships.

 

7.             Compliance with
Securities Act; Lock-Up Agreement. 
The Company shall not be obligated to sell or issue any shares of Stock
or other securities pursuant to the exercise of this Option unless the shares
of Stock or other securities with respect to which this Option is being
exercised are at that time effectively registered or exempt from registration
under the Securities Act and applicable state securities laws. In the event
shares or other securities shall be issued that shall not be so registered, the
Optionee hereby represents, warrants and agrees that he will receive such
shares or other securities for investment and not with a view to their resale
or distribution, and will execute an appropriate investment letter satisfactory
to the Company and its counsel. The Optionee further hereby agrees that as a
condition to the purchase of shares upon exercise of this Option, he will
execute an agreement in a form acceptable to the Company to the effect that the
shares shall be subject to any underwriter’s lock-up agreement in connection
with a public offering of any securities of the Company that may from time to
time apply to shares held by officers and employees of the Company, and such
agreement or a successor agreement must be in full force and effect.

 

8.             Legends.  The Optionee hereby acknowledges that the
stock certificate or certificates evidencing shares of Stock or other
securities issued pursuant to any exercise of this Option may bear a legend
setting forth the restrictions on their transferability described in Section 7
hereof, if such restrictions are then in effect.

 

3

 

9.             Rights as
Stockholder.  The Optionee shall have
no rights as a stockholder with respect to any shares covered by this Option until
the date of issuance of a stock certificate to him for such shares. No
adjustment shall be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.

 

10.           Termination or
Amendment of Plan.  The Board may
terminate or amend the Plan at any time. No such termination or amendment will
affect rights and obligations under this Option to the extent it is then in
effect and unexercised.

 

11.           Effect Upon
Employment and Performance of Services. 
Nothing in this Option or the Plan shall be construed to impose any
obligation upon the Company or any Subsidiary to employ the Optionee or to
retain the Optionee in its employ or to engage or retain the services of the
Optionee.

 

12.           Time for Acceptance.  Unless the Optionee shall evidence his
acceptance of this Option by execution of this Agreement within thirty days
after its delivery to him, the Option and this Agreement shall be null and
void.

 

13.           Right of Repayment.  In the event that the Optionee accepts employment
with or performs services for a competitor of the Company within one year after
the date of exercise of this Option or any portion of it, the Optionee shall
pay to the Company an amount equal to the excess of the Fair Market Value of
the shares as to which the Option was exercised on the date of exercise over
the price paid for such shares; provided, however, that the Compensation
Committee or the full Board of Directors, as the case may be, in its discretion
may release the Optionee from the requirement to make such payment, if the
Compensation Committee or the full Board of Directors, as the case may be,
determines that the Optionee’s acceptance of such employment or performance of
such services is not inimical to the best interests of the Company. The Company
may deduct from any compensation or other amount payable by the Company to the
Optionee the amount of payment due under the preceding sentence. For purposes
of this Section 13, the term “Company” refers to the Company and all
Subsidiaries.

 

14.           General Provisions.

 

(a)           Amendment; Waivers.  This Agreement, including the Plan, contains
the full and complete understanding and agreement of the parties hereto as to
the subject matter hereof and, except as otherwise permitted by the express
terms of the Plan and this Agreement, it may not be modified or amended nor may
any provision hereof be waived, except by a further written agreement
duly signed by each of the parties; provided, however, that a modification or
amendment that does not materially diminish the rights of the Optionee
hereunder, as they may exist immediately before the effective date of the
modification or amendment, shall be effective upon written notice of its
provisions to the Optionee. The waiver by either of the parties hereto of any
provision hereof in any instance shall not operate as a waiver of any other
provision hereof or in any other instance.

 

(b)           Binding Effect.  This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns.

 

4

 

(c)           Governing Law.  This Agreement has been executed in
Massachusetts and shall be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts.

 

(d)           Construction.  This Agreement is to be construed in
accordance with the terms of the Plan. In case of any conflict between the Plan
and this Agreement, the Plan shall control. The titles of the sections of this
Agreement and of the Plan are included for convenience only and shall not be
construed as modifying or affecting their provisions. The masculine gender
shall include both sexes; the singular shall include the plural and the plural
the singular unless the context otherwise requires. Capitalized terms not
defined herein shall have the meanings given to them in the Plan.

 

(e)           Notices.  Any notice in connection with this Agreement
shall be deemed to have been properly delivered if it is in writing and is
delivered by hand or facsimile or sent by registered mail, postage prepaid, to
the party addressed as follows, unless another address has been substituted by
notice so given:

 

	
  To the Optionee:

  	
   

  	
  To his address as set forth on the signature page hereof.

  
	
   

  	
   

  	
   

  
	
  To the Company:

  	
   

  	
  Enterprise Bancorp, Inc.

  
	
   

  	
   

  	
  222 Merrimack Street

  
	
   

  	
   

  	
  Lowell, Massachusetts 01852

  
	
   

  	
   

  	
  Attn: Mr. James A. Marcotte

  
	
   

  	
   

  	
   

  
	
  Copy to:

  	
   

  	
  Edwards & Angell, LLP

  
	
   

  	
   

  	
  101 Federal Street

  
	
   

  	
   

  	
  Boston, Massachusetts 02110

  
	
   

  	
   

  	
  Attn: Stephen J. Coukos, Esq.

  

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed as a sealed instrument by its officer thereunto duly authorized as of
the date set forth below.

 

	
  Date of grant:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENTERPRISE BANCORP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  James F Conway, III

  
	
   

  	
   

  
	
   

  	
  Chairman

  
	
   

  	
   

  
	
   

  	
  Compensation Committee

  
					

 

5

 

ACCEPTANCE

 

I hereby accept the foregoing Option, a
nonqualified stock option, in accordance with its terms and conditions and in
accordance with the terms and conditions of the Enterprise Bancorp, Inc. [Amended
and Restated 1998] [2003] Stock Incentive Plan.

 

	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
  (Signature of Optionee)

  
	
   

  	
   

  
	
   

  	
  «FirstName» «EmployeeName»

  
	
   

  	
   

  
	
   

  	
   

  
	
  Notice Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of grant: [Date]

  	
   

  
					

 

 

Exhibit 2 to

Nonqualified Stock

Option Agreement

 

[FORM FOR EXERCISE OF NONQUALIFIED STOCK
OPTION]

[SAMPLE ONLY]

 

 

Enterprise Bancorp, Inc.

222 Merrimack Street

Lowell, Massachusetts 01852

 

RE:                              Exercise of
Nonqualified Stock Option under Enterprise Bancorp, Inc. [Amended and Restated
1998] [2003] Stock Incentive Plan

 

Gentlemen:

 

I hereby elect to exercise the stock option granted to me on                         ,
200     by and to the extent of purchasing                           
shares of the Common Stock of Enterprise Bancorp, Inc. for the exercise price
of $                            
per share, subject to the terms and conditions of the Nonqualified Stock Option
Agreement between myself and Enterprise Bancorp, Inc. dated as of                     ,
200     (the “Agreement”).

 

Enclosed please find payment, in cash or in such other property as is
permitted under the Enterprise Bancorp, Inc. 2003 Stock Incentive Plan (the “Plan”),
of the purchase price for the shares.  If
I am making payment of any part of the purchase price by delivery of shares of
stock of Enterprise Bancorp, Inc., I hereby confirm that I have investigated
and considered the possible income tax consequences of making such payments in
that form.

 

I hereby agree to provide to Enterprise Bancorp, Inc. an amount sufficient
to satisfy its obligation to withhold certain taxes, in accordance with the
Agreement.

 

I further agree to any securities lock-up agreement between one or more
underwriters and shareholders of the Company who are officers or employees of
the Company or a Subsidiary, and any successor to that agreement, with regard
to the shares acquired upon this exercise of my stock option.

 

I hereby specifically confirm to Enterprise Bancorp, Inc. that I am
acquiring the shares for investment and not with a view to their sale or
distribution, and that the shares shall be held subject to all of the terms and
conditions of the Plan and the Agreement.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
  (Signed
  by
                          
  or other party duly

  
	
   

  	
  exercising
  option)Exhibit 10.47

 

 

AGREEMENT AND PLAN OF REORGANIZATION

 

BY AND
AMONG

 

SAWTEK
INC.,

 

TFR
ACQUISITION, INC.,

 

AND

 

TFR
TECHNOLOGIES INC.

 

Dated as
of December 14, 2004

 

 

CONFIDENTIAL

 

TABLE OF CONTENTS

 

	
  ARTICLE 1.

  	
  The Merger

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  The
  Merger

  	
   

  
	
   

  	
   

  	
   

  
	
  1.2

  	
  Effective
  Time

  	
   

  
	
   

  	
   

  	
   

  
	
  1.3

  	
  Closing
  of the Merger

  	
   

  
	
   

  	
   

  	
   

  
	
  1.4

  	
  Effects
  of the Merger

  	
   

  
	
   

  	
   

  	
   

  
	
  1.5

  	
  Articles
  of Incorporation and Bylaws

  	
   

  
	
   

  	
   

  	
   

  
	
  1.6

  	
  Directors
  and Officers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2.

  	
  Effect of Merger on the Capital Stock of
  the Constituent Corporations

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Conversion
  of Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Stock
  Options.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Payment
  Fund

  	
   

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  Payment
  Procedures

  	
   

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  No
  Further Ownership Rights in Company Common Stock

  	
   

  
	
   

  	
   

  	
   

  
	
  2.6

  	
  Termination
  of Payment Fund

  	
   

  
	
   

  	
   

  	
   

  
	
  2.7

  	
  No
  Liability

  	
   

  
	
   

  	
   

  	
   

  
	
  2.8

  	
  Investment
  of the Payment Fund

  	
   

  
	
   

  	
   

  	
   

  
	
  2.9

  	
  Lost,
  Stolen, or Destroyed Certificates

  	
   

  
	
   

  	
   

  	
   

  
	
  2.10

  	
  Withholding
  Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  2.11

  	
  Stock
  Transfer Books

  	
   

  
	
   

  	
   

  	
   

  
	
  2.12

  	
  Dissenting
  Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3.

  	
  Representations and Warranties of
  Parent and MergerSub

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Due
  Organization

  	
   

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Authorization
  and Effect of Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  No
  Violations; Consents and Approvals

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4.

  	
  Representations and Warranties of the
  Company

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Capitalization;
  Ownership of Shares; No Liens on Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Due
  Organization

  	
   

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  4.4

  	
  Authority;
  Absence of Conflicts

  	
   

  
					

 

2

 

	
  4.5

  	
  Financial
  Statements

  	
   

  
	
   

  	
   

  	
   

  
	
  4.6

  	
  Absence
  of Undisclosed Liabilities

  	
   

  
	
   

  	
   

  	
   

  
	
  4.7

  	
  Conduct
  of Business; Certain Actions

  	
   

  
	
   

  	
   

  	
   

  
	
  4.8

  	
  Real
  Property

  	
   

  
	
   

  	
   

  	
   

  
	
  4.9

  	
  Tangible
  Personal Property

  	
   

  
	
   

  	
   

  	
   

  
	
  4.10

  	
  Accounts
  Receivable

  	
   

  
	
   

  	
   

  	
   

  
	
  4.11

  	
  Accounts
  Payable

  	
   

  
	
   

  	
   

  	
   

  
	
  4.12

  	
  Sales
  Representatives and Other Sales Agents/Sales Offices

  	
   

  
	
   

  	
   

  	
   

  
	
  4.13

  	
  Inventory

  	
   

  
	
   

  	
   

  	
   

  
	
  4.14

  	
  Backlog

  	
   

  
	
   

  	
   

  	
   

  
	
  4.15

  	
  Material
  and Affiliated Contracts

  	
   

  
	
   

  	
   

  	
   

  
	
  4.16

  	
  Compliance
  with Laws

  	
   

  
	
   

  	
   

  	
   

  
	
  4.17

  	
  Legal
  Proceedings

  	
   

  
	
   

  	
   

  	
   

  
	
  4.18

  	
  Ability
  to Conduct the Business

  	
   

  
	
   

  	
   

  	
   

  
	
  4.19

  	
  Labor
  Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  4.20

  	
  Employee
  Benefit Plans

  	
   

  
	
   

  	
   

  	
   

  
	
  4.21

  	
  Environmental
  Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  4.22

  	
  Warranties;
  Products Claims

  	
   

  
	
   

  	
   

  	
   

  
	
  4.23

  	
  Tax
  Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  4.24

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  4.25

  	
  Minute Books;
  Stock Record Books

  	
   

  
	
   

  	
   

  	
   

  
	
  4.26

  	
  Brokers’ or Finders’
  Fees

  	
   

  
	
   

  	
   

  	
   

  
	
  4.27

  	
  Material
  Customers and Suppliers

  	
   

  
	
   

  	
   

  	
   

  
	
  4.28

  	
  Bank Accounts;
  Powers of Attorney

  	
   

  
	
   

  	
   

  	
   

  
	
  4.29

  	
  Books and Records

  	
   

  
	
   

  	
   

  	
   

  
	
  4.30

  	
  Intellectual Property
  Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  4.31

  	
  Information Furnished

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5.

  	
  Covenants
  Related to Conduct of the Business

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Inspection

  	
   

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Financial Statements

  	
   

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Interim
  Operations of the Company and its Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6.

  	
  Additional
  Agreements

  	
   

  
				

 

3

 

	
  6.1

  	
  Company Shareholder
  Meeting

  	
   

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  Satisfaction
  of All Conditions Precedent

  	
   

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  Acquisition Proposals

  	
   

  
	
   

  	
   

  	
   

  
	
  6.4

  	
  Notice of Developments

  	
   

  
	
   

  	
   

  	
   

  
	
  6.5

  	
  Public Announcements

  	
   

  
	
   

  	
   

  	
   

  
	
  6.6

  	
  Notice of Breach

  	
   

  
	
   

  	
   

  	
   

  
	
  6.7

  	
  Continuation of
  Insurance Coverage

  	
   

  
	
   

  	
   

  	
   

  
	
  6.8

  	
  Maintenance of Credit
  Terms

  	
   

  
	
   

  	
   

  	
   

  
	
  6.9

  	
  Updating Schedules

  	
   

  
	
   

  	
   

  	
   

  
	
  6.10

  	
  Third Party Consents

  	
   

  
	
   

  	
   

  	
   

  
	
  6.11

  	
  Commercially
  Reasonable Efforts and Certain Filings

  	
   

  
	
   

  	
   

  	
   

  
	
  6.12

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  
	
  6.13

  	
  FIRPTA

  	
   

  
	
   

  	
   

  	
   

  
	
  6.14

  	
  Contingent Earn-Out
  Payment

  	
   

  
	
   

  	
   

  	
   

  
	
  6.15

  	
  Benefits for
  Retained Employees

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7.

  	
  Conditions
  to Consummation of the Merger

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Conditions
  to Each Party’s Obligation to Effect the Merger

  	
   

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Conditions
  to the Obligations of Parent and MergerSub

  	
   

  
	
   

  	
   

  	
   

  
	
  7.3

  	
  Conditions
  to Obligations of the Company

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8.

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Termination by
  Mutual Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Termination
  by Either Parent or the Company

  	
   

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Termination by the
  Company

  	
   

  
	
   

  	
   

  	
   

  
	
  8.4

  	
  Termination by Parent

  	
   

  
	
   

  	
   

  	
   

  
	
  8.5

  	
  Effect of
  Termination and Abandonment

  	
   

  
	
   

  	
   

  	
   

  
	
  8.6

  	
  Amendment

  	
   

  
	
   

  	
   

  	
   

  
	
  8.7

  	
  Extension; Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9.

  	
  Survival
  of Representations, Warranties, Covenants, and Agreements; Warranty Reserve

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Survival
  of Representations, Warranties, Covenants and Agreements; Warranty Reserve

  	
   

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  Warranty Reserve

  	
   

  
				

 

4

 

	
  9.3

  	
  Shareholder
  Agent of the Shareholders; Power of Attorney

  	
   

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  Third-Party Claims

  	
   

  
	
   

  	
   

  	
   

  
	
  9.5

  	
  Remedies

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10.

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Collateral Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  10.2

  	
  Successors and Assigns

  	
   

  
	
   

  	
   

  	
   

  
	
  10.3

  	
  Guaranty

  	
   

  
	
   

  	
   

  	
   

  
	
  10.4

  	
  Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  10.5

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  10.6

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  10.7

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
   

  
	
  10.8

  	
  Specific Performance

  	
   

  
	
   

  	
   

  	
   

  
	
  10.9

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  
	
  10.10

  	
  Remedies Not Exclusive

  	
   

  
	
   

  	
   

  	
   

  
	
  10.11

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  10.12

  	
  Titles and Headings

  	
   

  
	
   

  	
   

  	
   

  
	
  10.13

  	
  Certain Interpretive Matters and Definitions

  	
   

  
				

 

5

 

AGREEMENT
AND PLAN OF REORGANIZATION

 

THIS AGREEMENT AND PLAN
OF REORGANIZATION (this “Agreement”) is
by and among Sawtek Inc., a Florida corporation (“Parent”),
TFR Acquisition, Inc., an Oregon corporation and direct wholly-owned subsidiary
of Parent (“MergerSub”), and TFR Technologies,
Inc., an Oregon corporation (the “Company”).

 

This Agreement is
executed and delivered, and is entered into and effective as of December 14,
2004.

 

RECITALS:

 

WHEREAS, the Boards of
Directors of Parent, MergerSub, and the Company have, in light of and subject
to the terms and conditions set forth herein, approved this Agreement and the
transactions contemplated hereby, including the Merger;

 

WHEREAS, the Board of
Directors of the Company has resolved to recommend to its shareholders the
approval and adoption of this Agreement and the consummation of the
transactions contemplated hereby upon the terms and subject to the conditions
set forth herein;

 

WHEREAS, at the Effective
Time, MergerSub will be merged with and into the Company, the Company shall
continue as the Surviving Corporation, and the separate corporate existence of
MergerSub shall cease;

 

WHEREAS, pursuant to the
Merger and subject to the terms and conditions of this Agreement, all of the
issued and outstanding shares of common stock, without par value, of the
Company (“Company Common Stock”) shall be
converted into the right to receive payment from Parent in the amounts set
forth below;

 

WHEREAS, a portion of payments
by Parent in connection with the Merger shall be made by Parent to a Paying
Agent for the benefit of the shareholders of the Company upon the occurrence of
certain events and the satisfaction of certain conditions;

 

WHEREAS, Parent,
MergerSub, and the Company desire to make certain representations, warranties,
covenants, and agreements in connection with the Merger as set forth in this
Agreement.

 

NOW, THEREFORE, in
consideration of the foregoing premises and the representations, warranties,
covenants, and agreements contained herein, and intending to be legally bound
hereby, Parent, MergerSub, and the Company hereby agree as follows:

 

ARTICLE 1.

The Merger

 

1.1           The Merger.  At the Effective Time and subject to and
upon the terms and conditions of this Agreement and in accordance with the
applicable provisions of the Oregon Business Corporation Act (the “Act”), MergerSub will be merged with and into the Company

 

6

 

(the “Merger”).  Following
the Merger, the Company shall continue as the surviving corporation (the “Surviving Corporation”) and the separate corporate existence
of MergerSub shall cease.

 

1.2           Effective Time.  Subject to the provisions of
this Agreement, Parent, MergerSub, and the Company shall cause the Merger to be
consummated by filing Articles of Merger as set forth on Exhibit A
or other appropriate documents (the “Articles of Merger”)
with the Secretary of State of the State of Oregon in such form as required by,
and executed in accordance with, the applicable provisions of the Act, as soon
as practicable on the Closing Date.  The
Merger shall become effective upon such filing or at such time thereafter as is
provided in the Articles of Merger (the “Effective Time”).

 

1.3           Closing of the Merger.  The closing of the Merger
(the “Closing”) will take place at a time and
on a date to be specified by the parties (the “Closing Date”),
which shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in Article 7 (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions), at the offices of Ater Wynne
LLP, 222 SW Columbia Street, Suite 1800, Portland, Oregon 97201, or at such
time, date, or place as agreed to in writing by the parties hereto.

 

1.4           Effects of the Merger.  At the Effective Time, the
Merger shall have the effects set forth in this Agreement, the Articles of
Merger, and the applicable provisions of the Act.  Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all of the properties,
rights, privileges, powers, and franchises of the Company and MergerSub shall
vest in the Surviving Corporation, and all debts, liabilities, and duties of
the Company and MergerSub shall become the debts, liabilities, and duties of
the Surviving Corporation.

 

1.5           Articles of Incorporation and Bylaws.  The name of the Surviving
Corporation will be “TFR Technologies Inc.” Subject to the foregoing, effective
immediately following the Merger: (a) the articles of incorporation of the
Surviving Corporation shall be amended so that the articles of incorporation of
MergerSub, in the form attached hereto as Exhibit B,
shall be the articles of incorporation of the Surviving Corporation; and (b)
the bylaws of the Surviving Corporation shall be amended so that the bylaws of
MergerSub, in the form attached hereto as Exhibit C,
shall be the bylaws of the Surviving Corporation.

 

1.6           Directors and Officers.  The directors of MergerSub
at the Effective Time shall become the directors of the Surviving Corporation
and shall hold office in accordance with the articles of incorporation and
bylaws of the Surviving Corporation until their successors are duly elected or
appointed and qualified or until their earlier resignation or removal.  The officers of MergerSub at the Effective
Time shall become the officers of the Surviving Corporation and shall hold
office in accordance with the articles of incorporation and bylaws of the
Surviving Corporation until their successors are duly elected or appointed and
qualified or until their earlier resignation or removal.

 

7

 

ARTICLE 2.

Effect of Merger on the Capital Stock of the Constituent Corporations

 

2.1           Conversion of Shares.

 

(a)           At the Effective Time, each outstanding
share of common stock, par value $0.001 per share, of MergerSub shall, by
virtue of the Merger and without any action on the part of Parent, MergerSub,
or the Company, be converted into one fully paid and nonassessable share of
common stock of the Surviving Corporation.

 

(b)           At the Effective Time, each share of
Company Common Stock issued and outstanding immediately prior to the Effective
Time (including Outstanding Shares but subject to Section 2.12, not
including Dissenting Shares) shall, by virtue of the Merger and without any
action on the part of Parent, MergerSub, or the Company, be converted into and
exchangeable for the right to receive the following payments:

 

(i)            an amount of cash determined in
accordance with the provisions of Section 2.1(c), payable at the
Effective Time, provided, however, that for any Outstanding Share issued
pursuant to the exercise of Company Stock Options pursuant to Section 7.2(g)
for which there is an Unpaid Exercise Price, the amount otherwise payable with
respect to such Outstanding Share shall be reduced by the Unpaid Exercise Price
relating to such Outstanding Share, and such amount will be reallocated among
all the Outstanding Shares (the “Tranche One Payment”);

 

(ii)           subject to Section 9.2(c), an
amount of cash equal to the quotient of $3,750,000 divided by the number of
Outstanding Shares, payable on the first anniversary of the Effective Time (the
“Tranche Two Payment”); and

 

(iii)          an amount of cash determined in
accordance with the provisions of Section 2.1(d) (the “Contingent Earn-Out Payment”).

 

The Tranche One Payment,
the Tranche Two Payment, and the Contingent Earn-Out Payment are collectively
referred to in this Agreement as the “Merger Consideration.”  The number of “Outstanding
Shares” is the aggregate number of shares of Company Common Stock
outstanding immediately prior to the Effective Time, including the shares of
Company Common Stock issuable under stock options as described in Section 7.2(g).

 

(c)           The per share Tranche One Payment is
equal to the Initial Payment divided by the number of Outstanding Shares.

 

“Initial
Payment” means $3,000,000 minus the sum of all out-of-pocket
expenses incurred by the Company prior to the Effective Time in connection with
the Merger and the other transactions contemplated hereby (including without
limitation all legal, accounting, and other consulting fees, as described in Section 10.4).

 

8

 

(d)           The per share Contingent Earn-Out Payment
is equal to the Distribution Amount divided by the number of Outstanding
Shares.

 

“Distribution
Amount” means, for each of the first four years following the
Effective Time, 2.5% of actual revenues realized by TriQuint, Parent, or their affiliates
for sales of Qualifying Products or for the license of Company Intellectual
Property (to the extent, in the case of such licensing revenues, such revenues
can be traced and allocated specifically to Company Intellectual Property, and
not including in any event any revenues relating to any cross-licensing
agreements) during such year, taking into account discounts, credits, offsets,
and the like made in the ordinary course of business, including such discounts,
credits, and offsets made on account of revenues realized in a prior year.  That is, there may be up to four Distribution
Amounts: one for each of the four years following the Effective Time.  Notwithstanding the above, the aggregate
Distribution Amounts paid under this Agreement will not exceed $3,000,000.

 

“Qualifying
Products” means all products sold by TriQuint, Parent, or their
affiliates that incorporate Company Intellectual Property relating to bulk
acoustic wave filters except Company Products sold under U.S. Government
contract number H98230-04-C-0724/0000 on Standard Form 28, between the Company
and the Maryland Procurement Office, dated February 27, 2004, as amended.

 

Parent shall accurately
report to the Shareholder Agent sales activity for Qualifying Products and the
calculation of amounts owing to the shareholders therefor on an annual
basis.  Such reports shall be delivered
within 45 days of the end of each year following the Effective Time.  Parent shall also provide sale activity
updates to the Shareholder Agent upon the Shareholder Agent’s reasonable
request.

 

Parent shall keep records
in sufficient detail to permit the determination of Contingent Earn-Out
Payments payable under this Agreement for at least two years after each
applicable period.  The Shareholder Agent
may have a certified independent auditor perform an audit of Parent’s financial
records and other records relevant to Contingent Earn-Out Payments under this
Agreement upon reasonable advance written notice to assess the accuracy of
Parent’s payments, at the Shareholder Agent’s expense, subject to the last
sentence of this paragraph.  The audit
shall be conducted during normal business hours no more than once per year, and
shall be subject to a confidentiality agreement reasonably acceptable to
Parent.  The auditor shall report to only
the Shareholder Agent the amount of any underpayment and the basis therefor,
and shall provide a copy of the report to Parent.  If the audit shows any underpayment, Parent
shall promptly pay the outstanding amounts to the Paying Agent on behalf of the
shareholders, plus interest from the time such payment was due until paid to
the Paying Agent at the rate of eight percent (8%) per annum.  In the case the audit establishes an
underpayment greater than ten percent (10%) of the correct total for any period
audited, Parent shall reimburse the Shareholder Agent’s expenses for the audit.

 

2.2           Stock Options.

 

(a)           As described in Section 7.2(g),
immediately prior to the Effective Time, each outstanding option to purchase
shares of Company Common Stock (each a “Company Stock Option”)
under Company’s stock option plans or arrangements (the “Company
Stock

 

9

 

Option Plans”), whether or not exercisable and
whether or not vested, shall have been exercised for shares of Company Common
Stock.

 

(b)           Following the Effective Time, no holder
of a Company Stock Option will have any right to receive shares of common stock
of the Surviving Corporation upon exercise of the Company Stock Option.

 

2.3           Payment Fund.

 

(a)           As of the Effective Time, Parent shall
deposit, or shall cause to be deposited, with or for the account of Kenneth
Lakin or such other third party as may be designated by the holders of a
majority in interest of the Company Common Stock, which shall be reasonably
satisfactory to Parent (the “Paying Agent”),
for the benefit of the holders of the shares of Company Common Stock, an amount
of cash sufficient to pay the Tranche One Payment.  Any cash deposited with the Paying Agent is referred
to as the “Payment Fund.”

 

(b)           As of the first anniversary of the
Effective Time, Parent shall deposit, or shall cause to be deposited, with or
for the account of the Paying Agent, for the benefit of the holders of the
Outstanding Shares, an amount of cash sufficient to pay the applicable Tranche
Two Payment.

 

(c)           No later than the 45th day following each
of the first four anniversaries of the Effective Time, Parent shall deposit, or
shall cause to be deposited, with or for the account of the Paying Agent, for
the benefit of the holders of the Outstanding Shares, an amount of cash
sufficient to pay the applicable Contingent Earn-Out Payment.

 

2.4           Payment Procedures.

 

(a)           Tranche One Payment.  As
soon as reasonably practicable after the Effective Time (and in any event within
five business days after the Effective Time), the Paying Agent shall mail to
each record holder of a certificate or certificates that immediately prior to
the Effective Time represented outstanding shares of Company Common Stock
(including certificates representing shares of Company Common Stock issued upon
exercise of Company Stock Options as described in Section 7.2(g)) (the “Certificates”) (i) a letter of transmittal which shall
specify that delivery shall be effective and risk of loss and title to the
Certificates shall pass only upon delivery of the Certificates to the Paying
Agent, and which letter shall be in customary form and have such other
provisions as Parent may reasonably specify; and (ii) instructions for
effecting the surrender of such Certificates in exchange for the Merger
Consideration.  Upon surrender of a
Certificate to the Paying Agent together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, and such
other documents as may reasonably be required by the Paying Agent, the holder
of such Certificate shall be entitled to receive in exchange therefor a check
in the amount equal to the cash that such holder has the right to receive
pursuant to this Article 2 (after taking into account all shares of
Company Common Stock then held by such holder).

 

(b)           Tranche Two Payment.  Within
five business days after the Paying Agent receives funds for the Tranche Two
Payment, the Paying Agent shall deliver appropriate checks in the amount equal
to the cash each person who held Certificates is entitled to receive as Merger

 

10

 

Consideration (taking
into account all shares of Company Common Stock previously held by such
holder).

 

(c)           Contingent Earn-Out Payment.  Within
five business days after the Paying Agent receives funds for each applicable
Contingent Earn-Out Payment, the Paying Agent shall deliver appropriate checks in
the amount equal to the cash each person who held Certificates is entitled to
receive as Merger Consideration (taking into account all shares of Company
Common Stock previously held by such holder).

 

(d)           General Provisions.  Interest
shall accrue on any payments of Merger Consideration from Parent to the Paying
Agent at the rate of 8% per annum from the date such payment is due until the
date paid to the Paying Agent.  If the
Merger Consideration (or any portion thereof) is to be delivered to any person
other than the person in whose name the Certificate surrendered in exchange
therefor is registered, it shall be a condition to such exchange that the
Certificate so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the person requesting such exchange shall pay to the
Paying Agent any transfer or other Taxes required by reason of the payment of
such consideration to a person other than the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Paying
Agent that such Tax has been paid or is not applicable.

 

2.5           No Further Ownership Rights in Company
Common Stock.  All
cash paid upon conversion of the shares of Company Common Stock in accordance
with this Article 2 shall be deemed to have been issued or paid in
full satisfaction of all rights pertaining to the shares of Company Common
Stock.

 

2.6           Termination of Payment Fund.  Any portion of the Payment
Fund that remains undistributed to the holders of Certificates after the second
anniversary of the date such funds were originally delivered to the Paying
Agent shall be delivered to the Surviving Corporation or otherwise on the
instruction of the Surviving Corporation, and any holders of the Certificates
who have not theretofore complied with this Article 2 shall
thereafter look only to the Surviving Corporation and Parent and only as
general creditors thereof for the Merger Consideration to which such holders
are entitled pursuant to Section 2.1.  Any such portion of the Payment Fund
remaining unclaimed by holders of shares of Company Common Stock five years
after the date such funds were originally delivered to the Paying Agent (or
such earlier date immediately prior to such time as such amounts would
otherwise escheat to or become property of any Governmental Entity) shall, to
the extent permitted by applicable law, become the property of the Surviving
Corporation free and clear of any claims or interest of any person previously
entitled thereto.

 

2.7           No Liability.  None of Parent, MergerSub,
the Company, the Surviving Corporation, or the Paying Agent shall be liable to
any person in respect of any Merger Consideration delivered, in good faith, to
a public official pursuant to any applicable abandoned property, escheat, or
similar law.

 

2.8           Investment of the Payment Fund.  The Paying Agent shall
invest any cash included in the Payment Fund in such investments, if any, as
the Paying Agent shall determine, subject to the consent of Parent, which shall
not be unreasonably withheld.  Any
interest and

 

11

 

other income resulting
from such investments shall be paid to the holders of the Outstanding Shares on
a pro rata basis, based on the number of Outstanding Shares owned immediately
prior to the Effective Time; provided, however, that any such interest or other
income remaining in the Payment Fund when it is terminated pursuant to Section 2.6
shall be paid to Parent.

 

2.9           Lost, Stolen, or Destroyed Certificates.  If any Certificate shall
have 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 such reasonable amount as the Surviving Corporation may direct as
indemnity by such person against any claim that may be made against the
Surviving Corporation in respect of such Certificate, the Paying Agent will
deliver in exchange for such lost, stolen, or destroyed Certificate the Merger
Consideration in respect of the shares of Company Common Stock formerly
represented thereby.

 

2.10         Withholding Rights.  Each of the Surviving
Corporation and Parent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as it is required to deduct and
withhold in respect of the making of such payment under the IRC, the rules and
regulations thereunder, or any provision of a Tax law, provided that no such
withholding shall be made without the Shareholder Agent’s consent, which shall
not be unreasonably withheld.  To the
extent that amounts are so withheld by the Surviving Corporation or Parent, as
the case may be, such withheld amounts shall be treated for all purposes as
having been paid to the holder of Company Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation or Parent, as
the case may be.

 

2.11         Stock Transfer Books.  The stock transfer books of
the Company shall be closed immediately upon the Effective Time, and there
shall be no further registration of transfers of shares of Company Common Stock
thereafter on the records of the Company. 
On or after the Effective Time, any Certificates presented to the Paying
Agent or Parent for any reason shall be converted into the right to receive the
Merger Consideration to which the holders thereof are entitled pursuant to Section 2.1.

 

2.12         Dissenting Shares.  Notwithstanding any other
provision of this Agreement to the contrary, shares of Company Common Stock
that are issued and outstanding immediately prior to the Effective Time and
that are held by shareholders who did not vote in favor of the Merger (the “Dissenting Shares”), and the holders of which comply with
all of the applicable provisions of the Act relating to dissenters’ rights (the
“Dissenting Shareholders”), shall not be
converted into or be exchangeable for the right to receive the Merger
Consideration, unless and until such holders shall have failed to perfect or
shall have effectively withdrawn or lost their dissenters’ rights under the Act.  If any Dissenting Shareholder shall have
failed to perfect or shall have effectively withdrawn or lost the right to
dissent, such holder’s shares of Company Common Stock shall thereupon be
treated as though such shares of Company Common Stock had been converted, as of
the Effective Time, into the right to receive the Merger Consideration pursuant
to this Article 2.  The
Company shall give Parent (i) prompt notice of any written demands for
appraisal of any shares of Company Common Stock, attempted withdrawals of such
demands, and any other instruments served pursuant to the Act and received by
the Company relating to shareholders’ rights of appraisal, and (ii) the
opportunity to direct all negotiations and

 

12

 

proceedings in respect of
demands for appraisal under the Act. 
Neither the Company nor the Surviving Corporation shall, except with the
prior written consent of Parent, voluntarily make any payment in respect of, or
settle or offer to settle, any such demand for payment.

 

ARTICLE 3.

Representations and Warranties of Parent and MergerSub

 

Parent and MergerSub each
represent and warrant to the Company as follows (with the understanding that
the Company is relying materially on such representations and warranties in
entering into and performing this Agreement):

 

3.1           Due Organization.  Each of Parent and MergerSub
is a corporation, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has all requisite corporate power and
authority to own, lease, or otherwise hold its assets and properties and to
carry on its business as presently conducted.

 

3.2           Authorization and Effect of Agreement.  Each of Parent and MergerSub
has the requisite corporate power to execute and deliver this Agreement and to
perform the transactions contemplated hereby to be performed by it.  The execution and delivery of this Agreement
by each of Parent and MergerSub and the performance by Parent and MergerSub of
their respective obligations hereunder have been duly authorized by all
necessary corporate action on the part of Parent and MergerSub and by the sole
shareholder of MergerSub.  This Agreement
has been duly executed and delivered by each of Parent and MergerSub and,
assuming the due execution and delivery of this Agreement by the Company,
constitutes a valid and binding obligation of each of Parent and MergerSub,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium,
or other similar laws affecting the enforcement of creditors’ rights in general
and subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).

 

3.3           No Violations; Consents and Approvals.  The execution and delivery
of this Agreement by each of Parent and MergerSub does not, and the performance
by each of Parent and MergerSub of the transactions contemplated hereby to be
performed by it will not (i) conflict with or violate the certificate or
articles of incorporation or bylaws of Parent or MergerSub, (ii) conflict
with or violate, or constitute a default (with or without notice, lapse of
time, or both) under, or give rise to a right of termination, amendment,
cancellation, or acceleration of any obligation or to loss of a benefit under,
any material contract or permit to which Parent or MergerSub is a party or by
which it is bound, or (iii) conflict with or violate any federal, state,
local, or foreign law, rule, or regulation (“Law”)
applicable to Parent or any order, judgment, decree, writ, or injunction (“Order”) of any Governmental Entity applicable to
Parent.  Except for any filings, permits,
authorizations, consents, and approvals required under the Securities Act of
1933, as amended (the “Securities Act”),
the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
state securities or blue sky laws, and the filing of the Articles of Merger
with the Secretary of State of the State of Oregon, no consent, approval,
order, or authorization of, or registration, declaration, or filing with any
domestic or foreign court, government, governmental or regulatory agency,
authority, entity, or instrumentality or subdivision thereof (each, a “Governmental Entity”) is required to be obtained or made by
or in respect of Parent or MergerSub in connection with the execution and
delivery of this Agreement by each of Parent

 

13

 

and MergerSub or the
performance by it of the transactions contemplated hereby to be performed by
it.

 

ARTICLE 4.

Representations and Warranties of the Company

 

The Company hereby
represents and warrants to Parent and MergerSub, subject to such exceptions as
are specifically disclosed in the disclosure schedules delivered by the Company
to Parent with this Agreement, the matters set forth in this Article 4
(with the understanding that Parent and MergerSub are relying materially on
each such representation and warranty in entering into and performing this
Agreement).  Parent and MergerSub agree
that any exception or limitation set forth in one disclosure schedule or section of
this Article 4 shall be deemed an exception or limitation to any
other Section of this Article 4 if the relevance of such
disclosure to such other section is reasonably apparent.

 

4.1           Capitalization; Ownership of Shares; No
Liens on Shares.  The
authorized capital stock of the Company consists of 10,000,000 shares of
Company Common Stock, of which 5,499,334 shares are issued and outstanding as
of the close of business on the date hereof. 
All of such issued and outstanding shares of Company Common Stock are
duly authorized, validly issued, fully paid, and nonassessable.  All of such shares of Company Common Stock
are owned of record by the holders as set forth on Schedule 4.1.  None of such shares of Company Common Stock
were issued or will be transferred under this Agreement in violation of any
preemptive or preferential rights of any person of which the Company has actual
notice.  As of the date of this Agreement,
600,666 shares of Company Common Stock are reserved for issuance and issuable
or otherwise deliverable in connection with the exercise of outstanding Company
Stock Options issued pursuant to the Company Stock Option Plan, and no shares
of Company Common Stock are issuable upon exercise of options issued outside
the Company Stock Option Plan.  As of the
date of this Agreement, the Company has issued no warrants to purchase shares
of Company Common Stock.  Except as set
forth in the preceding sentences, as of the date hereof, there are no
outstanding options, warrants, calls, subscriptions, conversion, exchange, or
other similar rights, agreements, or commitments to acquire from the Company
any shares of capital stock or any other securities convertible into,
exercisable or exchangeable for, or evidencing the right to subscribe for, any
shares of capital stock of the Company. 
There are no shareholder agreements, voting trusts, or other agreements
to which the Company is a party or to which it is bound relating to the voting
of any shares of capital stock of the Company (other than the Voting Agreement
between Parent and certain shareholders of the Company).  The Company has not issued any stock
appreciation rights or other rights related to equity participation, and the
Company has no debt instruments outstanding that have any voting rights.  Schedule 4.1 sets forth true and
complete information regarding the name of the holder, the term, the current
exercise price, the date of grant, the type of option (incentive or
nonqualified), and the number of Company Stock Options granted to each holder
of Company Stock Options.

 

4.2           Due Organization.  The Company and each of its
Subsidiaries is a corporation duly organized and validly existing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to own, lease, or otherwise hold its assets and properties
and to carry on its business as presently conducted.  The Company and each Subsidiary is qualified
to do business and is in good standing in the jurisdictions set forth on

 

14

 

Schedule 4.2, which jurisdictions represent every
jurisdiction where such qualification is required, except where the failure to
be so qualified would not have a Material Adverse Effect.

 

4.3           Subsidiaries.

 

(a)           Schedule 4.3 sets forth (i) the name of each
Subsidiary of the Company, (ii) the name of each corporation, partnership,
joint venture or other entity (other than Subsidiaries of the Company) in which
the Company has, or has the right to acquire, an equity or other ownership
interest and (iii) the capitalization of the foregoing and the percentage
of equity or other ownership interests therein held by the Company or by any of
its Subsidiaries.

 

(b)           All of the outstanding shares of capital
stock of each corporate Subsidiary of the Company have been duly authorized and
validly issued, are fully paid, and nonassessable, and have not been issued in
violation of any preemptive rights or federal or state securities law.  The stock or other ownership interest of each
Subsidiary of the Company shown to be owned by the Company or a Subsidiary of
the Company on Schedule 4.3 is owned by the Company or such
Subsidiary of record and beneficially free and clear of any liens,
restrictions, pledges, security interests, claims, rights of another, or
encumbrances of any nature whatsoever (“Liens”).

 

(c)           There are no options, warrants, calls,
subscriptions, conversion, exchange, or other similar rights, agreements, or
commitments obligating any of the Subsidiaries of the Company to issue any
additional shares of capital stock or other ownership interests of such
Subsidiary or any other securities convertible into or exchangeable for or
evidencing the right to subscribe for any shares of such capital stock or other
ownership interests or obligating the Company or any of its Subsidiaries to
transfer any of their respective shares of capital stock or other ownership
interests of such Subsidiary.

 

(d)           “Subsidiary”
means, when used with reference to any entity, any corporation or other
organization, whether incorporated or unincorporated, (i) of which such
party or any other subsidiary of such party is a general or managing partner or
(ii) the outstanding voting securities or interests of which having by
their terms ordinary voting power to elect a majority of the board of directors
or others performing similar functions in respect of such corporation or other
organization are directly or indirectly owned or controlled by such party or by
any one or more of its subsidiaries.

 

4.4           Authority; Absence of Conflicts.

 

(a)           The Company has full corporate power and
authority to execute, deliver, and perform this Agreement and to consummate the
transactions contemplated hereby.  The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved by the Board of
Directors of the Company, and no other corporate action on the part of the
Company is necessary to authorize and approve the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby
(other than, in respect of the Merger and this Agreement, the Company Requisite
Vote).  This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due execution
and delivery of this Agreement by each of Parent and MergerSub, constitutes the
valid and binding obligation of the Company, enforceable against it in
accordance

 

15

 

with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium, or other
similar laws affecting the enforcement of creditors’ rights in general and
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity).

 

(b)           The Board of Directors of the Company has
taken all corporate actions required to be taken by the Board of Directors of
the Company for the consummation of the transactions contemplated hereby
(including the Merger).  The affirmative
approval of the holders of shares of Company Common Stock representing a
majority of the votes that may be cast by the holders of all outstanding shares
of Company Common Stock (the “Company Requisite Vote”)
are the only votes of the holders of any class or series of capital stock of
the Company necessary to adopt this Agreement and approve the transactions
contemplated hereby, including the Merger.

 

(c)           Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby, nor
compliance with the terms hereof, will (i) materially conflict with or
violate or result in a material breach of the articles of incorporation or
bylaws of the Company, nor (ii) materially conflict with or violate or result
in a material breach of or material default (with or without notice, lapse of
time, or both) under, or give rise to a right of termination, amendment,
cancellation, or acceleration of any material obligation or to loss of a material
benefit under any material agreement, understanding, arrangement, commitment,
indenture, contract, lease, sublease, loan agreement, note, or other material
document or instrument to which the Company or any of its Subsidiaries is a party
or by which it or any of its Subsidiaries is bound or to which it, any of its
Subsidiaries or its or any of its Subsidiaries assets are subject, nor
(iii) result in the creation of any Liens on the assets, capital stock, or
properties of the Company or any of its Subsidiaries other than Permitted Liens,
nor (iv) materially conflict with, violate or result in a material breach
of or constitute a material default under any Law or Order to which the
Company, any of its Subsidiaries or any of the Company’s or any of its
Subsidiaries’ assets or properties are subject, nor (v) require the
Company or any of its Subsidiaries to give notice to, or obtain an
authorization, approval, order, license, franchise, declaration, or consent of,
or make a filing with, any third person, including, without limitation, any
Governmental Entity, other than such filings as may be required under the
Securities Act, state securities or blue sky laws, the filing of the Articles
of Merger with the Secretary of State of the State of Oregon, and the consents
and approvals identified on Schedule 4.4(c) and such other
authorizations, approvals, orders, licenses, franchises, declarations,
consents, or filings, the failure to obtain or make which could not reasonably
be expected to result in a Material Adverse Effect on the Company.

 

4.5           Financial Statements.

 

(a)           The following financial statements of the
Company are attached hereto as Schedule 4.5:

 

(i)            The “Interim Financial
Statements,” defined as the unaudited consolidated balance sheet and
related statement of income, shareholders’ equity, and cash flows of the
Company and its Subsidiaries as of and for the period beginning on the first
day of the current fiscal year, and ending

 

16

 

on the Statement Date (the “Interim
Statement Period”).  The “Statement Date” means the last day of the calendar month
preceding the date of this Agreement.

 

(ii)           The audited consolidated balance sheet
and related statements of income, shareholders’ equity, and cash flows of the
Company and its Subsidiaries, as of and for the three most recent fiscal years,
together with notes thereto and the report of the Company’s auditor in respect
thereof (the “Annual Financial Statements,” and
together with the Interim Financial Statements, the “Financial
Statements”).

 

(b)           Except for, in respect of the Interim
Financial Statements, normally recurring year-end audit adjustments that in the
aggregate are immaterial and the omission of footnote disclosures, the
Financial Statements (i) fairly present in all material respects the
financial position, results of operations, and cash flows of the Company and
its Subsidiaries for the respective periods stated therein, (ii) have been
prepared from and are consistent with the books and records of the Company and
its Subsidiaries, and (iii) have been prepared in accordance with GAAP
consistently applied throughout the relevant periods.

 

4.6           Absence of Undisclosed Liabilities.  Except as set forth on Schedule 4.6,
neither the Company nor any of its Subsidiaries has any material liabilities or
obligations of any nature, whether accrued, absolute, contingent, unliquidated,
or otherwise, whether due or to become due and whether arising out of
transactions entered into or any condition or state of facts existing on or
prior to the date hereof, that would in accordance with GAAP be required to be
reflected on, or disclosed in the notes to, a balance sheet, other than
(i) liabilities and obligations set forth on the Interim Financial Statements,
and (ii) liabilities and obligations that have arisen after the date of
the Interim Financial Statements in the ordinary course of business and
consistent with past practices, all of which are properly reflected in the
books and records of the Company and its Subsidiaries.

 

4.7           Conduct of Business; Certain Actions.  Except as set forth on Schedule 4.7
and for the transactions contemplated by this Agreement, since the Statement
Date, each of the Company and its Subsidiaries has conducted its business and operations
in the ordinary course and consistent with past practices and neither the
Company nor its Subsidiaries has:

 

(a)           paid or declared any dividend or
distribution or purchased or retired any indebtedness from any shareholder
thereof, or directly or indirectly purchased, retired, or redeemed any capital
stock from any shareholder;

 

(b)           increased the compensation of any of the
directors, officers, or employees of, or consultants to, the Company or any
Subsidiary or, except for wage and salary increases made in the ordinary course
of business and consistent with past practices or as required by Law;

 

(c)           made any capital expenditures in excess
of $25,000 in the aggregate;

 

(d)           sold any asset (or any group of related
assets) to any director, officer, or employee of the Company or any Subsidiary;

 

17

 

(e)           sold any asset to any person other than a
director, officer, or employee of the Company or any Subsidiary, in any
transaction (or series of related transactions) in which the purchase price for
such asset (or group of related assets) exceeded $25,000, except for sales of
inventory in the ordinary course of business and consistent with past
practices;

 

(f)            leased, licensed, or granted to any third
person any rights in any of its assets or properties except in the ordinary
course of business and consistent with past practices;

 

(g)           revalued any of its assets;

 

(h)           discharged or satisfied any Lien or paid
any obligation or liability, absolute or contingent, other than current
liabilities incurred and paid in the ordinary course of business and consistent
with past practices;

 

(i)            failed to pay any accounts payable of the
Company or any of its Subsidiaries in the ordinary course of business
consistent with past practice and in accordance with their terms;

 

(j)            accelerated the collection of, or sold or
otherwise transferred, any accounts receivable of the Company or any of its
Subsidiaries;

 

(k)           made or guaranteed any loans or advances
to any person whatsoever;

 

(l)            canceled, waived, released, or forgiven
any debts or obligations of, or rights or claims against, third persons;

 

(m)          amended the articles of incorporation or
bylaws of the Company or any of its Subsidiaries;

 

(n)           made or paid any severance or termination
payment to any employee or consultant of the Company or any of its Subsidiaries
in excess of $5,000 in the aggregate;

 

(o)           made any change in its financial or Tax
accounting principles or methods;

 

(p)           made any investment in any person;

 

(q)           made, entered into, amended, or
terminated any written employment or consulting contract, created, made,
amended, or terminated any bonus, stock option, pension, retirement, profit
sharing, or other employee benefit plan or arrangement, or withdrawn from any “multi-employer
plan” (as defined in IRC Section 414(f)), so as to create any liability
under Article IV of ERISA to any entity;

 

(r)            amended or experienced a termination of
any contract, agreement, lease, franchise, or license required to be listed on Schedule 4.15(a)
or (b);

 

(s)           agreed to do any acts described in the
foregoing clauses (a)-(r) of this Section 4.7;

 

18

 

(t)            suffered any material damage,
destruction, or loss (whether or not covered by insurance) to any material
assets of the Company or any of its Subsidiaries;

 

(u)           made or revoked any Tax election that
could reasonably be expected to have a Material Adverse Effect on the Company
or any of its Subsidiaries, or compromised or settled any material Tax liability;

 

(v)           experienced any strike, slowdown, or
demand for recognition by a labor organization by or in respect of any of the
employees of the Company or any of its Subsidiaries; or

 

(w)          experienced any event or condition that
has had or could reasonably be expected to result in a Material Adverse Effect.

 

4.8           Real Property.

 

(a)           Schedule 4.8(a) sets forth a complete list and summary
description of all real property leased by the Company or any of its
Subsidiaries (the “Leased Real Property”).  The Company owns no real property.  Each of the Company and its Subsidiaries has
delivered or made available to Parent and MergerSub true and correct copies of
all leases, subleases, abstracts of title, surveys, title opinions, and title
insurance policies in the Company’s and its Subsidiaries’ possession, custody,
or control relating to the Leased Real Property.

 

(b)           Except as set forth on Schedule 4.8(b),
each of the Company and its Subsidiaries has a valid leasehold interest in all
Leased Real Property, free and clear of any Lien (other than Permitted Liens).  Each of the Company and its Subsidiaries has
good and marketable title to all structures, plants, leasehold improvements,
systems, fixtures, and other property located on or about any of the Leased
Real Property that is owned by the Company and its Subsidiaries, as reflected
in the Interim Financial Statements, free and clear of any Lien except for Permitted
Liens.  None of the Leased Real Property
or other such assets is subject to any agreement, arrangement, or understanding
for its use by any person other than the Company or its Subsidiaries.  As used in this Agreement, the term “Permitted Liens” means (i) Liens for current Taxes not
yet due and payable, (ii) covenants, conditions, and restrictions of
record, none of which materially impairs the use of such property in the manner
currently used or impairs the ability of the Company or any of its Subsidiaries
to transfer a valid leasehold interest to such Leased Real Property,
(iii) any materialmen’s, mechanic’s, workmen’s, repairmen’s, contractor’s,
warehousemen’s, carrier’s, supplier’s, vendor’s or similar lien, if payment is
not yet due on the underlying obligation, (iv) Liens in respect of pledges or
deposits under workers’ compensation laws or similar legislation, (v) all
building codes, zoning ordinances, planning restrictions and other laws,
ordinances, regulations, rules, orders or determinations of any federal, state,
county, municipal or other governmental authority heretofore, now or hereafter
enacted, made or issued by any such authority affecting the property, and (vi)
minor defects in title, none of which, individually or in the aggregate,
materially interfere with the use of such property.

 

(c)           Each of the leases and subleases relating
to the Leased Real Property is in full force and effect, there is no material
default by the Company or any Subsidiary (or to the

 

19

 

knowledge of the Company,
by the lessor) under any such lease or sublease, and each such lease and
sublease will remain in full force and effect immediately following the Closing
without any modification in the rights or obligations of the parties under any
such lease or sublease agreed to by the Company or any of its Subsidiaries.

 

4.9           Tangible Personal Property.

 

(a)           Each of the Company and its Subsidiaries
has good and marketable title to all machinery and equipment, tools, spare and
maintenance parts, furniture, vehicles, and all other tangible personal
property (collectively, the “Tangible Personal Property”)
owned by the Company and its Subsidiaries, free and clear of any Liens, except
for Permitted Liens, and/or pursuant to applicable leases.  All items of Tangible Personal Property
currently owned or used by the Company and its Subsidiaries as of the date
hereof are in good operating condition and repair in all material respects in
light of their respective ages, ordinary wear and tear excepted, are physically
located at or about the Company’s place of business and are owned outright by
the Company and its Subsidiaries or, to the Company’s knowledge, validly
leased.  None of the Tangible Personal
Property is subject to any agreement, arrangement, or understanding for its use
by any person other than the Company or its Subsidiaries.  The maintenance and operation of the Tangible
Personal Property complies in all material respects with all applicable Laws,
ordinances, contractual commitments, and obligations.  Schedule 4.9(a) sets forth a
brief description of all Tangible Personal Property subject to any conditional
sale agreement, installment sale agreement, or title retention or security
agreement or arrangement of any kind, and the amount and repayment terms of the
underlying obligation.  Schedule 4.9(a)
sets forth a complete and correct fixed asset list of the Company and its
Subsidiaries dated as of the Statement Date.

 

(b)           Schedule 4.9(b) sets forth a complete and correct list
of all material Tangible Personal Property leases to which the Company or any
of its Subsidiaries is a party, together with a brief description of the
property leased.  Each of the Company and
its Subsidiaries has made available to Parent and MergerSub complete and
correct copies of each lease (and any amendments thereto) listed on Schedule 4.9(b).  Except as set forth on Schedule 4.9(b):  (i) each such lease is in full force and
effect; (ii) all lease payments due to the date hereof on any such lease
have been paid, and neither the Company, any of its Subsidiaries, nor (to the
knowledge of the Company) any other party is in material default under any such
lease, and no event has occurred that constitutes, or with or without notice,
lapse of time, or both would constitute, a material default by the Company or
any of its Subsidiaries or (to the knowledge of the Company) any other party
under such lease; and (iii) there are no disputes or disagreements between
the Company or any of its Subsidiaries and any other party in respect of any
such lease.

 

4.10         Accounts Receivable.  The accounts receivable and
notes receivable (collectively, the “Accounts Receivable”)
reflected on the Interim Financial Statements are, and the Accounts Receivable
of the Company created from and after the date of the Interim Financial
Statements to the Closing Date will be, free and clear of any Liens, other than
write-offs, discounts or credits made in the ordinary course of business
consistent with past practice.  All
Accounts Receivable of the Company and its Subsidiaries (i) arose from
bona fide sales of goods or services in the ordinary course of business
consistent with past practices, (ii) subject to any reserves for

 

20

 

doubtful accounts, are
accurately and fairly reflected on the Interim Financial Statements or, in
respect of Accounts Receivable of the Company and its Subsidiaries created
after the date thereof, are accurately and fairly reflected in the books and
records of the Company, and (iii) except as set forth on Schedule 4.10,
are valid obligations of the makers thereof, and there is no pending or, to the
knowledge of the Company, threatened contest, claim, or right of set-off
contained in any agreement with any maker of any such Account Receivable
relating to the amount or validity thereof.

 

4.11         Accounts Payable.  All accounts payable of the
Company and its Subsidiaries (i) arose from bona fide purchases in the
ordinary course of business consistent with past practices, and (ii) are
accurately and fairly reflected on the Interim Financial Statements or, in
respect of accounts payable of the Company and its Subsidiaries created after
the date thereof, are accurately and fairly reflected in the books and records
of the Company.

 

4.12         Sales Representatives and Other Sales
Agents/Sales Offices.  Schedule 4.12
sets forth a complete and correct list of the names and addresses of each sales
representative or other sales agent currently engaged by the Company and its
Subsidiaries who is not an employee of the Company or its Subsidiaries, and a
summary description of the territory assigned to each such person (noting
whether such territory is exclusive or non-exclusive).  Schedule 4.12 also sets forth a
complete and correct list of all agreements between the Company, its
Subsidiaries and any such person, complete and correct copies of which
agreements have been provided or made available to Parent and MergerSub.

 

4.13         Inventory.  The inventory of the Company and its
Subsidiaries, including, without limitation, raw materials, work in progress,
and finished goods, consists only of items of a quality and quantity useful or
saleable in the ordinary course of business of the Company and its Subsidiaries
and consistent with past practices, other than immaterial portions thereof.  The inventory of the Company and its
Subsidiaries was purchased at prices and in quantities consistent with the
Company’s custom in the ordinary course of business.  Schedule 4.13 sets forth a
complete and correct list of the inventory of the Company and its Subsidiaries
as of the Statement Date.

 

4.14         Backlog.  All outstanding customer purchase orders
for products of the Company and its Subsidiaries have been entered at prices
and upon terms and conditions consistent with the normal practices of the
Company and its Subsidiaries, and the completion of such orders will not, to
the knowledge of the Company, have a Material Adverse Effect.  Neither the Company nor any of its
Subsidiaries has been informed by any customer that any material order included
in the Company’s or its Subsidiaries’ backlog is likely to be cancelled or
terminated prior to its completion.

 

4.15         Material and Affiliated Contracts.

 

(a)           Schedule 4.15(a) sets forth a complete and correct list
of all of the following agreements, to which the Company or any Subsidiary is a
party, copies of which the Company has delivered or made available to Parent:

 

21

 

(i)            any agreement, arrangement, or
understanding, or series of related agreements, arrangements, or
understandings, that involves annual expenditures or receipts by the Company or
any of its Subsidiaries of more than $25,000 or that provides for performance,
regardless of amounts, over a period in excess of one (1) year after the date
of such agreement, arrangement, or understanding;

 

(ii)           any license agreement, whether as licensor
or licensee, other than licenses for generally available software used by the
Company and its Subsidiaries in the ordinary course of business;

 

(iii)          any agreement with suppliers or customers
for discounts or allowances;

 

(iv)          any note, bond, indenture, credit
facility, mortgage, security agreement, or other instrument or document
relating to or evidencing indebtedness for money borrowed or a security
interest in or mortgage on the assets of the Company and its Subsidiaries;

 

(v)           any express warranty, indemnity, or
guaranty issued by the Company or any of its Subsidiaries (other than customary
product warranties provided by the Company and its Subsidiaries in the ordinary
course of business);

 

(vi)          any agreement, arrangement, or
understanding granting to any person the right to use any property or property
right of the Company or any of its Subsidiaries, including any lease;

 

(vii)         any agreement, arrangement, or
understanding restricting the right of the Company or any of its Subsidiaries
to engage in any business activity or to compete with any business;

 

(viii)        any joint venture agreement;

 

(ix)           any agreement granting to any person the
right to manufacture or distribute products of the Company or any of its
Subsidiaries;

 

(x)            any other material agreement,
arrangement, or understanding not made in the ordinary course of business and
consistent with past practices; or

 

(xi)           any outstanding offer or commitment to
enter into any contract or arrangement of the nature described in
clauses (i) through (x) of this Section 4.15(a).

 

(b)           Schedule 4.15(b) contains a complete and correct list and
description of all agreements, arrangements, and understandings (including
outstanding indebtedness) that are currently in effect between the Company or
its Subsidiaries and any of the following and that

 

22

 

involve a value of
$25,000 or more: (i) each director and officer of the Company or any of
its Subsidiaries; (ii) the spouses, children, grandchildren, siblings,
parents, grandparents, uncles, aunts, nieces, nephews, or first cousins of any
director or officer of the Company or any of its Subsidiaries or their
respective spouses (collectively, “near relatives”);
(iii) any trust for the benefit of any director or officer of the Company
or any of its Subsidiaries or any of their respective near relatives; and
(iv) any person owned or controlled by any director or officer of the
Company or any of its Subsidiaries or any of their respective near relatives.  The agreements, arrangements, and
understandings described in Schedules 4.15(a) and 4.15(b)
are collectively referred to herein as “Material Contracts.”

 

(c)           Each of the Company and its Subsidiaries
has delivered or made available to Parent and MergerSub complete and correct copies
of each written Material Contract (and all amendments thereto).  Except as set forth on Schedule 4.15(c):
(i) each Material Contract is in full force and effect; (ii) neither
the Company, any of its Subsidiaries, nor, to the knowledge of the Company, any
other party is in material default under any such Material Contract, and no
event has occurred that constitutes, or that with or without notice, lapse of
time, or both would constitute, a material default by the Company or any
Subsidiary or, to the knowledge of the Company, by any other party under such
Material Contract; and (iii) there are no disputes or disagreements
between the Company or any of its Subsidiaries and any other party in respect
of any such Material Contract.

 

4.16         Compliance with Laws.  Except as set forth on Schedule 4.16,
each of the Company and its Subsidiaries is complying and has complied in all
material respects with all Laws and ordinances applicable to its business,
properties, and operations, and has secured all necessary permits,
authorizations, and licenses issued by any Governmental Entity applicable to
its business, properties, and operations, other than such items the failure of
which to obtain would not result in a Material Adverse Effect on the Company.  Except in respect of incidents of
noncompliance that have been corrected, neither the Company nor any Subsidiary
has received any notice alleging a failure to so comply or to secure such a
permit, authorization, or license nor, to the knowledge of the Company, is
there any inquiry, investigation, or proceeding relating thereto.

 

4.17         Legal Proceedings.  Except as set forth on Schedule 4.17,
there are no actions, suits, proceedings (including, without limitation,
arbitral and administrative proceedings), claims, or governmental or regulatory
investigations or audits pending or, to the knowledge of the Company,
threatened, against the Company, any of its Subsidiaries, or its or its
Subsidiaries’ properties, assets, or business, or to the knowledge of the
Company, pending or threatened against, relating to, or involving any of the
officers, directors, employees, or agents of the Company or any of its
Subsidiaries in connection with the business of the Company or any of its
Subsidiaries.  There are no such actions,
suits, proceedings, claims, or investigations pending or, to the knowledge of
the Company, threatened, challenging the validity or propriety of, or otherwise
relating to or involving, this Agreement or the transactions contemplated
hereby.  Except as set forth on Schedule 4.17,
there is no Order or award (whether issued by an arbitrator, a Governmental
Entity, or otherwise) to which the Company or any of its Subsidiaries is a
party, or involving the property, assets, or business of the Company or its
Subsidiaries, that is unsatisfied or that requires continuing compliance
therewith by the Company or any of its Subsidiaries.  For the purposes of this Agreement, an
action, suit, proceeding, claim,

 

23

 

investigation, dispute,
or other matter will be deemed to have been “threatened”
if any demand or statement has been made in writing or any notice has been
given in writing that such action, suit, proceeding, claim, investigation,
dispute, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.

 

4.18         Ability to Conduct the Business.  Except as set forth on Schedule 4.18,
there is no agreement, arrangement, or understanding to which the Company or
any of its Subsidiaries is a party, nor any Order of any Governmental Entity
directed at the Company or any of its Subsidiaries or in which the Company or
any of its Subsidiaries is named nor, to the knowledge of the Company, any
other Order that could in any such case materially prevent the use by the
Company or any of its Subsidiaries of its or its Subsidiaries’ assets and
properties or the conduct by the Company or its Subsidiaries of its or its
Subsidiaries business as of the date hereof. 
Each of the Company and its Subsidiaries has in force, and has complied
in all material respects with, all of the conditions and requirements imposed
by, all material permits, licenses, exemptions, consents, authorizations, and
approvals used in or required for the conduct of its business as presently
conducted.  Neither the Company nor any
Subsidiary has received any notice of, and to the knowledge of the Company,
there is no intention on the part of any Governmental Entity to cancel, revoke,
or modify, or any inquiries, proceedings, or investigations the purpose or
possible outcome of which is the cancellation, revocation, or modification of,
any such permit, license, exemption, consent, authorization, or approval.  Such permits, licenses, exemptions, consents,
authorizations, and approvals will not be adversely affected by the
consummation of the transactions contemplated hereby.

 

4.19         Labor Matters.

 

(a)           Neither the Company nor any of its Subsidiaries is a
party to any labor or collective bargaining agreement, and no employees of the
Company or any of its Subsidiaries are represented by any labor
organization.  Within the preceding three
years, there have been no representation or certification proceedings, or
petitions seeking a representation proceeding, pending or, to the knowledge of
the Company, threatened to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority.  Within the preceding three years, to the
knowledge of the Company, there have been no organizing activities involving
Company or any of its Subsidiaries in respect of any group of employees of
Company or any of its Subsidiaries.

 

(b)           There are no strikes, work stoppages,
slowdowns, lockouts, material arbitrations, or material grievances or other
material labor disputes pending or, to the knowledge of the Company, threatened
against or involving the Company or any of its Subsidiaries.  There are no unfair labor practice charges,
grievances, or complaints pending or, to the knowledge of the Company, threatened
by or on behalf of any employee or group of employees of the Company or its
Subsidiaries that, if individually or collectively resolved against the Company
or its Subsidiaries, would have a Material Adverse Effect.

 

(c)           Each of the Company and its Subsidiaries
is in material compliance with all Laws and Orders relating to the employment
of labor, including all such Laws and Orders relating to wages, hours, the
Worker Adjustment and Retraining Notification Act, as amended (“WARN”), collective bargaining, discrimination, civil rights,
safety and health, workers’

 

24

 

compensation, and the
collection and payment of withholding and/or social security Taxes and any
similar Tax.

 

(d)           There has been no “mass layoff” or “plant
closing” as defined by WARN in respect of the Company or its Subsidiaries
within the six months prior to Closing.

 

(e)           Schedule 4.19(e) sets forth the names of all directors
and officers of the Company and its Subsidiaries, together with the respective
term of office and titles for each such person and all remuneration payable to
any such officers and directors.  Schedule 4.19(e)
includes, in respect of each employee, director and officer of the Company and
its Subsidiaries, such person’s date of employment, the current salary and commission
terms of such person, the amount of any bonuses or other cash compensation
(other than regular salary or commissions) paid during and since the end of the
Company’s most recent fiscal year to such person and a description of all
compensation arrangements currently applicable to such person.

 

4.20         Employee Benefit Plans.

 

(a)           List of Benefit Plans and Employee
Arrangements.  Schedule 4.20(a)
sets forth a complete and correct list of:

 

(i)            all “employee benefit plans,” as defined
in Section 3(3) of ERISA, pursuant to which the Company or its
Subsidiaries has any obligation or liability, contingent or otherwise (“Benefit Plans”); and

 

(ii)           all employment or consulting agreements,
bonus or other incentive compensation, deferred compensation, salary continuation
during any absence from active employment for disability or other reasons,
severance, supplemental retirement, cafeteria benefits or dependent care, sick
days, stock award, stock option, stock purchase, tuition assistance, club
membership, employee discount, employee loan, or vacation pay agreements,
policies, or arrangements that the Company or any of its Subsidiaries maintains
or has any obligation or liability (contingent or otherwise) in respect of any
current officer, director, or employee of the Company or its Subsidiaries (the “Employee Arrangements”).

 

(b)           Documents.  In respect of each Benefit Plan and
Employee Arrangement, the Company has provided or made available to Parent a
complete and correct copy of each of the documents requested.

 

(c)           Multiemployer Plans.  Neither the Company nor any entity
under “common control” with the Company (within the meaning of Section 4001
of ERISA) has maintained, contributed to or otherwise had any obligation with
respect to any “multiemployer plan” (as defined in Section 3(37) of ERISA).

 

(d)           Tax Qualification.  Each Benefit Plan and its
related trust that is intended to be qualified under IRC Sections 401(a) and
501(a) either; (i) is the subject of an unrevoked favorable determination
letter from the IRS with respect to such Benefit Plan’s qualified status under
the IRC, as amended by the Tax Reform Act of 1986 and all subsequent
legislation

 

25

 

through what is commonly
referred to as “GUST,” (ii) has remaining a period of time under the IRC
or IRS pronouncements in which to request, and to make any amendments necessary
to obtain, such a letter from the IRS, or (iii) if reliance is permitted
under IRS Announcement 2001-77, relies on the favorable opinion or advisory
letter of the master and prototype or volume submitter plan sponsor of the
Benefit Plan.

 

(e)           Contributions.  All contributions or other
payments required to have been made by the Company or its Subsidiaries to or
under any Benefit Plan or Employee Arrangement by applicable Law or the terms
of such Benefit Plan or Employee Arrangement (or any agreement relating
thereto) have been timely and properly made or properly accounted for on the
Financial Statements.

 

(f)            Compliance with Laws.  The Benefit Plans and
Employee Arrangements have been maintained and administered in all material
respects in accordance with their terms and all applicable Laws.

 

(g)           Claims.  There are no pending or, to the knowledge
of the Company, threatened actions, suits, proceedings, or claims against or
relating to any Benefit Plan or Employee Arrangement other than routine benefit
claims by persons entitled to benefits thereunder.

 

(h)           Retiree Medical.  Neither the Company nor its
Subsidiaries has any obligation or liability under any retiree life or retiree
health plans that provide for continuing coverage for current or former
officers, directors, or employees of the Company or its Subsidiaries except
(i) as may be required under Part 6 of Title I of ERISA and at
the sole expense of the participant or the participant’s beneficiary or
(ii) a medical expense flexible spending account plan pursuant to IRC Section 125.

 

(i)            Employer Securities.  None of the assets of any
Benefit Plan is stock of the Company, its Subsidiaries, or any of their
respective affiliates, or property leased to or jointly owned by the Company,
its Subsidiaries, or any of their respective affiliates.

 

(j)            Change in Control.  Except in connection with
equity compensation, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result
in any material payment becoming due to any employee (current, former, or
retired) of the Company or its Subsidiaries, (ii) materially increase any
benefits under any Benefit Plan or Employee Arrangement, or (iii) result
in the acceleration of the time of payment of, vesting of or other rights in
respect of any such benefits.

 

(k)           Underfunded Pension Plans.  Neither the Company nor any
Subsidiary has liability (contingent or otherwise) by reason of a transfer of
an underfunded pension plan.

 

4.21         Environmental Matters.

 

(a)           Environmental Compliance. 
Except as set forth on Schedule 4.21(a), the Company (i) is
not aware of any Hazardous Materials that are present in, on, or under any
properties owned, leased or used at any time (including both land and
improvements thereon) by the Company; (ii) has obtained all applicable and
material permits, licenses and other

 

26

 

authorizations that are
required under Environmental Laws (as defined below) for the conduct of its
business as currently conducted (“Environmental Permits”)
and all such Environmental Permits are valid and in full force and effect;
(iii) is in compliance with all material terms and conditions of such
Environmental Permits; (iv) is not aware of any event, condition,
circumstance, activity, practice, incident, action or plan which constitutes a material
violation of any Environmental Law applicable to the Company, any person or
entity for which the Company is legally liable or any of the Company’s current
or past locations or assets or which could reasonably be expected to form the
basis of any material Environmental Claim (as defined below) with respect to
the Company or any person or entity whose liability for any Environmental Claim
the Company has retained or assumed either contractually or by operation of
law; (v) has not disposed of, released, discharged or emitted any Hazardous
Materials (as defined below) into the soil, air, surface water, building
materials or groundwater at any properties owned or leased at any time by the
Company, or at any other property, or exposed any employee or other individual
to any Hazardous Materials or condition, in such a manner as would reasonably
be expected to result in any material liability to the Company or result in any
material Company corrective or remedial action obligation; and (vi) has taken
all actions reasonably necessary under Environmental Laws to register any products
or materials required to be registered by the Company (or any person for whom
Company has legal responsibility) thereunder. 
For the purposes of this Section 4.21, “Environmental
Claim” means any notice, claim, act, cause of action or investigation
by any person alleging potential liability (including potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) arising
out of, based on or resulting from (a) the presence, or release into the
environment, of any Hazardous Materials (b) any violation, or alleged
violation, of any Environmental Laws, (c) the exposure of any person to any
Hazardous Materials or (d) the use, storage, disposal, discharge,
transportation, emission, destruction, remediation or investigation of any
Hazardous Materials.  “Environmental Laws” means all federal, state, local and
foreign laws and regulations relating to pollution or the environment
(including ambient air, surface water, ground water, land surface or subsurface
strata) or the protection of human health and worker safety, including, without
limitation, laws and regulations relating to emissions, discharges, releases or
threatened releases of Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials. 
“Hazardous Materials” means chemicals,
pollutants, contaminants, wastes, toxic substances, radioactive and biological
materials, asbestos-containing materials (ACM), hazardous substances, petroleum
and petroleum products or any fraction thereof or other substance which is or
has been designated as a danger or threat to health, reproduction or the
environment, excluding, however, Hazardous Materials contained in products
typically used for office and janitorial purposes properly, safely and legally
maintained in accordance with Environmental Laws.

 

(b)           Hazardous Materials Activities. 
The Hazardous Materials Activities (as defined below) of the Company
(i) have been conducted in compliance in all material respects with
applicable Environmental Laws and (ii) have not resulted in the exposure
of any person to any Hazardous Materials in a manner which has caused or could
reasonably be expected to cause a material adverse health effect to said
person.  For the purpose of the
foregoing, “Hazardous Materials Activity” is
the transportation, transfer, recycling, storage, use, treatment, manufacture,
investigation, removal, remediation, release, exposure of others to, sale or
distribution of any Hazardous Materials or any product containing Hazardous
Materials.

 

27

 

(c)           Effect of Transaction. 
To the knowledge of the Company, no circumstances exist which could
cause any Environmental Permit to be revoked, modified, or rendered
nonrenewable upon payment of the permit fee or which could impose upon the
Company the obligation to obtain any additional Environmental Permit.  All Environmental Permits and all other
consents and clearances required by any Environmental Law or any agreement to
which the Company is bound as a condition to the performance and enforcement of
this Agreement (including without limitation, all so called “ECRA”
environmental clearances) which are required by any Governmental Entity in
connection with the transactions contemplated by this Agreement have been
obtained or will be obtained prior to the Closing at no cost to Parent or the
Company.  Schedule 4.21(c) accurately
describes all Company Environmental Permits.

 

(d)           Offsite Hazardous Material Disposal.  To
the knowledge of the Company, no action, proceeding, liability or claim exists
or is threatened, against any disposal site, transporter, recycler or handler
used by the Company (“Disposal Site”)
or against the Company or any person or entity for which the Company is legally
responsible with respect to any transfer or release of Hazardous Materials to a
Disposal Site.

 

(e)           Environmental Liabilities. 
The Company is not aware of any fact or circumstance which could involve
the Company or any person or entity for which the Company is legally
responsible in any material environmental litigation or impose upon the Company
or any such person or entity any material environmental liability.

 

(f)            Disclosure of Environmental Matters. 
The Company has delivered or made available to Parent or made available
for inspections by Parent and its agents and employees all records concerning
the Hazardous Materials Activities of the Company and all environmental audits
and environmental assessments of any current or past Company facility conducted
at the request of, or otherwise reasonably available to the Company.  The Company has complied in all material
respects with all material environmental disclosure, facility closure and
clearance obligations imposed upon the Company with respect to this transaction
or otherwise by applicable law.

 

4.22         Warranties; Products Claims.  During the one-year period
prior to the date hereof, neither the Company nor its Subsidiaries has
experienced any material return or warranty claims, nor are there any pending
or, to the knowledge of the Company, threatened, any return or warranty claims
in respect of products sold by the Company or its Subsidiaries.

 

4.23         Tax Matters.

 

(a)           Definition of Taxes. 
For the purposes of this Agreement, “Tax”
or “Taxes” refers to any and all federal,
state, local and foreign taxes, assessments and other governmental charges,
duties, impositions and liabilities relating to taxes, including taxes based
upon or measured by gross receipts, income, profits, sales, use and occupation,
and value added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together with all interest,
penalties and additions imposed with respect to such amounts and any
obligations under any agreements or arrangements with any other person with
respect to 

 

28

 

such amounts and
including any liability for taxes of a predecessor entity.  “IRC” means the
Internal Revenue Code of 1986, as amended, and the Treasury Regulations
thereunder.

 

(b)           Tax Returns and Audits; Taxes.

 

(i)            The Company and each of its Subsidiaries
have timely filed (taking into account applicable extensions) all federal and
state, local and foreign returns, estimates, information statements and reports
(“Returns”) relating to Taxes required to
be filed by the Company and each of its Subsidiaries with any Tax authority and
such Returns were true and correct in all material respects when filed. All
Taxes shown on such Returns as owing by Company or any of its Subsidiaries have
been paid.  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.

 

(ii)           The Company and each of its Subsidiaries
as of the Effective Time will have withheld with respect to its employees all
federal and state income taxes, Taxes pursuant to the Federal Insurance
Contribution Act (“FICA”) and other Taxes required to be withheld.

 

(iii)          There is no Tax deficiency outstanding
which has been proposed or assessed in writing against the Company or any of
its Subsidiaries, nor has the Company or any of its Subsidiaries executed any
unexpired waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax.

 

(iv)          To the Company’s knowledge, no audit or
other examination of any Return of the Company or any of its Subsidiaries by
any Tax authority is presently in progress. 
Neither the Company nor any of its Subsidiaries has been notified of any
request for such an audit or other examination.

 

(v)           Neither the Company nor any of its
Subsidiaries has any liability for unpaid Taxes which has not been accrued for
or reserved on the Financial Statements, whether asserted or unasserted,
contingent or otherwise, which is material to the Company, other than any
liability for unpaid Taxes that may have accrued since the date of the
Financial Statements in connection with the operation of the business of the
Company and its Subsidiaries in the ordinary course of business.

 

(vi)          [Reserved.]

 

(vii)         Neither the Company nor any of its
Subsidiaries has filed any consent agreement under former IRC Section 341(f)
or agreed to have former IRC Section 341(f)(2) apply to any disposition of
a subsection (f) asset (as defined in former IRC Section 341(f)(4))
owned by the Company.

 

29

 

(viii)        Neither the
Company nor any of its Subsidiaries is party to or has any obligation under any
tax-sharing, tax indemnity or tax allocation agreement or arrangement.

 

(ix)           The Company and
its Subsidiaries have not been and will not be required to include any material
adjustment in taxable income for any Tax period (or portion thereof) pursuant
to IRC Section 481 or Section 263A or any comparable provision under
state or foreign Tax laws as a result of transactions, events or accounting
methods employed prior to the Closing.

 

(x)            None of the
Company’s or its Subsidiaries’ assets are tax exempt use property within the
meaning of IRC Section 168(h).

 

(xi)           Schedule 4.23 lists (A) any
foreign Tax holidays, (B) any intercompany transfer pricing agreements, or
other arrangements that have been established by the Company or any of its
Subsidiaries with any Tax authority and (C) any expatriate programs or policies
affecting the Company or any of its Subsidiaries.

 

(xii)          Neither
Company, nor any of its Subsidiaries (A) has been a member of an affiliated
group filing a consolidated federal income Tax Return (other than a group the
common parent of which was Company), or (B) has any liability for the Taxes of
any Person (other than Company or any of its Subsidiaries) under Treasury
Regulations Section 1.1502-6 (or any comparable provision under state,
local or foreign Tax laws), as a transferee or successor, by contract, or
otherwise.

 

(xiii)         Neither
Company, nor any of its Subsidiaries, was either a “distributing corporation”
or a “controlled corporation” in a distribution of stock qualifying for
tax-free treatment under IRC Section 355.

 

(xiv)        Company has
delivered or made available to Parent correct and complete copies of all
federal income Tax Returns of Company and its Subsidiaries for periods ending
after December 31, 2000.

 

4.24         Insurance.  Schedule 4.24
sets forth a complete and correct list and brief summary description of all
insurance policies carried by, or covering, the Company and its Subsidiaries in
respect of their respective businesses. 
Complete and correct copies of each such policy have been made available
to Parent and MergerSub, all such policies are in full force and effect, and no
notice of cancellation has been given in respect of any such policy.  All premiums due thereon have been paid.  Except as set forth on Schedule 4.24,
there are no pending claims or, to the knowledge of the Company, threatened
claims under any of the Company’s or its Subsidiaries’ insurance policies.

 

4.25         Minute Books; Stock Record
Books.  Complete
and correct copies of the Company’s and its Subsidiaries’ minute books and
stock record books have been provided to Parent and MergerSub.  The minute books of the Company and its
Subsidiaries contain true and complete originals or copies of all minutes of
meetings of and actions by the shareholders, Board

 

30

 

of Directors, and all
committees of the Board of Directors of the Company and its Subsidiaries.  The stock record books accurately reflect all
transactions in shares of the Company’s and its Subsidiaries’ capital stock.

 

4.26         Brokers’ or Finders’ Fees.  No agent,
broker, investment banker, or other person or firm acting on behalf of the
Company and its Subsidiaries is or will be entitled to any broker’s or finder’s
fee or any other commission or similar fee directly or indirectly from the
Company or its Subsidiaries in connection with any of the transactions
contemplated by this Agreement.

 

4.27         Material Customers and
Suppliers.

 

(a)           Each of the ten largest
customers of the Company and its Subsidiaries in terms of amounts invoiced to
such customers during the most recent fiscal year, and during the Interim
Statement Period, respectively is a “Material Customer.”  No Material Customer has given the Company or
its Subsidiaries any notice terminating, suspending, or reducing in any
material respect, or specifying an intention to terminate, suspend, or reduce
in any material respect in the future, the business relationship between such
customer and the Company or its Subsidiaries and, to the Company’s knowledge,
there has not been any Material Adverse Effect on the business relationship of
the Company or its Subsidiaries with any such customer since the end of the
most recent fiscal year.

 

(b)           Each of the ten largest
suppliers of the Company and its Subsidiaries in terms of amounts purchased
from such suppliers during the most recent fiscal year, and during the Interim
Statement Period, respectively is a “Material Supplier.”  No Material Supplier has given the Company or
its Subsidiaries any notice terminating, suspending, or reducing in any
material respect, or specifying an intention to terminate, suspend, or reduce
in any material respect in the future, the business relationship between such
supplier and the Company or its Subsidiaries and to the Company’s knowledge, there
has not been any Material Adverse Effect on the business relationship of the
Company or its Subsidiaries with any such supplier since the end of the most
recent fiscal year.

 

4.28         Bank Accounts; Powers of
Attorney.  Schedule 4.28
sets forth a complete and correct list showing: 
(i) all banks in which the Company and its Subsidiaries maintain a
bank account or safe deposit box (collectively, “Bank
Accounts”), together with, as to each such Bank Account, the account
number, the names of all signatories thereof, and the authorized powers of each
such signatory and, in respect of each such safe deposit box, the number
thereof and the names of all persons having access thereto; and (ii) the
names of all persons holding powers of attorney from the Company or its
Subsidiaries, true and correct copies of which have been provided or made
available to Parent and MergerSub.

 

4.29         Books and Records.  All of the
records, data, information, databases, systems, and controls maintained,
operated, or used by the Company and its Subsidiaries in connection with the conduct
or administration of their respective businesses (including all means of access
thereto and therefrom) are located on the premises of the Company and are under
the exclusive ownership or direct control of the Company.

 

31

 

4.30         Intellectual Property Rights.

 

(a)           For the purposes of this
Agreement, the following terms have the following definitions:

 

(i)            “Intellectual Property” shall mean any or all of the
following and all rights in, arising out of, or associated therewith:  (i) all United States and foreign patents and
applications therefor and all reissues, divisions, renewals, extensions,
provisional, continuations and continuations-in-part thereof (“Patents”); (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary information,
know how, technology, technical data and customer lists, and all documentation
relating to any of the foregoing; (iii) all works of authorship, copyrights,
copyright registrations and applications therefor and all other rights
corresponding thereto throughout the world; (iv) all semiconductor circuit
designs; (v) all rights to all mask works and reticules, mask work
registrations and applications therefor; (vi) all industrial designs and any
registrations and applications therefor throughout the world; (vii) all trade
names, logos, common law trademarks and service marks; trademark and service
mark registrations and applications therefor and all goodwill associated therewith
throughout the world; (viii) all databases and data collections and all rights
therein throughout the world; (ix) all computer software including all source
code, object code, firmware, development tools, files, records and data, all
media on which any of the foregoing is recorded, all Web addresses, sites and
domain names; (x) any similar, corresponding or equivalent rights to any of the
foregoing; and (xi) all technical, design, end-user and other documentation
related to any of the foregoing.

 

(ii)           “Company Intellectual Property” shall mean any Intellectual
Property that is owned by, subject to an agreement to assign to, or exclusively
licensed to the Company or any of its Subsidiaries.  Without in any way limiting the generality of
the foregoing, Company Intellectual Property includes all Intellectual Property
owned or exclusively licensed by the Company related to the Company’s products,
including without limitation all rights in any design code, documentation, and
tooling for packaging of semiconductors in connection with all current products
and products in design and development.

 

(iii)          “Registered Intellectual Property” shall mean all United
States, international and foreign: (i) patents, patent applications (including
provisional applications); (ii) registered trademarks, applications to register
trademarks, intent-to-use applications, or other registrations or applications
related to trademarks, and any domain name registrations; (iii) registered
copyrights and applications for copyright registration; (iv) any mask work
registrations and applications to register mask works; and (v) any other
Intellectual Property that is the subject of an application,

 

32

 

certificate, filing,
registration or other document issued by, filed with, or recorded by, any
state, government or other public legal authority.

 

(iv)          “Company Registered Intellectual Property” means all of the
Registered Intellectual Property owned by, or filed in the name of, the Company
or any of its Subsidiaries.

 

(b)           Schedule 4.30(b) is a complete
and accurate list of all Company Registered Intellectual Property and
specifies, where applicable, the jurisdictions in which each such item of
Company Registered Intellectual Property has been issued or registered and
lists any proceedings or actions before any court, tribunal (including the
United States Patent and Trademark Office or equivalent authority anywhere in
the world) related to any of the Company Registered Intellectual Property.

 

(c)           Schedule 4.30(c) is a complete
and accurate list (by name and version number) of all products and service
offerings of the Company or any of its Subsidiaries that have been distributed
or provided in the one-year period preceding the date hereof or which the
Company or any of its Subsidiaries currently is developing or has developed (“Company Products”).

 

(d)           No Company Intellectual
Property or Company Product is subject to any proceeding or outstanding decree,
order, judgment, contract, license, agreement, or stipulation restricting in
any material manner the use, transfer, or licensing thereof by the Company or
any of its Subsidiaries, or which may affect the validity, use or
enforceability of such Company Intellectual Property or Company Product.

 

(e)           Each item of Company
Registered Intellectual Property is valid and subsisting, all necessary
registration, maintenance and renewal fees currently due in connection with
such Company Registered Intellectual Property have been made and all necessary
documents, recordations and certificates in connection with such Company
Registered Intellectual Property have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such Company
Registered Intellectual Property.

 

(f)            The Company owns and has
good and exclusive title (or an exclusive license from a third party) to, each
item of Company Intellectual Property free and clear of any material lien or
encumbrance (excluding non-exclusive licenses and related restrictions granted
in the ordinary course).  Without
limiting the foregoing: (i) the Company is the exclusive owner in the relevant
markets of all trademarks and trade names used in connection with the operation
or conduct of the business of the Company and its Subsidiaries, including the
sale, distribution or provision of any Company Products by the Company or its
Subsidiaries; (ii) the Company owns exclusively, and has good title to, all
copyrighted works that are Company Products or which the Company or any of its
Subsidiaries otherwise purports to own; and (iii) except as set forth in Schedule 4.30(f),
the Company Products do not infringe any U.S. Patents, or to the Company’s
knowledge, any non-U.S. Patents.

 

33

 

(g)           To the extent that any
Intellectual Property has been developed or created independently or jointly by
a third party for the Company or any of its Subsidiaries or is incorporated
into any of the Company Products, the Company has a written agreement with such
third party with respect thereto and the Company thereby either (i) has
obtained ownership of, and is the exclusive owner of, or (ii) has obtained a
perpetual, non-terminable license (sufficient for the conduct of its business
as currently conducted, and to the Company’s knowledge, sufficient for the
conduct of its business as currently proposed to be conducted) to all such
third party’s Intellectual Property in such work, material or invention by
operation of law or by valid assignment, to the fullest extent it is legally
possible to do so.

 

(h)           Neither the Company nor any
of its Subsidiaries has transferred ownership of, or granted any exclusive
license with respect to, any Intellectual Property that is or was Company
Intellectual Property, to any third party. 
To the Company’s knowledge, neither the Company nor any of its
Subsidiaries has permitted its rights in any material portion of such Company
Intellectual Property to lapse or enter the public domain.

 

(i)            Schedule 4.30(i) lists all
contracts, licenses and agreements to which the Company or any of its
Subsidiaries is a party: (i) with respect to Company Intellectual Property
licensed or transferred to any third party (other than end-user licenses in the
ordinary course); or (ii) pursuant to which a third party has licensed or
transferred any Intellectual Property to the Company.

 

(j)            All contracts, licenses and
agreements relating to either (i) Company Intellectual Property or (ii) Intellectual
Property of a third party used in the business of the Company or any of its
Subsidiaries, are in full force and effect. 
The consummation of the transactions contemplated by this Agreement will
neither violate nor result in the breach, modification, cancellation,
termination or suspension of such contracts, licenses and agreements.  Each of the Company and its Subsidiaries is
in compliance in all material respects with, and has not materially breached
any term of any such contracts, licenses and agreements and, to the knowledge
of the Company, all other parties to such contracts, licenses and agreements
are in compliance in all material respects with, and have not materially breached
any term of, such contracts, licenses and agreements.  To the Company’s knowledge, immediately following
the Closing, the Surviving Corporation will be permitted to exercise all of the
Company’s rights under such contracts, licenses and agreements to the same
extent the Company and its Subsidiaries would have been able to had the
transactions contemplated by this Agreement not occurred and without the
payment of any additional amounts or consideration other than ongoing fees,
royalties or payments which the Company would otherwise be required to pay.  Neither this Agreement nor the transactions
contemplated by this Agreement, including the assignment to Parent or MergerSub
by operation of law or otherwise of any contracts or agreements to which the
Company is a party, will result in (i) either Parent’s or the MergerSub’s
granting to any third party any right to or with respect to any Intellectual
Property right owned by, or licensed to, either of them, (ii) either the Parent’s
or the Merger Sub’s being bound by, or subject to, any non-compete or other
restriction on the operation or scope of their respective businesses, or (iii)
either the Parent’s or the Merger Sub’s being obligated to pay any royalties or
other amounts to any third party in excess of those payable by Parent or Merger
Sub, respectively, prior to the Closing.

 

34

 

(k)           The operation of the
business of the Company and its Subsidiaries as such business currently is
conducted, including (i) the Company’s and its Subsidiaries’ design,
development, manufacture, distribution, reproduction, marketing or sale of the
products or services of the Company and its Subsidiaries (including Company
Products) and (ii) to the knowledge of the Company, the Company’s use of any
product, device or process for the purpose set forth in clause (i) of this Section 4.30(k),
has not and does not infringe or misappropriate the Intellectual Property of
any third party or constitute unfair competition or trade practices under the
laws of any jurisdiction applicable to the Company’s business.

 

(l)            Neither the Company nor any
of its Subsidiaries has received notice from any third party that the operation
of the business of the Company or any of its Subsidiaries or any act, product
or service of the Company or any of its Subsidiaries, infringes or
misappropriates the Intellectual Property of any third party or constitutes
unfair competition or trade practices under the laws of any jurisdiction.

 

(m)          To the knowledge of the
Company, no person has or is infringing or misappropriating any Company Intellectual
Property.

 

(n)           The Company and each of its
Subsidiaries has taken reasonable steps to protect the Company’s and its
Subsidiaries’ rights in the Company’s confidential information and trade
secrets that it wishes to protect or any trade secrets or confidential
information of third parties provided to the Company or any of its
Subsidiaries, and, without limiting the foregoing, each of the Company and its
Subsidiaries has and enforces a policy requiring each employee and contractor
to execute a proprietary information/confidentiality agreement substantially in
the form provided to Parent and all current and former employees and
contractors of the Company and any of its Subsidiaries have executed such an
agreement.

 

4.31         Information
Furnished.  Neither this Agreement nor the
Schedules attached hereto, taken as a whole, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements herein or therein not misleading.

 

ARTICLE 5.

Covenants Related to Conduct of the Business

 

5.1           Inspection.  From and after
the date hereof and until the Closing, the Company shall, and shall cause its
Subsidiaries to: (i) give to each of Parent and MergerSub and its
officers, directors, employees, agents, financial, advisors, attorneys,
accountants, environmental professionals and other representatives
(collectively, “Representatives”) free, full, and
complete access on reasonable notice during normal business hours to all books,
records, Tax Returns, files, correspondence, personnel, facilities, and
properties of the Company and its Subsidiaries; (ii) provide each of
Parent and MergerSub and its Representatives all information and material
pertaining to the business and affairs of the Company and its Subsidiaries as Parent
and MergerSub may deem reasonably necessary or appropriate; (iii) without
limiting the generality of the foregoing, permit Parent’s and MergerSub’s
accountants to examine the Company’s and its Subsidiaries’ financial statements
for any fiscal period; and (iv) use its reasonable efforts to afford each
of Parent and MergerSub and its Representatives the opportunity to meet, at
mutually agreed times and, at the election of the Company, with a Company
representative in attendance,

 

35

 

with the customers,
employees, and vendors of the Company and its Subsidiaries to discuss the
business, condition (financial or otherwise), operations, and prospects of the
Company and its Subsidiaries, including the status of customer programs and
customer relationships.

 

5.2           Financial Statements.  From and after
the date hereof and continuing until the Closing, as soon as available, and in
any event within 20 days after the end of each calendar month, the Company
shall, and shall cause its Subsidiaries to, furnish to Parent and MergerSub an
unaudited balance sheet as of the last day of the month during such period and
the related statements of income and cash flows of the Company and its
Subsidiaries for such month.  Such
monthly financial statements shall fairly present in all material respects the
financial position, results of operations, and changes in financial position of
the Company and its Subsidiaries as of the indicated dates and for the
indicated periods and shall be prepared in accordance with GAAP, consistently
applied, except as otherwise stated therein, and the omission of footnote
disclosure and any year-end adjustment consistent with past practice.

 

5.3           Interim Operations of the
Company and its Subsidiaries.

 

(a)           Other than for the
transactions contemplated by this Agreement, from the date hereof to the
Closing, the Company shall, and shall cause its Subsidiaries to, conduct their
respective businesses only in the ordinary course consistent with past
practices, and the Company shall not, and shall cause its Subsidiaries not to,
unless Parent or MergerSub gives its prior written approval:

 

(i)            amend or
otherwise change their articles of incorporation or bylaws, as each such
document is in effect on the date hereof;

 

(ii)           issue or sell,
or authorize for issuance or sale, additional shares of any class of capital
stock or issue, grant, or enter into any subscription, option, warrant, right,
convertible or exchangeable security, or other agreement or commitment of any
character obligating the Company or its Subsidiaries to issue securities, other
than shares issued pursuant to the exercise of Company Stock Options
outstanding as of the date hereof;

 

(iii)          declare, set
aside, make, or pay any dividend or other distribution in respect of their
capital stock;

 

(iv)          redeem,
purchase, or otherwise acquire, directly or indirectly, any of their capital
stock (other than repurchases of unvested shares in the ordinary course
consistent with past practices);

 

(v)           authorize any
capital expenditures or sell, pledge, dispose of, or encumber, or agree to
sell, pledge, dispose of, or encumber, any assets of the Company or its
Subsidiaries except for sales of inventory in the ordinary course of business
consistent with past practices;

 

(vi)          acquire (by
merger, share exchange, consolidation, combination, or acquisition of stock or
assets) any corporation, partnership, or other business organization or
division thereof or enter into any contract,

 

36

 

agreement, commitment, or
arrangement in respect of any of the foregoing;

 

(vii)         incur any
indebtedness for borrowed money, issue any debt securities, or enter into or
modify any contract, agreement, lease, commitment, or arrangement in respect
thereof;

 

(viii)        enter into any
new material contract, agreement, lease, or commitment, or amend or terminate
any existing material contract, agreement, lease, or commitment;

 

(ix)           enter into,
amend, or terminate any employment or consulting agreement with any director,
officer, consultant, or employee of the Company or its Subsidiaries, enter
into, amend, or terminate any employment or consulting agreement or arrangement
with any other person or take any action in respect of the grant or payment of
any severance or termination pay other than pursuant to policies or agreements
of the Company or its Subsidiaries in effect on the date hereof;

 

(x)            enter into,
extend, or renew any lease for equipment, office space, or other space;

 

(xi)           fail to pay any
accounts payable of the Company or its Subsidiaries in the ordinary course of
business consistent with past practice and in accordance with their terms
consistent with past practices (although the Company may accelerate the payment
of bank loans in order to obtain Lien releases relating to the Company’s
assets);

 

(xii)          accelerate the
collection of, or sell or otherwise transfer, any accounts receivable of the
Company or its Subsidiaries;

 

(xiii)         except as
required by applicable Law, adopt, amend, or terminate any bonus, profit
sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust,
fund, or arrangement for the benefit or welfare of any officer or employee of
the Company or its Subsidiaries, or withdraw from any multi-employer plan so as
to create any liability under Article IV of ERISA to any entity;

 

(xiv)        pay (except for
compensation under existing employment arrangements, advances to salesmen in
the ordinary course of business, and directors’ fees under standard terms in
effect prior to the date hereof), loan, or advance any amount to, or sell,
transfer, or lease any assets or properties to, or enter into any agreement or
arrangement with, any of their officers or directors or any affiliate,
associate, or near relative of any of their officers or directors;

 

37

 

(xv)         write down (or
write up) the value of any inventory or write off as uncollectible any Accounts
Receivable other than in the ordinary course of business consistent with past
practice;

 

(xvi)        cancel any
debts or waive any claims or rights of substantial value;

 

(xvii)       dispose of or
permit to lapse any rights to the use of any patent, trademark, trade name,
copyright, or other intangible asset, or dispose of or disclose to any person
any trade secret, formula, process, or know-how not theretofore a matter of
public knowledge;

 

(xviii)      change any of
the banking or safe deposit arrangements described in Schedule 4.28,
except in the ordinary course of business (although the Company may request
that the Company’s bank lenders remove Kenneth Lakin as a personal guarantor of
the Company’s bank loans);

 

(xix)         grant or extend
any power of attorney or act as guarantor, surety, co-signer, endorser,
co-maker, indemnitor, or otherwise, in respect of the obligation of any person;

 

(xx)          make any change
in financial or Tax accounting methods, principles, or practices or make or
cause to be made any elections on Tax Returns of the Company and its Subsidiaries,
unless required by GAAP or applicable law;

 

(xxi)         extend credit
in the sale of products, collection of receivables, or otherwise, other than in
the ordinary course of business consistent with past practice;

 

(xxii)        fail to
maintain its books, accounts, and records in the usual, regular, and ordinary
manner on a basis consistent with prior years;

 

(xxiii)       adopt or amend
in any material respect any collective bargaining agreement, Benefit Plan, or
Employee Arrangement other than as required by applicable Law;

 

(xxiv)       grant any
increase in compensation, or grant or make any bonus or other compensatory
payments, to any director, officer, consultant, or employee of the Company or
its Subsidiaries;

 

(xxv)        make or revoke
any Tax election that could reasonably be expected to have a Material Adverse
Effect on the Company and its Subsidiaries, or compromise or settle any
material Tax liability; or

 

(xxvi)       agree, whether
in writing or otherwise, to do any of the foregoing.

 

(b)           From the date hereof to the
Closing, the Company shall, and shall cause its Subsidiaries to, use their
respective commercially reasonable efforts to preserve intact the

 

38

 

business organization of
the Company and its Subsidiaries, to keep available in all material respects
the services of their present officers and employees, to preserve intact their
banking relationships and credit facilities, to preserve intact in all material
respects their relationships with their customers and vendors, to preserve in
all material respects the goodwill of those having business relationships with
them, and to comply with all applicable laws in all material respects.

 

ARTICLE 6.

Additional Agreements

 

6.1           Company Shareholder Meeting.  Unless this
Agreement has been terminated pursuant to the provisions of Article 8,
the Company shall take all lawful action to (i) cause a special meeting of
its shareholders (the “Company Shareholder
Meeting”) to be duly called and held as soon as practicable after
the date of this Agreement for the purpose of voting on the approval and
adoption of this Agreement and (ii) solicit proxies from its shareholders
to obtain the Company Requisite Vote for the approval and adoption of this
Agreement, or alternatively shall obtain the written consent of the holders of
outstanding shares of the Company’s stock having not less than the minimum
number of votes that would be necessary to approve and adopt this Agreement at
a meeting at which all shares entitled to vote thereon were present and voted,
in accordance with the Act (the “Shareholder Consent”).

 

6.2           Satisfaction of All
Conditions Precedent.  From
the date hereof to the Closing, each of the Company, Parent, and MergerSub
shall use its commercially reasonable efforts to cause all conditions precedent
to the obligations of Parent and MergerSub, in the case of the Company, and the
Company, in the case of Parent and MergerSub, hereunder to be satisfied.

 

6.3           Acquisition Proposals. Until the termination of
this Agreement, the Company will not, nor will it authorize or permit any
Representative of the Company to, directly or indirectly, (i) solicit,
initiate, or encourage the submission of any Acquisition Proposal or
(ii) participate in any discussions or negotiations regarding, or furnish to
any person any information in respect of, or knowingly take any other action to
facilitate, any Acquisition Proposal or any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal.  The Company shall
notify Parent of any Acquisition Proposal (including the material terms and
conditions thereof, any subsequent modifications thereto, and the identity of
the person making it) as promptly as practicable after its receipt thereof, and
shall provide Parent with a copy of any written Acquisition Proposal or
amendments or supplements thereto. 
Immediately after the execution and delivery of this Agreement, the
Company will, and will use its commercially reasonable efforts to cause its
affiliates, and their respective Representatives to, cease and terminate any
existing activities, discussions, or negotiations with any parties conducted
heretofore in respect of any possible Acquisition Proposal.  The Company shall take all necessary steps to
promptly inform the persons referred to in the first sentence of this Section 6.5
of the obligations undertaken in this Section 6.5.  “Acquisition Proposal”
means an inquiry, offer, or proposal regarding any of the following (other than
the transactions contemplated by this Agreement) involving the Company:
(w) any merger, consolidation, share exchange, recapitalization, business
combination, or other similar transaction; (x) any sale, lease, exchange,
mortgage, pledge, transfer, or other disposition of all or substantially all
the assets of the Company in a single transaction or series of related
transactions; (y) any tender offer or

 

39

 

exchange offer for 20% or
more of the outstanding shares of Company Common Stock; or (z) any public
announcement of a proposal, plan, or intention to do any of the foregoing or
any agreement to engage in any of the foregoing.

 

6.4           Notice of Developments.  From the date
hereof to the Closing, the Company shall notify Parent and MergerSub of any
changes or developments in respect of the business, operations, or prospects of
the Company that has had, or could reasonably be expected to result in, a
Material Adverse Effect.

 

6.5           Public Announcements.  Each of Parent,
MergerSub, and the Company will consult with one another before issuing any
press release or otherwise making any statement to any other person in respect
of the transactions contemplated by this Agreement, including the Merger, and
shall not issue any such press release or make any such statement prior to such
consultation, except as may be required by applicable law or by obligations
pursuant to any listing agreement with Nasdaq, as determined by Parent,
MergerSub, or the Company, as the case may be.

 

6.6           Notice of Breach.  From the date
hereof to the Closing, each party hereto shall, promptly upon becoming aware
thereof, give detailed written notice to the other parties hereto of the
occurrence of, or the impending or threatened occurrence of, any event that
would cause or constitute a breach, or would have caused or constituted a
breach had such event occurred or been known to such party prior to the date of
this Agreement, of any of such party’s covenants, agreements, representations,
or warranties contained or referred to herein or in any document delivered in
accordance with the terms hereof.

 

6.7           Continuation of Insurance
Coverage.  From
the date hereof to the Closing, the Company shall keep in full force and effect
insurance coverage for the Company and its assets and operations comparable in
amount and scope to the coverage now maintained covering the Company and its
assets and operations.

 

6.8           Maintenance of Credit Terms.  From the date
hereof to the Closing, the Company shall continue to effect sales of its
products and services only on the terms that have historically been offered by
the Company or on such other terms as market conditions may dictate consistent
with commercially reasonable practices.

 

6.9           Updating Schedules.  From the date
hereof until the Closing, the Company shall disclose to Parent and MergerSub
any material variances from the representations and warranties contained in Article 4
(which are based on the most recent Schedules as delivered by the Company to
Parent on or prior to the date of this Agreement) promptly upon discovery
thereof.  The Company shall promptly
provide Parent and MergerSub with any additional information regarding such
disclosure that is reasonably requested. 
The applicable Schedule(s) shall be deemed supplemented by (i) any
such disclosures that relate to occurrences subsequent to the date of this
Agreement and (ii) any such disclosures that relate to occurrences prior
to the date of this Agreement but subsequent to the date of the most recent
Schedules as delivered by the Company to Parent. In the event the Closing
condition in Section 7.2 is satisfied or waived by Parent and
MergerSub, the right of Parent or MergerSub to recover under the indemnity
provisions of Article 9 shall be determined based upon the
Schedules as supplemented as

 

40

 

provided above, which
supplements shall be deemed to cure and correct any breach of the
representations and warranties contained in Article 4 that would
have existed in the absence thereof.

 

6.10         Third Party Consents.  The Company
shall use its commercially reasonable efforts to obtain at the earliest
practicable date all consents, waivers and approvals of third persons
(including, without limitation, such as are listed on Schedule 4.4(c))
necessary to the consummation of the transactions contemplated hereby (the “Company Consents”) and will provide to Parent and MergerSub
copies of each such Company Consent promptly after it is obtained. Parent and
MergerSub shall cooperate fully with the Company in connection with the
obtaining of the Company Consents; provided, however, that Parent
and MergerSub shall not be required to pay any additional sums to secure such
Company Consents.

 

6.11         Commercially Reasonable
Efforts and Certain Filings.  Subject to the
terms and conditions of this Agreement, each of the Company, Parent and
MergerSub will use its respective commercially reasonable efforts to maintain
the accuracy of its representations and warranties hereunder and to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary or desirable to consummate the transactions contemplated by this
Agreement.  None of the Company or its
Subsidiaries, Parent, or MergerSub will take, agree to take, or knowingly
permit to be taken any action or do or knowingly permit to be done anything in
the conduct of its business, or otherwise, that would be contrary to or in
breach of any of the terms or provisions of this Agreement.

 

6.12         Confidentiality.  Each of the
parties hereby agrees to and reaffirms the terms and conditions of the Mutual
Nondisclosure Agreement by and between Parent and the Company effective as of November 12,
2003.

 

6.13         FIRPTA. Company shall, prior to
the Closing Date, provide Parent with a properly executed Foreign Investment
and Real Property Tax Act of 1980 (“FIRPTA) Notification Letter which states
that shares of capital stock of Company do not constitute “United States real
property interests” under IRC Section 897(c), for purposes of satisfying
Parent’s obligations under Treasury Regulations Section 1.1445-2(c)(3).  In addition, simultaneously with delivery of
such FIRPTA Notification Letter, Company shall provide to Parent a form of
notice to the Internal Revenue Service in accordance with the requirements of Treasury
Regulations Section 1.897-2(h)(2), along with written authorization for
Parent to deliver such notice form to the Internal Revenue Service on behalf of
Company upon the Closing of the Merger.

 

6.14         Contingent Earn-Out Payment. TriQuint and Parent shall use
commercially reasonable efforts to maximize the amount of the Contingent
Earn-Out Payment.  For the avoidance of
doubt, none of TriQuint, Parent, or their affiliates are required to continue
operating the Company’s business after the Effective Time or sell any products
that incorporate the Company Intellectual Property if such operations or sales
are not profitable, cost-effective, or otherwise consistent with TriQuint’s
business needs, goals, or strategies.  If
TriQuint or Parent sell or otherwise transfer the Surviving Corporation or the
Company Intellectual Property to a third party, then TriQuint or Parent (as the
case may be) shall ensure that the Contingent Earn-Out Payment obligations set
forth in this Agreement are appropriately binding on the third party.

 

41

 

6.15         Benefits for Retained
Employees.  To the extent that service is relevant for
purposes of eligibility, vesting, allowances, benefit accrual or any other
purpose under any employee benefit plan, program, arrangement, policy or
practice of Parent or any of its subsidiaries or affiliates extended to
Retained Employees (as defined below), Retained Employees shall receive full
credit for their service with the Company prior to the Closing with the
exceptions outlined below.

 

To
the extent Parent does not maintain or cause the Surviving Corporation to
maintain medical and dental Benefit Plans in place at the Company prior to the
Closing, Parent shall waive or shall cause to be waived pre-existing condition
limitations and waiting periods with respect to each of the Retained Employees
and their spouses and dependents under the Parent’s self-insured medical and
dental plans.

 

For
purposes of Parent’s service awards, only service under the Parent is counted.  For purposes of sabbatical, the Parent’s
sabbatical policy will remain in effect including past service and pro-ration
for service with the Parent of less than 5 years at qualifying Service
Anniversaries.

 

Nothing
in this Section 6.15 shall be deemed to limit or otherwise affect
the right of Parent and its subsidiaries and affiliates to terminate the
employment or change the place of work, responsibilities, status or description
of any employee or group of employees. 
Parent has the right to amend, modify, terminate, Benefits Plans,
programs, arrangements, practices and policies of Retained Employees so long as
any amendment, modification or termination applies to other employees of the
Parent.  For purposes of this Section 6.15
“Retained Employees” means individuals
who were employees of the Company immediately prior to the Closing and who
remain employed by the Surviving Corporation, or become employed by Parent of
any of its subsidiaries or Affiliates, immediately after the Closing.

 

ARTICLE 7.

Conditions to Consummation of the Merger

 

7.1           Conditions to Each Party’s
Obligation to Effect the Merger.  The respective
obligations of each party to consummate the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to the Effective Time of
each of the following conditions, any or all of which may be waived in whole or
in part by the party being benefited thereby, to the extent permitted by
applicable law:

 

(a)           The Agreement shall have
been approved and adopted by the Company Requisite Vote.

 

(b)           The Company, Parent, and
MergerSub shall have timely obtained from each Governmental Entity all
approvals, waivers, and consents, if any, necessary for consummation of or in
connection with the transactions contemplated hereby.

 

(c)           There shall not be in effect
any Law or Order of any Governmental Entity of competent jurisdiction
restraining, enjoining, or otherwise preventing consummation of the
transactions contemplated by this Agreement.

 

42

 

7.2           Conditions to the
Obligations of Parent and MergerSub.  The
respective obligations of Parent and MergerSub to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to
the Effective Time of each of the following additional conditions, any or all
of which may be waived in whole or part by Parent and MergerSub, as the case
may be, to the extent permitted by applicable law:

 

(a)           The representations and
warranties of the Company contained in this Agreement shall be true and correct
in all material respects at and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date, except to the extent that such representations and warranties
speak as of an earlier date (in which case they shall be true and correct as of
such earlier date); the Company shall have performed and complied in all
material respects with all agreements required by this Agreement to be
performed or complied with by the Company at or prior to the Closing Date; and
Parent, and MergerSub, shall have received a certificate, dated as of the
Closing Date, signed by a duly elected officer of the Company to the foregoing
effects;

 

(b)           Prior to the Closing, there
shall not have occurred any Material Adverse Effect or any material casualty or
damage (whether or not insured) to any facility, property, or equipment owned
or used by the Company.

 

(c)           The Company shall have
delivered to Parent the minute books and stock transfer records of the Company.

 

(d)           All material consents,
waivers, and approvals of any Governmental Entity or third person required in
connection with the execution, delivery, and performance of this Agreement
(including, without limitation, all consents listed on Schedule 4.4(c))
shall have been obtained.

 

(e)           The Company shall have
delivered to Parent and MergerSub such good standing certificates and officers’
certificates and similar documents as counsel for Parent and MergerSub shall
have reasonably requested prior to the Closing Date.

 

(f)            Holders of no more than 5%
of the outstanding shares of Company Common Stock shall have exercised and not
withdrawn, forfeited, or otherwise permitted to lapse dissenter’s or similar
rights under applicable Law with respect to their shares of Company Common
Stock in connection with the Merger.

 

(g)           The Company shall have
entered into appropriate agreements with each holder of outstanding Company
Stock Options, in form and substance acceptable to Parent, providing that:  subject to the consummation of the Merger and
effective immediately prior to the Effective Time, (A) the Company Stock Option
shall be exercised in full for shares of Company Common Stock, whether or not
exercisable, and whether or not vested, and (B) the holder of the Company Stock
Option may elect to pay the exercise price by means of a promissory note that
will be repaid by a corresponding deduction as an offset from the payment that
would otherwise be made to such holder on account of the Tranche One Payment as
set forth in Article 2.  Any
per share exercise price that is unpaid upon the exercise of a Company Stock
Option is referred to as the “Unpaid Exercise Price.”

 

43

 

(h)           Parent shall have obtained a
“key man” life insurance policy covering Kenneth Lakin in the amount of
$4,000,000 for up to two years following the Effective Time, on terms and
conditions that are reasonable and acceptable to Parent.

 

(i)            The Executive Employment
Agreement between the Surviving Corporation and Kenneth Lakin shall have been
executed and delivered by Mr. Lakin.

 

(j)            Each of the Stay Bonus
Agreements between the Surviving Corporation and each of the employees listed
on Schedule 7.2(j) shall have been executed and delivered by such
employees.

 

The decision of Parent and MergerSub to
consummate the transactions contemplated by this Agreement without the
satisfaction of any of the preceding conditions shall not constitute a waiver
of any of the Company’s representations, warranties, covenants, or indemnities
herein, except as otherwise provided in Section 6.10.

 

7.3           Conditions to Obligations of
the Company.  The
obligations of the Company to consummate the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to the Effective Time of
each of the following additional conditions, any or all of which may be waived
in whole or part by the Company, to the extent permitted by applicable law:

 

(a)           The representations and
warranties of Parent and MergerSub contained in this Agreement shall be true
and correct in all material respects at and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of the Closing Date; all agreements to be performed hereunder by Parent and
MergerSub at or prior to the Closing Date shall have been performed in all
material respects; and the Company shall have received a certificate, dated as
of the Closing Date, signed by an officer of Parent to the foregoing effects.

 

(b)           This Agreement and the
Merger shall have been approved by the Company Requisite Vote.

 

(c)           The Executive Employment
Agreement between the Surviving Corporation and Kenneth Lakin shall have been
executed and delivered by the Surviving Corporation.

 

(d)           Each of the Stay Bonus
Agreements between the Surviving Corporation and each of the employees listed
on Schedule 7.2(j) shall have been executed and delivered by the
Surviving Corporation.

 

The decision of Company to consummate the
transactions contemplated by this Agreement without the satisfaction of any of
the preceding conditions shall not constitute a waiver of any of the
representations, warranties, covenants, or indemnities of Parent or MergerSub
set forth herein.

 

44

 

ARTICLE 8.

Termination

 

8.1           Termination by Mutual
Agreement.  This
Agreement may be terminated and the Merger may be abandoned at any time prior
to the Effective Time, whether before or after the approval of the Merger by
the Company Requisite Vote, by mutual written consent of the Company and Parent
by action of their respective Boards of Directors.

 

8.2           Termination by Either Parent
or the Company.  This
Agreement may be terminated and the Merger may be abandoned at any time prior
to the Effective Time by action of the Board of Directors of either Parent or
the Company upon the occurrence of a Termination Event; provided, however,
that the right to terminate this Agreement pursuant to this Section 8.2
shall not be available to any party that has breached in any material respect
its obligations under this Agreement in any manner that shall have proximately
contributed to the occurrence of the failure of the Merger to be
consummated.  For the purposes of this
Agreement, a “Termination Event” is deemed to
occur if:

 

(a)           the Company Requisite Vote
shall not have been obtained at the Company Shareholder Meeting or at any
adjournment or postponement thereof (and the Shareholder Consent shall not have
been obtained); or

 

(b)           any Law or Order permanently
restraining, enjoining, or otherwise prohibiting consummation of the Merger
shall become final and non-appealable (whether before or after the approval of
the Merger by the Company Requisite Vote); or

 

(c)           the Closing shall not have
occurred prior to January 31, 2005; provided, however, that the right to
terminate this Agreement under this Section 8.2(c) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of or shall have resulted in the failure of
the Closing to occur prior to such date.

 

8.3           Termination by the Company.  This Agreement
may be terminated and the Merger may be abandoned at any time prior to the
Effective Time, whether before or after the approval of the Merger by the Company
Requisite Vote, by action of the Board of Directors of the Company if:

 

(a)           there is a breach by Parent
or MergerSub of any representation, warranty, covenant, or agreement contained
in this Agreement that cannot be cured and would cause a condition set forth in
Section 7.3(a) to be incapable of being satisfied as of 120 days
following the date of this Agreement (the “Termination Date”);
or

 

(b)           the Board of Directors of
Parent shall have withdrawn its recommendation of this Agreement in a manner
adverse to the Company or shall have resolved to do the foregoing.

 

8.4           Termination by Parent.  This Agreement
may be terminated and the Merger may be abandoned at any time prior to the
Effective Time, whether before or after the approval of the Merger by the Company
Requisite Vote, by action of the Board of Directors of Parent if:

 

45

 

(a)           there is a breach by the
Company of any representation, warranty, covenant, or agreement contained in
this Agreement that cannot be cured and would cause a condition set forth in Section 7.2(a)
to be incapable of being satisfied as of the Termination Date; or

 

(b)           the Board of Directors of
the Company shall have withdrawn its recommendation of this Agreement in a
manner adverse to Parent or shall have resolved to do the foregoing.

 

8.5           Effect of Termination and
Abandonment.  In
the event of termination of this Agreement and the abandonment of the Merger
pursuant to this Article 8, this Agreement (other than this Section 8.5,
Section 6.12, and Article 10) shall become void and of
no effect with no liability on the part of any party hereto (or of any of its
Representatives); provided, however, that except as otherwise provided herein,
no such termination shall relieve any party hereto of any liability or damages
resulting from any willful breach of this Agreement.

 

8.6           Amendment.

 

(a)           Before the Effective Time, this
Agreement may be amended by action taken by the Company, Parent, and MergerSub
at any time before or after approval of the Merger by the Company Requisite
Vote but, after any such approval, no material amendment shall be made that
changes any of the terms of this Agreement. 
Before the Effective Time, this Agreement may not be amended except by
an instrument in writing signed on behalf of Parent, Company, and MergerSub.

 

(b)           After the Effective Time,
this Agreement may be amended by action taken by the Surviving Corporation,
Parent, and the holders of a majority in interest of the Outstanding Shares
outstanding immediately before the Effective Time; provided, however, that any
amendment that would adversely affect the amount of Merger Consideration
payable to the holders of Company Common Stock immediately prior to the
Effective Time will require the consent of the holders in interest of at least
95% of the Outstanding Shares.  After the
Effective Time, this Agreement may not be amended except by an instrument in
writing signed on behalf of such persons.

 

8.7           Extension; Waiver.  At any time
prior to the Effective Time, each party hereto (for these purposes, Parent and
MergerSub shall together be deemed one party and the Company shall be deemed
the other party) may (i) extend the time for the performance of any of the
obligations or other acts of the other party, (ii) waive any inaccuracies
in the representations and warranties of the other party contained herein or in
any document, certificate, or writing delivered pursuant hereto, or
(iii) waive compliance by the other party with any of the agreements or
conditions contained herein.  Any
agreement on the part of either party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf
of such party.  The failure of any party
hereto to assert any of its rights hereunder shall not constitute a waiver of
such rights.

 

46

 

ARTICLE 9.

Survival of Representations, Warranties, Covenants, and Agreements; Warranty
Reserve

 

9.1           Survival of Representations,
Warranties, Covenants and Agreements; Warranty Reserve.  Notwithstanding
any right of Parent, MergerSub, or the Company (whether or not exercised) to
investigate the affairs of Parent, MergerSub, or the Company, each party shall
have the right, subject to Section 6.10, to rely fully upon the
representations, warranties, covenants, and agreements of the other party
contained in this Agreement or in any instrument required to be delivered
pursuant to Article 7.  The
covenants and agreements of the Company, Parent, and MergerSub contained in
this Agreement or in any instrument delivered pursuant to this Agreement that
by their terms apply or are to be performed in whole or in part after the
Effective Time shall survive the Effective Time.  The representations and warranties of the
Company, Parent, and MergerSub contained in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Merger and continue
until the first anniversary of the Closing Date, provided, however, that the
representations and warranties of Company contained in Section 4.23
shall survive the Merger and shall continue in full force and effect until 30
days following the expiration of the applicable statutes of limitations
(including any extensions thereof) (the “Expiration Date”).  Except for the representations and warranties
contained in this Agreement, none of Parent, MergerSub, or the Company has made
any representations or warranties and, except for the representations and
warranties contained in this Agreement, each of Parent, MergerSub, and the
Company acknowledges that no representations or warranties have been made by,
and it has not relied upon any representations or warranties made by, any of
the parties hereto or any of their respective Representatives in respect of
this Agreement and the transactions contemplated hereby, and the documents and
instruments referred to herein, notwithstanding the delivery or disclosure to
such party or its Representatives of any documentation or other information in
respect of any one or more of the foregoing. 
The inclusion of any entry on the Schedules attached hereto shall not
constitute an admission by, or agreement of, the Company that such matter is
material to the Company.  Without
limiting the generality of the foregoing, the Company makes no representation
or warranty to Parent or MergerSub with respect to any projections, estimates,
plans, or budgets delivered to or made available to Parent or any
Representative thereof of future revenues, expenses or expenditures, or future
results of operations or performance of the Company or its business.

 

9.2           Warranty Reserve.

 

(a)           Establishment of the Warranty
Reserve.  ”Warranty Reserve”
means $700,000 to be reserved by Parent from the Tranche Two Payment pool.

 

(b)           Recourse to the Warranty
Reserve.  The Warranty Reserve shall be available (and except only
for claims relating to the representations and warranties of Company contained
in Section 4.23, to the extent made after the first anniversary of
the Effective Time, shall be the sole and exclusive remedy of Parent and
MergerSub after the Effective Time) to compensate Parent for any and all Losses
(whether or not involving a Third Party Claim) incurred or sustained by Parent
as a result of any inaccuracy or breach of any representation, warranty,
covenant, or agreement of the Company contained in this Agreement or any
instrument required to be delivered pursuant to Article 7 that
survives the Effective Time in accordance with this Agreement; provided,
however, that Parent may not make any claims against the Warranty

 

47

 

Reserve unless and until
the aggregate Losses incurred or sustained by Parent exceed $50,000 (the “Threshold Amount”), in which event Parent may make claims
against the Warranty Reserve only for Losses in excess of the Threshold Amount
(thus excluding the Threshold Amount as a deductible).  No shareholder of the Company will be liable
to Parent with respect to any such Losses beyond such shareholder’s respective
pro rata share (based on the number of shares of Company Common Stock held
thereby prior to the Effective Time) of the Warranty Reserve.

 

(c)           Reserve Period; Distribution
of Warranty Reserve upon Termination of Reserve Period.  Subject
to the following requirements, the Warranty Reserve shall be in existence
immediately following the Effective Time and shall terminate at 5:00 P.M.,
Portland, Oregon time, on the Expiration Date (the period from the Effective
Time through and including the Expiration Date is referred to as the “Reserve Period”); and subject to Section 2.1(b)(ii),
the Warranty Reserve shall be distributed by Parent to the Paying Agent for the
holders of the Company’s Common Stock immediately prior to the Effective Time in
proportion to each shareholders’ respective contributions to the Warranty
Reserve; provided, however, that the Reserve Period shall not
terminate in respect of such amount (or some portion thereof) that is necessary
in the reasonable judgment of Parent, subject to the objection of the
Shareholder Agent and the subsequent resolution of the matter in the manner as
provided in Section 9.2(e), to satisfy any unsatisfied written
claims under this Section 9.2 concerning facts and circumstances
existing prior to the termination of such Reserve Period which claims are specified
in any Officer’s Certificate delivered to the Shareholder Agent prior to
termination of such Reserve Period.  Upon
resolution of each individual claim described above and subject to Section 2.1(b)(ii),
Parent shall deliver the remaining amount, if any, of the portion of the Warranty
Reserve designated for such individual claim after the resolution of such claim
to the Paying Agent for the holders of the Company’s Common Stock immediately
prior to the Effective Time as part of the Tranche Two Payment.

 

(d)           Claims Upon Warranty Reserve.

 

(i)            Upon delivery
by Parent to the Shareholder Agent, at any time on or before the last day of
the Reserve Period of a certificate signed by any officer of Parent (an “Officer’s Certificate”): (A) stating that Parent has
paid or properly accrued or, with respect to a Third Party Claim, reasonably
anticipates that it will have to pay or accrue Losses as a result of any
inaccuracy or breach of any representation, warranty, covenant, or agreement of
the Company contained herein, and (B) specifying in reasonable detail the
individual items of Losses included in the amount so stated, the date each such
item was paid or properly accrued or the basis for such anticipated liability,
and the nature of the misrepresentation or breach of warranty, agreement, or
covenant to which such item is related (including the specific provision
breached), Parent shall, subject to the provisions of Section 9.2(e)
and the Threshold Amount, reduce the amount of the Warranty Reserve in an
amount equal to such Losses.

 

(ii)           For purposes of
this Agreement, “Losses” means all losses, expenses
(including reasonable attorneys’ fees and expenses), damages,

 

48

 

liabilities, fines,
penalties, judgments, actions, claims, and costs. In no event shall Losses
include special, indirect, incidental, or consequential damages.

 

(iii)          Payments
pursuant to this Article 9 shall be limited to the amount of any Loss that
remains after deducting therefrom (A) any indemnity, contribution, or other
similar payment recoverable by Parent or any affiliates thereof from any person
with respect thereto, any other savings that would reduce the impact of the
Losses upon Parent or any such affiliates and (B) any reserve provided for the
item in question in the Financial Statements.

 

(iv)          Notwithstanding
anything contained herein to the contrary, Parent shall not be entitled to make
any claim against the Warranty Reserve to the extent (but only to the extent)
that Parent fails to take commercially reasonable action to mitigate any such
Loss reasonably promptly after obtaining knowledge thereof.

 

(e)           Objections to Claims.  For
a period of 30 days after delivery of such notice to the Shareholder
Agent, Parent shall make no reduction to the Warranty Reserve pursuant to Section 9.2(d)
unless Parent shall have received written authorization from the Shareholder
Agent to make such reduction.  After the
expiration of such 30-day period, Parent shall make the reduction to the
Warranty Reserve pursuant to Section 9.2(d); provided, however,
that no such payment or delivery may be made if the Shareholder Agent shall
object in a written statement to the claim made in the Officer’s Certificate,
and such statement shall have been delivered to Parent prior to the expiration
of such 30-day period.

 

(f)            Resolution of Conflicts.  In
the event the Shareholder Agent timely objects in writing to any claim or
claims made in any Officer’s Certificate, the Shareholder Agent and Parent
shall attempt in good faith to agree upon the rights of the respective parties
in respect of each of such claims.  If
the Shareholder Agent and Parent are unable to reach agreement with respect to
any such contested claim within 45 days after the delivery of the Shareholder
Agent’s objection, the matter shall be settled by binding arbitration in
Portland, Oregon as set forth below.  All
claims shall be settled in accordance with the Commercial Arbitration Rules
then in effect of the American Arbitration Association (the “AAA Rules”), although the parties shall not be required to
use AAA arbitrators.  The Shareholder
Agent and Parent shall mutually appoint a single arbitrator within 15 days
after the termination of such 45 day period. The Shareholder Agent and Parent
shall cause the arbitrator to decide the matter to be arbitrated pursuant
hereto within 60 days after the arbitrator’s appointment.  The decision of the arbitrator shall relate
to whether Parent is entitled to reduce the Warranty Reserve for the disputed
claim, or the disputed portion thereof, pursuant to the applicable terms of
this Agreement.  The final decision of
the arbitrator shall be furnished to the Shareholder Agent and Parent in
writing and shall constitute the conclusive determination of the issue in
question binding upon all parties hereto, and shall not be contested by any of
them.  Such decision may be used in a
court of law only for the purpose of seeking enforcement of the decision of the
arbitrator.  All the fees and expenses of
the arbitrator shall be paid by the party who does not prevail in the
arbitration.

 

49

 

9.3           Shareholder Agent of the
Shareholders; Power of Attorney.

 

(a)           Shareholder Agent.  In
the event that the Merger is approved by the shareholders of the Company,
effective upon such vote, and without further act of any shareholder, Kenneth
Lakin shall be appointed as the agent and attorney-in-fact (the “Shareholder Agent”), for each shareholder of the Company,
including all persons receiving shares of Company Common Stock upon exercise of
Company Stock Options (except such shareholders, if any, as shall have
perfected their dissenters’ rights under the Act), for and on behalf of
shareholders of the Company, to give and receive notices and communications, to
authorize reductions of the Warranty Reserve in satisfaction of claims by
Parent, to object to such reductions, to agree to, negotiate, enter into
settlements and compromises of, and demand litigation or arbitration and comply
with orders and awards of courts and arbitrators in respect of such claims, and
to take all actions necessary or appropriate in the judgment of the Shareholder
Agent for the accomplishment of the foregoing. 
Such agency may be changed by the shareholders of the Company from time
to time upon not less than 30 days’ prior written notice to Parent; provided,
however, that the Shareholder Agent may not be removed unless the
holders of at least a two-thirds’ interest in the Warranty Reserve agree to
such removal and to the identity of the substituted shareholder agent.  Any vacancy in the position of Shareholder
Agent may be filled by approval of the holders of a majority in interest of the
Warranty Reserve.  No bond shall be
required of the Shareholder Agent, and the Shareholder Agent shall not receive
compensation for his services.  Notices
or communications to or from the Shareholder Agent shall constitute notice to
or from each of the shareholders of the Company.

 

(b)           Exculpation.  The
Shareholder Agent shall not be liable for any act done or omitted hereunder as
Shareholder Agent while acting in good faith and in the exercise of reasonable
judgment.

 

(c)           Actions of the Shareholder
Agent.  A decision, act, consent, or instruction of the
Shareholder Agent shall constitute a decision for all of the shareholders of
the Company for whom a portion of the funds otherwise issuable to them are
deposited in the Warranty Reserve, and shall be final, binding, and conclusive
upon each of such shareholders, and the Depositary Agent and Parent may rely
upon any such decision, act, consent, or instruction of the Shareholder Agent
as being the decision, act, consent, or instruction of every such shareholder
of the Company.  Parent is hereby
relieved from any liability to any Person for any acts done by it in accordance
with such decision, act, consent, or instruction of the Shareholder Agent.

 

9.4           Third-Party Claims.  In the event
Parent or the Surviving Corporation receives written notice of a third-party
claim (a “Third Party Claim”) that Parent reasonably
expects may result in a demand against the Warranty Reserve, Parent shall
provide the Shareholder Agent with prompt written notice thereof.  The Shareholder Agent, as representative for
the shareholders of the Company, shall have the right to participate in or, by
giving written notice to Parent, to assume the defense of any Third Party Claim
at the expense of the Warranty Reserve and by counsel selected by the
Shareholder Agent (which counsel must be reasonably satisfactory to Parent),
and Parent will cooperate in good faith (and shall be permitted to participate
at Parent’s expense) in such defense; provided, however, that the Shareholder Agent shall not be entitled to assume
control of the defense of any Third Party Claim that (i) could reasonably be
expected to have any impact on the ongoing operations or goodwill of the

 

50

 

Surviving
Corporation or Parent or (ii) could reasonably be expected to result in
Losses in excess of the Warranty Reserve. 
Parent shall have the right to settle any Third Party Claim contemplated
by clause (i) or (ii) above with consent of the Shareholder Agent, which
consent shall not be unreasonably withheld. 
In the event that the Shareholder Agent has consented to any such
settlement, the Shareholder Agent shall have no power or authority to object
under any provision of this Article 9 to the amount of any claim by
Parent against the Warranty Reserve with respect to the amount of Losses
incurred by Parent in such settlement as consented to by the Shareholder Agent.

 

9.5           Remedies.  Parent hereby acknowledges and agrees that
its sole and exclusive remedy with respect to any and all claims relating to
the subject matter of this Agreement shall be pursuant to the provisions set
forth in this Article 9.  In
furtherance of the foregoing, Parent hereby waives, to the fullest extent
permitted under applicable law, any and all rights, claims and causes of action
it may have against any other party hereto arising under or based upon any
federal, state or local statute, law, ordinance, rule or regulation (including
any such rights, claims or causes of action arising under or based upon common
law or otherwise).  Parent further
acknowledges and agrees that no breach of any representation, warranty,
covenant or agreement contained herein or in any instrument required to be delivered
pursuant to Article 7 shall give rise to any right on the part of Parent
or MergerSub, after the Closing, to rescind this Agreement or any of the
transactions contemplated hereby.

 

ARTICLE 10.

Miscellaneous

 

10.1         Collateral
Agreements.  This Agreement (together with the
documents delivered pursuant hereto) supersedes all prior documents,
understandings, and agreements, oral or written, relating to this transaction
(other than the Mutual Nondisclosure Agreement referenced in Section 6.12)
and constitutes the entire understanding among the parties hereto in respect of
the subject matter hereof.

 

10.2         Successors and
Assigns.  Neither the rights nor obligations of the Company, Parent,
or MergerSub under this Agreement may be assigned or delegated, in whole or in
part, without the written consent of the other parties hereto, which will not
be unreasonably withheld; provided, however, that the rights and obligations of
Parent, MergerSub, and the Surviving Corporation hereunder may be assigned or
delegated freely among TriQuint, Parent, and their affiliates; and provided
further that the holders of Company Common Stock immediately prior to the
Effective Time may assign their rights hereunder at any time following the
Closing to such holders’ near relatives or to a trust for the benefit of such
holders or any of their respective near relatives.  Any assignment in violation of the preceding
sentence shall be null and void.  Subject
to the preceding sentences of this Section 10.2, the provisions of
this Agreement (and, unless otherwise expressly provided therein, of any
document delivered pursuant to this Agreement) shall be binding upon and inure
solely to the benefit of the parties hereto and their respective legal
representatives, successors, and permitted assigns, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits, or remedies of any nature whatsoever under or by
reason of this Agreement; provided, however, that the holders of the Company
Common Stock immediately prior to the Effective Time (and their respective
successors, heirs, legal representatives, and permitted assigns) shall, after
the Closing,

 

51

 

be
deemed third party beneficiaries of this Agreement and shall be entitled to
enforce the terms of this Agreement as if parties hereto.

 

10.3         Guaranty. TriQuint
Semiconductor, Inc. (“TriQuint”) hereby
guarantees absolutely and unconditionally the obligations of Parent to make
payment of the Merger Consideration pursuant to Article 2.  This is a continuing guaranty and shall
remain in force and effect until the Merger Consideration has been paid
pursuant to Article 2.

 

10.4         Expenses.  Except
as otherwise expressly provided herein, the Company shall be solely responsible
for the broker or finder, legal, accounting, and other fees and expenses
incurred by the Company in connection with the execution of this Agreement and
the consummation of the transactions contemplated hereby, and Parent and
MergerSub shall be solely responsible for the broker or finder, legal,
accounting, and other fees and expenses incurred by Parent and MergerSub in
connection with execution of this Agreement and the consummation of the
transactions contemplated hereby.

 

10.5         Severability.  If
any provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future laws, such provision shall be fully
severable, this Agreement shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by such illegal, invalid, or
unenforceable provision or by its severance from this Agreement.

 

10.6         Notices.  Any
notices required or permitted to be given under this Agreement (and, unless
otherwise expressly provided therein, under any document delivered pursuant to
this Agreement) shall be given in writing and shall be deemed received
(i) when personally delivered to the relevant party at such party’s
address as set forth below, (ii) if sent by mail (which must be certified
or registered mail, postage prepaid) or overnight courier, when received or
rejected by the relevant party at such party’s address indicated below, or
(iii) if sent by facsimile, when confirmation of delivery is received by
the sending party:

 

	
  Parent/MergerSub:

  	
   

  	
  Sawtek Inc.

  
	
   

  	
   

  	
  c/o TriQuint
  Semiconductor, Inc.

  
	
   

  	
   

  	
  2300 NE Brookwood Parkway

  
	
   

  	
   

  	
  Hillsboro, Oregon 97124

  
	
   

  	
   

  	
  Facsimile No.: (503)
  615-8901

  
	
   

  	
   

  	
  Attention: Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
  with
  a copy to:

  	
   

  	
  Ater
  Wynne LLP

  
	
   

  	
   

  	
  222
  SW Columbia Street, Suite 1800

  
	
   

  	
   

  	
  Portland,
  Oregon 97201

  
	
   

  	
   

  	
  Facsimile
  No: (503) 226-0079

  
	
   

  	
   

  	
  Attention:
  Bill Campbell

  

 

52

 

	
   

  	
   

  	
   

  
	
  The
  Company:

  	
   

  	
  TFR
  Technologies, Inc.

  
	
   

  	
   

  	
  63140
  Britta Street, Suite C-106

  
	
   

  	
   

  	
  Bend,
  Oregon 97701

  
	
   

  	
   

  	
  Facsimile
  No.: (541) 382-7783

  
	
   

  	
   

  	
  Attention:
  President

  
	
   

  	
   

  	
   

  
	
  with
  a copy to:

  	
   

  	
  Perkins
  Coie LLP

  
	
   

  	
   

  	
  1120
  N.W. Couch Street

  
	
   

  	
   

  	
  Tenth
  Floor

  
	
   

  	
   

  	
  Portland,
  Oregon 97209-4128

  
	
   

  	
   

  	
  Facsimile
  No.: (503) 727-2222

  
	
   

  	
   

  	
  Attention:
  David Matheson

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Shareholder
  Agent:

  	
   

  	
  Kenneth
  Lakin

  
	
   

  	
   

  	
  [    ]

  
	
   

  	
   

  	
  [    ]

  

 

Each
party hereto may change its address or facsimile number for purposes of this Section 10.6
by providing notice to the other parties in accordance with this Section 10.6.

 

10.7         Further
Assurances.  Each party to this Agreement shall
(i) furnish upon request to the other parties such further information,
(ii) execute and deliver to the other parties such other documents, and
(iii) do such other acts and things as the other parties reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents and instruments referred to herein.

 

10.8         Specific
Performance.  The parties recognize that if the Company
refuses to perform under the provisions of this Agreement, monetary damages
alone will not be adequate to compensate Parent for its injury.  Parent shall therefore be entitled, in
addition to any other remedies that may be available, to obtain specific
performance of the terms of this Agreement. 
If any action is brought by Parent to enforce this Agreement, the
Company shall waive the defense that there is an adequate remedy at law.  In the event of litigation pertaining to any
controversy, claim, or dispute between the parties hereto arising out of or
relating to this Agreement or the breach of any provision thereof, the
prevailing party shall be entitled to recover from the non-prevailing party
reasonable expenses, attorneys’ fees, and costs.

 

10.9         Governing Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Oregon.

 

10.10       Remedies Not
Exclusive.  Except to the extent otherwise
expressly provided herein with respect to Parent, the rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law or equity.

 

53

 

10.11       Counterparts.  This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same
agreement.

 

10.12       Titles and
Headings.  Titles and headings to articles and
sections herein are inserted for convenience of reference only, and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.

 

10.13       Certain
Interpretive Matters and Definitions.

 

(a)           Unless the context otherwise
requires, (i) all references to Articles, Sections, Exhibits, or Schedules
are to Articles, Sections, Exhibits, or Schedules of or to this Agreement,
(ii) each term defined in this Agreement has the meaning assigned to it,
(iii) “or” is disjunctive but not necessarily
exclusive, (iv) words in the singular include the plural and vice  versa,
and (v) the term “affiliate” has
the meaning given to it in Rule 12b-2 of Regulation 12B under the
Exchange Act.  All references to “$” or
dollar amounts will be to lawful currency of the United States of America.

 

(b)           No provision of this
Agreement will be interpreted in favor of, or against, any of the parties
hereto by reason of the extent to which any such party or its counsel
participated in the drafting thereof or by reason of the extent to which any
such provision is inconsistent with any prior draft hereof or thereof.

 

(c)           “Material
Adverse Effect” means, as to any person, any event, circumstance,
condition, fact, effect, or other matter that has had or would reasonably be
expected to have a material adverse effect (i) on the business, assets,
financial condition, or results of operations of such person, taken as a whole,
or (ii) on the ability of such person to perform on a timely basis any
material obligation under this Agreement or to consummate the transactions
contemplated hereby, excluding, in each of clauses (i) and (ii), the effects of
changes to the extent related to (x) conditions in the United States or global
economy or financial or capital markets generally, (y) general changes in
conditions (including changes in legal, regulatory or business conditions or
changes in GAAP) in or otherwise affecting the industries or businesses in
which the Company operates (except, in the case of (x) or (y), to the extent
that such changes materially disproportionately affect the Company compared to
the manner in which the changes affect the industries or businesses in which
the Company operates), or (z) this Agreement, the announcement or performance
hereof and the transactions and obligations contemplated hereby.

 

(d)           The phrase “to the knowledge of the Company” means the actual knowledge
of the officers, directors, and senior management of the Company.

 

(e)           “persons”
means an individual, corporation, limited liability company, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in the Exchange Act).

 

(f)            The Exhibits and Schedules
attached hereto are incorporated herein by reference as though fully set forth
herein.

 

54

 

Parent,
MergerSub, and the Company have executed and delivered this Agreement as of the
date set forth above.

 

	
   

  	
  SAWTEK
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  RALPH G. QUINSEY

  	
   

  
	
   

  	
  Name:

  	
  Ralph
  G. Quinsey

  	
   

  
	
   

  	
  Title:

  	
  President
  and CEO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TFR
  TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  KENNETH LAKIN

  	
   

  
	
   

  	
  Name:

  	
  Kenneth
  Lakin

  	
   

  
	
   

  	
  Title:

  	
  President
  and CEO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TFR
  ACQUISITION, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  RALPH G. QUINSEY

  	
   

  
	
   

  	
  Name:

  	
  Ralph
  G. Quinsey

  	
   

  
	
   

  	
  Title:

  	
  President
  and CEO

  	
   

  

 

55

 

By
execution of this signature page, TriQuint confirms that it is bound by the applicable
provisions of this Agreement and Plan of Reorganization to which this page is
attached, effective as of the effective date of this Agreement.

 

	
   

  	
  TRIQUINT
  SEMICONDUCTOR, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  RALPH G. QUINSEY

  	
   

  
	
   

  	
  Name:

  	
  Ralph
  G. Quinsey

  	
   

  
	
   

  	
  Title:

  	
  President
  and CEO

  	
   

  
	
   

  	
   

  

 

By
execution of this signature page, Shareholder Agent confirms that it is bound
by the applicable provisions of this Agreement and Plan of Reorganization to
which this page is attached, effective as of the effective date of this
Agreement.

 

	
   

  	
  Shareholder
  Agent:

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  KENNETH LAKIN

  	
   

  
	
   

  	
  Name:
  Kenneth Lakin

  	
   

  

 

By
execution of this signature page, Paying Agent confirms that it is bound by the
applicable provisions of this Agreement and Plan of Reorganization to which
this page is attached, effective as of the effective date of this Agreement.

 

	
   

  	
  Paying
  Agent:

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  KENNETH LAKIN

  	
   

  
	
   

  	
  Name:
  Kenneth Lakin

  

 

56

 

EXHIBITS

 

	
  Exhibit
  A

  	
  Articles
  of Merger

  
	
  Exhibit
  B

  	
  Articles
  of Incorporation of Surviving Corporation

  
	
  Exhibit
  C

  	
  Bylaws
  of Surviving Corporation

  

 

 

GLOSSARY OF DEFINED TERMS

 

	
  Accounts Receivable

  	
  15

  
	
  Acquisition
  Proposal

  	
  34

  
	
  Act

  	
  1

  
	
  affiliate

  	
  49

  
	
  Agreement

  	
  1

  
	
  Annual Financial Statements

  	
  12

  
	
  Articles of Merger

  	
  2

  
	
  Bank Accounts

  	
  26

  
	
  Benefit Plans

  	
  20

  
	
  Certificates

  	
  5

  
	
  Closing

  	
  2

  
	
  Closing Date

  	
  2

  
	
  Company

  	
  1

  
	
  Company Common Stock

  	
  1

  
	
  Company Consents

  	
  36

  
	
  Company Intellectual Property

  	
  27

  
	
  Company Products

  	
  28

  
	
  Company Registered Intellectual Property

  	
  28

  
	
  Company Requisite Vote

  	
  11

  
	
  Company Shareholder Meeting

  	
  34

  
	
  Company Stock Option

  	
  4

  
	
  Company Stock Option Plans

  	
  5

  
	
  Contingent Earn-Out Payment

  	
  3

  
	
  Disposal Site

  	
  23

  
	
  Dissenting Shareholders

  	
  7

  
	
  Dissenting Shares

  	
  7

  
	
  Distribution Amount

  	
  4

  
	
  Effective Time

  	
  2

  
	
  Employee Arrangements

  	
  20

  
	
  Environmental Claim

  	
  22

  
	
  Environmental Laws

  	
  22

  
	
  Environmental Permits

  	
  22

  
	
  Exchange Act

  	
  8

  
	
  Expiration Date

  	
  42

  
	
  Financial Statements

  	
  12

  
	
  Governmental Entity

  	
  8

  
	
  Hazardous Materials

  	
  22

  
	
  Hazardous Materials Activity

  	
  22

  
	
  Initial Payment

  	
  3

  
	
  Intellectual Property

  	
  27

  
	
  Interim Financial Statements

  	
  11

  
	
  Interim Statement Period

  	
  12

  

 

 

	
  IRC

  	
  24

  
	
  Law

  	
  8

  
	
  Leased Real Property

  	
  14

  
	
  Liens

  	
  10

  
	
  Losses

  	
  43

  
	
  Material Adverse Effect

  	
  49

  
	
  Material Contracts

  	
  18

  
	
  Material Customer

  	
  26

  
	
  Material Supplier

  	
  26

  
	
  Merger

  	
  2

  
	
  Merger Consideration

  	
  3

  
	
  MergerSub

  	
  1

  
	
  near relatives

  	
  18

  
	
  Officer’s Certificate

  	
  43

  
	
  Order

  	
  8

  
	
  Outstanding Shares

  	
  3

  
	
  Parent

  	
  1

  
	
  Patents

  	
  27

  
	
  Paying Agent

  	
  5

  
	
  Payment Fund

  	
  5

  
	
  Permitted Liens

  	
  14

  
	
  persons

  	
  49

  
	
  Qualifying Products

  	
  4

  
	
  Registered Intellectual Property

  	
  27

  
	
  Representatives

  	
  30

  
	
  Reserve Period

  	
  43

  
	
  Retained Employees

  	
  37

  
	
  Returns

  	
  24

  
	
  Securities Act

  	
  8

  
	
  Shareholder Agent

  	
  45

  
	
  Shareholder Consent

  	
  34

  
	
  Statement Date

  	
  12

  
	
  Subsidiary

  	
  10

  
	
  Surviving Corporation

  	
  2

  
	
  Tangible Personal Property

  	
  15

  
	
  Tax

  	
  23

  
	
  Termination Date

  	
  40

  
	
  Termination Event

  	
  40

  
	
  Third Party Claim

  	
  45

  
	
  threatened

  	
  19

  
	
  Threshold Amount

  	
  43

  
	
  to the knowledge of the Company

  	
  49

  
	
  Tranche One Payment

  	
  3

  
	
  Tranche Two Payment

  	
  3

  
	
  TriQuint

  	
  47

  
	
  Unpaid Exercise Price

  	
  38

  

 

 

	
  WARN

  	
  19

  
	
  Warranty Reserve

  	
  42

  

 

 

EXHIBIT A

(Articles of Merger)

 

	
  

  	
  Phone:

  	
   

  	
  (503) 986-2200

  	
   

  	
   

  
	
  Fax :

  	
   

  	
  (503) 378-4381

  	
   

  	
  Articles of Merger

  
	
   

  	
   

  
	
  Secretary of State

  	
  Check the appropriate box below:

  
	
  Corporation Division

  	
  ý
  MULTI ENTITY MERGER

  
	
  255 Capitol St. NE, Suite 151

  	
  (Complete only 1, 2, 3,
  4, 10, 11)

  
	
  Salem, OR 97310-1327

  	
  o
  FOR PARENT AND 90% OWNED SUBSIDIARY

  
	
  FilingInOregon.com

  	
  WITHOUT SHAREHOLDER
  APPROVAL

  
	
   

  	
   

  	
  (Complete only 5, 6, 7,
  8, 9, 10, 11)

  
	
  SURVIVOR

  	
   

  	
  FILED

  
	
  REGISTRY NUMBER:

  	
  258985-86

  	
   

  	
   

  	
  JAN 05 2004

  
	
   

  	
   

  	
  OREGON

  
	
   

  	
   

  	
  SECRETARY OF STATE

  
										

 

In accordance with Oregon Revised Statute 192.410-192.490, the
information on this application is public record.

We must release this information to all parties upon
request and it will be posted on our website.                     For
office use only

 

Please Type or Print Legibly in Black Ink. 
Attach Additional Sheet if Necessary.

 

1) NAMES
AND TYPES OF THE ENTITIES PROPOSING TO MERGE

 

	
  NAME

  	
   

  	
  TYPE

  	
   

  	
  REGISTRY NUMBER

  
	
  TFR Technologies, Inc.

  	
   

  	
  OR Corp.

  	
   

  	
  258985-86

  
	
  TFR Acquisition, Inc.

  	
   

  	
  OR Corp.

  	
   

  	
  257071-91

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  2) NAME AND TYPE OF THE SURVIVING ENTITY

  	
  TFR Technologies, Inc., an Oregon corporation

  
	
  o
  Check here if there is a name change in this plan of merger.

  

 

3) A COPY
OF THE MERGER PLAN IS ATTACHED. See ORS 60.481(2)

THE PLAN OF MERGER WAS
DULY AUTHORIZED AND APPROVED BY EACH ENTITY THAT IS A PARTY TO THE MERGER.

ý
A copy of the vote required by each entity is attached.

 

FOR PARENT AND 90% OWNED
SUBSIDIARY WITHOUT SHAREHOLDER APPROVAL.

 

	
  5) NAME OF PARENT CORPORATION

  	
   

  
	
   

  	
   

  
	
  Oregon Registry
  Number

  	
   

  
	
   

  	
   

  
	
  6) NAME OF SUBSIDIARY CORPORATION

  	
   

  
	
   

  	
   

  
	
  Oregon Registry
  Number

  	
   

  
	
   

  
	
  7) NAME OF SURVIVING CORPORATION

  	
   

  
						

 

8) COPY OF
PLAN

o
A copy of the plan of merger setting forth the manner and basis of converting
shares of the subsidiary into shares, obligations, or 

other securities of the parent corporation or any
other corporation or into cash or other property is attached.

 

	
  9) CHECK THE APPROPRIATE BOX

  
	
  o
  A copy of the plan of merger or summary was mailed to each shareholder of
  record of the subsidiary corporation

  on or before                      

  
	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
   

  

o
The mailing of a copy of the plan or summary was waived by all outstanding
shares.

 

10) EXECUTION

	
  Signature

  	
   

  	
  Printed Name

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Ralph Quinsey

  	
   

  	
  Ralph Quinsey

  	
   

  	
  President & CEO

  

 

11) CONTACT
NAME (To resolve questions with the filing.)

 

	
  Kelly Mecklem

  	
   

  	
  FEES

  
	
   

  	
   

  	
   

  
	
  DAYTIME PHONE NUMBER
  (Include area Code.)

  	
   

  	
  Required Processing Fee $50 - Conformation Copy
  (Optional) $5

  
	
   

  	
   

  	
  Processing Fees are nonrefundable.

  
	
  (503) 226-1191

  	
   

  	
  Please make
  check payable to “Corporation Division.”

  
	
   

  	
   

  	
  NOTE:

  
	
   

  	
   

  	
  Fees may be paid with VISA or MasterCard. The card
  number and expiration date should be submitted on a seperate sheet for your
  protection.

  

137 (Rev. 1/04)

 

 

Attachment
to Articles of Merger

 

Shareholder
Approval.   Shareholder
approval of the Plan of Merger was required as follows:

 

A.            TFR
Acquisition, Inc.

 

(1)           100
shares of Common Stock were outstanding and entitled to vote on the Plan of
Merger, voting as a single class.

 

(2)           100
shares of Common Stock were voted FOR the Plan of Merger, and 0 shares of
Common Stock were voted against the Plan of Merger.

 

B.            TFR
Technologies, Inc.

 

(1)           5,499,334
shares of Common Stock were outstanding and entitled to vote on the Plan of
Merger, voting as a single class.

 

(2)           5,449,334
shares of Common Stock were voted for FOR the Plan of Merger and 0 shares of
Common Stock were voted against the Plan of Merger.

 

 

Attachment to Articles of Merger

 

 

EXHIBIT B

(Articles of Incorporation of Surviving Corporation)

 

[Not Yet Drafted]

 

 

EXHIBIT C

(Bylaws of Surviving Corporation)

 

[Not Yet Drafted]

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