\n8.14 Third Parties……………………………………………………………………………… 55
\n8.15 Disclosure Letter………………………………………………………………………….. 55
\n8.16 Jurisdiction………………………………………………………………………………. 55
\n8.17 Waiver of Jury Trial……………………………………………………………………….. 55<\/p>\n GUARANTEE…………………………………………………………………………. 58
\n GLOSSARY OF DEFINED TERMS…………………………………………………………… 59
\n ANNEX I……………………………………………………………………………A-1
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
-5-<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
This Agreement and Plan of Merger (this “AGREEMENT”) is made and
\nentered into as of October 26, 1999, by and among Sigma Circuits, Inc.,
\n(“PARENT”), a Delaware company and an indirect subsidiary of Tyco International
\nLtd., a Bermuda company (“GUARANTOR”), T Merger Sub (OR), Inc., an Oregon
\ncorporation and a direct wholly owned subsidiary of Parent (“PURCHASER”), and
\nPraegitzer Industries, Inc., an Oregon corporation (the “COMPANY”).<\/p>\n
W I T N E S S E T H:<\/p>\n
WHEREAS, the respective Boards of Directors of the Company,
\nPurchaser and Parent have approved the acquisition by Purchaser of the Company;
\nand<\/p>\n
WHEREAS, in furtherance thereof, it is proposed that Purchaser
\nwill make a cash tender offer (the “OFFER”) to acquire all of the issued and
\noutstanding shares of common stock of the Company (“COMMON SHARES”), for $5.50
\nper share, or such higher price as may be paid in the Offer (the “PER SHARE
\nAMOUNT”), subject to any applicable withholding, net to the seller in cash
\nwithout interest; and<\/p>\n
WHEREAS, also in furtherance of such acquisition, the
\nrespective Boards of Directors of the Company, Purchaser and Parent have each
\napproved the merger (the “MERGER”) of Purchaser with and into the Company
\nfollowing the Offer in accordance with the laws of the State of Oregon; and<\/p>\n
WHEREAS, concurrently with the execution of this Agreement and
\nas an inducement to Parent to enter into this Agreement, Parent, Purchaser and
\nthe majority shareholder of the Company are entering into a Shareholder’s
\nAgreement pursuant to which such holder has, among other things, agreed to
\ntender all of his Common Shares in the Offer, upon the terms and subject to the
\nconditions set forth in the Shareholder’s Agreement; and<\/p>\n
WHEREAS, concurrently with the execution and delivery of this
\nAgreement, and as a condition to the Company’s willingness to enter into this
\nAgreement, Guarantor has agreed fully and unconditionally to guarantee the
\nrepresentations, warranties, covenants, agreements and other obligations of
\nParent and Purchaser in this Agreement (the “GUARANTEE”); and<\/p>\n
WHEREAS, the Board of Directors of the Company has approved
\nand resolved to recommend acceptance of the Offer and the Merger to the holders
\nof Common Shares and has determined that the consideration to be paid for each
\nShare in the Offer and the Merger is fair to and in the best interest of the
\nholders of Common Shares and to recommend that the holders of such Common Shares
\naccept the Offer and that the holders of Common Shares approve this Agreement
\nand the transactions contemplated hereby; and<\/p>\n
-6-<\/p>\n
WHEREAS, the Company, Purchaser and Parent desire to make
\ncertain representations, warranties and agreements in connection with, and
\nestablish various conditions precedent to, the transactions contemplated hereby;<\/p>\n
NOW, THEREFORE, in consideration of the premises and the
\nrepresentations, warranties, covenants and agreements hereinafter set forth, the
\nparties hereto agree as follows:<\/p>\n
ARTICLE I
\n TENDER OFFER AND MERGER<\/p>\n
1.1 THE OFFER. (a) Provided that this Agreement shall not have
\nbeen terminated in accordance with SECTION 7.1 hereof and that none of the
\nevents set forth in ANNEX I hereto shall have occurred and be existing,
\nPurchaser shall commence (within the meaning of Rule 14d-2 under the Securities
\nExchange Act of 1934, as amended, and the rules and regulations thereunder (the
\n“SECURITIES EXCHANGE ACT”)) the Offer as promptly as practicable, but in no
\nevent later than five business days following the first public announcement of
\nthe Offer, and shall use reasonable best efforts to consummate the Offer. The
\nobligation of Purchaser to accept for payment any Common Shares tendered shall
\nbe subject to the satisfaction of only those conditions set forth in ANNEX I
\nhereto. The Per Share Amount payable in the Offer shall be net to each seller in
\ncash, subject to reduction only for any applicable withholding or stock transfer
\ntaxes payable by such seller. The Company agrees that no Common Shares held by
\nthe Company or any Company Subsidiaries (as defined below) will be tendered
\npursuant to the Offer.<\/p>\n
(b) Without the prior written consent of the Company,
\nPurchaser shall not (i) decrease the Per Share Amount or change the form of
\nconsideration payable in the Offer, (ii) decrease the number of Common Shares
\nsought in the Offer, (iii) amend or waive satisfaction of the Minimum Condition
\n(as defined in ANNEX I hereto) or (iv) impose additional conditions to the Offer
\nor amend any other term of the Offer in any manner adverse to the holders of the
\nCommon Shares. The Offer shall initially expire twenty (20) business days after
\nthe date of its commencement, unless this Agreement is terminated in accordance
\nwith SECTION 7.1 hereof, in which case the Offer (whether or not previously
\nextended in accordance with the terms hereof) shall expire on such date of
\ntermination. Purchaser agrees that it shall not terminate or withdraw the Offer
\nor extend the expiration date of the Offer unless at the expiration date of the
\nOffer the conditions to the Offer described in ANNEX I hereto shall not have
\nbeen satisfied or earlier waived. Notwithstanding the foregoing, Purchaser may,
\nwithout the consent of the Company, extend the Offer at any time, and from time
\nto time, (i) if at the then scheduled expiration date of the Offer any of the
\nconditions to Purchaser’s obligation to accept for payment and pay for Common
\nShares shall not have been satisfied or waived, until such time as such
\nconditions are satisfied or waived; (ii) for any period required by any rule,
\nregulation, interpretation or position of the Securities and Exchange Commission
\n(the “SEC”) or its staff applicable to the Offer; or (iii) if all conditions to
\nPurchaser’s<\/p>\n
-7-<\/p>\n
obligation to accept for payment and pay for Common Shares are satisfied or
\nwaived but the number of Common Shares tendered is less than 90% of the then
\noutstanding number of Common Shares, for an aggregate period of not more than
\nten (10) business days (for all such extensions) beyond the latest expiration
\ndate that would be permitted under clause (i) or (ii) of this sentence.<\/p>\n
(c) The Offer shall be made by means of an offer to purchase
\n(the “OFFER TO PURCHASE”) having only the conditions set forth in ANNEX I
\nhereto. As soon as practicable on the date the Offer is commenced, Purchaser
\nshall file with the SEC a Tender Offer Statement on Schedule 14D-1 (together
\nwith all amendments and supplements thereto, the “SCHEDULE 14D-1”) with respect
\nto the Offer that will comply in all material respects with the provisions of,
\nand satisfy in all material respects the requirements of, such Schedule 14D-1
\nand all applicable federal securities laws and will contain (including as an
\nexhibit) or incorporate by reference the Offer to Purchase and forms of the
\nrelated letter of transmittal and summary advertisement (which documents,
\ntogether with any supplements or amendments thereto, and any other SEC schedule
\nor form which is filed in connection with the Offer and related transactions,
\nare referred to collectively herein as the “OFFER DOCUMENTS”). Each of Parent,
\nPurchaser and the Company agrees promptly to correct any information provided by
\nit for use in the Schedule 14D-1 or the Offer Documents if and to the extent
\nthat such information shall have become false or misleading in any material
\nrespect and to supplement the information provided by it specifically for use in
\nthe Schedule 14D-1 or the Offer Documents to include any information that shall
\nbecome necessary in order to make the statements therein, in light of the
\ncircumstances under which they were made, not misleading, and Purchaser further
\nagrees to take all steps necessary to cause the Schedule 14D-1, as so corrected
\nor supplemented, to be filed with the SEC and the Offer Documents, as so
\ncorrected or supplemented, to be disseminated to holders of Common Shares, in
\neach case as and to the extent required by applicable federal securities laws.
\nThe Company and its counsel shall be given a reasonable opportunity to review
\nand comment on any Offer Documents before they are filed with the SEC, and
\nParent and Purchaser shall consider any such comments in good faith.<\/p>\n
(d) Upon the terms and subject to the conditions of the Offer,
\nPurchaser shall accept for payment and pay for Common Shares as soon as
\npermitted under the terms of the Offer and applicable law.<\/p>\n
1.2 COMPANY ACTION. (a) The Company hereby approves and
\nconsents to the Offer and represents and warrants that the Board of Directors of
\nthe Company, at a meeting duly called and held on October 25, 1999, at which all
\nof the Directors was present, duly approved and adopted this Agreement and the
\ntransactions contemplated hereby, including the Offer and the Merger,
\nrecommended that shareholders of the Company accept the Offer, tender their
\nCommon Shares pursuant to the Offer and approve this Agreement and the
\ntransactions contemplated hereby, including the Merger, and determined that this
\nAgreement and the transactions contemplated hereby, including the Offer and the
\nMerger, are fair<\/p>\n
-8-<\/p>\n
to and in the best interests of the shareholders of the Company. The Company
\nhereby consents to the inclusion in the Offer Documents of such recommendation
\nof the Board of Directors of the Company. The Company represents that its Board
\nof Directors has received the written opinion (the “FAIRNESS OPINION”) of Adams,
\nHarkness & Hill, Inc. (the “FINANCIAL ADVISOR”) that the proposed consideration
\nto be received by the holders of Common Shares pursuant to the Offer and the
\nMerger is fair to such holders from a financial point of view. The Company has
\nbeen authorized by the Financial Advisor to permit, subject to the prior review
\nand consent by the Financial Advisor (such consent not to be unreasonably
\nwithheld), the inclusion of the Fairness Opinion (or a reference thereto) in the
\nOffer Documents, the Schedule 14D-9 (as hereinafter defined) and the Proxy
\nStatement (as hereinafter defined).<\/p>\n
(b) The Company shall file with the SEC, as promptly as
\npracticable after the filing by Parent of the Schedule 14D-1 with respect to the
\nOffer, a Tender Offer Solicitation\/ Recommendation Statement on Schedule 14D-9
\n(together with any amendments or supplements thereto, the “SCHEDULE 14D-9”) that
\nwill comply in all material respects with the provisions of all applicable
\nfederal securities laws. The Company shall mail such Schedule 14D-9 to the
\nshareholders of the Company as promptly as practicable after the commencement of
\nthe Offer. The Schedule 14D-9 and the Offer Documents shall contain the
\nrecommendations of the Board of Directors of the Company described in SECTION
\n1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if and
\nto the extent that it shall become false or misleading in any material respect
\n(and each of Parent and Purchaser, with respect to written information supplied
\nby it specifically for use in the Schedule 14D-9, shall promptly notify the
\nCompany of any required corrections of such information and cooperate with the
\nCompany with respect to correcting such information) and to supplement the
\ninformation contained in the Schedule 14D-9 to include any information that
\nshall become necessary in order to make the statements therein, in light of the
\ncircumstances under which they were made, not misleading, and the Company shall
\ntake all steps necessary to cause the Schedule 14D-9 as so corrected or
\nsupplemented to be filed with the SEC and disseminated to holders of Common
\nShares to the extent required by applicable federal securities laws. Purchaser
\nand its counsel shall be given a reasonable opportunity to review and comment on
\nthe Schedule 14D-9 before it is filed with the SEC, and the Company shall
\nconsider any such comments in good faith.<\/p>\n
(c) In connection with the Offer, the Company shall promptly
\nupon execution of this Agreement furnish Purchaser with mailing labels
\ncontaining the names and addresses of all record holders of Common Shares and
\nsecurity position listings of Common Shares held in stock depositories, each as
\nof a recent date, and shall promptly furnish Purchaser with such additional
\ninformation reasonably available to the Company, including updated lists of
\nshareholders, mailing labels and security position listings, and such other
\ninformation and assistance as Purchaser or its agents may reasonably request for
\nthe purpose of communicating the Offer to the record and beneficial holders of
\nCommon Shares. Subject to the requirements of applicable law and except as
\nnecessary to disseminate the Offer Documents and otherwise for the purpose of
\neffecting the transactions contemplated hereby,<\/p>\n
-9-<\/p>\n
Parent and Purchaser shall hold in confidence the materials furnished pursuant
\nto this SECTION 1.2(c), use such information only in connection with the Offer,
\nthe Merger and the other transactions contemplated by this Agreement and, if
\nthis Agreement is terminated, as promptly as practicable return to the Company
\nsuch materials and all copies thereof in the possession of Parent and Purchaser.<\/p>\n
1.3 DIRECTORS. Promptly upon the purchase by Parent of Common
\nShares pursuant to the Offer (and provided that the Minimum Condition has been
\nsatisfied), Parent shall be entitled to designate such number of directors,
\nrounded up to the next whole number, on the Board of Directors of the Company as
\nwill give Parent, subject to compliance with Section 14(f) of the Securities
\nExchange Act, representation on the Board of Directors of the Company equal to
\nat least that number of directors which equals the product of the total number
\nof directors on the Board of Directors of the Company (giving effect to the
\ndirectors appointed or elected pursuant to this sentence and including current
\ndirectors serving as officers of the Company) multiplied by the percentage that
\nthe aggregate number of Common Shares beneficially owned by Parent or any
\naffiliate of Parent (including for purposes of this SECTION 1.3 such Common
\nShares as are accepted for payment pursuant to the Offer, but excluding Common
\nShares held by the Company) bears to the number of Common Shares outstanding. At
\nsuch time, if requested by Parent, the Company will also cause each committee of
\nthe Board of Directors of the Company to include persons designated by Parent
\nconstituting the same percentage of each such committee as Parent’s designees
\nare of the Board of Directors of the Company. The Company shall, upon request by
\nParent, promptly increase the size of the Board of Directors of the Company or
\nexercise reasonable best efforts to secure the resignations of such number of
\ndirectors as is necessary to enable Parent’s designees to be elected to the
\nBoard of Directors of the Company in accordance with the terms of this SECTION
\n1.3 and to cause Parent’s designees so to be elected; PROVIDED, HOWEVER, that,
\nin the event that Parent’s designees are appointed or elected to the Board of
\nDirectors of the Company, until the Effective Time (as hereinafter defined) the
\nBoard of Directors of the Company shall have at least two directors who are
\ndirectors on the date hereof, one of whom will be Robert Praegitzer and one of
\nwhom will be a director who is neither an officer of the Company nor a designee,
\nshareholder, affiliate or associate (within the meaning of the federal
\nsecurities laws) of Guarantor (such directors, the “INDEPENDENT DIRECTORS”).
\nSubject to applicable law, the Company shall promptly take all action necessary
\npursuant to Section 14(f) of the Securities Exchange Act and Rule 14f-1
\npromulgated thereunder in order to fulfill its obligations under this SECTION
\n1.3 and shall include in the Schedule 14D-9 mailed to shareholders promptly
\nafter the commencement of the Offer (or in an amendment thereof or an
\ninformation statement pursuant to Rule 14f-1 if Parent has not theretofore
\ndesignated directors) such information with respect to the Company and its
\nofficers and directors as is required under Section 14(f) and Rule 14f-1 in
\norder to fulfill its obligations under this SECTION 1.3. Parent will supply the
\nCompany, and be solely responsible for, any information with respect to itself
\nand its nominees, officers, directors and affiliates required by such Section
\n14(f) and Rule 14f-1. Notwithstanding anything in this Agreement to the
\ncontrary, subsequent to the designation of the directors by Parent referred to
\nin the first sentence of this<\/p>\n
-10-<\/p>\n
Section 1.3 and prior to the Effective Time, the unanimous vote of the
\nIndependent Directors shall be required to (i) amend or terminate this Agreement
\non behalf of the Company, (ii) exercise or waive any of the Company’s rights or
\nremedies hereunder, (iii) extend the time for performance of Parent’s
\nobligations hereunder, (iv) take any other action by the Company in connection
\nwith this Agreement required to be taken by the Board of Directors of the
\nCompany or (v) amend the Company’s Second Amended and Restated Articles of
\nIncorporation or the Company’s Bylaws, each as in effect on the date of this
\nAgreement.<\/p>\n
1.4 THE MERGER. Upon the terms and subject to the conditions
\nof this Agreement, the Merger shall be consummated in accordance with the Oregon
\nBusiness Corporation Act (the “OREGON CODE”). At the Effective Time (as defined
\nin SECTION 1.5 hereof), upon the terms and subject to the conditions of this
\nAgreement, Purchaser shall be merged with and into the Company in accordance
\nwith the Oregon Code and the separate existence of Purchaser shall thereupon
\ncease, and the Company, as the surviving corporation in the Merger (the
\n“SURVIVING CORPORATION”), shall continue its corporate existence under the laws
\nof the State of Oregon as an indirect subsidiary of Parent. The parties shall
\nprepare and execute articles of merger (the “ARTICLES OF MERGER”) that comply in
\nall respects with the requirements of the Oregon Code and with the provisions of
\nthis Agreement.<\/p>\n
1.5 EFFECTIVE TIME. The Merger shall become effective at the
\ntime of the filing of the Articles of Merger with the Secretary of State of
\nOregon in accordance with the applicable provisions of the Oregon Code or at
\nsuch later time as may be specified in the Articles of Merger. As soon as
\npracticable after all of the conditions set forth in ARTICLE VI of this
\nAgreement have been satisfied or waived by the party or parties entitled to the
\nbenefit of the same, the parties hereto shall cause the Merger to become
\neffective. Parent and the Company shall mutually determine the time of such
\nfiling and the place where the closing of the Merger (the “CLOSING”) shall
\noccur. The time when the Merger shall become effective is herein referred to as
\nthe “EFFECTIVE TIME,” and the date on which the Effective Time occurs is herein
\nreferred to as the “CLOSING DATE.”<\/p>\n
1.6 CONVERSION OF COMMON SHARES. At the Effective Time, by
\nvirtue of the Merger and without any action on the part of Purchaser, the
\nCompany or the holder of any of the securities specified below:<\/p>\n
(a) Each Common Share issued and outstanding immediately
\nbefore the Effective Time (other than any Dissenting Shares (as hereinafter
\ndefined) and Common Shares to be canceled pursuant to SECTION 1.6(b)) shall be
\ncanceled and extinguished and be converted into the right to receive the Per
\nShare Amount in cash payable to the holder thereof, without interest, upon
\nsurrender of the certificate representing such Common Share in accordance with
\nSECTION 1.8 hereof. From and after the Effective Time, the holders of
\ncertificates evidencing ownership of Common Shares outstanding immediately prior
\nto the Effective Time shall cease to have any rights with respect to such Common
\nShares except as otherwise provided for herein or by applicable Law (as defined
\nbelow).<\/p>\n
-11-<\/p>\n
(b) Each Common Share owned by Guarantor, Parent, Purchaser or
\nany direct or indirect wholly owned subsidiary of Guarantor immediately before
\nthe Effective Time shall be canceled and extinguished, and no payment or other
\nconsideration shall be made with respect thereto.<\/p>\n
(c) The shares of Purchaser common stock outstanding
\nimmediately prior to the Merger shall be converted into 1,000 shares of the
\ncommon stock of the Surviving Corporation (the “SURVIVING CORPORATION COMMON
\nSTOCK”), which shares of the Surviving Corporation Common Stock shall constitute
\nall of the issued and outstanding capital stock of the Surviving Corporation and
\nshall be owned by Parent.<\/p>\n
1.7 DISSENTING SHARES. (a) Notwithstanding any provision of
\nthis Agreement to the contrary, any Common Shares issued and outstanding
\nimmediately prior to the Effective Time and held by a holder who has demanded
\nand perfected his demand for appraisal of his Common Shares in accordance with
\nthe Oregon Code (including but not limited to Sections 60.561 – 60.581 thereof),
\nand as of the Effective Time has neither effectively withdrawn nor lost his
\nright to such appraisal (“DISSENTING SHARES”), shall not be converted into or
\nrepresent a right to receive cash pursuant to SECTION 1.6 hereof, but the holder
\nthereof shall be entitled to only such rights as are granted by the Oregon Code.<\/p>\n
(b) Notwithstanding the provisions of SECTION 1.7(a) hereof,
\nif any holder of Common Shares who demands appraisal of his Common Shares under
\nthe Oregon Code shall effectively withdraw or lose (through failure to perfect
\nor otherwise) his right to appraisal, then as of the Effective Time or the
\noccurrence of such event, whichever occurs later, such holder’s Common Shares
\nshall automatically be converted into and represent only the right to receive
\ncash as provided in SECTION 1.6 hereof, without interest thereon, upon surrender
\nof the certificate or certificates representing such Common Shares.<\/p>\n
(c) The Company shall give Purchaser (i) prompt notice of any
\nwritten demands for appraisal or payment of the fair value of any Common Shares,
\nwithdrawals of such demands and any other instruments served pursuant to the
\nOregon Code received by the Company after the date hereof and (ii) the
\nopportunity to direct all negotiations and proceedings with respect to demands
\nfor appraisal under the Oregon Code. The Company shall not voluntarily make any
\npayment with respect to any demands for appraisal and shall not, except with the
\nprior written consent of Purchaser, settle or offer to settle any such demands.<\/p>\n
1.8 SURRENDER OF COMMON SHARES. (a) Prior to the Effective
\nTime, Purchaser shall appoint ChaseMellon Shareholder Services, L.L.C. or such
\nother commercial bank or trust company designated by Purchaser and reasonably
\nacceptable to the Company to act as exchange agent hereunder (the “EXCHANGE
\nAGENT”) for the payment of the Per Share Amount upon surrender of certificates
\nrepresenting the Common Shares. All of the fees and<\/p>\n
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expenses of the Exchange Agent shall be borne by Purchaser.<\/p>\n
(b) Parent shall cause the Surviving Corporation to provide
\nthe Exchange Agent with cash in amounts necessary to pay for all of the Common
\nShares pursuant to SECTION 1.8(c) hereof when and as such amounts are needed by
\nthe Exchange Agent.<\/p>\n
(c) On the Closing Date, Purchaser shall instruct the Exchange
\nAgent to mail to each holder of record of a certificate representing any Common
\nShares canceled upon the Merger pursuant to SECTIONS 1.6(a) hereof, within five
\nbusiness days of receiving from the Company a list of such holders of record,
\n(i) a letter of transmittal (which shall specify that delivery shall be
\neffected, and risk of loss and title to the certificates shall pass, only upon
\ndelivery of the certificates to the Exchange Agent and shall be in such form and
\nhave such other provisions as Parent may reasonably specify) and (ii)
\ninstructions for use in effecting the surrender of the certificates. Each holder
\nof a certificate or certificates representing any Common Shares canceled upon
\nthe Merger pursuant to SECTIONS 1.6(a) hereof may thereafter surrender such
\ncertificate or certificates to the Exchange Agent, as agent for such holder, to
\neffect the surrender of such certificate or certificates on such holder’s behalf
\nfor a period ending one year after the Effective Time. Upon the surrender of
\ncertificates representing the Common Shares, Parent shall cause the Exchange
\nAgent to pay the holder of such certificates in exchange therefor cash in an
\namount equal to the Per Share Amount multiplied by the number of Common Shares
\nrepresented by such certificate. Until so surrendered, each such certificate
\n(other than certificates representing Dissenting Shares) shall represent solely
\nthe right to receive the aggregate Per Share Amount relating thereto.<\/p>\n
(d) If payment of cash in respect of canceled Common Shares is
\nto be made to a person other than the person in whose name a surrendered
\ncertificate or instrument is registered, it shall be a condition to such payment
\nthat the certificate or instrument so surrendered shall be properly endorsed or
\nshall be otherwise in proper form for transfer and that the person requesting
\nsuch payment shall have paid any transfer and other taxes required by reason of
\nsuch payment in a name other than that of the registered holder of the
\ncertificate or instrument surrendered or shall have established to the
\nsatisfaction of Parent or the Exchange Agent that such tax either has been paid
\nor is not payable.<\/p>\n
(e) At the Effective Time, the stock transfer books of the
\nCompany shall be closed, and no transfer of Common Shares shall be made
\nthereafter, other than transfers of Common Shares that have occurred prior to
\nthe Effective Time. In the event that, after the Effective Time, certificates
\nare presented to the Surviving Corporation, they shall be canceled and exchanged
\nfor cash as provided in SECTIONS 1.6(a).<\/p>\n
(f) The Per Share Amount paid in the Merger shall be net to
\nthe holder of Common Shares in cash, and without interest thereon subject to
\nreduction only for any applicable withholding or stock transfer taxes payable by
\nsuch holder.<\/p>\n
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(g) Promptly following the date which is one year after the
\nEffective Time, the Exchange Agent shall deliver to Parent all cash,
\ncertificates and other documents in its possession relating to the transactions
\ncontemplated hereby, and the Exchange Agent’s duties shall terminate.
\nThereafter, each holder of a certificate representing Common Shares (other than
\ncertificates representing Dissenting Shares and certificates representing Common
\nShares held directly or indirectly by Purchaser, Parent or Guarantor) may
\nsurrender such certificate to the Surviving Corporation and (subject to any
\napplicable abandoned property, escheat or similar law) receive in consideration
\ntherefor the aggregate Per Share Amount relating thereto, without any interest
\nthereon.<\/p>\n
(h) None of the Company, Parent, Purchaser, Guarantor, the
\nSurviving Corporation or the Exchange Agent shall be liable to any holder of
\nCommon Shares for any cash delivered to a public official pursuant to any
\nabandoned property, escheat or similar law, rule, regulation, statute, order,
\njudgment or decree.<\/p>\n
1.9 OPTIONS, WARRANTS AND EMPLOYEE STOCK PURCHASE PLAN. (a)
\nEach option outstanding immediately prior to the Effective Time to purchase
\nCommon Shares (a “COMPANY OPTION”) under the Company’s 1995 Stock Incentive Plan
\nor any other stock option plan or agreement of the Company, whether or not then
\nvested or exercisable, shall constitute the right to receive an amount in cash
\nequal to the positive difference, if any, between the Per Share Amount and the
\nexercise price of the Company Option multiplied by the number of Common Shares
\nfor which the Company Option was exercisable immediately prior to the Effective
\nTime, subject to reduction only for any applicable withholding taxes. The
\nCompany shall provide a period of at least 30 days prior to the Effective Time
\nduring which Company Options may be exercised to the extent exercisable at the
\nEffective Time and, upon the expiration of such period, all unexercised Company
\nOptions shall immediately terminate. The Company may, in its sole discretion,
\npermit holders of Company Options that are not exercisable before the Effective
\nTime to exchange such options for cash as described in the first sentence of
\nthis Section 1.9(a). In lieu of exercising Company Options as described in this
\nSection 1.9(a), the holders shall be given the right, and the Company shall
\nencourage the holders of Company Options to exercise such right, to exchange
\nsuch options for cash as described in the first sentence of this Section 1.9(a).
\nIn no event will any Company Options be exercisable after the Effective Time,
\nexcept to receive cash as provided in the first sentence of this Section 1.9(a).<\/p>\n
(b) Each of the warrants of the Company, dated November 17,
\n1995, to purchase Common Shares at a price of $12.00 per share, subject to
\nadjustment (the “COMPANY WARRANTS”), shall be exercisable, from and after the
\nEffective Time, for an amount of cash equal to the Per Share Amount multiplied
\nby the number of Common Shares for which such warrant was exercisable
\nimmediately prior to the Effective Time. Except as aforesaid, the exercise of
\nany Company Warrant shall remain subject to all terms and conditions provided in
\nthe applicable Company Warrant and\/or Warrant Agreement. Each of the Company and
\nParent shall take all action necessary to provide that, upon consummation<\/p>\n
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of the Merger, all Company Warrants outstanding immediately prior to the
\nEffective Time shall be exercisable for a cash amount as aforesaid.<\/p>\n
(c) The Company shall take such action as is necessary to
\ncause the ending date of the then current offering period under the Company’s
\nemployee stock purchase plan (the “COMPANY STOCK PURCHASE PLAN”) to be prior to
\nthe Effective Time and to terminate such plan as of the Effective Time.<\/p>\n
1.10 ARTICLES OF INCORPORATION AND BYLAWS. Subject to SECTION
\n5.5 hereof, unless otherwise determined by Parent prior to the Effective Time,
\nat and after the Effective Time (a) the Second Amended and Restated Articles of
\nIncorporation of the Company, as in effect immediately prior to the Effective
\nTime, shall be the Articles of Incorporation of the Surviving Corporation until
\nthereafter amended as provided by the Oregon Code and such Articles of
\nIncorporation; PROVIDED, HOWEVER, that (i) Article II shall be amended and
\nrestated in its entirety to provide that the capital stock of the Surviving
\nCorporation shall consist solely of 1,000 shares of common stock; and (b) the
\nBylaws of the Surviving Corporation shall be the Bylaws of Purchaser in effect
\nat the Effective Time (subject to any subsequent amendments).<\/p>\n
1.11 DIRECTORS AND OFFICERS. At and after the Effective Time,
\nthe directors of Purchaser immediately prior to the Effective Time shall be the
\ninitial directors of the Surviving Corporation, and the officers of the Company
\nimmediately prior to the Effective Time shall be the initial officers of the
\nSurviving Corporation, in each case until their successors are duly elected or
\nappointed and qualified.<\/p>\n
1.12 OTHER EFFECTS OF MERGER. The Merger shall have all
\nfurther effects as specified in the applicable provisions of the Oregon Code.<\/p>\n
1.13 PROXY STATEMENT. (a) Following the consummation of the
\nOffer and if required by the Securities Exchange Act because of action by the
\nCompany’s shareholders necessary in order to consummate the Merger, the Company
\nshall prepare and file with the SEC and, when cleared by the SEC, shall mail to
\nshareholders, a proxy statement in connection with a meeting of the Company’s
\nshareholders to vote upon the adoption of this Agreement and the Merger and the
\ntransactions contemplated hereby and thereby (the “COMPANY PROPOSALS”), or an
\ninformation statement, as appropriate, satisfying all requirements of the
\nSecurities Exchange Act (such proxy or information statement in the form mailed
\nby the Company to its shareholders, together with any and all amendments or
\nsupplements thereto, is herein referred to as the “PROXY STATEMENT”).<\/p>\n
(b) Parent will furnish the Company with such information
\nconcerning Parent and its subsidiaries as is necessary in order to cause the
\nProxy Statement, insofar as it relates to Parent and its subsidiaries, to comply
\nwith applicable Law. Parent agrees promptly to advise the Company if, at any
\ntime prior to the meeting of shareholders of the Company<\/p>\n
-15-<\/p>\n
referenced herein, any Parent Information (as defined below) in the Proxy
\nStatement is or becomes incorrect or incomplete in any material respect and to
\nprovide the Company with the information needed to correct such inaccuracy or
\nomission. Parent will furnish the Company with such supplemental information as
\nmay be necessary in order to cause the Proxy Statement, insofar as it relates to
\nGuarantor and its subsidiaries, to comply with applicable Law after the mailing
\nthereof to the shareholders of the Company.<\/p>\n
(c) The Company and Parent agree to cooperate in making any
\npreliminary filings of the Proxy Statement with the SEC, as promptly as
\npracticable, pursuant to Rule 14a-6 or Rule 14c-5, as applicable, under the
\nSecurities Exchange Act.<\/p>\n
(d) The Company shall provide Parent for its review a copy of
\nthe Proxy Statement prior to each filing thereof, with reasonable time and
\nopportunity for such review. Parent authorizes the Company to utilize in the
\nProxy Statement the information concerning Parent and its subsidiaries provided
\nto the Company in connection with, or contained in, the Proxy Statement.<\/p>\n
1.14 ADDITIONAL ACTIONS. If, at any time after the Effective
\nTime, the Surviving Corporation shall consider or be advised that any deeds,
\nbills of sale, assignments, assurances or any other actions or things are
\nnecessary or desirable to vest, perfect or confirm of record or otherwise in the
\nSurviving Corporation its right, title or interest in, to or under any of the
\nrights, properties or assets of Purchaser or the Company or otherwise to carry
\nout this Agreement, the officers and directors of the Company and Purchaser
\nshall be authorized to execute and deliver, in the name and on behalf of
\nPurchaser or the Company, all such deeds, bills of sale, assignments and
\nassurances and to take and do, in the name and on behalf of Purchaser or the
\nCompany, all such other actions and things as may be necessary or desirable to
\nvest, perfect or confirm any and all right, title and interest in, to and under
\nsuch rights, properties or assets in the Surviving Corporation or otherwise to
\ncarry out this Agreement.<\/p>\n
1.15 MERGER WITHOUT MEETING OF SHAREHOLDERS. Notwithstanding
\nthe foregoing provisions of this ARTICLE I, in the event that Purchaser, or any
\nother direct or indirect subsidiary of Parent, shall acquire at least 90 percent
\nof the outstanding Common Shares, the parties hereto agree to take all necessary
\nand appropriate action to cause the Merger to become effective as soon as
\npracticable after the expiration of the Offer without a meeting of shareholders
\nof the Company, in accordance with Section 60.491 of the Oregon Code.<\/p>\n
1.16 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
\ncertificates representing shares of Common Shares shall have been lost, stolen
\nor destroyed, the Exchange Agent shall make such payment in exchange for such
\nlost, stolen or destroyed certificates upon the making of an affidavit of that
\nfact by the holder thereof; PROVIDED, HOWEVER, that Parent may, in its
\ndiscretion and as a condition precedent to the issuance<\/p>\n
-16-<\/p>\n
thereof, require the owner of such lost, stolen or destroyed certificates to
\ndeliver a bond in such sum as it may reasonably direct as indemnity against any
\nclaim that may be made against Parent or the Exchange Agent with respect to the
\ncertificates alleged to have been lost, stolen or destroyed.<\/p>\n
1.17 MATERIAL ADVERSE EFFECT. (a) When used in connection with
\nthe Company or any Company Subsidiaries (as defined below) or Parent, Guarantor
\nor any of their respective subsidiaries, as the case may be, the term “MATERIAL
\nADVERSE EFFECT” means any change, effect or circumstance that, individually or
\nwhen taken together with all other similar changes, effects or circumstances
\nthat have occurred during the period relevant to the determination of such
\nMaterial Adverse Effect, is or is reasonably likely to be materially adverse to
\nthe business, assets (including intangible assets), financial condition or
\nresults of operations of the Company and any Company Subsidiaries or Parent,
\nGuarantor and their respective subsidiaries, as the case may be, in each case
\ntaken as a whole; PROVIDED, HOWEVER, that effects of changes that are applicable
\nto or arise on account of (A) any changes in economic, regulatory, or political
\nconditions generally, (B) the United States securities markets, (C) this
\nAgreement or the transactions contemplated by this Agreement and (D) the effect
\nof the public announcement of the transactions contemplated hereby, including
\nany effect on customers or employees of the Company, shall be excluded from the
\ndefinition of “Material Adverse Effect” and from any determination as to whether
\na Material Adverse Effect has occurred or may occur.<\/p>\n
(b) The failure of a representation or warranty to be true and
\ncorrect, either individually or together with the failure of other
\nrepresentations or warranties to be true and correct, shall be deemed to have a
\nMaterial Adverse Effect if (x) the business, assets (including intangible
\nassets), financial condition, results of operations, or prospects of the Company
\nand its subsidiaries or Parent or Guarantor and their subsidiaries, as the case
\nmay be, in each case taken as a whole, are or would reasonably be expected to be
\nmaterially worse than if such representation or warranty had been true and
\ncorrect, (y) in the case of the Company, such representation or warranty
\nmaterially misstates the capitalization of the Company and\/or its subsidiaries
\nor (z) the failure of such representation or warranty to be true and correct
\nmaterially and adversely affects the ability of the Company or Parent, as the
\ncase may be, to timely consummate the transactions contemplated by this
\nAgreement.<\/p>\n
ARTICLE II
\n REPRESENTATIONS AND WARRANTIES OF THE COMPANY<\/p>\n
The Company represents and warrants to Parent and Purchaser
\nthat, except as set forth in the correspondingly numbered Sections of the
\nletter, dated the date hereof, from the Company to Parent (the “COMPANY
\nDISCLOSURE LETTER”):<\/p>\n
-17-<\/p>\n
2.1 ORGANIZATION AND GOOD STANDING. The Company and each of
\nthe Company Subsidiaries is a corporation duly organized, validly existing and
\nin good standing under the laws of the jurisdiction of its incorporation and has
\nall requisite corporate power and authority to own, lease and operate its
\nproperties and to carry on its business as now being conducted. The Company and
\neach of the Company Subsidiaries is duly qualified or licensed and in good
\nstanding to do business in each jurisdiction in which the character of the
\nproperty owned, leased or operated by it or the nature of the business conducted
\nby it makes such qualification or licensing necessary, except where the failure
\nto be so duly qualified or licensed and in good standing would not reasonably be
\nexpected to have a Material Adverse Effect. The Company has heretofore made
\navailable to Parent accurate and complete copies of the Articles of
\nIncorporation and Bylaws, as currently in effect, of the Company. For purposes
\nof this Agreement, the term “COMPANY SUBSIDIARY” shall mean any “subsidiary” (as
\nsuch term is defined in Rule 1-02 of Regulation S-X of the SEC) of the Company.<\/p>\n
2.2 CAPITALIZATION. As of the date hereof, the authorized
\ncapital stock of the Company consists of (A) 50,000,000 Common Shares and (B)
\n500,000 shares of preferred stock (the “PREFERRED SHARES”). As of October 22,
\n1999, (i) 13,129,751 Common Shares were issued and outstanding, (ii) no shares
\nof Preferred Shares were issued and outstanding, (iii) 1,809,550 Common Shares
\nwere reserved for future issuance pursuant to outstanding Company Options, of
\nwhich 752,431 shares are or will be exercisable before March 1, 2000 and 546,750
\nshares become exercisable on or after that date at prices below $5.50 per share,
\n(iv) no Common Shares were reserved for future issuance pursuant to the Company
\nStock Purchase Plan, (v) 46,333 shares of Common Shares were reserved for future
\nissuance upon exercise of Company Warrants, (vi) 1,743,559 Common Shares were
\nreserved for future issuance upon exercise of the conversion rights contained in
\nthat certain Deferral Loan and Lease Modification Agreement dated as of October
\n12, 1999 among the Company and the lenders and lessors named therein (the
\n“Deferral Agreement”) (as of the date of this Agreement the Company has received
\nno notice of intent to exercise such conversion rights) and (vii) 1,381,382
\nCommon Shares reserved for issuance upon the conversion of the Company’s 9%
\nConvertible Subordinated Notes due December 29, 2008 (the “NOTES”). No material
\nchange in the capitalization of the Company has occurred between October 22,
\n1999 and the date hereof. No other capital stock of the Company is authorized or
\nissued. All issued and outstanding Common Shares are duly authorized, validly
\nissued, fully paid and non-assessable. Except as set forth in the Company
\nSecurities Filings (as hereinafter defined) filed prior to the date of this
\nAgreement or as otherwise contemplated by this Agreement, as of the date hereof,
\nthere are no outstanding rights, subscriptions, warrants, puts, calls,
\nunsatisfied preemptive rights, options or other agreements of any kind relating
\nto any of the outstanding, authorized but unissued shares of the capital stock
\nor any other security of the Company, and there is no authorized or outstanding
\nsecurity of any kind convertible into or exchangeable for any such capital stock
\nor other security. Except as disclosed in the Company Securities Filings filed
\nprior to the date of this Agreement, there are no obligations, contingent or
\nother, of the Company or any Company Subsidiary to repurchase, redeem or
\notherwise acquire any shares of Common Shares or the capital stock of any
\nCompany<\/p>\n
-18-<\/p>\n
Subsidiary or to provide funds to or make any investment (in the form of a loan,
\ncapital contribution or otherwise) in any such Company Subsidiary or any other
\nentity.<\/p>\n
2.3 SUBSIDIARIES. Section 2.3 of the Company Disclosure Letter
\nsets forth the name and jurisdiction of incorporation of each Company
\nSubsidiary, each of which is wholly owned by the Company except as otherwise
\nindicated in said Section 2.3 of the Company Disclosure Letter. Except as set
\nforth in Section 2.3 of the Company Disclosure Letter, all of the capital stock
\nand other interests of the Company Subsidiaries so held by the Company are owned
\nby it or a Company Subsidiary as indicated in said Section 2.3 of the Company
\nDisclosure Letter, free and clear of any claim, lien, encumbrance or security
\ninterest with respect thereto. All of the outstanding shares of capital stock of
\neach of the Company Subsidiaries directly or indirectly held by the Company are
\nduly authorized, validly issued, fully paid and non-assessable and were issued
\nfree of preemptive rights and in compliance with applicable Laws. No equity
\nsecurities or other interests of any of the Company Subsidiaries are or may
\nbecome required to be issued or purchased by reason of any options, warrants,
\nrights to subscribe to, puts, calls or commitments of any character whatsoever
\nrelating to, or securities or rights convertible into or exchangeable for,
\nshares of any capital stock of any Company Subsidiary, and there are no
\ncontracts, commitments, understandings or arrangements by which any Company
\nSubsidiary is bound to issue additional shares of its capital stock, or options,
\nwarrants or rights to purchase or acquire any additional shares of its capital
\nstock or securities convertible into or exchangeable for such shares. Except as
\nset forth in the Company Securities Filings filed prior to the date of this
\nAgreement or Section 2.3 of the Company Disclosure Letter, the Company does not
\ndirectly or indirectly own any equity or similar interest in, or any interest
\nconvertible into or exchangeable or exercisable for any equity or similar
\ninterest in, any corporation, partnership, joint venture or other business
\nassociation or entity, with respect to which interest the Company has invested
\nor is required to invest $50,000 or more, excluding securities in any publicly
\ntraded company held for investment by the Company and comprising less than five
\npercent of the outstanding stock of such company.<\/p>\n
2.4 AUTHORIZATION; BINDING AGREEMENT. The Company has all
\nrequisite corporate power and authority to execute and deliver this Agreement
\nand to consummate the transactions contemplated hereby. The execution and
\ndelivery of this Agreement and the consummation of the transactions contemplated
\nhereby, including, but not limited to, the Merger, have been duly and validly
\nauthorized by the Company’s Board of Directors, and no other corporate
\nproceedings on the part of the Company or any Company Subsidiary are necessary
\nto authorize the execution and delivery of this Agreement or to consummate the
\ntransactions contemplated hereby (other than adoption of this Agreement by the
\nholders of Common Shares with voting power equal to a majority of the voting
\npower of all outstanding Common Shares, if required, in accordance with the
\nOregon Code). This Agreement has been duly and validly executed and delivered by
\nthe Company and constitutes the legal, valid and binding agreement of the
\nCompany, enforceable against the Company in accordance with its terms, except to
\nthe extent that enforceability thereof may be limited by applicable<\/p>\n
-19-<\/p>\n
bankruptcy, insolvency, reorganization or other similar laws affecting the
\nenforcement of creditors’ rights generally and by principles of equity regarding
\nthe availability of remedies (the “ENFORCEABILITY EXCEPTIONS”).<\/p>\n
2.5 GOVERNMENTAL APPROVALS. No consent, approval, waiver or
\nauthorization of, notice to or declaration or filing with (“CONSENT”) any nation
\nor government, any state or other political subdivision thereof or any entity,
\nauthority or body exercising executive, legislative, judicial or regulatory
\nfunctions of or pertaining to government, including, without limitation, any
\ngovernmental or regulatory authority, agency, department, board, commission or
\ninstrumentality, any court, tribunal or arbitrator and any self-regulatory
\norganization (“GOVERNMENTAL AUTHORITY”), on the part of the Company or any of
\nthe Company Subsidiaries is required in connection with the execution or
\ndelivery by the Company of this Agreement or the consummation by the Company of
\nthe transactions contemplated hereby other than (i) the filing of the Articles
\nof Merger with the Secretary of State of Oregon in accordance with the Oregon
\nCode, (ii) filings with the SEC, (iii) filings under the Hart-Scott-Rodino
\nAntitrust Improvements Act of 1976, as amended, and the rules and regulations
\npromulgated thereunder (the “HSR ACT”), (iv) filings pursuant to the rules and
\nregulations of The NASDAQ Stock Market (“NASDAQ”) and (v) those Consents that,
\nif they were not obtained or made, would not reasonably be expected to have a
\nMaterial Adverse Effect.<\/p>\n
2.6 NO VIOLATIONS. Except as set forth in Section 2.6 of the
\nCompany Disclosure Letter, the execution and delivery of this Agreement, the
\nconsummation of the transactions contemplated hereby and compliance by the
\nCompany with any of the provisions hereof will not (i) conflict with or result
\nin any breach of any provision of the Second Amended and Restated Articles of
\nIncorporation or Bylaws of the Company or similar documents of any of the
\nCompany Subsidiaries, (ii) require any Consent under or result in a violation or
\nbreach of, or constitute (with or without notice or lapse of time or both) a
\ndefault (or give rise to any right of termination, cancellation or acceleration)
\nunder any of the terms, conditions or provisions of, any Company Material
\nContract (as defined below ), (iii) result in the creation or imposition of any
\nlien or encumbrance of any kind upon any of the assets of the Company or any
\nCompany Subsidiary or (iv) subject to obtaining the Consents from Governmental
\nAuthorities referred to in SECTION 2.5 hereof, violate any applicable provision
\nof any statute, law, rule or regulation or any order, decision, injunction,
\njudgment, award or decree (“LAW”) to which the Company or any Company Subsidiary
\nor its assets or properties are subject, except, in the case of each of clauses
\n(ii), (iii) and (iv) above, for any deviations from the foregoing which would
\nnot reasonably be expected to have a Material Adverse Effect.<\/p>\n
2.7 SECURITIES FILINGS. The Company has made available to
\nParent true and complete copies of (i) its Annual Report on Form 10-K and 10-K\/A
\nfor the Fiscal Year ended June 30, 1999, as filed with the SEC, (ii) its proxy
\nstatements relating to all of the meetings of shareholders (whether annual or
\nspecial) of the Company since July 1, 1996 as filed with<\/p>\n
-20-<\/p>\n
the SEC, and (iii) all other reports, statements and registration statements and
\namendments thereto (including, without limitation, Annual Reports on Form 10-K,
\nQuarterly Reports on Form 10-Q and Current Reports on Form 8-K, in each case as
\namended) filed by the Company with the SEC since July 1, 1996. The reports and
\nstatements set forth in clauses (i) through (iii) above, and those subsequently
\nprovided or required to be provided pursuant to this SECTION 2.7, are referred
\nto collectively herein as the “COMPANY SECURITIES FILINGS.” Except as set forth
\nin Section 2.7 of the Company Disclosure Letter, as of their respective dates,
\nor as of the date of the last amendment thereof, if amended after filing, the
\nCompany Securities Filings (i) were prepared in all material respects in
\naccordance with the requirements of the Securities Act of 1933, as amended (the
\n“SECURITIES ACT”) and the rules and regulations promulgated thereunder, or the
\nSecurities Exchange Act, as the case may be, and none of the Company Securities
\nFilings contained or, as to the Company Securities Filings subsequent to the
\ndate hereof, will contain, any untrue statement of a material fact or omitted
\nor, as to the Company Securities Filings subsequent to the date hereof, will
\nomit, to state a material fact required to be stated therein or necessary to
\nmake the statements therein, in light of the circumstances under which they were
\nmade, not misleading.<\/p>\n
2.8 COMPANY FINANCIAL STATEMENTS. The audited consolidated
\nfinancial statements and unaudited interim financial statements of the Company
\nincluded in the Company Securities Filings (the “COMPANY FINANCIAL STATEMENTS”)
\nhave been prepared in accordance with generally accepted accounting principles
\napplied on a consistent basis (except as may be indicated therein or in the
\nnotes thereto) and present fairly, in all material respects, the financial
\nposition of the Company and the Company Subsidiaries as at the dates thereof and
\nthe results of their operations and cash flows for the periods then ended,
\nsubject, in the case of the unaudited interim financial statements, to normal
\nyear-end audit adjustments, any other adjustments described therein and the fact
\nthat certain information and notes have been condensed or omitted in accordance
\nwith the Securities Exchange Act.<\/p>\n
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
\nin the Company Securities Filings filed prior to the date of this Agreement or
\nSection 2.9 of the Company Disclosure Letter, from June 30, 1999, through the
\ndate of this Agreement, there has not been: (i) any event that has had or would
\nreasonably be expected to have a Material Adverse Effect; (ii) any declaration,
\npayment or setting aside for payment of any dividend or other distribution or
\nany redemption or other acquisition of any shares of capital stock or securities
\nof the Company by the Company; (iii) any material damage or loss to any material
\nasset or property, whether or not covered by insurance; (iv) any change by the
\nCompany in accounting principles or practices; (v) any material revaluation by
\nthe Company of any of its assets, including writing down the value of inventory
\nor writing off notes or accounts receivable other than in the ordinary course of
\nbusiness; (vi) any sale of a material amount of property of the Company, except
\nin the ordinary course of business; or (vii) any other action or event,
\ninvolving an amount exceeding $250,000, that would have required the consent of
\nParent pursuant to SECTION 4.1 hereof had such action or event occurred after
\nthe date of this Agreement.<\/p>\n
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2.10 NO UNDISCLOSED LIABILITIES. Except as set forth in the
\nCompany Securities Filings filed prior to the date of this Agreement or Section
\n2.10 of the Company Disclosure Letter, neither the Company nor any Company
\nSubsidiary has any liabilities (absolute, accrued, contingent or other), except
\nliabilities (a) adequately provided for in the Company’s audited balance sheet
\n(including any related notes thereto) for the fiscal year ended June 30, 1999
\nincluded in the Company’s 1999 Annual Report on Form 10-K and 10-K\/A (the “1999
\nBALANCE SHEET”), (b) incurred in the ordinary course of business and not
\nrequired under generally accepted accounting principles to be reflected on the
\n1999 Balance Sheet, (c) incurred since June 30, 1999 in the ordinary course of
\nbusiness consistent with past practice, (d) incurred in connection with this
\nAgreement or (e) which would not reasonably be expected to have a Material
\nAdverse Effect.<\/p>\n
2.11 COMPLIANCE WITH LAWS. Except as set forth in Section 2.11
\nof the Company Disclosure Letter, the business of the Company and each of the
\nCompany Subsidiaries has been operated in compliance with all Laws applicable
\nthereto, except for any non-compliance which would not reasonably be expected to
\nhave a Material Adverse Effect.<\/p>\n
2.12 PERMITS. Except as set forth in Section 2.12 of the
\nCompany Disclosure Letter, (i) the Company and the Company Subsidiaries have all
\npermits, certificates, licenses, approvals and other authorizations from
\nGovernmental Authorities required in connection with the operation of their
\nrespective businesses (collectively, “COMPANY PERMITS”), (ii) neither the
\nCompany nor any Company Subsidiary is in violation of any Company Permit and
\n(iii) no proceedings are pending or, to the knowledge of the Company,
\nthreatened, to revoke or limit any Company Permit, except, in the case of each
\nof clauses (i), (ii) and (iii) above, those the absence or violation of which
\nwould not reasonably be expected to have a Material Adverse Effect.<\/p>\n
2.13 LITIGATION. Except as disclosed in the Company Securities
\nFilings filed prior to the date of this Agreement or Section 2.13 of the Company
\nDisclosure Letter, there is no suit, action or proceeding (“LITIGATION”) pending
\nor, to the knowledge of the Company, threatened against the Company or any of
\nthe Company Subsidiaries which, individually or in the aggregate, would
\nreasonably be expected to have a Material Adverse Effect, nor is there any
\njudgment, decree, injunction, rule or order of any Governmental Authority
\noutstanding against the Company or any Company Subsidiary which, individually or
\nin the aggregate, would reasonably be expected to have a Material Adverse
\nEffect.<\/p>\n
2.14 CONTRACTS. Section 2.14 of the Company Disclosure Letter
\nincludes, as of the date hereof, a list of the Company’s material contracts (the
\n“COMPANY MATERIAL CONTRACTS”) which includes (i) all loan agreements,
\nindentures, mortgages, pledges, conditional sale or title retention agreements,
\nsecurity agreements, guaranties, standby letters of credit, equipment leases or
\nlease purchase agreements, each in an amount equal to or exceeding $250,000 to
\nwhich the Company or any Company subsidiary is a party or by which<\/p>\n
-22-<\/p>\n
any of them is bound; (ii) all contracts, agreements, commitments or other
\nunderstandings or arrangements other than those addressed in Section 2.15 to
\nwhich the Company or any of its subsidiaries is a party or by which any of them
\nor any of their respective properties or assets are bound or affected, but
\nexcluding contracts, agreements, commitments or other understandings or
\narrangements entered into in the ordinary course of business and involving, in
\nthe case of any such contact, agreement, commitment, or other understanding or
\narrangement, individual payments or receipts by the Company or any Company
\nSubsidiary of less than $250,000 over the term of such contract, commitment,
\nagreement, or other understanding or arrangement; and (iii) all agreements which
\nare required to be filed as “material contracts” with the SEC pursuant to the
\nrequirements of the Securities Exchange Act but have not been so filed with the
\nSEC. The Company is not a party to any agreements to acquire in the future the
\nstock or substantially all the assets of another person. Except as disclosed in
\nSection 2.14 of the Company Disclosure Letter or in the Company Securities
\nFilings filed prior to the date of this Agreement, all such Company Material
\nContracts are valid and binding and are in full force and effect and enforceable
\nagainst the Company or such Company Subsidiary in accordance with their
\nrespective terms, subject to the Enforceability Exceptions, and neither the
\nCompany nor any Company Subsidiary is in violation or breach of or default under
\nany such Company Material Contract, except where the failure to be in full force
\nand effect or where such violation or breach would not reasonably be expected to
\nhave a Material Adverse Effect. To the knowledge of the Company, no party (other
\nthan the Company or Company Subsidiaries) is in default, violation or breach of
\nany Company Material Contract where such violation or breach would reasonably be
\nexpected to have a Material Adverse Effect.<\/p>\n
2.15 EMPLOYEE BENEFIT PLANS. (a) Section 2.15(a) of the
\nCompany Disclosure Letter lists all employee pension benefit plans (as defined
\nin Section 3(2) of the Employee Retirement Income Security Act of 1974, as
\namended (“ERISA”)), all employee welfare benefit plans (as defined in Section
\n3(1) of ERISA) and all other bonus, stock option, stock purchase, incentive,
\ndeferred compensation, supplemental retirement, severance and other similar
\nfringe or employee benefit plans, programs or arrangements, and any employment,
\nexecutive compensation or severance agreements, written or otherwise, as
\namended, modified or supplemented, for the benefit of, or relating to, any
\nformer or current employee, officer or consultant who is an individual or an
\nindividual doing business in a corporate form (or any of their beneficiaries) of
\nthe Company or any other entity (whether or not incorporated) or which is under
\ncommon control with the Company (an “ERISA AFFILIATE”) within the meaning of
\nSection 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as
\namended, and the regulations thereunder (the “CODE”) or Section 4001(a)(14) or
\n(b) of ERISA, or any Company Subsidiary, with respect to which the Company has
\nor could have any current (actual or contingent) material liability (together
\nfor purposes of this SECTION 2.15, the “EMPLOYEE PLANS”). Prior to the date of
\nthis Agreement, the Company has provided or made available to Parent copies of
\n(i) each such written Employee Plan (or a written description of any Employee
\nPlan which is not written) and all related trust agreements, insurance and other
\ncontracts (including policies), summary plan descriptions, summaries of<\/p>\n
-23-<\/p>\n
material modifications and any material communications to plan participants,
\n(ii) the three most recent annual reports on Form 5500 series, with accompanying
\nschedules and attachments, filed with respect to each Employee Plan required to
\nmake such a filing, and (iii) the most recent favorable determination letters
\nissued for each Employee Plan and related trust which is intended to qualify
\nunder Section 401(a) of the Code (and, if an application for such determination
\nis pending, a copy of the application for such determination).<\/p>\n
(b) (i) None of the Employee Plans promises or provides
\nretiree medical or other retiree welfare benefits to any person (other than in
\naccordance with Section 4980B of the Code or Part 6 of Subtitle B of Title I of
\nERISA), and none of the Employee Plans is a “multiemployer plan” as such term is
\ndefined in Section 3(37) of ERISA; (ii) to the knowledge of the Company, no
\n“party in interest” or “disqualified person” (as defined in Section 3(14) of
\nERISA and Section 4975 of the Code) has at any time engaged in a transaction
\nwith respect to any Employee Plan which could subject the Company or any ERISA
\nAffiliate, directly or indirectly, to a tax, penalty or other liability for
\nprohibited transactions under ERISA or Section 4975 of the Code, except for any
\nsuch tax, penalty or liability that would not reasonably be expected to result
\nin a Material Adverse Effect; (iii) to the knowledge of the Company, no
\nfiduciary of any Employee Plan has breached any of the responsibilities or
\nobligations imposed upon fiduciaries under Title I of ERISA, except where such
\nbreach would not reasonably be expected to result in a Material Adverse Effect;
\n(iv) all Employee Plans have been established and maintained substantially in
\naccordance with their terms and have operated in compliance with the
\nrequirements prescribed by any and all statutes (including ERISA and the Code),
\norders, or governmental rules and regulations currently in effect with respect
\nthereto (including all applicable requirements for notification to participants
\nor the Department of Labor, the Internal Revenue Service (the “IRS”) or the
\nSecretary of the Treasury), except where failure to do so would not reasonably
\nbe expected to result in a Material Adverse Effect; and the Company and each
\nCompany Subsidiary have performed all obligations required to be performed by
\nthem under, are not in default under or in violation of any Employee Plan except
\nwhere failure to do so would not reasonably be expected to result in a Material
\nAdverse Effect, and have no knowledge of any default or violation by any other
\nparty to, any of the Employee Plans; (v) each Employee Plan which is subject to
\nParts 1, 2 and 4 of Subtitle B of ERISA is the subject of a favorable
\ndetermination letter from the IRS, and to the knowledge of the Company nothing
\nhas occurred which mayreasonably be expected to impair such determination; (vi)
\nall contributions required to be made with respect to any Employee Plan pursuant
\nto the terms of the Employee Plan have been made on or before their due dates
\nexcept for any failure to make contributions that would not reasonably be
\nexpected to result in a Material Adverse Effect; (vii) no facts exist or have
\nexisted under which the Company or any ERISA Affiliate could incur any liability
\nunder Title IV of ERISA; and (viii) there are no complaints, charges or claims
\nagainst the Company pending or to the Company’s knowledge threatened to be
\nbrought by or filed with any governmental authority based on, arising out of, in
\nconnection with or otherwise relating to the classification of any individual by
\nthe Company as an independent contractor or “leased employee” (within the
\nmeaning of section 414(n) of the Code) rather than as an employee.<\/p>\n
-24-<\/p>\n
(c) Section 2.15(c) of the Company Disclosure Letter sets
\nforth a true and complete list of each current or former employee, officer or
\ndirector of the Company or any Company Subsidiary who holds (i) any option to
\npurchase Common Shares as of the date hereof, together with the number of shares
\nof Common Shares subject to such option, the option price of such option (to the
\nextent determined as of the date hereof), whether such option is intended to
\nqualify as an incentive stock option within the meaning of Section 422(b) of the
\nCode (an “ISO”), and the expiration date of such option; (ii) any shares of
\nCommon Shares that are restricted as a result of an agreement with or stock plan
\nof the Company; and (iii) any other right, directly or indirectly, to receive
\nCommon Shares, except as otherwise disclosed in Section 2.15 of the Company
\nDisclosure Letter, together with the number of shares of Company Stock subject
\nto such right. Section 2.15(c) of the Company Disclosure Letter also sets forth
\nthe total number of any such ISOs and any such nonqualified options and other
\nsuch rights.<\/p>\n
(d) Unless otherwise disclosed in Section 2.15(a) of the
\nCompany Disclosure Letter, Section 2.15(d) of the Company Disclosure Letter sets
\nforth a true and complete list of (i) all employment agreements with officers of
\nthe Company or any of the Company Subsidiaries; (ii) all agreements with
\nconsultants who are individuals obligating the Company or any of the Company
\nSubsidiaries to make annual cash payments in an amount exceeding $250,000; (iii)
\nall agreements which individually or in the aggregate are or could be material
\nwith respect to the services of independent contractors or leased employees who
\nare individuals or individuals doing business in a corporate form whether or not
\nthey participate in any of the Employee Plans; (iv) all officers of the Company
\nor any of the Company Subsidiaries who have executed a non-competition agreement
\nwith the Company or any of the Company Subsidiaries; (v) all severance
\nagreements, programs and policies of the Company or any of the Company
\nSubsidiaries with or relating to its employees, in each case with outstanding
\ncommitments exceeding $250,000, excluding programs and policies required to be
\nmaintained by law; and (vi) all plans, programs, agreements and other
\narrangements of the Company which contain change in control provisions.<\/p>\n
(e) (i) Except as set forth in Section 2.15(e) of the Company
\nDisclosure Letter, no Employee Plan is an employee stock ownership plan (within
\nthe meaning of Section 4975(e)(7) of the Code) or otherwise invests in Company
\nStock; and (ii) the consummation of the transactions contemplated by this
\nAgreement will not result in an increase in the amount of compensation or
\nbenefits or accelerate the vesting or timing of payment of any benefits or
\ncompensation payable in respect of any employee except as otherwise provided in
\nSECTION 1.9 hereof or disclosed in Section 2.15(e) of the Company Disclosure
\nLetter or except where such increase or acceleration would not reasonably be
\nexpected to result in a Material Adverse Effect. The Company will take all
\nactions within its control to ensure that all actions required to be taken by a
\nfiduciary of any Employee Plan in order to effectuate the transaction
\ncontemplated by this Agreement shall comply with the terms of such Plan, ERISA
\nand other applicable laws. The Company will take all actions<\/p>\n
-25-<\/p>\n
within its control to ensure that all actions required to be taken by a
\ntrustee of any Employee Plan that owns Company Stock shall have been duly
\nauthorized by the appropriate fiduciaries of such Plan and shall comply with
\nthe terms of such Plan, ERISA and other applicable laws.<\/p>\n
(f) Except as set forth in Section 2.15(f) of the Company
\nDisclosure Letter, the Company maintains no Employee Plan covering non-U.S.
\nemployees.<\/p>\n
(g) The Company has fiduciary liability insurance of at least
\n$500,000 in effect covering the fiduciaries of the Employee Plans (including the
\nCompany) with respect to whom the Company may have liability.<\/p>\n
2.16 TAXES AND RETURNS. (a) The Company and each of the
\nCompany Subsidiaries has timely filed, or caused to be timely filed, all
\nmaterial Tax Returns (as hereinafter defined) required to be filed by it, and
\nall such tax returns are true, complete and correct in all material respects,
\nand has timely paid, collected or withheld, or caused to be paid, collected or
\nwithheld, all material amounts of Taxes (as hereinafter defined) required to be
\npaid, collected or withheld, other than such Taxes for which adequate reserves
\nin the Company Financial Statements have been established and which are being
\ncontested in good faith. Except as set forth in Section 2.16 of the Company
\nDisclosure Letter, there are no material claims or assessments pending against
\nthe Company or any of the Company Subsidiaries for any alleged deficiency in any
\nTax, and the Company has not been notified in writing of any proposed Tax claims
\nor assessments against the Company or any of the Company Subsidiaries (other
\nthan in each case, claims or assessments for which adequate reserves in the
\nCompany Financial Statements have been established and which are being contested
\nin good faith or claims or assessments which are immaterial in amount). Neither
\nthe Company nor any of the Company Subsidiaries has executed any waivers or
\nextensions of any applicable statute of limitations to assess any material
\namount of Taxes. There are no outstanding requests by the Company or any of the
\nCompany Subsidiaries for any extension of time within which to file any material
\nTax Return or within which to pay any material amounts of Taxes shown to be due
\non any Tax Return. The statute of limitations period for assessment of federal
\nincome taxes has not expired for any taxable year from the taxable year
\nended June 30, 1996, the Company’s first taxable year as a C corporation. To the
\nbest knowledge of the Company, there are no liens for material amounts of Taxes
\non the assets of the Company or any of the Company Subsidiaries except for
\nstatutory liens for current Taxes not yet due and payable. There are no
\noutstanding powers of attorney enabling any party to represent the Company or
\nany of the Company Subsidiaries with respect to Tax matters.<\/p>\n
(b) For purposes of this Agreement, the term “TAX” shall mean
\nany federal, state, local, foreign or provincial income, gross receipts,
\nproperty, sales, use, license, excise, franchise, employment, payroll,
\nalternative or add-on minimum, ad valorem, transfer or excise tax, or any other
\ntax, custom, duty, governmental fee or other like assessment or charge of any
\nkind whatsoever, together with any interest or penalty imposed by any
\nGovernmental Authority. The term “TAX RETURN” shall mean a report, return or
\nother<\/p>\n
-26-<\/p>\n
information (including any attached schedules or any amendments to such report,
\nreturn or other information) required to be supplied to or filed with a
\ngovernmental entity with respect to any Tax, including an information return,
\nclaim for refund, amended return or declaration or estimated Tax.<\/p>\n
(c) Except as set forth in Section 2.16 of the Company
\nDisclosure Letter, (i) neither the Company nor any of the Company Subsidiaries
\nhas been a member of an affiliated group within the meaning of Section 1504 of
\nthe Code or filed or been included in a combined, consolidated or unitary Tax
\nReturn, other than of the Company and the Company Subsidiaries; (ii) other than
\nwith respect to the Company and the Company Subsidiaries, neither the Company
\nnor any of the Company Subsidiaries is currently liable for Taxes of any other
\nperson, or is currently under any contractual obligation to indemnify any person
\nwith respect to Taxes (except for customary agreements to indemnify lenders or
\nsecurityholders in respect of taxes other than income taxes), or is a party to
\nany tax sharing agreement or any other agreement providing for payments by the
\nCompany or any of the Company Subsidiaries with respect to Taxes; (iii) neither
\nthe Company nor any of the Company Subsidiaries is a party to any joint venture,
\npartnership or other arrangement or contract which could be treated as a
\npartnership for federal income tax purposes; (iv) neither the Company nor any of
\nthe Company Subsidiaries has entered into any sale leaseback or any leveraged
\nlease transaction that fails to satisfy the requirements of Revenue Procedure
\n75-21 (or similar provisions of foreign law); (v) neither the Company nor any of
\nthe Company Subsidiaries has agreed or is required, as a result of a change in
\nmethod of accounting or otherwise, to include any adjustment under Section 481
\nof the Code (or any corresponding provision of state, local or foreign law) in
\ntaxable income; (vi) neither the Company nor any of the Company Subsidiaries is
\na party to any agreement, contract, arrangement or plan that would result
\n(taking into account the transactions contemplated by this Agreement),
\nseparately or in the aggregate, in the payment of any “excess parachute
\npayments” within the meaning of Section 280G of the Code; (vii) the prices for
\nany property or services (or for the use of property) provided by the Company or
\nany of the Company Subsidiaries to any other subsidiary or to the Company have
\nbeen arm’s length prices, determined using a method permitted by the Treasury
\nRegulations under Section 482 of the Code; (viii) neither the Company nor any of
\nthe Company Subsidiaries is liable with respect to any indebtedness the interest
\nof which is not deductible for applicable federal, foreign, state or local
\nincome tax purposes; (ix) neither the Company nor any of the Company
\nSubsidiaries is a “consenting corporation” under Section 341(f) of the Code or
\nany corresponding provision of state, local or foreign law; (x) the Company and
\neach Company Subsidiary have complied with all applicable laws, rules, and
\nregulations relating to the withholding and payment of Taxes except where the
\namount of taxes involved is not material; and (xi) none of the assets owned by
\nthe Company or any of the Company Subsidiaries is property that is required to
\nbe treated as owned by any other person pursuant to Section 168(g)(8) of the
\nInternal Revenue Code of 1954, as amended, as in effect immediately prior to the
\nenactment of the Tax Reform Act of 1986, or is “tax-exempt use property” within
\nthe meaning of Section 168(h) of the Code.<\/p>\n
-27-<\/p>\n
(d) The amount of net operating losses (as defined in Section
\n172 of the Code) of the Company and the Company Subsidiaries as of the end of
\nthe fiscal year ended June 30, 1999 is as set forth in the Company’s financial
\nstatements for such year.<\/p>\n
2.17 INTELLECTUAL PROPERTY. (a) Section 2.17(a) of the Company
\nDisclosure Letter sets forth a list of (i) all patents and patent applications
\nowned by the Company and\/or each of the Company Subsidiaries worldwide; (ii) all
\ntrademark and service mark registrations and all trademark and service mark
\napplications, material common law trademarks, material trade dress and material
\nslogans, and all trade names owned by the Company and\/or each of its
\nsubsidiaries worldwide; (iii) all copyright registrations and copyright
\napplications owned by the Company and\/or each of the Company Subsidiaries
\nworldwide; and (iv) all licenses in which the Company and\/or any of the Company
\nSubsidiaries is (A) a licensor with respect to any of the patents, trademarks,
\nservice marks, trade names or copyrights listed in Section 2.17 of the Company
\nDisclosure Letter which are material to the Company or (B) a licensee of any
\nother person’s patents, trade names, trademarks, service marks or copyrights
\nmaterial to the Company except for any licenses of software programs that are
\ncommercially available “off the shelf.”<\/p>\n
(b) The Company or the Company Subsidiaries own, or are
\nlicensed or otherwise possess legal enforceable rights to use, all patents,
\ntrademarks, trade names, service marks, trade dress, slogans, copyrights and any
\napplications therefor, technology, know-how, trade secrets, computer software
\nprograms or applications, domain names and tangible or intangible proprietary
\ninformation or materials that are used in the respective businesses of the
\nCompany and the Company Subsidiaries as currently conducted (the “COMPANY
\nINTELLECTUAL PROPERTY RIGHTS”), except for any such failures to own, be licensed
\nor possess that would not reasonably be expected to have a Material Adverse
\nEffect.<\/p>\n
(c) Except as disclosed in Section 2.17(c) of the Company
\nDisclosure Letter, the Company and\/or each Company Subsidiary has made all
\nnecessary filings and recordations for the patents, patent applications,
\ntrademark and service mark registrations, trademark and service mark
\napplications, copyright registrations and copyright applications set forth in
\nSection 2.17(a) of the Company Disclosure Letter, except where the failure to
\nmake such filings or recordations would not reasonably be expected to have a
\nMaterial Adverse Effect. There are not currently pending, and to the Knowledge
\nof the Company there are no valid grounds for, any bona fide claims (i) that the
\nbusiness of the Company or any of the Company Subsidiaries infringes on any
\ncopyright, patent, trademark, service mark or trade secret; (ii) against the use
\nby the Company or any of the Company Subsidiaries of any trademarks, trade
\nnames, trade secrets, copyrights, patents, technology, know-how or computer
\nsoftware programs and applications used in the business of the Company or any of
\nthe Company Subsidiaries as currently conducted or as proposed to be conducted;
\n(iii) challenging the ownership, validity or effectiveness of any of the Company
\nIntellectual Property Rights; or (iv) challenging the license or legally
\nenforceable right to use of any third-party patents, trademarks, service marks
\nand copyrights by the Company or any of the<\/p>\n
-28-<\/p>\n
Company Subsidiaries, except, in the case of each of clauses (i), (ii), (iii)
\nand (iv) above, for matters that, if determined adversely to the Company, would
\nnot reasonably be expected to have a Material Adverse Effect.<\/p>\n
(d) Except as set forth in the Company Securities Filings
\nfiled prior to the date of this Agreement or Section 2.17 of the Company
\nDisclosure Letter, to the Knowledge of the Company, there is no material
\nunauthorized use, infringement or misappropriation of any of the Company
\nIntellectual Property by any third party, including any employee or former
\nemployee of the Company or any of the Company Subsidiaries.<\/p>\n
(e) KNOWLEDGE OF THE COMPANY DEFINED. For purposes of this
\nSection 2.17, the parties acknowledge and agree that the phrase “to the
\nKnowledge of the Company”: (i) will be limited to the knowledge of the officers
\nand employees of the Company identified in Paragraph 2.17(e) of the Company
\nDisclosure Letter and (ii) will not be deemed to impose any obligation on the
\nCompany to conduct a patent, trademark or copyright search.<\/p>\n
2.18 DISCLOSURE DOCUMENTS. The Proxy Statement will comply in
\nall material respects with the applicable requirements of the Securities
\nExchange Act except that no representation or warranty is being made by the
\nCompany with respect to the Parent Information included in the Proxy Statement.
\nThe Proxy Statement will not, at the time the Proxy Statement is filed with the
\nSEC or first sent to shareholders or at the time of the Company’s shareholders’
\nmeeting, contain any untrue statement of a material fact or omit to state any
\nmaterial fact required to be stated therein or necessary in order to make the
\nstatements therein, in light of the circumstances under which they were made,
\nnot misleading except that no representation or warranty is being made by the
\nCompany with respect to the Parent Information (as defined below) included in
\nthe Proxy Statement. The Schedule 14D-9 will comply in all material respects
\nwith the Securities Exchange Act except that no representation or warranty is
\nbeing made by the Company with respect to the Parent Information included in the
\nSchedule 14D-9. Neither the Schedule 14D-9 nor any of the information relating
\nto the Company or its affiliates provided by or on behalf of the Company
\nspecifically for inclusion in the Schedule 14D-1 or the Offer Documents will, at
\nthe respective times the Schedule 14D-9, the Schedule 14D-1 and the Offer
\nDocuments are filed with the SEC and are first published, sent or given to
\nshareholders of the Company, contain any untrue statement of a material fact or
\nomit to state any material fact required to be stated therein or necessary in
\norder to make the statements made therein, in light of the circumstances under
\nwhich they were made, not misleading.<\/p>\n
2.19 LABOR MATTERS. Except as set forth in the Company
\nSecurities Filings filed prior to the date of this Agreement or Section 2.19 of
\nthe Company Disclosure Letter, (i) there are no controversies pending or, to the
\nknowledge of the Company or any of the Company Subsidiaries, threatened, between
\nthe Company or any of the Company Subsidiaries and any of their respective
\nemployees, which controversies would reasonably be expected to have a Material
\nAdverse Effect; (ii) neither the Company nor any of the Company<\/p>\n
-29-<\/p>\n
Subsidiaries is a party to any collective bargaining agreement or other labor
\nunion contract applicable to persons employed by the Company or the Company
\nSubsidiaries, nor, as of the date of this Agreement, does the Company or any of
\nthe Company Subsidiaries know of any activities or proceedings of any labor
\nunion to organize any such employees; and (iii) neither the Company nor any of
\nthe Company Subsidiaries has any knowledge of any strikes, slowdowns, work
\nstoppages, lockouts, or threats thereof, by or with respect to any employees of
\nthe Company or any of the Company Subsidiaries which would reasonably be
\nexpected to have a Material Adverse Effect.<\/p>\n
2.20 LIMITATION ON BUSINESS CONDUCT. Except as set forth in
\nthe Company Securities Filings filed prior to the date of this Agreement,
\nneither the Company nor any of the Company Subsidiaries is a party to, or has
\nany obligation under, any contract or agreement, written or oral, which contains
\nany covenants currently or prospectively limiting in any material respect the
\nfreedom of the Company or any of the Company Subsidiaries to engage in any line
\nof business or to compete with any entity.<\/p>\n
2.21 TITLE TO PROPERTY. Except as set forth in the Company
\nSecurities Filings filed prior to the date of this Agreement or Section 2.21 of
\nthe Company Disclosure Letter, each of the Company and each of the Company
\nSubsidiaries owns the properties and assets that it purports to own free and
\nclear of all liens, charges, mortgages, security interests or encumbrances of
\nany kind (“LIENS”), except for Liens which arise in the ordinary course of
\nbusiness and do not materially impair the Company’s or the Company Subsidiaries’
\nownership or use of such properties or assets, Liens for taxes not yet due or
\ndelinquent or being contested in good faith by appropriate proceedings for which
\nreserves have been established in accordance with GAAP and Liens securing
\nobligations under the Company’s credit agreements, loan agreements and equipment
\nleases (the “CREDIT AGREEMENTS”). Except as set forth in Schedule 2.21 of the
\nCompany Disclosure Letter, with respect to the property and assets it leases,
\nthe Company, the Company Subsidiaries, and to the best of the Company’s
\nknowledge each of the other parties thereto, is in material compliance with such
\nleases, and the Company or the Company Subsidiaries, as the case may be, hold a
\nvalid leasehold interest free of any Liens, except those referred to above. The
\nrights, properties and assets presently owned, leased or licensed by the Company
\nand the Company Subsidiaries include all rights, properties and assets necessary
\nto permit the Company and the Company Subsidiaries to conduct their business in
\nall material respects in the same manner as their businesses have been conducted
\nprior to the date hereof.<\/p>\n
2.22 OWNED AND LEASED PREMISES. Each of the buildings,
\nstructures and premises leased by the Company or any of the Company Subsidiaries
\nis in reasonably good repair and operating condition, except as would not
\nreasonably be expected to have a Material Adverse Effect.<\/p>\n
2.23 ENVIRONMENTAL MATTERS. Except as set forth in the Company
\nSecurities Filings filed prior to the date of this Agreement or Section 2.23 of
\nthe Company Disclosure<\/p>\n
-30-<\/p>\n
Letter:<\/p>\n
(a) The Company and the Company Subsidiaries are in material
\ncompliance with the Environmental Laws (as defined below), which compliance
\nincludes the possession by the Company and the Company Subsidiaries of all
\nmaterial permits and governmental authorizations required under applicable
\nEnvironmental Laws, and compliance in all material respects with the terms and
\nconditions thereof, except in each case where such non-compliance would not
\nreasonably be expected to have a Material Adverse Effect. Neither the Company
\nnor any of the Company Subsidiaries has received any communication (written or
\noral), whether from a governmental authority, citizens group, employee or
\notherwise, that alleges that the Company or any of the Company Subsidiaries is
\nnot in such material compliance, and there are no circumstances that may prevent
\nor interfere with such compliance in the future, except where such
\nnon-compliance would not reasonably be expected to have a Material Adverse
\nEffect.<\/p>\n
(b) There are no Environmental Claims (as defined below),
\nincluding claims based on “arranger liability,” pending or, to the best
\nknowledge of the Company, threatened against the Company or any of the Company
\nSubsidiaries or against any person or entity whose liability for any
\nEnvironmental Claim the Company or any of the Company Subsidiaries has retained
\nor assumed either contractually or by operation of law, except for such
\nEnvironmental Claims that would not reasonably be expected to have a Material
\nAdverse Effect.<\/p>\n
(c) To the knowledge of the Company, there are no past or
\npresent actions, inactions, activities, circumstances, conditions, events or
\nincidents, including the release, emission, discharge, presence or disposal of
\nany Material of Environmental Concern (as hereinafter defined), that would form
\nthe basis of any Environmental Claim against the Company or any of the Company
\nSubsidiaries or against any person or entity whose liability for any
\nEnvironmental Claim the Company or any of the Company Subsidiaries have retained
\nor assumed either contractually or by operation of law, except for such
\nEnvironmental Claims that would not reasonably be expected to have a Material
\nAdverse Effect.<\/p>\n
(d) The Company is in compliance in all material respects with
\nEnvironmental Laws as they relate to (i) any on-site or off-site locations where
\nthe Company or any of the Company Subsidiaries has stored, disposed or arranged
\nfor the disposal of Materials of Environmental Concern for itself (but not on
\nbehalf of others) or (ii) any underground storage tanks located on property
\nowned or leased by the Company or any of the Company Subsidiaries. To the
\nknowledge of Company, there is no asbestos contained in or forming part of any
\nbuilding, building component, structure or office space owned or leased by the
\nCompany or any of the Company Subsidiaries. To the knowledge of Company, no
\npolychlorinated biphenyls (PCB’s) or PCB-containing items are used or stored at
\nany property owned or leased by the Company or any of the Company Subsidiaries.<\/p>\n
-31-<\/p>\n
(e) For purposes of this Agreement:<\/p>\n
(i) “ENVIRONMENTAL CLAIM” means any written claim, action,
\n cause of action, investigation or notice by any person or entity
\n alleging potential liability (including potential liability for
\n investigatory costs, cleanup costs, governmental response costs,
\n natural resources damages, property damages, personal injuries, or
\n penalties) arising out of, based on or resulting from (x) the presence,
\n or release into the environment, of any Material of Environmental
\n Concern at any location, whether or not owned or operated by the
\n Company or any of the Company Subsidiaries, or (y) circumstances
\n forming the basis of any violation, or alleged violation, of any
\n Environmental Law.<\/p>\n
(ii) “ENVIRONMENTAL LAWS” means all Federal, state, local and
\n foreign laws or regulations relating to pollution or protection of
\n human health and the environment (including ambient air, surface water,
\n ground water, land surface or sub-surface strata), including laws and
\n regulations relating to emissions, discharges, releases or threatened
\n releases of Materials of Environmental Concern, or otherwise relating
\n to the manufacture, processing, distribution, use, treatment, storage,
\n disposal, transport or handling of Materials of Environmental Concern.<\/p>\n
(iii) “MATERIALS OF ENVIRONMENTAL CONCERN” means chemicals,
\n pollutants, contaminants, hazardous materials, hazardous substances and
\n hazardous wastes, toxic substances, petroleum and petroleum products
\n that are regulated under the Environmental Laws.<\/p>\n
2.24 INSURANCE. The Company maintains insurance that provides
\nadequate coverage for normal risks incident to the business of the Company and
\nthe Company Subsidiaries and their respective properties and assets and in
\ncharacter and amount comparable to that carried by persons engaged in similar
\nbusinesses. The insurance polices maintained by the Company are with reputable
\ninsurance carriers and have no premium delinquencies.<\/p>\n
2.25 PRODUCT LIABILITY AND RECALLS. (a) Except as disclosed in
\nthe Company SEC Filings filed prior to the date of this Agreement or Section
\n2.25 of the Company Disclosure Letter, to the Company’s knowledge, there is no
\nclaim, pending or overtly threatened, against the Company or any Company
\nSubsidiaries for injury to person or property of employees or any third parties
\nsuffered as a result of the sale of any product or performance of any service by
\nthe Company or any Company Subsidiaries, including claims arising out of the
\ndefective or unsafe nature of its products or services, which would reasonably
\nbe expected, individually or in the aggregate, to have a Material Adverse
\nEffect.<\/p>\n
(b) Except as disclosed in the Company SEC Filings filed prior
\nto the date of this Agreement or Section 2.25 of the Company Disclosure Letter,
\nthere is no pending or, to the knowledge of the Company, overtly threatened
\nrecall or investigation of any product <\/p>\n
-32-<\/p>\n
sold by the Company or any Company Subsidiaries, which recall or investigation
\nwould reasonably be expected, individually or in the aggregate, to have a
\nMaterial Adverse Effect.<\/p>\n
2.26 CUSTOMERS. Section 2.26 of the Company Disclosure Letter
\nsets forth a list of the Company’s ten (10) largest customers (detailed, in the
\ncase of government agencies, by separate government agency) in terms of gross
\nsales for the fiscal year ended June 30, 1999. Except as set forth in Section
\n2.26 of the Company Disclosure Letter, since June 30, 1999, there have not been
\nany changes in the business relationships of the Company with any of the
\ncustomers named therein that would constitute a Material Adverse Effect. Except
\nas set forth in Section 2.26 of the Company Disclosure Letter, no customer of
\nthe Company accounted for more than 5% of the revenues of the Company and the
\nCompany Subsidiaries, taken as whole, for the fiscal year ended June 30, 1999.<\/p>\n
2.27 INTERESTED PARTY TRANSACTIONS. Except as set forth in
\nSection 2.27 of the Company Disclosure Letter or in the Company Securities
\nFilings filed prior to the date of this Agreement, since the date of the
\nCompany’s proxy statement dated October 25, 1999, no event has occurred that
\nwould be required to be reported pursuant to Item 404 of Regulation S-K
\npromulgated by the SEC.<\/p>\n
2.28 FINDERS AND INVESTMENT BANKERS. Neither the Company nor
\nany of its officers or directors has employed any broker, finder or financial
\nadvisor or otherwise incurred any liability for any brokerage fees, commissions,
\nor financial advisors’ or finders’ fees in connection with the transactions
\ncontemplated hereby, other than pursuant to agreements with McDonald
\nInvestments, Inc. and Adams, Harkness & Hill, Inc., the terms of which have been
\ndisclosed to Parent.<\/p>\n
2.29 FAIRNESS OPINION. The Company’s Board of Directors has
\nreceived from the Financial Advisor a written opinion addressed to it for
\ninclusion in the Schedule 14D-9 and the Proxy Statement to the effect that the
\nconsideration to be received by the shareholders of the Company pursuant to each
\nof the Offer and the Merger is fair to the Company’s shareholders from a
\nfinancial point of view.<\/p>\n
2.30 TAKEOVER STATUTES. Assuming Parent and its “associates”
\nand “affiliates” (as defined in Section 60.825 of the Oregon Code) collectively
\nbeneficially own and have beneficially owned at all times during the three-year
\nperiod prior to the date hereof less than fifteen percent (15%) of the Company
\nStock outstanding, Sections 60.825 – 60.845 of the Oregon Code is, and shall be,
\ninapplicable to the acquisition of Common Shares pursuant to the Offer and the
\nMerger.<\/p>\n
2.31 FULL DISCLOSURE. No statement contained in any
\ncertificate or schedule, including, without limitation, the Company Disclosure
\nLetter, furnished or to be furnished by the Company or the Company Subsidiaries
\nto Parent or Purchaser in, or pursuant to the provisions of, this Agreement
\ncontains or shall contain any untrue statement of a material fact <\/p>\n
-33-<\/p>\n
or omits or will omit to state any material fact necessary, in the light of the
\ncircumstances under which it was made, in order to make the statements herein or
\ntherein not misleading.<\/p>\n
2.32 YEAR 2000. Except as would not reasonably be expected to
\nhave a Material Adverse Effect on the Company:<\/p>\n
(a) None of the computer software, computer firmware, computer
\nhardware (whether general or special purpose) or other similar or related items
\nof automated, computerized or software systems that are used or relied on by
\nCompany or by any of the Company Subsidiaries in the conduct of their respective
\nbusinesses will malfunction, will cease to function, will generate incorrect
\ndata or will produce incorrect results that are caused by processing, providing
\nor receiving (i) date-related data from, into and between the twentieth and
\ntwenty-first centuries or (ii) date-related data in connection with any valid
\ndate in the twentieth and twenty-first centuries.<\/p>\n
(b) None of the products and services sold, licensed,
\nrendered, or otherwise provided by the Company or by any of the Company
\nSubsidiaries in the conduct of their respective businesses will malfunction,
\nwill cease to function, will generate incorrect data or will produce incorrect
\nresults that are caused by processing, providing or receiving (i) date-related
\ndata from, into and between the twentieth and twenty-first centuries or (ii)
\ndate-related data in connection with any valid date in the twentieth and
\ntwenty-first centuries.<\/p>\n
(c) Neither the Company nor any of the Company Subsidiaries
\nhas made any other representations or warranties regarding the ability of any
\nproduct or service sold, licensed, rendered, or otherwise provided by the
\nCompany or by any of the Company Subsidiaries in the conduct of their respective
\nbusinesses to operate without malfunction, to operate without ceasing to
\nfunction, to generate correct data or to produce correct results when
\nprocessing, providing or receiving (i) date-related data from, into and between
\nthe twentieth and twenty-first centuries and (ii) date-related data in
\nconnection with any valid date in the twentieth and twenty-first centuries.<\/p>\n
2.33 RIGHTS AGREEMENTS. There are no “rights agreements”,
\n“poison pills” or similar defensive installments, arrangements or agreements
\nthat would prevent or interfere with the consummation of the transactions
\ncontemplated by this Agreement.<\/p>\n
2.34 ABSENCE OF CERTAIN PAYMENTS. None of the Company, any
\nCompany Subsidiaries or any of their respective affiliates, officers, directors,
\nemployees or agents or other people acting on behalf of any of them have (i)
\nengaged in any activity prohibited by the United States Foreign Corrupt
\nPractices Act of 1977 or any other similar law, regulation, decree, directive or
\norder of any other country and (ii) without limiting the generality of the
\npreceding clause (i), used any corporate or other funds for unlawful
\ncontributions, payments, gifts or entertainment, or made any unlawful
\nexpenditures relating to political activity to government officials or others.
\nNone of the Company, the Company Subsidiaries or any of <\/p>\n
-34-<\/p>\n
their respective affiliates, directors, officers, employees or agents of other
\npersons acting on behalf of any of them, has accepted or received any unlawful
\ncontributions, payments, gifts or expenditures.<\/p>\n
ARTICLE III
\n REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER<\/p>\n
Parent and Purchaser jointly and severally represent and
\nwarrant to the Company that:<\/p>\n
3.1 ORGANIZATION AND GOOD STANDING. Each of Guarantor, Parent
\nand Purchaser is a corporation duly organized, validly existing and in good
\nstanding under the laws of the jurisdiction of its incorporation and has all
\nrequisite corporate power and authority to own, lease and operate its properties
\nand to carry on its business as now being conducted.<\/p>\n
3.2 AUTHORIZATION; BINDING AGREEMENT. Parent, Purchaser and
\nGuarantor have all requisite corporate power and authority to execute and
\ndeliver this Agreement or the Guarantee, as the case may be, and to consummate
\nthe transactions contemplated hereby and thereby. The execution and delivery of
\nthis Agreement and the Guarantee and the consummation of the transactions
\ncontemplated hereby and thereby, including, but not limited to, the Merger, have
\nbeen duly and validly authorized by the respective Boards of Directors of
\nParent, Purchaser and Guarantor, as appropriate, and no other corporate
\nproceedings on the part of Parent, Purchaser, Guarantor or any other subsidiary
\nof Guarantor are necessary to authorize the execution and delivery of this
\nAgreement or the Guarantee, as applicable, or to consummate the transactions
\ncontemplated hereby and thereby (other than the requisite approval by the sole
\nshareholder of Purchaser of this Agreement and the Merger). This Agreement has
\nbeen duly and validly executed and delivered by each of Parent and Purchaser and
\nconstitutes the legal, valid and binding agreement of Parent and Purchaser,
\nenforceable against each of Parent and Purchaser in accordance with its terms,
\nsubject to the Enforceability Exceptions. The Guarantee has been duly and
\nvalidly executed and delivered by Guarantor, and constitutes the legal, valid
\nand binding agreement of Guarantor enforceable against Guarantor in accordance
\nwith its terms, subject to the Enforceability Exceptions.<\/p>\n
3.3 GOVERNMENTAL APPROVALS. No Consent from or with any
\nGovernmental Authority on the part of Parent, Purchaser or Guarantor is required
\nin connection with the execution or delivery by Parent, Purchaser and Guarantor
\nof this Agreement or the Guarantee, as the case may be, or the consummation by
\nParent, Purchaser and Guarantor of the transactions contemplated hereby or
\nthereby other than (i) the filing of the Articles of Merger with the Secretary
\nof State of Oregon in accordance with the Oregon Code, (ii) filings with the
\nSEC, (iii) filings under the HSR Act (iv) filings pursuant to the rules and
\nregulations of NASDAQ or the New York Stock Exchange and (v) those Consents
\nthat, if they were not obtained or made, would not reasonably be expected to
\nhave a Material Adverse Effect.<\/p>\n
-35-<\/p>\n
3.4 NO VIOLATIONS. The execution and delivery of this
\nAgreement, the consummation of the transactions contemplated hereby and
\ncompliance by Parent or Purchaser with any of the provisions hereof will not (i)
\nconflict with or result in any breach of any provision of the Memorandum of
\nAssociation and Bye-Laws or other governing instruments of Guarantor or similar
\ndocuments of any subsidiary of Guarantor, including Parent and Purchaser, (ii)
\nrequire any Consent under or result in a violation or breach of, or constitute
\n(with or without notice or lapse of time or both) a default (or give rise to any
\nright of termination, cancellation or acceleration) under any of the terms,
\nconditions or provisions of, any material note, bond, mortgage, indenture,
\ncontract, lease, license, agreement or instrument to which Guarantor or any
\nsubsidiary of Guarantor, including Parent, is a party or by which any of them or
\nany of their respective assets or property is subject, (iii) result in the
\ncreation or imposition of any material lien or encumbrance of any kind upon any
\nof the assets of Guarantor or any subsidiary of Guarantor, including Parent, or
\n(iv) subject to obtaining the Consents from Governmental Authorities referred to
\nin SECTION 3.3 hereof, violate any Law to which Guarantor or any subsidiary of
\nGuarantor, including Parent, or its assets or properties are subject, except in
\nany such case for any such conflicts, violations, breaches, defaults or other
\noccurrences that would not prevent or delay consummation of the Offer or the
\nMerger, or otherwise materially and adversely affect the ability of Parent or
\nPurchaser to perform their respective obligations under this Agreement.<\/p>\n
3.5 DISCLOSURE DOCUMENTS. None of the information supplied by
\nParent, or Purchaser or their respective officers, directors, representatives,
\nagents or employees (the “PARENT INFORMATION”) for inclusion in the Proxy
\nStatement will, at the time the Proxy Statement is filed with the SEC or first
\nmailed to the Company’s shareholders, at the time of the Company’s shareholders’
\nmeeting, contain any untrue statement of a material fact, or will omit to state
\nany material fact necessary in order to make the statements therein, in light of
\nthe circumstances in which they were made not misleading or necessary to correct
\nany statement in any earlier communication with respect to the solicitation of
\nproxies for such shareholders’ meeting which has become false or misleading.
\nNeither the Schedule 14D-1 or the Offer Documents or any amendments thereof or
\nsupplements thereto nor any of the Parent Information provided specifically for
\ninclusion in the Schedule 14D-9 will, at the respective times the Schedule
\n14D-1, the Offer Documents or the Schedule 14D-9 are filed with the SEC or first
\npublished, sent or given to the Company’s shareholders, contain any untrue
\nstatement of a material fact or omit to state any material fact necessary in
\norder to make the statements therein, in light of the circumstances under which
\nthey were made, not misleading. Notwithstanding the foregoing, neither Parent
\nnor Purchaser makes any representation or warranty with respect to any
\ninformation that has been supplied by the Company or its accountants, counsel or
\nother authorized representatives for use in any of the foregoing documents. The
\nSchedule 14D-1 and the Offer Documents will comply as to form in all material
\nrespects with the provisions of the Securities Exchange Act.<\/p>\n
3.6 FINDERS AND INVESTMENT BANKERS. Neither Parent, Guarantor,
\nPurchaser nor any of their respective officers or directors has employed any
\nbroker, finder or financial <\/p>\n
-36-<\/p>\n
advisor or otherwise incurred any liability for any brokerage fees, commissions
\nor financial advisors’ or finders’ fees in connection with the transactions
\ncontemplated hereby.<\/p>\n
3.7 FINANCING ARRANGEMENTS. Parent (including for this purpose
\none or more other subsidiaries of Guarantor ), has funds available to it
\nsufficient to enable the Purchaser to purchase the Common Shares in accordance
\nwith the terms of this Agreement and to pay all amounts due (or which will, as a
\nresult of the transactions contemplated hereby, become due) in respect of any
\nindebtedness of the Company for money borrowed.<\/p>\n
3.8 NO PRIOR ACTIVITIES. Except for obligations or liabilities
\nincurred in connection with its incorporation or organization or the negotiation
\nand consummation of this Agreement and the transactions contemplated hereby
\n(including any financing in connection therewith), Purchaser has not incurred
\nany obligations or liabilities and has not engaged in any business or activities
\nof any type or kind whatsoever or entered into any agreements or arrangements
\nwith any person or entity.<\/p>\n
ARTICLE IV
\nADDITIONAL COVENANTS OF THE COMPANY<\/p>\n
The Company covenants and agrees as follows:<\/p>\n
4.1 CONDUCT OF BUSINESS OF THE COMPANY AND THE COMPANY
\nSUBSIDIARIES. (a) Unless Parent shall otherwise consent in writing (which
\nconsent, in the case of paragraphs (D), (E), (F), (G), (H), (I), or (J) below,
\nshall not be unreasonably withheld) and except as expressly contemplated by this
\nAgreement or in the Company Disclosure Letter, during the period from the date
\nof this Agreement to the Effective Time, (i) the Company shall conduct, and it
\nshall cause the Company Subsidiaries to conduct, its or their businesses in the
\nordinary course and consistent with past practice, and the Company shall, and it
\nshall cause the Company Subsidiaries to, use its or their reasonable best
\nefforts to preserve substantially intact its business organization, to keep
\navailable the services of its present officers and employees and to preserve the
\npresent commercial relationships of the Company and the Company Subsidiaries
\nwith persons with whom the Company or the Company Subsidiaries do significant
\nbusiness and (ii) without limiting the generality of the foregoing, neither the
\nCompany nor any of the Company Subsidiaries will:<\/p>\n
(A) amend or propose to amend its Articles of
\nIncorporation or Bylaws (or similar organizational documents);<\/p>\n
(B) authorize for issuance, issue, grant, sell,
\npledge, dispose of or propose to issue, grant, sell, pledge or dispose of any
\nshares of, or any options, warrants, commitments, subscriptions or rights of any
\nkind to acquire or sell any shares of, the capital stock or other securities of
\nthe Company or any of the Company Subsidiaries, including, but not limited to,
\nany securities convertible into or exchangeable for shares of stock of any class
\nof the Company or any of the Company Subsidiaries, except for (a) the issuance
\nof shares <\/p>\n
-37-<\/p>\n
pursuant to the exercise of Company Options outstanding on the date of this
\nAgreement in accordance with their present terms, (b) the issuance of shares
\npursuant to the Company Stock Purchase Plans as in effect on the date of this
\nAgreement, (c) the issuance of shares upon the exercise of Company Warrants
\noutstanding on the date of this Agreement in accordance with their present
\nterms, or (d) the issuance of shares upon the conversion of the Notes in
\naccordance with the indenture relating to the Notes on its present terms;<\/p>\n
(C) split, combine or reclassify any shares of its
\ncapital stock or declare, pay or set aside any dividend or other distribution
\n(whether in cash, stock or property or any combination thereof) in respect of
\nits capital stock, other than dividends or distributions to the Company or a
\nCompany Subsidiary (except that in no case may the Company or a Company
\nSubsidiary declare or pay any cross-border dividends), make or allow any Company
\nSubsidiary to make any cross-border capital contributions, or directly or
\nindirectly redeem, purchase or otherwise acquire or offer to acquire any shares
\nof its capital stock or other securities (other than the repurchase of 100,000
\nCommon Shares from Matthew J. Bergeron pursuant to that certain Stock Purchase
\nAgreement dated December 22, 1998 between the Company and Mr. Bergeron);<\/p>\n
(D) (a) create or incur any indebtedness for borrowed
\nmoney or issue any debt securities, except pursuant to the Credit Agreements, or
\n(b) make any loans or advances, except in the ordinary course of business
\nconsistent with past practice;<\/p>\n
(E) (a) sell, pledge, dispose of or encumber any
\nassets of the Company or any of Company Subsidiaries (except for (i) sales of
\nassets in the ordinary course of business and in a manner consistent with past
\npractice, (ii) pledges to secure debt permitted under paragraph (D), (iii)
\ndispositions of obsolete or worthless assets, and (iv) sales of immaterial
\nassets not in excess of $250,000 in the aggregate); (b) acquire (by merger,
\nconsolidation, or acquisition of stock or assets) any corporation, partnership
\nor other business organization or division thereof; (c) authorize any capital
\nexpenditures or purchases of fixed assets which are, in the aggregate, in excess
\nof $250,000 from the date hereof until February 29, 2000; (d) assume, guarantee
\n(other than guarantees of obligations of the Company Subsidiaries entered into
\nin the ordinary course of business) or endorse or otherwise as an accommodation
\nbecome responsible for, the obligations of any person, or make any loans or
\nadvances, except in the ordinary course of business consistent with past
\npractice; or (e) voluntarily incur any material liability or obligation
\n(absolute, contingent or otherwise) except in the ordinary course of business
\nconsistent with past practice.<\/p>\n
(F) increase in any manner the compensation of any of
\nits officers or employees (other than, except with respect to employees who are
\nexecutive officers or directors, in the ordinary course of business reasonably
\nconsistent with past practice) or enter into, establish, amend or terminate any
\nemployment, consulting, retention, change in control, collective bargaining,
\nbonus or other incentive compensation, profit sharing, health or other welfare,
\nstock option or other equity, pension, retirement, vacation, severance, deferred<\/p>\n
-38-<\/p>\n
compensation or other compensation or benefit plan, policy, agreement, trust,
\nfund or arrangement with, for or in respect of, any shareholder, officer,
\ndirector, employee, consultant or affiliate other than, in any such case
\nreferred to above, as may be required by Law or as required pursuant to the
\nterms of agreements in effect on the date of this Agreement and other than
\narrangements with new employees (other than employees who will be officers of
\nthe Company) hired in the ordinary course of business consistent with past
\npractice and providing for compensation (other than equity-based compensation)
\nand other benefits consistent with those provided for similarly situated
\nemployees of the Company as of the date hereof;<\/p>\n
(G) alter through merger, liquidation,
\nreorganization, restructuring or in any other fashion the corporate structure or
\nownership of any Company Subsidiary or the Company;<\/p>\n
(H) except as may be required as a result of a change
\nin law or as required by the SEC, change any of the accounting principles or
\npractices used by it;<\/p>\n
(I) make any tax election or settle or compromise any
\nincome tax liability;<\/p>\n
(J) pay, discharge or satisfy any material claims,
\nliabilities or obliga- tions (absolute, accrued, asserted or unasserted,
\ncontingent or other), other than the payment, discharge or satisfaction in the
\nordinary course of business and consistent with past practice of liabilities
\nreflected or reserved against in, or contemplated by, the financial statements
\n(or the notes thereto) of the Company contained in the Company SEC Filings filed
\nprior to the date of this Agreement or incurred in the ordinary course of
\nbusiness consistent with past practice;<\/p>\n
(K) except to the extent necessary for the exercise
\nof its fiduciary duties by the Board of Directors of the Company as set forth
\nin, and consistent with the provisions of, SECTION 4.8 hereof, waive, amend or
\nallow to lapse any term or condition of any confidentiality or “standstill”
\nagreement to which the Company or any Company Subsidiary is a party; or<\/p>\n
(L) take, or agree in writing or otherwise to take,
\nany of the foregoing actions or any action which would make any of the
\nrepresentations or warranties of the Company contained in this Agreement untrue
\nor incorrect in any material respect at or prior to the Effective Time.<\/p>\n
(b) The Company shall, and the Company shall cause
\neach of the Company Subsidiaries to, comply with all Laws applicable to it or
\nany of its properties, assets or business and to maintain in full force and
\neffect all the Company Permits necessary for such business, except in any such
\ncase for any failure so to comply or maintain that would not <\/p>\n
-39-<\/p>\n
reasonably be expected to result in a Material Adverse Effect.<\/p>\n
4.2 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
\nprompt notice to Parent if any of the following occur after the date of this
\nAgreement: (i) receipt of any notice or other communication in writing from any
\nthird party alleging that the Consent of such third party is or may be required
\nin connection with the transactions contemplated by this Agreement; (ii) receipt
\nof any material notice or other communication from any Governmental Authority
\n(including, but not limited to, the National Association of Securities Dealers
\n(“NASD”), NASDAQ or any other securities exchange) in connection with the
\ntransactions contemplated by this Agreement; (iii) the occurrence of an event
\nwhich would be reasonably likely (A) to have a Material Adverse Effect or (B) to
\ncause any condition set forth in ANNEX I hereto to be unsatisfied in any
\nmaterial respect at any time prior to the consummation of the Offer; or (iv) the
\ncommencement or threat of any Litigation involving or affecting the Company or
\nany of the Company Subsidiaries, or any of their respective properties or
\nassets, or, to the Company’s knowledge, any employee, agent, director or
\nofficer, in his or her capacity as such, of the Company or any of the Company
\nSubsidiaries which, if pending on the date hereof, would have been required to
\nhave been disclosed pursuant to this Agreement or which relates to the
\nconsummation of the Offer or the Merger.<\/p>\n
4.3 ACCESS AND INFORMATION. Between the date of this Agreement
\nand the Effective Time, and without intending by this SECTION 4.3 to limit any
\nof the other obligations of the parties under this Agreement, the Company will
\ngive, and shall direct its accountants and legal counsel to give, Parent and its
\nauthorized representatives (including, without limitation, its financial
\nadvisors, accountants and legal counsel), at reasonable times and without undue
\ndisruption to or interference with the normal conduct of the business and
\naffairs of the Company, access as reasonably required in connection with the
\ntransactions provided for in this Agreement to all offices and other facilities
\nand to all contracts, agreements, commitments, books and records of or
\npertaining to the Company and the Company Subsidiaries and will furnish Parent
\nwith (a) such financial and operating data and other information with respect to
\nthe business and properties of the Company and the Company Subsidiaries as
\nParent may from time to time reasonably request in connection with such
\ntransactions and (b) a copy of each material report, schedule and other document
\nfiled or received by the Company or any of the Company Subsidiaries pursuant to
\nthe requirements of applicable securities laws, the NASD or NASDAQ.<\/p>\n
4.4 SHAREHOLDER APPROVAL. As soon as practicable following the
\nconsummation of the Offer, the Company will take all steps necessary to duly
\ncall, give notice of, convene and hold a meeting of its shareholders for the
\npurpose of voting upon the Company Proposals and for such other purposes as may
\nbe necessary or desirable in connection with effectuating the transactions
\ncontemplated hereby, if such meeting is required. Except as otherwise
\ncontemplated by this Agreement, the Board of Directors of the Company will
\nrecommend to the shareholders of the Company that they approve the Company
\nProposals.<\/p>\n
-40-<\/p>\n
4.5 REASONABLE BEST EFFORTS. Subject to the terms and
\nconditions herein provided, the Company agrees to use reasonable best efforts to
\ntake, or cause to be taken, all actions and to do, or cause to be done, all
\nthings necessary, proper or advisable to consummate and make effective as
\npromptly as practicable the transactions contemplated by this Agreement,
\nincluding, but not limited to, (i) obtaining all Consents from Governmental
\nAuthorities and other third parties required for the consummation of the Offer
\nand the Merger and the transactions contemplated thereby and (ii) timely making
\nall necessary filings under the HSR Act. Upon the terms and subject to the
\nconditions hereof, the Company agrees to use reasonable best efforts to take, or
\ncause to be taken, all actions and to do, or cause to be done, all things
\nnecessary to satisfy the other conditions of the Closing set forth herein.<\/p>\n
4.6 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in
\neffect, the Company shall not, and shall use reasonable best efforts to cause
\nits affiliates not to, issue or cause the publication of any press release or
\nany other announcement with respect to the Offer or the Merger or the
\ntransactions contemplated hereby without the consent of Parent (such consent not
\nto be unreasonably withheld or delayed), except where such release or
\nannouncement is required by applicable Law or pursuant to any applicable listing
\nagreement with, or rules or regulations of, the NASD or NASDAQ, in which case
\nthe Company, prior to making such announcement, will consult with Parent
\nregarding the same.<\/p>\n
4.7 COMPLIANCE. In consummating the transactions contemplated
\nhereby, the Company shall comply in all material respects with the provisions of
\nthe Securities Exchange Act and the Securities Act and shall comply, and cause
\nthe Company Subsidiaries to comply or to be in compliance, in all material
\nrespects, with, all other applicable Laws.<\/p>\n
4.8 NO SOLICITATION. (a) The Company shall not, directly or
\nindirectly, through any officer, director, employee, representative or agent of
\nthe Company or any of the Company Subsidiaries, solicit or encourage the
\ninitiation of (including by way of furnishing information) any inquiries or
\nproposals regarding any merger, sale of assets, sale of shares of capital stock
\n(including without limitation by way of a tender offer) or similar transactions
\ninvolving the Company or any Company Subsidiaries that if consummated would
\nconstitute an Alternative Transaction (as defined below) (any of the foregoing
\ninquiries or proposals being referred to herein as a “COMPANY TAKEOVER
\nPROPOSAL”). Nothing contained in this Agreement shall prevent the Board of
\nDirectors of the Company from (i) furnishing information to a third party which
\nhas made a BONA FIDE Company Takeover Proposal that is a Superior Proposal (as
\ndefined below) not solicited in violation of this Agreement, provided that such
\nthird party has executed an agreement with confidentiality provisions
\nsubstantially similar to those then in effect between the Company and an
\naffiliate of Parent (the “CONFIDENTIALITY AGREEMENT”) or (ii) subject to
\ncompliance with the other terms of this SECTION 4.8, considering and negotiating
\na bona fide Company Takeover Proposal that is a Superior Proposal not solicited
\nin violation of this Agreement; provided that, as to each of clauses (i) and
\n(ii), the Board of Directors of the Company reasonably determines in good faith
\n(after <\/p>\n
-41-<\/p>\n
due consultation with independent counsel, which may be Stoel Rives LLP) that it
\nis or is reasonably likely to be required to do so in order to discharge
\nproperly its fiduciary duties. For purposes of this Agreement, a “SUPERIOR
\nPROPOSAL” means any proposal made by a party to acquire, directly or indirectly,
\nfor consideration consisting of cash and\/or securities, all of the equity
\nsecurities of the Company entitled to vote generally in the election of
\ndirectors or all the assets of the Company (other than a de minimus amount of
\nassets not material to the conduct of the Company’s business), on terms which
\nthe Board of Directors of the Company reasonably believes (after due
\nconsultation with a financial advisor of nationally recognized reputation, which
\nmay be the Financial Advisor or McDonald Investments) to be more favorable from
\na financial point of view to its shareholders than the Offer and the Merger
\ntaking into account at the time of determination all factors relating to such
\nproposed transaction deemed relevant by the Board of Directors of the Company,
\nincluding, without limitation, the financing thereof, the proposed timing
\nthereof and all other conditions thereto and any changes to the financial terms
\nof this Agreement proposed by Parent and Purchaser. “ALTERNATIVE TRANSACTION”
\nmeans any of (i) a transaction pursuant to which any person (or group of
\npersons) other than Parent or its affiliates (a “THIRD PARTY”) acquires or would
\nacquire more than 20% of the outstanding shares of any class of equity
\nsecurities of the Company, whether from the Company or pursuant to a tender
\noffer or exchange offer or otherwise, (ii) a merger or other business
\ncombination involving the Company pursuant to which any Third Party acquires
\nmore than 20% of the outstanding equity securities of the Company or the entity
\nsurviving such merger or business combination, (iii) any transaction pursuant to
\nwhich any Third Party acquires or would acquire control of assets (including for
\nthis purpose the outstanding equity securities of Company Subsidiaries and
\nsecurities of the entity surviving any merger or business combination including
\nany of the Company Subsidiaries) of the Company or any Company Subsidiaries
\nhaving a fair market value (as determined by the Board of Directors of the
\nCompany in good faith) equal to more than 20% of the fair market value of all
\nthe assets of the Company and the Company Subsidiaries, taken as a whole,
\nimmediately prior to such transaction, or (iv) any other consolidation, business
\ncombination, recapitalization or similar transaction involving the Company or
\nany of the Company Subsidiaries, other than the transactions contemplated by
\nthis Agreement; PROVIDED, HOWEVER, that the term Alternative Transaction shall
\nnot include any acquisition of securities by a broker dealer in connection with
\na BONA FIDE public offering of such securities. Notwithstanding anything to the
\ncontrary contained in this SECTION 4.8 or elsewhere in this Agreement, prior to
\nthe Effective Time, the Company may, in connection with a possible Company
\nTakeover Proposal, refer any third party to this SECTION 4.8 and SECTION 8.7 and
\nmake a copy of this SECTION 4.8 and SECTION 8.7 available to a third party.<\/p>\n
(b) The Company shall immediately notify Parent and Purchaser
\nafter receipt of any Company Takeover Proposal, or any modification of or
\namendment to any Company Takeover Proposal, or any request for nonpublic
\ninformation relating to the Company or any of the Company Subsidiaries in
\nconnection with a Company Takeover Proposal or for access to the properties,
\nbooks or records of the Company or any subsidiary by any person or entity that
\ninforms the Board of Directors of the Company or such subsidiary that it is
\nconsidering <\/p>\n
-42-<\/p>\n
making, or has made, a Company Takeover Proposal. Such notice to Parent and
\nPurchaser shall be made orally and in writing, and shall indicate the identity
\nof the person making the Company Takeover Proposal or intending to make the
\nCompany Takeover Proposal or requesting non-public information or access to the
\nbooks and records of the Company, the terms of any such Company Takeover
\nProposal or modification or amendment to a Company Takeover Proposal, and
\nwhether the Company is providing or intends to provide the person making the
\nCompany Takeover Proposal with access to information concerning the Company as
\nprovided in SECTION 4.8(a). The Company shall also immediately notify Parent and
\nPurchaser, orally and in writing, if it enters into negotiations concerning any
\nCompany Takeover Proposal.<\/p>\n
(c) Except as set forth in this SECTION 4.8, neither the Board
\nof Directors of the Company nor any committee thereof shall (i) withdraw or
\nmodify, or indicate publicly its intention to withdraw or modify, in a manner
\nadverse to Parent, the approval or recommendation by such Board of Directors or
\nsuch committee of the Offer or the Company Proposals, (ii) approve or recommend,
\nor indicate publicly its intention to approve or recommend, any Company Takeover
\nProposal or (iii) cause the Company to enter into any letter of intent,
\nagreement in principle, acquisition agreement or other similar agreement (each,
\na “COMPANY ACQUISITION AGREEMENT”) related to any Company Takeover Proposal.
\nNotwithstanding the foregoing, in the event that prior to the Effective Time the
\nBoard of Directors of the Company determines in good faith, after due
\nconsultation with outside counsel, that the failure to do so constitutes or is
\nreasonably likely to constitute a breach of its fiduciary duties to the
\nCompany’s shareholders under applicable law, the Board of Directors of the
\nCompany may (subject to this and the following sentences) approve or recommend a
\nSuperior Proposal and, in connection therewith, withdraw or modify its approval
\nor recommendation of the Offer or the Company Proposals, but only at a time that
\nis after the third business day following Parent’s receipt of written notice
\nadvising Parent that the Board of Directors of the Company has received a
\nSuperior Proposal and, in the case of any previously received Superior Proposal
\nthat has been materially modified or amended, such modification or amendment and
\nspecifying the material terms and conditions of such Superior Proposal,
\nmodification or amendment.<\/p>\n
(d) Nothing contained in this SECTION 4.8 shall prohibit the
\nCompany from taking and disclosing to its shareholders a position contemplated
\nby Rule 14e-2(a) promulgated under the Securities Exchange Act or from making
\nany disclosure to the Company’s shareholders if, in the good faith judgment of
\nthe Board of Directors of the Company, with the advice of outside counsel,
\nfailure so to disclose could be determined to be a breach of its fiduciary
\nduties to the Company’s shareholders under applicable law; PROVIDED, HOWEVER,
\nthat neither the Company nor its Board of Directors nor any committee thereof
\nshall, except as permitted by SECTION 4.8(c), withdraw or modify, or indicate
\npublicly its intention to withdraw or modify, its position with respect to the
\nOffer or the Company Proposals or approve or recommend, or indicate publicly its
\nintention to approve or recommend, a Company Takeover Proposal.<\/p>\n
-43-<\/p>\n
(e) The Company shall advise its officers and directors and
\nany investment banker or attorney retained by the Company in connection with the
\ntransactions contemplated by this Agreement of the restrictions set forth in
\nthis SECTION 4.8.<\/p>\n
4.9 SEC AND SHAREHOLDER FILINGS. The Company shall send to
\nParent a copy of all material public reports and materials as and when it sends
\nthe same to its shareholders, the SEC or any state or foreign securities
\ncommission.<\/p>\n
4.10 TAKEOVER STATUTES. If any “fair price,” “moratorium,”
\n“control share acquisition” or other similar anti-takeover statute or regulation
\nenacted under state or federal laws in the United States (each a “TAKEOVER
\nSTATUTE”), including, without limitation, Sections 60.825 – 60.845 of the Oregon
\nCode, is or may become applicable to the Offer or the Merger, the Company will
\nuse reasonable best efforts to grant such approvals and take such actions as are
\nnecessary so that the transactions contemplated by this Agreement and the
\nCompany Proposals may be consummated as promptly as practicable on the terms
\ncontemplated hereby and otherwise act so as to eliminate or minimize the effects
\nof any Takeover Statute on any of the transactions contemplated hereby.<\/p>\n
4.11 COMPANY OPTIONS AND STOCK PURCHASE PLAN. (a) Prior to the
\nconsummation of the Offer, the Company shall take all action necessary in order
\nto effectuate the provisions of Section 1.9(a) relating to Company Options.<\/p>\n
(b) The Company will not accelerate the exercisability of any
\nCompany Option that by its terms is not exercisable prior to March 1, 2000.<\/p>\n
ARTICLE V
\nADDITIONAL COVENANTS OF PURCHASER AND PARENT<\/p>\n
Parent and Purchaser covenant and agree as follows:<\/p>\n
5.1 REASONABLE BEST EFFORTS. Subject to the terms and
\nconditions herein provided, Parent and Purchaser agree to use reasonable best
\nefforts to take, or cause to be taken, all actions and to do, or cause to be
\ndone, all things necessary, proper or advisable to consummate and make effective
\nas promptly as practicable the transactions contemplated by this Agreement,
\nincluding, but not limited to, (i) obtaining all Consents from Governmental
\nAuthorities and other third parties required for the consummation of the Offer
\nand the Merger and the transactions contemplated thereby and (ii) timely making
\nall necessary filings under the HSR Act. Upon the terms and subject to the
\nconditions hereof, Parent and Purchaser agree to use reasonable best efforts to
\ntake, or cause to be taken, all actions and to do, or cause to be done, all
\nthings necessary to satisfy the other conditions of the Closing set forth
\nherein.<\/p>\n
-44-<\/p>\n
5.2 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in
\neffect, Parent and Purchaser shall not, and shall use reasonable best efforts to
\ncause their affiliates not to, issue or cause the publication of any press
\nrelease or any other announcement with respect to the Offer or the Merger or the
\ntransactions contemplated hereby without the consent of the Company (such
\nconsent not to be unreasonably withheld or delayed), except where such release
\nor announcement is required by applicable Law or pursuant to any applicable
\nlisting agreement with, or rules or regulations of, any stock exchange on which
\nshares of Guarantor’s capital stock are listed or the NASD, or other applicable
\nsecurities exchange, in which case Parent, prior to making such announcement,
\nwill consult with the Company regarding the same.<\/p>\n
5.3 COMPLIANCE. In consummating the transactions contemplated
\nhereby, Parent and Purchaser shall comply in all material respects with the
\nprovisions of the Securities Exchange Act and the Securities Act and shall
\ncomply, and cause their subsidiaries to comply or to be in compliance, in all
\nmaterial respects, with all other applicable Laws.<\/p>\n
5.4 EMPLOYEE BENEFIT PLANS. (a) As of the Effective Time,
\nParent shall cause the Surviving Corporation to honor and satisfy all
\nobligations and liabilities with respect to the Employee Plans. Notwithstanding
\nthe foregoing, the Surviving Corporation shall not be required to continue any
\nparticular Employee Plan after the Effective Time, and any Employee Plan may be
\namended or terminated in accordance with its terms and applicable Law. To the
\nextent that any Employee Plan is terminated or amended after the Effective Date
\nso as to eliminate the future benefits that are being provided with respect to
\nparticipants thereunder, Parent shall arrange for each individual who is then a
\nparticipant in such terminated or amended plan to participate in a Parent
\nBenefit Plan (“PARENT BENEFIT PLAN”), to the extent similarly situated employees
\nof the Parent participate in such Parent Benefit Plan, in accordance with the
\neligibility criteria thereof, provided that (i) such participant shall receive
\nfull credit for years of service with the Company or any of the Company
\nSubsidiaries prior to the Effective Time for all purposes for which such service
\nwas recognized under the applicable Employee Plan, including, but not limited
\nto, recognition of service for eligibility, vesting (including acceleration
\nthereof pursuant to the terms of the applicable Employee Plan), entitlement to
\ncommence benefits and, to the extent not duplicative of benefits received under
\nsuch Employee Plan, the amount of benefits, (ii) Parent shall cause any and all
\npre-existing condition limitations (to the extent such limitations did not apply
\nto a pre-existing condition under the Employee Plans) and eligibility waiting
\nperiods under any group health plans to be waived with respect to such
\nparticipant and his or her eligible dependents and (iii) Parent shall cause the
\nParent Benefit Plans that are group welfare plans to provide such participant
\nwith credit towards any applicable deductibles, co-payments and similar
\nexclusions for expenses incurred prior to the Effective Time.<\/p>\n
(b) The provisions of this SECTION 5.4 are not intended to and
\ndo not create rights of third party beneficiaries.<\/p>\n
-45-<\/p>\n
5.5 INDEMNIFICATION. (a) From and after the Effective Time,
\nthe Surviving Corporation shall indemnify and hold harmless all past and present
\nofficers and directors (the “INDEMNIFIED PARTIES”) of the Company and of the
\nCompany Subsidiaries to the full extent such persons may be indemnified by the
\nCompany pursuant to Oregon law, the Company’s Second Amended and Restated
\nArticles of Incorporation and Bylaws, as each is in effect on the date of this
\nAgreement, for acts and omissions (x) arising out of or pertaining to the
\ntransactions contemplated by this Agreement or arising out of the Offer
\nDocuments or (y) otherwise with respect to any acts or omissions occurring or
\narising at or prior to the Effective Time and shall advance reasonable
\nlitigation expenses incurred by such persons in connection with defending any
\naction arising out of such acts or omissions, PROVIDED that such persons provide
\nthe requisite affirmations and undertaking, as set forth in Section 60.397 of
\nthe Oregon Code.<\/p>\n
(b) In addition, Parent will provide, or cause the Surviving
\nCorporation to provide, for a period of not less than six years after the
\nEffective Time, the Company’s current directors and officers an insurance and
\nindemnification policy that provides coverage for events occurring or arising at
\nor prior to the Effective Time (the “D&O INSURANCE”) that is no less favorable
\nthan the existing policy or, if substantially equivalent insurance coverage is
\nunavailable, the best available coverage; PROVIDED, HOWEVER, that Parent and the
\nSurviving Corporation shall not be required to pay an annual premium for the D&O
\nInsurance in excess of 200% of the annual premium currently paid by the Company
\nfor such insurance, but in such case shall purchase as much such coverage as
\npossible for such amount.<\/p>\n
(c) This SECTION 5.5 is intended to benefit the Indemnified
\nParties and shall be binding on all successors and assigns of Parent, Purchaser,
\nthe Company and the Surviving Corporation. Parent hereby guarantees the
\nperformance by the Surviving Corporation of the indemnified obligations pursuant
\nto this SECTION 5.5, which guaranty is absolute and unconditional and shall not
\nbe affected by any circumstance whatsoever, including the bankruptcy or
\ninsolvency of the Surviving Corporation or any other person. The Indemnified
\nParties shall be intended third-party beneficiaries of this SECTION 5.5.<\/p>\n
5.6 VOTING OF COMMON SHARES. At any meeting of the Company’s
\nshareholders held for the purpose of voting upon the Company Proposals, all of
\nthe Common Shares then owned by Parent, Purchaser or any other subsidiaries of
\nParent shall be voted in favor of the Company Proposals.<\/p>\n
5.7 GUARANTEE OF PARENT. Parent hereby guarantees the payment
\nby Purchaser of the Per Share Amount and any other amounts payable by Purchaser
\npursuant to this Agreement and will cause Purchaser to perform all of its other
\nobligations under this Agreement in accordance with their terms.<\/p>\n
-46-<\/p>\n
ARTICLE VI
\nMERGER CONDITIONS<\/p>\n
The respective obligations of each party to effect the Merger
\nshall be subject to the fulfillment or waiver at or prior to the Effective Time
\nof the following conditions:<\/p>\n
6.1 OFFER. The Offer shall have been consummated; PROVIDED
\nthat this condition shall be deemed to have been satisfied with respect to the
\nobligation of Parent and Purchaser to effect the Merger if Purchaser fails to
\naccept for payment or pay for Common Shares pursuant to the Offer in violation
\nof the terms of the Offer or of this Agreement.<\/p>\n
6.2 SHAREHOLDER APPROVAL. If required, the Company Proposals
\nshall have been approved at or prior to the Effective Time by the requisite vote
\nof the shareholders of the Company in accordance with the Oregon Code.<\/p>\n
6.3 NO INJUNCTION OR ACTION. No order, statute, rule,
\nregulation, executive order, stay, decree, judgment or injunction shall have
\nbeen enacted, entered, promulgated or enforced by any court or other
\nGovernmental Authority which prohibits or prevents the consummation of the
\nMerger which has not been vacated, dismissed or withdrawn prior to the Effective
\nTime. The Company and Parent shall use all reasonable best efforts to have any
\nof the foregoing vacated, dismissed or withdrawn by the Effective Time.<\/p>\n
6.4 GOVERNMENTAL APPROVALS. All Consents of any Governmental
\nAuthority required for the consummation of the Merger and the transactions
\ncontemplated by this Agreement shall have been obtained, except for those
\nConsents the failure to obtain which will not have a material adverse effect on
\nthe business, assets, condition (financial or other), liabilities or results of
\noperations of the Surviving Corporation and its subsidiaries taken as a whole.<\/p>\n
ARTICLE VII
\nTERMINATION AND ABANDONMENT<\/p>\n
7.1 TERMINATION. This Agreement may be terminated at any time
\nprior to the Effective Time, whether before or after approval of the
\nshareholders of the Company described herein:<\/p>\n
(a) by mutual written consent of Parent and the Company;<\/p>\n
(b) by either Parent or the Company if any Governmental
\n Authority shall have issued an order, decree or ruling or taken any
\n other action permanently enjoining, restraining or otherwise
\n prohibiting the consummation of the transactions contemplated by this
\n Agreement and such order, decree or ruling or other action shall have
\n become final and nonappealable;<\/p>\n
(c) by Parent if:<\/p>\n
-47-<\/p>\n
(i) the Company shall have breached or failed to perform in
\n any material respect any of its covenants or other agreements contained
\n in this Agreement, which breach or failure to perform is incapable of
\n being cured or has not been cured within five (5) days after the giving
\n of written notice thereof to the Company (but not later than the
\n expiration of the twenty (20) business day period provided for the
\n Offer under SECTION 1.1(b) hereof);<\/p>\n
(ii) any representation or warranty of the Company shall not
\n have been true and correct when made (without for this purpose giving
\n effect to qualifications of materiality contained in such
\n representation and warranty), if such failure to be true and correct,
\n individually or in the aggregate, would reasonably be expected to have
\n a Material Adverse Effect;<\/p>\n
(iii) any representation or warranty of the Company shall
\n cease to be true and correct at any later date (without for this
\n purpose giving effect to qualifications of materiality contained in
\n such representation and warranty) as if made on such date (other than
\n representations and warranties made as of a specified date) other than
\n as a result of a breach or failure to perform by the Company of any of
\n its covenants or agreements under this Agreement if such failure to be
\n true and correct, individually or in the aggregate, would reasonably be
\n expected to have a Material Adverse Effect; PROVIDED, HOWEVER, that
\n such representation or warranty is incapable of being cured or has not
\n been cured within five (5) days after the giving of written notice
\n thereof to the Company (but not later than the expiration of the twenty
\n (20) business day period provided for the Offer under SECTION 1.1(b)
\n hereof); PROVIDED, HOWEVER, that the right to terminate this Agreement
\n pursuant to this SECTION 7.1(c) shall not be available to Parent if
\n Purchaser or any other affiliate of Parent shall acquire shares of
\n Common Shares pursuant to the Offer;<\/p>\n
(d) by Parent if, whether or not permitted to do so by this
\n Agreement, (i) the Board of Directors of the Company or any committee
\n thereof shall have withdrawn or modified in a manner adverse to Parent
\n or Purchaser its approval or recommendation of the Offer or any of the
\n Company Proposals; (ii) the Board of Directors of the Company or any
\n committee thereof shall have approved or recommended to the
\n shareholders of the Company any Company Takeover Proposal or
\n Alternative Transaction; (iii) the Board of Directors of the Company or
\n any committee thereof shall have approved or recommended that the
\n shareholders of the Company tender their Common Shares in any tender or
\n exchange offer that is an Alternative Transaction; (iv) the Board of
\n Directors of the Company or any committee thereof shall have taken any
\n position or make any disclosures to the Company’s shareholders
\n permitted pursuant to SECTION 4.8(e) which has the effect of any of the
\n foregoing; (v) the Board of Directors of the Company or any committee
\n thereof shall have resolved to take any of the foregoing actions;<\/p>\n
-48-<\/p>\n
(e) by either Parent or the Company if, as the result of the
\n failure of the Minimum Condition or any of the other conditions set
\n forth in Annex I hereto, the Offer shall have terminated or expired in
\n accordance with its terms without Purchaser having purchased any Common
\n Shares pursuant to the Offer, PROVIDED that if the failure to satisfy
\n any conditions set forth in Annex I shall be a basis for termination of
\n this Agreement under any other clause of this Section 7.1, a
\n termination pursuant to this clause (e) shall be deemed a termination
\n under such other clause;<\/p>\n
(f) by either Parent or the Company if the Offer shall not
\n have been consummated on or before February 29, 2000, PROVIDED that the
\n right to terminate this Agreement pursuant to this SECTION 7.1(f) shall
\n not be available to any party whose failure to perform any of its
\n obligations under this Agreement results in the failure of the Offer to
\n be consummated by such time;<\/p>\n
(g) by the Company, if Parent or Purchaser shall have breached
\n or failed to perform in any material respect any of its
\n representations, warranties, covenants or other agreements contained in
\n this Agreement, which breach or failure to perform is incapable of
\n being cured or has not been cured within five (5) days after the giving
\n of written notice thereof to Parent; or<\/p>\n
(h) by the Company, in order to accept a Superior Proposal,
\n PROVIDED that the Board of Directors of the Company reasonably
\n determines in good faith (after due consultation with independent
\n counsel, which may be Stoel Rives LLP), that it is or is reasonably
\n likely to be required to accept such proposal in order to discharge
\n properly its fiduciary duties; the Company has given parent three
\n business days’ advance notice of the Company’s intention to accept such
\n Superior Proposal; the Company shall in fact accept such proposal; the
\n Company shall have paid the fee and expenses contemplated by SECTION
\n 8.7 hereof; and the Company shall have complied in all respects with
\n the provisions of Section 4.8.<\/p>\n
The party desiring to terminate this Agreement pursuant to the preceding
\nparagraphs shall give written notice of such termination to the other party in
\naccordance with SECTION 8.5 hereof.<\/p>\n
7.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
\ntermination of this Agreement and the abandonment of the Offer or the Merger
\npursuant to this ARTICLE VII, this Agreement (other than SECTIONS 7.2, 8.1, 8.3,
\n8.5, 8.6, 8.7, 8.8, 8.10, 8.11, 8.12, 8.14 and 8.15 hereof) shall become void
\nand of no effect with no liability on the part of any party hereto (or of any of
\nits directors, officers, employees, agents, legal or financial advisors or other
\nrepresentatives); PROVIDED, HOWEVER, that no such termination shall relieve any
\nparty hereto from any liability for any willful breach of this Agreement prior
\nto termination. If this Agreement is terminated as provided herein, each party
\nshall use all reasonable best efforts to <\/p>\n
-49-<\/p>\n
redeliver all documents, work papers and other material (including any copies
\nthereof) of any other party relating to the transactions contemplated hereby,
\nwhether obtained before or after the execution hereof, to the party furnishing
\nthe same.<\/p>\n
ARTICLE VIII
\nMISCELLANEOUS<\/p>\n
8.1 CONFIDENTIALITY. (a) Unless (i) otherwise expressly
\nprovided in this Agreement, (ii) required by applicable Law or any listing
\nagreement with, or the rules and regulations of, the NASDAQ or any other
\napplicable securities exchange or the NASD, (iii) necessary to secure any
\nrequired Consents as to which the other party has been advised or (iv) consented
\nto in writing by Parent and the Company, all information (whether oral or
\nwritten) and documents furnished in connection herewith together with analyses,
\ncompilations, studies or other documents prepared by such party which contain or
\notherwise reflect such information shall be kept strictly confidential by the
\nCompany, Parent, Purchaser and their respective officers, directors, employees
\nand agents. Prior to any disclosure permitted pursuant to the preceding
\nsentence, the party intending to make such disclosure shall consult with the
\nother party regarding the nature and extent of the disclosure. Nothing contained
\nherein shall preclude disclosures to the extent necessary to comply with
\naccounting, SEC and other disclosure obligations imposed by applicable Law. In
\nthe event the transactions contemplated by this Agreement are not consummated,
\neach party shall return to the other any documents furnished by the other and
\nall copies thereof that any of them may have made and will hold in confidence
\nany information obtained from the other party except to the extent (a) such
\nparty is required to disclose such information by Law or such disclosure is
\nnecessary or desirable in connection with the pursuit or defense of a claim, (b)
\nsuch information was known by such party prior to such disclosure (and PROVIDED
\nthat, except with respect to information referred to in the following clause
\n(c), such party shall have advised the other party of such knowledge upon or
\npromptly after its receipt of such information) or was thereafter developed or
\nobtained by such party independent of such disclosure or (c) such information is
\nor becomes generally available to the public other than by breach of this
\nSECTION 8.1 (or, to such party’s knowledge, breach of a confidentiality
\nagreement with the other party). Prior to any disclosure of information pursuant
\nto the exception in clause (a) of the preceding sentence, the party intending to
\ndisclose the same shall so notify the party which provided the same in order
\nthat such party may seek a protective order or other appropriate remedy should
\nit choose to do so.<\/p>\n
(b) The Parent and the Company further acknowledge that
\ncertain of the business and activities of each of them is competitive with
\nbusiness and activities of the other party, and each of them therefore agrees
\nthat it will not use, or seek to obtain any competitive or other business
\nadvantage as a result of, the information or documents so received by it in
\nconnection herewith, such party acknowledging that such use would be unfair and
\nmaterially detrimental to the other party, PROVIDED that the provisions of this
\nSECTION 8.1(b) shall not apply to information referred to in clause (c) of
\nSECTION 8.1(a) hereof.<\/p>\n
-50-<\/p>\n
8.2 AMENDMENT AND MODIFICATION. This Agreement may be amended,
\nmodified or supplemented only by a written agreement among the Company, Parent
\nand Purchaser.<\/p>\n
8.3 WAIVER OF COMPLIANCE; CONSENTS. Any failure of the Company
\non the one hand, or Parent and Purchaser on the other hand, to comply with any
\nobligation, covenant, agreement or condition herein may be waived by Parent on
\nthe one hand, or the Company on the other hand, only by a written instrument
\nsigned by the party granting such waiver, but such waiver or failure to insist
\nupon strict compliance with such obligation, covenant, agreement or condition
\nshall not operate as a waiver of, or estoppel with respect to, any subsequent or
\nother failure. Whenever this Agreement requires or permits consent by or on
\nbehalf of any party hereto, such consent shall be given in writing in a manner
\nconsistent with the requirements for a waiver of compliance as set forth in this
\nSECTION 8.3.<\/p>\n
8.4 SURVIVAL. The respective representations, warranties,
\ncovenants and agreements of the Company and Parent contained herein or in any
\ncertificates or other documents delivered prior to or at the Closing shall
\nsurvive the execution and delivery of this Agreement, notwithstanding any
\ninvestigation made or information obtained by the other party, but shall
\nterminate at the Effective Time, except for those contained in SECTIONS 1.7,
\n1.8, 1.9, 1.14, 5.4, 5.5, 5.7 and 8.8 hereof and this SECTION 8.4, which shall
\nsurvive beyond the Effective Time.<\/p>\n
8.5 NOTICES. All notices and other communications hereunder
\nshall be in writing and shall be deemed to have been duly given when delivered
\nin person, by facsimile, receipt confirmed, or on the next business day when
\nsent by overnight courier or on the second succeeding business day when sent by
\nregistered or certified mail (postage prepaid, return receipt requested) to the
\nrespective parties at the following addresses (or at such other address for a
\nparty as shall be specified by like notice):<\/p>\n
(i) if to the Company, to:<\/p>\n
PRAEGITZER INDUSTRIES INC.
\n 19801 S.W. 72nd Avenue
\n Tualatin, OR 97052
\n Attention: Matthew J. Bergeron
\n Telecopy: (503) 454-6266
\n Confirm: (503) 454-6066<\/p>\n
with a copy to:<\/p>\n
Stoel Rives LLP
\n 900 S.W. Fifth Avenue<\/p>\n
-51-<\/p>\n
Suite 2600
\n Portland, Oregon 97204-1268
\n Attention: Robert J. Moorman
\n Telecopy: (503) 220-2480
\n Confirm: (503) 220-3380<\/p>\n
(ii) if to Parent or Purchaser, to:<\/p>\n
SIGMA CIRCUITS, INC.
\n c\/o Tyco International (US) Inc.
\n One Tyco Park
\n Exeter, NH 03833
\n Attention: General Counsel
\n Telecopy: (603) 778-7360
\n Confirm: (603) 778-9700<\/p>\n
with a copy to:<\/p>\n
Kramer Levin Naftalis & Frankel LLP
\n 919 Third Avenue
\n New York, New York 10022
\n Attention: Abbe L. Dienstag, Esq.
\n Telecopy: (212) 715-8000
\n Confirm: (212) 715-9100<\/p>\n
8.6 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
\nprovisions hereof shall be binding upon and inure to the benefit of the parties
\nhereto and their respective successors and permitted assigns. Neither this
\nAgreement nor any of the rights, interests or obligations hereunder shall be
\nassigned by any of the parties hereto prior to the Effective Time without the
\nprior written consent of the Company, in the case of a proposed assignment by
\nParent or Purchaser, or by Parent, in the case of a proposed assignment by the
\nCompany, except that any Parent and Purchaser may assign its rights, interest
\nand obligations hereunder to any other wholly owned direct or indirect
\nsubsidiary of Guarantor.<\/p>\n
8.7 FEES AND EXPENSES. (a) Except as provided in SECTION
\n8.7(b) or 8.7(c) hereof, all costs and expenses incurred in connection with this
\nAgreement and the transactions contemplated hereby shall be paid by the party
\nincurring such costs or expenses.<\/p>\n
(b) The Company agrees that if this Agreement is terminated
\n pursuant to<\/p>\n
(i) SECTION 7.1(d);<\/p>\n
(ii) SECTION 7.1(h); or<\/p>\n
-52-<\/p>\n
(iii) SECTION 7.1(e) OR 7.1(f) and, with respect to this
\n clause (iii), (A) at the time of such termination, there shall be
\n outstanding a BONA FIDE Company Takeover Proposal which has been made
\n directly to the shareholders of the Company or has otherwise become
\n publicly known or there shall be outstanding an announcement by any
\n credible third party of a BONA FIDE intention to make an Acquisition
\n Proposal (in each case whether or not conditional and whether or not
\n such proposal shall have been rejected by the Board of Directors of the
\n Company) or (B) an Alternative Transaction shall be publicly announced
\n by the Company or any third party within 12 months following the date
\n of such termination and such transaction shall at any time thereafter
\n be consummated on substantially the terms theretofore announced<\/p>\n
then the Company shall pay to Parent the sum of (a) $5 million. Any payment
\nrequired by this SECTION 8.7(b) shall be made as promptly as practicable but in
\nno event later than two business days following termination of this Agreement in
\nthe case of clause (i) above, upon termination of this Agreement in the case of
\nclause (ii) above and, in the case of clause (iii) above, upon consummation of
\nsuch Company Takeover Proposal, and shall be made by wire transfer of
\nimmediately available funds to an account designated by Parent.<\/p>\n
(c) The Company further agrees that if this Agreement is
\nterminated pursuant to SECTION 7.1(c)(i) hereof,<\/p>\n
(i) the Company will pay to Parent, as promptly as practicable
\n but in no event later than two business days following termination of
\n this Agreement, the amount of all documented and reasonable costs and
\n expenses incurred by Parent, Purchaser and their affiliates (including
\n but not limited to fees and expenses of counsel and accountants and
\n out-of-pocket expenses (but not fees) of financial advisors) in an
\n aggregate amount not to exceed $500,000 in connection with this
\n Agreement or the transactions contemplated hereby (“PARENT EXPENSES”);
\n and<\/p>\n
(ii) in the event that the Company consummates a Company
\n Takeover Proposal (whether or not solicited in violation of this
\n Agreement) which is publicly announced within one year from the date of
\n termination of this Agreement, the Company will pay to Parent the sum
\n of $5 million, which payment shall be made not later than two business
\n days following consummation of such Company Takeover Proposal.<\/p>\n
(d) The Company further agrees that if this Agreement is
\nterminated pursuant to SECTION 7.1(c)(ii) hereof, the Company will pay to
\nParent, as promptly as practicable but in no event later than two business days
\nfollowing termination of this Agreement, the Parent Expenses.<\/p>\n
8.8 GOVERNING LAW. This Agreement shall be deemed to be made
\nin, and <\/p>\n
-53-<\/p>\n
in all respects shall be interpreted, construed and governed by and in
\naccordance with the laws of, the State of New York.<\/p>\n
8.9 COUNTERPARTS. This Agreement may be executed in one or
\nmore counterparts, each of which shall be deemed an original, but all of which
\ntogether shall constitute one and the same instrument.<\/p>\n
8.10 INTERPRETATION. The article and section headings
\ncontained in this Agreement are solely for the purpose of reference, are not
\npart of the agreement of the parties and shall not in any way affect the meaning
\nor interpretation of this Agreement. As used in this Agreement, (i) the term
\n“PERSON” shall mean and include an individual, a partnership, a joint venture, a
\ncorporation, a limited liability company, a trust, an association, an
\nunincorporated organization, a Governmental Authority and any other entity, (ii)
\nunless otherwise specified herein, the term “AFFILIATE,” with respect to any
\nperson, shall mean and include any person controlling, controlled by or under
\ncommon control with such person and (iii) the term “SUBSIDIARY” of any specified
\nperson shall mean any corporation 50 percent or more of the outstanding voting
\npower of which, or any partnership, joint venture, limited liability company or
\nother entity 50 percent or more of the total equity interest of which, is
\ndirectly or indirectly owned by such specified person.<\/p>\n
8.11 ENTIRE AGREEMENT. This Agreement and the documents or
\ninstruments referred to herein including, but not limited to, the Annex(es)
\nattached hereto and the Company Disclosure Letter referred to herein, which
\nAnnex(es) and Company Disclosure Letter are incorporated herein by reference,
\nembody the entire agreement and understanding of the parties hereto in respect
\nof the subject matter contained herein. There are no restrictions, promises,
\nrepresentations, warranties, covenants, or undertakings other than those
\nexpressly set forth or referred to herein. This Agreement supersedes all prior
\nagreements and understandings among the parties with respect to such subject
\nmatter. Notwithstanding the foregoing provisions of this SECTION 8.11, the
\nConfidentiality Letter shall remain in effect in accordance with its terms.<\/p>\n
8.12 SEVERABILITY. (a) In case any provision in this Agreement
\nshall be held invalid, illegal or unenforceable in a jurisdiction, such
\nprovision shall be modified or deleted, as to the jurisdiction involved, only to
\nthe extent necessary to render the same valid, legal and enforceable, and the
\nvalidity, legality and enforceability of the remaining provisions hereof shall
\nnot in any way be affected or impaired thereby nor shall the validity, legality
\nor enforceability of such provision be affected thereby in any other
\njurisdiction.<\/p>\n
(b) Parent and the Company agree that the payments to Parent
\nprovided in SECTION 8.7 are fair and reasonable in the circumstances,
\nconsidering not only the consideration payable to the holders of Common Shares
\nin the Offer and the Merger but also the outstanding funded indebtedness
\n(including capital leases) of the Company and the Company Subsidiaries and
\nParent’s anticipated costs, including lost opportunity costs, if the <\/p>\n
-54-<\/p>\n
Offer and Merger are not consummated. If a court of competent jurisdiction shall
\nnonetheless, by a final, non-appealable judgment, determine that the amount of
\nsuch payments exceed the maximum amount permitted by law, then the amount of
\nsuch payments shall be reduced to the maximum amount permitted by law in the
\ncircumstances, as determined by such court of competent jurisdiction.<\/p>\n
8.13 SPECIFIC PERFORMANCE. The parties hereto agree that
\nirreparable damage would occur in the event that any of the provisions of this
\nAgreement were not performed in accordance with their specific terms or were
\notherwise breached. Accordingly, the parties further agree that each party shall
\nbe entitled to an injunction or restraining order to prevent breaches of this
\nAgreement and to enforce specifically the terms and provisions hereof in any
\ncourt of the United States or any state having jurisdiction, this being in
\naddition to any other right or remedy to which such party may be entitled under
\nthis Agreement, at law or in equity.<\/p>\n
8.14 THIRD PARTIES. Nothing contained in this Agreement or in
\nany instrument or document executed by any party in connection with the
\ntransactions contemplated hereby shall create any rights in, or be deemed to
\nhave been executed for the benefit of, any person that is not a party hereto or
\nthereto or a successor or permitted assign of such a party; PROVIDED HOWEVER,
\nthat the parties hereto specifically acknowledge that the provisions of SECTION
\n5.5 hereof are intended to be for the benefit of, and shall be enforceable by,
\nthe Indemnified Parties.<\/p>\n
8.15 DISCLOSURE LETTER. Parent acknowledges that the Company
\nDisclosure Letter (i) relates to certain matters concerning the disclosures
\nrequired and transactions contemplated by this Agreement, (ii) is qualified in
\nits entirety by reference to specific provisions of this Agreement, (iii) is not
\nintended to constitute and shall not be construed as indicating that any such
\nmatter is required to be disclosed, nor shall such disclosure be construed as an
\nadmission that such information is material with respect to the Company, except
\nto the extent required by this Agreement.<\/p>\n
8.16 JURISDICTION. Each of the parties hereto submits to the
\nnon-exclusive jurisdiction of the state and federal courts of the United States
\nlocated in the City of New York, Borough of Manhattan with respect to any claim
\nor cause of action arising out of this Agreement or the transactions
\ncontemplated hereby.<\/p>\n
8.17 WAIVER OF JURY TRIAL. PARENT, PURCHASER AND THE COMPANY
\nHEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO<\/p>\n
-55-<\/p>\n
TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
\nCONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
\nOF THE TRANSACTIONS CONTEMPLATED HEREBY.<\/p>\n
[SIGNATURE PAGE FOLLOWS]<\/p>\n
-56-<\/p>\n
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
\ncaused this Agreement to be signed and delivered by their respective duly
\nauthorized officers as of the date first above written.<\/p>\n
SIGMA CIRCUITS, INC.<\/p>\n
By: \/s\/ Jeffrey D. Mattfolk
\n ———————————
\n Name: Jeffrey D. Mattfolk
\n Title: Vice President<\/p>\n
T MERGER SUB (OR), INC..<\/p>\n
By: \/s\/ Jeffrey D. Mattfolk
\n ———————————
\n Name: Jeffrey D. Mattfolk
\n Title: Vice President<\/p>\n
PRAEGITZER INDUSTRIES, INC.<\/p>\n
By: \/s\/ Matthew J. Bergeron
\n ———————————
\n Name: Matthew J. Bergeron
\n Title: President and Chief Operating
\n Officer<\/p>\n
-57-<\/p>\n
GUARANTEE<\/p>\n
Guarantor guarantees each and every representation, warranty, covenant,
\nagreement and other obligation of Parent and Purchaser, and\/or any of their
\nrespective permitted assigns (and where any such representation or warranty is
\nmade to the knowledge of Parent or Purchaser, such guarantee shall be deemed
\nmade to the knowledge of Guarantor), and the full and timely performance of
\ntheir respective obligations under the provisions of the foregoing Agreement.
\nThis is a guarantee of payment and performance, and not of collection, and
\nGuarantor acknowledges and agrees that this guarantee is unconditional, and no
\nrelease or extinguishment of Parent’s and Purchaser’s obligations or liabilities
\n(other than in accordance with the terms of the Agreement), whether by decree in
\nany bankruptcy proceeding or otherwise, shall affect the continuing validity and
\nenforceability of this guarantee, as well as any provision requiring or
\ncontemplating performance by Guarantor.<\/p>\n
The provisions of SECTIONS 8.2, 8.3, 8.5, 8.6, 8.8, 8.9, 8.10, 8.11,
\n8.12, 8.13, 8.14, 8.16 and 8.17 of the Agreement are incorporated herein,
\nMUTATIS MUTANDIS, except that notices and other communications hereunder to
\nGuarantor shall be delivered to Tyco International Ltd., The Gibbons Building,
\n10 Queen Street, Suite 301, Hamilton, Bermuda HM11, Attention: Secretary,
\nTelecopy No. (441) 295-9647, Confirm No. (441) 292-8674 (with a copy as provided
\ntherefor in Section 8.5).<\/p>\n
We understand that the Company is relying on this guarantee in entering
\ninto the Agreement and may enforce this guarantee as if Guarantor were a party
\nthereto.<\/p>\n
TYCO INTERNATIONAL LTD.<\/p>\n
By: \/s\/ Byron S. Kalogerou
\n ———————————-
\n Name: Byron S. Kalogerou
\n Title: Vice President and Assistant Secretary<\/p>\n
-58-<\/p>\n
GLOSSARY OF DEFINED TERMS<\/p>\n
\n\n Section
\nTerm Where Defined
\n—- ————-
\n
\n“1999 Balance Sheet” 2.10
\n“affiliate” 8.10
\n“Agreement” the recitals
\n“Alternative Transaction” 4.8(a)
\n“arranger liability” 2.23(b)
\n“Articles of Merger” 1.4
\n“Closing” 1.5
\n“Closing Date” 1.5
\n“Code” 2.15(a)
\n“Common Option” 1.9(a)
\n“Common Shares” the recitals
\n“Company” the recitals
\n“Company Acquisition Agreement” 4.8(c)
\n“Company Disclosure Letter” Article II
\n“Company Financial Statements” 2.8
\n“Company Intellectual Property Rights” 2.17(b)
\n“Company Material Contracts” 2.14
\n“Company Permits” 2.12
\n“Company Proposals” 1.13(a)
\n“Company Securities Filings” 2.7
\n“Company Stock Purchase Plan” 1.9(c)
\n“Company Subsidiary” 2.1
\n“Company Takeover Proposal” 4.8(a)
\n“Company Warrants” 1.9(b)
\n“Confidentiality Agreement” 4.8(a)
\n“Consent” 2.5
\n“Credit Agreements” 2.21
\n“D&O Insurance” 5.5(b)
\n“Deferral Agreement” 2.2
\n“Oregon Code” 1.4
\n“disqualified person” 2.15(b)
\n“Dissenting Shares” 1.7(a)
\n“Effective Time” 1.5
\n“Employee Plans” 2.15(a)
\n“Enforceability Exceptions” 2.4
\n“Environmental Claim” 2.23(e)(i)
\n“Environmental Laws” 2.23(e)(ii)
\n“ERISA” 2.15(a)
\n<\/c><\/s><\/caption>\n<\/table>\n -59-<\/p>\n
\n\n Section
\nTerm Where Defined
\n—– ————-
\n
\n“ERISA Affiliate” 2.15(a)
\n“excess parachute payments” 2.16(c)
\n“Exchange Agent” 1.8(a)
\n“Fairness Opinion” 1.2(a)
\n“Financial Advisor” 1.2(a)
\n“Governmental Authority” 2.5
\n“group” paragraph (h) of Annex I
\n“Guarantee” the recitals
\n“Guarantor” the recitals
\n“HSR Act” 2.5
\n“Indemnified Parties” 5.5(a)
\n“Independent Directors” 1.3
\n“IRS” 2.15(b)
\n“ISO” 2.15(c)
\n“Law” 2.6
\n“leased employee” 2.15(b)
\n“Liens” 2.21
\n“Litigation” 2.13
\n“Material Adverse Effect” 1.17(a)
\n“Materials of Environmental Concern” 2.23(e)(iii)
\n“Merger” the recitals
\n“Minimum Condition” the introductory paragraph
\n of Annex I
\n“multiemployer plan” 2.15(b)
\n“NASD” 4.2
\n“NASDAQ” 2.5
\n“Notes” 2.2
\n“Offer” the recitals
\n“Offer Documents” 1.1(c)
\n“Offer to Purchase” 1.1(c)
\n“Oregon Code” 1.4
\n“Parent” the recitals
\n“Parent Benefit Plan” 5.4(a)
\n“Parent Expenses” 8.7(c)(i)
\n“Parent Information” 3.5
\n“party in interest” 2.15(b)
\n“Per Share Amount” the recitals
\n“person” 8.10
\n“person\/group” paragraph (h) of Annex I
\n“Preferred Shares” 2.2
\n“Proxy Statement” 1.13(a)
\n<\/c><\/s><\/caption>\n<\/table>\n -60-<\/p>\n
\n\n Section
\nTerm Where Defined
\n—- ————–
\n
\n“Purchaser” the recitals
\n“SEC” 1.1(b)
\n“Securities Act” 2.7
\n“Securities Exchange Act” 1.1(a)
\n“Schedule 14D-1” 1.1(c)
\n“Schedule 14D-9” 1.2(b)
\n“subsidiary” 8.10
\n“Superior Proposal” 4.8(a)
\n“Surviving Corporation” 1.4
\n“Surviving Corporation Common Stock” 1.6(c)
\n“Takeover Statute” 4.10
\n“Tax” 2.16(b)
\n“tax-exempt use property” 2.16(c)
\n“Tax Return” 2.16(b)
\n“Third Party” 4.8(a)
\n<\/c><\/s><\/caption>\n<\/table>\n -61-<\/p>\n
ANNEX I<\/p>\n
CONDITIONS TO THE OFFER. Notwithstanding any other provision
\nof the Offer, Purchaser shall not be required to accept for payment or, subject
\nto any applicable rules and regulations of the SEC, including Rule 14e-1(c)
\npromulgated under the Securities Exchange Act (relating to Purchaser’s
\nobligation to pay for or return tendered Common Shares promptly after
\ntermination or withdrawal of the Offer), pay for, and (subject to any such rules
\nor regulations) may delay the acceptance for payment of any tendered Common
\nShares and (except as provided in this Agreement) amend or terminate the Offer
\nas to any Common Shares not then paid for if (i) the condition that there shall
\nbe validly tendered and not withdrawn prior to the expiration of the Offer a
\nnumber of Common Shares which represents at least 51% of the total number of
\nissued and outstanding Common Shares on a fully diluted basis (excluding,
\nhowever, shares of common stock issuable (x) upon exercise of conversion rights
\npursuant to the Deferral Agreement and (y) upon exercise of Company Options that
\nare not exercisable prior to March 1, 2000), shall not each have been satisfied
\n(the “MINIMUM CONDITION”) or (ii) any applicable waiting period under the HSR
\nAct shall not have expired or been terminated prior to the expiration of the
\nOffer or (iii) at any time after the date of this Agreement and before the time
\nof payment for any Common Shares (whether or not any Common Shares have
\ntheretofore been accepted for payment or paid for pursuant to the Offer), any of
\nthe following conditions exists:<\/p>\n
(a) there shall be in effect an injunction or other order,
\ndecree, judgment or ruling by a Governmental Authority of competent jurisdiction
\nor a Law shall have been promulgated, or enacted by a Governmental Authority of
\ncompetent jurisdiction which in any such case (i) restrains or prohibits the
\nmaking or consummation of the Offer or the consummation of the Merger, (ii)
\nprohibits or restricts the ownership or operation by Parent (or any of its
\naffiliates or subsidiaries) of any portion of the Company’s business or assets,
\nor Guarantor’s business or assets relating to the printed circuit board
\nbusiness, which is material to the printed circuit board of all such entities
\ntaken as a whole or which would substantially deprive Parent and\/or its
\naffiliates or subsidiaries of the benefit of ownership of the Company’s business
\nor assets, or compels Parent (or any of its affiliates or subsidiaries) to
\ndispose of or hold separate any portion of the Company’s business or assets, or
\nGuarantor’s business or assets relating to the printed circuit board business,
\nwhich is material to the printed circuit board business of all such entities
\ntaken as a whole or which would substantially deprive Parent and\/or its
\naffiliates or subsidiaries of the benefit of ownership of the Company’s business
\nor assets, (iii) imposes material limitations on the ability of Purchaser
\neffectively to acquire or to hold or to exercise full rights of ownership of the
\nCommon Shares, including, without limitation, the right to vote Common Shares
\npurchased by Purchaser pursuant to the Offer or the Merger on all matters
\nproperly presented to the shareholders of the Company, or (iv) imposes any
\nmaterial limitations on the ability of Parent and\/or its affiliates or
\nsubsidiaries effectively to control in any material respect the business and
\noperations of the Company, or (v) seeks to materially restrict any future
\nbusiness activity by Guarantor (or any of its affiliates) relating to the
\nprinted circuit board business, including,<\/p>\n
A-1<\/p>\n
without limitation, by requiring the prior consent of any person or entity
\n(including any Governmental Authority) to future transactions by Guarantor (or
\nany of its affiliates); or<\/p>\n
(b) there shall have been instituted, pending or threatened an
\naction by a Governmental Authority seeking to restrain or prohibit the making or
\nconsummation of the Offer, the consummation of the Merger or to impose any other
\nrestriction, prohibition or limitation referred to in the foregoing paragraph
\n(a); or<\/p>\n
(c) this Agreement shall have been terminated by the Company
\nor Parent in accordance with its terms; or<\/p>\n
(d) there shall have occurred (i) any general suspension of,
\nor limitation on prices for, trading in the Common Shares on NASDAQ, (ii) a
\ndeclaration of a banking moratorium or any general suspension of payments in
\nrespect of banks in the United States or (iii) in the case of any of the
\nforegoing existing at the time of the execution of this Agreement, a material
\nacceleration or worsening thereof; or<\/p>\n
(e) Parent and the Company shall have agreed that Purchaser
\nshall amend the Offer to terminate the Offer or postpone the payment for Common
\nShares pursuant thereto; or<\/p>\n
(f) any of the representations and warranties made by the
\nCompany in the Merger Agreement shall not have been true and correct when made,
\nor shall thereafter have ceased to be true and correct as if made as of such
\nlater date (other than representations and warranties made as of a specified
\ndate) (in each case without for this purpose giving effect to qualifications of
\nmateriality contained in such representation and warranty), or the Company shall
\nnot have performed each obligation and agreement and complied with each covenant
\nto be performed and complied with by it under this Agreement, if such failure to
\nbe true and correct or such failure to perform, individually or in the
\naggregate, would reasonably be expected to have a Material Adverse Effect,
\nPROVIDED, however, that such breach or failure to perform is incapable of being
\ncured or has not been cured within 5 days after the giving of written notice
\nthereof to the Company, PROVIDED, however, that no such 5-day cure period shall
\nrequire extension of the Offer beyond the twenty (20) business days provided
\nunder SECTION 1.1(b) of the Agreement; or<\/p>\n
(g) the Company’s Board of Directors shall have modified or
\namended its recommendation of the Offer in any manner adverse to Parent or shall
\nhave withdrawn its recommendation of the Offer, or shall have recommended
\nacceptance of any Company Takeover Proposal or shall have resolved to do any of
\nthe foregoing; or<\/p>\n
(h) (i) any corporation, entity or “group” (as defined in
\nSection 13(d)(3) of the Securities Exchange Act) (“PERSON\/GROUP”), other than
\nParent and Purchaser and any person\/group identified in the Company’s Proxy
\nStatement dated October 25, 1999), shall <\/p>\n
A-2<\/p>\n
have acquired beneficial ownership of more than 15% of the outstanding Common
\nShares, or shall have been granted any options or rights, conditional or
\notherwise, to acquire a total of more than 15% of the outstanding Common Shares
\nand which, in each case, does not tender the Common Shares beneficially owned by
\nit in the Offer; (ii) any new group shall have been formed which beneficially
\nowns more than 15% of the outstanding Common Shares and which does not tender
\nthe Common Shares beneficially owned by it in the Offer; or (iii) any
\nperson\/group (other than Parent or one or more of its affiliates) shall have
\nentered into an agreement in principle or definitive agreement with the Company
\nwith respect to a tender or exchange offer for any Common Shares or a merger,
\nconsolidation or other business combination with or involving the Company; or<\/p>\n
(i) any change, development, effect or circumstance shall have
\noccurred or be threatened that would reasonably be expected to have a Material
\nAdverse Effect with respect to the Company; or<\/p>\n
(j) the Company shall commence a case under any chapter of
\nTitle XI of the United States Code or any similar law or regulation; or a
\npetition under any chapter of Title XI of the United States Code or any similar
\nlaw or regulation is filed against the Company which is not dismissed within 2
\nbusiness days.<\/p>\n
The foregoing conditions are for the sole benefit of Parent
\nand Purchaser and may be asserted by Parent or Purchaser regardless of the
\ncircumstances giving rise to any such condition and may be waived by Parent or
\nPurchaser, in whole or in part, at any time and from time to time, in the sole
\ndiscretion of Parent. The failure by Parent or Purchaser at any time to exercise
\nany of the foregoing rights shall not be deemed a waiver of any right, the
\nwaiver of such right with respect to any particular facts or circumstances shall
\nnot be deemed a waiver with respect to any other facts or circumstances, and
\neach right shall be deemed an ongoing right which may be asserted at any time
\nand from time to time.<\/p>\n
Should the Offer be terminated pursuant to the foregoing
\nprovisions, all tendered Common Shares not theretofore accepted for payment
\nshall forthwith be returned to the tendering shareholders.<\/p>\n
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