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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 6, 1996
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PANATECH RESEARCH AND DEVELOPMENT CORPORATION
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(Exact name of registrant as specified in its charter)
Nevada
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(State or other jurisdiction of incorporation)
0-12530 95-3615472
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(Commission File Number) (IRS Employer Identification No.)
P. O. Box 23160, Albuquerque, New Mexico 87192-1160
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (505) 271-2200
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(Former name or former address, if changed since last report)
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Item 5. Other Events
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On December 6, 1996, the Company entered into an Agreement and
Plan of Merger with Titan Enterprises, Inc., a Delaware corporation ("Titan"),
and Panatech Acquisition Corporation, a Nevada corporation and wholly owned
subsidiary of Titan ("Merger Sub") (the "Merger Agreement"), pursuant to which,
and subject to satisfaction of the conditions set forth therein, (i) Merger Sub
will be merged with and into the Company (the "Merger"), with the Company
continuing as the surviving corporation, (ii) the Company will become a wholly
owned subsidiary of the Titan, and (iii) each outstanding share of the
Company's common stock (other than shares owned by Titan, Merger Sub or
subsidiaries of the Company, if any, which shares will be canceled) will be
converted, upon the effectiveness of the Merger, into the right to receive
$7.00 in cash per share, without interest, subject to reduction. The Merger
Agreement also provides for payment to the holders of the Company's Class B
Warrants of an amount equal to the consideration payable per share of common
stock less the exercise price per share of the Class B Warrants. Consummation
of the Merger is subject to, among other things, approval of the Merger
Agreement by the Company's shareholders and regulatory approvals. If the
Merger Agreement is terminated under certain circumstances relating to an
acquisition of the Company by a third party, the Company has agreed to pay
Titan a fee equal to $994,844.
A copy of the Merger Agreement is attached hereto as Exhibit 2.1 and
is incorporated herein by reference.
Item 7. Financial Statements and Exhibits
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(c) Exhibits
2.1 Agreement and Plan of Merger by and among Titan
Enterprises, Inc., Panatech Acquisition Corporation
and Panatech Research and Development Corporation
dated December 6, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
PANATECH RESEARCH AND DEVELOPMENT
CORPORATION
Dated: December 13, 1996 By:/S/ Arthur J. Rosenberg
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Arthur J. Rosenberg, President
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Exhibit Index
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2.1 Agreement and Plan of Merger by and among Titan Enterprises,
Inc., Panatech Acquisition Corporation and Panatech Research
and Development Corporation dated December 6, 1996.
The Exhibits and Schedules listed on page v of Exhibit 2.1
will be provided to the Commission on request.
3
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AGREEMENT AND PLAN OF MERGER
by and among
Titan Enterprises, Inc.,
Panatech Acquisition Corporation
and
Panatech Research and Development Corporation
December 6, 1996
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TABLE OF CONTENTS
PAGE
RECITALS .................................................................... 1
ARTICLE I DEFINITIONS
Section 1.1 Definitions ............................................. 1
Section 1.2 Interpretive Rules ...................................... 6
ARTICLE II THE MERGER
Section 2.1 The Merger .............................................. 6
Section 2.2 Effective Time of the Merger ............................ 6
Section 2.3 Articles of Incorporation ............................... 7
Section 2.4 By-laws ................................................. 7
Section 2.5 Directors and Officers .................................. 7
Section 2.6 Conversion of Shares .................................... 7
Section 2.7 Cancellation of Stock Options and Warrants .............. 8
Section 2.8 Closing of Panatech Transfer Books ...................... 8
Section 2.9 Supplementary Action .................................... 8
Section 2.10 Appointment of Representative ........................... 9
ARTICLE III MERGER CONSIDERATION
Section 3.1 Merger Consideration .................................... 9
Section 3.2 Payment of Merger Consideration ......................... 11
ARTICLE IV CLOSING
Section 4.1 Closing ................................................. 12
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PANATECH
Section 5.1 Corporate Organization .................................. 13
Section 5.2 Valid and Binding Agreement ............................. 14
Section 5.3 No Violation ............................................ 14
Section 5.4 Consents and Approvals .................................. 14
Section 5.5 Capitalization .......................................... 14
Section 5.6 Subsidiaries and Affiliates ............................. 15
Section 5.7 Financial Statements .................................... 15
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Section 5.8 Absence of Undisclosed Liabilities ...................... 15
Section 5.9 Interim Operations and Absence of Certain Changes ....... 16
Section 5.10 Taxes ................................................... 17
Section 5.11 Employee Benefit Plans .................................. 19
Section 5.12 Compliance with Law ..................................... 21
Section 5.13 Litigation; Claims ...................................... 22
Section 5.14 Contracts and Commitments ............................... 22
Section 5.15 Intellectual Property Rights ............................ 23
Section 5.16 Liens ................................................... 23
Section 5.17 Insurance ............................................... 24
Section 5.18 Disclosure .............................................. 24
Section 5.19 Tangible Personal Property .............................. 24
Section 5.20 Real Property ........................................... 24
Section 5.21 Environmental Matters ................................... 25
Section 5.22 Employees ............................................... 27
Section 5.23 Employee Relations ...................................... 27
Section 5.24 Customers and Vendors; Distributors and
Representatives.......................................... 28
Section 5.25 Governmental Authorizations ............................. 28
Section 5.26 Defects in Products or Designs; Product Safety .......... 29
Section 5.27 Broker's or Finder's Fees ............................... 29
Section 5.28 Certain Transactions .................................... 29
Section 5.29 Absence of Questionable Payments ........................ 29
Section 5.30 SEC Documents ........................................... 30
Section 5.31 Proxy Statement ......................................... 30
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF
PARENT AND SUB
Section 6.1 Corporate Organization .................................. 30
Section 6.2 Valid and Binding Agreement ............................. 31
Section 6.3 No Violation ............................................ 31
Section 6.4 Consents and Approvals .................................. 31
Section 6.5 Proxy Statement ......................................... 32
ARTICLE VII COVENANTS
Section 7.1 Compliance with Law ..................................... 32
Section 7.2 Operation of Business Prior to Closing .................. 32
Section 7.3 Access .................................................. 35
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Section 7.4 Letter of Intent ........................................ 36
Section 7.5 Fiduciary Duty .......................................... 36
Section 7.6 No Solicitation ......................................... 36
Section 7.7 Stockholders' Meeting ................................... 36
Section 7.8 Proxy Statement ......................................... 37
Section 7.9 Best Efforts ............................................ 37
Section 7.10 Press Releases .......................................... 37
Section 7.11 HSR Act ................................................. 37
Section 7.12 Payment of Expenses ..................................... 37
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND SUB
Section 8.1 Representations and Warranties .......................... 38
Section 8.2 Covenants, Agreements and Conditions .................... 38
Section 8.3 No Material Adverse Effect .............................. 38
Section 8.4 Corporate Proceedings ................................... 38
Section 8.5 Opinion of Counsel ...................................... 39
Section 8.6 Proceedings ............................................. 39
Section 8.7 Governmental Approvals .................................. 39
Section 8.8 HSR Act Requirements .................................... 39
Section 8.9 Deliveries .............................................. 39
Section 8.10 Insurance ............................................... 40
Section 8.11 Stockholder Approval .................................... 40
Section 8.12 Customer and Vendor Relationships ....................... 40
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF
PANATECH
Section 9.1 Representations and Warranties .......................... 41
Section 9.2 Covenants, Agreements and Conditions .................... 41
Section 9.3 Corporate Proceedings ................................... 41
Section 9.4 Opinion of Counsel ...................................... 41
Section 9.5 Proceedings ............................................. 41
Section 9.6 Governmental Approvals .................................. 42
Section 9.7 HSR Act Requirements .................................... 42
Section 9.8 Deliveries .............................................. 42
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ARTICLE X OTHER MATTERS
Section 10.1 Confidentiality ......................................... 42
Section 10.2 Further Assurances ...................................... 42
Section 10.3 Indemnification of Directors and Officers ............... 43
ARTICLE XI TERMINATION
Section 11.1 Methods of Termination .................................. 43
Section 11.2 Procedure Upon Termination .............................. 44
ARTICLE XII MISCELLANEOUS
Section 12.1 Survival of Representations and Warranties .............. 45
Section 12.2 Service of Process ...................................... 45
Section 12.3 Notices ................................................. 45
Section 12.4 Governing Law ........................................... 46
Section 12.5 Modification; Waiver .................................... 46
Section 12.6 Entire Agreement ........................................ 47
Section 12.7 Assignment; Successors and Assigns ...................... 47
Section 12.8 Severability ............................................ 47
Section 12.9 No Third Party Beneficiary .............................. 47
Section 12.10 Expenses ................................................ 47
Section 12.11 Execution in Counterpart ................................ 47
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EXHIBITS AND SCHEDULES*
Exhibit A Form of Stockholders' Representative Agreement
Exhibit B Principles and Procedures
Exhibit C Form of Opinion of Hagan, Saca & Hagan
Exhibit D Form of Opinion of Dickstein Shapiro Morin & Oshinsky
LLP
Exhibit E Sample Calculation of Pro-Rata Adjustment
Schedule 5.1 Foreign Qualifications
Schedule 5.5 Capitalization
Schedule 5.6 Subsidiaries and Affiliates
Schedule 5.8 Liabilities and Obligations
Schedule 5.9 Changes During Interim Operations
Schedule 5.10 Tax Matters
Schedule 5.11 Employee Benefit Plans
Schedule 5.13 Litigation; Claims
Schedule 5.14 Contracts and Commitments
Schedule 5.15 Intellectual Property
Schedule 5.16 Liens
Schedule 5.17 Insurance
Schedule 5.19 Leased Tangible Personal Property
Schedule 5.20 Leased Real Property
Schedule 5.22 Employees
Schedule 5.23 Employee Relations
Schedule 5.24 Customers and Vendors; Distributors and
Representatives
Schedule 5.25 Governmental Authorizations
Schedule 5.26 Certain Product Defects
Schedule 5.27 Broker's or Finder's Fees
Schedule 5.28 Certain Transactions
Schedule 7.2 Operation of Business Prior to Closing
* Not included herein, but will be provided to the Commission on request.
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated
December 6, 1996, by and among Titan Enterprises, Inc., a corporation organized
in and governed by the laws of the State of Delaware and whose address is 107
Bauer Drive, Oakland, New Jersey 07436 ("Parent"), Panatech Acquisition
Corporation, a corporation organized in and governed by the laws of the State of
Nevada and whose address is c/o Titan Enterprises, Inc., 107 Bauer Drive,
Oakland, New Jersey 07436 ("Sub"), and Panatech Research and Development
Corporation, a corporation organized in and governed by the laws of the State of
Nevada and whose address is 1208 Daskalos Drive NE, Albuquerque, New Mexico
84192 ("Panatech").
WITNESSETH:
WHEREAS, the respective Boards of Directors of Parent, Sub and
Panatech wish to merge Sub with and into Panatech (the "Merger"), pursuant to
and subject to the conditions set forth herein; and
WHEREAS, Parent, Sub and Panatech desire to make certain
representations, warranties and agreements in connection with the Merger and
also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and of the
mutual representations, warranties and covenants which are to be made and
performed by the respective parties, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
The following terms when used in this Agreement have the meanings
set forth below
(a) "ASM Litigation" shall have the meaning set forth in Section 5.13.
(b) "Accountants" shall mean Arthur Andersen LLP, as independent
certified public accountants of Panatech and its Subsidiaries.
(c) "Acquisition Transaction" shall have the meaning set forth in
Section 7.6.
(d) "Affiliate" shall mean any Person now or hereinafter controlling,
controlled by or under common control with another Person.
(e) "Arbitrator" shall have the meaning set forth in Section 3.1(b)(v).
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(f) "Articles of Merger" shall have the meaning set forth in Section
2.2.
(g)"CERCLA" shall have the meaning set forth in Section 5.21(a).
(h)"CERCLIS" shall have the meaning set forth in Section 5.21(f).
(i)"Certificates" shall have the meaning set forth in Section 3.2(b).
(j) "Closing" shall have the meaning set forth in Section 4.1.
(k) "Closing Date" shall have the meaning set forth in Section 4.1.
(l) "Closing Report" shall have the meaning set forth in Section
3.1(b)(ii).
(m) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(n)"Commission" shall mean the Securities and Exchange Commission.
(o) "Constituent Corporations" shall mean Sub and Panatech.
(p) "Effective Time" shall have the meaning set forth in Section 2.2.
(q) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
(r) "Environmental Laws" shall have the meaning set forth in Section
5.21(c).
(s) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(t) "Exchange Agent" shall have the meaning set forth in Section
3.2(a).
(u) "Exchange Fund" shall have the meaning set forth in Section 3.2(a).
(v) "Expenses" shall mean all out-of-pocket fees and expenses paid or
incurred in connection with this Agreement or the transactions contemplated
herein (including filing fees, printing fees and fees and expenses of legal
counsel, accountants and financial advisors).
(w)"GAAP" shall mean generally accepted accounting principles of the
United States applied in a manner consistent with past practice.
(x)"Hazardous Materials" has the meaning set forth in Section 5.21(a).
(y)"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
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(z) "Intellectual Property" means any and all inventions, Marks
(including trademarks, service marks, certification marks, collective marks, and
collective membership marks whether word, logo, or other forms of Marks, all of
the foregoing collectively referred to as "Marks"), trade names, copyrights,
applications therefor, patents thereon, registrations thereof and licenses
thereof, royalty rights, any and all goodwill associated with the business or
represented by the assets of Panatech and the Subsidiaries, trade secrets,
secret processes and procedures, engineering, production, assembly design and
installation encompassed in any and all embodiments including, but not limited
to technical drawings and specifications, working notes and memos, market
studies, consultants' reports, technical and laboratory data, competitive
samples, engineering prototypes, and confidential information, know-how, and all
similar property of any nature, tangible or intangible, including, but not
limited to, all property listed or described on Schedule 5.15.
(aa) "IRS" shall mean the Internal Revenue Service.
(ab) "Knowledge" shall mean the actual knowledge of the executive
officers of Panatech and its Subsidiaries, after due inquiry with respect
thereto.
(ac) "Leased Improvements" shall have the meaning set forth in Section
5.20(b).
(ad) "Leased Property" shall have the meaning set forth in Section
5.20(b).
(ae) "Letter of Intent" shall mean that certain Letter of Intent, dated
November 4 and 5, 1996, by and between Parent and Panatech.
(af) "Marks" shall have the meaning set forth in Section 1.1(x).
(ag)"Material Adverse Effect" shall mean, with respect to any Person,
any event, fact, condition, occurrence or effect which is materially adverse to
the business, properties, assets, liabilities, capitalization, stockholders
equity, financial condition, operations, licenses or other franchises, results
of operations or prospects of such Person.
(ah) "Merger Consideration" shall have the meaning set forth in Section
3.1.
(ai) "NRS" shall mean Chapter 92A of the Nevada Revised Statutes, as
amended.
(aj) "Operating Agreements" shall have the meaning set forth in Section
5.14(b).
(ak)"Panatech Financial Statements" shall mean the consolidated balance
sheets of Panatech for each of the two fiscal years ended March 31, 1996 and
1995 and the related consolidated statements of income, cash flows and changes
in stockholders' equity
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(including related notes thereto) for each of the three fiscal years ended March
31, 1996 1995 and 1994, as filed by Panatech in SEC Documents.
(al) "Panatech Interim Financial Statements" shall mean the
consolidated balance sheets of Panatech and related consolidated statements of
income, cash flows and changes in stockholders' equity (including related notes,
if any) as filed by Panatech in SEC Documents with respect to periods ended
subsequent to March 31, 1996.
(am)"Panatech Stock Option" and "Panatech Stock Options" shall have the
meaning set forth in Section 2.7(a).
(an)"Panatech Warrant" and "Panatech Warrants" shall mean the Class B
Warrants of Panatech.
(ao)"Payment Date" shall mean the third business day following the date
on which either (i) Parent and Panatech agree on the determination of the Quick
Assets and Target Number pursuant to Section 3.1(b)(i), (ii) Parent notifies the
Stockholders' Representative pursuant to Section 3.1(b)(ii) that Parent agrees
with the calculation of Quick Assets and any adjustments to the Merger
Consideration pursuant to 3.1(b)(iii), or (iii) the Arbitrator renders a final
decision pursuant to Section 3.1(b)(v).
(ap) "Pension Plans" shall have the meaning set forth in Section
5.11(c)(i).
(aq)"Permits" shall have the meaning set forth in Section 5.25.
(ar)"Person" shall mean and include an individual, a partnership, a
joint venture, a corporation or trust, an unincorporated organization, a group
or a government or other department or agency thereof.
(as)"Plans" shall have the meaning set forth in Section 5.11(a).
(at)"Price Waterhouse" shall mean Price Waterhouse LLP, as independent
certified public accountants of Parent and Sub.
(au)"Principles and Procedures" means the accounting principles and
procedures set forth in Exhibit B.
(av) "Product" shall have the meaning set forth in Section 5.26(a)
(aw) "Proxy Statement" shall mean the proxy statement of Panatech
together with any supplements thereto sent to the Stockholders to solicit their
votes in connection with this Agreement.
(ax) "Quick Assets" shall mean the excess as of the Closing Date of (i)
cash plus accounts receivable of Panatech on a consolidated basis over (ii)
current liabilities of Panatech on a consolidated basis, each as determined in
accordance with the Principles and Procedures.
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(ay) "Quick Assets Statement" shall have the meaning set forth in
Section 3.1(b)(ii).
(az) "Rights" shall mean warrants, options, rights, convertible
securities and other arrangements or commitments, including pre-emptive rights,
which obligate an entity to issue or dispose of any of its capital stock.
(ba) "SEC Documents" shall mean all reports, proxy statements and
registration statements filed, or required to be filed, by a party hereto
pursuant to the Securities Laws.
(bb) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(bc) "Securities Laws" shall mean the Securities Act; the Exchange Act;
the Investment Company Act of 1940, as amended; the Investment Advisers Act of
1940, as amended; the Trust Indenture Act of 1939, as amended; and the rules and
regulations of the Commission.
(bd) "Stock" shall mean the common stock of Panatech, par value $0.01
per share.
(be) "Stock Option Plans" shall have the meaning set forth in Section
2.7(a).
(bf) "Stockholders" shall mean the stockholders of Panatech.
(bg) "Stockholders' Representative" shall have the meaning set forth in
Section 2.10.
(bh) "Subsidiaries" shall mean ASM Company, Inc., a California
corporation, and Panatech Industries, Inc., a Delaware corporation.
(bi) "Surviving Corporation" shall have the meaning set forth in
Section 2.1.
(bj) "Target Number" shall mean (i) four million three hundred
sixty-two thousand dollars ($4,362,000) plus (ii) the amount in cash received by
Panatech from the exercise of Panatech Stock Options and Panatech Warrants from
September 30, 1996 through the Closing Date (as such amount is determined in
accordance with the Principles and Procedures) minus (iii) Expenses incurred by
Panatech as of the Closing Date up to a maximum of $225,000.
(bk) "Tax" shall mean any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, gains, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty
or addition thereto, whether disputed or not.
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(bl) "Tax Return" shall mean any return, declaration, report,
claim for refund, information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
(bm) "Taxing Authority" shall have the meaning set forth in
Section 5.10(a).
(bn) "Titan Personnel" shall include any person who is an
officer, director, employee or agent of Titan Tool other than (excluding Dean
Harrison) persons who are also officers, directors or employees of Harbour Group
Industries, Inc. and its Affiliates.
(bo) "Titan Tool" shall mean Titan Tool, Inc., a Delaware
corporation and wholly-owned subsidiary of Parent.
Section 1.2 Interpretive Rules.
For purposes of this Agreement, except as otherwise expressly
provided herein or unless the context otherwise requires: (a) defined terms
include the plural as well as the singular and the use of any gender shall be
deemed to include the other genders; (b) references to "Articles," "Sections"
and other subdivisions and to "Schedules" and "Exhibits" without reference to a
document, are to Schedules and Exhibits to this Agreement; (c) the use of the
term "including" means "including but not limited to"; and (d) the words
"herein," "hereof," "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular provision.
ARTICLE II
THE MERGER
Section 2.1 The Merger.
At the Effective Time, Sub shall be merged with and into Panatech
in accordance with the applicable provisions of the NRS and the separate
existence of Sub shall thereupon cease, and Panatech, as the surviving
corporation in the Merger (the "Surviving Corporation"), shall continue its
corporate existence in accordance with the NRS.
Section 2.2 Effective Time of the Merger.
At the Closing, Panatech shall cause the Merger to be consummated
by filing with the Secretary of State of Nevada appropriate articles of merger
(the "Articles of Merger"), duly executed in accordance with this Agreement and
the NRS. The date and time at which the Articles of Merger are filed is referred
to herein as the "Effective Time."
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Section 2.3 Articles of Incorporation.
The Articles of Incorporation of Panatech as in effect at the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation; provided, however, that as of the Effective Time, Article Fourth of
said Articles of Incorporation shall be amended in its entirety to read as
follows:
"FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is one hundred thousand
(100,000), designated as common stock, and the par value of each
such share of common stock is one cent ($0.01), amounting in the
aggregate to one thousand dollars ($1,000.00)."
Section 2.4 By-laws.
The By-laws of Sub as in effect at the Effective Time shall be
the By-laws of the Surviving Corporation.
Section 2.5 Directors and Officers.
The directors of the Surviving Corporation at the Effective Time
shall be the directors of Sub in office immediately prior to the Effective Time,
to serve in accordance with the By-laws of the Surviving Corporation. The
officers of the Surviving Corporation at the Effective Time shall be the
officers of Sub in office immediately prior to the Effective Time, to serve in
accordance with the By-laws of the Surviving Corporation.
Section 2.6 Conversion of Shares.
At the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any securities of the Constituent
Corporations:
(a)each share of Stock then outstanding, other than Stock to be
canceled pursuant to Section 2.6(b), and all rights with respect thereto, shall
be converted into and represent the right to receive $7.00 in cash, subject to
adjustment pursuant to Section 3.1(b) and payable as provided in Section 3.2;
(b)each share of Stock, if any, held in Panatech's treasury or
owned beneficially by Parent or Sub or by any Subsidiary of Panatech shall be
canceled and retired without payment of any consideration therefor and shall
cease to exist; and
(c)each issued and outstanding share of common stock, $0.01 par
value per share, of Sub outstanding immediately prior to the Effective Time
shall remain outstanding and unchanged as a share of common stock of the
Surviving Corporation.
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Section 2.7 Cancellation of Stock Options and Warrants.
(a)Immediately prior to the Effective Time, each option to
purchase shares of Stock (individually, a "Panatech Stock Option" and
collectively, the "Panatech Stock Options") issued pursuant to Panatech's 1993
Stock Option Plan and its 1983 Stock Option Plan (collectively, the "Stock
Option Plans") and each Panatech Warrant, which are then outstanding and
exercisable in full, shall be canceled and the holder thereof shall be entitled
to receive from Parent at the Effective Time an amount equal to the excess, if
any, of (i) $7.00, as adjusted pursuant to Section 3.1(b), multiplied by the
number of shares of Stock subject to the Panatech Stock Option or Panatech
Warrant over (ii) the exercise price of the Panatech Stock Option or Panatech
Warrant multiplied by the number of shares of Stock subject thereto. Appropriate
arrangements shall be made for reduction of the amount to be paid to each holder
of canceled Panatech Stock Options for any applicable withholding taxes or other
amounts required by law to be paid or withheld, either through reducing the
amount paid to or by obtaining a cash payment from, such holder. Prior to the
Effective Time, the Board of Directors of Panatech shall take such action,
including without limitation, actions ensuring that all Panatech Stock Options
outstanding as of the Effective Date shall be exercisable in full, as may be
required under the Stock Option Plans and the governing option agreements to
effectuate the foregoing.
(b)At the Effective Time, upon the payment of the Merger
Consideration, all of Panatech's obligations with respect to options granted
under its Stock Option Plans shall be terminated in accordance with such Stock
Option Plans.
Section 2.8 Closing of Panatech Transfer Books.
At the Effective Time, the stock transfer books of Panatech shall
be closed and there shall be no further registration of transfers of Stock
thereafter.
Section 2.9 Supplementary Action.
If at any time after the Effective Time, any further assignments
or assurances in law or any other things are necessary or desirable to vest or
to perfect or confirm of record in the Surviving Corporation the title to any
property or rights of either of the Constituent Corporations, or otherwise to
carry out the provisions of this Agreement, the officers and directors of the
Surviving Corporation are hereby authorized and empowered on behalf of the
respective Constituent Corporations, in the name of and on behalf of the
appropriate Constituent Corporation, to execute and deliver any and all things
necessary or proper to vest or to perfect or confirm title to such property or
rights in the Surviving Corporation, and otherwise carry out the purposes and
provisions of this Agreement.
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Section 2.10 Appointment of Representative.
Upon approval of the Merger by the Stockholders, the Stockholders
shall have been deemed to appoint James R. Hagan, Esq., as their agent and
attorney-in-fact (the "Stockholders' Representative"), with full power and
authority (including power of substitution), except as otherwise expressly
provided in this Agreement, in the name of and for and on behalf the
Stockholders, or in his own name as the Stockholders' Representative, to take
all actions required or permitted under Section 3.1 of this Agreement (including
giving and receiving all accountings, reports, notices and consents). The
authority conferred under this Section 2.10 shall be an agency coupled with an
interest, and all authority conferred hereby is irrevocable and not subject to
termination by the Stockholders or any of them, or by operation of law, whether
by the death or incapacity of any Stockholder, the termination of any trust or
estate or the occurrence of any other event. If any Stockholder should die or
become incapacitated, if any trust or estate should terminate or if any other
such event should occur, any action taken by a Stockholders' Representative
pursuant to this Section 2.10 shall be as valid as if such death or incapacity,
termination or other event had not occurred, regardless of whether or not the
Stockholders' Representative or Parent shall have received notice of such death,
incapacity, termination or other event. Any notice given to the Stockholders'
Representative pursuant to Section 12.3 shall constitute effective notice to the
Stockholders, and any other party to this Agreement or any other Person may rely
on any notice, consent, election or other communication received from such
Stockholders' Representative as if such notice, consent, election or other
communication had been received from all Stockholders. The responsibilities of
the Stockholders' Representative are subject to that certain Stockholders'
Representative Agreement substantially in the form attached hereto as Exhibit A.
ARTICLE III
MERGER CONSIDERATION
Section 3.1 Merger Consideration.
(a)Subject to adjustment pursuant to Section 3.1(b), the
aggregate merger consideration shall be $7.00 in cash per share of Stock as set
forth in Section 2.6(a) plus amounts payable in cash upon the cancellation of
Panatech Stock Options and Panatech Warrants pursuant to Section 2.7(a) (the
"Merger Consideration").
(b)The Merger Consideration is subject to adjustment in the
following manner:
(i) Parent and Panatech shall attempt to jointly determine the
Quick Assets and Target Number on the Closing Date.
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(ii) If Parent and Panatech cannot agree on the Quick
Assets and Target Number on the Closing Date, then as soon after the Closing
Date as possible, the Stockholders' Representative shall cause to be prepared in
accordance with the Principles and Procedures a statement of Quick Assets (the
"Quick Assets Statement") and shall cause such Quick Assets Statement to be
examined by the Accountants in accordance with the Principles and Procedures. As
soon as possible upon the conclusion of such examination, but in no event later
than five (5) business days after the Closing Date, the Accountants shall issue
a report to Parent and the Stockholders' Representative setting forth the
results of its examination and its determination of the Quick Assets and Target
Number (the "Closing Report"). Price Waterhouse shall have the opportunity to
review and evaluate all working papers, worksheets and other documents utilized
by the Stockholders' Representative in the preparation of the Quick Assets
Statement and by the Accountants in the preparation of the Closing Report. If
Parent agrees with the calculation of Quick Assets and Target Number pursuant to
the Quick Assets Statement and Closing Report, Parent shall notify the
Stockholders' Representative in writing as soon as possible following receipt of
the Quick Assets Statement and Closing Report.
(iii) If the Quick Assets of Panatech on the Closing
Date, as determined in accordance with the Quick Assets Statement and the
Closing Report, are less than the Target Number, and if such difference is not
disputed pursuant to this Section 3.1(b), the Merger Consideration shall be
decreased by the amount by which the Target Number exceeds the Quick Assets, and
the consideration to be paid per share of stock as set forth in Section 2.6(a)
and per cancelled Panatech Stock Option and Panatech Warrant pursuant to Section
2.7(a) shall be reduced pro-rata (a sample calculation of which is set forth on
Exhibit E). If the Quick Assets, as determined in accordance with the Quick
Assets Statement and the Closing Report, is equal to or greater than the Target
Number, the Merger Consideration shall not be adjusted.
(iv) If Parent disputes any items shown on the Quick
Assets Statement or Closing Report, Parent will provide the Stockholders'
Representative within five (5) days of receipt of the Quick Assets Statement and
Closing Report detailed written explanations of any disputed items in the Quick
Assets Statement or Closing Report. The amount of the Quick Assets and Target
Number not affected by the disputed items will be deemed to be as set forth in
the Quick Assets Statement and Closing Report. Within a further period of ten
(10) days from the end of the aforementioned review period, the parties will
attempt to resolve in good faith any disputed items.
(v) Failing resolution pursuant to paragraph (iii)
above, the unresolved disputed items will be referred for final binding
resolution to a nationally-recognized firm of certified public accountants as
the parties may hereafter jointly select (the "Arbitrator"). Such referral shall
be in the form of written statements of position by the Stockholders'
Representative, Parent, Price Waterhouse and the Accountants, with each party
having an opportunity to respond to such written statements and any requests for
statements or information by the Arbitrator. If the Arbitrator
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determines that the resolution of a given disputed item requires an
interpretation of law, then, with the permission of the parties, the Arbitrator
may request a law firm of national standing chosen by it to render a legal
opinion as to such matter. The amount of the Quick Assets and/or Target Number
affected by such unresolved disputed items (if any) will be as determined by the
Arbitrator. The cost of such Arbitrator's review (including reasonable
attorneys' fees, if any) shall be borne by the party or parties as determined by
the Arbitrator.
Section 3.2. Payment of Merger Consideration.
(a)(i) Exchange Agent. Immediately after the
Effective Time and after determination of the Merger Consideration pursuant to
Section 3.1, Parent shall deposit with U.S. Stock Transfer Corporation (the
"Exchange Agent"), a cash amount equal to the aggregate Merger Consideration to
which holders of shares of Stock and Panatech Warrants shall be entitled upon
consummation of the Merger, to be held for the benefit of and distributed to
such holders in accordance with this Section 3.2. The Exchange Agent shall agree
to hold such funds (such funds, together with earnings thereon, being referred
to herein as the "Exchange Fund") for delivery as contemplated by this Section
3.2 and upon such additional terms as may be agreed upon by the Exchange Agent,
Panatech and Parent before the Payment Date.
(ii) Panatech Stock Options. Immediately after the
Effective Time and after determination of the Merger Consideration pursuant to
Section 3.1, Parent shall pay each holder of Panatech Stock Options cancelled
pursuant to Section 2.7, by check or wire transfer, the Merger Consideration per
Panatech Stock Option which such holder has the right to receive pursuant to
Section 2.7. In no event will any such holder be entitled to interest on any
funds to be received in the Merger
(b) Exchange Procedures. Promptly after the Effective
Time, the Surviving Corporation shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Stock and Panatech Warrants
(collectively, the "Certificates") whose shares or warrants are converted
pursuant to Sections 2.6 or 2.7, as the case may be, into the right to receive
the Merger Consideration (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as the Surviving Corporation may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal duly executed and completed in accordance with its terms, the holder
of such Certificate shall be entitled to receive in exchange therefor a check
representing the Merger Consideration per share of Stock or Panatech Warrant, as
the case may be, represented thereby which such holder has the right to receive
pursuant to the provision of this Article III, and the Certificate so
surrendered shall forthwith be canceled. In no event
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shall the holder of any Certificate be entitled to receive interest on any funds
to be received in the Merger. In the event of a transfer of ownership of Stock
or Panatech Warrant which is not registered in the transfer records of Panatech,
the Merger Consideration may be issued to a transferee if the Certificate
representing such Stock or Panatech Warrant is presented to the Exchange Agent
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable transfer taxes have been paid. Until surrendered
as contemplated by this Section 3.2, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration per share of Stock or Panatech Warrant, as
the case may be, represented thereby as contemplated by this Article III.
Holders of Panatech Warrants outstanding at or immediately prior to the
Effective Time shall, subject to Section 3.2(d), be entitled to receive the
appropriate Merger Consideration upon surrender of their Certificates
notwithstanding the fact that such Panatech Warrants are submitted for payment
following their expiration date.
(c) No Further Ownership Rights in Stock. All cash
paid upon the surrender of shares of Stock, Panatech Stock Options or Panatech
Warrants in accordance with the terms hereof shall be deemed to have been paid
in full satisfaction of all rights pertaining to such shares of Stock, Panatech
Stock Options or Panatech Warrants, as the case may be. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Section 3.2.
(d) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the stockholders of Panatech or
holders of Panatech Warrants for one hundred twenty (120) days after the Payment
Date shall be delivered to the Surviving Corporation, upon demand, and any
stockholders of Panatech or holders of Panatech Warrants who have not
theretofore complied with this Section 3.2 shall thereafter look only to the
Surviving Corporation (subject to abandoned property, escheat and other similar
laws) as general creditors for payment of their claim for the Merger
Consideration. Neither Parent nor the Surviving Corporation shall be liable to
any holder of shares of Stock or holders of Panatech Warrants for cash
representing the Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If outstanding
Certificates are not surrendered, or cash payment therefor not claimed prior to
six years after the Payment Date (or, in any particular case, prior to such
earlier date on which such cash payment would otherwise escheat to or become the
property of any governmental unit or agency), the unclaimed amounts shall, to
the extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto.
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ARTICLE IV
CLOSING
Section 4.1. Closing.
The closing of the transactions contemplated hereby
(the "Closing") shall take place at a location to be agreed upon by the parties
hereto, no later than the third business day after satisfaction or waiver of all
conditions set forth in Article VIII and Article IX hereof, or at such other
time or date as may be agreed upon by the parties hereto (the "Closing Date").
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PANATECH
Panatech hereby represents and warrants, as to itself
and each of its Subsidiaries, to each of Parent and Sub as follows, and both
Parent and Sub in agreeing to consummate the transactions contemplated by this
Agreement have relied upon such representations and warranties, that:
Section 5.1 Corporate Organization.
(a) Each of Panatech and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has the requisite power and authority
(corporate and other) to own, lease and operate its properties and to carry on
its business as now being conducted.
(b) Each of Panatech and its Subsidiaries is
qualified as a foreign corporation and is in good standing in each state of the
United States and in each foreign jurisdiction in which the conduct of its
business or the ownership or leasing of its properties requires such
qualification and is not required to be qualified as a foreign corporation in
any other jurisdiction, except where such failure to be qualified would not have
a Material Adverse Effect on Panatech or its Subsidiaries. Schedule 5.1 hereto
sets forth a true and complete list of all jurisdictions in which Panatech and
its Subsidiaries are qualified and licensed to do business as foreign
corporations.
(c) The copies of the articles of incorporation and
all amendments thereto of each of Panatech and its Subsidiaries as certified by
the appropriate authorities of its jurisdiction of incorporation, and the
by-laws, as amended to date, of each of Panatech and its Subsidiaries, as
certified by its secretary, which have heretofore been delivered to Parent and
Sub, are true, complete and correct copies of the articles of incorporation and
by-laws of each of Panatech and its Subsidiaries, as amended and in effect on
the date hereof, and will be true, complete and correct as of the Closing Date.
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(d) The minute books and records of each of Panatech
and its Subsidiaries, copies of which have been delivered to Parent prior to the
date hereof, are the original minute books and records of such company; contain
all proceedings of the stockholders, the Board of Directors and any committees
thereof with respect to such company; are true, correct and complete in all
material respects; and there have been no changes, alterations or additions
thereto which have not been furnished to counsel for Parent and Sub prior to the
date hereof.
Section 5.2 Valid and Binding Agreement.
Panatech has the full right, capacity and power to
enter into this Agreement. All necessary action on the part of Panatech, other
than approval by the Stockholders, has been taken to authorize the execution and
delivery of this Agreement, the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Panatech, and will constitute a valid
and binding obligation enforceable against Panatech in accordance with its
terms, subject to bankruptcy, insolvency, reorganization or similar laws or
equitable principles relating to creditors' rights generally and the
availability of equitable remedies.
Section 5.3 No Violation.
Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby nor compliance by
Panatech with any of the provisions hereof will (a) violate or conflict with any
provision of the articles of incorporation or by-laws of Panatech or its
Subsidiaries, or any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Panatech or its Subsidiaries, or
(b) violate or conflict with, or result in a breach of any provision of, or
constitute a default (or any event which, with or without due notice or lapse of
time, or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in the creation of any
lien, security interest, charge or other encumbrance upon the Stock or any of
the properties or assets of Panatech or its Subsidiaries under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation of Panatech or its
Subsidiaries.
Section 5.4 Consents and Approvals.
Other than pursuant to the HSR Act, the Securities
Laws and Stockholder approval, and except for permits, consents, approvals or
authorizations which, if not received, or declarations, filings or registrations
which, if not made, would not have a Material Adverse Effect on Panatech or its
Subsidiaries, no permit, consent, approval or authorization of, or declaration,
filing or registration with, any governmental or regulatory authority or third
party is required to be made or obtained by Panatech or its Subsidiaries
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in connection with the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated hereby.
Section 5.5 Capitalization.
(a) The authorized, capital stock of Panatech consists of 20,000,000 shares
of common stock, par value $0.01 per share, of which 3,979,375 shares are issued
and outstanding and 16,000 shares are held in treasury by Panatech. The issued
and outstanding shares of common stock are duly authorized, validly issued,
fully paid and nonassessable, and none of the issued and outstanding shares of
common stock were issued in violation of the preemptive rights of any present or
former stockholder of Panatech.
(b) Except as set forth in Section 5.5(a) or Schedule 5.5, (i) there are no
shares of capital stock or other equity securities (as the term "equity
security" is defined in the Exchange Act) of Panatech or its Subsidiaries
outstanding, (ii) there are no outstanding Rights to purchase or acquire any
equity securities of Panatech or its Subsidiaries, (iii) no equity securities of
Panatech or its Subsidiaries are reserved for issuance for any purpose, and (iv)
there are no contracts, commitments, agreements, understandings, arrangements or
restrictions to which Panatech or its Subsidiaries are a party or by which
Panatech or its Subsidiaries are bound relating to any shares of the capital
stock or other equity securities of Panatech (including the Stock) or its
Subsidiaries, whether or not outstanding.
Section 5.6 Subsidiaries and Affiliates.
Except as set forth on Schedule 5.6, neither Panatech nor any of its
Subsidiaries owns any capital stock or other equity securities of any other
corporation or has any other type of interest (whether ownership or other) in
any other corporation, partnership, joint venture or other business organization
or entity. The interests of Panatech in any Person as set forth on Schedule 5.6
are owned by Panatech free and clear of all liens, options, claims or
encumbrances (including without limitation, rights of first refusal or similar
rights) with respect to the ownership thereof. Neither Panatech nor any of its
Subsidiaries are subject to any obligation or requirement to provide funds for,
or to make any investment (in the form of a loan, capital contribution or
otherwise) to or in, any Person, except as set forth on Schedule 5.6.
Section 5.7 Financial Statements.
The Panatech Financial Statements (i) present fairly the financial position
and results of operations of Panatech and its Subsidiaries, as of the statement
dates and for the periods indicated, and (ii) have been prepared in accordance
with GAAP consistently applied throughout and among the periods indicated. The
Panatech Interim Financial Statements (i) present fairly the financial position
and results of operations of Panatech and its Subsidiaries, as of the statement
date(s) and for the period(s) indicated, and (ii) have been prepared in
accordance with GAAP.
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Section 5.8 Absence of Undisclosed Liabilities.
Except as set forth on Schedule 5.8, neither Panatech nor any of its
Subsidiaries has any liability or obligation (absolute, accrued, contingent or
otherwise), including any guaranty with respect to any obligation, except (a)
such liabilities or obligations as are fully reflected or reserved against in
the Panatech Financial Statements or the Panatech Interim Financial Statements,
(b) such liabilities or obligations which are identified in any Schedule to this
Agreement or which are not required to be so identified, and (c) such
liabilities or obligations as have been incurred in the ordinary course of
business, consistent with past practice, since September 30, 1996.
Section 5.9 Interim Operations and Absence of Certain Changes.
Since September 30, 1996, except as set forth on Schedule 5.9, Panatech and
its Subsidiaries have conducted their business in the ordinary course and
consistent with past practice and Panatech and its Subsidiaries did not:
(a) incur any indebtedness or other liabilities (whether absolute, accrued,
contingent or otherwise) or guarantee any such indebtedness, except in the usual
and ordinary course of its business, consistent with past practice;
(b) suffer any damage, destruction or loss of tangible assets, whether or
not covered by insurance, in excess of $50,000;
(c) suffer any change in their financial condition, assets, liabilities or
business or suffer any other event or condition of any character which
individually or in the aggregate had or has a Material Adverse Effect on
Panatech or any of its Subsidiaries;
(d) pay, discharge or satisfy any claims, liabilities or obligations
(whether absolute, accrued, contingent or otherwise) except in each case in the
ordinary course of business;
(e) cancel any debts or waive any claims or rights of substantial value,
except in each case in the ordinary course of business;
(f) permit any material insurance policy to be cancelled or terminated;
(g) pledge or permit the imposition of any lien on or sell, assign,
transfer or otherwise dispose of any of their tangible assets, except the sale
of inventory in the ordinary course of business;
(h) sell, assign or otherwise transfer any patents, trademarks, trade
names, copyrights, licenses or other intangible assets;
(i) make any change in any method of accounting or accounting principle or
practice;
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(j) write up or down the value of inventory or determine as collectible any
notes or accounts receivable that were previously considered to be
uncollectible, except for write-ups or write-downs and other determinations in
accordance with GAAP and in the ordinary course of business and consistent with
past practice;
(k) grant any general increase in the compensation payable or to become
payable to their officers or employees (including any such increase pursuant to
any bonus, pension, profit-sharing or other plan or commitment) or any special
increase in the compensation payable or to become payable to any officer or
employee, except for (i) normal merit and cost of living increases in the
ordinary course of business and in accordance with past practice and (ii)
increases pursuant to collective bargaining agreements;
(l) declare, pay or set aside for payment any extraordinary dividend or
other distribution on any shares of their capital stock; split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock;
(m) or repurchase or otherwise acquire any shares of its capital stock;
make any loans which in the aggregate exceed $5,000 to any employee or make any
loans to any stockholder, officer or director;
(n) make commitments for capital expenditures in excess of $100,000 in the
aggregate; or
(o) agree, whether in writing or otherwise, to take any action described in
this Section 5.9.
Section 5.10 Taxes.
(a) Each of Panatech and its Subsidiaries has duly and timely filed all
Tax Returns required to be filed with any federal, state, local or foreign
governmental entity or other authority ("Taxing Authority"). All such Tax
Returns were true, correct and complete in all material respects. Each of
Panatech and its Subsidiaries has paid all Taxes, which have become due and
payable (whether or not shown on any Tax Return). The liability of each of
Panatech and its Subsidiaries for unpaid Taxes for all periods or portions
thereof ending on or before the Closing Date do not, in the aggregate, exceed
the amount of the current liability accruals for Taxes (excluding reserves for
deferred taxes) as of the Closing Date. There are no liens for Taxes upon any of
the assets of any of Panatech and its Subsidiaries except liens for current
Taxes not yet due. Panatech has delivered to Parent correct and complete copies
of all federal and state income and franchise Tax Returns filed with respect to
any of Panatech and its Subsidiaries for the five (5) most recently completed
taxable years, all examination reports by any Taxing Authority, and any
statements of deficiencies proposed or assessed against or agreed to by any of
Panatech and its Subsidiaries. No audit, examination, investigation, proceeding,
action or claim with respect
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to the Taxes of any of Panatech and its Subsidiaries is pending, proposed
or threatened, and there is no basis for the assessment or collection of
additional Taxes against any of Panatech and its Subsidiaries. Except as set
forth on Schedule 5.10, there has never been an examination or notice of
potential examination of the Tax Returns of any of Panatech and its Subsidiaries
by any Taxing Authority. No extension is in effect for any of Panatech and its
Subsidiaries with respect to the filing of any Tax Return, the payment of any
Taxes, or any limitation period regarding the assessment or collection of any
Taxes.
(b) All Taxes that are required to have been withheld or collected by any
of Panatech and its Subsidiaries have been duly withheld or collected, and to
the extent required, have been properly paid or deposited as required by
applicable laws, and Panatech and its Subsidiaries have complied with all
information reporting and backup withholding requirements, including maintenance
of required records with respect thereto.
(c) Schedule 5.10 lists each jurisdiction in which any of Panatech and its
Subsidiaries either files Tax Returns or pays Taxes with respect to which no
returns are required to be filed. No claim has ever been made by any Taxing
Authority in a jurisdiction where any of Panatech and its Subsidiaries does not
file Tax Returns that it is or may be subject to taxation by that jurisdiction.
(d) No property of any of Panatech and its Subsidiaries is property that it
is or will be required to treat as owned for tax purposes by another person, or
is "tax-exempt use property" as defined in Code section 168(h).
(e) None of Panatech and its Subsidiaries has ever agreed to or been
required to make any adjustment pursuant to Code section 481(a) by reason of any
change in accounting method initiated by it; the IRS has not proposed any such
adjustment or change in accounting method; and none of Panatech and its
Subsidiaries has any application pending with any Taxing Authority requesting
permission for any change in accounting method.
(f) None of Panatech and its Subsidiaries has been a United States real
property holding corporation as defined in Code section 897(c)(2) during the
applicable period specified in Code section 897(c)(1)(A)(ii).
(g) None of Panatech and its Subsidiaries has made any payments, is
obligated to make any payments, or is a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code section 280G.
(h) None of Panatech and its Subsidiaries has filed any consent under Code
section 341(f).
(i) None of Panatech and its Subsidiaries has ever been (i) a member of an
affiliated, consolidated, unitary or
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combined group filing a consolidated, unitary or combined Tax Return (other
than a group the common parent of which was Panatech), or (ii) a party to any
tax allocation, sharing or reimbursement agreement or arrangement.
(j) None of Panatech and its Subsidiaries has any liability for the Taxes
of any Person (other than any of Panatech and its Subsidiaries) under Treas.
Reg. Section 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
(k) None of Panatech and its Subsidiaries is an obligor on, and none of its
assets has been financed directly or indirectly by, any tax-exempt bonds.
(l) None of Panatech and its Subsidiaries has executed, become subject to,
or entered into any closing agreement pursuant to Code section 7121 or any
predecessor provision thereof or any similar provision of state, local or
foreign law.
(m) None of Panatech and its Subsidiaries has pending any ruling requests
with any Taxing Authority.
(n) Each of Panatech and its Subsidiaries has disclosed on its federal
income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of Code
section 6662.
Section 5.11 Employee Benefit Plans.
(a) Schedule 5.11 is a true and complete list of all annuity, bonus,
cafeteria, stock option, stock purchase, profit sharing, savings, pension,
retirement, incentive, group insurance, disability, employee welfare, prepaid
legal, nonqualified deferred compensation including, without limitation, excess
benefit plans, top-hat plans, deferred bonuses, rabbi trusts, secular trusts,
nonqualified annuity contracts, insurance arrangements, nonqualified stock
options, phantom stock plans or golden parachute payments, or other similar
fringe benefit plans, and all other employee benefit funds or programs (within
the meaning of Section 3(3) of ERISA), covering employees or former employees of
Panatech and its Subsidiaries (the "Plans"). Except as set forth on Schedule
5.11, Panatech and its Subsidiaries are not parties to any employee agreement,
understanding, plan, policy, procedure or arrangement, whether written or oral,
which provide compensation or fringe benefits to employees and Panatech and its
Subsidiaries are in compliance with their obligations under all such Plans.
Except for changes required by applicable law, there are no negotiations,
demands, commitments or proposals that are pending or that have been made that
concern matters now covered, or that would be covered by the type of agreements
described on Schedule 5.11 or this paragraph.
(b) With respect to each Plan listed on Schedule 5.11, true and complete
copies of (i) all Plan documents (including all amendments and modifications
thereof), and related agreements including, without limitation, the trust
agreement and amendments thereto, insurance contracts and investment management
agreements; (ii) the last three
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filed Form 5500 series and Schedules A, B, P and/or SSA, as applicable, and
Forms PBGC-1, if any; (iii) summary plan descriptions; (iv) summary of material
modifications, if any; (v) the most recent auditor's report, and copies of any
and all tax qualification correspondence including, without limitation, private
letter rulings, applications for determination and determination letters issued
with respect to the Plans; and (vi) the most recent annual and periodic
accounting of related Plan assets, have been delivered to Parent.
(c) With respect to the Plans listed on Schedule 5.11 which are subject to
ERISA:
(i) The Plans are in material compliance with the applicable
provisions of ERISA and each of the employee pension benefit plans, within
the meaning of Section 3(2) of ERISA (the "Pension Plans"), which are intended
to be qualified under Section 401(a) of the Code, have been determined by the
IRS to be so qualified or a request for such determination has been timely filed
with the IRS (and to the Knowledge of Panatech, nothing has occurred to cause
the IRS to revoke such determination and the IRS has not indicated any
disapproval of any request for such a determination);
(ii) Each Plan has been operated in accordance with its terms and all
required filings that are due prior to the date hereof, including, without
limitation, the Forms 5500, for all Plans have been made;
(iii) No prohibited transactions, as defined by Section 406 of ERISA
or Section 4975 of the Code, have occurred with respect to any of the Plans;
(iv) Neither Panatech nor its Subsidiaries have engaged in any
transaction in connection with which Panatech or its Subsidiaries could be
subjected to a criminal or civil penalty under ERISA;
(v) No condition exists which would constitute grounds for
involuntary termination of any of the Pension Plans under Section 4042 of
ERISA, and except as set forth on Schedule 5.11, there have been no reportable
events as defined in Section 4043(b) of ERISA (other than events for which the
30-day notice period has been waived by the Pension Benefit Guaranty Corporation
(the "PBGC")), with respect to any Pension Plan;
(vi) No proceeding or other action been initiated by the PBGC to
terminate any Pension Plan and no notice has been received of any intention
to commence or seek commencement of any such proceeding or action;
(vii) None of the , nor any trust which serves as a funding medium
for any of such Plans, nor any issue relating thereto is currently under
examination by or pending before the IRS, the Department of Labor, the PBGC or
any court, other than applications for determinations pending before the IRS;
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(viii) Except as set forth on Schedule 5.11, of the Pension Plans is
a defined benefit plan within the meaning of Section 414(j) of the Code;
(ix) Except as set forth on Schedule 5.11, none of the Plans is a
"multiemployer plan" as that term is defined in Section 3(37) of ERISA and
Section 414(f) of the Code, nor a plan maintained by more than one employer
(hereinafter referred to as an "multiple employer plan"), nor a single employer
plan under a multiple controlled group within the meaning of Section 4063 of
ERISA, and neither Panatech nor its Subsidiaries nor any entity required to be
aggregated with Panatech under Section 414(b), (c), (m), or (o) of the Code has
incurred any withdrawal liability with respect to any single, multiemployer or
multiple employer plan, which liability could constitute a liability of Parent,
Sub or the Surviving Corporation;
(x) Except as set forth on Schedule 5.11, no benefit claims (except
those submitted in the ordinary course of administration of such Plan) are
currently pending against any Plan;
(xi) Except as set forth on Schedule 5.11, no Plan provides for
retiree medical or retiree life insurance benefits for former employees of
Panatech or its Subsidiaries, and there is no liability for taxes with respect
to disqualified benefits under Section 4976 of the Code; and
(xii) No Pension Plan has been terminated by Panatech or its
Subsidiaries, and there is no liability for taxes with respect to a reversion or
qualified plan assets under Section 4980 of the Code.
(d) There have been no failures to comply with the continuation coverage
provisions required by Sections 601-608 of ERISA and Section 4980B of the Code
under any Plan.
(e) There are no employee benefit plans which cover employees of Panatech
or its Subsidiaries which are required to comply with the provisions of any
foreign law.
(f) All excess contributions, if any (together with any income allocable
thereto), have been distributed (or, if forfeitable, forfeited) before the close
of the first two and one half (2-1/2) months of the following plan year; and
there is no liability for excise tax under Section 4979 of the Code with respect
to such excess contributions, if any, for any Plan.
(g) There is no liability for taxes with respect to: (i) an accumulated
funding deficiency under Section 4971 of the Code and/or (ii) nondeductible
contribution under Section 4972 of the Code.
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Section 5.12 Compliance with Law.
Panatech and its Subsidiaries have been, are and on the Closing Date will
continue to be in compliance with all applicable laws (including duties imposed
by common law), rules, regulations, orders, ordinances, judgments and decrees of
all governmental authorities (federal, state, local and foreign), the
noncompliance with which would be likely to have a Material Adverse Effect on
Panatech or any of its Subsidiaries.
Sectino 5.13 Litigation; Claims.
Except for the suit filed by ASM Company, Inc. against Titan Tool and all
proceedings related thereto (the "ASM Litigation"), Schedule 5.13 hereto
contains a complete and accurate list of (a) all claims, actions, suits,
proceedings or investigations pending or (to the Knowledge of Panatech)
threatened by or against Panatech or its Subsidiaries, and (b) all judgments,
decrees, arbitration awards or orders binding upon Panatech or its Subsidiaries.
Except for the ASM Litigation and except as set forth on Schedule 5.13, no
material claims, including, without limitation, product liability claims, have
been asserted against Panatech or its Subsidiaries during the past five (5)
years, and, to the Knowledge of Panatech, there is no basis for any material
claim, action, suit, proceeding or investigation involving Panatech or its
Subsidiaries, other than as set forth on Schedule 5.13.
Section 5.14 Contracts and Commitments.
(a) Schedule 5.14 contains a complete and accurate list of all contracts,
agreements and commitments (other than the agreements or arrangements set forth
in Schedules 5.11, 5.15, 5.17, 5.19, 5.20, 5.22, 5.23, 5.24 and 5.27), whether
written or oral, of Panatech and its Subsidiaries that involve commitments in
excess of $25,000, have a term of six (6) months or more or that are not in the
ordinary course of business.
(b) The agreements set forth in Schedules 5.11, 5.14, 5.15, 5.17, 5.19,
5.20, 5.22, 5.23, 5.24 and 5.27 are hereinafter referred to collectively as the
"Operating Agreements." None of the Operating Agreements has been assigned or is
the subject of any security agreement, except as set forth on Schedule 5.14.
Except as otherwise set forth on Schedule 5.14, (a) each of the Operating
Agreements is a valid and binding obligation of Panatech or its Subsidiaries and
(to the Knowledge of Panatech) the other party or parties thereto, enforceable
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization or similar laws or equitable principles
relating to creditors' rights generally and the availability of equitable
remedies; (b) neither Panatech nor its Subsidiaries nor (to the Knowledge of
Panatech) any other party thereto, has terminated, canceled, modified or waived
any material term or condition of any Operating Agreement; and (c) neither
Panatech nor its Subsidiaries nor (to the Knowledge of Panatech) any other party
to any Operating Agreement is in default or alleged to be in
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default in any material respect under any Operating Agreement and there exists
no event, condition or occurrence that, after notice or lapse of time, or both,
would constitute such a default by Panatech or its Subsidiaries or any party to
any such Operating Agreement. None of such Operating Agreements contains any
covenant or other restriction preventing or limiting the consummation of the
transactions contemplated hereby. Neither Panatech nor its Subsidiaries have any
outstanding powers of attorney except routine powers of attorney relating to the
representation of Panatech or its Subsidiaries before governmental agencies or
given in connection with qualification to conduct business or customs matters.
Panatech and its Subsidiaries have delivered to each of Parent and Sub a copy of
each of the written Operating Agreements and a description of the terms and
conditions of any oral Operating Agreements.
Section 5.15 Intellectual Property Rights.
Schedule 5.15 contains a correct and complete list of the following assets
and related matters: (a) all patents and applications for patents, all Marks and
registration of Marks and applications for registration of Marks, all copyright
registrations and applications for copyright registration, and all trade names,
owned or used (pursuant to license agreements or otherwise) by Panatech or its
Subsidiaries, and in the case of any such Intellectual Property that is so
owned, the jurisdictions in or by which such assets or any of them have been
registered, filed or issued and (b) to the extent not listed on Schedule 5.14,
all contracts, agreements or understandings pursuant to which Panatech or its
Subsidiaries has authorized any Person to use any of the Intellectual Property
which is so owned. Panatech and its Subsidiaries own, possess or license and as
of the Closing Date will own, possess or license, all right, title and interest
in and to the items of Intellectual Property that are required to conduct their
businesses as now conducted without conflict with the rights of others. Except
as contended pursuant to the ASM Litigation and except as set forth in Schedule
5.15: (i) Panatech and its Subsidiaries have the right to use and, to Panatech's
Knowledge, the sole and exclusive right to use, the Intellectual Property
(including applications for any of the foregoing) used in connection with the
business of Panatech and its Subsidiaries, and, to Panatech's Knowledge, none of
the past or present employees, officers, directors or stockholders of Panatech
and its Subsidiaries, or anyone else, has any rights with respect thereto; (ii)
the consummation of the transactions contemplated hereby will not alter or
impair any such rights; (iii) none of Panatech or its Subsidiaries has received
any notice or claim of infringement or any claim challenging or questioning the
validity or effectiveness of any of the items of Intellectual Property, and
there is no valid basis for any such claim; and (iv) none of Panatech or its
Subsidiaries is liable, nor have they made any contract or arrangement whereby
they may become liable, to any Person for any royalty or other compensation for
use of any of the items of Intellectual Property.
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Section 5.16 Liens.
Except as set forth on Schedule 5.16, none of the properties or assets,
whether real, personal or mixed, or tangible or intangible, owned or leased by
Panatech or its Subsidiaries are subject to any mortgage, lien, encumbrance or
other security interest, except for (a) liens for taxes and assessments or
governmental charges or levies not at the time due or in respect of which the
validity thereof shall currently be contested in good faith by appropriate
proceedings and (b) liens in respect of pledges or deposits under workmen's
compensation laws or similar legislation, carriers', warehousemen's, mechanics',
laborers' and materialmen's and similar liens, if the obligations secured by
such liens are not then delinquent or are being contested in good faith by
appropriate proceedings.
Section 5.17 Insurance.
All insurance policies and fidelity bonds relating to the assets of
Panatech and its Subsidiaries, including summary descriptions and the
termination dates thereof, are set forth on Schedule 5.17. Except as set forth
on Schedule 5.17, Panatech and its Subsidiaries have not been refused any
insurance with respect to their business or any of their assets, nor has
coverage been limited by any insurance carrier to which they have applied for
insurance or with which they have carried insurance, during the last two (2)
years.
Section 5.18 Disclosure.
To the Knowledge of Panatech, no representation or warranty by Panatech to
each of Parent and Sub contained in this Agreement, and no statement contained
in the Schedules hereto or any certificate furnished to each of Parent and Sub
pursuant to the provisions hereof, contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary in
order to make the statements herein or therein not misleading.
Section 5.19 Tangible Personal Property.
(a) Except as set forth on Schedule 5.16 and except for the leased tangible
personal property set forth on Schedule 5.19, Panatech has good and marketable
title to all of its tangible personal property.
(b) Schedule 5.19 lists all tangible personal property leased by Panatech
or its Subsidiaries with annual lease payments in excess of $10,000 and the
location thereof. None of such leases contains any covenant or restriction
preventing or limiting the consummation of the transactions contemplated
hereunder.
(c) All of the material tangible personal property owned by Panatech and
all of the leased tangible personal property listed in Schedule 5.19 is in good
operating condition, subject to ordinary wear and tear.
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Section 5.20 Real Property.
(a) Panatech owns no real property and has not agreed (and
has no option) to purchase or sell any real property.
(b) Schedule 5.20 identifies all of the real property that
Panatech or its Subsidiaries lease, have agreed to lease or have an obligation
to lease in connection with their business (including a general description of
the improvements thereon). Such leased real property is hereinafter referred to
as the "Leased Property," and the improvements and fixtures thereon are
hereinafter referred to as the "Leased Improvements."
(c) There are no adverse or other parties in possession of
the Leased Property, the Leased Improvements or any portion or portions thereof,
and on the Closing Date the leasehold interests in the Leased Property and the
Leased Improvements will be free and clear of any and all leases, licensees,
occupants or tenants except as set forth on Schedule 5.20. There are no pending
or threatened condemnation, eminent domain or similar proceedings, or litigation
or other proceedings affecting the Leased Property, the Leased Improvements or
any portion or portions thereof. To the Knowledge of Panatech, there are no
pending or threatened requests, applications or proceedings to alter or restrict
any zoning or other use restrictions applicable to the Leased Property or the
Leased Improvements that would interfere with the conduct of the business of
Panatech or its Subsidiaries or the use of the assets consistent with past
practice, which interference would have a Material Adverse Effect on the
business of Panatech or its Subsidiaries.
Section 5.21 Environmental Matters.
(a) As used in this Agreement "Hazardous Material" shall
mean: (i) any "hazardous substance" as now defined pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42
U.S.C. Section 9601(14), or any substance listed or identified by any
characteristic in any regulation adopted pursuant to any statute referred to or
incorporated into such definition, all as in effect on the date hereof; (ii) any
petroleum, including crude oil and any fraction thereof; (iii) natural gas,
natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel;
(iv) any "hazardous chemical" as defined pursuant to 29 C.F.R. Part 1910; and
(v) any asbestos, polychlorinated biphenyl ("PCB"), or isomer of dioxin.
(b) There is no Hazardous Material within, under,
originating from or relating to any real property interest or other location
geologically or hydrologically connected to such properties owned, operated or
controlled by Panatech, its Subsidiaries or their predecessors in interest.
(c) Neither Panatech, its Subsidiaries nor any of their
predecessors in interest has any liability, matured or not matured, absolute or
contingent, assessed or unassessed, imposed or based upon any provision under
any foreign, federal, state or local law, rule, or
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regulation or common law, or under any code, order, decree, judgment or
injunction applicable to Panatech, its Subsidiaries or their predecessors in
interest, nor has Panatech or its Subsidiaries received any notice, or request
for information issued, promulgated, approved or entered thereunder, or under
the common law, or any tort, nuisance or absolute liability theory, relating to
public health or safety, worker health or safety, or pollution, damage to or
protection of the environment including without limitation, laws relating to
emissions, discharges, releases or threatened releases of Hazardous Material
into the environment (including without limitation, ambient air, surface water,
groundwater, land surface or subsurface), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, generation,
disposal, transport or handling of any Hazardous Material (hereinafter
collectively referred to as "Environmental Laws").
(d) Each of Panatech and its Subsidiaries possesses and is
in compliance in all material respects with all permits, licenses, certificates,
franchises and other authorizations relating to the Environmental Laws necessary
to conduct its business or required by environmental regulations.
(e) Neither Panatech nor its Subsidiaries has, during the
past five (5) years, been subject to any civil, criminal or administrative
action, suit, claim, hearing, notice of violation, investigation, inquiry or
proceeding for failure to comply with, or received notice of any violation or
potential liability under the Environmental Laws, nor is Panatech aware of any
information, whether or not confirmed or reported, which could give rise to any
such potential liability.
(f) No real property, site or facility (as defined in
CERCLA, 42 U.S.C. Section 9601(9)) owned or operated by Panatech or its
Subsidiaries is (i) listed or proposed for listing on the National Priority List
or (ii) listed on the Comprehensive Environmental Response, Compensation,
Liability Information System List ("CERCLIS") promulgated pursuant to CERCLA, or
any comparable list maintained by any foreign, state or local government
authority.
(g) There are no underground storage tanks owned or
operated by Panatech or its Subsidiaries, and any prior use and operation of
underground storage tanks owned or operated by Panatech or its Subsidiaries has
been in compliance with all Environmental Laws.
(h) Panatech has provided to Parent an opportunity to
inspect its facilities, and to review and copy documents, and Panatech has
delivered to Parent true, complete and correct copies of results of any reports,
together with supporting studies, analyses and tests in the possession of or
initiated by Panatech or its Subsidiaries pertaining to the existence of
Hazardous Material and any other environmental concerns relating to any of their
facilities, or sites or real property owned, leased, operated, used or
controlled by Panatech, its Subsidiaries or any of their predecessors in
interest, or concerning compliance with or liability under the Environmental
Laws.
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(i) There are no PCBs in or at any premises owned, leased,
operated or controlled by Panatech or its Subsidiaries and their prior use,
handling, storage, transport or disposal of PCBs has been in compliance with all
Environmental Laws.
(j) There is no friable asbestos or asbestos containing
materials on or in the properties and assets owned, leased, operated or
controlled by Panatech or its Subsidiaries and the facilities on such properties
comply with the Environmental Laws including but not limited to, Occupational
Safety and Health Act regulations with respect to ambient air exposure to
asbestos.
(k) Neither Panatech nor its Subsidiaries has, by
contract, agreed to assume the liability of any other person or entity pursuant
to any of the Environmental Laws.
Section 5.22 Employees.
Schedule 5.22 sets forth a complete and accurate list of
all employees of Panatech and its Subsidiaries having total annual compensation
in excess of $35,000, showing for each: name, hire date, current job title or
description, current salary level (including any bonus or deferred compensation
arrangements) and any bonus, commission or other remuneration paid during fiscal
1995 and fiscal 1996, and describing any existing contractual arrangement with
such employee. None of the employees of Panatech or its Subsidiaries is
currently on short-term or long-term disability. Except as set forth on Schedule
5.22, since March 31, 1996 no salaried employee of Panatech or its Subsidiaries
who has been compensated at an annual rate in excess of $35,000 has terminated
his or her employment or had such employment terminated for any reason or for no
reason; no such employee has given notice of his or her intent to terminate such
employment; and no notice of termination has been given to any such employee by
Panatech or its Subsidiaries. Except as set forth on Schedule 5.22 and except
for amounts owed employees upon cancellation of Panatech Stock Options pursuant
to Section 2.7(a), no employees of Panatech or its Subsidiaries shall receive
any compensation as a result of the consummation of the transaction contemplated
by this Agreement.
Section 5.23 Employee Relations.
Except as set forth on Schedule 5.23, neither Panatech nor
its Subsidiaries has at any time during the past five years had, nor is there
now threatened, any labor disputes or any strike, picket, work stoppage, work
slowdowns or other job action due to labor disagreements. Except as set forth on
Schedule 5.23, (a) Panatech and its Subsidiaries are in compliance in all
material respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including the
terms and provisions of any collective bargaining agreement or other contract
with a labor union representing any employees of Panatech or its Subsidiaries
and are not engaged in any unfair labor practice which could have a Material
Adverse Effect on Panatech or its Subsidiaries; (b) there is no unfair labor
practice charge or complaint against Panatech or its Subsidiaries, or (to the
Knowledge of Panatech) threatened before the
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National Labor Relations Board or any foreign authority; (c) no question
concerning representation has been raised or is (to the Knowledge of Panatech)
threatened respecting the employees of Panatech or its Subsidiaries; (d) no
grievance that might have Material Adverse Effect on Panatech or its
Subsidiaries, nor any arbitration proceeding arising out of or under any
collective bargaining agreement, is pending and no claims therefor exist; and
(e) no collective bargaining agreement that is binding on Panatech or its
Subsidiaries restricts them from relocating, closing or contracting any of their
operations.
Section 5.24 Customers and Vendors; Distributors and
Representatives.
(a) Schedule 5.24 sets forth correct and complete lists of
the twenty (20) largest (by dollar volume) customers and vendors of Panatech and
its Subsidiaries during the most recently completed fiscal year, indicating the
existing contractual arrangements, if any, with each such customer or vendor.
Except as set forth in Schedule 5.24, there are no outstanding disputes with any
customer or vendor listed thereon and no customer or vendor listed thereon has
refused to continue to do business with Panatech and its Subsidiaries or has
stated its intention not to continue to do business with Panatech and its
Subsidiaries. Since March 31, 1996, there has not been any material shortage or
unavailability of the raw materials necessary to manufacture the products sold
by Panatech and its Subsidiaries and, to the Knowledge of Panatech, there is no
current shortage or unavailability which may lead to such shortages.
(b) Schedule 5.24 sets forth a correct and complete list
of the twenty (20) largest (by dollar volume) distributors, representatives and
agents for the sale of the products of Panatech and its Subsidiaries during the
two most recently completed fiscal years and all distributors, representatives
and agents to whom Panatech and its Subsidiaries have given any exclusive rights
with respect to territories or products. Since March 31, 1996, there has been no
termination of any independent distributor, wholesaler, sales representative or
agent relationship, nor, to the Knowledge of Panatech, has any present
independent distributor, wholesaler, sales representative or agent indicated any
intention to termination or materially change the terms of its relationship with
Panatech and its Subsidiaries.
Section 5.25 Governmental Authorizations.
Except for licenses, permits or authorizations the lack of
which would not have a Material Adverse Effect on Panatech or its Subsidiaries,
Panatech and its Subsidiaries possess all licenses, franchises, permits,
certificates, orders, approvals, exemptions, registrations or other
authorizations (collectively, the "Permits") from governmental, regulatory or
administrative agencies or authorities required for the ownership of their
properties and assets and operation of their businesses in the manner presently
conducted (including those required pursuant to laws or regulations relating to
the protection of the environment), each of which will be in full force and
effect on the Closing Date. A list of all material Permits is set forth on
Schedule 5.25. Except as specified in Schedule 5.25, no
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registrations, filings, applications, notices, transfers, consents, approvals,
orders, qualifications, waivers or other actions of any kind are required by
virtue of the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby to enable Panatech and its Subsidiaries to
continue the possession and operation of their properties and assets and the
businesses of Panatech and its Subsidiaries as presently conducted in all
material respects.
Section 5.26 Defects in Products or Designs; Product
Safety.
(a) Except as set forth in Schedule 5.26, there has been
no pattern of defects in any product line in the design, construction,
manufacturing or installation of any material product ("Product") made,
manufactured, constructed, distributed, sold, leased or installed by Panatech,
its Subsidiaries or their employees, or agents, that would adversely affect the
performance or quality of such Product. Each Product has been designed,
manufactured, packaged and labelled in compliance with all regulatory,
engineering, industrial and other codes applicable thereto, and Panatech has not
received notice of any alleged noncompliance with any such code. Each Product
advertised or represented as being rated or approved by a rating organization,
such as Underwriters' Laboratories or other similar organizations, comply with
all conditions of such rating approval.
(b) Neither Panatech nor its Subsidiaries has been
required to file, and has not filed, a notification or other report with the
United States Consumer Product Safety Commission concerning actual or potential
hazards with respect to any Product manufactured or sold by Panatech or its
Subsidiaries.
Section 5.27 Broker's or Finder's Fees.
Except as set forth in Schedule 5.27 no agent, broker,
investment banker, Person or firm acting on behalf of Panatech or its
Subsidiaries or under the authority of Panatech or its Subsidiaries or any
Stockholder is or will be entitled to any broker's or finder's fee or any other
commission or similar fee directly or indirectly from Panatech or its
Subsidiaries in connection with any of the transactions contemplated hereby.
Schedule 5.27 sets forth a summary of all such broker's or finder's fees and
other commissions or fees payable by Panatech or its Subsidiaries in connection
with any of the transactions contemplated hereby.
Section 5.28 Certain Transactions.
Except as set forth on Schedule 5.28, none of the
directors or officers of Panatech is currently a party to any transaction with
Panatech (other than for services as employees, directors and officers),
including, without limitation, any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from, any
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such Person, or to or from any corporation, partnership, trust or other entity
in which any such Person owns in excess of five percent (5%) of the outstanding
equity interest.
Section 5.29 Absence of Questionable Payments.
To the Knowledge of Panatech, neither Panatech nor any of
its Subsidiaries nor any director, officer, agent, employee or other Person
acting on their behalf has (i) used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others or
established or maintained any unlawful or unrecorded funds in violation of
Section 30A of the Exchange Act, as amended, or any other applicable foreign,
federal or state law; or (ii) accepted or received any unlawful contributions,
payments, expenditures or gifts.
Section 5.30 SEC Documents.
Panatech has timely filed within the last 12 months all
SEC Documents required by the Securities Laws and such SEC Documents complied in
all material respects with the Securities Laws and no such SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact necessary to make the statements contained therein not misleading.
Section 5.31 Proxy Statement.
The information contained in the Proxy Statement at the
time the Proxy Statement is mailed to Stockholders up to and including the time
of Panatech's Stockholders' meeting to vote upon the Merger, (i) shall comply in
all material respects with the applicable provisions of the Securities Laws, and
(ii) except with respect to Parent or Sub, shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to Panatech, and Panatech in
agreeing to consummate the transactions contemplated by this Agreement has
relied upon such representations and warranties, that:
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Section 6.1 Corporate Organization.
(a) Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite power and authority (corporate and other) to own, lease and
operate its properties and to carry on its business as now being conducted.
(b) Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada and has the requisite
power and authority (corporate and other) to own, lease and operate its
properties and to carry on its business as now being conducted.
Section 6.2 Valid and Binding Agreement.
Each of Parent and Sub has the full right, capacity and
power to enter into this Agreement. All necessary action on the part of each of
Parent and Sub has been taken to authorize the execution and delivery of this
Agreement, the performance of their obligations hereunder and the consummation
of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Parent and Sub, and will constitute a valid
and binding obligation enforceable against Parent and Sub in accordance with its
terms, subject to bankruptcy, insolvency, reorganization or similar laws or
equitable principles relating to creditors' rights generally and the
availability of equitable remedies.
Section 6.3 No Violation.
Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby nor compliance by each
of Parent or Sub with any of the provisions hereof will (a) violate or conflict
with any provision of the certificate of incorporation or by-laws of Parent or
the articles of incorporation or by-laws of Sub or any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to
Parent or Sub, or (b) violate or conflict with, or result in a breach of any
provision of, or constitute a default (or any event which, with or without due
notice or lapse of time, or both, would constitute a default) under, or result
in the termination of, or accelerate the performance required by, or result in
the creation of any lien, security interest, charge or other encumbrance upon
the stock or any of the properties or assets of Parent or Sub under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation of Parent or
Sub.
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Section 6.4 Consents and Approvals.
Except under the HSR Act, and except for permits,
consents, approvals or authorizations which, if not received, or declarations,
filings or registrations which, if not made, would not have a Material Adverse
Effect on either Parent or Sub, no permit, consent, approval or authorization
of, or declaration, filing or registration with, any governmental or regulatory
authority or third party is required to be made or obtained by Parent or Sub in
connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
Section 6.5 Proxy Statement.
The information to be supplied by Parent and Sub to
Panatech for inclusion in the Proxy Statement shall not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading.
ARTICLE VII
COVENANTS
Section 7.1 Compliance with Law.
From the date hereof through the Closing Date, Panatech
and its Subsidiaries will promptly comply in all material respects with all laws
and regulations (including without limitation, those relating to the protection
of the environment and employee benefits) applicable to Panatech's and its
Subsidiaries' business and all laws and regulations with which compliance is
required for the valid consummation of the transactions contemplated hereby and
will promptly notify each of Parent and Sub of any legal, administrative or
other proceedings, investigations, inquiries, complaints, notices of violation
or other asserted claims, judgments, injunctions or restrictions, pending,
outstanding or, to the Knowledge of Panatech, threatened or contemplated, which
could have a Material Adverse Effect on Panatech's or its Subsidiaries'
business.
Section 7.2 Operation of Business Prior to Closing.
Except as set forth on Schedule 7.2, during the period
from the date hereof through the Closing Date, Panatech agrees that (except as
expressly contemplated or permitted by this Agreement or to the extent that
Parent and Sub shall otherwise consent in writing):
(a) Panatech and its Subsidiaries shall carry on their
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and
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shall use all reasonable efforts to preserve intact their present business
organizations, keep available the services of their present officers and
employees and preserve their relationships with customers, suppliers and others
having business dealings with them to the end that their goodwill and ongoing
business shall not be impaired in any material respect at the Closing Date.
(b) Panatech and its Subsidiaries shall not amend or
propose to amend their articles of incorporation or by-laws.
(c) Panatech and its Subsidiaries shall not: (i) except
with respect to the acceleration of Panatech Stock Options outstanding on the
date hereof in accordance with the Stock Option Plans, increase the compensation
payable or to become payable to their officers or employees, except for cash
bonuses consistent with past practice as to the amount and category of
employees, increases in salaries and wages of employees consistent with past
practice, or grant any severance or termination pay to or enter into any
employment or severance agreement with any of their directors, officers or other
employees; (ii) except as otherwise contemplated by this Agreement, establish,
adopt, enter into or make any new grants or awards under or amend any employee
benefit plan or other arrangement, plan or policy between Panatech or any of its
Subsidiaries and one or more of its directors, officers or employees; or (iii)
except as otherwise contemplated by this Agreement, establish, adopt, enter into
or amend any Plan.
(d) Panatech and its Subsidiaries shall not settle or
compromise any material claims or litigation or, except in the ordinary and
usual course of business, modify, amend or terminate any of their material
contracts or waive, release or assign any material rights or claims.
(e) Panatech and its Subsidiaries shall not permit any
material insurance policy to be canceled or terminated without notice to Parent
and Sub, except in the ordinary and usual course of business.
(f) Panatech and its Subsidiaries shall not fail to confer
on a regular and frequent basis with one or more representatives of Parent and
Sub to report material operational matters and the general status of ongoing
operations.
(g) Panatech and its Subsidiaries shall not commit a
breach of, or default under, any material contract, agreement, license or
instrument to which they are a party or to which any of their assets may be
subject, or violate any applicable law, regulation, ordinance, order, injunction
or decree or any other requirement of any governmental body or court, relating
to their assets or business if such breach, default or violation is reasonably
likely to result in a Material Adverse Effect on Panatech.
(h) Panatech and its Subsidiaries shall not, except in the
ordinary course of business, (i) factor, discount or otherwise accept less than
full payment with regard to accounts receivable or other amounts due; (ii) delay
payment on, or otherwise alter the
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payment terms of, accounts payable or pay the amounts due thereunder later than
the stated date for payment thereof; or (iii) sell any inventory at less than
fair market value or make any bulk sale of such inventory, or fail to maintain
inventory at ordinary, customary levels, consistent with Panatech Financial
Statements and Panatech Interim Financial Statements and past practice.
(i) Panatech and its Subsidiaries shall not, except as
expressly permitted by this Agreement, take any action that would or is
reasonably likely to result in any of their representations and warranties set
forth in this Agreement being untrue in any material respect, or in any of the
conditions in this Agreement set forth in Article VIII not being satisfied.
(j) Panatech and its Subsidiaries shall not (i) authorize
capital expenditures in excess of $100,000 or make any acquisition of, or
investment in, assets or stock of any other Person; (ii) acquire (by merger,
consolidation or acquisition of stock or assets) any corporation, partnership or
other business organization or division thereof; (iii) assume, guarantee or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any Person or make any loans or advances; (iv) enter into any
material contract or agreement other than in the ordinary course of business; or
(v) enter into or amend in any respect any material contract, agreement,
commitment or arrangement with respect to any of the matters set forth in this
Section 7.2(j).
(k) Except with respect to the issuance of Stock upon the
exercise of Panatech Stock Options and Panatech Warrants outstanding on the date
hereof, Panatech and its Subsidiaries shall not issue, sell, pledge, lease,
dispose of, encumber, or authorize the issuance, sale, pledge, lease,
disposition or encumbrance of, (i) any shares of capital stock of any class, or
any options, warrants, convertible securities or other rights of any kind to
acquire any shares of capital stock, or any other ownership interest, or (ii)
any assets that are material, alone or in the aggregate, to Panatech except for
the sale of products in the ordinary course of business and consistent with past
practice.
(l) Panatech and its Subsidiaries shall not make any tax
election or settle or compromise any material federal, state, local or foreign
income tax liability.
(m) Neither Panatech nor any of its Subsidiaries shall (i)
declare or pay any extraordinary dividends on or make other distributions in
respect of any of its capital stock, (ii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (iii) repurchase or otherwise acquire any shares of its capital
stock.
(n) Neither Panatech nor any of its Subsidiaries shall
incur or assume any indebtedness or other liabilities (whether absolute,
accrued, contingent or otherwise) or guarantee any indebtedness or commitments
for the same, except liabilities (other than indebtedness or guarantees of
indebtedness) in the usual and ordinary course of its business, and in amounts
and on terms consistent with past practice.
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(o) Except in the ordinary course of business, neither
Panatech nor any of its Subsidiaries shall pay, loan or advance any amount to,
or sell, transfer or lease any property or asset to, or enter into any agreement
or arrangement with, any of its stockholders, officers, employees or directors.
(p) Panatech and its Subsidiaries shall maintain their
real and personal properties in as good a state of operating condition and
repair as they are on the date of this Agreement, except for ordinary wear and
tear.
(q) Panatech and its Subsidiaries shall not terminate or
modify any leases, contracts, governmental licenses, permits, or other
authorizations or agreements affecting their real and/or personal properties or
the operation thereof or enter into any additional lease or contract of any
nature affecting such properties or the operation thereof.
(r) No liens, encumbrances, obligations or liabilities
relating to Panatech or its Subsidiaries, whether absolute or contingent
(including litigation claims), shall be discharged, satisfied or paid, other
than liabilities shown on Panatech Financial Statements or Panatech Interim
Financial Statements and liabilities incurred after the date thereof in the
ordinary course of business and in normal amounts, and no such discharge,
satisfaction or payment shall be effected other than in accordance with the
ordinary payment terms relating to the liability discharged, satisfied or paid.
(s) Panatech will timely file all SEC Documents and all
such documents shall comply in all material respects with the requirements of
the Securities Laws and none of such documents shall contain an untrue statement
of material fact or omit to state a material fact required, under the
circumstances, to make the statements contained therein not misleading.
(t) Panatech and its Subsidiaries shall not make any
changes in accounting methods, principles or practices.
Section 7.3 Access.
(a) Prior to the Closing Date, Panatech and its
Subsidiaries shall provide Parent and Sub and their representatives (excluding
Titan Personnel) with full access to, and will make available for inspection and
review, all properties, personnel, books, records and accounts of Panatech and
its Subsidiaries in order that Parent and Sub may have full opportunity to make
such investigation as they shall desire to make of the affairs of Panatech and
its Subsidiaries. It is understood that Parent and Sub shall be permitted to
maintain personnel (excluding Titan Personnel) on the premises of Panatech and
its Subsidiaries during customary business hours to observe all aspects of the
operations of Panatech and its Subsidiaries and to confer with their management,
attorneys and other third parties reasonably requested for verification of any
information obtained pursuant to such observations. Panatech also consents to
the examination by Price Waterhouse of
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workpapers and other records of the Accountants pertaining to Panatech and its
Subsidiaries.
(b) Notwithstanding the requirements set forth in Section
7.3(a), Panatech shall restrict the access of Parent and Sub to its customers,
vendors and distributors up until five (5) business days prior to Closing.
During such five (5) day period, Parent and Sub (excluding Titan Personnel)
shall be permitted to make reasonable inquiries of such customers, vendors and
distributors as may be necessary for due diligence purposes.
Section 7.4 Letter of Intent.
Paragraph 3(b) of the Letter of Intent shall remain in
full force and effect and is incorporated into this Agreement the same as if
fully set forth herein. The restrictions set forth in Paragraph 3(b) shall
terminate upon the earlier of (i) the Closing or (ii) the date forty-two (42)
months from the date of termination of this Agreement in accordance with Article
XI.
Section 7.5 Fiduciary Duty.
This Agreement is and shall at all times be subject to the
performance by the Board of Directors of Panatech of the fiduciary duties of its
directors.
Section 7.6 No Solicitation.
Panatech agrees that, without the prior written consent of
Parent, prior to the Effective Time, neither Panatech nor any of its
Subsidiaries shall hereafter initiate the direct and active solicitation of any
other party or parties (other than Parent and Sub) for a proposal that said
other party merge with, consolidate, or acquire the capital stock or
substantially all of the assets of Panatech or any of its Subsidiaries (an
"Acquisition Transaction"); provided, however, if Panatech or any of its
Subsidiaries, without the direct and active solicitation hereafter initiated by
Panatech or one of its Subsidiaries, receives from any other party or parties
(other than Parent or Sub) a proposal to merge with, consolidate, or acquire the
capital stock or substantially all of the assets of Panatech or any of its
Subsidiaries, then Panatech or such Subsidiary shall be entitled to respond
thereto in all appropriate ways consistent with the fiduciary duties of the
directors of Panatech. Panatech shall immediately advise Parent of the receipt
by Panatech or any of its Subsidiaries hereafter of a proposal from any other
party or parties (other than Parent or Sub) to merge with, consolidate, or
acquire the capital stock or substantially all of the assets of Panatech or any
of its Subsidiaries, and any such notice shall include a description of the
terms and conditions of any such proposal.
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Section 7.7 Stockholders' Meeting.
In order to consummate the Merger, Panatech, acting through its board
of directors shall in accordance with its Articles of Incorporation and By-laws
and applicable law:
(a) duly call, give notice of and hold a meeting of its Stockholders as
soon as practicable following the date hereof;
(b) subject to the fiduciary duties of its directors, include in the
Proxy Statement the recommendation of its board of directors that the
Stockholders vote in favor of the Agreement and use its best efforts to solicit
votes and proxies in favor of the adoption and approval of this Agreement; and
(c) obtain and furnish any information, with respect to Panatech,
required to be included in the Proxy Statement and cause the Proxy Statement to
be mailed to the Stockholders at the earliest practicable date.
Section 7.8 Proxy Statement.
As promptly as practicable after the date hereof, Parent and Panatech
shall cooperate in the preparation of the Proxy Statement to be mailed to the
Stockholders of Panatech in connection with the Merger.
Section 7.9 Best Efforts.
Subject to the fiduciary duties of their respective directors, Parent
and Panatech shall each use its respective best efforts in good faith, and each
of them shall cause its subsidiaries to use their respective best efforts in
good faith, to take or cause to be taken all actions, and to do or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations so as to permit consummation of the Merger in accordance with this
Agreement at the earliest possible date.
Section 7.10 Press Releases.
Parent and Panatech shall agree with each other as to the form and
substance of any press release related to this Agreement or the transactions
contemplated hereby, and shall consult each other as to the form and substance
of other public disclosures related thereto, provided, however, that nothing
contained herein shall prohibit any party, following notification to the other
parties, from making any disclosure which its counsel deems necessary.
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Section 7.11 HSR Act.
Each of Parent and Panatech will as promptly as reasonably practicable
file the notification and report form, and any supplemental information
requested thereafter, required pursuant to the HSR Act to consummate the
transaction contemplated hereby. Parent and Panatech agree to furnish to the
other such necessary information and reasonable assistance as each may request
in connection with any necessary filings or submissions required pursuant to the
HSR Act.
Section 7.12 Payment of Expenses.
Panatech shall use its best efforts in good faith to cause its legal
counsel, accountants, financial advisors and any other third parties it has
retained in connection with the transactions contemplated by this Agreement to
submit all invoices for payment prior to the Closing Date. Parent shall have
accrued all such fees and expenses, as well as any other out-of-pocket expenses
incurred in connection with the transactions contemplated by this Agreement as
of the Closing Date.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF PARENT AND SUB
All obligations of each of Parent and Sub that are to be discharged
under this Agreement at the Closing are subject to Panatech's fulfillment, at
the Closing or effective as of the Closing Date, of each of the following
conditions (unless expressly waived in writing by Parent and Sub at any time at
or prior to the Closing) and Panatech shall use its reasonable efforts to cause
each of such conditions to be satisfied:
Section 8.1 Representations and Warranties.
On the Closing Date, the representations and warranties of Panatech set
forth in Article V of this Agreement shall be true and correct in all material
respects as though such representations and warranties had been made by Panatech
on and as of the Closing Date, and Parent and Sub shall have received at the
Closing a certificate, dated the Closing Date, signed by the President or a Vice
President of Panatech to such effect.
Section 8.2 Covenants, Agreements and Conditions.
Panatech shall have performed and complied in all material respects
with all covenants, agreements and conditions contained in this Agreement
required to be performed by or complied with by it on or prior to the Closing
Date, and Parent and Sub
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shall have received at the Closing a certificate, dated the Closing Date, signed
by the President or a Vice President of Panatech to such effect.
Section 8.3 No Material Adverse Effect.
During the period from the date hereof through the Closing Date, there
shall not have been any change which has a Material Adverse Effect on the
condition (financial or otherwise) or earnings of Panatech.
Section 8.4 Corporate Proceedings.
All corporate and other proceedings to be taken and all consents to be
obtained by Panatech or its Subsidiaries in connection with the transactions
contemplated by this Agreement and all documents incident thereto shall be
reasonably satisfactory in form and substance to Parent and Sub and their
counsel, Dickstein Shapiro Morin & Oshinsky LLP, each of whom shall have
received all such originals or certified or other copies of such documents as
either may reasonably request.
Section 8.5 Opinion of Counsel.
Parent and Sub shall have received a written opinion dated the Closing
Date from Hagan, Saca & Hagan, counsel to Panatech, in the form attached as
Exhibit C hereto.
Section 8.6 Proceedings.
No action or proceeding shall be pending or threatened, nor shall any
statute, rule, regulation, executive order, decree or injunction have been
enacted, entered, promulgated or enforced by any court or governmental
authority, to restrain or prevent the consummation of the transactions
contemplated hereby.
Section 8.7 Governmental Approvals.
Except for the filing and approval of the Proxy Statement, there shall
have been received all necessary governmental consents or authorizations
required in connection with the transactions contemplated hereby.
Section 8.8 HSR Act Requirements.
Any "waiting periods" (and any extensions thereof) applicable to the
transactions contemplated hereby under the HSR Act shall have expired by the
Closing Date or shall have been terminated.
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Section 8.9 Deliveries.
Panatech shall have delivered to Parent and Sub the following items:
(a) the stock books, stock ledgers, minute books and corporate seals of
Panatech and its Subsidiaries and stock certificates evidencing Panatech's
ownership of its Subsidiaries;
(b) certificates from appropriate authorities, dated as of or about the
Closing Date, as to the good standing, qualification to do business of, and
payment of taxes by Panatech and its Subsidiaries in each jurisdiction where any
such entity is so qualified;
(c) the resignation of each director of Panatech and its Subsidiaries
and the officers of Panatech and its Subsidiaries for whom Parent has previously
requested resignations;
(d) evidence of the exercise or cancellation of all Panatech Stock
Options prior to the Effective Time;
(e) evidence of the assignment (and subsequent recordation), in form
satisfactory to Parent, of the patent application set forth in Schedule 5.15
from the inventors listed in such application to ASM Company, Inc.;
(f) releases or terminations, in form satisfactory to Parent, of the
security interest of Bank of America with respect to certain of the patents set
forth in Schedule 5.15 and any other liens, encumbrances or other security
interests which are not otherwise permitted pursuant to Section 5.16 which are
discovered by Parent or Panatech prior to Closing;
(g) a certificate of the Secretary or Assistant Secretary of Panatech,
certifying as to the Articles of Incorporation, By-Laws, resolutions of the
board of directors, and incumbency and signature of officers of Panatech; and
(h) all other previously undelivered items required to be delivered by
Panatech to Parent or Sub at or prior to the Closing pursuant to this Agreement
or otherwise required in connection herewith unless waived in writing by Parent
or Sub.
Section 8.10 Insurance.
Panatech and its Subsidiaries shall have maintained in full force and
effect the insurance coverage described on Schedule 5.17 hereto or policies
providing substantially equivalent coverage.
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Section 8.11 Stockholder Approval.
This Agreement and the Merger shall have been duly approved and adopted
by an affirmative vote or written consent of the Stockholders to the extent, and
only to the extent, required by the NRS or Panatech's Articles of Incorporation.
Section 8.12 Customer and Vendor Relationships.
Parent shall be reasonably satisfied with Panatech's and its
Subsidiaries' relationships with their customers, vendors and distributors
listed on Schedule 5.24.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF PANATECH
All obligations of Panatech that are to be discharged under this
Agreement at the Closing are subject to Parent's and Sub's fulfillment, at the
Closing or effective as of the Closing Date, of each of the following conditions
(unless expressly waived in writing by Panatech at any time at or prior to the
Closing) and each of Parent and Sub shall use its reasonable efforts to cause
each of such conditions to be satisfied:
Section 9.1 Representations and Warranties.
On the Closing Date, the representations and warranties of each of
Parent and Sub set forth in Article VI of this Agreement shall be true and
correct in all material respects as though such representations and warranties
had been made by Parent and Sub on and as of the Closing Date, and Panatech
shall have received at the Closing a certificate, dated the Closing Date, signed
by the President or a Vice President of each of Parent and Sub to such effect.
Section 9.2 Covenants, Agreements and Conditions.
Parent and Sub shall have performed and complied in all material
respects with all covenants, agreements and conditions contained in this
Agreement required to be performed by or complied with by them on or prior to
the Closing Date, and Panatech shall have received at the Closing a certificate,
dated the Closing Date, signed by the President or a Vice President of each of
Parent and Sub to such effect.
Section 9.3 Corporate Proceedings.
All corporate and other proceedings to be taken and all consents to be
obtained by Parent or Sub in connection with the transactions contemplated by
this Agreement and
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all documents incident thereto shall be reasonably satisfactory in form and
substance to Panatech and its counsel, Hagan, Saca & Hagan, each of whom shall
have received all such originals or certified or other copies of such documents
as either may reasonably request.
Section 9.4 Opinion of Counsel.
Panatech shall have received a written opinion dated the Closing Date
from Dickstein Shapiro Morin & Oshinsky LLP, counsel to each of Parent and Sub,
in the form attached as Exhibit D hereto.
Section 9.5 Proceedings.
No action or proceeding shall be pending or threatened, nor shall any
statute, rule, regulation, executive order, decree or injunction have been
enacted, entered, promulgated or enforced by any court or governmental
authority, to restrain or prevent the consummation of the transactions
contemplated hereby.
Section 9.6 Governmental Approvals.
Except for the filing and approval of the Proxy Statement, there shall
have been received all necessary governmental consents or authorizations
required in connection with the transactions contemplated hereby.
Section 9.7 HSR Act Requirements.
Any "waiting periods" (and any extensions thereof) applicable to the
transactions contemplated hereby under the HSR Act shall have expired or shall
have been terminated.
Section 9.8 Deliveries.
At the Closing, Parent and Sub shall deliver the following items to
Panatech:
(a) a certificate of the Secretary or Assistant Secretary, certifying
as to the Articles of Incorporation, By-Laws, resolutions of the board of
directs, and incumbency and signature of officers of such company; and
(b) all other previously undelivered items required to be delivered by
each of Parent and Sub at or prior to the Closing pursuant to this Agreement or
otherwise required in connection herewith unless waived in writing by Panatech.
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ARTICLE X
OTHER MATTERS
Section 10.1 Confidentiality.
From the date hereof until the earlier of (a) the Closing Date or (b)
the date forty-two (42) months from the date of termination of this Agreement in
accordance with Article (XI), each party hereto and its respective accountants,
attorneys, employees and other agents, will (i) keep confidential all
information, oral and written, obtained from any other party hereto or its
Affiliates, (ii) refrain from using in any manner all such information not
otherwise publicly available and (iii) in the case of Parent, Sub and their
Affiliates, refrain from disclosing any such information to Titan Personnel.
Section 10.2 Further Assurances.
Each party hereto shall cooperate with the others, and execute and
deliver, or cause to be executed and delivered, all such other instruments,
including instruments of conveyance, assignment and transfer, and take all such
other actions as may be reasonably requested by the other parties hereto from
time to time or by the arbitrator in the ASM Litigation from time to time,
consistent with the terms of this Agreement, to effectuate the purposes and
provisions of this Agreement.
Section 10.3 Indemnification of Directors and Officers.
From and after the Effective Date, Parent shall indemnify persons who
served as directors, officers and agents of Panatech or its Subsidiaries on or
before the Effective Date in accordance with and subject to the provisions of
the Articles of Incorporation and By-laws of Panatech and each such Subsidiary,
as delivered to Parent prior to the execution of this Agreement for a period of
not less than six (6) years from the Effective Date with respect to matters
occurring on or prior to the Effective Date, or the period of the applicable
statute of limitations, whichever is longer. This provision shall survive the
Closing and is for the benefit of and may be enforced by each indemnified party
or such person's heirs, successors and representatives.
ARTICLE XI
TERMINATION
Section 11.1 Methods of Termination.
This Agreement may be terminated at any time prior to the Closing,
notwithstanding stockholder approval:
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(a) by the mutual consent of Parent and Panatech;
(b) by Parent at any time after the date which is one hundred eighty
(180) days from the date of this Agreement if any of the conditions provided for
in Article VIII of this Agreement shall not have been met prior to such date;
(c) by Panatech at any time after the date which is one hundred eighty
(180) days from the date of this Agreement if any of the conditions provided for
in Article IX of this Agreement shall not have been met prior to such date;
(d) at any time prior to the Effective Time by either Parent or
Panatech if the Merger shall not have been consummated by July 1, 1997; or
(e) by Parent or Panatech, if any required approval of the Stockholders
shall not have been obtained by reason of failure to obtain the required vote at
a duly held meeting of Stockholders or at any adjournment thereof.
(f) by either Parent or Panatech if any court of competent jurisdiction
in the United States or other governmental body in the United States shall have
issued an order (other than a temporary restraining order), decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
Merger, and such order, decree, ruling or other action shall have become final
and nonappealable; provided that the party seeking to terminate this Agreement
shall have used its best efforts to remove or lift such order, decree or ruling;
(g) at any time prior to the Effective Time, by action of the board of
directors of Panatech, if the board of directors of Panatech determines in good
faith on the advice of counsel that its fiduciary duties require it to approve
an Acquisition Transaction (other than the Merger); or
(h) by Parent, at any time prior to the Effective Time, if (i) Panatech
enters into a letter of intent or definitive agreement to enter into an
Acquisition Transaction (other than the Merger), (ii) the board of directors of
Panatech withdraws, modifies or changes its approval or recommendation of this
Agreement or the Merger in a manner adverse to Parent or Sub, (iii) the board of
directors of Panatech recommends to the Stockholders any Acquisition Transaction
(other than the Merger) or (iv) the board of directors of Panatech resolves to
do any of the foregoing.
Section 11.2 Procedure Upon Termination.
In the event of termination by Parent, Panatech or both, pursuant to
this Article XI, written notice thereof shall promptly be given to the other
party or parties and the obligations of Parent and Sub and Panatech under this
Agreement shall terminate without further action. Upon any such termination:
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(a) each party will redeliver all documents, workpapers and other
materials of the other party or parties relating to the transactions
contemplated hereby, whether obtained before or after the execution hereof, to
the party or parties furnishing the same;
(b) all information received by any of the parties shall be kept
confidential in accordance with Section 10.1;
(c) except as provided in Sections 11.2(d) or 11.2(e), no party shall
have any liability or further obligation to any other party, except for such
legal and equitable rights and remedies as any party may have under this
Agreement or otherwise, by reason of any breach or violation of this Agreement
by the other party; and
(d) in the event of termination pursuant to Sections 11.1(g) or
11.1(h), Panatech shall pay to Parent in cash a fee equal to $.25 for each share
of Stock issued and outstanding on November 5, 1996, such amounts to be payable
upon the earlier of (i) the date ninety (90) days from the date of such
termination or abandonment or (ii) the date of the closing of an Acquisition
Transaction.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Survival of Representations and Warranties.
All representations and warranties of Parent, Sub and Panatech
contained in Articles V and VI herein and in any certificate executed and
delivered by either Parent, Sub or Panatech in connection with this Agreement
shall terminate and expire at the Effective Time; provided that no such
representations or warranties shall be deemed to be terminated or extinguished
so as to deprive Parent, Sub or Panatech (or any director, officer or
controlling person thereof) of any defense in law or equity which otherwise
would be available against the claims of any person, including without
limitation the Stockholders, the aforesaid representations and warranties being
material inducements to the consummation by Parent, Sub and Panatech of the
transactions contemplated herein.
Section 12.2 Service of Process.
Service of process on Panatech, Parent or Sub for any claim, legal
action or proceeding among the parties hereto in connection with this Agreement
may be made in the manner (excluding by telecopier) set forth in Section 12.3.
Section 12.3 Notices.
All notices, requests, consents and other communications hereunder
shall be deemed given if delivered personally (including by courier), telecopied
(confirmation of such receipt by confirmed facsimile transmission being deemed
receipt of communication
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sent by facsimile) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses or to other such addresses
as may be furnished in writing by one party to the others:
(a) if to Panatech (prior to Closing):
Panatech Research and Development Corporation
1208 Daskalos Drive NE
Albuquerque, New Mexico 84192
Attention: Dr. Arthur J. Rosenberg
with a copy to:
Hagan, Saca & Hagan
350 Cambridge Avenue
Suite 150
Palo Alto, California 94306
Attention: James R. Hagan, Esquire
(b) if to the Stockholders' Representative:
James R. Hagan, Esquire
Hagan, Saca & Hagan
350 Cambridge Avenue
Suite 150
Palo Alto, California 94306
(c) if to Parent, Sub or Surviving Corporation:
Titan Enterprises, Inc.
107 Bauer Drive
Oakland, New Jersey 07436
Attention: Chief Executive Officer
with a copy to:
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
Attention: Ira H. Polon, Esquire
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Section 12.4 Governing Law.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Nevada, without regard to such jurisdiction's conflict
of laws principles.
Section 12.5 Modification; Waiver.
This Agreement shall not be altered or otherwise amended except
pursuant to an instrument in writing signed by each of Parent and Sub and
Panatech. Any party may waive any misrepresentation by any other party, or any
breach of warranty by, or failure to perform any covenant, obligation or
agreement of, any other party, provided that mere inaction or failure to
exercise any right, remedy or option under this Agreement, or delaying in
exercising the same, will not operate as nor shall be construed as a waiver, and
no waiver will be effective unless set forth in writing and only to the extent
specifically stated therein.
Section 12.6 Entire Agreement.
Except as set forth in Section 7.4, this Agreement, the Schedules and
Exhibits hereto and any other agreements or certificates delivered pursuant
hereto constitute the entire agreement of the parties hereto with respect to the
matters contemplated hereby and supersede all previous written or oral
negotiations, commitments, representations and agreements.
Section 12.7 Assignment; Successors and Assigns.
This Agreement may not be assigned by Panatech without the prior
written consent of each of Parent and Sub. Prior to the Closing Date, this
Agreement may not be assigned by Parent or Sub without the prior written consent
of Panatech. After the Closing, each of Parent and the Surviving Corporation may
assign this Agreement. All covenants, representations, warranties and agreements
of the parties contained herein shall be binding upon and inure to the benefit
of their respective successors and permitted assigns.
Section 12.8 Severability.
The provisions of this Agreement are severable, and in the event that
any one or more provisions are deemed illegal or unenforceable, the remaining
provisions shall remain in full force and effect.
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Section 12.9 No Third Party Beneficiary.
Except as provided in Section 10.3, this Agreement is intended and
agreed to be solely for the benefit of the parties hereto and their
stockholders, and no other party shall accrue any benefit, claim or right of any
kind whatsoever pursuant to, under, by or through this Agreement.
Section 12.10 Expenses.
Except as otherwise expressly provided herein, each party to this
Agreement will pay its own expenses in connection with the negotiation of this
Agreement, the performance of its obligations hereunder, and the consummation of
the transactions contemplated herein.
Section 12.11 Execution in Counterpart.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement and Plan
of Merger as of the date first written above.
TITAN ENTERPRISES, INC.
By: /s/ Samuel A. Hamacher
-------------------------------------
Name: Samuel A. Hamacher
Title: Executive Vice President
PANATECH ACQUISITION CORPORATION
By: /s/ Samuel A. Hamacher
-------------------------------------
Name: Samuel A. Hamacher
Title: Executive Vice President
PANATECH RESEARCH AND DEVELOPMENT CORPORATION
By: /s/ Arthur J. Rosenberg
-------------------------------------
Name: Arthur J. Rosenberg
Title: President
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