Document:

Exhibit 10.1

THE NEW YORK TIMES COMPANY

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

 

	
   

  	
  Effective
  January 1, 1983,

  
	
   

  	
  Amended
  and Restated Effective February 19, 1987

  
	
   

  	
  Amended
  May 5, 1989

  
	
   

  	
  Amended
  and Restated Effective January 1, 1993

  
	
   

  	
  Amended and Restated Effective January 1, 2004

  
	
   

  	
  Amended and Restated
  Effective January 1, 2008

  

 

 

 

 

 

 

 

 

THE NEW
YORK TIMES COMPANY

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

PURPOSE

The Supplemental Executive Retirement Plan is designed to provide a
benefit which, when added to the retirement income provided under other Company
plans, will ensure the payment of a competitive level of retirement income to
key senior executives of The New York Times Company, thereby providing an
additional incentive for assuring orderly management succession.  Eligibility for participation in the Plan
shall be limited to executives designated by the SERP Committee.  This Plan became effective on January 1,
1983, and shall be effective as to each Participant on the date he or she is
designated as such hereunder.  The Plan,
as previously amended, is hereby amended and restated effective as of January
1, 2008.

 

2

 

SECTION I

DEFINITIONS

1.1.                “Basic Plan” means the qualified defined benefit pension
plan to which the Company makes or has made contributions on behalf of a
designated Participant (including, but not limited to The New York Times
Companies Pension Plan, The Guild-Times Pension Plan and The Retirement Annuity
Plan for Craft Employees of The New York Times Company (non-contributory
portion)).

1.2.                “Basic Plan Benefit” means the amount of benefit payable to a
Participant under any Basic Plan, assuming immediate commencement of payments
as of the date of Retirement, with benefits payable in the form of a straight
life annuity.

1.3                 “Code” means the Internal
Revenue Code of 1986, as amended.

1.4                 “Child” means a natural or
legally adopted child of a Participant and his/her Surviving Spouse.

1.5                 “Company” means The New York Times Company and its
subsidiaries and affiliates.

1.6                 “Dependent Child(ren)” means any
unmarried Child(ren) who reside with a Participant or a Surviving Spouse at the
time of Participant’s or the Surviving Spouse’s death, as applicable.

1.7                 “Final Average
Earnings” means effective
April 1, 2000,  the average of
the highest consecutive sixty (60) months of Earnings out of the last one
hundred twenty (120) months preceding the date on which the Participant retires
multiplied by twelve (12).  “Earnings”
for any calendar year shall include the Participant’s base salary, annual cash bonuses and sales
commissions paid during such

 

3

 

year, and shall exclude any other compensation (such as deferred
incentive compensation under the Long-Term Incentive Plan, retirement units and
performance awards (other than annual cash bonuses) under the Executive
Incentive Award Plan, the 1991 Executive Stock Incentive Plan, 1991 Executive
Cash Bonus Plan and any successor plans and stock options under the 1974
Incentive Stock Option Plan, the Employee Stock Purchase Plan, the 1991
Executive Stock Incentive Plan  and any
successor plans) and any contributions to or benefits under this Plan or any
other pension, profit-sharing, stock bonus or other plan of deferred
compensation; except that amounts deferred under a non-qualified deferred
compensation plan and/or amounts which the Company contributes to a plan on
behalf  of the Participant pursuant to a
salary reduction agreement which are not includible in the Participant’s gross
income under sections 125, 402(e)(3), 492(h) or 403(b) of the Code shall be
included.

1.8                “Key Executive Position”
means a position so designated by the SERP Committee.

1.09              “Participant” means an individual
holding a Key Executive Position who has been designated as a Participant by
the SERP Committee.  An executive shall
become a Participant in the Plan as of the date he or she is individually
selected by, and specifically named by the SERP Committee for inclusion in the
Plan.  If a Participant is reclassified
to a responsibility that is not a Key Executive Position, the Participant’s
continuing eligibility will be subject to the approval of the SERP Committee.

1.10              “Plan” means The New York Times
Company Supplemental Executive Retirement Plan.

1.11              “Retirement” or “Retire” means the
termination of a Participant’s employment with the Company on one of the
Retirement Dates specified in Section 2.1.

 

4

 

1.12              “SERP Committee” or “Committee” means a
committee consisting of the Chairman and the President of The New York Times
Company.

1.13              “Service” means the Participant’s
service for vesting purposes as defined in the Basic Plan, up to a maximum of
twenty (20) years, and shall include any additional service credit in specific
situations as may be authorized by the Committee.  Additionally, service shall include any
credits for service pursuant to a buyout plan or agreement accepted by a
Participant.

1.14              “Surviving Spouse” means the
person to whom a Participant is married on the date on which benefits commence
(or at his death, if earlier).

1.15              The masculine gender, where
appearing in the Plan, will be deemed to include the feminine gender, and the
singular may include the plural, unless the context clearly indicates the
contrary.

 

5

 

SECTION II

ELIGIBILITY FOR BENEFITS

2.1.          Each Participant
with ten (10) or more years of Service shall be eligible to Retire and receive
a benefit under this Plan beginning on one of the following Retirement Dates:

  (a)  “Normal
Retirement Date,” which is the first day of the month following the month in
which the Participant reaches age sixty-five (65).

  (b)  “Early
Retirement Date,” which is the first day of any month following (i) the
Participant’s sixtieth (60th) birthday, or (ii) if the Committee consents to
the Participant’s early retirement, the Participant’s fifty-fifth (55th)
birthday.

  (c)  “Postponed
Retirement Date,” which in the case of a Participant who terminates his
employment with the Company after his Normal Retirement Date, is the first day
of the month next following the month in which the Participant terminates
employment with the Company.

2.2.          For purposes of
determining a Participant’s age under this Plan and Retirement Dates
thereunder, the age of a Participant shall include any age credit pursuant to a
buyout plan or agreement accepted by a Participant.

 

6

 

SECTION
III

AMOUNT
AND FORM OF RETIREMENT BENEFIT

3.1.          The annual
Retirement benefit payable to a Participant who Retires on his Normal
Retirement Date shall equal the excess, if any, of (a) fifty percent (50)% of
the Final Average Earnings (prorated at two and one-half percent (2.5%) times
Final Average Earnings times years of Service for Service of less than twenty
(20) years) over (b) the sum of the Basic Plan Benefits payable as of the
Participant’s Normal Retirement Date.

3.2.          The annual
Retirement benefit payable to a Participant who Retires on an Early Retirement
Date shall equal the benefit determined using the formula in Section 3.1,
reduced by four percent (4%) for each year (one-third (1/3) of one percent (1%)
for each month) benefits commenced prior to age sixty (60), less the sum of the
annual Basic Plan Benefits payable as of the Participant’s Early Retirement
Date.

3.3.          The annual
Retirement benefit payable to a Participant who Retires on a Postponed
Retirement Date shall be equal to the benefit determined in accordance with
Section 3.1 based on the Participant’s Service and Final Average Earnings as of
the Participant’s Normal Retirement Date.

3.4.          Retirement benefits
payable under this Plan shall be payable at the same time and in the same
manner as benefits under the Basic Plan (except the Level Income options),
unless otherwise determined by the Company. 
Retirement benefits under this Plan for a Participant who elects a Level
Income Option under the Basic Plan shall be paid in the form of an annuity for
the life of the Participant.  Once in pay
status, a Participant may not change the form of benefit payable under the
Plan.

 

7

 

SECTION
IV

PAYMENT OF
RETIREMENT BENEFITS

4.1.         (a)        A
Participant with ten (10) or more years of Service who is age sixty (60) or
older, may Retire under the Plan by giving a minimum of six months’ notice to
the Committee (unless such notice is waived by the Committee).

(b)   A
Participant with ten
(10) or more years of Service who is not eligible for early Retirement
under Section 4.1(a) may request Retirement under this Plan as of the first of
any month between the ages of fifty-five (55) and sixty (60), but such request shall be
subject to the approval of the Committee, which may approve or deny the request
based on the needs of the Company.  If
the request is denied, the SERP Committee and the Participant will defer such
Retirement under this Plan for a mutually agreed upon period of time.  This will not preclude the right of the
Participant to retire under the Basic Plan, in which case the Participant will
not be entitled to any benefit hereunder.

4.2.          Retirement
benefits payable in accordance with Section III will commence on the
Participant’s date of Retirement under Section 2.1.  Plan payments must begin immediately upon
Retirement and may not be deferred. 
Benefits will continue to be paid on the first day of each succeeding
month.  The last payment will be on the
first day of the month in which the retired Participant dies unless an optional
form of benefit was elected in accordance with Section 3.4.

4.3             Any benefit payments under the Plan shall be net of any
applicable withholding tax under federal or state law.

 

8

 

SECTION
V

PRE-RETIREMENT
DEATH BENEFITS

5.1.                                             (a)        If
a Participant dies while actively employed by the Company or while receiving
Long-Term Disability benefits from the Company and (i) a Surviving Spouse is
eligible to receive benefits under the provisions of a Basic Plan and (ii) the
Participant had ten (10)
or more years of Service and (iii) the Participant’s age plus Service
at the time of death equaled or exceeded sixty-five (65), the Surviving
Spouse shall be entitled to receive an annual benefit commencing as of the
month following the month in which the Company receives satisfactory
documentation of the  Participant’s death
in an amount equal to fifty
percent (50%) of the amount
of the Participant’s accrued benefit as of his date of death determined in
accordance with Section III, in which case the sum of the Basic Plan Benefits
actually payable as of each respective benefit payment date hereunder shall be
substituted for the sum of the Basic Plan Benefits payable as of the
Participant’s Normal Retirement Date. 
The reduction described in Section 3.2 for the early payment of benefits
shall not apply to this benefit.

  (b)        If there is no Surviving Spouse, but there
are Dependent Children under age twenty-three (23), or if the Surviving Spouse
dies while there are Dependent Children under age twenty-three (23), the Surviving Spouse’s
benefits will be shared equally by each such Dependent Child until he or she
reaches the age of twenty-three
(23).

5.2.          The Surviving Spouse’s
benefit will be payable monthly, and will commence on the first day of the
month following the date of the Participant’s death.  The last payment will be made on the first
day of the month in which the Surviving Spouse dies, or, where Section 5.1(b)
applies, the date a Dependent Child reaches age twenty-three (23) or dies.

 

9

 

SECTION
VI

FORFEITURE
OF BENEFIT

Notwithstanding any other provision of this Plan, if at any time during
which a Participant is entitled to receive payments under the Plan, the
Participant engages in any business or practice or becomes employed in any
position, which the SERP Committee, in its sole discretion, deems to be in
competition with the Company or any of its business or interests, or which is
deemed by the SERP Committee, in its sole discretion, to be otherwise
prejudicial to any of its interests, or such Participant fails to make himself
available to the Company for reasonable consultation and other services, the
SERP Committee, in its sole discretion, may cause the Participant’s entire
interest in benefits otherwise payable under the Plan to be forfeited and
discontinued, or may cause the Participant’s payments of benefits under the
Plan to be limited or suspended until such Participant is no longer engaging in
the conduct above or for such other period the SERP Committee finds advisable
under the circumstances, or may take any other action the SERP Committee, in
its sole discretion, deems appropriate. 
The decision of the SERP Committee shall be final.  The omission or failure of the SERP Committee
to exercise this right at any time shall not be deemed a waiver of its right to
exercise such right in the future.  The
exercise of discretion will not create a precedent in any future cases.

 

10

 

SECTION VII

MISCELLANEOUS

7.1           This
Plan shall be binding on the Company and its successors and assigns.  In furtherance of the foregoing, the Company
may assign its obligations to make payments under this Plan to any successor to
all or substantially all of the Company’s business.

7.2.          The SERP Committee may, in its sole
discretion, terminate, suspend or amend this Plan at any time or from time to
time, in whole or in part.  However, no
amendment or suspension of the Plan will affect a retired Participant’s right
or the right of a Surviving Spouse or other beneficiary to continue to receive
a benefit in accordance with this Plan as in effect on the date such
Participant commenced to receive a benefit under this Plan.

7.3.          Nothing contained herein will confer
upon any Participant or other employee the right to be retained in the service
of the Company nor will it interfere with the right of the Company to discharge
or otherwise deal with Participants and other employees without regard to the
existence of this Plan.

7.4.          This Plan is intended to
meet the Employee Retirement Income Security Act’s definition of “an unfunded
plan for management or other highly compensated individuals” and, as such, the
Company will make Plan benefit payments solely on a current disbursement basis
out of general assets of the Company.

7.5.          To the maximum extent
permitted by law, no benefit under this Plan will be assignable or subject in
any manner to alienation, sale, transfer, claims of creditors, pledge,
attachment or encumbrances of any kind.

7.6.          The Plan shall be administered by the
SERP Committee.  The SERP Committee may
adopt rules and regulations to assist it in the administration of the Plan and
may appoint and/or employ individuals to assist it in the administration of the
Plan and any other

 

11

 

agents
it seems advisable, including legal and actuarial counsel.  In addition, the SERP Committee may, it is
discretion, delegate any of its authority, duties and responsibilities
hereunder to any other individual or individuals.

7.7.          This Plan is established under and
will be construed according to the laws of the State of New York, except to the
extent such laws are preempted by ERISA.

7.8.          Claims.  If any Participant, beneficiary or other properly
interested party is in disagreement with any determination that has been made
under the Plan, a claim may be presented, but only in accordance with the
procedures set forth herein.

  (a)        Original Claim.  Any Participant, beneficiary or other properly
interested party may, if he/she so desires, file with the SERP Committee a
written claim for benefits or a determination under the Plan.  Within ninety (90) days after the filing of
such a claim, the SERP Committee shall notify the claimant in writing whether
the claim is upheld or denied in whole or in part or shall furnish the claimant
a written notice describing specific special circumstances requiring a
specified amount of additional time (but not more than one hundred eighty (180)
days from the date the claim was filed) to reach a decision in the claim.  If the claim is denied in whole or in part,
the Committee shall state in writing:

                (i)            the
reasons for the denial;

                (ii)           the references to the pertinent
provisions of this Plan on which the denial is based;

                (iii)          a
description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary; and

 

12

 

                (iv)          an
explanation of the claims review procedure set forth in this section.

  (b)        Claim Review Procedure.  Within sixty (60) days after receipt of
notice that a claim has been denied in whole or in part, the claimant may file
with the SERP Committee a written request for a review and may, in conjunction
therewith, submit written issues and comments.  
Within sixty (60) days after the filing of such a request for review,
the SERP Committee shall notify the claimant in writing whether, upon review,
the claim was upheld or denied in whole or in part or shall furnish the
claimant a written notice describing specific special circumstances requiring a
specified amount of additional time (but not more than one hundred twenty (120)
days from the date the request for review was filed) to reach a decision on the
request for review.

  (c)        General Rules.

                (i)            No
inquiry or question shall be deemed to be a claim or a request for a review of
a denied claim unless made in accordance with the foregoing claims
procedure.  The SERP Committee may
require that any claim for benefits and any request for a review of denied
claim be filed on forms to be furnished by the SERP Committee upon request.

                (ii)           All
decisions on claims and on requests for a review of denied claims shall be made
by the SERP Committee.  The decisions of
the SERP Committee shall be final, binding and conclusive upon all persons.

                (iii)          The
decision of the SERP Committee on a claim and on a request for a review of a
denied claim shall be served on the claimant in writing.  If a decision or notice is not received by a
claimant within the time specified, the claim or request for a review of a
denied claim shall be deemed to have been denied.

 

13

 

                (iv)          Prior to filing a claim or a request
for a review of a denied claim, the claimant or the claimant’s representative
shall have a reasonable opportunity to review a copy of this Plan and all other
pertinent documents in the possession of the Company and the SERP Committee.

                (v)           The
individuals serving on the SERP Committee shall, except as prohibited by law,
be indemnified and held harmless by the employer from any and all liabilities,
costs, and expenses (including legal fees), to the extent not covered by
liability insurance arising out of any action taken by any individual of the
SERP Committee with respect to this Plan, unless such liability arises from the
individual’s claim for such individual’s own benefit, the proven gross
negligence, bad faith, or (if the individual had reasonable cause to believe
such conduct was unlawful) the criminal conduct of such individual.  This indemnification shall continue as to an
individual who has ceased to be a member of the SERP Committee for the employer
and shall enure to the benefit of the heirs, executors and administrators of
such an individual.

 

14

 

APPENDIX
I

Everything in this Plan to
the contrary notwithstanding, the following Participants shall have benefits
under this Plan as provided in their respective agreements with the Company as
follows:

1.              Lance R.
Primis: as per his agreement with the Company dated December 4, 1996.

 

15Exhibit
10.1

 

 

 

 

PURCHASE,
SALE AND ASSIGNMENT AGREEMENT

 

dated
November 15, 2007

 

Among the Sellers named herein,

 

Blitz F07-dreihundert-vierzehn
GmbH (in future: DYNAenergetics Holding GmbH) as Purchaser,

 

and

 

Dynamic Materials Corporation

 

for the purchase of all of
the shares of

 

DYNAENERGETICS
BETEILIGUNGS-GMBH

 

and interests in

 

DYNAENERGETICS
GMBH & CO. KG

 

[The
Agreement was executed by notarial deed executed by the parties to the
Agreement and Stephen Cueni, Notary Public, in Basel Switzerland on 15 November
2007.  The notarial deed has been
omitted.]

 

i

 

Table of Contents

 

	
  RECITALS

  	
  1

  
	
   

  	
   

  
	
  Sec. 1. Defined Terms

  	
  6

  
	
   

  	
   

  
	
  Sec. 2. Sale, Purchase
  and Assignment

  	
  6

  
	
   

  	
   

  
	
  Sec. 3. Purchase Price;
  Payment

  	
  8

  
	
   

  	
   

  
	
  Sec. 4. Sellers’
  Guaranties

  	
  10

  
	
   

  	
   

  
	
  Sec. 5. Remedies for
  Breach of Seller’s Guaranties

  	
  37

  
	
   

  	
   

  
	
  Sec. 6. Environmental
  Matters

  	
  42

  
	
   

  	
   

  
	
  Sec. 7. Taxes

  	
  43

  
	
   

  	
   

  
	
  Sec. 8. Further Actions
  and Obligations

  	
  43

  
	
   

  	
   

  
	
  Sec. 9. Indemnification
  for Sole Operating and Retransfer Obligation

  	
  44

  
	
   

  	
   

  
	
  Sec. 10. Covenants

  	
  46

  
	
   

  	
   

  
	
  Sec. 11.
  Non-Competition Clause

  	
  48

  
	
   

  	
   

  
	
  Sec. 12.
  Confidentiality / Press Releases

  	
  50

  
	
   

  	
   

  
	
  Sec. 13. Costs and
  Taxes

  	
  50

  
	
   

  	
   

  
	
  Sec. 14. Miscellaneous

  	
  50

  

 

ii

 

PURCHASE, SALE AND ASSIGNMENT AGREEMENT

 

This Purchase, Sale and
Assignment Agreement (this “Agreement”)
dated as of November 15, 2007, is among Mr. Rolf Rospek (“Seller 1”); Dr. Uwe Gessel (“Seller 2”);
Mr. Patrick Xylander (“Seller 3”)
and OaG Beteiligungs-GmbH, a German limited liability company (“Seller 4” and together with Seller 1,
Seller 2 and Seller 3, the “Sellers” and
each a “Seller”); Mr. Volker Mertens (“Mr. Mertens”); Blitz F07-dreihundert-vierzehn GmbH (in future: DYNAenergetics Holding
GmbH), a German limited liability company (the “Purchaser”);
and Dynamic Materials Corporation, a Delaware, U.S.A., corporation (“Dynamic Materials”).

 

Recitals

 

1.                                      DYNAenergetics GmbH & Co. KG (the “Company”) is a limited partnership with a limited liability
company as general partner organized under the laws of Germany with registered
offices at Troisdorf and registered with the Commercial Register of the Lower
Court (Amtsgericht) at Siegburg
under HRA 3522. The capital interest (Haftkapital
und Festkapital) of the Company amounts to EUR 400,000 (Euro
four hundred thousand) (the “Limited Partnership Capital
Interest”). The interests in the Company
are held by the sole general partner DYNAenergetics Beteiligungs GmbH (“DYNA
GmbH”), which has no Limited Partnership Capital Interest in the Company, and
by each of the Sellers as follows:

 

i)                                         A limited interest (Kommanditanteil)
with a part of the Limited Partnership Capital Interest (Kapitalanteil)
and a registered capital contribution (Hafteinlage)
each in the amount of EUR 108,000 (Euro one hundred eight thousand) (“KG-Interest 1”) is held by
Seller 1.

 

ii)                                      A limited interest (Kommanditanteil)
with a part of the Limited Partnership Capital Interest (Kapitalanteil)
and a registered capital contribution (Hafteinlage)
each in the amount of EUR 108,000 (Euro one hundred eight thousand) (“KG-Interest 2”) is held by
Seller 2.

 

iii)                                   A limited interest (Kommanditanteil)
with a part of the Limited Partnership Capital Interest (Kapitalanteil) and a registered capital
contribution (Hafteinlage) each in the amount
of EUR 72,000 (Euro seventy-two thousand) (“KG-Interest 3”) is held by Seller 3.

 

iv)                                  A limited interest (Kommanditanteil)
with a part of the Limited Partnership Capital Interest (Kapitalanteil)
and a registered capital contribution (Hafteinlage)
each in the amount of EUR 112,000 (Euro one hundred twelve thousand) (“KG-Interest 4”; the KG-Interest 1, the
KG-Interest 2, the KG-Interest 3 and the KG-Interest 4 are collectively
referred to as the “KG-Interests”)
is held by Seller 4.

 

2.                                      The Sellers are parties as lender of the following loans
(which comprise profits of the Company that have not been distributed as of the
Calculation Date):

 

i)                                         Seller 1 granted a loan to the Company that has a
nominal value of at least EUR 1,302,535.52 (Euro one million three hundred
two thousand five hundred thirty-five and 52/00) as of the date of this
Agreement (“Partner Loan Claim 1”).

 

ii)                                      Seller 2 granted a loan to the Company that has a
nominal value of at least EUR 1,304,869.67 (Euro one million three hundred
four thousand eight hundred sixty-nine and 67/00) as of the date of this
Agreement (“Partner Loan Claim 2”).

 

iii)                                   Seller 3 granted a loan to the Company that has a
nominal value of at least EUR 886,558.48 (Euro eight hundred eighty-six
thousand five hundred fifty-eight and 48/00) as of the date of this Agreement (“Partner Loan Claim 3”).

 

iv)                                  Seller 4 granted a loan to the Company that has a
nominal value of at least EUR 1,383,292.42 (Euro one million three hundred
eighty-three thousand two hundred ninety-two and 42/00) as of the date of this
Agreement (“Partner Loan Claim 4”;
Partner Loan Claim 1, Partner Loan Claim 2, Partner Loan Claim 3
and Partner Loan Claim 4 are collectively referred to as the “Partners’ Loan Claims ”).

 

3.                                      DYNA GmbH, the sole general
partner of the Company, is a limited liability company (Gesellschaft
mit beschränkter Haftung) organized under the laws of Germany with
registered offices at Troisdorf and registered with the Commercial Register of
the Lower Court (Amtsgericht) at Siegburg under
HRB 6271. The Registered Share Capital (Stammkapital)
of DYNA GmbH amounts to EUR 25,000 (Euro twenty-five thousand) (the “Registered Share Capital”). The Registered Share Capital is
divided into the following shares held by the Sellers as follows:

 

2

 

 

i)                                         One share with a par value (Nennbetrag)
of EUR 6,750 (Euro six thousand seven hundred fifty) (“GmbH-Share 1”) is held by
Seller 1.

 

ii)                                      One share with a par value (Nennbetrag) of EUR 6,750 (Euro six thousand seven
hundred fifty) (“GmbH-Share 2”)
is held by Seller 2.

 

iii)                                   One share with a par value (Nennbetrag)
of EUR 4,500 (Euro four thousand five hundred) (“GmbH-Share 3”) is held by
Seller 3.

 

iv)                                  One share with a par value (Nennbetrag)
of EUR 7,000 (Euro seven thousand) (“GmbH-Share 4”;
the GmbH-Share 1, the GmbH-Share 2, the GmbH-Share 3 and the GmbH-Share 4 are
collectively referred to as the “GmbH-Shares”)
is held by Seller 4.

 

4.                                      The Sellers are parties as lender of the following loans
(which comprise profits of DYNA GmbH that have not been distributed as of the
Calculation Date):

 

i)                                         Seller 1 granted a loan to DYNA GmbH that has a nominal value of at least
EUR 18,762.51 (Euro eighteen thousand seven hundred sixty-two and 51/00) as
of the date of this Agreement (“Shareholder
Loan Claim 1”).

 

ii)                                      Seller 2 granted a loan to DYNA GmbH that has a nominal value of at least
EUR 18,762.51 (Euro eighteen thousand seven hundred sixty-two and 51/00)
as of the date of this Agreement (“Shareholder
Loan Claim 2”).

 

iii)                                   Seller 3 granted a loan to DYNA GmbH that has a nominal value of at least
EUR 12,508.34 (Euro twelve thousand five hundred eight and 34/00) as of
the date of this Agreement (“Shareholder
Loan Claim 3”).

 

iv)                                  Seller 4 granted a loan to DYNA GmbH that has a nominal value of at least
EUR 19,457.42 (Euro nineteen thousand four hundred fifty-seven and 42/00)
as of the date of this Agreement (“Shareholder
Loan Claim 4”; Shareholder Loan Claim 1, Shareholder
Loan Claim 2, Shareholder Loan Claim 3 and Shareholder Loan
Claim 4 are collectively referred to as the “Shareholders’ Loan Claims ”).

 

5.                                      The
Company and DYNA GmbH have the following subsidiaries:

 

5.1          The Company holds the
following participations:

 

3

 

i)                                         55% of the registered share capital of OOO
DYNAenergetics RUS, having its registered offices in the Russian Federation,
115230, Moscow, Varshavskoye chaussée, 36, building 8, 2nd floor, being
registered with Inspectorate No. 26 of the Ministry of the Russian Federation
for Taxes and Duties for the Southern Administrative district for the City of
Moscow under OGRN 1037727047797 and having an aggregate share capital of RUR 1,200,000 (Rouble one
million two hundred thousand) (“DYNAenergetics
RUS”);

 

ii)                                      14% (one share with a par value (Nennbetrag) of EUR 3,500 (Euro three
thousand five hundred)) of the registered share capital of Troisdorf
Genehmigungshaltergesellschaft mbH, having its registered offices in Troisdorf,
being registered with the Commercial Register of the Lower Court (Amtsgericht) at Siegburg under
HRB 6200 and having an aggregate
share capital of EUR 25,000 (Euro twenty-five thousand) (“Troisdorf GHG”); and

 

iii)                                   16% (one share with a par value (Nennbetrag) of
EUR 4,000 (Euro four thousand)) of the registered share capital of
Würgendorf Genehmigungshaltergesellschaft mbH, having its registered offices in
Burbach-Würgendorf, being registered with the Commercial Register of the
Lower Court (Amtsgericht) at Siegen under HRB
5466  and having an aggregate share
capital of EUR 25,000 (Euro twenty-five thousand) (“Würgendorf
GHG”).

 

5.2          DYNA GmbH holds the
following participations:

 

i)                                         53.5% of the registered share capital of OOO
Perfoline, having its registered offices in the Russian Federation, 625017,
Tyumen’ oblast, Tyumen’, ul. Yanskaya, 105, being registered with Inspectorate
No. 3 of the Federal Tax Service of the Russian Federation for the City of
Tyumen’ under OGRN 1067203320975 and having an aggregate share capital of
RUR 10,000,000 (Rouble ten million) (“Perfoline”);

 

ii)                                      60% of the registered share capital of KOO KAZ
DYNAenergetics, having its registered offices in Republic of Kazakhstan,
Atyrau, Kantseva str., 7, 9-th office, being registered with the Ministry of
Justice of Republic of Kazakhstan under file no. 7899-1915-LLP (FP) and having
an aggregate share capital of 2,366,600 KZT (Kazakhstan, Tenge two million three hundred sixty-six thousand six
hundred) (about USD 19,558) (“KAZ
DYNAenergetics”);

 

4

 

iii)                                   51% of the registered share capital of 4391438 Canada
Ltd., having its registered offices in the City of Edmonton, in the Province of
Alberta, being registered with Corporations Canada of Industry Canada under
file no. 439143-8 and having an aggregate share capital of CAD 1,000
(Canada, Dollars one thousand) (“4391438
Canada”); and

 

iv)                                  49% of the registered share capital of 1306735 Alberta
Ltd., having its registered offices in the City of Edmonton, in the Province of
Alberta, being registered with the Registrar of Corporations of Alberta under
file no. 2013067356 and having an aggregate share capital of CAD 1,000
(Canada, Dollars one thousand) (“1306735 Alberta”).

 

(DYNAenergetics RUS,
Troisdorf GHG, Würgendorf GHG, Perfoline, KAZ DYNAenergetics, 4391438 Canada
and 1306735 Alberta are collectively also referred to as the “Subsidiaries” and each of them as a “Subsidiary”.  The Company, DYNA GmbH and
the Subsidiaries are collectively referred to as the “DYNA Group” or “DYNA Group Companies” and each of such companies hereinafter a
“DYNA Group Company”.  DYNAenergetics RUS, Perfoline, KAZ
DYNAenergetics, 4391438 Canada and 1306735 Alberta are collectively also
referred to as the “Operating Subsidiaries”
and each of them as an “Operating Subsidiary”.  The interests and shares in the Company, DYNA
GmbH and their Subsidiaries are collectively also referred to as the “Companies’ Shares”.)

 

6.                                      The DYNA Group manufactures, distributes and sells
(i) explosion-weld-clad metals and (ii) explosives and associated
hardware for the international oil field, seismic prospecting, and
decommissioning businesses, including related training and seminars for these
areas world wide (the “Business”).

 

7.                                      Purchaser is an indirect wholly owned subsidiary of Dynamic
Materials.

 

8.                                      The Sellers desire to sell to the Purchaser, and the
Purchaser desires to purchase from the Sellers, all of their KG-Interests in
the Company, all of their GmbH-Shares in DYNA GmbH, the Partners’ Loan Claims
and the Shareholders’ Loan Claims pursuant to the terms and conditions of this
Agreement.

 

5

 

NOW, THEREFORE, the Parties
hereto agree as follows:

 

Agreement

 

Sec. 1.

Defined Terms

 

                Capitalized terms
used herein shall have the meaning ascribed to them in Annex 1.

 

Sec. 2.

Sale, Purchase and Assignment

 

2.1                               Sale and Purchase of KG-Interests, GmbH-Shares, Partners’
Loan Claims and Shareholders’ Loan Claims; Right to Profits

 

Each
Seller hereby agrees to sell, and the Purchaser hereby agrees to purchase, upon
the terms and conditions of this Agreement, the KG-Interests and the
GmbH-Shares held by the individual Sellers. The KG-Interests and the
GmbH-Shares are sold to the Purchaser with all rights and obligations
pertaining thereto with economic effect (schuldrechtlicher Wirkung)
as from 1 October 2007, 0:00 hours CEST (the “Contractual
Effective Date” - wirtschaftlicher Stichtag).  All profits and losses of the Company and
DYNA GmbH shall pertain to the Purchaser other than preliminary distributions (Vorabentnahmen) and additional payments in an aggregate
amount of up to EUR 5,989,092.52 (Euro five million nine hundred
eighty-nine thousand ninety-two and 52/00) for the business year ended on the
Calculation Date that have already been paid from the Company to the
Sellers.  For the avoidance of doubt, the
parties agree, that any claims of Sellers 1 through 3, resulting from their
service agreements as managing directors of the Company (Geschäftsführer-Anstellungsverträge),
dating of 7 September 2001, especially claims on a bonus and on payment of
VAT, are not sold and assigned, but stay in the ownership of the respective
Seller.

Each
Seller hereby agrees to sell, and the Purchaser hereby agrees to purchase, upon
the terms and conditions of this Agreement, the Partners’ Loan Claims and
Shareholders’ Loan Claims belonging to such individual Seller.

 

2.2                               Assignment of the KG-Interests, GmbH-Shares, Partners’ Loan
Claims and Shareholders’ Loan Claims

 

2.2.1.                            Seller 1 hereby assigns (abtreten) to the Purchaser (i) the KG-Interest 1, (ii) the
GmbH-Share 1, (iii) Partner Loan Claim 1 and (iv) Shareholder Loan
Claim 1.

 

2.2.2.                            Seller 2 hereby assigns (abtreten) to the Purchaser (i) the KG-Interest 2, (ii) the
GmbH-

 

6

 

Share 2,
(iii) Partner Loan Claim 2 and (iv) Shareholder Loan Claim 2.

 

2.2.3.                            Seller 3 hereby assigns (abtreten) to the Purchaser (i) the KG-Interest 3, (ii) the
GmbH-Share 3, (iii) Partner Loan Claim 3 and (iv) Shareholder Loan Claim 3.

 

2.2.4.                            Seller 4 hereby assigns (abtreten) to the Purchaser (i) the KG-Interest 4, (ii) the
GmbH-Share 4, (iii) Partner Loan Claim 4 and (iv) Shareholder Loan Claim 4
(the assignments pursuant to Sections 2.2.1 through and including 2.2.4
the “Assignments”).

 

2.2.5.                            The Purchaser hereby accepts the
Assignments from the Sellers.

 

2.2.6.                            The Assignments are subject to the
condition precedent (aufschiebende Bedingung)
of the payment of the Closing Payments to the Sellers pursuant to Section 3.1.2
and deposited to the Hold Back in full pursuant to Section 3.1.3.
The Sellers shall confirm in writing vis-à-vis the Purchaser the receipt of the
Purchase Price in full promptly after its receipt on Execution Date with a
confirmation letter substantially in the form enclosed as Annex 2.2.6.

 

2.2.7.                            The assignment of the KG-Interests and
the GmbH-Shares is in addition subject to the condition precedent (aufschiebende Bedingung) that the Purchaser is registered
with the commercial register of the Company as limited partner by virtue of a
special succession (Sonderrechtsnachfolge).  The Purchaser is solely entitled to waiver of
the condition precedent of this Section 2.2.7 at any time by Notice or
notification by fax or e-mail to the Sellers.

 

2.3                               Consent to the Sale and Purchase of the KG-Interests and the GmbH-Shares

 

The
Company (internally by way of an unanimously passed partners’ resolution) has
agreed to the sale, purchase and assignment of each of the KG-Interests and the
Partners’ Loan Claims.  A copy of such agreement
including a copy of the partners’ resolution are attached as Annex 2.3-1
for identification purposes.

 

DYNA
GmbH (internally by way of an unanimously passed shareholders’ resolution) has
agreed to the sale, purchase and assignment of each of the GmbH-Shares.  A copy of such agreement including a copy of
the shareholders’ resolution are attached as Annex 2.3-2 for
identification purposes.

 

Each
of the Sellers hereby also waives any option or pre-emption right he or it may
have with regard to the KG-Interests and/or the GmbH-Shares and/or the Partners’
Loan Claims and/or the Shareholders’ Loan Claims.  The Purchaser hereby accepts such waivers.

 

7

 

Sec. 3.

Purchase Price; Payment

 

3.1                               Purchase Price

 

3.1.1.                            The purchase price (the “Purchase Price”) for the KG-Interests, the
GmbH-Shares, the Partners’ Loan Claims and the Shareholders’ Loan Claims shall
be an amount equal to EUR 65,850,000 (Euro sixty-five million eight
hundred fifty thousand) allocated among the Sellers as follows:

 

	
  Seller 1

  	
  EUR 17,779,500

  
	
  Seller 2

  	
  EUR 17,779,500

  
	
  Seller 3

  	
  EUR 11,853,000

  
	
  Seller 4

  	
  EUR 18,438,000

  

 

3.1.2.                            At Closing the Sellers shall receive
from or on behalf of the Purchaser the payments as follows (the “Closing Payments”):

 

(i)                                     Purchaser shall deliver a total of 251,041 (two hundred fifty-one
thousand and forty-one) shares of common stock, par value $.05 per share, of
Dynamic Materials (“DMC Common Stock”)
to the Sellers (the “Stock Consideration”)
as set forth on Annex 3.1.2. 
Part of the Stock Consideration will be delivered into escrow pursuant
to Section 3.1.3.

 

(ii)                                  Purchaser shall pay to the Sellers an aggregate amount of cash equal to
EUR 54,322,250 (Euro fifty-four million three hundred twenty-two
thousand two hundred fifty) as set forth on Annex 3.1.2, which is EUR 56,852,250 (Euro fifty-six million eight
hundred fifty-two thousand two hundred and fifty) less the amount of the
Preliminary Business Tax Amount.

 

3.1.3.                            At Closing, 185,956 (one hundred
eighty-five thousand nine hundred fifty-six) shares of DMC Common Stock, which
is a portion of the Stock Consideration equal to EUR 6,665,000 (Euro six
million six hundred sixty-five thousand) (“Hold
Back”), shall be delivered to an escrow account in accordance with
an escrow agreement to be entered into among Sellers, the Purchaser, and the
escrow agent named therein, substantially in the form attached as Annex 3.1.3
(the “Escrow Agreement”).  As further described in, and pursuant to the
terms of, the Escrow Agreement, the Hold Back amount shall be released by delivery
to the Sellers, on the date that is eighteen 

 

8

 

(18) months
after the Closing Date; however, this only applies if and to the extent no
claims under Sections  5 through 7 and Section 9
hereof have been asserted by the Purchaser until the due date. If and to the
extent claims under Sections 5 through 7 hereof have been
asserted by the Purchaser until the due date, the Hold Back shall be used to
secure such claims and any amount still in the Hold Back shall only be released
to the Sellers after full and final satisfaction or waiver of any such claims
of the Purchaser. The Purchaser shall be required to make use of the Hold Back
to satisfy its claims under this Agreement to the extent any of the Hold Back
still exists and is sufficient therefor.

 

3.1.4.                            Pursuant to the terms of the Escrow
Agreement, the parties are obliged to give joint instructions to the escrow
agent under the Escrow Agreement to deliver the Hold Back, including any
related cash in such escrow account to the Sellers:

 

(i)                                     eighteen (18)
months after the Closing Date to the Sellers, if and to the extent no claims
under any of Sections 5-7 and Section 9 have been
asserted by the purchaser until the due date; or

 

(ii)                                  in case and to
the extent that claims under any of Sections 5-7 and Section 9
have been asserted promptly after the parties have resolved such claims or
after a court order, which is final and non appealable has rejected such
claims.

 

3.1.5.                            If the escrow agent under the Escrow
Agreement resigns or is discharged before the Hold Back is released, the
parties are obliged to give joint instructions to the escrow agent to deliver
upon its resignation or discharge the Hold Back including any related cash
(i) to a new escrow agent, the parties have jointly agreed upon; or
(ii) if the parties have not agreed upon a new escrow agent, to the
parties to hold in joint ownership.

 

3.2                               Vesting of the Stock Consideration

 

The
shares of DMC Common Stock received as Stock Consideration, including any shares of DMC Common Stock released
to the Sellers from the Hold Back, may not be sold, assigned, transferred (by
gift or otherwise), conveyed, pledged or otherwise disposed of (the “Transfer Restrictions”) prior to the fifth anniversary of
the Closing Date.  The stock certificates
evidencing the Stock Consideration will be marked
with a legend to such effect.  Upon the
receipt by Dynamic Materials of notice of a scheduled delisting of its common
stock from the exchange on which it is listed, Dynamic Materials shall promptly
notify the Sellers and the Transfer Restrictions shall terminate.

 

9

 

3.3                               Dynamic Materials Common Stock

 

Dynamic
Materials guarantees that the DMC Common Stock delivered as the Stock
Consideration is duly authorized, validly issued, fully paid and
non-assessable.

 

Sec. 4.

Sellers’ Guaranties

 

The Sellers hereby, as
partial debtors (Teilschuldner) according to the
percentage set forth on Annex 5.1, guarantee to the Purchaser by way of
an independent promise of guaranty pursuant to Sec. 311 Para. 1 of
the German Civil Code (selbständiges
Garantieversprechen im Sinne des § 311 Abs. 1 BGB) within the
scope of, and subject to the requirements and limitations provided in Section 4
or otherwise in this Agreement, including the disclosure schedules (which will
be arranged in Annexes, schedules and sections corresponding to the lettered and
numbered sections contained in this Section 4) that the statements
set forth in this Section 4 are true, correct and complete as of
the Closing Date.  The Sellers and the
Purchaser agree and explicitly confirm that the guaranties in this Section 4
are not granted, and shall not be qualified and construed as, quality
guaranties concerning the object of the purchase (Garantien
für die Beschaffenheit der Sache) within the meaning of
Sec. 443, 444 of the German Civil Code, respectively, that Sec. 444
of the German Civil Code shall not and does not apply to the guaranties
contained in this Section 4.

 

For the purpose of this
Agreement the Sellers shall be deemed to have “Sellers’ Knowledge”
of a particular fact or other matter if (i) there exists the actual
knowledge (positive Kenntnis) of any of
Seller 1, Seller 2, Seller 3 or Mr. Mertens of such
particular fact or other matter as of the relevant date or (ii) any of
Seller 1, Seller 2, Seller 3 or Mr. Mertens could have had
knowledge of such fact or other matter after due inquiry in accordance with
their duties as a prudent businessman pursuant to Sec. 43 Para. 1 German
Limited Liability Companies Act.

 

4.1                               Authorization of Sellers

 

4.1.1.                            The execution, delivery and performance by each of the Sellers of this Agreement and the other
documents contemplated hereby (the “Transaction
Documents”) to which any Seller is or will become party and the
consummation of each of the transactions contemplated hereby (the “Contemplated Transactions”):

 

(i)                                     are within
Seller 4’s full corporate right, power and authority;

 

10

 

(ii)                                  do not violate
the articles of association, bylaws or equivalent organizational documents of Seller 4 or any of the DYNA Group
Companies; and

 

(iii)                               have been duly
authorized by all necessary corporate action on the part of Seller 4 and the DYNA Group
Companies.

 

4.1.2.                            The execution, delivery and performance
by each of the Sellers of this Agreement and the other Transaction Documents by
each of the Sellers
to which any such Seller is or will become party require no approval by any creditor, court or other
governmental authority, or any other person whose authority is binding on such Seller.

 

4.1.3.                            As of the date hereof, there is no
Proceeding pending or, to the Sellers’
Knowledge, threatened against any Seller before any court, arbitrator or other
governmental authority that in any manner challenges or seeks to prevent, alter
or materially delay the transaction contemplated by this Agreement.

 

4.2                               Legal Organization of Seller 4

 

4.2.1.                            Seller 4 is a limited
liability company duly
established and validly existing under the laws of Germany and has its actual center of administration in
Germany.  Seller 4 has all requisite
limited liability company power and authority to perform all its obligations
under the Transaction Documents to which it is a party or by which it is bound.

 

4.3                               Legal Organization of the DYNA Group Companies

 

4.3.1.                            Each of the DYNA Group Companies has
been duly established and is validly existing under the applicable Legal
Requirements of their respective jurisdictions.

 

4.3.2.                            Each of the Company, DYNA GmbH and, to
Sellers’ Knowledge, each Operating Subsidiary is duly qualified or licensed to conduct their respective businesses
as and in each jurisdiction where presently conducted.

 

4.3.3.                            Annex 4.3.3-1 contains for identification
purposes copies of the articles of association (or equivalent documents) of
each of the DYNA Group Companies, which are in force and effect and no
resolution for the amendment of the articles of association of any of the DYNA
Group Companies have been adopted, and no filing with the respective registers
for the amendment of the articles of association of any of the DYNA Group
Companies is pending. Annex 4.3.3-2 contains for identification
purposes copies of the current excerpts of the competent commercial registers
of each of the DYNA Group 

 

11

 

Companies.
These copies of the excerpts of the commercial registers reflect the current
situation of each of the DYNA Group Companies completely and correctly with
respect to the subject matter covered thereby.

 

4.3.4.                            None of the Company, DYNA GmbH or, to
Sellers’ Knowledge, any of the Operating Subsidiaries is a party to any
agreement that would permit any third party (other than any entity of the DYNA
Group) to control such DYNA Group Company or obligate it to transfer all of its profits or parts of it to any such third party.

 

4.4                               Solvency of the Sellers and the DYNA Group Companies

 

4.4.1.                            No bankruptcy or insolvency
Proceedings are pending or have been applied for with respect to the Sellers or
any of the DYNA Group Companies.  No
circumstances exist that would require the application for any bankruptcy or insolvency Proceedings with respect to any Seller or
any of the DYNA Group Companies, in particular none of the Sellers or any of
the DYNA Group Companies is over-indebted (überschuldet)
or insolvent (zahlungsunfähig) in the meaning
of the respective insolvency codes of the relevant jurisdictions nor to Sellers’
Knowledge are there existing circumstances that would cause Sellers to believe
they are impending (drohen).

 

4.4.2.                            None of the Sellers or any of
the Company, the DYNA GmbH or, to the Sellers’ Knowledge, any of the Operating Subsidiaries
has, or will have, as of Closing Date, ceased or suspended payments (Zahlungen eingestellt), and no debt settlement arrangement
with respect to any of the Sellers or the Company, the DYNA GmbH or, to the
Sellers’ Knowledge, any of the Operating Subsidiaries, or other compromise or
arrangement between any of the Sellers or the Company, the DYNA GmbH or, to the
Sellers’ Knowledge, any of the Operating Subsidiaries, on the one hand, and any
of their respective creditors, on the other hand, has been proposed or approved
or will have been proposed or approved as of Closing Date.

 

4.5                               Partners’ Loan Claims / Shareholders’ Loan Claims / Ownership in Shares
/ Interests; Shareholdings

 

4.5.1.                            Annex 4.5.1-1 sets forth the nominal value of each
of the Partners’ Loan Claims and Shareholders’ Loan Claims with respect to,
each of the Company and DYNA GmbH as of the date of this Agreement except for
losses occurred since Calculation Date.  Annex 4.5.1-2
sets forth the nominal value of each intercompany loan between any of the DYNA Group Companies as of
Calculation Date.

 

12

 

4.5.2.                            Seller 1  is the sole and unrestricted owner of the GmbH-Share 1,
the KG-Interest 1, Partner Loan Claim 1 and Shareholder Loan Claim 1.

 

4.5.3.                            Seller 2  is the sole and unrestricted owner of the GmbH-Share 2,
the KG-Interest 2, Partner Loan Claim 2 and Shareholder Loan Claim 2.

 

4.5.4.                            Seller 3  is the sole and unrestricted owner of the GmbH-Share 3,
the KG-Interest 3, Partner Loan Claim 3 and Shareholder Loan Claim 3.

 

4.5.5.                            Seller 4  is the sole and unrestricted owner of the GmbH-Share 4,
the KG-Interest 4, Partner Loan Claim 4 and Shareholder Loan Claim 4.

 

4.5.6.                            Each of the shares held by the DYNA Group
Companies in the Subsidiaries is
duly authorized, validly issued and fully paid in, either in cash or in kind,
has not been repaid (whether openly or in any concealed manner that would be
deemed to be a repayment under applicable Legal Requirements) and is not
subject to any contribution obligation (Nachschusspflicht),
except as set forth on Annex 4.5.6.

 

4.5.7.                            Each of the Companies Shares is free and clear of any Liens, restrictions on
transfer or other rights of third parties, and there are no pre-emptive rights,
rights of first refusal, options or other rights of any third party to purchase
or acquire any of the Companies Shares. 
Sellers shall specifically indemnify Purchaser for any adverse
consequences suffered by Purchaser as a result of any failure of the founders
or shareholders of DYNAenergetics RUS or Perfoline to comply with the Family
Code or antitrust notification provisions of the Civil Code of the Russian
Federation.

 

4.5.8.                            The statements made in the Recitals
concerning the DYNA Group Companies are true, correct and complete.

 

4.5.9.                            Other than their respective
participation in the Subsidiaries, neither the Company nor DYNA GmbH holds -
either directly, indirectly or in trust - any shares, partnership interests or
other equity interests (including, without limitation, silent partnerships and
sub-participations) in, or have entered into any agreement to hold any shares,
partnership interests or other equity interests in or to establish, or have any
rights to acquire the foregoing in (collectively, “Interests”), any other entity.  To
the Sellers’ Knowledge, this applies respectively to the Subsidiaries.

 

4.5.10.                     There are no outstanding options,
warrants, calls, subscriptions or other rights, agreements or commitments
obligating any of the Company, DYNA GmbH and, to 

 

 

13

 

Sellers’ Knowledge, each Operating
Subsidiary to redeem,
issue, transfer or sell any Interests in such DYNA Group Company.

 

4.5.11.                     Other than pursuant to this Agreement,
no person has any pre-emptive rights, rights of first refusal, options, or
other rights, whether conditioned or otherwise restricted in its
exercisability, with respect to the Companies Shares.

 

4.5.12.                     No dividend or other distribution in
respect of any of the Companies Shares or the Partners’ Loan Claims or the
Shareholders’ Loan Claims has been declared that remains unpaid other than
dividends owed to the Sellers, which amounts will continue to remain in the
Company or DYNA GmbH after completion of the Contemplated Transaction.

 

4.5.13.                     Immediately following the consummation
of the Contemplated Transactions, Purchaser will acquire the entire ownership
of the Company and DYNA GmbH and will have good and marketable title to the
KG-Interests and GmbH-Shares, free and clear of any Liens and possess all
rights with respect thereto.

 

4.6                               Financial Statements and Liabilities

 

4.6.1.                            The annual audited financial statements of each of the Company and DYNA GmbH for the business years ending on
30 September 2006 and 30 September 2007 each consist of a balance sheet
and a profit & loss account together with the notes (Anhang) and the reports (Lagebericht) and are attached for identification
purposes as Annex 4.6.1 (the “Financial
Statements”).  The Financial
Statements (including the notes thereto) (i) have been prepared in
accordance with German GAAP (Rechnungslegung nach dem
Handelsgesetzbuch unter Berücksichtigung der Grundsätze ordnungsmäßiger
Buchführung) and such accounting principles have been applied
consistently and without change with respect to the preceding years (Bilanzkontinuität); (ii) are complete and correct in
all material respects and (iii) present a true and fair view of the assets
and the liabilities,
the financial condition, changes in capital, cash flows and results of
operations of the relevant company and the business of such company as of the respective
dates of and for the periods referred to in such Financial Statements.  All reserves, provisions and accruals
contained in the Financial Statements of the Company and DYNA GmbH have been made
in accordance with German GAAP.

 

4.6.2.                            [intentionally omitted]

 

4.6.3.                            Neither of the Company nor
DYNA GmbH has any liability (and
there is no basis for 

 

14

 

any present or future Proceeding
against it giving rise to any liability), other than (i) those liabilities
accounted or accrued for in their full amount on the face of the Financial
Statements or obligations incurred in the ordinary course of business for
specific performance (vertragliche Erfüllungsansprüche)
under ongoing contracts (schwebende Geschäfte)
to the extent that such obligations are not to be shown in a balance sheet (nicht bilanzierungsfähig); and (ii) to the extent not
required to be included on the liabilities side of the balance sheet in
accordance with German GAAP, any contingent liabilities (Eventualverbindlichkeiten),
including liabilities based on comfort letters (Patronatserklärungen)
and other off-balance sheet undertakings of a similar nature, that have been
included in the notes to the Financial Statements; provided,
however, such liabilities do not relate to any breach of agreement or violation of any Legal
Requirement.  Since the Calculation Date, the Company and
DYNA GmbH have incurred liabilities only in the ordinary course of business.

 

4.6.4.                            According to the Sellers’ best
knowledge, the internal
controls and procedures of each of the Company and DYNA GmbH are sufficient to ensure that each of the Financial
Statements are accurate in all material respects.

 

4.6.5.                            The books of account of the
Company, DYNA GmbH and, to Sellers’ Knowledge, each Operating Subsidiary have
been maintained in accordance with sound business practices, including the
maintenance of adequate internal controls, are accurate and complete in all
material respects and there are no material inaccuracies or discrepancies of
any kind contained or reflected therein. 
The meeting minutes relating to shareholder meetings of the Company,
DYNA GmbH and, to Sellers’ Knowledge, each Operating Subsidiary contain accurate
and complete records of all meetings held of, and corporate action taken by,
the respective shareholders of the Company, DYNA GmbH and each Operating
Subsidiary.

 

4.6.6.                            Annex 4.6.6 identifies (i) any
off-balance sheet arrangements with respect to each of the Company and DYNA
GmbH, and (ii) any disputes between any of the Company, DYNA GmbH or, to
Sellers’ Knowledge, any of the Operating Subsidiaries and its respective
auditors.

 

4.6.7.                            Annex 4.6.7 lists all of the indebtedness
of each Operating Subsidiary as of the Calculation Date.

 

4.6.8.                            There is no negative impact on
the combined balance sheet of the Company and DYNA GmbH as of the Calculation
Date from the activities of the Subsidiaries for the period 

 

15

 

ending on the
Calculation Date.

 

4.6.9.                            There is no, nor will there be
any, event or circumstance of the Subsidiaries that would have a detrimental
effect on the combined profit and loss statement of the Company and DYNA GmbH
for the three (3) months ended 31 December 2007 or the combined balance
sheet of the Company and DYNA GmbH as of 31 December 2007.

 

4.6.10.                     Neither the Company nor DYNA
GmbH has guaranteed or is otherwise liable for any debt obligation of any of
the Subsidiaries.

 

4.7                               Assets, Product Liability

 

4.7.1.                            Each of the Company, DYNA GmbH and, to
Sellers’ Knowledge, each Operating Subsidiary have good, marketable and valid
title (free and clear of any Lien) to, or, in case of leased or licensed
property and assets, have valid rights as lessee or licenses in or similar
rights to use, and undisturbed and unchallenged possession of all fixed and
revolving  assets (Anlage-
und Umlaufvermögen)
reflected in the Financial Statements, except for fixed assets disposed of
since Calculation Date in the ordinary course of business (the “DYNA-Assets”), or except for assets that are subject to vendors’
retention of title rights (Eigentumsvorbehalt)
as disclosed in Annex 4.7.1. 
The Company, DYNA GmbH and, to Sellers’ Knowledge, each Operating Subsidiary
have good and valid title to all assets that are necessary for or desirable to
carry out the Business.

 

4.7.2.                            All DYNA-Assets are in good operating
condition and repair, according to their normal wear and tear, are adequate and
appropriate for the respective uses to which they are being put.

 

4.7.3.                            Annex 4.7.3-1 contains a list of all real estate
property owned by either of the Company and DYNA GmbH (the “Real Property”).  The Company and DYNA GmbH each has good and
marketable title to its respective Real Property and such Real Property is not
subject to any Lien that would affect or restrict the continued use of such
Real Property by the Company or DYNA GmbH, as appropriate.  Any Lien or other encumbrance affecting the
Real Property has been or is being complied with.  Except as set forth on Annex 4.7.3-2,
to Sellers’ Knowledge, there exist no circumstances that with or without the
passage of time or taking of other action would adversely restrict the
continued possession, enjoyment or use of the Real Property for the provision
of services in connection with the Business. 
All statutes, orders or regulations affecting the Real 

 

16

 

Property, its current use or the
employment of persons or the use of any fixtures, machinery or chattels in it,
have been observed and there are no outstanding requirements or recommendations
of any competent authority regarding the Real Property and the Real Property
complies with the current requirements of the insurers of the Real
Property.  Each building and other
structure on or comprising the Real Property is in good repair and
condition.  None of the Company, DYNA
GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries expect that
(i) the expenditure for repair and maintenance in respect of the Real
Property within three (3) years after the Closing Date, and (ii) no
buildings or structures on or comprising the Real Property require substantial
works of construction, refurbishment or alteration in an aggregate amount for
(i) and (ii) exceeding EUR 100,000 (Euro one hundred thousand).  None of the Company, DYNA GmbH or, to Sellers’
Knowledge, any of the Operating Subsidiaries has received any adverse surveyors’,
engineers’ or other professionals’ reports in respect of the Real
Property.  None of the Company, DYNA GmbH
or, to Sellers’ Knowledge, any of the Operating Subsidiaries has received a
written threat of condemnation or similar Proceeding relating to the Real
Property exceeding an amount of EUR 50,000 (Euro fifty thousand) in each single
case or an amount of EUR 100,000 (Euro one hundred thousand) in aggregate.

 

4.7.4.                            Annex 4.7.4  contains a complete list of lease agreements concluded by
the Company and DYNA GmbH regarding Real Property.  Each of the Company, DYNA GmbH and, to
Sellers’ Knowledge, each Operating Subsidiary has valid and enforceable leases
or sub-leases, as the case may be, with respect to the real property that is
leased to each such DYNA Group Companies. 
The real property leased by the Company, DYNA GmbH and, to Sellers’
Knowledge, each Operating Subsidiary is appropriate and sufficient for purposes
of conducting the respective business of the respective DYNA Group Companies as
currently being conducted.

 

Any leased building or any
leased premises is in good repair and condition, and none of the Company, DYNA
GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries expect that
(i) the expenditure for repair and maintenance will be
required in respect of the leased buildings or leased premises within
three (3) years after the Closing Date and (ii) no buildings or
leased premises require substantial works of construction, refurbishment or
alteration exceeding an aggregate amount of EUR 150,000 (Euro one hundred fifty
thousand) per year.  None of the Company,
DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries have
received any 

 

17

 

adverse surveyors’,
engineers’ or other professionals’ reports in respect of the buildings or leased
premises.

 

The business conducted by the Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries on
the leased real property is duly authorized by the applicable lease
agreements.  No event or condition
exists, or is alleged by any other party, to have occurred or exist, that
constitutes a basis for a termination for cause (außerordentliches Kündigungsrecht) of any such agreements
and no notice of termination with respect to any of the lease agreements listed
in Annex 4.7.4 has been served on any of the DYNA Group Companies.

 

4.7.5.                            Except as disclosed in Annex 4.7.5, neither any of Sellers 1,
2 or 3 nor their relatives in the meaning of Sec. 15
German Tax Code (Abgabenordnung)
own any asset (whether tangible or intangible) that constitutes a material
basis for the Business (wesentliche
Betriebsgrundlage).  The same
applies for the Seller 4 and its affiliates pursuant to Sec. 15 et seq. of the German Stock Corporation
Act (Aktiengesetz) as well as for
Mr. Mertens and his relatives in the meaning of Sec. 15 German Tax
Code (Abgabenordnung).

 

4.7.6.                            There are no products warranty claims  (Gewährleistungsklagen)
against any of the Company, DYNA GmbH or, to Sellers’ Knowledge, any of the
Operating Facilities pending and no such claim has been asserted in the past
against any of the DYNA Group Companies. 
To the Sellers’ Knowledge, none of the DYNA Group Companies will have
any liability under the terms of any express or implied product warranties of
the DYNA Group Companies, except to the extent expressly or in general reserved
in the Financial Statements.

 

4.8                               Intellectual Property Rights

 

4.8.1.                            Annex 4.8.1 contains a list of all current brand names, trade names, patents,
patent applications, trademarks, trademark applications, trade secrets,
copyrights, service marks and other intellectual property rights (whether or
not registered) including domain names and databases that are owned by or  have been filed by the Company or DYNA GmbH (the “Intellectual Property Rights”). Intellectual Property Rights
include, without being limited to, patents and patent applications, rights in
inventions, all information and know-how that is of a confidential nature or
not generally known in the public domain; utility models and design patents
together with applications therefore, contracts for material software that is
licensed or otherwise used by the

 

18

 

Company or
DYNA GmbH, and all software that is owned by the Company or DYNA GmbH.  The Company and DYNA GmbH own solely and
exclusively (free and clear of any Liens) and/or have the right to use all
Intellectual Property Rights for the conduct of the Business.

4.8.2.                            Except as set forth in Annex 4.8.2,

 

(i)                                     each of the
Company, DYNA GmbH and, to Sellers’ Knowledge, each Operating Subsidiary have validly maintained Intellectual
Property Rights owned or used by any of the DYNA Group Companies and no Seller
or any employee of any of the Company, DYNA GmbH or, to Sellers’ Knowledge, any
Operating Subsidiary has any rights to any Intellectual Property Rights used by
any such DYNA Group Company or has a claim for compensation for such
Intellectual Property Rights;

(ii)                                  each Intellectual Property
Right owned by any of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries immediately
prior to the Closing will be owned by the respective DYNA Group Companies on
identical terms and conditions immediately subsequent to the Closing;

(iii)                               with respect to
each
Intellectual Property Right that any third party owns and that any of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries
uses, or intends to use as the business is presently intended to be conducted,
pursuant to license, sublicense, agreement or permission immediately prior to
the Closing, (A) such Intellectual Property Right will be available for
use by the Company, DYNA GmbH and, to Sellers’ Knowledge, each Operating
Subsidiary on identical terms and conditions immediately subsequent to the
Closing; (B) all such licenses, sublicenses, agreements and permissions
(each as amended to date) of the Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating
Subsidiaries, is fully paid for to the extent required as of the
Closing Date; (C) the license, sublicense, agreement or permission of the Company, DYNA GmbH or, to Sellers’
Knowledge, any of the Operating Subsidiaries covering the item is
binding and enforceable; and (D) none of the Company, DYNA GmbH or, to
Sellers’ Knowledge, any of the Operating Subsidiaries nor any other party to
the license, sublicense, agreement or permission is in breach or default, and
no event has occurred that with notice or lapse of time or both would
constitute a breach or default or permit termination or modification
thereunder;

19

 

(iv)                              none of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries
has granted any license (exclusive or non-exclusive) with respect to any
Intellectual Property Right to any third party (other than any entity of the
DYNA Group);

(v)                                 none of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries
has ever agreed to indemnify any person for or against any interference,
infringement, misappropriation or other conflict with respect to any
Intellectual Property Right owned or used by any of the DYNA Group Companies;

(vi)                              to the Sellers’
Knowledge, no third party is infringing or making unauthorized use of any
Intellectual Property Rights owned by any of the Company, DYNA GmbH or, to
Sellers’ Knowledge, any of the Operating Subsidiaries;

(vii)                           the
consummation of the Contemplated Transactions will not result in the loss or
impairment of the rights of any of the Company, DYNA GmbH or, to Sellers’
Knowledge, any of the Operating Subsidiaries to own or use any of the
Intellectual Property Rights, nor will such consummation require the consent of
any third party in respect of any Intellectual Property Right; and

(viii)                        none of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries
has interfered with, infringed upon, misappropriated, reverse engineered or
otherwise come into conflict with any Intellectual Property Rights of third
parties and has never received any charge, complaint, claim, demand or notice
alleging any such interference, infringement, misappropriation, reverse
engineering or violation.

4.8.3.                            None of the Intellectual Property
Rights of the Company, DYNA GmbH or, to Sellers’ Knowledge, any of the
Operating Subsidiaries is subject to any outstanding Order that restricts the
use thereof by it and, to the Sellers’ Knowledge, no third party has asserted
or claimed any challenges to, and no Proceeding is pending or is threatened
that challenges the legality, validity, enforceability, use or ownership of any
Intellectual Property Right owned or used by any of the Company, DYNA GmbH or,
to Sellers’ Knowledge, any of the Operating Subsidiaries and there is no basis
for such assertion or claim.

 

4.8.4.                            To the Sellers’ Knowledge, each of the
Company, DYNA GmbH and the Operating 

 

20

 

Subsidiaries respectively own all Intellectual Property
Rights or licenses thereof necessary or desirable for the operation of their
respective current businesses as presently conducted and as presently proposed
to be conducted (other than commercially available off-the-shelf software
purchased or licensed for less than a total cost of EUR 1,000 (Euro one
thousand) in the aggregate).  This
applies especially but is not limited to the right to use the software
necessary to operate the relevant respective business.

 

4.9                               Compliance with Laws and Permits

4.9.1.                            Each of the Company, DYNA
GmbH, Troisdorf GHG, Würgendorf GHG and, to Sellers’ Knowledge, the Operating
Subsidiaries validly holds, or Troisdorf GHG or Würgendorf GHG holds on its
behalf, all governmental permits, licenses, authorizations and consents that
are required by any competent authority in order to conduct the businesses of
such DYNA Group Company as presently conducted (the “Governmental Permits”). 
All Governmental Permits held by the Company, DYNA GmbH, Troisdorf GHG
and Würgendorf GHG are valid and in full force and effect.  Except as disclosed in Annex 4.9.1,
no Governmental Permit for the operations of the Company, DYNA GmbH nor, to
Sellers’ Knowledge, each Operating Subsidiary
has been cancelled or revoked by any competent authority and none of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any Operating Subsidiary has
received any notice by any such authority that it intends to cancel or revoke
any Governmental Permit.  To the Sellers’
Knowledge, no circumstances exist that could result in a revocation or
limitation of the Governmental Permits, including, but not limited to, as a
consequence of the implementation of this Agreement or other Contemplated
Transactions, or that could lead to the imposition of conditions to the Governmental
Permits.

 

4.9.2.                            Each of the Company, DYNA GmbH
and, to Sellers’ Knowledge, the Subsidiaries conducts, and has at all times
during the last five (5) years conducted, its business, in all material
respects, in compliance with Legal Requirements applicable to it, the conduct
of its business or the ownership or use of its assets or properties and all
Governmental Permits in such jurisdictions where any of such DYNA Group
Companies conducts its business, in each case as in effect, enforced and
construed on the date hereof, except as disclosed in Annex 4.9.1.  None of the Company, DYNA GmbH or, to Sellers’
Knowledge any Operating Subsidiary nor Seller has received any notice of any
violation of any such Legal Requirement or Governmental Permit or of any obligation

 

21

 

to undertake any material remedial action
under any such Legal Requirement or Governmental Permit and, to the Sellers’
Knowledge, there has been no assertion by any governmental authority of any
such violation or obligation. In particular, but without limitation, none of
the Company, DYNA GmbH or, to Sellers’ Knowledge, the Subsidiaries is or was an
addressee of claims by any person for the violation of direct marketing law
during the past five (5) years.

 

4.9.3.                            Each of the Company, DYNA GmbH
and, to Sellers’ Knowledge, the Subsidiaries and, to Sellers’ Knowledge, each
of their respective predecessors
concerning the assets of the Company, DYNA GmbH and, to Sellers’ Knowledge,
each Operating Subsidiary (i) has materially complied and are in material
compliance with all Environmental, Health and Safety Laws and (ii) has and
has had reasonable procedures in place to address compliance with all
Environmental, Health and Safety Laws. 
Neither any of the Company, DYNA GmbH or, to Sellers’ Knowledge, the
Subsidiaries nor, to Sellers’ knowledge, each of their respective predecessors
has received any written or oral notice, report, or other information regarding
any actual or alleged violation of Environmental, Health and Safety Laws.

 

4.9.4.                            Except as disclosed in Annex
4.9.4, with regard to noise emissions, the continuous operation of the DYNA
Group Companies’ business is ensured and no
orders to stop the business operations of any of the Company, DYNA GmbH or, to
Sellers’ Knowledge, the Subsidiaries have been issued or enforced in the past.

 

4.9.5.                            During the past five (5)
years, to the Sellers’ Knowledge neither any of the Company, DYNA GmbH or, to
Sellers’ Knowledge, the Subsidiaries, nor any affiliate, shareholder, partner,
manager, director, officer, agent or employee of any DYNA Group Company, or any other person
associated with or acting for or on behalf of any DYNA Group Company, has
directly or indirectly (i) made any unlawful payment to any person;
(ii) performed any unlawful favor or given any unlawful gift;
(iii) used funds of any DYNA Group Company (A) to make any unlawful
political contribution or gift or for any other unlawful purpose relating to
any political activity; (B) to make any unlawful payment to any
governmental official or employee; (C) to establish or maintain any
unlawful or unrecorded fund or account of any nature; (D) to make any
contribution, gift, bribe, rebate, disbursement, influence payment, kickback or
other payment to any person, private or public, regardless of form, whether in
money, property or services (a) to obtain favorable treatment in securing
business, (b) to pay for favorable treatment for business secured,
(c) to obtain special concessions or for special 

 

22

 

concessions already obtained, or
(d) in violation of any applicable Legal Requirements;
(iv) established or maintained any fund or asset that has not been
recorded in the books and records of the Sellers, or any DYNA Group Company or
their respective affiliates; or (v)  agreed, committed or offered (in
writing or otherwise) to take any of the actions described in clauses (i)
through (iv) above.

 

4.10                        Material Agreements

4.10.1.                     Annex 4.10.1 contains a list of all contracts to
which the Company or DYNA GmbH is a party and that have not yet been completely
fulfilled (the “Material
Agreements”) that:

 

(i)                                     involve the ten
(10) largest customers and the ten (10) largest suppliers of the Company and
DYNA GmbH based on revenues in the business year ending on Calculation
Date;  

(ii)                                  relate to the
acquisition or sale of interests in other companies, businesses or real estate;

(iii)                               comprise the
services still to be rendered vis-à-vis the Company or DYNA GmbH by third parties
under the mutual supply agreements regarding the business of the Company and
DYNA GmbH on the Troisdorf and Würgendorf sites;

(iv)                              relate to the
rental and lease of real estate that, individually, provide for annual payments
of EUR 50,000 (Euro fifty thousand)
or more and that cannot be terminated by the Company or DYNA GmbH on twelve
(12) months or more notice without penalty;

(v)                                 involve
non-compete covenants or other non-compete agreements that restrict either the
Company or DYNA GmbH from operating its business as presently conducted;

(vi)                              concern
material license agreements regarding rights to Information Technology or
Intellectual Property Rights to which either of the Company and DYNA GmbH is
party as licensor or licensee (except for license agreements concerning
standard application software) and material cooperation agreements relating to
software and other rights to Information Technology;

23

 

(vii)                           concern loan
agreements, bonds, notes or any other instruments of debt involving any third
party outside the DYNA Group Companies;

(viii)                        involve
guarantees, indemnities or suretyships issued for any debt of any third party or a DYNA Group Company;

(ix)                                involve
agreements with any of the Sellers, other than in connection with commercial
transactions made in the ordinary course of the DYNA Group Companies’
respective businesses;

(x)                                   concern a joint
venture, partnership, strategic alliance or joint development of products;

(xi)                                concern any
loan or extension of credit to directors or executive officers;

(xii)                             relate to any
continuing obligations (Dauerschuldverhältnisse)
other than described above
in this Section 4.10.1 that cannot be terminated within a notice period
of three months or that provide for annual obligations of the Companies in
excess of EUR 50,000 (Euro fifty thousand); or

(xiii)                          (A) involve a
value in excess  of EUR 50,000
(Euro fifty thousand) per annum or (B) that may otherwise be material (in the
determination of a reasonably prudent operator in the Company’s Business) to
either the Company or DYNA GmbH, and (C) those containing change of control
provisions according to which such agreements could be terminated or materially
affected as a result of a consummation of the transactions contemplated by this
Agreement.

4.10.2.                     Unless otherwise disclosed in Annex 4.10.2,
each Material Agreement is valid and enforceable in accordance with its terms,
has been entered into in the ordinary course of business and, where concluded
with the Sellers and their related parties at arms’ length terms, and the
Company and DYNA GmbH
have in all respects complied with all Material Agreements and have taken all
reasonable steps in the ordinary course of business to be in a position to
fulfill the obligations under such Material Agreements when they become due and
neither the Company or DYNA GmbH nor, to the Sellers’ Knowledge, any other
party thereto is in default under the terms of any such Material Agreement and no other event has occurred or
condition exists that, with notice or lapse of time or both, would constitute a
default by either the Company or DYNA GmbH or, to Sellers’ Knowledge, any other
party to any such Material Agreement.

 

24

 

4.10.3.                     Except as disclosed in Annex 4.10.3, no third party is entitled to
terminate or materially amend any terms of any Material Agreement as a result
of the execution and consummation of this Agreement and the consummation of the
Contemplated Transactions.

 

4.10.4.                     For the Company and DYNA GmbH, there
are no agreements with distributors or sales representatives, other than those
referred to in Annex 4.10.4. 
The Sellers have provided to the Purchaser true, complete and correct copies of all
such agreements, as amended to date.  There
are no outstanding payments to distributors or sales representatives other than
shown in the Financial Statements or occurred in the ordinary course of
business since Calculation Date.

 

4.10.5.                     Annex 4.10.5 sets forth each Material
Agreement that requires the consent of or notice to any third party in
connection with the consummation of any of the Contemplated Transactions.

 

4.11                        Managing Directors and Employees

4.11.1.                     Annex 4.11.1 contains a true, correct and complete list outlining all
managing directors of the DYNA Group Companies.

 

4.11.2.                     Annex 4.11.2-1 contains a true, correct and
complete list of the names, jobs and material details of the terms of
employment (including, without limitation, salary, benefits, seniority, age) of
every individual employed or engaged (whether as a managing director, an
employee or a consultant) by the Company and DYNA GmbH (the “Employees”) and there is no omission that
makes that list misleading.  None of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries
makes or has agreed to make ex gratia payments to any Employee or former
Employee or spouse, child or dependent of any of them.  There have been no issues relating to the
treatment of freelancers by the Company, DYNA GmbH and, to Sellers’ Knowledge,
each Operating Subsidiary and no freelancer employed or retained by the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries
qualifies as a so-called “Scheinselbständiger”.  No commitments have been made outside the ordinary course
of business by the Company, DYNA GmbH or, to Sellers’ Knowledge, any of the
Operating Subsidiaries to the Employees, the unions and / or the workers’
council to amend any works agreement or collective bargaining agreement, to
increase or decrease benefits thereunder or to establish any new works
agreements or collective bargaining agreements. 
There are no imminent changes, with 

 

25

 

the exception of the regular increase of
wages of four percent (4%) as per 1 October 2007 and of individual
increases set forth in Annex 4.11.2-2, in any wages or other
compensation of any of the Employees of the Company, DYNA GmbH or, to Sellers’
knowledge, the Operating Subsidiaries. 
The Company, DYNA GmbH and, to Sellers’ Knowledge, each Operating
Subsidiary have, in relation to each of their respective Employees, complied
with all statutes, regulations, codes of conduct, works agreement, collective
bargaining agreements, terms and conditions of employment, orders and awards
relevant to their conditions of service or to their relations with the
Employees or any recognized trade union or works council.  Annex 4.11.2-3 contains for
identification purposes copies of five agreements.  There are no other employee benefit plans,
stock purchase plans and similar plans for the benefit of the Employees by
which any of the Company and DYNA GmbH are bound or that have been introduced
in draft form to the Employees.

 

4.11.3.                     None of the DYNA Group
Companies is party to any agreements with unions (Gewerkschaften)
and similar organizations (including, without
limitation, works agreements and collective bargaining agreements) by which any
of the Company and DYNA GmbH, as of the Closing Date, are bound.

 

4.11.4.                     None of the managing directors of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating
Subsidiaries and of the employees of the Company, DYNA GmbH or, to Sellers’
Knowledge, any of the Operating Subsidiaries whose annual base salary
(excluding, for the avoidance of doubt, performance-related payments, bonuses
and any benefits), exceeds EUR 60,000 (Euro sixty thousand) has given written
notice of termination of his or her employment.

 

4.11.5.                     Except for any pension rights deriving
from the pension plans disclosed in Annex 4.11.5 and direct pension insurances (Direktversicherungen) listed in Annex 4.11.5, no
pension or post retirement scheme or any other
similar commitments or arrangements have been made or promised by the Company,
DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries to any
of its current or former employees.  The
rights of the Employees being entitled to participate in the Dynamit Nobel
pension scheme (Pensionskasse Dynamit Nobel
Versicherungsverein aGg) shall not be negatively affected by the
consummation of the transaction under this Agreement. All obligations of the
Company, DYNA GmbH or, to Sellers’ knowledge, any of the Operating Subsidiaries
that are due and payable as per the Closing Date, whether arising by operation
of law, by agreement or past custom, for payments and 

 

26

 

contributions with respect to direct or indirect pension and
retirement benefits to Employees ending prior to or on the Closing Date have
been paid, or have been accrued for in compliance with the applicable generally accepted accounting
principles.  The reserves made in the
balance sheets included in the Financial Statements for pension commitments
(together with any pension liability insurance (Rückdeckungsversicherung) taken out by the Company and DYNA
GmbH respectively) are in accordance with German GAAP (HGB).

 

4.11.6.                     None of the Company, DYNA GmbH or, to
Sellers’ Knowledge, any of the Operating Subsidiaries is experiencing
(i) any strike, lockout or slowdown of its employees (and no such strike,
lockout or slowdown is threatened) or (ii) any lawsuit or dispute with any
union, workers’ council, other body employee representatives or Employee
pending or threatened before any court, governmental authority or arbitrator
(including any Proceedings pending before any conciliation committee (Einigungsstellenverfahren)).

 

4.11.7.                     There are no non-compete agreements
with third parties entailing compensation of any of the Company, DYNA
GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries based on the
non-compete regulation.

 

4.11.8.                     To Sellers’ Knowledge, any permission
required by law with regard to committed employees (überlassene Arbeitnehmer) of third-party companies exist.

 

4.11.9.                     Any employee
inventions (Arbeitnehmererfindungen)
of the Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating
Subsidiaries are listed in Annex 4.11.9.

 

4.11.10.              The employees of the Company or DYNA
GmbH being in partial retirement (Altersteilzeit) are listed in Annex 4.11.10.  All requirements are fulfilled in order to
receive public reimbursement by the competent employment offices in connection
with partial retirement.

 

4.11.11.              All claims vis-à-vis the Company
resulting from the balancing of interest (Interessenausgleich)
concluded between Dynamit Nobel GmbH Explosivstoff- und Systemtechnik and the
works councils of the branches in Troisdorf and
Würgendorf on 27 September 2001 have been fully fulfilled and are finally
settled.

 

4.11.12.              Annex 4.11.12 contains a list of all shop agreements
that originally were concluded with Dynamit Nobel GmbH Explosivstoff- und
Systemtechnik and that are still in force within the Company or DYNA GmbH due
to the transfer of employees from Dynamit 

 

27

 

Nobel GmbH Explosivstoff- und Systemtechnik to the Company;
this list comprises the employees of the Company and DYNA GmbH to which any
shop agreement is applicable.

 

4.11.13.              There are no shop agreements (Betriebsvereinbarungen) concluded between the  works councils (Betriebsräten)
(including the general works council - Gesamtbetriebsrat)
and either of the Company or DYNA GmbH except as disclosed in Annex 4.11.13.

 

4.11.14.              Neither the Company nor DYNA GmbH is
party to any kind of employers’ associations. 
Except as disclosed in Annex 4.11.14, neither the
Company nor DYNA GmbH is bound by any collective agreements (Tarifverträge).

 

4.11.15.              No employee of the Company or DYNA GmbH
has a contractual right to any (i) extra income or bonus
payment from the Company or DYNA GmbH as a result of the execution of this
Agreement or the consummation of the Contemplated Transactions or
(ii) enhanced redundancy or severance payment from the Company or DYNA
GmbH arising solely from the execution of this Agreement or consummation of the
Contemplated Transactions.

 

4.11.16.              No non-compete covenants have been
agreed upon with any employees of the Company or DYNA GmbH that requires the
Company or DYNA GmbH to pay compensation after the termination of such
employees.

 

4.12                        Insurance

Annex 4.12-1 contains a list of all
insurance policies relating to the assets, Business or operations of the
Company and DYNA GmbH.  Such insurance
coverage, in the determination of a reasonably prudent operator in the Company’s
Business, is adequate and customary for business operations such as the
Business.  All premiums due under the relevant insurance
policies have been paid when due, and neither the Company nor DYNA GmbH is in
breach of any other provision of the insurance contracts.  All such policies are binding and enforceable except as
disclosed in Annex 4.12-2. 
There are no material claims by the Company or DYNA GmbH pending under
any of such policies as to which coverage has been questioned, denied or disputed
by the insurer except for the claims against GVG Grzybowski
Versicherungs-Vermittlungs-GmbH concerning the insurance Gerling Allgemeine
Versicherungs-AG that is described in Annex 4.12-3.

 

28

 

4.13                        Litigation

Except as disclosed in Annex 4.13, none of the Company, DYNA
GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries is involved
in any Proceedings whether pending (rechtshängig)
or threatened in writing before any court of justice, arbitration panel,
administrative authority or other governmental body and, to the Seller’s
Knowledge, there are no circumstances that could lead to any such Proceedings.

 

4.14                        Compliance and Change of Control

4.14.1.                     The Sellers guarantee that neither the execution and delivery of the
Transaction Documents nor the consummation of the Contemplated Transactions
will, directly or indirectly:

(i)                                     contravene any
provision of law applicable to any of the Sellers or the Company, DYNA GmbH or,
to Sellers’ Knowledge, any of the Operating Subsidiaries or by which any of
their respective assets or properties may be bound;

(ii)                                  contravene any
provision of the articles, bylaws or equivalent organizational documents of any
of the Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating
Subsidiaries;

(iii)                               provided that
there will be no change in the management (Geschäftsleitung) of
the Company and of DYNA GmbH, contravene any of the terms of, or give any
governmental body the right to revoke or modify, any governmental authorization
that is held by, or on behalf of, any of the Company, DYNA GmbH or, to Sellers’
Knowledge, any of the Operating Subsidiaries and/or any Seller or by which any
of their respective assets or properties may be bound;

(iv)                              change or create
any liability of any of the Company, DYNA GmbH or, to Sellers’ Knowledge, any
of the Operating Subsidiaries or give any person any rights or remedies against any of the Company,
DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries or give
to any person any rights of termination or modification of any agreement or
permit to which any of the Company, DYNA GmbH or, to Sellers’ Knowledge, any of
the Operating Subsidiaries is a party or by which any of the Company, DYNA GmbH
or, to Sellers’ Knowledge, any of the Operating Subsidiaries or their
respective assets or properties is bound or affected, including, but not
limited to, agreements with 

29

 

shareholders and employees, in each case, with
or without the passage of time or giving of notice or both;

(v)                                 alter, diminish
or (directly or indirectly) result in the loss of any asset of the Company,
DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries, or
create any rights or assets in any other person that may be adverse to the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating
Subsidiaries; or

(vi)                              result in the
imposition of any Lien on any of the Company Shares or the assets or properties
of the Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating
Subsidiaries.

4.14.2.                     The Sellers are not, nor will be, required to obtain any consent from
any third party in order to validly execute and deliver the Transaction
Document or to perform
any of their obligations thereunder.

4.14.3.                     The change of the shareholding in the
Company to the Purchaser does not have any negative impact on the legal
position of the Company within Troisdorf GHG.

4.14.4.                     The change of the shareholding in the
Company to the Purchaser does not have any negative impact on the legal
position of the Company within Würgendorf GHG.

4.15                        Information Technology

All
computer hardware, software, firmware, networks and other information
technology and any aspect or asset of a business that relies on any of the
foregoing, whether embedded or otherwise (the “Information
Technology”) used by or required to carry on the Business of the
Company, DYNA GmbH and, to Sellers’ Knowledge, each Operating Subsidiary in the
manner carried on prior to and/or as at the Closing Date (including the
fulfillment of existing contracts and commitments) is either owned or validly
leased or licensed to the Company, DYNA GmbH and the Operating Subsidiaries for a period of at least twelve (12)
months after the Closing Date.  The
Information Technology owned or used by the Company, DYNA GmbH and, to Sellers’ Knowledge,
each Operating Subsidiary and/or that relates to the Business has the capacity
and performance necessary to fulfill the present requirements of the respective
company.

 

30

 

4.16                        [intentionally
omitted]

4.17                        Events since Calculation Date

Since
the Calculation Date, except for any Contemplated Transactions:

 

(i)                                     the business of
the Company, DYNA GmbH and, to Sellers’ Knowledge, each Operating Subsidiary
has been carried out in the ordinary and usual course consistent with past
practice;

(ii)                                  there has not occurred any Material Adverse
Change, or any development that is reasonably likely to cause a Material
Adverse Change to, the DYNA Group Companies taken as a whole.  A “Material
Adverse Change” to a person means a material adverse change in or
any result, effect, event, occurrence, fact, change, contingency or
circumstance (whether or not constituting a breach of a representation,
warranty or covenant set forth in this Agreement) that, individually or in the
aggregate with any such other results, effects, events, occurrences, facts,
changes or circumstances has had or could reasonably be expected to result in a
material adverse effect on the Business, key members of management, assets,
condition (financial or otherwise), liabilities or results of operations
(including earnings or cash flow) of any such person, taken as a whole, as
determined from the perspective of a reasonable person in Purchaser’s position
including the taking of any action contemplated by any Transaction Documents;

(iii)                               none of the Company, DYNA GmbH or, to Sellers’
Knowledge, any of the Operating Subsidiaries has terminated any business
relationship that is material to the business of the Company, DYNA GmbH or
the Operating Subsidiaries;

(iv)                              none of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating
Subsidiaries
(A) has, outside of its usual course of business, entered into
any agreement except as disclosed in Annex 4.17(iv), (B) incurred
any capital expenditure or guarantee in excess of EUR 75,000 (Euro seventy-five
thousand); (C) disposed of or encumbered any of its tangible or intangible
long-term assets (Anlagevermögen)
or shares in excess of EUR 75,000 (Euro seventy-five thousand) or
(D) contributed in kind or in cash into another
DYNA Group Companies, a joint venture or another third-party company,
with an individual value in excess of EUR 75,000 (Euro seventy-five thousand);

31

 

(v)                                 none of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries
(A) have declared any dividend or other distribution in respect of the
Companies Shares or the Partners’ Loan Claims or the Shareholders’ Loan Claims
or made any other distribution to a person that is not part of the DYNA Group
or (B) have entered into agreements according to which any of the DYNA
Group Companies is obliged to make such distributions;

(vi)                              issued any
share capital or similar interest to an entity that is not part of the DYNA
Group;

(vii)                           none of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries
has become a party to any merger, divestiture of a business (in whole or in
part) or a company, spin-off agreement or a similar transaction;

(viii)                        none of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries
has caused or experienced any damage to or destruction of, or written-off or
written-down any of, its material tangible or intangible assets with the
exception of rectifications of entries concerning the Financial Statements as
of the Calculation Date, which rectifications were performed in the ordinary
course of business in a manner consistent with past practice with the exception
of rebookings (Umbuchungen) in connection with
the preparation of the annual Financial Statements insofar as these rebookings
are in accordance with the rules for proper bookkeeping pursuant to German GAAP
(HGB);

(ix)                                other than in
the ordinary course of business none of the Company, DYNA GmbH or, to Sellers’
Knowledge, any of the Operating Subsidiaries has incurred, assumed or
guaranteed any material indebtedness;

(x)                                   none of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries
has made any advance or extended any loan to any third party except for any
trade receivables (Forderungen aus
Lieferungen und Leistungen) made available to the Purchaser prior to
the Closing Date and other than payment grace periods (Zahlunsgziele) in the ordinary course of
business;

(xi)                                except as
disclosed in Annex 4.17(xi), none of the Company, DYNA GmbH or, to
Sellers’ Knowledge, any of the Operating Subsidiaries has made any payments, 

32

 

incurred any costs or has any obligations to
make payments related to any of the Contemplated Transactions;

(xii)                             none of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries
has changed any of the accounting principles or practices used by it in the
past;

(xiii)                          no
modifications have been made to the articles of association, partnership
agreements, by-laws or other constituent documents of the Company, DYNA GmbH
or, to Sellers’ Knowledge, any of the Operating Subsidiaries;

(xiv)                         except as
otherwise disclosed in
Annex 4.11.2-1 or Annex 4.11.2-2, no employees have
been hired, no material increases (i.e., increases by more than four percent
(4%)) in employee remuneration or benefit plans (unless required by law, prior
agreement, collective-bargaining agreement or enterprise agreement) have been
made by the Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating
Subsidiaries and none of the employment or service agreements for employees,
officers or directors of the Company, DYNA GmbH or, to Sellers’ Knowledge, any
of the Operating Subsidiaries has been otherwise amended or extended;

(xv)                            no party
(including any of the Company, DYNA GmbH or, to Sellers’ Knowledge, any of the
Operating Subsidiaries) has (including given notice of any of the following)
accelerated, terminated, modified or cancelled any Material Agreement; or
contract (or series of related contracts) involving more than EUR 40,000 (Euro forty thousand) to
which the Company, DYNA GmbH or, to Sellers’ Knowledge, any of the
Operating Subsidiaries is a party or by which any DYNA Group Company is bound;

(xvi)                         none of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries
has discharged a material liability or Lien outside the ordinary course of
business;

(xvii)                      neither the Company nor DYNA
GmbH has made any investment in or loans to any affiliate of such company,
including its joint ventures; and

33

 

(xviii)                   none of the Company, DYNA
GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries has
undertaken to do any of the matters listed in Section 4.17(i)
through (xvii) above.

4.18                        No Broker

None
of the Sellers, the Company, DYNA GmbH or, to Sellers’ Knowledge, any of the
Operating Subsidiaries has any liability to any broker, finder, or agent with
respect to the Contemplated Transactions for which Purchaser shall have any
liability.

 

4.19                        Accounts Receivable

The
accounts receivable of the Company and DYNA GmbH as reflected in the Financial
Statements (i) are reflected properly on its books and records,
(ii) are genuine, good and collectible within ninety (90) days after their
respective due date in accordance with their terms at their recorded amounts,
(iii) arose in the ordinary course of business from bona fide transactions
and (iv) to Sellers’ Knowledge, are not subject to any setoff,
counterclaim, deduction or defense other than as reflected in the applicable
reserves as reflected in the Financial Statements.  The allowance for doubtful accounts is
materially true and correct and accurate.  The allowance
for doubtful accounts is not materially true and correct and accurate if the
actual shortfall exceeds the allowances by more than EUR 75,000 (Euro
seventy-five thousand).  A currency
devaluation shall not be deemed as shortfall of the accounts.  Annex 4.19 provides a breakdown
and aging of all accounts receivable, notes receivable and other receivables of
the Company and DYNA GmbH as of the Calculation Date and identifies all
unreturned security deposits and other deposits made by, or held by any person
for the benefit of, the Company or DYNA GmbH. 
For each of the Company and DYNA GmbH, the reserves established for
doubtful accounts, any valid counterclaims, set-offs, deductions, or allowances
as reflected in the Financial Statements is in accordance with the past
practice of the Company and DYNA GmbH in the ordinary course of business.

 

4.20                        Tax Representations

Effective
as of the date hereof, the Sellers make the following representations (in the
form of an independent guarantee (selbständiges
Garantieversprechen) to the Purchaser):

 

4.20.1.                     All Tax Returns and all notices and
information required to be filed or given by or on behalf of any of the
Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries
in respect of any Taxes have been properly prepared, executed 

34

 

and
duly filed or given within applicable time limits pursuant to applicable Legal
Requirements. Such Tax Returns, notices and information are true and accurate
in all material respects and are not the subject of any question or dispute nor
are likely to become the subject of any dispute.

4.20.2.                     All Pre-Calculation Date Taxes owed by
the Company, DYNA GmbH or, to Sellers’ Knowledge, any of the Operating
Subsidiaries have been timely paid or, if not due and payable, sufficient
reserves (Rückstellungen) have been adequately
provided for in the Financial Statements. 
All Pre-Closing Date Taxes owed by the Company, DYNA GmbH or, to Sellers’
Knowledge, any of the Operating Subsidiaries have been timely paid if due and
payable on or before the Closing Date. 
For the avoidance of doubt, this also includes any real estate transfer
Taxes relating to restructurings and similar measures effected prior to the
Closing Date.  Section 13.1
applies.

4.20.3.                     Each of the Company, DYNA GmbH and, to
Sellers’ Knowledge, each Operating Subsidiary are not and have not, at any
time, been treated as resident in any other jurisdiction for any Tax purpose
(including any double taxation treaty) except for the jurisdiction of their
place of incorporation or registered seat (Hauptsitz).  None of the Company, DYNA GmbH or, to Sellers’
Knowledge, any of the Operating Subsidiaries is subject to Tax in any
jurisdiction other than its place of incorporation or registered seat (Hauptsitz) by virtue of having a permanent
establishment or a place of business outside the jurisdiction of its place of
incorporation or registered seat.

4.20.4.                     Since their incorporations (Gründungen) none of the Company, DYNA GmbH or, to Sellers’
Knowledge, any of the Operating Subsidiaries has been involved in an
extraordinary audit or investigation, or a dispute in relation to Taxes and
have not paid or become liable to pay any penalty, surcharge, fine or interest
in respect of Taxes. No such extraordinary audit, investigation or dispute is
imminent, threatened or likely to be threatened against any of the Company,
DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries except
for ordinary tax assessments (Betriebsprüfungen).

4.20.5.                     None of the Company, DYNA GmbH or, to
Sellers’ Knowledge, any of the Operating Subsidiaries has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency. There are no binding rulings or written and
binding agreements with any Tax authorities that will remain or become
effective after the Closing Date.

4.20.6.                     None of the Company, DYNA GmbH or, to
Sellers’ Knowledge, any of the Operating

35

 

 Subsidiaries has benefited from any fiscal
advantage or favorable Tax regime in exchange for undertakings, covenants or obligations
by which it is still directly or indirectly bound or shall incur any additional
Tax burden after the Closing Date as a result of having obtained a benefit from
any fiscal advantage or favorable Tax regime. None of the Company, DYNA GmbH
or, to Sellers’ Knowledge, any of the Operating Subsidiaries has received any
subsidies or grants of any kind that may be, or may become, repayable following
the Closing Date.

4.20.7.                     None of the Company, DYNA GmbH or, to
Sellers’ Knowledge, any of the Operating Subsidiaries is a party to any Tax
allocation or Tax sharing agreement.

4.20.8.                     None of the Company, DYNA GmbH or, to
Sellers’ Knowledge, any of the Operating Subsidiaries has recorded shares or
any other fixed assets below their adjusted book values. None of the Company,
DYNA GmbH or, to Sellers’ Knowledge, any of the Operating Subsidiaries holds
tainted shares that cannot be sold under a beneficial tax regime generally
applicable to the sale of shares (including, without limitation,
Sec. 8b(2) of the German Corporate Income Tax Act).

4.20.9.                     All Tax relevant transactions and
events have been duly documented in the books and records of the Company, DYNA
GmbH and, to Sellers’ Knowledge, each Operating Subsidiary and all bookkeeping
and relevant business records have been properly prepared and retained and are
available for all Tax periods, in each case as required by applicable Legal
Requirements.

4.20.10.              None of the Company, DYNA GmbH or, to
Sellers’ Knowledge, any of the Operating Subsidiaries has made any hidden
distribution or withdrawal of profits (verdeckte
Gewinnausschüttung).

4.20.11.              None of the Company, DYNA GmbH or, to
Sellers’ Knowledge, any of the Operating Subsidiaries has experienced any
excessive withdrawals (Überentnahmen)
in the meaning of Sec. 4, Para. 4a German Income Tax Code.

4.20.12.              Neither the claims for Tax refunds nor
the value of any deferred Tax assets have been overstated in the Financial
Statements.

4.20.13.              The Company, DYNA GmbH and, to Seller’s
Knowledge, each Operating Subsidiary has complied in all respects with
applicable Tax or social security Legal Requirements.  All Taxes and social security contributions
that the Company, DYNA GmbH or, to 

36

 

Sellers’
Knowledge, any of the Operating Subsidiaries is required by applicable Legal
Requirements to withhold or to collect for payment have been duly withheld and
collected, and have been paid or accrued, reserved against and entered in the
books of such DYNA Group Company.

4.21                        Inventory

The
inventory of the Company, DYNA GmbH and, to Sellers’ Knowledge, each Operating
Subsidiary consists of raw materials and supplies, manufactured and purchased
parts, goods in process and finished goods, all of which is merchantable and
fit for the purpose for which it was procured or manufactured, and none of
which is obsolete, damaged or defective, subject only to the reserve for
inventory writedown set forth on the face of the Financial Statement as
adjusted for the passage of time through the date hereof in accordance with the
past custom and practice of the Company, DYNA GmbH and, to Sellers’ Knowledge,
each Operating Subsidiary.

 

4.22                        Investment Representations

4.22.1.                     Each Seller understands that
(i) the issuance of DMC Common Stock to Sellers has not been registered
under the Securities Act, or under any state securities laws, and are being
offered and sold in reliance upon federal and state exemptions for transactions
not involving any public offering and (ii) all of the DMC Common Stock issued
to such Seller are “restricted securities” within the meaning of the Securities
Act and may only be resold by such Seller if such DMC Common Stock are
registered under the Securities Laws (as will occur pursuant to Section 10.2)
or an exemption from such registration is available.

4.22.2.                     Each Seller has had full opportunity to
review the Purchaser’s filings with the SEC and to ask questions and receive
answers from representatives of the Purchaser regarding the business,
properties, prospects and financial condition of the Purchaser, each as is
necessary to evaluate the merits and risks of investing in the DMC Common
Stock.

Sec. 5.

Remedies for Breach of Seller’s Guaranties

5.1                               General/Recoverable Damages

Subject
to Section 5.2, in the event of any breach or non fulfillment by
the Sellers’ guarantees or covenants contained in this Agreement, the Sellers
shall be liable as partial debtors (Teilschuldner)
for putting the Purchaser, or at the election of the Purchaser, the DYNA Group 

 

37

 

Companies,
into the same position that they would have been in if the Sellers’ Guaranties
or covenants contained in this Agreement had been correct or had not been
breached (Naturalrestitution).  The percentage according to which the Sellers
are liable vis-à-vis the Purchaser as partial debtors is set forth on Annex 5.1.  If the Sellers are unable to achieve this
position within sixty (60) days after having been notified by the Purchaser of
the breach, the Purchaser is entitled to claim for monetary damages at the sole
election of the Purchaser (i) by payment of the amount necessary to fully
compensate the damage suffered by the Purchaser or (ii) to fully
compensate the Loss suffered by the DYNA Group Companies arising directly or
indirectly from the breach or non-fulfillment by the Sellers of any of the
Sellers’ guarantees or covenants. Sec. 249, et seq.,
German Civil Code shall apply. 
Sec. 442 Para. 1 Sentence 2 German Civil Code shall not apply.

 

5.2                               Overall Scope of Seller’s Liability pursuant to this Agreement

5.2.1.                            The Sellers’ aggregate liability under
this Agreement including, but not limited to, any and all claims for breach of
any of the guaranties pursuant to Section 4, Section 6,
Section 7 and Section  9 shall be limited to EUR
13,330,000 (Euro thirteen million three hundred thirty thousand).  However, the liability of each Seller shall
be limited to the portion equal to the ratio of their respective liability
outlined in Annex 5.1.

5.2.2.                            Sellers shall be liable for any
breaches of guaranties only to the extent that such damages are not satisfied
from insurance proceeds.

5.2.3.                            If a claim is brought for a breach of
the guarantees of Section 6.1, to the extent it applies to the Company’s
property at Königszug, Sellers may purchase the property at Königszug for the
purchase price paid by the Company and assume any related liabilities in lieu
of paying the Purchaser any damages with respect to the liability for breach of
guarantee.  The Company shall be entitled
to continue use of the property until 31 December 2017 for no charge provided
such use is in a manner consistent with the use prior to the sale to
Sellers.  However, it is agreed that any
operational costs (Betriebskosten)
for the property at Königszug (i.e., in particular but not limited to any real
property tax (Grundsteuer), electricity, water
and heating) shall be borne by the Company. 
In the event capital expenditures are required after the Sellers acquire
the property at Königszug according to the provisions above the parties shall
enter into good faith negotiations in order to agree as to which costs the
Purchaser shall assume.

 

38

 

 

5.3                               De Minimis Amount; Threshold

The Purchaser shall only be entitled to any
claims under Section 4 to the extent each individual claim exceeds
an amount of EUR 20,000 (Euro twenty thousand) (the “De Minimis
Amount” and being acknowledged that a group of related occurrences
of claims having the same course or similar course of action will be considered
as one single claim for the purpose of the De Minimis Amount) and the aggregate
amount of all such individual claims exceeds EUR 100,000 (Euro one hundred
thousand) (the “Threshold”). In case the De
Minimis Amount and the Threshold are exceeded, the Sellers’ liability shall be
for the entire and not limited to the excess amount.

 

5.4                               Procedure in Case of Third Party Claims

5.4.1.                            Furthermore, in the event that in
connection with a breach of a guaranty under Section 4, Section 6,
Section 7 or Section 9, any claim or demand of a third
party is asserted against the Purchaser or any of the DYNA Group Companies, the
Purchaser shall (i) make available to the Sellers a copy of the
third-party claim or demand and of all time-sensitive documents and
(ii) give the Sellers the opportunity to defend the Purchaser or any of
the DYNA Group Companies against such claim. The Sellers shall have the right
to defend the claim by all appropriate Proceedings and shall have the sole
power to direct and control such defense. In particular, without limitation,
the Sellers may (i) participate in and direct all negotiations and
correspondence with the third party; (ii) appoint and instruct counsel
acting, if necessary, in the name of the Purchaser or any of the DYNA Group
Companies (for the avoidance of doubts the cost for the counsel shall be borne
by the Sellers) and (iii) require that the claim be litigated or settled
in accordance with the Sellers’ instructions. The Sellers shall conduct such
Proceedings in good faith with due regard to the concerns of the Purchaser. The
Sellers shall always inform the Purchaser, upon its request (x) of the
current status of the defense of the third-party claims, (y) the major
developments regarding the defense of third-party claims and (z) the next
steps that will be taken by the Sellers to defend the third-party claims before
such steps will be taken.

 

5.4.2.                            In no event shall the Purchaser or any
of the DYNA Group Companies be entitled to acknowledge or settle a claim or
permit any such acknowledgement or settlement without the Sellers’ prior
consent to the extent that such claims may result in a liability of the Sellers
under this Agreement. The Purchaser or any of the DYNA Group Companies shall
reasonably cooperate with the Sellers in the defense of any third-party claim,
provide the Sellers and their representatives (including, for the avoidance of
doubt, its advisors) access to all relevant business records and documents and
permit the

 

39

 

Sellers and its representatives
to consult with the directors, employees and representatives of the Purchaser
or any of the DYNA Group Companies. All costs and expenses (including advisors’
fees) incurred by the Sellers in defending such claim shall be borne by the
Sellers.

5.5                               Mitigation

Sec. 254
of the German Civil Code shall remain unaffected, i.e., the Purchaser is in
particular obliged to prevent the occurrence of any damages and to limit the
scope of any damages incurred.  If any of
the DYNA Group Companies has a monetary advantage (geldwerten
Vorteil) in connection with a breach of a Guarantee this shall
mitigate the remedies of the Purchaser under this Agreement or, if this
mitigation is impossible, the respective assets (reflecting the monetary
advantage) shall be provided to the Sellers.

 

5.6                               Limitation Periods and Notice of Claim

All
of the guaranties of the Sellers
in this Agreement shall survive the Closing hereunder (even if the Purchaser
knew or had reason to know of any misrepresentation or breach of guaranties at the time of Closing).

 

All
claims for any breach of guaranties of the Sellers pursuant to Section 4
above shall become time-barred (verjähren) on the date that is eighteen (18) months after
the Closing Date, except for claims based on a breach of the
guaranties given under (i) Sections 4.1 through 4.3 and
Sections 4.5.1 through 4.5.11, which shall become time-barred
three (3) years after the Closing Date and (ii) Section 4.9.3 and Section 6,
which shall become time-barred thirty (30) months after the Closing Date.  Claims with respect to Taxes (Sec. 5.9)
shall become time-barred in accordance with Section 5.10.  Sec. 203 of the German Civil Code shall
not apply.

 

5.7                               Disclosure Schedules

Disclosure of an item set forth on one Annex in
the disclosure schedules shall be deemed to suffice as disclosure in each other
Annex in disclosure schedules provided that such item is either expressly
cross-referenced in the other Annexes or the application of such item to the
other Annexes is accurate and abundantly clear from its context in the first
Annex.

 

5.8                               Information Duty

The
Sellers are obliged to inform the Purchaser in writing immediately after they
became aware

 

40

 

of
any facts that could lead to a breach of the Sellers’ guarantees.

 

5.9                               Tax Indemnity

The
Sellers shall, as partial debtors (Teilschuldner)
as further specified under Section 5.1, indemnify and hold harmless
the Purchaser and, as the case may be, at the Purchaser’s request the DYNA
Group Companies, from (i) any Losses arising from or in connection with a
breach of a representation contained in Section 4.20, (ii) any
Pre-Calculation Date Taxes imposed on any of the DYNA Group Companies and any
Losses related to such Pre-Calculation Date Taxes (in particular, any costs
incurred in connection with the defense of any Tax related claims prior to the
Calculation Date) unless covered by a specific Tax provision that was made for
the Pre-Calculation Date Tax in the Financial Statements, and (iii) all
Taxes related to the Pre-Closing Date Period connected to a non-timely payment
of due and payable Taxes.

The
limitations pursuant to Section 5.2 and Section 5.3 shall
apply.  A damage, that Purchaser claims because of Pre-Calculation-Date Taxes,
which results from a change of the tax valuation shall be decreased by the
positive effects of such a change of tax valuation after the Calculation Date.

 

5.10                        Limitation of Tax Indemnity

Any
claims of the Purchaser under Section 5.9 shall be time-barred upon
expiration of a limitation period of six (6) months after all indemnifiable
Taxes are finally binding and non-appealable (formell und
materiell bestandskräftig).

 

5.11                        Satisfaction of Claims

Any
payment to be made under this Section 5 or under Sections 6
or 7 by the Sellers shall become payable in cash in ten (10) Business
Days after the Sellers have received from the Purchaser a notification in
writing stating the amount to be paid under the remedies under this Section 5
or indemnifications, however any payments with respect to the Tax guarantees
and/or Tax indemnities shall become due and payable not prior to the date at
which the Taxes become due and payable. 
The parties agree that the claims of the Purchaser under this Section 5
or under Sections 6 or 7 (equal to the damage of the
Purchaser or the DYNA Group Companies as elected by the Purchaser in accordance
with Section 5.1) shall be satisfied (i) first by transfer of shares or
of cash, if available, out of the Hold Back from the Sellers to the Purchaser
and (ii) next, in the event the claims of the Purchaser under this Section 5
exceed the value of the Hold Back by payment by the Sellers to the Purchaser of
the Stock Consideration not in the Hold Back or cash.

 

41

 

5.12                        Adjustment to
Purchase Price

Any
payment by the Sellers to the Purchaser under Sections 5 through 7
and 9 shall be regarded as a reduction of the Purchase Price.

 

5.13                        Exclusion of Further Remedies

The
rights of the Purchaser in case of any breach or non fulfillment by the Sellers’
Guarantees shall be restricted to
claims according to this Section 5. Further claims based on German
statutory warranty provisions, including without limitations to, reduction of
the purchase price (Minderung) or
cancellation of the agreement (Rücktritt vom Vertrag),
frustration of the contract (Störung der Geschäftsgrundlage
according to Sec. 313 German Civil Code), are hereby excluded.

 

Sec. 6.

ENVIRONMENTAL MATTERS

 

6.1                               Environmental Guarantees

The Sellers hereby, as
partial debtors (Teilschuldner) in accordance with
the percentages set forth on Annex 5.1, guarantee to the Purchaser by
way of an independent promise of guaranty
pursuant to Sec. 311 Para. 1 of the German Civil Code (selbständiges Garantieversprechen im Sinne des § 311
Abs. 1 BGB) that there are no Environmental, Health and Safety Liabilities or
Existing Environmental Conditions that (i) were caused by the operation of the
business of the Company, DYNA GmbH or, to Sellers’ Knowledge, any Operating
Subsidiary, or (ii) that occurred on or related to the Real Property during the
period such Real Property was owned or leased by the Company, DYNA GmbH or any
Operating Subsidiary.  The limitations of
liability pursuant to Sections  5.2 through 5.5 and Section
5.11 shall apply accordingly.

 

6.2                               Environmental Claims Insurance

The
Sellers have obtained from an insurance company reasonably acceptable to
Purchaser an insurance policy to indemnify Purchaser from any Environmental,
Health and Safety Liabilities relating to any Existing Environmental
Conditions.  The policy shall cover
damages up to EUR 25,000,000 (Euro twenty-five million) and the premium shall
be fully paid for the period ending 30 September 2008.  A copy of such insurance policy is attached
as Annex 6.2. for identification purposes.

 

42

 

Sec. 7.

TAXES

 

7.1                               Cooperation on Tax Matters

The
Purchaser and the Sellers shall reasonably cooperate, and shall cause their
representatives to reasonably cooperate, with each other in connection with all
Tax matters relating to any Pre-Closing Date Period, including the preparation
and filing of any Tax return or the conducting of any audit, investigation,
dispute or appeal or any other communication with any Tax authority.  Section 5.4 shall apply accordingly.

 

7.2                               Registration Period Tax Returns

7.2.1.                            As to all Tax Returns of Company and
its participations as set out under Recital 5.2 due on or before
the date of the registration of the special succession by the Purchaser
regarding the KG-Interests with the commercial register as outlined under
Section 2.2.7, the Sellers shall cause the Company to prepare and
timely file such Tax Returns and pay any Taxes shown as due thereon.

7.2.2.                            As to Tax Returns of the DYNA Group
Companies due after the Closing Date for tax periods ending on or before the
Closing Date, the Purchaser shall cause the DYNA Group Companies to prepare and
timely file such Tax Returns in accordance with past practice; provided, however, (i) the Purchaser
shall deliver any such Tax Return to the Sellers at least thirty (30) days
before it is due; (ii) the Sellers shall have the right to examine and
comment on any such Tax Return prior to the filing thereof; (iii) the
Sellers shall provide any notice of objection (a “Notice of Objection”) no later than fifteen (15) days before
the Tax Return is due; (iv) prior to the filing thereof, the Sellers shall
reimburse the Purchaser the amount shown to be due on the final version of any
such Tax Return that is in excess of any amounts previously paid by the Sellers
in respect of such liability for Taxes by way of estimated Tax payments or
otherwise; and (v) past practice does not violate the respective Legal
Requirement.

Sec. 8.

          

FURTHER ACTIONS AND OBLIGATIONS

 

8.1                               Actions at Closing

8.1.1.                            Seller 1 has accepted the
appointment as a member of the board of directors of Dynamic Materials,
effective as of the Closing Date.

 

43

 

8.1.2.                            Each of Seller 1, 2 and 3 have
entered into service agreements with DYNA GmbH or an affiliate of Purchaser.
Copies of such service agreements are enclosed as Annex 8.1.2.

8.1.3.                            [Intentionally Omitted.]

8.1.4.                            The Parties agree that Seller 4 shall
pay to Purchaser the amount equal to any and all business taxes (Gewerbesteuer) that become due and payable for the Company
in connection with the sale and assignment of KG-Interest 4 to the Purchaser by
the Seller 4.  The Parties agreed on
a preliminary business tax amount of EUR 2,530,000 (Euro two million five
hundred thirty thousand) (the “Preliminary
Business Tax Amount”) that is to be deducted from the Purchase Price
to be paid by Purchaser to Seller 4 pursuant to Section 3.1.1.  The final business tax amount will be the
business tax liability that shall be borne by the Company in accordance with
the Contemplated Transaction finally assessed by a finally binding and
non-appealable (formell und materiell bestandkräftig)
tax bill or court decision (the “Final
Business Tax Amount”). Immediately after the assessment of the Final
Business Tax Amount, Seller 4 shall promptly pay to the Purchaser the
amount, if any, by which the Final Business Tax Amount exceeds the Preliminary
Business Tax Amount, and the Purchaser shall promptly pay to Seller 4 the
amount, if any, by which the final Business Tax Amount is less than the
Preliminary Business Tax Amount.  Seller
4 shall have the rights provided in Section 5.4 with respect to
determination of the Final Business Tax Amount.

8.1.5.                            The Sellers and Purchaser herewith
agree that the Sellers indemnify and hold harmless (freistellen)
the DYNA Group Companies from any and all obligations vis-à-vis all advisors (in
particular but not limited to financial, tax and legal advisors) for their
services rendered in connection with the Contemplated Transaction, if any.

8.1.6.                            The Sellers shall take all actions in
connection with consummation of the Contemplated Transactions, and deliver all
certificates, opinions, instruments, and other documents required to effect the
Contemplated Transactions in form and substance satisfactory to Purchaser if
legally possible.

Sec. 9.              

INDEMNIFICATION FOR SOLE OPERATING AND RETRANSFER OBLIGATION

9.1                               Indemnification for Sole Operating

The
Sellers shall, as partial debtors (Teilschuldner)
as further specified under Section 5.1,

 

44

 

indemnify and hold harmless the
Purchaser and upon request of the Purchaser any DYNA Group Company from any
Exercise Event claim as well as any costs and expenses incurred in connection
with an Exercise Event.  The
indemnification pursuant to this Section 9.1 shall not apply if the
claim exists solely due to the fact that the Company changed its operation
compared to the operations as presently conducted.  The burden of proof for the fact that the
Company did not change its business is with the Purchaser if (i) an alleged
Exercise Event claim is based on the facts that the Company changed its
operations and (ii) in the event the Sellers 1 through 3 ceased to be managing
director of the Company or DYNA GmbH.

 

9.2                               Exercise Event

“Exercise Event” means any exercise of any of the rights that
Orica Germany GmbH has under that certain Sole Permitted Operator Agreement
concluded between Dynamit Nobel GmbH Explosivstoff- und Systemtechnik GmbH and
Orica Germany GmbH on 1 March 2001, as a consequence of which any of the
DYNA Group Companies, within five (5) years following the Closing, (i) is
obligated, pursuant to the terms of the Sole Permitted Operating Agreement,
fully or partially to leave the production site in Troisdorf, or (ii) is
not permitted to conduct its Business as conducted at the respective point in time
beyond 1 March 2011.  A copy of
the Sole Permitted Operating Agreement is attached for identification purposes
in Annex 9.7.

 

9.3                               Indemnification for Retransfer Obligation for the Würgendorf
Site

The
Sellers shall, as partial debtors (Teilschuldner)
as further specified under Section 5.1, hereby indemnify and hold
harmless the Purchaser and, upon
request of the Purchaser, any
DYNA Group Company from any retransfer obligation by the Company regarding a
portion of the real estate in Würgendorf pursuant to Section 7.9(b) of the
purchase agreement regarding the sale of the Dynawell and Dynaplat business
(notarial deed No. 2001/174 of Notary Dr. Werner Wenger, Basel,
Switzerland) (the “APA”).

 

9.4                               Coverage of Indemnification

The
indemnifications of Sections 9.1 and 9.3 shall also cover
all Losses, including actual damages incurred by the Exercise Event and / or
the satisfaction of the retransfer obligation pursuant to Section 9.3
and, in particular, any consequential damages (Folgeschäden)
and any loss of profits (entgangener Gewinn);
provided, however, the limitations
pursuant to Sections 5.2.1, 5.4 and 5.5 shall apply
accordingly.

 

45

 

9.5                               Limitations

Any
claims of the Purchaser under this Section 9 shall be time-barred (verjähren) on 30 June 2015.

 

9.6                               Payments

Any payment to be made under this Section 9
by the Sellers shall become payable ten (10) Business Days after the Sellers
have received from the Purchaser a notification in writing stating the amount
of the Losses.

Any payments by the Sellers to the Purchaser
under this Section 9 shall be regarded as a reduction of the
Purchase Price. For the sake of clarity, the indemnifications pursuant to this Section 9
shall be satisfied (i) first by transfer of shares or cash, out of the Hold
Back from the Sellers to the Purchaser, if possible, and (ii) next, in the
event the claims of the Purchaser exceed the value of the Hold Back or the Hold
Back has been released, by delivery of any of the Stock Consideration (not
currently in the Hold Back) or cash.

 

Sec. 10.

Covenants

 

10.1                        Seller Covenants

10.1.1.                     No Seller will take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of any of the DYNA Group
Companies from maintaining the same business relationships with any of the DYNA
Group Companies after the Closing as it maintained with such DYNA Group Company
prior to the Closing.  Each Seller will
refer to Purchaser and the DYNA Group Companies all customer inquiries relating
to any of the DYNA Group Companies of which he or it is aware.

10.1.2.                     Between the Closing Date and the time
of registration of Purchaser as limited partner of the Company by virtue of a
special succession (Sonderrechtsnachfolge)
with the Commercial Register (the “Registration
Date”), to the extent permissible under applicable Legal
Requirements, the Sellers shall, and shall cause each of the DYNA Group
Companies to, and where this is impossible, use their best efforts to shall
cause each of the DYNA Group Companies to (i) conduct its business
operations in the ordinary course of business and substantially in the same
manner as before except as set forth in Annex 10.1.2;
(ii) subject to the satisfaction of the condition precedent under
Section 2.2.6 sentence 1 act
or refrain from acting, as applicable, in order to comply

 

46

 

with the covenants and prevent a
breach of any representations and warranties applicable to subsidiaries of
Dynamic Materials under that certain credit agreement, with JPMorgan Chase
Bank, N.A. and such lenders to which Purchaser is a credit party  and (iii) except as otherwise
agreed to by the Purchaser in writing, use all reasonable efforts to preserve
the relationship with its employees and consultants and to preserve intact its
current relationships with such of its customers, suppliers, and other persons
with which it has significant business relations.  Between the Closing Date and the Registration
Date, Section 4.17 shall apply mutatis
mutandis with no adjustment
to the related Annexes except as otherwise agreed to by the Purchaser in
writing.  Sellers and Purchaser agree
that as of the satisfaction of the condition precedent pursuant to
Section 2.2.6 sentence 1 the Sellers shall act and behave in such manner
as if the KG-Interests and the GmbH-Shares had already been validly assigned.

10.2                        Dynamic Materials Covenants

Dynamic Materials will use its best efforts to
ensure that the DMC Common Stock held by the Sellers will be registered with
Nasdaq or a similar stock exchange where DMC stock is registered for trading by
and including 31 December 2008.  As
soon as reasonably possible, but no later than 30 April 2008, Dynamic
Materials shall file with the U.S. Securities and Exchange Commission (“SEC”) a registration statement to permit the Sellers to
freely sell all of the shares of DMC Common Stock held by the Sellers following
the date such shares are no longer subject to the transfer restrictions of Section 3.2.  Dynamic Materials will provide Sellers with a
copy of the registration statement and any amendments thereto.  Dynamic Materials will use its best efforts
and guarantees (by way of an independent guarantee pursuant to Sec. 311
German Civil Code) to Sellers that it will undertake all costs and expenses
necessary to register such shares under the Securities Laws pursuant to
standard terms and conditions to permit them to be freely tradeable by the
Sellers.  In the event Dynamic Materials
becomes aware of any planned delisting of DMC Common Stock, Dynamic Materials
will use its best efforts and guarantees (by way of an independent guarantee
pursuant to Sec. 311 German Civil Code) to Sellers, that it will undertake
all costs and expenses necessary to register such shares under the Securities
Laws pursuant to standard terms and conditions to permit them to be freely
tradeable by the Sellers immediately after such earlier date.  In the event that Dynamic Materials becomes
aware of any planned delisting of DMC Common Stock, Dynamic Materials will
promptly inform the Sellers.

 

10.3                        Mutual Covenants

 

10.3.1.                     If at any time after the Closing any
further actions are necessary or desirable to carry

 

47

 

out the purposes of this
Agreement, each of the Parties will take such further actions (including the
execution and delivery of such further instruments and documents) as any other
Party may reasonably request, all at the sole cost and expense of the
requesting Party.  The Sellers
acknowledge and agree that from and after the Closing, the Purchaser will be
entitled to copies of all documents, books, contracts, records (including Tax
records), agreements and financial data of any sort relating to the DYNA Group
Companies.

10.3.2.                     In the event and for so long as any
Party actively is contesting or defending against any Proceeding in connection
with (i) any Contemplated Transaction or (ii) any alleged fact,
action, or other event, involving the DYNA Group Companies, each of the Parties
will use its best efforts to cooperate with it and its counsel in the contest
or defense, make available his or its personnel, and provide such testimony and
access to his or its books and records as shall be necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting or
defending Party.

Sec. 11.           

NON-COMPETITION CLAUSE

11.1                        Non-Compete Covenant

11.1.1.                     For a period of five (5) years after
the Closing Date, the respective Sellers and Mr. Mertens shall not, either
directly or indirectly, engage in the Geographical Markets in any competition
to the Business as presently conducted (herein referred to as “Competitive Activities”), or directly or
indirectly manage, assist or acquire any interest (equity or votes) in any
companies conducting any Competitive Activities (except the acquisition of
shares of the DMC Common Stock as outlined above and except any activity the
Sellers or any of them will conduct for any of the DYNA Group Company in accord
with the Purchaser). “Geographical Markets”
herein shall mean the markets in which DYNA Group Companies are currently
active in the Business or have been themselves directly (including via direct
participations in consortiums or other co-operations) active in the Business in
the last five (5) years before the Closing Date.  The obligations of this Section 11.1.1
shall terminate as to Mr. Mertens (i) in respect to certain regions,
upon the termination of an agreement disclosed in Annex 11.1.1-1
relating to such region, in which ANKO Industry Service GmbH was obliged to
provide services under the respective agreement terminated, and (ii) in
respect to certain clients, upon the full or partly termination of the
provision agreement disclosed

 

48

 

in Annex 11.1.1-2
relating to such clients, for which the payment of provisions according that
provision agreement is terminated.

11.1.2.                     The Sellers acknowledge and agree that
the value to the Purchaser of the transactions contemplated by this Agreement
would be substantially and materially diminished if any of the Sellers,
directly or indirectly, were to breach any of the provisions of this Section 11.1,
and the Sellers have therefore agreed to the provisions of this Section 11.1
as a material inducement to the Purchaser to enter into this Agreement. The
Sellers specifically acknowledge and agree that the provisions of this Section 11.1
are commercially reasonable restraints in accordance with common market
practice, which in light of the investment, effort and risk to acquire
hereunder and thereafter operate the business of the DYNA Group Companies are
reasonably necessary to protect the value of the DYNA Group Companies and their
Business. The Sellers acknowledge and agree that the Purchaser could be
irreparably damaged by a breach of this Section 11.1 and would not
be adequately compensated by monetary damages for any such breach and thus
shall also be entitled to injunctive relief.

11.2                        Non-Solicitation Covenant

11.2.1.                     For a period of five (5) years after
the Closing Date, the respective Sellers shall not solicit or entice away from
any of the DYNA Group Companies any person who presently or during such period
is employed by any of the DYNA Group Companies.

11.2.2.                     For a period of five (5) years after
the Closing Date, the respective Sellers shall not solicit any clients or
customers of any of the DYNA Group Companies or endeavour to entice away from
any DYNA Group Companies any person who is or has been a client or customer of
any of the DYNA Group Companies.

11.3                        Minority Participation in Listed Companies

Any direct or indirect participations in listed
companies shall be excluded from the non-compete provisions under Section 11.1,
as long as the percentage of the participation of the Sellers and any current
or future companies of the Sellers’ does not exceed five percent (5%) of the
respective listed companies and the participation is for investment purposes
only (i.e., the mere holding of shares).

 

11.4                        Liquidated Damages

If the Sellers do not comply with any of the
provisions of this Section 11.1 through 11.3, such

 

49

 

 

Seller shall be liable to
the Purchaser for payment of liquidated damages (pauschalierter
Schadensersatz) in the amount of EUR 2,000,000 (Euro two
million) for each case of non-compliance. The Purchaser is entitled to claim
actual damages (Schadensersatzansprüche) that
exceed the Liquidated Damages with respect to such non-compliance.  The Sellers are entitled to prove, that the
actual damages of the Purchaser in respect to such non-compliance are less than
EUR 2,000,000 (Euro two million).

 

Sec. 12.  

Confidentiality
/ Press Releases

 

12.1                        Confidentiality; Press Releases; Public Disclosure

The
Parties understand a copy of this Agreement will be filed publicly with the
SEC.  The Parties may make press releases
or other public announcements concerning the transactions contemplated by this
Agreement only after having consulted and discussed the press release or other
public announcements with the other Parties.

 

Sec. 13.  

Costs and Taxes

 

13.1                        Taxes and fees

 

The
costs for the notarization of (i) this Agreement and (ii) completion
of the Contemplated Transactions shall be borne by Purchaser.  Purchaser shall pay any real estate transfer
taxes incurred in connection with the Contemplated Transactions.

 

13.2                        Costs

 

Each
Party shall bear its own costs and expenses (including financial advisory fees
and legal fees and expenses) incurred in connection with the Transaction
Documents and the Contemplated Transactions. 
In the event of any dispute related to or based upon this Agreement, the
prevailing party shall be entitled to recover from the other party its
reasonable attorneys’ fees and costs.

 

Sec. 14.  

Miscellaneous

 

14.1                        Assignment; Successors and Assigns

 

This
Agreement and any rights and obligations hereunder may not be assigned or
transferred, in whole or in part, without the prior written consent of the
other Parties hereto; provided, however, that each or
either of Purchaser and Dynamic Materials may (i) assign any or all of its
rights and interests hereunder to one or more of its Affiliates;
(ii) designate one or more of its Affiliates to

 

50

 

perform
its obligations hereunder (in any or all of which cases Purchaser nonetheless
shall remain responsible for the performance of all of its obligations hereunder);
and (iii) assign any or all of its rights and interests hereunder,
including its rights to indemnification, to JPMorgan Chase Bank, N.A.
(including, without limitation, JPMorgan Chase Bank, N.A., as administrative
agent, J.P. Morgan Europe Limited, as administrative agent, and JPMorgan
Securities Inc., as sole bookrunner and lead arranger), or its successor in
interest from time to time, on behalf of the lenders from time to time under
that certain credit agreement, with JPMorgan Chase Bank, N.A. and such lenders
to which Purchaser is a credit party, or any of its Affiliates as collateral
security.  All of the terms and
provisions of this Agreement shall be binding on, and shall inure to the
benefit of, the respective heirs, administrators, personal representatives,
successors and permitted assigns, as applicable, of the Parties.

 

14.2                        Notices

 

All
notices and other communications hereunder (“Notices”)
shall be in writing in the English language and shall be deemed to have been
duly given and received when delivered in person or received by telegraphic or
other electronic means (including facsimile, telecopy and e-mail) with
confirmation of transmission by the transmitting equipment or when delivered by
overnight courier, or if mailed, five days after being deposited in the mail,
certified or registered mail, first-class postage prepaid, return receipt
requested, to the Parties at the addresses or facsimile numbers set forth in Annex 14.2.

 

Any
Party from time to time may change its physical address, e-mail address or
facsimile number for the purpose of receipt of notices to that Party hereunder
by giving notice specifying a new physical address, e-mail address or facsimile
number to the other persons listed above in accordance with the provisions of
this Section 14.2, which will not constitute an amendment under Section 14.6.  The receipt of copies of Notices by the
Parties’ advisors shall not constitute or substitute the receipt of such
Notices by the Parties themselves.  Any
Notice shall be deemed received by a Party regardless of whether any copy of
such Notice has been sent to or received by an advisor of such Party or the
acting notary, irrespective of whether the delivery of such copy was mandated
by this Agreement.

 

14.3                        Governing Law

 

This
Agreement shall be governed by and construed in accordance with, the laws of
Germany, excluding the United Nations Convention on Contracts for the
International Sale of Goods (CISG).

 

51

 

14.4                        Venue for Disputes

 

The
venue for any disputes arising out of this Agreement or any of its Annexes
shall be, unless provided for otherwise by mandatory statutory provisions, the
District Court of Frankfurt am Main (Landgericht Frankfurt am
Main).

 

14.5                        Business Day

 

Heretofore and hereinafter, “Business Day” means a day (other than a Saturday or Sunday)
on which banks are open for business in Frankfurt am Main, Germany.

 

14.6                        Amendments; Waiver

 

No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by each Party, except where a stricter form
(e.g., notarization) is required under applicable Legal Requirements.  This also applies for a waiver or amendment
of this form requirement.

 

14.7                        Language

 

14.7.1.                     This Agreement is written in the
English language (except that Annexes may be partly in the German language).
Terms to which a German translation has been added shall be interpreted
throughout this Agreement in the meaning assigned to them by the German
translation

 

14.7.2.                     Any reference made in this Agreement to
any types of companies or participations, Proceedings, authorities or other
bodies, rights, institutions, regulations or legal relationships (the “Legal Terms”) under German law shall extend
to any corresponding or identical Legal Terms under foreign law to the extent
that relevant facts and circumstances must be assessed under such foreign law.
Where no corresponding or identical Legal Term under foreign law exists, such
Legal Terms shall be introduced that functionally come closest to the Legal
Terms under German Law.

 

14.8                        Headings; Construction

 

The
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this
Agreement. Any reference to any Legal Requirement shall be deemed also to refer
to all rules and regulations promulgated thereunder, as amended from time to
time, unless the context requires otherwise.

 

52

 

14.9                        Entire Agreement

 

Except
as otherwise set forth herein, the Annexes identified in this Agreement are
incorporated herein by reference and made a part hereof unless attached for
identification purposes only.  The
Transaction Documents (including the other documents expressly referred to
herein and therein) constitute the entire agreement among the Parties and
supersedes any prior understandings, agreements or representations by or among
the Parties, written or oral, to the extent they relate in any way to the
subject matter hereof.  Side agreements
to this Agreement do not exist.

 

14.10                 Severability

 

Should
any provision of this Agreement be or become invalid, ineffective or
unenforceable as a whole or in part, the validity, effectiveness and
enforceability of the remaining provisions shall not be affected thereby. Any
such invalid, ineffective or unenforceable provision shall be deemed replaced
by such valid, effective and enforceable provision as comes closest to the
economic intent and the purpose of such invalid, ineffective or unenforceable
provision as regards subject-matter, amount, time, place and extent. The
aforesaid shall apply mutatis mutandis
to any gap in this Agreement.

 

14.11                 Interpretation of Disclosure Schedule

 

If
there is any inconsistency between the statements in this Agreement and those
in the disclosure schedule (other than an exception expressly set forth as such
in the disclosure schedule with respect to a specifically identified
representation or warranty), the statements in this Agreement will control.  The statements in the disclosure schedule,
except as provided in Section 5.7, relate only to the provisions in
the Section of this Agreement to which they expressly relate, including by
express cross-reference to numbered and lettered sections in the disclosure
schedule, and not to any other provision in this Agreement.

 

14.12                 No Benefit to Others

 

Except
as expressly set forth herein, the representations, warranties, covenants, and
agreements contained in this Agreement are for the sole benefit of the Parties
and their respective heirs, administrators, personal representatives,
successors and permitted assigns, and they shall not be construed as conferring
and are not intended to confer any rights, remedies, obligations, or
liabilities on any other person, unless such person is expressly stated herein
to be entitled to any such right, remedy, obligation, or liability.

 

53

 

14.13                 This Deed Conditional

 

This
Agreement is subject to the condition precedent that the parties hereto agree
in a separate notarial deed on the Annexes, which are not contained in the
Reference Deed or this Deed.

(continued
on next page)

 

54

 

IN
WITNESS THEREOF this Notarial Deed including the Annex thereto has
been read aloud to the persons appearing and was confirmed and approved by the
persons appearing. The persons appearing then signed this Deed.  All this was done at the day herebelow
written in the presence of me, the Notary Public, who also signed this Deed and
affixed my official Seal.

Basel,
this 15th (fifteenth) day of November 2007 (two thousand and seven).

 

 

	
   

  	
  /s/
  Rolf Rospek

  
	
   

  	
   

  
	
   

  	
  /s/
  Tobias Kordes

  
	
   

  	
   

  
	
   

  	
  /s/
  Patrick Xylander

  
	
   

  	
   

  
	
   

  	
  /s/
  Volker Mertens

  
	
   

  	
   

  
	
   

  	
  /s/
  Christian Becker

  
	
   

  	
   

  
	
   

  	
  /s/
  Stephen Cueni

  
	
   

  	
  Stephen
  Cueni, Notary Public

  

 

55

 

Annex 1

 

Defined Terms

 

In
this Agreement, including the recitals and schedules hereto, the following
words and phrases have the following meanings:

 

“1306735 Alberta” shall have the meaning ascribed to it in
the Recitals.

 

“4391438 Canada” shall have the meaning ascribed to it in the
Recitals.

 

“Agreement” shall have the meaning ascribed to it in the
preface.

 

“Assignments” shall have the meaning ascribed to it in Section
2.2.4.

 

“Business” shall have the meaning ascribed to it in the
Recitals.

 

“Business Day”
shall have the meaning ascribed to it in Section 14.5.

 

“Calculation Date” shall mean 30 September 2007.

 

“Closing” shall mean the closing of the transactions
contemplated by this Agreement.

 

“Closing Date” shall mean 15 November 2007, or such
other date as may be agreed to by the Parties.

 

“Company” shall have the meaning ascribed to it in the
Recitals.

 

“Companies’ Shares” shall have the meaning ascribed to it in
the Recitals.

 

“Competitive Activities” shall have the meaning ascribed to
it in Section 11.1.1.

 

“Contemplated Transactions” shall have the meaning ascribed
to it in Section 4.1.1.

 

“Contractual Effective Date” shall have the meaning ascribed
to it in Section 2.1.

 

“De Minimis Amount” shall have the meaning ascribed to it in Section 5.3.

 

“Disclosure Schedule” shall mean the disclosure schedules
with respect to Section 4 prepared by the Sellers and delivered by
the Sellers to Purchaser on the date of this Agreement.

 

“DMC Common Stock” shall have the meaning ascribed to it in Section 3.1.2.

 

“DYNAenergetics RUS” shall have the meaning ascribed to it in
the Recitals.

 

“DYNA-Assets” shall have the meaning ascribed to it in Section 4.7.1.

 

“DYNA GmbH” shall have the meaning ascribed to it in the
Recitals.

 

“DYNA Group” shall have the meaning ascribed to it in the
Recitals.

 

“DYNA Group Company(ies)” shall have the meaning ascribed to
it in the Recitals.

 

“Dynamic Materials” shall have the meaning ascribed to it in
the Recitals.

 

“Employee(s)” shall have the meaning ascribed to it in Section 4.11.2.

 

“Environmental, Health and Safety Laws” means all applicable
Legal Requirements and technical standards and accepted codes of conduct
relating to Environmental, Health and Safety Matters and being applicable
before or as of the Closing Date in the jurisdiction in which any of the DYNA
Group Companies conducts its business or as otherwise applicable from time to
time.

 

“Environmental, Health and Safety Liabilities” means, all
Losses reasonably incurred in

 

 

connection
with (i) an investigation in connection with or in anticipation of a
remediation of an Existing Environmental Condition, (ii) a clean-up of an
Existing Environmental Condition, (iii) securing measures or protective
containment measures, relating in each case to an Existing Environmental Condition,
(iv) measures to eliminate, reduce or otherwise remedy a danger to
well-being or health resulting from an Existing Environmental Condition or
(v) the failure to obtain or comply with any Governmental consents
required under any Environmental, Health and Safety Laws authorizing the
construction or modification of a facility or comply with any Environmental,
Health and Safety Laws.

 

“Environmental, Health and Safety Matters” means any matter
concerning worker health or safety, public health or safety, product or
materials safety, pollution, contamination, replacement, renewal or protection
of the soil, air, ground water, surface water, land surface and natural
resources, including buildings and other man-made structures and third-party
properties.

 

“Escrow Agreement” shall have the meaning ascribed to it in Section
3.1.3.

 

“Exchange Act” shall mean the U.S. Securities Exchange Act of
1934.

 

“Exercise Event” shall have the meaning ascribed to it in Section 9.2.

 

“Existing Environmental Condition” means (i) the
presence on or prior to the Closing Date of pollution or contamination, or any
other adverse condition (including, without limitation, the presence of
Hazardous Materials) in either the soil, groundwater and all buildings thereon,
of the Real Property and any other real property owned or used by the DYNA
Group Companies prior to the Closing Date (herein collectively “Environmental
Real Properties”), (ii) the presence on or prior to the Closing Date of
Hazardous Materials in the soil, groundwater, surface water or natural
resources, beneath, on, at or above, the Environmental Real Properties, and/or,
whether on or prior to or after the Closing Date, the migration of such
Hazardous Materials from the Environmental Real Properties, or (iii) the disposal
of any Hazardous Materials used, handled, transported, disposed, deposited,
generated or stored by or on behalf of the Company, DYNA GmbH or, to Sellers’
Knowledge, the Operating Subsidiaries on or prior to the Closing Date at any
offsite location. There shall be the presumption that any Environmental, Health
and Safety Matter newly discovered within six (6) months after the Closing Date
is attributable to operations occurring on or prior to the Closing Date, unless
the Sellers can demonstrate that such Environmental, Health and Safety Matter
is attributable to major operations that occurred after the Closing Date,
provided that (i) the Sellers 1 through 3 remain during this six (6) month
period managing directors of the Company or DYNA GmbH and (ii) the Sellers 1
through 3 in this function are in the position to have influence on the
relevant business activities.

 

“Final Business Tax Amount” shall have the meaning ascribed
to it in Section 8.1.4.

 

“Financial Statements” shall have the meaning ascribed to it
in Section 4.6.1.

 

“Geographical Markets” shall have the meaning ascribed to it
in Section 11.1.1.

 

 

“GmbH-Share 1” shall have the meaning ascribed to it in the
Recitals.

 

“GmbH-Share 2” shall have the meaning ascribed to it in the
Recitals.

 

“GmbH-Share 3” shall have the meaning ascribed to it in the
Recitals.

 

“GmbH-Share 4” shall have the meaning ascribed to it in the
Recitals.

 

“GmbH-Shares” shall have the meaning ascribed to it in the
Recitals.

 

“Governmental Permits” shall have the meaning ascribed to it
in Section 4.9.1.

 

“Hazardous Materials” means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature that are
regulated by Environmental, Health and Safety Laws.

 

“Hold Back” shall have the meaning ascribed to it in Section 3.1.3.

 

“Information” shall have the meaning ascribed to it in Section 4.16.

 

“Information Technology” shall have the meaning ascribed to
it in Section 4.15.

 

“Intellectual Property Rights” shall have the meaning
ascribed to it in Section 4.8.1.

 

“Interests” shall have the meaning ascribed to it in Section 4.5.9.

 

“KAZ DYNAenergetics” shall have the meaning ascribed to it in
the Recitals.

 

“KG-Interest 1” shall have the meaning ascribed to it in the
Recitals.

 

“KG-Interest 2” shall have the meaning ascribed to it in the
Recitals.

 

“KG-Interest 3” shall have the meaning ascribed to it in the
Recitals.

 

“KG-Interest 4” shall have the meaning ascribed to it in the
Recitals.

 

“KG-Interest” shall have the meaning ascribed to it in the
Recitals.

 

“Legal Requirement” means any national, regional, local or
foreign statute, law, code, ordinance, rule, regulation, resolution, judgment,
writ, order, decree, injunction, award, restraining order or ruling by any
court, judge, justice, arbitrator or magistrate or any other governmental
authority, regulatory agreement with any governmental authority or general
principle of common or civil law or equity.

 

“Legal Terms” shall have the meaning ascribed to it in Section 14.7.2.

 

“Lien” means any transfer, mortgage, option, pledge,
encumbrance and/or other disposal rights (Verfüguengen) including
agreements on transfer, mortgage, option, pledge, encumbrance and/or other
disposal.

 

“Limited Partnership Capital Interest” shall have the meaning
ascribed to it in the Recitals.

 

“Losses” shall mean any obligations, liabilities, losses
(including any direct or indirect reduction in value of the participation in
the DYNA Group Companies), costs and expenses and other damages.

 

 

“Management Report” shall have the meaning ascribed to it in Section 4.6.1.

 

“Material Adverse Change” shall have the meaning ascribed to
it in Section 4.17.

 

“Material Agreement(s)” shall have the meaning ascribed to it
in Section 4.10.1.

 

“Nasdaq” shall mean the NASDAQ Stock Market.

 

“Notice of Objection” shall have the meaning ascribed to it
in Section 7.2.2.

 

“Notices” shall have the meaning ascribed to it in Section 14.2.

 

“Operating Subsidiar(y)(ies)” shall have the meaning ascribed
to it in the Recitals.

 

“Order” means any order, judgment or injunction made, entered
or rendered by any court, administrative agency or other Governmental
Authority, or by any arbitrator.

 

“Partner Loan Claim 1” shall have the meaning ascribed
to it in the Recitals.

 

“Partner Loan Claim 2” shall have the meaning ascribed
to it in the Recitals.

 

“Partner Loan Claim 3” shall have the meaning ascribed
to it in the Recitals.

 

“Partner Loan Claim 4” shall have the meaning ascribed
to it in the Recitals.

 

“Partners’ Loan Claims” shall have the meaning ascribed to in
the Recitals.

 

“Perfoline” shall have the meaning ascribed to it in the
Recitals.

 

“Pre-Closing Date Period” shall mean any period or portion of
it ending on or before the Closing Date.

 

“Pre-Calculation Date Taxes” shall mean any Taxes related to
actions, events, periods or portions of periods ending on or before the
Calculation Date.

 

“Preliminary Business Tax Amount” shall have the meaning
ascribed to it in Section 8.1.4.

 

“Proceeding” means any action, claim, litigation,
arbitration, proceeding (including any civil, criminal, administrative
proceeding), prosecution, charge or dispute commenced by or before, or
otherwise involving, any governmental body or arbitrator.

 

“Purchase Price” shall have the meaning ascribed to it in Section 3.1.1.

 

“Purchaser” shall have the meaning ascribed to it in the
preface.

 

“Real Property” shall have the meaning ascribed to it in Section 4.7.3.

 

“Registration Date” shall have the meaning ascribed to it in Section
10.1.2.

 

“Registered Share Capital” shall have the meaning ascribed to
it in the Recitals.

 

“SEC” shall have the meaning ascribed to it in Section
10.2.

 

“Securities Act” shall mean the U.S. Securities Act of 1933.

 

“Securities Laws” shall mean the Securities Act together with
the Exchange Act.

 

“Seller(s)” shall have the meaning ascribed to it in the
preface.

 

“Seller 1” shall have the meaning ascribed to it in the
preface.

 

“Seller 2” shall have the meaning ascribed to it in the
preface.

 

“Seller 3” shall have the meaning ascribed to it in the
preface.

 

“Seller 4” shall have the meaning ascribed to it in the
preface.

 

 

“Sellers’ Knowledge” shall have the meaning ascribed to it in
Section 4.

 

“Shareholder Loan Claim 1” shall have the meaning
ascribed to it in the Recitals.

 

“Shareholder Loan Claim 2” shall have the meaning
ascribed to it in the Recitals.

 

“Shareholder Loan Claim 3” shall have the meaning
ascribed to it in the Recitals.

 

“Shareholder Loan Claim 4” shall have the meaning
ascribed to it in the Recitals.

 

“Shareholders’ Loan Claims” shall have the meaning ascribed
to in the Recitals.

 

“Signing Date” shall mean the date hereof.

 

“Statutory Auditor” shall mean Sozietät Prinz & Mueller.

 

“Stock Consideration” shall have the meaning ascribed to it
in Section 3.1.2.

 

“Subsidiary(-ies)” shall have the meaning ascribed to it in
the Recitals.

 

“Tax Benefit” shall mean any present or future decrease of an
assessed Tax.

 

“Tax Return” means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes.

 

“Taxes” shall mean all taxes (including, without limitation,
taxes on income, profits and gains, payroll and withholding taxes, real estate
transfer taxes, VAT and other levies), duties, charges (including, without
limitation, labor insurance and social security charges), public contributions,
arrears, advance payments, liabilities stamps and imposts of whatever nature
imposed by any tax, governmental body or other authority, together with any
interest, penalty, fine, supplement, surcharge or addition thereto and all
penalties for incorrect transfer pricing documentation.  For the avoidance of doubt, the term Taxes
shall also include any liabilities for Taxes (Haftungsbeträge)
as well as reductions of Tax losses or potential write-offs.

 

“Threshold” shall have the meaning ascribed to it in Section 5.3.

 

“Transfer Restrictions” shall have the meaning ascribed to it
in Section 3.2.

 

“Transaction Documents” shall have the meaning ascribed to it
in Section 4.1.1.

 

“Troisdorf GHG” shall have the meaning ascribed to it in the
Recitals.

 

“Würgendorf GHG” shall have the meaning ascribed to it in the
Recitals.

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