STOCK AGREEMENT
THIS STOCK AGREEMENT (this "AGREEMENT") is made this 18th day of March,
1998 by and between DYNAMIC MATERIALS CORPORATION, a Delaware corporation
("PURCHASER"), having a principal place of business at 551 Aspen Ridge Drive,
Lafayette, Colorado 80026 and SPIN FORGE, LLC, a California limited liability
company ("SELLER"), having a principal place of business at 1700 East Grand
Avenue, El Segundo, California 90245.
RECITALS
A. Purchaser, Seller and Joseph Allwein ("ALLWEIN") have entered into a
certain Asset Purchase Agreement (the "PURCHASE AGREEMENT") dated as of an even
date herewith whereby Purchaser is purchasing certain assets owned by Seller and
used in the conduct of Seller's metal fabrication business. Capitalized terms
not otherwise defined herein shall have the meanings ascribed to such terms in
the Purchase Agreement.
B. As part of the consideration given for the assets purchased by
Purchaser under the Purchase Agreement, Purchaser is obligated to deliver 50,000
shares of Purchaser Common Stock, which number of shares is subject to
adjustment in accordance with the procedures set forth in the Purchase Agreement
(the "PURCHASE STOCK").
C. Purchaser desires to issue the Purchase Stock upon the terms and
conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and conditions set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties to this Agreement hereby agree as follows:
1. VESTING OF PURCHASE STOCK. A certain portion of the Purchase Stock
shall be subject to the option set forth in this Section 1 ("PURCHASE OPTION").
In the event Allwein shall cease to be employed by Purchaser (including a parent
or subsidiary of Purchaser) at any time prior to the third anniversary of
Allwein's employment (the Closing Date being considered the first day of
Allwein's employment for purposes of this Agreement (the "COMMENCEMENT DATE"))
for any reason, or no reason with or without cause, the Purchaser shall have the
right, at any time within ninety (90) days after the date Allwein ceases to be
so employed (the "TERMINATION DATE"), to exercise the Purchase Option, which
consists of the right to purchase from the Seller or his personal
representative, as the case may be, at the closing sales price of the Company's
Stock as reported on the Nasdaq National Market on the Termination Date (the
"OPTION PRICE"), up to but not exceeding the number of shares of the Purchase
Stock which have not vested under the provisions of Section 2 below, upon the
terms hereinafter set forth.
2. VESTING SCHEDULE. Seller's right to receive the Purchase Stock shall
vest in accordance with the following schedule:
PORTION OF PURCHASE STOCK
IF TERMINATION DATE IS SUBJECT TO THE PURCHASE OPTION
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After the Commencement Date and before the 75%
first anniversary of the Commencement Date
After the first anniversary of the 50%
Commencement Date and before the second
anniversary of the Commencement Date
After the second anniversary of the 25%
Commencement Date and before the third
anniversary of the Commencement Date
After third anniversary after the Commencement 0%
Date
3. NO EMPLOYMENT AGREEMENT. Nothing in this Agreement shall affect in any
manner whatsoever the right or power of Purchaser to terminate Allwein's
employment for any reason, or for no reason, with or without cause.
4. MERGERS; ADJUSTMENTS; ETC. If, from time to time during the period
prior to the date which is three years after the Closing Date:
(a) there is any stock dividend or liquidating dividend of cash
and/or property, stock split, or other change in the character or amount
of any of the outstanding securities of Purchaser; or
(b) there is any consolidation, merger or sale of all, or
substantially all, of the assets of Purchaser;
then, in such event, any and all new, substituted or additional securities or
other property to which Seller is entitled by reason of its ownership of the
Purchase Stock shall be immediately subject to this Agreement and shall be
included in the term "Purchase Stock" for all purposes of this Agreement.
5. RESTRICTIONS UNDER SECURITIES LAWS. Seller acknowledges that it is
aware that the Purchase Stock to be issued to it by Purchaser pursuant to the
Purchase Agreement and this Agreement has not been registered under the
Securities Act of 1933 (the "SECURITIES ACT") and that the Purchase Stock is
deemed to constitute "restricted securities" under Rule 144 promulgated under
the Securities Act. In this regard, Seller represents and warrants to Purchaser
that Seller will hold the Purchase Stock for Seller's own account and has no
present intention of distributing or selling
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the Purchase Stock except as permitted under the Securities Act. Seller further
represents and warrants that Seller has either (i) preexisting personal or
business relationships with Purchaser or any of its officers, directors or
controlling persons, or (ii) the capacity to protect its own interests in
connection with the receipt of the Purchase Stock by virtue of the business or
financial expertise of any professional advisors to the Seller who are
unaffiliated with and who are not compensated by the Purchaser or any of its
affiliates, directly or indirectly. Seller acknowledges that the exemption from
registration of the Purchase Stock under the Securities Act provided under Rule
144 of the Securities Act will not be available for at least two years from the
Closing Date unless at least one year from the Closing Date (i) a public trading
market then exists for the Common Stock of Purchaser, (ii) adequate information
concerning Purchaser is then available to the public, and (iii) Seller complies
with the other terms and conditions of Rule 144. Seller further acknowledges
that any sale of Purchase Stock may be made only in limited amounts in
accordance with the terms and conditions of Rule 144.
6. RESTRICTIVE LEGENDS. All certificates representing shares of Purchase
Stock subject to the terms of this Agreement shall have endorsed thereon the
following legends:
(a) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS SET FORTH IN A STOCK AGREEMENT BETWEEN THE CORPORATION AND
THE REGISTERED HOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF
THIS CORPORATION. ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY SHARES SUBJECT TO
SUCH RESTRICTIONS IS VOID WITHOUT PRIOR EXPRESS WRITTEN CONSENT OF THE ISSUER OF
THESE SHARES.
(b) THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1993 (THE "SECURITIES ACT"). THEY MAY NOT
BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED UNLESS THE SECURITIES ARE
REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION THEREFROM IS AVAILABLE.
(c) Any legend required to be placed thereon by appropriate Blue Sky
officials.
7. TRANSFER RESTRICTIONS. Seller shall not sell or transfer any shares of
the Purchase Stock that have not vested in accordance with the schedule set
forth in Section 2 of this Agreement. Without in any way limiting the foregoing,
Seller further agrees that it shall in no event make any transfer or disposition
of all or any portion of the Purchase Stock unless and until:
(a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with said registration statement; or
(b) Seller shall have (i) notified Purchaser of the proposed
transfer or disposition by providing Purchaser with a detailed written statement
of the circumstances surrounding the proposed transfer or disposition, and (ii)
furnished Purchaser with an opinion of Seller's counsel to
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the effect that such transfer or disposition will not require registration of
such shares under the Securities Act, which opinion shall have been concurred in
by counsel for Purchaser, such concurrence not to be unreasonably withheld.
8. VOID TRANSFERS. Purchaser shall not be required (i) to transfer on its
books any shares of Purchase Stock which shall be been sold or transferred in
violation of any of the provisions set forth in this Agreement, or (ii) to treat
as owner of such shares or to accord the right to vote as such owner or to pay
dividends to any transferee to whom such shares shall have been so transferred.
9. NOTICE. Except as otherwise provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be delivered in person, with receipt acknowledged, or sent by confirmed
facsimile or by United States mail as the case may be, registered or certified,
return receipt requested, postage prepaid and addressed as follows:
If to Purchaser: Dynamic Materials Corporation
551 Aspen Ridge Drive
Lafayette, Colorado 80026
Attn: Richard Santa, Chief Financial Officer
Telephone: 303/604-3938
Fax: 303/604-1897
With a copy to: Davis, Graham & Stubbs LLP
Suite 4700
370 Seventeenth Street
Denver, Colorado 80202
Attn: David Bartlett, Esq.
Telephone: 303/892-9400
Fax: 303/892-7400
If to Seller: Spin Forge, LLC
1700 East Grand Avenue
El Segundo, California 90245
Attn: Joseph Allwein
Telephone: 310-640-8099
Fax: 310-640-8599
With a copy to: Wolf, Rifkin & Shapiro, LLP
11400 West Olympic Boulevard
Los Angeles, California 90064
Attn: Richard Grant, Esq.
Telephone: 310-478-4100
Fax: 310-479-1422
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Or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, three (3) business days after the same shall have
been deposited in the United States mail, or when received by confirmed
facsimile.
10. ENTIRE AGREEMENT. This Agreement constitutes and contains the entire
agreement of the parties and supersedes any and all prior and contemporaneous
agreements, negotiations, correspondence, understandings and communications
between the parties, whether written or oral, respecting the subject matter
hereof.
11. SEVERABILITY. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted, if possible, rather than
voided in order to achieve the intent of the parties to the extent possible. In
any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent possible.
12. GOVERNING LAW AND VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without regard
to its choice-of or conflicts-of-laws, rules and venue for any action to enforce
or interpret this Agreement shall be in a court of competent jurisdiction
located in the State of Colorado and each of the parties consents to the
jurisdiction of such court in any such action or proceeding and waives any
objection to venue laid therein.
13. INUREMENT. This Agreement shall be binding upon and shall inure to the
benefit of the successors and assigns of Purchaser and Seller.
14. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so delivered shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.
15. HEADINGS. The section headings contained herein are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
PURCHASER:
DYNAMIC MATERIALS CORPORATION
By: /s/Richard Santa
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Title: Vice President & CFO
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SELLER:
SPIN FORGE, LLC
By: /s/Joe Allwein
-----------------------------------------
Title: President
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