FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: February 3, 1998
(Date of earliest event reported)
LANXIDE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-16293 51-0270253
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
1300 MARROWS ROAD
P.O. BOX 6077
NEWARK, DELAWARE 19714-6077
(302) 456-6200
(Address including zip code, and telephone number including
area code of registrant's principal executive offices)
Item 5. Other Events.
Termination of Employees
On February 3, 1998, Lanxide Corporation, a Delaware
corporation ("Lanxide"), terminated all of its employees, as well as
those of three of its subsidiaries located at Lanxide's Newark, Delaware
offices, as a result of its inability to secure adequate funding to
continue its operations.
Assignment of Option; Transfer of Subsidiaries
As previously disclosed, in February, 1993, E. I. du Pont de
Nemours and Company ("DuPont") entered into an agreement with PNC Bank,
Delaware (f.k.a., Bank of Delaware) (the "Bank"), pursuant to which
DuPont agreed to guaranty Lanxide's obligations to the Bank under a
Revolving Credit and Term Note, dated February 24, 1993, in the original
principal amount of $5,970,000 (as amended, the "Note"). In consideration
for DuPont's guaranty, Lanxide and DuPont entered into a Loan Guarantee
Letter Agreement, dated December 15, 1992 (as amended, the "Guarantee
Agreement"), pursuant to which Lanxide granted to DuPont, as collateral,
an option (the "Option") to acquire all of the outstanding common equity
securities of Lanxide Armor Products ("LAP") and Lanxide Electronic
Components ("LEC"). DuPont's exercise of the Option would release Lanxide
from all obligations and liabilities under the Note. Under the terms of
the Guarantee Agreement, the Option would become exercisable by DuPont
upon Lanxide's notification to DuPont of Lanxide's inability to meet its
obligations under the Note.
In a letter agreement entered into between Lanxide and
DuPont, dated February 6, 1998 (the "Letter Agreement"), Lanxide notified
DuPont that Lanxide would not be able to meet its obligations under the
Note. In the Letter Agreement, Lanxide consented to DuPont's assignment
of its right to exercise the Option to DHB Capital Group, Inc. ("DHB")
and DuPont agreed to repay the Bank all amounts owed by Lanxide to the
Bank under the Note.
Concurrent with the assignment of the Option by DuPont to
DHB, Lanxide entered into a Transfer Agreement, dated as of February 6,
1998 (the "Transfer Agreement"), by and among Lanxide, DHB, LAP, LEC and
Lanxide Technology Company, L.P. ("LTC"), pursuant to which DHB elected
to exercise the Option and, accordingly, Lanxide transferred to DHB all
of the outstanding common equity securities of LEC and LAP. Pursuant to
the Transfer Agreement, DHB has agreed to use its best efforts to cause
LEC and LAP to hire, at a minimum, all of the persons employed as of
February 2, 1998, by LEC and LAP, respectively. Pursuant to the Transfer
Agreement, DHB further agreed to transfer to LTC certain assets of LAP
set forth on a schedule attached to the Transfer Agreement (the "Asset
Sale") and (i) LTC and LEC have each agreed to amend the License
Agreement, dated as of July 25, 1995, between LTC and LEC and (ii) LTC
and LAP have each agreed to amend the License Agreement, dated as of
March 31, 1987, between LTC and LAP (f.k.a., Lanxide Products Company) to
provide for a 2% royalty to LTC of all products containing Lanxide
technology that are sold by LEC or LAP for five years and a 1% royalty
thereafter.
Lanxide announced the transactions contemplated by the
assignment of the Option by DuPont to DHB, the Letter Agreement and the
Transfer Agreement in a press release on February 9, 1998 (the "Press
Release"). The foregoing is qualified in its entirety by reference to the
full text of the Press Release, the Letter Agreement and the Transfer
Agreement, copies of which are attached as Exhibits hereto and
incorporated by reference herein.
Lanxide is considering alternatives to attempt to resolve its
financial situation.
Termination of Voting Agreement; Resignation of
Directors and Officers
As previously disclosed, on Lanxide's Current Report on Form
8-K dated July 3, 1997, Commodore Environmental Services, Inc., a
Delaware corporation ("COES"), assumed effective control of Lanxide
pursuant to a Voting Agreement, dated July 3, 1997, among Lanxide and
certain of its stockholders (the "Voting Agreement") which was executed
in connection with certain transactions contemplated by a Securities
Purchase Agreement, dated July 3, 1997, between Lanxide and COES (the
"Securities Purchase Agreement"). Pursuant to the Voting Agreement,
stockholders of Lanxide who owned 664,329 shares of common stock, par
value $.01 per share (the "Common Stock"), or 50.1% of the outstanding
Common Stock, granted proxies to the members of the Board of Directors of
COES (the "Proxyholders") to vote all shares of Common Stock held by each
such stockholder until December 31, 1998.
In accordance with the Securities Purchase Agreement, on July
7, 1997, the Board of Directors of Lanxide increased the number of
members on the Lanxide Board of Directors to seven and elected Messrs.
Michael Fullwood and William Toller to fill the newly created
directorships. In addition, the Board of Directors of Lanxide appointed
Mr. Toller to the position of Vice Chairman of Lanxide and Mr. Fullwood
to the position of Senior Vice President, Chief Financial and
Administrative Officer and General Counsel of Lanxide.
On February 3, 1998, COES terminated the Voting Agreement in
accordance with its terms and Messrs. Fullwood and Toller resigned from
their respective positions as directors and officers of Lanxide.
Reference is made to the description of the Voting Agreement and the
Securities Purchase Agreement, respectively, and copies of such
agreements which were filed previously with the Commission as Exhibits to
Lanxide's Current Report on Form 8-K dated July 3, 1997.
On February 6, 1998, Paul E. Hannesson, chairman of the Board
of Directors of Lanxide and COES, resigned from his position on the
Lanxide Board of Directors.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired:
Not applicable.
(b) Pro Forma financial information:
Not applicable.
(c) Exhibits:
10.1 Letter Agreement, dated as of February 6, 1998, by and
between, Lanxide Corporation and E. I. du Pont de Nemours
and Company.
10.2 Transfer Agreement, dated as of February 6, 1998, by
and among Lanxide Corporation, DHB Capital Group, Inc.,
Lanxide Armor Products, Inc., Lanxide Electronic
Components, Inc. and Lanxide Technology Company, L.P.
99.1 Press Release issued by Lanxide on February 4, 1998.
99.2 Press Release issued by Lanxide on February 9, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
LANXIDE CORPORATION
By /s/ Robert J. Ferris
------------------------
Robert J. Ferris
Secretary, Treasurer and
Vice President - Administration
Date: February 10, 1998
EXHIBIT INDEX
10.1 Letter Agreement, dated as of February 6, 1998, by and
between, Lanxide Corporation and E. I. du Pont de Nemours
and Company.
10.2 Transfer Agreement, dated as of February 6, 1998, by
and among Lanxide Corporation, DHB Capital Group, Inc.,
Lanxide Armor Products, Inc., Lanxide Electronic
Components, Inc. and Lanxide Technology Company, L.P.
99.1 Press Release issued by Lanxide on February 4, 1998.
99.2 Press Release issued by Lanxide on February 9, 1998.
EXHIBIT 10.1
[LETTERHEAD OF LANXIDE CORPORATION]
February 6, 1998
E.I. du Pont de Nemours and Company
DuPont Building
1007 Market Street
Wilmington, DE 19898
Attention: Mr. Robert Paonessa
Gentlemen:
This letter serves to notify you pursuant to the terms of the
Loan Guarantee Letter Agreement dated December 15, 1992 between E. I. du
Pont de Nemours and Company ("DuPont") and Lanxide Corporation
("Lanxide"), as amended (the "Letter Agreement"), that Lanxide does not
intend to meet its obligations under the Revolving Credit and Time Note
dated February 24, 1993 (as amended, the "Note"), executed by Lanxide in
favor of PNC Bank, Delaware (f/k/a/ Bank of Delaware) (the "Bank").
Lanxide understands that DuPont is assigning its right under the Letter
Agreement to DHB Capital Group, Inc. ("DHB") and Lanxide hereby consents
to such assignment.
This letter also serves to evidence the agreement between
DuPont and Lanxide that upon DuPont's receipt of a wire transfer in the
amount of $4,800,000 from DHB pursuant to the terms of the Assignment
Agreement dated as of the date hereof between DuPont and DHB (the
"Assignment Agreement"), DuPont: (i) shall wire transfer to the account
set forth in the letter from the Bank to Lanxide, dated February 4, 1998,
a copy of which is attached hereto (the "Payoff Letter"), immediately
available funds in an amount equal to $5,745,758.33, plus any additional
daily interest and late fees that are required to be paid pursuant to the
Payoff Letter in order for the Bank to be paid in full; and (ii) agrees
that Lanxide shall be released from any and all obligations and
liabilities to DuPont under the Letter Agreement.
This letter further serves to evidence the agreement between
DuPont and Lanxide that upon the payment by DuPont of the Payoff Payment,
Lanxide agrees to cancel its line of credit with the Bank.
If the foregoing correctly sets forth our understanding,
please sign the acknowledgment set forth below.
Sincerely,
LANXIDE CORPORATION
By: /s/ Marc S. Newkirk
----------------------------------
Marc S. Newkirk
President and Chief Executive
Officer
Acknowledged and Agreed
this 6th day of February, 1998
E.I. du Pont de Nemours and Company
By: /s/ E. Catherine Stump
--------------------------------
Name: E. Catherine Stump
Title: Global Finances Manager
EXHIBIT 10.2
TRANSFER AGREEMENT
TRANSFER AGREEMENT, dated as of February 6, 1998 by and among
Lanxide Corporation ("Lanxide"), DHB Capital Group, Inc. ("DHB"),
Lanxide Armor Products, Inc. ("LAP"), Lanxide Electronic Components,
Inc. ("LEC") and Lanxide Technology Company, L.P. ("LTC").
WHEREAS, pursuant to the terms of the Assignment Agreement
(the "Assignment Agreement"), dated as of February 6, 1998, by and
between DHB and E. I. du Pont de Nemours and Company ("DuPont"), DuPont
has assigned all of its right, title and interest under the Letter
Agreement (as defined in the Assignment Agreement) relating to Option 1
(as defined in the Assignment Agreement); and
WHEREAS, Lanxide, in connection with the execution of this
Agreement, is simultaneously notifying DuPont that it does not intend
to meet its obligations under the Note (as defined in the Assignment
Agreement).
NOW, THEREFORE, intending to be legally bound hereby, the
parties agree as follows:
1. Transfer of LEC and LAP.
(a) DHB hereby notifies Lanxide that it elects to
acquire all of the outstanding common equity securities of LEC and LAP
(the "Equity Securities") pursuant to Option 1.
(b) Lanxide hereby conveys, assigns, transfers and
delivers to DHB all of the Equity Securities (the "Equity Sale")
pursuant to Option 1.
(c) Notwithstanding the Equity Sale, Lanxide shall
retain custody, to the extent permitted by law, of (i) all information
covered by LAP's U.S. Government Facility Clearance until DHB obtains a
U.S. Government Facility Clearance covering such information and (ii)
all assets covered by LAP's Federal Firearms License until DHB obtains
a Federal Firearms License covering such assets.
(d) DHB hereby agrees to use its best efforts, and
Lanxide hereby agrees to assist DHB in connection therewith, to cause
LEC and LAP to hire, at a minimum, all of the persons employed as of
February 2, 1998, by LEC and LAP, respectively, upon substantially the
same wages that such persons were receiving from LEC and LAP as of
February 2, 1998 and consistent with current benefits provided by DHB
to its employees..
(e) DHB hereby agrees to the cancellation of the
outstanding shares of preferred stock of LEC that DuPont is
transferring to DHB pursuant to the Assignment Agreement and waives any
and all rights relating thereto.
(f) Lanxide hereby represents and warrants to DHB that:
(i) the Equity Securities constitute all of the issued and outstanding
common equity of LEC and LAP, other than certain options to acquire
securities of LEC held by employees of LEC representing no more than
10% of the common equity of LEC; (ii) accounts payable of LEC are not
greater than $506,000 and the accounts payable of LAP are not greater
than $320,000; (iii) all rent on real estate occupied by LEC and LAP at
Marrows Road has been paid through March 31; (iv) LAP rent at Forge
Road through March 31 will be paid by Lanxide; (v) the attached
Equipment List represents machinery and equipment owned or leased by
LEC and LAP and, to the extent necessary for operations, is in
satisfactory working condition; (vi) financial statements and other
documents provided to DHB by Lanxide in connection with the
transactions contemplated thereby, are to the best knowledge of
Lanxide, true and correct in all material respects or to be completed;
(vii) Lanxide is current on its real estate taxes; and (viii)
utilities, including telephone through the date hereof will be paid by
Lanxide from the proceeds of asset sales. Lanxide will use its best
efforts to ensure that telephone service will not be shut off pending
such payments. EXCEPT FOR THE FOREGOING REPRESENTATIONS AND
WARRANTIES, LANXIDE HAS NOT MADE AND DOES NOT HEREBY MAKE ANY EXPRESS
OR IMPLIED REPRESENTATIONS AND WARRANTIES OF ANY NATURE AND DHB
ACKNOWLEDGES AND AGREES THAT IT IS ACQUIRING LEC AND LAP PURSUANT TO
THE OPTION ON AN "AS IS WHERE IS" BASIS.
(g) DHB hereby releases Lanxide from any further
obligation or liability under the Guarantee Agreement.
2. Sale of LAP Equipment.
(a) DHB hereby sells, conveys, assigns, transfers and
delivers to LTC, and LTC hereby purchases and acquires from DHB, all of
the assets set forth on Schedule 1 hereto (the "Asset Sale").
(b) In consideration of the Asset Sale, upon the
execution of this Agreement, LTC shall immediately pay an aggregate
cash payment of $1.00 to DHB.
(c) Lanxide agrees to require any purchaser of the
assets set forth on Schedule 1 hereto from LTC to provide adequate
assurance that such purchaser will provide castable MMC Ingot to LEC on
a basis no less favorable than those made available to any other
customer of like quantity and quality of MMC Ingot.
3. License Agreement.
(a) LTC and LEC each agrees that the License Agreement,
dated as of July 25, 1995, between LTC and LEC is hereby amended in the
manner set forth in Schedule 2 hereto, effective as of the date hereof.
(b) LTC and LAP each agrees that the License Agreement
dated as of March 31, 1987, between LTC and LAP (f/k/a Lanxide Products
Company, Inc.) is hereby amended in the manner set forth in Schedule 3
hereto, effective as of the date hereof.
4. Miscellaneous.
(a) Notwithstanding anything to the contrary contained
in this Agreement, no party hereto shall have any obligation or
liability under this Agreement until DHB pays DuPont $4,800,000 in
accordance with Section 2(a) of the Assignment Agreement.
(b) All of the transactions contemplated by this
Agreement shall be deemed to have occurred simultaneously, and no such
transaction shall be deemed to have been consummated until all such
transactions have been consummated.
(c) This Agreement may be amended, modified or
supplemented at any time by written agreement of the parties hereto.
(d) This Agreement contains the entire understanding
of the parties hereto with respect to its subject matter and supersedes
all prior agreements and understandings, oral and written, with respect
to its subject matter.
(e) Should any provision of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not
affect the validity or enforceability of any of the other provisions of
this Agreement, which other provisions shall remain in full force and
effect and the application of such invalid or unenforceable provision
to persons or circumstances other than those as to which it is held
invalid or unenforceable shall be valid and be enforced to the fullest
extent permitted by law.
(f) This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, executors, successors and permitted
assigns, but except as contemplated herein, neither this Agreement nor
any of the rights, interests or obligations hereunder shall be
assigned, directly or indirectly, by any party hereto without the prior
written consent of the other parties hereto. Nothing contained herein
shall prohibit DHB from selling LEC with its license from LTC or
require Lanxide's consent thereto.
(g) This Agreement is not intended and shall not be
deemed to confer upon or give any person except the parties hereto and
their respective successors and permitted assigns any remedy, claim,
liability, reimbursement, cause of action or other right under or by
reason of this Agreement.
(h) This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(i) This Agreement shall be governed by the laws of the
State of Delaware, without regard to the principles of conflicts of law
thereof.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, the parties hereto have executed this
Transfer Agreement as of the date first written above.
LANXIDE CORPORATION
By: /s/ Marc S. Newkirk
--------------------------------
Name: Marc S. Newkirk
Title: President
DHB CAPITAL GROUP, INC.
By: /s/ David Brooks
--------------------------------
Name: David Brooks
Title: Chairman of the Board
LANXIDE ARMOR PRODUCTS, INC.
By: /s/ Robert J. Ferris
--------------------------------
Name: Robert J. Ferris
Title: Secretary
LANXIDE ELECTRONIC COMPONENTS, INC.
By: /s/ Robert J. Ferris
--------------------------------
Name: Robert J. Ferris
Title: Secretary
LANXIDE TECHNOLOGY COMPANY, L.P.
By: Lanxide Corporation,
General Partner
By: /s/ Marc S. Newkirk
--------------------------------
Name: Marc S. Newkirk
Title: President
EXHIBIT 99.1
NEWARK, DELAWARE ... February 4, 1998 - Lanxide Corporation (OTC
Bulletin Board: LNXI), today announced that at the close of business
yesterday, it had laid off all of its employees and those of its three
subsidiaries at its Newark location. Du Pont Lanxide Composites Inc.,
a joint venture at the same site, is unaffected by the action.
Lanxide's subsidiary in Japan, Lanxide K.K., continues to operate.
Lanxide has been seeking capital for a long period of time to finance
the continued commercialization of its technology and has not been able
to secure adequate funding to continue its operations.
A small staff at the Company's Marrows Road facility in Newark is
taking measures to resolve the Company's financial position. These
measures include discussions with various parties to restart various
business operations.
Any questions can be directed to the spokesman for the Company:
R. Michael Rice
Lanxide Corporation
1300 Marrows Road
P.O. Box 6077
Newark, DE 19714-6077
Tel. (302) 456-6219
Fax (302) 454-1712
EXHIBIT 99.2
NEWARK, DELAWARE ... February 9, 1998 - Lanxide Corporation (OTC
Bulletin Board: LNXI), today announced that a transaction has been
completed whereby DHB Capital Group Inc. (OTC Bulletin Board: DHBT)
has acquired Lanxide Electronic Components Inc. ("LEC") and Lanxide
Armor Products Inc. ("LAP") in consideration for satisfaction of
Lanxide's loan from its bank in the amount of $5.7 million, plus
royalties to be paid to Lanxide on the ongoing businesses. Certain
equipment of LAP not utilized in the armor business was sold to Lanxide
Technology Company L.P., a subsidiary of Lanxide.
Because of its lack of operating funds, Lanxide was forced on
Tuesday of last week to lay off approximately 280 employees. DHB hired
all LEC and LAP employees and a few Lanxide employees, necessary to
support LEC and LAP, last Wednesday in anticipation of closing the
transaction. Thus, approximately 120 employees have been hired back
since last Tuesday.
With this new ownership, LEC and LAP will continue to supply their
customers. Lanxide Corporation now has ten royalty-bearing license
arrangements with various industrial companies. The Company is
continuing to work with potential buyers of assets to re-open various
parts of its operation. However, at this time Lanxide only has a small
staff with limited funding to continue the effort to restructure its
operations.
Any questions can be directed to the Company's spokesman:
R. Michael Rice
Lanxide Corporation
1300 Marrows Road
P.O. Box 6077
Newark, DE 19714-6077
Tel. (302) 456-6219
Fax (302) 454-1712
