ASSET PURCHASE AGREEMENT
------------------------
THIS AGREEMENT made the 7th day of October, 2003, by and between the Seller,
DYNAMIC MATERIALS CORPORATION, a Delaware Corporation, of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ("DMC"), and the Purchaser, SILVERTIP, L.L.C., a
Michigan limited liability company,of ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ("Buyer"). DMC and Buyer may also be collectively referred to as "the
parties".
1. Assets to Be Purchased. DMC agrees to sell to Buyer and Buyer agrees to
purchase from DMC, all of the following property, assets and rights utilized in
the business commonly known as Precision Machined Products (the "Business"),
wherever located: all personal and fixture property of every kind and nature,
including, without limitation, all goods (including equipment and any
replacements and accessions thereto) and insurance claims and proceeds and use
of the trade name "Precision Machined Products" (it being understood that DMC
has not registered the trade name Precision Machined Products and makes no
representations or warranties of any kind with respect to the use of such trade
name); provided, however, that inventory, cash and accounts receivable are
specifically excluded and further, provided, that the parties agree that Buyer
is not acquiring any interest in equipment leased by DMC and used in the
Business (all of the foregoing assets used in the Business being transferred to
Buyer are hereinafter referred to collectively as the "Assets"). The Assets will
be more fully described on Exhibit A annexed hereto, to be updated no later than
twenty (20) days after closing.
2. Purchase Price/Terms of Payment. The purchase price for the Assets shall be
FIVE HUNDRED EIGHTY THOUSAND DOLLARS ($580,000.00). At close, Buyer shall
execute and deliver to DMC, a Promissory Note (the "Note") for the full purchase
price, which Note shall provide as follows:
Interest Rate: 2 1/2% per annum for the first
six months, thereafter,
5% per annum
Note Term: 2-1/2 years (30 months)
Interest & Payment Commencement Date: Interest only for the first six
months payable monthly in
arrears, thereafter principal
and interest payable monthly
in arrears
Monthly Payment of Principal: $17,500 (months 6 through 29)
Balloon Payment: $160,000 (month 30)
Interest shall accrue on the outstanding balance of the Note and shall be
computed on the basis of a year of 360 days and paid for the actual number of
days elapsed, all as more fully provided for in the Note. Buyer shall be
responsible for payment of all applicable sales and use taxes. The Note shall be
secured by a Security Agreement and UCC-1 Financing Statement covering all
Assets, other than inventory. Buyer shall have the right to sell any of the
Assets during the Note term with the prior written consent of DMC; provided
however, that all proceeds of sale are applied to the outstanding amount due
under the Note and provided, further, that the proceeds of sale are at least
equal to the fair market value of the Assets being sold as determined by DMC in
its sole discretion. Buyer shall have the right to further pledge the Assets for
security to third parties with the prior written consent of DMC; provided
however, that DMC shall retain a first position and any such third party shall
be required to enter into an intercreditor and subordination agreement in form
and substance satisfactory to DMC.
"AS IS" Sale of Assets. BUYER REPRESENTS THAT BUYER INSPECTED THE ASSETS AND
AGREES THAT EXCEPT, AS EXPRESSLY SET FORTH BELOW WITH RESPECT TO TITLE , DMC HAS
NOT MADE AND MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE,
DIRECTLY OR INDIRECTLY, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER,
INCLUDING (WITHOUT LIMITATION) THE SUITABILITY OF SUCH ASSETS, THEIR DURABILITY,
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THEIR FITNESS FOR ANY PARTICULAR PURPOSE, THEIR MERCHANTABILITY, THEIR
CONDITION, THEIR CAPACITY, THEIR OPERATION, THEIR PERFORMANCE, THEIR DESIGN,
THEIR MATERIALS, THEIR WORKMANSHIP AND/OR THEIR QUALITY. BUYER IS PURCHASING THE
ASSETS "AS IS". DMC SHALL NOT BE LIABLE TO BUYER FOR ANY LOSS, DAMAGE, INJURY OR
EXPENSE OF ANY KIND OR NATURE CAUSED, DIRECTLY OR INDIRECTLY, BY ANY ASSET SOLD
UNDER THIS AGREEMENT OR THE USE OR MAINTENANCE THEREOF OR ANY DEFECT THEREIN,
THE FAILURE OF OPERATION THEREOF, OR ANY REPAIR, SERVICE OR ADJUSTMENT THERETO,
OR BY ANY DELAY OR FAILURE TO PROVIDE ANY THEREOF, OR BY ANY INTERRUPTION OF
SERVICE OR LOSS OF USE THEREOF OR FOR ANY LOSS OF BUSINESS OR DAMAGE WHATSOEVER
AND HOWSOEVER CAUSED, INCLUDING (WITHOUT LIMITATION) ANY LOSS OF ANTICIPATORY
PROFITS OR ANY OTHER INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, NOR SHALL DMC
BE LIABLE FOR ANY DAMAGES WHICH MAY BE ASSESSED AGAINST BUYER IN ANY ACTION FOR
INFRINGEMENT OF ANY UNITED STATES PATENT, TRADEMARK OR COPYRIGHT. DMC MAKES NO
WARRANTY AS TO THE TREATMENT OF THIS AGREEMENT FOR TAX OR ACCOUNTING PURPOSES.
DMC MAKES NO WARRANTY AS TO THE COMPLIANCE OF THE ASSETS WITH APPLICABLE
GOVERNMENT REGULATIONS OR REQUIREMENTS.
Buyer acknowledges that the business is currently operated on premises leased
from a third party located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, which lease is prepaid through and expires on November 30, 2003. In
consideration of the sum of ONE DOLLAR ($1.00) paid to DMC by Buyer, Buyer shall
have the right to occupy the leased premises through November 30, 2003, and be
entitled to all other rights and privileges granted DMC under the lease
arrangement; provided, however, that it shall be the responsibility of Buyer to
obtain the written consent of the landlord to the occupation and use of the
leased premises by Buyer. All obligations and duties under the lease arrangement
shall remain the responsibility of DMC, excepting however, utilities and
insurance from date of close through November 30, 2003, which shall be assumed
by Buyer and further excepting that Buyer shall assume all responsibility and
obligations with regard to the environmental condition of the leased premises as
of the date of close.
3. Representations, Warranties and Covenants of DMC. DMC
represents and warrants the following to be true:
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a) Corporate. DMC has the power and authority to perform
its obligations under this Agreement, which shall be
binding upon and enforceable against DMC in
accordance with its terms. DMC is a duly organized
Delaware Corporation, validly existing and in good
standing under the laws of the State of Delaware, and
is validly authorized to conduct business in Delaware
and to consummate the transaction contemplated by
this Agreement. DMC has the power to own its property
and to carry on its business as and where its
business is now conducted.
b) Title. DMC has good and marketable title to the
Assets except for liens in favor of ▇▇▇▇▇ Fargo
Business Credit which liens shall be released as soon
as practicable. DMC, for itself and its successors
and assigns, covenants and agrees to and with Buyer
to warrant and defend both title to the Assets and
the sale of the Assets conveyed hereunder against all
and every person whomever.
c) Absence of Liens. DMC represents and warrants that
the Assets conveyed hereunder are free and clear of
all liens, encumbrances, and third-party interests,
except liens in favor of ▇▇▇▇▇ Fargo Business Credit.
d) Violation/Breach. The execution and/or performance
of this Agreement, or any other documents to be
executed in accordance herewith, will
not violate in any material respect any laws,
statutes, local ordinances, state or federal
regulations, court or administrative orders or
rulings applicable to DMC, nor is the execution
and/or performance of this Agreement, or any other
documents to be executed in accordance herewith,
in violation of any material condition or material
restriction in effect for any for material financing
ormaterial loan document, whether secured or unsecured
to which DMC is a party or by which DMC is bound.
e) Environmental Report. DMC has delivered to Buyer a
copy of the Report of a Phase I Environmental Site
Assessment prepared for Precision Machine Products
and dated October, 1998.
4. Representations, Warranties and Covenants of Buyer. Buyer makes the
following representations, warranties and covenants:
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a) Name . Buyer is a validly existing limited liability
company duly organized under the laws of the State of
Michigan. Buyer will qualify to do business in the
State of Colorado within twenty (20) days of the date
hereof. Buyer agrees to give DMC at least twenty (20)
days' prior written notice of any change of its name,
address, or state of organization.
b) Authority. Buyer the power and authority to own its
assets, to conduct its business as now being
conducted and to perform its obligations under this
Agreement, which shall be binding upon and
enforceable against Buyer accordance with its terms.
Buyer is authorized to consummate the transaction
contemplated by this Agreement, to deliver this
Agreement and the documents and instruments to be
delivered herewith.
c) Location of Assets. Buyer hereby represents that the
Assets shall be owned by it and held at the leased
premises located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Buyer agrees to give DMC at
least twenty (20) days' prior written notice of any
change in the ownership or location of the Assets.
d) Solvency. Buyer hereby represents and warrants that
it is solvent as of the date hereof and, after giving
effect to the transactions contemplated by this
Agreement, will be solvent, will have assets in
excess of liabilities and will be generally able to
pay its debts as they become due in the ordinary
course.
e) Violation/Breach. The execution and/or performance
of this Agreement, or any other documents to be
executed in accordance herewith, will not violate in
any material respect any laws, statutes, local ordinances,
state or federal regulations, court or administrative
orders or rulings applicable to Buyer, nor is the
execution and/or performance of this Agreement, or
any other documents to be executed in accordance
herewith, in violation of any material condition or
material restriction in effect for any for material
financing or material loan document, whether secured
or unsecured to which Buyer is a party or by which Buyer
is bound.
5. Close/Closing Documents/Possession. Close shall take place at a
place mutually agreed upon by the parties, on or before October 7, 2003. At
close, each party shall execute and deliver to the appropriate party or entity,
any and all documents required to consummate the transaction contemplated by
this Agreement, to include, but not by way of limitation, ▇▇▇▇ of Sale, Note,
Security Agreement, UCC-1 Financing Statement, Resolution(Buyer), Corporate
Resolution (DMC), Certificate of Good Standing (DMC), and applicable sales tax
forms. Possession of the Assets shall be given to Buyer immediately following
close. All risk of loss shall be borne by DMC until final sale is closed, and
thereafter by Buyer, provided however, that Buyer shall, at his sole discretion,
have the right to terminate this Agreement, upon notice to DMC, if the Assets
are materially damaged at any time prior to close, and, prior to close the
damage cannot reasonably be repaired upon payment of the sums available by
insurance settlement.
6. Right to Assign. This Agreement and the covenants herein contained
shall be binding upon and inure to the benefit of the parties and their
respective heirs, administrators, representatives, successors, and assigns;
provided, however, that Buyer may not assign this Agreement without the prior
written consent of DMC, which consent shall not be unreasonably withheld.
7. Representations, Warranties and Covenants to Survive Close. Except
to the extent that the rights and duties of the parties are altered by the
documents executed at time of close, the agreement of the parties with respect
to all matters addressed in this Agreement shall survive close.
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8. Default. In the event either DMC or Buyer shall default in the
performance of their obligations herein, the non-defaulting party may: (a)
specifically enforce the terms hereof; and (b) pursue such other remedies as are
available at law. All rights shall be cumulative.
9. Notices. Except for any notice required under applicable law to be
given in another manner, any notice or demand required or permitted to be given
pursuant to this Agreement shall be deemed effective only if in writing and
delivered either personally or by certified mail, postage fully prepaid, return
receipt requested, or by ordinary mail with proof of mailing, to the appropriate
party at the addresses listed on page one (1) of this Agreement, or to such
other address as may be designated by any party, from time to time, in writing
and in conformity with the terms of this Section. Additionally, a copy of any
notice to Buyer shall also be furnished to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ of ▇▇▇▇▇▇▇▇ & ▇▇▇▇,
P.C., Attorneys at Law, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, via
regular first-class mail.
10. Covenant of Further Assurances. The parties covenant, each with
the other, and their respective heirs, administrators, representatives,
successors, and assigns, that each party shall, at any time and at all times
hereafter, upon reasonable request, make, do, execute and/or deliver all such
other and further reasonable assurances, acts, deeds, documentation, and things
as in the opinion of competent counsel may be necessary or proper to effectuate
the intentions of the parties and complete this transaction.
11. General Construction/Miscellaneous. This Agreement and all other
documentation executed in accordance herewith shall be governed in all respects,
whether as to validity, construction, capacity, performance or otherwise, by the
laws of the State of Michigan. The individual executing this Agreement on behalf
of DMC represents that he is authorized to execute this Agreement and bind the
Corporation. Words of any gender shall be held to include the other gender and
the words in the singular number shall be held to include the plural when the
context so requires. Unless the context clearly indicates to the contrary, time
shall be deemed to be of the essence in the interpretation of this Agreement. In
the event the time for performance of any act falls on a Saturday, Sunday, or
legal holiday, the time for performance shall be extended through the next
business day. Section titles have been utilized for convenience and are not part
of this Agreement or interpretive of any of its language or intent. This
Agreement, together with Exhibit A, the ▇▇▇▇ of Sale, Note and Security
Agreement, sets forth the entire agreement of the parties on the subjects
contained herein. All prior agreements between the parties on those subjects
have been merged herein. Each party acknowledges that they have not agreed to,
or relied on any representation, inducement, or condition not expressly set
forth in this Agreement, Exhibit A, the ▇▇▇▇ of Sale, Note and Security
Agreement. No modification of this Agreement shall be effective unless in
writing and executed by all parties. The invalidation or unenforceability of one
or more of the provisions of this Agreement shall not affect the validity of the
remaining provisions. No provision of this Agreement shall be interpreted for or
against any party because that party or that party's legal representative
drafted the Agreement or its provisions.
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IN WITNESS WHEREOF, this Asset Purchase Agreement has been executed the day and
year first written.
Witnesses: Signed and Sealed:
DYNAMIC MATERIALS CORPORATION, a Delaware
Corporation, Seller
--------------------------- By: ▇▇▇▇▇▇▇ ▇. SANTA
(As To Seller Only) Its: Vice President, Secretary, and Chief
Financial Officer
--------------------------- SILVERTIP, L.L.C., a
(As To Seller Only) Michigan Limited Liability Corporation
---------------------------
(As To Purchaser Only) ------------------------------------------
By: R. ▇▇▇▇▇ ▇▇▇▇
Its: Member
---------------------------
(As To Purchaser Only)
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