PURCHASE AND SALE AGREEMENT
BETWEEN
DYNAMIC MATERIALS CORPORATION
AND
E. I. DU PONT DE NEMOURS AND COMPANY
DATED
JULY 22, 1996
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 BUSINESS ASSETS . . . . . . . . . . . . . . . . . 3
(a) Machinery and Equipment. . . . . . . . . . . 3
(b) Marketing Documents and Materials. . . . . . 3
(c) Intellectual Property. . . . . . . . . . . . 3
(d) Miscellaneous. . . . . . . . . . . . . . . . 4
(e) Contracts. . . . . . . . . . . . . . . . . . 4
(f) Inventory. . . . . . . . . . . . . . . . . . 4
(g) Accounts Receivable. . . . . . . . . . . . . 4
(h) Facilities . . . . . . . . . . . . . . . . . 5
(i) Claims.. . . . . . . . . . . . . . . . . . .
ARTICLE 3 EXCLUDED ASSETS . . . . . . . . . . . . . . . . . 5
ARTICLE 4 BUYER'S ASSUMPTION OF LIABILITY AND
INDEMNITY . . . . . . . . . . . . . . . . . . . . 6
(a) Assumed and Excluded Liabilities . . . . . . 6
(b) Accounts Payable . . . . . . . . . . . . . . 7
ARTICLE 5 PURCHASE PRICE. . . . . . . . . . . . . . . . . . 7
(a) Purchase Price . . . . . . . . . . . . . . . 7
(b) Payment Term . . . . . . . . . . . . . . . . 7
(c) Allocation of Purchase Price . . . . . . . . 7
(d) Proration. . . . . . . . . . . . . . . . . . 8
(e) Instruments of Conveyance, Transfer and
Assumption . . . . . . . . . . . . . . . . . 8
ARTICLE 6 SELLER'S WARRANTIES . . . . . . . . . . . . . . . 9
(a) Corporate Status . . . . . . . . . . . . . . 9
(b) Performance of Agreement . . . . . . . . . . 9
(c) Corporate Power. . . . . . . . . . . . . . . 9
(d) Litigation . . . . . . . . . . . . . . . . . 9
(e) Intellectual Property. . . . . . . . . . . . 10
(f) Environmental Matters. . . . . . . . . . . . 10
(g) Financial Statements . . . . . . . . . . . . 11
(h) Title to Properties; Liens; Condition of
Properties . . . . . . . . . . . . . . . . . 12
(i) Taxes. . . . . . . . . . . . . . . . . . . . 12
(j) Disclosure of Material Information . . . . . 12
(k) Inventory. . . . . . . . . . . . . . . . . . 13
(l) Existing Employment Contracts. . . . . . . . 13
(m) Absence of Certain Changes . . . . . . . . . 13
(n) Product Warranty and Product Liability . . . 14
(o) Contracts. . . . . . . . . . . . . . . . . . 14
(p) Other Contracts. . . . . . . . . . . . . . . 15
(q) Compliance with Laws . . . . . . . . . . . . 15
(r) Broker's Fees. . . . . . . . . . . . . . . . 16
i.
(s) No Other Representations or Warranties; No
Warranty Regarding Success . . . . . . . . . 16
ARTICLE 7 BUYER'S WARRANTIES. . . . . . . . . . . . . . . . 16
(a) Corporate Status; Authorization. . . . . . . 16
(b) Performance of Agreement . . . . . . . . . . 16
(c) Broker's Fees. . . . . . . . . . . . . . . . 17
(d) Permits and Licenses . . . . . . . . . . . . 17
(e) Miscellaneous. . . . . . . . . . . . . . . . 17
ARTICLE 8 INDEMNITIES AND LIMITATION OF LIABILITY.. . . . . 17
(a) Buyer's Indemnity. . . . . . . . . . . . . . 17
(b) Seller's Indemnity . . . . . . . . . . . . . 18
(c) Assertion of Claims. . . . . . . . . . . . . 19
(d) Limitation of Liability. . . . . . . . . . . 19
ARTICLE 9 EMPLOYEE RELATIONS. . . . . . . . . . . . . . . . 19
(a) Seller's Employees . . . . . . . . . . . . . 19
(b) Compensation and Benefits. . . . . . . . . . 20
(c) Transitional Employees . . . . . . . . . . . 20
(d) Accrued Wages and Benefits; Termination Costs 20
(e) Employment Liabilities . . . . . . . . . . . 20
(f) Employee Tax Matter. . . . . . . . . . . . . 20
ARTICLE 10 OTHER MATTERS . . . . . . . . . . . . . . . . . . 21
(a) Covenant Not to Compete. . . . . . . . . . . 21
(b) Confidentiality Provisions . . . . . . . . . 21
(c) Other Remedies . . . . . . . . . . . . . . . 22
ARTICLE 11 Closing . . . . . . . . . . . . . . . . . . . . . 22
(a) Purchase Price . . . . . . . . . . . . . . . 23
(b) Instruments of Conveyance. . . . . . . . . . 23
(c) Delivery of Other Agreements . . . . . . . . 23
ARTICLE 12 POST CLOSING TRANSACTIONS . . . . . . . . . . . . 23
(a) Product Claims and Replacement Product . . . 23
(b) Books and Records. . . . . . . . . . . . . . 23
(c) Personnel Records. . . . . . . . . . . . . . 24
(d) Access to Books and Records. . . . . . . . . 24
(e) Further Assurances . . . . . . . . . . . . . 24
(f) Outstanding Collections. . . . . . . . . . . 24
(g) Signage. . . . . . . . . . . . . . . . . . . 24
(h) Computer Systems . . . . . . . . . . . . . . 24
ii.
ARTICLE 13 BULK SALES ACT AND TAXES. . . . . . . . . . . . . 25
(a) Bulk Sales Act . . . . . . . . . . . . . . . 25
(b) Sales, Use, Transfer and Similar Taxes . . . 25
ARTICLE 14 MISCELLANEOUS . . . . . . . . . . . . . . . . . . 25
(a) Press Release. . . . . . . . . . . . . . . . 25
(b) Fees . . . . . . . . . . . . . . . . . . . . 25
(c) Amendments . . . . . . . . . . . . . . . . . 25
(d) Successors . . . . . . . . . . . . . . . . . 25
(e) Patent License . . . . . . . . . . . . . . . 25
(f) Entire Agreement . . . . . . . . . . . . . . 25
(g) Notices. . . . . . . . . . . . . . . . . . . 26
(h) Governing Law. . . . . . . . . . . . . . . . 26
(i) Schedules. . . . . . . . . . . . . . . . . . 26
(j) Headings . . . . . . . . . . . . . . . . . . 26
(k) Counterparts . . . . . . . . . . . . . . . . 26
(l) Third Party Beneficiaries. . . . . . . . . . 26
(m) Independent Parties. . . . . . . . . . . . . 27
(n) Severability . . . . . . . . . . . . . . . . 27
(o) Export Control . . . . . . . . . . . . . . . 27
SCHEDULE 2(a)(i)
MACHINERY AND EQUIPMENT AT DUNBAR FACILITY. . . . . . . . . i
SCHEDULE 2(a)(ii)
MACHINERY AND EQUIPMENT AT KENNETT SQUARE AND COATESVILLE
FACILITIES. . . . . . . . . . . . . . . . . . . . . . . . . ix
SCHEDULE 2(b)
PRODUCTS. . . . . . . . . . . . . . . . . . . . . . . . . . x
SCHEDULE 2(c)(i)(a)
PATENTS . . . . . . . . . . . . . . . . . . . . . . . . . . xi
SCHEDULE 2(c)(i)(b)
ASSIGNMENT OF PATENTS AND PATENT APPLICATIONS . . . . . . . xii
SCHEDULE 2(c)(iii)
OPERATING AND TECHNICAL LITERATURE. . . . . . . . . . . . . xiv
SCHEDULE 2(c)(v)
FORM OF ASSIGNMENT OF TRADEMARKS. . . . . . . . . . . . . . xv
SCHEDULE 2(e)
CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . xvi
SCHEDULE 2(f)
INVENTORY . . . . . . . . . . . . . . . . . . . . . . . . . xvii
iii.
SCHEDULE 2(g)
ACCOUNTS RECEIVABLE . . . . . . . . . . . . . . . . . . . . xx
SCHEDULE 2(h)(i)
SUBLEASE AGREEMENT. . . . . . . . . . . . . . . . . . . . . xxii
SCHEDULE 2(h)(i)
ASSIGNMENT AND ASSUMPTION OF LEASE. . . . . . . . . . . . . xxiii
SCHEDULE 3(e)
NON-ASSIGNABLE CONTRACTS. . . . . . . . . . . . . . . . . . xxiv
SCHEDULE 4(b)
ALLOCATION FOR ACCOUNTS PAYABLE . . . . . . . . . . . . . . xxv
SCHEDULE 5(e)
BILL OF SALE. . . . . . . . . . . . . . . . . . . . . . . . xxvi
SCHEDULE 6
DISCLOSURE SCHEDULE . . . . . . . . . . . . . . . . . . . . xxvii
SCHEDULE 9(a)
LIST OF EMPLOYEES . . . . . . . . . . . . . . . . . . . . . xxix
SCHEDULE 9(b)
EMPLOYEE BENEFIT PACKAGE. . . . . . . . . . . . . . . . . . xxx
SCHEDULE 9(c)
TRANSITIONAL EMPLOYEES. . . . . . . . . . . . . . . . . . . xxxi
iv.
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is entered into and effective as of the 22nd day
of July, 1996, between E. I. DU PONT DE NEMOURS AND COMPANY, a
Delaware corporation, with its principal place of business at 1007
Market Street, Wilmington, Delaware 19898, ("SELLER") and DYNAMIC
MATERIALS CORPORATION, a Colorado corporation, with its principal
place of business at 551 Aspen Ridge Drive, Lafayette, Colorado 80026
("BUYER").
BACKGROUND
Seller owns and operates the DETACLAD(R) explosion bonded clad
metal business (the "BUSINESS") and Seller desires to sell and Buyer
desires to purchase such Business;
NOW, THEREFORE, subject to the terms, conditions, covenants and
provisions of this Agreement, Seller and Buyer mutually covenant and
agree as follows:
ARTICLE 1
DEFINITIONS
(a) "AFFILIATE" means:
(1) any corporation owning or directly or indirectly
controlling at least thirty-five percent (35%) of the stock normally
entitled to vote for election of directors of a party, or
(2) any corporation owned or directly or indirectly
controlled by a party or a person or by a corporation defined by
subparagraph (1) above through ownership of at least fifty percent
(50%) of stock normally entitled to vote for election of directors.
(b) "AGREEMENT" means this Purchase and Sale Agreement, together
with all Schedules attached hereto.
(c) "AMENDED INFORMATION" shall have the meaning set forth in
Section 5(a).
(d) "BUSINESS" means the business engaged in by Seller under the
DETACLAD(R) trademark of manufacturing, storing, handling, processing,
distributing, selling and marketing explosion bonded clad metal.
(e) "BUSINESS ASSETS" shall have the meaning set forth in
Article 2.
(f) "CLAIMS" means any and all damages, losses, liabilities,
costs, expenses (including, without limitation, fees and disbursements
of counsel, court costs, and expenses of investigation), claims,
liens, or judgments.
1.
(g) "CLOSING" shall have the meaning set forth in Article 14.
(h) "CLOSING DATE" shall have the meaning set forth in
Article 14.
(i) "CONTRACTS" shall have the meaning set forth in Section
2(e).
(j) "DUNBAR FACILITY" means the explosion bonding operating
facility located in Dunbar, Pennsylvania, which includes only those
portions of the former Blue Stone Mine.
(k) "DUNBAR LEASE" means the lease agreement dated October 19,
1985, for the parcel of land that includes the Dunbar Facility (and
the former Blue Stone Mine), which lease agreement is extendible to
December 15, 2005.
(l) "EMPLOYEES" means certain of those employees of Seller
assigned to the Business as are specified in Schedule 9(a).
(m) "EXCLUDED ASSETS" shall have the meaning set forth in
Article 3.
(n) "FACILITIES" means the Dunbar Facility and the Kennett
Square Facility.
(o) "GOVERNMENTAL ENTITY" means any court, governmental
department, commission, council, board, agency or other
instrumentality of the United States of America or any foreign
country, or any state, county, municipality or local governmental body
located in the United States of America or any such other foreign
country.
(p) "INVENTORY" shall have the meaning set forth in Section
2(f).
(q) "KENNETT SQUARE FACILITY" means the office building located
in Kennett Square, Pennsylvania and comprising approximately 4650
square feet that serves as the business office of the Business
(r) "KENNETT SQUARE LEASE" means the lease agreement dated
September 8, 1988, between Seller, as tenant, and Walnut Road
Associates, as landlord, for the Kennett Square Facility, which lease
agreement extends through September 30, 1998.
(s) "OPERATING INSTRUCTIONS" means the instructions for
manufacturing, storing, handling and processing of explosion bonded
clad metal and the performance of explosive services in connection
with the production of Mypolex(R) industrial diamonds, as are to be
provided to Buyer by Seller in connection with Buyer's operation of
the Dunbar Facility after the Closing Date.
(t) "TOLLING AGREEMENT" means the Tolling/Services Agreement for
Industrial Diamonds dated as of the Closing Date between Seller and
Buyer.
(u) "SUBLEASE" means the Sublease Agreement between the parties
dated as of the Closing Date for the sublease from Seller to Buyer of
the Dunbar Facility.
2.
ARTICLE 2
BUSINESS ASSETS
Seller hereby grants, sells, conveys, assigns, transfers and
delivers unto Buyer, and Buyer purchases, accepts and takes delivery
of the following business assets (the "BUSINESS ASSETS") of Seller as
of the Closing Date:
(a) MACHINERY AND EQUIPMENT.
(i) The buildings, machinery and equipment located at the
Dunbar Facility which are necessary for Buyer to operate the Business
or which otherwise relate to the explosion bonding of metals and the
manufacture of cladding explosives and magazines for their storage,
and certain order entry and invoicing systems and related equipment
used solely in connection with the Business, such buildings, equipment
and machinery being more fully described in Schedule 2(a)(i) hereto
(the "DUNBAR EQUIPMENT"), and
(ii) The equipment and furnishings located at the Kennett
Square Facility or the Coatesville, Pennsylvania facility, relating
solely and specifically to quotations, metal preparation and post-
bonding operation, as are largely described in Schedule 2(a)(ii)
hereto (the "KENNETT SQUARE EQUIPMENT"; the Dunbar Equipment and the
Kennett Square Equipment being collectively referred to herein as the
"MACHINERY AND EQUIPMENT").
(b) MARKETING DOCUMENTS AND MATERIALS. Seller's business
records, customer and supplier lists, confidential and other marketing
information, price lists and information, sales history and
information and sales aids relating solely and specifically to the
explosion bonded clad metal products, all as described in Schedule
2(b) hereto which Seller manufactured in connection with the Business
(the "PRODUCTS") and located at the Dunbar Facility, the Kennett
Square Facility, or the field offices of Seller's sales
representatives, subject to Seller's continuing right to maintain
copies of the supplier lists for use in connection with its other
businesses.
(c) INTELLECTUAL PROPERTY.
(i) Except as expressly provided herein, all of Seller's
right, title and interest in and to the United States and foreign
patents and patent applications directly relating to the Business as
described in Schedule 2(c)(i)(A) hereto and any and all inventions
claimed in such patents and patent applications. Simultaneous with
the execution and delivery of this Agreement, Seller shall execute and
deliver to Buyer an instrument of assignment of such patents and
patent applications in the form attached hereto as Schedule
2(c)(i)(B). Buyer shall be responsible for the recordation of the
assignment of the patents and patent applications in the U.S. Patent
and Trademark Office and corresponding non - U.S. patent offices.
Seller shall retain a royalty-free, non-sublicensable, non-exclusive
license to such patents and patent applications for the purpose of
procuring Products from third parties for use by the Fluoroproducts
division of Seller or its Affiliates. Buyer will not assert any of
the patents or patent applications to prevent the Fluoroproducts
division of Seller or its Affiliates or their
3.
third party suppliers (to the extent required to supply Products to
the Fluoroproducts division of Seller or its Affiliates) from
operating under such license.
(ii) All of Seller's right, title, and interest in Seller's
other intellectual property, including technical information and know-
how, whether or not protectable by patent, copyright or trade secret
laws and solely and specifically related to the conduct of the
Business or the operation of the Machinery and Equipment or the
manufacture, testing, sale, distribution, or use of the Products or
reasonably necessary in order to enable Buyer to conduct the Business
or to operate the Machinery and Equipment, as set forth in the
proprietary process manuals, operating and technical literature
described in Schedule 2(c)(ii) hereto.
(iii) All product specifications, process specifications,
raw material specifications, packaging specifications, drawings,
blueprints, photographs, test methods, customer complaint records,
material safety data sheets, and related information relating solely
and specifically to the Business, to the Products or to the Machinery
and Equipment.
(iv) The software designed to facilitate quotations.
(v) All of the Seller's right, title and interest in and to
the registered trademarks "DETACLAD(R)" and "DETACOUPLE(R)" and the
goodwill associated therewith. Simultaneous with the execution of
delivery hereof Seller shall execute and deliver to Buyer a separate
instrument of assignment of such trademarks in the form attached
hereto as Schedule 2(c)(v). Buyer shall be responsible for the
recordation of such assignment in the U.S. Patent and Trademark Office
and corresponding non - U.S. offices.
(d) MISCELLANEOUS. The office equipment, furniture and fixture,
files, cabinets and related equipment located at the Kennett Square
Facility and the Dunbar Facility ("MISCELLANEOUS TANGIBLES").
(e) CONTRACTS. All contracts and other agreements, including
purchase and sales orders in excess of $5,000, directly relating to
the Business and described in Schedule 2(e), to the extent they shall
not have been terminated on or before the Closing Date and are
assignable (the "CONTRACTS").
(f) INVENTORY. The inventories of raw materials, stores, tools,
semi-finished product, finished product, supplies, spare parts and
packaging materials as are further described in Schedule 2(f), which
are directly related to the Business (the "INVENTORY"). The Inventory
shall be valued at Seller's cost, as determined by Seller's internal
accounting procedures.
(g) ACCOUNTS RECEIVABLE. All accounts receivable relating to
the Business that are aged no more than sixty (60) days as of the
Closing Date (the "ACCOUNTS RECEIVABLE"), with the exception of those
accounts receivables described in Schedule 2(g) hereto.
4.
(h) FACILITIES. Buyer and Seller hereby agrees as follows with
respect to the Facilities:
(i) DUNBAR FACILITY. Seller shall sublease the Dunbar
Facility to Buyer in accordance with the terms of the Sublease
Agreement substantially in the form attached hereto as Schedule
2(h)(i).
(ii) KENNETT SQUARE FACILITY. Seller shall sublet its
rights and delegate its duties to Buyer under the Kennett Square Lease
pursuant to the sublease and side letter substantially in the form
attached hereto as Schedule 2(h)(ii).
(i) CLAIMS. All claims against any parties directly relating to
the Business Assets, including, without limitation, unliquidated
rights under any manufacturers' and vendors' warranties or guarantees.
ARTICLE 3
EXCLUDED ASSETS
Notwithstanding anything, express or implied, to the contrary
contained in Article 2, the following properties, assets, and rights
used in, or related to Seller's operation of the Business are excluded
from Business Assets as that term is used in this Agreement:
(a) Accounts payable systems, accounting systems and related
equipment.
(b) Cash on hand or in banks or other depositories, including
investments.
(c) All refunds or other reimbursements relating to prepaid
taxes, expense and advances.
(d) Taxes withheld by Seller from its employees' salaries and
wages, and other taxes of Seller incurred by it as an employer or as a
vendor, which Seller is obligated to pay.
(e) Agreements, as follows:
(i) Non-assignable contracts described in Schedule 3(e) to
the extent the other parties to such agreements fail or refuse to give
their consent to the assignment thereof by Seller to Buyer without
recourse, provided that Seller shall assist Buyer in its efforts to
enter into substantially equivalent agreements; and
(ii) Assignable contracts which Buyer and Seller agree are
not to be assigned.
(f) Insurance policies.
(g) Off-plant records relating to the Business which are not to
be transferred to Buyer, provided Buyer is permitted reasonable access
to such records after the Closing Date.
5.
(h) Causes of action or claims of Seller against third parties,
whether known or unknown on the Closing Date which may arise solely in
connection with the Excluded Assets.
(i) Equipment used solely for Seller's Mypolex(R) industrial
diamonds business.
(j) Order entry and invoicing and similar corporate information
systems and related equipment, except as described in Section 2(a).
(k) Use of the DuPont name or the DuPont oval, except as
expressly provided herein.
(l) Computer software, except as described in Section 2(c)(iv).
(m) Information, including technical information, the Seller is
obliged to maintain in secret pursuant to secrecy agreements with
third parties.
(n) All other assets of Seller (including rights in land or real
estate at the Facilities) not included as part of the Business Assets
as described in Article 2.
(The items described in this Article 2 are collectively referred
to herein as the "EXCLUDED ASSETS".)
ARTICLE 4
BUYER'S ASSUMPTION OF LIABILITY AND INDEMNITY
(a) ASSUMED AND EXCLUDED LIABILITIES. Except as expressly
provided in this Agreement, Buyer shall not undertake, assume or agree
to perform, pay or discharge and expressly disclaims any and all
liabilities of Seller, whether fixed or contingent, incurred in the
ordinary course of business or otherwise, known or unknown, all of
which shall be retained by Seller, except for those obligations of
Seller under the Contracts, the Kennett Square Lease and other
obligations of Seller under purchase orders, sales orders, contracts,
licenses or permits assigned to Buyer pursuant to this Agreement or
other liabilities and obligations of Seller that arise from the
ownership, use or operation of the Business Assets occurring from and
after Closing. In addition, except as expressly provided in this
Agreement, the Sublease or the Tolling Agreement, Seller shall remain
fully responsible for all liabilities or obligations arising from
activities conducted on and all conditions of the Facilities, and all
adjacent sites, including those sites described in the Excluded
Assets, and for all activities conducted off the Facilities, to the
extent such liabilities or obligations arise from activities occurring
prior to the Closing, provided, however, that all Machinery and
Equipment are provided "as is" in accordance with Section 6(h)(ii).
Except as expressly provided in this Agreement, the Sublease or the
Tolling Agreement, Seller's responsibility (as described in the
preceding sentence) shall include, without limitation, the
responsibility to perform any and all response activities required
under any federal, state, or local law, regulation or requirement
relating to any environmental condition or circumstance.
6.
(b) ACCOUNTS PAYABLE. Seller shall remain responsible for all
payments and other obligations with respect to third party invoices
directly relating to Products delivered and invoiced by Seller prior
to Closing. Buyer shall be responsible for all payments and other
obligations with respect to invoices directly relating to Products
delivered and invoiced by Buyer after Closing. Each party agrees to
use commercially reasonable efforts to promptly forward invoices to
the responsible party hereunder. With respect to invoices for
materials or services ordered by Seller which are partially delivered
or performed prior to Closing, the Buyer shall initially be
responsible for payments to third parties. Within sixty (60) days
following the Closing, the total costs relating to such invoices shall
be allocated between Seller and Buyer in proportion to the respective
revenue generated as set forth in Schedule 4(b). Such allocation will
occur promptly upon receipt of the applicable invoice relating to such
products or services.
ARTICLE 5
PURCHASE PRICE
(a) PURCHASE PRICE. The purchase price to be paid by Buyer to
Seller for the Business Assets shall be the sum of Four Million Nine
Hundred Twenty-Eight Thousand Four Hundred Sixty-Nine Dollars
($4,928,469), consisting of a cash payment of Four Million Eight
Hundred Seventy-Eight Thousand Four Hundred Sixty-Nine Dollars
($4,878,469) at Closing and the application of the Fifty Thousand
Dollar ($50,000) deposit paid by Buyer to Seller on May 15, 1996 (the
"PURCHASE PRICE"). The Purchase Price includes, and assumes, the
value of Accounts Receivable as of the Closing (estimated as of July
19, 1996, (the "AMENDED INFORMATION") to be One Million Three Hundred
Forty-Six Thousand Two Hundred Seventy-Five Dollars ($1,346,275)) and
the value of the Inventory as of the Closing Date, to be valued at
Seller's cost determined in accordance with generally accepted cost
accounting procedures (estimated as of July 19, 1996, per the Amended
Information to be One Million Four Hundred Thirty-Three Thousand Four
Hundred Thirty-Six Dollars ($1,433,436)). The Purchase Price is
subject to an adjustment after Closing on a dollar-for-dollar basis to
the extent that the actual value of the Inventory and the Accounts
Receivable at Closing are not equal to the estimates provided in the
Amended Information to be determined by the Parties' review of such
financial information and documents. Such adjustment will take place
as soon as practicable after Closing, but no later than sixty (60)
days following the Closing Date.
(b) PAYMENT TERMS. The outstanding balance of the Purchase
Price shall be payable on the Closing Date in immediately available
funds in U.S. dollars by wire transfer to an account at a bank in the
United States designated in writing by Seller to Buyer.
(c) ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Business Assets in manner reasonably agreeable to
Seller as provided in an allocation schedule to be prepared by Buyer
and delivered to Seller within sixty (60) days after Closing. The
Buyer and Seller agree that the Purchase Price allocated as set forth
in this Article shall be reflected on their respective tax returns
which shall be filed on a basis consistent with such allocation.
7.
(d) PRORATIONS. The following prorations relating to the
Business Assets will be made as of the Closing Date, with Seller
liable to the extent such items relate to any time period up to and
including the Closing Date and Buyer liable to the extent such items
relate to periods subsequent to the Closing Date. Except as otherwise
specifically provided herein, the net amount of all such prorations
will be settled and paid by Seller, or Buyer, if applicable, within
sixty (60) days following the Closing Date:
(i) Personal property taxes, real estate taxes and
assessments, and other taxes, if any, on or with respect to the
Business Assets; provided that special assessments for work actually
commenced or levied prior to the date of this Agreement shall be paid
by Seller.
(ii) Rents, additional rents, taxes and other items payable
by Seller under any lease, license, permit, contract, service contract
or other agreement or arrangement to be assigned to or assumed by
Buyer.
(iii) The amount of rents, taxes and charges for sewer,
water, fuel, telephone, electricity and other utilities, provided that
if practicable, meter readings shall be taken at the Closing Date and
the respective obligations of the parties determined in accordance
with such readings.
(iv) Maintenance and service fees.
(v) All other items normally adjusted in connection with
similar transactions.
(vi) Fuel or oil in the storage tanks situate at the Dunbar
Facility.
The prorations shall be settled and paid within sixty (60) after
Closing. Seller agrees to furnish Buyer documents and other records
as shall be reasonably requested in order to confirm all proration
calculations.
(e) INSTRUMENTS OF CONVEYANCE, TRANSFER AND ASSUMPTION. Seller
agrees to deliver or cause to be delivered to Buyer at the Closing
full possession of all of the Business Assets together with (i) a bill
of sale substantially in the form of Schedule 5(e) hereto (the "BILL
OF SALE"); (ii) such other instruments of conveyance and transfer
reasonably required to vest in Buyer all right, title and interest in
and to the Business Assets free and clear of all liens, charges,
easements, mortgages, pledges, claims and other encumbrances in favor
of any third party, except for the Excluded Assets, other agreements
not assigned and other rights not transferred or otherwise retained by
Seller; and (iii) any and all tangible manifestations of the Business
Assets including, without limitation, all notes, records, files,
prints, drawings, schematics, diagrams, specifications and tangible
items of any sort in Seller's possession or under Seller's control
directly relating to the Business Assets, and including original
trademarks and related registrations, copyrights and related
registrations, and certificates of letters patent, and applications
and disclosures therefor, if any.
8.
ARTICLE 6
SELLER'S WARRANTIES
Except as otherwise set forth in a Disclosure Schedule
specifically identifying the relevant subparagraph hereof, which
exceptions shall be deemed to be representations and warranties as if
made hereunder (the "DISCLOSURE SCHEDULE"), Seller represents and
warrants that on the date hereof:
(a) CORPORATE STATUS. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has corporate power to carry on its business as now being
conducted.
(b) PERFORMANCE OF AGREEMENT. Neither the execution, delivery
or performance of this Agreement nor the consummation of the
transactions contemplated by this Agreement will:
(i) violate any provision of Seller's Certificate of
Incorporation or Bylaws or similar charter documents, each as amended,
or any law, regulation, order, judgment or decree by which the Seller
or any of its properties may be bound or to which the Business Assets
are subject; or
(ii) conflict with, result in a breach of the terms and
conditions of, result in the imposition of any lien or other
encumbrance on or with respect to any of the Business Assets as a
result of the provision of, or constitute a default under, any
agreement to which Seller is a party or by which it or any of its
properties may be bound.
(c) CORPORATE POWER. Seller has the corporate power, including
all necessary authorization, to execute, deliver and fulfill the
provisions of this Agreement, and (except as expressly provided
herein) and this Agreement constitutes Seller's legal, valid and
binding agreement enforceable against Seller in accordance with its
terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and by rules
of law governing specific performance, injunctive relief or other
equitable remedies. Seller has all requisite corporate power to own
and operate the Business Assets, and has all licenses, franchises,
rights and privileges necessary for the conduct of the Business. To
Seller's knowledge, none of the information that Seller is obliged to
maintain secret pursuant to secrecy agreements with third parties is
essential for Buyer's operation of the Business.
(d) LITIGATION. There is no material litigation, action,
investigation or proceeding pending against Seller as a result of
Seller's ownership of the Business or ownership or operation of the
Business Assets or pending against the Business Assets for any reason
whatsoever, including any claims alleging infringement of the
intellectual property rights of others, nor to Seller's knowledge, is
any such claim or proceeding threatened. Seller is not aware of any
threat by any person or federal, state, or municipal government, or
governmental or regulatory agency of its intent to institute same; and
the use or operation of the Business Assets is not subject to any
injunction, order, judgment, writ or decree. The parties
9.
acknowledge that Seller is responding to requests for information by
the United States International Trade Commission ("ITC") in connection
with an antidumping petition initiated by Lukens, Inc., concerning
imports of clad steel plate from Japan, as more fully described in
Section (d) of the Disclosure Schedule. After Closing, Buyer shall
promptly advise the ITC of this transaction and assume responsibility
for responding to such requests for information.
(e) INTELLECTUAL PROPERTY. Seller is conveying to Buyer all
patents, patent applications, common law trademarks, registered
trademarks and trademark applications which are owned by or licensed
to Seller and are directly related to the Business or are included in
the Business Assets. All such patents, patent applications, common
law trademarks, registered trademarks and trademark applications have
been duly registered in, filed in or issued by the U.S. Patent and
Trademark Office or, in each case, the corresponding offices of other
countries identified on said Schedule, and have been properly
maintained and renewed in accordance with all applicable provisions of
law and administrative regulations in the United States and each such
country. Use of said patents, patent applications, common law
trademarks, registered trademarks, trademark applications and other
trademark and trade secrets that are part of the Business Assets
(collectively, the "INTELLECTUAL PROPERTY") does not require the
consent of any other person and the same are freely transferable
(except as otherwise provided by law) and are owned exclusively by
Seller free and clear of any licenses, charges, attachments, liens,
encumbrances or adverse claims. Except as set forth in Section (e) of
the Disclosure Schedule, (a) no other person has in interest in or
right or license to use, or the right to license others to use, any of
the Intellectual Property, (b) there are no claims or demands of any
other person pertaining thereto and no proceedings have been
instituted, or are pending or threatened, which challenge Seller's
rights in respect thereof, (c) none of the Intellectual Property is
subject to any outstanding order, decree, judgment or stipulation, or,
to the knowledge of Seller, is being infringed by others. There are
no royalties, fees or other payments payable by Seller to any person
by reason of the ownership, use, license, sale or disposition of any
instrument or agreement governing any of the Intellectual Property.
(f) ENVIRONMENTAL MATTERS.
(i) With respect to the Business, Seller is not in
violation of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters now in existence or
hereinafter enacted or amended, including without limitation those
arising under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act
of 1986 ("CERCLA"), the Federal Clean Water Act, the Federal Clean Air
Act, the Toxic Substances Control Act, or any other federal, state or
local law, statute, regulation, ordinance, order or decree relating to
health, safety or the environment (hereinafter "ENVIRONMENTAL LAWS"),
which violation would have a material adverse effect on the Business.
(ii) With respect to the Business, Seller has not received
written notice from any third party including without limitation any
federal, state or local governmental authority, (i) that Seller or any
predecessor in interest has been identified by the United States
10.
Environmental Protection Agency ("EPA") as a potentially responsible
party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that any
hazardous waste as defined by 42 U.S.C. Section 6903(5), any hazardous
substances as defined by 42 U.S.C. Section 9601(14), any pollutant or
contaminant as defined by 42 U.S.C. Section 9601(33) and any toxic
substance, oil or hazardous materials or other chemicals or substances
regulated by any Environmental Laws ("HAZARDOUS SUBSTANCES") which any
one of them has generated, transported or disposed of has been found
at any site at which a federal, state or local agency or other third
party has conducted or has ordered that Seller or any predecessor in
interest conduct a remedial investigation, removal or other response
action pursuant to any Environmental Law; or (iii) that any of them is
or shall be named party to any claim, action, cause of action,
complaint (contingent or otherwise), or legal or administrative
proceeding arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with
the release of Hazardous Substances. The parties acknowledge that the
EPA initiated an Investigation of the Dunbar Facility in 1991 and the
result of such investigation are reported in Environmental Priorities
Initiatives - Preliminary Assessment of Dunbar Mine, prepared by NUS
Corporation dated June 5, 1991 (the "NUS REPORT").
(iii) No portion of the Facilities have been used by Seller
or, to the best of Seller's knowledge by any other party, for the
handling, manufacturing, processing, storage or disposal of Hazardous
Substances except in accordance with applicable Environmental Laws;
(b) in the course of any activities conducted by Seller as part of the
Business no Hazardous Substances have been generated or are being used
on such properties except in accordance with applicable Environmental
Laws; (c) except as provided in the NUS Report, there have been no
releases (i.e. any past or present releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, disposing or dumping) or threatened releases of Hazardous
Substance on, upon, into or from the properties of the Business
(including, without limitation, all of the property subject to the
Dunbar Lease); and (d) in addition, any Hazardous Substances that have
been generated on the properties of the Business, by Seller, or to the
Seller's knowledge, by any third party have been transported offsite
only by carriers having an identification number issued by the EPA and
treated or disposed of only by treatment or disposal facilities
maintaining valid permits as required under applicable Environmental
Laws, which transporters and facilities have been and are, to Seller's
knowledge, operating in compliance with such permits and applicable
Environmental Laws.
(iv) Section (h)(iv) of the Disclosure Schedule lists all
environmental reports, investigations and investigations and audits in
the possession of Seller with respect to the operations of the
Business, or the Facilities (whether conducted by or on behalf of
Seller or a third party and whether done at the initiative of Seller
or directed by a governmental authority or other third party).
Complete and accurate copies of each such report, or the results of
each such investigation or audit, have been provided to Buyer.
(g) FINANCIAL STATEMENTS. Seller has previously delivered to
Buyer certain internal annual financial data for the calendar years
ending December 31, 1994 and December 31, 1995, including (i) earnings
data, specifically revenue; cost of goods sold; selling, general and
11.
administrative costs; physical distribution; and earnings before
interest and taxes; and (ii) other financial data, specifically, plant
and equipment; accounts receivable; certain cash flow information;
inventory; and intellectual property (the "FINANCIAL STATEMENTS").
Such financial data present fairly the financial condition and the
results of operations of the Business for the periods covered thereby.
(h) TITLE TO PROPERTIES; LIENS; CONDITION OF PROPERTIES.
(i) Seller has good, clear and marketable title to all of
the Business Assets. No default by Seller exists under or with
respect to any of such Business Assets and none of the Business Assets
is subject to any mortgage, pledge, lien, conditional sale agreement,
security interest, encumbrance or other charge.
(ii) The Machinery and Equipment are sold on an "AS IS,
WHERE IS" basis. Except as expressly provided herein, Seller makes no
warranty or representation of any kind or nature whatsoever with
respect to any of the Machinery and Equipment. The Machinery and
Equipment conform with all material applicable ordinances, regulations
and zoning or other laws and do not encroach on the property of
others.
(iii) As of the date of this Agreement there is, to Seller's
knowledge, no pending or threatened change in any such ordinance,
regulation or zoning or other law which would materially adversely
effect the Business, and there is, to Seller's knowledge, no pending
or threatened condemnation of any buildings, machinery, equipment or
other property that comprise the Business Assets.
(iv) The Business Assets, the Employees (and the
Transitional Employees) and certain of the Excluded Assets constitute
all of the assets presently used by Seller in conducting the Business
prior to Closing.
(i) TAXES. With respect to the Business and the Business
Assets, Seller has accurately prepared and timely filed all income tax
returns and other tax returns or other reports which are required to
be filed, and has paid, or made provision for the payment of, all
federal, state and local taxes, including, but not limited to, income
and sales taxes, which have or may have become due pursuant to said
returns or reports or pursuant to any assessment which has been
received by it. Seller is not a party to any pending action or
proceeding, nor, to Seller's knowledge, is any such action or
proceeding threatened by any governmental authority for the assessment
or collection of taxes, interest, penalties, assessments or
deficiencies, and no claim for assessment or collection of taxes,
interest, penalties, assessments or deficiencies has been asserted
against Seller with respect to the Business or the Business Assets.
The Business Assets, excluding motor vehicles and Inventory, shall
constitute an isolated sale for purposes of claiming an exemption form
sales tax under Pennsylvania state tax laws.
(j) DISCLOSURE OF MATERIAL INFORMATION. With respect to the
Business and the Business Assets, neither this Agreement nor any
Schedule hereto contains any untrue statement of a material fact, or
omits to state a material fact necessary to make the statements herein
or
12.
therein not misleading. No representation or warranty by Seller in
this Agreement, nor any statement, certificate, schedule or exhibit
hereto furnished or to be furnished by or on behalf of Seller pursuant
to this Agreement, nor any document or certificate delivered to Buyer
pursuant to this Agreement or in connection with transactions
contemplated hereby, contains or shall contain any untrue statement of
material fact or omits or shall omit a material fact necessary to make
the statements contained therein not misleading. All statements and
information contained in any certificate, instrument, Disclosure
Schedule or document delivered by or on behalf of Seller shall be
deemed representations and warranties by the Seller.
(k) INVENTORY. All of the Inventory is valued at cost in
accordance with Seller's internal accounting principles. Except as
set forth in Section (k) of the Disclosure Schedule, substantially all
Inventory is located in one of the Facilities (or in Coatesville, PA)
as reflected in this Agreement. All work in process contained in
Inventory constitutes items in process of production pursuant to
contracts or open orders taken in the ordinary course of business,
from regular customers of Seller, for whom Seller has no material
accounts receivable aged ninety (90) days or more except as set forth
in Section (k) of the Disclosure Schedule; neither Seller nor any such
customer is in material breach of the terms of any obligation to the
other, and, based on Seller's knowledge, valid grounds exist for any
counterclaim or set off of amounts billable to such customers upon the
completion of orders to which work in process relates. All work in
process contained in the Inventory is of a quality ordinarily produced
in accordance with the requirements of the orders to which such work
in process is identified, and, to Seller's knowledge, will require no
rework with respect to work performed prior to Closing. To the extent
that Buyer is required to rework any material work in process caused
by Seller's performance prior to Closing in order to comply with the
requirements of a sales order, Buyer shall submit to Seller an invoice
for Buyer's actual cost of rework within sixty (60) days following the
Closing Date; Seller shall pay such invoice within thirty (30) days
following receipt.
(l) EXISTING EMPLOYMENT CONTRACTS. With respect to the
Business, there are no employment contracts or collective bargaining
agreements. Seller has customary pension, bonus, profit sharing, or
other agreements or arrangements providing for employee remuneration
or benefits. All of these contracts and arrangements are in full
force and effect, and with respect to the Business, neither Seller nor
any other party is in default under them. There is no pending or, to
the best of Seller's knowledge, threatened labor dispute, strike, or
work stoppage affecting the Business Assets or the Business.
(m) ABSENCE OF CERTAIN CHANGES. Except as and to the extent set
forth in Section (m) of the Disclosure Schedule, since May 31, 1996 or
the date of Seller's most recent financial report there has not been:
(i) ADVERSE CHANGE. Any material adverse change in the
financial condition, assets, liabilities, business, prospects or
operations of Seller with respect to the Business;
13.
(ii) DAMAGE. Any material loss, damage or destruction,
whether covered by insurance or not, affecting the Business or the
Business Assets;
(iii) LABOR DISPUTES. Any labor dispute or disturbance
affecting the Business or the Business Assets;
(iv) COMMITMENTS. Any commitment or transaction by Seller
with respect to the Business or the Business Assets (including,
without limitation, any borrowing or capital expenditure) other than
in the ordinary course of business consistent with past practice;
(v) DISPOSITION OF PROPERTY. Any sale, lease or other
transfer or disposition of any of the Business Assets, except for the
sale of Inventory items in the ordinary course of business;
(vi) LIENS. Any mortgage, pledge, lien or encumbrance made
on any of the Business Assets;
(vii) CONTRACTS. Any entering into, amendment or
termination by Seller of any contract affecting the Business or the
Business Assets, or any waiver of material rights thereunder,
including the Contracts, other than in the ordinary course of
business, except for tolling service agreements with G.O. Carlson,
Inc. dated June 17, 1996.
(viii) CREDIT. Any grant of credit to any customer of the
Business on terms or in amounts more favorable than those which have
been extended to such customer in the past, any other change in the
terms of any credit heretofore extended, or any other change of
Seller's policies or practices with respect to the granting of credit;
(ix) NO UNUSUAL EVENTS. Any other material event or
condition not in the ordinary course of business of Seller, materially
adversely affecting the Business.
(n) PRODUCT WARRANTY AND PRODUCT LIABILITY. There are no
standard warranties, commitments or obligations with respect to
Seller's performance of services or sale of Products. There are no
product liability claims and similar claims, actions, litigation and
other proceedings relating to services rendered, which are presently
pending or which to Seller's knowledge are threatened, or which have
been asserted or commenced against Seller within the last one (1)
year, in which a party thereto either requests injunctive relief
(whether temporary or permanent) or alleges damages (whether or not
covered by insurance).
(o) CONTRACTS. True and correct copies of the Contracts will be
delivered to Buyer after its execution of this Agreement, and to the
knowledge and belief of Seller each other party thereto is in material
compliance with all the provisions thereof and no other party to any
Contract has notified Seller that it considers Seller to be in breach
thereto, and Seller has no knowledge or belief that any other party to
any contract is contemplating the breach thereof. The Contracts
constitute all of the material contracts and other agreements related
to the Business.
14.
(p) OTHER CONTRACTS. Except as set forth in Section (q) of the
Disclosure Schedule, with respect to the Business Assets, Seller is
not a party to, or bound by, any undischarged, written or oral:
(i) contract for the employment for any period of time
whatsoever, or restricting the employment, of any employee;
(ii) consulting agreement;
(iii) collective bargaining agreement;
(iv) contract or agreement restricting in any manner
Seller's right to compete with any other person or restricting
Seller's right to sell to or purchase from any other person;
(v) agreement with any Affiliate of Seller for or with
respect to the purchase or sale of goods or the performance of
services;
(vi) contract for the payment or receipt of license fees or
royalties to or from any person, firm or corporation;
(vii) contract of agency, representation, distribution or
franchise;
(viii) guaranty, performance, bid or completion bond, or
surety or indemnification agreement;
(ix) contract relating to the purchase, sale, use or license
of technology except licenses for third party software generally
available to the public;
(x) lease or sublease, either as leasee or subleasee,
lessor or sublessor, of personal property or intangibles;
(xi) warranty or service contracts;
(xii) joint venture, partnership or other contracts
involving a sharing of revenues, profits, losses, costs or
liabilities; or
(xiii) any other contract which provides for the receipt or
expenditure by Seller of more than $50,000, other than sales order in
the ordinary course of business.
(q) COMPLIANCE WITH LAWS. To the knowledge of Seller the
operations of the Business are in compliance with all applicable laws,
regulations and codes of the federal, state or municipal governments,
or other governmental or regulatory bodies having jurisdiction over
the Business or its operations, including, without limitation, laws
and regulations relating to employment, occupational safety and
environmental matters and the Seller has not been notified of any
noncompliance therewith.
15.
(r) BROKER'S FEES. Seller has incurred no obligation or
liability, contingent or otherwise, for broker's or finder's fees with
respect to the matters provided for in this Agreement.
(s) NO OTHER REPRESENTATIONS OR WARRANTIES; NO WARRANTY
REGARDING SUCCESS. Except as otherwise expressly set forth in this
Agreement, neither Seller nor any agent or representative of Seller,
has made, and Seller is not liable for or bound in any manner by, any
express or implied warranties, guarantees, promises, statements,
inducements, representations, or information pertaining to the
Business Assets or any part thereof made or furnished by Seller or any
broker employee, agent, consultant or other person representing or
purportedly representing Seller. Seller makes no warranty regarding
the probable success or profitability of the ownership, use or
operation of the Business or the Business Assets after the Closing.
Seller doesn't warrant or guarantee the Products against any health or
safety hazard. Seller shall not be liable to Buyer or any customer of
Buyer because of infringement of any patent or patent application of a
third party by Buyer. However, if Buyer has a reasonable belief that
its use of operating procedures provided by Seller pursuant to the
Tolling Agreement may infringe the proprietary rights of any third
party, Buyer shall notify Seller in writing, and the parties shall
jointly modify such procedures so that they are substantially
equivalent and non-infringing.
ARTICLE 7
BUYER'S WARRANTIES
Buyer represents and warrants that as of the date hereof:
(a) CORPORATE STATUS; AUTHORIZATION. Buyer is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Colorado, and has full corporate power to execute,
deliver and perform this Agreement and to carry on its business as now
being conducted. Buyer has all corporate power to own and operate its
business, and has all licenses, franchises, rights and privileges
necessary for the conduct of its business. All corporate action on
the part of Buyer and all action on the part of its officers and
directors necessary for the authorization, execution and delivery of
this Agreement by Buyer and for the performance of Buyer's obligations
hereunder has been taken, and this Agreement and the Schedules, when
duly executed and delivered, shall constitute the legal and binding
obligations of Buyer, enforceable against Buyer in accordance with
their terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and by rules
of law governing specific performance, injunctive relief or other
equitable remedies.
(b) PERFORMANCE OF AGREEMENT. Neither the execution, delivery
or performance of this Agreement nor the consummation of transactions
contemplated by this Agreement will:
16.
(i) violate any provision of Buyer's Certificate of
Incorporation or Bylaws or similar charter documents, each as amended,
or any law, regulation, order, judgment or decree by which the Buyer
or any of its properties may be bound ; or
(ii) conflict with, result in a breach of the terms and
conditions of or constitute a default under any agreement to which
Buyer is a party or to which it is bound or by which any of its
properties may be bound.
(c) BROKER'S FEES. Buyer has incurred no obligation or
liability, contingent or otherwise, for broker's or finder's fees with
respect to the matters provided for in this Agreement.
(d) PERMITS AND LICENSES. Buyer will apply for and retain in
full force and effect all permits, certificates of occupancy and
licenses required to operate the Business.
(e) MISCELLANEOUS. Buyer will not instigate any activity that
would require or encourage Federal, state, municipal or other
governmental or public body or authority to investigate matters
covered by Seller's warranties or indemnities, except as may be
required of Buyer under any applicable Federal, state or local or
municipal laws, or under regulations of any governmental or public
body.
ARTICLE 8
INDEMNITIES AND LIMITATION OF LIABILITY
(a) BUYER'S INDEMNITY. For Claims asserted by Seller against
Buyer during the term (including any extensions or renewal thereof) of
the Sublease plus twelve (12) months, Buyer shall indemnify, defend
and hold harmless Seller, its directors, officers, employees, agents
and representatives and all of its Affiliates, from and against any
and all liability with respect to any Claims, of any kind or nature
whatsoever (including without limitation those for personal injury,
death, property damage or economic loss) incurred or asserted by Buyer
or by any third party (including without limitation any government
entity or Buyer's employee) in any way relating to the ownership, use
or operations of the Business Assets by Buyer, except liabilities
under Environmental Laws (which are specified in the Sublease) and
except if caused solely by willful misconduct on the part of Seller.
This indemnification shall include, without limitation, Claims
relating to the following:
(i) the breach or inaccuracy of any representation or
warranty of Buyer contained in this Agreement or in any other
agreement, instrument, certificate, schedule, document delivered by
Buyer to Seller or written statement made by Buyer to Seller and
delivered by Buyer pursuant hereto or otherwise in connection with any
of the transactions contemplated by this Agreement;
(ii) the breach of any covenant or other promise of Buyer
contained in this Agreement or in any other agreement, instrument,
certificate, schedule, document delivered by Buyer to Seller or
written statement made by Buyer to Seller and delivered by Buyer
pursuant
17.
hereto or otherwise in connection with any of the transactions
contemplated by this Agreement;
(iii) violations or alleged violations by Seller or by Buyer
of antitrust laws or regulations in connection with this transaction;
(iv) Buyer's operation of the Business Assets or conduct of
the Business on or after the Closing Date, including, without
limitation, operations related to Products manufactured but not
sold; or
(v) deficiencies of any kind with respect to (a) the
design, construction, maintenance, operating procedures (except for
operating procedures provided by Seller to Buyer pursuant to the
Tolling Agreement) or physical condition of any Machinery and
Equipment or (b) any information included in the marketing documents
and materials, whether any such deficiency is caused by the negligence
or gross negligence of Seller or otherwise, except to the extent
attributable to willful misconduct on the part of Seller, provided,
however, that nothing in this Section 8(a)(v) shall require Buyer to
indemnify Seller against any such liabilities, losses and costs
directly arising out of or relating to Seller's operation of the
Business or use of any such information prior to Closing.
(b) SELLER'S INDEMNITY. For Claims asserted by Buyer against
Seller within a period of twelve (12) months following the Closing
Date, Seller shall indemnify, defend and hold harmless Buyer, its
directors, officers, employees, agents and representatives, and all of
its Affiliates, from and against any and all liability with respect to
any Claims, of any kind or nature whatsoever (including without
limitation those for personal injury, death, property damage or
economic loss) incurred or asserted by Seller or by any third party
(including without limitation any government entity or Seller
employee) in any way relating to the ownership, use or operation of
the Business Assets by Seller prior to the Closing Date (except
liabilities under Environmental Laws which liabilities are specified
in the Sublease) and except if caused solely by willful misconduct on
the part of Buyer. This indemnification shall include, without
limitation, Claims relating to the following:
(i) the breach or inaccuracy of any representation or
warranty of Seller contained in this Agreement or in any other
agreement, instrument, certificate, schedule, document delivered by
Seller to Buyer, or written statement made by Seller to Buyer and
delivered by Seller pursuant hereto or otherwise in connection with
any of the transactions contemplated by this Agreement;
(ii) the breach of any covenant or other promise of Seller
contained in this Agreement or in any other agreement, instrument,
certificate, schedule, document delivered by Seller to Buyer, or
written statement made by Seller to Buyer and delivered by Seller
pursuant hereto or otherwise in connection with any of the
transactions contemplated by this Agreement;
18.
(iii) Seller's operation of the Business Assets or the
conduct or the Business prior to the Closing Date, including any
liability which arises as a result of products manufactured or sold by
Seller prior to the Closing;
(iv) any debt, liability or other obligation of any nature
(whether due or to become due and whether absolute, accrued, matured,
unmatured, asserted, fixed, contingent or otherwise) of Seller
relating directly or indirectly to the Business or any of the Business
Assets or any of the transactions contemplated herein, except for
liabilities assumed by Buyer pursuant to Article 4 herein;
(v) those operations of Seller not acquired by Buyer
pursuant to this Agreement; and
(vi) all warranty, product liability and similar obligations
of the Business for Products shipped prior to the Closing Date not
expressly assumed by Buyer pursuant to Article 4 herein.
(c) ASSERTION OF CLAIMS. Any suits involving claims for breach
of any warranty or representation set forth in this Agreement shall be
commenced not later than one (1) year after the date hereof. In the
event any damages or expenses are incurred by either party for which
it claims indemnification under this Agreement (the "INDEMNITEE"), the
Indemnitee shall promptly notify the other party (the "INDEMNITOR") in
writing of such damages and expenses. If any claim for
indemnification hereunder is based upon an action or claim filed or
made against the Indemnitee by a third party, then the Indemnitor
shall have the right to negotiate a settlement or compromise of any
such action or claim or to defend any such action or claim at its sole
cost and expense.
(d) LIMITATION OF LIABILITY. The liability of the parties under
this Agreement shall be limited to actual damages and shall not
include incidental, consequential, indirect or punitive damages. In
no event shall the liability of either party to the other with respect
to the matters described in this Agreement exceed 30% of the Purchase
Price.
ARTICLE 9
EMPLOYEE RELATIONS
(a) SELLER'S EMPLOYEES. As of the Closing Date, Seller will
terminate those employees of Seller assigned to the Business, except
for the Transitional Employees described in Section 9(c) below.
Following the Closing Date, Buyer will offer employment to the 17
employees of Seller specified in Schedule 9(a) (the "EMPLOYEES").
Buyer intends to, during the earlier of the (i) three (3) year period
following Closing or (ii) termination of the Sublease, use reasonable
good faith efforts to employ at-will the Employees, when all
circumstances, including Buyer's financial condition, the performance
of the Employees and the financial condition of the Business, are
taken into account. The foregoing statement is not intended and does
not impose a contractual obligation on Buyer, but is merely a
statement of the parties' intent. Effective as of the Closing Date,
Seller shall release the Employees from any secrecy
19.
or confidentiality agreement theretofore entered into between such
Employee and Seller, except as related to any business of the Seller
other than the Business.
(b) COMPENSATION AND BENEFITS. Buyer shall provide all
Employees with a package of employee benefits and compensation
substantially equivalent in value to those currently provided by
Seller, taking into consideration comparable equivalence of value of
the various forms of compensation in the aggregate. Buyer shall use
commercially reasonable efforts to provide the employee benefit
package described in Schedule 9(b) to the Employees, effective at
Closing.
(c) TRANSITIONAL EMPLOYEES. At no cost to Buyer, Seller shall
continue to employ at will, and shall use reasonable efforts to be
responsible for all compensation payments and benefits owed to, those
employees specified on Schedule 9(c) (the "TRANSITIONAL EMPLOYEES")
for the period specified in Schedule 9(c) for each such employee (the
"TRANSITION PERIOD") to provide services to Buyer in connection with
transitioning the operation of the Business from Seller to Buyer.
After the Closing and until the expiration of the Transition Period,
Buyer, at Buyer's expense, shall provide the Transitional Employees
with office equipment and office support services comparable to those
presently being provided to the Employees after the Closing Date.
(d) ACCRUED WAGES AND BENEFITS; TERMINATION COSTS. Seller will
be responsible for all compensation payments and benefits owed to its
employees for periods prior to Closing (and during the Transitional
Period with respect to the Transitional Employees) and all other costs
associated with the termination of its employees, including but not
limited to retirement benefits and severance payments. Buyer will be
responsible for all compensation payments and benefits owed after the
Closing Date (except with respect to the Transitional Employees) to
Seller's employees employed by Buyer.
(e) EMPLOYMENT LIABILITIES. Except as specifically described
herein, Seller shall assume and be responsible for all employment
liabilities with respect to its employees assigned to the Business in
connection with claims incurred prior to the Closing Date (and during
the Transitional Period with respect to Transitional Employees).
Buyer shall assume and be responsible for all employment liabilities
with respect to those of Seller's employees employed by Buyer in
connection with claims incurred on and after the Closing Date. For
purpose of this Section, a claim shall be considered incurred and on
the date treatment is rendered or a service performed. Worker's
Compensation claims of any employees shall be the responsibility and
liability of Seller if the claim is made prior to the Closing Date and
shall be the responsibility and liability of Buyer if the claim is
made on or after the Closing Date. To Seller's knowledge (excluding
knowledge of the affected Employees) as of the Closing Date, none of
its employees assigned to the Business has a potential Worker's
Compensation claim against Seller.
(f) EMPLOYEE TAX MATTERS. For purposes of reaching the annual
wage limitations for the Federal Insurance Contributions Act (FICA),
Federal Unemployment Tax Act (FUTA), and State Unemployment Tax Act
(SUTA), any remuneration paid by Seller during the
20.
calendar year and prior to the acquisition is considered to have been
paid by Buyer. Buyer and Seller will follow the "standard" IRS
procedure (as outlined in Section 4 of Revenue Procedure 84-77, 1984-2
C.B. 753) with regard to reporting of wages on form W-2 and
disposition of forms W-4 and W-5. Under the standard procedure,
Seller performs all reporting duties for wages and other compensation
it pays. Buyer reports only its own payments of wages and other
compensation. Also, the Employees must provide Buyer with new forms
W-4 and W-5 for the current year. Both parties must provide the
Employees with form W-2 by January 31, 1997. However, if requested by
any Employee, Seller must furnish the form W-2 within thirty (30) days
of the request or within thirty (30) days after the final payment of
wages, whichever is later.
ARTICLE 10
OTHER MATTERS
(a) COVENANT NOT TO COMPETE. Seller agrees that for a period of
five (5) years after the Closing it will not, directly or indirectly,
engage or invest in, own, manage, operate, control, or participate in
the ownership, management, operation, financing, or control of, be
associated with, or in any manner connected with, lend its name or any
similar name to, lend its credit to any business (other than Buyer,
its successors or assigns) in the field of explosion bonding of clad
metals ("SIMILAR PRODUCTS OR ACTIVITIES"), except as such Similar
Products or Activities are used for the development, marketing,
manufacture and sale of Seller's Mypolex(R) industrial diamonds.
Seller agrees that this covenant is reasonable with respect to its
duration, geographical area, and scope. In the event of a breach by
Seller of any covenant set forth in this Section, the term of such
covenant will be extended by the period of the duration of such
breach. Seller also understands and agrees that due to the unique
nature of the rights protected by this Section, Buyer could not be
reasonably or adequately compensated in damages in an action at law
for Seller's breach of its obligations under this Section.
(b) CONFIDENTIALITY PROVISIONS.
(i) OBLIGATION. Seller agrees that upon the Closing Date
all of the Business Assets shall be the sole and exclusive property of
Buyer and any Confidential Information (as defined below) relating to
the Business Assets shall comprise a special, valuable and unique
asset of Buyer's business, and that the confidentiality and restricted
use of such Confidential Information is an integral part of its
ascribed value. Seller shall use all reasonable efforts, not less
than those used to maintain the confidentiality of its own
confidential information, not to disclose or use such information for
a period of five (5) years following the date of this Agreement. For
purposes of this Agreement, "Confidential Information" shall mean
(a) any information, know-how, data, process, technique, design,
drawing, formula or test data relating to any research project, work
in process, future development, engineering, manufacturing, marketing,
business plan, servicing, financial or personnel matter directly
relating to the Business Assets, the Business, Buyer, its present or
future products, sales, suppliers, customers, employees, investors or
business, whether in oral, written, graphic or electronic form.
Seller shall deliver to Buyer, upon Buyer's request, copies of
documents,
21.
memoranda, notes, plans, records, reports and other documentation
directly relating to the Business Assets that it may possess or have
under its control, provided that Seller may maintain archival copies
of such materials.
(ii) EXCLUSIONS. Confidential Information shall not include
and Seller shall not be obligated to hold in confidence any
information which is or becomes public knowledge without breach of
this Agreement, or which is or becomes publicly available without a
confidentiality restriction and without breach of this Agreement from
a source other than Buyer, or information that Seller independently
develops after the Closing Date. Buyer acknowledges that Seller may
not disclose information disclosed to Seller by a third party which
Seller is obligated to treat as confidential or proprietary.
(iii) REMEDIES. Seller acknowledges that disclosure or use
of any Confidential Information prior to or after the Closing Date in
a manner inconsistent with this Section or any other provision of this
Agreement will cause Buyer irreparable injury which may not be
adequately compensated by damages. Accordingly, in addition to all
other remedies that Buyer may have hereunder, Buyer shall have the
right to equitable and injunctive relief to prevent the unauthorized
use or disclosure of any such Confidential Information and the right
to such damages (including without limitation, court costs and
reasonable attorneys' fees) as are occasioned by such unauthorized use
or disclosure.
(c) OTHER REMEDIES. The specific remedies to which Seller or
Buyer may resort under the terms of this Agreement are cumulative and
are not intended to be exclusive of any other remedy or means of
redress to which Seller or Buyer may be lawfully entitled if there is
any breach or threatened breach by the other party of any provision of
this Agreement. The failure of Seller or Buyer to insist, in any one
or more instances, upon the strict performance of any of the terms,
conditions or covenants of this Agreement shall not be construed as a
waiver or relinquishment for the future of such term, condition or
covenant. A receipt by Seller or Buyer of any money with knowledge of
the breach of any term, condition or covenant of this Agreement, shall
not be deemed a waiver of such breach, and no waiver, change,
modification or discharge by either party hereto of any provision in
this Agreement shall be deemed to have been made or shall be effective
unless expressed in writing and signed by both Seller and Buyer. In
addition to the other remedies provided in this Agreement, Seller and
Buyer shall be entitled to the restraint by injunction of the
violation, or attempted or threatened violation of any of the terms,
conditions or covenants of this Agreement, or to a decree compelling
performance of any of such term, condition or covenant.
ARTICLE 11
CLOSING
The closing of the transaction contemplated by this Agreement
(the "CLOSING") shall take place at the offices of E. I. du Pont de
Nemours and Company, Wilmington, Delaware 19898, on the date hereof
(the "CLOSING DATE").
22.
(a) PURCHASE PRICE. At the Closing, Buyer shall deliver to
Seller wire transfer for immediately available funds in Seller's favor
for an amount equal to the balance of the Purchase Price as calculated
pursuant to Article 5.
(b) INSTRUMENTS OF CONVEYANCE. At the Closing, Seller shall
deliver to Buyer the following executed instruments in such form and
substance as is reasonably satisfactory to Buyer and Seller:
(i) Bill of Sale.
(ii) Assignment of the Patents.
(iii) Assignment of Trademarks.
(iv) Assignment of the Contracts.
(v) Such other instruments and documents deemed necessary
or appropriate by Buyer, and agreed to by Seller, to effectuate the
transactions contemplated by this Agreement.
(c) DELIVERY OF OTHER AGREEMENTS. At the Closing, Buyer and
Seller shall enter into the following agreements:
(i) Tolling Agreement.
(ii) Sublease Agreement.
(iii) Sublease and side letter for the Kennett Square Lease.
ARTICLE 12
POST CLOSING TRANSACTIONS
Seller and Buyer agree that after the Closing Date:
(a) PRODUCT CLAIMS AND REPLACEMENT PRODUCT. During the period
of one (1) year after the Closing Date, Buyer shall cooperate with
Seller's efforts to resell any rejected or returned finished Products
which have been sold, shipped or set aside for a customer of Seller
prior to the Closing Date. At Seller's request, Buyer shall reprocess
any such rejected or returned finished product at a charge to Seller
equal to Buyer's costs for such services.
(b) BOOKS AND RECORDS. At Closing, or as soon after the Closing
as is reasonably practicable, Seller shall cause to be delivered to
Buyer all books and plant records exclusively used in, or related to,
Seller's operation of the Business.
23.
(c) PERSONNEL RECORDS. Seller shall deliver to Buyer all
personnel records, including medical files, on Seller's former
employees who are hired by Buyer and who consent in writing to such
delivery.
(d) ACCESS TO BOOKS AND RECORDS. From time to time, upon
request by Seller, Buyer shall permit Seller reasonable access to the
books and records delivered to Buyer hereunder for the purposes of
enabling Seller to prepare and support its various tax returns and
verifying its quality control procedures with respect to filled
orders, provided Buyer shall not be required to retain such books and
records for a period of more than five (5) years from the Closing
Date.
(e) FURTHER ASSURANCES. From time to time after the Closing, at
Buyer's request and without further consideration, Seller agrees to
execute and deliver such other instruments of conveyance and transfer
and take such other action as Buyer reasonably may require more
effectively to convey, transfer to and vest in Buyer, and to put Buyer
in possession of, any property to be sold, conveyed, transferred and
delivered hereunder, including, without limitation, assistance in the
transfer of open purchase orders to Buyer. In the case of contracts
and rights, if any, that have not at the Closing been transferred
effectively due to the lack of the consent of third parties, endeavor
to obtain such consents promptly, and if any such consents be
unobtainable, to use commercially reasonably efforts to provide Buyer
with the benefits thereof in some other manner acceptable to Buyer.
In addition, Seller or Seller's designee shall reasonably cooperate
with Buyer, at Buyer's expense, in providing Buyer or Buyer's auditors
with access to certain raw financial data directly relating to the
Business Assets. Such access shall be during normal business hours
and upon reasonable advance notice to Seller within sixty (60) days
after the Closing Date. Buyer acknowledges that Seller does not
maintain audited financial statements at the Business level.
(f) OUTSTANDING COLLECTIONS. Seller shall promptly notify Buyer
of any payments received by Seller on or after the Closing Date
corresponding to any of the Accounts Receivable and shall promptly
forward all amounts so received to Buyer. Buyer shall promptly notify
Seller of any payments received by Buyer on or after the Closing Date
corresponding to Products sold by Seller on or before the Closing Date
and shall promptly forward all amounts so received to Seller.
(g) SIGNAGE. Not later, than thirty (30) days after the Closing
Date, Buyer shall remove Seller's name from the exterior of the
Facilities.
(h) COMPUTER SYSTEMS. During the period of three (3) months
after the Closing Date, Seller shall provide Buyer with reasonable
assistance in connection with transitioning its computer services.
24.
ARTICLE 13
BULK SALES ACT AND TAXES
(a) BULK SALES ACT. Buyer hereby waives compliance by Seller
with the requirements of any and all laws relating to bulk sales and
transfers; and as consideration for such waiver by Buyer, Seller
agrees to indemnify Buyer for any loss to Buyer resulting from any
claim by any creditors of Seller under any such law.
(b) SALES, USE, TRANSFER AND SIMILAR TAXES. Buyer shall bear
and pay all recording fees, sales or use taxes and any transfer,
transfer gain, documentation, gross receipts, value added, and other
taxes and charges, upon or with respect to the sale or transfer of the
Business Assets by Seller to Buyer pursuant to this Agreement and all
interest or penalties thereon, if any. To the extent that applicable
law or regulation imposes upon Seller the obligation to report or pay
such taxes, charges, interest, or penalty, Buyer shall promptly
reimburse Seller therefor upon receipt of Seller's invoice for the
amount of such payment. Buyer shall provide Seller with properly
completed resale certificates covering the purchase of inventories.
ARTICLE 14
MISCELLANEOUS
(a) PRESS RELEASE. Buyer and Seller shall each be at liberty to
issue a press release or public announcement following execution of
this Agreement with respect to the transaction contemplated by this
Agreement provided that the parties shall consult each other in
advance on the form and content of such releases or announcements.
(b) FEES. Except as otherwise specifically provided herein, the
parties shall pay their own expenses including attorneys' fees,
incident to the preparation and performance of this Agreement, whether
or not the transactions contemplated herein are consummated.
(c) AMENDMENTS. This Agreement shall not be amended or modified
except in writing, signed by both parties.
(d) SUCCESSORS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors
and assigns, provided neither party shall assign this Agreement or any
rights herein without the other party's prior written consent.
(e) PATENT LICENSE. Transfer by Seller to Buyer of the Business
Assets does not include any right or license for Buyer to operate
under any of Seller's patents or use any of Seller's technical
information except for the patents and technical information to be
transferred pursuant to this Agreement.
(f) ENTIRE AGREEMENT. This Agreement, including the Schedules
referred to herein, which are incorporated herein and made a part
hereof, and the Sublease Agreement
25.
and the Tolling Agreement, both of even date herewith, contain the
final, complete and exclusive understanding of the parties hereto with
respect to the subject matter contained herein.
(g) NOTICES. All notices, consents, requests and approvals, any
notice of change in address for the purpose of this Article, and other
communications provided for or required herein, and all legal process
in regard thereto, shall be deemed validly given, made or served, if
in writing, and delivered personally or sent by U.S. Certified Mail,
postage prepaid:
If to Seller, addressed to:
E. I. du Pont de Nemours and Company
Specialty Chemicals
1007 Market Street
Wilmington, Delaware 19898
Attention: Business Director
If to Buyer, addressed to:
Dynamic Materials Corporation
551 Aspen Ridge Drive
Lafayette, Colorado 80026
Attention: President
(h) GOVERNING LAW. This Agreement shall be governed by and
construed according to the laws of the State of Delaware, without
regard to its conflict of laws principles.
(i) SCHEDULES. All Schedules referred to herein are hereby
incorporated in this Agreement by reference.
(j) HEADINGS. The various headings used in this Agreement are
for convenience only and are not to be used in interpreting the text
of the Article in which they appear or to which they relate.
(k) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same instrument.
(l) THIRD PARTY BENEFICIARIES. Notwithstanding any other
provision of this Agreement, nothing in this Agreement, express or
implied, is intended to create any third-party beneficiary rights
respecting any person or entity (including, without limitation, any
employee of Seller or person otherwise engaged in the Business), or to
confer upon any person or entity, other than the parties hereto, their
respective Affiliates, and their respective heirs, successors and
assigns, any rights, remedies or obligations under or by reason of
this Agreement, and the parties hereto specifically deny any such
intention.
26.
(m) INDEPENDENT PARTIES. The employees, facilities, and
equipment of Buyer shall, at all times, be under Buyer's exclusive
direction and control. Buyer's relationship with Seller shall be that
of an independent party and nothing in this Agreement shall be
construed to constitute Buyer or any of its employees or officers as
an employee, agent, joint venturer, or partner of Seller. The
employees, facilities, and equipment of Seller shall, at all times, be
under Seller's exclusive direction and control. Seller's relationship
with Buyer shall be that of an independent party and nothing in this
Agreement shall be construed to constitute Seller or any of its
employees or officers as an employee, agent, joint venturer, or
partner of Buyer.
(n) SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending
term or provision in any other, situation or in any other
jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power
to reduce the scope, duration, or area of the term or provision, to
delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid
and enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time
within which the judgment may be appealed.
(o) EXPORT CONTROL. The use and disclosure of technical
information acquired pursuant to this Agreement and the exercise of
patent rights granted by this Agreement shall be subject to the
export, assets and financial control regulations of the United States
of America, but without limitation, restrictions under regulations of
the United States that may be applicable to direct or indirect
reexportation of such technical information or of equipment, products
or services directly produced by use of such technical information.
[Signature Page Follows]
27.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed the day and year first above written.
SELLER:
E. I. DU PONT DE NEMOURS AND COMPANY
By: /s/ JEFFREY A. COE
-------------------------------------
Name: Jeffrey A. Coe
Title: Business Director
BUYER:
DYNAMIC MATERIALS CORPORATION
By: /s/ PAUL LANGE
-------------------------------------
Name: Paul Lange
Title: President
28.