SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report - February 28, 1997
----------------------------------
(Date of Earliest Event Reported)
CARPENTER TECHNOLOGY CORPORATION
- ----------------------------------------------------------------
(Exact Name of Registrant as specified in its charter)
Delaware 1-5828
- ------------------------ ---------------------
(State of Incorporation) (Commission File No.)
23-0458500
--------------------
(IRS Employer I.D. No.)
101 West Bern Street, Reading, Pennsylvania 19603
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(Address of principal executive offices)
Registrant's telephone number, including area code: (610) 208-2000
Exhibit Index is on page __.
<PAGE>
Item 2. Acquisition or Disposition of Assets.
- ------ ------------------------------------
On February 28, 1997 (the "Merger Date"), Dynamet Incorporated, a
Pennsylvania corporation ("DI") was merged (the "Merger") with
and into a new-formed, wholly-owned subsidiary of the Registrant
("New DI") pursuant to the terms of an Agreement and Plan of
Merger dated January 6, 1997 (the "Merger Agreement"), and a
related Plan of Merger dated as of February 21, 1997 between DI
and New DI (the "Merger Plan"). A copy of the Merger Agreement
is filed as Exhibit 1 hereto, and the form of the definitive
Merger Plan is attached as Exhibit A to the Merger Agreement.
On the Merger Date, there were outstanding 305,616 shares of
Common Stock of DI ("DI Stock") held by four individuals and two
trusts. Each share of DI Stock outstanding immediately prior to
the effectiveness of the Merger was converted into the right to
receive $166.0581 in cash and 9.0704 shares of the Registrant's
Common Stock ("CarTech Stock"), resulting in payment of an
aggregate of $50,750,612.78 in cash and the issuance of an
aggregate of 2,772,058 whole shares (not including fractional
interests) of CarTech Stock (the "Merger Shares"). No fractional
shares of CarTech Stock were issued in the Merger. Pursuant to
the Merger Agreement and the Merger Plan, a DI Shareholder who
would have otherwise been entitled to such a fractional interest
was paid cash in an amount equal to $34 multiplied by the
fraction representing such fractional interest.
The terms of the Merger Agreement were determined as a result of
arms' length negotiations between officers and representatives of
the Registrant and the shareholders of DI and their
representatives. There are no material relationships in
existence between the DI shareholders and the Registrant or any
other of its affiliates, or its officers or directors or their
associates, except as created by the Merger Agreement. Pursuant
to the provisions of the Merger Agreement, Mr. Peter C. Rossin
has been elected as a member of the Registrant's Board of
Directors.
The Merger Shares were not registered under the Securities Act of
1933, having been issued without such registration in reliance
upon the exemption afforded by Section 4(2) of such Act.
However, the Merger Agreement provides the terms and conditions
upon which the Registrant will file with the Securities and
Exchange Commission a registration statement with respect to all
or a portion of the Merger Shares in order to permit a public
distribution thereof, if so requested by the holders of a
majority of the Merger Shares.
The acquisition of DI will be treated by the Registrant for
accounting purposes as a purchase.
Organized in 1967, DI has evolved into a substantial purchaser of
titanium bar and wire and of powdered metals for the aerospace
and tool industries.
<PAGE>
Pursuant to the Merger Agreement, New DI sold to Trigon
Incorporated on the Merger Date the assets and business of its
Forged Products Division in consideration of the cash payment of
$2.6 million and the assumption of certain specified liabilities.
Trigon Incorporated is substantially owned by Mr. Peter Stephans,
a former DI shareholder, and trusts for his children.
It is the intention of the Registrant to continue to operate the
business of DI substantially as presently conducted, except as
impacted by the foregoing transaction.
Item 7. Financial Statements, Pro Forma Financial
- ------ -----------------------------------------
Information and Exhibits.
------------------------
Note: The Financial Statements of Business Acquired and Pro
Forma Financial Information hereinafter described under
subsections 9(a) and (b) will be filed by amendment to
this Report, to be filed not later than 60 days from
the filing date of this Report, in accordance with the
provisions of subsections 9(a)(4) and (b)(2) of Item 7
of Form 8-K.
(a) Financial Statements of Business Acquired
-----------------------------------------
The following financial statements of Dynamet
Incorporated are filed as a part of this report
beginning on page __ hereof:
Page No.
--------
Report of Price Waterhouse LLP as
to the Financial Statements for
the Year Ended December 31, 1996
Balance Sheets
as of December 31, 1995 and 1996
Statements of Income
for the Years Ended December 31,
1995 and 1996
Statements of Shareholders' Equity
for the Years Ended December 31, 1995
and 1996
Statements of Cash Flow for the
Years Ended December 31, 1995
and 1996
Notes to Consolidated Financial
Statements
<PAGE>
(b) Pro Forma Financial Information.
-------------------------------
The following pro forma financial information with
respect to the transaction described in this Report is filed as a
part hereof, beginning on page __ hereof:
Pro Forma Balance Sheets as of
June 30, 1996 and December 31, 1996
Pro Forma Statements of Income
for the Year Ended June 30, 1996
and the six-month period ended
December 31, 1996
The historical financial statements of the
Registrant for the years ended June 30, 1996, 1995 and 1994
(as previously filed in the Registrant's Annual Report on
Form 10-K), and for the Six Months Ended December 31, 1996
(as previously filed on the Company's report on Form 10-Q)
are hereby incorporated by reference.
(c) Exhibits.
--------
Ref. No. Per
Table II Under
Item 601(a) of
Regulation S-K Description of Exhibit Exhibit No.
-------------- ---------------------- -----------
(2) Agreement and Plan of 1
Merger dated January
6, 1997 by and among
Dynamet Incorporated,
Shareholders of Dynamet
Incorporated and
Carpenter Technology
Corporation
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Date: March __, 1997 CARPENTER TECHNOLOGY CORPORATION
By:_______________________________
G. Walton Cottrell
Senior Vice President-Finance
Chief Financial Officer
<PAGE>
________________________________________________________________
AGREEMENT AND PLAN OF MERGER
Dated January 6, 1997
By and Among
DYNAMET INCORPORATED,
THE SHAREHOLDERS OF DYNAMET INCORPORATED
and
CARPENTER TECHNOLOGY CORPORATION
________________________________________________________________
<PAGE>
_________________
TABLE OF CONTENTS
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Page
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ARTICLE I
THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Merger . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Closing. . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF DI AND DI SHAREHOLDERS. . . . . . . . . . . . . . . . . . 3
2.1. Organization, Qualification, Authority and
Good Standing. . . . . . . . . . . . . . . . . . . . . 3
2.2. Capitalization . . . . . . . . . . . . . . . . . . . . 3
2.3. Subsidiaries and Affiliates. . . . . . . . . . . . . . 4
2.4. Authorization and Enforceability . . . . . . . . . . . 4
2.5. No Violation of Laws or Agreements . . . . . . . . . . 4
2.6. Financial Statements . . . . . . . . . . . . . . . . . 4
2.7. Undisclosed Liabilities. . . . . . . . . . . . . . . . 5
2.8. No Changes . . . . . . . . . . . . . . . . . . . . . . 5
2.9. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 7
2.10. Inventories. . . . . . . . . . . . . . . . . . . . . . . 8
2.11. Accounts Receivable. . . . . . . . . . . . . . . . . . . 9
2.12. No Pending Litigation or Proceedings . . . . . . . . . . 9
2.13. Contracts; Compliance. . . . . . . . . . . . . . . . . . 9
2.14. Compliance with Laws . . . . . . . . . . . . . . . . . 10
2.15. Consents . . . . . . . . . . . . . . . . . . . . . . . 11
2.16. Title. . . . . . . . . . . . . . . . . . . . . . . . . 11
2.17. Real Estate. . . . . . . . . . . . . . . . . . . . . . 12
2.18. Transactions with Related Parties. . . . . . . . . . . 12
2.19. Condition of Assets. . . . . . . . . . . . . . . . . . 12
2.20. Compensation Arrangements; Bank Accounts, Directors,
Officers and Fiduciaries . . . . . . . . . . . . . . . 13
2.21. Labor Relations. . . . . . . . . . . . . . . . . . . . 13
2.22. Insurance. . . . . . . . . . . . . . . . . . . . . . . 13
2.23. Patents and Intellectual Property Rights . . . . . . . 14
2.24. Employee Benefit Plans . . . . . . . . . . . . . . . . 14
2.25. Environmental Matters. . . . . . . . . . . . . . . . . 16
2.26. Brokers. . . . . . . . . . . . . . . . . . . . . . . . 19
2.27. Disclosure . . . . . . . . . . . . . . . . . . . . . . 19
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CTC. . . . . . . . . . . . 19
3.1. Organization, Qualification, Authority and
Good Standing of CTC . . . . . . . . . . . . . . . . . 19
3.2. Organization, Qualification, Authority and
Good Standing of Merger Sub. . . . . . . . . . . . . . 19
3.3. Capitalization . . . . . . . . . . . . . . . . . . . . 19
3.4. Authorization and Enforceability . . . . . . . . . . . 20
3.5. No Violation of Laws or Agreements . . . . . . . . . . 20
3.6. Financial Statements; 1934 Act Filings . . . . . . . . 20
3.7. Consents . . . . . . . . . . . . . . . . . . . . . . . 21
3.8. Brokers. . . . . . . . . . . . . . . . . . . . . . . . 21
3.9. Disclosure . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IV
CERTAIN OBLIGATIONS OF DI AND
DI SHAREHOLDERS PENDING CLOSING . . . . . . . . . . . . . . 21
4.1. Conduct of Business Pending Closing. . . . . . . . . . 21
4.2. Insurance; Environmental Permits . . . . . . . . . . . 23
4.3. Fulfillment of Agreements. . . . . . . . . . . . . . . 23
4.4. Access, Information and Documents. . . . . . . . . . . 23
4.5. H-S-R Act Compliance . . . . . . . . . . . . . . . . . 24
4.6. Delivery of Financial Statements for Subsequent
Periods. . . . . . . . . . . . . . . . . . . . . . . . 24
4.7. Environmental Lists. . . . . . . . . . . . . . . . . . 24
ARTICLE V
CERTAIN OBLIGATIONS OF CTC PENDING CLOSING . . . . . . . . . 24
5.1. Fulfillment of Agreements. . . . . . . . . . . . . . . 24
5.2. H-S-R Act Compliance . . . . . . . . . . . . . . . . . 25
5.3. Formation of Merger Sub. . . . . . . . . . . . . . . . 25
5.4. Listing of CTC Stock . . . . . . . . . . . . . . . . . 25
5.5. Delivery of 1934 Act Reports for Subsequent Periods. . 25
5.6. Environment Audit. . . . . . . . . . . . . . . . . . . 25
5.7 Agreements . . . . . . . . . . . . . . . . . . . . . . 26
5.8 Confidentiality. . . . . . . . . . . . . . . . . . . . 26
ARTICLE VI
CONDITIONS TO CLOSING; TERMINATION . . . . . . . . . . . . . 27
6.1. Conditions Precedent to Obligation of CTC. . . . . . . 27
6.2. Conditions Precedent to Obligations of DI and DI
Shareholders . . . . . . . . . . . . . . . . . . . . . 29
6.3. Termination. . . . . . . . . . . . . . . . . . . . . . 30
<PAGE>
ARTICLE VII
RESTRICTIONS ON TRANSFER OF CTC STOCK;
REGISTRATION RIGHTS; BOARD REPRESENTATION. . . . . . . . . . 31
7.1. Restrictions on Transfer and Certain Activities. . . . 31
7.2. Registration of CTC Stock. . . . . . . . . . . . . . . 36
7.3. Board Representation . . . . . . . . . . . . . . . . . 38
7.4. No Disposition Inconsistent with Reorganization. . . . 39
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION . . . . . . . . . . . . . . . . 39
8.1. Nature and Survival of Representations . . . . . . . . 39
8.2. Indemnification by DI Shareholders . . . . . . . . . . 40
8.3. Indemnification by CTC . . . . . . . . . . . . . . . . 40
8.4. Notification of Actions; Control of Proceedings and
Cooperation. . . . . . . . . . . . . . . . . . . . . . 41
8.5. Limitations. . . . . . . . . . . . . . . . . . . . . . 41
8.6. Satisfaction of Claims with CTC Stock. . . . . . . . . 42
8.7. Definition of Material Adverse Effect. . . . . . . . . 42
ARTICLE IX
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 42
9.1. Costs, Expenses and Taxes. . . . . . . . . . . . . . . 42
9.2. Further Assurances; Cooperation. . . . . . . . . . . . 42
9.3. Option to Purchase or Sell Forged Products Assets. . . 42
9.4. Post-Closing Access; Preservation of Books and
Records. . . . . . . . . . . . . . . . . . . . . . . . 43
9.5. Communications . . . . . . . . . . . . . . . . . . . . 43
9.6. Assignability; Successors and Assigns. . . . . . . . . 44
9.7. Governing Law; Remedies. . . . . . . . . . . . . . . . 44
9.8. Headings . . . . . . . . . . . . . . . . . . . . . . . 45
9.9. Amendment and Waiver . . . . . . . . . . . . . . . . . 45
9.10. Entire Agreement . . . . . . . . . . . . . . . . . . . 45
9.11. Execution in Counterparts. . . . . . . . . . . . . . . 45
9.12. Appointment of Agent for Delivery. . . . . . . . . . . 45
<PAGE>
EXHIBITS
--------
Section Where
Designation Description First Referenced
- ----------- ----------- ----------------
A Plan of Merger Preamble
B Forms of Consulting 1.2(b)(iii)
and Non-Competition
Agreements
C Form of Opinion of 6.1(c)
Counsel for DI
D Opinion of Counsel for CTC 6.2(c)
E Form of Option Agreement 9.3
<PAGE>
SCHEDULES
---------
Section Where
Designation Description First Referenced
- ----------- ----------- ----------------
2.01 Jurisdictions Where Qualified 2.1
2.02 Capital Stock 2.2
2.03 Affiliated Company 2.3
2.05 Violation of Laws or Agreements 2.5
2.06 Financial Disclosure 2.6
2.07 Disclosed Liabilities 2.7
2.08 Changes Since Balance Sheet Date 2.8
2.09 Taxes 2.9
2.10 Inventories 2.10
2.11 Accounts Receivable 2.11
2.12 Pending Litigation or Proceedings 2.12
2.13 Contracts, Leases and Other 2.13
Commitments
2.14 Permits & Registrations 2.14
2.15 Necessary Consents and Approvals 2.15
2.16 Liens 2.16
2.17 Real Estate Interests 2.17
2.18 Permitted Related Party 2.18
Transactions
2.20 Compensation Arrangements 2.8(n)
and Bank Accounts
2.21 Labor Relations 2.21
2.22 Insurance Policies 2.22
2.23 Patents and Intellectual 2.23
Property Rights
2.24 ERISA Disclosures 2.8(f)
2.25 Environmental Matters 2.25
4.01 Property Distribution 4.1(c)(vi)
5.07 Employment Agreements 5.7
and Programs
9.03 FPD Assets and Liabilities 9.3
<PAGE>
INDEX OF DEFINED TERMS
-----------------------
The following terms used herein are defined in the Sections
indicated:
Section in
Term Which Defined
---- -------------
DI Preamble
DI Shareholders Preamble
Warranting Shareholders Preamble
CTC Preamble
Merger Preamble
Merger Sub Preamble
Plan of Merger Preamble
DI Stock 1.1(b)
CTC Stock 1.1(b)
CTC Market Price 1.1(b)
Closing 1.2(a)
Closing Date 1.2(a)
time of Closing 1.2(a)
Effective Time 1.2(a)
State Merger Filings 1.2(b)(i)
Exchange Agent 1.2(b)(ii)
Disclosure Statement 2.1
Material Adverse Effect 2.5
Financial Statements 2.6
GAAP 2.6
Balance Sheet 2.6
Balance Sheet Date 2.6
Ordinary Course of Business 2.7
Related Party 2.8(n)
Taxes 2.9(a)
Tax 2.9(a)
Code 2.9(d)
Proceedings 2.12
Permits and Licenses 2.14
H-S-R Act 2.15
Real Properties 2.17
Permitted Related Party Transactions 2.18
ERISA 2.24(a)
Benefit Plans 2.24(a)
Affiliate 2.24(i)
Former Affiliate 2.24(i)
Environmental Laws 2.25(a)
Environmental Permits 2.25(a)
Management 2.25(c)
Managed 2.25(c)
Hazardous Substances 2.25(c)
PCBs 2.25(f)
ACM 2.25(f)
<PAGE>
CERCLA 2.25(g)
CERCLIS 2.25(g)
Released 2.25(h)
NYSE 3.3
CTC MAE 3.5
Most-Recent 10-Ks 3.6
SEC 3.6
1934 Act 3.6
CTC Financial Statements 3.6
Permitted Distributions 4.1(c)(vi)
Aggregate AAA Value 4.1(c)(vi)
FTC 4.5
AT Division 4.5
NYSE Application 5.4
Environmental Auditors 5.6
Environmental Report 5.6
Merger Shares 7.1(a)(i)
1933 Act 7.1(a)(i)
Rule 144 7.1(a)(i)
Limited 144 Resale Period 7.1(a)(ii)
Response Period 7.1(a)(iii)
Repurchase Right 7.1(a)(iii)
Offered Merger Shares 7.1(a)(iii)
Unrestricted Permitted Transferee 7.1(e)(i)
Permitted Transferee 7.1(e)(ii)
affiliate 7.1(e)(iii)
Disposition 7.1(e)(iii)
Standstill Term 7.1(f)(i)
CTC Change of Control Event 7.1(f)(ii)
CTC Voting Securities 7.1(f)(iii)
voting power 7.1(f)(iii)
Participating Sellers 7.2(c)
DI Designee 7.3(a)
Damages 8.2(a)
Indemnitee 8.4
Indemnitor 8.4
FPD Assets 9.3
Stelkast Preferred Stock 9.3
Agent for Delivery 9.12(a)
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER dated January 6, 1997 by
and among DYNAMET INCORPORATED, a Pennsylvania corporation
("DI"), PETER C. ROSSIN, PETER N. STEPHANS, ADA E. ROSSIN, and
JOAN R. STEPHANS, individually and as trustees, holders of all of
the issued and outstanding shares of capital stock of DI
(collectively, the "DI Shareholders," with Messrs. Rossin and
Stephans being hereinafter sometimes referred to as the
"Warranting Shareholders") and CARPENTER TECHNOLOGY CORPORATION,
a Delaware corporation ("CTC").
The parties hereto desire to provide for the merger
(the "Merger") of DI with and into a newly-formed corporation to
be organized as a wholly-owned subsidiary of CTC ("Merger Sub")
pursuant to the Plan of Merger attached hereto as Exhibit A (the
---------
"Plan of Merger") and further to provide for certain
undertakings, conditions, representations, warranties and
covenants in connection with the Merger, all for the purpose of
effecting a reorganization under the provisions of sections
368(a)(1)(A) and (a)(2)(D) of the Internal Revenue Code of 1986,
as amended.
INTENDING TO BE LEGALLY BOUND, the parties agree as
follows:
ARTICLE I
---------
THE TRANSACTION
---------------
1.1. Merger.
------
(a) Effective Date. At the time of Closing (as
--------------
hereinafter defined) hereunder, DI will be merged into Merger Sub
pursuant to the terms of the Plan of Merger.
(b) Conversion of DI Capital Stock. As a result
------------------------------
of the Merger, each share of Common Stock, par value $5 per
share, of DI ("DI Stock") outstanding at the time of Closing
hereunder will be converted into (i) the right to receive
$166.0581 in cash and (ii) 9.0704 shares of Common Stock, par
value $5 per share, of CTC ("CTC Stock"); provided, however, that
-----------------
in the event that the average of the closing sale prices of CTC
Stock as reported on the New York Stock Exchange Composite Tape
for the most recent 15 days on which trading in CTC Stock has
occurred ending on the day immediately preceding the Closing Date
(as hereinafter defined) (the "CTC Market Price"), is greater
than $40 or less than $28, DI and CTC shall each have the right
to terminate this Agreement pursuant to Section 6.3(a)(iv)
hereof.
<PAGE>
(c) Fractional Shares. No fractional shares of
-----------------
CTC Stock will be issued as a result of the Merger; fractional
interests will be provided for in accordance with the terms of
the Plan of Merger.
1.2. Closing.
-------
(a) Time and Place. The closing under this
--------------
Agreement (the "Closing") will take place at 10:00 a.m., local
time, on the later to occur of February 28, 1997 or the third
business day after all consents and authorizations referred to in
Sections 6.1(e) and 6.2(e) have been obtained and the parties
have otherwise determined that all conditions to Closing
contemplated by Article VI hereof not theretofore waived have
been or can be satisfied, at the offices of Kirkpatrick &
Lockhart LLP, 1500 Oliver Building, Pittsburgh, Pennsylvania, or
at such other time, date or place as the parties may mutually
agree. The date on which and the time of day at which Closing
occurs are sometimes respectively referred to herein as the
"Closing Date" and the "time of Closing." The Closing will be
deemed to be effective as of the close of business on the Closing
Date, such time being sometimes referred to herein as the
"Effective Time."
(b) Deliveries and Proceedings at the Closing.
-----------------------------------------
At the time of Closing:
(i) Filing of Articles and Certificate of
-------------------------------------
Merger. Articles of merger and a certificate of merger
- ------
(collectively, the "State Merger Filings"), having been duly
executed and delivered by the parties thereto, shall be filed
with the Department of State of the Commonwealth of Pennsylvania
and the Office of the Secretary of State of the State of
Delaware, respectively, thereby effecting the Merger.
(ii) Exchange of Stock Certificates and
----------------------------------
Cash. Upon receipt of notice of the effectiveness of the Merger,
- ----
Peter C. Rossin, as Agent for Delivery (as hereinafter defined)
for those holders of DI Stock who have duly appointed him as
such, will surrender to CTC or to the Exchange Agent designated
pursuant to Paragraph 4(a) of the Plan of Merger (the "Exchange
Agent"), if so designated, certificates representing all the
shares of DI Stock of which each such holder is then the
registered owner, in exchange for which CTC or the Exchange Agent
will deliver to the Agent for Delivery a stock certificate for
<PAGE>
the number of shares of CTC Stock to which such holder is
entitled by the terms of this Agreement and the Plan of Merger,
with each such stock certificate to be registered in the name of
the appropriate holder and to bear the legend referred to in
Section 7.1(b) hereof and shall wire transfer the amount of the
cash payment for such holder in immediately available funds to an
account designated by such holder no later than two days prior to
the Closing Date.
(iii) Execution of Consulting and Non-
--------------------------------
Competition Agreements. Consulting and Non-Competition
- ----------------------
Agreements in substantially the forms attached hereto as
Exhibits B-1 and B-2 will be executed and delivered by CTC, DI
- ------------ ---
and Messrs. Rossin and Stephans, respectively.
(iv) Other Deliveries. The Closing
----------------
certificates, opinions of counsel and other documents required to
be delivered pursuant to this Agreement will be exchanged.
<PAGE>
ARTICLE II
----------
REPRESENTATIONS AND WARRANTIES
------------------------------
OF DI AND DI SHAREHOLDERS
-------------------------
Each DI Shareholder hereby individually and severally
and not jointly represents to CTC that such DI Shareholder has
full legal right, power and authority to execute and deliver this
Agreement and perform such DI Shareholder's obligations
hereunder, without need for any consent, approval, authorization
or order of any court or governmental agency or body.
Each of DI and the Warranting Shareholders hereby
individually and severally and not jointly represents and
warrants to CTC as follows:
2.1. Organization, Qualification, Authority and Good
-----------------------------------------------
Standing. DI is a corporation duly organized, validly existing
- --------
and in good standing under the laws of the Commonwealth of
Pennsylvania and has all requisite corporate power and authority
to own or lease its properties and assets as now owned or leased,
to carry on its business as and where now being conducted, to
enter into this Agreement and the Plan of Merger, and to perform
its obligations hereunder and thereunder. DI is duly qualified
and in good standing as a foreign corporation, duly authorized to
do business, in those jurisdictions referred to in Schedule 2.01
of the Disclosure Statement delivered by DI to CTC in connection
with this Agreement (the "Disclosure Statement"), except where
the failure to be so qualified, in good standing and duly
authorized is not likely to have a Material Adverse Effect (as
hereinafter defined). The copies of DI's articles of
incorporation and bylaws, as amended to date, which have been
delivered to CTC are correct and complete and such instruments
are in full force and effect on the date hereof.
2.2. Capitalization. Schedule 2.02 of the Disclosure
--------------
Statement sets forth the authorized and outstanding capital stock
of DI. All of such outstanding shares have been duly authorized
and validly issued, are fully paid and nonassessable, were not
issued in violation of the terms of any agreement or other
understanding binding upon DI and were issued in compliance with
all applicable federal and state securities or "blue sky" laws
and regulations. There are no outstanding or unexercised
options, warrants, rights, agreements, calls, commitments or
demands of any character relating to the capital stock of DI to
which DI is a party or of which DI has knowledge and there are no
securities convertible into or exchangeable for any of DI's
capital stock issued by DI.
<PAGE>
2.3. Subsidiaries and Affiliates. DI does not
---------------------------
directly or indirectly control any other corporation or business
organization with the exception of those listed on Section 2.03
of the Disclosure Statement, which are not material to the core
business of DI.
2.4. Authorization and Enforceability. The execution,
--------------------------------
delivery and performance of this Agreement by DI have been duly
authorized by the Board of Directors of DI and have been duly
approved by all necessary action on the part of the holders of DI
Stock. This Agreement has been and the Plan of Merger will be
duly executed and delivered by DI and each of them constitutes or
will constitute, when so executed and delivered, the legal, valid
and binding obligation of DI, enforceable in accordance with its
terms except as such enforceability may be limited or affected by
(i) bankruptcy, insolvency, reorganization, moratorium,
liquidation, arrangement, fraudulent transfer, fraudulent
conveyance and other similar laws (including court decisions) now
or hereafter in effect and affecting the rights and remedies of
creditors generally or providing for the relief of debtors,
(ii) the refusal of a particular court to grant equitable
remedies, including, without limitation, specific performance or
injunctive relief, and (iii) general principles of equity
(regardless whether such remedies are sought in a proceeding in
equity or at law).
2.5. No Violation of Laws or Agreements. Except as
----------------------------------
disclosed on Schedule 2.05 of the Disclosure Statement, the
execution and delivery of this Agreement by DI do not, and its
consummation of the transactions contemplated hereby and its
compliance with the terms, conditions and provisions of this
Agreement will not, (a) contravene any provision of the articles
of incorporation or bylaws of DI; (b) conflict with or result in
a breach of or constitute a default (or an event which would with
the passage of time or the giving of notice or both constitute a
default) under any of the terms, conditions or provisions of any
material indenture, mortgage, loan or credit agreement or other
agreement or instrument to which DI is a party or by which it or
any of its assets may be bound, or any judgment or order to which
DI is subject of any court or governmental department,
commission, board, agency or instrumentality, domestic or
foreign, or any applicable law, rule or regulation, any of which
contraventions, conflicts, breaches or defaults, individually or
in the aggregate, is likely to have a material adverse effect on
the financial condition of DI or the results of its operations (a
"Material Adverse Effect"); (c) result in the creation or
imposition of any lien, charge or encumbrance of any nature
whatsoever upon the assets of DI or give to others any interest
or right therein which is likely to have a Material Adverse
<PAGE>
Effect; (d) result in the maturation or acceleration of any
liability of DI with a value in excess of $500,000 (or give
others the right to cause such a maturation or acceleration)
which is likely to have a Material Adverse Effect; or (e) result
in the termination of or loss of any right (or give others the
right to cause such a termination or loss) under any material
agreement or contract to which DI is a party or by which it may
be bound which is likely to have a Material Adverse Effect.
2.6. Financial Statements. The books of account and
--------------------
related records of DI fairly and accurately reflect in reasonable
detail its assets, liabilities and transactions. DI has
delivered to CTC the following financial statements of DI (the
"Financial Statements"):
(a) Audited balance sheets as at December 31,
1995 and 1994, and related statements of income, shareholders'
equity and cash flows for the years then ended, audited by Price
Waterhouse LLP; and
(b) Unaudited balance sheet as at November 30,
1996 and related statements of income, shareholders' equity and
cash flows for the eleven months then ended.
The Financial Statements (i) have been prepared in accordance
with the books and records of DI and (ii) except as disclosed on
Schedule 2.06 of the Disclosure Statement, present fairly in all
material respects the financial condition of DI as at the
respective dates and the results of operations, shareholders'
equity and cash flows for the periods covered thereby, in
accordance with generally accepted accounting principles
("GAAP") consistently applied. All references in this Agreement
to the "Balance Sheet" shall mean the balance sheet of DI as at
December 31, 1995 included in the Financial Statements, and all
references to the "Balance Sheet Date" shall mean December 31,
1995.
2.7. Undisclosed Liabilities. As of the date hereof,
-----------------------
DI has no liability or obligation of any nature, whether due or
to become due, absolute, contingent or otherwise (including
liabilities for or in respect of federal, state, local or foreign
taxes or any interest or penalties relating thereto) that would
be required to be disclosed on a balance sheet and related notes
thereto prepared in accordance with GAAP, except liabilities
(a) reflected on the Balance Sheet and related notes thereto,
(b) incurred in the Ordinary Course of Business (as hereinafter
defined) since the Balance Sheet Date and appropriately reflected
on DI's books of account, or (c) as disclosed on Schedule 2.07 of
the Disclosure Statement. For purposes of this Agreement,
"Ordinary Course of Business" shall mean with respect to any
<PAGE>
transaction, series of transactions or activities undertaken by
DI that such transactions or activities are consistent in amount
or volume, timing and purposes with similar transactions or
activities undertaken by DI in the 24-month period ended on the
Balance Sheet Date.
2.8. No Changes. Except as contemplated by this
----------
Agreement or as disclosed on Schedule 2.08 of the Disclosure
Statement, from the Balance Sheet Date to the date hereof, DI has
conducted its business only in the Ordinary Course of Business.
Without limiting the generality of the foregoing sentence, except
as disclosed on such Schedule 2.08, between the Balance Sheet
Date and the date of this Agreement there has not been:
(a) Any change in the financial condition,
assets, liabilities, net worth or business of DI except changes
in the Ordinary Course of Business, which, individually or in the
aggregate, has had or is likely to have a Material Adverse
Effect;
(b) Any damage, destruction or loss, whether or
not covered by insurance, which has had or is likely to have a
Material Adverse Effect;
(c) Any entering into a material mortgage or
pledge of, or any granting of a material security interest in,
any of DI's tangible or intangible assets except in the Ordinary
Course of Business;
(d) Any strike, walkout, labor trouble or any
similar event, development or condition which has had a Material
Adverse Effect;
(e) Any declaration, setting aside or payment of
a dividend or other distribution in respect of any capital stock
of DI, or any direct or indirect redemption, purchase or other
acquisition by DI of any such stock or any rights or options to
purchase such stock or securities convertible into or
exchangeable for such stock;
(f) Any material increase in the salaries or
other compensation payable or to become payable to, or any
material advance (excluding advances in the Ordinary Course of
Business) or loan to, any officer or director of DI (except
normal merit increases made in the Ordinary Course of Business),
or any payments to any pension, retirement, profit sharing, bonus
or similar plan except payments in the Ordinary Course of
Business made pursuant to the plans described on Schedule 2.24 of
the Disclosure Statement, or any other payment of any kind to (or
on behalf of) any such officer or director other than payment of
base compensation and reimbursement for reasonable business
expenses in the Ordinary Course of Business or as disclosed on
Schedule 2.08 of the Disclosure Statement;
<PAGE>
(g) Any making or authorization of any single
capital expenditure by DI in excess of $250,000;
(h) Any cancellation or waiver of any right
material to the operation of the business of DI or any
cancellation (other than upon satisfaction) or any waiver of any
material debts or claims or any cancellation or waiver of any
debts or claims against any Related Party (as such term is
hereinafter defined), except in the Ordinary Course of Business;
(i) Any sale, transfer or other disposition of
any material assets of DI, except in the Ordinary Course of
Business;
(j) Any payment, discharge or satisfaction of any
material liability or obligation (whether accrued, absolute,
contingent or otherwise) by DI, other than the payment, discharge
or satisfaction of liabilities or obligations in the Ordinary
Course of Business;
(k) Any change or, to the knowledge of DI or
either of the Warranting Shareholders, threat of any change in
any of the relations of DI with its significant suppliers,
clients or customers other than in the Ordinary Course of
Business;
(l) Any material write-off as uncollectible of
any notes or accounts receivable of DI or material write-downs of
the value of any assets or inventory by DI other than in the
Ordinary Course of Business;
(m) Any change by DI in any method of accounting
or keeping its books of account or accounting practices or
policies or method of application thereof, including but not
limited to changes in estimates or valuation methods;
(n) Any material payment, loan or advance to, or
sale, transfer or lease of any properties or assets (whether
real, personal or mixed, tangible or intangible) to, or the
entering into of any agreement, arrangement or transaction with,
any Related Party, except for (i) advisory fees disclosed on
Schedule 2.08 of the Disclosure Statement and (ii) compensation
to the officers and employees of DI at rates not exceeding the
rates of compensation disclosed on Schedule 2.20 of the
Disclosure Statement or expense or other advances to such persons
made in the Ordinary Course of Business (as used herein, a
"Related Party" means any of the officers, directors or
shareholders of DI, any affiliate, associate or relative of DI or
of any shareholder of DI, or any of their respective officers or
directors, or any business or entity in which any shareholder of
DI or any affiliate, associate or relative of any such person or
of DI has any direct or indirect interest); or
<PAGE>
(o) Any disposition of, or failure to keep in
effect any rights in, to or for the use of, any patent,
trademark, service mark, trade name or copyright, other than in
the Ordinary Course of Business, except for any such disposition
or failure that is likely to have a Material Adverse Effect.
2.9. Taxes.
-----
(a) DI has (i) timely filed all federal, state
and local or foreign income, payroll, withholding, excise, sales,
use, personal property, use and occupancy, business and
occupation, mercantile, real estate, capital stock and franchise
or other tax returns or extensions in respect thereof (all the
foregoing taxes, including interest and penalties thereon and
including estimated taxes, being hereinafter collectively
referred to as "Taxes" and individually referred to as a
("Tax") and (ii) paid all Taxes which are shown to have become due
pursuant to such returns or extensions and (iii) paid all other
Taxes for which a notice of assessment or demand for payment has
been received, other than any such Taxes which DI is disputing in
good faith proceedings. All such returns are correct and
complete in all material respects, have been prepared in
accordance with all applicable laws and requirements and
accurately reflect in all material respects the taxable income
(or other measure of Tax) of the party filing the same. The
accruals for Taxes contained in the Balance Sheet are adequate to
cover all liabilities for Taxes for all periods ending on or
before the Balance Sheet Date and nothing has occurred
subsequently to make any of such accruals inadequate. All Taxes
for periods beginning after the Balance Sheet Date and ending on
the date hereof have been paid or are adequately reserved against
on the books of DI.
(b) DI has filed all information returns or
reports, including 1099 forms, which are required to be filed and
has accurately reported all information required to be included
on such returns or reports. True copies of federal and state
income tax returns of DI for each of the years ended December 31,
1994 and 1995 will be delivered to CTC within twenty (20) days of
the signing of this Agreement. Except as disclosed on
Schedule 2.09 of the Disclosure Statement, there are no proposed
assessments of Tax against DI, or proposed adjustments with
respect to any tax returns filed by DI, or proposed adjustments
to the manner in which any Tax of DI is determined pending.
Except as disclosed on such Schedule 2.09, each Tax return of DI
has been audited by the relevant authorities (and all
deficiencies or proposed deficiencies resulting from such audits
have been paid or are adequately provided for or reserved against
in the Financial Statements), or the statute of limitations with
respect to such Tax return has expired, and no Tax return is
under examination by any taxing authority, and no notification of
<PAGE>
intention to examine has been received from any taxing authority.
No claim has been made by any taxing authority in a jurisdiction
where DI does not file tax returns that DI is or may be subject
to taxation by that jurisdiction.
(c) There is no agreement or arrangement with any
person or entity pursuant to which DI would have any obligation
with respect to Taxes of another person following the Closing.
(d) Except as disclosed on Schedule 2.09 of the
Disclosure Statement, DI has never (i) filed any consent
agreement under section 341(f) of the Internal Revenue Code of
1986 or any predecessor or successor statute (the "Code"),
(ii) executed or had executed by a parent company a waiver or
consent extending any statute of limitation for the assessment or
collection of any Tax which waiver or consent remains in effect,
(iii) joined in or been required to join in filing a consolidated
federal income tax return or consolidated or combined state
income tax return, (iv) applied for a tax ruling, (v) entered
into a closing agreement with any taxing authority, or (vi) filed
or been the subject of an election under section 338(g) or
section 338(h)(10) of the Code or caused or been the subject of a
deemed election under section 338(e) thereof. DI timely and
properly filed an election to be taxed as an "S corporation"
within the meaning of section 1361 of the Code for federal income
tax purposes effective for the taxable year beginning January 1,
1993 and has continued to be taxed as an "S corporation" at all
times thereafter. DI timely and properly elected or otherwise
qualified under the income tax laws of the states of Pennsylvania
and Florida to be taxed as an "S corporation" (or analogous
provisions) effective for the taxable year beginning January 1,
1993 and has continued to be taxed as an "S corporation" (or
analogous provisions) at all times thereafter in such
jurisdictions.
2.10. Inventories. Except for the inventory relating
-----------
to the Forged Products Division, all of the inventories of DI
reflected on the Balance Sheet are valued on a last in, first out
(LIFO) basis. Except as disclosed on Schedule 2.10 of the
Disclosure Statement, all of the finished goods inventories of DI
reflected on the Balance Sheet and all such inventories acquired
since the Balance Sheet Date consist of items of a quality and
quantity generally useable and merchantable in the Ordinary
Course of Business, and all of the raw materials and work in
process inventory of DI reflected in the Balance Sheet and all
such inventories acquired since the Balance Sheet Date are
reasonably expected to be consumed in the Ordinary Course of
Business (taking into account any reserves accrued by the
Company). Except as set forth on such Schedule 2.10, no material
portion of the finished goods inventory of DI is consigned to any
third party or is located anywhere other than on the Real
Properties (as hereinafter defined) or in transit.
<PAGE>
2.11. Accounts Receivable. All of the trade accounts
-------------------
and notes receivable of DI reflected on the Balance Sheet as well
as those arising after the Balance Sheet Date represent amounts
receivable for merchandise actually delivered or services
actually provided (or, in the case of non-trade accounts or
notes, represent amounts receivable in respect of other bona fide
business transactions), have arisen in the Ordinary Course of
Business, are not subject to any counterclaims or offsets (except
to the extent adequately reserved) and have been billed and are
generally due within 30 days (90 days in the case of foreign
customers) after such billing. Except as set forth on Schedule
2.11 of the Disclosure Statement, to the knowledge of DI and each
of the Warranting Shareholders, all such receivables were at the
Balance Sheet Date and are presently fully collectible in the
Ordinary Course of Business except to the extent reserved on the
Balance Sheet or since the Balance Sheet Date on DI's books of
account.
2.12. No Pending Litigation or Proceedings. Except as
------------------------------------
set forth on Schedule 2.12 of the Disclosure Statement, there are
no actions, suits, investigations or proceedings pending or, to
the knowledge of DI or either of the Warranting Shareholders,
threatened against DI, any of its directors or officers, or any
of its assets (including with respect to claims involving alleged
defects in products sold to consumers) or affecting its ability
to consummate the transactions contemplated by this Agreement, at
law or in equity, by or before any court, arbitrator,
governmental department, agency or instrumentality (collectively,
"Proceedings"), other than those which are not likely to have a
Material Adverse Effect. There are presently no outstanding
judgments, decrees or orders of any court, arbitrator or any
governmental or administrative agency against DI or any of its
assets.
2.13. Contracts; Compliance. Except as listed on
---------------------
Schedule 2.13 of the Disclosure Statement or as reflected on the
Balance Sheet, DI is not a party to or bound by any written
agreement or contract of the following types:
(a) mortgages, indentures, security agreements or
other agreements and instruments relating to the borrowing of
money or the extension of credit involving more than $250,000,
individually;
(b) employment and consulting agreements;
(c) union or other collective bargaining
agreements;
<PAGE>
(d) guaranty, surety and accommodation
agreements;
(e) sales agency, manufacturer's representative
and distributorship agreements;
(f) licenses of patent, trademark and other
intellectual property rights;
(g) agreements, orders or commitments for the
purchase of services, raw materials, supplies or finished
products from any one supplier or related suppliers for an amount
in excess of $250,000;
(h) agreements, orders or commitments for the
sale of products or services in excess of $250,000 to a single
customer or purchaser;
(i) contracts or options relating to the sale by
DI of any material asset, other than sales of inventory in the
Ordinary Course of Business;
(j) agreements or commitments for capital
expenditures in excess of $250,000 for any single project;
(k) joint venture agreements;
(l) agreements, arrangements or understandings
with any Related Party;
(m) lease agreements under which it is either
lessor or lessee;
(n) non-competition and non-disclosure or secrecy
agreements;
(o) agreements, contracts or commitments for any
charitable, educational or political contribution; and
(p) other agreements, contracts and commitments
which involve payments or receipts of more than $500,000 in any
single year and which were entered into other than in the
Ordinary Course of Business.
All such agreements and contracts are in full force and effect;
DI has complied in all material respects with all provisions
thereof; DI is not in material default under any of the terms
thereof; and no event has occurred that with the passage of time
or the giving of notice or both would constitute a material
default by DI under any provision thereof.
<PAGE>
2.14. Compliance with Laws. Schedule 2.14 of the
--------------------
Disclosure Statement sets forth a list of all material permits,
certificates, licenses, orders, registrations, franchises,
authorizations and other approvals from all federal, state, local
and foreign governmental and regulatory bodies held by DI, other
than Environmental Permits (as hereinafter defined) which are
separately addressed in Sections 2.25 and 4.7, (collectively,
"Permits and Licenses"). All Permits and Licenses are in full
force and effect and DI is in substantial compliance with the
terms and conditions thereof except where the failure to be in
compliance is not likely to have a Material Adverse Effect. DI
holds and is in substantial compliance with all Permits and
Licenses required under all laws, rules and regulations
applicable to DI except where the failure to so hold or be in
compliance is not likely to have a Material Adverse Effect.
Except as disclosed on such Schedule 2.14, DI has substantially
complied with and is in substantial compliance with all
applicable federal, state and local laws, rules, regulations and
orders (including those relating to occupational safety and
health and equal employment practices and excluding all laws
referred to in Section 2.17 and all Environmental Laws (as
hereinafter defined)) presently in effect and those no longer in
effect if the applicable statute of limitations for violations
has not yet lapsed except where the failure to be in compliance
is not likely to have a Material Adverse Effect. Except as
disclosed on Schedule 2.14 of the Disclosure Statement, no
notice, citation, summons, order or request for information has
been issued, no complaint has been filed, no penalty has been
assessed and no investigation or review is pending or, to the
knowledge of DI or either of the Warranting Shareholders,
threatened by any governmental, administrative or other entity
with respect to any (a) alleged violation by DI of any law, rule,
regulation or order of any governmental, administrative or other
entity or (b) alleged failure by DI to have any Permit or License
required in connection with its business.
2.15. Consents. Except as (a) required by the Hart
--------
Scott-Rodino Antitrust Improvements Act of 1976, as amended
("H-S-R Act"), (b) contemplated by Section 1.2(b)(i) hereof, and
(c) disclosed on Schedule 2.15 of the Disclosure Statement, no
consent, approval or authorization of, or registration or filing
with, any person, including any governmental authority or other
regulatory agency, is required to be obtained or made by DI in
connection with the execution and delivery of this Agreement and
the Plan of Merger by DI or the consummation by DI of the Merger
or the other transactions contemplated hereby except for any
consents, approvals, authorizations or registrations the failure
to obtain which and any filings the failure to make which are not
likely to have a Material Adverse Effect.
<PAGE>
2.16. Title. DI has good insurable and valid title
-----
(fee or leasehold) to all of its properties and assets, including
the properties and assets reflected on the Balance Sheet (except
those disposed of in the Ordinary Course of Business since the
Balance Sheet Date), and none of such properties or assets is
subject to any material mortgage, pledge, lien, restriction,
encumbrance, tenancy, license, encroachment, covenant, right of
way, easement, claim, security interest or charge except for
(a) minor imperfections of title, none of which individually or
in the aggregate materially detracts from the value of or impairs
the current use of the affected properties or impairs any current
operations of DI, (b) liens for current taxes and assessments not
yet due and payable or for taxes, assessments, governmental
charges or levies, the validity of which are being contested in
good faith by appropriate proceedings, (c) mechanics', carriers',
workmen's, repairmen's or other similar liens arising in the
Ordinary Course of Business, or (d) as disclosed on Schedule 2.16
of the Disclosure Statement.
2.17. Real Estate. Schedule 2.17 of the Disclosure
-----------
Statement sets forth a list and summary description of all real
properties owned (beneficially or of record) or leased by DI, and
identifies all title insurance policies covering any of, and all
leases relating to, such properties (the "Real Properties"). The
use and operation of each Real Property substantially complies
with all applicable material building, zoning, safety and other
laws, ordinances, regulations, codes, permits, licenses and
certificates (excluding Environmental Laws and Environmental
Permits) and all restrictions and conditions affecting title
except where the failure to be in compliance is not likely to
have a Material Adverse Effect. DI has not received any notice
for assessments for public improvements against any of the Real
Properties which remain unpaid except as disclosed in such
Schedule 2.17, and, to the knowledge of DI and each of the
Warranting Shareholders, no such assessment has been proposed.
Except as disclosed in such Schedule 2.17, DI has not received
any notice or order of any governmental, zoning or other public
authority which (a) relates to violations of building, safety,
fire or other ordinances or regulations, (b) claims any defect or
deficiency with respect to any of the Real Properties or
(c) requests the performance of any repairs, alterations or other
work to or in any of such Real Properties or in the streets
bounding the same. There is no pending condemnation,
expropriation, eminent domain or similar proceeding affecting all
or any portion of any of the Real Properties and there is no
indication that any such proceeding is contemplated.
<PAGE>
2.18. Transactions with Related Parties. Except as
---------------------------------
disclosed on Schedule 2.18 of the Disclosure Statement (the
transactions so disclosed being hereinafter referred to as
"Permitted Related Party Transactions"), no Related Party has:
(a) borrowed money from or loaned money to DI
which has not been repaid;
(b) any contractual or other claim, express or
implied, of any kind whatsoever against DI;
(c) any interest in any property or assets used
by DI in its business; or
(d) engaged in any other transaction with DI or
Subsidiary (other than employment relationships at the salaries
disclosed in Schedule 2.20 of the Disclosure Statement).
2.19. Condition of Assets. The buildings, machinery,
-------------------
equipment, tools, furniture and improvements of DI reflected in
the Balance Sheet are in good operating condition and repair
(reasonable wear and tear excepted) and are suitable for the
purposes for which they are used in the business of DI (other
than any such assets disposed of in the Ordinary Course of
Business).
2.20. Compensation Arrangements; Bank Accounts,
-----------------------------------------
Directors, Officers and Fiduciaries. Schedule 2.20 of the
- -----------------------------------
Disclosure Statement sets forth the following information:
(a) the names and current annual salaries,
including any bonus and commissions, if applicable, of all
present officers and employees of DI whose current annual salary,
including any promised, expected or customary bonus, equals or
exceeds $75,000, together with a statement of the full amount of
all remuneration paid by DI to each such person during the 12
month period ending December 31, 1995 and, on an estimated basis,
for the 12 month period ending December 31, 1996;
(b) the name of each bank in which DI has an
account or safe deposit box, the identifying numbers or symbols
thereof and the names of all persons authorized to draw thereon
or to have access thereto; and
(c) the names and titles of all directors and
officers of DI and of each trustee, fiduciary or plan
administrator of each employee benefit plan of DI.
<PAGE>
2.21. Labor Relations. Except as disclosed on
---------------
Schedule 2.21 of the Disclosure Statement, (a) no employee of DI
is represented by any union or other labor organization,
(b) there is no unfair labor practice complaint against DI
pending before the National Labor Relations Board; (c) there is
no labor strike, dispute, slow-down or stoppage actually pending
against or involving DI; (d) no grievance which is likely to have
a Material Adverse Effect is pending; and (e) no private
agreement restricts DI from relocating, closing or terminating
any of its operations or facilities. As a result of the Merger,
Merger Sub will become the successor in interest to DI as a party
to all collective bargaining agreements referred to on such
Schedule 2.21 without the need for the consent of or further
action by any other party thereto.
2.22. Insurance. Schedule 2.22 of the Disclosure
---------
Statement contains a list of all property and casualty and
workers compensation insurance policies (and does not include any
life insurance policies) in force at the date of this Agreement
of which DI is the owner, insured or beneficiary, indicating for
each policy the carrier, the insured, risks insured, premium
rate, deductible amounts, expiration date and any pending claims
thereunder. All such policies are and will be outstanding and
will be in full force and effect until the respective termination
dates indicated on such Schedule 2.22. There has not been any
failure to give any notice or present any claim under any such
policy in a timely fashion or in the manner or detail required by
the policy, except where such failure is not likely to have a
Material Adverse Effect. Except as set forth on such
Schedule 2.22, there are no outstanding unpaid premiums or claims
under such policies with respect to the coverage afforded DI.
2.23. Patents and Intellectual Property Rights.
----------------------------------------
Schedule 2.23 of the Disclosure Statement contains a list of all
patents, patent applications, trademarks and trade names,
copyrights, patent and trademark licenses, service marks, logos
and the like owned by DI. To the knowledge of DI and each of the
Warranting Shareholders, no claim has been made that any of them
infringes the patents, trademarks or other rights of others. To
the knowledge of DI and each of the Warranting Shareholders, the
manufacture or sale of any products now or heretofore
manufactured or sold by DI did not and does not infringe (nor has
any claim been made that any such action infringes) the patents
or rights of others. DI owns or possesses licenses or other
rights to use all patents, patent applications, copyrights,
trademarks, trade names and other intellectual property necessary
to conduct its business as presently conducted.
<PAGE>
2.24. Employee Benefit Plans.
----------------------
(a) The only employee pension benefit plans (as
defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), welfare benefit
plans (as defined in Section 3(1) of ERISA), bonus, stock
purchase, stock ownership, stock option, deferred compensation,
incentive or other compensation plans and arrangements, and other
material employee fringe benefit plans presently maintained or
contributed to by DI, other than a multiemployer plan as defined
in Section 3(37) of ERISA, are those listed on Schedule 2.24 of
the Disclosure Statement (the "Benefit Plans"), and a complete
copy of each of such plans will be furnished to CTC within twenty
(20) days of the signing of this Agreement.
(b) Each of the Benefit Plans is in compliance in
all material respects with the applicable provisions of ERISA and
those provisions of the Code applicable to the Benefit Plans.
(c) Except as disclosed in Schedule 2.24 of the
Disclosure Statement and except where the failure so to do is not
likely to have a Material Adverse Effect, all contributions to
the Benefit Plans which may have been required to be made in
accordance with the Benefit Plans and, when applicable,
Section 302 of ERISA or section 412 of the Code, have been timely
made. All such contributions to the Benefit Plans, except those
that are not yet, but will be, required to be made prior to the
time of Closing are properly accrued and reflected on the Balance
Sheet or are disclosed on such Schedule 2.24.
(d) Except as disclosed on Schedule 2.24 of the
Disclosure Statement and except where the failure so to do is not
likely to have a Material Adverse Effect, all material reports,
returns and similar documents with respect to the Benefit Plans
required to be filed with any governmental agency or distributed
to any Benefit Plan participant have been duly and timely filed
or distributed.
(e) Except as disclosed on Schedule 2.24 of the
Disclosure Statement, all of the Benefit Plans which are pension
benefit plans are qualified and exempt from federal income taxes
under sections 401(a) and 501(a), respectively, of the Code, and
no such qualification with respect to any such Benefit Plan has
been revoked nor, to the knowledge of DI or either of the
Warranting Shareholders, has any such revocation been threatened
in writing.
(f) Each of the Benefit Plans has been
administered at all times, and in all material respects, in
accordance with its terms except that in any case in which any
Benefit Plan is currently required to comply with a provision of
ERISA or of the Code but is not yet required to be amended to
<PAGE>
reflect such provision, it has been administered in accordance
with such provision. Except as disclosed on Schedule 2.24 of the
Disclosure Statement, there are no pending investigations by any
governmental agency involving the Benefit Plans, no termination
proceedings involving the Benefit Plans, and no pending or, to
the knowledge of DI or either of the Warranting Shareholders,
threatened claims (except for claims for benefits payable in the
normal operation of the Benefit Plans), suits or proceedings
against any Benefit Plan or asserting any rights or claims to
benefits under any Benefit Plan which could give rise to any
material liability.
(g) None of the Benefit Plans nor, to the
knowledge of DI or either of the Warranting Shareholders, any
trusts created thereunder or any trustee, administrator or other
fiduciary thereof has engaged in a "prohibited transaction" (as
such term is defined in section 4975 of the Code or Section 406
of ERISA) which could subject any thereof to the tax or penalty
on prohibited transactions imposed by such section 4975 or the
sanctions imposed under Title I of ERISA. Except as indicated on
Schedule 2.24 of the Disclosure Statement, neither any of the
Benefit Plans nor any such trust has been terminated nor have
there been any "reportable events" (as defined in Section 4043 of
ERISA and the regulations thereunder) with respect to either
thereof.
(h) No Benefit Plan is or ever has been subject
to Title IV of ERISA other than the Dynamet Powder Products
Defined Benefit Pension Plan, which was terminated in December,
1995.
(i) At no time since September 2, 1974 has
(i) DI, (ii) any other employer (an "Affiliate") that is,
together with DI, treated as a "single employer" under section
414(b), 414(c) or 414(m) of the Code, or (iii) any employer which
was at any time after September 2, 1974 an Affiliate of DI (a
"Former Affiliate") incurred any liability which could subject
CTC to liability under Section 4062 of ERISA.
(j) Except as to (i) the National Industrial
Group MultiEmployer Group Pension Plan as to which DI was
obligated to make contributions through September, 1995, and
(ii) the UIU MultiEmployer Group Pension Plan to which DI has
been obligated to contribute subsequent to September 30, 1995, as
reflected on Schedule 2.24 of the Disclosure Statement, at no
time since September 26, 1980, has DI or any Affiliate or Former
Affiliate been required to contribute to, or incurred any
withdrawal liability, within the meaning of Section 4201 of
ERISA, to, any multiemployer pension plan, within the meaning of
Section 3(37) of ERISA, which liability has not been fully paid
as of the date hereof, nor has any such employer announced an
intention to withdraw, but not yet completed such withdrawal,
from any multiemployer plan.
<PAGE>
(k) Each Benefit Plan that is a "group health
plan", within the meaning of Section 607(1) of ERISA and which is
subject to section 4980B of the Code (or section 162(k) as in
effect prior to 1989), has complied with the continuation
coverage requirements of those provisions and Part 6 of Title I
of ERISA.
(l) There are no "leased employees" within the
meaning of section 414(n) of the Code who perform services for
DI.
(m) No Benefit Plan provides for "parachute
payments" within the meaning of section 280G of the Code. There
is no plan, fund or arrangement under which any employee of DI is
entitled to claim or receive severance pay or benefits, except
for non-qualified supplemental retirement plans for one retired
executive employee and two active executive employees as
disclosed on Schedule 2.24 of the Disclosure Statement.
(n) After Closing, neither DI nor CTC shall have
any obligations to make payments, contributions or transfers in
respect of any Benefit Plan on account of service performed
before the time of Closing, except for (i) monthly contributions
and (ii) annual contributions to the Dynamet defined contribution
plans listed on Schedule 2.24 of the Disclosure Statement, to be
made, in both cases, in the Ordinary Course of Business and
consistent with past practices.
2.25. Environmental Matters. Except as disclosed on
---------------------
Schedule 2.25 of the Disclosure Statement:
(a) DI is in compliance with all applicable
environmental statutes, rules, regulations, ordinances and common
laws and settlement agreements, consent decrees or orders of any
governmental entity to which DI is a party, all as in effect as
of the date hereof ("Environmental Laws"), except where the
failure to be in compliance is not likely to have a Material
Adverse Effect. DI holds and is in compliance with all
environmental permits, certificates, licenses, approvals,
registrations and authorizations required for its business as
currently operated and required under Environmental Laws
("Environmental Permits"), which are in full force and effect as
of the date hereof, except where the failure of such
Environmental Permits to be so held or in full force and effect
or of the Company to be in compliance therewith is not likely to
have a Material Adverse Effect.
<PAGE>
(b) DI has made timely application for renewals
of all such Environmental Permits as are to expire by
December 31, 1996, except Environmental Permits, for which, by
their terms or by operation of law, renewal applications need not
be made before their expiration or the failure to renew which is
not likely to have a Material Adverse Effect. To the knowledge
of DI and each of the Warranting Shareholders, all such
Environmental Permits should be renewed in the ordinary course
and should not be renewed with conditions which would require the
expenditure of money in such amounts or result in changes that
are likely to have a Material Adverse Effect.
(c) No notice of violation, citation, summons or
order has been received, no complaint has been served, no penalty
has been assessed and, to the knowledge of DI, no investigation
or review is pending or has been threatened by any governmental
or other entity within the five-year period immediately preceding
the date hereof or if prior to that time period which remains
unresolved, which could require DI to expend money or abide by
conditions contained in settlement agreements or consent decrees
to which DI is a party to an extent which is likely to have a
Material Adverse Effect on Merger Sub as the successor to DI
following the Merger: (i) with respect to any alleged violation
by DI or any of its predecessors in interest of any Environmental
Law; or (ii) with respect to any alleged failure by DI to have
complied with any Environmental Permit required in connection
with its business; or (iii) with respect to any use, possession,
generation, treatment, storage, recycling, transportation or
disposal (collectively, "Management" or when used as a verb,
("Managed") or Release (as hereinafter defined) of any hazardous
or toxic or polluting substance or waste, pollutant or
contaminant, including, without limitation, petroleum products
and radioactive materials, ("Hazardous Substances") by or on
behalf of DI or any of its predecessors in interest.
(d) DI has not received any request for
information, notice of claim, demand or notification that it is
or may be potentially responsible, with respect to any
investigation or clean-up of any threatened or actual release of
any Hazardous Substance within the five-year period immediately
preceding the date hereof or if prior to that time period which
remains unresolved, which could require DI to expend money to an
extent which is likely to have a Material Adverse Effect on
Merger Sub as the successor to DI following the Merger.
(e) DI has not and, to the knowledge of DI or
either of the Warranting Shareholders, no one else has generated,
treated, stored for more than 90 days, recycled or disposed of
any Hazardous Substances on any property now or previously owned
or leased by DI, except for any such actions which are not likely
to have a Material Adverse Effect on Merger Sub as the successor
to DI following the Merger.
<PAGE>
(f) No polychlorinated biphenyls ("PCBs") or
asbestos-containing materials ("ACM") are present at any property
now owned or leased by DI, nor, to the knowledge of DI, were PCBs
or ACM present at any property during the time in which DI
previously owned or leased such property, nor are there any
underground storage tanks owned or operated by DI at any property
now or previously owned or leased by DI or, to the knowledge of
DI or either of the Warranting Shareholders, by anyone else at
any property now owned or leased by DI, except for the presence
of any such PCBs, ACM or tanks which are not likely to have a
Material Adverse Effect.
(g) To the knowledge of DI or either of the
Warranting Shareholders, no Hazardous Substance Managed by or on
behalf of DI or any predecessor in interest of DI has come to be
located at any site which is listed under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended, ("CERCLA"), the Comprehensive Environmental Response
Compensation and Liability Information System ("CERCLIS") or on
any similar published state list, or which is the subject of
federal, state or local enforcement actions or other
investigations which may lead to claims against DI, CTC or Merger
Sub for cleanup costs, remedial work, damages to natural
resources or for personal injury claims, including, but not
limited to, claims under CERCLA.
(h) To the knowledge of DI or either of the
Warranting Shareholders, no Hazardous Substance has been
released, spilled, leaked, discharged, disposed of, pumped,
poured, emitted, emptied, injected, leached, dumped or allowed to
escape ("Released") at, on, about or under any property now or
previously owned or leased by DI or any predecessor in interest
of DI which is likely to have a Material Adverse Effect on Merger
Sub as the successor to DI following the Merger.
(i) To the knowledge of DI or either of the
Warranting Shareholders, during the last three years ending on
the date hereof, no written notification of a Release or threat
of Release of a Hazardous Substance has been filed by or on
behalf of DI in relation to any property now or previously owned
or leased by DI. No property now or previously owned or leased
by DI is, to the knowledge of DI or either of the Warranting
Shareholders, listed on the National Priority List promulgated
pursuant to CERCLA, on CERCLIS, or on any similar published state
list of sites requiring investigation or cleanup.
(j) To the knowledge of DI or either of the
Warranting Shareholders, there are no environmental liens on any
properties now owned or leased by DI and no governmental actions
have been taken or are in process or pending which could subject
any of such properties to such liens.
<PAGE>
(k) DI would not be required to place any notice
or restriction relating to the presence of Hazardous Substances
in the deed to any property now owned by it, and, to the
knowledge of DI or either of the Warranting Shareholders, no
property now or previously owned by DI has such a notice or
restriction in its deed.
(l) Except as listed in Schedule 2.25 of the
Disclosure Statement and heretofore made available for review by
CTC, there have been no environmental inspections,
investigations, studies, audits, tests, reviews or other
analyses, other than those required to be done routinely pursuant
to Environmental Permits or Environmental Laws, conducted in
relation to any property or business now or previously owned or
leased by DI which have been performed by or on behalf of DI or,
to the knowledge of DI or either of the Warranting Shareholders,
by any other person.
2.26. Brokers. Neither DI nor any DI Shareholder has
-------
made any agreement or taken any other action which might cause
anyone to become entitled to a broker's fee, commission or other
similar compensation as a result of the transactions contemplated
hereby.
2.27. Disclosure. No representation or warranty by DI
----------
or either of the Warranting Shareholders in this Agreement and no
Schedule furnished or to be furnished to CTC pursuant hereto
knowingly contains or will contain as of the time made or
provided any untrue statement of a material fact or knowingly
omits or will omit as of the time made or provided to state any
material fact necessary to make the statements contained herein
or therein not misleading.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF CTC
-------------------------------------
CTC hereby represents and warrants to DI and the DI
Shareholders as follows:
3.1. Organization, Qualification, Authority and Good
-----------------------------------------------
Standing of CTC. CTC is a corporation duly organized, validly
- ---------------
existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to
own or lease its properties and assets as now owned or leased, to
carry on its business as and where now being conducted, to enter
into this Agreement and the Plan of Merger, and to perform its
obligations hereunder and thereunder.
<PAGE>
3.2. Organization, Qualification, Authority and Good
-----------------------------------------------
Standing of Merger Sub. At the time of Closing, Merger Sub will
- ----------------------
be a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and will have
all requisite power and authority to enter into the Plan of
Merger and to perform its obligations thereunder.
3.3. Capitalization. CTC's authorized capital stock
--------------
consists solely of 2,000,000 shares of Preferred Stock, par value
$5 per share, of which 451.40 have been issued and are
outstanding as Series A Convertible Preferred Shares and
50,000,000 shares of CTC Stock, of which 16,626,844 are issued
and outstanding and of which an additional 2,930,916 are held in
CTC's treasury as of the date hereof. All of such outstanding
shares have been duly authorized and validly issued, are fully
paid and non-assessable, were not issued in violation of the
terms of any agreement or other understanding binding upon CTC
and are duly listed upon and admitted to trading on the New York
Stock Exchange (the "NYSE").
3.4. Authorization and Enforceability. The execution,
--------------------------------
delivery and performance by CTC of this Agreement and each of the
other instruments to be delivered by CTC at Closing have been
duly authorized by all necessary corporate action on the part of
CTC, and this Agreement constitutes, and each of such other
instruments, when executed and delivered, will constitute, the
legal, valid and binding obligation of CTC, enforceable in
accordance with its terms except as such enforceability may be
limited or affected by (i) bankruptcy, insolvency,
reorganization, moratorium, liquidation, arrangement, fraudulent
transfer, fraudulent conveyance and other similar laws (including
court decisions) now or hereafter in effect and affecting the
rights and remedies of creditors generally or providing for the
relief of debtors, (ii) the refusal of a particular court to
grant equitable remedies, including, without limitation, specific
performance or injunctive relief, and (iii) general principles of
equity (regardless whether such remedies are sought in a
proceeding in equity or at law).
3.5. No Violation of Laws or Agreements. The
----------------------------------
execution and delivery of this Agreement by CTC do not, and its
consummation of the transactions contemplated hereby and its
compliance with the terms, conditions and provisions of this
Agreement will not, (a) contravene any provision of CTC's
certificate of incorporation or bylaws; (b) conflict with or
result in a breach of or constitute a default (or an event which
would with the passage of time or the giving of notice or both
constitute a default) under any of the terms, conditions or
<PAGE>
provisions of any material indenture, mortgage, loan or credit
agreement or other agreement or instrument to which CTC or any of
its subsidiaries is a party or by which any of them or any of
their assets may be bound, or any judgment or order to which CTC
or any of its subsidiaries is subject of any court or
governmental department, commission, board, agency or
instrumentality, domestic or foreign, or any applicable law, rule
or regulation, any of which contraventions, conflicts, breaches
or defaults, individually or in the aggregate, is likely to have
a materially adverse effect on the financial condition of CTC and
its subsidiaries or the results of their operations taken as a
whole (a "CTC MAE"), (c) result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon any
of their assets or give to others any interest or right therein
which is likely to have a CTC MAE, (d) result in the maturation
or acceleration of any liability or obligation of any of them in
excess of $500,000 (or give others the right to cause such a
maturation or acceleration) which is likely to have a CTC MAE, or
(e) result in the termination of or loss of any right (or give
others the right to cause such a termination or loss) under any
material agreement or contract to which any of them is a party or
by which any of them may be bound which is likely to have a CTC
MAE.
3.6. Financial Statements; 1934 Act Filings. CTC has
--------------------------------------
delivered to DI copies of its 1995 and 1996 Annual Reports to
Shareholders, its proxy statements for its 1994, 1995 and 1996
annual meetings of stockholders, its Form 10-K Annual Reports for
the years ended June 30, 1995 and 1996 (collectively, the "Most-
Recent 10-Ks") as filed with the Securities and Exchange
Commission ("SEC") under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and all its Form 10-Q Quarterly Reports
and Form 8-K Current Reports filed under the 1934 Act since
June 30, 1996. All such documents fairly present the information
contained therein as at their respective dates and for their
respective periods and no statement or information set forth
therein or included as a part thereof knowingly contains any
untrue statement of a material fact or knowingly omits to state
any material fact necessary to make it not misleading or
necessary to provide proper information with respect to the
matters covered thereby. The consolidated financial statements
as at and for the three years ended June 30, 1996, audited by
Coopers & Lybrand, which are included in the Most-Recent 10-Ks
(the "CTC Financial Statements") (a) have been prepared in
accordance with the books and records of CTC and its consolidated
subsidiaries and (b) present fairly in all material respects the
financial condition of CTC and its consolidated subsidiaries as
at the dates thereof and the results of their operations and cash
flows for the periods covered thereby, in accordance with GAAP
consistently applied since the beginning of the periods covered
thereby.
<PAGE>
3.7. Consents. Except as (a) required by the H-S-R
--------
Act and (b) contemplated by Sections 1.2(b)(i), 5.3 and 5.4
hereof, no consent, approval or authorization of, or registration
or filing with, any person, including any governmental authority
or other regulatory agency, is required to be obtained or made by
CTC or Merger Sub in connection with the execution, delivery,
negotiation and performance of this Agreement and the Plan of
Merger by CTC and Merger Sub or the consummation by CTC and
Merger Sub of the transactions contemplated hereby and thereby
except for any consents, approvals, authorizations or
registrations the failure to obtain which and any filings the
failure to make which are not likely to have a CTC MAE.
3.8. Brokers. CTC has not made any agreement or taken
-------
any other action which might cause anyone to become entitled to a
broker's fee or commission from DI or any DI Shareholder as a
result of the transactions contemplated by this Agreement.
3.9. Disclosure. No representation or warranty by CTC
----------
in this Agreement and no Schedule furnished or to be furnished to
DI pursuant hereto knowingly contains or will contain as of the
time made or provided any untrue statement of a material fact or
knowingly omits or will omit as of the time made or provided to
state any material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE IV
----------
CERTAIN OBLIGATIONS OF DI AND
-----------------------------
DI SHAREHOLDERS PENDING CLOSING
-------------------------------
4.1. Conduct of Business Pending Closing. From and
-----------------------------------
after the date hereof and pending Closing, unless CTC shall
otherwise consent or agree in writing and except as otherwise
provided in this Agreement, DI covenants and agrees that:
(a) Ordinary Course. The business of DI will be
---------------
conducted only in the Ordinary Course of Business.
(b) Preservation of Business. DI will use
------------------------
diligent efforts to preserve the business organization of DI
intact, to keep available to CTC the services of the present
officers and employees of DI and to preserve for the benefit of
CTC the good will of the material suppliers, customers and others
having business relations with DI, to the extent consistent with
the Ordinary Course of Business.
<PAGE>
(c) Material Transactions. DI will not:
---------------------
(i) Enter into any contract or commitment
the performance of which may extend beyond the Closing Date,
except those made in the Ordinary Course of Business;
(ii) Enter into any employment or
consulting contract or arrangement with any person which is not
terminable, without penalty or other owed compensation, at will;
(iii) Incur or create any mortgage, pledge,
lien, restriction, encumbrance, tenancy, license, encroachment,
covenant, condition, right-of-way, easement, claim, security
interest, charge or other matter affecting title on any of its
assets or other property other than in the Ordinary Course of
Business;
(iv) Waive or permit the loss of any
substantial right except to the extent consistent with the
Ordinary Course of Business;
(v) Guarantee or become a co-maker or
accommodation maker or otherwise become contingently liable in
connection with any liability or obligation of any person or
business entity except in the Ordinary Course of Business;
(vi) Except for distributions ("Permitted
Distributions") to the DI Shareholders of cash and the property
comprised exclusively of the assets of DI described on
Schedule 4.01 of the Disclosure Statement, the aggregate fair
market value of which, together with the amount of such cash,
shall not, as of the Closing Date, exceed the good faith estimate
of the Warranting Shareholders of the amount of the accumulated
adjustments account (as defined in section 1368(e)(1) of the
Code) of DI (the "Aggregate AAA Value") as of such date, take any
action set forth in Section 2.8(e);
(vii) Take any action set forth in Section
2.8(f), (g), (i) or (m);
(viii) Enter into any transaction with, or
make any payment to, any Related Party, except for those
Permitted Related Party Transactions contemplated by
Schedules 2.18 and 2.20 of the Disclosure Statement; or
<PAGE>
(ix) Amend its articles of incorporation or
bylaws; provided, however, that if and to the extent that the
-------- -------
aggregate amount of Permitted Distributions is not equal to the
Aggregate AAA Value, as determined by an audit of such value to
be conducted by the independent auditors for CTC as soon as
practicable after the Closing but in any case prior to June 30,
1997, if such amount exceeds such Aggregate AAA Value, such
excess shall be repaid by the DI Shareholders to Merger Sub and,
if such amount is less than such Aggregate AAA Value, such
difference shall be paid by Merger Sub to the DI Shareholders.
4.2. Insurance; Environmental Permits.
--------------------------------
(a) Maintenance of Policies. Except as otherwise
-----------------------
indicated on Schedule 2.22 of the Disclosure Statement, DI shall
maintain in full force and effect the policies of insurance
listed on such Schedule 2.22 or will obtain, prior to the lapse
of any such policy, substantially similar coverage with insurers
of recognized standing. DI shall promptly advise CTC in writing
of any change of insurer or type of coverage in respect of the
policies listed on such Schedule 2.22.
(b) Permit Transfers. To the extent practicable
----------------
and permitted by or under applicable Environmental Laws, DI will
prepare and file all applications for transfer of its
Environmental Permits to Merger Sub in adequate time for transfer
to occur as of the time of Closing hereunder.
4.3. Fulfillment of Agreements. DI shall use its
-------------------------
reasonable commercial efforts to (i) cause all of the conditions
precedent to the obligation of CTC under Section 6.1 of this
Agreement which are within its control or influence to be
satisfied at or prior to the time of Closing, and (ii) conduct
its business in such a manner that at the time of Closing the
representations and warranties of DI and the Warranting
Shareholders contained in this Agreement shall be true and
correct in all material respects as though such representations
and warranties were made on the Closing Date. DI will promptly
notify CTC in writing of any event or fact which is or is likely
to cause a breach of any of the representations, warranties,
covenants or agreements of DI and the Warranting Shareholders and
shall promptly advise CTC in writing of the occurrence of any
condition that is materially adverse to the business, operations,
properties, assets or condition (financial or otherwise) of DI.
<PAGE>
4.4. Access, Information and Documents. DI will
---------------------------------
provide to CTC and to CTC's counsel, accountants and other
representatives reasonable access during normal business hours to
all properties, books, tax returns, contracts, commitments,
records, documents, officers, personnel and accountants of DI and
will furnish to CTC all such documents and copies of documents
(certified to be true copies if requested) and all information
with respect to the affairs of DI as CTC may reasonably request,
including, without limitation, access to perform such inspections
and surveys as CTC deems necessary in the conduct of the
environmental examination and study contemplated by Section 5.6
hereof.
4.5. H-S-R Act Compliance. DI shall promptly file
--------------------
with the Federal Trade Commission ("FTC") and the Antitrust
Division of the Department of Justice ("AT Division") the
notifications required by the H-S-R Act in respect of the Merger,
shall not intentionally delay submission of information requested
by FTC or AT Division under the H-S-R Act and shall use its
reasonable commercial efforts to obtain early termination of the
applicable waiting period.
4.6. Delivery of Financial Statements for Subsequent
-----------------------------------------------
Periods. DI will deliver to CTC promptly after the close of each
- -------
of its interim accounting periods hereafter until the Closing
Date copies of interim financial statements for such period
comparable to those described in Section 2.6 and, if otherwise
available prior to the Closing Date, its audited balance sheet as
at December 31, 1996, and related statements of income,
shareholders' equity and cash flows for the year then ended,
audited by Price Waterhouse LLP.
4.7. Environmental Lists. (a) Within twenty (20)
-------------------
business days of the date hereof, DI shall deliver to CTC a true
and complete list of all Environmental Permits held by it. Such
list shall set forth, to the extent known by DI, which
Environmental Permits may be transferred to Merger Sub as of the
Closing Date without the prior approval of any governmental
department, commission, board, agency or instrumentality.
(b) Within twenty (20) business days of the date
hereof, DI shall deliver to CTC a true and complete list of each
entity that has recycled, treated, stored, disposed of or
transported any Hazardous Substance generated by DI based on
either the documents retained by DI at its principal executive
offices or the knowledge of Alfred L. Donlevy.
<PAGE>
ARTICLE V
---------
CERTAIN OBLIGATIONS OF CTC PENDING CLOSING
------------------------------------------
5.1. Fulfillment of Agreements. CTC shall use its
-------------------------
reasonable commercial efforts to (i) cause all of the conditions
precedent to the obligations of DI and the DI Shareholders under
Section 6.2 of this Agreement which are within its control or
influence to be satisfied at or prior to the time of Closing and
(ii) conduct its business in such a manner that at the time of
Closing the representations and warranties of CTC contained in
this Agreement shall be true and correct in all material respects
as though such representations and warranties were made on the
Closing Date. CTC will promptly notify DI in writing of any
event or fact which is or is likely to cause a breach of any of
its representations, warranties, covenants or agreements.
5.2. H-S-R Act Compliance. CTC shall promptly file
--------------------
with the FTC and the AT Division the notifications required by
the H-S-R Act in respect of the Merger, shall not intentionally
delay submission of information requested by FTC or AT Division
under the H-S-R Act and shall use its reasonable commercial
efforts to obtain early termination of the applicable waiting
period.
5.3. Formation of Merger Sub. Prior to the time of
-----------------------
Closing, CTC shall cause Merger Sub to be incorporated and
organized under the laws of the State of Delaware and thereafter
to execute and deliver the Plan of Merger. Immediately after the
incorporation of Merger Sub, CTC shall purchase all of the
authorized shares of capital stock of Merger Sub and shall make
no disposition or transfer of such shares pending the Closing.
5.4. Listing of CTC Stock. Upon receipt of the
--------------------
requisite financial statements of DI in appropriate form and any
other necessary background information relating thereto, CTC will
promptly file with the NYSE an Application for Additional Listing
for the shares of CTC Stock to be issued and delivered pursuant
hereto and the Plan of Merger (the "NYSE Application") and, to
the extent reasonably requested, DI and the DI Shareholders will
use their reasonable commercial efforts to assist CTC in the
preparation and filing of the NYSE Application.
<PAGE>
5.5. Delivery of 1934 Act Reports for Subsequent
-------------------------------------------
Periods. CTC will deliver to DI and the DI Shareholders
- -------
(i) promptly after the filing thereof with the SEC copies of all
its Form 10-Q Quarterly Reports and Form 8-K Current Reports (if
any) filed under the 1934 Act prior to Closing and (ii) promptly
after the distribution thereof any interim financial reports or
other communications distributed generally to the holders of CTC
Stock.
5.6. Environmental Audit. CTC has engaged Dames &
-------------------
Moore (the "Environmental Auditors") for the purpose of
conducting a site assessment or assessments of the Real
Properties and compliance audit of DI and rendering to counsel
for CTC a report thereon (the "Environmental Report"). In
performing such assessments, CTC shall cause the Environmental
Auditors not to conduct their work in any manner that could
create an unsafe or hazardous condition on any Real Property and
shall cause the Environmental Auditors not to interfere
unreasonably with the conduct of DI's business. CTC shall cause
all work performed by the Environmental Auditors to be done in
accordance with all applicable laws, shall be solely responsible
for all fees and expenses of the Environmental Auditors and shall
not permit (i) any claims to be made against DI with respect to
the activities being performed by the Environmental Auditors or
their contractors or agents, except to the extent that such
claims are for negligent or willful misconduct by DI's employees,
or (ii) any liens to be created against any Real Property by the
Environmental Auditors or their contractors or agents. Prior to
the commencement of any work by the Environmental Auditors on the
Real Properties, CTC shall (i) deliver to DI's counsel evidence
that the Environmental Auditors have in full force and effect
workers' compensation insurance in at least the amount required
by applicable laws and a comprehensive general liability policy
with a single incident limit of at least $2,000,000 in respect of
the injury or death of any one person or damage to property and
DI shall be named as an additional insured thereunder; and (ii)
provide DI with a copy of the proposed scope of the work for the
site assessment or assessments in accordance with this Section.
DI shall not be liable to CTC or the Environmental Auditors,
their contractors or agents and CTC shall release, indemnify and
hold DI harmless from any claims by any person on account of any
injury, damages or loss to personal property resulting from,
incident to or arising out of the performance of any assessment
or any entry upon the Real Properties in accordance with this
Section and from all costs incurred by DI in defending against
any such claim. CTC shall keep DI informed in a timely manner as
to the findings of the Environmental Auditors and shall arrange
to have provided to DI's counsel copies of the final written
report prepared by the Environmental Auditors promptly following
<PAGE>
receipt thereof by CTC or its counsel. CTC shall insure that all
factual information is reported accurately and completely by the
Environmental Auditors in the Environmental Report consistent
with the information supplied by DI or developed by the
Environmental Auditors from published databases or information
contained in governmental agency files, to the extent that such
information accurately describes the state of affairs, and that
no legal conclusions are contained in the Environmental Report.
Within ten days of its receipt of the Environmental Report, DI
will provide to CTC notice of incomplete or erroneous factual
information or legal conclusions with appropriate supporting
information, if any, contained in the Environmental Report. Any
such incomplete or erroneous factual information shall be
corrected and any such legal conclusions shall be removed and the
Environmental Report shall be reissued. Once the Environmental
Report is reissued, all copies of the original version shall be
destroyed. All information obtained by CTC or the Environmental
Auditors shall be treated as confidential in accordance with
Section 5.8 and CTC shall instruct the Environmental Auditors,
their representatives, employees and contractors regarding the
confidentiality of all such information.
5.7. Agreements. After the Closing, CTC shall, and
----------
shall cause Merger Sub to, honor all employment agreements and
supplemental employee retirement programs of DI set forth in
Schedule 5.7 of the Disclosure Statement.
5.8. Confidentiality. CTC shall use all information
---------------
and documents obtained prior to the date hereof from DI or its
representative or pursuant to Section 4.4 or in accordance with
Section 5.6 only in connection with the transactions contemplated
by this Agreement and shall not use them for any purpose
unrelated to the consummation of the transactions contemplated by
this Agreement. Prior to the Effective Time, CTC shall keep all
such information and documents confidential and shall not (except
as required by applicable law, regulation or legal process, and
then only after compliance with the procedure set forth below),
without DI's prior written consent, disclose any such information
or documents in any manner whatsoever, other than any information
or documents which (i) are or become publicly available other
than as a result of a disclosure by CTC or any of its
representatives or (ii) are or become available to CTC on a
nonconfidential basis from a source (other than DI or any of its
representatives) which, to CTC's knowledge, is not prohibited
from disclosing such information to CTC by a legal, contractual
or fiduciary obligation to DI. In the event that, prior to the
Effective Time, CTC or any of its representatives is requested
pursuant to, or required by, applicable law, regulation or legal
process to disclose any of such information and documents, CTC
will notify DI promptly so that DI may seek a protective order or
<PAGE>
other appropriate remedy or, in its sole discretion, waive
compliance with the terms of this Section 5.8. CTC agrees not to
oppose any action to obtain a protective order or other
appropriate remedy. In the event that no such protective order
or other remedy sought is obtained, CTC will furnish only that
portion of such information and documents which CTC is advised by
counsel is legally required and will exercise all reasonable
efforts to obtain reliable assurance that confidential treatment
will be accorded such information and documents. If this
Agreement is terminated, CTC shall return all such information
and documents to DI and convey and release to DI whatever right,
title and interest CTC may have in such documents and
information.
ARTICLE VI
----------
CONDITIONS TO CLOSING; TERMINATION
----------------------------------
6.1. Conditions Precedent to Obligation of CTC. The
------------------------------------------
obligation of CTC to proceed with the Closing under this
Agreement is subject to the fulfillment, prior to or at the time
of Closing, of the following conditions (any one or more of which
may be waived in whole or in part by CTC at CTC's option):
(a) Representations and Warranties of DI and
----------------------------------------
Warranting Shareholders. The representations and warranties of
- -----------------------
DI, the DI Shareholders and the Warranting Shareholders contained
in Article II of this Agreement shall be true and correct in all
material respects on the Closing Date with the same force and
effect as though such representations and warranties had been
made on such date, and CTC shall have received a certificate to
such effect with respect to the representations and warranties of
DI signed by the Chairman of the Board and President of DI.
(b) Performance and Compliance. DI and the DI
--------------------------
Shareholders shall have in all material respects performed all of
the covenants and complied with all of the provisions required by
this Agreement to be performed or complied with by any of them at
or before Closing, and CTC shall have received a certificate to
such effect signed by the Chairman of the Board and President of
DI with respect to DI and by each of the DI Shareholders with
respect to himself or herself.
(c) Opinion of Counsel for DI. CTC shall have
-------------------------
received from Kirkpatrick & Lockhart LLP, counsel for DI, an
opinion dated the Closing Date in substantially the form of
Exhibit C hereto.
- ---------
<PAGE>
(d) Satisfactory Instruments. All instruments
------------------------
and documents required to be delivered on the part of DI and the
DI Shareholders to effectuate and consummate the transactions
contemplated hereby to be consummated at or prior to the time of
Closing shall be delivered to CTC and shall be in form and
substance reasonably satisfactory to CTC and its counsel.
(e) Required Consents. All consents and
-----------------
approvals of all governmental departments, agencies and
authorities required for the consummation of the transactions
contemplated hereby shall have been obtained, and all waiting
periods specified by law, the ending of which are necessary for
the consummation of such transactions, shall have expired or been
terminated.
(f) Litigation. No order of any court,
----------
arbitrator or governmental, regulatory or administrative agency
or commission shall be in effect which restrains or prohibits the
Merger or any of the other transactions contemplated hereby or
which would limit or adversely affect CTC's ownership or control
of the business of DI, and there shall not be pending any action
or proceeding by or before any court, arbitrator or governmental,
regulatory or administrative agency or commission challenging any
of the transactions contemplated by this Agreement or seeking
monetary relief by reason of the consummation of such
transactions.
(g) Related Party Indebtedness. Except as
--------------------------
expressly contemplated by this Agreement, DI shall have been
discharged in full as a guarantor of any indebtedness of any
Related Party, and there shall be no outstanding debts,
obligations or amounts due existing between any Related Party and
DI other than debts, obligations or amounts incurred in the
Ordinary Course of Business.
(h) Consulting and Non-Competition Agreements.
-----------------------------------------
Each of Messrs. Rossin and Stephans shall have executed and
delivered Consulting and Non-Competition Agreements with DI and
CTC in substantially the forms attached hereto as Exhibits B-1
------------
and B-2, respectively.
---
(i) Approval of NYSE Listing Application. The
------------------------------------
NYSE Listing Application to be filed by CTC pursuant to
Section 5.4 hereof shall have been duly approved by the NYSE and
CTC shall have received written notice of such approval.
<PAGE>
(j) Environmental Report. The Environmental
--------------------
Auditors shall have delivered their final Environmental Report
which Environmental Report discloses no fact, event or condition
which would make any of the representations and warranties
contained in Section 2.25 not true and correct in all material
respects on the Closing Date; provided, that for purposes of this
--------
Section 6.1(j) any qualification or limitation of the
representations and warranties contained in Section 2.25 on
account of the knowledge of DI or either of the Warranting
Shareholders shall be disregarded and that, except to the extent
that any inspections, investigations, studies, audits, tests,
reviews or other analyses that are listed on Schedule 2.25 of the
Disclosure Statement in response to Section 2.25(l) hereof or any
information contained therein are specifically referred to
elsewhere in such Schedule 2.25, for purposes of this
Section 6.1(j) any information set forth therein shall be
disregarded.
6.2. Conditions Precedent to Obligations of DI and DI
------------------------------------------------
Shareholders. The obligations of DI and the DI Shareholders to
- ------------
proceed with the Closing under this Agreement is subject to the
fulfillment, prior to or at the time of Closing, of the following
conditions (any one or more of which may be waived in whole or in
part by DI at DI's option):
(a) Representations and Warranties of CTC. The
-------------------------------------
representations and warranties of CTC contained in Article III of
this Agreement shall be true and correct in all material respects
on the Closing Date with the same force and effect as though such
representations and warranties had been made on such date, and
CTC shall have delivered to the DI Shareholders a certificate to
such effect signed by its Chairman of the Board and President.
(b) Performance and Compliance. CTC shall have
--------------------------
in all material respects performed all of the covenants and
complied with all of the provisions required by this Agreement to
be performed or complied with by it at or before Closing, and CTC
shall have delivered to the DI Shareholders a certificate to such
effect signed by its Chairman of the Board and President.
(c) Opinion of Counsel for CTC. The DI
--------------------------
Shareholders shall have received from Dechert Price & Rhoads,
counsel for CTC, an opinion dated the Closing Date and in form
and substance reasonably satisfactory to the DI Shareholders, to
the effects set forth in Exhibit D hereto.
---------
<PAGE>
(d) Satisfactory Instruments. All instruments
------------------------
and documents required to be delivered on CTC's part to
effectuate and consummate the transactions contemplated hereby to
be consummated at or prior to the time of Closing shall be
delivered by CTC and shall be in form and substance reasonably
satisfactory to the DI Shareholders and their counsel.
(e) Required Consents. All consents and
-----------------
approvals of all governmental departments, agencies and
authorities required for the consummation of the transactions
contemplated hereby shall have been obtained, and all waiting
periods specified by law, the ending of which are necessary for
the consummation of such transactions, shall have expired or been
terminated.
(f) Litigation. No order of any court,
----------
arbitrator or governmental, regulatory or administrative agency
or commission shall be in effect which restrains or prohibits the
transactions contemplated hereby, and there shall not be pending
any action or proceeding by or before any court, arbitrator or
governmental, regulatory or administrative agency or commission
challenging any of the transactions contemplated by this
Agreement or seeking monetary relief by reason of the
consummation of such transactions.
(g) Approval of NYSE Listing Application. The
------------------------------------
NYSE Listing Application to be filed by CTC pursuant to
Section 5.4 hereof shall have been duly approved by the NYSE and
DI shall have received written notice of such approval.
(h) Consulting and Non-Competition Agreements.
-----------------------------------------
Each of CTC and DI shall have executed and delivered the
Consulting and Non-Competition Agreements with Messrs. Rossin and
Stephans in substantially the forms attached hereto as Exhibits
--------
B-1 and B-2, respectively.
- --- ---
6.3. Termination.
-----------
(a) When Agreement May Be Terminated. This
--------------------------------
Agreement may be terminated at any time prior to Closing:
(i) By mutual written consent of CTC and DI;
<PAGE>
(ii) By CTC if there has been a material
misrepresentation or a material breach by DI or the DI
Shareholders of any of their warranties or covenants, or if any
of the conditions specified in Section 6.1 hereof shall not have
been fulfilled by the time required and shall not have been
waived by CTC;
(iii) By DI if there has been a material
misrepresentation or a material breach by CTC of any of its
warranties or covenants, or if any of the conditions specified in
Section 6.2 hereof shall not have been fulfilled by the time
required and shall not have been waived by DI in writing;
(iv) By CTC or DI if the CTC Market Price
is greater than $40 or less than $28; or
(v) By CTC or DI if Closing shall not have
occurred prior to or on March 30, 1997; provided, that CTC or DI
--------
may terminate this Agreement pursuant to this subparagraph
(v) only if the Closing shall not have occurred by such date for
a reason other than a willful or grossly negligent failure by the
party seeking to terminate this Agreement to provide for the
satisfaction of the conditions to the obligation of the other
party to proceed with Closing as set forth in Section 6.1 or 6.2
hereof, respectively, which were in the control of the party
seeking to terminate this Agreement.
(b) Effect of Termination. In the event of any
---------------------
termination of this Agreement by either DI or CTC as herein
provided, there shall be no liability on the part of either DI or
CTC, except for liabilities arising from a willful or deliberate
breach of this Agreement with respect to which a claim has
accrued prior to such termination. If this Agreement is
terminated as provided in this Section 6.3: (i) CTC and DI shall
deliver all documents, work papers and other material relating to
the transactions contemplated hereby, whether obtained before or
after the execution hereof, to the party furnishing the same or
will deliver to such party a duly executed officer's certificate
to the effect that all copies of such material have been
destroyed; (ii) no information received by any party hereto with
respect to the business of the other party or its affiliated
companies (other than information which is a matter of public
knowledge or which has heretofore been or is hereafter published
in any publication for public distribution or filed or available
as public information with any governmental authority) shall at
any time be used for the advantage of, or disclosed to third
parties by, such party for any reason whatsoever; (iii) CTC shall
deliver to DI all studies, reports or other documents prepared in
connection with its investigation in accordance with Section 5.6;
and (iv) the obligations of CTC under this Section and Sections
5.6 and 5.8 shall survive for a period of five years following
such termination.
<PAGE>
ARTICLE VII
-----------
RESTRICTIONS ON TRANSFER OF CTC STOCK;
--------------------------------------
REGISTRATION RIGHTS; BOARD REPRESENTATION
-----------------------------------------
7.1. Restrictions on Transfer and Certain Activities.
-----------------------------------------------
(a) Representations of DI Shareholders. Each DI
----------------------------------
Shareholder hereby covenants and represents that such DI
Shareholder:
(i) understands that the shares of CTC
Stock which such DI Shareholder is to receive pursuant to
Article I hereof and the Plan of Merger (the "Merger
Shares") have not been registered under the Securities Act of
1933, as amended (the "1933 Act"), and, when delivered in
accordance with the terms of this Agreement, will be "restricted
securities" (securities acquired from an issuer in a transaction
not involving any public offering) as defined in Rule 144 of the
General Rules and Regulations of the SEC under the 1933 Act
("Rule 144");
(ii) has no present plan or intention to
effect any transfer of the Merger Shares to any person or other
entity (including a Permitted Transferee as hereinafter defined),
and, except as otherwise contemplated by the provisions of
Section 7.2 hereof, will hold the Merger Shares for a minimum of
two years following the Closing Date (unless the holding period
applicable to resales of restricted securities (the "Limited 144
Resale Period") is reduced from two years to one year as proposed
in SEC 1933 Act Release No. 7187 (6-27-95), in which case such
two-year period shall be automatically reduced to one year), and
will not consummate any sale or transfer of any Merger Shares in
the absence of registration thereof under the 1933 Act (other
than in accordance with the provisions of Rule 144), unless and
until such DI Shareholder shall have delivered to CTC an opinion
of Kirkpatrick & Lockhart LLP, or other counsel chosen by such DI
Shareholder, which counsel shall be reasonably satisfactory to
CTC and its counsel, to the effect that such sale or transfer may
be effected without registration under the 1933 Act;
<PAGE>
(iii) undertakes that, throughout the
Standstill Term (as hereinafter defined), such DI Shareholder
will not agree to or arrange for or effect the transfer (other
than pursuant to the procedures contemplated by Section 7.2) in a
single transaction or related series of transactions (other than
a disposition to a Permitted Transferee) to a single purchaser or
related or affiliated group of purchasers of more than the
maximum number of Merger Shares which such DI Shareholder could
then sell or transfer in a transaction or transactions effected
in full compliance with Rule 144(e)(1), assuming that such Rule
was then applicable, unless and until such DI Shareholder first
advises CTC of the intention so to do in writing and provides CTC
with an opportunity to respond to such advice within ten business
days of receipt thereof by CTC (the "Response Period") by
agreeing to repurchase (the "Repurchase Right") such Merger
Shares (the "Offered Merger Shares") at the same price offered by
such purchaser or group; provided, however, that such DI
-------- -------
Shareholder will be obligated to effect such sale to CTC only if
capital gain treatment of the transaction is assured under
section 302(b) of the Code; and
(iv) throughout the Standstill Term, except
with the prior express written consent of CTC or in the capacity
of a DI Designee (as defined in Section 7.3), neither such DI
Shareholder nor any of such DI Shareholder's affiliates (as
hereinafter defined), will, nor will such DI Shareholder or any
of such affiliates assist or encourage others to, directly or
indirectly:
(A) effect, or offer, seek or propose
to effect, or cause to be effected, any (i) acquisition of
ownership (including, but not limited to, "beneficial ownership"
as defined in Rule 13d-3 under the 1934 Act) by such DI
Shareholder of any additional shares of CTC Stock (which hereby
waives any right such DI Shareholder might otherwise have as a DI
Designee to participate in CTC's Non-Qualified Stock Option Plan
for Non-Employee Directors) or any other CTC Voting Securities
(as hereinafter defined) other than CTC Voting Securities issued
pursuant to a stock split or dividend or distribution in respect
of CTC Stock or any material portion of CTC's assets or any
rights or options to acquire such ownership (including from a
third party); or (ii) tender or exchange offer, merger or other
business combination involving CTC or any of its subsidiaries
(which shall not prevent any DI Shareholder from accepting any
such offer or voting for and participating in any such merger or
other business combination; provided, however, that such DI
-------- -------
Shareholder shall advise CTC with reasonable promptness of such
DI Shareholder's intention to accept any tender or exchange offer
in order to permit CTC to exercise the Repurchase Right with
respect to the applicable Merger Shares, and such DI Shareholder
shall not accept such offer until the final day prior to its
then-scheduled expiration); or (iii) recapitalization or
<PAGE>
restructuring resulting in an increase in the proportional
percentage of CTC Voting Securities held by such DI Shareholder
or liquidation, dissolution or other extraordinary transaction
involving CTC or any of its subsidiaries (which shall not prevent
any DI Shareholder from voting for and participating in any such
transaction);
(B) make or in any way participate in
any "solicitation" of "proxies" (as such terms are defined or
used in Regulation 14A under the 1934 Act) or become a
"participant" in any "election contest" (as such terms are
defined or used in Rule 14a-11 under the 1934 Act) with respect
to CTC; seek to advise or influence any person (within the
meaning of Section 13(d)(3) of the 1934 Act), other than members
of the initial "group" referred to in clause (C), with respect to
the voting of any CTC Voting Securities; or execute any written
consent in lieu of a meeting of holders of CTC Voting Securities;
(C) form, join or in any way
participate in a "group" (within the meaning of Section 13(d)(3)
of the 1934 Act) with respect to any CTC Voting Securities or
otherwise act (other than by the voting of CTC Voting
Securities), alone or in concert with others, to seek to control
or influence CTC's Board of Directors, management or corporate
policies, other than any such actions undertaken solely with
other DI Shareholders and their Permitted Transferees; or
(D) enter into any negotiations,
arrangements, agreements or understandings with any third party
with respect to any of the foregoing.
(b) Legend on Certificates. The certificates
----------------------
representing the Merger Shares will bear the following legend:
"The shares of stock evidenced by this certificate have
not been registered pursuant to the Securities Act of
1933, as amended, and are transferable only upon such
registration or upon proof of exemption therefrom.
Certain conditions precedent to the transfer of these
shares are set forth in an Agreement and Plan of Merger
dated January 6, 1997 among Dynamet Incorporated, the
shareholders of Dynamet Incorporated and Carpenter
Technology Corporation (which Agreement and Plan of
Merger is on file with Carpenter Technology
Corporation)."
(c) Stop Transfer Instructions. At the time of
--------------------------
the delivery of the certificates representing the Merger Shares,
stop transfer instructions with respect to such certificates will
be given by CTC to the transfer agent for CTC Stock.
<PAGE>
(d) Procedure for Repurchases by CTC. In the
--------------------------------
event that CTC elects to exercise its Repurchase Right with
respect to Offered Merger Shares under subsection (a)(iii), CTC
will within the Response Period deliver to the disposing DI
Shareholder written notice stating the date, time and place for
the closing of the repurchase transaction, which date shall not
be more than five business days after the notice date. Such
notice shall be accompanied by an opinion of Dechert Price &
Rhoads, or other counsel reasonably satisfactory to the disposing
DI Shareholder, to the effect that the repurchase by CTC will
result in capital gain treatment to such DI Shareholder under
section 302(b) of the Code. Unless otherwise agreed, the
purchase price for the Offered Merger Shares shall be paid in
full at such closing by certified check or wire transfer against
delivery of the appropriate stock certificates, duly endorsed or
accompanied by duly executed stock transfer powers. If CTC does
not deliver such notice and opinion within the Response Period,
the disposing DI Shareholder shall be free to dispose of the
Offered Merger Shares to any third party (subject to compliance
with all applicable federal and state securities laws), and CTC
will take all action necessary to permit such disposition to be
effected without further restrictions, including removal of the
legend contemplated by subsection (b) hereof and voiding of the
stop transfer instructions contemplated by subsection (c).
(e) Permitted Transferees.
---------------------
(i) Nothing in this Section 7.1 shall
prevent the disposition of Merger Shares by a DI Shareholder or a
Permitted Transferee to one or more of his, her or its Permitted
Transferees, to another DI Shareholder or to CTC; provided, however,
-------- -------
that each such DI Shareholder or Permitted Transferee (except a
Permitted Transferee pursuant to clause (D), (E), (F) or (G) of
subsection (e)(ii), hereinafter referred to as an "Unrestricted
Permitted Transferee") shall take such Merger Shares subject to
and be fully bound by the terms of this Agreement applicable to
such person with the same effect as if such person were a party
hereto; and provided, further, that
-------- -------
(A) no such transferee (other than an
Unrestricted Permitted Transferee) shall be a Permitted
Transferee unless such transferee executes a representation
letter embodying the substantive provisions of Article VII of
this Agreement, reasonably satisfactory in form and substance to
CTC, and
(B) no disposition shall be effected
except in compliance with the registration requirements of the
1933 Act or pursuant to an available exemption therefrom.
<PAGE>
(ii) "Permitted Transferee" shall mean:
(A) in the case of any DI Shareholder
or Permitted Transferee who is a natural person, his or her
spouse or lineal descendants, any trust for his or her benefit or
the benefit of his or her spouse or lineal descendants or the
benefit of any combination thereof, or any corporation or
partnership in which the direct and beneficial owners of all of
the equity interests are any combination of such individual DI
Shareholder or Permitted Transferee and his or her spouse and
lineal descendants and any trusts for the benefit of any
combination of such persons; provided, that any such trust,
--------
partnership or corporation shall not be subject to any
obligations inconsistent with the obligations of a DI Shareholder
or Permitted Transferee under this Agreement;
(B) in the case of any DI Shareholder
or Permitted Transferee who is a natural person, his or her
heirs, executors, administrators or personal representatives upon
the death of such DI Shareholder or Permitted Transferee or upon
the incompetency or disability of such DI Shareholder or
Permitted Transferee for purposes of the protection and
management of his or her assets;
(C) in the case of any DI Shareholder
or Permitted Transferee that is a corporation, partnership or
trust, its shareholders, partners or beneficiaries, as the case
may be (other than any person who becomes a shareholder, partner
or beneficiary solely to enable him, her or it to become a
Permitted Transferee) and, in the case of any DI Shareholder or
Permitted Transferee, any affiliate thereof;
(D) the Rossin Foundation or any other
charitable, religious or philanthropic organization qualified
under section 501(c)(3) of the Code and any charitable remainder
trust as defined in Section 664 of the Code, either of which is
an affiliate of any DI Shareholder, which shall be an
Unrestricted Permitted Transferee only with respect to the
initial 200,000 Merger Shares transferred thereto, and which
shall acquire any additional Merger Shares subject to the general
restrictions of subsection (e)(i);
(E) any charitable, religious or
philanthropic organization qualified under section 501(c)(3) of
the Code and any charitable remainder trust as defined in Section
664 of the Code, other than the Rossin Foundation or any other
such organization which is an affiliate of any DI Shareholder;
(F) any person or other entity if such
person or other entity takes such Merger Shares in a transaction
in accordance with Section 7.2 hereof or another public offering
under the 1933 Act or in a transaction in accordance with Rule
144; or
<PAGE>
(G) any person acquiring Merger Shares
from any DI Shareholder or Permitted Transferee after full
compliance with subsection (d) hereof.
(iii) As used in this Section 7.1,
"affiliate" means any person controlling, controlled by or under
common control with a specified person. "Disposition" includes
any sale, exchange, assignment, hypothecation, gift, donation or
any voting trust or other agreement or arrangement with respect
to the transfer of voting rights or any other beneficial interest
in any of the Merger Shares.
(f) Duration of Standstill Term.
---------------------------
(i) The period during which the provisions
of this Section 7.1 shall be effective (the "Standstill
Term") shall begin on the Closing Date and shall end on the
earlier to occur of (A) the date upon which the percentage of the
voting power of the CTC Voting Securities held by the DI
Shareholders and their Permitted Transferees bound by the
provisions of Article VII of this Agreement is less than 5% of
the voting power of all outstanding CTC Voting Securities or
(B) the tenth anniversary of the Closing Date; provided, however,
-------- -------
that the Standstill Term shall terminate immediately upon CTC's
failure to honor or to carry out its obligations with respect to
the election of a DI Designee to the CTC Board of Directors under
Section 7.3(a) hereof or the occurrence of a CTC Change of
Control Event (as hereinafter defined).
(ii) As used in this Section 7.1, a "CTC
Change of Control Event" means a transaction or series of
transactions (including any tender or exchange offer, merger,
sale of assets or other business combination, contested election
of directors or any combination thereof) as the result of which
(A) any person, together with all affiliates of such person, or
group (other than CTC, any subsidiary of CTC, any employee
benefit plan of CTC or of any subsidiary of CTC, any person or
entity organized, appointed or established by CTC for or pursuant
to the terms of any such employee benefit plan or any group of
which any DI Shareholder is a member and in which such DI
Shareholder participates in his capacity as a stockholder of the
Company) shall become the beneficial owner of 30% or more of the
voting power of all CTC Voting Securities then outstanding, other
than a transaction to which CTC is a party and in connection with
which such person or group enters into a "standstill" agreement
with CTC which has a duration not less than the remaining term of
the Standstill Term and contains covenants and conditions, which
shall not thereafter be modified or waived prior to the end of
the Standstill Term, relating to the sale and acquisition of CTC
Voting Securities and the exercise of voting rights which are at
<PAGE>
least as restrictive as those contained herein; or (B) during any
period of two consecutive calendar years there is a change of 50%
or more in the membership of the Board of Directors of CTC from
the directors in office at the beginning of such period except
for changes approved by at least two-thirds of the directors then
in office who were directors at the beginning of the period; or
(C) persons who were the holders of CTC Voting Securities immediately
prior to such transaction do not, immediately thereafter, own more
than 50% of the voting power of the reorganized, merged, consolidated,
combined or acquiring corporation's then outstanding voting securities.
A CTC Change of Control Event shall be deemed to have occurred on the
date upon which any of the foregoing results is consummated or becomes
effective.
(iii) "CTC Voting Securities" shall mean CTC
Stock and any other securities of CTC entitled to vote generally
for the election of directors of CTC; and "voting power" means,
with respect to any CTC Voting Security, the maximum number of
votes that such security is entitled to cast generally for the
election of directors.
7.2. Registration of CTC Stock.
-------------------------
(a) Form S-3 or Other Registration Statement on
-------------------------------------------
Demand. On one occasion at any time after the first to occur of
- ------
(i) the first anniversary of the Closing Date or (ii) the death
of either Peter or Ada Rossin, CTC will file with the SEC within
60 days after being so requested by the holders of a majority of
the Merger Shares then held by the DI Shareholders a registration
statement on Form S-3 (or, if such form shall not then be
available for use by CTC in connection with such proposed
offering, on any other appropriate form) under the 1933 Act and
will include therein such number of the Merger Shares as the DI
Shareholders shall designate in writing to CTC no later than ten
days prior to the proposed date of such filing. CTC will use its
reasonable commercial efforts to have such registration statement
declared effective as promptly as practicable after the filing
thereof, subject to the provisions hereinafter set forth.
(b) Additional Registration Rights. If, at any
------------------------------
time, CTC files a registration statement (including a
registration statement filed under Rule 415 under the 1933 Act),
contemplating a public offering of CTC Voting Securities, other
than in connection with a business acquisition or combination
transaction or a stock purchase, stock option or other employee
benefit plan or a dividend reinvestment plan, the DI Shareholders
will have the right to have all or a portion of the Merger Shares
included in such registration to the extent designated in writing
<PAGE>
to CTC within ten days following receipt of notice by DI
Shareholders of the proposed registration from CTC; provided however,
----------------
that the period during which CTC shall be required to keep such
registration statement effective shall be limited to 90 days; and
provided, further, that CTC may delay the filing or suspend the
- -------- -------
effectiveness of such registration statement for a reasonable
period of time if it reasonably believes that such filing would
require the disclosure of information then held confidential or
would disrupt or prejudice the negotiation or completion of any
contemplated or pending financing, acquisition, disposition or
other significant corporate transaction, and that CTC may exclude
all or a portion of such Merger Shares from any offering under such
registration statement if it is advised by the managing underwriter
for such offering if the offering is underwritten that the inclusion
of such shares or such portion in the offering would prejudice or
impair the marketability thereof, so long as any such reduction is
effected pro rata with the shares of any other shareholder exercising
rights similar to the rights provided in this Section 7.2(b).
(c) Undertakings of Participating Sellers. As a
-------------------------------------
condition of any such registration under Section 7.2(a) or (b),
the DI Shareholders electing to participate therein (the
"Participating Sellers") will (i) furnish such information to CTC
and take such additional action as CTC and its counsel may
reasonably request in connection with such registration statement
and the offering contemplated thereby; (ii) agree to indemnify
CTC (to the extent reasonably deemed necessary by CTC) with
respect to the accuracy of any information so furnished;
(iii) pay all (or a pro rata portion, if CTC itself, or other
holders of CTC Stock, elect to participate in such registration,
of) the underwriting discounts and commissions or brokerage
commissions, and the fees and expenses of their own counsel in
excess of $10,000, it being understood that all other costs and
expenses associated with such registration, including SEC
registration fees, printing costs and blue sky fees and expenses
will be borne by CTC; and (iv) cooperate with CTC and its
representatives to cause such registration statement to become
effective at the earliest practicable time. Upon request, CTC
will furnish the Participating Sellers with such number of copies
of the prospectus related to any such registration statement as
the Participating Sellers may reasonably request.
(d) Indemnification by CTC. In connection with
----------------------
any offering and registration statement contemplated by the
foregoing provisions, CTC shall indemnify each Participating
Seller against any and all loss, liability, claim, damage and
expense whatsoever (i) arising out of any untrue statement of a
material fact contained in such registration statement at the
time it becomes effective or the final prospectus or any
supplement thereto is filed in connection with such registration
statement, or any omission therefrom of a material fact required
<PAGE>
to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading, unless such statement or omission was made in
reliance upon and in conformity with information furnished to CTC
by a Participating Seller for use in such registration statement,
prospectus or supplement, or (ii) arising out of any violation by
CTC of any law or rule or regulation relating to action or
inaction required of CTC in connection with such registration
statement or the offering thereunder; provided, however, that CTC
-------- -------
shall not be liable hereunder with respect to any claim made
against any Participating Seller unless CTC shall be notified in
writing of the existence of the claim within thirty days after
the assertion thereof in writing; and provided, further, that CTC
-------- -------
shall be entitled to participate at its own expense in the
defense or, if it so elects within thirty days after receipt of
such notice, to assume the defense of any suit brought to enforce
any such claim. If a Participating Seller's right to the
indemnification hereinbefore provided for is for any reason held
unenforceable although otherwise applicable in accordance with
its terms, CTC will contribute to the loss, liability, claim,
damage or expense for which such indemnification is held
unenforceable in such proportion as is appropriate to reflect the
relative benefits to CTC, on the one hand, and such Participating
Seller, on the other hand, of the transaction giving rise to such
loss, liability, claim, damage or expense and the relative fault
of CTC, on the one hand, and such Participating Seller, on the
other hand, with respect to such loss, liability, claim, damage
or expense, as well as any other relevant equitable
considerations.
(e) Underwritten Offerings. In any case where
----------------------
the shares of CTC Stock registered pursuant to this Section 7.2
are to be sold and distributed by means of or as part of an
underwritten public offering,
(i) if the offering is pursuant to Section
7.2(a), the managing underwriter shall be J. P. Morgan Securities
Inc. or such other investment banking firm of national reputation
as CTC shall select and to the selection of whom the majority of
Participating Sellers shall consent (which consent shall not be
unreasonably withheld);
(ii) CTC will use its best efforts to cause
the registration statement to remain current (including the
filing of necessary supplements or post-effective amendments)
throughout the period commencing on the initial effective date
thereof and ending on the earlier of (A) the date on which the
underwriting distribution is completed or (B) the expiration of
nine months; and
<PAGE>
(iii) CTC will agree to indemnify all
participating underwriters and controlling persons thereof, such
indemnification to be in substantially the form and to the effect
customarily proposed by the managing underwriter in similar
transactions, with such modifications therein as may be agreed
upon by such underwriters and CTC.
7.3. Board Representation.
--------------------
(a) Designation of Candidate. CTC will cause
------------------------
Peter C. Rossin or, if he is unable for any reason to serve, a
person designated by the DI Shareholders then holding a majority
of the Merger Shares and reasonably acceptable to CTC, to be
elected to CTC's Board of Directors as of the Closing Date.
Thereafter, during the Standstill Term and subject to the further
provisions hereof, CTC's Corporate Governance Committee (or any
other committee of its Board of Directors exercising a similar
function) shall recommend to CTC's Board of Directors that such
person or any other person designated by the DI Shareholders then
holding a majority of the Merger Shares after consultation with
and reasonably acceptable to CTC (any such person including Mr.
Rossin being hereinafter referred to as the "DI Designee") be
included and such person shall be included in the slate of
nominees recommended by CTC's Board of Directors to stockholders
for election as directors at each annual meeting of stockholders
of CTC at which members of the class of directors to which the DI
Designee is originally appointed are to be elected, commencing
with the next annual meeting of stockholders. In the event that
any DI Designee shall cease to serve as a director for any
reason, the vacancy resulting thereby shall be filled by another
DI Designee. Upon expiration of the Standstill Term, CTC shall
have no further obligations under this Section 7.3.
(b) Acceptability. Notwithstanding the
-------------
provisions of this Section 7.3, the DI Shareholders shall not be
entitled to designate any person as the DI Designee to CTC's
Board of Directors if the election of such person as a director
would result in any violation of any applicable law or order.
CTC shall not be obligated to elect to its Board of Directors any
person whose service as a member thereof would have or be
reasonably likely to have a material adverse effect on CTC's
conduct of its business or such Board's ability to carry out or
discharge its responsibilities. If any such person has been
designated by the DI Shareholders and rejected by CTC, the DI
Shareholders shall be permitted to designate a substitute DI
Designee in accordance with this Section.
<PAGE>
7.4. No Disposition Inconsistent with Reorganization.
-----------------------------------------------
Notwithstanding any provisions set forth in this Article VII to
the contrary, the DI Shareholders will make no disposition of any
of the Merger Shares which, on a stand-alone basis or together
with any other dispositions previously made by the DI
Shareholders, would disqualify the Merger as a reorganization
under sections 368(a)(1)(A) and (a)(2)(D) of the Code, and in no
event will the aggregate number of Merger Shares disposed of by
the DI Shareholders in the first year of the Standstill Term
(including dispositions to Permitted Transferees) exceed 630,000,
except dispositions occasioned by the death of a DI Shareholder
or a Permitted Transferee or as otherwise contemplated by
Section 7.2(a).
ARTICLE VIII
------------
SURVIVAL AND INDEMNIFICATION
----------------------------
8.1. Nature and Survival of Representations. The
--------------------------------------
representations, warranties, covenants and agreements of CTC, DI,
the Warranting Shareholders and the DI Shareholders contained in
this Agreement and all statements contained in any Schedule
hereto or any certificate or financial statement delivered
pursuant to this Agreement shall be deemed to constitute
representations, warranties, covenants and agreements of the
party delivering the same. All such representations and
warranties shall survive the Closing hereunder for a period
extending until February 28, 1998, except those set forth in
(a) Section 2.27, which, in the event of fraud, shall survive
until February 28, 2000, (b) Section 2.14, which shall survive
until February 28, 1999 and (c) Section 2.25, which shall not
survive the Closing.
8.2. Indemnification by DI Shareholders. Subject to
----------------------------------
the terms and conditions of this Article VIII, the DI
Shareholders shall severally (in proportion to their respective
DI stockholdings) indemnify, defend and hold harmless CTC and DI
from and against:
(a) any loss, liability, claim, obligation, fine,
penalty, damage, deficiency or cost of investigation, remediation
or other response activity (collectively, "Damages") arising out
of or resulting from any misrepresentation, breach of warranty or
nonfulfillment of any agreement (other than Section 4.7) on the
part of DI and the DI Shareholders contained in this Agreement or
in any certificate furnished to CTC pursuant hereto; and
<PAGE>
(b) any actions, judgments, costs and expenses
(including reasonable attorneys' fees and all other expenses
incurred in investigating, preparing for or defending any
litigation, settlement or other proceeding) incident to any of
the foregoing or the enforcement of this Section 8.2; provided, however,
-------- -------
that, notwithstanding anything to the contrary contained herein, no DI
Shareholder shall have any obligation to indemnify, defend or hold
harmless CTC or DI from and against any (i) Damages arising out of,
resulting from or otherwise relating to (x) any violation of, default
under, breach of, or conflict with, any Environmental Law or
Environmental Permit or (y) the subject matter of Section 2.25 in any
manner or (ii) any actions, judgments, costs and expenses (including
reasonable attorneys' fees and all other expenses incurred in
investigating, preparing for or defending any litigation, settlement
or other proceeding) incident to any of the foregoing.
8.3. Indemnification by CTC. (a) CTC shall indemnify,
----------------------
defend and hold harmless the DI Shareholders from and against:
(i) any Damages arising out of or resulting
from any misrepresentation, breach of warranty or nonfulfillment
of any agreement on the part of CTC contained in this Agreement
or in any certificate furnished pursuant hereto; and
(ii) any actions, judgments, costs and
expenses (including reasonable attorneys' fees and all other
expenses incurred in investigating, preparing for or defending
any litigation, settlement or other proceeding) incident to any
of the foregoing or the enforcement of this Section.
(b) CTC and DI shall indemnify, defend and hold
harmless Mr. Rossin and Mr. Stephans from and against any Damages
arising out of or resulting from any third-party or governmental
claims relating to any violations or alleged violations of
Environmental Laws or Environmental Permits by DI prior to the
Closing Date and any actions, judgments, costs and expenses
(including reasonable attorneys' fees and all other expenses
incurred in investigating, preparing for or defending any
litigation, settlement or other proceeding) incident to any of
the foregoing or the enforcement of this Section other than any
such Damages, actions, judgments, costs or expenses arising out
of or resulting from or otherwise incident to any such claims
relating to any such violations by DI's Forged Products Division
if the transactions contemplated by Section 9.3 are consummated.
<PAGE>
8.4. Notification of Actions; Control of Proceedings
-----------------------------------------------
and Cooperation. A party potentially entitled to indemnification
- ---------------
("Indemnitee") hereunder shall give the party under the
obligation to provide indemnification hereunder ("Indemnitor")
written notice of any third-party claim for which the Indemnitee
may be entitled to indemnification hereunder specifying the
nature of the claim in reasonable detail and amount, all to the
extent known, within 60 days after the Indemnitee has knowledge
of such third-party claim. The Indemnitor shall have the right,
by giving written notice to the Indemnitee within 30 days after
receipt of the notice hereinbefore described, to assume control
of such defense using counsel of its choice at its expense. If
the Indemnitor shall not so assume control of such defense, or,
having assumed control, shall fail to defend the claim
diligently, the Indemnitee shall retain or reassert control and
dispose of the claim without in any way affecting its rights to
indemnification hereunder. The parties hereto will cooperate
with one another in any defense and the Indemnitee, with respect
to any claim, shall be entitled to participate at its own expense
in the defense of any such claim following assumption of control
of such defense of any such claim by Indemnitor as hereinbefore
provided. Except as hereinbefore provided, neither Indemnitee
nor Indemnitor shall enter into any agreement, compromise or
settlement in respect of any such claim without first obtaining
the other party's written consent thereto, which consent shall
not be unreasonably withheld.
8.5. Limitations. With respect to any Damages
-----------
resulting from misrepresentations and breaches of warranties of
any party hereto, (a) any calculation of such Damages or costs
shall take into account any actual tax benefit realized or tax
cost incurred by either the Indemnitee or the Indemnitor in
connection therewith, (b) such Damages or costs shall only be a
basis for a claim against an Indemnitor to the extent that the
aggregate dollar amount of all Damages and costs incurred by an
Indemnitee for which such Indemnitee is otherwise entitled to
indemnification hereunder have exceeded $1,000,000, and (c) only
claims with respect to Damages of which an Indemnitor receives
written notice from an Indemnitee prior to the expiration of the
relevant survival period specified in Section 8.1 shall survive
such expiration and be enforceable as otherwise provided in this
Article VIII. Any such written notice, to be effective, must
specify with reasonable detail the nature and amount of the
indemnity claim.
<PAGE>
8.6. Satisfaction of Claims with CTC Stock. Any
-------------------------------------
obligation of any DI Shareholder under this Article VIII may be
discharged by payment in cash or, in whole or in part at the
election of such DI Shareholder, by the delivery to CTC, in
negotiable form and free from any lien, security interest,
encumbrance or claim, of a certificate or certificates
representing on the date of delivery thereof to CTC such number
of shares of CTC Stock as shall have an aggregate fair market
value (as hereinafter defined) on such date equal to that portion
of the obligation for which such election has been made. For
purposes of this Section 8.6, the term fair market value of one
share of CTC Stock shall mean, with respect to any particular
date, the average of the closing sale prices of CTC Stock as
reported on the New York Stock Exchange Composite Tape for the
immediately preceding ten days on which trading in CTC Stock
occurred.
8.7. Definition of Material Adverse Effect. For
-------------------------------------
purposes of the determination of any Damages and the application
of the indemnification provisions of this Article VIII only, the
term "Material Adverse Effect" as such term appears in the
representations and warranties of DI and the Warranting
Shareholders in Article II hereof (or any qualification or
limitation of any such representations and warranties as to
materiality) shall exclude the assets, liabilities, revenues and
income attributable to DI's Forged Products Division if the
transactions contemplated by Section 9.3 are consummated.
ARTICLE IX
----------
MISCELLANEOUS
-------------
9.1. Costs, Expenses and Taxes. CTC and DI will each
-------------------------
pay all its own expenses incurred in connection with this
Agreement and the transactions contemplated hereby and by the
Plan of Merger, including (a) all costs and expenses stated
herein to be borne by a party, and (b) all accounting, legal and
appraisal fees and settlement charges.
9.2. Further Assurances; Cooperation. At and after
-------------------------------
the Closing, each party hereto will execute and deliver such
further instruments and documents and perform such acts as may be
reasonably necessary or appropriate to cause the satisfactory
completion and consummation of the transactions contemplated by
this Agreement and the Plan of Merger. Following the Closing
Date, CTC will use its best efforts to have the DI Shareholders
released from any personal guarantees which any of them may have
<PAGE>
previously given in connection with financing for DI to the
extent such guarantees are disclosed in the Disclosure Statement,
and CTC will indemnify and hold harmless such DI Shareholders
from and against liability thereunder after the Closing Date to
the extent so disclosed.
9.3. Option to Purchase or Sell Forged Products Assets.
--------------------------------------------------
Pursuant to the Option Agreement in substantially the form attached
hereto as Exhibit E, CTC and Merger Sub will have the option to require
---------
Mr. Stephans to purchase from Merger Sub and Mr. Stephans will have the
option to require CTC and Merger Sub to sell at any time during the 60-day
period immediately following the Closing Date the assets of DI's Forged
Products Division (the "FPD Assets") and its holding of preferred stock of
Stelkast Corporation (the "Stelkast Preferred Stock"), all as more fully
described in Schedule 9.03 of the Disclosure Statement. The purchase price
for the FPD Assets and Stelkast Preferred Stock shall consist of $2,600,000
in cash and the assumption by the purchaser of specified liabilities,
including long-term debt of approximately $1,022,000, accounts payable and
accrued expenses, as described on such Schedule 9.03.
9.4. Post-Closing Access; Preservation of Books and Records.
------------------------------------------------------
CTC shall, following the Closing, give to the DI Shareholders and their
respective authorized representatives such reasonable access, during normal
business hours and upon prior written notice, to books and records of DI
(including, without limitation, all books of account and tax records) as the
DI Shareholders may reasonably request in connection with (a) the
preparation and filing of individual tax returns and (b) the verification
of any claim of CTC for indemnification under this Agreement and shall
permit the DI Shareholders to make copies of such books and records.
9.5. Communications. All notices, requests, demands
--------------
and other communications hereunder shall be in writing and shall
be deemed to have been duly given if (i) personally delivered,
(ii) sent by facsimile transmission (with transmission
confirmed), (iii) sent by overnight courier (with delivery
confirmed) or (iv) mailed by United States first-class, certified
or registered mail, postage prepaid, to the other parties at the
following addresses (or at such other address as shall be given
in writing by any party to the others):
<PAGE>
(a) If to DI and the DI Shareholders, to:
Dynamet Incorporated
195 Museum Road
Washington, PA 15301
Attention: Peter C. Rossin,
Chairman of the Board
Fax Number: 412-228-2087
With required copy to:
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, PA 15222
Attention: Charles J. Queenan, Jr.
Fax Number: 412-355-6501
<PAGE>
(b) If to CTC, to:
Carpenter Technology Corporation
101 W. Bern Street
Reading, PA 19612-4662
Attention: John R. Welty,
Vice President, General
Counsel and Secretary
Fax Number: 610-208-3068
With required copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103-2793
Attention: Herbert F. Goodrich, Jr.
Fax Number: 215-994-2222
9.6. Assignability; Successors and Assigns. Except as
-------------------------------------
hereinafter contemplated, this Agreement and the rights of the
parties hereunder may not be assigned by any party without the
prior written consent of the other parties. Notwithstanding the
foregoing, nothing herein contained shall prohibit the assignment
by CTC of certain or all of its rights hereunder to Merger Sub or
one or more other wholly-owned subsidiaries of CTC; provided, however,
-------- -------
that no such assignment shall limit or affect CTC's obligations
hereunder; nor shall any assignment by operation of law in
connection with the merger, consolidation or dissolution of any
party hereto be prohibited. Subject to the foregoing, this
Agreement and all rights and powers granted and obligations
created hereby will bind and inure to the benefit of the parties
hereto and their respective successors, assigns and personal
representatives.
9.7. Governing Law; Remedies. This Agreement shall be
-----------------------
governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania applicable to agreements made and to
be performed wholly within such jurisdiction, without regard to
the conflicts of laws provisions thereof. The parties
acknowledge that a breach by a party hereto of the provisions of
Article VII will cause irreparable damage to the other parties,
the exact amount of which will be difficult or impossible to
ascertain, and that such other parties' remedies at law for any
such breach will be inadequate. Accordingly, upon breach or
<PAGE>
threatened breach of the covenants and undertakings contained in
Article VII, such other parties shall be entitled to injunctive
or other equitable relief in any court of the United States or
any state thereof having jurisdiction.
9.8. Headings. The headings preceding the text of the
--------
sections and subsections hereof are inserted solely for
convenience of reference, and shall not constitute a part of this
Agreement, nor shall they affect its meaning, construction or
effect.
9.9. Amendment and Waiver. CTC and DI may by mutual
--------------------
written agreement amend this Agreement in any respect. CTC and
DI may also (a) extend the time for the performance of any of the
obligations of any other party, and (b) waive (i) any
inaccuracies in representations by any other party,
(ii) compliance by any other party with any of the agreements
contained herein and performance of any obligations by such other
party, and (iii) the fulfillment of any condition that is
required prior to the performance by such party of any of its
obligations under this Agreement. To be effective, any such
amendment or waiver must be signed by an authorized
representative of the party against whom enforcement of the same
is sought.
9.10. Entire Agreement. This Agreement and the
----------------
Exhibits and Schedules hereto, each of which is hereby
incorporated herein, set forth all of the promises, covenants,
agreements, conditions and undertakings between the parties
hereto with respect to the subject matter hereof, and supersede
all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written
with respect to the subject matter hereof.
9.11. Execution in Counterparts. This Agreement may
-------------------------
be executed in any number of counterparts, each of which shall be
termed an original and all of which together shall constitute one
and the same instrument.
<PAGE>
9.12. Appointment of Agent for Delivery.
---------------------------------
(a) Each DI Shareholder hereby irrevocably
constitutes and appoints Peter C. Rossin his or her agent and
attorney-in-fact (the "Agent for Delivery") to effectuate the
delivery to CTC of the DI Stock held by him or her as
contemplated by Section 1.2(b)(ii) hereof, the receipt from CTC
of the cash payment and stock certificate contemplated by such
Section and the delivery to such DI Shareholder of such cash
payment and stock certificate. Any action taken by the Agent for
Delivery pursuant to the authority granted hereby will be
effective and absolutely binding on each DI Shareholder and
without recourse notwithstanding any contrary action of or
direction from such DI Shareholder, except in the case of willful
misconduct or actions taken in bad faith by the Agent for
Delivery. The death or incapacity of any DI Shareholder will not
terminate the authority and agency of the Agent for Delivery.
CTC will not be obligated to inquire into the authority of the
Agent for Delivery and will be fully protected in dealing with
the Agent for Delivery in lieu of the several DI Shareholders as
to matters set forth herein.
(b) The Agent for Delivery is hereby fully
authorized by the DI Shareholders for each of them and in their
respective names to:
(i) Receive all notices or documents given
or to be given to the DI Shareholders in connection with this
Agreement or the transactions contemplated hereby;
(ii) Deliver at the Closing on behalf of
the DI Shareholders certificates for the shares of DI Stock owned
by each in exchange for the cash payment and a certificate for
the shares of CTC Stock to which such DI Shareholder is entitled,
all as contemplated by Section 1.2;
(iii) Sign and deliver to CTC at the Closing
a receipt for the cash payment and the certificate representing
such shares of CTC Stock;
(iv) Deliver to CTC at the Closing all such
other certificates and documents to be delivered to CTC by such
DI Shareholder as hereinbefore provided; and
(v) Deliver to each DI Shareholder,
personally or by registered mail addressed to the address of each
such DI Shareholder on the books of DI, the cash and stock
certificate referred to in subparagraph (ii) above.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the day and year first above written.
DYNAMET INCORPORATED
By:____________________________________
Peter C. Rossin
Chairman of the Board
_______________________________________
Peter C. Rossin
________________________________________
Ada E. Rossin,
individually and as
Trustee under the irrevocable
Deeds of Trust each dated
July 12, 1989 for the
benefit of Katherine Rossin
Stephans and Elizabeth Lee
Stephans, respectively.
________________________________________
Peter N. Stephans
________________________________________
Joan R. Stephans,
individually and as
Trustee under the irrevocable
Deeds of Trust each dated
July 12, 1989 for the
benefit of Katherine Rossin
Stephans and Elizabeth Lee
Stephans, respectively.
CARPENTER TECHNOLOGY CORPORATION
By:_____________________________________
Robert W. Cardy
Chairman of the Board,
President & Chief Executive
Officer
<PAGE>
EXHIBIT A
PLAN OF MERGER
--------------
PLAN OF MERGER, dated as of February 21, 1997, between
DYNAMET INCORPORATED, a Pennsylvania corporation ("DI"), and DY
ACQUISITION CORPORATION, a Delaware corporation ("DYAC") (such
corporations being hereinafter sometimes collectively referred to
as the "Constituent Corporations"). All of the outstanding
capital stock of DYAC is owned by CARPENTER TECHNOLOGY
CORPORATION, a Delaware corporation ("CTC").
The Boards of Directors of DI, DYAC and CTC have
determined that it is advisable and in the best interests of
their respective corporations and shareholders that DI be merged
into DYAC upon the terms and conditions set forth herein and in
that certain Agreement and Plan of Merger dated January 6, 1997
by and among DI, the shareholders of DI and CTC (the "Merger
Agreement") and in accordance with the Business Corporation Law
of 1988, as amended, of the Commonwealth of Pennsylvania (the "PA
BCL") and the General Corporation Law of the State of Delaware
(the "DE GCL").
1. MERGER. DI shall merge into DYAC (the "Merger")
------
and the separate existence of DI shall cease. DYAC shall be the
surviving corporation of the Merger (hereinafter sometimes
referred to as the "Surviving Corporation") and shall continue
its existence under Delaware law under the name "DYNAMET
INCORPORATED." The Merger shall become effective at the close of
business on the date upon which appropriate articles of merger,
to which this Plan of Merger will be attached, are filed with the
Department of State of the Commonwealth of Pennsylvania and a
certificate of merger is filed with the Office of the Secretary
of State of the State of Delaware (the "Merger Date").
2. CERTIFICATE OF INCORPORATION; BYLAWS.
------------------------------------
(a) Certificate of Incorporation. The
----------------------------
Certificate of Incorporation of DYAC as in effect on the Merger
Date, amended to reflect the corporate name specified in
Section 1, shall be the Certificate of Incorporation of the
Surviving Corporation until changed as provided in the DE GCL.
(b) Bylaws. The Bylaws of DYAC as in effect on
------
the Merger Date shall be the Bylaws of the Surviving Corporation
until changed as provided therein and in the DE GCL.
3. CONVERSION OF SHARES OF CAPITAL STOCK. On the
-------------------------------------
Merger Date, as a result of the effectiveness of the Merger:
<PAGE>
(a) Conversion of DYAC Capital Stock. Each share
--------------------------------
of Common Stock, par value $1 per share, of DYAC issued and
outstanding immediately prior to the Merger Date shall, by virtue
of the Merger and without any action on the part of the holder
thereof, be converted into and become one share of Common Stock,
par value $1 per share, of the Surviving Corporation.
(b) Conversion of DI Stock. Each share of Common
----------------------
Stock, par value $5 per share, of DI ("DI Stock") issued and
outstanding immediately prior to the Merger Date shall, by virtue
of the Merger and without any action on the part of the holder
thereof, be converted into, in lieu of shares or other securities
or obligations of the Surviving Corporation, (i) the right to
receive $166.0581 in cash and (ii) 9.0704 shares of Common Stock,
par value $5 per share, of CTC ("CTC Stock").
(c) Effect of Recapitalization. In the event
--------------------------
that, between the date of this Plan of Merger and the Merger
Date, the number of outstanding shares of CTC Stock is increased
by a stock split, stock dividend or recapitalization, a
proportionate adjustment will be made in the number of shares of
CTC Stock into which each share of DI Stock will be converted
pursuant hereto.
4. EXCHANGE OF CERTIFICATES AND CASH PAYMENTS;
--------------------------------------------
FRACTIONAL INTERESTS.
- --------------------
(a) Surrender of DI Stock Certificates. The
----------------------------------
stock transfer books of DI shall be closed as of the Merger Date,
and the holders of record of outstanding shares of DI Stock as of
that date shall be the shareholders entitled to surrender their
certificates to CTC, or to an exchange agent to be designated by
CTC if CTC determines in its sole discretion to appoint such an
agent (if so appointed, the "Exchange Agent"), in exchange for
the cash amounts and certificates representing the number of
whole shares of CTC Stock to which they are entitled pursuant to
the conversion provisions set forth in Section 3(b) hereof. In
the event that any transfer or assignment of the record ownership
of any of the outstanding shares of DI Stock has occurred which
has not been registered in the stock transfer books of DI at or
before the Merger Date, or shall occur after the Merger Date,
payment of the appropriate cash amount and delivery of the
appropriate CTC Stock certificate shall be made to such
transferee upon presentation to CTC (or to the Exchange Agent) of
the certificates representing such shares of DI Stock, duly
endorsed or assigned and accompanied by such documents as may be
required to evidence such transfer or assignment and by the
amount of any transfer or other taxes due in respect thereof.
<PAGE>
(b) Fractional Interests. Fractional shares of
--------------------
CTC Stock will not be issued, but in lieu thereof cash in an
amount equal to the fractional part of a share of CTC Stock to
which a holder of DI Stock would otherwise be entitled multiplied
by the Per Share Value (as hereinafter defined), rounded up to
the next full cent, will be paid by check by CTC (or the Exchange
Agent) to such holder. For purposes of this paragraph, "Per
Share Value" shall mean $34.
5. PAYMENT OF DIVIDENDS. No holder of a certificate
--------------------
representing shares of DI Stock shall be entitled to receive any
dividends with respect to the shares of CTC Stock to which such
holder is entitled pursuant hereto, unless and until such holder
shall have surrendered such certificate to CTC (or the Exchange
Agent, if appointed) for the cash amount and the certificates
representing the shares of CTC Stock deliverable in exchange
therefor. When the exchange is made, dividends which would
otherwise have been payable on such shares of CTC Stock, if any,
shall then be paid to such holder without interest.
6. EFFECT OF MERGER. Upon the effectiveness of the
----------------
Merger, all of the property, real, personal and mixed, and
franchises of each of the Constituent Corporations and all debts
due on whatever account to either of them, shall be deemed to be
transferred to and vested in the Surviving Corporation without
further action and the title to any real estate, or any interest
therein, vested in either of the Constituent Corporations shall
not revert or be in any way impaired by reason of the Merger.
The Surviving Corporation shall thenceforth be responsible for
all the liabilities and obligations of each of the Constituent
Corporations (including any liabilities in respect of demands
made by holders of DI Stock dissenting from the Merger) and the
liabilities of the Constituent Corporations or of their
shareholders, directors or officers shall not be affected, nor
shall the rights of the creditors thereof or of any persons
dealing with such corporations or any liens upon the property of
such corporations be impaired by the Merger, and any claim
existing or action or proceeding pending by or against either of
such corporations may be prosecuted to judgment as if the Merger
had not taken place or the Surviving Corporation may be proceeded
against or substituted in its place.
<PAGE>
7. INDEMNIFICATION OF DI DIRECTORS AND OFFICERS.
--------------------------------------------
(a) Undertaking to Indemnify. From and after the
------------------------
Merger Date and subject to the terms and conditions hereinafter
set forth, the Surviving Corporation shall indemnify and hold
harmless for a period of six years from the Merger Date, to the
fullest extent consistent with and permitted by applicable law,
each present and former director and officer of DI (collectively,
the "Indemnified Parties") from and against any threatened,
pending or completed action or proceeding brought against any
such Indemnified Party in such party's capacity as a director or
officer of DI (individually, a "Claim") as provided in the
articles of incorporation and bylaws of DI as of the date hereof.
In the event any Claim is asserted or made and written notice
thereof is received by the Surviving Corporation within such
six-year period, all rights of the Indemnified Parties hereunder
in respect of such Claim shall continue until final disposition
thereof. The Surviving Corporation, to the fullest extent
consistent with and permitted by applicable law, shall
periodically advance as incurred reasonable expenses directly
related to the defense of a Claim; provided, that the Indemnified
--------
Party to whom such expenses are advanced provides an undertaking
to repay such advances if it is ultimately determined that such
person is not entitled to indemnification hereunder.
(b) Procedures for Defense of Claims. In the
--------------------------------
event of the assertion of any Claim with respect to which the
Surviving Corporation may be obligated to indemnify hereunder,
the Indemnified Party or Parties against whom such Claim is
asserted will promptly notify the Surviving Corporation thereof
in writing, specifying the nature of such Claim in reasonable
detail and including copies of any pleadings or correspondence
relating thereto, and the Surviving Corporation shall assume the
defense thereof with legal counsel of its choice, who will be
reasonably satisfactory to the Indemnified Party or Parties. The
Surviving Corporation shall not be responsible for any fees,
costs or expenses of other counsel or any other expenses
subsequently incurred by any such Indemnified Party in connection
with the defense of such Claim, unless the Surviving Corporation
fails to assume such defense within 15 days after receipt of
written notice of such Claim, in which case such Indemnified
Party may retain counsel reasonably satisfactory to the Surviving
Corporation, and the Surviving Corporation shall pay promptly all
reasonable fees, costs and expenses of such counsel; provided, however,
-------- -------
that the Surviving Corporation shall be obligated for the fees and
expenses of only one firm of counsel (together with appropriate local
counsel) for all of the Indemnified Parties in respect of any Claim,
unless such use of one counsel would present a conflict of interest of
such a nature as to render impossible the provision of a reasonably
adequate defense for certain of the Indemnified Parties, in which case
the Surviving
<PAGE>
Corporation's obligation will include the reasonable fees, costs
and expenses of separate counsel for such parties. The
Indemnified Parties shall cooperate with the Surviving
Corporation and each other in the defense of any Claim.
(c) Settlement Conditions. No settlement shall
---------------------
be effected by or on behalf of any Indemnified Party without the
prior written consent of the Surviving Corporation, which shall
not be unreasonably withheld. In addition, the Surviving
Corporation shall be released from any further obligation to an
Indemnified Party hereunder in respect of any Claim upon the
unreasonable refusal of such Indemnified Party to consent to any
settlement, compromise or entry of judgment with respect to such
Claim which would result in a complete release of such
Indemnified Party from all liability arising from such Claim.
8. FURTHER ASSURANCE. If requested by the Surviving
-----------------
Corporation or by its successors or assigns, DI will execute and
deliver such instruments and take or cause to be taken such other
or further action as the Surviving Corporation may deem necessary
or desirable in order to vest or perfect in, or confirm of record
or otherwise to, the Surviving Corporation title to and
possession of all of its property, rights, privileges, powers or
franchises, and otherwise to carry out the purpose hereof.
9. DIRECTORS OF SURVIVING CORPORATION. Upon the
----------------------------------
Merger Date, the following persons shall constitute the Board of
Directors of the Surviving Corporation, each of whom shall hold
office until the next annual meeting of the shareholders of the
Surviving Corporation and until their successors have been duly
elected and shall have qualified:
Robert W. Cardy
G. Walton Cottrell
John R. Welty
If, at the Merger Date, any vacancy exists on the
Board of Directors it will be filled in the manner provided in
the Bylaws of the Surviving Corporation.
10. DI SHAREHOLDER APPROVAL. This Plan of Merger has
-----------------------
been submitted to and unanimously approved by the shareholders of
DI as provided by the PA BCL and by CTC as the sole stockholder
of DYAC as provided by the DE GCL and, in accordance with the
requirements of such law, there shall be filed with the
appropriate state authorities such documents, executed in such a
manner as may be necessary to effect the Merger at the Merger
Date.
<PAGE>
11. TERMINATION OF PLAN. This Plan of Merger shall be
-------------------
terminated and the Merger abandoned upon termination of the
Merger Agreement pursuant to the provisions of Section 6.3
thereof.
12. MODIFICATION OF PLAN. This Plan of Merger may be
--------------------
amended or supplemented in any manner at any time and from time
to time prior to the Merger Date by mutual consent of the Boards
of Directors of the Constituent Corporations, except that no
change may be made in the conversion amount set forth in
Section 3(b) hereof without the prior approval thereof by the
shareholders of DI.
IN WITNESS WHEREOF, each of the Constituent
Corporations has executed this Plan of Merger on the date first
above written.
DYNAMET INCORPORATED
By:_______________________________
Peter C. Rossin
Chairman of the Board
DY ACQUISITION CORPORATION
By:_______________________________
Robert W. Cardy
President
<PAGE>
NON-COMPETITION AGREEMENT
-------------------------
NON-COMPETITION AGREEMENT ("Agreement") dated
February __, 1997 by and among CARPENTER TECHNOLOGY CORPORATION,
a Delaware corporation ("CTC"), DYNAMET INCORPORATED, a Delaware
corporation formerly known as "DI Acquisition Corporation ("DI")
and PETER C. ROSSIN, formerly a principal shareholder ("Rossin")
of Dynamet Incorporated, a Pennsylvania corporation ("Old DI") .
CTC and DI are hereinafter sometimes referred to collectively as
the "Companies."
The Companies and Rossin are parties to an Agreement
and Plan of Merger dated January 6, 1997 (the "Merger
Agreement"), which provides for the merger on the date hereof of
Old DI with and into DI. It is a condition to the obligations of
the parties to the Merger Agreement that this Non-Competition
Agreement be executed and delivered by the parties hereto, as an
undertaking ancillary to the Merger Agreement.
In consideration of the mutual covenants contained
herein, and INTENDING TO BE LEGALLY BOUND HEREBY, the parties
hereto agree as follows:
1. PAYMENTS. In consideration of the covenants and
--------
undertakings in Sections 2 and 3 hereof, Rossin has received a
cash payment in the amount of $100,000 contemporaneously with the
execution and delivery of this Agreement.
2. CONFIDENTIAL INFORMATION. Rossin acknowledges
------------------------
that by reason of his relationship with and service to Old DI and
his services to the Companies, Rossin has had and will have
access to confidential information relating to operations and
technology and know-how which have been developed by Old DI and
may be developed in the future by the Companies, including,
without limitation, information and knowledge pertaining to
products and their design and manufacture, methods of operation,
sales and profit data, customer and supplier lists and
relationships between Old DI and its customers, suppliers and
others who have business dealings with it, other information not
readily available to the public, and plans for future
developments relating thereto. In recognition of the foregoing,
Rossin will maintain the confidentiality of all such information
and other matters of DI (as the successor to Old DI) and CTC
known to Rossin which are not otherwise in the public domain and
will not disclose any such information to any person outside the
respective organizations of DI and CTC, wherever located, during
the term of this Agreement except as required by law or with
CTC's prior written authorization and consent.
<PAGE>
3. COVENANT NOT TO COMPETE. During the Non-Compete
-----------------------
Term, Rossin shall not, unless acting with the prior written
consent of CTC, directly or indirectly (i) own, manage, operate,
finance, join, control or participate in the ownership,
management, operation, financing or control of, or be associated
as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with, or use or permit
his name to be used in connection with, any profit or
not-for-profit business or enterprise which at any time during
such period designs, manufactures, assembles, sells, distributes
or provides products (or related services) in competition with
those designed, manufactured, assembled, sold, distributed or
provided, or under active development, by Old DI (including all
future developments in and improvements on such products and
services), other than products (or related services) designed,
manufactured, assembled, sold, distributed or provided, or under
active development by the Forged Products Division of Old DI
(including all future developments in and improvements on such
products and services), immediately prior to the effective time
of the merger contemplated by the Merger Agreement in any part of
the world or (ii) offer or provide employment to, interfere with
or attempt to entice away from either of the Companies, either on
a full-time or part-time or consulting basis, any person who then
currently is, or who within one year prior thereto had been,
employed by DI, Old DI or CTC; provided, however, that this
-------- -------
provision shall not be construed to prohibit the ownership by
Rossin of not more than 2% of any class of securities of any
corporation which is engaged in any of the foregoing businesses
that has a class of securities registered pursuant to the
Securities Exchange Act of 1934. If Rossin's spouse engages in
any of the restricted activities set forth in the preceding
sentence, Rossin shall be deemed to have indirectly engaged in
such activities in violation of this covenant.
4. REMEDIES. Rossin acknowledges that a breach of
--------
the provisions of Section 2 or Section 3 will cause irreparable
damage to the Companies, the exact amount of which will be
difficult or impossible to ascertain, and that Companies'
remedies at law for any such breach will be inadequate.
Accordingly, upon a breach of the covenants and agreements
contained in Section 2 or Section 3, the Companies shall be
entitled to injunctive or other equitable relief, without posting
bond or other security. Rossin shall be liable for any monetary
damages awarded by a court of competent jurisdiction to either of
the Companies as the result of any breach or violation of the
provisions of this Agreement, such liability to be borne in
accordance with the judgment of such court.
5. NON-COMPETE TERM. The term of this Agreement with
----------------
respect to which the covenants in Sections 2 and 3 shall remain
in effect (the "Non-Compete Term") shall begin on the date hereof
and shall extend for five years thereafter, ending on the fifth
anniversary of such date.
<PAGE>
6. NOTICES. Any notice, request, demand, waiver,
-------
consent, approval or other communication which is required or
permitted to be given to any party hereunder shall be in writing
and shall be deemed given only if delivered to the party
personally or sent to the party by overnight courier or facsimile
transmission or by registered or certified mail (return receipt
requested) with postage and registration or certification fees
thereon prepaid, addressed to the party at the address set forth
below:
(a) If to DI or CTC, to:
Carpenter Technology Corporation
101 West Bern Street
P. O. Box 14662
Reading, PA 19612-4662
Attention: John R. Welty,
Vice President & General
Counsel
Fax Number: 610-208-3068
(b) If to Rossin, to:
Mr. Peter C. Rossin
621 Trotwood Circle
Pittsburgh, PA 15241
or to such other person or address as either party shall furnish
to the other party in writing. All notices required or permitted
hereunder shall be deemed duly given and received on the second
day next succeeding the date of mailing if sent by certified or
registered mail and on the next day if delivered by overnight
courier.
7. SEVERABILITY. If any term or provision of this
------------
Agreement or the application thereof to any person or
circumstance shall, to any extent, be held invalid or
unenforceable by a court of competent jurisdiction, the remainder
of this Agreement or the application of any such term or
provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected
thereby, and each term and provision of this Agreement shall be
valid and enforceable to the fullest extent permitted by law. If
any of the provisions contained in this Agreement shall for any
reason be held to be excessively broad as to duration, scope,
activity or subject, it shall be construed by limiting and
reducing it, so as to be valid and enforceable to the extent
compatible with the applicable law or the determination by a
court of competent jurisdiction.
<PAGE>
8. UNCONDITIONAL OBLIGATIONS. This Agreement
-------------------------
establishes and vests in Rossin a contractual right to the
benefits to which he is entitled hereunder. Except in the event
of a material breach by Rossin of the covenants and undertakings
in Sections 2 and 3 hereof, the Companies' obligations under this
Agreement shall be absolute and unconditional, and shall not be
affected by any circumstances, including, without limitation, any
offset, counterclaim, recoupment, defense, or other right which
the Companies or their affiliates may have against Rossin or any
other party. Each and every payment made hereunder by the
Companies shall be final, and the Companies shall not seek to
recover all or any part of such payment from Rossin or from
whomsoever may be entitled thereto, for any reasons whatsoever.
9. JOINT AND SEVERAL OBLIGATIONS. Notwithstanding any
-----------------------------
provision of this Agreement to the contrary, the Companies shall
be jointly and severally liable to Rossin and his heirs or estate
for all payment obligations under this Agreement.
10. BINDING EFFECT. This Agreement shall be binding
--------------
upon and inure to the benefit of the heirs and representatives of
Rossin and the successors and assigns of the Companies. CTC and
DI shall each require any successor (whether direct or indirect,
by purchase, merger, reorganization, consolidation, acquisition
of property or stock, liquidation, or otherwise) to all or a
significant portion of their respective assets, by agreement in
form and substance satisfactory to Rossin, expressly to assume
and agree to perform this Agreement in the same manner and to the
same extent that CTC or DI, as the case may be, would be required
to perform this Agreement if no such succession had taken place.
Regardless whether such agreement is executed, this Agreement
shall be binding upon any successor of CTC or DI in accordance
with the operation of law and such successor shall be deemed
"CTC" or "DI", as the case may be, for purposes of this
Agreement.
11. MISCELLANEOUS PROVISIONS.
------------------------
(a) This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania without regard to its choice of law doctrine.
(b) This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an
original, but which together shall constitute one and the same
instrument.
<PAGE>
(c) This Agreement constitutes the entire agreement
with respect to the subject matter hereof between the parties hereto
and replaces and supersedes as of the date hereof and all prior oral
or written agreements and understandings between the parties hereto.
This Agreement may be modified only by an agreement in writing executed
by the Companies and Rossin.
[Remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
CARPENTER TECHNOLOGY CORPORATION
By:_______________________________
Title:
DYNAMET INCORPORATED
By:_______________________________
Title:
By:_______________________________
Peter C. Rossin
<PAGE>
CONSULTING AND NON-COMPETITION AGREEMENT
----------------------------------------
CONSULTING AND NON-COMPETITION AGREEMENT ("Agreement")
dated February __, 1997 by and among CARPENTER TECHNOLOGY
CORPORATION, a Delaware corporation ("CTC"), DYNAMET
INCORPORATED, a Delaware corporation formerly known as "DI
Acquisition Corporation" ("DI") and PETER N. STEPHANS, formerly a
principal shareholder ("Stephans") of Dynamet Incorporated, a
Pennsylvania corporation ("Old DI"). CTC and DI are hereinafter
sometimes referred to collectively as the "Companies."
The Companies and Stephans are parties to an Agreement
and Plan of Merger dated January 6, 1997 (the "Merger
Agreement"), which provides for the merger on the date hereof of
Old DI with and into DI. It is a condition to the obligations of
the parties to the Merger Agreement that this Consulting and
Non-Competition Agreement be executed and delivered by the
parties hereto, as an undertaking ancillary to the Merger
Agreement.
In consideration of the mutual covenants contained
herein, and INTENDING TO BE LEGALLY BOUND HEREBY, the parties
hereto agree as follows:
I. SERVICES. During the Consulting Term, Stephans will
--------
diligently provide consulting services to the Companies on such
projects as may be designated by the Chief Executive Officer of
CTC and as are reasonable and appropriate in light of Stephans'
former role as President of Old DI ("Services"). During the
Consulting Term, Stephans shall make himself available to perform
Services on such reasonable basis as may from time to time be
agreed with CTC. The Companies will provide such office and
secretarial support as Stephans may reasonably require in his
performance of Services.
1. CONSULTING TERM. The term of this Agreement
---------------
during which Stephans will provide Services (the "Consulting
Term") shall begin on March 1, 1997 and shall continue for a
period of six months, unless sooner terminated as hereinafter
provided or extended by mutual agreement.
2. PAYMENTS. In consideration of the covenants and
--------
undertakings in Sections 1, 7 and 8 hereof, Stephans has received
a cash payment in the amount of $3,700,000 contemporaneously with
the execution and delivery of this Agreement and will receive
additional monthly payments of $135,416.67 throughout the first
four years of the Non-Compete Term, payable on the last day of
each such month.
<PAGE>
3. EXPENSES. CTC or DI shall pay or reimburse
--------
Stephans for any expenses reasonably incurred by him in
furtherance of Services rendered hereunder, including, without
limitation, expenses for travel (including automobile operating
expenses, meals, hotel accommodations and the like), upon
submission by him of vouchers or itemized lists thereof prepared
in compliance with such rules and policies relating thereto as
CTC may from time to time adopt generally with respect to its
executives and consultants and as may be required in order to
permit such payments as proper deductions to the Companies under
the Internal Revenue Code and the rules and regulations adopted
pursuant thereto now or hereafter in effect.
4. ACCELERATED TERMINATION. The Consulting Term
-----------------------
shall automatically terminate upon the death of Stephans or the
date upon which CTC reasonably determines that the state of
Stephans's health no longer permits Stephans to fulfill his
responsibilities hereunder, but such termination shall have no
effect on the obligation of the Companies to continue to make the
payments contemplated by Section 3 hereof.
5. RELATIONSHIP. Stephans will act hereunder as an
------------
independent contractor with no entitlement to any rights or
benefits as an employee of the Companies.
6. CONFIDENTIAL INFORMATION. Stephans acknowledges
------------------------
that by reason of his relationship with and service to Old DI and
his Services to the Companies, Stephans has had and will have
access to confidential information relating to operations and
technology and know-how which have been developed by Old DI and
may be developed in the future by the Companies, including,
without limitation, information and knowledge pertaining to
products and their design and manufacture, methods of operation,
sales and profit data, customer and supplier lists and
relationships between Old DI and its customers, suppliers and
others who have business dealings with it, other information not
readily available to the public, and plans for future
developments relating thereto. In recognition of the foregoing,
Stephans will maintain the confidentiality of all such
information and other matters of DI (as the successor to Old DI)
and CTC known to Stephans which are not otherwise in the public
domain and will not disclose any such information to any person
outside the respective organizations of DI and CTC, wherever
located, during the term of this Agreement except as required by
law or with CTC's prior written authorization and consent.
<PAGE>
7. COVENANT NOT TO COMPETE. During the Non-Compete
-----------------------
Term, Stephans shall not, unless acting with the prior written
consent of CTC, directly or indirectly (i) own, manage, operate,
finance, join, control or participate in the ownership,
management, operation, financing or control of, or be associated
as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with, or use or permit
his name to be used in connection with, any profit or
not-for-profit business or enterprise which at any time during
such period designs, manufactures, assembles, sells, distributes
or provides products (or related services) in competition with
those designed, manufactured, assembled, sold, distributed or
provided, or under active development, by Old DI (including all
future developments in and improvements on such products and
services), other than products (or related services) designed,
manufactured, assembled, sold, distributed or provided, or under
active development by the Forged Products Division of Old DI
(including all future developments in and improvements on such
products and services), immediately prior to the effective time
of the merger contemplated by the Merger Agreement in any part of
the world or (ii) offer or provide employment to, interfere with
or attempt to entice away from either of the Companies, either on
a full-time or part-time or consulting basis, any person who then
currently is, or who within one year prior thereto had been,
employed by DI, Old DI or CTC (other than employees of the Forged
Products Division of Old DI); provided, however, that this
-------- -------
provision shall not be construed to prohibit the ownership by
Stephans of not more than 2% of any class of securities of any
corporation which is engaged in any of the foregoing businesses
that has a class of securities registered pursuant to the
Securities Exchange Act of 1934. If Stephans's spouse engages in
any of the restricted activities set forth in the preceding
sentence, Stephans shall be deemed to have indirectly engaged in
such activities in violation of this covenant.
8. REMEDIES. Stephans acknowledges that a breach of
--------
the provisions of Section 7 or Section 8 will cause irreparable
damage to the Companies, the exact amount of which will be
difficult or impossible to ascertain, and that Companies'
remedies at law for any such breach will be inadequate.
Accordingly, upon a breach of the covenants and agreements
contained in Section 7 or Section 8, the Companies shall be
entitled to injunctive or other equitable relief, without posting
bond or other security. Stephans shall be liable for any
monetary damages awarded by a court of competent jurisdiction to
either of the Companies as the result of any breach or violation
of the provisions of this Agreement, such liability to be borne
in accordance with the judgment of such court.
9. NON-COMPETE TERM. The term of this Agreement with
----------------
respect to which the covenants in Sections 7 and 8 shall remain
in effect (the "Non-Compete Term") shall begin on the date hereof
and shall extend for five years thereafter, ending on the fifth
anniversary of such date.
<PAGE>
10. NOTICES. Any notice, request, demand, waiver,
-------
consent, approval or other communication which is required or
permitted to be given to any party hereunder shall be in writing
and shall be deemed given only if delivered to the party
personally or sent to the party by overnight courier or facsimile
transmission or by registered or certified mail (return receipt
requested) with postage and registration or certification fees
thereon prepaid, addressed to the party at the address set forth
below:
(a) If to DI or CTC, to:
Carpenter Technology Corporation
101 West Bern Street
P. O. Box 14662
Reading, PA 19612-4662
Attention: John R. Welty,
Vice President & General
Counsel
Fax Number: 610-208-3068
(b) If to Stephans, to:
Mr. Peter N. Stephans
601 Trotwood Circle
Pittsburgh, PA 15241
or to such other person or address as either party shall furnish
to the other party in writing. All notices required or permitted
hereunder shall be deemed duly given and received on the second
day next succeeding the date of mailing if sent by certified or
registered mail and on the next day if delivered by overnight
courier.
11. SEVERABILITY. If any term or provision of this
------------
Agreement or the application thereof to any person or
circumstance shall, to any extent, be held invalid or
unenforceable by a court of competent jurisdiction, the remainder
of this Agreement or the application of any such term or
provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected
thereby, and each term and provision of this Agreement shall be
valid and enforceable to the fullest extent permitted by law. If
any of the provisions contained in this Agreement shall for any
reason be held to be excessively broad as to duration, scope,
activity or subject, it shall be construed by limiting and
reducing it, so as to be valid and enforceable to the extent
compatible with the applicable law or the determination by a
court of competent jurisdiction.
<PAGE>
12. UNCONDITIONAL OBLIGATIONS. This Agreement
-------------------------
establishes and vests in Stephans a contractual right to the
benefits to which he is entitled hereunder. Except in the event
of a material breach by Stephans of the covenants and
undertakings in Sections 7 and 8 hereof, the Companies'
obligations under this Agreement shall be absolute and
unconditional, and shall not be affected by any circumstances,
including, without limitation, any offset, counterclaim,
recoupment, defense, or other right which the Companies or their
affiliates may have against Stephans or any other party. Each
and every payment made hereunder by the Companies shall be final,
and the Companies shall not seek to recover all or any part of
such payment from Stephans or from whomsoever may be entitled
thereto, for any reasons whatsoever.
13. JOINT AND SEVERAL OBLIGATIONS. Notwithstanding any
-----------------------------
provision of this Agreement to the contrary, the Companies shall
be jointly and severally liable to Stephans and his heirs or
estate for all payment obligations under this Agreement.
14. BINDING EFFECT. This Agreement shall be binding
--------------
upon and inure to the benefit of the heirs and representatives of
Stephans and the successors and assigns of the Companies. CTC
and DI shall each require any successor (whether direct or
indirect, by purchase, merger, reorganization, consolidation,
acquisition of property or stock, liquidation, or otherwise) to
all or a significant portion of their respective assets, by
agreement in form and substance satisfactory to Stephans,
expressly to assume and agree to perform this Agreement in the
same manner and to the same extent that CTC or DI, as the case
may be, would be required to perform this Agreement if no such
succession had taken place. Regardless whether such agreement is
executed, this Agreement shall be binding upon any successor of
CTC or DI in accordance with the operation of law and such
successor shall be deemed "CTC" or "DI", as the case may be, for
purposes of this Agreement.
15. MISCELLANEOUS PROVISIONS.
------------------------
(a) This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania without regard to its choice of law doctrine.
(b) This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an
original, but which together shall constitute one and the same
instrument.
(c) This Agreement constitutes the entire
agreement with respect to the subject matter hereof between the
parties hereto and replaces and supersedes as of the date hereof
and all prior oral or written agreements and understandings
between the parties hereto. This Agreement may be modified only
by an agreement in writing executed by the Companies and
Stephans.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
CARPENTER TECHNOLOGY CORPORATION
By:_____________________________
Title:
DYNAMET INCORPORATED
By:_____________________________
Title:
________________________________
Peter N. Stephans
<PAGE>
OPTION AGREEMENT
THIS OPTION AGREEMENT ("Option Agreement") is made this
28th day of February, 1997 by and between DYNAMET INCORPORATED, a
Delaware corporation ("New Dynamet"), and PETER N. STEPHANS, an
individual resident of Pennsylvania ("Buyer").
WITNESSETH:
WHEREAS, New Dynamet is the surviving corporation of
the merger of Dynamet Incorporated, a Pennsylvania corporation,
into New Dynamet, a wholly-owned subsidiary of Carpenter
Technology Corporation; and
WHEREAS, New Dynamet owns certain assets related to its
Forged Products Division and all the outstanding preferred stock
of Trigon Incorporated (formerly known as Stelkast Incorporated)
(together, the "Assets"); and
WHEREAS, New Dynamet desires to acquire an option to
sell the Assets to Buyer, and Buyer is willing to grant such an
option to New Dynamet, on the terms and conditions set forth
herein; and
WHEREAS, Buyer desires to acquire an option to purchase
the Assets from New Dynamet, and New Dynamet is willing to grant
such an option to Buyer, on the terms and conditions set forth
herein.
NOW, THEREFORE, the parties hereto, for good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the parties, and intending to be legally
bound hereby, agree as follows:
1. Buyer hereby grants to New Dynamet an option ("New
Dynamet's Option") for sixty (60) days beginning on the date
hereof (the "Option Period") to sell the Assets to Buyer, in
connection with which Buyer will assume certain liabilities
associated with the Assets ("Assumed Liabilities"), and New
Dynamet hereby grants to Buyer an exclusive option ("Buyer's
Option") for the Option Period to purchase the Assets and assume
the Assumed Liabilities.
2. New Dynamet shall exercise New Dynamet's Option by
giving Buyer written notice thereof. Such notice shall be deemed
to have been duly given if (i) personally delivered, (ii) sent by
facsimile transmission (with transmission confirmed) or (iii)
sent by overnight courier (with delivery confirmed), and shall be
addressed to Peter N. Stephans, 601 Trotwood Circle, Pittsburgh,
PA 15241, telecopy number: (412) 831-2309.
<PAGE>
3. Buyer shall exercise Buyer's Option by giving New
Dynamet written notice thereof. Such notice shall be deemed to
have been duly given if (i) personally delivered, (ii) sent by
facsimile transmission (with transmission confirmed) or
(iii) sent by overnight courier (with delivery confirmed), and
shall be addressed or delivered as follows: to New Dynamet at
the offices of Kirkpatrick & Lockhart LLP, 1500 Oliver Building,
Pittsburgh, PA 15222 if delivered today and otherwise at 195
Museum Road, Washington, PA 15301, Attention: Robert J. Dickson,
Senior Vice President, Chief Financial Officer and Treasurer with
a copy to Carpenter Technology Corporation, 101 W. Bern Street,
Reading, PA 19612-4662, Attn: John R. Welty, Vice President,
General Counsel and Secretary, telecopy number: (610) 208-3068.
4. If Buyer exercises Buyer's Option on the date of
this Option Agreement, the date for the closing of the purchase
of the Assets and assumption of the Assumed Liabilities shall be
this day. In all other cases, if New Dynamet or Buyer exercises
its respective Option, Buyer shall select a date for the closing
of the purchase of the Assets and assumption of the Assumed
Liabilities and shall give notice of such date to New Dynamet at
195 Museum Road, Washington, PA 15301, Attention: Robert J.
Dickson, Senior Vice President, Chief Financial Officer and
Treasurer. If such date is not the date of this Option
Agreement, such date shall be not less than two nor more than
fifteen days after the date that notice of exercise of the
applicable Option is delivered to Buyer or New Dynamet. At any
such closing, the Assets shall be transferred in accordance with
the terms of the asset purchase agreement in the form attached
hereto as Annex 1 (the "Asset Purchase Agreement"). Upon
exercise by Buyer or New Dynamet of its respective Option, the
other Option provided for in this Option Agreement shall
terminate.
5. During the Option Period, New Dynamet will give to
Buyer and Buyer's agents, representatives and consultants full
access, at all reasonable times and upon reasonable notice to New
Dynamet, to the Assets and to all of New Dynamet's records
relating to the Assets.
6. (a) This Option Agreement, the Annex attached
hereto and all schedules, exhibits and documents referenced
therein represent the entire agreement between the parties hereto
with respect to the subject matter hereof and may not be modified
except in a writing signed by both parties.
(b) This Option Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of
Pennsylvania without regard to its conflicts of laws doctrine.
<PAGE>
(c) The right to acquire the Assets in accordance
with the Asset Purchase Agreement may be assigned by Buyer to any
entity in which Buyer has an ownership interest.
(d) This Option Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and assigns.
(e) This Option Agreement may be executed in two
counterparts, each of which shall be deemed to be an original but
both of which together shall be deemed to be one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this
Option Agreement as of the date first set forth above.
Dynamet Incorporated
By:________________________________
Title:_____________________________
___________________________________
Peter N. Stephans
<PAGE>
ANNEX 1
Asset Purchase Agreement (this "Agreement"),
dated as of February 28, 1997, by and between
Dynamet Incorporated, a Delaware corporation
("Seller"), and Trigon Incorporated, a
Pennsylvania corporation formerly known as
Stelkast Incorporated ("Buyer").
Seller desires to sell and assign to Buyer, and Buyer
desires to purchase and assume from Seller, all of Seller's
assets and certain of Seller's liabilities relating to Seller's
Forged Products Division and all of the preferred stock of Buyer
owned by Seller on the terms and subject to the conditions set
forth below. In consideration of the representations,
warranties, covenants and agreements contained herein, Seller and
Buyer, each intending to be legally bound hereby, agree as set
forth below:
ARTICLE I
DEFINITIONS; CONSTRUCTION
-------------------------
1.01. Definitions. As used in this Agreement, the
-----------
following terms have the meanings specified in this Section:
"Affiliate" means, with respect to a specified Person, any
other Person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common
control with, such specified Person.
"Business" means the business of the Forged Products
Division conducted by Seller at 124 Hidden Valley Road, McMurray,
Pennsylvania 15317.
"Code" means the Internal Revenue Code of 1986, as amended,
and the applicable rulings and regulations thereunder.
"Encumbrance" means any mortgage, pledge, security interest,
encumbrance, easement, lien, encroachment or claim of any kind or
nature whatsoever or any item similar or related to the
foregoing.
"Governmental Body" means any court, government (federal,
state, local or foreign), commission, bureau, agency or other
regulatory, administrative or governmental authority or
instrumentality.
<PAGE>
"Law" means any applicable federal, state, municipal, local
or foreign statute, law, rule, regulation, judgment or order of
any kind or nature whatsoever, including any judgment or order of
any Governmental Body.
"Liabilities" with respect to any Person, means all debts,
liabilities and obligations of such Person of any nature or kind
whatsoever, whether or not due or to become due, accrued, fixed,
absolute, matured, determined, determinable or contingent,
whether or not incurred directly by such Person or by any
predecessor of such Person and whether or not arising out of any
act, omission, transaction, circumstance, sale of goods or
service or otherwise.
"Other Agreement" means each other agreement or document to
be executed and delivered in connection with the transactions
contemplated by this Agreement.
"Person" means and includes a natural person, a corporation,
an association, a partnership, a limited liability company, a
trust, a joint venture, an unincorporated organization, a
Governmental Body or any other legal entity.
"Transitional Services Agreement" means the agreement by and
between Seller and Buyer providing, inter alia, for certain
accounting, personnel, information systems, cash management and
administrative services to be provided for a period of six months
following the Closing Date by Seller to Buyer.
"Trigon Stock" means the 3,501 currently outstanding shares
of Class A 10% Cumulative Preferred Stock, par value $.01 per
share, of Buyer.
1.02. Construction. As used herein, unless the context
------------
otherwise requires: (i) references to "Article" or "Section" are
to an article or section hereof; (ii) all "Exhibits" and
"Schedules" referred to herein are to exhibits and schedules
attached hereto and are incorporated herein by reference and made
a part hereof; (iii) "include," "includes" and "including" are
deemed to be followed by "without limitation" whether or not they
are in fact followed by such words or words of like import; and
(iv) the headings of the various articles, sections and other
subdivisions hereof are for convenience of reference only and
shall not modify, define or limit any of the terms or provisions
hereof.
<PAGE>
ARTICLE II
THE TRANSACTION
---------------
2.01. Sale and Purchase of Assets. At the closing under
---------------------------
this Agreement (the "Closing"), Seller shall sell and transfer to
Buyer, and Buyer shall purchase from Seller, (i) all of Seller's
right, title and interest in and to the properties, assets and
rights of Seller that are used in or are related to the conduct
of the Business, wherever such assets are located and whether
real, personal or mixed, tangible or intangible, and (ii) the
Trigon Stock (collectively, the "Purchased Assets"). Without
limiting the generality of the foregoing, the Purchased Assets
shall include the following assets owned by Seller and used in
the Business:
(a) all those certain lots and pieces of ground, together
with the buildings, structures and other improvements erected
thereon, and all easements, rights and privileges appurtenant to
any of the foregoing, owned by Seller and located in Peters
Township, McMurray, Pennsylvania ("Real Property"), as more
particularly described in Schedule 2.01(a);
(b) all of the inventory, personal property, machinery,
equipment, computers, vehicles, supplies, tools, furniture and
fixtures that are owned by Seller and used in the Business,
including those described in Schedule 2.01(b);
(c) all know-how, trade secrets, trademarks, trade names,
service marks, logos, licenses, patents, copyrights and
applications and registrations, if applicable, for any of the
foregoing ("Intellectual Property") owned by Seller and used in
the Business, including those described in Schedule 2.01(c);
(d) all rights of Seller under the purchase and sales
orders and contracts, license agreements, supply agreements,
labor contracts and other contracts and agreements to which
Seller is a party and that relate to the Business ("Contracts"),
including those listed in Schedule 2.01(d); and
(e) all of Seller's cash, trade and other notes and account
receivables (including accounts receivable from Buyer), advance
payments and prepaid items and expenses arising from the
Business.
<PAGE>
2.02. Retained Assets. Seller shall retain and the
---------------
Purchased Assets shall not include the following assets: (i) the
consideration to be delivered to Seller pursuant to this
Agreement, (ii) Seller's minute books, stock book and seal, (iii)
all claims, choices in action, causes of action and judgments in
respect of any Retained Liability, and (iv) all of the Seller's
assets, properties and rights related to businesses of Seller
other than the Business (collectively, the "Retained Assets").
2.03. Assumption of Liabilities. At the Closing, Buyer
-------------------------
shall, pursuant to an Assumption Agreement substantially in the
form of Exhibit 1 (the "Assumption Agreement"), assume and agree
to perform, pay or discharge, when due, to the extent not
theretofore performed, paid or discharged, (a) the Liabilities of
Seller listed in Schedule 2.03, (b) the Liabilities of Seller
specified pursuant to the express terms of the Contracts and
(c) any Liabilities occurring on or before February 28, 1997
relating to or arising from (i) any environmental condition on
the Real Property or any non-compliance with any existing
environmental statute, ordinance, regulation or other
governmental requirement, permit, license or registration
("Environmental Laws") in connection with the operation of the
Business or (ii) the generation, treatment, transportation,
storage, recycling, disposal or release by the Business of any
toxic, hazardous or polluting substance or waste, including
petroleum or radioactive materials, regulated under Environmental
Laws (collectively, the "Assumed Liabilities").
2.04. Retained Liabilities. Except for the Assumed
--------------------
Liabilities, Buyer does not hereby, and shall not, assume or in
any way undertake to pay, perform, satisfy or discharge any other
Liability of Seller (i) existing on the Closing Date or
(ii) arising out of any transactions entered into, or any state
of facts existing, prior to or on the Closing Date or
(iii) arising after the Closing Date with respect to any assets
other than the Purchased Assets (the "Retained Liabilities"), and
Seller shall pay and satisfy when due all Retained Liabilities.
2.05. Purchase Price. The aggregate purchase price for the
--------------
Purchased Assets shall be $2,600,000 and the assumption of the
Assumed Liabilities (the "Purchase Price"). At the Closing, the
Purchase Price shall be paid by Buyer to Seller as follows: (i)
$2,600,000 by cashier's check payable in next day funds or by
wire transfer of immediately available funds if prior to the date
of this Agreement Seller shall have delivered to Buyer
appropriate wire transfer instructions; and (ii) by Buyer's
execution and delivery of the Assumption Agreement.
<PAGE>
2.06. Closing. The consummation of the purchase and sale
-------
of the Purchased Assets, the assumption of the Assumed
Liabilities, and the consummation of the other transactions
contemplated hereby shall take place at 11:30 o'clock A.M., local
time, on February 28, 1997 at the offices of Kirkpatrick &
Lockhart LLP, 1500 Oliver Building, Pittsburgh, Pennsylvania, or
at such other time or place or on such other date as the parties
agree (the "Closing Date").
2.07. Allocation of Purchase Price. The Purchase Price
----------------------------
shall be allocated among the Purchased Assets in accordance with
the appraisal to be provided by Willamette Management Associates,
Inc. Such appraisal shall be delivered to Buyer and Seller
within sixty (60) days of the Closing Date. Buyer and Seller
shall report the federal, state and local income and other tax
consequences of the purchase and sale contemplated hereby in a
manner consistent with such allocation and appraisal and shall
not take any position inconsistent therewith upon examination of
any tax return, in any refund claim, in any litigation or
otherwise.
2.08. Passage of Title. Title to all Purchased Assets
----------------
shall pass from Seller to Buyer at the Closing, subject to the
terms and conditions of this Agreement. Buyer assumes no risk of
loss to the Purchased Assets prior to the Closing.
2.09. Certain Consents. Nothing in this Agreement shall be
----------------
construed as an attempt to assign any Contract, permit, franchise
or claim included in the Purchased Assets which is by its terms
or in law nonassignable without the consent of the other party or
parties thereto, unless such consent shall have been given, or as
to which all the remedies for the enforcement thereof enjoyed by
Seller would not, as a matter of law, pass to Buyer as an
incident of the assignment provided for by this Agreement. In
order, however, to provide Buyer with the full realization and
value of every Contract, permit, franchise and claim of the
character described in the immediately preceding sentence, Seller
after the Closing shall, at the request and under the direction
of Buyer in the name of Seller or otherwise as Buyer shall
specify, take all reasonable action (including the appointment of
Buyer as attorney-in-fact for Seller) and do or cause to be done
all such things as shall in the opinion of Buyer or its counsel
be necessary or proper (i) to assure that the rights of Seller
under such Contracts, permits, franchises and claims shall be
preserved for the benefit of Buyer and (ii) to facilitate receipt
of the consideration to be received by Seller in and under every
such Contract, permit, franchise and claim, which consideration
shall be held for the benefit of, and shall be delivered to,
Buyer. Nothing in this Section shall in any way diminish
<PAGE>
Seller's obligation to obtain all consents and approvals and to
take all such other actions prior to or at the Closing as are
necessary to enable Seller to convey or assign valid title to all
the Purchased Assets to Buyer.
2.10. Pension Plans. At Buyer's election, Seller shall
-------------
transfer from its pension plans to one or more plans established
by Buyer the accrued benefits of transferring employees and an
amount of assets sufficient to comply with the requirements of
Section 414(l) of the Code.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
As an inducement to Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, Seller
represents and warrants to Buyer as follows:
3.01. Organization. Seller is a corporation duly
------------
organized, validly existing and in good standing under the laws
of the State of Delaware, and has the corporate power and
authority to own or lease its properties, carry on the Business
as now conducted, enter into this Agreement and the Other
Agreements to which it is or is to become a party and perform its
obligations hereunder and thereunder.
3.02. Authorization; Enforceability. This Agreement and
-----------------------------
each Other Agreement to which Seller is or is to become a party
have been or will be duly executed and delivered by Seller and
constitute or will constitute the legal, valid and binding
obligations of Seller, enforceable against it in accordance with
their respective terms. All actions contemplated by this
Agreement have been duly and validly authorized by all necessary
proceedings by Seller.
3.03. Encumbrances on Purchased Assets. Seller has not
--------------------------------
created or permitted to exist any Encumbrances upon the Purchased
Assets except those existing prior to the effective time of the
merger of Dynamet Incorporated, a Pennsylvania corporation, with
and into Seller.
3.04. Finders' Fees. Neither Seller nor any of its
-------------
officers, directors or employees has employed any broker or
finder or incurred any Liability for any brokerage fee,
commission or finders' fee in connection with any of the
transactions contemplated hereby or by any Other Agreement.
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
As an inducement to Seller to enter into this Agreement and
consummate the transactions contemplated hereby, Buyer represents
and warrants to Seller as follows:
4.01. Organization. Buyer is a corporation duly organized,
------------
validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, and has the corporate power and
authority to enter into this Agreement and the Other Agreements
to which it is or is to become a party and perform its
obligations hereunder and thereunder.
4.02. Authorization; Enforceability. This Agreement and
-----------------------------
each Other Agreement to which Buyer is or is to become a party
have been or will be duly executed and delivered by Buyer and
constitute or will constitute the legal, valid and binding
obligations of Buyer, enforceable against it in accordance with
their respective terms. All actions contemplated by this
Agreement have been duly and validly authorized by all necessary
proceedings by Buyer.
4.03. Finders' Fees. Neither Buyer nor any of its
-------------
officers, directors or employees has employed any broker or
finder or incurred any Liability for any brokerage fee,
commission or finders' fee in connection with any of the
transactions contemplated hereby or by any Other Agreement.
ARTICLE V
DELIVERIES AT CLOSING
---------------------
5.01. Deliveries by Seller. Seller shall deliver or cause
--------------------
to be delivered to Buyer at the Closing:
(i) A general warranty deed or deeds to the Real
Property in a form acceptable to Buyer, duly executed and
acknowledged by Seller.
(ii) A general warranty bill of sale and instrument of
assignment to the other Purchased Assets in a form acceptable to
Buyer, duly executed by Seller.
<PAGE>
(iii) Assignments of all transferable or assignable
Contracts, Intellectual Property and licenses, permits and
warranties relating to the Purchased Assets, duly executed by
Seller and in forms acceptable to Buyer.
(iv) Certificates representing the Trigon Stock, which
certificates will be in negotiable form with stock powers duly
executed in blank and all requisite stock transfer stamps
attached.
(v) Title certificates to any motor vehicles included
in the Purchased Assets, duly executed by Seller (together with
any other transfer forms necessary to transfer title to such
vehicles).
(vi) Any other assignments or certificates necessary
or appropriate to legally and validly transfer title of any
Purchased Assets to Buyer, duly executed by Seller and in forms
acceptable to Buyer.
(vii) The Transitional Services Agreement.
(viii) A certificate of the Secretary of Seller
setting forth all resolutions of the Board of Directors of Seller
authorizing the execution and delivery of this Agreement and the
Other Agreements and the performance by Seller of the
transactions contemplated hereby and by the Other Agreements.
(ix) Such other documents as Buyer may reasonably
request.
5.02. Deliveries by Buyer. Buyer shall deliver or cause to
-------------------
be delivered to Seller at the Closing:
(i) A cashier's check or a wire transfer in accordance
with Section 2.05.
(ii) The Assumption Agreement.
(iii) A certificate of the Secretary of Buyer setting
forth all resolutions of the Board of Directors of Buyer
authorizing the execution and delivery of this Agreement and the
Other Agreements and the performance by Buyer of the transactions
contemplated hereby and by the Other Agreements.
(iv) Such other documents as Seller may reasonably request.
<PAGE>
ARTICLE VI
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
--------------------------------------------
6.01. Survival of Representations. The representations and
---------------------------
warranties made in this Agreement or pursuant hereto shall
survive the Closing.
6.02. Indemnification by Seller. Seller shall indemnify,
-------------------------
defend, save and hold Buyer and its officers, directors,
employees, agents and other Affiliates (collectively, "Buyer
Indemnitees") harmless from and against any and all demands,
claims, allegations, assertions, actions or causes of action,
assessments, losses, damages, deficiencies, Liabilities, costs
and expenses (including reasonable legal fees, interest,
penalties and all reasonable amounts paid in investigation,
defense or settlement of any of the foregoing, whether or not any
such demands, claims, allegations, etc., of third parties are
meritorious) (collectively, "Buyer Damages") asserted against,
imposed upon, resulting to, required to be paid by, or incurred
by, any Buyer Indemnitees, directly or indirectly, in connection
with, arising out of, or resulting from, (i) any Retained
Liability or (ii) any misrepresentation or breach of warranty by
Seller.
6.03. Indemnification by Buyer. Buyer shall indemnify,
------------------------
defend, save and hold Seller and its officers, directors,
employees, agents and other Affiliates (collectively, "Seller
Indemnitees") harmless from and against any and all demands,
claims, allegations, assertions, actions or causes of action,
assessments, losses, damages, deficiencies, Liabilities, costs
and expenses (including reasonable legal fees, interest,
penalties and all reasonable amounts paid in investigation,
defense or settlement of any of the foregoing, whether or not any
such demands, claims, allegations, etc., of third parties are
meritorious) (collectively, "Seller Damages") asserted against,
imposed upon, resulting to, required to be paid by, or incurred
by, any Seller Indemnitees, directly or indirectly, in connection
with, arising out of, or resulting from, (i) any Assumed
Liability, (ii) Buyer's operation of the Business after the
Closing Date or (iii) any misrepresentation or breach of warranty
by Seller.
<PAGE>
6.04. Notice of Claims. If any Buyer Indemnitee or Seller
----------------
Indemnitee (an "Indemnified Party") believes that it has suffered
or incurred or will suffer or incur any Buyer Damages or Seller
Damages, as the case may be, ("Damages") for which it is entitled
to indemnification under this Article VI, such Indemnified Party
shall so notify the party or parties from whom indemnification is
being claimed (the "Indemnifying Party") with reasonable
promptness and reasonable particularity in light of the
circumstances then existing. If any action at law or suit in
equity is instituted by or against a third party with respect to
which any Indemnified Party intends to claim any Damages, such
Indemnified Party shall promptly notify the Indemnifying Party of
such action or suit. The failure of an Indemnified Party to give
any notice required by this Section shall not affect any of such
party's rights under this Article VI or otherwise except and to
the extent that such failure is actually prejudicial to the
rights or obligations of the Indemnifying Party.
6.05. Third Party Claims. The Indemnified Party shall have
------------------
the right to conduct and control, through counsel of its
choosing, the defense of any third party claim, action or suit
with respect to which it intends to claim any Damages, and the
Indemnified Party may compromise or settle the same; provided,
that the Indemnified Party shall give the Indemnifying Party
advance notice of any proposed compromise or settlement. The
Indemnified Party shall permit the Indemnifying Party to
participate in the defense of any such claim, action or suit
through counsel chosen by the Indemnifying Party; provided, that
the fees and expenses of such counsel shall be borne by the
Indemnifying Party. If the Indemnified Party permits the
Indemnifying Party to undertake control of the conduct and
settlement of any such claim, action or suit, (i) the
Indemnifying Party shall not thereby permit to exist any
Encumbrance upon any asset of the Indemnified Party; (ii) the
Indemnifying Party shall not consent to any settlement that does
not include as an unconditional term thereof the giving of a
complete release from liability with respect to such claim,
action or suit to the Indemnified Party; (iii) the Indemnifying
Party shall permit the Indemnified Party to participate in such
conduct or settlement through counsel chosen by the Indemnified
Party; and (iv) the Indemnifying Party shall promptly reimburse
the Indemnified Party for the full amount of any Damages,
including fees and expenses of counsel for the Indemnified Party
incurred prior to the assumption of the control of such claim,
action or suit by the Indemnifying Party.
<PAGE>
ARTICLE VII
MISCELLANEOUS
--------------
7.01. Costs and Expenses. Buyer and Seller shall each
------------------
pay its respective expenses incurred in connection with this
Agreement and the transactions contemplated hereby, including all
accounting, legal and appraisal fees and settlement charges. All
transfer taxes incurred as a result of the transfer of the
Purchased Assets shall be paid by Buyer, other than real estate
transfer taxes which shall be borne equally by Buyer and Seller.
7.02. Proration of Expenses. All accrued expenses
---------------------
associated with the Real Property, such as electricity, gas, water,
sewer, telephone, property taxes, security services and similar
items, shall be prorated between Buyer and Seller as of the Closing
Date. Buyer and Seller shall settle such amounts on March 14, 1997.
7.03. Further Assurances. Seller shall, at any time and
------------------
from time to time on and after the Closing Date, upon request by
Buyer and without further consideration, take or cause to be
taken such actions and execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered, such instruments,
documents, transfers, conveyances and assurances as may be
required or desirable for the better conveying, transferring,
assigning, delivering, assuring and confirming the Purchased
Assets to Buyer.
7.04. Notices. All notices and other communications given
-------
or made pursuant to this Agreement shall be in writing and shall
be deemed to have been duly given or made (i) on the second
business day after the date of mailing, if delivered by
registered or certified mail, postage prepaid, return receipt
requested, (ii) upon delivery, if sent by hand delivery,
(iii) upon delivery, if sent by prepaid courier, with a record of
receipt, or (iv) the next day after the date of dispatch, if sent
by cable, telegram, facsimile or telecopy (with a copy
simultaneously sent by registered or certified mail, postage
prepaid, return receipt requested), to the parties at the
following addresses:
<PAGE>
(a) if to Buyer, to:
Trigon Incorporated
800 Vinial Street
Suite B-210
Pittsburgh, PA 15212
Telecopy: (412) 322-8577
with a required copy to:
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, PA 15222
Telecopy: (412) 355-6501
Attention: Charles J. Queenan, Jr.
(b) if to Seller, to:
Dynamet Incorporated
195 Museum Road
Washington, PA 15301
Telecopy: (412) 229-4131
Attention: Robert J. Dickson
Senior Vice President, Chief Financial
Officer and Treasurer
with required copies to:
Carpenter Technology Corporation
101 W. Bern Street
Reading, PA 19612-4662
Telecopy: (610) 208-3068
Attention: John R. Welty
Vice President, General Counsel and Secretary
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103-2793
Telecopy: (215) 994-2222
Attention: Herbert F. Goodrich, Jr.
Either party hereto may change the address to which notice to it,
or copies thereof, shall be addressed, by giving notice thereof
to the other party hereto in conformity with the foregoing.
<PAGE>
7.05. Assignment; Governing Law. This Agreement and all
-------------------------
the rights and obligations hereunder shall bind and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement and the rights, interests and
obligations hereunder may not be assigned by either party hereto
without the prior written consent of the other party hereto.
This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania without regard
to its conflicts of laws doctrine.
7.06. Amendment and Waiver; Cumulative Effect. To be
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effective, any amendment of or waiver under this Agreement must
be in writing and be signed by the party against whom enforcement
of the same is sought. Neither the failure of either party
hereto to exercise any right, power or remedy provided under this
Agreement or to insist upon compliance by the other party with
its obligations hereunder, nor any custom or practice of the
parties at variance with the terms hereof, shall constitute a
waiver by either party of its right to exercise any such right,
power or remedy or to demand such compliance. The rights and
remedies of the parties hereto are cumulative and not exclusive
of the rights and remedies that they otherwise might have now or
hereafter, at law, in equity, by statute or otherwise.
7.07. Entire Agreement; No Third Party Beneficiaries. This
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Agreement and the Schedules and Exhibits set forth all of the
promises, covenants, agreements, conditions and undertakings
between the parties hereto with respect to the subject matter
hereof, and supersede all prior or contemporaneous agreements and
understandings, negotiations, inducements or conditions, express
or implied, oral or written. This Agreement is not intended to
confer upon any Person other than the parties hereto any rights
or remedies hereunder, except the provisions of Article VI.
7.08. Severability. If any term or other provision of this
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Agreement is held by a court of competent jurisdiction to be
invalid, illegal or incapable of being enforced under any rule of
law in any particular respect or under any particular
circumstances, such term or provision shall nevertheless remain
in full force and effect in all other respects and under all
other circumstances, and all other terms, conditions and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any
manner materially adverse to either party. Upon a determination
<PAGE>
that any such term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate
in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the fullest extent possible.
7.9. Counterparts. This Agreement may be executed in two
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counterparts, each of which shall be deemed to be an original but
both of which together shall be deemed to be one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
DYNAMET INCORPORATED
By:___________________________
Title:________________________
TRIGON INCORPORATED
By:___________________________
Title:________________________
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