CERTAIN CONFIDENTIAL MATERIAL CONTAINED
IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2
OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED.
TOLLING / SERVICES AGREEMENT FOR INDUSTRIAL DIAMONDS
THIS AGREEMENT, made and entered into as of this 22nd day of
July, 1996, by and between E. I. DU PONT DE NEMOURS AND COMPANY, a
Delaware corporation having its principal place of business at 1007
Market Street, Wilmington, Delaware 19898 (hereinafter referred to as
"DuPont") and DYNAMIC MATERIALS CORPORATION, a Colorado corporation
having its principal place of business at 551 Aspen Ridge Drive,
Lafayette, Colorado 80026 (hereinafter referred to as "Contractor").
BACKGROUND
- ----------
Contractor has on the date hereof acquired from DuPont DuPont's
DETACLAD(R) explosion bonded clad metal business, including the
Machinery and Equipment located at the Dunbar, Pennsylvania facility.
In connection with such transaction and subject to the terms and
conditions of this Agreement, Contractor agrees to (i) manufacture at
the Dunbar Facility high density ammonium nitrate explosives, and (ii)
to detonate such explosives around industrial diamond assemblies, as
described in DuPont's procedures for producing Mypolex(R) industrial
diamonds. Contractor will make available suitable facilities and
equipment and sufficiently trained and qualified employees at the
Dunbar Facility for the performance of such services as further
described herein; and
DuPont desires to avail itself of the services of Contractor for
the time, in the manner, and upon the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the premises and of the
mutual undertakings hereunder, the Parties agree as follows:
1. REPLACEMENT OF PRIOR AGREEMENTS
-------------------------------
This Agreement, the Purchase and Sale Agreement and the Sublease
by and between DuPont and Contractor of even date herewith shall take
the place of and entirely supersede any oral or written contracts,
agreements, arrangements that deal with the same subject matter as
referenced herein.
2. DEFINITIONS
-----------
Unless otherwise defined herein, capitalized terms shall have the
same meaning herein as ascribed to them in the Purchase and Sale
Agreement dated the date hereof
between the parties.
"Assemblies" means Material in the form of welded driver tube /
product tube arrangements supplied by DuPont to Contractor which are
substantially ready to be shocked by detonation of the Explosives.
"Explosive" means the explosive material produced by Contractor
according to the Mypolex(R) operating procedures.
"Material" means any matter defined in DuPont's operating
instructions for the process, set forth in Exhibit 1 attached hereto,
including tubes and culverts, furnished by DuPont to Contractor for
processing, handling or for use in the production of Product.
"PPI" means Producer Price Index - Finished Goods as published by
the Bureau of Labor and Statistics in which the 1982 Index equals 100.
"Product" means the Assemblies after they have been shocked by
detonation of the Explosives.
"Production Order" means a production order for Services
submitted by DuPont to Contractor at least two (2) calendar months in
advance of the month in which the Services are required, as more
fully described in Article 5.
"Purchase and Sale Agreement" means the Purchase and Sale
Agreement - DETACLAD(R) Business between the parties dated the date
hereof.
"Quarters" means calendar quarters.
"Raw Material Fee" means the raw material fee described in
Exhibit 2.
"Service" means services necessary to (a) manufacture and test
the Explosive, and (b) convert the Material to finished Products by
detonation of Explosives, as more fully described in Article 3.
"Service Fee" means the service fee described in Exhibit 2.
3. SCOPE OF WORK AND TIMING
------------------------
Contractor shall, except to the extent otherwise expressly stated
herein, furnish all labor, supervision, materials, tools, equipment,
facilities and services to properly and efficiently do all things
necessary to (a) manufacture and test the Explosive at the Dunbar
Facility, and (b) convert the Assemblies to finished Products by
detonation of Explosives at the Dunbar Facility, in accordance with
the operating instructions set forth in Exhibit 1 attached hereto.
Such operating instructions may be modified from time to time by
mutual written agreement. In the event that such operating
instructions are required to be modified [
]*
Contractor shall not be in default under this Agreement if Contractor
is required by law to suspend operations until such operating
procedures are
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
2
modified. DuPont and Contractor acknowledge and agree that if the
operating instructions are modified in a way which materially
increases or decreases the cost of the Services to Contractor, then
the parties shall negotiate a corresponding increase or decrease in
the compensation to be paid Contractor pursuant to Section 9.
DuPont shall provide Contractor with the Assemblies and the
accompanying culverts. DuPont shall notify Contractor in advance of
making any material changes to the composition of the Assemblies,
provided that DuPont shall not be obliged to disclose the specific
composition of the Assemblies. Contractor shall procure, manufacture
and test the Explosives (per the operating instructions attached as
Exhibit 1). The services to be provided are substantially set forth
in Exhibit 1 attached hereto and such services are hereinafter
referred to as "Services".
4. SAFEKEEPING/TITLE/STORAGE
-------------------------
Contractor assumes full responsibility and liability for the
safekeeping and safe handling of all DuPont Material or Product when
such Material or Product is in Contractor's care, custody and control.
Unless otherwise specified in this Agreement, title to such Material
or Product shall remain with DuPont at all times. Title to the
Explosive shall remain with Contractor at all times.
Contractor shall reimburse DuPont for DuPont's actual cost,
according to normal business accounting procedures, of any such
Material or Product lost, damaged or destroyed while in Contractor's
control. Reimbursement of such cost shall not affect DuPont's title
to such Material or Product. Contractor shall segregate such Material
or Product indicating DuPont's ownership. Contractor shall obtain
prior written approval of DuPont's Contract Administrator before
moving any such Material or Product to a location outside of the
Dunbar Facility.
DuPont reserves the right to file a U.C.C. Financial Statement or
such other documents as may be necessary under federal, state or local
law to preserve its interest in and assure its right to recover
without lien or other encumbrance any Material, Product or other
tangible items which DuPont delivers to Contractor from the control of
Contractor, its employees, agents or assigns. Contractor agrees on
behalf of itself, its employees, agents and assigns to cooperate fully
with DuPont, including the signing of any and all appropriate filing
or other documents necessary to preserve DuPont's interests in said
Material, Product or other tangible items.
Products shall be delivered F.O.B. the Dunbar Facility.
Liability for loss or damage to same shall pass to DuPont upon
Contractor's tender of delivery to DuPont's carrier for shipment to
DuPont. After Contractor's tender of delivery, DuPont shall be
3
responsible for all transportation charges and DuPont requested
insurance expenses, including any associated taxes, duties or
documents. At the request of DuPont, shipments will be shipped by
Contractor freight collect, or if prepaid, such freight will be
subsequently billed to DuPont and DuPont will reimburse Contractor for
such freight in accordance with Section 9 below. Unless otherwise
specified by DuPont, transportation will be by the most cost-effective
method of transportation in keeping with any particular delivery date.
At DuPont's option, Contractor will insure the shipments against
damage to or loss of the Products. Any such shipping insurance so
provided by Contractor will subsequently be billed to DuPont, and
DuPont will reimburse Contractor for such expense. Unless otherwise
agreed, packaging of shipments shall be in accordance with DuPont's
customary practices. Upon approval by DuPont, Contractor may deliver
the Products in installments.
5. QUANTITY
--------
(a) Requirements. Except as expressly provided herein,
------------
Contractor agrees to provide and DuPont agrees to purchase one hundred
percent (100%) of DuPont's requirements for the Services described
herein for its Mypolex(R) industrial diamond business.
(b) Forecast and Monthly Quantity. It is anticipated that
-----------------------------
DuPont will require Services for the following number of Assemblies:
Year Number of Assemblies (per month)
---- --------------------------------
[
]*
The foregoing forecast is not binding and is merely intended to
provide the parties with general guidance as to DuPont's demand for
Services. On request by Contractor, DuPont shall provide Contractor
with an updated forecast of DuPont's anticipated demand for Services.
Contractor acknowledges that Services are typically provided for
[ ]* per day. Notwithstanding the above, Contractor shall
not be obligated to provide Services for more than [ ]*
per month. In the event DuPont's production forecast changes, DuPont
shall inform Contractor as soon as reasonably possible of such change.
The parties agree to cooperate with each other in order to reasonably
satisfy both parties' production needs.
DuPont is developing a process wherein Contractor will be able to
explosively
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
4
[
]* In the event both
parties mutually determine to use [ ]* Contractor and
DuPont shall modify the operating instructions attached hereto as
Exhibit 1 accordingly. For purposes of calculating the quantity of
Services provided per month, [
]* In no event shall Contractor be
obligated to perform [ ]* if in the parties' reasonable
opinions such services would [
]* In the event the parties cannot
agree on whether [
]* at the request of either party, an independent
consultant shall be engaged to evaluate the impact of [
]* The parties shall mutually select the
independent consultant. Such consultant shall be skilled in the field
of mining and the integrity of subterranean mines. The parties shall
share the cost of such independent consultant, whose determination
shall be final and binding upon the parties.
(c) Rolling Monthly Forecast and Production Order. DuPont shall
---------------------------------------------
also provide Contractor with rolling monthly forecasts of production
requirements hereunder. The monthly forecast shall state DuPont's
anticipated demand for the next six (6) months. To the extent
possible, DuPont shall specify in such monthly forecast the amount of
Services DuPont anticipates for [ ]* and development
activities. It is understood that all such forecasts are estimates
only and are not commitments, provided, however, DuPont will submit
written confirmation of its production orders for Services hereunder
at least two (2) months in advance of the month in which the Services
are required (the "Production Order"). The Production Order
represents DuPont's binding commitment to procure Services from
Contractor, subject to the provisions of this Agreement.
DuPont shall deliver Assemblies to Contractor no later than the
last business day of the prior calendar month. The number of
Assemblies delivered to Contractor shall be consistent with the
Production Order provided by DuPont to Contractor two (2) months
earlier. Contractor shall arrange for the delivery of the appropriate
number of culverts from DuPont's supplier, as a release against
DuPont's master purchase order for the supply of culverts. Contractor
shall furnish the Services with respect to such Assemblies by the last
day of the calendar month for which the Services were requested in the
Production Order. In the unforeseen event that Contractor does not
complete such Services by the end of any calendar month, then
Contractor shall provide such Services every normal business day until
the month's Production Order of Product has been completed, and
Contractor shall make such Product available for immediate shipment.
DuPont's Industrial Diamonds Business may, at its option, waive this
requirement upon written notice to
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
5
Contractor.
In the event the Services result in one or more blown shots (as
defined in Exhibit 2 attached hereto), Contractor shall not be
required to furnish additional Services with respect to the affected
Assembly.
(d) Penalty for Delivery of Fewer Assemblies than Specified in
----------------------------------------------------------
the Production Order. The parties acknowledge that Contractor must
- --------------------
schedule time in the Dunbar Facility in order to provide Services to
DuPont. Therefore, in the event DuPont provides Contractor with fewer
Assemblies than specified in the Production Order, DuPont shall
compensate Contractor as follows:
(i) If DuPont provides Contractor with no more than one Assembly
less than specified in the Production Order, DuPont shall
pay no compensation to Contractor, but Contractor shall not
be responsible to DuPont for not completing the Services for
the Assembly which was not provided.
(ii) If (for any reason including force majeure) DuPont provides
Contractor with more than one Assembly less than specified
in the Production Order (and further provided that
Contractor is substantially in compliance with the terms and
conditions of this Agreement and the Sublease (as defined in
Paragraph 7 below), DuPont shall pay Contractor the Service
Fee [
]* for each Assembly less than
specified in the Production Order.
Contractor may, at its option, provide Services for more Assemblies
than specified in the Production Order, provided that such excess
Services shall be applied to current or subsequent quarterly take or
pay requirements, and may, at DuPont's option, be applied towards the
subsequent periods' Purchase Order requirements, . Contractor may, at
its option, waive the penalty specified in this Paragraph.
(e) DuPont shall have the obligation to take or pay for
Assemblies as further set forth in Exhibit 2 attached hereto.
6. STORAGE OF ASSEMBLIES.
---------------------
In anticipation of shipping truckloads of Assemblies and Product
to and from the Dunbar Facility at any one time on a periodic basis,
DuPont may, free of charge, store on an ongoing basis up to eight (8)
Assemblies and accompanying culverts at the Dunbar Facility for up to
thirty (30) days. Such eight (8) Assemblies and accompanying culverts
are in excess of the number specified in the monthly
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
6
Production Order. In addition DuPont may, free of charge, store up
to eight (8) Product items in excess of the monthly Production Order
at the Dunbar Facility for up to thirty (30) days. Contractor shall
provide adequate space to store such Assemblies, culverts and Product.
7. SUBLEASE OF DUNBAR FACILITY
---------------------------
The parties acknowledge that DuPont has leased to Contractor the
Dunbar Facility pursuant to the terms of a Sublease Agreement between
the parties dated the date hereof (the "Sublease").
8. PERIOD OF AGREEMENT
-------------------
This Agreement will become effective as of the date hereof, and
shall continue in full force and effect until expiration or earlier
termination of the Sublease Agreement (the expiration date of the
Sublease Agreement, as extended for its full term is December 15,
2005).
In addition, this Agreement, may be earlier terminated by either
party without cause, at any time following thirty (30) months after
the date hereof, upon nine (9) months prior written notice sent to the
address set forth in the Notices Article herein. The first date that
this Agreement may be terminated without cause is thirty (30) months
following the date hereof.
In the event Contractor elects to terminate this Agreement (other
than because of the breach or non-performance of this Agreement by
DuPont), then, at DuPont's option upon written notice to Contractor,
the Sublease shall terminate on the same date. If Contractor
terminates this Agreement because of the breach or non-performance
(which is capable of cure) of the Agreement by DuPont, then the
Sublease shall continue in full force and effect. If DuPont
terminates this Agreement, the Sublease shall not terminate, provided,
however, if this Agreement is terminated by DuPont as a result of a
material breach or non-performance (which is capable of cure) by
Contractor (after applicable cure periods as provided in Paragraph
23), DuPont may, at its option and upon written notice to Contractor,
immediately terminate the Sublease .
Termination of this Agreement, which shall be accomplished
without penalty unless otherwise specifically stated herein, shall not
relieve or release either DuPont or Contractor from any rights,
liabilities or obligations they may have accrued under the law or
terms of this Agreement prior to the date of such termination. Upon
the termination or expiration of this Agreement, or any extension
thereof, Contractor shall promptly tender to DuPont all Material(s)
and Product, at which time Contractor will invoice DuPont for Services
performed prior to termination. Dupont shall pay such invoice in
accordance with the terms of Paragraph 12 herein.
7
If, at any time during the term of the Sublease or any extensions
or renewals thereof, Contractor purchases all or any portion of the
Dunbar Facility or obtains a lease directly from the owners thereof,
DuPont may at its option extend this Agreement on the same terms and
conditions for a period of up to five (5) years or such other period
as the parties may mutually agree.
9. COMPENSATION
------------
As consideration for Services properly provided hereunder, DuPont
agrees to pay and Contractor agrees to accept the compensation
described in Exhibit 2 attached hereto.
10. EXCLUSIVITY AND NON-COMPETE
---------------------------
During the term of this Agreement and for a period of one year
thereafter, Contractor agrees that it (a) will not provide Services in
connection with the manufacture of polycrystalline industrial diamonds
similar to those covered herein to any third parties (including
Contractor and its Affiliates) and that Contractor will provide
Services exclusively to DuPont, and (b) will not engage in
consultation, development, licensing marketing or research services
related to the Services or within the field of polycrystalline
industrial diamonds other than in connection with the performance of
the Services hereunder. Contractor shall not use, reuse, sell or
otherwise dispose of any DuPont Material or Product, except in
connection with performing Services. If Contractor fails to keep and
perform every covenant of this Article, DuPont shall be entitled to
specifically enforce the same by injunction in equity in addition to
any remedies which DuPont may have.
11. TAXES
-----
DuPont agrees either to pay directly all property taxes,
licenses, charges and assessments properly levied by any properly
constituted governmental authority upon the Material, Assemblies or
Product hereunder, or to reimburse Contractor therefore if paid by
Contractor at DuPont's written direction. Contractor assumes full
responsibility for the payment of all federal and state taxes of
whatever sort, social security and unemployment compensation taxes,
withholding taxes, gross receipts taxes, franchise taxes and all other
taxes or charges applicable to Contractor's actions, employees, and
materials used for providing Services hereunder or applicable to
Contractor's income hereunder.
8
12. TERMS OF PAYMENT
----------------
Contractor shall invoice DuPont once per month for all Services
properly provided under this Agreement during the preceding calendar
month.
If Contractor's invoice does not indicate that Contractor is an
incorporated entity, by use of the words (or abbreviations)
"Incorporated", "Corporation" or "P.C." as a part of Contractor's
company name, then Contractor shall display its tax identification
number (TIN) on the invoice in lieu of such designations. Failure to
furnish such information may result in withholding twenty percent
(20%) of payments in accordance with IRS regulations.
Terms of payment shall be net thirty (30) days after DuPont's
receipt of such invoice at the address set forth in the Section 32
herein. Payment shall be considered made when payment checks are
mailed by DuPont via first class mail to the address set forth in the
Notice Article herein. Contractor's invoice shall be prepared in the
form set out in Exhibit 3 attached hereto, as may be changed from time
to time upon thirty (30) days prior written notice from DuPont to
Contractor.
If payment is not received by Contractor within thirty (30) days
following DuPont's receipt of Contractor's written notice of non-
payment , DuPont shall be in default under this Agreement.
13. SHIPMENTS
---------
Freight charges, excluding detention and demurrage charges, for
all Assemblies or other items supplied directly by DuPont under this
Agreement and for all Product produced hereunder by Contractor and
shipped per DuPont's instructions, shall be paid by DuPont. Detention
and demurrage charges on incoming shipments shall be borne by
Contractor unless caused by DuPont's early or excessive delivery of
Material.
14. WASTE DISPOSAL
--------------
Contractor agrees to employ reasonable efforts to minimize the
waste generated as a result of providing Services. Contractor shall
dispose of any waste produced as a result of providing services,
including waste from blown shots,, provided, however, that Contractor
shall return to DuPont for disposal all Materials, including the
Assemblies resulting from blown shots. Contractor agrees that it will
furnish all required equipment and labor to remove and dispose of such
waste generated as a result of providing Services.
9
15. RECORDS AND INSPECTION
----------------------
Contractor agrees to maintain a record of all Services performed
at the Dunbar Facility. Such records shall include, without
limitation, (a) the type and quantity of explosives, and (b) the cost
of Explosives and other raw materials used in connection with the
Services, and (c) the results of inspections the Dunbar Facility and
scaling operations inside the Dunbar Facility. DuPont or its designee
shall have the right from time to time, at DuPont's cost, to inspect
and verify the records kept by Contractor in connection with this
Agreement. In addition, DuPont or its designee shall have the right
to visit, observe, audit, and inspect the facilities and operations
related to the Services performed at the Dunbar Facility at any time
during Contractor's normal business hours so long as DuPont provides
Contractor with reasonable advance notice and reasonably limits the
frequency of such visits.
16. DEVELOPMENT ACTIVITIES
----------------------
The parties acknowledge that Contractor and/or DuPont may
periodically desire to develop new and improved Services or Products,
which may include furnishing services for such development activities.
Such development activities may include, without limitation, any or
all of the following: [
]
Contractor and DuPont agree that the terms of any Services rendered by
Contractor for DuPont development activities shall be subject to prior
negotiation between the parties. Contractor shall cooperate with
DuPont in connection with such development activities. DuPont and
Contractor shall negotiate mutually agreeable schedules based on
costs, and fees for services rendered in connection with the
development activities.
17. NONDISCLOSURE
-------------
Contractor hereby agrees not to disclose to others without the
prior written consent of DuPont:
(a) the terms and conditions of this Agreement , including
the terms and conditions under which DuPont has
purchased or plans to purchase Services, provide
Material and Assemblies or receive Product from
Contractor, or
(b) the structure or composition of Material, Assemblies or
Product,
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
10
information or methods which are provided by DuPont and
development activities,
except when such disclosure is necessary to provide Services.
DuPont hereby agrees not to disclose to others without the prior
written consent of Contractor:the terms and conditions of this
Agreement , including the terms and conditions under which DuPont has
purchased or plans to purchase Services, provide Material and
Assemblies or receive Product from Contractor.
18. HAZARDS
-------
Contractor acknowledges that hazards may be involved in providing
the Services described hereunder and Contractor shall provide Services
in a careful manner as specified in the Sublease.
19. ARBITRATION
-----------
In the event a dispute arises between the Parties in connection
with any aspect of this Agreement and such dispute shall not have been
resolved pursuant to good faith negotiations between the Parties, then
either Party may refer such dispute to arbitration, which shall be the
sole and exclusive means for resolution of such dispute and shall be
final and binding upon the Parties.
Any such arbitration shall be held in Philadelphia, Pennsylvania,
under the rules of the American Arbitration Association then in force
and shall be conducted in English. The arbitration panel shall
consist of three arbitrators, one of which shall be appointed by each
of the Parties, and the third arbitrator shall be appointed by the
first two arbitrators (or, in case such two arbitrators cannot agree,
then by the American Arbitration Association in accordance with its
rules).
In making their award, the arbitrators shall not be bound by the
law of any jurisdiction but shall decide the issues referred to them
in accordance with good commercial practice applying such principles
of fairness and equity as they may deem appropriate. If any question
concerning the interpretation, applicability, or enforceability of
this provision arises, the Parties agree that the interpretative law
to be applied shall be the law of the State of Delaware. Any judgment
or award rendered by the arbitrators may be entered as final in any
court having jurisdiction or an application may be made to such court
for judicial acceptance and enforcement of the award, as the case may
be.
11
20. INDEMNIFICATION
---------------
(a) Contractor shall, to the extent permitted by law, indemnify,
defend, and hold harmless DuPont against all claims, liabilities,
damages, losses or expenses of Contractor or any third party to the
extent arising out of any negligence, willful misconduct, breach of
contract or violations of law by Contractor, or Contractor's
employees, agents, subcontractors or assigns in the performance of
this Agreement. This indemnity will not apply where the sole cause of
the claim, liability, damage, loss or expense is the willful
misconduct or gross negligence of DuPont.
(b) DuPont shall indemnify and hold harmless Contractor from and
against, and shall compensate and reimburse Contractor for, any
claims, liabilities, damages, losses or expenses of Contractor or any
third party to the extent arising out of (i) the infringement by
DuPont's procedures for producing the Products of any third party's
----- -------
intellectual property or intellectual property rights, or (ii) any
- ------------
negligence, willful misconduct, breach of contract or violations of
law by DuPont or DuPont's employees, agents, subcontractors or assigns
in the performance of this Agreement. This indemnity will not apply
where the sole cause of the claim, liability, damage, loss or expense
is the willful misconduct or gross negligence of Contractor.
(c) The claims, liabilities, damages, losses or expenses covered
hereunder include, but are not limited to, settlements, judgments,
court costs, attorneys' fees and other litigation expenses, fines and
penalties arising out of actual or alleged (1) injury to or death of
any person, including employees of Contractor or DuPont, or (2) loss
of or damage to property, including the Dunbar Facility and other
property of Contractor or DuPont.
(d) Claims, liabilities, damages, losses or expenses arising
from violations of environmental laws are specified in the Sublease.
(e) 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 actin or
claim at its sole cost and expense.
21. PERFORMANCE OF SERVICES; ACCEPTANCE
-----------------------------------
Contractor will provide the Services hereunder in a professional
manner and shall meet the operating conditions set forth in Exhibit 1.
DuPont shall inspect all Products
12
upon receipt thereof at the shipping destination. Products not
rejected by written notification to Contractor within fourteen (14)
working days of receipt shall be deemed to have been accepted. DuPont
shall not be obligated to pay the Service Fee or the Raw Material Fee
for any properly rejected Products.
THIS IS AN AGREEMENT FOR SERVICES. NEITHER PARTY MAKES ANY
EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE.
22. MACHINERY AND EQUIPMENT
-----------------------
Contractor purchased certain Machinery and Equipment situated at
the Dunbar Facility from DuPont pursuant to the terms of the Purchase
and Sale Agreement. Contractor agrees to maintain the Machinery and
Equipment which is used in connection with the Services in good
condition and repair.
23. DEFAULT IN PERFORMING SERVICES
------------------------------
In the event that either Party hereto shall default in the
performance of any obligation specified herein, the nondefaulting
Party shall notify the other Party hereof in writing and, if such
default is not remedied within thirty (30) days from date of such
notice, or if the other Party is diligently attempting to cure such
default but is unable to cure such default within sixty (60) days from
the date of such notice, then the nondefaulting Party shall have the
right to terminate this Agreement immediately upon the expiration of
such cure period. If, in the non-defaulting Party's sole reasonable
opinion, such default may result in substantial property damage,
injury, accident or death, that Party may, at any time, immediately
suspend this Agreement without penalty or damages.
If Contractor should be adjudged bankrupt or make a general
assignment for the benefit of its creditors, or if a receiver should
be appointed on account of its insolvency, or should it fail to make
payment for materials or labor in the ordinary course of business, or
disregard laws, ordinances or other governmental regulations, DuPont
may, immediately on written notice to Contractor, terminate this
Agreement; provided, however, that if a petition under any state or
federal bankruptcy act, receivership statute or the like is filed by
any third party, or an application for a receiver of Contractor is
made by third party, DuPont may terminate this Agreement only if such
petition or application is not resolved favorably to Contractor within
sixty (60) days of DuPont's written notice to Contractor.
Termination under this Article, or any Articles hereof, shall not
relieve or release either party from any rights, liabilities, or
obligations which may have arisen prior to the date of such
termination.
13
Contractor acknowledges and agrees that the Services provided
hereunder are [
]* In the event Contractor materially defaults under the terms of
this Agreement and such default is not cured within a reasonable
period of time, [
]*
Except with respect to each party's indemnification obligations
set forth in Section 20 herein and except in the event of an
intentional breach of or default under this Agreement or gross
negligence, neither party shall be liable to the other party for any
incidental or consequential damages, including, without limitation,
lost profits incurred by the other party or any third party, arising
out of a breach of or default under this Agreement, even if such party
has been advised of the possibility of such damages.
24. FORCE MAJEURE
-------------
No liability shall result to either Party from delay in
performance or from nonperformance caused by circumstances beyond the
control of the Party who has delayed performance or not performed.
The nonperforming Party shall be diligent in attempting to remove any
such cause and shall promptly notify the other Party of its extent and
probable duration.
If Contractor, due to circumstances beyond its control, is unable
to supply the total demands for the Product or Services required by
the Agreement, then Contractor shall preferentially allocate its
resources so as to use its best efforts to provide the Services.
If the nonperforming Party who has delayed performance or not
performed on account of circumstances beyond its control is unable to
remove the causes within thirty (30) days or if the nonperforming
Party is diligently attempting to cure such default but is unable to
cure such default within ninety (90) days, the other Party shall have
the right to terminate, without penalty, this entire Agreement or any
portion of it.
25. INDEPENDENT CONTRACTOR
----------------------
It is understood that employees, methods, facilities and
equipment of Contractor shall at all times be under its exclusive
direction and control. Contractor's relationship to DuPont shall be
that of an independent contractor. Nothing in the Agreement shall be
construed to constitute Contractor, or any of its employees, as an
agent, associate, joint venturer or partner of DuPont.
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
14
26. COMPLIANCE WITH LAWS
--------------------
Contractor agrees that in the performance of the processing
operations and other Services provided hereunder, including but not
limited to, the disposal of any waste resulting from said operations,
it will comply with all applicable laws, rules and regulations of
governmental authority in connection therewith.
27. MINORITY VENDORS
----------------
DuPont encourages Contractor to provide maximum practicable
opportunities to include Minority subcontractors and vendors among its
sources of supply in the performance of this Agreement. Minorities
include but are not limited to Black Americans, Asian Pacific
Americans and Asian-Indian Americans. A Minority business is at least
51% owned by a Minority or group of Minorities.
28. QUALITY
-------
In the event the quality of the Services is not reasonably
satisfactory to DuPont (including without limitation, Services which
do not result an Assembly which has a relatively symmetrical and
uniform reduction in circumference of the driver tube, with the bottom
end of the Assembly remaining intact), DuPont and Contractor shall
mutually investigate the problem and implement a plan to improve
Services.
29. ISO CERTIFICATION
-----------------
Contractor shall provide all necessary assistance to DuPont in
connection with procedures and practices at the Dunbar Facility in
order to maintain the ISO 9002 certification for DuPont's industrial
diamonds business. In the event Contractor is required to perform
services (that would not otherwise be performed by Contractor in
connection with its own business or in connection with the Services
provided under this Agreement) in order to maintain the ISO 9002
certification for DuPont's industrial diamonds business, then DuPont
and Contractor shall negotiate a mutually agreeable fee schedule based
on cost plus a fixed fee for such services.
30. NONDISCRIMINATION
-----------------
Contractor warrants that it complies with all applicable laws,
rules, orders and regulations of governmental authority covering the
production, sale and delivery of the goods or services specified
herein, including, but not limited to, the Equal Opportunity Clause
prescribed in 41 CFR 60-1.4; the Affirmative
15
Action Clause prescribed in 41 CFR 60-250.4, regarding disabled
veterans and veterans of the Vietnam Era; the Affirmative Action
Clause for Handicapped Workers prescribed in 41 CFR 60-741.4; 48 CFR
Chapter 1 Subpart 19.7 regarding Small Business and Small
Disadvantaged Business Concerns; 48 CFR Chapter 1 Subpart 20.3
regarding Utilization of Labor Surplus Area Concerns; Executive Order
12138 and regulations thereunder regarding subcontracts to women-owned
business concerns; Affirmative Action Compliance Program (41 CFR 60-
1.40); annually file SF-100 Employer Information Report (41 CFR 60-
1.7); 41 CFR 60-1.8 prohibiting segregated facilities; and the Fair
Labor Standards Act of 1938, as amended.
31. CONTRACT ADMINISTRATOR
----------------------
The Contract Administrator will represent DuPont in the
administrative phases of the work to be performed under this
Agreement. He or she will maintain an interface between the
Contractor and DuPont and will keep DuPont's Sourcing Function or any
successor function informed at all times as to the adequacy of the
Contractor's performance and progress.
In the performance of this assignment, the Contract Administrator
will have no legal right to authorize changes of any kind that are
outside the scope and compensation of this Agreement, nor shall his
actions be construed as giving implied approval of any such change.
Except as otherwise specifically provided herein, such changes shall
be effected only by a properly executed modification to this
Agreement.
32. NOTICES
-------
All notices required under this Agreement shall be in writing and
shall be effective if delivered to the Party entitled to receive the
same by hand or if deposited in the United States Mail (First Class)
addressed to such Party at the address set forth below.
All notices required or contemplated under this Agreement shall
be addressed as follows:
a. Proposed price changes, correspondence or notices involving
the contractual relationship and tax election statements
should be sent to:
E. I. du Pont de Nemours and Company
Specialty Chemicals
Brandywine Building
B-12272
1007 Market Street
Wilmington, DE 19898
Attn: Laura Prechtl
with a copy to:
16
E. I. du Pont de Nemours and Company
Repauno Plant
Repauno Drive
P.O. Box 68
Gibbstown, N.J. 08027
Attn: Industrial Diamonds
b. Invoices, Insurance Certificates, Accountability Reports,
Safety Reports, and routine performance summaries are to be
sent to:
E. I. du Pont de Nemours and Company
Accounts Payable
P.O. Box 631
Old Hickory, TN 37138-0631
with a copy to:
E. I. du Pont de Nemours and Company
Repauno Plant
Repauno Drive
P. O. Box 68
Gibbstown, N.J. 08027
Attn: Industrial Diamonds
17
c. All freight bills for DuPont's account shall be by third
party billing and forwarded to:
FMIS
E. I. du Pont de Nemours and Company
P. O. Box 8964
Wilmington, Delaware 19899
DuPont correspondence, information, documents, notices or
payments to Contractor shall be sent personally or by first-class mail
to:
Dynamic Materials Corporation
551 Aspen Ridge Drive
Lafayette, Colorado 80026
Attention: President
Either Party may change its address for notice hereunder upon no
less than thirty (30) days prior written notice thereof to the other
Party.
33. AUTHORITY
---------
The Parties hereby represent that they have full power and
authority to enter into and perform this Agreement and the Parties do
not know of any contract, agreements, promises or undertakings which
would prevent the full execution and performance of this Agreement.
34. ASSIGNMENT AND SUBCONTRACTING
-----------------------------
The parties shall not, without the prior written consent of the
other party, assign or transfer this Agreement, in whole or in part,
nor shall either party contract any work under this Agreement to any
subcontractor (other than equipment rental necessary to provide the
Services), except with the other party's prior written consent
thereof.
If, during the term of this Agreement, Contractor shall dissolve,
transfer, sell, assign, mortgage, encumber, pledge, or otherwise
dispose of (a) substantially all of its assets used to provide the
Services herein, (b) over thirty percent (30%) of its ownership or
controlling interest (whether in the form of stock or otherwise), or
if Contractor shall consolidate with or merge into another corporation
or permit one or more other corporations to consolidate or merge into
it, or if Contractor contemplates or reasonably expects the occurrence
of any event referred to in this Article, then Contractor shall give
DuPont notice of such occurrence as soon as is legally permissible.
If such occurrence or proposed occurrence is unacceptable to DuPont,
DuPont may terminate this Agreement upon written notice to Contractor.
Notwithstanding anything to the contrary contained herein, either
party may freely
18
assign this Agreement to the purchaser of all or substantially all of
the business to which this Agreement relates.
35. RESERVATION OF RIGHTS
---------------------
DuPont's waiver of any of its remedies afforded hereunder or by
law is without prejudice and shall not operate to waive any other
remedies which DuPont shall have available to it, nor shall such
waiver operate to waive DuPont's rights to any remedies due to a
future breach, whether of a like or different character.
36. HEADINGS
--------
All headings of the Articles of this Agreement are inserted for
convenience only and shall not affect any construction or
interpretations of this Agreement.
37. APPLICABLE LAW
--------------
This Agreement will be governed by and construed in accordance
with the laws of the State of Delaware without giving effect to
principles of conflict of law, and the courts within Delaware will be
the only courts of competent jurisdiction. This Agreement will not be
governed by the U. N. Convention on Contracts for the International
Sale of Goods.
38. SEVERABILITY
------------
In the event that any Article of this Agreement shall be found to
be void or unenforceable, such findings shall not be construed to
render any other Article of this Agreement either void or
unenforceable, and all other Articles shall remain in full force and
effect unless the Article(s) which is/are invalid or unenforceable
shall substantially affect the rights or obligations granted to or
undertaken by either Party.
39. ENTIRETY
--------
This Agreement, the Purchase and Sale Agreement and the Sublease,
together with the attachments and Exhibits specifically referenced and
attached hereto, embodies the entire understanding between DuPont and
Contractor and, except as otherwise specifically stated herein, there
are no contracts, understandings, conditions, or representations, oral
or written, with reference to the subject matter hereof which are not
merged herein.
19
Except as otherwise specifically stated, no modification hereto shall
be of any force or effect unless (1) reduced to writing and signed by
both Parties hereto, and (2) expressly referred to as being
modifications of this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives.
E. I. DU PONT DE NEMOURS DYNAMIC MATERIALS CORPORATION
AND COMPANY
BY /s/ R. A. Gregg BY /s/ Paul Lange
---------------------------- ---------------------------------
Print Name R. A. Gregg Print Name: Paul Lange
--------------------- ------------------------
TITLE Dir - Global Services TITLE Pres/CEO
-------------------------- ------------------------------
Date 7/19/96 Date 7/22/96
--------------------------- -------------------------------
20
EXHIBIT 1
---------
OPERATING INSTRUCTIONS
----------------------
No changes shall be made to the attached procedures without the
express written consent of DuPont and Contractor.
21
EXHIBIT 2
---------
COMPENSATION
------------
DuPont shall pay Contractor the following fees for Services provided
for each Assembly:
(a) a service fee for Services provided on each Assembly (the
"Service Fee") as follows:
Assemblies/Month Service Fee per Assembly
---------------- ------------------------
[
]*
The Service Fee shall be adjusted on April 1 of each year in
accordance with [
]*
(b) a raw material fee in the amount of Contractor's reasonable
cost of the Explosive and other raw materials directly related to
the Services (as set forth in Exhibit 1) provided on each
Assembly (the "Raw Material Fee").
provided, however, that DuPont shall not be required to pay Contractor
for Services which result in an Assembly where the bottom end of the
Assembly does not remain intact ("blown shot").
In 1996, DuPont shall take or pay Services for [
]*. In 1997 and thereafter, DuPont shall take or pay
Services for [ ]*
In the event DuPont is required to pay a penalty to Contractor
pursuant to Paragraph 5(d) of this Agreement, DuPont shall not be
required to pay Contractor twice for failure to take such Services.
As such, if failure to take Services is subject to fees under both
Paragraph 5(d) and this Exhibit, only one such fee shall be paid to
Contractor, in order that duplication of fees be avoided.
[
]*
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
22
[
]*
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.
23
EXHIBIT 3
---------
SAMPLE INVOICE
--------------
INVOICE
Remit to:
Dynamic Materials Corporation Invoice Number: __________
551 Aspen Ridge Drive
Lafayette, Colorado 80026 Invoice Date: __________
Attention: President
Telephone: (303) 665-5700
Reference: Tolling/Services Agreement for Industrial Diamonds
Purchase Order Number: LMD-xxxxxxxxx
For Services performed during calendar month of August, 1996 as
follows:
[
]*
______________________________________________________________________
Description of Development Activities (if any):
______________________________________________________________________
* Indicates portions of text
that have been omitted. A
separate filing of such
omitted text has been made
with the Commission as part of
Registrant's application for
confidential treatment.