EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
Dated as of June 28, 2001
between
DYNAMIC MATERIALS CORPORATION
and
NOBEL EXPLOSIFS FRANCE
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.........................................................4
Section 1.1 Definitions..................................................4
ARTICLE II THE ACQUISITION....................................................8
Section 2.1 Purchase and Sale of Shares..................................8
Section 2.2 Consideration for the Shares.................................8
Section 2.3 Closing Date Deliveries and Payments.........................8
ARTICLE III THE CLOSING.......................................................8
Section 3.1 Date of Closing..............................................8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER...........................9
Section 4.1 Corporate Organization......................................9
Section 4.2 Authority; Absence of Conflicts.............................9
Section 4.3 Subsidiaries...............................................10
Section 4.4 Consents and Approvals.....................................10
Section 4.5 Outstanding Capital Stock; Title to Shares.................10
Section 4.6 Financial Statements.......................................11
Section 4.7 Undisclosed Liabilities....................................11
Section 4.8 Absence of Changes.........................................11
Section 4.9 Title to Assets............................................13
Section 4.10 Computer Software..........................................13
Section 4.11 Intellectual Property Rights...............................13
Section 4.12 Material Contracts.........................................14
Section 4.13 Permits and Licenses.......................................15
Section 4.14 Legal Proceedings..........................................15
Section 4.15 Employee Benefit Plans.....................................15
Section 4.16 Labor Matters..............................................16
Section 4.17 Environmental Matters......................................16
Section 4.18 Tax Matters................................................17
Section 4.19 Operating Insurance........................................18
Section 4.20 Regulatory Filings.........................................19
Section 4.21 Books and Records..........................................19
Section 4.22 Compliance with Laws.......................................19
Section 4.23 Certain Business Practices, Potential
Conflicts of Interest....................................19
Section 4.24 Brokers' or Finders' Fees..................................20
Section 4.25 Disclosure.................................................20
Section 4.26 Inventory20
Section 4.27 Receivables................................................20
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Section 4.28 Employment Agreements......................................20
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER............................21
Section 5.1 Organization and Corporate Power...........................21
Section 5.2 Authority; Absence of Conflicts............................21
Section 5.3 No Investigation...........................................21
Section 5.4 Brokers' or Finders' Fees..................................22
ARTICLE VI COVENANTS.........................................................22
Section 6.1 Balance Sheet..............................................22
Section 6.2 Preservation of Business...................................22
Section 6.3 Negative Covenants.........................................22
Section 6.4 Governmental and Third Party Consents......................22
Section 6.5 Notice of Developments.....................................23
Section 6.6 Notice of Breach...........................................23
Section 6.8 Reasonable Efforts.........................................23
Section 6.9 Delivery of Certificates...................................23
ARTICLE VII TAX MATTERS......................................................23
Section 7.1 Indemnity23
Section 7.2 Returns and Payments.......................................24
Section 7.3 Refunds 25
Section 7.4 Contests 25
Section 7.5 Time of Payment............................................25
Section 7.6 Cooperation and Exchange of Information....................26
Section 7.7 Conveyance Taxes...........................................26
Section 7.8 Miscellaneous..............................................26
ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER...............27
Section 8.1 Representations, Warranties and Covenants..................27
Section 8.2 Closing Certificate........................................28
Section 8.3 No Adverse Proceedings.....................................28
Section 8.4 Buyer Consents.............................................28
ARTICLE IX CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER..................28
Section 9.1 Representations, Warranties and Covenants..................28
Section 9.2 Closing Certificate........................................28
Section 9.3 Fairness Opinion...........................................28
Section 9.4 No Adverse Proceedings.....................................29
Section 9.5 No Material Adverse Effect.................................29
Section 9.6 Company Consents...........................................29
Section 9.7 Final Monthly Balance Sheet................................29
Section 9.8 Environmental Matters......................................29
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Section 9.9 Loan.......................................................26
Section 9.10 Environmental Permits and Releases.........................29
ARTICLE X TERMINATION........................................................29
Section 10.1 Termination...............................................29
Section 10.2 Liabilities Upon Termination..............................30
ARTICLE XI SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS; INDEMNIFICATION.......................30
Section 11.1 Survival30
Section 11.2 Obligation of Seller to Indemnify.........................31
Section 11.3 Obligation of Buyer to Indemnify..........................31
Section 11.4 Notice and Opportunity to Defend
Against Third Party Claims..............................31
Section 11.5 Net Indemnity.............................................32
Section 11.6 Limits on Indemnification.................................32
Section 11.7 No Consequential Damages..................................32
ARTICLE XII MISCELLANEOUS....................................................33
Section 12.1 Expenses..................................................33
Section 12.2 Notices...................................................33
Section 12.3 Successors and Assigns....................................34
Section 12.4 Entire Agreement and Modification.........................34
Section 12.5 Certain Interpretive Matters..............................34
Section 12.6 GOVERNING LAW.............................................34
Section 12.7 Forum Selection and Submission to Jurisdiction............34
Section 12.8 Waiver of Jury Trial......................................35
Section 12.9 Counterparts..............................................35
Section 12.10 Further Assurances........................................35
Section 12.11 Severability..............................................35
Section 12.12 Public Statements.........................................35
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of the 28th day of June, 2001, by and between Dynamic Materials Corporation,
a Delaware corporation ("Buyer"), and Nobel Explosifs France, a company
organized under the laws of France ("Seller").
RECITALS:
WHEREAS, Seller is the legal and beneficial owner of 254,994 shares of
Nobelclad Europe S.A., a company organized under the laws of France (the
"Company") (the "Shares"), which Shares constitute all but 6 shares (as required
by French law) of the issued and outstanding shares of the Company's capital
stock;
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase,
the Shares;
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements set forth in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. For all purposes of this Agreement, the following
terms shall have the respective meanings set forth in this Section 1.1 (such
definitions to be equally applicable to both the singular and plural forms of
the terms herein defined):
"Action" means any legal, administrative, arbitration or other similar
proceeding, claim, action or governmental or regulatory investigation of any
nature.
"Affiliate" means, with respect to any Person, any other Person who
directly or indirectly controls, is controlled by or is under common control
with such Person. The term "control," for the purposes of this definition, means
the power to direct or cause the direction of the management or policies of the
controlled Person.
"Agreement" means this Stock Purchase Agreement between Buyer and Seller,
as such may hereafter be amended from time to time.
"Applicable Law" means any federal, state or local statute, law, ordinance,
rule, regulation, order, writ, injunction, judgment or decree applicable to a
Person or any such Person's subsidiaries, properties, assets, officers,
directors, employees or agents (whether of France, any province or other
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Governmental Authority thereof, or of the United States or any state or other
Governmental Authority thereof).
"Asserted Liability" has the meaning set forth in Section 11.4(a).
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banks in New York, New York are required to be closed for regular banking
business.
"Buyer" has the meaning set forth in the first paragraph of this Agreement.
"Claims Notice" has the meaning set forth in Section 11.4(a).
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" means the date of the Closing.
"Code" means the United States Internal Revenue Code of 1986, as amended
from time to time, or any successor statute.
"Company" has the meaning set forth in the Recitals of this Agreement.
"Consolidated Return" has the meaning set forth in Section 7.2(a).
"Contest" has the meaning set forth in Section 7.4(a).
"Encumbrance" means any lien, pledge, security interest, claim, easement,
limitation, restriction or encumbrance of any kind or nature whatsoever, or any
agreement to give any of the foregoing; provided that this definition of
"Encumbrance" shall not include: (i) liens for current Taxes and assessments not
yet due and payable, including, without limitation, liens for nondelinquent ad
valorem Taxes and nondelinquent statutory liens arising other than by reason of
any default on the part of Seller, the Company or the Subsidiary, and (ii) such
liens, minor imperfections of title or easements on real property, leasehold
estates or personalty as do not in any material respect detract from the value
thereof and do not in any material respect interfere with the present use of the
property subject thereto.
"Environmental Claim" has the meaning set forth in Section 4.17.
"Environmental Laws" has the meaning set forth in Section 4.17.
"Environmental Permits" has the meaning set forth in Section 4.17.
"Federal Funds Rate" shall mean for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that if such day is not a Business Day, the
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Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day.
"French GAAP" has the meaning set forth in Section 4.6(a).
"GAAP" means generally accepted accounting principles as used in the United
States of America as in effect at the time any applicable financial statements
were prepared or any act requiring the application of GAAP was performed.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Hazardous Material" has the meaning set forth in Section 4.18 means any
(i) hazardous substance, toxic substance, hazardous waste or pollutant (as such
terms are defined by or within the meaning of any Environmental Law), (ii)
material or substance which is regulated or controlled as a hazardous substance,
toxic substance, pollutant or other regulated or controlled material, substance
or matter pursuant to any Environmental Law, (iii) petroleum, crude oil or
fraction thereof, (iv) asbestos-containing material, (v) polychlorinated
biphenyls, (vi) lead-based paint or (vii) radioactive material.
"Indemnifying Party" has the meaning set forth in Section 11.4(a).
"Indemnitee" has the meaning set forth in Section 11.4(a).
"Intellectual Property Right" has the meaning set forth in Section 4.11.
"IRS" means the United States Internal Revenue Service.
"Knowledge of Seller" means the actual knowledge of the individuals listed
on Schedule 1.1.
"Legal Proceedings" has the meaning set forth in Section 4.14.
"Loss" means any and all claims, losses, liabilities, damages, costs and
expenses (including attorney's, accountant's, consultant's and expert's fees and
expenses) that are imposed upon or otherwise incurred or suffered by the
relevant party.
"Material Adverse Effect" means a material adverse effect on the business,
financial condition or results of operations of the Company and its Subsidiary,
taken as a whole.
"Material Contract" has the meaning set forth in Section 4.12.
"Permits" has the meaning set forth in Section 4.13.
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"Person" means any individual, corporation, company, partnership (limited
or general), joint venture, limited liability company, limited liability
partnership, association, business organization, trust or other entity.
"Purchase Price" has the meaning set forth in Section 2.2.
"Recorded Intellectual Property" has the meaning set forth in Section
4.11(c).
"Records" means all records and original documents which pertain to or are
utilized primarily by the Company or the Subsidiary to administer, reflect,
monitor, evidence or record information relating to the business or conduct of
the Company or such Subsidiary and all such records and original documents,
including all such records maintained on electronic or magnetic media, or in any
electronic database system of the Company or the Subsidiary or necessary to
comply with any Applicable Law with respect to the business of the Company or
the Subsidiary.
"Release" has the meaning set forth in Section 4.17.
"Seller" has the meaning set forth in the first paragraph of this
Agreement.
"Shares" has the meaning set forth in the Recitals of this Agreement.
"Subsidiary" means any corporation, association or other entity of which
more than fifty percent (50%) of the total voting power of shares of stock or
other equity interests entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is, at the time as of which any determination is made, owned or controlled,
directly or indirectly, by the Company.
"Tax" means all taxes, charges, fees, levies and assessments based upon
gross or net income, gross receipts, franchises, premiums, profits, sales, use,
value added, transfer, employment or payroll, including, without limitation, any
ad valorem, environmental, excise, license, occupation, property, severance,
stamp, withholding, or windfall profit tax, any custom duty or other tax,
together with any interest credit or charge, penalty, addition to tax or
additional amount imposed by or payable to any Taxing Authority.
"Tax Return" means with respect to any corporation or group of
corporations, all reports, estimates, extension requests, information statements
and returns relating to, or required to be filed with any Governmental Authority
in connection with, any payment of any Tax.
"Taxable Period" means, with respect to any Tax of any corporation, or any
group of corporations filing a consolidated, combined or unitary return for
federal, state, local or foreign Tax purposes, the period for which the Tax is
computed.
"Taxing Authority" means any domestic or foreign governmental authority
responsible for the administration of any Tax.
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"Termination Date" has the meaning set forth in Section 10.1(b).
"Unaudited Financial Statements" has the meaning set forth in Section
4.6(a).
"Wire Transfer" means a payment in immediately available funds by wire
transfer in lawful money of the United States of America to such bank account or
accounts as shall have been designated by notice of Seller to Buyer.
ARTICLE II
THE ACQUISITION
Section 2.1 Purchase and Sale of Shares. On the terms and subject to the
conditions of this Agreement, at the Closing, Seller will sell and deliver to
Buyer, and Buyer will purchase and acquire from Seller, all right, title and
interest in and to the Shares, free and clear of all Encumbrances.
Section 2.2 Consideration for the Shares. The aggregate consideration (the
"Purchase Price") payable by Buyer for the Shares shall be $4,000,000.00.
Section 2.3 Closing Date Deliveries and Payments. At the Closing, the
Seller shall cause all action to be taken to transfer the Shares to the
ownership of Buyer (including the notation of a transfer by the Company, its
agents, and all necessary or advisable government entities). At the Closing,
Buyer shall pay to the Seller the Purchase Price.
ARTICLE III
THE CLOSING
Section 3.1 Date of Closing. The consummation of the purchase and sale of
the Shares contemplated hereby (the "Closing") shall take place on July 2, 2001
(or such other date as the parties may mutually agree upon), at the offices of
Seller in Boulder, Colorado at 9:00 a.m. local time. The date on which the
Closing is effected is referred to in this Agreement as the "Closing Date." At
the Closing, the parties shall execute and deliver the documents referred to in
Articles VIII and IX.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and warranties to Buyer, each of
which is true and correct as of the date hereof and shall be true and correct as
of the Closing Date as a condition to the Closing and shall be unaffected by any
investigation heretofore or hereafter made by Buyer.
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Section 4.1 Corporate Organization. (a) The Company is a company duly
organized, validly existing and in good standing as a societe anonyme under the
laws of France, and has all requisite corporate power and authority to own,
lease and operate the properties and assets it now owns, leases or operates and
to carry on its business as presently conducted or proposed to be conducted
pursuant to existing plans. The Company is duly qualified or licensed to
transact business in each of the jurisdictions where such qualification or
licensing is required by reason of the nature or location of the properties and
assets owned, leased or operated by it or the business conducted by it, except
where the lack of such qualification or license would not have a Material
Adverse Effect. Seller has provided to Buyer complete and correct copies of (a)
the organizational documents of the Company certified by the competent authority
of the jurisdiction of incorporation within 30 days of the date hereof and (b)
the Bylaws of the Company, certified as true and correct by the Secretary of the
Company, each as amended to the date hereof.
(b) Seller is a company duly organized, validly existing and in good
standing under the laws of France.
Section 4.2 Authority; Absence of Conflicts. (a) Seller has full corporate
power and authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly approved by the Board of Directors of Seller, and no other corporate
action or proceedings on the part of Seller are necessary to authorize and
approve the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller and, assuming this Agreement constitutes a
valid and binding obligation of Buyer, constitutes the valid and binding
obligation of Seller, enforceable against it in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws of general applicability relating to or affecting
creditors' rights and by general equitable principles (whether applied in a
court of equity or a court of law).
(b) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, nor compliance with the
terms hereof, will: (i) conflict with or violate any provision of the governing
documents of Seller; (ii) violate in any respect any Applicable Law with respect
to Seller, the Company or the Subsidiary; (iii) violate, conflict with or result
in a breach of or default (or constitute any event which with the lapse of time
or the giving of notice or both would constitute a breach or default) under any
of the terms, conditions or provisions of any Material Contract to which Seller,
the Company or the Subsidiary is a party or by which any of Seller's, the
Company's or the Subsidiary's property or assets may be bound; (iv) result in
the creation of any Encumbrance on the Shares or upon the assets or properties
of the Company or the Subsidiary; or (v) require Seller, the Company or the
Subsidiary to give notice to, or obtain an authorization, approval, order,
license, franchise, declaration or consent of, or make a filing with, any third
party, including, without limitation, any Governmental Authority, except as
would not have a Material Adverse Effect.
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Section 4.3 Subsidiaries. (a) The Company has no Subsidiaries other than
Nitro Metall (the "Subsidiary").
(b) All of the outstanding shares of capital stock of the Subsidiary are
owned beneficially and of record by the Company, free and clear of any
Encumbrances. The Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization, and has
corporate and other requisite power and authority to carry on its business as
now being conducted and to own, lease and operate all of its properties and
assets. The Subsidiary is duly licensed or qualified to do business and has all
required Permits in each jurisdiction in which the nature of the business
conducted by it or the character of the assets owned by it makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed would not, individually or in the aggregate, have a
Material Adverse Effect. Seller has provided to Buyer complete and correct
copies of the organizational documents of the Subsidiary.
(c) Other than the capital stock of the Subsidiary, the Company does not
own or have the right to acquire any shares of the capital stock of any
corporation or have any equity or partnership interest or limited liability
company interest in any other entity.
Section 4.4 Consents and Approvals. No consents or approvals of or filings
or registrations with any Governmental Authority or third party are necessary by
Seller or the Company in connection with (A) the execution and delivery by
Seller of this Agreement, and (B) the consummation by Seller of the transactions
contemplated thereby.
Section 4.5 Outstanding Capital Stock; Title to Shares. The authorized
capital stock of the Company consists of: 255,000 shares of which at the date
hereof 255,000 shares are issued and outstanding. No other classes of capital
stock of the Company are authorized or outstanding. All of the Shares are duly
authorized, validly issued, fully paid and nonassessable, and none of such
Shares has been issued in violation of any preemptive rights of any present or
former stockholder.
There is no outstanding right, subscription, warrant, call, preemptive
right, option or other agreement of any kind to purchase or otherwise to receive
from Seller or the Company any shares of capital stock of the Company or any
other security of the Company, and there is no outstanding security of any kind
convertible into or exchangeable for such capital stock or other security or any
agreement to issue any such security.
Section 4.6 Financial Statements. Seller has delivered to Buyer true and
complete copies of the unaudited balance sheets of the Company and its
Subsidiary at December 31, 2000 and March 31, 2001 and the related statements of
income, changes in stockholders' equity, and cash flow for the year and quarter
then ended (the "Unaudited Financial Statements"). Such Unaudited Financial
Statements have been prepared in accordance with French generally accepted
accounting principles consistently applied throughout the periods involved
("French GAAP"), and such Unaudited Financial Statements, fairly present the
financial position of the Company and its Subsidiary at the dates indicated and
such statements of income, changes in stockholders' equity and cash flow fairly
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present the results of operations, changes in stockholders' equity and cash flow
of the Company for the periods indicated. No financial statements of any Person
other than the Company and its Subsidiary are required by French GAAP to be
included in the Unaudited Financial Statements. The Unaudited Financial
Statements were compiled from and are in accordance with the books and records
of the Company and its Subsidiary, which are complete in all material respects.
Section 4.7 Undisclosed Liabilities. Since the date of the Unaudited
Financial Statements, no liabilities have been incurred by the Company or the
Subsidiary other than those that would not, individually or in the aggregate,
have a Material Adverse Effect.
Section 4.8 Absence of Changes. Since December 31, 2000, the Company has
been operated in all material respects in the ordinary course of business
consistent with past practice and there has not been any change, event,
development or state of facts with respect to the business or condition of the
Company, which, individually or together with other such changes, events,
developments, or states of facts, has had or would reasonably be expected to
have a Material Adverse Effect. In addition, without limiting the foregoing,
except in the ordinary course of business consistent with past practice or
except as otherwise contemplated by this Agreement, there has not occurred since
December 31, 2000:
(a) any amendment or change to the organizational documents of the Company
or Subsidiary;
(b) any declaration, setting aside, or payment of any dividend or other
distribution (whether in cash, stock or other property) in respect to the
capital stock of the Company, or any direct or indirect redemption, purchase or
other acquisition by the Company of any equity securities of the Company;
(c) any authorization, issuance, sale or other disposition by Seller or the
Company of any shares of capital stock or other securities of the Company or the
Subsidiary, or any option, warrant, right or other security relating to such
capital stock or such other security, or any modification or amendment of any
right of any holder of any outstanding shares of capital stock or other
securities of the Company or the Subsidiary (other than pursuant to existing
employee benefit plans in which the Company or the Subsidiary participates);
(d) (i) any increase (whether current or deferred) in the salary or bonus
of any director, officer, employee, agent, consultant or representative of the
Company or the Subsidiary, other than salary increases in the ordinary course of
business consistent with past practice, (ii) any payment of consideration of any
nature whatsoever (A) to any officer, director, stockholder or employee of the
Company or the Subsidiary other than salary, bonus or dividend equivalent salary
paid in the ordinary course of business consistent with past practice, or (B) to
any agent consultant or representative of the Company or the Subsidiary other
than in the ordinary course of business consistent with past practice, (iii) any
grant of any severance, continuation or termination pay or similar rights to any
director, officer, stockholder, employee, agent consultant or representative of
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the Company or the Subsidiary, or (iv) any adoption, entering into, amendment,
modification, or termination (partial or complete) of any employee benefit plan
or employment contract with respect to any officer, director, stockholder,
employee, agent; consultant or representative of the Company or the Subsidiary;
(e) any write-off or write-down of or any determination to write off or
write down any of the assets of the Company or the Subsidiary in an aggregate
amount exceeding $25,000;
(f) any sale, license or other disposition of, or incurrence of an
Encumbrance on any asset of the Company or the Subsidiary in an aggregate amount
exceeding $25,000;
(g) any entering into, material amendment, modification, termination
(partial or complete) or granting of a waiver, or failure to perform under (i)
any Material Contract or (ii) any material amendment, termination, waiver,
disposal, or lapse of, or failure to preserve, any material Permit or other form
of authorization held by the Company or the Subsidiary;
(h) any revaluation of any of the assets or properties of the Company or
the Subsidiary;
(i) any capital expenditures or commitments for additions to property,
plant or equipment of the Company or the Subsidiary constituting capital assets,
in an aggregate amount exceeding $50,000;
(j) any transaction by the Company or the Subsidiary with any officer,
director, stockholder, Affiliate or associate of the Company or the Subsidiary
or any business or entity in which any such individual has an interest;
(k) any loan or advance by the Company or the Subsidiary to any Person,
except for advances in the ordinary course of business consistent with past
practice to employees for business travel and other business expenses;
(l) any material change in the accounting methods or procedures of the
Company or the Subsidiary, except to the extent required by French GAAP or any
Governmental Authority;
(m) any work-stoppage, strike, labor difficulty, or union organizational
campaign (in process or, to Seller's knowledge after due inquiry, threatened) at
or affecting the Company or the Subsidiary;
(n) any payment, prepayment, discharge, or satisfaction by the Company or
the Subsidiary of any lien or liability of or owing by the Company or the
Subsidiary, other than liens or liabilities that were paid, discharged or
satisfied in the ordinary course of business and consistent with past practice;
or
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(o) any cancellation of any liability or indebtedness owed to the Company
or the Subsidiary by any other Person in an aggregate amount exceeding $25,000.
Section 4.9 Title to Assets. The Company and Subsidiary have good title to,
or valid and subsisting leasehold interests in, all real and material personal
property and other material assets on its books and reflected on the Company's
or the Subsidiary's balance sheet at December 31, 2000 or acquired in the
ordinary course of business since December 31, 2000 which would have been
required to be reflected on such balance sheet if acquired on or prior to
December 31, 2000, other than assets which have been disposed of in the ordinary
course of business and those assets as to which the failure to have good title
or valid and subsisting leasehold interests would not, individually or in the
aggregate, have a Material Adverse Effect on all real property owned by the
Company or the Subsidiary and all real estate leases or subleases to which the
Company or the Subsidiary is a party. None of such assets is subject to any
Encumbrance. The Company and the Subsidiary have the right to quiet enjoyment of
all property leased for the full term of each such lease or sublease or similar
agreement (or any renewal option) relating thereto.
Section 4.10 Computer Software. All computer software programs (excluding
noncustomized computer software available to the Company and the Subsidiary on
an over-the-counter basis through normal commercial channels) used by the
Company or the Subsidiary in the conduct of their respective businesses are
owned or licensed by the Company or the Subsidiary free and clear of
Encumbrances and, to the Knowledge of Seller, do not infringe any patent,
copyright, trade secret or trademark of any other Person.
Section 4.11 Intellectual Property Rights. (a) Each of the Company and its
Subsidiary owns or possesses, or has enforceable rights or licenses to use, the
patents, trademarks, service marks, trade names, copyrights (including any
registrations, applications, licenses or rights relating to any of the
foregoing), technology, trade secrets, inventions, know-how and computer
programs which are necessary to carry on its business as presently conducted
(each, an "Intellectual Property Right"), and neither the Company nor the
Subsidiary has received any written notice of any infringement of the rights of
others with respect to any such Intellectual Property Right that, if such
infringement were determined to be unlawful, would have, individually or in the
aggregate, a Material Adverse Effect. The execution and delivery of this
Agreement by Seller, and the consummation of the transactions contemplated
hereby, will not cause the Company or the Subsidiary to be in violation or
default under any licenses, sublicenses or other agreements to which the Company
or the Subsidiary is a party and pursuant to which the Company or the Subsidiary
is authorized to use any Intellectual Property Right, nor entitle any other
party to any such license, sublicense or agreement to terminate or modify such
license, sublicense or agreement, except where any such violation, default,
termination or modification would not, individually or in the aggregate, have a
Material Adverse Effect.
(b) To the Knowledge of Seller, no use of any Intellectual Property Right
by the Company or the Subsidiary breaches, violates or infringes any rights of
any third party or (except for the payment of computer software licensing fees)
requires any payment for the use of any patent, trade name, service ▇▇▇▇, trade
10
secret, trademark, copyright or other intellectual property right or technology
owned by any third party.
(c) There is no material Intellectual Property Right that any third party
owns and that the Company or the Subsidiary uses pursuant to any contract.
Section 4.12 Material Contracts. (a) "Material Contract" means, in each
case, each contract, agreement, license, lease, sublease, arrangement or
understanding, whether oral or written, or series of related contracts
(excluding purchase orders and customer orders in the ordinary course of
business), (i) which involves annual expenditures or receipts by the Company or
the Subsidiary of more than $100,000, (ii) which provides for performance,
regardless of amount, over a period in excess of one year after the date of such
contract, arrangement or commitment or (iii) which is otherwise material to the
business of the Company and the Subsidiary, taken as a whole.
(b) To the Knowledge of Seller, neither any officer, director or employee
of the Company or any Affiliate, nor any member of any such Person's immediate
family, is presently a party to or directly interested in any material
transaction with the Company, including any contract or other binding
arrangement (i) providing for the furnishing of material services by such Person
(except in such Person's capacity as an officer, director, employee or
consultant), (ii) providing for the rental of material real or personal property
from such Person, or (iii) otherwise requiring material payments to such Person
(other than for services as an officer, director, employee or consultant of the
Company or such Affiliate).
Seller has made available to Buyer complete and correct copies of each
Material Contract (and any amendments thereto). Each Material Contract is in
full force and effect. Neither the Company or the Subsidiary nor any other party
is in default under any such Material Contract, and there are no defaults
alleged against the Company or the Subsidiary by any other party with respect to
any such Material Contract.
Section 4.13 Permits and Licenses. The Company and Subsidiary hold all
permits, licenses, approvals, franchises, notices, authorizations, exemptions,
classifications, certificates, registrations, and similar documents or
instruments issued by any Governmental Authority to the Company or Subsidiary
(collectively, the "Permits") necessary for the ownership and conduct of the
business of the Company and Subsidiary in each of the jurisdictions in which the
Company or Subsidiary conducts or operates its business in the manner now
conducted. All Permits are valid and in full force and effect. Each of the
Company and Subsidiary is in compliance in all material respects with all terms
required for the continued effectiveness of each such Permit, and there is not
pending or threatened, any non-renewal, suspension, termination or revocation of
any such Permit. All such Permits are renewable by their terms or in the
ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine filing fees.
None of such Permits will be adversely affected by consummation of the
transactions contemplated hereby. No present or former officer, director,
shareholder or employee of the Company or the Subsidiary, or any other Person,
owns or has any proprietary, financial or other interest (direct or indirect) in
11
any Permits which the Company or Subsidiary owns, possesses or uses in the
conduct of its business as now or previously conducted.
Section 4.14 Legal Proceedings. There are no suits, actions, proceedings
(including, without limitation, arbitral and administrative proceedings), claims
or governmental investigations or audits (collectively, "Legal Proceedings")
pending or, to the Knowledge of Seller, threatened, against the Company or
Subsidiary or any of their respective properties, assets, business, employees or
agents in connection with the business of the Company and Subsidiary which,
individually or together with similar Legal Proceedings, involve a claim in
excess of $50,000, nor is reasonably likely (in the reasonable judgment of
Seller) that such claims will be prosecuted successfully or upon such successful
prosecution, such claims would reasonably be expected to have a Material Adverse
Effect. There are no such Legal Proceedings pending or threatened, challenging
the validity or propriety of, or otherwise relating to or involving, this
Agreement or the transactions contemplated hereby. There is no judgment, order,
writ injunction, decree or award (whether issued by a Governmental Authority or
otherwise) to which the Company or the Subsidiary is a party, or involving the
property, assets or business of the Company or the Subsidiary, which is
unsatisfied or which requires continuing compliance therewith by the Company or
the Subsidiary.
Section 4.15 Employee Benefit Plans. All employee benefit plans maintained
by the Company and its Subsidiary are in substantial compliance with all
applicable laws and have been administered and operated in all material respects
in accordance with their terms.
No material liability has been, or could reasonably be expected to be,
incurred with respect to any employee pension benefit plan. No individual shall
accrue or receive additional benefits, service or accelerated rights to payment
of benefits as a direct result of the transactions contemplated by this
Agreement.
Section 4.16 Labor Matters. Seller has disclosed to Buyer the labor
organizations recognized at the Company's or Subsidiary's operations. Neither
the Company nor Subsidiary is a party to, the subject of, involved in or, to the
Knowledge of Seller, threatened by any labor dispute, unfair labor practice
charge, strike, work stoppage, work slowdown, picketing, boycott, or other
concerted action by or on behalf of any employees of the Company or Subsidiary.
Section 4.17 Environmental Matters. (a) Each of the Company and Subsidiary
and their respective operations and properties are in compliance with all
Environmental Laws. Neither the Company nor the Subsidiary has received any
communication from any person or Governmental Authority that alleges that the
Company or Subsidiary or any of their respective operations or properties are
not in material compliance with Environmental Laws.
(b) The Company and its Subsidiary and their respective facilities and
operations have obtained or applied for all required Environmental Permits and
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are in material compliance with all terms and conditions of such Environmental
Permits. All such Environmental Permits are in full force and effect.
(c) There is no material Environmental Claim pending or threatened: (i)
against the Company or the Subsidiary; (ii) against any real or personal
property or operation currently or formerly owned, leased or managed, in whole
or in part, by the Company or the Subsidiary; or (iii) against any Person whose
liability for any Environmental Claim the Company or the Subsidiary has or may
have retained or assumed either contractually or by operation of law.
(d) There has been no Release of any Hazardous Materials that would be
reasonably likely to: (i) form the basis of any Environmental Claim against the
Company or the Subsidiary or any of their respective operations or properties;
or (ii) cause any real property or operation currently or formerly owned, leased
or managed, in whole or in part, by the Company or the Subsidiary to be subject
to any restrictions on ownership, operation, occupancy, use or transfer. Neither
the Company nor the Subsidiary is currently required or obligated to perform any
investigation, removal, remediation, response action or corrective action with
respect to the presence of any Release of Hazardous Materials at any facility,
property or operation where the Company or the Subsidiary conducts its business,
or at any other location.
(e) Seller has made available to Buyer: (i) copies of all Environmental
Permits as well as material environmental inspections, audits, studies, plans or
reports conducted or prepared by or on behalf of the Company or Subsidiary or
any of their respective operations or properties; (ii) a list of all Hazardous
Materials used, stored, generated, recycled or disposed of by the Company and
its Subsidiary and all such available information concerning its joint ventures,
if any; and (iii) a list of all off-site facilities used by the Company and its
Subsidiary for the treatment, storage or disposal facilities of Hazardous
Materials.
(f) There is not now, nor, to the Knowledge of Seller, has there been in
the past, on, in or under any real property at the time owned, leased or
operated by the Company or Subsidiary any underground storage tanks,
above-ground storage tanks, dikes or impoundments containing Hazardous Material.
For purposes of this Agreement, the following terms have the following
definitions:
"Environmental Claim" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, directives, claims, causes of
action, notices, liens, investigations, proceedings or notices of noncompliance
or violation by any Person (including any Governmental Authority) alleging
potential liability (including, without limitation, potential responsibility or
liability for enforcement costs, investigatory costs, cleanup costs,
governmental response costs, removal costs, remedial costs, natural-resources
damages, property damages, personal injuries, fines or penalties) arising out
of, based on or resulting from: (A) the presence, or Release into the
environment, of any Hazardous Materials at any location, whether or not owned,
13
operated, leased or managed by the Company or the Subsidiary; or (B)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Laws or Environmental Permits.
"Environmental Laws" means all applicable national, state, local laws
(including common laws), rules, ordinances, regulations, orders, directives and
binding administrative or judicial interpretations thereof relating to:
pollution, the environment (including, without limitation, indoor and outdoor
air, surface water, groundwater, land surface or subsurface strata); noise and
vibration, the protection and use of land or natural resources; the protection
of human health and safety; or the Release, manufacture, processing,
distribution, use, generation, treatment, storage, disposal, transport or
handling of Hazardous Materials.
"Environmental Permits" means all applicable permits, consents, licenses,
approvals or authorizations issued by any Governmental Authorities under
Environmental Laws.
"Release" means any actual or threatened release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the atmosphere, soil, surface water, groundwater or property.
Section 4.18 Tax Matters. (a) (i) All Tax Returns required to be filed by
or with respect to the Company and its Subsidiary have been timely filed; (ii)
all Taxes shown on such Tax Returns or otherwise due have been timely paid;
(iii) all such Tax Returns are true, correct and complete in all material
respects; (iv) no adjustment relating to such Tax Returns has been proposed
formally or informally by any Tax authority and, to the Knowledge of Seller, no
basis exists for any such adjustment; (v) with respect to any period for which
Taxes are not yet due, the Company and its Subsidiary have made sufficient
current accruals for all such Taxes in its Unaudited Financial Statements; (vi)
the Company and its Subsidiary have made all required estimated Tax payments
sufficient to avoid any underpayment penalties; (vii) the Company and its
Subsidiary have withheld and paid all Taxes required by all applicable laws to
be withheld or paid in connection with any amounts paid or owing to any
employee, creditor, independent contractor or other third party; (viii) there
are no Encumbrances as a result of any unpaid Taxes, other than Taxes not yet
due and payable, upon any of the assets of the Company and its Subsidiary ; (ix)
the Company and its Subsidiary have not been members of any consolidated,
combined, unitary or affiliated group of corporations for any Tax purposes; (x)
the Company and its Subsidiary have not been at any time members of any
partnership or joint venture or the holders of a beneficial interest in any
trust for any period for which the statute of limitations for any Tax has not
expired; and (xi) the Company and its Subsidiary are not parties to, are not
bound by, and have no obligation under, any Tax sharing agreement, Tax
allocation agreement, Tax indemnity agreement, or any other similar contract.
(ii) There are no pending or, to the Knowledge of Seller, threatened
actions or proceedings for the assessment or collection of Taxes against the
Company or the Subsidiary; (ii) there are no outstanding waivers or agreements
14
extending the statutory period of limitations for any period with respect to any
Tax to which the Company or the Subsidiary may be subject; (iii) no power of
attorney that is currently in force has been granted with respect to any matter
relating to Taxes that could affect the Company or the Subsidiary; (iv) no
closing agreement has been entered into by or with respect to the Company or the
Subsidiary; (v) there are no requests for information by any Taxing Authority
currently outstanding that could affect the Taxes of the Company or the
Subsidiary; (vi) no claim has been made in writing addressed to the Company or
the Subsidiary by a taxing authority in a jurisdiction where the Company or the
Subsidiary does not file Tax Returns asserting that the Company or the
Subsidiary is or may be subject to taxation in that jurisdiction; and (vii)
there are no proposed reassessments of any property owned by the Company or the
Subsidiary or other proposals that would be reasonably likely to increase the
amount of any Tax to which the Company or the Subsidiary would be subject.
(b) Seller has made available to Buyer complete copies of: (i) all filed
Tax Returns of the Company and the Subsidiary relating to the taxable periods
since the organization of the Company; and (ii) any audit report relating to
Taxes due from or with respect to the Company and the Subsidiary, or their
respective income, assets or operations.
Section 4.19 Operating Insurance. The Company and the Subsidiary carry
insurance with respect to their respective businesses which is consistent with
insurance carried by similar businesses as to coverage amounts, costs, and any
limitations. The insurance is provided as part of the group coverage of Seller
and its Affiliate. All such policies are in full force and effect for such
amounts, types of coverage and risks as are customarily obtained by Persons
engaged in similar businesses. After giving effect to the transactions
contemplated hereby, all such insurance in effect prior to the Closing will
remain in full force and effect on the same cost basis as existed prior to
closing. No notice of cancellation has been received with respect to any such
policy. All premiums due thereon have been paid in a timely manner and no event
has occurred, including, without limitation, the failure of the Company or the
Subsidiary to give any notice or information or the Company or the Subsidiary
giving inaccurate or erroneous notice or information, which would reasonably be
expected to have a Material Adverse Effect upon the rights of the Company or the
Subsidiary under any such insurance policy. There are no pending claims or, to
the knowledge of Seller, threatened claims, under the insurance policies of the
Company or the Subsidiary with respect to their respective property or assets.
Section 4.20 Regulatory Filings. Except as would not reasonably be likely
to result, individually or in the aggregate, in a Material Adverse Effect, the
Company and its Subsidiary have filed all reports, data, registrations, filings,
other information and applications required to be filed with or otherwise
provided to Governmental Authorities having jurisdiction over them, their
respective business or assets, and all required regulatory approvals in respect
thereof are in full force and effect. All such regulatory filings were in
compliance in all material respects with Applicable Laws, and no deficiencies
have been asserted by any Governmental Authority with respect to such regulatory
filings.
15
Section 4.21 Books and Records. True and correct copies of the minute books
and stock record books of the Company and the Subsidiary have been provided to
Buyer. Such minute books contain true and complete originals or copies of all
minutes of meetings of and actions by the shareholders and Board of Directors of
the Company and its Subsidiary and accurately reflect in all material respects
all corporate actions of the Company and its Subsidiary which are required by
law to be passed upon by the Board of Directors or the shareholders of the
Company and its Subsidiary. The stock record books accurately reflect all
transactions in shares of the capital stock of the Company and its Subsidiary.
All accounting, financial, reporting, business, tax, corporate and other similar
books and records of the Company and its Subsidiary accurately reflect the
business and financial condition of the Company and its Subsidiary.
Section 4.22 Compliance with Laws. Each of the Company and its Subsidiary:
(i) is in compliance and has complied with all laws, statutes, rules,
regulations, codes and ordinances applicable to its business, properties and
operations; and (ii) is not in violation of any writ, judgment, decree,
injunction, or similar order applicable to such entity, except where such
failure to comply or violation would not or would not reasonably be expected to
have a Material Adverse Effect. There have been no claims made or, to the
Knowledge of Seller, threatened thereunder against the Company or the Subsidiary
arising out of, relating to or alleging any violation of any of the foregoing,
and no event has occurred that (with or without the giving of notice or the
lapse of time or both) constitutes or results, directly or indirectly, in a
violation by the Company or the Subsidiary or failure to comply with any law,
except for claims which are no longer pending or would not reasonably be
expected to have a Material Adverse Effect.
Section 4.23 Certain Business Practices, Potential Conflicts of Interest.
Neither the Company nor its Subsidiary nor any of their respective directors,
officers, agents or employees have: (i) used any funds of the Company or its
Subsidiary for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; (ii) made any unlawful payment to
officials or employees of any Governmental Authority or to any political parties
or campaigns from the funds of the Company or its Subsidiary; or (iii) made any
other unlawful payment from the funds of the Company or its Subsidiary.
Section 4.24 Brokers' or Finders' Fees. No agent, broker, investment
banker, or other person or firm acting on behalf of the Company or Seller is or
will be entitled to any broker's or finder's fee or any other commission or
similar fee directly or indirectly from the Company or Seller in connection with
any of the transactions contemplated by this Agreement.
Section 4.25 Disclosure. No representation or warranty by Seller or any of
its representatives contained in this Agreement, and no statement contained in
the Financial Statements, the Schedules hereto or any certificate furnished or
to be furnished by or on behalf of Seller or the Company to Buyer pursuant to
this Agreement in connection with the transactions contemplated hereby, contains
or will contain any untrue statement of a material fact necessary, in light of
the circumstances under which it was or will be made, in order to make the
16
statements herein or therein not misleading or necessary in order fully and
fairly to provide the information required to be provided in any such document,
certificate or other instrument.
Section 4.26 Inventory. The inventories of the Company and its Subsidiary
(including raw materials, supplies and other materials) are of a quality of
usable or salable in the ordinary course of business, net of any applicable
reserves for obsolete, damaged or defective inventory, which reserves are
reasonable and appropriate under the circumstances and are in accordance with
French GAAP. The value at which the inventory is carried on the books and
records of the Company and its Subsidiary reflects the normal inventory
valuation policy utilized by the Company and its Subsidiary and is in accordance
with French GAAP, consistently applied.
Section 4.27 Receivables. All of the accounts receivable reflected in the
Unaudited Financial Statements were generated from bona fide transactions by the
Company and its Subsidiary in the ordinary course of their respective businesses
consistent with past practice and, except for reserves and trade provisions
reflected in the Unaudited Financial Statements, which reserves are reasonable
and appropriate under the circumstances and are in accordance with French GAAP,
constitute valid, undisputed claims of the Company or the Subsidiary in the
amounts reflected therein, and are not subject to valid defenses for a material
amount, or material claims of set-off, recoupment or counterclaim.
Section 4.28 Employment Agreements. There are no employment agreements to
which the Company or its Subsidiary are a party. Seller has furnished to Buyer
copies of all consulting contracts or similar agreements in effect on the date
hereof relating to any consultant employed or retained by the Company or the
Subsidiary in its conduct of its businesses.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to the Company,
each of which is true and correct as of the date hereof and shall be true and
correct as of the Closing Date and shall be unaffected by any investigation
heretofore or hereafter made by Seller or the Company:
Section 5.1 .Organization and Corporate Power. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
Buyer has full corporate power and authority to own, lease and operate the
properties and assets which it currently owns, leases or operates and to carry
on its business as presently conducted or proposed to be conducted pursuant to
existing plans.
Section 5.2 .Authority; Absence of Conflicts. Buyer has full corporate
power and authority to execute, deliver and perform this Agreement and to
17
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly approved by the Board of Directors of Buyer, and no other corporate
actions on the part of Buyer are necessary to authorize and approve the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Buyer and, assuming this Agreement constitutes a valid and binding
obligation of the Company, constitutes the valid and binding obligation of
Buyer, enforceable against it in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws of general applicability relating to or affecting creditors' rights and by
general equitable principles.
Except for the consents and approvals listed on Schedule 5.2(a) hereto
(collectively, the "Buyer Consents"), neither the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby nor
compliance with the terms hereof will: (i) conflict with or violate any
provision of the Certificate of Incorporation or Bylaws (or comparable
constituent documents) of Buyer; (ii) violate, conflict with or result in a
breach of or default (or constitute any event which with the lapse of time or
the giving of notice or both would constitute a breach or default) under any of
the terms, conditions or provisions of any material contract to which Buyer is a
party or by which Buyer's assets are bound; (iii) conflict with, violate or
result in a breach of or constitute a default under any law, statute, rule,
judgment, order, decree, injunction, ruling or regulation of any Governmental
Entity to which Buyer or any of its assets or properties are subject; or (iv)
except as set forth on Schedule 5.2(b) hereto, require Buyer to give notice to,
obtain an authorization, approval, order, license, franchise, declaration or
consent of, or make a filing with, any third party, including, without
limitation, any Governmental Authority.
Section 5.3 No Investigation. There are no suits, actions, proceedings
(including, without limitation, arbitral and administrative proceedings), claims
or governmental investigations or audits pending or, to the knowledge of Buyer,
threatened, challenging the validity or propriety of, or otherwise relating to
or involving, this Agreement or the transactions contemplated hereby.
Section 5.4 Brokers' or Finders' Fees. No agent, broker, investment
banker, or other person or firm acting on behalf of Buyer is or will be entitled
to any broker's or finder's fee or any other commission or similar fee directly
or indirectly from Buyer or the Company in connection with any of the
transactions contemplated by this Agreement, other than customary fees and
expenses of attorneys, accountants and similar professionals.
ARTICLE VI
COVENANTS
Section 6.1 Balance Sheet. On or before June 28, 2001, Seller will deliver
to Buyer an unaudited balance sheet and income statement of the Company and the
Subsidiary as of May 31, 2001 for the five months then ended (the "Monthly
Balance Sheet"), which financial statements shall be prepared in accordance with
18
French GAAP in a manner consistent with past accounting practices of Seller, the
Company and the Subsidiary.
Section 6.2 Preservation of Business. From May 31, 2001 through the Closing
Date, Seller shall cause the Company and the Subsidiary to conduct their
respective businesses consistent with past business practices, and Seller shall
cause the Company and its Subsidiary to use their reasonable best efforts to
preserve their respective business organizations intact, maintain in good repair
all of their respective assets and personal property, keep available the
services of, and maintain present relationships with, key officers, directors,
employees, consultants, and agents, and material suppliers, customers, and
others having material business relationships with the Company and its
Subsidiary and preserve the goodwill of the Company and its Subsidiary.
Section 6.3 Negative Covenants. From and after May 31, 2001 through the
Closing Date, Seller shall cause the Company and its Subsidiary not to, except
with the prior written consent of Buyer, or except as expressly permitted by
this Agreement (i) take or agree to take, whether in writing or otherwise, any
of the actions described in Section 4.8, (ii) issue additional indebtedness with
a maturity date of more than one year from the date hereof or (iii) change the
composition of the board of directors of the Company or the Subsidiary.
Section 6.4 Governmental and Third Party Consents. Each of Buyer, on the
one hand, and Seller, on the other hand, shall use its commercially reasonable
efforts to obtain, and to cooperate with the other party in obtaining, as
promptly as practicable, all authorizations, consents, orders and approvals of
any Governmental Authority or other third party (including, without limitation,
the Buyer Consents and all regulatory filings) that may be or become necessary
in connection with the consummation of the transactions contemplated by this
Agreement.
Section 6.5 Notice of Developments. From the date hereof to the Closing,
Seller shall notify Buyer of any changes or developments with respect to the
business, operations or prospects of the Company and its Subsidiary which would
have or would reasonably be expected to have a Material Adverse Effect.
Section 6.6 Notice of Breach. Each party hereto shall, immediately upon
becoming aware thereof, give detailed written notice to the other party hereto
of the occurrence of, or the impending or threatened occurrence of, any event
which would cause or constitute a breach, or would have caused or constituted a
breach had such event occurred or been known to such party prior to the date of
this Agreement, of any of such party's covenants, agreements, representations or
warranties contained or referred to herein or in any document delivered in
accordance with the terms hereof; provided, however, that such notice shall not
be deemed to modify, amend or supplement the representations and warranties of
Buyer or Seller or the Schedules hereto for any purpose of this Agreement or
shall not relieve the notifying party for any liability that such party may
otherwise have in respect of such breach.
19
Section 6.7 Reasonable Efforts. Subject to the terms and conditions of
this Agreement, Buyer, on the one hand, and Seller, on the other hand, will use
their respective reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary or desirable to consummate
the transactions contemplated by this Agreement and to maintain the accuracy of
its representations and warranties hereunder. Neither Buyer nor Seller will
take, agree to take or knowingly authorize to be taken any action or do or
knowingly authorize to be done anything in the conduct of the business of Buyer
or Seller or otherwise, which would be contrary to or in breach of any of the
terms or provisions of this Agreement.
Section 6.8 Delivery of Certificates. At the Closing, each party shall
deliver to the other such good standing certificates, officers' certificates and
similar documents and incumbency certificates as counsel for the requesting
party shall have reasonably requested prior to the Closing Date.
ARTICLE VII
TAX MATTERS
Section 7.1 Indemnity. (a) Seller agrees to indemnify and hold harmless
Buyer and the Company against the following Taxes (except for those Taxes
reserved for on the December 31, 2001 Unaudited Financial Statement) and, except
as otherwise provided in Section 7.4, against any loss, damage, liability or
expense, including reasonable fees for attorneys and other outside consultants
incurred in contesting or otherwise in connection with any such Taxes: (i) Taxes
imposed on the Company or the Subsidiary with respect to Taxable Periods of such
Person ending on or before the Closing Date; and (ii) with respect to Taxable
Periods beginning before the Closing Date and ending after the Closing Date,
Taxes imposed on the Company which are allocable, pursuant to Section 7.1(b), to
the portion of such period ending on the Closing Date. Except as provided in
Section 7.1(b), Buyer agrees to indemnify and hold harmless Seller for all Taxes
and associated expenses not allocated to Seller pursuant to the first sentence
of this Section 7.1(a).
(b) In the case of Taxes that are payable with respect to a Taxable Period
that begins before the Closing Date and ends after the Closing Date, the portion
of any such Tax that is allocable to the portion of the period ending on the
Closing Date shall be:
(i) in the case of Taxes that are either (A) based upon or
related to income or receipts, or (B) imposed in connection with any
sale or other transfer or assignment of property (real or personal,
tangible or intangible) (other than conveyances pursuant to this
Agreement, as provided under Section 7.7), deemed equal to the amount
which would be payable if the Taxable Period ended with the Closing
Date; and
(ii) in the case of Taxes imposed on a periodic basis with
respect to the assets of the Company or the Subsidiary, or otherwise
20
measured by the level of any item, deemed to be the amount of such
Taxes for the entire period (or, in the case of such Taxes determined
on an arrears basis, the amount of such Taxes for the immediately
preceding period), multiplied by a fraction the numerator of which is
the number of calendar days in the period ending on the Closing Date
and the denominator of which is the number of calendar days in the
entire period.
Section 7.2 Returns and Payments. (a) Seller shall prepare and file or
otherwise furnish in proper form to the appropriate Taxing Authority (or cause
to be prepared and filed or so furnished) in a timely manner all (i)
consolidated, combined and unitary Tax Returns (each a "Consolidated Return")
that include Seller and (ii) Tax Returns relating to the Company and its
Subsidiary that are due on or before the Closing Date (and Buyer shall do the
same with respect to any non-Consolidated Return for the Company and its
Subsidiary due after the Closing Date). Tax Returns of the Company and its
Subsidiary not yet filed for any Taxable Period that begins before the Closing
Date shall be prepared in a manner consistent with past practices employed with
respect to the Company and its Subsidiary (except to the extent counsel for
Seller or the Company renders a legal opinion that there is no reasonable basis
in law therefor or determines that a Tax Return cannot be so prepared and filed
without being subject to penalties). With respect to any non-Consolidated Return
required to be filed by Buyer or Seller with respect to the Company and as to
which an amount of Tax is allocable to the other party under Section 7.1(b), the
filing party shall provide the other party and its authorized representatives
with a copy of such completed Tax Return and a statement certifying the amount
of Tax shown on such Tax Return that is allocable to such other party pursuant
to Section 7.1(b), together with appropriate supporting information and
schedules at least forty-five (45) days prior to the due date (including any
extension thereof) for the filing of such Tax Return, and such other party and
its authorized representatives shall have the right to review and comment on
such Tax Return and statement prior to the filing of such Tax Return.
(b) Seller shall pay or cause to be paid when due and payable all Taxes
with respect to the Company for any Taxable Period ending on or before the
Closing Date to the extent such Taxes exceed the amount, if any, accrued for
such Taxes on the December 31, 2001 Unaudited Financial Statement.
(c) After the Closing Date (subject to Buyer's right of indemnification
from Seller by the date set forth in Section 7.5 for Taxes attributable to the
portion of any Tax period that includes the Closing Date pursuant to Sections
7.1(a) and 7.1(b)), Buyer shall pay or cause to be paid any Taxes for any
Taxable Period or portion thereof that begins after the Closing Date.
Section 7.3 Refunds. Any Tax refund (including any interest with respect
thereto) relating to the Company for Taxes paid for any Taxable Period prior to
the Closing Date shall be the property of Seller, and if received by Buyer or
the Company shall be paid over promptly to Seller.
Section 7.4 Contests. (a) After the Closing, the Buyer shall promptly
notify the Seller in writing of any written notice of a proposed assessment or
21
claim with respect to any inquiry, assessment, contest, proceeding or litigation
(a "Contest") of Buyer or Seller or of any of the Company and the Subsidiary
which, if determined adversely to the taxpayer, would be grounds for
indemnification under this Article VII.
(b) For all Consolidated Returns for any group of which Seller or any of
its Affiliates (other than the Company or the Subsidiary) is a member, Seller
shall control all such Contests in connection therewith. Prior to the Closing
Date, Seller shall control all Contests relating to the Company or the
Subsidiary. After the Closing Date, in the case of a Contest that relates to a
non-Consolidated Return (or any item relating thereto or reported thereon) for a
Taxable Period ending on or before, or that includes the Closing Date, Seller
shall have the right at its expense to participate in and control the conduct of
such Contest, and for all Taxable Periods thereafter, Buyer shall control such
Contests. If Seller does not assume the defense of any such Contest for a
Taxable Period ending on or before the Closing Date, Buyer may defend the same
in such manner as it may deem appropriate, including, but not limited to,
settling such Contest after giving ten days' prior written notice to Seller
setting forth the terms and conditions of settlement. In the event of a Contest
covered by the second sentence of this paragraph, that involves issues relating
to a potential adjustment for which Seller has liability are required to be
dealt with in a proceeding that also involves separate issues relating to a
potential adjustment for which Buyer would be liable, Buyer shall have the
right, at its expense, to control the Contest but only with respect to the
latter issues.
(c) Neither Buyer nor Seller shall enter into any compromise or agree to
settle any claim pursuant to any Contest which would adversely affect the other
party for such year or a subsequent year without the written consent of the
other party, which consent may not be unreasonably withheld. Buyer and Seller
agree to cooperate, and Buyer agrees to cause the Company and its Subsidiary to
cooperate, in the defense against or compromise of any claim in any Contest.
Section 7.5 Time of Payment. Payment of any amounts due under this Article
VII in respect of Taxes shall be made (i) at least three Business Days before
the due date of the applicable estimated or final Tax Return required to be
filed by either Buyer or Seller, as the case may be, that shows Taxes due for
which the other party is responsible under Sections 7.1(a) and 7.1(b), and (ii)
within three Business Days following an agreement between Seller and Buyer that
an indemnity amount is payable, an assessment of a Tax by a Taxing Authority, or
a "determination" having been made as such term is defined in Section 1313(a) of
the Code. If liability under this Article VII is in respect of costs or expenses
other than Taxes, payment of any amounts due under this Article VII shall be
made within five Business Days after the date when the relevant entity has been
notified that such entity has a liability for a determinable amount under this
Article VII and is provided with calculations or other materials supporting such
liability.
Section 7.6 Cooperation and Exchange of Information. Upon the terms set
forth in Section 6.1 of this Agreement, Seller and Buyer will provide each other
with such cooperation and information as either of them reasonably may request
of the other in filing any Tax Return, amended Tax Return or claim for refund,
22
determining a liability for Taxes or a right to a refund of Taxes, participating
in or conducting any Contest in respect of Taxes or making representations to or
furnishing information to parties subsequently desiring to purchase any capital
stock of the Company or the Subsidiary or any part of the business from Buyer.
Such cooperation and information shall include providing copies of relevant Tax
Returns or portions thereof, together with accompanying schedules, related work
papers and documents relating to rulings or other determinations by Taxing
Authorities. Seller shall make its employees and employees of the Company
available on a basis mutually convenient to both parties to provide explanations
of any documents or information provided hereunder. Each of Seller and Buyer
shall retain all Tax Returns, schedules and work papers, records and other
documents in its possession relating to Tax matters of the Company and its
Subsidiary for each Taxable Period first ending after the Closing Date and for
all prior Taxable Periods until the later of (i) the expiration of the statute
of limitations of the Taxable Periods to which such Tax Returns and other
documents relate, without regard to extensions except to the extent notified in
writing of such extensions for the respective Tax periods, or (ii) three years
following the due date (without extension) for such Returns. Any information
obtained under this Section 7.6 shall be kept confidential except as may be
otherwise necessary in connection with the filing of Tax Returns or claims for
refund or in conducting a Contest.
Section 7.7 Conveyance Taxes. Buyer shall be liable for and shall hold
Seller harmless against any real property transfer or gains, sales, use,
transfer, value added, stock transfer, and stamp taxes, any transfer, recording,
registration, and other fees, and any similar Taxes which become payable in
connection with the transactions contemplated by this Agreement, and shall file
such applications and documents as shall permit any such Tax to be assessed and
paid on or prior to the Closing Date in accordance with any available pre-sale
filing procedure. Buyer or Seller, as appropriate, shall execute and deliver all
instruments and certificates necessary to enable the other to comply with any
filing requirements relating to any such Taxes.
Section 7.8 Miscellaneous. (a) Seller and Buyer agree to treat all
payments made by either of them to or for the benefit of the other (including
any payments to the Company) under this Article VII, under other indemnity
provisions of this Agreement and for any misrepresentations or breaches of
warranties or covenants as adjustments to the Purchase Price or as capital
contributions for Tax purposes and that such treatment shall govern for purposes
hereof except to the extent that the laws of a particular jurisdiction provide
otherwise, in which case such payments shall be made in an amount sufficient to
indemnify the relevant party on an after-Tax basis.
(b) All payments payable under any Tax sharing agreement or arrangement
between Seller and the Company for any Taxable Period ending on or prior to the
Closing Date shall be calculated on a basis consistent with that used to date
and be payable in full on or before the Closing Date or within a reasonable
period of time thereafter in order for the parties hereto to determine the
actual amounts due pursuant to the terms thereof. No payments shall be made
pursuant to any Tax sharing agreement or arrangement between Seller and the
Company for or with respect to any Tax liabilities for any Taxable Period or
portions thereof beginning after the Closing Date. Any such Tax sharing
23
agreement or arrangement shall be treated as having been terminated with respect
to the payment or allocation of Taxes for any post-Closing Date Taxable Period.
(c) Notwithstanding any provision in this Agreement to the contrary, the
obligations of Seller to indemnify and hold harmless Buyer and the Company
pursuant to this Article VII shall terminate on the expiration of the applicable
statute of limitations with respect to the Tax liabilities in question.
(d) For purposes of this Article VII, all Taxes of the Company and the
Subsidiary for all pre-Closing periods shall be determined without regard to the
carryback of any net operating loss, capital loss, general business credit or
other tax attribute from a post-Closing period.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
SELLER
The obligations of Seller hereunder are subject to the fulfillment on or
before the Closing Date of each of the following conditions, any one or more of
which may be waived in writing by Seller:
Section 8.1 Representations, Warranties and Covenants. All representations
and warranties of Buyer contained herein shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date (except for any representation or
warranty that expressly relates to an earlier date, in which case it shall have
been true and correct as of such earlier date). Buyer shall have performed and
complied in all material respects with all covenants and agreements contained
herein and required to be performed or complied with by it on or prior to the
Closing Date.
Section 8.2 Closing Certificate. Buyer shall have delivered to the Company
a certificate signed by a duly authorized officer of Buyer, dated as of the
Closing Date, to the effect set forth in Section 8.1 hereof.
Section 8.3 No Adverse Proceedings. No suit, action, claim, or governmental
proceeding shall be pending against, and no order, decree, or judgment of any
court, agency or other Governmental Authority shall have been rendered against,
any party hereto which would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
Section 8.4 Buyer Consents. The Buyer Consents shall have been duly and
validly obtained and shall be in full force and effect as of the Closing Date,
and they shall not have required as a condition thereto the payment of any
consent fee or other financial consideration or the material modification or
amendment of any contract or Permit or any agreement to materially modify the
24
future conduct of the business of the Company and its Subsidiary from the manner
in which such business is currently conducted, except for the payment of filing
and other customary fees to any Governmental Authority or such payments or such
material modifications or amendments as were previously approved in writing by
the Company or Seller.
ARTICLE IX
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
The obligations of Buyer hereunder are subject to the fulfillment on or
before the Closing Date of each of the following conditions, any one or more of
which may be waived in writing by Buyer.
Section 9.1 Representations, Warranties and Covenants. All representations
and warranties of Seller contained herein shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date (except for any representation or
warranty that expressly relates to an earlier date, in which case it shall have
been true and correct as of such earlier date). Seller shall have performed and
complied in all material respects with all covenants and agreements contained
herein and required to be performed or complied with by it on or prior to the
Closing Date.
Section 9.2 Closing Certificate. Buyer shall have received certificates to
the effect set forth in Section 9.1 and Section 9.5 hereof signed by a duly
authorized Officer of Seller, and dated as of the Closing Date.
Section 9.3 Fairness Opinion. The Board of Directors of Buyer shall have
received the "fairness opinion" of McDonald Investments/The ▇▇▇▇▇▇▇ Company,
dated as of the Closing Date, in substantially the form attached hereto as
Exhibit A.
Section 9.4 No Adverse Proceedings. No suit, action, claim, or governmental
proceeding shall be pending against, and no order, decree, or judgment of any
court, agency, or other Governmental Authority shall have been rendered against,
any party hereto which would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
Section 9.5 No Material Adverse Effect. Since the date hereof, there shall
not have occurred a Material Adverse Effect, including without limitation as a
result of a change in the laws or regulations that govern the business of the
Company and its Subsidiary.
Section 9.6 Company Consents. Any consents required to be obtained by
Seller or Company to give effect to the transactions described herein shall have
been duly and validly obtained and shall be in full force and effect as of the
Closing Date, and they shall not have required as a condition thereto the
payment of any consent fee or other financial consideration or the modification
25
or amendment to any Material Contract or Permit, or any agreement to materially
modify the future conduct of the business of the Company from the manner in
which such business is currently conducted (all as determined by Buyer in the
reasonable exercise of its discretion), except for the payment of filing and
other customary fees to any Governmental Authority or such payments or such
material modifications or amendments as were previously approved in writing by
Buyer.
Section 9.7 Final Monthly Balance Sheet. Buyer shall have received the
Monthly Balance Sheet of the Company and its Subsidiary for the month
immediately preceding the month in which the Closing Date occurs, and such
Monthly Balance Sheet shall be satisfactory in form and substance to Buyer.
Section 9.8 Environmental Matters. The Company shall have maintained all
its operations and Real Property in compliance with all Environmental Laws and
Environmental Permits to the reasonable satisfaction of Buyer.
Section 9.9 .Loan. Buyer shall have obtained financing of not less than
$4,000,000.00 upon terms acceptable to it and at an interest rate of no greater
than the Federal Funds Rate plus 3%.
Section 9.10 Environmental Permits and Releases. The Company shall have
obtained any required transfer, renewal, assignment or application of any
Environmental Permits pursuant to all applicable Environmental Laws.
ARTICLE X
TERMINATION
Section 10.1 Termination. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may be terminated at any time prior to
the Closing:
(a) By the mutual written consent of Buyer and Seller;
(b) By either Buyer or Seller, if the Closing shall not have occurred on or
before July 31, 2001 or such other date as the parties may mutually agree upon
(the "Termination Date") or any closing condition set forth in Articles VI or
VII has not been satisfied by the date required for such satisfaction by the
party of whom performance is required; provided, however, that the right to
terminate this Agreement pursuant to this Section 10.1(b) shall not be available
to any party that is in material breach of this Agreement at the time the notice
of termination is delivered or whose delay or failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur on or before such date;
26
(c) By either Buyer or Seller, if there shall have been entered a final,
nonappealable order or injunction of any Governmental Authority restraining or
prohibiting the consummation of the transactions contemplated hereby or any
material part hereof;
(d) By either Buyer or Seller, if, prior to the Closing Date, the other
party is in material breach of any representation, warranty, covenant or
agreement herein contained and such breach shall not be cured within 10 days of
the date of notice of default served by the party claiming such material
default.
If either Buyer or Seller terminates this Agreement pursuant to the
foregoing provisions of this Section 10.1, such termination shall be effected by
written notice by the terminating party to the other party specifying the
provision pursuant to which such termination is made.
Section 10.2 Liabilities Upon Termination. Except for the confidentiality
provisions of Section 6.1 hereof, which shall survive any termination of this
Agreement, upon the termination of this Agreement, this Agreement shall
forthwith become null and void, and no party hereto or any of its officers,
directors, partners, employees, agents, consultants, stockholders, principals or
other affiliates shall have any rights, obligations or liabilities hereunder or
with respect hereto.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS; INDEMNIFICATION
Section 11.1 Survival. (a) Notwithstanding any right of Buyer to
investigate the affairs of the Company and the Subsidiary, Buyer has the right
to rely upon the representations, warranties, covenants and agreements of Seller
contained in this Agreement. The representations and warranties of Seller set
forth in Sections 4.16, 4.18 and 4.19 shall survive until the expiration of all
applicable statutes of limitations (including all periods of extension, whether
automatic or permissive), and the representations and warranties of the parties
set forth in Sections 4.1, 4.2, 4.5 and 4.7, 5.1 and 5.2 shall survive the
Closing without limitation as to time. All other representations and warranties
of the parties set forth in this Agreement shall terminate and expire on July 3,
2011. Notice with respect to any claim in respect of any inaccuracy in or breach
of any representation or warranty shall be in writing and shall be given to the
party against which such claim is asserted. Any representation or warranty shall
survive the time it would otherwise terminate pursuant to this Section 11.1 to
the extent that the party claiming indemnification for such breach shall have
delivered to the other party written notice setting forth with reasonable
specificity the basis of such claim prior to the expiration of such time
pursuant to this Section 11.1, provided, that after the delivery of any such
notice, the party claiming indemnification shall expeditiously pursue the
resolution of such claim.
27
(b) All covenants and agreements made by the parties to this Agreement
which contemplate performance following the Closing Date shall survive the
Closing Date. All other covenants and agreements shall not survive the Closing
Date and shall terminate as of the Closing.
Section 11.2 Obligation of Seller to Indemnify. Subject to the limitations
set forth in Article VII and Sections 11.1, 11.5, 11.6 and 11.7, Seller shall
indemnify, reimburse, defend and hold harmless Buyer and its directors,
officers, employees, Affiliates, and their respective successors and assigns
from and against any Loss incurred by any of them based upon, arising out of or
otherwise in respect of (i) any inaccuracy in or any breach of any
representation or warranty of Seller (after taking into account the exceptions
to such representations and warranties which are set forth on the Schedules, as
supplemented in accordance with Section 6.8, related to such representations and
warranties) and (ii) the nonfulfillment on the part of Seller of any unwaived
covenant or agreement set forth in this Agreement which survives the Closing
Date in accordance with Section 11.1.
Section 11.3 Obligation of Buyer to Indemnify. Subject to the limitations
set forth Article VII and in Sections 11.1 and 11.5, Buyer shall indemnify,
defend and hold harmless Seller and its directors, officers, employees,
Affiliates, and their respective successors and assigns from and against any
Loss incurred by any of them based upon, arising out of or otherwise in respect
of (i) any inaccuracy in or breach of any representation or warranty of Buyer
(after taking into account the exceptions to such representations and warranties
which are set forth on the Schedules related to such representations and
warranties), and (ii) the nonfulfillment on the part of Buyer of any unwaived
covenant or agreement set forth in this Agreement which survives the Closing
Date in accordance with Section 11.1.
Section 11.4 Notice and Opportunity to Defend Against Third Party Claims.
(a) Promptly after receipt from any third party by either party hereto (the
"Indemnitee") of a notice of any demand, claim or circumstance that, immediately
or with the lapse of time, would give rise to a claim or the commencement (or
threatened commencement) of any action, proceeding or investigation (an
"Asserted Liability") that may result in a Loss for which indemnification may be
sought hereunder, the Indemnitee shall give written notice thereof (the "Claims
Notice") to the party obligated to provide indemnification pursuant to Section
11.2 or 11.3 (the "Indemnifying Party"), provided, however, that a failure to
give such notice shall not prejudice the Indemnitee's right to indemnification
hereunder except to the extent that the Indemnifying Party is actually
prejudiced thereby. The Claims Notice shall describe the Asserted Liability in
reasonable detail, and shall indicate the amount (estimated, if necessary) of
the Loss that has been or may be suffered by the Indemnitee.
(b) The Indemnifying Party may elect to compromise or defend, at its own
expense and by its own counsel, any Asserted Liability. If the Indemnifying
Party elects to compromise or defend such Asserted Liability, it shall, within
20 Business Days following its receipt of the Claims Notice (or sooner, if the
nature of the Asserted Liability so requires) notify the Indemnitee of its
intent to do so, and the Indemnitee shall cooperate, at the expense of the
Indemnifying Party, in the compromise of, or defense against, such Asserted
28
Liability. If the Indemnifying Party elects not to compromise or defend the
Asserted Liability, fails to notify the Indemnitee of its election as herein
provided or contests its obligation to provide indemnification under this
Agreement, the Indemnitee may pay, compromise or defend such Asserted Liability.
Notwithstanding the foregoing, neither the Indemnifying Party nor the Indemnitee
may settle or compromise any claim without the consent of the other party,
provided, however, that such consent to settlement or compromise shall not be
unreasonably withheld. In any event, the Indemnitee and the Indemnifying Party
may participate, at their own expense, in the defense of such Asserted
Liability. If the Indemnifying Party chooses to defend any claim, the Indemnitee
shall make available to the Indemnifying Party any books, records or other
documents within its control that are necessary or appropriate for such defense.
Section 11.5 Net Indemnity. The amount of any Loss from and against which
either party is liable to indemnify, reimburse, defend and hold harmless the
other party or any other Person pursuant to Section 11.2 or Section 11.3 shall
be reduced by any insurance or other recoveries or any Tax benefit that such
indemnified Person actually realizes as a result of or in connection with such
Loss and increased by any Taxes such indemnified Person actually realizes in
respect of indemnification for such Loss.
Section 11.6 Limits on Indemnification. No party shall have any right to
seek indemnification under this Agreement (i) until Losses which would otherwise
be indemnifiable hereunder incurred by such party (including Losses incurred by
all other indemnitees affiliated with or related to such party) exceed $100,000
in the aggregate, after insurance or other recoveries and on an after-tax basis,
as provided in Section 11.5, and such party (including such affiliated or
related Persons) shall only be entitled to be indemnified for Losses in excess
of such aggregate amount, or (ii) in respect of Losses to the extent such Losses
result from or arise out of actions taken by such party or an Affiliate,
employee, representative or agent thereof after the Closing. After the Closing,
the remedies provided by this Section 11.6 shall be the sole and exclusive
remedy for the parties to this Agreement with respect to any dispute arising
from, or related to, this Agreement.
Section 11.7 No Consequential Damages. Neither party shall be entitled to
consequential or special damages.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Expenses. Each party shall be responsible for its own expenses
incurred in connection with the transactions provided for herein or contemplated
hereby.
Section 12.2 Notices. Any notice, request, demand or other communication
given by any party under this Agreement (each a "notice") shall be in writing,
may be given by a party or its legal counsel, and shall be deemed to be duly
29
given: (i) when personally delivered; or (ii) upon delivery by an overnight
courier service which provides evidence of delivery; or (iii) when five days
have elapsed after its transmittal by registered or certified mail, postage
prepaid, return receipt requested, addressed to the party to whom directed at
that party's address as it appears below or another address of which that party
has given written notice to the other parties hereto; or (iv) when transmitted
by facsimile transmission, the sender having received machine confirmation
thereof.
Notice to Buyer shall be directed to:
Dynamic Materials Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. Santa
with a copy to:
LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇ d'Esclapon, Esq.
Notice to Seller shall be directed to:
Nobel Explosifs France
▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇ (▇▇▇▇▇)
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Section 12.3 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns. This Agreement or any part hereof may not be assigned by any party
without the prior written consent of the other party hereto. Any assignment in
violation of the foregoing shall be null and void.
Section 12.4 Entire Agreement and Modification. This Agreement, the
Schedules and Exhibits hereto and any agreements executed concurrently herewith
(all of which are hereby incorporated by reference into and considered part of
this Agreement) supersede all prior agreements and understandings among the
parties or any of its respective Affiliates (written or oral) relating to the
subject matter of this Agreement, and are intended to be the entire and complete
statement of the terms of the agreement between the parties, and may be amended
30
or modified only by a written instrument executed by both parties. The waiver by
one party of any breach of this Agreement by any other party shall not be
considered to be a waiver of any succeeding breach (whether of a similar or a
dissimilar nature) of any such provision or other provision or a waiver of any
such provision itself. No representation, inducement, promise, understanding,
condition or warranty not set forth herein has been made or relied upon by
either party.
Section 12.5 Certain Interpretive Matters. Unless the context otherwise
requires: (i) all references to Sections, Articles, Schedules or Exhibits are to
Sections, Articles, Schedules or Exhibits of or to this Agreement; (ii) each
term defined in this Agreement has the meaning assigned to it; (iii) "or" is
disjunctive but not necessarily exclusive; and (iv) words in the singular
include the plural and vice versa. No provision of this Agreement will be
interpreted in favor of, or against, either of the parties hereto by reason of
the extent to which either such party or its counsel participated in the
drafting thereof or by reason of the extent to which any such provision is
inconsistent with any prior draft hereof or thereof.
Section 12.6 GOVERNING LAW. THIS AGREEMENT, AND THE RESPECTIVE RIGHTS,
DUTIES AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF.
Section 12.7 Forum Selection and Submission to Jurisdiction. Any litigation
based on, or arising out of, under or in connection with, this Agreement or any
agreement delivered or which may in the future be delivered in connection with
this Agreement shall be brought and maintained in the courts of the State of New
York in The City of New York or in the United States District Court for the
Southern District of New York. Each of the parties hereto hereby expressly
submits to the exclusive jurisdiction of such courts for the purpose of any such
litigation as set forth above and agrees to be bound by any judgment rendered
thereby in connection with such litigation. Each of the parties hereby
designates CT Corporation System, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, and such
other persons as may hereafter be selected by such party and irrevocably
agreeing in writing to serve, as its agent to receive on its behalf, service of
all process in any such proceedings in any court, such service being hereby
acknowledged by each of the parties to be effective and binding service in every
respect. A copy of such process so served shall be mailed by registered mail,
postage prepaid, to each party, as applicable, at its address for notices set
forth in Section 12.2 hereof.
Section 12.8 Waiver of Jury Trial. Each party hereto hereby expressly
waives any right to a trial by jury in any action or proceeding to enforce or
defend any rights under this Agreement, any Supplement, or under any document or
agreement delivered or which may in the future be delivered in connection
therewith, and agrees that any such action or proceeding shall be tried before a
court and not before a jury.
31
Section 12.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, and such
counterparts shall together constitute one and the same instrument.
Section 12.10 Further Assurances. Each of the parties shall, at any time
and from time to time after the Closing Date, and at the expense of the other
parties but without further consideration, execute and deliver such further
instruments, assignments or documents and other papers and take such further
actions as may be reasonably required to carry out the provisions hereof and the
transactions contemplated hereby. Each party shall use its reasonable efforts to
fulfill or obtain the fulfillment of the conditions to the Closing.
Section 12.11 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 12.12 Public Statements. Buyer, on the one hand, and Seller, on the
other hand, will consult with the other before issuing, and will provide the
other with a reasonable opportunity to review and comment upon, any press
release or other public statements with respect to the transactions contemplated
by this Agreement, and shall not issue any such press release or make any such
public statements prior to such consultation except as may be required by
applicable law or judicial process.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
DYNAMIC MATERIALS CORPORATION
By:
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive Officer
NOBEL EXPLOSIFS FRANCE
By:
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive Officer
32